Document:

Exhibit 10.5 

Hilton Garden Inn

Denver, CO

MANAGEMENT AGREEMENT

by and between

STONEBRIDGE REALTY ADVISORS, INC.,

d/b/a STONEBRIDGE COMPANIES

as “MANAGER”

and

APPLE TEN HOSPITALITY MANAGEMENT, INC.

as “OWNER”

Dated as of March 4, 2011

	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 I            APPOINTMENT
 OF MANAGER

 	
 1

 
	
  

 	
  

 
	
 1.01.

 	
  

 	
 Appointment

 	
 1

 
	
  

 	
  

 	
  

 	
  

 
	
 1.02.

 	
  

 	
 Management
 of the Hotel

 	
 2

 
	
  

 	
  

 	
  

 	
  

 
	
 1.03.

 	
  

 	
 Employees

 	
 3

 
	
  

 	
  

 	
  

 	
  

 
	
 1.04.

 	
  

 	
 Owner’s
 Right to Inspect

 	
 4

 
	
  

 	
  

 	
  

 	
  

 
	
 1.05.

 	
  

 	
 Regular
 Meetings

 	
 4

 
	
  

 	
  

 	
  

 	
  

 
	
 1.06.

 	
  

 	
 System
 Standards

 	
 5

 
	
  

 	
  

 	
  

 	
  

 
	
 1.07.

 	
  

 	
 Limitations
 on Manager’s Authority

 	
 5

 
	
  

 	
  

 	
  

 	
  

 
	
 1.08.

 	
  

 	
 Representations
 and Warranties of Manager

 	
 5

 
	
  

 	
  

 	
  

 	
  

 
	
 1.09.

 	
  

 	
 Limitations
 on Manager’s Duties

 	
 5

 
	
  

 	
  

 	
  

 	
  

 
	
 1.10.

 	
  

 	
 Centralized
 Services

 	
 6

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 II            TERM

 	
 6

 
	
  

 	
  

 
	
 2.01.

 	
  

 	
 Term

 	
 6

 
	
  

 	
  

 	
  

 	
  

 
	
 2.02.

 	
  

 	
 Performance
 Termination

 	
 6

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 III           COMPENSATION
 OF MANAGER

 	
 8

 
	
  

 	
  

 
	
 3.01.

 	
  

 	
 Management
 Fees

 	
 8

 
	
  

 	
  

 	
  

 	
  

 
	
 3.02.

 	
  

 	
 Operating
 Profit

 	
 8

 
	
  

 	
  

 	
  

 	
  

 
	
 3.03.

 	
  

 	
 Accounting
 Fee

 	
 9

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 IV           ACCOUNTING,
 BOOKKEEPING AND BANK ACCOUNTS

 	
 10

 
	
  

 	
  

 
	
 4.01.

 	
  

 	
 Accounting,
 Distributions and Annual Reconciliation

 	
 10

 
	
  

 	
  

 	
  

 	
  

 
	
 4.02.

 	
  

 	
 Books and
 Records

 	
 11

 
	
  

 	
  

 	
  

 	
  

 
	
 4.03.

 	
  

 	
 Accounts,
 Expenditures

 	
 11

 
	
  

 	
  

 	
  

 	
  

 
	
 4.04.

 	
  

 	
 Annual
 Operating Projection

 	
 12

 
	
  

 	
  

 	
  

 	
  

 
	
 4.05.

 	
  

 	
 Working
 Capital

 	
 12

 
	
  

 	
  

 	
  

 	
  

 
	
 4.06.

 	
  

 	
 Fixed Asset
 Supplies

 	
 13

 
	
  

 	
  

 	
  

 	
  

 
	
 4.07.

 	
  

 	
 Real Estate
 and Personal Property Taxes

 	
 13

 
	
  

 	
  

 	
  

 	
  

 
	
 4.08.

 	
  

 	
 Sarbanes-Oxley
 Certification

 	
 14

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 V             REPAIRS,
 MAINTENANCE AND REPLACEMENTS

 	
 15

 
	
  

 	
  

 
	
 5.01.

 	
  

 	
 Repairs and
 Maintenance to be Paid from Gross Revenues

 	
 15

 
	
  

 	
  

 	
  

 	
  

 
	
 5.02.

 	
  

 	
 Repairs,
 Maintenance and Equipment Replacements to be Paid from Reserve

 	
 15

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 VI            INSURANCE

 	
 17

 
	
  

 	
  

 
	
 6.01.

 	
  

 	
 Property
 Insurance

 	
 17

 

i

	
  

 	
  

 	
  

 	
  

 
	
 6.02.

 	
  

 	
 Operational
 Insurance

 	
 17

 
	
  

 	
  

 	
  

 	
  

 
	
 6.03.

 	
  

 	
 Coverage;
 Deductibles

 	
 18

 
	
  

 	
  

 	
  

 	
  

 
	
6.04.

 	
  

 	
 Costs and
 Expenses

 	
 19

 
	
  

 	
  

 	
  

 	
  

 
	
6.05.

 	
  

 	
 Owner’s
 Right to Provide Insurance

 	
 19

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 VII        DAMAGE AND REPAIR

 	
 19

 
	
  

 	
  

 
	
7.01.

 	
  

 	
 Damage and
 Repair

 	
 19

 
	
  

 	
  

 	
  

 	
  

 
	
7.02.

 	
  

 	
 Condemnation

 	
 20

 
	
  

 	
  

 	
  

 	
  

 
	
7.03.

 	
  

 	
 Subordination
 to Qualified Mortgage

 	
 21

 
	
  

 	
  

 	
  

 	
  

 
	
7.04.

 	
  

 	
 No
 Covenants, Conditions or Restrictions

 	
 21

 
	
  

 	
  

 	
  

 	
  

 
	
 7.05.

 	
  

 	
 Liens;
 Credit

 	
 22

 
	
  

 	
  

 	
  

 	
  

 
	
7.06.

 	
  

 	
 Hotel Lease

 	
 22

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 VIII       DEFAULTS

 	
 22

 
	
  

 	
  

 
	
8.01.

 	
  

 	
 Events of
 Default

 	
 22

 
	
  

 	
  

 	
  

 	
  

 
	
8.02.

 	
  

 	
 Remedies

 	
 23

 
	
  

 	
  

 	
  

 	
  

 
	
8.03.

 	
  

 	
 Additional
 Remedies

 	
 24

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 IX         ASSIGNMENT AND SALE

 	
 24

 
	
  

 	
  

 
	
 9.01.

 	
  

 	
 Assignment

 	
 24

 
	
  

 	
  

 	
  

 	
  

 
	
9.02.

 	
  

 	
 Sale of the
 Hotel

 	
 24

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 X           MISCELLANEOUS

 	
 25

 
	
  

 	
  

 
	
 10.01.

 	
  

 	
 Right to
 Make Agreement

 	
 25

 
	
  

 	
  

 	
  

 	
  

 
	
 10.02.

 	
  

 	
 Consents and
 Cooperation

 	
 25

 
	
  

 	
  

 	
  

 	
  

 
	
 10.03.

 	
  

 	
 Relationship

 	
 25

 
	
  

 	
  

 	
  

 	
  

 
	
 10.04.

 	
  

 	
 Applicable
 Law

 	
 26

 
	
  

 	
  

 	
  

 	
  

 
	
 10.05.

 	
  

 	
 Recordation

 	
 26

 
	
  

 	
  

 	
  

 	
  

 
	
 10.06.

 	
  

 	
 Headings

 	
 26

 
	
  

 	
  

 	
  

 	
  

 
	
 10.07.

 	
  

 	
 Notices

 	
 26

 
	
  

 	
  

 	
  

 	
  

 
	
 10.08.

 	
  

 	
 Environmental
 Matters

 	
 27

 
	
  

 	
  

 	
  

 	
  

 
	
 10.09.

 	
  

 	
 Confidentiality

 	
 28

 
	
  

 	
  

 	
  

 	
  

 
	
 10.10.

 	
  

 	
 Indemnification

 	
 29

 
	
  

 	
  

 	
  

 	
  

 
	
 10.11.

 	
  

 	
 Actions to
 be Taken Upon Termination

 	
 29

 
	
  

 	
  

 	
  

 	
  

 
	
 10.12.

 	
  

 	
 Waiver

 	
 30

 
	
  

 	
  

 	
  

 	
  

 
	
 10.13.

 	
  

 	
 Partial
 Invalidity

 	
 31

 
	
  

 	
  

 	
  

 	
  

 
	
 10.14.

 	
  

 	
 Survival

 	
 31

 

ii

	
  

 	
  

 	
  

 	
  

 
	
 10.15.

 	
  

 	
 Negotiation
 of Agreement

 	
 31

 
	
  

 	
  

 	
  

 	
  

 
	
 10.16.

 	
  

 	
 Estoppel
 Certificates

 	
 31

 
	
  

 	
  

 	
  

 	
  

 
	
 10.17.

 	
  

 	
 Affiliates

 	
 32

 
	
  

 	
  

 	
  

 	
  

 
	
 10.18.

 	
  

 	
 Blocked
 Persons or Entities

 	
 32

 
	
  

 	
  

 	
  

 	
  

 
	
 10.19.

 	
  

 	
 Restrictions
 on Operating the Hotel in Accordance with System Standards

 	
 33

 
	
  

 	
  

 	
  

 	
  

 
	
 10.20.

 	
  

 	
 Counterparts

 	
 33

 
	
  

 	
  

 	
  

 	
  

 
	
 10.21.

 	
  

 	
 Entire
 Agreement

 	
 33

 
	
  

 	
  

 	
  

 	
  

 
	
 10.22.

 	
  

 	
 Franchise
 Agreement

 	
 33

 
	
  

 	
  

 	
  

 	
  

 
	
 10.23.

 	
  

 	
 Operation of
 Other Hotels

 	
 34

 
	
  

 	
  

 	
  

 	
  

 
	
 10.24.

 	
  

 	
 Expert
 Decisions

 	
 34

 
	
  

 	
  

 	
  

 	
  

 
	
 10.25.

 	
  

 	
 Waiver of
 Jury Trial and Punitive Damages

 	
 35

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 XI              DEFINITION OF TERMS

 	
 35

 
	
  

 	
  

 
	
 11.01.

 	
  

 	
 Definition
 of Terms

 	
 35

 
	
  

 	
  

 	
  

 	
  

 
	
 Schedule 1

 	
  

 	
 -          Hotel
 Specific Data

 
	
 Exhibit A

 	
  

 	
 -          Legal
 Description of Site

 
	
 Exhibit B

 	
  

 	
 -          Representations
 and Warranties

 

iii

MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT (“Agreement”)
is executed as of the 4th day of March, 2011 (“Effective Date”), by APPLE TEN
HOSPITALTY MANAGEMENT, INC., a Virginia corporation, (“Owner”), with a mailing address at c/o
Apple REIT Companies, 1814 East Main Street, Richmond, Virginia 23219,
Attention: Krissy Gathright, and STONEBRIDGE REALTY ADVISORS, INC., a Colorado
corporation, d/b/a STONEBRIDGE COMPANIES (“Manager”),
with a mailing address at c/o Stonebridge Companies, 9100 East Panorama Drive,
Suite 300, Englewood, Colorado 80112, Attention: Navin C. Dimond.

RECITALS:

          A.
Apple Ten Hospitality Ownership, Inc., a Virginia corporation (“Landlord”), is the owner of that
certain hotel consisting of the Buildings located on the Site. The Site and the
Buildings, in addition to certain other rights, improvements, and personal
property as more particularly described in the definition of “Hotel” in Section 11.01 hereof, are
collectively referred to as the “Hotel.”

          B.
Landlord and Owner have entered into that certain Hotel Lease Agreement dated
as of the Effective Date (the “Hotel Lease”)
pursuant to which Landlord leases the Hotel to Owner. Concurrently with the
execution of this Agreement, Landlord, Owner and Manager have entered into a
recognition agreement, pursuant to which Landlord has agreed to recognize
Manager as the operator of the Hotel and assume the remaining obligations of
Owner under this Agreement or cause Manager to be so recognized and such
remaining obligations to be assumed by a successor tenant, if the Hotel Lease
terminates prior to the end of the term of this Agreement, as it may be
extended.

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

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

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

ARTICLE I

APPOINTMENT OF MANAGER

          1.01.
Appointment.

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

          1.02.
Management of the Hotel.

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

                              1.
Recruit, employ, supervise, direct and discharge the employees at the Hotel and
maintain adequate staff, consistent with Prudent Industry Practices, to carry
out its duties under this Agreement, which employees may be employed by an
Affiliate of Manager as provided in Section 1.03.

                              2.
Establish prices, rates and charges for services provided in the Hotel,
including Guest Room rates.

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

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

                              5.
Procure (for Owner) all Inventories and replace Fixed Asset Supplies.

                              6.
Prepare and deliver interim accountings, annual accountings, Annual Operating
Statements, Building Estimates, Repairs and Equipment Estimates and such other
information as is required by this Agreement.

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

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

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

                              10.
Subject to the terms of this Agreement, execute subordination agreements,
estoppel certificates and other documentation required by any purchaser or
mortgagee and reasonably cooperate (provided that Manager shall not be
obligated to enter into 

2

any amendments
of this Agreement) with Owner or Landlord in any attempt(s) by Owner or
Landlord to effectuate a Sale of the Hotel or to obtain a Qualified Mortgage.

                              11.
Arrange for and supervise public relations and advertising and prepare
marketing plans.

                              12.
Manage and operate the Hotel at all times in compliance with the Franchise
Agreement, including (without limitation) the Manual and the System standards
(as such terms are defined therein).

                    B.
The operation of the Hotel shall be under the exclusive supervision and control
of Manager, except as otherwise specifically provided in this Agreement, and
Manager shall be responsible for the proper and efficient operation of the
Hotel. In fulfilling its obligations under this Agreement, Manager will act as
a reasonable, prudent operator of the Hotel, having regard for the status of
the Hotel, operating the Hotel in accordance with Prudent Industry Practices
and at all times maintaining and complying with all standards imposed by the
Franchise Agreement, and subject to the foregoing and all other terms and
conditions of this Agreement, shall have discretion in the following: charges,
terms and conditions for Guest Rooms and commercial space; credit policies and
services provided by the Hotel; food and beverage services; employment
policies; granting of leases, subleases, licenses and concessions for shops and
businesses within the Hotel, provided that the term of any such lease,
sublease, license or concession shall not exceed the lesser of one (1) year or
the Term without the prior written approval of Owner; receipt, holding and
disbursement of funds; maintenance of bank accounts; procurement of
Inventories, supplies and services; promotion and publicity; payment of costs
and expenses as are specifically provided for in this Agreement or are otherwise
reasonably necessary for the proper and efficient operation of the Hotel; and,
generally, all activities necessary for operation of the Hotel. With respect to
all Material Management Decisions, Manager shall consult with Owner in advance
of making any such decisions. The term “Material
Management Decisions” means a decision to be made in connection
with any expenditure of more than $10,000 in each instance, or aggregate
expenditures in any Fiscal Year of five percent (5%) or more of the total
annual expenses provided for in the approved Annual Operating Projection for
such Fiscal Year, if such expenditure is not included in the approved Annual
Operating Projection for such Fiscal Year or if such expenditure would result
in an increase in the overall Annual Operating Projection approved by Owner,
unless such expenditure is made to address an emergency situation.

                    C.
Manager shall comply with and abide by all applicable Legal Requirements
pertaining to its operation of the Hotel. Any of Landlord, Owner or Manager
shall have the right, but not the obligation, in its reasonable discretion, to
contest or oppose, by appropriate proceedings, any such Legal Requirements. The
reasonable expenses of any such contest of a Legal Requirement shall be Deductions
and shall be paid from Gross Revenues or from other funds in the Operating
Accounts.

          1.03.
Employees

          All
personnel employed at the Hotel shall at all times be the employees of Manager
(or, after disclosure to Owner, one of its Affiliates) and not the employees of
Owner. Manager shall 

3

have
reasonable discretion with respect to all personnel employed at the Hotel,
including, without limitation, decisions regarding hiring, promoting,
transferring, compensating, supervising, terminating, directing and training
all employees at the Hotel, and, generally, establishing and maintaining all
policies relating to employment; provided, however, that (i) Owner shall have
the right to approve the hiring of the persons who occupy the position of
General Manager for the Hotel in accordance with the procedures set forth below
and (ii) except as otherwise required by applicable Legal Requirements, Manager
shall not negotiate or enter into any collective bargaining or other labor
agreement with employees or with any organization representing or claiming to
represent employees without Owner’s prior consent. No person shall be given
gratuitous accommodations or services without prior joint approval of Owner and
Manager except in accordance with policies agreed upon by Owner and Manager and
except corporate personnel of Manager at the Hotel on a temporary basis for
Hotel business (such as the meetings described in Section 1.05). Manager shall
reimburse Owner for the costs (including relocation costs) of hiring and
training General Managers who are employed at the Hotel for six (6) months or
less and are transferred or relocated (other than to another hotel managed by
Manager for Owner or any of Owner’s Affiliates), and for such costs on a
pro-rated basis (over twelve (12) months) for General Managers employed at the
Hotel for more than six (6) months but less than twelve (12) months (other than
those transferred or relocated to another hotel managed by Manager for Owner or
any of Owner’s Affiliates), and Manager shall promptly reimburse Owner for any
such costs that are payable by Manager, which amounts shall be Manager’s
Liabilities. 

          The
procedures for selection of the General Manager shall be as follows: Manager
shall provide Owner with the resume of the candidate for General Manager who is
qualified for such position in Manager’s reasonable judgment. Owner shall
notify Manager in writing of its approval or disapproval of such candidate
within five (5) Business Days after Owner’s receipt of the candidate’s resume,
Owner’s approval not to be unreasonably withheld. If Owner approves the
candidate or fails to notify Manager in writing of Owner’s approval or
disapproval of the candidate presented by Manager, Manager may appoint such
candidate to the position of General Manager. If Owner disapproves any
candidate presented by Manager, Manager shall not appoint such candidate as
General Manager. 

          1.04.
Owner’s Right to Inspect.

          Owner,
its representatives, employees, agents, Affiliates and Mortgagees shall have
access to the Hotel at any and all reasonable times for the purpose of
inspection, exercising any of its rights under this Agreement or showing the
Hotel to prospective purchasers, tenants or Mortgagees, provided that the
operation of the Hotel is not unreasonably interfered with, and at any time in
case of an emergency.

          1.05.
Regular Meetings.

          At
Owner’s request, Owner and Manager shall have meetings at the Hotel and at
mutually convenient times no more frequently than once a quarter. Manager shall
be represented at such meetings by the General Manager of the Hotel and such
other personnel as the General Manager and Owner may deem appropriate. The
travel costs and expenses for such other personnel to attend the meetings shall
be paid from the Operating Accounts as Deductions. The purpose of 

4

the meetings
shall be, inter alia, to discuss the performance of the Hotel and
other related issues, including any variations from the approved Annual
Operating Projection for the preceding quarter.

          1.06.
System Standards

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

          1.07.
Limitations on Manager’s Authority

          Unless
provided for in the approved Annual Operating Projection, Manager shall not,
without Owner’s prior written approval, enter into any FF&E Lease if (i)
the fair market value of the FF&E subject to such FF&E Lease at the
time of entering into such FF&E Lease exceeds Thirty-Five Thousand Dollars
($35,000); (ii) the fair market value of the FF&E subject to all FF&E
Leases at the time of entering into such FF&E Lease exceeds Sixty Thousand
Dollars ($60,000) in the aggregate; (iii) the FF&E subject to such FF&E
Lease is FF&E that is not, consistent with Prudent Industry Practices,
customarily leased; (iv) such FF&E Lease is with an Affiliate of Manager or
is on payment terms (including the amounts and schedule of payments) that would
be materially more favorable to the lessor thereof than payment terms customary
under Prudent Industry Practices for leases of similar FF&E; or (v) such
FF&E Lease is not terminable by Owner upon thirty (30) days’ notice if such
FF&E Lease is more than one (1) year in duration.

          1.08.
Representations and Warranties of Manager.

          Manager
hereby makes the representations and warranties to Owner set forth in Exhibit B
attached hereto and made a part hereof by this reference. 

          1.09.
Limitations on Manager’s Duties

                    A.
Manager’s duties under this Agreement are subject to the availability of
sufficient funds from the operation of the Hotel or which are otherwise
provided by Owner. Except as otherwise expressly provided in this Agreement,
all costs and expenses of operating, maintaining, marketing and improving the
Hotel shall be payable out of funds from the operation of the Hotel or which
are otherwise provided by Owner. In no event shall Manager be obligated to
advance any of its own funds to pay any such costs or expenses for the Hotel
except as expressly provided in this Agreement. Anything in this Agreement to
the contrary notwithstanding, Manager shall be excused from its obligations to
operate the Hotel in conformity with its obligations hereunder to the extent
and whenever Manager shall be prevented from compliance with such standard by
reason of the occurrence of a Force Majeure.

                    B.
In connection with any insurance coverages required or obtained under this
Agreement, neither Manager nor any insurance broker Manager or its Affiliates
may retain makes any warranty or representation regarding the advisability,
nature, or extent of the insurance coverages provided by Manager for the
benefit of Owner or any other coverages that 

5

Owner should
consider for the protection of Owner, the Hotel and its operations. Owner
agrees to rely exclusively on its own insurance advisors with respect to all
insurance matters.

                    C.
Any and all financial projections and budgets prepared by Manager under this
Agreement, including the Annual Operating Projection, are intended to assist in
operating the Hotel, but are not to be relied on by Owner or any third party as
to the accuracy of the information contained therein or the results predicted.
Manager does not guarantee the accuracy of the information contained in such
projections and budgets, nor does it guarantee the results of such projections
and budgets, and Owner acknowledges that Manager shall not be held responsible
by Owner or any third party for any divergence between such projections and
budgets and actual operating results achieved. If Owner provides any such
financial projections or budgets to a third party, Owner shall be obligated to
advise such third party in writing of the substance of this disclaimer.

          1.10.
Centralized Services.

          Manager
may provide to the Hotel the following services that are furnished generally on
a central or system-wide basis to other hotels operated by Manager or its
Affiliates: Director of Engineering and Maintenance, Revenue/Channel Manager,
Risk Manager, Group/Tour Sales Department, MIS Support Services and joint
advertising and marketing. The salaries, wages, development costs and overhead
related to the employees of Manager providing such centralized services shall
be allocated on a fair basis among all hotels receiving such services based
upon the extent to which such services benefit the Hotel. Manager shall provide
to Owner for Owner’s approval as a part of the Annual Operating Projection
pursuant to Section 4.04 the projected costs of such centralized services.

ARTICLE II

TERM

          2.01.
Term.

          The
“Term” of this Agreement
shall begin on the Effective Date and shall continue until the expiration of
the tenth anniversary of the date hereof. The Term of this Agreement may be
extended only upon mutual agreement of Manager and Owner, each in the exercise
of its sole and absolute discretion, on all the same terms (other than term) as
set forth in this Agreement for two (2) consecutive periods, each such
extension term being for periods of five (5) years each. In the event the
parties do not reach an agreement to so extend, this Agreement shall terminate
as provided in the first sentence of this Section.

          2.02.
Performance Termination.

                    A.
Owner shall have the option to terminate this Agreement if during any of the
first five (5) Fiscal Years both of the following occur:

                              1.
Operating Profit for (i) the second Fiscal Year is insufficient to pay to Owner
at least $4,680,000 in Owner’s Priority for such Fiscal Year or (ii) the third
Fiscal Year is insufficient to pay to Owner at least $5,265,000 in Owner’s
Priority for such Fiscal Year, or 

6

(iii) in each
of the fourth or fifth Fiscal Year is insufficient to pay to Owner at least
$5,850,000 in Owner’s Priority for such Fiscal Year; and

                              2.
The Revenue Index of the Hotel for such Fiscal Year is less than the Revenue
Index Threshold.

                    B.
Owner shall have the option to terminate this Agreement if during the sixth (6th)
Fiscal Year or any Fiscal Year thereafter any of the following occur:

                              1.
Operating Profit for any such Fiscal Year is insufficient to pay to Owner the
full amount of Owner’s Priority for such Fiscal Year; or

                              2.
The Revenue Index of the Hotel for such Fiscal Year is less than the Revenue
Index Threshold.

                    C.
For purposes of determining whether Owner has the option to terminate this
Agreement under Subsection A or Subsection B of this Section 2.02, to the
extent the operating results of the Hotel were materially and quantifiably
affected by Force Majeure affecting the Hotel or by major renovations of the
Hotel, the Operating Profit or Revenue Index, as applicable, shall be equitably
adjusted to amounts reasonably projected absent such Force Majeure or major
renovations, such adjustments to be substantiated by such evidence and
reasonably detailed calculations provided by Manager to Owner as are reasonably
acceptable to Owner. Owner shall exercise its option to terminate pursuant to
Subsection A or B of this Section 2.02 based upon the Operating Profit and/or
Revenue Index, as applicable, for a Fiscal Year by serving written notice
thereof on Manager no later than sixty (60) days after Owner’s receipt of the
Annual Operating Statement under Section 4.01.A for such Fiscal Year, and this
Agreement shall terminate as of the end of the second (2nd) full
Accounting Period following the date on which Manager receives the
above-described notice from Owner.

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

                    E.
Upon receipt of Owner’s written notice of termination under Section 2.02A or B,
above, if Operating Profit is less than five percent (5%) below the full amount
of Owner’s Priority for the applicable Fiscal Year, Manager shall have the
option, to be exercised within ten (10) days after receipt of the notice, to
avoid the termination by electing (in a notice to Owner) to pay Owner the
amount (the “Cure Payment”)
by which Owner’s Priority exceeded Operating Profit for the Fiscal Year in
which the performance test was failed. Except as expressly provided in the
preceding sentence of this Section 2.02E, Manager shall not have any right to
avoid termination without the prior written consent of Owner.

7

ARTICLE III

COMPENSATION OF MANAGER

          3.01.
Management Fees.

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

                    A.
the Base Management Fee, which shall be retained by Manager from Gross
Revenues; plus

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

          3.02.
Operating Profit.

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

                              1.
Any accrued but unpaid Base Management Fee payable in respect of any prior
Accounting Period shall be paid to Manager;

                              2.
An amount up to the maximum amount of Owner’s Priority shall be paid to Owner;

                              3.
The Incentive Management Fee shall be paid to Manager; and

                              4.
Any remaining balance of Operating Profit shall be paid to Owner.

          Owner’s
Priority shall not be cumulative from one Fiscal Year to the next, and to the
extent the maximum amount of Owner’s Priority is unpaid in any Fiscal Year,
such unpaid amount shall not accrue or be payable in any subsequent Fiscal
Year. The Incentive Management Fee for each Fiscal Year will be payable to
Manager, in quarterly installments at the end of each calendar quarter, based
upon the projected Incentive Management Fee provided for in the approved Annual
Operating Projection for such Fiscal Year, calculated and adjusted quarterly
using actual operating results to date for such Fiscal Year and projected
Operating Profit for the remainder of such Fiscal Year as provided for in the
approved Annual Operating Projection. Notwithstanding anything in this
Agreement to the contrary, Manager acknowledges and agrees that (i) Base
Management Fees are payable monthly within thirty (30) days after the end of
each Accounting Period during the Term; (ii) estimated and unpaid Incentive Management
Fees for the remainder of any Fiscal Year shall be adjusted at the end of each
calendar quarter in such Fiscal Year based upon the actual operating results to
date for such Fiscal Year, with all final adjustments to be made (and payment
made to Owner or Manager, as applicable, any amount payable by Manager to a
Manager’s Liability) annually within thirty (30) days after Owner’s receipt and
acceptance of the Annual Operating Statement; (iii) Incentive Management Fees
are payable only to the extent of available Operating Profit after payment in

8

full of
Owner’s Priority; and (iv) in no event shall Incentive Management Fees accrue
or be deemed to accrue.

