Document:

<PAGE>

                                                                   Exhibit 10.17

                                 LEASE AGREEMENT

                            DATED AS OF ____________

                                     BETWEEN

                            ________________________

                                    AS LESSOR

                                       AND

                        _________________________________

                                    AS LESSEE

<PAGE>

                                 LEASE AGREEMENT

     THIS LEASE AGREEMENT (hereinafter called "Lease"), made as of the ___ day
of ____, 2003, by and between _________________________, a
____________________________ (hereinafter called "Lessor"), and
_______________________________________, a _________ corporation (hereinafter
called "Lessee"), provides as follows.

                              W I T N E S S E T H:

     Lessor owns fee title to the Leased Property (as defined below) and desires
to lease to Lessee, and Lessee desires to lease from Lessor, the Leased Property
on the terms set forth herein.

     NOW, THEREFORE, Lessor and Lessee, intending to be legally bound, agree
that Lessor, in consideration of the payment of rent by Lessee to Lessor, the
covenants and agreements to be performed by Lessee, and upon the terms and
conditions hereinafter stated, does hereby rent and lease unto Lessee, and
Lessee does hereby rent and lease from Lessor, the Leased Property (as defined
below).

                                   ARTICLE I

     Section 1.1.   Leased Property.

     The Leased Property is comprised of all of Lessor's right, title and
interest in the following:

               (a)  a parcel or parcels of land or ground leasehold interest
described on 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

<PAGE>

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;

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

               (g)  the rights of Lessor in any Franchise Agreement with respect
to the Leased Improvements.

     For all purposes hereunder, the term "Leased Property" shall mean the
specific parcel or parcels of Land together with all items of property described
in Section 1.1(b) through (g) above relating to said parcel or parcels of land.

THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION
OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO ALL THE RIGHTS OF
PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL
COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS OF RECORD
INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, THE LIEN OF FINANCING INSTRUMENTS,
MORTGAGES, DEEDS OF TRUST AND SECURITY DEEDS, AND INCLUDING OTHER MATTERS WHICH
WOULD BE DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN ACCURATE
SURVEY THEREOF.

     Section 1.2.

     The term of the Lease (the "Term") is set forth on Exhibit B attached
hereto.

                                   ARTICLE II

     Section 2.1.   Definitions.

     For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted accounting
principles as are at the time applicable, (c) all references in this Lease to
designated "Articles," "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.

                                       2

<PAGE>

     Section 2.2.   Additional Charges.

     As defined in Section 3.3.

     Section 2.3.   Affiliate.

     As used in this Lease, the term "Affiliate" of a person shall mean (a) any
person that, directly or indirectly, controls or is controlled by or is under
common control with such person, (b) any other person that owns, beneficially,
directly or indirectly, five percent (5%) or more of the outstanding capital
stock, shares or equity interests of such person, or (c) any officer, director,
employee, partner or trustee of such person or any person controlling,
controlled by or under common control with such person (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of such
person). The term "person" means and includes individuals, corporations, general
and limited partnerships, stock companies or associations, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, or other entities and governments and agencies and political
subdivisions thereof. For the purposes of this definition, "control" (including
the correlative meanings of the terms "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.

     Section 2.4.   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 3.6.

     Section 2.5.   Award.

     As defined in Section 15.1(c).

     Section 2.6.   Base Rate.

     The prime rate of interest announced publicly by Citibank, N.A., in New
York, New York, from time to time. If no such rate is announced or becomes
discontinued, then such rate as is published in The Wall Street Journal as the
prime rate from time to time.

     Section 2.7.   Base Rent.

     As defined in Article III.

                                       3

<PAGE>

     Section 2.8.   Beverage Sales: Gross revenue from (i) the sale of wine,
beer, liquor or other alcoholic beverages, whether sold in the bar or lounge,
delivered to a guest room, sold at meetings or banquets or at any other location
at the Leased Property or (ii) non-alcoholic beverages sold in the bar or
lounge. Such revenues shall not include the following:

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

               (b)  Credits, rebates, or refunds; and

               (c)  Sales taxes or taxes of any other kind imposed on the sale
of alcoholic or other beverages.

     Section 2.9.   Beverage Sales Computation: As defined in Exhibit C attached
hereto.

     Section 2.10.  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 applicable Leased Property is located are closed.

     Section 2.11.  Capital Expenditures.

     As used in this Lease, the term "Capital Expenditures" shall mean
expenditures for capital improvements to the Leased Property and replacement or
refurbishing of the Improvements, Fixtures, Furniture and Equipment and of other
equipment and systems that constitute portions of the Leased Property in
connection with its Primary Intended Use, and the cost of all approvals,
licenses, permits and other authorizations necessary to complete such
improvements, replacements and refurbishings, all as designated as capital
improvements by and determined in accordance with generally accepted accounting
principles.

     Section 2.12.  Capital Impositions.

     Taxes, assessments or similar charges imposed upon or levied against the
Leased Property for the costs of public improvements, including, without
limitation, roads, sidewalks, public lighting fixtures, utility lines, storm
sewers, drainage facilities and similar improvements.

     Section 2.13.  CERCLA.

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

     Section 2.14.  Code.

     The Internal Revenue Code of 1986, as amended.

                                       4

<PAGE>

     Section 2.15.  Commencement Date.

     As defined on Exhibit B.

     Section 2.16.  Condemnation, Condemnor.

     As defined in Section 15.1.

     Section 2.17.  Consolidated Financials.

     For any fiscal year or other accounting period for Lessee and its
consolidated subsidiaries, statements of earnings and retained earnings and cash
flow 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 accordance with generally accepted
accounting principles and certified by Lessee's Chief Accounting Officer.

     Section 2.18.  CPI.

     The "Consumer Price Index" published by the Bureau of Labor Statistics of
the United States Department of Labor, U.S. City Average, All Items for Urban
Wage Earners and Clerical Workers (1982-1984=100).

     Section 2.19.  Date of Taking.

     As defined in Section 15.1(b).

     Section 2.20.  Eligible Independent Contractor.

     A management company that meets all of the following requirements:

               (a)  The management company does not own, directly or indirectly,
more than 35% of the outstanding stock of Highland Hospitality Corporation.

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

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

               (d)  At the time that the management company enters into a
management agreement with Lessee to operate the Leased Property, the management
company (or any "related person" within the meaning of Section 856(d)(9)(F) of
the Code) is actively engaged in

                                       5

<PAGE>

the trade or business of operating "qualified lodging facilities" within the
meaning of Section 856(d)(9)(D) of the Code for any Person who is not a "related
person" within the meaning of Section 856(d)(9)(F) of the Code with respect to
Highland Hospitality Corporation or Lessee (an "Unrelated Person"). For purposes
of determining whether the requirement of this paragraph (d) has been met, a
management company shall be treated as being actively engaged in such a trade or
business if the management company (i) derives at least 10% of both its profits
and revenue from operating "qualified lodging facilities" within the meaning of
Section 856(d)(9)(D) of the Code for Unrelated Persons or (ii) complies with any
regulations or other administrative guidance under Section 856(d)(9) of the Code
that provide a "safe harbor " rule with respect to the amount of hotel
management business with Unrelated Persons that is necessary to qualify as an
"eligible independent contractor" within the meaning such Code section.

     Section 2.21.  Encumbrance.

     As defined in Article XXXIV.

     Section 2.22.  Environmental Authority.

     Any department, agency or other body or component of any Government that
exercises any form of jurisdiction or authority over Lessor, Lessee or the
Leased Property under any Environmental Law.

     Section 2.23.  Environmental Authorization.

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

     Section 2.24.  Environmental Laws.

     All applicable federal, state, local and foreign laws and regulations
relating to 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 and laws relating to health or
safety. Environmental Laws include but are not limited to CERCLA, FIFRA, RCRA,
SARA, OSHA and TSCA.

     Section 2.25.  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

                                       6

<PAGE>

or imposed upon Lessor, Lessee, any Predecessor, the Leased Property or any
property used therein and arising out of:

               (a)  Failure of Lessee, Lessor, any Predecessor or the Leased
Property to comply at any time with all Environmental Laws;

               (b)  Presence of any Hazardous Materials in excess of allowable
limits under any Environmental Laws 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 by an Environmental Authority 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.

     Section 2.26.  Event of Default.

     As defined in Section 16.1.

     Section 2.27.  Existing Leases.

     As defined in the preamble on page 1.

     Section 2.28.  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 the 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 XXXIII or in such other manner as shall be mutually acceptable to Lessor
and Lessee.

     Section 2.29.  Fair Market Value.

     The fair market value of Lessee's leasehold interest in the Leased Property
or of any other 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
property, (a) determined in accordance with the appraisal procedures set forth
in Article XXXIII or in such other manner as shall
be

                                       7

<PAGE>

mutually acceptable to Lessor and Lessee, (b) assuming that such seller must pay
any customary closing costs and title premiums, and (c) taking into account the
positive or negative effect on the value of the 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.

     Section 2.30.  FIFRA.

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

     Section 2.31.  Fiscal Year.

     The 12-month period from January 1 to December 31.

     Section 2.32.  Fixtures.

     As defined in Section 1.1.

     Section 2.33.  Food Sales. Gross revenue from the sale, for on-site
consumption, of food and non-alcoholic beverages sold at the Leased Property,
including in respect to guest rooms, banquet rooms, meeting rooms and other
similar rooms. Such revenues shall not include the following:

               (a)  Vending machine sales;

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

               (c)  Non-alcoholic beverages sold in the bar or lounge; and

               (d)  Sales taxes or taxes of any other kind imposed on the sale
of food or non-alcoholic beverages.

     Section 2.34.  Food Sales Computation: As defined in Exhibit C attached
hereto.

     Section 2.35.  Franchise Agreement.

     Any franchise agreement or license agreement with a franchisor under which
the Hotel is operated.

     Section 2.36.  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, if any, laundry and dry cleaning facilities, (ii) office
equipment, (iii) dining room

                                       8

<PAGE>

wagons, materials handling equipment, cleaning and engineering equipment, (iv)
telephone and computerized accounting systems, and (v) vehicles.

     Section 2.37.  Government.

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

     Section 2.38.  Gross Operating Expenses.

     For purposes of this Lease, the term "Gross Operating Expenses" with
respect to the Leased Property shall mean the "Deductions" as defined in the
Management Agreement.

     Section 2.39.  Gross Operating Profit.

     Gross Operating Profit with respect to the Leased Property shall mean, for
any Fiscal Year, the excess of Gross Revenues for such Fiscal Year over Gross
Operating Expenses for such Fiscal Year.

     Section 2.40.  Gross Revenues.

     As set forth in the Management Agreement.

     Section 2.41.  Hazardous Materials.

     Hazardous Materials shall mean and include:

               (a)  Solid, gaseous, or liquid wastes (including hazardous
wastes), hazardous air pollutants, hazardous substances, hazardous materials,
regulated substances, restricted hazardous wastes, hazardous chemical
substances, mixtures, toxic substances, pollutants or contaminants or terms of
similar import as such terms are defined in any Environmental Law as such
definition may change from time to time;

               (b)  Any substance or material which now or in the future is
known to constitute a threat to health, safety, property or the environment or
which has been or in the future is determined by an Environmental Authority to
be capable of posing a risk of injury to health, safety, property or the
environment or exposure to which is prohibited, limited or regulated by any
Environmental Law or any Environmental Authority, including all of those
materials, wastes and substances designated now or in the future as hazardous or
toxic by any Environmental Authority; and

               (c)  Any petroleum, or petroleum products or byproducts,
radioactive materials, polychlorinated biphenols, asbestos, whether friable or
non-friable, and urea formaldehyde foam insulation or radon gas.

                                       9

<PAGE>

     Section 2.42.  Hotel.

     Each hotel and/or other facility offering lodging and other services or
amenities being operated or proposed to be operated on the Leased Property as
listed on Exhibit A attached hereto.

     Section 2.43.  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 under private covenants and 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), 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 the 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.

     Section 2.44.  Indemnified Party.

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

     Section 2.45.  Indemnifying Party.

     Any party obligated to indemnify an Indemnified Party pursuant to Section
8.3 or Article XXXII.

                                       10

<PAGE>

     Section 2.46.  Insurance Requirements.

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

     Section 2.47.  Inventory.

     All "Inventories of Merchandise" and "Inventories of Supplies" as defined
in the Uniform System, including, but not limited to, linens and other
non-depreciable personal property.

     Section 2.48.  Land.

     As defined in Article I.

     Section 2.49.  Lease.

     This Lease.

     Section 2.50.  Leased Improvement, Leased Property.

     Each as defined in Article I.

     Section 2.51.  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 under Lessee's control), whether or not
hereafter enacted and in force, including (a) all laws, rules or regulations
pertaining to the environment, occupational health and safety and public health,
safety or welfare, and (b) any laws, rules or regulations that may (1) require
repairs, modifications or alterations in or to the Leased Property or (2) in any
way adversely affect the use and enjoyment thereof; and all permits, licenses
and authorizations and regulations relating thereto and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Lessee (other than encumbrances created by Lessor without
the consent of Lessee), at any time in force affecting the Leased Property.

