Mayor and City Council of Baltimore

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. The Series 2017 Bonds may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2017 Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or filing under the applicable securities laws of any such jurisdiction. Depository TrustCompanyanddelivery inNewYork,onoraboutJune22,2017. Underwriters’ compensation,see“UNDERWRITING” herein.ItisexpectedthattheSeries2017Bondsinbook-entry formwillbeavailablefordepositwithThe Baltimore, MarylandasUnderwriters’ Counsel. to the City, and for the Corporation by McGuireWoods LLP, Baltimore Maryland, as counsel to the Corporation, and for the Underwriters by Ballard Spahr LLP, by McGuireWoodsLLP,Baltimore,Maryland,BondCounsel.Certainlegalmatters willbepasseduponfortheCitybyInterimSolicitorofCity,ascounsel Official Statementinitsentiretygivingparticularattentiontothematters discussedunder“RISKFACTORS.” ARTICLE XI,SECTION7OFTHECONSTITUTIONMARYLAND OR ANYOTHERCONSTITUTIONAL,STATUTORYCHARTERPROVISION. FAITH ANDCREDITORTAXINGPOWEROFTHECITYSHALL NOTCONSTITUTEADEBTOFTHECITY,ALLWITHINMEANING ARE LIMITEDSOLELYTOTHETRUSTESTATEASDESCRIBEDIN THEINDENTURE. PROVIDED THEREFORASINTHEINDENTURE.OBLIGATIONS OFTHECITYTOREGISTEREDOWNERSBONDS DOCUMENT, THE SERIES 2017 BONDS SHALL BE SPECIAL, LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY FROMTHEFUNDS June 1,2017.See“SECURITYFORSERIES2017BONDS–LoanAgreement” and“–DeedofTrust.” Rents datedasofFebruary1,2006,supplementedbyaFirstSupplementtoDeedTrust,SecurityAgreement,andAssignmentLeases datedasof individual trusteesforthebenefitofCityanditsassigns,includingTrustee,pursuanttoaDeedTrust,SecurityAgreement,Assignment of Leasesand its obligationsundertheLoanAgreementandIndenture,Corporationwillgrantalienon,securityinterestin,Project,includingSite, tocertain derived bytheCorporationfromoperationofProject,subjectonlytopaymentcertainandmaintenanceexpenses.Asadditional securityfor Indenture. AssecurityforitsobligationsundertheLoanAgreementandIndenture,CorporationhaspledgedtoCityainterestin the revenues Revenues andloanpaymentstobemadebytheCorporationCityunderLoanAgreement,certainfundsaccountsheldTrustee underthe THE SERIES2017BONDS–TrustEstate.”TheEstateiscomprisedofcertainrevenuesandpropertypledgedbytheCitytoTrustee,including thePledged 2017 BONDS–RedemptionProvisions.” OF FINANCING–SourcesandUsesofFunds.” of theSeries2017Bonds,and(3)fundDebtServiceReserveFundinanamountequaltoRequirementforBonds. See“PLAN acquisition, demolition,construction,renovation,expansion,improvement,furnishingandequippingoftheProject(asdefinedherein),(2)payCosts ofIssuance 2006B (the“SeriesBonds”andtogetherwiththeSeries2006ABonds,2006Bonds”),proceedsofwhichwereusedtofinance refinance the Senior Series2006A(the“Series 2006A Bonds”)and$53,440,000MayorCityCouncilofBaltimoreConventionCenterHotelRevenueBonds,Subordinate Series Corporation andusedto(1)refundtheoutstandingamountofCity’s$247,500,000MayorCityCouncilBaltimoreConventionCenterHotelRevenue Bonds, amends andsupplementsaLoanAgreementdatedasofFebruary1,2006(asamendedsupplemented,the“LoanAgreement”),between City andthe interests intheSeries2017Bonds.See“APPENDIXI–Book-EntrySystem.” to bemadeinbook-entryformtheprincipalamountof$5,000oranyintegralmultiplethereof.Beneficialownersarenotreceivecertificatesevidencing their Company, assecuritiesdepositoryfortheSeries2017Bonds,towhichpaymentsofprincipalandinterestarebemade.Purchasesbybeneficial ownersare circumstances wiretransfer,totheregisteredownersofSeries2017Bonds. other interest(initiallydueSeptember1,2017,andeachMarch1thereafter)ispayable,bytheTrustee,aspayingagent,check,draft orincertain association, astrustee(the“Trustee”). Baltimore HotelCorporation,aMarylandnon-stock,not-for-profitcorporation(the“Corporation”)andWellsFargoBank,NationalAssociation,national banking and Restated Indenture of Trust, originally dated as of February 1, 2006 and Amended and Restated as of June1, 2017 (the “Indenture”), among the City, the Center HotelRevenueRefundingBonds,Series2017(the“SeriesBonds”).TheBondsarebeingissuedpursuanttotheprovisionsofanAmended * Preliminary, subjecttochange IFS Securities, Inc. Citigroup Dated: DateofDelivery Series 2017Bonds,theirtransferortheinterestthereon.See“TAXMATTERS”herein. Maryland doesnotexpresslyreferto,andnoopinionisexpressedconcerning,estateorinheritancetaxes,anyothertaxeslevieddirectlyonthe be includedincomputingthenetearningsoffinancialinstitutionsasrequiredbylawStateMaryland;however, shall beexemptfromtaxationbytheStateofMarylandoranyitspoliticalsubdivisions,municipalcorporations,publicagenciesbut 2017 Bonds,theinterestpayablethereon,theirtransfer,andanyincomederivedtherefrom,includingprofitrealizedonsaleorexchange, “TAX MATTERS”herein.ItisalsotheopinionofBondCounselthat,underexistinglawStateMaryland,principalamountSeries 2017 Bondsmay,however,beincludedinthecalculationofcertaintaxes,includingalternativeminimumtaxoncorporations,asdescribedunder for federalincometaxpurposesandisnotaspecificitemofpreferencethealternativeminimumtax.InterestonSeries amended (the“Code”),asdescribedherein,interestontheSeries2017Bondsisexcludablefromgrossincomeofowners NEW ISSUE–BOOK-ENTRYONLY Subject toprevailingmarketconditions, theUnderwritersintend,butarenotobligated,tomakeamarketin theSeries2017Bonds.Fordetailsof The Series2017Bondsareofferedwhen,asandifissuedbytheCityaccepted bytheUnderwriters,subjecttoapprovaloflegalityandcertainothermatters This coverpagecontainscertaininformationforquickreferenceonly.It isnotasummaryofthisissue.Prospectivepurchasersareurgedtoread THE SERIES2017BONDSSHALLNOTCONSTITUTEAGENERAL OBLIGATIONOFTHECITYORAPLEDGEINVOLVEFULL NOTWITHSTANDING ANYPROVISIONORINFERENCECONTAINED HEREINORINANYOTHERBONDDOCUMENTTRANSACTION The Series2017Bondsarespecial,limitedobligationsoftheCity,payablesolelyfromTrustEstateestablishedunderIndenture.See“SECURITY FOR The Series2017Bondsaresubjecttooptional,extraordinaryandmandatorysinkingfundredemptionasdescribedhereinunderthecaption“THESERIES The proceedsoftheSeries2017BondswillbeloanedtoCorporationpursuantaFirstSupplementLoanAgreementdatedasJune1,2017, which The Series2017BondsareissuableinfullyregisteredformandinitiallytobethenameofCede&Co.,asnomineeforDepository Trust The principalandRedemptionPriceoffinalinstallmentinterestontheSeries2017Bondsarepayableuponpresentationsurrenderthereof, andall The MayorandCityCouncilof Baltimore, a body corporate and politic a political subdivision of the State of Maryland (the “City”), is issuingitsConvention In theopinionofBondCounsel,basedonexistinglawandassumingcompliancewithprovisionsInternalRevenueCode1986,as

PRELIMINARY OFFICIAL STATEMENT DATED MAY 15, 2017 MAYOR AND CITY COUNCIL OF BALTIMORE

(CITY OFBALTIMORE,MARYLAND) CONVENTION CENTERHOTEL REVENUE REFUNDINGBONDS Piper Jaffray&Co. $285,370,000* SERIES 2017 Siebert Cisneros Shank&Co,L.L.C. Due: September1,asshownoninsidecover RATING: S&P(Preliminary):“BBB-” Loop Capital Markets See “RATING”herein

$285,370,000* MAYOR AND CITY COUNCIL OF BALTIMORE (CITY OF BALTIMORE, MARYLAND) CONVENTION CENTER HOTEL REVENUE REFUNDING BONDS SERIES 2017

MATURITY SCHEDULE* (CUSIP 6-digit issuer number: ______)

Maturity Maturity Value Coupon Yield CUSIP No. 09/01/2018 $1,080,000 09/01/2019 1,950,000 09/01/2020 2,350,000 09/01/2021 2,800,000 09/01/2022 3,335,000 09/01/2023 3,900,000 09/01/2024 4,510,000 09/01/2025 5,190,000 09/01/2026 5,460,000 09/01/2027 5,760,000 09/01/2028 6,150,000 09/01/2029 6,850,000 09/01/2030 8,050,000 09/01/2031 8,900,000 09/01/2032 9,820,000

$56,965,000 ____% Term Bond due September 1, 2037 – Yield ____%, CUSIP No.___ $72,695,000 ____% Term Bond due September 1, 2042 – Yield ____%, CUSIP No.___ $79,605,000 ____% Term Bond due September 1, 2046 – Yield ____%, CUSIP No.___

* Preliminary, subject to change

No dealer, salesman or other person has been authorized to give any information or to make any representation, other than the information contained in this Official Statement, in connection with the offering of the Series 2017 Bonds, and, if given or made, such information or representation must not be relied upon as having been authorized by the underwriters listed on the cover hereof (collectively, the “Underwriters”) or by the Corporation or the City. The information in this Official Statement is subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder, under any circumstances, creates any implication that there has been no change in the affairs of the Corporation, the City or others since the date hereof. This Official Statement does not constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is not authorized or in which any person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

The information contained in this Official Statement has been obtained from the Corporation, the City and other sources that are deemed reliable. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of, their respective responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information, and such information is not to be construed as the promise or guarantee of the Underwriters. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions, or that they will be realized.

Hilton Worldwide Holdings Inc., its affiliated partnerships or bodies corporate, partners, shareholders, officers, employees or agents of any of them (the foregoing collectively, “Hilton Parent”) has not verified the information contained in this Official Statement. Hilton Parent does not assumes any responsibility for or makes any representation or warranty, express or implied, as to the accuracy, currency, reliability, reasonableness or completeness of, any information contained in this Official Statement. All such parties, entities and persons expressly disclaim any and all liability, claim, loss or damage (except in the case of fraud) for, or based on, or relating to any such information contained in, or errors or omissions from, this Official Statement or based upon or relating to the use of this Official Statement by any recipient of it, including any liability or responsibility for any financial statements, projections or other financial information or other information contained in this Official Statement or otherwise disseminated in connection with the offer to participate in the investment referred to in this Official Statement.

The Trustee assumes no responsibility for this Official Statement and has not reviewed or undertaken to verify any information contained herein.

The order and placement of materials in this Official Statement, including the appendices, are not to be deemed a determination of relevance, materiality or importance, and this Official Statement, including the appendices, must be considered in its entirety. The captions and headings in this Official Statement are for convenience only and in no way define, limit or describe the scope or intent, or affect the meaning or construction, of any provisions or sections of this Official Statement. The offering of the Series 2017 Bonds is made only by means of this entire Official Statement.

CUSIP® is a registered trademark of American Bankers Association. CUSIP data herein are provided by CUSIP Global Services, managed by S&P Capital IQ on behalf of American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the Corporation, the City or the Underwriters and are included solely for the convenience of the holders of the Series 2017 Bonds. None of the Corporation, the City or the Underwriters is responsible for the selection or use of these CUSIP numbers and no representation is made as to their correctness on the Series 2017 Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of the Series 2017 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of the Series 2017 Bonds.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Series 2017 Bonds or passed upon the adequacy or accuracy of this Official Statement. Any representation to the contrary is a criminal offense.

THIS OFFICIAL STATEMENT IS BEING PROVIDED TO PROSPECTIVE PURCHASERS EITHER IN BOUND PRINTED FORM (“ORIGINAL BOUND FORMAT”) OR IN ELECTRONIC FORMAT ON THE FOLLOWING WEBSITE: WWW.MUNIOS.COM. THIS OFFICIAL STATEMENT MAY BE RELIED UPON ONLY IF IT IS IN ITS ORIGINAL BOUND FORMAT OR IT IS PRINTED IN FULL DIRECTLY FROM SUCH WEBSITE.

THE PRICES AT WHICH THE BONDS ARE OFFERED TO THE PUBLIC BY THE UNDERWRITERS (AND THE YIELDS RESULTING THEREFROM) MAY VARY FROM THE INITIAL PUBLIC OFFERING PRICES OR YIELDS APPEARING ON THE INSIDE COVER PAGE HEREOF. IN ADDITION, THE UNDERWRITERS MAY ALLOW CONCESSIONS OR DISCOUNTS FROM SUCH INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS. IN ORDER TO FACILITATE DISTRIBUTION OF THE SERIES 2017 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SERIES 2017 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

MAYOR AND CITY COUNCIL OF BALTIMORE ELECTED AND CERTAIN APPOINTED OFFICIALS CATHERINE E. PUGH, MAYOR

CITY COUNCIL

President (elected City-Wide): Bernard C. “Jack” Young First District Councilperson: Zeke Cohen Second District Councilperson: Brandon M. Scott Third District Councilperson: Ryan Dorsey Fourth District Councilperson: William B. Henry Fifth District Councilperson: Isaac “Yitzy” Schleifer Sixth District Councilperson: Sharon Green Middleton Seventh District Councilperson: Leon Pinkett III Eighth District Councilperson: Kristerfer Burnett Ninth District Councilperson: John Bullock Tenth District Councilperson: Edward L. Reisinger Eleventh District Councilperson: Eric T. Costello Twelfth District Councilperson: Robert Stokes, Sr. Thirteenth District Councilperson: Shannon Sneed Fourteenth District Councilperson: Mary Pat Clarke

BOARD OF ESTIMATES

Bernard C. “Jack” Young President Catherine E. Pugh Mayor Joan M. Pratt Comptroller Rudolph S. Chow Director of Public Works David Ralph Interim City Solicitor

BOARD OF FINANCE

Catherine E. Pugh (President) Mayor Joan M. Pratt Comptroller Larry I. Silverstein (Vice President) Member Frederick W. Meier, Jr. Member Dana C. Moulden Member

iii

TABLE OF CONTENTS INTRODUCTION ...... 1 General ...... 1 Series 2017 Bonds ...... 2 Additional Bonds ...... 5 The Project ...... 5 Operation of the Project ...... 6 Additional Information ...... 6 Investment Considerations ...... 7 THE SERIES 2017 BONDS ...... 7 Authorization ...... 7 Description ...... 7 Redemption Provisions ...... 7 Payment and Registration ...... 11 Transfer and Exchange ...... 11 FORWARD LOOKING STATEMENTS ...... 12

PLAN OF FINANCING ...... 13 Sources and Uses of Funds ...... 13 Debt Service Requirements ...... 14 HOTEL MARKET CONSULTANT’S REPORT ...... 15

HISTORY OF PROJECT CASH FLOWS ...... 17

CASH FLOW PROJECTIONS ...... 17

SECURITY FOR THE SERIES 2017 BONDS ...... 24 Special, Limited Obligations of the City ...... 24 Trust Estate ...... 24 Pledged Revenues ...... 25 Loan Agreement ...... 33 Lockbox Funds; Cash Management Agreements ...... 34 Deed of Trust ...... 36 Trust Funds; Flow of Funds ...... 37 Debt Service Reserve Fund ...... 41 Amounts Transferred to Debt Service Account ...... 41 Additional Bonds ...... 42 Enforceability ...... 43 THE PROJECT ...... 43 The Site ...... 43 Existing Environmental Conditions ...... 44 Description of the Project ...... 45 Operation of the Project ...... 46 THE CONVENTION CENTER ...... 48

THE PARTICIPANTS ...... 50 The City ...... 50 The Corporation ...... 54 Hotel Manager – Hilton Management LLC ...... 56

RISK FACTORS ...... 58 Special, Limited Obligations of the City ...... 58 Insufficient Occupancy of the Hotel; Inability to Generate Sufficient Revenues ...... 58 Reliance on the Convention Center ...... 59 Competition ...... 59 Economic Considerations ...... 60 Reliance on Brand Name Recognition and Competent Management ...... 60 Failure to Appropriate ...... 60 Environmental Risks ...... 61 Actual Results May Differ from Forecasts ...... 61 Enforceability of Remedies ...... 61 No Secondary Market ...... 62 Other Possible Risk Factors ...... 62 CONTINUING DISCLOSURE AGREEMENT ...... 63

LITIGATION ...... 63

LEGAL MATTERS ...... 64

TAX MATTERS ...... 64 Federal Tax Treatment of Series 2017 Bonds ...... 64 Reliance and Assumptions; Effect of Certain Changes ...... 64 Original Issue Premium ...... 66 Certain Collateral Federal Tax Consequences ...... 66 Possible Legislative or Regulatory Action ...... 66 Maryland Tax Treatment of the Series 2017 Bonds ...... 67 RATING ...... 67

UNDERWRITING ...... 68

VERIFICATION OF MATHEMATICAL COMPUTATIONS ...... 69

INDEPENDENT AUDITORS ...... 69

EXPERTS ...... 69

MISCELLANEOUS ...... 70

APPENDIX A Summary of Certain Information Regarding the City ...... A-1 APPENDIX B Hotel Market Consultant’s Report ...... B-1 APPENDIX C Amended and Restated Master Glossary of Terms ...... C-1 APPENDIX D Summary of Certain Provisions of the Indenture and Loan Agreement ...... D-1 APPENDIX E Summary of Certain Provisions of the Hotel Operating Agreement ...... E-1 APPENDIX F Form of Continuing Disclosure Agreement ...... F-1 APPENDIX G Form of Opinion of Bond Counsel ...... G-1 APPENDIX H Audited Financial Statements of the Corporation for the Fiscal Years ended December 31, 2016 and 2015 ...... H-1 APPENDIX I Book-Entry System ...... I-1

INDEX OF TABLES

NOTE: Tables marked with an (*) indicate Annual Financial Information to be updated pursuant to SEC Rule 15c2-12, as amended. See "CONTINUING DISCLOSURE" and Appendix F. Page Table 1 Debt Service Requirements 14 Table 2 Hotel Market Consultant’s Forecast 16 Table 3 History of Project Cash Flow 17 Table 4* Project Cash Flow Summary 18 Table 5 Historical Collections 28 Table 6 Routine Flow of Funds 40 Table 7 Available Revenues 42

The information to be updated may be reported in any format chosen by the Corporation; it is not required that the format reflected in this Official Statement be used in future years.

OFFICIAL STATEMENT relating to

$285,370,000* MAYOR AND CITY COUNCIL OF BALTIMORE (CITY OF BALTIMORE, MARYLAND) CONVENTION CENTER HOTEL REVENUE REFUNDING BONDS SERIES 2017

INTRODUCTION

This Official Statement provides information in connection with the Mayor and City Council of Baltimore (the “City”) offering of $285,370,000* Mayor and City Council of Baltimore Convention Center Hotel Revenue Refunding Bonds, Series 2017 (the “Series 2017 Bonds”) dated the date of delivery thereof. The Series 2017 Bonds are secured by an Indenture of Trust, dated as of February 1, 2006 as amended and restated on June 1, 2017 (the “Indenture”), by and among the City, the Baltimore Hotel Corporation, a Maryland non-stock, not-for-profit corporation (the “Corporation”) and Wells Fargo Bank, National Association, a national banking association, as trustee (the “Trustee”). Unless otherwise defined herein, capitalized terms used herein are defined in “APPENDIX C – Amended and Restated Master Glossary of Terms.”

General

The City is a body politic and corporate and a political subdivision of the State of Maryland and has had a charter form of government since 1797 and home rule powers since 1918. All local government functions are performed by the City. See “THE PARTICIPANTS – The City” and “Summary of Certain Information Regarding the City” in Appendix A.

The City owns and operates the Baltimore Convention Center (the “Convention Center”), an approximately 1,225,000 square foot convention facility (including a 300,000 square foot exhibition hall) located at One West Pratt Street in the City, between Baltimore’s Inner Harbor and Oriole Park at Camden Yards and a short distance from many of Baltimore’s other top attractions, including the National Aquarium, the Maryland Science Center, Harbor Place and the M&T Bank Football Stadium. See “THE CONVENTION CENTER.”

The City previously determined that construction of a convention center headquarters hotel on an approximate 5-acre site located across the street from the Convention Center (the “Site”) would enhance the City’s ability to attract and meet the demand of larger conventions and permit more efficient and effective operation of the Convention Center, resulting in public benefit. Pursuant to Ordinance No. 05-128 (the “Bond Ordinance”) adopted by the City Council of the City (the “City Council”) on September 19, 2005 and approved by the Mayor of the City on October 7, 2005, the City approved, among other things, (1) the issuance of its $247,500,000 Mayor and City Council of Baltimore Convention Center Hotel Revenue Bonds, Senior Series 2006A (the “Series 2006A Bonds”) and $53,440,000 Mayor and City Council of Baltimore Convention Center Hotel Revenue Bonds, Subordinate

* Preliminary, subject to change

Series 2006B (the “Series 2006B Bonds” and together with the Series 2006A Bonds, the Series 2006 Bonds”), to finance a convention center headquarters hotel and supporting facilities (as more particularly described herein, the “Project”) and the (2) the creation of the Corporation to own and operate the Project.

The Project was completed in August, 2008. The Bond Ordinance provides that the Board of Finance of the City is authorized to refund or advance refund the Series 2006 Bonds at any time or from time to time, through the issuance of refunding bonds, notes or other obligations issued by the City. Pursuant to Resolutions adopted by the Board of Finance on April 24, 2017, the City approved the issuance of the Series 2017 Bonds.

Series 2017 Bonds

General

The proceeds of the Series 2017 Bonds are to be used to (i) refund the Series 2006 Bonds, (ii) pay the Costs of Issuance of the Series 2017 Bonds, and (iii) fund the Debt Service Reserve Fund equal to the Reserve Fund Requirement for the Series 2017 Bonds. See “PLAN OF FINANCING – Sources and Uses of Funds.”

Security for the Series 2017 Bonds

Trust Estate; Pledged Revenues. The Series 2017 Bonds are special, limited obligations of the City, payable as to principal and interest solely from the Trust Estate established under the Indenture. The Trust Estate is comprised of certain revenues and property pledged to the Trustee, including the Pledged Revenues, the City’s right, title and interest in and to the Transaction Documents, including the Loan Agreement and the Deed of Trust, and the Lockbox Funds, and certain funds and accounts held by the Trustee under the Indenture, except for the Reserved Rights of the City. The Pledged Revenues consist of (i) the loan payments made by the Corporation to the City pursuant to the Loan Agreement, (ii) the Site Specific Hotel Tax Revenues, if, as and when appropriated, (iii) a portion of the City-Wide Hotel Tax Revenues in an amount equal to the City-Wide Hotel Tax Pledge Amount, not to exceed in any Fiscal Year of the City the amount of City-Wide Hotel Tax Revenues collected by the City in such Fiscal Year, if, as and when appropriated, (iv) the Personal Property Tax Revenues, if, as and when appropriated, and (v) the Tax Increment Revenues, if, as and when appropriated. See “SECURITY FOR THE SERIES 2017 BONDS – Trust Estate” and “– Pledged Revenues.”

NOTWITHSTANDING ANY PROVISION OR INFERENCE CONTAINED HEREIN OR IN ANY OTHER BOND DOCUMENT OR TRANSACTION DOCUMENT, THE SERIES 2017 BONDS SHALL BE SPECIAL, LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE FUNDS PROVIDED THEREFOR AS PROVIDED IN THE INDENTURE. THE OBLIGATIONS OF THE CITY TO THE REGISTERED OWNERS OF THE BONDS ARE LIMITED SOLELY TO THE TRUST ESTATE AS DESCRIBED IN THE INDENTURE.

THE MEANING OF ARTICLE XI, SECTION 7 OF THE CONSTITUTION OF MARYLAND OR ANY OTHER CONSTITUTIONAL, STATUTORY OR CHARTER PROVISION.

Pursuant to Ordinance No. 05-127 (the “Tax Increment Ordinance”) adopted by the City Council on September 19, 2005 and approved by the Mayor on October 7, 2005, the City created the Convention Center Hotel Development District (the “Tax Increment District”). The boundaries of the Tax Increment District are coterminous with the Site. The Tax Increment Ordinance requires the City to deposit the Tax Increment Revenues into a special fund (the “Tax Increment Fund”). The Tax Increment Revenues consist of a percentage of the real property taxes that would normally be paid to the City in each Fiscal Year that represent the levy on the amount by which the assessable base of the real property in the Tax Increment District subject to taxation as of the January 1 preceding such Fiscal Year exceeds the assessable base of such real property on January 1, 2004. Pursuant to the Indenture, the City has covenanted to transfer the Tax Increment Revenues, if, as and when appropriated, to the Trustee for deposit to the Tax Increment Account of the City Tax Reserve Fund, for further application as set forth in the Indenture. See “SECURITY FOR THE SERIES 2017 BONDS – Pledged Revenues – Tax Increment Revenues” and “– Trust Funds; Flow of Funds” and “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts – City Tax Reserve Fund.”

The City imposes a tax on the value of tangible personal property owned, leased or used by a business and located within the City. Pursuant to the Bond Ordinance and the Indenture, the City has, respectively, approved and covenanted to transfer the Personal Property Tax Revenues collected by the City from the Corporation, if, as and when appropriated, to the Trustee for deposit to the Personal Property Tax Account of the City Tax Reserve Fund, for further application as set forth in the Indenture. See “SECURITY FOR THE SERIES 2017 BONDS – Pledged Revenues – Personal Property Tax Revenues” and “− Trust Funds; Flow of Funds” and “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts – City Tax Reserve Fund.”

Article 28, Subtitle 21 of the Baltimore City Code levies and imposes a tax on all gross amounts of money paid to the owners or operators of hotels in the City by transient guests or tenants for renting, using or occupying a room or rooms in such hotels. Since 1958, the hotel room tax has been levied and collected and the hotel taxes have been deposited into the City’s General Fund. The hotel tax rate is currently 9.5%. Pursuant to the Indenture, the City has covenanted to transfer the Site Specific Hotel Tax Revenues collected from the Project, if, as and when appropriated, and in certain circumstances a portion of the City-Wide Hotel Tax Revenues, if, as and when appropriated, to the Trustee for deposit to the Site Specific Hotel Tax Account or the City-Wide Hotel Tax Account, as applicable, of the City Tax Reserve Fund for further application as set forth in the Indenture. See “SECURITY FOR THE SERIES 2017 BONDS – Pledged Revenues – Hotel Tax Revenues” and “− Trust Funds; Flow of Funds” and “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts – City Tax Reserve Fund” and “− Baltimore City Convention Center Fund; Site Specific Hotel Tax Revenues; City-Wide Hotel Tax Revenues.” See also “RISK FACTORS – Other Possible Risk Factors.”

The City-Wide Hotel Tax Revenues and the Site Specific Hotel Tax Revenues do not include any portion of the Hotel Tax Revenues appropriated by the City to the payment of the City’s

Senior Convention Center Bonds and the pledge of the Site Specific Hotel Tax Revenues and the City- Wide Hotel Tax Revenues pursuant to the Indenture is subject and subordinate to the pledge of such funds to pay the principal of and interest on the Mayor and City Council of Baltimore (City of Baltimore, Maryland) Convention Center Refunding Revenue Refunding Bonds, Series 1998, originally issued in the amount of $58,515,000 (the “1998 Senior Convention Center Bonds”). See “Pledged Revenues – Hotel Tax Revenues – Subordinate Pledge.” Currently, $12,660,000 aggregate principal amount of 1998 Senior Convention Center Bonds are outstanding, and the final maturity thereof is September 1, 2019. See “THE CONVENTION CENTER.” Furthermore, the Indenture provides that the City may issue other bonds secured by a senior or parity lien on the Hotel Tax Revenues upon the satisfaction of certain conditions. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Certain Agreements of the City – Issuance of Additional Convention Center Bonds.”

All amounts payable by the City under the Indenture from the City-Wide Hotel Tax Revenues, the Site Specific Hotel Tax Revenues, the Personal Property Tax Revenues and the Tax Increment Revenues are subject each year to appropriation by the City Council and the City Council is under no obligation to make any such appropriation.

Loan Agreement. The City will lend the proceeds of the Series 2017 Bonds to the Corporation pursuant to the Loan Agreement. The Loan Agreement will require the Corporation to make payments sufficient to pay, among other things, the principal and Redemption Price of, and interest on, the Series 2017 Bonds when due. Pursuant to the Indenture, the City will assign to the Trustee all of its right, title and interest in and to, and remedies under, the Loan Agreement, except the Reserved Rights of the City, which include certain rights of the City to notice, reimbursement and indemnification; provided that the Trustee shall have no right to exercise any remedies under the Loan Agreement until an Event of Default occurs under the Indenture.

Under the Loan Agreement, the Corporation has pledged to the City as security for its obligations under the Loan Agreement and the Indenture, the revenues derived by the Corporation from the operation of the Project, subject to the payment of certain operation and maintenance expenses. The Corporation agrees to deposit or cause to be deposited, as long as any of the Bonds remain Outstanding, all of the Gross Operating Revenues as calculated on a cash basis (less the Petty Cash Amount for the Hotel Project, which shall be retained by the Hotel Manager, for use solely at the Hotel Project), as soon as practical upon receipt (but in no event less often than once each Business Day), in the Lockbox Fund or the Parking Lockbox Fund, as applicable. The Corporation shall cause to be filed UCC financing statements, and shall execute and deliver such other documents (including, but not limited to, continuation statements) as may be necessary in order to perfect or maintain as perfected the security interest of the City and the Trustee in the Lockbox Funds or give public notice thereof. See “SECURITY FOR THE SERIES 2017 BONDS – Lockbox Funds; Cash Management Agreements.”

Lockbox Funds. The Lockbox Fund is established pursuant to the terms of the Cash Management Agreement and the Parking Lockbox Fund is established pursuant to the terms of the Parking Cash Management Agreement. See “SECURITY FOR THE SERIES 2017 BONDS – Lockbox Funds; Cash Managements Agreements.”

Deed of Trust. As additional security for its obligations under the Loan Agreement and the Indenture, the Corporation will grant lien on, and a security interest in, the Project and the Site, and all fixtures attached thereto, to certain individual trustees for the benefit of the City and its assigns, including the Trustee, pursuant to a Deed of Trust, Security Agreement, and Assignment of Leases and Rents dated as of February 1, 2006, as amended and supplemented by a First Supplement to Deed of Trust, Security Agreement, and Assignment of Leases and Rents, dated as of June 1, 2017 (as amended and supplemented, the “Deed of Trust”). Pursuant to the Indenture, the City will assign to the Trustee all of its right, title and interest in and to, and remedies under, the Deed of Trust, except for the Reserved Rights of the City; provided that until an Event of Default occurs under the Indenture, the Trustee shall have no right to exercise any remedies under the Deed of Trust. The Deed of Trust provides for the release of certain property, including a portion of the Site constituting approximately 13,288 square feet and located on the eastern edge of the Site (the “Maglev Site”) to facilitate construction of a train station for a magnetic levitation (“Maglev”) train line, which has been proposed to run from Baltimore to Washington, upon the satisfaction of certain conditions. See “SECURITY FOR THE SERIES 2017 BONDS – Deed of Trust.”

Additional Bonds

Under the Indenture, the City has the right to issue additional bonds that would be payable on parity with the Series 2017 Bonds upon satisfaction of certain requirements. See “SECURITY FOR THE SERIES 2017 BONDS – Additional Bonds” and “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Additional Bonds.”

The Project

The Project features two buildings, connected to each other as well as to the Convention Center by an enclosed air-conditioned skywalk. A three story building closest in proximity to the Convention Center houses the Project’s junior ballroom, three meal restaurant, smaller meeting rooms and retail space (the “Leased Retail Space”). A nineteen story building houses the Hotel’s front desk and reception area, the grand ballroom, the recreational areas, back of the house areas and all of the Hotel’s guestrooms.

The Project consists of approximately 883,000 gross square feet, including 757 hotel guest rooms, a full service restaurant, a lobby bar, a convenience/sundries store, approximately 56,554 gross square feet of meeting space, including a ballroom of approximately 24,000 gross square feet (excluding pre conference space and circulation space), the skywalk connecting to the Convention Center and other supporting facilities and all finish materials, fixtures, furnishings, equipment and appliances contained in the Hotel.

The Project also includes a parking garage (the “Garage”) (which includes approximately 570 parking spaces to service the needs of the Project), the Leased Retail Space and other supporting facilities and all finish materials, fixtures, furnishings, equipment and appliances contained in the Project. As used in this Official Statement, “Hotel Project” includes all portions of the Project, except for the Garage and the Leased Retail Space. See “THE PROJECT.”

Operation of the Project

The Hotel Project is managed and operated pursuant to a Hotel Operating Agreement, dated as of February 1, 2006 between the Corporation and the Hotel Manager (as may be amended and supplemented, the “Hotel Operating Agreement”). The City and the Corporation are currently negotiating with the Hotel Manager to, among other things, extend the term of the Hotel Operating Agreement to December 31, 2046, and revise the method of calculation of the management fees thereunder to be based on a percentage of Hotel Gross Revenues.

More than half of the occupancy at the Hotel Project relates to Convention Center bookings or other use of the meeting space. Up to twelve months in advance of their scheduled stay, a Potential Convention Center Customer is permitted to reserve blocks of up to 600 rooms for patrons of the Convention Center under the terms of a Room Block Agreement, dated as of February 1, 2006, between the Corporation and the Hotel Manager, as amended by the First Amendment to Room Block Agreement dated as of June 1, 2017 by and between the Corporation and the Hotel Manager (as amended and supplemented, the “Room Block Agreement”). See “THE PROJECT – Operation of the Project” and “RISK FACTORS – Economic Considerations.”

The Corporation has entered into a Parking Management Agreement with a Parking Manager for the management and operation of the Garage. See “THE PROJECT – Operation of the Project.”

Additional Information

This Official Statement includes financial, demographic and other information about the Corporation and the City. Prospective purchasers are encouraged to read this Official Statement (including the appendices hereto) in its entirety. This Official Statement also contains descriptions of the Series 2017 Bonds and other documents and information pertaining to the Series 2017 Bonds. Certain market studies, financial projections and economic and demographic information prepared by HVS Consulting & Valuation, a division of TS Worldwide, LLC (the “Hotel Market Consultant”), appear in “APPENDIX B – Hotel Market Consultant’s Report.” Summaries of certain documents prepared in connection with the financing, development and operation of the Project are set forth in “APPENDIX C – Amended and Restated Master Glossary of Terms,” “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement,” and “APPENDIX E – Summary of Certain Provisions of Hotel Operating Agreement.” The form of an undertaking by the Corporation to provide continuing disclosures (the “Continuing Disclosure Agreement”) relating to certain information contained in this Official Statement appears in “APPENDIX F – Form of Continuing Disclosure Agreement.” The annual audited financial statements of the Corporation for the Fiscal Years ended December 31, 2016 and 2015 are included as Appendix H, and the City of Baltimore, Maryland Comprehensive Annual Financial Report Year Ended June 30, 2015 may be found at: http://finance.baltimorecity.gov/public-info/reports. Such descriptions and information are qualified in their entirety by reference to the originals of the documents described therein, copies of which are available during the initial offering of the Series 2017 Bonds from Peter Phillippi, Managing Director, Piper Jaffray & Co. at [email protected].

Investment Considerations

The purchase and ownership of the Series 2017 Bonds involve investment risk. Prospective purchasers of the Series 2017 Bonds are urged to read this Official Statement (including the appendices hereto) in its entirety. For a discussion of certain risks relating to the Series 2017 Bonds, see “RISK FACTORS.”

THE SERIES 2017 BONDS

Authorization

The Series 2017 Bonds are issued pursuant to (a) Subsection (50) of Article II of the Baltimore City Charter, (b) the Bond Ordinance, and (c) Resolutions of the Board of Finance of the City adopted on April 24, 2017.

Description

The Series 2017 Bonds are dated, mature and bear interest and are subject to other terms and conditions as described on the cover page hereof.

The Series 2017 Bonds are initially to be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York, as securities depository for the Series 2017 Bonds (the “Security Depository”). Purchases by beneficial owners of the Series 2017 Bonds (“Beneficial Owners”) are to be made in book-entry form only in the principal amount of $5,000 or any integral multiple thereof.

See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement” for certain provisions contained in the Indenture, including without limitation, the provisions related to the issuance of Additional Bonds and extraordinary mandatory redemption of the Series 2017 Bonds, certain agreements of the City and Corporation, the responsibilities of the Trustee, the rights and remedies of the Trustee (or, in certain circumstances, the registered owners of a majority in aggregate principal amount of outstanding Series 2017 Bonds) upon an Event of Default under the Indenture, provisions relating to amendments of the Indenture, the Loan Agreement and the Deed of Trust and procedures for defeasance of the Series 2017 Bonds.

Redemption Provisions

Optional Redemption. The Series 2017 Bonds are subject to redemption at the option of the City, in whole or in part, on any date on or after September 1, 2027* from any legally available funds, at a Redemption Price equal to the principal amount of Series 2017 Bonds called for redemption, without premium, plus accrued interest with respect thereto to the date fixed for redemption.

In the case of any redemption of Series 2017 Bonds, an Authorized City Officer shall give written notice to the Trustee of its election or direction so to redeem, of the Redemption Date, of the principal amounts of the Series 2017 Bonds of each maturity to be redeemed (which maturities and

* Preliminary, subject to change

principal amounts to be redeemed shall be determined as described below under “Selection of Bonds to be Redeemed”). If at the time of mailing of notice of redemption, there shall not have been deposited with the Trustee moneys sufficient to redeem all the Series 2017 Bonds called for redemption, which moneys are or will be available for redemption of Series 2017 Bonds, such notice will state that it is conditional upon the deposit of the redemption moneys with the Trustee on or before the Redemption Date, and such notice will be of no effect unless such moneys are so deposited.

As discussed in “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts – Cash Trap Fund,” certain money in the Cash Trap Fund may be deposited annually in the Redemption Fund and the Trustee is then required to transfer amounts in the Redemption Fund to the Redemption Account to optionally redeem Series 2017 Bonds. Any Series 2017 Bonds redeemed with moneys in the Redemption Fund are to be redeemed as described below under “Selection of Bonds to be Redeemed.”

Mandatory Sinking Fund Redemption. The Series 2017 Bonds maturing on September 1, 20__ are subject to mandatory redemption, at a Redemption Price equal to the principal amount of the Series 2017 Bonds maturing on September 1, 20__ being redeemed, together with accrued interest thereon to the Redemption Date, pursuant to Sinking Fund Installments on September 1 in each of the years and principal amounts set forth in the table below, except that the Sinking Fund Installments of Series 2017 Bonds maturing on September 1, 20__ shall be reduced on a pro rata basis by the principal amount of any Series 2017 Bonds maturing on September 1, 20__ redeemed pursuant to any other optional or mandatory redemption provision on or before the date on which any such Sinking Fund Installment is due:

Year Sinking Fund Installment $

______(1) Final Maturity

The Series 2017 Bonds maturing on September 1, 20__ are subject to mandatory redemption, at a Redemption Price equal to the principal amount of the Series 2017 Bonds maturing on September 1, 20__ being redeemed, together with accrued interest thereon to the Redemption Date, pursuant to Sinking Fund Installments on September 1 in each of the years and principal amounts set forth in the table below, except that the Sinking Fund Installments of Series 2017 Bonds maturing on September 1, 20__ shall be reduced on a pro rata basis by the principal amount of any Series 2017 Bonds maturing on September 1, 20__ redeemed pursuant to any other optional or mandatory redemption provision on or before the date on which any such Sinking Fund Installment is due:

Year Sinking Fund Installment $

______(1) Final Maturity

Year Sinking Fund Installment $

______(1) Final Maturity

In lieu of depositing cash with the Trustee for payment of any Sinking Fund Installment due with respect to the Series 2017 Bonds of a maturity and interest rate, the City has the option to tender to the Trustee for cancellation at least 45 days prior to a sinking fund Redemption Date any amount of the Series 2017 Bonds of such maturity and interest rate purchased by the City, which Series 2017 Bonds may be purchased by or upon the direction of the City at public or private sale as and when and at such prices not in excess of the par amount thereof plus accrued interest thereon as the City may in its discretion determine from moneys held by the Trustee under the Indenture that are available for such purpose. The par amount of any Series 2017 Bonds of a maturity and interest rate so purchased by or upon the direction of the City and tendered to the Trustee in any 12-month period ending on July 1 in any calendar year is to be credited towards and will reduce the Sinking Fund Installments required to be made with respect to the Series 2017 Bonds of such maturity and interest rate on a pro rata basis.

Extraordinary Mandatory Redemption. The Series 2017 Bonds are subject to extraordinary mandatory redemption, in whole or in part on the earliest date following the date for which notice of redemption can be given as provided in the Indenture, at a price equal to the principal amount of the Series 2017 Bonds to be redeemed plus interest accrued thereon to the date fixed for redemption, without premium, from proceeds of insurance (including any title insurance), or condemnation awards permitted or required to be applied to such redemption under the Indenture. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Disposition of Insurance and Condemnation Proceeds.”

Selection of Bonds to be Redeemed. Series 2017 Bonds subject to optional redemption shall be selected on a pro rata basis among all Outstanding maturities. If less than all of the Series 2017 Bonds of a single maturity are to be redeemed, the Series 2017 Bonds to be redeemed will be selected by lot or other random method by the Trustee in such a manner as the Trustee may determine; provided, however, that the portion of any Bond of a denomination greater than the minimum Authorized Denomination for the Series 2017 Bonds to be redeemed shall be redeemed in part only in Authorized Denominations and that, in selecting portions of Series 2017 Bonds for redemption, the Trustee shall treat

each Bond as representing that number of Series 2017 Bonds of the minimum Authorized Denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by the minimum Authorized Denomination. In case of any partial redemption during the continuance of an Event of Default, such redemption shall be applied on a pro rata basis of all Outstanding Series 2017 Bonds called for redemption, without differentiation by maturity or within a maturity.

Notice of Redemption. Notice of mandatory and optional redemption of Series 2017 Bonds shall be given in accordance with the Indenture. When the Trustee shall receive notice from the City of its election or direction to redeem Series 2017 Bonds, and when redemption of Series 2017 Bonds is authorized or required otherwise than at the option of the City, the Trustee shall give notice, in the name of the City, of the redemption of such Series 2017 Bonds, which notice is to specify the maturities and interest rates of the Series 2017 Bonds to be redeemed, the Redemption Date and the place or places where amounts due upon such Redemption Date will be payable and, if less than all of the Series 2017 Bonds of any like maturity and interest rate are to be redeemed, the letters and numbers or other distinguishing marks of such Series 2017 Bonds so to be redeemed, and, in the case of Series 2017 Bonds to be redeemed in part only, such notices shall also specify the respective portions of the principal amounts thereof to be redeemed. Such notice shall further state that on such Redemption Date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portions of the principal thereof, in the case of Series 2017 Bonds to be redeemed in part only, together with interest accrued to the Redemption Date, and that from and after such date interest thereon shall cease to accrue and be payable. Such notice of redemption may also be a conditional notice as provided in the Indenture. The Trustee shall to mail a copy of such notice, first-class mail postage prepaid, not less than 30 days nor more than 60 days before the Redemption Date, to the Registered Owners of any Series 2017 Bonds, or portions of Series 2017 Bonds that are to be redeemed, at their last addresses, if any, appearing upon the Register.

In addition to the notice of redemption required pursuant to the preceding paragraph, if any of the Series 2017 Bonds are to be redeemed, then, upon the written request of an Authorized City Officer, received at least 40 days before the date fixed for redemption, the Trustee shall also give redemption notice at least 30 days before the date fixed for redemption, by (i) registered or certified mail, return receipt requested, postage prepaid, (ii) telephonically confirmed facsimile transmission, or (iii) overnight delivery service, to the Information Services specified by the City.

Failure to give the notices described in the Indenture, or any defects therein, does not in any manner affect the validity of any proceedings for redemption of any other Series 2017 Bonds for which such notice has been duly given. Neither the City nor the Trustee will have any responsibility for any defect in the CUSIP number that appears on any Series 2017 Bonds or in any redemption notice with respect thereto.

Payment of Redeemed Bonds. Notice having been given in the manner provided in the Indenture, the Series 2017 Bonds or portions thereof so called for redemption shall become due and payable on the Redemption Date so designated at the Redemption Price, plus interest accrued and unpaid to the Redemption Date, upon presentation and surrender thereof at the office specified in such notice. If there are called for redemption less than all of the principal of any Bond, the City shall execute and the Trustee shall authenticate, upon the surrender of such Bond, without charge to the Registered Owner thereof, for the unredeemed balance of the principal amount of the Bond so surrendered, Series 2017

Bonds of like maturity and interest rate in any Authorized Denomination. If, on the Redemption Date, moneys for the redemption of all the Series 2017 Bonds or portions thereof to be redeemed, together with interest to the Redemption Date, shall be held by the Trustee so as to be available therefor on said date and, if notice of redemption shall have been given as required, then, from and after the Redemption Date interest on the Series 2017 Bonds or portions thereof so called for redemption are to cease to accrue and become payable. If said moneys are not so available on the Redemption Date, such Series 2017 Bonds or portions thereof are to continue to bear interest until paid at the same rate as they would be borne interest at had they not been called for redemption.

Payment and Registration

The Series 2017 Bonds are issuable in fully registered form and upon initial execution, authentication and delivery, the ownership of the Series 2017 Bonds are to be registered in the name of Cede & Co., as nominee of DTC, as Securities Depository for the Series 2017 Bonds. Purchases by Beneficial Owners of the Series 2017 Bonds are to be made in book-entry form in the principal amount of $5,000 or any integral multiple thereof. Subject to the provisions described in “APPENDIX I – Book- Entry System” below, principal and Redemption Price of and final installment of interest on the Series 2017 Bonds are payable upon presentation and surrender thereof to, and all other interest is payable by, the Trustee, as Paying Agent, by check or draft mailed to the registered owners at the addresses appearing on the Register maintained by the Registrar, at the close of business on the fifteenth day of the calendar month (whether or not a Business Day) preceding the interest payment date (the “Record Date”) or by wire transfer to registered owners of $1,000,000 or more in aggregate principal amount of Series 2017 Bonds as of the Record Date at such wire transfer address in the United States of America as such registered owners specify in writing to the Trustee prior to the Record Date. The amount of interest paid is computed on the basis of a 360-day year consisting of twelve 30-day months. Payments to Beneficial Owners are to be made as described in “APPENDIX I – Book-Entry System.”

Neither the City nor the Trustee, as the Paying Agent, has any responsibility or obligation for the payment to Beneficial Owners of the principal or Redemption Price of or interest on the Series 2017 Bonds.

Neither the City nor the Trustee, as the Registrar, has any responsibility or obligation with respect to the accuracy of the records of the Securities Depository or its participants (“Participants”) regarding any ownership interest in the Series 2017 Bonds or the delivery to any Participant, Beneficial Owner or entity (other than the registered owners of the Series 2017 Bonds) of any notice with respect to the Series 2017 Bonds.

Transfer and Exchange

The Series 2017 Bonds are transferable only upon the Register, which is to be kept at the designated office of the Registrar, by the Registered Owner thereof, in person or by the Registered Owner’s attorney duly authorized in writing, upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the Registered Owner or the Registered Owner’s duly authorized attorney.

The Registrar is required to keep, or cause to be kept, on behalf of the City at the designated office of the Registrar, the Register, in which, subject to such reasonable regulations as the City, the Trustee, and the Registrar may prescribe, the Registrar is to cause Series 2017 Bonds to be registered and transferred as provided in the Indenture. The Register is to contain the name and address of the Registered Owner of each Series 2017 Bond as well as the name and address of each Beneficial Owner to the extent such Beneficial Owner provides such information to the Registrar. Upon the transfer of any such Series 2017 Bond and payment of any required fees, the Registrar is required to deliver in the name of the transferee a new fully registered Series 2017 Bond or Series 2017 Bonds of the same aggregate principal amount, maturity and interest rate as the surrendered Series 2017 Bond or Series 2017 Bonds and only in Authorized Denominations. Transfers by Beneficial Owners are to be made as described under “APPENDIX I – Book-Entry System.”

The City and any fiduciary, including the Trustee, may deem and treat the person in whose name any Series 2017 Bond is registered in the Register as the absolute owner of such Series 2017 Bond, whether such Series 2017 Bond shall be overdue or not, or the purpose of receiving payment of, or on account of, the principal and Redemption Price of and interest on such Series 2017 Bond and for all other purposes, and all such payments so made to any such Registered Owner or upon the Registered Owner’s order will be valid and effectual to satisfy and discharge the liability upon such Series 2017 Bond to the extent of the sum or sums so paid, and the City and any fiduciary, including the Trustee, will not be affected by any notice to the contrary.

None of the City, the Trustee or the Registrar has any responsibility or obligation with respect to the accuracy of the records of the Securities Depository or its Participants regarding any ownership interest in the Series 2017 Bonds or transfers thereof.

FORWARD LOOKING STATEMENTS

This Official Statement, and particularly the information contained under the captions, “PLAN OF FINANCING,” “HOTEL MARKET CONSULTANT’S REPORT,” “CASH FLOW PROJECTIONS” and “RISK FACTORS,” contains statements relating to future results that are “forward- looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words “estimate,” “forecast,” “intend,” “expect,” “assume” and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. For a discussion of certain of such risks and possible variations in results, see “RISK FACTORS.”

PLAN OF FINANCING

Sources and Uses of Funds

It is estimated that the sources and uses of funds in connection with the issuance of the Series 2017 Bonds and refinancing of the Project will be as follows:

Sources and Uses of Funds*

SOURCES OF FUNDS Par Amount of Bonds $285,370,000* Net Premium Funds on Deposit in the Debt Service Fund Funds on Deposit in the Senior Debt Service Reserve Fund(1) Fund on Deposit in the Subordinate Debt Service Reserve Fund(1)

TOTAL SOURCES OF FUNDS $

USES OF FUNDS Refunding of Series 2006 Bonds $ Deposit to Debt Service Reserve Fund Costs of Issuance Rounding TOTAL USES OF FUNDS $

(1) In connection with the issuance of the Series 2017 Bonds, the Subordinate Debt Service Reserve Fund is being closed and the Senior Debt Service Reserve Fund will be referred to as the Debt Service Reserve Fund.

* Preliminary, subject to change.

Debt Service Requirements

The annual debt service requirements of the Series 2017 Bonds (as estimated by the Underwriters) to maturity are as follows:

Table 1

Debt Service Period Ending Principal of the Interest on the Requirements of the September 1 Series 2017 Bonds* Series 2017 Bonds Series 2017 Bonds 2017 - 2018 1,080,000 2019 1,950,000 2020 2,350,000 2021 2,800,000 2022 3,335,000 2023 3,900,000 2024 4,510,000 2025 5,190,000 2026 5,460,000 2027 5,760,000 2028 6,150,000 2029 6,850,000 2030 8,050,000 2031 8,900,000 2032 9,820,000 2033 10,310,000 2034 10,825,000 2035 11,365,000 2036 11,935,000 2037 12,530,000 2038 13,155,000 2039 13,815,000 2040 14,505,000 2041 15,230,000 2042 15,990,000 2043 16,790,000 2044 17,630,000 2045 18,515,000 2046 26,670,000 ______Total $285,370,000

* Preliminary, subject to change.

HOTEL MARKET CONSULTANT’S REPORT

In connection with the issuance of the Series 2017 Bonds, HVS Consulting and Valuation, a division of TS Worldwide, LLC, the Hotel Market Consultant, prepared the Market Study Report, dated May 12, 2017 (the “Market Study Report”), which is included herein as “APPENDIX B – Hotel Market Consultant’s Report.”

The Hotel Market Consultant is a global consulting and services organization focused on the hotel, restaurant, time share, gaming, and leisure industries. Established in 1980, the Hotel Market Consultant has completed more than 4,500 hotel-specific assignments each year globally. The Hotel Market Consultant’s principals have extensive experience in the area of hospitality consulting, authoring numerous textbooks and hundreds of articles on the subject of hospitality consulting and are recognized as industry leaders in the field of hospitality consulting. With a staff of 350, the Hotel Market Consultant has offices in over 35 cities worldwide.

Set forth on the following pages are financial data taken from or based upon the net income forecasts contained in the Market Study Report attached as part of “APPENDIX B – Hotel Market Consultant’s Report” and the requirements of the Indenture. Investors considering purchase of the Series 2017 Bonds are urged to review carefully the Market Study Report in its entirety. Although the Hotel Market Consultant believes the assumptions underlying the forecasts included in the Market Study Report are reasonable, investors are cautioned that there may be differences between the forecasted and actual results. There are a number of factors which may cause actual results to vary materially from forecasts. See “RISK FACTORS” and “FORWARD LOOKING STATEMENTS.”

The Market Study Report presents the Hotel Market Consultant’s analysis of supply and demand factors that affect the market for transient accommodations in a competitive set of hotel properties in downtown Baltimore. The Market Study Report presents a forecast of income and expenses for the Project from February 1, 2017 through December 31, 2026 (the “Forecast Period”), including the assumptions upon which the forecasts are based. In the Market Study Report projections are made for twelve month periods ending December 31 (a “Projection Year”) within the Forecast Period.

Significant assumptions made in the Market Study Report include (1) operation of the Hotel Project by the Hotel Manager or other competitive manager with a high-end nationally recognized brand name, (2) an ongoing preventative maintenance program and appropriate management and ownership oversight, (3) renovations will be required in order to maintain current brand affiliation, (4) that demand for the use of Convention Center and bookings therefor will increase after a period of previous decline, (5) operating results that do not take into account nor make provisions for the effect of any sharp rise or decline in local or national economic conditions and (6) that the relationship among the Hotel, the Convention Center and the Baltimore Area Convention and Visitors Association (BACVA), now known as Visit Baltimore, Inc. (“Visit Baltimore”) will be a positive and effective one as the Convention Center would serve as the Hotel’s primary demand generator. The Market Study Report should be read in its entirety for an understanding of the forecasts and all of the underlying assumptions contained therein.

The following table summarizes the Hotel Market Consultant’s forecast of the occupancy levels, average rates and net income for the Hotel Project during the Forecast Period. Since all forecasts

are based on estimates and assumptions which are inherently subject to uncertainty and variations depending on future events, there are likely to be differences between the forecast and actual results and the differences may be material. See “FORWARD LOOKING STATEMENTS.”

Table 2

Projection Occupancy Average Year Level Rate RevPAR(1)

2017(2) 69% $175.21 $120.89 2018 70% 179.59 125.71 2019 72% 184.97 133.18 2020 72% 190.52 137.18 2021 72% 196.24 141.29 2022 72% 202.13 145.53 2023 72% 208.19 149.90 2024 72% 214.43 154.39 2025 72% 220.87 159.02 2026 72% 227.49 163.80 ______(1) Revenue per available room. Data are from the table captioned “Ten-Year Forecast of Revenue and Expense (Calendar Year)” in Figure 7-11 of the Market Study Report. (2) January 1 through December 31, based on actual and projected results. Source: The Market Study Report.

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HISTORY OF PROJECT CASH FLOWS

The following table sets forth a history of project cash flows for the past five calendar years as provided by the Corporation. Investors should be aware that collection of revenue, or components thereof, may not continue at the levels shown below.

Table 3

Year End 12/31 2016 2015 2014 2013 2012 Trustee Sweeps from Hotel Lockbox $15,444,853 $17,172,993 $17,865,595 $18,746,160 $17,371,910 Trustee Sweeps from Garage Lockbox 1,880,059 1,944,289 1,726,506 1,546,887 1,490,662 Retail Rental Income 157,172 155,226 160,206 139,153 144,240 Tax Increment Payments 4,060,222 4,075,205 3,910,886 3,974,573 4,030,058 Hotel Occupancy Taxes 3,859,779 3,199,239 3,186,824 2,848,996 2,801,241

Total $25,402,085 $26,546,952 $26,850,017 $27,255,769 $25,838,111

Source: Baltimore Hotel Corporation Audited Financial Statements

CASH FLOW PROJECTIONS

Table 4 has been compiled by Piper Jaffray & Co. and summarizes the net income as provided by the Hotel Market Consultant, Tax Revenues estimated based on operating projections provided by the Hotel Market Consultant, the estimated annual debt service requirements for the Series 2017 Bonds, the projected debt service coverage for the Series 2017 Bonds, and current and projected balances of certain funds held by the Trustee. Notes for Table 4 appear at the end of the Table.

In addition to the assumptions set forth in the Market Study Report, the table assumes interest income generated by the Debt Service Reserve Fund at a rate of 2.00% per annum. There can be no assurance that amounts on deposit in the Debt Service Reserve Fund can be invested at such assumed rate for the entire Forecast Period. See “SECURITY FOR THE SERIES 2017 BONDS – Trust Funds; Flow of Funds” and “FORWARD LOOKING STATEMENTS.”

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TABLE 4 Project Cash Flow Summary Baltimore Convention Center Hotel (Dollars in Thousands) Hotel Operating Year Ending, 2017* 2018 2019 2020 2021 REVENUE AVAILABLE FOR DEBT SERVICE Net Operating Income(1)(1-B) 8,982 16,271 17,840 18,375 18,926 Less: Property Tax Payment (3,838) (5,392) (5,527) (5,665) (5,807) Plus: Parking Income(2) 968 1,995 2,054 2,116 2,180 Plus: Rental Income(3) 90 183 188 192 197 Plus: Hotel Senior FF&E Reserve 1,157 2,314 2,444 2,517 2,593 Project Net Income 7,359 15,371 16,999 17,535 18,089

Plus: Tax Increment (TIF) Payment(3) 2,081 4,266 4,372 4,482 4,594 Plus: Site-Specific HOT(4) 1,526 3,173 3,300 3,496 3,601 Plus: Other Investment Earnings - - - - -

TOTAL AVAILABLE REVENUE 10,965 22,810 24,671 25,513 26,284 BOND DEBT SERVICE AND COVERAGE RATIOS Total Available Revenue 10,965 22,810 24,671 25,513 26,284 Plus: City Appropriation 4,083 7,000 7,000 7,000 7,000 Total Revenue Available for Debt Service 15,048 29,810 31,671 32,513 33,284

Net Debt Service 2,686 14,892 15,730 16,052 16,384

Net Debt Service Coverage(5) 5.60 2.00 2.01 2.03 2.03 Net Debt Service Coverage Adjusted for City Appropriation.(6) n/a 2.89 2.83 2.82 2.80 Hotel Operating Year Ending, 2017 2018 2019 2020 2021 OPERATING SUMMARY Occupancy 70% 70% 72% 72% 72% Average Daily Rate 173.98 179.59 184.97 190.52 196.24 TOTAL AVAILABLE REVENUE 10,965 22,810 24,671 25,513 26,284 CASH FLOW EXPENDITURES Gross Debt Service(7) 2,766 15,307 16,145 16,467 16,800 Debt Service Reserve Fund Earnings (81) (415) (415) (415) (415) City Appropriation (2,685) (7,000) (7,000) (7,000) (7,000) ADJUSTED NET DEBT SERVICE - 7,892 8,730 9,052 9,385

Hotel Senior FF&E Deposit (4%) 1,157 2,314 2,444 2,517 2,593 Administrative Expenses (Estimate) 322 474 486 498 511 Release of City Appropriation Pledge 4,083 7,000 7,000 7,000 7,000 CASH FLOW REMAINING 5,403 5,130 6,011 6,446 6,795

Site Specific HOT Reversal - - 3,300 3,496 3,601 Subordinate Management Fee(8) - - - 472 486 Hotel Subordinate FF&E Reserve Deposit (2%) - 1,157 1,222 1,259 1,296 Supersubordinate Management Fee(9) - - - - - EXCESS REVENUES - 1,157 4,522 5,227 5,383 APPLICATION OF EXCESS REVENUES Deposit to Cash Trap Fund 5,403 3,971 626 - - Deposit to Bond Redemption Fund - - 863 1,220 1,412 Distribution to City - - - - - Total Reserve Fund Deposits 5,403 3,971 1,489 1,220 1,412 RESERVE FUND BALANCES Operating Reserve Fund(10) 5,000 5,000 5,000 5,000 5,000 Cash Trap Fund(11) 5,403 9,374 10,000 10,000 10,000 Redemption Fund(12) - - 863 2,082 3,495 Total Reserve Fund Balances 10,403 14,374 15,863 17,082 18,495 Total Debt Service Reserve Fund 20,774 20,774 20,774 20,774 20,774 TOTAL RESERVE FUND BALANCE 31,177 35,148 36,637 37,856 39,269 PRINCIPAL BALANCES Total Bond Balance 285,370 284,290 282,340 279,990 277,190 * Represents the portion of the year between dated date of the Series 2017 Bonds and December 31, 2017. (1) Operating revenue and income projections for years 2017 through 2026 provided by Hotel Market Consultant, May 2017. Assumed 2.5% growth thereafter. (1-B) Hotel Market Consultant projection in 2017 represents the portion of the year between dated date and year-end. (2) Actual 2016 results and 3.0% growth thereafter. (3) Actual 2016 results and 2.5% growth thereafter. (4) Equal to the site specific hotel occupancy taxes collected in the prior year. (5) Equal to Total Revenue Available for Debt Service / Net Debt Service. (6) Equal to Total Available Revenue / (Net Debt Service - City Appropriation of $7 million). (7) Principal and interest reserved monthly in the Debt Service Account from Jan.1 to Dec.31. Does not conform to the semi-annual payments. (8) Years 2018-2019 equal to 0.00% and 0.75% thereafter. (9) Years 2018-2022 equal to 0.00% and 0.75% thereafter. (10) Includes Key Money contribution at closing (11) Estimate for 2017 fiscal year end balance (12) Balances in the Bond Redemption Fund will be used to redeem outstanding Bonds after the first call date (September 1, 2027).

Hotel Operating Year Ending, 2022 2023 2024 2025 2026 REVENUE AVAILABLE FOR DEBT SERVICE Net Operating Income(1) 19,494 20,079 20,681 21,301 21,939 Less: Property Tax Payment (5,952) (6,101) (6,254) (6,410) (6,570) Plus: Parking Income(2) 2,245 2,312 2,382 2,453 2,527 Plus: Rental Income(3) 202 207 212 218 223 Plus: Hotel Senior FF&E Reserve 2,671 2,751 2,833 2,918 3,006 Project Net Income 18,660 19,248 19,854 20,480 21,125

Plus: Tax Increment (TIF) Payment(3) 4,709 4,826 4,947 5,071 5,197 Plus: Site-Specific HOT(4) 3,709 3,820 3,935 4,053 4,174 Plus: Other Investment Earnings - - - - -

TOTAL AVAILABLE REVENUE 27,078 27,894 28,736 29,604 30,496 BOND DEBT SERVICE AND COVERAGE RATIOS Total Available Revenue 27,078 27,894 28,736 29,604 30,496 Plus: City Appropriation 7,000 7,000 7,000 7,000 7,000 Total Revenue Available for Debt Service 34,078 34,894 35,736 36,604 37,496

Net Debt Service 16,779 17,177 17,592 18,047 18,057

Net Debt Service Coverage(5) 2.03 2.03 2.03 2.03 2.08 Net Debt Service Coverage Adjusted for City Appropriation.(6) 2.77 2.74 2.71 2.68 2.76 Hotel Operating Year Ending, 2022 2023 2024 2025 2026 OPERATING SUMMARY Occupancy 72% 72% 72% 72% 72% Average Daily Rate 202.13 208.19 214.43 220.87 227.49 TOTAL AVAILABLE REVENUE 27,078 27,894 28,736 29,604 30,496 CASH FLOW EXPENDITURES Gross Debt Service(7) 17,195 17,593 18,008 18,462 18,473 Debt Service Reserve Fund Earnings (415) (415) (415) (415) (415) City Appropriation (7,000) (7,000) (7,000) (7,000) (7,000) ADJUSTED NET DEBT SERVICE 9,780 10,178 10,593 11,047 11,058

Hotel Senior FF&E Deposit (4%) 2,671 2,751 2,833 2,918 3,006 Administrative Expenses (Estimate) 523 537 550 564 578 Release of City Appropriation Pledge 7,000 7,000 7,000 7,000 7,000 CASH FLOW REMAINING 7,104 7,428 7,760 8,075 8,854

Site Specific HOT Reversal 3,709 3,820 3,935 4,053 4,174 Subordinate Management Fee(8) 501 516 531 547 564 Hotel Subordinate FF&E Reserve Deposit (2%) 1,335 1,375 1,417 1,459 1,503 Supersubordinate Management Fee(9) - 516 531 547 564 EXCESS REVENUES 5,545 6,227 6,414 6,606 6,805 APPLICATION OF EXCESS REVENUES Deposit to Cash Trap Fund - - - - - Deposit to Bond Redemption Fund 1,559 1,203 1,347 1,466 2,050 Distribution to City - - - - - Total Reserve Fund Deposits 1,559 1,203 1,347 1,466 2,050 RESERVE FUND BALANCES Operating Reserve Fund(10) 5,000 5,000 5,000 5,000 5,000 Cash Trap Fund(11) 10,000 10,000 10,000 10,000 10,000 Redemption Fund(12) 5,054 6,257 7,604 9,070 11,120 Total Reserve Fund Balances 20,054 21,257 22,604 24,070 26,120 Total Debt Service Reserve Fund 20,774 20,774 20,774 20,774 20,774 TOTAL RESERVE FUND BALANCE 40,828 42,031 43,378 44,844 46,894 PRINCIPAL BALANCES Total Bond Balance 273,855 269,955 265,445 260,255 254,795 (1) Operating revenue and income projections for years 2017 through 2026 provided by Hotel Market Consultant, May 2017. Assumed 2.5% growth thereafter. (2) Actual 2016 results and 3.0% growth thereafter. (3) Actual 2016 results and 2.5% growth thereafter. (4) Equal to the site specific hotel occupancy taxes collected in the prior year. (5) Equal to Total Revenue Available for Debt Service / Net Debt Service. (6) Equal to Total Available Revenue / (Net Debt Service - City Appropriation of $7 million). (7) Principal and interest reserved monthly in the Debt Service Account from Jan.1 to Dec.31. Does not conform to the semi-annual payments. (8) Years 2018-2019 equal to 0.00% and 0.75% thereafter. (9) Years 2018-2022 equal to 0.00% and 0.75% thereafter. (10) Includes Key Money contribution at closing (11) Estimate for 2017 fiscal year end balance (12) Balances in the Bond Redemption Fund will be used to redeem outstanding Bonds after the first call date (September 1, 2027).

Hotel Operating Year Ending, 2027 2028 2029 2030 2031 REVENUE AVAILABLE FOR DEBT SERVICE Net Operating Income(1) 22,487 23,049 23,625 24,216 24,821 Less: Property Tax Payment (6,734) (6,903) (7,075) (7,252) (7,434) Plus: Parking Income(2) 2,602 2,681 2,761 2,844 2,929 Plus: Rental Income(3) 229 234 240 246 252 Plus: Hotel Senior FF&E Reserve 3,081 3,158 3,237 3,318 3,401 Project Net Income 21,665 22,219 22,788 23,372 23,969

Plus: Tax Increment (TIF) Payment(3) 5,327 5,461 5,597 5,737 5,880 Plus: Site-Specific HOT(4) 4,299 4,407 4,517 4,630 4,746 Plus: Other Investment Earnings - - - - -

TOTAL AVAILABLE REVENUE 31,291 32,087 32,902 33,739 34,595 BOND DEBT SERVICE AND COVERAGE RATIOS Total Available Revenue 31,291 32,087 32,902 33,739 34,595 Plus: City Appropriation 7,000 7,000 7,000 7,000 7,000 Total Revenue Available for Debt Service 38,291 39,087 39,902 40,739 41,595

Net Debt Service 18,084 18,186 18,579 19,436 19,884

Net Debt Service Coverage(5) 2.12 2.15 2.15 2.10 2.09 Net Debt Service Coverage Adjusted for City Appropriation.(6) 2.82 2.87 2.84 2.71 2.69 Hotel Operating Year Ending, 2027 2028 2029 2030 2031 OPERATING SUMMARY Occupancy 72% 72% 72% 72% 72% Average Daily Rate 233.18 239.01 244.98 251.11 257.38 TOTAL AVAILABLE REVENUE 31,291 32,087 32,902 33,739 34,595 CASH FLOW EXPENDITURES Gross Debt Service(7) 18,500 18,602 18,994 19,852 20,299 Debt Service Reserve Fund Earnings (415) (415) (415) (415) (415) City Appropriation (7,000) (7,000) (7,000) (7,000) (7,000) ADJUSTED NET DEBT SERVICE 11,085 11,187 11,579 12,437 12,884

Hotel Senior FF&E Deposit (4%) 3,081 3,158 3,237 3,318 3,401 Administrative Expenses (Estimate) 592 607 622 638 654 Release of City Appropriation Pledge 7,000 7,000 7,000 7,000 7,000 CASH FLOW REMAINING 9,533 10,135 10,464 10,346 10,656

Site Specific HOT Reversal 4,299 4,407 4,517 4,630 4,746 Subordinate Management Fee(8) 578 592 607 622 638 Hotel Subordinate FF&E Reserve Deposit (2%) 1,541 1,579 1,619 1,659 1,700 Supersubordinate Management Fee(9) 578 592 607 622 638 EXCESS REVENUES 6,996 7,170 7,350 7,533 7,722 APPLICATION OF EXCESS REVENUES Deposit to Cash Trap Fund - - - - - Deposit to Bond Redemption Fund 2,539 1,483 1,557 1,407 1,468 Distribution to City - 1,483 1,557 1,407 1,468 Total Reserve Fund Deposits 2,539 2,966 3,114 2,814 2,936 RESERVE FUND BALANCES Operating Reserve Fund(10) 5,000 5,000 5,000 5,000 5,000 Cash Trap Fund(11) 10,000 10,000 10,000 10,000 10,000 Redemption Fund(12) 13,659 15,142 16,699 18,106 19,574 Total Reserve Fund Balances 28,659 30,142 31,699 33,106 34,574 Total Debt Service Reserve Fund 20,774 20,774 20,774 20,774 20,774 TOTAL RESERVE FUND BALANCE 49,433 50,916 52,473 53,880 55,348 PRINCIPAL BALANCES Total Bond Balance 249,035 242,885 236,035 227,985 219,085 (1) Operating revenue and income projections for years 2017 through 2026 provided by Hotel Market Consultant, May 2017. Assumed 2.5% growth thereafter. (2) Actual 2016 results and 3.0% growth thereafter. (3) Actual 2016 results and 2.5% growth thereafter. (4) Equal to the site specific hotel occupancy taxes collected in the prior year. (5) Equal to Total Revenue Available for Debt Service / Net Debt Service. (6) Equal to Total Available Revenue / (Net Debt Service - City Appropriation of $7 million). (7) Principal and interest reserved monthly in the Debt Service Account from Jan.1 to Dec.31. Does not conform to the semi-annual payments. (8) Years 2018-2019 equal to 0.00% and 0.75% thereafter. (9) Years 2018-2022 equal to 0.00% and 0.75% thereafter. (10) Includes Key Money contribution at closing (11) Estimate for 2017 fiscal year end balance (12) Balances in the Bond Redemption Fund will be used to redeem outstanding Bonds after the first call date (September 1, 2027).

Hotel Operating Year Ending, 2032 2033 2034 2035 2036 REVENUE AVAILABLE FOR DEBT SERVICE Net Operating Income(1) 25,442 26,078 26,730 27,398 28,083 Less: Property Tax Payment (7,619) (7,810) (8,005) (8,205) (8,410) Plus: Parking Income(2) 3,017 3,107 3,201 3,297 3,396 Plus: Rental Income(3) 259 265 272 279 286 Plus: Hotel Senior FF&E Reserve 3,486 3,573 3,662 3,754 3,848 Project Net Income 24,585 25,213 25,860 26,523 27,203

Plus: Tax Increment (TIF) Payment(3) 6,027 6,178 6,333 6,491 6,653 Plus: Site-Specific HOT(4) 4,864 4,986 5,111 5,238 5,369 Plus: Other Investment Earnings - - - - -

TOTAL AVAILABLE REVENUE 35,476 36,377 37,304 38,252 39,225 BOND DEBT SERVICE AND COVERAGE RATIOS Total Available Revenue 35,476 36,377 37,304 38,252 39,225 Plus: City Appropriation 7,000 7,000 7,000 7,000 7,000 Total Revenue Available for Debt Service 42,476 43,377 44,304 45,252 46,225

Net Debt Service 20,359 20,358 20,357 20,356 20,358

Net Debt Service Coverage(5) 2.09 2.13 2.18 2.22 2.27 Net Debt Service Coverage Adjusted for City Appropriation.(6) 2.66 2.72 2.79 2.86 2.94 Hotel Operating Year Ending, 2032 2033 2034 2035 2036 OPERATING SUMMARY Occupancy 72% 72% 72% 72% 72% Average Daily Rate 263.82 270.41 277.18 284.10 291.21 TOTAL AVAILABLE REVENUE 35,476 36,377 37,304 38,252 39,225 CASH FLOW EXPENDITURES Gross Debt Service(7) 20,774 20,773 20,773 20,772 20,773 Debt Service Reserve Fund Earnings (415) (415) (415) (415) (415) City Appropriation (7,000) (7,000) (7,000) (7,000) (7,000) ADJUSTED NET DEBT SERVICE 13,359 13,358 13,358 13,357 13,358

Hotel Senior FF&E Deposit (4%) 3,486 3,573 3,662 3,754 3,848 Administrative Expenses (Estimate) 670 687 704 722 740 Release of City Appropriation Pledge 7,000 7,000 7,000 7,000 7,000 CASH FLOW REMAINING 10,961 11,759 12,580 13,419 14,279

Site Specific HOT Reversal 4,864 4,986 5,111 5,238 5,369 Subordinate Management Fee(8) 654 670 687 704 721 Hotel Subordinate FF&E Reserve Deposit (2%) 1,743 1,787 1,831 1,877 1,924 Supersubordinate Management Fee(9) 654 670 687 704 721 EXCESS REVENUES 7,915 8,113 8,316 8,523 8,735 APPLICATION OF EXCESS REVENUES Deposit to Cash Trap Fund - - - - - Deposit to Bond Redemption Fund 1,523 1,824 2,132 2,448 2,771 Distribution to City 1,523 1,824 2,132 2,448 2,771 Total Reserve Fund Deposits 3,046 3,648 4,264 4,896 5,542 RESERVE FUND BALANCES Operating Reserve Fund(10) 5,000 5,000 5,000 5,000 5,000 Cash Trap Fund(11) 10,000 10,000 10,000 10,000 10,000 Redemption Fund(12) 21,097 22,921 25,053 27,502 30,273 Total Reserve Fund Balances 36,097 37,921 40,053 42,502 45,273 Total Debt Service Reserve Fund 20,774 20,774 20,774 20,774 20,774 TOTAL RESERVE FUND BALANCE 56,871 58,695 60,827 63,276 66,047 PRINCIPAL BALANCES Total Bond Balance 209,265 198,955 188,130 176,765 164,830 (1) Operating revenue and income projections for years 2017 through 2026 provided by Hotel Market Consultant, May 2017. Assumed 2.5% growth thereafter. (2) Actual 2016 results and 3.0% growth thereafter. (3) Actual 2016 results and 2.5% growth thereafter. (4) Equal to the site specific hotel occupancy taxes collected in the prior year. (5) Equal to Total Revenue Available for Debt Service / Net Debt Service. (6) Equal to Total Available Revenue / (Net Debt Service - City Appropriation of $7 million). (7) Principal and interest reserved monthly in the Debt Service Account from Jan.1 to Dec.31. Does not conform to the semi-annual payments. (8) Years 2018-2019 equal to 0.00% and 0.75% thereafter. (9) Years 2018-2022 equal to 0.00% and 0.75% thereafter. (10) Includes Key Money contribution at closing (11) Estimate for 2017 fiscal year end balance (12) Balances in the Bond Redemption Fund will be used to redeem outstanding Bonds after the first call date (September 1, 2027).

Hotel Operating Year Ending, 2037 2038 2039 2040 2041 REVENUE AVAILABLE FOR DEBT SERVICE Net Operating Income(1) 28,785 29,505 30,243 30,999 31,774 Less: Property Tax Payment (8,621) (8,836) (9,057) (9,284) (9,516) Plus: Parking Income(2) 3,497 3,602 3,710 3,822 3,936 Plus: Rental Income(3) 293 300 308 315 323 Plus: Hotel Senior FF&E Reserve 3,944 4,043 4,144 4,247 4,354 Project Net Income 27,898 28,614 29,348 30,099 30,871

Plus: Tax Increment (TIF) Payment(3) 6,819 6,990 7,165 7,344 7,527 Plus: Site-Specific HOT(4) 5,504 5,641 5,782 5,927 6,075 Plus: Other Investment Earnings - - - - -

TOTAL AVAILABLE REVENUE 40,221 41,245 42,295 43,370 44,473 BOND DEBT SERVICE AND COVERAGE RATIOS Total Available Revenue 40,221 41,245 42,295 43,370 44,473 Plus: City Appropriation 7,000 7,000 7,000 7,000 7,000 Total Revenue Available for Debt Service 47,221 48,245 49,295 50,370 51,473

Net Debt Service 20,356 20,355 20,357 20,356 20,356

Net Debt Service Coverage(5) 2.32 2.37 2.42 2.47 2.53 Net Debt Service Coverage Adjusted for City Appropriation.(6) 3.01 3.09 3.17 3.25 3.33 Hotel Operating Year Ending, 2037 2038 2039 2040 2041 OPERATING SUMMARY Occupancy 72% 72% 72% 72% 72% Average Daily Rate 298.49 305.95 313.60 321.44 329.47 TOTAL AVAILABLE REVENUE 40,221 41,245 42,295 43,370 44,473 CASH FLOW EXPENDITURES Gross Debt Service(7) 20,772 20,770 20,772 20,772 20,771 Debt Service Reserve Fund Earnings (415) (415) (415) (415) (415) City Appropriation (7,000) (7,000) (7,000) (7,000) (7,000) ADJUSTED NET DEBT SERVICE 13,357 13,355 13,357 13,357 13,356

Hotel Senior FF&E Deposit (4%) 3,944 4,043 4,144 4,247 4,354 Administrative Expenses (Estimate) 758 777 797 816 837 Release of City Appropriation Pledge 7,000 7,000 7,000 7,000 7,000 CASH FLOW REMAINING 15,162 16,070 16,997 17,950 18,926

Site Specific HOT Reversal 5,504 5,641 5,782 5,927 6,075 Subordinate Management Fee(8) 740 758 777 796 816 Hotel Subordinate FF&E Reserve Deposit (2%) 1,972 2,021 2,072 2,124 2,177 Supersubordinate Management Fee(9) 740 758 777 796 816 EXCESS REVENUES 8,956 9,178 9,408 9,643 9,884 APPLICATION OF EXCESS REVENUES Deposit to Cash Trap Fund - - - - - Deposit to Bond Redemption Fund 3,105 3,446 3,795 4,154 4,522 Distribution to City 3,105 3,446 3,795 4,154 4,522 Total Reserve Fund Deposits 6,210 6,892 7,590 8,308 9,044 RESERVE FUND BALANCES Operating Reserve Fund(10) 5,000 5,000 5,000 5,000 5,000 Cash Trap Fund(11) 10,000 10,000 10,000 10,000 10,000 Redemption Fund(12) 33,378 36,824 40,618 44,772 49,293 Total Reserve Fund Balances 48,378 51,824 55,618 59,772 64,293 Total Debt Service Reserve Fund 20,774 20,774 20,774 20,774 20,774 TOTAL RESERVE FUND BALANCE 69,152 72,598 76,392 80,546 85,067 PRINCIPAL BALANCES Total Bond Balance 152,300 139,145 125,330 110,825 95,595 (1) Operating revenue and income projections for years 2017 through 2026 provided by Hotel Market Consultant, May 2017. Assumed 2.5% growth thereafter. (2) Actual 2016 results and 3.0% growth thereafter. (3) Actual 2016 results and 2.5% growth thereafter. (4) Equal to the site specific hotel occupancy taxes collected in the prior year. (5) Equal to Total Revenue Available for Debt Service / Net Debt Service. (6) Equal to Total Available Revenue / (Net Debt Service - City Appropriation of $7 million). (7) Principal and interest reserved monthly in the Debt Service Account from Jan.1 to Dec.31. Does not conform to the semi-annual payments. (8) Years 2018-2019 equal to 0.00% and 0.75% thereafter. (9) Years 2018-2022 equal to 0.00% and 0.75% thereafter. (10) Includes Key Money contribution at closing (11) Estimate for 2017 fiscal year end balance (12) Balances in the Bond Redemption Fund will be used to redeem outstanding Bonds after the first call date (September 1, 2027).

Hotel Operating Year Ending, 2042 2043 2044 2045 2046 REVENUE AVAILABLE FOR DEBT SERVICE Net Operating Income(1) 32,568 33,382 34,217 35,072 35,949 Less: Property Tax Payment (9,754) (9,997) (10,247) (10,503) (10,766) Plus: Parking Income(2) 4,055 4,176 4,301 4,430 4,563 Plus: Rental Income(3) 331 340 348 357 366 Plus: Hotel Senior FF&E Reserve 4,462 4,574 4,688 4,805 4,926 Project Net Income 31,662 32,475 33,307 34,161 35,038

Plus: Tax Increment (TIF) Payment(3) 7,716 7,909 8,106 8,309 8,517 Plus: Site-Specific HOT(4) 6,227 6,383 6,542 6,706 6,873 Plus: Other Investment Earnings - - - - -

TOTAL AVAILABLE REVENUE 45,605 46,767 47,955 49,176 50,428 BOND DEBT SERVICE AND COVERAGE RATIOS Total Available Revenue 45,605 46,767 47,955 49,176 50,428 Plus: City Appropriation 7,000 7,000 7,000 7,000 7,000 Total Revenue Available for Debt Service 52,605 53,767 54,955 56,176 57,428

Net Debt Service 20,354 20,355 20,355 20,359 6,814

Net Debt Service Coverage(5) 2.58 2.64 2.70 2.76 8.43 Net Debt Service Coverage Adjusted for City Appropriation.(6) 3.42 3.50 3.59 3.68 - Hotel Operating Year Ending, 2042 2043 2044 2045 2046 OPERATING SUMMARY Occupancy 72% 72% 72% 72% 72% Average Daily Rate 337.71 346.15 354.81 363.68 372.77 TOTAL AVAILABLE REVENUE 45,605 46,767 47,955 49,176 50,428 CASH FLOW EXPENDITURES Gross Debt Service(7) 20,770 20,770 20,771 20,774 7,229 Debt Service Reserve Fund Earnings (415) (415) (415) (415) (415) City Appropriation (7,000) (7,000) (7,000) (7,000) (7,000) ADJUSTED NET DEBT SERVICE 13,355 13,355 13,356 13,359 (186)

Hotel Senior FF&E Deposit (4%) 4,462 4,574 4,688 4,805 4,926 Administrative Expenses (Estimate) 858 879 901 924 947 Release of City Appropriation Pledge 7,000 7,000 7,000 7,000 7,000 CASH FLOW REMAINING 19,930 20,959 22,010 23,088 37,741

Site Specific HOT Reversal 6,227 6,383 6,542 6,706 6,873 Subordinate Management Fee(8) 837 858 879 901 924 Hotel Subordinate FF&E Reserve Deposit (2%) 2,231 2,287 2,344 2,403 2,463 Supersubordinate Management Fee(9) 837 858 879 901 924 EXCESS REVENUES 10,132 10,386 10,644 10,911 11,184 APPLICATION OF EXCESS REVENUES Deposit to Cash Trap Fund - - - - - Deposit to Bond Redemption Fund 4,900 5,286 5,683 6,089 13,279 Distribution to City 4,900 5,286 5,683 6,089 13,279 Total Reserve Fund Deposits 9,800 10,572 11,366 12,178 26,558 RESERVE FUND BALANCES Operating Reserve Fund(10) 5,000 5,000 5,000 5,000 5,000 Cash Trap Fund(11) 10,000 10,000 10,000 10,000 10,000 Redemption Fund(12) 54,193 59,479 65,163 71,251 84,530 Total Reserve Fund Balances 69,193 74,479 80,163 86,251 99,530 Total Debt Service Reserve Fund 20,774 20,774 20,774 20,774 - TOTAL RESERVE FUND BALANCE 89,967 95,253 100,937 107,025 99,530 PRINCIPAL BALANCES Total Bond Balance 79,605 62,815 45,185 26,670 - (1) Operating revenue and income projections for years 2017 through 2026 provided by Hotel Market Consultant, May 2017. Assumed 2.5% growth thereafter. (2) Actual 2016 results and 3.0% growth thereafter. (3) Actual 2016 results and 2.5% growth thereafter. (4) Equal to the site specific hotel occupancy taxes collected in the prior year. (5) Equal to Total Revenue Available for Debt Service / Net Debt Service. (6) Equal to Total Available Revenue / (Net Debt Service - City Appropriation of $7 million). (7) Principal and interest reserved monthly in the Debt Service Account from Jan.1 to Dec.31. Does not conform to the semi-annual payments. (8) Years 2018-2019 equal to 0.00% and 0.75% thereafter. (9) Years 2018-2022 equal to 0.00% and 0.75% thereafter. (10) Includes Key Money contribution at closing (11) Estimate for 2017 fiscal year end balance (12) Balances in the Bond Redemption Fund will be used to redeem outstanding Bonds after the first call date (September 1, 2027). .

SECURITY FOR THE SERIES 2017 BONDS

Special, Limited Obligations of the City

The Series 2017 Bonds are special, limited obligations of the City payable solely from the Trust Estate described in the Indenture. See “– Trust Estate” below. Also see “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement.”

THE SERIES 2017 BONDS SHALL NOT CONSTITUTE A GENERAL OBLIGATION OF THE CITY OR A PLEDGE OF OR INVOLVE THE FULL FAITH AND CREDIT OR TAXING POWER OF THE CITY AND SHALL NOT CONSTITUTE A DEBT OF THE CITY, ALL WITHIN THE MEANING OF ARTICLE XI, SECTION 7 OF THE CONSTITUTION OF MARYLAND OR ANY OTHER CONSTITUTIONAL, STATUTORY OR CHARTER PROVISION.

Trust Estate

The Trust Estate, as described in the Indenture, consists of the following: (i) the Pledged Revenues; (ii) all amounts and investment earnings in the Funds (except the Excess Revenue Fund and the Rebate Fund) held by the Trustee as provided in the Indenture; (iii) the City’s right, title and interest in and to the Transaction Documents, including the Loan Agreement and the Deed of Trust, and all Receipts received by the City under the Transaction Documents and all amounts on deposit in the Lockbox Funds, subject to the rights of the City, the Corporation and the Hotel Manager to use such amounts as provided in the Loan Agreement, the Hotel Operating Agreement, the Cash Management Agreement and the Indenture; (iv) all other property owned by the City which may be sold, transferred, conveyed, hypothecated, mortgaged, granted or delivered to the Trustee by or on behalf of the City as additional security under the Indenture or possessed or controlled by the Trustee, the Depository Bank or any receiver appointed under the Indenture as additional security, including proceeds of payment and performance bonds, guaranties and insurance policies. See “– Pledged Revenues,” “− Loan Agreement” and “− Deed of Trust” below.

The pledge of the Trust Estate is subject to the following: (1) the Trust Estate does not include the Reserved Rights of the City, (2) the Trustee shall have no right to exercise any remedies under the Loan Agreement, the Deed of Trust or any other Transaction Document until an Event of Default occurs under the Indenture, (3) the Tax Revenues are not irrevocably pledged to the payment of the Series 2017 Bonds and the City’s obligations under the Indenture

to transfer the Tax Revenues to the Trustee are subject to annual appropriation of the Tax Revenues by the City for such purposes, and (4) the Hotel Tax Revenues do not include the Hotel Tax Revenues appropriated by the City for the payment of the City’s 1998 Senior Convention Center Bonds and the City’s pledge of the Hotel Tax Revenues under the Indenture is subordinate to the pledge of such amounts made by the City for the benefit of the holders of its 1998 Senior Convention Center Bonds. See “Pledged Revenues – Hotel Tax Revenues” and “– Subject to Appropriation” below.

Pledged Revenues

General

The Pledged Revenues consist of (i) the loan payments made by the Corporation to the City pursuant to the Loan Agreement, (ii) the Site Specific Hotel Tax Revenues, if, as and when appropriated, (iii) a portion of the City-Wide Hotel Tax Revenues in an amount equal to the City-Wide Hotel Tax Pledge Amount, not to exceed in any Fiscal Year of the City the amount of City-Wide Hotel Tax Revenues collected by the City in such Fiscal Year, if, as and when appropriated, (iv) the Personal Property Tax Revenues, if, as and when appropriated, and (v) the Tax Increment Revenues, if, as and when appropriated.

Hotel Tax Revenues

General. Article 28, Subtitle 21 of the Baltimore City Code levies and imposes a tax on all gross amounts of money paid to the owners or operators of hotels in the City by transient guests or tenants for renting, using or occupying a room or rooms in such hotels. The hotel tax rate is currently 9.5%.

“City-Wide Hotel Tax Revenues” means all revenues and receipts of the City from the hotel room tax levied and collected by the City pursuant to Article 28, Subtitle 21, inclusive of the Baltimore City Code, as amended, replaced or supplemented from time to time, but shall not include that portion of the hotel room tax revenues and receipts appropriated by the City to the payment of the principal of, premium, if any, and interest on the Senior Convention Center Bonds. See “Pledged Revenues – Hotel Tax Revenues – Subordinate Pledge,” below.

“City-Wide Hotel Tax Pledge Amount” means an amount equal to 25% of the Maximum Annual Debt Service Requirement of the Series 2017 Bonds.

“Hotel Tax Revenues” means, collectively, the City-Wide Hotel Tax Revenues and the Site Specific Hotel Tax Revenues.

“Site Specific Hotel Tax Revenues” means an amount equal to all revenues and receipts of the City from the hotel room tax levied on all gross amounts of money paid to the owners or operator of the Hotel by transient guests occupying rooms and collected by the City pursuant to Article 28, Subtitle 21, inclusive of the Baltimore City Code, as amended, replaced or supplemented from time to time but shall not include the portion of the Hotel Tax Revenues appropriated by the City to the payment of the principal of, premium, if any, and interest on the

Senior Convention Center Bonds. See “Pledged Revenues – Hotel Tax Revenues – Subordinate Pledge,” below.

Application of Hotel Tax Revenues. The City has covenanted in the Indenture that the Director of Finance will in each Fiscal Year of the City (beginning in the Fiscal Year of the City ending June 30, 2017 and continuing for each Fiscal Year of the City until and including the Fiscal Year of the City in which the Series 2017 Bonds are no longer Outstanding), use his or her best efforts to obtain an authorization and appropriation in the City Budget which provides for the payment and delivery by the City directly to the Trustee, for deposit in the Site Specific Hotel Tax Account, of an amount equal to the amount of Site Specific Hotel Tax Revenues collected by the City during the preceding Operating Year. The Site Specific Hotel Tax Revenues collected from the Project will be paid by the City, if, as and when appropriated, to the Trustee for deposit to the Site Specific Hotel Tax Account of the City Tax Reserve Fund. Moneys in the Site Specific Hotel Tax Account shall be applied by the Trustee to cure any deficiency in the Debt Service Account as described below under the caption “– Amounts Transferred to the Debt Service Account.” Moneys in the Site Specific Hotel Tax Account may also be applied to cure a deficiency in the Debt Service Account, the Senior FF&E Reserve Fund, the Operating Reserve Fund, the Subordinate FF&E Reserve Fund, and the Cash Trap Fund (in such order of priority). On the first Business Day after each March 1, if there is then no Event of Default with respect to the payment of principal of or interest on the Series 2017 Bonds that has occurred and is continuing and no deficiency exists in the Debt Service Account, the Senior FF&E Reserve Fund, the Operating Reserve Fund, the Subordinate FF&E Reserve Fund, and the Cash Trap Fund as of such March 1, the Trustee shall pay and deliver to the City all amounts on deposit in the Site Specific Hotel Tax Account.

The City has covenanted in the Indenture that continuing for each Fiscal Year of the City (beginning in the Fiscal Year of the City ending June 30, 2017 and until and including the Fiscal Year of the City in which the Series 2017 Bonds are no longer Outstanding), on or about February 1, if during the preparation of the City Budget for the succeeding Fiscal Year, the Director of Finance determines, based on the available amounts on deposit in the Debt Service Fund and the amount of Tax Increment Revenues and Site Specific Hotel Tax Revenues expected to be included in the City Budget for the succeeding Fiscal Year and such other materials as he or she deems appropriate, that the City-Wide Hotel Tax Revenues will be needed to pay Debt Service on the Series 2017 Bonds in the succeeding Fiscal Year, then the Director of Finance will use his or her best efforts to obtain an authorization and appropriation in the City Budget which provides for the payment and delivery by the City directly to the Trustee, for deposit in the City-Wide Hotel Tax Account, of an amount equal to the City-Wide Hotel Tax Pledge Amount.

appropriated, the City covenants that, subject to applicable law, the Director of Finance will use his or her best efforts to submit a supplemental appropriation to the City Council requesting the City Council to appropriate and approve the payment by the City to the Trustee of a portion of the City-Wide Hotel Tax Revenues, equal to the lesser of the aggregate amount of such deficiencies or the City-Wide Hotel Tax Pledge Amount. In no event shall the City be required to request appropriation or transfer to the Trustee pursuant to this paragraph in any Fiscal Year an amount of City-Wide Hotel Tax Revenues in excess of the City-Wide Hotel Tax Pledge Amount. The City-Wide Hotel Tax Revenues were not needed to pay debt service on the Series 2006 Bonds, other than in (March 2017), when $705,844.53 of City-Wide Hotel Tax Revenues were necessary to pay a portion of the debt service on the Series 2006B Bonds. The City will be reimbursed for such amount from available funds in accordance with the Indenture.

Notwithstanding the foregoing, in no event shall the City be required to request appropriation or transfer to the Trustee in any Fiscal Year of the City an amount of City-Wide Hotel Tax Revenues in excess of either (1) 100% of the City-Wide Hotel Tax Pledge Amount or (2) the amount of City-Wide Hotel Tax Revenues collected by the City in such Fiscal Year.

The Trustee shall deposit all City-Wide Hotel Tax Revenues received from the City to the City-Wide Hotel Tax Account of the City Tax Reserve Fund. Moneys in the City- Wide Hotel Tax Account shall be applied to cure any deficiency in the Debt Service Account as described under the caption “– Amounts Transferred to the Debt Service Account.” On the first Business Day after each March 1, if there is then no Event of Default with respect to the payment of principal of or interest on the Series 2017 Bonds that has occurred and is continuing and no deficiency exists in the Debt Service Account as of such March 1, the Trustee shall pay and deliver to the City all amounts on deposit in the City-Wide Hotel Tax Account. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts – City Tax Reserve Fund.”

Subordinate Pledge. The Hotel Tax Revenues pledged to pay the Series 2017 Bonds do not include any amounts appropriated to the payment of the City’s 1998 Senior Convention Center Bonds and the City’s pledge of the Hotel Tax Revenues to the payment of the Series 2017 Bonds is subordinate to the pledge of such revenues to the payment of the City’s 1998 Senior Convention Center Bonds. The maximum annual debt service for the City’s 1998 Senior Convention Center Bonds is $4,652,250 and the final maturity date for the City’s 1998 Senior Convention Center Bonds is September 1, 2019. See “THE CONVENTION CENTER.” The Indenture provides that the City may issue additional bonds secured by a senior or parity lien on the Hotel Tax Revenues upon the satisfaction of certain conditions. See “THE CONVENTION CENTER” below.

Historical Collections. The table below shows, for each of the City’s Fiscal Years 2008 through 2016, the taxable hotel room sales for each of such Fiscal Years and the City-Wide Hotel Tax Revenues of each Fiscal Year (in millions):

Table 5

FYE HOT Revenues Room Revenues

2008 $21,711,542 $213,464,441 2009 $20,660,153 $210,580,950 2010 $19,037,753 $205,547,235 2011 $27,149,826 $227,576,146 2012 $32,559,735 $253,172,081 2013 $30,478,932 $295,234,993 2014 $31,304,748 $316,580,859 2015 $32,666,250 $334,722,524 2016 $34,147,258 $358,265,439 Source: City of Baltimore, Department of Finance

Personal Property Tax Revenues

General. All tangible personal property owned, leased, consigned or used by a business and located within the State of Maryland on January 1 of each year is subject to taxation. Tangible personal property includes, but is not limited to office and plant furniture, machinery, equipment, tools, furnishings, inventory, and all other property not considered a part of the real estate. Tangible personal property falls into two categories. Stock in business or inventory is goods held by a taxpayer for sale and goods placed on consignment to another for sale in the expectation of a quick turnover. Stock in business does not include goods manufactured by the taxpayer but held by a taxpayer for purposes other than sale or goods manufactured by the taxpayer but placed in possession and control of another as in the case of leased property. Stock in business is assessed at cost or market value whichever is lower. LIFO method of valuation is prohibited. All other personal property includes all personal property other than inventory and is assessed at full cash value (original cost less an annual depreciation allowance). Generally, property will not be depreciated below 25% of the original cost.

Application of Personal Property Tax Revenues. The City has covenanted that the City shall transfer to the Trustee, if, as and when appropriated, all Personal Property Tax Revenues received promptly after the collection thereof. The Trustee shall deposit all Personal Property Tax Revenues received from the City to the Personal Property Tax Account of the City Tax Reserve Fund. On the first Business Day of each month, the Trustee shall transfer all amounts on deposit in the Personal Property Tax Account to the Available Revenue Fund. The City has covenanted in the Indenture that the Director of Finance will, in each Fiscal Year of the City (beginning with the Fiscal Year of the City ending June 30, 2017 and continuing for each Fiscal Year of the City thereafter until and including the Fiscal Year of the City in which the Series 2017 Bonds are no longer Outstanding), use his or her best efforts to obtain an authorization and appropriation which provides for the payment and delivery by the City directly to the Trustee, for deposit in the Personal Property Tax Account, of any amount equal to the amount of Personal Property Tax Revenues expected to be collected by the City during such Fiscal Year.

Assessment Procedures. Each business must file an annual personal property tax return with SDAT by April 15 of each year. A business which files the annual return after April 15 will receive an initial penalty of 1/10 of 1% of the City assessment, plus interest at the rate of 2% of the initial penalty amount for each thirty days or part thereof that the return is late. A business which files the annual return after April 15 also loses their status as an entity in good standing in the State. Extensions of the filing deadline of up to 60 days may be granted if requested before April 15. After a personal property tax return is reviewed and the valuations are determined, an assessment notice is mailed by the SDAT to the business.

Collection Procedures. The collection of all personal property taxes within the City is the responsibility of the City. The City calculates the tax due based on the assessments determined as described above and issues a tax bill. The personal property tax bill is due when received. Interest and penalties will be assessed for failure to pay the property tax bill after a thirty day grace period.

Tax Increment Revenues

General. Pursuant to Article II, Section (62) of the Baltimore City Charter, 1996 edition, as amended (the “Tax Increment Act” or the “TIF Act”), and the Tax Increment Ordinance, the City has created the Tax Increment District, the boundaries of which are coterminous with the Site, and established the Tax Increment Fund. See “SECURITY FOR THE SERIES 2017 BONDS – Trust Estate” and “– Pledged Revenues.” Pursuant to the Tax Increment Ordinance, in each Fiscal Year, the City will deposit in the Tax Increment Fund, if, as and when appropriated, the Tax Increment Revenues collected in the Tax Increment District. The Tax Increment Fund was established for the purpose of providing funds for the development of the Tax Increment District, although the Tax Increment Revenues would customarily be paid to the City. The monies in the Tax Increment Fund may be used to pay or reimburse the City for debt service that the City is obligated to pay or has paid on bonds issued by the City, the State of Maryland or any agency, department or political subdivision of the State, the proceeds of which have been used for any of the purposes specified in the TIF Act, including, without limitation, debt service on the Series 2017 Bonds and/or for any other legal purpose.

The Tax Increment Revenues in any Fiscal Year consist of a portion of the real property taxes paid with respect to the Tax Increment District representing the levy on the amount by which the assessable base of real property in the Tax Increment District subject to taxation as of January 1 preceding that Fiscal Year exceeds the Original Assessable Base for the Tax Increment District. The Original Assessable Base for the Tax Increment District is the assessable base of all real property in the Tax Increment District subject to taxation as of January 1, 2004. Prior to the issuance of the Series 2006 Bonds, the City received a certification as to the Original Assessable Base from the Supervisor of Assessments for Baltimore City.

Tax Increment Revenues include any scheduled payments thereof, interest thereon and net proceeds of the redemption or the sale of property in the Tax Increment District sold as a result of the foreclosure of the lien of the City property tax, up to the amount of said lien and interest thereon, including any penalties collected in connection with delinquent property taxes, but excluding any expenses of sale or any other administrative expenses collected by the City in

connection with such delinquent taxes, in each case to the extent attributable to such levy on the Tax Increment. Tax Increment Revenues do not include any State real property taxes.

Application of Tax Increment Revenues. Pursuant to the Indenture, the City has covenanted to transfer to the Trustee all Tax Increment Revenues collected by the City, if, as and when appropriated, for deposit to the Tax Increment Account of the City Tax Reserve Fund. On the first Business Day of each month, the Trustee will transfer any amounts on deposit in the Tax Increment Account to the Available Revenue Fund. See “– Trust Funds; Flow of Funds” below and “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts – City Tax Reserve Fund.” The City has covenanted in the Indenture that the Director of Finance will, in each Fiscal Year of the City (beginning with the Fiscal Year ending June 30, 2017 and continuing for each Fiscal Year of the City thereafter until and including the Fiscal Year of the City in which the Series 2017 Bonds are no longer Outstanding) use his or her best efforts to obtain an authorization and appropriation in the City Budget which provides for the payment and delivery by the City directly to the Trustee, for deposit in the Tax Increment Account, of an amount equal to the amount of Tax Increment Revenues expected to be collected by the City during such Fiscal Year.

Assessment Procedure. The property within the Tax Increment District is assessed by the Maryland State Department of Assessments and Taxation (“SDAT”). SDAT is an independent state agency responsible for real and personal property assessment as well as the mapping of all real estate. Maryland’s assessment system is based on a three-year cycle in which one-third of all real property is physically inspected and reassessed each year. Assessments are based upon an estimate of full cash value. The State assessors utilize the three traditional approaches to value: cost, sales comparison, and income capitalization. To lessen the impact of any increase in full cash value, a three year phase-in period is implemented. This provides for one-third of the increase in full cash value added to the first year of the assessment cycle with the balance being added in equal installments over the next two years.

For new construction, the assessor uses a cost approach to determine the initial full cash value using the land acquisition price (if applicable) as the land value and actual construction costs provided by the developer of such property (if available). Upon completion of the Project, the Project and Site were assessed using the cost approach. Thereafter, the Project and Site will be assessed using the income capitalization approach. No assurances can be given that such assessment procedure will continue to remain in effect during the term of the Series 2017 Bonds.

The Original Assessable Base of the real property in the Tax Increment District is $531,200. The real property in the District was reassessed as of January 1, 2015 at $169,487,700, which assessment will be used to calculate the tax bill due and payable by the Corporation as of July 1, 2017.

Collection Procedures. The collection of all real property taxes within the City is the sole responsibility of the City. Taxes on real property under the City Code are due and payable as of July 1, in each taxable year. The City grants a discount of 0.5% if the tax bill is

paid in full before August 1. No discount is given for payments made on and after August 1. The taxes are overdue and in arrears on October 1. Penalties and interest will be assessed on all delinquent real estate property taxes at the rate of 1% interest per month or fraction thereof on the State portion of the bill and 2% per month (1% interest and 1% penalty) or fraction thereof on the City portion of the bill until the bill is paid in full.

Under current State law, the City is not required to initiate procedures to sell any property in the City on which the total taxes on the property, including interest and penalties, is less than $750 in any one year. Prior to selling any property at the City tax sale to satisfy the tax obligations then due on such property, the City first will certify as liens the amount of taxes and other municipal charges in arrears on the property, including any other delinquencies that are eligible for tax sale. Thereafter, the City will notify by mail the person last appearing as the owner of the property on the City’s tax roll that the liens on the property will be sold at public auction in order to satisfy the entire amount of taxes and other charges then due, including any other delinquencies that are eligible for tax sale, and any interest and penalties then due, unless the entire indebtedness is paid within thirty (30) days. This process currently occurs in early February. Payment of all outstanding liens, including interest and penalties on or before April 30, can stop the tax sale process. Upon the failure of the owner of record to pay all liens certified for payment as well as any interest and penalties due, and following two publications of notice of the date and location of sale in accordance with State law, the City will conduct a sale of the liens on the property at public auction which generally occurs in mid-May. Such liens will be sold to the highest bidder at a price not less than the total amount of all taxes and other charges on the property certified as due for payment, together with interest and penalties and expenses incurred in connection with making the sale. After payment by the highest bidder of all liens and the high bid premium, if any, the City will issue to the bidder a tax sale certificate evidencing the sale of the liens which the bidder can use to foreclose the owner’s right of redemption in the property.

In the event that liens on any property which have been offered for sale for nonpayment of taxes have not been purchased by a private bidder, the City will “buy in” and hold the liens. When the City retains the liens not sold at tax sale, the City may pay, but is not required to pay, the delinquent taxes and pays no taxes during the period after the tax sale but retains the same rights and remedies with regard to the property as other bidders, including the right to foreclose the right of redemption. The City may subsequently sell or assign the tax sale certificate for the property at which time such taxes, interest and any penalties to the date of sale will be paid by the purchaser of the certificate. The City may not execute or deliver a deed to a person who holds a tax sale certificate until the Court enters a judgment directing the City to execute and deliver such a deed in a proceeding that has been brought to foreclose all rights of redemption of the prior owner. A holder of a certificate may file a complaint in the Circuit Court for Baltimore City at any time after six (6) months from the date of sale, but no later than two (2) years from the date of the certificate. Failure to file a complaint within the two-year period will result in the certificate becoming void. Once the certificate becomes void, the purchaser ceases to have any right, title and interest in the property and any money received by the City from the tax sale is forfeited. Prior to any foreclosure of the right of redemption, the prior owner may continue in possession of the property, provided that a receiver for the property may be appointed in accordance with State and local law, and the prior owner may redeem the property by paying all

taxes, whether or not in arrears, and any interest, penalties, and expenses relating to the sale as well as interest due at the rate of redemption accruing from the date of the tax sale. Until the Circuit Court for Baltimore City has issued a judgment that forecloses all rights of redemption, the property shall continue to be assessed as though no sale had been made, and all taxes are additional liens against the property and are the responsibility of the prior owner. Payment of taxes assessed during the redemption period is not due and payable by the holder of the certificate until foreclosure of the right of redemption. If the prior owner does not redeem the property from tax sale and pay all outstanding taxes, no taxes will be collected by the City during the redemption period. Such amounts will be paid by the person holding the certificate on the property following foreclosure of the right of redemption. Upon the completion of the foreclosure of the right of redemption, the holder of the certificate may obtain from the City a deed to the property upon payment in full of all the taxes which are then due on the property, together with all taxes, interest and penalties accrued after the date of sale and the balance of the purchase price.

No assurance can be given that the real property subject to sale will be sold or redeemed or, if sold or redeemed, that the proceeds of such sale or redemption will be sufficient to pay any delinquent real property tax. The provisions of the Tax-Property Article of the Annotated Code of Maryland pertaining to tax sales do not require the City to pay the delinquent real property tax relating to any lot or parcel of property offered for tax sale if there is no purchaser at such tax sale.

Release of Maglev Site. Pursuant to the Deed of Trust and the Indenture, the Corporation may request that the Trustee release the Maglev Site from the lien of the Deed of Trust upon the completion, approval and recordation of a parcel subdivision and the grant of any necessary easements to the Corporation with respect to the Project. See “– Deed of Trust” below and “THE PROJECT – The Site.” Upon release of the Maglev Site from the Deed of Trust and transfer of title in the Maglev Site, the Maglev Site will no longer be included in the assessable base of the Tax Increment District, which may result in a decrease in the Tax Increment Revenues. The projections of the Tax Increment Revenues included under the caption “CASH FLOW PROJECTIONS” are based solely on the projected increase in the assessable base of the Project and do not include any increase in the assessable base relating to the Maglev Site. However, to the extent the assessable base of the Tax Increment District is decreased upon the release of the Maglev Site, the real property taxes payable by the Corporation will also be reduced.

Subject to Appropriation

The Tax Increment Revenues, the Hotel Tax Revenues and the Personal Property Tax Revenues are not irrevocably pledged to the payment of principal and interest on the Series 2017 Bonds or for other purposes as provided in the Indenture. The City’s obligations under the Indenture to transfer the Tax Increment Revenues, the Hotel Tax Revenues and the Property Tax Revenues to the Trustee are subject to and dependent on the City’s annual appropriation of such funds. The City is not legally obligated to make such appropriations.

The City has covenanted that, subject to applicable law and public policy, in each Fiscal Year in which the Series 2017 Bonds are outstanding, the Director of Finance shall use his or her best efforts to obtain the authorization and appropriation of Tax Increment Revenues, Hotel Tax Revenues and Personal Property Tax Revenues in the amounts specified in the Indenture and as described above.

During the Fall of each Fiscal Year, each City agency submits operating budget requests to the City’s Department of Finance and capital budget requests to the City’s Planning Commission. Following review of the respective budget requests, the Department of Finance and the Planning Commission prepare recommendations for a proposed Ordinance of Estimates for the City which are submitted to the Board of Estimates for its review and recommendation to the City Council. The Board of Estimates also conducts formal hearings on the various agency budget requests. On the basis of its review, the Board of Estimates prepares and submits a proposed Ordinance of Estimates to the City Council. The City Council conducts public hearings on the Ordinance of Estimates and may reduce or eliminate budget items, but may not increase or add new items. The City Council votes to pass the Ordinance of Estimates as submitted or with reductions to the appropriations included therein. The Ordinance of Estimates, as approved by the City Council, is submitted to the Mayor who may further reduce or eliminate budget items, but may not increase or add new items, prior to signing the Ordinance of Estimates into law.

Loan Agreement

General

The Loan Agreement will be an unconditional general obligation of the Corporation and will remain in full force and effect until all of the principal and Redemption Price of the Series 2017 Bonds and the interest thereon have been paid or provision for the payment thereof has been made in accordance with the Indenture. The Loan Agreement will require the Corporation to make payments in such amounts as shall be sufficient to provide for the payment of the principal and Redemption Price of and interest on the Series 2017 Bonds when due, to pay the Administrative Expenses and to maintain the Debt Service Reserve Fund at the Reserve Fund Requirement. Pursuant to the Indenture, the payments required by the Loan Agreement with respect to the Series 2017 Bonds will be assigned by the City to the Trustee. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement” and “THE PARTICIPANTS – The Corporation.”

Security Interest in Gross Revenues

Under the Loan Agreement, the Corporation will grant to the City a security interest in the Gross Revenues, subject to the Permitted Encumbrances, to secure its obligations under the Loan Agreement and the Indenture. “Gross Revenues” means Gross Operating Revenue plus the following: receipts from the sale or financing of capital assets not in the ordinary course of business, income derived from securities and other investment property, condemnation awards or receipts, insurance proceeds, proceeds of financing, initial operating funds, working capital loans and other funds provided by the Corporation to the Hotel Manager,

income or proceeds from operations unrelated to the Project, interest earned on any Funds and Accounts.

“Gross Operating Revenue” means all revenue and income derived from operations at the Project, including rentals or other payments from licensees, lessees or concessionaires of retail space in the Project, but not including Excluded Taxes and Other Charges, Pass Through Costs, receipts from the sale, financing or other disposition of capital assets and other items not in the ordinary course of business, income derived from securities and other investment property, condemnation awards or receipts, insurance proceeds, proceeds of financings undertaken by the City or the Corporation, rebates, discounts (except credit card discounts) or credits, consideration received for accommodations, goods and services provided at other hotels arranged by, for or on behalf of the Hotel Manager, gratuities collected for Hotel Personnel, initial operating funds, working capital loans and other funds provided by the Corporation to the Hotel Manager, income or proceeds from operations unrelated to the Project, interest earned on any Funds and Accounts, the value of complimentary rooms, goods and services and refunds to Hotel guests and parking customers or credits to Hotel and parking customers for lost or damaged items.

Following the issuance of the Series 2017 Bonds, appropriate financing statements will be filed among the appropriate financing statement records of the State in order to perfect the security interest in the Gross Revenues to the extent possible by such filing.

Lockbox Funds; Cash Management Agreements

Hotel Cash Management Agreement. Under the Indenture, the Corporation and the Trustee are required to establish a Lockbox Fund with respect to the Hotel Project. The Lockbox Fund is initially established under the Hotel Cash Management and Lockbox Agreement, dated as of August 8, 2008, among the Corporation, the Trustee, Hotel Manager and Manufacturers and Traders Trust Company D/B/A M&T Bank, as amended by the First Amendment to Hotel Cash Management and Lockbox Agreement dated as of June 1, 2017, and is to be maintained at all times throughout the term of the Indenture. The Indenture sets forth certain requirements in respect of the maintenance of the Lockbox Fund and the Cash Management Agreement, including a form of the Cash Management Agreement. The initial Cash Management Agreement is, and all subsequent Cash Management Agreements are to be, executed by the Corporation, the Trustee, the then current Hotel Manager and the selected Depository Bank in substantially this form. The provisions of the current Cash Management Agreement are summarized in this Official Statement; however the final terms of any Cash Management Agreement may vary from such provisions so long as the terms thereof are not inconsistent with the terms of the Indenture. See also “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Deposit of Gross Operating Revenues; Cash Management Agreements.”

Under the Cash Management Agreement, the Hotel Manager is required to instruct, in writing, all credit card companies and all Persons (i) that maintain open accounts with the Hotel Manager, (ii) from whom the Hotel Manager receives payments of accounts receivable and (iii) who are tenants under any Occupancy Agreements, to transfer or deliver payments

constituting Gross Operating Revenues, Excluded Taxes and Other Charges and Pass Through Costs from the Hotel Project to a Clearing Bank Account or the Lockbox Fund or to the Hotel Manager for deposit therein. The Corporation and the Hotel Manager each agree to deposit promptly in a Clearing Bank Account or the Lockbox Fund any Gross Operating Revenues, Excluded Taxes and Other Charges and Pass Through Costs from the Hotel Project it may receive from any third party, except that the Hotel Manager may retain the Petty Cash Amount on the Hotel Project premises.

The Cash Management Agreement authorizes the Depository Bank to make periodic disbursements from the Lockbox Fund to the Hotel Manager in amounts requested by the Hotel Manager or to honor checks or drafts of the Hotel Manager against the Lockbox Fund for amounts due and owing on Short Term Indebtedness and Operating Expenses including, without limitation, the Base Management Fee, and against the Excluded Taxes and Pass Through Cost Fund or, to the extent provided in the Cash Management Agreement, the Lockbox Fund for amounts due and owing on Excluded Taxes and Other Charges and Pass Through Costs. If an Event of Default by the Hotel Manager has occurred and is continuing under the Hotel Operating Agreement, but the Hotel Operating Agreement has not been terminated, disbursements from the Lockbox Fund to the Hotel Manager for unbudgeted Operating Expenses require the written consent of the Corporation (after consultation with the Asset Manager).

Parking Cash Management Agreement. Under the Indenture, the Corporation and the Trustee are required to establish a Parking Lockbox Fund with respect to the Garage. The Parking Lockbox Fund is initially established under the Parking Cash Management and Lockbox Agreement dated as of June 30, 2011, by and among the Corporation, the Trustee, The Harbor Bank of Maryland and the Parking Manager, and is to be maintained at all times throughout the term of the Indenture. The Indenture sets forth certain requirements in respect of the maintenance of the Parking Lockbox Fund and the Parking Cash Management Agreement, including a form of the Parking Cash Management Agreement. The initial Parking Cash Management Agreement is, and all subsequent Parking Cash Management Agreements are to be, executed by the Corporation, the Trustee, the then current Parking Manager and the selected Depository Bank in substantially this form. The provisions of the current Parking Cash Management Agreement are summarized in this Official Statement; however the final terms of any Parking Cash Management Agreement may vary from such provisions so long as the terms thereof are not inconsistent with the terms of the Indenture. See also “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Deposit of Gross Operating Revenues; Cash Management Agreements.”

Under the Parking Cash Management Agreement, the Corporation and the Parking Manager each agree to deposit promptly in the Parking Lockbox Fund any Gross Operating Revenues of the Garage it may receive from any third party.

