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                                                                    Exhibit 10.3

                                    FORM OF

                                LEASE AGREEMENT

                            DATED AS OF ______, 2004

                                    BETWEEN

                        -------------------------------,

                                   AS LESSOR

                                      AND

                       --------------------------------,

                                   AS LESSEE




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                                TABLE OF CONTENTS

                                                                       Page


ARTICLE I.................................................................1

  1.1       Leased Property...............................................1
  1.2       Term..........................................................2

ARTICLE II................................................................2


ARTICLE III..............................................................14

  3.1       Rent.........................................................14
  3.2       Confirmation of Percentage Rent..............................17
  3.3       Additional Charges...........................................18
  3.4       Rent Payable Without Deduction...............................18
  3.5       Budgets......................................................19
  3.6       Approval of Capital Budget...................................19
  3.7       Capital Projects.............................................20
  3.8       Books and Records............................................20

ARTICLE IV...............................................................20

  4.1       Payment of Impositions.......................................20
  4.2       Notice of Impositions........................................21
  4.3       Adjustment of Impositions....................................21
  4.4       Utility Charges..............................................21
  4.5       Insurance Premiums...........................................21
  4.6       Other Charges................................................21
  4.7       Reimbursement for Additional Charges.........................21

ARTICLE V................................................................21

  5.1       No Termination, Abatement, Etc...............................21
  5.2       Abatement Procedures.........................................22

ARTICLE VI...............................................................22

  6.1       Ownership of the Leased Property.............................22
  6.2       Lessee's Personal Property...................................23
  6.3       Lessor's Representations.....................................23
  6.4       Lessee's Representations.....................................23
  6.5       Lessor's Lien................................................23


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ARTICLE VII..............................................................23

  7.1       Condition of the Leased Property.............................23
  7.2       Use of the Leased Property...................................24
  7.3       Lessor to Grant Easements, Etc...............................25

ARTICLE VIII.............................................................25

  8.1       Compliance with Legal and Insurance
            Requirements, Etc............................................25
  8.2       Legal Requirement Covenants..................................25
  8.3       Environmental Covenants......................................26

ARTICLE IX...............................................................28

  9.1       Maintenance and Repair.......................................28
  9.2       FF&E Reserve.................................................29
  9.3       Encroachments, Restriction, Etc..............................31

ARTICLE X................................................................31

  10.1      Alterations..................................................31
  10.2      Salvage......................................................31
  10.3      Joint Use Agreements.........................................31

ARTICLE XI...............................................................32

  11.1      Liens........................................................32

ARTICLE XII..............................................................32

  12.1      Permitted Contests...........................................32

ARTICLE XIII.............................................................33

  13.1      General Insurance Requirements...............................33
  13.2      Responsibility for Insurance.................................34
  13.3      Replacement Cost.............................................35
  13.4      Workers' Compensation........................................35
  13.5      Waiver of Subrogation........................................35
  13.6      Form Satisfactory, Etc.......................................35
  13.7      Increase in Limits...........................................36
  13.8      Blanket Policy...............................................36
  13.9      Separate Insurance...........................................36
  13.10     Reports On Insurance Claims..................................36


                                      -ii-
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ARTICLE XIV..............................................................37

  14.1      Insurance Proceeds...........................................37
  14.2      Reconstruction in the Event of Damage or
            Destruction Covered by Insurance.............................37
  14.3      Reconstruction in the Event of Damage or
            Destruction Not Covered by Insurance.........................38
  14.4      Lessee's Property and Business
            Interruption Insurance.......................................38
  14.5      Abatement of Rent............................................39
  14.6      Damage Near End of Term......................................39
  14.7      Waiver.......................................................39

ARTICLE XV...............................................................39

  15.1      Definitions..................................................39
  15.2      Parties' Rights and Obligations..............................40
  15.3      Total Taking.................................................40
  15.4      Allocation of Award..........................................40
  15.5      Partial Taking...............................................40
  15.6      Temporary Taking.............................................41

ARTICLE XVI..............................................................41

  16.1      Events of Default............................................41
  16.2      Surrender....................................................43
  16.3      Damages......................................................43
  16.4      Waiver.......................................................44
  16.5      Application of Funds.........................................44

ARTICLE XVII.............................................................44

  17.1      Lessor's Right to Cure Lessee's Default......................44

ARTICLE XVIII............................................................45

  18.1      REIT Requirements............................................45
  18.2      Lessee Officer and Employee Limitation.......................46
  18.3      Payments to Affiliates of Lessee.............................47
  18.4      Management Agreement.........................................47

ARTICLE XIX..............................................................47

  19.1      Holding Over.................................................47

ARTICLE XX...............................................................48

  20.1      Risk of Loss.................................................48


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ARTICLE XXI..............................................................48

  21.1      Indemnification..............................................48

ARTICLE XXII.............................................................49

  22.1      Subletting and Assignment....................................49
  22.2      Attornment...................................................50
  22.3      Permitted Sublease and Assignment............................50
  22.4      Sublease Limitation..........................................50

ARTICLE XXIII............................................................51

  23.1      Officer's Certificates; Financial Statements;
            Lessor's Estoppel Certificates and Covenants.................51

ARTICLE XXIV.............................................................52

  24.1      Lessor's Right to Inspect....................................52

ARTICLE XXV..............................................................52

  25.1      No Waiver....................................................52

ARTICLE XXVI.............................................................53

  26.1      Remedies Cumulative..........................................53

ARTICLE XXVII............................................................53

  27.1      Acceptance of Surrender......................................53

ARTICLE XXVIII...........................................................53

  28.1      No Merger of Title...........................................53

ARTICLE XXIX.............................................................53

  29.1      Conveyance by Lessor.........................................53
  29.2      Other Interests..............................................53

ARTICLE XXX..............................................................54

  30.1      Quiet Enjoyment..............................................54

ARTICLE XXXI.............................................................54

  31.1      Notices......................................................54


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ARTICLE XXXII............................................................54

  32.1      Appraisers...................................................54

ARTICLE XXXIII...........................................................55

  33.1      Lessor May Grant Mortgages...................................55
  33.2      Lessee's Right to Cure.......................................55
  33.3      Grant of Easements or Imposition of Restrictions.............56
  33.4      Outparcels, Leases and Licenses..............................56

ARTICLE XXXIV............................................................56

  34.1      Miscellaneous................................................56
  34.2      Transition Procedures........................................56
  34.3      Waiver of Presentment, etc...................................57

ARTICLE XXXV.............................................................57

  35.1      Memorandum of Lease..........................................57


ARTICLE XXXVI............................................................57

  36.1      Compliance with Management Agreement.........................57

ARTICLE XXXVII...........................................................58

  37.1      Arbitration..................................................58

EXHIBIT A -          Legal Description
EXHIBIT B -          Schedule of Lease Terms






                                      -v-
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                                 LEASE AGREEMENT


                  THIS LEASE AGREEMENT (this "Lease"), made as of the ___ day of
________, 2004, by and between _______________________________, a Delaware
limited liability company (the "Lessor"), and _____________________________, a
Delaware limited liability company (the "Lessee"), provides as follows:

                              W I T N E S S E T H:

                  WHEREAS, Lessor and Lessee desire to enter into this Lease to
evidence the terms and conditions upon which Lessor will lease and demise to
Lessee the Leased Property, and the terms and conditions upon which Lessee will
lease and take from Lessor the Leased Property.


                  NOW, THEREFORE, intending to be legally bound, Lessor and
Lessee agree that Lessor, in consideration of the payment of rent by Lessee to
Lessor, the covenants and agreements to be performed by Lessee, and upon the
terms and conditions hereinafter stated, does hereby rent and lease unto Lessee,
and Lessee does hereby rent and lease from Lessor, the Leased Property.


                                   ARTICLE I

                  1.1 Leased Property. The Leased Property is comprised of
Lessor's interest in the following:

                  (a) the parcel of land more particularly described in the
legal description attached hereto as Exhibit A (the "Land");

                  (b) all buildings, structures and other improvements and
appurtenances of every kind, including, but not limited to the Hotel, the
alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines
(on-site and offsite), parking areas and roadways appurtenant to such buildings
and structures presently situated upon the Land (collectively, the "Leased
Improvements");

                  (c) all easements, rights and appurtenances relating to the
Land and the Leased Improvements;

                  (d) all equipment, machinery, fixtures, and other items of
property required for or incidental to the use of the Leased Improvements as a
hotel, including all components thereof, now or hereafter permanently affixed to
or incorporated into the Leased Improvements, including, without limitation, all
furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, all of which to the greatest
extent permitted by law are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto (collectively, the "Fixtures");


<PAGE>

                  (e) all furniture and furnishings and all other items of
personal property (excluding Inventory and personal property owned by Lessee)
located on, and used in connection with, the operation of the Leased
Improvements as a hotel, together with all replacements, modifications,
alterations and additions thereto; and

                  (f) all existing leases of space within the Leased Property
(including any security deposits or collateral held by Lessor pursuant thereto).

THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION
OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF
PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL
COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS OF RECORD
INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, FINANCING INSTRUMENTS, MORTGAGES,
DEEDS OF TRUST AND SECURITY DEEDS, AND INCLUDING OTHER MATTERS WHICH WOULD BE
DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN ACCURATE SURVEY
THEREOF.

                  1.2 Term. The term of the Lease (the "Term") shall commence on
the date of this Lease (the "Commencement Date") and shall end on the fifth
(5th) anniversary of the last day of the month in which the Commencement Date
occurs, unless sooner terminated or later renewed and extended in accordance
with the provisions hereof.

                                   ARTICLE II

                  Definitions. For all purposes of this Lease, except as
otherwise expressly provided or unless the context otherwise requires, (a) the
terms defined in this Article have the meanings assigned to them in this Article
and include the plural as well as the singular, (b) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as are at the time applicable, (c) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (d) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:

                  Accounting Period: Accounting Period shall mean each four (4)
week accounting period of Manager corresponding to calendar months. If Manager
shall, for a bona fide business reason, change its Accounting Period during the
Term, appropriate adjustments, if any, shall be made with respect to the timing
of certain accounting and reporting requirements of this Lease; provided,
however, that, in no event shall any such change or adjustment alter the amount
or frequency of payment of Base Rent within any Fiscal Year, or alter the
frequency of payment of Percentage Rent to less than four (4) times during any
Fiscal Year, or otherwise increase or reduce any monetary obligation under this
Lease.



                                      -2-
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                  Accounting Period Statement: Accounting Period Statement shall
have the meaning given such term in Section 23.1(d).

                  Additional Charges:  As defined in Section 3.3.

                  Affiliate: As used in this Lease, the term "Affiliate" of a
person shall mean (a) any Person that, directly or indirectly, Controls or is
Controlled by or is under common Control with such Person, (b) any other person
that owns, beneficially, directly or indirectly, more than fifty percent (50%)
of the outstanding capital stock, shares or equity interests of 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
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such person). The term "Person" means and includes
individuals, corporations, limited liability companies, general and limited
partnerships, stock companies or associations, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, or
other legal entities and governments and agencies and political subdivisions
thereof, and the heirs, executors, administrators, legal representatives,
successors and assigns of such Person where the context so admits.

                  Annual Budgets: As used in this Lease, the term "Annual
Budgets" shall mean the Operating Budget and Capital Budget prepared, delivered
and approved in accordance with Section 3.6.

                  Annual Revenue Computation:  As defined in Exhibit B.

                  Award:  As defined in Section 15.1(c).

                  Base Rate: The rate of interest announced publicly by
Citibank, N.A., in New York, New York, from time to time, as such bank's base
rate. If no such rate is announced or becomes discontinued, then such other rate
as Lessor may reasonably designate.

                  Base Rent:  As defined in Article III.

                  Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which national banks in the City of New York, New
York, or in the municipality wherein the Leased Property is located are closed.

                  Capital Budget:  As defined in Section 3.5(b).

                  Capital Expenditures: Amounts advanced to pay the costs of
Capital Improvements.

                  Capital Improvements: Non-routine, major repairs, alterations,
improvements, renewals, replacements and additions to the Leased Property,
including, without limitation, to (A) the external walls and internal
load-bearing walls (other than windows and plate glass) of the Hotel; (B) the
roof of the Hotel; (C) private roadways, parking areas, sidewalks and curbs
appurtenant thereto (other than cleaning, patching and striping); (D)
mechanical, electrical, heating, ventilating, air conditioning, plumbing systems
and vertical transportation that service common areas, entire wings of the Hotel
or the entire Hotel, including conduit and ductwork connected thereto.




                                      -3-
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                  CERCLA: The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.

                  Code: The Internal Revenue Code of 1986, as amended.

                  Commencement Date: As defined in Section 1.2 of the Lease.

                  Condemnation, Condemnor: As defined in Section 15.1.

                  Consumer Price Index: The "Consumer Price Index" published by
the Bureau of Labor Statistics of the United States Department of Labor, U.S.
City Average, All Items for Urban Wage Earners and Clerical Workers (1982-1984 =
100) or, in the event publication thereof ceases, by reference to whatever index
then published by the United States Department of Labor at that time is most
nearly comparable as a measure of general changes in price levels for urban
areas, as reasonably determined by Lessor and Lessee.

                  Control: (Including the correlative meanings of the terms
"controlled by", "controlling" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, through the ownership of voting securities, partnership interests or
other equity interests.

                  Date of Taking: As defined in Section 15.1(b).

                  Eligible Independent Contractor: A management company that
meets the following requirements:

                  (a)      The management company does not own, directly or
                           indirectly, more than 35% of the outstanding stock of
                           SHC.

                  (b)      If the management company is a corporation, no more
                           than 35% of the total combined voting power of its
                           outstanding stock (or 35% of the total shares of all
                           classes of its outstanding stock) or, if it is not a
                           corporation, no more than 35% of the ownership
                           interest in its assets or profits is owned, directly
                           or indirectly, by one or more Persons owning 35% or
                           more of the outstanding stock of SHC.

                  (c)      Neither SHC, Lessor, Lessee, nor any Affiliate
                           thereof derives any income from the management
                           company.



                                      -4-
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                  (d)      At the time that the management company enters into a
                           management agreement with Lessee to operate the
                           Leased Property, the management company (or any
                           "related person" within the meaning of Section 856(d)
                           (9)(F) of the Code) is actively engaged in the trade
                           or business of operating "qualified lodging
                           facilities" within the meaning of Section
                           856(d)(9)(D) of the Code for any Person who is not a
                           "related person" within the meaning of Section
                           856(d)(9)(F) of the Code with respect to SHC or
                           Lessee (an "Unrelated Person"). For purposes of
                           determining whether the requirement of this paragraph
                           (d) has been met, a management company shall be
                           treated as being actively engaged in such a trade or
                           business if the management company (i) derives at
                           least 10% of both its profits and revenue from
                           operating "qualified lodging facilities" within the
                           meaning of Section 856(d)(9)(D) of the Code for
                           Unrelated Persons or (ii) complies with any
                           regulations or other administrative guidance under
                           Section 856(d)(9) of the Code that provide a "safe
                           harbor" rule with respect to the amount of hotel
                           management business with Unrelated Persons that is
                           necessary to qualify as an "eligible independent
                           contractor" within the meaning of such Code section.

                  Environmental Authority: Any department, agency or other body
or component of any Government that exercises any form of jurisdiction or
authority under any Environmental Law.

                  Environmental Authorization: Any license, permit, order,
approval, consent, notice, registration, filing or other form of permission or
authorization required under any Environmental Law.

                  Environmental Laws: All applicable federal, state, local and
foreign laws and regulations relating to pollution of the environment (including
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, laws and regulations relating
to emissions, discharges, Releases or threatened Releases of Hazardous Materials
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
Environmental Laws include, but are not limited to, CERCLA, FIFRA, RCRA, SARA
and TSCA.

                  Environmental Liabilities: Any and all obligations to pay the
amount of any judgment or settlement, the cost of complying with any settlement,
judgment or order for injunctive or other equitable relief, the cost of
compliance or corrective action in response to any notice, demand or request
from an Environmental Authority, the amount of any civil penalty or criminal
fine, and any court costs and reasonable amounts for attorney's fees, fees for
witnesses and experts, and costs of investigation and preparation for the
defense of any claim or any Proceeding, regardless of whether such Proceeding is
threatened, pending or completed, that may be or have been asserted against or
imposed upon Lessor, Lessee, any Predecessor, the Leased Property or any
property used therein and arising out of:


                                      -5-
<PAGE>

                  (a)      Failure of Lessee, Lessor, any Predecessor or the
                           Leased Property to comply at any time with all
                           Environmental Laws; Presence of any Hazardous
                           Materials on, in, under, at or in any way affecting
                           the Leased Property;

                  (c)      A Release at any time of any Hazardous Materials on,
                           in, at, under or in any way affecting the Leased
                           Property;

                  (d)      Identification of Lessee, Lessor or any Predecessor
                           as a potentially responsible party under CERCLA or
                           under any Environmental Law similar to CERCLA;

                  (e)      Presence at any time of any above-ground and/or
                           underground storage tanks, as defined in RCRA or in
                           any applicable Environmental Law on, in, at or under
                           the Leased Property or any adjacent site or facility;
                           or

                  (f)      Any and all claims for injury or damage to persons or
                           property arising out of exposure to Hazardous
                           Materials originating or located at the Leased
                           Property, or resulting from operation thereof or any
                           adjoining property.

                  Event of Default:  As defined in Section 16.1.

                  Fair Market Rental: The fair market rental of the Leased
Property means the rental which a willing tenant not compelled to rent would pay
a willing landlord not compelled to lease for the use and occupancy of such
Leased Property, (a) assuming that Lessee is not in default hereunder and (b)
determined in accordance with the appraisal procedures set forth in Article
XXXII or in such other manner as shall be mutually acceptable to Lessor and
Lessee.

                  Fair Market Value: The fair market value of the Leased
Property means an amount equal to the price that a willing buyer not compelled
to buy would pay a willing seller not compelled to sell for such Leased
Property, (a) assuming the same is unencumbered by this Lease, (b) determined in
accordance with the appraisal procedures set forth in Article XXXII or in such
other manner as shall be mutually acceptable to Lessor and Lessee, (c) assuming
that such seller must pay customary closing costs and title premiums, and (d)
taking into account the positive or negative effect on the value of the Leased
Property attributable to the interest rate, amortization schedule, maturity
date, prepayment penalty and other terms and conditions of any encumbrance that
is assumed by the transferee. In addition, in determining the Fair Market Value
with respect to damaged or destroyed Leased Property such value shall be
determined as if such Leased Property has not been so damaged or destroyed.


                                      -6-
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                  FF&E Estimate: As defined in Section 9.2(c).

                  FF&E Reserve: As defined in Section 9.2(a).

                  FIFRA:  The Federal Insecticide, Fungicide, and Rodenticide
Act, as amended.

                  Fiscal Year: The 12-month period from January 1 to December
31.

                  Fixtures: As defined in Section 1.1(d).

                  Food and Beverages Revenues: Shall mean (a) gross revenue from
the sale of food and beverages that are prepared at the Hotel and sold or
delivered on or off the Hotel by or on behalf of Lessee (including, without
limitation, revenues from mini-bars), whether for cash or for credit, including
in respect of guest rooms, banquet rooms, meeting rooms and other similar rooms
and (b) gross revenue from the rental of banquet, meeting and other similar
rooms. Food and Beverages Revenues shall be determined in a manner consistent
with the Uniform System. Food and Beverages Revenues shall not include the
following:

         (a)      sales by Lessee's subtenants, licensees and concessionaires,
                  the rent, license fees or concession payments from which are
                  included in Gross Revenues, and any rent, license fees,
                  concession payments or other amounts paid to Lessee by any
                  such subtenants, licensees and concessionaires;

         (b)      vending machine sales;

         (c)      any gratuities or service charges added to a customer's bill
                  or statement in lieu of a gratuity that is paid directly to
                  Hotel employees, to the extent actually paid to such
                  employees;

         (d)      credits, rebates or refunds; or

         (e)      sales taxes or taxes of any other kind imposed on the sale of
                  food or beverages.

                  Furniture and Equipment: For purposes of this Lease, the terms
"furniture and equipment" shall mean collectively all furniture, furnishings,
wall coverings, fixtures and hotel equipment and systems located at, or used in
connection with, the Hotel, together with all replacements therefor and
additions thereto, including, without limitation, (i) all equipment and systems
required for the operation of kitchens and bars, if any, laundry and dry
cleaning facilities, (ii) office equipment, (iii) dining room wagons, materials
handling equipment, cleaning and engineering equipment, (iv) telephone and
computerized accounting systems, (v) vehicles and (vi) and any other items
included within "property and equipment" under the Uniform System.


