What is the Franchisee's responsibility for ensuring compliance with System Standards at The Standardx hotel?

and loyalty, social responsibility, discount or promotional, training and operating programs, including a property management system that interfaces with the CRS. Franchisee must sign and comply with any license, participation and other agreements Hyatt periodically specifies relating to these programs.

Despite Hyatt's right to establish and periodically to modify System Standards for the Hotel and modify the Hotel System as Hyatt deems best, Franchisee retains the right to control, and responsibility for, the Hotel's day-to-day management and operation and implementing and maintaining System Standards at the Hotel. Because complete and detailed uniformity under many varying conditions might not be possible or practical, Hyatt reserves the right, as Hyatt deems best, to vary the Hotel System and System Standards for any Brand Hotel based upon the peculiarities of any condition or factors that Hyatt considers important to that hotel's successful operation. Franchisee has no right to require Hyatt to grant Franchisee a similar variation or accommodation.

Hyatt and Franchisee agree that any materials, guidance or assistance that Hyatt provides with respect to employment-related policies or procedures are solely for Franchisee's (and/or the Management Company's) optional use. Those materials, guidance and assistance do not form part of the mandatory System Standards. Franchisee (or the Management Company) will determine to what extent, if any, these materials, guidance or assistance should apply to the Hotel's employees. Franchisee acknowledges that Hyatt does not dictate or control labor or employment matters for franchisees and their employees. Franchisee (or the Management Company) is solely responsible for determining the terms and conditions of employment for all Hotel employees (including Core Management), for all decisions concerning the hiring, firing and discipline of Hotel employees, and for all other aspects of the Hotel's labor relations and employment practices.

• 4.4 Sources of Products and Services. Hyatt may require Franchisee to acquire FF&E, supplies, and other goods and services only from Hyatt (or its Affiliate) or from one or more sources that Hyatt periodically designates or approves. If Franchisee wishes to obtain any FF&E, supplies, or other goods and services from a source that Hyatt has not previously approved as a supplier of the particular item or service, Franchisee must comply with Hyatt's then current supplier approval standards. Upon Hyatt's request, Franchisee must reimburse Hyatt's costs in reviewing Franchisee's request and evaluating the product, service and/or source. Hyatt may designate a particular source for, or model or brand of, FF&E, supplies or other goods or services that Hyatt (in its sole judgment) determines to be critical to the Hotel System. Hyatt and its Affiliates have the right to receive rebates, commissions, and other consideration from suppliers on account of their actual or prospective dealings with Franchisee and other franchisees and owners of Brand Hotels, but (subject to Section 4.1) neither Hyatt nor its Affiliates will receive rebates from suppliers based solely on the volume of Franchisee's purchases from those suppliers unless Hyatt either forwards those rebates to Franchisee, uses them to cover System Services Costs, or otherwise uses those rebates for the benefit of the Hotel System or the Brand Hotel network.
• 4.5 CRS, GDS and ADS. Franchisee must participate in, connect with, and use the authorized CRS, GDS and ADS (and only the authorized CRS, GDS and ADS) in the manner Hyatt periodically designates for offering, booking, modifying, and communicating guest room reservations for the Hotel. Franchisee must honor and give first priority on available rooms to all

confirmed reservations that the CRS, GDS or ADS refers to the Hotel. The CRS and approved GDS and ADS are the only reservation systems or services that the Hotel may use for reservations. Franchisee will establish the Hotel's room rates, provided that those rates and Franchisee's pricing policies comply with System Standards (to the maximum extent the law allows). Franchisee may not charge any guest a rate higher than the rate that the reservations center specifies to the guest when the guest makes the reservation.

• 4.6 F&B Operations and Spa Operations. Franchisee is responsible for ensuring that all F&B Operations and all Spa Operations (if the Hotel has Spa Operations) operate in full compliance with all applicable laws, rules and regulations and all applicable System Standards. Franchisee agrees to provide, or cause the Management Company to provide, all training programs to the F&B Operator and Spa Operator (as applicable) that Hyatt periodically specifies. If the F&B Operator or Spa Operator at any time fails to operate in full compliance with all applicable laws, rules and regulations and all applicable System Standards, or fails to comply with any agreement with Hyatt, then, without limiting Hyatt's other rights and remedies under this Agreement and applicable law, Hyatt may revoke its approval of the F&B Operator or Spa Operator (as applicable). If Hyatt does so, then Franchisee must promptly terminate its arrangement with the F&B Operator or Spa Operator and either assume direct control of the Hotel's F&B Operations or Spa Operations (as applicable), if Hyatt has approved Franchisee to manage the Hotel, or engage another approved F&B Operator or Spa Operator that Hyatt has approved in writing.
• 4.7 Upgrading the Hotel and CapEx Account. Franchisee may not make any material changes to the Hotel's construction, including any changes to any structural or life safety equipment or systems, the number and/or type of guest rooms or common areas, or any architectural features, without Hyatt's prior written consent and complying with such conditions and procedures that Hyatt periodically establishes for such changes.

Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)