The Parking Cash Management Agreement authorizes the Depository Bank to make periodic disbursements from the Parking Lockbox Fund to the Corporation in amounts requested by the Corporation or to honor checks or drafts of the Corporation against the Parking

Lockbox Fund for amounts due and owing on Parking Operating Expenses including, without limitations, the Parking Management Fee.

Deed of Trust

Under the Deed of Trust, the Corporation has granted to certain individual trustees for the benefit of the City and its assigns, including the Trustee, as security for its obligations under the Loan Agreement and the Indenture, a first priority lien on the Site and all improvements thereon, including the Project, together with all fixtures attached thereto, all building materials and equipment to be installed thereon, all leases, lettings and licenses of the premises and rents, issues, profits, accounts receivable and revenues of the premises, and all insurance proceeds obtained for the collateral. The Deed of Trust creates a lien on the Site and the Project that may be enforced in accordance with the terms of the Deed of Trust and the Maryland foreclosure statutes and rules described below.

In addition, the Deed of Trust grants a security interest in that portion of the collateral which is personal property, general intangibles and/or is otherwise covered by Article 9 of the Maryland Uniform Commercial Code. The Deed of Trust requires that appropriate financing statements be filed in the appropriate financing statement records in the State in order to perfect the security interest in such personal property to the extent possible by such filing. The Deed of Trust will be subject to Permitted Encumbrances and the right of the Corporation, under certain conditions, to dispose of portions of its assets. In addition, the Corporation may request that the Trustee release the Maglev Site from the lien of the Deed of Trust upon the completion, approval and recordation of a parcel subdivision and the grant of any necessary easements to the Corporation with respect to the Project. See “THE PROJECT – The Site.”

Maryland law provides for nonjudicial foreclosure sales. In order to commence foreclosure proceedings under the power of sale provisions contained in the Deed of Trust, the individual trustees must file an order to docket with the Baltimore City Circuit Court, together with a statement of debt and the original or a certified copy of the Deed of Trust. Upon docketing of the foreclosure proceeding, the individual trustees may conduct the sale, after giving the property owner/debtor notice of the sale by certified mail and first class mail no later than two days after the action to foreclose is docketed. The sale must also be advertised once a week for three successive weeks in a newspaper of general circulation in the City.

The sale may be held at the premises or on the courthouse steps. A professional auctioneer must conduct the sale. Upon acceptance by the individual trustees of the high bid at the sale, the successful bidder will pay over the required deposit and execute a contract of sale, itemizing its obligations and incorporating the previously advertised terms and conditions of the sale. Upon execution of the contract, the successful bidder becomes responsible for the property, including risk of loss.

Within 30 days after the sale, the individual trustees must file a report of the sale with the Circuit Court and request that the sale be ratified. Notice of the report of sale must be advertised once a week for three successive weeks in a newspaper of general circulation in the City. The notice will state that the sale will be ratified unless cause to the contrary is shown

within 30 days of the date of the notice. The debtor or another party in interest may file an objection during the 30-day period. After the 30-day period has expired, the court may ratify the sale or consider any objections that were filed. Upon ratification of the sale, equitable title to the property vests in the successful bidder. Promptly after ratification of the sale, a formal settlement is conducted, at which the successful bidder pays the balance of the purchase price to the individual trustees and legal title is transferred to the successful bidder.

After the settlement occurs, the individual trustees must file an account of the application of the sales proceeds with the Circuit Court and the court must refer the matter to the court auditor to state an account. Within the time prescribed by the Circuit Court, the auditor must file its account with the court and at the same time send copies to all interested parties. Within 10 days of the filing of the auditor’s account, an interested party may file exceptions with the court. After the expiration of the 10 day period, the court may ratify the account or consider any exceptions filed. Upon ratification of the account, the individual trustees may disburse the proceeds of sale to the secured party. If the proceeds of the sale are insufficient to satisfy the debt, the secured party may obtain a deficiency judgment.

Trust Funds; Flow of Funds

As further described in “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts,” the Indenture provides for the maintenance by the Trustee of the following funds and accounts pledged to the payment of the Series 2017 Bonds and for the application of moneys for the following purposes in the following order of priority, subject to the following provisions:

Available Revenue Fund. Moneys distributed to the Trustee by the Depository Banks from the Lockbox Fund and the Parking Lockbox Fund pursuant to the Cash Management Agreement and the Parking Cash Management Agreement are to be deposited in the Available Revenue Fund and further deposited or transferred by the Trustee to the funds, accounts and purposes described below in the following order of priority:

Taxes and Insurance Fund. An amount which, together with moneys on deposit in the Taxes and Insurance Fund, will equal but not exceed the Taxes and Insurance Set Aside Amount accrued but not paid through the preceding month.

Debt Service Account of the Debt Service Fund. To the Debt Service Account of the Debt Service Fund, (i) the amount necessary to make the amount on deposit in the Debt Service Account equal to the amount of any interest to become due and payable on each Series of Outstanding Bonds on the next Interest Payment Date, plus (ii) one-twelfth of the next Principal Installment to become due and payable in such Bond Year on each Series of Outstanding Bonds, together with an amount equal to any shortfall from a prior month or due to any investment loss to the extent not made up from another source.

Senior FF&E Reserve Fund. To the Hotel Senior FF&E Account therein, an amount which together with moneys otherwise transferred to the Hotel Senior FF&E Account will equal but not exceed the Hotel Senior FF&E Reserve Set Aside Amount accrued but not

paid through the preceding month and to the Garage Senior FF&E Account therein, an amount which together with moneys otherwise transferred to the Garage Senior FF&E Account will equal but not exceed the Garage Senior FF&E Reserve Set Aside Amount accrued but not paid through the preceding month; provided that if there are not sufficient Available Funds to make the deposits required by this paragraph, then pro-rata to such Accounts.

Administrative Expenses Account. An amount which together with moneys on deposit in the Administrative Expenses Account will equal the amount necessary to pay the Administrative Expenses then due and owing for such month, together with any accrued but unpaid amounts from prior periods.

Debt Service Reserve Fund. (A) If the Debt Service Reserve Fund contains less than the Reserve Fund Requirement either as a result of a disbursement of moneys on deposit in the Debt Service Reserve Fund or a drawing on a Financial Guaranty or (B) interest is due with respect to a Financial Guaranty, to the Debt Service Reserve Fund, an amount equal to the amount needed to attain the Reserve Fund Requirement and to pay interest due with respect to a Financial Guaranty.

Rebate Fund. Amounts which, when added to other amounts in the Rebate Fund, shall equal the amount required to be on deposit therein pursuant to the Tax Certificate delivered in connection with the issuance of each Series of Bonds.

Operating Reserve Fund. If the Operating Reserve Fund contains less than the Operating Reserve Requirement, to the Operating Reserve Fund, an amount equal to the amount needed to attain the Operating Reserve Requirement.

City Repayment. To the City, an amount equal to the amount of any transfer from the City-Wide Hotel Tax Account to the Debt Service Account described in clause (10) under the caption “– Amounts Transferred to the Debt Service Account,” to the extent not previously reimbursed under the Flow of Funds.

Loan Repayments. To any Person which has made a loan to the Corporation for the purpose of making any payments required pursuant to any of the foregoing paragraphs.

Subordinate Management Fee Fund. An amount equal to the Subordinate Management Fee accrued but not paid through the preceding month.

Subordinate FF&E Reserve Fund. To the Hotel Subordinate FF&E Account therein, an amount which together with moneys otherwise transferred to the Hotel Subordinate FF&E Account will equal but not exceed the Hotel Subordinate FF&E Reserve Set Aside Amount accrued but not paid through the preceding month (as the Hotel Subordinate FF&E Reserve Set-Aside Amount may be adjusted from time to time pursuant to the Indenture) and to the Garage Subordinate FF&E Account therein, an amount which together with moneys otherwise transferred to the Garage Subordinate FF&E Account will equal but not exceed the Garage Subordinate FF&E Reserve Set Aside Amount accrued but not paid through the preceding month (as the Garage Subordinate FF&E Reserve Set Aside Amount may be adjusted

from time to time pursuant to the Indenture); provided that if there are not sufficient Available Funds to make the deposits required by this paragraph, then pro-rata to such Accounts.

Supersubordinate Management Fee Fund. An amount equal to the Supersubordinate Management Fee accrued but not paid through the preceding month.

Cash Trap Fund. All moneys remaining in the Available Revenue Fund are to be deposited in the Cash Trap Fund. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts – Cash Trap Fund” for a description of the permitted uses of amounts deposited in the Cash Trap Fund including circumstances in which certain amounts therein may be deposited to the Redemption Fund and circumstances in which certain amounts therein may be released from the Trust Estate and paid to the City. Also see “THE SERIES 2017 BONDS – Redemption Provisions – Optional Redemption.”

The following table graphically depicts the flow of funds described above:

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Table 6 Routine Flow of Funds Parking Revenues Hotel Gross Revenues Citywide Hotel Taxes Parking Lockbox Guest Parking Fees Fund Under Parking Cash Site Specific Citywide Hotel Tax Management Hotel Lockbox Fund Under Hotel Convention Center Agreement Cash Management Occupancy Account Agreement Taxes 1998 Bonds

Excluded Taxes & Pass Through Costs Site Specific Operating Expenses HOT1 Base Management Fee Parking Operating Expenses Parking Management Fee Real Property Taxes Available Revenue Fund Citywide CC Hotel Special Personal Property Taxes Account(s) (held by City) Taxes and Insurance Fund

Debt Service Account Site Specific HOT Tax Increment Revenues Personal Property Taxes Senior FF&E Reserve Fund City Tax Reserve Fund Administrative (Held by Trustee) Expenses-Account (Hotel Corporation) TIF Account

Site Specific If shortfall HOT1 Debt Service Reserve Fund Account If shortfall If shortfall

Rebate Fund Site Specific HOT1 Reversal Operating Reserve Fund

Repayment of City-Wide Hotel Tax Pledge Amount City General Fund Repayment of Loans made to the Corporation

Subordinate Management Fee Fund Citywide HOT Subordinate FF&E Account Reserve Fund (up to an amount equal to City-Wide Hotel Tax Pledge Amount) Supersubordinate Management Fee Fund

Cash Trap Fund Excess Revenue Fund Trustee-Held for Benefit of City (not pledged) Redemption Fund

City General Fund 1 “HOT” means an amount equal to the Hotel Occupancy Taxes.

Debt Service Reserve Fund

The Indenture requires an initial deposit of $______into the Debt Service Reserve Fund which amount constitutes the Reserve Fund Requirement. Amounts in the Debt Service Reserve Fund are to be maintained as a continuing reserve to be used to cure any deficiency in the Debt Service Account after the application of other moneys in other funds and accounts as described under “– Amounts Transferred to Debt Service Account” below.

Subject to the provisions of the Indenture, there are to be deposited into the Debt Service Reserve Fund from Available Revenues from time to time moneys sufficient to maintain the Debt Service Reserve Fund in an amount equal to the Reserve Fund Requirement.

In lieu of or in addition to the deposits and transfers to the Debt Service Reserve Fund required by the Indenture, the City may cause to be deposited in the Debt Service Reserve Fund a Financial Guaranty in an amount equal to the Reserve Fund Requirement less the amount then on deposit in the Debt Service Reserve Fund or being deposited in Debt Service Reserve Fund concurrently with such Financial Guaranty. In addition, the City may withdraw funds on deposit in the Debt Service Reserve Fund and replace such funds with a Financial Guaranty in an amount equal to the funds to be withdrawn, upon the occurrence of certain events and in respect of specific circumstances as set forth in the Indenture. See “Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Funds and Accounts – Debt Service Reserve Fund” in APPENDIX D.

Amounts Transferred to Debt Service Account

If on the tenth Business Day prior to any Interest Payment Date there are not sufficient moneys in the Debt Service Account on such date to pay Principal Installments of and interest on the Bonds to become due and owing on such Interest Payment Date (other than Bonds for which moneys have been set aside and dedicated to the payment of such Bonds as permitted in the Indenture), moneys are to be transferred to the Debt Service Account from the following sources in the priority listed below and in an amount which, together with the amount then on deposit in the Debt Service Account, will result in the Debt Service Account having the balance required to be on deposit therein in order to pay Principal Installments and interest to become due and payable on such Interest Payment Date: (1) Cash Trap Fund; (2) Supersubordinate Management Fee Fund; (3) Subordinate FF&E Reserve Fund, to the extent permitted by the Indenture; (4) Subordinate Management Fee Fund; (5) Redemption Fund (except for any amount on deposit therein that will be used to redeem Bonds notice of the redemption of which has been given pursuant to the Indenture); (6) Operating Reserve Fund, but only from amounts therein in excess of $1,000,000; (7) Tax Increment Account of the City Tax Reserve Fund; (8) Personal Property Tax Account of the City Tax Reserve Fund; (9) Site Specific Hotel Tax Account of the City Tax Reserve Fund; (10) City-Wide Hotel Tax Account of the City Tax Reserve Fund, up to an amount equal to the City-Wide Hotel Tax Pledge Amount (subject to the limitations described in the Indenture); (11) Debt Service Reserve Fund; and (12) Senior FF&E Reserve Fund, to the extent permitted by the Indenture.

The following table graphically depicts the priority of the amounts transferred to the Debt Service Account other than from amounts deposited therein from Available Revenues.

Table 7

Amounts on deposit in the Cash Trap Fund ↓ Amounts on deposit in the Supersubordinate Management Fee Fund

↓ Certain amounts on deposit in the Subordinate FF&E Reserve Fund (to the extent permitted by the Indenture) ↓ Amounts on deposit in the Subordinate Management Fee Fund ↓ Amounts on deposit in the Redemption Fund except for any amount on deposit therein that will be used to redeem Bonds, notice of redemption of which has been given pursuant to the Indenture ↓ Amounts on deposit in the Operating Reserve Fund in excess of $1 million ↓ Amounts on deposit in the Tax Increment Account of the City Tax Reserve Fund ↓ Amounts on deposit in the Personal Property Tax Account of the City Tax Reserve Fund ↓ Amounts on deposit in the Site Specific Hotel Tax Account of the City Tax Reserve Fund ↓ Amounts on deposit in the City-Wide Hotel Tax Account of the City Tax Reserve Fund up to an amount equal to the City-Wide Hotel Tax Pledge Amount (subject to the limitations described in the Indenture) ↓ Amounts on deposit in the Debt Service Reserve Fund ↓ Certain amounts on deposit in the Senior FF&E Reserve Fund (to the extent permitted by the Indenture)

Additional Bonds

Pursuant to the Indenture, the City may issue one or more series of Additional Bonds payable from the Trust Estate and secured by a lien thereon on a parity with the lien thereon of the Series 2017 Bonds. Additional Bonds may be issued, authenticated and delivered by the City from time to time for the purpose of (1) refunding one or more Series of Bonds or portion thereof; (2) paying all costs incidental to or connected with any Bonds authorized in clause (1) above; (3) making deposits into any applicable reserve fund required by the issuance of Bonds authorized in clause (1) above; and/or (4) making any deposits into the Funds and Accounts required by the provision of the Supplemental Indenture authorizing such Series of Additional Bonds authorized in clause (1) above. Notwithstanding any provision of the Indenture to the contrary, the City may issue Additional Bonds in the principal amount not to exceed ten percent (10%) of the aggregate principal amount of the Series 2017 Bonds, the

proceeds of which are required to pay amounts reasonably determined by the City to be required with respect to the Project to be made to protect life, health or property from imminent danger or to comply with Applicable Laws. Prior to issuing any Additional Bonds, the City must receive confirmation from any Rating Agency then rating the Series 2017 Bonds that the then current ratings on the Series 2017 Bonds will not be downgraded, suspended or withdrawn as a result of the issuance of such Additional Bonds. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Additional Bonds” for a description of the conditions the City must satisfy prior to the issuance of Additional Bonds, including in certain cases required Debt Service Coverage Ratios.

Pursuant to the Indenture, the City may issue Additional Bonds secured by a parity lien on the City-Wide Hotel Tax Revenues if the City adopts an ordinance supplementing the Bond Ordinance that authorizes a pledge of the City-Wide Hotel Tax Revenues in an amount at least equal to 25% of the Maximum Annual Debt Service Requirement for such Additional Bonds as security for the Series 2017 Bonds and such Additional Bonds. The City may also issue bonds, notes, or other obligations secured in whole or in part by liens on the Available Revenues that are junior and subordinate to the Series 2017 Bonds as set forth in the Indenture payable from amounts on deposit in the Cash Trap Fund. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Junior Lien Obligations” for a description of the conditions the City must satisfy prior to the issuance of such subordinate indebtedness.

Enforceability

It is the opinion of Bond Counsel that enforceability of the Series 2017 Bonds, the Indenture, the Loan Agreement and the Deed of Trust is subject to bankruptcy, insolvency, moratorium, reorganization and other laws affecting creditors’ rights and to general principles of equity. Enforcement of a claim for payment of the principal or Redemption Price of or interest on the Series 2017 Bonds could be made subject to any statutes that may be constitutionally enacted by the Congress of the United States of America or the Maryland General Assembly affecting the time and manner of payment or imposing other constraints upon enforcement. See APPENDIX G for the complete text of the proposed form of the opinion of Bond Counsel with respect to the Series 2017 Bonds.

THE PROJECT

The Site

The Project is located on a parcel of land located in the southwestern quadrant of downtown Baltimore (the “Site”) across the street and adjacent to the Convention Center. The Site spans two city blocks, contains approximately 5.20 acres, and is level and at grade with local roadways. Buildings adjacent to and north of the Site include the Baltimore Marriott and the Holiday Inn. South of the Site is Oriole Park at Camden Yards and the historic Camden Yards train depot. East of the Site is the Convention Center, and west of the Site is a small, vacant parcel. The Site is within close proximity to shopping areas, cultural facilities, restaurants, and evening activities, located primarily along the waterfront, on the opposite side of the Convention

Center amongst the majority of downtown leisure amenities. The Hotel’s civic address is 401 West Pratt Street, Baltimore, Maryland 21201-1629. The Site’s current zoning permits hotel use. Upon release of the Maglev Site, there is not expected to be any excess land on the Site available for further development.

As additional security for its obligations under the Loan Agreement and the Indenture, the Corporation will grant a lien on, and security interest in, all of its interest in the Site and improvements thereon, including the Project, for the benefit of the City and its assigns, including the Trustee, pursuant to the Deed of Trust. See “SECURITY FOR THE SERIES 2017 BONDS – Deed of Trust.”

A portion of the Site constituting approximately 13,288 square feet and located on the eastern edge of the Site (the “Maglev Site”) may be transferred after the 2017 Closing Date to facilitate construction of a train station for a Maglev train line, which has been proposed to run from Baltimore to Washington, or for any other purpose the City deems necessary. Pursuant to the Deed of Trust and the Indenture, the Corporation is authorized to transfer the Maglev Site upon the occurrence of certain conditions and the Corporation has covenanted in the Indenture to transfer title to the Maglev Site at the direction of the City. In the event it is not released, the Maglev Site will remain in the Corporation’s possession and control unless and until the City directs its transfer. So long as the Maglev Site remains in the possession of the Corporation and is not released from the Deed of Trust or its title transferred, it will continue to be included in the Tax Increment District. See “SECURITY FOR THE SERIES 2017 BONDS – Pledged Revenues – Tax Increment Revenues.”

Additionally, on September 19, 2016, the Baltimore Hotel Corporation and the Babe Ruth Birthplace Foundation, Inc. (“Foundation”) entered into a non-binding Memorandum of Understanding in connection with construction of a sports memorabilia museum by the Foundation on property adjacent to the Hotel Project to be leased by the Baltimore Hotel Corporation to the Foundation. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Certain Agreements of the Corporation – Limitation on Disposition of Assets.”

Existing Environmental Conditions

Topography. The Site is approximately 700 by 700 feet in size and lies approximately 41 feet above mean sea level. The closest body of water is the Patapsco River (Baltimore Inner Harbor), which is approximately 2,500 feet from the Site. The Site does not lie in the 100-year flood zone or the 500-year flood zone.

Environmental Site Assessment. A thorough and comprehensive Environmental Site Assessment was prepared in connection with the construction of the Project. No update or other investigation regarding recognized environmental conditions associated with the Site has been performed in connection with the issuance of the Series 2017 Bonds. No representation or warranties are made regarding the quality of the report, or whether the report has adequately addressed constructability of the Project from an environmental and subsoil perspective.

Description of the Project

The Project contains approximately 883,000 gross square feet, including 757 hotel guest rooms, one 5,000 square foot, a full service restaurant, a lobby lounge, a gourmet coffee bar, approximately 56,554 net square feet of meeting space, a Garage (which includes approximately 550 parking spaces to service the needs of the Project), the Leased Retail Space and other supporting facilities and all finish materials, fixture, furnishings, equipment and appliances to be contained in the Project.

The main entrance of the Project, located in the 20-story building, features a porte cochere (covered entry) that is easily identifiable from the main entrance to the Site. The porte cochere is located along the heavily traveled Pratt Street and enables Eutaw Street to be pedestrian-oriented. Two-story glass walls on both buildings highlight the lobbies of both buildings.

The Hotel has 757 guestrooms, inclusive of a suite count of twenty, including four deluxe one-bedroom suites, two executive suites, two meeting planner suites and two presidential suites. The top three floors are concierge floors and include a concierge lounge on the 18th floor.

The food and beverage facilities feature a three-meal restaurant, a gourmet coffee bar and a lobby lounge located on the south end of the first level of the Hotel.

The Project’s meeting space spans approximately 56,554 square feet, and is located on the third floor of the westernmost building, as well as on all three levels of the easternmost building. The largest space is the Francis Scott Key Ballroom, which can be divided into twelve separate rooms and is bordered by pre-function space on all sides. The second-largest space is the Billie Holiday Junior Ballroom, which is divisible by six and features 26-foot ceilings. Twelve smaller meeting spaces are located in the Project, surrounding the main ballrooms. There is no dedicated business center in the Hotel, but there is a three station work center in the lobby, and a third party on-site provider of business services such as copying, printing and faxing.

Parking for the Project is available to guests of the Hotel in addition to the general public in the Garage, consisting of an underground parking deck located below the guestroom tower. Recreational amenities include an indoor pool and fitness center, located adjacent to the pool.

Renovation. The Corporation will be undertaking a $12.3 million room and corridor renovation from late October 2017 through the end of February 2018 utilizing funds on hand. This renovation will involve all 757 guestrooms and suites, in addition to all guest floor corridors and the concierge lounge. The room renovation will involve replacement of televisions, carpets, bedding, lighting, wall, ceiling and window finishes in addition to newly created local art pieces with some newly selected soft goods. Bathrooms will be upgraded with new lighting, wall and ceiling finishes along with newly selected accent pieces. Guest corridors will be updated with new carpet, lighting, paint and local art pieces.

Operation of the Project

Hotel Operating Agreement. Pursuant to the Hotel Operating Agreement, Hilton Management LLC (the “Hotel Manager”) supervises, directs and controls the management, operation and promotion of all aspects of the Hotel Project as exclusive manager and operator of the Hotel Project during the term of the Hotel Operating Agreement. The Hotel Manager is responsible for operation of the Hotel Project in accordance with certain prescribed operating standards. All charges, rent, fees and other amounts due from guests, lessees and concessionaires of the Hotel Project are collected by the Hotel Manager and deposited in accordance with the Cash Management Agreement. An annual operating plan and budget (which is to include a proposed room rate schedule) and a capital budget is to be developed by the Hotel Manager and approved by the Corporation. The Hotel Manager is required to prepare monthly and year-to-date operating reports and annual Certified Financial Statements for the Corporation.

The term of the Hotel Operating Agreement commenced on February 8, 2006, and currently continues for a period of 15 years after the Opening Date of the Hotel Project. The City and the Corporation are currently negotiating with the Hotel Manager to, among other things, extend the term of the Hotel Operating Agreement to December 31, 2046, and revise the method of calculation of the management fees thereunder to be based on a percentage of Hotel Gross Revenues. It is expected that an amended hotel operating agreement will be in place prior to the issuance of the Series 2017 Bonds. The Hotel Manager or the Corporation may terminate the Hotel Operating Agreement upon the occurrence of an Event of Default under the Hotel Operating Agreement by the other party thereto, and under certain circumstances the Corporation may terminate the Hotel Operating Agreement (with the Trustee’s consent so long as any Series 2017 Bonds remain outstanding) upon the occurrence of a Performance Termination Event. The Hotel Operating Agreement contains additional provisions allowing termination of the Hotel Operating Agreement upon the occurrence of certain events. See “APPENDIX E – Summary of Certain Provisions of the Hotel Operating Agreement.” Also seek “RISK FACTORS – Reliance on Brand Name Recognition and Competent Management.” The Hotel Operating Agreement and any and all liens, rights and interests owed, claimed or held by Hotel Manager in and to the Property or arising in connection with the Hotel Manager’s possession or operation of the Hotel is subordinate to the liens, security interests or rights of the Corporation and Trustee and securing payment and performance of the Corporation’s bond obligations; provided that upon a foreclosure or deed in lieu of foreclosure, of the Hotel Project, the Hotel Operating Agreement will continue in full force and effect.

The Indenture requires the Corporation to include in the Hotel Operating Agreement and any other operating agreement covering the Project provisions relating to the attainment of certain debt service coverage ratios and the need in some circumstances for the appointment of a Hotel Consultant to make written recommendations regarding the operation, management, marketing, improvement, condition or use of the Hotel Project. See “APPENDIX E – Summary of Certain Provisions of Hotel Operating Agreement.”

Cash Management Agreement. During the Operating Term, the Hotel Manager is required to cause to be deposited at the end of each Business Day into the Lockbox Fund all Gross Operating Revenues from the Hotel Project (other than the amounts described under

“SECURITY FOR THE SERIES 2017 BONDS – Lockbox Funds; Cash Management Agreements”). The Hotel Manager may withdraw funds from the Lockbox Fund for the sole purpose of paying Operating Expenses and paying Short Term Indebtedness, Pass Through Costs and Excluded Taxes and Other Charges in accordance with the terms of the Hotel Operating Agreement, the Cash Management Agreement and the Indenture. While any Series 2017 Bonds remain outstanding, the Cash Management Agreement and the Indenture will control and govern the use of Gross Operating Revenues of the Hotel Project. See “SECURITY FOR THE SERIES 2017 BONDS – Lockbox Funds; Cash Management Agreements.”

Parking Management Agreement. The Corporation has entered into the Parking Facility Operations and Management Agreement dated June 30, 2011 among the Corporation, LAZ Parking Mid-Atlantic LLC and PMS Parking, Inc., as amended (the “Parking Management Agreement”). The Indenture requires that any Parking Management Agreement be substantially in the form of the Parking Management Agreement and approved by the Hotel Manager. The Parking Management Agreement provides, and any future Parking Management Agreement will provide, among other things, for the operation of the Garage, including valet services, at all times the Hotel is open for business, adequacy of security, maintenance obligations and an agreed-upon number of parking spaces within the Garage reasonably expected by the Hotel Manager to be used by guests of the Hotel as valet service.

Parking Cash Management Agreement. Pursuant to the Parking Cash Management Agreement, the Parking Manager is required to cause to be deposited at the end of each Business Day into the Parking Lockbox Fund all Gross Operating Revenues of the Garage. The Corporation may withdraw funds from the Parking Lockbox Fund for the sole purpose of paying Parking Operating Expenses in accordance with the terms of the Parking Management Agreement, the Parking Cash Management Agreement and the Indenture. While any Series 2017 Bonds remain outstanding, the Parking Cash Management Agreement and the Indenture will control and govern the use of Gross Operating Revenues of the Garage. See “SECURITY FOR THE SERIES 2017 BONDS – Lockbox Funds; Cash Management Agreements.”

Room Block Agreement. Under the Room Block Agreement, the Hotel Manager is required to reserve a block of up to 600 rooms for patrons of the Convention Center at agreed- upon room rates.

Asset Manager. The Corporation has hired and entered into a Contract for Hotel Asset Manager Services with CHMWarnick, LLC (as successor in interest to Capital Hotel Management, LLC, the “Asset Manager”), dated October 16, 2006, which has been subsequently amended to extend the term and revise the scope of services and applicable fees, with the most recent term to expire on December 31, 2019, to assist the Corporation in overseeing the operations of the Project for the benefit of and on behalf of the Corporation and the Trustee. The duties of the Asset Manager for the Hotel Project and the Garage are set forth in the Indenture and include, but are not limited to, the following: (i) reviewing and recommending approval or disapproval to the Corporation of the proposed Capital Budget and Operating Plan and Budget for the upcoming Operating Year; (ii) reviewing all reports required to be delivered by the Hotel Manager and the Garage Manager pursuant to the Hotel Operating Agreement and the Parking Management Agreement; (iii) providing reports to the Corporation on a monthly basis

summarizing the Asset Manager’s findings for the preceding month regarding the Hotel Manager’s and the Garage Manager’s compliance with the Hotel Operating Agreement and the Parking Management Agreement; (iv) approving the list of possible replacement hotel consultants supplied by the Hotel Manager or the Garage Manager; and (v) commenting on the recommendations submitted by any Hotel Consultant or consultant with respect to the Garage. The Asset Manager for the Hotel Project or Garage shall not have any additional or different rights with respect to the Hotel Manager, the Garage Manager, the property or any part thereof than the Corporation has.

Insurance. The Corporation is required to cause the Project and its operations to be adequately insured, including property insurance, business interruption insurance, boiler and machine insurance, commercial general liability and property damage insurance, and fidelity bonds as described in “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Insurance” and any net insurance proceeds are required to be applied as described therein.

Insurance Consultant. The Corporation is required to employ or cause to be employed for the benefit of the City, the Trustee and the Corporation an Insurance Consultant to review the insurance requirements of the Corporation from time to time (but not less frequently than once every 24 months) as described in “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Insurance.”

THE CONVENTION CENTER

The City owns the Baltimore Convention Center (the “Convention Center”), which is located at One West Pratt Street in the City, between Baltimore’s Inner Harbor and Oriole Park at Camden Yards, a short distance from many of Baltimore’s top attractions, including the National Aquarium, the Maryland Science Center, Harbor Place, and the M&T Bank Football Stadium. The location of the Convention Center gives convention visitors convenient access to air transportation, interstate transportation, Baltimore’s Light Rail System, and is connected by a skywalk to several tourist attractions and shopping facilities. It is also within easy walking distance of sporting venues and a popular shopping and entertainment district. The original Convention Center was completed in 1979 and cost approximately $51.4 million. An expansion of the Convention Center, adding 800,000 square feet was completed in 1996 in order to accommodate larger groups and promote economic development in Baltimore. The convention center portion of the Convention Center boasts approximately 1,225,000 square feet of total space. This includes 300,000 square feet of exhibition space, a 36,672 square foot ballroom and 85,000 square feet of meeting rooms. The exhibit halls are on the street level, and are easily divisible to meet the needs of various sized groups. The Convention Center features 32 covered loading docks, as well as ample pre-function space, elevators, and support facilities. The second level of the Convention Center offers lobby gathering areas and access to the City’s skywalk system, while the third level offers 50 meeting rooms, an outdoor terrace, and additional pre-function space. The fourth level of the facility houses the ballroom, which is divisible into four sections and a pre-function area.

The Convention Center is operated as a City agency. Management of the Convention Center is the responsibility of the Convention Center Executive Director, a City employee who serves under the Mayor of the City. The Convention Center Executive Director’s duties include the administration of the Convention Center including oversight of the Directors of Information Systems, Accounting, Building Services, Sales and Marketing, Client Services, Sales and Marketing and Human Resources for the Convention Center. The current Convention Center Executive Director has worked at the Convention Center since its opening in 1979 and has served as its Executive Director since 1986. In 1996, the Convention Center created an in-house sales team to allow it to work closely with Visit Baltimore, Inc., as defined below, in order to reach out, book and service increased business from the local, state and regional areas. The Convention Center and Visit Baltimore, Inc. entered into a contractual agreement to achieve full usage of the Convention Center building, to maximize the use of hotel rooms and to strengthen sales and marketing efforts for the Convention Center.

Visit Baltimore, Inc. is a Maryland not-for-profit corporation established to promote Baltimore and the surrounding region as a destination for business and leisure travel. Visit Baltimore, Inc. is funded primarily through an appropriation from the City’s General Fund; however, the City is not bound by any statutory requirement or contractual agreement to continue to fund Visit Baltimore, Inc. Since the Mayor of the City selects the directors of Visit Baltimore, Inc., it is considered a quasi-City Agency, but it is not a direct component or instrumentality of the City. Visit Baltimore, Inc. promotes activity, tourism and events in Baltimore and the surrounding region through a number of means, including direct marketing, advertising and networking. It provides assistance in promoting the Convention Center by marketing large group planners on a long term basis and integrating the services of its members throughout the City at large. Visit Baltimore, Inc. works closely with the Hotel Manager in the areas of marketing, group sales and reservations to promote the Project.

The Convention Center (including its expansion and renovation) was financed by the issuance of $56,385,000 of Mayor and City Council of Baltimore Convention Center Revenue Refunding Bonds, Series 1994, which were refunded by the 1998 Senior Convention Center Bonds. The 1998 Senior Convention Center Bonds are secured by a pledge of the Hotel Tax Revenues, if, as and when appropriated, that is senior to the pledge of the Hotel Tax Revenues under the Indenture. Currently there are outstanding $12,660,000 aggregate principal amount of 1998 Senior Convention Center Bonds, which have a maturity of September 1, 2019.

The City and the State, acting through the Maryland Stadium Authority (the “Authority”), entered into an agreement regarding the respective contributions of the City and the State toward the Convention Center’s operating deficits and capital improvement reserve fund (the “Operating Agreement”). Chapter 283 of the Laws of Maryland of 2013 authorizes the Authority’s statutory obligations with respect to the funding of the Convention Center. Pursuant to the Operating Agreement, the Authority and the City each agreed to contribute to operating deficits and a capital improvement reserve fund ending on December 31, 2019. The Authority agreed to annually contribute two-thirds (2/3) and the City agreed to annually contribute one-third (1/3) to annual operating deficits of the Convention Center and the Authority and the City each agreed to annually contribute $200,000 to the Convention Center’s capital improvement reserve fund. The Operating Agreement between the City and the Authority is scheduled to expire December 31,

2019, after which the City will become solely responsible for all of the Convention Center’s operating deficits and capital improvements, which have averaged $7,848,193 in years 2011 to 2015. No assurance can be given that the Operating Agreement will be extended.

The Indenture provides that the City may issue additional bonds secured by a parity pledge of the Hotel Tax Revenues upon the satisfaction of certain conditions. See “SECURITY FOR THE SERIES 2017 BONDS – Additional Bonds” and “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Additional Bonds.”

THE PARTICIPANTS

The City

Introduction

The Mayor and City Council of Baltimore (the “City”) is a body corporate and politic of the State of Maryland (the “State”) in which all local governmental functions are performed by the City. The City has had a charter form of government since 1797; home rule powers since 1918, and is governed by an elected Mayor, Comptroller and a City Council. The City has a total area of approximately 92 square miles and the United States Census Bureau estimates its 2015 population to be 621,849. The City is a major deep-water seaport located on the Patapsco River, a tributary of the Chesapeake Bay. It is served by Baltimore/Washington International Thurgood Marshall Airport in adjacent Anne Arundel County. The City is almost completely surrounded by Baltimore County, a separate entity, which borders the City on the east, north, west and part of the south. Anne Arundel County also adjoins the City on its southern border.

Services provided or paid for by the City from local, State or Federal sources include police, fire and emergency services, education, various welfare programs, public works, storm water management and court and correctional services. The City is also responsible for adoption and maintenance of building codes and regulation of licenses and permits, collection of certain taxes and revenues, maintenance of public records, conduct of elections and collection and disposal of refuse. There are no overlapping local governmental entities or taxing jurisdictions. Accordingly, there is no overlapping debt of the City.

The City’s executive offices are located at City Hall, 100 N. Holliday Street, Baltimore, Maryland 21202, and can be reached by telephone at (410) 396-3100.

History

The founding of the City dates back to 1729 when the Maryland General Assembly authorized the erection of Baltimore town on the north side of the Patapsco River. Three land additions in 1816, 1888 and 1918 and separation in 1851 from Baltimore County brought the City to its present size. Since 1918, the City boundaries have remained unchanged.

In 1797, the City became an incorporated city when the General Assembly granted a charter to the City of Baltimore. One hundred years later, the City appointed a commission to draft a new charter. The product of their efforts, known as the New Charter (also referred to herein as the “Charter”), was adopted by the Maryland General Assembly in 1898. The New Charter placed the power of appointing most of the heads of the City departments in the hands of the Mayor, subject to confirmation by the City Council.

In 1918, the Charter was amended to provide for a municipal civil service system based on merit and to provide for Home Rule. Home Rule allows the Mayor and City Council to pass all local laws affecting the City, subject to the State Constitution and public general law of the State (as defined by the State Constitution).

The Charter has been revised many times since its adoption. The Charter was revised in 1996 with the publication of the 1996 Edition, and was most recently amended to change the dates of election of Mayor, the president and other members of the City Council and the Comptroller to coincide with the election of the President of the United States.

Organizational Structure

Under the Charter, the City’s executive functions are vested in the Mayor, the Board of Estimates and an independent Comptroller. The City’s legislative functions are vested in the City Council.

The Mayor is the chief executive officer of the City. The Mayor is elected for a term of four years and is eligible to succeed as Mayor without limitation as to the number of terms. If the Mayor is disabled or absent from the City, the President of the City Council acts as ex-officio Mayor. If the Mayor resigns, is permanently disqualified or dies in office, the President of the City Council becomes Mayor for the remainder of the term. The Mayor has authority to veto ordinances, has power of appointment of most department heads and municipal officers, serves on the Board of Estimates and appoints two of the other four members of the Board of Estimates.

The Board of Estimates is the highest administrative body of the City. It is composed of the President of the City Council, who serves as President of the Board, the Mayor, the Comptroller, the City Solicitor and the Director of Public Works. The latter two members hold their positions on the Board through appointments by the Mayor. The Board of Estimates formulates and determines fiscal policy through its recommendation of the City’s annual budget, known as the “Ordinance of Estimates.”

The Board of Estimates also awards contracts for public works, supplies, materials, equipment and services, subject to certain limited exceptions, fixes the salary or wage scales of City employees in the Classified Civil Service, and adopts such rules as it deems appropriate to ensure, so far as practicable, like working conditions for employees in the several municipal agencies, including vacation and sick leave.

The Board of Finance was established by the Charter to, among other things, issue and sell certificates of indebtedness of the City, including bonds, notes and other forms of indebtedness, to determine all matters pertaining to their issuance and sale and to regulate,

monitor, or advise with regard to a number of treasury functions. The Charter provides that the Board of Finance is composed of the Mayor, who serves as President of the Board, the Comptroller, and three members appointed by the Mayor. Current appointees to the Board of Finance are: Frederick W. Meier, Jr., President, Lord Baltimore Capital Corporation, Dana C. Moulden, Financial Consultant, and Larry I. Silverstein, President, Union Box Company.

The Comptroller is an elected official who has, among other duties and responsibilities, the authority to appoint the City Auditor, subject to the Charter provisions relative to the Classified Civil Service. He or she also has responsibility for the Department of Real Estate, the Department of Audits, the Insurance Manager, the Municipal Telephone Service, the Municipal Post Office and the Harbormaster. The Comptroller serves as a member of the board of trustees of the City’s three actuarially funded retirement systems and other boards, committees and commissions.

The City Council consists of fifteen members. There are fourteen councilman districts and one member is elected from each district. The President of the City Council is elected on a citywide basis. There is no limitation as to the number of terms that may be served by any member of the City Council. Legislation is passed by the City Council by simple majority vote, except in certain instances, which require a favorable vote of three-fourths of all members, such as a suspension of rules or an override to the Mayor’s veto.

Certain Elected and Appointed Officials

CATHERINE E. PUGH, Mayor, was sworn in as the 50th Mayor of the City of Baltimore on December 6, 2016. Ms. Pugh has been a public servant for more than 15 years. She served as a member of the Baltimore City Council, representing the 4th district (1999-2003) and serving as Chair of the Taxation Subcommittee on Economic Development, Vice-Chair of the Land Use & Planning Committee and member of the Urban Affairs Committee. In 2005 she was appointed to the Maryland General Assembly, House of Delegates, where she served for one year before running for her Senate seat in 2006, where she served as the Majority Leader, was Named Legislator of the Year (2010) by the City Paper, and passed over 150 pieces of legislation. Ms. Pugh has served as President of CEPugh and Company, a marketing and public relations firm. She has worked as a banker, business developer, Dean and Director of Strayer Business College, Special Editor for the Baltimore Sun, and as a television and radio news reporter and talk show host. She is the author of Mind Garden: Where Thoughts Grow and Healthy Holly, a series of children’s books advocating exercise and healthy eating. Mayor Pugh holds an MBA from Morgan State University and has received qualification from the University of California as an Economic Development Specialist.

BERNARD C. “JACK” YOUNG, President of the City Council, was elected to his second full term as President in November 2016. Mr. Young, a native East Baltimorean, served as chairman of the City Council’s Public Safety and Health Committees from 2007 to 2010. Mr. Young, a 14-year veteran of the City Council, has played a major role in passing legislation that has increased funding for education and crime prevention. He also played a role in the development of the Biotech Park in East Baltimore, the Charles North Urban Renewal Program and fought for funding for city swimming pools. Mr. Young has spent all of his time on the City Council representing the interests of the citizens of the District 12.

JOAN M. PRATT, CPA, Comptroller, was re-elected to a fifth term in November 2016. Ms. Pratt is the second female as well as the second African-American to hold the position of Comptroller. Ms. Pratt received her undergraduate degree in accounting from Hampton University and received her Masters of Science degree in taxation from the University of Baltimore. Ms. Pratt started her career at the accounting firm of Price Waterhouse Coopers LLP. Prior to her election, she served as Comptroller of the Baltimore Legal Aid Bureau, Inc. for 13 years.

RUDOLPH S. CHOW, P.E., Director of Public Works, was appointed Acting Director in January 2014 by then Mayor Stephanie Rawlings-Blake and subsequently confirmed as Director by the Baltimore City Council on February 3, 2014. Mr. Chow is a graduate of George Washington University and the University of Maryland, where he earned a Master of Science Degree, and is a registered Professional Engineer in Maryland and Delaware. He has a long and distinguished career in the water industry, developing and implementing innovative programs and delivering them with the ideals of commitment, accountability, and integrity. He most recently served as Head of the Bureau of Water and Wastewater, which provides the highest quality drinking water to 1.8 million people, wastewater conveyance and treatment for 1.6 million people, as well as flood prevention and stream protection. Prior to that he rose through the ranks of the Washington Suburban Sanitary Commission to become the Interim Deputy General Manager, where he had oversight of the operational departments.

DAVID E. RALPH, Interim City Solicitor, was appointed August 24, 2016. Prior to serving as the Interim City Solicitor, Mr. Ralph served as the Chief of Litigation and then as Deputy City Solicitor. Prior to working with the City, he served as a partner in regional and national corporate law firms, where he concentrated on complex commercial litigation and employment law. His practice particularly focused on sophisticated high exposure litigation, including complex business disputes, financial services, and constitutional issues at both the state and federal levels. Mr. Ralph received his B.A. from Fordham University and J.D. from University of Maryland. He was admitted to the Bar in 1991.

HENRY J. RAYMOND, Director of Finance, was appointed to this position in August 2014. Mr. Raymond earned his Bachelor of Science degree from North Carolina A&T State University. He also holds a Master of Public Administration from the University of Baltimore and a Master of Business Administration from Bowie State University. Prior to his appointment as Director, he served as Deputy Director of Finance, Bureau Chief for Budget and Management Research, Revenue Collections, and Accounting and Payroll Services. Mr. Raymond has over 34 years of State and Local government experience; some of his career highlights include serving as Finance Director for the Maryland Office of the Governor, Chief Financial Officer for the Baltimore Public Schools System, and Director of the Maryland Central Collection Agency. His leadership and contributions to the development, planning and implementation of finance policy and processes in the City of Baltimore has enhanced the fiscal integrity of the City.

ANDREW W. KLEINE, Chief, Bureau of the Budget and Management Research, was appointed March 26, 2008. Mr. Kleine holds a Bachelor’s degree from Washington University in St. Louis and a Master of Public Policy degree from the University of Michigan. Prior to his work with Baltimore City he served as the Acting CFO and Deputy CFO for Planning and Program Management at the Corporation for National and Community Service, a federal

agency. Mr. Kleine started his federal career as a Presidential Management Intern in the U.S. Department of Transportation. He has also worked as a Program Examiner in the White House Office of Management and Budget and as CFO of the Bureau of Transportation Statistics.

JENNELL A. ROGERS, Chief, Bureau of Treasury Management, was appointed on March 5, 2015. Ms. Rogers holds a Bachelor of Science degree in Finance from Towson University. Prior to her appointment as Chief, she served as Treasury Manager for the Bureau of Treasury Management. Ms. Rogers has over 28 years of accounting experience and has served in other public finance positions within Baltimore City government.

ROBERT L. MCCARTY, JR., CPA, City Auditor, earned both his Bachelor of Science degree in Business Administration/Accounting and his Master of Science degree in Taxation from the University of Baltimore. He became a CPA in 1979 and has over 28 years of government auditing experience. Mr. McCarty is also a Certified Fraud Examiner (CFE) and a Certified Government Financial Manager (CGFM).

The Corporation

General Description. The Corporation is a non-stock, not-for-profit corporation organized under the laws of the State of Maryland, and is an instrumentality of the City. The Corporation is organized exclusively for the limited purpose of owning, acquiring, constructing, equipping, operating, financing and taking any other action that a Maryland corporation may take with respect to the Project. The Corporation’s Articles of Incorporation (the “Articles”) authorize the Corporation to, among other things, (1) purchase, lease or acquire real and personal property, (2) make contracts, incur liabilities, borrow money, and secure the same by mortgage of its property, (3) lease or sell its real or personal property subject to the provisions of these articles, and (4) exercise all other powers incidental to the purposes of the Corporation provided or allowed under the general laws of the State of Maryland.

The Articles provide that, among other things, (i) the Corporation is established to assist the City in accomplishing an essential governmental function of enhancing economic development within the City by promoting and expanding the use of the Convention Center, (ii) the Corporation shall be operated as a non-profit corporation, none of the income of which shall inure to the benefit of any private person or entity, (iii) the City shall have the right, upon the payment in full of the Series 2017 Bonds, to become the unencumbered owner of the Project and all other Project assets, (iv) upon the retirement of the Series 2017 Bonds and the dissolution of the Corporation, all assets of the Corporation shall vest in the City, (v) all income derived from the operation of the Project, after payment of all debt service, and the funding of reserves and other amounts payable under the Indenture, and the payment of operating expenses of the Corporation and other costs of the Corporation, shall be paid to the City, and (vi) the Corporation may not sell the Project without the approval of the City.

Under the Bond Ordinance, the Corporation is authorized to pledge the Gross Revenues, the Project, including the Site and all improvements thereon and any other collateral that the Corporation is authorized by law or resolution to pledge, to secure its obligations under the Loan Agreement, including to pay the principal of, premium, if any, and interest on the Series 2017

Bonds, to pay operating expenses of the Project, to fund operating, capital improvements and other reserves, and for any other purposes set forth in the Indenture.

The Corporation is not an agency or department of the City. The Corporation (i) may not pledge the full faith and credit of the City or otherwise obligate the City to any borrowing or contract, (ii) does not have any taxing authority, (iii) may not exercise the power of eminent domain and (iv) may not issue any public bonds.

The Corporation has not conducted any business to date other than the operation of the Project. The Corporation is dependent upon the revenues from the Project to meet its obligations under the Loan Agreement. The obligations of the Corporation under the Loan Agreement are unconditional obligations of the Corporation and are recourse to its general credit. However, the Corporation’s only assets are the Project and the Gross Revenues. The City has no liability with respect to the Corporation’s obligations under the Loan Agreement or any other Bond Document.

Board of Directors

The Corporation is managed and controlled by a board of directors (the “Board”), which must have a minimum of nine and a maximum of fifteen members.

The Board is comprised of five ex-officio members consisting of (i) the Mayor or his or her designee, (ii) the President of the City Council, or his or her designee, (iii) the Comptroller of the City, (iv) the Director of Finance, and (v) the President of the Baltimore Development Corporation (the “Ex-Officio Members”) and four individuals who are not officials or employees of the City (the “Appointed Members”). The current Board members are nominated and elected by the Board, and there are currently two vacancies on the Board.

The current directors of the Corporation and the expiration dates of the initial terms are as follows:

Name Occupation Initial Term Expires

Catherine E. Pugh (or her Mayor Ex-officio designee)

Bernard C. “Jack” Young President of the City Council Ex-officio

Joan M. Pratt Comptroller Ex-officio

Henry J. Raymond Director of Finance Ex-officio

William Cole President, Baltimore Development Ex-officio Corporation

Davon Barbour Vice President, Economic December, 2018 Development and Planning, Downtown Partnership of Baltimore, Inc. and Downtown Management Authority

Nan Rohrer Director of Strategic Development, December, 2018 Mahan Rykiel Associates Inc.

The directors may be removed, with or without cause, by the affirmative vote of a majority of directors entitled to vote. Each director serves for a term of three years, except that the initial terms are staggered as set forth above so that the terms of one-third of the members will expire each year. Appointed Members may not serve more than two consecutive full terms. The directors have no financial or proprietary interest in the Corporation, its assets or the Project.

The Board is required to develop and adopt an annual financial plan for the ensuing Fiscal Year (the “Financial Plan”). A copy of the Financial Plan must be delivered to the Mayor, the President of the City Council, and the Board of Estimates no later than 180 days following the close of the Corporation’s Fiscal Year for review. Additionally, no later than 180 days following the Fiscal Year the Board must deliver the Corporation’s audited financial statements to the Mayor, the President of the City Council and the Board of Estimates.

Hotel Manager – Hilton Management LLC

The following information described under this heading has been provided by the Hilton Parent for use in the Official Statement in connection with the offering of the Series 2017 Bonds. No representation is made by the Corporation, the City or the Underwriters as to the accuracy or completeness of the information set forth herein concerning the Hotel Manager or the Hilton Parent.

General

The Corporation has contracted with Hilton Management LLC (the “Hotel Manager”) to manage and operate the Hotel under the Hilton name. The Hotel Manager’s ultimate parent entity is the Hilton Parent, a New York Stock Exchange company (NYSE:HLT) and is primarily engaged, together with its subsidiaries, in the ownership, management, and franchising of hotels. Hilton Parent is recognized internationally as a preeminent hospitality company. Hilton Parent’s world headquarters are located at 7930 Jones Branch Drive, McLean, Virginia 22102.

As of December 31, 2016, the Hilton Parent’s hotel system included 4,922 properties, totaling approximately 804,097 rooms. The Hilton brand is Hilton Parent’s global flagship brand with approximately 570 hotels and resorts.

Number of Properties and Rooms

The number of properties and rooms as of December 31, 2016 by brand and type are as follows:

Total Properties Rooms Waldorf Astoria Hotels & Resorts 26 10,203 Conrad Hotels & Resorts 29 9,554 Canopy by Hilton 1 112 Hilton Hotels & Resorts 570 208,762 Curio – A Collection by Hilton 31 7,242 DoubleTree by Hilton 494 117,699 Embassy Suites by Hilton 232 54,589 Hilton Garden Inn 717 102,786 Hampton by Hilton 2,221 223,114 Homewood Suites by Hilton 418 47,104 Home2 Suites by Hilton 129 13,349 Other 7 1,926 Hilton Grand Vacations 47 7,657 Total 4,922 804,097

Hilton’s convention center hotels portfolio includes, but is not limited to the following (with all room numbers being approximate):

• Hilton Anaheim – 1,572 rooms • Hilton Atlanta – 1,249 rooms • Hilton Chicago – 1,544 rooms • Palmer House Hilton – 1,641 rooms • Hilton Minneapolis – 821 rooms • Hilton New Orleans Riverside – 1,622 rooms • Hilton New York Midtown – 1,929 rooms • Hilton San Francisco Union Square – 1,919 rooms • Hilton Washington – 1,070 rooms • Hilton Austin Convention Center – 801 rooms • Hilton Houston Americas – 1,200 • Hilton Omaha – 600 rooms • Hilton Vancouver Washington – 226 rooms

Reservation Service/Hilton HHonors Program

Hilton hotels are listed and participate in the reservation service operated by Hilton Parent and its subsidiaries.

Hilton Honors is a guest loyalty program provided to hotels and timeshare properties by Hilton Parent and its subsidiaries. Nearly all Hilton hotels participate in the Hilton Honors program. Hilton Honors members earn points based on their spending at our participating hotels and timeshare properties and through participation in affiliated partner programs. When points are earned by Hilton Honors member, the property or affiliated partner pays Hilton Honors based on an estimated cost per point for the costs of operating the program, which include marketing, promotion, communication, administration and the estimated cost of award redemptions. Hilton Honors member points are accumulated and may be redeemed for the right to stay at participating properties, as well as for other goods and services from third parties, including, but not limited to, airlines, car rentals, cruises, vacation packages, shopping and dining.

RISK FACTORS

THE PURCHASE OF THE SERIES 2017 BONDS IS SUBJECT TO CERTAIN RISKS. EACH PROSPECTIVE INVESTOR IN THE SERIES 2017 BONDS IS ENCOURAGED TO READ THIS OFFICIAL STATEMENT IN ITS ENTIRETY, INCLUDING ALL APPENDICES HERETO. PARTICULAR ATTENTION SHOULD BE GIVEN TO THE FACTORS DESCRIBED BELOW THAT, AMONG OTHERS, COULD AFFECT THE PAYMENT OF PRINCIPAL OF AND INTEREST ON THE SERIES 2017 BONDS AND THAT COULD ALSO AFFECT THE MARKET PRICE OF THE SERIES 2017 BONDS TO AN EXTENT THAT CANNOT BE DETERMINED.

Special, Limited Obligations of the City

The Series 2017 Bonds are special, limited obligations of the City, payable solely from the Trust Estate as described in “SECURITY FOR THE SERIES 2017 BONDS.”

Insufficient Occupancy of the Hotel; Inability to Generate Sufficient Revenues

The inability of the Hotel to maintain projected occupancy at projected room rates may adversely affect the ability of the Corporation to generate sufficient gross operating revenues to pay the costs of operating and maintaining the Project and net operating revenues sufficient, together with other available revenues and funds, to pay debt service on the Series 2017 Bonds. Factors affecting the occupancy of and room rates at the Hotel include, but are not limited to, concerns about the safety of, or the availability of, air travel or the effectiveness of security precautions, particularly in the context of international hostilities and potential terrorist attacks, public health concerns whether local or international, levels of tourism, civil unrest, levels of business travel, the state of the national, regional and local economies, the price of gasoline, the cost of airline tickets, availability of airline travel, hurricanes and other adverse weather conditions. In addition, the revenues and value of the Project are dependent, in part, upon convention business in the Convention Center as hereinafter discussed under “– Reliance on the Convention Center.” Additional factors impacting the occupancy and room rates of the Hotel include the appeal of the Project to convention attendees and other guests, the success of marketing efforts, the reservation system, room rates available to convention attendees and other guests, competition from other Baltimore hotels for rooms and other cities in the United States competing for national conventions, temporary or permanent damage to or destruction of the

Hotel or other Project facilities and the sufficiency of insurance to pay the costs of repair or reconstruction and to compensate the Project for interruption of business, delays associated with disputed insurance coverage, labor shortages, strikes and other work stoppages, and the future availability of financing to upgrade Project technology or amenities. Many of these factors, including levels of business travel, levels of tourism and convention activity are beyond the control of the City, the Corporation and the Hotel Manager.

Reliance on the Convention Center

As a convention center headquarters hotel, the success of the Project and the revenues generated thereby will be in part dependent on the Convention Center and on the ability of the Convention Center to attract large and frequent national conventions. In recent years, bookings in the Convention Center have declined. Convention business in the Convention Center, and the ability to attract convention bookings, could be affected by a number of factors including the sufficiency of Convention Center marketing budgets and expenditures, the success of Visit Baltimore in booking conventions, the marketing efforts and reservation system of the Hotel Manager, Baltimore’s reputation as a convention center destination, increased competition from new and existing convention centers, temporary or permanent damage to or destruction of the Convention Center and the sufficiency of insurance to pay the costs of repair or reconstruction, delays associated with disputed insurance coverage, labor shortages, strikes and other work stoppages, the future availability of financing to upgrade Convention Center technology or amenities and labor relations with employees of the Convention Center. In addition, although management of the Convention Center has indicated its need for substantial rooms available to users of its facilities, the Convention Center is not obligated to provide any level of room usage for the benefit of the Project. See “APPENDIX B – Hotel Market Consultant’s Report – Convention Market and Demand Analysis.”

Competition

The level of occupancy of the Hotel and the room rates charged by the Hotel are directly affected by competition from other hotels. As new supply enters the market, or existing hotels are renovated or improved, the Project’s market share and occupancy rates could be adversely impacted. The Project will not only be subject to competition from hotels in Baltimore and the surrounding area, but will also be affected by competition from other cities across the United States competing for national convention business. As a convention center headquarters hotel, the Project will be competing to attract national convention attendees to the Project. As discussed in the Market Study Report, other cities across the country have large hotels designed to attract national conventions. While the Indenture provides that it is an Event of Default thereunder if the City or the Corporation develops certain hotel and motel facilities within a certain designated area that would compete with the Project, and the Hotel Operating Agreement similarly restricts any such development of a competing hotel by the City, the Corporation and the Hotel Manager, no assurances can be given concerning potential competition by other entities or cities or the potential impact of such competition on the revenues of the Project. See “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Defaults and Remedies” and “APPENDIX E – Summary of Certain Provisions of the Hotel Operating Agreement.”

Economic Considerations

Over the past decade, the downtown Baltimore lodging market has not experienced large decreases in occupancy or rates as has been experienced in comparable markets in other major U.S. cities. However, no assurances can be provided that this trend will continue during the Forecast Period. Hotel rooms are rented for a relatively short period of time compared to most commercial properties, and therefore hotels may respond to adverse economic conditions and competition more quickly than commercial properties that are leased or rented for longer periods of time. In addition, occupancy rates and average room rates are dependent in large part on business and leisure travel. The Market Study Report estimates that 62% of the Hotel’s guests are either convention attendees or part of in-house groups utilizing the meeting space in the Project, and anticipates growth in the bookings at the Convention Center. Economic factors can influence the budgets of convention planners and companies planning group meetings. The Market Study Report assumes that there will be neither a sharp rise nor a sharp decline in local or national economic conditions. The Market Study Report forecasts that Baltimore’s economy will be expanding, however, there can be no assurances that the economy will experience the recovery assumed in the Market Study Report or that occupancy rates and Project revenue will correspondingly increase.

Reliance on Brand Name Recognition and Competent Management

The occupancy rates and room rates charged by the Hotel are dependent in part on national brand name recognition. This is particularly true in the case of a convention center headquarters hotel. Convention planners and in-house group planners in large part book their conventions and groups into hotels with national recognition. In addition, the Market Study Report bases its economic forecasts on the assumption that Hilton, with its national brand name recognition, will competently manage the Hotel Project. While the Corporation currently has a contract with Hilton Management LLC to serve as Hotel Manager for a 15-year term (which the parties are currently negotiating to extend to December 31, 2046), if Hilton Management LLC were to discontinue its services as Hotel Manager or fail to renew the Hotel Operating Agreement in the future, this could adversely impact the occupancy rates and average room rates of the Hotel unless Hilton were replaced by a comparable manager with national brand name recognition. See “APPENDIX E – Summary of Certain Provisions of Hotel Operating Agreement” for a description of the conditions under which Hilton Management LLC’s services as Hotel Manager may be terminated prior to the expiration of the Hotel Operating Agreement.

Failure to Appropriate

Consistent with the requirements of the Enabling Acts and the Bond Ordinance, the payment of Tax Increment Revenues, Hotel Tax Revenues and Personal Property Tax Revenues to the Trustee as required by the Indenture is subject to annual appropriation by the City. The City Council is not obligated to make any appropriation, or to make a sufficient appropriation, to pay such amounts in any Fiscal Year. A failure to appropriate amounts sufficient to pay the required payments under the Indenture would not constitute an event of default.

While the City has covenanted that, subject to applicable law and public policy, the Director of Finance shall use his or her best efforts in each Fiscal Year in which the Series 2017 Bonds are outstanding, to obtain the authorization and appropriation of Tax Increment Revenues, Hotel Tax Revenues and Personal Property Tax Revenues in the amounts specified in the Indenture, there is no assurance that the City Council will appropriate money sufficient to make such payments.

Environmental Risks

No assurance can be given that environmental conditions do not now or will not in the future exist at the Site which could become the subject of enforcement actions by governmental agencies or that remediation costs will not exceed insurance policy limits.

Actual Results May Differ from Forecasts

The financial forecasts described under “PLAN OF FINANCING” are based upon assumptions made by the Hotel Market Consultant in the Market Study Report. Inevitably, some assumptions used to develop the forecasts will not be realized, and unanticipated events and circumstances may occur. Therefore, the actual results achieved during the Forecast Period will vary and the variations may be material. In particular, any substantial decrease in occupancy or average room rates at the Hotel will reduce revenues available to pay debt service on the Series 2017 Bonds. See “PLAN OF FINANCING – Hotel Market Consultant’s Report,” “PLAN OF FINANCING – Cash Flow Projections,” “FORWARD LOOKING STATEMENTS” and “APPENDIX B – Hotel Market Consultant’s Report.”

Enforceability of Remedies

If an Event of Default occurs under the Indenture, the Trustee may, in certain situations, declare the principal of the Series 2017 Bonds to be immediately due and payable and the Trustee will have the right to foreclose on the Project in accordance with the Indenture and the Deed of Trust by the nonjudicial foreclosure process provided under Maryland law. The Trustee may also exercise all the rights and remedies of a secured party under the Maryland Uniform Commercial Code with respect to the personal property included in the Project. See “SECURITY FOR THE SERIES 2017 BONDS – Deed of Trust.” The enforceability of the Indenture, the Series 2017 Bonds, the Loan Agreement and the Deed of Trust are subject to applicable bankruptcy laws, principles of equity affecting the enforcement of creditors’ rights generally and liens securing such rights, the police powers of the State and its political subdivisions and judicial discretion. Because of the delays inherent in enforcing the remedies of the Trustee upon the Project through the courts, a potential purchaser of the Series 2017 Bonds should not anticipate that the remedies of the Trustee are remedies that could be accomplished rapidly. Any delays in the ability of the Trustee to resolve its claim to possession of or title to the Project may result in delays in the payment of the Series 2017 Bonds. In addition, repayment of the Series 2017 Bonds in the event of a foreclosure on the Project will be dependent primarily on the cash flow derived from and the market or liquidation value of the Project. The practical use of the Project is limited to its use as a hotel and parking garage. There can be no assurances

that in the event of a foreclosure on the Project the Trustee would receive sufficient revenues to pay the Series 2017 Bonds in full.

No Secondary Market

There can be no assurance that a secondary market for the Series 2017 Bonds will be established or maintained. Accordingly, each prospective investor should expect to bear the risk of the investment represented by the Series 2017 Bonds to maturity.

Other Possible Risk Factors

The occurrence of any of the following events, or other unanticipated events, could adversely affect the financial condition or results of operations of the Corporation:

(i) employee strikes and other adverse labor actions that could result in a sizeable increase in expenditures without a corresponding increase in revenues;

(ii) reinstatement of or establishment of mandatory governmental price controls;

(iii) adoption of other federal, state or local legislation or regulations having an adverse effect on the future operating or financial performance of the Corporation;

(iv) downward adjustment of the current 9.5% hotel room tax rate by legislative action;

(v) inability to control increases in operating costs, including salaries, wages and fringe benefits, supplies and other expenses, given an inability to obtain corresponding increases in revenues;

(vi) developments or events affecting the federal or state exemption of the Corporation’s income from taxation or the Corporation’s status as a not-for- profit corporation;

(vii) suspension or revocation of or failure to renew a license necessary to operate the Project, or any portion thereof; and

(viii) increases in the cost and limitations on the availability of insurance, such as fire and general comprehensive liability insurance and business interruption insurance, that corporations of size and type similar to the Corporation generally carry.

Regulatory and other changes resulting from the factors mentioned above, among others, or the occurrence of other unanticipated events could have a material adverse effect on the Corporation’s financial condition or results of its operations.

CONTINUING DISCLOSURE AGREEMENT

In connection with the issuance of the Series 2017 Bonds and to assist the Underwriters in complying with Rule 15c2-12 (as amended from time to time, the “Rule”) promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, the Continuing Disclosure Agreement contains a covenant by the Corporation that it will provide annually to the Municipal Securities Rulemaking Board (“MSRB”), via the Electronic Municipal Market Access system for municipal securities disclosures operated by the MSRB (“EMMA”), certain financial information and operating data with respect to the City and the Project, including audited financial statements for the Corporation and for the City, and provide notice of certain events specified by the Rule and the annual financial statements of the Project. See “APPENDIX F – Form of Continuing Disclosure Agreement” for the detailed provisions of the Continuing Disclosure Agreement.

In connection with the Series 2006 Bonds, the Corporation entered into a continuing disclosure undertaking pursuant to which the Corporation agreed to provide certain financial information and operating data with respect to the City (but only to the extent that it received the same from the City), the Corporation and the Project. With respect the to the information relating to the Corporation and the Project, the Corporation failed to file its audited financial statement for the Fiscal Year ended December 31, 2012, and further failed to file a notice of failure to file in connection therewith. Additionally, the Corporation failed to file notice of a downgrade of certain ratings on the Series 2006 Bonds in 2014. With respect to the information required to be filed with respect to the City, the Corporation failed to file the Comprehensive Annual Financial Report of the City for the Fiscal Years ended June 30, 2011, 2012, 2014 and 2015 (and filed a failure to file notice only with respect to the Fiscal Year ended June 30, 2014), and filed the Comprehensive Annual Financial Report of the City for the Fiscal Years ended June 30, 2013 late without filing a failure to file notice with respect thereto.

The Corporation has subsequently filed the missing audited financial statements, City Comprehensive Annual Financial Reports and failure to file notices. The Corporation will implement certain policies and procedures to insure future compliance with its continuing disclosure obligations.

LITIGATION

There is no pending litigation, or, to the knowledge of the City or the Corporation, litigation threatened in writing against the Hotel Manager, the City or the Corporation, respectively, that in any way materially challenges the validity of the Series 2017 Bonds or any proceedings or transactions relating to the authorization, sale or delivery of the Series 2017 Bonds or that materially challenges the operation or management of the Project, or the enforceability of the Indenture, the Deed of Trust, the Loan Agreement, the Hotel Operating Agreement or the Room Block Agreement.

LEGAL MATTERS

Legal matters incident to the authorization, execution and delivery of the Bonds are subject to approval by McGuireWoods, LLP, Baltimore, Maryland, Bond Counsel. The form of the opinion of Bond Counsel with respect to the Series 2017 Bonds is attached hereto as APPENDIX G and will be available at the time of delivery of the Series 2017 Bonds. Certain legal matters will be passed upon for the City by the Interim City Solicitor of the City, as counsel to the City, and for the Corporation by McGuireWoods LLP, Baltimore Maryland, as counsel to the Corporation; and for the Underwriters by Ballard Spahr LLP, Baltimore, Maryland, as Underwriters’ Counsel.

TAX MATTERS

Federal Tax Treatment of Series 2017 Bonds

Opinion of Bond Counsel - Tax Status of the Series 2017 Bonds In the opinion of Bond Counsel, under existing law and assuming compliance with the Covenants (defined herein), interest on the Series 2017 Bonds is (i) excludable from gross income of the owners thereof for purposes of federal income taxation and (ii) not a specific item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, for purposes of the alternative minimum tax imposed on corporations (as defined for federal income tax purposes under Section 56 of the Internal Revenue Code of 1986, as amended (the “Code”)), interest on the Series 2017 Bonds must be included in computing adjusted current earnings. See “APPENDIX G – Proposed Form of Bond Counsel Opinion.”

Bond Counsel will express no other opinion regarding other tax consequences arising with respect to the Series 2017 Bonds.

Bond Counsel’s opinions speak as of their dated date, are based on current legal authority and precedent, cover certain matters not directly addressed by such authority and precedent, and represent Bond Counsel’s judgment as to the proper treatment of interest on the Series 2017 Bonds for federal income tax purposes. Bond Counsel’s opinions do not contain or provide any opinion or assurance regarding the future activities of the City or the Corporation or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the Internal Revenue Service (the “IRS”). The City and the Corporation have covenanted, however, to comply with the requirements of the Code.

Reliance and Assumptions; Effect of Certain Changes

In delivering its opinions regarding the Series 2017 Bonds, Bond Counsel is relying upon certifications of representatives of the City, the Corporation and other parties as to facts material to the opinions, which Bond Counsel has not independently verified. In addition, Bond Counsel is assuming continuing compliance with the Covenants (defined herein) by the City and the Corporation. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied after the issuance of the Series 2017 Bonds in order for interest on the Series 2017 Bonds to be and remain excludable from gross income for purposes of

federal income taxation. The City and the Corporation will execute and deliver certain tax certifications and covenants (collectively, the “Tax Agreement”) on the date of delivery of the Series 2017 Bonds to comply with the provisions of the Code applicable to the Series 2017 Bonds including, among other things, requirements as to the use, expenditure and investment of the proceeds thereof, the use of the property financed thereby, the source of the payment thereof and the security therefor, the arbitrage yield restrictions and rebate payment obligations imposed by the Code and certain other actions that could cause interest thereon to be includable in gross income of their owners (the “Covenants”). Bond Counsel has not independently verified, and will not monitor compliance with, the covenants, representations and agreements of the City and the Corporation. In the event of noncompliance with such covenants and agreements, the available enforcement remedies may be limited by applicable provisions of law and, therefore, may not be adequate to prevent interest on the Series 2017 Bonds from becoming includable in gross income for Federal income tax purposes.

Certain requirements and procedures contained, incorporated or referred to in the Tax Agreement, including the Covenants, may be changed, and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such agreements. Bond Counsel expresses no opinion concerning any effect on the excludability of interest on the Series 2017 Bonds from gross income for federal income tax purposes of any such subsequent change or action that may be made, taken, or omitted upon the advice or approval of counsel other than Bond Counsel.

Original Issue Discount

With respect to the Series 2017 Bonds, the initial offering prices of the Series 2017 Bonds in the aggregate principal amounts of $______and $______and maturing in the years ______and ______, respectively (the “OID Bonds”), will be less than their stated principal amounts. Under current law, the difference between the stated principal amounts and the initial offering prices of the OID Bonds (excluding bond houses and brokers) at which a substantial amount of such Series 2017 Bonds are sold will constitute “original issue discount” (“OID”). The offering prices set forth on the inside cover of this Official Statement for the OID Bonds are expected to be the initial offering prices at which a substantial amount of such Series 2017 Bonds are sold.

Under the Code, for purposes of determining the holder’s adjusted basis in an OID Bond, OID treated as having accrued while the holder holds such OID Bond will be added to the holder’s basis. OID will accrue on a constant yield-to-maturity method. The adjusted basis will be used to determine taxable gain or loss upon the sale or other disposition (including redemption or payment at maturity) of an OID Bond.

Prospective purchasers of the OID Bonds should consult their own tax advisors with respect to the calculation of accrued OID and the state and local tax consequences of owning or disposing of the OID Bonds.

Original Issue Premium

Series 2017 Bonds purchased, whether upon issuance or otherwise, for an amount (excluding any amount attributable to accrued interest) in excess of their principal amount will be treated for federal income tax purposes as having amortizable bond premium. A holder’s basis in such Series 2017 Bonds must be reduced by the amount of premium which amortizes while such Series 2017 Bonds are held by the holder. No deduction for such amount will be allowed, but it generally will offset interest on such Series 2017 Bonds while so held. Purchasers of Series 2017 Bonds should consult their own tax advisors as to the calculation, accrual, and treatment of amortizable bond premium and the state and local tax consequences of holding such Series 2017 Bonds.

Certain Collateral Federal Tax Consequences

The following is a brief discussion of certain collateral federal income tax matters with respect to the Series 2017 Bonds. It does not purport to address all aspects of federal taxation that may be relevant to a particular owner thereof. Prospective purchasers of the Series 2017 Bonds, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the federal tax consequences of owning or disposing of the Series 2017 Bonds.

Prospective purchasers of the Series 2017 Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers including, without limitation, financial institutions, certain insurance companies, certain corporations (including S corporations and foreign corporations), certain foreign corporations subject to the “branch profits tax,” individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations and taxpayers attempting to qualify for the earned income tax credit.

In addition, prospective purchasers should be aware that the interest paid on, and the proceeds of the sale of, tax-exempt obligations, including the Series 2017 Bonds, are in many cases required to be reported to the IRS in a manner similar to interest paid on taxable obligations. Additionally, backup withholding may apply to any such payments made to any owner of a Series 2017 Bond who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any owner of a Series 2017 Bond who is notified by the IRS of a failure to report all interest and dividends required to be shown on federal income tax returns. The reporting and withholding requirements do not in and of themselves affect the excludability of such interest from gross income for federal tax purposes or any other federal tax consequence of purchasing, holding, or selling tax- exempt obligations.

Possible Legislative or Regulatory Action

The IRS has established a program to audit tax-exempt obligations to determine whether the interest thereon is includable in gross income for federal income tax purposes. If the IRS does audit the Series 2017 Bonds, the IRS, under its current procedures, will treat the City as the

taxpayer. As such, the beneficial owners of the Series 2017 Bonds will have only limited rights, if any, to participate in the audit or any administrative or judicial review or appeal thereof. Any action of the IRS, including but not limited to the selection of the Series 2017 Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the marketability or market value of the Series 2017 Bonds.

Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and various State legislatures. The U.S. Department of the Treasury and the IRS are continuously drafting regulations to interpret and apply the provisions of the Code, and court proceedings may be filed the outcome of which could modify the federal or State tax treatment of tax-exempt obligations. There can be no assurance that legislation proposed or enacted after the date of issue of the Series 2017 Bonds, regulatory clarification of the Code, or actions by a court involving either the Series 2017 Bonds or other tax-exempt obligations will not have an adverse effect on the federal tax status of the Series 2017 Bonds or the State tax status of the Series 2017 Bonds, the marketability or market price of the Series 2017 Bonds, or the economic value of the tax exempt status of the interest on the Series 2017 Bonds.

Prospective purchasers of the Series 2017 Bonds should consult their own tax advisors regarding the potential consequences of any such pending or proposed federal or State tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

The foregoing is only a general summary of certain provisions of the Code and does not purport to be complete; prospective purchasers and holders of the Series 2017 Bonds should consult their own tax advisors as to the effects, if any, of the Code in their particular circumstances.

Maryland Tax Treatment of the Series 2017 Bonds

Bond Counsel’s opinion will also state that, under existing law of the State, the principal amount of the Series 2017 Bonds, the interest payable thereon, their transfer, and any income derived therefrom, including any profit realized on their sale or exchange, shall be exempt from taxation by the State or by any of its political subdivisions, municipal corporations, or public agencies but shall be included in computing the net earnings of financial institutions as required by the law of the State; however, the law of the State does not expressly refer to, and no opinion is expressed concerning, estate or inheritance taxes, or any other taxes not levied directly on the Series 2017 Bonds, their transfer or the interest thereon.

Interest on the Series 2017 Bonds may be subject to state or local income taxes in jurisdictions other than the State under applicable state or local tax laws. Prospective purchasers of the Series 2017 Bonds should consult their tax advisors regarding the taxable status of the Series 2017 Bonds in a particular state or local jurisdiction other than the State.

RATING

S&P Global Ratings (“S&P”) has issued a corporate project finance preliminary issue rating of “BBB-” to the Series 2017 Bonds. S&P’s final rating will be issued after S&P’s review of final execution documents for the transaction and the final pricing of the Series 2017

Bonds. Pursuant to the Bond Purchase Agreement, the assignment of a rating no lower than “BBB-” by S&P is a condition precedent to the Underwriters’ purchase of the Series 2017 Bonds.

Such rating reflects only the view of S&P, and any desired explanation of the significance of such rating should be obtained from S&P. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2017 Bonds.

UNDERWRITING

The 2017 Bonds were sold on ______, 2017, to the Underwriters at a price equal to $______, representing the principal amount of the 2017 Bonds plus a net original issue premium of $______and less an underwriting discount of $______. The Underwriters have agreed to accept delivery of and pay for all the 2017 Bonds if any are delivered, and that the obligation to make such purchase is subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions.

Information Provided by the Underwriters

The Underwriters and their respective affiliates are full services financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriters and their respective affiliates have, from time to time, performed and may in the future perform, various investment banking services for the City for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the City or the Corporation.

The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should require, long and/or short positions in such assets, securities and instruments.

Piper Jaffray & Co. has entered into a distribution agreement (“Distribution Agreement”) with Charles Schwab & Co., Inc. (“CS&Co”) for the retail distribution of certain securities offerings at the original issue prices. Pursuant to the Distribution Agreement, CS&Co. will purchase Series 2017 Bonds from Piper at the original issue price less a negotiated portion of the selling concession applicable to any Series 2017 Bonds that CS&Co. sells.

Citigroup Global Markets Inc., one of the Underwriters of the Series 2017 Bonds, has entered into a retail distribution agreement with UBS Financial Services Inc. ("UBSFS"). Under the distribution agreement, Citigroup Global Markets Inc. may distribute municipal securities to retail investors through the financial advisor network of UBSFS. As part of this arrangement, Citigroup Global Markets Inc. may compensate UBSFS for its selling efforts with respect to the Series 2017 Bonds.

VERIFICATION OF MATHEMATICAL COMPUTATIONS

Grant Thornton LLP, a firm of independent public accountants, will deliver to the City, on or before the date of issuance of the Series 2017 Bonds, its verification report indicating that it has verified, in accordance with standards established by the American Institute of Certified Public Accountants, certain information and assertions provided by the Underwriters with respect to the refunded Series 2006 Bonds. Included in the scope will be a verification of the (a) mathematical accuracy of the mathematical computations of the adequacy of the cash deposited with the Trustee to pay the Redemption Price of the Outstanding Series 2006 Bonds and accrued interest thereon and (b) mathematical computations of the yield on the Series 2017 Bonds in accordance with the Code and the regulations promulgated thereunder.

INDEPENDENT AUDITORS

The financial statements of the Corporation as of December 31, 2016 and for the year then ended and December 31, 2015 and for the year then ended, included as APPENDIX H, have been audited by CliftonLarsonAllen LLP, independent auditors, as stated in their reports appearing therein and should be read in their entirety.

EXPERTS

The information contained under the headings “PLAN OF FINANCING – Hotel Market Consultant’s Report,” “PLAN OF FINANCING – Cash Flow Projections” (forecast of net operating income only), and “APPENDIX B – Hotel Market Consultant’s Report” has been included in reliance upon the authority of HVS Consulting & Valuation, a division of TS Worldwide, LLC, as experts in the preparation of hotel feasibility and market analyses.

PFM Financial Advisors, LLC has served as the Financial Advisor to the City with respect to the issuance of the Series 2017 Bonds. The Financial Advisor, in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Series 2017 Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the City and,

as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information.

MISCELLANEOUS

The appendices are integral parts of this Official Statement and must be read together with all other parts of this Official Statement.

Any statements made in this Official Statement involving matters of opinion or estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representation is made that any such estimates will be realized. This Official Statement shall not be construed as a contract between the City and any person.

MAYOR AND CITY COUNCIL OF BALTIMORE

By: Catherine E. Pugh, Mayor

By: By: Henry T. Raymond Jennell A. Rogers Director of Finance Chief, Bureau of Treasury Management, Department of Finance

APPENDIX A

CERTAIN INFORMATION REGARDING THE CITY

Profile of the Government

The Mayor and City Council of Baltimore (the “City”) is a body corporate and politic of the State of Maryland (the “State”) in which all local governmental functions are performed by the City. The City has had a charter form of government since 1797, home rule powers since 1918, and is governed by an elected Mayor, Comptroller and a City Council. The City has a total area of approximately 92 square miles and the United States Census Bureau estimates its 2015 population to be 621,849. The City is a major deep-water seaport located on the Patapsco River, a tributary of the Chesapeake Bay. It is served by Thurgood Marshall/Baltimore- Washington International Airport in adjacent Anne Arundel County. The City is almost completely surrounded by Baltimore County, a separate entity, which borders the City on the east, north, west and part of the south. Anne Arundel County also adjoins the City on its southern border.

The City provides the full range of municipal services contemplated by statute or charter, which are provided or paid for by the City form local, State or Federal sources. These services include public safety (police and fire protections), water and waste water utilities, highways and streets, sanitation, health and human services, culture and recreation, education (elementary through high school, provided by a component unit, the Baltimore City Public School System), public improvements, planning and zoning, parking facilities, mortgage loan programs, industrial development, and general and administrative services. The City is also responsible for adoption and maintenance of building codes and regulation of licenses and permits, collection on certain taxes and revenues, maintenance of public records and the conduct of elections. There are no overlapping local governmental entities or taxing jurisdictions. Accordingly, there is no overlapping debt of the City.

Under the Charter, the City’s executive functions are vested in the Mayor, the Board of Estimates and an independent Comptroller. The City’s legislative functions are vested in the City Council. The Mayor is the chief executive officer of the City. The Mayor is elected for a term of four years (or for the current term, three years) and is eligible to succeed himself without limitation as to the number of terms. If the Mayor is disable or absent from the City, the President of the City Council acts as ex-officio Mayor. If the Mayor resigns, is permanently disqualified or dies in offices, the President of the City Council becomes Mayor for the remainder of the term. The Mayor has authority to veto ordinances, has power of appointment for most department heads and municipal officers, services on the Board of Estimates and appoints two of the other four members of the Board of Estimates.

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formulates and determines city fiscal policy with its primary policy tool being the recommended annual Ordinance of Estimates, the City’s Budget.

The Board of Finance is an administrative body of the City, which advises the Department of Finance and approves certain financial matters of the City. These matters include the review and approval of the issuance and delivery of the City’s revenue bonds.

Key Budgetary Policies

Balanced Budget: The Charter requires the operating budget to be balanced. Any difference between non-property tax revenues and total expenditures are to be made up by adjusting the property tax rate or enactment of new revenue measures.

Public Hearings: The Charter mandates that both the Board of Estimates and the City Council conduct public hearings on the proposed budget.

Timely Adoption: The Charter sets forth a schedule requiring the budget to be adopted before the beginning of the Fiscal Year, July 1.

Budget Amendment: The Charter provides means for adopting supplemental appropriations funded from unanticipated revenues and/or new grants and sources that materialize during the year. The City’s policy is to minimize the use of supplemental appropriations. In addition, the Charter allows for and spells out the procedures for amending the budget to transfer appropriations between programs within an agency and between agencies.

Six-Year Capital Plan: Guiding the physical development budget plan of the City is the Charter requirement for a six-year capital improvement plan, the first year comprising the capital budget year. The plan is prepared in conformance with basic capital budgeting policies, which include appropriating funds in the year in which projects are likely to begin, financing a portion of capital improvements from current revenues, and estimating the impact of capital projects on the operating budget.

Budget Monitoring and Execution: Budget analysts maintain ongoing contact with agency fiscal officers in the process of implementation and execution of the budget. Expenditure and revenue projections are developed and reviewed on a monthly basis. The Mayor, through the Department of Finance, exercises appropriate fiscal management to adjust budget policy, as necessary, to be within the limits of the current adopted plan. The City Council has the practice of reviewing budget performance at mid-year and during the fourth quarter.

Debt Policy: The City adopted a formal debt policy which set annual borrowing limits, consolidated all financing arrangements within the Department of Finance, established refunding and refinancing policies, and set limits on key debt management ratios. The objective is to maintain the City’s reputation as a locality having a conservative approach to all aspects of debt management, including debt service expenses, debt retirement schedules, and debt capacity ratios. See “Debt of the City -- Debt Policy of the City” herein.

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Budget Stabilization Reserve Policy: In November 2008, the City’s Board of Estimates approved a budget stabilization reserve policy that establishes the basis for having a budget stabilization reserve as well as identifying its maintenance level, scope of coverage, circumstances under which funds shall be drawn down from the reserve, and the requirements to replenish the reserve when utilized. The policy stipulates that the reserve serves to provide a budget defense to stabilize a post-adopted budget that has been impacted by an uncorrectable shortfall in revenues and/or an unanticipated and uncorrectable emergency expense. The reserve is the revenue source of last resort to avoid a budget deficit. Under no circumstances is the reserve to be used as a revenue source to balance a planning year budget. The policy further stipulates that the reserve shall be maintained on any June 30 at a minimum level of 8% of the value of the general fund operating budget of the subsequent Fiscal Year.

“Ten-Year Plan” Initiative

On February 20, 2013, the Mayor released Change to Grow: A Ten-Year Financial Plan for Baltimore. The Ten-Year Plan, a first of its kind for the City, calls for comprehensive reforms to close a projected $745.0 million structural budget deficit, make Baltimore’s taxes more competitive, increase infrastructure investment, and reduce the City’s long-term pension and health care liabilities.

Implementation of the Ten-Year Plan began in Fiscal Year 2013 with two key initiatives: The 20 Cents by 2020 program to reduce the effective property tax rate for owner-occupied properties, and health benefit changes for employees and retirees that will save the City $20.0 million a year.

In fiscal year 2014, the City implemented initiatives to further reduce the fiscal gap, including: pension changes for current and future employees; a new schedule for firefighters; a revenue enhancement package, a State-mandated stormwater fee, reduction to the real property tax rate and the discontinuation of retiree pharmacy benefits. The City projected to save $395 million through fiscal year 2022 as a result of these initiatives.

The fiscal year 2015 budget reflected the implementation of more Ten-Year Plan initiatives, including reducing workers’ compensation payments, increasing parking revenues, reducing the size of the City’s workforce and the City’s fleet. In addition to targeted savings initiatives, a number of initiatives planned in the Fiscal year budget are investments, including increasing the contribution to the budget stabilization reserve, increasing PAYGO capital funding, increasing general obligation bond authority, and implementing a new pay schedule for professional employees to help with recruitment and retention.

The fiscal year 2016 budget included further initiatives that seek to improve the efficiency of government, lower the property tax rate for homeowners, make much-needed infrastructure investments, and reduce the City’s long-term liabilities. Key initiatives included an additional $9 million PAYGO capital contribution beyond the $8 million baseline and the elimination of 280 General Fund positions. In fiscal 2016, the City also negotiated a new Memorandum of Understanding (MOU) with 14 non-profit institutions who will contribute a collective $6 million annually for ten years beginning in fiscal year 2017. In order to continue to address the remaining shortfall, the City will explore other innovative solutions including

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pursuing public-private partnerships, managed competition, City office consolidation, better risk management, and changes to sick and compensatory leave accruals.

OTHER FINANCIAL INFORMATION

Retirement Plans

Professional employees the Enoch Pratt Free Library, an agency of the City, are members of the State of Maryland Retirement System to which the City is not required to contribute. The City contributes to fours retirement plans established for all other City employees and elected officials.

City laws require that contribution to its three funded pension system be based on actuarial valuations. City contributions to the Unfunded Fire and Police Plan (for eligible employees hired prior to January 1, 1947, all whom are now retired) are not actuarially determined and these benefits are paid from annual appropriations.

Temporary Investment of Cash Balances

The City, through the Office of the Director of Finance, pursues an aggressive cash management and investment program to achieve maximum financial return on available funds. Depending on cash needs, excess funds are invested on a short, intermediate or long-term basis at the best obtainable rates. Investments are limited generally to direct or indirect obligations of the U.S. government and fully collateralized repurchase agreement. The City utilizes the practice of recording investment income in the period in which it is earned.

Risk Management

The City is self-insured in the area of casualty and property losses, including the uninsured portion of losses to City buildings and contents, vehicles, watercraft, boilers, machinery, workers’ compensation and employers’ liability, employees’ health insurance, third party general liability and automobile liability losses. The Office of Risk Management, within the Department of Finance, administers the fund.

Internal Control

City management is responsible for establishing and maintaining effective internal control over financial reporting. The City has established a comprehensive framework of internal control to provide a reasonable basis for asserting that the financial statements are fairly presented. Because the cost of a control should not exceed the benefits to be derived, the City’s objective is to provide reasonable, rather than absolute assurance, that the financial statements are free of any material misstatements.

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ECONOMIC PROFILE AND OUTLOOK

Baltimore is the historic, business, education and cultural center of Maryland. The City benefits from being in one of the wealthiest states in the nation and is the northern anchor of the Washington-Baltimore-Northern Virginia Combined Statistical Area – one of the largest, wealthiest and best educated population centers in the country. The City’s economy has traditionally benefited from its locations, as it is accessible to a large and diversified workforce. With an excellent highway and rail transportation system, the City is able to access both min- western and north-eastern markets in support of its international port activity. About 364,200 or 26.9%, or the 1.15 million jobs in the metropolitan area are located in the City.

The City has become less dependent on traditional manufacturing. Manufacturing jobs comprise only 2.8% of the City’s total jobs, which represents a lower percentage than the region and the State. However, health care and education related services continue to be the leading employment industry, representing 31.7% of the 2016 jobs located in the City; a proportion that is considerably higher than the regional and U.S. totals of 19.2% and 15.9%, respectively. The prominence of health care and knowledge-related industries is reflected in the City’s major employers. Among the ten largest non-governmental employers, nine are health care and education-related entities and one is a utility service provider. The City derives economic strength from the number of jobs in the growing health care sector, and in the knowledge- information-based education and information services sectors.

The population trend is often considered the single most important economic factor in the City due to the fact that Baltimore’s population peaked at 949,708 in 1950, and has declined to 621,849 in 2015. This 65-year trend reflects an average monthly drop of 420 persons with some decades experiencing faster drops than others. The 1970’s saw the greatest declines. During this period, population loss approached 12,000 per year, or 1,000 per month; however, the loss rate has declined in recent years, experiencing an average monthly drop of 151 people since 2000. Additionally, according to the latest U.S. Census Bureau’s population estimate, the City gained 888 new residents from 2010 to 2015, for an average net gain of 15 people per month since then.

Economic Outlook

The threat of a recession was one of the major concerns for the Fiscal 2016 and 2017 budgets; however, even with the moderation in the national economy the City remained stable in general terms. In Fiscal 2016 the City housing market experienced material growth and the labor market improved its steady growth trend. These improvements were reflected in the Fiscal 2016 revenues.

After two years of continue decline in the average value of homes sold, figures reported by the Metropolitan Regional Information (MRIS) indicated that the City experienced a 3.4% increase from $153,011 in Fiscal 2015 to $158,204 in Fiscal 2016. Additionally, there were a total of 7,874 residential houses sold in the City during Fiscal 2016, representing 195 or 0.6% more than in Fiscal 2015. For the last two fiscal years it has taken in average 82 days for residential properties to be sold. This average is 12 fewer days than average of fiscals 2013 and 2014, and 38 lower than the average days on market experienced between Fiscal 2008 and Fiscal 2012.

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The City’s employment market also improved. The total number of City residents in the labor market increased by 992 or 0.3% to 296,474 in 2016 from the 2015 average of 295,482, while the average number working City residents increased by 4,682 or 1.7% to reach the historically high level of 277,438 in 2016. The remarkable increase in our labor force and the absorption of these workers by the job market were the reason for the reduction of the City’s average unemployment rate to 6.4% during 2016, the lowest rate since 2007.

The City, and the nation, are currently enjoying one of the longest periods of economic expansion, but the risk of a recession is still vivid; therefore, short and mid-term budgetary decisions need to be carefully considered to minimize the risk of unanticipated long-term impacts.

FINANCIAL ACCOMPLISHMENTS

Over the past five years, the City has closed more than $400.0 million in cumulative budget shortfalls by prioritizing spending, gaining efficiency, reducing legacy costs, and diversifying revenues. Remarkably, Baltimore today has a larger fund balance and lower property tax rate then before the Great Recession, and its combined pension and OPEB unfunded liabilities shrank from $3.2 billion in fiscal year 2011 to $2.4 billion in fiscal year 2015. A series of reforms over the past three years has helped to reduce the City’s unfunded OPEB liability from $2.1 billion to $791 million, as of fiscal year 2015.

HIGHLIGHTS OF THE FISCAL YEAR 2016 ADOPTED BUDGET

The Adopted Budget for Fiscal 2016 continues the transition to more proactive city services. Among the highlights:

• A smarter police patrol schedule matches deployments to crime activity and reduces overtime costs. • A new approach to EMS adds basic life support units during peak periods, speeding response times and reducing costs at the same time. • New technology will increase the productivity of Healthy Homes case workers by 25%, meaning that more families will get help reducing asthma triggers. • Proactive street tree pruning will improve the city’s “green infrastructure” and head off emergency service calls and property damage due to falling limbs. • Rat Rub-Out will transition from reactive to proactive, with alleys inspected every 20 days. • New capital spending, including $21.8 million in General Fund capital, $15 million in transportation bond funding, and $65 million in General Obligation Bond funding – highest level in the city’s history – continues the city’s reversal of years of deferred investment.

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CERTAIN STATISTICAL INFORMATION

Property Tax Levies and Collections 2006-2015

(Dollars Expressed in Thousands)

Percent of Collected within Percent Collections in Total Tax Total Tax Total Tax Fiscal Year Tax Rate* the Fiscal Year of Levy Subsequent Levy Collections Collections of the Levy Collected Years to Tax Levy 2006 2.308 565,648 544,463 96.3% 8,193 552,656 97.7% 2007 2.288 599,534 577,759 96.4 6,819 584,578 97.5 2008 2.268 655,080 605,961 92.5 10,648 616,609 94.1 2009 2.268 728,359 671,869 92.2 16,238 688,107 94.5 2010 2.268 751,510 723,533 96.3 17,020 740,553 98.5 2011 2.268 777,332 750,144 96.5 26,879 777,023 99.9 2012 2.268 761,237 743,352 97.7 10,881 754,233 99.1 2013 2.268 763,106 732,467 96.0 10,910 743,377 97.4 2014 2.248 767,619 741,449 96.6 10,734 752,183 98.0 2015 2.248 779,567 752,939 96.6 752,939 96.6

Source: City of Baltimore * Tax rate per each hundred dollars of assessed value.

Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years

(Dollars Expressed in Thousands)

Real Property Personal Property Total Ratio of Total Assessed Value Estimated Estimated Estimated to Total Total Fiscal Assessed Actual Assessed Actual Assessed Actual Estimated Direct Year Value Value Value Value Value Value Actual Value Tax Rate 2007 21,254,392 23,236,872 1,893,973 1,893,973 23,148,365 25,130,845 92.1 2.400 2008 23,943,402 27,398,671 1,965,726 1,965,726 25,909,128 29,364,397 88.2 2.380 2009 26,601,299 32,038,540 2,145,251 2,145,251 28,746,550 34,183,791 84.1 2.380 2010 28,511,521 35,600,999 1,805,889 1,805,889 30,317,410 37,406,888 81.0 2.380 2011 29,613,826 36,799,638 1,767,656 1,767,656 31,381,482 38,567,294 81.4 2.380 2012 28,762,325 35,431,581 1,878,997 1,878,997 30,641,322 37,310,578 82.1 2.380 2013 28,844,799 34,386,667 1,845,424 1,845,424 30,690,223 36,232,091 84.7 2.380 2014 29,209,703 33,938,341 1,966,795 1,966,795 31,176,498 35,905,136 86.8 2.360 2015 29,063,381 33,749,836 1,895,006 1,895,006 30,958,387 35,644,842 86.9 2.360 2016 31,577,756 35,782,497 2,011,722 2,011,722 33,589,478 37,794,219 88.9 2.360

Note: Assessed values are established by the Maryland State Department of Assessments and Taxation on July 1 of each year. Each real property’s assessment is reevaluated every three years. Tax rates are for each $100 of assessed value. The Baltimore City real property tax rate is $2.248 and the Maryland State real property tax rate is $0.112, for a total of $2.360.

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Property Taxes Rates 2006-2015

(Dollars Expressed in Thousands)

Fiscal City Tax State Tax Year Rate Rate (2) Total (3) 2006 $ 2.308 $ 0.132 $2.440 2007 2.288 0.112 2.400 2008 2.268 0.112 2.380 2009 2.268 0.112 2.380 2010 2.268 0.112 2.380 2011 2.268 0.112 2.380 2012 2.268 0.112 2.380 2013 2.268 0.112 2.380 2014 2.248 0.112 2.360 2015 2.248 0.112 2.360

Notes: (1) Tax rates are for each $100 of assessed valuation. (2) The State tax rate is shown for informational purposes only, since the City acts in the role of collector and does not report this portion of the property tax as revenue. (3) The City has no special assessments.

Source: Baltimore City Department of Finance

Ratios of General Bonded Debt Outstanding 2006-2015

Funds Net Percentage of General Available in General Actual Taxable Fiscal Obligation Debt Service Bonded Value Per Year Bonds Funds(b) Debt of Property Capita(a) 2006 $ 588,604 $ 26,082 $ 562,522 2.43% $ 884.73 2007 609,950 30,296 579,654 2.31 909.33 2008 646,533 82,579 563,954 1.92 885.44 2009 629,018 41,240 587,778 1.72 922.12 2010 631,993 41,319 590,674 1.58 950.84 2011 630,957 36,261 594,696 1.54 957.66 2012 570,148 36,796 533,352 1.69 856.90 2013 569,097 45,523 523,574 1.45 841.62 2014 528,082 49,947 478,135 1.33 767.73 2015 556,779 51,130 505,649 1.42 N/A

(a) Per capita calculations utilize calendar year figure provided by U.S. Department of Commerce, Census Bureau in thousands.

(b) Externally restricted for repayment of principal on debt. N/A Information not available.

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Demographic and Economic Statistics 2006-2015

Personal

Income(b) Per Capita

Calendar (thousands Personal Total Unemployment Year Population(a) of dollars) Income(c) Employment(d) Rate(d) 2006 640,961 $ 21,180,094 $ 33,044 257,382 6.2% 2007 640,150 22,250,152 34,758 261,355 5.6 2008 638,091 23,435,086 36,727 262,046 6.6 2009 637,418 23,919,308 37,525 251,950 10.7 2010 621,210 24,778,915 39,888 244,498 11.8 2011 620,987 26,209,592 42,206 246,114 10.8 2012 622,417 27,502,677 44,187 249,021 10.2 2013 622,104 27,405,666 44,053 250,660 9.6 2014 622,793 26,423,706 42,428 336,664 7.9 2015 N/A N/A N/A N/A N/A

Source:

(a) Maryland State Department of Planning (b) U.S. Bureau of Economic Analysis (c) Per capita personal income is calculated based on the personal income divided by the estimated population (d) Maryland Department of Labor, Licensing and Regulation N/A Information not available

Principal Employers 2015 and 2006

2015 2006

Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment

Government [1] State ...... 35,157 1 10.57% 39,247 1 11.24% Other Government authority (City, Schools, etc) . . . . . 24,294 2 7.30 27,543 2 7.89 Federal ...... 9,885 3 2.97 8,266 3 2.37 Subtotal Government ...... 69,336 20.84 75,056 21.51 Ten Largest Private Sector Employers [2] Johns Hopkins University...... 25,000 1 7.51 19,000 1 5.44 Johns Hopkins Hospital and Health System ...... 19,340 2 5.81 12,800 2 3.67 University of Maryland Medical System ...... 9,830 3 2.95 8,600 3 2.46 University System of Maryland ...... 9,111 4 2.74 MedStar Health ...... 6,176 5 1.86 5,400 4 1.55 LifeBridge Health ...... 5,316 6 1.60 5,100 5 1.46 Mercy Health Services ...... 4,028 7 1.21 2,500 8 0.72 St. Agnes HealthCare ...... 3,267 8 0.98 3,100 6 0.89 Exelon / Constellation Energy / BGE ...... 2,952 9 0.89 2,800 7 0.80 Kennedy Krieger Institute...... 2,417 10 0.73 2,100 9 0.60 Bon Secours Health System ...... 1,100 10 0.31 Subtotal Ten Largest Private Sector Employers . . . . 87,437 26.28 62,500 17.90 Total Government and Ten Largest Private Sector Employers 156,773 47.12% 137,556 39.41%

Sources: [1] For the government sector: Maryland Dept of Labor Licensing and Regulations, Employment data [2] For the private sector: Department of Business and Economic Development data figures as of November 2015; For 2006, City of Baltimore Comprehensive Annual Financial Report for Fiscal Year 2006

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Demographic and Miscellaneous Statistics For the Year Ended June 30, 2015

Form and Structure City incorporated in 1797 with Home Rule Charter since 1918 Executive and Legislative Officials: Mayor runs city-wide Comptroller runs city-wide City Council, President runs city-wide Other City Council Members by district Approve officials serve concurrent four year terms with no term limits. There are one council Member in each of the 14th of the districts.

Full time Equivalent Employee by Function 2006-2015

Year Ended June 30 Function/program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General government ...... 1,710 1,690 1,720 1,733 1,725 1,700 1,754 1,674 1,666 1,700 Public safety Police ...... 3,935 3,937 3,930 3,909 3,897 3,897 3,892 3,796 3,608 3,444 Fire ...... 1,743 1,743 1,796 1,800 1,795 1,795 1,789 1,732 1,699 1,699 Other...... 735 752 766 793 795 791 721 683 695 700 Conservation of health ...... 680 671 761 883 878 875 873 862 719 890 Public library ...... 417 418 437 430 432 430 399 399 394 391 Recreation and parks ...... 364 364 369 404 400 399 389 368 385 310 Highways and streets ...... 1,510 1,518 1,523 1,514 1,499 1,458 1,382 1,352 1,331 1,428 Public works Water ...... 926 900 901 893 878 875 850 893 857 717 Wastewater ...... 1,069 1,059 1,031 1,014 1,011 1,012 991 985 1,096 797 Solid waste ...... 868 863 899 876 875 856 889 853 705 802 Other...... 598 606 607 627 621 625 579 537 682 504 Public service ...... 64 68 68 68 68 67 62 70 260 65 Economic development ...... 518 541 518 598 564 563 554 560 461 559 15,137 15,130 15,326 15,542 15,438 15,343 15,124 14,764 14,558 14,006

Source: Baltimore City Bureau of Budget and Management Research

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Capital Assets Statistics by Functions

Fiscal Year Function/program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Police/Sheriff Buildings ...... 10 10 10 10 10 13 12 16 16 16 Marked patrol units ...... 525 466 473 471 487 479 373 403 463 576 Other vehicles ...... 616 654 639 645 633 616 602 448 311 309 Fire Stations Buildings ...... 39 39 39 39 39 39 41 61 62 62 Fire/EMS apparatus (tankers/ladders/medics 160 160 160 160 160 137 122 154 142 138 Other vehicles ...... 152 168 164 164 164 176 235 142 217 228 Recreation and Parks Buildings ...... 148 148 148 148 148 148 148 210 210 210 Acreage ...... 5,827 5,827 5,827 5,827 5,827 5,827 5,827 5,827 5,827 5,827 Vehicles ...... 127 129 125 119 123 120 119 120 121 120 Equipment ...... 304 309 295 286 296 183 157 157 158 151 Public Works (Transportation, Solid Waste, and General Services) Buildings ...... 30303030303082119119119 Vehicles ...... 990 971 980 968 952 984 967 942 1,017 987 Equipment ...... 496 509 515 503 515 595 545 552 538 537 Streets (miles) ...... 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 Water/Wastewater/Stormwater Treatment plants ...... 5555555555 Other buildings ...... 31 31 31 31 31 31 95 221 221 221 Vehicles ...... 611 625 615 608 599 632 608 631 641 636 Equipment ...... 411 412 420 418 429 495 487 489 482 481 Water mains (miles) ...... 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,669 Water treatment capacity (MGD) ...... 360 360 360 360 360 360 360 360 360 360 Sanitary sewers (miles) ...... 1,340 1,340 1,335 1,335 1,335 1,335 1,335 1,335 1,335 1,361 Storm sewers (miles) ...... 1,080 1,080 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,108 Wastewater treatment capacity (MGD). . . . 253 253 253 253 253 253 253 253 253 253 Libraries Buildings ...... 32 33 34 34 34 22 30 30 29 24 Vehicles ...... 17171716162018161717 Other-General Government Buildings ...... 1,353 1,353 1,353 1,353 1,353 4,250 4,250 132 132 * 132 *

Vehicles ...... 197 211 799 1,017 1,141 753 907 869 514 175 *The total number of buildings excludes residential properties under the ownership of the Mayor and City Council.

Source: Baltimore City Department of Finance

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[THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX B

MARKETSTUDY HiltonBaltimore

401WESTPRATTSTREET BALTIMORE,MARYLAND

SUBMITTEDTO:EXISTING PREPAREDBY: Mr.PeterJPhillippi HVSConsulting&Valuation PiperJaffray&Co. DivisionofTSWorldwide,LLC 2525EastCamelbackRoad,Suite925 1601ConcordPike,Suite74-76 Phoenix,Arizona,85016 Wilmington,Delaware,19803 +1(602)808-5427 +1(901)481-3058

May-2017

May12,2017

Mr.PeterJPhillippi PiperJaffray&Co.

2525EastCamelbackRoad,Suite925 HVSPHILADELPHIA Phoenix,Arizona,85016 1601ConcordPike,Suite74-76 Wilmington,Delaware,19803 +1(901)481-3058 Re: HiltonBaltimore +1(516)742-3059FAX Baltimore,Maryland www.hvs.com HVSReference:2017020048 DearMr.Phillippi: Pursuanttoyourrequest,weherewithsubmitourmarketstudyreportpertaining totheabove-captionedhotel.Wehaveinspectedtherealestateandanalyzedthe marketconditionsintheBaltimore,Marylandarea.Ourreporthasbeenprepared inaccordancewith,andissubjectto,therequirementstheUniformStandardsof ProfessionalAppraisalPractice(USPAP),asprovidedbytheAppraisalFoundation. Weherebycertifythatwehavenoundisclosedinterestintheproperty,andour employmentandcompensationarenotcontingentuponourfindings.Thisstudyis subjecttothecommentsmadethroughoutthisreportandtoallassumptionsand limitingconditionssetforthherein. Sincerely, TSWorldwide,LLC JerodS.Byrd,MAI,ManagingDirector,SeniorPartner [email protected],+1(901)481-3058 Superiorresultsthroughunrivaled hospitalityintelligence.Everywhere.

TableofContents

SECTION TITLE PAGE 1. SummaryofSalientDataandConclusions 4 2. NatureoftheAssignment 14 3. DescriptionoftheRealEstate 18 4. MarketAreaAnalysis 42 5. SupplyandDemandAnalysis 65 6. ProjectionofOccupancyandAverageRate 92 7. ForecastofIncomeandExpense 102 8. StatementofAssumptionsandLimitingConditions 130 9. Certification 133 Addenda Qualifications

1. SummaryofSalientDataandConclusions

Property: HiltonBaltimore Location: 401WestPrattStreet Baltimore,Maryland21201-1629 DateofInspection: January16,2017 DateofReport: January27,2017

LANDDESCRIPTION

Area: 5.20acres,or226,512squarefeet Zoning: B-5-CentralCommercialDistrict Assessor'sParcelNumber(s): 22-030-0678-001 FEMAFloodZone: X

IMPROVEMENTSDESCRIPTION

YearOpened: 2008 PropertyType: Full-service,conventionheadquarterslodgingfacility BuildingArea: 431,238squarefeet Guestrooms: 757 NumberofStories: 20 FoodandBeverageFacilities: Arestaurant,alounge,acoffeeshop MeetingSpace: 56,554squarefeet AdditionalFacilities: Anindoorpool,afitnesscenter,alobbyworkstation,agift shop,aUPSStore,acar-rentalservice,andvendingareas ParkingSpaces: 550(garage)

May-2017 SummaryofSalientDataandConclusions 4 HiltonBaltimore–Baltimore,Maryland

MARKETPERFORMANCE

RevPAR generally increased from 2010 through 2014, with the exception of a slight dip in 2012 as a weak conventionschedulecausedhotelierstosacrificerateinordertomaintainastrongoccupancy.Themarket's performancein2015wasadverselyaffectedbythecivilunrestandriotsthatoccurredfollowingthedeathof Freddie Gray, which received widespread media coverage. Following the city's settling and movement away fromthenationalmedia'sattention,RevPARreboundedin2016tolevelspriortothecivilunrest.Thefollowing tablessummarizemarket-widesupply,demand,occupancy,averagerate,andRevPARtrendsforthismarket.

May-2017 SummaryofSalientDataandConclusions 5 HiltonBaltimore–Baltimore,Maryland

FIGURE1-1 HISTORICALSUPPLYANDDEMANDTRENDS(STR)

AverageDaily AvailableRoom OccupiedRoom Average Year RoomCount Nights Change Nights Change Occupancy Rate Change RevPAR Change 2009 4,188 1,528,620 — 883,787 — 57.8 % $159.77 — $92.37 — 2010 4,188 1,528,620 0.0 % 965,831 9.3 % 63.2 159.71 (0.0) % 100.91 9.2 % 2011 4,188 1,528,530 (0.0) 975,863 1.0 63.8 158.68 (0.6) 101.31 0.4 2012 4,136 1,509,739 (1.2) 968,908 (0.7) 64.2 156.39 (1.4) 100.37 (0.9) 2013 3,889 1,419,485 (6.0) 969,857 0.1 68.3 161.60 3.3 110.41 10.0 2014 3,801 1,387,365 (2.3) 965,593 (0.4) 69.6 163.34 1.1 113.68 3.0 2015 3,802 1,387,549 0.0 935,725 (3.1) 67.4 160.93 (1.5) 108.53 (4.5) 2016 3,802 1,387,730 0.0 956,240 2.2 68.9 165.36 2.8 113.94 5.0 AverageAnnualCompoundedChange: 2011-2016 (1.9) (0.4) 0.8 2.4 Competitive Number Year Year HotelsIncludedinSample Status ofRooms Affiliated Opened RadissonHotelBaltimoreDowntownInnerHarbor Secondary 323 May2016 Jun1967 HyattRegencyBaltimore Primary 488 Oct1981 Oct1981 MarriottBaltimoreInnerHarbor@CamdenYards Primary 524 Feb1985 Feb1985 SheratonHotelInnerHarbor Primary 338 Jul1985 Jul1985 RenaissanceBaltimoreHarborplaceHotel Secondary 622 Jun1995 Mar1988 MarriottBaltimoreWaterfront Secondary 750 Feb2001 Feb2001 HiltonBaltimore SubjectProperty 757 Aug2008 Aug2008 Total 3,802

Source:STR

May-2017 SummaryofSalientDataandConclusions 6 HiltonBaltimore–Baltimore,Maryland

FIGURE1-2 PRIMARYCOMPETITORS–OPERATINGPERFORMANCE

Est.Segmentation Estimated2015 Estimated2016

Weighted We ighted Annual Annual Numberof Room Room Occupancy Property Rooms Count Occ. AverageRate RevPAR Count Occ. AverageRate RevPAR P enet ration Y ie ldPene tration Commercial Leisure MeetingandGroup

HiltonBaltimore 757 18 % 20 % 62 % 757 66.2 % $169.15 $111.92 757 68.0 % $170.93 $116.24 98.8 % 103.0 %

MarriottInnerHarbor 524 25 20 55 524 65-70 130-140 90-95 524 70-75 130-140 95-100 100-110 80-85

SheratonInnerHarborHotel 338 30 25 45 338 55-60 150-160 90-95 338 60-65 150-160 95-100 85-90 80-85

HyattRegencyBaltimore 488 25 20 55 488 65-70 160-170 110-115 488 70-75 160-170 115-120 100-110 100-110

Sub-Totals/Averages 2,107 23 % 21 % 56 % 2,107 67.0 % $154.89 $103.80 2,107 68.5 % $158.79 $108.74 99.5 % 96.3 %

SecondaryCompetitors 1,695 34 % 30 % 36 % 985 68.4 % $170.19 $116.37 985 69.5 % $174.99 $121.69 101.1 % 107.8 %

Totals/Averages 3,802 27 % 24 % 49 % 3,092 67.5 % $159.83 $107.80 3,092 68.8 % $164.01 $112.87 100.0 % 100.0 %

*Specificoccupancyandaverageratedatawasutilizedinouranalysis,butispresentedinrangesintheabovetableforthepurposesofconfidentiality.

May-2017 SummaryofSalientDataandConclusions 7 HiltonBaltimore–Baltimore,Maryland FIGURE1-3 SECONDARYCOMPETITOR(S)–OPERATINGPERFORMANCE

Est.Segmentation Estimated2015 Estimated2016

Weighted Total We ighted Annual Numberof Competitive Annual Room Property Rooms Level RoomCount Occ. AverageRate RevPAR Count Occ. AverageRate RevPAR Commercial Leisure MeetingandGroup

MarriottWaterfrontHotel 750 35 % 30 % 35 % 60 % 450 70-75 % $190-$200 $130-$140 450 70-75 % $190-$200 $140-$150

RenaissanceBaltimoreHarborplace 622 35 25 40 60 373 70-75 160-170 115-120 373 70-75 160-170 120-125

RadissonHotelBaltimoreDowntown- 323 30 45 25 50 162 50-55 100-105 55-60 162 55-60 105-110 60-65 InnerHarbor

Totals/Averages 1,695 34 % 30 % 36 % 58 % 985 68.4 % $170.19 $116.37 985 69.5 % $174.99 $121.69 *Specificoccupancyandaverageratedatawasutilizedinouranalysis,butispresentedinrangesintheabovetableforthepurposesofconfidentiality.

May-2017 SummaryofSalientDataandConclusions 8 HiltonBaltimore–Baltimore,Maryland

Asillustratedintheprevioustable,themarketcomprisesavarietyofhotelswithwhichthesubjectpropertyis expectedtocompete.Ourforecastofincomeandexpenseisbasedonthesecurrentperformancelevels,aswell as market changes expected to occur. These changes are discussed in depth in the market area and hotel demandtrendschaptersofthisreport.

ForecastResults

Ourforecastofincomeandexpenseispresentedinthefollowingtables.Theprojectionincludeapartialyearof JunethroughDecemberfor2017,aswellasafull10-yearprojectionfromforthefiscalyears.

May-2017 SummaryofSalientDataandConclusions 9 HiltonBaltimore–Baltimore,Maryland

FIGURE1-4 SUBJECTPROPERTY–JUNETHROUGHDECEMBER2017

2017(June-Dec)

NumberofRooms: 757 OccupiedRooms: 113,399 Occupancy: 70% AverageRate: $173.98 %of RevPAR: $121.79 Gross OPERATINGREVENUE Rooms $19,729 56.4 Food&Beverage 12,724 36.4 OtherOperatedDepartments 34 0.1 ParkingRevenue 1,973 5.6 RetailSpaceIncome 145 0.4 MiscellaneousIncome 397 1.1 TotalOperatingRevenue 35,003 100.0 DEPARTMENTALEXPENSES* Rooms 5,200 26.4 Food&Beverage 7,363 57.9 OtherOperatedDepartments 58 167.5 ParkingExpenses 792 40.1 Total 13,413 38.3 DEPARTMENTALINCOME 21,590 61.7 UNDISTRIBUTEDOPERATINGEXPENSES Administrative&General 2,375 6.8 Info.andTelecom.Systems 409 1.2 Marketing 2,760 7.9 Prop.Operations&Maint. 1,038 3.0 Utilities 2,012 5.7 Total 8,594 24.6 GROSSHOUSEPROFIT 12,996 37.1 ManagementFee 1,050 3.0 INCOMEBEFORENON-OPER.INC.&EXP. 11,946 34.1 NON-OPERATINGINCOMEANDEXPENSE PropertyTaxes 4,277 12.2 Insurance 228 0.7 EquipmentLease 10 0.0 ReserveforReplacement 1,400 4.0 Total 5,915 16.9 EBITDALESSRESERVES $6,031 17.2 1 NetOperatingIncome** $8,982 *Departmentalexpensesareexpressedasapercentageofdepartmentalrevenues.

