Document:

MANAGEMENT AGREEMENT

 Exhibit 10.16 
 Rancho Bernardo, CA – Hilton Garden Inn 
 MANAGEMENT AGREEMENT 
 by and between 
 INN VENTURES, INC.

 as “MANAGER” 
 and

 APPLE SEVEN HOSPITALITY MANAGEMENT, INC. 
 as “OWNER” 
 Dated as of May 9, 2006 

					
	 ARTICLE I APPOINTMENT OF MANAGER
	  	1
			
	 1.01.
	  	Appointment.	  	1
			
	 1.02.
	  	Management of the Hotel.	  	1
			
	 1.03.
	  	Employees	  	3
			
	 1.04.
	  	Owner’s Right to Inspect.	  	4
			
	 1.05.
	  	Regular Meetings.	  	4
			
	 1.06.
	  	System Standards	  	4
			
	 1.07.
	  	Limitations on Manager’s Authority	  	4
			
	 1.08.
	  	Representations and Warranties of Manager.	  	4
		
	ARTICLE II TERM	  	5
			
	 2.01.
	  	Term.	  	5
			
	 2.02.
	  	Performance Termination.	  	5
		
	ARTICLE III COMPENSATION OF MANAGER	  	6
			
	 3.01.
	  	Management Fees.	  	6
			
	 3.02.
	  	Operating Profit.	  	6
		
	ARTICLE IV ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS	  	7
			
	 4.01.
	  	Accounting, Distributions and Annual Reconciliation.	  	7
			
	 4.02.
	  	Books and Records.	  	9
			
	 4.03.
	  	Accounts, Expenditures.	  	9
			
	 4.04.
	  	Annual Operating Projection.	  	10
			
	 4.05.
	  	Working Capital.	  	10
			
	 4.06.
	  	Fixed Asset Supplies.	  	11
			
	 4.07.
	  	Real Estate and Personal Property Taxes.	  	11
			
	 4.08.
	  	Sarbanes-Oxley Certification.	  	12
		
	ARTICLE V REPAIRS, MAINTENANCE AND REPLACEMENTS	  	13
			
	 5.01.
	  	Repairs and Maintenance to be Paid from Gross Revenues.	  	13
			
	 5.02.
	  	 Repairs, Maintenance and Equipment Replacements to be Paid from Reserve.
	  	13
		
	ARTICLE VI INSURANCE	  	14
			
	 6.01.
	  	Property Insurance.	  	14
			
	 6.02.
	  	Operational Insurance.	  	15
			
	 6.03.
	  	Coverage.	  	16
			
	 6.04.
	  	Costs and Expenses.	  	16
			
	 6.05.
	  	Owner’s Right to Provide Insurance.	  	16

  

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	 ARTICLE VII DAMAGE AND REPAIR
	  	17
			
	 7.01.
	  	Damage and Repair.	  	17
			
	 7.02.
	  	Condemnation.	  	17
		
	 ARTICLE VIII MORTGAGES AND OTHER LIENS
	  	18
			
	 8.01.
	  	Subordination to Mortgage.	  	18
			
	 8.02.
	  	Liens; Credit.	  	18
		
	 ARTICLE IX DEFAULTS
	  	19
			
	 9.01.
	  	Events of Default.	  	19
			
	 9.02.
	  	Remedies.	  	20
			
	 9.03.
	  	Additional Remedies.	  	20
		
	 ARTICLE X ASSIGNMENT AND SALE
	  	21
			
	 10.01.
	  	Assignment.	  	21
			
	 10.02.
	  	Sale of the Hotel.	  	21
		
	 ARTICLE XI MISCELLANEOUS
	  	22
			
	 11.01.
	  	Consents and Cooperation.	  	22
			
	 11.02.
	  	Relationship.	  	22
			
	 11.03.
	  	Applicable Law; Jurisdiction.	  	23
			
	 11.04.
	  	Recordation.	  	23
			
	 11.05.
	  	Headings.	  	23
			
	 11.06.
	  	Notices.	  	23
			
	 11.07.
	  	Environmental Matters.	  	24
			
	 11.08.
	  	Confidentiality; Projections.	  	25
			
	 11.09.
	  	Indemnification.	  	26
			
	 11.10.
	  	Actions to be Taken Upon Termination.	  	26
			
	 11.11.
	  	Waiver.	  	27
			
	 11.12.
	  	Partial Invalidity.	  	27
			
	 11.13.
	  	Survival.	  	28
			
	 11.14.
	  	Negotiation of Agreement.	  	28
			
	 11.15.
	  	Estoppel Certificates.	  	28
			
	 11.16.
	  	Affiliates.	  	28
			
	 11.17.
	  	Blocked Persons or Entities.	  	28
			
	 11.18.
	  	Restrictions on Operating the Hotel in Accordance with System Standards.	  	29

  

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	 11.19.
	  	Counterparts.	  	29
			
	 11.20.
	  	Entire Agreement.	  	29
			
	 11.21.
	  	Operation of Other Hotels.	  	30
			
	 11.22.
	  	Waiver of Jury Trial and Punitive Damages.	  	30
		
	 ARTICLE XII DEFINITION OF TERMS
	  	30
			
	 12.01.
	  	Definition of Terms.	  	30
		
	 ARTICLE XIII SUPPLEMENTAL PROVISIONS
	  	38

  

					
	Schedule 1	  	-	  	Hotel Specific Data
	Schedule 2	  	-	  	Supplemental Provisions
	Exhibit A	  	-	  	Legal Description of Site
	Exhibit B	  	-	  	FF&E Leases, Service Contracts and Leases
	Exhibit C	  	-	  	Restricted Area

  

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 MANAGEMENT AGREEMENT 
 THIS MANAGEMENT AGREEMENT (“Agreement”) is made as of the 9th day of May, 2006 (“Effective Date”) by the party identified as the “Owner” in Schedule 1 attached hereto (“Owner”), and the party identified as the “Manager” in
Schedule 1 attached hereto (“Manager”). 
 RECITALS: 
 A. Owner desires to engage Manager to manage and operate the hereinafter described hotel, and Manager desires to accept such engagement, upon the terms
and conditions set forth in this Agreement. 
 B. All capitalized terms used in this Agreement shall have the meaning set forth in
Section 12.01 hereof. 
 NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner and Manager agree as follows: 
 ARTICLE I

 APPOINTMENT OF MANAGER 
 1.01. Appointment. 
 Owner hereby appoints and employs Manager as Owner’s exclusive independent contractor to supervise,
direct and control the management and operation of the Hotel throughout the Term. Manager accepts such appointment and agrees to manage the Hotel during the Term in accordance with the terms and conditions of this Agreement. 
 1.02. Management of the Hotel. 
 A.
Manager shall manage the Hotel, including, without limitation, performance of the following functions, in accordance with Prudent Industry Practices, the provisions of this Agreement and all standards imposed by the Franchise Agreement (provided
that in all cases, except as otherwise specifically set forth in this Agreement, the costs and expenses of performing such functions shall be Deductions): 
 1. Recruit, employ, supervise, direct and discharge the employees at the Hotel (either itself or through an Affiliate of Manager provided nothing contained herein shall relieve Manager of its obligations to fully
perform hereunder) and maintain adequate staff, consistent with Prudent Industry Practices, to carry out its duties under this Agreement. 
 2. Establish prices, rates and charges for services provided in the Hotel, including Guest Room rates, subject to Owner’s prior approval, which approval shall not be unreasonably withheld and further which prior approval shall not be
required where the local market conditions are particularly volatile. Notwithstanding the foregoing, Owner reserves the right at any time and from time to time to require prior approval of pricing changes. 

 3. Establish and revise, as necessary and in accordance with Prudent Industry Practices, administrative
policies and procedures, including policies and procedure for the control of revenue and expenditures, for the purchasing of supplies and services, for the control of credit and for the scheduling of maintenance, and verify that the foregoing
procedures are operating in a sound manner. 
 4. Make payments on accounts payable and collect accounts receivable. 
 5. Procure (for Owner) all Inventories and replace Fixed Asset Supplies. 
 6. Prepare and deliver interim accountings, annual accountings, Annual Operating Statements, Building Estimates, Repairs and Equipment Estimates and such other information as is required by this Agreement. 

7. Plan, execute and supervise repairs and maintenance at the Hotel. 
 8. Obtain the insurance required to be obtained by Manager pursuant to Article VI of this Agreement and provide or cause to be provided all risk management services related thereto, subject to the provisions of
Section 6.05. 
 9. Obtain and keep in full force and effect, either in its own name or in Owner’s or Owner’s affiliate’s
name, as may be required by applicable law, any and all licenses (including, without limitation, liquor licenses which shall be maintained in the name of Manager to the extent permitted by law) and permits to the extent same is within the control of
Manager (or, if same is not within the control of Manager, Manager shall use all due diligence and best efforts to obtain and keep same in full force and effect). 
 10. Subject to the terms of this Agreement, execute subordination agreements, estoppel certificates and other documentation required by any purchaser or mortgagee and reasonably cooperate (provided that Manager shall
not be obligated to enter into any amendments of this Agreement) with Owner or Landlord in any attempt(s) by Owner or Landlord to effectuate a Sale of the Hotel or to obtain a Mortgage. 
 11. At the direction and with the concurrence of Owner, arrange for and supervise public relations and advertising and prepare marketing plans.

 12. Manage and operate the Hotel at all times in compliance with the Franchise Agreement, including (without limitation) the Manual and
the System standards (as such terms are defined therein). 
 B. The operation of the Hotel shall be under the exclusive supervision and
control of Manager, except as otherwise specifically provided in this Agreement, and Manager shall be responsible for the proper and efficient operation of the Hotel. In fulfilling its obligations under this Agreement, Manager will act as a
reasonable, prudent operator of the Hotel, having regard for the status of the Hotel, operating the Hotel in accordance with Prudent Industry Practices and at all times maintaining and complying with all standards imposed by the Franchise Agreement,
and subject to the foregoing and all other terms and conditions of this Agreement, shall have discretion in the following: charges, terms and conditions for Guest Rooms and commercial 

  

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space; credit policies and services provided by the Hotel; food and beverage services; employment policies; granting of leases, subleases, licenses and
concessions for shops and businesses within the Hotel, provided that the term of any such lease, sublease, license or concession shall not exceed the lesser of one (1) year or the Term without the prior written approval of Owner; receipt,
holding and disbursement of funds; maintenance of bank accounts; procurement of Inventories, supplies and services; promotion and publicity; payment of costs and expenses as are specifically provided for in this Agreement or are otherwise reasonably
necessary for the proper and efficient operation of the Hotel; and, generally, all activities necessary for operation of the Hotel. With respect to all Material Management Decisions, Manager shall consult with Owner in advance of making any such
decisions. The term “Material Management Decisions” means a decision to be made in connection with any expenditure of more than $10,000 for each item or $50,000 in the aggregate for all such items in any Fiscal Year if such
expenditure is not included in the approved Annual Operating Projection for such Fiscal Year or if such expenditure would result in an increase in the overall Annual Operating Projection. 
 C. Manager shall comply with and abide by all applicable Legal Requirements pertaining to its operation of the Hotel. Any of Landlord, Owner or Manager
shall have the right, but not the obligation, in its reasonable discretion, to contest or oppose, by appropriate proceedings, any such Legal Requirements. The reasonable expenses of any such contest of a Legal Requirement shall be paid from Gross
Revenues as Deductions. 
 1.03. Employees 
 All personnel employed at the Hotel shall at all times be the employees of Manager and not the employees of Owner. Manager shall have reasonable discretion with respect to all personnel employed at the Hotel,
including, without limitation, decisions regarding hiring, promoting, transferring, compensating, supervising, terminating, directing and training all employees at the Hotel, and, generally, establishing and maintaining all policies relating to
employment; provided, however, that (i) Owner shall have the right to approve the hiring or termination of the persons who occupy the position of General Manager for the Hotel and (ii) Manager shall not negotiate or enter into any
collective bargaining or other labor agreement with employees or with any organization representing or claiming to represent employees without Owner’s prior consent. No person shall be given gratuitous accommodations or services without prior
joint approval of Owner and Manager except in accordance with policies agreed upon by Owner and Manager. Notwithstanding the immediately preceding sentence, employees of Manager shall be entitled to up to five nights at the Hotel during any 12-month
period without charge on a space available basis; provided, however, Owner reserves the right to discontinue these complimentary stay privileges if Owner determines that such stays are overburdening the Hotel or the business conducted therein.
Manager shall reimburse Owner for the costs (including relocation costs) of hiring and training General Managers who are employed at the Hotel for less than one (1) year and are transferred or relocated other than to a hotel owned by Owner or
its Affiliates. Manager shall be solely responsible and liable for all acts or omissions of the personnel employed at the Hotel and all persons managing such employees, and Manager shall indemnify, defend and hold Owner harmless from any and all
claims, damages, liabilities, obligations and costs (including reasonable attorneys’ fees) arising therefrom, including (without limitation) all claims, damages, liabilities, obligations and costs arising from the negligence, 

  

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fraud, theft and willful misconduct of Manager’s employees and from employment discrimination, wrongful termination, violations of law and other claims
asserted by such employees, except to the extent of any costs properly payable from Gross Revenues as Deductions. 
 1.04. Owner’s
Right to Inspect. 
 Owner, its representatives, employees, agents, Affiliates and Mortgagees shall have access to the Hotel at any and
all reasonable times for the purpose of inspection, exercising any of its rights under this Agreement or showing the Hotel to prospective purchasers, tenants or Mortgagees and at any time in case of an emergency. 
 1.05. Regular Meetings. 
 At
Owner’s request, Owner and Manager shall have meetings at the Hotel and at mutually convenient times. Manager shall be represented at such meetings by the General Manager of the Hotel and such other personnel as the Manager and/or Owner may
deem appropriate. The purpose of the meetings shall be, inter alia, to discuss the performance of the Hotel and other related issues, including any variations from the Annual Operating Projection. 
 1.06. System Standards 
 Subject to
the availability of adequate funds, Manager shall take such actions consistent with this Agreement as are necessary for the Hotel to comply with the System Standards, and Manager shall operate the Hotel so that the Hotel will at all times comply
with System Standards. 
 1.07. Limitations on Manager’s Authority 
 Manager shall not, without Owner’s prior written approval, enter into any FF&E Lease if (i) the fair market value of the FF&E subject to
such FF&E Lease at the time of entering into such FF&E Lease exceeds ($25,000); (ii) the fair market value of the FF&E subject to all FF&E Leases at the time of entering into such FF&E Lease exceeds Fifty Thousand Dollars
($50,000) in the aggregate; (iii) the FF&E subject to such FF&E Lease is FF&E that is not, consistent with Prudent Industry Practices, customarily leased; (iv) such FF&E Lease is with an Affiliate of Manager or is on
payment terms (including the amounts and schedule of payments) that would be materially more favorable to the lessor thereof than payment terms customary under Prudent Industry Practices for leases of similar FF&E; or (v) such FF&E
Lease is not terminable by Owner upon thirty (30) days’ notice. 
 1.08. Representations and Warranties of Manager.

 Manager hereby represents and warrants to Owner as follows: 
 A. Authority. Manager is an entity of the type identified in Schedule 1 and is duly formed, validly existing and in good standing in the state identified in Schedule 1. Manager has obtained all
necessary consents to enter into and perform this Agreement and is fully authorized to enter into and perform its obligations under this Agreement. No consent or approval of any 

  

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person, entity or governmental authority is required for the execution, delivery or performance by Manager of this Agreement, and this Agreement is hereby
binding and enforceable against Manager. 
 B. No Conflicts. Neither the execution nor the performance of, or compliance with, this
Agreement by Manager has resulted, or will result, in any violation of, or default under, or acceleration of, any obligation under any existing corporate charter, certificate of incorporation, bylaw, articles of organization, limited liability
company agreement or regulations, partnership agreement or other organizational documents of Manager and under any, mortgage indenture, lien agreement, promissory note, contract, or permit, or any judgment, decree, order, restrictive covenant,
statute, rule or regulation, applicable to Manager or to the Hotel. 
 C. Bankruptcy. Neither Manager nor any of its Affiliates, is
insolvent or the subject of any bankruptcy proceeding, receivership proceeding or other insolvency, dissolution, reorganization or similar proceeding. 
 1.09. Centralized Services. Manager may provide to the Hotel the following services that are furnished generally on a central or system-wide basis to other hotels operated by Manager or its Affiliates: Director
– Revenue Management; Director – Corporate Marketing and Training; Regional Manager; Manager – Technology or their respective departmental subordinates. The salaries, wages, development costs and overhead related to the employees of
Manager providing such centralized services shall be allocated on a fair and reasonable basis among all the hotels (including the Hotel) receiving such services. The portion allocated to the Hotel shall be based upon the extent to which such
services actually benefit the Hotel and Manager shall provide to Owner for Owner’s prior approval the projected costs of such centralized services as part of the Annual Operating Projection pursuant to Section 4.04 below. 
 ARTICLE II 
 TERM 
 2.01. Term. 
 The “Initial
Term” of this Agreement shall begin on the Effective Date and shall continue until the expiration date identified in Schedule 1. The Initial Term of this Agreement may be extended for the extension term(s), if any, provided in
Schedule 1 (each an “Extension Term”) upon the following terms and conditions: (i) Manager or Owner shall give written notice, which shall be irrevocable, to the other party of its desire to extend
(“Extension Notice”) not less than one hundred eighty (180) days nor more than two hundred seventy (270) days prior to the end of the Initial Term or first Extension Term, as applicable, and (ii) at the end of
the Initial Term or first Extension Term, as applicable, no event of default on the part of the party giving the Extension Note shall have occurred and be continuing beyond any applicable cure period under this Agreement, and any then existing event
of default shall have been cured within the applicable cure period Notwithstanding the foregoing, Manager or Owner shall have the option to terminate this Agreement at any time, with or without cause, by giving the other party not less than one
hundred-eighty (180) days prior written notice of its election to terminate. 
  

