Document:

exv10w3

Exhibit 10.3

FORM OF HOTEL MANAGEMENT AGREEMENT

     THIS AMENDED AND RESTATED HOTEL MANAGEMENT AGREEMENT (this “Agreement”) is made as of the ___
day of ____________, 2010, between the lessee entities set forth on Exhibit A attached
hereto and made a part hereof (collectively, “Owner”) and INTERSTATE MANAGEMENT COMPANY, LLC
(“Operator”), a Delaware limited liability company.

RECITALS

     A. Owner and its affiliates lease from Summit Hotel OP, LP, a Delaware limited partnership
(the “OP”), and its affiliates described on Exhibit A (each a “Land Holder” and
collectively, the “Land Holders”, whether held as a Land Holder or as a ground lessee) the hotel
properties described in Exhibit A (each a “Hotel” and collectively, the “Hotels”) pursuant
to one or more Lease Agreements (each, a “Lease”). Summit Hotel OP is substantially owned by
Summit Hotel Properties, Inc., a Maryland corporation (the “REIT”).

     B. The Hotels, together with certain other hotels and lodging assets owned by Land Holders and
leased by Owner, comprise a portfolio of hotels, which prior to the date hereof were managed by The
Summit Group Inc. (“Prior Manager”) pursuant to the terms of five (5) certain management agreements
of varying dates entered into between 2003 and 2007 (as amended, the “Existing Management
Agreements”).

     C. Owner desires Operator to assume management of the Hotels.

     D. Pursuant to an Assignment and Assumption Agreement of even date herewith (the
“Assignment”), Prior Manager has assigned all of its right, title and interest in the Existing
Management Agreements to Operator, and Operator has assumed the obligations of Prior Manager under
the Existing Management Agreements to the extent arising on or after the date of the Assignment, on
the terms and conditions set forth in the Assignment.

     E. Owner and Operator desire to amend, restate and replace the Existing Management Agreements
with this Agreement, and evidence their agreement with respect to the operation, direction,
management, and supervision of the Hotels individually as more particularly set forth below.

     NOW, THEREFORE, for and in consideration of the premises, and other good and valuable
consideration, Owner and Operator agree as follows:

ARTICLE I

THE HOTEL

1.1. Owner and Operator acknowledge that each Hotel consists of and contains:

A. A building (the “Building”) with guest rooms and suites, restaurant(s), lounge(s), and

 

 

conference and meeting rooms together with the parcel of land on which the Building is located and
any outdoor parking areas or other facilities located on such land, all as more fully described on
Exhibit B attached hereto and made a part hereof;

B. Mechanical systems and built-in installations (the “Installations”) in each Building including,
but not limited to, heating, ventilation, air conditioning, electrical and plumbing systems,
elevators and escalators, and built-in laundry, refrigeration and kitchen equipment;

C. Furniture, furnishings, wall coverings, floor coverings, window treatments, fixtures and hotel
equipment and vehicles (the “FF&E”);

D. Chinaware, glassware, silverware, linens, and other items of a similar nature (the “Operating
Equipment”);

E. Stock and inventories of paper supplies, cleaning materials and similar consumable items and
food and beverage (the “Operating Supplies”); and

F. Any whirlpool, fitness center, spa, on-site parking, pool , beach, club facilities, retail
facilities, restaurants and related amenities or facilities for each Hotel.

ARTICLE II

OPERATING TERM

2.1. This Agreement shall have a term (the “Operating Term”) commencing on the date hereof (the
“Commencement Date”) and expiring on the tenth (10th) anniversary of the Commencement Date (the
“Initial Term”), unless sooner terminated in accordance with the provisions of this Agreement or
unless extended as provided by the terms of this Agreement or as otherwise provided by the written
agreement of Owner and Operator. This Agreement shall automatically renew for additional terms of
thirty (30) days each (each, a “Renewal Term”) unless either party gives the other party written
notice of termination at least sixty (60) days prior to the end of the Initial Term or thirty (30)
days prior to the end of the then-current Renewal Term. Owner and Operator, by mutual written
agreement, may renew this Agreement for a longer term and, in such case, such longer term shall be
a Renewal Term. Any and all reference contained herein to Term shall be deemed to include the
Operating Term, the Initial Term and the Renewal Term(s).

ARTICLE III

APPOINTMENT AND ENGAGEMENT OF OPERATOR

3.1. Owner hereby engages Operator as the exclusive operator of the Hotels during the Term and
Operator hereby accepts such engagement.

3.2. Subject to the terms of this Agreement and the applicable Budgets, Operator shall have control
and discretion in all aspects of the operation, direction, management and supervision of the
Hotels. Such control and discretion of Operator shall include, without limitation, the
determination

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of credit policies (including entering into agreements with credit card
organizations), terms of admittance, charges for rooms, food and beverage policies, employee wage,
benefits and severance policies, entertainment and amusement policies, leasing, licensing and
granting of concessions for commercial space at the Hotels, and all phases of advertising,
promotion and publicity relating to the Hotels. Notwithstanding the foregoing, Operator
acknowledges that the contracts with credit card vendors listed on Exhibit C attached
hereto are required to remain in effect following the Commencement Date pursuant to the terms of
the such contracts, and that Operator will not terminate such agreements (other than as permitted
under the terms of such agreements) without Owner’s prior written consent.

3.3. Operator shall operate, manage and maintain each Hotel and all of its facilities and
activities in a diligent and careful manner in accordance with the following standards (the “Hotel
Standard”) in order to maintain the condition and character of such Hotel and with the primary goal
of maximizing the Gross Operating Profit (as defined herein) of such Hotel:

     (a) in a manner that is equal to or better than the operation of similar hotels in the area of
such Hotel and other similar hotels operated by Operator, to the extent consistent with the Budgets
and such Hotel’s facilities; and

     (b) in accordance with the standards imposed by the hotel franchise agreement, if any,
applicable to such Hotel (a “Franchise Agreement”).

3.4. Operator shall make its senior executives available to meet with Owner at least once each
quarter and, in addition, at Owner’s reasonable request, consult with and advise Owner concerning
all policies and procedures affecting all phases of the conduct of business at the Hotels.
Operator shall in all events consult with Owner before implementing any material changes in
policies and procedures relating to the Hotels. Operator shall make the Key Hotel Personnel (as
defined in Section 4.7) for each Hotel available through the General Manager of such Hotel to meet
with Owner at least once per month and at additional times (including by teleconference) from time
to time upon Owner’s reasonable request, to review the operations of the Hotel and current matters
of import, and in each instance, Owner shall give Operator adequate advance notice, in no event to
be less than three (3) days advance notice. Operator shall in all events meet with Owner before
implementing any material changes in policies and procedures relating to any Hotel. Owner shall
not contact any other Hotel Employee regarding the operations of the Hotels.

3.5. During the Term, Operator, as agent and for the account of Owner, shall in accordance with the
Budgets (as defined in Section 8.4) and the other applicable provisions of this Agreement, and only
to the extent Owner has provided sufficient funds therefor, either through Hotels operations or
directly from Owner:

	 	A.	 	Recruit, train, direct, supervise, employ and dismiss on-site staff (the “Hotel
Employees”) for the operation of the Hotels, and in connection therewith establish and
maintain an affirmative action plan for the Hotels; provided, however, no employment
agreement for any Hotel Employee shall contain an automatic renewal provision without
the prior written consent of the Owner specifically referring to
such renewal provision;

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	 	B.	 	Develop and implement advertising, marketing, promotion, publicity and other
similar programs for the Hotels;
	 
	 	C.	 	(i) Negotiate and enter into leases, licenses and concession agreements for
stores, office space and lobby space at the Hotels (including without limitation, car
rental counters and gift shops) and commercial space, if any, that is adjacent to or
otherwise part of the Hotels (including without limitation, rooftop antennas)
(collectively, the “Leases”), collect the rent under such Leases and otherwise
administer the Leases and (ii) negotiate and enter into contracts for the provision of
services to the Hotels; provided that, Operator shall not, without Owner’s consent,
enter into any such Leases or contracts for terms in excess of one (1) year, unless
such Lease or contract may be terminated without cause and without payment of any
penalty on no less than sixty (60) days’ notice;
	 
	 	D.	 	Upon receipt of all necessary information from Owner, apply for, process and
take all necessary steps to procure and keep in effect in Owner’s name (or, if required
by the licensing authority, in Operator’s name or both) all licenses and permits and
the sales tax registration(s) required for the operation of the Hotels;
	 
	 	E.	 	Pursuant to a separate written agreement on terms and conditions set forth
therein, Operator’s affiliate will purchase all FF&E, Operating Equipment and Operating
Supplies necessary for the operation of the Hotels; provided, however, Owner may
purchase any of the FF&E, Operating Equipment or Operating Supplies used in connection
with the operation of the Hotels, as an operating or capital expense, as appropriate,
of the Hotels, in which case Owner will provide to Operator sufficient information for
Operator to maintain accurate books and records regarding sales tax accruals and pay
such accruals out of Total Revenues from the Hotel. At the request of Owner, Operator
shall put out for competitive bid the purchase of FF&E, Operating Equipment or
Operating Supplies used in connection with the operation of the Hotels as contemplated
in this Section E;
	 
	 	F.	 	Provide routine accounting and purchasing services as required in the ordinary
course of business;
	 
	 	G.	 	Comply with all applicable laws, ordinances, regulations, rulings and orders of
governmental authorities affecting or issued in connection with the Hotel, as well as
with orders and requirements of any board of fire underwriters or any other body which
may exercise similar functions, so long as Owner promptly delivers to Operator any
notice of violation thereof received by Owner;
	 
	 	H.	 	Subject to the Budgets, cause all needed repairs and maintenance to the Hotel
of which Operator is aware to be made, and unless otherwise set forth in the Budgets,
any expense for repairs and maintenance that exceeds Five Thousand Dollars ($5,000)
shall require Owner’s prior approval and shall be put out for a minimum of
three (3) competitive bids unless otherwise approved by Owner. Notwithstanding 

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	 	 	 	the foregoing, such prior approval and bids shall not be required for ;any expenses
regardless of amount which, in Operator’s reasonable judgment, are immediately
necessary to prevent immediate material damage to a Hotel or the health or safety of
its occupants (“Emergency Expenses”); provided that, Operator shall make good faith
attempts to contact and notify Owner of the need for such Emergency Expenses prior
to incurring them and in all events shall notify Owner within twenty-four (24) hours
after Operator becomes aware of such emergency;
	 
	 	I.	 	Subject to Section 3.6 below, use commercially reasonable efforts to operate
the Hotels in accordance with any mortgage or deed of trust on the Hotels and/or
Franchise Agreement (collectively, “Major Agreements”); provided, however, Operator
shall have no responsibility for causing the payment of any Fixed Charges or Owner
Expenses (as defined in Section 7.2), unless expressly set forth in this Agreement;
	 
	 	J.	 	At the direction of Owner, in its sole discretion and pursuant to a separate
written agreement between Owner and Operator (or its affiliates), provide project
coordination services to the Owner and its general contractor to aid in any
construction or remodeling at the Hotels;
	 
	 	K.	 	Use good faith efforts to identify, and provide recommendations to Owner
regarding the use of, any vendor relationships established by Operator, in order to
implement potential cost savings and operational efficiencies for the Hotels; and
	 
	 	L.	 	Provide such other services as are required under the terms of this Agreement
or as are customarily performed without additional fee by management companies of
similar properties in the areas of the Hotels.

3.6. Notwithstanding any other provision of this Agreement to the contrary, Operator’s obligations
with respect to any Major Agreement shall be limited to the extent (i) complete and accurate copies
and/or summaries of the relevant provisions thereof have been delivered to Operator sufficiently in
advance to allow Operator to perform such obligations and (ii) the provisions thereof and/or
compliance with such provisions by Operator (1) are applicable to the day-to-day operation,
maintenance and non-capital repair and replacement of the Hotels or any portion thereof, (2) do not
require contribution of capital or payments of Operator’s own funds, (3) do not materially increase
Operator’s obligations hereunder or materially decrease Operator’s other rights hereunder, provided
however, that Operator acknowledges and agrees that standards, expectations, responsibilities and
limitations prescribed by franchisors are not deemed to materially increase Operator’s obligations
or materially decrease its rights hereunder (4) do not limit or purport to limit any corporate
activity or transaction with respect to Operator or its affiliates or any other activity, transfer,
transaction, property or other matter involving Operator or its affiliates other than at the sites
of the Hotels, and (5) are otherwise within the scope of Operator’s duties under this Agreement.
Owner acknowledges and agrees, without limiting the foregoing, that any failure of Operator or the
Hotels to comply with the provisions of any Major Agreement arising out of (A) the condition of the
Hotels, and/or the failure of the Hotels to comply with the provisions of such Major Agreement,
prior to Operator’s assuming the day-to-day management thereof, (B) construction activities at the Hotels, (C) inherent

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limitations in the design and/or construction of, location of and/or parking at the Hotels, (D)
instructions from Owner to operate any Hotel in a manner inconsistent with the Major Agreements
and/or (E) Owner’s failure to approve any matter requested by Operator in Operator’s reasonable
good faith business judgment as necessary or appropriate to achieve compliance with any Major
Agreement, shall not be deemed a breach by Operator of its obligations under this Agreement.
Operator shall be entitled to rely on the copies of the Franchise Agreements provided by Owner.

ARTICLE IV

AGENCY; HOTEL EMPLOYEES

4.1. In the performance of its duties as Operator of the Hotels, Operator shall act solely as agent
of Owner. Nothing in this Agreement shall constitute or be construed to be or create a partnership
or joint venture between Owner and Operator. Except as otherwise provided in this Agreement, (a)
all debts and liabilities to third persons incurred by Operator in the course of its operation and
management of the Hotels in accordance with the provisions of this Agreement shall be the debts and
liabilities of Owner only and (b) except to the extent provided in Section 23.1, Operator shall not
be liable for any such obligations by reason of its management, supervision, direction and
operation of the Hotel as agent for Owner. Operator may so inform third parties with whom it deals
on behalf of Owner and may take any other reasonable steps to carry out the intent of this
paragraph.

4.2. All Hotel Employees shall be employees of Operator or an affiliate. All compensation
(including without limitation all wages, fringe benefits and severance payments) of the Hotel
Employees shall be an Operating Expense (as defined in Section 10.2) and shall be borne by Owner
and paid or reimbursed to Operator out of the Agency Account (as hereinafter defined) or if the
amounts therein are insufficient by Owner upon demand therefor by Operator. Owner acknowledges and
agrees that (a) Operator shall have the right to institute bonus programs for the Hotel Employees
so long as such policies are reasonable and customary in the industry and (b) Operator shall have
the right to institute severance payment policies for the Hotel Employees so long as such policies
are consistent with Operator’s severance payment policies in effect from time to time for other
similar hotels managed by Operator and its affiliates. Operator’s current severance payment policy
is attached hereto as Exhibit D, and Operator shall obtain Owner’s prior consent before
implementing any material changes to such policy at the Hotels.

4.3. Operator may, subject to the Budgets, enroll the Hotel Employees in retirement, health and
welfare employee benefit plans substantially similar to corresponding plans implemented in other
hotels with similar service levels managed by Operator or similar hotels in the areas of the Hotel.
Such plans may be joint plans for the benefit of employees at more than one hospitality property
owned, leased or managed by Operator or its affiliates. Employer contributions to such plans
(including any withdrawal liability incurred upon termination of this Agreement) and reasonable
administrative fees which Operator may expend in connection therewith shall be the responsibility
of Owner and shall be an Operating Expense. The administrative expenses of any joint plans will be
equitably apportioned by Operator among properties covered by such plan. The apportionment for
each Hotel shall be based upon the total costs of the administrative expenses multiplied by a
fraction, the numerator of which is the total payroll expense of the Hotel, and the denominator of
which is the total payroll expense of all hotels participating in the joint plans. Owner hereby acknowledges and

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agrees that (a) any employee benefit plan withdrawal liability and (b) compliance with the
provisions of the Worker Adjustment and Retraining Notification Act and/or any similar state or
local laws (together with all rules and regulations promulgated thereunder and including without
limitation any such state or local laws, the “WARN Act”) upon any disposition of a Hotel, upon any
termination of this Agreement or upon the occurrence of any other event giving rise to the
application of the WARN Act are the responsibility and obligation of Owner, and Owner hereby agrees
to indemnify, defend and hold Operator harmless from and against any cost, expense, obligation,
claim or other liability which Operator may incur arising out of or in connection with any employee
benefit plan withdrawal liability or any breach or claimed breach of the WARN Act in connection
with any such disposition, termination or other occurrence; provided, however, in the event that
Operator receives notice of termination of this Agreement with sufficient time to comply with the
WARN Act but fails to satisfy the applicable WARN Act requirements, then Operator shall indemnify,
defend, and hold harmless Owner from and against any cost, expense, obligation, claim or other
liability which Owner may incur arising out of such failure by Operator.

4.4. Operator, in its discretion but subject to the Budgets (unless otherwise approved by Owner),
may, as an Operating Expense of the Hotels, (i) provide lodging for Operator’s executive employees
to the extent they are visiting the Hotels in connection with the performance of Operator’s
services and allow them the use of Hotel facilities and (ii) provide the General Manager of the
Hotels and other Hotel Employees temporary living quarters within the Hotels and the use of all
Hotel facilities, in either case without charge, as the case may be, but for no more than an
aggregate of sixty (60) days without the Owner’s prior written consent.

4.5. Operator shall not be liable for any failure of the Hotels to comply prior to the Commencement
Date with any federal, state, local and foreign statutes, laws, ordinances, regulations, rules,
permits, judgments, orders and decrees affecting labor union activities, civil rights or employment
in the United States, including, without limitation, the Civil Rights Act of 1870, 42 U.S.C. §1981,
the Civil Rights Acts of 1871, 42 U.S.C. §1983 the Fair Labor Standards Act, 29 U.S.C. §201,
et seq., the Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq.,
as amended, the Age Discrimination in Employment Act of 1967, 29 U.S.C. §621, et
seq., the Rehabilitation Act, 29 U.S.C. §701, et seq., the Americans With
Disabilities Act of 1990, 29 U.S.C. §706, 42 U.S.C. §12101, et seq., the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 301, et seq., the Equal Pay
Act, 29 U.S.C. §201, et seq., the National Labor Relations Act, 29 U.S.C. §151,
et seq., and any regulations promulgated pursuant to such statutes (collectively,
as amended from time to time, and together with any similar laws now or hereafter enacted, the
“Employment Laws”).

4.6. Operator shall from time to time develop and implement policies, procedures and programs for
the Hotels (collectively, the “Employment Policies”) reasonably designed to effect compliance with
the Employment Laws. The Employment Policies shall be consistent with industry standards from time
to time for reputable hotel management companies.

4.7. Notwithstanding anything stated herein to the contrary, the hiring of any new candidates for
the Key Hotel Personnel positions shall be subject to Owner’s approval, not to be unreasonably
withheld so long as the candidate is reasonably qualified to perform the position based on the
candidate’s education and experience. If requested by Owner, Operator shall make a candidate for a
Key Hotel Personnel position available to interview with Owner’s representative at Owner’s offices

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(or other mutually agreeable location) at a mutually agreeable reasonable time. In the event Owner
fails to respond in writing to a request for approval from Operator within five (5) days of the
latter of (i) such request, or (ii) the provision to Owner of a written summary of such candidate’s
education, professional experience and qualifications, Owner shall be deemed to have provided such
approval. If Owner becomes dissatisfied with the performance of any Key Hotel Personnel, Owner
may meet with senior management of the Operator to resolve such dissatisfaction. Operator will
give Owner not less than fourteen (14) days prior notice of any proposed transfer of any Key Hotel
Personnel. For the purposes hereof, “Key Hotel Personnel” shall be defined as the following
individuals, to the extent employed at a Hotel: General Manager.

4.8. Operator, as the sole employer, shall have the duty and responsibility to negotiate with any
labor union lawfully entitled to represent its Hotel Employees. Operator shall consult with Owner
before and during any discussions about strategies, objectives, tactics, proposals and agreements
as well as keep the Owner fully informed as to the progress of any negotiations and any agreements
that are reached. Nothing in this Section 4.8 shall require Operator to employ persons belonging
to labor unions. In addition, Operator shall consult with Owner during the course of any
negotiations with such labor union. Operator shall use diligent efforts to settle and compromise
all controversies and disputes arising under any labor union contracts affecting the Hotel
Employees upon such terms and conditions as Operator reasonably deems to be in Owner’s best
interests. Notwithstanding any term of this Agreement Operator may enter into no labor union
agreement, settlement or compromise that shall be binding upon Owner (either directly or as a
successor under any agreement or indirectly as an agreement covering union representation or
Operator’s policies with respect to wages and conditions applicable to the Hotels) without the
prior written consent of Owner, which consent shall not be unreasonably withheld or delayed.

ARTICLE V

PROVISION OF FUNDS

5.1. In performing its services under this Agreement, Operator shall act solely as agent and for
the account of Owner. Operator shall not be deemed to be in default of its obligations under this
Agreement to the extent it is unable to perform any obligation due to the lack of available funds
from the operation of the Hotels or as otherwise provided by Owner.

5.2. Operator shall in no event be required (i) to advance any of its funds (whether by waiver or
deferral of its management fees or otherwise) for the operation of the Hotels or (ii) to incur any
liability unless Owner shall have furnished Operator with funds necessary for the discharge thereof
prior to incurring such liability.

5.3. Owner acknowledges that prior to and during the two (2) weeks following the Commencement Date,
Manager will undertake certain transition activities which are necessary to effectuate Manager’s
take-over of management of the Hotels, and that Manager will incur expenses in connection with such
transition activities, which are described and estimated in the transition budget (“Transition
Budget”) attached hereto as Exhibit E. Owner expressly agrees to reimburse Operator for
fifty percent (50%) of the expenses incurred in connection with the transition activities
during such period, which are not to exceed the amounts set forth in the Transition Budget unless

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otherwise approved by Owner, whether incurred prior to or following the Commencement Date. Owner
agrees to pay such amounts within thirty (30) days after written demand by Operator, as issued from
time to time.

