Document:

Exhibit 10.3

 Exhibit 10.3 
 Fort Worth, Texas (SHS) 
  
 HOTEL LEASE AGREEMENT 
  
 EFFECTIVE AS OF MAY
28, 2004 
  
 BETWEEN 
  
 APPLE SIX HOSPITALITY TEXAS, L.P., 
 A VIRGINIA LIMITED PARTNERSHIP, 
  
 AS LESSOR 
  
 AND 
  
 APPLE SIX SERVICES, L.P., 
 A VIRGINIA LIMITED PARTNERSHIP 
  
 AS LESSEE 
  

 TABLE OF CONTENTS 
  

							
	 	 	 	  	 	  	PAGE

		
	 ARTICLE 1 LEASED PROPERTY; OTHER DEFINITIONS
	  	1
	 	 	 1.2.
	  	Definitions	  	2
		
	 ARTICLE 2 TERM; TERMINATION
	  	14
	 	 	 2.1.
	  	Term	  	14
	 	 	 2.2.
	  	Lessor’s Option to Terminate Lease	  	14
	 	 	 2.3.
	  	Transition Procedures	  	15
	 	 	 2.4.
	  	Holding Over	  	16
		
	 ARTICLE 3 RENT; RENT ADJUSTMENTS
	  	17
	 	 	 3.1.
	  	Rent	  	17
	 	 	 3.2.
	  	Confirmation of Percentage Rent and Sundry Rent	  	21
	 	 	 3.3.
	  	Additional Charges	  	22
	 	 	 3.4.
	  	Net Lease; No Termination, Abatement, Etc.	  	22
	 	 	 3.5.
	  	Material Changes in Economic Climate	  	23
	 	 	 3.6.
	  	Rent Adjustment: Basic Assumptions Incorrect	  	24
		
	 ARTICLE 4 ANNUAL BUDGETS; BOOKS AND RECORDS
	  	25
	 	 	 4.1.
	  	Annual Budget	  	25
	 	 	 4.2.
	  	Books and Records	  	25
		
	 ARTICLE 5 IMPOSITIONS; HOTEL COSTS
	  	26
	 	 	 5.1.
	  	Payment of Impositions	  	26
	 	 	 5.2.
	  	Notice of Impositions	  	27
	 	 	 5.3.
	  	Adjustment of Impositions	  	27
	 	 	 5.4.
	  	Utility Charges	  	27
	 	 	 5.5.
	  	Insurance Premiums	  	27
	 	 	 5.6.
	  	Franchise Fees	  	27
	 	 	 5.7.
	  	Ground Rent	  	27
		
	 ARTICLE 6 LEASED PROPERTY; LESSEE’S PERSONAL PROPERTY
	  	27
	 	 	 6.1.
	  	Ownership of the Leased Property	  	27
	 	 	 6.2.
	  	Lessee’s Personal Property	  	27
	 	 	 6.3.
	  	Lessor’s Lien	  	28
	 	 	 6.4.
	  	Lessor’s Option to Purchase Assets of Lessee	  	28
		
	 ARTICLE 7 CONDITION AND USE OF LEASED PROPERTY
	  	29
	 	 	 7.1.
	  	Condition of the Leased Property	  	29
	 	 	 7.2.
	  	Use of the Leased Property	  	29
	 	 	 7.3.
	  	Lessor to Grant Easements, Etc.	  	30
		
	 ARTICLE 8 LESSEE’S COMPLIANCE WITH LAW; ENVIRONMENTAL COVENANTS
	  	30
	 	 	 8.1.
	  	Compliance with Legal and Insurance Requirements, Etc.	  	30
	 	 	 8.2.
	  	Legal Requirement Covenants	  	31
	 	 	 8.3.
	  	Environmental Covenants.	  	32
		
	 ARTICLE 9 MAINTENANCE AND REPAIRS; ENCROACHMENTS AND RESTRICTIONS
	  	34
	 	 	 9.1.
	  	Maintenance and Repairs	  	34
	 	 	 9.2.
	  	Encroachments, Restrictions, Etc.	  	35

  

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	 ARTICLE 10 ALTERATIONS AND IMPROVEMENTS; FF&E RESERVE
	  	36
	 	 	 10.1.
	  	Alterations	  	36
	 	 	 10.2.
	  	Salvage	  	36
	 	 	 10.3.
	  	Joint Use Agreements	  	36
	 	 	 10.4.
	  	[Reserved]	  	36
	 	 	 10.5.
	  	Furniture, Fixture and Equipment Allowance	  	36
		
	 ARTICLE 11 COMPLIANCE WITH FRANCHISE
	  	37
	 	 	 11.1.
	  	Compliance with Franchise Agreement and Management Agreement	  	37
		
	 ARTICLE 12 PERMITTED LIENS AND CONTESTS
	  	37
	 	 	 12.1.
	  	Liens	  	37
	 	 	 12.2.
	  	Permitted Contests	  	38
		
	 ARTICLE 13 INSURANCE REQUIREMENTS
	  	39
	 	 	 13.1.
	  	General Insurance Requirements	  	39
	 	 	 13.2.
	  	Replacement Cost	  	40
	 	 	 13.3.
	  	Waiver of Subrogation	  	40
	 	 	 13.4.
	  	Form Satisfactory, Etc.	  	40
	 	 	 13.5.
	  	Increase in Limits	  	41
	 	 	 13.6.
	  	Blanket Policy	  	41
	 	 	 13.7.
	  	No Separate Insurance	  	41
	 	 	 13.8.
	  	Reports On Insurance Claims	  	42
		
	 ARTICLE 14 CASUALTY INSURANCE PROCEEDS; RECONSTRUCTION
	  	42
	 	 	 14.1.
	  	Insurance Proceeds	  	42
	 	 	 14.2.
	  	Reconstruction in the Event of Damage or Destruction Covered by Insurance	  	42
	 	 	 14.3.
	  	Reconstruction in the Event of Damage or Destruction Not Covered by Insurance	  	43
	 	 	 14.4.
	  	Lessee’s Property	  	44
	 	 	 14.5.
	  	Abatement of Rent	  	44
	 	 	 14.6.
	  	Damage Near End of Term	  	44
	 	 	 14.7.
	  	Waiver	  	44
		
	 ARTICLE 15 CONDEMNATION; AWARD ALLOCATION
	  	44
	 	 	 15.1.
	  	Definitions	  	44
	 	 	 15.2.
	  	Parties’ Rights and Obligations	  	45
	 	 	 15.3.
	  	Total Taking	  	45
	 	 	 15.4.
	  	Allocation of Award	  	45
	 	 	 15.5.
	  	Partial Taking	  	45
	 	 	 15.6.
	  	Temporary Taking	  	45
		
	 ARTICLE 16 DEFAULT BY LESSEE; LESSOR’S REMEDIES
	  	46
	 	 	 16.1.
	  	Events of Default	  	46
	 	 	 16.2.
	  	Surrender	  	47
	 	 	 16.3.
	  	Damages	  	48
	 	 	 16.4.
	  	Waiver	  	49
	 	 	 16.5.
	  	Application of Funds	  	49
	 	 	 16.6.
	  	Lessor’s Right to Cure Lessee’s Default	  	49
		
	 ARTICLE 17 DEFAULT BY LESSOR; LESSEE’S REMEDIES
	  	49
	 	 	 17.1.
	  	Breach by Lessor	  	49
	 	 	 17.2.
	  	Lessee’s Right to Cure	  	50
	 	 	 17.3.
	  	Provisions Relating to Purchase of the Leased Property by Lessee	  	50

  

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	 ARTICLE 18 INDEMNIFICATION
	  	51
	 	 	 18.1.
	  	Indemnification	  	51
		
	 ARTICLE 19 REIT REQUIREMENTS AND RESTRICTIONS
	  	52
	 	 	 19.1.
	  	Personal Property Limitation	  	52
	 	 	 19.2.
	  	Sublease Rent Limitation	  	52
	 	 	 19.3.
	  	Sublease Tenant Limitation	  	52
	 	 	 19.4.
	  	Lessee Ownership Limitations	  	52
	 	 	 19.5.
	  	Lessee Officer and Employee Limitation	  	52
	 	 	 19.6.
	  	Payments to Affiliates of Lessee	  	53
		
	 ARTICLE 20 SUBLETTING AND ASSIGNMENT
	  	53
	 	 	 20.1.
	  	Subletting and Assignment	  	53
	 	 	 20.2.
	  	Attornment	  	53
	 	 	 20.3.
	  	Conveyance by Lessor	  	54
		
	 ARTICLE 21 QUIET ENJOYMENT; RISK OF LOSS
	  	54
	 	 	 21.1.
	  	Quiet Enjoyment	  	54
	 	 	 21.2.
	  	Risk of Loss	  	54
		
	 ARTICLE 22 LESSOR MORTGAGES; SUBORDINATION OF LEASE
	  	54
	 	 	 22.1.
	  	Lessor May Grant Liens	  	54
	 	 	 22.2.
	  	Subordination of Lease	  	55
		
	 ARTICLE 23 ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS; INSPECTION RIGHTS
	  	55
	 	 	 23.1.
	  	Estoppel Certificates; Financial Statements	  	55
	 	 	 23.2.
	  	Lessor’s Right to Inspect	  	56
		
	 ARTICLE 24 APPRAISERS
	  	56
	 	 	 24.1.
	  	Appraisers	  	56
		
	 ARTICLE 25 ARBITRATION AND DISPUTE RESOLUTION PROCEDURES
	  	57
	 	 	 25.1.
	  	Arbitration	  	57
	 	 	 25.2.
	  	Alternative Arbitration	  	57
	 	 	 25.3.
	  	Arbitration Procedure	  	58
		
	 ARTICLE 26 NOTICES
	  	58
	 	 	 26.1.
	  	Notices	  	58
		
	 ARTICLE 27 MISCELLANEOUS
	  	58
	 	 	 27.1.
	  	No Waiver	  	58
	 	 	 27.2.
	  	Remedies Cumulative	  	59
	 	 	 27.3.
	  	Waiver of Trial by Jury	  	59
	 	 	 27.4.
	  	Acceptance of Surrender	  	59
	 	 	 27.5.
	  	No Merger of Title	  	59
	 	 	 27.6.
	  	Waiver of Presentment, Etc.	  	59
	 	 	 27.7.
	  	Action for Damages	  	59
	 	 	 27.8.
	  	Lease Assumption in Bankruptcy Proceeding	  	59
	 	 	 27.9.
	  	Enforceability	  	60
	 	 	 27.10.
	  	Memorandum of Lease	  	60

  

 iii 

	
	 Exhibit A - Legal Description

	 Schedule 2.1 – Commencement Dates

	 Schedule 3.1(a) – Base Rents

	 Schedule 3.1(b) – Suite Revenue Breakpoint

  

 iv 

 HOTEL LEASE AGREEMENT 
  
 THIS HOTEL LEASE AGREEMENT (hereinafter called “Lease”), effective as of the 28th of May, 2004, by and between Apple Six Hospitality Texas, L.P., a Virginia limited partnership (hereinafter called “Lessor”), and Apple Six
Services, L.P., a Virginia limited partnership (hereinafter called “Lessee”), provides as follows: 
  
 AGREEMENT: 
  
 Lessor, for and in consideration of the payment of rent by Lessee to Lessor, the covenants and agreements to be performed by Lessee, and upon the terms and conditions hereinafter stated, does hereby rent and lease
unto Lessee, and Lessee does hereby rent and lease from Lessor, the Leased Property. 
  
 ARTICLE 1 
 LEASED PROPERTY; OTHER DEFINITIONS 
  
 1.1. Leased Property. The Leased Property shall mean and is comprised
of Lessor’s interest in the following: 
  
 (a) the land described in Exhibit A attached hereto and by reference incorporated herein (the “Land”); 
  
 (b) all buildings, structures and other improvements of every kind including, but not limited to, alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and offsite), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Land (collectively, the “Leased Improvements”); 
  
 (c) all easements, rights and appurtenances relating to the
Land and the Leased Improvements; 
  
 (d) all
equipment, machinery, fixtures, and other items of property required for or incidental to the use of the Leased Improvements as a hotel, including all components thereof, now and hereafter permanently affixed to or incorporated into the Leased
Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft protection equipment, all of which to the greatest extent permitted by law are hereby deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto (collectively, the “Fixtures”); 
  
 (e) all furniture and furnishings and all other items of personal property (excluding Inventory and personal property owned by Lessee)
located on, and used in connection with, the operation of the Leased Improvements as a hotel, together with all replacements, modifications, alterations and additions thereto; and 
  

 (f) all existing leases of space within the Leased Property (including any security
deposits or collateral held by Lessor pursuant thereto). 
  
 THE LEASED PROPERTY
IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL COVENANTS, CONDITIONS, RESTRICTIONS,
EASEMENTS AND OTHER MATTERS OF RECORD INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS AND OTHER MATTERS WHICH WOULD BE DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN ACCURATE SURVEY THEREOF. 
  
 1.2. Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted accounting principles as are at the time applicable, (c) all references in this Lease to designated “Articles,” “Sections” and other subdivisions are
to the designated Articles, Sections and other subdivisions of this Lease and (d) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision: 
  
 Additional Charges: As defined in Section 3.3. 
  
 Affiliate: As used in this Lease the term “Affiliate” of a Person shall mean (a) any Person that, directly or indirectly, controls or is controlled by or is under common control with such Person, (b)
any other Person that owns, beneficially, directly or indirectly, ten percent (10%) or more of the outstanding capital stock, shares or equity interests of such Person, or (c) any officer, director, employee, partner, manager or trustee of such
Person or any Person controlling, controlled by or under common control with such Person or any Person that owns, beneficially, directly or indirectly, ten percent (10%) or more of the outstanding capital stock, shares or equity interests of such
Person (excluding trustees and Persons serving in similar capacities who are not otherwise an Affiliate of such Person). For the purposes of this definition, “control” (including the correlative meanings of the terms “controlled
by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the
ownership of voting securities, partnership interests or other equity interests. 
  
 Annual Budget: As used in this Lease, the term “Annual Budget” shall mean an operating and capital budget prepared by
Lessee and delivered to Lessor in accordance with Section 4.1. 
  
 Award: As defined in Subsection 15.1(a). 
  
 Base Rate: The rate of interest announced publicly by Citibank, N.A., in New York, New York, from time to time, as such bank’s
base rate. If no such rate is announced or if such rate becomes discontinued, then such other rate as Lessor may reasonably designate. 
  

 2 

 Base Rent: As defined in Subsection 3.1(a). 
  
 Business Day: Each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which national banks in the City of New York, New York, or in the municipality wherein the Leased Property is located are closed. 
  
 CERCLA: The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

  
 Change of Control: The sale,
conveyance, assignment, encumbering, pledging, hypothecation, granting a security interest in, granting of options with respect to, or other disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration) of any class stock or other equity interests in a Person (other than among existing holders of interests in such Person on the Commencement Date and/or family members of such holders and/or trusts for the benefit of
any of the foregoing) that, upon a transfer of any portion thereof, will create in the transferee thereof, directly or indirectly, a majority of any class of stock or other equity interests of such Person. 
  
 Claims: As defined in Section 12.2. 
  
 COBRA: As defined in Subsection 8.2(b). 

 
 Code: The Internal Revenue Code of 1986, as
amended. 
  
 Commencement Date: As defined
in Section 2.1. 
  
 Competitive Set: As
defined in the STR Reports. Lessor and Lessee shall work in good faith to determine any additions and deletions to the Hotel’s Competitive Set, on or before November 15th of each year, with such changes to be applicable for the following Fiscal
Year. In the event Lessor and Lessee cannot agree to the Hotel’s Competitive Set by November 15th of any year, such unagreed items shall be determined by Smith Travel Research (or, if it refuses or is unable to do so, by arbitration pursuant to
Section 25.2). The costs of resetting the Hotel’s Competitive Set shall be borne equally by the parties. 
  
 Comparison Month: As defined in Subsection 3.1(d). 
  
 Condemnation, Condemnor: As defined in Section 15.1 
  
 Consolidated Financials: For any fiscal year or other
accounting period for Lessee and its consolidated subsidiaries, if any, statements of earnings and retained earnings and of changes in financial position for such period and for the period from the beginning of the respective fiscal year to the end
of such period and the related balance sheet as at the end of such period, together with the notes thereto, all in reasonable detail and setting forth in comparative form the corresponding figures for the corresponding period in the preceding fiscal
year, and prepared in 

  

 3 

 
accordance with generally accepted accounting principles and audited by independent certified public accountants acceptable to Lessor in its sole discretion.

  
 Consumer Price Index: The “U.S.
City Average, All Items” Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor (Base: 1982-1984=100), or any successor index thereto. If the Consumer Price Index is
hereafter converted to a different standard reference base or otherwise revised, any determination hereunder that uses the Consumer Price Index shall be made with the use of such conversion factor, formula or table for converting the Consumer Price
Index as may be published by the Bureau of Labor Statistics, or, if the Bureau shall no longer publish the same, then with the use of such conversion factor, formula or table as may be published by Prentice Hall, Inc., or, failing such publication,
by any other nationally recognized publisher of similar statistical information. 
  
 Date of Taking: As defined in Subsection 15.1(d). 
  
 Encumbrance: As defined in Section 22.1. 
  
 Environmental Audit: As defined in Subsection 8.3(b).

  
 Environmental Authority: Any
department, agency or other body or component of any Government that exercises any form of jurisdiction or authority under any Environmental Law. 
  
 Environmental Authorization: Any license, permit, order, approval, consent, notice, registration, filing or other form of
permission or authorization required under any Environmental Law. 
  
 Environmental Laws: All applicable federal, state, local and foreign laws and regulations relating to pollution of the environment (including without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), including without limitation laws and regulations relating to emissions, discharges, Releases or threatened Releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials. Environmental Laws include but are not limited to CERCLA, FIFRA, RCRA, SARA and TSCA. 
  
 Environmental Liabilities: Any and all obligations to pay the amount of any judgment or settlement,
the cost of complying with any settlement, judgment or order for injunctive or other equitable relief, the cost of compliance or corrective action in response to any notice, demand or request from an Environmental Authority, the amount of any civil
penalty or criminal fine, and any court costs and reasonable amounts for attorney’s fees, fees for witnesses and experts, and costs of investigation and preparation for defense of any claim or any Proceeding, regardless of whether such
Proceeding is threatened, pending or completed, that may be or have been asserted against or imposed upon Lessor, Lessee, any Predecessor, the Leased Property or any property used therein and arising out of: 
  
 (a) Failure of Lessee, Lessor, any Predecessor or the Leased
Property to comply at any time with all Environmental Laws; 
  

 4 

 (b) Presence of any Hazardous Materials on, in, under, at or in any way affecting the
Leased Property; 
  
 (c) A Release at any time of
any Hazardous Materials on, in, at, under or in any way affecting the Leased Property; 
  
 (d) Identification of Lessee, Lessor or any Predecessor as a potentially responsible party under CERCLA or under any Environmental Law
similar to CERCLA; 
  
 (e) Presence at any time
of any above-ground and/or underground storage tanks, as defined in RCRA or in any applicable Environmental Law on, in, at or under the Leased Property or any adjacent site or facility; or 
  
 (f) Any and all claims for injury or damage to Persons or
property arising out of exposure to Hazardous Materials originating or located at the Leased Property, or resulting from operation thereof or any adjoining property. 
  
 Event of Default: As defined in Section 16.1. 
  
 Fair Market Rental: The fair market rental of the
Leased Property means the rental which a willing tenant not compelled to rent would pay a willing landlord not compelled to lease for the use and occupancy of such Leased Property pursuant to the Lease for the term in question, (a) assuming that
Lessee is not in default thereunder and (b) determined in accordance with the appraisal procedures set forth in Article 24 or in such other manner as shall be mutually acceptable to Lessor and Lessee. 
  
 Fair Market Value: The fair market value of the
Leased Property means an amount equal to the price that a willing buyer not compelled to buy would pay a willing seller not compelled to sell for such Leased Property, (a) assuming the same is unencumbered by this Lease, (b) determined in accordance
with the appraisal procedures set forth in Article 24 or in such other manner as shall be mutually acceptable to Lessor and Lessee, (c) assuming that such seller must pay customary closing costs and title premiums, and (d) taking into account the
positive or negative effect on the value of the Leased Property attributable to the interest rate, amortization schedule, maturity date, prepayment penalty and other terms and conditions of any encumbrance that is assumed by the transferee. In
addition, in determining the Fair Market Value with respect to damaged or destroyed Leased Property such value shall be determined as if such Leased Property had not been so damaged or destroyed. 
  
 FIFRA: The Federal Insecticide, Fungicide, and
Rodenticide Act, as amended. 
  
 Fiscal
Year: The twelve (12) month period from January 1 to December 31, or any shorter period at the beginning or end of the Term. 
  

 5 

 Fixtures: As defined in Section 1.1. 
  
 Force Majeure: An Unavoidable Occurrence, generally
affecting travel and/or the hotel or lodging business in the market and/or submarket in which the Hotel is located. 
  
 Franchise Agreement: Any franchise agreement or license agreement with a franchisor (such as Springhill Suites by Marriott) under
which the Hotel is operated. 
  
 Furniture and
Equipment: For purposes of this Lease, the terms “furniture and equipment” shall mean collectively all furniture, furnishings, wall coverings, fixtures and hotel equipment and systems located at, or used in connection with, the Hotel,
together with all replacements therefor and additions thereto, including, without limitation, (i) all equipment and systems required for the operation of kitchens and bars, laundry and dry cleaning facilities, (ii) office equipment, (iii) material
handling equipment, cleaning and engineering equipment, (iv) telephone and computerized accounting systems, and (v) vehicles. 
  
 Government: The United States of America, any state, district or territory thereof, any foreign nation, any state, district,
department, territory or other political division thereof, or any agency or political subdivision of any of the foregoing. 
  
 Gross Operating Expenses: The term “Gross Operating Expenses” shall include (i) all costs and expenses of operating the
Hotel included within the meaning of the term “Total Costs and Expenses” contained in the Uniform System and, (ii) without duplication, the following: all salaries and employee expense and payroll taxes (including salaries, wages, bonuses
and other compensation of all employees of the Hotel, and benefits including life, medical and disability insurance and retirement benefits), expenditures described in Section 9.1, operational supplies, utilities, insurance to be provided by Lessee
under the terms of this Lease, governmental fees and assessments, common area maintenance costs and other common area fees and assessments, food, beverages, laundry service expense, the cost of Inventories, license fees, advertising, marketing,
reservation systems and any and all other operating expenses as are reasonably necessary for the proper and efficient operation of the Hotel and the Leased Property incurred by Lessee in accordance with the provisions hereof (excluding, however, (i)
federal, state and municipal excise, sales and use taxes collected directly from patrons and guests or as a part of the sales price of any goods, services or displays, such as gross receipts, admissions, cabaret or similar or equivalent taxes paid
over to federal, state or municipal governments, (ii) the cost of insurance to be provided under Article 13, (iii) expenditures by Lessor pursuant to Article 13 and (iv) payments on any Mortgage or other mortgage or security instrument on the
Hotel); all determined in accordance with generally accepted accounting principles. No part of Lessee’s central office overhead or general or administrative expense (as opposed to that of the Hotel) shall be deemed to be a part of Gross
Operating Expenses, as herein provided. Reasonable out-of-pocket expenses of Lessee incurred for the account of or in connection with the Hotel operations, including but not limited to postage, telephone charges and reasonable travel expenses of
employees, officers and other representatives and consultants of Lessee and its Affiliates, shall be deemed to be a part of Gross Operating Expenses and such Persons shall be afforded reasonable accommodations, food, beverages, laundry, valet and
other such services by and at the Hotel without charge to such Persons or Lessee. 
  

 6 

 Gross Operating Profit: For any Fiscal Year, the excess of Gross Revenues for such
Fiscal Year over Gross Operating Expenses for such Fiscal Year. 
  
 Gross Revenues: All revenues, receipts, and income of any kind derived directly or indirectly by Lessee from or in connection with the Hotel (including rentals or other payments from tenants, lessees, licensees
or concessionaires but not including their gross receipts) whether on a cash basis or credit, paid or collected, determined in accordance with generally accepted accounting principles, excluding, however: (i) funds furnished by Lessor, (ii) federal,
state and municipal excise, sales, and use taxes collected directly from patrons and guests or as a part of the sales price of any goods, services or displays, such as gross receipts, admissions, cabaret or similar or equivalent taxes and paid over
to federal, state or municipal governments, (iii) the amount of all credits, rebates or refunds to customers, guests or patrons, and all service charges, finance charges, interest and discounts attributable to charge accounts and credit cards, to
the extent the same are paid to Lessee by its customers, guests or patrons, or to the extent the same are paid for by Lessee to, or charged to Lessee by, credit card companies, (iv) gratuities or service charges actually paid to employees, (v)
proceeds of insurance and condemnation, (vi) proceeds from sales other than sales in the ordinary course of business, (vii) all loan proceeds from financing or refinancings of the Hotel or interests therein or components thereof, (viii) judgments
and awards, except any portion thereof arising from normal business operations of the Hotel, and (ix) items constituting “allowances” under the Uniform System. 
  
 Hazardous Materials: All chemicals, pollutants, contaminants, wastes and toxic substances, including
without limitation: 
  
 (a) Solid or hazardous
waste, as defined in RCRA or any other Environmental Law; 
  
 (b) Hazardous substances, as defined in CERCLA or any other Environmental Law; 
  
 (c) Toxic substances, as defined in TSCA or any other Environmental Law; 
  
 (d) Insecticides, fungicides, or rodenticides, as defined in FIFRA or any other Environmental Law; and

  
 (e) Gasoline or any other petroleum product
or byproduct, polychlorinated biphenyl, asbestos and urea formaldehyde. 
  
 Hotel: The hotel and/or other facility offering lodging and other services or amenities being operated or proposed to be operated on the Leased Property. 
  
 Hotel Market Decline: A period of six (6) consecutive
calendar months during which there is (i) a twenty percent (20%) decline in average hotel occupancy for the Hotel from the average hotel occupancy levels for same period during the prior calendar year and (ii) a twenty percent (20%) decline in
average hotel occupancy for the Hotel’s Competitive Set from the average hotel occupancy levels for the same period during the prior calendar year, as published in the applicable STR Reports. 
  

 7 

 Impositions: Collectively, all taxes (including, without limitation, all ad
valorem, sales and use, single business, gross receipts, transaction, privilege, rent or similar taxes as the same relate to or are imposed upon Lessee or its business conducted upon the Leased Property), assessments (including, without limitation,
all assessments for public improvements or benefit, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term), ground rents, water, sewer or other rents and charges, excises, tax inspection,
authorization and similar fees and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Leased Property or the business conducted thereon
by Lessee (including all interest and penalties thereon caused by any failure in payment by Lessee), which at any time prior to, during or with respect to the Term hereof may be assessed or imposed on or with respect to or be a lien upon (a)
Lessor’s interest in the Leased Property, (b) the Leased Property, or any part thereof or any rent therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity
conducted on or in connection with the Leased Property, or the leasing or use of the Leased Property or any part thereof by Lessee. Nothing contained in this definition of Impositions shall be construed to require Lessee to pay (1) any tax based on
net income (whether denominated as a franchise or capital stock or other tax) imposed on Lessor or any other Person, or (2) any net revenue tax of Lessor or any other Person, or (3) any tax imposed with respect to the sale, exchange or other
disposition by Lessor of any Leased Property or the proceeds thereof, or (4) any single business, gross receipts (other than a tax on any rent received by Lessor from Lessee), transaction, privilege or similar taxes as the same relate to or are
imposed upon Lessor, except to the extent that any tax, assessment, tax levy or charge that Lessee is obligated to pay pursuant to the first sentence of this definition and that is in effect at any time during the Term hereof is totally or partially
repealed, and a tax, assessment, tax levy or charge set forth in clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof. 
  
 Indemnified Party: Either of a Lessee Indemnified Party or a Lessor Indemnified Party. 
  
 Indemnifying Party: Any party obligated to indemnify
an Indemnified Party pursuant to Sections 8.3 or 18.1. 
  
 Insurance Requirements: All terms of any insurance policy required by this Lease and all requirements of the issuer of any such policy. 
  
 Inventory: All “Inventories of Merchandise” and “Inventories of Supplies” as defined in the Uniform System,
including without limitation linens, china, silver, glassware and other non-depreciable personal property, and including any property of the type described in Section 1221(1) of the Code. 
  
 Land: As defined in Section 1.1. 
  
 Lease: This Lease. 
  
 Leased Improvements; Leased Property: Each as defined
in Section 1.1. 
  

 8 

 Legal Requirements: All federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting either the Leased Property or the maintenance, construction, use or alteration thereof (whether by Lessee or otherwise), whether now in force or
hereafter enacted and in force, including (a) all laws, rules or regulations pertaining to the environment, occupational health and safety and public health, safety or welfare, and (b) any laws, rules or regulations that may (1) require repairs,
modifications or alterations in or to the Leased Property or (2) in any way adversely affect the use and enjoyment thereof; and all permits, licenses and authorizations and regulations relating thereto and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to Lessee (other than encumbrances created by Lessor without the consent of Lessee), at any time in force affecting the Leased Property. 
  
 Lending Institution: Any insurance company, credit
company, federally-insured commercial or savings bank, national banking association, savings and loan association, employees welfare, pension or retirement fund or system, corporate profit sharing or pension trust, college or university, or real
estate investment trust, including any corporation qualified to be treated for federal tax purposes as a real estate investment trust, such trust having a net worth of at least $10,000,000. 
  
 Lessee: The Lessee designated on this Lease and its
respective permitted successors and assigns. 
  
 Lessee Indemnified Party: Lessee, any Affiliate of Lessee, any other Person against whom any claim for indemnification may be asserted hereunder as a result of a direct or indirect ownership interest (including a stockholder’s
or member’s interest) in Lessee, the officers, directors, stockholders, members, managers, employees, agents and representatives of Lessee, and the respective heirs, personal representatives, successors and assigns of any such officer,
director, stockholder, member, manager, employee, agent or representative. 
  
 Lessee’s Personal Property: As defined in Section 6.2. 
  
 Lessor: The Lessor designated In this Lease and its respective successors and assigns. 
  
 Lessor Indemnified Party: Lessor, any Affiliate of
Lessor, any other Person against whom any claim for indemnification may be asserted hereunder as a result of a direct or indirect ownership interest (including a stockholder’s or partnership interest) in Lessor, the officers, directors,
stockholders, members, managers, employees, agents and representatives of the general partner of Lessor and any partner, agent, or representative of Lessor, and the respective heirs, personal representatives, successors and assigns of any such
officer, director, stockholder, partner, member, manager, employee, agent or representative. 
  
 Licenses: As defined in Subsection 2.3(a). 
  

 9 

 Management Agreement: The agreement pursuant to which Manager operates the Hotel.

  
 Manager: Springhill SMC Corporation, a
Delaware corporation, or any successor manager that is retained by Lessee to operate the Hotel pursuant to this Lease and the Franchise Agreement. 
  
 Minimum Price: The sum of (a) the equity in the Leased Property at the time of acquisition of the Leased Property by Lessor, plus
(b) other capital expenditures on the Leased Property by Lessor after the date hereof (less depreciation and amortization thereof) plus (c) the unpaid principal balance of all encumbrances against the Leased Property at the time of purchase of the
Leased Property by Lessee, less (x) all proceeds received by Lessor from any financing or refinancing of the Leased Property after the date hereof (after payment of any debt refinanced and net of any costs and expenses incurred in connection with
such financing or refinancing, including, without limitation, loan points, commitment fees and commissions and legal fees) and (y) the net amount (after deduction of all reasonable legal fees and other costs and expenses, including without
limitation expert witness fees, incurred by Lessor in connection with obtaining any such proceeds or award) of all insurance proceeds received by Lessor and awards received by Lessor from any partial Taking of the Leased Property that are not
applied to restoration. 
  
 Mortgage: As
defined in Section 22.2. 
  
 National Economic
Decline: A period of six (6) consecutive calendar months during which there occurs or continues a ten percent (10%) decline in average hotel occupancy, from average hotel occupancy levels for the same period during the prior calendar year, for
all open and operating hotels in the United States as determined from the applicable STR Reports or, if the STR Reports are not longer published, other reputable national economic data regarding the hospitality industry. 
  
 Notice: As defined in Article 26. 
  
 Officer’s Certificate: A certificate of Lessee
reasonably acceptable to Lessor, signed by the chief financial officer or another officer authorized so to sign by the board of directors or other governing body of Lessee, or bylaws or limited liability company agreement of Lessee, or any other
Person whose power and authority to act has been authorized by delegation in writing by any such officer. 
  
 Optional Termination Date: As defined in Section 2.2. 
  
 Overdue Rate: On any date, a rate equal to the Base Rate plus five percent (5%) per annum, but in no
event greater than the maximum rate then permitted under applicable law. 
  
 Payment Date: Any due date for the payment of any installment of Base Rent. 
  
 Percentage Rent: As defined in Subsection 3.1(b). 
  

 10 

 Person: Any Government, natural person, corporation, general or limited
partnership, limited liability company, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, or other entity. 
  
 Personal Property Taxes: All personal property taxes imposed on the furniture, furnishings or other
items of personal property located on, and used in connection with, the operation of the Leased Improvements as a hotel (other than Inventory and other personal property owned by Lessee), together with all replacement, modifications, alterations and
additions thereto. 
  
 Predecessor: Any
Person whose liabilities arising under any Environmental Law have or may have been retained or assumed by Lessor or Lessee, either contractually or by operation of law, relating to the Leased Property. 
  
 Primary Intended Use: As defined in Subsection
7.2(b). 
  
 Proceeding: Any judicial
action, suit or proceeding (whether civil or criminal), any administrative proceeding (whether formal or informal), any investigation by a governmental authority or entity (including a grand jury), and any arbitration, mediation or other
non-judicial process for dispute resolution. 
  
 Quarterly Revenues Computation: As defined in Subsection 3.1(b). 
  
 RCRA: The Resource Conservation and Recovery Act, as amended. 
  
 Real Estate Taxes: All real estate taxes, including general and special assessments, if any, which
are imposed upon the Land, and any improvements thereon. 
  
 Regional Market Decline: A period of six (6) consecutive calendar months during which there is a twenty percent (20%) decline in average hotel occupancy from hotel occupancy levels for the same period during
the then prior calendar year, for all open and operating hotels in the Smith Travel Research Region in which the Hotel is located, as determined from applicable STR Reports or, if the STR Reports are no longer published, other reputable regional
economic data regarding the hospitality industry. 
  
 Rejectable Offer Price: An amount equal to the greater of (a) the Fair Market Value, determined as of the applicable purchase date, or (b) the Minimum Price. 
  
 Release: A “Release” as defined in CERCLA or in any Environmental Law, unless such Release
has been properly authorized and permitted in writing by all applicable Environmental Authorities or is allowed by such Environmental Law without authorizations or permits. 
  
 Rent: Collectively, the Base Rent, Percentage Rent, Sundry Rent and Additional Charges. 

 
 Repositioning: As defined in Section 3.6.

  

 11 

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

  
 Solvent: As to any Person, (a) the sum
of the assets of such Person exceeds its liabilities and (b) such Person has sufficient capital with which to conduct its business as presently conducted and as proposed to be conducted. 
  
 State: The state or commonwealth in which the Hotel is located. 
  
 STR Reports: Reports compiled by Smith Travel
Research, or its successor, which contain historical supply and demand, occupancy, and average rate information for the Hotel and hotels with which it competes (or, in the event that Smith Travel Research discontinues providing such information,
reports of similar nature compiled by an authority recognized nationally in the hospitality industry). 
  
 Subsidiaries: Persons in which Lessee owns, directly or indirectly, more than fifty percent (50%) of the voting stock or control,
as applicable. 
  
 Suite Revenue
Breakpoint: As defined in Subsection 3.1(b). 
  
 Suite Revenues: All revenues, receipts, and income of any kind derived directly or indirectly by Lessee from or in connection with the rental of guest rooms or suites, whether to individuals, groups or transients, at the Hotel,
whether on a cash basis or credit, paid or collected, determined in accordance with generally accepted accounting principles, but excluding the following: 
  
 (a) The amount of all credits, rebates or refunds to customers, guests or patrons, and all service charges, finance charges, interest and
discounts attributable to charge accounts and credit cards, to the extent the same are paid to Lessee by its customers, guests or patrons, or to the extent the same are paid for by Lessee to, or charged to Lessee by, credit card companies;

  
 (b) All sales taxes or any other taxes
imposed on the rental of such guest rooms or suites; 
  
 (c) Gratuities or service charges actually paid to employees; 
  
 (d) Proceeds of business interruption and other insurance; and 
  
 (e) Sundry Revenues. 
  
 Sundry Rent: As defined in Section 3.1(c). 
  