                                      -7-
<PAGE>

                  Government: The United States of America, any state, district
or territory thereof, any foreign nation, any state, district, department,
territory or other political division thereof, or any political subdivision of
any of the foregoing.

                  Gross Operating Expenses: For purposes of this Lease, the term
"Gross Operating Expenses" shall mean all salaries and employee expense and
payroll taxes (including salaries, wages, bonuses and other compensation of all
employees at the Hotel, and benefits including life, medical and disability
insurance and retirement benefits), expenditures described in Section 9.1,
operational supplies, utilities, insurance to be provided by Lessee under the
terms of this Lease, governmental fees and assessments, food, beverages, laundry
service expense, the cost of Inventories and fixed asset supplies, license fees,
advertising, marketing, reservation systems and any and all other operating
expenses as are reasonably necessary for the proper and efficient operation of
the Hotel incurred by Lessee in accordance with the provisions hereof
(excluding, however, (i) federal, state and municipal excise, sales and use
taxes collected directly from patrons and guests or as a part of the sales price
of any goods, services or displays, such as gross receipts, admissions, cabaret
or similar or equivalent taxes paid over to federal, state or municipal
governments, (ii) expenditures by Lessor pursuant to Article XIII and (iii)
payments on any Mortgage or other mortgage or security instrument on the Leased
Property); all determined in accordance with generally accepted accounting
principles and the Uniform System. No part of Lessee's central office overhead
or general or administrative expense (as opposed to that of the Hotel) shall be
deemed to be a part of Gross Operating Expenses, as herein provided; provided
that accounting services provided to the Leased Property but performed at
Lessee's central office shall be included in Gross Operating Expenses.
Reasonable out-of-pocket expenses of Lessee incurred for the account of or in
connection with the hotel operations, including but not limited to postage,
telephone charges and reasonable travel expenses of employees, officers and
other representatives and consultants of Lessee and its Affiliates, shall be
deemed to be a part of Gross Operating Expenses and such persons shall be
afforded reasonable accommodations, food, beverages, laundry, valet and other
such services by and at the hotel without charge to such persons or Lessee.

                  Gross Operating Profit: For any Fiscal Year, the excess of
Gross Revenues for such Fiscal Year over Gross Operating Expenses for such
Fiscal Year.

                  Gross Revenues: All revenues, receipts, and income of any kind
derived directly or indirectly by Lessee from or in connection with the Hotel
(including rentals or other payments from tenants, lessees, licensees or
concessionaires but not including their gross receipts) whether on a cash basis
or credit, paid or collected, determined in accordance with generally accepted
accounting principles and the Uniform System, excluding, however: (i) funds
furnished by Lessor, (ii) federal, state and municipal excise, sales, and use
taxes collected directly from patrons and guests or as a part of the sales price
of any goods, services or displays, such as gross receipts, admissions, cabaret
or similar or equivalent taxes and paid over to federal, state or municipal
governments, (iii) gratuities, (iv) proceeds of insurance and Condemnation, (v)
proceeds from sales other than sales in the ordinary course of business, (vi)
all loan proceeds from financing or refinancings of the hotel or interests
therein or components thereof, (vii) judgments and awards, except any portion
thereof arising from normal business operations of the Hotel, (viii) items
constituting "allowances" under the Uniform System.


                                      -8-
<PAGE>

                  Hazardous Materials: All chemicals, pollutants, contaminants,
wastes and toxic substances, including without limitation:

                  (a)      Solid or hazardous waste, as defined in RCRA or in
                           any Environmental Law;

                  (b)      Hazardous substances, as defined in CERCLA or in any
                           Environmental Law;

                  (c)      Toxic substances, as defined in TSCA or in any
                           Environmental Law;

                  (d)      Insecticides, fungicides, or rodenticides, as defined
                           in FIFRA or in any Environmental Law; and

                  (e)      Gasoline or any other petroleum product or byproduct,
                           polychlorinated biphenyls, asbestos and urea
                           formaldehyde.

                  Hotel: The hotel and/or other facility offering lodging and
other services or amenities being operated or proposed to be operated on the
Leased Property.

                  Hotel Revenues: Room Revenues, Food and Beverage Revenues,
Telephone Revenues and Other Revenues, collectively.

                  Impositions: Collectively, all taxes (including, without
limitation, all taxes imposed under the laws of the State, as such laws may be
amended from time to time, and all ad valorem, sales and use, single business,
commercial residence or occupancy, gross receipts, transaction privilege, rent
or similar taxes as the same relate to or are imposed upon Lessor, Lessee or the
business conducted upon the Leased Property), assessments (including, without
limitation, all assessments for public improvements or benefit, whether or not
commenced or completed prior to the date hereof and whether or not to be
completed within the Term), water, sewer or other rents and charges, excises,
tax inspection, authorization and similar fees and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Property or
the business conducted thereon by Lessee (including all interest and penalties
thereon caused by any failure in payment by Lessee), which at any time prior to,
during or with respect to the Term hereof may be assessed or imposed on or with
respect to or be a lien upon (a) Lessor's interest in the Leased Property, (b)
the Leased Property, or any part thereof or any rent therefrom or any estate,
right, title or interest therein, or (c) any occupancy, operation, use or
possession of, or sales from, or activity conducted on or in connection with the
Leased Property, or the leasing or use of the Leased Property or any part
thereof by Lessee. Nothing contained in this definition of Impositions shall be
construed to require Lessee to pay (1) any tax based on net income, net worth or
capital (whether denominated as a franchise or capital stock or other tax)
imposed on Lessor or any other person, or (2) any net revenue tax of Lessor or
any other person, or (3) any tax imposed with respect to the sale, exchange or
other disposition by Lessor of any Leased Property or the proceeds thereof, or
(4) any single business, gross receipts (other than a tax on any rent received
by Lessor from Lessee), transaction, privilege or similar taxes as the same
relate to or are imposed upon Lessor, except to the extent that any tax,
assessment, tax levy or charge that Lessee is obligated to pay pursuant to the
first sentence of this definition and that is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (1) or (2) is levied, assessed or imposed expressly
in lieu thereof, or (5) any interest or penalties imposed on Lessor as a result
of the failure of Lessor to file any return or report timely and in the form
prescribed by law or to pay any tax or imposition, except to the extent such
failure is a result of a breach by Lessee of its obligations pursuant to Section
4.1, or (6) any Impositions imposed on Lessor that are a result of Lessor not
being considered a "United States person" as defined in Section 7701(a)(30) of
the Code, or (7) any Impositions that are enacted or adopted by their express
terms of this Lease or (8) any Impositions imposed as a result of a breach of
covenant or representation by Lessor in any agreement entered into by Lessor
governing Lessor's conduct or operation or as a result of the negligence or
willful misconduct of Lessor.


                                      -9-
<PAGE>

                  Indemnified Party: Either of a Lessee Indemnified Party or a
Lessor Indemnified Party.

                  Indemnifying Party: Any party obligated to indemnify an
Indemnified Party pursuant to Section 8.3 or Article XXI.

                  Insurance Requirements: All terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.

                  Inventory: All "Inventories of Merchandise" and "Inventories
of Supplies" as defined in the Uniform System, including, but not limited to,
linens and other non-depreciable personal property, and including any property
of the type described in Section 1221(1) of the Code.

                  Land:  As defined in Article I.

                  Lease:  This Lease, as it relates to the Leased Property.

                  Leased Improvements; Leased Property:  Each as defined in
Article I.

                  Legal Requirements: All federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting either the Leased Property or the
maintenance, construction, use or alteration thereof (whether by Lessee or
otherwise), whether now or hereafter enacted or in existence including, without
limitation, (a) all laws, rules or regulations pertaining to the environment,
occupational health and safety and public health, safety or welfare, and (b) any
laws, rules or regulations that may (1) require repairs, modifications or
alterations in or to the Leased Property or (2) in any way adversely affect the
use and enjoyment thereof; and all permits, licenses and authorizations and
regulations relating thereto and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to Lessee
(other than encumbrances created by Lessor without the consent of Lessee), at
any time in force affecting the Leased Property.


                                      -10-
<PAGE>

                  Lending Institution: Any insurance company, credit company,
federally insured commercial or savings bank, national banking association,
savings and loan association, employees welfare, pension or retirement fund or
system, corporate profit sharing or pension trust, college or university, or
real estate investment trust, including any corporation qualified to be treated
for federal tax purposes as a real estate investment trust, such trust having a
net worth of at least $10,000,000.

                  Lessee:  Lessee designated on this Lease and its
permitted successors and assigns.

                  Lessee Indemnified Party: Lessee, any Affiliate of Lessee, any
other Person against whom any claim for indemnification may be asserted
hereunder as a result of a direct or indirect ownership interest (including a
stockholder's interest) in Lessee, the officers, directors, stockholders,
employees, agents and representatives of Lessee and any corporate stockholder,
agent, or representative of Lessee, and the respective heirs, personal
representatives, successors and assigns of any such officer, director,
stockholder, employee, agent or representative.

                  Lessee's Personal Property:  As defined in Section 6.2.

                  Lessor:  Lessor designated on this Lease and its
respective successors and assigns.

                  Lessor Indemnified Party: Lessor, any Affiliate of Lessor, or
any other Person against whom any claim for indemnification may be asserted
hereunder as a result of a direct or indirect ownership interest (including a
stockholder's or partnership interest) in Lessor, the officers, directors,
stockholders, employees, agents and representatives of the general partner of
Lessor and any partner, agent, or representative of Lessor, and the respective
heirs, personal representatives, successors and assigns of any such officer,
director, partner, stockholder, employee, agent or representative.

                  Management Agreement:  As defined in Section 18.4.

                  Manager:  As defined in Section 18.4.

                  Mortgage:  As defined in Section 29.2.

                  Notice:  A notice given pursuant to Article XXXI.

                  Officer's Certificate: A certificate of Lessee reasonably
acceptable to Lessor, signed by the chief financial officer or other authorized
officer of the entity authorized so to sign on behalf of Lessee, or any other
person whose power and authority to act has been authorized by delegation in
writing by any such officer.


                                      -11-
<PAGE>

                  Operating Budget:  As defined in Section 3.5(a).

                  Other Revenues: All revenues, receipts and income of any kind
derived directly or indirectly from or in connection with the Hotel and included
in Gross Revenues, other than Room Revenues, Food Sales and Beverage Revenues,
and Telephone Revenues.

                  Overdue Rate: On any date, a rate equal to the Base Rate plus
5% per annum, but in no event greater than the maximum rate then permitted under
applicable law.

                  Payment Date:  Any due date for the payment of any
installment of Base Rent or Percentage Rent.

                  Percentage Rent:  As defined in Section 3.1(b).

                  Personal Property Taxes: All personal property taxes imposed
on the furniture, furnishings or other items of personal property located on,
and used in connection with, the operation of the Leased Improvements as a hotel
(other than Inventory and other personal property owned by Lessee), together
with all replacement, modifications, alterations and additions thereto.

                  Predecessor: Any Person whose liabilities arising under any
Environmental Law have or may have been retained or assumed by Lessee, either
contractually or by operation of law, relating to the Leased Property.

                  Primary Intended Use:  As defined in Section 7.2(b).

                  Proceeding: Any judicial action, suit or proceeding (whether
civil or criminal), any administrative proceeding (whether formal or informal),
any investigation by a governmental authority or entity (including a grand
jury), and any arbitration, mediation or other non-judicial process for dispute
resolution.

                  Qualified Manager: A Manager that is (or is controlled by,
controlling or under common control with) either (a) an entity then owned or
controlled by the executive management or shareholders of SHC, or (b) a
professional management company which at the time of its engagement as Manager
shall be the property manager for at least ten (10) hotel properties containing
at least one thousand three hundred (1,300) rooms exclusive of the Leased
Property.

                  Quarterly Revenues Computation:  As defined in Exhibit B.

                  RCRA:  The Resource Conservation and Recovery Act, as amended.

                  Real Estate Taxes: All real estate taxes, including general
and special assessments, if any, which are imposed upon the Land, and any
improvements thereon.



                                      -12-
<PAGE>

                  Release: A "Release" as defined in CERCLA or in any
Environmental Law, unless such Release has been properly authorized and
permitted in writing by all applicable Environmental Authorities or is allowed
by such Environmental Law without authorizations or permits.

                  Rent:  Collectively, the Base Rent, Percentage Rent, and
Additional Charges.

                  Revenues Computations:  Shall mean, collectively, the
Quarterly Revenues Computation, and the Annual Revenues Computation.

                  Room Revenues: Gross revenue from the rental of guest rooms,
whether to individuals, groups or transients, at the Hotel, determined in a
manner consistent with the Uniform System and excluding the following:

                  (a)      the amount of all credits, bad debt written off,
                           rebates or refunds to customers, guests or patrons;
                           and

                  (b)      all sales taxes or any other taxes imposed on the
                           rental of such guest rooms; and

                  (c)      any fees collected for amenities including, but not
                           limited to, telephone, laundry, movies or
                           concessions.

                  SARA:  The Superfund Amendments and Reauthorization Act of
1986, as amended.

                  SHC:  Strategic Hotel Capital, Inc., a Maryland corporation.

                  State:  The State or Commonwealth of the United States in
which the Leased Property is located.

                  Subsidiaries:  Entities in which Lessee owns, directly or
indirectly, more than 50% of the voting stock or Control, as applicable
(individually, a "Subsidiary").

                  Taking: A taking or voluntary conveyance during the Term
hereof of all or part of the Leased Property, or any interest therein, or right
accruing thereto or use thereof, as the result of, or in settlement of, any
Condemnation or other eminent domain proceeding affecting the Leased Property
whether or not the same shall have actually been commenced.

                  Telephone Revenues:  Gross revenue from the use of telephones
in the Hotel.

                  Term:  As defined in Section 1.4.

                  TSCA:  The Toxic Substances Control Act, as amended.

                  Unavoidable Delays: Delays due to strikes, lock-outs, labor
unrest, inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty or other
causes beyond the control of the party responsible for performing an obligation
hereunder, provided that lack of funds shall not be deemed a cause beyond the
control of either party hereto unless such lack of funds is caused by the
failure of the other party hereto to perform any obligations of such party under
this Lease or any guaranty of this Lease.



                                      -13-
<PAGE>

                  Uneconomic for its Primary Intended Use: A state or condition
of the Hotel such that, in the good faith judgment of Lessee, reasonably
exercised and evidenced by the resolution of the governing body of the entity
authorized to act on behalf of Lessee, the Hotel cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, among other relevant factors, the number of usable rooms and projected
revenues, such that Lessee intends to, and shall, complete the cessation of
operations from the Hotel.

                  Uniform System: Shall mean the "Uniform System of Accounts for
Hotels" (9th Revised Edition, 1996) as published by the American Hotel and Motel
Association, as it may be amended from time to time with such exceptions as may
be required by the provision of this Lease.

                  Unsuitable for its Primary Intended Use: A state or condition
of the Hotel such that, in the good faith judgment of Lessee, reasonably
exercised and evidenced by the resolution of the governing body of the entity
authorized to act on behalf of Lessee, due to casualty damage or loss through
Condemnation, the Hotel cannot function as an integrated hotel facility
consistent with standards applicable to a well maintained and operated hotel.

                  Working Capital: Shall mean funds that are used in the
day-to-day operation of the business of the Hotel, including, without
limitation, amounts sufficient for the maintenance of change and petty cash
funds, amounts deposited in operating bank accounts, receivables, amounts
deposited in payroll accounts, prepaid expenses and funds required to maintain
Inventories, less accounts payable and accrued current liabilities.

                                  ARTICLE III

                  3.1 Rent. Lessee will pay or cause Manager to pay, on behalf
of Lessee, to Lessor by wire transfer of immediately available federal funds or
by other means acceptable to Lessor in its sole discretion, in lawful money of
the United States of America which shall be legal tender for the payment of
public and private debts, without offset, abatement, demand or deduction (unless
otherwise expressly provided in this Lease) at Lessor's address set forth on the
signature page or at such other place or to such other Person, as Lessor from
time to time may designate in a Notice, all Base Rent, Percentage Rent and
Additional Charges, during the Term, as follows:

                  (a) Base Rent. Commencing on the Commencement Date, the annual
sum in the amount set forth on Exhibit B hereto (as adjusted under Section
3.1(d)) as the "Base Rent" for the Leased Property, payable in advance in equal,
consecutive monthly installments, on or before the tenth day of each calendar
month of the Term ("Base Rent"); provided, however, that the first and last
monthly payments of Base Rent shall be pro-rated as to any partial month
(subject to adjustment as provided in Sections 5.2, 14.5 and 15.3); and


                                      -14-
<PAGE>

                  (b) Percentage Rent. For each Fiscal Year during the Term
commencing with the Fiscal Year beginning January 1, 2004, Tenant shall pay
percentage rent ("Percentage Rent") quarterly, with respect to the four calendar
quarters of each Fiscal Year, in an amount calculated using the following
formula:

           The amount equal to the Quarterly Revenues Computation (as
                     defined on Exhibit B attached hereto)

                                      less

           an amount equal to the Base Rent paid year to date for the
                             applicable Fiscal Year

                                      less

          an amount equal to Percentage Rent paid year to date for the
                             applicable Fiscal Year

                                     equals

                  Percentage Rent for the applicable quarter.

                  (c) Officer's Certificates. Within 30 days after the last day
of each quarter of each Fiscal Year (or part thereof) in the Term, Lessee shall
deliver to Lessor an Officer's Certificate reasonably acceptable to Lessor,
together with the applicable quarterly Percentage Rent payment, setting forth
the calculation of Percentage Rent accrued and paid for such quarter including
the Quarterly Revenues Computation. Such quarterly payments shall be based on
the formulas set forth in Section 3.1(b). There shall be no reduction in the
Base Rent regardless of the result of the Quarterly Revenues Computation.

                  In addition, on or before March 31 of each year, commencing
with March 31, 2005, Lessee shall deliver to Lessor an Officer's Certificate
reasonably acceptable to Lessor setting forth the computation of the actual
Percentage Rent that accrued for each quarter of the Fiscal Year that ended on
the immediately preceding December 31. Additionally, if the annual Percentage
Rent due and payable for any Fiscal Year (as shown in the applicable Officer's
Certificate) exceeds the amount actually paid as Percentage Rent by Lessee for
such year, Lessee shall pay such excess to Lessor at the time such certificate
is delivered. If the Percentage Rent actually due and payable for such Fiscal
Year is shown by such certificate to be less than the amount actually paid as
Percentage Rent for the applicable Fiscal Year, Lessor shall reimburse such
amount to Lessee, subject to Lessor's right to confirm the annual Percentage
Rent in Section 3.2 hereof.

                  Any difference between the annual Percentage Rent due and
payable for any Fiscal Year (as shown in the applicable Officer's Certificate)
and the total amount of quarterly payments for such Fiscal Year actually paid by
Lessee as Percentage Rent, whether in favor of Lessor or Lessee, shall bear
interest at the Overdue Rate, which interest shall accrue from the due date of
the last quarterly payment for the Fiscal Year until the amount of such
difference shall be paid or otherwise discharged. Any such interest payable to
Lessor shall be deemed to be and shall be payable as Additional Charges.


                                      -15-
<PAGE>

                  The obligation to pay Percentage Rent due through the date of
termination of this Lease shall survive the expiration or earlier termination of
the Term, and a final reconciliation, taking into account, among other relevant
adjustments, any adjustments which are accrued after such expiration or
termination date but which related to Percentage Rent accrued prior to such
termination date, and Lessee's good faith best estimate of the amount of any
unresolved contractual allowances, shall be made not later than two (2) years
after such expiration or termination date, but Lessee shall advise Lessor within
sixty (60) days after such expiration or termination date of Lessee's best
estimate at that time of the approximate amount of such adjustments, which
estimate shall not be binding on Lessee or have any legal effect whatsoever.