May-2017 SummaryofSalientDataandConclusions 10 HiltonBaltimore–Baltimore,Maryland

FIGURE1-5 DETAILEDFORECASTOFINCOMEANDEXPENSE

HistoricalOperatingResults 2016 CalendarYear 2017/18 2018/19 Stabilized NumberofRooms: 757 757 757 757 Occupancy(PaidRooms): 68% 69% 70% 72% AverageRate: $170.93 $175.58 $180.04 $185.44 RevPAR: $116.24 $121.15 $126.03 $133.52 DaysOpen: 365 365 365 365 OccupiedRooms(Paid): 187,891 %Gross PAR POR 190,650 %Gross PAR POR 193,414 %Gross PAR POR 198,940 %Gross PAR POR OPERATINGREVENUE Rooms $32,117 56.9 % $42,426 $170.93 $33,474 56.5 % $44,219 $175.58 $34,823 56.5 % $46,001 $180.04 $36,892 56.7 % $48,734 $185.44 Food&Beverage 20,418 36.2 26,972 108.67 21,521 36.3 28,430 112.88 22,409 36.4 29,602 115.86 23,579 36.3 31,148 118.53 OtherOperatedDepartments 57 0.1 75 0.30 58 0.1 77 0.31 60 0.1 79 0.31 62 0.1 83 0.31 ParkingRevenue 3,204 5.7 4,232 17.05 3,349 5.7 4,424 17.56 3,474 5.6 4,590 17.96 3,630 5.6 4,796 18.25 RetailSpaceIncome 0 0.0 0 0.00 145 0.2 192 0.76 150 0.2 198 0.77 155 0.2 204 0.78 MiscellaneousIncome 658 1.2 870 3.50 676 1.1 893 3.54 696 1.1 919 3.60 723 1.1 955 3.63 TotalOperatingRevenues 56,454 100.0 74,575 300.46 59,224 100.0 78,235 310.64 61,612 100.0 81,390 318.55 65,042 100.0 85,921 326.94 DEPARTMENTALEXPENSES* Rooms 8,595 26.8 11,354 45.74 8,837 26.4 11,673 46.35 9,110 26.2 12,035 47.10 9,493 25.7 12,540 47.72 Food&Beverage 12,191 59.7 16,104 64.88 12,522 58.2 16,542 65.68 12,899 57.6 17,039 66.69 13,416 56.9 17,723 67.44 OtherOperatedDepartments 96 168.5 127 0.51 98 168.0 130 0.51 101 167.5 133 0.52 104 166.5 137 0.52 ParkingExpenses 1,299 40.5 1,716 6.91 1,351 40.3 1,784 7.08 1,394 40.1 1,842 7.21 1,442 39.7 1,906 7.25 Total 22,181 39.3 29,301 118.05 22,808 38.5 30,129 119.63 23,504 38.1 31,049 121.52 24,456 37.6 32,306 122.93 DE PARTMENT ALINCO ME 34,273 60.7 45,274 182.41 36,416 61.5 48,105 191.01 38,108 61.9 50,340 197.03 40,586 62.4 53,614 204.01 UNDISTRIBUTEDOPERATINGEXPENSES Administrative&General 3,946 7.0 5,213 21.00 4,049 6.8 5,348 21.24 4,163 6.8 5,500 21.53 4,316 6.6 5,701 21.69 Info.andTelecom.Systems 680 1.2 898 3.62 698 1.2 922 3.66 717 1.2 948 3.71 744 1.1 982 3.74 Marketing 4,585 8.1 6,057 24.40 4,705 7.9 6,215 24.68 4,838 7.9 6,391 25.01 5,015 7.7 6,625 25.21 Prop.Operations&Maint. 1,708 3.0 2,256 9.09 1,770 3.0 2,339 9.29 1,829 3.0 2,417 9.46 1,896 2.9 2,505 9.53 Utilities 3,342 5.9 4,415 17.79 3,429 5.8 4,530 17.99 3,526 5.7 4,658 18.23 3,655 5.6 4,829 18.37 Total 14,261 25.3 18,839 75.90 14,650 24.7 19,353 76.84 15,075 24.6 19,914 77.94 15,626 23.9 20,642 78.55 GROSSHOUSEPROFIT 20,011 35.4 26,435 106.50 21,765 36.8 28,752 114.16 23,033 37.3 30,427 119.09 24,960 38.5 32,973 125.47 ManagementFee 2,010 3.6 2,655 10.70 1,777 3.0 2,347 9.32 1,848 3.0 2,442 9.56 1,951 3.0 2,578 9.81 INCOMEBEFORENON-OPER.INC.&EXP. 18,002 31.9 23,780 95.81 19,989 33.8 26,405 104.84 21,185 34.3 27,985 109.53 23,009 35.5 30,395 115.66 NON-OPERATINGINCOMEANDEXPENSE PropertyTaxes 0 0.0 0 0.00 4,277 7.2 5,651 22.44 4,384 7.1 5,792 22.67 4,516 6.9 5,966 22.70 Insurance 21 0.0 28 0.11 389 0.7 514 2.04 399 0.6 527 2.06 411 0.6 542 2.06 EquipmentLease 17 0.0 22 0.09 17 0.0 23 0.09 18 0.0 23 0.09 18 0.0 24 0.09 ReserveforReplacement 0 0.0 0 0.00 2,369 4.0 3,129 12.43 2,464 4.0 3,256 12.74 2,602 4.0 3,437 13.08 Total 38 0.1 50 0.20 7,053 11.9 9,316 36.99 7,265 11.7 9,597 37.56 7,546 11.5 9,969 37.93 EBITDALESSRESERVE $17,964 31.8 % $23,730 $95.61 $12,936 21.9 % $17,089 $67.85 $13,920 22.6 % $18,388 $71.97 $15,463 24.0 % $20,426 $77.73

*Departmentalexpensesareexpressedasapercentageofdepartmentalrevenues. NOIadjustedtoreflecta 3.0%mgmtfeeanda4.0%reserve $16,022 28.4 %

May-2017 SummaryofSalientDataandConclusions 11 HiltonBaltimore–Baltimore,Maryland

FIGURE1-6 TEN-YEARFORECASTOFINCOMEANDEXPENSE

2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27

NumberofRooms: 757 757 757 757 757 757 757 757 757 757 OccupiedRooms: 190,650 193,414 198,940 198,940 198,940 198,940 198,940 198,940 198,940 198,940 Occupancy: 69% 70% 72% 72% 72% 72% 72% 72% 72% 72% AverageRate: $175.58 %of $180.04 %of $185.44 %of $191.01 %of $196.74 %of $202.64 %of $208.72 %of $214.98 %of $221.43 %of $228.07 %of RevPAR: $121.15 Gross $126.03 Gross $133.52 Gross $137.53 Gross $141.65 Gross $145.90 Gross $150.28 Gross $154.79 Gross $159.43 Gross $164.21 Gross OPERATINGREVENUE Rooms $33,474 56.5 % $34,823 56.5 % $36,892 56.7 % $37,999 56.7 % $39,139 56.7 % $40,313 56.7 % $41,523 56.7 % $42,768 56.7 % $44,051 56.7 % $45,373 56.7 Food&Beverage 21,521 36.3 22,409 36.4 23,579 36.3 24,287 36.3 25,015 36.3 25,766 36.3 26,539 36.3 27,335 36.3 28,155 36.3 29,000 36.3 OtherOperatedDepartments 58 0.1 60 0.1 62 0.1 64 0.1 66 0.1 68 0.1 70 0.1 72 0.1 75 0.1 77 0.1 ParkingRevenue 3,349 5.7 3,474 5.6 3,630 5.6 3,739 5.6 3,852 5.6 3,967 5.6 4,086 5.6 4,209 5.6 4,335 5.6 4,465 5.6 RetailSpaceIncome 145 0.2 150 0.2 155 0.2 160 0.2 165 0.2 170 0.2 176 0.2 181 0.2 187 0.2 193 0.2 Mis cellaneousIncome 676 1.1 696 1.1 723 1.1 744 1.1 767 1.1 790 1.1 814 1.1 838 1.1 863 1.1 889 1.1 TotalOperatingRevenue 59,224 100.0 61,612 100.0 65,042 100.0 66,994 100.0 69,004 100.0 71,074 100.0 73,207 100.0 75,403 100.0 77,666 100.0 79,997 100.0 DEPARTMENTALEXPENSES* Rooms 8,837 26.4 9,110 26.2 9,493 25.7 9,778 25.7 10,071 25.7 10,373 25.7 10,684 25.7 11,005 25.7 11,335 25.7 11,675 25.7 Food&Beverage 12,522 58.2 12,899 57.6 13,416 56.9 13,819 56.9 14,233 56.9 14,660 56.9 15,100 56.9 15,553 56.9 16,020 56.9 16,500 56.9 OtherOperatedDepartments 98 168.0 101 167.5 104 166.5 107 166.5 110 166.5 114 166.5 117 166.5 121 166.5 124 166.5 128 166.5 ParkingExpenses 1,351 40.3 1,394 40.1 1,442 39.7 1,486 39.7 1,530 39.7 1,576 39.7 1,624 39.7 1,672 39.7 1,722 39.7 1,774 39.7 Total 22,808 38.5 23,504 38.1 24,456 37.6 25,189 37.6 25,945 37.6 26,723 37.6 27,525 37.6 28,351 37.6 29,201 37.6 30,077 37.6 DE PARTMENT AL INCO ME 36,416 61.5 38,108 61.9 40,586 62.4 41,804 62.4 43,059 62.4 44,351 62.4 45,682 62.4 47,052 62.4 48,464 62.4 49,919 62.4 UNDISTRIBUTEDOPERATINGEXPENSES Administrative&General 4,049 6.8 4,163 6.8 4,316 6.6 4,445 6.6 4,579 6.6 4,716 6.6 4,858 6.6 5,003 6.6 5,153 6.6 5,308 6.6 Info.andTelecom.Systems 698 1.2 717 1.2 744 1.1 766 1.1 789 1.1 813 1.1 837 1.1 862 1.1 888 1.1 915 1.1 Marketing 4,705 7.9 4,838 7.9 5,015 7.7 5,165 7.7 5,320 7.7 5,480 7.7 5,645 7.7 5,814 7.7 5,988 7.7 6,168 7.7 Prop.Operations&Maint. 1,770 3.0 1,829 3.0 1,896 2.9 1,953 2.9 2,012 2.9 2,072 2.9 2,134 2.9 2,199 2.9 2,265 2.9 2,332 2.9 Utilities 3,429 5.8 3,526 5.7 3,655 5.6 3,765 5.6 3,878 5.6 3,995 5.6 4,114 5.6 4,238 5.6 4,365 5.6 4,496 5.6 Total 14,650 24.7 15,075 24.6 15,626 23.9 16,095 23.9 16,578 23.9 17,076 23.9 17,588 23.9 18,116 23.9 18,660 23.9 19,220 23.9 GROSSHOUSEPROFIT 21,765 36.8 23,033 37.3 24,960 38.5 25,709 38.5 26,481 38.5 27,275 38.5 28,094 38.5 28,937 38.5 29,805 38.5 30,700 38.5 ManagementFee 1,777 3.0 1,848 3.0 1,951 3.0 2,010 3.0 2,070 3.0 2,132 3.0 2,196 3.0 2,262 3.0 2,330 3.0 2,400 3.0 INCOMEBEFORENON-OPER.INC.&EXP. 19,989 33.8 21,185 34.3 23,009 35.5 23,700 35.5 24,411 35.5 25,143 35.5 25,898 35.5 26,674 35.5 27,475 35.5 28,300 35.5 NON-OPERATINGINCOMEANDEXPENSE PropertyTaxes 4,277 7.2 4,384 7.1 4,516 6.9 4,651 6.9 4,791 6.9 4,935 6.9 5,083 6.9 5,235 6.9 5,392 6.9 5,554 6.9 Insurance 389 0.7 399 0.6 411 0.6 423 0.6 436 0.6 449 0.6 462 0.6 476 0.6 490 0.6 505 0.6 EquipmentLease 17 0.0 18 0.0 18 0.0 19 0.0 19 0.0 20 0.0 21 0.0 21 0.0 22 0.0 22 0.0 ReserveforReplacement 2,369 4.0 2,464 4.0 2,602 4.0 2,680 4.0 2,760 4.0 2,843 4.0 2,928 4.0 3,016 4.0 3,107 4.0 3,200 4.0 Total 7,053 11.9 7,265 11.7 7,546 11.5 7,773 11.5 8,006 11.5 8,246 11.5 8,494 11.5 8,748 11.5 9,011 11.5 9,281 11.5 EBITDALESSRESERVE $12,936 21.9 % $13,920 22.6 % $15,463 24.0 % $15,927 24.0 % $16,405 24.0 % $16,897 24.0 % $17,404 24.0 % $17,926 24.0 % $18,464 24.0 % $19,018 24.0 1 1 1 1 1 1 1 1 1 1 *Departmentalexpensesareexpressedasapercentageofdepartmentalrevenues.

May-2017 SummaryofSalientDataandConclusions 12 HiltonBaltimore–Baltimore,Maryland

Asillustrated,thehotelisexpectedtostabilizeataprofitablelevel.Ourpositioningofeachrevenueandexpense levelissupportedbycomparableoperationsortrendsspecifictothismarket.

May-2017 SummaryofSalientDataandConclusions 13 HiltonBaltimore–Baltimore,Maryland

2. NatureoftheAssignment

Subjectofthe Thesubjectofthestudyisthe 5.20-acre (226,512-square-foot)parcelimproved MarketStudy withafull-service,conventionheadquarterslodgingfacilityknownastheHilton Baltimore.Theproperty,whichopenedin2008,features757rooms,arestaurant, a lounge, a coffee shop, 56,554 square feet of meeting space, an indoor pool, a fitnesscenter,alobbyworkstation,agiftshop,aUPSStore,acar-rentalservice, andvendingareas.Thehotelalsocontainsallnecessaryback-of-the-housespace. The hotel's civic address is 401 West Pratt Street, Baltimore, Maryland, 21201- 1629.

PertinentDates Theeffective date of thereport is February 17, 2017. Thesubject property was inspectedbyDinakerP.MallyaonJanuary16,2017.Inadditiontotheinspection, DinakerP.Mallyaparticipatedintheresearchforthisassignmentandassistedin thereport’spreparation.

Ownership,Franchise, The subject property is currently owned by Baltimore Hotel Corporation; the andManagement parent company of this owning partnership is the Baltimore Development Historyand Corporation,whichisbasedinBaltimore,Maryland.TheBaltimoreDevelopment Assumptions Corporation is the development agency for the City of Baltimore. The subject property was built in 2008 at a total cost of approximately $301 million, not includingtheland.Notransfersofthepropertyhavereportedlyoccurredsinceits construction.Thehotelisneitherlistednorundercontractforsale;furthermore, wehavenoknowledgeofanyrecentlistings.

The hotel is managed by Hilton Management LLC. The agreement can be terminated upon a sale of the hotel. Terms of this agreement call for a base managementfee,aswellasanadditionalsubordinateandsupersubordinatefee. Accordingtotheprovidedhoteloperatingagreement,thethreeseparatefeesare escalated in the first three full years of operation, then increased yearly by the percentage difference of the preceding two years consumer price index. In conversationwiththeassetmanagerofthesubjectpropertyandinreviewofthe hoteloperatingagreement,thesubordinateandsupersubordinatefeesarepaidto the hotel manager only from available funds. If the subordinate and supersubordinatefeesareoutstandingtothehotelmanager,theaforementioned feesdonotaccrueanyinterestcharges.Wenotethatwewerenotprovideddetails pertaining to the bond mentioned in the hotel operating agreement. Our study assumesthatthesubjecthotelwillbemanagedbyaprofessionalhotel-operating company throughout the assumed holding period, with fees deducted at rates consistentwithcurrentmarketstandards.Wehaveassumedamarket-appropriate

May-2017 NatureoftheAssignment 14 HiltonBaltimore–Baltimore,Maryland

totalmanagementfeeof3.0%oftotalrevenuesinourstudy.Pleaserefertothe forecastofincomeandexpensechapterforadditionaldiscussionpertainingtoour managementfeeassumptions.

The hotel is expected to remain managed by the brand throughout the forecast period;therefore,thepropertywillnotbesubjecttofranchisefees.Thecostsof the Hilton affiliation are reflected in our forecast. Other charges related to the affiliation, such as the brand's loyalty program, are reflected in the appropriate departmental expenses, consistent with the Uniform System of Accounts for the LodgingIndustry(USALI).

Wehaveassumedthatthesubjectpropertywouldrequirerenovationsinorderto maintain its current brand affiliation and, as such, have considered a capital deductioninouranalysis.

Hilton Hotels & Resorts, commonly known as simply Hilton, is the signature/flagship brand of Hilton Worldwide (formerly Hilton Hotels Corporation), recognized internationally as a preeminent hospitality company. Withover90yearsofhistory,theHiltonbrandisoneofthelargesthotelbrandsin the world, with locations in major city centers, near airports and convention centers, and in popular vacation destinations. Hilton hotels cater to business, group,andleisuretravelers,withmostpropertiesfeaturingswimmingpoolsand whirlpools, fitness centers, business centers, restaurant facilities, and meeting space,amongotheramenities.Inaddition,guestsbenefitfromHilton'sworldwide reservations system and its highly acclaimed guest loyalty program, Hilton HHonors.Asofyear-end2015,therewere238hotels(99,807rooms)operating under the Hilton brand in the U.S. In 2015, the brand operated at an average occupancylevelof75.9%,withanaveragedailyrateof$165.44andanaverage RevPARof$125.57(worldwide).

ScopeofWork Themethodologyusedtodevelopthisstudyisbasedonthemarketresearchand valuationtechniquessetforthinthetextbooksauthoredbyHospitalityValuation ServicesfortheAmericanInstituteofRealEstateAppraisersandtheAppraisal Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and Restaurants:ValuationsandMarketStudies,2 TheComputerizedIncomeApproach to Hotel/Motel Market Studies and Valuations,3 HotelsandMotels:AGuideto 1StephenRushmore,TheValuationofHotelsandMotels.(Chicago:AmericanInstituteof RealEstateAppraisers,1978). 2 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago:AmericanInstituteofRealEstateAppraisers,1983). 3StephenRushmore,TheComputerizedIncomeApproachtoHotel/MotelMarketStudiesand Valuations.(Chicago:AmericanInstituteofRealEstateAppraisers,1990).

May-2017 NatureoftheAssignment 15 HiltonBaltimore–Baltimore,Maryland

Market Analysis, Investment Analysis, and Valuations,4andHotels and Motels – ValuationsandMarketStudies,5aswellasinaccordancewiththeUniformSystem ofAccountsfortheLodgingIndustry(USALI).

1. AllinformationwascollectedandanalyzedbythestaffofTSWorldwide, LLC.Informationsuchashistoricaloperatingstatements,franchiseand/or managementagreements,siteplans,floorplans,andleases,asapplicable, weresuppliedbytheclientorpropertymanagement. 2. The subject site was evaluated from the viewpoint of its utility for the developmentandoperationofahotel.Thepotentialexistenceofsurplusor excess land was investigated. We have reviewed adjacent uses, regional and local accessibility attributes, and visibility characteristics. Astudyof thelocalneighborhoodwasundertakentodetermineitsboundaries,land uses,recentdevelopments,andlife-cyclestage.Otheraspectsoftheland, such as soil and subsoil conditions, nuisances, hazards, easements, encroachments,zoning, and thecurrent flood zone of the property,have beenevaluated. 3. The subject property's improvements were inspected to evaluate their currentcondition,qualityofconstruction,anddesignandlayout,including any items of physical deterioration or functional obsolescence. A list of facilities and amenities that the property offers has been compiled, and past upgrades of each area of the hotel have been investigated. Recent capital expenditures, as well as planned future upgrades, have been reviewed.Theremainingeconomiclifeofthehotelhasbeenestimated. 4. Economic and demographic statistics for the subject property’s market have been reviewed to identify specific hostelry-related trends that may affect future demand for hotels. Workforce characteristics have been evaluated, including employment trends by sector and unemployment rates. Major businesses and industries operating in the local area were investigated,andlocalareaofficestatisticsandtrendswerereviewed,as available. Passenger levels and recent changes at the area’s pertinent airport have been researched, and visitor demand generators have been identifiedandevaluated. 5. AnSTRTrendReportpertainingtohistoricaltrendsinroom-nightsupply, demand,occupancy,averagerate,andRevPARforthesubjectpropertyand a group of selected competitors has been ordered and analyzed. 4StephenRushmore,HotelsandMotels:AGuidetoMarketAnalysis,InvestmentAnalysis, andValuations(Chicago:AppraisalInstitute,1992). 5 StephenRushmoreandErichBaum,HotelsandMotels–ValuationsandMarketStudies. (Chicago:AppraisalInstitute,2001).

May-2017 NatureoftheAssignment 16 HiltonBaltimore–Baltimore,Maryland

Performance levels for each of the competitive hotels have been researched and/or estimated. Ownership, management, facilities, renovations, and other pertinent factors for the competitive properties have been investigated. Potential new hotel supply was researched and quantified. Occupancy levels of the subject property and its existing competition provide a basis for quantifying current accommodated demandinthemarket.Themarketforhotelaccommodationsissegmented basedonthespecificcharacteristicsofthetypesoftravelersutilizingthe area'shotels.Bysegmentingthedemandaccommodatedbyeachhotel,the totaldemandbymarketsegmentisquantified.Thedemandgeneratedby eachmarketsegmentisthenprojectedbyyearupthroughapointof hypothetical market stabilization. Latent demand, if applicable, is estimatedandaddedtothebasedemandforecast,resultinginaforecastof overalloccupancyforthecompetitivemarket. 6. Basedonthephysical,economic,financial,andlegalfactorsinfluencingthe subject property, a conclusion regardingtheproperty’shighestandbest use,ascurrentlyimproved,wasdeveloped.Thehighestandbestuseofthe subjectland,asifvacant,wasalsoevaluatedbasedoncurrentrealestate trendsandmarketconditions. 7. Occupancy of the subject property was projected based on a forecast of overall market penetration, or penetration by market segment. Average rate was projected based on competitive positioning, through the application of an overall ADR penetration rate, or penetration by each marketsegment’saveragerate. 8. Historicalincomeandexpensestatementsforthesubjecthotelhavebeen reviewed, analyzed, and compared to the financial performance of comparablehotels.Inflationforecastswereresearched,formingthebasis forourownforecastofinflation.Aprojectionofincomeandexpensewas prepared in accordance with the USALI, setting forth the anticipated economicbenefitsofthesubjectproperty.Allprojectionsareexpressedin inflated dollars. Each line item has been reviewed individually. Amounts areforecastbasedonpastperformance,expectedchangesattheproperty inthefuture,andcomparablehotelperformancelevels.Propertytaxesare forecast based on a review of past assessment levels, comparable hotel assessments,andhistoricaltaxrates.

May-2017 NatureoftheAssignment 17 HiltonBaltimore–Baltimore,Maryland

3. RealEstateOverview

LAND Thesuitability of theland for the operation of alodging facility is an important consideration affecting the economic viability of a property and its ultimate marketability. Factors such as size, topography, access, visibility, and the availabilityofutilitieshaveadirectimpactonthedesirabilityofaparticularsite.

The subject property is located in Downtown Baltimore, to the southeast of the intersection formed by Paca Street and Pratt Street. The street address of the HiltonBaltimoreis401WestPrattStreet,Baltimore,Maryland,21201-1629.

PhysicalCharacteristics Thesubjectsitemeasuresapproximately5.20acres,or226,512squarefeet.The parcel'sadjacentusesaresetforthinthefollowingtable.

FIGURE3-1 SUBJECTPARCEL'SADJACENTUSES

Direction AdjacentUse

North PrattStreet East HowardStreet South CamdenStreet West PacaStreet

May-2017 RealEstateOverview 18 HiltonBaltimore–Baltimore,Maryland

PLATMAP

SiteUtility Thetopographyofeachparcelisgenerallyflat,andtheshapepermitsefficientuse ofthesiteforbuildingandsiteimprovements,includingingressandegress.The subject site does not contain any significant portion of undeveloped land that couldbesold,entitled,anddevelopedforalternateuse.Thesiteisfullydeveloped withbuildingandsiteimprovements.

May-2017 RealEstateOverview 19 HiltonBaltimore–Baltimore,Maryland

AERIALPHOTOGRAPH

VIEWFROMSITETOTHENORTH VIEWFROMSITETOTHESOUTH

May-2017 RealEstateOverview 20 HiltonBaltimore–Baltimore,Maryland

VIEWFROMSITETOTHEEAST VIEWFROMSITETOTHEWEST

AccessandVisibility Itisimportanttoanalyzethesitewithrespecttoregionalandlocaltransportation routesanddemandgenerators,includingeaseofaccess.Thesubjectsiteisreadily accessible to a variety of local and county roads, as well as state and interstate highways.

May-2017 RealEstateOverview 21 HiltonBaltimore–Baltimore,Maryland

MAPOFREGIONALACCESSROUTES

Primary regional access through the areaisprovidedbyInterstate95,which extendstosuchcitiesasPhiladelphia,Pennsylvania,totheeastandWashington, D.C. to the west. North/south Interstate 83 provides access to Harrisburg, Pennsylvania, to the north. Another major access route is the Baltimore- Washington Parkway, which extends southwest from Baltimore to Washington, D.C.Thesubjectproperty'smarketisservedbyavarietyofadditionallocalroutes, whichareillustratedonthemap.

Primary vehicular access to the subject property is provided by Pratt Street. AccessisalsoavailablefromPacaStreetandEutawStreet.Thesubjectpropertyis locatedatabusyintersectionandisrelativelysimpletolocatefromInterstate95, which is the nearest major highway. Overall, thesubject property benefits from verygoodaccessibilityandvisibilityattributes.

AirportandMetrorail The proposed subject hotel will be served by the Baltimore Washington Access International Thurgood Marshall Airport, which is located approximately seven milestothesouthwestofthesubjectsite.TheBaltimoreMetroSubway,knownas

May-2017 RealEstateOverview 22 HiltonBaltimore–Baltimore,Maryland

theBaltimoreMetro,isarapidtransitlinethatisoperatedbytheMarylandTransit Administration. The Baltimore Metro serves the greater area of Baltimore, featuring 14 stations that start in Owings Mills and end at the Johns Hopkins UniversityHospital.Onaverage,theBaltimoreMetroprovidestransportationfor approximately51,000peopleperday.

Neighborhood Theneighborhoodsurroundingalodgingfacilityoftenhasanimpactonahotel's status, image, class, style of operation, and sometimes its ability toattract and properlyserveaparticularmarketsegment.

Thesubjectproperty'sneighborhoodisgenerallydefinedbyU.S.Highway40to thenorth,Interstate83/SouthPresidentStreettotheeast,WestConwayStreetto the south, and Greene Street to the west. The neighborhood is characterized by restaurants, hotels, office buildings, and apartment buildings. Some specific businessesandentitiesintheareaincludetheInternalRevenueService,Pandora, AECOM, Wells Fargo, and Transamerica; nearby hotels include the Baltimore Marriott Hotel Inner Harbor, Holiday Inn, Sheraton Hotel, and Hyatt Regency. Restaurants located near the subject site include Luna Del Sea Steak & Seafood Bistro,ChipotleMexicanGrill,andPrattStreetAleHouse.

In general, this neighborhood is in the growth stage of its life cycle. Several buildings are planned for development or redevelopment within this neighborhood; the most notable project is 414 Light Street, which is a 44-story multipurposebuildingthathasbeenunderconstructionsinceMarch2016,withan expected completion in 2018. This building will become the tallest building in Baltimore.Othernotablechangesincludetheconstructionofa28-story,mixed-use buildingconsistingofofficespace,274residentialunits,parking,andground-level retailat1LightStreet.

May-2017 RealEstateOverview 23 HiltonBaltimore–Baltimore,Maryland

MAPOFNEIGHBORHOOD

Overall, the supportive nature of the development in the immediate area is consideredappropriateforandconducivetotheoperationofahotel.

ProximitytoLocal The subject property is located near the area's primary generators of lodging DemandGenerators demand.Asampleofthesedemandgeneratorsisreflectedonthefollowingmap, andAttractions including respective distances from and drive times to the subject property. Overall,thesubjectpropertyiswellsituatedwithrespecttodemandgenerators.

May-2017 RealEstateOverview 24 HiltonBaltimore–Baltimore,Maryland

ACCESSTODEMANDGENERATORSANDATTRACTIONS

May-2017 RealEstateOverview 25 HiltonBaltimore–Baltimore,Maryland

Utilities According to property ownership, the subject site is served by all necessary utilities.

Soiland Geological and soil reports were not provided to us or made available for our SubsoilConditions reviewduringthepreparationofthisreport.Wearenotqualifiedtoevaluatesoil conditions other than by a visual inspection of the surface; no extraordinary conditionswereapparent.

Nuisances Wewerenotinformedofanysite-specificnuisancesorhazards,andtherewereno andHazards visiblesignsoftoxicgroundcontaminantsatthetimeofourinspection.Because wearenotexpertsinthisfield,wedonotwarranttheabsenceofhazardouswaste andurgethereadertoobtainanindependentanalysisofthesefactors.

FloodZone AccordingtotheFederalEmergencyManagementAgencymapillustrated below, thesubjectsiteislocatedinX.

May-2017 RealEstateOverview 26 HiltonBaltimore–Baltimore,Maryland

COPYOFFLOODMAPANDCOVER

ThefloodzonedefinitionfortheXdesignationisasfollows:areasoutsidethe500- year flood plain; areas of the 500-year flood; areas of the 100-year flood with

May-2017 RealEstateOverview 27 HiltonBaltimore–Baltimore,Maryland

averagedepthsoflessthanonefootorwithdrainageareaslessthanonesquare mileandareasprotectedbyleveesfromthe100-yearflood.

Zoning Accordingtothelocalplanningoffice,thesubjectpropertyiszonedasfollows:B-5 - Central Commercial District. Additional details pertaining to the subject property’szoningregulationsaresummarizedinthefollowingtable.

ZONING

MunicipalityGoverningZoning CentralCommercialDistrict CurrentZoning CentralCommercialDistrict CurrentUse Full-ServiceHotel IsCurrentUsePermitted Yes IsChangeinZoningLikely NotApplicable RetailShopping,ServiceEstablishments,Convention PermittedUses Halls,HotelsandMotels HotelAllowed Yes LegallyNon-Conforming NotApplicable

Easementsand Wearenotawareofanyeasementsorencroachmentsencumberingtheproperty Encroachments thatwouldsignificantlyaffectitsutilityormarketability.

Conclusion We have analyzed the issues of size, topography, access, visibility, and the availabilityofutilities.Thesubjectparcelsarefavorablylocatedproximatetothe interstateandnearamajorinterchange.Ingeneral,thesiteiswellsuitedforhotel use,withacceptableaccess,visibility,andtopographyforaneffectiveoperation.

IMPROVEMENTS Thequalityofalodgingfacility'sphysicalimprovementshasadirectinfluenceon its marketability and attainable occupancy and average rate. The design and functionality of the structure can also affect operating efficiency and overall profitability.

The descriptions and pictures presented in this section reflect the hotel as observedatthetimeofourinspectiononJanuary16,2017.

PropertyOverview The Hilton Baltimore is an full-service, convention headquarters lodging facility containing757rentableunits.TheHiltonBaltimorewasoriginallydesignedand developedasa757-room,full-servicehotelwithuniqueproximityandattachment totheBaltimoreConventionCenter.Thishotel,whichwasdevelopedbytheCityof Baltimore, features two sky bridges over Eutaw Street and Howard Street that connect the two hotel buildings to the Baltimore Convention Center. During the lasteightyearsofoperation,theHiltonBaltimorehasbeensubjecttobothpublic andgovernmentscrutiny,asroughly$301millioninbondswasspenttoconstruct

May-2017 RealEstateOverview 28 HiltonBaltimore–Baltimore,Maryland

thehotel.Asthehotelopenedinthemidstofthemostrecenteconomicrecession andcivilunrestoccurredin2015,therehasbeenmediacoverageregardingthe hotel's lack of profitability and declineinperformance,contradictorytothe expected success of the property. The high construction cost, as well as the government and public involvement, has created a unique background for this hotel. The hotel was designed and developed as a Hilton Hotel in 2008; the configuration and array of facilities and amenities are consistent with Hilton’s brandstandardsasofthatdate.Thepropertyhasreceivedminorupgradessince opening;however,theguestroomsandmeetingspacesappearedwornandinneed ofrefurbishment.Weareoftheopinionthatanewownerwouldneedtocomplete minorupgradestotheguestroomsandmeetingspacestoadheretothetermsof thebrand'smanagementagreement.Thescopeoftheserenovations,whichform thebasisofourcapitaldeduction,willbepresentedsubsequentlyinthissection.

SUBJECTPROPERTY–FRONTOFHOTEL SUBJECTPROPERTY–BACKOFHOTEL

Summaryofthe Based on our inspection and information provided by the subject property’s Facilities management representatives, the following table summarizes the facilities availableatthesubjectproperty.

May-2017 RealEstateOverview 29 HiltonBaltimore–Baltimore,Maryland

FIGURE3-2 FACILITIESSUMMARY

GuestroomConfiguration NumberofUnits King 294 Double/Double 443 PresidentialSuites 2 ExecutiveSuites 2 MeetingPlannerSuites 2 DeluxeSuites 4 HospitalitySuites 10 Total 757

Food&BeverageFacilities SeatingCapacity DiamondTavern 200 LobbyBar 80 TheCoffeeBean&TeaLeaf - JimmyJohn's(leased) -

Meeting&BanquetFacilities SquareFootage KeyBallroom 25,000 HolidayBallroom 15,105 DiamondTavern 4,699 Pea le 2,464 Johnson 1,932 Ruth 1,287 Poe 1,011 Latrobe 999 Ca l l owa y 901 Pickersgill 757 Brent 731 Blake 673 Armistead 671 Mencken 324

Total 56,554

Amenities&Services IndoorSwimmingPool LobbyWorkstation FitnessCenter UPSStore GiftShop VendingArea(s) Ca r-Renta l Se rvi ce

May-2017 RealEstateOverview 30 HiltonBaltimore–Baltimore,Maryland

SiteImprovementsand Onceguestsenterthesite,parkingisavailableinthethreesubterraneanlevelsof HotelStructure thewesternmostbuilding.Valetandself-parkingservicesareprovided.Signageis located on all sides of the westernmost building. The site’s landscaping and sidewalkswereingoodconditionuponourinspection.

May-2017 RealEstateOverview 31 HiltonBaltimore–Baltimore,Maryland

Thehotelcomprisesonetwenty-storybuildingwiththreesubterraneanlevelsand one three-story building; two sky bridges are attached to the buildings, one connectingthetwobuildingsandanotherconnectingthesubjectpropertytothe Baltimore Convention Center. The hotel's exterior was in good condition; there werenomajorproblemsobservedorreportedpertainingtothehotel’sexterior finish.Thehotel'selevatorsandstairwaysarefunctional,appearingtobewellkept upon inspection. According to hotel management, the roof is in good condition with no deficiencies. There were no problems reported with the hotel's foundation, structure, or windows; furthermore, we did not observe any deficiencieswiththeseareas.

Lobby Overall,theentrytothehotelwasingoodcondition.Thelobbyarea,locatedonthe first floor in the northwest portion of the westernmost building, was in good conditionatthetimeofinspection.Thelobbyisspacious,featuringhighceilings, andisappropriateforafull-serviceHilton.

LOBBYSEATINGAREA FRONTDESK

Guestrooms The hotel features standard and suite-style guestroom configurations, and guestroomsarefoundonlevelsfourthroughtwentyofthewesternmostbuilding. Theroomsareadequatelysizedandoffertypicalamenitiesforthisproducttype. Suites,whichareavailableforapremiumrate,provideextraamenities,includinga wet-barwitharefrigerator.Overall,theguestroomswereingoodconditionupon inspection,albeitshowingsignsofwearandtear.

May-2017 RealEstateOverview 32 HiltonBaltimore–Baltimore,Maryland

FIGURE3-3 SUMMARYOFROOMTYPES

GuestroomConfiguration NumberofUnits King 294 Double/Double 443 HospitalitySuites 9 One-BedroomSuite 6 Two-BedroomSuite 5 Total 757

FIGURE3-4 GUESTROOMAMENITIES

• Black-OutCurtains • ClockRadiowithMP3Connection • In-RoomMovies • Flat-PanelTelevision • Coffeemaker • High-SpeedInternetAccess • IronandIroningBoard • Telephone • Hairdryer

Theguestroombathroomsareofastandardsize.Thefixturesandfinisheswerein overallgoodconditionuponinspection.

May-2017 RealEstateOverview 33 HiltonBaltimore–Baltimore,Maryland

TYPICALGUESTROOM–SLEEPINGAREA TYPICALGUESTROOMBATHROOM–SINK

TYPICALGUESTROOM–LIVINGAREA TYPICALGUESTROOMBATHROOM–BATH

The interior guestroom corridors are wide and functional, permitting the easy passage of housekeeping carts. Overall, the guestroom corridors were in good condition,albeitshowingsignsofwearandtear.

FoodandBeverage Thehotelfeaturesthreefoodandbeverageoutlets,whicharelocatedonthemain Facilities floorsofthetwobuildings.DiamondTavernisthehotel’sprimarydiningoutlet andislocatedinthesoutheastportionoftheeasternmostbuilding.Therestaurant

May-2017 RealEstateOverview 34 HiltonBaltimore–Baltimore,Maryland

hasabuilt-inbuffettofacilitatebreakfastandlunchservice.Itssizeandlayoutare appropriateforthehotel,andthespacewasingoodcondition.TheLobbyBaris situatedoffofthesouthendofthelobby;thisoutletisopenintheeveningsfor cocktails and appeared to be in good condition. The Coffee Bean & Tea Leaf, a coffeeshopthatoffersdrinksandgrab-and-gofooditems,islocatedadjacentto theLobbyBar.

FIGURE3-5 SUMMARYOFFOODANDBEVERAGEOUTLETS

Food&BeverageFacilities SeatingCapacity

DiamondTavern 200 LobbyBar 80 TheCoffeeBean&TeaLeaf - JimmyJohn's(leased) -

May-2017 RealEstateOverview 35 HiltonBaltimore–Baltimore,Maryland

DIAMONDTAVERN LOBBYBAR

THECOFFEEBEAN&TEALEAF JIMMYJOHN’S(LEASED)

MeetingSpace Thehotel'smeetingspaceislocatedonthethirdfloorofthewesternmostbuilding, aswellasonallthreelevelsoftheeasternmostbuilding.Thelargestspaceisthe FrancisScottKeyBallroom,whichcanbedividedintotwelveseparateroomsand is bordered by pre-function space on all sides. The second-largest space is the Billie Holiday Junior Ballroom, which is divisible by six and features 26-foot ceilings. Twelve smaller meeting spaces are located in the subject property, surroundingthemainballrooms.Thehotel’smeetingandbanquetspaceappeared

May-2017 RealEstateOverview 36 HiltonBaltimore–Baltimore,Maryland

tobeinfair-to-goodconditionuponinspection,asseveralaspectsofthesoftgoods showedsignsofwearandtear.Thesoftgoodsareexpectedtobeupdatedinthe neartermtomeetbrandrequirements.

FIGURE3-6 SUMMARYOFMEETINGSPACE

Meeting&BanquetFacilities SquareFootage KeyBallroom 25,000 HolidayBallroom 15,105 DiamondTavern 4,699 Peale 2,464 Johnson 1,932 Ruth 1,287 Poe 1,011 Latrobe 999 Calloway 901 Pickersgill 757 Brent 731 Blake 673 Armistead 671 Mencken 324

Total 56,554

KEYBALLROOM

May-2017 RealEstateOverview 37 HiltonBaltimore–Baltimore,Maryland

AdditionalFacilities Thehotelfeaturesanindoorpoolonthefifthflooroftheproperty.Therewereno andAmenities major problems reported with the pool operation, and the area was clean and attractive.Thehoteloffersafitnesscenter,locatedadjacenttothepoolarea,which wasingoodconditionatthetimeofourinspection.

The hotel offers a gift shop, located off the lobby, which is operated by a third- partymanagementcompany.Thehoteloffersvariousvendingareasthroughout theproperty.Furthermore,aHertzcar-rentalserviceislocatedinthenortheast cornerofthemainlobby,adjacenttothelobbyworkstation.Aretailspace,which currently houses a Jimmy John's Gourmet Sandwich shop, is located in the northeastcorneroftheeasternmostbuilding.Thesespaceswereingoodcondition atthetimeofinspection.

Thehoteldoesnothaveadedicatedbusinesscenter;however,athree-computer workstationislocatedinthelobby.Furthermore,thesubjectpropertyoffersaUPS Storeonsitethatprovidesbusinessservicessuchascopying,printing,andfaxing; thisoutletisoperatedbyathird-partymanagementcompany.Thesespaceswere ingoodconditionatthetimeofinspection.

FIGURE3-7 SUMMARYOFAMENITIESANDSERVICES

Amenities&Services IndoorSwimmingPool LobbyWorkstation FitnessCenter UPSStore GiftShop VendingArea(s) Car-RentalService

May-2017 RealEstateOverview 38 HiltonBaltimore–Baltimore,Maryland

FITNESSCENTER INDOORPOOL

GIFTSHOP LOBBYWORKSTATION

ADAand Thesubjectpropertyisservedbythenecessaryback-of-the-housespace,including Environmental administrativeoffices,twofull-servicekitchens,andoneprepkitchentoservethe needs of the Coffee Bean & Tea Leaf. The hotel's primary full-service kitchen is locatedadjacenttotheDiamondTavernrestaurant,whileasecondarykitchenis located adjacent to themeeting spaces in the easternmost building. Thekitchen facilitiesareappropriateforthescopeofserviceprovided,appearingtobeingood condition.Bothfacilitieswerereportedtobefullyoperationalbymanagement.It

May-2017 RealEstateOverview 39 HiltonBaltimore–Baltimore,Maryland

shouldbenotedthatthehoteldoesnotincludeanin-houselaundryfacilityand outsources its laundry needs to a third party. The hotel's back-of-the-house equipment and appliances were reported to be operational at the time of inspection,appearingtobeingoodcondition.

KITCHEN/FOODPREPAREA

Back-of-the-House Accordingtoinformationprovidedbymanagementrepresentatives,thereareno environmental hazards present in the subject property's improvements, nor did we observe any. The property reportedly complies with the Americans with DisabilitiesAct.

CapitalExpenditures The subject hotel underwent various renovations and received a number of repairs and updates from 2012 through 2016, as summarized in the following table.

May-2017 RealEstateOverview 40 HiltonBaltimore–Baltimore,Maryland

FIGURE3-8 CAPITALEXPENDITURES

2012 2013 2014 2015 2016 Item Amount Amount Amount Amount Amount

ScheduledEquipmentUpgrades 63,000 427,000 224,000 166,000 138,000 CoffeeShopInstallation 0 325,000 0 0 0 LobbyRefresh 0 234,000 0 0 0 StructuralImprovements 0 78,000 0 0 0 Info&Telecomm.SystemsUpgrades 0 500,000 80,000 0 85,000 FitnessCenterRefresh 0 0 0 0 158,000 DigitalSignageUpgrades 0 0 0 0 90,000

Totals: $63,000 $1,564,000 $304,000 $166,000 $471,000 PerRoom: $83 $2,066 $402 $219 $622

Source:HiltonHotels

Inordertofundplannedrenovations,wehaveassumedacapitaldeductioninour analysis.Inreviewofthefuturecapitalexpenditures,andtakingintoconsideration the current condition and our understanding of the Hilton brand standards, we haveassumedanewownerwouldneedtoperformasoftgoodsrenovationtothe guestrooms,guestroomcorridors,andforamajorityofthehotel'smeetingspaces. In addition to the capital deduction, our forecast of income and expense incorporates a reserve for replacement in recognition of the future renovation needs of the property. Our appraisal also assumes an ongoing preventive maintenanceprogramandappropriatemanagementandownershipoversight.The reserveforreplacementisconsistentwithacceptedindustrynormsforaproperty ofthistype.Investorsalsorecognizethatadditionalcapitalmayberequiredover theholdingperiod;thisexpectationisfactoredintotheirreturnrequirements.Our selecteddiscountandcapitalizationratesarebasedonmarketrequirementsand, thus, implicitly consider potential additional capital investments that may be requiredduringtheholdingperiod.

Conclusion Overall,thesubjectpropertyoffersawell-designed,functionallayoutofsupport areasandguestrooms.Strengthsofthepropertyincludeitsuniqueconnectionto the Baltimore Convention Center and variety of amenities, as well as the ample sizeoftheguestrooms.Aweaknessofthisassetisthesomewhatdatedcondition oftheguestroomsandmeetingspaces.

May-2017 RealEstateOverview 41 HiltonBaltimore–Baltimore,Maryland

4. MarketAreaAnalysis

The economic vitality of the market area and neighborhood surrounding the subjectpropertyisanimportantconsiderationinforecastinglodgingdemandand income potential. Economic and demographic trends that reflect the amount of visitationprovideabasisfromwhichtoprojectlodgingdemand.Thepurposeof themarketareaanalysisistoreviewavailableeconomicanddemographicdatato determinewhetherthelocalmarketwillundergoeconomicgrowth,stabilize,or decline.Inadditiontopredictingthedirectionoftheeconomy,therateofchange mustbequantified.Thesetrendsarethencorrelatedbasedontheirpropensityto reflectvariationsinlodgingdemand,withtheobjectiveofforecastingtheamount ofgrowthordeclineinvisitationbyindividualmarketsegment(e.g.,commercial, meetingandgroup,andleisure).

MarketAreaDefinition Themarketareaforalodgingfacilityisthegeographicalregionwherethesources ofdemandandthecompetitivesupplyarelocated.Thesubjectpropertyislocated in the city of Baltimoreand the state of Maryland. Baltimore, the largest city in Maryland, is part of the greater Baltimore/Towson economic area. The city of Baltimore is named after the founding proprietor of the Maryland colony, Lord BaltimoreoftheIrishHouseofLords.Thecityhasgrownconsiderablysinceit was founded in 1729, and now represents a modern service-based economy. Baltimore is a growing financial, business, and healthcare hub for the southern Mid-Atlanticregion.ThecityisalsohometotheJohnsHopkinsHospital,whichis widely regarded as one of the world’s most important repositories of medical knowledge.

May-2017 MarketAreaAnalysis 42 HiltonBaltimore–Baltimore,Maryland

BALTIMORE

Thesubjectproperty’smarketareacanbedefinedbyitsCombinedStatisticalArea (CSA): Washington-Baltimore-Arlington, DC-MD-VA-WV-PA. The CSA represents adjacent metropolitan and micropolitan statistical areas that have a moderate degreeofemploymentinterchange.Micropolitanstatisticalareasrepresenturban areasintheUnitedStatesbasedaroundacorecityortownwithapopulationof 10,000to49,999;theMSArequiresthepresenceofacorecityofatleast50,000 people and a total population of at least 100,000 (75,000in New England). The followingexhibitillustratesthemarketarea.

May-2017 MarketAreaAnalysis 43 HiltonBaltimore–Baltimore,Maryland

MAPOFMARKETAREA

Economicand Aprimarysourceofeconomicanddemographicstatisticsusedinthisanalysisis DemographicReview theCompleteEconomicandDemographicDataSourcepublishedbyWoods&Poole Economics, Inc.—a well-regarded forecastingservicebasedinWashington,D.C. Usingadatabasecontainingmorethan900variablesforeachcountyinthenation, Woods&Pooleemploysasophisticatedregionalmodeltoforecasteconomicand demographictrends.Historicalstatisticsarebasedoncensusdataandinformation published by the Bureau of Economic Analysis. Projections are formulated by Woods & Poole, and all dollar amounts have been adjusted for inflation, thus reflectingrealchange.

Thesedataaresummarizedinthefollowingtable.

May-2017 MarketAreaAnalysis 44 HiltonBaltimore–Baltimore,Maryland FIGURE4-1 ECONOMICANDDEMOGRAPHICDATASUMMARY

AverageAnnual CompoundedChange 2000 2010 2016 2020 2000-10 2010-16 2016-20

ResidentPopulation(Thousands) Baltimore(IndependentCity) 649.1 621.3 620.7 617.0 (0.4) % (0.0) % (0.1) % Baltimore-Columbia-Towson,MDMSA 2,558.0 2,715.6 2,835.9 2,942.9 0.6 0.7 0.9 Washington-Baltimore-Arlington,DC-MD-VA-WV-PACSA 8,014.1 9,088.9 9,786.7 10,300.1 1.3 1.2 1.3 StateofMaryland 5,311.0 5,788.1 6,093.4 6,342.2 0.9 0.9 1.0 UnitedStates 282,162.4 309,347.1 324,506.9 336,690.4 0.9 0.8 0.9 Per-CapitaPersonalIncome* Baltimore(IndependentCity) $30,360 $36,810 $40,245 $43,348 1.9 1.5 1.9 Baltimore-Columbia-Towson,MDMSA 41,257 47,857 50,842 54,161 1.5 1.0 1.6 Washington-Baltimore-Arlington,DC-MD-VA-WV-PACSA 46,454 52,989 55,374 58,409 1.3 0.7 1.3 StateofMaryland 42,517 48,875 51,209 54,284 1.4 0.8 1.5 UnitedStates 36,812 39,622 43,613 46,375 0.7 1.6 1.5 W&PWealthIndex Baltimore(IndependentCity) 79.0 89.4 88.9 89.7 1.2 (0.1) 0.2 Baltimore-Columbia-Towson,MDMSA 110.6 118.6 114.1 114.3 0.7 (0.6) 0.0 Washington-Baltimore-Arlington,DC-MD-VA-WV-PACSA 127.2 133.8 127.1 126.2 0.5 (0.9) (0.2) StateofMaryland 115.9 122.8 116.6 116.3 0.6 (0.9) (0.1) UnitedStates 100.0 100.0 100.0 100.0 0.0 0.0 0.0 FoodandBeverageSales(Millions)* Baltimore(IndependentCity) $854 $1,038 $1,271 $1,308 2.0 3.4 0.7 Baltimore-Columbia-Towson,MDMSA 3,541 4,469 5,547 5,946 2.4 3.7 1.8 Washington-Baltimore-Arlington,DC-MD-VA-WV-PACSA 12,192 16,073 20,567 22,297 2.8 4.2 2.0 StateofMaryland 7,103 8,888 11,108 11,947 2.3 3.8 1.8 UnitedStates 368,829 447,728 562,999 602,635 2.0 3.9 1.7 TotalRetailSales(Millions)* Baltimore(IndependentCity) $5,051 $4,537 $4,766 $4,867 (1.1) 0.8 0.5 Baltimore-Columbia-Towson,MDMSA 35,512 37,138 42,538 45,603 0.4 2.3 1.8 Washington-Baltimore-Arlington,DC-MD-VA-WV-PACSA 115,571 122,629 144,362 156,564 0.6 2.8 2.0 StateofMaryland 75,133 76,984 88,689 95,100 0.2 2.4 1.8 UnitedStates 3,902,830 4,130,414 4,846,834 5,181,433 0.6 2.7 1.7

*InflationAdjusted Source:Woods&PooleEconomics,Inc.

May-2017 MarketAreaAnalysis 45 HiltonBaltimore–Baltimore,Maryland

The U.S. population grew at an average annual compounded rate of 0.8% from 2010 to 2016; the state’s population changed by 0.9% during that period. The city’spopulationdeclinedslightlywhencomparedtothenation’spopulation;the averageannualgrowthrateof0.0%between2010and2016reflectsarelatively stablearea.In2016,thecity’spopulationwasapproximately620,000;itisforecast toberoughly620,000by2020.

Followingthispopulationtrend,per-capitapersonalincomeincreasedslowly,at 1.5%onaverageannuallyforthecitybetween2010and2016.Thecity’sannual per-capita personal income level was approximately $40,000 in 2016; it is expectedtobe$43,000by2020.ThiscomparestorespectivestateandU.S.levels of$51,000and$44,000in2015,and$54,000and$46,000by2020.Thecity’slocal wealthindexin2016wasarelativelymodestat88.9,lowerthanthestate’s2016 wealthindexof116.6.Thecity’swealthindexisanticipatedtobe89.7by2020, whilethestate’swealthindexisforecasttobe116.3.

Foodandbeveragesalestotaled$1,271millioninthecityin2016,versus$1,038 millionin2010.Thisreflectsa3.4%averageannualchange,whichisstrongerthan the2.0%pacerecordedinthepriordecade,thelatteryearsofwhichwere adverselyaffectedbytherecession.Thepaceofgrowthisanticipatedtomoderate to a more sustainable level of 0.7% through 2020. The retail sales sector demonstrated an annual decline of -1.1% from 2000 to 2010, followed by an increase of 0.8% during the period from 2010 to 2016. An increase of 0.5% averageannualchangeincityretailsalesisforecastthrough2020.

Workforce Thecharacteristicsofanarea'sworkforceprovideanindicationofthetypeand Characteristics amountoftransientvisitationlikelytobegeneratedbylocalbusinesses.Sectors suchasfinance,insurance,andrealestate(FIRE);wholesaletrade;andservices produceaconsiderablenumberofvisitorswhoarenotparticularlyrate-sensitive. The government sector often generates transient room nights, but per-diem reimbursement allowances often limit the accommodations selection to budget andmid-pricedlodgingfacilities.Contributionsfrommanufacturing,construction, transportation,communications,andpublicutilities(TCPU)employerscanalsobe important,dependingonthecompanytype.

Thefollowingtablesetsforththecityworkforcedistributionbybusinesssectorin 2000,2010,and2016,aswellasaforecastfor2020.

May-2017 MarketAreaAnalysis 46 HiltonBaltimore–Baltimore,Maryland FIGURE4-2 HISTORICALANDPROJECTEDEMPLOYMENT(000S)

AverageAnnual CompoundedChange Percent Percent Percent Percent 2000- 2010- 2016- Industry 2000 ofTotal 2010 ofTotal 2016 ofTotal 2020 ofTotal 2010 2016 2020

Farm 0.0 0.0 % 0.0 0.0 % 0.0 0.0 % 0.0 0.0 % 0.0 % 0.0 % 0.0 % Forestry,Fishing,RelatedActivitiesAndOther 0.1 0.0 0.1 0.0 0.1 0.0 0.1 0.0 (4.0) 1.5 1.7 Mining 0.1 0.0 0.0 0.0 0.1 0.0 0.1 0.0 (2.8) 17.2 1.1 Utilities 3.0 0.7 4.0 1.0 3.2 0.8 3.3 0.8 2.8 (3.5) 0.4 Construction 14.6 3.3 11.7 3.1 13.6 3.3 14.2 3.4 (2.2) 2.6 1.1 Manufacturing 29.0 6.5 13.5 3.5 12.4 3.1 12.1 2.9 (7.3) (1.4) (0.5) TotalTrade 42.7 9.5 27.0 7.1 30.0 7.4 30.3 7.2 (4.5) 1.8 0.3 WholesaleTrade 16.2 3.6 8.7 2.3 9.4 2.3 9.4 2.2 (6.0) 1.3 (0.1) RetailTrade 26.5 5.9 18.3 4.8 20.5 5.1 20.9 5.0 (3.6) 1.9 0.4 TransportationAndWarehousing 13.9 3.1 12.1 3.2 14.7 3.6 14.4 3.4 (1.3) 3.2 (0.4) Information 10.9 2.4 4.8 1.3 4.6 1.1 4.5 1.1 (7.8) (0.8) (0.4) FinanceAndInsurance 29.1 6.5 16.6 4.3 16.1 4.0 16.9 4.0 (5.5) (0.5) 1.3 RealEstateAndRentalAndLease 11.7 2.6 10.3 2.7 11.0 2.7 11.0 2.6 (1.3) 1.1 (0.1) TotalServices 209.9 46.8 204.7 53.7 230.8 56.8 241.4 57.6 (0.2) 2.0 1.1 Profess ionalAndTechnicalServices 31.0 6.9 24.5 6.4 26.5 6.5 26.5 6.3 (2.3) 1.3 0.0 ManagementOfCompaniesAndEnterprises 0.8 0.2 1.0 0.3 2.5 0.6 2.7 0.7 1.3 17.4 2.2 AdministrativeAndWasteServices 29.1 6.5 21.5 5.6 29.0 7.1 29.9 7.1 (3.0) 5.1 0.7 EducationalServices 26.1 5.8 31.1 8.1 32.5 8.0 34.5 8.2 1.8 0.7 1.5 HealthCareAndSocialAssistance 71.5 15.9 77.8 20.4 83.3 20.5 88.8 21.2 0.9 1.2 1.6 Arts,Entertainment,AndRecreation 7.0 1.6 7.5 2.0 9.5 2.3 10.1 2.4 0.7 3.9 1.5 AccommodationAndFoodServices 23.1 5.2 21.1 5.5 24.8 6.1 25.4 6.1 (0.9) 2.7 0.6 OtherServices,ExceptPublicAdministration 21.2 4.7 20.2 5.3 22.7 5.6 23.4 5.6 (0.5) 1.9 0.8 TotalGovernment 83.3 18.6 76.5 20.1 69.7 17.2 70.6 16.9 (0.8) (1.5) 0.3 FederalCivilianGovernment 12.7 2.8 10.8 2.8 9.8 2.4 9.8 2.3 (1.6) (1.6) (0.0) FederalMilitary 2.4 0.5 2.0 0.5 2.1 0.5 2.1 0.5 (2.0) 0.6 0.1 StateAndLocalGovernment 68.2 15.2 63.7 16.7 57.8 14.2 58.7 14.0 (0.7) (1.6) 0.4

TOTAL 448.2 100.0 % 381.3 100.0 % 406.2 100.0 % 418.8 100.0 % (1.6) % 1.1 % 0.8 %

MSA 1,541.7 — 1,648.4 — 1,813.6 — 1,928.6 — 0.7 % 1.6 % 1.5 % U.S. 165,370.9 — 173,034.7 — 191,870.8 — 203,418.4 — 0.9 1.7 1.5

Source:Woods&PooleEconomics,Inc.

May-2017 MarketAreaAnalysis 47 HiltonBaltimore–Baltimore,Maryland

Woods&PooleEconomics,Inc.reportsthatduringtheperiodfrom2000to2010, totalemploymentinthecitycontractedatanaverageannualrateof-1.6%.This trendwasbelowthegrowthraterecordedbytheMSAandalsolaggedthenational average,reflectingthecontractingnatureofthelocaleconomythroughoutmostof thedecadeuntiltherecessioninthelatteryears.Morerecently,thepaceoftotal employment growth in the city accelerated to 1.1% on an annual average from 2010to2016,reflectingtheinitialyearsoftherecovery.

Oftheprimaryemploymentsectors,TotalServicesrecordedthehighestincrease in number of employees during the period from 2010 to 2016, increasing by 26,062 people, or 12.7%, and transitioning from 53.7% to 56.8% of total employment.Ofthevariousservicesub-sectors,HealthCareAndSocialAssistance and Educational Services were the largest employers. Forecasts developed by Woods&PooleEconomics,Inc.anticipatethattotalemploymentinthecitywill changeby0.8%onaverageannuallythrough2020.Thetrendisbelowtheforecast rateofchangefortheU.S.asawholeduringthesameperiod.

Thefollowing tableillustrateshistorical and projected employment,households, populationandaveragehouseholdincomedataasprovidedbyREISfortheoverall Baltimoremarket.

May-2017 MarketAreaAnalysis 48 HiltonBaltimore–Baltimore,Maryland

FIGURE4-3 HISTORICAL&PROJECTEDEMPLOYMENT,HOUSEHOLDS,POPULATION,ANDHOUSEHOLDINCOMESTATISTICS

Total Office Industrial Household Year Employment %Chg Employment %Chg Employment %Chg Households %Chg Population %Chg Avg.Income %Chg

2003 1,253,600 — 400,316 — 150,160 — 999,050 — 2,622,890 — $102,066 — 2004 1,270,470 1.3 % 404,499 1.0 % 150,409 0.2 %,007,040 1 0.8 % 2,637,990 0.6 % 108,716 6.5 % 2005 1,295,970 2.0 413,737 2.3 151,125 0.5 1,014,070 0.7 2,651,600 0.5 113,145 4.1 2006 1,312,930 1.3 417,678 1.0 149,553 (1.0) 1,022,010 0.8 2,662,830 0.4 119,167 5.3 2007 1,318,970 0.5 419,594 0.5 147,862 (1.1) 1,031,400 0.9 2,673,260 0.4 122,718 3.0 2008 1,302,970 (1.2) 416,355 (0.8) 142,981 (3.3) 1,037,090 0.6 2,687,360 0.5 123,492 0.6 2009 1,265,970 (2.8) 408,482 (1.9) 135,455 (5.3) 1,041,690 0.4 2,705,600 0.7 123,864 0.3 2010 1,279,000 1.0 414,560 1.5 134,254 (0.9) 1,043,340 0.2 2,725,350 0.7 129,041 4.2 2011 1,300,970 1.7 425,840 2.7 133,256 (0.7) 1,051,990 0.8 2,745,740 0.7 133,766 3.7 2012 1,320,770 1.5 434,482 2.0 131,158 (1.6) 1,059,710 0.7 2,765,320 0.7 138,433 3.5 2013 1,334,570 1.0 438,889 1.0 127,535 (2.8) 1,067,870 0.8 2,780,650 0.6 136,165 (1.6) 2014 1,354,630 1.5 444,920 1.4 127,326 (0.2) 1,074,560 0.6 2,792,360 0.4 141,547 4.0 2015 1,372,200 1.3 447,920 0.7 129,191 1.5 1,083,050 0.8 2,803,530 0.4 146,496 3.5

Forecasts 2016 1,403,710 2.3 % 460,063 2.7 % 128,912 (0.2) % 1,091,240 0.8 % 2,816,210 0.5 % $151,898 3.7 % 2017 1,412,330 0.6 461,689 0.4 128,956 0.0 1,099,770 0.8 2,828,840 0.4 158,854 4.6 2018 1,422,090 0.7 464,036 0.5 129,327 0.3 1,108,800 0.8 2,841,400 0.4 166,239 4.6 2019 1,434,520 0.9 468,830 1.0 129,702 0.3 1,118,630 0.9 2,853,900 0.4 172,497 3.8 2020 1,437,550 0.2 470,175 0.3 129,073 (0.5) 1,127,740 0.8 2,866,360 0.4 176,756 2.5

AverageAnnualCompoundChange 2003-2015 0.8 % 0.9 % (1.2) % 0.7 % 0.6 % 3.1 % 2003-2007 1.3 1.2 (0.4) 0.8 0.5 4.7 2007-2010 (1.0) (0.4) (3.2) 0.4 0.6 1.7 2010-2015 1.4 1.6 (0.8) 0.7 0.6 2.6 Forecast2016-2020 0.6 % 0.5 % 0.0 % 0.8 % 0.4 % 3.9 %

Source:REISReport,3rdQuarter,2016

May-2017 MarketAreaAnalysis 49 HiltonBaltimore–Baltimore,Maryland

Forthe Baltimoremarket,oftheroughly1,400,000personsemployed, 33%are categorizedasofficeemployees,while9%arecategorizedasindustrialemployees. Totalemploymentdecreasedbyanaverageannualcompoundrateof-1.0%during therecessionof2008to2011,followedbyanincreaseof1.4%from2011to2015. Bycomparison,officeemploymentreflectedcompoundchangeratesof-0.4%and 1.6%,duringthesamerespectiveperiods.Totalemploymentisexpectedtoexpand by2.3%in2016,whileofficeemploymentisforecasttoexpandby2.7%in2016. From2015through2020,REISanticipatesthattotalemploymentwillincreaseat anaverageannualcompoundrateof0.6%,whileofficeemploymentwillincrease by0.5%onaverageannuallyduringthesameperiod.

The number of households is forecast to increase by 0.8% on average annually between2015and2020.Populationisforecasttoexpandduringthissameperiod, at an average annual compounded rate of 0.4%. Household average income is forecasttogrowby3.9%onaverageannuallyfrom2015through2020.

RadialDemographic The following table reflects radial demographic trends for our market area Snapshot measuredbythreepointsofdistancefromthesubjectproperty.

May-2017 MarketAreaAnalysis 50 HiltonBaltimore–Baltimore,Maryland

FIGURE4-4 DEMOGRAPHICSBYRADIUS

0.00-1.00miles 0.00-3.00miles 0.00-5.00miles Population 2022Projection 39,355 275,589 551,630 2017Estimate 37,820 271,018 543,861 2010Census 35,838 268,133 540,526 2000Census 32,550 287,479 569,833 Growth2017-2022 4.1% 1.7% 1.4% Growth2010-2017 5.5% 1.1% 0.6% Growth2000-2010 10.1% -6.7% -5.1% Households 2022Projection 19,530 115,410 222,937 2017Estimate 18,745 112,752 219,012 2010Census 17,734 110,074 216,186 2000Census 15,306 113,119 224,006 Growth2017-2022 4.2% 2.4% 1.8% Growth2010-2017 5.7% 2.4% 1.3% Growth2000-2010 15.9% -2.7% -3.5% Income 2017Est.AverageHouseholdIncome $68,665 $62,971 $63,968 2017Est.MedianHouseholdIncome 45,047 40,673 43,963 2017Est.Civ.EmployedPop16+byOccupation 18,520 116,670 233,981 Architect/Engineer 460 2,315 3,430 Arts/Entertainment/Sports 667 3,376 5,828 BuildingGroundsMaintenance 530 5,791 11,205 Business/FinancialOperations 1,406 6,616 11,653 Community/SocialServices 580 2,847 6,595 Computer/Mathematical 716 3,806 7,049 Construction/Extraction 160 3,873 9,362 Education/Training/Library 1,715 8,820 16,672 Farming/Fishing/Forestry 0 94 191 FoodPrep/Serving 1,139 7,988 14,745 HealthPractitioner/Technician 2,520 9,468 15,738 HealthcareSupport 311 3,910 8,148 MaintenanceRepair 148 1,872 5,327 Legal 692 2,208 3,517 Life/Physical/SocialScience 615 2,525 4,195 Management 2,056 10,247 18,413 Office/Admin.Support 1,812 13,871 32,078 Production 436 3,495 7,741 ProtectiveServices 294 3,818 8,013 Sales/Related 1,386 9,362 20,012 PersonalCare/Service 479 3,823 7,674 Transportation/Moving 398 6,546 16,394 Source:TheNielsenCompany

Thissourcereportsapopulationof543,861withinafive-mileradiusofthesubject property, and 219,012 households within this same radius. Average household

May-2017 MarketAreaAnalysis 51 HiltonBaltimore–Baltimore,Maryland

incomewithinafive-mileradiusofthesubjectpropertyiscurrentlyreportedat $63,968,whilethemedianis$43,963.

Unemployment The following table presents historical unemployment rates for the subject Statistics property’smarketarea,thestate,andthenation.

FIGURE4-5 UNEMPLOYMENTSTATISTICS

Year City MSA State U.S. 2006 6.4 % 4.1 % 3.9 % 4.6 % 2007 5.5 3.6 3.5 4.6 2008 6.5 4.4 4.2 5.8 2009 10.2 7.4 7.0 9.3 2010 11.2 8.1 7.7 9.6 2011 10.6 7.6 7.2 8.9 2012 10.2 7.2 7.0(d) 8.1 2013 9.7 6.8 6.6(d) 7.4 2014 8.6 6.0 5.8(d) 6.2 2015 7.7 5.4 5.1(d) 5.3 RecentMonth-Dec 2015 7.0 % 4.8 % 4.4 % 5.0 % 2016 5.7 4.0 3.9 4.7

*Lettersshownnexttodatapoints(ifany)reflectrevisedpopulationcontrols and/ormodelre-estimationimplementedbytheBLS.

Source:U.S.BureauofLaborStatistics

AftertheU.S.unemploymentratedeclinedtoanannualaverageof4.6%in2006 and2007,theGreatRecession,whichspannedDecember2007throughJune2009, resulted in heightened unemployment rates. The unemployment rate peaked at 10.0%inOctober2009,afterwhichjobgrowthresumed;thenational unemployment rate has steadily declined since 2010. Total nonfarm payroll employment increased by 135,000, 204,000, and 156,000 jobs in October, November, and December 2016, respectively. The strongest gains in December were recorded in the healthcare sector and the social assistance sector. The nationalunemploymentrateremainslow,at4.9%inOctober,4.6%inNovember, and4.7%inDecember;ithasremainednearthe5.0%marksinceAugust2015, reflectingatrendofrelativestabilityandtheoverallstrengthoftheU.S.economy.

Locally,theunemploymentratewas7.7%in2015;forthissameareain2016,the mostrecentmonth’sunemploymentratewasregisteredat5.7%,versus7.0%for thesamemonthin2015.Aftershowinganimprovement,unemploymentbeganto

May-2017 MarketAreaAnalysis 52 HiltonBaltimore–Baltimore,Maryland

rise in 2008 as the region entered an economic slowdown, and this trend continued through 2010 as the height of the national recession took hold. However,unemploymentdeclinedin2011astheeconomyrebounded,andthis positive trend continued through 2015. The most recent comparative period illustratesafurtherimprovement,indicatedbythelowerunemploymentratein thelatestavailabledatafor2016.Itshouldbenotedthatthecityunemployment rate normally registers much higher than the MSA given the geographical perimeter and respective demographics. Reportedly, local employment has remained strong within the healthcare and education sectors, including strong employment levels at major entities such as Johns Hopkins University and the UniversityofMaryland,aswellastheirhealthcareaffiliates.

MajorBusinessand Providing additional context for understanding the nature of the regional Industry economy,thefollowingtablepresentsalistofthemajoremployersinthesubject property’smarket.

FIGURE4-6 MAJOREMPLOYERS

Numberof Rank Firm Employees

1 JohnsHopkinsUniversity 25,000 2 JohnsHopkinsHospitalandHealthSystem 19,340 3 UniversityofMarylandMedicalSystem 9,830 4 UniversitySystemofMaryland 9,111 5 MedStarHealth 6,027 6 LifeBridgeHealth 5,316 7 MercyHealthServices,Inc. 4,028 8 St.AgnesHealthCare 3,267 9Exelon 2,952 10 KennedyKriegerInstitute 2,417

Source:MarylandDepartmentofCommerce,October2015

Thefollowingbulletpointshighlightmajordemandgeneratorsforthismarket:

• The strong presence of government, military, and related contractors has bufferedtheareafromlargeeconomicswings.Furthermore,despitetherecent federalbudgetsequestrationin2013andtherelocationoftheSocialSecurity Administration to outside the downtown area in early 2014, the government/militarysectormaintainsasignificantpresenceinthemarketand hasamajoreconomicimpact.Oneofthemostsignificanteconomicdriversfor the greater Baltimore region is the NationalSecurityAgency(NSA).Ahigh-

May-2017 MarketAreaAnalysis 53 HiltonBaltimore–Baltimore,Maryland

technology organization, the NSA is at the forefront of communications and data processing systems and is one of the federal government's most important centers of foreign language analysis and research. Northrop Grumman Corporation is another important defense-related entity for the Baltimore region. This global defense and technology company provides innovativeproductsandsolutionsinthefieldsofelectronics,aerospace,and shipbuilding to government and commercial customers worldwide. The NSA alsoheadstheU.S.CyberCommand,whichisbasedatFortGeorgeG.Meade. The Department of Veterans Affairs is also a major contributor to the Baltimoreeconomy. • Thehealthcaresectorplaysacriticalroleinthestrengthandstabilityofthe Baltimoreregion.TheJohnsHopkinsHospitalsystem,thecity’ssecond-largest employer,isoneofthenation’spreeminenthealthcareinstitutions.Themain Baltimore hospital features a variety of specialty facilities. In 2015, Johns Hopkins was ranked first in the "Regionally Ranked Hospitals" list by U.S. News & World Report, with 15 adult specialties and 10 pediatric specialties receiving the "Best" ranking nationally. Johns Hopkins' $1.1-billion cardiovascularandcritical-caretowerandchildren'shospital,theBloomberg Children's Center, opened in May 2012 featuring 560 private patient rooms and33state-of-the-artoperatingrooms.Anotherprimaryhealthcareprovider intheBaltimoreregionistheUniversityofMarylandMedicalSystem(UMMS), a not-for-profit hospital system with almost 2,500 licensed beds. The University is in the process of expanding its Baltimore campus, with such projectsunderwayasthe$304.5-millionHealthSciencesFacilityandthe$270- million cancer treatment center known as the Maryland Proton Treatment Center.Thenewcancerfacilityopenedinlate2015,locatedattheconstantly expanding University of Maryland BioPark. Other notable BioPark projects includetheMarylandForensicMedicalCenter,TheBioInnovationCenter,and aproposed250,000-square-footofficeandlaboratorybuilding. • Inadditiontothenumerousgovernment,healthcare,andeducationalentities and companies throughout the region, a variety of large national and multinational companies support the area. These companies cover a wide range of industries from financial to energy and include companies such as Exelon, Morgan Stanley, Transamerica, T. Rowe Price Group, and Under Armour. Furthermore, many of these companies have announced recent expansions.FollowingthemergerofExelonandConstellationEnergy,which beganin2012,Exelonannouncedplanstobuildanewregionalheadquarters at the Harbor Point development. This relocation is part of the company's general move out of the Baltimore CBD. Exelon moved its new $160-billion headquarters in late 2016. The Harbor Point mixed-use development is anticipatedtocover27acresandincludemorethanthreemillionsquarefeet

May-2017 MarketAreaAnalysis 54 HiltonBaltimore–Baltimore,Maryland

once completed. Furthermore, Morgan Stanley is in the process of creating 1,500jobsbytheendof2018. Theeconomicbaseisdiverseinthismarket,withstrongemployersinthefieldsof healthcare, government, military, and education. Our research found that the greaterBaltimoremarkethasbeguntostrengthenwithrobustgrowthplannedor underway. Development within the medical industry and education sector, including the continued development of the University of Maryland Baltimore BioPark, is anticipated to stimulate new jobs during the next several years. Additionally, the presence of nearby Fort Meade is an increasingly important factor.Furthermore,theareacontinuestogrowwiththeexpansionsofseveralkey companies,suchasExelonandMorganStanley,aswellasover4,000residential unitsplannedorunderconstruction.ThedevelopmentofHarborPointisexpected toincreasedemandinthemarketinthenearterm,asconstructioncontinueson theprojectandnewofficesbegintoopen.Thedevelopmentofprivate-andpublic- sector entities,along with thecity'sairport, tourism attractions,and convention base,shouldprovideastrongplatformforeconomicgrowth.

OfficeSpaceStatistics Trendsinoccupiedofficespacearetypicallyamongthemostreliableindicatorsof lodgingdemand,asfirmsthatoccupyofficespaceoftenexhibitastrongpropensity toattractcommercialvisitors.Thus,trendsthatcausechangesinvacancyratesor occupied office space may have a proportional impact on commercial lodging demand and a less direct effect on meeting demand. The following table details officespacestatisticsforthepertinentmarketarea.

FIGURE4-7 OFFICESPACESTATISTICS–MARKETOVERVIEW

Inventory OccupiedOffice Vacancy AverageAsking Submarket Buildings SquareFeet Space Rate LeaseRate

1 EastBaltimore 57 2,606,000 2,181,200 16.3 % $25.95 2 SouthWestBaltimore/BWI 86 4,769,000 3,867,700 18.9 23.17 3 AnneArundel 164 8,478,000 7,587,800 10.5 27.53 4 Harford/NorthBaltimoreCty 51 1,882,000 1,451,000 22.9 23.34 5 West/NorthWestBaltimore 153 8,107,000 7,142,300 11.9 21.65 6 CentralBaltimore 122 16,123,000 13,075,800 18.9 24.62 7 HowardCounty 196 11,331,000 9,676,700 14.6 25.50 8 Towson/Timonium 180 10,405,000 8,781,800 15.6 22.13

TotalsandAverages 1,009 63,701,000 53,764,300 15.6 % $24.29 Source:REISReport,3rdQuarter,2016

ThegreaterBaltimoremarketcomprisesatotalof63.7millionsquarefeetofoffice space.Forthe3rdQuarterof2016,themarketreportedavacancyrateof15.6%

May-2017 MarketAreaAnalysis 55 HiltonBaltimore–Baltimore,Maryland

andanaverageaskingrentof$24.29.ThesubjectpropertyislocatedintheCentral Baltimore submarket, which houses 16,123,000 square feet of office space. The submarket's vacancy rate of 18.9% is above the overall market average. The average asking lease rate of $24.62 is on par with the average for the broader market.

The following table illustrates a trend of office space statistics for the overall BaltimoremarketandtheCentralBaltimoresubmarket.

May-2017 MarketAreaAnalysis 56 HiltonBaltimore–Baltimore,Maryland

FIGURE4-8 HISTORICALANDPROJECTEDOFFICESPACESTATISTICS–GREATERMARKETVS.SUBMARKET

BaltimoreMarket CentralBaltimoreSubmarket

Available Occupied Vacancy Asking Available Occupied Vacancy Asking Year OfficeSpace %Chg OfficeSpace %Chg Rate LeaseRate %Chg OfficeSpace %Chg OfficeSpace %Chg Rate LeaseRate %Chg

2003 53,331,000 — 46,135,000 — 13.5 % $19.72 — 15,949,000 — 13,030,000 — 18.3 % $20.23 — 2004 54,923,000 3.0 % 47,571,000 3.1 % 13.4 20.16 2.2 % 16,091,000 0.9 % 13,050,000 0.2 % 18.9 20.79 2.8 % 2005 56,704,000 3.2 49,540,000 4.1 12.6 20.76 3.0 16,043,000 (0.3) 13,203,000 1.2 17.7 21.56 3.7 2006 58,416,000 3.0 51,386,000 3.7 12.0 21.75 4.8 15,880,000 (1.0) 13,212,000 0.1 16.8 21.83 1.3 2007 59,198,000 1.3 52,020,000 1.2 12.1 22.95 5.5 15,721,000 (1.0) 13,410,000 1.5 14.7 22.95 5.1 2008 59,980,000 1.3 52,054,000 0.1 13.2 22.91 (0.2) 15,721,000 0.0 13,614,000 1.5 13.4 22.95 0.0 2009 60,699,000 1.2 51,007,000 (2.0) 16.0 22.77 (0.6) 16,213,000 3.1 12,970,000 (4.7) 20.0 22.49 (2.0) 2010 61,250,000 0.9 50,447,000 (1.1) 17.6 22.93 0.7 16,264,000 0.3 12,279,000 (5.3) 24.5 22.66 0.8 2011 62,472,000 2.0 51,307,000 1.7 17.9 23.30 1.6 16,414,000 0.9 12,639,000 2.9 23.0 23.09 1.9 2012 62,516,000 0.1 51,976,000 1.3 16.9 23.43 0.6 15,895,000 (3.2) 12,287,000 (2.8) 22.7 23.33 1.0 2013 63,055,000 0.9 52,616,000 1.2 16.6 23.49 0.3 15,843,000 (0.3) 12,674,000 3.1 20.0 23.15 (0.8) 2014 63,079,000 0.0 52,622,000 0.0 16.6 23.84 1.5 15,843,000 0.0 12,738,000 0.5 19.6 23.59 1.9 2015 63,406,000 0.5 53,399,000 1.5 15.8 24.12 1.2 15,903,000 0.4 12,929,000 1.5 18.7 24.22 2.7

Forecasts 2016 64,032,000 1.0 % 54,028,000 1.2 % 15.6 % $24.46 1.4 % 16,123,000 1.4 % 13,092,000 1.3 % 18.8 % $24.83 2.5 % 2017 64,647,000 1.0 54,688,000 1.2 15.4 25.06 2.5 16,123,000 0.0 13,108,000 0.1 18.7 25.40 2.3 2018 65,340,000 1.1 55,471,000 1.4 15.1 25.76 2.8 16,206,000 0.5 13,175,000 0.5 18.7 25.93 2.1 2019 66,106,000 1.2 56,467,000 1.8 14.6 26.58 3.2 16,206,000 0.0 13,208,000 0.3 18.5 26.50 2.2 2020 66,968,000 1.3 57,588,000 2.0 14.0 27.40 3.1 16,206,000 0.0 13,240,000 0.2 18.3 27.14 2.4

AverageAnnualCompoundChange 2003-2015 1.5 % 1.2 % 1.7 % (0.0) % (0.1) % 1.5 % 2003-2007 2.6 3.0 3.9 (0.4) 0.7 3.2 2007-2010 1.1 (1.0) (0.0) 1.1 (2.9) (0.4) 2010-2015 0.7 1.1 1.0 (0.4) 1.0 1.3 Forecast2016-2020 1.1 % 1.6 % 2.9 % 0.1 % 0.3 % 2.2 %

Source:REISReport,3rdQuarter,2016

May-2017 MarketAreaAnalysis 57 HiltonBaltimore–Baltimore,Maryland

The inventory of office space in the Baltimore market increased at an average annual compound rate of 1.5% from 2003 through 2015, while occupied office spaceexpandedatanaverageannualrateof1.2%overthesameperiod.During theperiodof 2003through 2008,occupiedofficespace expandedatanaverage annual compound rate of 3.0%. From 2008 through 2011, occupied officespace contractedatanaverageannualcompoundrateof-1.0%,reflectingtheimpactof the recession. The onset of the recovery is evident in the 1.1% average annual changeinoccupiedofficespacefrom2011to2015.From2015through2020,the inventory of occupied office space is forecast to increase at an average annual compoundrateof1.6%,withavailableofficespaceexpectedtoincrease1.1%,thus resultinginananticipatedvacancyrateof14.0%asof2020.AccordingtoREIS,the greaterBaltimoreofficemarkethasexperiencedhighvacancyratesandweakrent gains,butnewspacecontinuestobebuilt. The Central Baltimore submarket comprises thelargest amount of both available and occupied officespacein the Baltimore market. East Baltimore, consisting of the Harbor Point development projects,isexpectedtohavethelargestamountofnewofficesupplyinthecoming year.

ConventionActivity Aconventioncenterservesasagaugeofvisitationtrendstoaparticularmarket. Conventioncentersalsogeneratesignificantlevelsofdemandforareahotelsand serveasafocalpointforcommunityactivity.Typically,hotelswithintheclosest proximitytoaconventioncenter—uptothreemilesaway—willbenefitthemost. Hotelsservingasheadquartersforaneventbenefitthemostbywayofpremium rates and hosting related banquet events. During the largest of conventions, peripheralhotelsmaybenefitfromcompressionwithinthecityasawhole.

TheBaltimoreConventionCenter(BCC)containsatotalof1,225,000squarefeet of net-rentable space, which includes a 36,000-square-foot ballroom, meeting rooms totaling approximately 85,000 square feet, and exhibit halls comprising 300,000squarefeet.ThecenterismarketedasthepremierlocationintheMid- Atlantic region for organizations hosting conventions, meetings, banquets, and otheractivities.ArenovationofBCCwascompletedin2012;upgradesincluded newcarpeting,newenergy-efficientlighting,newkitchenequipment,anewgreen roof,andfreshpaint.ConventionandBaltimorecityofficialshaveannouncedthat theBCCmayundergoanexpansion,inadditiontotheconstructionofan18,500- seat Inner Harbor arena. Both projects are still in the feasibility stage and are contingent on financing; as of the date of this appraisal, no approvals or constructionplanshavebeenannounced.

May-2017 MarketAreaAnalysis 58 HiltonBaltimore–Baltimore,Maryland

BALTIMORECONVENTIONCENTER

Thefollowingtableillustratesrecentusestatisticsforthisfacility.

FIGURE4-9 CONVENTIONCENTERSTATISTICS

Percent Percent Year NumberofEvents Change NumberofDelegates Change

2009/10 131 — 368,834 — 2010/11 162 23.7 % 488,469 32.4 % 2011/12 162 0.0 622,342 27.4 2012/13 152 (6.2) 554,833 (10.8) 2013/14 132 (13.2) 681,122 22.8 2014/15 123 (6.8) 515,667 (24.3) 2015/16 121 (1.6) 459,849 (10.8)

Source:BaltimoreConventionCenter

May-2017 MarketAreaAnalysis 59 HiltonBaltimore–Baltimore,Maryland

The Baltimore Convention Center was negatively affected by slowing business levelsanddecreasedgrouptravelcausedbythedownturninthenational economy. Fiscal 2011/12 statistics show a decline in the number of events and delegate activity at the center when compared with figures from the previous fiscalyear.TheBaltimoreAreaConventionandVisitorsAssociation(BACVA)has sincerampedupeffortstoincreaseconventionbookings,workinginpartnership withtheBaltimoreConventionCenterandBaltimorehotelcommunitytoincrease production, streamline sales processes, and identify opportunities for future business.Becauseofthispartnershipandstrongermarketing,conventionactivity at the BCC increased modestly in 2012/13. However, the cancelation of several groupeventsbecauseofthesequestrationandgovernmentshutdownreportedly limited the continuation of this positive trend in 2013/14. Reports from the market indicate that convention activity in the first half of 2015 was strong, highlighted by several first-time citywide conventions; however, convention activity dropped off in the second half of the year. Several conventions were reportedlycanceledaftercityriotsbrokeoutinApril2015,detractingorganizers from the city after several weeks of negative media portrayal. This downward trendcontinuedinfiscal2015/16.

AirportTraffic Airportpassengercountsareimportantindicatorsoflodgingdemand.Depending on the type of service provided by a particular airfield, a sizable percentage of arrivingpassengersmayrequirehotelaccommodations.Trendsshowingchanges inpassengercountsalsoreflectlocalbusinessactivityandtheoveralleconomic healthofthearea.

The Baltimore/Washington International Thurgood Marshall Airport, commonly referredtoasBWI,wasrenamedin2005tohonortheformerU.S.SupremeCourt Justice,whogrewupinBaltimore.WhileSouthwestcontinuestobeBWI'slargest carrier, the airport is serviced by a variety of major airlines. A $100-million expansionandmodernizationofConcoursesA,B,andC,whichbeganinJune2012, were completed mid-year 2014. Furthermore, construction on a $125-million expansionoftheairport'sinternationalfacilitiestoconnecttheDandEconcourses beganinthefirstquarterof2015.Thefirstphaseoftheprojectwascompletedin November 2016, while a completion date for the connector enhancements is scheduledforearly2017.InApril2015,asbestosandmoldwerefoundduringthe renovationproject;however,officialsreportthatthetimelineforcompletionwill remainthesame,buttheBoardofPublicWorkswillconsideradding$100,000to anexistingcontracttocoverthecostsofremediation.

The following table illustrates recent operating statistics for the Baltimore WashingtonInternationalThurgoodMarshallAirport,whichistheprimaryairport facilityservingthesubjectproperty’ssubmarket.

May-2017 MarketAreaAnalysis 60 HiltonBaltimore–Baltimore,Maryland

FIGURE4-10 AIRPORTSTATISTICS-BALTIMOREWASHINGTON INTERNATIONALTHURGOODMARSHALLAIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2006 20,698,967 — — 2007 21,082,132 1.9 % 1.9 % 2008 20,488,881 (2.8) (0.5) 2009 20,953,615 2.3 0.4 2010 21,963,461 4.8 1.5 2011 22,391,785 2.0 1.6 2012 22,679,987 1.3 1.5 2013 22,491,346 (0.8) 1.2 2014 22,312,676 (0.8) 0.9 2015 23,823,532 6.8 1.6 Year-to-date,Oct 2015 19,782,274 — — 2016 20,885,260 5.6 % —

*Annualaveragecompoundedpercentagechangefromthepreviousyear **Annualaveragecompoundedpercentagechangefromfirstyearofdata

Source:BaltimoreWashingtonInternationalThurgoodMarshallAirport

FIGURE4-11 LOCALPASSENGERTRAFFICVS.NATIONALTREND

-2%

ChangeInPassengerActivity -4%

-6% 2007 2008 2009 2010 2011 2012 2013 2014 2015

LocalPassengerVolume NationalPassengerVolume

Source:HVS,LocalAirportAuthority

May-2017 MarketAreaAnalysis 61 HiltonBaltimore–Baltimore,Maryland

This facility recorded 23,823,532 passengers in 2015. The change in passenger trafficbetween2014and2015was6.8%.Theaverageannualchangeduringthe periodshownwas1.6%.Theincreaseinpassengertrafficshownbythemost recent data can be attributed in large part to the addition of more flights, particularlyinternationalservice.

TouristAttractions Themarketbenefitsfromavarietyoftouristandleisureattractionsinthearea. ThepeakseasonfortourisminBaltimoreisfromMaytoSeptember,particularly duringthesummer,althoughmajorsportingeventsandfestivalsdrawhighlevels ofvisitationaswell.Duringothertimesoftheyear,weekenddemandcomprises travelerspassingthroughenroutetootherdestinations,peoplevisitingfriendsor relatives, and other similar weekend demand generators. Primary attractions in theareaincludethefollowing:

• The Inner Harbor is a historic seaport and iconic landmark of the City of Baltimore. The Inner Harbor area contains a variety of restaurants, entertainment venues, attractions, and retails shops. Someof the attractions include the Baltimore Maritime Museum, Maryland Science Center, Port DiscoveryChildren'sMuseum,ReginaldF.LewisMuseumofMarylandAfrican AmericanHistory&Culture,andtheNationalAquarium. • TheNationalAquariuminBaltimorehasanannualattendanceof1.3million visitorstoitscollectionofover17,000animalsfrommorethan750different species.TheNationalAquariumisthenumber-onepaidattractioninthecityof Baltimore,andmorethan88%ofvisitorsstatedthattheNationalAquarium was their primary reason for visiting Baltimore. The museum includes a variety of attractions, such as the Dolphin Discovery, Upland Tropical Rain Forest,themulti-storyAtlanticCoralReed,andSharkAlley. • Professionalsportingeventsplaceakeyroleinroomnightdemandforarea hotels, particularlyevents held at the nearby M&T Bank Stadiumand Oriole Park at Camden Yards. Oriole Park at Camden Yards is home to the Orioles, Baltimore’s professional baseball team. It was the first, and thus one of the mosthighlypraised,ofthe"retro"majorleagueballparksconstructedduring the1990sandearly2000s.Thefieldopenedin1992wasupdatedwithnew lower-bowlseatingandtheadditionofpartysuitesandcasualluxuryboxesin 2011. This most recent renovation reduced the seating capacity to 45,971. Furthermore, M&T Bank Stadium is home to the Baltimore Ravens of the National Football League. Often referred to as “Ravens Stadium,” M&T Bank StadiumislocatedadjacenttoOrioleParkatCamdenYards,andhasacapacity ofapproximately71,000people.In2016,M&TBankStadiumwasrankedas thebestoverallexperienceforanNFLstadium.

May-2017 MarketAreaAnalysis 62 HiltonBaltimore–Baltimore,Maryland

• Pimlico Race Course is a horse racetrack, most famous for hosting the PreaknessStakesinMay.Pimlicoofficiallyopenedinthefallof1870,withthe coltPreaknesswinningthefirstrunningoftheDinnerPartyStakes.Three yearslater,thehorsewouldhavethe1873PreaknessStakes,thesecondjewel oftheTripleCrown,namedinhishonor. ORIOLEPARKATCAMDENYARDS

Conclusion This section discussed a wide variety of economic indicators for the pertinent market area. Baltimore is experiencing a period of economic strength and expansion, primarily led by the education and healthcare sectors. Our market interviews and research revealed that Baltimore's diverse economic base and number of tourist attractions contribute positively to the overall health of the marketarea.

Our analysis of the outlook for this specific market also considers the broader contextofthenationaleconomy.TheU.S.economyexpandedduringthelastten quarters,witharelativelowpointingrowthoccurringduringthefourthquarterof 2015andthefirstquarterof2016.Duringthefollowingthreequarters,thepaceof growthslowed,fallingto1.8%duringthefirstquarterof2016.Theeconomythen expanded by 1.4% and 2.9% in the third quarter of 2016. In recent months, increases in personal consumption expenditures, exports, private inventory

May-2017 MarketAreaAnalysis 63 HiltonBaltimore–Baltimore,Maryland

investment, federal government spending, and nonresidential fixed investment weretheprimaryfactorsinthenetgain.

FIGURE4-12 UNITEDSTATESGDPGROWTHRATE

6.0 5.0 4.6 5.0 3.9 4.0 4.0 4.0 3.2 3.1 2.9 2.8 2.8 2.6 3.0 2.3 2.5 2.3 1.9 2.0 2.0 1.6 1.4 2.0 1.6 1.1 0.8 0.9 0.8 1.0 0.1 0.0 -1.0 -2.0 -1.3 -1.2 2010 2011 2012 2013 2014 2015 2016

Source:tradingeconomics.com,BureauofEconomicAnalysis

U.S. economic growth continues to support expansion of lodging demand; however, demand growth has not been as robust in 2016 as in the last several years.Aswillbereflectedinthefollowingchapter,nationwidesupplygrowthhas nowsurpasseddemandgrowth.Nevertheless,thestabilityintheU.S.economyis maintaining strong interest in hotel investments by a diverse array of market participants.

May-2017 MarketAreaAnalysis 64 HiltonBaltimore–Baltimore,Maryland

5. SupplyandDemandAnalysis

In the lodging industry, supply is measured by the number of guestrooms available, and demand is measured by the number of rooms occupied; the net effectofsupplyanddemandtowardequilibriumresultsinaprevailingprice,or average rate. The purpose of this section is to investigate current supply and demand trends as indicated by the current competitive market, resulting in a forecastofmarket-wideoccupancy.

NationalTrends Thesubject property and local lodging market are most directly affected by the Overview supply and demand trends within the immediate area. However, individual marketsarealsoinfluencedbyconditionsinthenationallodgingmarket.Wehave reviewednationallodgingtrendstoprovideacontextfortheforecastofthesupply anddemandforthesubjectproperty’scompetitiveset.

STRisanindependentresearchfirmthatcompilesdataonthelodgingindustry, andthisinformationisroutinelyusedbytypicalhotelbuyers.ThefollowingSTR diagrampresentsannualhoteloccupancyandaverageratedatasince1987. The nexttwotablescontaininformationthatismorerecent;thedataarecategorized by geographical region, price point, type of location, and chain scale, and the statisticsincludeoccupancy,averagerate,androomsrevenueperavailableroom (RevPAR). RevPAR is calculated by multiplying occupancy by average rate and providesanindicationofhowwellroomsrevenueisbeingmaximized.

May-2017 SupplyandDemandAnalysis 65 HiltonBaltimore–Baltimore,Maryland

FIGURE5-1 NATIONALOCCUPANCY,AVERAGERATE,ANDREVPARTRENDS

70.0% $120

$100 65.0%

$80 60.0%

$60 55.0% $40

50.0% $20

$0 45.0% 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

RevPAR AverageRate Occupancy

Source:STR

May-2017 SupplyandDemandAnalysis 66 HiltonBaltimore–Baltimore,Maryland

FIGURE5-2 NATIONALOCCUPANCYANDAVERAGERATETRENDS–YEAR-TO-DATEDATA

Occupancy-ThruNovember AverageRate-ThruNovember RevPAR-ThruNovember

2015 2016 %Change 2015 2016 %Change 2015 2016 %Change UnitedStates 66.6 % 66.7 % 0.2 % $120.60 $124.32 3.1 % $80.26 $82.88 3.3 % Region NewEngland 66.1 % 65.8 % (0.5) % $147.86 $152.36 3.0 % $97.81 $100.23 2.5 % MiddleAtlantic 68.3 68.2 (0.1) 161.13 161.96 0.5 110.12 110.54 0.4 SouthAtlantic 67.4 68.2 1.1 116.85 120.19 2.9 78.81 81.91 3.9 EastNorthCentral 62.7 62.6 (0.1) 105.94 108.97 2.9 66.41 68.27 2.8 EastSouthCentral 62.1 62.7 1.0 91.42 95.46 4.4 56.77 59.86 5.4 WestNorthCentral 61.0 60.5 (0.8) 93.74 96.44 2.9 57.17 58.34 2.0 WestSouthCentral 64.0 62.5 (2.3) 99.01 99.35 0.3 63.35 62.13 (1.9) Mountain 66.2 66.8 0.8 108.92 114.35 5.0 72.13 76.34 5.8 Pacific 74.2 75.0 1.0 151.73 159.12 4.9 112.64 119.28 5.9 Class Luxury 71.8 % 72.0 % 0.3 % $276.85 $281.40 1.6 % $198.69 $202.53 1.9 % UpperUpscale 73.9 73.9 0.0 174.25 178.52 2.4 128.81 131.95 2.4 Upscale 73.3 73.3 0.1 136.17 140.06 2.9 99.75 102.72 3.0 UpperMidscale 68.4 68.4 0.1 111.49 114.45 2.7 76.24 78.31 2.7 Midscale 61.1 61.1 0.0 90.56 93.08 2.8 55.32 56.87 2.8 Economy 59.6 59.6 0.0 67.82 70.45 3.9 40.43 41.99 3.9 Location Urban 74.2 % 74.3 % 0.2 % $174.59 $177.93 1.9 % $129.53 $132.22 2.1 % Suburban 67.9 68.1 0.2 102.51 106.44 3.8 69.61 72.44 4.1 Airport 74.7 74.5 (0.2) 110.53 114.51 3.6 82.54 85.34 3.4 Interstate 58.4 57.7 (1.1) 81.71 83.44 2.1 47.72 48.17 1.0 Resort 68.8 69.5 1.0 163.19 167.82 2.8 112.20 116.56 3.9 SmallMetro/Town 58.2 58.2 0.1 97.16 99.97 2.9 56.50 58.21 3.0 ChainScale Luxury 76.1 % 75.8 % (0.4) % $315.24 $320.17 1.6 % $239.75 $242.54 1.2 % UpperUpscale 75.6 75.5 (0.1) 175.76 179.76 2.3 132.84 135.68 2.1 Upscale 75.5 75.1 (0.5) 135.35 139.22 2.9 102.20 104.62 2.4 UpperMidscale 68.9 68.8 (0.1) 109.37 112.15 2.5 75.32 77.18 2.5 Midscale 60.6 60.6 (0.1) 83.76 85.93 2.6 50.80 52.04 2.5 Economy 59.1 58.8 (0.4) 59.12 61.17 3.5 34.92 35.99 3.1 Independents 62.9 63.4 0.8 118.84 123.26 3.7 74.72 78.11 4.5

Source:STR-November2016LodgingReview

May-2017 SupplyandDemandAnalysis 67 HiltonBaltimore–Baltimore,Maryland

FIGURE5-3 NATIONALOCCUPANCYANDAVERAGERATETRENDS–CALENDARYEARDATA

Occupancy AverageRate RevPAR

2014 2015 %Change 2014 2015 %Change 2014 2015 %Change UnitedStates 64.4 % 65.6 % 1.7 % $114.92 $120.01 4.4 % $74.04 $78.67 6.3 % Region NewEngland 63.5 64.8 % 2.0 % $139.15 $145.84 4.8 % $88.37 $94.48 6.9 % MiddleAtlantic 66.9 67.6 1.1 160.87 162.13 0.8 107.58 109.61 1.9 SouthAtlantic 64.9 66.6 2.6 110.77 116.36 5.0 71.91 77.49 7.8 EastNorthCentral 60.5 61.5 1.6 99.68 104.72 5.1 60.34 64.37 6.7 EastSouthCentral 59.2 61.1 3.1 85.96 90.62 5.4 50.92 55.34 8.7 WestNorthCentral 59.6 59.7 0.2 89.96 93.06 3.4 53.63 55.56 3.6 WestSouthCentral 63.9 63.1 (1.3) 96.05 98.21 2.2 61.36 61.94 0.9 Mountain 63.1 65.0 3.0 103.07 108.69 5.5 65.05 70.66 8.6 Pacific 71.4 73.3 2.7 141.90 150.79 6.3 101.32 110.54 9.1 Price Luxury 69.7 % 70.9 % 1.8 % $270.22 $279.21 3.3 % $188.27 $198.01 5.2 % Upperupscale 72.0 72.6 1.0 166.79 173.45 4.0 120.01 125.99 5.0 Upscale 71.5 72.4 1.3 128.61 134.69 4.7 91.92 97.51 6.1 Uppermidscale 65.8 67.0 1.9 105.86 110.41 4.3 69.61 73.99 6.3 Midscale 59.0 60.2 2.1 86.44 90.21 4.4 50.97 54.29 6.5 Economy 57.5 58.6 1.9 62.57 65.69 5.0 36.00 38.50 7.0 Location Urban 72.3 % 73.1 % 1.0 % $168.19 $173.95 3.4 % $121.67 $127.13 4.5 % Suburban 65.5 66.8 2.0 96.70 101.77 5.2 63.29 67.96 7.4 Airport 72.4 73.7 1.7 102.69 109.36 6.5 74.40 80.61 8.3 Interstate 56.8 57.4 1.0 78.67 81.11 3.1 44.66 46.52 4.2 Resort 66.1 68.2 3.2 156.21 163.49 4.7 103.32 111.57 8.0 SmallMetro/Town 56.4 57.1 1.2 92.65 95.91 3.5 52.27 54.77 4.8 ChainScale Luxury 75.0 % 75.3 % 0.5 % $304.72 $317.43 4.2 % $228.44 $239.11 4.7 % UpperUpscale 73.6 74.2 0.7 168.45 175.24 4.0 124.04 129.99 4.8 Upscale 73.8 74.3 0.7 127.55 133.79 4.9 94.15 99.46 5.6 Mid-scalew/F&B 66.4 67.6 1.9 104.45 108.93 4.3 69.32 73.66 6.3 Mid-scalew/oF&B 58.3 59.5 2.1 79.84 83.18 4.2 46.55 49.50 6.3 Economy 57.5 58.3 1.4 56.14 58.97 5.0 32.26 34.37 6.5 Independents 60.7 62.2 2.5 113.21 118.25 4.4 68.70 73.55 7.1 Source:STR-December2015LodgingReview

May-2017 SupplyandDemandAnalysis 68 HiltonBaltimore–Baltimore,Maryland

Following the significant RevPAR decline experienced during the last recession, demandgrowthresumedin2010,ledbyselectmarketsthathadrecordedgrowth trendsinthefourthquarterof2009.Areturnofbusinesstravelandsomegroup activitycontributedtothesepositivetrends.Theresurgenceindemandwaspartly fueledbythesignificantpricediscountsthatwerewidelyavailableinthefirsthalf of2010.Thesediscountingpolicieswerelargelyphasedoutinthelatterhalfofthe year,balancingmuchoftheearlyrateloss.Demandgrowthremainedstrong,but deceleratedfrom2011through2013,increasingatratesof4.7%,2.8%,and2.0%, respectively. Demand growth then surged to 4.0% in 2014, driven by a strong economy,arobustoilandgassector,andlimitednewsupply,amongotherfactors. By 2014, occupancy had surpassed the 64% mark. Average rate rebounded similarlyduringthistime,bracketing4.0%annualgainsfrom2011through2014.

In2015,demandgrowthcontinuedtooutpacesupplygrowth,arelationshipthat hasbeeninplacesince2010.Witha2.9%increaseinroom-nights,thenation's occupancylevelreachedarecordhigh65.6%in2015.Supplygrowthintensified, butremainedat1.1%,followingannualsupplygrowthlevelsof0.7%and0.9%of 2013and2014,respectively.Averageratepostedanotherstrongyearofgrowth, at4.4%in2015,inpacewiththeannualgrowthofthelastfouryears.Robustjob growth, intensified group and leisure travel, and waning price-sensitivity all contributed to the gains. The comparative period through November illustrates thatoccupancymovedslightlyhigher(by0.1percentagepoint)to66.7%in2016, asdemandgrowthkeptpacewithsupplygrowth.Averagerateincreased3.1%for thesameperiod,andthenetchangeinRevPARthroughNovember2016was 3.3%,reflectingahealthylodgingmarketoverall.

DefinitionofSubject ThesubjectsiteislocatedinthegreaterBaltimorelodgingmarket.Thisgreater HotelMarket lodging market spans nearly 260 open and operating lodging facilities totaling roughly34,000guestrooms.Withinthisgreatermarket,thedirectsubmarketthat willencompasstheproposedsubjecthotelisknownasDowntownBaltimore.The subject hotel competes with three hotels on a primary level based on location withintheInnerHarbor.Wehaveconsideredanadditionalthreehotelsasbeing secondarilycompetitiveduetodifferencesinlocation.

HistoricalSupply STR is an independent research firm that compiles and publishes data on the andDemandData lodging industry, routinely used by typical hotel buyers. HVS has ordered and analyzedanSTRTrendReportofhistoricalsupplyanddemanddataforthesubject propertyanditscompetitors.Thisinformationispresentedinthefollowingtable, along with the market-wide occupancy, average rate, and rooms revenue per available room (RevPAR). RevPAR is calculated by multiplying occupancy by average rate and provides an indication of how well rooms revenue is being maximized.

May-2017 SupplyandDemandAnalysis 69 HiltonBaltimore–Baltimore,Maryland FIGURE5-4 HISTORICALSUPPLYANDDEMANDTRENDS(STR)

Source:STR

May-2017 SupplyandDemandAnalysis 70 HiltonBaltimore–Baltimore,Maryland

ItisimportanttonotesomelimitationsoftheSTRdata.Hotelsareoccasionally added to or removed from thesample; furthermore, not every property reports data in a consistent and timely manner. These factors can influence the overall qualityoftheinformationbyskewingtheresults,andtheseinconsistenciesmay also cause the STR data to differ from the results of our competitive survey. Nonetheless,STRdataprovidethebestindicationofaggregategrowthordecline in existing supply and demand; thus, these trends have been considered in our analysis.Openingdates,asavailable,arepresentedforeachreportinghotelinthe previoustable.

The STR data for the competitive set reflect a market-wide occupancy level of 68.9%in2016,whichcomparesto67.4%for2015.Theoverallaverageoccupancy level for the calendar years presented equates to 67.0%. The STR data for the competitivesetreflectamarket-wideaverageratelevelof$165.36in2016,which comparesto$160.93for2015.Theseoccupancyandaverageratetrendsresulted inaRevPARlevelof$113.94in2016.

RevPAR generally increased from 2010 through 2014, with the exception of a slightdipin2012asaweakconventionschedulecausedhotelierstosacrificerate inordertomaintainastrongoccupancy.Themarket'sperformancein2015was adverselyaffectedbythecivilunrestandriotsthatoccurredfollowingthedeathof Freddie Gray, which received widespread media coverage. Following the city's settling and movement away from the national media's attention, RevPAR reboundedin2016tolevelspriortothecivilunrest.

Seasonality Monthlyoccupancyandaverageratetrendsarepresentedinthefollowingtables.

May-2017 SupplyandDemandAnalysis 71 HiltonBaltimore–Baltimore,Maryland

FIGURE5-5 MONTHLYOCCUPANCYTRENDS

Month 2009 2010 2011 2012 2013 2014 2015 2016 January 41.2 % 41.4 % 45.8 % 43.0 % 50.2 % 48.9 % 50.2 % 53.3 % February 45.8 46.2 56.4 44.7 56.3 57.1 67.1 56.0 March 58.5 62.1 60.8 61.1 72.6 72.3 72.4 68.9 April 64.0 71.5 69.3 75.2 71.4 76.0 69.7 79.4 May 67.4 71.6 73.9 75.0 72.4 80.3 66.0 78.3 June 73.7 81.3 74.0 80.8 79.8 84.0 76.7 80.7 July 64.6 71.9 73.0 70.1 80.9 77.9 74.0 73.7 August 61.5 65.4 65.3 75.5 75.4 76.5 71.9 75.8 September 66.7 71.6 67.6 71.4 73.9 76.3 67.2 77.2 October 65.4 77.7 70.8 71.5 74.1 75.4 79.5 74.5 November 50.3 55.2 64.5 56.5 69.3 65.1 67.8 60.6 December 34.5 41.7 44.7 42.4 43.1 45.0 47.1 47.8

AnnualOccupancy 57.8 % 63.2 % 63.8 % 64.2 % 68.3 % 69.6 % 67.4 % 68.9 % Source:STR

FIGURE5-6 MONTHLYAVERAGERATETRENDS

Month 2009 2010 2011 2012 2013 2014 2015 2016 January $153.01 $132.75 $135.63 $128.01 $127.10 $128.41 $124.17 $126.79 February 151.95 133.95 132.73 130.16 132.24 128.95 138.17 133.87 March 174.84 159.10 163.30 151.05 162.37 163.20 156.76 165.64 April 166.25 164.55 164.44 161.43 166.59 162.13 170.53 181.03 May 164.78 171.93 174.93 171.47 169.04 176.47 172.73 195.17 June 162.46 172.75 168.60 165.26 181.51 173.79 178.13 173.53 July 162.28 155.25 159.36 159.08 163.53 165.16 158.64 149.66 August 147.13 142.61 145.09 145.37 156.92 162.13 154.00 158.64 September 163.67 168.77 176.24 178.06 176.16 182.62 173.60 186.26 October 165.83 181.12 170.16 169.07 181.77 178.40 187.06 181.96 November 153.58 162.59 155.64 153.04 162.17 164.09 161.46 159.35 December 132.48 135.48 133.28 126.50 123.86 141.59 130.21 137.53

AnnualAverageRate $159.77 $159.71 $158.68 $156.39 $161.60 $163.34 $160.93 $165.36 Source:STR

May-2017 SupplyandDemandAnalysis 72 HiltonBaltimore–Baltimore,Maryland

FIGURE5-7 SEASONALITY

2009 2010 2011 2012 2013 2014 2015 2016 HighSeason-April,May,June,July,August,September,October Occupancy 66.1 % 73.0 % 70.6 % 74.2 % 75.4 % 78.0 % 72.2 % 77.1 % AverageRate $161.88 $165.84 $165.70 $164.11 $170.74 $171.55 $170.84 $175.34 RevPAR 107.08 121.02 116.93 121.76 128.77 133.89 123.29 135.15 ShoulderSeason-March,November Occupancy 54.5 % 58.7 % 62.6 % 58.9 % 71.0 % 68.7 % 70.1 % 64.8 % AverageRate $165.19 $160.71 $159.43 $151.96 $162.27 $163.61 $158.99 $162.75 RevPAR 89.95 94.28 99.84 89.47 115.18 112.48 111.47 105.49 LowSeason-January,February,December Occupancy 40.3 % 43.0 % 48.7 % 43.3 % 49.7 % 50.1 % 54.4 % 52.3 % AverageRate $146.59 $134.06 $133.84 $128.23 $127.94 $132.68 $131.35 $132.54 RevPAR 59.06 57.60 65.17 55.56 63.54 66.46 71.43 69.26 Source:SmithTravelResearch

May-2017 SupplyandDemandAnalysis 73 HiltonBaltimore–Baltimore,Maryland

The illustrated monthly occupancy and average rates patterns reflect important seasonal characteristics. We have reviewed these trends in developing our forthcoming forecast ofmarket-wide demand and average rate. The competitive marketischaracterizedbyasignificantdegreeofseasonality,whichisevidentin the monthly occupancy statistics. The strongest occupancy levels are recorded fromAprilthroughOctober,whendemandfromleisuretravelerssupplementsthe commercial segment that is the principal source of demand in this submarket. Conventionactivitycontributestothemarket’sstrongperformanceinthespring andfallmonths,aswell.Averageratelevelsreflectasimilarpattern,withratesin thepeakseasonasmuchas$68higherthaninthewintermonths.

PatternsofDemand Areviewofthetrendsinoccupancyandaverageratebydayoftheweekprovides someinsightintotheimpactthatthecurrenteconomicconditionshavehadonthe competitive lodging market. The data, as provided by STR, areillustratedin the followingtable(s).

May-2017 SupplyandDemandAnalysis 74 HiltonBaltimore–Baltimore,Maryland

FIGURE5-8 OCCUPANCYBYDAYOFWEEK(TRAILING12MONTHS)

Month Sunday Monday Tuesday Wednesday Thursday Friday Saturday TotalMonth Jan-16 29.0 % 39.3 % 58.1 % 71.5 % 63.9 % 54.7 % 60.6 % 53.3 % Feb-16 36.2 48.9 56.4 60.7 61.6 64.4 65.7 56.0 Mar-16 48.7 72.2 81.8 77.4 66.2 65.0 66.6 68.9 Apr-16 52.4 76.5 85.9 87.7 78.6 82.0 89.3 79.4 May-16 77.6 75.4 81.4 86.0 65.3 74.0 88.9 78.3 Jun-16 58.3 75.3 88.8 83.7 78.1 89.6 91.2 80.7 Jul-16 54.8 70.9 75.7 82.0 69.1 77.7 86.0 73.7 Aug-16 51.6 68.7 82.4 80.3 73.1 80.9 92.9 75.8 Sep-16 63.2 67.1 77.3 84.4 77.1 80.8 89.7 77.2 Oct-16 60.5 73.7 81.2 81.9 73.8 68.8 83.4 74.5 Nov-16 39.1 47.3 57.0 65.2 69.7 68.3 77.0 60.6 Dec-16 29.1 37.0 45.9 45.3 41.9 57.3 71.4 47.8 Average 50.5 % 63.0 % 72.9 % 75.6 % 68.0 % 71.9 % 80.1 % 68.9 %

Source:STR

FIGURE5-9 AVERAGERATEBYDAYOFWEEK(TRAILING12MONTHS)

Month Sunday Monday Tuesday Wednesday Thursday Friday Saturday TotalMonth Jan-16 $116.44 $123.64 $130.99 $135.70 $133.54 $120.92 $121.36 $126.79 Feb-16 128.86 138.38 138.35 134.78 136.12 131.39 128.07 133.87 Mar-16 174.29 178.62 173.38 170.28 166.04 147.14 144.21 165.64 Apr-16 172.30 183.69 183.23 187.54 186.88 180.93 172.47 181.03 May-16 197.27 206.29 201.80 192.66 189.79 182.02 190.83 195.17 Jun-16 171.97 178.10 178.29 176.23 171.57 168.80 169.78 173.53 Jul-16 144.42 153.52 159.41 154.87 146.41 143.69 147.11 149.66 Aug-16 146.13 152.48 155.98 160.37 165.78 165.84 160.47 158.64 Sep-16 173.47 185.51 198.76 208.46 194.82 174.28 168.47 186.26 Oct-16 180.13 190.53 191.20 189.00 188.25 173.15 164.33 181.96 Nov-16 156.86 158.34 165.75 168.26 167.64 148.48 148.04 159.35 Dec-16 128.54 123.30 126.49 113.89 121.26 152.66 161.43 137.53

Average $163.88 $169.99 $170.92 $169.55 $166.81 $159.16 $158.20 $165.36

Source:STR

May-2017 SupplyandDemandAnalysis 75 HiltonBaltimore–Baltimore,Maryland

FIGURE5-10 OCCUPANCY,AVERAGERATE,ANDREVPARBYDAYOFWEEK(MULTIPLEYEARS)

Occupancy(%) Sunday Monday Tuesday Wednesday Thursday Friday Saturday TotalYear Jan14-Dec14 49.7 % 66.8 % 73.5 % 74.2 % 68.7 % 73.8 % 80.4 % 69.6 % Jan15-Dec15 51.4 65.7 72.5 71.6 63.1 68.6 79.2 67.4 Jan16-Dec16 50.5 63.0 72.9 75.6 68.0 71.9 80.1 68.9 Change(OccupancyPoints) FY14-FY15 1.7 (1.0) (1.0) (2.6) (5.6) (5.1) (1.2) (2.2) FY15-FY16 (0.9) (2.7) 0.5 4.1 4.9 3.2 0.9 1.5

ADR($) Sunday Monday Tuesday Wednesday Thursday Friday Saturday TotalYear Jan14-Dec14 $159.26 $164.51 $166.43 $167.86 $166.39 $159.28 $158.95 $163.34 Jan15-Dec15 159.71 165.45 168.83 165.16 162.04 151.09 154.55 160.93 Jan16-Dec16 163.88 169.99 170.92 169.55 166.81 159.16 158.20 165.36 Change(Dollars) FY14-FY15 $0.44 $0.94 $2.41 ($2.70) ($4.36) ($8.19) ($4.39) ($2.41) FY15-FY16 4.17 4.54 2.08 4.39 4.78 8.07 3.65 4.43 Change(Percent) FY14-FY15 0.3 % 0.6 % 1.4 % (1.6) % (2.6) % (5.1) % (2.8) % (1.5) % FY15-FY16 2.6 2.7 1.2 2.7 2.9 5.3 2.4 2.8

RevPAR($) Sunday Monday Tuesday Wednesday Thursday Friday Saturday TotalYear Jan14-Dec14 $79.20 $109.88 $122.31 $124.56 $114.29 $117.47 $127.87 $113.68 Jan15-Dec15 82.09 108.78 122.34 118.24 102.24 103.71 122.41 108.53 Jan16-Dec16 82.74 107.18 124.65 128.26 113.47 114.36 126.69 113.94 Change(Dollars) FY14-FY15 $2.89 ($1.10) $0.03 ($6.33) ($12.05) ($13.76) ($5.45) ($5.16) FY15-FY16 0.65 (1.60) 2.30 10.02 11.24 10.65 4.27 5.42 Change(Percent) FY14-FY15 3.6 % (1.0) % 0.0 % (5.1) % (10.5) % (11.7) % (4.3) % (4.5) % FY15-FY16 0.8 (1.5) 1.9 8.5 11.0 10.3 3.5 5.0

Source:STR

In most markets, business travel, including individual commercial travelers and corporate groups, is the predominant source of demand on Monday through Thursday nights. Leisure travelers and non-business-related groups generate a majority of demand on Friday and Saturday nights. The influence of the leisure segment,particularlydemandgeneratedbysportingorconcertevents,isevident intheoccupancyandaverageratelevelsrecordedonFridayandSaturdaynights

May-2017 SupplyandDemandAnalysis 76 HiltonBaltimore–Baltimore,Maryland

ofAprilthroughOctober.Thissourcealsogeneratessupplementaldemandduring theweekinthesummermonths.

SUPPLY Basedonanevaluationoftheoccupancy,ratestructure,marketorientation,chain affiliation,location,facilities,amenities,reputation,andqualityofeachareahotel, as well as the comments of management representatives, we have identified several properties that are considered primarily competitive with the subject property.Ifapplicable,additionallodgingfacilitiesmaybejudgedonlysecondarily competitive;althoughthefacilities,ratestructures,ormarketorientationsofthese hotels prevent their inclusion among the primary competitive supply, they do competewiththesubjectpropertytosomeextent.

The following table summarizes the important operating characteristics of the primarycompetitorsandtheaggregatesecondarycompetitors(ifapplicable).This informationwascompiledfrompersonalinterviews,inspections,onlineresources, andourin-housedatabaseofoperatingandhotelfacilitydata.

