EXHIBIT 10.32



 Exhibit 10.32 
 CHATTANOOGA—HWS 
 MANAGEMENT AGREEMENT 
 by and between 
 LBAM – INVESTOR GROUP, L.L.C. 
 as “MANAGER” 
 and 
 APPLE EIGHT HOSPITALITY MANAGEMENT, INC. 
 as “OWNER” 
 Dated as of December     , 2007 







 Table of Contents 
  


					
	 	 	 	  	Page
	ARTICLE I	 	 APPOINTMENT OF MANAGER
	  	1
	 1.01.
	 	Appointment	  	1
	 1.02.
	 	Management of the Hotel	  	1
	 1.03.
	 	Employees	  	3
	 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	  	4
	 1.08.
	 	Representations and Warranties of Manager	  	5
			
	ARTICLE II	 	 TERM
	  	6
	 2.01.
	 	Term	  	6
	 2.02.
	 	Performance Termination	  	7
			
	ARTICLE III	 	 COMPENSATION OF MANAGER
	  	7
	 3.01.
	 	Management Fees	  	7
	 3.02.
	 	Operating Profit	  	8
			
	ARTICLE IV	 	 ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS
	  	8
	 4.01.
	 	Accounting, Distributions and Annual Reconciliation	  	8
	 4.02.
	 	Books and Records	  	9
	 4.03.
	 	Accounts, Expenditures	  	10
	 4.04.
	 	Annual Operating Projection	  	11
	 4.05.
	 	Working Capital	  	11
	 4.06.
	 	Fixed Asset Supplies	  	12
	 4.07.
	 	Real Estate and Personal Property Taxes	  	12
	 4.08.
	 	Sarbanes-Oxley Certification	  	13
			
	ARTICLE V	 	 REPAIRS, MAINTENANCE AND REPLACEMENTS
	  	14
	 5.01.
	 	Repairs and Maintenance to be Paid from Gross Revenues	  	14
	 5.02.
	 	Repairs, Maintenance and Equipment Replacements to be Paid from Reserve	  	14
			
	ARTICLE VI	 	 INSURANCE
	  	15
	 6.01.
	 	Property Insurance	  	15

  

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	 6.02.
	 	Operational Insurance	  	16
	 6.03.
	 	Coverage	  	17
	 6.04.
	 	Costs and Expenses	  	17
	 6.05.
	 	Owner’s Right to Provide Insurance	  	17
			
	ARTICLE VII	 	 DAMAGE AND REPAIR
	  	17
	 7.01.
	 	Damage and Repair	  	17
	 7.02.
	 	Condemnation	  	18
	 7.03.
	 	Subordination to Mortgage	  	18
	 7.04.
	 	No Covenants, Conditions or Restrictions	  	19
	 7.05.
	 	Liens; Credit	  	19
			
	ARTICLE VIII	 	 DEFAULTS
	  	19
	 8.01.
	 	Events of Default	  	19
	 8.02.
	 	Remedies	  	20
	 8.03.
	 	Additional Remedies	  	21
			
	ARTICLE IX	 	 ASSIGNMENT AND SALE
	  	21
	 9.01.
	 	Assignment	  	21
	 9.02.
	 	Sale of the Hotel	  	22
			
	ARTICLE X	 	 MISCELLANEOUS
	  	22
	 10.01.
	 	Right to Make Agreement	  	22
	 10.02.
	 	Consents and Cooperation	  	22
	 10.03.
	 	Relationship	  	22
	 10.04.
	 	Applicable Law; Jurisdiction	  	23
	 10.05.
	 	Recordation	  	23
	 10.06.
	 	Headings	  	23
	 10.07.
	 	Notices	  	23
	 10.08.
	 	Environmental Matters	  	24
	 10.09.
	 	Confidentiality; Projections	  	25
	 10.10.
	 	Indemnification	  	26
	 10.11.
	 	Actions to be Taken Upon Termination	  	26
	 10.12.
	 	Waiver	  	28
	 10.13.
	 	Partial Invalidity	  	28
	 10.14.
	 	Survival	  	29

  