                  (d) CPI Adjustments. On January 1st of each Fiscal Year during
the Term (each, a "CPI Adjustment Date"), the Base Rent then in effect, and the
threshold dollar amounts of Room Revenues, Food and Beverage Revenues, Telephone
Revenues and Other Revenues then included in the Revenues Computations set forth
in Section 3.1(b), shall be adjusted as follows:

(1)      The average Consumer Price Index for the twelve months ended on
         September 30 of the most recently completed Fiscal Year shall be
         divided by the average Consumer Price Index for the twelve months ended
         on September 30 of the prior Fiscal Year;

(2)      The new Base Rent for the then current Fiscal Year shall be equal to
         the product of the Base Rent in effect in the most recently ended
         Fiscal Year and the quotient obtained under subparagraph (1) above;

(3)      The new threshold dollar amounts in the applicable Revenues
         Computations described in Section 3.1(b) above for the then current
         Fiscal Year shall be (i) in the case of Room Revenues, the product of
         the threshold dollar amounts of Room Revenues in effect in the most
         recently ended Fiscal Year and the quotient obtained in subparagraph
         (1) above, (ii) in the case of Food and Beverage Revenues, the product
         of the threshold dollar amounts of Food and Beverage Revenues in effect
         in the most recently ended Fiscal Year and the quotient obtained in
         subparagraph (1) above, in the case of Telephone Revenues, the product
         of the threshold dollar amounts of Telephone Revenues in effect in the
         most recently ended Fiscal Year and the quotient obtained in
         subparagraph (1) above, and in the case of Other Revenues, the product
         of the threshold dollar amounts of Other Revenues in effect in the most
         recently ended Fiscal Year and the quotient obtained in subparagraph
         (1) above.

                  By way of example, on the first CPI Adjustment Date, the
amount of Base Rent and the threshold dollar amounts of Hotel Revenues in the
Revenues Computations for the Fiscal Year commencing January 1, 2005 shall be
adjusted to reflect any change in the average Consumer Price Index for the
twelve months ended September 30, 2004 as compared to the twelve months ended
September 30, 2003.


                                      -16-
<PAGE>

                  Lessor shall calculate the annual Consumer Price Index
adjustments as soon as reasonably possible after the Consumer Price Index
becomes available and shall notify Lessee in writing of the amount of the annual
adjustment, together with a copy of the computation showing the adjustment
amount.

                  Adjustments calculated as set forth above in the Base Rent and
threshold dollar amounts of Hotel Revenues shall be effective on each CPI
Adjustment Date. If Rent is paid in any Fiscal Year prior to determination of
the amount of any adjustment to Base Rent or the threshold dollar amounts of
Hotel Revenues applicable for such Fiscal Year, payment adjustments for any
shortfall in or overpayment of Rent paid shall be made with the first Base Rent
payment due after the amount of the adjustments is determined.

(4)      If (i) a significant change is made in the number or nature (or both)
         of items used in determining the Consumer Price Index, or (ii) the
         Consumer Price Index shall be discontinued for any reason, the Bureau
         of Labor Statistics shall be requested to furnish a new index
         comparable to the Consumer Price Index, together with information which
         will make possible a conversion to the new index in computing the
         adjusted Base Rent and threshold dollar amounts of Hotel Revenues
         hereunder. If for any reason the Bureau of Labor Statistics does not
         furnish such an index and such information, the parties will instead
         mutually select, accept and use such other index or comparable
         statistics on the cost of living in Washington, D.C. that is computed
         and published by an agency of the United States or a responsible
         financial periodical of recognized authority.

                  3.2 Confirmation of Percentage Rent. Lessee shall utilize, or
cause to be utilized, an accounting system for the Leased Property in accordance
with its usual and customary practices, and in accordance with generally
accepted accounting principles and the Uniform System, that will accurately
record all data necessary to compute Percentage Rent, and Lessee shall retain,
for at least five (5) years after the expiration of each Fiscal Year (and in any
event until the reconciliation described in Section 3.1(d) for such Fiscal Year
has been made), reasonably adequate records conforming to such accounting system
showing all data necessary to compute Percentage Rent for the applicable Fiscal
Years. Lessor, at its expense (except as provided herein below), shall have the
right from time to time by its accountants or representatives to audit the
information that formed the basis for the data set forth in any Officer's
Certificate provided under Section 3.1(c) and, in connection with such audits,
to examine all Lessee's records (including supporting data, sales and excise tax
returns and franchise reports) reasonably required to verify Percentage Rent,
subject to any prohibitions or limitations on disclosure of any such data under
Legal Requirements. If any such audit discloses a deficiency in the payment of
Percentage Rent, and either Lessee agrees with the result of such audit or the
matter is otherwise determined or compromised, Lessee shall forthwith pay to
Lessor the amount of the deficiency, as finally agreed or determined, together
with interest at the Overdue Rate from the date when said payment should have
been made to the date of payment thereof; provided, however, that as to any
audit that is commenced more than two (2) years after the date Percentage Rent
for any Fiscal Year is reported by Lessee to Lessor, the deficiency, if any,
with respect to such Percentage Rent shall bear interest at the Overdue Rate
only from the date such determination of deficiency is made unless such
deficiency is the result of gross negligence or willful misconduct on the part
of Lessee, in which case interest at the Overdue Rate will accrue from the date
such payment should have been made to the date of payment thereof. If any such
audit discloses that the Percentage Rent actually due from Lessee for any Fiscal
Year exceeds those reported by Lessee by more than 3%, Lessee shall pay the cost
of such audit and examination. Any proprietary information obtained by Lessor
pursuant to the provisions of this Section shall be treated as confidential,
except that such information may be used, subject to appropriate confidentiality
safeguards, in any litigation between the parties and except further that Lessor
may disclose such information to prospective lenders, investors and underwriters
and to any other persons to whom disclosure is necessary to comply with
applicable laws, regulations and government requirements. The obligations of
Lessee contained in this Section shall survive the expiration or earlier
termination of this Lease. Any dispute as to the existence or amount of any
deficiency in the payments of Percentage Rent as disclosed by Lessor's audit
shall, if not otherwise settled by the parties, be submitted to arbitration
using the procedures set forth in Article XXXVII hereof.

                                      -17-
<PAGE>

                  3.3 Additional Charges. In addition to the Base Rent and
Percentage Rent, (a) Lessee also will pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions (other than
Impositions which are Lessor's obligations hereunder), including payments made
by Lessee out of the FF&E Reserve during the Term and funds in the FF&E Reserve
and all property purchased with funds from the FF&E Reserve during the Term that
are paid over to Lessor upon expiration of the Term, relating to the Leased
Property and (b) in the event of any failure on the part of Lessee to pay any of
those items referred to in clause (a) of this Section 3.3, Lessee also will
promptly pay and discharge every fine, penalty, interest and cost that may be
added for non-payment or late payment of such items (the items referred to in
clauses (a) and (b) of this Section 3.3 being additional rent hereunder and
being referred to herein collectively as the "Additional Charges"), and Lessor
shall have all legal, equitable and contractual rights, powers and remedies
provided either in this Lease or by statute or otherwise in the case of
non-payment of the Additional Charges as in the case of non-payment of the Base
Rent including, but not limited to, the right to pay such Additional Charges on
behalf of Lessee and to require reimbursement thereof by Lessee, together with
interest thereon at the Overdue Rate. If any installment of Base Rent,
Percentage Rent or Additional Charges (but only as to those Additional Charges
that are payable directly to Lessor) shall not be paid on its due date, Lessee
will pay Lessor on demand, as Additional Charges, a late charge (to the extent
permitted by law) computed at the Overdue Rate on the amount of such
installment, from the due date of such installment to the date of payment
thereof. To the extent that Lessee pays any Additional Charges to Lessor
pursuant to any requirement of this Lease, Lessee shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due and Lessor shall pay same from monies received from Lessee.

                  3.4 Rent Payable Without Deduction. The Rent shall be paid to
Lessor so that this Lease shall yield to Lessor the full amount of the
installments of Base Rent, Percentage Rent and Additional Charges throughout the
Term, all as more fully set forth in Article V, but subject to any other
provisions of this Lease that expressly provide for adjustment or abatement of
Rent or other charges or expressly provide that certain expenses or maintenance
shall be paid or performed by Lessor.



                                      -18-
<PAGE>

                  3.5 Budgets. Not later than sixty (60) days prior to the
commencement of each Fiscal Year, Lessee shall submit the following budgets to
Lessor:

                  (a) An operating budget ("Operating Budget") shall be prepared
in accordance with this Section 3.5(a). The Operating Budget shall be prepared
in good faith and otherwise in accordance with the Uniform System to the extent
applicable and shall show by month and quarter and for the full Fiscal Year in
the degree of detail specified by the Uniform System, the following:

                  (1)      Lessee's reasonable estimate of Gross Revenues
                           (including room rates and Hotel Revenues), Gross
                           Operating Expenses, and Gross Operating Profits for
                           the forthcoming Fiscal Year itemized on schedules on
                           a quarterly basis as reasonably approved by Lessor
                           and Lessee, as same may be revised or replaced from
                           time to time by Lessee and reasonably approved by
                           Lessor, together with the assumptions, in narrative
                           form, forming the basis of such schedules.

                  (2)      An estimate of the amounts to be dedicated to
                           routine, non-capital repair and maintenance.

                  (3)      A cash flow projection.

                  (4)      Lessee's reasonable estimate of Percentage Rent by
                           quarter for the Fiscal Year.

                  (5)      A narrative description of the program for
                           advertising and marketing the Hotel for the
                           forthcoming Fiscal Year containing a detailed budget
                           itemization of the proposed advertising expenditures
                           by category and the assumptions, in narrative form,
                           forming the basis of such budget itemizations.

                  (b) A capital budget ("Capital Budget") containing a
description in reasonable detail of the proposed Capital Improvements and an
estimate of all amounts Lessor will be requested to provide for Capital
Improvements to the Hotel or any of its components for the Fiscal Year. The
Capital Budget shall be prepared in accordance with the Uniform System to the
extent applicable.

                  3.6 Approval of Capital Budget. Within thirty (30) days
following submission of the Capital Budget to Lessor, Lessor shall give Lessee
written notice either (a) that Lessor approves the Capital Budget or (b)
indicating with reasonable specificity the respects in which Lessor objects to
the Capital Budget. In the latter event, Lessor and Lessee shall act promptly,
reasonably and in good faith to seek to resolve Lessor's objections. In the
event that Lessor and Lessee fail to reach agreement with respect to the Capital
Budget within thirty (30) days after receipt of Lessor's written notice, Lessee
and Lessor shall refer any disputed Capital Budget matter to arbitration using
procedures set forth in Article XXXVII hereof and each party shall endeavor to
cause such arbitration to be completed as quickly as possible, but in any event
not later than six (6) months following referral to arbitration. In the event
Lessor fails to deliver the notice set forth in this section within the required
time period, the Capital Budget shall be deemed approved. Lessor shall be
obligated to make all Capital Expenditures which are pursuant to a Capital
Budget which has been approved or deemed approved in accordance with the
procedures set forth above.

                                      -19-
<PAGE>

                  3.7 Capital Projects. (a) The selection of all design
professionals and contractors for capital projects shall be made by Lessor,
after consultation with Lessee. (b) Lessor may require that all contracts in
connection with capital projects be subject to competitive bidding procedures
reasonably acceptable to Lessor. Lessor shall also have the right to review and
approve all contract bids, whether competitively bid or not. Lessor may also
retain, at its sole cost and expense, an inspecting architect or engineer to
monitor costs, time, quality and performance for all capital projects.

                  3.8 Books and Records. Lessee 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 the Uniform System and
generally accepted accounting principles and the obligations of Lessee under
this Lease. The books of account and all other records relating to or reflecting
the operation of the Hotel shall be kept either at the Hotel or at Lessee's
offices in Chicago, Illinois and shall be available to Lessor and its
representatives and its auditors or accountants, at all reasonable times for
examination, audit, inspection, and transcription. All of 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 Lessor
and shall not be removed from the Hotel or Lessee's offices without Lessor's
approval.

                                   ARTICLE IV

                  4.1 Payment of Impositions. Subject to Article XII relating to
permitted contests, Lessee will pay, or cause to be paid, all Impositions (other
than Real Estate Taxes and Personal Property Taxes, which shall be paid by
Lessor) before any fine, penalty, interest or cost may be added for non-payment,
such payments to be made directly to the taxing or other authorities where
feasible, and will promptly furnish to Lessor copies of official receipts or
other satisfactory proof evidencing such payments. Lessee's obligation to pay
such Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Lessee may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Imposition) in installments and, in such event, shall pay
such installments during the Term hereof (subject to Lessee's right of contest
pursuant to the provisions of Article XII) as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto. Lessor, at its expense, shall, to the extent required or permitted by
applicable law, prepare and file all tax returns in respect of Lessor's net
income, gross receipts, sales and use, single business, transaction privilege,
rent, ad valorem, franchise taxes, Real Estate Taxes, Personal Property Taxes
and taxes on its capital stock, and Lessee, at its expense, shall, to the extent
required or permitted by applicable laws and regulations, prepare and file all
tax returns and reports in respect of any Imposition as may be required by
governmental authorities. If any refund shall be due from any taxing authority
in respect of any Imposition paid by Lessee, the same shall be paid over to or
retained by Lessee if no Event of Default shall have occurred hereunder and be
continuing. If an Event of Default shall have occurred and be continuing, any
such refund shall be paid over to or retained by Lessor. Any such funds retained
by Lessor due to an Event of Default shall be applied as provided in Article
XVI. Lessor and Lessee shall, upon request of the other, provide such data as is
maintained by the party to whom the request is made with respect to the Leased
Property as may be necessary to prepare any required returns and reports. Lessee
shall file all Personal Property Tax returns in such jurisdictions where it is
legally required to so file. Lessor, to the extent it possesses the same, and
Lessee, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing returns for any
property classified as personal property. Where Lessor is legally required to
file Personal Property Tax returns, Lessee shall provide Lessor with copies of
assessment notices in sufficient time for Lessor to file a protest. Lessor may,
upon notice to Lessee, at Lessor's option and at Lessor's sole expense, protest,
appeal, or institute such other proceedings (in its or Lessee's name) as Lessor
may deem appropriate to effect a reduction of real estate or personal property
assessments for those Impositions to be paid by Lessor, and Lessee, at Lessor's
expense as aforesaid, shall fully cooperate with Lessor in such protest, appeal,
or other action. Lessor hereby agrees to indemnify, defend, and hold harmless
Lessee from and against any claims, obligations, and liabilities against or
incurred by Lessee in connection with such cooperation. Billings for
reimbursement of Personal Property Taxes by Lessee to Lessor shall be
accompanied by copies of a bill therefor and payment thereof which identify the
personal property with respect to which such payments are made. Lessor, however,
reserves the right to effect any such protest, appeal or other action and, upon
notice to Lessee, shall control any such activity, which shall then go forward
at Lessor's sole expense. Upon such notice, Lessee, at Lessor's expense, shall
cooperate fully with such activities.


                                      -20-
<PAGE>

                  4.2 Notice of Impositions. To the extent Lessor is notified of
any Impositions, Lessor shall give prompt Notice to Lessee of such Impositions
payable by Lessee hereunder, provided that Lessor's failure to give any such
Notice shall in no way diminish Lessee's obligations hereunder to pay such
Impositions, but such failure shall obviate any default hereunder for a
reasonable time after Lessee receives Notice of any Imposition which it is
obligated to pay during the first taxing period applicable thereto and Lessor
shall be responsible for any interest or penalties incurred as a result of
Lessor's failure to promptly forward the same.

                  4.3 Adjustment of Impositions. Impositions imposed in respect
of the tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's obligation to pay its prorated
share thereof after termination shall survive such termination.

                  4.4 Utility Charges. Lessee will be solely responsible for
obtaining and maintaining utility services to the Leased Property and will pay
or cause to be paid all charges for electricity, gas, oil, water, sewer and
other utilities used in the Leased Property during the Term.

                  4.5 Insurance Premiums. Lessor and Lessee, as the case may be,
will pay or cause to be paid all premiums for the insurance coverages required
to be maintained by them under Article XIII.

                  4.6 Other Charges. Lessee shall pay or cause to be paid all
other amounts, liabilities and obligations arising in connection with the Leased
Property except those obligations expressly assumed by Lessor pursuant to the
provisions of this Lease or expressly stated not to be an obligation of Lessee
pursuant to this Lease.

                  4.7 Reimbursement for Additional Charges. If Lessee pays or
causes to be paid property taxes or similar or other Additional Charges
attributable to periods after the end of the Term, whether upon expiration or
sooner termination of this Lease, Lessee may, within a reasonable time after the
end of the Term, provide Notice to Lessor of its estimate of such amounts.
Lessor shall promptly reimburse Lessee for all payments of such taxes and other
similar Additional Charges that are attributable to any period after the Term of
this Lease.

                                    ARTICLE V

                  5.1 No Termination, Abatement, Etc. Except as otherwise
specifically provided in this Lease, and except for loss of the Management
Agreement solely by reason of any action or inaction by Lessor, Lessee, to the
extent permitted by law, shall remain bound by this Lease in accordance with its
terms and shall neither take any action without the written consent of Lessor to
modify, surrender or terminate the same, nor seek nor be entitled to any
abatement, deduction, deferment or reduction of the Rent, or setoff against the
Rent, nor shall the obligations of Lessee be otherwise affected by reason of (a)
any damage to, or destruction of, any Leased Property or any portion thereof
from whatever cause or any Taking of the Leased Property or any portion thereof,
(b) the lawful or unlawful prohibition of, or restriction upon, Lessee's use of
the Leased Property, or any portion thereof, or the interference with such use
by any Person, or by reason of eviction by paramount title, (c) any claim which
Lessee has or might have against Lessor by reason of any default or breach of
any warranty by Lessor under this Lease or any other agreement between Lessor
and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Lessor or any assignee or transferee
of Lessor, or (e) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Lessee from any such obligations as a
matter of law; provided, however, that the foregoing shall not apply or be
construed to restrict any other rights Lessee may have as a result of Lessor's
gross negligence or willful misconduct. Lessee hereby specifically waives all
rights, arising from any occurrence whatsoever, which may now be conferred upon
it by law to (1) modify, surrender or terminate this Lease or quit or surrender
the Leased Property or any portion thereof, or (2) entitle Lessee to any
abatement, reduction, suspension or deferment of the Rent or other sums payable
by Lessee hereunder, except as otherwise specifically provided in this Lease.
The obligations of Lessee hereunder shall be separate and independent covenants
and agreements and the Rent and all other sums payable by Lessee hereunder shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease or by
termination of this Lease other than by reason of an Event of Default.


                                      -21-
<PAGE>

                  5.2 Abatement Procedures. In the event of a partial Taking as
described in Section 15.5, the Lease shall not terminate, but the Base Rent
shall be abated in the manner and to the extent that is fair, just and equitable
to both Lessee and Lessor, taking into consideration, among other relevant
factors, the number of usable rooms, the amount of square footage, or the
revenues affected by such partial Taking. If Lessor and Lessee are unable to
agree upon the amount of such abatement within 30 days after such partial
Taking, the matter may be submitted by either party to arbitration in accordance
with the provisions of Article XXXVII hereof for resolution.

                                   ARTICLE VI

                  6.1 Ownership of the Leased Property. Lessee acknowledges that
the Leased Property is the property of Lessor and that Lessee has only the right
to the possession and use of the Leased Property upon the terms and conditions
of this Lease.

                  6.2 Lessee's Personal Property. Lessee will acquire and
maintain through the Term such Inventory as is required to operate the Leased
Property in the manner contemplated by this Lease. Lessee may (and shall as
provided hereinbelow), at its expense, install, affix or assemble or place on
any parcels of the Land or in any of the Leased Improvements, any items of
personal property (including Inventory) owned by Lessee. Lessee, at the
commencement of the Term, and from time to time thereafter, shall provide Lessor
with an accurate list of all such items of Lessee's personal property
(collectively, the "Lessee's Personal Property"). Lessee may, subject to the
first sentence of this Section 6.2 and the conditions set forth below, remove
any of Lessee's Personal Property set forth on such list at any time during the
Term or upon the expiration or any prior termination of the Term. All of
Lessee's Personal Property, other than Inventory, not removed by Lessee within
ten (10) days following the expiration or earlier termination of the Term shall
be considered abandoned by Lessee and may be appropriated, sold, destroyed, or
otherwise disposed of by Lessor without first giving Notice thereof to Lessee,
without any payment to Lessee and without any obligation to account therefor.
Lessee will, at its expense, restore the Leased Property to the condition
required by Section 9.1(d), including repair of all damage to the Leased
Property caused by the removal of Lessee's Personal Property, whether effected
by Lessee or Lessor. Upon the expiration or earlier termination of the Term,
Lessor or its designee shall have the option to purchase all Inventory on hand
at the Leased Property at the time of such expiration or termination for a sale
price equal to the fair market value of such Inventory. Lessee may make such
financing arrangements, title retention agreements, leases or other agreements
with respect to Lessee's Personal Property as it sees fit provided that Lessee
first advises Lessor of any such arrangement and such arrangement expressly
provides that in the event of Lessee's default thereunder, Lessor (or its
designee) may assume Lessee's obligations and rights under such arrangement.