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 2.02. Performance Termination. 
 A. After the first Fiscal Year, Owner shall have the option to terminate this Agreement with respect to any twelve (12) month period that begins
after May 9, 2008 (“Performance Termination Period”)with respect to which any of the following occur: 
 1.
Operating Profit for any Performance Termination Period is less than the Performance Termination Threshold for such Performance Termination Period; or 
 2. The Revenue Index of the Hotel during any Performance Termination Period is less than the Revenue Index Threshold for such Performance Termination Period. 
 Owner shall exercise such option to terminate by serving written notice thereof on Manager no later than sixty (60) days after Owner’s receipt
of the interim accounting under Section 4.01.A for the fourth applicable Accounting Period, and this Agreement shall terminate as of the end of the second (2nd) full Accounting Period following the date on which Manager receives the above-described notice from Owner. Notwithstanding the foregoing, Manager at its option may elect to void such termination
by so notifying Owner within such sixty (60) day period; provided, however, that the amount that was necessary to have achieved the Performance Termination Threshold (the “Deficit Amount”) shall be made up to Owner by either
(i) Manager’s paying the Deficit Amount to Owner within ten (10) days after such 60-day period or (ii) offsetting the Deficit Amount against the Base Management Fees and/or other amounts or reimbursements payable to Manager under
this Agreement, as Owner may direct. 
 B. Owner’s failure to exercise its right to terminate this Agreement pursuant to this
Section 2.02 shall not be deemed an estoppel or waiver of Owner’s right to terminate this Agreement with respect to any subsequent event or circumstance that could give Owner the right to terminate hereunder. 
 ARTICLE III 
 COMPENSATION OF MANAGER

 3.01. Management Fees. 
 In consideration of services to be performed during the Term, Manager shall be paid the sum of the following as its management fees: 
 A. the Base Management Fee, which shall be retained by Manager from Gross Revenues except as otherwise provided in this Agreement; plus 
 B. the Incentive Management Fee but only to the extent of available Operating Profit after payment of Owner’s Priority (including, without limitation, all accrued and unpaid Owner’s Priority) as provided in Section 3.02
below. 
 3.02. Operating Profit. 
 A. Operating Profit, to the extent available, shall be distributed to Owner and to Manager in the following order of priority, except as otherwise provided in this Agreement: 
 1. An amount up to the maximum amount of Owner’s Priority shall be paid to Owner; 
  

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 2. The Incentive Management Fee shall be paid to Manager; and 
 3. Any remaining balance of Operating Profit shall be paid to Owner. 
 Owner’s Priority shall be cumulative from one Fiscal Year to the next, and to the extent the maximum amount of Owner’s Priority is unpaid in any Fiscal Year, such unpaid amount shall accrue and be payable in
any subsequent Fiscal Year to the extent of Operating Profit. Notwithstanding anything in this Agreement to the contrary, Manager acknowledges and agrees that Incentive Management Fees are only payable (i) annually within thirty (30) days
after Owner’s receipt and acceptance of the Annual Operating Statement, (ii) to the extent of available Operating Profit after payment in full of Owner’s Priority and (iii) in no event shall Incentive Management Fees accrue or be
deemed to accrue. 
 B. To the extent of available Operating Profit with respect to each Accounting Period, Manager shall distribute a
prorated portion of the Owner’s Priority (including any accrued and unpaid Owner’s Priority) to Owner for each such Accounting Period in accordance with Section 4.01. Any Incentive Management Fee payable to Manager will be payable
within thirty (30) days after Owner’s receipt and acceptance of the Annual Operating Statement. 
 ARTICLE IV 
 ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS 
 4.01. Accounting, Distributions and Annual Reconciliation. 
 A. Within fifteen (15) days after the close of each
Accounting Period, Manager shall deliver an interim accounting (the “Accounting Period Statement”) to Owner, prepared in accordance with the Uniform System of Accounts, showing Gross Revenues, Deductions, Operating Profit and
applications and distributions thereof for the preceding Accounting Period and any other information reasonably requested by Owner. Manager shall transfer to Owner, with each Accounting Period Statement, any interim amounts due Owner, subject to
Working Capital needs mutually agreed upon by Owner and Manager, and shall retain any interim amounts payable to Manager pursuant to the terms of this Agreement. 
 B. Calculations and payments of the Incentive Management Fee, the Base Management Fee and distributions of Operating Profit made with respect to each Accounting Period shall be accounted for cumulatively within a
Fiscal Year, but shall not be cumulative from one Fiscal Year to the next. Within the SEC Filing Period, Manager shall deliver to Owner a statement (the “Annual Operating Statement”) in reasonable detail summarizing the
operations of the Hotel for the immediately preceding Fiscal Year and a certificate of Manager’s chief accounting officer certifying that, to the best of his or her knowledge, such Annual Operating Statement is true and correct. The parties
shall, within five (5) Business Days after Owner’s receipt of such Annual Operating Statement, make any adjustments, by cash payment, in the amounts paid or retained for such Fiscal Year as are needed because of the final figures set forth
in such Annual Operating Statement. Such Annual Operating Statement shall be controlling over the preceding Accounting Period Statements. 
  

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 C. To the extent there is an Operating Loss for any Accounting Period, unless such loss was due to a
force majeure event, no Base Management Fee shall be paid to or retained from Gross Revenues by Manager. Any Base Management Fee that would have been payable to Manager had there been an Operating Profit for such Accounting Period shall
accrue (but not beyond the Term of this Agreement) and shall be payable to Manager to the extent of, and shall reduce, any Incentive Management Fee payable to Manager in respect of subsequent Accounting Periods. In no event shall Incentive
Management Fees accrue, nor shall any Incentive Management Fee be payable to Manager in respect of any Accounting Period (i) as to which there is an Operating Loss or (ii) as to which accrued Base Management Fees are payable to Manager or
accrued Owner’s Priority is payable to Owner. 
 To the extent there is an Operating Loss for any Accounting Period, additional funds in
the amount of any such Operating Loss (other than the amount of any Base Management Fee) shall be provided by Owner within thirty (30) days after Manager has delivered written notice thereof to Owner. If Owner does not fund such Operating Loss
within the thirty (30) day time period, Manager shall have the right (without affecting Manager’s other remedies under this Agreement) to withdraw an amount to cover such Operating Loss from future distributions of funds otherwise due to
Owner. Furthermore, if Owner fails to fund such deficiency upon request by Manager, Manager may also withdraw interest upon such sum from the date payment was due until repayment to Manager at a rate equal to the Prime Rate plus one (1) percent
per annum. In the event an Operating Loss occurs in respect of one (1) or more Accounting Quarters during any Fiscal Year, Owner may elect to terminate this Agreement. In no event shall Manager be obligated to invest its own funds to cover any
Operating Loss. 
  

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 4.02. Books and Records. 
 Books of control and account pertaining to operations at the Hotel shall be kept on the accrual basis and in all material respects in accordance with the
Uniform System of Accounts. Owner may at reasonable intervals during Manager’s normal business hours examine such records. If Owner desires to audit, examine or review the Annual Operating Statement, Owner shall notify Manager in writing within
sixty (60) days after receipt of such Annual Operating Statement of its intention to audit and begin such audit no sooner than ten (10) days after Manager’s receipt of such notice. Owner shall use reasonable efforts to complete such
audit within one hundred twenty (120) days after commencement thereof. If Owner does not make such an audit, then such Annual Operating Statement shall be deemed to be conclusively accepted by Owner as being correct, except in the event of
manifest error or fraud, misrepresentation, misconduct or negligence by Manager or its agents, employees, representatives or contractors or other third parties. If any audit by Owner discloses an understatement of any amounts due Owner, Manager
shall promptly pay Owner such amounts found to be due, plus interest thereon at the Prime Rate plus one percent (1%) per annum from the date such amounts should originally have been paid. If any audit discloses that Manager has not received any
amounts due it, Owner shall pay Manager such amounts, plus interest thereon at the Prime Rate plus one percent (1%) per annum from the date such amounts should originally have been paid. The cost of the audit shall be paid by Owner; provided,
however, Manager shall pay for such cost if such audit discloses an underpayment to Owner for the Fiscal Year so audited of five percent (5%) or more of the amount that should have been paid to Owner for such Fiscal Year. In addition, if the
Franchise Agreement requires Owner to pay interest and/or the cost of an audit to the Franchisor on account of an understatement in reports provided by Manager, Manager shall pay such interest and costs in accordance with the Franchise Agreement
without (either directly or indirectly) passing such charges on to Owner. 
 4.03. Accounts, Expenditures. 
 A. All funds derived from operation of the Hotel shall be deposited by Manager in Owner’s bank accounts (the “Operating
Accounts”) established by Manager in a bank or banks designated by Manager with the concurrence of Owner. Withdrawals by Manager from such Operating Accounts shall be made solely by the General Manager or the Assistant General Manager
of the Hotel, a senior officer of Manager or such other representatives of Manager whose signatures have been authorized by Manager with the concurrence of Owner. Reasonable petty cash funds shall be maintained at the Hotel. 
 B. Except as otherwise provided in this Agreement, all payments made by Manager hereunder shall be made from the Operating Accounts, petty cash funds, or
from the Reserve (in accordance with Section 5.02). Manager shall not be required to make any advance or payment with respect to the Hotel except out of such funds, and Manager shall not be obligated to incur any liability or obligation with
respect to the Hotel unless resulting from acts or omissions of Manager that are in violation of or inconsistent with this Agreement or from Manager’s negligence or misconduct (each, “Manager’s Liability” and,
collectively, “Manager’s Liabilities”). 
  

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 C. Debts and liabilities (other than Manager’s Liabilities) incurred by Manager as a result of its
operation and management of the Hotel pursuant to the terms hereof, whether asserted before or after Termination, will be paid by Owner to the extent funds are not available for that purpose from Gross Revenues, and Owner shall indemnify, defend and
hold Manager harmless from and against all loss, costs, liability, and damage (including, without limitation, reasonable attorneys’ fees and expenses) arising from Owner’s failure to pay or perform such debts and liabilities. Manager shall
pay, indemnify, defend and hold Owner harmless from and against all Manager’s Liabilities and all loss, costs, liability and damage (including, without limitation, reasonable attorneys’ fees and expenses) arising from Manager’s
failure to pay or perform Manager’s Liabilities. The provisions of this Section 4.03.C shall survive Termination. 
 4.04.
Annual Operating Projection. 
 Manager shall deliver to Owner for its review, at least forty-five (45) days prior to the
beginning of each Fiscal Year after the first Fiscal Year following the Effective Date, a preliminary draft of the business plan (including a proposed budget) and a projection of the estimated Gross Revenues, departmental profits, Deductions, and
Operating Profit for the forthcoming Fiscal Year for the Hotel (the “Annual Operating Projection”) for approval by Owner. Manager will consider in good faith suggestions made by Owner with respect to the Annual Operating
Projection and make modifications thereto that are agreed upon by Owner and Manager. In the case of the Fiscal Year beginning on the Effective Date, Manager and Owner have already agreed upon the Annual Operating Projection for such Fiscal Year.
Upon approval of the Annual Operating Projection by Owner and Manager, Manager in good faith shall use best efforts to adhere to such Annual Operating Projection. In the event Owner and Manager are unable to agree upon the Annual Operating
Projection by the commencement of the Fiscal Year to which it relates, Owner or Manager may elect to terminate this Agreement as of the end of the then current Fiscal Year. 
 4.05. Working Capital. 
 The parties
recognize that, as of the Effective Date, the level of Working Capital funds, which shall be held in the Operating Accounts, is reasonably believed to be reasonably sufficient for the operations of the Hotel, subject at all times to seasonal
differences and changes in circumstances after the Effective Date. Manager may from time to time during the Term request that Owner advance any additional funds necessary to maintain Working Capital at levels reasonably determined by Manager (with
the concurrence of Owner) to be necessary to satisfy the needs of the Hotel. In the event Owner and Manager are unable to agree upon the need for and/or amount of additional Working Capital within thirty (30) days after Owner’s receipt of
such written notice from Manager (the “Working Capital Deadline”), Owner or Manager may elect to terminate this Agreement by written notice to the other given no earlier than sixty (60) days following the Working Capital
Deadline. If Owner and Manager agree upon the need for and amount of additional Working Capital and thereafter Owner does not so fund additional Working Capital within ten (10) Business Days after Owner’s receipt of a written request from
Manager to fund such additional Working Capital, Manager shall have the right to withdraw an amount equal to the funds requested by Manager for additional Working Capital from future distribution of funds otherwise due to Owner. All funds so
advanced for Working Capital shall be utilized by Manager for the purposes of this Agreement. Upon Termination, Manager shall immediately return the outstanding balance of the Working Capital to Owner. 
  

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 4.06. Fixed Asset Supplies. 
 The parties further recognize that, as of the Effective Date, the level of funds for Fixed Asset Supplies is reasonably believed to be reasonably
sufficient for the operations of the Hotel, subject at all times to seasonal differences and changes in circumstances after the Effective Date. Any additional funds which are necessary to maintain Fixed Asset Supplies at levels determined by Manager
(with the concurrence of Owner) to be necessary to satisfy the needs of the Hotel, shall be paid from Gross Revenues as Deductions. Fixed Asset Supplies shall remain the property of Owner throughout the term of this Agreement and upon Termination.

 4.07. Real Estate and Personal Property Taxes. 
 A. Except as specifically set forth in Section 4.07.B below, all real estate and personal property taxes, levies, assessments (including special assessments (regardless of when due or whether they are paid as a
lump sum or in installments over time) imposed because of facilities that are constructed by or on behalf of the assessing jurisdiction (for example, roads, sidewalks, sewers, culverts, etc.) which directly benefit the Hotel (regardless of whether
or not they also benefit other buildings)), fees (regardless of when due or whether they are paid as a lump sum or in installments over time) which are required of Owner as a condition to the issuance of zoning variances or building permits
(“Impact Fees”), if any, and similar charges on or relating to the Hotel (collectively, “Impositions”) during the Term shall be paid by Manager from Gross Revenues, before any fine, penalty, or
interest is added thereto or lien placed upon the Hotel or upon this Agreement, unless payment thereof is in good faith being contested and enforcement thereof is stayed. Any such payments shall be Deductions in determining Operating Profit. Owner
shall, within five (5) days after receipt, furnish Manager with copies of official tax bills and assessments which it may receive with respect to the Hotel. Either Landlord or Owner may, and at Owner’s request Manager shall, initiate
proceedings to contest any negotiations or proceedings with respect to any Imposition, and all reasonable costs of any such contest shall be paid from Gross Revenues and shall be a Deduction in determining Operating Profit. Manager shall, as part of
its contest or negotiation of any Imposition, be entitled, on Owner’s behalf, to waive any applicable statute of limitations in order to avoid paying the Imposition during the pendency of any proceedings or negotiations with applicable
authorities. Notwithstanding anything contained herein to the contrary, at Owner’s option (i) Manager shall establish an escrow account in the name of Owner in a bank or banks designated by Manager with the concurrence of Owner and shall
deposit monthly into such account from Gross Revenues an amount that Manager reasonably estimates shall be sufficient to pay the Impositions, in which case Manager shall pay the Impositions from funds in the escrow account as and when the
Impositions become due (and Owner shall promptly deposit into the escrow account any deficiency if the estimated monthly payments are not sufficient to pay all of the Impositions) or (ii) the amounts that would otherwise be deposited into such
escrow account shall be included in the Operating Profit, not deducted from Gross Revenues and shall be distributed in cash to Owner along with the remainder of the Owner’s Priority. If Owner elects to retain such amounts pursuant to clause
(ii) above, Manager shall accrue such amounts as a reserve on the accounting records of the Hotel, and Owner shall fund the same as and when the Impositions become due, 

  

