Exhibit 10.2

HOTEL

MANAGEMENT AGREEMENT

Between

TRS KCI LOFT, LLC

and

PRESIDIAN DESTINATIONS, LTD.

Dated

December 14, 2016

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TABLE OF CONTENTS
HOTEL MANAGEMENT AGREEMENT
4
ARTICLE 1
DEFINITIONS
4
Section 1.01.
Definitions.
4
ARTICLE 2
TERM OF AGREEMENT
12
Section 2.01.
Term.
12
ARTICLE 3
OPERATION OF THE HOTELS
12
Section 3.01.
Representations by Lessee and Operator; Engagement of Operator.
12
Section 3.02.
Standards of Operation.
13
Section 3.03
Limitations on Operator’s Authority
15
Section 3.04.
Reservations Services and Revenue Management.
17
Section 3.05.
Marketing.
17
Section 3.06.
Consultations Between Lessee and Operator.
18
Section 3.07.
Transactions with Affiliates and Other Relationships.
18
Section 3.08.
Regional Manager.
18
Section 3.09.
Certain Expenses.
18
ARTICLE 4
INDEPENDENT CONTRACTOR
19
Section 4.01.
Operator Status.
19
Section 4.02.
Employees.
19
Section 4.03.
Employee Expenses.
20
Section 4.04.
Employee Benefit Plans.
20
Section 4.05.
Execution of Agreements.
21
ARTICLE 5
INDEMNIFICATION
21
Section 5.01.
Indemnification by Operator.
21
Section 5.02.
Limitations on Indemnification.
22
Section 5.03.
Indemnification by Lessee.
22
Section 5.04.
Survival of Indemnity.
23
ARTICLE 6
BUDGETS AND POLICY MEETINGS
23
Section 6.01.
Budgets.
23
Section 6.02.
Budget Meetings.
24
ARTICLE 7
OPERATING EXPENSES
24
Section 7.01.
Payment of Operating Expenses.
24
Section 7.02.
Operating Expenses Not an Obligation of Operator.
24
ARTICLE 8
BANK ACCOUNTS
25
Section 8.01.
Lessee Revenue Account.
25
Section 8.02.
Operating Account
25
Section 8.03.
Ownership of Accounts
25
Section 8.04.
Exculpation of Operator
25

 
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Section 8.05.
Reimbursement of Operator
26
Section 8.06.
Working Capital Funds
26
ARTICLE 9
BOOKS, RECORDS AND STATEMENTS
26
Section 9.01.
Books and Records.
26
Section 9.02.
Statements.
27
ARTICLE 10
OPERATOR’S FEE AND TRANSFERS TO LESSEE
28
Section 10.01.
Payment of Operator’s Fee.
28
ARTICLE 11
REPAIRS AND MAINTENANCE
28
ARTICLE 12
INSURANCE
28
Section 12.01.
General.
28
Section 12.02.
Workers’ Compensation and Other Employment Insurance.
29
Section 12.03.
Approval of Companies and Cost by Owner and Lessee.
29
Section 12.04.
Maintenance of Coverages.
29
Section 12.05.
Waiver of Subrogation.
29
Section 12.06.
Blanket Coverage.
29
Section 12.07.
Employment Practice Liability
30
Section 12.08.
Cyber/Network/Privacy Liability.
30
Section 12.09.
Liquor Liability.
30
Section 12.10.
Automobile Liability.
30
Section 12.11.
General Liability.
30
Section 12.12.
Property.
31
Section 12.13.
Crime.
31
ARTICLE 13
PROPERTY TAXES, LOCAL TAXES, LEVIES AND OTHER ASSESSMENTS
31
Section 13.01.
Property Taxes.
31
Section 13.02.
Lessee’s Right to Contest.
31
ARTICLE 14
DAMAGE OR DESTRUCTION - CONDEMNATION
31
Section 14.01.
Damage.
31
Section 14.02.
Condemnation.
31
ARTICLE 15
USE OF NAME
32
ARTICLE 16
TERMINATION
32
Section 16.01.
Inspection Failure.
32
Section 16.02.
Performance Failure.
32
Section 16.03.
Sale of Hotel.
33
Section 16.04.
Bad Acts
33
Section 16.05.
Optional Termination.
33
Section 16.06.
Lessee Change of Control.
34
Section 16.07.
Operator Change of Control.
35
Section 16.08.
Bookings Beyond Expiration of Term
36
Section 16.09.
Tax Law Change.
37

 
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Section 16.10.
Default or Termination of Alcoholic Concession Agreement by Operator.
37
Section 16.11.
Termination Fees.
37
ARTICLE 17
DEFAULT AND REMEDIES
37
Section 17.01.
Events of Default- Remedies.
37
Section 17.02.
Rights Not Exclusive.
39
ARTICLE 18
NOTICES
39
Section 18.01.
Notices.
39
ARTICLE 19
ASSIGNMENT
40
Section 19.01.
No Assignment by Operator.
40
Section 19.02.
Assignment by Lessee.
40
ARTICLE 20
SUBORDINATION
41
Section 20.01.
Subordination To Mortgage.
41
Section 20.02.
Foreclosure.
41
Section 20.03.
Estoppel Certificates.
42
ARTICLE 21
MISCELLANEOUS
42
Section 21.01.
Further Documentation and Reporting Compliance.
42
Section 21.02.
Captions.
42
Section 21.03.
Successors and Assigns.
42
Section 21.04.
Competitive Market Area.
42
Section 21.05.
Assumption of Post Termination Obligations.
43
Section 21.06.
Entire Agreement.
43
Section 21.07.
Governing Law.
43
Section 21.08.
No Political Contributions.
43
Section 21.09.
Eligible Independent Contractor.
44
Section 21.10.
Time of the Essence.
45
Section 21.11.
Offsets.
45
Section 21.12.
Final Accounting.
45
Section 21.13.
Franchisor Communications.
45

EXHIBIT A -- Hotel Properties and Owners

EXHIBIT A-1 -- Competitive Set

EXHIBIT A-2 -- Accounting Software and Payroll Processes

EXHIBIT A-3 -- List of Operator’s Hotels Within 5 Mile Radius

EXHIBIT B -- Franchise Agreements
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HOTEL MANAGEMENT AGREEMENT
This HOTEL MANAGEMENT AGREEMENT is made and entered into effective as of
December 14, 2016, by and among TRS KCI LOFT, LLC, a Delaware limited liability
company (“Lessee”) and Presidian Destinations, Ltd. (“Operator”), with reference
to the following facts:
A.            Lessee leases from the entity described on Exhibit A (“Owner” and
collectively, the “Owners”) the hotel property described on Exhibit A (“Hotel”)
pursuant to the Master Lease Agreement dated December 14, 2016 (the “Lease” );
B.            Lessee desires to engage Operator to operate and manage the Hotels
listed on Exhibit A beginning on the Commencement Date in accordance with the
terms of this Agreement;
C.            Operator desires to supply the services and to operate the Hotels
beginning on the Commencement Date in accordance with the terms of this
Agreement; and
D.            The parties desire that this Agreement, while it controls all of
the Hotels collectively, will represent an individual hotel management agreement
for each Hotel described on Exhibit A, as it may be amended from time to time.
NOW, THEREFORE, for and in consideration of the mutual covenants, conditions,
stipulations, agreements and obligations hereinafter set forth and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, Lessee and Operator covenant and agree as
follows:
ARTICLE 1                          

DEFINITIONS
Section 1.01.                          Definitions.
(a)            As used herein, the following terms shall have the indicated
meanings:
“Adjusted Operating Expenses” shall mean Operating Expenses excluding Operator’s
Fee, insurance premiums (with the exception of the insurance described in
Section 12.02), discretionary employee bonuses (to the extent exclusion is
approved by Lessee), and Property real estate and personal property taxes.
“ABC Lease” shall refer to the Alcoholic Beverage Concession and Lease
Agreement, dated as of March 15, 2009, as amended by a First Amendment of even
date with this Agreement by and between Lessee and LJABC-KS, LLC (the “ABC
Tenant”).  ABC Tenant is an affiliate of Operator.
“Affiliate” shall mean (a) any person that, directly or indirectly, controls or
is controlled by or is under common control with such person, (b) any person
that owns, beneficially, directly or indirectly, ten percent or more of the
outstanding capital stock, shares or equity interests of
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such person, or (c) any officer, director, employee, partner or trustee of such
person or any person controlling, controlled by, or under common control with
such person.
“Agreement” shall mean this Hotel Management Agreement and all amendments,
modifications, supplements, consolidations, extensions and revisions to this
Hotel Management Agreement approved by Lessee and Operator.
“Approved Budget” shall mean the Hotel Operating Budget prepared in accordance
with Section 6.01 of this Agreement and approved in writing by Lessee.
“CPI” shall mean the Consumer Price Index, all items for All Urban Consumers,
published by the Bureau of Labor Statistics of the United States Department of
Labor as reported in The Wall Street Journal.
“Capital Improvements” will mean all expenditures for replacements,
substitutions and additions to Hotels and Hotel FF&E, which are required to be
capitalized in accordance with generally accepted accounting principles.
“Commencement Date” shall mean December 14, 2016.
“Competitive Set” for each Hotel means the hotels listed on Exhibit_A-1 attached
hereto, or such other hotels as may be reasonably agreed upon by Lessee and
Operator from time to time during the Term.  The Lessee and Operator shall
discuss at least once a year, and upon any major change to the Hotel or an
existing hotel in the Competitive Set, the composition of the Competitive Set.
Notwithstanding the foregoing to the contrary, the Competitive Set shall at all
times consist of hotels in the market areas that are most comparable to the
Hotel in quality, price, location and market (with due consideration given to
age, quality, size, amenities, amount of meeting space and business mix) (the
“Market Considerations”), and in the event that any hotel within the then
current Competitive Set suffers a material change during any period of a Fiscal
Year (including the  cessation of operation for any period exceeding  30 days, a
change in the standards of operation of a hotel (including any material brand
license change or modification), or the occurrence of Force Majeure, then such
hotel shall be excluded during the period that such hotel doesn’t conform to the
operations of the Hotel for any purpose that Competitive Set is used in this
Agreement. Any changes to a Hotel’s Competitive Set must be approved by Lessee.
“Event(s) of Default” shall mean one or more of the events or occurrences listed
in Section 17.01 of this Agreement.
“Fiscal Year” shall mean each twelve (12) month calendar year ending December 31
during the Operating Term, except that the first Fiscal Year and the last Fiscal
Year of the Operating Term may not be full calendar years.
“Force Majeure” shall mean interruptions in the operation of the Hotel (or in
the case of the hotels within the Competitive Set, to any such hotels) or any of
its essential services on account of an interruption in any one or more of the
utility services servicing the Hotel, or on account of act of God, labor dispute
not caused by Operator, shortage of labor or materials, earthquake, hurricane,
flood, fire or other casualty, taking by eminent domain, civil commotion, riot,
mob violence, insurrection, malicious mischief, sabotage, rebellion, act of
public enemy,
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invasion, embargo, or any similar cause beyond Operator’s reasonable control,
but excluding any changes in economic or market conditions. For purpose of Force
Majeure pertaining to one or more hotels within the Competitive Set, the
reference to the “Operator” means the respective operator or manager under the
Competitive Set hotel that is affected by the interruption.
“Franchisor” shall mean the franchisor under the Franchise Agreements.
“Franchisor Agreement” shall mean the franchise license agreement held by Lessee
with respect to the Hotel as described in Exhibit B as it may be amended from
time to time.
“GAAP” shall mean generally accepted accounting principles and procedures in the
United States.
“Gross Hotel Income” shall mean all income and proceeds of sales received by
Operator for guest use, occupancy or enjoyment of the Hotel or for the sale of
any goods, services or other items sold on or provided from the Hotel to guests
in the ordinary course of the Hotel operation, but excluding the following: (i)
any excise, sales or use taxes or similar government 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; (ii) receipts from condemnation awards or sales in lieu of or under
threat of condemnation; (iii) proceeds of insurance (other than proceeds from
business interruption insurance received by Lessee which shall be allocated by
Lessee to any applicable periods); (iv) proceeds of sales of capital assets,
furniture and Hotel Operating Equipment; (v) 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, Operator; (vi) proceeds of any
financing; (vii) working capital provided by Lessee; (viii) any funds provided
by Lessee to Operator whether for Operating Expenses or otherwise; (ix) interest
income and fees, rents and other revenues from telecommunications tower or
similar leases or other leases or sub-leases of any part of the Property (x)
other income or proceeds resulting other than from guest use or occupancy of the
Hotel or the Property, or any part thereof, or other than from the sale of
goods, services or other items sold on or provided in connection with guest
services at the Hotel in the ordinary course of business; (xi) tips and service
charges paid to employees; (xii) interest on accounts; (xiii) value of
complimentary rooms, f&b, and services; (xiv) revenues of subtenants,
concessionaires, and licensees, but rent and license fees aid to Lessee would be
included.  The parties intend that Gross Hotel Income shall be computed in a
manner consistent with “room rentals and other hotel services” computation of
revenues on the Parent’s audited Consolidated Statements of Operations.
 “Holder” shall mean the holder of any Mortgage and the indebtedness secured
thereby, and such holder’s successors and assigns.
“Hotel Capital Budget” shall mean the budget relating to capital expenditures at
a Hotel as described in Section 6.01.
“Hotel FF&E” shall mean the furniture, furnishings, wall coverings, fixtures and
hotel equipment for a Hotel and which includes equipment required for operation
of the kitchens, restaurants and laundry, office equipment, material handling
equipment, cleaning and engineering equipment and vehicles.