                                      -22-
<PAGE>

                  6.3 Lessor's Representations. Lessor represents and warrants
that (a) Lessor has full authority to grant to Lessee the leasehold interest
described in this Lease, and (b) that this Lease has been duly authorized by all
necessary action on behalf of Lessor.

                  6.4 Lessee's Representations. Lessee represents and warrants
that (a) Lessee is a validly existing limited liability company organized under
the laws of the State of Delaware and is qualified to do business in all states
in which it is required to so qualify due to the nature of its business
activities, (b) Lessee has the requisite power and authority to enter into this
Lease and (c) this Lease has been duly authorized by all necessary action on
behalf of Lessee.

                  6.5 Lessor's Lien. To the fullest extent permitted by
applicable law, Lessor is granted a first priority lien and security interest on
all Lessee's Personal Property now or hereinafter placed in or upon the Leased
Property, and such lien and security interest shall remain attached to such
Lessee's Personal Property until payment in full of all Rent and satisfaction of
all of Lessee's obligations hereunder; provided, however, Lessor shall
subordinate its lien and security interest to that of any non-Affiliate of
Lessee which finances such Lessee's Personal Property or any non-Affiliate
conditional seller of such Lessee's Personal Property, the terms and conditions
of such subordination to be satisfactory to Lessor in the exercise of reasonable
discretion. Lessee shall, upon the request of Lessor, file such financing
statements or execute such other documents or instruments reasonably requested
by Lessor to perfect the lien and security interests herein granted.

                                  ARTICLE VII

                  7.1 Condition of the Leased Property. Lessee acknowledges
receipt and delivery of possession of the Leased Property. Lessee has examined
and otherwise has knowledge of the condition of the Leased Property and has
found the same to be satisfactory for its purposes hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. LESSOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
LEASED PROPERTY, OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN
OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT
ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED
PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT AND IS NOT
RELYING ON ANY REPRESENTATION OR WARRANTY OF LESSOR OR LESSOR'S AGENTS OR
EMPLOYEES WITH RESPECT THERETO, EXCEPT AS EXPRESSLY SET FORTH HEREIN.




                                      -23-
<PAGE>

                  7.2 Use of the Leased Property.

                  (a) Lessee covenants that it will proceed with all due
diligence and will exercise commercially reasonable efforts to obtain and to
maintain all approvals needed to, or to cause Manager to, use and operate the
Leased Property and the Hotel under applicable local, state and federal law.
Lessor shall cooperate with Lessee in this regard, including executing all
applications and consents required to be signed by Lessor in order for Lessee to
obtain and maintain such approvals.

                  (b) Lessee shall, and shall cause Manager to, use or cause to
be used the Leased Property only as a hotel facility, and for such other uses as
may be necessary or incidental to such use or such other use as otherwise
approved by Lessor (the "Primary Intended Use"). Lessee shall not, and Lessee
shall ensure that Manager shall not, use the Leased Property or any portion
thereof for any other use without the prior written consent of Lessor, which
consent may be granted, denied or conditioned upon Lessor's sole discretion. No
use shall be made or permitted to be made of the Leased Property, and no acts
shall be done, which will cause the cancellation or increase the premium of any
insurance policy covering the Leased Property or any part thereof (unless
another adequate policy satisfactory to Lessor is available and Lessee pays any
premium increase), and Lessee shall not, and shall ensure that Manager shall
not, sell or permit to be kept, used or sold in or about the Leased Property any
article which may be prohibited by law or fire underwriter's regulations. Lessee
shall, at its sole cost, comply with all of the requirements pertaining to the
Leased Property of any insurance board, association, organization or company
necessary for the maintenance of insurance, as herein provided, covering the
Leased Property and Lessee's Personal Property. Further, Lessee shall not, and
Lessee shall ensure that Manager shall not, take or omit to take any action, the
taking or omission of which materially impairs the usefulness of the Leased
Property or any part thereof for its Primary Intended Use.

                  (c) Subject to the provisions of Articles XIV and XV, Lessee
covenants and agrees that during the Term it will, and shall cause Manager to,
(1) operate continuously the Leased Property as a hotel facility, (2) maintain
appropriate certifications and licenses for such use, and (3) will seek to
maximize the Gross Revenues generated therefrom consistent with sound business
practices.

                  (d) Lessee shall not, and Lessee shall ensure that Manager
shall not, (1) commit or suffer to be committed any waste on the Leased
Property, or in the Hotel, nor shall Lessee cause or permit any unlawful
nuisance thereon or therein, or (2) suffer or permit the Leased Property or any
portion thereof, or Lessee's Personal Property, to be used in such a manner as
(i) might reasonably tend to impair Lessor's (or Lessee's, as the case may be)
title thereto or to any portion thereof, or (ii) may reasonably make possible a
claim or claims of adverse usage or adverse possession by the public, as such,
or of implied dedication of the Leased Property or any portion thereof, except
as necessary in the ordinary and prudent operation of the Hotel on the Leased
Property.



                                      -24-
<PAGE>

                  (e) In the event that, in the reasonable determination of
Lessor and Lessee, it shall no longer be economically practical to operate the
Leased Property as a Hotel, Lessor may elect to terminate this Lease, by
providing to Lessee Notice thereof, which Notice shall set forth in reasonable
detail the reasons therefor.

                  7.3 Lessor to Grant Easements, Etc. Lessor will, from time to
time, so long as no Event of Default has occurred and is continuing, at the
request of Lessee and at Lessee's cost and expense (but subject to the approval
of Lessor, which approval shall not be unreasonably withheld or delayed), (a)
grant easements and other rights in the nature of easements with respect to the
Leased Property to third parties, (b) release existing easements or other rights
in the nature of easements which are for the benefit of the Leased Property, (c)
dedicate or transfer unimproved portions of the Leased Property for road,
highway or other public purposes, (d) execute petitions to have the Leased
Property annexed to any municipal corporation or utility district, (e) execute
amendments to any covenants and restrictions affecting the Leased Property and
(f) execute and deliver to any person any instrument appropriate to confirm or
effect such grants, releases, dedications, transfers, petitions and amendments
(to the extent of its interests in the Leased Property), but only upon delivery
to Lessor of an Officer's Certificate stating that such grant, release,
dedication, transfer, petition or amendment does not interfere with the proper
conduct of the business of Lessee on the Leased Property and does not materially
reduce the value of the Leased Property.

                                  ARTICLE VIII

                  8.1 Compliance with Legal and Insurance Requirements, Etc.
Subject to Section 8.3(b) below and Article XII relating to permitted contests,
Lessee, at its expense, shall, or shall cause Manager to (a) comply with all
applicable Legal Requirements and Insurance Requirements in respect of the use,
operation, maintenance, repair and restoration of the Leased Property, and (b)
procure, maintain and comply with all appropriate licenses and other
authorizations required for any use of the Leased Property and Lessee's Personal
Property, if any, then being made and which are material to the operation of the
Leased Property, and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof.

                  8.2 Legal Requirement Covenants. Subject to Section 8.3(b)
below, Lessee covenants and agrees that the Leased Property and Lessee's
Personal Property shall not be used for any unlawful purpose, and that Lessee
shall not, and Lessee shall ensure that Manager shall not, permit or suffer to
exist any unlawful use of the Leased Property by others. Lessee shall, or shall
cause Manager to, acquire and maintain all appropriate licenses, certifications,
permits and other authorizations and approvals needed to operate the Leased
Property in its customary manner for the Primary Intended Use, and any other
lawful use conducted on the Leased Property as may be permitted from time to
time hereunder. Lessee further covenants and agrees that Lessee's use and
Manager's use of the Leased Property and maintenance, alteration, and operation
of the same, and all parts thereof, shall at all times conform to all Legal
Requirements, unless the same are finally determined by a court of competent
jurisdiction to be unlawful (and Lessee shall cause all such sub-tenants,
invitees or others to so comply with all Legal Requirements). Lessee may,
however, upon prior Notice to Lessor, contest the legality or applicability of
any such Legal Requirement or any licensure or certification decision if Lessee
maintains such action in good faith, with due diligence, without prejudice to
Lessor's rights hereunder, and at Lessee's sole expense. If by the terms of any
such Legal Requirement compliance therewith pending the prosecution of any such
proceeding may legally be delayed without the incurrence of any lien, charge or
liability of any kind against the Hotel or Lessee's leasehold interest therein
and without subjecting Lessee or Lessor to any liability, civil or criminal, for
failure so to comply therewith, Lessee may delay compliance therewith until the
final determination of such proceeding. If any lien, charge or civil or criminal
liability would be incurred by reason of any such delay, Lessee, on the prior
written consent of Lessor, which consent shall not be unreasonably withheld, may
nonetheless contest as aforesaid and delay as aforesaid provided that such delay
would not subject Lessor to criminal liability and Lessee both (a) furnishes to
Lessor security reasonably satisfactory to Lessor against any loss or injury by
reason of such contest or delay and (b) prosecutes the contest with due
diligence and in good faith.


                                      -25-
<PAGE>

                  8.3 Environmental Covenants. Lessor and Lessee (in addition
to, and not in diminution of, Lessee's covenants and undertakings in Sections
8.1 and 8.2 hereof) covenant and agree as follows:

                  (a) At all times hereafter until the later of (i) such time as
all liabilities, duties or obligations of Lessee to Lessor under the Lease have
been satisfied in full and (ii) such time as Lessee completely vacates the
Leased Property and surrenders possession of the same to Lessor, Lessee shall
fully comply with all Environmental Laws applicable to the Leased Property and
the operations thereon. Lessee agrees to give Lessor prompt written notice of
(1) all Environmental Liabilities; (2) all pending, threatened or anticipated
Proceedings, and all notices, demands, requests or investigations, relating to
any Environmental Liability or relating to the issuance, revocation or change in
any Environmental Authorization required for operation of the Leased Property;
(3) all Releases at, on, in, under or in any way affecting the Leased Property,
or any Release known by Lessee at, on, in or under any property adjacent to the
Leased Property; and (4) all facts, events or conditions that could reasonably
lead to the occurrence of any of the above-referenced matters.

                  (b) Lessor hereby agrees to defend, indemnify and save
harmless any and all Lessee Indemnified Parties from and against any and all
Environmental Liabilities other than Environmental Liabilities which were caused
by the acts, or grossly negligent failures to act, of Lessee.

                  (c) Lessee hereby agrees to defend, indemnify and save
harmless any and all Lessor Indemnified Parties from and against any and all
Environmental Liabilities which were caused by the acts, or grossly negligent
failures to act, of Lessee.

                  (d) If any Proceeding is brought against any Indemnified Party
in respect of an Environmental Liability with respect to which such Indemnified
Party may claim indemnification under either Section 8.3(b) or (c), the
Indemnifying Party, upon request, shall at its sole expense resist and defend
such Proceedings, or cause the same to be resisted and defended by counsel
designated by the Indemnifying Party and approved by the Indemnified Party,
which approval shall not be unreasonably withheld; provided, however, that such
approval shall not be required in the case of defense by counsel designated by
any insurance company undertaking such defense pursuant to any applicable policy
of insurance. Each Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel will be at the sole expense of such
Indemnified Party unless such counsel has been approved by the Indemnifying
Party, which approval shall not be unreasonably withheld. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding made without its
consent, which shall not be unreasonably withheld, but if settled with the
consent of the Indemnifying Party, or if settled without its consent (if its
consent shall be unreasonably withheld), or if there be a final nonappealable
judgment for an adversary party in any such Proceeding, the Indemnifying Party
shall indemnify and hold harmless the Indemnified Parties from and against any
liabilities incurred by such Indemnified Parties by reason of such settlement or
judgment.

                  (e) At any time any Indemnified Party has reason to believe
circumstances exist which could reasonably result in an Environmental Liability,
upon reasonable prior written notice to Lessee stating such Indemnified Party's
basis for such belief, an Indemnified Party shall be given immediate access to
the Leased Property (including, but not limited to, the right to enter upon,
investigate, drill wells, take soil borings, excavate, monitor, test, cap and
use available land for the testing of remedial technologies), Lessee's
employees, and to all relevant documents and records regarding the matter as to
which a responsibility, liability or obligation is asserted or which is the
subject of any Proceeding; provided that such access may be conditioned or
restricted as may be reasonably necessary to ensure compliance with law and the
safety of personnel and facilities or to protect confidential or privileged
information. All Indemnified Parties requesting such immediate access and
cooperation shall endeavor to coordinate such efforts to result in as minimal
interruption of the operation of the Leased Property as practicable.


                                      -26-
<PAGE>

                  (f) The indemnification rights and obligations provided for in
this Article VIII shall be in addition to any indemnification rights and
obligations provided for elsewhere in this Lease.

                  (g) The indemnification rights and obligations provided for in
this Article VIII shall survive the termination of this Lease.

For purposes of this Section 8.3, all amounts for which any Indemnified Party
seeks indemnification shall be computed net of (i) any actual income tax benefit
resulting therefrom to such Indemnified Party, (ii) any insurance proceeds
received (net of tax effects) with respect thereto, and (iii) any amounts
recovered (net of tax effects) from any third parties based on claims the
Indemnified Party has against such third parties which reduce the damages that
would otherwise be sustained; provided that in all cases, the timing of the
receipt or realization of insurance proceeds or income tax benefits or
recoveries from third parties shall be taken into account in determining the
amount of reduction of damages. Each Indemnified Party agrees to use its
reasonable efforts to pursue, or assign to Lessee or Lessor, as the case may be,
any claims or rights it may have against any third party which would materially
reduce the amount of damages otherwise incurred by such Indemnified Party.



                                      -27-
<PAGE>

Notwithstanding anything to the contrary contained in this Lease, if Lessor
shall become entitled to the possession of the Leased Property by virtue of the
termination of the Lease or repossession of the Leased Property, then Lessor may
assign its indemnification rights under Section 8.3 of this Lease (but not any
other rights hereunder) to any Person to whom Lessor subsequently transfers the
Leased Property, subject to the following conditions and limitations, each of
which shall be deemed to be incorporated into the terms of such assignment,
whether or not specifically referred to therein:

(1)      The indemnification rights referred to in this section may be assigned
         only if a known Environmental Liability then exists or if a Proceeding
         is then pending or, to the knowledge of Lessee or Lessor, then
         threatened with respect to the Leased Property;

(2)      Such indemnification rights shall be limited to Environmental
         Liabilities relating to or specifically affecting the Leased Property;
         and

(3)      Any assignment of such indemnification rights shall be limited to the
         immediate transferee of Lessor and shall not extend to any such
         transferee's successors or assigns.

                                   ARTICLE IX

                  9.1 Maintenance and Repair.

                  (a) Unless caused by Lessee's negligence or willful misconduct
or that of its employees or agents, Lessee shall not be required to bear the
cost of any Capital Improvements. Lessor shall be responsible for all Capital
Expenditures, subject to Lessor's right to approve all Capital Expenditures, in
connection with Lessor's approval or deemed approval of the Capital Budget
pursuant to Section 3.6. Except as set forth in the preceding sentence, nothing
herein shall be construed to require Lessor to build or rebuild any improvement
on the Leased Property, or to fund any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, foreseen or unforeseen, or to make any
expenditure whatsoever with respect thereto, in connection with this Lease, or
to maintain the Leased Property in any way (other than Capital Expenditures
pursuant to an approved Capital Budget as contemplated by Section 3.6). Lessee
hereby waives, to the extent permitted by law, the right to make repairs at the
expense of Lessor pursuant to any law in effect at the time of the execution of
this Lease or hereafter enacted. Lessor shall have the right to give, record and
post, as appropriate, notices of nonresponsibility under any mechanic's lien
laws now or hereafter existing.

                  (b) Lessee will keep the Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto that are under Lessee's
control, including windows and plate glass, parking lots, mechanical, electrical
and plumbing systems and equipment (including conduit and ductwork), and
non-load bearing interior walls, in good order and repair, except for ordinary
wear and tear (whether or not the need for such repairs occurred as a result of
Lessee's use, any prior use, the elements or the age of the Leased Property, or
any portion thereof), and, except as otherwise provided in Articles XIV or XV,
with reasonable promptness, make all necessary and appropriate repairs,
replacements, and improvements thereto of every kind and nature, whether
interior or exterior, ordinary or extraordinary, foreseen or unforeseen, or
arising by reason of a condition existing prior to the commencement of the Term
of this Lease (concealed or otherwise), or required by any governmental agency
having jurisdiction over the Leased Property, except as to the structural
elements of the Leased Improvements. All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work. Lessee will
not take or omit to take any action, the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part
thereof for its Primary Intended Use. Notwithstanding any other provision of
this Lease, however, other than under Articles XIV and XV on the conditions set
forth therein, Lessee shall not be required to bear the costs of complying with
this section with respect to items classified as capital items under U.S.
generally accepted accounting principles.

                                      -28-
<PAGE>

                  (c) Nothing contained in this Lease and no action or inaction
by Lessor shall be construed as (i) constituting the request of Lessor,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property for the construction, alteration, addition,
repair or demolition of or to the Leased Property or any part thereof, or (ii)
giving Lessee any right, power or permission to contract for or permit the
performance of any labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any claim against Lessor
in respect thereof or to make any agreement that may create, or in any way be
the basis for any right, title, interest, lien, claim or other encumbrance upon
the estate of Lessor in the Leased Property, or any portion thereof.

                  (d) Lessee will, upon the expiration or prior termination of
the Term, vacate and surrender the Leased Property to Lessor in the condition in
which the Leased Property was originally received from Lessor, except as
repaired, rebuilt, restored, altered or added to as permitted or required by the
provisions of this Lease and except for ordinary wear and tear (subject to the
obligation of Lessee to maintain the Leased Property in accordance with Section
9.1(b) above during the entire Term of the Lease, or damage by casualty or
Condemnation (subject to the obligations of Lessee to restore or repair as set
forth herein).

                  9.2 FF&E Reserve.

                  (a) Upon execution of this Lease, Lessee has established a
reserve account (the "FF&E Reserve") in a bank designated by Lessee and approved
by Lessor. The purpose of the FF&E Reserve is to cover the cost of: (i)
replacements and renewals of the Hotel's Furniture and Equipment and Fixtures;
(ii) certain routine repairs and maintenance to any Hotel building which are
normally capitalized under GAAP such as exterior and interior repainting,
resurface building walls, floors, roofs and parking areas, and replacing folding
walls and the like; and (iii) major repairs, alterations, improvements to the
Hotel's buildings, structure, roof, or exterior facade, or to its mechanical,
electrical, heating, ventilating, air conditioning, plumbing or vertical
transportation systems. Lessee agrees that it will, from time to time, execute
such reasonable documentation as may be requested by Lessor and any Lessor
mortgagee to assist Lessor and such Lessor mortgagee in establishing or
perfecting Lessor mortgagee's security interest in Lessor's residual interest in
the funds which are in the FF&E Reserve; provided, however, that no such
documentation shall contain any amendment to or modification of any of the
provisions of this Lease. It is acknowledged and agreed, that during the Term,
funds in the FF&E Reserve are the property of Lessee. Payments made by Lessee
out of the FF&E Reserve during the Term will be Additional Charges.

                                      -29-
<PAGE>

                  (b) Throughout the Term, Lessee shall transfer (within ten
(10) Business Days after the end of each calendar month during the Term) into
the FF&E Reserve an amount equal to __% of Room Revenues for such calendar
month. Together with the documentation provided to Lessor pursuant to Section
3.1, Lessee shall also deliver to Lessor an Officer's Certificate setting forth
the total amount of deposits made to and expenditures from the FF&E Reserve for
the preceding Fiscal Year, together with a reconciliation of such expenditures
with the FF&E Estimate (as defined below).