May-2017 SupplyandDemandAnalysis 77 HiltonBaltimore–Baltimore,Maryland FIGURE5-11 PRIMARYCOMPETITORS–OPERATINGPERFORMANCE

Est.Segmentation Estimated2015 Estimated2016

Weighted Weighted Annual Annual Numberof Room Room Occupancy Property Rooms Count Occ. AverageRate RevPAR Count Occ. AverageRate RevPAR Penetration YieldPenetration Commercial Leisure MeetingandGroup

HiltonBaltimore 757 18 % 20 % 62 % 757 66.2 % $169.15 $111.92 757 68.0 % $170.93 $116.24 98.8 % 103.0 %

MarriottInnerHarbor 524 25 20 55 524 65-70 130-140 90-95 524 70-75 130-140 95-100 100-110 80-85

SheratonInnerHarborHotel 338 30 25 45 338 55-60 150-160 90-95 338 60-65 150-160 95-100 85-90 80-85

HyattRegencyBaltimore 488 25 20 55 488 65-70 160-170 110-115 488 70-75 160-170 115-120 100-110 100-110

Sub-Totals/Averages 2,107 23 % 21 % 56 % 2,107 67.0 % $154.89 $103.80 2,107 68.5 % $158.79 $108.74 99.5 % 96.3 %

SecondaryCompetitors 1,695 34 % 30 % 36 % 985 68.4 % $170.19 $116.37 985 69.5 % $174.99 $121.69 101.1 % 107.8 %

Totals/Averages 3,802 27 % 24 % 49 % 3,092 67.5 % $159.83 $107.80 3,092 68.8 % $164.01 $112.87 100.0 % 100.0 % *Specificoccupancyandaverageratedatawasutilizedinouranalysis,butispresentedinrangesintheabovetableforthepurposesofconfidentiality.

May-2017 SupplyandDemandAnalysis 78 HiltonBaltimore–Baltimore,Maryland FIGURE5-12 PRIMARYCOMPETITORS–FACILITYSUMMARY

Approx.Miles Meeting Numberof Year LastMajor ToSubject IndoorMeeting Spaceper Property Rooms Opened Renovation(s) Property FoodandBeverageOutlets Space(SF) Room Facilities&Amenities HiltonBaltimore 757 2008 — — DiamondTavern,LobbyBar,TheCoffee 56,554 74.7 IndoorPool;FitnessCenter;LobbyWorkstation;GiftShop;UPSStore;HertzCar-RentalService;Vending 401WestPrattStreet Bean&TeaLeaf Areas

MarriottInnerHarbor 524 1985 2013 0.1 CafePromenade,TheYardBar,Bricknpizza 14,000 26.7 BusinessCenter;GuestLaundryArea;Concierge;RoomService;GiftShop;IndoorSwimmingPool;Fitness 110SouthEutawStreet Company,FreshBites Center;IndoorWhirlpool;Sauna

SheratonInnerHarborHotel 338 1985 — 0.3 Morton'sSteakhouse,OriolesBar&Grille 20,000 59.2 BusinessCenter;Concierge;RoomService;GiftShop;IndoorSwimmingPool;FitnessCenter;Sauna 300SouthCharlesStreet

HyattRegencyBaltimore 488 1981 2012/13 0.4 Bistro300,Perks 30,000 61.5 BusinessCenter;GuestLaundryArea;Concierge;RoomService;GiftShop;OutdoorSwimmingPool;Tennis 300LightStreet Court(s);FitnessCenter;IndoorWhirlpool

May-2017 SupplyandDemandAnalysis 79 HiltonBaltimore–Baltimore,Maryland

The following map illustrates the locations of the subject property and its competitors.

MAPOFCOMPETITION

Oursurveyoftheprimarilycompetitivehotelsinthelocalmarketshowsarangeof lodgingtypesandfacilities.Eachprimarycompetitorwasinspectedandevaluated. Descriptionsofourfindingsarepresentedbelow.

May-2017 SupplyandDemandAnalysis 80 HiltonBaltimore–Baltimore,Maryland

PRIMARYCOMPETITOR#1- MARRIOTTINNERHARBOR

MarriottInnerHarbor Figure5-13 EstimatedHistoricalOperatingStatistics 110SouthEutawStreet Baltimore,MD Wtd.Annual Occupancy Yield Year RoomCount Occupancy AverageRate RevPAR Penetration Penetration Est.2012 524 60-65 % $130-$140 $80-$85 95-100 % 80-85 % Est.2013 524 65-70 130-140 85-90 95-100 80-85 Est.2014 524 70-75 130-140 95-100 100-110 80-85 Est.2015 524 65-70 130-140 90-95 100-110 80-85 Est.2016 524 70-75 130-140 95-100 100-110 80-85

Thishotelissomewhatdisadvantagedbyitslackofrecentguestroomrenovations, but benefits from its popular flagship Marriott affiliation. Overall, the property appearedtobeingoodcondition,similartothesubjectproperty’scondition.Its accessibilityissimilartothatofthesubjecthotel,anditsvisibilityissimilartothe HiltonBaltimore.

May-2017 SupplyandDemandAnalysis 81 HiltonBaltimore–Baltimore,Maryland

PRIMARYCOMPETITOR#2- SHERATONINNERHARBORHOTEL

SheratonInnerHarbor FIGURE5-14 ESTIMATEDHISTORICALOPERATINGSTATISTICS Hotel 300SouthCharles Wtd.Annual Occupancy Yield Street Year RoomCount Occupancy AverageRate RevPAR Penetration Penetration Baltimore,MD Est.2012 337 55-60 % $150-$160 $90-$95 90-95 % 90-95 % Est.2013 337 60-65 150-160 95-100 90-95 85-90 Est.2014 337 60-65 150-160 95-100 85-90 80-85 Est.2015 338 55-60 150-160 90-95 85-90 80-85 Est.2016 338 60-65 150-160 95-100 85-90 80-85

ThishotelbenefitsfromitslocationadjacenttotheBaltimoreConventionCenter, asitservesasoneoftheprimaryheadquarterhotelsforthefacility.Overall,the property appeared to be in good condition, similar to the subject property’s condition.Itsaccessibilityissimilartothatofthesubjecthotel,anditsvisibilityis similartotheHiltonBaltimore.

May-2017 SupplyandDemandAnalysis 82 HiltonBaltimore–Baltimore,Maryland

PRIMARYCOMPETITOR#3- HYATTREGENCYBALTIMORE

HyattRegency FIGURE5-15 ESTIMATEDHISTORICALOPERATINGSTATISTICS Baltimore 300LightStreet Wtd.Annual Occupancy Yield Baltimore,MD Year RoomCount Occupancy AverageRate RevPAR Penetration Penetration Est.2012 488 70-75 % $160-$170 $115-$120 100-110 % 110-120 % Est.2013 488 70-75 160-170 115-120 100-110 100-110 Est.2014 488 70-75 160-170 115-120 100-110 100-110 Est.2015 488 65-70 160-170 110-115 100-110 100-110 Est.2016 488 70-75 160-170 115-120 100-110 100-110

Thishotelbenefitsfromitsadjacentlocationandconnectionviaskybridgetothe Baltimore Convention Center. Overall, the property appeared to be in good condition,similartothesubjectproperty’scondition.Itsaccessibilityissimilarto thatofthesubjecthotel,anditsvisibilityissimilartotheHiltonBaltimore.

May-2017 SupplyandDemandAnalysis 83 HiltonBaltimore–Baltimore,Maryland

Secondary Wehavealsoreviewedotherarealodgingfacilitiestodeterminewhetheranymay Competitors competewiththesubjectpropertyonasecondarybasis.Theroomcountofeach secondary competitor has been weighted based on its assumed degree of competitiveness with the subject property. By assigning degrees of competitiveness,wecanassesshowthesubjectpropertyanditscompetitorsmay reacttovariouschangesinthemarket,includingnewsupply,changestodemand generators,andrenovationsorfranchisechangesofexistingsupply.Thefollowing table sets forth the pertinent operating characteristics of the secondary competitors.

May-2017 SupplyandDemandAnalysis 84 HiltonBaltimore–Baltimore,Maryland

FIGURE5-16 SECONDARYCOMPETITOR(S)–OPERATINGPERFORMANCE

Est.Segmentation Estimated2015 Estimated2016

Weighted Total Weighted Annual Numberof Competitive Annual Room

Property Rooms Commercial Leisure MeetingandGroup Level RoomCount Occ. AverageRate RevPAR Count Occ. AverageRate RevPAR

MarriottWaterfrontHotel 750 35 % 30 % 35 % 60 % 450 70-75 % $190-$200 $130-$140 450 70-75 % $190-$200 $140-$150

RenaissanceBaltimoreHarborplace 622 35 25 40 60 373 70-75 160-170 115-120 373 70-75 160-170 120-125

RadissonHotelBaltimoreDowntown- 323 30 45 25 50 162 50-55 100-105 55-60 162 55-60 105-110 60-65 InnerHarbor

We have identified three hotels that compete with the subject property on a secondary level. The Marriott Waterfront Hotel, Renaissance Baltimore Harborplace,andRadissonHotelBaltimoreDowntownarecompetitivegiventheir similar scope of guestrooms and full-service product offering; however, these hotelsarelocatedclosertotheCentralBusinessDistrictandattractlessbusiness fromtheBaltimoreConventionCenterincomparisontothesubjectproperty.

SupplyChanges Itisimportanttoconsideranynewhotelsthatmayhaveanimpactonthesubject property’soperatingperformance.Wenotethata151-unitHiltonGardenInnand a156-unitCanopybyHiltonareproposedforlocationslessthantwomilesfrom thesubjectproperty;however,thesehotelswillbesignificantlysmallerthanthe subject property and are anticipated to target a different customer base. Therefore,thesehotelshaveonlybeenconsideredqualitativelyinourpositioning ofthesubjecthotel'sstabilizedoccupancylevel.

Whilewehavetakenreasonablestepstoinvestigateproposedhotelprojectsand their status, due to the nature of real estate development, it is impossible to determine with certainty every hotel that will be opened in the future, or what their marketing strategies and effect in the market will be. Depending on the outcome of current and future projects, the future operating potential of the subjectpropertymaybeaffected.Futureimprovementinmarketconditionswill raise the risk of increased competition. Our forthcoming forecast of stabilized occupancyandaveragerateisintendedtoreflectsuchrisk.

SupplyConclusion Wehaveidentifiedvariouspropertiesthatarecompetitivetosomedegreewith thesubjectproperty.Wehavealsoinvestigatedpotentialincreasesincompetitive supplyinthisBaltimoresubmarket.TheHiltonBaltimorewillcontinuetooperate inadynamicmarketofvaryingproducttypesandpricepoints.Next,wewill presentourforecastfordemandchange,usingthehistoricalsupplydatapresented asastartingpoint.

DEMAND Thefollowingtablepresentsthemostrecenttrendsforthesubjecthotelmarketas tracked by HVS. These data pertain to the subject and competitors discussed previously in this section; performance results are estimated, rounded for the competition,andinsomecasesweightediftherearesecondarycompetitors present. In this respect, the information in the table differs from the previously presented STR data and is consistent with the supply and demand analysis developedforthisreport.

May-2017 SupplyandDemandAnalysis 86 HiltonBaltimore–Baltimore,Maryland

FIGURE5-17 HISTORICALMARKETTRENDS

Accommodated RoomNights Market Market Year RoomNights %Change Available %Change Occupancy MarketADR %Change RevPAR %Change Est.2012 766,759 — 1,189,243 — 64.5 % $157.39 — $101.47 — Est.2013 786,604 2.6 % 1,144,166 (3.8) % 68.7 160.92 2.2 % 110.63 9.0 % Est.2014 788,768 0.3 1,128,106 (1.4) 69.9 162.35 0.9 113.51 2.6 Est.2015 761,164 (3.5) 1,128,471 0.0 67.5 159.83 (1.6) 107.80 (5.0) Est.2016 776,577 2.0 1,128,471 0.0 68.8 164.01 2.6 112.87 4.7

Avg.AnnualCompounded Chg.,Est.2012-Est.2016: 0.3 % (1.3) % 1.0 % 2.7 %

DemandAnalysis Forthepurposeofdemandanalysis,theoverallmarketisdividedintoindividual UsingMarket segmentsbasedonthenatureoftravel.Basedonourfieldwork,areaanalysis,and Segmentation knowledge of the local lodging market, we estimate the 2016 distribution of accommodated-room-nightdemandasfollows.

FIGURE5-18 ACCOMMODATEDROOM-NIGHTDEMAND

Marketwide SubjectProperty Accommodated Percentageof MarketSegment Demand Total AccommodatedDemand PercentageofTotal

Commercial 208,130 27 % 33,820 18 % Leisure 184,270 24 37,578 20 MeetingandGroup 384,177 49 116,492 62

Total 776,577 100 % 187,891 100 %

The market’s demand mix comprises commercial demand, with this segment representing roughly 27% of the accommodated room nights in this Baltimore submarket.Theremainingportioncomprisesleisureat24%,withthefinalportion meetingandgroupinnature,reflecting49%.

Usingthedistributionofaccommodatedhoteldemandasastartingpoint,wewill analyzethecharacteristicsofeachmarketsegmentinanefforttodeterminefuture trendsinroom-nightdemand.

CommercialSegment Commercialdemandconsistsmainlyofindividualbusinesspeoplepassingthrough the subject market or visiting area businesses, in addition to high-volume corporateaccountsgeneratedbylocalfirms.Brandloyalty(particularlyfrequent- travelerprograms),aswellaslocationandconveniencewithrespecttobusinesses and amenities, influence lodging choices in this segment. Companies typically

May-2017 SupplyandDemandAnalysis 87 HiltonBaltimore–Baltimore,Maryland

designate hotels as “preferred” accommodations in return for more favorable rates,whicharediscountedinproportiontothenumberofroomnightsproduced by a commercial client. Commercial demand is strongest Monday through Thursday nights, declines significantly on Friday and Saturday, and increases somewhat on Sunday night. It is relatively constant throughout the year, with marginaldeclinesinlateDecemberandduringotherholidayperiods.

Amajorfactorconsideredinthedevelopmentofourgrowthratesisthepresence ofvariouslocalandnationalhealthcare,medical,andfinancialfirmslocatedinthis area. Companies such as Exelon, Legg Mason, Morgan Stanley, Transamerica, T. Rowe Price, and Under Armour all provide significant room nights to the downtown hotels. Commercial demand is also generated by government and militaryentitiesinDowntownBaltimore.JohnsHopkinsUniversity,theUniversity of Maryland, and the surrounding medical complexes provide significant room nights,aswell.GovernmentdemandoriginatesfromtheNationalSecurityAgency (NSA),NorthropGrummanCorporation,andtheDepartmentofVeteransAffairs. The increase in businesses moving to Baltimore, as well as the expansion and growth of many existing businesses, such as Under Armour, Pandora, and the UniversityofMarylandBioPark,shouldsupporttheexpectedgrowthwithinthis segment.

LeisureSegment Leisuredemandconsistsofindividualsandfamiliesspendingtimeinanareaor passing through en route to other destinations. Travel purposes include sightseeing, recreation, or visiting friends and relatives. Leisure demand also includesroomnightsbookedthroughInternetsitessuchasExpedia,Hotels.com, andPriceline;however,leisuremaynotbethepurposeofthestay.Thisdemand mayalsoincludebusinesstravelersandgroupandconventionattendeeswhouse thesechannelstotakeadvantageofanydiscountsthatmaybeavailableonthese sites.LeisuredemandisstrongestFridayandSaturdaynights,andallweekduring holiday periods and the summer months. These peak periods represent the inverse of commercial visitation trends, underscoring the stabilizing effect of capturingweekendandsummertouristtravel.Futureleisuredemandisrelatedto theoveralleconomichealthoftheregionandthenation.Trendsshowingchanges in state and regional unemployment and disposable personal income correlate stronglywithleisuretravellevels.

LeisuredemandintheareaisprimarilygeneratedbytheInnerHarborandHarbor Eastneighborhoodsandtheirrespectiveretailandentertainmentvenues.These destinationsdrawprimarilyweekenddemandfromsurroundingcities,whichlack asimilardepthofretail,restaurant,andentertainmentvenues.Leisuredemandis also generated by The National Aquarium, which has an annual attendance of roughly1.5million,aswellasconcertsandsportingeventsheldatCamdenYards, M&TBankStadium,andPierSixPavilion.DowntownBaltimore,areauniversities,

May-2017 SupplyandDemandAnalysis 88 HiltonBaltimore–Baltimore,Maryland

festivals,andsportingeventsdrawvisitorstoBaltimore,aswell.Similartothe meetingandgroupsegment,leisuretraveldeclinedinthesummerof2015given thenegativepublicityfollowingthecityriots.Weexpectgrowthtooccurwithin this segment through the stabilized year, as visitation levels are anticipated to increaseinthenearfuture.

MeetingAndGroup The meeting and group market includes meetings, seminars, conventions, trade Segment associationshows,andsimilargatheringsoftenormorepeople.Peakconvention demand typically occurs in the spring and fall. Although there are numerous classifications within the meeting and group segment, the primary categories consideredinthisanalysisarecorporategroups,associations,andSMERFE(social, military,ethnic,religious,fraternal,andeducational)groups.Corporategroups typically meet during the business week, most commonly in the spring and fall months.Thesegroupstendtobethemostprofitableforhotels,astheytypically pay higher rates and usually generate ancillary revenues including food and beverage and/or banquet revenue. SMERFE groups are typically price-sensitive andtendtomeetonweekendsandduringthesummermonthsorholidayseason, when greater discounts are usually available; these groups generate limited ancillary revenues. Association demand is generally divided on a geographical basis,withnational,regional,andstateassociationsrepresentingthemost commonsources.Professionalassociationsand/orthosesupportedbymembers' employersoftenmeetonweekdays,whileotherassociationsprefertoholdevents onweekends.Theprofileandrevenuepotentialofassociationsvariesdepending onthegroupandthepurposeofthemeetingorevent.

MeetingandgroupdemandinBaltimoreisgeneratedbymanysources.Thesame companies that create commercial demand also provide room nights for area hotels through training activities and social corporate events. High school and collegiatesportsteams,SMERFEgroups,andsocialevents,suchasweddingsand familyreunions,alsocontributetothis demandsegment.Demanddrivenbythe Baltimore Convention Center is the most significant source for the larger, full- service hotels in the market. The city riots in 2015 negatively affected demand withinthissegment,includingnotabledropsinconventionattendanceduringthe summer months. Demand growth rates for this segment correlate with reports fromthemarketonfutureconventionbookings;accordingtomarketparticipants, bookings were strong for 2016, but are tracking at a more normalized pace for 2017,withasofteningexpectedin2018.However,wenotethat2019isontrackto be a banner year for the convention center, and we have therefore forecast an uptickinmeetingandgroupdemandduringthatyear.

BaseDemandGrowth The purpose of segmenting the lodging market is to define each major type of Rates demand, identify customer characteristics, and estimate future growth trends. Starting with an analysis of the local area, three segments were defined as

May-2017 SupplyandDemandAnalysis 89 HiltonBaltimore–Baltimore,Maryland

representingthesubjectproperty’slodgingmarket.Varioustypesofeconomicand demographic data were then evaluated to determine their propensity to reflect changes in hotel demand. Based on this procedure, we forecast the following annualgrowthratesforeachdemandsegment.

FIGURE5-19 AVERAGEANNUALCOMPOUNDEDMARKETSEGMENTGROWTHRATES

AnnualGrowthRate MarketSegment 2017 2018 2019 2020

Commercial 1.0 % 1.0 % 0.5 % 0.0 % Leisure 1.0 1.0 0.5 0.0 MeetingandGroup 1.0 -0.5 2.0 1.5

BaseDemandGrowth 1.0 % 0.3 % 1.2 % 0.7 %

Accommodated Baseduponareviewofthemarketdynamicsinthesubjectproperty’scompetitive DemandandMarket- environment,wehaveforecastgrowthratesforeachmarketsegment.Usingthe wideOccupancy calculated potential demand for the market, we have determined market-wide accommodateddemandbasedontheinherentlimitationsofdemandfluctuations andotherfactorsinthemarketarea.Thefollowingtabledetailsourprojectionof lodging demand growth for the subject market, including the total number of occupiedroomnightsandanyresidualunaccommodateddemandinthemarket.

May-2017 SupplyandDemandAnalysis 90 HiltonBaltimore–Baltimore,Maryland

FIGURE5-20 ACCOMMODATEDDEMAND

2016 2017 2018 2019 2020 Commercial BaseDemand 208,130 210,211 212,314 213,375 213,375 TotalDemand 210,211 212,314 213,375 213,375 GrowthRate 1.0 % 1.0 % 0.5 % 0.0 %

Leisure BaseDemand 184,270 186,112 187,974 188,913 188,913 TotalDemand 186,112 187,974 188,913 188,913 GrowthRate 1.0 % 1.0 % 0.5 % 0.0 %

MeetingandGroup BaseDemand 384,177 388,019 386,079 393,801 399,708 TotalDemand 388,019 386,079 393,801 399,708 GrowthRate 1.0 % (0.5) % 2.0 % 1.5 %

Totals BaseDemand 776,577 784,343 786,366 796,089 801,996 less:ResidualDemand 2,488 3,308 7,308 10,270 TotalAccommodatedDemand 781,855 783,059 788,781 791,726 OverallDemandGrowth 0.7 % 0.2 % 0.7 % 0.4 % MarketMix Commercial 26.8 % 26.8 % 27.0 % 26.8 % 26.6 % Leisure 23.7 23.7 23.9 23.7 23.6 MeetingandGroup 49.5 49.5 49.1 49.5 49.8 ExistingHotelSupply 3,092 3,092 3,092 3,092 3,092

AvailableRoomNightsperYear 1,128,471 1,128,471 1,128,471 1,128,471 1,128,471 NightsperYear 365 365 365 365 365 TotalSupply 3,092 3,092 3,092 3,092 3,092 RoomsSupplyGrowth — 0.0 % 0.0 % 0.0 % 0.0 % MarketwideOccupancy 68.8 % 69.3 % 69.4 % 69.9 % 70.2 %

The defined competitive market of hotels should experience modest occupancy growth over the next several years. Based on historical occupancy levels in this market, and taking into consideration typical supply and demand cyclicality, marketoccupancyisforecasttostabilizearound70%.

May-2017 SupplyandDemandAnalysis 91 HiltonBaltimore–Baltimore,Maryland

6. ProjectionofOccupancyandAverageRate

Alongwithaveragerateresults,theoccupancylevelsachievedbyahotelarethe foundation of the property's financial performance. Most of a lodging facility's otherrevenuesources(suchasfood,beverages,otheroperateddepartments,and miscellaneous income) are driven by the number of guests, and many expense levelsvarywithoccupancy.Toacertaindegree,occupancyattainmentcanbe manipulatedbymanagement.Forexample,hoteloperatorsmaychoosetolower rates in an effort to maximize occupancy. Our forecasts reflect an operating strategy that we believe would be implemented by a typical, professional hotel managementteamtoachieveanoptimalmixofoccupancyandaveragerate.

Historical Thefollowingtablesetsforththesubjectproperty'shistoricaloccupancy,average Operating rate, and RevPAR results. For the purpose of comparison, we have presented Performance correspondingdata(asprovidedbySTR)forthecompetitivehotelsdescribedin the previous section. In addition to the annual percent change calculations, we havedeterminedthesubjectproperty'soccupancy,averagerate,andRevPAR penetrationrates.

May-2017 ProjectionofOccupancyandAverageRate 92 HiltonBaltimore–Baltimore,Maryland

FIGURE6-1 HISTORICALTRENDS

2009 2010 2011 2012 2013 2014 2015 2016 HiltonBaltimore Occupancy 37.0 % 55.0 % 62.0 % 64.2 % 71.7 % 71.2 % 66.2 % 68.0 % Change — 48.6 % 12.7 % 3.6 % 11.6 % (0.8) % (7.0) % 2.8 % OccupancyPenetration 64.0 % 87.0 % 97.1 % 100.1 % 104.9 % 102.2 % 98.1 % 98.7 % AverageRate $186.00 $169.00 $176.00 $170.79 $170.61 $171.68 $169.15 $170.93 Change — (9.1) % 4.1 % (3.0) % (0.1) % 0.6 % (1.5) % 1.1 % AverageRatePenetration 116.4 % 105.8 % 110.9 % 109.2 % 105.6 % 105.1 % 105.1 % 103.4 % RevPAR $68.82 $92.95 $109.12 $109.71 $122.34 $122.17 $111.92 $116.24 Change — 35.1 % 17.4 % 0.5 % 11.5 % (0.1) % (8.4) % 3.9 % RevPARPenetration 74.5 % 92.1 % 107.7 % 109.3 % 110.8 % 107.5 % 103.1 % 102.0 %

2009 2010 2011 2012 2013 2014 2015 2016 CompetitiveSet Occupancy 57.8 % 63.2 % 63.8 % 64.2 % 68.3 % 69.6 % 67.4 % 68.9 % Change — % 9.3 % 1.0 % 0.5 % 6.5 % 1.9 % (3.1) % 2.2 % AverageRate $159.77 $159.71 $158.68 $156.39 $161.60 $163.34 $160.93 $165.36 Change — % (0.0) % (0.6) % (1.4) % 3.3 % 1.1 % (1.5) % 2.8 % RevPAR $92.37 $100.91 $101.31 $100.37 $110.41 $113.68 $108.53 $113.94 Change — % 9.2 % 0.4 % (0.9) % 10.0 % 3.0 % (4.5) % 5.0 %

Source:STR

May-2017 ProjectionofOccupancyandAverageRate 93 HiltonBaltimore–Baltimore,Maryland

The Hilton Baltimore experienced a 1.8-point occupancy change in 2016, increasing from 66.2% in 2015 to 68.0% in 2016. As a result of this change, occupancypenetrationrelativetotheSTRsetofreportinghotelsequaled98.7%in 2016. Average rate penetration for the Hilton Baltimore equated to 103.4% in 2016,contributingtotheoverallRevPARpenetrationlevelof102.0%inthesame year.

The subject hotel'soccupancy increasedin 2013,only to decreasemarginally in 2014 as several key management positions transitioned during that period. Thereafter, occupancy declined further in 2015 given the aforementioned civil unrestandriotssurroundingthedeathofFreddieGray;manyoftheprotestsand riots occurred within the area near the subject property. As media coverage surroundingthisunrestdissipated,occupancyresumedgrowthin2016asgroup bookingsreboundedandthesubjectpropertybegantorecapturedemand. Averagerateatthesubjecthotelremainedrelativelystableoverthelastfewyears, withtheexceptionofaminimaldecreasein2015giventheaforementionedcivil unrest and riots in Baltimore. This overall stability was largely attributed hotel management's efforts to maintain meeting and group rates, which comprise a significantportionofthesubjecthotel'smarketsegmentation.

PenetrationRate The subject property's forecasted market share and occupancy levels are based Analysis uponitsanticipatedcompetitivepositionwithinthemarket,asquantifiedbyits penetrationrate.Thepenetrationrateistheratioofaproperty'smarketshareto itsfairshare.

HistoricalPenetration Inthefollowingtable,thepenetrationratesattainedbytheprimarycompetitors RatesbyMarket and the aggregate secondary competitors are set forth for each segment for the Segment baseyear,2016.

FIGURE6-2 HISTORICALPENETRATIONRATES

Group

Property Commercial Leisure Meetingand Overall

HiltonBaltimore 66 % 83 % 124 % 99 % MarriottInnerHarbor 96 87 115 103 SheratonInnerHarborHotel 101 95 82 90 HyattRegencyBaltimore 96 87 115 103 SecondaryCompetition 129 128 73 101

May-2017 ProjectionofOccupancyandAverageRate 94 HiltonBaltimore–Baltimore,Maryland

Because of its varying levels of penetration among the three market demand segments, the Hilton Baltimore achieved an overall penetration rate of 99% in 2016. Overall, the subject property’s occupancy penetration level was ranked fourthamongtheillustratedaverages.Thesubjectpropertyachieveditshighest segmentpenetrationrateinthemeetingandgroupsegment,at124%,duetothe hotel’spopularitywithweekendleisuretravelersinthearea.

Among all properties listed, the secondary competition achieved the highest penetrationratewithinthecommercialsegment.Thehighestpenetrationratein theleisuresegmentwasachievedbythesecondarycompetition,whiletheHilton Baltimoreledthemarketwiththehighestmeetingandgrouppenetrationrate.

ForecastofSubject Becausethesupplyanddemandbalanceforthecompetitive marketisdynamic, Property’sOccupancy thereisacircularrelationshipbetweenthepenetrationfactorsofeachhotelinthe market. The performance of individual new hotels has a direct effect upon the aggregate performance of the market, and consequently upon the calculated penetrationfactorforeachhotelineachmarketsegment.Thesameistruewhen the performance of existing hotels changes, either positively (following a refurbishment,forexample)ornegatively(whenapoorlymaintainedormarketed hotellosesmarketshare).

Ahotel’spenetrationfactoriscalculatedasitsachievedmarketshareofdemand dividedbyitsfairshareofdemand.Thus,ifonehotel’spenetrationperformance increases,therebyincreasingitsachievedmarketshare,thisleaveslessdemand available in the market for the other hotels to capture and the penetration performance of one or more of those other hotels consequently declines (other thingsremainingequal).Thistypeofmarketshareadjustmenttakesplaceevery time there is a change in supply, or a change in the relative penetration performanceofoneormorehotelsinthecompetitivemarket.

Ourprojectionsofpenetration,demandcapture,andoccupancyperformancefor thesubjectpropertyaccountforthesetypesofadjustmentstomarketsharewithin the defined competitive market. Consequently, the actual penetration factors applicabletothesubjectpropertyanditscompetitorsforeachmarketsegmentin eachprojectionyearmayvarysomewhatfromthepenetrationfactorsdelineated intheprevioustable.

The subject hotel is anticipated to maintain its current market mix, focusing primarily on meeting and group business. According to management representatives, marketing efforts will be focused on capturing a stronger corporate transient customer base, which we have assumed in our analysis. Plannedrenovationsthroughtheneartermareexpectedtohelpthecompetitive level of the subject property and to assist the hotel in achieving the occupancy

May-2017 ProjectionofOccupancyandAverageRate 95 HiltonBaltimore–Baltimore,Maryland

forecastpresentedinthischapter.Nonewcompetitivesupplyisanticipatedinthis submarket,whichshouldcontributetothemarket'soverallstability.

Thesubjectproperty'soccupancyforecastissetforthasfollows,withtheadjusted projectedpenetrationratesusedasabasisforcalculatingtheamountofcaptured marketdemand.

FIGURE6-3 FORECASTOFSUBJECTPROPERTY'SOCCUPANCY

MarketSegment 2016 2017 2018 2019 2020

Commercial Demand 208,130 209,545 211,421 211,416 210,643 MarketShare 16.2 % 16.7 % 17.5 % 17.7 % 17.7 % Capture 33,820 34,905 36,919 37,338 37,201 Penetration 66 % 68 % 71 % 72 % 72 %

Leisure Demand 184,270 185,522 187,183 187,179 186,494 MarketShare 20.4 % 20.4 % 20.8 % 21.2 % 21.2 % Capture 37,578 37,834 38,898 39,617 39,472 Penetration 83 % 83 % 85 % 86 % 86 %

MeetingandGroup Demand 384,177 386,788 384,455 390,186 394,589 MarketShare 30.3 % 30.3 % 30.7 % 31.0 % 31.0 % Capture 116,492 117,284 117,882 120,951 122,316 Penetration 124 % 124 % 125 % 127 % 127 %

TotalRoomNightsCaptured 187,891 190,023 193,699 197,906 198,989 AvailableRoomNights 276,305 276,305 276,305 276,305 276,305 SubjectOccupancy 68 % 69 % 70 % 72 % 72 % MarketwideAvailableRoomNights 1,128,471 1,128,471 1,128,471 1,128,471 1,128,471 FairShare 24 % 24 % 24 % 24 % 24 % MarketwideOccupiedRoomNights 776,577 781,855 783,059 788,781 791,726 MarketShare 24 % 24 % 25 % 25 % 25 % MarketwideOccupancy 69 % 69 % 69 % 70 % 70 % TotalPenetration 99 % 99 % 101 % 102 % 103 %

Thesubjecthotel'soccupancypenetrationinthefirstprojectionyearisforecastto increasemarginallyasrenovationsbegin.Weanticipatethehotel'spenetrationto continue to increase through 2019 as the renovations are completed and as

May-2017 ProjectionofOccupancyandAverageRate 96 HiltonBaltimore–Baltimore,Maryland

demand associated with the adjoining Baltimore Convention Center helps drive thesubjectproperty'soccupancyabovethatofthecompetitiveset.

These positioned segment penetration rates result in the following market segmentationforecast.

FIGURE6-4 MARKETSEGMENTATIONFORECAST–SUBJECTPROPERTY

2016 2017 2018 2019 2020

Commercial 18 % 18 % 19 % 19 % 19 % Leisure 20 20 20 20 20 MeetingandGroup 62 62 61 61 61

Total 100 % 100 % 100 % 100 % 100 %

Basedonouranalysisofthesubjectpropertyandmarketarea,wehaveselecteda stabilized occupancy level of 72% in 2019/20. The stabilized occupancy is intended to reflect the anticipated results of the property over its remaining economiclife,givenallchangesinthelifecycleofthehotel.Thus,thestabilized occupancy excludes from consideration any abnormal relationship between supply and demand, as well as any nonrecurring conditions that may result in unusuallyhighorlowoccupancies.Althoughthesubjectpropertymayoperateat occupancies above this stabilized level, we believe it equally possible for new competition and temporary economic downturns to force the occupancy below thisselectedpointofstability.

AverageRateAnalysis Oneofthemostimportantconsiderationsinestimatingtheoperatingpotentialof alodgingfacilityisasupportableforecastofitsattainableaveragerate,whichis moreformallydefinedastheaveragerateperoccupiedroom.Averageratecanbe calculatedbydividingthetotalroomsrevenueachievedduringaspecifiedperiod bythenumberofroomssoldduringthesameperiod.Theprojectedaveragerate and the anticipated occupancy percentage are used to forecast rooms revenue, whichin turn provides the basis for estimatingmost otherincomeand expense categories.

CompetitivePosition Although the average rate analysis presented here follows the occupancy projection,thesetwostatisticsarehighlycorrelated;inreality,onecannotproject occupancy without making specific assumptions regarding average rate. This relationship is best illustrated by revenue per available room (RevPAR), which reflects a property's ability to maximize rooms revenue. The following table summarizes the historical average rate and the RevPAR of the subject property anditscompetitors.

May-2017 ProjectionofOccupancyandAverageRate 97 HiltonBaltimore–Baltimore,Maryland

FIGURE6-5 BASE-YEARAVERAGERATEANDREVPAROFTHESUBJECTANDITSCOMPETITORS

RoomsRevenue Estimated2016 AverageRate PerAvailable RevPAR Property AverageRoomRate Penetration Room(RevPAR) Penetration

HiltonBaltimore $170.93 104.2 % $116.24 103.0 %

MarriottInnerHarbor 130-140 80-85 95-100 80-85

SheratonInnerHarborHotel 150-160 90-95 95-100 80-85

HyattRegencyBaltimore 160-170 100-110 115-120 100-110

Average-Subject&PrimaryCompetitors $158.79 96.8 % $108.74 96.3 %

Average-SecondaryCompetitors 174.99 106.7 121.69 107.8

OverallAverage $164.01 $112.87

The defined primarily competitive market realized an overall average rate of $158.79inthe2016baseyear,improvingfromthe2015levelof$154.89.Therate ofchangeforthisBaltimoreareaprimarysetwas2.5%between2015and2016. The subject property’s base-year rate position was $170.93. The Marriott Waterfront Hotel (a secondary competitor) achieved the highest estimated averagerateinthelocalcompetitivemarket,byamodestmargin,becauseofits waterfrontlocationandproximitytothecentralbusinessdistrictofBaltimore.Of theprimarycompetitiveset,thesubjectpropertyachievedthehighestestimated averageratebecauseofitsrelativelyrecentconstruction,locationneartheOrioles ParkatCamdenYards,andconnectiontotheBaltimoreConventionCenter,which warrants a premium rate for convention bookings. This rate level is considered appropriateforthismarket.Otherimportantrateaspectsofthismarketinclude productoffering,location,andproximitytodemandgenerators.Followingabrief decline, market-wide rates began to trend upward in 2016. We expect average ratestocontinuetoincreasebecauseofthestrengtheningdynamicsinthismarket. The continued focus on the healthcare and education sectors, as well as the addition of corporations within the downtown market, should also support rate growth going forward. Strong demand related to citywide convention activity shouldfurthersupportrategrowth.

May-2017 ProjectionofOccupancyandAverageRate 98 HiltonBaltimore–Baltimore,Maryland

Basedontheseconsiderations,thefollowingtableillustratestheprojectedaverage rate and the growth rates assumed. As a context for the average rate growth factors,notethatwehaveappliedanunderlyinginflationrateof2.0%in2017/18, 2.5%in2018/19,and3.0%in2019/20andthereafter.

FIGURE6-6 MARKETANDSUBJECTPROPERTYAVERAGERATEFORECAST

Areawide(CalendarYear) SubjectProperty(CalendarYear) AverageRate AverageRate AverageRate Year Occupancy Growth AverageRate Occupancy Growth AverageRate Penetration

BaseYear 68.8 % — $164.01 68.0 % — $170.93 104.2 % 2017 69.3 1.5 % 166.47 69.0 2.5 % 175.21 105.2 2018 69.4 2.5 170.63 70.0 2.5 179.59 105.2 2019 69.9 2.5 174.90 72.0 3.0 184.97 105.8 2020 70.2 3.0 180.14 72.0 3.0 190.52 105.8

Asillustratedabove,a2.5%rateofchangeisexpectedforthesubjectproperty's room rate in 2017. As illustrated at the beginning of this chapter, the subject property’s rate remain unchanged in the most recent historical period. This is followedbyratesof2.5%and3.0%in2018and2019,respectively.Thesubject hotel’s room rate is anticipated to follow a trend similar to that of the market, increasing in the first projection year. The average-rate penetration level is forecasttoincreasebythestabilizedyearduetotheanticipatedrenovationstothe subject property. The strength in citywide event bookings for 2019 should also help bolster room rate for the subject property given its connection to the BaltimoreConventionCenter.

The following table provides a comparison of the historical performance and forecastsforthesubjectpropertyandcompetitiveset.

May-2017 ProjectionofOccupancyandAverageRate 99 HiltonBaltimore–Baltimore,Maryland

FIGURE6-7 COMPARISONOFHISTORICALANDPROJECTEDOCCUPANCY,AVERAGERATE,ANDREVPAR–SUBJECTPROPERTYANDMARKET

Historical Projected 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 HiltonBaltimore Occupancy 64.2 % 71.7 % 71.2 % 66.2 % 68.0 % 68.8 % 70.1 % 71.6 % 72.0 % 72.3 % 72.3 % ChangeinPoints — 7.5 (0.5) (5.0) 1.8 0.8 1.3 1.5 0.4 0.3 0.0 OccupancyPenetration 99.6 104.3 101.8 % 98.1 % 98.8 % 99.3 % 101.0 % 102.5 % 102.6 % 102.8 % 102.8 % AverageRate $170.79 $170.61 $171.68 $169.15 $170.93 $175.21 $179.59 $184.97 $190.52 $196.24 $202.13 Change — (0.1) % 0.6 % (1.5) % 1.1 % 2.5 % 2.5 % 3.0 % 3.0 % 3.0 % 3.0 % AverageRatePenetration 108.5 106.0 105.8 % 105.8 % 104.2 % 105.2 % 105.2 % 105.8 % 105.8 % 105.8 % 105.8 % RevPAR $109.71 $122.34 $122.17 $111.92 $116.24 $120.49 $125.90 $132.49 $137.21 $141.85 $146.10 Change — 11.5 % (0.1) % (8.4) % 3.9 % 3.7 % 4.5 % 5.2 % 3.6 % 3.4 % 3.0 % RevPARPenetration 108.1 110.6 107.6 % 103.8 % 103.0 % 104.5 % 106.3 % 108.4 % 108.6 % 108.7 % 108.7 %

Historical(Estimated) Projected 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 BaltimoreSubmarket

Occupancy 64.5 % 68.7 % 69.9 % 67.5 % 68.8 % 69.3 % 69.4 % 69.9 % 70.2 % 70.3 % 70.3 % ChangeinPoints — 4.3 1.2 (2.5) 1.4 0.5 0.1 0.5 0.3 0.2 0.0 AverageRate $157.39 $160.92 $162.35 $159.83 $164.01 $166.47 $170.63 $174.90 $180.14 $185.55 $191.11 Change — 2.2 % 0.9 % (1.6) % 2.6 % 1.5 % 2.5 % 2.5 % 3.0 % 3.0 % 3.0 % RevPAR $101.47 $110.63 $113.51 $107.80 $112.87 $115.34 $118.40 $122.25 $126.39 $130.51 $134.42 Change — 9.0 % 2.6 % (5.0) % 4.7 % 2.2 % 2.7 % 3.2 % 3.4 % 3.3 % 3.0 %

May-2017 ProjectionofOccupancyandAverageRate 100 HiltonBaltimore–Baltimore,Maryland

The following occupancies and average rates will be used to project the subject property's rooms revenue; this forecast begins on February 1, 2017, and correspondswithourfinancialprojections.

FIGURE6-8 FORECASTSOFOCCUPANCY,AVERAGERATE,ANDREVPAR

Year Occupancy AverageRate 2017/18 69 % $175.58 2018/19 70 180.04 2019/20 72 185.44 2020/21 72 191.01

May-2017 ProjectionofOccupancyandAverageRate 101 HiltonBaltimore–Baltimore,Maryland

7. ForecastofIncomeandExpense

Inthischapterofourreport,wehavecompiledaforecastofincomeandexpense for the subject property. This forecast is based on all assumptions set forth previously,aswellastheoccupancyandaveragerateforecastpresented.

Theforecastofincomeandexpenseisexpressedincurrentdollarsforeachyear. Thestabilizedyearisintendedtoreflecttheanticipatedoperatingresultsofthe property over its remaining economic life, given any or all applicable stages of build-up, plateau, and decline in the life cycle of the hotel. Thus, income and expense estimates from the stabilized year forward exclude from consideration any abnormal relationship between supply and demand, as well as any nonrecurringconditionsthatmayresultinunusualrevenuesorexpenses.Theten- yearperiodreflectsthetypicalholdingperiodoflargerealestateassetssuchas hotels. In addition, the ten-year period provides for the stabilization of income streams and comparison of yields with alternate types of real estate. The forecastedincomestreamsreflectthefuturebenefitsofowningspecificrightsin income-producingrealestate.

Reviewof Because the subject property is an existing hotel with an established operating OperatingHistory performance,itshistoricalincomeandexpenseexperiencecanserveasabasisfor projections. The following income and expense statements were provided by current ownership. Where applicable, we have reorganized the statements in accordancewiththeUniformSystemofAccountsfortheLodgingIndustry(USALI). The 11th edition of the USALI, which was issued in 2014, became effective on January 1, 2015; however, the hospitality industry is still in the process of convertingtothenewreportingstandards.Giventhatthesubjecthotel'shistorical financialstatementsforcalendar2016isconsistentwiththe11theditionofthe USALI,wehaveplacedthegreatestemphasisonthesedata(perthe11theditionof theUSALI)inourforecastsofrevenuesandexpensesforthesubjecthotel.

May-2017 ForecastofIncomeandExpense 102 HiltonBaltimore–Baltimore,Maryland FIGURE7-1 HISTORICALOPERATINGPERFORMANCE

2016 CalendarYear 2015 CalendarYear 2014 CalendarYear NumberofRooms: 757 757 757 PaidOccupiedRooms: 187,891 182,823 196,614 DaysOpen: 365 365 365 PaidOccupancy: 68.0% Amount 66.2% Amount 71.2% Amount AverageRate: $170.93 Percentage Available Occupied $169.15 Percentage Available Occupied $171.68 Percentage Available Occupied RevPAR: $116.24 ofRevenue Room Room $111.92 ofRevenue Room Room $122.17 ofRevenue Room Room OPERATINGREVENUE Rooms $32,117 56.9 % $42,426 $170.93 $30,925 57.0 % $40,852 $169.15 $33,755 61.7 % $44,591 $171.68 Food&Beverage 20,418 36.2 26,972 108.67 18,825 34.7 24,868 102.97 16,932 31.0 22,367 86.12 OtherOperatedDepartments 57 0.1 75 0.30 391 0.7 517 2.14 377 0.7 499 1.92 ParkingRevenue 3,204 5.7 4,232 17.05 3,154 5.8 4,167 17.25 3,030 5.5 4,003 15.41 RetailSpaceIncome 0 0.0 0 0.00 155 0.3 205 0.85 160 0.3 212 0.81 MiscellaneousIncome 658 1.2 870 3.50 777 1.4 1,026 4.25 443 0.8 586 2.25 TotalOperatingRevenue 56,454 100.0 74,575 300.46 54,228 100.0 71,635 296.61 54,698 100.0 72,257 278.20 DEPARTMENTALEXPENSES* Rooms 8,595 26.8 11,354 45.74 8,303 26.8 10,968 45.41 9,274 27.5 12,251 47.17 Food&Beverage 12,191 59.7 16,104 64.88 11,099 59.0 14,662 60.71 9,751 57.6 12,881 49.59 OtherOperatedDepartments 96 168.5 127 0.51 341 87.2 451 1.87 301 79.9 398 1.53 ParkingExpenses 1,299 40.5 1,716 6.91 1,186 37.6 1,566 6.49 1,168 38.6 1,543 5.94 Total 22,181 39.3 29,301 118.05 20,929 38.6 27,647 114.48 20,494 37.5 27,073 104.24 DEPARTMENTALINCOME 34,273 60.7 45,274 182.41 33,299 61.4 43,988 182.14 34,204 62.5 45,184 173.97 UNDISTRIBUTEDOPERATINGEXPENSES Administrative&General 3,946 7.0 5,213 21.00 3,898 7.2 5,149 21.32 3,589 6.6 4,741 18.25 Info.andTelecom.Systems 680 1.2 898 3.62 97 0.2 127 0.53 0 0.0 0 0.00 Marketing 4,585 8.1 6,057 24.40 4,237 7.8 5,597 23.17 4,027 7.4 5,320 20.48 Prop.Operations&Maint. 1,708 3.0 2,256 9.09 1,871 3.4 2,471 10.23 1,865 3.4 2,463 9.48 Utilities 3,342 5.9 4,415 17.79 3,174 5.9 4,193 17.36 3,288 6.0 4,343 16.72 Total 14,261 25.3 18,839 75.90 13,275 24.5 17,537 72.61 12,769 23.3 16,867 64.94 GROSSHOUSEPROFIT 20,011 35.4 26,435 106.50 20,023 36.9 26,451 109.52 21,436 39.2 28,317 109.02 ManagementFee 2,010 3.6 2,655 10.70 2,003 3.7 2,645 10.95 1,973 3.6 2,606 10.03 INCOMEBEFORENON-OPER.INC.&EXP. 18,002 31.9 23,780 95.81 18,021 33.2 23,806 98.57 19,463 35.6 25,710 98.99 NON-OPERATINGINCOMEANDEXPENSE PropertyTaxes 0 0.0 0 0.00 4,624 8.5 6,109 25.29 4,457 8.1 5,888 22.67 Insurance 21 0.0 28 0.11 385 0.7 509 2.11 395 0.7 521 2.01 EquipmentLease 17 0.0 22 0.09 23 0.0 30 0.13 24 0.0 32 0.12 ReserveforReplacement 2,258 4.0 2,983 12.02 2,169 4.0 2,865 11.86 2,188 4.0 2,890 11.13 Total 2,296 4.0 3,033 12.22 7,202 13.2 9,513 39.39 7,064 12.8 9,331 35.93 EBITDALESSRESERVE $15,706 27.9 % $20,747 $83.59 $10,819 20.0 % $14,293 $59.18 $12,399 22.8 % $16,379 $63.06

*Departmentalexpensesareexpressedasapercentageofdepartmentalrevenues.

May-2017 ForecastofIncomeandExpense 103 HiltonBaltimore–Baltimore,Maryland

FIGURE7-2 HISTORICALOPERATINGPERFORMANCE(CONTINUED)

2013 CalendarYear 2012 CalendarYear NumberofRooms: 757 757 PaidOccupiedRooms: 198,129 177,483 DaysOpen: 365 365 PaidOccupancy: 71.7% Amount 64.2% Amount AverageRate: $170.61 Percentage Available Occupied $170.79 Percentage Available Occupied RevPAR: $122.34 ofRevenue Room Room $109.71 ofRevenue Room Room OPERATINGREVENUE Rooms $33,803 59.9 % $44,653 $170.61 $30,313 60.3 % $40,044 $170.79 Food&Beverage 18,566 32.9 24,526 93.71 16,197 32.2 21,396 91.26 OtherOperatedDepartments 513 0.9 677 2.59 546 1.1 721 3.07 ParkingRevenue 2,883 5.1 3,808 14.55 2,725 5.4 3,600 15.35 RetailSpaceIncome 139 0.2 184 0.70 144 0.3 191 0.81 MiscellaneousIncome 522 0.9 690 2.64 361 0.7 477 2.03 TotalOperatingRevenue 56,426 100.0 74,538 284.79 50,285 100.0 66,427 283.33 DEPARTMENTALEXPENSES* Rooms 8,528 25.2 11,266 43.04 7,574 25.0 10,005 42.67 Food&Beverage 10,185 54.9 13,455 51.41 9,386 58.0 12,400 52.89 OtherOperatedDepartments 365 71.3 483 1.84 397 72.8 525 2.24 ParkingExpenses 1,274 44.2 1,683 6.43 1,170 43.0 1,546 6.59 Total 20,353 36.1 26,887 102.73 18,528 36.8 24,475 104.39 DEPARTMENTALINCOME 36,072 63.9 47,652 182.06 31,758 63.2 41,952 178.93 UNDISTRIBUTEDOPERATINGEXPENSES Administrative&General 3,785 6.7 5,000 19.10 3,603 7.2 4,760 20.30 Info.andTelecom.Systems 0 0.0 0 0.00 0 0.0 0 0.00 Marketing 3,874 6.9 5,117 19.55 3,522 7.0 4,653 19.84 Prop.Operations&Maint. 1,920 3.4 2,536 9.69 1,823 3.6 2,408 10.27 Utilities 3,005 5.3 3,969 15.17 2,913 5.8 3,848 16.41 Total 12,583 22.3 16,623 63.51 11,861 23.6 15,668 66.83 GROSSHOUSEPROFIT 23,489 41.6 31,029 118.55 19,897 39.6 26,284 112.11 ManagementFee 1,944 3.4 2,568 9.81 1,902 3.8 2,512 10.72 INCOMEBEFORENON-OPER.INC.&EXP. 21,545 38.2 28,461 108.74 17,995 35.8 23,771 101.39 NON-OPERATINGINCOMEANDEXPENSE PropertyTa xes 4,521 8.0 5,972 22.82 4,577 9.1 6,046 25.79 Insurance 313 0.6 414 1.58 385 0.8 509 2.17 EquipmentLease 32 0.1 42 0.16 20 0.0 27 0.12 ReserveforReplacement 2,257 4.0 2,982 11.39 2,011 4.0 2,657 11.33 Total 7,123 12.7 9,410 35.95 6,993 13.9 9,238 39.40 EBITDALESSRESERVE $14,422 25.5 % $19,051 $72.79 $11,001 21.9 % $14,533 $61.99

*Departmentalexpensesareexpressedasapercentageofdepartmentalrevenues.

May-2017 ForecastofIncomeandExpense 104 HiltonBaltimore–Baltimore,Maryland

In the food and beverage department, revenue growth in 2016 was influenced primarilybyanincreaseinpharmaceuticalandotherhigh-endcorporategroups, which reportedly had higher food and beverage budgets than typical group functions held at the subject property. Revenues associated with telephone charges, high-speed Internet access, and other miscellaneous revenues are included in the other operated departments line. Miscellaneous income sources include the hotel's cancelation charges, attrition fees, outsourced laundry commissions, vending commissions, in-room movie commissions, and other miscellaneousincome.Nomajorchangesinexpenselevelsandratioswerenoted.

ComparableOperating In order to gauge the subject property’s profitability, we have reviewed the Statements following individual income and expense statements from comparable hotels, derivedfromourdatabaseofhotelincomeandexpensestatements.Thefollowing data reflect the performance of five full-service hotel properties, which were chosenbasedonsimilaritiesinproduct,marketorientation,brandaffiliation,size, and price positioning. All of the properties are brand-affiliated first-class hotels withrelativelysimilarguestroomcounts,productofferings,andavailablemeeting space. All financial data are presented according to the three most common measures of industry performance: ratio to sales (RTS), amounts per available room(PAR),andamountsperoccupiedroomnight(POR).Thesehistoricalincome andexpensestatementswillbeusedasbenchmarksinourforthcomingforecastof income and expense. The subject property's 2016 operating history has been included to facilitate a comparison. The stabilized statement of income and expense,in2016dollars,ispresentedaswell.

May-2017 ForecastofIncomeandExpense 105 HiltonBaltimore–Baltimore,Maryland

FIGURE7-3 COMPARABLEOPERATINGSTATEMENTS:RATIOTOSALES

Subject Comp1 Comp2 Comp3 Comp4 Comp5 Subject Stabilized$ Year: 2016 2014 2013 2013 2013 2012 2016 NumberofRooms: 757 640to800 620to770 990to1210 390to480 900to1110 757 DaysOpen: 365 365 365 365 365 365 365 Occupancy: 68.0% 77% 74% 73% 76% 73% 72% AverageRate: $170.93 $162 $174 $164 $172 $157 $172 RevPAR: $116.24 $124 $129 $120 $130 $115 $124 REVENUE Rooms 56.9 % 55.6 % 65.4 % 60.0 % 71.1 % 61.7 % 56.7 % Food&Beverage 36.2 34.8 29.8 34.5 22.0 32.6 36.3 OtherOperatedDepartments 5.8 8.8 4.9 4.2 5.9 4.7 5.9 Rentals&OtherIncome 1.2 0.8 0.0 1.2 1.0 0.9 1.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 DEPARTMENTALEXPENSES* Rooms 26.8 21.8 25.0 29.0 21.4 26.4 25.7 Food&Beverage 59.7 64.7 66.0 61.9 53.6 67.7 56.9 OtherOperatedDepartments 2.9 39.2 40.5 65.0 44.5 38.0 206.2 Total 37.0 38.1 37.9 41.5 29.6 40.2 37.6 DEPARTMENTALINCOME 63.0 61.9 62.1 58.5 70.4 59.8 62.4 OPERATINGEXPENSES Administrative&General 7.0 6.8 7.7 7.6 5.9 7.7 6.6 Info.andTelecom.Systems 1.2 0.0 0.0 0.0 0.0 0.0 1.1 Marketing 8.1 7.3 7.4 5.2 6.4 6.5 7.7 PropertyOperations&Maintenance 3.0 3.6 4.1 4.0 3.4 3.4 2.9 Utilities 5.9 3.0 2.5 2.2 3.0 4.3 5.6 Total 25.3 20.7 21.6 19.0 25.8 21.9 24.0 HOUSEPROFIT 37.7 41.2 40.5 39.5 44.6 37.9 38.4 ManagementFee 3.6 2.9 3.0 5.6 2.3 3.4 3.0 INCOMEBEFOREFIXEDCHARGES 34.2 38.3 37.4 33.8 42.3 34.5 35.4

*Departmentalexpenseratiosareexpressedasapercentageofdepartmentalrevenues

May-2017 ForecastofIncomeandExpense 106 HiltonBaltimore–Baltimore,Maryland

FIGURE7-4 COMPARABLEOPERATINGSTATEMENTS:AMOUNTSPERAVAILABLEROOM

Subject Comp1 Comp2 Comp3 Comp4 Comp5 Subject Stabilized$ Year: 2016 2014 2013 2013 2013 2012 2016 NumberofRooms: 757 640to800 620to770 990to1210 390to480 900to1110 757 DaysOpen: 365 365 365 365 365 365 365 Occupancy: 68.0% 77% 74% 73% 76% 73% 72% AverageRate: $170.93 $162 $174 $164 $172 $157 $172 RevPAR: $116.24 $124 $129 $120 $130 $115 $124 REVENUE Rooms $42,426 $45,376 $46,913 $43,712 $47,363 $41,834 $45,256 Food&Beverage 26,972 28,394 21,358 25,137 14,640 22,087 28,925 OtherOperatedDepartments 4,308 7,139 3,482 3,091 3,938 3,202 4,720 Rentals&OtherIncome 870 647 0 900 635 624 887 Total 74,575 81,556 71,754 72,840 66,576 67,748 79,788 DEPARTMENTALEXPENSES Rooms 11,354 9,896 11,718 12,697 10,124 11,062 11,645 Food&Beverage 16,104 18,370 14,087 15,549 7,852 14,962 16,458 OtherOperatedDepartments 127 2,796 1,412 2,010 1,754 1,215 1,897 Total 27,585 31,062 27,217 30,255 19,729 27,239 30,000 DEPARTMENTALINCOME 46,990 50,494 44,537 42,585 46,847 40,509 49,788 OPERATINGEXPENSES Administrative&General 5,213 5,571 5,515 5,571 3,960 5,236 5,294 Info.andTelecom.Systems 898 0 0 0 0 0 912 Marketing 6,057 5,914 5,316 3,800 4,278 4,378 6,152 PropertyOperations&Maintenance 2,256 2,976 2,928 2,894 2,292 2,335 2,326 Utilities 4,415 2,422 1,768 1,610 2,013 2,885 4,484 Total 18,839 16,883 15,527 13,873 17,152 14,834 19,168 HOUSEPROFIT 28,151 33,611 29,010 28,712 29,695 25,675 30,619 ManagementFee 2,655 2,359 2,168 4,066 1,551 2,335 2,394 INCOMEBEFOREFIXEDCHARGES 25,496 31,252 26,842 24,646 28,144 23,340 28,226

May-2017 ForecastofIncomeandExpense 107 HiltonBaltimore–Baltimore,Maryland

FIGURE7-5 COMPARABLEOPERATINGSTATEMENTS:AMOUNTSPEROCCUPIEDROOM

Subject Comp1 Comp2 Comp3 Comp4 Comp5 Subject Stabilized$ Year: 2016 2014 2013 2013 2013 2012 2016 NumberofRooms: 757 640to800 620to770 990to1210 390to480 900to1110 757 DaysOpen: 365 365 365 365 365 365 365 Occupancy: 68.0% 77% 74% 73% 76% 73% 72% AverageRate: $170.93 $162 $174 $164 $172 $157 $172 RevPAR: $116.24 $124 $129 $120 $130 $115 $124 REVENUE Rooms $170.93 $162.04 $174.00 $164.41 $171.54 $156.82 $172.21 Food&Beverage 108.67 101.40 79.22 94.55 53.02 82.79 110.07 OtherOperatedDepartments 17.36 25.50 12.92 11.63 14.26 12.00 17.96 Rentals&OtherIncome 3.50 2.31 0.00 3.39 2.30 2.34 3.37 Total 300.46 291.25 266.13 273.97 241.12 253.96 303.61 DEPARTMENTALEXPENSES Rooms 45.74 35.34 43.46 47.76 36.67 41.47 44.31 Food&Beverage 64.88 65.60 52.25 58.48 28.44 56.09 62.63 OtherOperatedDepartments 0.51 9.98 5.24 7.56 6.35 4.56 7.22 Total 111.14 110.93 100.95 113.80 71.46 102.11 114.16 DEPARTMENTALINCOME 189.32 180.32 165.18 160.17 169.67 151.85 189.45 OPERATINGEXPENSES Administrative&General 21.00 19.89 20.45 20.95 14.34 19.63 20.14 Info.andTelecom.Systems 3.62 0.00 0.00 0.00 0.00 0.00 3.47 Marketing 24.40 21.12 19.72 14.29 15.49 16.41 23.41 PropertyOperations&Maintenance 9.09 10.63 10.86 10.88 8.30 8.75 8.85 Utilities 17.79 8.65 6.56 6.05 7.29 10.82 17.06 Total 75.90 60.29 57.59 52.18 62.12 55.61 72.94 HOUSEPROFIT 113.42 120.03 107.60 107.99 107.55 96.24 116.51 ManagementFee 10.70 8.42 8.04 15.29 5.62 8.75 9.11 INCOMEBEFOREFIXEDCHARGES 102.72 111.60 99.55 92.70 101.93 87.49 107.40

The comparables’ departmental income ranged from 58.5% to 70.4% of total revenue. The subject property’s 2016 departmental income ratio of 60.7% is withinthisrange.Thecomparablepropertiesachievedahouseprofitrangingfrom 37.9% to 44.6% of total revenue. The subject property’s 2016 house profit percentageof35.4%oftotalrevenuefallsbelowthisrange,indicatingroomfor improvement. The subject hotel is projected to stabilize at a house-profit ratio above what has been achieved historically due to adjustments to operating expenses that have been at inflated levels; moreover, the historical profitability hasbeenlowerthanwhatatypicalbuyerwouldbeexpectedtoachieve.Wewill refertothecomparableoperatingdatainourdiscussionofeachlineitem,which followslaterinthissectionofthereport.

May-2017 ForecastofIncomeandExpense 108 HiltonBaltimore–Baltimore,Maryland

FixedandVariable HVSusesafixedandvariablecomponentmodeltoprojectalodgingfacility's ComponentAnalysis revenueandexpenselevels.Thismodelisbasedonthepremisethathotel revenuesandexpenseshaveonecomponentthatisfixedandanotherthatvaries directlywithoccupancyandfacilityusage.Aprojectioncanbemadebytakinga known level of revenue or expense and calculatingitsfixedandvariable components.Thefixedcomponentisthenincreasedintandemwiththeunderlying rateofinflation,whilethevariablecomponentisadjustedforaspecificmeasureof volumesuchastotalrevenue.

Theactualforecastisderivedbyadjustingeachyear’srevenueandexpensebythe amountfixed(thefixedexpensemultipliedbytheinflatedbase-yearamount)plus the variable amount (the variable expense multiplied by the inflated base-year amount)multipliedbytheratiooftheprojectionyear’soccupancytothebase-year occupancy(inthecaseofdepartmentalrevenueandexpense)ortheratioofthe projectionyear’srevenuetothebaseyear’srevenue(inthecaseofundistributed operatingexpenses).Fixedexpensesremainfixed,increasingonlywithinflation. Ourdiscussionoftherevenueandexpenseforecastinthisreportisbasedupon theoutputderivedfromthefixedandvariablemodel.Thisforecastofrevenueand expenseisaccomplishedthroughasystematicapproach,followingtheformatof the USALI. Each category of revenue and expense is estimated separately and combinedattheendinthefinalstatementofincomeandexpense.

InflationAssumption Ageneralrateofinflationmustbeestablishedthatwillbeappliedtomostrevenue and expense categories. The following table shows inflation estimates made by economistsatsomenotedinstitutionsandcorporations.

May-2017 ForecastofIncomeandExpense 109 HiltonBaltimore–Baltimore,Maryland

FIGURE7-6 INFLATIONESTIMATES

ProjectedIncreaseinConsumerPriceIndex (AnnualizedRateVersus12MonthsEarlier) June Dec June Dec Dec Name(SamplefromSurvey) Firm 2017 2017 2018 2018 2016

LewisAlexander NomuraSecuritiesInternational 2.6 % 2.4 % 2.1 % 2.2 % 2.2 % PaulAshworth CapitalEconomics 2.8 3.0 3.2 3.3 3.3 DanielBachman DeloitteLP 2.1 1.8 2.2 2.4 2.4 BernardBaumohl EconomicOutlookGroup 2.1 2.3 2.3 2.5 2.5 NarimanBehravesh IHSGlobalInsight 2.5 2.2 2.4 2.4 2.4 DavidBerson NationwideInsurance 2.6 2.5 2.7 2.8 2.8 BrianBethune TuftsUniversity 1.9 2.1 2.3 2.3 2.3 StevenBlitz PangeaMarketAdvisory 2.2 1.9 2.5 3.0 3.0 BethAnnBovino StandardandPoor's 2.5 2.1 2.2 2.3 2.3 MichaelCarey CreditAgricoleCIB 2.3 2.2 2.4 2.6 2.6 JosephCarson AllianceBernstein 2.4 3.0 3.0 3.0 3.0 MikeCosgrove Econoclast 2.5 2.5 2.2 2.0 2.0 LouCrandall WrightsonICAP 2.5 2.7 2.7 2.6 2.6 AmyCrewsCutts Equifax 1.7 2.0 2.3 2.5 2.5 J.DeweyDaane VanderbiltUniversity 1.8 2.0 2.3 2.5 2.5 GregDaco OxfordEconomics 2.3 2.2 2.3 2.2 2.2 RajeevDhawan GeorgiaStateUniversity 2.3 2.0 2.1 2.0 2.0 RobertDietz NationalAssociationofHomeBuilders 2.0 2.1 2.1 2.1 2.1 DouglasDuncan FannieMae 2.5 2.3 2.2 2.1 2.1 RobertDye ComericaBank 2.5 2.4 2.3 2.2 2.2 MariaFioriniRamirez/JoshuaShapiro MFR,Inc. 2.4 2.2 0.0 — — MikeFratantoni MortgageBankersAssociation 2.6 2.3 2.4 2.6 2.6 MichaelGregory BMOCapital 2.2 2.3 2.3 2.3 2.3 JanHatzius Goldman,Sachs&Co. 2.4 2.6 2.1 2.2 2.2 StuartHoffman PNCFinancialServicesGroup 2.3 2.3 2.4 2.4 2.4 DerekHolt Scotiabank 2.0 2.3 2.3 2.3 2.3 ConstanceHunter KPMG 2.2 2.4 2.1 2.1 2.1 NathanielKarp BBVACompass 2.2 2.4 2.6 2.8 2.8 JackKleinhenz NationalRetailFederation 2.4 2.5 2.6 2.5 2.5 JosephLaVorgna DeutscheBankSecurities,Inc. 1.8 2.1 2.2 2.3 2.3 EdwardLeamer/DavidShulman UCLAAndersonForecast 2.3 2.5 2.8 2.7 2.7 JohnLonski Moody'sInvestorsService 1.9 1.6 1.5 1.6 1.6 AnetaMarkowska SocieteGenerale 2.5 2.8 2.3 2.2 2.2 JimMeil ACTResearch 1.8 2.7 3.0 2.5 2.5 MichaelMoran DaiwaCapital 2.4 2.3 2.4 2.5 2.5 ChadMoutray NationalAssociationofManufacturers 2.3 2.8 2.7 2.6 2.6 JoelNaroff NaroffEconomicAdvisors 2.6 2.8 3.0 2.8 2.8 MarkNielson MacroEconGlobalAdvisors 1.9 2.2 2.5 2.7 2.7 FrankNothaft Corelogic 2.3 2.4 2.5 2.5 2.5 JimO'Sullivan HighFrequencyEconomics 2.2 2.7 2.8 2.9 2.9 LindseyPiegza Stifel,NicoulasandCompany,Incorporated(forme 1.8 1.3 1.2 — — Dr.JoelPrakken/ChrisVarvares MacroeconomicAdvisers 2.5 2.3 2.0 2.1 2.1 RussellPrice AmeripriseFinancial 2.3 2.2 2.2 2.2 2.2 LynnReaser PointLomaNazareneUniversity 1.8 2.0 2.1 2.2 2.2 MartinRegalia ChamberofCommerce 1.8 1.8 — — — IanShepherdson PantheonMacroeconomics 2.7 3.0 2.7 2.5 2.5 JohnSilvia WellsFargo&Co. 2.4 2.5 2.7 2.5 2.5 AllenSinai DecisionEconomics,Inc. 2.4 2.5 2.4 2.3 2.3 JamesF.Smith ParsecFinancialManagement 1.6 1.6 1.7 1.8 1.8 SeanM.Snaith UniversityofCentralFlorida 3.1 3.3 3.4 3.3 3.3 SungWonSohn CaliforniaStateUniversity 2.3 2.3 2.3 2.4 2.4 StephenStanley PierpontSecurities 2.9 3.3 3.4 3.3 3.3 SusanM.Sterne EconomicAnalysisAssociatesInc. 2.5 2.2 2.3 2.5 2.5 JamesSweeney CSFB 2.0 2.1 0.0 — — KevinSwift AmericanChemistyCouncil 2.3 2.5 2.5 2.3 2.3 DianeSwonk DianeSwonk&AssociatesLLC 2.7 2.4 2.4 2.5 2.5 CarlTannenbaum TheNorthernTrust 2.0 2.0 2.0 2.0 2.0 USEconomicsTeam BNPParibas 2.2 2.3 2.5 2.6 2.6 BartvanArk TheConferenceBoard 2.2 2.4 0.0 — — BrianS.Wesbury/RobertStein FirstTrustAdvisors,L.P. 2.7 2.8 2.9 3.0 3.0 LawrenceYun NationalAssociationofRealtors 3.0 3.1 3.0 2.8 2.8

Averages: 2.3 % 2.4 % 1.8 % 2.5 % 2.5 % Source:WallStreetJournalEconomicForecastingSurvey,December2016

May-2017 ForecastofIncomeandExpense 110 HiltonBaltimore–Baltimore,Maryland

As the preceding table indicates, the financial analysts who were surveyed in December 2016 anticipated inflation rates ranging from 1.6% to 3.1% (on an annualizedbasis)forJune2017;theaverageofthesedatapointswas2.3%.The same group expects annualized inflation rates of 2.4% for both December 2017 and June 2018, slightly lower than the 2.5% average inflation rate forecast for December2018.

As a further check on these inflation projections, we have reviewed historical increasesintheConsumerPriceIndex(CPI-U).Becausethevalueofrealestateis predicated on cash flows over a relatively long period, inflation should be consideredfromalong-termperspective.

FIGURE7-7 NATIONALCONSUMERPRICEINDEX(ALLURBANCONSUMERS)

NationalConsumer PercentChange Year PriceIndex fromPreviousYear

2005 195.3 — 2006 201.6 3.2 % 2007 207.3 2.8 2008 215.3 3.8 2009 214.5 -0.4 2010 218.1 1.6 2011 224.9 3.1 2012 229.6 2.1 2013 233.0 1.5 2014 234.8 0.8 2015 236.5 0.7

AverageAnnualCompoundedChange 2005-2015: 1.9 % 2010-2015: 1.6

Source:BureauofLaborStatistics

Between 2005 and 2015, the national CPI increased at an average annual compounded rate of 1.9%; from 2010 to 2015, the CPI rose by a slightly lower average annual compounded rate of 1.6%. In 2015, the CPI rose by 0.7%, a decreasefromthelevelof0.8%recordedin2014.

In consideration of the most recent trends, the projections set forth previously, andourassessmentofprobablepropertyappreciationlevels,wehaveappliedan underlying inflation rate of 2.0% in 2017, 2.5% in 2018, and 3.0% in 2019 and thereafter. This stabilized inflation rate takes into account normal, recurring inflationcycles.Inflationislikelytofluctuateaboveandbelowthislevelduringthe

May-2017 ForecastofIncomeandExpense 111 HiltonBaltimore–Baltimore,Maryland

projection period. Any exceptions to the application of the assumed underlying inflation rate are discussed in our write-up of individual income and expense items.

Summaryof Based on an analysis that will be detailed throughout this section, we have Projections formulated a forecast of revenue and expense. The following table presents a forecastthroughthefirstseveralprojectionyears,includingamountsperavailable roomandperoccupiedroom.Thesecondtableillustratesourten-yearforecastof incomeandexpense,presentedwithalesserdegreeofdetail.Theforecastspertain toyearsthatbeginonFebruary1,2017,expressedininflateddollarsforeachyear.

We have also included a partial year projection for the period of June through Decemberof2017.

May-2017 ForecastofIncomeandExpense 112 HiltonBaltimore–Baltimore,Maryland

FIGURE7-8 2017PARTIALYEARJUNETHROUGHDECEMBER

2017(June-Dec)

May-2017 ForecastofIncomeandExpense 113 HiltonBaltimore–Baltimore,Maryland

FIGURE7-9 FORECASTOFREVENUEANDEXPENSEANDTRAILING-12-MONTHOPERATINGHISTORY

HistoricalOperatingResults 2016 CalendarYear 2017/18 2018/19 Stabilized NumberofRooms: 757 757 757 757 Occupancy(PaidRooms): 68% 69% 70% 72% AverageRate: $170.93 $175.58 $180.04 $185.44 RevPAR: $116.24 $121.15 $126.03 $133.52 DaysOpen: 365 365 365 365 OccupiedRooms(Paid): 187,891 %Gross PAR POR 190,650 %Gross PAR POR 193,414 %Gross PAR POR 198,940 %Gross PAR POR OPERATINGREVENUE Rooms $32,117 56.9 % $42,426 $170.93 $33,474 56.5 % $44,219 $175.58 $34,823 56.5 % $46,001 $180.04 $36,892 56.7 % $48,734 $185.44 Food&Beverage 20,418 36.2 26,972 108.67 21,521 36.3 28,430 112.88 22,409 36.4 29,602 115.86 23,579 36.3 31,148 118.53 OtherOperatedDepartments 57 0.1 75 0.30 58 0.1 77 0.31 60 0.1 79 0.31 62 0.1 83 0.31 ParkingRevenue 3,204 5.7 4,232 17.05 3,349 5.7 4,424 17.56 3,474 5.6 4,590 17.96 3,630 5.6 4,796 18.25 RetailSpaceIncome 0 0.0 0 0.00 145 0.2 192 0.76 150 0.2 198 0.77 155 0.2 204 0.78 MiscellaneousIncome 658 1.2 870 3.50 676 1.1 893 3.54 696 1.1 919 3.60 723 1.1 955 3.63 TotalOperatingRevenues 56,454 100.0 74,575 300.46 59,224 100.0 78,235 310.64 61,612 100.0 81,390 318.55 65,042 100.0 85,921 326.94 DEPARTMENTALEXPENSES* Rooms 8,595 26.8 11,354 45.74 8,837 26.4 11,673 46.35 9,110 26.2 12,035 47.10 9,493 25.7 12,540 47.72 Food&Beverage 12,191 59.7 16,104 64.88 12,522 58.2 16,542 65.68 12,899 57.6 17,039 66.69 13,416 56.9 17,723 67.44 OtherOperatedDepartments 96 168.5 127 0.51 98 168.0 130 0.51 101 167.5 133 0.52 104 166.5 137 0.52 ParkingExpenses 1,299 40.5 1,716 6.91 1,351 40.3 1,784 7.08 1,394 40.1 1,842 7.21 1,442 39.7 1,906 7.25 Total 22,181 39.3 29,301 118.05 22,808 38.5 30,129 119.63 23,504 38.1 31,049 121.52 24,456 37.6 32,306 122.93 DEPARTMENTALINCOME 34,273 60.7 45,274 182.41 36,416 61.5 48,105 191.01 38,108 61.9 50,340 197.03 40,586 62.4 53,614 204.01 UNDISTRIBUTEDOPERATINGEXPENSES Administrative&General 3,946 7.0 5,213 21.00 4,049 6.8 5,348 21.24 4,163 6.8 5,500 21.53 4,316 6.6 5,701 21.69 Info.andTelecom.Systems 680 1.2 898 3.62 698 1.2 922 3.66 717 1.2 948 3.71 744 1.1 982 3.74 Marketing 4,585 8.1 6,057 24.40 4,705 7.9 6,215 24.68 4,838 7.9 6,391 25.01 5,015 7.7 6,625 25.21 Prop.Operations&Maint. 1,708 3.0 2,256 9.09 1,770 3.0 2,339 9.29 1,829 3.0 2,417 9.46 1,896 2.9 2,505 9.53 Utilities 3,342 5.9 4,415 17.79 3,429 5.8 4,530 17.99 3,526 5.7 4,658 18.23 3,655 5.6 4,829 18.37 Total 14,261 25.3 18,839 75.90 14,650 24.7 19,353 76.84 15,075 24.6 19,914 77.94 15,626 23.9 20,642 78.55 GROSSHOUSEPROFIT 20,011 35.4 26,435 106.50 21,765 36.8 28,752 114.16 23,033 37.3 30,427 119.09 24,960 38.5 32,973 125.47 ManagementFee 2,010 3.6 2,655 10.70 1,777 3.0 2,347 9.32 1,848 3.0 2,442 9.56 1,951 3.0 2,578 9.81 INCOMEBEFORENON-OPER.INC.&EXP. 18,002 31.9 23,780 95.81 19,989 33.8 26,405 104.84 21,185 34.3 27,985 109.53 23,009 35.5 30,395 115.66 NON-OPERATINGINCOMEANDEXPENSE PropertyTaxes 0 0.0 0 0.00 4,277 7.2 5,651 22.44 4,384 7.1 5,792 22.67 4,516 6.9 5,966 22.70 Insurance 21 0.0 28 0.11 389 0.7 514 2.04 399 0.6 527 2.06 411 0.6 542 2.06 EquipmentLease 17 0.0 22 0.09 17 0.0 23 0.09 18 0.0 23 0.09 18 0.0 24 0.09 ReserveforReplacement 0 0.0 0 0.00 2,369 4.0 3,129 12.43 2,464 4.0 3,256 12.74 2,602 4.0 3,437 13.08 Total 38 0.1 50 0.20 7,053 11.9 9,316 36.99 7,265 11.7 9,597 37.56 7,546 11.5 9,969 37.93 EBITDALESSRESERVE $17,964 31.8 % $23,730 $95.61 $12,936 21.9 % $17,089 $67.85 $13,920 22.6 % $18,388 $71.97 $15,463 24.0 % $20,426 $77.73

*Departmentalexpensesareexpressedasapercentageofdepartmentalrevenues. NOIadjustedtoreflecta 3.0%mgmtfeeanda4.0%reserve $16,022 28.4 %

May-2017 ForecastofIncomeandExpense 114 HiltonBaltimore–Baltimore,Maryland

FIGURE7-10 TEN-YEARFORECASTOFREVENUEANDEXPENSE(FISCALIZED)

2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27

NumberofRooms: 757 757 757 757 757 757 757 757 757 757 OccupiedRooms: 190,650 193,414 198,940 198,940 198,940 198,940 198,940 198,940 198,940 198,940 Occupancy: 69% 70% 72% 72% 72% 72% 72% 72% 72% 72% AverageRate: $175.58 %of $180.04 %of $185.44 %of $191.01 %of $196.74 %of $202.64 %of $208.72 %of $214.98 %of $221.43 %of $228.07 %of RevPAR: $121.15 Gross $126.03 Gross $133.52 Gross $137.53 Gross $141.65 Gross $145.90 Gross $150.28 Gross $154.79 Gross $159.43 Gross $164.21 Gross OPERATINGREVENUE Rooms $33,474 56.5 % $34,823 56.5 % $36,892 56.7 % $37,999 56.7 % $39,139 56.7 % $40,313 56.7 % $41,523 56.7 % $42,768 56.7 % $44,051 56.7 % $45,373 56.7 % Food&Beverage 21,521 36.3 22,409 36.4 23,579 36.3 24,287 36.3 25,015 36.3 25,766 36.3 26,539 36.3 27,335 36.3 28,155 36.3 29,000 36.3 OtherOperatedDepartments 58 0.1 60 0.1 62 0.1 64 0.1 66 0.1 68 0.1 70 0.1 72 0.1 75 0.1 77 0.1 ParkingRevenue 3,349 5.7 3,474 5.6 3,630 5.6 3,739 5.6 3,852 5.6 3,967 5.6 4,086 5.6 4,209 5.6 4,335 5.6 4,465 5.6 RetailSpaceIncome 145 0.2 150 0.2 155 0.2 160 0.2 165 0.2 170 0.2 176 0.2 181 0.2 187 0.2 193 0.2 MiscellaneousIncome 676 1.1 696 1.1 723 1.1 744 1.1 767 1.1 790 1.1 814 1.1 838 1.1 863 1.1 889 1.1 TotalOperatingRevenue 59,224 100.0 61,612 100.0 65,042 100.0 66,994 100.0 69,004 100.0 71,074 100.0 73,207 100.0 75,403 100.0 77,666 100. 0 79,997 100.0 DEPARTMENTALEXPENSES* Rooms 8,837 26.4 9,110 26.2 9,493 25.7 9,778 25.7 10,071 25.7 10,373 25.7 10,684 25.7 11,005 25.7 11,335 25.7 11,675 25.7 Food&Beverage 12,522 58.2 12,899 57.6 13,416 56.9 13,819 56.9 14,233 56.9 14,660 56.9 15,100 56.9 15,553 56.9 16,020 56.9 16,500 56.9 OtherOperatedDepartments 98 168.0 101 167.5 104 166.5 107 166.5 110 166.5 114 166.5 117 166.5 121 166.5 124 166.5 128 166.5 ParkingExpenses 1,351 40.3 1,394 40.1 1,442 39.7 1,486 39.7 1,530 39.7 1,576 39.7 1,624 39.7 1,672 39.7 1,722 39.7 1,774 39.7 Total 22,808 38.5 23,504 38.1 24,456 37.6 25,189 37.6 25,945 37.6 26,723 37.6 27,525 37.6 28,351 37.6 29,201 37.6 30,077 37.6 DEPARTMENTALINCOME 36,416 61.5 38,108 61.9 40,586 62.4 41,804 62.4 43,059 62.4 44,351 62.4 45,682 62.4 47,052 62.4 48,464 62.4 49,919 62.4 UNDISTRIBUTEDOPERATINGEXPENSES Administrative&General 4,049 6.8 4,163 6.8 4,316 6.6 4,445 6.6 4,579 6.6 4,716 6.6 4,858 6.6 5,003 6.6 5,153 6.6 5,308 6.6 Info.andTelecom.Systems 698 1.2 717 1.2 744 1.1 766 1.1 789 1.1 813 1.1 837 1.1 862 1.1 888 1.1 915 1.1 Marketing 4,705 7.9 4,838 7.9 5,015 7.7 5,165 7.7 5,320 7.7 5,480 7.7 5,645 7.7 5,814 7.7 5,988 7.7 6,168 7.7 Prop.Operations&Maint. 1,770 3.0 1,829 3.0 1,896 2.9 1,953 2.9 2,012 2.9 2,072 2.9 2,134 2.9 2,199 2.9 2,265 2.9 2,332 2.9 Utilities 3,429 5.8 3,526 5.7 3,655 5.6 3,765 5.6 3,878 5.6 3,995 5.6 4,114 5.6 4,238 5.6 4,365 5.6 4,496 5.6 Total 14,650 24.7 15,075 24.6 15,626 23.9 16,095 23.9 16,578 23.9 17,076 23.9 17,588 23.9 18,116 23.9 18,660 23.9 19,220 23.9 GROSSHOUSEPROFIT 21,765 36.8 23,033 37.3 24,960 38.5 25,709 38.5 26,481 38.5 27,275 38.5 28,094 38.5 28,937 38.5 29,805 38.5 30,700 38.5 ManagementFee 1,777 3.0 1,848 3.0 1,951 3.0 2,010 3.0 2,070 3.0 2,132 3.0 2,196 3.0 2,262 3.0 2,330 3.0 2,400 3.0 INCOMEBEFORENON-OPER.INC.&EXP. 19,989 33.8 21,185 34.3 23,009 35.5 23,700 35.5 24,411 35.5 25,143 35.5 25,898 35.5 26,674 35.5 27,475 35.5 28,300 35.5 NON-OPERATINGINCOMEANDEXPENSE PropertyTaxes 4,277 7.2 4,384 7.1 4,516 6.9 4,651 6.9 4,791 6.9 4,935 6.9 5,083 6.9 5,235 6.9 5,392 6.9 5,554 6.9 Insurance 389 0.7 399 0.6 411 0.6 423 0.6 436 0.6 449 0.6 462 0.6 476 0.6 490 0.6 505 0.6 EquipmentLease 17 0.0 18 0.0 18 0.0 19 0.0 19 0.0 20 0.0 21 0.0 21 0.0 22 0.0 22 0.0 ReserveforReplacement 2,369 4.0 2,464 4.0 2,602 4.0 2,680 4.0 2,760 4.0 2,843 4.0 2,928 4.0 3,016 4.0 3,107 4.0 3,200 4.0 Total 7,053 11.9 7,265 11.7 7,546 11.5 7,773 11.5 8,006 11.5 8,246 11.5 8,494 11.5 8,748 11.5 9,011 11.5 9,281 11.5 EBITDALESSRESERVE $12,936 21.9 % $13,920 22.6 % $15,463 24.0 % $15,927 24.0 % $16,405 24.0 % $16,897 24.0 % $17,404 24.0 % $17,926 24.0 % $18,464 24.0 % $19,018 24.0 % 1 1 1 1 1 1 1 1 1 1 *Departmentalexpensesareexpressedasapercentageofdepartmentalrevenues.

May-2017 ForecastofIncomeandExpense 115 HiltonBaltimore–Baltimore,Maryland FIGURE7-11 TEN-YEARFORECASTOFREVENUEANDEXPENSE(CALENDARYEAR)

2017 2018 20 19 2020 202 1 2022 2023 2 024 2025 2 026

NumberofRooms: 7 57 757 75 7 757 75 7 757 757 7 57 757 757 OccupiedRooms: 190,6 50 193,414 198,94 0 1 98,940 198,94 0 1 98,940 198,940 198 ,9 40 198,940 198 ,940 Occupancy: 69% 7 0% 72% 72 % 72% 72 % 7 2% 72% 72% 72% AverageRate: $175.21 %of $179.59 %of $184.97 %of $190.52 %of $196.24 %of $202.13 %of $208.19 %of $214.43 %of $220.87 %of $227.49 %of RevPAR: $120.89 Gross $125.71 Gross $133.18 Gross $137.18 Gross $141.29 Gross $145.53 Gross $149.90 Gross $154.39 Gross $159.02 Gross $163.80 Gross OPERATINGREVENUE Rooms $33,403 60.1 % $34,734 60.0 % $36,798 60.2 % $37,902 60.2 % $39,039 60.2 % $40,211 60.2 % $41,417 60.2 % $42,660 60.2 % $43,939 60.2 % $45,257 60.2 % Food&Beverage 21,469 38.6 22,354 38.6 23,521 38.5 24,227 38.5 24,954 38.5 25,702 38.5 26,473 38.5 27,268 38.5 28,086 38.5 28,928 38.5 OtherOperatedDepartments 58 0.1 60 0.1 62 0.1 64 0.1 66 0.1 68 0.1 70 0.1 72 0.1 74 0.1 77 0.1 MiscellaneousIncome 674 1.2 694 1.2 721 1.2 743 1.2 765 1.2 788 1.2 812 1.2 836 1.2 861 1.2 887 1.2 TotalOperatingRevenue 55,604 100.0 57,842 100.0 61,103 100.0 62,936 100.0 64,824 100.0 66,770 100.0 68,773 100.0 70,836 100.0 72,960 100. 0 75,149 100.0 DEPARTMENTALEXPENSES* Rooms 8,818 26.4 9,092 26.2 9,473 25.7 9,758 25.7 10,050 25.7 10,352 25.7 10,662 25.7 10,982 25.7 11,312 25.7 11,651 25.7 Food&Beverage 12,497 58.2 12,872 57.6 13,389 56.9 13,790 56.9 14,204 56.9 14,630 56.9 15,069 56.9 15,521 56.9 15,987 56.9 16,466 56.9 OtherOperatedDepartments 98 168.0 101 167.5 104 166.5 107 166.5 110 166.5 113 166.5 117 166.5 120 166.5 124 166.5 128 166.5 Total 21,413 38.5 22,065 38.1 22,966 37.6 23,655 37.6 24,36 5 37.6 25,095 37.6 25,848 37.6 26,624 37.6 27,423 37.6 28,245 37.6 DEPARTMENTALINCOME 34,191 61.5 35,778 61.9 38,137 62.4 39,281 62.4 40,460 62.4 41,674 62.4 42,924 62.4 44,212 62.4 45,538 62.4 46,904 62.4 UNDISTRIBUTEDOPERATINGEXPENSES Administrative&General 4,040 6.8 4,154 6.8 4,306 6.6 4,436 6.6 4,569 6.6 4,706 6.6 4,847 6.6 4,993 6.6 5,143 6.6 5,297 6.6 Info.andTelecom.Systems 696 1.2 716 1.2 742 1.1 764 1.1 787 1.1 811 1.1 835 1.1 860 1.1 886 1.1 913 1.1 Marketing 4,695 7.9 4,828 7.9 5,004 7.7 5,154 7.7 5,309 7.7 5,468 7.7 5,633 7.7 5,802 7.7 5,976 7.7 6,155 7.7 Prop.Operations&Maint. 1,766 3.0 1,825 3.0 1,892 2.9 1,948 2.9 2,007 2.9 2,067 2.9 2,129 2.9 2,193 2.9 2,259 2.9 2,327 2.9 Utilities 3,422 5.8 3,519 5.7 3,648 5.6 3,757 5.6 3,870 5.6 3,986 5.6 4,106 5.6 4,229 5.6 4,356 5.6 4,487 5.6 Total 14,619 24.7 15,042 24.6 15,592 23.9 16,060 23.9 16,54 2 23.9 17,038 23.9 17,550 23.9 18,077 23.9 18,619 23.9 19,178 23.9 GROSSHOUSEPROFIT 19,572 35.2 20,736 35.8 22,545 36.9 23,221 36.9 23,918 36.9 24,636 36.9 25,374 36.9 26,136 36.9 26,919 36.9 27,726 36.9 FIXEDCHARGES BaseManagementFee 1,668 3.0 1,735 3.0 1,833 3.0 1,888 3.0 1,945 3.0 2,003 3.0 2,063 3.0 2,125 3.0 2,189 3.0 2,254 3.0 PropertyTaxes 4,277 7.7 4,384 7.6 4,516 7.4 4,651 7.4 4,791 7.4 4,935 7.4 5,083 7.4 5,235 7.4 5,392 7.4 5,554 7.4 Insurance 388 0.7 398 0.7 410 0.7 422 0.7 435 0.7 448 0.7 461 0.7 475 0.7 489 0.7 504 0.7 EquipmentLease 17 0.0 18 0.0 18 0.0 19 0.0 19 0.0 20 0.0 20 0.0 21 0.0 22 0.0 22 0.0 ReserveforReplacement 2,224 4.0 2,314 4.0 2,444 4.0 2,517 4.0 2,593 4.0 2,671 4.0 2,751 4.0 2,833 4.0 2,918 4.0 3,006 4.0 Total 8,575 15.4 8,849 15.3 9,221 15.1 9,498 15.1 9,783 1 5.1 10,076 15.1 10,378 15.1 10,690 15.1 11,010 15.1 11,341 15.1 ADJUSTEDNOI $10,997 19.8 % $11,887 20.6 % $13,324 21.8 % $13,724 21.8 % $14,135 21.8 % $14,560 21.8 % $14,996 21.8 % $15,446 21.8 % $15,909 21.8 % $16,385 21.8 % 1 1 1 1 1 1 1 1 1 1 NetParking — — — — — — — — — — Retail — — — — — — — — — — PropertyTaxes 4,277 4,384 4,516 4,651 4,791 4,935 5,083 5,235 5,392 5,554 NetOperatingIncome $15,274 2 2 7.5 % $16,271 22 8.1 % $17,840 22 9.2 % $18,375 22 9.2 % $18,926 22 9.2 % $19,494 22 9.2 % $20,079 22 9.2 % $20,681 22 9.2 % $21,301 22 9.2 % $21,939 22 9.2 %

May-2017 ForecastofIncomeandExpense 116 HiltonBaltimore–Baltimore,Maryland

ForecastofRevenue The following description sets forth the basis for the forecast of revenue and andExpense expense. We anticipate that it will take three years for the subject property to reach a stabilized level of operation. Each revenue and expense item has been forecast based upon our review of the subject property’s operating history, operatingbudget,andcomparablerevenueandexpensestatements.Theforecast beginsonFebruary1,2017,expressedininflateddollarsforeachyear.

RoomsRevenue Roomsrevenueisdeterminedbytwovariables:occupancyandaveragerate.We projectedoccupancyandaveragerateinaprevioussectionofthisreport.The subjectpropertyisexpectedtostabilizeat72.0%withanaveragerateof$185.44 in 2019/20. Following the stabilized year, thesubject property’s average rate is projectedtoincreasealongwiththeunderlyingrateofinflation.

FoodandBeverage InthecaseoftheHiltonBaltimore,theoutletofferings(arestaurant,alounge,a Revenue coffeeshop)serveasasourceofrevenueaswellasanamenitythatassistsinthe sale of guestrooms. In addition to this offering, banquet space at the subject property spans 56,554 square feet. The subject property's food and beverage operation is considered to be largely stable. The anticipated renovations to the meeting spaces should allow the subject property to maintain its current performancelevels.

FIGURE7-12 FOODANDBEVERAGEREVENUE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

Food&BeverageRevenue PercentageofRevenue 36.2 % 34.8 % 29.8 % 34.5 % 22.0 % 32.6 % 36.2 % 36.3 % PerAvailableRoom $26,972 $28,394 $21,358 $25,137 $14,640 $22,087 $26,972 $28,925 PerOccupiedRoom $0.00 $101.40 $79.22 $94.55 $53.02 $82.79 $108.67 $110.07

OtherOperated AccordingtotheUSALI,otheroperateddepartmentsincludeanymajororminor DepartmentsRevenue operateddepartmentotherthanroomsandfoodandbeverage.Revenuesthatare collected from telephone charges, high-speed Internet access, and other miscellaneousrevenuesarereflectedinthislineitem.

May-2017 ForecastofIncomeandExpense 117 HiltonBaltimore–Baltimore,Maryland

FIGURE7-13 OTHEROPERATEDDEPARTMENTSREVENUE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 0.1 % 8.8 % 4.9 % 4.2 % 5.9 % 4.7 % 0.1 % 0.1 % PerAvailableRoom $75 $7,139 $3,482 $3,091 $3,938 $3,202 $77 $77 PerOccupiedRoom $0.30 $25.50 $12.92 $11.63 $14.26 $12.00 $0.31 $0.29

ParkingRevenue The subject property offers valet and self-parkingforguestandpublicuse.We werenotprovidedfull-year2016parkingrevenues.Assuch,wehaveadjustedthis lineiteminthebaseyeargiventheyear-to-dateNovember2016dataprovided. Weexpecttheserevenuestoincreaseataninflationarylevelgoingforward.We forecastthesubjectproperty’sparkingrevenueincometostabilizeat$18.25per occupiedroombythestabilizedyear,2019/20.

RetailSpaceIncome Aspreviouslymentioned,thesubjectpropertyoffersagiftshopandaretailspace thatiscurrentlyoccupiedbyaJimmyJohn'sGourmetSandwichshop.Theseretail spaces are operated by third-party entities with separate lease agreements in place;thegiftshopleaseexpiresin2018,whiletheJimmyJohn'sleaseexpiresin 2023.Inreviewofbothleaseagreements,thegiftshopandJimmyJohn'srentfees arescheduledtoincreaseyearlyat3.5%and3.0%,respectively.Forpurposesof this appraisal, we have assumed that the leases would be renewed beyond the aforementioned expiration dates and would operate under similar terms as the existingagreements.Thefollowingchartshowstheescalationoftheannuallease paymentsthroughtheprojectionperiod.Weforecastthesubjectproperty’sretail space income income to stabilize at $0.78 per occupied room by the stabilized year,2019/20.

MiscellaneousIncome AccordingtotheUSALI,miscellaneousincomeincludesattritionfees,cancellation fees, outside agreement commissions, and interest income, among other items. Revenues that are collected from hotel's cancelation charges, attrition fees, outsourced laundry commissions, vending commissions, in-room movie commissions,andothermiscellaneousincomearereflectedinthislineitem.

May-2017 ForecastofIncomeandExpense 118 HiltonBaltimore–Baltimore,Maryland

FIGURE7-14 MISCELLANEOUSINCOME

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 1.2 % 0.8 % 0.0 % 1.2 % 1.0 % 0.9 % 1.1 % 1.1 % PerAvailableRoom $870 $647 $0 $900 $635 $624 $893 $887 PerOccupiedRoom $3.50 $2.31 $0.00 $3.39 $2.30 $2.34 $3.54 $3.37

RoomsExpense Roomsexpenseconsistsofitemsrelatedtothesaleandupkeepofguestroomsand public space. Salaries, wages, and employee benefits account for a substantial portion of this category. Although payroll varies somewhat with occupancy and managerscangenerallyscalethelevelofservicestaffonhandtomeetanexpected occupancy level, a base level of front desk personnel, housekeepers, and supervisors must be maintained at all times. As a result, salaries, wages, and employeebenefitsaremoderatelysensitivetochangesinoccupancy.

Commissions and reservations are usually based on room sales and, thus, are highlysensitive to changes inoccupancy and average rate.While guest supplies vary100%withoccupancy,linensandotheroperatingexpensesareonlyslightly affectedbyvolume.

FIGURE7-15 ROOMSEXPENSE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 26.8 % 21.8 % 25.0 % 29.0 % 21.4 % 26.4 % 26.4 % 25.7 % PerAvailableRoom $11,354 $9,896 $11,718 $12,697 $10,124 $11,062 $11,673 $11,645 PerOccupiedRoom $45.74 $35.34 $43.46 $47.76 $36.67 $41.47 $46.35 $44.31

FoodandBeverage Foodandbeverageexpenseisassociatedwiththegenerationoffoodandbeverage Expense revenue within the restaurant and lounge outlets, as well as the banquet and meetingfacilities.Thecostoffoodandbeverageisdirectlycorrelatedtofoodand beveragerevenue,whilefoodandbeveragepayrollexpenseismoderatelyfixed. The cost of items such as china, linens, and uniforms are less dependent on volume.

May-2017 ForecastofIncomeandExpense 119 HiltonBaltimore–Baltimore,Maryland

FIGURE7-16 FOODANDBEVERAGEEXPENSE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 59.7 % 64.7 % 66.0 % 61.9 % 53.6 % 67.7 % 58.2 % 56.9 % PerAvailableRoom $16,104 $18,370 $14,087 $15,549 $7,852 $14,962 $16,542 $16,458 PerOccupiedRoom $64.88 $65.60 $52.25 $58.48 $28.44 $56.09 $65.68 $62.63

OtherOperated Other operated departments expense comprises expenses associated with the DepartmentsExpense hotel’svariousotherandminoroperateddepartments.

FIGURE7-17 OTHEROPERATEDDEPARTMENTSEXPENSE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 168.5 % 39.2 % 40.5 % 65.0 % 44.5 % 38.0 % 168.0 % 166.5 % PerAvailableRoom $127 $2,796 $1,412 $2,010 $1,754 $1,215 $130 $128 PerOccupiedRoom $0.51 $9.98 $5.24 $7.56 $6.35 $4.56 $0.51 $0.49

ParkingRevenue Wehaveadjustedthislineitemupwardbasedupontheyear-to-dateNovember Expense 2016dataprovided.Weexpecttheparkingexpensetoincreaseataninflationary level going forward. We have projected a stabilized expense ratio of 39.7% in 2019/20.

Administrativeand Administrative and general expense includes the salaries and wages of all GeneralExpense administrative personnel who are not directly associated with a particular department. Expense items related to the management and operation of the propertyarealsoallocatedtothiscategory.

Mostadministrativeandgeneralexpensesarerelativelyfixed.Theexceptionsare cash overages andshortages; commissions oncredit card charges; provision for doubtfulaccounts,whicharemoderatelyaffectedbythenumberoftransactionsor totalrevenue;andsalaries,wages,andbenefits,whichareveryslightlyinfluenced byvolume.

May-2017 ForecastofIncomeandExpense 120 HiltonBaltimore–Baltimore,Maryland

FIGURE7-18 ADMINISTRATIVEANDGENERALEXPENSE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 7.0 % 6.8 % 7.7 % 7.6 % 5.9 % 7.7 % 6.8 % 6.6 % PerAvailableRoom $5,213 $5,571 $5,515 $5,571 $3,960 $5,236 $5,348 $5,294 PerOccupiedRoom $21.00 $19.89 $20.45 $20.95 $14.34 $19.63 $21.24 $20.14

Informationand Information and telecommunications systems expense consists of all costs Telecommunications associatedwithahotel’stechnologyinfrastructure.Thisincludesthecostsofcell SystemsExpense phones, administrative call and Internet services, and complimentary call and Internet services. Expenses in this category are typically organized by type of technology, or the area benefitting from the technology solution. We expect the subjecthotel'sinformationandtelecommunicationssystemstobewellmanaged. Expenselevelsshouldstabilizeatatypicallevelforapropertyofthistype.Perthe 11theditionoftheUSALI,informationandtelecommunicationssystemsexpenses are required to be reported within the undistributed operating expenses. The comparableoperatingstatementsreviewed,however,areconsistentwiththe10th edition of the USALI, with these expenses allocated to the other operated departments,roomexpense,andundistributedoperatingexpenselineitems.

MarketingExpense Marketing expense consists of all costs associated with advertising, sales, and promotion;theseactivitiesareintendedtoattractandretaincustomers.Marketing can be used to create an image, develop customer awareness, and stimulate patronageofaproperty'svariousfacilities.

Themarketingcategoryisuniqueinthatallexpenseitems,withtheexceptionof feesandcommissions,aretotallycontrolledbymanagement.Mosthoteloperators establishanannualmarketingbudgetthatsetsforthallplannedexpenditures.If thebudgetisfollowed,totalmarketingexpensescanbeprojectedaccurately.

Marketingexpendituresareunusualbecausealthoughthereisalagperiodbefore resultsarerealized,thebenefitsareoftenextendedoveralongperiod.Depending onthetypeandscopeoftheadvertisingandpromotionprogramimplemented,the lagtimecanbeasshortasafewweeksoraslongasseveralyears.However,the favorableresultsofaneffectivemarketingcampaigntendtolinger,andaproperty oftenenjoysthebenefitsofconcentratedsaleseffortsformanymonths.

May-2017 ForecastofIncomeandExpense 121 HiltonBaltimore–Baltimore,Maryland

FIGURE7-19 MARKETINGEXPENSE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 8.1 % 7.3 % 7.4 % 5.2 % 6.4 % 6.5 % 7.9 % 7.7 % PerAvailableRoom $6,057 $5,914 $5,316 $3,800 $4,278 $4,378 $6,215 $6,152 PerOccupiedRoom $24.40 $21.12 $19.72 $14.29 $15.49 $16.41 $24.68 $23.41

Marketingexpenseandfranchisefeesareoften analyzed in total becausehotels mayaccountforsomecomponentsoffranchiseexpenseinthemarketingexpense category.Thesubjectproperty’stotalmarketingandfranchiseexpensehasbeen forecastat7.7%oftotalrevenueonastabilizedbasis,whichcompareswithatotal forthecomparablesrangingfrom5.2%to13.3%oftotalrevenue.

PropertyOperations Propertyoperationsandmaintenanceexpenseisanotherexpensecategorythatis andMaintenance largelycontrolledbymanagement.Exceptforrepairsthatarenecessarytokeep thefacilityopenandpreventdamage(e.g.,plumbing,heating,andelectricalitems), mostmaintenancecanbedeferredforvaryinglengthsoftime.

The age of a lodging facility has a strong influence on the required level of maintenance.Aneworthoroughlyrenovated property is protected for several years by modern equipment and manufacturers' warranties. However, as a hostelrygrowsolder,maintenanceexpensesescalate.Awell-organizedpreventive maintenancesystemoftenhelpsdelaydeterioration,butmostfacilitiesfacehigher propertyoperationsandmaintenancecostseachyear,regardlessoftheoccupancy trend.Thequalityofinitialconstructioncanalsohaveadirectimpactonfuture maintenance requirements. The use of high-quality building materials and construction methods generally reduces the need for maintenance expenditures overthelongterm.

Maintenance is an accumulating expense. If management elects to postpone performingarequiredrepair,theyhavenoteliminatedorsavedtheexpenditure; theyhaveonlydeferredpaymentuntilalaterdate.Alodgingfacilitythatoperates with a lower-than-normal maintenance budget is likely to accumulate a considerableamountofdeferredmaintenance.

May-2017 ForecastofIncomeandExpense 122 HiltonBaltimore–Baltimore,Maryland

FIGURE7-20 PROPERTYOPERATIONSANDMAINTENANCEEXPENSE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 3.0 % 3.6 % 4.1 % 4.0 % 3.4 % 3.4 % 3.0 % 2.9 % PerAvailableRoom $2,256 $2,976 $2,928 $2,894 $2,292 $2,335 $2,339 $2,326 PerOccupiedRoom $9.09 $10.63 $10.86 $10.88 $8.30 $8.75 $9.29 $8.85

UtilitiesExpense Theutilitiesconsumptionofalodgingfacilitytakesseveralforms,includingwater andspaceheating,airconditioning,lighting,cookingfuel,andothermiscellaneous power requirements.The most common sources of hotel utilities are electricity, natural gas, fuel oil, and steam. This category also includes the cost of water service.

Totalenergycostdependsonthesourceandquantityoffuelused.Electricitytends to be the most expensive source, followed by oil and gas. Although all hotels consumeasizableamountofelectricity,manypropertiessupplementtheirutility requirements with less expensive sources,suchasgasandoil,forheatingand cooking. Utility expenses are highly tied to local utility rates in the Baltimore market; therefore, wehave given primary consideration to the hotel’s operating history.

FIGURE7-21 UTILITIESEXPENSE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 5.9 % 3.0 % 2.5 % 2.2 % 3.0 % 4.3 % 5.8 % 5.6 % PerAvailableRoom $4,415 $2,422 $1,768 $1,610 $2,013 $2,885 $4,530 $4,484 PerOccupiedRoom $17.79 $8.65 $6.56 $6.05 $7.29 $10.82 $17.99 $17.06

ManagementFee Managementexpenseconsistsofthefeespaidtothemanagingagentcontractedto operatetheproperty.Somecompaniesprovidemanagementservicesandabrand- name affiliation (first-tier management company), while others provide management services alone (second-tier management company). Some management contracts specify only a base fee (usually a percentage of total revenue), while others call for both a base fee and an incentive fee (usually a percentageofdefinedprofit).Basichotelmanagementfeesareoftenbasedona percentage of total revenue, which means they have no fixed component. While basefeestypicallyrangefrom2%to4%oftotalrevenue,incentivefeesaredeal- specific and often are calculated as a percentage of income available after debt serviceand,insomecases,afterapreferredreturnonequity.Totalmanagement

May-2017 ForecastofIncomeandExpense 123 HiltonBaltimore–Baltimore,Maryland

feesforthesubjectpropertyhavebeenforecastatamarketratefeeof 3.0%of totalrevenue.

PropertyTaxes Property (or ad valorem) tax is one of the primary revenue sources of municipalities.Basedontheconceptthatthetaxburdenshouldbedistributedin proportiontothevalueofallpropertieswithinataxingjurisdiction,asystemof assessmentsisestablished.Theoretically,theassessedvalueplacedoneachparcel bearsadefiniterelationshiptomarketvalue;thus,propertieswithequalmarket valueswillhavesimilarassessments,andpropertieswithhigherandlowervalues willhaveproportionatelylargerandsmallerassessments.

Dependingonthetaxingpolicyofthemunicipality,propertytaxescanbebasedon thevalueoftherealpropertyorthevalueofthepersonalpropertyandthereal property.Wehavebasedourestimateofthesubjectproperty'smarketvalue(for tax purposes) on an analysis of assessments of both the subject property and comparablehotelpropertiesinthelocalmunicipality.Thefollowingtabledetails thesubjectproperty'sassessmenthistory.

FIGURE7-22 SUBJECTPROPERTY'SASSESSMENTHISTORY–REAL/PERSONALPROPERTY

RealProperty PersonalProperty

AssessedValue Assessed Percent Percent Year Land Improvements Total Change Value Change

2014 $22,947,400 $141,043,900 $163,991,300 — $5,665,830 — 2015 22,947,400 141,043,900 163,991,300 0.0 % 4,532,664 (20.0) % 2016 22,947,400 142,876,033 165,823,433 1.1 5,544,010 22.3 2017 22,947,400 144,708,167 167,655,567 1.1 5,708,270 3.0

Source:MarylandDepartmentofAssessmentsandTaxation

Wenotethehistoricalfinancialsprovidedbyhotelmanagementdidnotinclude any property tax expenses. According to our interviews with representatives of hotelownership,thesubjectpropertyissubjecttoTaxIncrementFinancing(TIF) thatispartofthebondissuedfortheconstructionofthesubjectproperty.ThisTIF requiresthesubjectpropertytoremitallrealpropertyandpersonalpropertytax burdens; however, the city tax burdens are refunded to the subject property annually. Therefore, the only tax fee the hotel pays is the Maryland state tax. However,forthepurposesofthisappraisal,thepropertytaxlineitemincludesthe entiretyoftherealandpersonalpropertytaxburdens.

May-2017 ForecastofIncomeandExpense 124 HiltonBaltimore–Baltimore,Maryland

Taxratesarebasedonthecityandcountybudgets,whichchangeannually.The followingtableshowschangesinthetaxrateduringthelastseveralyears.

FIGURE7-23 PROPERTYTAXRATES

RealProperty PersonalProperty Year TaxRate MillageRate 2014 2.36 5.62 2015 2.36 5.62 2016 2.36 5.62 2017 2.36 5.62

Source:MarylandDepartmentofAssessmentsand

Becausetheobjectiveofassessedvalueistomaintainaspecificvaluerelationship amongallpropertiesinataxingjurisdiction,comparablehotelassessmentsshould be evaluated to determine whether the assessed value of the subject property appears reasonable in this context. A review of the assessed values of several comparable hotels located in the local county jurisdiction reveals the following information.

May-2017 ForecastofIncomeandExpense 125 HiltonBaltimore–Baltimore,Maryland

FIGURE7-24 COUNTY-ASSESSEDVALUEOFCOMPARABLEHOTELS

Year Hotel Open Land Improvements Total SubjectProperty 2008 $22,947,400 $142,876,033 $165,823,433 MarriottInnerHarbor 1985 $12,867,600 $30,419,567 $43,287,167 SheratonInnerHarborHotel 1985 8,032,400 23,141,233 31,173,633 HyattRegencyBaltimore 1981 14,897,600 54,658,600 69,556,200 MarriottWaterfrontHotel 2001 14,760,300 125,225,633 139,985,933 RadissonHotelBaltimoreDowntown-InnerHarbor 1967 5,567,000 1,790,200 7,357,200

Number AmountsPerRoom Hotel ofRooms Land Improvements Total SubjectProperty 757 $30,314 $188,740 $219,053 MarriottInnerHarbor 524 $24,556 $58,053 $82,609 SheratonInnerHarborHotel 337 23,835 68,668 92,503 HyattRegencyBaltimore 488 30,528 112,005 142,533 MarriottWaterfrontHotel 753 19,602 166,302 185,904 RadissonHotelBaltimoreDowntown-InnerHarbor 323 17,235 5,542 22,778

Source:MarylandDepartmentofAssessmentsandTaxation

Thesedatashowthatthesubjectproperty'sassessmentishigherthantherange presentedbythecomparabledatabutappearsreasonableinthiscontextgiventhe extentofthesubjecthotel'simprovements,thecurrentqualityofthebuilding,and thesizeofthesite.

Based on comparable assessments and the tax rate information, the subject property'sprojectedpropertytaxexpenselevelsarecalculatedasfollows.

FIGURE7-25 PROJECTEDPROPERTYTAXEXPENSE

AssessedValue ForecastRateof BaseRateofTax RealProp. Pers.Prop. Tax Year Land Improvements Personal Total ValueChange BurdenIncrease TaxRate MillageRate Forecast

Historical $22,947,400 $142,876,033 $5,544,010 $171,367,443 — — 2.36 5.62 $4,225,006 2017/18 $22,947,400 $144,708,167 $5,708,270 $173,363,837 1.2 % 2.0 % 2.36 5.62 $4,277,476 2018/19 22,947,400 144,708,167 5,708,270 173,363,837 0.0 2.5 — — 4,384,413 2019/20 22,947,400 144,708,167 5,708,270 173,363,837 0.0 3.0 — — 4,515,945 2020/21 22,947,400 144,708,167 5,708,270 173,363,837 0.0 3.0 — — 4,651,424 2021/22 22,947,400 144,708,167 5,708,270 173,363,837 0.0 3.0 — — 4,790,967

May-2017 ForecastofIncomeandExpense 126 HiltonBaltimore–Baltimore,Maryland

InsuranceExpense Theinsuranceexpensecategoryconsistsofthecostofinsuringthehotelandits contentsagainstdamageordestructionbyfire,weather,sprinklerleakage,boiler explosion,plateglassbreakage,andsoforth.Generalinsurancecostsalsoinclude premiumsrelatingtoliability,fidelity,andtheftcoverage.

Insurance rates are based on many factors, including building design and construction, fire detection and extinguishing equipment, fire district, distance fromthefirehouse,andthearea'sfireexperience.Insuranceexpensesdonotvary withoccupancy.

FIGURE7-26 INSURANCEEXPENSE

SubjectProperty ComparableOperatingStatements SubjectPropertyForecast 2016 #1 #2 #3 #4 #5 2017/18 DeflatedStabilized

PercentageofRevenue 0.0 % 1.3 % 0.7 % 0.6 % 3.0 % 0.8 % 0.7 % 0.6 % PerAvailableRoom $28 $1,088 $524 $468 $2,014 $512 $514 $504 PerOccupiedRoom $0.11 $3.88 $1.94 $1.76 $7.29 $1.92 $2.04 $1.92

OtherFixedItems The subject hotel incurs minimal expenses for various equipment leases. In the historicalbaseyear,theseexpenseswereforthesubjectproperty'sadministrative copy machines. We expect these expenses to continue and increase at the underlyinginflationaryrate.

Reservefor Furniture,fixtures,andequipmentareessentialtotheoperationofalodging Replacement facility,andtheirqualityofteninfluencesaproperty'sclass.Thiscategoryincludes allnon-realestateitemsthatarecapitalized,ratherthanexpensed.Thefurniture, fixtures,andequipmentofahotelareexposedtoheavyuseandmustbereplaced atregularintervals.Theusefullifeoftheseitemsisdeterminedbytheirquality, durability,andtheamountofguesttrafficanduse.

Periodicreplacementoffurniture,fixtures,andequipmentisessentialtomaintain the quality, image,and income-producing potential of a lodging facility. Because capitalizedexpendituresarenotincludedintheoperatingstatementbutaffectan owner'scashflow,aforecastofincomeandexpenseshouldreflecttheseexpenses intheformofanappropriatereserveforreplacement.

The International Society of Hospitality Consultants (ISHC) oversees a major industry-sponsored study of the capital expenditure requirements for full- service/luxury, select-service, and extended-stay hotels. The most recent study

May-2017 ForecastofIncomeandExpense 127 HiltonBaltimore–Baltimore,Maryland

waspublishedin2014.6Historicalcapitalexpendituresofwell-maintainedhotels wereinvestigatedthroughthecompilationofdataprovidedbymostofthemajor hotel companies in the United States. A prospective analysis of future capital expenditure requirements was also performed based upon the cost to replace short-andlong-livedbuildingcomponentsoverahotel'seconomiclife.Thestudy showed that the capital expenditure requirements for hotels vary significantly from year to year and depend upon both the actual and effective ages of a property.Theresultsofthisstudyshowedthathotellendersandinvestorsare requiringreservesforreplacementrangingfrom4%to5%oftotalrevenue.

Based on the results of our analysis and on our review of the subject asset and comparable lodging facilities, as well as on our industry expertise, we estimate thatareserveforreplacementof4%oftotalrevenuesissufficienttoprovidefor thetimelyandperiodicreplacementofthesubjectproperty'sfurniture,fixtures, andequipment.

ForecastofRevenue Revenuesandexpenseshavebeenforecastforthesubjecthoteloverthe andExpense projectionperiodshown.Overthelongterm,occupancyisexpectedtoimproveas Conclusion the economy strengthens further, while average rate is anticipated to achieve greatergainsasthehotelcontinuestorampuptowardstabilization.Historicaland projected total revenue and net operating income are set forth in the following chart.

FIGURE7-27 FORECASTOFREVENUEANDEXPENSECONCLUSION

TotalRevenue HouseProfit House EBITDALessReplacementReserve Profit Asa%of Year Total %Change Total %Change Ratio Total %Change TtlRev

Historical 2012 $50,285,000 — $19,897,000 — 39.6 % $11,395,000 — 22.7 % 2013 56,426,000 12.2 % 23,489,000 18.1 % 41.6 14,673,000 28.8 % 26.0 2014 54,698,000 (3.1) 21,436,000 (8.7) 39.2 12,731,000 (13.2) 23.3 2015 54,228,000 (0.9) 20,023,000 (6 .6) 36.9 11,195,000 (12.1) 20.6 CalendarYear 2016 56,454,000 0.0 20,011,000 0.0 35.4 16,022,000 0.0 28.4 Projected 2017/18 $59,224,000 4.9 % $21,765,000 8.8 % 36.8 % $12,936,000 (19.3) % 21.9 % 2018/19 61,612,000 4.0 23,033,000 5.8 37.3 13,920,000 7.6 22.6 2019/20 65,042,000 5.6 24,960,000 8.4 38.5 15,463,000 11.1 24.0 2020/21 66,994,000 3.0 25,709,000 3.0 38.5 15,927,000 3.0 24.0 2021/22 69,004,000 3.0 26,481,000 3.0 38.5 16,405,000 3.0 24.0

6 The International Society of Hotel Consultants, CapEx 2014, A Study of Capital ExpenditureintheU.S.HotelIndustry.

May-2017 ForecastofIncomeandExpense 128 HiltonBaltimore–Baltimore,Maryland

Theforecastofrevenueandexpenseanticipatesthenetoperatingincomeratioto declinefrom28.4%ofgrossrevenuesinthebaseyearto24.0%ofgrossrevenues bythefifthprojectionyear.