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but such accrued and unfunded amounts shall be deducted from Gross Revenues for purposes of calculating the Incentive Management Fee. In addition, if any
Mortgagee requires the establishment of an escrow account with respect to the Impositions, Manager shall comply with such requirements, and the amounts so escrowed shall be applied to Impositions in accordance with such Mortgagee’s requirements
and any amounts so escrowed shall be Deductions. 
 B. The word “Impositions” as used in this Agreement shall not
include any franchise, corporate, estate, inheritance, succession, capital levy or transfer tax or other assessment or payment in lieu thereof imposed on Owner or Manager, or any income tax imposed on any income of Owner or Manager (including
distributions to Owner or Manager pursuant to Article III hereof), all of which shall be paid solely by Owner or Manager, as applicable, not from Gross Revenues nor from the Reserve. 
 4.08. Sarbanes-Oxley Certification. 
 A. Owner may, in connection with its or any of its Affiliate’s annual or quarterly Securities and Exchange Commission reporting requirements (and in any event no more than four (4) times in any Fiscal Year), request that Manager
deliver to Owner or its Affiliate a certificate from an accounting officer of Manager, in a form approved by Manager’s accounting firm, certifying that, to his or her knowledge, the information contained in the Accounting Period Statements for
the Accounting Periods contained within the applicable Fiscal Year or quarter are true and correct in all material respects, subject to final adjustment based on the annual review conducted by Manager in preparing the Annual Operating Statement.
Owner shall submit such request in writing, along with the date by which such certificate is to be delivered, not less than five (5) business days prior to the requested delivery date, and Manager shall deliver the certificate by the requested
date or, if later, within five (5) business days after Manager’s receipt of Owner’s request. 
 B. In connection with
Owner’s or its Affiliates’ certifications under Section 404 (“Section 404”) of the Sarbanes-Oxley Act of 2002, Owner or such Affiliate shall have the right, at its option: 
 1. Either (i) to require Manager to document its processes and related internal controls for Owner or such Affiliate to use in its required
documentation under Section 404 or (ii) to have access to Manager’s books and records relating to the Hotel (including, without limitation, reasonable access to Manager’s premises) to document Manager’s processes and related
internal controls; and 
 2. Either (i) to require testing by Manager of the controls identified in clause 1 above or (ii) to have
access to Manager’s books and records relating to the Hotel (including, without limitation, reasonable access to Manager’s premises) to permit Owner or such Affiliate to test the controls identified in clause 1 above. 
 Manager shall provide Owner’s or such Affiliates’ independent auditors access to Manager’s books and records relating to the Hotel
(including, without limitation, access to Manager’s premises) to conduct their audit of the testing performed pursuant to this Section 4.08. If Owner or such Affiliate determine such controls have weaknesses which should be mentioned

  

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in Owner’s or such Affiliates’ report on internal controls under Section 404 or other certifications under the Sarbanes-Oxley Act of 2002,
Manager shall use reasonable best efforts to remedy and/or correct identified weaknesses in a timely manner. 
 ARTICLE V 

REPAIRS, MAINTENANCE AND REPLACEMENTS 
 5.01. Repairs and Maintenance to be Paid from Gross Revenues. 
 Subject to the availability of adequate funds, Manager shall
maintain the Hotel in good repair and condition, comply with and abide by all applicable Legal Requirements pertaining to its operation of the Hotel and shall make or cause to be made such routine maintenance, repairs and minor alterations as it
determines are necessary for such purposes and as required pursuant to the terms of the Franchise Agreement or by Owner. The phrase “routine maintenance, repairs, and minor alterations” as used in this Section 5.01 shall
include only those which are normally expensed (as opposed to capitalized) under generally accepted accounting principles. The cost of such maintenance, repairs and alterations shall be paid from Gross Revenues (and not from the Reserve) and shall
be treated as a Deduction. Manager shall not be required to undertake any major renovation or repair work unless otherwise agreed in writing by Manager and Owner. 
 5.02. Repairs, Maintenance and Equipment Replacements to be Paid from Reserve. 
 A. At Owner’s
option and request, a reserve account in the name of Owner (the “Reserve”) shall be established by Manager, in a bank or similar institution reasonably acceptable to both Manager and Owner, to cover the cost of: 
 1. Replacements, renewals and additions to the FF&E at the Hotel; and 
 2. Routine Capital Expenditures. 
 B. Manager shall transfer into the Reserve a percentage of the Gross
Revenues as provided in Schedule 1. Transfers into the Reserve shall be made at the time of each interim accounting described in Section 4.01 hereof. All amounts transferred to the Reserve shall be deducted from Gross Revenues in
determining Operating Profit and shall be deposited in the special Reserve account described in Section 5.02.A. 
 C. Subject to the
availability of adequate funds, Manager shall from time to time make such (1) replacements and renewals to the FF&E of the Hotel, and (2) Routine Capital Expenditures, as may be agreed upon by Owner and Manager and as may be required
by the Franchise Agreement. Except as may be required by the Franchise Agreement, no expenditures will be made in excess of the balance of the Reserve without the approval of Owner. At the end of each Fiscal Year, any amounts remaining in the
Reserve shall be carried forward to the next Fiscal Year. Proceeds from the sale of FF&E no longer necessary to the operation of the Hotel shall be added to the Reserve. The Reserve will be kept in an interest-bearing account, and any interest
which accrues thereon shall be retained in the Reserve. Neither (x) proceeds from the disposition of FF&E, nor (y) interest which accrues on amounts held in the Reserve, shall (a) result in any reduction in the required
contributions to the Reserve set forth in Section 5.02.B 

  

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above, nor (b) be included in Gross Revenues. Withdrawals by Manager from the Reserve may be made in accordance with the approved Annual Operating
Projection only by representatives of Manager whose signatures have been authorized by Manager with the concurrence of Owner. 
 D. All
repairs, alterations, improvements, renewals or replacements made pursuant to this Article V, and all amounts kept in the Reserve, shall be the property of Owner, subject to Manager’s rights to apply such funds as otherwise provided in this
Agreement. In addition and notwithstanding anything contained herein to the contrary, no funds shall be expended for replacements, renewals and additions to the FF&E, for Routine Capital Expenditures or for any other capital expenditures unless
each such expenditure is included in the Annual Operating Projection approved by Owner. In the event that Owner requests that Manager perform capital improvements that are not included in the Annual Operating Projection, Manager will perform such
improvements provided that Owner and Manager have theretofore agreed upon a mutually satisfactory funding mechanism to pay for the cost of such improvements. Notwithstanding the foregoing, in case of threatened damage or destruction to the Hotel or
persons or property thereon due to force majeure or other comparable emergency, Manager may make such repairs, replacements or improvements to the Hotel as Manager reasonably deems necessary to avoid and/or minimize any such damage or
destruction. 
 E. Notwithstanding anything contained herein to the contrary, at Owner’s option the amounts that would otherwise be
deposited into the Reserve pursuant to this Section 5.02 shall be included in the Operating Profit, not deducted from Gross Revenues and shall be distributed in cash to Owner along with the remainder of the Owner’s Priority. In such case,
Manager shall accrue such amounts as a reserve on the accounting records of the Hotel, and Owner shall fund the same only when required under this Agreement to cover the appropriate costs actually incurred. However, such accrued and unfunded
reserves shall be deducted from Gross Revenues for purposes of calculating the Incentive Management Fee. 
 F. Unless otherwise expressly
covered by this Article V (including without limitation in case of emergency as provided in Section 5.02.D.), Manager shall not make any capital expenditure or improvement without first obtaining Owner’s prior written consent and approval.

 ARTICLE VI 
 INSURANCE

 6.01. Property Insurance. 
 A. Subject to Owner’s prior approval and the provisions of Section 6.05, Manager shall, commencing with the Effective Date and for the duration of the Term, procure and maintain, using funds deducted from Gross Revenues as a
Deduction in determining Operating Profit, a the following insurance and /or such other insurance as may be approved or required by Owner: 
 1. Insurance on the Hotel (including contents) against loss or damage by all perils included in “all risk” (as such term is commonly used in the insurance industry) coverage, in an amount not less than one hundred percent
(100%) of the replacement cost thereof, except 

  

 14 

 
that if such 100% replacement cost coverage is not available on reasonable rates and terms, then such insurance shall be in an amount not less than ninety
percent (90%) of the replacement cost thereof (less excavation and foundation costs), of the Hotel; 
 2. Insurance against loss or
damage from explosion of boilers, pressure vessels, pressure pipes and sprinklers, to the extent applicable, installed in the Hotel; 
 3.
Business interruption insurance covering loss of profits and necessary continuing expenses for interruptions caused by any occurrence covered by the insurance referred to in Section 6.0l.A.1, 2 and 3, for a period of not less than one
(1) year after the occurrence, of a type and in amounts and with such deductible limits as are agreed upon by Owner and Manager. 
 4.
If the Hotel is in an earthquake-prone area, earthquake insurance in accordance with Prudent Industry Practices. 
 B. All policies of
insurance required under Section 6.01.A. 1, 2 and 3 shall insure Owner, Landlord, Manager, and any Mortgagee, and any losses thereunder shall be payable to the parties as and to the extent their respective interests, if any, may appear.

 6.02. Operational Insurance. 
 Subject to Owner’s prior approval and the provisions of Section 6.05, Manager shall, commencing with the Effective Date and for the duration of the Term, procure and maintain, using funds deducted from Gross Revenues as a
Deduction in determining Operating Profit, with insurance companies approved by Owner the following insurance and/or such other insurance as may be approved or required by Owner: 
 A. Workers, compensation and employer’s liability insurance as may be required under applicable laws covering all of the employees at the Hotel, with
such deductible limits or self-insured retentions as are agreed upon by owner and Manager; 
 B. Commercial general liability insurance
against claims for all injury, death or property damage occurring on, in, or about the Hotel, and automobile insurance on vehicles owned or leased by owner and operated in conjunction with the Hotel, with a combined single limit of not less than
Twenty Million Dollars ($20,000,000) for each occurrence for personal injury, death and property damage, with such deductible limits as are agreed upon by Owner and Manager; 
 C. Employee Dishonesty Coverage with respect to the Hotel employees handling funds of the Hotel, in an amount approved by Owner; 
 D. Employment practices liability insurance covering all of Manager’s employees at the Hotel, in an amount agreed approved by Owner; and 

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

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 Owner and Landlord shall be the named insureds with respect to the insurance described in Subsection
6.02B and 6.02D and, to the extent applicable, Subsection 6.02E. Manager shall be the named insured and Owner and Landlord shall be additional insureds on the policies described in Subsections 6.02A and 6.02C and, to the extent applicable,
Subsection 6.02E. 
 6.03. Coverage. 
 All policies of insurance described in Sections 6.02 and 6.03, including the coverages and the deductibles thereunder, shall be subject to Owner’s prior approval, and Owner may require that any such coverage or
policy be eliminated or not be carried, provided that Owner will not require Manager to eliminate any coverage that is customarily carried in accordance with Prudent Industry Practice or that is required under a Mortgage, the Franchise Agreement or
other agreement binding on the Hotel. Either Owner or Manager may require that insurance and/or additional insurance and/or coverage be maintained in excess of that customarily carried in accordance with Prudent Industry Practice, provided that the
cost of such excess insurance and/or coverage shall not be a Deduction and shall be borne by the party requesting the same. Subject to Owner’s prior approval, such approval not to be unreasonably withheld, and the provisions of
Section 6.05, all insurance described in Sections 6.01 and 6.02 may be obtained by Manager by endorsement or equivalent means under its blanket insurance policies, provided that such blanket policies fulfill the requirements specified herein.
Deductible limits shall be as agreed upon by Owner and Manager. No coverage required hereunder shall be self-insured by Manager without prior written approval of Owner. Owner shall have the right to approve the insurance policies to be obtained by
Manager pursuant hereto and the insurance companies issuing such policies. 
 6.04. Costs and Expenses. 
 Insurance premiums and any costs or expenses with respect to the insurance described in this Article VI shall be Deductions in determining Operating
Profit. Premiums on policies for more than one year shall be charged pro rata against Gross Revenues over the period of the policies. Any reserves, losses, costs, damages or expenses which are uninsured, or fall within deductible limits, shall be
treated as a cost of insurance and shall be Deductions in determining Operating Profit. In the event Manager procures and maintains any or all of the insurance for the Hotel (as opposed to the Owner pursuant to Section 6.05 below) and, to the
extent such policies cover one or more hotels managed by Manager, then Manager may allocate the premiums for such policies across the covered hotels on a fair and reasonable basis; provided, however, Owner reserves the right to audit this practice
at any time and from time to time. If Owner determines that the allocable share charged to the Hotel is not fair and reasonable, Owner may require Manager to keep and maintain a separate policy or policies for the Hotel. 
 6.05. Owner’s Right to Provide Insurance. 
 Notwithstanding anything contained in this Agreement to the contrary, Owner and/or its Affiliates (including, without limitation, Landlord) shall have the right to procure and maintain any or all of the insurance for
the Hotel otherwise required to be maintained by Manager under 

  

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this Article VI and in lieu of Manager’s procuring the same, provided that Owner shall give Manager not less than thirty (30) days notice of
Owner’s intent to provide such insurance and shall provide to Manager upon request certificates of insurance evidencing the same and provided that such insurance procured by Owner shall not become effective until the end of the then-current
term of the applicable policy or policies maintained by Manager. In such case, all of the terms and conditions of this Article VI, to the extent applicable, shall govern the insurance procured by Owner under this Section 6.05. Without limiting
the generality of the foregoing, all insurance premiums and any costs or expenses with respect to such insurance shall be Deductions in determining Operating Profit. 
 ARTICLE VII 
 DAMAGE AND REPAIR 
 7.01. Damage and Repair. 
 A. If,
during the Term, the Hotel is damaged or destroyed by fire, casualty or other cause, Owner and/or Landlord may elect, in its sole and absolute discretion, to repair or replace the damaged or destroyed portion of the Hotel with such modifications as
Owner may deem appropriate or as may be required by law, and Manager shall have the right to discontinue operating the Hotel to the extent it deems necessary to comply with applicable law, ordinance, regulation or order or as necessary for the safe
and orderly operation of the Hotel. All proceeds from the insurance described in this Agreement shall be paid to Owner and/or Landlord, as the case may be. If Owner elects not to repair or replace said damaged portion of the Hotel, Owner shall so
notify Manager by written notice within ninety (90) days after the date of the casualty. 
 B. In the event damage or destruction to the
Hotel from any cause materially and adversely affects the operation of the Hotel and Owner notifies Manager that Owner will not repair or replace such damage, either party may terminate by at least sixty (60) days prior written notice to the
other party. 
 7.02. Condemnation. 
 A. In the event all or substantially all of the Hotel shall be taken in any eminent domain, condemnation, compulsory acquisition, or similar proceeding by any competent authority for any public or quasi-public use or
purpose or in the event a portion of the Hotel shall be so taken, but the result is that either Owner or Manager reasonably determines that it is not feasible to continue to operate the Hotel in accordance with the standards required by this
Agreement, Owner or Manager may terminate this Agreement as of the effective date of such taking. All awards and proceeds of any such taking or proceeding shall belong to Owner and/or Landlord, as the case may be. 
 B. In the event this Agreement is not terminated pursuant to Section 7.02.A, such portion of the Hotel that is not so taken shall be repaired or
replaced, with such modifications as Owner may deem appropriate or as may be required by law, and this Agreement shall continue except as may be otherwise agreed by the parties. All awards for any such partial taking or condemnation shall belong to
Owner and/or Landlord, as the case may be. Manager shall have the right to discontinue temporarily operating the Hotel to the extent it deems necessary for the safe and orderly operation of the Hotel. 
  

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 C. If this Agreement is terminated pursuant to Section 7.02. A, a reasonable reserve shall be
established from Gross Revenues to reimburse Manager for all costs and expenses for accrued vacation and sick leave incurred by Manager in terminating its employees at the Hotel. If Gross Revenues are insufficient to meet the requirements of such
reserve, then Owner shall deliver to Manager, within ten (10) Business Days after receipt of Manager’s written request therefor, the sums necessary to establish such reserve. 
 ARTICLE VIII 
 MORTGAGES AND OTHER LIENS 
 8.01. Subordination to Mortgage. 
 Manager shall provide to any Mortgagee an instrument (the “Subordination Agreement”), reasonably satisfactory in all respects to Owner and such Mortgagee, which shall be recordable in the jurisdiction where the Hotel
is located, pursuant to which: 
 A. This Agreement and any extensions, renewals, replacements or modifications thereto, and all right and
interest of Manager in and to the Hotel, shall be subject and subordinate to such Mortgagee’s Mortgage, with notice and opportunity to cure rights and post-default cure rights in favor of Mortgagee; 
 B. Manager shall be obligated to each of the Subsequent Owners (as defined below) to perform all of the terms and conditions of this Agreement for the
balance of the remaining Term hereof, with the same force and effect as if such Subsequent Owner were the Owner; and 
 C. In the event that
there is a Foreclosure of such Mortgage in connection with which title or possession of the Hotel is transferred to the Mortgagee (or its designee) or to a purchaser at foreclosure or to a subsequent purchaser from the Mortgagee (or from its
designee) (all of the foregoing shall collectively be referred to as “Subsequent Owners”), this Agreement may be terminated at the election of such Subsequent Owner as of the date of such Foreclosure or upon thirty (30) days
notice. If this Agreement is terminated pursuant to this Section 8.01.C., a reasonable reserve shall be established from Gross Revenues to reimburse Manager for all reasonable obligated costs and expenses incurred by Manager in terminating its
employees at the Hotel as provided in Section 11.10 E. below. If Gross Revenues are insufficient to meet the requirements of such reserve, then Subsequent Owner shall deliver to Manager, within ten (10) Business Days after receipt of
Manager’s written request therefor, the sums necessary to establish such reserve. 
 8.02. Amendments Requested by Mortgagee

 If requested by any Mortgagee or prospective Mortgagee, Manager agrees to execute and deliver any amendment of this Agreement that is
reasonably required by such Mortgagee or prospective Mortgagee, provided that Manager shall be under no obligation to amend this Agreement if the result of such amendment would be: (i) to reduce, defer or delay the amount of any payment to be
made to Manager hereunder; (ii) to materially and adversely increase 

  

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Manager’s obligations or affect Manager’s rights under this Agreement; (iii) to change the Term; or (iv) to cause the Hotel to be
operated other than pursuant to the System Standards and other provisions hereof. Any such amendment shall be in effect only for the period of time in which such Mortgage is outstanding. 
 8.03. Liens; Credit. 
 Manager and Owner shall use
commercially reasonable efforts to prevent any liens from being filed against the Hotel which arise from any maintenance, repairs, alterations, improvements, renewals or replacements in or to the Hotel and shall cooperate fully in obtaining the
release of any such liens. If the lien was not occasioned by the fault of either party, the cost of releasing any lien shall be treated the same as the cost of the matter to which it relates. If the lien arises as a result of the fault of either
party, then the party at fault shall bear the cost of obtaining the lien release. In no event shall either party borrow money in the name of or pledge the credit of the other. 
 ARTICLE IX 
 DEFAULTS 
 9.01. Events of Default. 
 Each of the
following shall, to the extent permitted by applicable law, constitute an “Event of Default” under this Agreement. 
 A. The filing of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law by either party, or the admission by either party that it is unable to pay its debts as they become due. 