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	 10.15.
	 	Negotiation of Agreement	  	29
	 10.16.
	 	Estoppel Certificates	  	29
	 10.17.
	 	Affiliates	  	29
	 10.18.
	 	Blocked Persons or Entities	  	30
	 10.19.
	 	Restrictions on Operating the Hotel in Accordance with System Standards	  	30
	 10.20.
	 	Counterparts	  	30
	 10.21.
	 	Entire Agreement	  	30
	 10.22.
	 	Franchise Agreement	  	31
	 10.23.
	 	Operation of Other Hotels	  	31
	 10.24.
	 	Waiver of Jury Trial and Punitive Damages	  	31
			
	ARTICLE XI	 	 DEFINITION OF TERMS
	  	32
	 11.01.
	 	Definition of Terms	  	32
			
	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      day of December, 2007 (“Effective Date”), by APPLE EIGHT HOSPITALITY
MANAGEMENT, 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, and LBAM – INVESTOR GROUP,
L.L.C., an Alabama limited liability company (“Manager”), with a mailing address at c/o Larry Blumberg & Associates, Inc., 2733 Ross Clark Circle, P.O. Box 5566, Dothan, Alabama 36302. 
 RECITALS: 
 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): 

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. 
 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 best efforts to obtain and keep same in full force and effect). 
 10.
Execute 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 each such contract or agreement is approved in advance by Owner. 
  

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 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. 
 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. 
 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 approve the hiring or termination of the persons who
occupy the position of General Manager for the Hotel and (ii)

  

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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 except to a hotel owned by Owner or an Affiliate of Owner. 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. 
 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 Twenty-Five Thousand Dollars ($25,000); (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 Fifty Thousand Dollars ($50,000) 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. 
  

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 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 or to the Hotel. Owner hereby acknowledges that Manager’s Affiliates, including Manager’s parent company, Larry Blumberg and Associates, Inc., and Affiliates thereof,
manage other hotel properties, that no relationship is established between Owner and Manager other than as set forth in this Agreement and that no agency or contractor relationship is established whatsoever between Owner and Manager’s
Affiliates, including Manager’s parent company and Affiliates thereof. 
 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. 
 C. Property Agreements. A complete list of all FF&E Leases, Service Contracts and Leases (as such terms are defined in the Hotel Purchase Contract) entered into by or on behalf of Manager used in or
otherwise relating to the operation and business of the Hotel is attached hereto as Exhibit B. There are no leases, license agreements, leasing agent’s agreements, equipment leases, building service agreements, maintenance contracts,
suppliers contracts, warranty contracts, operating agreements, or other agreements (i) to which Manager is a party or an assignee, or (ii) binding upon the Hotel, relating to the ownership, occupancy, operation, management or maintenance
of the Hotel, except for those Service Contracts, Leases, Warranties and FF&E Leases disclosed on Exhibit B. The Service Contracts, Leases, Warranties and FF&E Leases disclosed on Exhibit B are in full force and effect, and no
default has occurred and is continuing thereunder and no circumstances exist which, with the giving of notice, the lapse of time or both, would constitute such a default. No party has any right or option to acquire the Hotel or any portion thereof,
other than Buyer. 
 D. Pending Claims. Manager has not received any written notice of: (i) any claims, demands, litigation,
proceedings or governmental investigations pending or threatened against Manager or its Affiliates or related to the business or assets of the Hotel, except as disclosed in the Hotel Purchase Contract, (ii) any special assessments or
extraordinary taxes, and (iii) any 

  