     Section 2.52.  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.

                                       11

<PAGE>

     Section 2.53.  Lessee.

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

     Section 2.54. Lessee Indemnified Party.

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

     Section 2.55.  Lessee's Personal Property.

     As defined in Section 6.2.

     Section 2.56.  Lessor.

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

     Section 2.57.  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, partners, members, stockholders, employees,
agents and representatives of the general partner of Lessor and any partner,
agent, or representative of Lessor, and the respective heirs, personal
representatives, successors and assigns of any such officer, director, partner,
member, stockholder, employee, agent or representative.

     Section 2.58.  Management Agreement.

     The agreement pursuant to which the Manager operates the Leased Property.
Initially, the Management Agreement shall mean the Management Agreement dated
_______, 200__, between Lessee and ___________________ as it may be amended or
supplemented from time to time, a copy of which is attached as Exhibit D hereto.

     Section 2.59.  Manager.

     As defined in Section 19.3.

     Section 2.60.  Notice.

     A notice given pursuant to Article XXXII.

                                       12

<PAGE>

     Section 2.61.  Officer's Certificate.

     A certificate of Lessee reasonably acceptable to Lessor, signed by the
chief accounting officer or another officer authorized so to sign by the board
of directors or by-laws of Lessee, or any other person whose power and authority
to act has been authorized by delegation in writing by any such officer.

     Section 2.62.  OSHA

     The Occupational Health and Safety Act, as amended.

     Section 2.63.  Overdue Rate.

     On any date, a rate equal to the Base Rate plus 2% per annum, but in no
event greater than the maximum rate then permitted under applicable law.

     Section 2.64.  Payment Date.

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

     Section 2.65.  Percentage Rent.

     As defined in Section 3.1(b).

     Section 2.66.  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.

     Section 2.67.  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.

     Section 2.68.  Predecessor.

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

     Section 2.69. Primary Intended Use.

     As defined in Section 7.2(b)

                                       13

<PAGE>

     Section 2.70.  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.

     Section 2.71.  Quarterly Revenues Computations.

     As defined in Exhibit C attached hereto.

     Section 2.72.  RCRA.

     The Resource Conservation and Recovery Act, as amended.

     Section 2.73.  Real Estate Taxes.

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

     Section 2.74.  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.

     Section 2.75.  Rent.

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

     Section 2.76.  Room Revenues.

     Gross Revenue from the rental of guestrooms, whether to individuals, groups
or transients, at the Hotel, excluding the following:

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

               (b)  all sales taxes or any other taxes imposed on the rental of
such guest rooms;

               (c)  any fees collected for amenities including, but not limited
to: telephone, laundry, movies or concessions; and

               (d) accounts receivable that previously have been included in
Room Revenues but which have remained uncollected for at least 180 days and have
become, in the reasonable judgment of Lessee, uncollectable.

                                       14

<PAGE>

     Section 2.77.  SARA.

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

     Section 2.78.  State.

     The State or Commonwealth of the United States in which the Leased Property
is located.

     Section 2.79.  Subsidiaries.

     Persons in which a party owns, directly or indirectly, more than 50% of the
voting stock or control, as applicable (individually, a "Subsidiary").

     Section 2.80.  Taking.

     A taking or voluntary conveyance during the Term 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.

     Section 2.81.  Term.

     As defined in Section 1.2.

     Section 2.82.  TSCA.

     The Toxic Substances Control Act, as amended.

     Section 2.83.  Uneconomic for its Primary Intended Use.

     A state or condition of the Leased Property 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 Leased Property 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 Property.

     Section 2.84.  Uniform System.

     Shall mean the Uniform System of Accounts for Hotels (9th Revised Edition,
1996) as published by the Hotel Association of New York City, Inc., as same may
hereafter be revised.

     Section 2.85.  Unsuitable for its Primary Intended Use.

     A state or condition of the Leased Property 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 Leased

                                       15

<PAGE>

Property cannot function as an integrated hotel facility consistent with
standards applicable to a well maintained and operated hotel.

                                  ARTICLE III

     Section 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 Error!
Reference source not found. hereof or at such other place or to such other
Person, as Lessor from time to time may designate in a Notice, all Base Rent,
Percentage Rent and Additional Charges, during the Term, as follows:

               (a)  Base Rent: An annual sum in the amount set forth on Exhibit
C hereto as the "Base Rent" for the Leased Property, payable in arrears in
equal, consecutive monthly installments, on or before the tenth day of each
calendar month during the Term; provided, however, 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 5.2, 14.5, 15.3, 15.5, and 15.6);
and

               (b)  Percentage Rent: For each Fiscal Year during the Term
commencing with the Fiscal year in which the Commencement Date occurs, Tenant
shall pay percentage rent ("Percentage Rent") quarterly, on or before the tenth
day following the end of each calendar quarter in each Fiscal Year, in an amount
calculated by the following formula:

                    The amount equal to the Quarterly Revenues Computation plus
                    the Food Sales Computation plus the Beverage Sales
                    Computation

                                        less

                    an amount equal to the Base Rent paid year to date for the
                    applicable Fiscal Year

                                        less

                    an amount equal to Percentage Rent paid year to date for the
                    applicable Fiscal Year

                                       equals

                    Percentage Rent for the applicable quarter.

     In the event the Term begins and ends in the middle of a Fiscal Year, the
foregoing formula shall be applied as if the first Fiscal Year had only the
number of calendar quarters within the initial Fiscal Year which are within the
Term and the last Fiscal Year had only the number of calendar quarters within
the last Fiscal Year which are within the Term. If less than all of a calendar
quarter falls within the Term, the Percentage Rent for that quarter shall equal
(i) the

                                       16

<PAGE>

Percentage Rent calculated as indicated above multiplied by (ii) a fraction
equal to (A) the number of days in the quarter that fall within the Term divided
by (B) the total number of days in the quarter.

     The Base Rents and Percentage Rent threshold amounts contained on Exhibit C
shall be adjusted at the end of each Fiscal Year based upon the adjustments to
the CPI pursuant to Section 3.1(d), if any.

               (c)  Officer's Certificates. Additionally, if requested by
Lessor, an Officer's Certificate shall be delivered to Lessor quarterly,
together with such quarterly Percentage Rent payment, setting forth the
calculation of such rent payment for such quarter within 15 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 Section 3.1(b).
There shall be no reduction in the Base Rent regardless of the result of the
Quarterly Revenues Computations.

     In addition, on or before February 15 of each year, if requested by Lessor,
Lessee shall deliver to Lessor an Officer's Certificate reasonably acceptable to
Lessor setting forth the computation of the actual Percentage Rent that accrued
for each quarter of the Fiscal Year that ended on the immediately preceding
December 31 and shall pay to Lessor Percentage Rent, if due and payable, for the
last quarter of the applicable Fiscal Year. Additionally, if the annual
Percentage Rent due and payable for any Fiscal Year (as shown in the applicable
Officer's Certificate) exceeds the amount actually paid as Percentage Rent by
Lessee for such year, Lessee also shall pay such excess to Lessor at the time
such certificate is delivered. If the Percentage Rent actually due and payable
for such Fiscal Year is shown by such certificate to be less than the amount
actually paid as Percentage Rent for the applicable Fiscal Year, Lessor shall
reimburse such amount to Lessee or alternatively, at the Lessor's option, credit
such amount against subsequent months' Base Rent and, 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 due and payable for any
Fiscal Year (as shown in the applicable Officer's Certificate or as adjusted
pursuant to Section 3.3) and the total amount of quarterly payments for such
Fiscal Year actually paid by Lessee as Percentage Rent, whether in favor of
Lessor or Lessee, shall bear interest at the Overdue Rate, which interest shall
accrue from the 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.

         The obligation to pay Percentage Rent shall survive the expiration or
earlier termination of the Term, and a final reconciliation, taking into
account, among other relevant adjustments, any adjustments which are accrued
after such expiration or termination date but which related to Percentage Rent
accrued prior to such termination date, and Lessee's good faith best estimate of
the amount of any unresolved contractual allowances, shall be made not later
than one year after such expiration or termination date, but Lessee shall advise
Lessor within 60 days after such expiration or termination date of Lessee's best
estimate at that time of the approximate amount

                                       17

<PAGE>

of such adjustments, which estimate shall not be binding on Lessee or have any
legal effect whatsoever.

               (d)  CPI Adjustments. For each Fiscal Year during the Term
                    beginning January 1, 200_, the Base Rent then in effect, and
                    the quarterly Percentage Rent threshold amounts then
                    included in the Quarterly Revenues Computations set forth in
                    Section 3.1(b), shall be adjusted as follows:

                    (i)    The average CPI for the most recently ended Fiscal
     Year shall be divided by the average CPI for the immediately preceding
     Fiscal Year;

                    (ii)   The new Base Rent for the then current Fiscal Year
     shall be the adjusted amount obtained by multiplying the Base Rent for the
     immediately preceding Fiscal Year by the quotient obtained under
     subparagraph (i) above;

                    (iii)  The new quarterly and annual Percentage Rent
     threshold dollar amounts in the Quarterly Revenues Computation described in
     Section 3.1(b) above for the then current Fiscal Year shall be the product
     of the threshold dollar amount of Room Revenues in effect in the most
     recently ended Fiscal Year and the quotient obtained in subparagraph (i)
     above.

                    The amount of any adjustment under paragraphs (d)(i)-(iii)
     to Base Rent and the quarterly Percentage Rent threshold amounts for any
     Fiscal Year shall not exceed __% of the Base Rent and quarterly and annual
     Percentage Rent threshold amount applicable for the prior Fiscal Year.

                    By way of example, the Base Rent and the quarterly and
     annual Percentage Rent threshold amounts in the Quarterly Revenues
     Computation for the Fiscal Year commencing January 1, 2005 would be
     adjusted to reflect any change in the average CPI for the Fiscal Year ended
     December 31, 2004 as compared to the Fiscal Year ended December 31, 2003.

                    Adjustments calculated as set forth above in the Base Rent
     and quarterly and annual Percentage Rent threshold amounts shall be
     effective on the first day of each Fiscal Year to which such adjusted
     amounts apply. If Rent is paid in any period prior to determination of the
     amount of any adjustment to Base Rent or the quarterly and annual
     Percentage Rent threshold applicable for such period, payment adjustments
     for any shortfall in or overpayment of Rent paid shall be made with the
     first Base Rent payment due after the amount of the adjustments are
     determined.

                    The "average CPI" for a Fiscal Year shall be the average of
     the monthly CPI during the Fiscal Year.

                    (iv)   If (A) a significant change is made in the number or
     nature (or both) of items used in determining the CPI, or (B) the CPI shall
     be discontinued for any reason, the Bureau of Labor Statistics shall be
     requested to furnish a new index

                                       18

<PAGE>

     comparable to the CPI, together with information which will make possible a
     conversion to the new index in computing the adjusted Base Rent and
     adjusted quarterly and annual Percentage Rent threshold amounts hereunder.
     If for any reason the Bureau of Labor Statistics does not furnish such an
     index and such information, the parties will instead mutually select,
     accept and use such other index or comparable statistics on the cost of
     living in Washington, D.C. that is computed and published by an agency of
     the United States or a responsible financial periodical of recognized
     authority.

     Section 3.2.   Confirmation of Percentage Rent.

     Lessee shall utilize, or cause to be utilized, an accounting system for the
Leased Property in accordance with its usual and customary practices, and in
accordance with generally accepted accounting principles and the Uniform System,
that will accurately record all data necessary to compute Percentage Rent, and
Lessee shall retain, for at least four (4) years after the expiration of each
Fiscal Year (and in any event until the reconciliation described in Section
3.1(c) for such Fiscal Year has been made), reasonably adequate records
conforming to such accounting system showing all data necessary to compute
Percentage Rent for the applicable Fiscal Years. Lessor, at its expense (except
as provided hereinbelow), shall have the right from time to time by its
accountants or representatives to audit the information that formed the basis
for the data set forth in any Officer's Certificate provided during the
preceding four (4) Fiscal Years under Section 3.1(c) and, in connection with
such audits, to examine all Lessee's records (including supporting data and
sales and excise tax returns and franchise reports) reasonably required to
verify Percentage Rent (and for no other purpose), subject to any prohibitions
or limitations on disclosure of any such data under Legal Requirements. If any
such audit discloses a deficiency in the payment of Percentage Rent, and either
Lessee agrees with the result of such audit or the matter is otherwise
determined or compromised, Lessee shall forthwith pay to Lessor the amount of
the deficiency, as finally agreed or determined, together with interest at the
Overdue Rate from the date when said payment should have been made to the date
of payment thereof; provided, however, that as to any audit that is commenced
more than two (2) years after the date Percentage Rent for any Fiscal Year is
reported by Lessee to Lessor, the deficiency, if any, with respect to such
Percentage Rent shall bear interest at the Overdue Rate only from the date such
determination of deficiency is made unless such deficiency is the result of
gross negligence or willful misconduct on the part of Lessee, in which case
interest at the Overdue Rate will accrue from the date such payment should have
been made to the date of payment thereof. If any such audit discloses that the
Percentage Rent actually due from Lessee for any Fiscal Year exceeds that
reported by Lessee by more than 3%, Lessee shall pay the cost of such audit and
examination. Any proprietary information obtained by Lessor pursuant to the
provisions of this Section shall be treated as confidential, except that such
information may be used, subject to appropriate confidentiality safeguards, in
any litigation between the parties and except further that Lessor may disclose
such information to prospective lenders. The obligations of Lessee contained in
this Section shall survive the expiration or earlier termination of this Lease.

