Exhibit 10.9

Winston-Salem HI&S

MANAGEMENT AGREEMENT

by and between

MHH MANAGEMENT, LLC

as MANAGER

and

APPLE TEN HOSPITALITY MANAGEMENT, INC.

as OWNER

Dated as of March 15, 2011

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Table of Contents

|            |                                            |                                                                          |    |     
|----------- | ------------------------------------------ | ------------------------------------------------------------------------ | -- | ----
|            |                                            |                                                                          |    | Page
|            |                                            |                                                                          |    |     
|            |                                            |                                                                          |    |     
|ARTICLE I   | APPOINTMENT
 OF MANAGER                    |                                                                          | 1 
|            |                                            |                                                                          |    |     
|1.01.       |                                            | Appointment                                                              |    | 1   
|            |                                            |                                                                          |    |     
|1.02.       |                                            | Management
 of the Hotel                                                 |    | 1   
|            |                                            |                                                                          |    |     
|1.03.       |                                            | Employees                                                                |    | 4   
|            |                                            |                                                                          |    |     
|1.04.       |                                            | Owners
 Right to Inspect                                                |    | 4   
|            |                                            |                                                                          |    |     
|1.05.       |                                            | Regular
 Meetings                                                        |    | 4   
|            |                                            |                                                                          |    |     
|1.06.       |                                            | System
 Standards                                                        |    | 4   
|            |                                            |                                                                          |    |     
|1.07.       |                                            | Limitations
 on Managers Authority                                      |    | 5   
|            |                                            |                                                                          |    |     
|1.08.       |                                            | Representations
 and Warranties of Manager                               |    | 5   
|            |                                            |                                                                          |    |     
|ARTICLE II  | TERM                                       |                                                                          | 5 
|            |                                            |                                                                          |    |     
|2.01.       |                                            | Term                                                                     |    | 5   
|            |                                            |                                                                          |    |     
|2.02.       |                                            | Performance
 Termination                                                 |    | 6   
|            |                                            |                                                                          |    |     
|ARTICLE III | COMPENSATION
 OF MANAGER                   |                                                                          | 6 
|            |                                            |                                                                          |   
|3.01.       |                                            | Management
 Fees                                                         |    | 6   
|            |                                            |                                                                          |    |     
|3.02.       |                                            | Operating
 Profit                                                        |    | 7   
|            |                                            |                                                                          |    |     
|ARTICLE IV  | ACCOUNTING,
 BOOKKEEPING AND BANK ACCOUNTS |                                                                          | 7 
|            |                                            |                                                                          |    |     
|4.01.       |                                            | Accounting,
 Distributions and Annual Reconciliation                     |    | 7   
|            |                                            |                                                                          |    |     
|4.02.       |                                            | Books and
 Records                                                       |    | 8   
|            |                                            |                                                                          |    |     
|4.03.       |                                            | Accounts,
 Expenditures                                                  |    | 9   
|            |                                            |                                                                          |    |     
|4.04.       |                                            | Annual
 Operating Projection                                             |    | 10  
|            |                                            |                                                                          |    |     
|4.05.       |                                            | Working
 Capital                                                         |    | 10  
|            |                                            |                                                                          |    |     
|4.06.       |                                            | Fixed Asset
 Supplies                                                    |    | 11  
|            |                                            |                                                                          |    |     
|4.07.       |                                            | Real Estate
 and Personal Property Taxes                                 |    | 11  
|            |                                            |                                                                          |    |     
|4.08.       |                                            | Sarbanes-Oxley
 Certification                                            |    | 12  
|            |                                            |                                                                          |    |     
|ARTICLE V   | REPAIRS,
 MAINTENANCE AND REPLACEMENTS     |                                                                          | 13
|            |                                            |                                                                          |    |     
|5.01.       |                                            | Repairs and
 Maintenance to be Paid from Gross Revenues                  |    | 13  
|            |                                            |                                                                          |    |     
|5.02.       |                                            | Repairs,
 Maintenance and Equipment Replacements to be Paid from Reserve |    | 13  
|            |                                            |                                                                          |    |     
|ARTICLE VI  | INSURANCE                                  |                                                                          | 14
|            |                                            |                                                                          |    |     
|6.01.       |                                            | Property
 Insurance                                                      |    | 14  

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|             |                      |                                           |    |   
|------------ | -------------------- | ----------------------------------------- | -- | --
|6.02.        |                      | Operational
 Insurance                    |    | 15
|             |                      |                                           |    |   
|6.03.        |                      | Coverage                                  |    | 16
|             |                      |                                           |    |   
|6.04.        |                      | Costs and
 Expenses                       |    | 16
|             |                      |                                           |    |   
|6.05.        |                      | Owners
 Right to Provide Insurance       |    | 16
|             |                      |                                           |    |   
|ARTICLE VII  | DAMAGE
 AND REPAIR   |                                           | 16
|             |                      |                                           |    |   
|7.01.        |                      | Damage and
 Repair                        |    | 16
|             |                      |                                           |    |   
|7.02.        |                      | Condemnation                              |    | 17
|             |                      |                                           |    |   
|7.03.        |                      | Subordination
 to Mortgage                |    | 17
|             |                      |                                           |    |   
|7.04.        |                      | No
 Covenants, Conditions or Restrictions |    | 18
|             |                      |                                           |    |   
|7.05.        |                      | Liens;
 Credit                            |    | 18
|             |                      |                                           |    |   
|ARTICLE VIII | DEFAULTS             |                                           | 18
|             |                      |                                           |    |   
|8.01.        |                      | Events of
 Default                        |    | 18
|             |                      |                                           |    |   
|8.02.        |                      | Remedies                                  |    | 20
|             |                      |                                           |    |   
|8.03.        |                      | Additional
 Remedies                      |    | 20
|             |                      |                                           |    |   
|ARTICLE IX   | ASSIGNMENT
 AND SALE |                                           | 20
|             |                      |                                           |    |   
|9.01.        |                      | Assignment                                |    | 20
|             |                      |                                           |    |   
|9.02.        |                      | Sale of the
 Hotel                        |    | 21
|             |                      |                                           |    |   
|ARTICLE X    | MISCELLANEOUS        |                                           | 21
|             |                      |                                           |    |   
|10.01.       |                      | Right to
 Make Agreement                  |    | 21
|             |                      |                                           |    |   
|10.02.       |                      | Consents and
 Cooperation                 |    | 21
|             |                      |                                           |    |   
|10.03.       |                      | Relationship                              |    | 22
|             |                      |                                           |    |   
|10.04.       |                      | Applicable
 Law; Jurisdiction             |    | 22
|             |                      |                                           |    |   
|10.05.       |                      | Recordation                               |    | 23
|             |                      |                                           |    |   
|10.06.       |                      | Headings                                  |    | 23
|             |                      |                                           |    |   
|10.07.       |                      | Notices                                   |    | 23
|             |                      |                                           |    |   
|10.08.       |                      | Environmental
 Matters                    |    | 23
|             |                      |                                           |    |   
|10.09.       |                      | Confidentiality;
 Projections             |    | 24
|             |                      |                                           |    |   
|10.10.       |                      | Indemnification                           |    | 25
|             |                      |                                           |    |   
|10.11.       |                      | Actions to
 be Taken Upon Termination     |    | 26
|             |                      |                                           |    |   
|10.12.       |                      | Waiver                                    |    | 27
|             |                      |                                           |    |   
|10.13.       |                      | Partial
 Invalidity                       |    | 28
|             |                      |                                           |    |   
|10.14.       |                      | Survival                                  |    | 28
|             |                      |                                           |    |   
|10.15.       |                      | Negotiation
 of Agreement                 |    | 28

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|            |                          |                                                                          |    |   
|----------- | ------------------------ | ------------------------------------------------------------------------ | -- | --
|10.16.      |                          | Estoppel
 Certificates                                                   |    | 28
|            |                          |                                                                          |    |   
|10.17.      |                          | Affiliates                                                               |    | 28
|            |                          |                                                                          |    |   
|10.18.      |                          | Blocked
 Persons or Entities.                                            |    | 29
|            |                          |                                                                          |    |   
|10.19.      |                          | Restrictions
 on Operating the Hotel in Accordance with System Standards |    | 29
|            |                          |                                                                          |    |   
|10.20.      |                          | Counterparts                                                             |    | 29
|            |                          |                                                                          |    |   
|10.21.      |                          | Entire
 Agreement                                                        |    | 30
|            |                          |                                                                          |    |   
|10.22.      |                          | Franchise
 Agreement                                                     |    | 30
|            |                          |                                                                          |    |   
|10.23.      |                          | Operation of
 Other Hotels                                               |    | 30
|            |                          |                                                                          |    |   
|10.24.      |                          | Waiver of
 Jury Trial and Punitive Damages                               |    | 31
|            |                          |                                                                          |    |   
|ARTICLE XI  | DEFINITION
 OF TERMS     |                                                                          | 31
|            |                          |                                                                          |    |   
|11.01.      |                          | Definition
 of Terms                                                     |    | 31
|            |                          |                                                                          |    |   
|ARTICLE XII | SUPPLEMENTAL
 PROVISIONS |                                                                          | 40

|           |   |                                           
|---------- | - | ------------------------------------------
|Schedule 1 | - | Hotel
 Specific Data                      
|Schedule 2 | - | Supplemental
 Provisions                  
|Exhibit A  | - | Legal
 Description of Site                
|Exhibit B  | - | FF&E
 Leases, Service Contracts and Leases

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MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT (Agreement)
is executed as of the 15th day of March, 2011 (Effective Date), byAPPLE TEN HOSPITALITY OWNERSHIP, INC., a
Virginia corporation (Owner),
with a mailing address at c/o Apple REIT Companies, 814 E. Main Street,
Richmond, Virginia 23219, Attention: Krissy Gathright, andMHH MANAGEMENT, LLC, a Georgia limited
liability company (Manager),
with a mailing address at c/o McKibbon Hotel Group, Inc., 402 Washington St.,
SE, Suite 200, Gainesville, Georgia 30501, Attention: David Hughs.

A. The
party identified as the Landlord in Schedule 1 attached hereto (Landlord) is the
owner of the hotel identified in Schedule 1, as more particularly
described in the definition of Hotel
in Section 11.01 hereof.

B. Landlord
and Owner have entered into that certain Hotel Lease Agreement dated as of the
Effective Date (the Hotel Lease)
pursuant to which Landlord leases the Hotel to Owner.

C. All
capitalized terms used in this Agreement shall have the meaning set forth in
Section 11.01 hereof.

D. Owner
desires to engage Manager to manage and operate the Hotel, and Manager desires to
accept such engagement, upon the terms and conditions set forth in this
Agreement.

NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Owner and Manager agree as follows:

ARTICLE I

APPOINTMENT OF MANAGER

1.01. Appointment.

Owner
hereby appoints and employs Manager as Owners exclusive independent contractor
to supervise, direct and control the management and operation of the Hotel
throughout the Term. Manager accepts
said appointment and agrees to manage the Hotel during the Term in accordance
with the terms and conditions of this Agreement.

1.02. Management
of the Hotel.

A. Manager
shall manage the Hotel, including, without limitation, performance of the
following functions, in accordance with Prudent Industry Practices, the
provisions of this Agreement and all standards imposed by the Franchise
Agreement (provided that in all cases, except as otherwise specifically set
forth in this Agreement, the costs and expenses of performing such functions
shall be Deductions):

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1.
Recruit, employ, relocate, manage, supervise, direct and discharge all employees
at the Hotel and maintain adequate staff, consistent with Prudent Industry
Practices, to carry out its duties under this Agreement.

2.
Establish prices, rates and charges for services provided in the Hotel,
including Guest Room rates, subject to Owners prior approval, which approval
shall be part of the Annual Operating Projections process.

3.
Establish and revise, as necessary, administrative policies and procedures,
including employment policies and procedures and policies and procedures for
the control of revenue and expenditures, for the purchasing of supplies and
services, for the control of credit and for the scheduling of maintenance, and
verify that the foregoing procedures are operating in a sound manner.

4.
Make payments on accounts payable and collect accounts receivable.

5.
Procure (for Owner) all Inventories and replace Fixed Asset Supplies and
otherwise incur customary and reasonable expenses in the operation of the
Hotel, subject to the approved Annual Operating Projection.

6.
Prepare and deliver Annual Operating Projections, Accounting Period Statements,
Annual Operating Statements, Building Estimates, Repairs and Equipment
Estimates and such other information as is required by this Agreement.

7.
Plan, execute and supervise repairs and maintenance at the Hotel.

8.
Obtain the insurance required to be obtained by Manager pursuant to Article VI
of this Agreement and provide or cause to be provided all risk management
services related thereto, subject to the provisions of Section 6.05.

9.
Obtain and keep in full force and effect, either in its own name or in Owners
or Owners affiliates name, as may be required by applicable law, any and all
licenses (including, without limitation, liquor licenses which shall be
maintained in the name of Manager to the extent permitted by law) and permits
to the extent same is within the control of Manager (or, if same is not within
the control of Manager, Manager shall use all due diligence and commercially
reasonable efforts to obtain and keep same in full force and effect).

10.
Subject to Section 7.03 of this Agreement, execute commercially reasonable
subordination agreements, estoppel certificates and other documentation
required by any purchaser or mortgagee and reasonably cooperate (provided that
Manager shall not be obligated to enter into any amendments of this Agreement)
with Owner or Landlord in any attempt(s) by Owner or Landlord to effectuate a
Sale of the Hotel or to obtain a Mortgage.

11.
At the direction and with the concurrence of Owner, arrange for and supervise
public relations and advertising and prepare marketing plans.

12.
Negotiate and enter into, on behalf of Owner, service contracts and other third
party agreements required in the ordinary course of operating the Hotel,
provided that

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Owners prior written approval shall be required for any contract
having a non-terminable term in excess of one year, or if the amount of the
aggregate expenditures thereunder would, or are reasonably anticipated to,
exceed $20,000 in the aggregate per annum.

13.
Manage and operate the Hotel at all times in compliance with the Franchise
Agreement, including (without limitation) the Manual and the System standards
(as such terms are defined therein).