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“Hotel Standards” shall mean the standards established by the respective
Franchisor of the Hotel from time to time as well as those identified in section
3.02.
“Hotels” shall mean the hotel properties described in Exhibit A hereto, as it
may be amended from time to time by mutual agreement of Lessee and Operator to
add hotel properties or to delete hotel properties as a result of termination of
this Agreement with respect to one or more hotel properties pursuant to the
termination provisions set forth in this Agreement.  “Hotel” shall mean any
hotel set forth on Exhibit A as it may be amended from time to time.
“Incentive Fees” shall mean incentive compensation paid by Lessee to Operator
for performance above budgeted expectations, achievable to a maximum payout of
2% of Gross Hotel Income. The following will trigger Incentive Fee payouts:
(i)
Fiscal Year 1: Beginning January 1, 2017, Lessee shall pay to Operator an amount
equal to 1% of Gross Hotel Income for such Fiscal Year if the Hotel achieves an
IR of 8.5 % to 8.99% for such Fiscal Year. Lessee shall pay to Operator an
additional amount equal to 1% of Gross Hotel Income for such Fiscal Year if the
Hotel achieves an IR of 9.0% or higher for such Fiscal Year.

(ii)
Fiscal Year 2: Beginning January 1, 2018, Lessee shall pay to Operator an amount
equal to 1% of Gross Hotel Income for such Fiscal Year if the Hotel achieves an
IR of 9.0% to 9.49% for such Fiscal Year.  Lessee shall pay to Operator an
additional amount equal to 1% of Gross Hotel Income for such Fiscal Year if the
Hotel achieves an IR of 9.5% or higher for such Fiscal Year.

For Year 1 and Year 2, all Incentive Fees will be paid annually based on the
standard Fiscal Year. All Incentive Fees will be paid the first of the month
after the respective Fiscal Year end profit and loss statements (P&L’s) are
finalized.

(iii)
Year 3: Beginning January 1, 2019 and continuing until the termination of this
Agreement, Lessee shall pay to Operator the following amounts, up to a maximum
payout of 2% of Gross Hotel Income:

a.
0.5% of Gross Hotel Income if the Hotel achieves budgeted NOI.

b.
25% of any NOI in excess of budgeted NOI for the Hotel.

c.
If the Hotel has achieved its budgeted NOI, 25% of any Gross Hotel Income for
the Hotel in excess of budgeted Gross Hotel Income for the Hotel.

“Initial Term” shall have the meaning set forth in Section 2.01.
“Independent CPA” shall mean the firm of independent public accountants, which
is selected by Lessee from time to time.
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"IR" shall mean Investment Return, which shall be equal to the product obtained
by dividing NOI, by the total investment of Lessee in the hotel, including
acquisitions price, acquisition costs and any capital expenditures not covered
in any year by any FF &E reserve.
“Land” shall mean the real property described in Exhibit A to the Lease.
“Lease” shall have the meaning set forth in the recitals.
“Lessee” shall have the meaning set forth in the recitals.
“Lessee Revenue Account” shall mean the bank accounts opened and maintained in
Lessee’s name, or in a name designated by Lessee, with a banking institution
selected by Lessee, into which all income, receipts and proceeds included in the
definition of Gross Hotel Income (without exclusion of any of the items excluded
from the definition of such term) shall be deposited.
“Mortgage” shall mean any deed to secure debt, mortgage or deed of trust, from
time to time, encumbering all or any portion of a Property, together with all
other instruments evidencing or securing payment of the indebtedness secured by
such deed to secure debt, mortgage or deed of trust and all amendments,
modifications, supplements, extensions, and revisions of such mortgage, deed of
trust and other instruments.
“NOI” shall mean Net Operating Income, which shall be determined by deducting
Adjusted Operating Expenses from Gross Hotel Income.
“Operating Account” shall mean the bank account opened and maintained in
Operator’s name, or in a name designated by Operator, with a banking institution
selected by Lessee, from which disbursements shall be made pursuant to the terms
of this Agreement.
“Operating Budget” shall mean the budget relating to the operation of the Hotel
as described in Section 6.01.
“Operating Equipment” shall mean linens, chinaware, glassware, silverware,
uniforms, utensils and other non-consumable items of similar nature.
“Operating Expenses” shall mean all costs and expenses of maintaining,
conducting and supervising the operation of the Property, to the extent set
forth in an Approved Budget, incurred pursuant to this Agreement or as otherwise
specifically provided herein which are properly attributable to the period under
consideration under Lessee’s system of accounting, including without limitation:
(i)
The cost of all food and beverages sold or consumed and of all Hotel Operating
Equipment and Hotel Operating Supplies;

(ii)
Salaries and wages of on-site Hotel personnel, including costs of payroll taxes
and employee benefits and amounts payable under bonus plans approved by Lessee.
The salaries or wages of other employees or executives of Operator, or any
Affiliate of Operator shall in no event be Operating Expenses;

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(iii)
The cost of all other goods and services obtained by Operator in connection with
its operation of the Property including, without limitation, heat and utilities,
office supplies and all services performed by third parties, including leasing
expenses in connection with telephone and data processing equipment and such
other equipment as Lessee shall designate;

(iv)
The cost of repairs to and maintenance of the Property to keep the Property in
good condition;

(v)
Insurance premiums for all insurance maintained with respect to the Property,
including without limitation, property damage insurance, public liability
insurance, workers’ compensation insurance or insurance required by similar
employee benefits acts, employment liability practices insurance, and such
business interruption or other insurance as may be provided for protection
against claim, liabilities and losses arising from the use and operation of the
Hotel and losses incurred with respect to deductibles applicable to the
foregoing types of insurance;

(vi)
All taxes, assessments and other charges (other than federal, state or local
income taxes and franchise taxes or the equivalent) payable by or assessed
against Operator or Lessee with respect to the operation of the Hotel, including
water and sewer charges;

(vii)
Legal fees relating to Hotel operations (excluding legal fees with respect to
employee claims), and real estate tax abatement and appeal services excluding
legal fees with respect to employee claims;

(viii)
The costs and expenses of technical consultants and specialized operational
experts for specialized services in connection with non-recurring work on
operational, functional, decorating, design or construction problems and
activities, including reasonable third party fees reasonably deemed necessary by
Lessee for the efficient operation of the Hotels;

(ix)
All expenses for marketing and sales, including all expenses of advertising,
sales promotion and public relations activities at the Hotels, exclusive of
Operator’s marketing manager and similar administrative personnel (which
expenses shall be borne by Operator);

(x)
Municipal, county and state license and permit fees;

(xi)
All normal and recurring fees, assessments and charges due and payable under
Franchisor Agreements;

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(xii)
Centralized Services, such as revenue management, accounting, or other services
approved in the operating budget;

(xiii)
Credit card fees, travel agent commissions and other third party reservation
fees and charges;

(xiv)
All parking charges and parking rental fees and other expenses associated with
revenues received by the Hotels related to parking operations, including valet
services, including any related to the option lot;

(xv)
All expenses related to the revenues included in Gross Hotel Income, including
without limitation, expenses relating to telephone, vending, television, cable
television, pay television and similar services;

(xvi)
The costs of obtaining and keeping in force all licenses or permits (including
liquor licenses, if any) necessary for the operation of the Hotel and in
complying with governmental laws, rules, regulations, ordinances, orders and
requirements;

(xvii)
All reasonable travel expenses of Operator’s supervisory personnel on the next
level above hotel manager, to include director of engineering, revenue manager
and internal auditors (to the extent approved by Lessee) for visits to the
Hotels in the performance of their duties hereunder, but not including travel
between Operator’s main office and Operator’s regional offices. Travel shall be
limited to economy fares;

(xviii)
The costs to send above property supervisory personnel to brand conferences,
which costs shall be reimbursed in proportion to the number of Lessee’s hotels
associated with the brand conference out of Operator’s total portfolio of hotels
managed associated with the specific brand conference. Such percentage of
reimbursable costs shall be pre-approved by Lessee prior to the date of the
conference;

(xix)
Other potential operating expenses which are budgeted for and approved by Lessee
provided they are disclosed in advance to Lessee’s designated representative;
and

(xx)
Operator’s Fee, if any.

Operating Expenses shall not include (a) depreciation and amortization except as
otherwise provided in this Agreement; (b) debt service; (c) capital expenditures
per the Hotel Capital Budget; (d) lease payments to Lessee; and (e) matters
incidental to any exercise of the Seller’s parking lot option; (f) All costs,
expenses, salaries, wages or other compensation, and any recruitment costs, of
any corporate, regional or other headquarters/corporate level employees of
Operator, except to the extent such employees are assigned to the Hotel on a
temporary basis for at least five (5) consecutive days (but unless approved by
Lessee, not more than ten (10) consecutive days) to fill a vacant Executive
Staff position, in which case a fair and equitable cost and expense of the
foregoing shall constitute an Operating Expense; (g) Any expenses of
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Operator's principal or branch offices; (h) Any part of Operator's capital
expenses; (i) Operator's overhead or general expenses, including but not limited
to duplicating, stationery and postage expenses incurred at Operator's principal
or branch offices, and Operator's own fidelity, liability, errors and omissions
and casualty insurance, except as may be expressly assumed by Lessee pursuant to
the terms of this Agreement; (j) (k) Any expenses for advertising or promotional
materials that feature Operator's name or activities but which do not promote
the Hotel, unless and to the extent approved in advance by Lessee to be an
Operating Expense; (l) Any travel expenses of Operator, other than those
described in clause (xvi) of the definition of Operating Expenses; (m) Any
interest or penalty payment with respect to an imposition or lien upon the Hotel
imposed on Lessee by reason of (1) the failure of Operator to make a payment
required to be made by Operator under this Agreement when the funds therefor
were available, or (2) the funds therefor were not available and Operator failed
to so notify Lessee; provided, however, that interest or penalty payments for
the first five (5) such failures in a Fiscal Year and interest or penalty
payments incurred as a result of a good faith decision to contest the imposition
or lien, which could not be contested without incurrence thereof, shall be
Operating Expenses; (n) Any cost for which Operator is liable under any
indemnification or any other provision of this Agreement; and (o) Political or
charitable contributions made by Operator on its own behalf.
The parties intend that Operating Expenses shall be computed in a manner
consistent with “Hotel and property operations expenses” computation of expenses
on the Parent’s Audited Consolidated Statements of Operations.
“Operating Loss” shall mean for any period the amount by which Operating
Expenses exceed Gross Hotel Income.
“Operating Supplies” shall mean paper supplies, cleaning materials and similar
consumable items.
“Operating Term” shall mean, with respect to any Hotel, the term of this
Agreement as set forth in Section 2.01.
“Operator” shall have the meaning set forth in the recitals.
“Operator’s Fee” shall mean a monthly fee equal to 3% of Gross Hotel Income.
“Owners” shall mean the entities described on Exhibit A as it may be amended
from time to time as the owners of the Hotels. “Owner” shall mean any entity
described on Exhibit A as it may be amended from time to time.
“Parent” shall mean Condor Hospitality Trust, Inc.
“Property” shall mean the Land, the Hotel, all real and personal property now or
hereafter situated upon the Land and all appurtenant rights and easements
thereto.
“Renewal Term” shall have the meaning set forth in Section 2.01.
“RevPAR” shall mean Hotel occupancy percentage multiplied by average daily rate.
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“RevPAR Benchmark” means the Hotel’s RevPAR Index for the trailing 12-months
ending on the Commencement Date.
“RevPAR Index” means the RevPAR Index included in the Smith Travel Research
Report (“STR Report”).
“STR Report” shall mean Smith Travel Research Report produced for the Hotel by
Smith Travel Research or, if Smith Travel Research no longer is in existence,
the successor of Smith Travel Research or such other industry resource that is
equally as reputable as Smith Travel Research will be substituted, in order to
obtain substantially the same result as would be obtained if Smith Travel
Research has not ceased to be in existence.
“Unrelated Persons” shall have the meaning set forth in Section 21.09.
“Working Capital Amount” shall be $15,000, which will be distributed among two
separate accounts.
(b)            Terms with initial capital letters which appear within the
foregoing definitions are defined in this Article I or as indicated in this
Agreement.  Dollars are denominated in U.S. Dollars.
ARTICLE 2                              

TERM OF AGREEMENT
Section 2.01.                          Term.
The term of this Agreement shall commence on the Commencement Date and shall
terminate at midnight on December 31, 2019 (the “Initial Term”), subject to
earlier termination or extension as set forth herein.  This Agreement shall
automatically renew for additional two (2) terms of one (1) year each (each, a
“Renewal Term”) unless either party gives the other party written notice of
termination at least ninety (90) days prior to the end of the Initial Term or
the then-current Renewal Term.
ARTICLE 3                              