     Section 3.3.   Additional Charges.

     In addition to the Base Rent and Percentage Rent, (a) Lessee also will pay
and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions that

                                       19

<PAGE>

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 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.

     Section 3.4.   Rent Payable Without Deduction.

     The Rent shall be paid so that this Lease shall yield to Lessor the full
amount of the installments of Base Rent, Percentage Rent and Additional Charges
throughout the Term, all as more fully set forth in Article Error! Reference
source not found., 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 (including Capital
Expenditures, Real Estate Taxes, Personal Property Taxes and Capital
Impositions) shall be paid or performed by Lessor. In order that the Hotel yield
the maximum amount of Rent under this Lease, Lessee does hereby covenant and
agree that it shall not barter or trade for goods or services from providers
thereof to the Hotel in exchange for free or reduced rates for guestrooms or
other goods and services provided by or at the Hotel for its guests.

     Section 3.5.   Conversion of Property.

     If, during the Term, Lessee desires to provide food and beverage operations
at the Hotel which differ materially from the food and beverage operations
provided at the commencement of the Term (for example, eliminating full service
food and beverage operations), Lessee shall give notice of such desire to
Lessor. Lessor and Lessee shall then commence negotiations to adjust Rent to
reflect the proposed change to the operation of the Hotel, each acting
reasonably and in good faith. All other terms of this Lease will remain
substantially the same. During negotiations, which shall not extend beyond 60
days, Lessee shall not "convert" the Hotel and shall continue fulfilling its
obligations under the existing terms of this Lease. If no agreement is reached
after such 60-day period, Lessee shall withdraw such notice and this Lease shall
continue in full force.

     Section 3.6.   Annual Budget.

     Lessee shall submit to Lessor with respect to the Hotel:

                                       20

<PAGE>

               (a)  An annual operating budget ("Annual Budget") delivered at
the times and prepared in the manner described in the Management Agreement.

               (b)  A capital budget ("Capital Budget") delivered at the times
and prepared in the manner described in the Management Agreement. The Capital
Budget shall be prepared in accordance with the Uniform System to the extent
applicable.

     Section 3.7.   Approval of Capital Budget.

     Lessor and Lessee shall endeavor in good faith to approve the Capital
Budget within the time periods specified in the Management Agreement. Within the
time periods specified in the Management Agreement, Lessor shall give Lessee
written notice either (a) that Lessor approves the Capital Budget (which
approval may not be unreasonably withheld, conditioned or delayed) or (b)
indicating with reasonable specificity the respects in which Lessor objects to
the Capital Budget. In the latter event, Lessor and Lessee shall act promptly,
reasonably and in good faith to seek to resolve Lessor's objections. In the
event that Lessor and Lessee fail to reach agreement with respect to the Capital
Budget within thirty (30) days after receipt of Lessor's written notice, Lessee
and Lessor shall refer any disputed Capital Budget matter to arbitration using
procedures set forth in Article XXXIX hereto and each party shall endeavor to
cause such arbitration to be completed as quickly as possible, but in any event
not later than six (6) months following referral to arbitration. While any
arbitration is pending, Lessee shall continue to operate the Hotel in accordance
with the terms of this Lease, including without limitation, making all Capital
Expenditures for approved portions of the Capital Budget and mandatory projects
to the extent such mandatory projects are included in the Capital Budget. Lessor
shall be obligated to make all Capital Expenditures which are required pursuant
to a Capital Budget which has been approved or deemed approved in accordance
with the procedures set forth above.

     Section 3.8.   Approval of Annual Budget.

         Lessor and Lessee shall endeavor in good faith to approve the Annual
Budget within the time periods specified in the Management Agreement. Within the
time periods specified in the Management Agreement, Lessor shall give Lessee
written notice either (a) that Lessor approves the Annual Budget (which approval
may not be unreasonably withheld, conditioned or delayed) or (b) indicating with
reasonable specificity the respects in which Lessor objects to the Annual
Budget. In the latter event, Lessor and Lessee shall act promptly, reasonably
and in good faith to seek to resolve Lessor's objections. In the event that
Lessor and Lessee fail to reach agreement with respect to the Annual Budget
within thirty (30) days after receipt of Lessor's written notice, any contested
matter within the Annual Budget then remaining shall be submitted to arbitration
in accordance with the procedure therefor set forth in Article XXXIX of this
Lease.

     Section 3.9.   Capital Projects.

               (a)  The selection of all design professionals and contractors
for capital projects shall be made by Lessor and Lessor shall provide at its
expense all materials and services for capital projects.

                                       21

<PAGE>

               (b)  Lessee shall cooperate with Lessor with respect to capital
projects. Notwithstanding anything in the foregoing which may be construed to
the contrary, Lessee shall have no obligation to perform any such capital
projects unless Lessee agrees to perform and be responsible for same in
accordance with a written agreement therefor between Lessor and Lessee.

     Section 3.10.  Books and Records.

     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 the Uniform System and generally accepted accounting principles
to the extent applicable 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 executive offices
and shall be available to Lessor and its representatives and its auditors or
accountants, at all reasonable times for examination, audit, inspection, and
transcription. 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 executive offices without Lessor approval.

                                   ARTICLE IV

     Section 4.1.   Payment of Impositions.

     Subject to Article XII relating to permitted contests (a) Lessee will pay,
or cause to be paid, all Impositions (other than Real Estate Taxes, Personal
Property Taxes and Capital Impositions) 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, and (b) 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. Lessor will pay, or cause to be paid, all Real
Estate Taxes, Personal Property Taxes and Capital Impositions before they become
delinquent. 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 (subject to
Lessee's right of contest pursuant to the provisions of Article ***) 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, Capital Impositions 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

                                       22

<PAGE>

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 Error! Reference source not
found.. Lessor and Lessee shall, upon request of the other, provide such data as
is maintained by the party to whom the request is made with respect to the
Leased Property as may be necessary to prepare any required returns and reports.
Lessee shall file all Personal Property Tax returns in such jurisdictions where
it is legally required to so file. Lessor, to the extent it possesses the same,
and Lessee, to the extent it possesses the same, will provide the other party,
upon request, with cost and depreciation records necessary for filing returns
for any property 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, and liabilities 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 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.

     Section 4.2.   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 and Lessor will pay any interest, penalty or fine caused by
Lessor's failure to give such Notice.

     Section 4.3.   Adjustment of Impositions.

     Impositions payable by Lessee 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.

                                       23

<PAGE>

     Section 4.4.   Utility Charges.

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

     Section 4.5.   Insurance Premiums.

     To the extent provided in Section 13.1, Lessor and Lessee will pay or cause
to be paid in a timely manner all premiums for the insurance coverages required
to be maintained by them under Article Error! Reference source not found..

     Section 4.6.   Franchise Fees.

     Lessee will pay or cause to be paid in a timely manner all franchise fees
due and owing in accordance with the terms and conditions of the Franchise
Agreement.

                                   ARTICLE V

     Section 5.1.   No Termination, Abatement, etc.

     Except as otherwise specifically provided in this Lease, and except in the
event of termination of the Franchise Agreement solely by reason of any action
or inaction by Lessor, Lessee, to the extent permitted by law, shall remain
bound by this Lease in accordance with its terms and shall neither take any
action without the written consent of Lessor to modify, surrender or terminate
the same, nor seek nor be entitled to any abatement, deduction, deferment or
reduction of the Rent, or setoff against the Rent, nor shall the obligations of
Lessee be otherwise affected by reason of (a) any damage to, or destruction of,
the Leased Property or any portion thereof from whatever cause or any Taking of
the Leased Property or any portion thereof, (b) 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, (c) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Lessor or any assignee or transferee of Lessor,
or (d) 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.
Except in the event of a constructive eviction of Lessee from the Leased
Property for any reason other than an Event of Default, 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.

                                       24

<PAGE>

     Section 5.2.   Abatement Procedures.

     In the event of a partial Taking of the Leased Property as described in
Sec, the Lease shall not terminate with respect to the affected Leased Property,
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 30 days after such
partial Taking, the matter may be submitted by either party to arbitration
pursuant to the arbitration procedures set forth in Article XXXIX.

                                   ARTICLE VI

     Section 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.

     Section 6.2.   Lessee's Personal Property.

     Lessee will acquire, own, maintain and replace, at Lessee's cost and
expense, 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, including Inventory, the "Lessee's Personal Property"). Lessee
may, subject to the first sentence of this *** and the conditions set forth
below, remove any of Lessee's Personal Property set forth on such list at any
time during the Term or upon the expiration or any prior termination of the
Term. All of Lessee's Personal Property, other than Inventory, not removed by
Lessee within thirty (30) 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 Error! Reference source not found., 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 shall have
the option to purchase all (but not less than all) of Lessee's Personal Property
on hand at the Leased Property at the time of such expiration or termination for
a sale price (payable in cash on the expiration date of this Lease) equal to the
fair market value thereof (or cost in the case of Inventory).

     Except as hereinafter set forth, Lessee may make such financing
arrangements, title retention agreements, leases or other agreements with
respect to Lessee's Personal Property as it

                                       25

<PAGE>

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. Lessee shall have the right to lease a van for the
purposes of providing shuttle service to hotel guests; provided that the terms
and conditions of such lease are approved by Lessor and any secured lender with
respect to the Leased Property.

     Section 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 that are
outstanding on such date; provided, however, Lessor shall subordinate its lien
and security interest to that of any non-Affiliate of Lessee which finances such
Lessee's Personal Property or any non-Affiliate conditional seller of such
Lessee's Personal Property, the terms and conditions of such subordination to be
satisfactory to Lessor in the exercise of reasonable discretion. Lessee shall,
upon the request of Lessor, execute such financing statements or other documents
or instruments reasonably requested by Lessor to perfect the lien and security
interests herein granted.

                                  ARTICLE VII

     Section 7.1.   Condition of the Leased Property.

     Lessee acknowledges receipt and delivery of possession of the Leased
Property as of the Commencement Date and that 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. EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED HEREIN TO THE CONTRARY, 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 LESSEE TAKES THE
LEASED PROPERTY SUBJECT TO ALL SUCH RISKS. LESSEE ACKNOWLEDGES THAT THE LEASED
PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT. Provided,
however, to the extent permitted by law, Lessor hereby assigns to Lessee all of
Lessor's rights to proceed against any predecessor in title other than Lessee
(or an 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

                                       26

<PAGE>

Lessor from and against any claims, obligations and liabilities against or
incurred by Lessor in connection with such cooperation.

     Section 7.2.   Use of the Leased Property.

               (a)  Lessee covenants that it will (with Lessor's commercially
reasonable cooperation to the extent necessary and required) proceed with all
due diligence and will exercise its commercially reasonable efforts to obtain
and to maintain all approvals needed to use and operate the Leased Property
under applicable local, state and federal law.

               (b)  Lessee shall use, or cause to be used, the Leased Property
only as a hotel facility, and for such other uses as may be necessary or
incidental to such use or such other use as otherwise approved by Lessor (the
"Primary Intended Use"). Lessee shall not use the Leased Property or any portion
thereof for any other use without the prior written consent of Lessor, which
consent may be granted, denied or conditioned in Lessor's reasonable 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,
except that Lessee shall have no obligation to complete capital improvements to
the Leased Property.

               (c)  Subject to the provisions of Articles XIV, XV, XXI and XXII
and other express provisions in this Lease, with respect to the Leased Property,
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 (except
that Lessee shall have no obligation to take any actions that are the
responsibility of Lessor hereunder or to complete any capital improvements to
the Leased Property required by the franchisor unless Lessor funds the cost
thereof), (3) not terminate or amend the Franchise Agreement without the consent
of Lessor (not to be unreasonably withheld, conditioned 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 and Lessee's concurrent goal of maximizing its net operating income
therefrom. Lessor covenants and agrees that, with respect to the Leased
Property, during the Term it will (1) not take or allow any Affiliate to take or
fail to take any action that would interfere with, restrict or prohibit Lessee's
operation of the Leased Property for its Primary Intended Use, including,
without limitation, modifying, amending or terminating any Franchise Agreement
or any licenses, franchises, permits, easements, leases, undertakings or
agreements held by Lessor or such Affiliate and pertaining to the Leased
Property, (2) comply with all the provisions of any Franchise Agreement relating
to Capital Expenditures (to the extent such Capital Expenditures are provided
for in the Capital Budget), the payment of Real Estate Taxes, Personal Property
Taxes, Capital Impositions and other requirements thereof that are not the
responsibility of

                                       27

<PAGE>

Lessee hereunder and (3) seek to maximize the net income generated by Lessee
from the Leased Property consistent with Lessor's concurrent goal of maximizing
the Gross Revenues generated therefrom.