 Sundry Revenues: All revenues, receipts, and income derived from the Hotel’s meeting rooms,
telephones, TV and movie rentals, check room, washroom, laundry, valet, vending machines, and other sources not specified herein as Suite Revenues. 
  

 12 

 Taking: A taking or voluntary conveyance during the Term hereof of all or part of
the Leased Property, or any interest therein or right accruing thereto or use thereof, as the result of, or in settlement of, any Condemnation or other eminent domain Proceeding affecting the Leased Property whether or not the same shall have
actually been commenced. 
  
 Term: As
defined in Section 2.1. 
  
 TSCA: The
Toxic Substances Control Act, as amended. 
  
 Unavoidable Delays: Delays due to strikes, lock-outs, labor unrest, inability to procure materials, power failure, acts of God, governmental restrictions, enemy action, civil commotion, fire, unavoidable casualty or other causes
beyond the control of the party responsible for performing an obligation hereunder, provided that lack of funds shall not be deemed a cause beyond the control of either party hereto unless such lack of funds is caused by the failure of the other
party hereto to perform any obligations of such party under this Lease or any guaranty of this Lease. 
  
 Unavoidable Occurrence. The occurrence of strikes, lockouts, labor unrest, gasoline and other energy shortages, widespread
disruption of air, auto or other travel, inability to procure materials or services, power or other utility failure, acts of God (such as hurricanes, tornadoes, earthquakes, floods and mud slides), governmental restrictions, war or other enemy or
terrorist action, civil commotion, fire, casualty, condemnation or other similar causes, in each case, if such cause is beyond the reasonable control of Lessee; provided that (i) lack of funds shall not be deemed a cause beyond the reasonable
control of either party hereto unless such lack of funds is caused by the failure of the other party hereto to perform any obligations of such party under this Lease or any guaranty of this Lease, and (ii) any such occurrence is an extraordinary, as
opposed to a routine or cyclical, material event that was not reasonably foreseeable when the then-applicable Annual Budget was prepared. 
  
 Uneconomic for its Primary Intended Use: A state or condition of the Hotel such that, in the good faith judgment of Lessee,
reasonably exercised and evidenced by the resolution of the board of directors or other governing body of Lessee, the Hotel cannot be operated on a commercially practicable basis for its Primary Intended Use, taking into account, among other
relevant factors, the number of usable rooms and projected revenues, such that Lessee intends to, and shall, complete the cessation of operations from the Leased Hotel. 
  
 Uniform System: The Uniform System of Accounts for Hotels (9th Revised Edition, 1996) as published by
the Hotel Association of New York City, Inc., with such later revisions as may be agreed to by both Lessor and Lessee. 
  
 Unsuitable for its Primary Intended Use: A state or condition of the Hotel such that, in the good faith judgment of Lessee,
reasonably exercised and evidenced by the resolution of the board of directors or other governing body of Lessee, due to casualty damage or loss through Condemnation, the Hotel cannot function as an integrated hotel facility consistent with
standards applicable to a well maintained and operated hotel. 
  

 13 

 WARN Act: As defined in Subsection 8.2(b). 
  
 Working Capital: Funds reasonably necessary for the
day-to-day operation of the Hotel’s business for a thirty (30) day period, including, without limitation, amounts sufficient for the maintenance of change and petty cash funds, operating bank accounts, payrolls, accounts payable, accrued
current liabilities, and funds required to maintain Inventories. 
  
 ARTICLE 2 
 TERM; TERMINATION 
  
 2.1. Term. 
  
 (a) The term of the Lease (the “Term”) shall commence on the date specified in Schedule 2.1 (the “Commencement
Date”), and shall end on the tenth (10th) anniversary of the Commencement Date, unless sooner terminated in accordance with the provisions hereof or extended to an anniversary of the initial expiration date pursuant to this Article 2.

  
 (b) Lessee is granted the option to extend
the Term of this Lease for a period of five (5) years (the “First Extension”), provided that Lessee is not in default hereunder either at the time of deemed exercise of the option or at the end of the original Term, which option must be
exercised by written notice to Lessor at least one hundred twenty (120) days prior to the expiration of the original Term. The First Extension shall be upon the same terms, conditions and rentals as set forth herein for the original Term.

  
 (c) Lessee is granted an option to extend the
Term for a period of five (5) years following the end of the First Extension (the “Second Extension”), provided that Lessee is not in default hereunder either at the time of exercise of the option or at the end of the First Extension,
which option must be exercised by written notice to Lessor at least one hundred twenty (120) days prior to the expiration of the First Extension. If such option is exercised, Lessor and Lessee shall negotiate in good faith modifications to the Rent
for the Second Extension to adjust such Rent to market rates for arms-length hotel REIT leases between unrelated parties for similar hotel properties at that time. In the event Lessor and Lessee are unable to agree upon Rent terms for the Second
Extension at least ninety (90) days prior to the expiration of the Term, the Rent terms for the Second Extension shall be determined by a panel of three (3) persons who have generally recognized expertise in evaluating hotel REIT leases and who are
not Affiliates of Lessor or Lessee. Lessee and the Lessor each shall have the right to designate one panel member and the two (2) panel members so designated will designate the third panel member. Rent terms approved by at least two (2) of the three
(3) panel members will be binding on Lessee and Lessor for the Second Extension, which shall be otherwise on the terms set forth herein. In determining the market rates for the Second Extension, the panel members shall be instructed to consider
hotel REIT lease terms with respect to similar hotel property types. The Second Extension shall be otherwise upon the same terms and conditions as set forth herein for the original Term. 
  
 2.2. Lessor’s Option to Terminate Lease. In the event Lessor enters into a bona fide contract to sell the Leased
Property to a non-Affiliate, there is a Change of Control of Lessor, or the 

  

 14 

 
provisions of the Code are amended to permit Lessor to operate hotels or otherwise render the structure embodied by this Lease to be obsolete, Lessor may
terminate the Lease by giving not less than thirty (30) days’ prior Notice to Lessee of Lessor’s election to terminate the Lease effective upon, as appropriate, the closing under such contract, the date of such Change of Control, or the
effective date of such amendment to the Code (or any other specified date within 30 days after such date) (the “Optional Termination Date”). Effective upon the Optional Termination Date, this Lease shall terminate and be of no further
force and effect except as to any obligations of the parties existing as of such date that survive termination of this Lease. As compensation for the early termination of its leasehold estate under this Section 2.2, Lessor shall within 12 months of
the Optional Termination Date either (a) pay to Lessee the fair market value of Lessee’s leasehold estate hereunder plus interest thereon at the Base Rate as of the Optional Termination Date or (b) offer to lease to Lessee one or more
substitute hotel facilities pursuant to one or more leases that would create for Lessee leasehold estates that have an aggregate fair market value of no less than the fair market value of the original leasehold estate, both such values as determined
as of the Optional Termination Date. Lessor also shall pay to Lessee, or reimburse Lessee for any assignment fees, termination fees or other liabilities arising under the Franchise Agreement or Management Agreement solely as a result of the
assignment or termination of such Franchise Agreement or Management Agreement in connection with the termination of this Lease under this Section 2.2. If Lessor elects and complies with the option described in (b) above, regardless of whether Lessee
enters into the lease(s) described therein, Lessor shall have no further obligations to Lessee with respect to compensation for the early termination of this Lease. In the event Lessor and Lessee are unable to agree upon the fair market value of an
original or replacement leasehold estate, it shall be determined by appraisal using the appraisal procedure set forth in Article 24. 
  
 For the purposes of this Article, fair market value of the leasehold estate means, as applicable, an amount equal to the price that a willing buyer not
compelled to buy would pay a willing seller not compelled to sell for Lessee’s leasehold estate under this Lease or an offered replacement leasehold estate, taking into account that the leasehold estate is encumbered by the Franchise Agreement
and an arm’s-length Management Agreement. 
  
 2.3.
Transition Procedures. Upon the expiration or termination of the Term of this Lease, for whatever reason (other than a purchase of the Leased Property by Lessee), Lessor and Lessee shall do the following (and the provisions of this Section
2.3 shall survive the expiration or termination of this Lease until they have been fully performed) and, in general, shall cooperate in good faith to effect an orderly transition of the management and/or lease of the Hotel: 
  
 (a) Transfer of Licenses. Lessee shall use reasonable
efforts (i) to transfer to Lessor or Lessor’s nominee all licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental entities, that may be necessary for the
operation of the Hotel (collectively, “Licenses”), or (ii) if such transfer is prohibited by law or Lessor otherwise elects, to cooperate with Lessor or Lessor’s nominee in connection with the processing by Lessor or Lessor’s
nominee of any applications for, all Licenses; provided, in either case, that the costs and expenses of any such transfer or the processing of any such application shall be paid by Lessor or Lessor’s nominee. 
  

 15 

 (b) Leases and Concessions. Lessee shall assign to Lessor or Lessor’s nominee
simultaneously with the termination of this Lease, and the assignee shall assume, all leases and concession agreements in effect with respect to the Hotel then in Lessee’s name. 
  
 (c) Books and Records. All books and records for the Hotel kept by Lessee pursuant to Section 4.2
shall be delivered promptly to Lessor or Lessor’s nominee, simultaneously with the termination of this Lease, but such books and records shall thereafter be available to Lessee at all reasonable times for inspection, audit, examination, and
transcription for a period of one (1) year and Lessee may retain (on a confidential basis) copies or computer records thereof. 
  
 (d) Receivables and Payables. Lessee shall be entitled to retain all cash, bank accounts and house banks, and to collect all Gross
Revenues and accounts receivable accrued through the termination date. Lessee shall be responsible for the payment of Rent, all Gross Operating Expenses and all other obligations of Lessee accrued under this Lease as of the termination date, and
Lessor or Lessor’s nominee shall be responsible for all Gross Operating Expenses of the Hotel accruing after the termination date. 
  
 (e) Final Accounting. Lessee shall, within forty five (45) days after the expiration or termination of the Term, prepare and
deliver to Lessor a final accounting statement, dated as of the date of the expiration or termination, along with a statement of any sums due from Lessee to Lessor pursuant hereto and payment of such funds. 
  
 (f) Inventory. Lessee shall insure that the Leased
Property, at the date of such termination or expiration, has Inventory of a substantially equivalent nature and amount as exists at the Leased Property on the Commencement Date, and Lessor or its designee shall acquire such Inventory from Lessee for
a sale price equal to the fair market value of such Inventory. 
  
 (g) Surrender. Lessee will, upon the expiration or prior termination of the Term, vacate and surrender the Leased Property to Lessor in the condition in which the Leased Property was originally received from
Lessor, except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Lease and except for ordinary wear and tear (subject to the obligation of Lessee to maintain the Leased Property in good order and
repair, as would a prudent owner, during the entire Term of the Lease), or damage by casualty or Condemnation (subject to the obligations of Lessee to restore or repair as set forth in the Lease) 
  
 The provisions of this Section 2.3 shall survive the expiration or
termination of this Lease until they have been fully performed. Nothing contained herein shall limit Lessor’s rights and remedies under this Lease if such termination occurs as the result of an Event of Default. 
  
 2.4. Holding Over. If Lessee for any reason remains in possession of
the Leased Property after the expiration or earlier termination of the Term, such possession shall be as a tenant at sufferance during which time Lessee shall pay as rental each month 150% of the aggregate of (a) one-twelfth of the aggregate Base
Rent and Percentage Rent payable with respect to the last Fiscal Year of the Term, (b) all Additional Charges accruing during the applicable month and (c) all other sums, if any, payable by Lessee under this Lease with respect to the Leased
Property. During such period, Lessee shall be obligated to perform and observe all of the terms, covenants and conditions 

  

 16 

 
of this Lease, but shall have no rights hereunder other than the right, to the extent given by law to tenancies at sufferance, to continue its occupancy and
use of the Leased Property. Nothing contained herein shall constitute the consent, express or implied, of Lessor to the holding over of Lessee after the expiration or earlier termination of this Lease. 
  
 ARTICLE 3 
 RENT; RENT ADJUSTMENTS 
  
 3.1. Rent. Lessee will pay to Lessor in lawful money of the United States of America which shall be legal tender for the payment of public and
private debts, in immediately available funds, at Lessor’s address set forth in Article 26 hereof or at such other place or to such other Person as Lessor from time to time may designate in a Notice, all Base Rent, Percentage Rent, Sundry Rent
and Additional Charges, during the Term, as follows: 
  
 (a) Base Rent: The annual sum specified in Schedule 3.1(a) (prorated for fiscal year 2004), as adjusted pursuant to Subsection 3.1(d) hereof, payable in advance in equal, consecutive monthly installments, on or before the
tenth day of each calendar month of the Term (“Base Rent”); provided, however, that the first monthly payment of Base Rent shall be payable during the second calendar month of the Term, and that the first and last monthly payments of Base
Rent shall be pro rated as to any partial month (subject to adjustment as provided in Sections 14.5, 15.3 and 15.5). 
  
 (b) Percentage Rent: For each calendar quarter during the Term commencing with the calendar quarter in which the Commencement Date
falls and ending with the calendar quarter in which the Term (including any applicable extensions) ends, Lessee shall pay percentage rent (“Percentage Rent”). 
  
 Percentage Rent for the applicable quarter shall be an amount equal to the following formula: 
  
 The amount equal to the applicable Quarterly Revenues
Computation (as defined below) less the sum of 
  
 (i) an amount equal to the Base Rent paid with respect to such quarter and all prior calendar quarters of the applicable Fiscal Year and 
  
 (ii) an amount equal to Percentage Rent paid with respect to all prior calendar quarters of the applicable Fiscal Year. 
  
 For the purpose of the above formula: 
  
 The quarterly revenues computation (“Quarterly Revenues
Computation”) is equal to the amount obtained by adding, for the applicable calendar quarter, an amount equal to the sum of (i) seventeen percent (17%) of all Fiscal Year to date Suite Revenues up to the applicable suite revenue breakpoint (the
“Suite Revenue Breakpoint”) described in Schedule 3.1(b), attached hereto, 

  

 17 

 
(prorated for the first and last calendar quarters of the Term (including any applicable extensions)) and fifty-five percent (55%) of all Fiscal Year to date
Suite Revenues in excess of the applicable Suite Revenue Breakpoint. At the beginning of each Fiscal Year, the Suite Revenue Breakpoints shall be adjusted by the same percentage that the Base Rent is adjusted pursuant to Subsection 3.1(d).

  
 The Percentage Rent shall be payable as follows: 
  

	 	(i)	with respect to each calendar month of the Term, except for the calendar months in the first partial and next two full calendar quarters at the beginning of the Term, Lessee shall
pay on or before the last day of the calendar month an amount equal to the excess, if any, of (A) seventy-five percent (75%) of the amount of Lessee’s budgeted Percentage Rent payable with respect to the then current calendar month (which
budgeted amount shall be equal to one-third (1/3) of the quarterly estimate of Percentage Rent included in the Annual Budget for the calendar quarter in which the calendar month occurs) over (B) Base Rent for such calendar month; and

  

	 	(ii)	with respect to each calendar quarter of the Term, except for the calendar months in the first partial and next two full calendar quarters at the beginning of the Term, Lessee shall
pay on or before the 15th day following the end of the calendar quarter an amount equal to the amount, if any, by
which the aggregate of all payments in respect of Base Rent and Percentage Rent for such calendar quarter shall be less than the amount determined pursuant to the Quarterly Revenues Computation for such calendar quarter; and

  

	 	(iii)	with respect to the first partial and next two full calendar quarters at the beginning of the Term, Lessee shall pay on or before the 15th day following the end of the calendar quarter an amount equal to the amount, if any, by which the aggregate of all payments in respect of Base Rent for such
calendar quarter shall be less than the amount determined pursuant to the Quarterly Revenues Computation of such calendar quarter. 

  
 In no event will the amount of Percentage Rent payable for any calendar quarter or the result of any Quarterly Revenues Computation be less than zero, and there shall be
no reduction in the Base Rent regardless of the result of any Quarterly Revenues Computation. 
  
 (c) Sundry Rent. For each calendar quarter during the Term commencing with the calendar quarter in which the Commencement Date
falls and ending with the calendar quarter in which the Term (including any applicable extensions) ends, Lessee shall pay sundry rent (“Sundry Rent”). Sundry Rent shall be an amount equal to fifty-five percent (55%) of all Fiscal Year to
date Sundry Revenues less an amount equal to Sundry Rent paid with respect to all prior calendar quarters of the applicable Fiscal Year. Sundry Rent shall be payable as follows: 
  

	 	(i)	 with respect to each calendar month of the Term, except for the calendar months in the first partial and next two full calendar quarters at the beginning of the
Term, on or before the last day of the calendar month an amount equal to seventy-five percent (75%) 

  

 18 

	 	 
of the amount of Lessee’s budgeted Sundry Rent payable with respect to the then current calendar month (which budgeted amount shall be equal to
one-third (1/3) of the quarterly estimate of Sundry Rent included in the Annual Budget for the calendar quarter in which the calendar month occurs); and 

  

	 	(ii)	with respect to each calendar quarter of the Term, except for the calendar months in the first partial and next two full calendar quarters at the beginning of the Term, on or before
the 15th day following the end of the calendar quarter an amount equal to the amount, if any, by which the aggregate
of all payments pursuant to Section 3.1(c)(i) in respect of Sundry Rent for such calendar quarter shall be less than fifty-five percent (55%) of Sundry Revenues for such calendar quarter; and 

  

	 	(iii)	with respect to the first partial and next two full calendar quarters at the beginning of the Term, on or before the 15th day following the end of the calendar quarter. 

  
 (d) Officer’s Certificates. Additionally, an Officer’s Certificate shall be delivered to Lessor quarterly, together with
such quarterly Percentage Rent payment and quarterly Sundry Rent payment, setting forth the calculation of such rent payment for such quarter, within thirty (30) days after each of the first three quarters of each Fiscal Year (or part thereof) in
the Term. Such quarterly payments shall be based on the formula set forth in Subsection 3.1(b) and 3.1(c), as applicable. There shall be no reduction in the Base Rent regardless of the result of the Quarterly Revenues Computations. 
  
 In addition, on or before March 1 of each year, commencing with March 1,
2005, Lessee shall deliver to Lessor an Officer’s Certificate reasonably acceptable to Lessor setting forth the computation of the actual Percentage Rent and Sundry Rent that accrued for each quarter of the Fiscal Year that ended on the
immediately preceding December 31 and shall pay to Lessor Percentage Rent and Sundry Rent, if due and payable, for the last quarter of the applicable Fiscal Year. Additionally, if the annual Percentage Rent or Sundry Rent due and payable for any
Fiscal Year (as shown in the applicable Officer’s Certificate) exceeds the amount actually paid as Percentage Rent or Sundry Rent by Lessee for such year, Lessee also shall pay such excess to Lessor at the time such certificate is delivered. If
the Percentage Rent or Sundry Rent actually due and payable for such Fiscal Year is shown by such certificate to be less than the amount actually paid as Percentage Rent or Sundry Rent for the applicable Fiscal Year, Lessor, at its option, shall
reimburse such amount to Lessee or credit such amount against subsequent months’ Base Rent or Sundry Rent, as applicable, and with respect to Percentage Rent, to the extent necessary, subsequent quarters’ Percentage Rent payments. Any such
credit to Base Rent shall not be applied for purposes of calculating Percentage Rent payable for any subsequent quarter. 
  
 Any difference between the annual Percentage Rent or Sundry Rent due and payable for any Fiscal Year (as shown in the applicable Officer’s
Certificate or as adjusted pursuant to Section 3.3) and the total amount of quarterly payments for such Fiscal Year actually paid by Lessee as Percentage Rent or Sundry Rent, whether in favor of Lessor or Lessee, shall bear interest at the Overdue
Rate, which interest shall accrue from the due date of the last quarterly payment for the Fiscal Year until the amount of such difference shall be paid or otherwise discharged. Any such interest payable to Lessor shall be deemed to be and shall be
payable as Additional Charges. 
  

 19 

 The obligation to pay Percentage Rent and Sundry Rent shall survive the expiration or earlier termination
of the Term, and a final reconciliation, taking into account, among other relevant adjustments, any adjustments which are accrued after such expiration or termination date but which related to Percentage Rent and Sundry Rent accrued prior to such
termination date, and Lessee’s good faith best estimate of the amount of any unresolved contractual allowances, shall be made not later than two (2) years after such expiration or termination date, but Lessee shall advise Lessor within sixty
(60) days after such expiration or termination date of Lessee’s best estimate at that time of the approximate amount of such adjustments, which estimate shall not be binding on Lessee or have any legal effect whatsoever. 
  
 (e) CPI Adjustments to Base Rent and Percentage Rent.
For each year of the Term beginning on or after January 1, 2005, the Base Rent shall be adjusted from time to time as follows: 
  
 (1) If the most recently published Consumer Price Index as of the last day of the last month (the “Comparison Month”) of any
Fiscal Year is different than the average Consumer Price Index for the twelve (12) month period prior thereto, the Base Rent for the next Fiscal Year shall be adjusted by the percentage change in the Consumer Price Index calculated as follows:

  
 (A) The difference between the Consumer
Price Index for the most recent Comparison Month and the average Consumer Price Index for the twelve (12) month period prior thereto shall be divided by the average Consumer Price Index for the twenty four (24) month period prior thereto.

  
 (B) The Base Rent shall be multiplied by the
lesser of (i) seven percent (7%) or (ii) the quotient obtained in subparagraph (d)(1)(A) above. 
  
 (C) The product obtained in subparagraph (d)(1)(B) above shall be added to the Base Rent. 
  
 Adjustments in the Base Rent shall be effective on the first day of the first
calendar month of the Fiscal Year to which such adjusted Base Rent applies. The Suite Revenue Breakpoint then included in the Quarterly Revenues Computation pursuant to Subsection 3.1(b) shall be similarly adjusted, effective with any such
adjustment in the Base Rent. 
  
 (2) If (i) a
significant change is made in the number or nature (or both) of items used in determining the Consumer Price Index, or (ii) the Consumer Price Index shall be discontinued for any reason, the Bureau of Labor Statistics shall be requested to furnish a
new index comparable to the Consumer Price Index, together with information which will make possible a conversion to the new index in computing the adjusted Base Rent hereunder. If for any reason the Bureau of Labor Statistics does not furnish such
an index and such information, the parties will instead mutually select, accept and use such other index or comparable statistics on 

  

 20 

 
the cost of living in Washington, D.C. that is computed and published by an agency of the United States or a responsible financial periodical of recognized
authority. 
  
 (f) Manager Fund-up Cure
Payments. If and to the extent that Manager pays amounts to Lessee pursuant to the Management Agreement in order to avoid termination of the Management Agreement by Lessee for Manager’s failure to meet certain performance hurdles described
therein, such amounts shall be treated as additional Suite Revenues for purposes of the Percentage Rent calculation hereunder. 
  
 (g) Allocation of Rent. The parties hereto acknowledge and agree that the Base Rent paid or payable by Lessee to Lessor hereunder shall,
to the extent relevant, be allocated between the personal property and real property constituting Leased Property hereunder in direct proportion to the then recognizable fair market value of such personal property and real property. Percentage Rent
in excess of Base Rent shall be allocated solely to real property. 
  
 3.2. Confirmation of Percentage Rent and Sundry Rent. Lessee shall utilize, or cause to be utilized, an accounting system for the Leased Property in accordance with its usual and customary practices, and in accordance with generally
accepted accounting principles, that will accurately record all data necessary to compute Percentage Rent and Sundry Rent, and Lessee shall retain, for at least four (4) years after the expiration of each Fiscal Year (and in any event until the
reconciliation described in Subsection 3.1(c) for such Fiscal Year has been made), reasonably adequate records conforming to such accounting system showing all data necessary to compute Percentage Rent and Sundry Rent for the applicable Fiscal
Years. Lessor, at its expense (except as provided hereinbelow), shall have the right from time to time, upon prior written notice to Lessee and Manager, by its accountants or representatives to audit the information that formed the basis for the
data set forth in any Officer’s Certificate provided under Subsection 3.1(d) and, in connection with such audits, to examine all Lessee’s records (including supporting data and sales and excise tax returns) reasonably required to verify
Percentage Rent and Sundry Rent, subject to any prohibitions or limitations on disclosure of any such data under Legal Requirements; provided, however that Lessor may only inspect or audit records in Manager’s possession subject to the terms of
Lessee’s access thereto under the Management Agreement. If any such audit discloses a deficiency in the payment of Percentage Rent or Sundry Rent, and either Lessee agrees with the result of such audit or the matter is otherwise determined or
compromised, Lessee shall forthwith pay to Lessor the amount of the deficiency, as finally agreed or determined, together with interest at the Overdue Rate from the date when said payment should have been made to the date of payment thereof;
provided, however, that as to any audit that is commenced more than two (2) years after the date Percentage Rent or Sundry Rent for any Fiscal Year is reported by Lessee to Lessor, the deficiency, if any, with respect to such Percentage Rent or
Sundry Rent shall bear interest at the Overdue Rate only from the date such determination of deficiency is made unless such deficiency is the result of gross negligence or willful misconduct on the part of Lessee, in which case interest at the
Overdue Rate will accrue from the date such payment should have been made to the date of payment thereof. If any such audit discloses that the Percentage Rent or Sundry Rent actually due from Lessee for any Fiscal Year exceed those reported by
Lessee by more than three percent (3%), Lessee shall pay the cost of such audit and examination. Any proprietary information obtained by Lessor pursuant to the provisions of this Section shall be treated as confidential, except that such information
may be used, subject to appropriate 

  

 21 

 
confidentiality safeguards, in any litigation between the parties and except further that Lessor may disclose such information to prospective lenders. The
obligations of Lessee contained in this Section shall survive the expiration or earlier termination of this Lease. 
  
 3.3. Additional Charges. In addition to the Base Rent, Percentage Rent and Sundry Rent, (a) Lessee also will pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions that Lessee assumes or agrees to pay under this Lease, and (b) in the event of any failure on the part of Lessee to pay any of those items referred to in clause (a) of this Section
3.3, Lessee also will promptly pay and discharge every fine, penalty, interest and cost that may be added for non-payment or late payment of such items (the items referred to in clauses (a) and (b) of this Section 3.3 being additional rent hereunder
and being referred to herein collectively as the “Additional Charges”), and Lessor shall have all legal, equitable and contractual rights, powers and remedies provided either in this Lease or by statute or otherwise in the case of
non-payment of the Additional Charges as in the case of non-payment of the Base Rent. If any installment of Base Rent, Percentage Rent and Sundry Rent or Additional Charges (but only as to those Additional Charges that are payable directly to
Lessor) shall not be paid on its due date, Lessee will pay Lessor on demand, as Additional Charges, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment, from the due date of such installment
to the date of payment thereof. To the extent that Lessee pays any Additional Charges to Lessor pursuant to any requirement of this Lease, Lessee shall be relieved of its obligation to pay such Additional Charges to the entity to which they would
otherwise be due and Lessor shall pay same from monies received from Lessee. 
  
 3.4. Net Lease; No Termination, Abatement, Etc. 
  
 (a) The Rent shall be paid absolutely net to Lessor, so that this Lease shall yield to Lessor the full amount of the installments of Base
Rent, Percentage Rent, Sundry Rent and Additional Charges throughout the Term, all as more fully set forth in Article 5, but subject to any other provisions of this Lease that expressly provide for adjustment or abatement of Rent or other charges or
expressly provide that certain expenses or maintenance shall be paid or performed by Lessor. 
  
 (b) Except as otherwise specifically provided in this Lease, and except for loss of the Franchise Agreement solely by reason of any action
or inaction by Lessor, Lessee, to the extent permitted by law, shall remain bound by this Lease in accordance with its terms and shall neither take any action without the written consent of Lessor (which shall not be unreasonably withheld or
delayed) to modify, surrender or terminate the same, nor seek nor be entitled to any abatement, deduction, deferment or reduction of the Rent, or setoff against the Rent, nor shall the obligations of Lessee be otherwise affected by reason of (a) any
damage to, or destruction of, any Leased Property or any portion thereof from whatever cause or any Taking of the Leased Property or any portion thereof, (b) the lawful or unlawful prohibition of, or restriction upon, Lessee’s use of the Leased
Property, or any portion thereof, or the interference with such use by any Person other than Lessor, (c) any claim which Lessee has or might have against Lessor by reason of any default or breach of any warranty by Lessor under this Lease or any
other agreement between Lessor and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting 

  

 22 

 
Lessor or any assignee or transferee of Lessor, or (e) for any other cause whether similar or dissimilar to any of the foregoing other than a discharge of
Lessee from any such obligations as a matter of law. Lessee hereby specifically waives all rights, arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law to (1) modify, surrender or terminate this Lease or
quit or surrender the Leased Property or any portion thereof, or (2) entitle Lessee to any abatement, reduction, suspension or deferment of the Rent or other sums payable by Lessee hereunder, except as otherwise specifically provided in this Lease.
The obligations of Lessee hereunder shall be separate and independent covenants and agreements and the Rent and all other sums payable by Lessee hereunder shall continue to be payable in all events unless the obligations to pay the same shall be
terminated pursuant to the express provisions of this Lease or by termination of this Lease other than by reason of an Event of Default. 
  
 3.5. Material Changes in Economic Climate. 
  
 (a) In the event of the occurrence of a Force Majeure or a Hotel Market Decline, Lessor and Lessee shall, in good faith, negotiate
possible modifications to the Base Rent and Percentage Rent to reduce such Base Rent and Percentage Rent to recent market rates for hotel REIT leases for similar hotel properties in the Hotel’s Competitive Set, retroactively effective as of the
first calendar month of the Term following the last day of the six-month period during which such Hotel Market Decline has occurred with the excess of Base Rent and Percentage Rent actually paid for such period over the reduced Base Rent and
Percentage Rent, plus interest thereon at the Base Rate, to be credited to the next payments of Rent due and owing hereunder. If Lessor and Lessee are unable to agree that a Force Majeure or a Hotel Market Decline has occurred, within thirty (30)
days after the date of written certification from Lessee to Lessor that a Force Majeure and Hotel Market Decline has occurred (accompanied by reasonably detailed computations and documentation to support such assertion), the matter may be submitted
by either party to arbitration under Section 25.2 hereof for resolution (during which period Lessee shall continue to pay Base Rent and Percentage Rent as required under Section 3.1 of this Lease). If, within ninety (90) days (during which period
Lessee shall continue to pay Base Rent and Percentage Rent as required under Section 3.1 of this Lease) following the date of such written certification from Lessee (or the date of a decision of an arbitrator if required hereunder to determine that
a Force Majeure and Hotel Market Decline has occurred), Lessor and Lessee are unable to agree upon the amount of reduction in Base Rent and Percentage Rent contemplated hereby, Lessee shall have the option to terminate this Lease upon not less than
thirty (30) days prior written notice to Lessor. 
  
 (b) In the event of the occurrence of a National Economic Decline or a Regional Market Decline, Lessor and Lessee shall, in good faith, negotiate (i) possible modifications to the Base Rent and Percentage Rent to reduce such Base Rent and
Percentage Rent to recent market rates for hotel REIT leases for similar hotel properties in the Hotel’s Competitive Set, and (ii) possible modifications to the Base and Percentage Rent payable under each of the Other Leases for Other Hotels in
the same Region (as defined in the STR Reports) as the Hotel to reduce such Base Rent and Percentage Rent to recent market rates for hotel REIT leases for similar hotel properties in the Hotel’s Competitive Set, in each case retroactively
effective as of the first calendar month of the Term following the last day of the six month period during which such Regional Market Decline has occurred with the excess of Base Rent and Percentage Rent actually paid for such period over the
reduced Base Rent and Percentage Rent, plus interest thereon at the Base Rent, to 

  

 23 

 
be credited to the next payments of Rent due and owing hereunder. If, within thirty (30) days after the date of written certification from Lessee to Lessor
that a National Economic Decline and Regional Market Decline has occurred (accompanied by reasonably detailed computations and documentation to support such assertion), Lessor and Lessee are unable to agree that a National Economic Decline or
Regional Market Decline has occurred, the matter may be submitted by either party to arbitration under Section 25.2 hereof for resolution (during which period Lessee shall continue to pay Base Rent and Percentage Rent as required under Section 3.1
of this Lease). If, within ninety (90) days (during which period Lessee shall continue to pay Base Rent and Percentage Rent as required under Section 3.1 of this Lease) following the date of such initial written certification from Lessee (or the
date of a decision of an arbitrator if required hereunder to determine that a National Economic Decline and Regional Market Decline has occurred), Lessor and Lessee are unable to agree upon the amount of reduction in Base Rent and Percentage Rent
contemplated hereby, Lessee shall have the option, upon not less than sixty (60) days prior written notice to Lessor, to terminate all (but not less than all) of the Existing Leases of hotels in the same Region as the Hotel, including this Lease.

  
 3.6. Rent Adjustment: Basic Assumptions Incorrect.
Except to the extent that doing so would cause Lessor to recognize income other than “rents from real property” as defined in Section 856(d) of the Code, notwithstanding anything herein (other than Article 19) to the contrary, if (i) the
facts and circumstances underlying the documented, basic assumptions upon which both Lessor and Lessee have relied in determining the Base Rent, the Suite Revenue Breakpoint, and the Percentage Rent payable hereunder become materially incorrect
solely as a result of (A) a decision to re-brand the Hotel that is made after the Commencement Date, (B) the scope or cost of substantial renovations or other capital improvements to the Hotel, or (C) the implementation of any other hotel
repositioning strategies (that were not planned as of the Commencement Date) resulting in significant disruption of the operations of the Hotel (collectively, a “Repositioning”), and (ii) Lessor and Lessee so agree in writing, then Lessor
and Lessee shall, in good faith, negotiate modifications to the Base Rent, Suite Revenue Breakpoint and Percentage Rent to adjust (i.e., increase, decrease or reallocate among revenue categories) such Base Rent, Suite Revenue Breakpoint and
Percentage Rent to reflect such change in basic assumptions for the affected periods, using the same methodology and other basic assumptions as were initially utilized in determining the Base Rent, Suite Revenue Breakpoint and Percentage Rent
hereunder. If Lessor and Lessee are unable to agree, within thirty (30) days after the date of written certification from either Lessee or Lessor to the other party that a good faith dispute exists, as to the existence of the occurrence of a
Repositioning or the adjustments to be made to the amounts or percentages for the Base Rent, Suite Revenue Breakpoint and Percentage Rent hereunder as a result of any repositioning, the dispute may be submitted by either party to arbitration under
Section 25.2 hereof for resolution (during which period Lessee shall continue to pay Base Rent and Percentage Rent as required under Section 3.1 of this Lease); provided, however, that for purposes of applying the procedures in Section 25.3 to such
arbitration, the target deadline therein for concluding the arbitration shall be shortened from ninety (90) days to thirty (30) days. 
  

 24 

 ARTICLE 4 
 ANNUAL BUDGETS; BOOKS AND RECORDS 
  
 4.1. Annual Budget. Not later than thirty (30) days prior to the commencement of each Fiscal Year, Lessee shall submit the Annual Budget to Lessor. The Annual Budget shall contain the following, to the extent
included in the operating budgets and capital budgets provided to Lessee by Manager under the management agreement for the Hotel: 
  
 (a) Lessee’s reasonable estimate of Gross Revenues (including room rates and Suite Revenues), Gross Operating Expenses, and Gross
Operating Profits for the forthcoming Fiscal Year itemized on schedules on a quarterly basis as approved by Lessor and Lessee, as same may be revised or replaced from time to time by Lessee and approved by Lessor, together with the assumptions, in
narrative form, forming the basis of such schedules. 
  
 (b) An estimate of the amounts to be dedicated to the repair, replacement, or refurbishment of Furniture and Equipment. 
  
 (c) An estimate of any amounts Lessor will be required to provide for required or desirable capital improvements to the Hotel or any of
its components. 
  
 (d) A cash flow projection.

  
 (e) A business plan, which shall describe
business objectives and strategies for the forthcoming Fiscal Year, and shall include without limitation an analysis of the market area in which the Hotel competes, a comparison of the Hotel and its business with competitive hotels, an analysis of
categories of potential guests, and a description of sales and marketing activities designed to achieve and implement identified objectives and strategies. 
  
 4.2. Books and Reccords. Lessee shall keep full and adequate books of account and other records reflecting the results of operation of the Hotel on
an accrual basis, all in accordance with generally accepted accounting principles and the obligations of Lessee under this Lease. The books of account and all other records relating to or reflecting the operation of the Hotel shall be kept either at
the Hotel or at Lessee’s offices in Richmond, Virginia or at Manager’s central offices, and shall be available to Lessor and its representatives and its auditors or accountants, at all reasonable times, upon prior written notice to Lessee
and Manager, for examination, audit, inspection, and transcription; provided, however that Lessor may only inspect or audit records in Manager’s possession subject to the terms of Lessee’s access thereto under the Management Agreement. All
of such books and records pertaining to the Hotel including, without limitation, books of account, guest records and front office records, at all times shall be the property of Lessor and shall not be removed from the Hotel or Lessee’s offices
or Manager’s central offices (but may be moved among any of the foregoing) by Lessee without Lessor approval. 
  