                    B.
To the extent of available Operating Profit with respect to each Accounting Period,
Manager shall distribute a prorated portion of the Owner’s Priority (including
any accrued and unpaid Owner’s Priority) to Owner for each such Accounting
Period in accordance with Section 4.01.

                    C.
During any period of discontinued or reduced operations of the Hotel or any
part thereof as a result of damage, destruction or condemnation that does not
result in a termination of this Agreement and during repair or restoration
thereafter, Owner shall pay to Manager for each Accounting Period, in lieu of
any Base Management Fee and/or Incentive Management Fee that might otherwise be
payable under this Agreement, an amount equal to the higher of (a) the Base
Management Fee for such Accounting Period that would be payable pursuant to Section
3.01A treating business interruption insurance proceeds and/or condemnation
proceeds as Gross Revenues or (b) the Base Management Fee and Incentive
Management Fee (if any) for such Accounting Period that would have been payable
if the Hotel had achieved the projected operating results set forth in the
approved Annual Operating Projection. Notwithstanding the foregoing, in no
event will any Base Management Fees, Incentive Management Fees or management
fees in lieu thereof accrue or be payable by Owner to Manager in excess of the
amount included as management fees in any business interruption proceeds
received by Owner in respect of such Accounting Period.

          3.03.
Accounting Fee.

          Manager
will perform certain data processing and accounting functions for the Hotel at
Manager’s headquarters or central office using personnel that are not employed
at the Hotel. In consideration of Manager’s performance of these data
processing and accounting functions for the benefit of the Hotel, Owner will pay
to Manager on a monthly basis the Accounting Fee, which Accounting Fee shall be
prorated for any partial month and may be withheld by Manager from Gross
Revenues.

9

ARTICLE IV

ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS

          4.01.
Accounting, Distributions and Annual Reconciliation.

                    A.
Within fifteen (15) days after the close of each Accounting Period, Manager
shall deliver an interim accounting (the “Accounting
Period Statement”) to Owner, prepared in accordance with the
Uniform System of Accounts, showing Gross Revenues, Deductions, Operating
Profit and applications and distributions thereof for the preceding Accounting
Period and any other information reasonably requested by Owner. Manager shall
transfer to Owner, with each Accounting Period Statement, any interim amounts
due Owner, subject to Working Capital needs reasonably proposed by Manager and
approved by Owner, such approval not to be unreasonably withheld, and shall
retain any interim amounts payable to Manager pursuant to the terms of this
Agreement. 

                    B.
Calculations and payments of the Incentive Management Fee, the Base Management
Fee and distributions of Operating Profit made with respect to each Accounting
Period shall be accounted for cumulatively within a Fiscal Year, but shall not
be cumulative from one Fiscal Year to the next. Within the SEC Filing Period,
Manager shall deliver to Owner a statement (the “Annual Operating Statement”) in reasonable detail
summarizing the operations of the Hotel for the immediately preceding Fiscal
Year and a certificate of Manager’s chief accounting officer certifying that,
to the best of his or her knowledge, such Annual Operating Statement is true
and correct. The parties shall, within five (5) Business Days after Owner’s
receipt of such Annual Operating Statement, make any adjustments, by cash
payment, in the amounts paid or retained for such Fiscal Year as are needed
because of the final figures set forth in such Annual Operating Statement. Such
Annual Operating Statement shall be controlling over the preceding Accounting
Period Statements.

                    C.
To the extent there is an Operating Loss for any Accounting Period, no Base
Management Fee shall be paid to or retained from Gross Revenues by Manager. Any
Base Management Fee that would have been payable to Manager had there been an
Operating Profit for such Accounting Period shall accrue (but not beyond the
Term of this Agreement) and shall be payable to Manager as provided in Article
III to the extent of Operating Profit in subsequent Accounting Periods. 

          To
the extent there is an Operating Loss for any Accounting Period, additional
funds in the amount of any such Operating Loss (other than the amount of any
Base Management Fee) shall be provided by Owner within thirty (30) days after
Manager has delivered written notice thereof to Owner. If Owner does not fund
such Operating Loss within the thirty (30) day time period, Manager shall have
the right after prior written notice to Owner (without affecting Manager’s
other remedies under this Agreement) to withdraw an amount equal to such
Operating Loss from future distributions of funds otherwise due to Owner. In
the event an Operating Loss occurs for each of six (6) consecutive Accounting
Periods during any Fiscal Year, Owner may elect to terminate this Agreement,
provided that, in determining whether Owner has the option to terminate this
Agreement pursuant to this sentence, to the extent the operating results of the
Hotel were materially and quantifiably affected by Force Majeure affecting the
Hotel or by major renovations to the Hotel, such operating results shall be
equitably adjusted to amounts reasonably 

10

projected
absent such Force Majeure or major renovations, such adjustments to be substantiated
by such evidence and reasonably detailed calculations provided by Manager to
Owner as are reasonably acceptable to Owner.

          4.02.
Books and Records.

          Books
of control and account pertaining to operations at the Hotel shall be kept on
the accrual basis and in all material respects in accordance with the Uniform
System of Accounts. Owner may at reasonable intervals during Manager’s normal
business hours examine such records. If Owner desires (at its own expense,
except as provided below) to audit, examine or review the Annual Operating
Statement, Owner shall notify Manager in writing within sixty (60) days after
receipt of such Annual Operating Statement of its intention to audit and begin
such audit no sooner than ten (10) days after Manager’s receipt of such notice
and not later than sixty (60) days after Manager’s receipt of such notice.
Owner shall use reasonable efforts to complete such audit within one hundred
twenty (120) days after commencement thereof. If Owner does not make such an
audit, then such Annual Operating Statement shall be deemed to be conclusively
accepted by Owner as being correct, except in the event of manifest error or
fraud, misrepresentation, misconduct or negligence by Manager or its agents,
employees, representatives or contractors or other third parties. If any audit
by Owner discloses an understatement of any amounts due Owner, Manager shall
promptly pay Owner such amounts found to be due, plus interest thereon at the
Prime Rate plus one percent (1%) per annum from the date such amounts should
originally have been paid. If any audit discloses that Manager has not received
any amounts due it, Owner shall pay Manager such amounts, plus interest thereon
at the Prime Rate plus one percent (1%) per annum from the date such amounts
should originally have been paid. The cost of the audit shall be paid by Owner;
provided, however, Manager shall pay for such cost if such audit discloses an
underpayment to Owner for the Fiscal Year so audited of five percent (5%) or more
of the amount that should have been paid to Owner for such Fiscal Year. In
addition, if the Franchise Agreement requires Owner to pay interest and/or the
cost of an audit to the franchisor on account of an understatement in reports
provided by Manager, Manager shall pay such interest and costs in accordance
with the Franchise Agreement without (either directly or indirectly) passing
such charges on to Owner.

          4.03.
Accounts, Expenditures.

                    A.
All funds derived from operation of the Hotel shall be deposited by Manager in
Owner’s bank accounts (the “Operating
Accounts”) established by Manager in a bank or banks designated
by Manager with the concurrence of Owner. Withdrawals by Manager from said
Operating Accounts shall be made solely by representatives of Manager, but only
those representatives whose signatures have been authorized by Manager with the
concurrence of Owner. Reasonable petty cash funds shall be maintained at the
Hotel.

                    B.
Except as otherwise provided in this Agreement, all payments made by Manager
hereunder shall be made from the Operating Accounts, petty cash funds, or from
the Reserve (in accordance with Section 5.02). Manager shall not be required to
make any advance or payment with respect to the Hotel except out of such funds,
and Manager shall not be obligated to incur any liability or obligation with
respect to the Hotel except as otherwise 

11

provided in
this Agreement (including, without limitation, pursuant to Sections 1.03,
3.02A, 3.03 and 10.10A) (each, “Manager’s
Liability”, and, collectively, “Manager’s Liabilities”).

                    C.
Debts and liabilities (other than Manager’s Liabilities) incurred by Manager as
a result of its operation and management of the Hotel pursuant to the terms
hereof, whether asserted before or after Termination, will be paid by Owner to
the extent funds are not available for that purpose from Gross Revenues.
Manager shall pay all of Manager’s Liabilities. The provisions of this Section
4.03C shall survive Termination.

          4.04.
Annual Operating Projection.

          Manager
shall deliver to Owner for its review, at least thirty (30) days prior to the
beginning of each Fiscal Year after the first Fiscal Year following the
Effective Date, a preliminary draft of the business plan (including a proposed
budget) and a projection of the estimated Gross Revenues, departmental profits,
Deductions, and Operating Profit for the forthcoming Fiscal Year for the Hotel
(the “Annual Operating Projection”)
for approval by Owner. Manager will consider in good faith suggestions made by
Owner with respect to the Annual Operating Projection and make modifications
thereto that are agreed upon by Owner and Manager. In the case of the Fiscal
Year beginning on the Effective Date, Manager and Owner have already agreed
upon the Annual Operating Projection for such Fiscal Year. Notwithstanding the
foregoing, Owner shall not be entitled to withhold its approval of the Annual
Operating Projection based solely on its objection to: (i) Manager’s reasonable
projections of either Gross Revenues or the components thereof, (ii)
Impositions, utility charges and similar charges determined by governmental
authorities or providers whose rates cannot be controlled or negotiated by Manager,
or (iii) increases in projected costs and expenses of operating the Hotel
caused by projected increases in occupancy or use of Hotel facilities that are
projected to increase Gross Revenues. Upon approval of the Annual Operating
Projection by Owner and Manager, Manager in good faith shall use best efforts
to adhere to such Annual Operating Projection. In the event Owner and Manager
(each acting reasonably and in good faith in considering projections for
operation of the Hotel pursuant to Prudent Industry Practice, the Franchise
Agreement, any Qualified Mortgage affecting the Hotel and this Agreement) are
unable to agree upon the Annual Operating Projection by the commencement of the
Fiscal Year to which it relates, Owner or Manager may elect to terminate this
Agreement by serving written notice to the other party, and this Agreement
shall terminate as of the end of the second (2nd) full Accounting
Period following the date on which such party receives such notice of
termination. Any such notice of termination shall be given not later than
thirty (30) days after the end of the then-current Fiscal Year, provided that
Owner shall have received the proposed Annual Operating Projection from Manager
at least thirty (30) days prior to the end of the then-current Fiscal Year.
Pending such termination, Manager shall operate the Hotel with respect to those
categories that are in dispute based on the previous Fiscal Year’s approved
Annual Operating Projection.

          4.05.
Working Capital.

          The
parties recognize that, as of the Effective Date, the level of Working Capital
funds, which shall be held in the Operating Accounts, is reasonably believed to
be reasonably sufficient for the operations of the Hotel, subject at all times
to seasonal differences and changes in 

12

circumstances
after the Effective Date. To the extent the expenditure of additional Working
Capital funds has been reasonably proposed by Manager and approved by Owner,
such approval not to be unreasonably withheld, Owner shall from time to time
during the Term advance any such additional funds which Manager shall use to
satisfy such needs of the Hotel as have been reasonably proposed by Manager and
approved by Owner. If Owner does not so fund additional Working Capital as
approved by Owner within thirty (30) days after receipt by Owner of a written
request therefor from Manager, Manager shall have the right (without affecting
Manager’s other remedies under this Agreement) to withdraw, after prior written
notice to Owner, from future distributions of funds otherwise due to Owner an
amount equal to the funds agreed upon by Owner and Manager for additional
Working Capital. All funds so advanced for Working Capital shall be utilized by
Manager for the purposes of this Agreement. In the event Owner and Manager are
unable to agree upon the need for and/or amount of additional Working Capital
within thirty (30) days after Owner’s receipt of a written notice from Manager
of the need for additional funds for Working Capital, Owner shall have no obligation
to fund additional Working Capital and Manager may elect to terminate this
Agreement. Upon Termination, Manager shall immediately return the outstanding
balance of the Working Capital to Owner.

          4.06.
Fixed Asset Supplies.

          The
parties further recognize that, as of the Effective Date, the level of funds
for Fixed Asset Supplies is reasonably believed to be reasonably sufficient for
the operations of the Hotel, subject at all times to seasonal differences and
changes in circumstances after the Effective Date. Any additional funds which
are necessary to maintain Fixed Asset Supplies at levels reasonably proposed by
Manager and approved by Owner, such approval not to be unreasonably withheld,
as being necessary to satisfy the needs of the Hotel, shall be paid from
available Gross Revenues or, at Owner’s election, funded by Owner within thirty
(30) days after Owner’s approval of such additional funds and, in each case,
shall be Deductions. Fixed Asset Supplies shall remain the property of Owner
throughout the term of this Agreement and upon Termination.

          4.07.
Real Estate and Personal Property Taxes.

                    A.
Except as specifically set forth in Section 4.07.B below, all real estate and
personal property taxes, levies, assessments (including special assessments
(regardless of when due or whether they are paid as a lump sum or in
installments over time) imposed because of facilities that are constructed by
or on behalf of the assessing jurisdiction (for example, roads, sidewalks,
sewers, culverts, etc.) which directly benefit the Hotel (regardless of whether
or not they also benefit other buildings)), “Impact Fees” (regardless of when
due or whether they are paid as a lump sum or in installments over time) which
are required of Owner as a condition to the issuance of zoning variances or
building permits, and similar charges on or relating to the Hotel
(collectively, “Impositions”)
during the Term shall be paid by Manager from Gross Revenues, before any fine,
penalty, or interest is added thereto or lien placed upon the Hotel or upon
this Agreement, unless payment thereof is in good faith being contested and
enforcement thereof is stayed. Any such payments shall be Deductions in
determining Operating Profit. Owner shall, within five (5) days after receipt,
furnish Manager with copies of official tax bills and assessments which it may
receive with respect to the Hotel. Either Landlord, Owner or Manager with the
concurrence of Owner (in which case Owner agrees to sign, and cause Landlord to
sign, the required applications and otherwise reasonably cooperate with Manager
in 

13

expediting the
matter) may, and at Owner’s request Manager shall, initiate proceedings to
contest any negotiations or proceedings with respect to any Imposition, and all
reasonable costs of any such contest shall be paid from Gross Revenues and
shall be a Deduction in determining Operating Profit. Manager shall, as part of
its contest or negotiation of any Imposition, be entitled, on Owner’s and
Landlord’s behalf, to waive any applicable statute of limitations in order to
avoid paying the Imposition during the pendency of any proceedings or
negotiations with applicable authorities. Notwithstanding anything contained
herein to the contrary, at Owner’s option (i) Manager shall establish an escrow
account in the name of Owner in a bank or banks designated by Manager with the
concurrence of Owner and shall deposit monthly into such account from Gross
Revenues an amount that Manager reasonably estimates shall be sufficient to pay
the Impositions, in which case Manager shall pay the Impositions from funds in
the escrow account as and when the Impositions become due (and Owner shall
promptly deposit into the escrow account any deficiency if the estimated
monthly payments are not sufficient to pay all of the Impositions) or (ii) the
amounts that would otherwise be deposited into such escrow account shall be
included in the Operating Profit, not deducted from Gross Revenues and shall be
distributed in cash to Owner along with the remainder of the Owner’s Priority.
If Owner elects to retain such amounts pursuant to clause (ii) above, Manager
shall accrue such amounts as a reserve on the accounting records of the Hotel,
and Owner shall fund the same as and when the Impositions become due, but such
accrued and unfunded amounts shall be deducted from Gross Revenues for purposes
of calculating the Incentive Management Fee. In addition, if any Mortgagee
requires the establishment of an escrow account with respect to the Impositions,
Manager shall comply with such requirements, and the amounts so escrowed shall
be applied to Impositions in accordance with such Mortgagee’s requirements and
any amounts so escrowed shall be Deductions.

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

          4.08.
Sarbanes-Oxley Certification.

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

14

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

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

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

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

ARTICLE V

REPAIRS, MAINTENANCE AND REPLACEMENTS

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

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

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

                    A.
A reserve account in the name and under the control of Owner (the “Reserve”) shall be established by
Manager in a bank or similar institution reasonably acceptable to both Manager
and Owner, to cover the cost of:

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

                    2.
Routine Capital Expenditures.

15

                    B.
Manager shall deposit funds in the Reserve as provided in Item 3 of Schedule
1. Transfers
into the Reserve shall be made at the time of each interim accounting described
in Section 4.01 hereof. All amounts transferred to the Reserve shall be
deducted from Gross Revenues in determining Operating Profit and shall be
deposited in the special Reserve account described in Section 5.02.A.

                    C.
Subject to the availability of adequate funds, Manager shall from time to time
make such (1) replacements and renewals to the FF&E of the Hotel, and (2)
Routine Capital Expenditures, as may be provided for in the approved Annual
Operating Projection, as may be agreed upon by Owner and Manager or as may be
required by the Franchise Agreement. Except as may be required by the Franchise
Agreement, no expenditures will be made in excess of the balance of the Reserve
without the approval of Owner. At the end of each Fiscal Year, any amounts
remaining in the Reserve shall be carried forward to the next Fiscal Year.
Proceeds from the sale of FF&E no longer necessary to the operation of the
Hotel shall be added to the Reserve. The Reserve will be kept in an
interest-bearing account, and any interest which accrues thereon shall be
retained in the Reserve. Neither (x) proceeds from the disposition of FF&E,
nor (y) interest which accrues on amounts held in the Reserve, shall (a) result
in any reduction in the required contributions to the Reserve set forth in
Section 5.02.B above, nor (b) be included in Gross Revenues. Withdrawals by
Manager from the Reserve may be made in accordance with the approved Annual
Operating Projection only by representatives of Manager whose signatures have
been authorized by Manager with the concurrence of Owner.

                    D.
All repairs, alterations, improvements, renewals or replacements made pursuant
to this Article V, and all amounts kept in the Reserve, shall be the property
of Owner, subject to Manager’s rights to apply such funds as otherwise provided
in this Agreement. In addition and notwithstanding anything contained herein to
the contrary, no funds shall be expended for replacements, renewals and
additions to the FF&E, for Routine Capital Expenditures or for any other
capital expenditures unless each such expenditure is included in the approved
Annual Operating Projection or is necessary in an emergency to protect or
preserve the Hotel or the health and safety of Hotel employees, guests or
customers. If Owner elects to use Manager’s construction management services
for construction projects in connection with any Routine Capital Expenditures
or other non-emergency alterations or improvements, Owner will pay Manager such
construction management fee as may be agreed upon by the parties.

                    E.
Notwithstanding anything contained herein to the contrary, upon the mutual
agreement of Owner and Manager, the amounts that would otherwise be deposited
into the Reserve pursuant to this Section 5.02 shall be included in the
Operating Profit, not deducted from Gross Revenues and shall be distributed in
cash to Owner along with the remainder of the Owner’s Priority. In such case,
Manager shall accrue such amounts as a reserve on the accounting records of the
Hotel, and Owner shall fund the same only when required under this Agreement to
cover the appropriate costs actually incurred. If Owner does not so fund such
amounts within thirty (30) days after Owner is required to do so under this
Agreement, Manager shall have the right after prior written notice to Owner
(without affecting Manager’s other remedies under this Agreement) to withdraw
from future distributions of funds otherwise due to Owner an amount equal to
such amount required to be so funded by Owner. However, such accrued and
unfunded reserves shall be deducted from Gross Revenues for purposes of
calculating the Incentive Management Fee. 

16

                    F.
Unless otherwise expressly covered by this Article V, except in the case of an
emergency, Manager shall not make any capital expenditure or improvement without
first obtaining Owner’s prior written consent and approval.

ARTICLE VI

INSURANCE

          6.01.
Property Insurance.

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

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

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

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

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

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

          6.02.
Operational Insurance.

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

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

17

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

                    C.
Fidelity bonds with respect to the Hotel employees handling funds of the Hotel,
in an amount agreed upon by Owner and Manager;

                    D.
Employment practices liability insurance; and

                    E.
Such other insurance in amounts as Manager in its reasonable judgment deems
advisable (with the concurrence of Owner) for protection against claims,
liabilities and losses arising out of or connected with the operation of the
Hotel or as reasonably required by a Mortgagee.

          Owner
and Landlord shall be the named insureds with respect to the insurance
described in Subsection 6.02B and 6.02D (to the extent possible) and, to the
extent applicable, Subsection 6.02E. Manager shall be the named insured and
Owner and Landlord shall be additional insureds on the policies described in
Subsections 6.02A and 6.02C.

          6.03.
Coverage; Deductibles.

          All
policies of insurance described in Sections 6.02 and 6.03, including the
coverages and the deductibles thereunder, shall be subject to Owner’s prior
approval, and Owner may require that any such coverage or policy be eliminated
or not be carried, provided that Owner will not require Manager to eliminate
any coverage that is customarily carried in accordance with Prudent Industry
Practice or that is required under a Qualified Mortgage, the Franchise
Agreement or other agreement binding on the Hotel. Either Owner or Manager may
require that insurance and/or additional insurance and/or coverage be
maintained in excess of that customarily carried in accordance with Prudent
Industry Practice, provided that the cost of such excess insurance and/or
coverage shall not be a Deduction and shall be borne by the party requesting
the same. Subject to Owner’s prior approval, such approval not to be
unreasonably withheld, and the provisions of Section 6.05, all insurance
described in Sections 6.01 and 6.02 may be obtained by Manager by endorsement
or equivalent means under its blanket insurance policies, provided that such
blanket policies fulfill the requirements specified herein. Deductible limits
shall be as agreed upon by Owner and Manager. No coverage required hereunder
shall be self-insured by Manager without prior written approval of Owner. Owner
shall have the right to approve the insurance policies to be obtained by
Manager pursuant hereto and the insurance companies issuing such policies. In
order to avoid any lapse in insurance coverage required to be maintained
pursuant to this Article VI, Manager shall request any consent required from
Owner hereunder with respect to insurance matters in a timely manner so that
Owner has a reasonable period of time to consider any such request, and Owner
shall respond within ten (10) days after receipt of any such request. Failure
to respond within such ten (10) day period shall be deemed approval by Owner.

18

          6.04.
Costs and Expenses.

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

          6.05.
Owner’s Right to Provide Insurance. 

          Notwithstanding
anything contained in this Agreement to the contrary, Owner and/or its
Affiliates (including, without limitation, Landlord) shall have the right to
procure and maintain any or all of the insurance for the Hotel otherwise
required to be maintained by Manager under this Article VI and in lieu of
Manager procuring the same, provided that Owner shall give Manager not less
than thirty (30) days notice of Owner’s intent to provide such insurance, shall
maintain such insurance as is customary in accordance with Prudent Industry
Practice and shall provide to Manager upon request certificates of insurance
evidencing the same. In such case, all of the terms and conditions of this
Article VI, to the extent applicable, shall govern the insurance procured by
Owner under this Section 6.05, including, without limitation, the requirement
that Owner be a named insured on the operational insurance described in Section
6.02. Without limiting the generality of the foregoing, all insurance premiums
and any costs or expenses and all deductibles with respect to such insurance
shall be Deductions in determining Operating Profit., provided that, in the
event the premiums for the insurance maintained by Owner are in excess of the
premiums that would have been payable by Manager had Manager maintained the
same insurance, the amount of such excess shall be payable by Owner and shall
not be a Deduction for the purposes of determining Operating Profit. Each
insurance policy maintained by Owner or Manager in accordance with this Section
6.05 shall contain a waiver of subrogation in favor of the other party, and
Owner and Manager each release the other from claims against the other to the
extent the same are covered by insurance.

ARTICLE VII

DAMAGE AND REPAIR

          7.01.
Damage and Repair.

                    A.
If, during the Term, the Hotel is damaged or destroyed by fire, casualty or
other cause, Owner and/or Landlord may elect, in its sole and absolute
discretion, to repair or replace the damaged or destroyed portion of the Hotel
with such modifications as Owner may deem appropriate or as may be required by
law, and Manager shall have the right to discontinue operating the Hotel to the
extent it deems necessary to comply with applicable law, ordinance, regulation
or order or as necessary for the safe and orderly operation of the Hotel,
provided that Manager and Owner acknowledge that, in the event such damage is a
Minor Casualty, such damage shall be repaired as provided in Section 7.01C and
this Agreement shall remain in effect. Proceeds of insurance with respect to
the insurance described in Subsections 6.02A, 6.02C and 6.02D shall be paid to
Owner, Landlord and/or Manager, as their interests may appear. All proceeds
from all other insurance described in this Agreement shall be paid to Owner
and/or 

19

Landlord, as
their interests may appear. If such damage or destruction is other than a Minor
Casualty and Owner elects not to repair or replace said damaged portion of the
Hotel, Owner shall so notify Manager by written notice within ninety (90) days
after the date of the casualty.

                    B.
In the event damage or destruction to the Hotel is other than a Minor Casualty
and Owner notifies Manager that Owner will not repair or replace such damage,
either party may terminate by at least sixty (60) days prior written notice to
the other party.

                    C.
If, during the Term, the Hotel is damaged by fire, casualty or other cause and
such damage is a Minor Casualty or Owner otherwise elects to repair or replace
such damaged or destroyed portion of the Hotel, Manager, with the concurrence
of Owner, shall, with all reasonable diligence, proceed to process the claim
with the applicable insurance carriers, including settling such claim, and to
make the necessary arrangements with appropriate contractors and suppliers to
repair and/or replace the damaged portion of the Hotel. Owner’s consent shall
be needed for Manager to perform any of the foregoing, all of which shall be
performed in accordance with Prudent Industry Practices. Owner agrees to sign
promptly any documents which are necessary to process and/or adjust the claim
with the insurance carriers, as well as any contracts with such contractors
and/or suppliers, provided that in each instance such documents and contracts
have previously been approved by Owner. If Owner elects to use Manager’s
construction management services for construction projects in connection with
any non-emergency repairs or replacements, Owner will pay Manager such
construction management fee as may be agreed upon by the parties.
Notwithstanding anything in this Agreement to the contrary, Manager agrees to
make or cause to have made all emergency repairs and replacements at the actual
cost paid or incurred for such repair or replacement.

          7.02.
Condemnation.

                    A.
In the event all or substantially all of the Hotel shall be taken in any
eminent domain, condemnation, compulsory acquisition, or similar proceeding by
any competent authority for any public or quasi-public use or purpose, or in
the event a portion of the Hotel shall be so taken, but the result is that
either Owner or Manager reasonably determines that it is not feasible to
continue to operate the Hotel in accordance with the standards required by this
Agreement, Owner or Manager may terminate this Agreement as of the effective
date of such taking. All awards and proceeds of any such taking or proceeding
shall belong to Owner and/or Landlord, as the case may be. 

                    B.
In the event this Agreement is not terminated pursuant to Section 7.02.A, such
portion of the Hotel that is not so taken shall be repaired or replaced, with
such modifications as Owner may deem appropriate or as may be required by law,
and this Agreement shall continue except as may be otherwise agreed by the
parties. All awards for any such partial taking or condemnation shall belong to
Owner and/or Landlord, as the case may be. Manager shall have the right to
discontinue temporarily operating the Hotel to the extent it deems necessary
for the safe and orderly operation of the Hotel.