ARTICLE VI

CENTRALIZED SERVICES; MULTI-PROPERTY PROGRAMS;

INFORMATION TECHNOLOGY

6.1. Operator may, subject to the Budgets, provide or cause its affiliated companies to provide for
the Hotels and their guests the full benefit of any reservations system hereafter established by
Operator or its affiliates and provide, or cause its affiliated companies to provide, such aspects
of any accounting or purchasing services, other group benefits and services, revenue management
services, on-site sales training, associate satisfaction surveys, Operator’s national training
program and other training as are made available generally to similar properties managed by
Operator (individually and collectively, “Centralized Services”). Subject to the provisions of the
applicable Budget, Operator or such of Operator’s affiliated companies as provide Centralized
Services shall be entitled to be reimbursed for each Hotel’s share of the total costs that are
reasonably incurred in providing such Centralized Services on a system-wide basis to hotels and
motels managed by Operator or its affiliates which costs may include, without limitation, salaries
(including payroll taxes and employee benefits) of employees and officers of Operator and its
affiliates, costs of all equipment employed in the provision of such services and a reasonable
charge for overhead. Each Hotel’s share of such costs shall be determined in an equitable manner
by Operator (which shall be reasonably satisfactory to Owner) and substantiated to Owner after each
Fiscal Year (as hereinafter defined), shall be an Operating Expense of the Hotels and shall be
borne by Owner and paid or reimbursed to Operator out of the Agency Account or if the amounts
therein are insufficient by Owner upon demand therefor by Operator. Operator shall maintain and
make available to Owner invoices or other evidence supporting all of the charges for Centralized
Services. Notwithstanding the foregoing, Operator’s fee for providing centralized accounting
services shall be the Accounting Fee (as defined in Section 9.2 hereof). Owner acknowledges and
agrees that (i) Operator has disclosed to Owner the types of Centralized Services Operator
currently makes available to properties which it operates, (ii) the Hotels are likely to receive
substantial benefit from its participation in such Centralized Services, (iii) Operator is not
obligated to provide such Centralized Services under Article III of this Agreement, (iv) Operator
is entitled to payment for such Centralized Services in the manner set forth above in addition to
its Basic Fee and Incentive Fee, and (v) the receipt by Operator of any such payment does not
breach any fiduciary or other duty which Operator may have to Owner. A list of the Centralized
Services currently offered by Operator to hotels operated by Operator is attached hereto as
Exhibit F.

6.2. Owner acknowledges and agrees that Operator may, subject to the Budgets, enter into certain
purchasing, maintenance, service or other contracts with respect to the Hotels (collectively,
“Multi-Property Programs”) pursuant to which Operator or affiliates of Operator receive rebates,
discounts, cash or other incentives, administration fees, concessions, profit participations, stock
or stock options, investment rights or similar payments or economic consideration (collectively,
“Operator Rebates”) from or in, as applicable, the vendors or suppliers of goods or services
provided under such Multi-Property Programs. Owner acknowledges and agrees that (i) Operator

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has disclosed to Owner the types of Multi-Property Programs Operator currently makes available to
properties which it operates and (ii) subject to the last sentence of this Section, (1) the Hotels
are likely to receive substantial benefit from its participation in such Multi-Property Programs
which the Hotels could not obtain on their own and for which Operator is not adequately compensated
by its Basic Fee and Incentive Fee and (2) any and all Operator Rebates are the sole property of
Operator and not Owner. To the extent any such Operator Rebate is specifically designated for one
or more Hotels, Operator shall disclose to the amount of such Operator Rebate to Owner. To the
extent the Operator Rebates from the Multi-Property Programs exceed all costs and expenses in
managing and overseeing the Multi-Property Programs during any Fiscal Year, such excess shall be
allocated ratably among all of the hotels that participated in the Multi-Property Programs by using
such excess (i) to develop — both internally and externally — and establish additional associate
training programs; (ii) to compensate third-party experts who provided such training; and (iii) to
provide other benefits for the hotels such as third-party food and beverage consulting expertise.
The excess is allocated by multiplying the amount of such excess by a fraction, the numerator of
which is the total amount of purchases through the Multi-Property Programs made by a Hotel and the
denominator of which is the total amount of purchases through the Multi-Property Programs made by
all of the hotels managed by Operator that participate in the Multi-Property Programs. The Owner
has the right to require that (i) one or more of the purchasing, maintenance, service or other
goods, services or other benefits contracted for in the Multi-Property Programs may be purchased
from a provider designated by Owner other than the party providing the Multi-Property Programs, and
(ii) Operator put out for competitive bid any one or more goods or services provided through the
Multi-Property Program; provided that, Owner cannot require early termination of a contract within
a Multi-Property Program unless such early termination is permitted by the terms of such contract.

6.3. The Hotels shall incur, as an Operating Expense, subject to the Budgets, fees for certain
information technology services, including, but not limited to: (i) de-centralized accounting
support services, pursuant to Section 9.2, (ii) Operator’s IT Central Support Services (support
desk and e-mail services), (iii) Operator’s IT Delphi System Support (centralized sales and
catering software application), (iv) license fees equal to the Operator’s actual costs for use of
certain Microsoft software applications at the Hotels, and (v) Virtual Private Network (“VPN”)
Connectivity and Support (connection to Operator’s software applications via secure internet
connection). For purposes of the VPN, Operator may install hardware at the Hotels, which shall be
Owner’s property, and the cost thereof shall be chargeable as an Operating Expense. In addition,
Owner shall pay the costs of all information technology equipment, software and costs associated
with business process changes from time to time to (i) comply with the operating standards required
by the Major Agreements, (ii) make reasonable adaptations to changing technology, (iii) be
otherwise consistent with industry standards for similar hotel operations, and (iv) achieve and
sustain compliance on an on-going basis with the then current Payment Card Industry Data Security
Standards and other applicable information security and operating rules and regulations of the
credit card associations, and applicable data protection and privacy laws and regulations. A list
of the fees payable to Operator pursuant to this Section 6.3 (the “IT Fees”) is included in
Exhibit F, subject to change as set forth in the Budgets for each Fiscal Year. Commencing
on the Commencement Date and continuing throughout the term, such fees shall be incurred by the
Hotels and payable to Operator on a monthly basis. All IT Fees shall be an Operating Expense,
shall be included in and subject to the Budgets and shall be paid or reimbursed to Operator out of
the Agency Account or, if the funds therein are insufficient, by Owner.

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6.4. To the extent requested by Owner, Operator may provide project management services in
connection with the procurement and installation of additional information technology for the
Hotels on terms and conditions (including separate fees for such services) mutually agreed upon by
Owner and Operator.

ARTICLE VII

WORKING CAPITAL AND BANK ACCOUNTS

7.1. Owner will provide Operator with working capital for the Hotels in the amount of Two Million
Seven Hundred Fifty Thousand Dollars ($2,750,000) (the “Working Capital”). Owner shall at all
times provide, either from Total Revenues or from other funds of Owner, sufficient funds as
determined in the good faith business judgment of Operator to constitute normal working capital for
the uninterrupted and efficient operation of the Hotels (but which, in no event, shall be an amount
less than the Working Capital), including without limitation funds sufficient to operate, maintain
and equip the Hotels in accordance with all Major Agreements and to maintain the Hotels in
accordance with the Hotel Standard. The Working Capital amount required under this Section 7.1
shall be increased (but not decreased) annually on the first day of each succeeding Fiscal Year by
the same percentage as any percentage increase in the CPI (as defined in Section 8.6) from the
first day of the prior Fiscal Year through the first day of such succeeding Fiscal Year.

Upon Operator’s written notice to Owner that additional funds are required to pay necessary
Operating Expenses (including but not limited to payroll expenses), Owner shall provide the funds
necessary to pay such Operating Expenses within three (3) business days following Owner’s receipt
of such notice. Any such failure to provide such funding shall constitute a breach under this
Agreement. If Operator chooses to fund any such expenses (which shall be totally at Operator’s
sole discretion), Operator may, in addition to all other rights, repay itself as soon as any funds
are available, and pay itself interest upon such sum from the date payment was made at a rate equal
to the Prime Rate plus three hundred (300) basis points.

7.2. All funds received by Operator in the operation of the Hotels, including working capital
furnished by Owner, shall be deposited in a special account or accounts (the “Agency Account”) in
such federally insured bank, savings and loan or trust company as may be selected by Owner and
reasonably approved by Operator. Any successor or substitute bank, savings and loan or trust
company shall be selected in the same manner. Operator shall pay all Operating Expenses and Fixed
Charges on behalf of Owner from the Agency Account; provided, however, that Operator shall not be
obligated to pay any Operating Expenses or Fixed Charges in the event that such funds are not
currently available in the Agency Account. Upon Owner’s written request and direction, Operator
shall pay on behalf of Owner from the Agency Account (but only to the extent that such funds are
available in the Agency Account following the payment of all Operating Expenses and Fixed Charges),
such other fixed expenses as may be requested by Owner (e.g., debt service, ground lease payments,
capital costs, etc.) (“Owner Expenses”); provided, however, Operator will not be required to pay
such Owner Expenses until Operator receives Owner’s written request and direction to do so
(including copies of any material agreements) (“Owner’s Expense Notice”). Owner agrees
to provide Owner’s Expense Notice at least thirty (30) days prior to the date on which the first

11

 

payment by Operator is due, and such Owner’s Expense Notice shall only be revocable upon thirty
(30) days prior written notice from Owner.

7.3. A. The Agency Account shall be in the name of the Hotel(s), with Operator as agent for Owner
(bearing Owner’s Federal tax identification number), and shall be under the control of Operator.
The FF&E Reserve Account (as defined in Section 11.1) shall be in the name of Owner and under the
control of Owner. Checks or other documents of withdrawal from the Agency Account shall be signed
only by Operator’s representatives, provided that such representatives shall be bonded or otherwise
insured in a manner reasonably satisfactory to Owner. The premiums for bonding or other insurance
shall be an Operating Expense except for premiums for bonding off-site executive employees of
Operator. No later than ninety (90) days following the expiration or termination of this
Agreement, all remaining amounts in the Agency Account shall be transferred to Owner. The Operator
shall not co-mingle any Agency Account funds with any other funds of Operator or funds from hotels
that are not Hotels.

     B. Except for the payroll account referred to below, Operator shall not maintain, for the
deposit of revenues generated at the Hotels, any bank account in Operator’s sole name. Working
Capital shall be adjusted as appropriate in the mutual judgment of Owner and Operator, and within
three (3) business days of written notice, Owner shall advance additional funds deemed necessary to
maintain Working Capital or Operator shall return any amounts deemed unnecessary to maintain as
Working Capital as is requested by Owner and reasonably approved by Operator. At such time as
Owner enters into a credit facility with a Lender, provided that such credit facility provides for
the payment of necessary disbursements, checks and transfers by Operator on behalf of Owner,
Operator shall arrange such daily sweeps of cash into such accounts as is requested by Owner, so
long as there is sufficient money available to pay payroll and normal operating expenses.

     C. All sums received from the operation of the Hotels and any and all items paid by Operator
arising by virtue of management of the Hotels shall pass through the Agency Account. Nothing
herein contained shall be construed to deprive Operator of the right to maintain separate payroll
accounts or petty cash funds and to make payments therefrom as the same are customary in the hotel
business.

ARTICLE VIII

BOOKS, RECORDS AND STATEMENTS; BUDGETS

8.1. Operator shall keep full and accurate books of account and other records reflecting the
results of the operation of the Hotels in accordance with the “Uniform System of Accounts for the
Lodging Industry” (Tenth Revised Edition 2006, as further revised from time to time) as adopted by
the American Hotel & Lodging Educational Institute (the “Uniform System”) with such exceptions as
may be required by the provisions of this Agreement; provided, however, that Operator may, with
prior notice to Owner, make such modifications to the methodology in the Uniform System as are
consistent with Operator’s standard practice in accounting for its operations under management
contracts generally and applicable to substantially all of the hotels managed by Operator, so long
as such modifications do not affect the determination of Total Revenues, Operating Expenses or
Fixed
Charges under Article X. Except for the books and records which may be kept in Operator’s home

12

 

office or other suitable location pursuant to the adoption of a central billing system or other
centralized service, the books of account and all other records relating to or reflecting the
operation of the Hotels shall be kept at the Hotels and shall be available to Owner and its
representatives at all reasonable times for examination, audit, inspection and transcription. All
of such books and records including, without limitation, books of account, guest records and front
office records, shall be the property of Owner. Upon any termination of this Agreement, physical
possession of all of such books and records shall be transferred to Owner, but shall thereafter be
available to Operator at all reasonable times for inspection, audit, examination and transcription
for a period of five (5) years. Owner shall reimburse Operator for any costs or expenses incurred
by Operator in connection with any assistance requested by Owner to determine the inventory of
books and records for retention, which determination shall be Owner’s responsibility; provided,
however, that Owner shall be specifically required to, and Operator may, retain a copy of all sales
tax returns and supporting documents relating to all tax reporting periods for the Hotels covered
by the Term.

8.2. Operator shall deliver to Owner within ten (10) business days after the end of each month, the
following items for each Hotel and a consolidated report for all Hotels (collectively, the “Monthly
Reports”):

	 	A.	 	A balance sheet as of the last day of such month;
	 
	 	B.	 	A source and use of funds statement for such month;
	 
	 	C.	 	An income and expense statement for such month;
	 
	 	D.	 	Detailed departmental income and expense statements for such month;
	 
	 	E.	 	A report listing updated operating projections and forecasts for the remainder
of the Fiscal Year;
	 
	 	F.	 	A variance report showing expense line-items that exceed the Budget by more
than Five Hundred Dollars ($500); and
	 
	 	G.	 	Such other monthly reports as Owner may reasonably request and to which
Operator agrees in writing.

The Monthly Reports shall be prepared in accordance with the Uniform System and/or other applicable
generally accepted accounting principles as promulgated by the Financial Accounting Standards Board
and approved by the Securities and Exchange Commission (“GAAP”) but in all events consistent with
this Agreement. In addition to the Monthly Reports, the Operator shall allow the Owner reasonable
access at Owner’s request to Operator’s internal electronic reporting software systems to review
information related to the Hotels.

8.3. Year-end unaudited financial statements for each Hotel and a consolidated report for all
Hotels (including a balance sheet, income statement and statement of sources and uses of funds)
shall be prepared and delivered to Owner within twenty-five (25) days following Fiscal Year end.
Owner may request that the financial statements be audited by an independent certified public

13

 

accountant. Such accountant shall address any findings, reports or opinions that concern
Operator’s work under this Agreement to both Operator and Owner. Owner shall pay the cost of such
audit and Operator shall provide reasonable assistance with such accountant in the preparation of
such statements.

8.4. On or before each November 1 during the Term, Operator shall submit to Owner for the next
Fiscal Year the following items for each Hotel (collectively, the “Budgets”):

	 	A.	 	An operating budget (the “Operating Budget”) setting forth in reasonable
line-item detail the projected income from and expenses of all aspects of the
operations of the Hotel;
	 
	 	B.	 	A capital budget (the “Capital Budget”) setting forth in reasonable line-item
detail proposed capital projects and expenditures for the Hotel including but not
limited to FF&E expenditures which, if any, will be expensed in the then current Fiscal
Year in accordance with GAAP;
	 
	 	C.	 	A marketing and strategic sales plan for the Hotel;
	 
	 	D.	 	A cash flow analysis for the Hotel; and
	 
	 	E.	 	Such other reports or projections as Owner may reasonably request and to which
Operator agrees in writing.

Owner and Operator shall start meetings and discussions for the Budgets no later than October 1 of
each Fiscal Year. The Operating Budget shall include: a detailed operating budget showing
estimated Gross Operating Profit, department profits, all Operating Expenses and Fixed Charges; a
marketing plan, marketing and sales strategies, objectives and tactics, a detailed competitive
analysis and everything else typically included in a hotel marketing plan including projections of
average daily room rates and average daily occupancy; a cash flow forecast; projections for and
limits on discounted and complementary rooms and services, estimated corporate reimbursements to
Operator and its affiliates, including without limitation, Centralized Services and Multi-Property
Programs and Operator Rebates. All of the foregoing information shall be set forth in reasonable
detail, including by month and compared by month, quarter and year to the prior year, and, where
appropriate, with the basis for all assumptions expressly set forth. Owner shall review the
proposed Budgets and deliver to Operator its comments and suggested changes within fourteen (14)
days after Owner’s receipt of such Operating Budget and Capital Budget, respectively. Within ten
(10) days after receiving Owner’s objection(s) to the proposed Budgets, Owner and Operator shall
meet at the applicable Hotel (or such other location as they may agree) and endeavor in good faith
to resolve such objections and arrive at approved Budgets. Operator shall submit revised Budgets
within fourteen (14) days of any meeting. Owner shall thereafter have fourteen (14) days to review
the revised Budgets and advise Operator in writing of any objections to thereto. Owner’s notice
shall include a reasonably detailed explanation of each objection. This process shall continue
until there is an approved Operating Budget and Capital Budget. If Owner approves any proposed
Budgets, whether before or after any such exchange of comments and suggestions, then such proposed
Budgets shall become the approved Budgets for the Fiscal Year to which it relates. Operator shall

14

 

not be deemed to have made any guarantee, warranty of representation whatsoever in connection with
the Budgets or with respect to the economic performance or profitability of the Hotels, and Owner
acknowledges that the Budgets and any other projections previously or hereafter prepared by
Operator are intended only to be reasonable estimates and that actual results may vary due to
unanticipated events and circumstances occurring subsequent to the date of such Budgets or
projection and unforeseen circumstances, including but not limited to, cost of labor, material,
services and supplies, casualty, law, economic or market conditions may make adherence to the
Budgets impracticable. If the Owner and Operator cannot agree upon the Budgets, the parties agree
to submit their claims to either PKF Consulting or HVS (or other mutually agreeable hospitality
consultant) to act as a mediator to assist the parties in finalization of the Budgets.

8.5. Upon approval of the Budgets by Owner, Operator shall use diligent and commercially reasonable
efforts to operate the Hotels substantially in accordance with the Budgets. Operator shall not,
without Owner’s prior approval:

	 	A.	 	Incur any expense for any line-item in the Operating Budget which causes the
aggregate expenditures for such line-item to exceed the budgeted amount by the lesser
of (i) 10% or (ii) $5,000 for the applicable fiscal period set forth in the Operating
Budget, provided that, aggregate expenses shall not exceed those provided in the
Operating Budget by more than two percent (2%) and provided further that, Operator may
at Owner’s cost and expense, without Owner’s approval, (x) pay any expenses (the
“Necessary Expenses”) regardless of amount, which are necessary for the continued
operation of the Hotels in accordance with the requirements of any Major Agreement and
the operational standards set forth in this Agreement and which are not within the
reasonable control of Operator (including, but not limited to, those for insurance,
taxes, utility charges and debt service), (y) pay Emergency Expenses regardless of
amount; provided that, Operator shall make good faith attempts to contact and notify
Owner of the need for such Emergency Expenses prior to incurring them and in all events
shall notify Owner within twenty-four (24) hours after Operator becomes aware of such
emergency, and/or (z) pay any third-party operating expenses which are commercially
desirable to be incurred in order to obtain unbudgeted Hotel revenue in the ordinary
course of operating the Hotels in accordance with the then current business plan
provided that such unbudgeted revenue is reasonably certain and sufficient in
Operator’s reasonable professional judgment to offset such expenses (“Opportunity
Expenses”); provided, that such additional expenses shall be proportionally equal to or
less than the projected additional revenue to be realized.
	 
	 	B.	 	Incur any expense for any line-item in the Capital Budget which causes the
aggregate expenditures for such capital line-item or related series of capital
line-items to exceed the budgeted amount by the lesser of (i) 10% or (ii) $5,000,
provided that Operator may, without Owner’s approval, pay any Emergency Expenses which
are capital in nature; provided that, Operator shall make good faith attempts to
contact and notify Owner of the need for such Emergency Expenses prior to incurring
them and in all events shall notify Owner within twenty-four (24) hours after Operator
becomes aware of such emergency.

15

 

8.6. If the Budgets (or any component of the Budgets) with respect to any Fiscal Year are
disapproved by Owner as provided in Section 8.4 then, until approval of the Budgets (or such
components) by Owner, Operator until the resolution of such dispute shall cause the Hotels to be
operated substantially in accordance with most recent approved Budgets, except for, or as modified
by, (a) those components of such Budgets for the applicable Fiscal Year approved by Owner, (b) an
adjustment to the disputed Budgets so as to increase (but not decrease) disputed expense items by
the same percentage as any percentage increase in the Consumer Price Index — All Urban Consumers
(U.S. City Average) (1982-1984 =100), or any successor index thereto appropriately adjusted (the
“CPI”), from the CPI in effect on the first day of the first month of the Fiscal Year applicable to
such last approved Budget to the CPI in effect on the first day of the first month of the Fiscal
Year applicable to the disputed Budgets, (c) Necessary Expenses which shall be paid as required,
(d) Emergency Expenses which shall be paid as required and (e) Opportunity Expenses.

8.7. Notwithstanding any provisions of this Agreement granting Operator the authority to enter into
contracts, perform repairs and improvements, or incur expenditures on behalf of Owner, Operator
shall not be authorized to take any actions or incur any expenditures that would be inconsistent
with the Operating Budgets described in Section 8.4 (but subject to the right of Operator to
deviate from such Budgets to the extent permitted in Sections 8.5 and 8.6).

8.8. Owner recognizes the necessity for regular replacement of FF&E (the “FF&E Replacements”).
Owner in its sole and absolute discretion agrees to expend such amounts for FF&E Replacements as
shall be approved in the Budgets. For the avoidance of doubt, any approval of FF&E Replacements
and capital expenditures in any Budgets, shall only be the starting point and the actual
implementation and timing of such FF&E Replacements and capital expenditures shall be subject to
approval by Owner in its sole and absolute discretion. Owner acknowledges that, in order for the
Operator to be able to operate the Hotels in accordance with the Hotel Standard, it is necessary
that Owner exercise reasonable discretion in determining the amounts necessary for FF&E
Replacements and the actual timing of such FF&E Replacements and capital expenditures. Each
contract to provide FF&E and for capital expenditures must be approved by Owner. For routine FF&E
Replacements, after contract approval, (a) Operator may incur any expenditure for FF&E Replacements
during any Fiscal Year which has been specifically approved in the Budgets without further Owner’s
approval and (b) Owner shall fund payments therefor from the FF&E Reserve Account (as defined in
Section 11.1) (or from other Owner funds) directly to the vendor and handle all processing and
accounting of such payments. For capital projects and non-routine FF&E Replacements (a) if Owner
desires Operator to coordinate such items, such arrangements shall be subject to Owner and Operator
(or its affiliate) entering into a separate written agreement pursuant to Section 3.5(E) hereof and
(b) Owner shall fund payments therefor from the FF&E Reserve Account (or from other Owner funds)
directly to the vendor and handle all processing and accounting of such payments. Notwithstanding
the foregoing, Operator shall be permitted to incur and pay Emergency Expenses as permitted under
Sections 3.5(H), Article 8 and Article 14.