B. The
operation of the Hotel shall be under the exclusive supervision and control of
Manager, except as otherwise specifically provided in this Agreement, and
Manager shall be responsible for the proper and efficient operation of the
Hotel. In fulfilling its obligations
under this Agreement, Manager will act as a reasonable, prudent operator of the
Hotel, having regard for the status of the Hotel, operating the Hotel in
accordance with Prudent Industry Practices and at all times maintaining and
complying with all standards imposed by the Franchise Agreement, and subject to
the foregoing and all other terms and conditions of this Agreement, shall have
discretion in the following: charges,
terms and conditions for Guest Rooms and commercial space; credit policies and
services provided by the Hotel; food and beverage services; employment
policies; granting of leases, subleases, licenses and concessions for shops and
businesses within the Hotel, provided that the term of any such lease,
sublease, license or concession shall not exceed the lesser of one (1) year or
the Term without the prior written approval of Owner; receipt, holding and
disbursement of funds; maintenance of bank accounts; procurement of
Inventories, supplies and services; promotion and publicity; payment of costs
and expenses as are specifically provided for in this Agreement or are
otherwise reasonably necessary for the proper and efficient operation of the
Hotel; and, generally, all activities necessary for operation of the
Hotel. With respect to all Material
Management Decisions, Manager shall consult with Owner in advance of making any
such decisions. The term Material Management Decisions
means a decision to be made in connection with any expenditure of more than
$10,000 for each item or $50,000 in the aggregate for all such items in any
Fiscal Year if such expenditure is not included in the approved Annual
Operating Projection for such Fiscal Year or if such expenditure would result
in an increase in the overall Annual Operating Projection. For purposes hereof, Material Management Decisions
shall also be deemed not to include (i) emergency capital repairs as referenced
in Section 5.02 of this Agreement and (ii) expenditures for utilities, real
estate taxes and assessments, and insurance premiums for insurance policies. With respect to the foregoing exceptions to
Material Management Decisions, Manager may at Owners expense make such
expenditures without seeking prior approval from Owner.

C. Manager
shall comply with and abide by all applicable Legal Requirements pertaining to
its operation of the Hotel. Landlord or
Owner shall have the right, but not the obligation, in its reasonable
discretion, to contest or oppose, by appropriate proceedings, any such Legal
Requirements. The reasonable expenses
of any such contest of a Legal Requirement shall be paid from Gross Revenues as
Deductions. Owner or Landlord, as
applicable, shall indemnify and hold Manager harmless from any loss, claim,
fees or expenses (including reasonable attorneys fees) arising from the
noncompliance with any Legal Requirement that Owner or Landlord chooses to
contest or as to which Owner does not fund the cost of compliance.

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1.03. Employees

All
personnel employed at the Hotel shall at all times be the employees of Manager
and not the employees of Owner. Manager
shall have reasonable discretion with respect to all personnel employed at the
Hotel, including, without limitation, decisions regarding hiring, promoting,
transferring, compensating, supervising, terminating, directing and training
all employees at the Hotel, and, generally, establishing and maintaining all
policies relating to employment; provided, however, that (i) Owner shall have
the right to participate in the process for the hiring or termination of the
persons who occupy the position of General Manager for the Hotel, including the
interview process, provided that the final selection of the General Manager
shall rest solely with Manager and (ii) Manager shall not negotiate or enter
into any collective bargaining or other labor agreement with employees or with
any organization representing or claiming to represent employees without
Owners prior consent. No person shall
be given gratuitous accommodations or services without prior joint approval of
Owner and Manager except in accordance with policies agreed upon by Owner and
Manager. Owner shall not pay for the
relocation costs of any employees except for the cost of relocating the General
Manager; provided, however, that (i) the relocation costs for the General
Manager shall be subject to Owners prior approval, which approval shall not be
unreasonably withheld or delayed, and (ii) Manager shall reimburse Owner for
the costs (including relocation costs) of hiring and training General Managers
who are employed at the Hotel for less than one (1) year and are transferred or
relocated to a hotel (other than a hotel owned by Owner or an Affiliate of
Owner) owned or managed by Manager or an Affiliate of Manager. Manager shall be solely responsible and
liable for all acts or omissions of the personnel employed at the Hotel and all
persons managing such employees.

1.04. Owners
Right to Inspect.

Owner, its representatives, employees, agents, Affiliates and
Mortgagees shall have access to the Hotel at any and all reasonable times for
the purpose of inspection, exercising any of its rights under this Agreement or
showing the Hotel to prospective purchasers, tenants or Mortgagees and at any
time in case of an emergency.

1.05. Regular
Meetings.

At Owners
request, Owner and Manager shall have meetings at the Hotel and at mutually
convenient times. Manager shall be represented at such meetings by the General
Manager of the Hotel and such other personnel as the General Manager and/or
Owner may deem appropriate. The purpose
of the meetings shall be, inter alia, to discuss the performance of the Hotel
and other related issues, including any variations from the Annual Operating
Projection for the preceding quarter.

1.06. System
Standards

Subject to
the availability of adequate funds, Manager shall take such actions consistent
with this Agreement as are necessary for the Hotel to comply with the System
Standards, and Manager shall operate the Hotel so that the Hotel will at all
times comply with System Standards.

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1.07. Limitations
on Managers Authority

Manager
shall not, without Owners prior written approval, enter into any FF&E
Lease if (i) the fair market value of the FF&E subject to such FF&E
Lease at the time of entering into such FF&E Lease exceeds Ten Thousand
Dollars ($10,000); (ii) the fair market value of the FF&E subject to all
FF&E Leases at the time of entering into such FF&E Lease exceeds
Twenty-five Thousand Dollars ($25,000) in the aggregate; (iii) the FF&E
subject to such FF&E Lease is FF&E that is not, consistent with Prudent
Industry Practices, customarily leased; (iv) such FF&E Lease is with an
Affiliate of Manager or is on payment terms (including the amounts and schedule
of payments) that would be materially more favorable to the lessor thereof than
payment terms customary under Prudent Industry Practices for leases of similar
FF&E; or (v) such FF&E Lease is not terminable by Owner upon thirty
(30) days notice.

1.08. Representations
and Warranties of Manager. Manager hereby represents and warrants to Owner
as follows:

A. Authority;
No Conflicts. Manager is a limited liability company duly formed, validly
existing and in good standing in the state identified in Schedule 1. Manager has obtained all necessary consents
to enter into and perform this Agreement and is fully authorized to enter into
and perform its obligations under this Agreement. No consent or approval of any person, entity or governmental
authority is required for the execution, delivery or performance by Manager of
this Agreement, and this Agreement is hereby binding and enforceable against
Manager. Neither the execution nor the
performance of, or compliance with, this Agreement by Manager has resulted, or
will result, in any violation of, or default under, or acceleration of, any
obligation under any existing corporate charter, certificate of incorporation,
bylaw, articles of organization, limited liability company agreement or
regulations, partnership agreement or other organizational documents of Manager
and under any, mortgage indenture, lien agreement, promissory note, contract,
or permit, or any judgment, decree, order, restrictive covenant, statute, rule
or regulation, applicable to Manager.

B. Bankruptcy.
Neither Manager nor any of its Affiliates, is insolvent or the subject of any
bankruptcy proceeding, receivership proceeding or other insolvency,
dissolution, reorganization or similar proceeding.

ARTICLE II

TERM

2.01. Term.

The Term of this Agreement shall begin
on the Effective Date and shall continue until the expiration date identified
in Schedule 1. Notwithstanding the foregoing, Manager or Owner shall
have the option to terminate this Agreement at any time, with or without cause,
by giving the other party not less than ninety (90) days prior written notice
of its election to terminate.
Notwithstanding anything to the contrary in this Agreement, for a period
of twelve (12) months

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following the Effective Date, Owner shall have no right to terminate
this Agreement pursuant to (i) Section 2.01 of this Agreement or (ii) Section
2.02 of this Agreement.

2.02. Performance
Termination.

A. Owner
shall have the option to terminate this Agreement after any twelve (12)
consecutive Accounting Periods (the Performance Termination Period)
with respect to which the following occurs:

1.
The SALT (or any successor program in the event SALT is no longer used) results
fail to meet or exceed the average scores for the brand under which the Hotel
operates; or

2.
The Revenue Index of the Hotel during the Performance Termination Period is
less than the Revenue Index Threshold for such Performance Termination Period.

Owner shall
exercise such option to terminate by serving written notice thereof on Manager
no later than sixty (60) days after Owners receipt of the last Accounting
Period Statement for Performance Termination Period, and this Agreement shall
terminate as of the end of the second (2nd) full Accounting Period
following the date on which Manager receives the above-described notice from
Owner. Notwithstanding anything
contained herein to the contrary, Manager at its option may elect to void such
Termination by so notifying Owner within such sixty (60) day period; provided,
however, that the amount that was necessary to have achieved the Performance
Termination Threshold or Revenue Index Threshold, as applicable (the Deficit
Amount) shall be made up to Owner by either (i) Managers paying the Deficit
Amount to Owner within ten (10) days after such 60-day period (the Cure Payment) or (ii) offsetting
the Deficit Amount against the Base Management Fees, the Incentive Management
Fees and/or other amounts or reimbursements payable to Manager under this
Agreement, as Owner may direct.

B. Owners
failure to exercise its right to terminate this Agreement pursuant to this
Section 2.02 shall not be deemed an estoppel or waiver of Owners right to
terminate this Agreement with respect to any subsequent event or circumstance
that could give Owner the right to terminate hereunder.

ARTICLE III

COMPENSATION OF MANAGER

3.01. Management
Fees.

In consideration of services to be performed during the Term, Manager
shall be paid the sum of the following as its management fees:

A. the Base
Management Fee, which shall be retained by Manager from Gross Revenues except
as otherwise provided in this Agreement; plus

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B. the Incentive
Management Fee but only to the extent of available Operating Profit after
payment of Owners Priority (including, without limitation, all accrued and
unpaid Owners Priority) as provided in Section 3.02 below.

3.02. Operating
Profit.

A.
Operating Profit, to the extent available, shall be distributed to Owner and to
Manager in the following order of priority, except as otherwise provided in
this Agreement:

1.
An amount up to the maximum amount of Owners Priority shall be paid to Owner;

2. The
Incentive Management Fee shall be paid to Manager; and

3. Any
remaining balance of Operating Profit shall be paid to Owner.

Owners
Priority shall be cumulative from one Fiscal Year to the next, and to the
extent the maximum amount of Owners Priority is unpaid in any Fiscal Year,
such unpaid amount shall accrue and be payable in any subsequent Fiscal
Year. Notwithstanding anything in this
Agreement to the contrary, Manager acknowledges and agrees that Incentive
Management Fees are only payable (i) annually within thirty (30) days after
Owners receipt and acceptance of the Annual Operating Statement, (ii) to the
extent of available Operating Profit after payment in full of Owners Priority
and any accumulated Owners Priority and (iii) in no event shall Incentive
Management Fees accrue or be deemed to accrue.

B. To the
extent of available Operating Profit with respect to each Accounting Period,
Manager shall distribute a prorated portion of the Owners Priority (including
any accrued and unpaid Owners Priority) to Owner for each such Accounting
Period in accordance with Section 4.01.
Any Incentive Management Fee payable to Manager will be payable within
thirty (30) days after Owners receipt and acceptance, which shall not be
unreasonably withheld, of the Annual Operating Statement.

ARTICLE IV

ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS

4.01. Accounting,
Distributions and Annual Reconciliation.

A. Within
fifteen (15) days after the close of each Accounting Period, Manager shall
deliver an interim accounting (the Accounting
Period Statement) to Owner, prepared in accordance with the
Uniform System of Accounts, showing Gross Revenues, Deductions, Operating
Profit and applications and distributions thereof for the preceding Accounting
Period and any other information reasonably requested by Owner. Manager shall transfer to Owner, with each
Accounting Period Statement, any interim amounts due Owner, subject to Working
Capital needs mutually agreed upon by Owner and Manager, and shall retain any
interim amounts payable to Manager pursuant to the terms of this Agreement.

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B.
Calculations and payments of the Incentive Management Fee and the Base
Management Fee made with respect to each Accounting Period shall be accounted
for cumulatively within a Fiscal Year, but shall not be cumulative from one
Fiscal Year to the next. Within each
SEC Filing Period, Manager shall deliver to Owner (1) 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 and (2) a statement (the Quarterly Operating Statement) in
reasonable detail summarizing the operations of the Hotel for the immediately
preceding calendar quarter and a certificate of Managers chief accounting
officer certifying that, to the best of his or her knowledge, such Quartlery
Operating Statement is true and correct.
The parties shall, within five (5) Business Days after Owner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.

C. To the
extent there is an Operating Loss for any Accounting Period, unless such loss
was due to a force majeureevent,
no Base Management Fee or Incentive Management Fee shall be paid to or retained
from Gross Revenues by Manager. Any
Base Management Fee that would have been payable to Manager had there been an
Operating Profit for such Accounting Period shall accrue and shall be payable
to Manager to the extent of, and shall reduce, any Incentive Management Fee
payable to Manager in respect of subsequent Accounting Periods. In no event shall Incentive Management Fees
accrue, nor shall any Incentive Management Fee be payable to Manager in respect
of any Accounting Period (i) as to which there is an Operating Loss or (ii) as
to which accrued Base Management Fees are payable to Manager or accrued Owners
Priority is payable to Owner.

To the
extent there is an Operating Loss for any Accounting Period, additional funds
in the amount of any such Operating Loss (other than the amount of any Base
Management Fee) shall be provided by Owner within thirty (30) days after
Manager has delivered written notice thereof to Owner. If Owner does not fund such Operating Loss
within the thirty (30) day time period, Manager shall have the right (without
affecting Managers other remedies under this Agreement) to withdraw an amount
to cover such Operating Loss from future distributions of funds otherwise due
to Owner. In the event an Operating Loss
occurs in respect of a Fiscal Year, either Owner or Manager may elect to
terminate this Agreement. In no event
shall Manager be obligated to invest its own funds to cover any Operating Loss.

4.02. Books
and Records.

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 GAAP. Owner may
at reasonable intervals during Managers normal business hours examine such
records. If Owner desires to audit,
examine or review the Annual Operating Statement, Owner shall notify Manager in
writing within sixty (60) days after receipt of such Annual Operating Statement
of its intention to audit and begin such audit no sooner than ten (10) days
after Managers receipt of such notice.
Owner shall use reasonable efforts to complete such audit within one
hundred twenty (120) days after commencement thereof. If Owner does not make such an audit, then such Annual

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Operating Statement shall be deemed to be conclusively accepted by
Owner as being correct, except in the event of manifest error or fraud,
misrepresentation, misconduct or negligence by Manager or its agents,
employees, representatives or contractors or other third parties. If any audit by an independent certified
professional accountant retained by Owner discloses an understatement of any
amounts due Owner, Manager shall promptly pay Owner such amounts found to be
due, plus interest thereon at the Prime Rate plus one percent (1%) per annum
from the date such amounts should originally have been paid. For the purposes hereof, any amounts held in
accounts for the benefit of Owner shall be deemed to have been paid to
Owner. If any audit discloses that
Manager has not received any amounts due it, Owner shall pay Manager such
amounts. If such audit discloses an
underpayment to Owner for the Fiscal Year so audited of less than five percent
(5%) of the amount that should have been paid to Owner for such Fiscal Year,
the cost of the audit shall be paid by Owner and be a Deduction; provided, however,
Manager shall pay for such cost if such audit discloses an underpayment to
Owner for the Fiscal Year so audited of five percent (5%) or more of the amount
that should have been paid to Owner for such Fiscal Year. In addition, if the Franchise Agreement
requires Owner to pay interest and/or the cost of an audit to the franchisor on
account of an understatement in reports provided by Manager, Manager shall pay
such interest and costs in accordance with the Franchise Agreement without
(either directly or indirectly) passing such charges on to Owner.