May-2017 ForecastofIncomeandExpense 129 HiltonBaltimore–Baltimore,Maryland

8. StatementofAssumptionsandLimitingConditions

1. Thisreportissetforthasamarketstudyofthesubjectproperty;thisisnot anappraisalreport. 2. Thisreportistobeusedinwholeandnotinpart. 3. No responsibility is assumed for matters of a legal nature, nor do we renderanyopinionastotitle,whichisassumedmarketableandfreeofany deedrestrictionsandeasements.Thepropertyisevaluatedasthoughfree andclearunlessotherwisestated. 4. Weassumethattherearenohiddenorunapparentconditionsofthesub- soilorstructures,suchasundergroundstoragetanks,thatwouldrender thepropertymoreorlessvaluable.Noresponsibilityisassumedforthese conditionsorforanyengineeringthatmayberequiredtodiscoverthem. 5. We have not consideredthe presence of potentially hazardousmaterials such as asbestos, urea-formaldehyde foam insulation, polychlorinated biphenyls(PCBs),anyformoftoxicwaste,pesticides,mold,orlead-based paints.Wearenotqualifiedtodetecthazardoussubstancesandurgethe clienttoretainanexpertinthisfieldifdesired. 6. TheAmericanswithDisabilitiesAct(ADA)becameeffectiveonJanuary26, 1992. We have conducted no specific compliance survey to determine whether the subject property has been designed in accordance with the various detailed requirements of the ADA. It is possible that the design does notconform to therequirements of the act,and thiscould have an unfavorable effect on operations. Because we have no direct evidence regarding this issue, our estimates do not consider possible non- compliancewiththeADA. 7. Wehavemadenosurveyoftheproperty,andweassumenoresponsibility inconnectionwithsuchmatters.Sketches,photographs,maps,andother exhibitsareincludedtoassistthereaderinvisualizingtheproperty.Itis assumedthattheuseofthedescribedrealestateiswithintheboundaries ofthepropertydescribed,andthatthereisnoencroachmentortrespass unlessnoted. 8. All information, financial operating statements, estimates, and opinions obtained from parties not employed byTS Worldwide, LLC are assumed trueandcorrect.Wecanassumenoliabilityresultingfrom misinformation.

May-2017 StatementofAssumptionsandLimitingConditions 130 HiltonBaltimore–Baltimore,Maryland

9. Unless noted, we assume that there are no encroachments, zoning violations,orbuildingviolationsencumberingthesubjectproperty. 10. The property is assumed to be in full compliance with all applicable federal, state, local, and private codes, laws, consents, licenses, and regulations (including the appropriate liquor license if applicable), and thatalllicenses,permits,certificates,franchises,andsoforthcanbefreely renewedortransferredtoapurchaser. 11. All mortgages, liens, encumbrances, leases, and servitudes have been disregardedunlessspecifiedotherwise. 12. Noneofthismaterialmaybereproducedinanyformwithoutourwritten permission,andthereportcannotbedisseminatedtothepublicthrough advertising,publicrelations,news,sales,orothermedia. 13. Wearenotrequiredtogivetestimonyorattendanceincourtbecauseof this analysis without previous arrangements, and shall do so only when our standard per-diem fees and travel costs have been paid prior to the appearance. 14. Ifthereaderismakingafiduciaryorindividualinvestmentdecisionand has any questions concerning the material presented in this report, it is recommendedthatthereadercontactus. 15. Wetakenoresponsibilityforanyeventsorcircumstancesthattakeplace subsequenttothedateofourfieldinspection. 16. Thequalityofalodgingfacility'sonsitemanagementhasadirecteffecton a property's economic viability. The financial forecasts presented in this analysisassumeresponsibleownershipandcompetentmanagement.Any departure from this assumption may have a significant impact on the projectedoperatingresults. 17. Thefinancialanalysispresentedinthisreportisbaseduponassumptions, estimates, and evaluations of the market conditions in the local and nationaleconomy,whichmaybesubjecttosharprisesanddeclines.Over the projection period considered in our analysis, wages and other operatingexpensesmayincreaseordecreasebecauseofmarketvolatility and economic forces outside the control of the hotel’s management. We assumethatthepriceofhotelrooms,food,beverages,andothersourcesof revenuetothehotelwillbeadjustedtooffsetanyincreasesordecreasesin relatedcosts.Wedonotwarrantthatourestimateswillbeattained,but they have been developed based upon information obtained during the courseofourmarketresearchandareintendedtoreflecttheexpectations ofatypicalhotelinvestorasofthestateddateofthereport.

May-2017 StatementofAssumptionsandLimitingConditions 131 HiltonBaltimore–Baltimore,Maryland

18. This analysis assumes continuation of all provisions of the Internal RevenueCodeof1986,asamendedtodate. 19. Many of the figures presented in this report were generated using sophisticatedcomputermodelsthatmakecalculationsbasedonnumbers carriedouttothreeormoredecimalplaces.Intheinterestofsimplicity, mostnumbershavebeenroundedtothenearesttenthofapercent.Thus, thesefiguresmaybesubjecttosmallroundingerrors. 20. Itisagreedthatourliabilitytotheclientislimitedtotheamountofthefee paidasliquidateddamages.Ourresponsibilityislimitedtotheclient,and useofthisreportbythirdpartiesshallbesolelyattheriskoftheclient and/orthirdparties.Theuseofthisreportisalsosubjecttothetermsand conditionssetforthinourengagementletterwiththeclient. 21. Evaluating hotels is both a science and an art. Although this analysis employs various mathematical calculations to provide operating result indications,thefinalestimatesissubjectiveandmaybeinfluencedbyour experienceandotherfactorsnotspecificallysetforthinthisreport. 22. This study was prepared by TS Worldwide, LLC. All opinions, recommendations, and conclusions expressed during the course of this assignmentarerenderedbythestaffofTSWorldwide,LLCasemployees, ratherthanasindividuals.

May-2017 StatementofAssumptionsandLimitingConditions 132 HiltonBaltimore–Baltimore,Maryland

9. Certification

Theundersignedherebycertifythat,tothebestofourknowledgeandbelief:

1. thestatementsoffactpresentedinthisreportaretrueandcorrect; 2. thereportedanalyses,opinions,andconclusionsarelimitedonlybythe reported assumptions and limiting conditions, and are our personal, impartial,andunbiasedprofessionalanalyses,opinions,andconclusions; 3. we have no present or prospective interest in the property that is the subjectofthisreportandnopersonalinterestwithrespecttotheparties involved; 4. we have no bias with respect to the property that is the subject of this reportortothepartiesinvolvedwiththisassignment; 5. ourengagementinthisassignmentwasnotcontingentupondevelopingor reportingpredeterminedresults; 6. ourcompensationforcompletingthisassignmentisnotcontingentupon the development or reporting of a predetermined result or direction in performance that favors the cause of the client, the attainment of a stipulatedresult,ortheoccurrenceofasubsequenteventdirectlyrelated totheintendeduseofthisstudy; 7. our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of ProfessionalAppraisalPractice; 8. Dinaker P. Mallya personally inspected the property described in this report; Jerod S. Byrd, MAI participated in the analysis and reviewed the findings,butdidnotpersonallyinspecttheproperty; 9. DinakerP.MallyaprovidedsignificantassistancetoJerodS.Byrd,MAI,and thatnooneotherthanthoselistedaboveandtheundersignedprepared theanalyses,conclusions,andopinionsconcerningtherealestatethatare setforthinthisreport; 10. JerodS.Byrd,MAIhasnotperformedservices,asanappraiserorinany othercapacity,onthepropertythatisthesubjectofthisreportwithinthe three-yearperiodimmediatelyprecedingacceptanceofthisassignment; 11. thereportedanalyses,opinions,andconclusionsweredeveloped,andthis reporthasbeenprepared,inconformitywiththerequirementsoftheCode

May-2017 Certification 133 HiltonBaltimore–Baltimore,Maryland

ofProfessionalEthicsandtheStandardsofProfessionalAppraisalPractice oftheAppraisalInstitute; 12. the use of this report is subject to the requirements of the Appraisal Instituterelatingtoreviewbyitsdulyauthorizedrepresentatives;and 13. as of the date of this report, Jerod S. Byrd, MAI has completed the continuing education program for Designated Members of the Appraisal Institute. JerodS.Byrd,MAI ManagingDirector,SeniorPartner TSWorldwide,LLC

May-2017 Certification 134 HiltonBaltimore–Baltimore,Maryland

JerodByrd,MAI

EMPLOYMENT 2007 to present HVSCONSULTINGANDVALUATIONSERVICES Philadelphia,Pennsylvania 2006 MERCURYINVESTMENTMANAGEMENT Memphis,Tennessee 2005 BLENNERHASSETTHOTEL Parkersburg,WestVirginia EDUCATIONANDOTHER BS–BusinessAdministration,UniversityofMemphis TRAINING OtherSpecializedTrainingClassesCompleted: UniformStandardsofProfessionalAppraisalPractice–15hours BasicAppraisalPrinciples–30hours BasicAppraisalProcedures–30hours GeneralAppraiserIncomeApproach(PartsIandII)–60hours GeneralAppraiserMarketAnalysisandHBU–30hours GeneralAppraiserSiteValuationandCostApproach–30hours GeneralAppraiserSalesComparisonApproach–30hours BusinessPracticesandEthics–7hours Statistics,ModelingandFinance–15hours GeneralAppraiserReportWritingandCaseStudies–30hours AdvancedIncomeCapitalization–40hours DelawareLawRulesandRegulations–3hours AnIntroductiontoValuingCommercialGreenBuildings–7hours ApartmentAppraisal,Concepts&Applications–16hours FundamentalsofSeparatingReal,PersonalProperty,andIntangibleBusinessAssets–15 hours AdvancedConceptsandCaseStudies–35hours PALawClass–2hours BusinessPracticesandEthics–7hours DELawRulesandRegulations–3hours CTLawUpdatewithSupervisor/ProvisionalEducation–3hours AdvancedIncome–35hours AdvancedHotelAppraisals–7hours USPAPUpdate–2010,2012,2014,2016

HVS,Philadelphia,Pennsylvania QualificationsofJerodByrd,MAI 1

STATECERTIFICATIONS Connecticut,Delaware,DistrictofColumbia,Maine,Maryland,NewJersey,NewYork, Pennsylvania,Virginia PROFESSIONAL AppraisalInstitute–DesignatedMember(MAI) AFFILIATIONS PUBLISHEDARTICLES HVS Journal “InFocus:Washington,D.C.,”co-authoredwithChelseyLeffet,July2014 HVS Journal “HVSMarketIntelligenceReport:Philadelphia,”co-authoredwithChelseyLeffet,August 2013 HVS Journal “HVSMarketIntelligenceReport:GreaterWilmington,Delaware,”co-authoredwith ChelseyLeffet,April2013 HVS Journal “HVSMarketIntelligenceReport:WilmingtonandNewark,Delaware,”August2009 HVS Journal “HVSMarketIntelligenceReport:Philadelphia,Pennsylvania,”January2009 HVS Journal “HVSMarketIntelligenceReport:Baltimore-WashingtonInternationalAirport,”October 2007

HVS,Philadelphia,Pennsylvania QualificationsofJerodByrd,MAI 2

EXAMPLESOFPROPERTIESAPPRAISED HoneyspotMotorLodge,Stratford EmbassyWashington,D.C. OREVALUATED CourtyardbyMarriott,Waterbury HyattPlaceE-Street TheDelmar,WestHartford MarriottMarquis PORTFOLIOANALYSIS ComfortInn,Wethersfield ProposedCambriaSuites SpringHillSuitesbyMarriott,Windsor ProposedCanopyHotel Portfolioof50SunSuites,Crestwood Locks ProposedEmbassySuites Suites,andHomeTowneSuites, ProposedHamptonInn VariousLocations DELAWARE ProposedHomewoodSuitesbyHilton InterbankPortfolioof7,Various ProposedHyattPlace Locations CrownePlaza,Claymont ProposedInterContinental HolidayInn,Dover ProposedMarriottMarquis ALABAMA MicrotelInn&Suites,Dover ProposedSpringHillSuites ProposedLaQuintaInn&Suites, QualityInnRedevelopment1- BaymontInn&Suites,Oxford Dover ProposedHamptonInn HiltonGardenInn,Tuscaloosa ProposedHotel,Georgetown QualityInnRedevelopment2- MicrotelInn&Suites,Georgetown ProposedHomewoodSuites ARIZONA HamptonInn,Milford WashingtonHilton ComfortSuites(FourPoints WillardIntercontinentalHoteland MarriottUniversityPark,Tucson Conversion),Newark Office FourPointsConversion(Closed), CALIFORNIA Newark FLORIDA ProposedFourPoints,Newark DaysInn,Anaheim ProposedHamptonInn&Suites, ProposedW,BocaRaton Travelodge,Anaheim Newark HamptonInn,BonitaSprings LandAppraisal,ElSegundo ProposedHotel,Newark HomewoodSuitesbyHilton,Bonita EmbassySuitesonMontereyBay, ProposedSpringHillSuites,Newark Springs Seaside RedRoofInn,Newark SeagateHotelandBeachClub,DelRay TownePlaceSuitesbyMarriott, Beach COLORADO Newark Ritz-Carlton(formerlySt.Regis),Fort ProposedTrubyHilton,Rehoboth Lauderdale Super8,ColoradoSprings Beach TownePlaceSuites,Miami DoubleTree,Westminster BestWesternBrandywineValleyInn, TownePlaceSuites,MiamiLakes Wilmington HardRockHotelatUniversalStudios, CONNECTICUT CourtyardbyMarriott,Wilmington Orlando DoubleTree,Wilmington LoewsPortofinoBayHotel,Orlando HolidayInnExpress,Branford InnatWilmington,Wilmington LoewsRoyalPacificResortat BaymontInn,EastWindsor ProposedHamptonInn,Wilmington UniversalOrlando,Orlando HolidayInnExpress,EastWindsor ProposedResidenceInnorHilton ProposedHotelSaba,RosemaryBeach TravelInn,Hartford GardenInn,Wilmington HolidayInn&Suites,Sunrise FairfieldInnConversiontoDaysInn, ProposedSpringHillSuites, HolidayInn,Tallahassee Milford Wilmington EmbassySuites,Tampa HyattPlace,Milford ProposedWestinDowntown, LaQuintaInn&SuitesNewBritain Wilmington GEORGIA Farmington,NewBritain PremiereHotel&Suites,NewHaven DISTRICTOFCOLUMBIA FairfieldInnSixFlags,Atlanta RedRoofInn,NewLondon HamptonInnAirport,Atlanta HamptonInn,Shelton CapellaHotelGeorgetown WestinAirport,Atlanta

HVS,Philadelphia,Pennsylvania QualificationsofJerodByrd,MAI 3

HolidayInnExpress,Augusta MAINE ComfortInn&Suites,Hagerstown HamptonInn,Cartersville SleepInn&Suites,Hagerstown DaysInn,CollegePark ProposedHomewoodSuitesbyHilton, ProposedAloft,Hanover/Arundel HamptonInn,Fairburn Augusta Mills HolidayInn,JekyllIsland ComfortInn,Brunswick ProposedElement,Hanover/Arundel HamptonInn,Marietta CountryInn,Bangor Mills Hospital,Montezuma ProposedHamptonInn,Kennebunk Super8,HavredeGrace ClarionInn&Suites(Conversiontoa BourneB&B,Ogunquit ComfortInn,HuntValley HiltonGardenInn),Savannah ColonialVillageResort,Ogunquit CourtyardBaltimoreHuntValley,Hunt HamptonInn,Waycross ProposedHotel,Oxford Valley ProposedHotel,SouthPortland ProposedHyattPlace,KentNarrows HAWAII HavenbytheSea,Wells Super8,LaVale LighthouseInn,York SpringHillSuitesbyMarriottBWI, KonaKamehameha,Kona Linthicum MARYLAND StaybridgeSuitesBWI,Linthicum ILLINOIS SleepInnBWI,LinthicumHeights BrookshireSuites,Baltimore MetroPointsHotel,NewCarrollton HotelAllegro,Chicago EmbassySuitesAirport,Baltimore CourtyardbyMarriott,OceanCity RamadaInn,Plymouth HolidayInnInnerHarbor,Baltimore ProposedAloft,OceanCity HotelIndigo,Baltimore ProposedHomewoodSuitesbyHilton, INDIANA HotelMonaco,Baltimore OceanCity ProposedCanopybyHilton,Baltimore ProposedResidenceInnbyMarriott, HolidayInnExpress,Greenfield ProposedExtended-StayHotel, OceanCity CountryInn&Suites,Indianapolis Baltimore ProposedSelect-ServiceHotel& StaybridgeSuites,Merrillville ProposedFourPointsbySheraton, ConferenceCenter,QueenAnne’s Baltimore County IOWA ProposedHolidayInnExpress, ProposedMirbeauInn&Spa, Baltimore Queenstown Sheraton,WestDesMoines ProposedHotelIndigo,Baltimore HiltonGardenInn/HomewoodSuites, ProposedStaybridgeSuites,Baltimore Rockville KANSAS RadissonCrossKeys,Baltimore HarbourtownResort,St.Michaels SheratonBaltimoreCityCenter, InnatPerryCabin,St.Michaels Radisson(conversiontoCrowne Baltimore Super8,Thurmont Plaza),Lenexa ComfortInnofSolomons,Beacons ProposedHamptonInn,Timonium CapitolPlaza,Topeka Marina Radisson,Timonium HomewoodSuitesbyHilton,BelAir HolidayInn,Towson KENTUCKY ProposedHotel,BelAir ProposedResidenceInnbyMarriott, ResidenceInnbyMarriott,Bethesda UpperMarlboro ProposedHiltonGardenInn,Louisville CountryInn&Suites,CapitolHeights ProposedSelect-ServiceHotel,Capitol MASSACHUSETTS LOUISIANA Heights HiltonColumbia,Columbia ProposedHamptonInn,Amesbury HolidayInnNewOrleansWestbank, HolidayInnExpress,Easton DoubleTreebyHiltonBedfordGlen, Gretna CourtyardbyMarriott,Frederick Bedford HolidayInn,NewOrleans WyndhamGardenHotel,Gaithersburg HotelCommonwealth,Boston LandAppraisal,NewOrleans ProposedCourtyard,Germantown ProposedLimited-ServiceHotel, ResidenceInnbyMarriott,Greenbelt Boston

HVS,Philadelphia,Pennsylvania QualificationsofJerodByrd,MAI 4

QualityInn,Chicopee HyattHouse,Branchburg WyndhamGardenNewarkAirport, Hilton,Dedham ProposedHotel,Brick Newark CapeCodResort,Hyannis ProposedCourtyardbyMarriott, Clarion,NorthBrunswick NewEnglanderMotorCourt,Malden Bridgewater RamadaInn,NorthBordentown ProposedHolidayInnExpress, ProposedResidenceInnbyMarriott, ProposedCourtyardbyMarriott, Plainville Bridgewater NorthBrunswick MirbeauInn&SpaatthePinehills, DaysInn,Brooklawn ProposedStaybridgeSuites,North Plymouth HolidayInn,BuddLake Brunswick ProposedHome2SuitesbyHilton, Capt.SamuelEwing HolidayInnExpress,Paramus Watertown Mansion/Expansion,CapeMay FairfieldInn&Suites,Parsippany CourtyardbyMarriott,Westborough ClarionHotelConversion,CherryHill HyattHouseParsippany-East, DaysInn,CherryHill Parsippany MICHIGAN QualityInn,Cookstown HamptonInn,Pennsville ProposedHamptonInn,Cranbury QualityInn,Pleasantville ProposedDetroitBoutiqueHotel, ResidenceInn,Cranbury BestWestern,PomptonPlains Detroit ProposedSpringHillSuites,East CourtyardbyMarriott,Princeton Rutherford BestWestern,Ramsey MISSISSIPPI ResidenceInnbyMarriott,EggHarbor HamptonInn,RidgefieldPark ProposedSheratonHotel,Elmwood CrownePlaza,SaddleBrook ComfortSuites,Starkville Park DesertPalmInn,SeasidePark CourtyardbyMarriott,Ewing CourtyardbyMarriott,Secaucus MISSOURI Element,Ewing DriftingSandsMotel,ShipBottom ProposedHyattPlace,FortLee ProposedHome2SuitesbyHilton, LaQuintaInn,KansasCity CountryInn&Suites,Galloway SomersPoint HolidayInnRiverfront,St.Joseph LandAppraisal,GloucesterCity MadisonSuitesHotel,Somerset ProposedHamptonInn,JerseyCity ResidenceInn,Somerset NEBRASKA ProposedHolidayInnExpress,Jersey ResidenceInnbyMarriott,Stanhope City ProposedTownePlaceSuites, AmericanInn,Alliance ProposedHomewoodSuites,Jersey Swedesboro CarlisleHotel,Omaha City ProposedHotel,UnionCity ComfortInn&Suites,Omaha ProposedHotel,Lakewood ProposedSelect-ServiceHotelUnion ProposedLimited-ServiceHotel, City,UnionCity NEWHAMPSHIRE Lakewood ComfortInn,Vineland CourtyardbyMarriott,Lebanon TravelInn,Vineland DaysInn,Campton ProposedFairfieldInn&Suites, BroadwayMotel,Washington ProposedHotel,Hampton Millville ProposedCourtyardbyMarriott, ProposedLilacCenteratGraniteHills, ProposedHotel,Millville Wayne Hooksett ProposedTownePlaceSuites,Millville HamptonInn,Westampton FairfieldInnConversiontoRedRoof HyattHouse,Morristown LaQuintaInn,WestLongBranch Inn,Manchester HamptonInn,MountHolly ProposedCambriaSuites,WestOrange HiltonGardenInn,MountLaurel BestWestern,Westampton NEWJERSEY ProposedAloft,MountLaurel HyattHouse,Whippany TownePlaceSuitesbyMarriott,Mount Hilton,WoodcliffLake ProposedHamptonInn,AtlanticCity Laurel ProposedHotel,AsburyPark ProposedHomewoodSuites,Neptune NEWYORK HamptonInn,Blackwood ProposedHotel,Neptune ProposedRedRoofInn,Bordentown HiltonDowntown,Newark ComfortInn,Albany

HVS,Philadelphia,Pennsylvania QualificationsofJerodByrd,MAI 5

ComfortInn&Suites,Albany HolidayInnExpress,Hauppauge ProposedComfortInn,Roslyn DaysInn,Albany ComfortInn&Suites,Hogansburg HotelSaranac,SaranacLake DesmondHotel,Albany ClarionHotel,Ithaca HiltonGardenInn,SaratogaSprings HolidayInn,Albany RamadaInn,Ithaca ProposedHotel,SaratogaSprings InnattheFingerLakes,Auburn ProposedQualityInn,Jamaica ProposedLexingtonClubHotel, ProposedHamptonInn,Amherst HolidayInnExpress,Jamaica SaratogaSprings TheAnchorInn,Bayside DaysInn,Jamaica ProposedCourtyardbyMarriott, ComfortInn,Bellerose BestWestern,Jamaica Schenectady Motel6,Binghamton EconoLodge,Jamaica GouldHotel,SenecaFalls CapriWhitestoneMotel,Bronx DoubleTreebyHilton,Jamestown ProposedHolidayInn,StatenIsland ProposedComfortInn,Bronx HostwayMotorInn,Jericho HotelSkyler,Syracuse ProposedHolidayInnExpress,Bronx MirrorLakeInn,LakePlacid ProposedElement,Syracuse ProposedSouthBronxHotel,Bronx HolidayInn/OfficeBuilding,Liverpool ProposedHome2SuitesbyHilton, Ramada,Bronx ProposedAscendCollectionHotel, Syracuse HamptonInn,Brookhaven LongIslandCity BestWesternPlus,Victor BrooklynAHotel,Brooklyn ProposedBoutiqueHotel,LongIsland FairfieldInn&SuitesbyMarriott, ComfortInn,Brooklyn City Watertown Hotel718,Brooklyn ProposedCrownePlaza,LongIsland HolidayInnExpress,Webster ProposedBestWestern,Brooklyn City QueensMotorInn,Woodside ProposedHotel,Brooklyn ProposedHamptonInn,LongIsland ProposedLimited-ServiceHotel, City NORTHCAROLINA Brooklyn ProposedLimited-ServiceHotel,Long ProposedMonumentalHotel,Brooklyn IslandCity HamptonInn,Aberdeen ProposedTownePlaceSuitesby Super8,Massena EmbassySuites,Cary Marriott,Brooklyn GaslightMotorInn,Medford ComfortInn,Charlotte DoubleTreebyHilton,Buffalo MonticelloMotel,Monticello HolidayInnExpress,Kinston QualityInn,Catskill ProposedAscend,NewRochelle Super8(ConversiontoHawthorn ComfortSuites,CliftonPark Affinia,NewYork Suites),Kinston ParkManorHotel,CliftonPark KingandGroveHotel,NewYorkCity HamptonInn,Raleigh InnatCobleskill,Cobleskill ProposedCourtyardbyMarriott,New HolidayMotel,Whiteville ProposedLimited-ServiceHotel, YorkCity Full-ServiceRestaurant,Winston- Cortland TribecaBluHotel,NewYorkCity Salem HamptonInn,EastAurora ProposedLaQuintaInn&Suites, Honor’sResort&Spa,Ellenville NiagaraFalls OKLAHOMA DaysInn,Elmsford HolidayInn(Conv.toQualityInn), ElmsfordMotel,Elmsford Oneonta BestwayInn,Blackwell EndicottInn,Endicott ProposedCourtyardbyMarriott, AmericasBestValueInn,Farmington Oneonta OREGON MarcoHotel&Condos,Flushing BrookwoodInn,Pittsford MarcoLaGuardiaHotel&Suites, StonehelmMotel,Plattsburgh EmbassySuitesAirport,Portland Flushing ProposedComfortInn,Queens ProposedCourtyardbyMarriott,Fresh ProposedBestWestern,Richmond PENNSYLVANIA Meadows HolidayInnAirport,Rochester ProposedFairfieldInn&Suitesby LexingtonInn&Suites,Rochester ComfortSuites,Altoona Marriott,FreshMeadows ProposedLakeOntarioPlace, ProposedHolidayInnExpress,Altoona HyattPlace,GardenCity Rochester HowardJohnson,Bartonsville AmericasBestValueInn,Geneva LandAppraisal,Ronkonkoma Travelodge,Bedford

HVS,Philadelphia,Pennsylvania QualificationsofJerodByrd,MAI 6

Courtyard,Bensalem FairfieldInn&Suites,Hazleton HamptonInn&Suites,Phoenixville SleepInn,Bensalem ProposedCandlewoodSuites,Hazelton ProposedHiltonGardenInn, HotelBethlehem,Bethlehem ResidenceInnHazleton,Hazleton Phoenixville HyattPlace,Bethlehem HamptonInn,Hershey HolidayInnExpress,Pittsburgh BestWestern,Blakeslee HolidayInnExpress,Hershey HotelMonaco,Pittsburgh NormandyConferenceHotel,BlueBell ProposedHolidayInn&Suites, HyattPlace,Pittsburgh ProposedWyndhamGarden, Horsham ProposedHotelIndigo,Pittsburgh Boalsburg HolidayInnExpress,Hummelstown ProposedMoxy,Pittsburgh HiltonGardenInn,Breinigsville ComfortInn,Huntingdon SpringHillSuites,Pittsburgh DaysInn,Brookville ProposedBestWestern,Jonestown Super8,Pittsburgh BushkillInn&ConferenceCenter, ProposedTownePlaceSuitesby HamptonInn,PlymouthMeeting Bushkill Marriott,KingofPrussia ProposedResort&Marina,Raystown RedRoofInn,Carlisle CoveHavenResort,Lakeville Lake ResidenceInnbyMarriott,Carlisle EconoLodge,Lancaster AbrahamLincolnHotel,Reading SleepInn,Carlisle ProposedHotel,Lancaster ProposedHotel,Reading ClarionInn(ConversiontoRedLion), ProposedHolidayInnExpress, ProposedSpringHillSuites,Royersford Chambersburg Lebanon ProposedStaybridgeSuites, EconoLodge,Clarion HolidayInnExpress,Langhorne Royersford ProposedMicrotelInn&Suites, ResidenceInnbyMarriott,Langhorne GreatWolfLodgePoconos,Scotrun Clarion DaysInn,Lewisburg ProposedHyattPlace,StateCollege Super8,Danville HolidayInnExpress,Limerick ProposedHolidayInnExpress, QualityInn&Suites,Danville DesmondGreatValley,Malvern Strasburg HolidayInnExpress,Dickson DoubleTreebyHilton,Mars HolidayInnExpress,Stroudsburg ComfortInn,Duncansville ProposedHolidayInnExpress, CrownePlaza,Trevose PoconoPalaceResort,East Mechanicsburg GeorgeWashingtonHotel,Washington Stroudsburg WingateInn,Mechanicsburg ProposedTownePlaceSuitesby AvalonHotel,Erie ProposedHamptonInn,Media Marriott,Washington BaymontInn&Suites,Erie HolidayInn,Middletown CourtyardPhiladelphiaValleyForge, Super8,Erie ParadiseStreamResort,MountPocono Wayne QualityInn&Suites,Erie ClarionHotel&ConferenceCenter, ProposedWarnerHotel,WestChester WyndhamGarden(conversionto NewCumberland ProposedBoutiqueHotel& HolidayInn),Essington ProposedHotel,NewtownSquare Restaurant,WestChester WyndhamGarden,Exton FourPointsPhiladelphia,Northeast ProposedHotel,WestChester SheratonGreatValley,Frazer Philadelphia DaysInn,Wilkes-Barre ProposedHolidayInnExpress,Fort BestWesternPlus,Philadelphia RedRoofInn,Wilkes-Barre Washington HawthornSuites,Philadelphia ProposedFairfieldInnbyMarriott, ProposedHotel,Gettysburg HotelMonaco,Philadelphia WillowGrove CrownePlaza,Harrisburg LeMéridien,Philadelphia EconoLodge,Wexford DaysInn,Harrisburg ParkerSpruce(FairfieldConversion), HolidayInnManchesterMall,York EconoLodge,Harrisburg Philadelphia ProposedTrubyHilton,York Hilton,Harrisburg ProposedACbyMarriott,Philadelphia HolidayInnExpressHarrisburgEast, ProposedHamptonInn,Philadelphia RHODEISLAND Harrisburg ProposedHiltonGardenInn, TownePlaceSuitesbyMarriott, Philadelphia ProposedHolidayInnExpress, Harrisburg ProposedHotelFalcon,Philadelphia Providence WoodlochSpaResort,Hawley ProposedHyattPlace,Philadelphia HamptonInnHazleton,Hazleton SheratonSuites,Philadelphia SOUTHCAROLINA

HVS,Philadelphia,Pennsylvania QualificationsofJerodByrd,MAI 7

HolidayInnExpress&Suites,Emporia GranCaribe,Cancun HamptonInn,Bluffton CourtyardFairfaxFairOaks,Fairfax RoyalCancun,Cancun Ramada,Clemson ProposedSpringHillSuitesby GranPorto,PlayadelCarmen HamptonInn,Columbia Marriott,Gainesville RoyalPorto,PlayadelCarmen HolidayInnExpress,Greer CourtyardHerndonReston,Herndon CourtyardbyMarriott,MyrtleBeach RoseloeMotel,HotSprings EconoLodge,NorthCharleston CourtyardbyMarriott,Lynchburg Hilton,McLean TENNESSEE ProposedMirbeauInn&Spa,New Kent HolidayInnExpress,Germantown HolidayInn(CourtyardConversion), CrownePlazaDowntown,Memphis Norfolk HolidayInn,Memphis AmericasBestValueInn,Richmond LaQuintaInn&Suites,Memphis DaysInn,Richmond HamptonInn,Murfreesboro ResidenceInnbyMarriott,Richmond ResidenceInnbyMarriottNorthwest, TEXAS Richmond ProposedHome2SuitesbyHilton, CountryInn&Suites,Dallas Roanoke LandAppraisal,Southlake SheratonRoanokeHotel&Conference Center,Roanoke VERMONT FairfieldInn&Suites,SouthBoston Hilton,Springfield EquinoxGolfResort&Spa,Manchester ComfortInn,StephensCity HolidayInn,Rutland CountryInn&Suites,Sterling ProposedHamptonInn,St.Albans ProposedViennaMetroWestHotel, AutumnInn,Bennington Vienna Super8,Brattleboro DoubleTreebyHilton,VirginiaBeach EquinoxGolfResort&Spa,Manchester FairfieldInnbyMarriott,Virginia Beach VIRGINA ResidenceInnbyMarriott,Virginia Beach ComfortInn,Alexandria Studio4Less,VirginiaBeach CourtyardbyMarriott,Alexandria EconoLodge,Williamsburg DaysInn,Alexandria Holiday Inn Express, Williamsburg Monaco,Alexandria HolidayInnExpress,Woodstock MorrisonHouse,Alexandria ProposedHiltonGardenInn, WESTVIRGINIA Alexandria DoubleTreeCrystalCity,Arlington DaysInn,Bridgeport EmbassySuitesCrystalCity,Arlington EmbassySuites,Charleston MarriottCrystalGateway,Arlington HolidayInn,Martinsburg HolidayInn,Charlottesville ProposedHotel,Charlottesville INTERNATIONAL BaymontInn&Suites,Chesapeake TownePlaceSuites,Chesapeake Mexico RiverEdgeInn,ColonialBeach

HVS,Philadelphia,Pennsylvania QualificationsofJerodByrd,MAI 8

APPENDIX C

AMENDED AND RESTATED MASTER GLOSSARY OF TERMS FOR BALTIMORE HOTEL CORPORATION CONVENTION CENTER HOTEL REVENUE REFUNDING BOND TRANSACTION Originally Dated as of February 1, 2006 As Amended and Restated as of June 1, 2017

CONSTRUCTION

Defined terms in this Glossary shall include in the singular number the plural and in the plural number the singular.

Unless otherwise stated, any reference in this Glossary to any Person shall include its permitted successors and assigns and, in the case of any Governmental Authority, any Person succeeding to its functions and capacities.

Unless otherwise expressly specified, any agreement, contract or document defined or referred to herein means such agreement, contract or document in the form (including all amendments, schedules, exhibits, appendices, attachments, clarification letters and the like relating thereto) delivered on the 2006 Closing Date, and (except as provided in the last paragraph of this section “Construction”) as the same may thereafter be amended, supplemented, replaced or otherwise modified from time to time in accordance with the terms of the Transaction Documents.

Terms defined in this Glossary and also within any Transaction Documents shall for purposes of such agreement have the meaning assigned to such term in that agreement. On and after the 2017 Closing Date, terms capitalized, but not otherwise defined, in any Transaction Document shall have the meaning assigned to such term in this Glossary, unless such term is not defined herein, in which case such term shall have the meaning assigned to such term in the 2006 Glossary.

Unless otherwise defined herein, terms relating to insurance have the meanings customarily associated with such terms in the insurance industry.

Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

The words “include,” “includes” and “including” shall not be limiting, and shall be deemed in all instances to be followed by the phrase “without limitation.”

The phrase “and/or” means either or both of the items referenced thereby.

References to “days” means calendar days, unless otherwise indicated.

Unless the context clearly requires otherwise, the word “or” is not exclusive.

Any defined term herein that is incorporated by reference to any other document, shall be deemed to also incorporate herein any defined term or rule of construction in such document applicable to or contained within such incorporated term. Any amendment or deletion of any such incorporated defined term in its

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original document shall not amend or delete such defined term as used herein. Any termination of the original document from which a defined term was incorporated herein shall not affect such defined term’s use herein.

DEFINITIONS

“1933 Act” means the Securities Act of 1933.

“1998 Senior Convention Center Bonds” means the Convention Center Refunding Revenue Bonds, Series 1998, issued pursuant to the Convention Center Bond Indenture and outstanding in the aggregate principal amount of $12,660,000 on the 2017 Closing Date.

“2006 Closing Date” means February 8, 2006.

“2006 Glossary” means the Master Glossary of Terms for Baltimore Hotel Corporation Convention Center Hotel Revenue Bond Transaction dated as of February 1, 2006.

“2006 Indenture” means the Indenture of Trust dated as of February 1, 2006 by and among the Issuer, the Corporation and the Trustee.

“2017 Closing Date” means June __, 2017.

“AAA” means the American Arbitration Association.

“Account” or “Accounts” means any one or more of the accounts from time to time created in any of the Funds established by the Indenture or by any Supplemental Indenture.

“Accountant” means any nationally recognized certified public accountant or firm of certified public accountants or accounting corporation of recognized experience and qualifications selected by the Corporation, and may be the Independent Accountant or such accountant or firm that serves as the accountant for the City.

“Accountant’s Certificate” means a certificate or opinion signed by an Accountant.

“ACH System” means the Federal Reserve Automated Clearing House System, or any other system that may replace such system.

“Act” means, collectively, the Revenue Bond Act and the Tax Increment Act.

“Additional Bonds” means any additional Bonds issued by the City pursuant to Section 3.02 of the Indenture; provided that the Additional Bonds shall never constitute Series 2017 Bonds.

“Additional Convention Center Bonds” means any bonds issued by the City to finance “convention center facilities” (as such term is defined in the Revenue Bond Act) or any other facilities permitted to be financed under the Revenue Bond Act, the payment of principal of and interest on which is secured by a pledge of Hotel Tax Revenues that is senior to or on a parity with the pledge of the Hotel Tax Revenues to the Bonds under the Indenture; provided, however, that Additional Bonds shall not constitute Additional Convention Center Bonds.

“Additional Information” means (a) quarterly operations reports from the Asset Manager; (b) monthly operations reports provided by the Manager and the Parking Manager, including executive summary; (c) unaudited quarterly reports (which shall include income and cash flow statements and balance sheets) to be

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provided within 45 days of the end of each quarter; and (d) quarterly reports of the Trustee indicating fund balances for the debt service reserves, operating reserves, and the Cash Trap Fund.

“Administrative Expenses” means the reasonable expenses of the City incurred by reason of its issuance of the Bonds, including, without limitation, expenses incurred in carrying out its duties under the Bond Documents, the reasonable fees and expenses of the Corporation and the Trustee (inclusive of the salaries and wages of the Corporation’s executive and administrative personnel and the fees and expenses of the Asset Manager, but specifically excluding the salaries, wages and benefits of any official or employee of the City and any legal judgments, settlements or similar resolutions of disputes reduced to a monetary amount against the City or the Corporation or any officer, director, official, employee or representative thereof, unless such judgment, settlement or similar resolution of dispute arises out of the acts or omissions of the Manager), paid in accordance with the Indenture and directly relating to the Property and limited as provided in the applicable Operating Plan and Budget or Garage Operating Plan and Budget. Administrative Expenses shall be reasonable, shall be supported by documentation evidencing such expenses and shall not exceed $400,000 for the initial Operating Year increased or decreased, as applicable, for any subsequent Operating Year by a percentage equal to the percentage change in the Index from the last month of the year prior to the preceding Operating Year as compared to the last month of the preceding Operating Year. The City, the Corporation and the Trustee have the right to engage legal counsel as they determine appropriate and the fees and expenses of such legal counsel, as approved by the City, the Corporation or the Trustee, respectively, shall be deemed reasonable.

“Administrative Expenses Account” means the Account by that name within the Administrative Expenses Fund established and designated as such in Section 5.02 of the Indenture.

“Administrative Expenses Fund” means the Convention Center Hotel Revenue Bond Administrative Expenses Fund established pursuant to Section 5.02 of the Indenture.

“ADR Provider” means the alternative dispute resolution provider identified in accordance with Section 10.01(a) of the Management Agreement, or if the Management Agreement is not then in effect, JAMS or AAA or any other similar arbitration/mediation service acceptable to the Corporation.

“Affiliate” means, with respect to Manager and Corporation as of the relevant date in question, any other Person directly or indirectly controlling, controlled by, or under common control with Manager or Corporation, as the case may be, and any Person directly or indirectly controlling, controlled by or under common control with such entities and, without limiting the generality of the foregoing, shall include (i) any Person which beneficially owns or holds 50% or more of any class of voting securities of such designated Person or 50% or more of the equity interest in such designated Person and (ii) any Person of which such designated Person beneficially owns or holds 50% or more of any class of voting securities or in which such designated Person beneficially owns or holds 50% or more of the equity interest. For greater clarity, the Parties acknowledge that (A) as of the Effective Date, Hilton Reservations Worldwide LLC and Hilton Honors Worldwide LLC are each Affiliates of Manager; and (B) the term control (including “controls,” “controlled by,” and “under common control with”) means the ability through ownership, direct or indirect, of voting stock or other equity interests, to direct or cause the direction of the management and policies of a person, partnership, corporation, limited liability company or other entity; provided, however, solely for purposes of any provision of the Management Agreement pertaining to contracts between Manager and any Manager Affiliate, an Affiliate of Manager shall be deemed to include any entity in which Manager owns (directly or indirectly) more than a 50% equity interest or otherwise participates in more than 50% of the profits or revenues of such entity (excluding such participation that represents management fees to Manager). Under no circumstances shall the City, the Trustee or any Registered Owner be deemed to be an Affiliate of the Corporation.

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“Aggregate Debt Service” means, for any Fiscal Year or other 12-month period, as of the date of calculation, the sum of the amounts of Debt Service for such Fiscal Year or other 12-month period.

“Annual Budget Meeting” means the meeting described in Section 2.18(d)(ii) of the Hotel Operating Agreement.

“Annual Independent Accounting” has the meaning assigned to such term in Section 2.22(c) of the Management Agreement.

“Applicable Law(s)” or “Legal Requirements” means (a) all laws, statutes, acts, ordinances, rules, regulations, permits, licenses, authorizations, directives, orders and requirements of all Governmental Authorities, that now or hereafter may be applicable to, as applicable, (i) the Property and the construction, maintenance, use and operation thereof, including those relating to employees, zoning, building, health, safety, Hazardous Materials, natural resources, and environmental matters, and accessibility of public facilities; (ii) Manager and Parking Manager; (iii) Manager’s and Parking Manager’s business operations; and/or (iv) Corporation; and (b) the requirements of all documents properly filed in the real property records against the Property.

“Approvals” means licenses, approvals, permits, authorizations, registrations and the like required by any governmental or regulatory organization or unit having jurisdiction over Corporation or the Property.

“Approved Parking Agreement” or “Parking Management Agreement” means (i) the Parking Facility Operations and Management Agreement dated June 30, 2011 among the Corporation, LAZ Parking Mid- Atlantic LLC and PMS Parking, Inc., as amended by the Amendment to Parking Facility Operations and Management Agreement dated October 4, 2013 and the Amendment to Parking Facility Operations and Management Agreement dated December 12, 2016, each among the Corporation, LAZ Parking Mid-Atlantic LLC and PMS Parking, Inc. and (ii) any other agreement entered into between the Corporation and a Parking Manager with respect to the operation and management of the Garage, which will provide, among other things, operation of the Garage, including valet services, at all times the Hotel is open for business, adequacy of security, maintenance obligations, and an agreed-upon number of parking spaces within the Garage reasonably expected by the Manager to be used by guests of the Hotel as valet service, and shall be substantially in the form attached as Exhibit Y to the Management Agreement and Exhibit K to the Indenture.

“Approved Retail Lease Agreement” or “Approved Retail Lease Agreements” has the meaning assigned to it in Section 2.26 of the Management Agreement.

“Arbitrable Dispute” means any dispute, claim or issue arising under the Management Agreement with respect to (a) the proper inclusion or exclusion of items in Gross Operating Revenue, Gross Operating Profit or Net Operating Income, (b) the proper calculation of Group Services Fees and Charges and Reimbursable Expenses, (c) any dispute regarding the Operating Standard, (d) any disputes arising under Section 2.18 or 2.19 of the Management Agreement, and (e) any other matter as to which the Management Agreement expressly provides for dispute resolution by arbitration. Notwithstanding the foregoing or any other provision of the Management Agreement, there shall be excluded from Arbitrable Disputes claims and disputes which (i) relate to preserving or protecting Manager’s proprietary rights in the proprietary information described in Article 11 in the Management Agreement, (ii) are for extraordinary relief such as injunction or eviction, and (iii) either Manager or Corporation asserts against the other in any action brought by a third party and in which Manager and/or Corporation are named or joined defendants (including counter-defendants and third-party defendants).

“Arbitration Request” means a written notice of requirement for arbitration initiated by either the Manager, Corporation or the Trustee and delivered to the others.

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“Asbestos” means any asbestos or material containing asbestos.

“Assessable Base” shall have the meaning given such term in the Tax Increment Ordinance.

“Assessment Ratio” shall have the meaning given such term in the Tax Increment Ordinance.

“Asset Manager” means (i) with respect to the Hotel Project, a Person with hospitality management experience of at least five years (including at least three years asset management experience in a hotel similar in size and quality to the Hotel with a similar type of market as the Hotel) selected by the Corporation pursuant to Section 8.22(g) of the Indenture and (ii) with respect to the Garage, a Person with parking facility management experience with parking facilities similar in size and quality to the Garage, who may be, but is not required to be, the Parking Authority of Baltimore City. As of the 2017 Closing Date, the Asset Manager for the Hotel Project is CHMWarnick, LLC pursuant to the Asset Management Agreement.

“Asset Management Agreement” means the Contract for Hotel Asset Manager Services Hilton Baltimore Convention Center Hotel dated as of October 16, 2006 by and between the Corporation and Capital Hotel Management, LLC, as amended by (i) the First Amendment to Contract for Hotel Asset Manager Services Hilton Baltimore Convention Center Hotel dated October 1, 2009 by and between the Corporation and Capital Hotel Management, LLC, (ii) the Second Amendment to Contract for Hotel Asset Manager Services Hilton Baltimore Convention Center Hotel dated September 20, 2010 by and between the Corporation and Capital Hotel Management, LLC, (iii) the Third Amendment to Contract for Hotel Asset Manager Services Hilton Baltimore Convention Center Hotel dated September 22, 2011 by and between the Corporation and Capital Hotel Management, LLC, (iv) the Fourth Amendment to Contract for Hotel Asset Manager Services Hilton Baltimore Convention Center Hotel dated July 1, 2012 by and between the Corporation and Capital Hotel Management, LLC, (v) the Fifth Amendment to Contract for Hotel Asset Manager Services Hilton Baltimore Convention Center Hotel dated October 18, 2013 by and between the Corporation and Capital Hotel Management, LLC, and (ii) the Sixth Amendment to Contract for Hotel Asset Manager Services Hilton Baltimore Convention Center Hotel dated July 19, 2016 by and between the Corporation and CHMWarnick, LLC (as successor in interest to Capital Hotel Management, LLC).

“Assignment Agreement” means the Assignment Agreement dated as of February 1, 2006, by and among the City, the Trustee, the Architect, the Corporation, the Manager and the Design/Builder, as amended by the First Amendment to Assignment Agreement dated as of June 1, 2017 by and among the City, the Trustee, the Corporation and the Manager.

“Assignment Agreements” means, collectively, the Assignment Agreement, the Hotel Assignment Agreement and the Parking Assignment Agreement.

“Authorized City Officer” means each of the Director of Finance of the City, the Chief, Bureau of Treasury Management of the City and any other officer or employee designated to act on behalf of the City by a written certificate signed by the Director of Finance of the City. Such certificate may designate an alternate or alternates.

“Authorized Corporation Representative” means the Chairman of the Corporation Board or any other officer or employee of the Corporation authorized by resolution of the Corporation Board to act as an Authorized Corporation Representative under the Transaction Documents or otherwise with respect to the Bonds or the Property, which Person shall be acting solely in its representative capacity on behalf of the Corporation and not individually.

“Authorized Denominations” means (a) with respect to the Series 2017A Bonds $5,000 principal amount and integral multiples thereof, (b) with respect to the Series 2017B Bonds, $100,000 principal amount

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and integral multiples of $5,000 in excess of $100,000, provided that if the Series 2017B Bonds are rated in a rating category not lower than “Baa3” or “BBB” by a Rating Agency, and upon compliance with applicable securities laws, then the Series 2017B Bonds shall be issuable in denominations of $5,000 and integral multiples thereof, and (c) with respect to all other Bonds, unless otherwise provided in a Supplemental Indenture, $100,000 principal amount and integral multiples of $5,000 in excess of $100,000.

“Authorized Manager Representative” means such individuals as may from time to time be designated in writing as such by the Manager.

“Authorized Officer” means with respect to a Person, if the Person is not an individual, any vice president, director or more senior officer (if a corporation or financial institution), any trustee (if a trust), any manager (if a limited liability company), or any general partner or joint venturer of the Person (if a partnership or joint venture) who shall be duly authorized to execute documents.

“Available Amount” means all insurance proceeds or the proceeds of any award, payment or claim for damages, direct or consequential, in connection with any Condemnation of all or any portion of the Property, less the Trustee’s reasonable out-of-pocket expenses incurred in the collection of such proceeds.

“Available Casualty/Condemnation Amounts” has the meaning assigned to such term in Section 7.01(a) of the Management Agreement.

“Available Revenue Fund” or “Hotel Available Revenue Fund” means, so long as any Bonds remain Outstanding, the Convention Center Hotel Revenue Bond Available Revenue Fund established by Section 5.02 of the Indenture, and after no Bonds remain Outstanding, has the meaning assigned to such term in Section 3.09 of the Management Agreement.

“Available Revenues” means, for a period of time (1) with respect to the Hotel Project, Gross Operating Revenues determined on a cash basis for such period of time, plus any portion of the Operating Costs Set Aside Amount remaining in the Lockbox Fund during such period of time, and less (a) Operating Expenses determined on a cash basis for such period of time, (b) the Operating Costs Set Aside Amount, (c) repayments of any Short Term Indebtedness, and (d) all other amounts payable by Manager from the Lockbox Fund in accordance with the Management Agreement or the Cash Management Agreement; (2) with respect to the Garage, Gross Operating Revenues determined on a cash basis for such period of time, plus any portion of the Parking Operating Costs Set Aside Amount remaining in the Parking Lockbox Fund during such period of time, and less (a) Parking Operating Expenses determined on a cash basis for such period of time, (b) the Parking Operating Costs Set Aside Amount, and (c) all other amounts payable by the Corporation from the Parking Lockbox Fund in accordance with the Parking Cash Management Agreement; and (3) with respect to the Property, the amounts described in clauses (1) and (2), collectively.

“Average Competitive REVPAR” means, with respect to any Operating Year, the average REVPAR of the hotels constituting the Competitive Set, as calculated by Smith Travel Research, Inc. or, if Smith Travel Research, Inc. does not calculate such REVPAR for any such hotels within the Competitive Set, then with respect to any such hotel as calculated by such other reputable independent third party market research firm as may be mutually approved by Manager and Corporation, or if there is no such independent third party market research firm, then as calculated by the Asset Manager; provided however, that if the Manager disputes the calculation by the Asset Manager, then as calculated by a Hotel Consultant.

“Baltimore City Convention Center Fund” means the fund by that name established under the Convention Center Bond Indenture, or any other similar fund created by the City for the collection of Hotel Tax Revenues.

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“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended (11 U.S.C. Section 101, et seq.).

“Base Management Fee” has the meaning set forth in Section 3.01(b) of the Management Agreement.

“Beneficial Owner” means (a) for purposes of the Continuing Disclosure Agreement any person which (i) has or shares the power, directly or indirectly, to vote or consent with respect to, to make investment decisions concerning the ownership of, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (ii) is treated as the owner of any Bonds for federal income tax purposes; and (b) for all other purposes any Person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including Persons holding Bonds through nominees, depositories or other intermediaries).

“Bond” or “Bonds” means the Series 2017 Bonds and any Additional Bonds and Refunding Bonds issued by the City for the benefit of the Corporation, authenticated and delivered under and pursuant to the Indenture or under any Supplemental Indenture.

“Bond Counsel” means McGuireWoods LLP, or another firm of attorneys, selected by the City and acceptable to the Trustee, whose experience in matters relating to the issuance of obligations by states and their political subdivisions is nationally recognized.

“Bond Documents” means the Indenture, the Loan Agreement, the Note, the Assignment Agreements, the Cash Management Agreement, the Parking Cash Management Agreement, the Deed of Trust, and any and all other documents which the City or the Corporation may hereafter execute and deliver to evidence or secure the Bonds or the Corporation’s Bond Obligations, or any part thereof.

“Bond Ordinance” means Ordinance No. 05-128 passed by the City Council of the City and approved by the Mayor of the City authorizing the issuance of (i) not to exceed $305,000,000 in aggregate principal amount of its revenue bonds to finance the Project and (ii) refunding bonds to refund or advance refund any revenue bonds issued pursuant thereto, without limitation as to aggregate principal amount, as supplemented and amended from time to time.

“Bond Purchase Agreement” means the Bond Purchase Agreement dated ______, 2017 among the Representative, the City and the Corporation, pursuant to which the Underwriters have agreed to purchase the Series 2017 Bonds from the City.

“Bond Year” means a period of twelve consecutive months beginning on September 2 in any calendar year and ending on September 1 of the following calendar year; provided that the first Bond Year shall begin on the Closing Date and end on the next succeeding September 1.

“Bondholder” or “Registered Owner” means the person in whose name any of the Bonds are registered on the Register kept and maintained by the Registrar.

“Booking Period” means the third Operating Year and each Operating Year following the third Operating Year.

“Budget” means the Operating Plan and Budget and the Capital Budget for the applicable Operating Year.

“Building” shall mean the buildings constructed on the Land, including without limitation, the Hotel, the Systems, the Garage, the FF&E and the Operating Supplies and Equipment.

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“Business Day” means any day other than (i) a Saturday, Sunday or legal holiday on which banking institutions in the States of Maryland or New York are authorized or required by law or executive order to remain closed or (ii) a day the New York Stock Exchange or DTC is closed.

“Business Interruption Insurance” means insurance coverage against “Business Interruption and Extra Expense” (as that phrase is used within the United States insurance industry).

“Business Interruption Proceeds” has the meaning assigned to such term in Section 8.02(b) of the Management Agreement.

“Capital Budget” means the approved annual plan and budget setting forth all approved Capital Improvements and Capital Expenses for the Hotel Project for the relevant Operating Year, including the summary five-year schedules of expenditures for other capital improvements and replacing FF&E, prepared in accordance with the terms of Section 2.18 of the Management Agreement and Section 8.23 of the Indenture.

“Capital Expense” means any item of expense that, according to Generally Accepted Accounting Principles, is not properly deducted as a current expense on the books of the Property, but rather should be capitalized.

“Capital Improvement” means an item of any nature incorporated into the Property, the cost of which is a Capital Expense.

“Cash Flow Deficit” means, at any point in time, an insufficiency of amounts on deposit in the Hotel Lockbox Fund and Parking Lockbox Fund to pay Operating Expenses and Parking Operating Expenses when due.

“Cash Management Agreement” or “Hotel Cash Management Agreement” means the Hotel Cash Management and Lockbox Agreement dated as of August 8, 2008, among the Corporation, the Trustee, the Manager and Manufacturers and Traders Trust Company D/B/A M&T Bank, as amended by the First Amendment to Hotel Cash Management and Lockbox Agreement dated as of June 1, 2017, or any other agreement with substantially the same terms and conditions with a replacement Depository Bank.

“Cash Trap Fund” means the Convention Center Hotel Revenue Bond Cash Trap Fund established pursuant to Section 5.02 of the Indenture.

“Casualty” means, for the purposes of the Management Agreement, the damage or destruction of the Property at any time or times during the Operating Term by fire or other casualty.

“Casualty Proceeds” means, for the purposes of the Management Agreement, the proceeds (excluding Business Interruption Proceeds) paid under any casualty and property insurance policy maintained by Manager or Corporation with respect to the Property, in accordance with the terms of the Management Agreement, as a result of damage to or destruction of the Property arising as a result of a fire or other casualty.

“Casualty Restoration” has the meaning assigned to such term in Section 7.02 of the Management Agreement.

“Cede & Co.” means the nominee of the DTC.

“Certificate of Reduction in Debt Service” means a certificate signed by an Authorized City Officer to the effect that the Debt Service in each Fiscal Year on the Bonds to be Outstanding immediately after the

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issuance of the Series of Refunding Bonds to which such certificate relates is not greater than the Debt Service on the Bonds Outstanding immediately prior to the issuance of such Series of Refunding Bonds.

“Certificate,” “Statement,” “Request,” “Requisition” or “Order” means a written certificate, statement, request, requisition or order signed in the name of the Corporation by an Authorized Corporation Representative or in the name of the City by the Authorized City Officer, as applicable. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.

“Certified Financial Statements” means audited financial statements consisting of a balance sheet, a statement of earnings and retained earnings, and a statement of cash flows and a certificate of the Independent Accountant to the effect that, subject to any qualifications contained therein, the financial statements fairly present, in conformity with Generally Accepted Accounting Principles, the financial position, results of operations, and cash flows of the Hotel Project or the Property, as applicable, for the Operating Year then ended.

“Charter” means the Baltimore City Charter, 1996 edition, as amended.

“City” or “Baltimore” means the Mayor and City Council of Baltimore, a body politic and corporate and a political subdivision of the State.

“City Budget” means the City’s annual Ordinance of Estimates or any other similar annual budget document adopted by the City.

“City Tax Reserve Fund” means the Convention Center Hotel Revenue Bond City Tax Reserve Fund established by Section 5.02 of the Indenture.

“City-Wide Hotel Tax Account” means the Account by that name within the City Tax Reserve Fund established and designated as such by Section 5.02 of the Indenture.

“City-Wide Hotel Tax Pledge Amount” means an amount equal to 25% of the Maximum Annual Debt Service Requirement of the Series 2017 Bonds.

“Claims” (a) with respect to the Management Agreement, has the meaning given to such term in Section 12.15(a) of the Management Agreement; and (b) for all other purposes mean costs, expenses (including reasonable attorneys fees, expenses and court costs), liabilities, penalties, damages, claims, actions and causes of actions.

“Clearing Bank Accounts” means the accounts bearing the name of the Corporation, at a bank or banks selected by the Corporation, for the purpose of depositing all Gross Operating Revenues, Excluded Taxes and Other Charges and Pass Through Costs, whether from the Manager, the Parking Manager, from credit card companies, or anyone, each of which shall be given instructions to make deposits in the appropriate Clearing Bank Account pursuant to the Hotel Cash Management Agreement or the Parking Cash Management Agreement, as applicable.

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“Code” means the Internal Revenue Code of 1986, as amended, and the United States Treasury Regulations proposed or in effect with respect thereto.

“Comparable Other Hilton Hotels” means collectively, the following hotels: [Hilton Americas Houston, Hilton Omaha, Hilton Austin, Hilton Minneapolis, Hilton Portland, Hilton Washington, Hilton Chicago, Hilton New York, Hilton New Orleans, and Hilton San Francisco].

“Competitive Set” means, from time to time during the Operating Term, at least six hotels in the Hotel’s immediate market area that are most comparable to the Hotel in quality, price and market (with due consideration given to age, quality, size, amenities, amount of meeting space, and business mix). All determinations as to which hotels are to be included in the Competitive Set shall be made by the mutual agreement of Corporation and Manager and if possible shall all be first class Upscale Hotels, or, if the parties are unable to reach agreement, as determined by an independent nationally recognized hospitality industry consultant that is mutually acceptable to Corporation and Manager and otherwise qualified to be a Hotel Consultant. As of the 2017 Closing Date, the Competitive Set shall be made up of the following hotels in Baltimore, Maryland, in addition to the Hotel: Renaissance Baltimore Harborplace (202 East Pratt Street), Marriott Baltimore Inner Harbor@Camden Yards (110 South Eutaw Street), Hyatt Regency Baltimore (300 Light Street), Radisson Baltimore Downtown Inner Harbor (101 West Fayette Street), Marriott Baltimore WaterFront (700 Aliceanna Street), and Royal Sonesta Harbor Court Baltimore (550 Light Street). During the annual budgeting process for the Sixth Operating Year, Manager and Corporation will, for the period from the Sixth Operating Year through the Tenth Operating Year, agree upon any changes in the Competitive Set which would more properly reflect first class convention oriented, Upscale Hotels. If any such hotels, subsequent to the Effective Date, either changes its chain affiliation or ceases to operate or otherwise fails to meet the original criteria of inclusion in the Competitive Set, Corporation and Manager agree to mutually, reasonably and in good faith, discuss appropriate changes to the then-current list of hotels in the Competitive Set. Disputes regarding such changes to the Competitive Set shall be resolved by the Hotel Consultant, In addition, during the annual budgeting process for the Eleventh Operating Year, Manager and Corporation will, for the period from the Eleventh Operating Year through the Fifteenth Operating Year, agree upon any changes to the Competitive Set that would more properly reflect first class convention oriented, Upscale Hotels; provided, however, the Parties acknowledge and agree that the determination of the REVPAR Performance Standard was agreed upon based upon the defined Competitive Set as of the Closing Date. To the extent the Competitive Set is modified as permitted herein, the Corporation and Manager shall also reasonably and mutually agree upon revisions to the REVPAR Performance Standard, taking into consideration such change in the defined Competitive Set, and any other changes in the market, the hotel industry or other factors that have impacted, or are expected to impact, the REVPAR Performance Standard.

“Condemnation Proceeds” means, for the purposes of the Management Agreement, the proceeds payable in respect of any Condemnation of all or a portion of the Property.

“Condemned” or “Condemnation” means a condemnation as a result of compulsory purchase or acquisition of all or part of the Property, any taking by any governmental authority (or any authority or entity acting on behalf of or purporting to act on behalf of any governmental authority) for any purpose whatsoever or a conveyance by Corporation in lieu thereof.

“Consultant” means any Person at the time employed by or on behalf of the Corporation or the City, as applicable (or, to the extent specifically provided in the Indenture or in any Supplemental Indenture, by or on behalf of the Trustee) for the benefit of the Registered Owners to carry out the duties imposed by or pursuant to the Indenture or a Supplemental Indenture, which Person shall be experienced, have a national and favorable reputation in the matters for which such Person is so employed, and be independent of the Corporation, the Manager and the City.

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“Consultant’s Certificate” means a certificate or opinion signed by a Consultant.

“Continuing Disclosure Agreement” or “Disclosure Agreement” means the Continuing Disclosure Agreement by the Corporation, dated as of June 1, 2017.

“Contracts” means, with respect to the Management Agreement, all contracts, agreements and licenses entered into by the Manager for or on behalf of the Corporation.

“Contractual Obligation” as applied to any Person, means any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject including, without limitation, the Transaction Documents.

“Controlling Party” means the Registered Owners of one-third in aggregate principal amount of the Bonds then Outstanding.

“Convention Center” means the Baltimore Convention Center located across Howard Street from the Site, together with additions and modifications thereto.

“Convention Center Bond Indenture” means the Indenture of Trust dated as of May 1, 1998, by and between the City and Manufacturers and Traders Trust Company, as successor trustee, as the same may be amended and supplemented from time to time.

“Convention Center Bonds” means collectively, the 1998 Senior Convention Center Bonds and the Additional Convention Center Bonds.

“Convention Center Bonds Debt Service Coverage Ratio” means for a particular period of time a fraction calculated by dividing (a) all revenues and receipts of the City from the hotel room tax levied and collected by the City pursuant to Article 28, Subtitle 21, inclusive of the Baltimore City Code, as amended, replaced or supplemented from time to time for such period by (b) the sum of (i) net debt service (calculated in the same manner as Net Debt Service) during the same particular period of time for the outstanding Convention Center Bonds, (ii) all revenues and receipts of the City from the hotel room tax levied on all gross amounts of money paid to the owners or operator of the Hotel by transient guests occupying rooms and collected by the City pursuant to Article 28, Subtitle 21, inclusive of the Baltimore City Code, as amended, replaced or supplemented from time to time during the same particular period of time, and (iii) the City-Wide Hotel Tax Pledge Amount.

“Convention Center Operator” means any convention center management company designated by the City to operate the Convention Center.

“Corporate Personnel” means any personnel from the corporate or regional offices of Manager and its Affiliates or who are otherwise area supervisors for Manager who perform activities in connection with the services provided by Manager under the Management Agreement.

“Corporation” or “Owner” means Baltimore Hotel Corporation, a Maryland nonstock, nonprofit corporation, and its successors and permitted assigns.

“Corporation Board” or “Owner Board ” means the board of directors of the Corporation, or any successor in function.

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“Corporation Documents” or “Owner Documents” means any and all contracts, instruments and agreements, now existing or hereafter arising, in connection with the acquisition, operation, construction, use or occupancy of the Property, including, without limitation, each of those contracts, instruments and agreements set forth on Exhibit A of the Assignment Agreement.

“Corporation Related Parties” means the Corporation, and its officers, directors, employees, agents and representatives.

“Corporation’s Bond Obligations” means the obligations of the Borrower under the Bond Documents to (a) pay the principal of and interest on the Loan as required by Section 4.2 of the Loan Agreement and any supplements thereto, when and as the same become due and payable (whether at the stated maturity thereof, or by acceleration of maturity, or after notice of redemption or prepayment or otherwise), (b) pay all other payments required by the Bond Documents to be paid by the Borrower to the City, to the Trustee or to others, when and as the same shall become due and payable, and (c) timely perform, observe and comply with all of the terms, covenants, conditions, stipulations, and agreements, express or implied, which the Borrower is required by any of the Bond Documents to perform or observe.

“Corporation’s Costs” or “Owner’s Costs” means (i) compensation or reimbursable costs payable to Corporation’s representatives and agents, (ii) costs incurred by Corporation solely as a result of performing its own obligations under the Loan Agreement or any other agreement to which the Corporation is a party, and (iii) title premiums and costs, surety costs, transfer and recording taxes, and other costs ancillary to the execution and recording of the Deed of Trust.

“Corporation’s Negligent or Willful Act” or “Owner’s Negligent or Willful Act” means any (a) acts or omissions constituting fraud, negligence, or willful misconduct on the part of Corporation its officers, directors, employees, agents or assigns; or (b) criminal violation of law by Corporation under the Management Agreement or any of its officers, directors or employees.

“Corporation’s Parties” has the meaning assigned to such term in Section 12.15(c) of the Management Agreement.

“Costs of Issuance” means the items of expense relating to the authorization, sale and issuance of Bonds, which items of expense may include, without limitation: travel expenses; printing costs; costs of reproducing documents; computer fees and expenses; filing and recording fees; initial fees and charges of the Trustee, Consultants, Registrar, any paying agent, and other Fiduciaries; initial fees and charges of banks, insurers or other parties pursuant to guarantees or bond insurance policies; bond discounts; legal fees and charges; consulting fees and charges; auditing fees and expense; financial advisor’s fees and charges; costs of credit ratings; insurance premiums; fees and charges for the execution, transportation and safekeeping of Bonds; title premiums and costs, surety costs, transfer and recordation taxes, and other costs ancillary to the execution and recordation of the Deed of Trust; and any other administrative or other costs of issuing, carrying and repaying such Bonds and investing the Bond proceeds.

“Date of Substantial Completion” means August 9, 2008.

“Debt Service” means, as of any date of calculation, with respect to any particular period and with respect to all Bonds, all Bonds of any Series or any portion thereof as the context requires, an amount equal to the sum of (a) interest accruing during such period on such Outstanding Bonds and not accounted for with amounts on deposit in a capitalized interest account held by the Trustee for such Bonds and (b) that portion of each principal payment and Sinking Fund Installment for such Outstanding Bonds which would accrue during such period if each such principal payment and Sinking Fund Installment for such Bonds were deemed to accrue daily in equal amounts from the next preceding date on which the principal of or a Sinking Fund

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Installment for such Bonds is payable (or, if there shall be no such preceding date, from a date one year preceding the due date of such principal payment or Sinking Fund Installment or from the date of issuance of the such Bonds, whichever date is later). Such interest, principal and Sinking Fund Installment payments for the Outstanding Bonds shall be calculated on the assumption that no Bonds Outstanding at the date of calculation shall cease to be Outstanding except by reason of the payment of principal and Sinking Fund Installments on the due dates thereof and on the basis of the actual number of days within the relevant period.

“Debt Service Coverage Ratio” means a fraction calculated by dividing the Total Net Revenues for a particular period of time by the Net Debt Service for the Outstanding Bonds for the same period of time.

“Debt Service Coverage Requirement” means a Debt Service Coverage Ratio for the Outstanding Bonds which is not less than 1.35:1.00.

“Debt Service Fund” means the Convention Center Hotel Revenue Bond Debt Service Fund established by Section 5.02 of the Indenture, together with the Accounts established therein.

“Debt Service Requirement” means, for any Fiscal Year of the City, the amount of all payments of Debt Service payable on the Bonds for such period.

“Debt Service Reserve Fund” means the Convention Center Hotel Revenue Bond Debt Service Reserve Fund established by Section 5.02 of the Indenture.

“Deed of Trust” means the Deed of Trust, Security Agreement and Assignment of Rents and Leases dated as of February 1, 2006, executed by the Corporation, as grantor, to certain individual trustees acting for the benefit of the City and its assigns, including the Trustee, as amended and supplemented by the First Supplement to Deed of Trust, and any other instrument amendatory thereof or supplemental thereto.

“Default Rate” shall mean an annual rate of interest of equal to the lesser of seven percent (7.00%) or the maximum rate permitted by applicable law.

“Defeasance Investment Securities” means (a) cash (insured at all times by Federal Deposit Insurance Corporation (“FDIC”); (b) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series – (SLGs)); (c) Direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself; (d) Resolution Funding Corp. (“REFCORP”) (only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable); (e) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P (if, however, the issue is only rated by S&P (i.e., there is no Moody’s rating) then the pre-refunded bonds must have been pre- refunded with cash, direct U.S. or U.S. guaranteed obligations, or “AAA” rated pre-refunded municipals to satisfy this condition); and (f) Obligations issued by the following agencies which are backed by the full faith and credit of the U.S.:

1. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership

2. Farmers Home Administration (FmHA)

3. Federal Financing Bank

4. General Services Administration Participation Certificates

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5. U.S. Maritime Administration Guaranteed Title XI financing

6. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures – U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds – U.S. government guaranteed public housing notes and bonds.

“Depository” means initially DTC, or any other securities depository selected as set forth in Section 3.13 of the Indenture with respect to the Series 2017 Bonds.

“Depository Bank” means such banking institution or institutions as the Corporation shall from time to time designate in writing to the Trustee, at which the account or accounts shall be established and maintained with respect to the Hotel Lockbox Fund and the Parking Lockbox Fund pursuant to the Hotel Cash Management Agreement and the Parking Cash Management Agreement, respectively.

“Direct or Indirect Profit” means any monetary compensation, other than for the reasonable and actual costs of providing goods, services, supplies, products or equipment (including carrying costs of facilities), whether in the form of a payment, credit, rebate, refund, kick-back, revenue sharing, royalty, profit participation, equity participation, barter consideration in the form of goods or services, or any other device, however denominated, and whether similar or dissimilar to any of the foregoing, received by the Manager and/or any of its Affiliates, directly or indirectly, in any calendar year from or on account of the Gross Operating Revenues from the Project. For purposes of this definition, none of the following shall be considered a Direct or Indirect Profit to Manager and/or its Affiliates: (i) any payment received from a vendor or other third party for services provided by Manager and/or its Affiliates directly to such vendor or other third party in its ordinary course of business, such as market research, collection of purchasing data or participation in co-marketing or advertising programs with such vendor; provided that such payment for such services is reasonable; (ii) any rebate or other amount received by Manager or its Affiliates which is applied to reduce the cost of Manager’s national purchasing operations which reduction in cost benefits the Hotel and Other Hilton Hotels which are included in such national purchasing operations; (iii) any rebate or other payment received by Manager or its Affiliates which is otherwise available to each hotel in the Hilton System, including the Hotel, without being included in such national purchasing operations, so long as the reduction in cost is allocated in the same manner among such hotels as allocated to the Hotel or any Direct or Indirect Profit derived from such payment is redistributed among such hotels in the same manner as redistributed to the Hotel; (iv) any other reduction in cost or payment in the form of cash, goods or services to the extent the Hotel is allocated its proportionate share of such reduction in cost or payment (with the allocation to the Hotel and to Other Hilton Hotels determined using the same formula, including fair, reasonable and equitable variables consistently applied or using different formulas for each type of Hotel provided that the use of multiple formulas does not result in the Hotel being allocated a materially disproportionate share of such costs); (v) any amount which could otherwise be considered Direct or Indirect Profit to Manager or its Affiliates if the Hotel is allocated its proportionate share of such amount in the form of cash, good, services or a credit (with the allocation to the Hotel and to Other Hilton Hotels determined using the same formula, including fair, reasonable and equitable variables consistently applied or using different formulas for each type of Hotel provided that the use of multiple formulas does not result in the Hotel being allocated a materially disproportionate share of such costs); (vi) any payment received by the Manager and any of its Affiliates in such calendar year which does not exceed 5% of the Management Fee paid to Manager during such calendar year; (vii) any payment for hotel rooms, food or other services received by any hotel owned in whole or in part or managed by Hilton or any of its Affiliates in connection with any meetings or other travel involving representatives of Hilton, its Affiliates

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or the Hotel (i.e. national sales meetings) which payment is paid out of Group Services Fees and Charges or directly by the Hotel, provided such payment represents a reasonable charge for such services and is allocated to the Hotel in the same manner as to comparable Other Hilton Hotels; and (viii) any increase in the value of any equity investment by Manager or any of its Affiliates in any entity providing goods and/or services to the Hotel.

“Disability Acts” means the provisions of the Americans With Disabilities Act of 1990, 42 U.S.C. §§12101-12213 and all regulations and interpretations issued thereunder and all amendments thereto and any Maryland counterpart thereto.

“Disclosure Agreement” or “Continuing Disclosure Agreement” means the Continuing Disclosure Agreement by the Corporation, dated as of June 1, 2017.

“Dissemination Agent” means any Person designated in writing by the Corporation to act as dissemination agent under the Continuing Disclosure Agreement and which has filed with the Corporation written acceptance of such designation. As of the 2017 Closing Date, the Corporation has not appointed a Dissemination Agent.

“Dollars” and “$” means the lawful money of the United States of America.

“DTC” means The Depository Trust Company, or any successor securities depository thereto.

“Effective Date” means the 2006 Closing Date.

“Emergency” means a situation imminently threatening life, health, or safety.

“Emergency Expenses” means the expenses incurred to remove the existence of an Emergency.

“Emergency Situation” means a situation which, if not remedied within forty-eight (48) hours from its discovery, (a) will impair or will be imminently likely to impair structural support or improvements on the Property; or (b) will cause or will be imminently likely to cause bodily injury to persons or substantial physical damage to all or any portion of the Property; or (c) will imminently cause or will be imminently likely to cause substantial economic loss to the Property; or (d) will imminently and materially interfere with the beneficial use of the Property. The duration of any Emergency Situation shall be deemed to include the time reasonably necessary to remedy the Emergency Situation.

“Encumbrance” means any mortgage, pledge, lien, security interest, charge or other encumbrance.

“Environmental Claims” means Claims (including, without limitation, claims for equitable relief), liabilities (whether based on strict liability or otherwise), investigations, litigation, administrative proceedings, whether pending or to the knowledge of Corporation, threatened, or judgments, orders or anticipated damages in law relating to any Hazardous Materials or any matter regulated by any Environmental Law.

“Environmental Law” means any Applicable Laws or other legally binding obligations affecting the Property that relate to chemicals, wastes, petroleum products, or any other Hazardous Materials, pollution, the environment, natural resources, industrial hygiene or to any other environmental or unsafe conditions including, but not limited to, those relating to the generation, manufacture, storage, handling, transportation, disposal, release, recycling, reclamation, treatment, emission or discharge of Hazardous Materials and/or Asbestos, those relating to any construction activities, fuel supply, power generation and transmission, waste disposal or any other operations or processes involving Hazardous Materials or potentially affecting any environmental medium, and those relating to the atmosphere, soil, surface and ground water, wetlands, stream

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sediments, vegetation, flora, and/or fauna. “Environmental Laws” also shall include, but not be limited to, the Resource Conservation and Recovery Act of 1976, the Hazardous and Solid Waste Amendments of 1984, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Emergency Planning and Community Right-to-Know Act of 1986, the Hazardous Materials Transportation Act, the Solid Waste Disposal Act, the Federal Water Pollution Control Act, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Endangered Species Act, and the Occupational Safety and Health Act, (all as amended), any Maryland counterparts thereto, and all similar federal, state and local environmental statutes, ordinances and the regulations, orders, and decrees now or hereafter promulgated thereunder.

“Environmental Site Assessments” means any assessments, audits, investigations, testing, sampling, analysis and similar procedures conducted on the Property for the purpose of assessing potential liabilities under any Environmental Laws and/or identifying Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time (and any successor statute), and the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) which together with the Corporation would be deemed to be a single employer, within the meaning of Section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of Section 414 of the Code.

“ERISA Event” means (a) (i) the occurrence of a Reportable Event or (ii) the requirements of paragraph (1) of Section 4043(b) of ERISA are met with respect to the Corporation or an ERISA Affiliate that is a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Title IV Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such plan within the following thirty (30) days; (b) the filing of an application for a minimum funding waiver with respect to a Title IV Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Corporation or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Corporation or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the withdrawal by the Corporation or any ERISA Affiliate from a Multiemployer Plan; (g) the conditions for the imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any title IV Plan; (h) the adoption of an amendment to a Title IV Plan requiring the provision of security to such plan pursuant to Section 307 of ERISA; or (i) the institution by the PBGC of proceedings to terminate a Title IV Plan or the appointment of a trustee to administer a Title IV Plan pursuant to Section 4042 of ERISA, or any other event or condition that might constitute grounds under Section 4092 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan.

“Event” means an event held or to be held at the Convention Center.

“Event of Bankruptcy” means with respect to any Person (a) the filing of a petition by or against such Person under the Bankruptcy Code or the commencement of any other bankruptcy, insolvency, reorganization, readjustment of debt or similar proceeding by or against such Person under the laws of the United States or any state; (b) the filing of any petition, or the commencement of any case or proceeding, by or against such Person for the purpose of winding up its affairs or the liquidation of all or any part of its assets or seeking the appointment of a receiver, liquidator, trustee, conservator, custodian or other similar official for it or all or any part of its assets; (c) the making by such Person of a general assignment for the benefit of its creditors; or

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(d) such Person’s general failure or inability to, or its written admission that it cannot, pay its debts as they become due.

“Event of Default” as to any Transaction Document, has the meaning assigned to such term in such Transaction Document.

“Event Room Block” means a block of guest rooms in the Hotel for a series of nights that the Manager, on behalf of a PCC, may reserve in the Hotel pursuant to the Room Block Agreement.

“Excess Revenue Fund” means the Convention Center Hotel Revenue Bond Excess Revenue Fund established by Section 5.02 of the Indenture.

“Excess Revenue Fund Requirement” means (i) initially, the City-Wide Hotel Tax Pledge Amount and (ii) upon delivery of the Consultant’s Certificate described in Section 5.20(c) of the Indenture, $-0-.

“Excluded Taxes and Other Charges” means any (a) Gross Receipts Taxes; (b) withholding tax or other employment related taxes; (c) wage, child support or spousal support garnishments; or (d) unclaimed property or wages.

“Excluded Taxes and Pass Through Costs Fund” means the fund by that name required to be maintained pursuant to Section 5.04 of the Indenture and established pursuant to Section 4 of the Hotel Cash Management Agreement which is available to be drawn upon by the Manager for the payment of Excluded Taxes and Other Charges and Pass Through Costs.

“Executive Staff” means the persons employed by the Manager as Managing Director/General Manager, Assistant Managing Director/Resident Manager/Executive Assistant Manager, Executive Chef, Director of Food and Beverage, Director of Human Resources, Director of Sales, Director of Sales & Marketing, Director of Property Maintenance, Director of Finance, Director of Conventions and Meetings, Director of Front Office, Director of Housekeeping, Director of Revenue Management, and Restaurant Manager.

“FF&E” means all items of furniture, furnishing, fixtures, equipment and other personal property (including, without limitation, all equipment, hardware, wiring connections, software and other property necessary to operate computers) used or held for use in storage in the ordinary course of operating the Property, the cost of which is ordinarily a Capital Expense, but a portion of which may be currently expensed such as smaller items thereof, or expenditures which are ancillary thereto but that are properly chargeable as an Operating Expense to Property Operations and Maintenance under the most recently issued edition, as of the Closing Date, of the Uniform System of Accounts for Hotels.

“Fiduciary” or “Fiduciaries” means the Trustee, the Registrar, any paying agent, and any escrow, authentication or other agent of the City or of any other Fiduciary, or any or all of them, as the context may require.

“Financial Guaranty” means one or more of the following which may be delivered to the Trustee pursuant to Sections 5.08 of the Indenture: (i) an irrevocable, unconditional and unexpired letter or letters by a banking institution the senior long-term debt obligations of which (or the holding company of any such banking institution) are rated (at the time of issue of such letter of credit and at all times thereafter that such letter of credit is deposited in the Debt Service Reserve Fund) in the top two Rating Categories by both Moody’s and S&P; or (ii) an irrevocable and unconditional policy or policies of insurance in full force and effect issued by a municipal bond insurer the obligations insured by which (at the time of issuance such insurance policy and at all time thereafter that such insurance policy is deposited in the Debt Service Reserve

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Fund) are eligible for a rating in the top two Rating Categories by both Moody’s and S&P; in each case providing for the payment thereunder of sums for the payment of principal or Redemption Price of, and interest on, the Bonds as required by the Indenture.

“First Calendar Year” has the meaning assigned to such term in Section 2.21(g)(i) of the Management Agreement.

“First Amendment to Management Agreement” means the First Amendment to Hotel Operating Agreement dated as of June 1, 2017, by and between the Manager and the Corporation.

“First Supplement to Deed of Trust” means the First Supplement to Deed of Trust dated as of June 1, 2017, by and among the Corporation, the City, the individual trustees named therein and the Trustee.

“First Supplement to Loan Agreement” means the First Supplement to Loan Agreement dated as of June 1, 2017, by and between the Corporation and the City.

“Fiscal Year” means (i) with respect to the Corporation, the fiscal year of the Corporation, currently the 12-month period ending December 31, and (ii) with respect to the City, the 12-month period ending June 30.

“Fitch” means Fitch Ratings, Inc., its successors and assigns, and if Fitch Ratings, Inc., shall no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency designated by the City.

“Force Majeure Event” means any one or more of the following events or circumstances that directly and materially adversely affects the ability of the party to perform: fire, storm, earthquake, flood, natural disaster, and other casualty events with respect to the Project; acts of terrorism, war, rebellion or insurgency within the United States; strikes, lock-outs or other labor interruptions involving employees of companies that provide goods or services that are essential for the operation of the Project; riots or other civil unrest within the United States; acts of government agencies including eminent domain or condemnation proceedings; but in no event shall general market or economic conditions constitute a force majeure event.

“Foreclosure Event” has the meaning assigned to such term in Section 6.03(a) of the Management Agreement.

“Foreclosure Purchaser” means a purchaser of the Property pursuant to a sale conducted pursuant to a Mortgage.

“Fund” or “Funds” means any one or more, as the case may be, of the separate special funds established by the Indenture and by any Supplemental Indenture.

“Garage” means that portion of the Building designated for parking of approved motor vehicles and entries, exits, ramps and control devices.

“Garage Manager” or “Parking Manager” means any person who enters into a Parking Management Agreement with the Corporation to operate the Garage on behalf of the Corporation.

“Garage Senior FF&E Account” means the Account by that name within the Senior FF&E Reserve Fund established and designated as such by Section 5.02 of the Indenture.

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“Garage Senior FF&E Reserve Set Aside Amount” means amount determined by the Corporation for each Fiscal Year as the amount necessary to fund the Garage Senior FF&E Account, as set forth in the Parking Budget. The Garage Senior FF&E Reserve Set Aside Amount shall not be classified as an Operating Expense or Capital Expense, provided that upon disbursement of funds from the Garage Senior FF&E Account, the disbursed amounts shall be classified as an Operating Expense or Capital Expense in accordance with GAAP.

“Garage Subordinate FF&E Account” means the Account by that name within the Subordinate FF&E Reserve Fund established and designed as such by Section 5.02 of the Indenture.

“Garage Subordinate FF&E Reserve Set Aside Amount” means the amount determined by the Corporation for each Operating Year as the amount necessary to fund the Garage Subordinate FF&E Account, as set forth in the Parking Budget.

“Generally Accepted Accounting Principles” or “GAAP” means those conventions, rules, procedures, and practices, consistently applied, affecting all aspects of recording and reporting financial transactions which are generally accepted by major independent accounting firms in the United States. If Corporation and Manager cannot agree on what constitutes Generally Accepted Accounting Principles, then the accounting firm then or most recently engaged to prepare the Certified Financial Statements for the Project in accordance with Section 2.20(c) of the Management Agreement shall make the determination on the request of either Party, unless such accounting firm is also the auditing firm for Manager, in which case a different nationally recognized accounting firm shall make such determination.

“Generation” means use, collection, generation, storage, transportation, treatment, disturbance, conjuring or disposal.

“Glossary” or “Master Glossary” means this Amended and Restated Master Glossary of Terms for Baltimore Hotel Corporation Convention Center Hotel Revenue Bond Transaction, originally dated as of February 1, 2006 and amended and restated as of June 1, 2017.

“Governing Documents” means, (a) with respect to any corporation, (i) the articles/certificate of incorporation (or the equivalent organizational documents) of such corporation, (ii) the by-laws (or the equivalent governing documents) of the corporation and (iii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any class or series of such corporation’s capital stock; and (b) with respect to any general partnership, (i) the partnership agreement (or the equivalent organizational documents) of such partnership and (ii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any of the partnership interests; and (c) with respect to any limited partnership, (i) the partnership agreement (or the equivalent organizational documents) of such partnership, (ii) a certificate of limited partnership (or the equivalent organizational documents) and (iii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any of the partnership interests; and (d) with respect to any limited liability company, (i) the certificate of limited liability (or equivalent filings) of such limited liability company, (ii) the operating agreement (or the equivalent organizational documents) of such limited liability company, and (iii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any of such company’s membership interests.

“Governmental Authority” means any agency, authority, board, branch, division, department or similar unit of any federal, state, county, city, town, village, district, or other governmental entity or unity having jurisdiction over or imposing requirements on the Corporation or the Property.

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“Gross Operating Profit” or “GOP” means for any period of time, the amount by which Gross Operating Revenue properly attributable to such period exceeds Operating Expenses and Parking Operating Expenses for the same period.

“Gross Operating Revenue” or “GOR” means all revenue and income of any kind derived directly or indirectly from operations at the Property, whether or not arranged by, for or on behalf of another Person or at another location, properly attributable to the period under consideration (including rentals or other payments from licensees, lessees or concessionaires of retail space in the Project, but not gross receipts of such licensees, lessees, or concessionaires), determined in accordance with Generally Accepted Accounting Principles, and with respect to the Hotel Project, the Uniform System of Accounts (except that in determining the amount deposited into the Lockbox Fund and the Parking Lockbox Fund, such determination shall be made on a cash basis), except that the following shall not be included in determining Gross Operating Revenue:

(a) Excluded Taxes and Other Charges and Pass Through Costs (to the extent not already deducted from Gross Operating Revenue);

(b) receipts from the financing, sale or other disposition of capital assets and other items not in the ordinary course of the Property’s operations and income derived from securities and other property acquired and held for investment;

(c) receipts from awards or sales in connection with any Condemnation, from other transfers in lieu of and under the threat of any Condemnation, and other receipts in connection with any Condemnation, but only to the extent that such amounts are specifically identified as compensation for alterations or physical damage to the Property;

(d) proceeds of any insurance, including the proceeds of any Business Interruption Insurance and any payments pursuant to the Performance and Payment Bonds;

(e) rebates, discounts, or credits or a similar nature (not including charge or credit card discounts, which shall not constitute a deduction from revenues in determining Gross Operating Revenues, but shall constitute an Operating Expense);

(f) with respect to the Hotel Project, consideration received at the Hotel for hotel accommodations, goods and services to be provided at other hotels although arranged by, for or on behalf of, Manager;

(g) with respect to the Hotel Project, notwithstanding any contrary requirements of Generally Accepted Accounting Principles, all gratuities collected (or to be collected) for the benefit of and paid to Hotel Personnel (to the extent not already deducted from Gross Operating Revenue);

(h) proceeds of any Bonds, Short-Term Indebtedness or other financing undertaken by the City or the Corporation;

(i) the initial operating funds and working capital loans and any other funds provided by Corporation to Manager whether for Operating Expenses or otherwise;

(j) other income or proceeds derived from operations outside of the Property and resulting other than from the use or occupancy of the Property, or any part thereof, or other than from the sale of goods, services or other items sold on or provided from the Property in the ordinary course of business;

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(k) interest earned on funds held in any Fund or Account;

(l) the value of any complimentary rooms, goods or services;

(m) with respect to the Hotel Project, refunds to Hotel guests of any sums or credits to any Hotel customers for lost or damaged items; and

(n) with respect to the Garage, refunds to parking customers of any sums or credits to any parking customers for lost or damaged items.

“Gross Receipts Taxes” means applicable excise, sales, occupancy and use taxes, or similar government taxes, duties, levies or charges collected directly from patrons or guests, or as a part of the sales price of any goods, services, or displays, such as gross receipts, admission, cabaret or similar or equivalent taxes, including, but not limited to, any hotel occupancy tax, transaction tax, resale of electricity tax, soft drink tax, head tax, occupancy tax, amusement tax, beverage tax, USC tax, SUTA, MEPA sales tax, public utility tax, parking tax, and/or new service tax.

“Gross Revenues” means Gross Operating Revenues, including all receivables related thereto, except that the following shall also be included in determining Gross Revenue:

(a) receipts from the financing, sale or other disposition of capital assets and other items not in the ordinary course of the Property’s operations and income derived from securities and other property acquired and held for investment;

(b) receipts from awards or sales in connection with any Condemnation, from other transfers in lieu of and under the threat of any Condemnation, and other receipts in connection with any Condemnation, but only to the extent that such amounts are specifically identified as compensation for alterations or physical damage to the Property;

(c) proceeds of any insurance, including the proceeds of any Business Interruption Insurance and any payments pursuant to the Performance and Payment Bonds;

(d) proceeds of any Bonds, Short Term Indebtedness or any other financing undertaken by the City or the Corporation;

(e) the initial operating funds and working capital loans and any other funds provided by Corporation to Manager whether for Operating Expenses or otherwise;

(f) other income or proceeds derived from operations outside of the Property and resulting other than from the use or occupancy of the Property, or any part thereof, or other than from the sale of goods, services or other items sold on or provided from the Property in the ordinary course of business;

(g) interest earned on funds held in any Fund or Account; and

(h) deposits for room reservations received by the Manager prior to the Opening Date of the Hotel Project.

“Group Services” means the collective reference to the following services, programs and group benefits (for so long as such services are offered generally within the Hilton System): (a) group advertising,

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(b) sales and business promotion services for both individual guests and conventions, (c) national marketing programs, (d) OnQ, (e) credit card services, (f) the Hilton Software, (g) accounting services and (h) such additional services, programs or group benefits as are, from time to time, provided generally to all Other Hilton Hotels.

“Group Services Fees and Charges” means the aggregate fees and charges assessed against Hotel and all Other Hilton Hotels pursuant to agreements effective on and after the 2006 Closing Date for the provision of Group Services, provided that (a) all such fees and charges shall be solely for reimbursement of payments made by Manager to unrelated third parties (including payments of salaries, wages, compensations and benefits payable to Manager’s employees) for the reasonable and actual costs of providing Group Services to the Hotel and all Other Hilton Hotels pursuant to agreements effective on and after the 2006 Closing Date, which system wide costs may be determined using a reasonable accounting procedure, applied on a consistent basis (which accounting procedure in the case of the Manager shall at all times comply with the requirements of Section 2.22 of the Management Agreement); and (b) the fees and charges shall not include any Direct or Indirect Profit.

“Group Services Marketing Program” means the marketing and sales program described in Section 2.22(a)(ii) of the Management Agreement pursuant to agreements effective on and after the 2006 Closing Date.

“Hazardous Materials” includes, without limitation, petroleum and petroleum products and wastes, flammable materials, explosives, radioactive materials, polychlorinated biphenyls, asbestos in any form that is or could become friable, paint with 0.5% or more lead by dry weight, hazardous waste, toxic or hazardous substances or other related materials whether solid, semisolid, liquid, or gaseous in nature and in the form of a chemical, element, product, byproduct, article, compound, solution, mixture or otherwise including, but not limited to, those materials defined as “hazardous substances,” “extremely hazardous substances,” “hazardous chemicals,” “hazardous materials,” “toxic substances,” “toxic chemicals,” “air pollutants,” “toxic pollutants,” “hazardous wastes,” “extremely hazardous waste” or “restricted hazardous waste” by, or otherwise regulated by, or the basis for liability under any Environmental Laws.

“Hilton” means Hilton Management LLC, a Delaware limited liability company.

“Hilton Classification of Accounts” means the classification of accounts generally used by Manager at any particular time in connection with the operation of the Other Hilton Hotels.

“Hilton Parties” and “Hilton Party” means Hilton, its Affiliates, subsidiaries, parent(s), partners, joint venturers, successors and assigns and their respective subcontractors, contractors, agents, employees, directors, officers, attorneys, invitees and guests.

“Hilton Requirements” means (i) Hilton’s standards and requirements for construction and design of full service hotels with a scope similar to the Required Scope of the Project, as set forth in the Hilton Full Service Brand Standards, dated January 2004, as updated July 2004; the Hilton Design and Construction Standards, dated October 23, 2003; and the Hilton Voice and Data Wiring Standards, dated February 1, 2005 (collectively, the “Manual”) as modified by the Clarifications, Exclusions and Modifications to the Hilton Requirements set forth on Exhibit E of the Design/Build Agreement, and any modification to the Hilton Requirements approved pursuant to Section 1.03 of the Management Agreement, (ii) compliance with all Applicable Law including, without limitation, all Disability Acts and the issuance of all ADA certifications required by any Project Requirements, (iii) conformity of the scope of the Project and all aspects of the Project to the Required Scope of the Project, (iv) compliance with all applicable aspects of the Manual, (v) compliance with the terms of the Design/Build Agreement, (vi) proper purchase, testing and incorporation of Systems, FF&E and Initial Supplies and Equipment required for operation of the Project in accordance with

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the Design/Build Agreement, (vii) all equipment, computer hardware, wiring connections, software and other property necessary for the installation of the Hilton Proprietary Systems, and (viii) the layout of the public and guest room areas of the Hotel (including, the number and size of guest rooms and the public areas and facilities), the layout, design, fixturing and equipping of the kitchens, laundry and main central mechanical and electrical systems, the public circulation system (including vertical transportation systems), life/safety support systems, all security systems (including locks, safe deposit boxes, surveillance and security communication systems) and telephone systems, computer hardware for data possessing and other computer systems and Project signage (including outdoor signs) included in the Contract Documents.

“Hilton Software” has the meaning assigned to such term in Section 11.06 of the Management Agreement.

“Hilton System” means, collectively, the elements uniformly designated from time to time to identify structures, facilities, appurtenances, furniture, fixtures, equipment that provide to the consuming public a similar, distinctive, high quality hotel service identified with the “Hilton” brand name, in whole or in part; including licensed brands associated with the Hilton name, trademarks, logos, servicemarks and the like, access to a “Hilton” reservation system, publicity and marketing, training, standards, specifications, policies, inspection programs and manuals containing standards and requirements for the operation of “Hilton” branded hotels.

“Hilton Trademarks” means the Hilton Trademarks, trade name, service marks, and copyrights associated with the name “HILTON,” and the related marks that include the word “HILTON,” including “HILTON HOTELS,” “HILTON RESORTS,” and the “Hilton Hotels & Resorts” corporate logo or symbol, together with the right to use any and all slogans, derivations, trade secrets, know how, and trade dress, and all other proprietary rights associated with such names, marks and slogans reflected in Exhibit P to the Management Agreement.

“Hotel” means the hotel facilities constructed on the Site consisting of approximately 883,000 gross square feet, including 750 hotel guest rooms, a full-service restaurant, a lobby bar, a convenience/sundries store, 61,000 gross square feet of meeting space, including a ballroom of approximately 24,000 gross square feet (excluding pre-conference space and circulation space), an enclosed air conditioned skywalk connecting to the Convention Center and other supporting facilities and all finish materials, fixtures, furnishings, equipment and appliances contained in such Hotel.

“Hotel Agreements” means the Management Agreement and the Room Block Commitment.

“Hotel Assignment Agreement” means the Assignment and Subordination of Hotel Agreements dated as of February 1, 2006, by and among the City, the Trustee, the Corporation, the Design/Builder and the Manager, as amended by the First Amendment to the Hotel Assignment Agreement dated as of June 1, 2017 by and among the City, the Trustee, the Corporation and the Manager.

“Hotel Available Revenue Fund” or “Available Revenue Fund” means the Convention Center Hotel Revenue Bond Available Revenue Fund established by Section 5.02 of the Indenture.

“Hotel Base Systems” means Systems which exclusively serve the Hotel.

“Hotel Cash Management Agreement” or “Cash Management Agreement” means the Hotel Cash Management and Lockbox Agreement dated as of August 8, 2008, among the Corporation, the Trustee, the Manager and Manufacturers and Traders Trust Company D/B/A M&T Bank, as amended by the First Amendment to Hotel Cash Management and Lockbox Agreement dated as of June 1, 2017, or any other agreement with substantially the same terms and conditions with a replacement Depository Bank.

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“Hotel Chain” means any hotel or hotels which are members of a chain or group of hotels under common ownership (provided that such chain or group has or contains a minimum of four or more hotels in operation), all or substantially all (but in no event less than four hotels) of which are (in a single transaction with a single seller or transferor) hereafter owned, operated, acquired, leased, managed, franchised or licensed by, or merged with, any entity acquired by, or merged with, or joined through a marketing agreement with, Manager or its Affiliates (or the operation of which is transferred to Manager or any of its Affiliates).

“Hotel Consultant” means an independent nationally recognized consulting firm with substantial and significant experience in the first-class convention hotel segment as chosen by Corporation from the list of hotel consultants attached to the Management Agreement as Exhibit T. Once selected, the Corporation shall have the right to remove such Hotel Consultant and choose a new Hotel Consultant with the prior written consent of the Controlling Party, which consent shall not be unreasonably withheld, delayed or conditioned. If either Manager or Corporation in their sole discretion determines that any such consulting firm listed on Exhibit T to the Management Agreement no longer qualifies as a nationally recognized consulting firm with substantial and significant experience in the first-class convention hotel segment, such consulting firm shall be removed from the list on Exhibit T to the Management Agreement and Manager shall submit to the Corporation and the Trustee the names of two nationally recognized consulting firms with substantial and significant experience in the first-class convention center hotel segment, none of whom shall be Manager’s primary hotel consultant or auditor and each of whom shall provide a written statement to each of Corporation and Trustee representing that it will make a fair and impartial judgment in any matter submitted to it pursuant to the Management Agreement. Corporation, upon the advice of the Asset Manager, shall select one of the names submitted as a replacement; provided that the Corporation, upon the advice of the Asset Manager, may reject both names in its sole discretion and require the Manager to submit two additional names for consideration until the Corporation selects the replacement.

“Hotel Lockbox Fund” or “Lockbox Fund” means the fund by that name required to be maintained pursuant to Section 5.04 of the Indenture and established pursuant to Section 2 of the Hotel Cash Management Agreement.

“Hotel Manager” or “Manager” means Hilton and any other person who enters into an agreement with the Corporation to operate the Hotel on behalf of the Corporation.

“Hotel Operating Agreement” or “Management Agreement” means the Hotel Operating Agreement dated as of February 1, 2006, by and between the Corporation and Manager, as amended by the First Amendment to Management Agreement dated as of June 1, 2017 by and between the Corporation and the Manager, or as the context requires, any other management agreement entered into by the Corporation with respect to the operation and management of the Hotel Project.

“Hotel Operator” means Hilton or any other person who enters into an agreement with the Corporation to operate the Hotel on behalf of the Corporation. It may be used interchangeably with “Manager” or “Hotel Manager”.

“Hotel Personnel” means all individuals performing services at the Hotel employed by Manager or an Affiliate of Manager or Hotel Operator or any of the foregoing.

“Hotel Personnel Costs” means all costs associated with the employment, management or termination of Hotel Personnel, including training expenses, recruitment expenses, the costs of moving executive level Hotel Personnel, their families and their belongings to the area in which the Hotel is located at the commencement of their employment at the Hotel, wages and salaries, compensation and benefits, employment taxes, training and severance payments, all in accordance with Legal Requirements and Manager’s policies for substantially all Comparable Other Hilton Hotels.

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“Hotel Project” means the Project, except for (i) the Garage and (ii) when used in the Management Agreement and the Indenture, the Leased Retail Space.

“Hotel Senior FF&E Account” means the Account by that name within the Senior FF&E Reserve Fund established and designated as such by Section 5.02 of the Indenture.

“Hotel Senior FF&E Reserve Set Aside Amount” or “Senior FF&E Reserve Set Aside Amount” means up to 4% of Gross Operating Revenue, as set forth in the Budget. The Hotel Senior FF&E Reserve Set Aside Amount shall not be classified as an Operating Expense or Capital Expense, provided that upon disbursement of funds from the Senior FF&E Reserve Fund, the disbursed amounts shall be classified as an Operating Expense or Capital Expense in accordance with GAAP.

“Hotel Subordinate FF&E Account” means the Account by that name within the Subordinate FF&E Reserve Fund established and designated as such by Section 5.02 of the Indenture.

“Hotel Subordinate FF&E Reserve Set Aside Amount” or “Subordinate FF&E Reserve Set Aside Amount” means up to 2% of Gross Operating Revenue, as set forth in the Budget.

“Hotel Tax Revenues” means, collectively, the City-Wide Hotel Tax Revenues and the Site Specific Hotel Tax Revenues.

“Impositions” means all taxes, assessments, governmental charges of any kind whatsoever, adverse judgments, water rates, meter charges and other utility charges.

“Improvements” means the Building and all other structures, buildings, pavement, fencing, landscaping, recreational facilities, plumbing, electrical and telephone lines and computer cables and man- made objects of every type, existing or to be placed on the Land.

“Indebtedness” or “indebtedness,” as applied to any Person, means: (a) all indebtedness for borrowed money; (b) that portion of obligations with respect to leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (c) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (d) any obligation owed for all or any part of the deferred purchase price of property or services if the purchase price is due more than six months from the date the obligation is incurred or is evidenced by a note or similar written instrument; and (e) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby has been assumed by that Person or is nonrecourse to the credit of that Person.

“Indemnified Parties” means the City, the Trustee and its affiliates, and each of their respective officers, directors, officials, employees, attorneys and agents.

“Indenture” means the Amended and Restated Indenture of Trust originally dated as of February 1, 2006 and amended and restated as of June 1, 2017, by and among the Issuer, the Corporation and the Trustee.

“Independent Accountant” means a firm of independent certified public accountants selected by the Corporation.

“Index” means the Consumer Price Index for All Urban Consumers, All Items, for the market area that includes the Property, as published by the Bureau of Labor Statistics of the United States Department of Labor, using the years 1982-84 as a base of 100, or if such index is discontinued, the most comparable index

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published by any federal governmental agency. The percentage increase or decrease during the immediately preceding Operating Year shall be established at each Annual Budget Meeting.

“Information Services” means Financial Information, Inc.’s “Daily Called Bond Service,” 1 Craigwood Road, 2nd Floor, South Plainfield, New Jersey 07080, Attention: Editor; Mergent, Inc., 585 Kingsley Park Drive, Fort Mill, South Carolina 29715, Attention: Called Bond Department; and Standard and Poor’s J.J. Kenny Information Services’ “Called Bond Record,” 55 Water Street, 45th Floor, New York, New York 10041; or, in accordance with then-current guidelines of the Securities and Exchange Commission, to such other addresses and/or such other services providing information with respect to called bonds, or no such services, as the City may designate in a certificate of the City delivered to the Trustee.

“Insolvency Proceeding” means the commencement of any proceeding by or against the Corporation under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law. “Insurance and Condemnation Proceeds Fund” means the “Convention Center Hotel Revenue Bond Insurance and Condemnation Proceeds Fund” established pursuant to Section 5.02 of the Indenture.

“Insurance Consultant” means an insurance consultant mutually acceptable to Manager and Corporation.

“Insurance Costs” means (i) insurance premiums relating to liability and casualty coverage and Business Interruption Insurance policies and other insurance policies and coverages maintained with respect to the Hotel as required pursuant to the Management Agreement and the Indenture, including, without limitation, Exhibit O attached to the Management Agreement and costs directly related to the procurement and maintenance of such insurance including a portion of the Manager’s administrative costs and fees allocable to the Hotel Project if and to the extent the Hotel Project is insured under the Manager’s insurance program and (ii) insurance premiums relating to insurance coverages and policies maintained with respect to the Garage as required pursuant to the Parking Management Agreement and the Indenture.

“Insurance Proceeds” means any and all proceeds received by the Trustee from an insurance company as a result of a casualty loss in connection with the Property.

“Interest Payment Date” means, with respect to the Series 2017 Bonds, March 1 and September 1 of each year, commencing September 1, 2017, or any other date on which the principal or Redemption Price of, or interest on the Series 2017 Bonds is due, and with respect to any other Series of Bonds, the date on which interest is due and payable thereon.

“Investment Security” means any investment set forth below which is an authorized investment for the City under State law, and which matures (or is redeemable at the option of the holder thereof or is marketable prior to maturity) at such time or times as to enable disbursements to be made from the Fund in which such investment is held in accordance with the terms of the Indenture:

(a) Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America;

(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):

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1. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership

2. Farmers Home Administration (FmHA) Certificates of Beneficial Ownership

3. Federal Financing Bank

4. Federal Housing Administration Debentures (FHA)

5. General Services Administration Participation Certificates

6. Government National Mortgage Association (GNMA or Ginnie Mae) GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations

7. U.S. Maritime Administration Guaranteed Title XI financing

8. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds

(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies which are not backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):

1. Federal Home Loan Bank System Senior debt obligations

2. Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) Participation Certificates Senior debt obligations

3. Federal National Mortgage Association (FNMA or Fannie Mae) Mortgage-backed securities and senior debt obligations

4. Student Loan Marketing Association (SLMA or Sallie Mae) Senior debt obligations

5. Resolution Funding Corp. (REFCORP) obligations

6. Farm Credit System Consolidated systemwide bonds and notes

(d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of

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“AAAm-G;” “AAA-m;” or “AA-m” and if rated by Moody’s rated “Aaa,” “Aa1” or “Aa2” (including any proprietary funds of the Trustee or its affiliates).

(e) Certificates of deposit secured at all times by collateral described in paragraphs (a) and/or (b) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral.

(f) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF.

(g) Investment Agreements, including GIC’s, Forward Purchase Agreements and Reserve Fund Put Agreements.

(h) Commercial paper rated, at the time of purchase, “Prime-1” by Moody’s and “A-1” or better by S&P.

(i) Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in one of the two highest rating categories assigned by such rating agencies.

(j) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime - 1” or “A3” or better by Moody’s and “A-1” or “A” or better by S&P.

(k) Repurchase Agreements (“Repos”) must follow the following criteria.

Repos provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date.

1. Repos must be between the municipal entity and a dealer bank or securities firm.

a. Primary dealers on the Federal Reserve reporting dealer list which are rated “A” or better by S&P and “A2” or better by Moody’s, or

b. Banks rated “A” or better by S&P and “A2” or better by Moody’s.

2. The written repurchase agreement must include the following:

a. Securities which are acceptable for transfer are:

(1) Direct obligations of the United States of America referred to in paragraph (a) above,

(2) Obligations of federal agencies referred to in paragraph (b) above, or

(3) Obligations of FNMA and FHLMC

b. The term of the Repos may be up to 30 days.

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c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee is (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities).

d. Valuation of Collateral.

(1) the securities must be valued weekly, marked-to-market at current market price plus accrued interest.

(2) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the Repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by the municipal entity, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%.

3. A legal opinion which must be delivered to the municipal entity that states that the Repo meets guidelines under state law for legal investment of public funds.

“Issuer” means the Mayor and City Council of Baltimore, in its capacity as issuer of the Bonds.

“Key Employees” means the following positions for the Hotel, together with any additions thereto or deletions therefrom made by the Manager with the written consent of the Corporation, which consent shall not be unreasonably conditioned, delayed or withheld: the Senior Executive Personnel, the executive assistant manager, the resident manager, the director of food and beverage, the director of front office operations, the director of security, the director of human resources, the director of housekeeping, the director of engineering and the executive chef.

“Land” or “Site” means the real property described in Exhibit A attached to the Deed of Trust, together with any and all easements and other appurtenances affecting the same.

“Leased Retail Space” means that portion of the Project consisting of retail space located in the ground floor of the Project, with access to Howard or Pratt Street, but without direct access to the Hotel, which Leased Retail Space shall be administered, maintained and leased to retail lessees by the Corporation.

“Legal Requirements” or “Applicable Law(s)” means (a) all laws, statutes, acts, ordinances, rules, regulations, permits, licenses, authorizations, directives, orders and requirements of all Governmental Authorities, that now or hereafter may be applicable to, as applicable, (i) the Property and the construction, maintenance, use and operation thereof, including those relating to employees, zoning, building, health, safety, Hazardous Materials, natural resources, and environmental matters, and accessibility of public facilities; (ii) Manager and Parking Manager; (iii) Manager’s and Parking Manager’s business operations; and/or (iv) Corporation; and (b) the requirements of all documents properly filed in the real property records against the Property.

“Letter of Instructions” means a written directive and authorization executed by an Authorized City Officer.

“Liens” means liens against the Project of Consultants, laborers, material suppliers, vendors, and any other Persons, or a lis pendens or judgment lien with respect to any Claims.

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“Liquor License” means the liquor licenses issued for the Hotel Project in the name of the Owner pursuant to Section 2.04(e) of the Management Agreement.

“Listed Events” means any of the events listed in Section 2(f) of the Disclosure Agreement.

“Loan” means the loan made by the City to the Corporation of the proceeds of sale of the Series 2017 Bonds.

“Loan Agreement” means the Loan Agreement dated as of February 1, 2006 by and between the City and the Corporation, as amended by the First Supplement to Loan Agreement.

“Loan Collateral” means all collateral granted by the Corporation pursuant to the Bond Documents to secure the Corporation’s Bond Obligations.

“Lockbox Fund” or “Hotel Lockbox Fund” means the fund by that name required to be maintained pursuant to Section 5.04 of the Indenture and established pursuant to Section 2 of the Hotel Cash Management Agreement.

“Lockbox Funds” means, collectively, the Hotel Lockbox Fund and the Parking Lockbox Fund.

“Maglev Site” means a portion of the Site containing approximately 13,286 square feet, together with certain subsurface and air rights interests, all as more particularly described in Schedule A-4 to the Land Disposition Agreement dated January 11, 2006, between the City and the Corporation.

“Main Transaction Documents” means the Hotel Agreements, the Bond Documents and the Parking Management Agreement.

“Majority of Holders” means the Registered Owners of a majority in aggregate principal amount of the Bonds then Outstanding.

“Management Agreement” or “Hotel Operating Agreement” means the Hotel Operating Agreement dated as of February 1, 2006 by and between the Corporation and the Manager, as amended by the First Amendment to Management Agreement, or as the context requires, any other management agreement entered into by the Corporation with respect to the operation and management of the Hotel Project.

“Management Fee” has the meaning assigned to such term in Section 3.01(a) of the Management Agreement.

“Manager” or “Hotel Manager” means Hilton and any other person who enters into an agreement with the Corporation to operate the Hotel on behalf of the Corporation.

“Manager Event of Default” means an Event of Default with respect to the Manager set forth in Section 4.02 of the Management Agreement.

“Manager’s Intellectual Property” has the meaning assigned to such term in Section 11.06 of the Management Agreement.

“Manager’s Negligent or Willful Acts” means any (a) acts or omissions constituting fraud, gross negligence, or willful misconduct on the part of Manager or its Affiliates, their officers, directors, employees, agents, or assigns, or Key Employees; or (b) criminal violations of law by Manager, Manager’s Affiliates or permitted assignees under the Management Agreement, or any of their respective officers, directors or

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employees, or Key Employees; or (c) acts or omissions constituting negligence on the part of any Key Employee except as such acts, omissions or attendant Claims are related to, in whole or in part, directly or indirectly (i) the hiring, firing, training or supervision of any Hotel Personnel whenever same may have occurred or (ii) any error, failure, mistake, oversight or misstatement in judgment, opinion, determination, decision-making or management decision reasonably made by a Key Employee which Key Employee actually believed such judgment, opinion, determination, decision-making or management decision was in the best interests of the Hotel or otherwise made in good faith by any Key Employee whenever the same may have occurred. Notwithstanding the foregoing, acts or omissions of Hotel Personnel (other than Key Employees) shall be excluded from Manager’s Negligent or Willful Acts, so long as Manager acted reasonably, prudently and diligently in hiring, firing, training and supervising such Hotel Personnel including but not limited to Key Employees.

“Manager’s Parties” has the meaning assigned to such term in Section 12.15(a) of the Management Agreement.

“Manager’s Proprietary Information” means (a) Manager’s and its Affiliates’ know-how, trade secrets, documents, designs, plans, reports, guest lists, and studies; (b) information Manager reasonably identifies from time to time as confidential; (c) personnel information; (d) information that should be treated as confidential under the circumstances surrounding its disclosure including guest history information, sales and marketing information, account information; and (e) information which could cause competitive harm to Manager or any of its Affiliates relating to the Other Hilton Hotels and other proprietary information relative to the operating methods, procedures and policies distinctive to Other Hilton Hotels, including without limitation, the contents of the Hilton operating manuals information and methodologies relating to the Hilton Honors Program or other similar programs or the Hilton Reservation System and all commercial or financial information (including without limitation, all expenses, calculations and apportionments) relating thereto, and Hilton System information.

“Manager’s Right of First Offer” has the meaning assigned to such term in Section 11.07 of the Management Agreement.

“Manual” has the meaning assigned to such term within the definition of the term Hilton Requirements.

“Material Adverse Effect” means (a) a material adverse effect upon the business, operations, properties, assets or condition (financial or otherwise) of Corporation or such other Person as may be referenced or (b) the impairment of the ability of Corporation or such other Person as may be referenced to perform its non-monetary obligations under any Transaction Document or (c) if a particular item of property is referenced, a material adverse effect upon the business, operations, assets located at or condition (financial or otherwise) of the referenced property, or upon such referenced property’s ability to be in compliance with the terms of the Transaction Documents. In determining whether any individual event would result in a Material Adverse Effect, notwithstanding that such event does not of itself have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then occurring events and existing conditions would result in a Material Adverse Effect.

“Material Matter” means the incurrence or creation of any Encumbrance (other than an Encumbrance evidencing or securing a Permitted Indebtedness or a Permitted Encumbrance), Indebtedness or Subordination, a material violation of any Legal Requirements, the failure to obtain any required approval from a Governmental Authority, a default under any Indebtedness, or any other event likely to have a Material Adverse Effect.

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“Maximum Annual Debt Service” means, as of any date of calculation and with respect to a particular Series or Tier of Bonds, the greatest amount required in the then-current or any future Bond Year to pay Debt Service on such Series or Tier of Bonds.

“Maximum Annual Debt Service Requirement” means the greatest amount of Debt Service Requirement in any Fiscal Year of the City during which the Bonds are Outstanding.

“Memorandum of Agreement” means the Memorandum of Agreement dated as of November 1, 2003 between the Manager and the union locals identified therein, attached as Exhibit BB to the Management Agreement.

“Minimum Cash Trap Fund Amount” means the amount of $10,000,000.

“Monthly Reports” has the meaning assigned to such term in Section 2.20(b) of the Management Agreement.

“Moody’s” means Moody’s Investors Service, Inc., its successors and assigns, and, if Moody’s Investors Service, Inc., shall for any reason no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the City.

“Mortgage” means the Deed of Trust and any other mortgage, deed of trust or similar instrument encumbering the Property.

“Mortgagee” means the beneficiary under any Mortgage, including the City and its assigns, including the Trustee, as beneficiary under the Deed of Trust.

“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, subject to Title IV of ERISA, to which the Corporation or any ERISA Affiliate is making or accruing an obligation to make contributions, or any within any of the preceding five plan years made or accrued an obligation to make contributions.

“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Corporation or any ERISA Affiliate and for the employees of other Persons or (b) was so maintained and in respect of which the Corporation or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

“National Vendor” means any vendor providing goods or services to the Hotel and Other Hilton Hotels under a purchasing program or a contractual arrangement with Manager or any of its Affiliates available to or for the benefit of the Hotel and Other Hilton Hotels.

