Exhibit 10.13



 Exhibit 10.13 

 
 LEASE AGREEMENT 

 
 DATED AS OF DECEMBER 21, 2004 

 
 BETWEEN 

 
 PHILADELPHIA HOTEL ASSOCIATES LP 

 
 AS LESSOR 

 
 AND 

 
 MHI HOSPITALITY TRS, LLC 

AS LESSEE 

  








 TABLE OF CONTENTS 

 

							
	 Article 1 LEASED PROPERTY; TERM
	  	 	4	  
	   1.1  
	  	 Leased Property
	  	 	4	  
	   1.2  
	  	 Term
	  	 	5	  
	 Article 2 DEFINITIONS
	  	 	5	  
	   2.1  
	  	 Definitions
	  	 	5	  
	 Article 3 BASE RENT; PERCENTAGE RENT; ADDITIONAL CHARGES
	  	 	16	  
	   3.1  
	  	 Rent
	  	 	16	  
	   3.2  
	  	 Confirmation of Percentage Rent
	  	 	18	  
	   3.3  
	  	 Additional Charges
	  	 	19	  
	   3.4  
	  	 Net Lease Provision
	  	 	19	  
	   3.5  
	  	 Conversion of Property
	  	 	20	  
	 Article 4 IMPOSITIONS
	  	 	20	  
	   4.1  
	  	 Payment of Impositions
	  	 	20	  
	   4.2  
	  	 Notice of Impositions
	  	 	21	  
	   4.3  
	  	 Adjustment of Impositions
	  	 	21	  
	   4.4  
	  	 Utility Charges
	  	 	21	  
	 Article 5 NO TERMINATION; ABATEMENT
	  	 	21	  
	   5.1  
	  	 No Termination, Abatement, etc.
	  	 	21	  
	   5.2  
	  	 Abatement Procedures
	  	 	22	  
	 Article 6 PERSONAL PROPERTY; LANDLORD’S LIEN
	  	 	22	  
	   6.1  
	  	 Ownership of the Leased Property
	  	 	22	  
	   6.2  
	  	 Lessee’s Personal Property
	  	 	22	  
	   6.3  
	  	 Lessor’s Lien
	  	 	23	  
	 Article 7 CONDITIONS; USE
	  	 	23	  
	   7.1  
	  	 Condition of the Leased Property
	  	 	23	  
	   7.2  
	  	 Use of the Leased Property
	  	 	24	  
	   7.3  
	  	 Lessor to Grant Easements, etc.
	  	 	24	  
	 Article 8 COMPLIANCE WITH APPLICABLE LAWS
	  	 	25	  
	   8.1  
	  	 Compliance with Legal and Insurance Requirements, etc.
	  	 	25	  
	   8.2  
	  	 Legal Requirement Covenants
	  	 	25	  
	   8.3  
	  	 Environmental Covenants
	  	 	26	  
	 Article 9 MAINTENANCE AND REPAIRS
	  	 	28	  
	   9.1  
	  	 Maintenance and Repair
	  	 	28	  
	   9.2  
	  	 Encroachments, Restrictions, etc.
	  	 	29	  
	 Article 10 ALTERATIONS
	  	 	29	  
	 10.1  
	  	 Alterations
	  	 	29	  
	 Article 11 PROHIBITED LIENS AND ENCUMBRANCES
	  	 	29	  
	 11.1  
	  	 Liens
	  	 	29	  
	 Article 12 PERMITTED CONTESTS
	  	 	30	  
	 12.1  
	  	 Permitted Contests
	  	 	30	  
	 Article 13 INSURANCE REQUIREMENTS
	  	 	31	  
	 13.1  
	  	 General Insurance Requirements
	  	 	31	  
	 13.2  
	  	 Replacement Cost
	  	 	32	  
	 13.3  
	  	 Waiver of Subrogation
	  	 	33	  
	 13.4  
	  	 Form Satisfactory, etc.
	  	 	33	  
	 13.5  
	  	 Increase in Limits
	  	 	33	  
	 13.6  
	  	 Blanket Policy
	  	 	33	  
	 13.7  
	  	 No Separate Insurance
	  	 	33	  


  









							
	 Article 14 INSURANCE PROCEEDS
	  	 	34	  
	 14.1  
	  	 Insurance Proceeds
	  	 	34	  
	 14.2  
	  	 Reconstruction in the Event of Damage or Destruction Covered by Insurance
	  	 	34	  
	 14.3  
	  	 Reconstruction in the event of Damage or Destruction not covered by Insurance
	  	 	35	  
	 14.4  
	  	 Lessee’s Property
	  	 	35	  
	 14.5  
	  	 Abatement of Rent
	  	 	35	  
	 14.6  
	  	 Damage near end of Term
	  	 	35	  
	 14.7  
	  	 Waiver
	  	 	35	  
	 Article 15 CONDEMNATION; TAKING
	  	 	36	  
	 15.1  
	  	 Definitions
	  	 	36	  
	 15.2  
	  	 Parties’ Rights and Obligations
	  	 	36	  
	 15.3  
	  	 Total Taking
	  	 	36	  
	 15.4  
	  	 Allocation of Award
	  	 	36	  
	 15.5  
	  	 Partial Taking
	  	 	36	  
	 15.6  
	  	 Temporary Taking
	  	 	37	  
	 Article 16 EVENTS OF DEFAULT; REMEDIES; DAMAGES
	  	 	38	  
	 16.1  
	  	 Events of Default
	  	 	38	  
	 16.2  
	  	 Surrender
	  	 	39	  
	 16.3  
	  	 Damages
	  	 	39	  
	 16.4  
	  	 Waiver
	  	 	40	  
	 16.5  
	  	 Application of Funds
	  	 	40	  
	 Article 17 LESSOR’S RIGHT TO CURE
	  	 	41	  
	 17.1  
	  	 Lessor’s Right to Cure Lessee’s Default
	  	 	41	  
	 Article 18 RESERVED
	  	 	41	  
	 Article 19 REIT REQUIREMENTS
	  	 	41	  
	 19.1  
	  	 REIT Requirements
	  	 	41	  
	 19.2  
	  	 Lessee Officer and Employee Limitation
	  	 	42	  
	 19.3  
	  	 Management Agreement
	  	 	43	  
	 Article 20 HOLDING OVER
	  	 	43	  
	 20.1  
	  	 Holding Over
	  	 	43	  
	 Article 21 RISK OF LOSS
	  	 	44	  
	 21.1  
	  	 Risk of Loss
	  	 	44	  
	 Article 22 INDEMNIFICATION
	  	 	44	  
	 22.1  
	  	 Indemnification
	  	 	44	  
	 Article 23 SUBLETTING AND ASSIGNMENT
	  	 	45	  
	 23.1  
	  	 Subletting and Assignment
	  	 	45	  
	 23.2  
	  	 Attornment
	  	 	45	  
	 Article 24 REPORTING AND CERTIFICATION REQUIREMENTS
	  	 	46	  
	 24.1  
	  	 Officer’s Certificates; Financial Statements; Budgets; Lessor’s Estoppel Certificates and
Covenants
	  	 	46	  
	 24.2  
	  	 Operating Budget
	  	 	46	  
	 24.3  
	  	 Capital Budget
	  	 	47	  
	 Article 25 LESSOR’S DEFAULT; CURE RIGHTS
	  	 	48	  
	 25.1  
	  	 Lessee’s Right to Cure
	  	 	48	  
	 25.2  
	  	 Breach by Lessor
	  	 	48	  
	 Article 26 NOTICES
	  	 	48	  
	 26.1  
	  	 Notices
	  	 	48	  


  
 2 









							
	 Article 27 MISCELLANEOUS PROVISIONS
	  	 	49	  
	 27.1  
	  	 Transfer of Licenses
	  	 	49	  
	 27.2  
	  	 Early Termination Rights; Termination Fees
	  	 	49	  
	 27.3  
	  	 Substitution of Initial Hotel
	  	 	49	  
	 27.4  
	  	 Compliance with Franchise Agreement
	  	 	49	  
	 27.5  
	  	 Lessor’s Right to Inspect
	  	 	50	  
	 27.6  
	  	 Conveyance by Lessor
	  	 	50	  
	 27.7  
	  	 Lessor may Grant Liens
	  	 	50	  
	 27.8  
	  	 Non Disturbance Agreement
	  	 	50	  
	 27.9  
	  	 Waiver of Presentment, etc.
	  	 	50	  
	 27.10
	  	 Memorandum of Lease
	  	 	50	  
	 27.11
	  	 Usury
	  	 	50	  
	 27.12
	  	 No Waiver
	  	 	51	  
	 27.13
	  	 Remedies Cumulative
	  	 	51	  
	 27.14
	  	 Acceptance of Surrender
	  	 	51	  
	 27.15
	  	 No Merger of Title
	  	 	51	  
	 27.16
	  	 Quiet Enjoyment
	  	 	51	  
	 27.17
	  	 Binding Effect
	  	 	51	  
	 27.18
	  	 Entire Agreement; No Offer
	  	 	51	  
	 27.19
	  	 Severability
	  	 	52	  
	 27.20
	  	 Counterparts
	  	 	52	  
	 27.21
	  	 Governing Law
	  	 	52	  
	 27.22
	  	 Recitals; Headings
	  	 	52	  
	 27.23
	  	 Survival
	  	 	52	  
	 27.24
	  	 Exhibits
	  	 	53	  
	 Exhibit A Land
	  	 	55	  
	 Exhibit B Base Rent and Percentage Rent
	  	 	56	  
	 Exhibit C Management Agreement
	  	 	57	  


  
 3 








 LEASE AGREEMENT 

 
 THIS LEASE AGREEMENT (hereinafter called
“Lease”), is made as of the 21st day of December, 2004, by and between Philadelphia Hotel Associates LP, a Pennsylvania limited partnership (hereinafter called “Lessor”), and MHI Hospitality TRS, LLC, a Delaware limited liability
company (hereinafter called “Lessee”), and provides as follows: 
  
 WITNESSETH: 
  
 Lessor owns fee title to the Leased Property (as defined below); and 
  

Lessor desires to lease to Lessee and Lessee desires to lease from Lessor, the Leased Property, pursuant to the terms and conditions of
this Lease. 
  
 NOW, THEREFORE, intending to
be legally bound, Lessor, in consideration of the payment of rent by Lessee to Lessor, the covenants and agreements to be performed by Lessee, and upon the terms and conditions hereinafter stated, does hereby rent and lease unto Lessee, and Lessee
does hereby rent and lease from Lessor, the Leased Property, as follows: 
  
 ARTICLE 1 
  
 LEASED PROPERTY; TERM 
  
 1.1 Leased Property. The Leased Property is comprised of all of Lessor’s right, title and interest in that certain hotel located at 4501 Island Avenue, Philadelphia, PA in
Philadelphia County, Pennsylvania and known as the “Hilton, Philadelphia Airport”: 
  

(a) the land and/or ground leasehold interests described in Exhibit “A” attached hereto and by reference
incorporated herein (the “Land”); 
  
 (b) all buildings, structures and other improvements of every kind including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and
offsite), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Land (collectively, the “Improvements”); 

 
 (c) all easements, rights and
appurtenances relating to the Land and the Improvements; 
  
 (d) all equipment, machinery, fixtures, and other items of property required or incidental to the use of the Improvements as a hotel, including all components thereof, now and hereafter permanently
affixed to or incorporated into the Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler systems and fire and 

  
 4 








 
theft protection equipment, all of which to the greatest extent permitted by law are hereby deemed by the parties hereto to constitute real estate, together with all replacements, modifications,
alterations and additions thereto (collectively, the “Fixtures”); 
  
 (e) all furniture and furnishings and all other items of personal property (excluding Inventory and personal property owned by Lessee) located on, and used in connection with, the operation of the
Improvements as a hotel, together with all replacements, modifications, alterations and additions thereto; and 
  

(f) all existing occupancy leases within the Leased Property (including any security deposits or collateral held by
Lessor pursuant thereto). 
  
 THE LEASED PROPERTY IS DEMISED IN ITS
PRESENT CONDITION WITHOUT REPRESENTATION OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER
MATTERS OF RECORD INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, THE LIEN OF FINANCING INSTRUMENTS, MORTGAGES, DEEDS OF TRUST AND SECURITY DEEDS, AND INCLUDING OTHER MATTERS WHICH WOULD BE DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN
ACCURATE SURVEY THEREOF. 
  
 1.2
Term. The term of the Lease (the “Term”) shall commence on December 21, 2004 (the “Commencement Date”) and shall end on December 21, 2014 (the “Expiration Date”), unless sooner terminated in
accordance with the provisions hereof, provided however that the Lessor and Lessee will renegotiate the Rent for the period commencing on December 21, 2004. 
  

ARTICLE 2 
  

DEFINITIONS 
  

2.1 Definitions. For all purposes of this Lease, used in this Lease and not otherwise defined, shall except as
otherwise expressly provided or unless the context otherwise requires, (a) the terms used in this Lease and not otherwise defined, shall have the meanings assigned to them in this Article II and include the plural as well as the singular, (b) all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as are at the time applicable, (c) all references in this Lease to designated “Articles,”
“Sections” and other subparagraphs are to the designated Articles, Sections and other subparagraphs of this Lease and (d) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to
this Lease as a whole and not to any particular Article, Section or other subparagraphs. 
  
 “Additional Charges” shall have the meaning as set forth in Section 3.3. 

  
 5 








 “Affiliate” as used in this Lease the term “Affiliate” of a
person shall mean (a) any person that, directly or indirectly, controls or is controlled by or is under common control with such person, (b) any other person that owns, beneficially, directly or indirectly, ten percent or more of the outstanding
capital stock, shares or equity interests of such person, or (c) any officer, director, employee, member, partner or trustee of such person or any person controlling, controlled by or under common control with such person (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of such person). The term “Person” as used within this definition means and includes individuals, corporations, general and limited partnerships, stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, or other entities and governments and agencies and political subdivisions thereof. For the purposes of this definition,
“Control” (including the correlative meanings of the terms “Controlled By” and “Under Common Control With”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such person, through the ownership of voting securities, partnership interests or other equity interests. 

 
 “Award” shall have the meaning as set forth
in Section 15.1(c). 
  
 “Base Rent”
shall have the meaning as set forth in Section 3.1(a). 
  
 “Beverage Sales” shall mean gross revenue from (i) the sale of wine, beer, liquor or other alcoholic beverages, whether sold in the bar or lounge, delivered to a guest room, sold at
meetings or banquets or at any other location at the Leased Property, or (ii) non-alcoholic beverages sold in the bar or lounge. Such revenues shall not include the following: 

 
 (a) Any gratuity or service charge
added to a customer’s bill or statement in lieu of a gratuity which is paid to an employee; 
  

(b) Any revenues that are subsequently credited, rebated or refunded in the ordinary course of business; and

  
 (c) Sales taxes or taxes
of any other kind imposed on the sale of alcoholic or other beverages. 
  
 “Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which national banks in the Commonwealth of Virginia, or in the municipality wherein
the Leased Property is located are closed. 
  

“Capital Budget” shall have the meaning as set forth in Section 24.3. 

 
 “Capital Expenditures” shall mean amounts
expended to pay the costs of replacement and renewals to the FF&E of the Leased Property and Capital Improvements. 
  

“Capital Improvements” shall mean certain non-routine repairs and maintenance to the building(s) of the Leased Property
which are normally capitalized under generally accepted accounting principles such as, but not limited to, exterior and interior repainting, resurfacing, building walls, floors, roofs and parking areas, and replacing folding walls and the like, and


  
 6 








 
major repairs, alterations, improvements, renewals or replacement to the building structure of the Leased Property or to its mechanical, electrical, heating, ventilating, air conditioning,
plumbing or vertical transportation systems. 
  

“CERCLA” means The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. 

 
 “Claims” shall have the meaning as set forth
in Section 12.1. 
  