20

          7.03.
Subordination to Qualified Mortgage.

                    A.
Manager shall provide to any Mortgagee an instrument (the “Subordination Agreement”), reasonably
satisfactory in all respects to Owner and such Mortgagee, which shall be
recordable in the jurisdiction where the Hotel is located, pursuant to which:

                              1.
This Agreement and any extensions, renewals, replacements or modifications
thereto, and all right and interest of Manager in and to the Hotel, shall be
subject and subordinate to such Mortgagee’s Qualified Mortgage, with notice and
opportunity to cure rights and post-default cure rights in favor of Mortgagee;

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

                              3.
In the event that there is a Foreclosure of such Qualified Mortgage in connection
with which title or possession of the Hotel is transferred to the Mortgagee (or
its designee) or to a purchaser at foreclosure or to a subsequent purchaser
from the Mortgagee (or from its designee) (all of the foregoing shall
collectively be referred to as “Subsequent
Owners”), this Agreement may be terminated at the election of
such Subsequent Owner as of the date of such Foreclosure or upon thirty (30)
days notice, unless and to the extent the Mortgagee, in its sole and absolute
discretion, shall have agreed to recognize Manager’s rights under this
Agreement following foreclosure or deed-in-lieu of foreclosure, which
recognition may be requested from such Mortgagee by Manager prior to
encumbrance of the Hotel by such Mortgagee’s Qualified Mortgage. Such
recognition may be granted or denied by such Mortgagee in its sole and absolute
discretion and shall not be a condition to Owner’s or Landlord’s right to
mortgage the Hotel with any such Qualified Mortgage and denial of recognition
of this Agreement by a Mortgagee shall not affect any of Manager’s obligations
or duties under this Agreement.

                    B.
Except as otherwise agreed by Owner and Manager, Owner will not encumber its
leasehold estate under the Hotel Lease with any Mortgage other than a Qualified
Mortgage. Manager shall have no responsibility for payment of debt service due
with respect to the Hotel, from Gross Revenues or otherwise, and such
responsibility shall be solely that of Owner, provided that Manager shall
comply with any requirements of any Mortgagee with respect to establishment of
escrows and payment of Impositions. 

          7.04.
No Covenants, Conditions or Restrictions.

                    A.
Manager acknowledges and agrees with Owner, and represents and warrants to
Owner, that, as of the Effective Date, to the best of Manager’s knowledge,
except as disclosed to Owner in writing, there are no covenants, conditions or
restrictions, including reciprocal easement agreements or cost-sharing
arrangements (individually or collectively referred to as “CC&R(s)”) affecting the Site or the
Hotel which: (i) would prohibit or limit Manager from operating the Hotel in
accordance with the System Standards; (ii) would allow the 

21

Hotel
facilities (for example, parking spaces) to be used by persons other than
guests, invitees or employees of the Hotel; (iii) would allow the Hotel
facilities to be used for specified charges or rates which have not been
approved by Manager; (iv) would subject the Hotel to exclusive arrangements
regarding food and beverage operation or retail merchandise; or (v) would
impose any financial obligations on Owner or Landlord or on the Hotel.

          7.05.
Liens; Credit.

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

          7.06.
Hotel Lease.

          Manager
shall use reasonable efforts to comply with any requirements of the Hotel Lease
respecting operation of the Hotel, and Owner shall comply with any other
obligations of Owner under the Hotel Lease, including but not limited to
payment as and when due, of any and all rental and other payments due under the
Hotel Lease. Manager shall have no responsibility for payment of rental or
other sums due under the Hotel Lease, from Gross Revenues or otherwise, and
such responsibility shall be solely that of Owner.

ARTICLE VIII

DEFAULTS

          8.01.
Events of Default.

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

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

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

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

22

                    D.
The failure of either party to make any payment required to be made in
accordance with the terms of this Agreement, as of the due date as specified in
this Agreement and the failure to cure such default within ten (10) days after
receipt of written notice from the non-defaulting party demanding such cure, or
in the case of any failure by Manager to make payments of Owner’s Priority or
other distributions of Operating Profit payable to Owner, such failure is not
cured within three (3) Business Days after receipt of written notice from
Owner.

                    E.
Any employee at the Hotel is or becomes a Specially Designated National or
Blocked Person and is not terminated from his or her employment at the Hotel on
or before thirty (30) days after Manager’s receipt of notice of such employee’s
status.

                    F.
In carrying out its duties hereunder, any principal or owner of Manager or its
Affiliates providing services to the Hotel commits any act involving fraud or
moral turpitude relating to the business or affairs of the Hotel, or is
indicted or convicted of an act which constitutes a felony.

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

                    H.
The failure of either party to perform, keep or fulfill any of the other
covenants, undertakings, obligations or conditions set forth in this Agreement,
and the continuance of such default for a period of thirty (30) days after the
defaulting party’s receipt of written notice from the non-defaulting party of
said failure, or, if the default is such that it cannot reasonably be cured
within said thirty (30) day period of time, if the defaulting party fails to
commence the cure of such default within said thirty (30) day period of time or
thereafter fails to diligently pursue such efforts to completion, provided that
(i) in the case of any default by Manager (other than in clause (ii) below),
such default is cured not later than ninety (90) days after Manager’s receipt
of such written notice, (ii) in the case of Manager’s failure to maintain the
insurance required by Article VI (except with respect to any insurance that
Owner has elected to maintain pursuant to Section 6.05), such failure is cured
not later than ten (10) days after Manager’s receipt of such written notice
and, in any event, prior to the date any insurance coverage would lapse, and
(iii) in the event Owner has elected to maintain insurance pursuant to Section
6.05 and fails to maintain such insurance, such failure is cured not later than
ten (10) days after Owner’s receipt of written notice of default from Manager. 

          8.02.
Remedies.

          Upon the
occurrence of an Event of Default, the non-defaulting party shall have the
right to pursue any one or more of the following courses of action: (1) to
terminate this Agreement by written notice to the defaulting party, which
termination shall be effective as of the effective date which is set forth in
said notice, provided that said effective date shall be at least thirty (30)
days after the date of said notice in the case of an Event of Default by Owner;
(2) to institute forthwith any and all proceedings permitted by law or equity
including, without limitation (but subject to 

23

the provisions
of Section 10.20 hereof), actions for specific performance and/or damages;
and/or (3) to avail itself of the remedies described in Section 8.03.

          8.03.
Additional Remedies.

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

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

ARTICLE IX

ASSIGNMENT AND SALE

          9.01.
Assignment.

                    A.
Manager shall not assign or transfer its interest in this Agreement without the
prior written consent of Owner and any franchisor under the Franchise
Agreement. Any assignee consented to by Owner and by such franchisor shall
agree in writing to be bound by and comply with the terms of this Agreement
(such written agreement to be acceptable in form and substance to Owner and
such franchisor). For purposes of the foregoing, a transfer of Manager’s
interest in this Agreement shall include (i) an assignment or pledge of this
Agreement as security for an obligation, (ii) a transfer of more than fifty
percent (50%) ownership or beneficial interest, direct or indirect, in Manager,
including any such transfer by operation of law and (iii) a transfer of
Manager’s interest in this Agreement by operation of law, including by merger
or consolidation.

                    B.
Owner shall have the right to assign or transfer its interest in this Agreement
without the prior written consent of the Manager (1) as security for a
Qualified Mortgage of the Hotel in accordance with this Agreement, (2) in
connection with a sale, assignment, transfer or other disposition of the Hotel
by Owner or Landlord and (3) in connection with a merger or consolidation or
reorganization of, or a sale of all or substantially all of the assets of,
Apple REIT Ten, Inc., or any Affiliate thereof.

                    C.
In the event Owner and the franchisor under the Franchise Agreement consent to
an assignment of this Agreement by Manager, no further assignment or transfer
shall be made without the express consent in writing of such parties. An
assignment by Manager of its interest in this Agreement shall not relieve
Manager from its obligations under this Agreement.

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

          9.02.
Sale of the Hotel.

24

          Owner
or Landlord may, in its or their sole and absolute discretion, enter into any
Sale of the Hotel to any Person. In connection with any such Sale of the Hotel
during the first five (5) years of the Term, this Agreement will be assigned
and not terminated so long as no Event of Default exists. In connection with
any Sale of the Hotel thereafter, Owner may assign this Agreement as provided
in Section 9.01 or terminate this Agreement upon thirty (30) days notice to
Manager, provided that if this Agreement is terminated as a result of such Sale
during the second five (5) years (i.e., years six (6) through ten (10)) of the
Term, and no Event of Default exists, Owner will pay or cause to be paid to
Manager a termination fee within five (5) Business Days after the effective
date of such termination, such fee to be in an amount equal to eighty percent
(80%) of the Base Management Fee reasonably estimated to be payable to Manager
from the effective date of the termination until the end of the tenth (10th)
year of the Term. In connection with any Sale of the Hotel after the tenth (10th)
year of the Term, Owner, in its sole discretion, may assign this Agreement as
provided in Section 9.01 or terminate this Agreement upon thirty (30) days
notice to Manager, and no termination fee shall be payable to Manager. Upon any
such sale or assignment, Owner shall be released of all liabilities and
obligations arising under and with respect to this Agreement on and after the
date of such Sale of the Hotel. 

ARTICLE X

MISCELLANEOUS

          10.01.
Right to Make Agreement.

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

          10.02.
Consents and Cooperation.

          Wherever
in this Agreement the consent or approval of Owner or Manager is required,
except as otherwise provided in this Agreement or agreed by the parties, such
consent or approval shall not be unreasonably withheld, delayed or conditioned
by the party whose consent or approval is required, shall be in writing and
shall be executed by a duly authorized officer or agent of such party. Owner
agrees to cooperate with Manager by executing such leases, subleases, licenses,
concessions, equipment leases, service contracts and other agreements
negotiated in good faith and at arm’s length by Manager and pertaining to the
Hotel that, in Manager’s reasonable judgment, should be made in the name of the
Owner, provided that all such agreements shall be subject to Owner’s prior
approval.

          10.03.
Relationship.

25

          The
relationship of Owner and Manager shall be that of independent contractors, and
neither this Agreement nor any agreements, instruments, documents, or
transactions contemplated hereby shall in any respect be interpreted, deemed or
construed as making Manager an agent of or partner or joint venturer with
Owner. Owner and Manager agree that neither party will make any contrary
assertion, claim or counterclaim in any action, suit, arbitration or other
legal proceedings involving Owner and Manager. Any contract or agreement that
Manager enters into with an Affiliate of Manager or with a third party to
provide goods or services to the Hotel shall be entered into in the name of
Manager and not Owner, and Owner have no liability with respect to any such
contract or agreement except for contracts or agreements to which Owner has
previously consented to in writing and which are consistent with the Annual
Operating Projection.

          10.04.
Applicable Law.

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

          10.05.
Recordation.

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

          10.06.
Headings.

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

          10.07.
Notices.

26

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

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 To Owner:

 	
 Apple Ten
 Hospitality Management, Inc.

 
	
  

 	
  

 	
 c/o Apple
 REIT Companies

 
	
  

 	
  

 	
 814 East
 Main Street

 
	
  

 	
  

 	
 Richmond,
 Virginia 23219

 
	
  

 	
  

 	
 Attn:

 	
 Krissy Gathright

 
	
  

 	
  

 	
 Attn:

 	
 General
 Counsel

 
	
  

 	
  

 	
 Phone:

 	
 (804)
 344-8121

 
	
  

 	
  

 	
 Fax:

 	
 (804)
 344-8129

 
	
  

 	
  

 	
  

 
	
  

 	
 To Manager:

 	
 Stonebridge
 Realty Advisors, Inc.

 
	
  

 	
  

 	
 c/o
 Stonebridge Companies

 
	
  

 	
  

 	
 9100 East
 Panorama Drive, Suite 300

 
	
  

 	
  

 	
 Englewood,
 Colorado 80112

 
	
  

 	
  

 	
 Attn:

 	
 Navin C.
 Dimond

 
	
  

 	
  

 	
 Phone:

 	
 (303)
 785-3100, ext. 122

 
	
  

 	
  

 	
 Fax:

 	
 (303)
 785-3107

 
	
  

 	
  

 	
  

 
	
  

 	
 With copy
 to:

 	
 Stonebridge
 Realty Advisors, Inc.

 
	
  

 	
  

 	
 c/o
 Stonebridge Companies

 
	
  

 	
  

 	
 9100 East
 Panorama Drive, Suite 300

 
	
  

 	
  

 	
 Englewood,
 Colorado 80112

 
	
  

 	
  

 	
 Attention:
 Howard Pollack, General Counsel

 
	
  

 	
  

 	
 Phone: (303)
 785-3100, ext. 126

 
	
  

 	
  

 	
 Fax No.:
 (303) 785-3107

 

or at such
other address as is from time to time designated by the party receiving the
notice. Any such notice that is mailed in accordance herewith shall be deemed
received when delivery is received or refused, as the case may be.
Additionally, notices may be given by telephone facsimile transmission,
provided that an original copy of said transmission shall be delivered to the
addressee by nationally utilized overnight delivery service on the business day
following such transmission. Telephone facsimiles shall be deemed delivered on
the date of such transmission.

          10.08.
Environmental Matters.

                    A.
Manager shall operate the Site and the Hotel in compliance with all applicable
Environmental Laws. Manager shall (i) not use, generate or store any Hazardous
Materials in or on the Site or the Hotel except as necessary for the operation
and maintenance of the Hotel and in compliance with the Environmental Laws,
(ii) not allow, permit or cause the release or threat of release of any
Hazardous Materials in, on, under or from the Site or the Hotel, except for the
ordinary use of cleaning and maintenance supplies in compliance with applicable

27

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

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

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

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

          10.09.
Confidentiality.

          Owner
and Manager agree that the terms of this Agreement are strictly confidential
and will use their reasonable efforts to ensure that the terms of this
Agreement are not disclosed to any outside person or entities without the prior
written consent of the other party, except (1) as Owner may determine is
required by any law, rule, regulation or judicial process, or by any regulatory
or supervisory authority having jurisdiction over the parties or any of their
Affiliates or (2) to the extent reasonably necessary, (i) to obtain licenses,
permits and other public approvals, (ii) in connection with a financing of the
Hotel, Owner, or any Affiliate thereof, (iii) in connection with a Sale of the
Hotel or other sale of Owner, or any Affiliate thereof or its or their
corporate assets, (iv) subject to the provisions of Section 4.02, in connection
with an audit or other investigation conducted pursuant to this Agreement or
(v) in connection with either party’s enforcement of its rights and remedies
under this Agreement. Notwithstanding the foregoing or anything to the contrary
set forth herein, the terms of this Agreement shall not be deemed confidential
to the extent: (a) such information becomes generally available to the public 

28

other than as
a result of unauthorized disclosure by the recipient or persons to whom such
recipient has made the information available; or (b) the party seeking to
disclose such confidential information can demonstrate to the reasonable
satisfaction of the other party that the information sought to be disclosed is
customarily disclosed by at least 80% of all Persons directly or indirectly
owning hotels in the United States.

          10.10.
Indemnification.

                    A.
Manager hereby agrees to indemnify, defend and hold harmless Owner, its
officers, directors, stockholders, employees, agents and their respective
successors and assigns from and against any and all claims, liabilities,
damages, losses, obligations and costs (including reasonable attorneys’ fees)
arising from (i) Manager’s or any of its Affiliates’ failure to comply with its
obligations under this Agreement, and (ii) any gross negligence, theft, fraud
or willful misconduct of the corporate level staff of Manager or its Affiliates
or the on-site executive staff at the Hotel. All liabilities of Manager
pursuant to this Section 10.10A shall be Manager’s Liabilities.

                    B.
Owner hereby agrees to indemnify, defend and hold harmless Manager, its
officers, directors, stockholders, employees, agents and their respective
successors and assigns from and against any and all claims, liabilities,
damages, losses, obligations and costs (including reasonable attorneys’ fees)
arising from Owner’s failure to comply with its obligations under this
Agreement.

          10.11.
Actions to be Taken Upon Termination.

          Upon
a Termination, the following shall be applicable:

                    A.
Manager shall, within ninety (90) days after Termination, prepare and deliver
to Owner a final accounting statement with respect to the Hotel, as more
particularly described in Section 4.01 hereof, along with a statement of any
sums due from Owner to Manager pursuant hereto, dated as of the date of
Termination. Within thirty (30) days of the receipt by Owner of such final
accounting statement, the parties will make whatever cash adjustments are
necessary pursuant to such final statement. The cost of preparing such final
accounting statement shall be a Deduction, unless the Termination occurs as a
result of an Event of Default by either party, in which case the defaulting
party shall pay such cost. Manager and Owner acknowledge that there may be
certain adjustments for which the information will not be available at the time
of the final accounting and the parties agree to readjust such amounts and make
the necessary cash adjustments when such information becomes available; provided,
however, that all accounts shall be deemed final two (2) years after
Termination.

                    B.
Manager shall immediately release and transfer to Owner any of Owner’s funds
which are held or controlled by Manager with respect to the Hotel, after
deducting any amounts due and owing to Manager under this Agreement.

                    C.
Manager shall make available to Owner such books and records respecting the
Hotel (including those from prior Fiscal Years during the Term of this
Agreement) as will be needed by Owner to prepare the accounting statements, in
accordance with the Uniform System of Accounts, for the Hotel for the year in
which the Termination occurs. Manager’s obligation 

29

under this
Subsection 10.11C shall expire two (2) years after the date of termination of
this Agreement.

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

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

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

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

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

                    I.
Owner may elect to maintain any insurance coverages or policies that Manager
has procured pursuant to Article VI. In the event Owner elects to cancel any
such insurance coverages or policies prior to the applicable expiration date(s)
thereof, Owner shall pay any cancellation penalties with respect to the
cancelled insurance coverage unless termination results from a default by
Manager.

          The
provisions of this Section 10.11 shall survive Termination.

          10.12.
Waiver.

          The
failure of either party to insist upon a strict performance of any of the terms
or provisions of this Agreement, or to exercise any option, right or remedy
contained in this Agreement, shall not be construed as a waiver or as a relinquishment
for the future of such term, provision, option, right or remedy, but the same
shall continue and remain in full force and 

30

effect. No
waiver by either party of any term or provision hereof shall be deemed to have
been made unless expressed in writing and signed by such party.

          10.13.
Partial Invalidity.

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

          10.14.
Survival.

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

          10.15.
Negotiation of Agreement.

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

          10.16.
Estoppel Certificates.

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

31

          10.17.
Affiliates.

          Except
for the contract between Manager and its Affiliate that furnishes employees for
the Hotel as provided in Section 1.03, Manager shall not be entitled to
contract with companies that are Affiliates (or companies in which Manager has
an ownership interest if such interest is not sufficient to make such a company
an Affiliate) to provide goods and/or services to the Hotel without the prior
written consent of Owner. Owner agrees not to unreasonably withhold consent if
the terms of such contracts are on terms as favorable to Owner and the Hotel as
are available from third parties that are not affiliated and the terms of the
contract have been specifically disclosed and approved in the approved Annual
Operating Projection. In addition, Manager shall not be entitled to contract
with third parties or their Affiliates that have other contractual
relationships with Manager and/or its Affiliates to provide goods and/or
services to the Hotel without the prior written consent of Owner unless the
terms of such contracts are as favorable to Owner and the Hotel as are
available from unrelated third parties, except for geographic and regional
differences in the pricing of goods and services that are attributable to the
location of the Hotel. In each instance, all direct and indirect benefits of
such contractual relationships with affiliated companies and/or third parties
having other contractual relationships shall have been disclosed to Owner and
shall accrue to the benefit of the Hotel and/or Owner, other than incidental
entertainment of Manager’s senior staff and principals that is not material and
could not reasonably be expected to influence any decision made by Manager, its
Affiliates or its or their officers, directors, employees or principals with
respect to any contract affecting the Hotel.

          10.18.
Blocked Persons or Entities. 

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

32

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

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

          10.20.
Counterparts.

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

          10.21.
Entire Agreement.

          This
Agreement, together with any other writings signed by the parties expressly
stated to be supplemental hereto and together with any instruments to be
executed and delivered pursuant to this Agreement, constitutes the entire
agreement between the parties and supersedes all prior understandings and
writings, and may be changed only by a written non-electronic instrument that
has been duly executed by the non-electronic (which shall not be deemed to
exclude facsimile) signature of an authorized representative of the parties
hereto.

          10.22.
Franchise Agreement. 

          During
the Term of this Agreement, Manager shall perform all of the obligations of
Owner as “Franchisee” under the Franchise Agreement to the extent such
obligations relate to the management or operation of the Hotel, including,
without limitation, the obligations of “Franchisee” under Paragraphs ____ ____
_____ _____ of the Franchise Agreement, and Manager shall not commit any act or
omit to take any action that would cause a default by the Franchisee under the
Franchise Agreement. In the event of any inconsistency between the provisions
of this Agreement and the provisions of the Franchise Agreement, the provisions
of the Franchise Agreement shall prevail. Manager and Owner shall each send
promptly to the other any and all material notices that it receives from the
Franchisor with respect to the Hotel or the Franchise Agreement, and Manager
shall keep Owner fully informed with respect to all matters that come to
Manager’s attention under the Franchise Agreement that could be material to
Owner and/or the business operated at the Hotel. Notwithstanding the foregoing,
Manager shall not have the right to grant any consent, approval or other right
reserved to the Franchisee 

33

under the
Franchise Agreement or to make any decision or agreement on behalf of Owner
under the Franchise Agreement. In the event the Franchise Agreement is
terminated as a result of any Event of Default or any other act, omission or
default by Manager or its Affiliates, this Agreement shall also terminate
effective as of the date of termination of the Franchise Agreement; if the
Franchise Agreement is terminated for any other reason, the Agreement shall not
terminate but shall remain in full force and effect, unless the parties hereto
agree otherwise. 

          10.23.
Operation of Other Hotels. 

          During
the Term and except for the Hotel and the hotel listed in Schedule 1 attached
hereto (the “Excluded Hotel”),
if Manager or any of its Affiliates shall acquire, lease, own, manage or
operate, directly or indirectly, any hotel, inn, motel or other type of lodging
facility, regardless of whether similar to the Hotel or whether operated under
the same or a different brand, in the same geographic area or market as the
Hotel, Manager shall not permit unfair favoritism in the operation and
management of such other hotels that would disadvantage the operation or
business of the Hotel (such as, by way of example only, directing potential
Hotel guests to such other hotels instead of to the Hotel). At Owner’s request,
Manager shall provide such information as may reasonably be requested by Owner
to determine if there has been any such unfair favoritism and, in the event
Owner, in its reasonable business judgment, determines that any such unfair
favoritism has occurred, Owner may terminate the Agreement, provided that if
Manager is able to demonstrate to Owner’s reasonable satisfaction that Manager
can effect a cure of such unfair favoritism, Owner will permit Manager to
effect such cure, and if such cure is effected to Owner’s reasonable satisfaction,
this Agreement will not be terminated as a result of such unfair favoritism,
provided that this Agreement shall again become terminable pursuant to this
Section 10.23 if there is unfair favoritism after such cure. 

          10.24.
Expert Decisions. 

          Where
a matter is to be referred to an Expert for determination, the following
provisions shall apply to such Expert’s determination:

                    A.
The use of the Expert shall be the exclusive remedy of the parties and neither
party shall attempt to adjudicate any dispute in any other forum. The decision
of the Expert shall be final and binding on the parties and shall not be
capable of challenge, whether by arbitration, in court or otherwise;

                    B.
Each party shall be entitled to make written submissions to the Expert, and if
a party makes any submission it shall also provide a copy to the other party
and the other party shall have the right to comment on such submission. The
parties shall make available to the Expert all books and records relating to
the issue in dispute and shall render to the Expert any assistance requested of
the parties. The costs of the Expert and the proceedings shall be borne as
directed by the Expert unless otherwise provided for herein. The Expert may
direct that such costs be treated as Deductions;

                    C.
The Expert shall make its decision with respect to the matter referred for
determination by applying the standards applicable to first-class hotels in
accordance with the 

34

System
Standards (including the requirements of any quality assurance program) and
determining whether the matter at issue is necessary to satisfy such standards;
and

                    D.
The terms of engagement of the Expert shall include an obligation on the part
of the Expert to: (i) notify the parties in writing of his decision within
forty-five (45) days from the date on which the Expert has been selected (or
such other period as the parties may agree or as set forth herein); and (ii)
establish a timetable for the making of submissions and replies.

          10.25.
Waiver of Jury Trial and Punitive Damages. 

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

ARTICLE XI

DEFINITION OF TERMS

          11.01.
Definition of Terms.

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

          “Accounting Fee” shall mean a monthly
fee of One Thousand Five Hundred Fifty and No/100 Dollars ($1,550.00) payable
to Manager and pro-rated, as applicable, as provided in Section 3.04. The
Accounting Fee will be increased on each anniversary of the Effective Date by
five percent (5%) of the amount then in effect.

          “Accounting Period” shall mean a
calendar month, except that the first Accounting Period shall begin on the
Effective Date and shall end on the last day of the calendar month in which the
Effective Date occurs.

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

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

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

          “Annual Operating Projection” shall have
the meaning ascribed to it in Section 4.04.

35

          “Annual Operating Statement” shall have
the meaning set forth in Section 4.0l.B.

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

          “Base Management Fee” shall mean an
amount payable to Manager as a Deduction from Gross Revenues for all services
provided by Manager pursuant to this Agreement, except as otherwise expressly
provided herein. The Base Management Fee shall be three percent (3%) of Gross
Revenues.

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

          “Business Day” shall mean any day other
than a Saturday, Sunday or legal holiday in the Commonwealth of Virginia or the
State of Colorado.

          “CC&R’s” shall have the meaning
ascribed to it in Section 7.04.A.

          “Competitive Set” shall mean the group
of hotels which are closest in geographical distance from the Hotel and which
are generally within the same hotel market segment as the Hotel. The initial
Competitive Set is identified on Schedule 1 attached hereto and made a
part hereof. If any such hotels, subsequent to the Effective Date, either
changes its chain affiliation or ceases to operate or otherwise ceases to reflect
the general criteria set forth in the first sentence of this definition, the
Competitive set shall be changed at the request of either Owner or Manager and
approval of both parties, such approval not to be unreasonably withheld,
conditioned or delayed so that it continues to satisfy the criteria set forth
in the first sentence of this definition. Any disagreements shall be resolved
by the Expert in accordance with Section 10.24.

          “Deductible Leases” shall mean the lease
of the property management computer system for the Hotel and such other leases
as Owner and Manager may mutually agree will be “Deductible Leases.”

          “Deductions” shall have the meaning
ascribed to it in the definition of Operating Profit.

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

          “Effective Date” shall have the meaning
ascribed to it in the Preamble.

          “Environmental Laws” shall have the
meaning ascribed to it in Section 10.08.A.

          “Event of Default” shall have the
meaning ascribed to it in Section 8.01.

36

          “Expert” shall mean an independent,
nationally recognized hotel consulting firm or individual who is qualified to
resolve the issue in question, and who is appointed in each instance by
agreement of the parties or, failing agreement, each party shall select one (1)
such nationally recognized consulting firm or individual and the two (2)
respective firms and/or individuals so selected shall select another such
nationally recognized consulting firm or individual to be the Expert. Each
party agrees that it shall not appoint an individual as an Expert hereunder if
the individual is as of the date of appointment, or prior to such date was, an
Affiliate of such party or employed by such party or its Affiliates, either
directly or as a consultant, in connection with any other matter. In the event
that either party calls for an Expert determination pursuant to the terms hereof,
the parties shall have ten (10) days from the date of such request to agree
upon an Expert and, if they fail to agree, each party shall have an additional
ten (10) days to make its respective selection of a firm or individual, and
within ten (10) days of such respective selections, the two (2) respective
firms and/or individuals so selected shall select another such nationally
recognized consulting firm or individual to be the Expert. If either party
fails to make its respective selection of a firm or individual within the ten
(10) day period provided for above, then the other party’s selection shall be
the Expert. Also, if the two (2) respective firms and/or individuals so
selected shall fail to select a third nationally recognized consulting firm or
individual to be the Expert, then such Expert shall be appointed by the
American Arbitration Association and shall be a qualified person having at
least ten (10) years recent professional experience as to the subject matter in
question.

          “FF&E” shall mean furniture,
furnishings, fixtures, soft goods, case goods, signage, audio-visual equipment,
kitchen appliances, vehicles, carpeting and equipment, including front desk and
back-of-the-house computer equipment, but shall not include Fixed Asset Supplies
or Software.