4.03. Accounts,
Expenditures.

A. All
funds derived from operation of the Hotel shall be deposited by Manager in
Owners bank accounts (the Operating
Accounts) established by Manager in a bank or banks designated
by Manager with the concurrence of Owner, which shall not be unreasonably
withheld. Withdrawals by Manager from
said Operating Accounts shall be made solely by the General Manager or the Assistant
General Manager of the Hotel, a senior officer of Manager or such other
representatives of Manager whose signatures have been authorized by Manager
with the concurrence of Owner.
Reasonable petty cash funds shall be maintained at the Hotel.

B. Except
as otherwise provided in this Agreement, all payments made by Manager hereunder
shall be made from the Operating Accounts, petty cash funds, or from the
Reserve (in accordance with Section 5.02).
Manager shall not be required to make any advance or payment with
respect to the Hotel except out of such funds, and Manager shall not be
obligated to incur any liability or obligation with respect to the Hotel unless
resulting from acts or omissions of Manager that are in violation of or
inconsistent with this Agreement or from Managers gross negligence or
intentional misconduct (each, Managers
Liability and, collectively, Managers Liabilities).

C. Debts
and liabilities (other than Managers Liabilities) incurred by Manager as a
result of its operation and management of the Hotel pursuant to the terms
hereof, whether asserted before or after Termination, will be paid by Owner to
the extent funds are not available for that purpose from Gross Revenues, and
Owner shall indemnify, defend and hold Manager harmless from and against all
loss, costs, liability, and damage (including, without limitation, reasonable
attorneys fees and expenses) arising from Owners failure to pay or perform
such debts and liabilities. Manager
shall pay, indemnify, defend and hold Owner harmless from and against all
Managers Liabilities and all loss, costs, liability and damage (including,
without

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limitation, reasonable attorneys fees and expenses) arising from
Managers failure to pay or perform Managers Liabilities. The provisions of this Section 4.03.C shall
survive Termination.

4.04. Annual
Operating Projection.

Manager shall deliver to Owner for its review, at least forty-five (45)
days prior to the beginning of each Fiscal Year after the first Fiscal Year
following the Effective Date, a preliminary draft of the business plan
(including a proposed budget) and a projection of the estimated Gross Revenues,
departmental profits, Deductions, and Operating Profit for the forthcoming
Fiscal Year for the Hotel (the Annual
Operating Projection) for approval by Owner. Manager will consider in good faith
suggestions made by Owner with respect to the Annual Operating Projection and
make modifications thereto that are agreed upon by Owner and Manager. In the case of the Fiscal Year beginning on
the Effective Date, Manager and Owner have already agreed upon the Annual
Operating Projection for such Fiscal Year.
Upon approval of the Annual Operating Projection by Owner and Manager,
Manager in good faith shall use best efforts to adhere to such Annual Operating
Projection. In the event Owner and
Manager are unable to agree upon the Annual Operating Projection by the
commencement of the Fiscal Year to which it relates, the Manager shall be
entitled to operate the Hotel in accordance with this Agreement with the
maximum approved amount of expenditures to be equal to (i) the aggregate of all
items in the proposed budget which are not disputed by Owner, plus (ii) the sum
of the actual expenditures for the items in dispute in the previous Fiscal Year
increased by the increase (if any) in the CPI on January 1 of the year in
question over the CPI on January 1 of the previous year, or if the previous
Fiscal Year were not a full calendar year, such amount multiplied by a
fraction, the numerator of which is the number of days in the full calendar
year in which most of such Fiscal Year fell and the denominator of which is the
number of days in such Fiscal Year, as reasonably adjusted for seasonality and
changes in circumstances.

4.05. Working
Capital.

The parties
recognize that, as of the Effective Date, the level of Working Capital funds,
which shall be held in the Operating Accounts, is reasonably believed to be
reasonably sufficient for the operations of the Hotel, subject at all times to
seasonal differences and changes in circumstances after the Effective Date.
Manager may from time to time during the Term request that Owner advance any
additional funds necessary to maintain Working Capital at levels reasonably
determined by Manager (with the concurrence of Owner) to be necessary to
satisfy the needs of the Hotel. In the
event Owner and Manager are unable to agree upon the need for and/or amount of
additional Working Capital within thirty (30) days after Owners receipt of such
written notice from Manager, Manager may increase the amount based on the CPI
formula in Paragraph 4.04 above. If
Owner and Manager agree upon the need for and amount of additional Working
Capital and thereafter Owner does not so fund additional Working Capital within
ten (10) Business Days after Owners receipt of a written request from Manager
to fund such additional Working Capital, Manager shall have the right to
withdraw an amount equal to the funds requested by Manager for additional
Working Capital from future distribution of funds otherwise due to Owner. All
funds so advanced for Working Capital shall be utilized by Manager for the
purposes of this Agreement. Upon
Termination, Manager shall immediately return the outstanding balance of the
Working Capital to Owner.

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4.06. Fixed
Asset Supplies.

The parties further recognize that, as of the Effective Date, the level
of funds for Fixed Asset Supplies is reasonably believed to be reasonably
sufficient for the operations of the Hotel, subject at all times to seasonal
differences and changes in circumstances after the Effective Date. Any
additional funds which are necessary to maintain Fixed Asset Supplies at levels
determined by Manager (with the concurrence of Owner) to be necessary to
satisfy the needs of the Hotel, shall be paid from Gross Revenues as
Deductions. Fixed Asset Supplies shall
remain the property of Owner throughout the term of this Agreement and upon
Termination.

4.07. Real
Estate and Personal Property Taxes.

A. Except
as specifically set forth in Section 4.07.B below, all real estate and personal
property taxes, levies, assessments (including special assessments (regardless
of when due or whether they are paid as a lump sum or in installments over
time) imposed because of facilities that are constructed by or on behalf of the
assessing jurisdiction (for example, roads, sidewalks, sewers, culverts, etc.)
which directly benefit the Hotel (regardless of whether or not they also
benefit other buildings)), Impact Fees (regardless of when due or whether
they are paid as a lump sum or in installments over time) which are required of
Owner as a condition to the issuance of zoning variances or building permits,
and similar charges on or relating to the Hotel (collectively, Impositions) during the Term shall
be paid by Manager from Gross Revenues, before any fine, penalty, or interest
is added thereto or lien placed upon the Hotel or upon this Agreement, unless
payment thereof is in good faith being contested and enforcement thereof is
stayed. Any such payments shall be
Deductions in determining Operating Profit.
Owner shall, within five (5) days after receipt, furnish Manager with
copies of official tax bills and assessments which it may receive with respect
to the Hotel. Either Landlord or Owner
may, and at Owners request Manager shall, initiate proceedings to contest any
negotiations or proceedings with respect to any Imposition, and all reasonable
costs of any such contest shall be paid from Gross Revenues and shall be a
Deduction in determining Operating Profit.
Manager shall, as part of its contest or negotiation of any Imposition,
be entitled, on Owners behalf, to waive any applicable statute of limitations
in order to avoid paying the Imposition during the pendency of any proceedings
or negotiations with applicable authorities.
Notwithstanding anything contained herein to the contrary, at Owners
option (i) Manager shall establish an escrow account in the name of Owner in a
bank or banks designated by Manager with the concurrence of Owner and shall
deposit monthly into such account from Gross Revenues an amount that Manager
reasonably estimates shall be sufficient to pay the Impositions, in which case
Manager shall pay the Impositions from funds in the escrow account as and when
the Impositions become due (and Owner shall promptly deposit into the escrow
account any deficiency if the estimated monthly payments are not sufficient to
pay all of the Impositions) or (ii) the amounts that would otherwise be
deposited into such escrow account shall be included in the Operating Profit,
not deducted from Gross Revenues and shall be distributed in cash to Owner
along with the remainder of the Owners Priority. If Owner elects to retain such amounts pursuant to clause (ii)
above, Manager shall accrue such amounts as a reserve on the accounting records
of the Hotel, and Owner shall fund the same as and when the Impositions become
due, but such accrued and unfunded amounts shall be deducted from Gross Revenues
for purposes of calculating the Incentive Management Fee. In addition, if any Mortgagee requires the

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establishment of an escrow account with respect to the Impositions,
Manager shall comply with such requirements.

B. The word
Impositions as used in
this Agreement shall not include any franchise, corporate, estate, inheritance,
succession, capital levy or transfer tax or other assessment or payment in lieu
thereof imposed on Owner or Manager, or any income tax imposed on any income of
Owner or Manager (including distributions to Owner or Manager pursuant to
Article III hereof), all of which shall be paid solely by Owner or Manager, as
applicable, not from Gross Revenues nor from the Reserve.

4.08. Sarbanes-Oxley
Certification.

A. Owner
may, in connection with its or any of its Affiliates annual or quarterly
Securities and Exchange Commission reporting requirements (and in any event no
more than four (4) times in any Fiscal Year), request that Manager deliver to
Owner or its Affiliate a certificate from an accounting officer of Manager, in
a form approved by Managers accounting firm, certifying that, to his or her
knowledge, the information contained in the Accounting Period Statements for
the Accounting Periods contained within the applicable Fiscal Year or quarter
are true and correct in all material respects, subject to final adjustment
based on the annual review conducted by Manager in preparing the Annual
Operating Statement. Owner shall submit
such request in writing, along with the date by which such certificate is to be
delivered, not less than five (5) business days prior to the requested delivery
date, and Manager shall deliver the certificate by the requested date or, if
later, within five (5) business days after Managers receipt of Owners
request.

B. In
connection with Owners or its Affiliates certifications under Section 404 (Section 404) of the Sarbanes-Oxley
Act of 2002, Owner or such Affiliate shall have the right, at its option:

1.
Either (i) to require Manager to document its processes and related internal
controls for Owner or such Affiliate to use in its required documentation under
Section 404 or (ii) to have access to Managers books and records relating to
the Hotel (including, without limitation, reasonable access to Managers
premises) to document Managers processes and related internal controls; and

2.
Either (i) to require testing by Manager of the controls identified in clause 1
above or (ii) to have access to Managers books and records relating to the
Hotel (including, without limitation, reasonable access to Managers premises)
to permit Owner or such Affiliate to test the controls identified in clause 1
above.

Manager shall
provide Owners or such Affiliates  independent auditors access to Managers
books and records relating to the Hotel (including, without limitation, access
to Managers premises) to conduct their audit of the testing performed pursuant
to this Section 4.08. If Owner or such
Affiliate determine such controls have weaknesses which should be mentioned in
Owners or such Affiliates report on internal controls under Section 404 or
other certifications under the Sarbanes-Oxley Act of 2002, Manager shall use
commercially reasonable efforts to remedy and/or correct identified weaknesses
within thirty (30) days after notice; provided,

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however, that in the event that Manager does not so remedy and/or
correct such weaknesses within the applicable thirty (30) day cure period,
Owner shall be entitled to terminate this Agreement upon thirty (30) days prior
notice to Manager. Manager shall be
responsible for any costs of Owner or its auditors associated with correcting or
retesting any such weaknesses.

ARTICLE V

REPAIRS, MAINTENANCE AND REPLACEMENTS

5.01. Repairs
and Maintenance to be Paid from Gross Revenues.

Subject to the availability of adequate funds, Manager shall maintain
the Hotel in good repair and condition, comply with and abide by all applicable
Legal Requirements pertaining to its operation of the Hotel and shall make or
cause to be made such routine maintenance, repairs and minor alterations as it
determines are necessary for such purposes and as required pursuant to the
terms of the Franchise Agreement or by Owner.
The phrase routine maintenance,
repairs, and minor alterations as used in this Section 5.01
shall include only those which are normally expensed under generally accepted
accounting principles. The cost of such
maintenance, repairs and alterations shall be paid from Gross Revenues (and not
from the Reserve) and shall be treated as a Deduction.

5.02. Repairs,
Maintenance and Equipment Replacements to be Paid from Reserve.

A. At
Owners option and request, a reserve account in the name of Owner (the Reserve) shall be established by
Manager, in a bank or similar institution reasonably acceptable to both Manager
and Owner, to cover the cost of:

1.
Replacements, renewals and additions to the FF&E at the Hotel; and

2.
Capital Expenditures.

B. During
the Term, Manager shall transfer into the Reserve the amount(s) specified in Schedule
1. Transfers into the Reserve shall be made at the time of each interim accounting
described in Section 4.01 hereof. All
amounts transferred to the Reserve shall be deducted from Gross Revenues in
determining Operating Profit and shall be deposited in the special Reserve
account described in Section 5.02.A.

C. Subject
to the availability of adequate funds, Manager at Owners expense shall from
time to time make such (1) replacements and renewals to the FF&E of the
Hotel, and (2) Routine Capital Expenditures, as may be agreed upon by Owner and
Manager and as may be required by the Franchise Agreement. At the end of each Fiscal Year, any amounts
remaining in the Reserve shall be carried forward to the next Fiscal Year. The Reserve will be kept in an
interest-bearing account, and any interest which accrues thereon shall be
retained in the Reserve. Interest which
accrues on amounts held in the Reserve, shall not (a) result in any reduction
in the required contributions to the Reserve set forth in Section 5.02.B above,
nor (b) be included in Gross Revenues.

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D. All
repairs, alterations, improvements, renewals or replacements made pursuant to
this Article V, and all amounts kept in the Reserve, shall be the property of
Owner, subject to Managers rights to apply such funds as otherwise provided in
this Agreement. In addition and
notwithstanding anything contained herein to the contrary, no funds shall be
expended for replacements, renewals and additions to the FF&E, for Routine
Capital Expenditures or for any other capital expenditures unless each such expenditure
is included in the Annual Operating Projection approved by Owner. In the event that Owner requests that
Manager perform capital improvements that are not included in the Annual
Operating Projection, Manager will perform such improvements provided that
Owner and Manager have theretofore agreed upon a mutually satisfactory funding
mechanism to pay for the cost of such improvements. Notwithstanding the foregoing, in case of threatened damage or
destruction to the Hotel or persons or property thereon due to force majeure or
other comparable emergency, Manager may at Owners expense make such repairs,
replacements or improvements to the Hotel as Manager reasonably deems necessary
to avoid and/or minimize any such injury, damage or destruction.