OPERATION OF THE HOTELS
Section 3.01.                          Representations by Lessee and Operator;
Engagement of Operator.
Lessee hereby represents and warrants that any authorization or acts, which it
does or grants, are specifically authorized by the Owner under the Lease. Lessee
further warrants that it has the requisite power and authority to perform its
obligations under this Agreement and Lessee shall notify Operator immediately if
the Lease terminates or is no longer in effect.
Operator hereby represents that Operator (i) is experienced and capable and will
remain experienced and capable in the management and operation of the hotel in
the regions it manages hotels, (ii) has reviewed and understands the terms and
provisions of the Lease and the Franchise
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Agreements and the Hotel Standards, and (iii) will, on the effective date of
this Agreement, meet the requirements to be an “eligible independent contractor”
under Section 856(d)(9) of the Internal Revenue Code. In reliance on the
foregoing representations, Lessee hereby engages Operator to manage and operate
the Hotels during the Operating Term and Operator agrees to manage and operate
the Hotels during the Operating Term, in accordance with this Agreement.
Operator will provide all property management, financial accounting, reporting,
marketing and other operational services for the Hotel, including the services
of regional operations and regional sales support as necessary for the Hotel and
will use commercially reasonable efforts to maximize the operating profitability
thereof. Lessee and Operator acknowledge that it is the intention of the parties
that the Hotels be operated in a profitable manner and in a manner for
comparable hotels operated by a national operator within the Hotel’s market
segment, all in accordance with the Hotel Standards. Operator shall diligently
pursue all commercially reasonable measures to enable the Hotel to adhere to the
Approved Budget.
Section 3.02.                          Standards of Operation.
Without limiting the generality of the foregoing, Operator's engagement under
this Agreement shall include the responsibility and authority (subject to the
limitations on Operator’s authority set forth in this Agreement), to do the
following, at all times in material compliance with the Annual Plan, the
Franchise Agreement, the Lease Agreement, Mortgage, if any, Legal Requirements
and the Hotel Standards:
(a)
Train, supervise, discharge and determine and pay the compensation, fringe
benefits, 401(k) retirement plans and other policies and terms of employment of
all personnel as may be reasonably required to provide proper operation,
supervision, and management of the Hotel in a professional manner suitable to
the character of the Hotel;

(b)
Determine the terms for guest admittance to the Hotel and establish all prices,
price schedules, rates and rate schedules for rooms, and other amenities and
services provided at or in connection with the Hotel;

(c)
Develop, revise, and implement all prudent policies and practices relating to
all aspects of the Hotel, which shall be set forth in one or more policy manuals
or other writings, and train and supervise all Hotel employees for compliance
with all such policies and practices, including policies and practices relating
to:  (i) terms and conditions of employment, applicant screening, background
checks, selection, hiring, training, supervision, compensation, employee
benefits, discipline, dismissal, transfer and replacement;  (ii) compliance with
laws, including but not limited to anti-discrimination, sexual harassment and
Environmental Laws; and (iii) safety procedures, including those relating to the
handling of hazardous and other dangerous materials;

(d)
Select, purchase and install all Inventories and Operating Equipment and
Supplies for the Hotel, and to the extent set forth in the Approved Capital
Budget, but subject to the requirement to obtain Lessee’s specific authorization
for expenditures in the Approved Capital Budget exceeding $10,000, or otherwise
requested by Lessee, FF&E and other items on the Approved Capital Budget. 
Without limiting the generality of the foregoing, Operator agrees to maintain
the levels of Inventories and Operating Supplies at standards consistent with
past practice and the requirements of the Operating Standard through the date of
termination of this Agreement, including the period after a notice of
termination of this Agreement has been given by Lessee or Operator;

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(e)
Negotiate and enter into service contracts on Lessee’s behalf which are
necessary or desirable in the ordinary course of business in operating the
Hotel, including, without limitation, contracts for provision of electricity,
gas, water, telephone and other utility services, cleaning services, security
services, vermin extermination, trash removal, elevator and boiler maintenance,
air conditioning maintenance, master television service, laundry and dry
cleaning, entertainment satellite systems and other services necessary for
operation of the Hotel in accordance with this Agreement.  Unless Lessee
otherwise elects, all such service contracts shall be entered into in the
Lessee’s or Affiliate of Lessee’s or the Hotel name;

(f)
Establish all credit policies, and enter into agreements with credit card
companies, in connection with the Hotel;

(g)
Apply for, and obtain and maintain in the name of Lessee or Operator, as
required by Legal Requirements and this Agreement, all Permits required of
Lessee or Operator in connection with the management and operation of the Hotel;

(h)
Institute and defend in the name of Operator or Lessee (or both), utilizing
legal counsel selected by Lessee, any and all legal actions or proceedings (i)
involving routine collection litigation and similar matters respecting ordinary
day-to-day operations of the Hotel where the amount in controversy is less than
$10,000; and (ii) which Lessee shall deem necessary or proper in connection with
the operation of the Hotel and requests Operator to institute or defend;

(i)
Establish, supervise and implement a sales and marketing program for the Hotel
consistent with the Marketing Plan, and in conjunction therewith, plan, prepare,
arrange and contract for all advertising, publicity and promotional activities
for the Hotel, including advertising and promotional activities in conjunction
with other hotels owned, operated or franchised by Operator and its Affiliates,
and all discount and complimentary policies with respect to bona fide travel
agents, tourist officials, airline representatives, and employees of Lessee,
Lessor, Operator and their Affiliates in accordance with the customary practices
of the travel industry;

(j)
Engage such persons, on behalf of Lessee, as have been approved by Lessee (in
Lessee’s sole discretion) for providing services of a specialist nature (such as
legal counsel and independent accountants) related to matters within Operator's
responsibility under this Agreement;

(k)
Perform (or cause to be performed and supervised) such maintenance and repairs
to the Hotel as shall be required to maintain the Hotel in all material respects
in accordance with the Operating Standard.  Without limiting the generality of
the foregoing Operator agrees to perform (or cause to be performed and
supervised) all necessary or scheduled repair and maintenance through the date
of termination of this Agreement, including the period after a notice of
termination of this Agreement has been given by Lessee or Operator;

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(l)
Perform any obligations of Lessee under the Lease Agreement and any Mortgage
which are applicable to the operation and management of the Hotel, to the extent
Lessee specifically notifies Operator of the same in writing, and upon request
of Lessee;

(m)
Pay all Operating Expenses, including but not limited to Impositions and
insurance premiums (whether for insurance maintained in accordance with this
Agreement by Lessee, Lessor or Operator);

(n)
Pay all gross receipts, transient occupancy and similar taxes;

(o)
Comply with all Legal Requirements and the requirements of insurance companies
which are applicable to the operation and management of the Hotel;

(p)
Perform each and all of the obligations of Lessee and Operator under the
Franchise Agreement, communicate directly with Franchisor and provide copies of
all written communication between Operator and Franchisor to Lessee;

(q)
Operate and/or lease to third parties selected by Lessee gift and sundry shops,
concessions, food and beverage, banquet and room service facilities of the
Hotel, provided, that Lessee shall seek Operator’s approval of any such lease,
which approval which may be withheld only if Operator can demonstrate that the
third party operator is unable to manage the space or facility in a manner
consistent with the Operating Standard;

(r)
Do any and all other acts and things as Operator may deem necessary and
appropriate to carry out its responsibilities under this Agreement; and

(s)
Comply with the provisions of any covenants, conditions and restrictions
recorded against the Hotel.

Section 3.03 Limitations on Operator’s Authority
Operator shall have no authority to do any of the following without Lessee’s
prior written approval in each instance, which may be withheld in Lessee’s sole
and absolute discretion:
(a)             Borrow money, guaranty the debts of any third person, or
mortgage, pledge, grant a security interest in or otherwise encumber all or any
part of the Hotel;
(b)             Enter into any lease for the use of any item of FF&E or other
property, except as may be otherwise specifically provided in this Agreement;
(c)            Enter into any agreement, lease, license or concession agreement
for office, retail, lobby or other commercial space at the Hotel, except as may
be otherwise specifically provided in this Agreement;
(d)            Incur any liabilities or obligations to third parties which are
unrelated to the operation, maintenance and security of the Hotel or to the
performance of Operator's responsibilities under this Agreement;
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(e)            Engage in collective bargaining with the bargaining
representative or representatives of Hotel employees, enter into collective
bargaining agreements, or modify or renew existing Union Agreements, or approve
across-the-board wage increases affecting any class of Hotel Employees;
(f)            Enter into any contract or other arrangement (or series of
related contracts or arrangements) if (i) the contract or other arrangement
would, or are reasonably anticipated to, exceed $25,000 in the aggregate, (ii)
the term of such contract or other arrangement is in excess of one year, or
(iii) the contract or other arrangement is not terminable by Lessee or Operator
without payment or penalty upon not less than thirty (30) days’ notice, or (iv)
if the contract is for the employment of any member of the Executive Staff or
other Hotel Employee;
(g)            Settle any casualty and insurance claims which involve, or which
are reasonably estimated to involve, amounts in excess of $10,000, and any
condemnation awards regardless of amount;
(h)            Institute or defend any Legal Proceedings with respect to the
Hotel, other than as required by Section 3.02 (h);
(i)            Employ any professional firm for more than $10,000 in the
aggregate except as set forth in the Annual Plan, or enter into any arrangement
for the employment of any attorney or accountant;
(j)            Prosecute or settle any tax claims or appeals;
(k)            Purchase goods, supplies and services from itself or any
Affiliate of Operator, or enter into any other transaction with an Affiliate of
Operator, unless (i) such purchase from or other transaction with Operator or
any Affiliate of Operator is disclosed in the Annual Plan or (ii) prior to the
consummation of such transaction all of the prices and other terms thereof and
the identity of the vendor and its relationship to Operator shall have been
disclosed to and approved by Lessee, which may be withheld in Lessee’s sole
discretion.  Lessee may require that the supplier of any goods, supplies or
services for the Hotel be selected through competitive bidding by qualified
independent third parties, with the transaction being awarded to the lowest
bidder.  Except to the extent disclosed to Lessee in advance and approved by
Lessee in its sole and absolute discretion, neither Operator nor any Affiliate
of Operator shall charge or receive any mark-up, profit or purchasing fee on the
purchase by or for the Hotel of any goods, supplies or services.  Operator shall
ensure that the prices and terms of goods and services purchased under such
contracts are competitive with the prices and terms of goods and services of
equal quality available from others.  Operator shall use its best efforts to
obtain the maximum available discounts and rebates on purchases and the most
favorable terms available.  Any allowances, credits, rebates, discounts and the
like received with respect to any such purchases shall be for the account of
Lessee, and if received by Operator or any of its Affiliates, shall be turned
over to Lessee;
(l)            Provide complimentary rooms or services to any guests, employees
or other persons except in accordance with Operator’s policies approved by
Lessee or for which the business purpose for the benefit of the Hotel is
properly documented;
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(m)            Acquire on behalf of Lessee any land or any interest therein;
(n)            Consent to any condemnation or participate in any condemnation
proceeding relating to the Hotel, the Site or any portion thereof;
(o)            Sell, transfer or otherwise dispose of all or any portion of the
Hotel or any capital assets of the Hotel or other interest therein, except for
dispositions of FF&E to the extent expressly provided for in the Annual Plan;
(p)            Perform any alterations to the Hotel or any portion thereof
except to the extent Operator's performance of any such alteration shall be
expressly provided for in the Annual Plan;
(q)            Take any other action which, under the terms of this Agreement,
is prohibited or requires the approval of Lessee;
(r)            Lease or rent any one or more of the Hotel's ballroom, bar or
restaurant for periods in excess of two (2) consecutive weeks; and
(s)            Do or take any other action that shall be contrary to any written
directions of Lessee or limitations on Operator’s authority imposed by Lessee
pursuant to any other provision of this Agreement.
Section 3.04. Reservations Services and Revenue Management.
Operator shall use, among other things, the respective Franchisors’ sales and
reservations systems and will encourage the use of the Hotel by all recognized
sources of hotel business.  Operator must employ at least one employee
responsible for revenue management of the Hotel, with certification by a
governing body reasonably acceptable to Lessee or use Franchiser’s Regional
Manager services, which costs will be approved through the Operating Budget.
Section 3.05. Marketing.
(a)            Operator shall maintain a sales staff dedicated to the Hotels to
arrange, contract for and carry out such marketing, advertising, national trade
show attendance, and promotion of the Hotel as Operator shall deem advisable and
consistent with the Approved Budget and in accordance with the Hotel Standards. 
Operator will use reasonable effort to ensure that the Hotel shall receive an
equitable share of the benefit of the cooperative advertising and promotion
reasonably commensurate with its contribution to the costs thereof.  The costs
thereof shall be equitably allocated by Operator between the Hotel and other
participating hotels. Upon Lessee’s request, Operator shall provide reasonable
documentation to support such allocations.  Operator shall provide Lessee with
detailed monthly reports of its marketing, advertising and promotional
activities through standard monthly reporting.  Each property shall be visited
at least once every three (3) months by a member of Operator’s sales leadership
team if in approved budget.
(b)            Operator may, consistent with the Approved Budget, and otherwise,
with the consent of Lessee, cause the Hotel to participate in sales and
promotional campaigns and activities involving complimentary rooms, food and
beverages, consistent with customary
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practices in the travel industry.  Operator shall not provide rooms or Hotel
facilities at no cash charge or at a discounted cash rate in trade for non-cash
consideration or services without the consent of Lessee.
Section 3.06. Consultations Between Lessee and Operator.
When requested by Lessee, Operator shall, from time to time, render advice and
assistance to Lessee and Owner in the negotiation and prosecution of all claims
for the reduction of real estate or other taxes or assessments affecting the
Hotel and for any award for taking by condemnation or eminent domain affecting
the Hotel.
Section 3.07. Transactions with Affiliates and Other Relationships.
(a)            Except as reflected in the Annual Plan, Operator shall obtain the
prior written consent of Lessee (which Lessee may withhold in Lessee’s sole and
absolute discretion) prior to contracting with any Affiliate (or companies in
which Operator has an ownership or other economic interest if such interest is
not sufficient to make such a company an Affiliate) to provide goods and/or
services to the Hotel.
(b)            Prior to entering into any contract, agreement or arrangement
with respect to one or more of the Hotels pursuant to which Operator may receive
rebates, credit card rebates, cash incentives, administration fees, concessions,
profit participations, stock or stock options, investment rights or similar
payments or economic consideration from or in, as applicable, vendors or
suppliers of goods or services (collectively, “Rebates”), Operator shall
promptly disclose to Lessee in writing the fact of and the estimated amount of
such Rebates, and the charges and other amounts expected to be incurred in
connection with any such contracts or agreements (which shall not exceed
prevailing market rates with respect to such goods or services).  All Rebates
associated with the Hotel will accrue to the benefit of Lessee and will be
applied against Operating Expenses.
Section 3.08. Regional Manager.
Operator shall provide the services of one of its experienced management
employees to oversee and manage the operations of the Hotels (the “Regional
Manager”).  Lessee shall have the right to approve the Regional Manager and any
successor provided that such approval shall not be unreasonably withheld.  The
Regional Manager shall initially be Chip Young.  The Regional Manager shall meet
telephonically with the designated representatives of Lessee at least monthly to
discuss operations at the Hotels and consult with Lessee to answer any questions
Lessee may have, and to address any concerns of Lessee.  Lessee’s
representatives shall have the right to meet with the COO of Operator or his/her
mutually acceptable alternative on a semi-annual basis to review hotel
performance.
Section 3.09. Certain Expenses.
Operator shall not be entitled to charge Lessee for any of its costs and
expenses, except as follows:
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(a)            Operator shall not charge tuition for training courses provided
by Operator for employees employed at the Hotels or for course materials but
shall be reimbursed the cost of course materials developed by third party
companies, subject to approval in the Operating Budget.  Reasonable travel and
housing expenses of trainees shall be included in Operating Expenses, subject to
approval in the Operating Budget.
(b)            Travel expenses described in (xvi) of “Operating Expenses” above.
Operator shall be solely responsible and shall reimburse Lessee and Owner for
re-inspection and/or penalty fees charged by Franchisors following a “failure”
or its equivalent in any quality inspection report or brand required score
standards unless the failure is for a Capital Improvement that has been
previously brought to the attention of the Owner or Lessee and Owner or Lessee
has not corrected at the time of the inspection or if the Operator has met the
required brand guest service scores in which case the penalty fees will be paid
by Lessee.
ARTICLE 4                              