          “FF&E Lease” means a lease of any
FF&E, which lease is properly capitalized for financial accounting
purposes.

          “Fiscal Year” shall mean, initially, the
period beginning as of the Effective Date and ending at midnight on the
following December 31 and thereafter each calendar year during the Term. Any
partial Fiscal Year between the Effective Date and the commencement of the
first full Fiscal Year shall constitute a separate Fiscal Year. A partial
Fiscal Year between the end of the last full Fiscal Year and the Termination of
this Agreement shall also constitute a separate Fiscal Year. If Fiscal Year is
changed in the future, appropriate adjustment to this Agreement’s reporting and
accounting procedures shall be made; provided, however, that no such change or
adjustment shall alter the term of this Agreement or in any way reduce the
distributions of Operating Profit or other payments due hereunder except as may
otherwise be expressly agreed upon by the parties to this Agreement.

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

37

          “Force Majeure” shall mean acts of God,
acts of war, civil disturbance, governmental action (including the revocation
or refusal to grant licenses or permits, where such revocation or refusal is
not due to the fault of the party whose performance is to be excused for
reasons of Force Majeure), strikes, lockouts, fire, unavoidable casualties or
any other causes beyond the reasonable control of either party (excluding,
however, (i) lack of financing, or (ii) general economic and/or market
factors).

          “Foreclosure” shall mean any exercise of
the remedies available to a Mortgagee, upon a default under the Qualified
Mortgage held by such Mortgagee, which results in a transfer of title to or
possession of the Hotel. The term “foreclosure” shall include, without
limitation, any one or more of the following events, if they occur in
connection with a default under a Qualified Mortgage: (i) a transfer by
judicial or non-judicial foreclosure; (ii) a transfer by deed in lieu of
foreclosure; (iii) the appointment by a court of a receiver to assume
possession of the Hotel; (iv) a transfer of either ownership or control of the
Owner, by exercise of a stock pledge or otherwise; (v) if title to the Hotel is
held by a tenant under a ground lease, an assignment of the tenant’s interest
in such ground lease; or (vi) any similar judicial or non-judicial exercise of
the remedies held by the Mortgagee resulting in actual ownership or control of
the Hotel by such Mortgagee or its designee.

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

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

          “Guest Room” shall mean a
separately-keyed lodging unit in the Hotel.

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

38

          “Hazardous Materials” shall have the
meaning ascribed to it in Section 10.08.A.

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

          “Hotel
Lease” shall have the meaning ascribed to it in Recital B.

          “Impact Fees” shall have the meaning
ascribed to it in Section 4.07.A.

          “Impositions” shall have the meaning
ascribed to it in Section 4.07.

          “Incentive Management Fee” shall mean an
amount payable to Manager, pursuant to Section 3.01 and Section 4.01, that is
equal to twenty percent (20%) of Available Cash Flow in any Fiscal Year (or
portion thereof) after payment to Owner of Owner’s Priority (including, without
limitation, all accrued and unpaid Owner’s Priority).

          “Initial Term” shall have the meaning
ascribed to it in Section 2.01.

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

          “Landlord”
shall mean the Person identified as Landlord on Schedule 1 attached
hereto and made part hereof.

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

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

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

          “Manager’s Liability” and “Manager’s Liabilities” shall have the
meanings ascribed to such terms in Section 4.03.B.

39

          “Minor Casualty” shall mean any fire or
other casualty that results in damage to the Hotel and/or its contents, the
repair cost for which is less than fifteen percent (15%) of the replacement
cost of the Hotel, as reasonably determined by Manager and substantiated
estimates prepared by independent third party general contractors or
consultants reasonably selected by Manager and reasonably approved by Owner.

          “Mortgage” shall mean any mortgage
creating a lien on the Hotel.

          “Mortgagee” shall mean the holder of any
Qualified Mortgage encumbering the Hotel or the Site.

          “Operating Accounts” shall have the
ascribed to it in Section 4.03.A.

          “Operating Loss” shall mean a negative
Operating Profit.

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

                    1.
the cost of sales, including, without limitation, costs associated with the
employment, management and termination of Hotel employees (including hiring and
recruitment fees and expenses), the costs of moving the Hotel General Manager
and Director of Sales to the area in which the Hotel is located at the
commencement of their employment at the Hotel (except to the extent Manager is
required to reimburse Owner for such costs as provided in Section 1.03),
compensation, benefits, employment taxes, training and severance payments and
other costs related to Hotel employees, provided that the foregoing costs shall
not include salaries and other employee costs of executive personnel of Manager
who do not work at the Hotel on a regular basis, which salaries and costs shall
be Manager’s Liability;

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

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

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

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

                    6.
all costs and fees of technical consultants and operational experts who are
retained or employed by Manager in accordance with the approved Annual
Operating Projection with the concurrence of Owner for specialized services
(including, without limitation, quality 

40

assurance
inspectors) and the reasonable cost of attendance by employees of the Hotel at
training and manpower development programs sponsored by Manager, provided the
costs thereof are included in the approved Annual Operating Projection or Owner
has approved attendance at programs and the cost thereof;

                    7.
the Base Management Fee;

                    8.
all “Monthly Royalty Fees,” “Monthly Program Fees,” and other similar fees
payable to the Franchisor under the Franchise Agreement;

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

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

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

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

                    13.
payments pursuant to Deductible Leases; 

                    14.
the per diem (or hourly, if charged on that basis by Manager to hotels it
operates) charge for personnel of Manager assigned to special projects for the
Hotel approved by Owner;

                    15.
travel expenses of headquarters and regional personnel of Manager supervising
the Hotel or providing specialized services to the Hotel and of Hotel employees
for attendance at training sessions, in connection with marketing of the Hotel
or other purposes related to Manager’s performance of its obligations under
this Agreement;

                    16.
the allocated costs of the centralized services provided to the Hotel pursuant
to Section 1.10; and

                    17.
to the extent included in the approved Annual Operating Projection or approved
in advance by Owner, such other costs and expenses incurred by Manager as are
specifically provided for elsewhere in this Agreement or are otherwise
reasonably necessary for the proper and efficient operation of the Hotel,
including without limitation, travel expenses or supervisory personnel of
Manager incurred in connection with managing the Hotel.

          The
term “Deductions” shall not
include (a) debt service payments pursuant to a Qualified Mortgage, or (b)
rental payments under any Hotel Lease, all of which shall be paid by Owner from
its own funds, (c) FF&E Leases (other than Deductible Leases), which
FF&E Leases (if any) shall be funded from the Reserve, (d) expenses
incurred for improvements under the Hotel property improvement plan that are
funded from the PIP Escrow, or (e) other capital 

41

expenditures,
determined in accordance with generally accepted accounting principles that are
funded from the Reserve or that increase Owner’s Priority.

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

          “Owner’s Priority” shall mean an amount
up to, but not in excess of the amount shown as Owner’s Priority on Schedule
1 attached hereto and made a part hereof, per Fiscal Year (prorated for any
partial Fiscal Year). Owner’s Priority for each Fiscal Year shall be paid to
the extent of Operating Profit available in such Fiscal Year, as provided in
Section 3.02 of this Agreement. In the event of any capital expenditures made
with respect to the Hotel in accordance with the approved Annual Operating
Projection after the Effective Date that are in excess of the Reserve, the
Owner’s Priority shall be increased (but not decreased) for the remaining
portion of the Fiscal Year in which such capital expenditures are made and all
subsequent Fiscal Years by an amount equal to ten and one-half percent (10.5%)
of such capital expenditures.. 

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

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

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

          “Qualified Mortgage” shall mean a
Mortgage securing a loan the original principal amount of which is not greater
than seventy-five percent (75%) of the fair market value of the Hotel.

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

          “Revenue Data Publication” shall mean
Smith’s STAR Report, a monthly publication distributed by Smith Travel
Research, Inc. of Gallatin, Tennessee, or an alternative source, reasonably
satisfactory to both parties, of data regarding the Revenue Per Available Room
of hotels in the general trade area of the Hotel. If such Smith’s STAR Report
is discontinued in the future, or ceases (in the reasonable opinion of either
Owner or Manager) to be a satisfactory source of data regarding the Revenue Per
Available Room of various hotels in the general trade area of the Hotel, Owner
and Manager shall select an alternative source for such data. 

          “Revenue Index” shall mean that fraction
that is equal to (a) the Revenue Per Available Room for the Hotel divided by
(b) the average Revenue Per Available Room for the hotels in the 

42

Competitive
Set, as set forth in the Revenue Data Publication. Appropriate adjustments to
the Revenue Index acceptable to Owner shall be made in the event of a major
renovation of the Hotel.

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

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

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

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

          “SEC Filing Period” shall mean such
period of time (not to exceed thirty (30) days) after the close of each Fiscal
Year within which Owner must receive the Annual Operating Statement from
Manager with respect to such Fiscal Year in order for Owner to have a
reasonable period of time within which to prepare and make all required filings
with the Securities and Exchange Commission and other applicable governmental
agencies.

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

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

          “Specially Designated National or Blocked Person”
shall mean (i) a person designated by the U.S. Department of Treasury’s Office
of Foreign Assets Control from time to time as a 

43

“specially
designated national or blocked person” or similar status, (ii) a person
described in Section 1 of U.S. Executive Order 13224 issued on September 23,
2001, or (iii) a person otherwise identified by government or legal authority
as a person with whom Manager or its Affiliates are prohibited from transacting
business. Currently, a listing of such designations and the text of the
Executive Order are published under the internet website address
www.ustreas.gov/offices/enforcement/ofac.

          “Subordination Agreement” shall have the
meaning ascribed to it in Section 7.03.

          “Subsequent Owners” shall have the
meaning ascribed to it in Section 7.03.A.

          “System” shall have the meaning set
forth in the Franchise Agreement.

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

          “Term” shall have the meaning ascribed
to it in Section 2.01.

          “Termination” shall mean the expiration
or sooner cessation of this Agreement.

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

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

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

          “Working Capital” shall mean funds that
are used in the day-to-day operation of the business of the Hotel, including,
without limitation, amounts sufficient for the maintenance of change and petty
cash funds, amounts deposited in operating bank accounts, receivables, amounts
deposited in payroll accounts, prepaid expenses and funds required to maintain
Inventories, less accounts payable and accrued current liabilities. The initial
Working Capital deposited by Owner as of the Effective Date shall be Forty-Five
Thousand and No/100 Dollars ($45,000.00).

44

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

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 OWNER:

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 APPLE TEN
 HOSPITALTY MANAGEMENT, INC.

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By: 

 	
 /s/ David
 Buckley

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Name: 

 	
 David
 Buckley

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Title: 

 	
 Vice
 President

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 

S - 1 – Management Agreement

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 MANAGER:

 	
  

 
	
  

 
	
  

 	
  

 	
 STONEBRIDGE
 REALTY ADVISORS, INC., 

 	
  

 
	
  

 	
  

 	
 a Colorado
 corporation, d/b/a STONEBRIDGE COMPANIES

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By: /s/

 	
 Navin C.
 Dimond

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Name:

 	
 Navin C.
 Dimond

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Title:

 	
 President
 and CEO

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 

S - 2 – Management Agreement

SCHEDULE 1

HOTEL SPECIFIC DATA

1. Description
of Hotel: That certain hotel known as the Hilton Garden Inn Denver
Downtown, located at 1400 Welton Street, Denver, Colorado 80202, containing 221
Guest Rooms, a lobby, meeting rooms, administrative offices, restaurant,
parking and certain amenities and related facilities located on the Site,
including the following:

	
  

 	
  

 
	
  

 	
 a. Number
 of Guest Rooms: 221

 
	
  

 	
  

 
	
  

 	
 b. Other
 Improvements/Amenities: Approximately 3,239 sq. ft. aggregate meeting
 room space; indoor swimming pool, exercise room, spa, business center

 

2. Franchise
Agreement: Hilton Garden Inn – Franchise License Agreement, dated as of the
date of this Management Agreement, between Hilton Garden Inns LLC as licensor,
and Owner, as licensee.

3. Funding
of Reserve for Repairs, Maintenance and Replacements: During the period
from the Effective Date to the expiration or earlier termination of this
Agreement, Manager shall transfer into the Reserve an amount equal to four
percent (4%) of Gross Revenues for each such Accounting Period.

4. Competitive
Set: 

	
  

 	
  

 
	
  

 	
 Crowne Plaza

 
	
  

 	
 Magnolia

 
	
  

 	
 Courtyard

 
	
  

 	
 Hampton Inn

 
	
  

 	
 Curtis Hotel

 
	
  

 	
 Embassy
 Suites

 

5. Landlord:
Apple Ten Hospitality Ownership, Inc., a Virginia corporation

6. Owner’s
Priority: Six Million One Hundred Forty-Two Thousand Five Hundred and
No/100 Dollars ($6,142,500.00)

7. Revenue
Index Threshold: 1.0

8. Excluded
Hotel: Potential Homewood Suites by Hilton

Schedule 1 – p. 1

EXHIBIT A

LEGAL DESCRIPTION OF SITE

LOTS 10
THROUGH 16, BLOCK 172, EAST DENVER, CITY AND COUNTY OF DENVER, STATE OF
COLORADO.

Exhibit A – p. 1

EXHIBIT B

REPRESENTATIONS AND WARRANTIES

          Manager
hereby represents and warrants to Owner as set forth below. 

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

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

                    (c)
Employees. All employees employed at the Hotel are the employees of
Manager or an Affiliate of Manager identified to Owner. To the best of
Manager’s knowledge, there are no (i) unions organized at the Hotel, (ii) union
organizing attempts, strikes, organized work stoppages or slow downs, or any
other labor disputes pending or threatened with respect to any of the employees
at the Hotel, or (iii) collective bargaining or other labor agreements to which
Manager or the Manager or the Hotel is bound with respect to any employees
employed at the Hotel.

Exhibit B – p. 1Exhibit 10.6 

FRANCHISE LICENSE AGREEMENT

HILTON GARDEN INN – DENVER DOWNTOWN 

(DENVER, COLORADO)

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI 

TABLE OF CONTENTS

	
  

 	
  

 	
  

 	
  

 
	
 1.
 DEFINITIONS

 	
  

 	
 1

 
	
  

 	
  

 	
  

 	
  

 
	
 2.
 GRANT OF LICENSE

 	
  

 	
 5

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Non-Exclusive
 License

 	
  

 	
 5

 
	
 b.

 	
 Reserved Rights

 	
  

 	
 5

 
	
 c.

 	
 Restricted Area
 Provision

 	
  

 	
 5

 
	
  

 	
  

 	
  

 	
  

 
	
 3.
 OUR RESPONSIBILITIES

 	
  

 	
 5

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Training

 	
  

 	
 5

 
	
 b.

 	
 Reservation
 Services

 	
  

 	
 5

 
	
 c.

 	
 Consultation

 	
  

 	
 6

 
	
 d.

 	
 Marketing

 	
  

 	
 6

 
	
 e.

 	
 Inspections/Compliance
 Assistance

 	
  

 	
 6

 
	
 f.

 	
 Manual

 	
  

 	
 6

 
	
 g.

 	
 Equipment and
 Supplies

 	
  

 	
 6

 
	
  

 	
  

 	
  

 	
  

 
	
 4.
 PROPRIETARY RIGHTS

 	
  

 	
 7

 
	
  

 	
  

 	
  

 	
  

 
	
 5.
 TRADE NAME, USE OF THE MARKS

 	
  

 	
 7

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Trade Name

 	
  

 	
 7

 
	
 b.

 	
 Use of Trade Name
 and Marks

 	
  

 	
 7

 
	
 c.

 	
 Trademark
 Disputes

 	
  

 	
 7

 
	
 d.

 	
 Web Sites

 	
  

 	
 7

 
	
 e.

 	
 Covenant

 	
  

 	
 8

 
	
  

 	
  

 	
  

 	
  

 
	
 6.
 YOUR RESPONSIBILITIES

 	
  

 	
 8

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Operational and
 Other Requirements

 	
  

 	
 8

 
	
 b.

 	
 Hotel
 Refurbishment

 	
  

 	
 11

 
	
 c.

 	
 Staff and
 Management

 	
  

 	
 11

 
	
 d.

 	
 Obligations of
 Prior Licensee

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 
	
 7.
 FEES

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Monthly Fees

 	
  

 	
 12

 
	
 b.

 	
 Calculation and
 Payment of Fees

 	
  

 	
 12

 
	
 c.

 	
 Room Addition Fee

 	
  

 	
 12

 
	
 d.

 	
 Other Fees

 	
  

 	
 13

 
	
 e.

 	
 Taxes

 	
  

 	
 13

 
	
 f.

 	
 Application of
 Fees

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 
	
 8.
 REPORTS, RECORDS, AUDITS, AND PRIVACY

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Reports

 	
  

 	
 13

 
	
 b.

 	
 Maintenance of
 Records

 	
  

 	
 13

 
	
 c.

 	
 Audit

 	
  

 	
 13

 
	
 d.

 	
 Ownership of
 Information

 	
  

 	
 14

 
	
 e.

 	
 Privacy and Data
 Protection

 	
  

 	
 14

 
	
  

 	
  

 	
  

 	
  

 
	
 9.
 INDEMNITY

 	
  

 	
 14

 
	
  

 	
  

 	
  

 	
  

 
	
 10.
 NOTICE OF INTENT TO MARKET

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 
	
 11.
 TRANSFER

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Our Transfer

 	
  

 	
 15

 
	
 b.

 	
 Your Transfer

 	
  

 	
 15

 

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

	
  

 	
  

 	
  

 	
  

 
	
 12.
 CONDEMNATION AND CASUALTY

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Condemnation

 	
  

 	
 19

 
	
 b.

 	
 Casualty

 	
  

 	
 19

 
	
 c.

 	
 No Extensions of
 Term

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 
	
 13.
 TERM OF LICENSE

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 
	
 14.
 TERMINATION BY US

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Termination with
 Opportunity to Cure

 	
  

 	
 19

 
	
 b.

 	
 Immediate
 Termination by Us

 	
  

 	
 20

 
	
 c.

 	
 Suspension/Interim
 Remedies by Us

 	
  

 	
 21

 
	
 d.

 	
 Liquidated Damages
 upon Termination

 	
  

 	
 21

 
	
 e.

 	
 Actual Damages
 Under Special Circumstances

 	
  

 	
 22

 
	
 f.

 	
 Your Obligations
 upon Termination or Expiration

 	
  

 	
 22

 
	
  

 	
  

 	
  

 	
  

 
	
 15.
 RELATIONSHIP OF PARTIES

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 No Agency
 Relationship

 	
  

 	
 23

 
	
 b.

 	
 Notices to Public
 Concerning Your Independent Status

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 
	
 16.
 MISCELLANEOUS

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 
	
 a.

 	
 Severability and
 Interpretation

 	
  

 	
 23

 
	
 b.

 	
 Governing Law,
 Jurisdiction and Venue

 	
  

 	
 24

 
	
 c.

 	
 Exclusive Benefit

 	
  

 	
 24

 
	
 d.

 	
 Entire
 Agreement/Amendment/Waiver

 	
  

 	
 24

 
	
 e.

 	
 Consent; Business
 Judgment

 	
  

 	
 25

 
	
 f.

 	
 Notices

 	
  

 	
 25

 
	
 g.

 	
 General Release

 	
  

 	
 25

 
	
 h.

 	
 Remedies
 Cumulative

 	
  

 	
 25

 
	
 i.

 	
 Economic
 Conditions Not a Defense

 	
  

 	
 25

 
	
 j.

 	
 Representations
 and Warranties

 	
  

 	
 25

 
	
 k.

 	
 Counterparts

 	
  

 	
 26

 
	
 l.

 	
 Restricted Persons
 and Anti-bribery Representations and Warranties

 	
  

 	
 26

 
	
 m.

 	
 Attorneys’ Fees
 and Costs

 	
  

 	
 27

 
	
 n.

 	
 Interest

 	
  

 	
 27

 
	
 o.

 	
 Successors and
 Assigns

 	
  

 	
 27

 
	
 p.

 	
 Our Delegation of
 Rights and Responsibility

 	
  

 	
 27

 
	
  

 	
  

 	
  

 	
  

 
	
 17.
 WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES

 	
  

 	
 27

 
	
  

 	
  

 	
  

 	
  

 
	
 ATTACHMENT
 A - PERFORMANCE CONDITIONS: CHANGE OF OWNERSHIP

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 ATTACHMENT
 B - RIDER TO FRANCHISE LICENSE AGREEMENT

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT
 A – RESTRICTED AREA MAP

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT
 B – PRODUCT IMPROVEMENT PLAN

 	
  

 	
  

 

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI 

FRANCHISE LICENSE AGREEMENT

This Franchise License Agreement is dated as of the Effective Date
between Hilton Garden Inns Franchise LLC (“we,” “us,” “our” or “Licensor”) and
the licensee entity (“you,” “your” or “Licensee”) set forth in the Rider
attached as Attachment B. 

INTRODUCTION

We are a subsidiary of Hilton Worldwide. Hilton Worldwide and its
Affiliates own, license, lease, operate, manage and provide various services
for the Network. We are authorized to grant licenses for selected, first-class,
independently owned or leased hotel properties, to operate under the Licensed
Brand. You have expressed a desire to enter into this Agreement with us to
obtain a license to use the Licensed Brand in the operation of a hotel at the
address or location described in the Rider. 

NOW, THEREFORE, in consideration of the premises and the undertakings
and commitments of each party to the other party in this Agreement the parties
agree as follows: 

THE AGREEMENT

1. Definitions 

The following capitalized terms will have the meanings set forth after
each term: 

“Affiliate” means
any natural person or firm, corporation, partnership, limited liability
company, association, trust or other entity which, directly or indirectly,
controls, is controlled by, or is under common Control with, the subject
entity. 

“Agreement” means
this Franchise License Agreement, including any exhibits, attachments and
addenda. 

“Applicable Laws”
means all public laws, statutes, ordinances, orders, rules, regulations,
permits, licenses, certificates, authorizations, directions and requirements of
all governments and governmental authorities having jurisdiction over the Hotel
or over Licensee to operate the Hotel, which, now or hereafter, may apply to
the construction, renovation, completion, equipping, opening and operation of
the Hotel, including, but not limited to, Title III of the Americans with
Disabilities Act, 42 U.S.C. § 12181, et seq., and 28 C.F.R. Part 36. 

“Change of Ownership Application”
means the application submitted to us by you or the Transferee Licensee for a
new franchise license agreement in connection with a Change of Ownership
Transfer. 

“Change of Ownership Transfer”
means any proposed Transfer that results in a change of Licensee or a change in
Control of Licensee, the Hotel, or the Hotel Site and is not otherwise
permitted by this Agreement, all as set out in Subparagraph 11.b.(3). 

“Competitor” means
any individual or entity that at any time during the License Term, whether
directly or through an Affiliate, owns in whole or in part, or is the licensor
or franchisor of, a hotel brand or trade name that, in our sole business
judgment, competes with the System or any System Hotel or Network Hotel. 

“Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, or of the power to veto
major policy decisions of an entity, whether through the ownership of voting
securities, by contract, or otherwise. 

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“Designs” means your
plans, layouts, specifications, drawings and designs for the proposed
furnishings, fixtures, equipment, signs and décor of the Hotel. 

“Effective Date”
means the Effective Date specified in the Rider. 

“Entities” means our
present or future Affiliates and direct or indirect owners. 

“Equity Interest”
means any direct or indirect legal or beneficial interest in the Licensee, the
Hotel and/or the Hotel Site. 

“Equity Owner” means
the direct or indirect owner of an Equity Interest. 

“Force Majeure” as
used in Attachment A means an event causing a delay in your performance of any
duties under Attachment A, or any non-performance of such duties, that is not
your fault or within your reasonable control. Force Majeure includes, but is
not limited to: fire; floods; natural disasters; Acts of God; war; civil
commotion; terrorist acts; any governmental act or regulation; and any other
similar event beyond your reasonable control. Force Majeure does not include
your own financial inability to perform, inability to obtain financing,
inability to obtain permits or any other similar events unique to you or the
Hotel, or to general economic downturn or conditions. 

“General Manager”
has the meaning set forth in Subparagraph 6.c. 

“Gross Receipts Tax”
means any gross receipts, sales, use, excise, value added or any similar tax. 

“Gross Rooms Revenue”
has the meaning set forth in Subparagraph 7.b. 

“Guarantor” means
the person or entity that guarantees your obligations under this Agreement or
any of Your Agreements. 

“Guest Rooms” means
each rentable unit in the Hotel generally used for overnight guest
accommodations, the entrance to which is controlled by the same key; provided
that adjacent rooms with connecting doors that can be locked and rented as
separate units are considered separate Guest Rooms. 

“Hilton Worldwide”
means Hilton Worldwide, Inc., a Delaware corporation. 

“Hotel” means the
property you will operate under this Agreement and includes all structures,
facilities, appurtenances, furniture, fixtures, equipment, and entry, exit,
parking and other areas located on the Hotel Site we have approved for your
business or located on any land we approve in the future for additions, signs,
parking or other facilities. 

“Hotel Site” means
the real property on which the Hotel is located or to be located, as approved
by us. 

“Indemnified Parties”
means us and the Entities and our respective predecessors, successors and
assigns, and the members, officers, directors, employees, managers, and agents
of each of us. 

“Information” means
all information we obtain from you or about the Hotel or its guests or
prospective guests under this Agreement or under any agreement ancillary to
this Agreement, including, but not limited to, agreements relating to the
computerized reservation, revenue management, property management, and other
systems we provide or require, or otherwise related to the Hotel. Information
includes, but is not limited to, Operational Information, Proprietary
Information, and Personal Information. 

“Interim Remedy” has
the meaning set forth in Subparagraph 14.c. 

“License” has the
meaning set forth in Subparagraph 2.a. 

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“License Term” means
the period from the Effective Date through the expiration of this Agreement on
the date set forth in the Rider, unless terminated earlier under the terms of
this Agreement. 

“Licensed Brand”
means the brand name set forth in the Rider. 

“Linked Sites” has
the meaning set forth in Subparagraph 5.d. 

“Liquidated Damages”
has the meaning set forth in Subparagraph 14.d. 

“Management Company”
has the meaning set forth in Subparagraph 6.c. 

“Manual” means all
written compilations of the Standards. The Manual may take the form of one or
more of the following: one or more loose leaf or bound volumes; bulletins;
notices; videos; CD-ROMS and/or other electronic media; online postings; e-mail
and/or electronic communications; facsimiles; or, any other medium capable of
conveying the Manual’s contents. 

“Marks” means the
Licensed Brand and all other service marks, copyrights, trademarks, trade
dress, logos, insignia, emblems, symbols and designs (whether registered or
unregistered), slogans, distinguishing characteristics, and trade names used in
the System. 

“Monthly Program Fee”
means the fee we require from you in Subparagraph 7.a., which is set forth in
the Rider. 

“Monthly Royalty Fee”
means the fee we require from you in Subparagraph 7.a., which is set forth in
the Rider. 

“Network” means the
hotels, inns, conference centers, timeshare properties and other operations
Hilton Worldwide and its subsidiaries own, license, lease, operate or manage
now or in the future. 

“Network Hotel”
means any hotel, inn, conference center, timeshare property or other similar
facility within the Network. 

“Opening Date” means
the day on which we authorize you to make available the facilities, Guest Rooms
or services of the Hotel to the general public under the Licensed Brand. 

“Operational Information”
means all information concerning Gross Rooms Revenue, other revenues generated
at the Hotel, room occupancy rates, reservation data and other financial and
non-financial information we require. 

“Other Business(es)”
means any business activity we or the Entities engage in, other than the
licensing of the Hotel. 

“Other Hotels” means
any hotel, inn, lodging facility, conference center or other similar business,
other than a System Hotel or a Network Hotel. 