 25 

 ARTICLE 5 
 IMPOSITIONS; HOTEL COSTS 
  
 5.1. Payment of Impositions. Subject to Section 12.2 (relating to permitted contests), Lessee will pay, or cause to be paid, all Impositions (other than Real Estate Taxes and Personal Property Taxes, which shall be paid by Lessor)
before any fine, penalty, interest or cost may be added for non-payment, such payments to be made directly to the taxing or other authorities where feasible, and will promptly furnish to Lessor copies of official receipts or other satisfactory proof
evidencing such payments. Lessee’s obligation to pay such Impositions shall be deemed absolutely fixed upon the date such Impositions become a lien upon the Leased Property or any part thereof. If any such Imposition may, at the option of the
taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in
installments and in such event, shall pay such installments during the Term hereof (subject to Lessee’s right of contest pursuant to the provisions of Section 12.2) as the same respectively become due and before any fine, penalty, premium,
further interest or cost may be added thereto. Lessor, at its expense, shall, to the extent required or permitted by applicable law, prepare and file all tax returns in respect of Lessor’s net income, gross receipts, sales and use, single
business, transaction privilege, rent, ad valorem, franchise taxes, Real Estate Taxes, Personal Property Taxes and taxes on its capital stock, and Lessee, at its expense, shall, to the extent required or permitted by applicable laws and regulations,
prepare and file all other tax returns and reports in respect of any Imposition as may be required by governmental authorities. If any refund shall be due from any taxing authority in respect of any Imposition paid by Lessee, the same shall be paid
over to or retained by Lessee if no Event of Default shall have occurred hereunder and be continuing. If an Event of Default shall have occurred and be continuing, any such refund shall be paid over to or retained by Lessor. Any such funds retained
by Lessor due to an Event of Default shall be applied as provided in Article 16. Lessor and Lessee shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as
may be necessary to prepare any required returns and reports. Lessee shall file all Personal Property Tax returns in such jurisdictions where it is legally required so to file. Lessor, to the extent it possesses the same, and Lessee, to the extent
it possesses the same, will provide the other party, upon request, with cost and depreciation records necessary for filing returns for any property classified as personal property. Where Lessor is legally required to file Personal Property Tax
returns, Lessee shall provide Lessor with copies of assessment notices in sufficient time for Lessor to file a protest. Lessor may, upon Notice to Lessee, at Lessor’s option and at Lessor’s sole expense, protest, appeal, or institute such
other proceedings (in its or Lessee’s name) as Lessor may deem appropriate to effect a reduction of real estate or personal property assessments for those Impositions to be paid by Lessor, and Lessee, at Lessor’s expense as aforesaid,
shall fully cooperate with Lessor in such protest, appeal, or other action. Lessor hereby agrees to indemnify, defend, and hold harmless Lessee from and against any claims, obligations, liabilities and loss against or incurred by Lessee in
connection with such cooperation. Billings for reimbursement of Personal Property Taxes by Lessee to Lessor shall be accompanied by copies of a bill therefor and payments thereof which identify the personal property with respect to which such
payments are made. Lessor, however, reserves the right to effect any such protest, appeal or other action and, upon 

  

 26 

 
Notice to Lessee, shall control any such activity, which shall then go forward at Lessor’s sole expense. Upon such Notice, Lessee, at Lessor’s
expense, shall cooperate fully with such activities. 
  
 5.2.
Notice of Impositions. Lessor shall give prompt Notice to Lessee of all Impositions payable by Lessee hereunder of which Lessor at any time has knowledge, provided that Lessor’s failure to give any such Notice shall in no way diminish
Lessee’s obligations hereunder to pay such Impositions, but such failure shall obviate any default hereunder for a reasonable time after Lessee receives Notice of any Imposition which it is obligated to pay during the first taxing period
applicable thereto. 
  
 5.3. Adjustment of Impositions.
Impositions imposed in respect of the tax-fiscal period during which the Term terminates shall be adjusted and prorated between Lessor and Lessee, whether or not such Imposition is imposed before or after such termination, and Lessee’s
obligation to pay its prorated share thereof after termination shall survive such termination. 
  
 5.4. Utility Charges. Lessee will be solely responsible for obtaining and maintaining utility services to the Leased Property and will pay or cause to be paid all charges for electricity, gas, oil, water, sewer
and other utilities used in the Leased Property during the Term. 
  
 5.5. Insurance Premiums. Lessee will pay or cause to be paid all premiums for the insurance coverage’s required to be maintained by it under Article 13. 
  
 5.6. Franchise Fees. Lessee will maintain in full force and effect, and pay or cause to be paid all fees and other
charges payable pursuant to, any Franchise Agreement with respect to the Hotel. 
  
 5.7. Ground Rent. In the event that Lessor’s interest in the Land is pursuant to a Ground Lease or sublease, Lessor shall be solely responsible for the payment of any ground rent, building rent or subrent,
as the case may be, due with respect to the Leased Property. 
  
 ARTICLE 6 
 LEASED PROPERTY; LESSEE’S PERSONAL PROPERTY 
  
 6.1. Ownership of the Leased Property. Lessee acknowledges that the
Leased Property is the property of Lessor and that Lessee has only the right to the possession and use of the Leased Property upon the terms and conditions of this Lease. 
  
 6.2. Lessee’s Personal Property. Lessee will acquire and maintain throughout the Term such Inventory as is
required to operate the Leased Property in the manner contemplated by this Lease. Lessee may (and shall as provided hereinbelow), at its expense, install, affix or assemble or place on any parcels of the Land or in any of the Leased Improvements,
any items of personal property (including Inventory) owned by Lessee. Lessee, at the commencement of the Term, and from time to time thereafter, shall provide Lessor with an accurate list of all such items of Lessee’s personal property
(collectively, the “Lessee’s Personal Property”). Lessee may, subject to the first sentence of this Section 6.2 and the conditions set forth below, remove any of Lessee’s Personal 

  

 27 

 
Property set forth on such list at any time during the Term or upon the expiration or any prior termination of the Term. All of Lessee’s Personal
Property, other than Inventory, not removed by Lessee within ten (10) days following the expiration or earlier termination of the Term shall be considered abandoned by Lessee and may be appropriated, sold, destroyed or otherwise disposed of by
Lessor without first giving Notice thereof to Lessee, without any payment to Lessee and without any obligation to account therefor. Lessee will, at its expense, restore the Leased Property to the condition required by Subsection 2.3(g), including
repair of all damage to the Leased Property caused by the removal of Lessee’s Personal Property, whether effected by Lessee or Lessor. Upon the expiration or earlier termination of the Term, Lessor or its designee shall have the option to
purchase all Inventory on hand at the Leased Property at the time of such expiration or termination for a sale price equal to the fair market value of such Inventory. Lessee may make such financing arrangements, title retention agreements, leases or
other agreements with respect to Lessee’s Personal Property as it sees fit provided that Lessee first advises Lessor of any such arrangement and such arrangement expressly provides that in the event of Lessee’s default thereunder, Lessor
(or its designee) may assume Lessee’s obligations and rights under such arrangement. 
  
 6.3. Lessor’s Lien. To the fullest extent permitted by applicable law, Lessor is granted a lien and security interest on all Lessee’s personal property now or hereinafter placed in or upon the Leased
Property, and such lien and security interest shall remain attached to such Lessee’s personal property until payment in full of all Rent and satisfaction of all of Lessee’s obligations hereunder; provided, however, Lessor shall subordinate
its lien and security interest to that of any non-Affiliate of Lessee which finances such Lessee’s personal property or any non-Affiliate conditional seller of such Lessee’s personal property, the terms and conditions of such subordination
to be satisfactory to Lessor in the exercise of reasonable discretion. Lessee shall, upon the request of Lessor, execute such financing statements or other documents or instruments reasonably requested by Lessor to perfect the lien and security
interests herein granted. Lessee hereby authorizes Lessor to execute and file financing statements signed only be a representative of Lessor covering the security interest of Lessor in Lessee’s personal property. 
  
 6.4. Lessor’s Option to Purchase Assets of Lessee. Effective on
not less than ninety (90) days’ prior Notice given at any time within one hundred eighty (180) days before the expiration of the Term, but not later than ninety (90) days prior to such expiration, or upon such shorter Notice period as shall be
appropriate if this Lease is terminated prior to its expiration date, Lessor shall have the option to purchase all (but not less than all) of the assets of Lessee, tangible and intangible, relating to the Leased Property (other than this Lease), at
the expiration or termination of this Lease for an amount (payable in cash on the expiration date of this Lease) equal to the fair market value thereof as appraised in conformity with Article 24, except that the appraisers need not be members of the
American Institute of Real Estate Appraisers, but rather shall be appraisers having at least ten (10) years’ experience in valuing similar assets. Notwithstanding any such purchase, Lessor shall obtain no rights to any trade name or logo used
in connection with the Franchise Agreement unless separate agreement as to such use is reached with the applicable franchisor. 
  

 28 

 ARTICLE 7 
 CONDITION AND USE OF LEASED PROPERTY 
  
 7.1. Condition of the Leased Property. Lessee acknowledges receipt and delivery of possession of the Leased Property. Lessee has examined and otherwise has knowledge of the condition of the Leased Property and
has found the same to be satisfactory for its purposes hereunder. Lessee is leasing the Leased Property “as is” in its present condition. Lessee waives any claim or action against Lessor in respect of the condition of the Leased Property.
LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY, OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT. Provided, however, to the extent
permitted by law, Lessor hereby assigns to Lessee all of Lessor’s rights to proceed against any predecessor in title (other than any Affiliate of Lessee, which conveyed the Property to Lessor) for breaches of warranties or representations or
for latent defects in the Leased Property. Lessor shall fully cooperate with Lessee in the prosecution of any such claim, in Lessor’s or Lessee’s name, all at Lessee’s sole cost and expense. Lessee hereby agrees to indemnify, defend
and hold harmless Lessor from and against any claims, obligations and liabilities against or incurred by Lessor in connection with such cooperation. 
  
 7.2. Use of the Leased Property. 
  
 (a) Lessee covenants that it will proceed with all due diligence and will exercise reasonable efforts to obtain and to maintain all
Licenses and other approvals needed to use and operate the Leased Property and the Hotel under applicable local, state and federal law. 
  
 (b) Lessee shall use or cause to be used the Leased Property only as a Springhill Suites by Marriott hotel facility, and for such other
uses as may be necessary or incidental to such use or such other use as otherwise approved by Lessor (the “Primary Intended Use”). Lessee shall not use the Leased Property or any portion thereof for any other use without the prior written
consent of Lessor, which consent may be granted, denied or conditioned in Lessor’s sole discretion. No use shall be made or permitted to be made of the Leased Property, and no acts shall be done, which will cause the cancellation or increase
the premium of any insurance policy covering the Leased Property or any part thereof (unless another adequate policy satisfactory to Lessor is available and Lessee pays any premium increase), nor shall Lessee sell or permit to be kept, used or sold
in or about the Leased Property any article which may be prohibited by law or fire underwriter’s regulations. Lessee shall, at its sole cost, comply with all of the requirements pertaining to the Leased Property of any insurance board,
association, organization or company necessary for the maintenance of insurance, as herein provided, covering the Leased Property and Lessee’s Personal Property. 
  

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 (c) Subject to the provisions of Articles 14, 15, 18 and 21, Lessee covenants and agrees
that during the Term it will (1) operate continuously the Leased Property as a hotel facility, (2) keep in full force and effect and comply with all the provisions of the Franchise Agreement and the Management Agreement, (3) not terminate or amend
the Franchise Agreement or the Management Agreement without the consent of Lessor (which shall not be unreasonably withheld or delayed), (4) maintain appropriate certifications and Licenses for such use and (5) seek to maximize the Gross Revenues
generated therefrom consistent with sound business practices. 
  
 (d) Lessee shall not commit or suffer to be committed any waste on the Leased Property, or in the Hotel, nor shall Lessee cause or permit any nuisance thereon. 
  
 (e) Lessee shall neither suffer nor permit the Leased
Property or any portion thereof, or Lessee’s Personal Property, to be used in such a manner as (1) might reasonably tend to impair Lessor’s (or Lessee’s, as the case may be) title thereto or to any portion thereof, or (2) may
reasonably make possible a claim or claims of adverse usage or adverse possession by the public, as such, or of implied dedication of the Leased Property or any portion thereof, except as necessary in the ordinary and prudent operation of the Hotel
on the Leased Property. 
  
 7.3. Lessor to Grant Easements,
Etc. Lessor will, from time to time, so long as no Event of Default has occurred and is continuing, at the request of Lessee and at Lessee’s cost and expense (but subject to the approval of Lessor, which approval shall not be unreasonably
withheld or delayed), (a) grant easements and other rights in the nature of easements with respect to the Leased Property to third parties, (b) release existing easements or other rights in the nature of easements which are for the benefit of the
Leased Property, (c) dedicate or transfer unimproved portions of the Leased Property for road, highway or other public purposes, (d) execute petitions to have the Leased Property annexed to any municipal corporation or utility district, (e) execute
amendments to any covenants and restrictions affecting the Leased Property and (f) execute and deliver to any Person any instrument appropriate to confirm or effect such grants, releases, dedications, transfers, petitions and amendments (to the
extent of its interests in the Leased Property), but only upon delivery to Lessor of an Officer’s Certificate stating that such grant, release, dedication, transfer, petition or amendment does not interfere with the proper conduct of the
business of Lessee on the Leased Property and does not materially reduce the value of the Leased Property. 
  
 ARTICLE 8 
 LESSEE’S COMPLIANCE WITH LAW; ENVIRONMENTAL COVENANTS

  
 8.1. Compliance with Legal and Insurance Requirements,
Etc. Subject to Subsection 8.3(b) below and Section 12.2 (relating to permitted contests), Lessee, at its expense, will promptly (a) comply with all applicable Legal Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the Leased Property (excluding any repair or restoration of any portion of the Leased Property required to be made by Lessor pursuant to Subsection 9.1(b) below, which repair shall be made by Lessor), and (b)
procure, maintain and comply with all appropriate Licenses and other authorizations required for any use of the Leased Property and Lessee’s Personal Property then being made, and for the proper erection, installation, operation and maintenance
of the Leased Property or any part thereof. 
  

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 8.2. Legal Requirement Covenants. 
  
 (a) Subject to Subsection 8.3(b) and Subsection 9.1(b) below, Lessee covenants and agrees that the Leased
Property and Lessee’s Personal Property shall not be used for any unlawful purpose, and that Lessee shall not permit or suffer to exist any unlawful use of the Leased Property by others. Lessee shall acquire and maintain all appropriate
licenses, certifications, permits and other authorizations and approvals needed to operate the Leased Property in its customary manner for the Primary Intended Use, and any other lawful use conducted on the Leased Property as may be permitted from
time to time hereunder. Lessee further covenants and agrees that Lessee’s use of the Leased Property and maintenance, alteration, and operation of the same, and all parts thereof, shall at all times conform to all Legal Requirements, unless the
same are finally determined by a court of competent jurisdiction to be unlawful (and Lessee shall cause all sub-tenants, invitees or others within its control so to comply with all Legal Requirements). Lessee may, however, upon prior Notice to
Lessor, contest the legality or applicability of any such Legal Requirement or any licensure or certification decision if Lessee maintains such action in good faith, with due diligence, without prejudice to Lessor’s rights hereunder, and at
Lessee’s sole expense. If by the terms of any such Legal Requirement compliance therewith pending the prosecution of any such proceeding may legally be delayed without the occurrence of any charge or liability of any kind, or the filing of any
lien, against the Hotel or Lessee’s leasehold interest therein and without subjecting Lessee or Lessor to any liability, civil or criminal, for failure so to comply therewith, Lessee may delay compliance therewith until the final determination
of such proceeding. If any lien, charge or civil or criminal liability would be incurred by reason of any such delay, Lessee, on the prior written consent of Lessor, which consent shall not be unreasonably withheld or delayed, may nonetheless
contest as aforesaid and delay as aforesaid provided that such delay would not subject Lessor to criminal liability and Lessee both (a) furnishes to Lessor security reasonably satisfactory to Lessor against any loss or injury by reason of such
contest or delay and (b) prosecutes the contest with due diligence and in good faith. 
  
 (b) As between Lessor and Lessee, Lessee is solely responsible for all liabilities or obligations of any kind with respect to employees at
the Leased Property during the Term. Without limiting the generality of the foregoing sentence, Lessee is solely responsible for any required compliance with the Worker Adjustment, Retraining and Notification Act of 1988 (the “WARN Act”)
or any similar state law applicable to the Leased Property; any required compliance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”); and all alleged and actual obligations and claims arising from or
relating to any employment agreement, collective bargaining agreement or employee benefit plans, any grievances, arbitration’s, or unfair labor practice charges, and relating to compliance with any applicable state or federal labor employment
law, including but not limited to all laws pertaining to discrimination, workers’ compensation, unemployment compensation, occupational safety and health, unfair labor practices, family and medical leave, and wages, hours or employee benefits.
Lessee agrees to indemnify and defend and hold harmless Lessor from and against any claims relating to any of the foregoing matters. Lessee further agrees to reimburse Lessor for any and all losses, damages, costs, expenses, liabilities and
obligations of any kind, including without limitation reasonable attorney’s fees and other legal costs and expenses, incurred by Lessor in connection with any of the foregoing matters. 
  

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 (c) Notwithstanding the Lessee’s obligations under Section 8.1 to obtain and
maintain all permits and licenses required for the use of the Leased Property, and without limiting any obligations of Lessee hereunder, if (i) applicable law requires that the owner (rather than a lessee) of a hotel be the licensee under the
required liquor license for the Hotel or (ii) the former owner of the Hotel is holding the liquor license and continuing to exercise management and supervision of the liquor services at the Hotel pending transfer of the license to Lessor or Lessee,
the Lessee shall indemnify and hold Lessor harmless from any liability, damages or claims (a) arising in connection with liquor operations at the Hotel during such period of time following the Commencement Date, except to the extent caused by
Lessor’s gross negligence or willful misconduct or (b) made by or through the former owner with respect to liquor operations at the Hotel following the Commencement Date. 
  
 8.3. Environmental Covenants. Lessor and Lessee (in addition to, and not in diminution of, Lessee’s covenants
and undertakings in Sections 8.1 and 8.2 hereof) covenant and agree as follows: 
  
 (a) At all times hereafter until the later of (i) such time as all liabilities, duties or obligations of Lessee to Lessor under the Lease
have been satisfied in full and (ii) such time as Lessee completely vacates the Leased Property and surrenders possession of the same to Lessor, Lessee shall fully comply with all Environmental Laws applicable to the Leased Property and the
operations thereon. Lessee agrees to give Lessor prompt Notice of (1) all Environmental Liabilities; (2) all pending, threatened or anticipated Proceedings, and all notices, demands, requests or investigations, relating to any Environmental
Liability or relating to the issuance, revocation or change in any Environmental Authorization required for operation of the Leased Property; (3) all Releases at, on, in, under or in any way affecting the Leased Property, or any Release known by
Lessee at, on, in or under any property adjacent to the Leased Property; and (4) all facts, events or conditions that could reasonably lead to the occurrence of any of the above-referenced matters. 
  
 (b) Lessor hereby agrees to defend, indemnify and save
harmless any and all Lessee Indemnified Parties from and against any and all Environmental Liabilities other than (i) Environmental Liabilities resulting from conditions disclosed in any environmental audit obtained by Lessor and provided to Lessee
prior to the execution of this Lease (the “Environmental Audit”), and (ii) Environmental Liabilities which were caused by the acts or negligent failures to act of Lessee. 
  
 (c) Lessee hereby agrees to defend, indemnify and save harmless any and all Lessor Indemnified Parties from
and against any and all Environmental Liabilities which were (i) resulting from conditions disclosed in the Environmental Audit, and (ii) caused by the acts or negligent failures to act of Lessee. 
  
 (d) If any Proceeding is brought against any Indemnified
Party in respect of an Environmental Liability with respect to which such Indemnified Party may claim indemnification under either Subsection 8.3(b) or (c), the Indemnifying Party, upon request, shall at its sole expense resist and defend such
Proceeding, or cause the same to be resisted and defended by counsel designated by the Indemnified Party and approved by the Indemnifying Party, which approval shall 

  

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not be unreasonably withheld or delayed; provided, however, that such approval shall not be required in the case of defense by counsel designated by any
insurance company undertaking such defense pursuant to any applicable policy of insurance. Each Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel will be at the sole expense of such Indemnified Party unless such counsel has been approved by the Indemnifying Party, which approval shall not be unreasonably withheld or delayed. The Indemnifying Party shall not be liable
for any settlement of any such Proceeding made without its consent, which shall not be unreasonably withheld or delayed, but if settled with the consent of the Indemnifying Party, or if settled without its consent (if its consent shall be
unreasonably withheld or delayed), or if there be a final, nonappealable judgment for an adversary party in any such Proceeding, the Indemnifying Party shall indemnify and hold harmless the Indemnified Parties from and against any liabilities and
loss incurred by such Indemnified Parties by reason of such settlement or judgment. 
  
 (e) At any time any Indemnified Party has reason to believe circumstances exist which could reasonably result in an Environmental
Liability, upon reasonable prior Notice to Lessee and Manager stating such Indemnified Party’s basis for such belief, an Indemnified Party shall be given immediate access to the Leased Property (including, but not limited to, the right to enter
upon, investigate, drill wells, take soil borings, excavate, monitor, test, cap and use available land for the testing of remedial technologies), Lessee’s employees, and to all relevant documents and records regarding the matter as to which a
responsibility, liability or obligation is asserted or which is the subject of any Proceeding; provided that such access may he conditioned or restricted as may be reasonably necessary to ensure compliance with law and the safety of personnel and
facilities or to protect confidential or privileged information. All Indemnified Parties requesting such immediate access and cooperation shall endeavor to coordinate such efforts to result in as minimal interruption of the operation of the Leased
Property as practicable. 
  
 (f) The
indemnification rights and obligations provided for in this Article 8 shall be in addition to any indemnification rights and obligations provided for elsewhere in this Lease. 
  
 (g) The indemnification rights and obligations provided for in this Article 8 shall survive the termination
of this Lease. 
  
 For purposes of this Section 8.3, all amounts
for which any Indemnified Party seeks indemnification shall be computed net of (a) any actual income tax benefit resulting therefrom to such Indemnified Party, (b) any insurance proceeds received (net of tax effects) with respect thereto, and (c)
any amounts recovered (net of tax effects) from any third parties based on claims the Indemnified Party has against such third parties which reduce the damages that would otherwise be sustained; provided that in all cases, the timing of the receipt
or realization of insurance proceeds or income tax benefits or recoveries from third parties shall be taken into account in determining the amount of reduction of damages. Each Indemnified Party agrees to use its reasonable efforts to pursue, or
assign to Lessee or Lessor, as the case may be, any claims or rights it may have against any third party that would materially reduce the amount of damages otherwise incurred by such Indemnified Party. 
  

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 Notwithstanding anything to the contrary contained in this Lease, if Lessor shall become entitled to the
possession of the Leased Property by virtue of the termination of the Lease or repossession of the Leased Property, then Lessor may assign its indemnification rights under this Section 8.3 (but not any other rights under this Section 8.3) to any
Person to whom Lessor subsequently transfers the Leased Property, subject to the following conditions and limitations, each of which shall be deemed to be incorporated into the terms of such assignment, whether or not specifically referred to
therein: 
  
 (i) The indemnification rights
referred to in this section may be assigned only if a known Environmental Liability then exists or if a Proceeding is then pending or, to the knowledge of Lessee or Lessor, then threatened with respect to the Leased Property; 
  
 (ii) Such indemnification rights shall be limited to
Environmental Liabilities relating to or specifically affecting the Leased Property; and 
  
 (iii) Any assignment of such indemnification rights shall be limited to the immediate transferee of Lessor, and shall not extend to any
such transferee’s successors or assigns. 
  
 ARTICLE
9 
 MAINTENANCE AND REPAIRS; ENCROACHMENTS AND RESTRICTIONS 
  
 9.1. Maintenance and Repairs. 
  
 (a) Lessee, at its sole expense, will keep the Leased Property, and all private roadways, sidewalks and
curbs appurtenant thereto that are under Lessee’s control, including windows and plate glass, mechanical, electrical and plumbing systems and equipment (including conduit and ductware), and non-load bearing interior walls, and parking lot
surfaces, in good order and repair, except (i) for ordinary wear and tear (whether or not the need for such repairs occurred as a result of Lessee’s use, any prior use, the elements or the age of the Leased Property, or any portion thereof) and
(ii) to the extent of damage caused by Lessor’s gross negligence or willful misconduct or that of its employees or agents, and, except as otherwise provided in Subsection 9.1(b), Article 14 or Article 15, with reasonable promptness, make all
necessary and appropriate repairs replacements, and improvements thereto of every kind and nature, whether interior or exterior ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement
of the Term of this Lease (concealed or otherwise), or required by any governmental agency having jurisdiction over the Leased Property, except as to the structural elements of the Leased Improvements. Lessee, however, shall be permitted to
prosecute claims against Lessor’s predecessors in title for breach of any representation or warranty or for any latent defects in the Leased Property to be maintained by Lessee unless Lessor is already diligently pursuing such a claim. All
repairs shall, to the extent reasonably achievable, be at least equivalent in quality to the original work. Lessee will not take or omit to take any action, the taking or omission of which might materially impair the value or the usefulness of the
Leased Property or any part thereof for its Primary Intended Use. 
  

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 (b) Notwithstanding Lessee’s obligations under Subsection 9.1(a) above, except to
the extent of damage caused by Lessee’s negligence or willful misconduct or that of its employees or agents, Lessor shall be required to bear the cost of maintaining any underground utilities and the structural elements of the Leased
Improvements, including exterior walls and the roof of the Hotel (but excluding windows and plate glass, mechanical, electrical and plumbing systems and equipment, including conduit and ductware, and non-load bearing walls, and parking lot
surfaces). Except as set forth in the preceding sentence and in Section 10.5, Lessor shall not under any circumstances be required to build or rebuild any improvement on the Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property, whether ordinary or extraordinary, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, in connection with this Lease, or to maintain the
Leased Property in any way. Lessee hereby waives, to the extent permitted by law, the right to make repairs at the expense of Lessor, pursuant to any law in effect at the time of the execution of this Lease or hereafter enacted, except following
default by Lessor under this Lease, to the extent of repairs (for which Lessor is obligated hereunder) required to be made in order for the Hotel, and Lessee’s use thereof, to comply with Lessee’s obligations under the Franchise Agreement
and the Management Agreement. Lessor shall have the right to give, record and post, as appropriate, notices of nonresponsibility under any mechanic’s lien laws now or hereafter existing. 
  
 (c) Nothing contained in this Lease and no action or
inaction by Lessor shall be construed as (1) constituting the request of Lessor, expressed or implied, to any contractor, subcontractor, laborer, materialman or vendor to or for the performance of any labor or services or the furnishing of any
materials or other property for the construction, alteration, addition, repair or demolition of or to the Leased Property or any part thereof, or (2) giving Lessee any right, power or permission to contract for or permit the performance of any labor
or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Lessor in respect thereof or to make any agreement that may create, or in any way be the basis for any right, title,
interest, lien, claim or other encumbrance upon the estate of Lessor in the Leased Property, or any portion thereof. 
  
 9.2. Encroachments, Restrictions, Etc. Lessor represents and warrants that the Leased Improvements do not materially encroach upon any property,
street or right-of-way adjacent to the Leased Property, or violate the agreements or conditions contained in any lawful restrictive covenant or other agreement affecting the Leased Property, or any part thereof, or impair the rights of others under
any easement or right-of-way to which the Leased Property is subject. Except to the extent that such representation and warranty is breached by Lessor, if any of the Leased Improvements, at any time hereafter, materially encroach upon any property,
street or right-of-way adjacent to the Leased Property, or violate the agreements or conditions contained in any lawful restrictive covenant or other agreement affecting the Leased Property, or any part thereof, or impair the rights of others under
any easement or right-of-way to which the Leased Property is subject, then promptly upon the request of Lessor or at the behest of any Person affected by any such encroachment, violation or impairment, Lessee shall, at its expense, subject to its
right to contest the existence of any encroachment, violation or impairment and in such case, in the event of an adverse final determination, either (a) obtain valid and effective waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation or impairment, 

  

 35 

 
whether the same shall affect Lessor or Lessee or (b) make such changes in the Leased Improvements, and take such other actions, as Lessee in the good faith
exercise of its judgment deems reasonably practicable to remove such encroachment, and to end such violation or impairment, including, if necessary, the alteration of any of the Leased Improvements, and in any event take all such actions as may be
necessary in order to be able to continue the operation of the Leased Improvements for the Primary Intended Use substantially in the manner and to the extent the Leased Improvements were operated prior to the assertion of such violation, impairment
or encroachment. Any such alteration shall be made in conformity with the applicable requirements of Article 10. Lessee’s obligations under this Section 9.2 shall be in addition to and shall in no way discharge or diminish any obligation of any
insurer under any policy of title or other insurance held by Lessor. 
  
 ARTICLE 10 
 ALTERATIONS AND IMPROVEMENTS; FF&E RESERVE 
  
 10.1. Alterations. After receiving approval of Lessor, which approval
shall not be unreasonably withheld or delayed, Lessee shall have the right to make such additions, modifications or improvements to the Leased Property from time to time as Lessee deems desirable for its permitted uses and purposes, provided that
such action will not significantly alter the character or purposes or significantly detract from the value or operating efficiency thereof and will not significantly impair the revenue-producing capability of the Leased Property or adversely affect
the ability of Lessee to comply with the provisions of this Lease. The cost of such additions, modifications or improvements to the Leased Property shall be paid by Lessee, and all such additions, modifications and improvements shall, without
payment by Lessor at any time, be included under the terms of this Lease and upon expiration or earlier termination of this Lease shall pass to and become the property of Lessor. 
  
 10.2. Salvage. All materials which are scrapped or removed in connection with the making of repairs required by
Articles 9 or 10 shall be or become the property of Lessor or Lessee depending on which party is paying for or providing the financing for such work. 
  
 10.3. Joint Use Agreements. If Lessee constructs additional improvements that are connected to the Leased Property or share maintenance facilities,
HVAC, electrical, plumbing or other systems, utilities, parking or other amenities, the parties shall enter into a mutually agreeable cross-easement or joint use agreement, the form of which has been approved in advance by Lessor, to make available
necessary services and facilities in connection with such additional improvements, to protect each of their respective interests in the properties affected, and to provide for separate ownership, use, and/or financing of such improvements.

  
 10.4. [Reserved]. 
  
 10.5. Furniture, Fixture and Equipment Allowance. Lessor shall be
obligated to pay Lessee, when and as required to meet the requirements of the Franchise Agreement and the Management Agreement for a reserve for periodic repair, replacement or refurbishing of furniture, fixtures and equipment that constitute Leased
Property, an amount equal up to five percent (5%) of Suite Revenues monthly. Upon written request by Lessee to Lessor stating the specific use to be 

  

 36 

 
made and the reasonable approval thereof by Lessor (or as otherwise required by the franchisor under the Franchise Agreement or Manager under the Management
Agreement), such reserve funds (and additional funds of Lessor, if necessary) shall be made available by Lessor for use by Lessee for replacement or refurbishing of furniture, fixtures and equipment that constitute Leased Property in connection with
the Primary Intended Use; provided, however, that no amounts made available under this Article shall be used to purchase property (other than “real property” within the meaning of Treasury Regulations Section 1.856-3(d)), to the extent
that doing so would cause Lessor to recognize income other than “rents from real property” as defined in Section 856(d) of the Code. Lessor’s obligation shall be cumulative, but not compounded, and any amounts that have accrued
hereunder shall be payable in future periods for such uses and in accordance with the procedure set forth herein. Lessee shall have no interest in any accrued obligation of Lessor hereunder after the termination of this Lease. 
  
 ARTICLE 11 
 COMPLIANCE WITH FRANCHISE 
  
 11.1. Compliance with Franchise Agreement and Management Agreement. To the extent any of the provisions of the Franchise Agreement or Management
Agreement impose a greater obligation on Lessee than the corresponding provisions of the Lease, then Lessee shall be obligated to comply with, and to take all reasonable actions necessary to prevent breaches or defaults under, the provisions of the
Franchise Agreement and the Management Agreement. It is the intent of the parties hereto that Lessee shall comply in every respect with the provisions of the Franchise Agreement and the Management Agreement so as to avoid any material default
thereunder during the term of this Lease. Lessee shall not terminate, extend or enter into any material modification of the Franchise Agreement or the Management Agreement without in each instance first obtaining Lessor’s prior written consent,
which shall not be unreasonably withheld. Lessor and Lessee agree to cooperate with each other in the event it becomes necessary to obtain a franchise extension or modification (or, at Lessor’s option, a new franchise) for the Leased Property,
and in any transfer of the Franchise Agreement or Management Agreement to Lessor or any designee of Lessor or any successor to Lessee upon the termination of this Lease. In the event of expiration or termination of a Franchise Agreement or
Management Agreement, for whatever reason, Lessor will have the right, in the exercise of its sole discretion, to approve any new Franchise Agreement or Management Agreement for the Hotel. 
  
 ARTICLE 12 
 PERMITTED LIENS AND CONTESTS 
  
 12.1. Liens. Subject to the provisions of Section 12.2 relating to permitted contests, Lessee will not directly or indirectly create or allow to
remain and will promptly discharge at its expense any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property or any attachment, levy, claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters included as exceptions in the title policy insuring Lessor’s interest in the Leased Property, (c) restrictions, liens and other encumbrances which are consented to in writing by Lessor or any easements granted pursuant to
the provisions of Section 7.3 of this Lease, (d) liens for those taxes upon Lessor or the Leased Property which Lessee is not required to pay hereunder, (e) subleases permitted by Article 20 hereof, (f) liens for Impositions or for sums 

  

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resulting from noncompliance with Legal Requirements so long as (1) the same are not yet payable or are payable without the addition of any fine or penalty
or (2) such liens are in the process of being contested as permitted by Section 12.2, (g) liens of mechanics, laborers, materialmen, suppliers or vendors for sums either disputed or not yet due provided that (1) the payment of such sums shall not be
postponed under any related contract for more than sixty (60) days after the completion of the action giving rise to such lien and such reserve or other appropriate provisions as shall be required by law or generally accepted accounting principles
shall have been made therefor or (2) any such liens are in the process of being contested as permitted by Section 12.2 hereof, and (h) any liens which are the responsibility of Lessor pursuant to the provisions of Article 22 of this Lease.

  
 12.2. Permitted Contests. Lessee shall have the right
to contest the amount or validity of any Imposition to be paid by Lessee or any Legal Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance, charge or claim (“Claims”) not otherwise permitted by Section 12.1, by
appropriate legal proceedings in good faith and with due diligence (but this shall not be deemed or construed in any way to relieve, modify or extend Lessee’s covenants to pay or its covenants to cause to be paid any such charges at the time
and in the manner as in this Section provided), on condition, however, that such legal proceedings shall not operate to relieve Lessee from its obligations hereunder and shall not cause the sale or risk the loss of any portion of the Leased
Property, or any part thereof, or cause Lessor or Lessee to be in default under any mortgage, deed of trust, security deed or other agreement encumbering the Leased Property or any interest therein. Upon the request of Lessor, Lessee shall either
(a) provide a bond or other assurance reasonably satisfactory to Lessor that all Claims which may be assessed against the Leased Property together with interest and penalties, if any, thereon will be paid, or (b) deposit within the time otherwise
required for payment with a bank or trust company as trustee upon terms reasonably satisfactory to Lessor, as security for the payment of such Claims, money in an amount sufficient to pay the same, together with interest and penalties in connection
therewith, as to all Claims which may be assessed against or become a Claim on the Leased Property, or any part thereof, in said legal proceedings. Lessee shall furnish Lessor and any lender of Lessor with reasonable evidence of such deposit within
five (5) days of the same. Lessor agrees to join in any such proceedings if the same be required legally to prosecute such contest of the validity of such Claims; provided, however, that Lessor shall not thereby be subjected to any liability or loss
for the payment of any costs or expenses in connection with any proceedings brought by Lessee; and Lessee covenants to indemnify and save harmless Lessor from any such liabilities, losses, costs or expenses. Lessee shall be entitled to any refund of
any Claims and such charges and penalties or interest thereon which have been paid by Lessee or paid by Lessor and for which Lessor has been fully reimbursed. In the event that Lessee fails to pay any Claims when due or to provide the security
therefor as provided in this Section and diligently to prosecute any contest of the same, Lessor may, upon ten (10) days’ advance Notice to Lessee, and Lessee’s failure to correct the same within such ten (10) day period, pay such charges
together with any interest and penalties and the same shall be repayable by Lessee to Lessor as Additional Charges at the next Payment Date provided for in this Lease; provided, however, that should Lessor reasonably determine that the giving of
such Notice would risk loss to the Leased Property or cause damage to Lessor, then Lessor shall give such Notice as is practical under the circumstances. Lessor reserves the right to contest any of the Claims at its expense not pursued by Lessee.
Lessor and Lessee agree to cooperate in coordinating the contest of any Claims. 
  