All proceeds from the sale of FF&E no longer needed for the operation of the Hotels shall be
distributed to Owner, subject to the terms of any Major Agreements.

8.9. The Operator will give Owner and its agents access to the accounting working papers related

16

 

to
the Hotels from the Operator’s accountants and the SAS 70 certification or any deficiencies with
respect thereto noted by their auditor. The Operator shall cooperate with and supply such
certifications as are reasonably required from those providing services to or for a public
“reporting company” under the applicable statutes and rules of the Securities and Exchange
Commission, including, without limitation, the Securities Act of 1933, the Securities Exchange Act
of 1934, and the Sarbanes Oxley Act of 2002 and other applicable laws, all as amended or replaced,
and Operator will with its auditors assist the Owner and its affiliates in any SAS 70 compliance or
similar audit. With respect to Operator’s centralized accounting office in Dallas, Texas, such
papers and reports shall be supplied free of charge. Owner shall pay the cost of obtaining such
reports for any other centralized accounting office servicing the Hotels.

ARTICLE IX

MANAGEMENT FEES

AND PAYMENTS TO OPERATOR AND OWNER

9.1. Owner shall pay to Operator, on a monthly basis, for services rendered under this Agreement a
management fee (the “Basic Fee”) equal to three percent (3.0%) of Total Revenues during any Fiscal
Year or portion thereof.

9.2. In addition to the Basic Fee, Owner shall pay to Operator, on a monthly basis, for its
centralized accounting services a fee (the “Accounting Fee”) during the Term and for three (3)
months after the termination of this Agreement equal to One Thousand Five Hundred Dollars ($1,500)
per month for Hotels with ninety (90) or more rooms and One Thousand Three Hundred Seventy-Five
Dollars ($1,375) per month for Hotels with less than ninety (90) rooms. The Accounting Fee shall
be increased (but not decreased) annually on the first day of each succeeding Fiscal Year by the
lesser of (i) the same percentage as any percentage increase in the CPI from the first day of the
prior Fiscal Year through the first day of such succeeding Fiscal Year and (ii) three percent (3%).

9.3. In addition to the Basic Fee and the Accounting Fee, commencing with the Fiscal Year beginning
January 1, 2011 Owner shall pay to Operator an incentive management fee (the “Incentive Fee”) equal
to ten percent (10%) of the amount by which actual aggregate EBITDA (as defined in Article X) for
all the Hotels exceeds Sixty Five Million Dollars ($65,000,000), subject to adjustment for
increases and decreases in the number of Hotels as described in this Section 9.3 (the
“Incentive Fee Threshold”). If a Hotel is removed from this Agreement during a Fiscal
Year, for purposes of the Incentive Fee calculation (i) the Incentive Fee Threshold for such Fiscal
Year and thereafter shall be reduced by an amount equal to the actual trailing 12-month EBITDA of
such Hotel as of the effective date of termination of with respect to such Hotel and (ii) the
actual EBITDA of such Hotel for such Fiscal Year through the date of termination shall be removed
from the aggregate year-end EBITDA for all the Hotels. If a Hotel is added to this Agreement
during a Fiscal Year pursuant to Section 24.1, for purposes of the Incentive Fee calculation (i)
the Incentive Fee Threshold for such Fiscal Year and thereafter shall be increased by an amount
equal to the actual trailing 12-month EBITDA of such Hotel as of the date such Hotel was added to
this Agreement and (ii) the actual EBITDA of such Hotel for such Fiscal Year (including any portion
of such Fiscal Year
occurring prior to the date such Hotel was added to the Management Agreement) shall be added to

17

 

the
aggregate year-end EBITDA for all the Hotels. Notwithstanding the foregoing, the total Incentive
Fee payable to Operator for all the Hotels for any Fiscal Year (or partial Fiscal Year) shall not
exceed one and one half percent (1.5%) of Total Revenues of all the Hotels for such Fiscal Year (or
partial Fiscal Year). In any case in which the effective date of termination falls prior to the
end of a calendar month, the trailing 12-month EBITDA shall be determined as of the end of the
prior month. Examples of the foregoing calculations are attached hereto on Exhibit G.

9.4. In each month during the Term, Operator shall be paid out of the Agency Account the following
payments for the preceding month: (a) the Basic Fee, (b) the Accounting Fee, and (c) any expense
reimbursements due to Operator, as determined from the monthly income and expense statement. Such
payment shall be due and made upon delivery of the income and expense statement for such month and
shall be deducted by Operator out of the Agency Account. The Incentive Fee for any Fiscal Year or
partial Fiscal Year during the Term shall be paid to Operator within thirty (30) days after the end
of the Fiscal Year or partial Fiscal Year at the time of delivery of the income and expense
statement for the Fiscal Year or partial Fiscal Year, shall be payable based upon the computation
of the Incentive Fee on a cumulative basis through the end of the Fiscal Year or partial Fiscal
Year and shall be subject to adjustment as provided in Section 9.6.

9.5. On or before the tenth (10th) day following the last day of each calendar month (or such other
fiscal period as Owner and Operator may determine) of each Fiscal Year during the Term, after (a)
payment of Operating Expenses, Fixed Charges and, to the extent the same are to be paid by Operator
under this Agreement, debt service, ground rent, capital costs and other amounts, (b) payment or
reserving of installments on account of the Incentive Fee, (c) deposits to the FF&E Reserve Account
in accordance with the Budget, (d) any required payment to Operator pursuant to Section 9.6 below
and (e) retention of working capital as required under Section 7.1 above, all remaining funds in
the Agency Account shall be paid to Owner.

9.6. At the end of each Fiscal Year and following receipt by Owner of the annual financial
statements set forth in Section 8.3 (or, if audited, following Owner’s receipt of such audited
financial statements), an adjustment will be made, if necessary, based on the audit so that
Operator shall have received the accurate Basic Fee and Incentive Fee for such Fiscal Year. Within
thirty (30) days of receipt by Owner and Operator of such audit, Operator shall either (a) place in
the Agency Account or remit to Owner, as appropriate, any excess amounts Operator may have received
for such fees during such calendar year or (b) be paid out of the Agency Account or by Owner, as
appropriate, any deficiency in the amounts due Operator for the Basic Fee and the Incentive Fee.
If such annual audit does not reveal that adjustment should be made to the calculation of the fees
payable to Operator, the calculation of the fees shall be deemed final unless Owner objects to such
calculation within one hundred twenty (120) days after the end of the applicable Fiscal Year.

9.7. Owner shall be liable for and shall pay or indemnify Operator for any applicable sales, use,
excise consumption or similar taxes that are payable to any taxing jurisdiction with respect to any
fees, reimbursements or other amounts due to Operator under this Agreement to ensure that the net
amount of such fees, reimbursements or other amounts received by Operator shall be equal to the
full amount that Operator would have otherwise received if no such taxes applied to such amounts.
This Section 9.7 does not apply to federal or state income taxes payable by Operator as a result of
its
gross or net income relating to any fees collected under this Agreement.

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ARTICLE X

CERTAIN DEFINITIONS

10.1. A. The term “Total Revenues” shall mean all income, revenue and proceeds resulting directly
or indirectly from the operation of the Hotels and all of its facilities (net of refunds and
credits to guests and other items deemed “Allowances” under the Uniform System) which are properly
attributable under the Uniform System to the period in question, but in all cases subject to the
terms of this Agreement. Subject to Section 10.1(B), Total Revenues shall include, without
limitation, all amounts derived from:

(i) The rentals of rooms, banquet facilities and conference facilities;

(ii) The sale of food and beverage whether sold in a bar, lounge or restaurant,
delivered to a guest room, sold through an in-room facility or vending machines,
provided in meeting or banquet rooms or sold through catering operations, including
for any events held off-site of Hotel premises;

(iii) Charges for admittance to or the use of any parking facilities, recreational
facilities or any entertainment events at the Hotels;

(iv) Rentals paid under Leases (percentage rent based on the receipts of the tenant,
licensee or concessionaire paid to the Hotel or Owner is included in such rentals,
but the underlying receipts of any tenant, licensee or concessionaire are not);

(v) Charges for other Hotel services or amenities, including, but not limited to,
telephone service, in-room movies, laundry services and spa services; and

(vi) The gross revenue amount on which the proceeds of business interruption or
similar insurance are determined, with respect to any period for which such proceeds
are received.

     B. Total Revenues shall not include:

(i) Sales or use taxes or similar governmental impositions collected by Owner or
Operator;

(ii) Tips, service charges and other gratuities received by Hotel Employees;

(iii) Proceeds of insurance except as set forth in Section 10.1(A);

(iv) Proceeds of the sale or condemnation of the Hotels, any interest therein or any
other asset of Owner not sold in the ordinary course of business, or the proceeds of
any loans or financings;

19

 

(v) Capital contributed by Owner to the Hotels; and

(vi) The receipts of any tenant, licensee or concessionaire under a Lease.

10.2. A. The term “Operating Expenses” shall mean all costs and expenses of maintaining, conducting
and supervising the operation of the Hotels and all of their facilities which are properly
attributable under the Uniform System to the period in question, but in all cases subject to the
terms of this Agreement. Operating Expenses shall include, without limitation:

	 	(i)	 	The cost of all Operating Equipment and Operating Supplies;
	 
	 	(ii)	 	Salaries and wages of Hotel Employees, including costs of
payroll taxes, employee benefits and severance payments. The salaries or wages
of off-site employees or off-site executives of Operator shall not be Operating
Expenses, provided that if it becomes necessary for an off-site employee or
executive of Operator to temporarily perform services at a Hotel of a nature
normally performed by Hotel Employees, his salary (including payroll taxes and
employee benefits) for such period only as well as his traveling expenses shall
be Operating Expenses and reimbursed to Operator;
	 
	 	(iii)	 	The cost of all other goods and services obtained in
connection with the operation of the Hotels including, without limitation, heat
and utilities, laundry, landscaping and exterminating services and office
supplies;
	 
	 	(iv)	 	The cost of all non-capital repairs to and maintenance of the
Hotels;
	 
	 	(v)	 	Insurance premiums (or the allocable portion thereof in the
case of blanket policies) for all insurance maintained under Article XII (other
than insurance against physical damage to the Hotels) and losses incurred on
any self-insured risks (including deductibles);
	 
	 	(vi)	 	All taxes, assessments, permit fees, inspection fees, and water
and sewer charges and other charges (other than income or franchise taxes)
payable by or assessed against Owner with respect to the operation of the
Hotels, excluding Property Taxes (as defined in Section 10.3);
	 
	 	(vii)	 	Legal fees and fees of any independent certified public
accountant for services directly related to the operation of the Hotels and
their facilities;
	 
	 	(viii)	 	All expenses for advertising the Hotel and all expenses of sales promotion
and public relations activities;
	 
	 	(ix)	 	All out-of-pocket expenses and disbursements reasonably
incurred by Operator, pursuant to, in the course of, and directly related to,
the management and operation of the Hotels under this Agreement, which fees
and disbursements shall be paid out of the Agency Account or paid or

20

 

	 	 	 	reimbursed by Owner to Operator upon demand. Without limiting the
generality of the foregoing, such charges may include all reasonable travel,
telephone, telegram, facsimile, air express and other incidental expenses
and any fees or expenditures required for Operator to operate the Hotels in
the given jurisdiction, but, except as otherwise provided in this Agreement,
shall not include any of the regular expenses of the central offices
maintained by Operator, other than offices maintained at the Hotels for the
management of the Hotels. Operator shall maintain and make available to
Owner invoices or other evidence supporting such charges;
	 
	 	(x)	 	The Accounting Fee and any fees or tax levied on those charges
by the local jurisdiction;
	 
	 	(xi)	 	Periodic payments made in the ordinary course of business under
any applicable Franchise Agreement;
	 
	 	(xii)	 	Any other item specified as an Operating Expense in this
Agreement; and
	 
	 	(xiii)	 	Any other cost or charge classified as an Operating Expense or an
Administrative and General Expense under the Uniform System unless specifically
excluded under the provisions of this Agreement.

     B. Operating Expenses shall not include:

	 	(i)	 	Amortization and depreciation;
	 
	 	(ii)	 	The making of or the repayment of any loans or any interest
thereon;
	 
	 	(iii)	 	The costs of any alterations, additions or improvements which
for Federal income tax purposes or under the Uniform System or GAAP must be
capitalized and amortized over the life of such alteration addition or
improvement;
	 
	 	(iv)	 	Payments on account of any equipment lease that is to be
capitalized under GAAP;
	 
	 	(v)	 	Payments under any ground lease, space lease or easement
agreement;
	 
	 	(vi)	 	Payments into or out of the FF&E Reserve Account; or
	 
	 	(vii)	 	Any item defined as a Fixed Charge in Section 10.3.

10.3. “Fixed Charges” shall mean the cost of the following items relating to the Hotels or their
facilities which are properly attributable under the Uniform System to the period in question:

(i) Real estate taxes, assessments, personal property taxes and any other ad valorem taxes

21

 

imposed on or levied in connection with the Hotels, the Installations and the FF&E (collectively, “Property
Taxes”);

	 	(ii)	 	Insurance against physical damage to the Hotels; and
	 
	 	(iii)	 	The Basic Fee.

10.4. “Gross Operating Profit” shall mean the amount, if any, by which Total Revenues exceed
Operating Expenses.

10.5. “EBITDA” for any period shall mean the amount, if any, by which Gross Operating Profit for
such period exceeds Fixed Charges.

10.6. “Fiscal Year” shall mean each twelve (12) consecutive calendar month period or partial twelve
(12) consecutive calendar month period within the Term commencing on January 1st (or, with respect
to the first year of the Term, the Commencement Date) and ending on December 31st (or, with respect
to the last year of the Term, the expiration or earlier termination of the Term) unless Owner and
Operator otherwise agree.

10.7. “Operating Loss” shall mean the amount, if any, by which Operating Expenses exceed Total
Revenues.

ARTICLE XI

FF&E RESERVE

11.1. In addition to the Agency Account established pursuant to Section 7.2, an account shall be
established at the same institution for a reserve for replacements, substitutions and additions to
the FF&E (the “FF&E Reserve Account”). During each Fiscal Year there shall be allocated and paid
on a monthly basis to the FF&E Reserve Account from Total Revenues or other funds provided by Owner
an amount equal to four percent (4%) of Total Revenues for such Fiscal Year or such amount as may
be required under the Major Agreements, whichever is greater.

11.2. All funds in the FF&E Reserve Account, together with any interest earned thereon and the
proceeds of any sale of FF&E (which proceeds shall be deposited in the FF&E Reserve Account) shall
be used solely for purposes of replacing or refurbishing the FF&E in accordance with the applicable
Capital Budget. Any funds remaining in the FF&E Reserve Account at the end of a Fiscal Year shall
be carried forward to the next Fiscal Year. The FF&E Reserve Account may be pledged to any lender
to the Hotels. Notwithstanding anything contained herein to the contrary, no additional FF&E
Reserve Account shall be required to the extent any lender(s) require an FF&E reserve.

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ARTICLE XII

INSURANCE

12.1. The following insurance with respect to each Hotel, to the extent such insurance is
commercially available, shall be obtained by Owner and maintained throughout the Term at Owner’s
sole cost and expense in the amounts as set forth on Exhibit H.

12.2. Operator shall obtain the following insurance with respect to the Hotel Employees and shall
maintain such insurance during the Term of this Agreement at Owner’s sole cost and expense:

	 	A.	 	Worker’s compensation insurance or insurance required by similar employee
benefit acts having a minimum per occurrence limit as Owner may deem advisable against
all claims which may be brought for personal injury or death of Hotel Employees, but in
any event not less than amounts prescribed by applicable state law;
	 
	 	B.	 	Fidelity insurance, in such amounts and with such deductibles as Owner may
require, covering Hotel Employees (including executive employees of Operator) or in job
classifications normally insured in other hotels it manages in the United States or
otherwise required by law; and
	 
	 	C.	 	Employment Practices Liability Insurance (“Employment Insurance”) with
reasonable limits and deductibles.

12.3. All insurance policies obtained by Owner in accordance with Section 12.1 shall name Owner as
the insured party and shall name as additional insured parties (a) Operator, its subsidiaries,
affiliates, directors, officers and employees and (b) such other parties as may be required by the
terms of the Major Agreements as appropriate. Owner’s coverage shall be primary and
non-contributory to any insurance obtained by the Operator.

12.4. All insurance policies shall be in such form and with such companies having a Best’s Rating
of A+ or better as shall be reasonably satisfactory to Owner and/or Operator and provided Owner has
given Operator detailed written notice of such requirements, shall comply with the requirements of
any Major Agreement. Insurance may be provided under blanket or master policies covering one or
more other hotels owned by Owner. The portion of the premium for any blanket or master policy
which is allocated to each Hotel as an Operating Expense or Fixed Charge shall be determined in an
equitable manner by Owner and reasonably approved by Operator and paid out of the Agency Account
or, if the funds therein are insufficient, by Owner upon demand therefor by Operator. Such amount
shall be determined by a suitable and customary formula applying the specific hotel exposures
against appropriate rates to determine the premium allocation for each Hotel.

12.5. All insurance policies shall specify that they cannot be canceled or modified on less than
thirty (30) days prior written notice to both Owner and Operator and any additional insureds (or
such longer period as may be required under a Major Agreement, provided that Operator has been
advised in writing of such period) and shall provide that claims shall be paid notwithstanding any
act or negligence of Owner, or Operator unilaterally or on behalf of Owner, including without
limitation

23

 

their respective agents or employees.

12.6. All insurance policies shall provide, to the extent customarily obtainable from the insurance
company providing such insurance, that the insurance company will have no right of subrogation
against Owner, Operator any party to a Major Agreement or any of their respective agents,
employees, partners, members, officers, directors or beneficial owners.

12.7. Owner and Operator hereby release one another from any and all liability, to the extent of
the waivers of subrogation obtained under Section 12.6, associated with any damage, loss or
liability with respect to which property insurance coverage is provided pursuant to this Article or
otherwise.

12.8. The proceeds of any insurance claim (other than proceeds payable to third parties under the
terms of the applicable policy) shall be deposited into the Agency Account to the extent of Owner’s
interest therein unless otherwise required by the terms of a Major Agreement.

12.9. Operator shall have the right to pay for, or reimburse itself for, insurance required under
this Article XII out of the Agency Account. Notwithstanding anything to the contrary set forth in
this Agreement, Operator shall have no obligation to obtain or maintain any insurance set forth in
this Article if funds from Total Revenues or funds otherwise provided by Owner are not made
available to Operator to purchase the same.

12.10. Subject to the provisions of the Budgets and with the prior written consent of the Owner,
Operator may act, directly or indirectly, in a brokerage capacity with respect to the insurance
required under this Article or as a direct insurer or reinsurer with respect to the same.

ARTICLE XIII

PROPERTY TAXES

13.1. Provided that funds from Total Revenues or funds otherwise provided by Owner are available,
and provided that Operator has received written notice thereof sufficiently in advance to make such
payments, Operator shall pay all Property Taxes on behalf of Owner not less than ten (10) days
prior to the applicable due dates. Upon Owner’s request, Operator shall promptly furnish Owner
with proof of payment of Property Taxes.

13.2. Owner may contest the validity or amount of any Property Tax (a “Tax Contest”), and Operator
agrees to cooperate with Owner in a Tax Contest and execute any documents or pleadings required for
such purpose, provided that the facts set forth in such documents or pleadings are accurate and
that such cooperation or execution does not impose any liability on Operator. All costs and
expenses incurred by Owner and Operator in connection with a Tax Contest shall be Fixed Expenses.

24

 

ARTICLE XIV

REPAIRS AND MAINTENANCE

14.1. Operator shall perform ordinary repairs and maintenance at the Hotels, subject to the Budgets
and Owner providing sufficient funding, to keep the Hotels in compliance with the Hotel Standard.
Ordinary repairs shall include only those which are normally expenses under GAAP. The cost of
ordinary repairs shall be paid from Total Revenues and shall be treated as an Operating Expense.

14.2. Operator shall, from time-to-time, make or cause to be made replacements and renewals to the
FF&E of the Hotels and shall make Routine Capital Expenditures (as defined below) in accordance
with the Budgets and from the FF&E Reserve Account. Costs of the foregoing shall be expensed in
the then-current Fiscal Year in accordance with GAAP. As used herein, Routine Capital Expenditures
shall mean expenses which are classified as capital expenditures under GAAP and shall consist of
non-material expenditures; by way of example, repainting interiors of the Hotels, resurfacing
parking lots and other miscellaneous expenditures.

14.3. Operator shall prepare an annual estimate of non-Routine Capital Expenditures to the Hotels,
including without limitation the structure, the exterior façade, the mechanical, electrical,
heating, ventilating, air conditioning, or plumbing systems. Operator shall submit the estimate to
the Owner for its approval at the time of the annual budgeting process as part of the Capital
Budget.

14.4. After notice to Owner, if practicable, Operator may take appropriate remedial action without
Owner consent in the event of: (i) an emergency threatening the health and safety of a Hotel or
its guests or employees; or (ii) if the expenditures are necessary to avoid Operator’s exposure to
any civil or criminal liability. Operator shall make good faith attempts to contact and notify
Owner of prior to undertaking such remedial action and in all events shall notify Owner within
twenty-four (24) hours after Operator takes such action. Operator shall have the right to
participate in any decisions that affect any conditions as described in this Section 14.4.

14.5. If Owner directly performs or contracts for repair, maintenance, refurbishing, construction
or renovations at a Hotel, Owner must coordinate, and require its contractors and subcontractors to
coordinate, with Operator including, but not limited to, causing any Owner employees, contractors
or subcontractors to comply with safety and security rules of the Hotel and communicate on a
regular basis the activities being performed at the Hotel to assure the health, safety and
efficient operation of the Hotel and its guests and employees. Owner must comply with all laws,
obtain all necessary permits and shall provide Operator copies of any permits prior to commencement
of any such activities.