E.
Notwithstanding anything contained herein to the contrary, at Owners option
the amounts that would otherwise be deposited into the Reserve pursuant to this
Section 5.02 shall be included in the Operating Profit, not deducted from Gross
Revenues and shall be distributed in cash to Owner along with the remainder of
the Owners Priority. In such case,
Manager shall accrue such amounts as a reserve on the accounting records of the
Hotel, and Owner shall fund the same only when required under this Agreement to
cover the appropriate costs actually incurred.
However, such accrued and unfunded reserves shall be deducted from Gross
Revenues for purposes of calculating the Incentive Management Fee.

F. Unless
otherwise expressly covered by this Article V (including without limitation in
case of emergency as provided in Section 5.02.D.), Manager shall not make any
capital expenditure or improvement without first obtaining Owners prior
written consent and approval.

ARTICLE VI

INSURANCE

6.01. Property
Insurance.

A. Subject
to Owners prior approval and the provisions of Section 6.05, Manager shall,
commencing with the Effective Date and for the duration of the Term, procure
and maintain, using funds deducted from Gross Revenues in determining Operating
Profit, the following insurance and /or such other insurance as may be approved
or required by Owner:

1.
Insurance on the Hotel (including contents) against loss or damage by all
perils included in all risk (as such term is commonly used in the insurance
industry) coverage, in an amount not less than one hundred percent (100%) of
the replacement cost thereof, except that if such 100% replacement cost
coverage is not available on reasonable rates and terms, then such insurance
shall be in an amount not less than ninety percent (90%) of the replacement
cost thereof (less excavation and foundation costs), of the Hotel;

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2.
Insurance against loss or damage from explosion of boilers, pressure vessels,
pressure pipes and sprinklers, to the extent applicable, installed in the
Hotel;

3.
Business interruption insurance covering loss of profits and necessary
continuing expenses for interruptions caused by any occurrence covered by the
insurance referred to in Section 6.0l.A.1, 2 and 3, for a period of not less
than one (1) year after the occurrence, of a type and in amounts and with such
deductible limits as are agreed upon by Owner and Manager.

4.
If the Hotel is in an earthquake-prone area, earthquake insurance in accordance
with Prudent Industry Practices.

B. All
policies of insurance required under Section 6.01.A. 1, 2 and 3 shall insure
Owner, Landlord, Manager, and any Mortgagee, and any losses thereunder shall be
payable to the parties as and to the extent their respective interests, if any,
may appear.

6.02. Operational
Insurance.

Subject to
Owners prior approval and the provisions of Section 6.05, Manager shall, commencing
with the Effective Date and for the duration of the Term, procure and maintain,
using funds deducted from Gross Revenues in determining Operating Profit, with
insurance companies approved by Owner the following insurance and/or such other
insurance as may be approved or required by Owner:

A. Workers
compensation insurance as may be required under applicable laws covering all of
the employees at the Hotel, with such deductible limits or self-insured
retentions as are agreed upon by Owner and Manager;

B. Fidelity
bonds or crime insurance with respect to Hotel employees handling funds of the
Hotel, in an amount approved by Owner;

C.
Comprehensive general public liability insurance against claims for all injury,
death or property damage occurring on, in, or about the Hotel, and automobile
insurance on vehicles owned or leased by owner and operated in conjunction with
the Hotel, with a combined single limit of not less than Twenty Million Dollars
($20,000,000) for each occurrence for personal injury, death and property
damage, with such deductible limits as are agreed upon by Owner and Manager;

D. Such
other insurance, including excess/umbrella coverage and employers practice
liability insurance, in amounts as Manager in its reasonable judgment deems
advisable (with the concurrence of Owner) for protection against claims,
liabilities and losses arising out of or connected with the operation of the
Hotel or as reasonably required by a Mortgagee.

Owner, Manager
and Landlord shall be the named insureds with respect to the insurance
described in Section 6.02.C and, to the extent applicable, Section 6.02.D. Manager shall be the name insured and Owner
and Landlord shall be additional insureds on the policies described in Section
6.02.A and 6.02B.

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6.03. Coverage.

All
insurance described in Sections 6.01 and 6.02 may be obtained by Manager by
endorsement or equivalent means under its blanket insurance policies, provided
that such blanket policies fulfill the requirements specified herein. Deductible limits shall be as agreed upon by
Owner and Manager. No coverage required
hereunder shall be self-insured by Manager without prior written approval of
Owner. Owner shall have the right to approve
the insurance policies to be obtained by Manager pursuant hereto and the
insurance companies issuing such policies.

6.04. Costs
and Expenses.

Insurance
premiums and any costs or expenses with respect to the insurance described in
this Article VI shall be Deductions in determining Operating Profit. Premiums on policies for more than one year
shall be charged pro rata against Gross Revenues over the period of the
policies. Any reserves, losses, costs,
damages or expenses which are uninsured, or fall within deductible limits,
shall be treated as a cost of insurance and shall be Deductions in determining
Operating Profit.

6.05. Owners
Right to Provide Insurance. Notwithstanding anything contained in this
Agreement to the contrary, Owner and/or its Affiliates (including, without
limitation, Landlord) shall have the right to procure and maintain any or all
of the property and operational insurance for the Hotel otherwise required to
be maintained by Manager under this Article VI and in lieu of Managers
procuring the same, provided that (i) Owner shall give Manager not less than
thirty (30) days notice of Owners intent to provide such insurance and shall
provide to Manager upon request certificates of insurance, naming Manager as an
additional insured, evidencing the same (ii) Owners insurance provides
reasonably equivalent coverage to Managers policies and (iii) such insurance
procured by Owner shall not become effective until the end of the then-current
term of the applicable policy or policies maintained by Manager. In such case, all of the terms and
conditions of this Article VI, to the extent applicable, shall govern the
insurance procured by Owner under this Section 6.05. Without limiting the generality of the foregoing, all insurance
premiums and any costs or expenses with respect to such insurance shall be
Deductions in determining Operating Profit.

ARTICLE VII

DAMAGE AND REPAIR

7.01. Damage
and Repair.

A. If,
during the Term, the Hotel is damaged or destroyed by fire, casualty or other
cause, Owner and/or Landlord may elect, in its sole and absolute discretion, to
repair or replace the damaged or destroyed portion of the Hotel with such
modifications as Owner may deem appropriate or as may be required by law, and
Manager shall have the right to discontinue operating the Hotel to the extent
it deems necessary to comply with applicable law, ordinance, regulation or
order or as necessary for the safe and orderly operation of the Hotel. All proceeds from the insurance described in
this Agreement shall be paid to Owner and/or Landlord, as the case may be. If Owner elects not to repair or replace
said damaged portion of the Hotel, Owner

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shall so notify Manager by written notice as soon as reasonable
practicable and no later than ninety (90) days after the date of the casualty.

B. In the
event damage or destruction to the Hotel from any cause materially and
adversely affects the operation of the Hotel and Owner notifies Manager that
Owner will not repair or replace such damage, either party may terminate this
Agreement by at least sixty (60) days prior written notice to the other
party. Until such time as Owner repairs
or replaces the damaged portion of the Hotel or this Agreement is terminated
pursuant to this section, then subject to receipt by Owner of proceeds from
business interruption insurance irrespective of any deductible, which shall be
Owners responsibility, (which policy Owner agrees shall be written to include
property management fees) Manager shall be due monthly fees equal to the
average monthly amount of both the Base Management Fee and the Incentive
Management Fee during the immediately preceding twelve (12) month period.

7.02. Condemnation.

A. In the
event all or substantially all of the Hotel shall be taken in any eminent
domain, condemnation, compulsory acquisition, or similar proceeding by any
competent authority for any public or quasi-public use or purpose or in the
event a portion of the Hotel shall be so taken, but the result is that either
Owner or Manager reasonably determines that it is not feasible to continue to
operate the Hotel in accordance with the standards required by this Agreement,
Owner or Manager may terminate this Agreement as of the effective date of such
taking. All awards and proceeds of any
such taking or proceeding shall belong to Owner and/or Landlord; provided,
however, Owner agrees as part of its claim to include a claim for Managers
lost fees resulting from such taking or condemnation, which shall be due to
Manager upon recovery.

B. In the
event this Agreement is not terminated pursuant to Section 7.02.A, such portion
of the Hotel that is not so taken shall be repaired or replaced, with such
modifications as Owner may deem appropriate or as may be required by law, and
this Agreement shall continue except as may be otherwise agreed by the
parties. All awards for any such
partial taking or condemnation shall belong to Owner and/or Landlord, as the
case may be; provided, however, Owner agrees as part of its claim to include a
claim for Managers lost fees resulting from such partial taking or
condemnation, which shall be due to Manager upon recovery. Manager shall have the right to discontinue
temporarily operating the Hotel to the extent it deems necessary for the safe
and orderly operation of the Hotel.

7.03. Subordination
to Mortgage.

Manager
shall provide to any Mortgagee a commercially reasonable instrument (the Subordination Agreement), reasonably
satisfactory in all respects to Owner and such Mortgagee, which shall be
recordable in the jurisdiction where the Hotel is located, pursuant to which:

1.
This Agreement and any extensions, renewals, replacements or modifications
thereto, and all right and interest of Manager in and to the Hotel, shall be
subject

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and subordinate to such Mortgagees Mortgage, with notice and
opportunity to cure rights and post-default cure rights in favor of Mortgagee;

2.
Manager shall be obligated to each of the Subsequent Owners (as defined below)
to perform all of the terms and conditions of this Agreement for the balance of
the remaining Term hereof, with the same force and effect as if such Subsequent
Owner were the Owner; and

3.
In the event that there is a Foreclosure of such Mortgage in connection with
which title or possession of the Hotel is transferred to the Mortgagee (or its
designee) or to a purchaser at foreclosure or to a subsequent purchaser from
the Mortgagee (or from its designee) (all of the foregoing shall collectively
be referred to as Subsequent Owners),
this Agreement may be terminated at the election of such Subsequent Owner on
the date of such Foreclosure or upon thirty (30) days notice; provided,
however, in no event will Manager agree to subordinate or waive its right to
receive fees, reimbursements or indemnification payments under this Agreement
arising prior to termination (but (a) if this Agreement is terminated by a
Subsequent Owner as set forth above, Manager shall not look to such Subsequent
Owner (but may look to Owner) for payment of such fees, reimbursements or
indemnification payments and Managers right to receive such fees,
reimbursements or indemnification payments shall be subordinated to the
Subsequent Owners rights and (b) if this Agreement is not terminated by a
Subsequent Owner as set forth above, then such fees, reimbursements or
indemnification payments shall be payable by the Subsequent Owner).

7.04. [Reserved.]

7.05. Liens;
Credit.

Manager and
Owner shall use commercially reasonable efforts to prevent any liens from being
filed against the Hotel which arise from any maintenance, repairs, alterations,
improvements, renewals or replacements in or to the Hotel and shall cooperate
fully in obtaining the release of any such liens. If the lien was not occasioned by the fault of either party, the
cost of releasing any lien shall be treated the same as the cost of the matter
to which it relates. If the lien arises
as a result of the fault of either party, then the party at fault shall bear
the cost of obtaining the lien release.
In no event shall either party borrow money in the name of or pledge the
credit of the other.

ARTICLE VIII

DEFAULTS

8.01. Events of Default.

Each of the
following shall, to the extent permitted by applicable law, constitute an Event of Default under this
Agreement.

A. The
filing of a voluntary petition in bankruptcy or insolvency or a petition for
reorganization under any bankruptcy law by either party, or the admission by
either party that it is unable to pay its debts as they become due.

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B. The
consent to an involuntary petition in bankruptcy or the failure to vacate,
within ninety (90) days from the date of entry thereof, any order approving an
involuntary petition by either party.

C. The
entering of an order, judgment or decree by any court of competent
jurisdiction, on the application of a creditor, adjudicating either party as
bankrupt or insolvent or approving a petition seeking reorganization or
appointing a receiver, trustee, or liquidator of all or a substantial part of
such partys assets, and such order, judgment or decrees continuing unstayed
and in effect for an aggregate of sixty (60) days (whether or not
consecutive).

D. The
failure of either party to make any payment required to be made in accordance
with the terms of this Agreement, as of the due date as specified in this
Agreement and the failure to cure such default within ten (10) days after
receipt of written notice from the non-defaulting party demanding such cure,
provided that in the case of payments by Manager of Owners Priority or other
distributions of Operating Profit payable to Owner, if such default shall occur
more than once in any calendar year period, Owner shall have the right to
terminate this Agreement immediately.

E. Manager,
any of its Affiliates or any employee at the Hotel is or becomes a Specially
Designated National or Blocked Person, unless, in the case of an employee,
Manager terminates any such employee promptly after becoming aware of the same.

F. In
carrying out its duties hereunder, Manager or an officer, director, employee,
agent or contractor of Manager or its Affiliates commits any act involving
fraud, moral turpitude or willful misconduct relating to the business or
affairs of the Hotel, or commits an act which constitutes a felony.

G. Any
representation or warranty by Manager or any of its Affiliates in this
Agreement or in any certificate or document or financial or other statement
furnished or delivered to Owner or any of its Affiliates at any time under or
in connection with this Agreement shall have been false or misleading in any
material respect on or as of the date made or deemed made.

H. The
failure of either party to perform, keep or fulfill any of the other covenants,
undertakings, obligations or conditions set forth in this Agreement, and the
continuance of such default for a period of thirty (30) days after the
defaulting partys receipt of written notice from the non-defaulting party of
said failure, or, if the default is such that it cannot reasonably be cured
within said thirty (30) day period of time, if the defaulting party fails to
commence the cure of such default within said thirty (30) day period of time or
thereafter fails to diligently pursue such efforts to completion, provided that
(i) in the case of any default by Manager such default is cured not later than
ninety (90) days after Managers receipt of such written notice and (ii) a ten
(10) day cure period shall be required in the case of Managers failure to
maintain the insurance required by Article VI, provided that (a) Owner shall
have the immediate right to obtain the insurance required by Article VI on its
own initiative and (b) if the foregoing default occurs more than once during
the term of this Agreement, Owner shall have the right to terminate this Agreement
immediately.

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8.02.
Remedies.