INDEPENDENT CONTRACTOR
Section 4.01.                          Operator Status.
In the performance of its duties in the administration, management and operation
of the Hotel, Operator shall act solely as an independent contractor. Nothing
herein shall constitute or be construed to be or create a partnership or joint
venture between Lessee and Operator, or be construed to create a lease by
Operator of the Hotel or the Property and Operator shall not constitute a tenant
or subtenant of Lessee or Owner. Operator’s rights under this Agreement shall be
those of an agent only and shall not constitute an interest in real property. It
is expressly covenanted that this Agreement is no more than an agreement for the
rendering of services by Operator on behalf of Lessee in the operation and
management of the Hotels.
Section 4.02.                          Employees.
Operator agrees that Lessee will have the right to review, interview, approve,
or override, the hiring of Hotel General Manager and Director of Sales. Operator
will use all methods at their disposal to find qualified candidates for the
above listed positions. If Operator presents three (3) qualified applicants,
Lessee must approve one of the three. Operator agrees that if termination of
either General Manager or Director of Sales occurs, Operator will put temporary
or task force help in those vacated positions to insure continued smooth running
operations of Hotel.
(a)            Each Hotel employee shall be the employee of Operator, or an
affiliate company of Operator, and not of Lessee, and every person performing
services in connection with this Agreement shall be acting as the employee of
Operator (except for any independent contractors engaged by Operator, in
accordance with this Agreement), but their salaries and other related expenses
shall be an Operating Expense.
(b)            Operator shall provide evidence to Lessee of statutory Worker’s
Compensation Insurance and Employer’s Liability Insurance for each such
employee. The insurance coverages (including, without limitation, the carrier,
policy limits of each and waiver of subrogation endorsements) must be in form,
substance and amount satisfactory to Lessee in all respects. Upon request of
Lessee, Operator will deliver to Lessee waiver of subrogation endorsements in
favor of Lessee and Owner.
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(c)            The hiring policies and the discharge of employees at the Hotel
shall in all respects comply with all applicable laws and regulations, and
Operator shall comply with all laws, regulations and ordinances regarding the
employment and payment of persons engaged in the operation of each Hotel.
(d)            Lessee shall have the right to participate in any negotiations
with labor unions representing employees at the Hotel, and Operator shall not
sign any union contracts or card check neutrality agreements covering such
employees at the Hotel, which have not been previously approved in writing by
Lessee.
Section 4.03.                          Employee Expenses.
(a)            All costs of every nature and reasonably available pertaining to
all employees at the Hotel, including, without limitation, salaries, benefits,
EPLI coverage, the terms of any bonus plan or arrangement, costs incurred in
connection with governmental laws and regulations and insurance rules, shall be
set forth in the Approved Budget as an Operating Expense.
(b)            Compensation, overhead costs and other expenses of Operator and
its Affiliates not specifically provided for herein shall not be Operating
Expenses and shall not be payable or reimbursable by Lessee; provided, however,
Operator may include in the calculation of Operating Expenses the salary of any
of Operator’s employees which have been temporarily transferred to a Hotel to
serve that Hotel exclusively; provided, further, that Operator may only include
in Operating Expenses that portion of that employee’s salary which is not to
exceed 10% of the normal rate charged for that employment position. Operator may
also include in the calculation of Operating Expenses reasonable travel costs
associated with Operator’s employees located at the Operator’s corporate
headquarters which have been temporarily transferred to a Hotel to serve that
Hotel exclusively. Lessee shall have the right to approve temporary travel
schedule.
Section 4.04.                          Employee Benefit Plans.
Operator shall enroll employees at the Hotel in medical and health, life
insurance and employee benefit plans which are approved by Lessee, with such
approval not to be unreasonably withheld.  Operator’s contributions to such
plans, reasonable administrative fees, at cost, which may be expended in
connection therewith, and reasonable expenses for such plans will be estimated
and disclosed to Lessee in advance and provided for in the Approved Budget and
will be an Operating Expense.   Except as otherwise provided in Section 6.03,
all costs referenced in Section 4.03 and this Section 4.04 will be the
responsibility of Lessee only to the extent the same are provided for in the
Approved Budget.  Operator will provide a 401(k) plan as an employee benefit
plan.  All costs incurred by Operator pursuant to actions taken by Operator at
Lessee’s direction will be Operating Expenses.
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Section 4.05.                          Execution of Agreements.
(a)            Except as provided in Section 4.05(b), Operator shall execute as
agent of Lessee leases and other agreements relating to equipment and/or
services provided to each Hotel, all of which, unless otherwise approved in
writing in advance by Lessee, shall either be a term of one year or less or be
cancelable upon not more than thirty (30) days’ written notice by Operator or
Lessee without the payment of a penalty or fee. Notwithstanding the foregoing,
without the prior written approval of Lessee, Operator shall not enter into any
agreement (i) which provides for the payment of sums not authorized by Lessee in
an Approved Budget, (ii) which would give rise to a lien upon all or any part of
the Property, (iii) which would result in liability to Lessee for sums other
than as set forth in the applicable Approved Budget, (iv) to lease any part of
any Property, (v) relating to alterations to the exterior, interior or
structural design of the Hotel, (vi) which requires an unbudgeted payment of
more than $5,000, or in the case of a repair of any payment of more than $1,500
(vii) which is not cancelable by Lessee upon 30 days’ notice or less unless the
term of said agreement is one year or less, (viii) which provides for any
automatic renewal terms greater than thirty (30) days; or (ix)contracts for
multiple rooms and / or multiple days that (a) exceed a 1-year term and / or (b)
exceed 40% of  the hotel’s room inventory for a period of 14 days or more, or
(c) exceed 50 room nights and have a negotiated net rate of $40 or less for
economy properties, and  $59 or less for midscale and above, this includes
promoting such rates online, in print ads such as coupons.  If Operator desires
to enter into any agreements requiring the consent of Lessee, Operator shall
first send written notice of intent to enter into such agreement to Lessee, and
Lessee shall either approve or disapprove within five (5) business days of
receipt of such notice.  Lessee’s failure to timely respond to said request
shall be deemed approval.
(b)            Subject to Lessee’s prior approval of the same and upon Lessee’s
request, Operator shall execute, as agent for Lessee, (i) all leases, as
sub-lessor, of any space at any Property, and (ii) equipment rental and/or lease
agreements which cannot be terminated upon thirty (30) days notice or less
without the payment of a penalty or fee. Operator shall exercise its best
efforts to obtain in each equipment agreement a right on the part of the lessee
of such equipment to terminate the same on thirty (30) days notice or less
without the payment of a penalty fee. Notwithstanding anything in this Section
4.05 to the contrary, Lessee reserves the right, exercisable at Lessee’s option,
to execute any lease or other agreement relating to equipment and/or services
being provided to the Hotel.
ARTICLE 5                          

INDEMNIFICATION
Section 5.01.                          Indemnification by Operator.
Operator shall indemnify and hold Lessee harmless against all claims, demands,
actions, liabilities, losses, damages, lawsuits and other proceedings at law or
in equity, judgments, awards, commissions, fees, costs and expenses (including,
without limitation, attorneys’ fees and expenses), of every kind and nature
whatsoever to or of any party connected with, or arising out of, or by reason of
any gross negligent act or omission, breach of contract (but not a contract
involving Lessee or an Affiliate of Lessee), willful misconduct, or intentional
tortious actions by Operator, or any Affiliate of Operator, or any officer or
employee, agent, or other person or entity working for Operator or any Affiliate
of Operator and any employment related claims by Operator’s employees.  The
indemnification provisions of this Section 5.01 are subject to the limitations
set forth in Section 5.02.
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Section 5.02.                          Limitations on Indemnification.
None of the indemnifications set forth in Section 5.01 shall be applicable to
(1) liability resulting from the design or construction of the Hotel, or (2)
that portion of a liability which is covered and paid for by insurance
maintained for the Hotel. The standard of performance of which Operator is to be
responsible under this Agreement shall be that, reasonably and diligently
exercised, of a professional hotel operator. Settlement of a third party claim
shall not be prima facie evidence that a party has triggered an indemnification
obligation hereunder.  Notwithstanding the provisions of Section 5.01 above, or
Section 5.02 below, neither Lessee nor Operator will assert against the other
and each does hereby waive with respect to the other any claims for any losses,
damages, liabilities and expenses (including lawyers’ fees and disbursements)
incurred or sustained by that party as a result or damage or injury to persons
or property arising out of the ownership, operation or management of the Hotels,
to the extent that the damage and injury are covered by insurance and the
proceeds are actually recovered from the insurer. Lessee and Operator agree to
indemnify and hold harmless the other against any and all claims, demands,
actions, liabilities, losses, damages, lawsuits and other proceedings at law or
in equity, judgment, awards, commissions, fees, costs and expenses (including,
without limitation, attorneys’ fees and expenses) or every kind and nature
whatsoever to or of any party connected with, or arising out of, or by reason of
the failure of such party to maintain (and, as to Lessee, its failure to cause
Owner to maintain) in full force and effect those insurance coverages required
by this Agreement and/or to list the other party as an Additional Insured as and
to the extent required by this Agreement.
Section 5.03.                          Indemnification by Lessee.
Lessee shall indemnify and hold Operator harmless against all claims, demands,
actions, liabilities, losses, damages, lawsuits and other proceedings at law or
in equity, judgments, awards, commissions, fees, costs and expenses (including,
without limitation, attorneys’ fees and expenses), of every kind and nature
whatsoever to or of any party connected with or arising out of, or by reason of
any gross negligent act or omission, breach of contract, willful misconduct, or
tortious actions by Lessee or any Affiliate of Lessee, or any officer, employee,
agent, contractor, subcontractor, or other person or entity working for Lessee
or any Affiliate of Lessee. The indemnification provisions of this Section 5.03
are subject to the limitations set forth in Section 5.02.  Lessee will indemnify
and hold Operator harmless from all costs, expenses, claims, damages and
liabilities, including without limitation, lawyers’ fees and disbursements,
arising or resulting from Lessee’s failure following the expiration or earlier
termination (for whatever cause) of this Agreement to provide all of the
services contracted for in connection with the business booked on commercially
reasonable terms for the Hotels on or prior to the date of such expiration or
termination.  The provisions of this Section will survive any expiration or
termination of this Agreement and will be binding upon Lessee and its successors
and assigns, including any successor or assign that becomes the beneficial or
legal owner of the Hotels after the effective date of any such expiration or
termination.
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Section 5.04.                          Survival of Indemnity.
The provisions of this Article 5 shall survive the expiration or sooner
termination of this Agreement with respect to matters arising out of facts or
circumstances occurring during the period prior to such expiration or
termination.
ARTICLE 6                              