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 ARTICLE 13 
 INSURANCE REQUIREMENTS 
  
 13.1. General Insurance Requirements. During the Term of this Lease, Lessor and Lessee shall at all times keep the Leased Property insured with the kinds and amounts of insurance described below, or such other insurance coverage(s)
as may be required by the Franchise Agreement. This insurance shall be written by companies authorized to issue insurance in the State. The policies must name Lessor and/or Lessee, as applicable, as the insured or as an additional named insured, as
the case may be. Losses shall be payable to Lessor or Lessee as provided in this Lease. Any loss adjustment shall require the written consent of Lessor and Lessee, each acting reasonably and in good faith. Evidence of insurance shall be deposited
with Lessor. The policies on the Leased Property, including the Leased Improvements, Fixtures and Lessee’s Personal Property, shall include the following: 
  

(a) Lessor shall obtain and maintain, at its own expense: 
  
 (i) Building insurance on the “Special Form” (formerly “All Risk” form) (including
earthquake and flood in reasonable amounts as determined by Lessor) in an amount not less than 100% of the then full replacement cost thereof (as defined in Section 13.2) or such other amount which is acceptable to Lessor and Lessee, and personal
property insurance (on other than Lessee’s Personal Property) on the “Special Form” in the full amount of the replacement cost thereof; 
  
 (ii) Insurance for loss or damage (direct and indirect) from steam boilers, pressure vessels or similar apparatus, now or hereafter
installed in the Hotel, in the minimum amount of $5,000,000 or in such greater amounts as are then customary; and 
  
 (iii) Loss of income insurance on the “Special Form”, in the amount of one year of Base Rent and Additional Charges (to the
extent quantifiable) for the benefit of Lessor. 
  
 (b) Lessee shall obtain and maintain, at its own expense: 
  
 (i) Personal property insurance on Lessee’s Personal Property on the “Special Form” in the full amount of the replacement cost thereof; 
  
 (ii) Comprehensive general liability insurance, with amounts not less than $10,000,000 covering each of the
following: bodily injury, death, or property damage liability per occurrence, personal and advertising injury, general aggregate, products and completed operations, with respect to Lessor, and “all risk legal liability” (including liquor
law or “dram shop” liability, if liquor or alcoholic beverages are served on the Leased Property) with respect to Lessor and Lessee; 
  

 39 

 (iii) Insurance covering such other hazards and in such amounts as may be customary for
comparable properties in the area of the Leased Property and is available from insurance companies, insurance pools or other appropriate companies authorized to do business in the State at rates which are economically practicable in relation to the
risks covered, as may be reasonably requested by Lessor; 
  
 (iv) Fidelity bonds with limits and deductibles as may be reasonably requested by Lessor, covering Lessee’s employees in job classifications normally bonded under prudent hotel management practices in the United
States or otherwise required by law; 
  
 (v)
Worker’s compensation insurance coverage for all persons, if any, employed by Lessee on the Leased Premises, to the extent necessary to protect Lessor and the Leased Property against Lessee’s worker’s compensation claims, such
worker’s compensation insurance to be in accordance with the requirements of applicable local, state and federal law; 
  
 (vi) Vehicle liability insurance for owned, non-owned, and hired vehicles, in the amount of $5,000,000; and 
  
 (vii) Such other insurance as Lessor may reasonably request
for facilities such as the Leased Property and the operation thereof. 
  
 13.2. Replacement Cost. The term “full replacement cost” as used herein shall mean the actual replacement cost of the Leased Property requiring replacement from time to time including an increased cost of construction
endorsement, if available, and the cost of debris removal. In the event either party believes that full replacement cost (the then-replacement cost less such exclusions) has increased or decreased at any time during the Lease Term, it shall have the
right to have such full replacement cost re-determined. 
  
 13.3.
Waiver of Subrogation. All insurance policies carried by Lessor or Lessee covering the Leased Property, the Fixtures, the Hotel or Lessee’s Personal Property, including, without limitation, contents, fire and casualty insurance, shall
expressly waive any right of subrogation on the part of the insurer against the other party. The parties hereto agree that their policies will include such waiver clause or endorsement so long as the same are obtainable without extra cost, and in
the event of such an extra charge the other party, at its election, may pay the same, but shall not be obligated to do so. 
  
 13.4. Form Satisfactory, Etc. 
  
 (a) All of the policies of insurance referred to in this Article 13 to be maintained by Lessee shall be written in a form, with
deductibles and by insurance companies satisfactory to Lessor. Lessee shall pay all of the premiums therefor, and deliver such policies or certificates thereof to Lessor prior to their effective date (and, with respect to any renewal policy, thirty
(30) days prior to the expiration of the existing policy), and in the event of the failure of Lessee either to effect such insurance as herein called for or to pay the premiums therefor, or to deliver such 

  

 40 

 
policies or certificates thereof to Lessor at the times required, Lessor shall be entitled, but shall have no obligation, to effect such insurance and pay
the premiums therefor, and Lessee shall reimburse Lessor for any premium or premiums paid by Lessor for the coverages required of Lessee under this Article 13 upon written demand therefor, and Lessee’s failure to repay the same within thirty
(30) days after Notice of such failure from Lessor shall constitute an Event of Default within the meaning of Section 16.1. Each insurer mentioned in this Article 13 shall agree, by endorsement to the policy or policies issued by it, or by
independent instrument furnished to Lessor, that it will give to Lessor thirty (30) days’ written notice before the policy or policies in question shall be materially altered, allowed to expire or canceled. 
  
 (b) All of the policies of insurance referred to in this
Article 13 to be maintained by Lessor shall be written in a form, with deductibles and by insurance companies satisfactory to Lessee. Lessor shall pay all of the premiums therefor, and deliver such policies or certificates thereof to Lessee prior to
their effective date (and, with respect to any renewal policy, thirty (30) days prior to the expiration of the existing policy), and in the event of the failure of Lessor either to effect such insurance as herein called for or to pay the premiums
therefor, or to deliver such policies or certificates thereof to Lessee at the times required, Lessee shall be entitled, but shall have no obligation, to effect such insurance and pay the premiums therefor, and Lessor shall reimburse Lessee for any
premium or premiums paid by Lessee for the coverages required under this Section upon written demand therefor. Each insurer mentioned in this Article 13 shall agree, by endorsement to the policy or policies issued by it, or by independent instrument
furnished to Lessee, that it will give to Lessee thirty (30) days’ written notice before the policy or policies in question shall be materially altered, allowed to expire or canceled. 
  
 13.5. Increase in Limits. If either Lessor or Lessee at any time deems
the limits of the personal injury or property damage under the comprehensive public liability insurance then carried to be either excessive or insufficient, Lessor and Lessee shall endeavor in good faith to agree on the proper and reasonable limits
for such insurance to be carried and such insurance shall thereafter be carried with the limits thus agreed on until further change pursuant to the provisions of this Article 13. 
  
 13.6. Blanket Policy. Notwithstanding anything to the contrary contained in this Article 13. Lessee or Lessor may
bring the insurance provided for herein within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Lessee (or Manager) or Lessor; provided, however, that the coverage afforded to Lessor and Lessee will not
be reduced or diminished or otherwise be different from that which would exist under a separate policy meeting all other requirements of this Lease by reason of the use of such blanket policy of insurance, and provided further that the requirements
of this Article 13 are otherwise satisfied. 
  
 13.7. No
Separate Insurance. Lessee shall not, on Lessee’s own initiative or pursuant to the request or requirement of any third party, take out separate insurance concurrent in form or contributing in the event of loss with that required in this
Article to be furnished, or increase the amount of any then existing insurance by securing an additional policy or additional policies, unless all parties having an insurable interest in the subject matter of the insurance, including in all cases
Lessor, are included therein as additional insured, and the loss is payable under such additional separate insurance in the same manner as losses are payable under this Lease. Lessee 

  

 41 

 
shall immediately notify Lessor of any such separate insurance that Lessee has obtained or of the increase of any of the amounts of the then existing
insurance. 
  
 13.8. Reports On Insurance Claims. Lessee
shall promptly investigate and make a complete and timely written report to the appropriate insurance company as to all accidents, claims for damage relating to the ownership, operation, and maintenance of the Hotel, any damage or destruction to the
Hotel and the estimated cost of repair thereof and shall prepare any and all reports required by any insurance company in connection therewith. All such reports shall be timely filed with the insurance company as required under the terms of the
insurance policy involved, and a final copy of such report shall be furnished to Lessor. Lessee shall be authorized to adjust, settle, or compromise any insurance loss, or to execute proofs of such loss, in the aggregate amount of $25,000 or less,
with respect to any single casualty or other event. 
  
 ARTICLE 14 
 CASUALTY INSURANCE PROCEEDS; RECONSTRUCTION 
  
 14.1. Insurance Proceeds. Subject to the provisions of Section 14.4,
all proceeds payable by reason of any loss or damage to the Leased Property, or any portion thereof, insured under any policy of insurance required by Article 13 of this Lease, shall be paid to Lessor and held in trust by Lessor in an
interest-bearing account, shall be made available, if applicable, for reconstruction or repair, as the case may be, of any damage to or destruction of the Leased Property, or any portion thereof, and, if applicable, shall be paid out by Lessor from
time to time for the reasonable costs of such reconstruction or repair upon satisfaction of reasonable terms and conditions specified by Lessor. Any excess proceeds of insurance (and accrued interest) remaining after the completion of the
restoration or reconstruction of the Leased Property, as hereinafter set forth, shall be paid to Lessee. If neither Lessor nor Lessee is required or elects to repair and restore, and the Lease is terminated without purchase by Lessee as described in
Section 14.2, all such insurance proceeds shall be retained by Lessor. All salvage resulting from any risk covered by insurance shall belong to Lessor. 
  
 14.2. Reconstruction in the Event of Damage or Destruction Covered by Insurance. 
  
 (a) Except as provided in Section 14.6, if during the Term the Leased Property is totally or partially
destroyed by a risk covered by the insurance described in Article 13 and the Hotel thereby is rendered Unsuitable for its Primary Intended Use, Lessee shall, at Lessee’s option, either (1) restore the Hotel to substantially the same condition
as existed immediately before the damage or destruction and otherwise in accordance with the terms of the Lease, or (2) offer to acquire the Leased Property from Lessor for a purchase price equal to the Rejectable Offer Price of the Leased Property.
If Lessee restores the Hotel, the insurance proceeds shall be paid out by Lessor from time to time for the reasonable costs of such restoration upon satisfaction of reasonable terms and conditions, and any excess proceeds remaining after such
restoration shall be paid to Lessee. If Lessee acquires the Leased Property, Lessee shall receive the insurance proceeds. If Lessor does not accept Lessee’s offer so to purchase the Leased Property within ninety (90) days, Lessee may withdraw
its offer to purchase the Leased Property and, if so withdrawn, Lessee may terminate the Lease with respect to the Leased Property without further liability hereunder and Lessor shall be entitled to retain all insurance proceeds. 
  

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 (b) Except as provided in Section 14.6, if during the Term the Leased Property is
partially destroyed by a risk covered by the insurance described in Article 13, but the Hotel is not thereby rendered Unsuitable for its Primary Intended Use, Lessee shall restore the Hotel to substantially the same condition as existed immediately
before the damage or destruction and otherwise in accordance with the terms of the Lease. Such damage or destruction shall not terminate this Lease; provided, however, that if Lessee cannot within a reasonable time obtain all necessary government
approvals, including building permits, licenses and conditional use permits, after diligent efforts to do so, to perform all required repair and restoration work and to operate the Hotel for its Primary Intended Use in substantially the same manner
as that existing immediately prior to such damage or destruction and otherwise in accordance with the terms of the Lease, Lessee may offer to purchase the Leased Property for a purchase price equal to the Rejectable Offer Price of the Leased
Property, determined without regard to such damage or destruction if insurance proceeds are available to restore the Hotel. If Lessee makes such offer and Lessor does not accept the same, Lessee shall withdraw such offer, in which event this Lease
shall remain in full force and effect and Lessee shall immediately proceed to restore the Hotel to substantially the same condition as existed immediately before such damage or destruction and otherwise in accordance with the terms of the Lease. If
Lessee restores the Hotel, the insurance proceeds shall be paid out by Lessor from time to time for the reasonable costs of such restoration upon satisfaction of reasonable terms and conditions specified by Lessor, and any excess proceeds remaining
after such restoration shall be paid to Lessee. 
  
 (c) If the cost of the repair or restoration exceeds the amount of proceeds received by Lessor from the insurance it maintains as required under Article 13, Lessee shall be obligated to contribute any excess amounts needed to restore the
Hotel. Such difference shall be paid by Lessee to Lessor promptly after Lessee receives Lessor’s written invoice therefor, to be held in trust in an interest-bearing account, together with any other insurance proceeds, for application to the
cost of repair and restoration. 
  
 (d) If Lessor
accepts Lessee’s offer to purchase the Leased Property under this Article, this Lease shall terminate as to the Leased Property upon payment of the purchase price, and Lessor shall remit to Lessee all insurance proceeds pertaining to the Leased
Property being held in trust by Lessor. 
  
 14.3.
Reconstruction in the Event of Damage or Destruction Not Covered by Insurance. Except as provided in Section 14.6, if during the Term the Hotel is totally or materially destroyed by a risk not covered by the insurance described in Article 13,
whether or not such damage or destruction renders the Hotel Unsuitable for its Primary Intended Use, Lessee at its option shall either, (a) at Lessee’s sole cost and expense, restore the Hotel to substantially the same condition it was in
immediately before such damage or destruction and such damage or destruction shall not terminate this Lease, or (b) offer to purchase the Leased Property for a purchase price equal to the Rejectable Offer Price of the Leased Property without regard
to such damage or destruction. If such damage or destruction is not material, Lessee shall restore the Hotel to substantially the same condition as existed immediately before the damage or destruction and otherwise in accordance with the terms of
the Lease. If Lessor does not accept Lessee’s offer so to purchase the Leased Property within ninety (90) days, Lessee may withdraw its offer to purchase the Leased Property 

  

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and, if so withdrawn, Lessee may terminate the Lease with respect to the Leased Property without further liability hereunder. 
  
 14.4. Lessee’s Property. All insurance proceeds payable by reason
of any loss of or damage to any of Lessee’s Personal Property shall be paid to Lessee; provided, however, no such payments shall diminish or reduce the insurance payments otherwise payable to or for the benefit of Lessor hereunder. 

 
 14.5. Abatement of Rent. Any damage or destruction due to casualty
notwithstanding, this Lease shall remain in full force and effect and Lessee’s obligation to make rental payments and to pay all other charges required by this Lease shall remain unabated during the first three (3) months of any period required
for the applicable repair and restoration. Thereafter, Base Rent shall be equitably abated. 
  
 14.6. Damage Near End of Term. Notwithstanding any provisions of Section 14.2 or 14.3 appearing to the contrary, if damage to or destruction of the Hotel rendering it unsuitable for its Primary Intended Use
occurs during the last twenty-four (24) months of the Term, then Lessor or Lessee shall have the right to terminate this Lease by giving Notice, respectively, to Lessee or Lessor within thirty (30) days after the date of damage or destruction,
whereupon all accrued Rent shall be paid immediately, and this Lease shall automatically terminate five (5) days after the date of such Notice. 
  
 14.7. Waiver. Lessee hereby waives any statutory rights of termination that may arise by reason of any damage or destruction of the Hotel that
Lessor is obligated to restore or may restore under any of the provisions of this Lease. 
  
 ARTICLE 15 
 CONDEMNATION; AWARD ALLOCATION 
  
 15.1. Definitions. 
  
 (a) “Award” means all compensation, sums or
anything of value awarded, paid or received on a total or partial Condemnation. 
  
 (b) “Condemnation” means a Taking resulting from (1) the exercise of any governmental power, whether by legal proceedings
or otherwise, by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending. 
  
 (c) “Condemnor” means any public or
quasi-public authority, or private corporation or individual, having the power of Condemnation. 
  
 (d) “Date of Taking” means the date the Condemnor has the right to possession of the property being condemned.

  

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 15.2. Parties’ Rights and Obligations. If during the Term there is any Condemnation of all or
any part of the Leased Property or any interest in this Lease, the rights and obligations of Lessor and Lessee shall be determined by this Article 15. 
  
 15.3. Total Taking. If title to the fee of the whole of the Leased Property is condemned by any Condemnor, this Lease shall cease and terminate as
of the Date of Taking by the Condemnor. If title to the fee of less than the whole of the Leased Property is so taken or condemned, which nevertheless renders the Leased Property Unsuitable or Uneconomic for its Primary Intended Use, Lessee and
Lessor shall each have the option, by Notice to the other, at any time prior to the Date of Taking, to terminate this Lease as of the Date of Taking. Upon such date, if such Notice has been given, this Lease shall thereupon cease and terminate. All
Base Rent, Percentage Rent and Additional Charges paid or payable by Lessee hereunder shall be apportioned as of the Date of Taking, and Lessee shall promptly pay Lessor such amounts. 
  
 15.4. Allocation of Award. The total Award made with respect to the Leased Property or for loss of rent, or for
Lessor’s loss of business beyond the Term, shall be solely the property of and payable to Lessor. Any Award made for loss of Lessee’s business during the remaining Term, if any, for the taking of Lessee’s Personal Property, or for
removal and relocation expenses of Lessee in any such proceedings shall be the sole property of and payable to Lessee. In any Condemnation proceedings Lessor and Lessee shall each seek its Award in conformity herewith, at its respective expense;
provided, however, Lessee shall not initiate, prosecute or acquiesce in any proceedings that may result in a diminution of any Award payable to Lessor. 
  
 15.5. Partial Taking. If title to less than the whole of the Leased Property is condemned, and the Leased Property is not Unsuitable for its
Primary Intended Use, and not Uneconomic for its Primary Intended Use, or if Lessee or Lessor is entitled but neither elects to terminate this Lease as provided in Section 15.3, Lessee at its cost shall with all reasonable dispatch restore the
untaken portion of any Leased Improvements so that such Leased Improvements constitute a complete architectural unit of the same general character and condition (as nearly as may be possible under the circumstances) as the Leased Improvements
existing immediately prior to the Condemnation. Lessor shall contribute to the cost of restoration that part of its Award specifically allocated to such restoration, if any, together with severance and other damages awarded for the taken Leased
Improvements; provided, however, that the amount of such contribution shall not exceed such cost. In the event of such a partial Taking, this Lease shall not terminate, but the Base Rent shall be abated in the manner and to the extent that is fair,
just and equitable to both Lessee and Lessor, taking into consideration, among other relevant factors, the number of usable rooms, the amount of square footage, or the revenues affected by such partial Taking. If Lessor and Lessee are unable to
agree upon the amount of such abatement within thirty (30) days after such partial Taking, the matter may be submitted by either party to a court of competent jurisdiction for resolution. 
  
 15.6. Temporary Taking. If the whole or any part of the Leased Property (other than the fee) or of Lessee’s
interest under this Lease is condemned by any Condemnor for its temporary use or occupancy (which shall mean a period not to exceed two years), this Lease shall not terminate by reason thereof, and Lessee shall continue to pay, in the manner and at
the terms herein specified, the full amounts of Base Rent and Additional Charges. In addition, Lessee shall pay Percentage Rent at a rate equal to the average Percentage Rent during the last three (3) preceding Fiscal Years 

  

 45 

 
(or if three (3) Fiscal Years shall not have elapsed, the average during the preceding Fiscal Years). Except only to the extent that Lessee may be prevented
from so doing pursuant to the terms of the order of the Condemnor, Lessee shall continue to perform and observe all of the other terms, covenants, conditions and obligations hereof on the part of Lessee to be performed and observed, as though such
Condemnation had not occurred. In the event of any Condemnation as in this Section 15.6 described, the entire amount of any Award made for such Condemnation allocable to the Term of this Lease, whether paid by way of damages, rent or otherwise,
shall be paid to Lessee. Lessee covenants that upon the termination of any such period of temporary use or occupancy it will, at its sole cost and expense (subject to Lessor’s contribution as set forth below), restore the Leased Property as
nearly as may be reasonably possible to the condition in which the same was immediately prior to such Condemnation, unless such period of temporary use or occupancy extends beyond the expiration of the Term, in which case Lessee shall not be
required to make such restoration. If restoration is required hereunder, Lessor shall contribute to the cost of such restoration that portion of its entire Award that is specifically allocated to such restoration in the judgment or order of the
court, if any, and Lessee shall fund the balance of such costs in a manner reasonably satisfactory to Lessor. 
  
 ARTICLE 16 
 DEFAULT BY LESSEE; LESSOR’S REMEDIES 

 
 16.1. Events of Default. If any one or more of the following events
(individually, an “Event of Default”) occurs: 
  
 (a) if an Event of Default occurs under any other lease between Lessor or any Affiliate of Lessor and Lessee or any Affiliate of Lessee; or 
  
 (b) if Lessee fails to make payment of the Base Rent within ten (10) days after the same becomes due and
payable; or 
  
 (c) if Lessee fails to make
payment of Percentage Rent when the same becomes due and payable and such condition continues for a period of thirty (30) days after the end of the applicable quarter; or 
  
 (d) if Lessee fails to observe or perform any other term, covenant or condition of this Lease and such
failure is not cured by Lessee within a period of thirty (30) days after receipt by Lessee of Notice thereof from Lessor, unless such failure cannot with due diligence be cured within a period of thirty (30) days, in which case it shall not be
deemed an Event of Default if Lessee proceeds promptly and with due diligence to cure the failure and diligently completes the curing thereof provided, however, in no event shall such cure period extend beyond ninety (90) days after such Notice; or

  
 (e) if Lessee shall file a petition in
bankruptcy or reorganization for an arrangement pursuant to any federal or state bankruptcy law or any similar federal or state law, or shall be adjudicated a bankrupt or shall make an assignment for the benefit of creditors or shall admit in
writing its inability to pay its debts generally as they become due, or if a petition or answer proposing the adjudication of Lessee as a bankrupt or its reorganization pursuant to any federal or 

  

 46 

 
state bankruptcy law or any similar federal or state law shall be filed in any court and Lessee shall be adjudicated a bankrupt and such adjudication shall
not be vacated or set aside or stayed within sixty (60) days after the entry of an order in respect thereof, or if a receiver of Lessee or of the whole or substantially all of the assets of Lessee shall be appointed in any proceeding brought by
Lessee or if any such receiver, trustee or liquidator shall be appointed in any proceeding brought against Lessee and shall not be vacated or set aside or stayed within sixty (60) days after such appointment; or 
  
 (f) if Lessee is liquidated or dissolved, or begins
proceedings toward such liquidation or dissolution, or, in any manner, permits the sale or divestiture of substantially all of its assets; or 
  
 (g) if, except as expressly permitted herein, the estate or interest of Lessee in the Leased Property or any part thereof is voluntarily
or involuntarily transferred, assigned, conveyed, levied upon or attached in any proceeding (unless Lessee is contesting such lien or attachment in good faith in accordance with Section 12.2 hereof) or there is a Change of Control of Lessee; or

  
 (h) if, except as a result of damage,
destruction or a partial or complete Condemnation as contemplated by this Lease, Lessee voluntarily ceases operations on the Leased Property for a period in excess of thirty (30) days; or 
  
 (i) if an event of default has been declared by the
franchisor under the Franchise Agreement with respect to the Hotel as a result of any action or failure to act by Lessee or any Person with whom Lessee contracts for management services at the Hotel, and such default is not cured by the earlier of
(A) ten (10) days following notice from Lessor or (B) such earlier date as is required for Lessee to avoid termination of the Franchise Agreement by the franchisor; 
  
 then, and in any such event, Lessor may exercise one or more remedies available to it herein or at law or in equity, including but not
limited to its right to terminate this Lease by giving Lessee not less than ten (10) days’ Notice of such termination. 
  
 If litigation is commenced with respect to any alleged default under this Lease, the prevailing party in such litigation shall receive, in addition to its
damages incurred, such sum as the court shall determine as its reasonable attorneys’ fees, and all costs and expenses incurred in connection therewith. 
  
 No Event of Default (other than a failure to make a payment of money) shall be deemed to exist under clause (d) during any time the curing thereof is
prevented by an Unavoidable Delay, provided that upon the cessation of such Unavoidable Delay, Lessee remedies such default or Event of Default without further delay. 
  
 16.2. Surrender. If an Event of Default occurs (and the event giving rise to such Event of Default has not been cured
within the curative period relating thereto as set forth in Section 16.1) and is continuing, whether or not this Lease has been terminated pursuant to Section 16.1, Lessee shall, if requested by Lessor so to do, immediately surrender to Lessor the
Leased Property including, without limitation, any and all books, records, files, licenses, permits and keys relating 

  

 47 

 
thereto, and quit the same and Lessor may enter upon and repossess the Leased Property by summary proceedings, ejectment or otherwise, and may remove Lessee
and all other Persons and any and all personal property from the Leased Property, subject to rights of any hotel guests and to any requirement of law. Lessee hereby waives any and all requirements of applicable laws for service of notice to re-enter
the Leased Property. Lessor shall be under no obligation to, but may if it so chooses, relet the Leased Property or otherwise mitigate Lessor’s damages. 
  
 16.3. Damages. Neither (a) the termination of this Lease, (b) the repossession of the Leased Property, (c) the failure of Lessor to relet the
Leased Property, nor (d) the reletting of all or any portion thereof, shall relieve Lessee of its liability and obligations hereunder, all of which shall survive any such termination, repossession or reletting. In the event of any such termination,
Lessee shall forthwith pay to Lessor all Rent due and payable with respect to the Leased Property to and including the date of such termination. 
  
 Lessee shall forthwith pay to Lessor, at Lessor’s option, as and for liquidated and agreed current damages for Lessee’s default,
either: 
  
 (i) Without termination of
Lessee’s right to possession of the Leased Property, each installment of Rent (including Percentage Rent as determined below) and other sums payable by Lessee to Lessor under the Lease as the same becomes due and payable, which Rent and other
sums shall bear interest at the Overdue Rate, and Lessor may enforce, by action or otherwise, any other term or covenant of this Lease; or 
  
 (ii) the sum of: 
  
 (A) the unpaid Rent which had been earned at the time of termination, repossession or reletting, and 
  
 (B) the worth at the time of termination, repossession or
reletting of the amount by which the unpaid Rent for the balance of the Term after the time of termination, repossession or reletting, exceeds the amount of such rental loss that Lessee proves could be reasonably avoided and as reduced for rentals
received after the time of termination, repossession or reletting, if and to the extent required by applicable law, and 
  
 (C) any other amount necessary to compensate Lessor for all the detriment proximately caused by Lessee’s failure to perform its
obligations under this Lease or which in the ordinary course of things, would be likely to result therefrom. 
  
 The worth at the time of termination, repossession or reletting of the amount referred to in subparagraph (B) is computed by discounting
such amount at the discount rate of the Federal Reserve Bank of New York at the time of award plus one percent (1%). Percentage Rent for the purposes of this Section 16.3 shall be a sum equal to (i) the average of the annual amounts of the
Percentage Rent for the three (3) Fiscal Years immediately preceding the Fiscal Year in 

  

 48 

 
which the termination, re-entry or repossession takes place, or (ii) if three (3) Fiscal Years shall not have elapsed, the average of the Percentage Rent
during the preceding Fiscal Years during which the Lease was in effect, or (iii) if one Fiscal Year has not elapsed, the amount derived by annualizing the Percentage Rent from the effective date of this Lease. 
  
 16.4. Waiver. If this Lease is terminated pursuant to Section 16.1,
Lessee waives, to the extent permitted by applicable law, (a) any right to a trial by jury in the event of summary proceedings to enforce the remedies set forth in this Article 16, and (b) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt and Lessor waives any right to “pierce the corporate veil” of Lessee other than to the extent funds shall have been fraudulently paid by Lessee to any Affiliate of Lessee following a default
resulting in an Event of Default. 
  
 16.5. Application of
Funds. Any payments received by Lessor under any of the provisions of this Lease during the existence or continuance of any Event of Default shall be applied to Lessee’s obligations in the order that Lessor may determine or as may be
prescribed by the laws of the State. 
  
 16.6. Lessor’s
Right to Cure Lessee’s Default. If Lessee fails to make any payment or to perform any act required to be made or performed under this Lease, including, without limitation, Lessee’s failure to comply with the terms of any Franchise
Agreement, and fails to cure the same within the relevant time periods provided in Section 16.1, Lessor, without waiving or releasing any obligation of Lessee, and without waiving or releasing any obligation or default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of Lessee, and may, to the extent permitted by law, enter upon the Leased Property for such purpose and, subject to Section 16.4, take all
such action thereon as, in Lessor’s opinion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and expenses (including, without limitation, reasonable
attorneys’ fees and expenses, in each case to the extent permitted by law) so incurred, together with a late charge thereon (to the extent permitted by law) at the Overdue Rate from the date on which such sums or expenses are paid or incurred
by Lessors, shall be paid by Lessee to Lessor on demand. The obligations of Lessee and rights of Lessor contained in this Article shall survive the expiration or earlier termination of this Lease. 
  
 ARTICLE 17 
 DEFAULT BY LESSOR; LESSEE’S REMEDIES 
  
 17.1. Breach by Lessor. It shall be a breach of this Lease if Lessor fails to observe or perform any term, covenant or condition of this Lease on
its part to be performed and such failure continues for a period of thirty (30) days after Notice thereof from Lessee, unless such failure cannot with due diligence be cured within a period of thirty (30) days, in which case such failure shall not
be deemed to continue if Lessor, within such thirty (30) day period, proceeds promptly and with due diligence to cure the failure and diligently completes the curing thereof; provided, however, that such default shall be cured by Lessor in any event
prior to the date on which the default becomes an event of default under the terms of the Franchise Agreement for the Hotel. The time within which Lessor shall be obligated to cure any such failure also shall be subject to 

  

 49 

 
extension of time due to the occurrence of any Unavoidable Delay. If Lessor fails to cure any such breach within the grace period described above, Lessee,
without waiving or releasing any obligations hereunder, and in addition to all other remedies available to Lessee at law or in equity, may purchase the Leased Property from Lessor for a purchase price equal to the then Fair Market Value. If Lessee
elects to purchase the Leased Property it shall deliver a Notice thereof to Lessor specifying a settlement date to occur not less than ninety (90) days subsequent to the date of such Notice on which it shall purchase the Leased Property, and the
same shall be thereupon conveyed in accordance with the provisions of Section 17.3; provided, however, that Lessor shall pay the cost of Lessee’s title insurance and all closing costs associated with such purchase by Lessee following default by
Lessor. 
  
 17.2. Lessee’s Right to Cure. Subject to
the provisions of Section 17.1, if Lessor breaches any covenant to be performed by it under this Lease, Lessee, after Notice to and demand upon Lessor, without waiving or releasing any obligation hereunder, and in addition to all other remedies
available to Lessee, may (but shall be under no obligation at any time thereafter to) make such payment or perform such act for the account and at the expense of Lessor. All sums so paid by Lessee and all costs and expenses (including, without
limitation, reasonable attorneys’ fees) so incurred, together with interest thereon at the Overdue Rate from the date on which such sums or expenses are paid or incurred by Lessee, shall be paid by Lessor to Lessee on demand or, following entry
of a final, nonappealable judgment against Lessor for such sums, may be offset by Lessee against the Base Rent and/or Percentage Rent payments next accruing or coming due. The rights of Lessee hereunder to cure and to secure payment from Lessor in
accordance with this Section 17.2 shall survive the termination of this Lease with respect to the Leased Property. 
  
 17.3. Provisions Relating to Purchase of the Leased Property by Lessee. If Lessee purchases the Leased Property from Lessor pursuant to any of the
terms of this Lease, Lessor shall, upon receipt from Lessee of the applicable purchase price, together with full payment of any unpaid Rent due and payable with respect to any period ending on or before the date of the purchase, deliver to Lessee an
appropriate limited or special warranty deed or other conveyance conveying the entire interest of Lessor in and to the Leased Property to Lessee free and clear of all encumbrances other than (a) those that Lessee has agreed hereunder to pay or
discharge, (b) those mortgage liens, if any, that Lessee has agreed in writing to accept and to take title subject to, (c) those liens and encumbrances subject to which the Leased Property was conveyed to Lessor, to the extent not released in
connection with the transactions contemplated by this Lease, (d) encumbrances, easements, licenses or rights of way required to be imposed on the Leased Property under Section 7.3, and (e) any other encumbrances permitted to be imposed on the Leased
Property under the provisions of Article 22 that are assumable at no cost to Lessee or to which Lessee may take subject without cost to Lessee. The difference between the applicable purchase price and the total of the encumbrances assumed or taken
subject to shall be paid in cash to Lessor or as Lessor may direct, in federal or other immediately available funds, except as otherwise mutually agreed by Lessor and Lessee. All expenses of such conveyance, including, without limitation, the cost
of title examination or title insurance, if desired by Lessee, Lessee’s attorneys’ fees incurred in connection with such conveyance and release, and one-half of any transfer taxes and recording fees, shall be paid by Lessee. Lessor shall
pay one-half of any transfer taxes and recording fees and its attorney’s fees. 
  

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 ARTICLE 18 
 INDEMNIFICATION 
  
 18.1.
Indemnification. 
  
 (a) Notwithstanding
the existence of any insurance, and without regard to the policy limits of any such insurance or self-insurance, but subject to Section 13.3 and Section 8.3, Lessee will protect, indemnify, hold harmless and defend Lessor from and against all
liabilities, losses, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses), to the extent permitted by law, imposed upon or incurred by or asserted
against Lessor Indemnified Parties by reason of: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about the Leased Property or adjoining sidewalks, including without limitation any claims under liquor
liability, “dram shop” or similar laws, (b) any use, misuse, non-use, condition, management, maintenance or repair by Lessee or any of its agents, employees or invitees of the Leased Property or Lessee’s Personal Property during the
Term or any litigation, proceeding or claim by governmental entities or other third parties to which a Lessor Indemnified Party is made a party or participant related to such use, misuse, non-use, condition, management, maintenance, or repair
thereof by Lessee or any of its agents, employees or invitees, including any failure of lessee or any of its agents, employees or invitees to perform any obligations under this Lease or imposed by applicable law (other than arising out of
Condemnation proceedings), (c) any Impositions that are the obligations of Lessee pursuant to the applicable provisions of this Lease, (d) any failure on the part of Lessee to perform or comply with any of the terms of this Lease, and (e) the
non-performance of any of the terms and provisions of any and all existing and future subleases of the Leased Property to be performed by the landlord thereunder. 
  
 (b) Notwithstanding the existence of any insurance, and without regard to the policy limits of any such
insurance or self-insurance, but subject to Section 13.3 and Section 8.3, Lessor shall indemnify, save harmless and defend Lessee Indemnified Parties from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses imposed upon or incurred by or asserted against Lessee Indemnified Parties as a result of (a) the gross negligence or willful misconduct of Lessor arising in connection with this Lease or (b) any failure on the part of Lessor to perform
or comply with any of the terms of this Lease. Any amounts that become payable by an Indemnifying Party under this Section shall be paid within ten (10) days after liability therefor on the part of the Indemnifying Party is determined by litigation
or otherwise, and if not timely paid, shall bear a late charge (to the extent permitted by law) at the Overdue Rate from the date of such determination to the date of payment. An Indemnifying Party, at its expense, shall contest, resist and defend
any such claim, action or proceeding asserted or instituted against the Indemnified Party. The Indemnified Party, at its expense, shall be entitled to participate in any such claim, action, or proceeding, and the Indemnifying Party may not
compromise or otherwise dispose of the same without the consent of the Indemnified Party, which may not be unreasonably withheld or delayed. Nothing herein shall be construed as indemnifying a Lessor Indemnified Party against its own (or
Lessor’s) grossly negligent acts or omissions or willful misconduct. 
  

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 (c) Lessee’s or Lessor’s liability for a breach of the provisions of this
Article shall survive any termination of this Lease. 
  
 ARTICLE 19 
 REIT REQUIREMENTS AND RESTRICTIONS 
  
 19.1. Personal Property Limitation. Anything contained in this Lease to the contrary notwithstanding, the average of
the adjusted tax bases of the items of personal property that are leased to Lessee under this Lease at the beginning and at the end of any Fiscal Year shall not exceed fifteen percent (15%) of the average of the aggregate adjusted tax bases of the
Leased Property at the beginning and at the end of such Fiscal Year. This Section 19.1 is intended to ensure that the Rent qualifies as “rents from real property,” within the meaning of Section 856(d) of the Code, or any similar or
successor provisions thereto, and shall be interpreted in a manner consistent with such intent. 
  