 “Code” shall
mean the Internal Revenue Code of 1986, as amended. 
  

“Commencement Date” shall mean the date set forth in Section 1.2 as the commencement date with respect to the Facility.

  
 “Condemnation” shall have the
meaning as set forth in Section 15.1(a). 
  

“Condemnor” shall have the meaning as set forth in Section 15.1(d). 

 
 “Consumer Price Index” means Consumer Price
Index, published for Urban Consumers for the U.S. City Average for all Items, 1982-84 = 100 issued by the Bureau of Labor Statistics of the United States Department of Labor, as published in The Wall Street Journal. 

 
 “CPI Adjustment Year” shall mean the
calendar year next following the year in which the Commencement Date occurs, if the Commencement Date occurs between January 1 and June 30, or the second calendar year following the year in which the Commencement Date occurs, if the Commencement
Date occurs between July 1 and December 31. 
  

“Date of Taking” shall have the meaning as set forth in Section 15.1(b). 

 
 “Encumbrance” shall have the meaning as set
forth in Section 27.7. 
  
 “Eligible
Independent Contractor” shall mean a management company that meets the following requirements: 
  

(a) The management company does not permit wagering activities to be conducted at or in connection with the
Facility. 
  
 (b) The
management company does not own, directly or indirectly (within the meaning of Section 856(d)(5) of the Code), more than 35% of the outstanding stock of MHI. 
  

(c) No more than 35% of its interest in assets or net profits is owned, directly or indirectly (within the meaning
of Section 856(d)(5) of the Code), by one or more Persons owning 35% (within the meaning of Section 856(d) of the Code) or more of the outstanding stock of MHI. 

  
 7 








 (d) Neither MHI, the Lessor, nor the Lessee, derives or receives any
income from the management company or any of its subsidiaries. 
  
 (e) At the time that the management company enters into a management agreement with the Lessee to operate the Leased Property, the management company (or any “Related Person” within the
meaning of Section 856(d)(9)(F) of the Code) is actively engaged in the trade or business of operating “qualified lodging facilities” within the meaning of Section 856(d)(9)(D) of the Code for any Person who is not a “related
person” within the meaning of Section 856(d)(9)(F) of the Code with respect to MHI or the Lessee (an “Unrelated Person”). For purposes of determining whether the requirement of this paragraph (e) has been met, a management company
shall be treated as being “actively engaged” in such a trade or business if the management company (i) derives at least 10% of both its profits and revenue from operating “qualified lodging facilities” within the meaning of
Section 856(d)(9)(D) of the Code for Unrelated Persons or (ii) complies with any regulations or other administrative guidance under Section 856(d)(9) of the Code that provide a “safe harbor” rule with respect to the amount of hotel
management business with Unrelated Persons that is necessary to qualify as an “eligible independent contractor” within the meaning of such Code section. 

 
 A “qualified lodging facility” is defined in
Section 856(d)(9)(D) of the Code and means a “Lodging Facility” (defined below), unless wagering activities are conducted at or in connection with such facility by any person who is engaged in the business of accepting wagers and who is
fully authorized to engage in such business at or in connection with such facility. A “Lodging Facility” is a hotel, motel or other establishment more than one-half of the dwelling units in which are used on a transient basis, and includes
customary amenities and facilities operated as party of, or associated with, the lodging facility so long as such amenities and facilities are customary for other properties of a comparable size and class owned by other owners unrelated to MHI.

  
 “Environmental Authority” shall
mean any department, agency or other body or component of any Government that exercises any form of jurisdiction or authority under any Environmental Law. 
  

“Environmental Authorization” shall mean any license, permit, order, approval, consent, notice, registration, filing or
other form of permission or authorization required under any Environmental Law. 
  
 “Environmental Laws” shall mean all applicable federal, state, local and foreign laws and regulations relating to pollution of the environment (including without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), including, without limitation, laws and regulations relating to emissions, discharges, a Release or threatened Release of Hazardous Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials. Environmental Laws include but are not limited to CERCLA, FIFRA, RCRA, SARA and TSCA. 
  
 “Environmental Liabilities” shall mean any and all obligations to pay the amount of any
judgment or settlement, the cost of complying with any settlement, judgment or order for injunctive or other equitable relief, the cost of compliance or corrective action in response to any 

  
 8 








 
notice, demand or request from an Environmental Authority, the amount of any civil penalty or criminal fine, and any court costs and reasonable amounts for attorney’s fees, fees for
witnesses and experts, and costs of investigation and preparation for defense of any claim or any Proceeding, regardless of whether such Proceeding is threatened, pending or completed, that may be or have been asserted against or imposed upon
Lessor, Lessee, any Predecessor, the Leased Property or any property used therein and arising out of: 
  

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

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

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

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

“Event of Default” shall have the meaning as set forth in Section 16.1. 

 
 “Expiration Date” the date set forth in
Section 1.2 as the expiration date with respect to the Facility. 
  
 “Facility” shall mean the hotel and/or other facility offering lodging and other services or amenities being operated or proposed to be operated on the Leased Property. 

 
 “FF&E” shall mean all Fixtures,
furniture, furnishings and equipment. 
  

“FIFRA” means The Federal Insecticide, Fungicide, and Rodenticide Act, as amended. 

 
 “First Annual Room Revenues Break Point”
shall mean the amount of Room Revenues for the applicable Lease Year corresponding to such term as set forth on Exhibit B. 
  

“First Tier Room Revenue Recognition” shall mean all Lease Year to date Room Revenues in excess of the First Tier Rent
Floor up to but not exceeding the First Annual Room Revenues Break Point. 

  
 9 








 “First Tier Rent Floor” shall mean the amount of Room Revenues for the
applicable Lease Year corresponding to such term as set forth on Exhibit B. 
  
 “Fiscal Year” shall mean the 12-month period from January 1 to December 31. 
  

“Fixtures” shall have the meaning as set forth in Section 1.1(d). 

 
 “Food Sales” shall mean gross revenue from
the sale, for on-site consumption, of food and non-alcohol beverages sold at the Leased Property, including in respect to guest rooms, banquet rooms, meeting rooms and other similar rooms. Such revenues shall not include the following: 

 
 (a) Vending machine sales;

  
 (b) Any gratuities or
service charges added to a customer’s bill or statement in lieu of a gratuity which is paid to an employee; 
  

(c) Non-alcoholic beverages sold from the bar or lounge; 
  
 (d) Sales taxes or taxes of any other kind imposed on the sale of food or non-alcoholic
beverages; and 
  
 (e) Any
revenues that are subsequently credited, refunded or rebated in the ordinary course of business. 
  
 “Franchise Agreement” shall mean any franchise license agreement with a national franchisor under which the Facility is operated. 
  
 “Full Replacement Cost” shall have the meaning as set forth in Section 13.2. 

 
 “GAAP” shall mean, as of any date of
determination, generally accepted accounting principles consistently applied as recognized by the accounting industry and standards within the United States. 
  

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

“Gross Revenues” shall mean all revenues and receipts of every kind received from operating the Facility and all
departments and parts thereof, including but not limited to, income from both cash and credit transactions, income from the rental of rooms, stores, offices, banquet rooms, conference rooms, exhibits or sale space of every kind, license, lease and
concession fees and rentals (not including gross receipts of licensees, lessors and concessionaires), vending machines, 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, Gross Revenues shall not include (a) gratuities to the Facility’s employees, (b) federal, state or municipal excise, sales or use taxes or similar


  
 10 









 
impositions collected directly from customers, patrons or guests or included as part of the sales prices of any goods or services paid over to federal, state or municipal governments, (c)
property insurance or condemnation proceeds (excluding proceeds from business interruption coverage), (d) proceeds from the sale or refinance of assets other than sales in the ordinary course of business, (e) funds furnished by the Lessor, (f)
judgments and awards, (g) the amount of all credits, rebates or refunds (which shall be deductions from Gross Revenues) to customers, patrons or guests, (h) the value of complimentary rooms, food and beverages, (i) interest income, (j) lease
security deposits, and (k) items constituting “allowances” under the Uniform System. 
  
 “Hazardous Materials” shall mean all chemicals, pollutants, contaminants, wastes and toxic substances, including without limitation: 

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

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

 
 (d) Insecticides, fungicides, or
rodenticides, as defined in FIFRA or in any Environmental Law; and 
  
 (e) Gasoline or any other petroleum product or byproduct, polychlorinated biphenols, asbestos and urea formaldehyde. 

 
 “Impositions” shall mean collectively, all
taxes (including, without limitation, all ad valorem, sales and use, single business, gross receipts, transaction privilege, rent or similar taxes as the same relate to or are imposed upon Lessee or its business conducted upon the Leased Property),
assessments (including, without limitation, all assessments for public improvements or benefit, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term), ground rents, water, sewer or other
rents and charges, excises, tax inspection, authorization and similar fees and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Leased
Property or the business conducted thereon by Lessee (including all interest and penalties thereon caused by any failure in payment by Lessee), which at any time prior to, during or with respect to the Term hereof may be assessed or imposed on or
with respect to or be a lien upon (a) Lessor’s interest in the Leased Property, (b) the Leased Property, or any part thereof or any rent therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or
possession of, or sales from, or activity conducted on or in connection with the Leased Property, or the leasing or use of the Leased Property or any part thereof by Lessee. Nothing contained in this definition of Impositions shall be construed to
require Lessee to pay (1) any tax based on net income (whether denominated as a franchise or capital stock or other tax) imposed on Lessor or any other person, or (2) any net revenue tax of Lessor or any other person, or (3) any tax imposed with
respect to the sale, exchange or other disposition by Lessor of any Leased Property or the proceeds thereof, or (4) any single business, gross receipts (other than a tax on any rent received by Lessor from Lessee), transaction, privilege or similar
taxes as the same relate to or are imposed upon Lessor, except to the extent 

  
 11 









 
that any tax, assessment, tax levy or charge that Lessee is obligated to pay pursuant to the first sentence of this definition and that is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof. 
  

“Improvements” shall have the meaning as set forth in Section 1.1(b). 

 
 “Indemnified Party” shall mean either Lessee
Indemnified Party or a Lessor Indemnified Party. 
  

“Indemnifying Party” shall mean any party obligated to indemnify an Indemnified Party pursuant to Sections 8.3 or 22.1.

  
 “Insurance Requirements” shall
mean all terms of any insurance policy required by this Lease and all requirements of the issuer of any such policy. 
  

“Inventory” shall mean all “Inventories of Merchandise” and “Inventories of Supplies” as defined in
the Uniform System and including any property of the type described in Section 1221(1) of the Code. 
  
 “Land” shall have the meaning as set forth in Section 1.1(a). 
  

“Lease” shall mean this Lease Agreement. 

 
 “Lease Year” shall mean any 12-month period
from January 1 through December 31 during the Term, or any shorter period at the beginning or end of the Term. 
  

“Leased Property” shall have the meaning as set forth in Section 1.1. 

 
 “Legal Requirements” shall mean all federal,
state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting either the Leased Property or the maintenance, construction, use or alteration thereof (whether by
Lessee or otherwise),whether or not hereafter enacted and in force, including (a) all laws, rules or regulations pertaining to the environment, occupational health and safety and public health, safety or welfare, and (b) any laws, rules or
regulations that may (1) require repairs, modifications or alterations in or to the Leased Property or (2) in any way adversely affect the use and enjoyment thereof; and all permits, licenses and authorizations and regulations relating thereto and
all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Lessee (other than encumbrances created by Lessor without the consent of Lessee), at any time in force affecting the Leased Property.

  
 “Lessee” shall mean the Lessee
designated on this Lease and its respective permitted successors and assigns. 

  
 12 









 “Lessee Indemnified Party” shall mean the Lessee, any Affiliate of Lessee,
any other Person against whom any claim for indemnification may be asserted hereunder as a result of a direct or indirect ownership interest (including a stockholder’s interest) in Lessee, the officers, directors, stockholders, employees,
agents and representatives of Lessee and any corporate stockholder, agent, or representative of Lessee, and the respective heirs, personal representatives, successors and assigns of any such officer, director, stockholder, employee, agent or
representative. 
  
 “Lessee’s Personal
Property” shall have the meaning as set forth in Section 6.2. 
  
 “Lessor” shall mean the Lessor designated on this Lease and its respective successors and assigns. 
  

“Lessor Indemnified Party” shall mean the Lessor, any Affiliate of Lessor, including MHI, any other Person against whom
any claim for indemnification may be asserted hereunder as a result of a direct or indirect ownership interest in Lessor, the officers, trustees, directors, stockholders, partners, members, employees, agents and representatives of any of the
foregoing Persons and of any stockholder, partner, member, agent, or representative of any of the foregoing Persons, and the respective heirs, personal representatives, successors and assigns of any such officer, trustee, director, partner, member,
stockholder, employee, agent or representative. 
  

“Licenses” shall have the meaning as set forth in Section 27.1. 
  
 “Management Agreement” shall have the meaning as set forth in Section 19.3. 

 
 “Manager” shall have the meaning as set
forth in Section 19.3. 
  
 “MHI”
shall mean MHI Hospitality Corporation, a Maryland corporation. 
  
 “Notice” shall mean a notice given pursuant to Article XXVI. 
  

“Officer’s Certificate” shall mean a certificate of Lessee signed by the chief financial officer or another officer
authorized so to sign by the board of directors or by-laws of Lessee, or any other person whose power and authority to act has been authorized by delegation in writing by any such officer. 
  
 “Operating Budget” shall have the meaning as set forth in Section 24.2. 

 
 “Other Revenues” shall mean all revenues,
receipts, and income of any kind derived directly or indirectly from or in connection with the Facility and included in Gross Revenues, other than Room Revenues, Food Sales and Beverage Sales. 
  
 “Overdue Rate” shall mean on any date, a rate equal to the Prime Rate plus 3% per annum, but
in no event greater than the maximum rate then permitted under applicable law. 

  
 13 









 “Payment Date” shall mean any due date for the payment of any installment
of Base Rent. 
  
 “Percentage Rent”
shall have the meaning as set forth in Section 3.1(b). 
  
 “Period Revenues Computation” shall have the meaning as set forth in Section 3.1(b). 
  

“Person” shall mean any Government, natural person, corporation, partnership or other legal entity. 

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

 
 “Primary Intended Use” shall have the
meaning as set forth in Section 7.2(b). 
  

“Prime Rate” shall mean the “prime rate” as published in the “Money Rates” section of The Wall Street
Journal; however, if such rate is, at any time during the Term of this Agreement, no longer so published, the term “Prime Rate” shall mean the average of the prime interest rates which are announced, from time to time, by the three (3)
largest banks (by assets) headquartered in the United States which publish a “prime rate”. 
  

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

 
 “RCRA” shall mean The Resource Conservation
and Recovery Act, as amended. 
  
 “Real
Estate Taxes” shall mean all real estate taxes, including general and special assessments, if any, which are imposed upon the Land, and any improvements thereon. 

 
 “REIT Requirements” shall have the meaning
as set forth in Section 19.1(a). 
  

“Release” shall mean a “Release” as defined in CERCLA or in any Environmental Law, unless such Release has been
properly authorized and permitted in writing by all applicable Environmental Authorities or is allowed by such Environmental Law without authorizations or permits. 

 
 “Rent” shall have the meaning as set forth
in Section 3.1. 
  
 “Room Revenues”
shall mean gross revenue from the rental of guest rooms, whether to individuals, groups or transients, but excluding the following: 
  

(a) The amount of all credits, rebates or refunds to customers, guests or patrons; 

  
 14 









 (b) All sales taxes or any other taxes imposed on the rental of such
guest rooms; and 
  
 (c) Any
fees collected for amenities including, but not limited to: telephone, laundry, Internet, movies or concessions. 
  

“SARA” shall mean the Superfund Amendments and Reauthorization Act of 1986, as amended. 