BUDGETS AND POLICY MEETINGS
Section 6.01.                          Budgets.
(a)            No later than October 1 of each year, Operator will prepare and
submit (following discussions with Lessee) to Lessee an annual capital budget
for each Fiscal Year for each Hotel (the “Hotel Capital Budget”). 
Notwithstanding the foregoing, for the Fiscal Year in which this Agreement is
executed Operator shall manage the Hotels in accordance with the then existing
Hotel Capital Budget, which is subject to force majeure.  The Hotel Capital
Budget will set forth all projected Capital Improvements for such Fiscal Year,
which budget shall also be month-to-month as well as annual. The Hotel Capital
Budget will be subject to the approval of Lessee, in their sole and absolute
discretion.  No later than November 1 of each year, Operator shall prepare and
submit (following discussions with Lessee) to Lessee an annual operating budget
and business plan for the operation of each Hotel for the forthcoming Fiscal
Year containing detailed projections of Gross Hotel Income and budgets of
Operating Expenses (the “Hotel Operating Budget”).  Notwithstanding the
foregoing, for the Fiscal Year in which this Agreement is executed Operator
shall manage the Hotels in accordance with the then existing Hotel Operating
Budget.  The Hotel Operating Budget shall be month-to-month as well as annual
and shall be in the form designated by Lessee, and approved by Operator, which
approval of the form shall not be unreasonably withheld.  The Hotel Operating
Budget and the Hotel Capital Budget shall provide for operating, equipping and
maintaining the Hotel in accordance with the Hotel Standards. Contemporaneously
with the submission of the Hotel Capital Budget, Operator shall submit to Lessee
monthly budgeted occupancy, average daily rate and RevPAR statistics for each
hotel. The Hotel Operating Budget and the monthly budgeted hotel operating
statistics shall contain Operator’s reasonable good faith estimates of the
amounts set forth therein. Operator shall provide Lessee, upon request, all
details, information and assumptions used in preparing the Hotel Capital Budget
and the Hotel Operating Budget.  Lessee shall be responsible for implementing
the Hotel Capital Budget and may, in Lessee’s sole discretion, increase,
decrease, delete or modify in any respect any capital expenditure in any Hotel
Capital Budget.
(b)            Operator shall review the Hotel Capital Budget and the Hotel
Operating Budget with Lessee, and upon Lessee’s written approval of the Budget,
it shall constitute the Approved Budget for the succeeding Fiscal Year and shall
be implemented by Operator.  In the event Lessee does not provide Operator with
written objections to the Hotel Capital Budget and Hotel Operating Budget within
30 days following Lessee’s receipt of the same, they shall be deemed approved. 
If Lessee objects to any portion of the Hotel Capital Budget or the Hotel
Operating Budget within 30 days after receipt of the same, or to any portion of
the revisions within 20 days after submission of the revisions by Operator to
Lessee, the parties hereto will call a special budget meeting to resolve the
points of disagreement.  In the event that Lessee and Operator are unable to
agree on the Hotel Operating Budget for a Hotel prior to the commencement of the
applicable Fiscal Year, an interim operating budget shall be implemented which
will reflect CPI increases for expenses and RevPAR increases based on the
appropriate previous 12-month RevPAR growth percentage for the sector in which
the Hotel is included, as published by Smith Travel Research, for revenue growth
over the prior year’s actual amounts, including automatic increases of any
necessary expenses such as Real Estate Tax, franchise fees or insurance.
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Section 6.02.                          Budget Meetings.
Budget meetings between Lessee and Operator will be held at times as reasonably
scheduled by Lessee.  At each budget meeting and at any additional meetings
during a Fiscal Year called by Lessee, Operator shall consult with Lessee on
matters of policy concerning management, sales, room rates, wage scales,
personnel, general overall operating procedures, economics and operation and any
other matters affecting the operation of the Hotel as requested by Lessee.
ARTICLE 7                              

OPERATING EXPENSES
Section 7.01.                          Payment of Operating Expenses.
(a)          In performing its authorized duties hereunder, Operator shall
promptly pay all Operating Expenses, except that if requested by Lessee certain
Operating Expenses shall be paid by Operator directly to Lessee for payment by
Lessee to the appropriate lender, taxing authority, insurer or other party so
identified by Lessee to Operator.
(b)          Subject to Article 5, all reasonable third party Operating Expenses
incurred by Operator in performing its authorized duties shall be reimbursed or
borne by Lessee; provided that such Operating Expenses are incurred pursuant to
and within the limits set forth in an Approved Budget or otherwise pursuant to
the terms of this Agreement.
(c)          Notwithstanding anything to the contrary contained herein, (i)
Operator is authorized to spend up to an additional ten (10%) percent for any
budgeted line item in an Approved Budget for a period not exceeding in the
aggregate five percent (5%) of the total Approved Budget, (ii) if there is an
increase in revenue over the budgeted line items for revenue in the Approved
Budget, the budgeted line items in the Approved Budget for discretionary
expenses shall be increased by a corresponding and proportional amount, and
(iii) if there is a decrease in revenue under the budgeted line items for
revenue in the Approved Budget, the budgeted line items in the Approved Budget
for discretionary expenses shall be decreased by a corresponding and
proportional amount.
Section 7.02.                          Operating Expenses Not an Obligation of
Operator.
Operator shall in no event, be required to advance any of its own funds for
Operating Expenses of the Hotel, nor to incur any liability in connection
therewith unless Lessee shall have furnished Operator with funds as required of
Lessee under the terms of this Agreement. However, if Lessee has provided funds
required of Lessee hereunder, Operator shall advance such funds necessary to pay
expenses incurred by Operator in performing its duties and obligations
hereunder. Unless agreed to by Lessee in this Agreement, in the Hotel Operating
Budget or otherwise in writing in advance, compensation, overhead costs, and
other expenses of Operator and its Affiliates shall not be reimbursable to
Operator by Lessee.
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ARTICLE 8                                  

BANK ACCOUNTS
Section 8.01.                          Lessee Revenue Account.
  All income, receipts, and proceeds included in the definition of Gross Hotel
Income shall be deposited into Lessee Revenue Account.
Section 8.02. Operating Account
Operator shall establish and maintain one or more separate segregated operating
accounts (collectively, the "Operating Account") at a FDIC insured bank
designated by Operator (except to the extent any Lender requires that the
Operating Account be held with Lender as part of a cash management system) for
the collection and disbursement of monies in connection with the management and
operation of the Hotel.   From the Operating Account, Operator shall pay all
Operating Expenses, and other costs and expenses relating to the operation of
the Hotel (subject to Lessee’s performance of its obligations herein to fund the
Operating Account for such Operating Expenses) as permitted or required to be
paid by Operator in accordance with this Agreement before any penalty or
interest accrues thereon.  The Operating Account shall be a segregated account
and at all times shall be in Operator’s name; provided that Hotel Employees and
Home Office Employees designated by Operator from time to time which shall be
bonded or otherwise insured shall be authorized signatories of such account, as
shall be representatives of Lessee.  All interest earned or accrued on amounts
invested from the Operating Account shall be added to the Operating Account.
Section 8.03. Ownership of Accounts
Lessee shall furnish information necessary for the printing of all Operating
Account checks, which will bear the name of the Hotel.  All bank accounts
(including the Operating Account), bank balances, bank statements, advice, paid
checks, blank checks and other related records established in connection with
operation of the Hotel or the ownership of the Property shall be the sole
property of Operator and/or any designee of Operator. Upon request by Lessee,
Operator shall provide access to or any and all information relating to the
Operating Account maintained by Operator.
Section 8.04. Exculpation of Operator
All expenses incurred by Operator in performing its obligations under this
Agreement shall be borne by Lessee and, to the extent funds are available, paid
out of the Operating Account by Operator.  All debts and liabilities to third
parties which Operator incurs as Operator under this Agreement, whether incurred
in the name of Lessee, Operator or the name of the Hotel or any variation of
such name used as a trade name, are and shall be the obligations of Lessee, and
Operator shall not be liable for any such obligations by reason of its
management, supervision and operation of the Hotel.  In the event that funds are
not available in the Operating Account to pay any such expenses, debts or
liabilities, Lessee shall promptly upon request from Operator, deposit funds in
the Operating Account sufficient to pay such expense, debts or liabilities.
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Section 8.05. Reimbursement of Operator
Operator shall be reimbursed for all Out-of-Pocket Expenses and Travel Expenses
incurred in rendering services to the Hotel or Lessee to the extent such
Out-of-Pocket Expenses and Travel Expenses are provided for in the Annual
Budget, required or permitted by this Agreement or otherwise approved by Lessee,
which approval shall not be unreasonably withheld, conditioned or delayed. 
Nothing in this Agreement, however, shall require Operator to advance or
otherwise expend any of its own funds in connection with the operation of the
Hotel or ownership of the Property.  If Operator pays any amount for which
Lessee is responsible under this Agreement, Operator shall be entitled to
reimbursement thereof by Lessee.  Operator may pay to itself the Out- of-Pocket
Expenses and Travel Expenses or other reimbursements from the Operating Account,
with Lessee’s approval. The Out-of-Pocket Expenses and Travel Expenses shall be
payable to Operator monthly, in arrears.  Operator shall also be reimbursed for
all reasonable costs and expenses incurred in taking over management of the
Hotel in accordance with the pre-opening budget, such reimbursement to be paid
within fifteen (15) days after Operator delivers and invoice therefore.
Section 8.06. Working Capital Funds
Lessee further agrees to provide funds to Operator sufficient to maintain a cash
balance in the Operating Account equal to or greater than the Working Capital
Amount, which amount shall be used by Operator solely in connection with
operation of the Hotel and performance of the responsibilities of Operator under
this Agreement.  If Operator notifies Lessee that funds in the Operating Account
are less than the Working Capital Amount, Lessee shall promptly, but in no event
later than five (5) Business Days after receipt of such notice from Operator,
provide sufficient funds to bring the balance of the Operating Account up to the
Working Capital Amount.
ARTICLE 9                              

BOOKS, RECORDS AND STATEMENTS
Section 9.01.                          Books and Records.
(a)            Operator shall keep full and adequate books of account and other
records reflecting the results of operation of the Hotel on an accrual basis,
all in accordance with GAAP.
(b)            Except for the books and records which may be kept in Operator’s
home office or other location approved by Lessee the books of account and all
other records relating to or reflecting the operation of the Hotel shall be kept
at the Hotel. All such books and records pertaining to the Hotel, including,
without limitation, books of account, guest records and front office records, at
all times shall be the property of Lessee and, except for books of account,
accounts payable invoices, night audit packages, deposit records and similar
documents which may be sent to Operator’s accounting department shall not be
removed from any Hotel by Operator without Lessee’s written approval and
consent. All books and records pertaining to the Hotel and of Operator
(including all budgetary records of Operator), wherever kept, shall be available
to Lessee and its representatives at all reasonable times for examination,
audit, inspection, transcription and copying. Operator shall not remove, destroy
or delete any books and records of the Hotels without the prior written consent
of Lessee. Upon any termination of this Agreement, all of such books and records
pertaining to the Hotel forthwith shall be turned over to Lessee so as to ensure
the orderly continuance of the operation of the Hotel, but such books and
records shall be available to Operator for a period of five (5) years at all
reasonable times for inspection, audit, examination, and transcription of
particulars relating to the period in which Operator managed the Hotel.
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Section 9.02.                          Statements.
(a)            Operator shall deliver to Lessee by the eighth (8th) business day
following the last day of each month, for each Hotel, a monthly report of the
state of the business and affairs of the operation of the Hotel for the
immediately preceding month and for the Fiscal Year to date. Such reports shall
include at least (i) a balance sheet account reconciliation including all
intercompany accounts, (ii) a profit and loss statement, comparing current month
and Fiscal Year-to-date profit, loss, and operating expenses to the Approved
Budget and the prior year and comparing current month, quarter and Fiscal
Year-to-date average daily rate, occupancy and RevPAR to the Approved Budget and
the prior year, (iii) a statement which details the computation of all fees
payable to Operator for the month and quarter, (iv) the balance of all bank
accounts, and (v) an adjusting statement showing the actual cash position of the
Hotel for the month, quarter and Fiscal Year-to-date. Additionally, Operator
shall deliver to Lessee fifteen (15) business days following the end of each
month and fifteen (15) business days following the end of each quarter a written
narrative discussing any of the aforementioned reports and year-to-date
variances from the Approved Budget, without thereby implying Lessee’s approval
of such variance.
(b)            Such reports and statements (i) shall be in form and in detail
satisfactory to Lessee as reasonably requested by Lessee and consistent with
standard hotel reporting procedures, (ii) shall be taken from the books and
records maintained by Operator in the manner hereinabove specified, and (iii) if
requested by Lessee, shall be in electronic form.
(c)            Within sixty (60) days after the end of each Fiscal Year,
Operator shall deliver to Lessee reviewed financial statements for Operator,
and, if requested by Lessee, within thirty (30) days after the end of each
quarter of each Fiscal Year, Operator shall deliver to Lessee unaudited
financial statements for Operator.
(d)            In addition, Operator shall timely deliver to Lessee a copy of
(i) a monthly STAR report from Smith Travel Research for each Hotel, where
available (which Operator hereby agrees to order with respect to each Hotel and
provide to Lessee), (ii) each Guest Satisfaction report, (iii) upon receipt,
each Franchisor inspection report, and (iv) such other reports or information in
such form as may be reasonably requested by Lessee.  Any out-of-pocket costs
incurred by Operator to generate such reports will be included in Operating
Expenses
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(e)            Operator agrees to annually have accounting and operations
practices reviewed by a certified person or entity in order to provide Lessee
with verification of a Type 2 SOC 1 Report, Report on Controls at a Service
Organization Relevant to User Entities’ Internal Control over Financial
Reporting. This report is to be prepared under Statement on Standards for Attest
Engagements 16 (SSAE 16) as promulgated by the AICPA. If the standards of the
AICPA change, the operator agrees to comply with revisions of these standards.
(f)            Operator shall use the accounting software and payroll processor
specified in Exhibit A-2.
ARTICLE 10                              

OPERATOR’S FEE AND TRANSFERS TO LESSEE
Section 10.01.                                        Payment of Operator’s Fee.
Within three (3) business days after the delivery to Lessee of the monthly
report required by Section 9.02, Operator shall be paid the Operator’s Fee by
Lessee for the immediately prior month, based upon Gross Hotel Income for the
immediately prior month, as determined from the books and records referred to in
Article 9.
ARTICLE 11                              

REPAIRS AND MAINTENANCE
Subject to the provisions of the Approved Budget, Operator shall from time to
time make such expenditures for repairs and maintenance as are necessary to keep
the Hotel in good operating condition in accordance with the Hotel Standards. If
any repairs or maintenance shall be made necessary by any condition against the
occurrence of which Operator, Lessee or Owner has received the guaranty or
warranty of any contractor for the building of the Hotel or of any supplier of
labor or materials for the construction of the Hotel, then Operator shall, on
Lessee’s request, cooperate with Lessee and Owner in invoking such guarantees or
warranties. Notwithstanding the Approved Budget, Lessee may from time to time at
its expense make such alterations, additions, or improvements (including
structural changes or repairs) in or to the Hotel as they deem desirable, in
their sole discretion and responsibility, for the efficient operation of the
Hotels.
ARTICLE 12                              