 19.2. Sublease Rent Limitation. Anything contained in this Lease to the contrary notwithstanding, Lessee shall not sublet the Leased Property on
any basis such that the rental to be paid by the sublessee thereunder would be based, in whole or in part, on either (a) the income or profits derived by the business activities of the sublessee, or (b) any other formula such that any portion of the
Rent would fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto. 
  
 19.3. Sublease Tenant Limitation. Anything contained in this Lease to the contrary notwithstanding, Lessee shall not
sublease the Leased Property to any Person in which Lessor owns, directly or indirectly, a ten percent (10%) or more interest, within the meaning of Section 856(d)(2)(B) of the Code, or any similar or successor provisions thereto. 
  
 19.4. Lessee Ownership Limitations. 
  
 (a) Anything contained in this Lease to the contrary
notwithstanding, neither Lessee nor an Affiliate of Lessee shall acquire, directly or indirectly, a ten percent (10%) or more interest in Lessor within the meaning of Section 856(d)(2)(B) of the Code, or any similar or successor provision thereto.

  
 (b) Lessee shall not own, operate, manage or
have any interest in any hotel or motel property in which Lessor or an Affiliate of Lessor does not have an interest, pursuant to this Lease or another lease, agreement or arrangement with Lessor or an Affiliate of Lessor. Lessor agrees to notify
Lessee promptly of the location of any hotel or motel property in which Lessor or an Affiliate of Lessor has an interest. 
  
 19.5. Lessee Officer and Employee Limitation. If a Person serves as both (a) a director of Lessee (or any Person who furnishes or renders services
to the tenants of the Leased Property, or manages or operates the Leased Property) and (b) an officer (or employee) of the Lessor that Person shall not receive any compensation for serving as a director of Lessee (or any Person who furnishes or
renders services to the tenants of the Leased Property, or manages or operates the 

  

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Leased Property). Furthermore, if a Person serves as both (a) a director of the Lessor and (b) an officer (or employee) of Lessee (or any Person who
furnishes or renders services to the tenants of the Leased Property, or manages or operates the Leased Property), that Person shall not receive any compensation for serving as a director of the Lessor. No Person, other than Glade M. Knight, shall
serve as an officer (or employee) of both Lessor and Lessee. 
  
 19.6. Payments to Affiliates of Lessee. During the Term, Lessee shall not pay, or become obligated to pay, any fees to any Affiliate of Lessee in connection with the Hotel, other than fees that are subordinated to the payments that
are required to be made to Lessor pursuant to this Lease. 
  
 ARTICLE 20 
 SUBLETTING AND ASSIGNMENT 
  
 20.1. Subletting and Assignment. Subject to the provisions of Article 19 and Section 20.2 and any other express
conditions or limitations set forth herein, Lessee may, but only with the consent of Lessor (which shall not be unreasonably withheld or delayed), (a) assign this Lease or sublet all or any part of the Leased Property to an Affiliate of Lessee, or
(b) sublet any retail or restaurant portion of the Leased Improvements in the normal course of the Primary Intended Use; provided that any subletting to any party other than an Affiliate of Lessee shall not individually as to any one such
subletting, or in the aggregate, materially diminish the actual or potential Percentage Rent payable under this Lease. In the case of a subletting, the sublessee shall comply with the provisions of Section 20.2, and in the case of an assignment, the
assignee shall assume in writing and agree to keep and perform all of the terms of this Lease on the part of Lessee to be kept and performed and shall be, and become, jointly and severally liable with Lessee for the performance thereof.
Notwithstanding the above, Lessee may assign the Lease to an Affiliate without the consent of Lessor; provided that any such assignee assumes in writing and agrees to keep and perform all of the terms of the Lease on the part of Lessee to be kept
and performed and shall be and become jointly and severally liable with Lessee for the performance thereof. In case of either an assignment or subletting made during the Term, Lessee shall remain primarily liable, as principal rather than as surety,
for the prompt payment of the Rent and for the performance and observance of all of the covenants and conditions to be performed by Lessee hereunder. An original counterpart of each such sublease and assignment and assumption, duly executed by
Lessee and such sublessee or assignee, as the case may be, in form and substance satisfactory to Lessor, shall be delivered promptly to Lessor. 
  
 20.2. Attornment. Lessee shall insert in each sublease permitted under Section 20.1 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights of Lessor hereunder, (b) if this Lease terminates before the expiration of such sublease, the sublessee thereunder will, at Lessor’s option, attorn to Lessor and
waive any right the sublessee may have to terminate the sublease or to surrender possession thereunder as a result of the termination of this Lease, and (c) if the sublessee receives a Notice from Lessor or Lessor’s assignees, if any, stating
that an uncured Event of Default exists under this Lease, the sublessee shall thereafter be obligated to pay all rentals accruing under said sublease directly to the party giving such Notice, or as such party may direct. All rentals received from
the sublessee by Lessor or Lessor’s assignees, if any, as the case may be, shall be credited against the amounts owing by Lessee under this Lease. 
  

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 20.3. Conveyance by Lessor. Lessor may assign this Lease to any purchaser of the Leased Property.
If Lessor or any successor owner of the Leased Property conveys the Leased Property in accordance with the terms hereof other than as security for a debt, and the grantee or transferee of the Leased Property expressly assumes all obligations of
Lessor hereunder arising or accruing from and after the date of such conveyance or transfer, Lessor or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of Lessor under this Lease
arising or accruing from and after the date of such conveyance or other transfer as to the Leased Property and all such future liabilities and obligations shall thereupon be binding upon the new owner. 
  
 ARTICLE 21 
 QUIET ENJOYMENT; RISK OF LOSS 
  
 21.1. Quiet Enjoyment. So long as Lessee pays all Rent as the same becomes due and complies with all of the terms of this Lease and performs its
obligations hereunder, in each case within the applicable grace periods, if any, Lessee shall peaceably and quietly have, hold and enjoy the Leased Property for the Term hereof, free of any claim or other action by Lessor or anyone claiming by,
through or under Lessor, but subject to all liens and encumbrances subject to which the Leased Property was conveyed to Lessor, to the extent not released in connection with the transactions contemplated by this Lease, or hereafter consented to by
Lessee or provided for herein. Notwithstanding the foregoing, Lessee shall have the right by separate and independent action to pursue any claim it may have against Lessor as a result of a breach by Lessor of the covenant of quiet enjoyment
contained in this Section. 
  
 21.2. Risk of Loss. During
the Term, the risk of loss or of decrease in the enjoyment and beneficial use of the Leased Property in consequence of the damage or destruction thereof by fire, the elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than those caused by Lessor and those claiming from, through or under Lessor) is assumed by Lessee, and, in the absence of gross negligence, willful misconduct or breach of this Lease by Lessor
pursuant to Section 17.1, Lessor shall in no event be answerable or accountable therefor, nor shall any of the events mentioned in this Section entitle Lessee to any abatement of Rent except as specifically provided in this Lease. 
  
 ARTICLE 22 
 LESSOR MORTGAGES; SUBORDINATION OF LEASE 
  
 22.1. Lessor May Grant Liens. Without the consent of Lessee, Lessor may, subject to the terms and conditions set forth below in this Section 22.1,
from time to time, directly or indirectly, create or otherwise cause to exist any lien, encumbrance or title retention agreement (“Encumbrance”) upon the Leased Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing. Upon the request of Lessor, Lessee shall subordinate this Lease to the lien of a new mortgage on the Leased Property, on the condition that the proposed mortgagee executes a non-disturbance
agreement recognizing this Lease in accordance with the provisions of Section 22.2, and agreeing, for itself and its successors and assigns, to comply with the provisions of this Article 22. 
  

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 22.2. Subordination of Lease. This Lease and Lessee’s interest hereunder shall at all times
be subject and subordinate to the lien and security title of any deeds to secure debt, deeds of trust, mortgages, or other Encumbrances heretofore or hereafter granted by Lessor or which otherwise encumber or affect the Leased Property and to any
and all advances to be made thereunder and to all renewals, modifications, consolidations, replacements, substitutions, and extensions thereof (all of which are herein called the “Mortgage”); provided, however, that with respect to any
Mortgage hereafter granted, such subordination is conditioned upon delivery to Lessee of a non-disturbance agreement which provides that Lessee shall not be disturbed in its possession of the Leased Property hereunder following a foreclosure of such
Mortgage (or delivery of a deed-in-lieu-of-foreclosure) and that the holder of such Mortgage or the purchaser at a foreclosure sale (or grantee under such deed-in-lieu-of-foreclosure) shall perform all obligations of Lessor under this Lease. In
confirmation of such subordination, however, Lessee shall, at Lessor’s request, promptly execute, acknowledge and deliver any instrument which may be required to evidence subordination to any Mortgage and to the holder thereof. In the event of
Lessee’s failure to deliver such subordination and if the Mortgage does not change any term of the Lease, Lessor may, in addition to any other remedies for breach of covenant hereunder, execute, acknowledge, and deliver the instrument as the
agent or attorney-in-fact of Lessee, and Lessee hereby irrevocably constitutes Lessor its attorney-in-fact for such purpose, Lessee acknowledging that the appointment is coupled with an interest and is irrevocable. 
  
 ARTICLE 23 
 ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS; INSPECTION RIGHTS 
  
 23.1. Estoppel Certificates; Financial Statements. 
  
 (a) At any time and from time to time upon not less than ten (10) days Notice by Lessor, Lessee will furnish
to Lessor an Officer’s Certificate certifying that this Lease is unmodified and in full force and effect (or that this Lease is in full force and effect as modified and setting forth the modifications), the date to which the Rent has been paid,
whether to the knowledge of Lessee there is any existing default or Event of Default exists thereunder by Lessor or Lessee, and such other information as may be reasonably requested by Lessor. Any such certificate furnished pursuant to this Section
may be relied upon by Lessor, any lender and any prospective purchaser of the Leased Property. 
  
 (b) Lessee will furnish the following statements to Lessor: 
  
 (i) with reasonable promptness, such information respecting the financial condition and affairs of Lessee
including audited financial statements prepared by the same certified independent accounting firm that prepares the returns for Lessor or such other accounting firm as may be approved by Lessor, as Lessor may request from time to time; and

  
 (ii) the most recent Consolidated Financials
of Lessee within forty-five (45) days after each quarter of any Fiscal Year (or, in the case of the final quarter in 

  

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any Fiscal Year, the most recent audited Consolidated Financials of Lessee within ninety (90) days); and 
  
 (iii) on or about the 20th day of each month, a detailed
profit and loss statement for the Leased Property for the preceding month, a balance sheet for the Leased Property as of the end of the preceding month, and a detailed accounting of revenues for the Leased Property for the preceding month, each in
form acceptable to Lessor. 
  
 Lessee will permit the inclusion of such statements
in any filings required to be made by Lessor under the Securities Act of 1933 and the Securities Exchange Act of 1934. 
  
 (c) At any time and from time to time upon not less than ten (10) days Notice by Lessee, Lessor will furnish to Lessee or to any Person
designated by Lessee an estoppel certificate certifying that this Lease is unmodified and in full force and effect (or that this Lease is in full force and effect as modified and setting forth the modifications), the date to which Rent has been
paid, whether to the knowledge of Lessor there is any existing default or Event of Default on Lessee’s part hereunder, and such other information as may be reasonably requested by Lessee. 
  
 (d) Lessee shall at all times be Solvent. Furthermore, as of
the date of this Agreement, Lessee agrees to establish and maintain, in a form satisfactory to Lessor, a funding commitment in an amount equal to $2,000,000 upon which Lessee may draw upon to pay to Lessor Base Rent, Percentage Rent and Additional
Charges. Repayment of the funding commitment shall be subordinated to all payments of Base Rent, Percentage Rent and additional charges under all Leases between Lessor and Lessee. 
  
 23.2. Lessor’s Right to Inspect. Lessee shall permit Lessor and its authorized representatives as frequently as
reasonably requested by Lessor to inspect the Leased Property and Lessee’s accounts and records pertaining thereto and make copies thereof, during usual business hours upon reasonable advance Notice, subject only to any business confidentiality
requirements reasonably requested by Lessee. 
  
 ARTICLE
24 
 APPRAISERS 
  
 24.1. Appraisers. If it becomes necessary to determine the Fair Market Value or Fair Market Rental of the Leased Property for any purpose of this
Lease, the party required or permitted to give Notice of such required determination shall include in the Notice the name of a Person selected to act as appraiser on its behalf. Within ten (10) days after Notice, Lessor (or Lessee, as the case may
be) shall by Notice to Lessee (or Lessor, as the case may be) appoint a second Person as appraiser on its behalf. The appraisers thus appointed, each of whom must be a member of the American Institute of Real Estate Appraisers (or any successor
organization thereto) with at least five (5) years’ experience in the State appraising property similar to the Leased Property, shall, within forty-five (45) days after the date of the Notice appointing the first appraiser, proceed to appraise
the Leased Property to determine the Fair Market Value or Fair Market Rental thereof as of the relevant date (giving effect to the impact, if any, of inflation from the date of their decision to 

  

 56 

 
the relevant date); provided, however, that if only one appraiser shall have been so appointed, then the determination of such appraiser shall be final and
binding upon the parties. To the extent consistent with sound appraisal practice as then existing at the time of any such appraisal, such appraisal shall be made on a basis consistent with the basis on which the Leased Property was appraised for
purposes of determining its Fair Market Value at the time the Leased Property was acquired by Lessor. If two (2) appraisers are appointed and if the difference between the amounts so determined does not exceed five percent (5%) of the lesser of such
amounts, then the Fair Market Value or Fair Market Rental shall be an amount equal to fifty percent (50%) of the sum of the amounts so determined. If the difference between the amounts so determined exceeds five percent (5%) of the lesser of such
amounts, then such two appraisers shall have twenty (20) days to appoint a third appraiser. If no such appraiser shall have been appointed within such twenty (20) days or within ninety (90) days of the original request for a determination of Fair
Market Value or Fair Market Rental, whichever is earlier, either Lessor or Lessee may apply to any court having jurisdiction to have such appointment made by such court. Any appraiser appointed by the original appraisers or by such court shall be
instructed to determine the Fair Market Value or Fair Market Rental within forty-five (45) days after appointment of such appraiser. The determination of the appraiser which differs most in the terms of dollar amount from the determinations of the
other two appraisers shall be excluded, and fifty percent (50%) of the sum of the remaining two determinations shall be final and binding upon Lessor and Lessee as the Fair Market Value or Fair Market Rental of the Leased Property, as the case may
be. This provision for determining by appraisal shall be specifically enforceable to the extent such remedy is available under applicable law, and any determination hereunder shall be final and binding upon the parties except as otherwise provided
by applicable law. Lessor and Lessee shall each pay the fees and expenses of the appraiser appointed by it and each shall pay one-half of the fees and expenses of the third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal. 
  
 ARTICLE 25

 ARBITRATION AND DISPUTE RESOLUTION PROCEDURES 
  
 25.1. Arbitration. Except as set forth in Section 25.2, in each case specified in this Lease in which it shall become
necessary to resort to arbitration, such arbitration shall be determined as provided in this Section 25.1. The party desiring such arbitration shall give Notice to that effect to the other party, and an arbitrator shall be selected by mutual
agreement of the parties, or if they cannot agree within thirty (30) days of such notice, by appointment made by the American Arbitration Association (“AAA”) from among the members of its panels who are qualified and who have experience in
resolving matters of a nature similar to the matter to be resolved by arbitration. 
  
 25.2. Alternative Arbitration. In each case specified in this Lease for a matter to be submitted to arbitration pursuant to the provisions of this Section 25.2, Lessor and Lessee will agree upon a nationally
recognized accounting firm with a hospitality division of which neither party nor their Affiliates of Lessor is a significant client to serve as arbitrator of such dispute within fifteen (15) days after written demand for arbitration is received or
sent by either party. In the event the parties fail to make such designation within such fifteen (15) day period, Lessor shall be entitled to designate any nationally recognized accounting firm with a hospitality division of which Lessor or an
Affiliate of Lessor is not a significant client to serve as arbitrator of such dispute within fifteen (15) days after the parties fail to timely make such designation. In the event Lessor 

  

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fails to make such designation within such fifteen (15) day period, Lessee shall be entitled to designate any nationally recognized accounting firm with
hospitality division of which Lessee or an Affiliate of Lessee is not a significant client to serve as arbitrator of such dispute within fifteen (15) days after the parties fail to timely make such designation. In the event no nationally recognized
accounting firm satisfying such qualifications is available and willing to serve as arbitrator, the arbitrator shall instead be administered as set forth in Section 25.1. 
  
 25.3. Arbitration Procedure. In any arbitration commenced pursuant to Sections 25.1 or 25.2, a single arbitrator
shall be designated and shall resolve the dispute. The arbitrator’s decision shall be binding on all parties, shall not be subject to further review or appeal except as otherwise allowed by applicable law and may be filed in and enforced by a
court of competent jurisdiction. Upon the failure of either party (the “non-complying party”) to comply with his decision, the arbitrator shall be empowered, at the request of the other party, to order such compliance by the non-complying
party and to supervise or arrange for the supervision of the non-complying party’s obligation to comply with the arbitrator’s decision, all at the expense of the non-complying party. To the maximum extent practicable, the arbitrator and
the parties, and the AAA if applicable, shall take any action necessary to insure that the arbitration shall be concluded within ninety (90) days of the filing of such dispute. The fees and expenses of the arbitrator shall be shared equally by
Lessor and Lessee except as otherwise specified above in this Section 25.3. Unless otherwise agreed in writing by the parties or required by the arbitrator or AAA, if applicable, arbitration proceedings hereunder shall be conducted in the State.
Notwithstanding formal rules of evidence, each party may submit such evidence as each party deems appropriate to support its position and the arbitrator shall have access to and right to examine all books and records of Lessee and Lessor regarding
the Hotel during the arbitration. 
  
 ARTICLE 26

 NOTICES 
  
 26.1. Notices. All notices, demands, requests, consents approvals and other communications (“Notice” or “Notices”) hereunder
shall be in writing and hand-delivered, sent by FedEx or other nationally recognized overnight courier service, or mailed (by registered or certified mail, return receipt requested and postage prepaid), if to Lessor at 10 South Third Street,
Richmond, Virginia 23219, Attn: Glade M. Knight and if to Lessee at 10 South Third Street, Richmond, Virginia 23219, Attn: Glade M. Knight or to such other address or addresses as either party may hereafter designate. Personally delivered Notice
shall be effective upon receipt, and Notice given by overnight courier service or by mail shall be complete at the time of deposit with the courier service or in the U.S. Mail system, respectively, but any prescribed period of Notice and any right
or duty to do any act or make any response within any prescribed period or on a date certain after the service of such Notice given by overnight courier service shall be extended one (1) day and by mail shall be extended five (5) days. 

 
 ARTICLE 27 
 MISCELLANEOUS 
  
 27.1. No Waiver. No failure by Lessor or Lessee to insist upon the strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and 

  

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no acceptance of full or partial payment of Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term.
To the extent permitted by law, no waiver of any breach shall affect or alter this Lease, which shall continue in full force and effect with respect to any other then existing or subsequent breach. 
  
 27.2. Remedies Cumulative. To the extent permitted by law and unless
otherwise provided herein to the contrary, each legal, equitable or contractual right, power and remedy of Lessor or Lessee now or hereafter provided either in this Lease or by statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power and remedy and the exercise or beginning of the exercise by Lessor or Lessee of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Lessor or Lessee
of any or all of such other rights, powers and remedies. 
  
 27.3.
Waiver of Trial by Jury. LESSOR AND LESSEE EACH WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF A PROCEEDING WITH RESPECT TO THIS LEASE, INCLUDING, WITHOUT LIMITATION, SUMMARY PROCEEDINGS
TO ENFORCE THE REMEDIES SET FORTH IN ARTICLE 16. 
  
 27.4.
Acceptance of Surrender. No surrender to Lessor of this Lease or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Lessor and no act by Lessor or
any representative or agent of Lessor, other than such a written acceptance by Lessor, shall constitute an acceptance of any such surrender. 
  
 27.5. No Merger of Title. There shall be no merger of this Lease or of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly: (a) this Lease or the leasehold estate created hereby or any interest in this Lease or such leasehold estate and (b) the fee estate in the Leased Property. 
  
 27.6. Waiver of Presentment, Etc. Lessee waives all presentments,
demands for payment and for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance and waives all notices of the existence, creation, or incurring of new or additional obligations, except
as expressly granted herein. 
  
 27.7. Action for Damages.
Except as otherwise expressly provided herein, in any suit or other claim brought by either party seeking damages against the other party for breach of its obligations under this Lease, the party against whom such claim is made shall be liable to
the other party only for actual damages and not for consequential, punitive or exemplary damages. 
  
 27.8. Lease Assumption in Bankruptcy Proceeding. If an Event of Default occurs and Lessee has filed or has had filed against it a petition in
bankruptcy or for reorganization or other relief pursuant to the federal bankruptcy code, Lessee shall promptly move the court presiding over the proceeding to assume this Lease pursuant to 11 U.S.C. §365, without seeking an extension of the
time to file said motion. 
  

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 27.9. Enforceability. Anything contained in this Lease to the contrary notwithstanding, all claims
against, and liabilities of, Lessee or Lessor arising prior to any date of termination of this Lease shall survive such termination. If any term or provision of this Lease or any application thereof is invalid or unenforceable, the remainder of this
Lease and any other application of such term or provisions shall not be affected thereby. If any late charges or any interest rate provided for in any provision of this Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the maximum permissible rate. Neither this Lease nor any provision hereof may be changed, waived, discharged or terminated except by a written instrument in recordable form signed
by Lessor and Lessee. All the terms and provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof. This Lease shall be governed by and construed in accordance with the laws of the State, but not including its conflicts of laws rules. 
  
 27.10. Memorandum of Lease. Lessor and Lessee shall promptly, upon the
request of either party, enter into a short form memorandum of this Lease, in form suitable for recording under the laws of the State in which reference to this Lease, and all options contained herein, shall be made. Lessee shall pay all costs and
expenses of recording such memorandum of this Lease. 
  

 60 

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

			
	 “LESSOR”

	
	APPLE SIX HOSPITALITY TEXAS, L.P., a Virginia limited partnership
		
	 By:
	 	Apple Six Texas General, Inc., a Virginia corporation, its general partner
		
	 By:
	 	 /s/ Justin G. Knight

	 	 	 Justin G. Knight, Vice President

	
	 “LESSEE”

	
	APPLE SIX SERVICES, L.P., a Virginia limited partnership
		
	 By:
	 	 Apple Six Services General, Inc., a Virginia
 corporation, its general partner

		
	 By:
	 	 /s/ Justin G. Knight

	 	 	 Justin G. Knight, Vice President

  

 61 

 EXHIBIT A 
 LEGAL DESCRIPTION 
  

 62 

 SCHEDULE 2.1 
 COMMENCEMENT DATE 
  
 May 28, 2004

  

 63 

 SCHEDULE 3.1(a) 
 BASE RENT 
  
 $1,279,389.00

  

 64 

 SCHEDULE 3.1(b) 
 SUITE REVENUE BREAKPOINT 
  

																																		
	 Quarters

	  	2004

	  	2005

	  	2006

	  	2007

	  	2008

	  	2009

	  	2010

	  	2011

	  	2012

	  	2013

	  	2014

	 1st Quarter
	  	$	0	  	$	185,137	  	$	188,840	  	$	192,617	  	$	196,469	  	$	200,398	  	$	204,406	  	$	208,495	  	$	212,664	  	$	216,918	  	$	221,256
	 2nd Quarter
	  	$	71,206	  	$	370,274	  	$	377,680	  	$	385,233	  	$	392,938	  	$	400,797	  	$	408,813	  	$	416,989	  	$	425,329	  	$	433,835	  	$	442,512
	 3rd Quarter
	  	$	254,309	  	$	555,412	  	$	566,520	  	$	577,850	  	$	589,407	  	$	601,195	  	$	613,219	  	$	625,484	  	$	637,993	  	$	650,753	  	$	663,768
	 4th Quarter
	  	$	433,342	  	$	740,549	  	$	755,360	  	$	770,467	  	$	785,876	  	$	801,594	  	$	817,626	  	$	833,978	  	$	850,658	  	$	867,671	  	$	885,024

  

 65Exhibit 10.4

 Exhibit 10.4 
  
 COURTYARD – MYRTLE BEACH (BROADWAY), SC 
  

MANAGEMENT AGREEMENT 
  
 by and between 
  
 COURTYARD MANAGEMENT CORPORATION 
  
 as “MANAGER” 
  
 and

  
 APPLE SIX HOSPITALITY MANAGEMENT, INC. 
  
 as “OWNER” 
  
 Dated as of June 8, 2004 
  

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page

	 ARTICLE I APPOINTMENT OF MANAGER
	  	 
			
	 1.01
	 	 APPOINTMENT
	  	2
	 1.02
	 	 MANAGEMENT OF THE HOTEL
	  	2
	 1.03
	 	 SERVICES PROVIDED BY MANAGER
	  	4
	 1.04
	 	 EMPLOYEES
	  	4
	 1.05
	 	 OWNER’S RIGHT TO INSPECT
	  	5
	 1.06
	 	 REGULAR MEETINGS
	  	5
	 1.07
	 	 SYSTEM STANDARDS
	  	5
	 1.08
	 	 LIMITATIONS ON MANAGER’S AUTHORITY
	  	5
		
	 ARTICLE II TERM
	  	 
			
	 2.01
	 	 TERM
	  	6
	 2.02
	 	 PERFORMANCE TERMINATION
	  	6
		
	 ARTICLE III COMPENSATION OF MANAGER
	  	 
			
	 3.01
	 	 MANAGEMENT FEES
	  	8
	 3.02
	 	 OPERATING PROFIT
	  	8
		
	 ARTICLE IV ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS
	  	 
			
	 4.01
	 	 ACCOUNTING, DISTRIBUTIONS AND ANNUAL RECONCILIATION
	  	9
	 4.02
	 	 BOOKS AND RECORDS
	  	9
	 4.03
	 	 ACCOUNTS, EXPENDITURES
	  	10
	 4.04
	 	 ANNUAL OPERATING PROJECTION
	  	11
	 4.05
	 	 WORKING CAPITAL
	  	11
	 4.06
	 	 FIXED ASSET SUPPLIES
	  	11
	 4.07
	 	 REAL ESTATE AND PERSONAL PROPERTY
TAXES
	  	12
	 4.08
	 	 SARBANES-OXLEY CERTIFICATION
	  	12
		
	 ARTICLE V REPAIRS, MAINTENANCE AND REPLACEMENTS
	  	 
			
	 5.01
	 	 REPAIRS AND MAINTENANCE TO BE PAID
FROM GROSS REVENUES
	  	13
	 5.02
	 	 REPAIRS, MAINTENANCE AND EQUIPMENT REPLACEMENTS TO
BE PAID FROM RESERVE
	  	13
	 5.03
	 	 MAJOR REPAIRS ALTERATIONS, IMPROVEMENTS, RENEWALS,
AND REPLACEMENTS TO BE FUNDED BY OWNER
	  	15
	 5.04
	 	 OWNERSHIP OF REPLACEMENTS
	  	16
	 5.05
	 	 DESIGN SPECIFICATIONS
	  	16
	 5.06
	 	 MANAGEMENT OF HOTEL RENOVATION AND CONSTRUCTION
PROJECTS
	  	16

  

 i 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page

		
	 ARTICLE VI INSURANCE
	  	 
			
	 6.01
	 	 PROPERTY INSURANCE
	  	17
	 6.02
	 	 OPERATIONAL INSURANCE
	  	17
	 6.03
	 	 COVERAGE
	  	18
	 6.04
	 	 COSTS AND EXPENSES
	  	18
		
	 ARTICLE VII DAMAGE AND REPAIR
	  	 
			
	 7.01
	 	 DAMAGE AND REPAIR
	  	19
	 7.02
	 	 CONDEMNATION
	  	20
		
	 ARTICLE VIII OWNERSHIP OF THE HOTEL
	  	 
			
	 8.01
	 	 OWNERSHIP OF THE HOTEL
	  	20
	 8.02
	 	 MORTGAGES
	  	21
	 8.03
	 	 SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
	  	22
	 8.04
	 	 NO COVENANTS, CONDITIONS OR RESTRICTIONS
	  	23
	 8.05
	 	 LIENS; CREDIT
	  	23
		
	 ARTICLE IX DEFAULTS
	  	 
			
	 9.01
	 	 EVENTS OF DEFAULT
	  	24
	 9.02
	 	 REMEDIES
	  	25
	 9.03
	 	 ADDITIONAL REMEDIES
	  	25
		
	 ARTICLE X ASSIGNMENT AND SALE
	  	 
			
	 10.01
	 	 ASSIGNMENT
	  	26
	 10.02
	 	 SALE OF THE HOTEL
	  	26
		
	 ARTICLE XI MISCELLANEOUS
	  	 
			
	 11.01
	 	 RIGHT TO MAKE AGREEMENT
	  	29
	 11.02
	 	 CONSENTS AND COOPERATION
	  	30
	 11.03
	 	 RELATIONSHIP
	  	30
	 11.04
	 	 APPLICABLE LAW
	  	30
	 11.05
	 	 RECORDATION
	  	30
	 11.06
	 	 HEADINGS
	  	30
	 11.07
	 	 NOTICES
	  	31
	 11.08
	 	 ENVIRONMENTAL MATTERS
	  	31
	 11.09
	 	 CONFIDENTIALITY
	  	33
	 11.10
	 	 PROJECTIONS
	  	33
	 11.11
	 	 ACTIONS TO BE TAKEN UPON TERMINATION
	  	33

  

 ii 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page

			
	 11.12
	 	 TRADEMARKS AND INTELLECTUAL PROPERTY
	  	35
	 11.13
	 	 WAIVER
	  	37
	 11.14
	 	 PARTIAL INVALIDITY
	  	37
	 11.15
	 	 SURVIVAL
	  	37
	 11.16
	 	 NEGOTIATION OF AGREEMENT
	  	37
	 11.17
	 	 INTENTIONALLY DELETED
	  	37
	 11.18
	 	 ESTOPPEL CERTIFICATES
	  	37
	 11.19
	 	 AFFILIATES
	  	38
	 11.20
	 	 COMPETING FACILITIES
	  	38
	 11.21
	 	 EXPERT DECISIONS
	  	39
	 11.23
	 	 WAIVER OF JURY TRIAL AND CONSEQUENTIAL
AND PUNITIVE DAMAGES
	  	40
	 11.24
	 	 COUNTERPARTS
	  	40
	 11.25
	 	 EXTRAORDINARY EVENTS
	  	40
	 11.26
	 	 ENTIRE AGREEMENT
	  	41
		
	 ARTICLE XII DEFINITION OF TERMS
	  	 
			
	 12.01
	 	 DEFINITION OF TERMS
	  	41

  

					
	 Exhibit A
	  	-	  	 Legal Description of the Site

	 Exhibit B
	  	-	  	 Equity Interest in Owner

	 Exhibit C
	  	-	  	 Memorandum of Management Agreement

	 Exhibit D
	  	-	  	 Map of the Restricted Area

  

 iii 

 MANAGEMENT AGREEMENT 
  
 THIS MANAGEMENT AGREEMENT (“Agreement”) is executed as of the 8th day of June 2004 and shall become effective as of 12:01 a.m. on June 19, 2004 (“Effective Date”), by APPLE SIX HOSPITALITY MANAGEMENT,
INC., a Virginia corporation (“Owner”), with a mailing address at c/o Apple REIT Companies, 10 South Third Street, Richmond, Virginia 23219, and COURTYARD MANAGEMENT CORPORATION, a Delaware corporation (“Manager”),
with a mailing address at c/o Marriott International, Inc., 10400 Fernwood Road, Bethesda, Maryland 20817. 
  
 R E C I T A L S: 
  
 A. Apple Six Hospitality, Inc., a Virginia corporation (“Landlord”) is the owner of that certain hotel containing One Hundred Thirty Five (135) Guest Rooms, a lobby, meeting rooms, administrative offices,
parking, and certain other amenities and related facilities (the “Buildings”) located in the City of Myrtle Beach, South Carolina, as more particularly set forth in Exhibit A hereto (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 12.01 hereof, are collectively referred to as the “Hotel.” 
  
 B. Landlord and Owner have entered into that certain Hotel Lease Agreement
dated on or about the date hereof, as amended or supplemented from time to time (the “Hotel Lease”) pursuant to which Landlord leases the Hotel to Owner. Landlord, Owner and Manager have entered into that certain Owner Agreement dated on
or about the date hereof (the “Owner Agreement”) pursuant to which Landlord has, among other things, agreed to be primarily liable as an obligor, and has guaranteed all of Owner’s obligations under this Agreement. 
  
 C. All capitalized terms used in this Agreement shall have the meaning set
forth in Section 12.01 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 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 under standards
comparable to those prevailing in other hotels in the System, in accordance with System Standards, including all activities in connection therewith which are customary and usual to such an operation. Manager shall, in connection with the Hotel and
in accordance with standards comparable to those prevailing at other hotels in the System and other terms of this Agreement, perform each of the following functions (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. 
  
 2. Establish prices, rates and charges for services provided
in the Hotel, including Guest Room rates. 
  
 3.
Establish and revise, as necessary, administrative policies and procedures, including policies and procedures for the control of revenue and expenditures, for the purchasing of supplies and services, for the control of credit, and for the scheduling
of maintenance, and verify that the foregoing procedures are operating in a sound manner. 
  
 4. Make payments on accounts payable and collections of accounts receivable. 
  
 5. Arrange for and supervise public relations and
advertising, and prepare marketing plans. 
  
 6.
Procure all Inventories and replacement Fixed Asset Supplies. 
  
 7. 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.

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

 2 

 9. Provide, or cause to be provided, risk management services relating to the types of
insurance required to be obtained or provided by Manager under this Agreement. 
  
 10. Obtain and keep in full force and effect, either in its own name or in Owner’s name, as may be required by applicable law, any
and all licenses and permits to the extent same is within the control of Manager (or, if same is not within the control of Manager, Manager shall use all due diligence and reasonable efforts to obtain and keep same in full force and effect). To the
extent permitted by law, Manager shall apply for, and/or maintain, any alcoholic beverage licenses or alcoholic beverage permits for the Hotel in the name of Manager rather than Owner. 
  
 11. Reasonably cooperate (provided that Manager shall not be obligated to enter into any amendments of this
Agreement) with Owner or Landlord in any attempt(s) by Owner or Landlord to effectuate a Sale of the Hotel (provided that nothing herein shall affect the provisions of Section 10.02), or to obtain any Mortgage. 
  
 C. The operation of the Hotel shall be under the exclusive supervision and
control of Manager which, except as otherwise specifically provided in this Agreement, 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 and maintaining the System Standards, and shall have discretion and control, free from interference, interruption or disturbance, in all matters relating to management and
operation of the Hotel, including, without limitation, 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 Term; 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. 
  
 D. Manager will use its reasonable efforts to comply with and abide by all applicable Legal Requirements pertaining to its operation of the Hotel (except for certain Legal Requirements which are Owner’s
responsibility under Section 5.03 and Section 11.08 hereof). Owner will use its reasonable efforts to comply with and abide by all applicable Legal Requirements pertaining to the Hotel or to Owner’s ownership interest in the Hotel (including,
without limitation, Owner’s obligations under Section 5.03 and Section 11.08 hereof). Either 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 paid from Gross Revenues as Deductions. 
  

 3 

 1.03 Services Provided by Manager 
  
 Commencing with the Effective Date and thereafter during the Term, Manager shall cause to be furnished the following
services: 
  
 A. System divisional executive management,
divisional financial planning, divisional contracting, divisional product planning and development, divisional human resources planning and development, divisional marketing planning, and services of Manager’s technical and operational experts
making periodic inspection and consultation visits to the Hotel (but specifically excluding “line management” personnel such as area managers and services of Manager’s Architecture and Construction personnel who provide design,
procurement, construction or related services) (collectively, “System Services”); 
  
 B. Marriott corporate planning and policy services, Marriott financial planning and corporate financial services, Marriott corporate executive management, in-house legal services pertaining to Marriott corporate
matters, and protection of the “Marriott” trade name, logos, trademarks, and service marks (“Central Office Services”); and 
  
 C. Certain services which are furnished generally on a central or regional basis to other hotels in the System which are managed by Manager, Marriott, or
any Affiliate, and which benefit each hotel as a participant in the System as follows: (i) national sales office services; central operational support for rooms, food and beverage and engineering; central training services; career development;
management personnel relocation; central safety and loss prevention services; central advertising and promotion (including direct and image media and advertising administration); consumer affairs; to the extent not charged or allocated directly to
the Hotel as a Deduction, the national and regional reservations system service and inventory and revenue management services; centralized payroll and accounting services; computer system development, support and operating costs; central monitoring
and management support from “line management” personnel such as area managers; and (ii) such additional central or regional services as are or may be, from time to time, furnished for the benefit of hotels in the Courtyard by Marriott
System or in substitution for services now performed at individual hotels which may be more efficiently performed on a group basis (“Chain Services”). Other than the charges for the national and regional reservation system services, the
charges for the Chain Services which are listed in clause (i) above shall be included in the Base Management Fee; the charges for the national and regional reservation system services shall be paid from Gross Revenues as Deductions. 
  