“Net Debt Service” means Debt Service on the Bonds less actual and anticipated investment earnings on amounts held in the Debt Service Reserve Fund; provided that an assumed annual investment rate of 4.00% shall be used in calculating anticipated investment earnings for any future period after the Investment Securities in which amounts on deposit in the Debt Service Reserve Fund are invested, mature or otherwise terminate.

“Net Operating Income” means, for any period, the amount by which the sum of (a) Gross Operating Profit properly attributable to the period under consideration and (b) interest earned on any of the Accounts or Funds (except for the Debt Service Reserve Fund, the Rebate Fund, the Senior FF&E Reserve Fund, the Subordinate FF&E Reserve Fund, any Account in the City Tax Reserve Fund, the Excess Revenue Fund, and

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the Operating Reserve Fund to the extent such interest earnings are retained in such Fund or paid to the City), exceeds the aggregate of the following: (i) Taxes and (ii) Insurance Costs.

“Net Revenues” means Gross Operating Revenues for the Property less (a) Operating Expenses and Parking Operating Expenses, (b) repayments on any Short Term Indebtedness and (c) Administrative Expenses.

“Nonassignable Contracts” means all contracts related to the Project which are not assignable or divisible and/or which are national type contracts as identified in Exhibit K to the Management Agreement or otherwise identified to the Corporation by the Manager within thirty (30) days of entering into such contracts.

“Nonrestricted Hotel” means any hotel or motel facility which is not a Restricted Hotel.

“Note” means the Promissory Note delivered to the City by the Corporation evidencing its obligation to repay the Loan.

“Notice Holder” means Piper Jaffray & Co. and any person who provides (i) a written request to the Corporation or the Trustee, as appropriate, to receive reports or other information delivered to the Corporation or the Trustee pursuant to the Indenture, and (ii) evidence satisfactory to the Corporation or the Trustee, as appropriate, of such person’s beneficial ownership of $1,000,000 or more in aggregate principal amount of Bonds. A Notice Holder shall cease to be a Notice Holder if such person’s beneficial ownership of Bonds falls below $1,000,000.

“Obligated Person” means any “obligated person” within the meaning of the Rule.

“Occupancy Agreement” means any leases, concession agreements or any other agreements for the use of any portion of the Hotel Project for a term in excess of thirty (30) days entered into by the Manager.

“Offer Period” has the meaning assigned to such term in Section 11.07 of the Management Agreement.

“Official Statement” means the Official Statement, dated ______, 2017, prepared and distributed in connection with the initial sale of the Series 2017 Bonds.

“OnQ” has the meaning assigned to it in Section 2.22(a)(v) of the Management Agreement.

“Opening Date” means (i) with respect to the Hotel Project, the first date on which the Hotel Project opens for business and (ii) with respect to the Garage, the first date on which the Garage opens for business.

“Operating Costs Set Aside Amount” means $1,000,000 for the period from the 2006 Closing Date through the last day of the first Operating Year, increased or decreased, as applicable, for any subsequent Operating Year by a percentage equal to the percentage change in the Index from the last month of the year prior to the preceding Operating Year as compared to the last month of the preceding Operating Year.

“Operating Expenses” means all those ordinary and necessary expenses, including, without limitation, Reimbursable Expenses, Base Management Fee, and bonuses paid to Hotel Personnel incurred in the operation of the Hotel Project in accordance with and to the extent provided in the Management Agreement, including but not limited to Hotel Personnel Costs, the cost of maintenance and utilities (including taxes or governmental fees included as part of the charges for such maintenance and utilities which, by this reference, do not constitute Taxes or Excluded Taxes and Other Charges), administrative expenses, the costs of advertising, marketing, and business promotion, lease payments for equipment to be installed and utilized at the Hotel, and

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any amounts payable to Manager as set forth in the Management Agreement, all as determined in accordance with Generally Accepted Accounting Principles and the Uniform System of Accounts. Notwithstanding the foregoing description, unless expressly made an Operating Expense under a specific provision of the Management Agreement, the following shall not constitute Operating Expenses: (a) Taxes and Excluded Taxes and Other Charges (save and except for payroll taxes included in Excluded Taxes and Other Charges); (b) Insurance Costs; (c) rentals of real property (unless approved in writing by Corporation); (d) depreciation and amortization on capitalized assets; (e) Administrative Expenses and other costs and expenses of Trustee, Corporation, or Trustee’s or Corporation’s personnel, such as entertainment expenses, salaries, wages and employee benefits of Trustee’s or Corporation’s employees, and the expenses of Trustee’s or Corporation’s employees to attend board meetings; (f) costs and professional fees, including the fees of attorneys, accountants, and appraisers, incurred directly or indirectly in connection with any category of expense that would not otherwise be an Operating Expense, unless otherwise expressly provided in the Management Agreement; (g) payments of principal and interest related to any financing of the Project; (h) costs covered by and of Manager’s indemnity, hold harmless and defense agreements contained in the Management Agreement, all of which shall be funded out of Manager’s own funds (from whatever source, including insurance proceeds); (i) costs incurred by Manager to perform obligations, duties, covenants, agreements and responsibilities which, under the express terms of the Management Agreement, are to be funded from Manager’s own funds; (j) Capital Expenses, including, without limitation, construction costs of the Project; and (k) the Subordinate Management Fee and the Supersubordinate Management Fee

“Operating Plan and Budget” means an annual marketing and operating plan and budget for the Hotel Project prepared by the Manager and approved by the Corporation, all in accordance with the terms of Section 2.18 of the Management Agreement and Section 8.23 of the Indenture.

“Operating Reserve Fund” means, so long as any Bonds remain outstanding, the Convention Center Hotel Revenue Bond Operating Reserve Fund established by Section 5.02 of the Indenture, and after no Bonds remain outstanding, has the meaning assigned to such term in Section 3.09 of the Management Agreement.

“Operating Reserve Requirement” means an amount equal to $5,000,000.

“Operating Standard” or “Standards” means the standard of management of the Hotel described in Exhibit F of the Management Agreement.

“Operating Supplies and Equipment” or “OS&E” means linen, china, glassware, silver, uniforms, guestroom electronics, guestroom, kitchen and housekeeping supplies, together with all items listed on Exhibit H to the Pre-Opening Services Agreement.

“Operating Term” means the term of the Management Agreement, as defined in Section 4.01 thereof.

“Operating Year” means each full period extending from January 1 to December 31 of a calendar year (both dates inclusive) occurring during the Operating Term, the calendar year in which the Termination of the Management Agreement occurs, and if the Required Opening Date occurs prior to June 30 of a calendar year, the period of time from the Required Opening Date to the end of such calendar year. If the Required Opening Date occurs prior to June 30 of a calendar year, then the period from the Required Opening Date until and including December 31 of such calendar year shall constitute the “first Operating Year.” If the Required Opening Date occurs on or after June 30 of a calendar year, then the period from the Required Opening Date until and including December 31 shall not constitute an Operating Year and the “first Operating Year” means the first full calendar year occurring after the Required Opening Date.

“Ordinances” means, collectively, the Bond Ordinance and the Tax Increment Ordinance.

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“Original Beneficial Owner” means each of the initial Beneficial Owners of the Series 2017 Bonds.

“Original Purchaser” means, with respect to the Series 2017 Bonds, each of the initial registered owners of such Series 2017 Bonds.

“Original Taxable Value” shall have the meaning given such term in the Tax Increment Ordinance.

“Other Hilton Hotels” means all hotels and resorts in the United States that are owned or managed by Manager and/or its Affiliates under the name “HILTON” (other than under the Hilton Garden Inn and Hilton Residential Suites and Hilton Suites names), including all such hotels and resorts under such brand that are owned or managed by Manager and its Affiliates.

“Other Project Scheduling Information” is defined within the definition of “Project Schedule.”

“Out-of-Pocket Expenses” means the reasonable out of pocket costs paid to non-Affiliates of Manager (with no mark-up or profit to Manager) incurred directly by Manager or any of its respective Affiliates providing services to the Hotel Project under the Management Agreement, including, without limitation, reasonable air and ground transportation, meals, lodging, reasonable business entertainment expenses, taxes, gratuities, computer services, document reproduction, printing, promotional materials, stationery, postage, long-distance telephone calls and facsimiles or such other out-of-pocket costs or expenses which were contemplated or provided by the then operative Operating Plan and Budget or Capital Budget, all in conformance with Manager’s policies as in effect from time to time (and provided to the Corporation).

“Outstanding” means, with respect to any Bonds as of any date, Bonds theretofore or thereupon being authenticated and delivered under the Indenture except:

(a) Bonds canceled or delivered for cancellation at or prior to such date;

(b) Bonds in lieu of or in substitution for which other Bonds have been authenticated and delivered pursuant to the Indenture; and

(c) Bonds deemed to have been paid, redeemed, purchased or defeased as provided in the Indenture, in any Supplemental Indenture, as applicable, or as provided by law.

“Owner” has the same meaning as the Corporation.

“Owner Board” or “Corporation Board” means the board of directors of the Corporation, or any successor in function.

“Owner Documents” or “Corporation Documents” means any and all contracts, instruments and agreements, now existing or hereafter arising, in connection with the acquisition, operation, construction, use or occupancy of the Property, including, without limitation, each of those contracts, instruments and agreements set forth on Exhibit A of the Assignment Agreement.

“Owner Related Parties” means the Owner and its officers, directors, employees, agents and representatives.

“Owner’s Authorized Representative” shall mean the President of Baltimore Development Corporation or his designee.

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“Owner’s Costs” or “Corporation’s Costs” means (i) compensation or reimbursable costs payable to Corporation’s representatives and agents, (ii) costs incurred by Corporation solely as a result of performing its own obligations under the Loan Agreement or any other agreement to which the Corporation is a party, and (iii) title premiums and costs, surety costs, transfer and recording taxes, and other costs ancillary to the execution and recording of the Deed of Trust.

“Owner’s Negligent or Willful Act” or “Corporation’s Negligent or Willful Act” means any (a) acts or omissions constituting fraud, negligence, or willful misconduct on the part of Corporation its officers, directors, employees, agents or assigns; or (b) criminal violation of law by Corporation under the Management Agreement, or any of its officers, directors or employees.

“Parking Assignment Agreement” means the Assignment and Subordination of Parking Management Agreement dated as of June 1, 2017, by and among the City, the Trustee, the Corporation and the Parking Manager.

“Parking Budget” means the Parking Operating Budget and the Parking Capital Budget for the applicable Fiscal Year.

“Parking Capital Budget” means the approved annual plan and budget for the Garage setting forth all approved Capital Improvements and Capital Expenses for the Garage for the relevant Fiscal Year, including a summary five-year schedule of expenditures for other capital improvements and replacing FF&E in the Garage.

“Parking Cash Management Agreement” means the Parking Cash Management and Lockbox Agreement dated as of June 30, 2011, by and among the Corporation, the Trustee, The Harbor Bank of Maryland and the Parking Manager, or any other agreement with substantially the same terms and conditions with a replacement Depository Bank.

“Parking Lockbox Fund” means the fund by that name required to be maintained pursuant to Section 5.04 of the Indenture and established pursuant to Section 2 of the Parking Cash Management Agreement.

“Parking Manager” or “Garage Manager” means any person who enters into a Parking Management Agreement with the Corporation to operate the Garage on behalf of the Corporation.

“Parking Management Agreement” or “Approved Parking Agreement” means (i) the Parking Facility Operations and Management Agreement dated June 30, 2011 among the Corporation, LAZ Parking Mid- Atlantic LLC and PMS Parking, Inc., as amended by the Amendment to Parking Facility Operations and Management Agreement dated October 4, 2013 and the Amendment to Parking Facility Operations and Management Agreement dated December 12, 2016, each among the Corporation, LAZ Parking Mid-Atlantic LLC and PMS Parking, Inc. and (ii) any other agreement entered into between the Corporation and a Parking Manager with respect to the operation and management of the Garage, which will provide, among other things, operation of the Garage, including valet services, at all times the Hotel is open for business, adequacy of security, maintenance obligations, and an agreed-upon number of parking spaces within the Garage reasonably expected by the Manager to be used by guests of the Hotel as valet service, and shall be substantially in the form attached as Exhibit Y to the Management Agreement and Exhibit K to the Indenture.

“Parking Management Fee” means collectively, the Base Management Fee and the Incentive Fee, as each such term is defined in the Parking Management Agreement.

“Parking Operating Budget” means the approved operating budget for the Garage setting forth all approved Parking Operating Expenses for the Garage for the relevant Fiscal Year.

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“Parking Operating Costs Set Aside Amount” means $81,000 for the period from the 2006 Closing Date through the last day of the first Operating Year, increased or decreased, as applicable, for any subsequent Operating Year by a percentage equal to the percentage change in the Index from the last month of the year prior to the preceding Operating Year as compared to the last month of the preceding Operating Year.

“Parking Operating Expenses” means all those ordinary and necessary direct expenses of operating the Garage, including, without limitation, Reimbursable Expenses and the Parking Management Fee, in accordance with and to the extent provided in the Parking Management Agreement, but excluding those costs excluded from the definition of “Operating Expenses” in the Parking Management Agreement.

“Participant” means those broker-dealers, banks and other financial institutions from time to time for which DTC holds Series 2017 Bonds as securities depository.

“Party” or “Parties” means, as used in and with respect to each Agreement, the parties entering into such Agreement.

“Pass Through Costs” means amounts collected by the Manager from the Hotel guests and patrons on behalf of third parties to be remitted to such third parties, including, without limitation, gratuities and amounts charged to guest folios for goods and services supplied by tenants, vendors or concessionaires of the Hotel.

“Paying Agent” means the Trustee and its successor or assigns.

“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

“PCC” or “Potential Convention Center Customer” means a person or entity that is planning an event that will potentially be held at the Convention Center.

“Performance Standard” means, as applicable, either the Series 2006 Performance Standard or the REVPAR Performance Standard.

“Performance Termination Event” has the meaning assigned to such term in Section 4.05(i) of the Management Agreement.

“Performance Test” means the tests identified in Section 4.05 of the Management Agreement to determine if a Performance Termination Event has occurred.

“Performance Test Period” means means with respect to the Performance Tests set forth in Section 4.05(a) of the Management Agreement, the period of the Operating Term commencing with the sixth Operating Year and ending on the last day of the Operating Term, provided, however, if on the expiration of the 60-Day Period the Hotel Project is open and available for use and occupancy by the general public and PCCs, but is not otherwise Substantially Complete, then the Performance Test Period shall not commence until August 9, 2014.

“Permits” means licenses, approvals, permits, variances, authorizations, entitlements, registrations and the like required by any Governmental Authority having jurisdiction over Corporation or the Property.

“Permitted 12-Month Period” has the meaning assigned to such term in Section 3.1.3 of the Room Block Agreement.

“Permitted Encumbrances” means with respect to the property of the Corporation:

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(a) Encumbrances specifically permitted by, or created by, the Indenture, the Loan Agreement, the Deed of Trust, or any other Transaction Document;

(b) Liens for taxes, assessments, fees, levies or other similar charges which are either not yet due and payable or are being contested in good faith by appropriate proceedings conducted with due diligence, if adequate reserves therefor have been established and are being maintained;

(c) materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like liens arising in the course of construction of the Project or in the ordinary course of operations or maintenance of the Property, in each such case securing obligations which are not delinquent or are bonded in a manner satisfactory to the Corporation acting reasonably and in good faith or are being contested in good faith by appropriate proceedings conducted with due diligence (unless by such contest there exists any risk (taking into account any applicable insurance, reserves or bonding covering such lien) that any portion of the Site or the Property may become subject to loss or forfeiture or that such lien or contest thereof might otherwise interfere with the use of the Site or the Property);

(d) presently existing utility, access and other easements and rights of ways, and restrictions as set forth in Schedule B to the Title Policy; and

(e) purchase money security interests and security interests placed upon personal property being acquired to secure a portion of the purchase price thereof, or lessor’s interests in leases required to be capitalized in accordance with generally accepted accounting principles; provided that the aggregate principal amounts secured by any such interests shall not exceed at any time more than $100,000.

“Permitted Indebtedness” means (i) the Corporation’s Bond Obligations, (ii) Short Term Indebtedness and (iii) Indebtedness described in clauses (b) and (d) of the definition of Indebtedness, provided that the Debt Service Coverage Requirement is met.

“Permitted Rates,” means the range of Permitted Rates approved or deemed approved by Manager and Corporation for guest rooms in the Hotel pursuant to Section 4.1 of the Room Block Agreement.

“Person” means any individual, public or private corporation, partnership, limited liability company, county, district, authority, municipality, political subdivision or other entity of any state or the United States of America, and any partnership, association, firm, trust, estate or any other entity or organization whatsoever.

“Personal Property Tax Account” means the Account by that name within the City Tax Reserve Fund established and designated as such by Section 5.02 of the Indenture.

“Personal Property Tax Revenues” means an amount equal to all revenues and receipts of the City from the tax levied on the personalty of the Property and collected by the City pursuant to Article 28, Subtitle 4, inclusive of the Baltimore City Code, as amended, replaced or supplemented from time to time.

“Petty Cash Amount” means (i) with respect to the Hotel Project an amount reasonably estimated by the Manager as the amount needed from time to time to be retained by the Manager at the Hotel as petty cash, which amount shall be comparable to the amount kept by Manager as petty cash at other hotels of comparable size and quality operated by Manager and (ii) with respect to the Garage, an amount reasonably estimated by the Corporation as the amount needed from time to time to be retained by the Parking Manager at the Garage as petty cash, which amount shall not exceed the amount set forth in the Parking Management Agreement.

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The amounts retained by the Manager and the Parking Manager are sometimes referred to collectively as the “Petty Cash Amounts.”

“PHC” or “Potential Hotel Customer” means a customer or group that is planning a meeting, conference, convention or other event to take place primarily in the Hotel function space.

“Plan” means with respect to any Person, any plan, program, arrangement, practice or contract, which provides benefits or compensation to or on behalf of employees or former employees of such Person, whether formal or informal, whether or not written, including, but not limited to any “employee benefit plan” (as defined in Section 3(3) of ERISA).

“Pledged Revenues” means (i) the loan payments made by the Corporation to the City pursuant to the Loan Agreement, (ii) the Site Specific Hotel Tax Revenues, but only to the extent that the Site Specific Hotel Tax Revenues are appropriated by the City to the payment of the principal of, premium, if any, and interest on the Bonds and for other purposes as provided under the Indenture, (iii) a portion of the City-Wide Hotel Tax Revenues in an amount equal to the City-Wide Hotel Tax Pledge Amount, but not to exceed, in any Fiscal Year of the City, the amount of City-Wide Hotel Tax Revenues collected by the City in such Fiscal Year, but only to the extent that the City-Wide Hotel Tax Revenues are appropriated by the City to the payment of the principal of, premium, if any, and interest on the Bonds and for other purposes as provided under the Indenture, (iv) the Personal Property Tax Revenues, but only to the extent that the Personal Property Tax Revenues are appropriated by the City to the payment of the principal of, premium, if any, and interest on the Bonds and for other purposes as provided under the Indenture, and (v) the Tax Increment Revenues but only to the extent that the Tax Increment Revenues are appropriated by the City to payment of, premium, if any, on and interest on the Bonds and for other purposes as provided in the Indenture, each as determined by the Board of Finance.

“Potential Convention Center Customer” or “PCC” means a person or entity that is planning an event that will potentially be held at the Convention Center.

“Potential Hotel Customer” or “PHC” means a customer or group that is planning a meeting, conference, convention or other event to take place primarily in the Hotel function space.

“Pre-Existing Condition” means the condition the Property was in immediately prior to a casualty in the case of any casualty or to a condition, in the case of any Condemnation, which permits the Property’s use in the manner contemplated by the Indenture and for which the Property was originally constructed, in each case in compliance with all Project Requirements.

“Pricing” has the meaning assigned to such term in Section 2.03 of the Management Agreement.

“Prime Rate” means (a) for the purpose of determining the Reimbursement Rate, for any day, the rate per annum in effect for such day as publicly announced from time to time by Bank of America as its “prime rate;” any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change and (b) for all other purposes, the prime rate of interest established and declared by the Trustee from time to time.

“Principal Installment” means as of any particular date of calculation and with respect to Bonds of a particular Series, an amount of money equal to the aggregate of (a) the principal amount of Outstanding Bonds of such Series which mature on a single future date, reduced by the aggregate principal amount of such Outstanding Bonds of such Series which would before said future date be retired as a result of Sinking Fund Installments applied in accordance with this Indenture or a Supplemental Indenture; plus (b) the amount of any

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Sinking Fund Installment payable on said future date for the retirement of any Outstanding Bonds of such Series.

“Principal Office” or “Principal Corporate Trust Office” with respect to the Trustee means the corporate trust office of the Trustee located at the address set forth in Section 15.11 of the Indenture, or at such other place as the Trustee shall designate by notice given under said Section 15.11, or such other office designated by the Trustee from time to time.

“Project” means the Land and the Building.

“Project Documents” means the Room Block Agreement, the Management Agreement and the Parking Management Agreement.

“Projected Additional Bonds Debt Service Coverage Ratio” means for any future period, a fraction calculated by dividing Total Projected Net Revenues for a particular future period of time by the Maximum Annual Debt Service for the Outstanding Bonds for the same particular period of time.

“Projected Convention Center Bonds Debt Service Coverage Ratio” means for any future period, a fraction calculated by dividing (a) the projected revenues and receipts of the City from the hotel room tax levied and collected by the City pursuant to Article 28, Subtitle 21, inclusive of the Baltimore City Code, as amended, replaced or supplemented from time to time for such future period of time by (b) the sum of (i) net debt service (calculated in the same manner as Net Debt Service) during the same particular period of time for the outstanding Convention Center Bonds, (ii) net debt service (calculated in the same manner as Net Debt Service) during the same particular period of time for the Additional Convention Center Bonds proposed to be issued, (iii) the projected revenues and receipts of the City from the hotel room tax levied on all gross amounts of money paid to the owners or operator of the Hotel by transient guests occupying rooms and collected by the City pursuant to Article 28, Subtitle 21, inclusive of the Baltimore City Code, as amended, replaced or supplemented from time to time, for such future period of time and (iv) the City-Wide Hotel Tax Pledge Amount.

“Projected Debt Service Coverage Ratio” means for any future period the ratio consisting of Total Projected Net Revenues for such future period of time divided by Net Debt Service during the same particular period of time for the Tier of Bonds so designated.

“Property” means the Land and the Improvements including, without limitation, the Project.

“Proposed Assignee,” with respect to the Management Agreement, has the meaning assigned to such term in Section 9.02(a) of the Management Agreement.

“Proposed Budget Documents” means the Proposed Capital Budget and the Proposed Operating Plan and Budget for any Operating Year.

“Proposed Capital Budget” means the proposed Capital Budget described in Section 2.18 of the Management Agreement.

“Proposed Operating Plan and Budget” means the proposed Operating Plan and Budget described in Section 2.18 of the Management Agreement.

“Proposed Parking Budgets” means the proposed Parking Capital Budget and the proposed Parking Operating Budget for any Fiscal Year.

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“Proprietary Information” means information pertaining to Proprietary Software or Manager’s Intellectual Property, but only to the extent such information is not in the public domain and Manager’s attorney work product related to the Proprietary Software and Manager’s Intellectual Property.

“Proprietary Software” means certain computer software specially developed by or for Manager and its Affiliates for use in hotels and resorts managed by Manager and its Affiliates or for use in Other Hilton Hotels, as more fully described in Exhibit U attached to the Management Agreement.

“Purchase Agreement” means the Bond Purchase Agreement.

“Qualified Assignee” means any proposed transferee (and its Affiliates) who: (1) is not known in the community as being of bad moral character; (2) is not in control of or controlled by persons who have been convicted of felonies in any state or federal court; (3) is not engaged, directly or indirectly, in the operation or management (as opposed to ownership) of hotels which are operated under a nationally or regionally recognized brand and which are competitive to Manager or any of its Affiliates; (4) does not own, lease or operate any casino or gambling facility, unless such entity or individual is licensed under the gaming laws of the state where such casino or gambling facility is located; and (5) is not a “Specially Designated National or Blocked Person.” For the purposes of the Management Agreement, a “Specially Designated National or Blocked Person” means: (i) persons designated by the U.S. Department of Treasury’s Office of Foreign Assets Control from time to time as a “specially designated national or blocked person” or similar status, (ii) a person described in Section 2 of U.S. Executive Order 13224 issued on September 23, 2001, or (ii) a person otherwise identified by government or legal authority as a person with whom Manager or its Affiliates are prohibited from transacting business.

“Qualified Management Agreement” is defined under Section 141 of the Code and Rev. Proc. 2017-13 or Rev. Proc. 97-13, 1997-1 C.B. 632, as modified by Rev. Proc. 2001-39, 2001-2 C.B. 38, as applicable.

“Rating Agency” means, as the context requires, Moody’s, S&P or Fitch.

“Rating Service” means J.D. Powers and Associates, or if J.D. Powers and Associates no longer conducts surveys with respect to Upscale Hotels, then such other Person mutually agreeable to the Manager and the Corporation who then conducts surveys of Upscale Hotels.

“Rebate Analyst” means a certified public accountant, financial analyst or bond counsel, or any firm of the foregoing, or financial institution (which may include the Trustee) experienced in making the arbitrage and rebate calculations required pursuant to Section 148 of the Code and retained by the City at the expense of the Corporation to make the computations required under the Indenture or any Supplemental Indenture.

“Rebate Fund” means the Convention Center Hotel Revenue Bond Rebate Fund established by Section 5.02 of the Indenture, and includes any separate accounts or subaccounts established by the terms of any Supplemental Indentures or any agreement pursuant thereto.

“Receipts” means (i) all payments to the Trustee for the account of the Issuer pursuant to the Loan Agreement, including (without limitation) moneys received by the Trustee from the Corporation pursuant to Section 4.2 of the Loan Agreement, and (ii) all other receipts of the Issuer or the Trustee attributable to the ownership, leasing or operation of any portion of the Property and the financing and refinancing of the Project with the proceeds of Bonds; provided, however, that the term “Receipts” does not include the Reserved Rights of the City.

“Receiving Party” or “receiving party” has the meaning assigned to such term in Section 12.31 of the Management Agreement.

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“Record Date” means the close of business on the fifteenth day of the calendar month (whether or not a Business Day) preceding such Interest Payment Date; provided that the Record Date for any Series of Additional Bonds, if different, means the date designated in any Supplemental Indenture as the record date for the payment of interest on such Series of Additional Bonds.

“Redemption Date” means the date upon which any Bonds are to be redeemed prior to their respective fixed maturities pursuant to the mandatory or optional redemption provision of the Indenture or any Supplemental Indenture.

“Redemption Fund” means the Convention Center Hotel Revenue Bond Redemption Fund established by Section 5.02 of the Indenture.

“Redemption Price” means, with respect to any Bond, the amount, including any applicable premium, payable upon the mandatory or optional redemption thereof, as provided in this Indenture or any Supplemental Indenture.

“Refunding Bonds” means all Bonds, whether issued in one or more Series, issued for the purpose of refunding a like or different principal amount of Bonds, and hereafter authenticated and delivered pursuant to the Indenture.

“Register” means the register maintained by the Registrar for each Series of Bonds which shows ownership of Bonds in accordance with Section 3.08 of the Indenture.

“Registered Owner” means, when used with respect to Bonds, the registered owner of any Bond.

“Registrar” means the Trustee, and the successor or successors appointed pursuant to and meeting the requirements of Article XI of the Indenture.

“Reimbursable Expenses” means (a) for purposes of the Management Agreement all costs and expenses reimbursable to Manager pursuant to Section 3.04 of the Management Agreement; and (b) for purposes of the Parking Management Agreement, all costs and expenses reimbursable to the Parking Manager pursuant to the Parking Management Agreement. Reimbursable Expenses shall not include Internal Expenses.

“Related Party” means any Person who is a “related person” within the meaning of Section 144(a)(3) of the Code.

“Remedial Action” means actions required to (a) investigate, monitor, clean up, remove, treat, dispose of off-site or in any other way address or respond to the effects of Hazardous Substances in the indoor or outdoor environment so as to render the Property safe for its intended use; or (b) prevent the release or threat of release, or minimize the further release, of Hazardous Substances in the indoor or outdoor environment.

“Renewal and Replacement Fund” has the meaning assigned to such term in Section 3.09 of the Management Agreement.

“Renewal and Replacement Set Aside Amount” shall have the same meaning as Senior FF&E Reserve Set Aside Amount.

“Reportable Event” means by event described in Section 4043(b) of ERISA, other than an event (excluding an event described in Section 4043(b)(I) relating to tax disqualification) with respect to which the thirty (30) day notice requirement has been waived.

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“Repository” means each National Repository and the State Repository.

“Representative” means Piper Jaffray & Co.

“Required Opening Date” shall mean August 24, 2008.

“Required Room Block Days” has the meaning given such term in the Room Block Agreement.

“Required Room Block Size” has the meaning assigned to it in Section 3.1 of the Room Block Agreement.

“Reservation Deposits” means deposits from guests to reserve rooms or facilities at the Hotel.

“Reservations Protocol” means the procedure followed by the Manager for its reservation system as described in Exhibit V of the Management Agreement, as may be modified from time to time by Manager with written notice to the Corporation.

“Reserve Fund Requirement” means so long as the Series 2017 Bonds are the only Bonds Outstanding, an amount equal to $______and upon the issuance of any Additional Bonds, the amount set forth in the Supplemental Indenture authorizing the issuance of the Additional Bonds as the Reserve Fund Requirement.

“Reserved Rights of the City” means (a) all rights of the City as set forth in Sections 4.2, 5.10, 6.3, 8.6 and 8.7 of the Loan Agreement and 5.20, 8.20 and 8.34 of the Indenture; (b) the right of the City (in its capacity as issuer of the Bonds and not as beneficiary under the Deed of Trust) to receive notices, reports or other information, make determinations and grant consents and approvals under the Indenture and the other Bond Documents, (c) all rights of the City to exercise or enforce the representations, covenants and agreements of the Corporation set forth in the Loan Agreement and the Deed of Trust, (d) all rights of the City to enforce the representations, warranties, covenants and agreements of the Corporation pertaining in any manner or way, directly or indirectly, to the tax-exempt status of interest on any Tax-Exempt Bonds set forth in the Loan Agreement or the Tax Certificate or in any other certificate or agreement of the Corporation, (e) all rights of the City in connection with any amendment of the Indenture, the Loan Agreement, the Deed of Trust or any other Bond Document, and (f) all enforcement remedies with respect to the foregoing.

“Resolutions” means the Resolutions passed by the Board of Finance of the City on April 24, 2017.

“Responsible Officer” means, when used with respect to the Trustee, any officer or employee of the Trustee who is responsible for matters relating to the Bonds.

“Restricted Area” means the area set forth on the map attached to the Management Agreement as Exhibit S.

“Restricted Hotel” means, for purposes of the Indenture, any hotel or motel facility, and for purposes of the Management Agreement, any hotel or motel facility which (a) is operated under the “Hilton Hotel” flag as a full service hotel but shall not include or apply to any other products, services or businesses under the “Hilton” brand, including, without limitation, Conrad Hilton, Hampton Inn, Hilton Suites and other all-suite hotels, Hilton Garden Inn or other limited service hotels, Homewood Suites by Hilton or any extended stay hotel or any other comparable brands created by Hilton; or (b) has more than 325 guest rooms and more than 40 square feet of meeting space per guest room within or immediately adjacent to such facility.

“Revenue Bond Act” means Article II, Section (50) of the Charter, as amended, replaced or supplemented from time to time.

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“REVPAR” means, with respect to each hotel that is a member of the Competitive Set and with respect to the Hotel, and with respect to any period of time, the “Revenue Per Available Room” for the hotel in question, as measured and reported by Smith Travel Research, Inc., or such other reputable independent third party market research firm as may be mutually approved by Corporation and Manager.

“REVPAR Performance Standard” means that the Hotel’s REVPAR for the applicable Operating Year is at least 95% of the Average Competitive REVPAR for such Operating Year; provided, however, the Parties acknowledge and agree that the determination of the REVPAR Performance Standard was agreed upon based upon the defined Competitive Set as of the 2006 Closing Date. To the extent the Competitive Set is modified as permitted herein, the Corporation and Manager shall also reasonably and mutually agree upon revisions to the REVPAR Performance Standard, taking into consideration such change in the defined Competitive Set, and any other changes in the market, the hotel industry or other factors that have impacted, or are expected to impact, the REVPAR Performance Standard.

“Room Block Agreement” or “Room Block Commitment” means that certain Room Block Commitment Agreement entered into between Corporation and Manager, dated as of February 1, 2006, as amended by the First Amendment to Room Block Agreement dated as of June 1, 2017 by and between the Corporation and the Manager.

“Room Block Contract” means a contract between a PCC and the Manager, pursuant to which Manager agrees to reserve rooms at the Hotel for the PCC pursuant to the Room Block Agreement.

“Room Block Request” means a written request from a Sales Representative or another designee of Corporation, requesting Manager to commit a specified number of rooms to a PCC on specific dates and alternate dates set forth in such request.

“Room Rate Schedule” has the meaning assigned to such term in Section 2.18(d)(i) of the Management Agreement.

“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934.

“S&P” means S&P Global Ratings, Inc., a division of S&P Global, Inc., its successors and assigns, and, if S&P Global Ratings, Inc., shall for any reason no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the City.

“Sales Representative” means a representative of Visit Baltimore, the Convention Center Operator, or the City with responsibility for the marketing, sales, scheduling or booking of events in the Convention Center.

“Securities Depository” means The Depository Trust Company, 55 Water Street, New York, New York, or in accordance with then-current guidelines of the Securities and Exchange Commission, to such other addresses and/or such other securities depositories, as the Securities and Exchange Commission may designate from time to time.

“Senior Convention Center Bonds” means the 1998 Senior Convention Center Bonds and any Additional Convention Center Bonds the payment of principal of and interest on which is secured by a pledge of Hotel Tax Revenues that is senior to the pledge of the Hotel Tax Revenues to the Bonds under the Indenture.

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“Senior Executive Personnel” means the individuals employed from time to time as the general manager, director of sales, the director of marketing and the director of finance and successor positions with comparable responsibilities.

“Senior FF&E Reserve Fund” means the Convention Center Hotel Revenue Bond Senior FF&E Reserve Fund established by Section 5.02 of the Indenture.

“Senior FF&E Reserve Set Aside Amount” or “Hotel Senior FF&E Reserve Set Aside Amount” means up to 4% of Gross Operating Revenue as set forth in the Budget. The Senior FF&E Reserve Set Aside Amount shall not be classified as an Operating Expense or Capital Expense, provided that upon disbursement of funds from the Senior FF&E Reserve Fund, the disbursed amounts shall be classified as an Operating Expense or Capital Expense in accordance with GAAP.

“Senior Redemption Account” means the Account by that name within the Debt Service Fund established and designated as such by Section 5.02 of the Indenture.

“Series” means Bonds identified as a separate series which are authenticated and delivered on original issuance and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to the Indenture, or any Supplemental Indenture. All Bonds of a particular Series shall be of the same Tier.

“Series 2006 Bonds” means, collectively, the Series 2006A Bonds and the Series 2006B Bonds.

“Series 2006 Performance Standard” means Net Operating Income for the applicable Operating Year is sufficient to satisfy the Net Debt Service on the Bonds for such Operating Year; provided however, that if the Manager is required to cease all operations of the Hotel Project due to the failure, revocation, lapse, non-issuance or non-reissuance or non-renewal of any Temporary, Partial or Final Certificate of Occupancy not caused by Manager’s Negligent or Willful Acts (provided that the Manager’s good faith compliance with such Certificate of Occupancy shall not be deemed to constitute Manager’s Negligent or Willful Acts), then for such Operating Year the amount of Net Operating Income required to satisfy the Series 2006 Performance Standard shall be reduced by an amount equal to (a) three times the number of days the Hotel Project is not operating divided by 365 multiplied by (b) the amount of Net Operating Income sufficient to satisfy such Series 2006 Performance Standard applicable to such Operating Year; and, provided further, that in the event of such failure, revocation, non-issuance, non-renewal or non-reissuance which does not result in a complete cessation of operations at the Hotel Project then for such Operating Year the Net Operating Income required to satisfy the Series 2006 Performance Standard shall be equitably reduced in proportion to the degree to which Manager’s operation of the Hotel has been interrupted.

“Series 2006A Bonds” means the $247,500,000 original aggregate principal amount of Mayor and City Council of Baltimore Convention Center Hotel Revenue Bonds, Senior Series 2006A.

“Series 2006B Bonds” means the $53,440,000 original aggregate principal amount of Mayor and City Council of Baltimore Convention Center Hotel Revenue Bonds, Subordinate Series 2006B.

“Series 2017 Bonds” means the $______aggregate principal amount of Mayor and City Council of Baltimore Convention Center Hotel Revenue Refunding Bonds, Series 2017.

“Series 2017 Costs of Issuance Fund” means the Fund by that name established and designated as such by Section 5.02 of the Indenture.

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“Short Term Indebtedness” means any notes or other indebtedness lawfully issued or incurred by the Corporation which is payable in full not later than twelve months from the date so issued or incurred and is incurred in accordance with Section 8.11 of the Indenture.

“Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, subject to Title IV of ERISA, that (a) is maintained for employees of the Corporation or any ERISA Affiliate and no Person other than the Corporation and the ERISA Affiliates or (b) was so maintained and in respect of which the Corporation or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

“Sinking Fund Installment” means, as of any particular date of calculation and with respect to any Series of Bonds, the amount of money to be applied as the Redemption Price of Bonds subject to mandatory sinking fund redemption in any Fiscal Year prior to maturity pursuant to this Indenture or the Supplemental Indenture for such Series, as such Sinking Fund Installment has been previously reduced by the principal amount of any Bonds of such Series of the maturity in respect of which such Sinking Fund Installment is payable which are purchased or redeemed by the Trustee in accordance with the provisions of Section 4.03 of the Indenture or of any Supplemental Indenture, other than by the prior payment of a Sinking Fund Installment.

“Site” has the meaning set forth in the definition of Land.

“Site Specific Hotel Tax Account” means the Account by that name within the City Tax Reserve Fund established and designated as such by Section 5.02 of the Indenture.

“State” means the State of Maryland.

“State Repository” means any public or private repository or entity designated by the State as the state repository for purposes of the Rule and recognized as such by the Securities and Exchange Commission.

“Subaccount” means any one or more of the subaccounts from time to time created in any of the Accounts established by Section 5.02 of the Indenture or by any Supplemental Indenture.

“Subordinate FF&E Reserve Fund” means the Convention Center Hotel Revenue Bonds Subordinate FF&E Reserve Fund established pursuant to Section 5.02 of the Indenture.

“Subordinate FF&E Reserve Set Aside Amount” or “Hotel Subordinate FF&E Reserve Set Aside Amount” means up to 2% of Gross Operating Revenue, as set forth in the Budget.

“Subordinate Management Fee” means that portion of the Management Fee designated as such pursuant to Section 3.01(c) of the Management Agreement.

“Subordinate Management Fee Fund” means the Convention Center Hotel Revenue Bonds Subordinate Management Fee Fund established pursuant to Section 5.02 of the Indenture.

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“Subordinate Redemption Account” means the Account by that name within the Debt Service Fund established and designated as such by Section 5.02 of the Indenture.

“Subordination” means (a) an agreement pursuant to which Indebtedness owed to a Person, and/or the Encumbrance securing such Indebtedness, is made subject and subordinate, in payment priority and/or lien priority, to Indebtedness owed to another Person and/or the Encumbrance securing the same; and (b) any arrangement segregating or restricting the use of cash, restricting payments or dividends, or otherwise altering a Person’s rights to make use of its cash as it sees fit.

“Subordination Agreement” has the meaning assigned to such term in Section 6.02(b) of the Management Agreement.

“Subsequent Calendar Year” means each Operating Year occurring after the First Calendar Year.

“Sufficient Funds” means the following, to the extent available for the purposes for which such funds are designated:

(a) with respect to the payment of Operating Expenses, there are sufficient amounts in the Lockbox Fund (or other funds that are made available to Manager for the payment of Operating Expenses) for the payment of such Operating Expenses;

(b) with respect to the payment of Parking Operating Expenses, there are sufficient amounts in the Parking Lockbox Fund (or other funds made available to the Parking Manager for payment of Parking Operating Expenses) for the payment of such Parking Operating Expenses;

(c) with respect to the payment of Capital Expenses in connection with unbudgeted Capital Improvements or an Emergency, there are sufficient funds in the Operating Reserve Fund, and the Cash Trap Fund to pay for such Capital Expenses;

(d) with respect to Taxes and Insurance Costs, there shall be sufficient balances in the Taxes and Insurance Fund to pay for such costs;

(e) with respect to Gross Receipts Taxes, there shall be funds available in the Lockbox Fund or the Parking Lockbox Fund, as applicable, to pay such taxes at least equal to the collections deposited by Manager or Parking Manager into the Lockbox Fund or the Parking Lockbox Fund, as applicable, that are attributable to such Gross Receipts Taxes; and

(f) with respect to the payment of costs to repair, cure and/or replace FF&E or Capital Expenses in connection with budgeted capital improvements, there are sufficient funds in the Senior FF&E Reserve Fund and the Subordinate FF&E Reserve Fund to pay for such costs and Capital Expenses.

“Supersubordinate Management Fee” means that portion of the Management Fee designated as such pursuant to Section 3.01(d) of the Management Agreement.

“Supersubordinate Management Fee Fund” means the Convention Center Hotel Revenue Bonds Supersubordinate Management Fee Fund established pursuant to Section 5.02 of the Indenture.

“Supplemental Indenture” means any Indenture supplemental to or amendatory of this Indenture, entered into by the Issuer and the Trustee in accordance with Article XII thereof.

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“Survey” means a survey of the Site, certified to City and its successors, assigns and designees, including the Trustee, and to the Title Company by a surveyor reasonably satisfactory to the City and the Trustee.

“Systems” include, but are not limited to, all fixtures, equipment, pipes, lines, wires, ducts, vents, computer cables, security system cables, monitoring system cables, conduits, and other systems and facilities used in the production, heating, cooling and/or transmission of air, water, gas, electricity, communications, waste water, sewage, and audio and video signals, elevators and escalators.

“Tax-Exempt Bonds” means the Series 2017 Bonds and any other Bonds with respect to which there shall have been delivered to the City an opinion of Bond Counsel to the effect that the interest on such Bonds is excludable from gross income for federal income tax purposes.

“Tax Certificate” means the Tax Certificate and Agreement executed and delivered by the City and the Corporation upon the issuance and sale of the Series 2017 Bonds and any other similar certificates executed and delivered by the City and the Corporation upon the issuance and sale of any Additional Bonds.

“Tax Increment” means, for any tax year, the amount by which the Assessable Base of all real property in the Tax Increment District as of January 1 preceding that tax year exceeds the Original Taxable Value of all real property in the Tax Increment District, divided by the Assessment Ratio used to determine the Original Taxable Value.

“Tax Increment Act” means Article II, Section (62) of the Charter, as amended, replaced or supplemented from time to time.

“Tax Increment District” means the Convention Center Hotel Development District established by the Tax Increment Ordinance.

“Tax Increment Fund” means the Convention Center Hotel Development District Tax Increment Fund established by the Tax Increment Ordinance and further described in Section 5.24 of the Indenture.

“Tax Increment Account” means the Account by that name within the City Tax Reserve Fund established and designated as such by Section 5.02 of the Indenture.

“Tax Increment Ordinance” means Ordinance No. 05-127 passed by the City Council of the City and approved by the Mayor of the City authorizing the creation of the Tax Increment District, as supplemented and amended from time to time.

“Tax Increment Revenues” means the revenues and receipts from the property taxes representing the levy of the Tax Increment that would normally be paid to the City, including any scheduled payments thereof, interest thereon and a portion of the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien equal to the amount of such lien and interest thereon, including any penalties collected in connection with delinquent taxes but excluding any expenses of sale or any other administrative expenses collected by the City in connection with such delinquent taxes, in each case to the extent attributable to such levy. No statewide property taxes constitute Tax Increment Revenues.

“Tax Revenues” means, collectively, the Hotel Tax Revenues, the Tax Increment Revenues and the Personal Property Tax Revenues.

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“Taxes” means all taxes, including ad valorem taxes on real property and personal property taxes relating to or assessed in connection with the ownership or operation of the Property, except for Excluded Taxes and Other Charges.

“Taxes and Insurance Fund” means, so long as any Bonds remain Outstanding, the Convention Center Hotel Revenue Bond Taxes and Insurance Fund established pursuant to Section 5.02 of the Indenture, and after no Bonds remain Outstanding, the fund by that name to be created pursuant to Section 3.09 of the Management Agreement.

“Taxes and Insurance Set Aside Amount” means an amount equal to the amount budgeted for Taxes and Insurance Costs by the then-current Operating Plan and Budget; provided that such amount may be adjusted to the extent determined to be necessary to cause the amount to be deposited therein to at least equal the payment for Taxes and Insurance Costs when due.

“Term” has the meanings assigned to such term in Section 2.1 of the Room Block Commitment Agreement or Section 4.01(a) of the Management Agreement, as applicable.

“Termination” means the expiration or sooner cessation or termination of the applicable Agreement.

“Termination Date” has the meaning assigned to it in Section 2.1 of the Room Block Agreement.

“Termination Fee” has the meaning assigned to it in Section 4.06 of the Management Agreement.

“Tier” means all Bonds of one or more Series the principal and Redemption Price of and interest on which are payable from the same Debt Service Account.

“Title Company” means Chicago Title Insurance Company.

“Title Policy” means the mortgagee policy of title insurance to be issued by the Title Company upon the 2017 Closing Date. The Title Policy must have a liability in the amount of the aggregate principal amount of the Bonds insuring, as of the 2017 Closing Date, that a fee simple interest in the Property is vested in the Corporation, and insuring the City and the Trustee that the lien of the Deed of Trust constitutes a first and valid lien upon the Property, subject only to such exceptions approved by the City and the Trustee and must otherwise be in form and substance acceptable to the City and the Trustee.

“Total Net Revenues” means Net Operating Income plus the earnings on amounts deposited into the Available Revenue Fund not otherwise included in the definition of Net Operating Income, plus Tax Increment Revenues and Site Specific Hotel Tax Revenues deposited with the Trustee pursuant to the Indenture.

“Total Projected Net Revenues” means the amount of Total Net Revenues for a particular period of time as projected by a Hotel Consultant.

“Trade Secrets” means information which is confidential and/or proprietary to Manager, including without limitation, all information and property relating to technology, development or project plans, potential or pending acquisitions, inventions, specifications and data, financial information, projections, forecasts, know-how, designs, marketing plans and strategies, customer and supplier lists, policies, and other valuable business information which is proprietary and/or confidential to Manager. Trade Secrets will only include that information, whether disclosed orally or in writing, which is clearly identified as being “confidential” or “proprietary” or which by the nature of the information and/or the manner or circumstances of its disclosure would reasonably indicate its confidential or proprietary nature. Trade Secrets will not include information

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which is or becomes publicly known, or is otherwise known by recipient prior to disclosure, through no wrongful act or failure to act on the part of recipient.

“Transaction Documents” means any and all documents relating to the acquisition, financing, development, construction, rehabilitation, ownership, management, use, or operation of the Property, as any such documents may be amended from time to time, including, without limitation, the Hotel Agreements, the Bond Documents, the Parking Management Agreement and all documents pertaining to title matters. To the extent that any documents or agreement is included within more than one of capitalized terms referenced within this defined term “Transaction Documents” such agreement or document shall be deemed included only once for purposes of this term “Transaction Documents.”

“Transition Period” has the meaning assigned to such term in Section 4.11(k) of the Management Agreement.

“Trust Estate” has the meaning assigned to such term in the Granting Clauses of the Indenture.

“Trustee” means Wells Fargo Bank, National Association, as trustee under the Indenture, together with any successors or assigns.

“Twelve-Month Period” means the 12-month period commencing with the date on which the Hotel is open for business to the general public and ending on and including the date immediately preceding the first anniversary of the date on which the Hotel is open for business to the general public (which Twelve-Month Period shall be the First Twelve-Month Period) and each other twelve-month period commencing on an anniversary of the date on which the Hotel is open for business to the general public and ending on and including the date immediately preceding the next occurring anniversary of the date on which the Hotel is open for business to the general public (each subsequent Twelve-Month Period may also be designated as the Second Twelve-Month Period, Third Twelve-Month Period, and so on as appropriate).

“UCC” means the Maryland Uniform Commercial Code.

“Underwriters” means, collectively, Piper Jaffray & Co., Citigroup Global Markets Inc., IFS Securities, Inc., Loop Capital Markets, and Siebert Cisneros Shank & Co., L.L.C.

“Uniform System of Accounts” means the latest edition of the Uniform System of Accounts for the Lodging Industry that is published by the Hotel Association of New York City, Inc. and approved by the American Hotel & Motel Association (currently, the 9th Revised Edition, 1996).

“Unrelated Third Parties” means any Person who is not a Related Party.

“Upscale Hotel” means a brand of hotels categorized by the Rating Service as being “upscale.”

“Upscale Rating” means, with respect to the results of the annual survey conducted by the Rating Service with respect to the Hotel as required by Section 2.02(a) of the Management Agreement, being no lower than one standard deviation below the mean of all Upscale Hotels for such Operating Year during which such annual survey was conducted.

“Upscale Standard” means operation of the Hotel as a full service, first class convention oriented hotel, by the Manager under a brand designated as an Upscale Hotel, as categorized by the Rating Service in its annual study of Upscale Hotels (or, if such study is discontinued, by a comparable source within the hotel industry).

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“USA&M” has the meaning assigned to such term in Section 10.01(a) of the Management Agreement.

“Variable Expenses” has the meaning assigned to such term in Section 2.18(g) of the Management Agreement.

“Visit Baltimore” means Visit Baltimore, Inc. or the successor entity designated by the City to promote events at the Convention Center.

“Withdrawal Liability” has the meaning specified in Part 1 of Subtitle E of Title IV of ERISA.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereof have executed this Glossary in several counterparts (each of which shall be deemed an original) as of the date first above written.

CITY:

MAYOR AND CITY COUNCIL OF BALTIMORE

By Name: Title:

TRUSTEE:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By Name: Title:

CORPORATION:

BALTIMORE HOTEL CORPORATION

By Name: Title:

MANAGER:

HILTON HOTELS CORPORATION

By Name: Title:

Approved as to form and legal sufficiency this __ day of June, 2017:

______Name: Title:

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APPENDIX D Summary of Certain Provisions of the Indenture and Loan Agreement

The following statements are summaries of certain provisions of the Indenture and the Loan Agreement. Reference is made to the Indenture and the Loan Agreement for their complete terms.

Summary of Certain Provisions of the Indenture

Pledge of Trust Estate; Moneys Held in Trust

Pursuant to the Indenture, the City grants, conveys, mortgages, creates a security interest in, pledges and assigns to the Trustee, for the benefit of the registered owners of any Bonds issued under the Indenture, the Trust Estate consisting of the revenues, funds and assets described under “SECURITY FOR THE SERIES 2017 BONDS - Trust Estate.” The Bonds shall be paid by the City solely from the Trust Estate.

All moneys deposited pursuant to, and each of the Funds and Accounts established by, the Indenture shall be held in trust and applied only as set forth in the Indenture and the Hotel Cash Management Agreement.

Additional Bonds

The City may issue Additional Bonds for the purposes described under “SECURITY FOR THE SERIES 2017 BONDS – Additional Bonds.”

Each Series of Additional Bonds which constitute Refunding Bonds shall be issued in a principal amount sufficient, together with other moneys available therefor, to accomplish such refunding including providing amounts for the costs incidental to or connected with any such Refunding Bonds including, without limitation, any amounts due and owing to the City, and the making of any deposits into any applicable reserve fund and any of the funds and accounts required by the provisions of the Supplemental Indenture authorizing such Series of Refunding Bonds.

Each Series of Additional Bonds shall be executed by the City for issuance under the Indenture and delivered to the Trustee and thereupon shall be authenticated by the Trustee and by it delivered upon the order of the City, but only upon the receipt by the Trustee of the following items (upon which receipt the Trustee may conclusively rely in determining whether the conditions precedent for the issuance and authentication of such Series of Additional Bonds have been satisfied): (i) an executed copy of the Supplemental Indenture authorizing such Series of Additional Bonds; (ii) an executed counterpart of a supplement to the Loan Agreement, which shall require the Corporation to make payments in such amounts as shall be sufficient to provide for the timely payment of the principal or Redemption Price of and interest on such Additional Bonds and otherwise provide for the security of such Additional Bonds on a parity with the Outstanding Bonds and shall be substantially in the same form and of the same content as the Loan Agreement, except as shall be required in order to reflect the amount, maturities and other details of such Additional Bonds or to further secure the Bonds; (iii) an executed counterpart of a supplement to the Deed of Trust evidencing the creation of a lien pursuant to the Deed of Trust and any Supplement thereto to secure the Corporation’s Bond Obligations relating to such Additional Bonds; (iv) an opinion or opinions of Independent Counsel; (v) an opinion of Bond Counsel; (vi) certified copies of such official actions by the City as may be required, in the opinion of Bond Counsel, including without limitation, a supplement to the Bond Ordinance; provided that if such Additional Bonds will be secured by the City-Wide Hotel Tax Revenues securing any Outstanding Bonds, such supplement to the Bond

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Ordinance shall authorize a pledge of the City-Wide Hotel Tax Revenues in an amount at least equal to 25% of the Maximum Annual Debt Service Requirement for such Additional Bonds as security for the Bonds; (vii) certified copies of the Corporation’s Articles of Incorporation, Bylaws and authorizing resolutions and a Good Standing Certificate from the Maryland State Department of Assessments and Taxation; (viii) confirmation from any Rating Agency then rating the Bonds that the then current rating on the Bonds will not be downgraded, suspended or withdrawn as a result of the issuance of such Additional Bonds; and (ix) such further opinions and instruments as are required by or pursuant to the provisions of the Indenture (including as described below under “Amendments” and “Discharge of Indenture; Defeasance” to the extent applicable) or by the provisions of any Supplemental Indenture.

If a Series of Additional Bonds constitutes Refunding Bonds, the following items are also required to be provided to the Trustee: (a) a certificate of either (1) an Authorized City Officer and an Authorized Corporation Representative stating that there exists no Event of Default under the Indenture or event that would constitute such an Event of Default upon notice and failure to cure, (2) there exists no Event of Default under the Loan Agreement or event which would constitute such an Event of Default upon notice and failure to cure pursuant to the Loan Agreement; or (3) the Controlling Party consenting to the issuance of the Refunding Bonds; and (b) either (1) a Certificate of Reduction in Debt Service or (2) a Consultant’s Certificate stating that the ratio of Total Net Revenues to Maximum Annual Debt Service for the Bonds, was not less than 2.00:1.00 for the preceding Fiscal Year.

Additional Bonds may be issued, authenticated and delivered under the Indenture for the purposes set forth above upon receipt by the Trustee (in addition to the opinions and certificates described above) of a certificate of an Authorized City Officer dated as of the date of issuance of such Series of Additional Bonds stating that there exists no Event of Default under the Indenture or event which would constitute an Event of Default upon notice and failure to cure pursuant the Indenture.

Notwithstanding any provision of the Indenture to the contrary, the City may (i) issue bonds or incur other obligations on a subordinate basis to the Bonds as described below under “Junior Lien Obligations” and (ii) issue Additional Bonds in the principal amount not to exceed ten percent (10%) of the aggregate principal amount of the Series 2017 Bonds the proceeds of which are required to pay amounts reasonably determined by the City to be required with respect to the Project to be made to protect life, health or property from imminent danger or to comply with Applicable Laws.

In making any calculations described under this caption, the City may assume that amounts then on deposit in the Debt Service Reserve Fund with respect to any Series of Bonds will be available to pay principal on the final maturity date of such Series of Bonds.

Funds and Accounts

The Indenture establishes certain funds and accounts that constitute a part of the Trust Estate and the application of moneys in respect of these funds and accounts in a certain order of priority. These funds and accounts and the related application of moneys are described under “SECURITY FOR THE SERIES 2017 BONDS - Trust Funds; Flow of Funds,” “– Debt Service Reserve Fund,” and “– Amounts Transferred to Debt Service Account.” Set forth below is a description of certain of the funds and accounts established under the Indenture.

Lockbox Funds; Available Revenue Fund. The Corporation and the Trustee shall maintain a Hotel Lockbox Fund and an Excluded Taxes and Pass Through Costs Fund with the Depository Bank pursuant to the Indenture and the Hotel Cash Management Agreement. On the first Business Day in each month, the Trustee shall deposit to the Available Revenue Fund from the Hotel Lockbox Fund all Available Revenues (in excess of the Operating Costs Set Aside Amount which shall remain in the Hotel

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Lockbox Fund). The Corporation may replace the Depository Bank under the Hotel Cash Management Agreement with a new Depository Bank reasonably acceptable to the Hotel Manager upon five days notice to the other parties to the Hotel Cash Management Agreement. The Corporation and the Trustee shall at all times cause to be maintained a Parking Lockbox Fund pursuant to the provisions of the Parking Cash Management Agreement. On the first Business Day in each month, the Trustee shall deposit to the Available Revenue Fund from the Parking Lockbox Fund all Available Revenues (in excess of the Parking Operating Costs Set Aside Amount which shall remain in the Parking Lockbox Fund). The Corporation may replace the Depository Bank under the Parking Cash Management Agreement with a new Depository Bank upon five days notice to the other parties to the Parking Cash Management Agreement. All amounts in the Available Revenue Fund shall be used for the purposes and in the order of priority described in “Flow of Funds” below and in “SECURITY FOR THE SERIES 2017 BONDS - Trust Funds; Flow of Funds.”

Flow of Funds. Except as otherwise described below or if an Event of Default under the Indenture has occurred and is continuing, on the first Business Day of each month, after making the deposits to the Available Revenue Fund described above in “Lockbox Funds; Available Revenue Fund,” the Trustee shall make the deposits, transfers or payments indicated below from amounts in the Available Revenue Fund in the priority listed below (including curing any deficiency in deposits, transfers or payments required in prior months):

First, to the Taxes and Insurance Fund, an amount which together with moneys on deposit in the Taxes and Insurance Fund will equal but not exceed the Taxes and Insurance Set Aside Amount accrued but not paid through the preceding month;

Second, to the Debt Service Account, (i) the amount necessary to make the amount on deposit in the Debt Service Account equal to the amount of any interest to become due and payable on each Series of Outstanding Bonds on the next Interest Payment Date, plus (ii) one-twelfth of the next Principal Installment to become due and payable in such Bond Year on each Series of Outstanding Bonds, together with an amount equal to any shortfall from a prior month or due to any investment loss to the extent not made up from another source;

Third, (i) to the Hotel Senior FF&E Account, an amount which together with moneys otherwise transferred to the Hotel Senior FF&E Account will equal but not exceed the Hotel Senior FF&E Reserve Set Aside Amount accrued but not paid through the preceding month and (ii) to the Garage Senior FF&E Account, an amount which together with moneys otherwise transferred to the Garage Senior FF&E Account will equal but not exceed the Garage Senior FF&E Reserve Set Aside Amount accrued but not paid through the preceding month;

Fourth, to the Administrative Expenses Account, an amount which together with moneys on deposit in the Administrative Expenses Account will equal the amount necessary to pay the Administrative Expenses then due and owing for such month, together with any accrued but unpaid amounts from prior periods;

Fifth, (A) if the Debt Service Reserve Fund contains less than the Reserve Fund Requirement either as a result of disbursement of moneys on deposit in the Debt Service Reserve Fund or drawing on a Financial Guaranty or (B) interest is due with respect to a Financial Guaranty, to the Debt Service Reserve Fund, an amount equal to the amount needed to attain the Reserve Fund Requirement and to pay interest due with respect to a Financial Guaranty;

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Sixth, to the Rebate Fund, amounts which, when added to other amounts in the Rebate Fund, shall equal the amount required to be on deposit therein pursuant to the Tax Certificate delivered in connection with the issuance of each Series of Bonds;

Seventh, if the Operating Reserve Fund contains less than the Operating Reserve Requirement, to the Operating Reserve Fund, an amount equal to the amount needed to attain the Operating Reserve Requirement;

Eighth, to the City, an amount equal to the amount of any transfer from the City-Wide Hotel Tax Account to the Debt Service Account as described in clause Eleventh under “Other Transfers to Debt Service Fund – Debt Service Account” below, to the extent not previously reimbursed under this provision;

Ninth, to any Person which has made a loan to the Corporation for the purpose of making any payments required pursuant to paragraphs First through Seventh above, the amounts due and owing on such obligations;

Tenth, to the Subordinate Management Fee Fund, an amount equal to the Subordinate Management Fee accrued but not paid through the preceding month;

Eleventh, (i) to the Hotel Subordinate FF&E Account, an amount which together with moneys otherwise transferred to the Hotel Subordinate FF&E Account will equal but not exceed the Hotel Subordinate FF&E Reserve Set Aside Amount accrued but not paid through the preceding month (as the Hotel Subordinate FF&E Reserve Set Aside Amount may be adjusted from time to time pursuant to the Indenture) and (ii) to the Garage Subordinate FF&E Account, an amount which together with moneys otherwise transferred to the Garage Subordinate FF&E Account will equal but not exceed the Garage Subordinate FF&E Reserve Set Aside Amount accrued but not paid through the preceding month (as the Garage Subordinate FF&E Reserve Set Aside Amount may be adjusted from time to time pursuant to the Indenture);

Twelfth, to the Supersubordinate Management Fee Fund, an amount equal to the Supersubordinate Management Fee accrued but not paid through the preceding month; and

Thirteenth, to the Cash Trap Fund, the balance, if any, of money remaining in the Available Revenue Fund.

Notwithstanding the foregoing provisions, if on the tenth Business Day prior to any Interest Payment Date there are not on deposit in the Debt Service Account amounts sufficient to pay the interest and Principal Installments to become due on the Bonds on such Interest Payment Date, and sufficient amounts are not on deposit in the Funds described under “Other Transfers to Debt Service Fund – Debt Service Account” to make up any such deficiency, then the Trustee shall notify the Depository Bank and the Corporation by not later than the immediately succeeding Business Day of such shortfall. Unless funds to cover such deficiency are transferred to the Trustee for deposit to the Available Revenue Fund within five Business Days after receipt of such notice, the Corporation shall cause the Depository Bank to transfer the Lockbox Funds to the name and credit of the Trustee, as assignee of the Corporation. The Lockbox Funds shall remain in the name and to the credit of the Trustee until the amounts on deposit in the Lockbox Funds are sufficient in the aggregate to pay in full (or have been used to pay in full) all amounts in default and until all other Events of Default known to the Trustee shall have been cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, whereupon the Lockbox Funds (except for the Available Revenues held in the Lockbox Funds

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which are required to make such payments or cure such defaults) shall be returned to the name and credit of the Corporation.

During any period that the Lockbox Funds are held in the name and to the credit of the Trustee, (i) the Trustee shall use and withdraw from time to time amounts in the Lockbox Funds to make payments of Debt Service on the Bonds when due and (ii) the Corporation shall not be entitled to use or withdraw any of the Gross Operating Revenues unless (and then only to the extent that) the Trustee so directs for the payment of current or past due Operating Expenses or Parking Operating Expenses, as applicable; provided, however, that the Corporation shall be entitled to withdraw any amounts in the Lockbox Funds which do not constitute Gross Operating Revenues and apply such amounts in the manner set forth in the Indenture for the application of such amounts.

Notwithstanding the foregoing, (i) if the Hotel Manager has not been terminated under the Hotel Operating Agreement and an Event of Default (as defined in the Hotel Operating Agreement) is not then in existence, the Hotel Manager shall be entitled to continue to receive the funds it would have otherwise been entitled to as if no Event of Default had occurred under the Indenture as provided in the Indenture, in the Hotel Operating Agreement and in the Hotel Cash Management Agreement and (ii) if an Event of Default (as defined in the Hotel Operating Agreement) by the Hotel Manager of which the Trustee has notice has occurred and is continuing under the Hotel Operating Agreement but the Trustee has not received notice that the Hotel Manager has been terminated under the Hotel Operating Agreement, the Trustee shall pay the Hotel Manager the following amounts, in the following order of priority: (i) amounts then due and owing with respect to Excluded Taxes and Other Charges, (ii) amounts then due and owing with respect to Pass Through Costs, (iii) amounts then due and owing pursuant to the terms of any Short Term Indebtedness, (iv) budgeted Operating Expenses including, without limitation, the Base Management Fee then due and owing and (v) with the prior written consent of the Corporation (after consultation with the Asset Manager), unbudgeted Operating Expenses; provided that the Hotel Manager shall provide a monthly report summarizing all Operating Expenses paid during each month to the Asset Manager, the City, the Corporation and, if requested by the Trustee, to the Trustee.

Other Transfers to Debt Service Fund. If on the tenth Business Day prior to any Interest Payment Date there are not sufficient moneys in the Debt Service Account to pay Principal Installments of and interest on the Bonds to become due and owing, moneys shall be transferred to the Debt Service Account from the following sources to provide for this deficiency:

First, from any Capitalized Interest Account created for such Series of Bonds;

Second, from the Cash Trap Fund;

Third, from the Supersubordinate Management Fee Fund;

Fourth, from the Subordinate FF&E Reserve Fund, but only to the extent described under “Subordinate FF&E Reserve Fund” below;

Fifth, from the Subordinate Management Fee Fund;

Sixth, from the Redemption Fund (except for any amount on deposit therein that will be used to redeem Bonds notice of the redemption of which has been given pursuant to the Indenture);

Seventh, from the Operating Reserve Fund, but only from amounts therein in excess of $1,000,000;

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Eighth, from the Tax Increment Account of the City Tax Reserve Fund;

Ninth, from the Personal Property Tax Account of the City Tax Reserve Fund;

Tenth, from the Site Specific Hotel Tax Account of the City Tax Reserve Fund;

Eleventh, from the City-Wide Hotel Tax Account of the City Tax Reserve Fund, up to an amount equal to the City-Wide Hotel Tax Pledge Amount for that Fiscal Year (provided that the aggregate amount transferred pursuant to this clause in any Fiscal Year of the City shall not exceed the City-Wide Hotel Tax Pledge Amount for that Fiscal Year);

Twelfth, from the Debt Service Reserve Fund; and

Thirteenth, from the Senior FF&E Reserve Fund, but only to the extent described under “Senior FF&E Reserve Fund” below.

Debt Service Fund. The Trustee shall pay out of the appropriate Account of the Debt Service Fund on or before each Interest Payment Date, Principal Installment due date or Redemption Date the amount required for the related interest payment, Principal Installment or Redemption Price for any Bonds.

Amounts in the Debt Service Account of the Debt Service Fund shall be applied only to the payment of Debt Service on the Bonds. If any amounts remain on deposit in the Debt Service Account of the Debt Service Fund and the Bonds are no longer Outstanding, such amounts shall be transferred to the Available Revenue Fund.

Debt Service Reserve Fund. The Trustee shall apply amounts on deposit in the Debt Service Reserve Fund to cure any deficiency in the Debt Service Account. If on the last Business Day of any month the amount in the Debt Service Reserve Fund exceeds the Reserve Fund Requirement, such excess shall be applied to the reimbursement of each drawing on, or the payment of other amounts due in respect of a Financial Guaranty. Any remaining excess shall be deposited in the Debt Service Account.

When the amount in the Debt Service Reserve Fund, together with the amounts in the Debt Service Account, the Redemption Fund, the Operating Reserve Fund (in excess of $1,000,000) and the Cash Trap Fund are sufficient to fully pay all Outstanding Bonds, such deposited amount may, at the direction of the City, be applied to pay all Outstanding Bonds.

The City may cause to be deposited in the Debt Service Reserve Fund a Financial Guaranty in an amount equal to the Reserve Fund Requirement less the amount then on deposit in the Debt Service Reserve Fund or being deposited in Debt Service Reserve Fund concurrently with such Financial Guaranty or Guaranties. In addition, the City may withdraw funds on deposit in the Debt Service Reserve Fund and replace such funds with a Financial Guaranty in an amount equal to the funds to be withdrawn. The Trustee shall draw upon or otherwise take such action as is necessary in accordance with the terms of the Financial Guaranties to receive payments with respect to the Financial Guaranties (including the giving of notice as required thereunder) (i) on any date on which moneys will be required to be withdrawn from the Debt Service Reserve Fund and applied to the payment of principal or Redemption Price of, or interest on, any Bonds and such withdrawal cannot be met by amounts on deposit in the Debt Service Reserve Fund; and (ii) on the first Business Day which is at least 30 days prior to the expiration date of each Financial Guaranty, in an amount equal to the deficiency which would exist in the Debt Service Reserve Fund if the Financial Guaranty expired, unless a substitute Financial Guaranty with an expiration date not earlier than one year after the expiration date of the expiring Financial Guaranty is acquired prior

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to such date or the City deposits funds in the Debt Service Reserve Fund on or before such date such that the amount in the Debt Service Reserve Fund on such date (without regard to such expiring Financial Guaranty) is at least equal to the Reserve Fund Requirement.

If a disbursement is made pursuant to a Financial Guaranty, the City shall either (1) reinstate the maximum limits of such Financial Guaranty, or (2) deposit into the Debt Service Reserve Fund, funds in the amount of the disbursement made under such Financial Guaranty, or a combination of such alternatives, in order that the amount in the Debt Service Reserve Fund equals the Reserve Fund Requirement.

Redemption Fund. The Trustee shall apply amounts in the Redemption Fund to any deficiency in the Debt Service Account of the Debt Service Fund. Amounts in the Redemption Fund, together with other amounts available for such purpose, may, at the direction of the City, be applied to pay the principal and Redemption Price of and interest on all Outstanding Bonds, as described above under “Debt Service Reserve Fund.” The Trustee shall transfer any amounts in the Redemption Fund to the Redemption Account to be used to optionally redeem Bonds pursuant to the Indenture. Bonds redeemed with moneys in the Redemption Fund shall be selected for redemption as provided in the Indenture.

Operating Reserve Fund. The Trustee shall apply amounts in the Operating Reserve Fund to any deficiency in the Debt Service Account subject to the limitations described above under “Other Transfers to Debt Service Fund – Debt Service Account.” Amounts in excess of $1,000,000 in the Operating Reserve Fund, together with other available amounts, may at the direction of the City, be applied to pay the principal and Redemption Price of and interest on all Outstanding Bonds as described under “Debt Service Reserve Fund” above. If the amount in the Operating Reserve Fund exceeds the Operating Reserve Requirement, amounts in excess of the Operating Reserve Requirement shall be deposited into the Debt Service Reserve Fund to the extent of any deficiency therein, and otherwise shall be deposited into the Available Revenue Fund.

Moneys in the Operating Reserve Fund shall be applied to the payment of Operating Expenses, Parking Operating Expenses, FF&E, Capital Expenses, other expenses and items specifically provided for in the Hotel Operating Agreement or the Parking Management Agreement and/or any other expenses of the Property which, if unbudgeted, are approved by the Hotel Manager (if such expenses relate to the Hotel Project and the Hotel Operating Agreement has not been terminated) and the Corporation, at any time during which such expenses exceed Gross Operating Revenue of the Hotel Project or the Garage, as applicable, for such month plus the amount otherwise available to pay such expenses in the Hotel Lockbox Fund or the Parking Lockbox Fund, as applicable, the Senior FF&E Reserve Fund, the Subordinate FF&E Reserve Fund and the Cash Trap Fund to pay such expenses (if amounts in such Funds are authorized to be used for such expenses), upon receipt by the Trustee of a Request of the Hotel Manager or the Corporation, as applicable, and in certain cases, with approval by the Corporation.

Moneys in the Operating Reserve Fund may also be used for unbudgeted capital Emergency Expenses or to comply with Applicable Laws (and then only if the violation of such Applicable Laws would expose the Hotel Manager, the Parking Manager or the Corporation to material risk of civil or criminal sanctions or would pose an imminent threat to the Property or its employees, guests or other persons using or occupying any portion of the Property), but only to the extent that there are insufficient moneys in the Cash Trap Fund, the Subordinate FF&E Reserve Fund and the Senior FF&E Reserve Fund for such purpose.

The Corporation may satisfy the Operating Reserve Requirement, or replace the cash and Investment Securities in the Operating Reserve Fund, with a line or letter of credit from a bank or insurance company rated at least “A1/P-1” (or its equivalent) by S&P and Moody’s, which line or letter of

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credit may be drawn upon by the Trustee to satisfy all of the purposes for which amounts on deposit in the Operating Reserve Fund may be used. Upon the delivery or substitution of such line or letter of credit, the amount on deposit in the Operating Reserve Fund shall be at least equal to the Operating Reserve Requirement. In the event the Corporation shall deliver a line or letter of credit, or substitute a line or letter of credit for the cash or Investment Securities in the Operating Reserve Fund, the amount on deposit in the Operating Reserve Fund with respect to such line or letter of credit shall be that amount available to be drawn or otherwise paid pursuant to such line or letter of credit at the time of calculation. Any draws on a line or letter of credit shall be made only after all cash and Investments Securities in the Operating Reserve Fund have been expended. In the event that the amount on deposit in, or credited to, the Operating Reserve Fund includes amounts available under more than one line or letter of credit, draws on the lines or letters of credit shall be made on a pro rata basis to fund the insufficiency. In the event amounts are withdrawn from the Operating Reserve Fund (including draws on a line or letter of credit), the Corporation shall replenish the amount so withdrawn from available amounts in the Available Revenue Fund, provided that such replenishments shall be used first to reinstate, on a pro rata basis, any lines or letters of credit (including interest on draws thereunder), and only then to replenish any cash in the Operating Reserve Fund to the required level, after taking into account the amounts available under any lines or letters of credit. Any such line or letter of credit shall provide that the Trustee may draw the full amount thereof if, prior to the expiration thereof, the Corporation has not delivered to the Trustee a replacement line or letter of credit or cash equal to the amount of such line or letter of credit for deposit to the Operating Reserve Fund.

If amounts on deposit in the Operating Reserve Fund are insufficient to fully fund Requests made for expenses relating to the Hotel Project and the Garage, such Requests shall be funded pro rata; provided however, that any portion of a Request made to remedy an Emergency or to comply with the requirements of Applicable Laws shall be given priority.

If on any date on which a deposit is required to be made to the Operating Reserve Fund as described in “Flow of Funds” clause Seventh above, there are insufficient amounts available to make such deposit, the Trustee shall transfer moneys from the Site Specific Hotel Tax Account to the Operating Reserve Fund as required by the Indenture to cure such deficiency.

Senior FF&E Reserve Fund. The Trustee shall apply amounts from the Senior FF&E Reserve Fund to any deficiency in the Debt Service Account, except to the extent that moneys in the Senior FF&E Reserve Fund are required to be used to pay unpaid FF&E expenses or Capital Expenses which have been incurred but are unpaid (or which will be incurred under a binding and non-cancelable contract). Amounts withdrawn from the Senior FF&E Reserve Fund pursuant to this paragraph shall be withdrawn from the Hotel Senior FF&E Account and the Garage Senior FF&E Account pro-rata based on the respective balances in such Accounts on the date of withdrawal.

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make disbursements as directed by the Hotel Manager and consented to by the Corporation and the Asset Manager for the purposes and in the manner described in the immediately preceding sentence; provided that the Hotel Manager shall provide a monthly report summarizing all amounts paid out of the Senior FF&E Reserve Fund during each month to the Trustee, the Asset Manager and the Corporation. Such payments of FF&E and Capital Expenses may be through periodic payments pursuant to an operating or capital lease or other financing mechanism. Amounts withdrawn from the Senior FF&E Reserve Fund pursuant to this paragraph shall be withdrawn first from the Hotel Senior FF&E Account until no moneys remain on deposit in such Account and, thereafter, from the Garage Senior FF&E Account.

The Trustee shall make disbursements as directed by the Corporation from the Senior FF&E Reserve Fund for the purpose of paying for (i) FF&E and Capital Expenses for the Garage included in the Parking Capital Budget, (ii) expenditures required to remedy an Emergency or to comply with Applicable Laws (only if the violation of such Applicable Laws would expose the Parking Manager or the Corporation to material risk of civil or criminal sanctions or would pose an imminent threat to the Garage or its employees, guests or other persons using or occupying any portion of the Garage and only to the extent sufficient funds are not available in the Cash Trap Fund to make such payments), and (iii) with the prior written consent of the Asset Manager, FF&E and Capital Expenses for the Garage not included in the Parking Capital Budget and Capital Expenses for the Leased Retail Space. Such payments of FF&E and Capital Expenses may be through periodic payments pursuant to an operating or capital lease or other financing mechanism. Amounts withdrawn from the Senior FF&E Reserve Fund pursuant to this paragraph shall be withdrawn first from the Garage Senior FF&E Account until no moneys remain on deposit in such Account and, thereafter, from the Hotel Senior FF&E Account.

Subordinate FF&E Reserve Fund. The Trustee shall apply amounts from the Subordinate FF&E Reserve Fund to any deficiency in the Debt Service Account, except to the extent that moneys in the Subordinate FF&E Reserve Fund are required to be used to pay unpaid FF&E expenses or Capital Expenses which have been incurred but are unpaid (or which will be incurred under a binding and non- cancelable contract). Amounts withdrawn from the Subordinate FF&E Reserve Fund pursuant to this paragraph shall be withdrawn from the Hotel Subordinate FF&E Account and the Garage Subordinate FF&E Account pro-rata based on the respective balances in such Accounts on the date of withdrawal.

Unless an Event of Default under the Hotel Operating Agreement by the Hotel Manager has occurred and is continuing or the Hotel Operating Agreement has been terminated, the Trustee shall make disbursements directed by the Hotel Manager from the Subordinate FF&E Reserve Fund for the purpose of paying for (1) Capital Expenses and FF&E for the Hotel Project included in the Capital Budget (but only to the extent sufficient funds are not available in the Senior FF&E Reserve Fund to pay for such Capital Expenses and FF&E), (2) expenditures required to be made to remedy an Emergency or to comply with Applicable Laws (only if the violation of such Applicable Laws would expose the Hotel Manager or the Corporation to material risk of civil or criminal sanctions or would pose an imminent threat to the Hotel Project or its employees, guests or other persons using or occupying any portion of the Hotel Project and only to the extent sufficient funds are not available in the Cash Trap Fund and the Senior FF&E Reserve Fund to make such payments), (3) with the prior consent of the Asset Manager and the Corporation, Capital Expenses and FF&E for the Hotel Project not included in the Capital Budget (but only to the extent sufficient funds are not available in the Senior FF&E Reserve Fund to pay for such Capital Expenses and FF&E). If an Event of Default under the Hotel Operating Agreement by the Hotel Manager has occurred and is continuing, but the Hotel Operating Agreement has not been terminated, the Trustee shall make disbursements as directed by the Hotel Manager and consented to by the Corporation and Asset Manager for the purposes and in the manner described in the immediately preceding sentence; provided that the Hotel Manager shall provide a monthly report summarizing all amounts paid out of the Subordinate FF&E Reserve Fund during each month to the Trustee, the Asset Manager and the Corporation. Such payments of FF&E and Capital Expenses may be through periodic payments pursuant

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to an operating or capital lease or other financing mechanism. Amounts withdrawn from the Subordinate FF&E Reserve Fund pursuant to this paragraph shall be withdrawn first from the Hotel Subordinate FF&E Account until no moneys remain on deposit in such Account and, thereafter, from the Garage Subordinate FF&E Account.

The Trustee shall make disbursements as directed by the Corporation from the Subordinate FF&E Reserve Fund for the purpose of paying for (i) Capital Expenses and FF&E for the Garage included in the Parking Capital Budget (but only to the extent sufficient funds are not available in the Senior FF&E Reserve Fund to pay for such Capital Expenses and FF&E), (ii) expenditures required to be made to remedy an Emergency or to comply with Applicable Laws (only if the violation of such Applicable Laws would expose the Parking Manager or the Corporation to material risk of civil or criminal sanctions or would pose an imminent threat to the Garage or its employees, guests or other persons using or occupying any portion of the Garage and only to the extent sufficient funds are not available in the Cash Trap Fund and the Senior FF&E Reserve Fund to make such payments), and (iii) with the prior written consent of the Asset Manager, Capital Expenses and FF&E for the Garage not included in the Parking Capital Budget and Capital Expenses for the Leased Retail Space (but only to the extent sufficient funds are not available in the Senior FF&E Reserve Fund to pay for such Capital Expenses and FF&E). Such payments of FF&E and Capital Expenses may be through periodic payments pursuant to an operating or capital lease or other financing mechanism. Amounts withdrawn from the Subordinate FF&E Reserve Fund pursuant to this paragraph shall be withdrawn first from the Garage Subordinate FF&E Account until no moneys remain on deposit in such Account and, thereafter, from the Hotel Subordinate FF&E Account.

Moneys in the Subordinate FF&E Reserve Fund may also be used to cure a deficiency in the Operating Reserve Fund upon the written request of the Corporation. Transfers from the Subordinate FF&E Reserve Fund to the Operating Reserve Fund shall not be made more often than once in each Fiscal Year and shall be made from the Hotel Subordinate FF&E Account and the Garage Subordinate FF&E Account pro rata based on the respective balances in such Accounts on the date of transfer.

bIf on any date on which a deposit is required to be made to the Subordinate FF&E Reserve Fund as described in “Flow of Funds” clause Eleventh there are insufficient amounts available to make such deposit, the Trustee shall transfer moneys from the Site Specific Hotel Tax Account to the Subordinate FF&E Reserve Fund as required by the Indenture in order to cure such deficiency.

Cash Trap Fund. The Trustee shall apply amounts from the Cash Trap Fund to the extent necessary to any deficiency in the Debt Service Account.

If an Event of Default is not then in existence, the amounts in the Funds and Accounts referenced in clauses First through Twelfth above under “Flow of Funds” are then equal to the amounts required to be on deposit therein and all amounts required to be paid to any Persons pursuant to clause Eighth and Ninth above under “Flow of Funds” have been paid, the Corporation may direct the Trustee, with respect to amounts in the Cash Trap Fund in excess of the Minimum Cash Trap Fund Amount, to pay (1) any unpaid expenses or obligations incurred with respect to the Property, (2) any Administrative Expenses in excess of the amounts available to pay such Administrative Expenses in the Administrative Expenses Fund or (3) any unpaid expenses or obligations owed by the Corporation to third parties that are not otherwise payable as Administrative Expenses, including without limitation any amounts that the Corporation is obligated to pay under the Hotel Operating Agreement or the Parking Management Agreement or any expenses or obligations that the Hotel Operating Agreement or the Parking Management Agreement provides will be paid out of the Cash Trap Fund.

The Trustee shall apply moneys in the Cash Trap Fund as directed by the Hotel Manager (if such expenses relate to the Hotel Project and the Hotel Operating Agreement has not been terminated) or the

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Corporation (if such expenses relate to the Garage or the Leased Retail Space) (1) to pay expenditures required to be made to remedy an Emergency or to comply with Applicable Laws (only if the violation of such Applicable Laws would expose the Hotel Manager, the Parking Manager or the Corporation to material risk of civil or criminal sanctions or would pose an imminent threat to the Property or its employees, guests or other persons using or occupying any portion of the Property) and (2) to pay Operating Expenses, Parking Operating Expenses, FF&E and Capital Expenses within the Capital Budget or Parking Capital Budget, Taxes and Insurance Costs, or any other expenses and items requested with prior notice to (and in some cases, approval of) the Corporation and the Asset Manager, at any time during which such Operating Expenses, Parking Operating Expenses, FF&E, Capital Expenses or other expenses and items exceed Gross Operating Revenues for such month plus the amount otherwise available in the Hotel Lockbox Fund or Parking Lockbox Fund, the Senior FF&E Reserve Fund and the Subordinate FF&E Reserve Fund (if amounts in such Funds are authorized to be so used).

All amounts in the Cash Trap Fund, together with other available amounts may, at the direction of the City, be applied to pay the principal and Redemption Price of and interest on all Outstanding Bonds, as described above under “Debt Service Reserve Fund”. If on any date the amount on deposit in the Cash Trap Fund is less than the Minimum Cash Trap Fund Amount, the Trustee shall transfer moneys from the Site Specific Hotel Tax Account to the Cash Trap Fund as required by the Indenture in order to cure such deficiency.

If on the first Business Day following each Interest Payment Date on the Bonds, the amounts in the Funds and Accounts referenced in clauses First through Twelfth above under “Flow of Funds” are not then equal to the amounts required to be on deposit therein or the amount required to be paid to the City or any Person pursuant to clauses Eighth and Ninth above under “Flow of Funds” has not been paid, then amounts in the Cash Trap Fund shall be applied to any deficiency in any such Account or Fund and used to pay such Person in such order of priority; provided in no event shall amounts on deposit in the Cash Trap Fund be applied to any deficiency in the Subordinate Management Fee Fund or the Supersubordinate Management Fee Fund unless the City has consented to such transfer. If an Event of Default is not then in existence, the amounts in the Funds and Accounts referenced in clauses First through Twelfth above under “Flow of Funds” are then equal to the amounts required to be on deposit therein and all amounts required to be paid to the City or any Person pursuant to clauses Eighth and Ninth above under “Flow of Funds” have been paid, then, on the first Business Day following each Principal Installment payment date for the Bonds, all amounts in the Cash Trap Fund in excess of the Minimum Cash Trap Fund Amount shall be deposited as follows (provided, however, if an Event of Default has occurred and is continuing under the Indenture, all such amounts shall be deposited to the Redemption Fund): (1) until January 1, 2027, all of such amounts shall be deposited to the Redemption Fund and used to redeem Bonds; and (2) on and after January 1, 2027, (A) 50% of such amounts shall be deposited to the Redemption Fund and (B) 50% of such amounts shall be, first, used to pay any amounts then due or transfers then required by any agreement or other instrument creating or evidencing any secured obligation which is not a Bond or Short Term Indebtedness and, second, deposited to the Excess Revenue Fund.

Notwithstanding any provision of the Indenture to the contrary, if the City fails to appropriate or to transfer to the Trustee any Tax Revenues as provided by the Indenture, no amount on deposit in the Cash Trap Fund shall be deposited in the Excess Revenue Fund pursuant to the preceding paragraph. Upon the earlier to occur of (i) the date on which the full amount of each and every appropriation the City failed to make is made and becomes effective and the Trustee receives the amount of each and every such appropriation (provided that in order to constitute a cure of such failure, such appropriation and transfer must occur in the Fiscal Year in which such appropriation and transfer was to occur as provided by the Indenture), or (ii) the expiration of the third consecutive Fiscal Year of the City, during which no event of nonappropriation or failure to transfer such funds has occurred, the Trustee shall transfer from amounts on

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deposit in the Cash Trap Fund in excess of the Minimum Cash Trap Amount to the Excess Revenue Fund an amount equal to the amount that the Trustee previously did not so deposit pursuant to the preceding paragraph and transfers to the Excess Revenue Fund may resume in accordance with the preceding paragraph.

Administrative Expenses Fund. There shall be deposited in the Administrative Expenses Account an amount sufficient to pay the Administrative Expenses related to the administration of the Bonds, the Tax Increment District and the Property, including fees and expenses of any Consultant, and the expenses of the City and Corporation. Upon the written requisition of an Authorized Corporation Representative, amounts deposited in the Administrative Expenses Account are to be withdrawn for payment for the Administrative Expenses then due and owing or to reimburse the City or Corporation for the payments of any Administrative Expenses previously paid by the City or Corporation; provided that the Trustee may debit its semiannual fee only which is then due and owing directly against the amount on deposit in the Administrative Expenses Account without the need for such requisition.

Subordinate Management Fee Fund; Supersubordinate Management Fee Fund. The Trustee shall apply amounts from the Subordinate Management Fee Fund, first, to any deficiency in the Debt Service Account, second, to the payment of the Hotel Manager’s Subordinate Management Fee on the first Business Day following each Interest Payment Date for the Bonds, and, third, to the Available Revenue Fund.

The Trustee shall apply amounts from the Supersubordinate Management Fee Fund, first, to any deficiency in the Debt Service Account, second, to the payment of the Hotel Manager’s Supersubordinate Management Fee on the first Business Day following each Interest Payment Date for the Bonds, and, third, to the Available Revenue Fund.

Taxes and Insurance Fund. There shall be deposited in the Taxes and Insurance Fund such amounts as are required to pay all Taxes (including property taxes, personal property taxes and payments in lieu of taxes) and Insurance Costs that become due and payable with respect to the ownership and operation of the Property and to pay any costs incurred by the Corporation in challenging the imposition of any Taxes. Moneys in the Taxes and Insurance Fund shall be paid out by the Trustee to pay all Taxes and Insurance Costs and to pay any costs incurred by the Corporation in challenging the imposition of any Taxes that become due and payable with respect to the ownership and operation of the Property, as directed by the Hotel Manager (unless the Hotel Operating Agreement has been terminated), or if none, the Corporation.

Excess Revenue Fund. Amounts in the Excess Revenue Fund are for the sole benefit of the City, do not constitute a part of the Trust Estate securing the Bonds and shall be held for the benefit of, and may be disbursed to, the City free and clear of any lien of the Indenture.

Amounts in excess of the Excess Revenue Fund Requirement (or any amounts on deposit in the Excess Revenue Fund if the City has delivered to the Trustee the Consultant’s Certificate described in the next sentence shall be disbursed by the Trustee as directed by a Request of the City. Upon delivery by the City to the Trustee of a Consultant’s Certificate evidencing that the Debt Service Coverage Ratio for the Bonds for the two most recently completed Operating Years was 1.85:1.00, the Excess Revenue Fund Requirement may be reduced to $-0- at the direction of the Authorized City Officer.

Notwithstanding any provision of the Indenture to the contrary, if the City fails to appropriate or to transfer to the Trustee any Tax Revenues as provided by the Indenture, the City shall not make any withdrawals from the Excess Revenue Fund. Upon the earlier to occur of (i) the date on which the full amount of each and every appropriation the City failed to make is made and becomes effective and the

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Trustee receives the amount of each and every such appropriation (provided that in order to constitute a cure of such failure, such appropriation and transfer must occur in the Fiscal Year in which such appropriation and transfer was to occur as provided by the Indenture), or (ii) the expiration of the third consecutive Fiscal Year of the City, during which no event of nonappropriation or failure to transfer such funds has occurred, the City may resume withdrawals from the Excess Revenue Fund as described above.

Insurance and Condemnation Proceeds Fund. The proceeds of (1) insurance required to be maintained as described below under “Insurance,” (2) title insurance with respect to the Property, and (3) any Condemnation with respect to the Property, shall be deposited immediately upon receipt by the Trustee in the Insurance and Condemnation Proceeds Fund; provided that if such amount is less than $100,000, it shall be distributed to or at the direction of the Corporation and applied to the cost of the repair or replacement of the property damaged, destroyed or taken. After deducting therefrom the reasonable charges and expenses of the Trustee in connection with the collection and disbursement of such moneys, moneys in the Insurance and Condemnation Proceeds Fund shall be disbursed or applied as described below under “Disposition of Insurance and Condemnation Proceeds.” See also “THE SERIES 2017 BONDS – Redemption - Extraordinary Mandatory Redemption”.

If Available Amounts are not to be applied to repair or replace the property damaged, destroyed or taken, amounts deposited in the Insurance and Condemnation Fund shall be used or transferred in the following order of priority: (1) used to pay any outstanding Operating Expenses; (2) used to pay any outstanding Taxes or Insurance Costs; (3) used to pay any outstanding Short Term Indebtedness; (4) transferred to the Redemption Account in order to redeem the Bonds; (5) used to pay any outstanding Administrative Expenses; (6) used to pay any amounts required to be paid to the City and any Person pursuant to clauses Eighth and Ninth above under "Flow of Funds"; (7) used to pay any outstanding Subordinate Management Fees; and (8) used to pay any outstanding Supersubordinate Management Fees.

After completion of the repairs or replacement of the property damaged, destroyed or taken, and all costs associated therewith have been paid, any amounts remaining in the Insurance and Condemnation Proceeds Fund shall be deposited into the Available Revenue Fund.

The proceeds of business interruption insurance shall be deposited by the Trustee when and as received in a segregated account (the “Business Interruption Account”) within the Insurance and Condemnation Proceeds Fund and held separate and apart from any other Funds and Accounts. Amounts deposited in the Business Interruption Account shall be immediately transferred in the following order of priority: (1) to the Debt Service Account, an amount for payment of debt service on the Bonds when due; (2) to the Taxes and Insurance Fund, an amount for payment of Taxes or Insurance Costs when due with respect to the ownership and operation of the Property; (3) to the Hotel Lockbox Fund, an amount for payment of Operating Expenses (including the Base Management Fee to the extent covered by such business interruption insurance) when due and to the Parking Lockbox Fund, an amount for payment of Parking Operating Expenses (including the Parking Management Fee) when due; (4) to the Administrative Expenses Account, an amount for payment of Administrative Expenses when due; (5) to the Subordinate Management Fee Fund, an amount for payment of the Subordinate Management Fee when due; (6) to the Supersubordinate Management Fee Fund, an amount for payment of the Supersubordinate Management Fee when due; and (7) to the Hotel Lockbox Fund and the Parking Lockbox Fund, proportionally based upon the Operating Costs Set Aside Amount and the Parking Operating Costs Set Aside Amount, the balance, if any, for application as provided in the Indenture.

Rebate Fund. Moneys shall be deposited into the Rebate Fund as described in the Tax Certificate delivered in connection with the issuance of the Series 2017 Bonds. Moneys in the Rebate Fund are not part of the Trust Estate. Moneys in the Rebate Fund shall be forwarded to the United States Treasury at the times and in the amounts set forth in the Tax Certificates. If the moneys in the Rebate

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Fund are insufficient, the Trustee shall transfer moneys in the amount of the insufficiency to the Rebate Fund from any amounts in any of the Funds and Accounts in excess of the amount necessary to be on deposit therein and otherwise from amounts then on deposit in the Funds and Accounts, in each case in the inverse order of priority set forth above under “Flow of Funds”.

City Tax Reserve Fund. The Trustee shall deposit all Tax Increment Revenues received from the City to the Tax Increment Account of the City Tax Reserve Fund. On the first Business Day of each month, the Trustee shall transfer all amounts on deposit in the Tax Increment Account to the Available Revenue Fund.

The City shall transfer to the Trustee all Personal Property Tax Revenues if, as and when appropriated, promptly to the Personal Property Tax Account of the City Tax Reserve Fund; provided that the City covenants to use its best efforts to transfer such amounts to the Trustee by December 31 of each year. The Trustee shall deposit all Personal Property Tax Revenues received from the City to the Personal Property Tax Account of the City Tax Reserve Fund. On the first Business Day of each month, the Trustee shall transfer all amounts on deposit in the Personal Property Tax Account to the Available Revenue Fund. The City covenants that the Director of Finance will, in each Fiscal Year of the City, until and including the Fiscal Year of the City in which the Bonds are no longer Outstanding, use his or her best efforts to obtain an authorization and appropriation in the City Budget which provides for the payment and delivery by the City directly to the Trustee, for deposit in the Personal Property Tax Account, of an amount equal to the amount of Personal Property Tax Revenues expected to be collected by the City during such Fiscal Year.

The Trustee shall deposit all Site Specific Hotel Tax Revenues received from the City to the Site Specific Hotel Tax Account of the City Tax Reserve Fund. Moneys in the Site Specific Hotel Tax Account shall be applied to the following purposes in the following order of priority: (A) to cure any deficiency in the Debt Service Account; (B) to cure any deficiency in the Senior FF&E Reserve Fund; (C) to cure any deficiency in the Operating Reserve Fund; (D) to cure any deficiency in the Subordinate FF&E Reserve Fund and (E) to cure any deficiency in the Cash Trap Fund. On the first Business Day after March 1, if there is then no Event of Default that has occurred and is continuing and no deficiency exists in the Debt Service Account, the Senior FF&E Reserve Fund, the Operating Reserve Fund, the Subordinate FF&E Reserve Fund or the Cash Trap Fund as of such March 1, the Trustee shall pay and deliver to the City all amounts on deposit in the Site Specific Hotel Tax Account.

Notwithstanding the foregoing, moneys in the City-Wide Hotel Tax Account shall be used to replenish the Debt Service Reserve Fund in the event that funds were withdrawn from the Debt Service Reserve Fund to pay Debt Service on the Bonds due to a delay in receiving a supplemental appropriation described below under “Baltimore City Convention Center Fund; Site Specific Hotel Tax Revenues; City- Wide Hotel Tax Revenues”.

Tax Increment Fund. As soon as practicable following receipt thereof, the City shall deposit all Tax Increment Revenues received by the City to the credit of the Tax Increment Fund. Promptly upon collection of the Tax Increment Revenues and the appropriation thereof, the City shall withdraw from the Tax Increment Fund all amounts on deposit therein and transfer such to the Trustee for deposit to the Tax Increment Account of the City Tax Reserve Fund; provided that the City covenants to use its best efforts

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to transfer such amounts to the Trustee by December 31 of each year. The City covenants that the Director of Finance will, in each Fiscal Year of the City, until and including the Fiscal Year of the City in which the Bonds are no longer Outstanding, use his or her best efforts to obtain an authorization and appropriation in the City Budget which provides for the payment and delivery by the City directly to the Trustee, for deposit in the Tax Increment Account, of an amount equal to the amount of Tax Increment Revenues expected to be collected by the City during such Fiscal Year.

Baltimore City Convention Center Fund; Site Specific Hotel Tax Revenues; City-Wide Hotel Tax Revenues. Subject to applicable laws, the City covenants to appropriate all Hotel Tax Revenues for deposit, upon receipt thereof, into the Baltimore City Convention Center Fund. The City covenants that the Director of Finance will in each Fiscal Year of the City, until and including the Fiscal Year of the City in which the Bonds are no longer Outstanding, use his or her best efforts to obtain an authorization and appropriation in the City Budget in accordance with the provisions of the Indenture described under “Covenant to Seek Appropriation” below which provides for the payment and delivery by the City directly to the Trustee, for deposit in the Site Specific Hotel Tax Account, of an amount equal to the amount of Site Specific Hotel Tax Revenues collected by the City during the preceding Operating Year.

The City covenants that for each Fiscal Year of the City until and including the Fiscal Year of the City in which the Bonds are no longer Outstanding, on or about February 1, if during the preparation of the City Budget for the succeeding Fiscal Year, the Director of Finance determines, based on the available amounts on deposit in the Debt Service Fund and the amount of Tax Increment Revenues and Site Specific Hotel Tax Revenues expected to be included in the City Budget for the succeeding Fiscal Year and such other materials as he or she deems appropriate (provided that such determination shall not be based upon any projected income from the Project), that the City-Wide Hotel Tax Revenues will be needed to pay debt service on the Bonds in the succeeding Fiscal Year, then the Director of Finance will use his or her best efforts to obtain an authorization and appropriation in the City Budget which provides for the deposit in the City-Wide Hotel Tax Account, of an amount equal to the City-Wide Hotel Tax Pledge Amount.

If the City receives from the Trustee a written notice pursuant to the Indenture stating that there is expected to be a deficiency in the Debt Service Account, taking into account amounts available for transfer pursuant to clauses First through Tenth as set forth under “Other Transfers to Debt Service Fund” above, and the City has not made the transfer described in the preceding paragraph in such Fiscal Year, the City shall transfer to the Trustee an amount equal to the lesser of the aggregate amount of such deficiency or the City-Wide Hotel Tax Pledge Amount. If for any reason such amount has not been appropriated, the City covenants that, subject to applicable law, the Director of Finance will use his or her best efforts to submit a supplemental appropriation to the City Council requesting the City Council to appropriate and approve the payment by the City to the Trustee of a portion of the City-Wide Hotel Tax Revenues, equal to the lesser of the aggregate amount of such deficiency or the City-Wide Hotel Tax Pledge Amount. The Director of Finance’s obligation to use his or her best efforts to submit this supplemental appropriation shall continue notwithstanding that any deficiency in the Debt Service Account has been cured by a transfer of funds from the Debt Service Reserve Fund. Notwithstanding the foregoing, in no event shall the City be required to request appropriation or transfer to the Trustee pursuant to this paragraph in any Fiscal Year of the City an amount of City-Wide Hotel Tax Revenues in excess of the City-Wide Hotel Tax Pledge Amount.

In no event shall the City be required to request appropriation or transfer to the Trustee in any Fiscal Year of the City an amount of City-Wide Hotel Tax Revenues in excess of either (i) the City-Wide Hotel Tax Pledge Amount or (ii) the amount of City-Wide Hotel Tax Revenues collected by the City in such Fiscal Year.

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Promptly after an appropriation of City-Wide Hotel Tax Revenues the City will transfer such amounts directly to the Trustee, for deposit in the City-Wide Hotel Tax Account.

Amounts available for payment to the City pursuant to clause Eighth under “Flow of Funds” above shall be paid to the City on the first Business Day of each month.

Right of Access to Funds by the Hotel Manager and the Corporation

So long as the Hotel Operating Agreement has not terminated (notwithstanding that an Event of Default by Hotel Manager or Corporation exists under the Hotel Operating Agreement), the Hotel Manager is entitled to submit Requests and receive funds notwithstanding any Event of Default under the Indenture, the breach of any provision of the Indenture or the occurrence of any event or condition which, with the giving of notice, the passage of time or both would constitute an Event of Default under the Indenture. On and after the termination date, the terminated Hotel Manager shall have no right to submit Requests and receive funds as described in the Indenture. If the Hotel Operating Agreement has terminated and a new Hotel Operating Agreement has not been entered into, the Corporation is entitled to submit Requests and receive funds as if the Corporation was the Hotel Manager.

Investment of Funds

Investments shall be made in accordance with applicable law. Moneys held in any Fund or Account shall be invested and reinvested by the Trustee in accordance with instructions of the City in Investment Securities subject to certain limitations set forth in the Indenture. Investment Securities in all Funds and Accounts shall mature, or the principal of and accrued interest on such Investment Securities shall be available for withdrawal without penalty, not later than such times as necessary to provide moneys when needed for payment to be made from such Funds and Accounts. Moneys held by the City in the Tax Increment Fund and the Baltimore City Convention Center Fund shall be invested in any lawful investment for such funds. Interest earned or profits realized from investing any moneys deposited in the Funds and Accounts shall be transferred to the Available Revenue Fund except that:

(1) interest and profits from the Rebate Fund shall be retained in the Rebate Fund;

(2) interest and profits from the Debt Service Reserve Fund shall first, be applied to the reimbursement of any drawing on a Financial Guaranty and to the payment of interest or other amounts due with respect to a Financial Guaranty and, second, be deposited into the Debt Service Account;

(3) interest and profits from the Senior FF&E Reserve Fund shall be retained in the Senior FF&E Reserve Fund;

(4) interest and profits from the Subordinate FF&E Reserve Fund shall be retained in the Subordinate FF&E Reserve Fund;

(5) interest and profits from the Operating Reserve Fund shall be deposited into the Debt Service Account;

(6) interest and profits from any Account in the City Tax Reserve Fund shall be retained in such Account;

(7) interest and profits from the Excess Revenue Fund shall be retained in such Fund until such Fund contains the Excess Revenue Fund Requirement and thereafter shall be transferred to the Available Revenue Fund; and

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(8) to the extent that the Trustee receives written notice from the City to the effect that any interest and profits from the Debt Service Reserve Fund are required to be rebated to the United States of America, such amounts shall be transferred to the Rebate Fund.

Certain Agreements of the City

Punctual Payment. The City will punctually pay or cause to be paid, but solely from the Trust Estate, the principal and Redemption Price of, and interest on the Bonds when and as due in strict conformity with the terms of the Indenture, the Bonds and any Supplemental Indenture, and it will faithfully observe and perform all of the conditions, covenants and requirements of the Indenture, the Bonds and any Supplemental Indenture.

Bonds Constitute Special, Limited Obligations. The Bonds are special, limited obligations of the City, payable solely from the Pledged Revenues and certain other assets and revenues pledged by the City under the Ordinances and the Indenture, including certain other funds held by the Trustee under the Indenture, provided that the Tax Revenues and amounts in the Tax Increment Fund, are not irrevocably pledged to the payment of the principal of and interest on the Bonds, and the obligation to pay the principal of and interest on the Bonds from the Tax Revenues is subject to annual appropriation by the City. The Bonds shall not constitute a general obligation of the City and shall not be a pledge of or involve the full faith and credit or taxing power of the City and the Bonds shall not constitute a debt of the City, all within the meaning of Section 7 of Article XI of the Maryland State Constitution or within the meaning of any other constitutional, statutory or charter provision. Except for the Tax Revenues that constitute Pledged Revenues, no other taxes or assessments are pledged to the payment of the Bonds.

Covenant to Seek Appropriation. The obligation of the City to transfer Tax Revenues as provided in the Indenture is subject in each year to appropriation by the City Council, which is under no obligation to make any such appropriation. Subject to applicable law, the Director of Finance in each Fiscal Year shall use his or her best efforts to obtain the authorization and appropriation of Tax Revenues as provided in the Indenture, including, without limitation, specifying such amounts in the City Budget for the Fiscal Year in which such payments are required to be made, requesting adequate funds to meet the City’s obligations under the Indenture in full in the budget for the Fiscal Year in which such payments are due, and obtaining an authorization and appropriation of Personal Property Tax Revenues, Tax Increment Revenues, Site Specific Hotel Tax Revenues and City-Wide Hotel Tax Revenues pursuant to the Indenture. Any official or agency of the City which may be required to take any action to carry out the provisions of the Indenture shall take such action to the extent permitted by applicable law. In the event that sufficient funds are not appropriated by the City Council in any Fiscal Year for any such payment, the City’s obligation to make such payments shall terminate on the last day of the Fiscal Year for which sufficient funds have been appropriated by the City Council for such payment, provided, however, that if the City Council subsequently appropriates funds for such payment, the City’s obligation to make such payment shall be reinstated to the extent of such appropriation. The City shall not be obligated to make payments from the Tax Revenues as set forth in the Indenture except to the extent that funds have been appropriated for that purpose by the City Council and in no event beyond the date on which the City’s obligation to make payments terminates for nonappropriation, except that the City shall pay to the Trustee, on behalf of the Registered Owners, on the date that the City’s obligation to make payments terminates for nonappropriation any and all amounts which have previously been appropriated by the City Council for such purpose, but which have not been applied for that purpose as of that date.

Encumbrances. The City shall not encumber, pledge or place any charge or lien upon any of the Pledged Revenues or other amounts pledged to the Bonds superior to, on a parity with or subordinate to the pledge and lien created for the benefit of the Bonds, except as permitted by the Indenture. So long as the Bonds are Outstanding under the Indenture, the City shall not issue any bonds, notes or other

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obligations (other than the Bonds, any Additional Convention Center Bonds permitted to be issued by the Indenture and any junior lien obligations permitted to be issued by the Indenture) that are secured by any pledge or lien on the Pledged Revenues or other property pledged under the Indenture.

Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default under the Indenture, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.

Books and Records. The City will keep, or cause to be kept, proper books of record and account in which complete and correct entries shall be made of all transactions relating to the Tax Increment District and the Pledged Revenues. Such books shall be subject to the inspection of the Trustee and any duly authorized representative of the Registered Owners of at least ten percent of the Bonds, upon written request to the City by the Trustee or such representative, as applicable. The City shall provide the Trustee or such representative, as applicable, an opportunity to inspect such books and records during the City's regular business hours and on a mutually agreeable date not later than 30 days after the City receives such request.

Collection of Tax Revenues. The City shall comply in all material respects with all requirements of the Acts and the Ordinances to the extent required assuring the timely collection of Tax Revenues for the payment of the Bonds and other amounts payable under the Indenture.

Protection of Security and Rights of Registered Owners of the Bonds; Further Assurances. The City will preserve and protect the security of the Bonds and the rights of the Registered Owners of the Bonds, and will warrant and defend their rights against all claims and demands of all persons. At any and all times the City shall, so far as it may be authorized by law, pass, make, do, execute, acknowledge and deliver, all and every such further resolutions, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, granting, pledging, assigning and confirming the Trust Estate, the Pledged Revenues, the Funds and Accounts, the Investment Securities held in any Fund or Account under the Indenture, and the Trustee’s right, title and interest in and to the foregoing, and all other moneys, securities and funds hereby pledged or assigned, or intended so to be, or which the City may become bound to pledge or assign.

Bonds Not to be Arbitrage Bonds. The Director of Finance of the City shall be one of the officials of the City responsible for issuing the Tax-Exempt Bonds (the "City’s Section 148 Certifying Official"). The City’s Section 148 Certifying Official shall execute and deliver (on the date of each issuance of Tax-Exempt Bonds) the Tax Certificate that complies with the requirements of Section 148 of the Code or any successor to such Section in effect on the date of issuance of such Bonds ("Section 148"). The City shall set forth in the Tax Certificate its reasonable expectations as to relevant facts, estimates and circumstances relating to the use of the proceeds of such Bonds, or of any moneys, securities or other obligations that may be deemed to be proceeds of such Bonds within the meaning of Section 148.

The City covenants that (i) the facts, estimates and circumstances set forth in the Tax Certificate will be based on the City's reasonable expectations on the date of delivery of such Certificate and will be, to the best of the City’s Section 148 Certifying Official’s knowledge, true, correct and complete as of that

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date, and (ii) the City’s Section 148 Certifying Official will make reasonable inquiries to ensure such truth, correctness and completeness.

The City covenants for the benefit of the Registered Owners of the Tax-Exempt Bonds that it will not take any action or omit to take any action with respect to the Tax-Exempt Bonds, the proceeds thereof, any other funds of the City or any facilities financed or refinanced with the proceeds of the Tax- Exempt Bonds if such action or omission (i) would cause the interest on the Tax-Exempt Bonds to lose its exclusion from gross income for federal income tax purposes under Section 103 of the Code; or (ii) would cause interest on the Tax-Exempt Bonds to lose its exclusion from alternative minimum taxable income as defined in Section 55(b)(2) of the Code, except to the extent such interest is required to be included in the adjusted current earnings adjustment applicable to corporations under Section 56 of the Code in calculating corporate alternative minimum taxable income. In furtherance of this covenant, the City agrees to comply with the procedures set forth in the Tax Certificate. The City further covenants that it will comply with those provisions of Section 148 that are applicable to any Tax-Exempt Bonds on the date of issuance of such Bonds and with those provisions of Section 148 that may subsequently be lawfully made applicable to such Bonds. The foregoing covenant shall remain in full force and effect notwithstanding the payment in full or defeasance of the Tax-Exempt Bonds until the date on which all obligations of the City in fulfilling the above covenant under the Code have been met.

The City covenants for the benefit of the Registered Owners of the Tax-Exempt Bonds that, if necessary, it will requisition amounts on deposit under the Indenture not otherwise required to pay Debt Service then due on any of the Tax-Exempt Bonds to make any payment to any Person for any reason if such payment will, in the opinion of Bond Counsel, prevent the interest on the Tax-Exempt Bonds from losing its exclusion from gross income for federal income tax purposes under Section 103 of the Code; provided, however, that the payment of such amount shall not deprive the City from any rights it may have to pursue remedies arising from such payment against other Persons. The City shall (i) hold and invest Bond Proceeds within its control (if such proceeds are invested), and (ii) direct the Trustee to transfer amounts on deposit in any Fund or Account created by the Indenture to the Rebate Fund for the payment of rebates or payments in lieu thereof to the United States of America, all in accordance with the expectations of the City set forth in the Tax Certificate. The City shall make timely payment, but only from the Rebate Fund, the Pledged Revenues and other property pledged under the Indenture, of any rebate amount or payment in lieu thereof (or installment of either) required to be paid to the United States of America in order to preserve the excludability from gross income, for federal income tax purposes, of interest paid on the Tax-Exempt Bonds and shall include with any such payment such other documents, certificates or statements as shall be required to be included therewith under then-applicable law and regulations.

Loan Agreement. The Loan Agreement sets forth the covenants and obligations of the City and the Corporation, including provisions that, subsequent to the issuance of the Bonds and prior to the payment in full or provision for payment thereof in accordance with the provisions thereof, the Loan Agreement may not be amended, changed, modified, altered or terminated without the written consent of the Trustee. The City agrees that, upon an Event of Default under the Indenture, the Trustee in its name or (to the extent required by law) in the name of the City, shall enforce all rights of the City and all obligations of the Corporation under and pursuant to the Loan Agreement for and on behalf of the Registered Owners of the Bonds, whether or not the City is in default under the Indenture. The City, at the expense of the Corporation, shall cooperate with the Trustee in enforcing the obligations of the Corporation to pay or cause to be paid all amounts payable by the Corporation under the Loan Agreement.

Power to Enter Into Indenture, Issue Bonds and Pledge Trust Estate. The City is duly authorized under all Applicable Laws to create and issue the Bonds, to enter into the Indenture, and to

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pledge the Trust Estate pledged by the Indenture in the manner and to the extent provided in the Indenture and no other authorization or consent is required thereof. The Trust Estate so pledged is and will be free and clear of any pledge, lien, charge or encumbrance thereon or with respect thereto except the pledge granted by the Indenture to the extent provided in the Indenture and all action on the part of the City to that end has been and will be duly and validly taken. The Indenture has been duly and lawfully entered into by the City, is in full force and effect and is valid and binding upon the City and enforceable in accordance with its terms subject only to the laws relating to bankruptcy, creditors’ rights and principles of governmental law and equity. The Bonds and the provisions of the Indenture are and will be the valid and legally enforceable obligations of the City in accordance with their terms and the terms of the Indenture subject only to the laws relating to bankruptcy, creditors’ rights and principles of governmental law and equity. The City shall at all times, to the extent permitted by law, defend, preserve and protect its title to the Trust Estate, the pledge of the Trust Estate under the Indenture and all the rights of the Registered Owners under the Indenture against all claims and demands of all persons whomsoever.

Issuance of Additional Convention Center Bonds. The City shall not issue any Additional Convention Center Bonds unless the City shall have delivered to the Trustee (i) a Consultant’s Certificate stating that (A) the Convention Center Bonds Debt Service Coverage Ratio was not less than 2.00:1.00 for each of the two Fiscal Years preceding the issuance of the Additional Convention Center Bonds and (B) the Projected Convention Center Bonds Debt Service Coverage Ratio is not less than 2.00:1.00 for each and every Fiscal Year succeeding the date of issuance of the Additional Convention Center Bonds; and (ii) a certificate of an Authorized City Officer dated as of the date of issuance of the Additional Convention Center Bonds stating that there exists no Event of Default under the Indenture or event which would constitute an Event of Default upon notice and failure to cure.

Certain Agreements of the Corporation

Maintenance of Corporate Existence; Consolidation, Merger, Sale or Transfer of Assets Under Certain Conditions. The Corporation agrees that it will (a) maintain its existence as a Maryland nonprofit corporation, (b) not dissolve, sell or otherwise dispose of all or substantially all of its assets and (c) not consolidate with or merge into another corporation or permit another corporation to consolidate with or merge into it; except that the Corporation may consolidate with or merge into another corporation or permit another corporation to consolidate with or merge into it, or sell or otherwise transfer to another corporation such assets if: (i) the surviving, resulting or transferee corporation meets certain requirements set forth in the Indenture including that such corporation assumes, if such corporation is not the Corporation, all of the covenants, conditions and obligations of the Corporation under all Main Transaction Documents and (ii) the Trustee receives an opinion of Bond Counsel to the effect that such merger, consolidation, sale or other transfer will not cause interest on the Tax-Exempt Bonds to be includible in gross income for federal income tax purposes.

Limitation on Encumbrances. The Corporation agrees that it will not directly or indirectly create, assume or suffer to exist any encumbrance, lien or charge of any kind upon any of its property or assets or any revenues, income or profit therefrom other than (a) the Deed of Trust, (b) Permitted Encumbrances, or (c) in order to further secure the Bonds. If, however, a lien is filed against any portion of the Property, the Corporation agrees to, within 20 days after the filing thereof, (i) take such action as necessary to cause the lien to be removed or (ii) provide a bond to indemnify against such lien in accordance with Maryland law. Any such lien shall be removed prior to the foreclosure thereof.

Tax Covenant. The Chairman of the Corporation or other officer designated by the Corporation shall be officials of the Corporation responsible for using the proceeds from the issuance of the Tax- Exempt Bonds (the “Corporation’s Section 148 Certifying Official”). The Corporation’s Section 148 Certifying Official shall execute and deliver (on the date of each issuance of Tax-Exempt Bonds) the Tax

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Certificate that complies with the requirements of Section 148 of the Code or any successor to such Section in effect on the date of issuance of such Bonds (“Section 148”). The Corporation shall set forth in the Tax Certificate its reasonable expectations as to relevant facts, estimates and circumstances relating to the use of the Bond Proceeds. The Corporation covenants that (i) the facts, estimates and circumstances set forth in the Tax Certificate will be based on the Corporation's reasonable expectations on the date of delivery of such Certificate and will be, to the best of the Corporation’s Section 148 Certifying Official’s knowledge, true, correct and complete as of that date, and (ii) the Corporation’s Section 148 Certifying Official will make reasonable inquiries to ensure such truth, correctness and completeness. The Corporation covenants that (a) it will not take or omit to take any action that would cause the interest on the Tax-Exempt Bonds to lose its exclusion from gross income for federal income tax purposes under Section 103 of the Code or from alternative minimum taxable income as defined in Section 55(b)(2) of the Code, except to the extent such interest is required to be included in the adjusted current earnings adjustment applicable to corporations under Section 56 of the Code in calculating corporate alternative minimum taxable income; and (b) if necessary, it will requisition amounts on deposit pursuant to the Indenture not otherwise required to pay Debt Service then due on any of the Bonds to make any payment to any Person for any reason if such payment will, in the opinion of Bond Counsel, prevent the interest on the Tax-Exempt Bonds from losing its exclusion from gross income for federal income tax purposes under Section 103 of the Code. The Corporation agrees to comply with the procedures set forth in the Tax Certificate. This covenant remains in full force and effect notwithstanding the payment in full or defeasance of the Tax-Exempt Bonds until the date on which all obligations of the Corporation to fulfill this covenant have been met.