ARTICLE XV

COVENANTS AND REPRESENTATIONS

15.1. Owner represents, warrants and covenants that it holds good and marketable leasehold title to
the Hotels and that Land Holder holds good and marketable fee or leasehold title to the Hotels,
except for easements or encumbrances that do not adversely affect the operation of the Hotels,

25

 

mortgages or liens for taxes, assessment levies or other public charges not yet due or payable.

15.2. Owner covenants and represents that, at a minimum, it has conducted Environmental Phase I
surveys at the time Owner acquired or leased the Hotels and that there are no Hazardous Materials
on any portion of the Hotels or their surrounding sites; that no Hazardous Materials have been
released or discharged on the Hotels or their surrounding sites, in either case in violation of
applicable law. Owner agrees that it has provided Operator with all information and reports
regarding the environmental condition of the Hotels and any hazards that are contained in or around
the Hotels, including, but not limited to, any Environmental Phase I or Phase II reports that may
have been performed. Owner shall update Operator immediately upon any change of this information
or status. In the event of the discovery of any Hazardous Materials on any portion of the Hotels
or their surrounding sites, Owner shall promptly remove such Hazardous Materials that are at the
Hotels in violation of applicable law and shall remedy the problem in accordance with all laws,
rules and regulations of any governmental authority. Owner shall indemnify, defend and hold
Operator harmless from and against all losses, expenses and liabilities (including but not limited
to any professional fees incurred by Operator to assess the situation or obtain advice on how to
proceed) in the event of a violation of this section or Owner’s failure to act promptly in
accordance with this Section, except to the extent Operator is required to indemnify Owner under
Section 23.1 hereof. Hazardous Materials shall mean any substance or material identified by any
law, rule or regulation as being hazardous to the health and safety or guests or employees and
requiring the monitoring, clean up or removal of such substance. Hazardous Materials shall
include, but not be limited to, asbestos, lead-based paint and PCB’s.

15.3. Owner represents, warrants and covenants that neither it, nor any of its affiliates (or any
of their respective principals, partners or funding sources), is nor will become (i) a person
designated by the U.S. Department of Treasury’s Office of Foreign Asset Control as a “specially
designated national or blocked person” or similar status, (ii) a person described in Section 1 of
U.S. Executive Order 13224 issued on September 23, 2001; (iii) a person otherwise identified by a
government or legal authority as a person with whom Owner or Operator is prohibited from
transacting business; (iv) directly or indirectly owned or controlled by the government of any
country that is subject to an embargo by the United States government; or (v) a person acting on
behalf of a government of any country that is subject to an embargo by the United States
government. Owner agrees that it will notify Operator in writing immediately upon the occurrence
of any event which would render the foregoing representations and warranties contained in this
Section 15.3 incorrect.

15.4. Owner represents, warrants and covenants: (A) that it is familiar with the United States
Foreign Corrupt Practices Act, 15 U.S.C. §§ 778dd-2 (the “FCPA”), a copy of which is available at
http://www.usdoj.gov/criminal/fraud/fcpa.html, and the purposes of the FCPA, and in
particular, the FCPA’s prohibition of the payment or the gift of any item of value, either directly
or indirectly, by a company organized under the laws of the United States of America, or any of its
states, to an official of a foreign government for the purpose of influencing an act or decision in
such person’s official capacity, or inducing such person to use influence with the foreign
government to assist a company in obtaining or retaining business for, with, or in that foreign
country or directing business to any person or company or obtaining an improper advantage, and (B)
that it has not taken, and during the Term of this Agreement it will not take, any action that
would constitute a violation of the FCPA or any similar law.

26

 

15.5. Owner represents, warrants and covenants that it is in full compliance with all Major
Agreements, that Owner has not received any notice of breach of any of such Major Agreements and
that Owner will maintain full compliance with all such Major Agreements during the Term of this
Agreement. Owner agrees to promptly provide to Operator copies of any notice of default or breach
received under any Major Agreement. Notwithstanding the foregoing, the Franchise Agreement
defaults set forth on Schedule 15.5 shall not be deemed Events of Default under this
Agreement unless Owner fails to cure such defaults within the applicable cure periods required by
the Hotel’s franchisor.

15.6. Owner represents, warrants and covenants as follows:

	 	A.	 	Owner is duly organized, validly existing and qualified to conduct its
business, and has full power and authority to enter into and fully perform and comply
with the terms of this Agreement.
	 
	 	B.	 	Neither the execution and delivery of this Agreement nor its performance by
Owner will conflict with or result in a breach of any contract, agreement, law, rule or
regulation to which it is bound.
	 
	 	C.	 	This Agreement is valid and enforceable against Owner in accordance with its
terms and each instrument to be executed by Owner pursuant to this Agreement or in
connection herewith will, when executed and delivered, be valid and enforceable against
Owner in accordance with its terms, subject to the effect of (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and (ii) the application of general principles of
equity (regardless of whether enforcement is considered in proceedings at law or in
equity).
	 
	 	D.	 	There is no legal action, suit, arbitration or other legal, administrative or
other governmental proceeding (whether federal, state, local or foreign) pending or, to
Owner’s knowledge, threatened against Owner or any equity holder of Owner or of Owner’s
affiliates or their equity holders or any of their respective properties, assets,
rights or business before any court or governmental department, commission, board,
bureau, agency or instrumentality or any arbitrator, that may have a material adverse
effect on Owner or that draws into question the validity of this Agreement or the
ability of Owner to perform its obligations hereunder.

15.7. Operator represents, warrants and covenants as follows:

	 	A.	 	Operator is duly organized, validly existing and qualified to conduct its
business, and has full power and authority to enter into and fully perform and comply
with the terms of this Agreement.
	 
	 	B.	 	Neither the execution and delivery of this Agreement nor its performance by
Operator will conflict with or result in a breach of any contract, agreement, law, rule

27

 

	 		 	or regulation to which it is bound.
	 
	 	C.	 	This Agreement is valid and enforceable against Operator in accordance with its
terms and each instrument to be executed by Operator pursuant to this Agreement or in
connection herewith will, when executed and delivered, be valid and enforceable against
Operator in accordance with its terms, subject to the effect of (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and (ii) the application of general principles of
equity (regardless of whether enforcement is considered in proceedings at law or in
equity).
	 
	 	D.	 	There is no legal action, suit, arbitration or other legal, administrative or
other governmental proceeding (whether federal, state, local or foreign) pending or, to
Operator’s knowledge, threatened against Operator or any member of Operator or of
Operator’s affiliates or their members or any of their respective properties, assets,
rights or business before any court or governmental department, commission, board,
bureau, agency or instrumentality or any arbitrator, that may have a material adverse
effect on Operator or that draws into question the validity of this Agreement or the
ability of Operator to perform its obligations hereunder.
	 
	 	E.	 	Neither it, nor any of its affiliates (or any of their respective principals,
partners or funding sources), is nor will become (i) a person designated by the U.S.
Department of Treasury’s Office of Foreign Asset Control as a “specially designated
national or blocked person” or similar status, (ii) a person described in Section 1
of U.S. Executive Order 13224 issued on September 23, 2001; (iii) a person otherwise
identified by a government or legal authority as a person with whom Owner or
Operator is prohibited from transacting business; (iv) directly or indirectly owned
or controlled by the government of any country that is subject to an embargo by the
United States government; or (v) a person acting on behalf of a government of any
country that is subject to an embargo by the United States government. Operator
agrees that it will notify Owner in writing immediately upon the occurrence of any
event which would render the foregoing representations and warranties contained in
this Section 15.7(E) incorrect.
	 
	 	F.	 	That (1) it is familiar with the United States Foreign Corrupt Practices Act,
15 U.S.C. §§ 778dd-2 (the “FCPA”), a copy of which is available at
http://www.usdoj.gov/criminal/fraud/fcpa.html, and the purposes of the FCPA,
and in particular, the FCPA’s prohibition of the payment or the gift of any item of
value, either directly or indirectly, by a company organized under the laws of the
United States of America, or any of its states, to an official of a foreign government
for the purpose of influencing an act or decision in such person’s official capacity,
or inducing such person to use influence with the foreign government to assist a
company in obtaining or retaining business for, with, or in that foreign country or
directing business to any person or company or obtaining an improper advantage, and (2)
it has not taken, and during the Term of this Agreement it will not take, any action
that would constitute a violation of the FCPA or any similar law.

28

 

15.8. Operator hereby agrees, for the benefit of Owner, its successors and assigns, that Operator
will not own, operate, lease or otherwise have an interest in, directly or indirectly, in any hotel
in the Competitive Set of a Hotel during the Operating Term except for those Hotels shown on the
attached Exhibit I unless expressly permitted by Owner. If Operator elects to do so
without Owner’s consent, Owner’s sole remedy shall be termination of this Agreement solely with
respect to the Hotel(s) for which the other hotel is in their Competitive Set, without payment of
any termination fee, upon at least thirty (30) days prior written notice to Operator.

ARTICLE XVI

DAMAGE OR DESTRUCTION; CONDEMNATION

16.1. If a Hotel is damaged by fire or other casualty, Operator shall promptly notify Owner. This
Agreement shall remain in full force and effect subsequent to such casualty; provided that:

     A. either party may terminate this Agreement upon thirty days prior written notice to the
other party if (i) Owner shall elect to close such Hotel as a result of such casualty (except on a
temporary basis for repairs or restoration) or (ii) Owner shall determine in good faith not to
proceed with the restoration of such Hotel; and

     B. Owner or Operator may terminate this Agreement upon thirty days prior written notice to the
other party if twenty percent (20%) or more of the rooms in such Hotel are unavailable for rental
for a period of sixty (60) days or more as a result of such casualty; provided that, if Owner
terminates this Agreement pursuant to this Section 16.1(B), such termination shall be deemed an
At-Will Termination (as defined in Section 19.3).

16.2. If all or any portion of a Hotel becomes the subject of a condemnation proceeding or if
Operator learns that any such proceeding may be commenced, Operator shall promptly notify Owner
upon Operator’s receipt of written notice thereof. Either party may terminate this Agreement with
respect to a Hotel on thirty (30) days written notice to the other party if (a) all or
substantially all of such Hotel is taken through condemnation or (b) less than all or substantially
all of such Hotel is taken, but, in the reasonable judgment of the party giving the termination
notice, such Hotel cannot, after giving effect to any restoration as might be reasonably
accomplished through available funds from the condemnation award, be profitably operated as a hotel
similar to that of the Hotel immediately prior to such condemnation.

16.3. Any condemnation award or similar compensation shall be the property of Owner, provided that
Operator shall have the right to bring a separate proceeding against the condemning authority for
any damages and expenses specifically incurred by Operator as a result of such condemnation.

ARTICLE XVII

REIT PROVISIONS

17.1. From the Commencement Date through the end of the Term:

29

 

     (a) no wagering activities shall be conducted at or in connection with any Hotel by any person
who is engaged in the business of accepting wagers and who is legally authorized to engage in such
business at or in connection with the applicable Hotel; and

     (b) Operator shall qualify as an “eligible independent contractor” as defined in Section
856(d)(9) of the Internal Revenue Code of 1986, as amended (the “Code”), with respect to Lessee and
the REIT. To that end, Operator shall satisfy the following requirements:

     (i) Operator shall not own, directly or indirectly (within the meaning of Section
856(d)(5) of the Code), more than thirty-five percent (35%) of the outstanding stock of the
REIT;

     (ii) No more than thirty-five percent (35%) of the ownership interest in Operator’s
assets or net profits shall be owned, directly or indirectly, by one or more persons owning
thirty-five percent (35%) or more of the outstanding stock of the REIT; and

     (iii) As of the Commencement Date and as of the commencement of any Renewal Term (each,
a “Renewal Commencement Date”), Operator shall be (or shall, within the definition of
Section 856(d)(9)(F), be related to a person (“Related Person”) that is) actively engaged in
the trade or business of operating “qualified lodging facilities” (defined below) for a
person who is not a “related person” within the meaning of Section 856(d)(9)(F) of the Code
with respect to the REIT (“Unrelated Persons”). In order to meet this requirement, Operator
shall, as of the Commencement Date and each Renewal Commencement Date, reasonably project
that it (or any Related Person) will derive at least 10% of both its revenue and profit from
operating “qualified lodging facilities” (defined below) that Operator or a Related Person
operates as of the Commencement Date and each Renewal Commencement Date, as applicable, for
Unrelated Persons for (i) the one-year period following the Commencement Date or the Renewal
Commencement Date, as applicable, and (ii) the Initial Term or the Renewal Term, as
applicable. Upon request from the REIT, Operator shall provide documentation reasonably
necessary to verify the representation in the preceding sentence. A “qualified lodging
facility,” as defined in Section 856(d)(9)(D) of the Code, means a “lodging facility”
(defined below), unless wagering activities are conducted at or in connection with such
facility by any person who is engaged in the business of accepting wagers and who is legally
authorized to engage in such business at or in connection with such facility. A “lodging
facility” is a hotel, motel or other establishment more than one-half of the dwelling units
in which are used on a transient basis, and includes customary amenities and facilities
operated as part of, or associated with, the lodging facility so long as such amenities and
facilities are customary for other properties of a comparable size and class owned by other
owners unrelated to the REIT.

ARTICLE XVIII

EVENTS OF DEFAULT

18.1. The following shall constitute events of default for which the non-defaulting party may

30

 

terminate this Agreement with respect to any individual Hotel or Hotels as described below:

	 	A.	 	If either party shall be in default in the payment of any amount required to be
paid under the terms of this Agreement, and such default continues for a period of ten
(10) days after written notice from the non-defaulting party;
	 
	 	B.	 	If either party shall be in material default of its obligations under this
Agreement that is reasonably likely to result in a threat to the health and safety of a
Hotel’s employees or guests, then this Agreement may be terminated upon written notice
from the non-defaulting party if such default is not immediately cured;
	 
	 	C.	 	If either party shall be in material default in the performance of its other
obligations under this Agreement, and such default continues for a period of thirty
(30) days after written notice from the non-defaulting party, provided that if such
default cannot by its nature reasonably be cured within such thirty (30) day period, an
event of default shall not occur if and so long as the defaulting party promptly
commences and diligently pursues the curing of such default;
	 
	 	D.	 	If either party shall (i) make an assignment for the benefit of creditors, (ii)
institute any proceeding seeking relief under any federal or state bankruptcy or
insolvency laws, (iii) institute any proceeding seeking the appointment of a receiver,
trustee, custodian or similar official for its business or assets or (iv) consent to
the institution against it of any such proceeding by any other person or entity (an
“Involuntary Proceeding”);
	 
	 	E.	 	If an Involuntary Proceeding shall be commenced against either party and shall
remain undismissed for a period of sixty (60) days;
	 
	 	F.	 	If Owner violates Sections 15.3 or 15.4 hereof, in which case Operator may
terminate this Agreement immediately; or
	 
	 	G.	 	If Operator violates any provision of Article XVII hereof, in which case Owner
may terminate this Agreement immediately.

18.2. Unless otherwise stated in Section 18.1 hereof, if any event of default shall occur, the
non-defaulting party may terminate this Agreement with respect to the applicable Hotel(s) on five
(5) days prior notice to the defaulting party.

18.3. The right of termination set forth in Section 18.2 shall not be in substitution for, but
shall be in addition to, any and all rights and remedies for breach of contract available in law or
at equity.

18.4. Neither party shall be deemed to be in default of its obligations under this Agreement if and
to the extent that such party is unable to perform such obligation as a result of fire or other
casualty, act of God, strike or other labor unrest, unavailability of materials, war, terrorist
activity, riot or other civil commotion or any other cause beyond the control of such party (a
“Force Majeure Event”) (which shall not include the inability of such party to meet its financial
obligations).

31

 

18.5. Each of the parties hereto irrevocably waives any right such party may have against the other
party hereto at law, in equity or otherwise to any consequential damages, punitive damages or
exemplary damages.

18.6. Notwithstanding anything to the contrary contained in this Agreement, if, within thirty (30)
days after receiving Operator’s written request, Owner fails to approve any changes, repairs,
alterations, improvements, renewals or replacements to a Hotel which Operator determines in its
reasonable judgment are necessary to (i) protect such Hotel, Owner and/or Operator from innkeeper
liability exposure, (ii) ensure material compliance with any applicable code requirements
pertaining to life safety systems requirements or (iii) ensure material compliance with any
applicable state, local or federal employment law, including without limitation the Americans with
Disabilities Act, then Operator may terminate this Agreement with respect to such Hotel upon thirty
(30) days’ written notice to Owner delivered at any time after the expiration of Owner’s thirty
(30) day approval period. Owner shall pay to Operator the At-Will Termination Fee (as defined in
Section 19.3) upon any termination of this Agreement pursuant to this Section, which At-Will
Termination Fee shall be due and payable upon the effective date of the termination of this
Agreement with respect to such Hotel.

ARTICLE XIX

TERMINATION OF AGREEMENT

19.1. Upon termination of this Agreement with respect to any individual Hotel, the rights and
obligations of the parties will cease with respect to such Hotel except as to fees and
reimbursements due the Operator and other claims of liabilities of either party which accrued or
arose before the effective date of termination, but shall remain in full force and effect with
respect to all other Hotels. Upon termination of this Agreement for any reason during the Term of
this Agreement, Operator and Owner agree to sign any documents reasonably necessary to effect such
termination or change in management for the applicable Hotel(s) and Owner shall pay to Operator all
amounts due under this Agreement with respect to such Hotel(s) through the effective date of
termination.

19.2. In addition to the other termination rights provided in this Agreement:

     A. Beginning with Fiscal Year 2011, if a Hotel fails to achieve as of the end of any Fiscal
Year (i) actual Gross Operating Profit of at least eighty-seven and one-half percent (87.5%) of the
budgeted Gross Operating Profit for such Hotel for such Fiscal Year, AND (ii) eighty-seven and
one-half percent (87.5%) of such Hotel’s RevPAR Benchmark (collectively, a “Performance Failure”),
subject to clauses (B) and (C) below, Owner may terminate this Agreement with respect to such Hotel
upon sixty (60) days prior written notice to Operator with no termination fee or similar
compensation. The effectiveness of any such notice of termination, however, shall be stayed until
completion of the applicable cure periods set forth in clause (B) below.

     B. Notwithstanding the foregoing:

     (i) If a Performance Failure occurs with respect to a Fiscal Year, but the Hotel

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achieves as of the end of the immediately following Fiscal Year (1) actual Gross Operating Profit
of at least eighty-seven and one-half percent (87.5%) of the budgeted Gross Operating Profit for
such Hotel for such Fiscal Year, OR (2) eighty-seven and one-half percent (87.5%) of such Hotel’s
RevPAR Benchmark, then the Performance Failure shall be deemed cured and Owner shall have no right
to terminate for such Performance Failure (and any notice of termination with respect thereto shall
be deemed null and void).

     (ii) If Owner notifies Operator that Owner elects to terminate this Agreement with respect to
a Hotel for a Performance Failure, Operator shall have a right exercisable no more than two (2)
times per Hotel, in its sole discretion, to cure the Performance Failure by, within thirty (30)
days of receipt of Owner’s termination notice, making a payment to Owner equal to the amount by
which eighty-seven and one-half percent (87.5%) of the budgeted Gross Operating Profit for such
Hotel exceeds actual Gross Operating Profit for such Hotel for such Fiscal Year. In such case,
Owner’s notice of termination shall be deemed null and void. Upon the occurrence of a third
Performance Failure (but subject to clause (B)(i) above), Owner shall have the right to terminate
this Agreement with respect to such Hotel without the payment of a termination fee upon sixty (60)
days prior written notice to Operator.

For purposes hereof:

     “RevPAR Benchmark” means the Hotel’s RevPAR Index for the trailing 12-months ending on
the Commencement Date.

     “RevPAR Index” means the RevPAR Index included in the STR Report produced for the Hotel
by Smith Travel Research or, if Smith Travel Research no longer is in existence at any time
during the Term, the successor of Smith Travel Research or such other industry resource that
is equally as reputable as Smith Travel Research will be substituted, in order to obtain
substantially the same result as would be obtained if Smith Travel Research has not ceased
to be in existence.

     “Competitive Set” for each Hotel means the hotels listed on Exhibit J attached
hereto, or such other hotels as may be reasonably agreed upon by Owner and Operator from
time to time during the Term. The Owner and Operator shall discuss at least once a year,
and upon any major change to an existing hotel in the Competitive Set, the composition of
the Competitive Set. Any changes to a Hotel’s Competitive Set must be mutually agreed upon
by Owner and Operator.

     C. In the event of the occurrence of any Force Majeure Event (as defined below), Owner shall
not be entitled to exercise its termination right under this Section 19.2 with respect to any
period of time in which such Force Majeure Event occurred or is continuing.

19.3. In addition to the other termination rights provided in this Agreement and notwithstanding
anything contained therein to the contrary:

     A. (i) Owner may terminate this Agreement with respect to an individual Hotel upon the sale of
such Hotel to a bona fide unaffiliated third party, so long as (a) Owner provides to

33

 

Operator at least sixty (60) days prior written notice of termination, (b) all amounts due Operator
under this Agreement with respect to such Hotel have been paid in full, and(c) subject to clause
(ii) below, Owner pays Operator the Sale Termination Fee (as defined below) on the effective date
of termination.

          For the purposes of this Section 19.3(A), the “Sale Termination Fee” shall be equal to
an amount which would provide Operator with a thirty percent (30%) Internal Rate of Return (as
defined below) with respect to the following cash flows for such Hotel: (x) the Hotel Allocated
Value (as defined below) as the initial outflow and (y) as inflows, as and when paid to Operator:

(1) fifty percent (50%) of the Basic Fees and Accounting actually collected by
Operator for such terminated Hotel for each Fiscal Year from the date the Hotel was
added to this Agreement through the date of termination of this Agreement with
respect to such Hotel; plus

(2) if for any given Fiscal Year, an Incentive Fee was earned and collected by
Operator under Section 9.3 and the EBITDA Percentage (as defined below) of the
terminated Hotel is above the mean of all the Hotels’ EBITDA Percentage for such
Fiscal Year, fifty percent (50%) of the Incentive Fee allocable to the terminated
Hotel and actually collected by Operator for each Fiscal Year from the date the
Hotel was added to this Agreement through the date of termination of this Agreement
with respect to such Hotel.