“Personal Information”
means any information that: (i) can be used (alone or when used in combination
with other information within your control) to identify, locate or contact an
individual; or (ii) pertains in any way to an identified or identifiable
individual. Personal Information can be in any media or format, including
computerized or electronic records as well as paper-based files. 

“PIP” means product
improvement plan. 

“PIP Fee” means the
fee we charge for creating a PIP. 

“Plans” means your
plans, layouts, specifications, and drawings for the Hotel. 

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“Principal Mark” is
the Mark identified as the Principal Mark in the Rider. 

“Privacy Laws” means any international, national,
federal, provincial, state, or local law, code or regulation that regulates the
processing of Personal Information in any way, including, but not limited to,
national data protection laws, laws regulating marketing communications and/or
electronic communications, information security regulations and security breach
notification rules. 

“Proprietary Information”
means all information or materials concerning the methods, techniques, plans,
specifications, procedures, information, systems and knowledge of and
experience in the development, operation, marketing and licensing of the
System, whether developed by us, you, or a third party. 

“Publicly Traded Equity Interest”
means (i)
any Equity Interest that is traded on any securities exchange or is quoted in
any publication or electronic reporting service maintained by the National
Association of Securities Dealers, Inc., or any of its successors or (ii)
any Equity Interests sold in any offering under the Securities Act of 1933, as
amended, so long as such Equity Interests are beneficially held by no less than
one hundred (100) unrelated persons or entities. 

“Quality Assurance Re-Evaluation Fee”
has the meaning set forth in Subparagraph 3.e. 

“Renovation Work”
has the meaning set forth in Attachment A. 

“Reports” mean
daily, monthly, quarterly and annual operating statements, profit and loss
statements, balance sheets, and other financial and non-financial reports we
require. 

“Reservation Service”
means the reservation service we designate in the Standards for use by System
Hotels. 

“Restricted Area Provision”
has the meaning set forth in the Rider.

“Rider” is attached as Attachment B. 

“Room Addition” has the meaning set forth in Subparagraph 7.c.  

“Room Addition Fee”
is the fee you must pay when submitting the Room Addition request. 

“Site” means domain
names, the World Wide Web, the Internet, computer network/distribution systems,
or other electronic communications sites. 

“Standards” means
all standards, specifications, requirements, criteria, and policies that have
been and are in the future developed and compiled by us for use by you in
connection with the design, construction, renovation, refurbishment,
appearance, equipping, furnishing, supplying, opening, operating, maintaining,
marketing, services, service levels, quality, and quality assurance of System
Hotels, including the Hotel, and for hotel advertising and accounting, whether
contained in the Manual or set out in this Agreement or other written
communication. 

“System” means the
elements, including know-how, that we designate to distinguish hotels operating
worldwide under the Licensed Brand (as may in certain jurisdictions be preceded
or followed by a supplementary identifier such as “by Hilton”) that provide to
the consuming public a similar, distinctive, high quality hotel service. The
System currently includes: the Licensed Brand, the Marks, the Trade Name, and
the Standards; access to a reservation service; advertising, publicity and
other marketing programs and materials; training programs and materials; and
programs for our inspecting the Hotel and consulting with you. 

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“System Hotels”
means hotels operating under the System using the Licensed Brand name. 

“Trade Name” means
the name of the Hotel set forth in the Rider. 

“Transfer” means in
all its forms, any sale, lease, assignment, spin-off, transfer, or other
conveyance of a direct or indirect legal or beneficial interest. 

“Transferee Licensee”
means the proposed new licensee resulting from a Transfer. 

“Your Agreements”
means any other agreement between you and us or any of the Entities related to
this Agreement, the Hotel and/or the Hotel Site. 

2. Grant of License 

          a.
Non-Exclusive License. We grant to you and you accept
a limited, non-exclusive License to use the Marks and the System during the
License Term at, and in connection with, the operation of the Hotel in
accordance with the terms of this Agreement. You agree to identify and operate
the Hotel as a System Hotel in accordance with the Marks, the System and this
Agreement only as and when authorized by us. You acknowledge and agree that you
are not acquiring any rights other than the non-exclusive right to use the
System to operate the Hotel under the Licensed Brand at the Hotel Site under
this Agreement and in accordance with the terms of this Agreement. 

          b.
Reserved Rights. This Agreement does not limit our
right, or the right of the Entities, to own, license or operate any Other
Business of any nature, whether in the lodging or hospitality industry or not,
and whether under the Licensed Brand, a competitive brand, or otherwise. We and
the Entities have the right to engage in any Other Businesses, even if they
compete with the Hotel, the System, or the Licensed Brand, and whether we or
the Entities start those businesses, or purchase, merge with, acquire, are
acquired by, come under common ownership with, or associate with, such Other
Businesses. We may also: (a) modify the System by adding, altering, or deleting
elements of the System; (b) use or license to others all or part of the System;
(c) use the facilities, programs, services and/or personnel used in connection
with the System in Other Businesses; and (d) use the System, the Licensed Brand
and the Marks in the Other Businesses. You acknowledge and agree that you have
no rights to, and will not make any claims or demands for, damages or other
relief arising from or related to any of the foregoing activities, and you
acknowledge and agree that such activities will not give rise to any liability
on our part, including, but not limited to, liability for claims for unfair
competition, breach of contract, breach of any applicable implied covenant of
good faith and fair dealing, or divided loyalty. 

          c.
Restricted Area Provision. The Restricted Area Provision
is set forth in the Rider. 

3. Our Responsibilities 

          We have the
following responsibilities to you under this Agreement. We reserve the right to
fulfill some or all of these responsibilities through one of the Entities or
through unrelated third parties, in our sole business judgment. We may require
you to make payment for any resulting services or products directly to the
provider. 

          a.
Training. We may specify certain required and optional
training programs and provide these programs at various locations. We may
charge you for required training services and materials and for optional
training services and materials we provide to you. You are responsible for all
travel, lodging and other expenses you or your employees incur in attending
these programs. 

          b.
Reservation Services. We will furnish you with the
Reservation Service. This service will be furnished to you on the same basis as
it is furnished to other System Hotels, subject to the provisions of
Subparagraph 14.c. below. 

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          c.
Consultation. We may, at our sole option, offer
consultation services and advice in areas such as operations, facilities, and
marketing on the same basis as other System Hotels. We may establish fees in
advance, or on a project-by-project basis, for any consultation service or
advice you request. 

          d.
Marketing. Periodically, we will publish (either in
hard copy or electronic form or both) and make available to the traveling
public a directory that includes System Hotels, including the Hotel.
Additionally, we will include the Hotel, or cause the Hotel to be included,
where applicable, in advertising of System Hotels and in international,
national and regional marketing programs offered by us, subject to and in
accordance with our general practice for System Hotels. 

          We will use
your Monthly Program Fee to pay for various programs to benefit the System,
including, but not limited to: (i) advertising, promotion, publicity, public
relations, market research, and other marketing programs; (ii) developing and
maintaining directories of and Internet sites for System Hotels; (iii)
developing and maintaining the Reservation Service systems and support; and (iv)
administrative costs and overhead related to the administration or direction of
these projects and programs. We will have the sole right to determine how and
when we spend these funds, including sole control over the creative concepts,
materials and media used in the programs, the placement and allocation of
advertising, and the selection of promotional programs. We may enter into
arrangements for development, marketing, operations, administrative, technical
and support functions, facilities, programs, services and/or personnel with any
other entity, including any of the Entities or a third party. You acknowledge
that Monthly Program Fees are intended for the benefit of the System and will
not simply be used to promote or benefit any one System Hotel or market. We
will have no obligation in administering any activities paid by the Monthly
Program Fee to make expenditures for you that are equivalent or proportionate
to your payments or to ensure that the Hotel benefits directly or
proportionately from such expenditures. We may create any programs and allocate
monies derived from Monthly Program Fees to any regions or localities, as we
consider appropriate in our sole business judgment. The aggregate of Monthly
Program Fees paid to us by System Hotels does not constitute a trust or
“advertising fund” and we are not a fiduciary with respect to the Monthly
Program Fees paid by you and other System Hotels. We are not obligated to
expend funds in excess of the amounts received from System Hotels. If any
interest is earned on unused Monthly Program Fees, we will use the interest
before using the principal. The Monthly Program Fee does not cover your costs
of participating in any optional marketing programs and promotions offered by
us in which you voluntarily choose to participate. These Monthly Program Fees
do not cover the cost of operating the Hotel in accordance with the Standards. 

          e.
Inspections/Compliance Assistance. We will administer
a quality assurance program for the System that may include conducting periodic
inspections of the Hotel and guest satisfaction surveys and audits to ensure
compliance with System Standards. You will permit us to inspect the Hotel
without prior notice to determine if the Hotel is in compliance with the
Standards. You will cooperate fully with our representatives during these
inspections. You will then take all steps necessary to correct any deficiencies
within the times we establish. You may be charged a Quality Assurance
Re-Evaluation Fee as set forth in the Standards. You will provide complimentary
accommodations for the quality assurance auditor each time we conduct a regular
inspection or a special on-site quality assurance re-evaluation after the Hotel
has failed a regular quality assurance evaluation or to verify that deficiencies
noted in a quality assurance evaluation report or PIP have been corrected or
completed by the required dates. 

          f.
Manual. We will issue to you or make available in
electronic form the Manual and any revisions and updates we may make to the
Manual during the License Term. You agree to ensure that your copy of the
Manual is, at all times, current and up to date. If there is any dispute as to
your compliance with the provisions of the Manual, the master copy of the
Manual maintained at our principal office will control. 

          g.
Equipment and Supplies. We will make available to you
for use in the Hotel various purchase, lease, or other arrangements for
exterior signs, operating equipment, operating supplies, and furnishings, which
we make available to other System Hotels. 

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4. Proprietary Rights 

          You will
not contest, either directly or indirectly during the License Term or after
termination or expiration of this Agreement: (i) our (and/or any Entities’)
ownership of, rights to and interest in the System, Licensed Brand, Marks and
any of their elements or components, including present and future
distinguishing characteristics; (ii) our sole right to grant licenses to use
all or any elements or components of the System; (iii) that we (and/or the
Entities) are the owner of (or the licensee of, with the right to sub-license)
all right, title and interest in and to the Licensed Brand and the Marks used
in any form and in any design, alone or in any combination, together with the
goodwill they symbolize; and (iv) the validity or ownership of the Marks. You
acknowledge that these Marks have acquired a secondary meaning which indicates
that the Hotel, Licensed Brand and System are operated by or with our approval.
All improvements and additions to, or associated with, the System, all Marks,
and all goodwill arising from your use of the System and the Marks, will inure
to our benefit and become our property (or that of the applicable Entities),
even if you develop them. You will not apply for or obtain any trademark or
service mark registration of any of the Marks or any confusingly similar marks
in your name or on behalf of or for the benefit of anyone else. You acknowledge
that you are not entitled to receive any payment or other value from us or from
any of the Entities for any goodwill associated with your use of the System or
the Marks, or any elements or components of the System. 

5. Trade Name, Use of the Marks 

          a. Trade Name. The Hotel will be initially
known by the Trade Name set forth in the Rider. We may change the Trade Name,
the Licensed Brand name and/or any of the Marks (but not the Principal Mark),
or the way in which any of them (including the Principal Mark) are depicted, at
any time at our sole option and at your expense. You may not change the Trade
Name without our specific prior written consent. You acknowledge and agree that
you are not acquiring the right to use any service marks, copyrights,
trademarks, trade dress, logos, designs, insignia, emblems, symbols, slogans,
distinguishing characteristics, trade names, domain names or other marks or
characteristics owned by us or licensed to us that we do not specifically
designate to be used in the System. 

          b.
Use of Trade Name and Marks. You will operate under
the Marks, using the Trade Name, at the Hotel. You will not adopt any other
names or marks in operating the Hotel without our approval. You will not use
any of the Marks, or the word “Hilton,” or other Network trademarks, trade
names or service marks, or any similar words or acronyms, in: (i) your
corporate, partnership, business or trade name except as we permit under this
Agreement or the Standards; (ii) any Internet-related name (including a domain
name), except as we permit under this Agreement or in the Standards; or (iii)
any business operated separately from the Hotel, including the name or identity
of developments adjacent to or associated with the Hotel. You agree that any
unauthorized use of the Marks will be an infringement of our rights and a
material breach of this Agreement. 

          c.
Trademark Disputes. You will immediately notify us of
any infringement or dilution of or challenge to your use of any of the Marks and
will not, absent a court order or our prior written consent, communicate with
any other person regarding any such infringement, dilution, challenge or claim.
We will take the action we deem appropriate with respect to such challenges and
claims and have the sole right to handle disputes concerning use of all or any
part of the Marks or the System. You will fully cooperate with us and any
applicable Entity in these matters. We do not reimburse your expenses incurred
in cooperating with us or the Entities in these matters. You appoint us as your
exclusive attorney-in-fact, to prosecute, defend and/or settle all disputes of
this type at our sole option. You will sign any documents we or the applicable
Entity believe are necessary to prosecute, defend or settle any dispute or
obtain protection for the Marks and the System and will assign to us any claims
you may have related to these matters. Our decisions as to the prosecution,
defense or settlement of the dispute will be final. All recoveries made as a
result of disputes regarding use of all or part of the System or the Marks will
be for our account. 

          d.
Web Sites. You may not register, own, maintain or use
any Sites that relate to the Network or the Hotel or that include the Marks.
The only domain names, Sites, or Site contractors that you may 

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use relating to the Hotel or this Agreement are those we assign or
otherwise approve in writing. You must also obtain our prior written approval
concerning any third-party Site in which the Hotel will be listed, any proposed
links between such Site and any other site (“Linked
Sites”) and any proposed modifications to Sites and Linked Sites.
All Sites containing any of the Marks and any Linked Sites must advertise,
promote, and reflect on the Hotel and the System in a first-class, dignified
manner. Any use of the Marks on any Site must conform to our requirements,
including the identity and graphics Standards for all System hotels. Given the
changing nature of this technology, we have the right to withhold our approval,
and to withdraw any prior approval, and to modify our requirements. 

          You
acknowledge that you may not, without a legal license or other legal right,
post on your Sites any material in which any third party has any direct or
indirect ownership interest (including, but not limited to, video clips,
photographs, sound bites, copyrighted text, trademarks or service marks, or any
other text or image in which any third party may claim intellectual property
ownership interests). You must incorporate on your Sites any information we
require in the manner we deem necessary to protect our Marks. 

          e.
Covenant. You agree, as a direct covenant with us and
the Entities, that you will comply with all of the provisions of this Agreement
related to the manner, terms and conditions of the use of the Marks and the
termination of any right on your part to use any of the Marks. Any
non-compliance by you with this covenant or the terms of this Agreement related
to the Marks, or any unauthorized or improper use of the System or the Marks,
will cause irreparable damage to us and/or to the Entities. If you engage in
such non-compliance or unauthorized and/or improper use of the System or the
Marks during or after the License Term, we and any of the applicable Entities,
along with the successors and assigns of each, separately or along with each
other, will be entitled to both temporary and permanent injunctive relief
against you from any court of competent jurisdiction, in addition to all other
remedies we or the Entities may have at law. You consent to the entry of such
temporary and permanent injunctions. You must pay all costs and expenses,
including reasonable attorneys’ fees, expert fees, costs and other expenses of
litigation that we and/or the Entities may incur in connection with your
non-compliance with this covenant. 

6. Your Responsibilities 

          In addition
to any other responsibilities and obligations you have under this Agreement,
you are responsible for performing the following obligations: 

          a.
Operational and Other Requirements. During the License
Term, you must: 

                    (1)
after the Opening Date, operate the Hotel twenty-four (24) hours a day; 

                    (2)
operate the Hotel using the System, in compliance with this Agreement and the
Standards, and in such a manner to provide courteous, uniform, respectable and
high quality lodging and other services and conveniences to the public. You acknowledge
that, although we provide the Standards, you have exclusive day-to-day control
of the business and operation of the Hotel and we do not in any way possess or
exercise such control; 

                    (3)
comply with System Standards, including our specifications for all supplies,
products and services, regarding (i) the types and levels of services,
amenities and products that must be used, promoted or offered in connection
with the Hotel and (ii) the purchase of products and services, including, but
not limited to, furniture, fixtures, equipment, food, operating supplies,
consumable inventories, merchandise for resale to be used at, and/or sold from,
the Hotel, in-room entertainment, computer networking, and any and all other
items used in the operation of the Hotel. We may require you to purchase a
particular brand of product. Unless we specify otherwise, you may purchase this
product from any authorized source of distribution; however, we reserve the
right, in our business judgment, to enter into exclusive purchasing
arrangements for particular products or services and to require that you
purchase products or services from approved suppliers or distributors; 

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                    (4)
install, display, and maintain signage displaying or containing the Licensed
Brand name and other distinguishing characteristics in accordance with
Standards we establish for System Hotels; 

                    (5)
comply with System Standards for the training of persons involved in the
operation of the Hotel, including completion by the General Manager and other
key personnel of the Hotel of a training program for operation of the Hotel
under the System, at a site we designate. You will pay us for all fees and
charges, if any, we require for your personnel to attend these training
programs. You will also be responsible for the wages, room, board and travel
expenses of your personnel; 

                    (6)
purchase and maintain property management, revenue management, in-room
entertainment, telecommunications, high-speed internet access, and other
computer and technology systems we designate as System-wide (or area-wide)
programs based on our assessment of the long-term best interests of System Hotels,
considering the interest of the System as a whole; 

                    (7)
advertise and promote the Hotel and related facilities and services on a local
and regional basis in a first-class, dignified manner, using our identity and
graphics Standards for all System Hotels, at your cost and expense. You must
submit to us for our approval samples of all advertising and promotional
materials that we have not previously approved (including any materials in
digital, electronic or computerized form or in any form of media that exists
now or is developed in the future) before you produce or distribute them. You
will not begin using the materials until we approve them. You must immediately
discontinue your use of any advertising or promotional material we believe in
our business judgment is not in the best interest of the Hotel or System, even
if we previously approved the materials; 

                    (8)
participate in and pay all charges in connection with (i) all required System
guest complaint resolution programs, which programs may include chargebacks to
the Hotel for guest refunds or credits, and (ii) all required System quality
assurance programs, such as guest comment cards, customer surveys and mystery
shopper programs. You must maintain minimum performance Standards and scores
for quality assurance programs we establish; 

                    (9)
honor all nationally recognized credit cards and credit vouchers issued for
general credit purposes that we require and enter into all necessary credit
card and voucher agreements with the issuers of such cards or vouchers; 

                    (10)
participate in and use, on the terms in this Agreement and in the Standards,
the Reservation Service, including any additions, enhancements, supplements or
variants we develop or adopt, and honor and give first priority on available
rooms to all confirmed reservations referred to the Hotel through the
Reservation Service. The only reservation service or system you may use for
outgoing reservations referred by or from the Hotel to other Network Hotels
will be the Reservation Service or other reservation services we designate; 

                    (11)
comply with Applicable Laws and, upon request, give evidence to us of
compliance; 

                    (12)
participate in, and promptly pay all fees, commissions and charges associated
with, all travel agent commission programs and third-party reservation and
distribution services (such as airline reservation systems), all as required by
the Standards and in accordance with the terms of these programs, all of which
may be modified; 

                    (13)
not engage, directly or indirectly, in any cross-marketing or cross-promotion
of the Hotel with any Other Hotel or related business, except as outlined in
this Paragraph, without our prior written consent, which we may be withhold or
condition in our business judgment. You agree to refer guests and customers,
wherever reasonably possible, only to System Hotels or Network Hotels. We may
require you to participate in programs designed to refer prospective customers
to Other Hotels. You must display all material, including brochures and
promotional material we provide for System Hotels and 

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Network Hotels, and allow advertising and promotion only of System
Hotels and Network Hotels on the Hotel Premises, unless we specifically direct
you to include advertising or promotion of Other Hotels; 

                    (14)
treat as confidential the Standards, the Manual and all other Proprietary
Information. You acknowledge and agree that you: (i) do not acquire any
interest in the Proprietary Information other than the right to utilize the
same in the development and operation of the Hotel under the terms of this
Agreement; (ii) will not use the Proprietary Information in any business or for
any purpose other than in the development and operation of the Hotel under the
System; (iii) will maintain the absolute confidentiality of the Proprietary
Information during and after the License Term; (iv) will not make unauthorized
copies of any portion of the Proprietary Information; and (v) will adopt and
implement all procedures we may periodically establish in our business judgment
to prevent unauthorized use or disclosure of the Proprietary Information,
including restrictions on disclosure to employees and the use of non-disclosure
and non-competition clauses in agreements with employees, agents and
independent contractors who have access to the Proprietary Information; 

                    (15)
not become a Competitor, or permit your Affiliate to become a Competitor,
without our prior written consent. These restrictions apply irrespective of the
number of hotels owned, licensed or franchised by the Competitor under such brand
name, but we do not prohibit you (or your Affiliates) from: (i) owning a
minority interest in a Competitor so long as neither you nor any of your
Affiliates is a director or employee of the Competitor, provides services
(including as a consultant) to the Competitor or exercises or has the right to
exercise, control or influence over the business decisions of the Competitor;
(ii) being a franchisee or licensee of a Competitor; or (iii) managing a
property for a Competitor; 

                    (16)
own fee simple title (or long-term ground leasehold interest, provided that
such interest has been granted to you by an unrelated third-party ground lessor
in an arms length transaction for a term equal to, or longer than, the License
Term) to the real property and improvements that comprise the Hotel, or
alternatively, at our request, cause the fee simple owner, or other third party
acceptable to us, to provide its guarantee covering all of your obligations
under this Agreement in form and substance acceptable to us; 

                    (17)
maintain legal possession and control of the Hotel and Hotel Site for the term
of the Agreement and promptly deliver to us a copy of any notice of default you
receive from any mortgagee, trustee under any deed of trust, or ground lessor
for the Hotel, and upon our request, provide any additional information we may
request related to any alleged default or any subsequent action or proceeding
in connection with any alleged default; 

                    (18)
refrain from directly or indirectly conducting, or permitting by lease,
concession arrangement or otherwise, gaming or casino operations in or
connected to the Hotel or on the Hotel Site; without our prior written consent,
which we may be withhold or condition in our business judgment; 

                    (19)
refrain from directly or indirectly conducting or permitting the marketing or
sale of timeshares, vacation ownership, fractional ownership, condominiums or
like schemes at, or adjacent to, the Hotel without our written consent, which
we may withhold or condition in our business judgment; provided, however, that
this restriction will not prohibit you from directly or indirectly conducting
timeshare, vacation ownership, fractional ownership, or condominium sales or
marketing at and for any property located adjacent to the Hotel that is owned
or leased by you so long as: (i) you do not use any of the Marks in such sales
or marketing efforts; and (ii) you do not use the Hotel or its facilities in
such sales and marketing efforts or in the business operations of the adjacent
property; 

                    (20)
participate in and pay all charges related to our marketing programs (in
addition to programs covered by the Monthly Program Fee), all guest frequency
programs we require; and any optional programs that you opt into. You must also
honor the terms of any discount or promotional programs (including any frequent
guest program) that we offer to the public on your behalf, any room rate quoted
to any guest at the time the guest makes an advance reservation, and any award
certificates issued to Hotel guests participating in these programs; 

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                    (21)
maintain, at your expense, insurance of the types and in the minimum amounts we
specify in the Standards. All such insurance must be with insurers having the
minimum ratings we specify, name as additional insureds the parties we specify
in the Standards, and carry the endorsements and notice requirements we specify
in the Standards. If you fail or neglect to obtain or maintain the insurance or
policy limits required by this Agreement, we have the option, but not the
obligation, to obtain and maintain such insurance without notice to you, and
you will immediately upon our demand pay us the premiums and cost we incur in
obtaining this insurance; 

                    (22)
refrain from sharing the business operations and Hotel facilities with any
Other Hotel, without our written consent, which we may withhold or condition in
our business judgment; 

                    (23)
refrain from any activity which, in our business judgment, is likely to
adversely reflect upon or affect in any manner, any gaming licenses or permits
held by the Entities or the then current stature of any of the Entities with
any gaming commission, board, or similar governmental or regulatory agency, or
the reputation or business of any of the Entities; 

                    (24)
notwithstanding anything to the contrary in this Agreement, refrain from
engaging in any tenant-in-common syndication or Transfer of any
tenant-in-common interest in the Hotel or the Hotel Site, without our express
written permission, which we may withhold at our sole option, and, if we grant
such permission, comply with the terms of such permission; and 

                    (25)
promptly provide to us all information we reasonably request about you and your
Affiliates (including your respective beneficial owners, officers, directors,
shareholders, partners or members) and/or the Hotel, title to the property on
which the Hotel is constructed and any other property used by the Hotel. The
information requested may include, but not necessarily be limited to, financial
condition, credit information, personal and family background, business
background, litigation, indictments, criminal proceedings and the like. 

          b.
Hotel Refurbishment. In addition to the general
requirement for you to operate the Hotel according to our Standards, we may
periodically require you to modernize, rehabilitate and/or upgrade the Hotel’s
fixtures, equipment, furnishings, furniture, signs, computer hardware and
software and related equipment, supplies and other items to meet the
then-current Standards. You will make these changes at your sole cost and
expense. Nothing in this subparagraph will relieve you from the obligation to
maintain acceptable product quality ratings at the Hotel and maintain the Hotel
in accordance with the Standards at all times during the License Term. You may
not make any change in the number of approved Guest Rooms in the Rider or any
other significant change (including major changes in structure, design or
decor) in the Hotel without our prior written approval. Minor redecoration and
minor structural changes that comply with our Standards will not be considered
significant. 

          c.
Staff and Management. You are at all times solely
responsible for the management of the Hotel’s business. You may fulfill this
responsibility by providing: (i) qualified and experienced management, which
may be a third-party Management Company; and (ii) a General Manager, each
approved by us in writing. You agree that we will have the right to communicate
directly with the Management Company and managers at the Hotel and that we may
rely on the communications of such managers or Management Company as being on
your behalf. 

          You
represent and agree that you have not, and will not, enter into any lease,
management agreement or other similar arrangement for the operation of the
Hotel or any part of the Hotel with any person or entity without our prior
written consent. To be approved by us as the operator of the Hotel, you, any
proposed Management Company and any proposed General Manager must be qualified
to manage the Hotel. We may refuse to approve you, any proposed Management
Company or any proposed General Manager which, in our business judgment, is
inexperienced or unqualified in managerial skills or operating capacity or
capability or is unable to adhere fully to the obligations and requirements of
this Agreement. You understand that we reserve the right to not approve a
Competitor, or any entity that (through itself or its Affiliate) is the
exclusive manager for a Competitor, to manage the Hotel. If the 

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Management Company becomes a Competitor or the Management Company
and/or the General Manager resigns or is terminated by you or otherwise becomes
unsuitable in our sole business judgment to manage the Hotel at any time during
the License Term, you will have ninety (90) days to retain a qualified
substitute Management Company and/or General Manager acceptable to us. Any
Management Company and/or General Manager must have the authority to perform
all of your obligations under this Agreement, including all indemnity and
insurance obligations. The engagement of a Management Company does not reduce
your obligations under this Agreement. In the case of any conflict between this
Agreement and any agreement with the Management Company or General Manager,
this Agreement prevails. 

          d.
Obligations of Prior Licensee. You acknowledge and
agree that you are directly responsible for, and will pay on demand, all fees
and charges due and owing us and the Entities related to the prior franchise
license agreement for the Hotel if any such fees and charges remain outstanding
as of or accrue after the Effective Date of this Agreement. 