                  (c) With respect to each Fiscal Year during the Term, Lessee
shall prepare an estimate (the "FF&E Estimate") of FF&E Reserve expenditures
necessary during the ensuing Fiscal Year, and shall submit such FF&E Estimate to
Lessor, on or before December 1st of the preceding Fiscal Year, for its review
and approval, which approval shall not be unreasonably withheld. In the event
that Lessor shall fail to respond within thirty (30) days after receipt of the
FF&E Estimate, such FF&E Estimate shall be deemed approved by Lessor. All
expenditures from the FF&E Reserve shall be (as to both the amount of such
expenditure and the timing thereof) both reasonable and necessary, given the
objective that the Hotel be maintained and operated to a standard comparable to
competitive hotels. All amounts from the FF&E Reserve shall be paid to Persons
who are not Affiliates of Lessee without markup or allocated internal costs by
Lessee or its Affiliates.

                  (d) Lessee shall, consistent with the FF&E Estimate approved
by Lessor, from time to time make expenditures from the FF&E Reserve as it deems
necessary provided that Lessee shall not materially deviate from the FF&E
Estimate approved by Lessor without the prior approval of Lessor, which approval
shall not be unreasonably withheld, except in the case of emergencies where
immediate action is necessary to prevent imminent harm to person or property.

                  (e) Upon the expiration of the Term, funds in the FF&E Reserve
and all property purchased with funds from the FF&E Reserve during the Term
shall be paid, granted and assigned to Lessor as Additional Charges.

                  (f) Notwithstanding anything to the contrary contained in this
Section 9.2, so long as the Management Agreement is in full force and effect and
Manager is maintaining the reserves required thereunder, Lessee's obligation to
maintain the FF&E Reserve and other obligations under this Section 9.2 shall be
deemed to have been met.



                                      -30-
<PAGE>

                  9.3 Encroachments, Restriction, Etc. If any of the Leased
Improvements, at any time, materially encroach upon any property, street or
right-of-way adjacent to the Leased Property, or violate the agreements or
conditions contained in any lawful restrictive covenant or other agreement
affecting the Leased Property, or any part thereof, or impair the rights of
others under any easement or right-of-way to which the Leased Property is
subject, then promptly upon the request of Lessor or at the behest of any person
affected by any such encroachment, violation or impairment, Lessee shall, at its
expense, subject to its right to contest the existence of any encroachment,
violation or impairment and in such case, in the event of an adverse final
determination, either (a) obtain valid and effective waivers or settlements of
all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Lessor or Lessee or (b)
make such changes in the Leased Improvements, and take such other actions, as
Lessee in the good faith exercise of its judgment deems reasonably practicable
to remove such encroachment, and to end such violation or impairment, including,
if necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to be able to continue the
operation of the Leased Improvements for the Primary Intended Use substantially
in the manner and to the extent the Leased Improvements were operated prior to
the assertion of such violation, impairment or encroachment. Any such alteration
shall be made in conformity with the applicable requirements of Article X.
Lessee's obligations under this Section 9.3 shall be in addition to and shall in
no way discharge or diminish any obligation of any insurer under any policy of
title or other insurance held by Lessor.

                                   ARTICLE X

                  10.1 Alterations. After receiving approval of Lessor, which
approval shall not be unreasonably withheld, Lessee shall have the right to make
such additions, modifications or improvements to the Leased Property from time
to time as Lessee deems desirable for its permitted uses and purposes, provided
that such action will not significantly alter the character or purposes or
significantly detract from the value or operating efficiency thereof and will
not significantly impair the revenue-producing capability of the Leased Property
or adversely affect the ability of Lessee to comply with the provisions of this
Lease. The cost of such additions, modifications or improvements to the Leased
Property shall be paid by Lessee, and all such additions, modifications and
improvements shall, without payment by Lessor at any time, be included under the
terms of this Lease and upon expiration or earlier termination of this Lease
shall pass to and become the property of Lessor. Nothing set forth in this
Section 10.1 is intended to abrogate or limit Lessor's obligations to make
Capital Expenditures as set forth in the approved Capital Budget pursuant to
Section 3.7.

                  10.2 Salvage. All materials which are scrapped or removed in
connection with the making of repairs required by Articles IX or X shall be or
become the property of Lessor or Lessee depending on which party is paying for
or providing the financing for such work.

                  10.3 Joint Use Agreements. If Lessee constructs additional
improvements that are connected to the Leased Property or share maintenance
facilities, HVAC, electrical, plumbing or other systems, utilities, parking or
other amenities, the parties shall enter into a mutually agreeable
cross-easement or joint use agreement, the form of which has been approved in
advance by Lessor, to make available necessary services and facilities in
connection with such additional improvements, to protect each of their
respective interests in the properties affected, and to provide for separate
ownership, use, and/or financing of such improvements.



                                      -31-
<PAGE>

                                   ARTICLE XI

                  11.1 Liens. Subject to the provision of Article XII relating
to permitted contests, Lessee will not and Lessee shall ensure that Manager does
not, directly or indirectly, create or allow to remain and will promptly
discharge, at its expense, any lien, encumbrance, attachment, title retention
agreement or claim upon the Leased Property or any attachment, levy, claim or
encumbrance in respect of the Rent, not including, however, (a) this Lease, (b)
the matters, if any, included as exceptions in the title policy insuring
Lessor's interest in the Leased Property, (c) restrictions, liens and other
encumbrances which are consented to in writing by Lessor or any easements
granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens for
those taxes upon Lessor which Lessee is not required to pay hereunder, (e)
subleases permitted by Article XXII hereof, (f) liens for Impositions or for
sums resulting from noncompliance with Legal Requirements so long as (1) the
same are not yet payable or are payable without the addition of any fine or
penalty or (2) such liens are in the process of being contested as permitted by
Article XII, (g) liens of mechanics, laborers, materialmen, suppliers or vendors
for sums either disputed or not yet due, provided that (1) the payment of such
sums shall not be postponed under any related contract for more than 60 days
after the completion of the action giving rise to such lien and such reserve or
other appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor or (2) any such liens are in
the process of being contested as permitted by Article XII hereof, and (h) any
liens which are the responsibility of Lessor pursuant to the provisions of
Article XXXIII of this Lease.

                                  ARTICLE XII

                  12.1 Permitted Contests. Lessee, or Manager at Lessee's
direction, shall have the right to contest the amount or validity of any
Imposition to be paid by Lessee or any Legal Requirement or Insurance
Requirement or any lien, attachment, levy, encumbrance, charge or claim
("Claims") not otherwise permitted by Article XI, by appropriate legal
proceedings in good faith and with due diligence (but this shall not be deemed
or construed in any way to relieve, modify or extend Lessee's covenants to pay
or its covenants to cause to be paid any such charges at the time and in the
manner as in this Article provided), on condition, however, that such legal
proceedings shall not operate to relieve Lessee from its obligations hereunder
and shall not cause the sale or risk the loss of any portion of the Leased
Property, or any part thereof, or cause Lessor or Lessee to be in default under
any mortgage, deed of trust, security deed or other agreement encumbering the
Leased Property or any interest therein. Upon the request of Lessor, Lessee
shall either (a) provide a bond or other security reasonably satisfactory to
Lessor that all Claims which may be assessed against the Leased Property
together with interest and penalties, if any, thereon will be paid, or (b)
deposit within the time otherwise required for payment with a bank or trust
company as trustee upon terms reasonably satisfactory to Lessor, as security for
the payment of such Claims, money in an amount sufficient to pay the same,
together with interest and penalties in connection therewith, as to all Claims
which may be assessed against or become a Claim on the Leased Property, or any
part thereof, in said legal proceedings. Lessee shall furnish Lessor and any
lender of Lessor with reasonable evidence of such deposit within five (5) days
of the same. Lessor agrees to join in any such proceedings if the same be
required to legally prosecute such contest of the validity of such Claims;
provided, however, that Lessor shall not thereby be subject to any liability for
the payment of any costs or expenses in connection with any proceedings brought
by Lessee; and Lessee covenants to indemnify and save harmless Lessor from any
such costs or expenses. Lessee shall be entitled to any refund of any Claims and
such charges and penalties or interest thereon which have been paid by Lessee or
paid by Lessor and for which Lessor has been fully reimbursed. In the event that
Lessee fails to pay any Claims when due or to provide the security therefor as
provided in this paragraph and to diligently prosecute any contest of the same,
Lessor may, upon ten (10) days' advance Notice to Lessee, pay such charges
together with any interest and penalties and the same shall be repayable by
Lessee to Lessor as Additional Charges at the next Payment Date provided for in
this Lease; provided, however, that should Lessor reasonably determine that the
giving of such Notice would risk loss to the Leased Property or cause damage to
Lessor, then Lessor shall give such Notice as is practical under the
circumstances. Lessor reserves the right to contest any of the Claims at its
expense not pursued by Lessee. Lessor and Lessee agree to cooperate in
coordinating the contest of any claims.

                                      -32-
<PAGE>

                                  ARTICLE XIII

                  13.1 General Insurance Requirements. At all times during the
Term of this Lease and at any other time Lessee shall be in possession of the
Leased Property, the Leased Property shall be insured against the risks and in
the amounts described below. This insurance shall be written by qualified,
solvent companies which can legally write insurance in the State. The policies
must name the party obtaining the policy as the insured and the other party, as
an additional named insured. Losses shall be payable to Lessor or Lessee as
provided in this Lease. Subject to Section 13.10, any loss adjustment for
coverages insuring both parties shall require the written consent of Lessor and
Lessee, each acting reasonably and in good faith. Evidence of insurance shall be
deposited with Lessor. The policies on the Leased Property, including the Leased
Improvements, Fixtures and Lessee's Personal Property, at a minimum shall
include:

                  (a) Building insurance of risks on the "Special Form" or "All
Risk Form" in an amount not less than 100% of the then full replacement cost
thereof (as defined in Section 13.3), and personal property insurance on the
"Special Form" or "All Risk Form" in the full amount of the replacement cost
thereof;

                  (b) Earthquake and flood insurance in reasonable and adequate
amounts as mutually agreed by Lessor and Lessee;

                  (c) Insurance for loss or damage (direct and indirect) from
steam boilers, pressure vessels or similar apparatus, now or hereafter installed
in the Hotel, in the minimum amount of $5,000,000 or in such greater amounts as
are then customary from time to time;

                  (d) Loss of income insurance on the "Special Form" or "All
Risk Form", in the amount of the greater of (i) one year of Base Rent or (ii)
the prior Fiscal Year's Base Rent plus Percentage Rent for the benefit of
Lessor, and business income or business interruption insurance on the "Special
Form" or "All Risk Form" in amounts not less than one year of gross profit, for
the benefit of Lessee;


                                      -33-
<PAGE>

                  (e) Commercial general liability insurance, with amounts not
less than $10,000,000 covering each of the following: bodily injury, death, or
property damage liability per occurrence, personal and advertising injury,
general aggregate, products and completed operations, with respect to Lessor,
and liquor law or "dram shop" liability, if liquor or alcoholic beverages are
served on the Leased Property, with respect to Lessor and Lessee;

                  (f) Insurance covering such other hazards and in such amounts
as may be customary for comparable properties in the area of the Leased Property
and is available from insurance companies, insurance pools or other appropriate
companies authorized to do business in the State at rates which are economically
practicable in relation to the risks covered as may be reasonably requested by
Lessor;

                  (g) Fidelity bonds with limits and deductibles as may be
reasonably requested by Lessor, covering Lessee's employees in job
classifications normally bonded under prudent hotel management practices in the
United States or otherwise required by law;

                  (h) Workers' compensation insurance to the extent necessary to
protect Lessor and the Leased Property against Lessee's workers' compensation
claims;

                  (i) Vehicle liability insurance for owned, non-owned, and
hired vehicles, in the amount of $1,000,000; and

                  (j) Such other insurance as Lessor may reasonably request for
facilities such as the Leased Property and the operation thereof.

                  13.2 Responsibility for Insurance. Lessee shall obtain or
cause to be obtained the insurance and pay the premiums for the coverages
described in Section 13.1(c), and Section 13.1(e) through (i) and for that
portion of the premium for the coverage described in Section 13.1(d) that is
attributable to business interruption insurance, and Lessor shall obtain the
insurance and pay the premiums for the coverages described in Sections 13.1(a),
(b), (d), and (j) (excluding that portion of the premium for the coverage
described in Section 13.1(d) that is attributable to business interruption
insurance that is for the benefit of Lessee). The party responsible for the
premium for any insurance coverage shall also be responsible for any and all
deductibles and self-insured retentions in connection with such coverages. In
the event that either party can obtain comparable insurance required to be
carried by the other party from comparable insurers and at a cost significantly
less than that at which such other party can obtain such coverage, the parties
shall cooperate in good faith to obtain such coverage at the lower cost and
shall allocate the premiums therefor in accordance with the provisions of the
first sentence of this Section 13.2.


                                      -34-
<PAGE>

                  Notwithstanding the foregoing, so long as the Management
Agreement is in full force and effect and Manager is maintaining the insurance
required thereunder as well as any additional insurance required by Lessor's
mortgage lender, Lessor and Lessee's obligations to maintain the insurance
required under this Article XIII shall be deemed to have been met (provided,
that the costs therefor shall be allocated between Lessor and Lessee in the
manner contemplated by the first sentence of this Section 13.2).

                  13.3 Replacement Cost. The term "full replacement cost" as
used herein shall mean the actual replacement cost of the Leased Property
requiring replacement from time to time including an increased cost of
construction endorsement, if available, and the cost of debris removal. In the
event either party believes that full replacement cost (the then-replacement
cost less such exclusions) has increased or decreased at any time during the
Lease Term, it shall have the right to have such full replacement cost
redetermined by an independent accredited appraiser approved by the other, which
approval shall not be unreasonably withheld. The party desiring to have the full
replacement cost so redetermined shall, on receipt of such determination by such
appraiser, give written notice thereof to the other party. The determination of
such appraiser shall be final and binding on the parties, and Lessor shall
conform the amount of the insurance carried to the amount so determined by the
appraiser.

                  13.4 Workers' Compensation. Lessee, at its sole cost, shall at
all times maintain adequate workers' compensation insurance coverage for all
persons, if any, employed by Lessee on the Leased Property. Such workers'
compensation insurance shall be in accordance with the requirements of
applicable local, state and federal law.

                  13.5 Waiver of Subrogation. All insurance policies carried by
Lessor or Lessee covering the Leased Property, the Fixtures, the Hotel or
Lessee's Personal Property, including, without limitation, contents, fire and
casualty insurance, shall expressly waive any right of subrogation on the part
of the insurer against the other party. The parties hereto agree that their
policies will include such waiver clause or endorsement even though extra
premium may result therefrom.

                  13.6 Form Satisfactory, Etc. All of the policies of insurance
referred to in this Article XIII shall be written in a form, with deductibles
and by insurance companies reasonably satisfactory to Lessor; provided, however,
that the qualitative financial condition and operating performance (or
claims-paying ability) of such insurance companies must be rated in at least the
third highest rating category of a nationally recognized statistical rating
organization or rated at least A:VIII by A.M. Best. Lessee shall be permitted to
acquire insurance through insurance companies which are Affiliates of Lessee and
which otherwise satisfy the requirements of this Article XIII, provided that the
terms of such insurance shall be no more favorable to such Affiliates than would
the same insurance if purchased from an independent third party. Lessee shall
pay all of the premiums therefor, and deliver such policies or certificates
thereof to Lessor prior to their effective date (and, with respect to any
renewal policy, thirty (30) days prior to the expiration of the existing
policy), and in the event of the failure of Lessee either to effect such
insurance as herein called for or to pay the premiums therefor, or to deliver
such policies or certificates thereof to Lessor at the times required, Lessor
shall be entitled, but shall have no obligation, to effect such insurance and
pay the premiums thereon, and Lessee shall reimburse Lessor for any premium or
premiums paid by Lessor for the coverages required under this Section upon
written demand therefor, and Lessee's failure to repay the same within thirty
(30) days after Notice of such failure from Lessor shall constitute an Event of
Default within the meaning of Section 16.1(b). Each insurer mentioned in this
Article XIII shall agree, by endorsement to the policy or policies issued by it,
or by independent instrument furnished to Lessor, that it will give to Lessor
thirty (30) days' written notice before the policy or policies in question shall
be materially altered, allowed to expire or canceled.


                                      -35-
<PAGE>

                  13.7 Increase in Limits. If either Lessor or Lessee at any
time deems the limits of the personal injury or property damage under the
comprehensive public liability insurance then carried to be either excessive or
insufficient, Lessor and Lessee shall endeavor in good faith to agree on the
proper and reasonable limits for such insurance to be carried and such insurance
shall thereafter be carried with the limits thus agreed on until further change
pursuant to the provisions of this Section.

                  13.8 Blanket Policy. Notwithstanding anything to the contrary
contained in this Article XIII, each of Lessee and Lessor may bring the
insurance provided for herein within the coverage of a so-called blanket policy
or policies of insurance carried and maintained by Lessee or Lessor, as the case
may be; provided, however, that the coverage afforded to Lessor and Lessee will
not be reduced or diminished or otherwise be different from that which would
exist under a separate policy meeting all other requirements of this Lease by
reason of the use of such blanket policy of insurance, and provided further that
the requirements of this Article XIII are otherwise satisfied.

                  13.9 Separate Insurance. Neither Lessor nor Lessee shall take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this Article to be furnished, or increase the amount of
any then existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance are included therein as additional insured, and the loss is
payable under such additional separate insurance in the same manner as losses
are payable under this Lease. In the event either party shall take out any such
separate insurance or increase any of the amounts of the then existing
insurance, it shall immediately notify the other party thereof.

                  13.10 Reports On Insurance Claims. Each of Lessor and Lessee
(as applicable) shall promptly investigate and make a complete and timely
written report to the appropriate insurance company, as to all accidents, claims
for damage relating to the ownership, operation, and maintenance of the Leased
Property, any damage or destruction to the Leased Property and the estimated
cost of repair thereof and shall prepare any and all reports required by any
insurance company in connection therewith. All such reports shall be timely
filed with the insurance company as required under the terms of the insurance
policy involved, and a final copy of such report shall be furnished to the
non-filing party. Lessee shall not adjust, settle, or compromise any insurance
loss, or execute proofs of such loss, with respect to the insurance coverages
set forth in Sections 13.1(a), 13.1(b) or 13.1(c), in the aggregate amount of
$10,000 or more, with respect to any single casualty or other event, without the
prior written consent of Lessor, which consent shall not be unreasonably
withheld, delayed or conditioned.

                                      -36-
<PAGE>

                                  ARTICLE XIV

                  14.1 Insurance Proceeds. Subject to the provisions of Section
14.6, all proceeds payable by reason of any loss or damage to the Leased
Property, or any portion thereof, and insured under any policy of insurance
required by Article XIII of this Lease shall be paid to Lessor and held in trust
by Lessor in an interest-bearing account, shall be made available, if
applicable, for reconstruction or repair, as the case may be, of any damage to
or destruction of the Leased Property, or any portion thereof, and, if
applicable, shall be paid out by Lessor from time to time for the reasonable
costs of such reconstruction or repair upon satisfaction of reasonable terms and
conditions specified by Lessor. Any excess proceeds of insurance remaining after
the completion of the restoration or reconstruction of the Leased Property shall
be equitably apportioned between Lessor and Lessee in proportion to the then
fair market values of the respective estates and interests of Lessor and Lessee
in and to the Leased Property and under this Lease. If neither Lessor nor Lessee
is required or elects to repair and restore, and the Lease is terminated without
purchase by Lessee as described in Section 14.2, all such insurance proceeds
shall be retained by Lessor. All salvage resulting from any risk covered by
insurance shall belong to Lessor.

                  14.2 Reconstruction in the Event of Damage or Destruction
Covered by Insurance.

                  (a) Except as provided in Section 14.6, if during the Term the
Leased Property is totally or partially destroyed by a risk covered by the
insurance described in Article XIII and the Hotel thereby is rendered Unsuitable
for its Primary Intended Use, Lessee may, at Lessee's option, either (1) restore
or cause Manager to restore the Hotel to substantially the same condition as
existed immediately before the damage or destruction and otherwise in accordance
with the terms of the Lease (subject to the provisions of Section 14.2(c)), or
(2) terminate the Lease with respect to the Leased Property without further
liability hereunder and all insurance proceeds shall be equitably apportioned
between Lessor and Lessee in proportion to the then fair market values of the
respective estates and interests of Lessor and Lessee in and to the Leased
Property and under this Lease. If this Lease terminates pursuant to this Section
14.2(a), Lessee shall pay all Rent due through the date of such termination. If
Lessee restores the Hotel, the insurance proceeds shall be paid out by Lessor
from time to time for the reasonable costs of such restoration upon satisfaction
of reasonable terms and conditions, and any excess proceeds remaining after such
restoration shall be equitably apportioned between Lessor and Lessee in
proportion to the then fair market values of the respective estates and
interests of Lessor and Lessee in and to the Leased Property and under this
Lease.