B. The consent to an involuntary petition in bankruptcy or the failure to vacate, within ninety (90) days from the date of entry thereof, any
order approving an involuntary petition by either party. 
 C. The entering of an order, judgment or decree by any court of competent
jurisdiction, on the application of a creditor, adjudicating either party as bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee, or liquidator of all or a substantial part of such party’s
assets, and such order, judgment or decree’s continuing unstayed and in effect for an aggregate of sixty (60) days (whether or not consecutive). 
 D. The failure of either party to make any payment required to be made in accordance with the terms of this Agreement, as of the due date as specified in this Agreement and the failure to cure such default within ten
(10) days after receipt of written notice from the non-defaulting party demanding such cure, provided that no such notice or cure period shall be required in the case of payments by Manager of Owner’s Priority or other distributions of
Operating Profit payable to Owner. 
 E. Manager, any of its Affiliates or any employee at the Hotel is or becomes a Specially Designated
National or Blocked Person. 
  

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 F. In carrying out its duties hereunder, Manager or an officer, director, employee, agent or contractor
of Manager or its Affiliates commits any act involving fraud, moral turpitude or willful misconduct relating to the business or affairs of the Hotel, or commits, or is formally charged with or indicted for committing, or convicted of an act which
constitutes a felony. 
 G. Any representation or warranty by Manager or any of its Affiliates in this Agreement or in any certificate or
document or financial or other statement furnished or delivered to Owner or any of its Affiliates at any time under or in connection with this Agreement shall have been false or misleading in any material respect on or as of the date made or deemed
made. 
 H. The failure of either party to perform, keep or fulfill any of the other covenants, undertakings, obligations or conditions set
forth in this Agreement, and the continuance of such default for a period of thirty (30) days after the defaulting party’s receipt of written notice from the non-defaulting party of said failure, or, if the default is such that it cannot
reasonably be cured within said thirty (30) day period of time, if the defaulting party fails to commence the cure of such default within said thirty (30) day period of time or thereafter fails to diligently pursue such efforts to
completion, provided that (i) in the case of any default by Manager such default is cured not later than ninety (90) days after Manager’s receipt of such written notice and (ii) no such notice or cure period shall be required in
the case of Manager’s failure to maintain the insurance required by Article VI. 
 9.02. Remedies. 
 Upon the occurrence of an Event of Default, the non-defaulting party shall have the right to pursue any one or more of the following courses of action:
(1) to terminate this Agreement by written notice to the defaulting party, which termination shall be effective as of the effective date which is set forth in said notice, provided that said effective date shall be at least ninety
(90) days after the date of said notice in the case of an Event of Default by Owner; (2) to institute forthwith any and all proceedings permitted by law or equity including, without limitation (but subject to the provisions of
Section 10.20 hereof), actions for specific performance and/or damages; and/or (3) to avail itself of the remedies described in Section 9.03. 
 9.03. Additional Remedies. 
 A. Upon the occurrence of a Default by either party under the provisions
of Section 9.0l.D, the amount owed to the non-defaulting party shall accrue interest, at an annual rate equal to the Prime Rate plus three (3) percentage points, from and after the date on which the Default occurred. 
 B. The remedies granted under Section 9.02 and Section 9.03 shall not be in substitution for, but shall be in addition, to, any and all rights
and remedies available to the non-defaulting party (including, without limitation, injunctive relief and damages) by reason of applicable provisions of law or equity and shall survive Termination. 
  

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 ARTICLE X 
 ASSIGNMENT AND SALE 
 10.01. Assignment. 
 A. Manager shall not assign or transfer its interest in this Agreement without the prior written consent of Owner and the Franchisor. Any assignee
consented to by Owner and by the Franchisor shall agree in writing to be bound by and comply with the terms of this Agreement (such written agreement to be acceptable in form and substance to Owner and the Franchisor). For purposes of the foregoing,
a transfer of Manager’s interest in this Agreement shall include (i) an assignment or pledge of this Agreement as security for an obligation, (ii) a transfer of any ownership or beneficial interest, direct or indirect, in Manager,
including any such transfer by operation of law (other than transfers of minority, non-controlling interests for estate planning purposes or to executive officers of Manager and which in the aggregate do not result in a transfer of a controlling or
majority interest, direct or indirect, in Manager) and (iii) a transfer of Manager’s interest in this Agreement by operation of law, including by merger or consolidation (other than such a transfer to an Affiliate approved by Owner, which
approval shall not be unreasonably withheld). 
 B. Owner shall have the right to assign or transfer its interest in this Agreement without
the prior written consent of the Manager (1) as security for a Mortgage of the Hotel in accordance with this Agreement, (2) in connection with a sale, assignment, transfer or other disposition of the Hotel by Owner or Landlord and
(3) in connection with a merger or consolidation or reorganization of, or a sale of all or substantially all of the assets of, any Affiliate of Owner. 
 C. In the event Owner and the Franchisor consent to an assignment of this Agreement by Manager, no further assignment or transfer shall be made without the express consent in writing of such parties. An assignment by
Manager of its interest in this Agreement shall not relieve Manager from its obligations under this Agreement. 
 D. Notwithstanding anything
contained herein to the contrary, Manager shall not assign its interest in this Agreement to a Specially Designated National or Blocked Person. 
 10.02. Sale of the Hotel. 
 A. Owner or Landlord may, in its or their sole and absolute discretion, enter into any Sale of
the Hotel to any Person and, in connection with any such Sale of the Hotel, may assign this Agreement as provided in Section 10.01 or terminate this Agreement upon thirty (30) days notice to Manager. Upon any such sale or assignment, Owner
shall be released of all liabilities and obligations arising under and with respect to this Agreement on and after the date of such Sale of the Hotel. Should the Owner terminate this Agreement because of a sale or transfer of the property under the
terms of Section 10.02 and such termination occurs at any time prior to the last twelve (12) months of the Initial Term, then, unless the purchaser or its lessee offers to assume Owner’s obligations under this Agreement or retain
Manager upon substantially the same terms as set forth in this Agreement, Owner shall pay Manager a fee equal to the total Base Management Fee earned by the Manager under Section 3.01 of this Agreement for the twelve (12) complete months
immediately preceding the date of termination or if such termination occurs during the first year of the Initial Term, such fee shall equal the annualized Base Management Fee earned up to the date of termination and if such termination occurs during
the 

  

 21 

 
last twelve (12) months of the Initial Term, such fee shall equal the product of the Base Management Fee earned during the 12 months immediately
preceding the date of termination times a fraction where the numerator is number of months remaining in the Initial Term (had this Agreement not been terminated) and the denominator is 12. This fee, if payable, shall be payable on the date of this
termination. 
 B. If this Agreement is terminated by Owner pursuant to Section 10.02.A, a reasonable reserve shall be established from
Gross Revenues to reimburse Manager for all reasonable obligated costs and expenses incurred by Manager in terminating its employees at the Hotel as provided in Section 11.10 E. below. If Gross Revenues are insufficient to meet the requirements
of such reserve, then Owner shall deliver to Manager, within ten (10) Business Days after receipt of Manager’s written request therefor, the sums necessary to establish such reserve. 
 C. Notwithstanding anything in Section 10.02 A above to the contrary, if Owner elects to sell the Hotel (other than to an Affiliate of Owner) and
the purchaser or its lessee offers to assume Owner’s obligations under this Agreement or retain Manager upon substantially the same terms as set forth in this Agreement, Manager shall have the right, upon written notice given to Owner within 30
days following the date Owner notifies Manger of the pending sale, to terminate this Agreement, effective as of the closing of the Sale of the Hotel, if in Manager’s reasonable discretion Manager does not approve of the purchaser. If Manager so
terminates, then no termination fee shall be payable to Manager and Section 10.02. B shall not apply. 
 ARTICLE XI 
 MISCELLANEOUS 
 11.01. Consents and
Cooperation. 
 Wherever in this Agreement the consent or approval of Owner or Manager is required, except as otherwise provided in this
Agreement or agreed by the parties, such consent or approval may be withheld or conditioned (but not delayed) in the sole and absolute discretion of the party whose consent or approval is required, shall be in writing and shall be executed by a duly
authorized officer or agent of such party. The parties agree, subject to the preceding sentence, to provide or withhold their approval or consent within a reasonable time following the date on which the initial request is made. Owner agrees to
cooperate with Manager by executing such leases, subleases, licenses, concessions, equipment leases, service contracts and other agreements negotiated in good faith and at arm’s length by Manager and pertaining to the Hotel that, in
Manager’s reasonable judgment, should be made in the name of the Owner, provided that all such agreements shall be subject to Owner’s prior approval. 
 11.02. Relationship. 
 The relationship of Owner and Manager shall be that of independent contractors,
and neither this Agreement nor any agreements, instruments, documents, or transactions contemplated hereby shall in any respect be interpreted, deemed or construed as making Manager an agent of or partner or joint venturer with Owner. Owner and
Manager agree that 

  

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neither party will make any contrary assertion, claim or counterclaim in any action, suit, arbitration or other legal proceedings involving Owner and
Manager. Any contract or agreement that Manager enters into with an Affiliate of Manager or with a third party to provide goods or services to the Hotel shall be entered into in the name of Manager and not Owner, and Owner have no liability with
respect to any such contract or agreement except to the extent that any payments thereunder constitute Deductions. 
 11.03. Applicable
Law; Jurisdiction. 
 This Agreement shall be construed under and shall be governed by the laws of the Commonwealth of Virginia , without
regard to that state’s conflict of laws provisions. Each of Owner and Manager hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the Commonwealth of Virginia and of the
United States District Court for the Eastern District of Virginia, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Virginia state court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any
right that Owner may otherwise have to bring any action or proceeding relating to this Agreement against the Manager in the courts of any jurisdiction. Each of Owner and Manager hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to above. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. 
 11.04. Recordation. 
 The terms and provisions of this Agreement shall not run with the parcel of land
designated as the Site, and neither this Agreement nor any memorandum or short form hereof shall be recorded or registered without the prior written consent of Owner. 
 11.05. Headings. 
 Headings of articles and sections are inserted only for convenience and are in no
way to be construed as a limitation on the scope of the particular articles or sections to which they refer. 
 11.06. Notices.

 Notices, statements and other communications to be given under the terms of this Agreement shall be in writing and delivered by hand
against receipt or sent by certified or registered mail (with a copy by first class mail) or Express Mail service, in each case postage prepaid, return receipt requested or by nationally utilized overnight delivery service, addressed to the parties
at the respective addresses set forth in Schedule 1 or at such other address as is from 

  

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time to time designated by the party receiving the notice. Any such notice that is mailed in accordance herewith shall be deemed received when delivery is
received or refused, as the case may be. Additionally, notices may be given by telephone facsimile transmission, provided that an original copy of said transmission shall be delivered to the addressee by nationally utilized overnight delivery
service on the business day following such transmission. Telephone facsimiles shall be deemed delivered on the date of such transmission. 
 11.07. Environmental Matters. 
 A. Manager shall operate the Hotel in compliance with all applicable Environmental Laws.
Manager shall (i) not use, generate or store any Hazardous Materials in or on the Hotel except as necessary for the operation and maintenance of the Hotel and in compliance with the Environmental Laws, (ii) not allow, permit or cause the
release or threat of release of any Hazardous Materials in, on, under or from the Hotel, except for the ordinary use of cleaning and maintenance supplies in compliance with applicable Environmental Laws, (iii) not allow the accumulation of
tires, spent batteries, construction and demolition debris or any other solid waste, except for solid waste generated from the operation of the Hotel and stored in containers for normal scheduled pickup and disposal off site in compliance with
applicable Environmental Laws and (iv) use best efforts to operate and maintain the Hotel in a manner to prevent mold, fungal or other microbial growth or conditions that are favorable for such growth, including, without limitation, the proper
operation and maintenance of heating, ventilation and air conditioning systems and removal of any mold, fungal or microbial growth. 
 B. In
the event of the discovery of a release or threat of release of Hazardous Materials in, on, under or from any portion of the Hotel during the Term, Manager shall promptly notify Owner and shall take all appropriate actions with regard to such
Hazardous Materials as required of an owner or operator under applicable Environmental Laws. Manager shall keep Owner apprised of the status of addressing the release or threat of release of Hazardous Materials, and Owner shall have the right at any
time to assume control of the matter from Manager. 
 C. All costs and expenses incurred pursuant to the obligations set forth in this
Section 10.07.A and B shall be borne by Owner, except to the extent resulting from a breach by Manager of its obligations hereunder. Manager shall indemnify, defend and hold Owner harmless from and against all losses, costs, liabilities and
damages (including, without limitation, engineers’ and attorneys’ fees and expenses, and the cost of Litigation) to the extent arising from a failure of Manager to fulfill its obligations or failure to pay its apportionment of costs or
expenses pursuant to this Section 10.07, and this obligation of Manager shall survive Termination. Owner shall indemnify, defend and hold Manager harmless from and against all losses, costs, liabilities and damages (including, without
limitation, engineers’ and attorneys’ fees and expenses, and the cost of Litigation) to the extent arising from the a failure of Owner to fulfill its obligations or failure to pay its apportionment of costs or expenses pursuant to this
Section 10.07, and this obligation of Owner shall survive Termination. 
 “Environmental Laws” shall mean all federal, state and
local environmental, health and safety laws, rules, regulations, ordinances, permits, orders, common law or requirements of any governmental authority, including, without limitation, the Comprehensive Environmental 

  

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Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et. seq., as amended; Solid Waste Disposal Act, 42 U.S.C. §§
6901, et. seq., as amended; Toxic Substances Control Act, 15 U.S.C. §§ 2601, et. seq., as amended; Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101, et. seq., as amended; Federal Water Pollution
Control Act, 33 U.S.C. §§ 1251, et. seq.  
 “Hazardous Materials” shall mean any hazardous substances, hazardous
wastes, toxic substances, hazardous materials, petroleum or petroleum products, pollutants or contaminants (as those terms are defined under Environmental Laws), including, without limitation, polychlorinated biphenyls, lead or lead-based paint,
asbestos or mold in such concentrations or amounts as may impose clean-up, removal, monitoring or other responsibility under the Environmental Laws or which may present a significant risk of harm to guests, invitees or employees of the Hotel.

 11.08. Confidentiality; Projections. 
 A. Owner and Manager agree that the terms of this Agreement are strictly confidential and will use their reasonable efforts to ensure that the terms of this Agreement are not disclosed to any outside person or
entities without the prior written consent of the other party, except (1) as Owner may determine is required by any law, rule, regulation or judicial process, or by any regulatory or supervisory authority having jurisdiction over the parties or
any of their Affiliates or (2) to the extent reasonably necessary, (i) to obtain licenses, permits and other public approvals, (ii) in connection with a financing of the Hotel, Owner, or any Affiliate thereof, (iii) in connection
with a Sale of the Hotel or other sale of Owner, or any Affiliate thereof or its or their corporate assets, (iv) subject to the provisions of Section 4.02, in connection with an audit or other investigation conducted pursuant to this
Agreement or (v) in connection with either party’s enforcement of its rights and remedies under this Agreement. Notwithstanding the foregoing or anything to the contrary set forth herein, the terms of this Agreement shall not be deemed
confidential to the extent: (a) such information becomes generally available to the public other than as a result of unauthorized disclosure by the recipient or persons to whom such recipient has made the information available; or (b) the
party seeking to disclose such confidential information can demonstrate to the reasonable satisfaction of the other party that the information sought to be disclosed is customarily disclosed by at least 80% of all Persons directly or indirectly
owning hotels in the United States. 
 B. Owner acknowledges that any written or oral projections, pro formas, or other similar information
that has been (prior to execution of this Agreement) or will (during the Term) be provided by Manager (or any Affiliate of either) to Owner is for information purposes only, and that Manager, and any such Affiliate do not guarantee that the Hotel
will achieve the results set forth in any such projections, pro formas, or other similar information. Owner further acknowledges that any such projections, pro formas, or other similar information are based on assumptions and estimates,
unanticipated events may occur subsequent to the date of preparation of such projections, pro formas, and other similar information, and the actual results achieved by the Hotel are likely to vary from the estimates contained in any such
projections, pro formas, or other similar information and such variations might be material. 
  