7. Fees 

          a.
Monthly Fees. Beginning on the Opening Date, you will
pay to us for each month (or part of a month, including the final month you
operate under this Agreement) a Monthly Royalty Fee and a Monthly Program Fee,
each of which is set forth in the Rider. The amount of the Monthly Program Fee
is subject to change by us. Any change may be established in the Standards, but
any increase in the Monthly Program Fee will not exceed one percent (1%) of the
Hotel’s Gross Rooms Revenue during the License Term. 

          b.
Calculation and Payment of Fees. The monthly fees will
be calculated in accordance with the accounting methods of the then current
Uniform System of Accounts for the Lodging Industry, or such other accounting
methods as may otherwise be specified by us in the Manual. Gross Rooms Revenue,
as used in the calculation of the Monthly Royalty Fee and the Monthly Program
Fee under this Agreement, means all revenues derived from the sale or rental of
Guest Rooms (both transient and permanent) of the Hotel, including revenue
derived from the redemption of points or rewards under the loyalty programs in
which the Hotel participates, amounts attributable to breakfast (where the
guest room rate includes breakfast), and guaranteed no-show revenue and credit
transactions, whether or not collected, at the actual rates charged, less
allowances for any Guest Room rebates and overcharges, and will not include
taxes collected directly from patrons or guests. In the event of fire or other
insured casualty that results in a reduction of Gross Rooms Revenue, you will
determine and pay us, from the proceeds of any business interruption or other
insurance applicable to loss of revenues, an amount equal to the forecasted
Monthly Program Fee and forecasted Monthly Royalty Fee, based upon the Gross
Rooms Revenue amount agreed upon between you and your insurance company that
would have been paid to us in the absence of such casualty; provided however,
we have the right, at our request, to participate with you in the determination
of the forecasted Gross Rooms Revenue amount for purposes of calculating the
Monthly Program Fee and Monthly Royalty Fee. Group booking rebates, if any,
paid by you or on your behalf to third-party groups for group stays must be
included in, and not deducted from, the calculation of Gross Rooms Revenue. The
Monthly Royalty Fee and the Monthly Program Fee will be paid to us at the place
and in the manner we designate on or before the fifteenth (15th) day of each
month and will be accompanied by our standard schedule setting forth in
reasonable detail the computation of the Monthly Royalty Fee and Monthly
Program Fee for such month. There will be an annual adjustment within ninety
(90) days after the end of each operating year so that the total Monthly
Royalty Fees and Monthly Program Fees paid annually will be the same as the
amounts determined by audit. We reserve the right to require you to transmit
the Monthly Royalty Fee and the Monthly Program Fee and all other payments
required under this Agreement by wire transfer or other form of electronic
funds transfer and to provide the standard schedule in electronic form. You
must bear all costs of wire transfer or other form of electronic funds transfer
or other electronic payment and reporting. 

          c.
Room Addition Fee. If you desire to add or construct
additional Guest Rooms at the Hotel at any time after the Opening Date of the
Hotel under the Licensed Brand (“Room
Addition”), before you enter into any agreement to construct the
Room Addition or begin constructing the Room Addition, you 

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must: (i) submit to us a written request describing the proposed Room
Addition and including any information we may in our business judgment require
to consider your request; and (ii) along with your request, pay us a
nonrefundable Room Addition Fee equal to the then-prevailing per room Guest
Room development fee charged for new System Hotels, multiplied by the number of
proposed additional Guest Rooms. We will follow our then-current procedure for
processing your Room Addition request. As a condition to our granting approval
of your Room Addition Application, we may require you to modernize,
rehabilitate or upgrade the Hotel, subject to Subparagraph 6(b) of this
Agreement, and to pay us our then prevailing PIP Fee to prepare a PIP to
determine the renovation requirements for the Hotel. We may also require you to
execute an amendment to this Agreement covering the terms and conditions of the
Room Addition, which may include an estoppel and general release of claims against
us, the Entities, and related persons. 

          d.
Other Fees. You will timely pay all amounts due us or
any of the Entities for any invoices or for goods or services purchased by or
provided to you or paid by us or any of the Entities on your behalf, including
pre-opening sales and operations training. 

          e.
Taxes. If any Gross Receipts Tax is imposed upon us or
any of the Entities based on any payments made by you related to this
Agreement, then you must reimburse us or the Entity for any such Gross Receipts
Tax to ensure that the amount we or the Entity retains, after paying the Gross
Receipts Tax, equals the full amount of the payments you are required to pay us
or the Entity had such Gross Receipts Tax not been imposed; provided that you will
not be required to pay income taxes payable by us or any Entity as a result of
the net income relating to any fees collected under this Agreement. 

          f.
Application of Fees. We may apply any amounts received
from you to any amounts due under this Agreement. Failure to pay any amount
when due is a material breach of this Agreement. Such unpaid amounts will
accrue a service charge beginning on the first day of the month following the
due date of one and one-half percent (11⁄2%) per month or the maximum amount
permitted by Applicable Law, whichever is less. 

8. Reports, Records, Audits, and Privacy 

          a.
Reports. At our request, you will prepare and deliver
to us daily, monthly, quarterly and annual Reports we require, prepared in the
form, manner and within the time frame we require. The Reports will contain all
Operational Information we require and will be certified as accurate in the
manner we require. You will also provide us any additional related Operational
Information and Reports and other information we may periodically request and
permit us to inspect your books and records at all reasonable times. At least
monthly, you will prepare a statement that will include all information
concerning the Operational Information. By the fifteenth (15th) day of each
month, you will submit to us a statement setting forth the Operational
Information for the previous month and reflecting the computation of the
amounts then due under Paragraph 7, in the form and detail we require. 

          b.
Maintenance of Records. In a manner and form
satisfactory to us and using accounting and reporting Standards we require in
our business judgment, you will: (i) prepare on a current basis (and preserve
for no less than the greater of four (4) years or our record retention
requirements), complete and accurate records concerning Gross Rooms Revenue and
all financial, operating, marketing and other aspects of the Hotel; and (ii)
maintain an accounting system that fully and accurately reflects all financial
aspects of the Hotel and its business. These records will include books of
account, tax returns, governmental reports, register tapes, daily reports, and
complete quarterly and annual financial statements (including profit and loss
statements, balance sheets and cash flow statements). 

          c.
Audit. We may require you to have the Gross Rooms
Revenue, fees or other monies due to us computed and certified as accurate by a
certified public accountant. During the License Term and for two (2) years
thereafter, we and our authorized agents have the right to verify Operational
Information required under this Agreement by requesting, receiving, inspecting
and auditing, at all reasonable times, any and all records referred to above
wherever they may be located (or elsewhere if we request). If any inspection or
audit reveals that you understated or underpaid any payment due to us that is
not fully offset 

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by overpayments, you will promptly pay to us the deficiency plus
interest from the date each payment was due until paid at a rate of one and
one-half percent (11⁄2%) per month or the maximum amount permitted by Applicable
Law, whichever is less. If the audit or inspection reveals that the
underpayment is willful, or is for five percent (5%) or more of the total
amount owed for the period being inspected, you will also reimburse us for all
inspection and audit costs, including reasonable travel, lodging, meals,
salaries and other expenses of the inspecting or auditing personnel. Our
acceptance of your payment of any deficiency will not waive any rights we may
have as a result of your breach, including our right to terminate this
Agreement. If the audit discloses an overpayment, we will credit this
overpayment against your future payments due under this Agreement, without
interest, or if no future payments are due under this Agreement, we will
promptly pay you the amount of the overpayment without interest. 

          d.
Ownership of Information. All Information and all
revenues we derive from such Information will be our property. You may use
Information that you acquire from third parties in operating the Hotel, such as
Personal Information, at any time during or after the License Term to the
extent lawful and at your sole risk and responsibility, but only in connection
with operating the Hotel. The Information will become our Proprietary
Information which we may use for any reason as we deem necessary, including
making a financial performance representation in our franchise disclosure
documents. 

          e.
Privacy and Data Protection. You will: (i) comply with
all applicable Privacy Laws; (ii) comply with all Standards that relate to
Privacy Laws and the privacy and security of Personal Information; (iii) refrain
from any action or inaction that could cause us or the Entities to breach any
Privacy Laws; (iv) do and execute, or arrange to be done and executed, each
act, document and thing we deem necessary in our business judgment to keep us
and the Entities in compliance with the Privacy Laws; and (v) immediately
report to us the theft or loss of Personal Information (other than the Personal
Information of your own officers, directors, shareholders, employees or service
providers). 

9. Indemnity 

          You must,
during and after the License Term, indemnify the Indemnified Parties against,
and hold them harmless from, all losses, costs, liabilities, damages, claims,
and expenses, including reasonable attorneys’ fees, expert fees, costs and
other expenses of litigation arising out of or resulting from: (i) any claimed
occurrence at the Hotel or arising from, as a result of, or in connection with
the development, construction or operation of the Hotel (including the design,
construction, financing, furnishing, equipment, acquisition of supplies or
operation of the Hotel in any way); (ii) any bodily injury, personal injury,
death or property damage suffered or claimed by any guest, customer, visitor or
employee of the Hotel; (iii) your alleged or actual infringement or violation
of any patent, mark or copyright or other proprietary right owned or controlled
by third parties; (iv) your alleged or actual violation or breach of any
contract (including any System-wide group sales agreement), any Applicable Law,
or any industry standard; (v) any business conducted by you or a third party
in, on or about the Hotel or its grounds; (vi) any other of you or your
Affiliates’ acts, errors, omissions or obligations, or those of anyone
associated or affiliated with you, your Affiliates or the Hotel or in any way
arising out of or related to this Agreement; or (vii) your failure to comply
with Subparagraph 16.l., including a breach of the representations set forth
therein. However, you do not have to indemnify an Indemnified Party to the
extent damages otherwise covered under this Paragraph 9 are adjudged by a
final, non-appealable judgment of a court of competent jurisdiction to have
been solely the result of the gross negligence or willful misconduct of that
Indemnified Party, and not any of the acts, errors, omissions, negligence or
misconduct of you or anyone related to you or the Hotel. You may not rely on
this exception to your indemnity obligation if the claims were asserted against
us or any other Indemnified Party on the basis of: (i) theories of imputed or
secondary liability, such as vicarious liability, agency, or apparent agency;
or (ii) our failure to compel you to comply with the provisions of this
Agreement, including compliance with Standards, Applicable Laws or other
requirements. 

          You will
also indemnify the Indemnified Parties for any claim for damages by reason of
the failure of any contractor, subcontractor, supplier or vendor doing business
with you relating to the Hotel to maintain adequate insurance as required in
the Standards. 

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          You
will give us written notice of any action, suit, proceeding, claim, demand,
inquiry or investigation involving an Indemnified Party within five (5) days of
your actual knowledge of it. At our election, you will defend us and/or the
Indemnified Parties against the same or we may elect to assume (but under no
circumstance will we be obligated to undertake) the defense and/or settlement
of the action, suit, proceeding, claim, demand, inquiry or investigation at
your expense and risk. We may obtain separate counsel of our choice if we
believe your and our interests may conflict. Our undertaking of defense and/or
settlement will in no way diminish your obligation to indemnify the Indemnified
Parties and to hold them harmless. You will also reimburse the Indemnified
Parties upon demand for all expenses, including reasonable attorneys’ fees,
expert fees, costs and other expenses of litigation, the Indemnified Parties
incur to protect themselves or to remedy your defaults. Under no circumstances
will the Indemnified Parties be required to seek recovery from third parties or
otherwise mitigate their losses to maintain a claim against you, and their
failure to do so will in no way reduce the amounts recoverable from you by the
Indemnified Parties. 

          Your
obligations under this Paragraph 9 will survive expiration or termination of
this Agreement.

10. Notice of Intent to Market

          Except
in the case of a Transfer governed by Subparagraph 11.b.(1) or 11.b.(2), below,
if you or an Affiliate that directly or indirectly Controls the Hotel and/or
Controls the entity that Controls the Hotel (the “Controlling Affiliate”), want
to Transfer by sale or lease or market for sale or lease all or part of your
interest in the Hotel or the Hotel Site, you or the applicable Controlling
Affiliate must first give us written notice of your intent to sell or lease the
Hotel or Hotel Site, concurrent with beginning your marketing efforts.

11. Transfer

          a.
Our Transfer. We may Transfer this Agreement or any of our rights, obligations, or
assets under this Agreement, by operation of law or otherwise, to any person or
legal entity without your consent. Any of the Entities may Transfer their
ownership rights in us or any of our parents or Affiliates, by operation of law
or otherwise, including by public offering, to any person or legal entity
without your consent. You acknowledge and agree that this Agreement is a
license for the Licensed Brand only and the programs that are unique to the
Licensed Brand. Therefore, if we Transfer or assign this Agreement, your right
to use any programs, rights or services related to or provided by the Entities
or their designees, including the Reservation Service, any guest frequency
program not unique to the Licensed Brand, and any Marks (except the principal
name identified in the Rider) may terminate. After our Transfer of this
Agreement to a third party who expressly assumes our obligations under this
Agreement, we will no longer have any performance or other obligations under this
Agreement. 

          b.
Your Transfer. You understand and acknowledge that the rights and duties in this
Agreement are personal to you and that we are entering into this Agreement in
reliance on your business skill, financial capacity, and the personal character
of you, your officers, directors, partners, members, shareholders or trustees.
A Transfer by you of any Equity Interest, or this Agreement, or any of your
rights or obligations under this Agreement, or a Transfer by an Equity Owner is
prohibited other than as expressly permitted herein. You represent that as of
the Effective Date, the Equity Interests are directly and/or indirectly owned
as shown in the Rider. 

                    (1)
Transfers That Do Not Require Notice to Us or Our Consent. The following Transfers will be
permitted, without giving us notice or receiving our consent, as long as they
meet the stated requirements.

                              (a)
Privately
Held Equity Interests: Less than 25% Change/No Change of Control. An
Equity Interest that is not publicly traded may be Transferred without notice
to us and without our consent, if after the transaction: (i) less than
twenty-five percent (25%) of the Equity Interest in the Licensee (excluding any
Transfer under Subparagraph 11.b.(1)(b) below) will have changed hands 

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since the Effective Date of this Agreement;
and (ii) any such Transfer will not result in a change of Control of the
Licensee, the Hotel or the Hotel Site. 

                              (b)
Publicly
Traded Equity Interests. A Publicly Traded Equity Interest may be
Transferred without notice to us and without our consent if the Transfer does
not result in a change in Control of the Licensee, the Hotel or the Hotel Site.

                    (2)
Other Permitted Transfers. We will permit the types of Transfers listed in this
Subparagraph 11.b.(2) (“Permitted Transfers”), on the conditions
stated, so long as (a) the proposed transferee is not a Specially Designated
National or Restricted or Blocked Person (as defined in Subparagraph 16.l.) or
a Competitor and (b) you or, if applicable, the transferring Affiliate or
Equity Owner: (i) give us sixty (60) days advance written notice of the
proposed Transfer (including the identity and contact information for any
proposed transferee and any other information we may in our business judgment
require in order to review the proposed Transfer and verify compliance with
this Paragraph 11; (ii) are not in default under this Agreement or any related
agreement; (iii) pay to us a nonrefundable processing fee of Three Thousand
Dollars ($3,000) with the Transfer request; (iv) follow our then-current
procedure for processing Permitted Transfers; and (v) execute any documents
required by the procedure for processing Permitted Transfers, which may include
an estoppel and general release of claims that you or the Equity Owner may have
against us, the Entities, and related persons.

                              (a) Affiliate
Transfer. You or any Equity Owner named in the Rider as of the
Effective Date (or any transferee Equity Owner we subsequently approve) may
Transfer an Equity Interest or this Agreement to an Affiliate, as long as: (i)
any Transfer of an Equity Interest does not result in a change of Control of
the Licensee, the Hotel or the Hotel Site; (ii) in any Transfer of this
Agreement to an Affiliate, the Control of the Transferee Licensee is not
different from the Control of the transferring Licensee; and (iii) the Transfer
otherwise satisfies the conditions in this Subparagraph 11.b.(2). 

                              (b) Transfers
to Family Member or Trust. If you or any Equity Owner as of the
Effective Date (or any transferee Equity Owner we subsequently approve) are a
natural person, and desire to Transfer any Equity Interest or this Agreement to
a member of your (or any such Equity Owner’s) immediate family (i.e. spouse,
children, parents, siblings) or to a trust or trusts for your benefit (or the
benefit of the Equity Owner or the Equity Owner’s immediate family members), we
will consent to the Transfer provided that (i) such event does not result in a
change of Control of the Licensee, the Hotel or the Hotel Site, and (ii) the
Transfer otherwise satisfies the conditions in this Subparagraph 11.b.(2). 

                              (c) Transfer
Upon Death. Upon the death of a Licensee or Equity Owner who is a
natural person, this Agreement or the Equity Interest of the deceased Equity
Owner may Transfer in accordance with such person’s will or, if such person
dies intestate, in accordance with laws of intestacy governing the distribution
of such person’s estate without our consent, provided that: (i) the Transfer
Upon Death is to an immediate family member or to a legal entity formed by such
family member(s); and (ii) within one (1) year after the death, such family
member(s) or entity meet all of our then current requirements for an approved
applicant and the Transfer otherwise satisfies the conditions in this Subparagraph
11.b.(2).

                              (d) Bricks and
Mortar Transfer. If you or your Affiliate own the Hotel and/or Hotel
Site, you or your Affiliate may Transfer the Hotel and/or the Hotel Site
provided that after completion of the transaction, (i) you remain in full
compliance with this Agreement and all of its subparts; (ii) you retain the
management control of the Hotel operations; and the Transfer otherwise
satisfies the conditions in this Subparagraph 11.b.(2).

                              (e) Privately
Held Equity Interests: 25% or Greater Change/No Change of Control. You
or any Equity Owner as of the Effective Date (or any transferee Equity Owner we
subsequently approve) may Transfer an Equity Interest even though, after the
completion of such conveyance, twenty-five percent (25%) or more cumulative
Equity Interest in Licensee will have changed hands since the Effective Date of
this Agreement, so long as (i) such event does not result in a change of 

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Control of the Licensee, the Hotel or the
Hotel Site; (ii) you are not then in material default under this Agreement; and
(iii) the Transfer otherwise satisfies the conditions in this Subparagraph
11.b.(2).

                    (3) Change of Ownership Transfer. Any
proposed Transfer that is not described in Subparagraph 11.b.(1), 11.b.(2), or
11.b.(5) is a Change of Ownership Transfer. You must give us at least sixty
(60) days advance written notice of any proposed Change of Ownership Transfer,
including the identity and contact information for any proposed Transferee
Licensee or transferee Equity Owner(s) and any other information we may in our
business judgment require in order to review and consent to the Transfer. The
Transferee Licensee must submit to us a Change of Ownership Application
accompanied by payment of our then prevailing development services fee. If you
are remaining as Licensee, with a change of Control, you or the transferee
Equity Owner(s) must submit the Change of Ownership Application and pay the
fee. We may also require you or the Transferee Licensee to pay the then
prevailing PIP Fee for us to determine the renovation requirements for the
Hotel. If we approve the Change of Ownership Transfer, we may require you (if
there is no Transferee Licensee), or the Transferee Licensee to pay any other
applicable fees and charges we then impose for new Licensed Brand franchise
licenses. 

                    We
will process the Change of Ownership Application in accordance with our then
current procedures, including review of criteria and requirements regarding
upgrading of the Hotel, credit, background investigation, operations abilities
and capabilities, prior business dealings, market feasibility, guarantees, and
other factors we consider relevant in our business judgment. We will have sixty
(60) days from our receipt of the completed and signed application to consent
or withhold our consent to the transferee Equity Owner(s), the Transferee
Licensee and/or Change of Ownership Transfer. During our review process, you
authorize us to communicate with the transferee Equity Owner(s), any Transferee
Licensee and any other necessary party and to provide to the transferee Equity
Owner(s), any Transferee Licensee any information we have about the Hotel and
the market in which the Hotel operates.

                    Our
consent to the Change of Ownership Transfer is subject to the following
conditions, all of which must be satisfied at or prior to the date of closing
the Transfer (“Closing”): 

                              (a) You
are not in default of this Agreement or any related agreement; 

                              (b) We must receive, at or before Closing,
payment of all amounts due to us or the Entities through the date of Closing,
along with your written agreement to promptly pay any amounts that may become
due after Closing related to your operation of the Hotel prior to Closing;

                              (c)
You, the Transferee Licensee and/or transferee Equity Owner(s) must submit to
us all information related to the Transfer that we, in our business judgment,
require, including, but not limited to: (i) copies of any Transfer agreements;
(ii) copies of organizational documents; (iii) identity and description of the
proposed ownership; and (iv) financial statements and business information for
all participants in the proposed Transfer;

                              (d)
You must, if we so request, execute our then-current standard form of voluntary
termination agreement, which may include an estoppel and general release,
covering termination of this Agreement; and

                              (e)
You resolve to our satisfaction, or provide adequate security (including
security for your continuing indemnity obligations) for, any suit, action, or
proceeding pending or threatened against you or us with respect to the Hotel,
which may result in liability to us, including outstanding accounts payable to
third parties.

                    We
may withhold our consent to any proposed Change of Ownership Transfer if: (i)
any of the above conditions are not met to our satisfaction; (ii) you, the
Transferee Licensee or transferee Equity Owner(s) do not provide us with
information we, in our business judgment, require, in order to review and
consent to the Transfer; (iii) you (if there is no Transferee Licensee) or, if
applicable, the Transferee Licensee does not agree to execute a new franchise
license agreement with us (“New 

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License”), which will be on our then
current form for the grant of new franchise licenses, contain our then
current license terms, and contain upgrading and other requirements, if any,
that we impose; (iv) any required Guarantor fails to execute our then-standard
form of guarantee of franchise license agreement; (v) you (if there is no
Transferee Licensee) or, if applicable, the Transferee Licensee fails to
provide evidence that insurance coverage, as required by the New License, will
be effective by the date of Closing; or (vi) the Transferee Licensee or a
transferee Equity Owner is a Specially Designated National, or Restricted or
Blocked Person (as defined in Subparagraph 16.l.) or a Competitor, or otherwise
fails to meet our then-current criteria for new licensees or Equity Owners. 

                    (4)
Public Offering or Private Placement. Any public offering, private placement or other sale
of securities in the Licensee, the Hotel or the Hotel Site (“Securities”)
requires our consent. All materials required by any Applicable Law for the
offer or sale of those Securities must be submitted to us for review at least
sixty (60) days before the date you distribute those materials or file them
with any governmental agency, including any materials to be used in any
offering exempt from registration under any securities laws. You must submit to
us a non-refundable Five Thousand Dollar ($5,000) processing fee with the
offering documents and pay any additional costs we may incur in reviewing your
documents, including reasonable attorneys’ fees. Except as legally required to
describe the Hotel in the offering materials, you also may not use any of the
Marks or otherwise imply our participation or that of Hilton Worldwide or any
other Entity in or endorsement of any Securities or any Securities offering. We
will have the right to approve any description of this Agreement or of your
relationship with us, or any use of the Marks, contained in any prospectus,
offering memorandum or other communications or materials you use in the sale or
offer of any Securities. Our review of these documents will not in any way be
considered our agreement with any statements contained in those documents,
including any projections, or our acknowledgment or agreement that the documents
comply with any Applicable Laws.

                    You
may not sell any Securities unless you clearly disclose to all purchasers and
offerees that: (i) neither we, nor any Entity, nor any of our or their
respective officers, directors, agents or employees, will in any way be deemed
an Issuer or underwriter of the Securities, as those terms are defined in
applicable securities laws; and (ii) we, the Entities, and our respective
officers, directors, agents and employees have not assumed and will not have
any liability or responsibility for any financial statements, prospectuses or
other financial information contained in any prospectus or similar written or
oral communication. You must indemnify, defend and hold the Indemnified Parties
free and harmless of and from any and all liabilities, costs, damages, claims
or expenses arising out of or related to the sale or offer of any of your
Securities to the same extent as provided in Paragraph 9 of this
Agreement. 

                    (5)
Other Transactions. 

                              (a)
Mortgages
and Pledges to Lending Institutions. You or an Equity Owner may
mortgage or pledge the Hotel or an Equity Interest to a lender that finances
the acquisition, development or operation of the Hotel, without notifying us or
obtaining our consent, provided that (i) the proceeds are used for the direct
benefit of the Hotel, (ii) you or the applicable Equity Owner are the sole
borrower, and (iii) the loan is not secured by any other hotels or other
collateral. You must notify us of any other proposed mortgage or pledge,
including any collateral assignment of this Agreement, and obtain our consent,
which we may withhold in our business judgment. We will evaluate the proposed
mortgage or pledge according to our then-current procedure and standards for
processing such requests. As a condition to our consent, we may require, among
other things, that you (and/or the Equity Owner) and the lender execute a
“lender comfort letter” agreement in a form satisfactory to us that describes
our requirements on foreclosure, and may include an estoppel and general
release of claims that you or the Equity Owner may have against us, the
Entities, and related persons. We may charge a fee for our review of a proposed
mortgage or pledge and for the processing of a lender comfort letter. 

                              (b) Commercial Leases. You may
lease or sublease commercial space in the Hotel, or enter into concession
arrangements for operations in connection with the Hotel, in the ordinary
course of business, subject to our right to review and approve the nature of
the proposed business and the proposed brand and concept, all in keeping with
our then current Standards for System Hotels.

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12. Condemnation and Casualty

          a. Condemnation. You must immediately
inform us of any proposed taking of any portion of the Hotel by eminent domain.
If, in our business judgment, the taking is significant enough to render the
continued operation of the Hotel in accordance with System Standards and guest
expectations impractical, then we may terminate this Agreement upon written
notice to you. You will take all necessary steps to permit us to participate in
the proceeds of an eminent domain proceeding and/or any insurance proceeds
applicable to the condemnation. If such taking, in our business judgment, does
not require the termination of the Hotel, then you will make all necessary
repairs to make the Hotel conform to its condition, character and appearance
immediately before such taking, according to plans and specifications approved
by us. You will take all measures to ensure that the resumption of normal
operations at the Hotel is not unreasonably delayed.

          b.
Casualty. You must immediately inform us if the Hotel is damaged by fire or other
casualty. If the damage or repair requires closing the Hotel, you may choose to
repair or rebuild the Hotel according to System Standards, provided you:
(i) begin reconstruction within four (4) months after closing; and
(ii) reopen the Hotel for continuous business operations as soon as
practicable (but in any event no later than one (1) year after the closing of
the Hotel), giving us at least thirty (30) days notice of the projected date of
reopening. Until we determine that the Hotel can be re-opened as a System
Hotel, the Hotel will not promote itself as a System Hotel or otherwise
identify itself with any of the Marks without our prior written consent. You
and we each have the right to terminate this Agreement if you elect not to
repair or rebuild the Hotel as set forth above in this Paragraph 12,
provided the terminating party gives the other party sixty (60) days written
notice, in which case we will not require you to pay Liquidated Damages;
provided however, if after the termination notice and before the expiration of
three (3) years thereafter or the natural expiration of the License Term,
whichever is earlier, you, or any of your Affiliates, have a controlling
interest in and/or operate a hotel at this Hotel Site and that hotel is not
operated under a license or franchise from one of the Entities, then you must
pay us the Liquidated Damages upon our demand. You will take all necessary
steps to permit us to participate in any insurance proceeds applicable to the
business interruption due to the casualty.

          c.
No Extensions of Term. Nothing in this Paragraph 12 will extend the
License Term.

13. Term of License.

          Unless
terminated earlier, this Agreement will expire without notice on the date set
forth in the Rider. You acknowledge and agree that this Agreement is
non-renewable and that this Agreement confers upon you absolutely no rights of
license renewal or extension whatsoever following the expiration of the License
Term.

14. Termination by Us

          a. Termination with Opportunity to Cure. We
may terminate this Agreement by written notice to you at any time before its
expiration on any of the following grounds:

                    (1)
You fail to pay us any sums due and owing to us or the Entities under this
Agreement within the cure period set forth in the notice;

                    (2)
You fail to comply with any provision of this Agreement, the Manual or any
System Standard and do not cure that default within the cure period set forth
in the notice; or

                    (3)
You do not purchase or maintain insurance required by this Agreement or do not
reimburse us for our purchase of insurance on your behalf.