 
 “Second Annual Room Revenues Break Point”
shall mean the amount of Room Revenues for the applicable Lease Year corresponding to such term as set forth on Exhibit B. 
  

“Second Tier Room Revenue Recognition” shall mean all Lease Year to date Room Revenues in excess of the Second Annual
Room Revenues Break Point. 
  

“State” shall mean the State or Commonwealth of the United States in which the Leased Property is located. 

 
 “Subsidiaries” shall mean one or more
corporations in which Lessee owns, directly or indirectly, more than 50% of the voting stock or control, as applicable. 
  

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

  
 “Term” shall have the meaning as
set forth in Section 1.2. 
  
 “Termination
Fee” shall have the meaning as set forth in Section 27.2. 
  
 “TSCA” shall mean the Toxic Substances Control Act, as amended. 
  

“Unavoidable Delay” shall mean delays due to acts of God (including adverse weather conditions), acts of the state or
federal government in its sovereign or contractual capacity, war, civil disturbance, riot or mob violence, terrorism, earthquake, flood, fire or other casualty, epidemic, quarantine restriction, labor strikes or lockout, freight embargo, or similar
causes beyond the control of the parties hereto. 
  

“Uneconomic for its Primary Intended Use” shall mean a state or condition of the Facility such that, in the good faith
judgment of Lessee, reasonably exercised and evidenced by the resolution of the board of directors or other governing body of Lessee, the Facility cannot be operated on a commercially practicable basis for its Primary Intended Use, taking into
account, among other relevant factors, the number of usable rooms and projected revenues, such that Lessee intends to, and shall, complete the cessation of operations at the Leased Facility. 

  
 15 









 “Uniform System” shall mean the Uniform System of Accounts for the Lodging
Industry, 9th Revised Edition, as may be modified from time to time by the International Association of Hospitality Accountants. 
  

“Unsuitable for its Primary Intended Use” shall mean a state or condition of the Facility such that, in the good faith
judgment of Lessee, reasonably exercised and evidenced by the resolution of the board of directors or other governing body of Lessee, due to casualty damage or loss through Condemnation, the Facility cannot function as an integrated hotel facility
consistent with standards applicable to a well maintained and operated hotel. 
  
 ARTICLE 3 
  
 BASE RENT; PERCENTAGE RENT; ADDITIONAL CHARGES 
  
 3.1 Rent. Lessee will pay to Lessor, in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, in immediately
available funds, at Lessor’s address set forth in Article XXVI hereof or at such other place or to such other Person, as Lessor from time to time may designate in a Notice, rent (“Rent”), which shall be equal to the greater of the
following: 
  
 (a) Base
Rent: the annual amount of Base Rent set forth on Exhibit B (the “Base Rent”), which shall be payable one-twelfth (1/12th) monthly in arrears on or before the first Business Day of the subsequent calendar month beginning on the
date as set forth on Exhibit B; provided, however, that Base Rent shall be prorated as to any partial Lease Year; plus 
  

(b) Percentage Rent: an amount of percentage rent (“Percentage Rent”), calculated for each
calendar quarter, equal to the Period Revenues Computation through the end of such calendar quarter for the applicable Lease Year, which amount shall be payable on or before the fifteenth (15th) day of the following calendar quarter, beginning on
the date as set forth on Exhibit B. 
  
 The term “Period
Revenues Computation” as used herein shall equal the sum of, for the applicable Lease Year: (i) an amount equal to 0.35 times the First Tier Room Revenue Recognition and (ii) an amount equal 0.70 times the Second Tier Room Revenue Recognition.

  
 If the Term begins or ends in the middle of a calendar year, then
the number of calendar quarters falling within the Term during such calendar year shall constitute a separate Lease Year. In that event, the First Annual Room Revenues Break Point and the Second Annual Room Revenues Break Point shall be multiplied
by a fraction equal to (x) the number of calendar quarters (including partial calendar quarters) in the Lease Year divided by (y) four. 
  

(c) Officer’s Certificates. Additionally, an Officer’s Certificate in a form reasonably acceptable
to Lessor shall be delivered to Lessor quarterly of each Lease Year during the Term with each Percentage Rent payment, setting forth the calculation of such rent payment for such quarter. Such quarterly payments shall be as set forth in Section
3.1(b). 

  
 16 









 In addition, on or before January 25 of each year, commencing with January 25 first following the end of the
Fiscal Year in which the Commencement Date occurs, Lessee shall deliver to Lessor an Officer’s Certificate reasonably acceptable to Lessor setting forth the computation of Percentage Rent accrued and paid during the Fiscal Year that ended on
the immediately preceding December 31. If the annual Percentage Rent due and payable for any Fiscal Year (as shown in the applicable Officer’s Certificate) exceeds the amount actually paid as Percentage Rent by Lessee for such year, Lessee
shall pay such excess to Lessor at the time such certificate is delivered. If the Percentage Rent actually due and payable for such Fiscal Year is shown by such certificate to be less than the amount actually paid as Percentage Rent for the
applicable Fiscal Year, Lessor, at its option, shall reimburse such amount to Lessee or credit such amount against the following months’ Rent payments. 
  

Any difference between the annual Percentage Rent due and payable for any Fiscal Year (as shown in the applicable Officer’s Certificate or as
adjusted pursuant to this Section 3.1(c)) and the total amount of quarterly payments for such Fiscal Year actually paid by Lessee as Percentage Rent, whether in favor of Lessor or Lessee, shall bear interest at the Overdue Rate, which interest shall
accrue from the close of such Fiscal Year until the amount of such difference shall be paid or otherwise discharged. Any such interest payable to Lessor shall be deemed to be and shall be payable as Additional Charges. 

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

 
 (d) CPI Adjustments to Rent.
For each Fiscal Year of the Term beginning on or after the CPI Adjustment Year, the Base Rent then in effect, the First Annual Room Revenues Break Point and the Second Annual Room Revenues Break Point shall be adjusted from time to time beginning in
the CPI Adjustment Year as follows: 
  
 (i) The average Consumer Price Index for the most recently ended Fiscal Year shall be divided by the average Consumer Price Index for the immediately preceding Fiscal Year. 

 
 (1) The new Base Rent for the then
current Fiscal Year shall be the adjusted amount obtained by multiplying the Base Rent for the immediately preceding Fiscal Year by the quotient obtained in subparagraph (d)(1) above. 
  
 (2) The new threshold dollar amount in the Period Revenues Computations described in
Section 3.1(b) above for the then current Fiscal Year shall be the product of the threshold dollar amount of Room Revenues in effect in the most recently ended Fiscal Year and the quotient obtained in subparagraph (d)(1)above. 

  
 17 









 By way of example, if the CPI Adjustment Year were 2004, the amount of Base Rent and the threshold Room
Revenues amounts in the Period Revenues Computations for the Fiscal Year commencing January 1, 2005 would be adjusted to reflect any change in the average Consumer Price Index from the Fiscal Year ended December 31, 2003 as compared to the Fiscal
Year ended December 31, 2004. Base Rent and the threshold Room Revenues amounts in the Period Revenues Computations for the Fiscal Year commencing January 1, 2005 would be the Base Rent and threshold Room Revenues amounts applicable for the fiscal
year ended December 31, 2004 as further adjusted to reflect any change in the average Consumer Price Index from December 31, 2004 as compared to December 31, 2003. 

 
 Lessor shall calculate the annual adjustments as soon as reasonably possible
after the Consumer Price Index becomes available and shall notify Lessee in writing of the amount of the annual adjustment, together with a copy of the computation showing the adjustment amount. Adjustments calculated as set forth above in the Base
Rent and threshold Room Revenues amounts shall be effective on January 1 of the Fiscal Year to which such adjusted amounts apply. If Rent is paid in any Fiscal Year prior to the determination of the amount of any adjustment to Base Rent or the
threshold Room Revenues applicable for such Fiscal Year, payment adjustments for any shortfall in or overpayment of rent paid shall be made with the first Base Rent payment due after the amount of the adjustments are determined. 

 
 The “Average Consumer Price Index” for any period shall be the
average of the Consumer Price Index for each month during the period. 
  
 (ii) If (i) a significant change is made in the number or nature (or both) of items used in determining the Consumer Price Index, or (ii) the Consumer Price Index shall be discontinued for any
reason, the Bureau of Labor Statistics shall be requested to furnish a new index comparable to the Consumer Price Index, together with information which will make possible a conversion to the new index in computing the adjustments to Rent hereunder.
If for any reason the Bureau of Labor Statistics does not furnish such an index and such information, the parties will instead mutually select, accept and use such other index or comparable statistics on the cost of living that is computed and
published by an agency of the United States or a responsible financial periodical of recognized authority. 
  

3.2 Confirmation of Percentage Rent. Lessee shall utilize, or cause to be utilized, an accounting system for
the Leased Property in accordance with its usual and customary practices, and in accordance with GAAP and the Uniform System, that will accurately record all data necessary to compute Percentage Rent, and Lessee shall retain, for at least four (4)
years after the expiration of each Fiscal Year (and in any event until the reconciliation described in Section 3.1(c) for such Fiscal Year has been made), reasonably adequate records conforming to such accounting system showing all data necessary to
compute Percentage Rent for the applicable Fiscal Years. Lessor, at its expense (except as provided herein below), shall have the right from time to time to have its accountants or representatives audit the information that formed the basis for the
data set forth in any Officer’s Certificate provided under Section 3.1(c) and, in connection with such audits, to examine all Lessee’s records (including supporting data, franchisor reports and sales and excise tax returns) reasonably
required to verify Percentage Rent, subject to any prohibitions or limitations on disclosure of any such data under Legal 

  
 18 









 
Requirements. If any such audit discloses a deficiency in the payment of Percentage Rent, and either Lessee agrees with the result of such audit or the matter is otherwise determined or
compromised, Lessee shall forthwith pay to Lessor the amount of the deficiency, as finally agreed or determined, together with interest at the Overdue Rate from the date when said payment should have been made to the date of payment thereof;
provided, however, that as to any audit that is commenced more than two years after the date Percentage Rent for any Fiscal Year is reported by Lessee to Lessor, the deficiency, if any, with respect to such Percentage Rent shall bear interest at the
Overdue Rate only from the date such determination of deficiency is made unless such deficiency is the result of gross negligence or willful misconduct on the part of Lessee, in which case interest at the Overdue Rate will accrue from the date such
payment should have been made to the date of payment thereof. If any such audit discloses that the Percentage Rent actually due from Lessee for any Fiscal Year exceed those reported and paid by Lessee by more than 3%, Lessee shall pay the cost of
such audit and examination. Any proprietary information obtained by Lessor pursuant to the provisions of this Section shall be treated as confidential, except that such information may be used, subject to appropriate confidentiality safeguards, in
any litigation between the parties and except further that Lessor may disclose such information to prospective lenders. The obligations of Lessee contained in this Section shall survive the expiration or earlier termination of this Lease.

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

3.4 Net Lease Provision. The Rent shall be paid absolutely net to Lessor, so that this Lease shall yield to
Lessor the full amount of the installments of Base Rent, Percentage Rent and Additional Charges throughout the Term, all as more fully set forth in Article V, but subject to any other provisions of this Lease that expressly provide for adjustment or
abatement of Rent or other charges or expressly provide that certain expenses or maintenance shall be paid or performed by Lessor. 

  
 19 









 3.5 Conversion of Property. If, during the Term, Lessee wishes
to cease food and beverage operations or institute food and beverage operations at the Facility (all in accordance with the requirements of any applicable Franchise Agreement), Lessee shall give Notice of such desire to Lessor. If, during the Term,
Lessor wishes (a) Lessee to cease food and beverage operations or to institute food and beverage operations at the Facility (all in accordance with the requirements of any applicable Franchise Agreement), or (b) to change the franchise affiliation
of the Facility or to make substantial renovations to the Facility, Lessor shall give Notice thereof to Lessee. Following any such notice, Lessor and Lessee shall commence negotiations to adjust Rent to reflect the proposed renovation or change to
the operation of the Facility, each acting reasonably and in good faith, and subject to Lessor’s reasonable satisfaction that any Rent adjustment will not adversely affect MHI’s status as a real estate investment trust under the Code. All
other terms of this Lease will remain substantially the same. During negotiations, which shall not extend beyond sixty (60) days, Lessee shall not “convert” the Facility and Lessor shall not change the franchise or commence substantial
renovations and Lessee shall continue fulfilling its obligations under the existing terms of this Lease. If no agreement is reached after such 60-day period, Lessee or Lessor, as appropriate, shall withdraw such notice and this Lease shall continue
in full force. 
  
 ARTICLE 4 

 
 IMPOSITIONS 

 
 4.1 Payment of Impositions.
Subject to Article XII relating to permitted contests, Lessee will pay, or cause to be paid, all Impositions (other than Real Estate Taxes, which shall be paid by Lessor) before any fine, penalty, interest or cost may be added for
non-payment, such payments to be made directly to the taxing or other authorities where feasible, and will promptly furnish to Lessor copies of official receipts or other satisfactory proof evidencing such payments. Lessee’s obligation to pay
such Impositions shall be deemed absolutely fixed upon the date such Impositions become a lien upon the Leased Property or any part thereof. If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not
interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and in such event, shall pay such installments during
the Term hereof (subject to Lessee’s right of contest pursuant to the provisions of Article XII) as the same respectively become due and before any fine, penalty, premium, further interest or cost may be added thereto. Lessor, at its expense,
shall, to the extent required or permitted by applicable law, prepare and file all tax returns in respect of Lessor’s net income, gross receipts, sales and use, single business, transaction privilege, rent, ad valorem, franchise taxes, Real
Estate Taxes and taxes on its capital stock, and Lessee, at its expense, shall, to the extent required or permitted by applicable laws and regulations, prepare and file all other tax returns and reports in respect of any Imposition as may be
required by governmental authorities. If any refund shall be due from any taxing authority in respect of any Imposition paid by Lessee, the same shall be paid over to or retained by Lessee if no Event of Default shall have occurred hereunder and be
continuing. If an Event of Default shall have occurred and be continuing, any such refund shall be paid over to or retained by Lessor. Any such funds retained by Lessor due to an Event of Default shall be applied as


  
 20 









 
provided in Article XVI. Lessor and Lessee shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as may
be necessary to prepare any required returns and reports. Lessee shall file all personal property tax returns in such jurisdictions where it is legally required to so file. Lessor, to the extent it possesses the same, and Lessee, to the extent it
possesses the same, will provide the other party, upon request, with cost and depreciation records necessary for filing returns for any property so classified as personal property. Where Lessor is legally required to file personal property tax
returns, Lessor shall provide Lessee with copies of assessment notices in sufficient time for Lessee to file a protest. Lessee may, upon notice to Lessor, at Lessee’s option and at Lessee’s sole expense, protest, appeal, or institute such
other proceedings (in its or Lessor’s name) as Lessee may deem appropriate to effect a reduction of real estate or personal property assessments for those Impositions to be paid by Lessee, and Lessor, at Lessee’s expense as aforesaid,
shall fully cooperate with Lessee in such protest, appeal, or other action. Lessee hereby agrees to indemnify, defend, and hold harmless Lessor from and against any claims, obligations, and liabilities against or incurred by Lessor in connection
with such cooperation. Billings for reimbursement of personal property taxes by Lessee to Lessor shall be accompanied by copies of a bill therefor and payments thereof which identify the personal property with respect to which such payments are
made. Lessor, however, reserves the right to effect any such protest, appeal or other action and, upon notice to Lessee, shall control any such activity, which shall then go forward at Lessor’s sole expense. Upon such notice, Lessee, at
Lessor’s expense, shall cooperate fully with such activities. 
  
 4.2 Notice of Impositions. To the extent Lessor is notified of any Impositions, Lessor shall give prompt Notice to Lessee of such Impositions payable by Lessee hereunder,
provided that Lessor’s failure to give any such Notice shall in no way diminish Lessee’s obligations hereunder to pay such Impositions, but such failure shall obviate any default hereunder for a reasonable time after Lessee receives Notice
of any Imposition which it is obligated to pay during the first taxing period applicable thereto. 
  