                  (b) Except as provided in Section 14.6, if during the Term the
Leased Property is partially destroyed by a risk covered by the insurance
described in Article XIII, but the Hotel is not thereby rendered Unsuitable for
its Primary Intended Use, Lessee shall restore or cause Manager to restore the
Hotel to substantially the same condition as existed immediately before the
damage or destruction and otherwise in accordance with the terms of the Lease,
subject to the provisions of Section 14.2(c). Such damage or destruction shall
not terminate this Lease; provided, however, that if Lessee cannot within a
reasonable time obtain all necessary government approvals, including building
permits, licenses and conditional use permits, after diligent efforts to do so,
to perform all required repair and restoration work and to operate the Hotel for
its Primary Intended Use in substantially the same manner as that existing
immediately prior to such damage or destruction and otherwise in accordance with
the terms of the Lease, Lessee may give Lessor written notice of termination of
the Lease and terminate this Lease with respect to the Leased Property without
further liability hereunder other than for accrued obligations hereunder and any
other obligations which survive the termination of this Lease and Lessor shall
be entitled to retain all insurance proceeds. If Lessee restores the Hotel, the
insurance proceeds shall be paid out by Lessor from time to time for the
reasonable costs of such restoration upon satisfaction of reasonable terms and
conditions specified by Lessor, and any excess proceeds remaining after such
restoration shall be equitably apportioned between Lessor and Lessee in
proportion to the then fair market values of the respective estates and
interests of Lessor and Lessee in and to the Leased Property and under this
Lease.

                                      -37-
<PAGE>

                  (c) If the estimated cost of the repair or restoration exceeds
the amount of proceeds received by Lessor and Lessee from the insurance required
under Article XIII (other than as a result of Lessee's failure to maintain the
types and amounts of insurance coverage required by Article XIII), and Lessee
indicates a desire to restore the Hotel if adequate funds were made available,
then if Lessor elects to direct Lessee to make such repairs or restoration,
Lessor shall be obligated to contribute any excess amounts needed to restore the
Hotel prior to the commencement of work thereon. Such difference to be held in
trust, together with any other insurance proceeds, for application to the cost
of repair and restoration, shall be paid by Lessor to Lessee promptly after
Lessor receives Lessee's written invoice therefor. In the event Lessee indicates
a desire to restore the Hotel but Lessor declines to provide the additional
funds necessary to do so, each of Lessor or Lessee shall have the right to
terminate this Lease as to the Hotel in question, without in any way affecting
this Lease with respect to any other Leased Property, by giving notice to the
other. Upon such termination all insurance proceeds with respect to the Leased
Property in question shall be retained by Lessor.

                  14.3 Reconstruction in the Event of Damage or Destruction Not
Covered by Insurance. Except as provided in Section 14.6, if during the Term the
Hotel is totally or substantially destroyed by a risk not covered by the
insurance described in Article XIII, whether or not such damage or destruction
renders the Hotel Unsuitable for its Primary Intended Use, Lessee at its option
may either (a) restore the Hotel to substantially the same condition it was in
immediately before such damage or destruction and such damage or destruction
shall not terminate this Lease (subject to the provisions of Section 14.2(c)),
or (b) terminate the Lease with respect to the Leased Property without further
liability hereunder. If such damage or destruction is not material, Lessee shall
restore the Hotel to substantially the same condition as existed immediately
before the damage or destruction and otherwise in accordance with the terms of
the Lease, and such damage or destruction shall not terminate the Lease.

                  14.4 Lessee's Property and Business Interruption Insurance.
All insurance proceeds payable by reason of any loss of or damage to any of
Lessee's Personal Property and the business interruption insurance maintained
for the benefit of Lessee shall be paid to Lessee; provided, however, no such
payments shall diminish or reduce the insurance payments otherwise payable to or
for the benefit of Lessor hereunder.




                                      -38-
<PAGE>

                  14.5 Abatement of Rent. Any damage or destruction due to
casualty notwithstanding, this Lease shall remain in full force and effect
provided that Lessee's obligation to make rental payments and to pay all other
charges required by this Lease shall not abate during the period required for
the applicable repair and restoration; provided that Lessee shall receive a
credit against such rental payments and other charges in an amount equal to any
loss of income insurance proceeds actually received by Lessor pursuant to any
loss of income insurance pursuant to Section 13.1(d).

                  14.6 Damage Near End of Term. Notwithstanding any provisions
of Section 14.2 or 14.3 appearing to the contrary, if damage to or destruction
of the Hotel rendering it Unsuitable for its Primary Intended Use occurs during
the last 24 months of the Term, then Lessee shall have the right to terminate
this Lease by giving written notice to Lessor within thirty (30) days after the
date of damage or destruction, whereupon all accrued Rent shall be paid
immediately, and this Lease shall automatically terminate five (5) days after
the date of such notice, without any further liability by Lessee to Lessor other
than liabilities that expressly survive a termination of this Lease.

                  14.7 Waiver. Lessee hereby waives any statutory rights of
termination that may arise by reason of any damage or destruction of the Hotel
that Lessor is obligated to restore or may restore under any of the provisions
of this Lease.

                                   ARTICLE XV

                  15.1 Definitions.

                  (a) "Condemnation" means a Taking resulting from (1) the
exercise of any governmental power, whether by legal proceedings or otherwise,
by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of condemnation or while legal proceedings for condemnation
are pending.

                  (b) "Date of Taking" means the date the Condemnor has the
right to possession of the property being condemned.

                  (c) "Award" means all compensation, sums or anything of value
awarded, paid or received on a total or partial Condemnation (after deduction of
all reasonable legal fees and other reasonable costs and expenses, including,
without limitation, expert witness fees incurred by Lessor, in connection with
obtaining any such Award).

                  (d) "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.

                                      -39-
<PAGE>

                  15.2 Parties' Rights and Obligations. If during the Term there
is any Condemnation of all or any part of the Leased Property or any interest in
this Lease, the rights and obligations of Lessor and Lessee shall be determined
by this Article XV.

                  15.3 Total Taking. If title to the fee of the whole of the
Leased Property is condemned by any Condemnor, this Lease shall cease and
terminate as of the Date of Taking by the Condemnor. If title to the fee of less
than the whole of the Leased Property is so taken or condemned, which
nevertheless renders the Leased Property Unsuitable or Uneconomic for its
Primary Intended Use, Lessee and Lessor shall each have the option, by notice to
the other, at any time prior to the Date of Taking, to terminate this Lease as
of the Date of Taking. Upon such date, if such Notice has been given, this Lease
shall thereupon cease and terminate. All Base Rent, Percentage Rent and
Additional Charges paid or payable by Lessee hereunder shall be apportioned as
of the Date of Taking, and Lessee shall promptly pay Lessor such amounts.

                  15.4 Allocation of Award. The total Award made with respect to
the Leased Property or for loss of rent, or for Lessor's loss of business beyond
the Term, shall be solely the property of and payable to Lessor. Any Award made
for loss of Lessee's business during the remaining Term, if any, for the taking
of Lessee's Personal Property, or for removal and relocation expenses of Lessee
in any such proceedings shall be the sole property of and payable to Lessee. In
any Condemnation proceedings, Lessor and Lessee shall each seek its Award in
conformity herewith, at its respective expense; provided, however, neither party
shall initiate, prosecute or acquiesce in any proceedings that may result in a
diminution of any Award payable to the other party.

                  15.5 Partial Taking. If title to less than the whole of the
Leased Property is condemned, and the Leased Property is still suitable for its
Primary Intended Use and not Uneconomic for its Primary Intended Use, or if
Lessee or Lessor is entitled but neither elects to terminate this Lease as
provided in Section 15.3, Lessee at its cost shall with all reasonable dispatch,
but only to the extent of any Award made available to Lessee and any other sums
advanced by Lessor pursuant to the next sentence, restore the untaken portion of
any Leased Improvements so that such Leased Improvements constitute a complete
architectural unit of the same general character and condition (as nearly as may
be possible under the circumstances) as the Leased Improvements existing
immediately prior to the Condemnation. If the condemnation awards are not
adequate to restore the Hotel to that condition, each of Lessor and Lessee shall
have the right to terminate this Lease, by giving Notice to the other; provided,
however that, if such termination is by Lessee, Lessor shall have the right, in
its sole discretion, to nullify the termination and keep this Lease in full
force by providing, within thirty (30) days after Lessee's Notice of
termination, a Notice to Lessee of Lessor's unconditional, legally binding
obligation to be responsible for all restoration costs in excess of the total
Award. If this Lease is not terminated and Lessee restores the Hotel, the
condemnation awards, and any other sums made available by Lessor as aforesaid,
shall be held in trust by Lessor and paid out by Lessor from time to time for
the reasonable costs of such restoration upon satisfaction of reasonable terms
and conditions, and any excess awards remaining after such restoration shall be
retained by Lessor unless the partial condemnation materially impairs the
operations or financial performance of the Hotel, in which latter event the
award shall be equitably apportioned between Lessor and Lessee in proportion to
the then fair market values of the respective estates and interests of Lessor
and Lessee in and to the Leased Property and under this Lease.

                                      -40-
<PAGE>

                  15.6 Temporary Taking. If the whole or any part of the Leased
Property or of Lessee's interest under this Lease is condemned by any Condemnor
for its temporary use or occupancy, this Lease shall not terminate by reason
thereof, and Lessee shall continue to pay, in the manner and at the terms herein
specified, the full amounts of Base Rent and Additional Charges. In addition,
Lessee shall pay Percentage Rent at a rate equal to the average Percentage Rent
during the last three preceding Fiscal Years (or if three Fiscal Years shall not
have elapsed, the average during the preceding Fiscal Years). Except only to the
extent that Lessee may be prevented from so doing pursuant to the terms of the
order of the Condemnor, Lessee shall continue to perform and observe all of the
other terms, covenants, conditions and obligations hereof on the part of Lessee
to be performed and observed, as though such Condemnation had not occurred. In
the event of any Condemnation as in this Section 15.6 described, the entire
amount of any Award made for such Condemnation allocable to the Term of this
Lease, whether paid by way of damages, rent or otherwise, shall be paid to
Lessee. Lessee covenants that upon the termination of any such period of
temporary use or occupancy it will, at its sole cost and expense (subject to
Lessor's contribution as set forth below), restore the Leased Property as nearly
as may be reasonably possible to the condition in which the same was immediately
prior to such Condemnation, unless such period of temporary use of occupancy
extends beyond the expiration of the Term, in which case Lessee shall not be
required to make such restoration. If restoration is required hereunder, Lessor
shall contribute to the cost of such restoration that portion of its entire
Award that is specifically allocated to such restoration in the judgment or
order of the court, if any, and Lessee shall fund the balance of such costs.

                                  ARTICLE XVI

                  16.1 Events of Default. If any one or more of the following
events (individually, an "Event of Default") occurs:

                  (a) if Lessee fails to make payment of the Base Rent,
Percentage Rent or Additional Charges within ten (10) days after written notice
from Lessor that the same has become due and payable; or

                  (b) except as set forth in Section 16.1(a), if either party
fails to observe or perform any other term, covenant or condition of this Lease
and such failure is not cured by such party within a period of thirty (30) days
after receipt by such party of Notice thereof from the other party, unless such
failure cannot with due diligence be cured within a period of thirty (30) days,
in which case it shall not be deemed an Event of Default if such party proceeds
promptly and with due diligence to cure the failure and diligently completes the
curing thereof provided, however, in no event shall such cure period extend
beyond ninety (90) days after such Notice; or

                  (c) if Lessee, any parent entity (which for the purposes of
this Section shall be deemed to include any direct or indirect parent entity
with effective management control over Lessee) or lease guarantor shall file a
petition in bankruptcy or reorganization for an arrangement pursuant to any
federal or state bankruptcy law or any similar federal or state law, or shall be
adjudicated a bankrupt or shall make an assignment for the benefit of creditors
or shall admit in writing its inability to pay its debts generally as they
become due, or if a petition or answer proposing the adjudication of Lessee, any
parent entity or lease guarantor as a bankrupt or its reorganization pursuant to
any federal or state bankruptcy law or any similar federal or state law shall be
filed in any court and Lessee, any parent entity or lease guarantor shall be
adjudicated a bankrupt and such adjudication shall not be vacated or set aside
or stayed within ninety (90) days after the entry of an order in respect
thereof, or if a receiver of Lessee, any parent entity or lease guarantor or of
the whole or substantially all of the assets of Lessee, any parent entity or
lease guarantor shall be appointed in any proceedings brought by Lessee, any
parent entity or lease guarantor or if any such receiver, trustee or liquidator
shall be appointed in any proceeding brought against Lessee, any parent entity
or lease guarantor shall not be vacated or set aside or stayed within ninety
(90) days after such appointment; or

                                      -41-
<PAGE>

                  (d) if Lessee, any parent entity or lease guarantor is
liquidated or dissolved, or begins proceedings toward such liquidation or
dissolution, or, if Lessee, any parent entity or lease guarantor in any manner,
permits the sale or divestiture of substantially all of its assets; or

                  (e) if the estate or interest of Lessee in the Leased Property
or any part thereof (i) is voluntarily or involuntarily transferred, assigned,
conveyed, levied upon or attached in any proceeding (unless Lessee is contesting
such lien or attachment in good faith in accordance with Article XII hereof) or
(ii) is transferred, assigned or conveyed; or

                  (f) if, except as a result of damage, destruction or a partial
or complete Condemnation, Lessee voluntarily ceases operations on the Leased
Property for a period in excess of thirty (30) days; or

                  (g) if an Event of Default has been declared by Manager under
the Management Agreement with respect to the Hotel on the Leased Premises as a
result of any action or failure to act by Lessee or any other person with whom
Lessee contracts for management services at the Hotel (other than a failure to
complete a Capital Improvement required by the Manager resulting from Lessor's
failure to fund the Capital Expenditure therefor pursuant to Section 9.1(b)) and
Lessee has failed, within thirty (30) days thereafter, to cure such default by
either (1) curing the underlying default under the Management Agreement and
paying all costs and expenses associated therewith, or (2) obtaining at Lessee's
sole cost and expense a substitute management agreement with a substitute
manager acceptable to Lessor, on terms and conditions acceptable to Lessor;
provided, however, that if Lessee is in good faith disputing an assertion of
default by the Manager or is proceeding diligently to cure such default, the
30-day period shall be extended for such period of time as Lessee continues
during this period to dispute such default in good faith or diligently proceeds
to cure such default (but in any event not longer than ninety (90) days
following the assertion of default by the Manager) and so long as there is no
period during which the Hotel is not operated pursuant to a Management Agreement
approved by Lessor; or

                  (h) the occurrence of an Event of Default under any guaranty
of lease in favor of Lessor with respect to Lessee's obligations under this
Lease.

                                      -42-
<PAGE>

                  Then, and in any such event, Lessor may exercise one or more
remedies available to it herein or at law or in equity, including, but not
limited to, its right to terminate this Lease, or, in the case of a breach by
Lessor under subsection (b) above, Lessee may exercise one or more remedies
available to it herein or at law or in equity, including, but not limited to,
its right to terminate this Lease.

                  If litigation is commenced with respect to any alleged default
under this Lease, the prevailing party in such litigation shall receive, in
addition to its damages incurred, such sum as the court shall determine as its
reasonable attorneys' fees, and all costs and expenses incurred in connection
therewith.

                  No Event of Default (other than a failure to make a payment of
money) shall be deemed to exist under clause (b) during any time the curing
thereof is prevented by an Unavoidable Delay, provided that upon the cessation
of such Unavoidable Delay, Lessee remedies such default or Event of Default
without further delay.

                  16.2 Surrender. If an Event of Default occurs (and the event
giving rise to such Event of Default has not been cured within the curative
period relating thereto as set forth in Section 16.1) and is continuing, whether
or not this Lease has been terminated pursuant to Section 16.1, Lessee shall, if
requested by Lessor so to do, immediately surrender and assign to Lessor or
Lessor's designee the Leased Property including, without limitation, any and all
books, records, files, licenses, permits and keys relating thereto, and quit the
same and Lessor may enter upon and repossess the Leased Property by reasonable
force, summary proceedings, ejectment or otherwise, and may remove Lessee and
all other persons and any and all personal property from the Leased Property,
subject to rights of any hotel guests and to any requirement of law. Lessee
hereby waives any and all requirements of applicable laws for service of notice
to re-enter the Leased Property. Lessor shall be under no obligation to, but may
if it so chooses, relet the Leased Property or otherwise mitigate Lessor's
damages, except unless otherwise required by applicable law.

                  16.3 Damages. Neither (a) the termination of this Lease, (b)
the repossession of the Leased Property, (c) the failure of Lessor to relet the
Leased Property, nor (d) the reletting of all or any portion thereof, shall
relieve Lessee of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. In the event of any
such termination, Lessee shall forthwith pay to Lessor all Rent due and payable
with respect to the Leased Property to and including the date of such
termination.

                  Lessee shall forthwith pay to Lessor, at Lessor's option, as
and for liquidated and agreed current damages for Lessee's default, either:

(1)      Without termination of Lessee's right to possession of the Leased
         Property, each installment of Rent (including Percentage Rent as
         determined below) and other sums payable by Lessee to Lessor under the
         Lease as the same becomes due and payable, which Rent and other sums
         shall bear interest at the Overdue Rate, and Lessor may enforce, by
         action or otherwise, any other term or covenant of this Lease; or



                                      -43-
<PAGE>

(2)      the sum of:

         (A)      the unpaid Rent which had been earned at the time of
                  termination, repossession or reletting, and

         (B)      the worth at the time of termination, repossession or
                  reletting of the amount by which the unpaid Rent for the
                  balance of the Term after the time of termination,
                  repossession or reletting, exceeds the amount of such rental
                  loss that Lessee proves could be reasonably avoided and as
                  reduced for rentals received after the time of termination,
                  repossession or reletting, if and to the extent required by
                  applicable law, and

         (C)      any other amount necessary to compensate Lessor for all the
                  detriment proximately caused by Lessee's failure to perform
                  its obligations under this Lease or which in the ordinary
                  course of things, would be likely to result therefrom. The
                  worth at the time of termination, repossession or reletting of
                  the amount referred to in subparagraph (B) is computed by
                  discounting such amount at the discount rate of the Federal
                  Reserve Bank of New York at the time of award plus 1%.

Percentage Rent for the purposes of this Section 16.3 shall be a sum equal to
(i) the average of the annual amounts of the Percentage Rent for the three
Fiscal Years immediately preceding the Fiscal Year in which the termination,
re-entry or repossession takes place, or (ii) if three (3) Fiscal Years shall
not have elapsed, the average of the Percentage Rent during the preceding Fiscal
Years during which the Lease was in effect, or (iii) if one Fiscal Year has not
elapsed, the amount derived by annualizing the Percentage Rent from the
effective date of this Lease.

                  16.4 Waiver. If this Lease is terminated pursuant to Section
16.1, Lessee waives, to the extent permitted by applicable law, (a) any right to
a trial by jury in the event of summary proceedings to enforce the remedies set
forth in this Article XVI, and (b) the benefit of any laws now or hereafter in
force exempting property from liability for rent or for debt and Lessor waives
any right to "pierce the corporate veil" of Lessee other than to the extent
funds shall have been inappropriately paid any Affiliate of Lessee following a
default resulting in an Event of Default.

                  16.5 Application of Funds. Any payments received by Lessor
under any of the provisions of this Lease during the existence or continuance of
any Event of Default shall be applied to Lessee's obligations in the order that
Lessor may determine or as may be prescribed by the laws of the State.