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 11.09. Indemnification. 
 A. Manager hereby agrees to indemnify, defend and hold harmless Owner, its officers, directors, stockholders, employees, agents and their respective
successors and assigns from and against any and all claims, liabilities, damages, losses, obligations and costs (including reasonable attorneys’ fees) arising from (i) Manager’s or any of its Affiliate’s failure to comply with
its obligations under this Agreement and, to the extent provided herein, the obligations of the franchisee under the Franchise Agreement, (ii) any negligent act or omission, theft, fraud or willful misconduct of Manager or its Affiliates and
their respective employees, agents or contractors and (iii) any claim asserted by any employee, contractor or agent of Manager or its Affiliates unless the loss or liability giving rise to such claim was caused directly by Owner’s breach
of its obligations under this Agreement. 
 B. Owner hereby agrees to indemnify, defend and hold harmless Manager, its officers, directors,
stockholders, employees, agents and their respective successors and assigns from and against any and all claims, liabilities, damages, losses, obligations and costs (including reasonable attorneys’ fees) arising from Owner’s failure to
comply with its obligations under this Agreement. 
 11.10. Actions to be Taken Upon Termination. 
 Upon a Termination, the following shall be applicable: 
 A. Manager shall, within ninety (90) days after Termination, prepare and deliver to Owner a final accounting statement with respect to the Hotel, as more particularly described in Section 4.01 hereof, along
with a statement of any sums due from Owner to Manager pursuant hereto, dated as of the date of Termination. Within thirty (30) days of the receipt by Owner of such final accounting statement, the parties will make whatever cash adjustments are
necessary pursuant to such final statement. The cost of preparing such final accounting statement shall be a Deduction, unless the Termination occurs as a result of an Event of Default by either party, in which case the defaulting party shall pay
such cost. Manager and Owner acknowledge that there may be certain adjustments for which the information will not be available at the time of the final accounting and the parties agree to readjust such amounts and make the necessary cash adjustments
when such information becomes available; provided, however, that all accounts shall be deemed final two (2) years after Termination. 
 B. Manager shall immediately release and transfer to Owner any of Owner’s funds which are held or controlled by Manager with respect to the Hotel. 
 C. Manager shall make available to Owner such books and records respecting the Hotel (including those from prior years) as will be needed by Owner to prepare the accounting statements, in accordance with the Uniform
System of Accounts, for the Hotel for the year in which the Termination occurs and for any subsequent year. 
 D. Manager shall (to the
extent permitted by law) assign to Owner or to the new manager all operating licenses and permits for the Hotel which have been issued in Manager’s name (including liquor and restaurant licenses, if any); provided that if Manager has expended
any of its own funds in the acquisition of any of any of such licenses or permits, Owner shall reimburse Manager therefor if it has not done so already unless such expenditure is a Manager’s Liability. 
  

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 E. Except as otherwise provided in this Section 11.10 E., if this Agreement is terminated for any
reason, a reasonable reserve shall be established from Gross Revenues to reimburse Manager for all reasonable obligated costs and expenses incurred by Manager in terminating its employees at the Hotel. If Gross Revenues are insufficient to meet the
requirements of such reserve, then Owner shall deliver to Manager, within ten (10) Business Days after receipt of Manager’s written request therefor, the sums necessary to establish such reserve. Provided, however, if this Agreement is
terminated by reason of Manager’s Event of Default (as described in Section 9.01 above), amounts for obligated costs and expenses related to the employment termination of the General Manager and Department Managers or Department Heads at
the Hotel shall not be reserved and Owner shall not be obligated to reimburse Manager for such costs and expenses unless Owner, in its sole discretion, provides written notice to Manager that Owner agrees to reimburse Manager. 
 F. Owner may, at its option, (i) provide Manager and/or the employees at the Hotel (or require Manager to provide to the employees at the Hotel) at
least sixty (60) days’ notice of a Termination and/or (ii) cause the entity which shall succeed Manager as the operator of the Hotel to offer employment to a sufficient number of the employees at the Hotel to avoid the occurrence, in
connection with such Termination, of a “plant closing” or “mass layoff” within the meaning of the WARN Act. If Owner elects to cause the entity which shall succeed Manager as operator of the Hotel to offer employment to certain
of Manager’s employees, Manager shall not take any action that would cause such employees not to continue as employees at the Hotel. 
 G. Various other actions shall be taken, as described in this Agreement, including, but not limited to, the actions described in Section 4.05 and Section 6.04. 
 H. Manager shall peacefully vacate and surrender the Hotel to Owner on the date of termination unless otherwise agreed to by the parties. 
 The provisions of this Section 10.10 shall survive Termination. 
 11.11. Waiver. 
 The failure of either party to insist upon a strict performance of any of the terms
or provisions of this Agreement, or to exercise any option, right or remedy contained in this Agreement, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall
continue and remain in full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. 
 11.12. Partial Invalidity. 
 If any
portion of any term or provision of this Agreement, or the application thereof to any person or circumstance shall be invalid or unenforceable, at any time or to any extent, the remainder of this Agreement, or the application of such term or
provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by
law. 
  

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 11.13. Survival. 
 Except as otherwise specifically provided in this Agreement, the rights and obligations of the parties herein shall not survive any Termination. 
 11.14. Negotiation of Agreement. 
 Owner and Manager are both business entities having substantial experience with the subject matter of this Agreement, and each has fully participated in the negotiation and drafting of this Agreement. Accordingly, this Agreement shall be
construed without regard to the rule that ambiguities in a document are to be construed against the draftsman. No inferences shall be drawn from the fact that the final, duly executed Agreement differs in any respect from any previous draft hereof.

 11.15. Estoppel Certificates. 
 Each party to this Agreement shall at any time and from time to time, upon not less than fifteen (15) days’ prior notice from the other party, execute, acknowledge and deliver to such other party, or to any third party specified
by such other party, a statement in writing: (a) certifying that this Agreement is unmodified and in full force and effect (or if there have been modifications, that the same, as modified, is in full force and effect and stating the
modifications); and (b) stating to the best knowledge of the certifying party (i) whether or not there is a continuing Default or Event of Default by the non-certifying party in the performance or observance of any covenant, agreement or
condition contained in this Agreement, (ii) the amount, if any, of any past due fees or other past due amounts owed to Manager or Owner; and (iii) whether or not there are any past due and unpaid obligations with respect to the Hotel,
other than in the ordinary course of business. Such statement shall be binding upon the certifying party and may be relied upon by the non-certifying party and/or such third party specified by the non-certifying party as aforesaid. In addition, upon
written request after a Termination, each party agrees to execute and deliver to the non-certifying party and to any such third party a statement certifying that this Agreement has been terminated. 
 11.16. Affiliates. 
 Manager shall not
be entitled to contract with companies that are Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such a company an Affiliate) or with third parties or their Affiliates that have other
contractual relationships with Manager and/or its Affiliates to provide goods and/or services to the Hotel without the prior written consent of Owner. 
 11.17. Blocked Persons or Entities. 
 Manager represents and warrants to Owner and covenants for the
benefit of Owner that (i) neither Manager nor any of its Affiliates or any of officers, directors, partners or employees of Manager or its Affiliates, or, to its knowledge, the funding sources for any of the foregoing, is or will be identified
on the list of the U. S. Treasury’s Office of Foreign Asset Control (“OFAC”); (ii) neither Manager nor any of its Affiliates is or will be directly or indirectly owned or 

  

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controlled by the government of any country that is subject to an embargo imposed by the United States government; and (iii) neither Manager nor any of
its Affiliates is acting or will act on behalf of a government of, or is involved in business arrangements or other transactions with, any country that is subject to such an embargo. Manager will notify Owner in writing immediately upon the
occurrence of any event which would render the foregoing representations and warranties incorrect. Owner represents and warrants to Manager and covenants for the benefit of Manger that (i) neither Owner nor any of its Affiliates or any of
officers, directors, partners or employees of Manager or its Affiliates, is or will be identified on the OFAC list (ii) neither Owner nor any of its Affiliates is or will be directly or indirectly owned or controlled by the government of any
country that is subject to an embargo imposed by the United States government; and (iii) neither Owner nor any of its Affiliates is acting or will act on behalf of a government of, or is involved in business arrangements or other transactions
with, any country that is subject to such an embargo. Owner will notify Manager in writing immediately upon the occurrence of any event which would render the foregoing representations and warranties incorrect. 
 11.18. Restrictions on Operating the Hotel in Accordance with System Standards. 
 In the event of either (i) a Legal Requirement, including an order, judgment or directive by a court or administrative body which is issued in
connection with any Litigation involving Owner, or (ii) any action taken by a Mortgagee in connection with a Foreclosure, which in either case restricts or prevents Manager, in a material and adverse manner, from operating the Hotel in
accordance with System Standards (including without limitation, any restrictions on expenditures by Manager from the Operating Accounts or from the Reserve, other than restrictions which are set forth in this Agreement), Manager shall be entitled,
at its option, to terminate this Agreement upon sixty (60) days’ written notice to Owner. The foregoing shall not reduce or otherwise affect the rights of the parties under Article VIII. 
 11.19. Counterparts. 
 This Agreement
may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which shall constitute one and the same instrument. Such executed counterparts may be delivered by facsimile which, upon transmission to the
other party, shall have the same force and effect as delivery of the original signed counterpart. The submission of an unsigned copy of this Agreement or an electronic instrument with or without electronic signature to either party shall not
constitute an offer or acceptance. This Agreement shall become effective and binding only upon execution and delivery of this Agreement in non-electronic form by both parties in accordance with this Section. 
 11.20. Entire Agreement. 
 This
Agreement, together with any other writings signed by the parties expressly stated to be supplemental hereto and together with any instruments to be executed and delivered pursuant to this Agreement, constitutes the entire agreement between the
parties and supersedes all prior understandings and writings, and may be changed only by a written non-electronic instrument that has been duly executed by the non-electronic (which shall not be deemed to exclude facsimile) signature of an
authorized representative of the parties hereto. 
  

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 11.21. Operation of Other Hotels. 
 During the Term and except for the Hotel, neither Manager nor any of its Affiliates shall acquire, lease, own, manage or operate, directly or indirectly,
any hotel, inn, motel or other type of lodging facility, regardless of whether similar to the Hotel or whether operated under the same or a different brand, in the same geographic area or market as the Hotel, without Owner’s prior written
consent, which maybe withheld in Owner’s sole discretion. For purposes of this Agreement, the same geographic area or market is as shown on Exhibit “C” attached hereto and made a part hereof. In the event Owner consents to Manager or
its Affiliates operating another hotel, then Manager or its Affiliates shall not permit unfair favoritism in the operation and management of such other hotels that would disadvantage the operation or business of the Hotel (such as, by way of example
only, directing potential Hotel guests to such other hotels instead of to the Hotel). At Owner’s request, Manager shall provide such information as may reasonably be requested by Owner to determine if there has been any such unfair favoritism
and, in the event Owner, it is reasonable business judgment, determines that any such unfair favoritism has occurred, Owner may terminate this Agreement, provided that if manager is able to demonstrate to Owner’s reasonable satisfaction that
Manger can effect a cure of such unfair favoritism, Owner will permit Manager to effect such cure. If such cure is effected to Owner’s reasonable satisfaction, this Agreement will not be terminated as a result of such unfair favoritism,
provided that this Agreement shall again become terminable pursuant to this Section 11.21 if there is unfair favoritism after such cure. 
 11.22. Waiver of Jury Trial and Punitive Damages. 
 Owner and Manager each hereby absolutely, irrevocably and unconditionally
waive trial by jury and the right to claim punitive damages in any litigation, action, claim, suit or proceeding, at law or in equity, arising out of or pertaining to this Agreement or any other agreement, instrument or document entered into in
connection herewith. 
 ARTICLE XII 
 DEFINITION OF TERMS 
 12.01. Definition of Terms. 
 The following terms when used in this Agreement shall have the meanings indicated: 
 “Accounting Period” shall have the meaning set forth in Schedule 2. 
 “Accounting Period Statement” shall have the meaning ascribed to it in Section 4.0l.A. 
 “Accounting Quarter” shall mean three consecutive Accounting Periods, the first of which begins on the first day of the Fiscal
Year; provided, that if there are more than 12 Accounting Periods in a Fiscal Year, the fourth Accounting Quarter of such Fiscal Year shall contain all remaining Accounting Periods in such Fiscal Year. 
  

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 “Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such Person. For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control
with”) of a Person means the possession, directly or indirectly, of the power: (i) to vote more than fifty percent (50%) of the voting stock or other beneficial interests of such Person; or (ii) to direct or cause the direction
of the management and policies of such Person, whether through the Ownership of voting stock, by contract or otherwise. 
 “Agreement” shall mean this Management Agreement between Owner and Manager, including the exhibits attached hereto. 
 “Annual Operating Projection” shall have the meaning ascribed to it in Section 4.04. 
 “Annual Operating Statement” shall have the meaning set forth in Section 4.0l.B. 
 “Available Cash Flow” shall mean an amount, with respect to each Fiscal Year or portion thereof during the Term, equal to the excess, if any, of the Operating Profit over the Owner’s Priority. 
 “Base Management Fee” shall mean an amount payable to Manager as a Deduction from Gross Revenues for all services provided by
Manager pursuant to this Agreement, except as otherwise expressly provided herein. The Base Management Fee shall be the percentage of Gross Revenues shown in Schedule 1 for each Fiscal Year thereafter during the Term. 
 “Buildings” shall mean the buildings and improvements constituting that certain hotel more particularly described in Schedule 1
attached hereto and made a part hereof which is located on the Site. 
 “Business Day” shall mean any day other than
a Saturday, Sunday or legal holiday in the Commonwealth of Virginia or the State of in which the Hotel is located. 
 “Competitive
Set” shall mean the group of hotels which are closest in geographical distance from the Hotel and which are generally within the same hotel market segment as the Hotel. The initial Competitive Set is identified on Schedule 1
attached hereto and made a part hereof. If any such hotels, subsequent to the Effective Date, either changes its chain affiliation or ceases to operate or otherwise ceases to reflect the general criteria set forth in the first sentence of this
definition, the Competitive set shall be changed at the request of either Owner or Manager and approval of both parties, such approval not to be unreasonably withheld, conditioned or delayed so that it continues to satisfy the criteria set forth in
the first sentence of this definition. Any disagreements shall be resolved by the Expert in accordance with Section 10.24. 
 “Deductions” shall mean the following deductions incurred by Manager, on behalf of Owner, in operating the Hotel: 
 1. the cost of sales, including, without limitation, compensation, fringe benefits, payroll taxes and other costs related to Hotel employees, provided that the foregoing costs shall not include salaries and other employee costs of executive
personnel of Manager who do not work at the Hotel on a regular basis, which salaries and costs shall be Manager’s Liability; 
  

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 2. departmental expenses incurred at departments within the Hotel; administrative and general expenses;
the cost of marketing incurred by the Hotel; advertising and business promotion incurred by the Hotel; heat, light, and power; computer line charges; and routine repairs, maintenance and minor alterations treated as Deductions under
Section 5.01; 
 3. the cost of Inventories and Fixed Asset Supplies consumed in the operation of the Hotel; 
 4. a reasonable reserve for uncollectible accounts receivable as reasonably determined by Manager with the concurrence of Owner; 
 5. all costs and fees of independent professionals or other third parties who are retained by Manager with the concurrence of Owner to perform services
required or permitted hereunder; 
 6. all costs and fees of technical consultants and operational experts who are retained or employed by
Manager with the concurrence of Owner for specialized services (including, without limitation, quality assurance inspectors) and the reasonable cost of attendance by employees of the Hotel at training and manpower development programs sponsored by
Manager, provided Owner has approved attendance at programs and the cost thereof; 
 7. the Base Management Fee; 
 8. all royalty, marketing fund, reservation, communication support, property management system and other similar fees payable to the Franchisor under the
Franchise Agreement; 
 9. insurance costs and expenses as provided in Section 6.04; 
 10. taxes, if any, (including B&O taxes, if any, imposed upon Manager pursuant to RCW 82.04.220 or similar laws) payable by or assessed against
Manager related to this Agreement or to Manager’s operation of the Hotel and Impositions (exclusive of Manager’s income taxes or franchise taxes and any other similar taxes payable by Manager and all other taxes, assessments and payments
excluded from the definition of Impositions); 
 11. transfers to the Reserve required pursuant to Section 5.02; 
 12. any costs paid by Manager pursuant to the Franchise Agreement; 
 13. the accounting fee identified in Schedule 1 to be paid to Manager for each Accounting Fee in connection with providing accounting services pursuant to this Agreement; 
 14. payments pursuant to FF&E leases or other forms of financing obtained for the FF&E located in or connected with the Hotel; and 
  

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 15. to the extent approved in advance by Owner, such other costs and expenses incurred by Manager as are
specifically provided for elsewhere in this Agreement or are otherwise reasonably necessary for the proper and efficient operation of the Hotel, including without limitation, travel expenses or supervisory personnel of Manager incurred in connection
with managing the Hotel. 
 The term “Deductions” shall not include (a) debt service payments pursuant to a
Mortgage or (b) rental payments under any Hotel Lease, all of which shall be paid by Owner from its own funds. 
 “Default” shall mean the occurrence of any event which, with the lapse of time, the giving of notice or both, would constitute an Event of Default. 
 “Effective Date” shall have the meaning ascribed to it in the Preamble. 
 “Environmental Laws” shall have the meaning ascribed to it in Section 10.08.A. 
 “Event of Default” shall have the meaning ascribed to it in Section 9.01. 
 “Extension Notice” shall have the meaning ascribed to it in Section 2.01. 
 “Extension Term” shall have the meaning ascribed to it in Section 2.01. 
 “FF&E” shall mean furniture, furnishings, fixtures, soft goods, case goods, signage, audio-visual equipment, kitchen
appliances, vehicles, carpeting and equipment, including front desk and back-of-the-house computer equipment, but shall not include Fixed Asset Supplies or Software. 
 “FF&E Lease” means a lease of any FF&E, which lease is properly capitalized for financial accounting purposes. 
 “Fiscal Year” shall have the meaning set forth in Schedule 2. If the Fiscal Year is changed in the future, appropriate
adjustment to this Agreement’s reporting and accounting procedures shall be made; provided, however, that no such change or adjustment shall alter the term of this Agreement or in any way reduce the distributions of Operating Profit or other
payments due hereunder. 
 “Fixed Asset Supplies” shall mean items included within “Property and Equipment”
under the Uniform System of Accounts including, but not limited to, linen, china, glassware, tableware, uniforms, and similar items, whether used in connection with public space or Guest Rooms. 
 “Foreclosure” shall mean any exercise of the remedies available to a Mortgagee, upon a default under the Mortgage held by such
Mortgagee, which results in a transfer of title to or possession of the Hotel. The term “foreclosure” shall include, without limitation, any one or more of the following events, if they occur in connection with a default under a Mortgage:
(i) a transfer by judicial or non-judicial foreclosure; (ii) a transfer by deed in lieu of foreclosure; (iii) the appointment by a court of a receiver to assume possession of the Hotel; (iv) a transfer of 