 1.04 Employees 
  
 All personnel employed at the Hotel shall at all times from and after the
Effective Date be the employees of Manager (or one of its Affiliates). Manager shall have absolute 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. Manager shall use best efforts to notify Owner as soon as practical of any
anticipated changes in the persons who occupy the positions of General Manager and Director of 

  

 4 

 
Sales and Marketing for the Hotel; provided, however, that the parties acknowledge and agree that any failure by Manager to provide such notice shall neither
constitute an “Event of Default” under this Agreement nor constitute a material breach of this Agreement. Manager shall decide which, if any, of the employees of the Hotel shall reside at the Hotel, and shall be permitted to provide free
accommodations and amenities to its employees and representatives living at or visiting the Hotel in connection with its management or operation. No person shall otherwise be given gratuitous accommodations or services without prior joint approval
of Owner and Manager except in accordance with usual practices of the hotel and travel industry. 
  
 1.05 Owner’s Right to Inspect 
  
 Owner, its agents, Affiliates and Mortgagees shall have access to the Hotel at any and all reasonable times for the purpose of inspection or showing the
Hotel to prospective purchasers, tenants or Mortgagees. 
  
 1.06
Regular Meetings 
  
 At Owner’s request, Owner and
Manager shall have quarterly meetings at the Hotel and at mutually convenient times. Manager shall be represented at such meetings by the general manager of the Hotel and such other personnel as the general manager may deem appropriate. The purpose
of the meetings shall be to discuss the performance of the Hotel and other related issues, including any variations from the Annual Operating Projection for the preceding quarter. 
  
 1.07 System Standards. 
  
 Owner shall take such actions consistent with this Agreement as are necessary to enable the Hotel to comply with the System Standards, and Manager shall
have discretion in operating the Hotel in order that the Hotel will comply with System Standards. 
  
 1.08 Limitations on Manager’s Authority 
  
 Manager shall not, without Owner’s prior written approval, enter into any FF&E Lease if: (i) the fair market value of the FF&E subject to
such FF&E Lease at the time of entering into such FF&E Lease exceeds Fifty Thousand Dollars ($50,000), as adjusted by the GDP Deflator; (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 Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate, as adjusted by the GDP Deflator; (iii) the FF&E subject to such FF&E Lease is FF&E that is not customarily leased in the hotel industry in the
United States; or (iv) such FF&E Lease 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 in the hotel industry in the United States for
leases of similar FF&E. 
  

 5 

 ARTICLE II 
  

TERM 
  
 2.01 Term 
  
 The “Term” of this Agreement shall consist of an “Initial Term” and the “Renewal Term(s).” The “Initial Term”
shall begin on the Effective Date and shall continue until the expiration of the thirtieth (30th) full Fiscal Year
after the expiration of the Fiscal Year in which the Effective Date occurs. Thereafter, this Agreement shall automatically, and with no further action required by Owner or Manager, be renewed on the same terms and conditions for each of three (3)
successive periods of ten (10) Fiscal Years each (“Renewal Term(s)”), unless Owner or Manager shall have given prior written notice to the other party of its election not to renew at least one hundred and eighty (180) days prior to the
expiration of the then current Initial Term or Renewal Term, as the case may be. 
  
 2.02 Performance Termination 
  
 A. Subject to the provisions of Section 2.02.B and Section 2.02.C. below, Owner shall have the option to terminate this Agreement and Owner, or an operator approved by Marriott in its sole discretion, shall enter into a Courtyard by
Marriott franchise agreement in the form as shall have been published by Manager or its Affiliate in its then-current Uniform Franchise Offering Circular (the “Franchise Agreement”) if, with respect to any two (2) consecutive Fiscal Years
(not including any portion of any Fiscal Year prior to the expiration of the fifth (5th) full Fiscal Year after the
Effective Date): 
  
 1. Operating Profit for each
such Fiscal Year is less than the Performance Termination Threshold for such Fiscal Year; provided that, for purposes of this Section 2.02.A.1. only, Operating Profit shall be computed without deducting any Impositions. Notwithstanding the
foregoing, real estate and personal property taxes in an amount not to exceed the amount of such taxes paid during the second (2nd) Fiscal Year following the Effective Date shall be deducted in computing Operating Profit for purposes of this Section 2.02.A.1.; and 
  
 2. The Revenue Index of the Hotel during each such Fiscal Year is less than the Revenue Index Threshold for such Fiscal Year; and

  
 3. The fact that the Hotel has not met the
tests set forth in Section 2.02.A.1. and Section 2.02.A.2. is not wholly or partially the result of (x) an Extraordinary Event, (y) any major renovation of the Hotel which has been approved by Owner, or (z) any default by Owner. In the event that
either clause (x), clause (y) or clause (z) has affected the ability of the Hotel to meet the tests set forth in Section 2.02.A.1. or Section 2.02.A.2. in any given Fiscal Year, then such Fiscal Year shall not be counted for purposes of the
foregoing test, and shall be treated as not having occurred for purposes of determining whether the tests are satisfied for two consecutive Fiscal Years. 
  

 6 

 Owner shall exercise such option to terminate by serving written notice thereof on Manager no later than
sixty (60) days after Owner’s receipt of the annual accounting under Section 4.01.B. for the second (2nd) of
the two (2) Fiscal Years referred to in Section 2.02.A. If Manager does not elect to avoid such Termination pursuant to Section 2.02.B. below, this Agreement shall terminate as of the end of the fourth (4th) full Accounting Period following the later of the date on which Manager receives (i) the above-described notice from Owner and (ii) the Franchise Agreement
executed by Owner or an operator approved by Marriott in its sole discretion; provided that such period of time shall be extended as required by applicable Legal Requirements pertaining to the termination of the employment of the employees at the
Hotel unless the entity which succeeds Manager as the operator of the Hotel hires a sufficient number of the employees at the Hotel to avoid the occurrence, in connection with such Termination, of a “closing” under the WARN Act and
otherwise complies with applicable Legal Requirements. Owner’s failure to exercise its right to terminate this Agreement pursuant to Section 2.02.A. with respect to any given Fiscal Year shall not be deemed an estoppel or waiver of Owner’s
right to terminate this Agreement with respect to subsequent Fiscal Years to which this Section 2.02.A. may apply. 
  
 B. Upon receipt of Owner’s written notice of Termination under Section 2.02.A., Manager shall have the option, to be exercised within sixty (60) days
after receipt of said notice, to avoid such Termination by electing (in a written notice to Owner) to either (i) waive the payment of the Base Management Fee (beginning as of the first (1st) day of the first (1st)
full Accounting Period following the date of such notice from Manager) until such time as the total cumulative amount of such waived Base Management Fee equals the total amount by which Operating Profit for each of the Fiscal Years in question
(i.e., the two (2) Fiscal Years referred to in Section 2.02.A.1.) was less than the Performance Termination Threshold for such Fiscal Years; or (ii) pay to Owner the total amount by which Operating Profit for each of the Fiscal Years in question
(i.e., the two (2) Fiscal Years referred to in Section 2.02.A.1.) was less than the Performance Termination Threshold for such Fiscal Years (the amounts set forth in clauses (i) and (ii) shall be referred to as the “Cure Payment”).
Notwithstanding the foregoing, any such waived Base Management Fee shall be deemed paid by Owner for purposes of computing Operating Profit for the period during which such Base Management Fee is waived by Manager. In the event Manager makes a Cure
Payment pursuant to this Section 2.02.B., the then prior two (2) Fiscal Years with respect to which such Cure Payment was made shall thereafter not be treated, for purposes of subsequent elections by Owner pursuant to Section 2.02.A., as Fiscal
Years in which the circumstances described in Section 2.02.A.1. have occurred. If Manager exercises such option to make such Cure Payment, then the foregoing Owner’s election to terminate this Agreement under Section 2.02.A. shall be canceled
and of no force or effect with respect to the two (2) Fiscal Years in question, and this Agreement shall not terminate. Such cancellation, however, shall not affect the right of Owner, as to each subsequent Fiscal Year to which Section 2.02.A.
applies, to again elect to terminate this Agreement pursuant to the provisions of Section 2.02.A. (which subsequent election shall again be subject to Manager’s rights under this Section 2.02.B.). If Manager does not exercise its option to make
a Cure Payment as aforesaid, then this Agreement shall be terminated as of the date set forth in Section 2.02.A. 
  

 7 

 C. Notwithstanding anything in this Section 2.02 to the contrary, if Manager does not elect to avoid such
Termination within the sixty (60) day period set forth in Section 2.02.B, upon execution of the Franchise Agreement, Owner shall cause a third party operator approved by Manager in its sole discretion to operate the Hotel. Manager shall provide to
Owner a list of at least five (5) operators acceptable to Manager within ten (10) Business Days after Owner’s request therefor. If Owner selects an operator from such list to operate the Hotel, Manager shall be deemed to have approved such
operator. 
  
 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. 
  
 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: 
  
 1. An amount up to the maximum amount of Owner’s Priority shall be paid to Owner; 
  
 2. The Incentive Management Fee shall be paid to Manager;
and 
  
 3. Any remaining balance of Operating
Profit shall be paid to Owner. 
  
 Owner’s Priority is not
cumulative from one Fiscal Year to the next, and to the extent the maximum amount of Owner’s Priority is unpaid in any Fiscal Year, such unpaid amount shall not accrue or otherwise be payable in any subsequent Fiscal Year. 
  
 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 to Owner for each such Accounting Period in accordance with Section 4.01.A., and shall be entitled to retain a prorated portion of the Incentive Management
Fee, which shall be retained by Manager from Operating Profit in accordance with Section 3.02 and Section 4.01 for each such Accounting Period based on its good faith estimate of the Incentive Management Fee for the full Fiscal Year. 
  

 8 

 ARTICLE IV 
  

ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS 
  
 4.01 Accounting, Distributions and Annual Reconciliation 
  

A. Within twenty (20) days after the close of each Accounting Period, Manager shall deliver an interim accounting (the “Accounting Period
Statement”) to Owner showing Gross Revenues, Deductions, Operating Profit, and applications and distributions thereof for the preceding Accounting Period. Manager shall transfer to Owner, with each Accounting Period Statement, any interim
amounts due Owner, subject to Working Capital needs, and shall retain any interim amounts due Manager. 
  
 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. No adjustments shall be made for any Operating Loss in any
preceding Fiscal Year. 
  
 C. To the extent there is an Operating
Loss for any Accounting Period, additional funds in the amount of any such Operating Loss shall be provided by Owner within thirty (30) days after Manager has delivered written notice thereof to Owner. If Owner does not so fund such Operating Loss
within the thirty (30) day time period, Manager shall have the right (without affecting Manager’s other remedies under this Agreement) to withdraw an amount to cover such Operating Loss from future distributions of funds otherwise due to Owner.
Furthermore, if Owner fails to fund a deficiency upon request by Manager, Manager may also withdraw interest upon such sum from the date payment was due until repayment to Manager at a rate equal to the Prime Rate plus three (3) percentage points.

  
 4.02 Books and Records 
  
 A. 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 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 thirty (30) days and no later than
sixty (60) days after Manager’s receipt of such notice. Owner shall complete 

  

 9 

 
such audit within ninety (90) 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, and Owner shall have no right thereafter, except in the event of fraud by Manager, to question or examine the same. 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 more than five percent (5%) of the amount that should have been paid to Owner for such Fiscal Year. Any dispute
concerning the correctness of an audit shall be settled by the Expert in accordance with Section 11.21. 
  
 B. All information regarding the operation of the Hotel which is obtained by Owner through an audit, other than aggregated financial information regarding
the results of operations of the Hotels in Owner’s portfolio, shall be considered confidential information and Owner agrees not to disclose such information except as necessary to its advisors, attorneys and consultants participating in the
audit process, who shall likewise be informed of the confidential nature of the information and of the duty not to disclose such information to third parties. 
  

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

  
 B. 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. In any event, if any such liability or obligation is incurred by Manager with respect to the Hotel, Manager shall have the option to deduct such amounts from Owner’s share of
Operating Profit if Owner has not fully reimbursed Manager for said amounts within ten (10) days after Owner’s receipt of notice from Manager that said amounts are due. 
  
 C. Debts and 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; Owner shall indemnify, defend and hold Manager harmless from and against all loss, costs,
liability, and damage (including, without limitation, attorneys’ fees and expenses) arising from Owner’s failure to pay such debts and liabilities; and the provisions of this Section 4.03.C. shall survive Termination. 
  

 10 

 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 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”). Manager will consider in good faith suggestions made by Owner with respect to the Annual Operating Projection and make modifications thereto that Manager deems appropriate. Manager in good faith shall
endeavor to adhere to the Annual Operating Projection. It is understood, however, that the Annual Operating Projection is an estimate only and that unforeseen circumstances such as, but not limited to, the costs of labor, material, services and
supplies, casualty, operation of law, or economic and market conditions may make adherence to the Annual Operating Projection impracticable, and Manager shall be entitled to depart therefrom due to causes of the foregoing nature. 
  
 4.05 Working Capital 
  
 On the Effective Date, Owner shall provide to Manager the initial Working
Capital for the Hotel in the amount of Fifty-Five Thousand Dollars ($55,000). Owner shall from time to time during the Term promptly, but no later than ten (10) days after written request by Manager, advance any additional funds necessary to
maintain Working Capital at levels reasonably determined by Manager to be necessary to satisfy the needs of the Hotel as its operation may from time to time require. If Owner does not so fund additional Working Capital within the said ten (10) day
time period, Manager shall have the right (without affecting Manager’s other remedies under this Agreement) to withdraw an amount equal to the funds requested by Manager for additional Working Capital from future distributions of funds
otherwise due to Owner. All funds so advanced for Working Capital shall be utilized by Manager for the purposes of this Agreement pursuant to cash-management policies established for the System. Upon Termination, Manager shall, except as otherwise
provided in this Agreement, return the outstanding balance of the Working Capital to Owner. 
  
 4.06 Fixed Asset Supplies 
  
 The parties recognize that, as of the Effective Date, the level of funds for Fixed Asset Supplies is reasonably believed to be reasonably sufficient for the operations of the Hotel, subject at all times to seasonal differences and changes
in circumstances after the Effective Date. Any additional funds which are necessary to maintain Fixed Asset Supplies at levels determined by Manager to be necessary to satisfy the needs of the Hotel, as its operation may from time to time require,
shall be paid from Gross Revenues as Deductions. Fixed Asset Supplies shall remain the property of Owner throughout the Term and upon Termination, except for Fixed Asset Supplies purchased by Manager pursuant to Section 11.11.E. 
  

 11 

 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 which 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
Owner or Manager (in which case Owner agrees to sign the required applications and otherwise cooperate with Manager in expediting the matter) may initiate proceedings to contest any negotiations or proceedings with respect to any Imposition, and all
reasonable costs of any such contest shall be paid from Gross Revenues and shall be a Deduction in determining Operating Profit. Manager shall, as part of its contest or negotiation of any Imposition, be entitled, on Owner’s behalf, to waive
any applicable statute of limitations in order to avoid paying the Imposition during the pendency of any proceedings or negotiations with applicable authorities. 
  
 B. The word “Impositions” as used in this Agreement shall not include the following, all of which shall be paid
solely by Owner, not from Gross Revenues nor from the Reserve: 
  
 1. Any franchise, corporate, estate, inheritance, succession, capital levy or transfer tax imposed on Owner, or any income tax imposed on any income of Owner (including distributions to Owner pursuant to Article III
hereof); or 
  
 2. “Tax-increment
financing” or similar financing whereby the municipality or other taxing authority has assisted in financing the construction of the Hotel by temporarily reducing or abating normal Impositions in return for substantially higher levels of
Impositions at later dates. 
  
 4.08 Sarbanes-Oxley
Certification 
  
 Owner may, in connection with its or any of
its Affiliates’ 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 

  

 12 

 
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. If Owner and its Affiliates own more than one hotel managed by Manager, Manager shall only be required to deliver to Owner and its Affiliates one such
certificate, which certificate shall apply in the aggregate to the Accounting Period Statements prepared by Manager for all such hotels. 
  
 ARTICLE V 
  
 REPAIRS, MAINTENANCE AND REPLACEMENTS 
  
 5.01 Repairs and Maintenance to be Paid from Gross Revenues 
  
 Manager shall maintain the Hotel in good repair and condition, use its commercially reasonable best efforts (which efforts
shall not require Manager to expend any of its own funds) to comply with and abide by all applicable Legal Requirements pertaining to its operation of the Hotel (except for certain Legal Requirements which are Owner’s responsibility under
Section 5.03 and Section 11.08 hereof), and shall make or cause to be made such routine maintenance, repairs and minor alterations as it determines are necessary for such purposes. 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. Manager shall establish a reserve account (the “Reserve”), in a bank or similar institution reasonably acceptable to both Manager and Owner, to cover the cost of: 
  
 1. Replacements, renewals and additions to the FF&E at
the Hotel; and 
  
 2. Routine Capital
Expenditures. 
  
 B. During the period from the Effective Date to
the expiration of the thirteenth (13th) full Accounting Period after the Effective Date, Manager shall transfer into
the Reserve an amount equal to four percent (4%) of Gross Revenues for such period and beginning with the fourteenth (14th) full Accounting Period and for all Accounting Periods thereafter, subject to the provisions of Section 5.02.E. below, Manager shall transfer into the Reserve an amount equal to five percent (5%) of Gross Revenues for each such
Accounting Period. 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 

  

 13 

 
Operating Profit and shall be deposited in the special Reserve account described in Section 5.02.A. 
  
 C. 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 it deems necessary, up to the balance in the Reserve. No expenditures will be made in excess of said balance 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 (1) proceeds from the disposition of FF&E, nor (2) interest which accrues on amounts held in the Reserve, shall (a) result in any reduction in the required
contributions to the Reserve set forth in Section 5.02.B. above, nor (b) be included in Gross Revenues. 
  
 D. Manager shall prepare an estimate (“Repairs and Equipment Estimate”) of the expenditures necessary for (1) replacements, renewals and
additions to the FF&E of the Hotel, and (2) Routine Capital Expenditures during the ensuing Fiscal Year and shall deliver the Repairs and Equipment Estimate to Owner at the same time it submits the Annual Operating Projection described in
Section 4.04. The Repairs and Equipment Estimate shall also indicate the estimated time schedule for making such replacements, renewals and expenditures. Owner shall have thirty (30) days after receipt to review and comment on such Repairs and
Equipment Estimate. Manager shall consider in good faith Owner’s comments regarding the Repairs and Equipment Estimate, provided that Owner’s comments are consistent with maintaining System Standards and acknowledging that FF&E
replacements occur at regular cycles for soft goods and case goods, which cycles are incorporated in System Standards. Owner shall have the right to approve any individual expenditure in the Repair and Equipment Estimate of $10,000 (as adjusted by
the GDP Deflator) or more, and in the event Owner disapproves any such individual expenditure, Owner will provide Manager in writing with the specific reasons for its disapproval within such thirty (30) day period; provided, however, Owner shall not
withhold its approval of any Routine Capital Expenditures or any replacements, renewals and additions to the FF&E that are required, in Manager’s reasonable judgment, to keep the Hotel in a first-class condition at least in accordance with
System Standards or otherwise required for the continued safe and orderly operation of the Hotel. Thereafter, in the thirty (30) day period following Manager’s receipt of Owner’s disapproval of such individual expenditure, the parties will
attempt to resolve in good faith Owner’s objections and if one or more of Owner’s objections have not been resolved as of the end of such thirty (30) day period, such dispute shall be referred to the Expert as provided in Section 11.21.
FF&E Leases shall be subject to Section 1.08. 
  
 E. As the
Hotel ages, these percentages may not be sufficient to keep the Reserve at the levels necessary to make the replacements, renewals and additions to the FF&E of the Hotel, or to make the Routine Capital Expenditures which are required to maintain
the Hotel in accordance with the System Standards therefor. If the Repairs and Equipment Estimate prepared in good faith by Manager exceeds the available funds in the Reserve, Owner shall: 
  
 1. agree in writing to increase temporarily the annual
percentage in Section 5.02.B. to provide the additional funds required, or 
  

 14 

 2. make a lump sum contribution to the Reserve in the necessary amount; such amount (plus
interest at the Prime Rate plus one percent (1%) per annum) shall be fully repaid to Owner from Gross Revenues in equal installments over the period of the next sixty-five (65) Accounting Periods, and such installment repayments shall be Deductions.

  
 If Owner fails to elect one of the above alternatives within
sixty (60) days after Manager’s request therefor, Owner shall be deemed to have elected the alternative set forth in Section 5.02.E.1. above. If Owner elects the alternative set forth in Section 5.02.E.2. above and fails to provide the
additional funds required thereunder within sixty (60) days after Owner’s receipt of Manager’s request for additional funding, such failure shall constitute an Event of Default by Owner. 
  
 5.03 Major Repairs Alterations, Improvements, Renewals, and Replacements
to be Funded by Owner 
  
 A. Manager shall prepare an annual
estimate (the “Building Estimate”) of the expenses necessary for non-routine or major repairs, alterations, improvements, renewals and replacements (which repairs, alterations, improvements, renewals and replacements are not Routine
Capital Expenditures) to the Hotel including, without limitation, the structure, the exterior facade, the mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation elements of each of the Hotel buildings,
and other non-routine repairs and maintenance to the Buildings. Manager shall not make any expenditures for such purposes without the prior written consent of Owner unless otherwise permitted herein. Manager shall submit the Building Estimate to
Owner for its approval at the same time the Annual Operating Projection is submitted. Owner shall have thirty (30) days after receipt to review and approve such Building Estimate, it being agreed that Owner shall not withhold its approval with
respect to Capital Expenditures as are required, in Manager’s reasonable judgment, to keep the Hotel in a first-class, competitive, efficient and economical operating condition in accordance with System Standards or otherwise required for the
continued safe and orderly operation of the Hotel, including the removal of Hazardous Materials in compliance with all Environmental Laws (as more particularly described in Section 11.08). Manager shall be authorized to take appropriate remedial
action without receiving Owner’s prior consent as follows: (i) in an emergency threatening the Hotel or the life or property of its guests, invitees or employees; (ii) if the Capital Expenditures are necessary to satisfy a Legal Requirement
(subject to Owner’s right to contest or oppose, by appropriate proceedings, any such Legal Requirement); or (iii) if the continuation of the given condition will subject Manager and/or Owner to civil or criminal liability. Manager shall
cooperate with Owner in the pursuit of any such action and shall have the right to participate therein. 
  
 B. The cost of all repairs, alterations, improvements, renewals or replacements referred to in this Section 5.03 (including the expenses incurred by
either Owner or Manager in connection with any civil or criminal proceeding described above) shall be borne solely by Owner, and shall not be paid from Gross Revenues nor from the Reserve. 
  

 15 

 C. If Owner fails to approve and fund any proposed expenditures described in Section 5.03.A. within sixty
(60) days after the submission to Owner of the request therefor, Manager shall have, in addition to any other rights it may have under this Agreement, the option of terminating this Agreement upon six (6) months’ written notice to Owner.

  
 5.04 Ownership of Replacements 
  
 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 such funds as otherwise provided in this Agreement. 
  
 5.05 Design Specifications 
  

Subject to brand design standards generally employed for the System, with respect to any capital expenditure programs submitted to Owner by Manager,
Owner shall have the right to choose in its reasonable discretion one prototype package for such capital expenditure program from the variety of standard prototype packages available to complete such program. With respect to custom design packages
that fall outside the scope of the then-current brand design standards and prototype packages generally employed for the System, Owner and Manager must mutually agree upon the details of such custom design packages, including design specifications.

  
 5.06 Management of Hotel Renovation and Construction
Projects 
  
 Owner shall have the right to manage the
construction of any repair, refurbishment (including FF&E replacement), renovation or construction project at the Hotel, that exceeds a total budgeted cost of Five Hundred Thousand Dollars ($500,000), as adjusted by the GDP Deflator; provided,
however, that (i) Marriott International Design & Construction Services, Inc. be allowed to bid on all projects funded from the Reserve; (ii) prior to commencement of a renovation or construction project, Owner shall submit to Manager’s
Hotel Design Review Committee (or such similar committee), for its approval, all project plans, drawings and specifications and shall ensure that the final plans, drawings and specifications pursuant to which the project is undertaken conform to
those approved by such committee; (iii) all materials used and quality of installation and finish shall be equal to or better than those required by System Standards; (iv) the contractors, architects and other consultants utilized by Owner shall be
subject to the approval of Manager (based upon reputation and experience) and shall be fully insured and bonded to the reasonable satisfaction of Manager; (v) the project shall not be deemed completed until Manager, in its reasonable judgment,
certifies that the renovation or construction work conforms with all project plans, drawings, and specifications approved by Manager; and (vi) Owner shall work cooperatively with Manager to minimize interruption to Hotel operations, and to the
experience of the Hotel’s guests, from the project. Any construction project or Hotel renovation that has a total budgeted cost of Five Hundred Thousand Dollars ($500,000), or less, as adjusted by the GDP Deflator, shall be managed through
Marriott International Design & Construction Services, Inc. or such other design and construction firm selected by Manager. 
  

 16 

 ARTICLE VI 
  

INSURANCE 
  
 6.01 Property Insurance 
  
 A. Manager shall, commencing with the Effective Date and for the duration of the Term, procure and maintain, using funds deducted from Gross Revenues in
determining Operating Profit, a minimum of the following insurance: 
  
 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. Earthquake (except in California) and flood insurance, if available on reasonable rates and terms, to be determined at the discretion
of Manager; 
  
 3. Insurance against loss or
damage from explosion of boilers, pressure vessels, pressure pipes and sprinklers, to the extent applicable, installed in the Hotel; 
  
 4. 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 6.01.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 generally established by Manager at the other Hotels
it owns or manages under the Marriott Courtyard Hotel name in the United States. 
  
 B. All policies of insurance required under Section 6.01. A. 1, 2, 3 and 4 shall insure Owner, Manager, and the holder of the first mortgage indebtedness with respect to the Hotel (a “First Mortgage”); and
any losses thereunder shall be payable to the parties as and to the extent their respective interests, if any, may appear. 
  
 C. Any Mortgage on the Hotel shall contain provisions to the effect that proceeds of the insurance policies required to be carried under Section 6.01
shall be available for repair and restoration of the Hotel. 
  
 6.02 Operational Insurance 
  
 Manager shall,
commencing with the Effective Date and for the duration of the Term, procure and maintain, using funds deducted from Gross Revenues in determining Operating Profit, with insurance companies approved by Owner the following insurance: 
  
 A. Workers’ compensation and employer’s liability insurance as may
be required under applicable laws covering all of Manager’s employees at the Hotel, with such deductible limits or self-insured retentions as are generally established by Manager at the other Hotels it owns or manages under the “Courtyard
by Marriott” name in the United States; 
  

 17 

 B. Fidelity bonds, with reasonable limits and deductibles to be determined by Manager, covering its
employees in job classifications normally bonded in the other Hotels it owns or manages under the “Courtyard by Marriott” name in the United States or as otherwise required by law, and comprehensive crime insurance to the extent Manager
and Owner mutually agree it is necessary for the Hotel; 
  
 C.
Comprehensive general public liability insurance against claims for personal injury, death or property damage occurring on, in, or about the Hotel, and automobile insurance on vehicles operated in conjunction with the Hotel, with a combined single
limit of not less than One Hundred Million Dollars ($100,000,000) for each occurrence for personal injury, death and property damage, with such deductible limits or self-insured retentions as are generally established by Manager at the other Hotels
it owns or manages under the “Courtyard by Marriott” name in the United States; if Manager feels in its reasonable discretion that higher limits are appropriate, it will obtain them; and 
  
 D. Such other insurance in amounts as Manager in its reasonable judgment
deems advisable for protection against claims, liabilities and losses arising out of or connected with the operation of the Hotel or as reasonably required by Owner’s lenders holding Qualified Mortgages on the Hotel. 
  
 6.03 Coverage 
  
 All insurance described in Sections 6.01 and 6.02 may be obtained by Manager
by endorsement or equivalent means under its or Marriott’s blanket insurance policies, provided that such blanket policies substantially fulfill the requirements specified herein. Deductible limits and self-insured retentions shall be as
provided in the blanket policies covering the Hotels owned or managed by Manager under the “Courtyard by Marriott” name in the United States. In addition, Manager may self-insure workers’ compensation insurance (if it has legally
qualified to do so) or otherwise retain such risks or portions thereof as it does with respect to other Hotels it owns or manages under the “Courtyard by Marriott” name in the United States. 
  
 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. The expenses incurred in maintaining
Manager’s self-insurance program shall be charged on an equitable basis to the hotels participating in such programs. 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. Upon Termination, an escrow fund in an amount reasonably acceptable to Manager (which amount, 

  

 18 

 
when funded, shall thereafter be final as between Owner and Manager) shall be established from Gross Revenues (or, if Gross Revenues are not sufficient, with
funds provided by Owner) to cover the amount of any deductible limits and all other costs which will eventually have to be paid by Manager with respect to pending or contingent claims, including those which arise after Termination for causes arising
during the term of the Agreement. 
  
 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 shall, at its cost and expense and with all reasonable diligence, repair or replace the damaged or destroyed portion of the Hotel to the same condition as existed previously 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. To the extent available, proceeds from the insurance described in
this Agreement shall be applied to such repairs or replacements. Notwithstanding the foregoing, Owner shall not be obligated to repair or replace the damaged or destroyed portion of the Hotel if one or more of the following is true: (i) the Hotel is
so badly damaged or destroyed that it cannot reasonably be repaired or replaced within eighteen (18) months of the date on which the construction work relating to the repair and/or replacement would begin; (ii) with respect to insurance obtained by
Manager under Section 6.01, the proceeds of such insurance available for such repair or replacement are less than ninety percent (90%) of the estimated repair and replacement costs; or (iii) the remainder of the Term is less than ten (10) years and,
upon Owner’s request, Manager fails to agree to extend the Term to a date which is at least ten (10) years after the estimated date of the completion of such repair and/or replacement. If Owner elects not to repair or replace said damaged
portion of the Hotel for one or more of the foregoing reasons, it 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 from any cause materially and adversely affects the operation of the
Hotel and (i) Owner fails to promptly commence and complete the repairing, rebuilding or replacement of the same as required by Section 7.01.A. so that the Hotel shall be substantially the same as it was prior to such damage or destruction, Manager
may, at its option, elect to either undertake such work for the account of Owner, terminate this Agreement by written notice to Owner and this Agreement shall terminate on the date that is sixty (60) days after receipt of such written notice by
Owner, and/or pursue all other rights and remedies pursuant to this Agreement; or (ii) Owner notifies Manager within the time period set forth in Section 7.01.A. above, that Owner will not repair or replace such damage for one or more of the reasons
set forth in Section 7.01.A., Manager may, at its option, terminate this Agreement by written notice to Owner and this Agreement shall terminate on the date that is sixty (60) days after receipt of such written notice by Owner. 
  

 19 

 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 it is unreasonable to continue to operate the Hotel in
accordance with the standards required by this Agreement, this Agreement shall terminate. Owner and Manager shall each have the right to initiate such proceedings as they deem advisable to recover any compensation to which they may be entitled.

  
 B. In the event a portion of the Hotel shall be taken by the
events described in Section 7.02.A., or the entire Hotel is affected but on a temporary basis, and the result is not to make it unreasonable to continue to operate the Hotel, this Agreement shall not terminate. However, so much of any award for any
such partial taking or condemnation as shall be necessary to render the Hotel equivalent to its condition prior to such event shall be used for such purpose, and the balance of such award shall be distributed in accordance with the provisions of a
Qualified Mortgage; provided, however, that such balance shall be deemed to be included in Gross Revenues. Manager shall have the right to discontinue operating the Hotel to the extent it deems necessary for the safe and orderly operation of the
Hotel.  
  
 ARTICLE VIII 
  
 OWNERSHIP OF THE HOTEL 
  
 8.01 Ownership of the Hotel 
  
 A. Owner hereby covenants that: (i) Owner holds leasehold title to the Site
pursuant to the Hotel Lease; (ii) Landlord holds good and marketable fee title to the Site; and (iii) Landlord will have, keep, and maintain good and marketable fee title to the Hotel free and clear of any and all liens, encumbrances or other
charges, except as follows: 
  
 1. easements or
other encumbrances (other than those described in this Section 8.01 below) that do not adversely affect the operation of the Hotel by Manager and that are not prohibited pursuant to Section 8.04 of this Agreement, including, without limitation, (i)
any encumbrances or other defects of title subject to which title was conveyed to Landlord, or (ii) liens, encumbrances or other charges resulting from Manager’s acts that are the fault of Manager pursuant to Section 8.05; 
  
 2. Qualified Mortgages; or 
  
 3. liens for taxes, assessments, levies or other public
charges not yet due or due but not yet payable. 
  
 B. Owner (and
its Affiliates) shall pay and discharge, or cause to be paid and discharged, on or before the due date, any and all (i) payments due under any Mortgage with 

  

 20 

 
respect to the Hotel; and (ii) any rent due under the Hotel Lease. Owner shall indemnify, defend, and hold Manager harmless from and against all claims,
Litigation and damages arising from the failure to make any such payments as and when required; and this obligation of Owner shall survive Termination. Manager shall have no responsibility for payment of debt service or rent due with respect to the
Hotel, from Gross Revenues or otherwise, and such responsibility shall be solely that of Owner (and its Affiliates). 
  
 C. Owner covenants that Manager shall quietly hold, occupy and enjoy the Hotel in accordance with the terms of this Agreement throughout the Term hereof
free from hindrance, ejection or molestation by Owner or any other party claiming under, through or by right of Owner. Owner agrees to pay and discharge any payments and charges and, at its expense, to prosecute all appropriate actions, judicial or
otherwise, necessary to assure such free and quiet occupation. 
  
 8.02 Mortgages 
  
 A. Owner shall be permitted to
encumber the Hotel and/or the Site with any Mortgage, provided that such Mortgage meets all of the following requirements: 
  
 1. The proposed Mortgage is from an Institutional Lender and is on commercially reasonable terms and conditions; 
  
 2. As of the date of the proposed financing, the aggregate
principal balance of all Mortgages encumbering the Hotel, including the proposed Mortgage, shall be no greater than the lesser of: (x) seventy percent (70%) of the fair market value of the Hotel; or (y) the dollar amount obtained by (a) dividing the
average annual Operating Profit for the twenty-six (26) most recent full Accounting Periods by the Coverage Ratio; then (b) multiplying the result of clause (a) by the Capitalization Multiple; and 
  
 3. Owner, Manager and the holder of such Mortgage shall have
entered into a Subordination Agreement (to be recorded in the real property records in the jurisdiction where the Site is located) as further described in Section 8.03 below. 
  
 B. For purposes of this Section 8.02, the fair market value of the Hotel shall be (i) as set forth in any then current
appraisal obtained or accepted by an Institutional Lender in connection with a Qualified Mortgage, or (ii) in the absence of such an appraisal, as reasonably determined by Owner and Manager. If Owner and Manager do not agree on such fair market
value, either party may request that a licensed appraiser (reasonably acceptable to both parties) shall determine the fair market value of the Hotel. If the parties cannot agree on an appraiser within thirty (30) days after the date on which either
party notifies the other that it wishes to have the fair market value of the Hotel be determined by an appraisal, either party may elect to have such fair market value determined by the Expert pursuant to Section 11.21. Any Mortgage which meets all
of the requirements set forth in this Section 8.02 shall be referred to in this Agreement as a “Qualified Mortgage.” 
  

 21 

 C. In the event Manager receives any reasonable request for information on the Hotel from the holder of
any Qualified Mortgage (and including any Affiliate of Manager providing any financing in connection with the Hotel), Owner agrees that Manager is hereby authorized to provide or distribute such information directly to such lender. 
  
 D. Without altering any of Manager’s rights under this Agreement, and
provided that none of Manager’s rights under this Agreement are adversely affected, Manager shall cooperate, at no cost to Manager, in good faith with Owner and its Mortgagee in connection with any Qualified Mortgage including the negotiation
and execution of any other agreements customarily required by Institutional Lenders in connection with the Qualified Mortgage. 
  