               (d)  Lessee shall not commit or suffer to be committed any waste
on the Leased Property, 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 Hotels.

     Section 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.

     Section 7.4.   Reservation by Lessor.

     Notwithstanding anything contained in this Lease to the contrary, Lessor
expressly reserves from the operation of this Lease and the Leased Property the
right of Lessor or third party lessees of Lessor to place communications
equipment on the roof of the Leased Improvements or elsewhere on the Land and to
receive all rental and income therefrom. Such communications equipment shall
include, but not be limited to, satellite dishes, antennas, wires, conduits,
cables and associated allied materials, machinery and equipment as necessary to
properly complete the installation, maintenance and operation of such
communications equipment ("the Installations"). Lessor covenants and agrees that
the Installations shall be in such locations so that their use (including
installation, operations, maintenance, repair and removal) shall not
unreasonably interfere with or impede the use by Lessee of the Leased Property
pursuant to this Lease. Lessor shall be responsible for the Installations being
in compliance with all applicable federal, state and local laws and ordinances.
As between Lessor

                                       28

<PAGE>

and Lessee, Lessor shall be responsible for the Installations being insured
under appropriate casualty and general liability insurance coverages and in that
regard, Lessor agrees to indemnify and hold Lessee harmless from and against any
and all loss, costs, claim and liability, including reasonable attorney's fees,
for injuries to all persons and for damage to or loss of all property, including
the Leased Property, arising or alleged to arise from any act or omission of
Lessor or third party lessees of Lessor, including their agents, employees or
contractors, relating to the installation, maintenance, repair, operation or
removal of the Installations.

                                  ARTICLE VIII

     Section 8.1.   Compliance with Legal and Insurance Requirements, etc.

     Subject to Sections 8.2 and 8.3(b) below and Article XII 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, 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 operation and maintenance of the
Leased Property or any part thereof, except that Lessee shall have no obligation
to complete capital improvements to the Leased Property.

     Section 8.2.   Legal Requirement Covenants.

     Subject to Section 8.3(b) below, Lessee covenants and agrees that the
Leased Property and Lessee's Personal Property shall not be used for any
unlawful purpose, and that Lessee shall not permit or suffer to exist any
unlawful use of the Leased Property by others. Lessee shall acquire and maintain
all appropriate licenses, certifications, permits and other authorizations and
approvals needed to operate the Leased Property in its customary manner for the
Primary Intended Use, and any other lawful use conducted on the Leased Property
as may be permitted from time to time hereunder. Lessee further covenants and
agrees that Lessee's use of the Leased Property and maintenance, alteration, and
operation of the same, and all parts thereof, shall at all times conform to all
Legal Requirements, unless the same are finally determined by a court of
competent jurisdiction to be unlawful (and Lessee shall use reasonable efforts
to cause all such sub-tenants, invitees or others to so comply with all Legal
Requirements). Lessee may, however, upon prior Notice to Lessor, contest the
legality or applicability of any such Legal Requirement or any licensure or
certification decision if Lessee maintains such action in good faith, with due
diligence, without prejudice to Lessor's rights hereunder, and at Lessee's sole
expense. If by the terms of any such Legal Requirement compliance therewith
pending the prosecution of any such proceeding may legally be delayed without
the incurrence of any lien, charge or liability of any kind against the 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, may nonetheless contest as aforesaid and
delay as aforesaid provided that such delay would not

                                       29

<PAGE>

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.

     Section 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, except to the extent that such compliance would require the
remediation of Environmental Liabilities for which Lessee has no indemnity
obligations under Section 8.3(c). Lessee agrees to give Lessor prompt written
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 Environmental Liabilities to the extent caused by the
grossly negligent acts or 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 to the extent caused by the grossly negligent acts or failures to
act of Lessee.

          (d) If any Proceeding is brought against any Indemnified Party in
respect of an Environmental Liability with respect to which such Indemnified
Party may claim indemnification under either Section 8.3(b) or (c), the
Indemnifying Party, upon request, shall at its sole expense resist and defend
such Proceeding, or cause the same to be resisted and defended by counsel
designated by the Indemnified Party and approved by the Indemnifying Party,
which approval shall not be unreasonably withheld; provided, however, that such
approval shall not be required in the case of defense by counsel designated by
any insurance company undertaking such defense pursuant to any applicable policy
of insurance. Each Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel will be at the sole expense of such
Indemnified Party unless such counsel has been approved by the Indemnifying
Party, which approval shall not be unreasonably withheld. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding made without its
consent, which shall not be unreasonably

                                       30

<PAGE>

withheld, but if settled with the consent of the Indemnifying Party, or if
settled without its consent (if its consent shall be unreasonably withheld), or
if there be a final, nonappealable judgment for an adversary party in any such
Proceeding, the Indemnifying Party shall indemnify and hold harmless the
Indemnified Parties from and against any liabilities incurred by such
Indemnified Parties by reason of such settlement or judgement.

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

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

          (g) The indemnification rights and obligations provided for in this
Article VIII shall survive the termination of this Lease.

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

     Notwithstanding anything to the contrary contained in this Lease, if Lessor
shall become entitled to the possession of the Leased Property by virtue of the
termination of the Lease or repossession of the Leased Property, then Lessor may
assign its indemnification rights under Section 8.3 of this Lease (but not any
other rights hereunder) to any Person to whom 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:

                                       31

<PAGE>

     (1) 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;

     (2) Such indemnification rights shall be limited to Environmental
Liabilities relating to or specifically affecting the Leased Property; and

     (3) 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 IX

     Section 9.1. Maintenance and Repair.

          (a) Unless caused by Lessee's gross negligence or willful misconduct
or that of its employees or agents, Lessee shall not be required to bear the
cost of any Capital Expenditures, including any expenditures for items
classified as capital items under U.S. generally accepted accounting principles.
Except to the extent required by Article XXXVIII or elsewhere in this Lease,
however, nothing herein shall be construed to require Lessor to build or rebuild
any improvement on the Leased Property, or to fund or 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.
Except as expressly set forth elsewhere in this Lease, Lessee hereby waives, to
the extent permitted by law, the right to make repairs at the expense of Lessor
pursuant to any law in effect at the time of the execution of this Lease or
hereafter enacted. Lessor shall have the right to give, record and post, as
appropriate, notices of nonresponsibility under any mechanic's lien laws now or
hereafter existing. Notwithstanding anything in the foregoing to the contrary,
to the extent any equipment used in the operation of the Hotel as of the
Commencement Date is leased equipment and not owned equipment, Lessor shall have
no obligation to acquire such leased equipment or replace such leased equipment
with owned equipment during the Term and therefore, to the extent Lessee elects
to acquire or replace any such leased equipment with owned equipment, the cost
to acquire such owned equipment shall not be charged to Lessor under any of the
provisions of this Lease or reduce any amounts to which Lessor is entitled under
this Lease.

          (b) Except for conditions caused by Lessor's or its agents' or
employees' breach of this Lease or their gross negligence or willful misconduct
or resulting from Force Majeure, Lessee 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, parking lots, mechanical,
electrical and plumbing systems and equipment (including conduit and ductware),
and non-load bearing interior walls, in good order and repair, except for
ordinary wear and tear (whether or not the need for such repairs occurred as a
result of Lessee's use, any prior use, the elements or the age of the Leased
Property, or any portion thereof), and, except as otherwise provided in Article
XIV or XV, with reasonable promptness, make all necessary and appropriate
repairs thereto of every kind and nature, whether interior or exterior, ordinary
or

                                       32

<PAGE>

extraordinary, foreseen or unforeseen, except repairs (i) arising by reason of a
condition existing prior to the commencement of the Term (concealed or
otherwise), or (ii) capital improvements requiring Capital Expenditures required
by any governmental agency having jurisdiction over the Leased Property, or
(iii) capital improvements or repairs to the structural elements of the Leased
Improvements, or (iv) other capital improvements to the Leased Improvements, the
cost of which would constitute Capital Expenditures. Lessee shall obtain and
maintain in effect maintenance contracts throughout the Term with reputable
service firms on all serviceable systems and assets included with the Fixtures
which constitute a portion of the Leased Property, unless such services can be
competently provided by Lessee's employees, in which event such services may be
provided by Lessee's employees. 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. Notwithstanding any other provision of
this Lease, however, other than under Articles XIV and XV on the conditions set
forth therein, Lessee shall not be required to bear the costs of complying with
this Section with respect to Capital Expenditures, including any items
classified as capital items under U.S. generally accepted accounting principles,
but shall be required to comply with this Section as to such items if and to the
extent that amounts are available therefor from the reserve required to be
established by Lessor under Article XX or are otherwise provided by Lessor.
Lessor shall be responsible for all such Capital Expenditures, including,
without limitation, Capital Expenditures required to comply with all Legal
Requirements (including, without limitation, all Environmental Laws, the
Americans with Disabilities Act and any state or local handicap access laws and
regulations and all zoning and land use laws and regulations) and Capital
Expenditures required to comply with any Franchise Agreement; subject to
Lessor's right to approve the Capital Budget for such Leased Property. If Lessor
fails to make any Capital Expenditure required by any Franchisor and such
refusal results in a default under or termination of the related Franchise
Agreement, Lessor shall be responsible for all damages, termination payments
payable by Lessee under the terms of such Franchise Agreement, application fees
for a new franchise license reasonably approved by Lessor, increased royalty
fees and other costs arising out of such refusal or out of the resulting need to
apply for and enter into a substitute franchise license agreement.

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

          (d) Lessee will, upon the expiration or prior termination of the Term,
vacate and surrender the Leased Property to Lessor in the condition in which the
Leased Property was originally received from Lessor, except as repaired,
rebuilt, restored, altered or added to as

                                       33

<PAGE>

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 accordance with Section 9.1(b) above 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).

          (e) If Lessor fails to make any emergency Capital Expenditures
promptly following Notice from Lessee of an emergency situation, then Lessee
will have the right, but not the obligation, to make such Capital Expenditures
on behalf of and for the account of Lessor, whereupon Lessor shall reimburse
Lessee therefor, together with interest thereon at the Overdue Rate, promptly
upon receipt of all documentation evidencing such Capital Expenditure. If Lessor
fails to so reimburse Lessee within ten days after written demand therefor, then
in addition to such rights and remedies as Lessee may have with respect to such
breach, Lessee may offset the amounts owed against the next payments of Rent due
to Lessor under this Lease.

     Section 9.2. Encroachments, Restrictions, etc.

     If as a result of any act or omission on the part of Lessee any of the
Leased Improvements, at any time, (i) materially encroach upon any property,
street or right-of-way adjacent to the Leased Property, or (ii) violate the
agreements or conditions contained in any lawful restrictive covenant or other
agreement affecting the Leased Property, or any part thereof, or (iii) impair
the rights of others under any easement or right-of-way to which the Leased
Property is subject as a result of any act or omission on the part of Lessee,
then promptly upon the request of Lessor or at the behest of any person affected
by any such encroachment, violation or impairment, Lessee shall, at its expense,
subject to its right to contest the existence of any encroachment, violation or
impairment and in such case, in the event of an adverse final determination,
either (a) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation or
impairment, whether the same shall affect Lessor or Lessee or (b) make such
changes in the Leased Improvements, and take such other actions, as Lessee in
the good faith exercise of its judgment deems reasonably practicable to remove
such encroachment, and to end such violation or impairment, including, if
necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to be able to continue the
operation of the Leased 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 X.
Lessee's obligations under this Section 9.2 shall be in addition to and shall in
no way discharge or diminish any obligation of any insurer under any policy of
title or other insurance held by Lessor.

                                   ARTICLE X

     Section 10.1. Alterations.

     After receiving approval of Lessor, which approval shall not be
unreasonably withheld and which approval may be evidenced by Lessor's approval
of the Capital Budget, Lessee shall have the right to make such material
additions, modifications or improvements to the Leased

                                       34

<PAGE>

Property from time to time as Lessee deems desirable for its permitted uses and
purposes, provided that non-material additions, modifications and improvements
will not require such consent and no such action significantly alters the
character or purposes or significantly detracts from the value or operating
efficiency thereof and will not significantly impair the revenue-producing
capability of the Leased Property (other than during the period such work is
being performed) or adversely affect the ability of Lessee to comply with the
provisions of this Lease. Except as approved in the Capital Budget, 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. Notwithstanding anything in this Lease to the
contrary, Lessor retains the right to reconfigure meeting/banquet rooms and
guestrooms, with the result thereof being an increase in the number of
guestrooms and a decrease in the area and/or number of meeting/banquet rooms,
all at the sole cost and expense of Lessor.