 4.3 Adjustment of Impositions. Impositions imposed in respect of the tax-fiscal period during which the Term terminates shall be adjusted and prorated between Lessor and Lessee,
whether or not such Imposition is imposed before or after such termination, and Lessee’s obligation to pay its prorated share thereof after termination shall survive such termination. 
  
 4.4 Utility Charges. Lessee will be solely responsible for obtaining and
maintaining utility services to the Leased Property and will pay or cause to be paid all charges for electricity, gas, oil, water, sewer and other utilities used in the Leased Property during the Term. 

 
 ARTICLE 5 

 
 NO TERMINATION; ABATEMENT 

 
 5.1 No Termination, Abatement,
etc. Except as otherwise specifically provided in this Lease, Lessee, to the extent permitted by law, shall remain bound by this Lease in accordance with its terms and shall neither take any action without the written consent of
Lessor 

  
 21 









 
to modify, surrender or terminate the same, nor seek nor be entitled to any abatement, deduction, deferment or reduction of the Rent, or setoff against the Rent, nor shall the obligations of
Lessee be otherwise affected by reason of (a) any damage to, or destruction of, any Leased Property or any portion thereof from whatever cause or any Taking of the Leased Property or any portion thereof, (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee’s use of the Leased Property, or any portion thereof, or the interference with such use by any Person, corporation, partnership or other entity, or by reason of eviction by paramount title, (c) any claim which Lessee
has or might have against Lessor by reason of any default or breach of any warranty by Lessor under this Lease or any other agreement between Lessor and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Lessor or any assignee or transferee of Lessor, or (e) for any other cause whether similar or dissimilar to any of the foregoing other
than a discharge of Lessee from any such obligations as a matter of law. Lessee hereby specifically waives all rights, arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law to (1) modify, surrender or
terminate this Lease or quit or surrender the Leased Property or any portion thereof, or (2) entitle Lessee to any abatement, reduction, suspension or deferment of the Rent or other sums payable by Lessee hereunder, except as otherwise specifically
provided in this Lease. The obligations of Lessee hereunder shall be separate and independent covenants and agreements and the Rent and all other sums payable by Lessee hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this Lease or by termination of this Lease other than by reason of an Event of Default. 
  

5.2 Abatement Procedures. In the event of a partial Taking as described in Section 15.5, the Lease shall not
terminate, but the Base Rent shall be abated in the manner and to the extent that is fair, just and equitable to both Lessee and Lessor, taking into consideration, among other relevant factors, the number of usable rooms, the amount of square
footage, or the revenues affected by such partial Taking. If Lessor and Lessee are unable to agree upon the amount of such abatement within thirty (30) days after such partial Taking, the matter may be submitted by either party to a court of
competent jurisdiction for resolution. 
  
 ARTICLE
6 
  
 PERSONAL PROPERTY; LANDLORD’S LIEN

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

 
 6.2 Lessee’s Personal Property.
At all times during the Term, Lessee will maintain Inventory as is required to operate the Leased Property in the manner contemplated by this Lease. Lessee may (and shall as provided herein below), at its expense, install, affix or
assemble or place on any parcels of the Land or in any of the Improvements, any items of personal property (including Inventory) owned by Lessee (the “Lessee’s Personal Property”). Lessee may, subject to the conditions set forth
herein, remove any of Lessee’s Personal Property upon the 

  
 22 









 
expiration or any prior termination of the Term. All of Lessee’s Personal Property, other than Inventory, not removed by Lessee within ten days following the expiration or earlier
termination of the Term shall be considered abandoned by Lessee and may be appropriated, sold, destroyed or otherwise disposed of by Lessor without first giving Notice thereof to Lessee, without any payment to Lessee and without any obligation to
account therefor. Lessee will, at its expense, restore the Leased Property to the condition required by Section 9.1(d), including repair of all damage to the Leased Property caused by the removal of Lessee’s Personal Property, whether effected
by Lessee or Lessor. 
  
 6.3
Lessor’s Lien. To the fullest extent permitted by applicable law, Lessor is granted a lien and security interest on all of Lessee’s Personal Property now or hereinafter placed in or upon the Leased Property, and
such lien and security interest shall remain attached to Lessee’s Personal Property until payment in full of all Rent and satisfaction of all of Lessee’s obligations hereunder; provided, however, Lessor shall subordinate its lien and
security interest to that of any non-Affiliate of Lessee which finances such Lessee’s Personal Property or any non-Affiliate conditional seller of such Lessee’s Personal Property, the terms and conditions of such subordination to be
satisfactory to Lessor in the exercise of reasonable discretion. Lessee shall, upon the request of Lessor, execute such financing statements or other documents or instruments reasonably requested by Lessor to perfect the lien and security interests
herein granted. 
  
 ARTICLE 7 

 
 CONDITIONS; USE 

 
 7.1 Condition of the Leased Property.
Lessee acknowledges receipt and delivery of possession of the Leased Property. Lessee has examined and otherwise has knowledge of the condition of the Leased Property and has found the same to be satisfactory for its purposes hereunder.
LESSEE IS LEASING THE LEASED PROPERTY “AS IS” IN ITS PRESENT CONDITION. LESSEE WAIVES ANY CLAIM OR ACTION AGAINST LESSOR IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY, OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED
THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT. Provided, however, to the extent permitted by law, Lessor hereby assigns to Lessee all of
Lessor’s rights to proceed against any predecessor in title other than Lessee for breaches of warranties or representations or for defects in the Leased Property. Lessor shall fully cooperate with Lessee in the prosecution of any such claim, in
Lessor’s or Lessee’s name, all at Lessee’s sole cost and expense. Lessee hereby agrees to indemnify, defend and hold harmless Lessor from and against any claims, obligations and liabilities against or incurred by Lessor in connection
with such cooperation. 

  
 23 









 7.2 Use of the Leased Property. 

 
 (a) Lessee covenants that it will
proceed with all due diligence and will exercise its best efforts to obtain and to maintain all approvals needed to use and operate the Leased Property and the Facility under applicable local, state and federal law. 

 
 (b) Lessee shall use or cause to be
used the Leased Property only as a hotel facility, and for such other uses as may be necessary or incidental to such use or such other use as otherwise approved by Lessor (the “Primary Intended Use”). Lessee shall not use the Leased
Property or any portion thereof or any other use without the prior written consent of Lessor, which consent may be granted, denied or conditioned in Lessor’s sole discretion. No use shall be made or permitted to be made of the Leased Property,
and no acts shall be done, which will cause the cancellation or increase the premium of any insurance policy covering the Leased Property or any part thereof (unless another adequate policy satisfactory to Lessor is available and Lessee pays any
premium increase), nor shall Lessee sell or permit to be kept, used or sold in or about the Leased Property any article which may be prohibited by law or fire underwriter’s regulations. Lessee shall, at its sole cost, comply with all of the
requirements pertaining to the Leased Property of any insurance board, association, organization or company necessary for the maintenance of insurance, as herein provided, covering the Leased Property and Lessee’s Personal Property. 

 
 (c) Subject to the provisions of
Articles XIV, XV, XXI and XXII, Lessee covenants and agrees that during the Term it will (1) operate or cause to operate continuously the Leased Property as a hotel facility, (2) keep in full force and effect and comply with all the provisions of
the Franchise Agreement, (3) not terminate or amend the Franchise Agreement without the consent of Lessor, (4) maintain appropriate certifications and licenses for such use and (5) will seek to maximize the gross revenues generated therefrom
consistent with sound business practices. 
  
 (d) Lessee shall not commit or suffer to be committed any waste on the Leased Property, or in the Facility, nor shall Lessee cause or permit any nuisance thereon. 

 
 (e) Lessee shall neither suffer nor
permit the Leased Property or any portion thereof, or Lessee’s Personal Property, to be used in such a manner as (1) might reasonably tend to impair Lessor’s (or Lessee’s, as the case may be) title thereto or to any portion thereof,
or (2) may reasonably make possible a claim or claims of adverse usage or adverse possession by the public, as such, or of implied dedication of the Leased Property or any portion thereof, except as necessary in the ordinary and prudent operation of
the Facility on the Leased Property. 
  
 7.3
Lessor to Grant Easements, etc. Lessor will, from time to time, so long as no Event of Default has occurred and is continuing, at the request of Lessee and at Lessee’s cost and expense (but subject to the approval of
Lessor, which approval shall not be unreasonably withheld or delayed), (a) grant easements and other rights in the nature of easements with respect to the Leased Property to third parties, (b) release existing easements or other rights in the nature
of easements which are for the benefit of the Leased Property, (c) dedicate or transfer unimproved portions of the Leased Property for road, highway or other public purposes, (d) execute petitions to have the Leased Property annexed to any municipal
corporation or utility 

  
 24 









 
district, (e) execute amendments to any covenants and restrictions affecting the Leased Property and (f) execute and deliver to any person any instrument appropriate to confirm or effect such
grants, releases, dedications, transfers, petitions and amendments (to the extent of its interests in the Leased Property), but only upon delivery to Lessor of an Officer’s Certificate stating that such grant, release, dedication, transfer,
petition or amendment is not detrimental to the proper conduct of the business of Lessee on the Leased Property and does not materially reduce the value of the Leased Property. 

 
 ARTICLE 8 

 
 COMPLIANCE WITH APPLICABLE LAWS 

 
 8.1 Compliance with Legal and Insurance
Requirements, etc. Subject to Section 8.3(b) below and Article XII relating to permitted contests, and subject further to the obligations of Lessor with respect to Capital Improvements as set forth in Section 9.1 (b), Lessee, at its
expense, will promptly (a) comply with all applicable Legal Requirements and Insurance Requirements in respect of the use, operation, maintenance, repair and restoration of the Leased Property, and (b) procure, maintain and comply with all
appropriate licenses and other authorizations required for any use of the Leased Property and Lessee’s Personal Property then being made, and for the proper erection, installation, operation and maintenance of the Leased Property or any part
thereof. 
  
 8.2 Legal Requirement
Covenants. Subject to Section 8.3(b) below, Lessee covenants and agrees that the Leased Property and Lessee’s Personal Property shall not be used for any unlawful purpose, and that Lessee shall not permit or suffer to exist any
unlawful use of the Leased Property by others. Lessee shall acquire and maintain all appropriate licenses, certifications, permits and other authorizations and approvals needed to operate the Leased Property in its customary manner for the Primary
Intended Use, and any other lawful use conducted on the Leased Property as may be permitted from time to time hereunder. Lessee further covenants and agrees that Lessee’s use of the Leased Property and maintenance, alteration, and operation of
the same, and all parts thereof, shall at all times conform to all Legal Requirements, unless the same are finally determined by a court of competent jurisdiction to be unlawful (and Lessee shall cause all such sub-tenants, invitees or others to so
comply with all Legal Requirements). Lessee may, however, upon prior Notice to Lessor, contest the legality or applicability of any such Legal Requirement or any licensure or certification decision if Lessee maintains such action in good faith, with
due diligence, without prejudice to Lessor’s rights hereunder, and at Lessee’s sole expense. If by the terms of any such Legal Requirement compliance therewith pending the prosecution of any such proceeding may legally be delayed without
the incurrence of any lien, charge or liability of any kind against the Facility or Lessee’s leasehold interest therein and without subjecting Lessee or Lessor to any liability, civil or criminal, for failure so to comply therewith, Lessee may
delay compliance therewith until the final determination of such proceeding. If any lien, charge or civil or criminal liability would be incurred by reason of any such delay, Lessee, on the prior written consent of Lessor, which consent shall not be
unreasonably withheld, may nonetheless contest as aforesaid and delay as aforesaid provided that such delay would not subject Lessor to criminal liability and Lessee both 

  
 25 









 
(a) furnishes to Lessor security reasonably satisfactory to Lessor against any loss or injury by reason of such contest or delay and (b) prosecutes the contest with due diligence and in good
faith. 
  
 8.3 Environmental
Covenants. Lessor and Lessee (in addition to, and not in diminution of, Lessee’s covenants and undertakings in Sections 8.1 and 8.2 hereof) covenant and agree as follows: 
  
 (a) At all times hereafter until such time as all liabilities, duties or obligations of
Lessee to the Lessor under the Lease have been satisfied in full, Lessee shall fully comply with all Environmental Laws applicable to the Leased Property and the operations thereon unless caused by the acts or grossly negligent failures to act of
Lessor. Lessee agrees to give Lessor written notice of the following, promptly after Lessee receives knowledge thereof: (1) all Environmental Liabilities; (2) all pending, threatened or anticipated Proceedings, and all notices, demands, requests or
investigations, relating to any Environmental Liability or relating to the issuance, revocation or change in any Environmental Authorization required for operation of the Leased Property; (3) all Releases at, on, in, under or in any way affecting
the Leased Property, or any Release at, on, in or under any property adjacent to the Leased Property; and (4) all facts, events or conditions that could reasonably lead to the occurrence of any of the above-referenced matters. 

 
 (b) Lessee hereby agrees to defend,
indemnify and save harmless any and all Lessor Indemnified Parties from and against any and all Environmental Liabilities except to the extent caused by the willful misconduct or gross negligence of Lessor. 

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

  
 26 









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

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

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

 
 (i) Notwithstanding anything to the
contrary contained in this Lease, if Lessor shall become entitled to the possession of the Leased Property by virtue of the termination of the Lease or repossession of the Leased Property, then Lessor may assign its indemnification rights under
Section 8.3 of this Lease (but not any other rights hereunder) to any Person to whom the Lessor subsequently transfers the Leased Property, subject to the following conditions and limitations, each of which shall be deemed to be incorporated into
the terms of such assignment, whether or not specifically referred to therein: 
  
 (i) The indemnification rights referred to in this section may be assigned only if a known Environmental Liability then exists or if a Proceeding is then pending or, to the knowledge of Lessee or
Lessor, then threatened with respect to the Leased Property; 

  
 27 









 (ii) Such indemnification rights shall be limited to Environmental
Liabilities relating to or specifically affecting the Leased Property; and 
  
 (iii) Any assignment of such indemnification rights shall be limited to the immediate transferee of Lessor, and shall not extend to any such transferee’s successors or assigns. 

 
 ARTICLE 9 

 
 MAINTENANCE AND REPAIRS 

 
 9.1 Maintenance and Repair. 

 
 (a) Except as provided in Section
9.1(b) or Articles VIII or XIV, Lessee, at its sole expense, will keep the Leased Property in good order and repair except for ordinary wear and tear (whether or not the need for such repairs occurred as a result of Lessee’s use, any prior use,
the elements or the age of the Leased Property, or any portion thereof), and, with reasonable promptness, make all necessary and appropriate repairs, replacements, and improvements thereto of every kind and nature, whether interior or exterior,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term of this Lease (concealed or otherwise), or required by any governmental agency having jurisdiction over the Leased
Property. Lessee, however, shall be permitted to prosecute claims against Lessor’s predecessors in title for breach of any representation or warranty or for any latent defects in the Leased Property to be maintained by Lessee unless Lessor is
already diligently pursuing such a claim. All repairs shall, to the extent reasonably achievable, be at least equivalent in quality to the original work. Lessee will not take or omit to take any action, the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part thereof for its Primary Intended Use. 
  

(b) Except as set forth in Article XVIII of this Lease, Lessee shall be required to make (at the sole cost and
expense of Lessor) all Capital Expenditures required in connection with (i) Emergency Situations, (ii) Legal Requirements, (iii) maintenance of the Franchise Agreement, (iv) the performance by Lessee of its obligations under this Lease, and (v)
other additions to the Leased Property as it may reasonably deem appropriate and that are permitted hereunder during the Term. 
  