 8.03 Subordination, Non-Disturbance and Attornment 
  
 A. Owner will obtain from any Mortgagee which holds a Mortgage as of the Effective Date (or thereafter) an instrument (the “Subordination
Agreement”), reasonably satisfactory in all respects to Manager 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 Mortgage, with notice and opportunity to cure rights and post-default cure rights in favor of Mortgagee; 
  
 2. Manager shall be obligated to each of the Subsequent Owners (as defined below) to perform all of the
terms and conditions of this Agreement for the balance of the remaining Term hereof, with the same force and effect as if such Subsequent Owner were the Owner; and 
  
 3. In the event that there is a foreclosure of such Mortgage (or a deed in lieu of foreclosure), or other
exercise by such Mortgagee (or its successor) of its remedies in the event of default, 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 shall not be terminated and Manager shall not be disturbed in its rights under this
Agreement. 
  
 B. In the event that the Subordination Agreement
contains provisions requiring Manager (upon a default under the Mortgage, or upon various other stipulated conditions) to pay certain amounts which are otherwise due to Owner under this Agreement to the Mortgagee or its designee (rather than to
Owner), Owner hereby gives its consent to such provisions, which consent shall be deemed to be irrevocable until the entire debt secured by the Mortgage has been discharged. 
  
 C. Prior to encumbering the Hotel or the Site with any Mortgage, Owner shall be obligated to obtain from the proposed
Mortgagee an executed, recordable Subordination Agreement. Manager agrees to execute such Subordination Agreement for the benefit of such 

  

 22 

 
proposed Mortgagee. If Owner encumbers the Hotel or the Site with a Mortgage without first obtaining such a Subordination Agreement from the Mortgagee: (i)
it shall be a Default of Owner under this Agreement, entitling Manager to all of the remedies set forth in Article IX; and (ii) in addition, Manager shall thereafter have a continuing right to terminate this Agreement upon sixty (60) days’
prior written notice to Owner. In addition, any Mortgage described in the preceding sentence shall be subject and subordinate to Manager’s rights under this Agreement. 
  
 D. Notwithstanding the subordination of this Agreement which is described in Section 8.03.A.1., if, in connection with the
exercise by any Mortgagee of its remedies under any Mortgage, there is a material adverse impact upon the operation of the Hotel by Manager in accordance with the System Standards, the foregoing shall be deemed to be an Event of Default by Owner
entitling Manager to all of the remedies set forth in Article IX. 
  
 8.04 No Covenants, Conditions or Restrictions 
  
 A. Owner covenants that, as of the Effective Date and during the Term, there will not be (unless Manager has given its prior consent thereto) any 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 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; or (iv) would subject the Hotel to exclusive arrangements regarding food and beverage operation or retail merchandise. 
  
 B. Unless otherwise agreed by both Owner and Manager, all financial obligations imposed on Owner or on the Hotel pursuant to any CC&Rs hereafter
affecting the Hotel shall be paid by Owner from its own funds, and not from Gross Revenues or from the Reserve. Manager’s consent to any such CC&R shall be conditioned (among other things) on satisfactory evidence that: (i) the CC&R in
question provides a reasonable and cost-effective benefit to the operation of the Hotel; (ii) the costs incurred (including administrative expenses) pursuant to such CC&R will be both reasonable and allocated to the Hotel on a reasonable basis;
and (iii) no capital expenditures incurred pursuant to said CC&R will be paid from Gross Revenues or from the Reserve (but rather, such capital expenditures will be paid separately by Owner). 
  
 8.05 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. 
  

 23 

 ARTICLE IX 
  

DEFAULTS 
  
 9.01 Events of Default 
  
 Each of the following shall, to the extent permitted by applicable law, constitute a “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. Upon the occurrence of any Default by either party (referred to as the “defaulting
party”) as described under this Section 9.01.A., said Default shall be deemed an “Event of Default” under this Agreement. 
  
 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. Upon the occurrence of any Default by either party as described under this Section 9.01.B., said Default shall be deemed an “Event of Default” under this Agreement. 
  
 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). Upon the occurrence of any Default by either party as described under this Section 9.01.C., said
Default shall be deemed an “Event of Default” under this Agreement. 
  
 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. Upon the occurrence of any Default by either
party as described under this Section 9.01.D., said Default shall be deemed an “Event of Default” under this Agreement if the defaulting party fails to cure such Default within ten (10) days after receipt of written notice from the
non-defaulting party demanding such cure. 
  
 E. Owner or any of
Owner’s Affiliates is or becomes a Specially Designated National or Blocked Person. Upon the occurrence of any Default as described in this Section 9.01.E., said Default shall be deemed an “Event of Default” under this Agreement.

  
 F. 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. Upon the occurrence of any Default by either party as described under this Section 9.01.F., said Default shall be deemed an “Event of Default” under this Agreement if the defaulting party fails to cure the Default
within thirty (30) days after receipt of written notice from the non-defaulting party demanding such cure, or, if the Default is 

  

 24 

 
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. 
  
 9.02 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) if the Event of Default has a material adverse impact on the non-defaulting party, 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 and further provided that, if the defaulting party is Manager, the foregoing period of thirty (30) days shall be extended to seventy-five (75)
days (or such longer period of time as may be necessary under Legal Requirements pertaining to termination of employment); (2) to institute forthwith any and all proceedings permitted by law or equity including, without limitation (but subject to
the provisions of Section 11.23 hereof), actions for specific performance and/or damages; and/or (3) to avail itself of the remedies described in Section 9.03. 
  

9.03 Additional Remedies 
  
 A. Upon the occurrence of a Default by either party under the provisions of Section 9.01.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. Upon the occurrence of a Default by Owner under the provisions of Section 9.01.D., Manager shall have the right (without affecting Manager’s other
remedies under this Agreement) to withdraw the amount (plus accrued interest as described in Section 9.03.A. above) owed to Manager by Owner from distributions otherwise payable to Owner pursuant to Section 3.02 and Section 4.01 of this Agreement.

  
 C. Manager and/or any Affiliate of Manager shall be entitled,
in case of any breach of the covenants of Section 11.11.E., Section 11.11.F. or Section 11.12 by Owner or others claiming through it, to injunctive relief and to any other right or remedy available at law or in equity. 
  
 D. The remedies granted under Section 9.02 and Section 9.03 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. 
  

 25 

 ARTICLE X 
  

ASSIGNMENT AND SALE 
  
 10.01 Assignment 
  
 A. Manager shall not assign or transfer its interest in this Agreement without the prior written consent of Owner; provided, however, that Manager shall
have the right, without Owner’s consent, to (1) assign its interest in this Agreement to Marriott or any Affiliate of Marriott which (i) has adequate experience in managing hotels and has adequate capital to conduct its business as Manager
under this Agreement, and (ii) agrees in writing to be bound by and comply with the terms of this Agreement (such written agreement to be delivered to Owner), (2) lease shops or grant concessions at the Hotel in accordance with the terms hereof so
long as the terms of any such leases or concessions do not exceed the Term, (3) assign its interest in this Agreement in connection with a merger or consolidation or a sale of all or substantially all of the assets of Manager or Marriott, and (4)
assign its interest in this Agreement in connection with a merger or consolidation or a sale of all or substantially all of the System assets owned by Manager, Marriott or any Affiliate of Manager or Marriott, if the successor or purchaser (i) has
adequate experience in managing hotels and has adequate capital to conduct its business as Manager under this Agreement, and (ii) agrees in writing to be bound by and comply with the terms of this Agreement (such written agreement to be delivered to
Owner). 
  
 B. Owner shall not assign or transfer its interest in
this Agreement without the prior written consent of the Manager; provided, however, that Owner shall have the right, without such consent, to (1) conditionally assign this Agreement as security for a Mortgage of the Hotel in accordance with this
Agreement, (2) assign its interest in this Agreement in connection with a Sale of the Hotel which complies with the provisions of Section 10.02 of this Agreement, (3) assign its interest in this Agreement in connection with any sale, assignment,
transfer or other disposition of the Hotel by Owner or Landlord to an Affiliate of Owner, subject to compliance with the provisions of Section 10.02.A, and (4) assign its interest in this Agreement in connection with a merger or consolidation or a
sale of all or substantially all of the assets of Apple REIT Six, Inc., subject to the provisions of Section 10.02.A. 
  
 C. In the event either party consents to an assignment of this Agreement by the other, no further assignment shall be made without the express consent in
writing of such party, unless such assignment may otherwise be made without such consent pursuant to the terms of this Agreement. An assignment by either Owner or Manager of its interest in this Agreement shall not relieve Owner or Manager, as the
case may be, from its respective obligations under this Agreement, and shall inure to the benefit of, and be binding upon, its respective successors, heirs, legal representatives, or assigns. 
  
 10.02 Sale of the Hotel 
  
 A. Neither Owner nor Landlord shall enter into any Sale of the Hotel to any
Person (or any Affiliate of any Person) who: (1) does not, in Manager’s reasonable judgment, have sufficient financial resources to fulfill Owner’s obligations under this Agreement; (2) is known 

  

 26 

 
in the community as being of bad moral character, or has been convicted of a felony in any state or federal court, or is in control of or controlled by
Persons who have been convicted of felonies in any state or federal court; (3) either directly or indirectly, has an ownership interest (other than the ownership of not more than five percent (5%) of the outstanding common stock of any publicly-held
company) in a brand of hotels totaling at least twenty (20) hotels, or in a group of hotels totaling at least twenty (20) hotels that are not affiliated with a brand but that are marketed and operated as a collective group, if such brand or group of
hotels competes with Manager, Marriott or any Affiliate thereof; or (4) such Person or any of its Affiliates is a Specially Designated National or Blocked Person. An individual or entity shall not be deemed to be in the business of operating hotels
or other lodging facilities in competition with Manager, Marriott or any Affiliate solely by virtue of (x) the ownership of such hotels or other lodging facilities, either directly or indirectly through subsidiaries, affiliates and partnerships, or
(y) holding a mortgage or mortgages secured by one or more hotels or other lodging facilities. Furthermore, Owner shall not enter into a Sale of the Hotel if Owner is at the time in Default under the terms of this Agreement. 
  
 B. If Owner or Landlord decides to sell or lease the Hotel to a third party,
then prior to offering the Hotel for sale or lease or negotiating a Sale of the Hotel with any third party, Owner and Landlord will give Manager notice of such decision (“Notice of Intent to Sell”), and Owner and Landlord, as applicable,
and Manager will, during the period of thirty (30) days after such notice, attempt in good faith to negotiate a mutually satisfactory agreement for the purchase of the Hotel. For purposes of this Section 10.02.B., a sale to a third party shall not
include any transfer, sale or assignment to a Mortgagee nor to a sale at Foreclosure under a Mortgage. If, after the expiration of thirty (30) days following the date of Owner’s notice of its desire to sell or lease the Hotel, Owner, Landlord
and Manager have not entered into a mutually acceptable agreement for the purchase or lease of the Hotel, Owner or Landlord shall be free, subject to the conditions of this Section 10.02, to sell or lease the Hotel to a third party provided; (i) the
Hotel is to be sold or leased in conjunction with other hotels not operated by Manager or its Affiliates, or other hotels operated by Manager or it Affiliates but for which Manager or such Affiliates do not have a right of first negotiation as
described in this Section 10.02.B; or (ii) the Hotel is sold as a single asset or is sold in conjunction with other hotels operated by Manager or its Affiliates for which Manager or such Affiliates have a right of first negotiation as described in
this Section 10.02.B, and the price or rental for the Hotel to such third party has not been reduced by more than five percent (5%) of the price or rental which Owner or Landlord offered to sell or rent the Hotel to Manager. Notwithstanding the
foregoing, any sale or lease shall be subject to the following further conditions: 
  
 1. Owner and Landlord shall deliver a written notice (the “Notice of Proposed Sale”) (which Notice of Proposed Sale may be given
concurrently with the Notice of Intent to Sell), of the proposed Sale of the Hotel to Manager stating: (i) the name of the prospective purchaser or tenant, as the case may be; (ii) the price or rental; and (iii) the terms and conditions of such
proposed Sale of the Hotel, together with all other information reasonably requested by Manager. 
  
 2. Within thirty (30) days after the date of receipt of such Notice of Proposed Sale from Owner and such other information, if Manager and
Landlord or Owner have not 

  

 27 

 
entered into a mutually acceptable agreement for the purchase or lease of the Hotel, Manager shall elect, by written notice to Owner and Landlord, one of the
following two (2) alternatives: 
  
 a. To consent
to such Sale of the Hotel and to the assignment of this Agreement to such purchaser or tenant, provided that concurrently with the closing thereof, the purchaser or tenant, as the case may be, shall, by appropriate instrument in form satisfactory to
Manager, assume all of Owner’s obligations under this Agreement. An executed original of such assumption agreement shall be delivered to Manager; or 
  
 b. To not consent to such proposed Sale of the Hotel, based upon such Sale of the Hotel not being in compliance with Section 10.02.A.
above, specifying in reasonable detail the reasons for such decision, in which event such Sale of the Hotel shall not be permitted hereunder and it shall be an Event of Default for Owner to proceed with such Sale of the Hotel. 
  
 C. If Manager shall fail to elect one of the alternatives set forth in
Section 10.02.B.2. above, within said thirty (30) day period, such failure shall be deemed to constitute an election to consent under Section 10.02.B.2.a. above, and the provisions thereof shall prevail as if Manager had consented in writing
thereto. Any proposed Sale of the Hotel with respect to which a Notice of Proposed Sale has been delivered by Owner to Manager hereunder must be finalized within one hundred eighty (180) days following the date of Manager’s written notice in
response to such Notice of Proposed Sale. Failing such finalization, such Notice of Proposed Sale, and any response thereto given by Manager, shall be null and void and all of the provisions of Section 10.02.B. and Section 10.02.C. must again be
complied with before Owner or Landlord, as applicable, shall have the right to finalize a Sale of the Hotel upon the terms contained in said Notice of Proposed Sale, or otherwise. 
  
 D. If Manager consents (or is deemed to have consented) to the proposed Sale of the Hotel, then Manager shall have the
option to require (in lieu of receipt of the assumption agreement described in Section 10.02.B.2.a.) that such purchaser or tenant enter into a new management agreement with Manager, which new management agreement will be on all of the terms and
conditions of this Agreement except that the Initial Term and Renewal Term(s) of any such new agreement shall consist only of the balance of the Initial Term and Renewal Term(s) remaining under this Agreement at the time of execution of any such new
management agreement. Such new management agreement shall be executed by Manager and such new owner at the time of closing of the Sale of the Hotel, and a memorandum of such new management agreement shall be executed by the parties and recorded
immediately following recording of the deed or memorandum of lease (or assignment) and prior to recordation of any other documents. 
  
 E. Each party hereby represents and warrants to the other that neither such party nor any of its Affiliates is a Specially Designated National or Blocked
Person. Owner hereby represents and warrants to Manager that its equity is directly and (if applicable) indirectly owned as shown on Exhibit B. In connection with the possibility of a Sale of the Hotel achieved by means of a transfer of the
controlling interest in Owner or Landlord, Owner shall, from time to time, within thirty (30) days after written request by Manager, furnish Manager with a list of the 

  

 28 

 
names and addresses of the direct and indirect owners of capital stock, partnership interest, or other proprietary interest of Owner and Landlord, provided
that Owner and Landlord shall not be required to provide the names and addresses of shareholders of a public company. 
  
 F. It is understood that no Sale of the Hotel shall reduce, require any increase or otherwise affect: (i) the current level of Working Capital; (ii) the
outstanding balance deposited in the Reserve; (iii) the outstanding balance in any of the Operating Accounts maintained by Manager pursuant to this Agreement; or (iv) Owner’s Priority. If, in connection with any Sale of the Hotel, the selling
Owner intends to withdraw, for its own use, any of the cash deposits described in the preceding sentence, the selling Owner must obtain the contractual obligation of the buying Owner to replenish those deposits (in the identical amounts)
simultaneously with such withdrawal. The selling Owner is hereby contractually obligated to Manager to ensure that such replenishment in fact occurs. The obligations described in this Section 10.02.F. shall survive such Sale of the Hotel and shall
survive Termination. 
  
 G. The terms and provisions of this
Agreement shall be binding upon all successors to Owner’s and Landlord’s interest in the Site and/or the Hotel. Each selling Owner shall be obligated to Manager to obtain from each buying Owner an assumption (reasonably satisfactory to
Manager) of this Agreement. 
  
 H. To the extent permitted by
applicable law, Manager shall have the right (without prejudice to its rights to declare an Event of Default and seek damages or other compensation) to terminate this Agreement, on thirty (30) days’ written notice, if title to or possession of
the Hotel is transferred by judicial or administrative process (including, without limitation, a Foreclosure, or a sale pursuant to an order of a bankruptcy court, or a sale by a court-appointed receiver) to an individual or entity which would not
qualify as a permitted transferee under Section 10.02.A., regardless of whether or not such transfer is the voluntary action of the transferring Owner, or whether (under applicable law) the Owner is in fact the transferor. 
  
 ARTICLE XI 
  
 MISCELLANEOUS 
  
 11.01 Right to Make Agreement 
  
 Each party warrants, with respect to itself, that neither the execution of
this Agreement nor the finalization 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. 
  

 29 

 11.02 Consents and Cooperation 
  
 Wherever in this Agreement the consent or approval of Owner or Manager is required, such consent or approval shall not be
unreasonably withheld, delayed or conditioned, shall be in writing and shall be executed by a duly authorized officer or agent of the party granting such consent or approval. If either Owner or Manager fails to respond within thirty (30) days to a
request by the other party for a consent or approval, such consent or approval shall be deemed to have been given (except as otherwise provided in this Agreement). Additionally, Owner agrees to cooperate with Manager by executing such leases,
subleases, licenses, concessions, equipment leases, service contracts and other agreements negotiated in good faith by Manager and pertaining to the Hotel that, in Manager’s reasonable judgment, should be made in the name of the Owner.

  
 11.03 Relationship 
  
 In the performance of this Agreement, Manager shall act solely as an
independent contractor. Neither this Agreement nor any agreements, instruments, documents, or transactions contemplated hereby shall in any respect be interpreted, deemed or construed as making Manager a partner, joint venturer with, or agent of,
Owner. Owner and Manager agree that neither party will make any contrary assertion, claim or counterclaim in any action, suit, Expert resolution pursuant to Section 11.21, arbitration or other legal proceedings involving Owner and Manager.

  
 11.04 Applicable Law 
  
 This Agreement shall be construed under and shall be governed by the laws of
the State of Maryland, without regard to that state’s conflict of laws provisions. 
  
 11.05 Recordation 
  
 The
terms and provisions of this Agreement shall run with the parcel of land designated as the Site, and with Owner’s interest therein, and shall be binding upon all successors to such interest. Simultaneously with the execution of this Agreement,
the parties shall execute a recordable “Memorandum of Management Agreement,” in the form which is attached hereto as Exhibit C. Such memorandum shall be recorded or registered, at Manager’s cost, promptly following the
Effective Date in the jurisdiction in which the Hotel is located. Upon Termination of this Agreement for any reason other than a default by Owner, Manager shall, at its own expense, promptly record a release of any such memorandum recorded
hereunder. 
  
 11.06 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. 
  

 30 

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

			
	 To Owner:
	 	 Apple Six Hospitality Management, Inc.

	 	 	 c/o Apple REIT Companies

	 	 	 10 South Third Street

	 	 	 Richmond, Virginia 23219

	 	 	 Attn:    Samuel F. Reynolds, Director of Acquisitions/ Dispositions & Portfolio
Management

	 	 	 Attn:    General Counsel

	 	 	 Phone:  (804) 344-8121

	 	 	 Fax:      (804) 344-8129

		
	 To Manager:
	 	 Courtyard Management Corporation

	 	 	 c/o Marriott International, Inc.

	 	 	 10400 Fernwood Road

	 	 	 Bethesda, Maryland 20817

	 	 	 Attn:    Department 52/923-Lodging Operations

	 	 	 Phone:  (301) 380-9555

	 	 	 Fax:      (301) 380-6727

		
	 with copy to:
	 	 Courtyard Management Corporation

	 	 	 c/o Marriott International, Inc.

	 	 	 10400 Fernwood Road

	 	 	 Bethesda, Maryland 20817

	 	 	 Attn:    Dept. 51/911.95 – Global Asset Management

	 	 	 Phone:  (301) 380-1380

	 	 	 Fax:      (301) 380-4700

  
 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. 
  
 11.08
Environmental Matters 
  
 A. Owner hereby represents and
warrants to Manager that, to Owner’s actual knowledge, as of the Effective Date, there are no Hazardous Materials (as defined below) on any 

  

 31 

 
portion of the Site or the Hotel, nor have any Hazardous Materials been released or discharged on any portion of the Site or the Hotel. In addition, Owner
hereby represents and warrants that it has previously delivered to Manager copies of all reports concerning environmental conditions which have been received by Owner or any of its Affiliates. In the event of the discovery of Hazardous Materials on
any portion of the Site or in the Hotel during the Term, Owner shall promptly remove such Hazardous Materials, together with all contaminated soil and containers, and shall otherwise remedy the problem in accordance with (1) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as amended; (2) the regulations promulgated thereunder, from time to time; (3) all federal, state and local laws, rules and regulations (now or hereafter in
effect) dealing with the use, generation, treatment, storage, disposal or abatement of Hazardous Materials; and (4) the regulations promulgated thereunder, from time to time (collectively referred to as “Environmental Laws”). Owner shall
indemnify, defend and hold Manager harmless from and against all loss, costs, liability and damage (including, without limitation, engineers’ and attorneys’ fees and expenses, and the cost of Litigation) to the extent arising from the
presence of Hazardous Materials on the Site or in the Hotel; and this obligation of Owner shall survive Termination. “Hazardous Materials” shall mean and include any substance or material containing one or more of any of the following:
“hazardous material,” “hazardous waste,” “hazardous substance,” “regulated substance,” “petroleum,” “pollutant,” “contaminant,” “polychlorinated biphenyls,” “lead
or lead-based paint” or “asbestos” as such terms are defined in any applicable Environmental Law in such concentration(s) or amount(s) as may impose clean-up, removal, monitoring or other responsibility under the Environmental Laws,
as the same may be amended from time to time, or which may present a significant risk of harm to guests, invitees or employees of the Hotel. 
  
 B. All costs and expenses of the aforesaid removal of Hazardous Materials from the Site or the Hotel, and of the aforesaid compliance with all
Environmental Laws, and any amounts paid to Manager pursuant to the indemnity set forth in Section 11.08.A. (collectively, the “Environmental Costs”), shall be paid by Owner from its own funds, and not from Gross Revenues or from the
Reserve. If the Environmental Costs exceed the combined Operating Profit for the two full Fiscal Years immediately preceding the Fiscal Year(s) in which such Environmental Costs are incurred, Owner shall provide written notice to Manager thereof,
and Manager shall have thirty (30) days from receipt of such notice to elect by written notice to Owner to either (i) terminate this Agreement in which event this Agreement shall terminate on the date that is sixty (60) days after Owner’s
receipt of such written termination notice from Manager; or (ii) increase Owner’s Priority by an amount equal to twelve percent (12%) of such Environmental Costs. If Manager does not provide notice of its election to Owner, Manager shall be
deemed to have elected to increase Owner’s Priority in accordance with Section 11.08.B(ii). If Manager elects, or is deemed to have elected, to increase Owner’s Priority in accordance with Section 11.08.B(ii), such increase shall be
effective upon (and to the extent of) the payment of such Environmental Costs. Notwithstanding anything to the contrary in this Agreement, Environmental Costs shall not be added to Owner’s Priority for purposes of calculating the Performance
Termination Threshold. Any dispute with respect to such Environmental Costs shall be referred to the Expert as provided in Section 11.21. 
  

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 11.09 Confidentiality 
  
 Owner and Manager agree that the terms of this Agreement are strictly confidential and will use their reasonable efforts to
ensure that such matters and information are not disclosed to any outside person or entities without the prior written consent of the other party, except (1) as either party 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 their Affiliates or, (2) to the extent necessary, (i) to obtain licenses, permits and other public approvals, (ii) in connection with a financing of the Hotel,
Owner, Landlord or any Affiliate thereof, (iii) in connection with a Sale of the Hotel or other sale of Owner, Landlord or any Affiliate thereof or its or their corporate assets, (iv) in connection with a financing or sale of Manager, Marriott, or
any Affiliate thereof or its or their corporate assets, or (v) subject to the provisions of Section 4.02, in connection with an audit or other investigation conducted pursuant to this Agreement. Notwithstanding the foregoing or anything to the
contrary set forth herein, the terms of this Agreement shall not be deemed confidential to the extent: (a) such information becomes generally available to the public other than as a result of unauthorized disclosure by the recipient or persons to
whom such recipient has made the information available; (b) the recipient can demonstrate that such information was received by such recipient on a non-confidential basis, prior to receipt from the other party, from a third party lawfully possessing
and lawfully entitled to disclose such information; (c) such confidential information consists of aggregated historical financial information for the Hotels in Owner’s portfolio; and (d) 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 eighty percent (80%) of all hotel owners directly or indirectly owning hotels in the
United States. 
  
 11.10 Projections 
  
 Owner acknowledges that any written or oral projections, pro formas, or other
similar information that has been (prior to execution of this Agreement) or will (during the Term) be provided by Manager or Marriott (or any Affiliate of either) to Owner is for information purposes only, and that Manager, Marriott, and any such
Affiliate do not guarantee that the Hotel will achieve the results set forth in any such projections, pro formas, or other similar information. Owner further acknowledges that any such projections, pro formas, or other similar information are based
on assumptions and estimates, unanticipated events may occur subsequent to the date of preparation of such projections, pro formas, and other similar information, and the actual results achieved by the Hotel are likely to vary from the estimates
contained in any such projections, pro formas, or other similar information and such variations might be material. 
  
 11.11 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 

  

 33 

 
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 a 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 release and transfer to Owner any of Owner’s funds which are held or controlled by Manager with respect to the Hotel with the exception of funds to be held in accordance with Section 6.04.B. and Section 11.11.G. and otherwise in
accordance herewith. 
  
 C. Manager shall make available to Owner
such books and records respecting the Hotel (including those from prior years, subject to Manager’s reasonable records retention policies) as will be needed by Owner to prepare the accounting statements, in accordance with the Uniform System of
Accounts, for the Hotel for the year in which the Termination occurs and for any subsequent year. 
  
 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 such licenses or permits, Owner shall reimburse Manager therefor if it has not
done so already. 
  
 E. Manager shall have the option, to be
exercised within thirty (30) days after Termination, to purchase, at their then book value, any items of the Hotel’s Inventories and Fixed Asset Supplies as may be marked with any Marriott Trademarks. Upon Termination, all use of or right to
use the Marriott Trademarks at or in connection with the Hotel shall cease forthwith, and Owner shall (i) immediately, as of the date of such Termination, place coverings over any signs or similar identification which contain any of the Marriott
Trademarks, or shall otherwise render such signs or other similar identification not visible to the public; (ii) remove any such signs or similar identification from the Hotel by no later than ten (10) days after the date of Termination; and (iii)
no later than ten (10) days after the date of such Termination, remove from the Hotel all Fixed Asset Supplies, Inventories and other items bearing any Marriott Trademark or remove all Marriott Trademarks from such items. If Owner has not removed
such signs or other items bearing Marriott Trademarks within ten (10) days after Termination, Manager shall have the right to do so at Owner’s expense; and if Owner fails to reimburse Manager for such expense within ten (10) days after receipt
of written notice thereof from Manager to Owner, then Manager shall have the right (without affecting Manager’s other remedies under this Agreement) to withdraw the amount of such expenses from the Operating Accounts, the Reserve, or any other
funds of Owner held by or under the control of Manager. Manager shall have the right to seek injunctive or other relief in a court of competent jurisdiction to enforce the foregoing provisions, and if such enforcement shall be necessary, Owner shall
bear all of Manager’s costs of such enforcement, including attorneys’ fees. 
  

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 F. All Software used at the Hotel which is owned by any of the Marriott Companies (or any Affiliates
thereof) or the licensor of any of them is proprietary to such Marriott Company (or such Affiliate) or the licensor of any of them, and shall in all events remain the exclusive property of such Marriott Company (or such Affiliate) or the licensor of
any of them, as the case may be, and nothing contained in this Agreement shall confer on Owner the right to use any of such Software. Manager shall have the right to remove from the Hotel without compensation to Owner any Software (including
upgrades and replacements). Furthermore, upon Termination, notwithstanding Section 5.04 hereof, Manager shall be entitled to remove from the Hotel any computer equipment which is: (i) owned by a party other than Owner (without reimbursement to
Owner); or (ii) owned by Owner, but utilized as part of a centralized reservation or property management system (with reimbursement to Owner of all previous expenditures made by Owner with respect to such equipment, subject to a reasonable allowance
for depreciation). Manager shall provide Owner hard copies (or to the extent technologically feasible, the electronic transfer) of guest information contained on such Software, sufficient to allow Owner to service existing guests of the Hotel as of
the Termination date and bookings (including group and transient business) on dates following the Termination of this Agreement. 
  
 G. If this Agreement is terminated for any reason, other than a Termination by reason of an Event of Default of Manager hereunder, 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) days after
receipt of Manager’s written request therefor, the sums necessary to establish such reserve; and if Owner fails to timely deliver such sums to Manager, Manager shall have the right (without affecting Manager’s other remedies under this
Agreement) to withdraw the amount of such expenses from the Operating Accounts, the Reserve, or any other funds of Owner held by or under the control of Manager. 
  
 H. Other than in connection with a Termination by reason of an Event of Default of Manager hereunder, Owner shall cause the
entity which shall succeed Manager as the operator of the Hotel to hire a sufficient number of the employees at the Hotel to avoid the occurrence, in connection with such Termination, of a “closing” under the WARN Act. 
  
 I. Various other actions shall be taken, as described in this Agreement,
including, but not limited to, the actions described in Section 4.05 and Section 6.04.B. 
  
 J. Manager shall peacefully vacate and surrender the Hotel to Owner. 
  
 The provisions of this Section 11.11 shall survive Termination. 
  

11.12 Trademarks and Intellectual Property 
  
 A. During the Term, the Hotel shall be known as a “Courtyard by Marriott” or a “Marriott Courtyard,” with such alternative
identification determined by Manager from time to 

  

 35 

 
time as may be necessary to provide local or specific geographic definition to the name of the Hotel. However, if the name of the Courtyard by Marriott
system of hotels is changed, Manager will have the right to change the name of the Hotel to conform thereto. 
  
 B. Owner acknowledges that Manager and its Affiliates are the sole and exclusive owners of all rights, title and interest to the Marriott Trademarks,
which shall in all events remain the exclusive property of Manager (or one of its Affiliates). All use of the Marriott Trademarks at or in connection with the Hotel, or as otherwise contemplated by this Agreement, shall be made solely by and inure
solely to the benefit of Manager and its Affiliates. Nothing in this Agreement shall be construed to grant Owner any right of ownership in or right to use or license others to use the Marriott Trademarks. Except for disclosure to the extent required
by applicable Legal Requirements, Owner may not use the Marriott Trademarks without the prior written consent of Manager, which may be withheld in Manager’s sole and absolute discretion, in any manner whatsoever, including, without limitation,
the following: 
  
 1. No reference to Manager,
any Affiliate of Manager, or any Marriott Trademark will be made in any prospectus, private placement memorandum, offering circular or offering documentation related thereto (collectively referred to as the “Prospectus”), issued by Owner
or by one of Owner’s Affiliates or by one or more Mortgagees, which is designed to interest potential investors in debt or equity securities related to the Hotel, unless Manager has given its prior written approval to each such reference, which
Manager may withhold in its sole and absolute discretion. However, regardless of whether Manager has approved all such references, neither Manager nor any Affiliate of Manager will be deemed a sponsor of the offering described in the Prospectus, nor
will it have any responsibility for the Prospectus, and the Prospectus will so state. Owner shall indemnify, defend and hold Manager harmless from and against all loss, costs, liability and damage (including attorneys’ fees and expenses, and
the cost of Litigation) arising out of any Prospectus or the offering described therein. 
  
 2. No reference to Manager, any Affiliate of Manager, or any Marriott Trademark will be made in any material prepared for the purpose of a
Sale of the Hotel, unless Manager has given its prior written approval to each such reference. 
  
 3. No Trade Name adopted by Owner or its Affiliates may include any Marriott Trademark or a term that is confusingly similar to a Marriott
Trademark. Owner shall not apply for registration of any Marriott Trademark in any jurisdiction. 
  
 C. All right, title and interest (including copyright and patent rights) to Intellectual Property shall at all times be the exclusive property of Manager
(or any other Marriott Company). Neither Manager nor any other Marriott Company shall be restricted in disclosing or using any Intellectual Property directly or indirectly by this Agreement, and Manager shall have the right to use it for any
purpose. Owner shall not have any rights to any Intellectual Property, shall treat as confidential any Intellectual Property in its possession, and shall not disclose to any third party any Intellectual Property or use any Intellectual Property for
any purpose whatsoever. Upon Termination, all Intellectual Property shall be removed from the Hotel by Manager, without compensation to Owner, subject to the provisions of Section 11.11.E. regarding Marriott Trademarks. 
  

 36 

 D. Manager and/or its Affiliates shall be entitled, in case of any breach by Owner of any of the
covenants of this Section 11.12, to injunctive relief and to any other right or remedy available at law or in equity. 
  
 E. The provisions of this Section 11.12 shall survive Termination. 
  
 11.13 Waiver 
  
 The failure of either party to insist upon a strict performance of any of the terms or provisions of this Agreement, or to exercise any option, right or
remedy contained in this Agreement, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect. No waiver by either party
of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. 
  
 11.14 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. 
  
 11.15 Survival 
  
 Except as otherwise specifically provided in this Agreement, the rights and obligations of the parties herein shall not survive any Termination.

  
 11.16 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. 
  
 11.17 Intentionally Deleted 
  

11.18 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) 

  

 37 

 
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) whether or not there shall have occurred any event which, with the giving of notice or passage of time or both, would become a Default or Event of Default, and, if so, specifying
each such Default or Event of Default or occurrence of which the certifying party may have knowledge; (iii) the amount, if any, of the Additional Capital Investment; (iv) the amount, if any, of any past due fees or other past due amounts owed to
Manager; and (v) 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. 
  
 11.19 Affiliates 
  
 Manager shall 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; provided that the prices
and/or terms for such goods and/or services are competitive. Additionally, Manager may contract for the purchase of goods and services for the Hotel with third parties that have other contractual relationships with Manager, Marriott and their
Affiliates, so long as the prices and terms are competitive. In determining, pursuant to the foregoing, whether such prices and/or terms are competitive, they will be compared to the prices and/or terms which would be available to Owner from
reputable and qualified parties for goods and/or services of similar quality, and the goods and/or services which are being purchased shall be grouped in reasonable categories, rather than being compared item by item. Any dispute as to whether
prices and/or terms are competitive shall be referred to the Expert as provided in Section 11.21. The prices paid may include overhead and the allowance of a reasonable return to Manager’s Affiliates (or companies in which Manager has an
ownership interest if such interest is not sufficient to make such a company an Affiliate). Owner acknowledges and agrees that, with respect to any purchases of goods or services pursuant to this Section 11.19 and subject to the foregoing
qualification that prices and/or terms are competitive, Manager’s Affiliates may retain for their own benefit any allowances, credits, rebates, commissions and discounts received with respect to any such purchases. 
  
 11.20 Competing Facilities 
  
 A. Neither Manager nor any of its Affiliates shall open for business, or
permit any other person to open for business, any Restricted Hotel within the Restricted Area during the period from the Effective Date to the third (3rd) anniversary of the Effective Date. 
  
 B. Except as set forth in Section 11.20.A, neither this Agreement nor anything implied by the relationship between Manager and Owner shall prohibit any of the Marriott 

  

 38 

 
Companies from constructing, operating, promoting, and/or authorizing others to construct, operate, or promote one or more Marriott Hotels, Marriott Resorts,
Marriott Suites Hotels, RITZ-CARLTON Hotels, Bvlgari Hotels, Renaissance Hotels, Renaissance Suites, Conference Centers by Marriott, Residence Inn by Marriott Hotels, Courtyard by Marriott Hotels, Fairfield Inns,
Fairfield Suites, Marriott Vacation Club International, TownePlace Suites by Marriott, SpringHill Suites by Marriott, or any other lodging concepts, time-share facilities, restaurants, or other business operations of any type, at any location,
including a location proximate to the Site. Owner acknowledges, accepts and agrees further that the Marriott Companies retain the right, from time to time, to construct or operate, or both, or promote or acquire, or authorize or otherwise license
others to construct or operate, or both, or promote or acquire any hotels, lodging concepts or products, restaurants or other business operations of any type whatsoever, including, but not by way of limitation, those listed above, at any location
including one or more sites which may be adjacent, adjoining or proximate to the Site, which business operations may be in direct competition with the Hotel and that any such exercise may adversely affect the operation of the Hotel. 
  