INSURANCE
Section 12.01.                                        General.
Lessee shall or cause Owner to maintain insurance policies with respect to the
Hotels as set forth below.  Operator agrees to cooperate with Lessee in
obtaining any such insurance. Operator further agrees to provide Lessee with
detailed summaries of their Worker’s Compensation, Auto Liability, Cyber and
Employment Practices Liability insurance policies and endorsements upon renewal.
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Section 12.02.                                        Workers’ Compensation and
Other Employment Insurance.
Operator shall obtain, and the Hotel Operating Budget shall include, as an
Operating Expense, Workers’ Compensation, in compliance with state law in the
state of operation of each Hotel, including Employers’ Liability with minimum
limits of $1,000,000 each accident. Such policy shall include an Alternate
Employer Endorsement naming Lessee, and shall provide for a Waiver of
Subrogation in favor of Lessee.
Section 12.03.                                        Approval of Companies and
Cost by Owner and Lessee.
All insurance provided by Owner or Lessee shall be with such insurance company
or companies as may be selected by Lessee. Lessee will obtain all insurance but,
upon the request of Lessee not less than one hundred twenty (120) days prior to
the coverage date, Operator will obtain such insurance, subject to Lessee’s
approval of the insurance companies and coverages.  Comprehensive general
liability insurance and such other liability insurance as may be obtained or
afforded shall be in the name of Owner and Lessee, and shall name Operator as an
additional named insured as respects liability arising from the operation,
maintenance and use of the Hotel and operations incidental thereto. All property
insurance policies shall be endorsed specifically to the effect that the
proceeds of any building, contents or business interruption insurance shall be
made payable to Lessee. Operator shall provide proper evidence of insurance
required by Operator to Lessee annually. Such policies shall require a minimum
of 30 days’ notice to Lessee in the case of cancellation, for any reason, if
allowed by insurance carrier.
Section 12.04.                                        Maintenance of Coverages.
Lessee shall hold all insurance policies obtained hereunder, and certificates of
such policies, if any, shall be delivered to each of Lessee and Operator.
Section 12.05.                                        Waiver of Subrogation.
To the extent obtainable from carriers and to the extent that endorsement forms
are approved by the Insurance Commissioner (or comparable office or department)
of the state in which the Hotel is located, all policies of property insurance
shall provide that the insurance companies will have no rights to subrogation
against Lessee or Operator or the agents or employees thereof.
Section 12.06.                                        Blanket Coverage.
Lessee reserves the right to provide any insurance referenced in this Article 12
by one or more so-called “blanket” or “umbrella” policies of insurance. Operator
further acknowledges that the insurance coverage of the Hotel may be part of the
general insurance plan of Lessee or of any of their affiliates. Lessee may elect
to obtain any of the insurance coverages set forth in this Article 12 with a
“deductible loss” clause providing for per occurrence deductibles.
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Section 12.07.
Employment Practice Liability

Operator shall obtain EPL coverage insuring against potential claims against
Operator by Operator’s employees, for employment related claims. Such coverage
shall have a minimum limit of $2,000,000, and shall name Owner/Lessee as
additional insured.
Section 12.08.
Cyber/Network/Privacy Liability.

Lessee shall obtain Cyber/Network/Privacy insurance against potential claims
against Operator and Lessee by third parties or a governmental authority arising
from unauthorized access, unauthorized use, theft of data, virus transmission,
denial of service, internet liability and failure to protect privacy and
intellectual property in connection with and arising out of the design,
development and use of any systems utilized to operate and maintain the
services, premises and operations of the Hotels, with minimum limits of
$1,000,000 per occurrence/aggregate.

Section 12.09.
Liquor Liability.

Where a liquor license is held in Operator’s name, Operator shall obtain Liquor
Legal Liability insurance against potential claims by third parties arising out
of the serving of such.  Coverages shall be in amount of minimum limits of
$1,000,000 per occurrence, and shall include Lessee as additional insured.

Section 12.10.
Automobile Liability.

(a)  Lessee shall obtain Automobile Liability insuring against third party
liability claims arising from the use of Lessee owned automobiles, with minimum
limits of $1,000,000 each accident.  Such coverage shall include the Operator as
Additional Insured as respects liability arising from the use of such
automobiles in connection with the Hotel and operations incidental thereto. 
Coverage shall include a Waiver of Subrogation in favor of Operator.

(b)  Operator shall obtain Operator-Owned, Non-Owned and Hired Automobile
Liability and Physical Damage insuring against third party liability and damage
of such vehicles, when such vehicles are used hired or rented by employees of
Operator, with minimum limits of liability $1,000,000 each accident. Coverage
shall include a Waiver of Subrogation in favor of Owner and Lessee.

Section 12.11.
General Liability.

Lessee shall obtain General Liability insuring against third party liability
claims with minimum limits of $1,000,000 each occurrence/$2,000,000 aggregate.
Such coverage shall include the Operator as Additional Insured as respects
liability arising from the operation, maintenance, and use of the Hotel and
operations incidental thereto. Owner/Lessee also agree to maintain Umbrella
Liability Policy with a minimum limit of $10,000,000.00.

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Section 12.12.
Property.

Lessee shall obtain Property insurance and Business Interruption insurance
insuring the Hotel properties, as determined appropriate by Lessee. Coverage
shall include a Waiver of Subrogation in favor of Operator.

Section 12.13.
Crime.

Lessee shall obtain Crime coverage insuring against the dishonest acts & theft
of Lessee’s and Lessee’s customers personal property by Operator’s employees.

ARTICLE 13                              

PROPERTY TAXES, LOCAL TAXES, LEVIES AND OTHER ASSESSMENTS
Section 13.01.                                        Property Taxes.
At Lessee’s request, Operator shall pay from the Hotel Operating Account prior
to the dates the same become delinquent, with the right upon Lessee’s request to
pay the same in installments to the extent permitted by law, all real and
personal property taxes levied against the Property or any of its component
parts.
Section 13.02.                                        Lessee’s Right to Contest.
Notwithstanding the foregoing, Lessee or Owner may contest the validity or the
amount of any real or personal tax or assessment. Operator agrees to cooperate
with Lessee and Owner and execute any documents or pleadings required for such
purpose.
ARTICLE 14                              

DAMAGE OR DESTRUCTION - CONDEMNATION
Section 14.01.                                        Damage.
If at any time during the Operating Term the Hotel or any portion thereof should
be damaged or destroyed, Owner and Lessee shall have the respective rights and
obligations provided in the Lease with respect to damage or destruction. In the
event the Hotel is not repaired, rebuilt or replaced, Lessee may terminate this
Agreement by written notice to Operator, effective as of the date sent and the
parties shall treat such termination as if it were in connection with the sale
of the Hotel in accordance with Section 16.03.
Section 14.02.                                        Condemnation.
If at any time during the Operating Term the whole or any part of the Property
shall be taken or condemned in any eminent domain, condemnation, compulsory
acquisition or like proceeding or sale in lieu thereof by any competent
authority, or if such a portion thereof shall be taken or condemned as to make
it imprudent or unreasonable to use the remaining portion as a hotel of the type
and class immediately preceding such taking or condemnation, then the parties
shall treat such termination as if it were in connection with the sale of Hotel
in accordance with Section 16.03. Operator shall have no right to the award from
the taking or condemning authority in any such proceeding; provided, however,
that this shall not prevent Operator from making a separate claim against the
condemning authority for loss of its business or profits.
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ARTICLE 15                              

USE OF NAME
During the term of this Agreement, each Hotel shall at all times be known by
such name as from time to time may be selected by Lessee.
ARTICLE 16                              

TERMINATION
Section 16.01.                                        Inspection Failure.
If Operator fails two consecutive Franchisor’s quality inspections
(“Inspection”), for reasons other than capital related issues, Lessee may
terminate this Agreement and such termination shall be by delivery of written
notice  by Lessee to Operator not less than  sixty (60) days prior to the
effective date of termination. Additionally, Lessee reserves the right, at its
sole and absolute discretion, to request an extra Inspection on the Hotel after
Operator has failed an Inspection, for reasons other than capital related items,
and if Operator fails the extra Inspection this will qualify as two consecutive
fails of Inspections and Lessee may terminate this Agreement and such
termination shall be by delivery of written notice by Lessee to Operator not
less than thirty (30) days prior to the effective date of termination. Lessee
will be responsible for any additional fee required by Franchisor for said extra
Inspection.
(a)
Performance Failure.

(a)            If a Hotel fails to achieve as of the end of any Fiscal Year
(i) actual NOI of at least 90% of the budgeted NOI, and (ii)  90%  of such
Hotel’s previous years running (12) month RevPAR index (as measured by STR) for
such Fiscal Year (collectively, an “Individual Hotel Performance Failure”),
subject to the cure periods below, Lessee may terminate this Agreement with
respect to such Hotel upon sixty (60) days prior written notice to Operator. The
effectiveness of any such notice of termination, however, shall be stayed until
completion of the following applicable cure periods.
If  the Hotel Performance Failure occurs with respect to a Fiscal Year, but the
Hotel achieves as of the end of the immediately following three (3) months
actual NOI of at least 100% of the budgeted NOI for such Hotel for such three
(3) months, and 100% of such Hotel’s previous years running (3) month RevPAR
index (as measured by STR), then the Individual Hotel Performance Failure shall
be deemed cured and Lessee shall have no right to terminate for such Individual
Hotel Performance Failure (and any notice of termination with respect thereto
shall be deemed null and void).
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(b)            If the Hotel, after the Operator has managed the Hotel for a
consecutive twelve (12) month period, at any point, has a negative RevPAR change
versus its competitive set, as of the date here of, as measured by the monthly
STR Report of greater than 10% for a running (12) month period (“Negative RevPAR
Individual Hotel Performance Failure”), subject to the cure periods below,
Lessee may terminate this Agreement with respect to the individual Hotel upon
sixty (60) days prior written notice to Operator. The effectiveness of such
notice of termination however, shall be stayed until completion of the following
applicable cure period.
If  the Hotel’s performance, as measured by the monthly STR Report, for the
following three (3) consecutive month period after notice of termination is
provided, has a positive RevPAR change versus its competitive set, then the
Negative RevPAR Individual Hotel Performance Failure shall be deemed cured and
Lessee shall have no right to terminate for such Negative RevPAR Individual
Hotel Performance Failure (and any notice of termination with respect thereto
shall be deemed null and void). If however, the Hotel’s performance at any given
period after termination has been cured, as measured by the monthly STR Report
for the following twelve (12) month period, again becomes greater than negative
10% change against the individual Hotel’s competitive set as measured by the
running twelve (12) month period, Lessee may terminate this Agreement with
respect to the individual Hotel upon sixty (60) days prior written notice and
Operator shall no longer have the option to cure.
Section 16.03.                                        Sale of Hotel.
Lessee may sell or otherwise dispose of the Hotel to any other person,
partnership, firm or corporation at any time. In such event during the Operating
Term, Lessee may notify Operator in writing no less than thirty (30) days prior
to any such sale of the Hotel and this Agreement shall terminate with respect to
the Hotel upon the closing of the sale.  Upon the sale of the hotel by the
Lessee, Operator will be entitled to an Operator Fee equivalent to the monthly
average of the preceding twelve (12) months Operator Fee for a sixty (60) day
period after the sale.
Section 16.04.
Bad Acts

This agreement may be terminated  with  a sixty (60) day notice should Operator
commit an act of fraud, criminal conduct, misappropriation of funds, dishonesty,
or willful misconduct of the Operator in connection with the management and
operation of the Hotel.  Such acts will be considered “bad person” acts and will
result in immediate termination of Operator with no recourse against Lessee or
Owner.

Section 16.05.                                        Optional Termination.

This Agreement may be terminated by Lessee at any time without a reason upon no
less than sixty (60) days prior notice to Operator, and Lessee shall pay
Operator a termination fee with respect to any such Hotel equal to the lesser
of: 1) 50% of the Operator’s Fee paid with respect to the Hotel during the
trailing twelve (12) months prior to the relevant termination (which may include
Operator's Fees for the Hotel for periods prior to the Commencement Date) or, 2)
50% of the average monthly Operator's Fee over the trailing twelve (12) months
prior to the relevant termination multiplied by the number of months remaining
of the then Initial Term or Renewal Term.

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Section 16.06.                                        Lessee Change of Control.
This Agreement may be terminated by Lessee or Operator upon a change of control
of Lessee (as defined below) during the Operating Term.  Said termination will
be exercised by delivery of written notice to the other party not less than
sixty (60) days prior to the effective date of termination which notice shall
set forth the effective date of termination.  For purposes hereof, a “change of
control” shall be deemed to have occurred if, during the Operating Term, any of
the following events occurs:
(i)
any “person”, as that term is used in Section 13(d) and Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), becomes, is
discovered to be, or files a report on Schedule 13D or 14D-1 (or any successor
schedule, form or report) disclosing that such person is, a beneficial owner (as
defined in Rule 13d-3 under the Exchange Act or any successor rule or
regulation), directly or indirectly, of securities of Condor Hospitality Trust,
Inc., the parent of Lessee (the “Parent”) representing 50% or more of the
combined voting power of the Parent’s then outstanding securities entitled to
vote generally in the election of directors;

(ii)
individuals who, as of the date of this Agreement, constitute the Board of
Directors of the Parent or their duly elected successors cease for any reason to
constitute at least a majority of the Board of Directors of the Parent;

(iii)
the Parent is merged, consolidated or reorganized into or with another
corporation or other legal person, or securities of the Parent are exchanged for
securities of another corporation or other legal person, and immediately after
such merger, consolidation, reorganization or exchange less than a majority of
the combined voting power of the then-outstanding securities of such corporation
or person immediately after such transaction are held, directly or indirectly,
in the aggregate by the holders of securities entitled to vote generally in the
election of directors of the Parent immediately prior to such transaction; or

(iv)
the Parent in any transaction or series of related transactions, sells all or
substantially all of its assets to any other corporation or other legal person
and less than a majority of the combined voting power of the then-outstanding
securities of such corporation or person immediately after such sale or sales
are held, directly or indirectly, in the aggregate by the holders of securities
entitled to vote generally in the election of directors of the Parent
immediately prior to such sale.