  

 33 

 
either ownership or control of the Owner, by exercise of a stock pledge or otherwise; (v) if title to the Hotel is held by a tenant under a ground
lease, an assignment of the tenant’s interest in such ground lease or (vi) any similar judicial or non-judicial exercise of the remedies held by the Mortgagee resulting in actual ownership or control of the Hotel by such Mortgagee or its
designee. 
 “Franchise Agreement” shall mean the franchise agreement described in Schedule 1 attached hereto and
made a part hereof, as the same may be amended or supplemented from time to time. 
 “Franchisor” shall mean the
franchisor identified in Schedule 1. 
 “Gross Revenues” shall mean all revenues and receipts of every kind derived
from operating the Hotel and all departments and parts thereof, including, but not limited to: income (from both cash and credit transactions) from rental of Guest Rooms, telephone charges, stores, cell phone sites, offices, exhibit or sales space
of every kind; license, lease and concession fees and rentals (not including gross receipts of licensees, lessees and concessionaires); income from vending machines; income from parking; health club membership fees; food and beverage sales;
wholesale and retail sales of merchandise; service charges; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that Gross Revenues shall not include the following: gratuities to employees of the
Hotel; federal, state or municipal excise, sales or use taxes or any other taxes collected directly from patrons or guests or included as part of the sales price of any goods or services; proceeds from the sale of FF&E; interest received or
accrued with respect to the funds in the Reserve or the other operating accounts of the Hotel; any refunds, rebates, discounts and credits of a similar nature, given, paid or returned in the course of obtaining Gross Revenues or components thereof;
insurance proceeds (other than proceeds from business interruption or other loss of income insurance); condemnation proceeds (other than for a temporary taking); or any proceeds from any Sale of the Hotel or from the financing or refinancing of any
debt encumbering the Hotel. 
 “Guest Room” shall mean a separately-keyed lodging unit in the Hotel. 
 “Guest Room Revenues” shall mean the portion of Gross Revenues of the Hotel which is attributed to the rental of Guest Rooms.

 “Hazardous Materials” shall have the meaning ascribed to it in Section 10.08.A. 
 “Hotel” shall mean the Site together with the Buildings and all other improvements construed or to be constructed on the Site
pursuant to this Agreement, all FF&E and Fixed Asset Supplies installed or located on the Site or in the Buildings, and all easements or other appurtenant rights thereto. 
 “Hotel Lease” shall mean the hotel lease agreement dated as of the Effective Date between the Landlord and the Owner, pursuant to
which the Landlord leases the Hotel to Owner. 
 “Impact Fees” shall have the meaning ascribed to it in
Section 4.07.A. 
 “Impositions” shall have the meaning ascribed to it in Section 4.07. 
  

 34 

 “Incentive Management Fee” shall mean an amount payable to Manager, pursuant to
Section 3.01 and Section 4.01, that is equal to the percentage set forth in Schedule 1 of Available Cash Flow in any Fiscal Year (or portion thereof) after payment to Owner of Owner’s Priority. 
 “Initial Term” shall have the meaning ascribed to it in Section 2.01. 
 “Inventories” shall mean “Inventories” as defined in the Uniform System of Accounts, such as, but not limited to,
provisions in storerooms, refrigerators, pantries and kitchens; beverages in wine cellars and bars; other merchandise intended for sale; fuel; mechanical supplies; stationery; and other expensed supplies and similar items. 
 “Landlord” shall mean the party identified as “Landlord” in Schedule 1. 
 “Legal Requirement(s)” shall mean any federal, state or local law, code, rule, ordinance, regulation or order of any governmental
authority or agency having jurisdiction over the business or operation of the Hotel or the matters which are the subject of this Agreement, including, without limitation, the following: (i) any building, zoning or use laws, ordinances,
regulations or orders; and (ii) Environmental Laws. 
 “Litigation” shall mean: (i) any cause of action
(including, without limitation, bankruptcy or other debtor/creditor proceedings) commenced in a federal, state or local court; or (ii) any claim brought before an administrative agency or body (for example, without limitation, employment
discrimination claims). 
 “Manager” shall mean the party identified as “Manager” in Schedule 1 or
shall mean any permitted successor or assign, as applicable. 
 “Manager’s Liability” and
“Manager’s Liabilities” shall have the meanings ascribed to such terms in Section 4.03.B. 
 “Mortgage” shall mean any mortgage, deed of trust, deed to secure debt or similar security instrument creating a lien on the Hotel. 
 “Mortgagee” shall mean the holder or beneficiary of any Mortgage encumbering the Hotel or the Site. 
 “Operating Accounts” shall have the meaning ascribed to it in Section 4.03.A. 
 “Operating Loss” shall mean a negative Operating Profit. 
 “Operating Profit” shall
mean the excess of Gross Revenues over Deductions. 
 “Owner” shall mean the party identified as “Owner” in
Schedule 1 or shall mean any successor or assign, as applicable. 
 “Owner’s Priority” shall mean an
amount up to, but not in excess of the amount shown as Owner’s Priority in Schedule 1 attached hereto and made a part hereof, per Fiscal Year (prorated for any partial Fiscal Year). Owner’s Priority for each Fiscal Year shall be paid to
the 

  

 35 

 
extent of Operating Profit available in such Fiscal Year, as provided in Section 3.02 of this Agreement. In the event of any capital expenditures made
with respect to the Hotel after the date of this Agreement that are in excess of the Reserve, the Owner’s Priority shall be increased (but not decreased) for the remaining portion of the Fiscal Year in which such capital expenditures are made
and all subsequent Fiscal Years so as to equal a twelve percent (12%) return on an amount equal to one hundred three percent (103%) of the sum of (i) the purchase price paid by Owner for the Hotel plus (ii) such capital
expenditures. 
 “Performance Termination Threshold” shall have the meaning ascribed to it in Schedule 1. 

“Person” means an individual (and the heirs, executors, administrators, or other legal representatives of an individual), a
partnership, a corporation, limited liability company, a government or any department or agency thereof, a trustee, a trust and any unincorporated organization. 
 “Prime Rate” shall mean the “prime rate” of interest announced from time to time in the “Money Rates” section of The Wall Street Journal. 
 “Purchase Contract” shall have the meaning ascribed to it in Schedule 1. 
 “Prudent Industry Practice” shall mean the customary practices of the hotel industry in the United States for hotels comparable
to the Hotel. To the extent inconsistent with the requirements of the Franchise Agreement, such practices shall be conformed to the requirements of the Franchise Agreement for purposes of this Agreement. 
 “Reserve” shall have the meaning ascribed to it in Section 5.02A. 
 “Revenue Data Publication” shall mean Smith’s STAR Report, a monthly publication distributed by Smith Travel Research, Inc.
of Gallatin, Tennessee, or an alternative source, reasonably satisfactory to both parties, of data regarding the Revenue Per Available Room of hotels in the general trade area of the Hotel. If such Smith’s STAR Report is discontinued in the
future, or ceases (in the reasonable opinion of either Owner or Manager) to be a satisfactory source of data regarding the Revenue Per Available Room of various hotels in the general trade area of the Hotel, Owner and Manager shall select an
alternative source for such data. If the parties fail to agree on such alternative source within a reasonable period of time, either party may terminate this Agreement upon sixty (60) days prior written notice to the other party. 
 “Revenue Index” shall mean that fraction that is equal to (a) the Revenue Per Available Room for the Hotel divided by
(b) the average Revenue Per Available Room for the hotels in the Competitive Set, as set forth in the Revenue Data Publication. Appropriate adjustments to the Revenue Index acceptable to Owner shall be made in the event of a major renovation of
the Hotel. 
 “Revenue Index Threshold” shall mean the number shown in Schedule 1 attached hereto and made a part
hereof. However, if the entry of a new hotel into the Competitive Set (or the removal of a hotel from the Competitive Set) causes significant variations in the Revenue Index that do not reflect the Hotel’s true position in the relevant market,
appropriate adjustments shall be made to the Revenue Index Threshold by mutual consent of Owner and Manager each acting in good faith. 
  

 36 

 “Revenue Per Available Room” shall mean (i) the term “revenue per
available room” as defined by the Revenue Data Publication, or (ii) if the Revenue Data Publication is no longer being used (as more particularly set forth in the definition of “Revenue Data Publication”), the aggregate gross
room revenues of the hotel in question for a given period of time divided by the total room nights for such period. If clause (ii) of the preceding sentence is being used, a “room” shall be an available hotel guestroom that is keyed
as a single unit. 
 “Routine Capital Expenditures” shall mean certain routine, non-major expenditures which are
classified as “capital expenditures” under generally-accepted accounting principles, and which will be funded from the Reserve (pursuant to Section 5.02). Routine Capital Expenditures consist of the following types of expenditures:
exterior and interior painting; resurfacing building walls and floors; resurfacing parking areas; and miscellaneous similar expenditures. Routine Capital Expenditures are not non-routine capital expenditures or major repairs or major alterations or
improvements. 
 “Sale of the Hotel” shall mean any sale, assignment, transfer or other disposition, for value or
otherwise, voluntary or involuntary, of the Site and/or the Hotel or any interest therein, in whole or part. For purposes of this Agreement, a Sale of the Hotel shall also include a lease (or sublease) of all or substantially all of the Hotel or
Site or any interest therein. 
 “SEC Filing Period” shall mean such period of time (not to exceed thirty
(30) days) after the close of each Fiscal Year within which Owner must receive the Annual Operating Statement from Manager with respect to such Fiscal Year in order for Owner or its Affiliates to have a reasonable period of time within which to
prepare and make all required filings with the Securities and Exchange Commission and other applicable governmental agencies. 
 “Site” shall mean the real property described on Exhibit A attached hereto and made a part hereof. 
 “Software” shall mean all computer software and accompanying documentation (including all future upgrades, enhancements, additions, substitutions and modifications thereof), other than computer software which is
generally commercially available, which are used by Manager in connection with operating or otherwise providing services to the Hotel. 
 “Specially Designated National or Blocked Person” shall mean (i) a person designated by the U.S. Department of Treasury’s Office of Foreign Assets Control from time to time as a “specially designated
national or blocked person” or similar status, (ii) a person described in Section 1 of U.S. Executive Order 13224 issued on September 23, 2001, or (iii) a person otherwise identified by government or legal authority as a
person with whom Manager or its Affiliates are prohibited from transacting business. Currently, a listing of such designations and the text of the Executive Order are published under the internet website address
www.ustreas.gov/offices/enforcement/ofac. 
 “Subordination Agreement” shall have the meaning ascribed to it in
Section 7.03. 
  

 37 

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

 “System” shall have the meaning set forth in the Franchise Agreement. 
 “System Standards” shall mean any one or more (as the context requires) of the following three (3) categories of standards:
(i) operational standards (for example, services offered to guests, quality of food and beverages, cleanliness, staffing and employee compensation and benefits, frequent traveler programs and other similar programs; (ii) physical standards
(for example, quality of the hotel, FF&E, and Fixed Asset Supplies, frequency of FF&E replacements, etc.); and (iii) technology standards (for example, those relating to software, hardware, telecommunications, systems security and
information technology); each of such standards shall be the standard which is generally prevailing or in the process of being implemented at other hotels in the System represented by the Franchise Agreement. 
 “Term” shall mean the Initial Term and any duly exercised Extension Term(s). 
 “Termination” shall mean the expiration or sooner cessation of this Agreement. 
 “Trade Name” shall mean any name, whether informal (such as a fictitious name or d/b/a) or formal (such as the full legal name of
a corporation or partnership) which is used to identify an entity. 
 “Uniform System of Accounts” shall mean the
Uniform System of Accounts for the Lodging Industry, Ninth Revised Edition, 1996, as published by the Educational Institute of the American Hotel & Motel Association, as revised. 
 “WARN Act” shall mean the Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101 et seq. 
 “Working Capital” shall mean funds that are used in the day-to-day operation of the business of the Hotel, including, without
limitation, amounts sufficient for the maintenance of change and petty cash funds, amounts deposited in operating bank accounts, receivables, amounts deposited in payroll accounts, prepaid expenses and funds required to maintain Inventories, less
accounts payable and accrued current liabilities. The initial Working Capital deposited by Owner as of the Effective Date shall be the amount set forth in Schedule 1. 
 ARTICLE XIII 
 SUPPLEMENTAL PROVISIONS 
 All of the terms, conditions, representations, warranties, covenants and other provisions, if any, set forth in the supplemental provisions attached
hereto as Schedule 2 (the “Supplemental Provisions”) are hereby incorporated into this Agreement and shall be considered a part hereof. All capitalized terms used in Schedule 2, unless otherwise defined therein, shall
have the respective meanings set forth in Article XII of this Agreement. In the event of any conflict or inconsistency between the Supplemental Provisions and the other provisions of this Agreement, the Supplemental Provisions shall control.

  

 38 

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

			
	OWNER:
	
	Apple Seven Hospitality Management, Inc.
		
	By:	 	 /s/ Justin G. Knight

	Name:	 	 Justin G. Knight

	Title:	 	 President

  

			
	MANAGER:
	
	Inn Ventures, Inc., a Washington corporation
		
	By:	 	 /s/ Randy M. Rogers

	Name:	 	 Randy M. Rogers

	Title:	 	 President

  

 39 

 SCHEDULE 1 
 HOTEL SPECIFIC DATA 
  

			
	 1. Owner: Apple Seven Hospitality Management, Inc.

	
	 Address for Notices:

		
		  	Apple Seven Hospitality Management, Inc.
		  	c/o Apple REIT Companies
		  	814 E. Main Street
		  	Richmond, Virginia 23219
		  	Attn: Krissy Gathright
		  	Phone: 804-727-6323
		  	Fax: 804-727-6348
	
	 2. Manager: Inn Ventures, Inc., a Washington corporation.

		
	 Address for Notices:
	  	
		
		  	Inn Ventures, Inc.
		  	2201 Lind Avenue SW, Suite 101
		  	Renton, WA 98055
		  	Attn: Randy Rogers
		  	Phone: (206) 431-8000
		  	Fax: (425) 255-0121

 3. Description of Hotel: That certain hotel known as Hilton Garden Inn Renton, located at
17240 Bernardo Center Drive, San Diego, California 92128, containing guest rooms, a lobby, meeting rooms, administrative offices, parking and certain amenities and related facilities located on the Site, including the following:

 a. Number of Guest Rooms: 200 
 b. Other Improvements/Amenities:              sq. ft. aggregate meeting room space; outdoor swimming pool, exercise room, spa, business center

 4. Franchise Agreement: Hilton Garden Inn Franchise License Agreement dated as of May 9, 2006 
 5. Franchisor: Hilton Inns, Inc. 
 6.
Competitive Set: 
 7. Landlord: Apple Seven Hospitality Ownership, Inc., a Virginia corporation 
  

 Schedule 1 – page 1 

 8. Expiration Date of Term: [Five Years from Effective Date] 
 9. Extension Term(s): Two (2) five-year periods 
 10. Base Management Fee: Three percent (3%) 
 11. Owner’s Priority: $4,140,000

 12. Revenue Index Threshold: 1 
 13. Initial Working Capital: $100,000.00 
 14. Performance Termination Threshold: $3,450,000.

 15. Purchase Contract: The Agreement of Purchase and Sale Agreement and Joint Escrow Instructions dated March 9, 2006, as
amended and assigned, between Bernardo Venture, a California general partnership as Seller and Apple Seven Hospitality Ownership, Inc., as Buyer. 
 16. Funding of Reserve for Repairs, Maintenance and Replacements: From and after the Effective Date, Manager shall transfer into the Reserve an amount equal to five percent (5%) of Gross Revenues for each Accounting Period
during the Term. 
 17. Incentive Management Fee: Twenty percent (20%) of Available Cash Flow. 
 18. Accounting Fee: One Thousand Dollars ($1,000.00) per Accounting Period. 
  