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pending or threatened condemnation or eminent domain proceeding which would affect the Hotel or any part thereof. To the best of Manager’s knowledge,
except as disclosed in the Hotel Purchase Contract, there are no: pending arbitration proceedings or unsatisfied arbitration awards, or judicial proceedings or orders respecting awards, which might become a lien on the Hotel or any portion thereof,
pending unfair labor practice charges or complaints, unsatisfied unfair labor practice orders or judicial proceedings or orders with respect thereto, pending charges or complaints with or by city, state or federal civil or human rights agencies,
unremedied orders by such agencies or judicial proceedings or orders with respect to obligations under city, state or federal civil or human rights or antidiscrimination laws or executive orders affecting the Hotel, or other pending, actual or
threatened litigation claims, charges, complaints, petitions or unsatisfied orders by or before any administrative agency or court which affect the Hotel or might become a lien on the Hotel. 
 E. Licenses, Permits and Approvals. The Hotel complies with all applicable licenses, permits and approvals and federal, state or local statutes,
laws, ordinances, rules, regulations, requirements and codes including, without limitation, those regarding zoning, land use, building, fire, health, safety, environmental, subdivision, water quality, sanitation controls and the Americans with
Disabilities Act, and similar rules and regulations relating and/or applicable to the ownership, use and operation of the Hotel as it is now operated. To the best of Manager’s knowledge, Manager has received all licenses, permits and approvals
required or needed for the lawful conduct, occupancy and operation of the business of the Hotel, and each license and permit is in full force and effect. 
 F. Employees. All employees employed at the Hotel were employees of the previous owner of the Hotel and upon sale of the Hotel to Owner became employees of Manager. There are no (i) unions organized at the
Hotel, (ii) union organizing attempts, strikes, organized work stoppages or slow downs, or any other labor disputes pending or threatened with respect to any of the employees at the Hotel, or (iii) collective bargaining or other labor
agreements to which Manager or the Manager or the Hotel is bound with respect to any employees employed at the Hotel. 
 G. (g)
Operations. The Hotel has at all times been operated by Manager in in all material respects in accordance with all applicable laws, rules, regulations, ordinances and codes. 
 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 one hundred-eighty (180) days prior written notice of its election to terminate. No termination fee or penalty shall be payable to Manager as result of a
termination by Owner under this Section 2.01. 
  

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 2.02. Performance Termination. 
 A. Owner shall have the option to terminate this Agreement after any thirteen (13) consecutive Accounting Periods (the “Performance
Termination Period”) with respect to which the following occurs: 
 1. The Operating Profit for the Performance Termination Period is
less than the Performance Termination Threshold; and 
 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 (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 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 
 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. 
 C. An accounting fee in the amount set forth in Schedule 1 (the “Accounting Fee”), per Accounting Period during the Term
of this Agreement and for one (1) month after the 

  

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termination of this Agreement. The Accounting Fee shall be paid on the tenth (10) day of each Accounting Period. If Manager chooses to outsource any
accounting services, the cost of such outsourcing will be included in the Accounting Fee and will not be added thereto. Notwithstanding the foregoing, the Accounting Fee shall be waived as to any Accounting Period for which Manager fails to deliver
any Accounting Period Statement or interim amounts due Owner in a timely manner as required by Section 4.01.A. 
 Owner also shall
reimburse Manager for travel expenses incurred by Manager’s operational support staff based on then current per diem travel costs, provided that all such expenses are included in the Annual Operating Projection approved by Owner. 
 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 is not 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 not accrue or otherwise 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 (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 for the current year) 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 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, 

  

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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. 
 B. Calculations and payments of the Incentive Management Fee, the Base Management Fee and distributions of
Operating Profit 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 the SEC Filing Period, Manager shall deliver to Owner 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. 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 majeure event, 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. Furthermore, if Owner fails to fund such deficiency
upon request by Manager, Manager may also withdraw interest upon such sum from the date payment was due until repayment to Manager at a rate equal to the Prime Rate plus one (1) percent per annum. 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 the Uniform System of Accounts. 

  

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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 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. If any audit discloses that Manager has not received any amounts due it, Owner shall pay Manager such amounts, plus interest thereon at the Prime Rate plus one percent
(1%) per annum from the date such amounts should originally have been paid from Owner’s funds. The cost of the audit shall be paid by Owner; 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.
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 negligence or 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 

  

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

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 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 reasonable best efforts to remedy and/or correct identified weaknesses in a
timely manner. 
  

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 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. Routine 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. Proceeds from the sale of FF&E no longer necessary to the operation of the Hotel shall be added to the Reserve. The Reserve will be kept in an interest-bearing account,
and any interest which accrues thereon shall be retained in the Reserve. Neither (x) proceeds from the disposition of FF&E, nor (y) interest which accrues on amounts held in the Reserve, shall (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. 
 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 

  

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

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 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 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.