The Incentive Fee allocable to the terminated Hotel for each Fiscal Year, if applicable, shall be
calculated by multiplying the actual Incentive Fee, if any, for each Fiscal Year by a fraction, the
numerator of which is the trailing 12-month EBITDA of the terminated Hotel, and the denominator of
which is the aggregate 12-month EBITDA for all Hotels that were covered by this Agreement in
determining the Incentive Fee for the Fiscal Year in question.

     (ii) If Owner and Operator add an Additional Hotel (as defined in Section 24.1) to this
Agreement:

     (a) within nine (9) months following the termination of this Agreement pursuant
to Section 19.3(A)(i) with respect to a Hotel (the “Replacement Window Period”), and

     (b) with an expiration date with respect to such Additional Hotel that is equal
to the original expiration date plus the number of days following commencement of
the Replacement Window Period required by Owner to add the Additional Hotel to this
Agreement,

then the payment of the Sale Termination Fee with respect to such terminated Hotel shall (x) if not
yet paid to Operator, be offset or (y) if paid to Operator, be credited against future Sale
Termination Fees due and payable from Owner. The amount of the offset or credit shall be
determined by multiplying the Sale Termination Fee by a fraction, the numerator of which is the
aggregate projected fifty percent (50%) of Basic Fees and Accounting Fees allocable to the
Additional Hotel

34

 

for the next 12-months and the denominator of which is the aggregate fifty percent (50%) of
projected aggregate Basic Fees and Accounting Fees allocable to the terminated Hotel, for the next
12-months (determined by such terminated Hotel’s Budget). Further, if Owner and Operator add an
Additional Hotel to this Agreement during a time period outside of a Replacement Window Period,
Owner shall receive a credit with respect to future terminations of Hotels subject to the this
Agreement (i.e., those terminated following the addition of such Additional Hotel to this
Agreement) equal for each such Additional Hotel to the present value of the aggregate fifty percent
(50%) of projected Basic Fees and Accounting Fees allocable to the Additional Hotel, discounted at
a rate of thirty percent (30%). Projected Basic Fees for an Additional Hotel shall be calculated
by multiplying (i) the mean of the actual Total Revenues of such Additional Hotel for the prior
three (3) Fiscal Years by (ii) the Basic Fee set forth in Section 9.1 hereof, and increasing such
product by the CPI. Projected Accounting Fees for an Additional Hotel shall be the Accounting Fee
set forth in Section 9.2 hereof multiplied by twelve (12).

     B. In addition, and notwithstanding anything contained in this Agreement to the contrary,
Owner may terminate this Agreement with respect to up to five (5) Hotels during any Fiscal Year,
with or without cause, so long as (i) Owner provides to Operator at least sixty (60) days prior
written notice of termination, (ii) all amounts due Operator under this Agreement with respect to
such Hotels have been paid in full, and (iii) Owner pays Operator the At Will Termination Fee (as
defined below) on the effective date(s) of termination. For the purposes of this Section 19.3(B),
the “At Will Termination Fee” shall be equal to the Sale Termination Fee; provided, however, solely
for the first (5) terminations with respect a Hotel, if the effective date of such termination
occurs on or before the end of the eighteenth (18th) month following the Commencement Date, the
Internal Rate of Return (as defined below) in such calculation shall be twenty percent (20%)
instead of thirty percent (30%).

     C. For the purposes of this Agreement:

     (i) “EBITDA Percentage” for any period shall mean EBITDA for such period divided by
Total Revenues for such period.

     (ii) “Hotel Allocated Value” shall mean the dollar amount set forth on Exhibit
K with respect to each Hotel.

     (iii) “Internal Rate of Return” shall mean the internal rate of return calculated for a
stream of payments using the XIRR function on Microsoft Excel.

19.4. Operator and Owner agree that upon termination, there may be certain adjustments to the final
accounting for which information may not be available at the time of the final accounting and the
parties agree to readjust such amounts and make the required cash adjustments when such information
becomes available; provided, however, but subject to the provisions of Article XXIII hereof, all
accounts shall be deemed final ninety (90) days after termination of the Agreement.

19.5. Operator shall release to Owner any of Owner’s funds and accounts controlled by Operator,
except as stated herein.

35

 

19.6. With the exception of employment records, Operator shall provide or make available to Owner
all books and records with respect to a Hotel upon termination of this Agreement with respect to
such Hotel.

19.7. To the extent permitted by applicable laws, Operator shall cooperate with Owner to assign any
permits or licenses to Owner or the subsequent manager or owner; provided that (i) Owner give
Operator sufficient time to effect such transfers; (ii) Owner shall cooperate and require that the
new manager and/or owner to cooperate with Operator with respect to such transfers; (iii) Owner
shall pay or reimburse any costs or expenses, including reasonable attorney fees, incurred by
Operator in connection with these efforts.

19.8. All software and hardware, used at the Hotel which is owned, licensed or proprietary to
Operator or its affiliated companies shall remain the exclusive property of Operator. Operator
shall have the right to remove such software and hardware, and Owner access to any proprietary
systems without compensation to Owner. Owner assumes all liability and shall indemnify Operator if
Owner uses illegally licensed software.

19.9. Intentionally Deleted.

19.10. Owner shall cause the succeeding employer to hire a sufficient number of employees at the
Hotel to avoid the occurrence of a “closing” under the WARN Act and shall otherwise comply with its
obligations under Section 4.3 hereof, or shall provide Operator with sufficient notice of
termination to allow Operator to comply with the WARN Act and avoid any liability thereunder.

ARTICLE XX

ASSIGNMENT

20.1. Operator shall not assign or pledge this Agreement without the prior written consent of
Owner; provided that, Operator may, without the consent of Owner, assign this Agreement to (a) any
entity controlling, controlled by or under common control with Operator (control being deemed to
mean the ownership of fifty percent (50%) or more of the stock or other beneficial interest in such
entity and/or the power to direct the day-to-day operations of such entity); (b) any entity which
is the successor by merger, consolidation or reorganization of Operator or Operator’s general
partner, managing member or parent corporation or (c) the purchaser of all or substantially all of
the hotel management business of Operator or Operator’s general partner, managing member or parent
corporation, unless any such assignment results in a Change in Control of Operator or Interstate
Hotels & Resorts, Inc. (“IHR”). For purposes of this Agreement, a “Change in Control” of Operator
or IHR shall mean a change of fifty percent (50%) or more of the voting control of Operator or IHR,
in a single transaction or series of transactions constituting a single transaction (unless arising
from the issuance in an underwritten public offering by IHR of voting stock or instruments
convertible into voting stock) that, within six (6) months following the closing of such
transaction, results in (i) a change in a majority of the members of the Board of Directors of IHR
and (ii) at the direction of such newly constituted Board of Directors, a substantial change in the
identity of the operating team responsible for the portfolio of Hotels owned by Owner and operated
under this Agreement. If Operator assigns this Agreement under subsection (a), (b) or (c) above
and such

36

 

assignment results in a Change in Control of Operator or IHR, then Owner, as its sole remedy, shall
have the right to terminate this Agreement upon at least sixty (60) days’ prior written notice to
Operator and upon any such termination, Operator shall not be entitled to any termination fee or
similar compensation. If Operator assigns this Agreement under subsection (a), (b) or (c) above
and such assignment does not result in a Change in Control of Operator or IHR, and such assignee
agrees in writing to be bound by this Agreement and assumes in writing all of Operator’s
obligations under this Agreement from and after the effective date of such assignment, Owner agrees
to attorn to the assignee.

     Nothing in this Agreement shall prohibit or be deemed to prohibit any pledge by Operator of
the Basic Fee, Incentive Fee or any other amounts received by Operator under this Agreement to any
lender as collateral security for debt of Operator and/or Operator’s affiliates.

20.2. Owner shall not assign or pledge this Agreement without the prior written consent of
Operator; provided that, Owner may assign this Agreement without Operator’s consent to any person
or entity acquiring Owner’s leasehold interest and/or Land Holder’s fee or leasehold interest in a
Hotel as of the effective date of such acquisition if (a) Owner provides Operator with thirty (30)
days prior written notice of such assignment, and (b) such assignee agrees in writing to be bound
by this Agreement and assumes in writing all of Owner’s obligations under this Agreement from and
after the effective date of such assignment.

20.3. Upon any permitted assignment of this Agreement and the assumption of this Agreement by the
assignee, the assignor shall be relieved of any obligation or liability under this Agreement
arising after the effective date of the assignment.

ARTICLE XXI

NOTICES

21.1. Any notice, statement or demand required to be given under this Agreement shall be in
writing, sent by certified mail, postage prepaid, return receipt requested, or by facsimile
transmission, receipt electronically or verbally confirmed, or by nationally-recognized overnight
courier, receipt confirmed, addressed if to:

			
	                    Owner:	 	c/o Summit Hotel Properties, Inc.

2701 S. Minnesota, Suite 6

Sioux Falls, SD 57105

Attention: Dan Hansen

Facsimile No.: (605) 362-9388

				
	                              With copies to:	 	
 

 

 

 
	 

			
	                    and Operator:	  	Interstate Management Company, LLC

37

 

			
	                                             	 	c/o Interstate Hotels & Resorts, Inc.

4501 N. Fairfax Drive, Suite 500

Arlington, VA 22203

Attention: Executive Vice President and General Counsel

Facsimile No.: (703) 542-0965

or to such other addresses as Operator and Owner shall designate in the manner provided in this
Section 21.1. Any notice or other communication shall be deemed given (a) on the date three (3)
business days after it shall have been mailed, if sent by certified mail, (b) on the business day
it shall have been sent by facsimile transmission (unless sent on a non-business day or after
business hours in which event it shall be deemed given on the following business day), or (c) on
the date received if it shall have been given to a nationally-recognized overnight courier service.

ARTICLE XXII

SUBORDINATION; ESTOPPELS; RECOGNITION

22.1. Operator acknowledges and agrees that its rights under this Agreement are subject and
subordinate to the lien of any first mortgage or deed of trust loan, or any junior mortgage or deed
of trust loan held by an institutional investor, encumbering one or more Hotels whether now or
hereafter existing; provided, however, that (i) Operator shall not be obligated to waive or forbear
from receiving, on a current basis and as and when due under this Agreement, any and all fees due
to it under this Agreement prior to an event of default under any such mortgage or deed of trust
and (ii) Operator shall not be obligated to waive, or to forbear from exercising (unless and to the
extent Operator receives adequate assurance, in Operator’s good faith business judgment, that it
will be paid or reimbursed for any and all amounts due to Operator under this Agreement during the
period of any such forbearance, which period will not exceed 60 days in any event) any right it may
have to terminate this Agreement pursuant to Article 18 above. The provisions of this Section 22.1
shall be self operative but Operator agrees to execute and deliver promptly any document or
certificate containing such other terms as may be customary and reasonable confirming such
subordination as Owner or the holder of any such lien may reasonably request.

22.2. If any person or entity making or holding a loan to be secured by a mortgage or deed of trust
encumbering one or more Hotels shall request that Operator agree to modifications of this
Agreement, Operator shall enter into an agreement setting forth such modifications provided that
the same do not adversely affect the rights or obligations of Operator under this Agreement. Such
modifications may include, but shall not be limited to, Operator’s agreement to give simultaneous
notice of, and the opportunity to cure within the applicable cure period set forth herein, any
defaults on the part of Owner to such person or entity.

22.3. Owner and Operator agree that from time to time upon the request of the other party or a
party to a Major Agreement, it shall execute and deliver within ten (10) days after the request a
certificate confirming that this Agreement is in full force and effect, stating whether this
Agreement has been modified and supplying such other information as the requesting party may
reasonably require.

38

 

ARTICLE XXIII

INDEMNIFICATION

23.1. Operator hereby agrees to indemnify, defend and hold Owner (and Owner’s agents, principals,
shareholders, partners, members, officers, directors and employees) harmless from and against all
liabilities, losses, claims, damages, costs and expenses (including, but not limited to, reasonable
attorneys’ fees and expenses) that may be incurred by or asserted against any such party and that
arise from (a) the fraud, willful misconduct or gross negligence of the off-site employees of
Operator or Key Hotel Personnel, (b) the breach by Operator of any provision of this Agreement
caused by the fraud, willful misconduct or gross negligence of the off-site employees of Operator
or Key Hotel Personnel, or (c) any action taken by Operator which is beyond the scope of Operator’s
authority under this Agreement. Owner shall promptly provide Operator with written notice of any
claim or suit brought against it by a third party which might result in such indemnification.
Owner shall cooperate with the Operator or its counsel in the preparation and conduct of any
defense to any such claim or suit.

23.2. Except as provided in Section 23.1, Owner hereby agrees to indemnify, defend and hold
Operator (and Operator’s agents, principals, shareholders, partners, members, officers, directors
and employees) harmless from and against all liabilities, losses, claims, damages, costs and
expenses (including, but not limited to, reasonable attorneys’ fees and expenses; and any
additional tax (excluding any tax that is based on net or gross income of Operator or its
affiliates) and interest and penalties thereon) that may be incurred by or asserted against
Operator and that arise from or in connection with (a) the performance of Operator’s services under
this Agreement, (b) any act or omission (whether or not willful, tortious, or negligent) of Owner
or any third party or (c) or any other occurrence related to the Hotels and/or Operator’s duties
under this Agreement whether arising before, during or after the Term. Operator shall promptly
provide Owner with written notice of any claim or suit brought against it by a third party which
might result in such indemnification. Operator shall cooperate with the Owner or its counsel in
the preparation and conduct of any defense to any such claim or suit.

23.3. Supplementing the provisions of Sections 23.1 and 23.2, if any claim shall be made against
Owner and/or Operator which is based upon a violation or alleged violation of the Employment Laws
(an “Employment Claim”), the Employment Claim shall fall within Operator’s indemnification
obligations under Section 23.1 ONLY IF it is based upon (a) the willful misconduct or gross
negligence of Operator’s off-site employees or Key Hotel Personnel or (b) Operator’s breach of its
obligations under Section 4.6 and shall otherwise fall within Owner’s indemnification obligations
under Section 23.2.

23.4. If any action, lawsuit or other proceeding shall be brought against any party (the
“Indemnified Party”) hereunder arising out of or based upon any of the matters for which such party
is indemnified under this Agreement, such Indemnified Party shall promptly notify the party
required to provide indemnification hereunder (the “Obligor”) in writing (which may be in the form
of email) thereof and Obligor shall promptly assume the defense thereof (including without
limitation the employment of counsel selected by Obligor) unless otherwise agreed to by the parties
as provided herein, such defense to be subject to the consent of the Indemnified Party, which
consent

39

 

shall not be unreasonably withheld (provided, however, by way of illustration and not limitation,
it shall be reasonable for the Indemnified Party to deny consent to any settlement that requires
the Indemnified Party to admit guilt or liability). The Indemnified Party shall cooperate with the
Obligor in the defense of any such action, lawsuit or proceeding, on the condition that the Obligor
shall reimburse the Indemnified Party for any out-of-pocket costs and expenses incurred in
connection therewith. The Obligor shall have the right to negotiate settlement or consent to the
entry of judgment with respect to the matters indemnified hereunder; provided, however, that if any
such settlement or consent judgment contemplates any action or restraint on the part of the
Indemnified Party, then such settlement or consent judgment shall require the written consent of
the Indemnified Party, which consent shall not be unreasonably withheld. In addition to the
foregoing, the Indemnified Party shall have the right (at its own expense) to employ separate
counsel in any such action and to participate in the defense thereof. An Indemnified Party may
settle any action on its own behalf (i.e., with respect to its own liability and with no
requirement of Obligor to admit guilt or liability) only with the prior written consent of Obligor,
which consent shall not be unreasonably withheld (provided, however, by way of illustration and not
limitation, it shall be reasonable for Obligor to deny consent to any settlement that requires
Obligor to expend funds in an amount Obligor determines in good faith is inappropriate so long as
the Indemnified Party remains adequately protected at all times). In the event that Obligor fails
to use reasonable efforts to defend or compromise any action, lawsuit or other proceeding for which
an Indemnified Party is indemnified hereunder or as the parties may agree, the Indemnified Party
may, at Obligor’s expense and without limiting Obligor’s liability under the applicable indemnity,
assume the defense of such action and the Obligor shall pay the charges and expenses of such
attorneys and other persons on a current basis within thirty (30) days of submission of invoices or
bills therefor. In the event the Obligor is Owner and Owner neglects or refuses to pay such
charges, Operator may pay such charges out of the Agency Account and deduct such charges from any
amounts due Owner, or add such charges to any amounts due Operator from Owner under this Agreement.
If Operator is the Obligor and Operator neglects or refuses to pay such charges, the amount of such
charges shall be deducted from any amounts due Operator under this Agreement.

23.5. The provisions of this Article shall survive the termination of this Agreement with respect
to acts, omissions and occurrences arising during the Operating Term.

ARTICLE XXIV

MISCELLANEOUS

24.1. In the event that Operator and Owner desire to add a Hotel to this Agreement after the date
of this Agreement (an “Additional Hotel”), such Hotel shall become subject to the terms of this
Agreement upon the date of execution by Operator and Owner of a Joinder and Amendment Agreement in
the form of Exhibit L attached hereto and made a part hereof.

24.2. Owner and Operator shall execute and deliver all other appropriate supplemental agreements
and other instruments, and take any other action necessary to make this Agreement fully and legally
effective, binding, and enforceable as between them and as against third parties; provided,
however, that neither party shall be required to execute any other document or instrument or
perform any other action that would materially increase its liability or decrease its rights under
this Agreement.

40

 

24.3. This Agreement constitutes the entire agreement between the parties relating to the subject
matter hereof, superseding all prior agreements or undertakings, oral or written. Owner
acknowledges that in entering into this Agreement, Owner has not relied on any projection of
earnings, statements as to the possibility of future success, or other similar matter which may
have been prepared by Operator.

24.4. The headings of the titles to the articles of this Agreement are inserted for convenience
only and are not intended to affect the meaning of any of the provisions hereof.

24.5. A waiver of any of the terms and conditions of this Agreement may be made only in writing and
shall not be deemed a waiver of such terms and conditions on any future occasion.

24.6. This Agreement shall be binding upon and inure to the benefit of Owner and Operator and their
respective successors and permitted assigns.

24.7. This Agreement shall be construed, both as to its validity and as to the performance of the
parties, in accordance with the laws of the state of Maryland without reference to its conflict of
laws provisions.

24.8. This Agreement may be executed in any number of counterparts each of which shall, when
executed, be deemed to be an original and all of which shall be deemed to be one and the same
instrument. Signatures on this Agreement delivered by facsimile shall be deemed to be original
signatures for all purposes of this Agreement.

24.9. Any capitalized terms used within this Agreement which were not defined in this Agreement
shall have the same meanings given to such terms in the Master Agreement.

ARTICLE XXV

SPECIAL FRANCHISE/LICENSE AGREEMENT PROVISIONS

So long as any Hotel is subject to a Franchise Agreement with Holiday Inn or another member of the
InterContinental Hotels Group (“IHG”), the following applies solely with respect to such Hotel(s)
and their respective Franchise Agreements:

     (1) Operator agrees to accept, abide by and be subject to all rules, regulations, inspections
and requirements of Holiday Inn and/or IHG.

     (2) If the Franchise Agreement shall terminate, the Operator shall cease to operate such Hotel
as a Holiday Inn Express Hotel or Holiday Inn Hotel, as the case may be.

     (3) If there is any conflict between the terms of this Agreement and the terms of the
Franchise Agreement, the terms of the Franchise Agreement shall govern and control.

     (4) Notwithstanding the consent of Holiday Inn and IHG to this Agreement, Owner and

41

 

all guarantors shall remain liable to Holiday Inn and/or IHG under the terms of Franchise
Agreement.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

42

 

     IN WITNESS WHEREOF, Operator and Owner have duly executed this Agreement the day and year
first above written.

	 	 	 	 	 
	 	[OWNER]

[INSERT LIST OF OWNER ENTITIES TO SIGN]

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 
	 	INTERSTATE MANAGEMENT COMPANY, LLC
 	 
	 	By:  	Interstate Operating Company, L.P., member 	 
	 
	 	 	By:  	Interstate Hotels & Resorts, Inc., general partner 	 
	 
	 	 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

43

 

Exhibit 10.3

EXHIBIT A

List of Hotels, Owners (Lessees) and Land Holders

See attached

44

 

EXHIBIT B

Buildings

See attached

45

 

EXHIBIT C

Existing Credit Card Vendor Contracts

1) Chase Merchant Services

2) First National Bank of Omaha

46

 

EXHIBIT D

Operator’s Current Severance Payment Policy

See attached

47

 

EXHIBIT E

Transition Budget

See attached for Transition Budget Per Hotel

48

 

EXHIBIT F

Centralized Services List

See attached for List per Hotel

49

 

EXHIBIT G

Example of Calculation of Incentive Fee

and Incentive Fee Threshold

50

 

EXHIBIT H

Insurance Amounts

51

 

EXHIBIT I

Existing Operated Hotels

52

 

EXHIBIT J

Competitive Sets

See attached

53

 

EXHIBIT K

Hotel Allocated Value List

	 	 	 	 	 	 	 
	Hotel	 	City	 	State	 	Allocated Value
	 
	 	 	 	 	 	 

54

 

EXHIBIT L

FORM OF JOINDER AND AMENDMENT TO

AMENDED AND RESTATED HOTEL MANAGEMENT AGREEMENT

      The undersigned Operator and Owner hereby agree that, as of the date set forth
below:

     (1) Owner and Operator are parties to an Amended and Restated Hotel Management Agreement,
dated as of _____________, 2010 (the “Management Agreement”). Owner and Operator desire to amend
the Management Agreement to include the hotel property set forth on Schedule I attached
hereto (the “Additional Hotel”).

     (3) Exhibit A and Exhibit K to the Management Agreement shall be amended to
include the Additional Hotel, and the Additional Hotel shall be a “Hotel” under the Management
Agreement.

     (4) Owner and Operator shall be bound by the terms of the Management Agreement with respect to
the Additional Hotel.

     (5) This Joinder may be executed in several counterparts, each of which shall be deemed an
original, and all such counterparts together constitute one and the same instrument. For the
purpose of this Joinder, facsimile signatures shall be deemed originals.