Upon the
occurrence of an Event of Default, the non-defaulting party shall have the
right to pursue any one or more of the following courses of action: (1) to
terminate this Agreement by written notice to the defaulting party, which
termination shall be effective as of the effective date which is set forth in
said notice; (2) to institute forthwith any and all proceedings permitted by
law or equity including, without limitation (but subject to the provisions of
Section 10.20 hereof), actions for specific performance and/or damages; and/or
(3) to avail itself of the remedies described in Section 8.03. If Manager
terminates this Agreement upon the occurance of an Event of Default of Owner,
Manager shall be entitled to payment by Owner of the Termination Fee.

8.03.
Additional Remedies.

A. Upon the
occurrence of a Default by either party under the provisions of Section 8.0l.D,
the amount owed to the non-defaulting party shall accrue interest, at an annual
rate equal to the Prime Rate plus three (3) percentage points, from and after
the date on which the Default occurred.

B. The
remedies granted under Section 8.02 and Section 8.03 shall not be in
substitution for, but shall be in addition, to, any and all rights and remedies
available to the non-defaulting party (including, without limitation,
injunctive relief and damages) by reason of applicable provisions of law or
equity and shall survive Termination.

ARTICLE IX

ASSIGNMENT AND SALE

9.01.
Assignment.

A. Manager
shall not assign or transfer its interest in this Agreement without the prior
written consent of Owner and any franchisor under the Franchise Agreement. For
purposes hereof, a transferee shall be deemed reasonably acceptable, and Owner
shall have no right to withhold its consent if (i) such Any assignee consented
to by Owner and by such franchisor shall agree in writing to be bound by and
comply with the terms of this Agreement (such written agreement to be acceptable
in form and substance to Owner and such franchisor). For purposes of the
foregoing, a transfer of Managers interest in this Agreement shall include (i)
an assignment or pledge of this Agreement as security for an obligation, (ii) a
transfer of any ownership or beneficial interest, direct or indirect, in
Manager, including any such transfer by operation of law except to an Affiliate
and (iii) a transfer of Managers interest in this Agreement by operation of
law, including by merger or consolidation (other than such a transfer to an
Affiliate approved by Owner, which approval shall not be unreasonably
withheld).

B. Owner
shall have the right to assign or transfer its interest in this Agreement
without the prior written consent of the Manager (1) as security for a Mortgage
of the Hotel in accordance with this Agreement, (2) in connection with a sale,
assignment, transfer or other disposition of the Hotel by Owner or Landlord,
subject to Section 9.02, and (3) in connection

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with a merger
or consolidation or reorganization of, or a sale of all or substantially all of
the assets of, Apple REIT Ten, Inc., or any Affiliate thereof.

C. In the
event Owner and the franchisor under the Franchise Agreement consent to an
assignment of this Agreement by Manager, no further assignment or transfer
shall be made without the express consent in writing of such parties. An
assignment by Manager of its interest in this Agreement, as permitted by this
Agreement, shall relieve Manager from its obligations under this Agreement.

D.
Notwithstanding anything contained herein to the contrary, Manager shall not
assign its interest in this Agreement to a Specially Designated National or
Blocked Person.

9.02.
Sale of the Hotel.

Owner or
Landlord may, in its or their sole and absolute discretion, enter into any Sale
of the Hotel to any Person and, in connection with any such Sale of the Hotel,
may assign this Agreement as provided in Section 9.01. However, if Owner or
Landlord enters into a Sale of the Hotel, either Owner or Manager may, at its
option, terminate this Agreement upon thirty (30) days notice to the other
party upon completion of the Sale of the Hotel. Upon any such sale or
assignment, Owner shall be released of all liabilities and obligations arising
under and with respect to this Agreement on and after the date of such Sale of
the Hotel; provided, however, that Owner shall continue to be liable for all
obligations and amounts due which arise or accrue during the Term of this
Agreement before the date of such Sale of the Hotel including, but not limited
to, the obligation to pay a Termination Fee but such Termination Fee shall only
be payable if Owner (not Manager) terminates this Agreement upon Sale of the
Hotel.

ARTICLE X

MISCELLANEOUS

10.01.
Right to Make Agreement.

Each party
warrants, with respect to itself, that neither the execution of this Agreement
nor the performance of the transactions contemplated hereby shall violate any
provision of law or judgment, writ, injunction, order or decree of any court or
governmental authority having jurisdiction over it; result in or constitute a
breach or default under any indenture, contract, other commitment or
restriction to which it is a party or by which it is bound; or, require any
consent, vote or approval which has not been taken, or at the time of the
transaction involved shall not have been given or taken. Each party covenants
that it has and will continue to have throughout the Term and any extensions
thereof, the full right to enter into this Agreement and perform its
obligations hereunder.

10.02.
Consents and Cooperation.

Wherever in
this Agreement the consent or approval of Owner or Manager is required, except
as otherwise provided in this Agreement or agreed by the parties, such consent
or approval may be withheld, delayed or conditioned in the sole and absolute
discretion of the party whose consent or approval is required, shall be in
writing and shall be executed by a duly

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authorized officer or agent of such party. Owner agrees to cooperate
with Manager by executing such leases, subleases, licenses, concessions,
equipment leases, service contracts and other agreements negotiated in good
faith and at arms length by Manager and pertaining to the Hotel that, in
Managers reasonable judgment, should be made in the name of the Owner,
provided that certain of such agreements shall be subject to Owners prior
approval pursuant to Section 1,02(A)(12).

10.03.
Relationship.

The
relationship of Owner and Manager shall be that of independent contractors, and
neither this Agreement nor any agreements, instruments, documents, or
transactions contemplated hereby shall in any respect be interpreted, deemed or
construed as making Manager an agent of or partner or joint venturer with
Owner. Owner and Manager agree that neither party will make any contrary
assertion, claim or counterclaim in any action, suit, arbitration or other
legal proceedings involving Owner and Manager. Any contract or agreement that
Manager enters into with an Affiliate of Manager or with a third party to
provide goods or services to the Hotel shall be entered into in the name of
Manager or Owner, provided that no such contract or agreement shall be entered
into in the name of Owner without Owners prior written consent and approval of
each such agreement and contract, and Owner shall have no liability with
respect to any contract or agreement entered into in the name of Manager other
than to pay any sums due thereunder which are Deductions or which Owner
otherwise agrees to pay. Notwithstanding anything contained herein to the
contrary, with respect to those agreements which require Owners prior written
approval pursuant to Section 1.02(A)(12), Manager shall defend, indemnify and
hold Owner harmless from and against any claims by the third party vendor or
supplier under any contract entered into by Manager (a) in the name of Owner
without Owners prior written consent and approval or (b) in the name of
Manager without Owners prior written consent and/or approval.

10.04.
Applicable Law; Jurisdiction.

This
Agreement shall be construed under and shall be governed by the laws of the
state in which the Hotel is located, without regard to that states conflict of
laws provisions. Each of Owner and Manager hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the state and (to the extent permitted by law) Federal courts
of such state, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such state court or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
Owner or Manager may otherwise have to bring any action or proceeding relating
to this Agreement against the other party in the courts of any other
jurisdiction. Each of Owner and Manager hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
court referred to above. Each of the parties hereto hereby irrevocably waives,

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to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

10.05.
Recordation.

The terms
and provisions of this Agreement shall not run with the parcel of land
designated as the Site, and neither this Agreement nor any memorandum or short
form hereof shall be recorded or registered without the prior written consent
of Owner.

10.06.
Headings.

Headings of
articles and sections are inserted only for convenience and are in no way to be
construed as a limitation on the scope of the particular articles or sections
to which they refer.

10.07.
Notices.

Notices,
statements and other communications to be given under the terms of this
Agreement shall be in writing and delivered by hand against receipt or sent by
certified or registered mail (with a copy by first class mail) or Express Mail
service, in each case postage prepaid, return receipt requested or by
nationally utilized overnight delivery service, addressed to the parties as
follows:

|            |                                        
|----------- | ---------------------------------------
|To Owner:   | Apple Ten
 Hospitality Management, Inc.
|            | c/o Apple
 REIT Companies              
|            | 814 E. Main
 Street                    
|            | Richmond,
 Virginia 23219              
|            | Attn:     Krissy
 Gathright            
|            | Phone:  (804)
 727-6323                
|            | Fax:      (804)
 727-6353              
|            |                                        
|To Manager: | MHH
 Management, LLC                   
|            | c/o McKibbon
 Hotel Group, Inc.        
|            | 402
 Washington St., SE, Suite 200     
|            | Gainesville,
 Georgia 30501            
|            | Attn: David
 Hughs                     
|            | Phone: (770)
 534-3381                 
|            | Fax: (770)
 532-3995                   

or at such other address as is from time to time designated by the
party receiving the notice. Any such notice that is mailed in accordance
herewith shall be deemed received when delivery is received or refused, as the
case may be.

10.08.
Environmental Matters.

A. Manager
shall operate the Hotel in compliance with all applicable Environmental Laws.
Manager shall (i) not use, generate or store any Hazardous Materials in or on
the Hotel except as necessary for the operation and maintenance of the Hotel
and in compliance with the

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Environmental Laws, (ii) not allow, permit or cause the release or
threat of release of any Hazardous Materials in, on, under or from the Hotel,
except for the ordinary use of cleaning and maintenance supplies in compliance
with applicable Environmental Laws, (iii) not allow the accumulation of tires,
spent batteries, construction and demolition debris or any other solid waste,
except for solid waste generated from the operation of the Hotel and stored in
containers for normal scheduled pickup and disposal off site in compliance with
applicable Environmental Laws and (iv) use best efforts to operate and maintain
the Hotel in a manner to prevent mold, fungal or other microbial growth or
conditions that are favorable for such growth, including, without limitation,
the proper operation and maintenance of heating, ventilation and air
conditioning systems and removal of any mold, fungal or microbial growth.

B. In the
event of the discovery of a release or threat of release of Hazardous Materials
in, on, under or from any portion of the Hotel during the Term, Manager shall
promptly notify Owner and shall take all appropriate actions with regard to
such Hazardous Materials as required of an owner or operator under applicable
Environmental Laws. Manager shall keep Owner apprised of the status of addressing
the release or threat of release of Hazardous Materials, and Owner shall have
the right at any time to assume control of the matter from Manager.

Environmental Laws
shall mean all federal, state and local environmental, health and safety laws, rules,
regulations, ordinances, permits, orders, common law or requirements of any
governmental authority, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§
9601, et. seq., as amended; Solid Waste Disposal Act, 42 U.S.C.
§§ 6901, et. seq., as amended; Toxic Substances Control Act, 15
U.S.C. §§ 2601, et. seq., as amended; Hazardous Materials
Transportation Act, 49 U.S.C. §§ 5101, et. seq., as amended;
Federal Water Pollution Control Act, 33 U.S.C. §§ 1251, et. seq.

Hazardous Materials
shall mean any hazardous substances, hazardous wastes, toxic substances,
hazardous materials, petroleum or petroleum products, pollutants or
contaminants (as those terms are defined under Environmental Laws), including,
without limitation, polychlorinated biphenyls, lead or lead-based paint,
asbestos or mold in such concentrations or amounts as may impose clean-up,
removal, monitoring or other responsibility under the Environmental Laws or
which may present a significant risk of harm to guests, invitees or employees
of the Hotel.

10.09.
Confidentiality; Projections.

A. Owner
and Manager agree that the terms of this Agreement are strictly confidential
and will use their reasonable efforts to ensure that the terms of this
Agreement are not disclosed to any outside person or entities without the prior
written consent of the other party, except (1) as Owner or Manager may
determine is required by any law, rule, regulation or judicial process, or by
any regulatory or supervisory authority having jurisdiction over the parties or
any of their Affiliates or (2) to the extent reasonably necessary, (i) to
obtain licenses, permits and other public approvals, (ii) in connection with a
financing of the Hotel, Owner, or any Affiliate thereof, (iii) in connection
with a Sale of the Hotel or other sale of Owner, or any Affiliate thereof or
its or their corporate assets, (iv) subject to the provisions of Section 4.02,
in connection with an audit or other investigation conducted pursuant to this
Agreement or (v) in

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connection with either partys enforcement of its rights and remedies
under this Agreement. Notwithstanding the foregoing or anything to the contrary
set forth herein, the terms of this Agreement shall not be deemed confidential
to the extent: (a) such information becomes generally available to the public
other than as a result of unauthorized disclosure by the recipient or persons
to whom such recipient has made the information available; or (b) the party
seeking to disclose such confidential information can demonstrate to the
reasonable satisfaction of the other party that the information sought to be
disclosed is customarily disclosed by at least 80% of all Persons directly or
indirectly owning hotels in the United States; or (c) the information
communicated was already known to recipient at the time of its receipt.

B. Owner
acknowledges that any written or oral projections, pro formas, or other similar
information that has been (prior to execution of this Agreement) or will
(during the Term) be provided by Manager (or any Affiliate of either) to Owner
is for information purposes only, and that Manager, and any such Affiliate do
not guarantee that the Hotel will achieve the results set forth in any such
projections, pro formas, or other similar information. Owner further
acknowledges that any such projections, pro formas, or other similar
information are based on assumptions and estimates, unanticipated events may
occur subsequent to the date of preparation of such projections, pro formas,
and other similar information, and the actual results achieved by the Hotel are
likely to vary from the estimates contained in any such projections, pro
formas, or other similar information and such variations might be material.

10.10.
Indemnification.

A. Manager
hereby agrees to indemnify, defend and hold harmless Owner, its officers,
directors, stockholders, employees, agents and their respective successors and
assigns from and against any and all claims, liabilities, damages, losses,
obligations and costs (including reasonable attorneys fees) arising from (i)
Managers or any of its Affiliates failure to comply with its obligations
under this Agreement and, to the extent provided herein, the obligations of the
franchisee under the Franchise Agreement, (ii) any grossly negligent act or
omission, theft, fraud or willful misconduct of Manager or its Affiliates and
their respective employees, agents or contractors and (iii) any claim asserted
by any employee, contractor or agent of Manager or its Affiliates, including
any claim for employment discrimination, wrongful termination, violations of
law and other claims asserted by such employees, except, as to any of the items
listed in clauses (i)  (iii) above, to the extent of any costs properly
payable from Gross Revenues as Deductions, to the extent of any costs or claims
covered by insurance or to the extent that the loss or liability giving rise to
such claim was caused directly by Owners breach of its obligations under this
Agreement or Owners grossly negligent act or omission, theft, fraud, or
willful misconduct.