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

  
 28 









 9.2 Encroachments, Restrictions, etc. If any of the
Improvements, at any time, materially encroach upon any property, street or right-of-way adjacent to the Leased Property, or violate the agreements or conditions contained in any lawful restrictive covenant or other agreement affecting the Leased
Property, or any part thereof, or impair the rights of others under any easement or right-of-way to which the Leased Property is subject, then promptly upon the request of Lessor or at the behest of any person affected by any such encroachment,
violation or impairment, Lessee shall, at its expense, subject to its right to contest the existence of any encroachment, violation or impairment and in such case, in the event of an adverse final determination, either (a) obtain valid and effective
waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation or impairment, whether the same shall affect Lessor or Lessee or (b) make such changes in the Improvements, and take such other actions,
as Lessee in the good faith exercise of its judgment deems reasonably practicable to remove such encroachment, and to end such violation or impairment, including, if necessary, the alteration of any of the Improvements, and in any event take all
such actions as may be necessary in order to be able to continue the operation of the Improvements for the Primary Intended Use substantially in the manner and to the extent the Improvements were operated prior to the assertion of such violation,
impairment or encroachment. Any such alteration shall be made in conformity with the applicable requirements of Article X. Lessee’s obligations under this Section 9.2 shall be in addition to and shall in no way discharge or diminish any
obligation of any insurer under any policy of title or other insurance held by Lessor. 
  
 ARTICLE 10 
  
 ALTERATIONS 
  
 10.1 Alterations. Lessor shall have the right to make additions, modifications or improvements to the Leased Property from time to time as Lessor, in its discretion, may deem
to be desirable for the permitted uses and purposes of the Leased Property, provided that such action will not significantly alter the character or purposes or significantly detract from the value or operating efficiency thereof and will not
significantly impair the revenue-producing capability of the Leased Property or adversely affect the ability of the Lessee to comply with the provisions of this Lease. The cost of such additions, modifications or improvements to the Leased Property
shall be paid by Lessor, and all such additions, modifications and improvements shall, be included under the terms of this Lease and shall at all times be the property of Lessor. 

 
 ARTICLE 11 

 
 PROHIBITED LIENS AND ENCUMBRANCES 

 
 11.1 Liens. Subject to the
provision of Article XII relating to permitted contests, Lessee will not directly or indirectly create or allow to remain and will promptly discharge at its expense any lien, encumbrance, attachment, title retention agreement or claim upon the
Leased Property or any attachment, levy, claim or encumbrance in respect of the Rent, not including, 

  
 29 









 
however, (a) this Lease, (b) the matters, if any, included as exceptions in the title policy insuring Lessor’s interest in the Leased Property, (c) restrictions, liens and other encumbrances
which are consented to in writing by Lessor or any easements granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens for those taxes upon Lessor which Lessee is not required to pay hereunder, (e) subleases permitted by Article
XXIII hereof, (f) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (1) the same are not yet payable or are payable without the addition of any fine or penalty or (2) such liens are in the process of
being contested as permitted by Article XII, (g) liens of mechanics, laborers, material-men, suppliers or vendors for sums either disputed or not yet due provided that (1) the payment of such sums shall not be postponed under any related contract
for more than sixty (60) days after the completion of the action giving rise to such lien and such reserve or other appropriate provisions as shall be required by law or generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article XII hereof, and (h) any liens which are the responsibility of Lessor pursuant to the provisions of Article IV of this Lease. 

 
 ARTICLE 12 

 
 PERMITTED CONTESTS 

 
 12.1 Permitted Contests. Lessee
shall have the right to contest the amount or validity of any Imposition to be paid by Lessee or any Legal Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance, charge or claim (“Claims”) not otherwise permitted
by Article XI, by appropriate legal proceedings in good faith and with due diligence (but this shall not be deemed or construed in any way to relieve, modify or extend Lessee’s covenants to pay or its covenants to cause to be paid any such
charges at the time and in the manner as in this Article XII provided), on condition, however, that such legal proceedings shall not operate to relieve Lessee from its obligations hereunder and shall not cause the sale or risk the loss of the Leased
Property, or any part thereof, or cause Lessor or Lessee to be in default under any mortgage, deed of trust or security deed encumbering the Leased Property or any interest therein. Upon the request of Lessor, Lessee shall either (a) provide a bond
or other assurance reasonably satisfactory to Lessor that all Claims which may be assessed against the Leased Property together with interest and penalties, if any, thereon will be paid, or (b) deposit within the time otherwise required for payment
with a bank or trust company as trustee upon terms reasonably satisfactory to Lessor, as security for the payment of such Claims, money in an amount sufficient to pay the same, together with interest and penalties in connection therewith, as to all
Claims which may be assessed against or become a Claim on the Leased Property, or any part thereof, in said legal proceedings. Lessee shall furnish Lessor and any lender of Lessor with reasonable evidence of such deposit within five days of the
same. Lessor agrees to join in any such proceedings if the same be required to legally prosecute such contest of the validity of such Claims; provided, however, that Lessor shall not thereby be subjected to any liability for the payment of any costs
or expenses in connection with any proceedings brought by Lessee; and Lessee covenants to indemnify and save harmless Lessor from any such costs or expenses. Lessee shall be entitled to any refund of any Claims and such charges and penalties or
interest thereon which have been paid by Lessee or paid by Lessor and for which Lessor has been fully reimbursed. In the event 

  
 30 









 
that Lessee fails to pay any Claims when due or to provide the security therefor as provided in this paragraph and to diligently prosecute any contest of the same, Lessor may, upon ten days
advance Notice to Lessee, pay such charges together with any interest and penalties and the same shall be repayable by Lessee to Lessor as Additional Charges at the next Payment Date provided for in this Lease. Provided, however, that should Lessor
reasonably determine that the giving of such Notice would risk loss to the Leased Property or cause damage to Lessor, then Lessor shall give such Notice as is practical under the circumstances. Lessor reserves the right to contest any of the Claims
at its expense not pursued by Lessee. Lessor and Lessee agree to cooperate in coordinating the contest of any Claims. 
  

ARTICLE 13 
  

INSURANCE REQUIREMENTS 
  

13.1 General Insurance Requirements. During the Term of this Lease, Lessee and/or Lessor, as applicable shall
at all times keep the Leased Property insured (or cause the Leased Property to be insured) with the kinds and amounts of insurance described below. This insurance shall be written by companies authorized to issue insurance in the State. The policies
must name Lessor and/or Lessee, as the insured or as an additional named insured, as the case may be. Losses shall be payable to Lessor or Lessee as provided in this Lease. Any loss adjustment shall require the written consent of Lessor and Lessee,
each acting reasonably and in good faith. Evidence of insurance shall be deposited with Lessor (with a copy to Lessee). The policies on the Leased Property, including the Improvements, Fixtures and Lessee’s Personal Property, shall include:

  
 (a) To be paid for by
Lessor as primary insured, with Lessee (lender or ground lessor, as applicable) as additional insured: 
  

(i) Building insurance on the “Special Form” (formerly “All Risk” form) (including earthquake
and flood in reasonable amounts as determined by Lessor) in an amount not less than 100% of the then full replacement cost thereof (as defined in Section 13.2) or such other amount which is acceptable to Lessor, and personal property insurance on
the “Special Form” in the full amount of the replacement cost thereof; 
  
 (ii) Insurance for loss or damage (direct and indirect) from steam boilers, pressure vessels or similar apparatus, now or hereafter installed in the Facility, in the minimum amount of $5,000,000 or
in such greater amounts as are then customary or as may be reasonably requested by Lessor from time to time; 

  
 31 









 (b) To be paid for by Lessee as primary insured, with Lessor,
franchisor and Manager, as required, as additional insured: 
  
 (i) Personal property insurance on the “Special Form” in the full amount of the replacement cost thereof for any personal property owned by Lessee; 

 
 (ii) Loss of income insurance on the
“Special Form”, in the amount of one year of the sum of Base Rent plus Percentage Rent (based on the most recently completed Lease Year of operation or, to the extent the Leased Property has not been operated for an entire 12-month Lease
Year, based on prorated Percentage Rent) for the benefit of Lessor, and business interruption insurance on the “Special Form” in the amount of one year of gross operating profit, for the benefit of Lessee; 

 
 (iii) Commercial general liability
insurance, with amounts not less than $1,000,000 combined single limit for each occurrence and $2,000,000 for the aggregate of all occurrences within each policy year, as well as excess liability (umbrella) insurance with limited of at least
$35,000,000 per occurrence, covering each of the following: bodily injury, death, or property damage liability per occurrence, personal and advertising injury, general aggregate, products and completed operations, with respect to Lessor, and
“all risk legal liability” including liquor law or “dram shop” liability if liquor or alcoholic beverages are served on the Leased Property) with respect to Lessor and Lessee; 

 
 (c) To be paid for by Lessee for the
benefit of Manager as primary insured, with Lessor and Lessee as additional insured: 
  

(i) Automobile insurance on vehicles operating in conjunction with the Facility with limits of liability of at
least $1,000,000 combined, single limit coverage; 
  
 (ii) Workers’ compensation and employer’s liability insurance as may be required under applicable laws to the extent necessary to protect Lessor, Lessee, and the Leased Property against
workers’ compensation claims covering all employees at the Facility, with such deductible limits or self insured retentions as may be established from time to time by Lessee and/or it’s Manager; 

 
 (iii) Fidelity bonds, or dishonest
employee insurance with limits and deductibles as may be reasonably requested by Lessor, covering Manager’s employees in job classifications normally bonded under prudent hotel management practices in the United States or otherwise required by
law; and 
  
 (d) Such other
insurance covering such other hazards and in such amounts as may be customary for comparable properties in the area of the Leased Property to be paid for and carried by Lessor or Lessee, as customary, and which is available from insurance companies,
insurance pools or other appropriate companies authorized to do business in the State at rates which are economically practicable in relation to the risks covered as may be reasonably requested by Lessor. 

 
 13.2 Replacement Cost. The term
“Full Replacement Cost” as used herein shall mean the actual replacement cost of the Leased Property requiring replacement from time to time including an increased cost of construction endorsement, if available, and the cost of debris
removal. In the event either party believes that full replacement cost (the then-replacement cost 

  
 32 









 
less such exclusions) has increased or decreased at any time during the Term, it shall have the right to have such full replacement cost re-determined. 

 
 13.3 Waiver of Subrogation. All
insurance policies carried by Lessor or Lessee covering the Leased Property, the Fixtures, the Facility or Lessee’s Personal Property, including, without limitation, contents, fire and casualty insurance, shall expressly waive any right of
subrogation on the part of the insurer against the other party. The parties hereto agree that their policies will include such waiver clause or endorsement so long as the same are obtainable without extra cost, and in the event of such an extra
charge the other party, at its election, may pay the same, but shall not be obligated to do so. 
  
 13.4 Form Satisfactory, etc. All of the policies of insurance referred to in this Article XIII shall be written in a form, with deductibles and by insurance companies
satisfactory to Lessor and shall satisfy the requirements of the Franchise Agreement, if any. Lessee shall pay or cause the payment of all of the premiums required for any insurance required to be carried by Lessee hereunder, and shall deliver such
policies or certificates thereof to Lessor prior to their effective date (and, with respect to any renewal policy, thirty (30) days prior to the expiration of the existing policy), and in the event of the failure by Lessee either to effect such
insurance as herein called for or to pay the premiums therefor, or to deliver such policies or certificates thereof to Lessor at the times required, Lessor shall be entitled, but shall have no obligation, after ten (10) days’ Notice to Lessee,
to effect such insurance and pay the premiums therefor, and to be reimbursed for any premium or premiums upon written demand therefore. Each insurer mentioned in this Article XIII shall agree, by endorsement to the policy or policies issued by it,
or by independent instrument furnished to Lessee, that it will give to Lessor thirty (30) days’ written notice before the policy or policies in question shall be materially altered, allowed to expire or canceled. 

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

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

13.7 No Separate Insurance. Lessee shall not on Lessee’s own initiative or pursuant to the request or
requirement of any third party, take out separate insurance concurrent in form or contributing in the event of loss with that required in this Article XIII to be furnished, or increase the amount of any then existing insurance by securing an
additional policy or additional policies, 

  
 33 









 
unless all parties having an insurable interest in the subject matter of the insurance, including in all cases Lessor, are included therein as additional insureds, and the loss is payable under
such additional separate insurance in the same manner as losses are payable under this Lease. Lessee shall immediately notify Lessor that Lessee has obtained any such separate insurance or of the increasing of any of the amounts of the then existing
insurance. 
  
 ARTICLE 14 

 
 INSURANCE PROCEEDS 

 
 14.1 Insurance Proceeds. Subject
to the provisions of Section 14.6 and the terms of any lender mortgage, all proceeds payable by reason of any loss or damage to the Leased Property, or any portion thereof, and insured under any policy of insurance required by Article XIII of this
Lease shall be paid to Lessor and held by Lessor in an interest-bearing account, shall be made available, if applicable, for reconstruction or repair, as the case may be, of any damage to or destruction of the Leased Property, or any portion
thereof, and, if applicable, shall be paid out by Lessor from time to time for the reasonable costs of such reconstruction or repair upon satisfaction of reasonable terms and conditions specified by Lessor. Any excess proceeds of insurance remaining
after the completion of the restoration or reconstruction of the Leased Property shall be paid to Lessor. If neither Lessor nor Lessee is required or elects to repair and restore, all insurance proceeds shall be retained by Lessor. All salvage
resulting from any risk covered by insurance shall belong to Lessor. 
  
 14.2 Reconstruction in the Event of Damage or Destruction Covered by Insurance. 
  

(a) Except as provided in Section 14.6, if during the Term the Leased Property is totally or partially destroyed by
a risk covered by the insurance described in Article XIII, whether or not such damage or destruction renders the Facility Unsuitable for its Primary Intended Use, Lessee shall be obligated, but only to the extent of any insurance proceeds made
available to Lessee and any other sums advanced by Lessor pursuant to the next sentence, to restore the Facility to substantially the same condition as existed immediately before the damage or destruction and otherwise in accordance with the terms
of the Lease. If the insurance proceeds are not adequate to restore the Facility to that condition, each of Lessor and Lessee shall have the right to terminate this Lease, without in any way affecting any other leases in effect between Lessor and
Lessee, by giving Notice to the other and all insurance proceeds shall be retained by Lessor; provided, however, that, if such termination is by Lessee, Lessor shall have the right, in its sole discretion, to nullify the termination and keep this
Lease in full force by providing, within thirty (30) days after Lessee’s Notice of termination, a Notice to Lessee of Lessor’s unconditional, legally binding obligation to be responsible for all restoration costs in excess of the insurance
proceeds. If this Lease is not terminated and Lessee restores the Facility, the insurance proceeds, and any other sums made available by Lessor as aforesaid, shall be paid out by Lessor from time to time for the reasonable costs of such restoration
upon satisfaction of reasonable terms and conditions, and any excess proceeds remaining after such restoration shall be retained by Lessor. 

  
 34 









 (b) Notwithstanding the provisions of Section 14.2(a) above, if
Lessee cannot within a reasonable time obtain all necessary government approvals, including building permits, licenses and conditional use permits, after diligent efforts to do so, to perform all required repair and restoration work and to operate
the Facility for its Primary Intended Use in substantially the same manner as that existing immediately prior to such damage or destruction and otherwise in accordance with the terms of the Lease, either Lessor or Lessee may terminate this Lease by
providing Notice to the other party, without in any way affecting any other Leases then in effect between Lessor and Lessee. 
  

14.3 Reconstruction in the event of Damage or Destruction not covered by Insurance. Except as provided in
Section 14.6, if during the Term the Facility is totally or materially destroyed by a risk not covered by the insurance described in Article XIII, whether or not such damage or destruction renders the Facility Unsuitable for its Primary Intended
Use, the provisions of Section 14.2 applicable to casualties for which insurance proceeds are inadequate shall govern. 
  