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          b.
Immediate Termination by Us. We may immediately
terminate this Agreement upon notice to you and without any opportunity to cure
the default if:

                    (1)
After curing any material breach of this Agreement or the Standards, you engage
in the same non-compliance within any consecutive twenty-four (24) month
period, whether or not the non-compliance is corrected after notice, which
pattern of non-compliance in and of itself will be deemed material; 

                    (2)
We send you three notices of material default in any twelve (12) month period,
regardless of whether the defaults have been cured;

                    (3)
You or any Guarantor fail to pay debts as they become due or admit in writing
your inability to pay your debts or you make a general assignment for the
benefit of your creditors; 

                    (4)
You: (i) file a voluntary petition in bankruptcy or any pleading seeking any
reorganization, liquidation, or dissolution under any law, or you admit or fail
to contest the material allegations of any such pleading filed against you or
the Hotel, and the action results in the entry of an order for relief against
you under the Bankruptcy Code, the adjudication of you as insolvent, or the
abatement of the claims of creditors of you or the Hotel under any law; or (ii)
have an order entered against you appointing a receiver for the Hotel or a
substantial part of your or the Hotel’s assets; or (iii) make an assignment for
the benefit of creditors, or similar disposition of the assets of the Hotel;

                    (5)
You or any Guarantor lose possession or the right to possession of all or a
significant part of the Hotel or Hotel Site, whether through foreclosure,
foreclosure of any lien, trust deed, or mortgage, loss of lease, or for any
other reason apart from those described in Paragraph 12; 

                    (6)
You fail to operate the Hotel for five (5) consecutive days, unless the failure
to operate is due to fire, flood, earthquake or similar causes beyond your
control, provided that you have taken reasonable steps to minimize the impact
of such events; 

                    (7)
You contest in any court or proceeding our ownership of the System or any part
of the System or the validity of any of the Marks; 

                    (8)
You or any Equity Owners with a controlling Equity Interest are or have been
convicted of a felony or any other offense or conduct, if we determine in our
business judgment it is likely to adversely reflect upon or affect the Hotel,
the System, us and/or any Entity; 

                    (9)
You conceal revenues, maintain false books and records of accounts, submit
false reports or information to us or otherwise attempt to defraud us; 

                    (10)
You, your Affiliate, or your Guarantor become a Competitor without our prior
written consent; 

                    (11)
You Transfer any interest in yourself, this Agreement, the Hotel or the Hotel
Site, other than in compliance with Paragraph 11 and its subparts; 

                    (12)
You or a Guarantor become a Specially Designated National or Restricted or
Blocked Person or are owned or controlled by a Specially Designated National or
Restricted or Blocked Person or fail to comply with the provisions of Subparagraph
16.l., including a breach of the representations set forth therein;

                    (13)
Information involving you or your Affiliates, whether provided by you or
obtained through our own investigation, discloses facts concerning you or your
Affiliates, including your or your Affiliates’ respective officers, directors,
shareholders, partners or members, and/or the Hotel, or title to the property
over which the Hotel is constructed or any other property used by the Hotel,
including leased commercial space, which, in our business judgment, is likely
to adversely reflect upon or affect in any 

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manner, any gaming licenses or permits held
by the Entities or the then current stature of any of the Entities with any
gaming commission, board, or similar governmental or regulatory agency, or the
reputation or business of any of the Entities; 

                    (14)
Any Guarantor breaches its guarantee, or any guarantee fails to be a continuing
obligation fully enforceable against the person(s) signing the guarantee, or if
there is any inadequacy of the guarantee or Guarantor, and the Guarantor fails
to provide adequate assurances to us as we may request; or 

                    (15)
a threat or danger to public health or safety results from the construction,
maintenance, or operation of the Hotel.

          c.
Suspension/Interim Remedies by Us. If you are in default of this Agreement, we may
elect to postpone termination and impose an Interim Remedy, including the
suspension of our obligations under this Agreement and/or our or the Entities’
obligations under any other of Your Agreements:

                    (1)
We may suspend the Hotel from the Reservation Service and any reservation and/or
website services provided through or by us. We may remove the listing of the
Hotel from any directories or advertising we publish. If we suspend the Hotel
from the Reservation Service, we may divert reservations previously made for
the Hotel to other System Hotels or Network Hotels. 

                    (2)
We may disable all or any part of the software provided to you under Your
Agreements and/or may suspend any one or more of the information technology
and/or network services that we provide or support under Your Agreements.

                    (3)
We may charge you for costs related to suspending or disabling your right to
use any software systems or technology we provided to you, together with
intervention or administration fees as set forth in the Standards after the
date of our notice of default. 

                    (4)
You agree that our exercise of the right to elect Interim Remedies will not
result in actual or constructive termination or abandonment of this Agreement
and that our decision to elect Interim Remedies is in addition to, and apart
from, any other right or remedy we may have in this Agreement. If we exercise
the right to elect Interim Remedies, the exercise will not be a waiver of any
breach by you of any term, covenant or condition of this Agreement. You will
not be entitled to any compensation, including repayment, reimbursement, refund
or offsets, for any fees, charges, expenses or losses you may directly or
indirectly incur by reason of our exercise and/or withdrawal of any Interim Remedy.

          d.
Liquidated Damages upon Termination. You acknowledge that the premature termination of
this Agreement will cause substantial damage to us, the actual amount of which
will be difficult to determine. Therefore, if we terminate this Agreement under
Subparagraph 14.a. or 14.b. as a result of your breach of this Agreement, or if
you owe Liquidated Damages pursuant to Subparagraph 12.b. of this Agreement, or
if you unilaterally terminate this Agreement, you will pay us Liquidated
Damages for the premature termination of the Agreement. You will owe Liquidated
Damages in addition to any outstanding fees and charges owed to us or any of
the Entities accruing through the date of termination. Payment of Liquidated
Damages is due the earlier of thirty (30) days following termination or the
Closing of any Change of Ownership transaction in which a New License is not
entered into; except that, if Liquidated Damages become due pursuant to
Paragraph 12.b., payment is due thirty (30) days after our demand. Nothing in
this Paragraph gives you any right to terminate this Agreement, but provides
for the calculation of damages in the event you do so.

          You
agree that Liquidated Damages are not a penalty and represent a reasonable
estimate of the minimum just and fair compensation for the damages we will
suffer as the result of your failure to operate the Hotel as a System Hotel in
compliance with this Agreement for the full License Term, assuming that we
would be able to replace the Hotel in the market within a reasonable time.

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          Liquidated
Damages for premature termination will be calculated by adding the result of
(1) plus the result of (2) where:

                    (1)
is calculated by multiplying the average monthly Gross Rooms Revenue of the
Hotel for the twenty-four (24) full calendar-month period immediately before
the month of termination by the Monthly Royalty Fee percentage under this
Agreement, without applying any discount to the standard fee percentage (this
product being the “Average Monthly Royalty Fees”), then
multiplying the Average Monthly Royalty Fees by thirty-six (36), or by such
lesser multiple as would represent the remaining full or partial months between
the date of termination and the expiration of the License Term. If the Hotel
has been open and operating as a System Hotel for less than twenty-four (24)
months, then we will multiply thirty-six (36) by the greater of (i) the Average
Monthly Royalty Fees from the date the Hotel opened as a System Hotel through
the month immediately before the month of termination, or (ii) the product of
the average Monthly Gross Rooms Revenue per Guest Room of all System Hotels in
operation in the US over the twelve (12) full calendar-month period immediately
before the month of termination, times the Monthly Royalty Fee percentage under
this Agreement (without applying any discount to the standard fee percentage)
multiplied by the number of Guest Rooms in the Hotel; and

                    (2)
is calculated by multiplying the average monthly Gross Rooms Revenue of the
Hotel for the twenty-four (24) full calendar-month period immediately before
the month of termination by the Monthly Program Fee percentage under this
Agreement, without applying any discount to the standard fee percentage (this
product being the “Average Monthly Program Fees”), then
multiplying the Average Monthly Program Fees by twelve (12), or by such lesser
multiple as would represent the remaining full or partial months between the
date of termination and the expiration of the License Term. If the Hotel has
been open and operating as a System Hotel for less than twenty-four (24)
months, then we will multiply twelve (12) by the greater of (i) the Average Monthly
Program Fees from the date the Hotel opened as a System Hotel through the month
immediately before the month of termination, or (ii) the product of the average
Monthly Gross Rooms Revenue per Guest Room of all System Hotels in operation in
the US over the twelve (12) full calendar-month period immediately before the
month of termination, times the Monthly Program Fee percentage under this
Agreement (without applying any discount to the standard fee percentage)
multiplied by the number of Guest Rooms in the Hotel.

          e.
Actual Damages Under Special Circumstances. You recognize that the Liquidated
Damages described in Subparagraph 14.d. may be inadequate to compensate us for
additional harm we may suffer, by reason of greater difficulty in re-entering
the market, competitive damage to the System or the Network, damage to goodwill
of the Marks, and other similar harm, under the following circumstances: (i)
within twelve (12) months of each other, five (5) or more franchise license
agreements for the Licensed Brand between yourself (or any of your Affiliates)
and us (or any of our Affiliates) terminate before their expiration date either
because you (or any of your Affiliates) unilaterally terminate the agreements
or because we or any of our Affiliates terminate the agreements as a result of
your or your Affiliate’s breach or default or (ii) this Agreement
terminates automatically or is terminated by us (or any of our Affiliates)
following an unapproved Transfer either to a Competitor or to a buyer that converts
the Hotel to a Competitor hotel within two (2) years from the date this
Agreement terminates. In any of these circumstances, we reserve the right to
seek actual damages in lieu of Liquidated Damages. 

          f. Your Obligations upon Termination or
Expiration. On termination or expiration of this Agreement you will:

                    (1)
immediately pay all sums due and owing to us or any of the Entities, including
any expenses incurred by us in obtaining injunctive relief for the enforcement
of this Agreement;

                    (2)
immediately cease operating the Hotel as a System Hotel and cease using the
System;

                    (3)
immediately cease using the Marks, the Trade Name, and any confusingly similar
names, marks, trade dress systems, insignia, symbols, or other rights,
procedures, and methods. You will deliver all goods and materials containing
the Marks to us and we will have the sole and exclusive use 

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of any items containing the Marks. You will
immediately make any specified changes to the location as we may reasonably
require for this purpose, which will include removal of the signs, custom
decorations, and promotional materials;

                    (4)
immediately cease representing yourself as then or formerly a System Hotel or
affiliated with the Licensed Brand or the Network;

                    (5)
immediately return all copies of the Manual and any other Proprietary
Information to us;

                    (6)
immediately cancel all assumed name or equivalent registrations relating to
your use of any Mark, notify the telephone company and all listing agencies and
directory publishers including Internet domain name granting authorities,
Internet service providers, global distribution systems, and web search engines
of the termination or expiration of your right to use the Marks, the Trade
Name, and any telephone number, any classified or other telephone directory
listings, Internet domain names, uniform resource locators, website names,
electronic mail addresses and search engine metatags and keywords associated
with the Hotel, and authorize their transfer to us; and

                    (7)
irrevocably assign and transfer to us (or to our designee) all of your right,
title and interest in any domain name listings and registrations that contain
any reference to our Marks, System, Network or Licensed Brand; notify the
applicable domain name registrars of the termination of your right to use any
domain name or Sites associated with the Marks or the Licensed Brand; and
authorize and instruct the cancellation of the domain name, or transfer of the
domain name to us (or our designee), as we specify. You will also delete all
references to our Marks, System, Network or Licensed Brand from any Sites you
own, maintain or operate beyond the expiration or termination of this
Agreement. 

15. Relationship of Parties

          a.
No Agency Relationship. You are an independent contractor. Neither of us is
the legal representative or agent of the other or has the power to obligate the
other for any purpose. You acknowledge that we do not supervise or direct your
daily affairs and that you have exclusive control over your daily affairs. You
expressly acknowledge that we have a business relationship based entirely on,
and defined by, the express provisions of this Agreement and that no
partnership, joint venture, agency, fiduciary or employment relationship is
intended or created by reason of this Agreement. 

          b. Notices to Public Concerning Your Independent
Status. All contracts for the Hotel’s operations and services at the
Hotel will be in your name or in the name of your Management Company. You will
not enter into or sign any contracts in our name or any Entity’s name or using
the Marks or any acronyms or variations of the Marks. You will disclose in all
dealings with the public, suppliers and third parties that you are an
independent entity and that we have no liability for your debts. 

16. Miscellaneous

          a. Severability and Interpretation. If any
provision of this Agreement is held to be unenforceable, void or voidable, that
provision will be ineffective only to the extent of the prohibition, without in
any way invalidating or affecting the remaining provisions of this Agreement,
and all remaining provisions will continue in effect, unless the
unenforceability of the provision frustrates the underlying purpose of this
Agreement. If any provision of this Agreement is held to be unenforceable due
to its scope, but may be made enforceable by limiting its scope, the provision
will be considered amended to the minimum extent necessary to make it
enforceable. This Agreement will be interpreted without interpreting any
provision in favor of or against either of us by reason of the drafting of the
provision, or either of our positions relative to the other. Any covenant, term
or provision of this Agreement that provides for continuing obligations after
the expiration or termination of this Agreement will survive any expiration or
termination.

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          b.
Governing Law, Jurisdiction and Venue. We each agree that the State of New
York has a deep and well developed history of business decisional law. For this
reason, we each agree that except to the extent governed by the United States
Trademark Act of 1946 (Lanham Act; 15 U.S.C. ¶ 1050 et seq.), as amended, this
Agreement will be construed in accordance with, and all disputes between us
(whether in contract, tort, or otherwise) arising out of or related to this
Agreement, any breach of this Agreement, or the relationship between us, will
be governed by, the laws of the State of New York without recourse to New York
(or any other) choice of law or conflicts of law principles. If, however, any
provision of this Agreement would not be enforceable under the laws of the
State of New York, and if the Hotel is located outside of New York and the
provision would be enforceable under the laws of the state in which the Hotel
is located, then the provision in question (and only that provision) will be
interpreted and construed under the laws of that state. Nothing in this
paragraph is intended to invoke the application of any franchise, business
opportunity, antitrust, “implied covenant,” unfair competition, fiduciary or
any other doctrine of law of the State of New York or any other state that
would not otherwise apply absent this Subparagraph 16.b.

          You
agree that any action brought by you against us arising out of or related to
this Agreement, any breach of this Agreement, or the relationship between us, must
be brought in the U.S. District Court for the Eastern District of Virginia, in
Alexandria, Virginia or if that court lacks subject matter jurisdiction, then
in a court of competent jurisdiction whose jurisdiction includes either Fairfax
County, Virginia or New York, New York. Any action brought by us or any Entity
against you arising out of or related to this Agreement, any breach of this
Agreement, or the relationship between us, may be brought by us in the U.S. District
Court for the Eastern District of Virginia, in Alexandria, Virginia or if that
court lacks subject matter jurisdiction, then in any court of competent
jurisdiction whose jurisdiction includes either Fairfax County, Virginia or New
York, New York, or the county and state where the Hotel is located. You consent
to personal jurisdiction and venue in each of these jurisdictions and waive,
and agree never to assert, move or otherwise claim that the venue in any of
these jurisdictions is for any reason improper, inconvenient, prejudicial or
otherwise inappropriate (including any claim under the judicial doctrine of forum non
conveniens).

          c.
Exclusive Benefit. This Agreement is exclusively for our and your
benefit, and none of the obligations of you or us in this Agreement will run
to, or be enforceable by, any other party (except for any rights we assign or
delegate to one of the Entities or covenants in favor of the Entities, which rights
and covenants will run to and be enforceable by the Entities or their
successors and assigns) or give rise to liability to a third party, except as
otherwise specifically set forth in this Agreement. 

          d.
Entire Agreement/Amendment/Waiver. You and we acknowledge that each of us wants all
terms of this business relationship defined in this written Agreement, and that
neither of us wants to enter into a business relationship with the other in
which any terms or obligations are subject to any oral statements or in which
oral statements serve as the basis for creating rights or obligations different
than or supplementary to the rights and obligations set forth in this
Agreement. Therefore, you and we agree that this Agreement and all of its
attachments, documents, schedules, exhibits, and any other information
specifically incorporated into this Agreement by reference: (i) will be
construed together as the entire agreement between you and us in respect to the
Hotel and any other aspect of the relationship between you and us; and (ii)
will supersede and cancel any prior and/or contemporaneous discussions or
writings (whether described as representations, inducements, promises,
agreements or by any other term) between you and us. You acknowledge that: (i)
no officer, employee, or other servant or agent of ours is authorized to make
any representation, warranty, or other promise not contained in this Agreement;
(ii) no claims, representations or warranties of earnings, sales, profits,
success or failure of the Hotel have been made to you; and (iii) you have not
relied on any such communications in entering into this Agreement. No change,
termination, or attempted waiver or cancellation of any provision of this
Agreement will bind us unless in writing, specifically designated as an
amendment or waiver, and signed by one of our officers. We may condition our
agreement to any amendment or waiver on receiving from you, in a form satisfactory to us, an estoppel and
general release of claims that you may have against us, the Entities, and
related parties. No failure by us or by any of the Entities to exercise
any power given us under this Agreement or to insist on strict compliance by
you with any of your obligations, and no custom or practice at variance with
the terms of this Agreement, will be considered a waiver of our or any Entity’s
right to 

24

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

demand exact compliance with the terms of
this Agreement. Nothing in this Subparagraph 16.d. disclaims any representation
made in the Franchise Disclosure Document provided to you for the Licensed
Brand in connection with the offer of this Agreement.

          e.
Consent; Business Judgment. Wherever our consent or approval is required in this
Agreement, unless the provision specifically indicates otherwise, we have the
right to withhold our approval at our option, in our business judgment, taking
into consideration our assessment of the long-term interests of the System
overall. We may withhold any and all consents or approvals required by this
Agreement if you are in default or breach of this Agreement. Our approvals and
consents will not be effective unless given in writing and signed by one of our
duly authorized representatives. In no event may you make any claim for money
damages based on any claim that we have unreasonably withheld or delayed any
consent or approval to a proposed act by you under the terms of this Agreement.
You also may not claim damages by way of set-off, counterclaim or defense for
our withholding of consent. Your sole remedy for the claim will be an action or
proceeding to enforce the provisions of this Agreement by specific performance
or by declaratory judgment.

          f.
Notices. Notices under this Agreement must be in writing and must be delivered
in person, by prepaid overnight commercial delivery service, or by prepaid
overnight mail, registered or certified, with return-receipt requested,
addressed as follows: Notices to us must be sent to us at 7930 Jones Branch
Drive, Suite 1100, McLean, VA 22102, ATTN: General Counsel. We will send
notices to your address set forth in the Rider. If you want to change the name
or address for notice to you, you must do so in writing, signed by you or your
duly authorized representative, designating a single address for notice, which
may not be a P.O. Box, in compliance with this subparagraph. notice will be
deemed effective upon the earlier of: 1) receipt or first refusal of delivery;
2) one day after posting if sent via overnight commercial delivery service or
overnight United States Mail; or 3) three days after placement in the United
States mail if overnight delivery is not available to the notice address.

          g.
General Release. With the exception of claims related to
representations contained in the Franchise Disclosure Document for the Licensed
Brand, you, on your own behalf and on behalf of, as applicable, your officers,
directors, managers, employees, heirs, administrators, executors, agents and
representatives and their respective successors and assigns hereby release,
remise, acquit and forever discharge us and the Entities and our and their
respective officers, directors, employees, managers, agents, representatives
and their respective successors and assigns from any and all actions, claims,
causes of action, suits, rights, debts, liabilities, accounts, agreements,
covenants, contracts, promises, warranties, judgments, executions, demands,
damages, costs and expenses, whether known or unknown at this time, of any kind
or nature, absolute or contingent, existing at law or in equity, on account of
any matter, cause or thing whatsoever that has happened, developed or occurred
before you sign and deliver this Agreement to us. This release will survive the
termination of this Agreement. 

          h.
Remedies Cumulative. The remedies provided in this Agreement are
cumulative. These remedies are not exclusive of any other remedies that you or
we may be entitled in case of any breach or threatened breach of the terms and
provisions of this Agreement.

          i.
Economic Conditions Not a Defense. Neither general economic downturn or conditions nor
your own financial inability to perform the terms of this Agreement will be a
defense to an action by us or one of the Entities for your breach of this
Agreement. 

          j.
Representations and Warranties. You warrant, represent and agree that all statements
in the your application, submitted to us in anticipation of this Agreement, and
all other documents and information submitted to us by you or on your behalf
are true, correct and complete as of the date of this Agreement. You further
represent and warrant to us that: 

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 you have independently investigated the risks of operating a hotel
 under the Licensed Brand, including current and potential market conditions
 and competitive factors and risks, and have made an independent evaluation of
 all such matters and reviewed our Franchise Disclosure Document, if
 applicable; 

 

25

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 neither we nor our representatives have made any promises,
 representations or agreements other than those provided in the Agreement or
 in our Franchise Disclosure Document provided to you in connection with the
 offer of this Agreement, if applicable, and you acknowledge that you are not
 relying on any promises, representations or agreements about us or the
 franchise not expressly contained in this Agreement in making your decision
 to sign this Agreement;

 
	
  

 	
 (iii)

 	
 you have the full legal power authority and legal right to enter
 into, perform and observe this Agreement; 

 
	
  

 	
 (iv)

 	
 this Agreement constitutes a legal, valid and binding obligation of
 Licensee and your entry into, performance and observation of this Agreement
 will not constitute a breach or default of any agreement to which you are a
 party or of any Applicable Law; 

 
	
  

 	
 (v)

 	
 if you are a corporation, limited liability company, or other entity,
 you are, and throughout the License Term will be, duly formed and validly
 existing, in good standing in the state in which you are organized, and are
 and will be authorized to do business in the state in which the Hotel is
 located; 

 
	
  

 	
 (vi)

 	
 no Equity Interest has been issued, converted to, or is held as,
 bearer shares or any other form of ownership, for which there is no traceable
 record of the identity of the legal and beneficial owner of such Equity
 Interest.

 

          You
hereby indemnify and hold us harmless from any breach of these representations
and warranties. These warranties and representations will survive the
termination of this Agreement.

          k.
Counterparts. This Agreement may be signed in counterparts, each of which will be
considered an original.

          l.
Restricted Persons and Anti-bribery Representations and Warranties. You represent and warrant to us and
the Entities that you (including your directors and officers, senior management
and shareholders (or other persons) having a controlling interest in you), and
the owner of the Hotel or the Hotel Site are not, and are not owned or
controlled by, or acting on behalf of, any of the following “Restricted Persons”: (1) the government of
any country that is subject to an embargo imposed by the United States
government; (2) individuals or entities (collectively, “Persons”) located in or organized under the
laws of any country that is subject to an embargo imposed by the United States
government; (3) Persons ordinarily resident in any country that is subject to
an embargo imposed by the United States government; or (4) Persons identified
from time to time by any government or legal authority under Applicable Laws as
a Person with whom dealings and transactions by us or the Entities are
prohibited or restricted, including Persons designated on the U.S. Department
of the Treasury’s Office of Foreign Assets Control (OFAC) List of Specially
Designated Nationals and Other Blocked Persons (including terrorists and
narcotics traffickers); and similar restricted party listings, including those
maintained by other governments pursuant to applicable United Nations, regional
or national trade or financial sanctions. You will notify us in writing
immediately upon the occurrence of any event which would render the foregoing
representations and warranties of this Subparagraph 16.l. incorrect. 

          You
further represent and warrant to us and the Entities that you will not directly
or indirectly pay, offer, give or promise to pay or authorize the payment of
any monies or other things of value to:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 an official or employee of a government department, agency or
 instrumentality, state-owned or controlled enterprise or
 public international organization; 

 
	
  

 	
 (b)

 	
 any political party or candidate for political office; or 

 
	
  

 	
 (c)

 	
 any other person at the suggestion, request or direction or for the
 benefit of any of the above-described persons and entities 

 

if any such payment, offer, act or
authorization is for purposes of influencing official actions or decisions or
securing any improper advantage in order to obtain or retain business, or
engaging in acts or transactions otherwise in violation of any applicable
anti-bribery legislation.

26

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

          m.
Attorneys’ Fees and Costs. If either party is required to employ legal counsel
or to incur other expenses to enforce any provision of this Agreement or defend
any claim by the other, then the prevailing party in any resulting dispute will
be entitled to recover from the non-prevailing party the amount of all
reasonable fees of attorneys and experts, court costs, and all other expenses
incurred in enforcing such obligation or in defending against such claim,
demand, action, or proceeding.

          n.
Interest. Any sum owed to us or the Entities by you or paid by us or the Entities
on your behalf will bear interest from the date due until paid by you at the
rate of eighteen percent (18%) per annum or, if lower, the maximum lawful rate.

          o.
Successors and Assigns. The terms and provisions of this Agreement will
inure to the benefit of and be binding upon the permitted successors and
assigns of the parties. 

          p. Our Delegation of Rights and
Responsibility. In addition to the rights granted to us in Paragraph
3 and Subparagraph 11.a., we reserve the right to delegate to one or more of
the Entities at any time, any and all of our rights, obligations or
requirements under this Agreement, and to require that you submit any
relevant materials and documents otherwise requiring approval by us under this
Agreement to such Entity, in which case approval by such Entity will be
conclusively deemed to be approval by us. During the period of such delegation
or designation, any act or direction by such Entity with respect to this
Agreement will be deemed the act or direction of us. We may revoke any such
delegation or designation at any time. You acknowledge and agree that such
delegation may result in one or more of the Entities which operate, license, or
otherwise support brands other than the Licensed Brand, exercising or
performing on our behalf any or all rights, obligations or requirements under
this Agreement or performing shared services on our behalf.

17. WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES

          a.
IF EITHER PARTY INITIATES LITIGATION INVOLVING THIS AGREEMENT OR ANY ASPECT OF
THE RELATIONSHIP BETWEEN US (EVEN IF OTHER PARTIES OR OTHER CLAIMS ARE INCLUDED
IN SUCH LITIGATION), ALL THE PARTIES WAIVE THEIR RIGHT TO A TRIAL BY JURY. 

          b.
IN ANY DISPUTE BETWEEN THE PARTIES, ARISING OUT OF OR RELATED TO THIS
AGREEMENT, ANY BREACH OF THIS AGREEMENT, OR THE RELATIONSHIP BETWEEN THE
PARTIES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ALL PARTIES WAIVE ANY
RIGHT THEY MAY HAVE TO PUNITIVE OR EXEMPLARY DAMAGES FROM THE OTHER. NOTHING IN
THIS PARAGRAPH LIMITS OUR RIGHT OR THE RIGHT OF AN INDEMNIFIED PARTY TO BE
INDEMNIFIED AGAINST THE PAYMENT OF PUNITIVE OR EXEMPLARY DAMAGES TO A THIRD
PARTY. THE PARTIES ACKNOWLEDGE THAT LIQUIDATED DAMAGES PAYABLE BY LICENSEE
UNDER THIS AGREEMENT (WHETHER PRE-OPENING LIQUIDATED DAMAGES, TRADEMARK LIQUIDATED
DAMAGES, OR LIQUIDATED DAMAGES FOR EARLY TERMINATION) ARE NOT PUNITIVE OR
EXEMPLARY DAMAGES.

THIS AGREEMENT CONTINUES WITH AN ATTACHMENT A
AND ATTACHMENT B, EACH OF 

WHICH IS A PART OF THIS AGREEMENT.

27

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

ATTACHMENT A - PERFORMANCE
CONDITIONS: 

CHANGE OF OWNERSHIP

	
  

 	
  

 
	
 A.