[Remainder of page intentionally left blank]

55

 

     IN WITNESS WHEREOF, Operator and Owner have duly executed this Joinder as of the _____ day of
______________, 20__.

	 	 	 	 	 
	 	OWNER:

[List of Owners (lessees)]

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 
	 	OPERATOR:

INTERSTATE MANAGEMENT COMPANY, L.L.C.
 	 
	 	By:  	Interstate Operating Company, L.P., member 	 
	 
	 	By:  	Interstate Hotels & Resorts, Inc., general partner 	 
	 
	 	 	By:  
	 
	 	 	Name:  
	 
	 	 	Title:  
	 
	 

56

 

SCHEDULE I TO THE JOINDER AGREEMENT

ADDITIONS TO EXHIBIT A AND EXHIBIT K TO

AMENDED AND RESTATED HOTEL MANAGEMENT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Owner Entity	 	Land Holder Entity	 	Hotel	 	City	 	State
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

     Hotel Allocated Value: $_________________

57

 

SCHEDULE 15.5

Franchise Defaults

1) Notice of Default received from Marriott on 8/20/2010 related to the Fairfield Inn, Emporia,
Kansas.

2) Notice of Red Zone Status received from Marriott on 8/20/2010 related to the Fairfield Inn,
Salina, Kansas.

3) Notice of Red Zone Status received from Marriott on 8/20/2010 related to the Residence Inn,
Germantown, Tennessee.

4) Cure of Default and Continuing Red 2 Status received from Marriott on 2/19/2010 related to the
SpringHill Suites, Nashville, Tennessee.

5) Cure of Default and Continuing Red 2 Status received from Marriott on 2/19/2010 related to the
Courtyard, Memphis, Tennessee.

6) Red Zone/Unacceptable notice received from Hilton on May 27, 2010 related to the Hampton Inn, Denver, Colorado.

58exv10w4

Exhibit 10.4

LEASE AGREEMENT

DATED AS OF _________________, _________, 2010

BETWEEN

SUMMIT HOTEL OP, LP

LESSOR

AND

SUMMIT HOTEL TRS 002, LLC

LESSEE

i

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 

	ARTICLE 1	 	 	 	 	 	 
	 

	 	 	1.1	 	 	Leased Property
	 	 	1	 
	 

	 	 	1.2	 	 	Term
	 	 	2	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 2	 	 	 	 
	 

	 	 	2.1	 	 	Definitions
	 	 	2	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 3	 	 	 	 
	 

	 	 	3.1	 	 	Rent
	 	 	11	 
	 

	 	 	3.2	 	 	Confirmation of Percentage Rent
	 	 	14	 
	 

	 	 	3.3	 	 	Additional Charges
	 	 	14	 
	 

	 	 	3.4	 	 	Net Lease Provision
	 	 	15	 
	 

	 	 	3.5	 	 	Conversion of Property
	 	 	15	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 4	 	 	 	 
	 

	 	 	4.1	 	 	Payment of Impositions
	 	 	15	 
	 

	 	 	4.2	 	 	Notice of Impositions
	 	 	16	 
	 

	 	 	4.3	 	 	Adjustment of Impositions
	 	 	16	 
	 

	 	 	4.4	 	 	Utility Charges
	 	 	17	 
	 

	 	 	4.5	 	 	Insurance Premiums
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 5	 	 	 	 
	 

	 	 	5.1	 	 	No Termination, Abatement, etc
	 	 	17	 
	 

	 	 	5.2	 	 	Abatement Procedures
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 6	 	 	 	 
	 

	 	 	6.1	 	 	Ownership of the Leased Property
	 	 	18	 
	 

	 	 	6.2	 	 	Lessee’s Personal Property
	 	 	18	 
	 

	 	 	6.3	 	 	Lessor’s Lien
	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 7	 	 	 	 
	 

	 	 	7.1	 	 	Condition of the Leased Property
	 	 	18	 
	 

	 	 	7.2	 	 	Use of the Leased Property.
	 	 	19	 
	 

	 	 	7.3	 	 	Lessor to Grant Easements, etc
	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 8	 	 	 	 
	 

	 	 	8.1	 	 	Compliance with Legal and Insurance Requirements, etc
	 	 	20	 
	 

	 	 	8.2	 	 	Legal Requirement Covenants
	 	 	20	 
	 

	 	 	8.3	 	 	Environmental Covenants
	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 9	 	 	 	 
	 

	 	 	9.1	 	 	Maintenance and Repair.
	 	 	23	 
	 

	 	 	9.2	 	 	Encroachments, Restrictions, Etc
	 	 	24	 

i

 

	 	 	 	 	 	 	 	 	 	 	 

	ARTICLE 10	 	 	 	 
	 

	 	 	10.1	 	 	Alterations
	 	 	25	 
	 

	 	 	10.2	 	 	Salvage
	 	 	25	 
	 

	 	 	10.3	 	 	Joint Use Agreements
	 	 	25	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 11	 	 	 	 
	 

	 	 	11.1	 	 	Liens
	 	 	25	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 12	 	 	 	 
	 

	 	 	12.1	 	 	Permitted Contests
	 	 	26	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 13	 	 	 	 
	 

	 	 	13.1	 	 	General Insurance Requirements
	 	 	27	 
	 

	 	 	13.2	 	 	Replacement Cost
	 	 	28	 
	 

	 	 	13.3	 	 	Worker’s Compensation
	 	 	28	 
	 

	 	 	13.4	 	 	Waiver of Subrogation
	 	 	28	 
	 

	 	 	13.5	 	 	Form Satisfactory, etc
	 	 	28	 
	 

	 	 	13.6	 	 	Increase in Limits
	 	 	29	 
	 

	 	 	13.7	 	 	Blanket Policy
	 	 	29	 
	 

	 	 	13.8	 	 	No Separate Insurance
	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 14	 	 	 	 
	 

	 	 	14.1	 	 	Insurance Proceeds
	 	 	29	 
	 

	 	 	14.2	 	 	Reconstruction in the Event of Damage or Destruction Covered by Insurance.
	 	 	29	 
	 

	 	 	14.3	 	 	Reconstruction in the Event of Damage or Destruction Not Covered by Insurance
	 	 	30	 
	 

	 	 	14.4	 	 	Lessee’s Property
	 	 	30	 
	 

	 	 	14.5	 	 	Abatement of Rent
	 	 	30	 
	 

	 	 	14.6	 	 	Damage Near End of Term
	 	 	31	 
	 

	 	 	14.7	 	 	Waiver
	 	 	31	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 15	 	 	 	 
	 

	 	 	15.1	 	 	Definitions.
	 	 	31	 
	 

	 	 	15.2	 	 	Parties’ Rights and Obligations
	 	 	31	 
	 

	 	 	15.3	 	 	Total Taking
	 	 	31	 
	 

	 	 	15.4	 	 	Allocation of Award
	 	 	31	 
	 

	 	 	15.5	 	 	Partial Taking
	 	 	32	 
	 

	 	 	15.6	 	 	Temporary Taking
	 	 	32	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 16	 	 	 	 
	 

	 	 	16.1	 	 	Events of Default
	 	 	33	 
	 

	 	 	16.2	 	 	Surrender
	 	 	34	 
	 

	 	 	16.3	 	 	Damages
	 	 	35	 
	 

	 	 	16.4	 	 	Waiver
	 	 	35	 
	 

	 	 	16.5	 	 	Application of Funds
	 	 	35	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 17	 	 	 	 
	 

	 	 	17.1	 	 	Lessor’s Right to Cure Lessee’s Default
	 	 	36	 

ii

 

	 	 	 	 	 	 	 	 	 	 	 

	ARTICLE 18	 	 	 	 
	 

	 	 	18.1	 	 	REIT Requirements.
	 	 	36	 
	 

	 	 	18.2	 	 	Lessee Officer and Employee Limitation
	 	 	38	 
	 

	 	 	18.3	 	 	Management Agreement
	 	 	38	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 19	 	 	 	 
	 

	 	 	19.1	 	 	Holding Over
	 	 	38	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 20	 	 	 	 
	 

	 	 	20.1	 	 	Risk of Loss
	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 21	 	 	 	 
	 

	 	 	21.1	 	 	Indemnification
	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 22	 	 	 	 
	 

	 	 	22.1	 	 	Subletting and Assignment.
	 	 	40	 
	 

	 	 	22.2	 	 	Attornment
	 	 	40	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 23	 	 	 	 
	 

	 	 	23.1	 	 	Officer’s Certificates; Financial Statements; Budgets; Lessor’s
Estoppel Certificates and Covenants.
	 	 	41	 
	 

	 	 	23.2	 	 	Operating Budget
	 	 	41	 
	 

	 	 	23.3	 	 	Marketing Plan
	 	 	42	 
	 

	 	 	23.4	 	 	Capital Budget
	 	 	42	 
	 

	 	 	23.5	 	 	Disputes
	 	 	42	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 24	 	 	 	 
	 

	 	 	24.1	 	 	Lessor’s Right to Inspect
	 	 	42	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 25	 	 	 	 
	 

	 	 	25.1	 	 	No Waiver
	 	 	42	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 26	 	 	 	 
	 

	 	 	26.1	 	 	Remedies Cumulative
	 	 	43	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 27	 	 	 	 
	 

	 	 	27.1	 	 	Acceptance of Surrender
	 	 	43	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 28	 	 	 	 
	 

	 	 	28.1	 	 	No Merger of Title
	 	 	43	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 29	 	 	 	 
	 

	 	 	29.1	 	 	Conveyance by Lessor
	 	 	43	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 30	 	 	 	 
	 

	 	 	30.1	 	 	Quiet Enjoyment
	 	 	43	 

iii

 

	 	 	 	 	 	 	 	 	 	 	 

	ARTICLE 31	 	 	 	 
	 

	 	 	31.1	 	 	Notices
	 	 	44	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 32	 	 	 	 
	 

	 	 	32.1	 	 	Appraisers
	 	 	44	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 33	 	 	 	 
	 

	 	 	33.1	 	 	Lessor May Grant Liens
	 	 	45	 
	 

	 	 	33.2	 	 	Lessee’s Right to Cure
	 	 	45	 
	 

	 	 	33.3	 	 	Breach by Lessor
	 	 	45	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 34	 	 	 	 
	 

	 	 	34.1	 	 	Miscellaneous
	 	 	46	 
	 

	 	 	34.2	 	 	Transfer of Licenses
	 	 	46	 
	 

	 	 	34.3	 	 	Waiver of Presentment, etc
	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 35	 	 	 	 
	 

	 	 	35.1	 	 	Memorandum of Lease
	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 36	 	 	 	 
	 

	 	 	36.1	 	 	Lessor’s Option to Purchase Assets of Lessee
	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 37	 	 	 	 
	 

	 	 	37.1	 	 	Lessor’s Option to Terminate Lease
	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 38	 	 	 	 
	 

	 	 	38.1	 	 	Compliance with Franchise Agreement
	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 39	 	 	 	 
	 

	 	 	39.1	 	 	Lessor Approval of Capital Expenditures
	 	 	48	 
	 

	 	 	39.2	 	 	Inventory
	 	 	48	 

	 	 	 

	Schedule “A”

	 	Property Description
	Schedule “B”

	 	Rent Terms
	Schedule “C”

	 	Management Agreement

iv

 

LEASE AGREEMENT

     THIS LEASE AGREEMENT (the “Lease”), made as of the _____ day of _____________ 2010, by
and between Summit Hotel OP, LP, a Delaware limited partnership (the “Lessor”), and Summit
Hotel TRS 002, LLC, a Delaware limited liability company (the “Lessee”), provides as
follows.

RECITALS:

     Lessor owns the fee simple title to the Leased Property (as defined below); and

     Lessor desires to let and Lessee desires to let the Leased Property and therefore desire to
enter into this Lease intending to be bound, for the property listed on Schedule “A” attached
hereto.

     NOW, THEREFORE, Lessor, in consideration of covenants and agreements set forth herein and
other good and valued consideration, and upon the terms and conditions hereinafter stated, hereby
rents and leases unto Lessee, and Lessee hereby rents and leases from Lessor, the Leased Property.

ARTICLE 1

1.1 Leased Property. The Leased Property is comprised of Lessor’s interest in the hotel
property described in Schedule “A” attached hereto (the “Leased Property”) as follows:

     (a) the land described in Schedule “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 “Leased Improvements”);

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

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

     (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

1

 

operation of the Leased Improvements as a hotel, together with all replacements,
modifications, alterations and additions thereto; and

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

THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION OR WARRANTY
(EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF PARTIES IN POSSESSION, AND TO THE
EXISTING STATE OF TITLE INCLUDING ALL COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER
MATTERS OF RECORD INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, 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 the Commencement
Date and shall end on the Expiration Date, unless sooner terminated in accordance with the
provisions hereof.

ARTICLE 2

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

     Accounting Period: A calendar month, or portion thereof in which the Term begins or
ends.

     Additional Charges: As defined in Section 3.3.

     Affiliate: As used in this Lease the term “Affiliate” of a person shall mean (a) any
person that, directly or indirectly, controls or is controlled by or is under common control with
such person, (b) any other person that owns, beneficially, directly or indirectly, five percent
(5%) or more of the outstanding capital stock, shares or equity interests of such person, or (c)
any officer, director, employee, partner or trustee of such person or any person controlling,
controlled by or under common control with such person (excluding trustees and persons serving in
similar capacities who are not otherwise an Affiliate of such person). The term “person” means and
includes individuals, corporations, 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

2

 

“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.

     Annual Room Revenue Breakpoint: As set forth in Schedule “B”.

     Average Daily Rate: Total Room Revenue divided by occupied rooms at the Facility.

     Award: As defined in Section 15.1(c).

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

     Base Rent: As defined in Section 3.1(a).

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

     Capital Budget: As defined in Section 23.4.

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

     Capital Improvements: Improvements to (A) the external walls and internal load
bearing walls (other than windows and plate glass), (B) the roof of the Facility, (C) private
roadways, parking areas, sidewalks and curbs appurtenant thereto that are under Lessee’s control
(other than cleaning, patching and striping), (D) mechanical, electrical and plumbing systems that
service common areas, entire wings of the Facility or the entire Facility, including conduit and
ductware connected thereto, and (E) items of the types which should be capitalized pursuant to
Lessor’s capital expenditures policy.

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

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

     Commencement Date: The date set forth on Schedule “B” attached hereto as the
commencement date with respect to the Facility.

     Condemnation, Condemnor: As defined in Section 15.1.

     Consolidated Financials: For any fiscal year or other accounting period for Lessee
and its consolidated subsidiaries, statements of earnings and retained earnings and of changes in
financial position for such period and for the period from the beginning of the respective fiscal
year to the end of such period and the related balance sheet as at the end of such period, together
with the notes thereto, all in reasonable detail and setting forth in comparative form the

3

 

corresponding figures for the corresponding period in the preceding fiscal year, and prepared
in accordance with generally accepted accounting principles and audited by nationally recognized
independent certified public accountants.

     Cumulative Accounting Period Portion: As defined in Section 3.1(b).

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

     Encumbrance: As defined in Section 33.1.

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

     (a) The management company does not own, directly or indirectly, more than thirty-five percent
(35%) of the outstanding stock of REIT.

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

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

     (d) 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 REIT or the Lessee (an “Unrelated Person”). For purposes of determining whether
the requirement of this paragraph (d) has been met, a management company shall be treated as being
actively engaged in such a trade or business if the management company (i) derives at least ten
percent (10%) of both its profits and revenue from operating “qualified lodging facilities” within
the meaning of Section 856(d)(9)(D) of the Code for Unrelated Persons or (ii) complies with any
regulations or other administrative guidance under Section 856(d)(9) of the Code that provide a
“safe harbor” rule with respect to the amount of hotel management business with Unrelated Persons
that is necessary to qualify as an “eligible independent contractor” within the meaning of such
Code section.

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

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

4

 

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

     Environmental Liabilities: Any and all obligations to pay the amount of any judgment
or settlement, the cost of complying with any settlement, judgment or order for injunctive or other
equitable relief, the cost of compliance or corrective action in response to any notice, demand or
request from an Environmental Authority, the amount of any civil penalty or criminal fine, and any
court costs and reasonable amounts for attorney’s fees, fees for witnesses and experts, and costs
of investigation and preparation for 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: As defined in Section 16.1.

     Excess Personal Property: As defined in Section 18.1.

     Expiration Date: The date set forth on Schedule “B” attached hereto as the expiration
date with respect to the Facility.

     F&B Revenue: Gross revenue from the sale of food and beverages, including alcoholic
beverages, whether to individuals, groups or transients, at the Facility, excluding the following:

5

 

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

     (b) all sales taxes or any other taxes imposed on the sale of food and beverages; and

     (c) accounts receivable which have been included in F&B Revenue which thereafter become, in
the reasonable judgment of Lessee, uncollectible.

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

     Fair Market Value: The fair market value of the leasehold estate hereunder, or under
a replacement lease offered under Article 37, means an amount equal to the price that a willing
buyer not compelled to buy would pay a willing seller not compelled to sell for such leasehold
estate, calculated based upon the present value (discounted at a rate of interest mutually
agreeable to the parties), of the net income stream reasonably projected by the parties to be
earned by Lessee under such lease for the then remaining term of such lease, determined in
accordance with the appraisal procedures set forth in Article 32 (with the understanding that such
appraisers will be instructed to utilize the income stream approach as aforesaid) or in such other
manner as shall be mutually acceptable to Lessor and Lessee, and assuming that such seller must pay
customary closing costs.

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

     First Tier Room Revenue Percentage: As defined in Schedule “B”.

     Fiscal Year: The twelve (12) month period from January 1 to December 31.

     Fixtures: As defined in Section 1.1.

     Franchise Agreement: Any franchise license agreement with a national franchisor under
which the Facility is operated.

     GAAP: GAAP shall mean, as of any date of determination, accounting principles (a) set
forth as generally accepted in then currently effective Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (b) set forth as generally accepted in
then currently effective Statements of the Financial Accounting Standards Board or (c) that are
then approved by such other entity as may be approved by a significant segment of the accounting
profession in the United States of America. The term “consistently applied,” as used in connection
therewith, means that the accounting principles applied are consistent in all material respects to
those applied at prior dates or for prior periods.

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

     Gross Revenue: All revenue, receipts, and income of any kind derived directly or
indirectly by Lessee from or in connection with the Facility (including rentals or other payments
from tenants, lessees, licensees or concessionaires but not including their gross receipts) whether

6

 

on a cash basis or credit, paid or collected, determined in accordance with GAAP and the
Uniform System, excluding, however: (i) funds furnished by Lessor, (ii) federal, state and
municipal excise, sales, and use taxes collected directly from patrons and guests or as a part of
the sales price of any goods, services or displays, such as gross receipts, admissions, cabaret or
similar or equivalent taxes and paid over to federal, state or municipal governments, (iii)
gratuities paid to employees, (iv) proceeds of insurance and condemnation, (v) proceeds from sales
other than sales in the ordinary course of business, (vi) all loan proceeds from financing or
refinancings of the Facility or interests therein or components thereof, (vii) judgments and
awards, except any portion thereof arising from normal business operations of the Facility, and
(viii) items constituting “allowances” under the Uniform System.

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

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

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

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

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

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

     Impositions: 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,

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

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

     Indemnifying Party: Any party obligated to indemnify an Indemnified Party pursuant to
Sections 8.3 or 21.1.

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

     Inventory: All “Inventories of Merchandise” and “Inventories of Supplies” as defined
in the Uniform System and including any property of the type described in Section 1221(1) of the
Code.

     Land: As defined in Section 1.1(a).

     Lease: This Lease.

     Lease Year: Any twelve (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 Improvements; Leased Property: Each as defined in Section 1.1.

     Legal Requirements: All federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
affecting either the Leased Property or the maintenance, construction, use or alteration thereof
(whether by Lessee or otherwise), whether 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.

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

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

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

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

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

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

     Management Agreement: As defined in Section 18.3.

     Manager: As defined in Section 18.3.

     Net Worth: The excess of total assets over total liabilities, total assets and total
liabilities each to be determined in accordance with GAAP, excluding, however, from the
determination of total assets: (a) unamortized goodwill, organizational expenses, research and
development expenses, trademarks, trade names, copyrights, patents, patent applications, and other
similar intangibles; (b) all deferred charges that are not required to be capitalized in accordance
with GAAP or unamortized debt discounts and expense; (c) treasury stock; (d) securities which are
not readily marketable (other than preferred stock or common stock of REIT or partnership interests
of the Lessor); (e) any write-up in the book value of any asset resulting from a revaluation
thereof; (f) this Lease or any other lease between the Lessor and the Lessee; and (g) any items not
included in clauses (a) through (f) above that are treated as intangibles in conformity with GAAP.

     Notice: A notice given pursuant to Article 31.

     Officer’s Certificate: 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: As defined in Section 23.2.

     Other Income: All revenue, receipts, and income of any kind derived directly or
indirectly from or in connection with the Facility and included in Gross Revenue, other than Room
Revenue and F&B Revenue.

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

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

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

     Periodic Revenue Computation: As defined in Section 3.1(b).

     Personal Property Limitation: As defined in Section 18.1.

     Person: Any Government, natural person, corporation, partnership or other legal
entity.

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

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

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

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

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

     REIT Requirements: As defined in Section 18.1.

     REIT: Summit Hotel Properties, Inc., a Maryland real estate investment trust and sole
general partner of Summit Hotel OP, LP, a Delaware limited partnership

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

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

     Room Revenue: 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;

     (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: food and beverage,
telephone, laundry, movies or concessions.

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

     State: The state, district or commonwealth of the United States in which the Leased
Property is located.

     Subsidiaries: Corporations in which Lessee owns, directly or indirectly, more than
fifty percent (50%) of the voting stock or control, as applicable (individually, a
“Subsidiary”).

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

     Term: As defined in Section 1.2.

     Transition Date: As defined in Section 7.2(f).

     TSCA: The Toxic Substances Control Act, as amended.

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

     Uneconomic for its Primary Intended Use: 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 revenue, such that Lessee intends to,
and shall, complete the cessation of operations at the Leased Facility.