 Schedule 1 – page 2 

 SCHEDULE 2 
 SUPPLEMENTAL PROVISIONS 
 1. [FOR EXISTING MANAGERS:] Representations and Warranties of Manager.
Manager hereby represents and warrants to Owner as follows: 
 a. Property Agreements. A complete list of all FF&E Leases, Service
Contracts and Leases (as such terms are defined in the Purchase Contract) entered into by or on behalf of Manager and used in or otherwise relating to the operation and business of the Hotel is attached hereto as Exhibit B. There are no
leases, license agreements, leasing agent’s agreements, equipment leases, building service agreements, maintenance contracts, suppliers contracts, warranty contracts, operating agreements, or other agreements (i) to which Manager is a
party or an assignee, or (ii) binding upon the Hotel, relating to the ownership, occupancy, operation, management or maintenance of the Hotel, except for those Service Contracts, Leases, Warranties and FF&E Leases disclosed on Exhibit
B. The Service Contracts, Leases, Warranties and FF&E Leases disclosed on Exhibit B are in full force and effect, and no default has occurred and is continuing thereunder and no circumstances exist which, with the giving of notice,
the lapse of time or both, would constitute such a default. 
 b. Pending Claims. Manager has not received any written notice of:
(i) any claims, demands, litigation, proceedings or governmental investigations pending or threatened against Manager or its Affiliates or related to the business or assets of the Hotel, (ii) any special assessments or extraordinary taxes,
and (iii) any pending or threatened condemnation or eminent domain proceeding which would affect the Hotel or any part thereof. To the best of Manager’s knowledge, there are no: pending arbitration proceedings or unsatisfied arbitration
awards, or judicial proceedings or orders respecting awards, which might become a lien on the Hotel or any portion thereof, pending unfair labor practice charges or complaints, unsatisfied unfair labor practice orders or judicial proceedings or
orders with respect thereto, pending charges or complaints with or by city, state or federal civil or human rights agencies, unremedied orders by such agencies or judicial proceedings or orders with respect to obligations under city, state or
federal civil or human rights or antidiscrimination laws or executive orders affecting the Hotel, or other pending, actual or threatened litigation claims, charges, complaints, petitions or unsatisfied orders by or before any administrative agency
or court which affect the Hotel or might become a lien on the Hotel. 
 c. Licenses, Permits and Approvals. The Hotel complies in all
material respects with all applicable licenses, permits and approvals and federal, state or local statutes, laws, ordinances, rules, regulations, requirements and codes including, without limitation, those regarding zoning, land use, building, fire,
health, safety, environmental, subdivision, water quality, sanitation controls and the Americans with Disabilities Act, and similar rules and regulations relating and/or applicable to the ownership, use and operation of the Hotel as it is now
operated. Manager has received all material licenses, permits and approvals required or needed for the lawful conduct, occupancy and operation of the business of the Hotel, and each such license and permit is in full force and effect. 
  

 Schedule 2 – page 1 

 d. Employees. All employees employed at the Hotel are the employees of the Manager. There are no
(i) unions organized at the Hotel, (ii) union organizing attempts, strikes, organized work stoppages or slow downs, or any other labor disputes pending or threatened with respect to any of the employees at the Hotel, or
(iii) collective bargaining or other labor agreements to which Manager or the Manager or the Hotel is bound with respect to any employees employed at the Hotel. 
 e, Operations. The Hotel has at all times been operated by Manager in in all material respects in accordance with all applicable laws, rules, regulations, ordinances and codes. 
 f. CC&R’s. To the best of Manager’s knowledge, there are no covenants, conditions or restrictions, including reciprocal easement
agreements or cost-sharing arrangements affecting the Hotel which: (i) would prohibit or limit Manager from operating the Hotel in accordance with the System Standards; (ii) would allow the Hotel facilities (for example, parking spaces) to
be used by persons other than guests, invitees or employees of the Hotel; (iii) would allow the Hotel facilities to be used for specified charges or rates which have not been approved by Manager; (iv) would subject the Hotel to exclusive
arrangements regarding food and beverage operation or retail merchandise; or (v) would impose any financial obligations on Owner or the Landlord or on the Hotel. 
 2. Franchise Agreement. [FOR MARRIOTT BRANDS:] During the Term of this Agreement, subject to the availability of adequate funds, Manager shall perform all of the obligations of Owner as “Franchisee”
under the Franchise Agreement to the extent such obligations relate to the management or operation of the Hotel, including, without limitation, the obligations of “Franchisee” under Sections XIII (Accounts and Receipts) and XIV (Insurance)
of the Franchise Agreement, and Manager shall not commit any act or omit to take any action that would cause a default by the Franchisee under the Franchise Agreement. In the event of any inconsistency between the provisions of this Agreement and
the provisions of the Franchise Agreement, the provisions of the Franchise Agreement shall prevail. Manager shall send promptly to Owner any and all notices that Manager receives from the Franchisor with respect to the Hotel or the Franchise
Agreement and shall keep Owner fully informed with respect to all matters that come to Manager’s attention under the Franchise Agreement. Likewise, Owner shall send promptly to Manager any and all notices that Owner receives from the Franchisor
with respect to the Hotel or the Franchise Agreement that would require action or compliance on the part of Manager. Notwithstanding the foregoing, Manager shall not have the right to grant any consent, approval or other right reserved to the
Franchisee under the Franchise Agreement or to make any decision or agreement on behalf of Owner under the Franchise Agreement. In the event the Franchise Agreement is terminated for any reason, this Agreement shall also terminate effective as of
the date of termination of the Franchise Agreement, unless the parties hereto agree otherwise. 
 [FOR HILTON BRANDS:] During the Term of this Agreement,
subject to the availability of adequate funds, Manager shall perform all of the obligations of Owner as “Licensee” under the Franchise Agreement to the extent such obligations relate to the management or operation of the Hotel, including,
without limitation, the obligations of “Licensee” under Paragraphs 6, 7 and 8 of the Franchise Agreement, and Manager shall not commit any act or omit to take any action that would cause a default by the Licensee under the Franchise
Agreement. In the event of any 

  

 Schedule 1 – page 2 

 
inconsistency between the provisions of this Agreement and the provisions of the Franchise Agreement, the provisions of the Franchise Agreement shall
prevail. Manager shall send promptly to Owner any and all notices that Manager receives from the Franchisor with respect to the Hotel or the Franchise Agreement and shall keep Owner fully informed with respect to all matters that come to
Manager’s attention under the Franchise Agreement. Notwithstanding the foregoing, Manager shall not have the right to grant any consent, approval or other right reserved to the Licensee under the Franchise Agreement or to make any decision or
agreement on behalf of Owner under the Franchise Agreement. In the event the Franchise Agreement is terminated for any reason, this Agreement shall also terminate effective as of the date of termination of the Franchise Agreement, unless the parties
hereto agree otherwise. 
 3. Accounting Period. For purposes of this Agreement, the term “Accounting Periods” shall mean a
calendar month, except that the first Accounting Period shall begin on the Effective Date and shall end on the last day of the calendar month in which the Effective Date occurs. 
 4. Fiscal Year. [FOR MARRIOTT BRANDS:] For purposes of this Agreement, the term “Fiscal Year” shall mean the fiscal year as of the
Effective Date that ends at midnight on the Friday closest to December 31 in each calendar year; the new Fiscal Year begins on the Saturday immediately following said Friday. Any partial Fiscal Year between the Effective Date and the
commencement of the first full Fiscal Year shall constitute a separate Fiscal Year. A partial Fiscal Year between the end of the last full Fiscal Year and the Termination of this Agreement shall also constitute a separate Fiscal Year. 
 [FOR HILTON BRANDS:] For purposes of this Agreement, the term “Fiscal Year” shall mean, initially, the period beginning as of the Effective Date and ending at
midnight on the following December 31 and thereafter each calendar year during the Term. Any partial Fiscal Year between the Effective Date and the commencement of the first full Fiscal Year shall constitute a separate Fiscal Year. A partial
Fiscal Year between the end of the last full Fiscal Year and the Termination of this Agreement shall also constitute a separate Fiscal Year. 
  

 Schedule 1 – page 3 

 EXHIBIT A 
 LEGAL DESCRIPTION OF SITE 
 Rancho Bernardo Hilton Garden Inn 
 All that certain real property situated in the County of San Diego, State of California, described as follows: 
 Parcel A: Parcel 1 of Parcel Map No. 18339, in the City of San Diego, County of San Diego, State of California, filed in the Office of the County Recorder of
San Diego County, September 10, 1999 as File No. 1999-0623032 of Official Records. 
 Parcel B: Easements for encroachments, utilities,
slope and drainage, grading, ingress, egress and parking in, to, over, under and across the “Association Maintenance Area” as defined, set forth and conveyed in an instrument entitled “Declaration of Covenants, Conditions and
Restrictions and Reciprocal Easement Agreement for Park Terrace Center” recorded March 1, 1994 as File No. 1994-0136831, of Official Records. 
  

 Exhibit A – page 1 

 EXHIBIT B 
 FF&E LEASES, SERVICE CONTRACTS AND LEASES 
 None 
  

 Exhibit B – page 1 

 EXHIBIT C 
 RESTRICTED AREA 
  

 Exhibit B – page 2FRANCHISE LICENSE AGREEMENT

 Exhibit 10.17 
 FRANCHISE LICENSE AGREEMENT 
 HILTON GARDEN INN SAN DIEGO/RANCHO BERNARDO 
 San Diego, California 
 March 2006 

 TABLE OF CONTENTS 
  

			
	 SECTION
	  	PAGE NO.
	1. DEFINITIONS	  	1
		
	 A.      THE HOTEL
	  	1
	 B.      THE MARKS
	  	1
	 C.      THE SYSTEM
	  	1
	 D.      THE MANUAL
	  	2
	 E.      INCLUDING
	  	2
	 F.      LICENSE TERM
	  	2
		
	2 . GRANT OF LICENSE	  	2
		
	3 . OUR RESPONSIBILITIES	  	2
		
	 A.      TRAINING
	  	2
	 B.      RESERVATION SERVICES
	  	2
	 C.      CONSULTATION
	  	3
	 D.      ARRANGEMENTS FOR MARKETING,
ETC
	  	3
	 E.      INSPECTIONS/COMPLIANCE
ASSISTANCE
	  	3
	 F.      MANUAL
	  	3
	 G.      EQUIPMENT AND SUPPLIES
	  	4
		
	4. PROPRIETARY RIGHTS	  	4
		
	5. PROPRIETARY MARKS	  	4
		
	 A.      USE OF TRADE
NAME
	  	4
	 B.      TRADEMARK DISPUTES
	  	4
	 C.      WEB SITES
	  	4
	 D.      COVENANT
	  	5
		
	6. YOUR RESPONSIBILITIES	  	5
		
	 A.      OPERATIONAL AND OTHER
REQUIREMENTS
	  	5
	 B.      HOTEL QUALITY ASSURANCE
	  	9
	 C.      STAFF AND MANAGEMENT
	  	9
		
	7. FEES	  	10
		
	 A.      MONTHLY FEES
	  	10
	 B.      CALCULATION AND PAYMENT OF
FEES
	  	10
	 C.      ROOM ADDITION FEE
	  	10
	 D.      OTHER FEES
	  	11
	 E.      TAXES
	  	11
	 F.      APPLICATION OF FEES
	  	11
		
	8. RECORDS AND AUDITS	  	11
		
	 A.      REPORTS
	  	11
	 B.      MAINTENANCE OF RECORDS
	  	11
	 C.      AUDIT
	  	11
	 D.      OWNERSHIP OF INFORMATION
	  	12
		
	9. INDEMNITY	  	12
		
	10. RIGHT OF FIRST OFFER: INTENTIONALLY DELETED	  	13
		
	11. TRANSFER	  	13

			
	 A.      OUR TRANSFER OF THIS
AGREEMENT
	  	13
	 B.      YOUR TRANSFER
	  	13
		
	12 . CONDEMNATION AND CASUALTY	  	18
		
	 A.      CONDEMNATION
	  	18
	 B.      CASUALTY
	  	18
	 C.      NO EXTENSIONS OF
TERM
	  	18
		
	13 . TERM OF LICENSE	  	18
		
	14 . TERMINATION	  	18
		
	 A.      TERMINATION. SUSPENSION OR
OTHER INTERIM REMEDIES BY US ON ADVANCE NOTICE
	  	18
	 B.      IMMEDIATE TERMINATION BY
US
	  	20
	 C.      LIQUIDATED DAMAGES UPON
TERMINATION BY US
	  	21
	 D.      DE-IDENTIFICATION OF HOTEL
UPON TERMINATION
	  	22
	 E.      SPECIAL TERMINATION
	  	22
		
	15. RELATIONSHIP OF PARTIES	  	22
		
	 A.      NO AGENCY RELATIONSHIP
	  	22
	 B.      NOTICES TO PUBLIC CONCERNING
YOUR INDEPENDENT STATUS
	  	23
		
	16. MISCELLANEOUS	  	23
		
	 A.      SEVERABILITY AND
INTERPRETATION
	  	23
	 B.      CONTROLLING LAW
	  	23
	 C.      EXCLUSIVE BENEFIT
	  	24
	 D.      ENTIRE AGREEMENT
	  	24
	 E.      CONSENT; BUSINESS JUDGMENT
	  	24
	 F.      NOTICES
	  	24
	 G.      GENERAL RELEASE
	  	25
	 H.      ESTOPPEL CERTIFICATE
	  	25
	 I.       DESCRIPTIVE HEADINGS
	  	25
	 J.       REPRESENTATIONS AND
WARRANTIES
	  	25
	 K.      TIME
	  	25
	 L.      COUNTERPARTS
	  	25
	 M.     PERFORMANCE
REQUIREMENTS/RESPONSIBILITIES
	  	25
	 N.      INFORMATIONAL COPIES
	  	26
	 O.      BLOCKED PERSONS OR
ENTITIES
	  	26
		
	17 . WAIVER OF JURY TRIAL	  	26
		
	ATTACHMENT A - PERFORMANCE CONDITIONS: CHANGE OF OWNERSHIP	  	A-1
		
	ATTACHMENT B - RIDER TO FRANCHISE LICENSE AGREEMENT	  	B-1
		
	EXHIBIT A - PIP	  	

 FRANCHISE LICENSE AGREEMENT 
 Dated as of the date set forth on the Rider attached as Attachment B (the “Rider”) between the licensor entity set forth on the Rider (“we,” “us,” “our” or
“Licensor”), and the licensee entity (“you,” “your” or “Licensee”), the name and address of which is set forth on the Rider. 
 INTRODUCTION 
 We are a subsidiary of Hilton Hotels Corporation, a Delaware corporation
(“HHC”). HHC and its subsidiaries and affiliates (collectively, “Hilton”) own, license, lease, operate, manage and provide various services for a network of hotels, inns, conference centers, time share properties
and other operations (the “Network”). HHC and Hilton Hospitality, Inc., a wholly owned subsidiary of HHC, have authorized us to grant licenses for selected, first-class, independently owned or leased hotel properties, to operate
under the brand name set forth in the Rider (the “Licensed Brand”). You have expressed an interest in operating the property identified on the Rider under the Licensed Brand. You have confirmed to us that you (i) independently
investigated the risks of operating a hotel under the Licensed Brand, including current and potential market conditions, and competitive factors and risks, and have made an independent evaluation of all such matters, and (ii) reviewed our
uniform franchise offering circular (“UFOC”). After doing so, you have expressed a desire to enter into this Franchise License Agreement (the “Agreement”) with us to obtain a license to use the Licensed Brand in the
operation of a hotel at the address set forth in the Rider. 
 NOW, THEREFORE, in consideration of the premises and the undertakings and
commitments of each party to the other party as set forth in this Agreement the parties agree as follows: 
 1. Definitions 
 The following capitalized terms will have the meanings set forth after each term: 
 a. The Hotel. The Hotel is the property you will operate under this Agreement. The “Hotel” includes all structures, facilities,
appurtenances, furniture, fixtures, equipment, and entry, exit, parking and other areas located on the site we have approved for your business, or located on any land we approve in the future for additions, signs, parking or other facilities.

 b. The Marks. References to the “Marks” will include the Licensed Brand service marks and all other service
marks, copyrights, trademarks, logos, insignia, emblems, symbols, designs, slogans, distinguishing characteristics, trade names, domain names, and all other marks or characteristics associated or used with or in connection with the System (as
defined in Subparagraph 1c.), and similar intellectual property rights, that we designate from time to time to be used in the System. 
 c. The System. The “System” is the elements we designate from time to time to identify hotels operating under the Licensed Brand that provide to the consuming public a similar, distinctive, high quality hotel
service. “System hotels” means hotels we license to operate under the System and to use the Licensed Brand name. The System currently includes the Licensed Brand and the Marks; access to a reservation service; advertising, publicity
and other marketing programs and materials; training programs and materials, standards, specifications and policies for construction, furnishing, operation, appearance and service of the Hotel, we refer to in this Agreement or in the Manual (as
defined in Subparagraph 1.d.) and programs for our inspecting the Hotel and consulting with you. We may add elements to the System or modify, alter or delete elements of the System at our sole option. 
  