In the event Lessee terminates this Agreement solely in accordance with this
Section 16.06, Lessee shall pay Operator a termination fee equal to 50% of the
Operator’s Fee paid to Operator during a number of months prior to the notice of
termination multiplied by the lesser of twelve (12) months or the number of
months otherwise remaining of the then Initial Term or Renewal Term.
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Section 16.07.                                        Operator Change of
Control.
This Agreement may be terminated by Lessee upon a change of control of Operator
(as defined below) during the Operating Term.  Said termination will be
exercised by delivery of written notice to the Operator, such notice to be
provided within sixty (60) days following the Lessee being made aware of the
event giving rise to the change of control and not less than thirty (30) days
prior to the effective date of termination which notice shall set forth the
effective date of termination; provided that, in the event such written notice
to Operator is not provided in accordance within the terms of this sentence, the
Lessee shall be deemed to have waived any rights to terminate this Agreement
with respect to the particular change of control giving rise to the required
notice.  For purposes hereof, a “change of control of Operator” shall mean (i) a
change of fifty percent or more of the voting control of Operator or any of its
owner entities or (ii) a substantial change in the current management of
Operator.
In addition to the rights and remedies otherwise available to the Parties at law
or in equity, the following provisions will apply following termination of this
Agreement pursuant to Article 14 or any other provision of this Agreement:
(a)
Operator shall quit, vacate, surrender, and deliver to Owner peacefully and
promptly the Hotel and all Permits and all books, records, accounts, contracts,
keys, Working Capital, and all other pertinent and necessary documents and
records pertaining to the Hotel and the operation thereof.  If any Permits,
including but not limited to any liquor license, is issued to Operator or any of
its Affiliates, Operator shall, to the extent permitted by Legal Requirements,
assign or cause its Affiliate holding any such Permits to assign to Lessee or
its designee all of the interest of Operator or its Affiliates in such Permits
and the Hotel liquor inventory without charge (other than any out of pocket
expenses of the assignment, which shall be Operating Expenses), or (if such
assignment is not permitted by applicable law) to use reasonable efforts to
provide Owner or Owner’s designee with the use and benefits of such Permits and
Hotel liquor inventory until such time (not to exceed 180 days) as Owner and/or
its designee are able to obtain new Permits; provided that Lessee shall
indemnify, defend and hold harmless Operator and its Affiliates from claims and
liabilities arising from the post-termination use of such Permits;

(b)
Operator shall deliver to Lessee any and all of Lessee’s properties and assets
within the possession of Operator, including keys, locks and safe combinations,
files, correspondence, information regarding group bookings, reservation lists,
ledgers, bank statements for the Operating Account and FF&E Reserve, accounting
books and records, all electronic data maintained by Operator relating to the
Hotel (which data shall be delivered on computer disc in a format that is
accessible and readable by Lessee’s then current computer systems), insurance
policies, bonds and other documents, agreements, leases, licenses, records and
plans (including, without limitation, the as-built or record set plans) relating
to the operation of the Hotel, provided that Operator may retain possession of
copies of any of the foregoing;

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(c)
Operator shall keep confidential all information concerning the Hotel obtained
by Operator or in Operator's possession, and not use any of it for its own
account, for the account of others or in any other manner that would directly or
indirectly compete with the Hotel;

(d)
Operator shall remit to Owner the balance (if any) of the Operating Account and
the FF&E Reserve, after computation and disbursement to Operator of all accrued
and unpaid Management Fees and Operating Expenses reimbursable to Operator;

(e)
As expeditiously as reasonably possible, prepare and deliver to Lessee the
financial reports required under this Agreement with respect to the final
Accounting Period and Fiscal Year and remit to Owner the amount (if any) shown
as owing to Owner in the final financial statements on account of previously
overpaid Management Fee, Operating Expenses reimbursable to Operator or other
payments due under this Agreement; and

(f)
Operator shall do all acts and execute and deliver all documents reasonably
requested by Lessee in connection with the transfer, all without consideration
therefor, and otherwise reasonably cooperate with Owner and any successor
operator to insure or facilitate orderly continuation of the business of the
Hotel;

(g)
The rights and liabilities of the Parties having accrued prior to termination of
this Agreement shall continue;

(h)
Operator will turn over possession of the Hotel in a clean, safe and secure
manner;

(i)
Prior to termination, Operator agrees to maintain operating inventories at
standards consistent with past practice and the Hotel pursuant to the Annual
Plan and existing repair and maintenance schedules;

(j)
Lessee, at its option, may install a shadow management team in the Hotel during
the  ten (10) day period immediately preceding the termination date to have
daily access to the Hotel and its books and records; provided that such team
shall not (a) unreasonably interfere with the management and operations of the
Hotel, and (b) consist of more than ten (10) members.  Lessee shall use its
reasonable efforts to cause the entity that succeeds Operator to hire a
sufficient number of Hotel Employees to avoid a WARN Act violation;

(k)
Operator shall at all times fully co-operate with and explain all aspects of the
business and operation of the Hotel to Lessee or any persons authorized by
Lessee to allow Owner or such persons to successfully and efficiently conduct
the business after the expiration of the Term.

Section 16.08.                                        Bookings Beyond Expiration
of Term.
              Operator shall diligently discharge all its obligations under this
Agreement during the whole of the Term, and in particular shall continue to
advertise and promote the Hotel and actively seek and accept bookings
notwithstanding that they are to occur after the expiration of the Term.  Lessee
shall be responsible on its own account for all costs, charges and commissions
payable for bookings made by Operator in the ordinary course of business of the
Hotel, which are for dates after the expiration of the Term.
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Section 16.09.                                        Tax Law Change.
Lessee may terminate this Agreement upon sixty (60) days’ notice to Operator if
Lessee ceases to be qualified as a real estate investment trust or if the United
States tax laws change to allow a hotel REIT to self-manage its properties.  In
such event, Lessee shall pay Operator a termination fee equal to 50% of the
Operator’s Fee paid to Operator during a number of months prior to the notice of
termination multiplied by the lesser of twelve (12) months or the number of
months otherwise remaining of the then Initial Term or Renewal Term.

Section 16.10.                                         Default or Termination of
Alcoholic Concession Agreement by Operator.
If Operator or its Affiliate chooses to exercise its option to terminate the ABC
Lease,  or if Lessee terminates the ABC Lease based upon default of ABC Tenant
under the ABC Lease, Lessee may terminate this Agreement and such termination
shall be by delivery of written notice by Lessee to Operator not less than
ninety (90) days prior to the effective date of the termination.

In the event the ABC Lease is terminated, the parties agree to work together in
good faith to make reasonable revisions to this Agreement, which might be
necessary due to the termination.

Section 16.11.                                        Termination Fees.
          Except as provided in Sections 16.03, 16.05, 16.06 and 16.09, Operator
shall not be entitled to a termination fee or compensation in the event this
agreement is terminated for a Hotel or Hotels by Lessee.

ARTICLE 17                              

DEFAULT AND REMEDIES
Section 17.01.                                        Events of Default-
Remedies.
(a)            The following shall constitute Events of Default:
(1)            The failure of Operator to diligently and efficiently operate the
Hotel in accordance with the provisions of this Agreement;

(2)            The failure of Operator to pay any amount to Lessee provided for
herein for a period of five (5) days after written notice by Lessee of failure
to pay such sum when payable;

(3)            The failure of Lessee to pay any amount to Operator provided for
herein for a period of five (5) days after written notice by Operator of failure
to pay such sum when payable;

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(4)            The filing of a voluntary petition in suspension of payments,
bankruptcy or insolvency by either Lessee or Operator or any entity which owns
or controls such party or if any such party otherwise voluntarily avails itself
of any federal or state laws for the relief of debtors or admits in writing its
inability to pay its debts as they become due;

(5)            The consent to an involuntary petition in bankruptcy or the
failure to vacate within sixty (60) days from the date of entry thereof any
order approving an involuntary petition by or against either Lessee or Operator;

(6)            The entering of an order, judgment or decree by any court of
competent jurisdiction, on the application of a creditor, adjudicating Lessee or
Operator a bankrupt or insolvent or appointing a judicial receiver, trustee or
liquidator of all or a substantial part of such party’s assets, and such order,
judgment or decree shall continue unstayed and in effect for a period of one
hundred twenty (120) consecutive days;

(7)            The failure of either Lessee or Operator to perform, keep or
fulfill any of the other covenants, undertakings, obligations or conditions set
forth in this Agreement, and the continuance of any such default for a period of
thirty (30) days after written notice of such failure;

(8)            Default or termination of the franchise license for a Hotel as a
result of any action, or failure to act, on the part of Operator;

(9)            Failure by Operator to pay, when due, the accounts payable for
the Hotels for which Lessee had previously reimbursed Operator.

(10)            Hotel receives a “failure” or its equivalent in any quality
inspection report from any of the Franchisors, if such deficiencies are within
Operator’s reasonable control.

(11)            Failure by Operator to execute any and all subordination
agreements, estoppel certificates and other documents requested by Lessee or
Owner and/or the Holder to further evidence the subordination of this Agreement
and Operator’s rights hereunder.

(b)            Upon the occurrence of any Event of Default, the non-defaulting
party shall give to the defaulting party notice of its intention to terminate
this Agreement after the expiration of a period of ten (10) days from such date
of notice and, upon the expiration of such period, this Agreement shall
terminate and expire without penalty. If, however, with respect to the Events of
Default referred to in items (1), (4), (5), (6), (7), (9) (10) and (11) of
subsection (a) above, unless a specific right of termination is specified
elsewhere in this Agreement for the event in question, upon receipt of such
notice, the defaulting party shall promptly and with all due diligence cure the
default or take and continue action to cure such default within such ten (10)
day period; provided, in the case of an event described in Section 17.01(a)(10),
and subject to Lessee’s termination rights pursuant to Section 16.01, the
Operator shall cure such default by receipt of a favorable quality inspection
report upon an inspection by the Franchisor within six (6) months following the
failed inspection.  If such default shall not be capable of being cured within
such ten (10) day period, then provided the defaulting party diligently pursues
the cure of such default, such party shall have an additional five (5) days to
cure any such default unless otherwise extended by the non-defaulting party. The
procedure set forth in the preceding two sentences shall not be available for
the curing of any default under items (2), (3) or (8) of subsection (a) above.
In the event such default is not cured by the expiration of such period, the
non-defaulting period may terminate this Agreement effective upon expiration of
such period without penalty or payment of any fee.
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Section 17.02.                                        Rights Not Exclusive.
(a)            The rights granted under this Article 17 shall not be in
substitution for, but shall be, except as otherwise provided in this Agreement,
in addition to any and all rights and remedies for breach of contract granted by
applicable provisions of law; provided, however, upon any termination of this
Agreement by Operator or Lessee as provided in this Agreement, Operator shall be
entitled to recover only such sums as are owing to or which accrued for the
benefit of Operator under this Agreement up to or on the date of any such
termination, and in no event will Operator have any claim or cause of action for
“future profits,” damages resulting from termination or otherwise under this
Agreement. Nothing in the preceding sentence, however, shall be interpreted to
limit or restrict the Operator’s rights under any indemnification, hold harmless
or defend provision of this Agreement all of which rights shall survive
termination and continue to remain enforceable against Lessee as more fully set
forth elsewhere in this Agreement.
(b)            No failure of Operator or Lessee to insist upon the strict
performance of any covenant, agreement, term or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof, shall
constitute a waiver of any such breach or any subsequent breach of such
covenant, agreement, term or condition. No covenant, agreement, term or
condition of this Agreement and no breach thereof shall be waived, altered or
modified except by written instrument signed by both Lessee and Operator. No
waiver of any breach shall affect or alter this Agreement but each and every
covenant, agreement, term and condition of this Agreement shall continue in full
force and effect with respect to any other then existing or subsequent breach
thereof.
(c)            Lessee, for itself and on behalf of Owner, waives any right to
seek or recover punitive or exemplary damages from Operator.
ARTICLE 18                              

NOTICES
Section 18.01.                                        Notices.
(a)            Any notice, statement or demand required to be given under this
Agreement shall be in writing and shall be delivered by certified or registered
mail, postage prepaid, return receipt requested, or by overnight delivery with
proof of delivery, or by facsimile with receipt of transmission, addressed to
the parties hereto at their respective addresses listed below:
(1)            Notices to Lessee shall be addressed:

Condor Hospitality Trust, Inc.
1800 West Pasewalk Avenue, Suite 200
Norfolk, NE 68702-1448
Attention:  J. William Blackham, CEO
Facsimile: (402) 371-4229

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(2)            Notices to Operator shall be addressed:

Presidian Destinations, Ltd.
9000 Tesoro Drive, Suite 300
San Antonio, Tx 78209
Attention: Charles Leddy, CEO
Facsimile:  (210) 646-8814