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

     Unsuitable for its Primary Intended Use: 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

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,

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at Lessor’s address set forth in Article 31 hereof or at such other place or to such other Person,
as Lessor from time to time may designate in a Notice, all Base Rent, Percentage Rent and
Additional Charges, during the Term, as follows:

     (a) Base Rent: Base Rent for any Fiscal Year shall be payable in the amounts set
forth on Schedule “B”, payable in arrears in equal, consecutive periodic installments, on or before
the tenth (10th) day after the end of an Accounting Period (“Base Rent”) (subject to
increase as provided in Section 3.1(d)(i)(B) hereof); provided, however, that if
the Term shall commence and/or end at any time other than the beginning or end of a calendar month,
the first and/or last periodic payments of Base Rent, as the case may be, shall be prorated for any
such partial calendar month; and

     (b) Percentage Rent: For each Accounting Period during the Term, commencing with the
Accounting Period in which the Term begins, Tenant shall at the time specified in Section 3.1(c)
hereof pay percentage rent (“Percentage Rent”), if any, in an amount calculated by the
following formulas:

     For any Accounting Period, Percentage Rent shall equal: (A) The amount equal to the Periodic
Revenue Computation (defined below), less (B) an amount equal to the Base Rent paid for the Fiscal
Year to date, (C) less an amount equal to the Percentage Rent paid for the Fiscal Year to date.

     For purposes of defining the Periodic Revenue Computation:

     “Cumulative Accounting Period Portion” shall mean a fraction having as its numerator the total
number of Accounting Periods (including partial periods) in the Fiscal Year which have elapsed
prior to the Accounting Period in which the payment of Percentage Rent is due, and having as its
denominator the total number of Accounting Periods (including partial periods) in the Fiscal Year.
For example, the Cumulative Accounting Period Portion in an entire (twelve (12) Accounting Period)
Fiscal Year for the first percentage Rent Payment will be 1/12 and for the second Percentage Rent
payment will be 2/12, and for the last Percentage Rent payment for said Fiscal Year (due in January
of the next Fiscal Year) will be 12/12 or one hundred percent (100%).

     "First Tier Room Revenue Percentage” shall mean the percentage corresponding to such term as
set forth in Schedule “B”.

     “Annual Room Revenue Breakpoint” shall mean the amounts of annual Room Revenue corresponding
to such terms as set forth in Schedule “B”.

     The “Periodic Revenue Computation” shall be the amount equal to the First Tier Room Revenue
Percentage of Room Revenue for the Fiscal Year to date to the extent that such Room Revenue does
not exceed the Cumulative Accounting Period Portion of the Annual Room Revenue Breakpoint.

     If the Term for the Leased Property begins or ends in the middle of a Fiscal Year, the
foregoing formulas shall be applied as if the first Fiscal Year had only the number of full
calendar month Accounting Periods remaining in the Fiscal Year in which the Term commenced

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or the last Fiscal Year had only the number of full calendar month Accounting Periods in the
Fiscal Year in which the Term ended. If the Term shall commence and/or end at any time other than
the beginning or end of the calendar month, the Percentage Rent for the Leased Property for the
first or last Accounting Period, as applicable, shall equal (i) the Percentage Rent calculated as
indicated above multiplied by (ii) a fraction equal to (A) the number of days in such Accounting
Period divided by (B) the total number of days in the calendar month in which such Accounting
Period begins.

     (c) Officer’s Certificates. Additionally, an Officer’s Certificate in form reasonably
acceptable to Lessor shall be delivered to Lessor quarterly, together with such quarterly
Percentage Rent payment, setting forth the calculation of such rent payment for such quarter within
thirty-five (35) days after each of the first three (3) quarters of each Fiscal Year (or part
thereof) in the Term. Such quarterly payments shall be based on the formula set forth in Section
3.1(b). There shall be no reduction in the Base Rent regardless of the result of the Revenue
Computations.

     In addition, on or before February 10 of each year, commencing with the February 10 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
the actual Percentage Rent that accrued for the last quarter of the Fiscal Year that ended on the
immediately preceding December 31 and shall pay to Lessor Percentage Rent, if due and payable, for
the last quarter of the applicable Fiscal Year. The Officer’s Certificate shall also set forth the
computation of the 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 also 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’ Base Rent and, to the extent necessary, the next
quarters’ Percentage Rent payments. Any such credit to Base Rent shall not be applied for purposes
of calculating Percentage Rent payable for any subsequent quarter.

     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 Section 3.3) 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 (2) years
after such expiration or termination date, but Lessee shall advise Lessor within sixty (60) days

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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.

3.2 Confirmation of Percentage Rent. Lessee shall utilize, or cause to be utilized, an
accounting system for the Leased Property in accordance with its usual and customary practices, and
in accordance with generally accepted accounting principles and the Uniform System, that will
accurately record all data necessary to compute Percentage Rent, and Lessee shall retain, for at
least four 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 hereinbelow), shall
have the right from time to time by its accountants or representatives to audit the information
that formed the basis for the data set forth in any Officer’s Certificate provided under Section
3.1(c) and, in connection with such audits, to examine all Lessee’s records (including supporting
data, 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
Requirements. If any such audit discloses a deficiency in the payment of Percentage Rent, and
either Lessee agrees with the result of such audit or the matter is otherwise determined or
compromised, Lessee shall forthwith pay to Lessor the amount of the deficiency, as finally agreed
or determined, together with interest at the Overdue Rate from the date when said payment should
have been made to the date of payment thereof; provided, however, that as to any
audit that is commenced more than two (2) years after the date Percentage Rent for any Fiscal Year
is reported by Lessee to Lessor, the deficiency, if any, with respect to such Percentage Rent shall
bear interest at the Overdue Rate only from the date such determination of deficiency is made
unless such deficiency is the result of gross negligence or willful misconduct on the part of
Lessee, in which case interest at the Overdue Rate will accrue from the date such payment should
have been made to the date of payment thereof. If any such audit discloses that the Percentage
Rent actually due from Lessee for any Fiscal Year exceed those reported and paid by Lessee by more
than three percent (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

14

 

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 5, 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.

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 REIT’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 sixty (60) day
period, Lessee or Lessor, as appropriate, shall withdraw such notice and this Lease shall continue
in full force.

ARTICLE 4

4.1 Payment of Impositions. Subject to Article 12 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

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such event, shall pay such installments during the Term hereof (subject to Lessee’s right of
contest pursuant to the provisions of Article 12) 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 provided in Article
16. 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.

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

4.5 Insurance Premiums. Lessee will pay or cause to be paid all premiums for the insurance
coverages required to be maintained by it under Article 13.

ARTICLE 5

5.1 No Termination, Abatement, etc. Except as otherwise specifically provided in this
Lease, and except for loss of the Franchise Agreement solely by reason of any action or inaction by
Lessor, Lessee, to the extent permitted by law, shall remain bound by this Lease in accordance with
its terms and shall neither take any action without the written consent of Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement, deduction, deferment or
reduction of the Rent, or setoff against the Rent, nor shall the obligations of Lessee be otherwise
affected by reason of (a) any damage to, or destruction of, any Leased Property or any portion
thereof from whatever cause or any Taking of the Leased Property or any portion thereof, (b) the
lawful or unlawful prohibition of, or restriction upon, Lessee’s use of the Leased Property, or any
portion thereof, or the interference with such use by any Person, 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 revenue 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

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

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

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

ARTICLE 7

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

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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 latent
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.

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 for 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 14, 15, 20 and 21, Lessee covenants and agrees that
during the Term it will (1) 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 (other than
requirements with respect to Capital Improvements), (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 revenue 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.

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     (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 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

8.1 Compliance with Legal and Insurance Requirements, etc. Subject to Section 8.3(b) below
and Article 12 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

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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 (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, subject to the
obligations of Lessor with respect to Capital Improvements as set forth in Section 9.1(b) unless
caused by the acts or grossly negligent failures to act of Lessee. 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) Lessor hereby agrees to defend, indemnify and save harmless any and all Lessee Indemnified
Parties from and against any and all Environmental Liabilities other than Environmental Liabilities
which were caused by the acts or grossly negligent failures to act of Lessee.

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

     (d) If any Proceeding is brought against any Indemnified Party in respect of an Environmental
Liability with respect to which such Indemnified Party may claim indemnification under either
Section 8.3(b) or (c), the Indemnifying Party, upon request, shall at its sole expense resist and
defend such Proceeding, or cause the same to be resisted and defended by counsel designated by the
Indemnified Party and approved by the Indemnifying Party, which

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approval shall not be unreasonably withheld; provided, however, that such
approval shall not be required in the case of defense by counsel designated by any insurance
company undertaking such defense pursuant to any applicable policy of insurance. Each Indemnified
Party shall have the right to employ separate counsel in any such Proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel will be at the sole expense of such
Indemnified Party unless such counsel has been approved by the Indemnifying Party, which approval
shall not be unreasonably withheld. The Indemnifying Party shall not be liable for any settlement
of any such Proceeding made without its consent, which shall not be unreasonably withheld, but if
settled with the consent of the Indemnifying Party, or if settled without its consent (if its
consent shall be unreasonably withheld), or if there be a final, nonappealable judgment for an
adversary party in any such Proceeding, the Indemnifying Party shall indemnify and hold harmless
the Indemnified Parties from and against any liabilities incurred by such Indemnified Parties by
reason of such settlement or judgment.

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

     (f) The indemnification rights and obligations provided for in this Article 8 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 8 shall survive
the termination of this Agreement.

     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.

     Notwithstanding anything to the contrary contained in this Agreement, if Lessor shall become
entitled to the possession of the Leased Property by virtue of the termination of the

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Lease or repossession of the Leased Property, then Lessor may assign its indemnification
rights under Section 8.3 of this Agreement (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;

          (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

9.1 Maintenance and Repair.

     (a) Except as provided in Section 9.1(b) or Article 14, 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) Notwithstanding Lessee’s obligations under Section 9.1(a) above or elsewhere in this
Lease, unless caused by Lessee’s negligence or willful misconduct or that of its employees or
agents, Lessee shall not be responsible for any Capital Improvements, including (without
limitation) Capital Improvements required by the Franchisor under the Franchise Agreement. Lessor
shall be responsible for all Capital Improvements, subject to (i) Lessor’s right to approve the
Capital Budget pursuant to Article 29, and (ii) Lessor’s right in its sole discretion to refuse to
make any Capital Expenditure required by the Franchisor; provided that, if such refusal results in
a default under or termination of the Franchise Agreement, Lessor shall be responsible for all
damages, termination payments payable by Lessee under the terms of the Franchise Agreement,
application fees for a new franchise license approved by Lessor, increased royalty fees and other

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costs arising out of such refusal or out of the resulting need to apply for and enter into a
substitute franchise license agreement. Except as set forth in the preceding sentence, Lessor
shall not under any circumstances be required to build or rebuild any improvement on the Leased
Property, or to make any repairs, replacements, alterations, restorations or renewals of any nature
or description to the Leased Property, whether ordinary or extraordinary, foreseen or unforeseen,
or to make any expenditure whatsoever with respect thereto, in connection with this Lease, or to
maintain the Leased Property in any way. Lessee hereby waives, to the extent permitted by law, the
right to make repairs at the expense of Lessor pursuant to any law in effect at the time of the
execution of this Lease or hereafter enacted. Lessor shall have the right to give, record and
post, as appropriate, notices of nonresponsibility under any mechanic’s lien laws now or hereafter
existing.

     (c) Nothing contained in this Lease and no action or inaction by Lessor shall be construed as
(1) constituting the request of Lessor, expressed or implied, to any contractor, subcontractor,
laborer, materialman or vendor to or for the performance of any labor or services or the furnishing
of any materials or other property for the construction, alteration, addition, repair or demolition
of or to the Leased Property or any part thereof, or (2) giving Lessee any right, power or
permission to contract for or permit the performance of any labor or services or the furnishing of
any materials or other property in such fashion as would permit the making of any claim against
Lessor in respect thereof or to make any agreement that may create, or in any way be the basis for
any right, title, interest, lien, claim or other encumbrance upon the estate of Lessor in the
Leased Property, or any portion thereof.

     (d) Lessee will, upon the expiration or prior termination of the Term, vacate and surrender
the Leased Property to Lessor in the condition in which the Leased Property was originally received
from Lessor, except as repaired, rebuilt, restored, altered or added to as permitted or required by
the provisions of this Lease and except for ordinary wear and tear (subject to the obligation of
Lessee to maintain the Leased Property in 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.)

9.2 Encroachments, Restrictions, Etc. If any of the Leased Improvements, at any time,
materially encroach upon any property, street or right-of-way adjacent to the Leased Property, or
violate the agreements or conditions contained in any lawful restrictive covenant or other
agreement affecting the Leased Property, or any part thereof, or impair the rights of others under
any easement or right-of-way to which the Leased Property is subject, then promptly upon the
request of Lessor or at the behest of any person affected by any such encroachment, violation or
impairment, Lessee shall, at its expense, subject to its right to contest the existence of any
encroachment, violation or impairment and in such case, in the event of an adverse final
determination, either (a) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation or impairment, whether the
same shall affect Lessor or Lessee or (b) make such changes in the Leased Improvements, and take
such other actions, as Lessee in the good faith exercise of its judgment deems reasonably
practicable to remove such encroachment, and to end such violation or impairment, including, if
necessary, the alteration of any of the Leased Improvements, and in any event take all such actions
as may be necessary in order to be able to continue the operation of the Leased

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Improvements for the Primary Intended Use substantially in the manner and to the extent the Leased
Improvements were operated prior to the assertion of such violation, impairment or encroachment;
provided, however, that any Capital Improvement shall be the responsibility of
Lessor. Any such alteration shall be made in conformity with the applicable requirements of
Article 10. 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

10.1 Alterations. Lessee shall have the right to make additions, modifications or
improvements to the Leased Property from time to time as Lessee, in its discretion, may deem to be
desirable for its permitted uses and purposes, provided that such action will not significantly
alter the character or purposes or significantly detract from the value or operating efficiency
thereof and will not significantly impair the revenue-producing capability of the Leased Property
or adversely affect the ability of 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
Lessee, and all such additions, modifications and improvements shall, without payment by Lessor at
any time, be included under the terms of this Lease and upon expiration or earlier termination of
this Lease shall pass to and become the property of Lessor.

10.2 Salvage. All materials which are scrapped or removed in connection with the making of
repairs required by Articles 9 or 10 shall be or become the property of Lessor or Lessee depending
on which party is paying for or providing the financing for such work.

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

ARTICLE 11

11.1 Liens. Subject to the provision of Article 12 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,
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 23 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 12, (g) liens of mechanics, laborers,

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materialmen, suppliers or vendors for sums either disputed or not yet due provided that (1) the
payment of such sums shall not be postponed under any related contract for more than 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 12 hereof, and (h) any liens which are the responsibility of Lessor pursuant
to the provisions of Article 34 of this Lease.

ARTICLE 12

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 11, by
appropriate legal proceedings in good faith and with due diligence (but this shall not be deemed or
construed in any way to relieve, modify or extend Lessee’s covenants to pay or its covenants to
cause to be paid any such charges at the time and in the manner as in this Article provided), on
condition, however, that such legal proceedings shall not operate to relieve Lessee from its
obligations hereunder and shall not cause the sale or risk the loss of 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 (5) days of
the same. Lessor agrees to join in any such proceedings if the same be required to legally
prosecute such contest of the validity of such Claims; provided, however, that
Lessor shall not thereby be 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 that Lessee fails to pay any
Claims when due or to provide the security therefor as provided in this Article 12 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

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13.1 General Insurance Requirements. During the Term of this Lease, Lessee shall at all
times keep the Leased Property 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 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. The policies on the Leased Property,
including the Leased Improvements, Fixtures and Lessee’s Personal Property, shall include:

     (a) 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 one hundred
percent (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;

     (b) 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 $1,000,000
or in such greater amounts as are then customary or as may be reasonably requested by Lessor from
time to time;

     (c) Loss of income insurance on the “Special Form”, in the amount of one (1) year of Base Rent
for the benefit of Lessor, and business interruption insurance on the “Special Form” in the amount
of one year of gross profit, for the benefit of Lessee;

     (d) Commercial general liability insurance, with amounts not less than $1,000,000 covering
each of the following: bodily injury, death, or property damage liability per occurrence, personal
and advertising injury, general aggregate, products and completed operations, with respect to
Lessor, and “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;

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

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

     (g) If applicable, workers’ compensation insurance to the extent necessary to protect Lessor
and the Leased Property against Lessee’s workers’ compensation claims;

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

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

     Lessee shall keep in force the foregoing insurance coverages at its expense. The Lessee shall
also be responsible for any and all deductibles in connection with such coverages. In the event
that the Lessor can obtain comparable insurance coverage required to be carried by Lessee from
comparable insurers at a cost significantly less than that at which Lessee can obtain such
coverage, the parties shall cooperate in good faith to obtain such coverage at the lower cost and
the Lessee shall pay the premiums therefor.

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

13.3 Worker’s Compensation. Lessee, at its sole cost, shall at all times maintain adequate
worker’s compensation insurance coverage for all persons employed by Lessee on the Leased Property.
Such worker’s compensation insurance shall be in accordance with the requirements of applicable
local, state and federal law.

13.4 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.

13.5 Form Satisfactory, etc. All of the policies of insurance referred to in this Article
13 shall be written in a form, with deductibles and by insurance companies satisfactory to Lessor.
Subject to the right to reimbursement or credit specified in Section 13.1, Lessor shall pay all of
the premiums therefor, and deliver such policies or certificates thereof to Lessee prior to their
effective date (and, with respect to any renewal policy, thirty (30) days prior to the expiration
of the existing policy), and in the event of the failure of Lessor either to effect such insurance
as herein called for or to pay the premiums therefor, or to deliver such policies or certificates
thereof to Lessee at the times required, Lessee shall be entitled, but shall have no obligation, to
effect such insurance and pay the premiums therefor, and Lessor shall reimburse Lessee for any
premium or premiums paid by Lessee for the coverages required under Sections 13.1(a) and 13.1(b)
upon written demand therefor, and Lessor’s failure to repay the same within thirty (30) days after
Notice of such failure from Lessee shall constitute an Event of Default within the meaning of
Section 16.1(b). Each insurer mentioned in this Article 13 shall agree, by endorsement to the
policy or policies issued by it, or by independent instrument furnished to Lessee, that it will
give to Lessee sixty (60) days’ written notice before the policy or policies in question shall be
materially altered, allowed to expire or canceled.

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13.6 Increase in Limits. If either Lessor or Lessee at any time deems the limits of the
personal injury or property damage under the comprehensive public liability insurance then carried
to be either excessive or insufficient, Lessor 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.

13.7 Blanket Policy. Notwithstanding anything to the contrary contained in this Article
13, Lessor may bring the insurance provided for herein within the coverage of a so-called blanket
policy or policies of insurance carried and maintained by Lessor; provided,
however, that the coverage afforded to 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 13 are otherwise satisfied.

13.8 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 13 to be furnished, or
increase the amount of any then existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter of the insurance,
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

14.1 Insurance Proceeds. Subject to the provisions of Section 14.6, all proceeds payable
by reason of any loss or damage to the Leased Property, or any portion thereof, and insured under
any policy of insurance required by Article 13 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 13, 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

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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 terminated by either party
as aforesaid (and such termination is not nullified by Lessor) and if the inadequacy of insurance
proceeds was the result of Lessor’s failure to maintain the proper insurance coverages as required
pursuant to Article 13, Lessor shall, within one hundred eighty (180) days after such termination,
either (i) pay to Lessee the Fair Market Value of the leasehold estate hereunder as of the
termination date or (ii) offer to lease to Lessee one or more hotel facilities pursuant to one or
more leases that would create for Lessee leasehold estates having an aggregate Fair Market Value no
less than the Fair Market Value of the leasehold estate hereunder, as of the date of termination.
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.

     (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 13, 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, 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 and Lessee’s obligation to make rental payments and to
pay all other charges required by this Lease shall remain unabated during the first six (6) months
of any period required for the applicable repair and restoration. Thereafter, Base Rent shall be
equitably abated.

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14.6 Damage Near End of Term. Notwithstanding any provisions of Section 14.2 or 14.3
appearing to the contrary, if damage to or destruction of the Facility unsuitable for its Primary
Intended Use occurs during the last twenty (24) months of the Term, then Lessee shall have the
right to terminate this Lease by giving written notice to Lessee within thirty (30) days after the
date of damage or destruction, whereupon all accrued Rent shall be paid immediately, and this Lease
shall automatically terminate five (5) days after the date of such notice.

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.

ARTICLE 15

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 15.

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,
without in any way affecting any other Leases then in effect between Lessor and Lessee. 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.

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15.5 Partial Taking. If title to less than the whole of the Leased Property is condemned,
and the Leased Property is still suitable for its Primary Intended Use, and not Uneconomic for its
Primary Intended Use, or if Lessee or Lessor is entitled but neither elects 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 Leased Improvements so
that such Leased Improvements constitute a complete architectural unit of the same general
character and condition (as nearly as may be possible under the circumstances) as the Leased
Improvements existing immediately prior to the Condemnation. If the condemnation awards are not
adequate to restore the 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, 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 Base 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 Revenue 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

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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.

ARTICLE 16

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 when the same becomes 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 make payment of quarterly Percentage Rent when the same becomes due and
payable and such condition continues for a period of ten days after receipt by the Lessee of Notice
from the Lessor thereof;

     (c) if Lessee fails to observe or perform any term, covenant or condition of this Lease, other
than the payment of 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, in no event shall such
cure period extend beyond ninety (90) days after such Notice; provided, however,
that a failure of Lessee to observe or perform any covenant contained in Article 18 hereof shall
result in an immediate Event of Default and there shall be no cure period applicable thereto; or

     (d) 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

     (e) 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

     (f) 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

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proceeding (unless Lessee is contesting such lien or attachment in good faith in accordance
with Article 12 hereof); or

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

     (h) 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,
other than a failure to complete a Capital Improvement required by the Franchisor resulting from
Lessor’s failure to fund the Capital Expenditure therefor pursuant to Section 9.1(b), 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 thirty (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 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) 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, relet the Leased Property or otherwise mitigate Lessor’s damages,
except unless otherwise required by applicable law.