The Corporation shall (i) hold and invest Bond Proceeds within its control (if such proceeds are invested), and (ii) direct the Trustee to transfer amounts on deposit in any Fund or Account created by the Indenture to the Rebate Fund for the payment of rebates or payments in lieu thereof to the United States of America, all in accordance with the expectations of the Corporation set forth in the Tax Certificate. The Corporation shall make or cause to be made timely payment of any rebate amount or payment in lieu thereof (or installment of either) required to be paid to the United States of America in order to preserve the excludability from gross income, for federal income tax purposes, of interest paid on the Tax-Exempt Bonds and shall include with any such payment such other documents, certificates or statements as shall be required to be included therewith under then-applicable law and regulations.

Limitation on Disposition of Assets. The Corporation may not cause or suffer to occur any sale, lease, pledge, encumbrance or other transfer of (a) any part of the Loan Collateral or any interest therein, including without limitation, the Property or the Gross Revenues, or (b) any direct or indirect ownership or beneficial interest in the Corporation, irrespective of the number of tiers of ownership, except for (1) changes in corporate ownership permitted as described above under “Maintenance of Corporate Existence; Consolidation, Merger, Sale or Transfer of Assets Under Certain Conditions”, (2) security interests permitted as described above under “Limitation on Encumbrances”, (3) assets sold, leased or disposed of in the ordinary course of business not to exceed $5,000,000 in any Operating Year without the prior consent of the Controlling Party, (4) the disposal of FF&E that is damaged, dilapidated or obsolete and replacement thereof with FF&E determined by the Hotel Manager (with respect to the Hotel Project) or the Corporation (with respect to the Garage) to be of comparable quality, utility and value, (5) a disposition of the Property that occurs after or contemporaneously with the defeasance of all of the Bonds, (6) leases of the Leased Retail Space and (7) the lease of a portion of the Project to the Babe Ruth Birthplace Foundation, Inc. (the “Foundation”) as contemplated by the Memorandum of Understanding dated September 19, 2016 between the Corporation and the Foundation.

Notwithstanding the foregoing, the Corporation shall, at the written request of the City, transfer the Maglev Site to the City or such other Person as the City directs. Upon such transfer, (i) the City and the Trustee shall release the Maglev Site from the lien of the Deed of Trust and the Maglev Site shall no

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longer constitute Loan Collateral securing the Corporation’s Bond Obligations and (ii) the City may take such actions as it deems necessary to remove the Maglev Site from the Tax Increment District and the Trustee shall release any future Tax Increment Revenues derived from the Maglev Site from the Trust Estate.

Sole Purpose Corporation. The Corporation covenants that it is a sole purpose corporation formed for the purpose of owning, acquiring, constructing, equipping, operating, financing and taking any other action that a Maryland corporation may take with respect to a convention center headquarters hotel adjacent to the Convention Center. The Corporation covenants that it will continue to be engaged solely in the business specified in the previous sentence unless its articles of incorporation are amended pursuant to the Indenture to permit other activities. Notwithstanding any other provision of law, the Corporation’s Articles of Incorporation and the Indenture, the Corporation covenants to abide by the following restrictions: (a) the Corporation shall be operated exclusively for, and the property and income of the Corporation shall be used exclusively for, the purposes described under this caption; (b) no part of the net earnings of the Corporation shall inure to the benefit of, or be distributable to, its directors, officers or employees or private Persons, except that the Corporation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of its authorized purposes; (c) no substantial part of the activities of the Corporation shall be the carrying on of propaganda, or otherwise attempting to influence legislation, and the Corporation shall not participate or intervene in (including the publishing or distribution of statements regarding) any political campaign on or on behalf of any candidate for public office; (d) the Corporation shall not engage in any activities which would cause it to be characterized as an action organization, as described in Treasury Regulations § l.501(c)(3)-l(c)(3); (e) all costs of owning, acquiring, constructing, equipping, operating and financing the Project shall be paid by the Corporation and all obligations relating thereto shall be satisfied by the Corporation from its own revenues and assets, which may include proceeds of the City’s revenue bonds. For purposes of this paragraph, the cost of acquiring the Project shall be deemed to include the actual cost of acquiring a site and the cost of construction of any part of the Project which may be constructed (including architects’ and engineers’ fees), the purchase price of any part of the Project that may be acquired by purchase and all expenses in connection with the authorization, sale and issuance of debt of the Corporation or the City issued to finance such acquisition; (f) the Corporation shall conduct its business in its own name and using its own stationery, invoices and checks; shall hold itself out as an independent nonprofit corporation that is separate and distinct from the City; shall hold title to its property in its own name or the name of a nominee or other Person who is not the City or an Affiliate of the City; and shall not, nor shall any of its directors, officers or employees, refer to the Corporation as a department, section, agency, board, commission or other component of the City for purposes of the charter and ordinances of the City or any other purpose or permit the City to direct or interfere in the day- to-day operations of the Corporation. The Corporation and its directors, officers and employees shall correct any known misunderstanding regarding the Corporation’s status as an independent nonprofit corporation that is separate and distinct from the City; (g) the Corporation shall observe all organizational, procedural and operational formalities for Maryland corporations, including holding regular meetings of the board of directors, maintaining appropriate minutes and other corporate records regarding action by the board of directors (including, without limitation, written consents) of all appropriate actions and filing tax returns and complying with other governmental rules and regulations in its own name; (h) the Corporation’s assets and funds shall be segregated from, and shall never be commingled with, the assets or funds of the City, any Affiliate of the City or any other Person. The Corporation shall maintain its financial and accounting books and records and financial statements separate from those of the City, any Affiliate of the City or any other Person; (i) the Corporation shall pay its officers, employees and contractors and shall pay its contractual and other obligations from its own funds; (j) any transactions between the Corporation and the City or any Affiliate of the City or between any Affiliate of the Corporation and the City or any Affiliate of the City (including any services performed by an employee of one of them for the benefit of the other) shall be on arm’s-length terms and in exchange for fair value.

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Any loan made by the City or an Affiliate of the City to the Corporation or an Affiliate of the Corporation shall be on arm’s-length terms and shall be reasonably expected to be repaid in accordance with its terms; (k) the Corporation shall pay from its assets all loans, leases and other obligations of any kind incurred by the Corporation and shall not pay from its assets any debt or other obligations of any other Person. Except in connection with its own loans, leases or agreements with respect to lines or letters of credit, the Corporation shall not pledge its assets for the benefit of any other Person or make any loans or advances to any Person; (l) the Corporation shall not guarantee or become obligated for any debt or other obligation of any other Person or hold out its credit as being available to satisfy the debt or other obligation of any other Person; (m) the Corporation shall file its own tax returns, if any, as may be required under applicable law, to the extent (i) not part of a consolidated group filing a consolidated return or returns or (ii) not treated as a division for tax purposes of another taxpayer, and pay any taxes so required to be paid under Applicable Laws; and (n) the Corporation shall not acquire assets or property other than the Project and any accretion thereto, or as otherwise specifically permitted by the Indenture or a Supplemental Indenture.

Other Indebtedness; Guaranties. The Corporation shall not create, incur, assume or suffer to exist any Indebtedness other than Permitted Indebtedness and shall not guarantee the Indebtedness of another Person. Notwithstanding any provision of the Indenture to the contrary, with the prior written consent of the Authorized City Officer, which consent may be withheld in the City’s sole discretion, the Corporation may incur or issue Short Term Indebtedness to fund any projected or actual Cash Flow Deficits resulting from an Emergency or other extraordinary occurrence, secured by and payable from a pledge of and first lien on Gross Operating Revenues provided that the aggregate principal amount of Short Term Indebtedness that may be outstanding at any one time shall not exceed ten percent (10%) of the current Operating Year’s budgeted Gross Operating Revenues, unless the Controlling Party has provided its prior written consent to a greater percentage, and the Corporation shall have provided the Trustee with a Consultant’s Certificate stating that the Gross Operating Revenues to be received during the 13 month period succeeding the issuance of such Short Term Indebtedness is expected to be sufficient to (i) repay such Short Term Indebtedness in full and (ii) pay all other obligations of the Corporation with respect to the Project (as set forth in the Budget Documents for such period). Such Short Term Indebtedness shall not be secured by a pledge of or lien on any other portion of the Loan Collateral including, without limitation, the Project, and shall not be entitled to any of the rights or benefits granted to the Registered Owners in the Indenture, including, without limitation, the right to declare an Event of Default thereunder and to exercise the remedies set forth therein. The proceeds of such Short-Term Indebtedness shall be applied solely to fund such Cash Flow Deficits.

Pay Officers or Directors. The Corporation shall not pay any compensation or make any distribution of income or other assets to any of its officers or directors other than as compensation to such persons in their capacities as employees, contractors or suppliers of the Corporation or the reimbursement of ordinary out-of-pocket expenses; provided, however, the Corporation may pay its directors a reasonable fee for such directors’ attendance at meetings of the Corporation, as provided in its bylaws.

Amend Articles and Bylaws. The Corporation may not amend its articles of incorporation or bylaws in any manner that would result in inclusion of interest on the Tax-Exempt Bonds in gross income for federal income tax purposes or would adversely affect the interest of the Registered Owners of the Bonds or any other beneficiary of the Indenture, as determined by an Opinion of Bond Counsel, without the prior consent of the Controlling Party and the City.

Bankruptcy, Insolvency; Receiver. The Corporation may not (i) commence any case, proceeding or other action or file a petition under any existing or future bankruptcy, insolvency or similar law seeking (A) to adjudicate the Corporation a bankrupt or insolvent, (B) to have an order for relief entered with respect to the Corporation, or (C) reorganization, arrangement, adjustment, wind-up, liquidation,

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dissolution, composition or other relief with respect to the Corporation or its obligations, (ii) consent to the institution of bankruptcy or insolvency proceedings against the Corporation, (iii) seek or consent to the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator (or other similar official) of the Corporation or a substantial part of its property, (iv) except as required by law, admit the Corporation’s inability to pay its obligations generally as they become due, (v) fail generally to pay its obligations as they become due within the meaning of the United States Bankruptcy Code, as determined by a relevant bankruptcy court, (vi) make a general assignment by the Corporation for the benefit of creditors, or (vii) authorize, take any action in furtherance of, consent to or acquiesce in any of the foregoing or any similar action or other proceedings under any United States or state bankruptcy or insolvency or similar law on behalf of, or with respect to, the Corporation. If a court of competent jurisdiction determines that the Corporation may, notwithstanding this prohibition, take such an action, the Corporation may not take any such action without the affirmative vote of all of the voting directors of the Corporation (excluding any director who is or ever has been an officer or employee of the City at any time during the director’s current term of office).

The Corporation shall notify the Trustee immediately of the filing of any petition, or commencement of any proceedings, in bankruptcy, or for a receiver or insolvency or for reorganization or composition, or any assignment for the benefit of creditors generally relating to the Corporation, the Property or any part thereof.

If the Corporation or its creditors file a petition alleging insolvency, requesting reorganization or a composition of creditors, or for an assignment for the benefit of creditors, in any court, the Trustee has the right to participate and vote on any plan of reorganization, agreement for a composition of creditors, and on any assignment for the benefit of creditors. If there is a proceeding to effect a receivership for the Corporation, the Trustee has the right to select the receiver.

In any bankruptcy proceeding involving the Corporation or any of its assets, neither the Corporation nor any Affiliate of the Corporation may, without the prior consent of the Majority of Holders, consent to the entry of any order, file any motion, or support any motion, and neither the Corporation nor any Affiliate of the Corporation may file or support any plan of reorganization. The Corporation and any Affiliate having any interest in such bankruptcy proceeding is required to (a) do all things reasonably requested by the Trustee to assist the Trustee in obtaining such relief as the Trustee seeks and (b) vote as directed by the Trustee.

Compliance with Law; Maintenance of the Property. The Corporation shall operate, use and maintain the Property in accordance with all Applicable Laws (except for inadvertent or unintentional noncompliance not expected to have a Material Adverse Effect on the use, operation or maintenance of the Property) and the Budget and Parking Budget and may not alter or change the Property from its intended use. Upon discovery of noncompliance, the Corporation shall promptly undertake all necessary remedial steps to achieve compliance.

The Corporation shall (a) maintain, use and operate the Property and all components thereof in good repair, working order and condition and (b) make all necessary and proper replacements, repairs, renewals and improvements, so that the efficiency and value of the Property is not impaired in any manner which could result in a Material Adverse Effect on the Corporation or the Property.

The Corporation shall (a) maintain all licenses, Permits and other governmental authorizations regarding the Corporation or the Property if the loss, suspension, revocation or failure to renew, could have a Material Adverse Effect on the Corporation or the Property and (b) perform, observe, fulfill and comply with all of its obligations and covenants in any Transaction Document.

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Taxes, Assessments, Governmental Charges and Adverse Judgments. Solely from Gross Revenues and amounts in the Taxes and Insurance Fund, the Corporation shall pay and discharge all Impositions upon the Property, the Gross Revenues or any portion of the Trust Estate. Such payments shall be made in time to prevent any delinquency or any forfeiture or sale of any part of the Property or the Trust Estate. Upon request, the Corporation shall furnish to the Trustee evidence of all such payments.

The Corporation is not required to pay any Imposition as long as it is in good faith contesting the validity thereof, and among other things, (a) the Corporation has deposited adequate reserves in the Taxes and Insurance Fund and (b) in the Trustee’s reasonable discretion, such contest does not, have a Material Adverse Effect. The Corporation shall promptly pay the amount of such Imposition as finally determined. The Trustee may apply any amount so deposited to the payment of any unpaid Imposition to prevent the sale or forfeiture of any part of the Trust Estate. Any surplus retained by the Trustee after payment of the Imposition shall be transferred to the Available Revenue Fund for disposition in accordance with the Indenture as described above under “Funds and Accounts – Flow of Funds.”

Insurance Required

The Corporation shall cause the Property and the operations thereon to be adequately insured at all times, in amounts that are customarily carried and against such risks as are customarily insured against by others in connection with the ownership and operation of facilities of similar character and size. The Corporation shall pay its allocable portion of the premiums for such insurance solely from funds in the Taxes and Insurance Fund. The types of insurance specified to be carried are described below.

(a) Property. Insurance on the Property, against special form perils of loss or damage by fire, lightning, collapse and other risks, subject to a reasonable deductible (not to exceed $250,000 for any one loss) per accident or casualty, in an amount equal to the full replacement value of the Building and its contents. The special form coverage is required to cover loss or damage by explosion, windstorm, earthquake, flood, terrorism, subsidence, aircraft, vehicle damage, smoke, vandalism, malicious mischief and such other hazards as are available on commercially reasonable terms, in amounts customarily carried and insured against by others in connection with the ownership and operation of facilities of similar character and size. Terrorism availability, limits and coverage is subject to the restrictions established for such insurance under federal law and the reasonableness of cost. It is agreed that individual or blanket sublimits of not less than $10,000,000 are acceptable for each of the perils of flood and earthquake. The replacement value of the Property shall be determined from time to time at the request of the Corporation or the Trustee (but not less frequently than once in every five years) by a recognized, licensed commercial appraiser. During the course of any substantial addition, extension, alteration or improvement to the Property, the Corporation shall maintain builder’s risk insurance in the amount of the completed value of such construction work, subject to reasonable deductibles per accident or casualty, covering loss by fire, lightning and other risks covered by the extended coverage endorsement then in use in the State.

(b) Business Interruption. With respect to property and boiler coverage described above under “Property” and below under “Boiler”, business interruption insurance with respect to the Property only covering actual losses to the Corporation of gross operating earnings that result from the interruption of business caused by damage to or destruction of any real or personal property constituting part of the Property from the risks described above under “Property,” and below under “Boiler” with limits not less than the sum of the following expected to be payable in the next 12 months: (1) Debt Service, (2) the Base Management Fee and (3) reasonable estimates of the Group Services Fees and Charges and Reimbursable Expenses payable to the Hotel

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Manager under the Hotel Operating Agreement, the Taxes and Insurance Costs for the Property and the Administrative Expenses. In addition, contingent business interruption insurance in respect of property located in the same vicinity that attracts business to the Property with minimum limit required for the exposure in an amount equal to 6 months of Debt Service and continuing expenses. Deductibles for business interruption insurance shall not exceed $500,000 per occurrence with respect to risks described above under “Property” and $250,000 per occurrence with respect to risks described below under “Boiler.” The business interruption insurance shall include (1) extended period of indemnity coverage to cover a demonstrable loss of revenue subsequent to repair of damaged facilities, and (2) service interruption coverage for the interruption of utility services including electricity, water and telephone, provided that damage or loss is within one (1) mile of the insured location.

(c) Boiler. Broad form boiler and machine insurance providing coverage of pressure vessels, auxiliary piping, pumps and compressors, refrigeration systems, transformers and miscellaneous electrical apparatus in the Property which present significant potential for loss, in an amount not less than the greater of $1,000,000 or the full replacement cost of the equipment, subject to deductibles not exceeding $250,000 per occurrence.

(d) Commercial General Liability. Commercial general liability insurance shall be maintained under a policy that (1) includes coverage for elevators and escalators, independent contractors, blanket contractual liability, personal injury and completed operations, (2) provides coverage on an occurrence basis against claims for personal injury, including bodily injury, death or property damage on, in or as a result of the Property or the Property’s operations with a limit of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate and (3) names the City and Trustee as additional insureds.

(e) Fidelity Bonds. Fidelity bonds or other insurance, including computer fraud, in an amount not less than $1,000,000 on all the officers and employees of any entity who are responsible for collecting or which have custody of or access to revenues, receipts or income of the Corporation or responsibility for or access to funds used for payment of the Bonds. Each party (Corporation and Hotel Manager) shall be responsible for such insurance to the extent of each party’s employees involved in such collection or custody.

(f) Garage Keepers Legal Liability. Garage Keepers Legal Liability insurance coverage in an amount not less than $1,000,000 combined single limit each occurrence.

(g) Workers Compensation. The Corporation shall require the Manager to maintain workers compensation insurance providing statutory benefits and employer’s liability insurance in an amount equal to but not less than $1,000,000 each accident, employee or disease.

(h) Excess Liability. Commercial umbrella or excess liability insurance with a policy including as underlying coverages those outlined in paragraphs (b), (c) and (d) above, in an amount equal to, but not less than, a combined single limit of $100,000,000 per occurrence and in the aggregate. The policy shall follow the form of the underlying policies and in no event serve to limit any of the coverages provided by the underlying policies

Insurers; Policy Forms and Loss Payees. Each carrier providing any required insurance must have a rating by Best’s Insurance Guide of not less than “A-VII.” All property and fidelity insurance required to be carried shall be payable to the Trustee as a mortgagee/loss payee and, in the case of all policies of insurance carried by any lessee or manager for the benefit of the Corporation, shall be payable to the Trustee as loss payee and the first named insured. All property insurance policies and renewals

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shall (a) provide for a term of not less than one year, (b) provide that such insurance policy will not be canceled, endorsed, altered, or reissued to effect a material change in coverage unless such insurer first give the Trustee 60 days prior notice thereof, (c) include a standard mortgagee clause in favor of the City and the Trustee, (d) include insurer’s waiver of subrogation as against the City and the Trustee, (e) be primary and without right of contribution of any other insurance carried with respect to the Trust Estate, (f) provide for claims to be made on an occurrence basis, except that boiler and machinery coverage may be made on an accident basis and directors’ and officers’ liability may be on a claims made basis, (g) contain an agreed (and updated) value clause or coverage and (h) contain a severability of interests provision with no exclusions for cross liability. All property damage insurance policies (except for flood and earthquake policies) must automatically reinstate after each loss and “claims made” policies shall maintain a retroactive date that shall be effective no later than the commencement of work on construction, installation and equipping the Project or Date of Substantial Completion as applicable, and, in the event coverage under such policy is terminated, non-renewed and/or placed with carriers on an occurrence basis, the Corporation shall purchase an extended reporting period or “tail” coverage for the longest period available on commercially reasonable terms, but in no event less than 3 years and such cost shall be allocated to the Hotel Project.

Insurance Consultant. The Corporation shall employ a recognized, licensed Insurance Consultant to review the insurance requirements of the Corporation not less frequently than once every 24 months. The cost of such Insurance Consultant shall be paid as an Operating Expense by the Hotel Manager from amounts in the Hotel Lockbox Fund. If the Insurance Consultant makes recommendations for the increase of any of the required insurance coverage, the Corporation shall increase such coverage in accordance with such recommendations as available on commercially reasonable terms in amounts customarily carried and insured against by others in connection with the ownership, maintenance and use of facilities of similar character and size. Should at any time during the term of the Indenture the Corporation fail to comply with any of the minimum insurance requirements described above, the Corporation shall first make a formal request for waiver in writing to the Trustee accompanied by a letter from a recognized licensed Insurance Consultant, stating that such required insurance coverage is not currently available or obtainable on commercially reasonable terms in the insurance marketplace, and providing reasonably sufficient evidence to support such statement. Such formal request for waiver and letter shall be reviewed by the Trustee in conjunction with the Insurance Consultant, and, if the Insurance Consultant and the Trustee, mutually agree that the Corporation has purchased the insurance with coverage terms and limits most consistent with the requirements described above available in the insurance marketplace on commercially reasonable terms for projects similar in size and scope, then the Corporation shall have the right, without giving rise to an event of default under the Indenture solely on such account, to maintain insurance coverage and limits that vary from that described above.

Workers’ Compensation and Insurance Law. The Corporation shall at all times maintain insurance or self-insurance for workers’ compensation claims as required by Applicable Laws.

Disposition of Insurance and Condemnation Proceeds

The provisions of the Indenture described below apply during any period following the Date of Final Completion. Prior to the Date of Final Completion, in the event of any casualty, loss or Condemnation affecting the Property, the Corporation shall cause the Project to be restored or rebuilt in accordance with the Design/Build Agreement.

The Corporation shall provide the Trustee with notice of (1) any event of loss or damage to the Property of (2) any actual or threatened action or proceeding relating to any Condemnation of the Property. The Corporation has assigned to the Trustee for deposit into the Insurance and Condemnation Proceeds Fund, all Available Amounts.

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The Trustee shall cause all Available Amounts, together with all other amounts deposited with the Trustee for such purpose or as a result of a Shortfall (as defined below), to be applied to the cost of restoration and reconstruction of the Property so long as the Corporation has certified that the following conditions have been met: (1) no Event of Default then exists, (2) the Available Amount together with all investment income earned or expected to be earned thereon and other proceeds deposited with the Trustee will be sufficient to restore the Property to its Pre-Existing Condition, or if such proceeds are not sufficient (a “Shortfall”), the Corporation shall have deposited into the Insurance and Condemnation Proceeds Fund the full amount of such Shortfall within 30 days of the Trustee’s notice of such Shortfall, (3) the Property can be restored and repaired as nearly as is reasonably possible to its Pre-Existing Condition, (4) the Corporation has received and approved plans and specifications for the repair or restoration of the Property, together with a statement of an architect that the Property can be restored to its Pre-Existing Condition as provided in such plans and specifications, and (5) if more than 15% of the Property is damaged, destroyed or taken, the Corporation has furnished to the Trustee a guaranteed maximum or fixed price contract for an amount not in excess of the Available Amount and investment income.

If the requirements described above cannot be satisfied by the Corporation, any Available Amount is required to be used to redeem Bonds. See “THE SERIES 2017 BONDS - Extraordinary Mandatory Redemption.”

If the Available Amount is made available for repair or restoration and is sufficient for such purpose, the Corporation shall cause the restoration of the Property to substantially its Pre-Existing Condition or such other condition as the Trustee as directed by the Controlling Party may approve in writing, and the Corporation shall cause the commencement of such restoration or repair as soon as is reasonably possible after the casualty loss or Condemnation and at all times thereafter the diligent prosecution thereof to completion. The Trustee shall disburse the Available Amounts using the disbursement procedures described in the Indenture.

If any of the Available Amount is applied to the extraordinary mandatory redemption of the Bonds, such application does not extend or change the amounts or the due dates of the payments due under the Bonds. If the Property is sold at foreclosure or if the Trustee acquires title to the Property, the Trustee shall have all of the right, title and interest of the Corporation in and to any insurance policies and unearned premiums thereon, any proceeds, awards or damages arising from any Condemnation and in and to the proceeds resulting from any damage to the Corporation’s interest therein prior to such sale or acquisition.

All condemnation proceeds resulting from a temporary Condemnation that are not attributable to compensation for alterations or physical damage to the real or personal property used in the operation of the Property are deemed Gross Operating Revenues and deposited in the Hotel Lockbox Fund (if such proceeds relate to a temporary Condemnation of the Hotel Project), the Parking Lockbox Fund (if such proceeds relate to a temporary Condemnation of the Garage) or the Available Revenue Fund (if such proceeds relate to a temporary Condemnation of the Leased Retail Space).

Operation of the Project

Management of the Hotel Project. The Corporation shall cause the Hotel Project to be managed and operated as a revenue-producing, full-service, first-class, convention center headquarters hotel in accordance with the Operating Standards, affiliated with either (a) a national hotel chain with experience in managing full service first class “upscale” convention hotels, (b) a hotel operator with a national chain affiliation through a franchise agreement with a national hotel franchiser of Upscale Hotels or (c) a hotel

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operator with experience in managing first class Upscale Hotels that is acceptable to the Corporation and the City; provided however, that if the Corporation is unable to retain such a management company due to its unwillingness to execute an operating agreement substantially consistent with the terms of the Hotel Operating Agreement, then the Corporation shall have the right to operate and manage the Hotel Project until a management company is retained and such failure shall not be an Event of Default except as provided in the Indenture and provided further that the Corporation covenants to diligently proceed to retain a management company during such period.

The Corporation shall cause to be in full force and effect at all times one or more Management Agreements with respect to the Hotel Project with terms and conditions substantially the same as those of the initial Hotel Operating Agreement (except for any changes (a) required by Bond Counsel in order for Bond Counsel to deliver its opinion required by the Indenture, (b) that are based upon the advice of a Hotel Consultant or (c) any changes which are otherwise consented to in writing by the Controlling Party, which consent shall not be unreasonably withheld, conditioned or delayed) and which requires the Hotel Manager to maximize over the term of the Hotel Operating Agreement the financial return to the Corporation from the operation of the Project as a first class, convention center headquarters hotel, after taking into consideration the Room Block Agreement. The Corporation may amend, modify, waive or otherwise alter such Hotel Operating Agreements, but if such amendment, modification, waiver or alteration materially and adversely affects the Corporation’s ability to satisfy the Debt Service on the Bonds for any Operating Year, the consent of the Controlling Party thereto is required. Each Hotel Operating Agreement shall expressly permit the assignment thereof to the Trustee and entitle the Trustee to the benefits thereof upon the occurrence of an Event of Default.

The Corporation covenants to use commercially reasonable efforts to enforce or cause to be enforced all of its rights and remedies under such operating agreement with regard to any circumstance that is reasonably likely to ripen into an event of default under such operating agreement (except as restricted by the Indenture), and, if it fails to do so, the Trustee shall have the right to do so. To the extent permitted under the Hotel Operating Agreement or any such other operating agreement, the Corporation shall have the right to cure the Hotel Operator’s defaults thereunder. The Hotel Operating Agreement shall not be terminated by the Corporation without the prior written consent of the Controlling Party. The Corporation shall not waive any remedy available to it with respect to such Event of Default (as defined in the Hotel Operating Agreement) by the Hotel Manager unless the Controlling Party consents to such waiver.

The Corporation covenants that it will not disapprove of a proposed room rate schedule or other Pricing (other than as set forth in the Room Block Agreement) under the terms of the Hotel Operating Agreement so long as (A) the Budget prepared assuming such Pricing does not result in a Debt Service Coverage Ratio for the Bonds of more than 2.50:1.00 or less than 1.00:1.00, (B) such rate schedules are not increased by more than 20% or decreased by more than 10% from the rate schedules of hotels in the Competitive Set, and (C) such rate schedules comply with or are consistent with the provisions of the Room Block Agreement. Notwithstanding the preceding sentence, if a Hotel Consultant is engaged by the Corporation, the Corporation will not disapprove of any changes proposed by the Hotel Manager to Pricing (other than as set forth in the Room Block Agreement) if the Hotel Consultant does not recommend a different modified Pricing as one of its recommendations described under “Debt Service Coverage” below. If the Corporation disapproves of the proposed Pricing or proposed modified Pricing by the Hotel Manager or any amendment thereto and the Hotel Manager disagrees with the Corporation’s reasons for disapproving such proposed Pricing (or modification thereto) and disputes the accuracy of the information used by the Corporation in making such disapproval, then the Corporation shall retain a Hotel Consultant to confirm or reject the accuracy of such information. If a Hotel Consultant agrees in all material respects with the Hotel Manager, the Corporation shall not have any right to dispute such proposed Pricing or modified Pricing and shall withdraw its disapproval and in any event its disapproval

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shall be of no further force and effect. If a Hotel Consultant agrees in all material respects with the Corporation, the Hotel Manager shall revise the proposed room rates or other Pricing, as applicable, as directed by the Corporation unless the Hotel Manager determines, as quantified by proforma calculations using reasonable budget assumptions, that such proposed room rate schedule or other Pricing, as applicable, as revised at the direction of the Corporation, would constitute or cause an Event of Default or other breach of or default under the Indenture or the Hotel Operating Agreement. If the Corporation disagrees with the Hotel Manager’s determination that following such advice would result in an Event of Default or breach of a covenant under the Indenture or under the Hotel Operating Agreement, then any of the Hotel Manager, the Corporation or the Trustee may, by delivering written notice of its requirement for arbitration to the others, require that the matter in dispute be submitted to arbitration in accordance with the Hotel Operating Agreement, or if the initial Hotel Operating Agreement is no longer in effect, in accordance with the Indenture. Each Hotel Operating Agreement will incorporate this provision therein.

Management of the Garage. The Corporation shall cause the Garage to be operated in accordance with operating standards that are consistent with a “first class” urban garage, and are reasonably calculated both to protect and preserve the assets that comprise the Garage and to control the Parking Operating Expenses attributable to the Garage. The Corporation shall cause to be in full force and effect at all times on and after the Opening Date of the Garage one or more management agreements with respect to the Garage with terms and conditions substantially the same as those of the form of Parking Management Agreement attached as an Exhibit to the Indenture (except any changes required by Bond Counsel in order for Bond Counsel to deliver the opinion required by the Indenture). The Corporation may amend, modify, waive or otherwise alter such Parking Management Agreement in compliance with the terms of such Parking Management Agreement. Each Parking Management Agreement for the Garage or any part thereof shall expressly permit the assignment thereof to the Trustee for the benefit of Registered Owners, and entitle the Trustee to the benefits thereof upon the occurrence of an Event of Default. Upon the execution of any Parking Management Agreement, the Corporation shall promptly deliver to the City and Trustee (i) a copy of the fully executed Parking Management Agreement, and (ii) an acknowledgement by the Parking Manager that the Parking Management Agreement has been assigned to the City and Trustee pursuant to the Assignment Agreement.

Maintain Licenses. The Corporation shall maintain the Permits necessary to operate the Hotel as a full service, first-class, Upscale Hotel, including all liquor licenses, food service licenses and other permits or licenses necessary for the lawful operation of bars, restaurants and other facilities offering food or beverage, alcoholic or otherwise, at the Hotel Project.

Equip the Property. The Corporation shall equip the Project to permit its overall operation in a manner reasonably expected to earn the Hotel an Upscale Rating as a convention headquarters hotel (including the operations of all restaurants, bars, lounges, food service facilities and other guest service facilities), but solely from Gross Revenues available for such purpose under the Indenture.

Termination of Hotel Operating Agreement Upon Foreclosure. If the Property is foreclosed upon due to an Event of Default under the Indenture, the ability of the Trustee to terminate the Hotel Operating Agreement is subject to the terms contained in the Hotel Operating Agreement.

Asset Manager. The Corporation shall hire, by not later than the first anniversary date of the Closing Date, one or more Asset Managers to assist the Corporation in overseeing the operations of the Property. If any Person then serving as Asset Manager for the Hotel Project is terminated or resigns, the Corporation shall hire a replacement within 60 days. The duties of Asset Manager for the Hotel Project shall include: (a) reviewing and recommending approval or disapproval to the Corporation of the Proposed Budget Documents for the upcoming Operating Year, (b) reviewing all reports required to be delivered by the Hotel Manager pursuant to the Hotel Operating Agreement, (c) providing reports to the

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Corporation on a quarterly basis summarizing the Asset Manager’s findings for the preceding quarter regarding the Hotel Manager’s compliance with the Hotel Operating Agreement, (d) approving the list of possible replacement Hotel Consultants supplied by the Hotel Manager and (e) commenting on the recommendations submitted by any Hotel Consultant.

Bond Counsel Opinion. No Hotel Operating Agreement or Parking Management Agreement may be entered into by the Corporation nor may any Hotel Operating Agreement or Parking Management Agreement be amended or extended or the identity of the Hotel Manager or Parking Manager changed unless the Corporation has received an opinion of Bond Counsel that such proposed action will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Tax-Exempt Bonds.

Budgets

On and after November 1 of each Operating Year, the Corporation shall cause the Hotel Manager to prepare and deliver to the Corporation and the Trustee, the Proposed Budget Documents for the next ensuing Operating Year. On or before November 1 of each year, the Corporation shall deliver to the Trustee the Proposed Parking Budgets for the next ensuing Fiscal Year. The Trustee shall promptly notify the Corporation as to any objections it may have to the Proposed Budget Documents or the Proposed Parking Budgets.

The Corporation and the Hotel Manager shall meet within 15 days after the Corporation’s receipt of the Proposed Budget Documents for any Operating Year. At such meeting (a) the Corporation shall provide to the Hotel Manager its then current estimate of Corporation’s Administrative Expenses for the next ensuing Operating Year and (b) the Hotel Manager shall provide to the Corporation its final Proposed Budget Documents for such Operating Year, together with an explanation of the changes from the proposed budgets initially delivered to the Corporation. The Corporation may not approve the Proposed Budget Documents if the Trustee has objected thereto.

If the Corporation and the Hotel Manager are unable to agree upon a Proposed Operating Plan and Budget and Proposed Capital Budget for an Operating Year within 15 days after such initial 15-day period, then within ten days after the expiration of such second 15-day period, the Corporation shall deliver to the Hotel Manager the Corporation’s objections to the Proposed Budget Documents, subject to the provisions of the Indenture discussed below under “Debt Service Coverage”. If the Corporation fails to deliver to the Hotel Manager its approval or disapproval of the Proposed Budget Documents within such 10-day period, then such Proposed Budget Documents are deemed the approved Operating Plan and Budget and approved Capital Budget for the applicable Operating Year, until the Corporation delivers to the Hotel Manager its objections in writing.

During the 15-day period following the Hotel Manager’s receipt of the Corporation’s items of disapproval, the Corporation and the Hotel Manager shall meet to discuss the disapproved items. Within five days after the expiration of such third 15-day period, the Hotel Manager shall submit to the Corporation a revised Proposed Operating Plan and Budget and Proposed Capital Budget, as applicable, incorporating revisions agreed upon during such third 15-day period. If the Corporation and the Hotel Manager do not agree, then the Corporation, the Hotel Manager or the Trustee may request arbitration pursuant to the Hotel Operating Agreement.

The Corporation has the right to object to any aspect of any Proposed Operating Plan and Budget and/or Proposed Capital Budget if:

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(a) the objection or change would not materially (1) interfere with the Manager’s operation of the Hotel Project in compliance with the Operating Standards, (2) impair the Hotel Manager’s ability to achieve a Performance Test, or (3) interfere with the Hotel Manager’s fulfillment of its agreements under the Hotel Operating Agreement, and

(b) the Proposed Operating Plan and Budget is not consistent with the requirements of the Room Block Agreement or rates approved by the Hotel Manager and the Corporation pursuant to a Room Block Contract;

(d) the Proposed Operating Plan and Budget would result in a Debt Service Coverage Ratio of less than the Debt Service Coverage Requirement;

(e) as to a Proposed Capital Budget, all or some of the proposed Capital Improvements represent material upgrades to the quality or facilities of the Hotel Project (as distinct from repairs, maintenance or replacements required to prevent any diminution in quality) that are not, in Corporation’s reasonable opinion, required to satisfy each Operating Standard; or

(f) as to a Proposed Capital Budget, any proposed upgrades to the quality of the facilities of the Hotel Project including upgrades required under a change to the Hilton Requirements would (1) be imprudent based upon a reasonable weighing of the costs and benefits to the Hotel Project of the upgrades (taking into account the cost and impact on Hotel Project revenue and expense of the upgrades, the useful life of the upgrades, and the remaining term of the Hotel Operating Agreement) or (2) render funds in the Senior FF&E Reserve Fund, the Subordinate FF&E Reserve Fund, the Operating Reserve Fund or the Cash Trap Fund inadequate for other necessary FF&E and Capital Expenses or funding of other amounts as contemplated by the Hotel Operating Agreement or an existing approved Capital Budget.

If the Hotel Manager and the Corporation are unable to reach final agreement on the Proposed Operating Plan and Budget and/or the Proposed Capital Budget for an Operating Year by December 31 of the prior Operating Year, then any of the Hotel Manager, the Corporation or the Trustee may, by delivering an Arbitration Request, require that the matter(s) in dispute be submitted to arbitration pursuant to the Hotel Operating Agreement.

If none of the Hotel Manager, the Corporation or the Trustee delivers an Arbitration Request by the required date, then the Hotel Manager, the Corporation and the Trustee are deemed to have waived their respective rights to arbitrate the matters in dispute and the Proposed Operating Plan and Budget and the Proposed Capital Budget for the applicable Operating Year are deemed to be the Operating Plan and Budget and Capital Budget for such Operating Year, except that, commencing with the first full Operating Year after the opening of the Hotel Project, any Operating Expense line item that is in dispute in the Proposed Operating Plan and Budget may not be greater than one hundred ten percent (110%) of the amount of the actual Operating Expenses incurred for such line item during the Operating Year preceding the Operating Year covered by the Proposed Operating Plan and Budget, unless the actual increase in such line item correlates to a ratable increase in Gross Operating Revenues generated by the budgeted line item for the prior Operating Year.

If any of the Hotel Manager, the Corporation or the Trustee timely delivers its Arbitration Request regarding the Proposed Operating Plan and Budget, then until the arbitrator issues its decision regarding the disputed items in the Proposed Operating Plan and Budget, the Proposed Operating Plan

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and Budget governs the areas of operations not in dispute and the prior year’s Operating Plan and Budget governs the areas in dispute, except that the Hotel Manager may increase the budgeted revenues and expenses provided for such disputed item(s) in the prior year’s Operating Plan and Budget by an amount not in excess of the lesser of 5% of the actual amount of the applicable expense line item for such prior Operating Year, the percentage increase in the Index during the immediately preceding Operating Year or the amount of the increase proposed by the Hotel Manager.

If any of the Hotel Manager, the Corporation or the Trustee timely delivers its Arbitration Request regarding the Proposed Capital Budget, then until the arbitrator issues its decision regarding the disputed items in the Proposed Capital Budget, the Proposed Capital Budget shall govern the areas of operations not in dispute and the Hotel Manager may not incur a Capital Expense or purchase FF&E for a disputed Capital Improvement included in a Proposed Capital Budget unless the Capital Expense (A) is for an amount not in excess of $25,000 (subject to increase based upon the change in the Index from the Required Opening Date to the beginning of the 12 month period in question) and when aggregated with all other Capital Expenses incurred for any other disputed Capital Improvements during such Operating Year, does not exceed $50,000 (subject to increase based upon the change in the Index from the Required Opening Date to the beginning of the 12 month period in question); (B) is necessary to eliminate or remove an Emergency; or (C) is required by Applicable Laws. Notwithstanding the foregoing, the Hotel Manager shall notify Corporation in writing of any such capital expenditure as soon as practicable and describe the reasons therefor.

Under each Hotel Operating Agreement, the Hotel Manager shall (a) use commercially reasonable efforts to operate within, and in a manner consistent with, each approved Operating Plan and Budget and each approved Capital Budget and (b) not substantially deviate (a deviation in excess of $50,000 in total Capital Expenses and FF&E in the first and second Operating Years and $100,000 in each Operating Year thereafter is substantial) from the budgeted Capital Expenses and FF&E in an approved Capital Budget unless the Hotel Manager obtains the prior consent of the Corporation; however the Hotel Manager is entitled to reallocate up to 10% of a line item in the Capital Budget without the prior written consent of the Corporation so long as (i) the remaining dollars in those line items from which such ten percent is removed are sufficient to complete the work contemplated by those line items and (ii) not more than ten percent of the Capital Budget is reallocated. The Hotel Manager shall prepare and deliver to Corporation each month a monthly variance report setting forth any deviation from the Operating Plan and Budget and/or the Capital Budget, including deviations from line items therein. The Hotel Manager may submit to the Corporation for its approval an interim budget to reflect any significant adjustments to the approved Operating Plan and Budget or Capital Budget caused by an Emergency or a lack of Sufficient Funds. If the Hotel Manager and the Corporation, despite their good faith efforts, are unable to reach final agreement on the proposed interim budget within fifteen days of submittal thereof to the Corporation, then the Hotel Manager, the Corporation or the Trustee may, by delivering an Arbitration Request, require that the matter(s) in dispute be submitted to arbitration pursuant to the Hotel Operating Agreement. Pending resolution of the interim budget, the Hotel Manager shall operate the Hotel Project in accordance with the approved Operating Plan and Budget and Capital Budget with such variations as are permitted elsewhere in this paragraph.

The Corporation shall file (i) the approved Operating Plan and Budget and Capital Budget with the Trustee prior to the commencement of the applicable Operating Year and (ii) the approved Parking Budget prior to the commencement of the applicable Fiscal Year. The Trustee may rely on the final Operating Plan and Budget and Parking Budget to determine the amounts to be deposited into the various Funds and Accounts.

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Deposit of Gross Operating Revenues; Cash Management Agreements

The Corporation agrees to (a) deposit all Gross Operating Revenues calculated on a cash basis (less the Petty Cash Amount) in the Hotel Lockbox Fund or Parking Lockbox Fund pursuant to the Hotel Cash Management Agreement or Parking Cash Management Agreement, as applicable, and deposit with the Trustee any Gross Revenues not constituting Gross Operating Revenue pursuant to the Indenture, (b) cause the Hotel Manager to be a party to the Hotel Cash Management Agreement and the Parking Manager to be a party to the Parking Cash Management Agreement, (c) maintain the Hotel Lockbox Fund or Parking Lockbox Fund during the period of time from at least seven days prior to the Opening Date of the Hotel Project or the Garage, respectively, until no Bonds are Outstanding and (d) execute any substitute or replacement cash management and lockbox agreements with respect to Gross Operating Revenues as reasonably required by the Trustee.

Debt Service Coverage

The Corporation agrees to include in each Hotel Operating Agreement covering the Hotel Project the following provisions:

(a) If the Proposed Operating Plan and Budget will result in a Debt Service Coverage Ratio of less than the Debt Service Coverage Requirement, the Hotel Manager will include with its delivery of the applicable Proposed Operating Plan and Budget a detailed explanation as to why the Hotel Manager has not budgeted to attain such ratios;

(b) The Corporation and the Trustee shall have the right to object to any aspect of any Proposed Operating Plan and Budget if the Proposed Operating Plan and Budget will result in a Debt Service Coverage Ratio of less than the Debt Service Coverage Requirement;

(1) If the Proposed Operating Plan and Budget does not result in the Debt Service Coverage Requirement being met, the Corporation will hire a Hotel Consultant within 30 days after receipt of such Proposed Operating Plan and Budget to make recommendations as to the operations, management, marketing, improvement, condition or use of the Hotel Project that the Hotel Consultant believes could result in satisfying the Debt Service Coverage Requirement or improving the total amount of Net Revenues available to pay Debt Service consistent with the Operating Standards;

(2) If the actual Debt Service Coverage Ratios with respect to the Bonds for any four consecutive quarters (tested quarterly) is less than the Debt Service Coverage Requirement, the Corporation will hire a Hotel Consultant within 30 days after receipt of the Monthly Report that reflects such Debt Service Coverage Ratio to make recommendations as to the operation, management, marketing, improvement, condition or use of the Hotel Project that the Hotel Consultant believes could result in satisfying such Debt Service Coverage Requirement or improving the total amount of Net Revenues available to pay Debt Service consistent with the Operating Standards;

(3) If the audited annual financial statement delivered to the Corporation pursuant to the Hotel Operating Agreement reflects that the Debt Service Coverage Requirement was not achieved, then the Corporation will hire a Hotel Consultant within 30 days of receipt of such financial statement to make recommendations as to the

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operation, management, marketing, improvement, condition or use of the Hotel Project that the Hotel Consultant believes could result in satisfying the Debt Service Coverage Requirement or improving the total amount of Net Revenues available to pay Debt Service consistent with the Operating Standards.

The Hotel Consultant shall be required to provide its reports and findings to the Corporation as soon as is reasonably practicable but in any event no later than 60 days after it has been engaged by the Corporation. The Corporation shall deliver the Hotel Consultant’s reports and findings to the Hotel Manager, the Trustee and the Asset Manager within 3 Business Days of receipt of such report and the Hotel Manager and the Asset Manager shall study and review such reports and any recommendations. The Hotel Manager shall meet with the Hotel Consultant, the Corporation and the Trustee to discuss the Hotel Consultant’s reports, findings and recommendations. The Hotel Manager shall accept and promptly implement all of the Hotel Consultant’s recommendations except those (a) requiring an expenditure of funds greater than the amount available for such purpose under the Indenture, (b) which could, according to the written advice of Bond Counsel, adversely affect the tax-exempt status of the interest on the Tax- Exempt Bonds, or (c) those written recommendations which will impose a material adverse financial burden on the Hotel Manager for which the Corporation is unable or unwilling to reimburse. Notwithstanding the foregoing, if the Hotel Manager disagrees with any or all of the written recommendations of such Hotel Consultant, the Hotel Manager may, by delivering an Arbitration Request within ten Business Days of receipt of such written recommendations, require that the matter(s) in dispute be submitted to arbitration pursuant to the Hotel Operating Agreement. The fees and expenses of the Hotel Consultant shall be paid from amounts on deposit in the Hotel Lockbox Fund. Contemporaneously with engaging a Hotel Consultant pursuant to the preceding provisions, the Corporation shall deliver to the Hotel Manager a copy of such engagement. In addition, the Corporation and the Hotel Manager shall each deliver to the other at no additional charge copies of any information, correspondence or documents delivered to the Hotel Consultant contemporaneously with delivering such information, correspondence or documents to the Hotel Consultant.

Financial Statements; Tax Returns; Other Reports

The Corporation shall provide or cause the Hotel Manager to provide to the Trustee the following financial statements and information on a continuing basis so long as any of the Bonds are Outstanding:

(i) Within one hundred fifty (150) days after the end of each Fiscal Year, (A) Certified Financial Statements for the Property and (B) a written statement by the Corporation’s Accountants (1) stating that such examination has included a review of the requirements set forth under this caption as such terms relate to the Corporation and its compliance with accounting matters, (2) stating whether, in connection with such examination, any failure to comply therewith has come to their attention, and (3) if such a condition or event has come to their attention, specifying the nature and period of existence thereof.

(ii) Within thirty (30) days after the end of each quarter, REVPAR reports (A) for such quarter, (B) for the year to date, including a comparison to the Competitive Set, and (C) for the 12-month period ending in and including the subject quarter.

(iii) Within forty-five (45) days of the end of each calendar quarter, true and complete copies of unaudited statements of operations of the Corporation, in accordance with Generally Accepted Accounting Principles, which statements shall include a statement of income and expenses for the quarter then ended, certified by the Authorized Corporation Representative, to the best of his or her knowledge or belief after due inquiry, to accurately represent the financial condition of the Corporation.

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(iv) Within forty-five (45) days after the end of each calendar quarter, operating statements (including statement of income and expenses) for the Property prepared in accordance with Generally Accepted Accounting Principles, consistently applied, and on an accrual basis, (A) for such quarter, (B) for the year to date, including a comparison of budgeted to actual income and expenses and an explanation of material variances, and (C) for the 12-month period ending in and including the subject quarter.

(v) As soon as available, but in no event more than thirty (30) days after the filing deadline, as may be extended from time to time, copies of all federal, state and local tax returns of the Corporation, if any, together with all supporting documentation and required schedules certified by the Authorized Corporation Representative as true, correct and complete.

(vi) Certain Monthly Reports delivered to the Corporation by the Hotel Manager pursuant to the Hotel Operating Agreement.

(vii) A monthly cash flow summary, together with a calculation of the Debt Service Coverage Ratio for the trailing 12-month period.

Periodic Structural and Mechanical Inspections; Adjustments to the Deposits to the Subordinate FF&E Reserve Fund

The Corporation shall provide the Trustee with a structural and mechanical inspection report of the Property prepared by a licensed engineer every five years, beginning with the fifth year after the Opening Date for the Hotel Project. The cost for such a structural and mechanical inspection shall be paid as an Operating Expense. If the structural and mechanical inspection report for the Property indicates that amounts being deposited in the Senior FF&E Reserve Fund and the Subordinate FF&E Reserve Fund are either insufficient or in excess of the amounts anticipated to be required to maintain the Property in accordance with the Indenture, the Corporation and the Trustee may adjust the Hotel Subordinate FF&E Reserve Set Aside Amount and the Garage Subordinate FF&E Reserve Set Aside Amount to provide that the required amount shall be deposited to the Subordinate FF&E Reserve Fund. The Corporation shall have the right to direct the Trustee to increase the Hotel Subordinate FF&E Reserve Set Aside Amount and the Garage Subordinate FF&E Reserve Set Aside Amount by an aggregate amount of up to 2% of Gross Operating Revenues. Any increase in the Hotel Subordinate FF&E Reserve Set Aside Amount and the Garage Subordinate FF&E Reserve Set Aside Amount by an aggregate amount in excess of 2% of Gross Operating Revenues shall require the written consent of the Controlling Party. In addition, if any deposits required to be made to the Subordinate FF&E Reserve Fund as described in paragraph Eleventh under “Funds and Accounts - Flow of Funds” above have not been made and have accrued as of any date, the Corporation, with the written consent of the Controlling Party, shall have the right to reduce the amount of the accrued deposits required to be made to the Subordinate FF&E Reserve Fund as described in paragraph Eleventh under “Funds and Accounts - Flow of Funds” above.

Indemnification

To the fullest extent permitted by law, the Corporation agrees to indemnify, hold harmless and defend the City and its officers, directors, officials, employees, attorneys and agents (collectively, the “City Indemnified Parties”) and the Trustee and its affiliates, and their respective officers, directors, officials, employees, attorneys and agents (collectively, the “Trustee Indemnified Parties” and, together with the City Indemnified Parties, the “Indemnified Parties”), against any and all losses, damages, Claims, actions, liabilities, costs and expenses of any conceivable nature, kind or character (including, without limitation, reasonable attorneys’ fees, litigation and court costs, amounts paid in settlement and

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amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under federal or state securities laws or any other statutory law or at common law or otherwise, arising out of or based upon or in any way relating to the following (except that (i) an Indemnified Party shall not be indemnified as described under this caption for any losses, damages, Claims, actions, liabilities, costs and expenses arising as a result of such Indemnified Party’s negligence or willful misconduct and (ii) the City shall not be indemnified pursuant to this Section for any losses, damages, Claims, actions, liabilities, costs and expenses arising from its breach of any Transaction Document):

(a) the Main Transaction Documents or the execution or amendment thereof, or in connection with transactions contemplated thereby, including the sale, resale or remarketing of the Bonds;

(b) any act or omission of the Corporation or any of its agents, contractors, servants, employees or licensees in connection with the Property, or any part thereof, the operation of the Property, or any part thereof, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or construction of, the Property, or any part thereof;

(c) any lien or charge upon payments by the Corporation or the City to the Trustee under the Indenture, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the Trustee in respect of any portion of the Property;

(d) (i) with respect to the Trustee Indemnified Parties, any Environmental Claim relating to the Property, any violation of any Environmental Law, rule or regulation with respect to, or the release of any Hazardous Material on, in, under, about, or from the Property or any part thereof or any other Hazardous Material contamination at, on, in, under, about, or from the Property and (ii) with respect to the City Indemnified Parties, Developer’s Generation of Hazardous Material at, to, or from the Property in violation of applicable law or in connection with Developer’s failure to comply with its environmental covenants set forth in the Indenture;

(e) the defeasance and/or redemption, in whole or in part, of the Bonds;

(f) any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact made by the Corporation contained in any offering statement or document for the Bonds or any of the documents relating to the Bonds to which the Corporation is a party, or any omission or alleged omission from any offering statement or document for the Bonds of any material fact with respect to the Corporation or the Property necessary to be stated therein in order to make the statements made therein made by the Corporation, in the light of the circumstances under which they were made, not misleading; provided that the City shall not be indemnified pursuant to this paragraph for any such statements to the extent the City delivers a certification with respect to such statements pursuant to the Bond Purchase Agreement; or

(g) the Trustee’s acceptance or administration of the trust of the Indenture, or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Bonds to which it is a party; except in the case of the foregoing indemnification of the Indemnified Parties only to the extent such damages are not caused by the negligence or willful misconduct of such Indemnified Party.

In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought under the Indenture, the Corporation, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Indemnified Party, and shall assume the payment of all expenses related thereto,

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with full power to litigate, compromise or settle the same in its sole discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Corporation shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense of the Corporation if in its judgment a conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel. The rights of any Indemnified Party to indemnity under the Indenture and rights to payment of fees and reimbursement of expenses pursuant to the Indenture shall survive the final payment or defeasance of the Bonds and in the case of the Trustee any resignation or removal. The foregoing provisions shall survive the termination of the Indenture and the Loan Agreement.

Discharge of Indenture; Defeasance

If the City pays all of the principal and Redemption Price of and interest on the Bonds, at the times and in the manner provided in the Bonds and causes the required amounts of payments to be made into the Funds and Accounts established in the Indenture or provides for the payment thereof by depositing with the Trustee an amount sufficient to provide for payment of the entire amount due or to become due thereon (including any amount due or to become due with respect to the Bonds under Section 148 of the Code), and keeps, performs and observes all the covenants and conditions under the Indenture to be kept, performed and observed by it on or prior to the date such payments are made, and pays to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions thereof, then, upon such payment and performance, the Indenture and the rights and liens thereby granted will cease, determine and be void. If the Indenture is discharged and the City so requests, the Trustee shall cause an accounting for any period to be prepared and filed with the City.

Bonds are deemed to have been paid prior to the maturity or redemption date thereof if (a) in case any of such Bonds shall be redeemed on any date prior to their maturity, the City has given to the Trustee irrevocable instructions to give notice of redemption of such Bonds on said date, (b) there has been deposited with the Trustee, in trust, either money in an amount sufficient, or Defeasance Investment Securities that are not callable or prepayable prior to maturity, the principal of and interest on which without any reinvestment thereof when due will provide money which, together with any other moneys held by the Trustee is sufficient, in the opinion of an independent certified public accountant, to pay when due the principal, or Redemption Price of, and interest due and to become due on, such Bonds on or prior to the Redemption Date or maturity date thereof, as the case may be, (c) in the event such Bonds are not to be redeemed within the next succeeding 60 days, the City has given the Trustee irrevocable instructions to mail, as soon as practicable, notice to the Registered Owners of all such Bonds that the required deposit has been made with the trustee or an escrow agent, such Bonds are deemed to have been paid and stating such maturity or Redemption Date upon which money shall be made available for the payment of the principal or Redemption Price of and interest on such Bonds, and (d) there shall be delivered to the Trustee a written opinion of Bond Counsel to the effect that the provisions of the Indenture have been complied with so that such Bonds are no longer entitled to the benefits of the Indenture and that such defeasance will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes.

Any cash received from a principal or interest payment on Defeasance Investment Securities (a) to the extent such cash will not be required at any time for such purpose as set forth in the opinion of an independent certified public accountant, (1) if all Bonds have been redeemed or discharged, shall be paid over to the Corporation as received and (2) otherwise such cash shall be deposited as Available Revenues, and (b) to the extent such cash will be required for such purpose at a later date as set forth in an opinion of

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an independent certified public accountant, shall be reinvested at the written direction of the City in Defeasance Investment Securities maturing at times and in amounts sufficient to pay when due the principal or Redemption Price of and interest to become due on such Bonds, on or prior to such Redemption Date or maturity date thereof and interest earned from such reinvestment (1) if all Bonds have been redeemed or discharged, shall be paid over to the Corporation, as received and (2) otherwise such cash shall be deposited as Available Revenues. Bonds defeased under the Indenture are no longer subject to redemption at the City’s option except to the extent such Bonds are called for redemption upon defeasance thereof.

Default and Remedies

Rights and Remedies Generally. The Registered Owners of the Bonds, the Controlling Party and the Trustee are entitled to all of the rights and remedies provided for in the Indenture or at law or in equity.

Events of Default. Each of the following events is an “Event of Default” under the Indenture:

(a) failure to make due and punctual payment of the principal or Redemption Price of any Bond when due and payable, whether at maturity or by call for redemption, or otherwise;

(b) failure to make due and punctual payment of any installment of interest on any Bond or the unsatisfied balance of any Sinking Fund Installment therefor when due and payable;

(c) failure by the City or the Corporation in the performance or observance of any other of the covenants, agreements or conditions on its part contained in the Indenture or any Supplemental Indenture or in the Bonds, and such failure shall continue for a period of 120 days after written notice thereof to the City and the Corporation by the Trustee; provided, however, if the failure stated in the notice was due to the failure of another Person in its performance or observance of one or more of its covenants, agreements or conditions on its part contained in another Transaction Document, then instead of such 120-day grace period, no Event of Default shall have occurred so long as corrective action is instituted by the City or the Corporation after any applicable grace period permitted under such Transaction Document for such Person and diligently pursued until corrected for a maximum time period of 30 days following the applicable grace period for such Person;

(d) the entry of a decree or order by a court having jurisdiction in the premises for relief in respect of the City or the Corporation, or adjudging the City or the Corporation as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, adjustment or composition of or in respect of the City or the Corporation under the United States Bankruptcy Code or any other applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of or for the City or the Corporation or any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days;

(e) the commencement by the City or the Corporation of a voluntary case under the United States Bankruptcy Code, or the filing by it of a petition or answer or consent seeking reorganization, arrangement or relief under the United States Bankruptcy Code or any other applicable federal or state law, or the consent or acquiescence by it to the filing of any such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the City or the Corporation or any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability or its failure to pay its debts

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generally as they become due, or the taking of corporate action by the City or the Corporation in furtherance of any such action;

(f) any representation or warranty made by the City or the Corporation in the Indenture or other document, instrument or certificate furnished to the Trustee proves to have been incorrect in any material respect as of the time made; except that if it can be corrected by the City and such default was unintentional, the City has a 60-day period to make such correction prior to an Event of Default occurring;

(g) the termination of the Hotel Operating Agreement and a new management agreement relating to the Hotel Project has not been delivered to the Trustee within 60 days from the effective date of such termination; except that, if the Corporation is unable to locate a new manager as described under “Operation of the Project” above within such 60-day period, such failure shall not become an Event of Default so long as the Corporation is diligently proceeding to locate such a manager, the Performance Standard is being met and the Corporation has retained a Hotel Consultant to provide advice to the Corporation in operating the Hotel Project;

(h) if the City or the Corporation or any other Person under the control of the City or the Corporation, on behalf of the City or the Corporation, acquires or commences the development of a Restricted Hotel within the Restricted Area, or the City issues its tax exempt bonds in support of or otherwise supports a Restricted Hotel located or to be developed within the Restricted Area (other than tax exempt bonds issued to finance public improvements located on or in proximity to a hotel or the use of tax increments or tax abatements or other commonly used development incentives), or enters into a room block commitment agreement which would have the effect of diverting convention business from the Hotel (other than in connection with business diverted when the Hotel reaches substantially full occupancy);

(i) if the City levies or imposes any tax, fee or other charge on the Property or Gross Revenues in a manner disproportionate to any other tax, fee or other charge on other hotels within the Restricted Area;

(j) if the City closes the facilities currently constituting the Convention Center or changes the use of such facilities to a use other than as the City’s Convention Center and a Hotel Consultant forecasts that such closure or change will have a Material Adverse Effect on the Gross Operating Revenues;

(k) any Transaction Document, including without limitation, the Loan Agreement, for any reason ceases to be in full force and effect or is declared to be null and void which has a Material Adverse Effect;

(l) failure of the Corporation to maintain or to be maintained the insurance required under the Indenture; and continuance of such failure for a period of five Business Days after there has been given to the Corporation by the Trustee a notice of such failure; and

(m) if the City formally commences condemnation proceedings against all or any part of the Property.

Upon the occurrence and continuance of an Event of Default as defined in the Indenture, the Majority of Holders is entitled to control and direct the enforcement of all rights and remedies granted to the Registered Owners or the Trustee, including (i) the right to accelerate the principal of the Bonds and (ii) the right to annul any declaration of acceleration, and the Majority of Holders is also entitled to approve all waivers of Events of Default.

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Upon the occurrence of an Event of Default, the Trustee shall promptly provide notice by first class mail to the Registered Owners and certain Beneficial Owners of the Bonds then Outstanding of (1) such Event of Default and (2) the action or remedy, if any, then proposed to be taken by the Trustee at the direction of the Majority of Holders.

Remedies. If an Event of Default occurs and is continuing, then, subject to the provisions of the Indenture described below, the Trustee shall, upon the request of the Majority of Holders, and may, but only upon the consent of the Majority of Holders, and having been indemnified to its satisfaction take any or all or any combination of the following actions:

(1) unless such Event of Default is an Event of Default under the provisions of the Indenture described in (c) or (i) under “Events of Default” above which does not have a Material Adverse Effect on the Property, or any part thereof, declare the principal of the Bonds to be immediately due and payable, whereupon that portion of the principal of the Bonds thereby coming due and the interest thereon accrued to the date of payment, without further action, become and are immediately due and payable.

(2) by mandamus or other suit, action or proceeding at law or in equity require the City to perform its covenants, representations and duties with respect to the Bonds;

(3) by action or suit in equity require the City to account as if it were the trustee of an express trust for the Registered Owners of the Bonds;

(4) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Registered Owners of the Bonds;

(5) prohibit the City or Corporation from withdrawing moneys from any Funds or Accounts (except the Excess Revenue Fund (other than as described above under “Funds and Accounts – Excess Revenue Fund”), the Rebate Fund, the Taxes and Insurance Fund, the Operating Reserve Fund, the Senior FF&E Reserve Fund and the Subordinate FF&E Reserve Fund) without the Controlling Party’s consent;

(6) request that a court of competent jurisdiction appoint, to the extent permitted by law, a receiver or receivers of the Trust Estate, and the income, revenues, profits and use thereof;

(7) unless such Event of Default is an Event of Default under the provisions of the Indenture described in (c) or (f) under “Events of Default” above which does not have a Material Adverse Effect on the Property, or any part thereof, commence foreclosure of the Deed of Trust by private sale or judicial foreclosure; so long as the Trustee has first received the consent of the Majority of Holders;

(8) upon the occurrence of an Event of Default described in (a) or (b) under “Events of Default” above, transfer moneys from any Funds or Accounts (other than amounts necessary to pay Operating Expenses and Parking Operating Expenses and amounts in the Excess Revenue Fund, the Rebate Fund, and the Taxes and Insurance Fund) to the Debt Service Account of the Debt Service Fund;

(9) enter into such agreements or other arrangements as the Controlling Party determines, in its discretion, to be necessary or appropriate either to retain the Hotel Manager and the Parking Manager under the existing Hotel Operating Agreement and Parking Management Agreement or make modifications to the Hotel Operating Agreement and Parking Management Agreement;

(10) enforce all rights of the Corporation under the Hotel Operating Agreement or the Parking Management Agreement, including the right to terminate and replace such parties under a new qualified management agreement which is reasonable under the circumstances and necessary and appropriate to

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(A) maximize the current and long term value of the Property, (B) maximize Net Revenues, and (C) enhance the overall operating efficiency of the Property;

(11) take such actions, including the filing and prosecution of lawsuits, but only at the direction of the Majority of Holders, as may be required to enforce for the benefit of the Registered Owners the terms of any agreements or instruments relating to the Property or any part thereof, which the Trustee at the written direction of the Majority of Holders may be entitled to enforce, including (A) the Hotel Operating Agreement, the Parking Management Agreement and the Loan Agreement, (B) any construction contracts, design contracts or consulting contracts or operating agreements, (C) any insurance policies or completion guaranties, and (D) any other agreements or instruments which the Trustee, at the direction of the Majority of Holders, may be entitled to enforce;

(12) exercise any right of the City or Corporation to give any consent or notice, to take any act or refrain from taking any act, and otherwise act in the full place and stead of the City or Corporation in any Transaction Document, either in its name, the name of the Majority of Holders or the City or Corporation; provided that if the Event of Default is an Event of Default described in paragraph (c) or (g) above under “Events of Default,” then such right to exercise this remedy shall be restricted to relate solely to curing such Event of Default unless such Event of Default results in a Material Adverse Effect with respect to the Property, or any part thereof; or

(13) take such other steps to protect and enforce its rights and the rights of the Registered Owners of the Bonds, whether by action, suit or proceeding in aid of the execution of any power granted in the Indenture or for the enforcement of any other appropriate legal or equitable remedy, including proceeding by suit or suits, at law or in equity or by any other appropriate legal or equitable remedy, to enforce payment of the principal and Redemption Price of and interest then due on the Bonds.

Any declaration of acceleration is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the City deposits with the Trustee a sum sufficient to pay all the principal or Redemption Price of an installments of interest on the Affected Bonds payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds, and the reasonable charges and expenses of the Trustee, and any and all other defaults known to the Trustee shall have been cured to the satisfaction of the Trustee, then the Trustee may, and shall at the direction of the Majority of Holders, rescind and annul such declaration and its consequences and waive such default. No such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

Application of Proceeds. The proceeds received by the Trustee pursuant to the exercise of any right or remedy under the Indenture, after provision for payment of Operating Expenses (including the Base Management Fee) and Parking Operating Expenses (including the Parking Management Fee) then due and payable and making the deposits to and disbursements from the Funds and Accounts as required under the Hotel Cash Management Agreement (which the Hotel Manager continues to have access to if the Hotel Cash Management Agreement remains in effect), together with all securities and other moneys that may then be held by the Trustee as a part of the Trust Estate, be applied as follows:

(a) First, to the payment of the reasonable and proper charges, expenses and liabilities of the Trustee, the City and the Controlling Party incurred in exercising their respective rights and remedies under the Transaction Documents; and

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(b) Second,

(i) Unless the principal of all Bonds has become or been declared due and payable,

First, to the payment of all installments of interest (including interest on overdue installments of interest to the extent allowed by law) then due on the Bonds in the order of the maturity of such installment, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably; and

Second, to the payment of the unpaid principal or Redemption Price of the Bonds with respect to which the remedy was exercised which shall be due, whether at maturity or by call for redemption, in the order of their due dates, and, if the amount available is not sufficient to pay in full all the Bonds due on any date, then to the payment thereof ratably.

(ii) If the principal of all of the Bonds with respect to which such remedy was exercised has become or been declared due and payable, to the payment of the principal or Redemption Price and interest then due and unpaid upon the Bonds, with interest on the overdue principal and interest (to the extent allowed by law) at the rate borne by the respective Bonds, and, if the amount available is not sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably without preference or priority of principal over interest or Redemption Price, or of interest over principal or Redemption Price, or of Redemption Price over principal or interest, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond.

Trustee as Attorney-in-Fact. The Trustee is appointed the attorney-in-fact of the Registered Owners of the Bonds, or on behalf of all Registered Owners as a class, with respect to any proof of debt, amendment to proof of debt, petition or other document, and to perform any and all acts and things for and in the name of the Registered Owners against the City or the Corporation allowed in any equity receivership, insolvency, liquidation, bankruptcy, reorganization or other proceedings to which the City or Corporation is a party and to receive payment of such claims. Any such receiver, assignee, liquidator or trustee is authorized by each of the Registered Owners to make such payments to the Trustee, and, in the event that the Trustee consents to the making of such payments directly to the Registered Owners, to pay to the Trustee any amount due for compensation and expenses of the Trustee, including counsel fees, incurred up to the date of such distribution, and the Trustee has full power of substitution and delegation in respect of any such powers.

Remedies Not Exclusive; Controlling Party to Direct Remedies. No remedy conferred upon or reserved to the Trustee or the Majority of Holders is intended to be exclusive of any other available remedy. Each remedy is cumulative and in addition to every other remedy given or now or hereafter existing at law or in equity or by statute, subject to the right of the Controlling Party to direct the remedies and the limitations on remedies for the benefit of the Registered Owners as set forth in the Indenture.

Limitation of Suits. All rights of action in respect of the Indenture may be exercised only by the Trustee. The Registered Owners do not have any rights to institute any suit, action or proceedings at law or in equity for the appointment of a receiver or for any other remedy, unless the Trustee has received a request of the Majority of Holders and been furnished reasonable indemnity and has refused or neglected for 30 days thereafter to institute such suit, action or proceedings and no direction inconsistent with such

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request has been given to the Trustee during such 30-day period by the Majority of Holders. The making of such request and the furnishing of such indemnity are conditions precedent to the execution and enforcement by any Registered Owner of any Affected Bond, if then the Majority of Holders, of the powers and remedies given to the Trustee under the Indenture and to the institution and maintenance by any such Registered Owner of any action or cause of action for the appointment of a receiver or for any other remedy. The Trustee may, in its discretion, and is required to if requested by the Majority of Holders and furnished satisfactory indemnity, take such appropriate action by judicial proceedings or otherwise in respect of any existing default on the part of the City or Corporation as the Trustee deems expedient in the interest of the Majority of Holders.

Nothing contained in the Indenture affects or impairs the right of any Registered Owner to enforce the payment of the principal of, premium, if any, and interest on the Bonds of such Registered Owner, subject in all cases to the Indenture and the rights of the Hotel Manager under the Hotel Operating Agreement, the Indenture and the Hotel Cash Management Agreement.

Right of Majority of Holders to Direct Proceedings. The Majority of Holders has the right, at any time, to direct the time, method and place of conducting all proceedings to be taken to enforce the Indenture or to exercise of any remedy available to the Trustee or any trust or power conferred on the Trustee, provided that the Trustee is satisfactorily indemnified.

Restoration of Rights and Remedies. If the Trustee or any Registered Owner has instituted any proceeding to enforce any right or remedy under the Indenture, and such proceeding has been discontinued or abandoned or has been determined adversely to the Trustee or such Registered Owner, then subject to any determination in such proceeding, the City, the Trustee and the Registered Owners shall be restored to their former positions under the Indenture. Thereafter all rights and remedies of the Trustee and the Registered Owners continue as though no such proceeding had been instituted.

Trustee

Responsibilities of the Trustee. The Indenture includes extensive exculpatory provisions and limitations, in a form customary for similar trust instruments, which are intended generally to limit the liability of the Trustee to the willful misconduct or negligence of its or its agents and employees, to authorize the Trustee to rely upon the advice of counsel and the representations of the City, the Manager and others and to provide for the indemnification of the Trustee for its costs and liabilities. Such costs and liabilities are stated to be expenses of the Trust Estate.

The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the Indenture. In case an Event of Default has occurred and has not been cured, the Trustee shall exercise such of the rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of their own affairs. The Trustee is not required to take notice or deemed to have notice or knowledge of any default under the Indenture except for (a) certain Events of Default described in the Indenture, (b) any other default or Event of Default of which a Responsible Officer of the Trustee has knowledge, or (c) any Event of Default (as defined in the Hotel Operating Agreement) or any termination of the Hotel Operating Agreement, unless a Responsible Officer of the Trustee is specifically notified of the default by the City or by the Registered Owners of not less than 25% in principal amount of the Affected Bonds then Outstanding.

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The Trustee shall provide copies of any document described above under “Financial Statements; Tax Returns; Other Reports” and “Debt Service Coverage” to each Notice Holder, as requested in writing by such Notice Holder.

Resignation of Trustee. Except as otherwise provided by a Supplemental Indenture, the Trustee may at any time resign and be discharged of its obligations under the Indenture, effective immediately upon the appointment of a successor Trustee, by giving not less than 60 days’ notice to the City of the date it desires to resign and mailing notice to the Registered Owners of all Bonds. Such resignation shall take effect immediately on the appointment of a successor Trustee pursuant to the provisions of the Indenture described below under “Appointment of Successor Trustee.”

Removal of Trustee. So long as an Event of Default has not occurred and is not continuing, the Trustee may be removed, with or without cause, at any time by a writing filed with the Trustee and signed by the City. The Trustee may also be removed at any time for any breach of the trust set forth in the Indenture. Any removal of the Trustee is not effective until a successor Trustee has been appointed.

Appointment of Successor Trustee. If the Trustee resigns or is removed or becomes incapable of acting, or is adjudged a bankrupt or insolvent, or if a receiver, liquidator or conservator of the Trustee, or of its property, is appointed a successor may be appointed by the City. The successor Trustee shall mail notice of its appointment to the Registered Owners of all Bonds.

If no appointment of a successor Trustee has been made within 45 days after the Trustee has given a resignation notice to the City or after a vacancy in the office of the Trustee has occurred for any reason, the Trustee (in the case of a resignation) or the Majority of Holders may apply to any court of competent jurisdiction to appoint a successor Trustee.

Any successor Trustee is required to be a bank or trust company or national or state banking association (a) in good standing in the State of Maryland and its state of incorporation, if any, (b) authorized to exercise trust powers and subject to examination by federal or state authority, (c) having (or whose parent holding company shall have) reported capital and surplus of not less than $100,000,000.

Controlling Party’s Right to Control Discretionary Acts of the Trustee. The Controlling Party has the right to direct the Trustee as to the exercise of any discretionary acts permitted of the Trustee under the Indenture.

Amendments

Supplemental Indentures and Amendments to Bond Documents Effective Without Consent of Registered Owners. The City, the Corporation and the Trustee may, without the consent of but with prior notice to Registered Owners, enter into Supplemental Indentures or any amendments to the Bond Documents as follows:

(a) to cure any formal defect, omission, inconsistency or ambiguity in the Indenture or the applicable Bond Document;

(b) to insert such provisions clarifying matters or questions arising under the Indenture or the applicable Bond Document as are necessary or desirable and are not contrary to or inconsistent with the Indenture or the applicable Bond Document then in effect;

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(c) to grant to or confer upon the Trustee for the benefit of the Registered Owners any additional rights, remedies, powers, authority or security that may lawfully be granted or conferred and that are not contrary to or inconsistent with the Indenture or the Bond Documents then in effect;

(d) to authorize Bonds of a Series and, in connection therewith, to specify the matters referred to in the Indenture and any other mattes related to such Bonds that are not in conflict with the Indenture, or to amend, modify, or rescind any such authorization at any time prior to the first delivery of such Bonds, except that such supplement or amendment is limited to the specific terms of the Additional Bonds and may not otherwise amend the Indenture;

(e) to provide limitations and restrictions in addition to the limitations and restrictions contained in the Indenture, any Supplemental Indenture or the Bond Documents on the delivery of Bonds or the issuance of other evidences of indebtedness;

(f) to add to the agreements of the City or Corporation in the Indenture, any Supplemental Indenture or the Bond Documents, other agreements by the City, the Corporation or others that are not in conflict with the Indenture, the Supplemental Indenture or the Bond Document then in effect;

(g) to add to the limitations and restrictions in the Indenture, any Supplemental Indenture or the Bond Documents other limitations and restrictions to be observed by the City, the Corporation or the other parties thereto that are not in conflict with the Indenture, the Supplemental Indenture or the Bond Documents then in effect;

(h) to confirm any pledge under, and the subjection to any lien or pledge created or to be created by, the Indenture or any Supplemental Indenture, of the Trust Estate or of any other moneys, securities or funds, or to subject to the lien or pledge of the Indenture additional revenues, properties or collateral;

(i) to provide for additional duties of the Trustee in connection with the Trust Estate or the Property;

(j) to modify, amend or supplement the Indenture or any Supplemental Indenture in such manner as to permit, if presented, the qualification thereof under the Trust Indenture Act of 1939 or any similar federal statute hereafter in effect or under any state blue sky law;

(k) to surrender any right, power or privilege reserved to or conferred upon the City or Corporation by the terms of the Indenture, except that the surrender of such right, power or privilege may not conflict with the covenants and agreements of the City or Corporation contained in the Indenture;

(l) to establish or increase the required balance to be accumulated or maintained in the Senior FF&E Reserve Fund or the Subordinate FF&E Reserve Fund;

(m) to designate Registrars and other Fiduciaries for the Bonds of any Series;

(n) to evidence the appointment of a succession of a new Trustee or a Co-Trustee under the Indenture;

(o) to modify, amend or supplement the Indenture or any Supplemental Indenture in order to provide for or eliminate book-entry registration of all or any of the Bonds to the extent not inconsistent with the provisions of the Indenture;

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(p) to make any change (including changes to reflect any amendment to the Code or interpretations by the Internal Revenue Service of the Code) that does not materially adversely affect the rights of any Registered Owner; and

(q) to amend a prior Supplemental Indenture in accordance with the provisions thereof.

Supplemental Indentures and Amendments to Bond Documents Requiring Registered Owner Consent. Except as described above under “Supplemental Indenture and Amendments to Bond Documents Effective Without Consent of Registered Owners” and in the next paragraph, any modification or amendment of the Indenture or any Bond Document and of the rights and obligations of the City, the Corporation and the Registered Owners thereunder, may only be made by a Supplemental Indenture or an amendment to the applicable Bond Document in each instance with the consent of the Registered Owners of a majority in aggregate principal amount of each Tier of Bonds (if all Bonds within such Tier are equally affected by such amendment) or each Series of the Bonds (if all Bonds within a Tier are not equally affected by such amendment) then Outstanding affected by such amendment.

No such modification or amendment may, without the consent of the Registered Owner of each Bond affected thereby, permit (a) a change in the terms of redemption or maturity of the principal of any outstanding Bond or of any installment of interest thereon or a reduction in the principal amount or the Redemption Price thereof or in the rate of interest thereon, or (b) creation of a lien upon or a pledge of or payment priority from the Trust Estate ranking prior to or on a parity with the lien or pledge created by the Indenture or (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds of the same Tier, or (d) a reduction in the percentages or otherwise affect the classes of Bonds of which the consent of the Registered Owners is required to effect any such modification or amendment, or (e) an impairment of the exclusion from gross income for federal income tax purposes of interest on any Bond or (f) a deprivation to any Registered Owners of the lien created by the Indenture or (g) a change or modification of any of the rights or obligations of any Fiduciary without its consent thereto.

A Series or Tier of Bonds shall be deemed to be affected by a modification or amendment of the Indenture or an amendment to the applicable Bond Document if the same materially adversely affects or diminishes the rights of the Registered Owners of the Bonds of such Series or Tier. The Trustee may in its discretion determine whether or not, in accordance with the foregoing powers of amendment, Bonds of any particular Series, Tier or maturity would be affected by any modification or amendment of the Indenture or an amendment to the applicable Bond Document and any such determination is binding and conclusive on the City, the Corporation and all Registered Owners.

Consent of Registered Owners. The City, the Corporation and the Trustee, as applicable, may at any time enter into a Supplemental Indenture or an amendment of a Bond Document making a modification or amendment as described above under “Supplemental Indentures and Amendments to Bond Documents Requiring Registered Owner Consent,” to take effect when and as described below. A copy of the proposed Supplemental Indenture or amendment to a Bond Document (or summary), together with a request to Registered Owners for their consent shall be mailed to Registered Owners. Such Supplemental Indenture or amendment to a Bond Document requiring the consent of all or any of the Registered Owners shall be effective when: (a) there has been filed with the Trustee, the consent of such Registered Owners of the percentages of Outstanding Bonds specified in the Indenture required to consent to such amendment and an opinion of Bond Counsel stating that such Supplemental Indenture has been duly and lawfully entered into by the City and the Corporation in accordance with the Indenture, is authorized or permitted by the Indenture, is valid and binding upon the City and the Corporation and enforceable in accordance with its terms, is in accordance with the Indenture and will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any Tax-Exempt Bonds; and (b) a notice has been mailed as described below. Each such consent is effective only if accompanied

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by proof of the holding, at the date of such consent, of the Bonds with respect to which such consent is given.

At any time after the Registered Owners of the required percentages of Bonds have filed their consents to the Supplemental Indenture or amendment to a Bond Document, the Trustee shall make and file with the City and the Corporation a statement that the Registered Owners of such required percentages of Bonds have filed such consents. Upon receipt of the requisite consents and the execution of such amendment by the parties thereto, the Trustee shall mail notice to the Registered Owners, stating in substance that the Supplemental Indenture or other amendment to the Bond Documents has been consented to by the Registered Owners of the required percentages of Bonds and is effective.

No Consent of Owners. Any Supplemental Indenture or amendment to a Bond Document referred to and permitted or authorized by the Indenture not requiring the consent of any Registered Owners may be entered into by the City, the Corporation and the Trustee, as applicable, becomes effective only (a) after the parties thereto have duly executed such Supplemental Indenture or Bond Document, (b) following notice of the proposed supplement or amendment provided to the Registered Owners and (c) if such Supplemental Indenture or amendment meets the conditions described above under “Supplemental Indentures and Amendments to Bond Documents Effective Without Consent of Registered Owners.” Prior to entering into any Supplemental Indenture or amendment to a Bond Document, the Trustee shall receive an opinion of Bond Counsel, in form and substance satisfactory to the Trustee, stating that such Supplemental Indenture or amendment to a Bond Document has been duly and lawfully entered into by the City in accordance with the Indenture, is authorized or permitted by the Indenture, and is valid and binding upon the City and the Corporation, and will not be materially adverse to the interests of the Registered Owners or adversely affect the exclusion from gross income for federal income tax purposes of any interest on the Tax-Exempt Bonds.

Consent of Hotel Manager. Provided the Hotel Operating Agreement has not been terminated, (i) the Corporation will provide the Hotel Manager with a copy of any proposed amendment to the Bond Documents at least 10 days prior to such amendment becoming effective and (ii) the Hotel Manager’s written consent shall be required to any Supplemental Indenture or amendment or other modification to a Bond Document which materially contravenes the rights of the Hotel Manager contained in the Indenture or in any other Bond Document, or which adversely affects or could adversely affect, modify or otherwise change any of the Hotel Manager’s rights, recourses, remedies, entitlements, benefits, liabilities, burdens, obligations, or other agreements under the Indenture, the Hotel Cash Management Agreement or the Hotel Operating Agreement or otherwise; provided that if the Hotel Manager does not deliver written notice to the Corporation and the City within 10 days after receipt of the proposed amendment stating that such amendment materially contravenes the rights of the Hotel Manager contained in the Indenture or in any other Bond Document, or adversely affects or could adversely affect, modify or otherwise change any of the Hotel Manager’s rights, recourses, remedies, entitlements, benefits, liabilities, burdens, obligations, or other agreements under the Indenture, the Hotel Cash Management Agreement or the Hotel Operating Agreement or otherwise, the Hotel Manager shall be deemed to have consented to such amendment.

Junior Lien Obligations

The City reserves the right to issue for any lawful purpose directly related to the Project, bonds, notes, or other obligations secured in whole or in part by liens on the Available Revenues that are junior and subordinate to the lien on Available Revenues securing payment of the Bonds and Short Term Indebtedness and to the other provisions of the Indenture, payable from amounts in the Cash Trap Fund. The issuance of any such subordinate obligation is subject to the provisions of a subordination agreement delivered by the creditors thereon to the Trustee providing that such obligations are and will remain junior and subordinate to the Bonds and the Short Term Indebtedness.

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Priority of Payment of Bonds

Upon any distribution of all or any part of the Trust Estate to any Registered Owner (i) in the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the City, or its assets, (ii) in the event of any liquidation, dissolution or other winding up of the City, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, (iii) in the event of any assignment for the benefit of creditors or any other marshaling of assets and liabilities of the City, or (iv) in any manner inconsistent with the provisions of the Indenture described herein, in such event payment of Debt Service on the Bonds shall be made subject to the provisions of the Indenture described above under “Default and Remedies - Application of Proceeds.” If any payments are received by any of the Registered Owners on account of its Bonds contrary to the provisions of the Indenture, such payments shall be held in trust by such Registered Owners for the Trustee’s benefit and delivered to the Trustee in kind, to be applied to, or held as collateral for, the payment of the Bonds then entitled to be paid from such amounts.

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Summary of Certain Provisions of the Loan Agreement

The Loan; Provisions For Payment; Security

The Loan; Term of Loan Agreement. The City shall lend the proceeds of the Series 2017 Bonds to the Corporation by (i) selling the Series 2017 Bonds pursuant to the Bond Purchase Agreement and (ii) depositing the proceeds of such sale in accordance with the Indenture. Neither the Corporation nor any other person shall have any legal or equitable interest in the proceeds of the Series 2017 Bonds or any proceeds of any investment thereof except to require their application in the manner and under the terms and conditions set forth in the Indenture.

The Loan shall be evidenced by a Note executed by the Corporation and secured in accordance with the Loan Agreement.

The Loan Agreement shall remain in full force and effect from the date of its execution and delivery until the date on which the Indenture shall be discharged and satisfied in accordance with the Indenture, at which time the Loan Agreement shall terminate and the City shall release and cancel the Loan Agreement and the Deed of Trust.

Payment Obligations of the Corporation. The Corporation shall pay when due (i) the total interest becoming due on all outstanding Bonds to the respective dates of payment thereof; (ii) the total principal amount of or Sinking Fund Installment due on the outstanding Bonds; and (iii) all redemption premiums (if any) payable on the redemption of outstanding Bonds prior to stated payment dates.

In addition, the Corporation shall pay when due (i) the Administrative Expenses of the City upon receipt of an invoice therefor, (ii) any amount required to maintain the Reserve Funds at the Reserve Fund Requirement in accordance with the Indenture and (iii) any other amount required to be paid by the Corporation pursuant to the Indenture.

As consideration for the issuance of the Series 2017 Bonds and the making of the Loan to the Corporation by the City in accordance with the provisions of the Loan Agreement, the Corporation agrees to execute and deliver to the City the Note substantially in the form attached to the Loan Agreement. In addition, the Corporation agrees, in accordance with and as provided in the Indenture, to make prompt payment to the Trustee, as assignee and pledgee of the City, for deposit in the Debt Service Fund, of all amounts payable under the Note as and when the same shall be due and payable, and to pay pursuant to the Loan Agreement and the Note sums sufficient to pay the principal and purchase price of, and premium, if any, or interest on the Series 2017 Bonds (whether at maturity, upon redemption or acceleration, or otherwise) when and as the same shall be due and payable. All such payments shall be made to the Trustee at its designated corporate trust office in lawful money of the United States of America, except as may be otherwise agreed to by the Trustee.

In order to provide for the payment of the amounts due under the Loan Agreement with respect to the Series 2017 Bonds, the Corporation shall pay an amount equal to the sum of the following:

(i) on the fifth Business Day prior to each Interest Payment Date, an amount equal to the interest becoming due on the outstanding Series 2017 Bonds on such Interest Payment Date; and

(ii) on the fifth Business Day prior to each Interest Payment Date, an amount equal to the principal of and the Sinking Fund Installment for the outstanding Series 2017 Bonds, if any, becoming due on such Interest Payment Date.

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If the Corporation should fail to make any of the payments described under this caption, the item or installment which the Corporation has failed to make shall continue as an obligation of the Corporation until the same shall have been fully paid, and the Corporation agrees to pay the same with interest thereon at the rate per annum borne by the Series 2017 Bonds until paid in full.

At the times required by the Tax Certificate, the Corporation shall pay to the Trustee for deposit in the Rebate Fund, moneys sufficient to satisfy the requirements of the Tax Certificate with respect to the Rebate Amount.

There shall be credited against the payment obligations of the Corporation as set forth in the Loan Agreement any moneys on deposit in the Debt Service Fund that are available to make such payment (without regard to the transfer of City-Wide Hotel Tax Revenues to the Debt Service Fund pursuant to the Indenture).

If the Corporation shall fail to perform any of the affirmative covenants contained in the Loan Agreement or to protect or preserve the Corporation's assets and properties, or if the Corporation shall fail to protect or preserve the Property or the status and priority of the security interest of the City in the Property, the City may, within ten days of the date on which such payments become due and payable, make advances from any moneys available to it to perform the same on behalf of the Corporation or to protect or preserve the assets and properties of the Corporation or to protect and preserve the Property or the status and priority of the security interest of the City in the Property, and all sums so advanced shall immediately upon advancement become secured by the security interest created by the Loan Agreement, and the terms and provisions of the Loan Agreement and all of the Bond Documents. The Corporation shall repay on demand all sums so advanced on the Corporation’s behalf, plus any expenses or costs incurred by the City, including attorneys' fees. The provisions of the Loan Agreement described above shall not be construed to prevent the institution of the rights and remedies of the City upon the occurrence of an Event of Default by the Corporation. Notwithstanding anything in the Loan Agreement to the contrary, the authorization contained in the Loan Agreement shall impose no duty or obligation on the City to perform any action or to make any advancement on behalf of the Corporation and is for the sole benefit and protection of the City.

Deposit of Gross Operating Revenues. Notwithstanding any provision of the Loan Agreement or the Note to the contrary, the Corporation shall deposit or cause to be deposited all of the Gross Operating Revenues as calculated on a cash basis (less the Petty Cash Amounts) into the Hotel Lockbox Fund or the Parking Lockbox Fund at the times and otherwise as required by the Indenture, Hotel Cash Management Agreement, Parking Cash Management Agreement, Hotel Operating Agreement and Parking Management Agreement.

Security Interest in Loan Collateral. As security for the Corporation’s Bond Obligations, including, without limitation, its obligation to make timely payment of all amounts due under the Loan Agreement, the Corporation pledges, assigns and grants to the City a first lien and claim on and a security interest in the following, subject to Permitted Encumbrances:

(a) All of the right, title and interest in the Corporation in and to the Gross Revenues;

(b) All of the right, title and interest of the Corporation, if any, in and to the Funds and Accounts and all amounts that constitute Gross Operating Revenues on deposit in or required from time to time to be deposited in or credited to the Hotel Lockbox Fund or the Parking Lockbox Fund to be held by the Depository Bank under the Hotel Cash Management Agreement or the Parking Cash Management Agreement, all in accordance with the Indenture, the Hotel Cash Management Agreement, the Parking Cash Management Agreement, the Hotel Operating Agreement and the Parking Management Agreement; and

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(c) All of the right, title and interest of the Corporation in and to any and all other real or personal property of every name and nature from time to time hereafter by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or transferred, as and for additional security under the Loan Agreement by the Corporation or by anyone on its behalf, or with its written consent, to the City.

Simultaneously with the issuance of the Series 2017 Bonds, the Corporation shall deliver the Deed of Trust to the City as additional security for the Corporation’s Bond Obligations, which shall constitute a first lien position on the Project, subject to Permitted Encumbrances.

Consent to Assignment of Loan Agreement

The Corporation and the City understand that (a) the City will, pursuant to the Indenture and as security for the payment of the principal of, premium, if any, and interest on the Bonds, assign and pledge to the Trustee, and create a security interest in favor of the Trustee in certain of its rights, title and interest in and to the Loan Agreement (including all Receipts) reserving, however, the Reserved Rights of the City; and the Corporation agrees and consents to such assignment and pledge and (b) upon the occurrence of an Event of Default under the Indenture, the Trustee shall be entitled to exercise or enforce, or to seek to exercise or enforce, any of the right, title or interest of the City in and to the Loan Agreement. The City directs the Corporation, and the Corporation agrees, to make all payments of the City’s Administrative Expenses to the City and all other payments required under the Loan Agreement to, including payments with respect to the principal or Redemption Price of and interest on the Bonds and the Reserve Funds, to the Trustee.

Deposits to Excess Revenue Fund

The Corporation agrees that any monies deposited to the Excess Revenue Fund of the Indenture shall not be credited against the Corporation’s Bond Obligations.

Particular Agreements

Maintenance, Operation and Insuring of Project; Impositions. The Corporation agrees that it will at its own expense maintain and operate all portions of the Project during their useful lives or until they are replaced with facilities necessary in their operation. The Loan Agreement does not prevent the Corporation from merging or consolidating with another entity as permitted by the Indenture. The Corporation further agrees that it will pay all Impositions levied with respect to the Project and the income therefrom and that it will at its own expense keep the Project properly insured against loss or damage, in each case as provided in the Indenture.

Maintenance of Existence. The Corporation agrees that so long as any Bonds remain outstanding it shall maintain its existence as a nonstock corporation organized under the laws of the State of Maryland and shall not merge or consolidate with any other entity and shall not transfer or convey all or substantially all of its property, assets and licenses; provided, however, the Corporation may, without violating any provision of the Loan Agreement, consolidate with or merge into another domestic entity (i.e., an entity existing under the laws of one of the states of the United States of America or the District of Columbia) or permit one or more other domestic entities to consolidate with or merge into it, or transfer all or substantially all of its assets to another domestic entity, but only pursuant to the conditions set forth in the Indenture.

Assignment, Pledge, Sale or Lease of Project. The Corporation may not assign or pledge its interest in the Loan Agreement nor sell, lease or otherwise dispose of the Project, except in accordance with the Indenture.

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Covenant to Maintain Tax Exemption. The City and the Corporation covenant and agree that they shall not take any action, cause any action to be taken, omit to take any action or cause any omission to occur which would cause the interest on the Tax-Exempt Bonds to become includable in the gross income of the recipients thereof for purposes of federal income taxation. The Corporation will take such action or actions as may be necessary, in the opinion of Bond Counsel, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service whether currently existing or hereafter made effective pertaining to obligations which are tax-exempt pursuant to Sections 103 of the Code.

Local Requirements. The Corporation shall comply with the local requirements of the City, including but not limited to the following: (a) MBE/WBE, in accordance with the provisions of the City Code Article 5, Subtitle 28; (b) Living Wage, in accordance with the provisions of the City Code Article 5, Subtitle 26; (c) First Source Hiring Agreement program, in accordance with the form of the First Source Hiring Guide attached to the Loan Agreement; and (d) the requirements applicable to a public body under the State Open Meetings Act, Section 10-501 et. seq. of the State Government Article of the Annotated Code of Maryland.

Events Of Default And Remedies

Events of Default. The following shall be “Events of Default” under the Loan Agreement and the term “Event of Default” shall mean, whenever it is used in the Loan Agreement, any one or more of the following events:

(a) an Event of Default, as defined in the Indenture, has occurred and is continuing under the Indenture; and

(b) Any Event of Default, including any of the following:

(i) failure by the Corporation to make any payment required to be made under the Note or the Loan Agreement when the same becomes due and payable;

(ii) if the Corporation takes or fails to take any action that causes the interest on the Tax- Exempt Bonds to be included as gross income;

(iii) failure by the Corporation to observe or perform any agreement in the Loan Agreement or on its part to be observed or performed other than as referred to in (a) above, for a period of 30 days after written notice, specifying such failure and requesting that it be remedied, given to the Corporation by the City or the Trustee, unless the City and the Trustee shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the City and the Trustee will not unreasonably withhold their consent to an extension of such time if it is possible to correct such failure and corrective action is instituted by the Corporation within the applicable period and diligently pursued until the failure is corrected; or in the case of any such default which can be cured with due diligence but not within such thirty-day period, the Corporation’s failure to proceed promptly to cure such default and thereafter prosecute the curing of such default with due diligence;

(iv) failure by the Corporation to pay any and all Impositions levied with respect to the Project and the income therefrom;

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(v) failure by the Corporation to maintain existence as a non-stock corporation under the laws of the State of Maryland;

(vi) failure by the Corporation to comply with the Local Requirements set forth in the Loan Agreement;

(vii) any representation by or on behalf of the Corporation contained in the Loan Agreement or in any instrument furnished in compliance with or in reference to the Loan Agreement, the Indenture or any other Transaction Document proves false or misleading in any material respect as of the date of the making or furnishing thereof;

(viii) the construction of the Project is not carried on with reasonable dispatch or at any time is discontinued for a period of fifteen Business Days following delivery by the Corporation of the second written notice to the Design/Builder as set forth in the Design/Build Agreement;

(ix) unless adequately insured or bonded in the sole opinion of the City, any final judgment against the Corporation or any attachment or any levy against the Property with respect to a claim for an amount in excess of $25,000 remains unpaid, undischarged, unbonded or undismissed for a period of thirty days;

(x) failure by the Corporation to take appropriate action with respect to an approval or consent in a timely fashion when required under any Transaction Document;

(xi) failure by the Corporation to provide the City with any information or documents pertaining to the Corporation or the Project within 5 days of the request, unless previously agreed upon by the City; or

(xii) any Transaction Document, including without limitation, the Indenture, for any reason ceases to be in full force and effect or is declared to be null and void which has a Material Adverse Effect.

The foregoing provisions described in (b) above, except for (b) (viii), are subject to the following limitations: If by reason of force majeure, the Corporation is unable in whole or in part to carry out the agreements on its part therein referred to, the failure to perform such agreements due to such inability shall not constitute an Event of Default nor shall it become an Event of Default upon appropriate notification to the Corporation or the passage of the stated period of time. The term “force majeure” as used in the Loan Agreement shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States of America or of the State or any of their departments, agencies, political subdivisions or officials, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; fires; hurricanes; tornadoes; storms; floods; washouts; droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery, transmission pipes or canals; partial or entire failure of utilities; or any other cause or event not reasonably within the control of the Corporation. The Corporation agrees, however, to remedy with all reasonable dispatch the cause or causes preventing the Corporation from carrying out its agreements; provided, that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Corporation, and the Corporation shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is, in the judgment of the Corporation, unfavorable to the Corporation.

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Remedies. Upon the occurrence of an Event of Default described in (a) above under the heading “Events of Default,” and upon notice thereof to the Corporation as provided in the Indenture, the City may and upon the written request of the Trustee, shall:

(i) accelerate the payment of the Loan and all amounts due under the Loan Agreement or the Indenture by notice to the Corporation, whereupon the entire unpaid principal of the Loan and all interest accrued thereon and all amounts to be paid under the Loan Agreement shall immediately become due and payable without further demand upon the Corporation;

(ii) file suit against the Corporation under the Loan Agreement or the Indenture;

(iii) take any action at law or in equity to collect the payments due and thereafter to become due, or to enforce the performance and observance of any obligation, agreement or covenant of the Corporation under the Loan Agreement or the Deed of Trust, including the right to foreclose the Deed of Trust;

(iv) accept a deed in lieu of foreclosure from the Corporation in lieu of foreclosing upon the Property; or

(v) appoint a receiver on behalf of the Corporation to manage the Property and the revenues and profits thereof, with all such other powers as the court making such appointment shall confer; and

Upon the occurrence of an Event of Default as set forth in (b) above under the heading “Events of Default" and upon notice thereof to the Corporation as provided in the Loan Agreement and the Indenture, as applicable, the City may:

(i) seek specific performance or injunctive relief to enforce performance of the undertakings, duties and agreements provided in the Bond Documents, whether or not a remedy exists at law or is adequate;

(ii) exercise any right of the Corporation to give consent or notice, to take any act or refrain from taking any act, and otherwise act in the full place and stead of the Corporation in any Transaction Document, either in its name or in the name of the Corporation (and the Corporation grants the City an irrevocable power of attorney to use the Corporation’s name); provided that if the Event of Default is an Event of Default as set forth in the Loan Agreement, then such right to exercise the remedy set forth in this clause shall be restricted to relate solely to curing such Event of Default unless such Event of Default results in a Material Adverse Effect with respect to the Project, or any part thereof;

(iii) take such actions as it deems necessary to cause to be removed any of the Corporation’s directors who are not ex-officio directors and cause to be appointed a like number of replacement directors named by the City and cause each replacement director to serve for the remainder of the term of the director being replaced; or

(iv) perform any additional rights set forth as Reserved Rights of the City.

Agreement to Pay Counsel Fees and Expenses. If there should occur a default or an Event of Default as described above under the heading “Events of Default,” and the Trustee or the City should employ counsel or incur other expenses for the collection of sums due under the Loan Agreement or the enforcement of performance or observance of any agreement on the part of the Corporation contained in the Loan Agreement, the Corporation agrees that it will on demand therefor pay to the Trustee or the City the fees of such counsel and such other expenses so incurred by the Trustee or the City. If the Corporation should fail to make any payments described under this heading, such item shall continue as

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an obligation of the Corporation until the same shall have been paid in full, with interest thereon from the date such payment was due at the rate per annum borne by the Bonds until paid in full.

Waiver of Events of Default and Rescission of Acceleration. At any time after the Loan and all amounts due under the Loan Agreement shall have been declared to be due and payable, and before the entry of final judgment or decree in any suit, action or proceeding instituted on account of such default, or before the completion of the enforcement of any other remedy under the Loan Agreement, the Deed of Trust or the Indenture, the City may, and upon the written direction of the Trustee shall, by written notice to the Corporation, annul such declaration and its consequences if: (i) no acceleration of the maturity of the Bonds shall have been declared pursuant to the Indenture or such declaration of acceleration shall have been annulled in accordance with the provisions of the Indenture, and (ii) every default in the payment of any amount or the observance or performance of any covenant, condition or agreement contained in the Bonds or in the Indenture, the Loan Agreement or the Deed of Trust of which the City has knowledge shall have been remedied to the satisfaction of the City and the Trustee. No such annulment shall extend to or affect any subsequent default or impair any right consequent thereon.

No Waiver of Rights. No failure or delay by the City or the Trustee in exercising any right, remedy, power or privilege under the Loan Agreement, the Indenture or the Deed of Trust, nor any single or partial exercise thereof nor the exercise of any other right, remedy, power or privilege shall affect the rights, remedies, powers or privileges of the City or the Trustee under the Loan Agreement, the Indenture or the Deed of Trust or shall operate as a waiver thereof. The rights, remedies, powers and privileges of the City and the Trustee under the Loan Agreement are cumulative and not exclusive of any other rights, remedies, powers or privileges now or hereafter existing at law or in equity.

Right to Enter and Occupy the Project; Receiver. If an Event of Default shall occur, the Corporation, upon demand, shall surrender to the City the actual possession of the Project, subject to the rights of the holders of any liens which are Permitted Encumbrances taking priority over the rights of the City in the property subject to such Permitted Encumbrances. The City, by such officers or agents as it may appoint, may enter and take possession of the Project or any part thereof, may exclude the Corporation, their agents and employees therefrom, and may use, operate, manage and control the Project or any part thereof. Upon every such entry, the City, at the expense of the Corporation and of the Project, from time to time, may make all necessary or proper repairs, renewals, replacements, alterations, additions and improvements to the Project as the City may deem judicious. The City may pay all costs and expenses of so taking, holding and managing the Project, including (without limitation) reasonable compensation to its employees and other agents, attorneys’ fees and management and rental commissions, and any taxes or assessments which the City may deem it wise or desirable to pay. The City shall have the right to manage the Project or any part thereof, to collect the revenues and profits therefrom and to carry on the business and exercise all rights and powers of the Corporation, either in the name of the Corporation, or otherwise, as the City shall deem advisable. The same right of entry shall exist if any subsequent Event of Default shall occur. The City shall apply the revenues of the Project in the manner provided for in the Indenture. Whenever all that is due upon the principal of, and interest and redemption premiums, if any, on the Outstanding Bonds and under any of the terms of the Loan Agreement shall have been paid and all Events of Default cured, the City shall surrender possession of the Project to the Corporation.

In addition to the foregoing, if an Event of Default shall occur, the City shall be entitled as a matter of right, and without regard to the adequacy of the security, to the immediate appointment of a receiver of the Project and of the revenues and profits thereof, with all such other powers as the court making such appointment shall confer. The City shall give notice to the Corporation of its intent to exercise such right, but failure to give such notice shall not affect the validity of any exercise of such right.

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The Corporation shall deliver to the receiver appointed, or to the City if the City takes possession of the Project or any part thereof, all original records, books, bank accounts, leases, agreements, security deposits of the lessees and all other materials relating to the operation of the Project.

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APPENDIX E

Summary of Certain Provisions of the Hotel Operating Agreement

The following statements are summaries of certain provisions of the Hotel Operating Agreement and are in addition and complementary to the information found under “THE PROJECT – Operation of the Project,” “SECURITY FOR THE SERIES 2017 BONDS – Loan Agreement – Security Interest in Gross Revenues” and “APPENDIX D – Summary of Certain Provisions of Indenture and Loan Agreement.” See also “APPENDIX C – Amended and Restated Master Glossary of Terms.” Reference is made to the Hotel Operating Agreement for its complete terms.

Operating Standards

Operating Standard Defined. The Hotel Manager agrees to operate the Hotel Project in accordance with certain Operating Standards, which include operating the Hotel Project: (a) consistent with the Hotel Operating Agreement, including the applicable Operating Plan and Budget and Capital Budget; (b) under the standards, policies and programs applicable to the operation of substantially all Comparable Other Hilton Hotels to the extent not inconsistent with the Hotel Operating Agreement, including purchasing, sales promotion and quality improvement programs; (c) as a full service, first-class, convention oriented Upscale Hotel; and (d) in a manner that will (1) protect and preserve the assets that comprise the Hotel Project; (2) maximize the financial return to the Corporation from the operation of the Hotel Project, taking into consideration the Room Block Agreement; and (3) control Operating Expenses.

The Hotel Manager agrees to retain the Rating Service to conduct a survey of the Hotel at least annually, beginning in the fourth Operating Year to review the prior Operating Year, to determine if the Hotel has attained an Upscale Rating. The failure to achieve an Upscale Rating does not constitute an Event of Default under the Hotel Operating Agreement if (1) Hotel Manager works diligently and in good faith to achieve such an Upscale Rating, (2) a Performance Termination Event has not occurred and (3) the Hotel has achieved an Upscale Rating in no less than four of the immediately preceding five Operating Years, with the first measurement period commencing in the fourth Operating Year (testing for Operating Year three).

Inability to Meet Operating Standard; Modification of Operating Standards. If the Hotel Manager believes that it cannot operate the Hotel to meet one of the Operating Standards without violating another of the Operating Standards or that the Garage is not being operated as required pursuant to the Approved Parking Agreement, it is required to notify the Corporation with recommendations as to modifications of the Operating Standards without compromising the operation or quality of the Hotel or changes in the operation of the Garage. The Corporation is not obligated to approve the proposed modifications so long as its disapproval is reasonable; provided that if Corporation does not approve any proposed recommendations or changes and solely as a respective result thereof, Hotel Manager fails to operate the Hotel in accordance with the Operating Standards, or a Performance Termination Event occurs, or an Upscale Rating is not achieved as required in the Hotel Operating Agreement, it shall not be a Manager Event of Default or such Performance Termination Event shall not be exercised, or Hotel Manager shall not be deemed to have failed to achieve an Upscale Rating as required in the Hotel Operating Agreement, as the case may be, and Hotel Manager shall have the right to Terminate the Hotel Operating Agreement, provided Hotel Manager shall receive full payment, in the order of priority as ordinarily paid, of (i) accrued or earned but unpaid Base Management Fees and Group Services Fees and Charges, from the Hotel Lockbox Fund and, if insufficient, from the Operating Reserve Fund, (ii) any Operating Expenses paid by Hotel Manager from its own funds from the Hotel Lockbox Fund and, if insufficient, from the Operating Reserve Fund, (iii) unpaid Reimbursable Expenses from the Hotel

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Lockbox Fund and, if insufficient, from the Operating Reserve Fund, (iv) percentage of accrued Eligible Employee Bonus Pool from the Eligible Employee Bonus Pool Fund and, if insufficient, from the Operating Reserve Fund, (v) accrued or earned and unpaid Subordinate Management Fees and Supersubordinate Management Fees from, respectively, the Subordinate Management Fee Fund and the Supersubordinate Management Fee Fund and, if insufficient, from the Cash Trap Fund and (vi) outstanding loan amounts under the Manager Guaranty, in the manner as set forth in the Manager Guaranty.

The Corporation is currently negotiating with the Hotel Manager to remove the Eligible Employee Bonus Pool and the Manager Guaranty from the Hotel Operating Agreement.

Establishing Rates, Rents, etc.

Establishing Rents, Etc. In connection with the Proposed Budget Documents, Hotel Manager (i) shall establish all prices, price schedules, rates and rate schedules, and all rents, lease charges and concession charges for all areas of the Hotel Project (collectively, the “Pricing”), (ii) shall have the right to implement at the Hotel Project national, regional or brand-wide value rates or promotional rates implemented at substantially all Comparable Other Hilton Hotels, and (iii) supervise, direct and control collection of income of any nature from the Hotel Project’s operations and the giving of receipts in connection therewith, provided, however, the foregoing shall in no way limit (y) Corporation’s right to review and approve the applicable Operating Plan and Budget (including, without limitation, the budgeted Gross Operating Revenues and the Pricing); or (z) Corporation’s right to appoint a Hotel Consultant and implement certain written recommendations of the Hotel Consultant. Further, Hotel Manager shall at all times have the right to implement at the Hotel Project national, regional or brand-wide value rates or promotional rates implemented at substantially all Comparable Other Hilton Hotels as Hotel Manager deems reasonably appropriate, provided any such rates are reflected in the Pricing set forth in the Proposed Budget Documents. Notwithstanding the foregoing, Hotel Manager’s establishment of room rates and schedules as described in this paragraph shall in all events be subject to the terms of the Room Block Agreement.

Interim Changes to Room Pricing Schedule. For so long as the Bonds are Outstanding, if Hotel Manager at any time believes that the current market conditions will not enable Hotel Manager to charge daily room rates or other Pricing at least equal to those set forth in the applicable Operating Plan and Budget for a period of two consecutive weeks or more, Hotel Manager shall have the right to reestablish all prices, price schedules, rates and rate schedules and all rent and lease charges and excluding the rates established in any Room Block Contract. Hotel Manager will promptly provide Corporation with a written detailed explanation of the situation and recommendations as to modifications of the applicable room rates or other Pricing. Upon request of Corporation, Hotel Manager shall meet with Corporation or Asset Manager to discuss such modifications. Corporation shall have the right to approve or disapprove of any such modifications unless (i) such modified rate schedules are not increased by more than 20% or decreased by more than 10% from the rate schedules of hotels in the Competitive Set; (ii) the revised budget prepared assuming such revised rate schedule does not result in Debt Service Coverage Ratios for the Bonds of more than 2.50:1.00 or less than 1.00:1.00; or (iii) if the Hotel Consultant has been appointed and is making recommendations, the Hotel Consultant does not recommend a different rate schedule or other Pricing as one of its recommendations.

Contracts Related to Hotel Project

The Hotel Manager shall negotiate, enter into and administer, as agent on behalf of the Corporation and for the benefit of the Hotel Project, certain contracts, including the Occupancy Agreements, service contracts and banquet and meeting facility contracts.

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Occupancy Agreements. Unless the Corporation has otherwise consented in writing (which consent shall not be unreasonably conditioned, withheld or delayed), the Hotel Manager is responsible for operating all space within the Hotel Project, including restaurants and lounges.

Service Contracts. The Hotel Manager is to enter into, as agent for and on behalf of the Corporation, service contracts for Hotel Project operations, including contracts for health and safety systems maintenance, electricity, gas, water, sewer, refuse disposal, telephone, cleaning, elevator and boiler maintenance, air conditioning maintenance, laundry and dry cleaning, master television service, broadband, high-speed internet access and other technological services as they are developed, use of copyrighted materials (such as music and videos), entertainment, and other services the Hotel Manager deems advisable, provided that Corporation reserves the right to contract for utilities and other services for the Hotel Project if, by so contracting, the cost of providing such services is reduced without materially reducing the quality of the services provided. Hotel Manager shall not be responsible for the management and administration of the Garage.

Banquet and Meeting Facility Contracts. The Hotel Manager is to enter into, as agent for and on behalf of the Corporation, contracts for the use of banquet and meeting facilities and guest rooms by groups and individuals.

Licenses and Permits. The Hotel Manager is to obtain all licenses and permits required for the management and operation of the Hotel Project or the making of Capital Improvements, as and when required under the Applicable Laws.

Approval of Certain Contracts. The Corporation’s written approval (which may not be unreasonably withheld, conditioned or delayed) is required for the negotiation, execution or administration of any Occupancy Agreement, contract, license, permit or agreement; provided, that such approval shall not be required for any such service contract, license, permit or agreement (other than an Occupancy Agreement) that (1) has a term (including any automatic renewals thereof) of less than one year, and requires aggregate payments of less than $100,000; (2) was specifically listed in and approved by the Corporation as part of the Operating Plan and Budget or the Capital Budget and for which the cost thereof is included in the Operating Plan and Budget or the Capital Budget, as applicable; or (3) for water, sewer, electricity, natural gas or refuse disposal services to the Hotel Project; or (4) for the provision of employee benefits for Hotel Manager’s employees. The Corporation may instruct that contracts providing for payments in any one year in excess of $40,000 be competitively bid. The Corporation’s approvals are deemed given if the Corporation fails to respond within ten Business Days (unless extended for an additional 10 Business Days) from the date of the Hotel Manager’s request for approval.

Contracts With Related Parties. The Hotel Manager may not enter into any contract, as a result of which the Hotel Manager, or any affiliate of or party related to the Hotel Manager, receives any Direct or Indirect Profit.

Provisions Applicable to All Contracts. Other than Nonassignable Contracts, the Hotel Manager is to use commercially reasonable efforts to include in all contracts a provision stating that such contracts are fully assignable to the Corporation or, at the direction of the Corporation, to a successor manager. Upon the Termination of the Hotel Operating Agreement, the Hotel Manager is to assign to the Corporation or its designee all contracts and agreements described therein (other than Nonassignable Contracts). In addition, Hotel Manager shall use commercially reasonable efforts to include in each such contract and agreement a “no personal liability” clause in favor of Corporation. The Hotel Manager is required to (a) generally comply with its standard practices and policies for Other Hilton Hotels (including competitive bidding) in the selection of vendors under contacts for goods and services; (b)

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select vendors that will provide the best combination of cost, quality of goods and services; (c) give preference to local vendors in its selection process if the local vendors are competitive in pricing and permit the Hotel Manager to operate the Hotel Project in the manner contemplated under the Hotel Operating Agreement and (d) use all commercially, reasonable, good faith efforts to utilize the services of City-certified minority business enterprises (“MBEs”) and women’s business enterprises (“WBEs”) in the selection of vendors under contracts for goods and services and the operation of the Hotel Project.

Maintenance of Hotel Project and FF&E

The Hotel Manager is to keep the Hotel Project and the FF&E which serves the Hotel Project in good operating order, repair and condition in accordance with the Operating Standard, including making necessary replacements, improvements, additions and substitutions and implementing a preventative maintenance program, subject to Sufficient Funds being available. In connection with such programs, the Hotel Manager is to arrange to have the Hotel Project and the FF&E physically inspected at least once each Operating Year (commencing with the second full Operating Year) by a party selected by the Corporation who shall prepare a report describing the results of such inspection and any recommended actions. The cost of such inspection shall be paid from the Gross Operating Revenues as an Operating Expense.

Supervision and Coordination of Renovations, Improvements, Etc.

The Hotel Manager agrees to (a) supervise and coordinate the construction and installation of any renovations, improvements, repairs or replacements of a capital nature to the Hotel Project at no additional fee to the Hotel Manager unless such fee is in the applicable Capital Budget or approved by the Corporation and (b) cooperate with, and render assistance to, the Trustee, the Corporation and their respective designees and consultants in any related design review and project oversight. Hotel Manager shall not change the signage or physical appearance of the exterior of the Hotel Project, including street scape and public space, without the written approval of the Corporation, which can be withheld at the sole discretion of Corporation. Corporation may, at its option, supervise and coordinate, or cause to be supervised and coordinated, the construction and installation of any renovations, improvements, repairs or replacements of a capital nature to the Hotel Project by giving Hotel Manager notice, concurrently with its approval of the Capital Budget which includes such renovations, improvements, repairs or replacements, of its elections to supervise and coordinate such work.

Purchase of Inventories, Supplies and Consumables

The Hotel Manager is to purchase, as agent for and on behalf of the Corporation, all inventories, provisions and consumable and operating supplies to maintain and operate the Hotel Project in accordance with the Operating Standards, use the same in the management and operation of the Hotel Project, and act in a commercially reasonable and economical manner in purchasing such items. The Corporation is to own all such inventories, provisions and consumables and operating supplies.