 11.21 Expert Decisions 
  
 Where this Agreement calls for a matter to be referred to an Expert for
determination, the following provisions shall apply: 
  
 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 System Standards (including compliance with
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. 
  

 39 

 11.22 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 IX.

  
 11.23 Waiver of Jury Trial and Consequential and Punitive
Damages 
  
 Owner and Manager each hereby absolutely,
irrevocably and unconditionally waive trial by jury and the right to claim or receive consequential, incidental, special or punitive damages in any litigation, action, claim, suit or proceeding, at law or in equity, arising out of, pertaining to or
in any way associated with the covenants, undertakings, representations or warranties set forth herein, the relationships of the parties hereto, whether as “Owner” or “Manager” or otherwise, this Agreement or any other agreement,
instrument or document entered into in connection herewith, or any actions or omissions in connection with any of the foregoing. 
  
 11.24 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 11.24. 
  
 11.25 Extraordinary Events 
  
 If either Owner’s or Manager’s failure to conform to, keep, perform, fulfill, or satisfy any representation, warranty, covenant, undertaking, obligation, standard, test, or condition set forth in this Agreement, other than an
obligation to make monetary payments or provide monetary funding, is caused in whole or in part by one or more Extraordinary Events, such failure shall not constitute an Event of Default or Default under this Agreement, and such failure shall be
excused for as long as the failure is caused in whole or in part by such Extraordinary Event(s). In order to have any such failure excused pursuant to this Section, the party claiming that an Extraordinary Event caused such failure must notify the
other party in writing within ninety (90) days after the Extraordinary Event first begins to affect its performance. 
  

 40 

 11.26 Entire Agreement 
  
 This Agreement, together with any other writings signed by the parties expressly stated to be supplemental hereto
(including, without limitation, the Owner Agreement) 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. 

 
 ARTICLE XII 
  
 DEFINITION OF TERMS 
  
 12.01 Definition of Terms 
  
 The following terms when used in this Agreement shall have the meanings
indicated: 
  
 “Accounting Period” shall mean the
four (4) week accounting periods having the same beginning and ending dates as Manager’s four (4) week accounting periods, except that an Accounting Period may occasionally contain five (5) weeks when necessary to conform Manager’s
accounting system to the calendar. 
  
 “Accounting Period
Statement” shall have the meaning ascribed to it in Section 4.01.A. 
  
 “Additional Capital Investment” shall mean, as of any given point in time, the total amount of: (i) Capital Expenditures funded by Owner pursuant to Section 5.03, through such point in time; and (ii)
the FF&E Reserve shortfall, if any, funded by Owner in connection with the Hotel’s six (6) year soft goods renovation. 
  
 “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 of such Person; or (ii) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting stock, by
contract or otherwise. 
  
 “Agreement” shall mean
this Management Agreement between Owner and Manager, including the exhibits attached hereto. 
  
 “Annual Operating Projection” shall have the meaning ascribed to it in Section 4.04. 
  
 “Annual Operating Statement” shall have the meaning set forth in Section 4.01.B. 
  

 41 

 “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 Central Office Services, System
Services and Chain Services (except as provided in the definition of Chain Services), pursuant to Section 3.01 and Section 4.01. The Base Management Fee shall be calculated as follows: (i) five percent (5%) of Gross Revenues for the period beginning
on the Effective Date through the 13th full Accounting Period; (ii) six percent (6%) of Gross Revenues beginning
with the 14th Accounting Period through the 26th full Accounting Period; and (iii) seven percent (7%) of Gross Revenues beginning on the 27th Accounting Period and continuing thereafter. 
  
 “Building Estimate” shall have the meaning ascribed to it in Section 5.03.A. 
  
 “Buildings” shall have the meaning ascribed to it in Section
A of the Recitals. 
  
 “Capital Expenditure(s)”
shall mean the costs necessary for non-routine, major repairs, alterations, improvements, renewals, replacements, and additions to the Hotel including, without limitation, to the structure, the exterior facade and all of the mechanical, electrical,
heating, ventilating, air conditioning, plumbing or vertical transportation elements of the Hotel building, together with all other expenditures which are classified as “capital expenditures” under generally-accepted accounting principles.
Capital Expenditures shall not include Routine Capital Expenditures. 
  
 “Capitalization Multiple” shall mean the number ten (10). 
  
 “CC&Rs” shall have the meaning ascribed to it in Section 8.04.A. 
  
 “Central Office Services” shall have the meaning ascribed to it in Section 1.03.B. 
  
 “Chain Services” shall have the meaning ascribed to it in
Section 1.03; provided, however, that the Base Management Fee is intended to cover only the services currently listed (as of the Effective Date) in clause (i) and clause (ii) of the definition of Chain Services in Section 1.03C. Accordingly, if
there are expenditures that were originally treated as Deductions but that are later determined to be more properly treated as Chain Services or if additional central or regional services are (after the Effective Date) furnished for the benefit of
hotels in the “Courtyard by Marriott” System, the Hotel’s allocable share of such expenditures shall be treated as Deductions over and above the Deductions listed in paragraph 7 of the definition of Operating Profit and shall not be
covered by the Base Management Fee. Conversely, if there are expenditures that were (as of the Effective Date) listed in clause (i) or clause (ii) of the definition of Chain Services and included in Chain Services (as of the Effective Date) but that
are later determined to be more properly furnished at the Hotel instead of on a central or regional basis, such expenditures shall not later be treated as Deductions over and above the Deductions listed in paragraph 7 of the definition of Operating
Profit but shall continue to be covered by the Base Management Fee. 
  

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 “Competitive Set” shall mean the group of hotels which are closest in geographical
distance from the Hotel and which are generally within the same hotel market segment as the Hotel. As of the Effective Date, the parties agree that the Competitive Set shall consist of: La Quinta Inn & Suites Myrtle Beach, Hampton Inn Myrtle
Beach Broadway, Holiday Inn Express Hotel (Broadway @ the Beach), Hampton Inn Myrtle Beach (48th Avenue North) and
Fairfield Inn (Broadway). If any of such hotels, subsequent to the Effective Date, either changes its chain affiliation or ceases to operate or otherwise ceases to reflect the general criteria set forth in the first sentence of this definition,
Owner and Manager agree to mutually, reasonably and in good faith, discuss appropriate changes to the foregoing list of the hotels that shall comprise the Competitive Set. Disputes regarding such changes to the Competitive Set will be resolved by
the Expert in accordance with the provisions of Section 11.21. 
  
 “Coverage Ratio” shall mean the number one and four tenths (1.4). 
  
 “Cure Payment” shall have the meaning set forth in Section 2.02.B. 
  
 “Deductions” shall have the meaning ascribed to it in the definition of Operating Profit. 
  
 “Default” shall have the meaning ascribed to it in Section
9.01. 
  
 “Effective Date” shall have the meaning
ascribed to it in the Preamble. 
  
 “Environmental
Laws” shall have the meaning ascribed to it in Section 11.08.A. 
  
 “Event of Default” shall have the meaning ascribed to it in Section 9.01. 
  
 “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 within
six (6) months prior to such date, 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 

  

 43 

 
be a qualified person having at least ten (10) years recent professional experience as to the subject matter in question. 
  
 “Extraordinary Event” shall mean any of the following
events, regardless of where it occurs or its duration: acts of nature without the interference of any human agency (including hurricanes, typhoons, tornadoes, cyclones, other severe storms, winds, lightning, floods, earthquakes, volcanic eruptions,
fires, explosions, disease, or epidemics); fires and explosions caused wholly or in part by human agency; acts of war or armed conflict; riots or other civil commotion; terrorism (including hijacking, sabotage, chemical or biological attack,
bombing, murder, assault and kidnapping), or the threat thereof; strikes or similar labor disturbances; shortage of critical materials or supplies; action or inaction of governmental authorities having jurisdiction over the Hotel (including the
imposition of restrictions on room rates or wages or other material aspects of operation, or 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 the Extraordinary Event); and any other events beyond the reasonable control of Owner or Manager, excluding, however, general economic and/or market conditions not caused by any of the events described herein. 
  
 “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 Manager’s Fiscal Year which as of the Effective Date ends at midnight on the Friday closest to December 31 in each calendar year; the new Fiscal Year begins on the Saturday immediately
following said Friday. Any partial Fiscal Year between the Effective Date and the commencement of the first full Fiscal Year shall constitute a separate Fiscal Year. A partial Fiscal Year between the end of the last full Fiscal Year and the
Termination of this Agreement shall also constitute a separate Fiscal Year. If Manager’s 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 or in any way reduce the distributions of Operating Profit or other payments due hereunder. 
  
 “Fixed Asset Supplies” shall mean items included within “Property and Equipment” under the Uniform System of Accounts
including, but not limited to, linen, china, glassware, tableware, uniforms, and similar items, whether used in connection with public space or Guest Rooms. 
  
 “Foreclosure” shall mean any exercise of the remedies available to a Mortgagee, upon a default under the Mortgage held by such Mortgagee,
which results in a transfer of title to or possession of the Hotel. The term “Foreclosure” shall include, without limitation, any one or more of the following events, if they occur in connection with a default under a Mortgage: (i) a

  

 44 

 
transfer by 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. 
  
 “GDP Deflator” shall mean the “Gross Domestic Product Implicit Price Deflator” issued from time
to time by the United States Bureau of Economic Analysis of the Department of Commerce, or if the aforesaid GDP Deflator is not at such time so prepared and published, any comparable index selected by Owner and reasonably satisfactory to Manager (a
“Substitute Index”) then prepared and published by an agency of the Government of the United States, appropriately adjusted for changes in the manner in which such index is prepared and/or year upon which such index is based. Any dispute
regarding the selection of the Substitute Index or the adjustments to be made thereto shall be settled by the Expert in accordance with Section 11.21. Except as otherwise expressly stated herein, whenever a number or amount is required to be
“adjusted by the GDP Deflator,” or similar terminology, such adjustment shall be equal to the percentage increase or decrease in the GDP Deflator which is issued for the month in which such adjustment is to be made (or, if the GDP Deflator
for such month is not yet publicly available, the GDP Deflator for the most recent month for which the GDP Deflator is publicly available) as compared to the GDP Deflator which was issued for the month in which the Effective Date occurred.

  
 “Gross Revenues” shall mean all revenues and
receipts of every kind derived from operating the Hotel and all departments and parts thereof, including, but not limited to: income (from both cash and credit transactions) from rental of Guest Rooms, telephone charges, stores, offices, exhibit or
sales space of every kind; license, lease and concession fees and rentals (not including gross receipts of licensees, lessees and concessionaires); income from vending machines; income from parking; health club membership fees; food and beverage
sales; wholesale and retail sales of merchandise; service charges; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that Gross Revenues shall not include the following: gratuities to employees of
the Hotel; federal, state or municipal excise, sales or use taxes or any other taxes collected directly from patrons or guests or included as part of the sales price of any goods or services; proceeds from the sale of FF&E; interest received or
accrued with respect to the funds in the Reserve or the other operating accounts of the Hotel; any refunds, rebates, discounts and credits of a similar nature, given, paid or returned in the course of obtaining Gross Revenues or components thereof;
insurance proceeds (other than proceeds from business interruption or other loss of income insurance); condemnation proceeds (other than for a temporary taking); or any proceeds from any Sale of the Hotel or from the refinancing of any debt
encumbering the Hotel. 
  
 “Guest Profile Data”
shall mean personal guest profiles and information regarding guest preferences, including, without limitation, any information derived from or contained in any frequent traveler program. 
  
 “Guest Room” shall mean a separately-keyed lodging unit in the Hotel. 
  

 45 

 “Guest Room Revenues” shall mean the portion of Gross Revenues of the Hotel which is
attributed to the rental of Guest Rooms. 
  
 “Hazardous
Materials” shall have the meaning ascribed to it in Section 11.08.A. 
  
 “Hotel” shall mean the Site together with the Buildings and all other improvements constructed 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 Section B of the Recitals. 
  
 “Impositions” shall have the meaning ascribed to it in
Section 4.07. 
  
 “Incentive Management Fee”
shall mean an amount payable to Manager, pursuant to Section 3.01 and Section 4.01, that is equal to twenty-five percent (25%) of Available Cash Flow in any Fiscal Year (or portion thereof). 
  
 “Initial Investment” shall mean: (i) Nine Million Two
Hundred Thousand Dollars ($9,200,000), which represents the price Owner paid for the Hotel; (ii) the Replacement Replenishment; and (iii) initial Working Capital as set forth in Section 4.05. 
  
 “Initial Term” shall have the meaning ascribed to it in
Section 2.01. 
  
 “Institutional Lender” shall
mean a foreign or domestic commercial bank, trust company, savings bank, savings and loan association, life insurance company, real estate investment trust, pension trust, pension plan or pension fund, a public or privately-held fund engaged in real
estate and/or corporate lending, or any other financial institution or financial services company then commonly known as an institutional lender (or any Affiliate thereof,) having a minimum paid up capital or minimum net worth (or net assets in the
case of a pension fund) of One Hundred Million Dollars ($100,000,000); provided, however, such lender shall be deemed to have satisfied this criteria if an Affiliate of such lender satisfies such criteria. 
  
 “Insurance Retention” shall have the meaning ascribed to it
in Section 6.04.C. 
  
 “Intellectual Property”
shall mean: (i) all Software, including the data and information processed or stored thereby; (ii) all manuals, brochures, directives, policies, programs and other information issued by Manager to its employees at the Hotel or otherwise used in the
operation of the Hotel or any other hotel in the Courtyard by Marriott system of hotels; (iii) customer information, customer lists and Guest Profile Data; (iv) all Marriott Trademarks; and (v) all Marriott (or other Marriott Company) trade secrets,
confidential information and all other information, materials, and copyrightable or patentable subject matter developed, acquired, licensed or used by any Marriott Company in the operation of the Hotel or in any other hotel in the Courtyard by
Marriott System of hotels, including, without limitation, materials relating to sales and marketing programs, revenue management programs, brand and pricing strategies, 

  

 46 

 
business and technology plans, and research and development reports. The foregoing shall apply regardless of the form or medium involved (e.g., paper,
electronic, tape, tangible or intangible). 
  
 “Inventories” shall mean “Inventories” as defined in the Uniform System of Accounts, such as, but not limited to, provisions in storerooms, refrigerators, pantries and kitchens; beverages in wine cellars and bars;
other merchandise intended for sale; fuel; mechanical supplies; stationery; and other expensed supplies and similar items. 
  
 “Landlord” shall have the meaning ascribed to it in Section A of the Recitals. 
  
 “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 successor or
permitted assign, as applicable. 
  
 “Marketing
Fund” shall mean that certain fund (or any successor to such fund) maintained by Manager or one of its Affiliates, in its capacity as franchisor of the System, to pay for the following System costs: all costs associated with developing,
preparing, producing, directing, administering, conducting, maintaining and disseminating advertising, marketing, promotional and public relations materials, programs, campaigns, sales and marketing seminars and training programs, and similar
activities of every kind and nature, including the Courtyard Hotel directory; and conducting market research; provided, however, that any costs described in this definition of Marketing Fund may, at the option of the Manager and any association
which may be formed by the Courtyard by Marriott franchisees, be charged directly to each hotel in the System on the basis of actual use by or benefit to each hotel and, in such event, shall become Deductions. Owner shall contribute to the Marketing
Fund. As of the Effective Date, the current system-wide charge is two percent (2.0%) of Guest Room Revenues, but is subject to change on an annual basis. 
  
 “Marriott” shall mean Marriott International, Inc., a Delaware corporation, and its successors and assigns. 
  
 “Marriott Company(ies)” shall mean Manager, Marriott, and
any Affiliate of Manager or Marriott. 
  
 “Marriott
Trademark” shall mean: (i) the name and mark “Marriott”; (ii) the federally registered “M” logo; (iii) the name and mark “Courtyard”; and (iv) any word, name, device, 

  

 47 

 
symbol, logo, slogan, design, brand, service mark, Trade Name, other distinctive feature or any combination of the foregoing, whether registered or
unregistered, and whether or not such term contains the “Marriott” and/or “Courtyard” mark, that is used in connection with the Hotel or by reason of extent of usage is associated with hotels in the Courtyard by Marriott and/or
Marriott system of hotels. 
  
 “Mortgage(s)”
shall mean any mortgage, deed of trust, or security document encumbering the Hotel and/or the Site. 
  
 “Mortgagee” shall mean the holder of any Mortgage encumbering the Hotel or the Site. 
  
 “Notice of Intent to Sell” shall have the meaning set forth
in Section 10.02.B. 
  
 “Notice of Proposed Sale”
shall have the meaning set forth in Section 10.02.B. 
  
 “Operating Accounts” shall have the meaning set forth in Section 4.03.A. 
  
 “Operating Loss” shall mean a negative Operating Profit. 
  
 “Operating Profit” shall mean the excess of Gross Revenues over the following deductions
(“Deductions”) incurred by Manager, on behalf of Owner, in operating the Hotel: 
  
 1. the cost of sales, including, without limitation, compensation, fringe benefits, payroll taxes and other costs related to Hotel
employees (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; except that the foregoing costs shall include the equitably allocable portion of
the salary and other employee costs of any general manager or other supervisory personnel assigned to a “cluster” of hotels which includes the Hotel); 
  
 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; 
  
 5. all costs and fees of independent professionals or other third parties who are retained by Manager 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 and/or Affiliates of the Manager for specialized services 

  

 48 

 
(including, without limitation, quality assurance inspectors) and the cost of attendance by employees of the Hotel at training and manpower development
programs sponsored by Manager; 
  
 7. the Base
Management Fee; 
  
 8. insurance costs and
expenses as provided in Section 6.04; 
  
 9.
taxes, if any, payable by or assessed against Manager related to this Agreement or to Manager’s operation of the Hotel (exclusive of Manager’s income taxes or franchise taxes) and all Impositions; 
  
 10. transfers to the Reserve required pursuant to Section
5.02; 
  
 11. transfers required to be made, as
they may change from time to time, to the Marketing Fund in order for the Hotel to remain a member of the System; 
  
 12. all sums charged to the Hotel for room reservations obtained for the Hotel through the reservation system used by Manager (as of the
Effective Date, the current system-wide charge is $2.80 per reservation plus one percent (1%) of Guest Room Revenues, but is subject to change on an annual basis); and 
  
 13. 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. 
  
 The term “Deductions” shall not include (a) debt service payments pursuant to the First Mortgage or any other mortgage financing on the Hotel,
(b) payments pursuant to FF&E Leases or other forms of financing obtained for the FF&E located in or connected with the Hotel, (c) rental payments pursuant to any ground lease of the Site, or (d) rental payments under the Hotel Lease, all of
which shall be paid by Owner from its own funds. 
  
 “Owner” shall have the meaning ascribed to it in the Preamble or shall mean any successor or permitted assign, as applicable. 
  
 “Owner Agreement” shall have the meaning ascribed to it in Section B of the Recitals. 
  
 “Owner’s Priority” shall mean an amount per Fiscal Year
(prorated for any partial Fiscal Year) equal to twelve percent (12%) of the Initial Investment. 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. During the Term, Owner’s Priority automatically shall be increased by an amount equal to twelve percent (12%) of the cost of any Additional Capital Investment. 
  
 “Performance Termination Threshold” shall mean an amount equal to eighty percent (80%) of Owner’s
Priority. 
  

 49 

 “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 (Eastern Edition). 
  
 “Prospectus” shall have the meaning ascribed to it in Section 11.12.B. 
  
 “Qualified Mortgage” shall have the meaning ascribed to it in Section 8.02. 
  
 “Renewal Term” shall have the meaning ascribed to it in
Section 2.01. 
  
 “Repairs and Equipment
Estimate” shall have the meaning ascribed to it in Section 5.02.D. 
  
 “Replacement Replenishment” shall mean an amount equal to Two Hundred Fifty-Four Thousand Eight Hundred and Three Dollars ($254,803.00), which amount was paid by Landlord into the Reserve at the time
of Landlord’s acquisition of the Hotel. 
  
 “Reserve” shall have the meaning ascribed to it in Section 5.02.A. 
  
 “Restricted Area” shall mean that area within a two (2) mile radius of the front door of the Hotel and that is shown on the map attached hereto as Exhibit D. In the event of any conflict
between the description set forth in this definition and the map attached hereto as Exhibit D, the description set forth in this definition shall govern. 
  
 “Restricted Hotel” shall mean any select-service hotel operating under the “Courtyard by
Marriott” trade name as a member of the System. The term “Restricted Hotel” shall not include any one or more of the following: (i) any existing (as of the Effective Date) Courtyard by Marriott hotel; (ii) any full-service Marriott
Hotel or Marriott Suites (or any similar full service lodging product), RITZ-CARLTON hotel, Bvlgari hotel, Conference Center by Marriott, Renaissance, Renaissance Suites, Residence Inn by Marriott Hotel, Fairfield Inn,
Fairfield Suites, Marriott Vacation Club International, SpringHill Suites, TownePlace Suites or any other lodging product (including time share or interval ownership facilities) which is not operated as a select-service hotel under the
“Courtyard by Marriott” trade name and as a member of the System; (iii) any hotel or hotels which are members of a chain of hotels (provided that such chain has a minimum of five (5) or more hotels in operation), all or substantially all
(but in no event less than four (4) hotels) of which are acquired by, or merged with, or franchised by or joined through a marketing agreement with, Manager or one of its Affiliates (or the operation of which is transferred to Manager or one of its
Affiliates); (iv) any hotel or hotels which are members of a group of hotels which is (in a single transaction with a single seller or transferor) acquired by, or merged with, or franchised by or joined through a marketing agreement with, Manager or
one of its Affiliates, or the operation of which is transferred to Manager or one of its Affiliates, provided that such group of hotels contains no fewer than five (5) hotels; (v) any future lodging 

  

 50 

 
product developed by Manager or one of its Affiliates which is not included within the System; or (vi) in the event that any existing hotel in the Restricted
Area described in clause (i) above ceases to operate under the “Courtyard by Marriott” trade name as a member of the System, then for each such hotel (if any), an additional hotel which may operate under the “Courtyard by
Marriott” trade name as a member of the System. 
  
 “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, Manager shall select an alternative source for such data, subject to Owner’s approval. If the parties fail to agree on such
alternative source within a reasonable period of time, the matter shall be resolved by the Expert in accordance with the provisions of Section 11.21. 
  
 “Revenue Index” shall mean that fraction that is equal to (a) the Revenue Per Available Room for the Hotel divided by (b) the average
Revenue Per Available Room for the hotels in the Competitive Set, as set forth in the Revenue Data Publication. Appropriate adjustments to the Revenue Index shall be made in the event of a major renovation of the Hotel. 
  
 “Revenue Index Threshold” shall mean 1.00. 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, but which will be funded from the Reserve (pursuant to Section 5.02), rather than pursuant to the provisions of Section 5.03. Routine Capital Expenditures consist of
the following types of expenditures: exterior and interior repainting; resurfacing building walls and floors; resurfacing parking areas; and miscellaneous similar expenditures (all such types of expenditures to be in accordance with Manager’s
policies as then generally implemented throughout the Courtyard by Marriott system of hotels). 
  
 “Sale of the Hotel” shall mean any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, of the fee simple title to the Site and/or the Hotel. 

  

 51 

 
For purposes of this Agreement, a Sale of the Hotel shall also include: (i) a lease (or sublease) of all or substantially all of the Hotel or Site; or (ii)
any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, in a single transaction or a series of transactions, of the controlling interest in Owner. The phrase “controlling interest,” as used in
the preceding sentence, shall mean either: (x) the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of Owner (through ownership of such shares or by contract); or (y) the
possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of Owner. Subject to the provisions of Section 10.02.A, for purposes of this Agreement, a Sale of the Hotel shall not be deemed or
construed to include: (i) any transfer, conversion, exchange or repurchase of publicly-held or publicly-traded securities of Apple REIT Six, Inc., by operation of law or otherwise, or any issuance of additional securities of Apple REIT Six, Inc.;
(ii) any merger, consolidation or sale of all or substantially all of the assets of Apple REIT Six, Inc.; or (iii) any sale, assignment, transfer or other disposition of the Hotel or Hotel Lease (or permitted amendment thereof) by Owner or Landlord
to an Affiliate of Owner or Landlord, provided that, a subsequent sale, assignment, transfer, lease, sublease or other disposition of the Hotel by, or a change in “controlling interest” of, such Affiliate would constitute a “Sale of
the Hotel”. 
  
 “SEC Filing Period” shall
mean a period of forty-five (45) days after the close of each Fiscal Year. Manager shall in good faith cooperate with Owner to provide the Annual Operating Statement with respect to such Fiscal Year before the end of such 45-day period if reasonably
necessary in order for Owner to prepare and make all required filings with the Securities and Exchange Commission and other applicable governmental agencies; provided, however, that Owner recognizes that it may not be practical for Manager to
provide the Annual Operating Statement sooner than thirty (30) days after the close of each Fiscal Year. 
  
 “Site” shall have the meaning ascribed to it in Section A of the Recitals. 
  
 “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 and/or the
Courtyard by Marriott system of hotels, including without limitation the property management system, the reservation system and the other electronic systems used by Manager in connection with operating or otherwise providing services to the Hotel
and/or the Courtyard by Marriott by Marriott system of hotels. 
  
 “Specially Designated National or Blocked Person” shall mean (i) a person designated by the U.S. Department of Treasury’s Office of Foreign Assets Control from time to time as a “specially designated national or
blocked person” or similar status, (ii) a person described in Section 1 of U.S. Executive Order 13224 issued on September 23, 2001, or (iii) a person otherwise identified by government or legal authority as a person with whom Manager or its
Affiliates are prohibited from transacting business. Currently, a listing of such designations and the text of the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac. 
  

 52 

 “Subordination Agreement” shall have the meaning ascribed to it in Section 8.02.A. and
Section 8.03. 
  
 “Subsequent Owners” shall have
the meaning ascribed to it in Section 8.03.A. 
  
 “System” shall mean all hotels which are operated under the “Courtyard Hotel,” “Courtyard by Marriott” or “Marriott Courtyard” Trade Names. 
  
 “System Services” shall have the meaning ascribed to it in
Section 1.03.A. 
  
 “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, Chain Services, frequent traveler programs such as the Marriott Rewards Program and other similar programs, etc.); (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 then existing hotels in the Courtyard by Marriott system of hotels, including all services and facilities in connection therewith that are customary and usual at comparable hotels in the Courtyard by
Marriott system of hotels. 
  
 “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 from time to time to the extent such revision has been or is in the process of being generally implemented within the Courtyard by Marriott system of hotels. 
  
 “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. 
  

 53 

 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 SIX HOSPITALITY MANAGEMENT, INC., a
Virginia corporation
	 ATTEST:
	 	 	 	 
					
	 By:
	 	 /s/ Jennifer R. Owen
	 	 	 	By:	 	 /s/ Justin G. Knight

	 Name:
	 	 Jennifer R. Owen
	 	 	 	 Name:
	 	 Justin G. Knight

	 Title:
	 	 Assistant Secretary
	 	 	 	 Title:
	 	 Vice President

			
	 	 	 	 	 MANAGER:

			
	 	 	 	 	COURTYARD MANAGEMENT CORPORATION, a
Delaware corporation
	 ATTEST:
	 	 	 	 
					
	By:	 	 /s/ Kevin E. Montand
	 	 	 	By:	 	 /s/ Joel Eisemann

	 Name:
	 	 Kevin E. Montand
	 	 	 	 Name:
	 	 Joel Eisemann

	 Title:
	 	 Assistant Secretary
	 	 	 	 Title:
	 	 Vice President

  

 ACKNOWLEDGMENT 
  

					
	 COMMONWEALTH OF VIRGINIA
	 	)	 	 
	 	 	)	 	ss:
	 CITY OF RICHMOND
	 	)	 	 

  
 On the 8th day of June 2004, before me, the undersigned, a Notary
Public, in and for the Commonwealth of Virginia, personally appeared Justin G. Knight, who acknowledged himself to be the Vice President of Apple Six Hospitality Management, Inc., a corporation, and that he, as such Vice President, being authorized
to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as Vice President. 
  
 In witness whereof, I hereunto set my hand and official seal. 
  

	
	
	 /s/ Debra L. Wilson

	 Notary Public

  
 My commission
expires: 12-31-2006                     
  
 ACKNOWLEDGMENT 
  

					
	 STATE OF MARYLAND
	 	)	 	 
	 	 	)	 	ss:
	 COUNTY OF MONTGOMERY
	 	)	 	 

  
 On the
8th day of June 2004, before me, the undersigned, a Notary Public, in and for the State of Maryland,
personally appeared Joel Eisemann, who acknowledged himself to be the Vice President of Courtyard Management Corporation, a corporation, and that he, as such Vice President, being authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as Vice President. 
  
 In witness whereof, I hereunto set my hand and official seal. 
  

	
	
	 /s/ Denise M. Pilter

	 Notary Public

  
 My commission
expires: November 5, 2005         
  

 EXHIBIT A 
  

LEGAL DESCRIPTION 
  
 All and Singular that certain piece, parcel or tract of land situate, lying and being in the State of South Carolina, County of Horry, consisting of 2.906 +/- acres, and
being more particularly shown and delineated upon a plat entitled, “Survey for Coastal Development Company” by Survey Technology, Inc. dated December 22, 1995, and recorded in Plat Book 140 at Page 173, records of Horry County, South
Carolina. 
  
 TOGETHER WITH all of those certain easement rights benefiting the
above-described property as contained in the Easement Agreement recorded in Book 1677, page 399, records of Horry County, and in the Easement from CNB Corporation in favor of W. Lee Guy, III and Daniel Warren Guy dated October 22, 1993, recorded
October 29, 1993, in Deed Book 1677, at Page 850, records of Horry County. 
  

 EXHIBIT B 
  
 EQUITY INTEREST IN OWNER 
  
 Apple Six Hospitality, Inc. owns one hundred percent (100%) of the equity of Owner. 
  
 Apple REIT Six, Inc. owns one hundred percent (100%) of the equity of Landlord. 

 

 EXHIBIT C 
  
 MEMORANDUM OF MANAGEMENT AGREEMENT 
  
 Prepared by and after Recording, return to: 
  

Marriott International, Inc. 
 10400 Fernwood Road 
 Bethesda, Maryland 20817 

	Attn:    	Law Department – Lodging Operations 

     Dept. 52-923.27 
  
 MEMORANDUM OF
MANAGEMENT AGREEMENT 
  
 (MYRTLE BEACH (BROADWAY), SOUTH
CAROLINA) 
  
 THIS MEMORANDUM OF MANAGEMENT AGREEMENT
(the “Memorandum”) is made and entered into as of this              day of June 2004 and shall become effective as of 12:01 a.m. on June 19, 2004 (the “Effective
Date”), by and between APPLE SIX HOSPITALITY MANAGEMENT, INC., a Virginia corporation (“Owner”), with a mailing address at c/o Apple REIT Companies, 10 South Third Street, Richmond, Virginia 23219 and COURTYARD MANAGEMENT
CORPORATION, a Delaware corporation (“Manager”), with a mailing address of 10400 Fernwood Road, Bethesda, Maryland 20817, and acknowledged by APPLE SIX HOSPITALITY, INC., a Virginia corporation with a mailing address at c/o
Apple REIT Companies, 10 South Third Street, Richmond, Virginia 23219 (“Landlord”). 
  
 W I T N E S S E T H 
  
 Owner and Manager have entered into that certain Management Agreement dated on even date herewith and effective as of the Effective Date (herein, the “Management Agreement”) with respect to the operation of a hotel on the premises
located in the City of Myrtle Beach, State of South Carolina, as more particularly described in Exhibit A attached hereto (the “Site”). 
  
 Owner, as tenant, and Landlord, are parties to that certain Hotel Lease Agreement executed on or about the date hereof wherein Owner leased the Site from
Landlord. 
  
 The Management Agreement is in effect. The term of
the Management Agreement expires at the expiration of the thirtieth (30th) full Fiscal Year after the expiration of
the Fiscal Year in which the Effective Date occurs. Subject to certain conditions contained in the Management Agreement, the Term will be automatically renewed, on the same terms and conditions contained in the Management Agreement, for each of
three (3) successive periods of ten (10) Fiscal Years each. 
  

 The Management Agreement contains terms and restrictions relating to financing of the Hotel. The
Management Agreement also contains terms and conditions relating to Owner’s ability to sell or transfer interests in itself or the Hotel or the Site. 
  
 This Memorandum is not intended to alter or modify in any way the terms and conditions of the Management Agreement. Terms not specifically defined in this
Memorandum are defined in the Management Agreement. 
  
 [SIGNATURES ON FOLLOWING PAGE] 
  

 IN WITNESS WHEREOF, Owner and Manager have caused this Memorandum to be executed under seal by their duly
authorized representatives as of the day first above written, for the purpose of providing an instrument for recording and giving notice of the Management Agreement and certain of the terms and conditions thereto. 
  

									
	 	 	 	 	OWNER:
			
	 	 	 	 	APPLE SIX HOSPITALITY MANAGEMENT, INC., a Virginia corporation
	 ATTEST:
	 	 	 	 
					
	 By:
	 	 	 	 	 	 By:
	 	 
	 Name:
	 	 	 	 	 	 Name:
	 	 J. Philip Hart

	 Title:
	 	 	 	 	 	 Title:
	 	 Senior Vice President

  

									
	 	 	 	 	MANAGER:
			
	 	 	 	 	COURTYARD MANAGEMENT CORPORATION, a Delaware corporation
	 ATTEST:
	 	 	 	 
					
	 By:
	 	 	 	 	 	 By:
	 	 
	 Name:
	 	 	 	 	 	 Name:
	 	 Joel Eisemann

	 Title:
	 	 	 	 	 	 Title:
	 	 Vice President

  

			
	ACKNOWLEDGED ON JUNE             , 2004:
	
	LANDLORD:
	
	APPLE SIX HOSPITALITY, INC., a Virginia corporation
		
	 By:
	 	 
	 Name:
	 	 J. Philip Hart

	 Title:
	 	 Senior Vice President

  

 ACKNOWLEDGMENT 
  

					
	COMMONWEALTH OF VIRGINIA	 	)	 	 
	 	 	)	 	ss:
	COUNTY OF                     	 	)	 	 

  
 On the
             day of June 2004, before me, the undersigned, a Notary Public, in and for the Commonwealth of Virginia, personally appeared J. Philip Hart, who acknowledged himself to
be the Senior Vice President of Apple Six Hospitality Management, Inc., a corporation, and that he, as such Senior Vice President, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as Senior Vice President. 
  
 In
witness whereof, I hereunto set my hand and official seal. 
  

	
	
	 
	 Notary Public

  
 My commission expires:
                                       
              
  
 ACKNOWLEDGMENT 
  

					
	COMMONWEALTH OF VIRGINIA	 	)	 	 
	 	 	)	 	ss:
	COUNTY OF                     	 	)	 	 

  
 On the
             day of June 2004, before me, the undersigned, a Notary Public, in and for the Commonwealth of Virginia, personally appeared J. Philip Hart, who acknowledged himself to
be the Senior Vice President of Apple Six Hospitality, Inc., a corporation, and that he, as such Senior Vice President, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the
corporation by himself as Senior Vice President. 
  
 In witness
whereof, I hereunto set my hand and official seal. 
  

	
	
	 
	 Notary Public

  
 My commission expires:
                                        
             
  

 ACKNOWLEDGMENT 
  

					
	STATE OF MARYLAND	 	)	 	 
	 	 	)	 	ss:
	COUNTY OF MONTGOMERY	 	)	 	 

  
 On the
             day of June 2004, before me, the undersigned, a Notary Public, in and for the State of Maryland, personally appeared Joel Eisemann, who acknowledged himself to be the
Vice President of Courtyard Management Corporation, a corporation, and that he, as such Vice President, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by
himself as Vice President. 
  
 In witness whereof, I hereunto set
my hand and official seal. 
  

	
	
	 
	 Notary Public

  
 My commission expires:
                                        
             
  

 EXHIBIT A 
  
 LEGAL DESCRIPTION 
  
 All and Singular that certain piece, parcel or tract of land situate, lying and being in the State of South Carolina, County of Horry, consisting of 2.906 +/- acres, and
being more particularly shown and delineated upon a plat entitled, “Survey for Coastal Development Company” by Survey Technology, Inc. dated December 22, 1995, and recorded in Plat Book 140 at Page 173, records of Horry County, South
Carolina. 
  
 TOGETHER WITH all of those certain easement rights benefiting the
above-described property as contained in the Easement Agreement recorded in Book 1677, page 399, records of Horry County, and in the Easement from CNB Corporation in favor of W. Lee Guy, III and Daniel Warren Guy dated October 22, 1993, recorded
October 29, 1993, in Deed Book 1677, at Page 850, records of Horry County.

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