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

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

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

          (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 worth at the time of termination, repossession or
reletting of the amount referred to in Section 16.3(b)(ii) is computed by discounting such amount
at the discount rate of the Federal Reserve Bank of New York at the time of award plus one percent
(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 Percentage Rent for the three (3) Fiscal Years immediately preceding the
Fiscal Year in which the termination, re-entry or repossession takes place, or (ii) if three (3)
Fiscal Years shall not have elapsed, the average of the Percentage Rent during the preceding Fiscal
Years during which the Lease was in effect, or (iii) if one (1) Fiscal Year has not elapsed, the
amount derived by annualizing the Percentage Rent from the effective date of this Lease.

16.4 Waiver. If this Lease is terminated pursuant to Section 16.1, Lessee waives, to the
extent permitted by applicable law, (a) any right to a trial by jury in the event of summary
proceedings to enforce the remedies set forth in this Article 16, and (b) the benefit of any laws
now or hereafter in force exempting property from liability for rent or for debt and Lessor waives
any right to “pierce the corporate veil” of Lessee other than to the extent funds shall have been
inappropriately paid any Affiliate of Lessee following a default resulting in an Event of Default.

16.5 Application of Funds. Any payments received by Lessor under any of the provisions of
this Lease during the existence or continuance of any Event of Default shall be applied to

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Lessee’s obligations in the order that Lessor may determine or as may be prescribed by the laws of
the State.

ARTICLE 17

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 shall survive the expiration or earlier termination of this Lease.

ARTICLE 18

18.1 REIT Requirements.

     (a) Lessee understands that, in order for REIT to qualify as a real estate investment trust
within the meaning of section 856 of the Code, the following requirements (the “REIT Requirements”)
must be satisfied:

          (i) Anything contained in this Lease to the contrary notwithstanding, the average of the Fair
Market Value of the items of personal property that are leased to the Lessee under this Lease at
the beginning and at the end of any Fiscal Year shall not exceed fifteen percent (15%) of the
average of the aggregate Fair Market Value of the real and personal property contained in the
Leased Property at the beginning and at the end of such Fiscal Year (the “Personal Property
Limitation”). If Lessor reasonably anticipates that the Personal Property Limitation will be
exceeded for any Fiscal Year, Lessor shall notify Lessee, and Lessee either (a) shall purchase any
personal property, anticipated to be in excess of the Personal Property Limitation (“Excess
Personal Property”) either from the Lessor or a third party or (b) shall lease the Excess
Personal Property from a third party. In either case, Lessee’s Rent obligation shall be reduced as
follows:

     (A) If Lessee purchases the Excess Personal Property and incurs no indebtedness
in connection with such purchase, the total Rent payable pursuant to Section 3.1
hereof shall be reduced for the Fiscal Year during which such purchase occurs by an
amount equal to the purchase price of the Excess Personal Property.

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     (B) If Lessee purchases the Excess Personal Property and finances any portion
of such purchase with indebtedness, the total Rent payable pursuant to Section 3.1
hereof shall be reduced (A) with respect to the Fiscal Year during which such
purchase occurs, by an amount equal to any portion of the purchase price paid in
cash and (B) with respect to each Fiscal Year during which such indebtedness is
outstanding, by an amount equal to the aggregate payments on such indebtedness
Lessee must make during such Fiscal Year. The total Rent may be reduced both by the
amount determined in clause (A) and the amount determined in clause (B) with respect
to the Fiscal Year during which the purchase occurs.

     (C) If Lessee leases the Excess Personal Property from a third party, the total
Rent payable pursuant to Section 3.1 hereof shall be reduced with respect to each
Fiscal Year during the term of such lease by an amount equal to the aggregate
payments under such lease Lessee must make during such Fiscal Year. This Section
18.1 is intended to ensure that the Rent qualifies as “rents from real property,”
within the meaning of Section 856(d) of the Code, or any similar or successor
provisions thereto, and shall be interpreted in a manner consistent with such
intent.

          (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 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 REIT owns, directly or indirectly, a ten percent (10%) or
more interest, within the meaning of Section 856(d)(2)(B) of the Code.

          (iv) Lessee will have in effect at all times during this Lease an election (jointly with the
REIT) to be, and Lessee will operate as, a “taxable REIT subsidiary” of REIT within the meaning of
Section 856(e) of the Code.

          (v) Lessee shall not permit any wagering activities to be conducted at or in connection with
the Leased Property by any person who is engaged in the business of accepting wagers and who is
legally authorized to engage in such business at or in connection with the Leased Property.

          (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

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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 REIT and Lessor to
ensure that the REIT Requirements are satisfied, including but not limited to, providing REIT with
information about the ownership of Lessee, Manager and their 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 REIT, and, where appropriate, at REIT’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, REIT of such noncompliance.

18.2 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 Affiliate shall be
officers or employees of Manager (or any Person who operates or manages the Leased Property). In
addition, if a Person serves as both (a) a director of the Lessee or any Affiliate 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 Affiliate. If a person serves as both (a) a director of Manager or any Affiliate (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.

18.3 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 Schedule “C” attached hereto (the “Management Agreement”) and Lessee shall
provide Lessor with an executed copy thereof. Lessee may not amend, modify or terminate the
Management Agreement in any respect or change the Manager without the prior written consent of
Lessor. 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 19

19.1 Holding Over. If Lessee for any reason remains in possession of the Leased Property
after the expiration or earlier termination of the Term, such possession shall be as a tenant at
sufferance during which time Lessee shall pay as rental each month two (2) times the aggregate of
(a) one-twelfth of the aggregate Base Rent and Percentage Rent payable with respect to the last
Fiscal Year of the Term, (b) all Additional Charges accruing during the applicable month and (c)
all other sums, if any, payable by Lessee under this Lease with respect to the Leased Property.
During such period, Lessee shall be obligated to perform and observe all of the terms, covenants
and conditions of this Lease, but shall have no rights hereunder other than the right, to

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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.

ARTICLE 20

20.1 Risk of Loss. During the Term, the risk of loss or of decrease in the enjoyment and
beneficial use of the Leased Property in consequence of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
attachments, levies or executions (other than those caused by Lessor and those claiming from,
through or under Lessor) is assumed by Lessee except as specifically provided in this Lease, and,
in the absence of gross negligence, willful misconduct or breach of this Lease by Lessor pursuant
to Section 34.3, 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 21

21.1 Indemnification. Notwithstanding the existence of any insurance, and without regard
to the policy limits of any such insurance or self-insurance, but subject to Section 16.4 and
Article 8, Lessee will protect, indemnify, hold harmless and defend Lessor from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses), to the extent permitted
by law, imposed upon or incurred by or asserted against Lessor Indemnified Parties by reason of:
(a) any accident, injury to or death of persons or loss of or damage to property occurring on or
about the Leased Property or adjoining sidewalks, including without limitation any claims under
liquor liability, “dram shop” or similar laws, (b) any past, present or future use, misuse,
non-use, condition, management, maintenance or repair by Lessee or any of its agents, employees or
invitees of the Leased Property or Lessee’s Personal Property or any litigation, proceeding or
claim by governmental entities or other third parties to which a Lessor Indemnified Party is made a
party or participant related to such use, misuse, non-use, condition, management, maintenance, or
repair thereof by Lessee or any of its agents, employees or invitees, including any failure of
Lessee or any of its agents, employees or invitees to perform any obligations under this Lease or
imposed by applicable law (other than arising out of 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 the terms of this Lease.

     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

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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 shall survive
any termination of this Lease.

ARTICLE 22

22.1 Subletting and Assignment.. Subject to the provisions of Article 19 and Section 22.2
and any other express conditions or limitations set forth herein, Lessee may, but only with the
prior written consent of Lessor, (a) assign this Lease or sublet all or any part of the Leased
Property to an Affiliate of Lessee, or (b) sublet any retail or restaurant portion of the Leased
Improvements in the normal course of the Primary Intended Use; provided that any subletting to any
party other than an Affiliate of Lessee shall not individually as to any one such subletting, or in
the aggregate, materially diminish the actual or potential Percentage Rent payable under this
Lease. In the case of a subletting, the sublessee shall comply with the provisions of Section
22.2, and in the case of an assignment, the assignee shall assume in writing and agree to keep and
perform all of the terms of this Lease on the part of Lessee to be kept and performed and shall be,
and become, jointly and severally liable with Lessee for the performance thereof. Notwithstanding
the above, Lessee may assign the Lease to an Affiliate without the consent of Lessor; provided that
any such assignee assumes in writing and agrees to keep and perform all of the terms of the Lease
on the part of the 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.

22.2 Attornment. Lessee shall insert in each sublease permitted under Section 22.1
provisions to the effect that (a) such sublease is subject and subordinate to all of the terms and
provisions of this Lease and to the rights of Lessor hereunder, (b) if this Lease terminates before
the expiration of such sublease, the sublessee 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 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

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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 23

23.1 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) 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.

     (d) Lessee covenants that during the Term it will maintain a ratio of debt-to-Net Worth of
fifty percent (50%) or less, exclusive of capitalized leases.

     (e) During the Term, Lessee will maintain a net worth sufficient to cover reasonably
anticipated working capital requirements. Lessee shall be treated as having satisfied this
requirement so long as (i) Lessee maintains a net worth of not less than One Hundred Thousand
Dollars ($100,000.00) or (ii) Summit Hotel TRS, Inc. owns 100% of the membership interests in
Lessee and maintains a net worth of not less than Two Million and Five Hundred Thousand Dollars
($2,500,000).

23.2 Operating Budget. Not later than sixty (60) days prior to the commencement of each
Lease Year, Lessee, in consultation with the Manager, shall prepare and submit to Lessor an
operating budget (the “Operating Budget”) in form and substance satisfactory to Lessor, prepared in
accordance with the requirements of this Section 23.2. 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 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:

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     (a) Lessee’s reasonable estimate of Gross Revenue, Room Revenue, F&B Revenue (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.

     (b) A cash flow projection.

     (c) Lessee’s reasonable estimate for each quarter of the Lease Year of Percentage Rent.

23.3 Marketing Plan. Not later than sixty (60) days prior to the commencement of each
Lease Year, Lessee, in consultation with the Manager, will prepare and submit to Lessor a narrative
description of the program for advertising and marketing the Facility for the forthcoming Lease
Year (the “Marketing Plan”) containing a detailed budget itemization of the proposed advertising
expenditures by category and the assumptions, in narrative form, forming the basis of such budget
itemization.

23.4 Capital Budget. Not later than sixty (60) days prior to the commencement of each
Lease Year, Lessor shall prepare and submit to Lessee a capital budget (the “Capital Budget”)
prepared in accordance with this Section 23.4. The Capital Budget shall be prepared in accordance
with the Uniform System to the extent applicable and shall set forth Lessor’s proposed Capital
Expenditures for the ensuing Lease Year.

23.5 Disputes. In the event of any dispute between Lessor and Lessee as to the Operating
Budget, the Marketing Plan or the Capital Budget, Lessor and Lessee shall act promptly, reasonably
and in good faith in seeking to resolve such disputes and in arriving at a mutually acceptable
Operating Budget, Marketing Plan and Capital Budget.

ARTICLE 24

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

ARTICLE 25

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

ARTICLE 26

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

ARTICLE 27

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

ARTICLE 28

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

ARTICLE 29

29.1 Conveyance by Lessor. If Lessor or any successor owner of the Leased Property conveys
the Leased Property to a Person other than an 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.

ARTICLE 30

30.1 Quiet Enjoyment. So long as Lessee pays all Rent as the same becomes due and complies
with all of the terms of this Lease and performs its obligations hereunder, in each case within the
applicable grace periods, if any, Lessee shall peaceably and quietly have, hold and enjoy the
Leased Property for the Term hereof, free of any claim or other action by Lessor or anyone claiming
by, through or under Lessor, but subject to all liens and encumbrances subject to which the Leased
Property was conveyed to Lessor or hereafter consented to by Lessee or provided for herein.
Notwithstanding the foregoing, Lessee shall have the right by separate and independent action to
pursue any claim it may have against Lessor as a result of a breach by Lessor of the covenant of
quiet enjoyment contained in this Section.

ARTICLE 31

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31.1 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 2701 S. Minnesota Avenue, Suite 6, Sioux Falls, SD 57105,
Facsimile (605) 362-9388, Attention: President, and addressed to Lessee at 2701 S. Minnesota
Avenue, Suite 6, Sioux Falls, SD 57105, Facsimile (605) 362-9388, Attention: President, 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 (5) days.

ARTICLE 32

32.1 Appraisers. If it becomes necessary to determine the Fair Market Value of the
leasehold estate hereunder for any purpose of this Lease, the party required or permitted to give
Notice of such required determination shall include in the Notice the name of a person selected to
act as appraiser on its behalf. Within ten (10) days after Notice, Lessor (or Lessee, as the case
may be) shall by Notice to Lessee (or Lessor, as the case may be) appoint a second person as
appraiser on its behalf. The appraisers thus appointed, each of whom must be a member of the
American Institute of Real Estate Appraisers (or any successor organization thereto) with at least
five (5) years experience in the State appraising property similar to the Leased Property, shall,
within forty-five (45) days after the date of the Notice appointing the first appraiser, proceed to
determine the Fair Market Value of the leasehold estate hereunder as of the relevant date (giving
effect to the impact, if any, of inflation from the date of their decision to the relevant date);
provided, however, that if only one (1) appraiser shall have been so appointed,
then the determination of such appraiser shall be final and binding upon the parties. If two (2)
appraisers are appointed and if the difference between the amounts so determined does not exceed
five percent (5%) of the lesser of such amounts, then the Fair Market Value shall be an amount
equal to fifty percent (50%) of the sum of the amounts so determined. If the difference between
the amounts so determined exceeds five percent (5%) of the lesser of such amounts, then such two
(2) appraisers shall have twenty (20) days to appoint a third appraiser. If no such appraiser
shall have been appointed within such twenty (20) days or within ninety (90) days of the original
request for a determination of Fair Market Value, whichever is earlier, either Lessor or Lessee may
apply to any court having jurisdiction to have such appointment made by such court. Any appraiser
appointed by the original appraisers or by such court shall be instructed to determine the Fair
Market Value within forty-five (45) days after appointment of such appraiser. The determination of
the appraiser which differs most in the terms of dollar amount from the determinations of the other
two (2) appraisers shall be excluded, and fifty percent (50%) of the sum of the remaining two (2)
determinations shall be final and binding upon Lessor and Lessee as the Fair Market Value of the
leasehold estate hereunder. This provision for determining by appraisal shall be specifically
enforceable to the extent such remedy is available under applicable law, and any determination
hereunder shall be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser appointed by it and
each shall pay one-half (.5) of the fees and expenses of the third appraiser and one-half (.5) of
all other costs and expenses incurred in connection with each appraisal.

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ARTICLE 33

33.1 Lessor May Grant Liens. Without the consent of Lessee, Lessor may, subject to the
terms and conditions set forth below in this Section 33.1, 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. Any such Encumbrance shall (a)
contain the right to prepay (whether or not subject to a prepayment penalty); (b) provide that it
is subject to the rights of Lessee under this Lease, (c) contain the Agreement by the holder of the
Encumbrance that it will (1) give Lessee the same notice, if any, given to Lessor of any default or
acceleration of any obligation underlying any such Encumbrance or any sale in foreclosure under
such Encumbrance, (2) permit Lessee to cure any such default on Lessor’s behalf within any
applicable cure period, and Lessee shall be reimbursed by Lessor for any and all costs incurred in
effecting such cure, including without limitation out-of-pocket costs incurred to effect any such
cure (including reasonable attorneys’ fees) and (3) permit Lessee to appear by its representative
and to bid at any sale in foreclosure made with respect to any such Encumbrance. Upon the request
of Lessor, Lessee shall subordinate this Lease to the lien of a new mortgage on the Leased
Property, on the condition that the proposed mortgagee executes a non-disturbance agreement
recognizing this Lease, and agreeing, for itself and its successors and assigns, to comply with the
provisions of this Article 33.

33.2 Lessee’s Right to Cure. Subject to the provisions of Section 33.3, if Lessor breaches
any covenant to be performed by it under this Lease, Lessee, after Notice to and demand upon
Lessor, without waiving or releasing any obligation hereunder, and in addition to all other
remedies available to Lessee, may (but shall be under no obligation at any time thereafter to) make
such payment or perform such act for the account and at the expense of Lessor. All sums so paid by
Lessee and all costs and expenses (including, without limitation, reasonable attorneys’ fees) so
incurred, together with interest thereon at the Overdue Rate from the date on which such sums or
expenses are paid or incurred by Lessee, shall be paid by Lessor to Lessee on demand or, following
entry of a final, nonappealable judgment against Lessor for such sums, may be offset by Lessee
against the Base Rent payments next accruing or coming due. The rights of Lessee hereunder to cure
and to secure payment from Lessor in accordance with this Section 33.2 shall survive the
termination of this Lease with respect to the Leased Property.

33.3 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 thirty (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. If Lessor fails to cure any such breach
within the grace period described above, Lessee, without waiving or releasing any obligations
hereunder, and in addition to all other remedies available to Lessee at law or in equity, may
purchase the Leased Property from Lessor for a purchase price equal to the then Fair Market Value.
If Lessee elects to purchase the Leased Property it shall deliver a Notice thereof to Lessor

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specifying a settlement date to occur not less than ninety (90) days subsequent to the date of such
Notice on which it shall purchase the Leased Property.

ARTICLE 34

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

34.2 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.

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

ARTICLE 35

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

ARTICLE 36

36.1 Lessor’s Option to Purchase Assets of Lessee. Effective on not less than ninety (90)
days prior Notice given at any time within one hundred eighty (180) days before the expiration of
the Term, but not later than ninety (90) days prior to such expiration, or upon such shorter Notice
period as shall be appropriate if this Lease is terminated prior to its expiration date, Lessor
shall

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have the option to purchase all (but not less than all) of the assets of Lessee, tangible and
intangible, relating to the Leased Property (other than this Lease), at the expiration or
termination of this Lease for an amount (payable in cash on the expiration date of this Lease)
equal to the fair market value thereof as agreed to by the parties or, in the absence of such
agreement, as determined by appraisal in conformity with Article 32, except that the appraisers
need not be members of the American Institute of Real Estate Appraisers, but rather shall be
appraisers having at least ten (10) years experience in valuing similar assets. Notwithstanding
any such purchase, Lessor shall obtain no rights to any trade name or logo used in connection with
the Franchise unless separate agreement as to such use is reached with the applicable franchisor.

ARTICLE 37

37.1 Lessor’s Option to Terminate Lease. Lessor may terminate the Lease as to any Leased
Property prior to the Expiration Date by giving to Lessee not less than thirty (30) days prior
Notice of Lessor’s election to terminate this Lease. Effective upon the termination date set forth
in the Notice, this Lease shall terminate and be of no further force and effect except as to any
obligations of the parties existing as of such date that survive termination of this Lease. As
compensation for the early termination of Lessee’s leasehold estate under this Article 37, Lessor
shall, within one hundred eighty (180) days following the termination date, either (a) pay to
Lessee the Fair Market Value of Lessee’s leasehold estate hereunder as of the termination date of
the Lease with respect to the Leased Property or (b) within one (1) year following the termination
date offer to lease to Lessee one or more substitute hotel facilities pursuant to one or more
leases that would create for the Lessee leasehold estates that have an aggregate Fair Market Value
of no less than the Fair Market Value of the leasehold estate for the Leased Property being
terminated hereunder, both such values as determined as of the termination date of the Lease;
provided, however, that in the event Lessor does not pay to Lessee the termination
amount or offer to lease to Lessee substitute hotel facilities which meet the requirements
described above within one hundred eighty (180) days following the termination date, Lessor may
extend the one hundred eighty (180) day period for an additional one hundred eighty-five (185) days
and interest on the amount of the termination payment shall accrue at the Base Rate from the one
hundred eighty first (181st) day following the termination date until the date of
payment or offer of a substitute lease and the amount of any accrued interest shall be included in
the computation of the Fair Market Value of the leasehold estate for purposes of this Article 37.
If Lessor elects and complies with the option described in (b) above, regardless of whether Lessee
enters into the lease(s) described therein, Lessor shall have no further obligations to Lessee with
respect to compensation for the early termination of the Lease. In the event Lessor and Lessee are
unable to agree upon the fair market value of an original or replacement leasehold estate, it shall
be determined by appraisal using the appraisal procedure set forth in Article 32.

ARTICLE 38

38.1 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
(other than requirements with respect to Capital Improvements). 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

47

 

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 or
any designee of Lessor or any successor to Lessee 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, 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.

ARTICLE 39

39.1 Lessor Approval of Capital Expenditures. All Capital Expenditures whether pursuant to
the Capital Budget or otherwise shall be subject to the approval of Lessor, which approval shall
extend both to the plans and specifications (including matters of design and decor) and to the
contracting and purchasing of all labor, services and materials. Lessor shall have the right to
require competitive bidding of contracts for Capital Improvements, review all bids and monitor
costs, time, quality and performance. The foregoing restrictions shall not apply to emergency
Capital Expenditures made by Lessee in amounts not to exceed $25,000, and with prior notice to
Lessor (if possible under the circumstances).

39.2 Inventory. On the Commencement Date, Lessee agrees to purchase from Lessor, for cash,
any Inventory at the Facility at a price equal to the fair market value as agreed by Lessor and
Lessee.

48

 

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

	 	 	 	 	 
	 	LESSOR

SUMMIT HOTEL OP, LP

a Delaware limited partnership

 

	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 
	 	LESSEE

SUMMIT HOTEL TRS 002, LLC

a Delaware limited liability company

 

	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

[Signature Page]

 

 

SCHEDULE “A”

LEASED PROPERTY

Comfort Inn, 1820 W. Crawford, Salina, Kansas 67401

Schedule A

 

 

SCHEDULE “B”

	 	 	 

	 
	 	 
	FACILITY:

	 	Comfort Inn
	 
	 	 
	LAND:

	 	Pursuant to Schedule “A” to that certain Loan Agreement between _________________
and __________________________
dated ________
	 
	 	 
	COMMENCEMENT DATE:
	 	 
	 
	 	 
	EXPIRATION DATE:
	 	 
	 
	 	 
	TERM:

	 	3 years
	 
	 	 
	BASE RENT:
	 	 
	 
	 	 
	FIRST TIER ROOM REVENUE 

PERCENTAGE:
	 	 
	 
	 	 
	ANNUAL ROOM REVENUE 

BREAK POINT:
	 	 

Schedule B

 

 

SCHEDULE “C”

MANAGEMENT AGREEMENT

Schedule C

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}]]