Legal Services

Retention of Legal Counsel. The Hotel Manager is to retain legal counsel (reasonably acceptable to the Corporation) to perform legal services for the Hotel Project in the ordinary course of business. The Hotel Manager is to, as an Operating Expense, (a) commence ordinary collection lawsuits to collect charges, rent or other income from the Hotel Project’s operations; (b) after written notice to Corporation of such claims, commence legal or other actions, as the Hotel Manager prudently and reasonably deems appropriate, to (1) enforce or terminate any contract or agreement related to the Hotel Project’s operations and under which the third party contractor is in default provided Corporation has received written notice

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of such default prior to such enforcement and termination, (2) oust or dispossess guests, tenants or other persons in possession who are not entitled to occupy any portion of the Hotel Project; and (3) cancel or terminate any lease, license or concession agreement for a breach thereof or default thereunder, provided Corporation has received written notice of such breach prior to such cancellation or termination; and (c) take appropriate steps to challenge, protest, appeal and/or litigate to final decision any counterclaims related to the foregoing, provided that if such counterclaim involves a claim for more than $75,000 (to be increased or decreased each Operating Year by the percentage change in the Index), provided such claim would constitute an Operating Expense or be payable from any Funds, or any counterclaim asserted against the Corporation, such counterclaim and litigation shall be subject to joint control as described below.

Joint Control of Certain Legal Proceedings. In respect of legal proceedings of a nature other than those discussed above that subject the Corporation or Hotel Manager to liability risk in excess of $75,000 (to be increased or decreased each Operating Year by the percentage change in the Index) that would constitute an Operating Expense or be payable from any Funds, the Corporation and the Hotel Manager are to (a) jointly select counsel reasonably acceptable to both Parties to represent both Parties, (b) coordinate and reasonably cooperate with regard to case management strategy, (c) have the right to review pertinent documents prior to submission to court and (d) participate in any settlement discussions.

Settlement of Claims. The Hotel Manager may not settle any claim, action, counterclaim or employment claim (if it would otherwise constitute an Operating Expense or be payable from any Funds) without the Corporation’s consent if such settlement would result in an uninsured liability for the current Operating Year in excess of $200,000 (to be increased or decreased each Operating Year by the percentage change in the Index). The Corporation will be deemed to have consented to any proposed settlement unless the Corporation delivers to the Hotel Manager a written notice rejecting such settlement within the period of time set forth in the Hotel Operating Agreement.

Taxes

Remitting Sales and other Similar Taxes. The Hotel Manager is to collect, on behalf of the Corporation, and account for and remit to applicable governmental authorities all Gross Receipts Taxes prior to delinquency. If any such Gross Receipts Taxes are deposited in the Lockbox Fund, Hotel Manager shall have the right to withdraw the amount of such deposited taxes in order to remit same to the applicable governmental authorities.

Ad Valorem Taxes and Personal Property Taxes. The Hotel Manager is to pay all ad valorem and personal property taxes, or payments in lieu thereof prior to delinquency, which shall be paid from the Taxes and Insurance Fund.

Indemnification by Hotel Manager. Hotel Manager shall indemnify, protect and hold the Corporation harmless for, from and against all costs, expenses, claims or liability arising from Hotel Manager’s failure to fulfill its obligations to pay taxes as described above, subject to Sufficient Funds being available to pay such taxes.

Financial Matters

The Hotel Manager is to keep the Corporation informed and advised of all material financial and other matters concerning the Hotel Project and its operation.

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Approval/Disapproval of Budgets

Delivery of Budgets. On or before November 1 of each Operating Year, the Hotel Manager is to prepare and deliver to the Corporation and its designees and consultants, a Proposed Operating Plan and Budget, including a proposed room rate schedule, and a Proposed Capital Budget, for the next ensuing Operating Year. Proposed Budget Documents are subject to the review and approval process described below under “Approval of Pricing and Budgets.”

Preparation Standards. Each Proposed Operating Plan and Budget is subject to the requirements set forth in the Hotel Operating Agreement. In addition, each Proposed Operating Plan and Budget and Proposed Capital Budget is to be prepared (a) giving due consideration to all relevant factors, including existing market and economic conditions and operation of the Hotel Project in a manner consistent with the Operating Standards and the Room Block Commitment; (b) in accordance with the Hotel Manager’s standard planning and budgeting requirements applicable to substantially all Comparable Other Hilton Hotels; (c) in the form used by the Hotel Manager at substantially all Comparable Other Hilton Hotels at the time of preparation of the applicable budget; (d) with respect to the proposed Capital Budget, to provide a written statement setting forth the basis of and purpose for each line item and (e) to include costs for specific renovations or replacements of the Hotel Project components including costs related to changes to the Hilton Requirements.

Required Information and Hotel Projections. Each Proposed Operating Plan and Budget is required to include: (a) annualized projections and monthly estimated results of operations of Gross Operating Revenue, Operating Expenses, Gross Operating Profit and Net Operating Income; (b) a statement of cash flow depicting monthly source and use of cash and a schedule of any anticipated expenditures to be made for each month from certain Funds held by the Trustee under the Indenture; (c) if the Proposed Operating Plan and Budget will result in a Debt Service Coverage Ratio of less than the Debt Service Coverage Requirement, a detailed explanation as to why the Hotel Manager has not budgeted to attain such ratio; (d) for each month, estimates of total labor costs, Group Service Fees and Charges, occupancy and average room rates and amount of accounts receivable and accounts payable that are more than 90 days past due; (e) a Capital Budget and a five-year replacement and renewal plan for the Hotel Project and (f) a marketing plan for the Hotel.

Approval of Pricing and Budgets

Approval of Pricing. Pursuant to the Indenture, the Corporation has agreed that it will not disapprove of a proposed room rate schedule or other Pricing by the Hotel Manager so long as certain conditions are satisfied, all as described under “APPENDIX D – Summary of Certain Provisions of the Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Operation of the Project – Management of the Hotel Project.” The provisions of the Indenture described under this caption have been incorporated in the Hotel Operating Agreement as required by the Indenture. Pursuant to the Room Block Agreement, the Corporation and the Hotel Manager shall also determine, during the Annual Budget Meeting, room block pricing and the maximum amount by which the Hotel Manager may increase room rates in future years in a Room Block Commitment. Hotel Manager will provide an annual report to Corporation of Room Block Contracts proposed and accepted under the Room Block Agreement.

Approval of Budgets. The Corporation and the Hotel Manager are to meet within 15 days after the Corporation’s receipt of the Proposed Budget Documents for any Operating Year. At such meeting, (A) Corporation shall provide to Hotel Manager its then current estimate of Corporation’s Administrative Expenses for the next ensuing Operating Year; and (B) Hotel Manager shall provide to Corporation its final Proposed Budget Documents for the applicable Operating Year, together with an explanation of the changes from the proposed budgets initially delivered to Corporation. Except as described below under

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“Budget Review Standards”, the Corporation shall approve expenses set forth in the final proposed Operating Plan and Budget or final proposed Capital Budget, as applicable, related to bringing the Hotel Project in compliance with the Hilton Requirements, if with respect to each modification to the Hilton Requirements, Hotel Manager has established to the reasonable satisfaction of the Corporation that (A) such modifications have been or are being made on substantially the same schedule at substantially all Comparable Other Hilton Hotels and (B) the implementation of such modifications on the schedule proposed by the Hotel Manager is appropriate, taking into account the cost and impact on Hotel Project revenues, the expense of the upgrades, the remaining useful life of the items to be replaced by the upgrades and the remaining term of the Hotel Operating Agreement. If Corporation and Hotel Manager are unable to agree upon the Proposed Budget Documents for an Operating Year within fifteen days after such initial 15-day period, then within ten days after the expiration of such second 15-day period, Corporation shall deliver to Hotel Manager its written objections to the Proposed Budget Documents. If Corporation fails to deliver to Hotel Manager its written approval or disapproval of the Proposed Budget Documents within such 10-day period, then such proposed Operating Plan and Budget and/or proposed Capital Budget, as applicable, shall be deemed the approved Operating Plan and Budget and/or approved Capital Budget for the applicable Operating Year, until Corporation delivers to Hotel Manager its objections in writing. At such time as Corporation timely delivers its objections to such proposed budgets, such disapproval shall specifically include the items disapproved. During the 15-day period following Hotel Manager’s receipt of Corporation’s items of disapproval, Corporation and Hotel Manager will meet to discuss the disapproved items. Within five days after the expiration of such third 15-day period, Hotel Manager shall submit to Corporation (and any designee or consultant appointed by Corporation) revised Proposed Budget Documents incorporating such revisions as Corporation and Hotel Manager agreed upon during such third 15-day period. If the Parties do not agree upon such revisions, then the Corporation shall retain a Hotel Consultant (who has not participated in Corporation's objection) to review the matter(s) in dispute and recommend a resolution to such dispute. If the Parties do not agree upon such resolution, then either Party may request arbitration as set forth in the Hotel Operating Agreement.

Budget Review Standards. The Corporation has the right to object to any aspect of any Proposed Budget Documents if: (a) the objection or change would not materially (1) interfere with Hotel Manager’s operation of the Hotel Project in a manner consistent and in compliance with the Operating Standards, (2) impair the Hotel Manager’s ability to achieve a Performance Test or (3) interfere with the Hotel Manager’s fulfillment of its agreements, responsibilities, obligations, duties or covenants under the Hotel Operating Agreement; (b) the budget is not consistent with the Room Block Agreement or rates approved by Hotel Manager or Corporation pursuant to a Room Block Contract; (c) as to a Proposed Capital Budget, there are not Sufficient Funds available to make the proposed Capital Improvements set forth therein; (d) the Proposed Operating Plan and Budget will result in a Debt Service Coverage Ratio of less than the Debt Service Coverage Requirement; (e) as to a Proposed Capital Budget, all or some of the proposed Capital Improvements represent material upgrades to the quality or facilities of the Hotel Project (as distinct from repairs, maintenance or replacements required to prevent any diminution in quality) that are not, in Corporation’s reasonable opinion, required to satisfy each Operating Standard; or (f) as to a Proposed Capital Budget, any proposed upgrades to the quality of the facilities of the Hotel Project, including upgrades required under a change to the Hilton Requirements, would (A) be imprudent based upon a reasonable weighing of the costs and benefits to the Hotel Project of the upgrades (taking into account the cost and impact on Hotel Project revenue and expense of the upgrades, the useful life of the upgrades, and the remaining term of the Hotel Operating Agreement); or (B) render funds in the Senior FF&E Reserve Fund, the Subordinate FF&E Reserve Fund, the Operating Reserve Fund, or Cash Trap Fund inadequate for other necessary FF&E and Capital Expenses or funding of other amounts as contemplated by the Hotel Operating Agreement or an existing approved Capital Budget. The foregoing shall not in any way limit Corporation’s right to approve a proposed Capital Budget as to reasonableness of specifications and cost of implementing any upgrade set forth therein.

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Arbitration of Proposed Budgets. If the Parties, despite their good faith efforts, are unable to reach final agreement on the Proposed Budget Documents for an Operating Year by December 31 of the prior Operating Year, either Party or the Trustee may, by delivering written notice of its requirement for arbitration by January 15 of such Operating Year (each such notice, an “Arbitration Request”), require that the matter(s) in dispute be submitted to arbitration pursuant to the Hotel Operating Agreement.

If neither Party nor the Trustee delivers an Arbitration Request by the required date, the rights to arbitrate the matters in dispute are waived and the Proposed Budget Documents for the applicable Operating Year are deemed to be the Operating Plan and Budget and Capital Budget for such Operating Year; provided that any Operating Expense line item that is in dispute in the Proposed Operating Plan and Budget may not be greater than one hundred ten percent (110%) of the amount of the actual Operating Expenses incurred for such line item during the Operating Year preceding the Operating Year covered by the Proposed Operating Plan and Budget, unless the actual increase in such line item correlates to a ratable increase in Gross Operating Revenues generated by the budgeted line item for the prior Operating Year.

If either Party or the Trustee timely delivers an Arbitration Request regarding the Proposed Operating Plan and Budget, until the arbitrator issues its decision regarding the disputed items, the Proposed Operating Plan and Budget is to govern the areas of operations not in dispute and, commencing with the first full Operating Year after the opening of the Hotel, the prior year’s Operating Plan and Budget is to govern the areas in dispute, except that Hotel Manager may increase the budgeted revenues and expenses provided for such disputed item(s) in the prior year’s Operating Plan and Budget by an amount not in excess of the lesser of 5% of the actual amount of the applicable expense line item for such prior Operating Year, the percentage increase in the Index during the immediately preceding Operating Year or the amount of the increase proposed by the Hotel Manager.

If either Party or Trustee timely delivers an Arbitration Request regarding the proposed Capital Budget, then, until the arbitrator issues its decision regarding the disputed items in the proposed Capital Budget, the proposed Capital Budget shall govern the areas of operations not in dispute and Hotel Manager may not incur a Capital Expense for a disputed Capital Improvement or purchase FF&E specifically related to the disputed Capital Improvement included in a proposed Capital Budget unless the Capital Expense (A) is for an amount not in excess of $25,000 (subject to increase based upon the change in the Index from the Required Opening Date to the beginning of the 12 month period in question) and when aggregated with all other Capital Expenses incurred for any other disputed Capital Improvements during such Operating Year, does not exceed $50,000 (subject to increase based upon the change in the Index from the Required Opening Date to the beginning of the 12 month period in question); (B) is necessary to eliminate or remove an Emergency; or (C) is required by Applicable Laws.

Permitted Variations from Budget. During the Operating Term, the Hotel Manager (a) is to use commercially reasonable efforts to operate within each approved Operating Plan and Budget and approved Capital Budget; and (b) may not substantially deviate from the budgeted Capital Expenses and FF&E in an approved Capital Budget unless the Hotel Manager obtains the prior consent of the Corporation (a deviation in excess of $50,000 in total Capital Expenses and FF&E in the first and second Operating Years and $100,000 in each Operating Year thereafter is substantial), except that the Hotel Manager is entitled to reallocate up to 10% of a line item in the Capital Budget to one or more line items in the Capital Budget without the Corporation’s consent so long as the remaining dollars in those line items from which such 10% is removed are sufficient to complete the work contemplated by those line items and no more than 10% of the Capital Budget is reallocated. Hotel Manager shall prepare and deliver to Corporation each month a monthly variance report setting forth any deviation from the Operating Plan and Budget and/or the Capital Budget, including deviations from line items therein.

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Characteristics of Budgets. The Corporation acknowledges that (a) the Capital Budget and Operating Plan and Budget each are intended by the Hotel Manager to be reasonable estimates of income and expenditure only; (b) the Hotel Manager does not give any guarantee, warranty or representation in connection with any Capital Budget or Operating Plan and Budget, other than that Hotel Manager prepared same in good faith, utilizing all available facts and commercially prudent business methods; and (c) a failure of the Hotel Project to achieve any Operating Plan and Budget will not in and of itself constitute an Event of Default or breach by the Hotel Manager under the Hotel Operating Agreement. The acknowledgement is not a limitation on (1) the Hotel Manager’s obligations (A) to use commercially reasonable efforts to operate within the approved Operating Plan and Budget and the Capital Budget; or (B) to obtain the Corporation’s approval prior to making expenditures that exceed in the aggregate the amount of the approved or authorized Capital Budget by more than $50,000; or (2) the Corporation’s right to terminate the Hotel Operating Agreement, including by reason of a Performance Termination Event or an Event of Default under the Hotel Operating Agreement.

Hotel Consultant. The Hotel Manager acknowledges in the Hotel Operating Agreement that the Corporation is to appoint a Hotel Consultant under each of the following circumstances, such appointment to occur not later than 30 days after the pertinent Proposed Operating Plan and Budget, Monthly Report or audited annual financial statements are received: (a) if the Proposed Operating Plan and Budget will not result in the Debt Service Coverage Requirement being met; (b) if the actual Debt Service Coverage Ratios with respect to the Bonds for any four consecutive quarters (tested quarterly) is less than the Debt Service Coverage Requirement; and (c) if the audited annual financial statements reflect that the Debt Service Coverage Requirement was not achieved. In each circumstance, the Hotel Consultant is to be appointed to make recommendations, no later than sixty days after it has been engaged.

The Corporation is to deliver the Hotel Consultant’s report to the Hotel Manager, the Trustee and the Asset Manager within three Business Days of receipt thereof by the Corporation. The Hotel Manager and the Asset Manager are to review such report and recommendations. Hotel Manager shall also, upon the request of Corporation or Trustee, meet with the Hotel Consultant, Corporation and Trustee to discuss the Hotel Consultant’s reports, findings and written recommendations. Hotel Manager shall accept and promptly implement all of the Hotel Consultant’s written recommendations except those written recommendations which require an expenditure of funds greater than the amount available for such purpose under the Indenture, or those written recommendations which could, according to the written advice of Bond Counsel, adversely affect the tax-exempt status of the interest on the Tax-Exempt Bonds or those written recommendations which will impose a material adverse financial burden on the Hotel Manager for which the Corporation is unable or unwilling to reimburse at the time incurred. Notwithstanding the foregoing, if the Hotel Manager disagrees with any or all of the written recommendations of such Hotel Consultant, the Hotel Manager may, by delivering an Arbitration Request within 10 Business Days of receipt of such written recommendations, require that the matter(s) in dispute be submitted to arbitration pursuant to the Hotel Operating Agreement. The fees and expenses of the Hotel Consultant shall be paid as an Operating Expense from amounts on deposit in the Lockbox Fund.

FF&E and Capital Expenses

During the Operating Term, the following provisions apply as to the maintenance, repair and improvement of the Hotel Project.

Generally. The Hotel Project is to be maintained, repaired and improved by the Hotel Manager, as a Hotel Project expense payable from the appropriate Fund as described in the Cash Management

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Agreement and the Indenture, in accordance with the related Capital Budget for operation of the Hotel Project in accordance with the Operating Standard.

Senior FF&E Reserve Fund. The Trustee is required (subject to the Indenture) to set aside from Gross Operating Revenues on a monthly basis the Senior FF&E Reserve Set Aside Amount accrued but not paid through the preceding month into the Senior FF&E Reserve Fund. In addition, amounts received from the salvage or disposal of FF&E shall be transferred to the Trustee with direction to deposit such amounts directly into the Senior FF&E Reserve Fund. To the extent amounts in the Senior FF&E Reserve Fund are not expended within the calendar year in which the deposits occurred, such amounts shall be accumulated and applied in future years in accordance with the Indenture. Hotel Manager shall not incur FF&E or Capital Expenses to the extent expenditures exceed an approved Capital Budget, except for (i) Capital Expenses incurred by Hotel Manager in connection with an Emergency or to comply with Applicable Laws pursuant to and subject to the limitations and requirements of the Hotel Operating Agreement, or (ii) FF&E and Capital Expenses pursuant to the Hotel Operating Agreement expressly permitting Hotel Manager to incur FF&E and Capital Expenses in excess of an approved Capital Budget or which Hotel Manager incurs with Corporation’s prior written approval.

Use of Senior FF&E Reserve Fund, Subordinate FF&E Reserve Fund, Operating Reserve Fund and Cash Trap Fund for Capital Expenses. The Senior FF&E Reserve Fund and the Subordinate FF&E Reserve Fund, subject to the Hotel Operating Agreement, shall be used for the purposes of funding FF&E and Capital Expenses, but only to the extent that such FF&E and Capital Expenses, as applicable, are included in the Capital Budget or otherwise clearly and expressly authorized by the Hotel Operating Agreement or pre-approved in writing by Corporation. The Senior FF&E Reserve Fund and the Subordinate FF&E Reserve Fund shall also be available to pay Debt Service on the Bonds to the extent set forth in the Indenture. Subject to the terms of the Indenture, the Hotel Manager may use the Cash Trap Fund, the Subordinate FF&E Reserve Fund, the Senior FF&E Reserve Fund, and the Operating Reserve Fund, in that order, for unbudgeted Emergency Expenses or to comply with Applicable Laws (and then only if the violation of such Applicable Laws would expose Hotel Manager to material risk of civil or criminal sanctions or would pose an imminent threat to the Hotel Project or its employees, guests or other persons using or occupying any portion of the Hotel Project).

Defective and Dangerous Conditions. If the design or construction of the Hotel Project is defective and the defective condition causes damage to the Hotel Project, poses a risk of injury to people or property, or is not in material compliance with one or more Applicable Laws, the Corporation is to make immediate demand on and use commercially reasonable efforts to cause the Design/Builder to expeditiously remedy such defect, provided, however, Corporation shall maintain the right to challenge in good faith the existence of any alleged defective condition and/or the materiality of such alleged defect and/or any Applicable Laws, and unless and until such challenge is settled, Corporation shall have no obligation to pursue Design/Builder regarding such alleged defect. Any recovery which Corporation receives from Design/Builder or any other party on account of such amounts shall be deposited into the Funds from which monies were withdrawn in order to cure the defective condition (in the reverse order as the monies were withdrawn).

Corporation’s Source of Funds for FF&E and Capital Expenses. (a) The Corporation’s obligations to provide funds for FF&E and Capital Expenses are limited to funds in the Senior FF&E Reserve Fund, the Subordinate FF&E Reserve Fund, the Operating Reserve Fund, and the Cash Trap Fund; and (b) the availability of funds from FF&E, Capital Expenses or any other expenses are limited to the extent provided in the Indenture. The Hotel Manager is to exercise commercially reasonable efforts consistent with the Operating Standards to schedule and budget for FF&E and Capital Expenses so that funding therefore may be provided solely from the Senior FF&E Reserve Fund and the Subordinate FF&E Reserve Fund (to the extent available under the Indenture).

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Books and Records; Financial Statement; Continuing Disclosure

Books and Records. The Hotel Manager is to cause books of account, front office records, guest information and other records to be prepared to reflect the operation and the results of operations of the Hotel Project. All such books of account and records are required to be (a) kept in accordance with Generally Accepted Accounting Principles, the Uniform System of Accounts and the Hilton Classification of Accounts, and (b) reported in the format that Hilton uses for substantially all Comparable Other Hilton Hotels and include such additional information required by the Indenture, in the Continuing Disclosure Agreement and by the Corporation, the Trustee or the Beneficiary. All of the financial books and records (but not Hotel Manager’s Proprietary Information and certain other employee records and other information) pertaining to the Hotel Project, including books of account, front office records and guest records and information, are the property of the Corporation.

Monthly/Year-to-Date Reports. Within 15 days after the end of each month, the Hotel Manager is to cause to be prepared and delivered to the Corporation monthly and year-to-date operating reports containing specified information (the “Monthly Reports”). The Monthly Reports are to reflect operational results for the current month and the year to date and, on a quarterly basis, the Debt Service Coverage Ratios. Upon request of the Corporation or its Asset Manager made not more than one time each Operating Year, the Hotel Manager is to have performed an evaluation of the Hotel Project in accordance with the standards then applied to substantially all Comparable Other Hilton Hotels, as set forth in the Hotel Operating Agreement.

Annual Certified Financial Statements. Within 90 days after the end of each Operating Year, the Hotel Manager is to have prepared and delivered to the Corporation, as an Operating Expense, Certified Financial Statements for the Hotel Project. The Certified Financial Statements shall be accompanied by the Independent Accountant’s calculation of the Debt Service Coverage Ratios.

Corporation’s Audit Rights. The Corporation and the Trustee may (a) audit and verify the books and records of the Hotel Project and the operations of the Hotel Project upon reasonable prior written notice to the Hotel Manager and (b) conduct spot audits or examinations at the Hotel without prior notice. The Hotel Manager is to cooperate with the Corporation, the Trustee and its auditors in connection with such audit and promptly make available all requested information. If Gross Operating Revenue or Net Operating Income as set forth in the Hotel Manager’s operating reports are found to be understated or overstated by more than 3% with respect to Gross Operating Revenue, or 5% with respect to Net Operating Income, the Hotel Manager must immediately pay to the Corporation the cost of such audit and any required restatement of the Corporation’s audit, and correct the misstatements. If the Hotel Manager is not responsible for the cost of the audit such cost is to be funded from the Cash Trap Fund. Any insufficiency in the Cash Trap Fund is to be funded first from the Operating Reserve Fund and then from the Gross Operating Revenue as an Operating Expense. The costs of such audit may not be included in the calculation of any Performance Test.

Personnel

During the Operating Term, the Hotel Manager is to manage all aspects of the Hotel Project’s human resources functions and implement at the Hotel Project the personnel policies and procedures applicable to substantially all Comparable Other Hilton Hotels; its right and responsibilities in this regard being outlined in detail in the Hotel Operating Agreement. Subject to the Corporation’s rights to approve certain Senior Executive Personnel, the Hotel Manager is to recruit, hire, relocate, pay, supervise, promote, discipline and dismiss all Hotel Personnel (including, without limitation Senior Executive

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Personnel, the Key Employees and the Executive Staff), with the understanding that all Hotel Personnel are to be the employees of the Hotel Manager, and not the Corporation.

None of the Hotel Personnel are considered employees of the Corporation, the City or the Trustee. All Hotel Personnel Costs (other than bonuses for Executive Staff) are Operating Expenses and the responsibility of the Corporation. The Hotel Manager is to pay all Hotel Personnel Costs and be reimbursed from the Lockbox Fund. See “SECURITY FOR THE SERIES 2017 BONDS – Lockbox Funds; Cash Management Agreements” and “APPENDIX D – Summary of Certain Provisions of Indenture and Loan Agreement – Summary of Certain Provisions of the Indenture – Deposit of Gross Operating Revenues; Cash Management Agreements.”

The Hotel Manager is responsible for any negotiation of collective bargaining agreements and all other personnel matters, including the administration of an Eligible Employee Bonus Pool to be provided through the Eligible Employee Bonus Pool Fund within the limitations set forth in detail in the Hotel Operating Agreement.

Group Services

Generally. The Hotel Manager is to furnish or cause its Affiliates to furnish to the Hotel Project the benefits of the Group Services set forth in detail in the Hotel Operating Agreement. The Corporation agrees that the Hotel Manager may in its discretion cause the Hotel Project to participate in any or all such Group Services.

Required Representations. In connection with and as a condition to providing Group Services, the Hotel Manager makes certain representations and warranties in the Hotel Operating Agreement concerning the amounts charged for Group Services, and indemnifies and holds harmless the Corporation and the Trustee from and against any and all damages, expenses, liabilities or obligations that arise out of a breach of any such representations and warranties.

Required Accounting. Within 120 days after the end of each Operating Year (or a later date agreed to by Corporation and Hotel Manager), the Hotel Manager is to furnish to the Corporation and the Trustee a procedures letter from one or more independent public accountants stating the matters set forth in the Hotel Operating Agreement and a certificate from its chief financial officer or comparable senior officer to the effect that Hotel Manager has not received any Direct or Indirect Profit for such year. The Hotel Manager indemnifies and holds harmless the Corporation and the Trustee from and against any and all damages, expenses, liabilities or obligations that arise out of the Hotel Manager receiving any direct or indirect profit.

Hotel Project Marketing Program; Automation; Purchasing

Hotel Project Marketing Program. In addition to affiliating the Hotel with the Group Services Marketing Program, the Hotel Manager is to, for no additional fee or compensation, develop and implement a specific marketing program for the Hotel Project, following the Hotel Manager’s policies and guidelines which will provide for the planning, publicity, internal communications, organizing and budgeting activities to be undertaken, including certain stated activities. Development and implementation of the Hotel Project’s individual marketing program is to be accomplished substantially by Hotel Personnel, with periodic assistance from Corporate Personnel with marketing sales expertise. The cost of the development and implementation of the Hotel Project’s marketing program is an Operating Expense (except for such periodic assistance) and the estimated costs for each Operating Year are to be included in the related Operating Plan and Budget for such Operating Year.

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Automation. The Hotel Project is to utilize all automation systems necessary to enable the Hotel Project to function as any Other Hilton Hotel, in accordance with certain terms and conditions specified in the Hotel Operating Agreement.

Leased Retail Space; Hotel Parking

The Project includes the Leased Retail Space. Hotel Manager will comply with the provisions of the Approved Retail Lease Agreements. “Approved Retail Lease Agreements” shall mean certain leases, licenses, easements, concessions or other agreements regarding the Leased Retail Space by and between the Corporation and such third parties reasonably satisfactory to Hotel Manager. All revenue generated by any of the Approved Retail Lease Agreements or the Leased Retail Space shall be caused to be deposited by Corporation in accordance with the Cash Management Agreement.

The Project includes the Garage which, together with other public parking available in the vicinity of the Hotel, will accommodate adequate parking spaces for use by the Hotel Project. The Garage shall be operated in accordance with an Approved Parking Agreement. All revenue generated by the Garage and received from the Parking Manager shall be deposited in accordance with the Parking Cash Management Agreement. Corporation agrees to cause the Parking Manager to allow Hotel guests to utilize the Garage at the same rates available to other parties and to comply with the terms of the Approved Parking Agreement.

Compliance with Legal Requirements

The Hotel Manager agrees to do or cause to be done all such acts and things in or about the Hotel Project that the Hotel Manager, in good faith and exercising prudent commercial judgment, believes to be necessary to comply with Legal Requirements and Approvals.

Hotel Manager shall use good faith and exercise commercially reasonable judgment to ensure that the business being conducted at the Hotel Project is in full compliance with all Legal Requirements that are applicable to the ownership or operation of the Hotel Project. Hotel Manager does not in any way assume any of Design/Builder’s obligations to comply with Legal Requirements or any other laws, rules or regulations or obligations of Design/Builder under the Design/Build Agreement including, without limitation, Design/Builder’s obligation to acquire the Final Certificate of Occupancy and to obtain certificates, approvals, licenses and permits required under the Design/Build Agreement or otherwise related to any part of the Work. If the cost of compliance is not a Capital Expense, the cost of compliance shall be an Operating Expense. If the cost of compliance is a Capital Expense, the cost shall be funded in the manner as provided in the Hotel Operating Agreement.

Manager Guaranty.

General Terms. Hotel Manager shall be required to deliver and maintain the Manager Guaranty in favor of the Trustee during the Term of the Hotel Operating Agreement. All costs and expenses associated with the Manager Guaranty shall be paid solely by Hotel Manager, and shall not be reimbursable. For a description of the determination of the amounts available to be drawn against the Manager Guaranty, reductions of the maximum amount available to be drawn and the requirements for the delivery of a Manager Letter of Credit, see “SECURITY FOR THE SERIES 2017 BONDS – Manager Guaranty” in this Official Statement.

Reimbursement of Draws on Manager Guaranty. The Corporation shall be required to reimburse Hotel Manager for any draws under the Manager Guaranty, together with interest on any unpaid draws equal to 7% per annum, from amounts available pursuant to clause Twelfth under

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“SECURITY FOR THE SERIES 2017 BONDS – Trust Funds; Flow of Funds” as more fully set forth in the Indenture.

Repayment Upon Termination of the Hotel Operating Agreement. Upon termination of the Hotel Operating Agreement for any reason (and as a condition precedent thereto), the following provisions shall be applicable in connection with any such termination:

General. If the Hotel Operating Agreement is terminated prior to the expiration of the Term of the Hotel Operating Agreement, other than due to a sale of the Hotel Project, any unreimbursed draws not repaid to Hotel Manager, pursuant to the above provisions, together with interest thereon, shall be due and payable solely from amounts available for payment to Hotel Manager pursuant to clause Twelfth under “SECURITY FOR THE SERIES 2017 BONDS – Trust Funds; Flow of Funds” or from amounts on deposit in the Cash Trap Fund in excess of $2,500,000 as more fully set forth in the Indenture and the Manager Guaranty.

Termination Due to Sale of Hotel Project. All amounts owed to Hotel Manager due to unreimbursed draws under the Manager Guaranty, including accrued and unpaid interest thereon, shall be due and payable in full immediately upon, and as a condition precedent to, a sale of the Project.

Additional Bonds. The issuance of Additional Bonds or any increase in debt service resulting therefrom shall not have any effect on triggering the Hotel Manager's obligations under the Manager Guaranty.

The Corporation is currently negotiating with the Hotel Manager to remove the Manager Guaranty from the Hotel Operating Agreement.

Certain Limitations on Hotel Manager’s Duties, Obligations and Rights

Sufficient Funds. The Hotel Manager’s obligations, duties, covenants, agreements and responsibilities under the Hotel Operating Agreement that require the expenditure of funds for the performance thereof and which constitute an Operating Expense, Capital Expense (without duplication), fixed expenses of the Hotel Project under the Uniform System of Accounts, Taxes, Excluded Taxes and Other Charges (but only to the extent that Hotel Manager has deposited in the Lockbox Fund collections that are attributable to such Excluded Taxes and Other Charges) and amounts required to be paid or otherwise funded (but which are not paid or otherwise funded) by the Design/Builder or the Corporation or otherwise under the Design/Build Agreement or any other agreement, are subject to Sufficient Funds being available to the Hotel Manager.

Insurance. In connection with any insurance coverage required or obtained under the Hotel Operating Agreement, Hotel Manager shall advise Corporation as to appropriate insurance coverage for all aspects of the Hotel Project, including, without limitation, the advisability, nature, and extent of the insurance coverages to be provided by Hotel Manager for the benefit of the Hotel Project and/or the Corporation or any other insurance coverages that Corporation should consider for the protection of the Hotel Project and its operations. Neither Hotel Manager nor its Affiliates shall be liable for any error in either Hotel Manager’s advice nor any deficiency or error in insurance coverages provided by Hotel Manager, except to the extent of Manager’s Negligent or Willful Acts in relation thereto.

Projections and Budgets. Any and all projections and budgets prepared by Hotel Manager, including those contained in the annual Operating Plan and Budget are to be prepared by Hotel Manager as accurately as is reasonably possible, using good faith information then available to Hotel Manager and Hotel Manager’s prudent business judgment. Any and all such financial projections and budgets are not

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to be independently relied upon by the Corporation or any third party as to the results predicted therein, although Hotel Manager acknowledges that the same will be used by Corporation and given to Corporation’s lenders and their financial, professional and legal advisors. The Hotel Manager does not guarantee the accuracy of any projections and budgets prepared by it under the terms of the Hotel Operating Agreement, nor does it guarantee the results of such projections and budgets. Corporation acknowledges that Hotel Manager shall not be held responsible by Corporation for any divergence between such projections and budgets and actual operating results achieved, so long as such budgets are prepared by Hotel Manager in good faith and Hotel Manager, in the preparation of such budgets, uses prudent business judgment and all relevant information then available to Hotel Manager

Environmental Matters. Except with respect to any environmental matters or matters relating to construction deficiencies at the Project or other items which the Design/Builder is responsible for under the Design/Build Agreement and except if any environmental matter in any report, study or assessment was previously disclosed to Corporation, if Hotel Manager determines that any such problem materially impairs or has the capacity to materially impair operations at the Hotel (including, without limitation, any problem which might result in negative publicity or lower occupancy rates), then Hotel Manager shall have the right and the obligation to consult with Corporation in pursuit of solutions to such problem and Hotel Manager may elect, at its option and if approved by Corporation, to assume management of such problem as part of its management duties and responsibilities under this Agreement for no additional compensation. Hotel Manager shall, for no additional compensation, manage and supervise (including the oversight and coordination of any environmental consultant) the abatement and correction of any environmental, construction or real property related problem existing at the Hotel Project during the Operating Term and occurring or arising out of activities undertaken after the Opening Date and caused by persons or entities other than Hotel Manager, Hotel Personnel, their agents or contractors or persons or entities providing services on the Site, or any other person or entity under the management, control or supervision of Hotel Manager, provided the abatement and correction costs $350,000 or less. In addition, Hotel Manager agrees to extend its management services to any such abatement and correction (i) for activities undertaken prior to the Opening Date at the Hotel or (ii) which costs in excess of $350,000 if Corporation requests such services and Hotel Manager and Corporation are able to agree upon a fair, equitable and reasonable fee for such services. The cost to correct and abate any such problems are to be funded as an Operating Expense up to $20,000, and thereafter are to be funded from the Cash Trap Fund. If the Cash Trap Fund is not sufficient to pay all such costs, then the deficiency is to be paid from the Operating Reserve Fund. Except with respect to any environmental matters or matters relating to construction deficiencies at the Hotel Project or other items which the Design/Builder is responsible for under the Design/Build Agreement, if the Hotel Manager determines that any such problem materially impairs or has the capacity to materially impair operations at the Hotel Project, the Hotel Manager has the right and the obligation to consult with the Corporation in pursuit of solutions to such problem and Hotel Manager may elect, at its option and if approved by the Corporation, to assume management of such problem as part of its management duties and responsibilities for no additional compensation. Notwithstanding any provision or inference to the contrary, Hotel Manager, as part of its management services and for no additional compensation will be responsible for overseeing and managing the correction or abatement of any environmental, construction and real property related problems which result from its management and operation of the Hotel Project, services provided to the Hotel Project after the Opening Date, or any such problem caused by Hotel Manager, Hotel Personnel, their agents or contractors or persons or entities providing services on the site under the management, control or supervision of the Hotel Manager on the Site.

Expansion of Hotel; Development of Reserved Portion of Site

Hotel Manager acknowledges that Corporation may in the future elect to expand the Hotel Project through the addition of rooms and other supporting facilities if the Corporation determines that the

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demand for the Hotel Project warrants such expansion and the Corporation delivers to the Hotel Manager a Consultant’s Certificate to the effect that the projected Debt Service Coverage Ratio for the Bonds, after taking into account any additional debt to be incurred with respect to such expansion, will not be materially adversely effected. Hotel Manager shall reasonably cooperate (but without any material adverse or financial impact on the Hotel Manager or the operation of the Hotel Project) with Corporation and all parties involved with such expansion in order to reasonably minimize the impact to the operation of the Hotel Project during the period of expansion. Hotel Manager shall continue to be obligated to perform all of its duties and obligations hereunder during and after such expansion. The City and/or the Corporation reserves the sole and exclusive right to expand or develop the Site or City property adjoining the Site for Hotel Manager and other uses that do not materially affect the Hotel Project, including, but not limited to, a MagLev train station. Pursuant to the terms of the Indenture, the Corporation will be permitted to transfer, without consideration, to the City or an entity designated by the City, that portion of the Site on which any such train station would be located.

Management Fee

Obligation for Management Fee. The Corporation is required to pay, for each Operating Year, a “Management Fee,” which is the sum of the Base Management Fee, the Subordinate Management Fee and the Supersubordinate Management Fee.

In addition, the Hotel Manager is entitled to the Eligible Employee Bonus Pool. Except for the Management Fee, Eligible Employee Bonus Pool, Group Services Fees and Charges and Reimbursable Expenses, the Hotel Manager is not entitled directly or indirectly to any other fees or compensation under the Hotel Operating Agreement. All such fees, except for the Subordinate Management Fee and the Supersubordinate Management Fee, are to be treated as Operating Expenses.

Base Management Fee. The “Base Management Fee” means that portion of the Management Fee designated as such in the Hotel Operating Agreement. The Base Management Fee payable for each Operating Year after the third full Operating Year is to be increased or decreased, as applicable, by a percentage equal to the percentage change in the Index from the last month of the preceding Operating Year as compared to last month of the Operating Year immediately preceding such preceding Operating Year. One-twelfth of the annual Base Management Fee is to be paid on the first Business Day of each month and the Hotel Manager may withdraw the monthly installment of the Base Management Fee from the Lockbox Fund. The Corporation is currently negotiating with the Hotel Manager to revise the method of calculation of the Base Management Fee to be based on a percentage of Hotel Gross Revenues.

Subordinate Management Fee. The “Subordinate Management Fee” means that portion of the Management Fee designated as such in the Hotel Operating Agreement. The Subordinate Management Fee payable for each Operating Year after the third full Operating Year is to be increased or decreased, as applicable, by a percentage equal to the percentage change in the Index from the last month of the preceding Operating Year as compared to last month of the Operating Year immediately preceding such preceding Operating Year.

The Hotel Manager is to be paid the amount of the Subordinate Management Fee accrued through each Interest Payment Date on the Business Day immediately following such interest Payment Date (each such installment, a “Semi-Annual Installment of the Subordinate Management Fee”). Each Semi-Annual Installment of the Subordinate Management Fee is to be paid only to the extent of the balance of the Subordinate Management Fee Fund as of the date of payment. If the balance of the Subordinate Management Fee Fund is not sufficient to satisfy the applicable Semi-Annual Installment of the Subordinate Management Fee, the unpaid portion of such Semi-Annual Installment of the Subordinate

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Management Fee accrues, without interest, and is to be paid as soon as there are funds in the Subordinate Management Fee Fund.

The Corporation is currently negotiating with the Hotel Manager to (i) revise the method of calculation of the Subordinate Management Fee to be based on a percentage of Hotel Gross Revenues, and (ii) delay accrual of Subordinate Management Fees until January 1, 2020.

Supersubordinate Management Fee. The “Supersubordinate Management Fee” means that portion of the Management Fee designated as such in the Hotel Operating Agreement. The Supersubordinate Management Fee payable for each Operating Year after the third full Operating Year is to be increased or decreased, as applicable, by a percentage equal to the percentage change in the Index from the last month of the preceding Operating Year as compared to last month of the Operating Year immediately preceding such preceding Operating Year.

The Hotel Manager is to be paid the amount of the Supersubordinate Management Fee accrued through each Interest Payment Date on the Business Day immediately following such Interest Payment Date (each such installment, a “Semi-Annual Installment of the Supersubordinate Management Fee”). Each Semi-Annual Installment of the Supersubordinate Management Fee is to be paid only to the extent of the balance of the Supersubordinate Management Fee Fund as of the date of payment. If the balance of the Supersubordinate Management Fee Fund is not sufficient to satisfy the applicable Semi-Annual Installment of the Supersubordinate Management Fee accrues, without interest, and it to be paid as soon as there are funds in the Supersubordinate Management Fee Fund.

The Corporation is currently negotiating with the Hotel Manager to (i) revise the method of calculation of the Supersubordinate Management Fee to be based on a percentage of Hotel Gross Revenues, and (ii) delay accrual of Supersubordinate Management Fees until January 1, 2023.

Group Services Fees and Costs

Hotel’s Share of Group Services Fees and Costs. The Hotel Manager and its Affiliates are to be paid for the Hotel Project’s pro rata share of Group Services Fees and Costs, determined and allocated in the same manner as is the pro rata share for all Other Hilton Hotels. If equipment and/or software are installed and maintained at the Hotel in connection with the provision of any Group Services, the costs thereof are to be paid subject to the applicable approved Operating Plan and Budget or Capital Budget.

Payment of Group Services Fees and Costs. The Group Services Fees and Charges are to be paid monthly in arrears during the Operating Term as an Operating Expense. Each time the Hotel Manager withdraws funds pursuant to the Cash Management Agreement for the payment of Group Services Fees and Charges, the Hotel Manager is deemed to have made certain required representations.

Reimbursable Expenses

Reimbursable Expenses Defined. Subject to the provisions of the Cash Management Agreement, the Indenture and the applicable Operating Plan and Budget, the Hotel Manager may reimburse itself from the Lockbox Fund for all reasonable direct costs and expenses, including certain specifically enumerated expenses, paid to non-Affiliates (and, if permitted, Affiliates of the Hotel Manager) incurred in the ordinary course of managing the Hotel Project (collectively, “Reimbursable Expenses”). The Hotel Manager is to keep records of all Reimbursable Expenses.

Payment of Reimbursable Expenses. Reimbursable Expenses are to be paid as Operating Expenses under the Cash Management Agreement, subject to the Hotel Operating Agreement. Any

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Reimbursable Expenses in excess of amounts available in the Lockbox Fund are to be paid to the Hotel Manager from the Operating Reserve Fund (and, if the Operating Reserve Fund is insufficient, from the Cash Trap Fund) within 30 days after the Hotel Manager requests such payment. If there are not sufficient funds in the Operating Reserve Fund and the Cash Trap Fund within the required 30-day period, any amounts not paid are to bear interest until paid.

Required Representations. In connection with and as a condition to being paid Reimbursable Expenses, the Hotel Manager makes certain representations and warranties in the Hotel Operating Agreement and indemnifies and holds harmless the Corporation and the Trustee from and against any and all damages, expenses, liabilities or obligations that arise out of a breach of any such representations and warranties.

Establishing Clearing Bank Account

On or prior to the Opening Date, the Hotel Manager is to establish with a banking institution with banking operations in the City an account or accounts for settling electronic transactions for the Hotel Project effected with bank and non-bank credit cards. The Hotel Manager is to promptly deposit during each Business Day all Gross Operating Revenue (in excess of the Petty Cash Amount retained at the Hotel) into the Clearing Bank Account. The Hotel Manager shall transfer funds in the Clearing Bank Accounts at the end of each Business Day into the Lockbox Fund.

Operating Costs Set Aside Amount and Operating Reserve Fund

No later than the Opening Date and from the proceeds of the Series 2006 Bonds, Corporation is to deposit (a) the Initial Operating Costs Set Aside Amount into the Lockbox Fund and (b) an amount of money as set forth in “PLAN OF FINANCING – Sources and Uses of Funds” into the Operating Reserve Fund. The Hotel Manager is to have access to the Operating Costs Set Aside Amount as provided in the Cash Management Agreement and access to amounts on deposit in the Operating Reserve Fund as provided in the Indenture.

Payment of Operating Expenses

The Hotel Manager has the right to withdraw funds from the Lockbox Fund solely to pay Operating Expenses (including the Base Management Fee and the Eligible Employee Bonus Pool); subject to the Hotel Operating Agreement, the Cash Management Agreement, the Indenture and the City’s and the Trustee’s security interest in the Lockbox Fund. The Hotel Manager is to establish controls reasonably satisfactory to the Corporation to endure control over and accurate reporting of all transactions involving such accounts.

Limitation on the Corporation’s Obligations

The Hotel Manager has acknowledged that the Corporation will have no responsibility or liability for the Trustee’s failure to honor any requests to disburse amounts from any Funds pursuant to the Indenture. The Corporation agrees to use commercially reasonable efforts to enforce the Trustee’s obligations under the Indenture. The Hotel Manager agrees that, so long as any Bonds remain Outstanding, the only funds the Corporation is obligated to use to pay any sums due under the Hotel Operating Agreement are the following (and then only to the extent such funds are available to so pay and subject to the limitations in, and the rights of the Trustee under, the Bond Documents): (a) the Operating Costs Set Aside Amount that is to be funded from the proceeds of the Series 2006 Bonds, which Operating Costs Set Aside Amount is to be used solely to pay Operating Expenses; (b) Gross Operating Revenues; and (c) insurance and condemnation proceeds received for events that occur during the

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Operating Term. The Corporation recognizes that the Hotel Manager’s remedy at law for damages is inadequate and agrees that the Hotel Manager has the right to seek any equitable action including temporary restraining orders and injunctive relief to enforce the Corporation’s obligations under the Hotel Operating Agreement and the Cash Management Agreement.

Term

Unless sooner terminated under the provisions of the Hotel Operating Agreement, the term of the Hotel Operating Agreement commences on the Closing Date and will continue for 15 years after the Opening Date. However, only certain limited provisions of the Hotel Operating Agreement are effective prior to the Opening Date. The Corporation is currently negotiating with the Hotel Manager to extend the term of the Hotel Operating Agreement to December 31, 2046.

Events of Default by the Hotel Manager

An Event of Default by the Hotel Manager occurs if and only if:

(a) the Hotel Manager breaches or fails to perform any of its covenants or agreements under the Hotel Operating Agreement and fails to cure such breach or failure within 30 days after notice from the Corporation, the Trustee or the Asset Manager specifying the breach or failure to perform, however, if more than 30 days is reasonably required to remedy such breach or failure, the Hotel Manager has an additional 90 days to cure so long as it is diligently pursuing such cure and such cure is likely to occur within such 90 days;

(b) the Hotel Manager fails to pay, within 30 days from the date any penalties, interest or additional amounts attach thereto (so long as no lien or other restriction is imposed upon the Hotel Project or there would be no adverse effect on the Hotel Project during such 30 days), Taxes, Gross Receipts Taxes, or withholding or other employment related taxes (unless Sufficient Funds are not available or made available to the Hotel Manager therefore), however, if the Hotel Manager is contesting the amount of such items in good faith, the Hotel Manager may withhold payment of the disputed amount until the earlier of 120 days after the payment’s due date or the date on which the failure to make full payment would result in the assessment of interest or penalties or the imposition of a lien or other restriction upon the Hotel Project, or would otherwise have an adverse effect upon the Hotel Project or the Corporation;

(c) the Hotel Manager fails to pay Insurance Costs for a period of 30 days after the date due (provided such delay in payment does not result in a lapse of coverage and Hotel Manager pays any penalty, interest or other additional cost caused by such delay) or permits the insurance coverages required by the Hotel Operating Agreement to lapse for any reason (unless Sufficient Funds are not available or made available to the Hotel Manager therefore);

(d) the Corporation determines, after consultation with Bond Counsel, that, due to the Hotel Manager’s actions in contravention of the Hotel Operating Agreement or failure to act in accordance therewith, the Hotel Operating Agreement does not constitute a Qualified Management Agreement, however, if such actions or failure to act can be cured within 30 days of notice thereof to the Hotel Manager and Bond Counsel is of the opinion that the interest on the Bonds will not be includible in gross income for federal income tax purposes during such 30 days, the Hotel Manager has 30 days to cure such default;

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(e) an Event of Default occurs under the Room Block Agreement or, prior to the Opening Date, an Event of Default occurs under the Pre-Opening Services Agreement or the Technical Services Agreement, beyond any applicable grace periods set forth therein;

(f) the Hotel Manager fails to pay amounts due to the Corporation or the Trustee under the Manager Guaranty or any indemnity, hold harmless or reimbursement clause in the Hotel Operating Agreement or any other amounts due thereunder and such failure continues for 30 days after the Hotel Manager receives notice thereof;

(g) the Hotel Manager fails to deposit cash receipts, checks, money orders and the like into the Clearing Bank Accounts or the Lockbox Fund as soon as is reasonably practicable but in no event may such failure continue for a period of five days after receipt by the Hotel Manager;

(h) any representation or warranty made by the Hotel Manager in the Hotel Operating Agreement is false or misleading in any material respect and there is no reasonable action the Hotel Manager could take to cause, or if such reasonable action exists and the Hotel Manager fails to have caused, such representation or warranty to be true, correct and not misleading in all material respects within 30 days after receiving notice thereof;

(i) the Hotel Manager makes a representation or warranty under the Hotel Operating Agreement knowing such representation or warranty is not true or is misleading in a material respect;

(j) the Hotel Manager assigns the Hotel Operating Agreement or any of its rights thereunder in violation of the provisions thereof;

(k) the Hotel Manager fails to continuously operate the Hotel during the Operating Term, 7 days a week, 24 hours a day, unless the failure to continuously operate did not occur by reason of an of the following: (a) Force Majeure Event; (b) lack of Sufficient Funds for (A) Operating Expenses; (B) Capital Expenses for budgeted Capital Improvements and FF&E, unbudgeted (but approved) Capital Improvements or an Emergency; (C) Taxes, Excluded Taxes and Other Charges (to the extent the Hotel Manager has deposited in the Lockbox Fund collections attributable to such Excluded Taxes and Other Charges); or (D) Insurance Costs; (c) an Event of Default by the Corporation; (d) breach by the Corporation of its obligations under the Hotel Operating Agreement, or a breach by the Trustee of the agreements and obligations benefiting the Hotel Manager pursuant to the Indenture; (e) a failure, revocation, lapse, nonissuance, nonreissuance or nonrenewal of a Certificate of Occupancy not due to the Manager’s Negligent or Willful Acts (the Hotel Manager’s good faith compliance with any Certificate of Occupancy does not constitute the Manager’s Negligent or Willful Acts); or (f) expansion or development by the Corporation in accordance with the Hotel Operating Agreement; provided that the closing of the shops, restaurants and lounges after normal business hours does not constitute an Event of Default;

(l) any of the Liquor Licenses are revoked or terminated and are not fully restored within 30 days thereafter; or

(m) any of the following occur or exist: (1) the Hotel Manager files a voluntary case concerning itself under the Bankruptcy Code; (2) the Hotel Manager consents to the filing of an involuntary petition or an involuntary case is filed against the Hotel Manager under the Bankruptcy Code, and such involuntary case is not dismissed within 90 days after the filing thereof; (3) the appointment of a custodian or a receiver for, or a custodian or receiver taking charge of all or any substantial part of the property of the Hotel Manager, and such appointment is not revoked or dismissed within 90 days after such appointment is made; (4) the Hotel Manager commences any proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of

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any jurisdiction whether now or hereafter in effect, or any such proceeding is commenced against the Hotel Manager and is not dismissed within 90 days after the commencement thereof; (5) the Hotel Manager is adjudicated insolvent or bankrupt; (6) the Hotel Manager makes a general assignment of its assets for the benefit of creditors; (7) the Hotel Manager calls a general meeting of substantially all of its creditors to arrange a composition or adjustment of its debts; (8) all or any substantial part of the property of the Hotel Manager is attached, and such attachment or levy is not released within 90 days thereafter; (9) the Hotel Manager indicates its consent to, approval of, or acquiescence, in any of the foregoing; or (10) if the Hotel Manager is a corporation or partnership, the Hotel Manager takes any corporate or partnership action to effect any of the foregoing.

No Event of Default by Hotel Manager shall occur if any item in (a) through (c), (e), (f)(ii), (g), (k), or (l) arises out of, is caused by or results from, to any extent, any of the following: (i) Force Majeure Event; (ii) lack of Sufficient Funds for (A) Operating Expenses; (B) Capital Expenses for budgeted Capital Improvements and FF&E, unbudgeted (but approved) Capital Improvements or an Emergency; (C) Taxes, Excluded Taxes and Other Charges (but only to the extent that Hotel Manager has deposited in the Lockbox Fund collections that are attributable to such Excluded Taxes and Other Charges); or (D) Insurance Costs; (iii) an Event of Default by the Corporation; (iv) failure, revocation, lapse, non-issuance, non-reissuance or non-renewal of a Certificate of Occupancy not due to the Manager’s Negligent or Willful Acts (provided that the Hotel Manager’s good faith compliance with any Certificate of Occupancy shall not be deemed to constitute Manager’s Negligent or Willful Acts); (v) Corporation has failed to provide for compliance with the Hilton Requirements, or the Parking Manager has failed to comply with the provisions of the Approved Parking Agreement and in either case such failure is the direct and primary reason for such Manager Event of Default; or (vi) expansion or development by Corporation in accordance with the Hotel Operating Agreement. The Hotel Manager has the burden of proof regarding the events described in this paragraph. If the Corporation disagrees that the Hotel Manager has met such burden of proof, then either Party or the Trustee may, by delivering notice, require that the matter be submitted to arbitration pursuant to the Hotel Operating Agreement.

If the cure periods provided to the Corporation under the Indenture with respect to the types of Events of Default described above are less than the cure periods granted in the Hotel Operating Agreement, the cure periods granted therein are reduced to be 15 days less than the cure periods under the Indenture. In no event may the cure periods granted in the Hotel Operating Agreement be for a period of less than one day. The Hotel Manager is to keep the Corporation and the Asset Manager informed of all actions the Hotel Manager is taking in order to cure a breach or failure and to satisfy the requirements regarding commencing, pursuing and curing the applicable breach or failure, including, without limitation, satisfaction of time lines regarding the proposed cure and satisfaction of the curative procedure and steps.

Events of Default by the Corporation

An Event of Default by the Corporation occurs if and only if:

(a) the Corporation breaches or fails to perform any of its covenants or agreements under the Hotel Operating Agreement and fails to cure such breach or failure within 30 days after notice from the Hotel Manager specifying the breach or failure to perform, however, if more than 30 days is reasonably required to remedy such breach or failure, the Corporation has an additional 90 days to cure so long as it is diligently pursuing such cure;

(b) the Corporation fails to timely pay any money to the Hotel Manager due under the Hotel Operating Agreement (including any amounts owed under an indemnity, hold harmless or reimbursement agreement) and such failure continues for 30 days after the Hotel Manager delivers notice thereof;

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provided that with respect to the Subordinate Management Fee and Supersubordinate Management Fee, failure to pay will only constitute an Event of Default to the extent of the amounts available therefor in the Subordinate Management Fee Fund and the Supersubordinate Management Fee Fund, respectively and provided further, if such failure relates to money Hotel Manager has paid or is obligated to pay to any third party, such failure continues for a period of 10 days after Hotel Manager delivers written notice to Corporation specifying such failure; or

(c) any representation or warranty made by the Corporation under the Hotel Operating Agreement is false or misleading in any material respect and there is no reasonable action the Corporation could take to cause, or if such a reasonable action exists and the Corporation fails to have caused, such representation or warranty to be true, correct and not misleading in all materials respects within 30 days after receiving notice thereof and in either case, the Hotel Manager is materially damaged as a result of such false or materially misleading representation or warranty.

Rights and Remedies of Non-Defaulting Party

Remedies. Upon the occurrence of an Event of Default by the Hotel Manager or the Corporation, the non-defaulting Party has the right, but not the obligation, to (1) terminate the Hotel Operating Agreement by giving notice to the other Party specifying a date, no earlier than 25 days and no later than 75 days after such notice, when the Hotel Operating Agreement is to terminate and (2) pursue all other remedies available to it under applicable law. If the Hotel Manager delivers any notice to the Corporation, the Hotel Manager is to provide the Trustee with a copy of the notice and the Trustee has the right but not the obligation to cure any such default to the same extent and for the same period of time afforded to the Corporation to cure such default under the Hotel Operating Agreement, except as otherwise provided in the Hotel Assignment Agreement or the Subordination Agreement then in effect. The Hotel Manager may not terminate the Hotel Operating Agreement until the applicable cure period has elapsed and each default has its own cure period. If the Corporation’s default is one that cannot be cured by the Trustee’s payment of money, then until the Trustee has obtained possession of the Hotel Project from the Corporation or exercised such other remedy that would allow the Trustee to cure the Corporation’s defaults, the time period the Trustee has to cure the Corporation’s default is to be extended by the time necessary for the Trustee to obtain possession of the Hotel Project or take such action, plus a reasonable time thereafter (but not to exceed 90 days), so long as the Trustee is diligently pursuing such actions.

Hotel Manager’s Source of Payment. Any damages owed to the Hotel Manager by the Corporation are to be satisfied solely out of the amounts in the Cash Trap Fund or any insurance proceeds available for such purpose.

Termination Payment. No Termination Fee is payable upon Termination for an Event of Default by the Hotel Manager, but a Termination Fee is payable to the Hotel Manager upon a Termination for an Event of Default by the Corporation. So long as any Bonds are Outstanding, such Termination Fee is payable solely out of funds on deposit in the Cash Trap Fund.

Performance Termination

Right to Terminate. Corporation shall have the right beginning at the end of the seventh (7th) Operating Year to terminate the Hotel Operating Agreement (with the Trustee’s consent so long as any Bonds remain Outstanding) in the event that, with respect to two out of any three consecutive Operating Years during the Performance Test Period (each such event a “Performance Termination Event”): (i) the Series 2006 Performance Standard is not satisfied; and (ii) the REVPAR Performance Standard is not satisfied.

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The Corporation is currently negotiating with the Hotel Manager to change the defined term “Series 2006 Performance Standard” to “Series 2017 Performance Standard” to reflect the Net Debt Service on the Series 2017 Bonds and to extend the Performance Test Period to commence in the Operating Year 2022 (or such later Operating Year if the product improvement plan for the Hotel set forth in the amendment to the Hotel Operating Agreement is not then completed).

Exceptions to Performance Termination Event. The Hotel Manager has the right, but not more than twice during the Term of the Hotel Operating Agreement and not more than one time every five Operating Years, to eliminate a Performance Termination Event if, for the applicable Operating Year, the Hotel Manager loans the amount of the shortfall to the Trustee for deposit in the Lockbox Fund upon such terms as shall be mutually agreed to by the Corporation and the Hotel Manager. Prior to making such loan, an Opinion of Bond Counsel that such loan will not cause the interest on the Bonds to be included in gross income of the holders thereof for federal income tax purposes is required to be delivered.

A Performance Termination Event does not exist if the Performance Termination Event is caused primarily by any of the following: (a) the occurrence of a Force Majeure Event; (b) the Corporation’s refusal to allow the Hotel Manager to make a Capital Improvement included in the approved Capital Budget; (c) an Event of Default by the Corporation under the Hotel Operating Agreement; (d) a latent defect in the construction of the Hotel Project if such latent defect is discovered and reported to the Corporation by the commencement of the fifth Operating Year; (e) the Corporation’s failure to require Design/Builder to perform required warranty work in accordance with the Design/Builder Agreement; (f) the Corporation’s refusal to disburse or Corporation’s inability to cause the Trustee to disburse funds on deposit in the Lockbox Fund or held by the Trustee for such purpose in order to pay Operating Expenses, Capital Expenses, fixed expenses of the Hotel Project under the Uniform System of Accounts (which expenses shall constitute Capital Expenses), Taxes, Excluded Taxes and Other Charges or Insurance Costs (but only to the extent that Hotel Manager has deposited in the Lockbox Fund collections that are attributable to such Excluded Taxes and Other Charges or Insurance Costs); provided that the Hotel Manager shall not be entitled to claim the benefits of this exception to a Performance Termination Event if Hotel Manager has failed to request such funds for the payment of such amounts during the Operating Year for which the Performance Termination Event has occurred; (g) failure, revocation, lapse, nonissuance, nonreissuance or nonrenewal of any Temporary, Partial, Final or other Certificate of Occupancy not due to the Manager’s Negligent or Willful Acts (provided that the Hotel Manager’s good faith compliance with any Certificate of Occupancy shall not be deemed to constitute Manager’s Negligent or Willful Acts); (h) lack of Sufficient Funds as provided in the Hotel Operating Agreement; (i) the Corporation has failed to provide for compliance with the Hilton Requirements, pursuant to the Hotel Operating Agreement, and such failure is the direct reason for such Performance Termination Event; or (j) failure by Parking Manager to comply with the terms of the Approved Parking Agreement and such failure is the direct reason for such Performance Termination Event.

The Hotel Manager has the burden of proof regarding the events described in clauses (a) through (g) above. If the Corporation disagrees that the Hotel Manager has met such burden of proof, then either Party or the Trustee may, by delivering notice, require that the matter be submitted to arbitration pursuant to the Hotel Operating Agreement.

Corporation’s Exercise of Its Termination Rights. The Corporation is to exercise its Termination rights, if at all, by giving notice to the Hotel Manager within 90 days following the scheduled deadline for the delivery of the Certified Financial Statements for the Operating Year on which the Termination is based. Any such notice must specify the effective date of Termination, to be no earlier than 90 days and no later than 365 days following the date of such notice.

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Termination Upon Sale

Subject to certain stated provisions of the Hotel Operating Agreement, if after the expiration of the 8th Operating Year, the Corporation or its successor-in-interest transfers the Hotel Project or more than a 50% direct or indirect equity interest in the Corporation or its successor-in-interest pursuant to a bona fide, arms length transaction to a third party that is not an Affiliate of the Corporation or its constituent owners immediately prior to such conveyance, the party acquiring the Hotel Project in such transfer has the right to terminate the Hotel Operating Agreement by delivering notice to the Hotel Manager not more than 45 days prior, and not later than 60 days after, the conveyance, and in any event at least 65 days prior to the effective date of the Termination selected by the Corporation or the party acquiring the Hotel Project in its sole and absolute discretion. Such Termination is subject to the Hotel Manager’s receipt of (i) the Termination Fee, (ii) accrued or earned but unpaid Management Fees and Group Services Fees and Charges, (iii) unpaid Eligible Employee Bonus Pool, (iv) unpaid Reimbursable Expenses, (v) outstanding loans under the Manager Guaranty and (vi) any Operating Expenses paid or incurred by Hotel Manager from its own funds on or before the effective date of Termination. If such Termination notice is forwarded to the Hotel Manager prior to the closing of the sale and the sale does not occur for a reason other than an Event of Default by the Corporation, the Corporation may withdraw the notice and the Hotel Operating Agreement is to continue in full force and effect. If such party acquiring the Hotel does not elect to terminate the Hotel Operating Agreement and: (a) is (or is an Affiliate of) a national or international chain manager of Upscale Hotels; (b) is generally recognized in the community as being of ill repute or is in any other manner a Person with whom a prudent businessperson would not wish to associate in a commercial venture or a Person that would be considered by regulators in the gaming industry to be an unsuitable business associate of the Hotel Manager and its Affiliates; or (c) does not have the ability to fulfill the Corporation’s financial obligations under the Hotel Operating Agreement; the Hotel Manager has the right to terminate the Hotel Operating Agreement and receive the amounts equal to (i) the Termination Fee, (ii) accrued or earned but unpaid Management Fees and Group Services Fees and Charges, (iii) unpaid Eligible Employee Bonus Pool, (iv) unpaid Reimbursable Expenses, (v) outstanding loans under the Guaranty and (vi) any Operating Expenses paid or incurred by Hotel Manager from its own funds.

If, at the time of the sale, the Hotel Manager is not in Default under the Hotel Operating Agreement, a Performance Termination Event does not exist and either the purchase or the Hotel Manager has delivered a notice of Termination, the Corporation is to pay a Termination Fee to the Hotel Manager, calculated as provided in the Hotel Operating Agreement.

The payment of the Termination Fee shall be a condition precedent to the Termination of the Hotel Operating Agreement in connection with the sale and this provision shall be included in any contract for the sale of the Hotel Project. If the Hotel Operating Agreement is terminated after the fourteenth Operating Year, the Termination Fee shall equal the remaining unpaid Management Fee for such Operating Year. Any Termination Fee payable will be payable on the effective date of the Termination, and no Termination of the Hotel Operating Agreement pursuant to this provision shall be effective unless and until the Termination Fee has been paid in full.

In addition, commencing with the beginning of the seventh Operating Year, as an alternative to every other Termination provision of the Hotel Operating Agreement, the Corporation may terminate the Hotel Operating Agreement for any reason by paying to the Hotel Manager (i) an amount equal to the remaining unpaid Management Fees (as if the Hotel Operating Agreement had not been terminated) due hereunder calculated based upon the pro forma Management Fee forecasted to have been earned by the Hotel Manager during such time discounted back to the date such payment is made at a discount rate of 7% per annum; (ii) unpaid Reimbursable Expenses, (iii) outstanding loans under the Guaranty, (iv) unpaid

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Eligible Employee Bonus Pool and (v) any Operating Expenses paid or incurred by Hotel Manager from its own funds.

The Corporation is currently negotiating with the Hotel Manager to extend the effectiveness of such provision to the 15th Operating Year after the execution of the amendment to the Hotel Operating Agreement.

Termination Upon Foreclosure

A Beneficiary (including Trustee) or any Foreclosure Purchaser has the right to terminate the Hotel Operating Agreement upon the foreclosure of its Mortgage or upon acceptance of a deed-in-lieu of foreclosure. If the Hotel Operating Agreement is so terminated by a Beneficiary, no Termination Fee is payable to the Hotel Manager. The Hotel Manager and the Corporation intend that the Trustee and any such Foreclosure Purchaser and their respective affiliates be a third party beneficiary to the foregoing provisions. Until the Hotel Manager is terminated, the Hotel Manager has the right to access moneys in the Funds held by the Trustee or the Depository Bank in the manner set forth in the Cash Management Agreement and the Indenture.

The Corporation is currently negotiating with the Hotel Manager to state that any Beneficiary or the Foreclosure Purchaser will not have the right to terminate the Hotel Operating Agreement, which will survive the foreclosure or deed in lieu of foreclosure of the Hotel; provided however that if the Hotel Operating Agreement otherwise permits a termination of the Hotel Operating Agreement, then such right to terminate shall survive such foreclosure or deed in lieu of foreclosure.

Actions to be Taken on Termination

Upon Termination of the Hotel Operating Agreement, the following apply, in addition to the rights of the non-defaulting Party to pursue all other available remedies:

Payment of Out-of-Pocket Expenses. Except in connection with a Termination by the Corporation based upon a Performance Termination or an Event of Default by the Hotel Manager (in which case the following amounts are payable by the Hotel Manager), all actual Out-of-Pocket Expenses arising as a result of such Termination or the cessation of Hotel Project are to be reimbursed to the Hotel Manager on receipt of any invoice, including, expenses arising in connection with the severing of Hotel Personnel incurred by the Hotel Manager in the course of effecting the Termination or the cessation of Hotel Project operations.

Final Accounting. Within forty-five (45) days after Termination, the Hotel Manager is to provide to the Corporation an accounting of all Management Fees, Group Services Fees and Charges, Reimbursable Expenses and other payments due the Hotel Manager and within 15 days of the Corporation’s receipt of such accounting, the Corporation is to pay the Hotel Manager all Management Fees, Group Services Fees and Charges, Eligible Employee Bonus Pool, Reimbursable Expenses and other payment due the Hotel Manager or provide the Corporation’s objections thereto. If the Corporation disagrees with any amounts claimed by the Hotel Manager, the Corporation is to meet with the Hotel Manager to resolve disputed amounts and if not resolved within 30 days, either Party may pursue resolution through arbitration. The Hotel Manager is to provide financial and other records related to the operation of the Hotel Project to the Corporation through the date of Termination and continue to provide assistance to the Corporation after Termination to the extent necessary for Certified Financial Statements to be prepared.

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Vacating Hotel Project. The Hotel Manager is to peacefully vacate and surrender the Hotel Project to the Corporation.

Books and Records. The Hotel Manager is to deliver to the Corporation all of the books and records respecting the Hotel Project and all contracts, leases and other documents respecting the Hotel Project that are not the Hotel Manager’s Proprietary Information or employee personnel files.

Licenses and Permits. Upon Termination of the Hotel Operating Agreement, the Hotel Manager is to surrender and assign all licenses and permits held for the operation of the Hotel Project and shall assign to Corporation (but only to the extent assignable) all of Hotel Manager’s rights, title and interest in and to all such licenses and permits, provided, however if Hotel Manager has expended any of its own funds in the acquisition of licenses or permits, Corporation shall reimburse Hotel Manager for such expended funds. Hotel Manager recognizes that all licenses held for the operation of the Hotel Project are held for the benefit of Corporation and Hotel Manager has no ownership therein, except in order to fulfill its obligations hereunder. The entity holding the Liquor License shall, upon the request of Corporation, enter into a temporary lease, license or such other agreement as may be permitted under Applicable Law to permit the continuous and uninterrupted sale of alcohol beverages at the Hotel Project consistent with prior operations. In such event, neither Hotel Manager nor the party holding the Liquor Licenses shall be entitled to compensation in connection with such arrangement, but shall be reimbursed by the Corporation for any cost (determined based on the original costs of such items) or liability in connection therewith and shall be named as an additional insured on any “dramshop” or other liability insurance pertaining to the sale of alcoholic beverages at the Hotel Project. In addition, any such temporary lease, license or other arrangement shall (i) include an indemnification, waiver and release of Hotel Manager and its Affiliates from all liabilities, obligations, reasonable costs and reasonable expenses, including reasonable attorneys’ fees, arising out of or in connection with such temporary lease, license or other agreement, save and except for liabilities, obligations, costs and expenses arising out of Manager’s Negligent or Willful Acts; and (ii) provide for the Termination of all obligations of Hotel Manager and its Affiliates thereunder within 90 days following the date of Termination of the Hotel Operating Agreement. Upon the Termination of the Hotel Operating Agreement, Hotel Manager and the entity holding the Liquor Licenses will surrender the Liquor Licenses and will fully cooperate with the owner of the Hotel Project or an entity designated by the owner in their attempts to transfer existing licenses and permits or obtain new Liquor Licenses for the Hotel Project.

Honoring Reservation Dates. Subject to the Room Block Agreement, the Corporation is to honor all business confirmed for the Hotel in the ordinary course of business with reservation dates after the Termination. However, the Corporation has no obligation to honor rooms at nominal or free rates to employees of the Hotel Manager of its Affiliates or members of the Hilton Honors Program or other Hilton promotional programs unless reimbursement is provided by the Hotel Manager.

Assignment of Contracts. If requested by the Corporation, the Hotel Manager is to assign to the Corporation its interest (if any) in, and the Corporation is to assume its continuing responsibility for all obligations and liabilities relating to, all contracts (including collective bargaining agreements (unless the Hotel withdraws from the collective bargaining agreement, in which event the Corporation is responsible for any withdrawal fees, and other than Nonassignable Contracts), leases, licenses or concession agreements, and maintenance and service contracts) in effect with respect to the Hotel as of the date of Termination. The Corporation may further assign such interests to the Trustee.

Trademarks. If the Hotel Operating Agreement is terminated, the Hotel Manager is to, at its cost, take all steps requested by the Corporation to disassociate the Hotel and the Corporation from the Trademarks.

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Proprietary Software. Subject to making such items available during the Transition Period, as of the effective date of the Termination, the Hotel Manager is to remove all the Hotel Manager’s Proprietary Software from the Hotel Project and disconnect the Hotel from the reservations systems and their related software applications. The Hotel Manager is to assist the Corporation in the orderly transfer of the Corporation’s records and data contained in the Hotel Manager’s Proprietary Software.

Protection of Guest Lists. Hotel Manager shall not contact any Hotel guests that have booked Hotel rooms or Hotel Project facilities prior to Termination for the purpose of soliciting such Hotel guests to cancel their previously booked Hotel rooms and transfer such business to any other transient lodging located in the City of Baltimore, Maryland or within a 15 mile radius of the City of Baltimore.

Special Provisions Regarding Foreclosure. Upon a Foreclosure Event, the Trustee can exercise its option to terminate the Hotel Operating Agreement or to retain the Hotel Manager, exercising such option within one hundred eighty (180) days after such foreclosure. During such 180-day period after a Foreclosure Event (therein, the “Transition Period”), if and only if requested by the Foreclosure Purchaser (promptly upon the commencement of the Transition Period), the Hotel Manager is to continue to manage and operate the Hotel Project on an interim basis pending the Foreclosure Purchaser’s selection and engagement of a new Hotel Manager. As compensation for such interim management, the Hotel Manager is to be paid as provided in the Hotel Operating Agreement but only to the extent accruing after the Foreclosure Event and during the Transition Period, without regard to any claims against the Corporation.

Termination of the Hotel Manager Provided Insurance. If, immediately preceding the date of Termination, the Hotel Project is included in the Hotel Manager’s insurance program, such participation is to be terminated for the periods after such Termination date (but without in any way destroying or altering the occurrence base nature of any such policies), and the Hotel Manager has the right to reimburse itself for such premiums accrued to the date of Termination by withdrawing the appropriate amount thereof from the Taxes and Insurance Fund (with the understanding that if the Taxes and Insurance Fund is insufficient, the Corporation is to advance the insufficiency from the Cash Trap Fund). If the Corporation pays its pro rate share of premiums under the chain-wide policies of insurance or the self-insurance program of the Hotel Manager in advance, the Hotel Manager is to reimburse the Corporation for the unearned portion of insurance premiums (to the extent such apportionment is available from the insurer) or the self-insurance program of the Hotel Manager.

Transition. Upon the expiration or earlier Termination of the Hotel Operating Agreement, the Hotel Manager and the Corporation are to cooperate to effect an orderly transition of management functions from the Hotel Manager to the Corporation, any transferee of the Corporation or any managing agent for a period of up to 90 days from the date of notice of Termination.

Receivables. All receivables of the Hotel Project outstanding as of the effective date of Termination, including guest ledger receivables, continue to be the property of the Corporation. All payables of the Hotel Project outstanding as of the effective date of Termination and due in the next 30 days shall continue to be the obligation of Corporation. The Hotel Manager is to cooperate with the Corporation at the Corporation’s sole expense, in the collection of any receivables, and turn over to the Corporation any receivables of the Hotel Project collected by the Hotel Manager after the date of Termination. Not later than five days after the date of Termination, the Hotel Manager is to provide the Corporation with a complete list of (a) all bookings for future reservations or use of Hotel rooms or facilities that had been accepted or entered into by the Hotel Manager on or prior to the Termination; (b) the terms applicable thereof; and (c) the amount of advance deposits (if any) received with respect to each booking. The Hotel Manager agrees that, except with the Corporation’s consent, the Hotel Manager will not book reservations for rooms or public space after (1) the date on which the Hotel Operating Agreement expires; or (2) the date of earlier Termination.

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Insurance

Hotel Manager shall, at all times during the Operating Term, and as an expense of the Hotel Project payable from the Taxes and Insurance Fund pursuant to the Indenture, maintain or cause to be maintained insurance with respect to the Hotel Project. If at any time Hotel Manager is unable to place any of the insurance required by Hotel Operating Agreement at least as advantageous to Corporation as the premiums and other terms and conditions available to Corporation under blanket or other insurance policies available to Corporation from time to time, then Corporation may arrange for such insurance through the blanket or other policies available to Corporation, as a cost and expense of the Hotel Project that will be paid from the Taxes and Insurance Fund. If Corporation desires to place its own insurance, Corporation shall so notify Hotel Manager in writing at least 60 days prior to the scheduled effective date of such insurance.

Upon the request of Corporation, Hotel Manager shall engage, as an Operating Expense, an Insurance Consultant, mutually agreed upon by both Parties, to review the insurance requirements. If the Insurance Consultant recommends increases in any of the coverages or modifications in any of the terms of such insurance requirements and Corporation approves such increases or modifications, Hotel Manager shall obtain the approved increases or modifications, to the extent such insurance is available on commercially reasonable terms.

In the event that either Party desires to make a change in the type or amount of any of the insurance policies to be maintained under the Hotel Operating Agreement, it shall notify the other Party of the desired change at least 60 days in advance of the expiration of the current policy proposed to be changed.

All insurance policy limits provided under the Hotel Operating Agreement shall, at the request of either Party, be reviewed every year following the commencement of the Operating Term, to determine the suitability of such insurance limits in view of exposures reasonably anticipated over the ensuing year.

Any insurance required under the Hotel Operating Agreement, at Hotel Manager’s option, be provided under policies of blanket insurance which cover other properties of Hotel Manager and its Affiliates. Hotel Manager shall have the right to charge a share of the total cost paid by Hotel Manager, such share to be allocated to the Hotel Project using the same methodology or formula as used to allocate to participating Other Hilton Hotels. Any policies of insurance maintained or caused to be maintained by Hotel Manager pursuant to the Hotel Operating Agreement may contain deductible provisions in such amounts as are maintained with respect to Other Hilton Hotels which Hotel Manager, as a cost and expense of the Hotel Project, shall pay. Further, in lieu of all or a part of commercial general liability insurance and workers’ compensation and employer’s liability insurance, any or all of the risks covered by such insurance, at Hotel Manager’s option shall be self-insured or self-assumed by Hotel Manager under a self-insurance or assumption of risk program similar to those in effect at Other Hilton Hotels, up to such amounts which such risks are assumed or self-insured at Other Hilton Hotels with the prior written consent of the Trustee as to such amounts. Notwithstanding the foregoing, Corporation shall have the right to obtain all or some of the insurance for the Hotel Project, other than workers’ compensation insurance and employer’s liability insurance; provided, that any such insurance, to the extent obtained by Corporation, shall constitute a cost and expense of the Hotel Project that will be paid from the Taxes and Insurance Fund.

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Subordination

The Hotel Manager subordinates the Hotel Operating Agreement and the Hotel Manager’s rights thereunder to the provisions of the Indenture and all other Bond Documents, as well as each Mortgage granted against the Hotel Project. If there is any conflict between the Hotel Operating Agreement and the Indenture, the Indenture controls. The Hotel Manager agrees that Trustee has the absolute right to consent to and approve all matters under the Hotel Operating Agreement to the same extent that Trustee has the right to consent to or approve of such matters under the Indenture or any other Bond Document.

The Hotel Manager agrees with the Corporation that: (a) it will not modify, amend or terminate the Hotel Operating Agreement without the Trustee’s prior consent nor will it receive or accept any fees, charges or reimbursements in excess of the amounts set forth in the Hotel Operating Agreement and the Cash Management Agreement; (b) Hotel Manager has no right or option of any nature whatsoever to own or acquire, directly or indirectly, any of Design/Builder or its Affiliates or any interest therein and, to the extent that Hotel Manager has had, or hereafter acquires, any such right or option, the same is acknowledged to be subject and subordinate to the Indenture and the Bonds and any subsequently recorded Mortgage filed against the Hotel Project in all respects and is hereby waived and released as against the Mortgagee or any interest of the Mortgagee or any beneficiary of any such Mortgage, as applicable; (c) Hotel Manager shall not modify, amend or terminate the Hotel Operating Agreement without the Trustee’s prior written consent. Hotel Manager shall not receive or accept any fees, charges or reimbursements in excess of the amounts set forth in the Hotel Operating Agreement and the Cash Management Agreement at any time. Any sums received by Hotel Manager in contravention of the Hotel Operating Agreement or the Indenture shall be held by Hotel Manager as trustee for Trustee and Hotel Manager shall pay the Trustee, forthwith, any such amounts; (d) a notice by the Trustee to the Hotel Manager advising it what all future performance under the Hotel Operating Agreement be made to the Trustee (or its agent), is to be construed as conclusive Corporation to the Hotel Manager that such performance is to be made to the Trustee (or its agent); and (e) no failure to delay on the part of Trustee in exercising any power or right is to operate as a waiver thereof or a waiver of any other term, provision or condition, all rights and remedies of Trustee under the Hotel Operating Agreement are cumulative and are not to be deemed exclusive of any other rights or remedies provided by law and the Trustee is not to be prejudiced in its right to enforce the Hotel Operating Agreement by any act or failure to act on the part of the Corporation or anyone in custody of the Corporation’s assets or property.

Bankruptcy

The Hotel Manager agrees not to cause the filing of a petition in bankruptcy against the Corporation for nonpayment of any sum due the Hotel Manager until the payment in full of the Bonds or other sums due under the Bond Documents and the expiration of a period equal to the applicable preference period under the federal Bankruptcy Code. In the event of a bankruptcy filing of the Corporation, the Hotel Manager is entitled to file claims in accordance with applicable bankruptcy laws.

Destruction, Condemnation

Corporation to Restore with Sufficient Available Casualty/Condemnation Amounts. If during the period any Bonds are Outstanding, the whole or any part of the Hotel Project is damaged or destroyed by fire or other casualty required to be insured against under the Hotel Operating Agreement or Taken, the Casualty Proceeds and/or the Condemnation Proceeds, are to be paid to the Trustee for deposit in the Insurance and Condemnation Proceeds Fund. If the amounts in the Insurance and Condemnation Proceeds Fund, after such deposit, together with reasonably expected investment income an certain other funds (including amounts in the Cash Trap Fund and the Operating Reserve Fund) (collectively, the “Available Casualty/Condemnation Amounts”), are not applied to the redemption of the Bonds and are

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sufficient to repair or replace the property damaged, destroyed or Taken, the Corporation is to cause the repair or replacement of the property damaged, destroy or Taken. The Corporation is under no obligation to engage a contractor to perform the repair and restoration of the Hotel Project if (a) all or substantially all of the Hotel Project is Condemned; (b) in the Corporation’s judgment, the portion of the Hotel Project Taken is such that the Hotel Project cannot be restored to economically feasible usefulness; (c) the damage, destruction or Taking makes it imprudent or unreasonable to operate the remaining portion of the Hotel Project in accordance with the Operating Standard; or (d) the Trustee does not make the Casualty Proceeds and/or Condemnation Proceeds available for repair or reconstruction.

Insufficient Available Amounts – Corporation’s Option to Terminate or Restore. If the Corporation does not repair, restore, replace or rebuild the Hotel Project due to insufficient Available Amounts and the damage, destruction or Condemnation makes it imprudent or unreasonable to operate the remaining portion of the Hotel Project in accordance with the Operating Standard, the Corporation may terminate the Hotel Operating Agreement by giving notice to Hotel Manager within 30 days after the report is delivered by the Independent Architect. If the Corporation operates a Hotel on the Site within three (3) years after such Termination date, the Hotel Manager has the right to elect to enter into a new hotel Operating Agreement on the same terms and conditions as the Hotel Operating Agreement with the then current owner of the Site. Such hotel Operating Agreement may be modified if insufficient funds exist to restore the Hotel Project to the condition prior to the casualty or condemnation but the Corporation restores the Hotel Project to the extent of available funds. If the Site is sold to a third party (other than pursuant to a foreclosure sale), such third party can terminate the foregoing right by paying to the Hotel Manager a Termination Fee equal to that which would have been payable at such time if the Hotel Operating Agreement were in effect at such time.

Destruction After Bonds Are No Longer Outstanding; Corporation to Restore After Insured Casualty. If, after the Bonds are no longer Outstanding, the Hotel Project or any part thereof is damaged or destroyed by fire or other Casualty required to be covered by the insurance described in the Hotel Operating Agreement, then Corporation shall repair, restore, replace or rebuild the Hotel Project (“Casualty Restoration”) as nearly as is reasonably possible to the condition and character of the Hotel immediately prior to the occurrence of the damage or destruction, subject to the following conditions precedent; (a) Corporation receives insurance proceeds in an amount sufficient to cover at least ninety percent (90%) of the cost to rebuild and replace the Hotel as certified in a statement of the Independent Architect; (b) the balance of the Operating Reserve Fund is sufficient to cover the difference between the cost to repair and the insurance proceeds received by Corporation; (c) the holder of any Mortgage then existing against all or any of the Hotel allows the Available Casualty and Condemnation Proceeds to be used for the repair and reconstruction of the Hotel; and (d) the repair of the Hotel is not reasonably anticipated by the Independent Architect to exceed six (6) months. If the conditions set forth in (a), (b), (c) and (d) are not satisfied, Corporation shall not be required to repair any damage or destruction of the Hotel and if Corporation elects not to repair the Hotel then Corporation or Hotel Manager may terminate the Hotel Operating Agreement by giving notice to the other Party (which shall be effective 90 days after its delivery within 30 days after the report is delivered by such independent licensed architect. Hotel Manager shall cooperate with Corporation in obtaining all property damage insurance proceeds payable with respect to the Casualty Restoration so that the same shall be available to Corporation as the Casualty Restoration progresses. Corporation shall use commercially reasonable efforts to negotiate provisions in any Mortgage to provide that all insurance proceeds covering damage or destruction to any real or personal property used in the operation of the Hotel shall be available for and used exclusively for the funding of the Casualty Restoration.

Substantial Uninsured Casualty After the Bonds Are No Longer Outstanding; Corporation’s Option to Terminate or Restore. If after the Bonds are no longer Outstanding, the whole or any part of the Hotel Project is damaged or destroyed by any peril or event and the cost of the Casualty Restoration

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exceeds the insurance proceeds payable on account thereof by an amount in excess of 5% of the replacement value of the Hotel Project as of the date of the Casualty, as determined by an Independent Architect to be mutually agreed upon by Hotel Manager and Corporation, then Corporation may terminate the Hotel Operating Agreement by giving notice to the other Party (which shall be effective 90 days after its delivery within 30 days after the report is delivered by such Independent Architect. In the event of such Termination, no Termination Fee shall be payable to Hotel Manager.

Commencement and Completion of Casualty Restoration

If the Corporation is required to repair or rebuild the Hotel Project due to fire or other casualty, the Corporation is to commence the Casualty Restoration as soon as practicable after the occurrence of the damage or destruction and complete the work with diligence. If a right of Termination exits, the obligation to commence the Casualty Restoration is to be delayed until the earlier of the giving of the applicable notice of Termination or the expiration of the applicable notice period.

Permitted Assignment by Hotel Manager

Permitted Assignments. So long as no Event of Default attributable to the Hotel Manager has occurred and remains uncured, the Hotel Manager has the right, without the Corporation’s consent but upon 10 days prior notice to the Corporation, to effect an Assignment of all, but not less than all, of its interest in the Hotel Operating Agreement to any of the following (each a “Proposed Assignee”): (a) any Affiliate of the Hotel Manager; (b) any successor of the Hotel Manager that may result from any merger, consolidation or reorganization; or (c) any Person that acquires all or substantially all of the business and assets of the hotel management and license operations associated with hotels and resorts operating under the Hilton brand continues the hotel management business using the Hilton brand.

Conditions Precedent to Assignment. The following are conditions precedent to any Assignment under the Hotel Operating Agreement: (a) the Proposed Assignee must execute an assignment and assumption agreement; (b) the Proposed Assignee is to continue the use of the Hilton brand and the use of the name of the Hotel immediately prior to such transaction; (c) the Proposed Assignee is recognized as having a national chain of Upscale Hotels; (d) if applicable, the Proposed Assignee is to continue to operate the Other Hilton Hotels then being operated under the Hilton name and to provide the Group Services and other provisions to be furnished by the Hotel Manager at the standards provided for in the Hotel Operating Agreement; (e) the Proposed Assignee is not generally recognized in the community as being of ill repute with whom a prudent business person would not wish to associate in a commercial venture or a Person that would be considered by regulators in the gaming industry to be an unsuitable business associate of the Hotel Manager and its Affiliates; (f) in the event that the Proposed Assignee does not have a net worth at least equal to $100,000,000 as of December 31 of the year preceding the proposed date of Assignment, Hotel Manager or the Proposed Assignee shall deliver to Corporation and Trustee a guaranty (in form and of substance reasonably satisfactory to Corporation and Trustee) executed by (A) a Person having the required net worth guaranteeing all of the obligations and liabilities of the Proposed Assignee under the Hotel Operating Agreement; or (B) Hotel Manager, if the Proposed Assignee is an Affiliate of Hotel Manager; (g) if a guaranty is to be provided pursuant to clause (vi), then Hotel Manager or the Proposed Assignee shall deliver to Corporation and Trustee a legal opinion, in form and substance, and from a law firm, satisfactory to Corporation and Trustee, opining as to the enforceability of the guaranty; (h) if a guaranty is to be provided, the Hotel Manager or the Proposed Assignee is to deliver a legal opinion opining as to the enforceability of the guaranty; (i) if the Proposed Assignee is an Affiliate of the Hotel Manager, the Hotel Manager may not be relieved of any of its obligations or liabilities under the Hotel Operating Agreement; and (j) the Hotel Manager is to give the Corporation notice of an Assignment to the Proposed Assignee including certain information with respect

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to such proposed assignment necessary for the Corporation to determine if the proposed assignment is a permitted assignment under the Hotel Operating Agreement.

Assignment by the Corporation

The Corporation is to give the Hotel Manager not less than 30 days notice of its intention to sell, transfer or convey the Hotel Project or effect an Assignment of the Hotel Operating Agreement. Except in the case of a foreclosure sale, the Hotel Manager has the right to require as an additional condition precedent of any such sale or lease that all existing defaults by the Corporation be cured or precedent of any such sale or lease that all existing defaults by the Corporation be cured or arrangements satisfactory to the Hotel Manager for curing defaults be made and evidence satisfactory to the Hotel Manager form the purchaser or transferee is furnished showing that insurance as required under the Hotel Operating Agreement is in full force and effect from and after the closing date. The proposed transferee or assignee is to execute an assignment and assumption agreement.

The Corporation may mortgage, hypothecate, encumber, pledge, assign or grant a security interest in the Hotel Project and/or the Hotel Operating Agreement in connection with the Bonds or other financing transactions.

Alternative Dispute Resolution Required

Administration of Mediation. The Parties are required to attempt to resolve any Arbitrable Dispute through a process of mediation administered by a provider of such services as determined under the Hotel Operating Agreement, such service provider referred to as the “ADR Provider.”

Conducting Mediation. The Parties are to attempt to settle the dispute by participating in a mediation process sets forth in the Hotel Operating Agreement. Neither Party may initiate litigation or arbitration proceedings with respect to any dispute until the mediation of such dispute is complete or timely attempted.

Arbitration or Litigation if Mediation Fails. If any dispute remains between the Parties after the mediation is complete or timely attempted, either Party may commence legal proceedings to resolve such dispute, however, if the dispute is an Arbitrable Dispute, either Party may require that the dispute be submitted to final and binding arbitration (without appeal or review) in the county in which the Hotel is located. The requirements for final and binding arbitration are outlined in detail in the Hotel Operating Agreement.

Period Within Which Arbitration or Litigation Must Be Commenced. Any litigation or arbitration of a dispute (including an Arbitrable Dispute) must be initiated within eighteen (18) months from the date on which either Party first gave notice to the other of the existence of the dispute, and any Party who fails to commence litigation or arbitration within such 18-month period is deemed to have waived any of its affirmative rights and claims in connection with the dispute and is barred from asserting such rights and claims at any time thereafter.

Compensation of Mediator or Arbitrator. Subject to the right of the prevailing Party to seek reimbursement from the other Party pursuant to the Hotel Operating Agreement, the Parties agree to share equally the costs, including fees, of the ADR Provider.

Venue, Jurisdiction and Jury Waiver. The venue of any mediation or arbitration is to be, and any judicial proceedings are to be in the City of Baltimore unless otherwise agreed by the Parties. Each Party irrevocably submits to the jurisdiction of the federal and state courts located in the county in the

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City of Baltimore, unless otherwise agreed by the Parties. Each Party waives to the fullest extent permitted by law, trial by jury of all disputes arising out of or relating to the Hotel Operating Agreement.

Expenses. The prevailing Party in any arbitration, suit or other action arising out of or related to the Hotel Operating Agreement may recover from the other Party all reasonable attorneys’ fees and out- of-pocket arbitration costs and expenses. If any Party secures a judgment in any proceeding brought to enforce or interpret the Hotel Operating Agreement, then any costs or expenses incurred in enforcing, or in appealing from, such judgment are payable to the prevailing party by the Party against whom such judgment has been rendered. If both parties are a prevailing party, then the arbitrator or court is to award attorneys’ fees and allocate costs as it determines to be fair and equitable, in its sole discretion. A Party is not a prevailing party if such party is awarded less than 75% of the amount of the claim for which it sought recovery.

Restrictive Covenant

Until the later of the expiration or prior Termination of the Hotel Operating Agreement and as a material inducement to Corporation entering into the Hotel Operating Agreement, the Hotel Manager and its Affiliates agree not to, without the prior consent of the Corporation, own, lease, operate, manage, license, franchise, merge with or join through a joint marketing or other similar arrangement, in whole or in part, directly or indirectly, a lodging facility within the Restricted Area. This restriction does not apply to (a) any Nonrestricted Hotels; (b) any Restricted Hotel or Hotels which are members of a Hotel Chain or group of Hotel Chains acquired by, owned, operated, leased, managed, franchised or licensed by or merged with or joined through a marketing agreement with Hotel Manager or its Affiliates (or the operation of which is transferred to Hotel Manager or any of its Affiliates in its entirety) at any time, provided that as to any member of the Hotel Chain located in the Restricted Area which is not a full-service Hilton hotel which shares the same reservation system as the Hotel, Hotel Manager shall not make such hotel a full-service Hilton hotel which shares the same reservation system as the Hotel, except as otherwise permitted in the Hotel Operating Agreement; (c) the replacement of a Restricted Hotel in the Restricted Area owned, leased, operated, managed, licensed or franchised by Hotel Manager or any of its Affiliates as of the date hereof or acquired by Hotel Manager or any of its Affiliates as a part of a Hotel Chain, with one or more other Restricted Hotels in the Restricted Area the total number of rooms of which do not exceed the total number of rooms in the Restricted Hotel then in use and being replaced, provided that unless the Restricted Hotel being replaced is or was operated as a part of the Hilton System as of the date hereof, any of the new Restricted Hotels within the Restricted Area shall not be operated as a “Hilton” hotel or as a part of the Hilton System except as may be otherwise permitted in the Hotel Operating Agreement; (d) commencing with the ninth Operating Year, any other Restricted Hotel, provided that a Hotel Consultant forecasts in writing to the Corporation and the Trustee that the lodging market segment of the Hotel Project for the five-year period following the date the competing Restricted Hotel is open will be at a level that will continue to support a Debt Service Coverage Ratio equal to at least the Debt Service Coverage Ratios attached hereto as Exhibit R with respect to the Bonds during such five-year period; and (e) any shared ownership properties commonly known as “vacation ownership” or “time-share ownership” or similar real estate properties. Any “time-share” or “vacation” ownership property shall be designed and intended for use on a regular basis by the individual owners of such interests who shall not be Affiliates of Hotel Manager.

Redirecting Reservations

Neither Hotel Manager nor any of its Affiliates will at any time redirect or permit the redirection of guests or other business requesting reservations for rooms or other facilities at the Hotel to any other hotel owned, managed, operated, acquired, leased, franchised, licensed by, merged with or joined through a marketing or other arrangement with the Hotel Manager, an Affiliate of the Hotel Manager or any entity

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in which the Hotel Manager has an interest (direct or indirect) if such rooms or other facilities are available at the Hotel during the requested period. The foregoing will only apply to specific inquiries regarding the Hotel and is not intended to create a reservation priority for the Hotel. The Hotel Manager and its Affiliates may accept reservations specifically requesting rooms or facilities at other hotels without attempting to redirect those inquiries to the Hotel, and may offer available options to Persons making inquiry which will, if appropriate to the inquiry, include the Hotel on a nondiscriminatory basis.

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APPENDIX F

Form of Continuing Disclosure Agreement

This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered by BALTIMORE HOTEL CORPORATION, a Maryland non-stock not-for-profit corporation (the “Corporation”) in connection with the issuance by the Mayor and City Council of Baltimore, a body corporate and politic and a political subdivision of the State of Maryland (the “City”), of the City’s Convention Center Hotel Revenue Refunding Bonds, Series 2017 (the “Series 2017 Bonds”). The Series 2017 Bonds are being issued pursuant to an Indenture of Trust dated as of February 1, 2006, as amended and restated on [______], 2017 (the “Indenture”) between the City, the Corporation and Wells Fargo Bank, National Association, as Trustee. Capitalized terms used but not defined herein shall have meanings ascribed thereto in the Indenture. The Corporation covenants and agrees as follows:

BACKGROUND

A. In order to allow the Participating Underwriters (as defined in the Rule defined below) of the Series 2017 Bonds to comply with Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities and Exchange Act of 1934 (17 CFR § 240.15c2-12) as amended to the date hereof (the “Rule” or “Rule 15c2-12”), the Corporation has agreed to make certain continuing disclosure undertakings for the benefit of owners (including beneficial owners) of the Series 2017 Bonds.

B. This Disclosure Agreement is intended to satisfy the requirements of the Rule 15c2-12, as in effect on the date hereof.

COVENANTS AND AGREEMENTS

Section 1. Definitions.

(a) “Annual Financial Information” means the City Annual Financial Information and the Corporation Annual Financial Information. Annual Financial Information may be provided in any format deemed convenient by the City or the Corporation, as applicable, which complies with the requirements of Rule 15c2-12.

(b) “Audited Financial Statements” means the City Audited Financial Statements and the Corporation Audited Financial Statements.

(d) “City Annual Financial Information” means the financial information or operating data with respect to the City for the most recently completed fiscal year, set forth in “Appendix A- Summary of Certain Information Regarding the City.”

(e) “City Audited Financial Statements” means the annual financial statements for the City, prepared in accordance with generally accepted accounting principles for governmental units as prescribed by the Government Accounting Standards Board, as in effect from time to time, audited by a firm of certified public accountants.

(f) “Corporation” means the Baltimore Hotel Corporation, a Maryland non-stock, not-for- profit corporation.

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(g) “Corporation Annual Financial Information” means the financial information or operating data with respect to the Corporation and the Project for the most recently completed fiscal year of the type set forth in Table 4 in the Final Official Statement.

(h) “Corporation Audited Financial Statements” means the annual financial statements for the Corporation, prepared in accordance with generally accepted accounting principles as prescribed by the Financial Accounting Standards Board, as in effect from time to time, audited by a firm of certified public accountants.

(i) “Dissemination Agent” means any person, firm, corporation or other entity and any successor thereto designated in writing by the Corporation to serve as its agent for disseminating on behalf of the Corporation the information required hereby, and which has filed with the Corporation a written acceptance of such designation.

(j) "EMMA" shall mean the Electronic Municipal Market Access system of the Municipal Securities Rulemaking Board as provided at http://www.emma.msrb.org, or any similar system that is acceptable to or as may be specified by the SEC from time to time. A current list of such systems may be obtained from the SEC at http://www.sec.gov/info/municipal/nrmsir.htm.

(k) “Listed Events” means any of the events listed in Section 2(f) hereof.

(l) “Official Statement” means the Official Statement delivered in connection with the original issue and sale of the Series 2017 Bonds.

(m) “Participating Underwriters” means the original underwriters of the Series 2017 Bonds or their successors in interest required to comply with the Rule in connection with the offering of the Series 2017 Bonds.

(n) “Rule 15c2-12” means Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (17 CFR § 240.15c2-12), as the same may be amended from time to time.

(o) “SEC” means the Securities and Exchange Commission.

(p) “State” means the State of Maryland.

Section 2. Provisions of Annual Information and Reporting of Listed Events.

(a) Commencing with the fiscal year ending June 30, 2017 (with respect to the City) and December 31, 2017 (with respect to the Corporation) and annually while the Bonds remain outstanding, the Corporation agrees to provide, or shall cause the Dissemination Agent to provide, annually to EMMA, the following information:

i. City Annual Financial Information (to the extent not already included in the City Audited Financial Statements);

ii. City Audited Financial Statements;

iii. Corporation Annual Financial Information; and

iv. Corporation Audited Financial Statements.

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(b) Such City Annual Financial Information and City Audited Financial Statements shall be provided to EMMA not later than 270 days after the end of each fiscal year for the City (i.e., each June 30); provided that for the year ending June 30, 2017, the City Audited Financial Information and City Audited Financial Statements shall be provided to EMMA not later than 364 days following such fiscal year end.

(c) Such Corporation Annual Financial Information and Corporation Audited Financial Statements shall be provided to EMMA not later than 270 days after the end of each fiscal year for the Corporation (i.e., each December 31).

(d) The Corporation or the Dissemination Agent may provide the Annual Financial Information and the Audited Financial Statements by specific reference to other documents, including information reports and official statements relating to other debt issues, which have been submitted to EMMA. The Corporation or the Dissemination Agent shall clearly identify each such other document so incorporated by cross-reference.

(e) The Corporation shall use its best efforts to cause the City to deliver to the Corporation or the Dissemination Agent, such information concerning the City as is necessary in the Corporation’s determination as to enable the Corporation to provide the City Annual Financial Information and City Audited Financial Statements in accordance with this Section 2. The Corporation shall be obligated to provide the City Annual Financial Information and City Audited Financial Statements as provided in this Agreement only to the extent it receives such from the City.

(f) At any time the Series 2017 Bonds are outstanding, the Corporation shall provide or shall cause the Dissemination Agent to provide to EMMA notice of the occurrence of any of the following Listed Events with respect to the Series 2017 Bonds in a timely manner not in excess of ten business days after the occurrence of the Listed Event:

i. Principal and interest payment delinquencies with respect to the Series 2017 Bonds;

ii. Non-payment related defaults with respect to the Series 2017 Bonds, if material;

iii. Unscheduled draws on debt service reserves reflecting financial difficulties;

iv. Unscheduled draws on credit enhancements reflecting financial difficulties;

v. Substitution of credit or liquidity providers, or their failure to perform;

vi. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Series 2017 Bonds, or other Listed Events affecting the tax status of the Series 2017 Bonds;

vii. Modifications to the rights of the owners of the Series 2017 Bonds, if material;

viii. Bond calls, if material, and tender offers;

ix. Defeasances;

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x. Release, substitution or sale of property securing repayment of the Series 2017 Bonds, if material;

xi. Rating changes;

xii. Bankruptcy, insolvency, receivership or similar event of the Corporation or the City. For purposes of this clause (xii), any such event shall be considered to have occurred when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Corporation or the City in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Corporation or the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Corporation or the City;

xiii. The consummation of a merger, consolidation, or acquisition involving the Corporation or the City or the sale of all or substantially all of the assets of the Corporation or the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

xiv. Appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent, if material.

(g) At any time the Series 2017 Bonds are outstanding, the Corporation shall provide or shall cause the Dissemination Agent to provide, in a timely manner, to EMMA, notice of any failure of the Corporation to timely provide the City Annual Financial Information as specified in Sections 2(a) and 2(b) hereof or the Corporation Annual Financial Information as specified in Sections 2(a) and 2(c) hereof.

(h) If the Corporation designates a Dissemination Agent pursuant to this Disclosure Agreement, the Dissemination Agent shall file a report with the Corporation certifying that the Annual Financial Information and Audited Financial Statements have been provided pursuant to this Disclosure Agreement, stating the date provided.

Section 3. Enforcement. The obligations of the Corporation hereunder shall be for the benefit of the owners (including beneficial owners) of the Series 2017 Bonds. The owner or beneficial owner of any Series 2017 Bonds is authorized to take action to seek specific performance by court order to compel the Corporation to comply with its obligations under this Disclosure Agreement, which action shall be the exclusive remedy available to it or to any other owners or beneficial owners of the Series 2017 Bonds; provided, that any owner or beneficial owner of Series 2017 Bonds seeking to require the Corporation to comply with this Disclosure Agreement shall first provide at least 30 days’ prior written notice to the Corporation of its failure, giving reasonable detail of such failure following which notice the Corporation shall have 30 days to comply. Any such action shall be brought only in a court of competent jurisdiction in the City. Breach of the obligations of the Corporation hereunder shall not constitute an Event of Default under the Indenture or any other Bond Document or with respect to the Series 2017

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Bonds, and the sole remedy hereunder in the event of any failure of the Corporation to comply herewith shall be an action to compel performance. None of the rights and remedies provided by the Indenture shall be available to the owners of the Series 2017 Bonds or the Trustee therein appointed.

Section 4. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Corporation from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other annual information or notice of occurrence of an event which is not a Listed Event, in addition to that which is required by this Disclosure Agreement; provided that the Corporation shall not be required to do so. If the Corporation chooses to include in any annual information or notice the occurrence of an event in addition to that which is specifically required by this Disclosure Agreement, the Corporation shall have no obligation under this Disclosure Agreement to update such information or include in any future annual filing or Listed Event filing.

Section 5. Term. This Disclosure Agreement shall be in effect from and after issuance and delivery of the Series 2017 Bonds and shall extend to the earliest of (i) the date all principal and interest on the Series 2017 Bonds shall have been deemed paid or legally defeased pursuant to the terms of the Indenture; (ii) the date that the City and the Corporation shall no longer each constitute an “obligated person” with respect to the Series 2017 Bonds within the meaning of Rule 15c2-12; or (iii) the date on which those portions of Rule 15c2-12 which require this Disclosure Agreement are determined to be invalid by a court of competent jurisdiction in a non-appealable action, have been repealed retroactively or otherwise do not apply to the Series 2017 Bonds, the determination of (i), (ii) or (iii) herein to be made in any manner deemed appropriate by the Corporation including by an opinion of counsel experienced in federal securities law selected by the Corporation.

Section 6. Dissemination Agent. The Corporation may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent.

Section 7. Amendments and Waivers. Notwithstanding any other provision of this Disclosure Agreement, the Corporation may amend this Disclosure Agreement from time to time, and any provision of this Disclosure Agreement may be waived, without the consent of the owners or beneficial owners of the Series 2017 Bonds upon the Corporation’s receipt of an opinion of counsel experienced in federal securities laws to the effect that such amendment or waiver will not adversely affect compliance with Rule 15c2-12. Any Annual Financial Information containing amended operating data or financial information will explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment changes the accounting principles to be followed in preparing financial statements, the Annual Financial Information for the year in which the change is made will present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The Corporation shall provide notice of such amendment or waiver to EMMA in the same manner as for a Listed Event under Section 2(f).

Section 8. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Corporation, the Participating Underwriters and the owners (including beneficial owners) from time to time of the Series 2017 Bonds, and shall create no rights in any other person or entity.

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BALTIMORE HOTEL CORPORATION

By: ______Name: ______Title: ______

Dated as of ______

(Signature page to Continuing Disclosure Agreement)

APPENDIX G

PROPOSED FORM OF BOND COUNSEL OPINION

June __, 2017

Mayor and City Council of Baltimore Baltimore, Maryland

$______MAYOR AND CITY COUNCIL OF BALTIMORE (CITY OF BALTIMORE, MARYLAND) CONVENTION CENTER HOTEL REVENUE REFUNDING BONDS SERIES 2017

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by Mayor and City Council of Baltimore (the “City”) of its $______Convention Center Hotel Revenue Refunding Bonds, Series 2017 (the “Series 2017 Bonds”). The Series 2017 Bonds are being issued under and pursuant to (i) Article II, Sections (50) and (62) of the Baltimore City Charter (1996 Edition, as amended) (together, the “Enabling Acts”); (ii) Ordinance No. 05-127 (the “Tax Increment Ordinance”) which was passed by the City Council on September 19, 2005 and approved by the Mayor of the City and effective on October 7, 2005; (iii) Ordinance No. 05-128 (the “Bond Ordinance” and, together with the Tax Increment Ordinance, the “Ordinances”), which was passed by the City Council on September 19, 2005, and approved by the Mayor of the City and effective on October 7, 2005; (iv) a resolution adopted by the Board of Finance of the City on April 24, 2017 (the “2017 Resolution”); and (v) an Amended and Restated Indenture of Trust dated as of June 1, 2017 (the “Indenture”) by and among the City, Baltimore Hotel Corporation (the “Corporation”) and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The Series 2017 Bonds mature, bear interest and contain such other terms and conditions as set forth in the Series 2017 Bonds.

Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Amended and Restated Master Glossary of Terms for Baltimore Hotel Corporation Convention Center Hotel Revenue Refunding Bond Transaction as amended and restated dated as of June 1, 2017.

We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. The scope of our engagement as bond counsel extends solely to an examination of the facts and law incident to rendering the opinions specifically expressed herein.

G-1 Mayor and City Council of Baltimore June __, 2017 Page 2

With respect to the due authorization, execution and delivery of the First Supplement to Loan Agreement and the validity and enforcement of it against the City, we refer you to the opinion of the Interim City Solicitor dated the same date as this opinion and addressed to you.

With respect to the organization of the Corporation, the power of the Corporation to enter into and perform its obligations under the Loan Agreement and certain other documents to which it is a party, the due authorization, execution and delivery of the First Supplement to Loan Agreement and the other documents by the Corporation and the validity and enforceability of them against the Corporation, we refer you to our opinion dated the same date as this opinion and addressed to you.

As to questions of fact material to our opinion, we have relied upon representations of the City and the Corporation contained in the Indenture, the Loan Agreement, the Tax Certificate executed by the City and the Corporation in connection with the issuance and sale of the Series 2017 Bonds (the “Tax Certificate”) and the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

We have assumed the accuracy and truthfulness of all public records and of all certifications, documents and other proceedings examined by us that have been executed or certified by public officials acting within the scope of their official capacities, and we have not independently verified the accuracy or truthfulness thereof. We have also assumed the genuineness of the signatures appearing upon such public records, certifications, documents and proceedings.

We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents.

We are qualified to practice law in the State of Maryland, and we do not purport to be experts on, or to express any opinion herein concerning, any law other than the law of the State of Maryland and the federal law of the United States of America.

We have not examined, and express no opinion as to, the existence of or title to real or personal property and, except as expressly stated herein; we express no opinion as to the creation, validity or priority of any lien upon, assignment of, pledge of or security interest in real or personal property.

Based on our examination and subject to the foregoing, we are of the opinion, as of the date hereof and under existing law, as follows:

1. The City is a validly created and existing body politic and corporate and a political subdivision of the State of Maryland, possessing the authority under the Enabling Acts, the Ordinances and the Resolutions to issue the Series 2017 Bonds.

G-2 Mayor and City Council of Baltimore June __, 2017 Page 3

2. The City has full power and authority under the Enabling Acts to adopt the Ordinances and to perform its obligations thereunder. The Ordinances have been duly adopted, have not been modified, amended or rescinded and are in full force and effect. 3. The 2017 Resolution has been duly adopted, have not been modified, amended or rescinded and are in full force and effect. 4. The Indenture has been duly authorized, executed and delivered by the City and, assuming the due authorization, execution and delivery thereof by the Corporation and the Trustee, constitutes the valid and binding obligation of the City, enforceable against the City in accordance with its terms. 5. The Series 2017 Bonds have been duly authorized and legally issued in accordance with the Enabling Acts, the Ordinances and the Resolutions. The Series 2017 Bonds have been duly executed and delivered by the City and, assuming their due and proper authentication by the Trustee, are valid and binding special obligations of the City, payable solely from the Trust Estate pledged by the City under the Indenture, to the extent provided in the Indenture, including amounts deposited in certain funds and accounts held by the Trustee and the City under the Indenture; provided that all amounts payable by the City under the Indenture from the Tax Revenues are not irrevocably pledged to the payment of the principal of and interest on the Series 2017 Bonds, and the obligation to pay the principal of and interest on the Series 2017 Bonds from the Tax Revenues is subject to annual appropriation by the City. 6. The Series 2017 Bonds do not constitute a general obligation debt of the City or a pledge of the City’s full faith and credit or taxing power and do not constitute a debt of the City within the meaning of Section 7 of Article XI of the Maryland State Constitution or within the meaning of any other constitutional, statutory or charter provision. 7. Under existing law, the interest on the Series 2017 Bonds (i) is excludable from gross income of the owners thereof for purposes of federal income taxation and (ii) is not a specific item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, for purposes of the alternative minimum tax imposed on corporations (as defined for federal income tax purposes under Section 56 of the Internal Revenue Code of 1986, as amended (the “Code”)), interest on the Series 2017 Bonds must be included in computing adjusted current earnings. 8. Under existing law of the State of Maryland, the principal amount of the Series 2017 Bonds, the interest payable thereon, their transfer, and any income derived therefrom, including any profit realized on their sale or exchange, shall be exempt from taxation by the State of Maryland or by any of its political subdivisions, municipal corporations or public agencies but shall be included in computing the net earnings of financial institutions as required by the law of the State of Maryland; however, the law of the State of Maryland does not expressly refer to, and no opinion is expressed concerning, estate or inheritance taxes, or any other taxes not levied directly on the Series 2017 Bonds or the interest thereon.

G-3 Mayor and City Council of Baltimore June __, 2017 Page 4

The opinions set forth in the paragraph numbered 7 above assume, and are subject to, continuing compliance with the covenants regarding federal tax law set forth in the Indenture, the Tax Certificate, and the Code. Failure to comply with such covenants could cause interest on the Series 2017 Bonds to be included in the gross income of the holders of the Series 2017 Bonds retroactive to the date of issue of the Series 2017 Bonds. The accrual or receipt of interest on the Series 2017 Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient’s particular status or other items of income or deduction. We express no opinion regarding any such consequences. Purchasers of the Series 2017 Bonds, particularly purchasers that are corporations (including S Corporations and foreign corporations operating branches in the United States), property and casualty insurance companies, banks, thrifts or other financial institutions, recipients of Social Security or Railroad Retirement Benefits or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations such as the Series 2017 Bonds, should consult their tax advisors concerning their tax consequences of purchasing and holding the Series 2017 Bonds.

It is to be understood that the rights of any holder of the Series 2017 Bonds and the enforceability of the Indenture and the Series 2017 Bonds may be subject to (a) bankruptcy, insolvency, reorganization, moratorium and other similar laws heretofore or hereafter in effect affecting creditors’ rights, to the extent constitutionally applicable, (b) the valid exercise of the constitutional powers of the United States of America and of the sovereign police and taxing powers of state or other governmental units having jurisdiction, and (c) the exercise of judicial discretion in accordance with general principles of equity (whether applied in a court of law or a court of equity).

Very truly yours,

McGuireWoods LLP

G-4 APPENDIX H

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APPENDIX I

BOOK-ENTRY SYSTEM

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Series 2017 Bonds. The Series 2017 Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered certificate will be issued for each series of the Series 2017 Bonds, each in the aggregate principal amount of such series, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Series 2017 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2017 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2017 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2017 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2017 Bonds, except in the event that use of the book-entry system for the Series 2017 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2017 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2017 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2017 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2017

I-1

Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2017 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2017 Bonds, such as prepayments, tenders, defaults, and proposed amendments to the security documents relating to the Series 2017 Bonds. For example, Beneficial Owners of Series 2017 Bonds may wish to ascertain that the nominee holding the Series 2017 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Certificate Registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2017 Bonds within a series are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2017 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Series 2017 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments represented by the Series 2017 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Series 2017 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered.

To the extent permitted by law, the City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC.

THE ABOVE INFORMATION CONCERNING DTC AND DTC’S BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE CITY BELIEVES TO BE RELIABLE, BUT THE CITY TAKES NO RESPONSIBILITY FOR THE ACCURACY THEREOF. NEITHER THE CITY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES

I-2

OR BENEFICIAL OWNERS WITH RESPECT TO DTC’S RECORD KEEPING, PAYMENTS BY DTC OR PARTICIPANTS, NOTICES TO BE DELIVERED BY DTC, OR ANY OTHER ACTION TAKEN BY DTC AS REGISTERED OWNER OF THE SERIES 2017 BONDS.

So long as Cede & Co. is the registered owner of the Series 2017 Bonds, as nominee for DTC, references herein to the holders or registered owners of the Series 2017 Bonds (other than under the caption “TAX MATTERS”) shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the Series 2017 Bonds. When reference is made to any action, which is required or permitted to be taken by the Beneficial Owners, such reference shall only relate to those permitted to act (by statute, regulation or otherwise) on behalf of such Beneficial Owners for such purposes. When notices are given the City or the Trustee shall send them to DTC only.

For every transfer and exchange of the Series 2017 Bonds, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto.

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MAYOR AND CITY COUNCIL OF BALTIMORE (CITY OF BALTIMORE, MARYLAND) • Convention Center Hotel Revenue Refunding Bonds, Series 2017