  

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 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. If Owner so terminates this
Agreement, Manager will be entitled to a termination fees in the amount equal to twenty-five percent (25%) of the Base Management Fee and Incentive Management Fee paid for the immediately preceding thirteen (13) consecutive Accounting
Periods, plus an amount equal to three (3) months of accounting fees payable hereunder (collectively, the “Termination Fee”). 
 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, as the case may be. If Owner so terminates this Agreement, Manager shall be entitled to the Termination Fee. 
 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. 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 an 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 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 
  

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 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 as of the date of such Foreclosure or upon thirty (30) days notice, in which case Manager shall be entitled to the Termination Fee. 
 7.04. No Covenants, Conditions or Restrictions. 
 A. Manager acknowledges and agrees with Owner, and represents and warrants to Owner, that, as of the Effective Date, to the best of Manager’s knowledge, there are no covenants, conditions or restrictions,
including reciprocal easement agreements or cost-sharing arrangements (individually or collectively referred to as “CC&R(s)”) affecting the Hotel, other than those disclosed on Owner’s title insurance commitment
which: (i) would prohibit or limit Manager from operating the Hotel in accordance with the System Standards; (ii) would allow the Hotel facilities (for example, parking spaces) to be used by persons other than guests, invitees or employees
of the Hotel; (iii) would allow the Hotel facilities to be used for specified charges or rates which have not been approved by Manager; (iv) would subject the Hotel to exclusive arrangements regarding food and beverage operation or retail
merchandise; or (v) would impose any financial obligations on Owner or the Landlord or on the Hotel. 
 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. 
 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. 
  

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 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 no such notice or cure period shall be required in the case of payments by Manager of Owner’s Priority or other distributions of Operating Profit payable to Owner.

 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) no such notice or cure period shall be required in
the case of Manager’s failure to maintain the insurance required by Article VI. 
 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, provided that said effective date shall be at least thirty
(30) days after the date of said notice in the case of an Event of Default by Owner; (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. 
  

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 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. 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 with a merger or consolidation or reorganization of, or a sale of all or substantially all of the
assets of, Apple REIT Six, 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 shall not 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. 
  

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 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 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. If Owner or Manager terminates this Agreement on account of a Sale of the Hotel, Owner shall pay the
Termination Fee to Manager. 
 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 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 all such agreements shall be subject to Owner’s prior approval. 
 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 

  

 22 








 
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 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. 
 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, 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 Eight 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

  

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	To Manager:	  	LBAM – Investor Group, L.L.C.
		  	c/o Larry Blumberg & Associates, Inc.
		  	2733 Ross Clark Circle P.O. Box 5566, Dothan, Alabama 36302
		  	Attn: Barry Kraselsky
		  	Fax No.: (334) 671-1356
		
	With copy to:	  	Johnston, Hinesley, Flowers & Clenney, P.C.
		  	Post Office Box 2246 (36302)
		  	291 North Oates Street Dothan, Alabama 36303
		  	Attn: William W. Hinesley
		  	Fax No.: (334) 793-6603

 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. Additionally, notices may be given by telephone facsimile transmission, provided that an original copy of said transmission
shall be delivered to the addressee by nationally utilized overnight delivery service on the business day following such transmission. Telephone facsimiles shall be deemed delivered on the date of such transmission. 
 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 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. 
  

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 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 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. 
  

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 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 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 and 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. 
 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 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 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 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 

  

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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 ninety (90) 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 Uniform System of Accounts, 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. 
 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 

  

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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. 
 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. 
  

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 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 without the prior written consent of Owner. 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. 
  

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 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. 
 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 (which shall not be deemed to exclude facsimile) signature of an authorized representative of the parties hereto. 
  

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 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, 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. 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, in the same geographic area or market as the Hotel. 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. 
 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. 
  

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 ARTICLE XI 
 DEFINITION OF TERMS 
 11.01. Definition of Terms. 
 The following terms when used in this Agreement shall have the meanings indicated: 
 “Accounting Fee” shall have the meaning ascribed to it in Section 3.01.D. 
 “Accounting Period” shall mean the four (4) week accounting periods having the same beginning and ending dates as
Franchisor’s four (4) week accounting periods, except that an Accounting Period may occasionally contain five (5) weeks when necessary to conform Franchisor’s accounting system to the calendar. 
 “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; provided, that if there are more than 12 Accounting Periods in a Fiscal Year, the fourth Accounting Quarter of such Fiscal Year shall contain all remaining Accounting Periods in such 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 thereafter during the Term. 
  