                                  ARTICLE XVII

                  17.1 Lessor's Right to Cure Lessee's Default. If Lessee fails
to make any payment or to perform any act required to be made or performed under
this Lease including, without limitation, Lessee's failure to comply with the
terms of any Management Agreement other than a failure to complete improvements
required by the Manager because Lessor has not provided Lessee with funds
therefor, and fails to cure the same within the relevant time periods provided
in Section 16.1, Lessor, without waiving or releasing any obligation of Lessee,
and without waiving or releasing any obligation or default, may (but shall be
under no obligation to) at any time thereafter make such payment or perform such
act for the account and at the expense of Lessee, and may, to the extent
permitted by law, enter upon the Leased Property for such purpose and, subject
to Section 16.4, take all such action thereon as, in Lessor's opinion, may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
Lessee. All sums so paid by Lessor and all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, in each case to the
extent permitted by law) so incurred, together with a late charge thereon (to
the extent permitted by law) at the Overdue Rate from the date on which such
sums or expenses are paid or incurred by Lessor, shall be paid by Lessee to
Lessor on demand. The obligations of Lessee and rights of Lessor contained in
this Article shall survive the expiration or earlier termination of this Lease.



                                      -44-
<PAGE>

                                 ARTICLE XVIII

                  18.1 REIT Requirements. Lessee understands that in order for
SHC to qualify as a REIT, the following requirements (the "REIT Requirements")
must be satisfied:

                  (a) Anything contained in this Lease to the contrary
notwithstanding, the average of the fair market value at the beginning and end
of a Fiscal Year of Lessor's personal property that is leased to Lessee under
the Lease shall not exceed 15% of the average of the aggregate fair market
values of all of the Leased Property at the beginning and at the end of such
Fiscal Year (the "Personal Property Limitation"). If Lessor reasonably
anticipates that the Personal Property Limitation will be exceeded with respect
to the Leased Property for any Fiscal Year, Lessor shall notify Lessee, and
Lessee either (i) shall purchase at fair market value any personal property
anticipated to be in excess of the Personal Property Limitation ("Excess
Personal Property") either from Lessor or a third party or (ii) shall lease the
Excess Personal Property from a third party. In either case, Lessee's Rent
obligation shall be equitably adjusted. In addition, in the case of the purchase
or lease of Excess Personal Property by Lessee from a third party, the Lessor's
capital expenditure reserve obligation shall be appropriately decreased to
reflect the reduced need for Lessor-owned personal property. Notwithstanding
anything to the contrary set forth above, Lessee shall not be responsible in any
way for determining whether or not Lessee has exceeded or will exceed the
Personal Property Limitation, and shall not be liable to Lessor or any of its
shareholders in the event that the Personal Property Limitation is exceeded, as
long as Lessee meets its obligation to acquire or lease any Excess Personal
Property as provided above. This Section 18.1 is intended to ensure that the
Rent qualifies as "rents from real property," within the meaning of Section
856(d) of the Code, or any similar or successor provisions thereto, and shall be
interpreted in a manner consistent with such intent.

                  (b) Anything contained in this Lease to the contrary
notwithstanding, Lessee shall not sublet the Leased Property on any basis such
that the rental to be paid by the sublessee thereunder would be based, in whole
or in part, on either (i) the net income or net profits derived by the business
activities of the sublessee, or (ii) 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 Code, or any similar or successor provision thereto.


                                      -45-
<PAGE>

                  (c) Lessee cannot sublet the Leased Property to any Person in
which SHC, owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code, or any similar or successor
provisions thereto.

                  (d) Lessee agrees to make an election to be, and to operate as
a "taxable REIT subsidiary" of SHC within the meaning of Section 856(e) of the
Code, or any similar or successor provision thereto.

                  (e) Lessee shall not (i) directly or indirectly operate or
manage a "lodging facility" within the meaning of Section 856(d)(9)(D)(ii) of
the Code or a "health care facility" within the meaning of Section
856(e)(6)(D)(ii) or (ii) directly or indirectly provide to any other person
(under a franchise, license, or otherwise) rights to any brand name under which
any lodging facility or health care facility is operated; provided, however,
that Lessee may provide such rights to Manager to operate or manage a lodging
facility as long as such rights are held by Lessee as a franchisee, licensee, or
in a similar capacity and such lodging facility is either owned by Lessee or is
leased to Lessee by Lessor or one of its Affiliates.

                  (f) Lessee agrees, and agrees to use reasonable efforts to
cause its Affiliates, to use their best efforts to permit the REIT Requirements
to be satisfied. Lessee agrees and agrees to use reasonable efforts to cause its
Affiliates, to cooperate in good faith with SHC and Lessor to ensure that the
REIT Requirements are satisfied, including but not limited to, providing SHC
with information about the ownership of Lessee, and its Affiliates to the extent
that such information is reasonably available. Lessee agrees, and agrees to use
reasonable efforts to cause its Affiliates, upon request by SHC, and, where
appropriate, at SHC's expense, to take reasonable action necessary to ensure
compliance with the REIT Requirements. Immediately after becoming aware that the
REIT Requirements are not, or will not be, satisfied, Lessee shall notify, or
use reasonable efforts to cause its Affiliates to notify, SHC of such
noncompliance.

                  (g) Both Lessee and Lessor agree that no provision of this
lease shall be construed so as to cause SHC to fail to qualify as a REIT.

                  18.2 Lessee Officer and Employee Limitation. Anything
contained in this Lease to the contrary notwithstanding, none of the officers or
employees of Lessee or any Lessee Affiliate shall be officers or employees of
Manager (or any Person who operates or manages the Leased Property). In
addition, if a Person serves as both (a) a director of Lessee or any Lessee
Affiliate and (b) a director or trustee and officer (or employee) of Manager (or
any Person who operates or manages the Leased Property), that Person shall not
receive any compensation for serving as a director of Lessee or any Lessee
Affiliate. If a Person serves as both (i) director or Manager of any Lessee
Affiliate (or any Person who operates or manages the Leased Property) and (ii) a
director and officer (or employee) of Lessee, that Person shall not receive any
compensation for serving as a director or Manager of such Lessee Affiliate.



                                      -46-
<PAGE>

                  18.3 Payments to Affiliates of Lessee. Notwithstanding
anything to the contrary contained in this Lease, Lessee shall make no payments
to Affiliates as Gross Operating Expenses unless expressly set forth in the
Operating Budget or an approved Capital Budget or otherwise expressly agreed to
in writing by Lessor, in either case, after full written disclosure (including
information regarding competitive pricing) by Lessee to Lessor of the
affiliation and any other related information requested by Lessor. Furthermore,
Lessee shall be permitted to contract with its Affiliates for management and
other services and to pay fees for such services, provided that such contracts
and fees are disclosed in writing to Lessor and such fees shall not be included
in Gross Operating Expenses and Lessee's obligation to pay such fees shall be
subordinated to Lessee's obligation to pay Base Rent, Percentage Rent and
Additional Charges to Lessor pursuant to the terms of this Lease.

                  18.4 Management Agreement. Lessee agrees that in order to
comply with certain of the REIT Requirements, it will, at all times, during the
Term cause the Leased Property to be operated and managed by a management
company ("Manager") that is an Eligible Independent Contractor. Lessee shall
provide Lessor with an executed copy of all agreements relating to the
management or operation of the Hotel (a "Management Agreement"). Lessor shall
have the right in its sole and absolute discretion to approve or disapprove in
advance any Manager or proposed Manager of the Hotel which is not a Qualified
Manager. Any Management Agreement must provide that (a) upon termination of this
Lease or termination of Lessor's or Lessee's right to possession of the Leased
Property for any reason, the Management Agreement may be terminated by Lessor
without liability for any payment due or to become due to the Manager
thereunder; (b) any management fees shall be subordinated to payments of Rent to
Lessor hereunder; and (c) in the event Lessee is in default, the Manager shall,
at the election of Lessor and provided the Manager continues to be paid, and
Lessor (or any party acting by or through Lessor) agrees to perform Lessee's
other obligations to Manager under the Management Agreement which accrue
subsequent to the date Lessor makes such election, continue to perform under the
terms of the Management Agreement for a period not to exceed ninety (90) days,
provided that such election by Lessor shall not constitute a waiver by Lessor of
any rights or remedies Lessor may have as a result of Lessee's default. No fees
or other amounts payable by Lessee to any Manager shall excuse Lessee from its
obligations to pay Rent and other amounts payable by Lessee to Lessor hereunder.
No Management Agreement may be amended or modified in any manner which
materially affects the subordination of the management fees without the prior
written consent of Lessor.

                                  ARTICLE XIX

                  19.1 Holding Over. If Lessee for any reason remains in
possession of the Leased Property after the expiration or earlier termination of
the Term, such possession shall be as a tenant at sufferance during which time
Lessee shall pay as rental each month two (2) times the aggregate of (a)
one-twelfth of the aggregate Base Rent and Percentage Rent payable with respect
to the last Fiscal Year of the Term, (b) all Additional Charges accruing during
the applicable month and (c) all other sums, if any, payable by Lessee under
this Lease with respect to the Leased Property. During such period, Lessee shall
be obligated to perform and observe all of the terms, covenants and conditions
of this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to tenancies at sufferance, to continue its occupancy and
use of the Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease.



                                      -47-
<PAGE>

                                   ARTICLE XX

                  20.1 Risk of Loss. During the Term, the risk of loss or of
decrease in the enjoyment and beneficial use of the Leased Property in
consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
attachments, levies or executions (other than those caused by Lessor and those
claiming from, through, or under Lessor) is assumed by Lessee except as
specifically provided in this Lease, and, in the absence of gross negligence,
willful misconduct or breach of this Lease by Lessor, Lessor shall in no event
be answerable or accountable therefor, nor shall any of the events mentioned in
this Section entitle Lessee to any abatement of Rent except as specifically
provided in this Lease.

                                  ARTICLE XXI

                  21.1 Indemnification. Notwithstanding the existence of any
insurance, and without regard to the policy limits of any such insurance or
self-insurance, but subject to Section 16.4 and Article VIII, Lessee will
protect, indemnify, hold harmless and defend Lessor from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses), to the extent permitted by law, imposed upon or incurred by or
asserted against Lessor Indemnified Parties by reason of: (a) any accident,
injury to or death of persons or loss of or damage to property occurring on or
about the Leased Property or adjoining sidewalks, including, without limitation,
any claims under liquor liability, "dram shop" or similar laws, (b) any past,
present or future use, misuse, non-use, condition, management, maintenance or
repair by Lessee or any of its agents, employees or invitees of the Leased
Property or Lessee's Personal Property or any litigation, proceeding or claim by
governmental entities or other third parties to which a Lessor Indemnified Party
is made a party or participant related to such use, misuse, non-use, condition,
management, maintenance, or repair thereof by Lessee or any of its agents,
employees or invitees, including any failure of Lessee or any of its agents,
employees or invitees to perform any obligations under this Lease or imposed by
applicable law (other than arising out of a Condemnation proceedings), (c) any
Impositions that are the obligations of Lessee pursuant to the applicable
provisions of this Lease, (d) any failure on the part of Lessee to perform or
comply with any of the terms of this Lease, and (e) the non-performance of any
of the terms and provisions of any and all existing and future subleases of the
Leased Property to be performed by the landlord thereunder.

                  Lessor shall indemnify, save harmless and defend Lessee
Indemnified Parties from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses imposed upon or
incurred by or asserted against Lessee Indemnified Parties as a result of (i)
the gross negligence or willful misconduct of Lessor arising in connection with
this Lease; (ii) any failure on the part of Lessor to perform or comply with any
of the terms of this Lease; (iii) any Impositions that are the obligations of
Lessor pursuant to the applicable provisions of this Lease; (iv) any liability
arising under the Management Agreement as a result of inadequate funding by
Lessor for Capital Expenditures; (v) liabilities or obligations arising under
the Americans with Disabilities Act (except to the extent relating to
alterations performed by or actions taken by Lessee subsequent to the
Commencement Date of this Lease); or (vi) contractual liabilities to third
parties not affiliated with Lessee (including managers) relating to, or arising
out of, the termination of this Lease by reason of an Event of Default by Lessor
prior to the expiration of any such third party contract.


                                      -48-
<PAGE>

                  To the extent that neither of the foregoing paragraphs applies
to a particular liability, action, claim, damage, cost or expense arising out of
operation of the Leased Property, such liability, action, claim, damage, cost or
expense shall be paid as a Gross Operating Expense.

                  Any amounts that become payable by an Indemnifying Party under
this Section shall be paid within ten (10) days after liability therefor on the
part of the Indemnifying Party is determined by litigation or otherwise, and if
not timely paid, shall bear a late charge (to the extent permitted by law) at
the Overdue Rate from the date of such determination to the day of payment. An
Indemnifying Party, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against the Indemnified
Party. The Indemnified Party, at its expense, shall be entitled to participate
in any such claim, action, or proceeding, and the Indemnifying Party may not
compromise or otherwise dispose of the same without the consent of the
Indemnified Party, which may not be unreasonably withheld. Nothing herein shall
be construed as indemnifying a Lessor Indemnified Party against its own grossly
negligent acts or omissions or willful misconduct.

                  Lessee's or Lessor's liability for a breach of the provisions
of this Article shall survive any termination of this Lease.

                                  ARTICLE XXII

                  22.1 Subletting and Assignment. Subject to the provisions of
Article XVIII and Section 22.2 and any other express conditions or limitations
set forth herein, Lessee may, but only with the prior written consent of Lessor,
which consent may not be unreasonably withheld or delayed, (a) assign this Lease
or sublet all or any part of the Leased Property to an Affiliate of Lessee, or
(b) sublet any retail or restaurant portion of the Leased Improvements in the
normal course of the Primary Intended Use; provided that any subletting to any
party other than an Affiliate of Lessee shall not individually as to any one
such subletting, or in the aggregate, materially diminish the actual or
potential Percentage Rent payable under this Lease. Any other assignment or
subletting shall require the express written consent of Lessor, which consent
may be withheld, delayed or conditioned in Lessor's sole discretion. In the case
of a subletting, the sublessee shall comply with the provisions of Section 22.2,
and in the case of an assignment, the assignee shall assume in writing and agree
to keep and perform all of the terms of this Lease on the part of Lessee to be
kept and performed and shall be, and become, jointly and severally liable with
Lessee for the performance thereof. Notwithstanding the above, Lessee may assign
the Lease without the consent of Lessor to any party providing a loan to Lessee
or any of its affiliates (a "Lender") provided (i) the assignment is for the
purpose of granting a collateral interest in Lessee's economic interest in the
Leases or in any future leases between Lessor and Lessee, to the Lender, or in
the economic interest of any Affiliate of Lessee in the Leases, to secure such
loan and (ii) such assignment is not made in violation of Lessee's
organizational documents. In case of either an assignment or subletting made
during the Term, Lessee shall remain primarily liable, as principal rather than
as surety, for the prompt payment of the Rent and for the performance and
observance of all of the covenants and conditions to be performed by Lessee
hereunder. An original counterpart of each such sublease and assignment and
assumption, duly executed by Lessee and such sublessee or assignee, as the case
may be, in form and substance satisfactory to Lessor, shall be delivered
promptly to Lessor. Any transfer of a Controlling interest in Lessee shall be
subject to the same limitations as are applicable to a direct assignment of this
Lease pursuant to this Section 22.1.

                                      -49-
<PAGE>

                  22.2 Attornment. Lessee shall insert in each sublease
permitted under Section 22.1 provisions to the effect that (a) such sublease is
subject and subordinate to all of the terms and provisions of this Lease and to
the rights of Lessor hereunder, (b) if this Lease terminates before the
expiration of such sublease, the sublessee hereunder will, at Lessor's option,
attorn to Lessor and waive any right the sublessee may have to terminate the
sublease or to surrender possession thereunder as a result of the termination of
this Lease, and (c) if the sublessee receives a written Notice from Lessor or
Lessor's assignees, if any, stating that an uncured Event of Default exists
under this Lease, the sublessee shall thereafter be obligated to pay all rentals
accruing under said sublease directly to the party giving such Notice, or as
such party may direct. All rentals received from the sublessee by Lessor or
Lessor's assignees, if any, as the case may be, shall be credited against the
amounts owing by Lessee under this Lease.

                  22.3 Permitted Sublease and Assignment. Notwithstanding the
foregoing, but subject to the provisions of Section 22.4 and any other express
conditions and limitations set forth herein, Lessee may, without Lessor's
consent, (a) sublease space at the Leased Property for newsstand, gift shop,
health club, restaurant, bar, retail, food concession, arcades, game rooms,
rental car desk, travel office or commissary purposes or similar concessions in
furtherance of the Primary Intended Use, and (b) sublease additional space at
the Leased Property for any such ancillary uses, so long as such additional
subleases do not demise, in the aggregate, in excess of 2,000 square feet and
will not violate or affect any Legal Requirement or Insurance Requirement.

                  22.4 Sublease Limitation. For so long as Lessor or any
Affiliate of Lessor shall seek to qualify as a real estate investment trust,
anything contained in this Lease to the contrary notwithstanding, Lessee shall
not sublet the Leased Property on any basis such that the rental to be paid by
any sublessee thereunder would be based, in whole or in part, on either (a) the
income or profits derived by the business activities of such sublessee, or (b)
any other formula such that any portion of such sublease rental would fail to
qualify as "rents from real property" within the meaning of Section 856(d) of
the Code or any similar or successor provision thereto.



                                      -50-
<PAGE>

                                 ARTICLE XXIII

                  23.1 Officer's Certificates; Financial Statements; Lessor's
Estoppel Certificates and Covenants.

                  (a) At any time and from time to time upon not less than ten
(10) days' Notice by Lessor, Lessee will furnish to Lessor an Officer's
Certificate certifying that this Lease is unmodified and in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications), the date to which the Rent has been paid, whether to
the knowledge of Lessee there is any existing default or Event of Default
hereunder by Lessor or Lessee, and such other information as may be reasonably
requested by Lessor. Any such certificate furnished pursuant to this Section may
be relied upon by Lessor, any lender and any prospective purchaser of the Leased
Property.

                  (b) Throughout the Term, Lessee will furnish to Lessor all
financial statements and financial and operating information, and access to
Lessee's books and records as are required by Lessor, as reasonably determined
by Lessor.

                  (c) At any time and from time to time upon not less than ten
(10) days' Notice by Lessee, Lessor will furnish to Lessee or to any person
designated by Lessee an estoppel certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications), the date to which Rent
has been paid, whether to the knowledge of Lessor there is any existing default
or Event of Default on Lessee's part hereunder, and such other information as
may be reasonably requested by Lessee.

                  (d) Within twenty (20) days after the close of each Accounting
Period, Lessee shall cause Manager to deliver an interim accounting (the
"Accounting Period Statement") to Lessor showing Gross Revenues, and
applications and distributions thereof for the preceding Accounting Period.
Lessee shall cause Manager to transfer to Lessee, with each Accounting Period
Statement, any interim amounts due Lessee subject to Working Capital needs, and
shall retain any interim amounts due Manager. Calculations and payments of the
management fees due Manager, and distributions to Lessee made with respect to
each Accounting Period within a Fiscal Year shall be accounted for cumulatively.
Within sixty (60) days after the end of each Fiscal Year, Lessee shall cause
Manager to deliver to Lessee and Lessor a statement (the "Annual Operating
Statement") in reasonable detail summarizing the operations of the Hotel for the
immediately preceding Fiscal Year and a certificate of Manager's chief
accounting officer certifying that, to the best of his or her knowledge, such
Annual Operating Statement is true and correct. Subject to the right to audit
described in Section 23.1(e) below, the parties shall, within ten (10) business
days after Lessor's receipt of such Annual Operating Statement, make any
adjustments, by cash payment, in the amounts paid or retained for such Fiscal
Year as are needed because of the final figures set forth in such Annual
Operating Statement. Such Annual Operating Statement shall be controlling over
the preceding Accounting Period Statements. Notwithstanding anything to the
contrary herein, so long as the Management Agreement is in full force and
effect, to the extent the financial reporting requirements herein are different
than the financial reporting requirements in the Management Agreement, the
financial requirements in the Management Agreement shall control over the
financial reporting requirements herein, including those set forth in Sections
23.1(e), (f) and (g) hereof.

                                      -51-
<PAGE>

                  (e) Books of control and account pertaining to operations at
the Hotel shall be kept on the accrual basis and in all material respects in
accordance with the Uniform System and generally acceptable accounting
principles consistently applied. Lessee, upon Lessor's reasonable request and at
reasonable intervals during Manager's normal business hours, shall examine such
records. If Lessor desires Lessee to audit, examine or review the Annual
Operating Statement, Lessor shall notify Lessee and Manager in writing within
sixty (60) days after receipt of such Annual Operating Statement of its desire
for Lessee to audit and Lessee shall begin such audit no sooner than thirty (30)
days and no later than sixty (60) days after Manager's receipt of such notice.
Lessee shall complete such audit within ninety (90) days after commencement
thereof. The terms of the Management Agreement concerning such audit shall
govern the same.