14.4 Lessee’s Property. All insurance proceeds payable by reason of any loss of or damage to any of
Lessee’s Personal Property shall be paid to Lessee; provided, however, that no such payments shall diminish or reduce the insurance payments otherwise payable to or for the benefit of Lessor hereunder. 

 
 14.5 Abatement of Rent. Any
damage or destruction due to casualty notwithstanding, this Lease shall remain in full force and effect (unless otherwise terminated as set forth hereinabove) and Lessee’s obligation to make rental payments and to pay Rent required by this
Lease shall remain unabated by any damage or destruction which does not result in a reduction of Gross Revenues. If and to the extent that any damage or destruction results in a reduction of Gross Revenues which would otherwise be realizable from
the operation of the Facility, then Lessor shall receive all loss of income insurance and Lessee shall have no obligation to pay Rent in excess of the amount of Percentage Rent, if any, realizable from Gross Revenues generated by the operation of
the Leased Property during the existence of such damage or destruction. 
  
 14.6 Damage near end of Term. Notwithstanding any provisions of Section 14.2 or 14.3 to the contrary, if damage to or destruction of the Facility unsuitable for its Primary
Intended Use occurs during the last twenty-four (24) months of the Term, then Lessee shall have the right to terminate this Lease by giving written notice to Lessor within thirty (30) days after the date of damage or destruction, whereupon all
accrued Rent shall be paid immediately, and this Lease shall automatically terminate five days after the date of such notice. 
  

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

  
 35 









 ARTICLE 15 

 
 CONDEMNATION; TAKING 

 
 15.1 Definitions. 

 
 (a) “Condemnation” means a
Taking resulting from (1) the exercise of any governmental power, whether by legal proceedings or otherwise, by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of condemnation or while legal
proceedings for condemnation are pending. 
  
 (b) “Date of Taking” means the date the Condemnor has the right to possession of the property being condemned. 

 
 (c) “Award” means all
compensation, sums or anything of value awarded, paid or received on a total or partial Condemnation. 
  

(d) “Condemnor” means any public or quasi-public authority, or private corporation or individual, having
the power of Condemnation. 
  
 15.2
Parties’ Rights and Obligations. If during the Term there is any Condemnation of all or any part of the Leased Property or any interest in this Lease, the rights and obligations of Lessor and Lessee shall be determined
by this Article XV. 
  
 15.3 Total
Taking. If title to the fee of the whole of the Leased Property is condemned by any Condemnor, this Lease shall cease and terminate as of the Date of Taking by the Condemnor. If title to the fee of less than the whole of the Leased Property
is so taken or condemned, which nevertheless renders the Leased Property Unsuitable or Uneconomic for its Primary Intended Use, Lessee and Lessor shall each have the option, by notice to the other, at any time prior to the Date of Taking, to
terminate this Lease as of the Date of Taking. Upon such date, if such Notice has been given, this Lease shall thereupon cease and terminate. All Base Rent, Percentage Rent and Additional Charges paid or payable by Lessee hereunder shall be
apportioned as of the Date of Taking, and Lessee shall promptly pay Lessor such amounts. 
  
 15.4 Allocation of Award. The total Award made with respect to the Leased Property in connection with a Total Taking shall be equitably apportioned between Lessor and Lessee in
proportion to the then fair market values of the respective estates and interests of Lessor and Lessee in and to the Leased Property and under this Lease. 
  

15.5 Partial Taking. If less than the whole of the Leased Property is condemned, and the Leased Property is
still suitable for its Primary Intended Use, and not Uneconomic for its Primary Intended Use, or if Lessee or Lessor is entitled but neither elects not to terminate this Lease as provided in Section 15.3, Lessee at its cost shall with all reasonable
dispatch, but only to the extent of any condemnation awards made available to Lessee and any other sums advanced by Lessor pursuant to the next sentence, restore the untaken portion of any Improvements so that such Improvements constitute a complete
architectural unit of the same general character and condition (as nearly as may be possible under the circumstances) as the Improvements existing immediately prior to the Condemnation. If the condemnation awards are


  
 36 









 
not adequate to restore the Facility to that condition, each of Lessor and Lessee shall have the right to terminate this Lease, without in any way affecting any other leases in effect between
Lessor and Lessee, by giving Notice to the other; provided, however, that if such termination is by Lessee, Lessor shall have the right, in its sole discretion, to nullify the termination and keep this Lease in full force by providing, within thirty
(30) days after Lessee’s Notice of termination, a Notice to Lessee of Lessor’s unconditional, legally binding obligation to be responsible for all restoration costs in excess of the condemnation awards. If this Lease is not terminated and
Lessee restores the Facility, the condemnation awards, and any other sums made available by Lessor as aforesaid, subject to the terms of any lender mortgage, shall be held in trust by Lessor and paid out by Lessor from time to time for the
reasonable costs of such restoration upon satisfaction of reasonable terms and conditions, and any excess awards remaining after such restoration shall be retained by Lessor unless the partial condemnation materially impairs the operations or
financial performance of the Facility, in which latter event the award shall be equitably apportioned between Lessor and Lessee in proportion to the then fair market values of the respective estates and interests of Lessor and Lessee in and to the
Leased Property and under this Lease. 
  
 15.6
Temporary Taking. If the whole or any part of the Leased Property or of Lessee’s interest under this Lease is condemned by any Condemnor for its temporary use or occupancy, this Lease shall not terminate by reason thereof, and
Lessee shall continue to pay, in the manner and at the terms herein specified, the full amounts of the Base Rent, Percentage Rent and Additional Charges. In addition, the entire amount of any Award made for such Condemnation allocable to the Term of
this Lease, whether paid by way of damages, rent or otherwise, shall be paid to Lessee and, except for any portion thereof utilized for restoration, shall be deemed to be Room Revenues for the purpose of calculating the Percentage Rent payable
hereunder during such temporary taking. Except only to the extent that Lessee may be prevented from so doing pursuant to the terms of the order of the Condemnor, Lessee shall continue to perform and observe all of the other terms, covenants,
conditions and obligations hereof on the part of the Lessee to be performed and observed, as though such Condemnation had not occurred. Lessee covenants that upon the termination of any such period of temporary use or occupancy it will, at its sole
cost and expense (subject to Lessor’s contribution as set forth below), restore the Leased Property as nearly as may be reasonably possible to the condition in which the same was immediately prior to such Condemnation, unless (a) such period of
temporary use or occupancy extends beyond the expiration of the Term, in which case Lessee shall not be required to make such restoration, or (b) the condemnation award is inadequate to cover the costs of such restoration, in which case the
provisions of Section 15.5 applicable to inadequate awards shall govern. If restoration is required in connection with such temporary taking and the condemnation award (together with any other sums Lessor elects, in its sole discretion, to advance)
is adequate to pay the costs thereof, the provisions of Section 15.5 shall govern the disbursement of the awards (and other sums, if applicable) and the disposition of any awards in excess of restoration costs. If restoration is required hereunder,
Lessor shall contribute to the cost of such restoration that portion of its entire Award that is specifically allocated to such restoration in the judgment or order of the court, if any, and Lessee shall fund the balance of such costs in advance of
restoration in a manner reasonably satisfactory to Lessor. 

  
 37 









 ARTICLE 16 

 
 EVENTS OF DEFAULT; REMEDIES; DAMAGES 

 
 16.1 Events of Default. 

  
 If any one or more of the following events
(individually, an “Event of Default”) occurs: 
  
 (a) if Lessee fails to make payment of the Base Rent or Percentage Rentor Additional Charges when the same become due and payable for a period of ten (10) days after receipt by the Lessee of Notice
from the Lessor thereof; 
  
 (b)
if Lessee fails to observe or perform any term, covenant or condition of this Lease, other than the payment of Rent or Additional Rent, and such failure is not cured by Lessee within a period of thirty (30) days after receipt by the Lessee of
Notice thereof from Lessor, unless such failure cannot with due diligence be cured within a period of thirty (30) days, in which case it shall not be deemed an Event of Default if Lessee proceeds promptly and with due diligence to cure the failure
and diligently completes the curing thereof provided, however, that in no event shall such cure period extend beyond one hundred and twenty (120) days after such Notice; or 

 
 (c) if the Lessee shall file a
petition in bankruptcy or reorganization for an arrangement pursuant to any federal or state bankruptcy law or any similar federal or state law, or shall be adjudicated a bankrupt or shall make an assignment for the benefit of creditors or shall
admit in writing its inability to pay its debts generally as they become due, or if a petition or answer proposing the adjudication of the Lessee as a bankrupt or its reorganization pursuant to any federal or state bankruptcy law or any similar
federal or state law shall be filed in any court and the Lessee shall be adjudicated a bankrupt and such adjudication shall not be vacated or set aside or stayed within sixty (60) days after the entry of an order in respect thereof, or if a receiver
of the Lessee or of the whole or substantially all of the assets of the Lessee shall be appointed in any proceeding brought by the Lessee or if any such receiver, trustee or liquidator shall be appointed in any proceeding brought against the Lessee
and shall not be vacated or set aside or stayed within sixty (60) days after such appointment; or 
  

(d) if Lessee is liquidated or dissolved, or begins proceedings toward such liquidation or dissolution, or, in any
manner, permits the sale or divestiture of substantially all of its assets; or 
  
 (e) if the estate or interest of Lessee in the Leased Property or any part thereof is voluntarily or involuntarily transferred, assigned, conveyed, levied upon or attached in any proceeding (unless
Lessee is contesting such lien or attachment in good faith in accordance with Article XII hereof); or 
  

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

  
 38 









 (g) if: (A) an Event of Default has been declared by the franchisor
under the Franchise Agreement with respect to the Facility on the Leased Premises as a result of any action or failure to act by Lessee or any Person with whom Lessee contracts for management services at the Facility, and (B) Lessee has failed,
within thirty (30) days thereafter, to cure such default by either (1) curing the underlying default under the Franchise Agreement and paying all costs and expenses associated therewith, or (2) obtaining at Lessee’s sole cost and expense a
substitute franchise license agreement with a substitute franchisor acceptable to Lessor, on terms and conditions acceptable to Lessor; provided, however, that if Lessee is in good faith disputing an assertion of default by the franchisor or is
proceeding diligently to cure such default, the 30-day period shall be extended for such period of time as Lessee continues to dispute such default in good faith or diligently proceeds to cure such default, so long as there is no period during which
the Facility is not operated pursuant to a Franchise Agreement approved by Lessor; then, and in any such event, Lessor may exercise one or more remedies available to it herein or at law or in equity, including, but not limited to, its right to
terminate this Lease by giving Lessee not less than ten (10) days’ Notice of such termination. 
  
 If litigation is commenced with respect to any alleged default under this Lease, the prevailing party in such litigation shall receive, in addition to its damages incurred, such sum as the court shall
determine as its reasonable attorneys’ fees, and all costs and expenses incurred in connection therewith. 
  
 No Event of Default (other than a failure to make a payment of money) shall be deemed to exist under clause (c) above during any time the curing thereof is prevented by an Unavoidable Delay, provided that
upon the cessation of such Unavoidable Delay, Lessee remedies such default or Event of Default without further delay. 
  

16.2 Surrender. If an Event of Default occurs (and the event giving rise to such Event of Default has not been
cured within the curative period relating thereto as set forth in Section 16.1) and is continuing, whether or not this Lease has been terminated pursuant to Section 16.1, Lessee shall, if requested by Lessor so to do, immediately surrender to Lessor
the Leased Property including, without limitation, any and all books, records, files, licenses, permits and keys relating thereto, and quit the same and Lessor may enter upon and repossess the Leased Property by reasonable force, summary
proceedings, ejectment or otherwise, and may remove Lessee and all other persons and any and all personal property from the Leased Property, subject to rights of any hotel guests and to any requirement of law. Lessee hereby waives any and all
requirements of applicable laws for service of notice to re-enter the Leased Property. Lessor shall be under no obligation to, but may if it so chooses, re-let the Leased Property or otherwise mitigate Lessor’s damages, except unless otherwise
required by applicable law. 
  
 16.3
Damages. Neither (a) the termination of this Lease, (b) the repossession of the Leased Property, (c) the failure of Lessor to re-let the Leased Property, nor (d) the re-letting of all or any portion thereof, shall relieve
Lessee of its liability and obligations hereunder, all of which shall survive any such termination, repossession or re-letting. In the event of any such termination, Lessee shall forthwith pay to Lessor all Rent due and payable with respect to the
Leased Property to and including the date of such termination. 

  
 39 









 Lessee shall forthwith pay to Lessor, at Lessor’s option, as and for liquidated and agreed current
damages for Lessee’s default, either: 
  
 (a) Without termination of Lessee’s right to possession of the Leased Property, each installment of Rent and other sums payable by Lessee to Lessor under the Lease as the same becomes due and
payable, which Rent and other sums shall bear interest at the Overdue Rate, and Lessor may enforce, by action or otherwise, any other term or covenant of this Lease; or 

 
 (b) the sum of: 

 
 (i) the unpaid Rent which had been
earned at the time of termination, repossession or reletting, and 
  
 (ii) the amount at the time of termination, repossession or reletting of the amount by which the unpaid Rent for the balance of the Term after the time of termination, repossession or reletting,
exceeds the amount of such rental loss that Lessee proves could be reasonably avoided, and 
  

(iii) any other amount necessary to compensate Lessor for all the detriment proximately caused by Lessee’s
failure to perform its obligations under this Lease or which in the ordinary course of things, would be likely to result therefrom. The amount at the time of termination, repossession or reletting referred to in subparagraph (B) is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of New York at the time of award plus 1%. 
  
 Rent for the purposes of this Section 16.3 shall be a sum equal to (i) the average of the annual amounts of the greater of the Base Rent or Percentage Rent for the three Fiscal Years immediately preceding
the Fiscal Year in which the termination, re-entry or repossession takes place, or (ii) if three Fiscal Years shall not have elapsed, the average of the greater of the Base Rent or Percentage Rent during the preceding Fiscal Years during which the
Lease was in effect, or (iii) if one Fiscal Year has not elapsed, the amount derived by annualizing the greater of the Base Rent or Percentage Rent from the effective date of this Lease. 
  
 16.4 Waiver. If this Lease is terminated pursuant to Section 16.1, Lessee waives,
to the extent permitted by applicable law, (a) any right to a trial by jury in the event of summary proceedings to enforce the remedies set forth in this Article XVI, and (b) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt and Lessor waives any right to “pierce the corporate veil” of Lessee other than to the extent funds shall have been inappropriately paid to any Affiliate of Lessee following a default resulting in an Event of
Default. 
  
 16.5 Application of
Funds. Any payments received by Lessor under any of the provisions of this Lease during the existence or continuance of any Event of Default shall be applied to Lessee’s obligations in the order that Lessor may determine or as
may be prescribed by the laws of the State. 

  
 40 









 ARTICLE 17 

 
 LESSOR’S RIGHT TO CURE 

 
 17.1 Lessor’s Right to Cure Lessee’s
Default. If Lessee fails to make any payment or to perform any act required to be made or performed under this Lease including, without limitation, Lessee’s failure to comply with the terms of any Franchise Agreement, and fails
to cure the same within the relevant time periods provided in Section 16.1, Lessor, without waiving or releasing any obligation of Lessee, and without waiving or releasing any obligation or default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the expense of Lessee, and may, to the extent permitted by law, enter upon the Leased Property for such purpose and, subject to Section 16.4, take all such action thereon
as, in Lessor’s opinion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and expenses (including, without limitation, reasonable attorneys’ fees and
expenses, in each case to the extent permitted by law) so incurred, together with a late charge thereon (to the extent permitted by law) at the Overdue Rate from the date on which such sums or expenses are paid or incurred by Lessor, shall be paid
by Lessee to Lessor on demand. The obligations of Lessee and rights of Lessor contained in this Article XVII shall survive the expiration or earlier termination of this Lease. 