(b)            All notices, statements, demands and requests shall be effective
three (3) days after being deposited in the United States mail or one day after
being sent by overnight delivery or by facsimile. However, the time period in
which a response to any such notice, statement, demand or request must be given
shall commence to run from date of receipt by the addressee thereof as shown on
the return receipt of the notice, statement, demand or request, but in all
events not later than the tenth (10th) day after it shall have been mailed as
required herein.
(c)            By giving to the other party at least thirty (30) days written
notice thereof, either party shall have the right from time to time and at any
time during the Operating Term to change their respective addresses for notices,
statements, demands and requests, provided such new address shall be within the
United States of America.
ARTICLE 19                              

ASSIGNMENT
Section 19.01.                                        No Assignment by Operator.
, Operator shall have no right to sell, transfer or assign (or permit the sale,
transfer or assignment of) any of its rights, duties or obligations under this
Agreement in any manner, either directly or indirectly, voluntarily, or by
operation of law without the prior written consent of Lessee (which consent may
be withheld in Lessee’s sole and absolute discretion). Notwithstanding the
foregoing, Purchaser may assign this Agreement to any properly formed business
entity owned primarily by Purchaser and/or its principal owners.
Section 19.02.                                        Assignment by Lessee.
Lessee may transfer or assign its rights and obligations under this Agreement
without the consent of Operator but shall deliver to Operator written notice of
such transfer or assignment not less than ten (10) days prior to the effective
date thereof; provided, however, in the event of the assignment of this
Agreement to a party that is not an Affiliate, Operator shall have the right to
terminate this Agreement within fifteen (15) days after receipt of written
notice of such assignment, which termination will be effective within thirty
(30) days of Lessee’s receipt of such termination notice.  Any transfer or
assignment of this Agreement by Lessee shall include an express assumption by
the transferee or assignee of Lessee’s obligations hereunder.  Nothing herein
shall be deemed to require Lessee to assign or attempt to assign this Agreement
to any third party, including any buyer of a Hotel.
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ARTICLE 20                              

SUBORDINATION
Section 20.01.                                        Subordination To Mortgage.
Operator hereby agrees that this Agreement, including, but not limited to
Operator’s Fee, shall in all respects be and is hereby expressly made
subordinate and inferior to the liens, security interest and/or any Mortgage and
to any promissory note and other indebtedness secured or to be secured thereby
and to all other instruments evidencing or securing or to evidence or secure
indebtedness, and all amendments, modifications, supplements, consolidations,
extensions and revisions of such note and other instruments and any other
indebtedness of Lessee or Owner, secured or unsecured. Operator shall execute
any and all subordination agreements, estoppel certificates and other documents
requested by Lessee or Owner and/or the Holder to further evidence the
subordination of this Agreement and Operator’s rights hereunder including
without limitation providing any purchaser of a Hotel at a foreclosure sale or
deed-in-lieu of foreclosure (including the lender) with the right to terminate
this Agreement; provided, however, Lessee shall use its commercially reasonable
efforts to obtain from the holder of any Mortgage a nondisturbance agreement, in
form reasonably acceptable to Operator providing that this Agreement shall
remain in full force and effect notwithstanding the fact that the Mortgage has
been foreclosed.
Section 20.02.                                        Foreclosure.
Prior to termination of this Agreement by foreclosure under the Mortgage or by
acquisition of the property to be covered by the Mortgage by deed in lieu of
foreclosure, Operator shall have the right to enjoy all rights and privileges
conferred upon it pursuant to this Agreement, including, without limitation the
rights to the Operator’s Fee, and Operator shall incur no liability to the
Holder for acting pursuant to the terms of this Agreement; provided, however,
Operator shall be required to (and does hereby agree to) repay to the Holder any
Operator’s Fee paid to Operator under this Agreement from and after the date
which is thirty (30) days after the date of receipt by Operator of a notice of
default under the Mortgage, which default is not cured and results in the
acceleration of the indebtedness secured by the Mortgage and the ultimate
foreclosure of the liens and/or security interest under the Mortgage and/or
other acquisition of the property covered thereby by the Holder in lieu of
foreclosure.  In the event of such foreclosure, Operator shall have the right to
terminate this Agreement on thirty (30) days’ written notice to Lessee. 
Notwithstanding the foregoing, Operator may pursue, as an unsecured creditor, a
claim for all amounts due and owing to Operator under this Management Agreement
in accordance with the terms of this Section 20.02.
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Section 20.03.                                        Estoppel Certificates.
Lessee and Operator agree, at any time and from time to time, upon not less than
10 days prior written notice from the other party or any purchaser or lender, to
provide a statement in writing certifying that this Agreement is unmodified and
in full force and effect (or, if there have been modifications, that the same is
full and force and effect as modified and stating the modifications), and
stating whether or not to the best knowledge of the signer of such certificate,
there exists any default in the performance of any obligation contained in this
Agreement, and if so, specifying each such default of which a signer may have
knowledge.  Any statement delivered pursuant to this Section may be relied upon
by the other party and by the prospective lender or purchaser.
ARTICLE 21                              

MISCELLANEOUS
Section 21.01.                                        Further Documentation and
Reporting Compliance.
Lessee and Operator shall execute and deliver all appropriate supplemental
agreements and other instruments, and take any other action necessary to make
this Agreement fully and legally effective, binding, and enforceable in
accordance with the terms hereof as between them and as against third parties. 
Operator acknowledges that Parent is a reporting company under the Securities
Exchange Act of 1934, as amended, (the “Exchange Act”) and other federal laws,
including the Sarbanes-Oxley Act of 2002, and Operator shall reasonably
cooperate in providing Lessee information as necessary for Parent to prepare and
submit its reports under such laws in a timely fashion.
Section 21.02.                                        Captions.
The titles to the several articles of this Agreement are inserted for
convenience only and are not intended to affect the meaning of any of the
provisions hereof.
Section 21.03.                                        Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of Lessee, its
successors and/or assigns, and subject to the provisions of Article XIX, shall
be binding upon and inure to the benefit of Operator, its permitted successors
and assigns.
Section 21.04.                                        Competitive Market Area.
Operator hereby agrees, for the benefit of Lessee, its successors and assigns,
except for the hotels, if any, listed as Exhibit A-3, that Operator (and its
Affiliates) will not own, operate, lease, manage, or otherwise have an interest
in, directly or indirectly, any hotel within a  three (3) mile radius of any
Hotel during the Operating Term unless expressly consented to in writing by
Lessee in advance, which consent may be withheld in Lessee’s sole and absolute
discretion.
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Section 21.05.                                        Assumption of Post
Termination Obligations.
In the event of termination of this Agreement, Lessee shall be responsible for
assuming obligations under contracts entered into by Operator only to the extent
that any such contract shall have been entered into in accordance with Section
4.05(a) and Lessee shall be responsible for the payment of obligations incurred
by Operator in the operation of the Hotel only to the extent that such
obligations shall have been incurred in accordance with the terms of this
Agreement, and Operator hereby agrees to indemnify and to hold Lessee harmless
from and against any liability in connection with any such contracts, agreements
or obligations not so approved in writing by Lessee.  Lessee will indemnify and
hold Operator harmless from all costs, expenses, claims, damages and
liabilities, including without limitation, lawyers’ fees and disbursements,
arising or resulting from Lessee’s failure following the expiration or earlier
termination (for whatever cause) of this Agreement to provide all of the
services contracted for in connection with the business booked on commercially
reasonable terms for the Hotels on or prior to the date of such expiration or
termination.  The provisions of this Section will survive any expiration or
termination of this Agreement and will be binding upon Lessee and its successors
and assigns, including any successor or assign that becomes the beneficial or
legal owner of the Hotels after the effective date of any such expiration or
termination.
Section 21.06.                                        Entire Agreement.
This Agreement, together with the Exhibits hereto, constitutes the entire
Agreement between the parties relating to the subject matter hereof, superseding
all prior agreements or undertakings, oral or written.  This Agreement and the
Exhibits hereto shall be construed and interpreted without reference to any
canon or rule of law requiring interpretation against the party drafting or
causing the drafting of this Agreement or the portions in question, it being
agreed and understood that all parties have participated in the preparation of
this Agreement.
Section 21.07.                                        Governing Law.
This Agreement shall be construed and enforced in accordance with the laws of
the State of Kansas.
Section 21.08.                                        No Political
Contributions.
Any provision hereof to the contrary notwithstanding, no money or property of
the Hotel shall be paid or used or offered, nor shall Lessee or Operator
directly or indirectly pay or use or offer, consent or agree to pay or use or
offer any money or property of the Hotel, for or in aid of any political party,
committee or organization, or for or in aid of, any corporation, joint stock or
other association organized or maintained for political purposes, or for, or in
aid or, any candidate for political office or for nomination for such office, or
in connection with any election including referendum for constitutional
amendment, or for any political purpose whatever, or for lobbying in connection
with legislation or regulation thereunder, or for the reimbursement for
indemnification of any person for money or property so used.
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Section 21.09.                                        Eligible Independent
Contractor.
(a)    At the effective time of this Agreement, Operator shall qualify as an
“eligible independent contractor” as defined in Section 856(d)(9) of the
Internal Revenue Code of 1986, as amended (the “Code”).  To that end:
(i)
during the Operating Term, Operator shall not permit wagering activities to be
conducted at or in connection with the Hotels;

(ii)
during the Operating Term, Operator shall not own, directly or indirectly
(within the meaning of Section 856(d)(5) of the Code), more than 35% of the
shares of Condor Hospitality Trust, Inc.;

(iii)
during the Operating Term, no more than 35% of the total combined voting power
of Operator’s outstanding stock (or 35% of the total shares of all classes of
its outstanding stock) shall be owned, directly or indirectly, by one or more
persons owning 35% or more of the outstanding stock of Condor Hospitality Trust,
Inc.; and

(iv)
At the effective time, Operator shall be actively engaged in the trade or
business of operating “qualified lodging facilities” (defined below) for a
person who is not a “related person” within the meaning of Section 856(d)(9)(F)
of the Code with respect to the Parent or Lessee (“Unrelated Persons”). In order
to meet this requirement, Operator agrees that it (i) shall derive at least 10%
of both its revenue and profit from operating “qualified lodging facilities” for
Unrelated Persons and (ii) shall comply with any regulations or other
administrative guidance under Section 856(d)(9) of the Code with respect to the
amount of hotel management business with Unrelated Persons that is necessary to
qualify as an “eligible independent contractor” with the meaning of such Code
Section.

(b)            A “qualified lodging facility” is defined in Section 856(d)(9)(D)
of the Code and means a “lodging facility” (defined below), unless wagering
activities are conducted at or in connection with such facility by any person
who is engaged in the business of accepting wagers and who is legally authorized
to engage in such business at or in connection with such facility. A “lodging
facility” is a hotel, motel or other establishment more than one-half of the
dwelling units in which are used on a transient basis, and includes customary
amenities and facilities operated as part of, or associated with, the lodging
facility so long as such amenities and facilities are customary for other
properties of a comparable size and class owned by other owners unrelated to
Condor Hospitality Trust, Inc.
(c)            Operator shall not sublet any Hotel or enter into any similar
arrangement on any basis such that the rental or other amounts to be paid by the
sublessee thereunder would be based, in whole or in part, on either (a) the net
income or profits derived by the business activities of the sublessee, or (b)
any other formula such that any portion of the rent would fail to qualify as
“rents from real property” within the meaning of Section 856(d) of the Internal
Revenue Code, or any similar or successor provision thereto.
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Section 21.10.                                        Time of the Essence.
Time is of the essence of this Agreement.
Section 21.11.                                        Offsets.
Each party may offset amounts owed to another party hereunder against any
amounts owed to such party, except to the extent any such offset is prohibited
by the terms of the Lessee (or its Affiliates) credit agreements.
Section 21.12.                                        Final Accounting.
(a)            In addition to the reports required by Section 9.02, within sixty
(60) days following the effective date of expiration or termination of this
Agreement, Operator shall prepare and submit to Lessee a final accounting of
Hotel operations through the effective date of such expiration or termination,
which accounting shall be in the form of the financial statements required
hereunder.
(b)            Upon the effective date of expiration or termination of this
Agreement, Operator shall deliver possession of the Hotel, and any cash,
property and other assets pertaining thereto, together with any and all keys or
other access devices, to Lessee.
(c)            Upon the expiration or termination of this Agreement, Operator
shall reasonably cooperate with and assist Lessee as may be necessary for the
transfer of the operations and management of the Hotels to the successor
operator and the transfer any and all Hotel licenses and permits to Lessee or
Lessee’s designee.
Section 21.13.                                        Franchisor Communications.
During the Operating Term, Operator shall promptly deliver to Lessee copies of
any deficiency notices or similar notices received from a Franchisor and any
response thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
LESSEE:

TRS KCI LOFT, LLC

By:            /s/ Jeffrey W. Dougan
Title:            Vice President

OPERATOR:

PRESIDIAN DESTINATIONS, LTD.

By:            /s/ Charles J. Leddy
Title:            Chief Executive Officer
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EXHIBIT A

HOTEL PROPERTIES AND OWNERS

Hotel
Owner
Location
# of Rooms
 
Aloft
CDOR KCI LOFT, LLC
11620 Ash Street, Leawood, KS
156
                                                                               
                                                                               
                                                                               
               

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EXHIBIT A-1

COMPETITIVE SET

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EXHIBIT A-2

ACCOUNTING SOFTWARE AND PAYROLL PROCESSES

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EXHIBIT A-3

LIST OF OPERATOR’S HOTELS WITHIN 3 MILE RADIUS

N/A

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EXHIBIT B

FRANCHISE AGREEMENTS

Hotel
Location
Franchisor

Aloft                                                                      11620
Ash St, Leawood,
KS                                                                        The
Sheraton, LLC