         Section 10.2. Salvage.

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

         Section 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.

                                   ARTICLE XI

         Section 11.1. Liens.

         Subject to the provision of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, included as exceptions in the title policy
insuring Lessor's interest in the Leased Property, (c) restrictions, liens and
other encumbrances which are consented to in writing by Lessor or any easements
granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens for
those taxes upon Lessor which Lessee is not required to pay hereunder, (e)
subleases permitted by Article XXV hereof, (f) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (1) the same are
not yet payable or are payable without the addition of any fine or penalty or
(2) such liens are in the

                                       35

<PAGE>

process of being contested as permitted by Article XII, (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 60 days after the completion of the action giving
rise to such lien and such reserve or other appropriate provisions as shall be
required by law or generally accepted accounting principles shall have been made
therefor or (2) any such liens are in the process of being contested as
permitted by Article XII hereof, and (h) any liens which are the responsibility
of Lessor pursuant to the provisions of this Lease.

                                  ARTICLE XII

         Section 12.1. Permitted Contests.

         Lessee shall have the right to contest the amount or validity of any
Imposition to be paid by Lessee or any Legal Requirement or Insurance
Requirement or any lien, attachment, levy, encumbrance, charge or claim
("Claims") not otherwise permitted by Article XI, by appropriate legal
proceedings in good faith and with due diligence (but this shall not be deemed
or construed in any way to relieve, modify or extend Lessee's covenants to pay
or its covenants to cause to be paid any such charges at the time and in the
manner as in this Article 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 days of
the same. Lessor agrees to join in any such proceedings if the same be required
to legally prosecute such contest of the validity of such Claims; provided,
however, that Lessor shall not thereby be subjected to any liability for the
payment of any costs or expenses in connection with any proceedings brought by
Lessee; and Lessee covenants to indemnify and save harmless Lessor from any such
costs or expenses. Lessee shall be entitled to any refund of any Claims and such
charges and penalties or interest thereon which have been paid by Lessee or paid
by Lessor and for which Lessor has been fully reimbursed. In the event that
Lessee fails to pay any Claims when due or to provide the security therefor as
provided in this paragraph and to diligently prosecute any contest of the same,
Lessor may, upon ten days advance Notice to Lessee, pay such charges together
with any interest and penalties and the same shall be repayable by Lessee to
Lessor as Additional Charges at the next Payment Date provided for in this
Lease. Provided, however, that should Lessor reasonably determine that the
giving of such Notice would risk loss to the Leased Property or cause damage to
Lessor, then Lessor shall give such Notice as is practical under the
circumstances. Lessor reserves the right to contest any

                                       36

<PAGE>

of the Claims at its expense not pursued by Lessee. Lessor and Lessee agree to
cooperate in coordinating the contest of any claims.

                                  ARTICLE XIII

         Section 13.1. General Insurance Requirements.

         During the Term, Lessor and Lessee agree at all times to keep the
Leased Property insured with the kinds and amounts of insurance described in the
Management Agreement.

         Section 13.2. Waiver of Subrogation.

         If available, all Property insurance policies carried by Lessor or
Lessee shall expressly waive any right of subrogation on the part of the insurer
against the other party.

         Section 13.3. Form Satisfactory, etc.

         All of the policies of insurance referred to in this Article XIII shall
be written in a form, with deductibles reasonably satisfactory to Lessor. Lessee
shall pay all of the premiums relating to insurance coverage required per
Section 13.1 and deliver certificates thereof to Lessor prior to their effective
date and annually thereafter. In the event of the failure of Lessee either to
effect such insurance as herein called for or to pay the premiums therefore, or
to deliver such 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 therefore, and Lessee shall reimburse Lessor for any premium or
premiums paid by Lessor for the coverage required under this Section upon
written demand therefore, and Lessee's failure to repay the same within 30 days
after Notice of such failure from Lessor shall constitute an Event of Default
within the meaning of Section 16.1(c). Each insurer mentioned in this Article
XIII shall agree, by endorsement to the policy or policies issued by it, that it
will give to Lessor at least 60 days written notice before the coverage under
such policy or policies in question shall be materially reduced, allowed to
expire or cancelled.

         Section 13.4. Increase in Limits.

         If either Lessor or Lessee at any time deems the limits and/or
retentions of the coverages outlined in Section 13.1 then carried to be either
excessive or insufficient, Lessor and Lessee shall endeavor in good faith to
agree in writing on the proper and reasonable limits for such insurance to be
carried and such insurance shall thereafter be carried with the limits and/or
retentions thus agreed on until further change pursuant to the provision of this
Section.

         Section 13.5. Blanket Policy.

         Notwithstanding anything to the contrary contained in this Article
XIII, 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 Lessor; provided, however, that the coverage afforded to
Lessor and Lessee will not be reduced or diminished or otherwise be

                                       37

<PAGE>

different from that which would exist under a separate policy of insurance, and
provided further that the requirements of this Article XIII are otherwise
satisfied.

         Section 13.6. 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 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 insureds, and the loss is payable under separate additional insurance
in the same manner as losses are payable under this Lease. Lessee shall
immediately notify Lessor in writing that Lessee has obtained any such separate
insurance or of the increasing of any of the amounts of the then existing
insurance.

         Section 13.7. 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
shall prepared by Lessee. Lessee shall prepare any and all reports required by
any 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 execute proofs of such loss, in the aggregate amount of
$5,000 or less, with respect to any single casualty or other event.

                                  ARTICLE XIV

         Section 14.1. Insurance Proceeds.

         Subject to the provisions of Section 14.5 and except to the extent
otherwise required in the policies of insurance required hereunder, all proceeds
payable by reason of any loss or damage to the Leased Property, or any portion
thereof, and insured under any policy of insurance required by Article XIII of
this Lease shall be paid to Lessor and held 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 remaining after the completion of the
restoration or reconstruction to the Leased Property shall be paid to Lessee. If
neither Lessor nor Lessee is required or elects to repair and restore, all such
insurance proceeds shall be retained by Lessor. Determination of all salvage
resulting from any property covered by insurance shall be made by Lessor.

                                       38

<PAGE>

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

         (a) If the Leased Property is totally or partially destroyed by a risk
covered by the insurance described in Article XIII and in Lessor's reasonable
judgment the Hotel thereby is rendered Unsuitable for its Primary Intended Use,
Lessor may, at Lessor's option to be exercised within ninety (90) days after the
date of such occurrence, 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 fails to timely make such
election, Lessor shall be deemed to have terminated the Lease, in which case
Lessor must provide Lessee with Substitute Leases for execution by Lessee, at
Lessee's election, as described in Article XL of this Lease.

         (b) If the Leased Property is partially destroyed by a risk covered by
the insurance described in Article XIII, but the Hotel is not thereby rendered
Unsuitable for its Primary Intended Use, Lessor shall promptly 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 to the
extent of insurance proceeds received by Lessor.

         Section 14.3. Lessee's Personal Property.

         All insurance proceeds payable by reason of any loss of or damage to
any of Lessee's Personal Property and any business interruption insurance 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.

         Section 14.4. Abatement of Rent.

         Any damage or destruction due to casualty notwithstanding, this Lease
shall remain in full force and effect, but Lessee's obligation to make rental
payments and to pay all other charges required by this Lease shall be equitably
abated from and after the date of such damage or destruction.

         Section 14.5. Damage Near End of Term.

         If damage to or destruction of the Leased Property rendering the Hotel
Unsuitable for its Primary Intended Use occurs during the last 24 months of the
Term, then Lessor or Lessee shall have the right to terminate this Lease by
giving written notice to the other party within 30 days after the date of damage
or destruction, whereupon all accrued Rent shall be paid immediately, and this
Lease shall automatically terminate five days after the date of such notice.

         Section 14.6. Waiver.

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

                                       39

<PAGE>

                                   ARTICLE XV

     Section 15.1. Definitions.

          (a) "Condemnation" means a Taking resulting from (1) the exercise of
any governmental power, whether by legal proceedings or otherwise, by a
Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of condemnation or while legal proceedings for condemnation
are pending.

          (b) "Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.

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

          (d) "Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.

     Section 15.2. Parties' Rights and Obligations.

     If, during the Term, there is any Condemnation of all or any part of the
Leased Property or any interest in this Lease, the rights and obligations of
Lessor and Lessee shall be determined by this Article XV.

     Section 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 with respect to the Leased Property. 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 with respect to the Leased Property. All Base
Rent, Percentage Rent and Additional Charges paid or payable by Lessee hereunder
with respect to the Leased Property shall be apportioned as of the Date of
Taking, and Lessee shall promptly pay Lessor such amounts.

     Section 15.4. Allocation of Award.

     The total Award made in connection with a Total Taking, or a partial Taking
that results in a termination of this Lease 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, or 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. Any
other Award not separately allocated to Lessor or Lessee shall be equitably
apportioned between Lessor and

                                       40

<PAGE>

Lessee in proportion to the then Fair Market Value of the leasehold estate of
Lessee hereunder and the then Fair Market Value of the Leased Property.

     Section 15.5. Partial Taking.

     If title to less than the whole of the Leased Property is condemned, and
the Leased Property is still suitable for its Primary Intended Use, and not
Uneconomic for its Primary Intended Use, or if Lessee or Lessor is entitled but
neither elects to terminate this Lease with respect to the Leased Property as
provided in Section 15.3, Lessor at its cost shall with all reasonable dispatch
restore the untaken portion of any Leased Improvements so that the 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.

     Section 15.6. Temporary Taking.

     If the whole or any part of the Leased Property or of Lessee's interest
under this Lease is condemned by any Condemnor for its temporary use or
occupancy, which for purposes hereof shall mean two (2) weeks or less, 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 with respect to such Leased Property. In addition, Lessee
shall pay Percentage Rent at a rate equal to the average Percentage Rent during
the last three preceding Fiscal Years (or if three 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
Lessor. Lessor covenants that upon the termination of any such period of
temporary use or occupancy it will, at its sole cost and expense, 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.

                                  ARTICLE XVI

     Section 16.1. Events of Default.

     If any one or more of the following events (individually, an "Event of
Default") occurs:

          (a) if Lessee fails to make payment of the Base Rent, Percentage Rent
or Additional Charges within ten (10) days after the same becomes due and
payable and such failure continues for five (5) business days after notice to
Lessee of such failure; provided,

                                       41

<PAGE>

however, Lessor shall not be required to give notice of such failure more than
three (3) times in any Fiscal Year; or

          (b) 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 such party 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 150 days after such Notice (provided that no Event of
Default shall be deemed to have occurred pursuant to this subsection (c) to the
extent that Lessee's failure to observe or perform any term, covenant or
condition of this Lease is caused by Lessor's failure to fulfill its obligations
under this Lease or an Unavoidable Occurrence); or

          (c) if Lessee or Lessor 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 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
of the whole or substantially all of the assets of Lessee shall be appointed in
any proceedings brought by Lessee or if any such receiver, trustee or liquidator
shall be appointed in any proceeding brought against Lessee shall not be vacated
or set aside or stayed within sixty (60) days after such appointment; or

          (d) if Lessee or Lessor is liquidated or dissolved, or begins
proceedings toward such liquidation or dissolution, or, if Lessee or Lessor in
any manner, permits the sale or divestiture of substantially all of its assets;
or

          (e) if the estate or interest of Lessee in the Leased Property or any
part thereof is voluntarily or involuntarily transferred, assigned, conveyed,
levied upon or attached in any proceeding (unless Lessee is contesting such lien
or attachment in good faith in accordance with this Lease); or

          (f) if, except as a result of damage, destruction, renovation or a
partial or complete Condemnation or otherwise with Lessor's prior written
approval, Lessee voluntarily ceases operations on the Leased Property for a
period in excess of thirty (30) days; or

          (g) 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 other person with whom Lessee contracts for
management services at the Hotel, other than a default caused by a breach of
this Lease by Lessor or a failure to complete improvements required by the
franchisor because Lessor has not provided funds for such improvements to the
extent required pursuant to this Lease or Lessor is otherwise accountable for
such default under

                                       42

<PAGE>

the Franchise Agreement, and such event of default is continuing after the
expiration of any applicable grace period; or

          (h) if an event of default by Lessee (or any Affiliate of Lessee)
occurs under any other lease between Lessor (or any Affiliate of Lessor) and
Lessee. In the event of an event of default by Lessee under this Lease, such
event of default shall also constitute an event of default under any other lease
between Lessor (or any Affiliate of Lessor) and Lessee.

     For purposes of this Section 16.1(h), Lessee shall mean and include any
additional lessee subsequently approved by Lessor (or any Affiliate of Lessor)
for lease transactions with Lessor (or any Affiliate of Lessor) and with whom a
lease or leases are actually entered into by Lessor (or any Affiliate of
Lessor).