                  (f) Lessee shall cause all funds derived from operation of the
Hotel to be deposited by Manager in bank accounts (the "Operating Accounts")
established by Manager and Lessee in a bank or banks designated by Manager,
subject to Lessor's reasonable approval. Withdrawals from said Operating
Accounts shall be made solely by representatives whose signatures have been
authorized by Lessee. Reasonable petty cash funds can be maintained at the
Hotel. Lessee shall cause all payments to be made by Manager under the
Management Agreement to be made from the Operating Accounts, petty cash funds,
or from the FF&E Reserve (in accordance with the terms of the Management
Agreement). Lessee may elect to cause Manager to pay any payments required to be
paid by Lessor to the existing mortgagee in accordance with the terms of the
Mortgage, and any other amounts required to be paid by Lessor under this Lease,
and any such sums so paid by Manager to the existing mortgagee or to any other
party on behalf of Lessor shall be credited against Rent payments due hereunder
from Lessee to Lessor. Notwithstanding the foregoing, any amounts paid to the
existing mortgagee or to any other party on behalf of Lessor that exceed Rent
payments hereunder shall be reimbursed to Lessee by Lessor.

                                  ARTICLE XXIV

                  24.1 Lessor's Right to Inspect. Lessee shall permit Lessor and
its authorized representatives as frequently as reasonably requested by Lessor
to inspect the Leased Property and Lessee's accounts and records pertaining
thereto and make copies thereof, during usual business hours upon reasonable
advance notice, subject only to any business confidentiality requirements
reasonably requested by Lessee.

                                  ARTICLE XXV

                  25.1 No Waiver. No failure by Lessor or Lessee to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy consequent upon a breach thereof, and no acceptance of full or partial
payment of Rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of any such term. To the extent permitted by law,
no waiver of any breach shall affect or alter this Lease, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach.

                                      -52-
<PAGE>

                                  ARTICLE XXVI

                  26.1 Remedies Cumulative. To the extent permitted by law, each
legal, equitable or contractual right, power and remedy of Lessor or Lessee now
or hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.

                                 ARTICLE XXVII

                  27.1 Acceptance of Surrender. No surrender to Lessor of this
Lease or of the Leased Property or any part thereof, or of any interest therein,
shall be valid or effective unless agreed to and accepted in writing by Lessor
and no act by Lessor or any representative or agent of Lessor, other than such a
written acceptance by Lessor, shall constitute an acceptance of any such
surrender.

                                 ARTICLE XXVIII

                  28.1 No Merger of Title. There shall be no merger of this
Lease or of the leasehold estate created hereby by reason of the fact that the
same Person or entity may acquire, own or hold, directly or indirectly: (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate and (b) the fee estate in the Leased Property.

                                  ARTICLE XXIX

                  29.1 Conveyance by Lessor. If Lessor or any successor owner of
the Leased Property conveys the Leased Property in accordance with the terms
hereof other than as security for a debt, and the grantee or transferee of the
Leased Property expressly assumes all obligations of Lessor hereunder arising or
accruing from and after the date of such conveyance or transfer, Lessor or such
successor owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Lessor under this Lease arising or accruing from
and after the date of such conveyance or other transfer as to the Leased
Property and all such future liabilities and obligations shall thereupon be
binding upon the new owner.

                  29.2 Other Interests. This Lease and Lessee's interest
hereunder shall at all times be subject and subordinate to the lien and security
title of any deeds to secure debt, deeds of trust, mortgages, or other interests
heretofore or hereafter granted by Lessor in order to finance or refinance the
Leased Property and to any and all advances to be made thereunder and to all
renewals, modifications, consolidations, replacements, substitutions, and
extensions thereof (all of which are herein called the "Mortgage").



                                      -53-
<PAGE>

                                  ARTICLE XXX

                  30.1 Quiet Enjoyment. So long as Lessee pays all Rent as the
same becomes due and complies with all of the terms of this Lease and performs
its obligations hereunder, in each case within the applicable grace periods, if
any, Lessee shall peaceably and quietly have, hold and enjoy the Leased Property
for the Term hereof, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor, but subject to all liens and encumbrances
subject to which the Leased Property was conveyed to Lessor or hereafter
consented to by Lessee or provided for herein. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to pursue any
claim it may have against Lessor as a result of a breach by Lessor of the
covenant of quiet enjoyment contained in this Section. Except as otherwise
provided in this Lease, no failure by Lessor to comply with the foregoing
covenant shall give Lessee the right to cancel or terminate this Lease or abate,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Lease, or fail to perform any other obligation of Lessee
hereunder.

                                  ARTICLE XXXI

                  31.1 Notices. All notices, demands, requests, consents
approvals and other communications ("Notice" or "Notices") hereunder shall be in
writing and personally served or mailed (by registered or certified mail, return
receipt requested and postage prepaid), addressed to Lessor at its principal
office, as indicated on the signature page hereof, Attention: General Counsel
and addressed to Lessee as indicated on the signature page hereof, Attention:
General Counsel, or to such other address or addresses as either party may
hereafter designate. All Notices required or permitted to be sent hereunder
shall be deemed to have been given for all purposes of this Lease upon the date
of receipt or refusal, except that whenever under this Lease a Notice is either
received on a day which is not a Business Day or is required to be delivered on
or before a specific day which is not a Business Day, the day of receipt or
required delivery shall automatically be extended to the next Business Day.

                                 ARTICLE XXXII

                  32.1 Appraisers. If it becomes necessary to determine the Fair
Market Value or Fair Market Rental of the Leased Property for any purpose of
this Lease, the party required or permitted to give Notice of such required
determination shall include in the Notice the name of a person selected to act
as appraiser on its behalf. Within ten (10) days after Notice, Lessor (or
Lessee, as the case may be) shall appoint a second person as appraiser on its
behalf. The appraisers thus appointed, each of whom must be a member of the
American Institute of Real Estate Appraisers (or any successor organization
thereto) with at least five years' experience in the State appraising property
similar to the Leased Property, shall, within forty-five (45) days after the
date of the Notice appointing the first appraiser, proceed to appraise the
Leased Property to determine the Fair Market Value or Fair Market Rental thereof
as of the relevant date (giving effect to the impact, if any, of inflation from
the date of their decision to the relevant date); provided, however, that if
only one appraiser shall have been so appointed, then the determination of such
appraiser shall be final and binding upon the parties. To the extent consistent
with sound appraisal practice as then existing at the time of any such
appraisal, such appraisal shall be made on a basis consistent with the basis on
which the Leased Property was appraised for purposes of determining its Fair
Market Value at the time the Leased Property was acquired by Lessor. If two
appraisers are appointed and if the difference between the amounts so determined
does not exceed 5% of the lesser of such amounts, then the Fair Market Value or
Fair Market Rental shall be an amount equal to 50% of the sum of the amounts so
determined. If the difference between the amounts so determined exceeds 5% of
the lesser of such amounts, then such two appraisers shall have twenty (20) days
to appoint a third appraiser. If no such appraiser shall have been appointed
within such twenty (20) days or within ninety (90) days of the original request
for a determination of Fair Market Value or Fair Market Rental, whichever is
earlier, either Lessor or Lessee may apply to any court having jurisdiction to
have such appointment made by such court. Any appraiser appointed by the
original appraisers or by such court shall be instructed to determine the Fair
Market Value or Fair Market Rental within forty-five (45) days after appointment
of such appraiser. The determination of the appraiser which differs most in the
terms of dollar amount from the determinations of the other two appraisers shall
be excluded, and 50% of the sum of the remaining two determinations shall be
final and binding upon Lessor and Lessee as the Fair Market Value or Fair Market
Rental of the Leased Property, as the case may be. This provision for
determining by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
appraiser appointed by it and each shall pay one-half of the fees and expenses
of the third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.



                                      -54-
<PAGE>

                                 ARTICLE XXXIII

                  33.1 Lessor May Grant Mortgages. Without the consent of
Lessee, Lessor may, subject to the terms and conditions set forth below in this
Section 33, from time to time, directly or indirectly, create or otherwise cause
to exist any Mortgage upon the Leased Property, or any portion thereof or
interest therein, whether to secure any borrowing or other means of financing or
refinancing.

                  33.2 Lessee's Right to Cure. If Lessor breaches any covenant
to be performed by it under this Lease, Lessee, after Notice to and demand upon
Lessor, without waiving or releasing any obligation hereunder, and in addition
to all other remedies available to Lessee, may (but shall be under no obligation
at any time thereafter to) make such payment or perform such act for the account
and at the expense of Lessor. All sums so paid by Lessee and all costs and
expenses (including, without limitation, reasonable attorneys' fees) so
incurred, together with interest thereon at the Overdue Rate from the date on
which such sums or expenses are paid or incurred by Lessee, shall be paid by
Lessor to Lessee on demand or, following entry of a final, nonappealable
judgment against Lessor for such sums, may be offset by Lessee against the Base
Rent payments next accruing or coming due. The rights of Lessee hereunder to
cure and to secure payment from Lessor in accordance with this Section 33.2
shall survive the termination of this Lease with respect to the Leased Property.

                                      -55-
<PAGE>

                  33.3 Grant of Easements or Imposition of Restrictions. Lessor
may not grant easements or impose restrictions with respect to any Leased
Property (other than those contemplated by Section 7.3) without the express
written consent of Lessee, which consent may not be unreasonably withheld.

                  33.4 Outparcels, Leases and Licenses. Lessor, without the
consent of Lessee, shall have the right to (a) develop, subdivide, lease, sell,
construct, operate or maintain improvements on that portion of the Land, if any,
not necessary for the operations of the Hotel, provided the intended use of such
portion of the Land would not materially interfere with the operations of the
Hotel (as determined by Lessee in its reasonable discretion), and (b) lease or
license portions of the Leased Property for telecommunications and similar or
related facilities, billboards or other uses, to the extent such leases or
licenses do not materially interfere with the operations of the Hotel; provided,
however, that in the event such lease or license is for a rooftop
telecommunications antennae, then the revenues received by Lessor shall be
distributed 50% to Lessee and 50% to Lessor. Lessee agrees to (i) cooperate with
Lessor or any designee of Lessor with respect to any outparcel or lease or
license which is in compliance with the provisions of this Section and (ii)
terminate this Lease as to any outparcel created under this Section.

                                 ARTICLE XXXIV

                  34.1 Miscellaneous. Anything contained in this Lease to the
contrary notwithstanding, all claims against, and liabilities of, Lessee or
Lessor arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision of this Lease or any application thereof
is invalid or unenforceable, the remainder of this Lease and any other interest
rate provided for in any provision of this Lease are based upon a rate in excess
of the maximum rate permitted by applicable law, the parties agree that such
charges shall be fixed at the maximum permissible rate. Neither this Lease nor
any provision hereof may be changed, waived, discharged or terminated except by
a written instrument in recordable form signed by Lessor and Lessee. All the
terms and provisions of this Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. The headings in this Lease are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. This Lease shall be
governed by and construed in accordance with the laws of the State, but not
including its conflicts of laws rules.

                  34.2 Transition Procedures. Upon the expiration or termination
of the Term of this Lease, for whatever reason, Lessor and Lessee shall do the
following (and the provisions of this Section 34.2 shall survive the expiration
or termination of this Lease until they have been fully performed) and, in
general, shall cooperate in good faith to effect an orderly transition with
respect to the management of the Hotel.

                  (a) Transfer of Licenses. Upon the expiration or earlier
termination of the Term, Lessee shall use its best efforts (i) to transfer to
Lessor or Lessor's nominee or assignee the Management Agreement and all
licenses, operating permits and other governmental authorizations and all
contracts, including contracts with governmental or quasi-governmental entities,
that may be necessary for the operation of the Hotel (collectively, "Licenses"),
or (ii) if such transfer is prohibited by law or Lessor otherwise elects, to
cooperate with Lessor or Lessor's nominee in connection with the processing by
Lessor or Lessor's nominee of any applications for, all Licenses; provided, in
either case, that the costs and expenses of any such transfer or the processing
of any such application shall be paid by Lessor or Lessor's nominee.

                                      -56-
<PAGE>

                  (b) Leases and Concessions. Lessee shall assign to Lessor or
Lessor's nominee simultaneously with the termination of this Lease, and the
assignee shall assume all leases and concession agreements in effect with
respect to the Hotel then in Lessee's name.

                  (c) Books and Records. All books and records for the Hotel
kept by Lessee pursuant to Section 3.7 shall be delivered promptly to Lessor or
Lessor's nominee, simultaneously with the termination of this Lease, but such
books and records shall thereafter be available to Lessee at all reasonable
times for inspection, audit, examination, and transcription for a period of one
(1) year and Lessee may retain (on a confidential basis) copies or computer
records thereof.

                  (d) Remittance. Lessee shall remit to Lessor or Lessor's
nominee, simultaneously with the termination of this Lease, all funds remaining,
if any, after payment of all accrued Gross Operating Expenses, and other amounts
due Lessee and after deducting the costs of any scheduled repair, replacement,
or refurbishment of Furniture and Equipment with respect to which deposits have
been made.

                  34.3 Waiver of Presentment, etc. Lessee waives all
presentments, demands for payment and for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance and waives all notices of the existence, creation, or incurring of
new or additional obligations, except as expressly granted herein.

                                  ARTICLE XXXV

                  35.1 Memorandum of Lease. Lessor and Lessee shall promptly
upon the request of either enter into a short form memorandum of this Lease, in
form suitable for recording under the laws of the State in which reference to
this Lease, and all options contained herein, shall be made. Lessee shall pay
all costs and expenses of recording such memorandum of this Lease.

                                 ARTICLE XXXVI

                  36.1 Compliance with Management Agreement. Lessee shall comply
in every respect with the provisions of the Management Agreement (other than
requirements with respect to funding Capital Improvements which shall be the
responsibility of Lessor) so as to avoid any default thereunder during the term
of this Lease. Lessee shall not terminate, extend, modify or enter into any
Management Agreement without in each instance first obtaining Lessor's prior
written consent. Lessor and Lessee agree to cooperate fully with each other in
the event it becomes necessary to obtain a Management Agreement extension or
modification or a new manager for the Leased Property. If the Management
Agreement expires prior to the expiration of the Lease Term, Lessee, with the
prior approval of Lessor, shall endeavor to obtain a new or extended management
agreement. In the event of a change in the manager for the Leased Property,
Lessor and Lessee shall promptly negotiate, if applicable, in good faith
appropriate and mutually acceptable modifications to the Rent terms for such
Leased Property under this Lease. In the event that Lessor and Lessee are unable
to agree, within sixty (60) days after such change in the manager, that
modifications to the Rent terms are warranted by the change in manager or to
agree on appropriate modifications to the Rent terms either Party may elect to
submit the matter to arbitration pursuant to Article XXXVII hereof. During the
pendency of the negotiations and/or arbitration, Lessee shall continue to pay
Rent in accordance with the terms of the Lease, with possible retroactive
adjustments based on the outcome of the negotiations and/or arbitration. If upon
any expiration or earlier termination of the Lease (other than upon an Event of
Default by Lessee), a Management Agreement remains in effect, or would but for
such expiration or termination remain in effect, Lessor shall indemnify, defend
and hold Lessee harmless with respect to the obligations and liabilities arising
thereunder after the date of expiration or termination of this Lease.

                                      -57-
<PAGE>

                                 ARTICLE XXXVII

                  37.1 Arbitration. Except as otherwise expressly provided, in
the event a dispute should arise concerning the interpretation or application of
any of the provisions of this Lease, the parties agree that the dispute shall be
submitted to arbitration by the American Arbitration Association under its then
prevailing rules, except as modified by this Article XXXVII. The Arbitration
Tribunal shall be formed of three (3) Arbitrators each of which shall have at
least five (5) years' experience in hotel operation, management or ownership,
one (1) to be appointed by each of Lessor and Lessee and the third (3rd) to be
appointed by the American Arbitration Association. The arbitration shall take
place in the county in which the Leased Property is located and shall be
conducted in the English language. The arbitration award shall be final and
binding upon the parties hereto and subject to no appeal, and shall deal with
the question of costs of arbitration and all matters related thereto. Judgment
upon the award rendered may be entered into any court having jurisdiction, or
applications may be made to such court for an order of enforcement. Any
arbitration under this Article XXXVII shall be submitted within three (3) months
following the notice which triggers the arbitration, and shall be concluded
within one (1) year thereafter. In the event either of the foregoing deadlines
are missed, either party may proceed to commence a court proceeding to resolve
the dispute.

                  IN WITNESS WHEREOF, the parties have executed this Lease by
their duly authorized officers as of the date first above written.


                            [Signature Page Follows]

                  [Remainder of Page Intentionally Left Blank]




                                      -58-
<PAGE>


                                 SIGNATURE PAGE

LEASE AGREEMENT

                                  LESSOR

                                  _______________________________, a Delaware
                                  limited liability company


                                  By:
                                      -----------------------------------------
                                  Name:
                                        ---------------------------------------
                                  Its:
                                      -----------------------------------------

                                  77 West Wacker Drive, Suite 4600
                                  Chicago, Illinois 60601


State of _______)
                ) SS.
County of ______)

                  On the _____ day of ________________ in the year 2004, before
me, the undersigned, personally appeared ___________ personally known to me or
proved to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.

                                              ----------------------------
                                              Notary Public

Signature and Office of individual
taking acknowledgement



                        SIGNATURES CONTINUED ON NEXT PAGE

<PAGE>


                                 SIGNATURE PAGE

LEASE AGREEMENT

                                   LESSEE

                                   ___________________________, a Delaware
                                   limited liability company


                                   By:
                                         ---------------------------
                                   Name:
                                         ---------------------------
                                   Its:
                                         ---------------------------
                                         77 West Wacker Drive, Suite 4600
                                         Chicago, Illinois 60601

State of _______)
                ) SS.
County of ______)

                  On the _____ day of ________________ in the year 2004, before
me, the undersigned, personally appeared ___________ personally known to me or
proved to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.

                                             ----------------------------
                                             Notary Public

Signature and Office of individual
taking acknowledgement




<PAGE>

                                    Exhibit A
                                Legal Description






<PAGE>

                                    Exhibit B
                             Schedule of Lease Terms



Name and Location of Hotel

Base Rent: The annual sum of $_________ (as adjusted under Section 3.1(d)).

Percentage Rent:

Revenues Computation to be used for Quarterly Revenue Computation and Annual
Revenue Computation:

(a) ROOM REVENUES: (i) an amount equal to __% of the first $_________ in year to
date Room Revenues (as adjusted under Section 3.1(d)) plus (ii) an amount equal
to __% of all year to date Room Revenues in excess of $_________ and less than
$__________ (as adjusted under Section 3.1(d)), plus (iii) an amount equal to
__% of all year to date Room Revenues equal to or in excess of $_________ (as
adjusted under Section 3.1(d)).

                                      plus

(b) FOOD AND BEVERAGE REVENUES: (i) an amount equal to __% of the first
$__________ in year to date Food and Beverage Revenues (as adjusted under
Section 3.1(d)) plus (ii) an amount equal to __% of all year to date Food and
Beverage Revenues in excess of $__________ and less than $__________ (as
adjusted under Section 3.1(d)), plus (iii) an amount equal to __% of all year to
date Food and Beverage Revenues equal to or in excess of $__________ (as
adjusted under Section 3.1(d)).

                                      plus

(c) TELEPHONE REVENUES: (i) an amount equal to __% of the first $_______ in year
to date Telephone Revenues (as adjusted under Section 3.1(d)) plus (ii) an
amount equal to __% of all year to date Telephone Revenues in excess of $_______
and less than $_______ (as adjusted under Section 3.1(d)), plus (iii) an amount
equal to __% of all year to date Telephone Revenues equal to or in excess of
$_______ (as adjusted under Section 3.1(d)).

                                      plus

(d) OTHER REVENUES: (i) an amount equal to __% of the first $_________ in year
to date Other Revenues (as adjusted under Section 3.1(d)) plus (ii) an amount
equal to __% of all year to date Other Revenues in excess of $_________ and less
than $__________ (as adjusted under Section 3.1(d)), plus (iii) an amount equal
to __% of all year to date Other Revenues equal to or in excess of $__________.




                                       B-1