 	
 Consultation. You or your representative(s)
 will meet with us to consult and coordinate with the project manager we
 assign to you. The meeting will take place within forty-five (45) days after
 we notify you of approval, and the meeting will be held at a location we
 select.

 
	
  

 	
  

 
	
 B.

 	
 Work and
 Purchase Requirement. If applicable, the PIP is attached to this
 Agreement as Exhibit B and incorporated in this Attachment A. You
 will perform the renovation and/or construction work and purchase the items
 described on the PIP (the “Renovation Work”) on or before the
 completion date specified in the Rider. The Renovation Work will include your
 purchasing and/or leasing and installing all fixtures, equipment,
 furnishings, furniture, signs, computer terminals and related equipment,
 supplies and other items that would be required of a new System Hotel under
 the Standards and any other equipment, furnishings and supplies as we may
 require for you to operate the Hotel. You will be solely responsible for
 obtaining all necessary licenses, permits and zoning variances required for
 the Hotel.

 
	
  

 	
  

 
	
 C.

 	
 Approval of
 Architect/Designer/Contractors. Before you submit Plans and Designs to us, you
 will furnish us with resumes and other information we request pertaining to
 the architect and/or interior designer you desire to retain to prepare your
 Plans and Designs. The Plans and Designs will not be approved until we have
 approved the architect and designer who are to prepare the Plans and Designs.
 Before Renovation Work, you will also submit to us resumes and other
 information we request pertaining to the general contractor and/or any major
 subcontractors for the Renovation Work. Renovation Work will not begin until
 we have approved the contractors, which approval may be conditioned on
 bonding of the contractors. 

 
	
  

 	
  

 
	
 D.

 	
 Approval of
 Plans and Designs. On or before the date specified in the Rider for
 submission of the Plans, you must submit to us your Plans for the Renovation
 Work, including any proposed changes to the Hotel’s Designs. We may supply
 you with representative prototype Guest Room and public area plans and
 schematic building plans as a guide for preparation of the Plans and Designs.
 Renovation Work will not begin unless and until we have approved the Plans
 and Designs. Before we approve the Plans and Designs, we may require you to
 submit to us the existing plans, equipment, layouts, specifications, drawings
 and designs for the Hotel. Once we approve the Plans and Designs, no change
 may be made to the Plans and Designs without our advance consent. In
 approving the Plans and Designs, we do not warrant the depth of our analysis
 or assume any responsibility for the efficacy of the Plans and Designs or the
 resulting Renovation Work. You will cause the Hotel Renovation Work to be in
 accordance with this Agreement, the approved Plans and Designs, the Standards
 and the PIP. You will be solely responsible for obtaining all necessary
 licenses, permits and zoning variances that may be required for the
 Renovation Work. It is solely your responsibility to ensure your Plans comply
 with our then prevailing Standards and with all Applicable Laws. 

 
	
  

 	
  

 
	
  

 	
 You are responsible for making certain that the Hotel and the Renovation
 Work complies in all respects with all Applicable Laws. We and our Affiliates
 will have the right to, and you will arrange for us and our Affiliates to,
 participate in all progress meetings during the development and construction
 of the Hotel, to have access to all contract and construction documents
 relating to the Hotel, and to have access to the Hotel during reasonable
 business hours to visit the Hotel and the Renovation Work. However, neither
 we nor our Affiliates are obligated to participate in progress meetings, or
 to visit the Hotel and the Renovation Work, and our and our Affiliate’s
 participation and site visits are not to be considered as a representation of
 the adequacy of the construction, the structural integrity, or the
 sufficiency of mechanical and electrical systems for the Hotel. Before we
 approve your Plans, your architect or other certified professional must
 certify to us that the Plans comply with all Applicable Laws relating to
 accessibility/ accommodations/ facilities for those with disabilities. Within
 ten (10) days after completion of the Renovation Work, your architect,
 general contractor or other certified professional must provide us with a
 certificate 

 

Attachment A - 1

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

	
  

 	
  

 
	
  

 	
 stating that the
 as-built premises comply with all Applicable Laws relating to accessibility/
 accommodations/ facilities for those with disabilities.

 
	
  

 	
  

 
	
  

 	
 The Standards and
 the Manual may not be used by you or any design or construction professional
 for any hotel project other than the Hotel.

 
	
  

 	
  

 
	
 E.

 	
 Commencement; Completion. You will begin the Renovation
 Work on or before the Renovation Commencement Date specified in the Rider and
 will continue the Renovation Work uninterrupted, except to the extent
 continuation is prevented Force Majeure, until it is completed.
 Notwithstanding any Force Majeure, or any other matter, the Renovation Work
 must be completed and the Hotel must be furnished, equipped, and comply with
 this Agreement no later than the Renovation Work Completion Date specified in
 the Rider. We will have the sole right in our business judgment to determine
 whether the Renovation Work has been completed in accordance with this
 Agreement, the approved Plans and Designs, the Standards and the PIP. 

 
	
  

 	
  

 
	
 F.

 	
 Site Visits. During the course of Renovation
 Work, you and your architect, designer, contractors, and subcontractors will
 cooperate fully with us for the purpose of permitting us to visit the Hotel
 and review the progress of the Renovation Work. In addition, you and your
 contractors, architect and designer will supply us with samples of
 construction materials, supplies, equipment, materials and reports as we may
 request and give our representatives access to the Hotel Site and Renovation
 Work in order to permit us to carry out our site visits.

 
	
  

 	
  

 
	
 G.

 	
 Progress Reports. You will submit to us upon our
 request a report showing progress made toward fulfilling the terms of this
 Agreement.

 
	
  

 	
  

 
	
 H.

 	
 Acquisition of Equipment, Furnishings, and
 Supplies. You will purchase and/or lease and install all fixtures, equipment,
 furnishings, furniture, signs, computer terminals and related equipment,
 supplies and other items we require in order to assure that the Renovation
 Work is completed under this Agreement. 

 
	
  

 	
  

 
	
 I.

 	
 Cost of Construction and Equipping. You will bear the entire cost of
 the Renovation Work, including the cost of the Plans and Designs,
 professional fees, licenses, permits, equipment, furniture, furnishings and
 supplies. 

 
	
  

 	
  

 
	
 J.

 	
 Limitation of Liability. We will have no liability or
 obligation with respect to design and construction of the Hotel. We have
 furnished to you that portion of the Manual which contains the technical
 Standards to assist you in completing the Renovation Work. You acknowledge
 you have studied these Standards and satisfied yourself that the Hotel can be
 designed, furnished and equipped in accordance with these Standards and that
 you and your design and construction consultants and contractors have the
 necessary resources and skills to do so. The Manual does not encompass the
 architectural, structural, mechanical or electrical safety, adequacy,
 integrity or efficiency of the design or compliance with Applicable Laws. We
 do not undertake to approve the Hotel as complying with these or with
 governmental requirements or as being safe for guests or other third parties
 and we have no responsibilities in these areas. You must indemnify us with
 regard to compliance with these matters to the extent provided in
 Paragraph 9 of this Agreement. 

 
	
  

 	
  

 
	
 K.

 	
 Conditional Authorization. We may conditionally authorize
 you to continue to operate the Hotel as a System Hotel even though you have
 not fully complied with the terms of this Attachment. Under certain
 circumstances, we may suspend services to the Hotel (including reservation
 services) while the Renovation Work is being performed by you.

 
	
  

 	
  

 
	
 L.

 	
 Performance of Agreement. You must satisfy all of the terms
 and conditions of this Agreement and equip, supply, staff and otherwise make
 the Hotel ready to continue to operate under our Standards. As a result of
 your efforts to comply with the terms and conditions of this Agreement, you
 will incur significant expense and expend substantial time and effort. You
 acknowledge and agree that we will have no liability or obligation to you for
 any losses, obligations, liabilities or 

 

Attachment A - 2

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

	
  

 	
  

 
	
  

 	
 expenses you incur
 if we terminate this Agreement because you have not complied with the terms
 and conditions of this Agreement.

 

 (Remainder of page left intentionally blank.)

Attachment A - 3

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

ATTACHMENT B –

RIDER TO FRANCHISE LICENSE AGREEMENT

	
  

 	
  

 	
  

 
	
 Effective Date:

 	
  

 	
 
 March 4, 2011 

 The
 Date of Closing

 
	
  

 	
  

 	
  

 
	
 Licensor Name:

 	
  

 	
 HILTON GARDEN INNS FRANCHISE LLC, 

 a Delaware limited liability company

 
	
  

 	
  

 	
  

 
	
 Licensed Brand:

 	
  

 	
 Hilton Garden Inn (excluding any other
 brands or product lines containing “Hilton” in the name)

 
	
  

 	
  

 	
  

 
	
 Initial Approved
 Hotel Name (Trade Name):

 	
  

 	
 Hilton Garden Inn Denver Downtown

 
	
  

 	
  

 	
  

 
	
 Principal Mark in
 Licensed Brand:

 	
  

 	
 Hilton 

 
	
  

 	
  

 	
  

 
	
 Licensee Name and
 Address (Attn: Principal Legal Correspondent):

 	
  

 	
 Apple Ten Hospitality Management, Inc. 

 (Krissy Gathright)

 814 East Main Street

 Richmond, Virginia 23219

 Phone: (804) 344-8121

 Fax: (804) 344-8129 

 Email: kgathright@applereit.com

 
	
  

 	
  

 	
  

 
	
 Address of Hotel:

 	
  

 	
 1400 Welton Street 

 Denver,
 Colorado 80202

 
	
  

 	
  

 	
  

 
	
 Initial Number of
 Approved Guest Rooms:

 	
  

 	
 221

 
	
  

 	
  

 	
  

 
	
 Renovation
 Commencement Date:

 	
  

 	
 The Effective Date

 
	
  

 	
  

 	
  

 
	
 Renovation Work
 Completion Date:

 	
  

 	
 As specified in the PIP attached hereto as
 Exhibit B

 
	
  

 	
  

 	
  

 
	
 You agree that the Renovation Commencement Date and Renovation Work
 Completion Date may be extended by written notice from us in our business
 judgment.

 
	
  

 	
  

 	
  

 
	
 Expiration of
 License Term:

 	
  

 	
 At Midnight on June 30, 2026

 
	
  

 	
  

 	
  

 
	
 Monthly Program
 Fee:

 	
  

 	
 Four and three tenths percent (4.3%) of the
 Hotel’s Gross Rooms Revenue for the preceding calendar month.

 
	
  

 	
  

 	
  

 
	
 Monthly Royalty
 Fee:

 	
  

 	
 Five percent (5%) of the Hotel’s Gross
 Rooms Revenue for the preceding calendar month.

 

Attachment B - 1

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

Additional Requirements/Special Provisions:

	
  

 	
  

 
	
 •

 	
 Restricted Area Provision 

 
	
  

 	
  

 
	
  

 	
           Notwithstanding
 the provisions of Paragraph 2 of this Agreement, from the Effective Date
 until midnight on February 27, 2012 (the “Restrictive Period”), neither we nor any
 of the Entities will open, or allow to open, a hotel or motel under the
 Licensed Brand, as such name may be changed by us from time to time, within
 the Restricted
 Area (described below). This restriction does not apply to any
 hotel or motel that is currently open or under construction or has been
 approved for development or opening as a Licensed Brand hotel as of the
 Effective Date (“Existing Hotel”). The term Existing Hotel
 also includes any hotel located or to be located within the Restrictive Area
 that replaces such Existing Hotel under the Licensed Brand. 

 
	
  

 	
  

 
	
  

 	
           The
 restrictions also do not apply to: (1) any hotel(s) or motel(s) under brands
 other than the Licensed Brand; (2) any hotel(s) or motel(s) that will not
 begin operating under the Licensed Brand until after the expiration of the
 Restrictive Period; (3) any gaming-oriented
 hotels or facilities using the Licensed Brand; (4) any shared ownership
 properties (commonly known as “vacation ownership” or “time share ownership”
 or similar real estate properties) under the Licensed Brand; and (5) any
 hotel(s), motel(s), or inn(s) that are part of a chain or group of four (4)
 or more hotels, motels, or inns that we or the Entities, as a result of a
 single transaction or group of related transactions, own, operate, acquire,
 lease, manage, franchise, license, or join through a merger, acquisition or
 marketing agreement (or otherwise), whether under their existing name or the
 Licensed Brand name or any other name.

 
	
  

 	
  

 
	
  

 	
           Restricted
 Area as used in this provision means the area located
 within the following boundaries:

 
	
  

 	
  

 
	
  

 	
      a three (3)
 mile radius of the Hotel, the center point of which is the front door of the
 Hotel. This Restricted Area is generally illustrated on the map attached to,
 and incorporated by reference into, this Agreement as Exhibit A. If there is
 a conflict between Exhibit A and this narrative description, this description
 will control. 

 
	
  

 	
  

 
	
 •

 	
 All references in this Agreement to the “Opening Date” will mean the
 “Effective Date.”

 
	
  

 	
  

 
	
 •

 	
 Paragraph 1: Definitions – “Publicly Traded Equity Interest”:
 modified

 

Your Ownership Structure: 

               See
Attached Schedule 1 

Ownership Structure of Affiliate Fee Owner or
Lessor/Sublessor of the Hotel or Hotel Site: 

               See
Attached Schedule 2

Signatures on the following Page.

Attachment B - 2

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

IN WITNESS WHEREOF, the parties have executed
this Agreement, which has been entered into and is effective as of the
Effective Date set forth above.

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 LICENSEE:

 	
 LICENSOR:

 
	
  

 	
  

 	
  

 	
  

 
	
 APPLE TEN HOSPITALITY MANAGEMENT, INC., 

 	
 HILTON GARDEN INNS FRANCHISE LLC,

 
	
 a Virginia
 corporation

 	
 a Delaware limited
 liability company

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ Justin G.
 Knight

 	
 By:

 	
 /s/ Adrian Kurre

 
	
  

 	

 

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
  

 
	
 Name: 

 	
 Justin G. Knight

 	
 Name: 

 	
 Adrian Kurre

 
	
  

 	

 

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
 Authorized
 Signatory

 
	
 Title:

 	
 President

 	
  

 	
  

 
	
  

 	

 

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 Executed on:

 	
 March 5, 2011

 	
 Executed on:

 	
 March 9, 2011

 
	
  

 	

 

 	
  

 	

 

 

Attachment B - 3

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

SCHEDULE 1

Your Ownership Structure: Apple Ten
Hospitality Management, Inc. 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name (Shareholder, Partner, 

 Member, and Manager)

 	
  

 	
 Nature of Ownership 

 Interest

 	
  

 	
  

 	
 % Interest

 	
  

 
	

 

 	
  

 	

 

 	
  

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Apple Ten
 Hospitality, Inc.

 	
  

 	
 Sole Shareholder

 	
  

 	
  

 	
 100%

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Apple REIT Ten, Inc.    100% 

 (a public REIT)

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 

Schedule 1

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

SCHEDULE 2

Ownership Structure of Affiliate Fee Owner or
Lessor/Sublessor of the Hotel or Hotel Site: 

Apple Ten Hospitality Ownership, Inc. 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name (Shareholder, Partner, Member, 

 and Manager)

 	
  

 	
 Nature of Ownership Interest

 	
  

 	
  

 	
 % Interest

 	
  

 
	

 

 	
  

 	

 

 	
  

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Apple Ten
 Hospitality, Inc.

 	
  

 	
 Sole Shareholder

 	
  

 	
  

 	
 100%

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Apple REIT Ten, Inc.    100% 

 (a public REIT)

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 

Schedule 2

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

Exhibit A

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

	
  

 
	
 Nothing in this Property
 Improvement Plan is intended to modify 

 the terms of any Franchise License Agreement to which it may 

 be attached. In the event of any conflict in the terms, the terms 

 of the Franchise License Agreement are the terms that prevail.

 

Product
Improvement Plan

Prepared for:

Hilton Garden Inn

Denver Downtown, CO 

(InnCode: DENDD, Facility ID: 38042)  

1400 Welton
Street, Denver, Colorado, United States 

To be
relicensed as a Hilton Garden Inn

By Dan Phipps

Inspection Date: Feb-07-2011

FINAL PIP REVISION DATE: Feb-21-2011 by Kurt Smith

Brand
Management Approval

Final PIP Approval Date:
Feb-21-2011

	
  

 	
  

 
	
Final FLA PIP Approval Signature:

 	

 

PIP Contact
Dan
Phipps
Email:
dan.phipps@hilton.com 

Phone: 9013745971

Printed
On: Feb-22-2011

Page: (1 of 4)

Exhibit B

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

Property
Information

	
  

 	
  

 
	
 Open
 Date:

 	
 2007-07-26
 

 
	
 Last
 Renovation:

 	
 None
 

 
	
 Parking:

 	
 Attached
 parking garage (2-4 floors) - Valet parking only 

 
	
 Whirlpool:

 	
 Yes
 

 
	
 Airport
 Van:

 	
 No
 

 
	
 Number
 Floors:

 	
 12
 

 
	
 Food
 Service Facilities:

 	
 Dazbog
 Coffee Shop and Pi Restaurant 

 
	
 Meeting
 Space:

 	
 68
 sq, ft. - (incl. 3200 sf ballroom) - 7 total rooms - 5th floor 

 
	
 Business
 Center:

 	
 Yes
 - lobby level 

 
	
 Exercise
 Room:

 	
 Yes
 - 600 sf - lower level - Nautilus equipment 

 
	
 Other
 Recreation:

 	
 None
 

 
	
 Retail
 Outlets:

 	
 Pavilion
 Pantry 

 
	
 Guest
 Laundry:

 	
 Yes
 - lower level 

 
	
 Number
 Of Guest Rooms:

 	
 221
 

 
	
 Guest
 Room Size

 	
 Suites
 - 420 sf. Std room average is 270sq.
 ft. 

 
	
 Guest
 Room Mix:

 	
  

 
	
 Typical King:

 	
 31
 

 
	
 Typical D/D:

 	
 0
 

 
	
 Double queen:

 	
 68
 

 
	
 King bed with sofa:

 	
 114
 

 
	
 Junior suite:

 	
 8
 

 
	
  

 	
  

 
	
 Guest
 Bathroom:

 	
  

 
	
 Size:

 	
 Std
 is 5’ X 8’. Suites are 7’ X 8’ 

 
	
 Door Width:

 	
 36”
 

 
	
 Tub Surround:

 	
 12”
 tile 

 
	
 Floor:

 	
 12”
 tile 

 
	
 Vanity

 	
 Granite
 counter top and apron - undermount bowl - no cubbies 

 
	
 Water Closet:

 	
 Elongated
 tank, type with closed front seat 

 
	
  

 	
  

 
	
 HVAC
 System:

 	
  

 
	
 100% Makeup Air:

 	
 Yes
 

 
	
 Public Areas:

 	
 Water
 source heat pump - chilled water 

 
	
 Guestrooms:

 	
 Heat
 pumps with digital thermostats 

 
	
  

 	
  

 
	
 Elevators:

 	
  

 
	
  

 	
  

 
	
 High
 Speed Internet:

 	
  

 
	
 Public Areas:

 	
 Wireless
 - Ibahn 

 
	
 Meeting Space:

 	
 Wireless
 - Ibahn 

 
	
 Guestrooms:

 	
 Wireless
 and wired- Ibahn 

 
	
  

 	
  

 
	
 Telephone
 System:

 	
 2
 incoming 1ines and two handsets per room - Guest programmable wake up calls
 -OnQ integrated 

 

Page: (2 of 4)

Exhibit B

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

The improvements
identified in this report are based on conditions existing on the above date.
After 180 days an updated report is required. Any negotiated waiver and/or
variance agreements are cancelled and no longer effective beyond this 180 day
term. Hilton Worldwide does not and cannot warrant conformance with any legally
mandated accessibility guidelines. Ownership is responsible for compliance with
applicable provisions for accessibility. Appropriate counsel to ensure
compliance is urged. All finish dates in the PIP that are a specified number of
months shall mean months after the agreement to which it is attached takes
effect.

	
  

 	
  

 	
  

 	
  

 
	

 

 
	
 General

 
	

 

 
	
  

 	
  

 	
  

 	
  

 
	
 #

 	
 Active Date

 	
 Scope of Work

 	
 Finish Date

 
	

 

 	

 

 	

 

 	

 

 
	
 General

 
	

 

 	

 

 	

 

 	

 

 
	
 1

 	
  

 	
 Brand
 Standard - Hilton Garden Inn has developed a comprehensive Pavilion Design
 Scheme “Project Grow” which must be implemented In addition to any individual
 condition or brand standard items listed on this PIP document all Pavilion
 improvements must be completed in accordance with the requirements of this
 design solution. This is a transitional scheme and replacement of most
 Pavilion items - including interior signage throughout the property may be
 required. The Design Guide will be located online and should be referenced.
 For further information, please contact Arnie Eillison at
 arnie.ellison@hilton.com or Teddy Roque at teddy.roque@hilton.com

 	
 24 Months

 
	
 2

 	
  

 	
 Brand
 Standard - Distributed audio (background music) is required in following
 areas - Porte COcehere’ elevator lobbies, lobby, public restrooms, meeting
 room/board
 room, pre-function, patio, lounge, and dining areas. Missing in public
 restrooms and meeting soaces - Provide

 	
 12 Months

 
	
 3

 	
  

 	
 Design
 review submittals must be submitted for all new products and replacements
 prior to purchase and installation In addition to any binders, fabrics,
 etc.,
 an electronic copy (via a non-returnable CD) is required.

 	
 12 Months

 
	

 

 	

 

 	

 

 	

 

 
	
 BRAND STANDARDS

 
	

 

 
	
 #

 	
 Active Date

 	
 Scope of Work

 	
 Finish Date

 
	

 

 
	
 Core Brand
 Standards

 
	

 

 
	
 4

 	
  

 	
 Technology
 - Hilton Hotels Corporation and the Hilton Garden Inn brand are implementing
 a new national standard for High Speed Internet Access that establishes a
 single company-wide solution This hotel is required to implement this new
 Stay Connected HSIA solution. An upgrade (or replacement) of hardware,
 cabling and bandwidth may be required to meet the new standard. For specifies
 on this new program, please contact Teleesa Mason with the Stay Connected team
 at Teleesa. Mason@hilton.com.

 	
 12 Months

 
	

 

 	

 

 	

 

 	

 

 
	
 Commercial
 Facilities

 
	

 

 
	
 #

 	
 Active Date

 	
 Scope of Work

 	
 Finish Date

 
	

 

 	

 

 	

 

 	

 

 
	
 Back of the House

 
	

 

 
	
 5

 	
  

 	
 Linen
 Storage - Stock HGI Brand approved upright roll away beds. See HGI Brand
 standards for correct number of beds required.

 	
 12 Months

 
	

 

 
	
 Corridors/Elevators/Stairwells

 
	

 

 
	
 6

 	
  

 	
 Elevators
 - Complete the replacement of the elevator floor tile

 	
 12 Months

 
	

 

 
	
 Pavilion
 Pantry/Business Center

 
	

 

 
	
 7

 	
  

 	
 Pavilion
 Pantry - Install the new Pavilion Pantry millwork design and basket shelving
 by 06/30/2011.

 	
 12 Months

 
	
 8

 	
  

 	
 Pavilion
 Pantry - Provide painted accent wall

 	
 12 Months

 
	

 

 
	
 Public Restrooms

 
	

 

 

Page: (3 of 4)

Exhibit B

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

	
  

 	
  

 	
  

 	
  

 
	
 9

 	
  

 	
 Public
 Restrooms - Remove the combination paper towel dispenser and waste receptacle
 recessed into the wall. Install an automated touch-less paper towel dispenser
 and a free-standing decorative trash receptacle.

 	
 12 Months

 
	
 10

 	
  

 	
 Public
 Restrooms - Kick plates must be provided on the push side of public restroom doors - Provide

 	
 12 Months

 
	

 

 	

 

 	

 

 	

 

 
	
 Recreation
 Facilities

 
	

 

 
	
 11

 	
  

 	
 Exercise
 Room - Renovate the exercise room to meet the new Hilton Garden Inn/Precor
 requirements. Install new equipment, flooring, and FF and E package. See
 Hilton Garden Inn Brand Standards for specifications.

 	
 24 Months

 
	
 12

 	
  

 	
 Pool
 - Resurface pool bottom (discolored)

 	
 12 Months

 
	

 

 	

 

 	

 

 	

 

 
	
 Food and Beverage
 Facilities

 
	

 

 
	
 #

 	
 Active Date

 	
 Scope of Work

 	
 Finish Date

 
	

 

 	

 

 	

 

 	

 

 
	
 Meeting/Pre-Function
 Facilities

 
	

 

 
	
 13

 	
  

 	
 Boardroom
 - Replace current chairs. Install Herman Miller “Mirra®” chairs.

 	
 24 Months

 
	
 14

 	
  

 	
 Meeting
 Rooms - Install kick plates on the meeting room side of interior doors.

 	
 12 Months

 
	
 15

 	
  

 	
 Ballroorn
 - - Install artwork, of an appropriate quantity and size, within the meeting
 space.

 	
 12 Months

 
	

 

 	

 

 	

 

 	

 

 
	
 Restaurant
 Facilities

 
	

 

 
	
 16

 	
  

 	
 Restaurant
 -Wood flooring is scarred - Return to a like new condition or replace

 	
 12 Months

 
	
 17

 	
  

 	
 Restaurant
 - Fabric on booths is discolored - Replace

 	
 12 Months

 
	

 

 	

 

 	

 

 	

 

 
	
 Guest Rooms

 
	

 

 
	
 #

 	
 Active Date

 	
 Scope of Work

 	
 Finish Date

 
	

 

 	

 

 	

 

 	

 

 
	
 Guest Bathrooms

 
	

 

 
	
 18

 	
  

 	
 Guest
 bathrooms - Increase light levels to meet minimum foot candle requirements at
 vanity surface - 50 fe required and 20-25 fe measured

 	
 12 Months

 
	
 19

 	
  

 	
 Guest
 Bathrooms - Install new, contoured wood vanity base with two cubby areas,
 one for the hairdryer and one for the hand towels.

 	
 24 Months

 
	

 

 	

 

 	

 

 	

 

 
	
 Guest Rooms

 
	

 

 
	
 20

 	
  

 	
 Guest
 Bedrooms -Provide lighting at each and of sofa sleepers - (30 fe min.
 required in all seating areas)

 	
 12 Months

 
	
 21

 	
  

 	
 Guest
 Bedrooms - Replace all non-GSS mattresses and box springs. Install GSS Sleep
 System Mattress in all rooms.

 	
 24 Months

 
	
 22

 	
  

 	
 Guest
 Bedrooms - Replace sheers

 	
 24 Months

 
	
 23

 	
  

 	
 Guest
 Bedrooms (suites)- Provide side table at chair in bedroom

 	
 12 Months

 
	
 24

 	
  

 	
 Guest
 Bedrooms - Replace mirrored closet doors. Closets must have sliding (bypass)
 wood doors with top and bottom tracks or have hinged bi-parting wood doors.
 Door style must coordinate with the other interior room doors. Coordinate wood
 door frame finish with adjacent hardware.

 	
 24 Months

 

This PIP review is
limited to aesthetic and functional
layout and design, and certain functional, operational and quality criteria as specified by Hilton
Worldwide. It does not encompass and Hilton Worldwide does not make any
representation or warranty as to, nor shall be responsible for, the
architectural, structural, mechanical, or electrical adequacy or other
compliance with applicable government or other legal requirements. Compliance
with Hilton Worldwide fire safety and security equipment standards and all
applicable local, state and federal building codes are required. Any omission
in this PIP report does not constitute a waiver
of such requirements and does not release owner’s responsibility to conform to
Hilton Worldwide standards.

Page: (4 of 4)

Exhibit B

HGI Denver
Downtown CO 38042 COO FLA 021811 

November 2010 - HGI

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