     Then, and in any such event and provided such Event of Default by Lessee is
continuing, 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 giving Lessee not less than ten (10) days' written 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.

     Section 16.2. Surrender.

     If an Event of Default occurs for other than by reason of Force Majeure
(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 and
assign to Lessor or Lessor's designee the Leased Property including, without
limitation, any and all books, records, files, licenses, permits and keys
relating thereto, and quit the same and Lessor may enter upon and repossess the
Leased Property by reasonable force, summary proceedings, ejectment or
otherwise, and may remove Lessee and all other persons and any and all personal
property from the Leased Property, subject to rights of any hotel guests and to
any requirement of law. Lessee hereby waives any and all requirements of
applicable laws for service of notice to re-enter the Leased Property. Lessor
shall be under no obligation to, but may if it so chooses, relet the Leased
Property or otherwise mitigate Lessor's damages.

     Section 16.3. Damages.

     (a) Neither (i) the termination of this Lease, (ii) the repossession of the
Leased Property, (iii) the failure of Lessor to relet the Leased Property, nor
(iv) 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.

                                       43

<PAGE>

     (b) 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;

               (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
         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
Fiscal Years immediately preceding the Fiscal Year in which the termination,
re-entry or repossession takes place, or (ii) if three Fiscal Years shall not
have elapsed, the average of the 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.

     Section 16.4. Waiver.

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

                                       44

<PAGE>

     Section 16.1. 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.

                                   ARTICLE II

     Section 17.1. Lessor's Right to Cure Lessee's Default.

     If Lessee fails to make any payment or to perform any act required to be
made or performed under this Lease including, without limitation, Lessee's
failure to comply with the terms of any Franchise Agreement other than a failure
to complete improvements required by the franchisor because Lessor has not
provided Lessee with the funds therefor, 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 XVIII

     Section 18.1. Provisions Relating to Purchase of the Leased Property.

     If Lessee purchases the Leased Property from Lessor pursuant to any of the
terms of this Lease, the closing of the purchase shall occur 30 days after
Lessor accepts Lessee's offer to purchase the Leased Property, unless the
provision of the Lease under which such offer was made specifies a different
closing date, in which case the date set forth in such provision shall be the
closing date. At such closing, 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, (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

                                       45

<PAGE>

Article XXXIV 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
transfer taxes and recording fees, shall be paid by Lessee. Lessor shall pay its
attorney's fees.

                                   ARTICLE XIX

     Section 19.1. REIT Requirements.

          (a) Lessee understands that, in order for Highland Hospitality
Corporation to qualify as a REIT, the following requirements (the "REIT
Requirements") must be satisfied:

              (i)    Personal Property Limitation. Anything contained in this
     Lease to the contrary notwithstanding, the average of the fair market
     values 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 fair market
     values 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.

              (ii)   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 or other amounts to be paid by
     the sublessee thereunder would be based, in whole or in part, on either (a)
     the net 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.

              (iii)  Sublease Tenant Limitation. Anything contained in this
     Lease to the contrary notwithstanding, Lessee shall not, without the prior
     written approval of the Lessor, sublease the Leased Property to any Person
     in which Highland Hospitality Corporation owns, directly or indirectly, a
     ten percent (10%) or greater interest, within the meaning of Section
     856(d)(2)(B) of the Code, or any similar or successor provisions thereto.

              (iv)   TRS Election. Lessee either has made an election to be and
     operates as a "taxable REIT subsidiary" of Highland Hospitality Corporation
     within the meaning of Section 856(1) of the Code, or is a subsidiary of an
     entity that has made an election to be and operates as a "taxable REIT
     subsidiary" of Highland Hospitality Corporation within the meaning of
     Section 856(1) of the Code.

                                       46

<PAGE>

                  (v)    Lessee shall not (A) directly or indirectly operate or
     manage a "lodging facility" within the meaning of Section 856(d)(9)(D)(ii)
     of the Code or a "health care facility" within the meaning of Section
     856(e)(6)(D)(ii) of the Code or (B) directly or indirectly provide to any
     other person (under a franchise, license, or otherwise) rights to any brand
     name under which any lodging facility or health care facility is operated;
     provided, however, that Lessee may provide such rights to a Manager (as
     defined in Section 19.3 hereof) to operate or manage a lodging facility as
     long as such rights are held by Lessee as a franchisee, licensee, or in a
     similar capacity and such lodging facility is either owned by Lessee or is
     leased to Lessee by Lessor or one of its Affiliates.

              (b) Lessee agrees, and agrees to use its best efforts to cause its
Affiliates, to use its best efforts to permit the REIT Requirements to be
satisfied and to cooperate in good faith with Highland Hospitality Corporation
and Lessor to ensure that the REIT Requirements are satisfied. Lessee agrees,
and agrees to use reasonable efforts to cause its Affiliates, upon request by
Highland Hospitality Corporation, and, where appropriate, at Highland
Hospitality Corporation's expense, to take reasonable action necessary to ensure
compliance with the REIT Requirements. Immediately after becoming aware that the
REIT Requirements are not, or will not be, satisfied, Lessee shall notify, or
use reasonable efforts to cause its Affiliates to notify, Highland Hospitality
Corporation of such noncompliance.

     Section 19.2. Lessee Officer and Employee Limitation.

     Anything contained in this Lease to the contrary notwithstanding, none of
the officers or employees of Lessee or any entity in which Lessee has a direct
or indirect ownership interest (a "Lessee-Owned Entity") shall be officers or
employees of a Manager (or any Person who operates or manages the Leased
Property) or any entity in which the Manager (or such Person) has a direct or
indirect ownership interest (a "Manager-Owned Entity"). In addition, if a Person
serves as both (a) a director of Lessee or any Lessee-Owned Entity and (b) a
director and officer (or employee) of Manager (or any Person who operates or
manages the Leased Property) or any Manager-Owned Entity, that Person shall not
receive any compensation for servicing as a director of Lessee or any
Lessee-Owned Entity. If a person serves as both (a) a director of Manager (or
any Person who operates or manages the Leased Property) or any Manager-Owned
Entity and (b) a director and officer (or employee ) of Lessee or any
Lessee-Owned Entity, that Person shall not receive any compensation for serving
as a director of Manager or any Manager-Owned Entity.

     Section 19.3. Management Agreement.

     Lessee agrees that, in order to comply with certain of the REIT
Requirements, it will, at all times during the Term, cause the Leased Property
to be operated and managed by a Manager that is an Eligible Independent
Contractor. Effective as of the Commencement Date, Lessee shall enter into a
Management Agreement and Lessee shall provide Lessor with an executed copy
thereof. Lessee may not amend, modify, or terminate the Management Agreement in
any respect or change the Manager without the prior written consent of Lessor.
Lessee also shall provide Lessor with copies of any amendments or modifications
to the Management Agreement

                                       47

<PAGE>

which are entered into from time to time or any other management agreement.
Lessor shall have the right to approve in advance any Manager.

                                   ARTICLE XX

     Section 20.1. Holding Over.

     If Lessee for any reason remains in possession of the Leased Property after
the expiration or earlier termination of the Term, such possession shall be as a
tenant at sufferance during which time Lessee shall pay as rental each month
150% 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 with respect to
such Leased Property, (b) all Additional Charges accruing during the applicable
month and (c) all other sums, if any, payable by Lessee under this Lease with
respect to the Leased Property. During such period, Lessee shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to tenancies at sufferance, to continue its occupancy and use of the Leased
Property. Nothing contained herein shall constitute the consent, express or
implied, of Lessor to the holding over of Lessee after the expiration or earlier
termination of this Lease.

                                  ARTICLE XXI

     Section 21.1. Abatement of Rent.

     Except in the event of a constructive eviction of Lessee from the Leased
Property for any reason other than an Event of Default or as expressly provided
in this Lease, Lessee shall not be entitled to any abatement of Rent.

                                  ARTICLE XXII

     Section 22.1. Indemnification.

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

                                       48

<PAGE>

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.

     Without limiting the generality of the foregoing paragraph, Lessee shall
indemnify, save harmless and defend Lessor Indemnified Parties (including, but
not limited to, any Lessor Indemnified Party that is a guarantor of the
Franchise Agreement) from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, but not
limited to, transfer fees and termination fees) imposed upon or incurred by or
asserted against Lessor Indemnified Parties under or with respect to the
Franchise Agreement which arises as a result of (a) any default by Lessee under
the terms of this Lease; or (b) any default by Lessee under the Franchise
Agreement unless such default is a result of Lessor's default under this Lease.

     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; (b) any
failure on the part of Lessor to perform or comply with any of the terms of this
Lease; (c) the failure by Lessor to make capital improvements required in this
Lease or to comply with applicable Legal Requirements or any requirements
imposed by the franchisor in accordance with the Franchise Agreement or
necessary to maintain the safety or structural soundness of the Leased Property;
(d) any condition existing on the Leased Property at the Commencement Date; and
(e) all events occurring prior to the Commencement Date and subsequent to the
expiration or termination of this Lease.

     Without limiting the generality of the foregoing paragraph, Lessor shall
indemnify, save harmless and defend Lessee Indemnified Parties (including, but
not limited to, any Lessee Indemnified Party that is a guarantor of the
Franchise Agreement) from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, but not
limited to, transfer fees and termination fees) imposed upon or incurred by or
asserted against Lessee Indemnified Parties under or with respect to the
Franchise Agreement which arises as a result of (a) any default by Lessor under
the terms of this Lease; (b) the sale by Lessor of the Leased Property or any
interest of Lessor in the Leased Property; (c) the failure by Lessor to make
capital improvements required to comply with applicable Legal Requirements or
any requirements imposed by the franchisor in accordance with the Franchise
Agreement or necessary to maintain the safety or structural soundness of the
Leased Property; or (d) any act or omission of any person that acquires the
Leased Property or any interest of Lesser in the Leased Property.

     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

                                       49

<PAGE>

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

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

                                 ARTICLE XXIII

         Section 23.1. Subletting and Assignment.

         Subject to the provisions of Article XIX and Section 23.2 and any other
express conditions or limitations set forth herein, Lessee may, but only with
the consent of Lessor, which consent may be withheld in Lessor's sole
discretion, (a) assign this Lease with respect to the Leased Property or sublet
all or any part of the Leased Property or (b) sublet any retail or restaurant
portion of the Leased Improvements with respect to the Leased Property 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 with respect to the Leased Property under this
Lease. In the case of a subletting, the sublessee shall comply with the
provisions of Section 23.2, and in the case of an assignment, the assignee shall
assume in writing and agree to keep and perform all of the terms of this Lease
on the part of Lessee to be kept and performed and shall be, and become, jointly
and severally liable with Lessee for the performance thereof. Notwithstanding
the above, Lessee may assign the Lease to an Affiliate with respect to the
Leased Property 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.

         Section 23.2. Subordination and Attornment.

         Lessee shall insert in each sublease permitted under Section 23.1
provisions to the effect that (a) such sublease is subject and subordinate to
all of the terms and provisions of this Lease and to the rights of Lessor
hereunder (if Lessor executes a non-disturbance agreement with respect thereto),
(b) if this Lease terminates before the expiration of such sublease, the
sublessee

                                       50

<PAGE>

thereunder will, at Lessor's option, attorn to Lessor and waive any right the
sublessee may have to terminate the sublease or to surrender possession
thereunder as a result of the termination of this Lease, and (c) if the
sublessee receives a written Notice from Lessor or Lessor's assignees, if any,
stating that an uncured Event of Default exists under this Lease, the sublessee
shall thereafter be obligated to pay all rentals accruing under said sublease
directly to the party giving such Notice, or as such party may direct. All
rentals received from the sublessee by Lessor or Lessor's assignees, if any, as
the case may be, shall be credited against the amounts owing by Lessee under
this Lease.

                                 ARTICLE XXIV

         Section 24.1. Officer's Certificates; Financing Statements; Lessor's
Estoppel Certificates and Covenants.

         (a) At any time and from time to time upon not less than 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 hereunder
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) Upon the request of Lessor, Lessee will furnish the following
statements to Lessor:

             (i)   with reasonable promptness, such information respecting the
     financial condition and affairs of Lessee including financial statements,
     as Lessor may reasonably request from time to time; and

             (ii)  the most recent Consolidated Financials of Lessee within 45
     days after each quarter of any Fiscal Year (or, in the case of the final
     quarter in any Fiscal Year, the most recent Consolidated Financials of
     Lessee within 90 days).

         (c) At any time and from time to time upon not less than 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.

                                       51

<PAGE>

                                  ARTICLE XXV

         Section 25.1. Lessor's Right to Inspect.

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

                                  ARTICLE XXVI

         Section 26.1. No Waiver.

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

                                 ARTICLE XXVII

         Section 27.1. Remedies Cumulative.