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 “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 or the State of Colorado. 
 “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.

 “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.B. 
 “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.A. 
 “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, but shall not include Fixed Asset Supplies or Software. 
 “FF&E Lease” means a lease of any FF&E, which lease is properly capitalized for financial accounting purposes. 
  

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 “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. 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 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; service
charges; and proceeds, if any, from business interruption or other loss of income insurance; 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 (other than proceeds from business
interruption or other loss of income insurance); 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. 
  

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 “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.A. 
 “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. 
 “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
equal to twenty-five percent (25%) 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 have the meaning ascribed to it in Recital A. 
 “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). 
  

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 “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 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 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; 
  

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 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 related to this Agreement or to Manager’s operation of the Hotel and
Impositions (exclusive of Manager’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. The Accounting Fee to be paid as
provided in Section 3.01.C; 
 14. payments pursuant to FF&E leases or other forms of financing obtained for the FF&E located in
or connected with the Hotel; and 
 15. 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 an amount up to, but not in excess of 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). 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 one hundred three percent (103%) of the sum of (i) the purchase price paid by Owner for the Hotel plus
(ii) such capital expenditures. 
  

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 “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. 
 “Reserve” shall have the meaning ascribed to it in Section 5.02A. 
 “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. 
  

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 “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 (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 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.A.

 “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, 

  

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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. 
 “Termination Fee” shall have the meaning ascribed thereto in Section 7.01.B. The
Termination Fee shall not be payable except as expressly provided in 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. 
 “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 used in the day-to-day
operation of the business of the Hotel, including, without limitation, amounts sufficient for the maintenance of change and petty cash funds, amounts deposited in operating bank accounts, receivables, amounts deposited in payroll accounts, prepaid
expenses and funds required to maintain Inventories, less accounts payable and accrued current liabilities. The initial Working Capital deposited by Owner as of the Effective Date shall be the amount set forth on Schedule 1. 
 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. 
  

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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 EIGHT HOSPITALITY MANAGEMENT, INC.,
 a Virginia corporation

		
	By:	 	 /s/ Justin G. Knight

	Name:	 	Justin G. Knight
	Title:	 	Vice President
	
	MANAGER:
	
	 LBAM – INVESTOR GROUP, L.L.C.,
 an
Alabama limited liability company

		
	By:	 	 /s/ Larry Blumberg

	Name:	 	Larry Blumberg
	Title:	 	  



  

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 SCHEDULE 1 
 HOTEL SPECIFIC DATA 
  

	1.	Description of Hotel: That certain hotel known as the Homewood Suites Chattanooga – Hamilton Place located at 2250 Center Street, Chattanooga, Tennessee 37421,
containing 76 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: 76 

  

	 	b.	Other Improvements/Amenities:          sq. ft. meeting room space;          sq.
ft. board room space; full service business center; indoor swimming pool; exercise room; wireless high speed internet access 

  

	2.	Franchise Agreement: Franchise Agreement between Apple Eight Hospitality Management, Inc. and Hilton Hotels Corp. dated as of
                                        .


  

	3.	Competitive Set: 

 Courtyard Chattanooga 

Residence Inn Chattanooga Downtown 
 Country Inn & Suites Chattanooga at Hamilton Place 
 Wingate by Wyndham Chattanooga 
 Mainstay Suites Chattanooga 
  

	4.	Landlord: Apple Eight Hospitality Ownership, Inc. 

  

	5.	Base Management Fee: three percent (3%) 

  

	6.	Owner’s Priority: $                     (12% of purchase
price) 

  

	7.	Performance Termination Threshold: $                     (10% of
purchase price) 

  

	8.	Revenue Index Threshold: 125% 

  

	9.	Initial Working Capital: $25,000.00 

  

	10.	Hotel Purchase Contract: Purchase Contract dated September 27, 2007 between Amtel Associates, LLC et al. and Apple Eight Hospitality Ownership, Inc.


  

	11.	Expiration Date of Term: Five (5) years after the Effective Date. 

  

	12.	State in which Manager is Organized: Alabama 

  

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

  

	14.	Accounting Fee: $600.00 per month. 

  

	15.	Other Hotels: None 

  

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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. 
  

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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. 
  

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