 
 ARTICLE 18 

 
 RESERVED 

 
 ARTICLE 19 

 
 REIT REQUIREMENTS 

 
 19.1 REIT Requirements. 

 
 (a) Lessee understands that, in order
for MHI to qualify as a REIT, the following requirements (the “REIT Requirements”) must be satisfied: 
  

(i) The average of the fair market values of Lessor’s personal property that is leased to Lessee under a lease
at the beginning and end of a calendar year cannot exceed 15% of the average of the aggregate fair market values of all of Lessor’s property that is leased to Lessee under such lease at the beginning and end of such calendar year. 

 
 (ii) Lessee cannot sublet the
property that is leased to it by Lessor, or enter into any similar arrangement, on any basis such that the rental or other amounts 

  
 41 









 
paid by the sublessee thereunder would be based, in whole or in part, on either (i) the net income or profits derived by the business activities of the sublessee or (ii) any other formula such
that any portion of the rent paid by Lessee to Lessor would fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code. 

 
 (iii) Lessee cannot sublease the
property leased to it by Lessor to, or enter into any similar arrangement with, any person in which MHI owns, directly or indirectly, a 10% or more interest, within the meaning of Section 856(d)(2)(B) of the Code. 

 
 (iv) Lessee agrees to make an
election to be, and to operate as a “Taxable REIT Subsidiary” of MHI within the meaning of Section 856(l) of the Code. 
  

(v) No person can own, directly or directly, capital stock of MHI that exceeds the “LIMIT” (as defined in
MHI’s certificate of incorporation, as amended and restated). 
  
 (vi) Lessee shall not (i) directly or indirectly operate or manage a “Lodging Facility” within the meaning of Section 856(d)(9)(D)(ii) of the Code or a “Health Care Facility”
within the meaning of Section 856(e)(6)(D)(ii) or (ii) directly or indirectly provide to any other person (under a franchise, license, or otherwise) rights to any brand name under which any lodging facility or health care facility is operated;
provided, however, that Lessee may provide such rights to Manager to operate or manage a lodging facility as long as such rights are held by Lessee as a franchisee, licensee, or in a similar capacity and such lodging facility is either owned by
Lessee or is leased to Lessee by Lessor or one of its Affiliates. 
  
 (b) Lessee agrees, and agrees to use reasonable efforts to cause its Affiliates, to use its best efforts to permit the REIT Requirements to be satisfied. Lessee agrees, and agrees to use reasonable
efforts to cause its Affiliates, to cooperate in good faith with MHI and Lessor to ensure that the REIT Requirements are satisfied, including but not limited to, providing MHI with information about the ownership of Lessee, and its Affiliates to the
extent that such information is reasonably available. Lessee agrees, and agrees to use reasonable efforts to cause its Affiliates, upon request by MHI, and, where appropriate, at MHI’s expense, to take reasonable action necessary to ensure
compliance with the REIT Requirements. Immediately after becoming aware that the REIT Requirements are not, or will not be, satisfied, Lessee shall notify, or use reasonable efforts to cause its Affiliates to notify, MHI of such noncompliance.

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

  
 42 









 19.3 Management Agreement. Lessee agrees that, in order to
comply with certain of the REIT Requirements, it will, at all times during the Term, cause the Leased Property to be operated and managed by a management company (“Manager”) that is an Eligible Independent Contractor. Effective as of the
Commencement Date, the Lessee shall enter into an initial management agreement in the form of Exhibit C attached hereto (the “Management Agreement”) and Lessee shall provide Lessor with an executed copy thereof. The Management
Agreement is a hotel master management agreement which covers the Leased Property and all of the other hotel properties currently (or to be in the future) leased by Lessee from Affiliates of Lessor. Lessee may not amend, modify or terminate the
Management Agreement in any material respect or change the Manager without the prior written consent of Lessor, which consent shall not be unreasonably withheld; provided that a majority of the independent directors of MHI as determined under the
AMEX rules and regulations approves such amendment, modification or termination of the Management Agreement. Lessee shall also provide Lessor with copies of any amendments or modifications to the Management Agreement which are entered into from time
to time or any other management agreement. Lessor shall have the right to approve in advance any Manager. 
  

ARTICLE 20 
  

HOLDING OVER 
  

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

  
 43 









 ARTICLE 21 

 
 RISK OF LOSS 

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

ARTICLE 22 
  

INDEMNIFICATION 
  

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

  
 44 









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

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

  
 ARTICLE 23 

 
 SUBLETTING AND ASSIGNMENT 

 
 23.1 Subletting and Assignment.
Subject to the provisions of Article XIX and Section 23.2 and any other express conditions or limitations set forth herein, Lessee may, but only with the prior written consent of Lessor which consent shall not be unreasonably withheld,
(a) assign this Lease or sublet all or any part of the Leased Property to an Affiliate of Lessee, or (b) sublet any retail or restaurant portion of the Improvements in the normal course of the Primary Intended Use; provided that any subletting to
any party other than an Affiliate of Lessee shall not individually as to any one such subletting, or in the aggregate, materially diminish the actual or potential Percentage Rent payable under this Lease. In the case of a subletting, the sublessee
shall comply with the provisions of Section 23.2, and in the case of an assignment, the assignee shall assume in writing and agree to keep and perform all of the terms of this Lease on the part of Lessee to be kept and performed and shall be, and
become, jointly and severally liable with Lessee for the performance thereof. In case of either an assignment or subletting made during the Term, Lessee shall remain primarily liable, as principal rather than as surety, for the prompt payment of the
Rent and for the performance and observance of all of the covenants and conditions to be performed by Lessee hereunder. An original counterpart of each such sublease and assignment and assumption, duly executed by Lessee and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Lessor, shall be delivered promptly to Lessor. 
  

23.2 Attornment. Lessee shall insert in each sublease permitted under Section 23.1 provisions to the effect that (a)
such sublease is subject and subordinate to all of the terms and provisions of this Lease and to the rights of Lessor hereunder, (b) if this Lease terminates before the expiration of such sublease, the sublessee thereunder will, at Lessor’s
option, attorn to Lessor and waive any right the sublessee may have to terminate the sublease or to surrender possession thereunder as a result of the termination of this Lease, and (c) if the sublessee receives a written Notice from Lessor or
Lessor’s assignees, if any, stating that an uncured Event of Default exists 

  
 45 









 
under this Lease, the sublessee shall thereafter be obligated to pay all rentals accruing under said sublease directly to the party giving such Notice, or as such party may direct. All rentals
received from the sublessee by Lessor or Lessor’s assignees, if any, as the case may be, shall be credited against the amounts owing by Lessee under this Lease. 

 
 ARTICLE 24 

 
 REPORTING AND CERTIFICATION REQUIREMENTS 

 
 24.1 Officer’s Certificates; Financial Statements;
Budgets; Lessor’s Estoppel Certificates and Covenants. 
  
 (a) At any time and from time to time upon not less than twenty (20) days Notice by Lessor, Lessee will furnish to Lessor an Officer’s Certificate certifying that this Lease is unmodified and
in full force and effect (or that this Lease is in full force and effect as modified and setting forth the modifications), the date to which the Rent has been paid, whether to the knowledge of Lessee there is any existing default or Event of Default
exists thereunder by Lessor or Lessee, and such other information as may be reasonably requested by Lessor. Any such certificate furnished pursuant to this Section may be relied upon by Lessor, any lender and any prospective purchaser of the Leased
Property. 
  
 (b) Throughout
the Term, Lessee will furnish to Lessor such historical financial information of Lessee and the Facility as Lessor may reasonably request and shall provide Lessor access to Lessee’s books and records with respect thereto. 

 
 (c) Within five (5) days of
Lessee’s receipt thereof, any inspection reports received from the franchisor under the Franchise Agreement. 
  

(d) At any time and from time to time upon not less than twenty (20) days notice by Lessee, Lessor will furnish to
Lessee or to any person designated by Lessee an estoppel certificate certifying that this Lease is unmodified and in full force and effect (or that this Lease is in full force and effect as modified and setting forth the modifications), the date to
which Rent has been paid, whether to the knowledge of Lessor there is any existing default or Event of Default on Lessee’s part hereunder, and such other information as may be reasonably requested by Lessee. 

 
 24.2 Operating Budget. Not later than
forty-five (45) days prior to the commencement of each Lease Year, Lessee, in consultation with the Manager, shall prepare and submit to Lessor an operating budget for the Lease Year (the “Operating Budget”) in form and substance
reasonably satisfactory to Lessor, prepared in accordance with the requirements of this Section 24.2. The Operating Budget shall be prepared in accordance with the Uniform System to the extent applicable and show by month and quarter and for the
Lease Year as a whole in the degree of detail specified by the Uniform System for monthly statements, and in accordance with the detail level of monthly financial statements, the following: 
  
 (a) Lessee’s reasonable estimate of Gross Revenues, Room Revenues, Food Sales and
Beverage Sales (including room rates) for the Facility for the forthcoming Lease Year itemized on schedules on a monthly and quarterly basis as approved by Lessor and Lessee, together with the assumptions, in narrative form, forming the basis of
such schedules; 

  
 46 









 (b) A cash flow projection for the Lease Year; and 

 
 (c) Lessee’s reasonable estimate
for each quarter of the Lease Year of Percentage Rent. 
  
 24.3 Capital Budget. Not later than forty-five (45) days prior to the commencement of each Lease Year, Lessee shall prepare and submit to Lessor a capital improvement budget
for the Lease Year (the “Capital Budget”) prepared in accordance with the Uniform System to the extent applicable, and shall set forth the proposed Capital Expenditures for the ensuing Lease Year. 

  
 47 









 ARTICLE 25 

 
 LESSOR’S DEFAULT; CURE RIGHTS 

 
 25.1 Lessee’s Right to Cure.
Subject to the provisions of Section 25.2, if Lessor breaches any covenant to be performed by it under this Lease, Lessee, after Notice to and demand upon Lessor, without waiving or releasing any obligation hereunder, and in addition to
all other remedies available to Lessee, may (but shall be under no obligation at any time thereafter to) make such payment or perform such act for the account and at the expense of Lessor. All sums so paid by Lessee and all costs and expenses
(including, without limitation, reasonable attorneys’ fees) so incurred, together with interest thereon at the Overdue Rate from the date on which such sums or expenses are paid or incurred by Lessee, shall be paid by Lessor to Lessee on demand
or, following entry of a final, nonappealable judgment against Lessor for such sums, may be offset by Lessee against the Base Rent payments next accruing or coming due. The rights of Lessee hereunder to cure and to secure payment from Lessor in
accordance with this Section 25.1 shall survive the termination of this Lease with respect to the Leased Property. 
  

25.2 Breach by Lessor. It shall be a breach of this Lease if Lessor fails to observe or perform any term,
covenant or condition of this Lease on its part to be performed and such failure continues for a period of thirty (30) days after Notice thereof from Lessee, unless such failure cannot with due diligence be cured within a period of thirty (30) days,
in which case such failure shall not be deemed to continue if Lessor, within such 30-day period, proceeds promptly and with due diligence to cure the failure and diligently completes the curing thereof. The time within which Lessor shall be
obligated to cure any such failure also shall be subject to extension of time due to the occurrence of any Unavoidable Delay. 
  

ARTICLE 26 
  

NOTICES 
  

26.1 Notices. All notices, demands, requests, consents approvals and other communications (“Notice”
or “Notices”) hereunder shall be in writing and personally served, mailed (by registered or certified mail, return receipt requested and postage prepaid) or sent by facsimile, addressed to Lessor at 814 Capital Landing Road, Williamsburg,
VA 23185, Facsimile 757-564-8801, Attention: Andrew M. Sims, and addressed to Lessee at 6411 Ivy Lane, Suite 510, Greenbelt, MD 20770, Attention: William Zaiser, Facsimile 301-474-0807, or to such other address or addresses as either party may
hereafter designate. Personally delivered Notice shall be effective upon receipt, and Notice given by mail shall be complete at the time of deposit in the U.S. Mail system, but any prescribed period of Notice and any right or duty to do any act or
make any response within any prescribed period or on a date certain after the service of such Notice given by mail shall be extended five days. 

  
 48 









 ARTICLE 27 

 
 MISCELLANEOUS PROVISIONS 

 
 27.1 Transfer of Licenses. Upon the
expiration or earlier termination of the Term, Lessee shall use its best efforts (i) to transfer to Lessor or Lessor’s nominee or designee all Franchise Agreements, licenses, operating permits and other governmental authorizations and all
contracts, including contracts with governmental or quasi-governmental entities, that may be necessary for the operation of the Facility (collectively, “Licenses”), or (ii) if such transfer is prohibited by law or Lessor otherwise elects,
to cooperate with Lessor or Lessor’s nominee in connection with the processing by Lessor or Lessor’s nominee of any applications for, all Licenses; provided, in either case, that the costs and expenses of any such transfer or the
processing of any such application shall be paid by Lessor or Lessor’s nominee. 
  
 27.2 Early Termination Rights; Termination Fees. Lessor may terminate the Lease as to any Leased Property prior to the Expiration Date by reason of a sale of the Facility,
(pursuant to the notice requirements contained herein), provided Lessor pays to Lessee a termination fee (the “Termination Fee”) equal to the fair market value of the leasehold estate. 

 
 27.3 Substitution of Initial Hotel.
Notwithstanding the foregoing Section 27.2, in the event of a termination of this Lease, Lessor may (in its sole and absolute discretion) avoid payment of the Termination Fee by offering to substitute for the Leased Property within 120
days of such termination, another hotel facility reasonably comparable in size, number of rooms, quality of franchise operation, market and geographical location, and gross revenues, to be governed by the terms and conditions of this Lease from and
after the date of such substitution, and, in the event Lessee desires to lease such substitute hotel, this Lease shall be amended accordingly. In the event of a substitution, any Rent and other charges payable under this Lease shall be suspended
until the substitution is fully consummated. 
  

27.4 Compliance with Franchise Agreement. To the extent any of the provisions of the Franchise Agreement
impose a greater obligation on Lessee than the corresponding provisions of this Lease, then Lessee shall be obligated to comply with the provisions of the Franchise Agreement except in regard to those obligations which are the responsibility of
Lessor as provided herein. It is the intent of the parties hereto that Lessee shall comply in every respect with the provisions of the Franchise Agreement so as to avoid any default thereunder during the term of this Lease. Lessee shall not
terminate, extend or enter into any modification of the Franchise Agreement without in each instance first obtaining Lessor’s prior written consent. Lessor and Lessee agree to cooperate with each other in the event it becomes necessary to
obtain a franchise extension or modification or a new franchise for the Leased Property, and in any transfer of the Franchise Agreement to Lessor (if applicable) or any designee of or any successor to Lessee (as applicable) upon the termination of
this Lease. In the event of expiration or termination of a Franchise Agreement, for whatever reason, the Lessor will have the right, in its sole discretion, to approve any new Franchise Agreement for the Facility. If, upon any expiration or earlier
termination of this Lease (other than upon an Event of Default by Lessee), a Franchise Agreement remains in effect, or would but for such expiration or termination remain in effect, 

  
 49 









 
Lessor shall indemnify, defend and hold Lessee harmless with respect to the obligations and liabilities arising thereunder after the date of expiration or termination of this Lease. 

 
 27.5 Lessor’s Right to Inspect.
Lessee shall permit Lessor and its authorized representatives as frequently as reasonably requested by Lessor to inspect the Leased Property and Lessee’s accounts and records pertaining thereto and make copies thereof, during usual
business hours upon reasonable advance notice, subject only to any business confidentiality requirements reasonably requested by Lessee, provided that Lessor shall not cause any interference with the operation of the Leased Property. 

 
 27.6 Conveyance by Lessor. If
Lessor or any successor owner of the Leased Property conveys the Leased Property to a Person other than a wholly owned Affiliate of Lessor in accordance with the terms hereof other than as security for a debt, and the grantee or transferee of the
Leased Property expressly assumes all obligations of Lessor hereunder arising or accruing from and after the date of such conveyance or transfer, Lessor or such successor owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Lessor under this Lease arising or accruing from and after the date of such conveyance or other transfer as to the Leased Property and all such future liabilities and obligations shall thereupon be binding upon the new
owner. 
  