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

                                 ARTICLE XXVIII

         Section 28.1. Acceptance of Surrender.

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

                                       52

<PAGE>

                                  ARTICLE XXIX

         Section 29.1. No Merger of Title.

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

                                  ARTICLE XXX

         Section 30.1. Conveyance by Lessor.

         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.

         Section 30.2. Other Interests.

         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 interests 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 hereinafter 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 and that the holder
of such Mortgage or the purchaser at a foreclosure sale 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. Lessee hereby waives and releases
any claim it might have against Lessor or any other party for any actions
lawfully taken by the holder of any Mortgage.

                                       53

<PAGE>

                                  ARTICLE XXXI

         Section 31.1. Quiet Enjoyment.

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

                                 ARTICLE XXXII

         Section 32.1. Notices.

         All notices, demands, requests, consents approvals and other
communications ("Notice" or "Notices") hereunder shall be in writing and (i)
personally served or, (ii) mailed by registered or certified mail, return
receipt requested and postage prepaid or, (iii) sent by trackable overnight
nationally recognized courier service, next business day delivery or, (iv) via
facsimile, provided (i), (ii) or (iii) are also utilized), if to Lessee or
Lessor c/o Highland Hospitality Corporation, _______________________________,
Attention: _______________, facsimile number: ______________, with a copy to
Tracy M.J. Colden, Esq., _____________, ___________________________________,
facsimile number: ______________. Personally delivered Notice shall be effective
upon receipt, Notice given by mail shall be complete at the time of deposit in
the U.S. Mail system, Notice given by trackable overnight nationally recognized
courier service, next business day delivery shall be complete at the time of
deposit with such courier service, and Notice given by facsimile shall be
complete at the time evidenced by the printed verification thereof, provided one
of the other methods is also utilized, but any prescribed period of Notice and
any right or duty to do any act or make any response within any prescribed
period or on a date certain after the service of such Notice given by mail shall
be extended five days.

                                 ARTICLE XXXIII

         Section 33.1. Appraisers.

         If it becomes necessary to determine the Fair Market Value of Lessee's
leasehold interest in the Leased Property or of any other real property or the
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 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

                                       54

<PAGE>

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 years experience in the State appraising property
similar to the subject property, shall, within 45 days after the date of the
Notice appointing the first appraiser, proceed to determine, as applicable, the
Fair Market Value of the subject property or the Fair Market Rental of the
Leased Property as of the relevant date (giving effect to the impact, if any, of
inflation from the date of their decision to the relevant date); provided,
however, that if only one appraiser shall have been so appointed, then the
determination of such appraiser shall be final and binding upon the parties. If
Lessee's leasehold interest in the Leased Property is the subject property, 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 appraisers are appointed and if the difference between the amounts so
determined does not exceed 5% of the lesser of such amounts, then the Fair
Market Value or Fair Market Rental shall be an amount equal to 50% of the sum of
the amounts so determined. If the difference between the amounts so determined
exceeds 5% of the lesser of such amounts, then such two appraisers shall have 20
days to appoint a third appraiser. If no such appraiser shall have been
appointed within such 20 days or within 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 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 50% of the sum of the remaining two determinations shall be final and
binding upon Lessor and Lessee as the Fair Market Value of the subject property
or the 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 XXXIV

     Section 34.1. Lessor May Grant Liens.

     Without the consent of Lessee, Lessor may, subject to the terms and
conditions set forth below in this Article XXXIV, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrance or title
retention agreement ("Encumbrance") upon the Leased Property, or any portion
thereof or interest therein, whether to secure any borrowing or other means of
financing or refinancing. Any such Encumbrance may (a) contain the right to
prepay (whether or not subject to a prepayment penalty); (b) provide that it is
subject to the rights of Lessee under this Lease and (c) contain the Agreement
by the holder of the Encumbrance that it will (1) give Lessee the same notice,
if any, given to Lessor of any default or acceleration of any

                                       55

<PAGE>

obligation underlying any such Encumbrance or any sale in foreclosure under such
Encumbrance, (2) permit Lessee to cure any such default on Lessor's behalf
within any applicable cure period, and Lessee shall be reimbursed by Lessor for
any and all costs incurred in effecting such cure, including without limitation
out-of-pocket costs incurred to effect any such cure (including reasonable
attorneys' fees) and (3) permit Lessee to appear by its representative and to
bid at any sale in foreclosure made with respect to any such Encumbrance. Upon
the request of Lessor, Lessee shall subordinate this Lease to the lien of a new
mortgage on the Leased Property, on the condition that the proposed mortgagee
executes a non-disturbance agreement recognizing this Lease, and agreeing, for
itself and its successors and assigns, to comply with the provisions of this
Article XXXIV.

     Section 34.2. Lessee's Right to Cure.

     Subject to the provisions of Section 34.3, if Lessor breaches any covenant
to be performed by it under this Lease, Lessee, after Notice to and demand upon
Lessor, without waiving or releasing any obligation hereunder, and in addition
to all other remedies available to Lessee, may (but shall be under no obligation
at any time thereafter to) make such payment or perform such act for the account
and at the expense of Lessor. All sums so paid by Lessee and all costs and
expenses (including, without limitation, reasonable attorneys' fees) so
incurred, together with interest thereon at the Overdue Rate from the date on
which such sums or expenses are paid or incurred by Lessee, shall be paid by
Lessor to Lessee on demand or, following entry of a final, nonappealable
judgment against Lessor for such sums, may be offset by Lessee against the Base
Rent payments next accruing or coming due. The rights of Lessee hereunder to
cure and to secure payment from Lessor in accordance with this Section 34.2
shall survive the termination of this Lease with respect to the related Leased
Property.

     Section 34.3. Breach by Lessor.

     It shall be a breach of this Lease if Lessor fails to observe or perform
any term, covenant or condition of this Lease on its part to be performed and
such failure continues for a period of 30 days after Notice thereof from Lessee,
unless such failure cannot with due diligence be cured within a period of 30
days, in which case such failure shall not be deemed to continue if Lessor,
within such 30-day period, proceeds promptly and with due diligence to cure the
failure and diligently completes the curing thereof. The time within which
Lessor shall be obligated to cure any such failure also shall be subject to
extension of time due to the occurrence of Force Majeure. 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 (or such portion thereof as the breach relates to) from Lessor for a
purchase price equal to the then Fair Market Value. If Lessee elects to purchase
the Leased Property (or portion thereof), it shall deliver a Notice thereof to
Lessor specifying a settlement date to occur not less than 90 days subsequent to
the date of such Notice on which it shall purchase the Leased Property (or
portion thereof), and the same shall be thereupon conveyed in accordance with
the provisions of Article XVIII.

                                       56

<PAGE>

                                 Article XXXV

     Section 35.1. Miscellaneous.

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

     Section 35.2. Transition Procedures.

     Upon the expiration or termination of the Term, for whatever reason, Lessor
and Lessee shall do the following (and the provisions of this Section 35.2 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. Upon the expiration or earlier termination
of the Term, Lessee shall use commercially 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.

          (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 3.7 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.

                                       57

<PAGE>

     Section 35.3. Waiver of Presentment, etc.

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

                                 ARTICLE XXXVI

     Section 36.1. Memorandum of Lease.

     Lessor and Lessee shall promptly upon the request of either enter into a
short form memorandum of this Lease, in form suitable for recording under the
laws of the State in which reference to this Lease, and all options contained
herein, shall be made. The party requesting such memorandum of this Lease shall
pay all costs and expenses of recording such memorandum, including any real
estate excise transfer or sales tax that may be due and payable in conjunction
with recording such memorandum.

                                 ARTICLE XXXVII

     Section 37.1. Compliance with Franchise Agreement.

     Lessor will pay any costs and expenses in connection with the assignment of
any existing Franchise Agreement to Lessee or to obtain a new Franchise
Agreement. Lessee shall comply in every respect with the provisions of the
Franchise Agreement so as to avoid any default thereunder during the term of
this Lease, except to the extent such compliance is an obligation of Lessor
pursuant to the terms of this Lease. Lessee shall not terminate, extend, modify
or enter into any Franchise Agreement without in each instance first obtaining
Lessor's prior written consent, not to be unreasonably withheld. Lessor and
Lessee agree to cooperate fully with each other in the event it becomes
necessary to obtain a Franchise Agreement extension or modification or a new
franchise for the Leased Property. If a Franchise Agreement expires prior to the
expiration of the Term for the related Leased Property, Lessee, with the prior
approval of Lessor, shall use its good faith efforts to obtain a new franchise
license for the Leased Property, together with a comfort letter in favor of
Lessor in form reasonably acceptable to Lessor.

                                ARTICLE XXXVIII

                           [Intentionally Left Blank]

                                       58

<PAGE>

                                 ARTICLE XXXIX

     Section 39.1. Arbitration.

     Except as otherwise expressly provided, in the event a dispute should arise
concerning the interpretation or application of any of the provisions of this
Lease, the parties agree that the dispute shall be submitted to arbitration of
the American Arbitration Association under its then prevailing rules, except as
modified by this Article XXXIX. The Arbitration Tribunal shall be formed of
three (3) Arbitrators each of which shall have at least five (5) years'
experience in hotel operation, management or ownership, one (1) to be appointed
by each of Lessor and Lessee and the third (3rd) to be appointed by the American
Arbitration Association. The arbitration shall take place in the county in which
the Leased Property is located and shall be conducted in the English language.
The arbitration award shall be final and binding upon the parties hereto and
subject to no appeal, and shall deal with the question of costs of arbitration
and all matters related thereto. Judgment upon the award rendered may be entered
into any court having jurisdiction, or applications may be made to such court
for an order of enforcement. Any arbitration under this Article XXXIX shall be
submitted within three (3) months following the notice which triggers the
arbitration, and shall be concluded within one (1) year thereafter. In the event
either of the foregoing deadlines are missed, either party may proceed to
commence a court proceeding to resolve the dispute.

                                   ARTICLE XL

     Section 40.1. Sale and Termination of Lease.

     In the event Lessor enters into a contract to sell its interest in the
Leased Property, Lessor may terminate this Lease by giving thirty (30) days
prior Notice to Lessee, and then, as of the closing of such sale, this Lease
shall terminate and be of no further force and effect except as to any
obligations existing as of such date that survive termination of this Lease, and
all Rent shall be adjusted as of such date. As compensation for the early
termination of Lessee's leasehold estate hereunder, Lessor shall, at Lessor's
election:

     (a) pay to Lessee a termination payment equal to the Fair Market Value of
Lessee's leasehold estate in the Hotel (a "Termination Payment"), which
Termination Payment shall be paid by Lessor to Lessee within eighteen (18)
months after the termination of this Lease; or

     (b) within eighteen (18) months after termination of this Lease, offer to
lease to Lessee, or cause Lessee to be offered the opportunity to lease, one or
more substitute hotel facilities comparable to the Hotel (i.e., comparable
market and substantially similar class, quality and condition of property)
pursuant to one or more leases ("Substitute Leases") that would create for
Lessee leasehold estates that have an aggregate Fair Market Value of no less
than the Termination Payment that otherwise would be payable with respect to the
Fair Market Value of Lessee's leasehold estate in the Hotel.

     In the event Lessor subsequently elects and complies with the option
described in (b) above, the Substitute Leases shall not take into account the
amount of the Termination Payment

                                       59

<PAGE>

accrued to the date the Substitute Leases are entered into and Lessor shall have
no further responsibility or obligation with respect to the Termination Payment.
If Lessor elects and complies with the option described in (b) above, regardless
of whether Lessee enters into any of the Substitute Leases, Lessor shall have no
further obligations to Lessee with respect to compensation for the early
termination of this Lease.

                                       60

<PAGE>

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

                                       LESSOR

                                       _________________________,
                                       a ____________________________

                                       By:   ____________________,
                                             a ___________________,
                                             General Partner

                                       By:_________________________________
                                       Printed Name:_________________________
                                       Title:________________________________

                                       LESSEE

                                       _________________________________
                                       a ____________________________________

                                       By:____________________________________
                                       Printed Name:____________________________
                                       Title:___________________________________

                                       61

<PAGE>

State of ______________
County of ____________

     I, a Notary Public of the County and State aforesaid, certify that
_________________ personally came before me this day and acknowledged that he is
______________ of ____________________, a _________________________, general
partner of ________________________, a _________ limited partnership, and
acknowledged the execution of the foregoing instrument. Witness my hand and
seal, this the ___ day of ______________________, 2003.

                                           _____________________________________
                                           Notary Public

                                           My commission expires:_______________

(SEAL)

State of _____________     )

                           )      SS.

County of ___________      )

     I, a Notary Public of the County and State aforesaid, certify that
_____________________ personally came before me this day and acknowledged that
he is __________ of _________________________________, a ______________
corporation, and acknowledged the execution of the foregoing instrument. IN
TESTIMONY WHEREOF, I have hereunto set my hand and seal this _____ day of
______________, 2003.