B. Owner
hereby agrees to indemnify, defend and hold harmless Manager, its officers,
directors, stockholders, employees, agents and their respective successors and
assigns from and against any and all claims, liabilities, damages, losses,
obligations and costs (including reasonable attorneys fees) arising from (i)
Owners failure to comply with its obligations under this Agreement, (ii) any
grossly negligent act or omission, theft, fraud or willful misconduct of Owner
or its Affiliates or their respective employees, agents or contractors and
(iii) any claim asserted by any employee, contractor or agent of Owner or its
Affiliates except, as to any of the

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items listed in clauses (i)-(iii) above, to the extent the loss or
liability giving rise to such claim was caused directly by Managers breach of
its obligations under this Agreement or Managers grossly negligent act or
omission, theft, fraud, or willful misconduct or is covered by insurance.

10.11.
Actions to be Taken Upon Termination.

Upon
a Termination, the following shall be applicable:

A. All fees
or expenses due to Manager for the period before such Termination shall be paid
to Manager. On the effective date of such Termination, Manager shall cease all
activities hereunder on behalf of Owner at the Hotel and shall have no further
obligations hereunder except as to matters arising before such date and except
as otherwise provided in this Agreement. However, Manager shall cooperate with
Owner in the orderly transfer of management to Owner or Owners designated
agent or manager.

B. Manager
shall, within forty-five (45) days after Termination, prepare and deliver to
Owner a final accounting statement with respect to the Hotel, as more
particularly described in Section 4.01 hereof, along with a statement of any
sums due from Owner to Manager pursuant hereto, dated as of the date of
Termination. Within thirty (30) days of the receipt by Owner of such final
accounting statement, the parties will make whatever cash adjustments are
necessary pursuant to such final statement. The cost of preparing such final accounting
statement shall be a Deduction, unless the Termination occurs as a result of an
Event of Default by either party, in which case the defaulting party shall pay
such cost. Manager and Owner acknowledge that there may be certain adjustments
for which the information will not be available at the time of the final
accounting and the parties agree to readjust such amounts and make the
necessary cash adjustments when such information becomes available; provided,
however, that all accounts shall be deemed final two (2) years after
Termination.

C. Manager
shall immediately release and transfer to Owner any of Owners funds which are
held or controlled by Manager with respect to the Hotel.

D. Manager
shall make available to Owner such books and records respecting the Hotel
(including those from prior years) as will be needed by Owner to prepare the
accounting statements, in accordance with the GAAP, for the Hotel for the year
in which the Termination occurs and for any subsequent year.

E. Manager
shall (to the extent permitted by law) assign to Owner or to the new manager
all operating licenses and permits for the Hotel which have been issued in
Managers name (including liquor and restaurant licenses, if any); provided
that if Manager has expended any of its own funds in the acquisition of any of
any of such licenses or permits, Owner shall reimburse Manager therefor if it
has not done so already unless such expenditure is a Managers Liability.

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F. If this
Agreement is terminated by reason of Owners Event of Default, a reasonable
reserve shall be established from Gross Revenues to reimburse Manager for all
costs and expenses incurred by Manager in terminating its employees at the
Hotel, such as severance pay, unemployment compensation, employment relocation
and other employee liability costs arising out of the termination of employment
of Managers employees at the Hotel. If Gross Revenues are insufficient to meet
the requirements of such reserve, then Owner shall deliver to Manager, within
ten (10) Business Days after receipt of Managers written request therefor, the
sums necessary to establish such reserve.

G. If this
Agreement is terminated before the expiration of the Term for any reason other
than an Event of Default by Manager, Manager may submit to Owner for its
approval a budget with respect to expenses anticipated to be incurred by
Manager to terminate its activities at the Hotel. Upon approval of such budget
by Owner, Owner shall deposit the total amount of such budget into the Hotels
operating account, and Manager may use such deposit to pay such expenses.
Manager shall provide Owner a final accounting of the foregoing, and any
surplus remaining from such deposit shall be refunded to Owner.

H. Owner
may, at its option, (i) provide Manager and/or the employees at the Hotel (or
require Manager to provide to the employees at the Hotel) at least sixty (60)
days notice of a Termination and/or (ii) cause the entity which shall succeed
Manager as the operator of the Hotel to offer employment to a sufficient number
of the employees at the Hotel to avoid the occurrence, in connection with such
Termination, of a plant closing or mass layoff within the meaning of the
WARN Act. If Owner elects to cause the entity which shall succeed Manager as
operator of the Hotel to offer employment to certain of Managers employees,
Manager shall not take any action that would cause such employees not to
continue as employees at the Hotel.

I. Various
other actions shall be taken, as described in this Agreement, including, but
not limited to, the actions described in Section 4.05 and Section 6.04.

J. Manager
shall peacefully vacate and surrender the Hotel to Owner on the date of
termination unless otherwise agreed to by the parties.

The
provisions of this Section 10.11 shall survive Termination.

10.12.
Waiver.

The failure
of either party to insist upon a strict performance of any of the terms or
provisions of this Agreement, or to exercise any option, right or remedy
contained in this Agreement, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect. No waiver by
either party of any term or provision hereof shall be deemed to have been made
unless expressed in writing and signed by such party.

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10.13.
Partial Invalidity.

If any
portion of any term or provision of this Agreement, or the application thereof
to any person or circumstance shall be invalid or unenforceable, at any time or
to any extent, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and be enforced to the fullest
extent permitted by law.

10.14.
Survival.

Except as
otherwise specifically provided in this Agreement, the rights and obligations
of the parties herein shall not survive any Termination.

10.15.
Negotiation of Agreement.

Owner and
Manager are both business entities having substantial experience with the
subject matter of this Agreement, and each has fully participated in the
negotiation and drafting of this Agreement. Accordingly, this Agreement shall
be construed without regard to the rule that ambiguities in a document are to
be construed against the draftsman. No inferences shall be drawn from the fact
that the final, duly executed Agreement differs in any respect from any
previous draft hereof.

10.16.
Estoppel Certificates.

Each party
to this Agreement shall at any time and from time to time, upon not less than
fifteen (15) days prior notice from the other party, execute, acknowledge and
deliver to such other party, or to any third party specified by such other
party, a statement in writing: (a) certifying that this Agreement is unmodified
and in full force and effect (or if there have been modifications, that the
same, as modified, is in full force and effect and stating the modifications);
and (b) stating to the best knowledge of the certifying party (i) whether or
not there is a continuing Default or Event of Default by the non-certifying
party in the performance or observance of any covenant, agreement or condition
contained in this Agreement, (ii) the amount, if any, of any past due fees or
other past due amounts owed to Manager or Owner; and (iii) whether or not there
are any past due and unpaid obligations with respect to the Hotel, other than
in the ordinary course of business. Such statement shall be binding upon the
certifying party and may be relied upon by the non-certifying party and/or such
third party specified by the non-certifying party as aforesaid. In addition,
upon written request after a Termination, each party agrees to execute and
deliver to the non-certifying party and to any such third party a statement
certifying that this Agreement has been terminated.

10.17.
Affiliates.

Manager
shall not be entitled to contract with companies that are Affiliates (or
companies in which Manager has an ownership interest if such interest is not
sufficient to make such a company an Affiliate) or with third parties or their
Affiliates that have other contractual relationships with Manager and/or its
Affiliates to provide goods and/or services to the Hotel

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without the prior written consent of Owner, unless such transaction is
in the ordinary course of business, is on terms and conditions that are no less
favorable than if the transaction had been entered into with a third party and
is in compliance with the Owner-approved Annual Operating Projections.
Notwithstanding the foregoing, Manager may contract with Affiliates to provide
marketing, accounting and human resource services subject to the conditions
that (i) the costs of such services are included in the Annual Operating Projection
approved by Owner and (ii) at the time Manager submits each Annual Operating
Projection to Owner for its approval, Manager specifically identifies the
services to be provided by Managers Affiliates.

10.18.
Blocked Persons or Entities.

Manager
represents and warrants to Owner and covenants for the benefit of Owner that
(i) neither Manager nor any of its Affiliates or any of officers, directors,
partners or employees of Manager or its Affiliates, or, to its knowledge, the
funding sources for any of the foregoing, is or will be identified on the list
of the U. S. Treasurys Office of Foreign Asset Control (OFAC); (ii) neither
Manager nor any of its Affiliates is or will be directly or indirectly owned or
controlled by the government of any country that is subject to an embargo
imposed by the United States government; and (iii) neither Manager nor any of
its Affiliates is acting or will act on behalf of a government of, or is
involved in business arrangements or other transactions with, any country that
is subject to such an embargo. Manager will notify Owner in writing immediately
upon the occurrence of any event which would render the foregoing
representations and warranties incorrect.

10.19.
Restrictions on Operating the Hotel in Accordance with System Standards.

In the
event of either (i) a Legal Requirement, including an order, judgment or
directive by a court or administrative body which is issued in connection with
any Litigation involving Owner, or (ii) any action taken by a Mortgagee in
connection with a Foreclosure, which in either case restricts or prevents
Manager, in a material and adverse manner, from operating the Hotel in
accordance with System Standards (including without limitation, any restrictions
on expenditures by Manager from the Operating Accounts or from the Reserve,
other than restrictions which are set forth in this Agreement), Manager shall
be entitled, at its option, to terminate this Agreement upon sixty (60) days
written notice to Owner. The foregoing shall not reduce or otherwise affect the
rights of the parties under Article VIII.

10.20.
Counterparts.

This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which shall constitute one and the same
instrument. Such executed counterparts may be delivered by facsimile which,
upon transmission to the other party, shall have the same force and effect as
delivery of the original signed counterpart. The submission of an unsigned copy
of this Agreement or an electronic instrument with or without electronic
signature to either party shall not constitute an offer or acceptance. This
Agreement shall become effective and binding only upon execution and delivery of
this Agreement in non-electronic form by both parties in accordance with this
Section.

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10.21.
Entire Agreement.

This
Agreement, together with any other writings signed by the parties expressly
stated to be supplemental hereto and together with any instruments to be
executed and delivered pursuant to this Agreement, constitutes the entire
agreement between the parties and supersedes all prior understandings and
writings, and may be changed only by a written non-electronic instrument that
has been duly executed by the non-electronic signature of an authorized
representative of the parties hereto.

10.22.
Franchise Agreement.

During the
Term of this Agreement, subject to the availability of adequate funds, Manager
shall perform all of the obligations of Owner as Franchisee under the
Franchise Agreement to the extent such obligations relate to the management or
operation of the Hotel, and Manager shall not commit any act or omit to take
any action that would cause a default by the Franchisee under the Franchise
Agreement. In the event of any inconsistency between the provisions of this
Agreement and the provisions of the Franchise Agreement, the provisions of the
Franchise Agreement shall prevail. Manager shall send promptly to Owner any and
all notices that Manager receives from the Franchisor with respect to the Hotel
or the Franchise Agreement and shall keep Owner fully informed with respect to
all matters that come to Managers attention under the Franchise Agreement.
Notwithstanding the foregoing, Manager shall not have the right to grant any
consent, approval or other right reserved to the Franchisee under the Franchise
Agreement or to make any decision or agreement on behalf of Owner under the
Franchise Agreement. In the event the Franchise Agreement is terminated for any
reason, this Agreement shall also terminate effective as of the date of
termination of the Franchise Agreement, unless the parties hereto agree
otherwise.

10.23.
Operation of Other Hotels.

During the
Term and except for the Hotel and the other hotels described in Schedule 1,
neither Manager nor any of its Affiliates shall acquire, lease, own, manage or
operate, directly or indirectly, any hotel, inn, motel or other type of lodging
facility, regardless of whether similar to the Hotel or whether operated under
the same or a different brand, that is a Competing Hotel without Owners prior
written consent. In addition, if Manager or any of its Affiliates shall
acquire, lease, own, manage or operate, directly or indirectly, any hotel, inn,
motel or other type of lodging facility, regardless of whether similar to the
Hotel or whether operated under the same or a different brand, in the same
geographic area or market as the Hotel, Manager shall not permit unfair
favoritism in the operation and management of such other hotels that would
disadvantage the operation or business of the Hotel (such as, by way of example
only, directing potential Hotel guests to such other hotels instead of to the
Hotel). At Owners request, Manager shall provide such information as may
reasonably be requested by Owner to determine if there has been any such unfair
favoritism and, in the event Owner, in its reasonable business judgment,
determines that any such unfair favoritism has occurred, Owner may terminate
this Agreement after notice and right to cure as provided in this Agreement.
For purposes of this Section, a Competing Hotel shall mean any hotel, inn,
motel or other type of lodging facility that is within the geographic area
covered by the STR Report for the Hotel that markets directly to or

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makes efforts
to attract customers, guests and/or hotel business that would otherwise do
business with the Hotel.

10.24.
Waiver of Jury Trial and Punitive Damages.

Owner and
Manager each hereby absolutely, irrevocably and unconditionally waive trial by
jury and the right to claim punitive damages in any litigation, action, claim,
suit or proceeding, at law or in equity, arising out of or pertaining to this
Agreement or any other agreement, instrument or document entered into in
connection herewith.

10.25 Accounting
Fee. In addition to the Base Management Fee and the Incentive Management
Fee, the Manager shall be paid a fee for centralized accounting services (the
Accounting Fee) equal to the amount charged by Manager monthly for all
Managers managed hotels based on the type of hotel managed per Accounting
Period during the Term of this Agreement and for one (1) Accounting Period
after the applicable termination of this Agreement with respect to the Hotel.
The Accounting Fee shall be set annually and is intended to be a break-even fee
for the accounting department. The Accounting Fee for 2008 is $1,500 per month.
Such centralized accounting services consist of the processing of daily
accounting transactions necessary for the preparation of the monthly financial
statements, including general ledger, accounts payable, payroll (in conjunction
with the payroll processing firm) and banking. In addition, the following
expenses are included in the annual accounting fee

| |    |                                                                                                                                                                                                                                                                                                                      
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | express mail
 and regular postage for items sent specifically to or on behalf of the Hotel,
 which would include accounts payable checks, weekly invoices and accounting
 information to and from the Hotel, payroll checks, payroll reports and other
 documents necessary for the efficient operation of the Hotel;
| |    |                                                                                                                                                                                                                                                                                                                      
| | b. | telephone
 and fax costs specifically for the Hotel; and                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                      
| | c. | costs of
 photocopying specifically for the Hotel.                                                                                                                                                                                                                                                                   

However, Owner is responsible for all payroll processing firm fees
associated with processing the hotels payroll as well as any banking service
charges for operating and maintaining the bank account or accounts for the
hotel. Owner shall have use of Managers software system (currently Inquire but
changing to M3 Link) at no charge for this Hotel.

ARTICLE XI

DEFINITION OF TERMS

11.01.
Definition of Terms.

The
following terms when used in this Agreement shall have the meanings indicated:

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Accounting Period shall mean a
calendar month.

Accounting Period Statement shall have
the meaning ascribed to it in Section 4.0l.A.