 27.7 Lessor may Grant
Liens. Without the consent of Lessee, Lessor may, subject to the terms and conditions set forth below in this Section 27.7, from time to time, directly or indirectly, create or otherwise cause to exist any lien, encumbrance or title
retention agreement (“Encumbrance”) upon the Leased Property, or any portion thereof or interest therein, whether to secure any borrowing or other means of financing or refinancing. Upon the request of Lessor, Lessee shall subordinate this
Lease to the lien of a new mortgage on the Leased Property. 
  
 27.8 Non Disturbance Agreement. Lessor agrees, subject to any restrictions or limitations imposed by any lender of Lessor, to execute in favor of Manager a non disturbance and
attornment agreement in form and substance reasonably acceptable to Lessor and Manager. 
  
 27.9 Waiver of Presentment, etc. Lessee waives all presentments, demands for payment and for performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, and notices of acceptance and waives all notices of the existence, creation, or incurring of new or additional obligations, except as expressly granted herein. 

 
 27.10 Memorandum of Lease. Lessor
and Lessee shall promptly upon the request of either enter into a short form memorandum of this Lease, in form suitable for recording under the laws of the State in which reference to this Lease, and all options contained herein, shall be made.
Lessee shall pay all costs and expenses of recording such memorandum of this Lease. 
  
 27.11 Usury. If any late charges or any interest rate provided for in any provision of this Lease are based upon a rate in excess of the maximum rate permitted by applicable
law, the parties agree that such charges shall be fixed at the maximum permissible rate. 

  
 50 









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

 
 27.13 Remedies Cumulative. To the
extent permitted by law, each legal, equitable or contractual right, power and remedy of Lessor or Lessee now or hereafter provided either in this Lease or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power and remedy and the exercise or beginning of the exercise by Lessor or Lessee of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Lessor or Lessee of any or all of
such other rights, powers and remedies. 
  
 27.14
Acceptance of Surrender. No surrender to Lessor of this Lease or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Lessor and no
act by Lessor or any representative or agent of Lessor, other than such a written acceptance by Lessor, shall constitute an acceptance of any such surrender. 
  

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

  
 27.16 Quiet Enjoyment.
So long as Lessee pays all Rent as the same becomes due and complies with all of the terms of this Lease and performs its obligations hereunder, in each case within the applicable grace periods, if any, Lessee shall peaceably and quietly
have, hold and enjoy the Leased Property for the Term hereof, free of any claim or other action by Lessor or anyone claiming by, through or under Lessor, but subject to all liens and encumbrances subject to which the Leased Property was conveyed to
Lessor or hereafter consented to by Lessee or provided for herein. Notwithstanding the foregoing, Lessee shall have the right by separate and independent action to pursue any claim it may have against Lessor as a result of a breach by Lessor of the
covenant of quiet enjoyment contained in this Section. 
  
 27.17 Binding Effect. The covenants, terms, conditions, provisions and undertakings in this Lease shall extend to and be binding upon the heirs, personal representatives,
executors, administrators and permitted successors and assigns of the respective parties hereto. 
  
 27.18 Entire Agreement; No Offer. This Lease contains the entire agreement of Lessor and Lessee with respect to the subject matter hereof, and no representations, warranties,
inducements, promises or agreements, oral or otherwise, between the parties not embodied in this Lease shall be of any force or effect. This Lease may be modified only by a written agreement executed by both parties with the same formalities as this
Lease. All prior agreements or communications are and shall be merged into this Lease and shall have no force or effect. 

  
 51 









 
Neither any submission of this Lease by one party to the other, nor any correspondence or other communications between the parties in connection therewith, is intended or shall be deemed to
constitute an offer of any kind or to create any obligations between the parties unless and until one or more duplicates of this Lease has been fully executed and delivered between the parties. Accordingly, any such submission or communications or
correspondence between the parties or their respective agents or attorneys is intended only as non-binding discussions, and either party shall have the absolute right to withdraw from such discussions without any liability whatsoever to the other
party. 
  
 27.19 Severability.
If any clause or provision of this Lease is illegal, invalid or unenforceable under applicable present or future Laws effective during the Term, the remainder of this Lease shall not be affected. In lieu of each clause or provision of
this Lease which is illegal, invalid or unenforceable, there shall be added as a part of this Lease a clause or provision as nearly identical as may be possible and as may be legal, valid and enforceable. Notwithstanding the foregoing, in the event
any clause or provision of this Lease is illegal, invalid or unenforceable as aforesaid and the effect of such illegality, invalidity or unenforceability is that Lessor no longer has the substantial benefit of its bargain under this Lease, then, in
such event, Lessor may in its discretion cancel and terminate this Lease upon providing at least ninety (90) days advance notice thereof to Lessee. 
  

27.20 Counterparts. This Lease may be executed in several counterparts, each of which shall be deemed an
original, and all of such counterparts together shall constitute one and the same instrument. 
  
 27.21 Governing Law. This lease and its interpretation, validity and performance shall be governed by the laws of the state in which the Land is situate. In the event any court
of law of appropriate judicial authority shall hold or declare that the law of another jurisdiction is applicable, this lease shall remain enforceable under the laws of the appropriate jurisdiction. The parties hereto agree that venue for any action
in connection herewith shall be proper in the state or federal courts in or having jurisdiction over the county where the Land is situated. Each party hereto consents to the jurisdiction of any local, state or federal court situated in any of such
locations and waives any objection which it may have pertaining to improper venue or forum non conveniens to the conduct of any proceeding in any such court. 
  

27.22 Recitals; Headings. The recitals set forth in this Lease are true and correct, and are incorporated
herein by this reference. The use of headings, captions and numbers in this Lease is solely for the convenience of identifying and indexing the various paragraphs and shall in no event be considered in construing or interpreting any provision in
this Lease. 
  
 27.23 Survival.
Notwithstanding anything to the contrary contained in this Lease, the provisions (including, without limitation, covenants, agreements, representations, warranties, obligations and liabilities described therein) of this Lease which from
their sense and context are intended to survive the expiration or sooner termination of this Lease shall survive such expiration or sooner termination of this Lease and continue to be binding upon the applicable party. 

  
 52 









 27.24 Exhibits. The exhibits referred to in, and attached to,
this Lease are hereby incorporated in full by reference. Unless otherwise expressly provided in the exhibit or the body of this Lease, in the event of any conflict or inconsistency with the provisions contained in the body of this Lease and the
exhibits, the provisions contained in the body of this Lease shall control. 
  
 [Signatures follow on next page] 

  
 53 









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

			
	“LESSOR”
	
	Philadelphia Hotel Associates LP,
	a Virginia limited partnership
		
	By:	 	MHI GP LLC
	 	 	its General Partner
		
	By:	 	MHI GP Hospitality, L.P.
	 	 	its sole member
		
	By:	 	MHI Hospitality Corporation
	 	 	its General Partner
		
	By:	 	/s/    Andrew M. Sims
	Andrew M. Sims
	Its: President

  

			
	“LESSEE”
	
	MHI Hospitality TRS, LLC
	A Delaware limited liability company
		
	By:	 	/s/    Andrew M. Sims
	Andrew M. Sims
	Its: Manager

  

  
 54 









 Exhibit A 
 Land 
  
 DESCRIPTION OF REAL PROPERTY 
  
 ALL of that certain lot, piece or parcel of land, with the 
 buildings and
improvements erected thereon, lying and being 
  
 SITUATE in the 40th
Ward of the City of Philadelphia, described according to a survey and Plan of property made for Marriott Corporation by Israel Zeitz, Surveyor and Regulator of the 10th Survey District, dated August 19, 1982, to wit: 

 
 BEGINNING at a point on the Southerly side of Penrose Avenue (170 feet wide)
State Highway Route #67053 which point is measured South 75 degrees 49 minutes 42 seconds East along the said Southerly side of Penrose Avenue and Penrose Avenue produced the distance of 92.287 feet from a point of intersection formed by the said
Southern side of Penrose Avenue and the Northeasterly side of Island Avenue both lines produced thence extending South 75 degrees 49 minutes 42 seconds East along the said Southerly side of Penrose Avenue the distance of 137.081 feet to a point of
curve thence Southeastwardly still along the said Southerly side of Penrose Avenue on the arc of a circle curving to the left having a radius of 1514.825 feet the arc distance of 475.891 feet to a point thence South 27 degrees 02 minutes 21.52
seconds West crossing a relocated 16 inch pipe line 819.427 feet to a point on the said Northeasterly side of Island Avenue thence North 19 degrees 04 minutes 48 seconds West along the said Northeasterly side of Island Avenue recrossing said
relocated 16 inch pipe line 361.732 feet to an angle point; thence North 22 degrees 41 minutes 49 seconds West still along the said Northeasterly side of Island Avenue 430.04 feet to a point of curve; thence along the arcs of circles curving to the
right connecting the said Northeasterly side of Island Avenue and the Southerly side of Penrose Avenue the two following courses and distances (1) Northeastwardly on the arc of a circle having a radius of 79.066 feet the arc distance of 45.383 feet
to a point of compound curve; (2) Northeastwardly, Eastwardly and Southeastwardly arc of a circle having a radius of 40.000 feet the arc distance of 56.596 feet to a point of tangent on the said Southerly side of Penrose Avenue being the first
mentioned point and place of beginning. 

  
 56 









 Exhibit B 
 Base Rent and Percentage Rent 
  
 Base Rent equals $3,100,000 
  
  

			
	 First Tier Rent Floor
	  	Second Annual Room Revenues Break Point
		
	 $7,850,000
	  	$8,400,000
		
	 Commencement Date: December 21, 2004
	  	 


  
 57 









 Schedule of Differences to Exhibit 10.13 

 
 MHI Hospitality Corporation 

 
 Filed herewith as Exhibit 10.13 to the Form 10-Q for the quarterly period
ended September 30, 2011, is a copy of the Lease Agreement by and between MHI Hospitality TRS, LLC and Philadelphia Hotel Associates LP, entered into effective as of December 21, 2004 (the “Lease Agreement”). The Company has also
entered into eight additional lease agreements that are substantially identical in all material respects to the Lease Agreement except as to the parties thereto, dates of execution, terms, base and percentage rent and other details as indicated
below (the “Additional Agreements”). Per Instruction 2 to Item 601 of Regulation S-K, the Company is not filing the Additional Agreements as exhibits to the Form 10-Q, but is filing this Schedule with Exhibit 10.13 describing the
differences between the Lease Agreement and the Additional Agreements. 







 Description of Differences 

 

											
	Name of Agreement	 	Parties	 	Date	 	Term	 	Hotel Asset	 	Base and Percentage 
Rent
	Lease Agreement by and between 
Capitol Hotel Associates, L.P., L.L.P. and MHI Hospitality TRS, LLC dated as of the 21st day of December, 2004 and as amended by Amendment No. 1 dated July 15,
2010.	 	 Lessee: MHI Hospitality TRS, LLC

 
 Lessor: Capitol Hotel Associates, L.P.,
L.L.P.
	 	12/21/2004	 	12/31/2013	 	Hilton Wilmington
Riverside	 	 Base Rent – $3,000,000

 
 First Tier Rent Floor – $7,000,000

 

Second Annual Room Revenues Break Point –
$7,300,000

	Lease Agreement by and between Savannah Hotel Associates LLC
and MHI Hospitality TRS, LLC dated as of the 21st day of December, 2004 and as amended by Amendment No. 1 dated July 15, 2010.	 	 Lessee: MHI Hospitality TRS, LLC

 
 Lessor: Savannah Hotel Associates, L.L.C.
	 	12/21/2004	 	12/31/2013	 	Hilton Savannah DeSoto	 	 Base Rent – $3,100,000

 
 First Tier Rent Floor – $8,200,000

 
 Second Annual Room Revenues Break
Point –
$8,500,000

	Lease Agreement by and between Brownestone Partners, LLC,
and MHI Hospitality TRS, LLC dated as of the 21st day of December, 2004 and as amended by Amendment No. 1 dated July 15, 2010.	 	 Lessee: MHI Hospitality TRS, LLC

 
 Lessor: Brownestone Partners, LLC
	 	12/21/2004	 	12/31/2013	 	Holiday Inn Brownstone
Raleigh	 	 Base Rent – $800,000

 
 First Tier Rent Floor – $2,850,000

 
 Second Annual Room Revenues Break
Point –
$3,500,000

	Lease Agreement by and between Laurel Hotel Associates LLC,
and MHI Hospitality TRS, LLC dated as of the 21st day of December, 2004 and as amended by Amendment No. 1 dated July 15, 2010.	 	 Lessee: MHI Hospitality TRS, LLC

 
 Lessor: Laurel Hotel Associates LLC
	 	12/21/2004	 	12/31/2013	 	Holiday Inn Laurel West	 	 Base Rent – $800,000

 
 First Tier Rent Floor – $4,200,000

 
 Second Annual Room Revenues Break
Point –
$4,600,000

	Lease Agreement by and between MHI Jacksonville LLC and MHI
Hospitality TRS, LLC, dated as of the 22nd day of July, 2005 and as amended by Amendment No. 1 dated July 15, 2010.	 	 Lessee: MHI Hospitality TRS, LLC

 
 Lessor: MHI Jacksonville LLC
	 	07/22/2005	 	12/31/2013	 	Crowne Plaza Jacksonville
Riverfront	 	 Base Rent – $924,000

 
 First Tier Rent Floor – $3,352,000

 
 Second Annual Room Revenues Break
Point –
$6,146,000

	Lease Agreement by and between Capitol Hotel Associates
L.P., L.L.P. and MHI Hospitality TRS, LLC, dated as of the 21st day of December, 2004 and as amended by Amendment No. 1 by and between Capitol Hotel Associates, L.P.,
L.L.P., MHI Hospitality TRS, LLC and Louisville Hotel Associates LLC dated July 15, 2010 and Amendment No. 2 dated July 15, 2010.	 	 Lessee: MHI Hospitality TRS, LLC

 
 Lessor: Louisville Hotel Associates, LLC
	 	12/21/2004	 	12/31/2013	 	Sheraton Louisville
Riverside	 	 Base Rent – $1,377,000

 
 First Tier Rent Floor – $3,633,000

 
 Second Annual Room Revenues Break
Point –
$6,661,000

	Lease Agreement by and between Hampton Hotel Associates LLC
and MHI Hospitality TRS, LLC as of the 24th day of April, 2008 and as amended by Amendment No. 1 dated October 7, 2008.	 	 Lessee: MHI Hospitality TRS, LLC

 
 Lessor: Hampton Hotel Associates LLC
	 	04/24/2008	 	10/07/2018	 	Crowne Plaza Hampton
Marina	 	Rent – 20% of Gross Room
Revenue









											
	Name of Agreement	 	Parties	 	Date	 	Term	 	Hotel Asset	 	Base and Percentage 
Rent
	Lease Agreement by and between Tampa Hotel Associates LLC
and MHI Hospitality TRS, LLC as of the 1st day of January, 2009.	 	 Lessee: MHI Hospitality TRS, LLC

 
 Lessor: Tampa Hotel Associates LLC
	 	01/01/2009	 	01/01/2019	 	Crowne Plaza Tampa
Westshore	 	 Base Rent – $2,683,296

 
 First Tier Rent Floor

 
 1st full Lease Year plus any initial stub Lease Year – 20%
  

2nd full Lease Year –
25%
  
 3rd full Lease Year – $400,000
  

Thereafter until Expiration Date prior year’s First Tier Rent Floor plus a Consumer Price Index adjustment
calculated consistent with Section 3.1(d)
  
 First Annual Room Revenues Break Point shall equal the applicable First Tier Rent Floor