                                           _____________________________________
                                           Notary Public

(SEAL)

                                           My commission expires:_______________

                                       62

<PAGE>

                                    EXHIBIT A

                               LEGAL DESCRIPTIONS

                                   [Attached]

                                      A-1

<PAGE>

                                    EXHIBIT B

                                     [TERM]

                               [COMMENCEMENT DATE]

                                      B-1

<PAGE>

                                    EXHIBIT C

                         QUARTERLY REVENUES COMPUTATION

For the purposes of the Percentage Rent formula:

The Quarterly Revenues Computation is defined to mean the amount obtained by
adding, for the applicable calendar quarter, amounts equal to:

     1.  The First Percentage Rent Percentage multiplied by year to date Room
         Revenues up to the year to date Quarterly Percentage Rent threshold
         described below; and

     2.  The Second Percentage Rent Percentage multiplied by the year to date
         Room Revenues exceeding the year to date Quarterly Percentage Rent
         threshold.

The initial First Percentage Rent Percentage, the Second Percentage Rent
Percentage and the Quarterly Percentage Rent threshold for the Leased Property
are listed below.

<TABLE>
<CAPTION>
                                                             Room Revenues     Room Revenues
                                   Quarterly and Annual      First             Second
                                     Percentage Rent         Percentage        Percentage
 Hotel     Base Rent                    Thresholds           Rent Percentage   Rent Percentage
 -----     ---------               --------------------      ---------------   ---------------
<S>        <C>              <C>                              <C>               <C>
                            1Q    2Q    3Q    4Q      YTD
                            --    --    --    --      ---
</TABLE>

The Beverage Sales Computation is equal to ___% of year to date Beverage Sales
for the applicable period. The Food Sales Computation is equal to ___% of year
to date Food Sales for the applicable period.

                                      C-1

<PAGE>

                                    EXHIBIT D

                              MANAGEMENT AGREEMENT

                                      D-1<PAGE>
                                                                   EXHIBIT 10.19

                                 PROMISSORY NOTE

$1,500,000.00                                                    October 1, 2003

     FOR VALUE RECEIVED, HIGHLAND HOSPITALITY CORPORATION, a Maryland
corporation (the "Maker"), promises to pay to the order of BRUCE D. WARDINSKI
(collectively, the "Holder"), at 5805 Ridings Manor Place, Centreville, Virginia
20120, or at such other place as the Holder of this Note may from time to time
designate, the principal amount of ONE MILLION FIVE HUNDRED THOUSAND AND 00/100
DOLLARS ($1,500,000.00) together with interest on the unpaid principal amount
hereof from the date hereof, until paid in full, said interest to be due and
payable when the entire balance of this Note shall be due and payable in full,
at a rate per annum (computed on the basis of a 360 day year and applied to the
actual number of days elapsed in each interest calculation period) equal to
eight percent (8%). All interest due and owing hereunder shall be paid on the
Maturity Date of this Note.

     This Note evidences a loan made by Holder to Maker in connection with
Maker's obligation to reimburse Barcelo Crestline Corporation pursuant to that
certain Assignment and Assumption of Agreement of Purchase and Sale between
Maker, as assignee, and Barcelo Crestline Corporation, as assignor, dated of
even date herewith with respect to the purchase of the San Antonio Marriott
hotel.

     The principal amount of this Note together with all interest accrued
hereunder shall be due and payable on the date of closing of the underwritten
initial public offering of the common shares of Maker to the public (the
"Maturity Date"). All payments required hereunder shall be made in lawful money
of the United States of America, without offset and free and clear of any and
all other defenses, offsets, claims, counterclaims, credits or deductions of any
kind.

     The unpaid principal amount of this Note may be prepaid, in whole or in
part, at any time and from time to time without premium or penalty upon three
(3) Business Days' prior written notice to the Holder; provided, however, that
                                                       --------  -------
each prepayment must be in a principal amount of at least Five Hundred Thousand
and 00/100 Dollars ($500,000.00). Each payment or prepayment made in respect of
this Note shall be applied to any principal then due hereunder. Notices of
intention to prepay on a specified date shall be irrevocable. No prepayment
shall entitle any person to be subrogated to the rights of the Holder unless and
until this Note has been indefeasibly paid in full.

<PAGE>

     The occurrence of any one or more of the following shall constitute an
"Event of Default" hereunder:

     (1) Failure to pay any amount of the principal of, or any other sum payable
in respect of the debt evidenced by this Note (whether upon maturity hereof,
upon any prepayment date for which proper notice has been given, upon
acceleration, or otherwise) when such payments are due and payable;

     (2) The Maker shall admit in writing its inability to pay its debts as such
debts become due or shall make a general assignment for the benefit of
creditors; the Maker shall commence any proceeding or other action seeking
reorganization, dissolution, liquidation or any other arrangement of it or its
debts under any laws relating to bankruptcy, reorganization, or relief of
debtors, or seeking appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property; or any proceeding
or other action against the Maker shall be commenced seeking to have an order
for relief entered against the Maker as debtor, or seeking reorganization,
dissolution or any other arrangement of the Maker or its debts under any laws
relating to bankruptcy, reorganization, or relief of debtors, or seeking
appointment of a receiver, trustee or other similar official for the Maker or
for any substantial part of the property of the Maker, and (i) the Maker shall
indicate its consent to or acquiescence in such case, proceeding, or action,
(ii) such proceeding or action results in the entry of an order for relief which
is not fully stayed within thirty (30) days after the entry thereof, or (iii)
such proceeding or action remains undismissed for a period of thirty (30) days
or more or is dismissed or suspended only pursuant to Section 305 of the United
States Bankruptcy Code or any corresponding provision of any future United
States bankruptcy law; and

     (3) A final judgment shall be rendered by a court of law or equity against
the Maker in excess of One Million Dollars ($1,000,000.00), and the same shall
remain undischarged for a period of thirty (30) days, unless either (i) such
judgment is fully covered by collectible insurance and such insurer has within
such period acknowledged such coverage in writing, or (ii) although not fully
covered by insurance, enforcement of such judgment has been effectively stayed,
such judgment is being contested or appealed by appropriate proceedings and the
Maker has established reserves adequate, in its reasonable judgment, for payment
in the event such person or entity is ultimately unsuccessful in such contest or
appeal and evidence thereof is provided to the Holder.

     Upon the occurrence of any such Event of Default hereunder, the entire
principal amount hereof and any other amounts due hereunder, shall, at the
Holder's election be accelerated, and shall be and become immediately due and
payable without demand or notice, and in addition thereto, and not in
substitution therefor, the Holder shall be entitled to exercise any one or more
of the rights and

                                       2

<PAGE>

remedies exercisable by the Holder upon an Event of Default under this Note or
under applicable law, provided that if the occurrence of an Event of Default is
due to the failure to pay all amounts due hereunder on the Maturity Date, the
Holder's sole remedy shall be to the assets of Maker. Subject to the immediately
preceding proviso, failure to exercise remedies under this Note or to pursue
remedies under applicable law shall not constitute a waiver of remedies under
this Note or remedies under applicable law or of the right to exercise any of
the same in the event of any subsequent Event of Default. In no event shall
Holder have any remedies or recourse against any (i) affiliate of the Maker, or
(ii) director, member, officer, partner (general or limited), employee or agent
of the Maker or of any affiliate of the Maker.

     In the event that the principal amount hereof, or other sum due hereunder
is not paid when due in accordance with this Note, the unpaid principal amount
evidenced hereby and any other sum due hereunder shall, from the date such
payment was due and unpaid until the date of payment in full thereof, bear
interest (before and after judgment) at a rate of fifteen percent (15%) per
annum (the "Default Rate"), which rate shall commence, without notice,
immediately upon the failure to make any such payment when due.

     The Maker promises to pay all reasonable costs and expenses (including
without limitation reasonable attorneys' fees and other costs) incurred in
connection with the collection hereof and to perform each and every covenant or
agreement to be performed by the Maker under this Note.

     Any payment on this Note coming due on a Saturday, a Sunday, or a day which
is a legal holiday (i.e., a date that is not a "Business Day") in the place at
which a payment is to be made hereunder shall be made on the next succeeding day
which is a business day in such place, and any such extension of the time of
payment shall be included in the computation of interest hereunder.

     Each Obligor (which term shall include the Maker and all makers, sureties,
guarantors, endorsers, and other persons assuming obligations pursuant to this
Note) under this Note hereby waives presentment, protest, demand, notice of
dishonor, and all other notices, and all defenses and pleas on the grounds of
any extension or extensions of the time of payments or the due dates of this
Note, in whole or in part, before or after maturity, with or without notice. No
renewal or extension of this Note, no release of any Obligor, and no delay in
enforcement of this Note or in exercising any right or power hereunder, shall
affect the liability of any Obligor. The pleading of any statute of limitations
as a defense to any demand against any Obligor is expressly waived.

                                       3

<PAGE>

     No single or partial exercise by the Holder of any right hereunder shall
preclude any other or further exercise thereof or the exercise of any other
rights. No delay or omission on the part of the Holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this Note.

     This Note and all agreements between the Maker and the Holder relating
hereto are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration or otherwise, shall the amount
paid or agreed to be paid to the Holder for the use, forbearance or detention of
money hereunder exceed the maximum amount permissible under applicable law. If
from any circumstance whatsoever fulfillment of any provision hereof, at the
time performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law, then, ipso facto, the obligation to be
                                           ---- -----
fulfilled shall be reduced to the limit of such validity, and if from any such
circumstance the Holder shall ever receive interest, or anything which might be
deemed interest under applicable law, which would cause the total amount of
interest hereunder to exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal amount
owing on account of this Note (applied to installments of principal in the
inverse order of their scheduled maturities) and not to the payment of interest,
or if such excessive interest exceeds the unpaid principal balance of this Note,
such excess shall be refunded to the Maker. All sums paid or agreed to be paid
to the Holder for the use, forbearance or detention of the indebtedness of the
Maker to the Holder shall, to the extent permitted by applicable law, be deemed
to be amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full on the Maturity Date so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof. The terms and provisions of this paragraph shall control and supersede
every other provision of this Note and all other agreements between the Maker
and the Holder.

     The Maker hereby declares, represents, and warrants that (i) the Maker is a
business or commercial organization and (ii) the indebtedness evidenced hereby
is (A) made solely for the purpose to acquire or carry on a business or
commercial enterprise and (B) is not secured by residential real property,
within the meaning of Md. Code Ann., Com. Lawss. 12-103(e).

     Whenever used herein, the words "Maker" and "Holder" and "Obligor" shall be
deemed to include their respective successors and, except as to Maker, assigns.

     This Note shall be governed by and construed under and in accordance with
the laws of Maryland (but not including the choice of law rules thereof).

                                       4

<PAGE>

     All notices and other communications given by the Maker and the Holder to
each other with respect to this Note shall be given in writing to the following
addresses:

     If to the Holder, to:

     Highland Hospitality Corporation
     8405 Greensboro Drive, Suite 500
     McLean, Virginia 22102
     Attention: General Counsel

     With a copy to:

     Highland Hospitality Corporation
     8405 Greensboro Drive, Suite 500
     McLean, Virginia 22102
     Attention: President and Chief Executive Officer

     If to the Maker, to:

     Bruce D. Wardinski
     5805 Ridings Manor Place
     Centreville, VA 20120

     EACH PARTY TO THIS AGREEMENT HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION
BETWEEN THE MAKER AND THE HOLDER ARISING OUT OF THIS NOTE AND THE TRANSACTIONS
CONTEMPLATED HEREBY.

     THE PARTIES HERETO SUBMIT (AND WAIVE ALL RIGHTS TO OBJECT) TO NON-EXCLUSIVE
PERSONAL JURISDICTION IN THE STATE OF MARYLAND FOR THE ENFORCEMENT OF ANY AND
ALL OBLIGATIONS UNDER THIS NOTE, EXCEPT THAT IF ANY SUCH ACTION OR PROCEEDING
ARISES UNDER THE CONSTITUTION, LAWS OR TREATIES OF THE UNITED STATES OF AMERICA,
OR IF THERE IS A DIVERSITY OF CITIZENSHIP BETWEEN THE PARTIES THERETO, SO THAT
IT IS TO BE BROUGHT IN A UNITED STATES DISTRICT COURT, IT SHALL BE BROUGHT IN
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND, SOUTHERN DIVISION
OR ANY SUCCESSOR FEDERAL COURT HAVING ORIGINAL JURISDICTION.

                                       5

<PAGE>

     IN WITNESS WHEREOF, the undersigned has duly executed this Note, or have
caused this Note to be duly executed on its behalf, as of the day and year first
hereinabove set forth.

WITNESS/ATTEST                                  HIGHLAND HOSPITALITY CORPORATION

   /s/   Tracy M.J. Colden                 By:   /s/   James L. Francis
------------------------------                  ------------------------
                                                Name:  James L. Francis
                                                Title: President and CEO

                                       6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]