Accounting Quarter shall mean three
consecutive Accounting Periods, the first of which begins on the first day of
the Fiscal Year.

Affiliate shall mean, as to any
Person, any other Person that, directly or indirectly, controls, is controlled
by or is under common control with such Person. For purposes of this
definition, the term control (including the terms controlling, controlled
by and under common control with) of a Person means the possession, directly
or indirectly, of the power: (i) to vote more than fifty percent (50%) of the
voting stock or other beneficial interests of such Person; or (ii) to direct or
cause the direction of the management and policies of such Person, whether
through the Ownership of voting stock, by contract or otherwise.

Agreement shall mean this Management
Agreement between Owner and Manager, including the exhibits attached hereto.

Annual Operating Projection shall have
the meaning ascribed to it in Section 4.04.

Annual Operating Statement shall have
the meaning set forth in Section 4.0l.B.

Available Cash Flow shall mean an
amount, with respect to each Fiscal Year or portion thereof during the Term,
equal to the excess, if any, of the Operating Profit over the Owners Priority.

Base Management Fee shall mean an
amount payable to Manager as a Deduction from Gross Revenues for all services
provided by Manager pursuant to this Agreement, except as otherwise expressly
provided herein. The Base Management Fee shall be the percentage of Gross
Revenues shown on Schedule 1 for each Fiscal Year during the Term.

Buildings shall mean the buildings and
improvements constituting that certain hotel more particularly described on Schedule
1 attached hereto and made a part hereof which is located on the Site.

Business Day shall mean any day other
than a Saturday, Sunday or legal holiday in the Commonwealth of Virginia.

CC&Rs shall have the meaning
ascribed to it in Section 7.04.A.

Competitive Set shall mean the group of
hotels which are closest in geographical distance from the Hotel and which are
generally within the same hotel market segment as the Hotel, as described in Schedule
1. If any such hotels, subsequent to the Effective Date, either changes its
chain affiliation or ceases to operate or otherwise ceases to reflect the
general criteria set forth in the first sentence of this definition, Owner and
Manager agree to mutually, reasonably and in good faith, discuss appropriate
changes to the foregoing list of the hotels that shall comprise the Competitive
Set.

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CPI, shall mean the Consumer Price
Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items
(1982-1984=100) published by the Bureau of Labor Statistics, United States Department
of Labor; provided, however, that if such index ceases to be published or is
converted to a different standard or is otherwise revised, the index shall be
adjusted by any then applicable conversion factor, or failing that, by any
published price or cost indices or other published data which are as comparable
as possible to the Index prior to its termination or revision.

Cure Payment shall have the meaning
set forth in Section 2.02.A.

Deductions shall have the meaning
ascribed to it in the definition of Operating Profit.

Default shall mean the occurrence of
any event which, with the lapse of time, the giving of notice or both, would
constitute an Event of Default.

Effective Date shall have the meaning
ascribed to it in the Preamble.

Environmental Laws shall have the
meaning ascribed to it in Section 10.08.

Event of Default shall have the
meaning ascribed to it in Section 8.01.

FF&E shall mean furniture,
furnishings, fixtures, soft goods, case goods, signage, audio-visual equipment,
kitchen appliances, vehicles, carpeting and equipment, including front desk and
back-of-the-house computer equipment, that meet Owners capitalization policy
consistent with GAAP, but shall not include Fixed Asset Supplies or Software.

FF&E Lease means a lease of any
property other than real property.

Fiscal Year shall mean a calendar year
commencing on January 1 and ending on December 31; provided, however, the first
fiscal year commences as of the Effective Date and ends at midnight on December
31 of that same calendar year. A partial Fiscal Year between the end of the
last full Fiscal Year and the Termination of this Agreement shall also
constitute a separate Fiscal Year. If Fiscal Year is changed in the future,
appropriate adjustment to this Agreements reporting and accounting procedures
shall be made; provided, however, that no such change or adjustment shall alter
the term of this Agreement or in any way reduce the distributions of Operating
Profit or other payments due hereunder.

Fixed Asset Supplies shall mean items
included within Property and Equipment under the Uniform System of Accounts
including, but not limited to, linen, china, glassware, tableware, uniforms,
and similar items, whether used in connection with public space or Guest Rooms.

Foreclosure shall mean any exercise of
the remedies available to a Mortgagee, upon a default under the Mortgage held
by such Mortgagee, which results in a transfer of title to or possession of the
Hotel. The term foreclosure shall include, without limitation, any one or
more of the following events, if they occur in connection with a default under
a Mortgage: (i) a

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transfer by judicial or non-judicial foreclosure; (ii) a transfer by
deed in lieu of foreclosure; (iii) the appointment by a court of a receiver to
assume possession of the Hotel; (iv) a transfer of either ownership or control
of the Owner, by exercise of a stock pledge or otherwise; (vi) if title to the
Hotel is held by a tenant under a ground lease, an assignment of the tenants
interest in such ground lease or (vi) any similar judicial or non-judicial
exercise of the remedies held by the Mortgagee resulting in actual ownership or
control of the Hotel by such Mortgagee or its designee.

Franchise Agreement shall mean the
franchise agreement described on Schedule 1 attached hereto and made a
part hereof, as the same may be amended or supplemented from time to time.

Gross Revenues shall mean all revenues
and receipts of every kind derived from operating the Hotel and all departments
and parts thereof, including, but not limited to: income (from both cash and
credit transactions) from rental of Guest Rooms, telephone charges, stores,
offices, exhibit or sales space of every kind; license, lease and concession
fees and rentals (not including gross receipts of licensees, lessees and
concessionaires); income from vending machines; income from parking; health
club membership fees; food and beverage sales; wholesale and retail sales of
merchandise; and service charges; provided, however, that Gross Revenues shall
not include the following: gratuities to employees of the Hotel; federal, state
or municipal excise, sales or use taxes or any other taxes collected directly
from patrons or guests or included as part of the sales price of any goods or
services; proceeds from the sale of FF&E; interest received or accrued with
respect to the funds in the Reserve or the other operating accounts of the
Hotel; any refunds, rebates, discounts and credits of a similar nature, given,
paid or returned in the course of obtaining Gross Revenues or components
thereof; insurance proceeds; condemnation proceeds (other than for a temporary
taking); or any proceeds from any Sale of the Hotel or from the financing or
refinancing of any debt encumbering the Hotel.

Guest Room shall mean a
separately-keyed lodging unit in the Hotel.

Guest Room Revenues shall mean the
portion of Gross Revenues of the Hotel which is attributed to the rental of
Guest Rooms.

Hazardous Materials shall have the
meaning ascribed to it in Section 10.08.

Hotel shall mean the Site together
with the Buildings and all other improvements construed or to be constructed on
the Site pursuant to this Agreement, all FF&E and Fixed Asset Supplies
installed or located on the Site or in the Buildings, and all easements or
other appurtenant rights thereto.

Hotel Lease shall have the meaning
ascribed to it in Recital B.

Hotel Purchase Contract shall have the
meaning ascribed to it in Schedule 1.

Impact Fees shall have the meaning
ascribed to it in Section 4.07.A.

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Impositions shall have the meaning
ascribed to it in Section 4.07.

Incentive Management Fee shall mean an
amount payable to Manager, pursuant to Section 3.01 and Section 4.01, that is
set forth in Schedule 1 of Available Cash Flow in any Fiscal Year (or portion
thereof) after payment to Owner of Owners Priority.

Initial Term shall have the meaning
ascribed to it in Section 2.01.

Inventories shall mean Inventories
as defined in the Uniform System of Accounts, such as, but not limited to,
provisions in storerooms, refrigerators, pantries and kitchens; beverages in
wine cellars and bars; other merchandise intended for sale; fuel; mechanical
supplies; stationery; and other expensed supplies and similar items.

Landlord shall mean the party
identified as Landlord in Schedule 1.

Legal Requirement(s) shall mean any
federal, state or local law, code, rule, ordinance, regulation or order of any
governmental authority or agency having jurisdiction over the business or
operation of the Hotel or the matters which are the subject of this Agreement,
including, without limitation, the following: (i) any building, zoning or use
laws, ordinances, regulations or orders; and (ii) Environmental Laws.

Litigation shall mean: (i) any cause
of action (including, without limitation, bankruptcy or other debtor/creditor
proceedings) commenced in a federal, state or local court; or (ii) any claim
brought before an administrative agency or body (for example, without limitation,
employment discrimination claims).

Manager shall have the meaning
ascribed to it in the Preamble hereto or shall mean any permitted successor or
assign, as applicable.

Managers Liability and Managers Liabilities shall have the
meanings ascribed to such terms in Section 4.03.B.

Mortgage shall mean any mortgage, deed
of trust or similar security instrument creating a lien on the Hotel.

Mortgagee shall mean the holder of any
Mortgage encumbering the Hotel or the Site.

Operating Accounts shall have the
meaning ascribed to it in Section 4.03.A.

Operating Loss shall mean a negative
Operating Profit.

Operating Profit shall mean the excess
of Gross Revenues over the following deductions (Deductions) incurred by Manager, on behalf of Owner, in
operating the Hotel:

1.
the cost of sales, including, without limitation, compensation, fringe
benefits, payroll taxes and other costs related to Hotel employees, provided
that the foregoing costs shall

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not include salaries and other employee costs of executive personnel of
Manager who do not work at the Hotel on a regular basis, which salaries and
costs shall be Managers Liability;

2.
departmental expenses incurred at departments within the Hotel; administrative
and general expenses; the cost of marketing incurred by the Hotel; advertising
and business promotion incurred by the Hotel; heat, light, and power; computer
line charges; and routine repairs, maintenance and minor alterations treated as
Deductions under Section 5.01;

3.
the cost of Inventories and Fixed Asset Supplies consumed in the operation of
the Hotel;

4.
a reasonable reserve for uncollectible accounts receivable as reasonably
determined by Manager with the concurrence of Owner;

5.
all costs and fees of independent professionals or other third parties who are
retained by Manager with the concurrence of Owner to perform services required
or permitted hereunder;

6.
all costs and fees of technical consultants and operational experts who are
retained or employed by Manager with the concurrence of Owner for specialized
services (including, without limitation, quality assurance inspectors) and the
reasonable cost of attendance by employees of the Hotel at training and
manpower development programs sponsored by Manager, provided Owner has approved
attendance at programs and the cost thereof;

7.
the Base Management Fee;

8.
all royalty, marketing fund, reservation, communication support, property
management system and other similar fees payable to the Franchisor under the
Franchise Agreement;

9.
insurance costs and expenses as provided in Section 6.04;

10.
taxes, if any, payable by or assessed against Manager, Owner or Landlord
related to this Agreement or to Managers operation of the Hotel and
Impositions (exclusive of Managers, Owners and Landlords income taxes or
franchise taxes and any other similar taxes payable by Manager and all other
taxes, assessments and payments excluded from the definition of Impositions);

11.
transfers to the Reserve required pursuant to Section 5.02;

12.
any costs paid by Manager pursuant to the Franchise Agreement;

13.
payments pursuant to FF&E leases or other forms of financing obtained for
the FF&E located in or connected with the Hotel; and

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14.
to the extent approved in advance by Owner, such other costs and expenses
incurred by Manager as are specifically provided for elsewhere in this
Agreement or are otherwise reasonably necessary for the proper and efficient
operation of the Hotel, including without limitation, travel expenses or
supervisory personnel of Manager incurred in connection with managing the
Hotel.

The term Deductions shall not include (a) debt
service payments pursuant to a Mortgage or (b) rental payments under any Hotel
Lease, all of which shall be paid by Owner from its own funds.

Owner shall have the meaning ascribed
to it in the Preamble or shall mean any successor or assign, as applicable.

Owners Priority shall mean the amount
shown as Owners Priority on Schedule 1 attached hereto and made a part
hereof, per Fiscal Year (prorated for any partial Fiscal Year) plus any accrued
but unpaid Owners Priority for any prior Fiscal Year. Owners Priority for
each Fiscal Year shall be paid to the extent of Operating Profit available in
such Fiscal Year, as provided in Section 3.02 of this Agreement. In the event
of any capital expenditures made with respect to the Hotel after the date of this
Agreement that are in excess of the Reserve, the Owners Priority shall be
increased (but not decreased) for the remaining portion of the Fiscal Year in
which such capital expenditures are made and all subsequent Fiscal Years so as
to equal a twelve percent (12%) return on an amount equal to the sum of (i) the
purchase price paid by Owner for the Hotel plus (ii) such excess capital
expenditures.

Performance
Termination Period shall have the meaning
ascribed to it in Schedule 1.

Performance Termination Threshhold
shall have the meaning ascribed thereto in Schedule 1.

Person means an individual (and the
heirs, executors, administrators, or other legal representatives of an
individual), a partnership, a corporation, limited liability company, a
government or any department or agency thereof, a trustee, a trust and any
unincorporated organization.

Prime Rate shall mean the prime rate
of interest announced from time to time in the Money Rates section of The Wall
Street Journal.

Prudent Industry Practice shall mean
the customary practices of the hotel industry in the United States for hotels
comparable to the Hotel. To the extent inconsistent with the requirements of
the Franchise Agreement, such practices shall be conformed to the requirements
of the Franchise Agreement for purposes of this Agreement.

Quarterly
Operating Statement shall have the meaning set
forth in Section 4.0l.B.

Reserve shall have the meaning
ascribed to it in Section 5.02A.

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Revenue Data Publication shall mean
Smiths STAR Report, a monthly publication distributed by Smith Travel
Research, Inc. of Gallatin, Tennessee, or an alternative source, reasonably
satisfactory to both parties, of data regarding the Revenue Per Available Room
of hotels in the general trade area of the Hotel. If such Smiths STAR Report
is discontinued in the future, or ceases (in the reasonable opinion of either
Owner or Manager) to be a satisfactory source of data regarding the Revenue Per
Available Room of various hotels in the general trade area of the Hotel, Owner
and Manager shall select an alternative source for such data. If the parties
fail to agree on such alternative source within a reasonable period of time,
either party may terminate this Agreement upon sixty (60) days prior written
notice to the other party.

Revenue Index shall mean that fraction
that is equal to (a) the Revenue Per Available Room for the Hotel divided by
(b) the average Revenue Per Available Room for the hotels in the Competitive
Set, as set forth in the Revenue Data Publication. Appropriate adjustments to
the Revenue Index acceptable to Owner shall be made in the event of a major
renovation of the Hotel.

Revenue Index Threshold shall mean the
number shown on Schedule 1 attached hereto and made a part hereof.
However, if the entry of a new hotel into the Competitive Set (or the removal
of a hotel from the Competitive Set) causes significant variations in the Revenue
Index that do not reflect the Hotels true position in the relevant market,
appropriate adjustments shall be made to the Revenue Index Threshold by mutual
consent of Owner and Manager each acting in good faith.

Revenue Per Available Room shall mean
(i) the term revenue per available room as defined by the Revenue Data
Publication, or (ii) if the Revenue Data Publication is no longer being used
(as more particularly set forth in the definition of Revenue Data
Publication), the aggregate gross room revenues of the hotel in question for a
given period of time divided by the total room nights for such period. If
clause (ii) of the preceding sentence is being used, a room shall be an
available hotel guestroom that is keyed as a single unit.

Routine Capital Expenditures shall
mean certain routine, non-major expenditures which are classified as capital
expenditures under generally-accepted accounting principles, and which will be
funded from the Reserve (pursuant to Section 5.02). Routine Capital
Expenditures consist of the following types of expenditures: exterior and
interior painting; resurfacing building walls and floors; resurfacing parking
areas; and miscellaneous similar expenditures. Routine Capital Expenditures are
not non-routine capital expenditures or major repairs or major alterations or
improvements.

Sale of the Hotel shall mean any sale,
assignment, transfer or other disposition, for value or otherwise, voluntary or
involuntary, of the Site and/or the Hotel or any interest therein, in whole or
part. For purposes of this Agreement, a Sale of the Hotel shall also include a
lease (or sublease) of all or substantially all of the Hotel or Site or any
interest therein.

SEC Filing Period shall mean such
period of time (a) (not to exceed thirty (30) days) after the close of each
Fiscal Year within which Owner must receive the Annual Operating Statement from
Manager with respect to such Fiscal Year and (b) (not to exceed twenty (20)

38

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days) after the close of each calendar quarter of a Fiscal Year within
which Owner must receive the Quarterly Operating Statement from Manager with
respect to such quarter, in each case in order for Owner to have a reasonable
period of time within which to prepare and make all required filings with the
Securities and Exchange Commission and other applicable governmental agencies.

Site shall mean the real property
described on Exhibit A attached hereto and made a part hereof.

Software shall mean all computer
software and accompanying documentation (including all future upgrades,
enhancements, additions, substitutions and modifications thereof), other than
computer software which is generally commercially available, which are used by
Manager in connection with operating or otherwise providing services to the
Hotel.

Specially Designated National or Blocked Person
shall mean (i) a person designated by the U.S. Department of Treasurys Office
of Foreign Assets Control from time to time as a specially designated national
or blocked person or similar status, (ii) a person described in Section 1 of
U.S. Executive Order 13224 issued on September 23, 2001, or (iii) a person
otherwise identified by government or legal authority as a person with whom
Manager or its Affiliates are prohibited from transacting business. Currently,
a listing of such designations and the text of the Executive Order are
published under the internet website address www.ustreas.gov/offices/enforcement/ofac.

Subordination Agreement shall have the
meaning ascribed to it in Section 7.03.

Subsequent Owners shall have the
meaning ascribed to it in Section 7.03.

System shall have the meaning set
forth in the Franchise Agreement.

System Standards shall mean any one or
more (as the context requires) of the following three (3) categories of
standards: (i) operational standards (for example, services offered to guests,
quality of food and beverages, cleanliness, staffing and employee compensation
and benefits, frequent traveler programs and other similar programs; (ii)
physical standards (for example, quality of the hotel, FF&E, and Fixed
Asset Supplies, frequency of FF&E replacements, etc.); and (iii) technology
standards (for example, those relating to software, hardware,
telecommunications, systems security and information technology); each of such
standards shall be the standard which is generally prevailing or in the process
of being implemented at other hotels in the System represented by the Franchise
Agreement.

Term shall have the meaning ascribed
to it in Section 2.01.

Termination shall mean the expiration
or sooner cessation of this Agreement.

Trade Name shall mean any name,
whether informal (such as a fictitious name or d/b/a) or formal (such as the
full legal name of a corporation or partnership) which is used to identify an
entity.

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Uniform System of Accounts shall mean
the Uniform System of Accounts for the Lodging Industry, Ninth Revised Edition,
1996, as published by the Educational Institute of the American Hotel &
Motel Association, as revised.

WARN Act shall mean the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. 2101 et seq.

Working Capital shall mean funds that
are necessary for 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 XII

SUPPLEMENTAL PROVISIONS

All of the
terms, conditions, representations, warranties, covenants and other provisions,
if any, set forth in the supplemental provisions attached hereto as Schedule
2 (the Supplemental Provisions) are hereby incorporated into
this Agreement and shall be considered a part hereof. In the event of any
conflict or inconsistency between the Supplemental Provisions and the other
provisions of this Agreement, the Supplemental Provisions shall control.

40

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IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed under
seal as of the day and year first written above.

| |                                            |                       |  | 
| | ------------------------------------------ | --------------------- |  | 
| | OWNER:                                     |                      
| |                                            |                       |  | 
| | APPLE TEN
 HOSPITALITY MANAGEMENT, INC., a
| | Virginia
 corporation                      |                      
| |                                            |                       |  | 
| |                                            |                       |  | 
| | By:                                        | /s/ Justin
 G. Knight | 
| |                                            |                       | 

| |       |                   |  | 
| | ----- | ----------------- |  | 
| | Name: | Justin G.
 Knight | 
| |       |                   | 

| |        |           |  | 
| | ------ | --------- |  | 
| | Title: | President | 
| |        |           | 

| |                                      |                                          |  | 
| | ------------------------------------ | ---------------------------------------- |  | 
| | MANAGER:                             |                                         
| |                                      |                                          |  | 
| | MHH
 MANGEMENT, LLC                  |                                         
| | a Georgia
 limited liability company |                                         
| |                                      |                                          |  | 
| | By:                                  | McKibbon
 Hotel Group, Inc., its Manager

| |  |     |                      | 
| |  | --- | -------------------- | 
| |  | By: | /s/ Vann M.
 Herring | 
| |  |     |                      | 

| |  |       |                  | 
| |  | ----- | ---------------- | 
| |  | Name: | Vann M.
 Herring | 
| |  |       |                  | 

| |  |        |           | 
| |  | ------ | --------- | 
| |  | Title: | President | 
| |  |        |           | 

Exhibit B  p.1

---



SCHEDULE 1

HOTEL SPECIFIC DATA

|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.       Description
 of Hotel: That certain hotel known as the Hampton Inn and
 Suites-Winston-Salem/University Area, located at 309 Summit Square Ct,
 Winston-Salem, North Carolina, 27105, containing 94 guest rooms, a lobby,
 meeting rooms, administrative offices, parking and certain amenities and
 related facilities located on the Site, including the following:
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                               | a.          Number
 of Guest Rooms: 94                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                               | b.          Other
 Improvements/Amenities: 1,064 sq. ft. meeting room space; full service
 business center; indoor saltwater swimming pool; whirlpool; exercise room;
 wireless high speed internet access
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|2.                                                                                                                                                                                                                                                                                                                                                                             | Franchise Agreement: Franchise Agreement
 between Apple Ten Hospitality Management, Inc. and Hampton Inns Franchise
 LLC, dated March 15, 2011.                                                           
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|3.                                                                                                                                                                                                                                                                                                                                                                             | Competitive
 Set:                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                               | Clarion
 Collection Hotel Sundance Plaza                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                               | Residence
 Inn Winston Salem                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                               | Courtyard
 Winston Salem University                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                               | Holiday Inn
 Winston Salem University Parkway                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                               | Hampton Inn
 Winston Salem I40 Hanes Mall                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                               | Comfort Inn
 Winston Salem                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|4.                                                                                                                                                                                                                                                                                                                                                                             | Landlord:
 Apple Ten North Carolina, L.P.                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|5.                                                                                                                                                                                                                                                                                                                                                                             | Base
 Management Fee: Three percent (3%)                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|6.                                                                                                                                                                                                                                                                                                                                                                             | a. Incentive
 Management Fee: 20% of available cash flow after payment of Owners
 Priority                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                               | b.Owners Priority: $1,320,000 (12% of purchase price)                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|7.                                                                                                                                                                                                                                                                                                                                                                             | Performance
 Termination Period: Any 12 consecutive Accounting
 Periods.                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|8.                                                                                                                                                                                                                                                                                                                                                                             | Revenue
 Index Threshold: 1.00                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|9.                                                                                                                                                                                                                                                                                                                                                                             | Hotel
 Purchase Contract: N/A                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                           
|10.                                                                                                                                                                                                                                                                                                                                                                            | Expiration
 Date of Term: 5 years from the Effective Date [March
 14, 2016]                                                                                                                               

2

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11.          State
in which Manager is Organized: Georgia

12.          FF&E
Reserve: An amount equal to five percent (5%) of Gross Revenues for each
Accounting Period.

13.          Reserved.

14.          Termination
Fee: Equals the average monthly amount of the Base Management Fee and
Incentive Management Fee during the immediately preceding twelve (12) month
period (Monthly Fee Average), multiplied by the lesser of (i) three (3) and
(ii) the total number of months remaining under the Term. If, at the time of
such termination, less than twelve (12) months have passed under the Agreement,
the Monthly Fee Average shall be equal to the monthly average of the Base
Management Fee and Incentive Management Fee during such period and shall be
multiplied by (i) the total number of months remaining during the first year
under the Agreement plus (ii) three (3).

15.          Initial
Working Capital: $25,000

16.          Capital
Project Fee: McKibbon will also serve as purchasing agent in connection
with renovation of properties when renovation is required by franchisor or
otherwise advisable in discretion of the Owner, including contract negotiation
with vendors and oversight of installation of purchases, if McKibbon and Owner
mutually agree to the terms and conditions of such engagement.

3

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SCHEDULE 2

1. Franchise Agreement. [FOR MARRIOTT BRANDS:] During the Term
of this Agreement, subject to the availability of adequate funds, Manager shall
perform all of the obligations of Owner as Franchisee under the Franchise
Agreement to the extent such obligations relate to the management or operation
of the Hotel, including, without limitation, the obligations of Franchisee
under Sections XIII (Accounts and Receipts) and XIV (Insurance) of the
Franchise Agreement, and Manager shall not commit any act or omit to take any
action that would cause a default by the Franchisee under the Franchise
Agreement. In the event of any inconsistency between the provisions of this
Agreement and the provisions of the Franchise Agreement, the provisions of the
Franchise Agreement shall prevail. Manager shall send promptly to Owner any and
all notices that Manager receives from the Franchisor with respect to the Hotel
or the Franchise Agreement and shall keep Owner fully informed with respect to
all matters that come to Managers attention under the Franchise Agreement.
Likewise, Owner shall send promptly to Manager any and all notices that Owner
receives from the Franchisor with respect to the Hotel or the Franchise
Agreement that would require action or compliance on the part of Manager.
Notwithstanding the foregoing, Manager shall not have the right to grant any
consent, approval or other right reserved to the Franchisee under the Franchise
Agreement or to make any decision or agreement on behalf of Owner under the
Franchise Agreement. In the event the Franchise Agreement is terminated for any
reason, this Agreement shall also terminate effective as of the date of
termination of the Franchise Agreement, unless the parties hereto agree
otherwise.

[FOR HILTON BRANDS:] During the Term of this Agreement, subject to the
availability of adequate funds, Manager shall perform all of the obligations of
Owner as Licensee under the Franchise Agreement to the extent such
obligations relate to the management or operation of the Hotel, including,
without limitation, the obligations of Licensee under Paragraphs 6, 7 and 8
of the Franchise Agreement, and Manager shall not commit any act or omit to
take any action that would cause a default by the Licensee under the Franchise
Agreement. In the event of any inconsistency between the provisions of this
Agreement and the provisions of the Franchise Agreement, the provisions of the
Franchise Agreement shall prevail. Manager shall send promptly to Owner any and
all notices that Manager receives from the Franchisor with respect to the Hotel
or the Franchise Agreement and shall keep Owner fully informed with respect to
all matters that come to Managers attention under the Franchise Agreement.
Notwithstanding the foregoing, Manager shall not have the right to grant any
consent, approval or other right reserved to the Licensee under the Franchise
Agreement or to make any decision or agreement on behalf of Owner under the
Franchise Agreement. In the event the Franchise Agreement is terminated for any
reason, this Agreement shall also terminate effective as of the date of
termination of the Franchise Agreement, unless the parties hereto agree
otherwise.

2. Accounting Period. For purposes of this Agreement, the term
Accounting Periods shall mean a calendar month, except that the first
Accounting Period shall begin on the Effective Date and shall end on the last
day of the calendar month in which the Effective Date occurs.

4

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3. Fiscal Year. [FOR MARRIOTT BRANDS:] For purposes of this
Agreement, the term Fiscal Year shall mean the fiscal year as of the
Effective Date that ends at midnight on the Friday closest to December 31 in
each calendar year; the new Fiscal Year begins on the Saturday immediately
following said Friday. Any partial Fiscal Year between the Effective Date and
the commencement of the first full Fiscal Year shall constitute a separate
Fiscal Year and shall be deemed the first Fiscal Year. A partial Fiscal Year
between the end of the last full Fiscal Year and the Termination of this
Agreement shall also constitute a separate Fiscal Year.

[FOR HILTON BRANDS:] For purposes of this Agreement, the term Fiscal
Year shall mean, initially, the period beginning as of the Effective Date and
ending at midnight on the following December 31 and thereafter each calendar
year during the Term. Any partial Fiscal Year between the Effective Date and
the commencement of the first full Fiscal Year shall constitute a separate
Fiscal Year and shall be deemed the first Fiscal Year. A partial Fiscal Year
between the end of the last full Fiscal Year and the Termination of this
Agreement shall also constitute a separate Fiscal Year.

5

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EXHIBIT A

Legal Description

the
Grantee in fee simple, all that certain lot or parcel of land situated in the
City of Winston-Salem, Winston
Township, Forsyth County, North Carolina and more particularly described as
follows:

| |                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | BEING KNOWN AND DESIGNATED as Lot 1, as shown on the plat of HANES MILL
 POINTE, as recorded in Plat Book 53, Page 61, in the Office of the Register
 of Deeds of Forsyth County, North Carolina, reference to which is hereby made
 for a more particular description.

6

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EXHIBIT B

Service Contracts

|  |                                                          
|- | ---------------------------------------------------------
| | Elevator Contract (Otis
 Elevator)                       
| | Telephone Contract
 (Windstream)                         
| | Cable (Time Warner Cable                                 
| | Music On Hold Service
 Contract (DMX)                    
| | Alarm Monitoring Contract
 (Piedmont Protective Services)
| | Landscaping Contract
 (Premier Landscaping)              
| | Dumpster Rental Contract
 (Republic Services)            

7

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