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 d. The Manual. References to the “Manual” will include all written standards and
requirements we adopt from time to time for constructing, equipping, furnishing, supplying, operating, maintaining and marketing System hotels, including the Hotel. Changes made in the Manual will apply to System hotels as specified and may not
apply to all System hotels. We may set forth these standards and requirements in one or more documents or guides. All of these items, as we modify them from time to time, will be considered the Manual. We will change the Manual from time to time. We
will notify you at least thirty (30) days before any change becomes effective. You will be responsible for the costs of complying with the Manual, including any changes. 
 e. Including. The word “including,” whenever used in this Agreement, will mean “including, by way of example, but without
limitation.” 
 f. License Term. References to the “License Term” will mean the period from the date of
this Agreement (as set forth in the Rider) through the expiration of this Agreement. 
 2. Grant of License 
 We hereby grant to you and you hereby accept a non-exclusive license (the “License”) to use the System at, and in connection with the
operation of, the Hotel, in accordance with the terms of this Agreement. 
 This Agreement does not limit our right, or the right of any of
our present or future owners, subsidiaries, and affiliated entities (the “Entities”), to own, license or operate any other business of any nature (“Other Businesses”), including a hotel, inn, conference center, time
share property, lodging facility or similar business, whether under the Licensed Brand, or as a competitive brand, or otherwise. We reserve the right to engage in any Other Businesses, even if they compete with the Hotel, the System, or the Licensed
Brand, and whether we start those businesses, or purchase, merge with, acquire, are acquired by, or affiliate with, such businesses. We may also: (a) use or license to others all or part of the System; (b) use the facilities, programs,
services and/or personnel used in connection with the System in Other Businesses; and (c) use the System, the Licensed Brand, and the Marks, in the Other Businesses. You acknowledge and agree that you are not acquiring any rights other than the
non-exclusive right to use the System to operate the Hotel under the Licensed Brand at the site licensed under this Agreement and in accordance with the terms of this Agreement. You acknowledge and agree that you have no rights and will not make any
claims, demands or damages arising from or related to any of the foregoing activities, and you acknowledge and agree that such activities will not give rise to any liability on our part, including liability for claims for unfair competition, breach
of contract, breach of any applicable implied covenant of good faith and fair dealing, or divided loyalty. 
 The Hotel will be initially
known by the trade name set forth in the Rider (the “Trade Name”). We may change the Trade Name and/or the Licensed Brand name and/or any of the Marks at any time at our sole option, but we will not change the principal name
identified in the Rider. You may not change the Trade Name without our specific written consent. You acknowledge and agree that you are not acquiring the right to use any service marks, copyrights, trademarks, logos, designs, insignia, emblems,
symbols, slogans, distinguishing characteristics, trade names, domain names or other marks or characteristics owned by Hilton or the Entities that we do not specifically designate to be used in the System. 
 3. Our Responsibilities 
 a. Training. We will
specify required and optional training programs and provide these programs at various locations. We may charge you for (i) required training services and materials and (ii) optional training services and materials we provide to you. You
are also responsible for all travel, lodging and other expenses you or your employees incur in attending these programs. 
 b. Reservation
Services. We will, directly or indirectly, furnish you with the Reservation Service (as defined in Subparagraph 6.a.(15) below). This service will be furnished to you on the same basis as is furnished to other System hotels, subject to the
provisions of Subparagraph 14.a.(3) below. 
  

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 c. Consultation. We may, from time to time at our sole discretion, make available to you
consultation and advice in areas such as operations, facilities, and marketing on the same basis as other Licensed Brand hotels. We have the right to establish fees in advance or on a project-by-project basis, for consultation and advice you
request. 
 d. Arrangements for Marketing, Etc. Periodically, we or one of the Entities will publish and make available to the
traveling public a directory of System hotels, including the Hotel. Additionally, we will include the Hotel, or cause the Hotel to be included in (i) national or regional group advertising of System hotels, and (ii) international, national
and regional market programs offered by us or the Entities; subject to and in accordance with our general practice for System hotels. 
 We
will use your Monthly Program Fee (as defined in Subparagraph 7.a. below) to pay for various programs to benefit the System, including (i) advertising, promotion, publicity, public relations, market research, and other marketing programs;
(ii) developing and maintaining Licensed Brand directories and Internet sites; (iii) developing and maintaining the Reservation Service systems and support; and (iv) administrative costs and overhead related to the administration or
direction of these projects and programs. We will have the sole right to determine how we spend these funds, including sole control over the creative concepts, materials and media used in the programs, the placement and allocation of advertising,
and the selection of promotional programs. We may enter into arrangements for development, marketing, operations, administrative, technical and support functions, facilities, programs, services and/or personnel with any other entity, including our
affiliates. You acknowledge that Monthly Program Fees are intended for the benefit of the System, and will not simply be used to promote or benefit any one property or market. We will have no obligation in administering any activities paid by the
Monthly Program Fee to make expenditures for you that are equivalent or proportionate to your payments, or to ensure that the Hotel benefits directly or proportionately from such expenditures. We may create any programs and allocate monies derived
from Monthly Program Fees to any regions or localities, as we consider appropriate in our sole judgment. The aggregate of Monthly Program Fees paid to us by System hotels does not constitute a trust or “advertising fund” and we are not a
fiduciary with respect to the Monthly Program Fees paid by you and other System hotels. We are not obligated to expend funds in excess of the amounts received from System hotels. If any interest is earned on unused Monthly Program Fees, we will use
the interest before using the principal. The Monthly Program Fee does not cover your costs of participating in any optional marketing programs and promotions offered by us or Hilton from time to time in which you voluntarily choose to participate.
These fees also do not cover the cost of operating the Hotel in accordance with the standards in the Manual. 
 e. Inspections/Compliance
Assistance. We will administer a quality assurance program for the System which may include conducting periodic inspections of the Hotel and guest satisfaction surveys and audits to ensure compliance with System standards. We have the right to
inspect the Hotel and its operations at any time, with or without prior notice to you, and to determine if the Hotel is in compliance with the standards and rules of operation set forth in this Agreement and in the Manual. If the Hotel fails to
comply with such standards and rules of operation, we may, at our option and at your cost, require an action plan to correct the deficiencies. You must then take all steps necessary to correct any deficiencies within the times we establish. You may
be charged a fee (“Quality Assurance Re-Evaluation Fee”), and you will provide complimentary accommodations for the quality assurance auditor, each time we conduct a special on-site quality assurance re-evaluation (a) after the
Hotel has failed a regular quality assurance evaluation or (b) to verify that deficiencies noted in a quality assurance evaluation report or property improvement plan have been corrected or completed by the required dates. The Quality Assurance
Re-Evaluation fee is subject to change by us from time to time provided that any change will be established in the Manual. Our approval of an action plan does not waive any rights we may have under this Agreement, nor does it relieve you of any
obligations under this Agreement. We will also have the right to place materials required for System and Hilton purposes at the Hotel. 
 f. Manual. We will issue the Manual to you, and any revisions and updates we may make to the Manual. 
  

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 g. Equipment and Supplies. We will make available to you for use in the Hotel various purchase,
lease, or other arrangements for exterior signs, operating equipment, operating supplies, and furnishings, which we or Hilton may have and which we make available to other System hotels. 
 4. Proprietary Rights 
 You acknowledge, and will not contest, either directly or indirectly during
the License Term or after termination or expiration of this Agreement: (i) our (and/or any Entities’) ownership of, rights to and interest in the System, Licensed Brand, Marks and any of their element(s) or component(s), including present
and future distinguishing characteristics; (ii) our sole right to grant licenses to use all or any element(s) or component(s) of the System; (iii) that we (and/or the Entities) are the owner of (or the licensee of, with the right to
sub-license) all right, title and interest in and to the Licensed Brand and the Marks used in any form and in any design, alone or in any combination, together with the goodwill they symbolize; and (iv) the validity or ownership of the Marks.
You acknowledge that these Marks have acquired a secondary meaning which indicates that the Hotel, Licensed Brand and System are operated by or with Hilton’s approval. All improvements and additions to, or associated with, the System, all
Marks, and all goodwill arising from your use of the System and the Marks, will inure to our benefit and become our property (or the Entities), even if you develop them. At our request, you will promptly assign to us any rights or registrations to
the Marks that you obtain. You acknowledge that you are not entitled to receive any payment or other value from us or from any of the Entities for any goodwill associated with your use of the System or the Marks, or any element(s) or component(s) of
the System. 
 5. Proprietary Marks 
 a. Use of Trade Name. You will operate under, and prominently display, the Marks in the Hotel. You will not adopt any other names in operating the Hotel that we do not approve. You also will not use any of the Marks, or the word
“Hilton,” or other Network trademarks, trade names or service marks, or any similar word(s) or acronyms, in (i) your corporate, partnership, business or trade name except as we provide in this Agreement or the Manual, or (ii) any
Internet-related name (including a domain name), except as we provide in this Agreement or in the Manual, or (iii) any business operated separately from the Hotel, including the name or identity of developments adjacent to or associated with
the Hotel. You agree that any unauthorized use of the Marks will be an infringement of our rights and a material breach of this Agreement. 
 b. Trademark Disputes. We and you each agree that the protection of the Marks and their distinguishing characteristics as standing for the System is important to all of us. Accordingly, you will immediately notify us of any
infringement or dilution of or challenge to your use of any of the Marks and will not, absent a court order or our prior written consent, communicate with any other person regarding any such infringement, dilution, challenge or claim. We will take
the action we deem appropriate with respect to such challenges and claims and have the sole right to handle disputes concerning use of all or any part of the Marks or the System. You will extend your full cooperation to us at your reasonable expense
in these matters. You appoint us as your exclusive attorney-in-fact, to prosecute, defend and/or settle all disputes of this type at our sole option. You will sign any documents we believe are necessary to prosecute, defend or settle any dispute or
obtain protection for the Marks and the System and assign to us any claims you may have related to these matters. Our decision as to the prosecution, defense and settlement of the dispute will be final. All recoveries made as a result of disputes
regarding use of all or part of the System or the Marks will be for our account. 
 c. Web Sites. You may not register, own, maintain
or use any domain names, World Wide Web or other electronic communications sites (collectively, “Site(s)”), relating to the Network or the Hotel or that include the Marks. The only domain names, Sites, or Site contractors that you
may use relating to the Hotel or this Agreement are those we assign or otherwise approve in writing. You also agree to obtain our prior written approval concerning any third-party Site in which the Hotel will be listed, and any proposed links
between such Site and any other Site(s) (“Linked Sites”) and any proposed modifications to all Sites and Linked Sites. All Sites containing any of the Marks and any Linked Sites must advertise, promote, and reflect on the Hotel and
the System in a first-class, dignified manner. You acknowledge 

  

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and agree that our right to approve all materials is necessitated by the fact that those materials will include and be linked with our Marks. Therefore, any
use of the Marks on the World Wide Web, the Internet, or any computer network/electronic distribution, must conform to our requirements, including the identity and graphics standards for all System hotels. Given the changing nature of this
technology, we have the right to withhold our approval, and to withdraw any prior approval, and to modify our requirements. 
 You
acknowledge that you may not, without a legal license or other legal right, post on your Site(s) any material in which any third party has any direct or indirect ownership interest (including video clips, photographs, sound bites, copyrighted text,
trademarks or service marks, or any other text or image in which any third party may claim intellectual property ownership interests). You also agree to incorporate on your Site(s) any information we require in the manner we deem necessary to
protect our Marks. 
 Upon the expiration or termination of this Agreement, you agree to irrevocably assign and transfer to us (or to our
designee) all of your right, title and interest in any domain name listings and registrations which contain any reference to our Marks, System, Network or Licensed Brand, and will notify the applicable domain name registrar(s) of the termination of
your right to use any domain name or Site(s) associated with the Marks or the Licensed Brand, and will authorize and instruct the cancellation of the domain name, or transfer of the domain name to us (or our designee), as we specify. You will also
delete all references to our Marks, System, Network or Licensed Brand from any Site(s) you own, maintain or operate beyond the expiration or termination of this Agreement. 
 d. Covenant. You agree, as a direct covenant with Hilton, that you will comply with all of the provisions of this Agreement related to the
manner, terms and conditions of the use of the Marks, and the termination of any right on your part to use any of the Marks. You agree that any non-compliance by you with this covenant, the terms of this Agreement, or any unauthorized or improper
use of the System or the Marks will cause irreparable damage to us and/or to the Entities. You therefore agree that if you engage in this non-compliance, or unauthorized and/or improper use of the System or the Marks during or after the License
Term, Hilton, its successors and assigns, separately or along with us, will be entitled to both temporary and permanent injunctive relief against you from any court of competent jurisdiction, in addition to all other remedies that Hilton or we may
have at law. You consent to the entry of such temporary and permanent injunctions. You will be responsible for payment of all costs and expenses, including, reasonable attorneys’ fees, which we and/or Hilton and/or the Entities may incur in
connection with your non-compliance with this covenant. 
 6. Your Responsibilities 
 a. Operational and Other Requirements. During the License Term, you agree to: 
 (1) promptly pay to us, or reimburse us for, all amounts due to us and/or Hilton as Monthly Royalty Fees, Monthly Program Fees, and other charges, and for
goods and services you or your agents purchase from us and/or Hilton, including those set forth in Paragraph 7 below; 
 (2) operate
the Hotel twenty-four (24) hours a day every day, except as we may otherwise permit based on special circumstances; 
 (3) operate,
furnish, maintain and equip the Hotel in a clean, safe and orderly manner and in first-class condition in accordance with the provisions of this Agreement and the Manual, and in compliance with all applicable local, state, and federal laws, customs
and regulations, including maintaining and conducting your business in accordance with sound business and financial practices; 
 (4) provide
efficient, courteous and high-quality service to the public; 
  

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 (5) adopt, use and comply with the standards, requirements, services, products, programs, materials,
specifications, policies, methods, procedures, and techniques set forth in the Manual, as it may be amended by us from time to time, and keep your Manual current at all times; 
 (6) comply with System standards, specifications and requirements regarding the purchase of products and services, including furniture, fixtures,
equipment, food, operating supplies, consumable inventories, merchandise for resale to be used at, and/or sold from, the Hotel, in-room entertainment, computer networking, and any and all other items used in the operation of the Hotel (collectively,
the “Supplies”), including our specifications for all Supplies. We may from time to time require you to purchase a particular brand of product (“Required Brand”); however, you may purchase this Required Brand from any authorized
source of distribution; 
 (7) comply with System standards, specifications and requirements as to the types and levels of services,
amenities and products that either must or may be used, promoted or offered at or in connection with the Hotel; 
 (8) install, display, and
maintain signage displaying or containing the Licensed Brand name and other distinguishing characteristics in accordance with plans, specifications and standards we establish for System hotels; 
 (9) comply with System requirements for the training of persons involved in the operation of the Hotel, including completion by the general manager and
other key personnel of the Hotel of a training program for operation of the Hotel under the System at a site we designate, except that if, in our sole opinion, it is not necessary or desirable for the general manager or any other key personnel of
the Hotel to complete that training program, then we may waive this requirement in whole or in part. You will pay us for all fees and charges, if any, we require for your personnel to attend these training program(s) on the same basis as we charge
other System hotels. You will also be responsible for the wages, room, board and travel expenses of your personnel; 
 (10) purchase and
maintain property management, revenue management, in-room entertainment, telecommunications and other computer and technology systems we designate as System-wide (or area-wide) programs based on our assessment of the long-term best interests of
System hotels, considering the interest of the System as a whole; 
 (11) advertise and promote the Hotel and related facilities and services
on a local and regional basis in a first-class, dignified manner, using our identity and graphics standards for all System hotels, at your cost and expense. You agree to submit to us samples of all advertising and promotional materials that we have
not previously approved (including any materials in digital, electronic or computerized form, or in any form of media that exists now or is developed in the future) before you produce or distribute them. You will not begin using the materials until
we approve them. You also agree to immediately discontinue your use of any advertising or promotional materials we reasonably believe is not in the best interest of the Hotel or System, even if we previously approved the materials; 
 (12) participate in, and pay all charges in connection with (i) all required System guest complaint resolution programs, which programs may include
chargebacks to the Hotel for guest refunds or credits, and (ii) all required System quality assurance programs, such as guest comment card and mystery shopper programs; and maintain minimum performance standards and scores for quality assurance
programs that we may establish from time to time in the Manual; 
 (13) comply with System standards, specifications and requirements as to
maintenance, appearance and condition of the Hotel, and adopt in your business all changes or additions to the System as we may periodically designate; 
 (14) honor all nationally recognized credit cards and credit vouchers issued for general credit purposes which are generally honored at other System hotels, and enter into all necessary credit card and voucher
agreements with the issuers of such cards or vouchers; 
  

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 (15) participate in and use, on the terms set forth in this Agreement and in the Manual, those
reservation services which we require (the “Reservation Service”), including any additions, enhancements, supplements or variants which we or the Entities develop or adopt; and honor and give first priority on available rooms to all
confirmed reservations referred to the Hotel through the Reservation Service. You agree that the only reservation service or system you may use for outgoing reservations referred by or from the Hotel to other hotels will be the Reservation Service
or other reservation services we or the Entities designate; 
 (16) comply with all governmental requirements, including the filing and
maintenance of any required trade name or fictitious name registrations, pay all taxes, and maintain all governmental licenses and permits necessary to operate the Hotel in accordance with the System; 
 (17) permit inspection of the Hotel by our representatives at any time to ensure compliance with System standards, cooperate fully with our
representatives during these inspections and take all steps necessary to correct any deficiencies detected within the time periods we specify. You will also provide free lodging to our personnel at the Hotel while they are making their inspections
on a space-available basis; 
 (18) provide to us statistics on Hotel operations in the form we specify and using definitions we specify;

 (19) not engage, directly or indirectly, in any cross-marketing or cross-promotion of the Hotel with any other hotel, lodging or related
business, except for Affiliated Hotels (as defined in Subparagraph 6.a.21), without our prior written consent; 
 (20) participate in, and
pay all fees of, any System travel agent commission payment program(s) as modified from time to time, and promptly pay as we require in the Manual and/or specific program terms, all travel agent commissions and third party reservation service
charges (such as airline reservation systems) in accordance with the terms of these programs; 
 (21) refer guests and customers, wherever
reasonably possible, only to, Licensed Brand, Network, Hilton International, and Conrad International hotels (collectively, the “Affiliated Hotels”) and (if and as we direct) any other hotel systems owned, managed, or licensed by us
and/or the Entities (each, “Other Hotels”) (except that this will not prohibit us from requiring you to participate in programs designed to refer prospective customers to other hotels, whether in the System or otherwise); display all
material, including brochures and promotional material we provide for Affiliated Hotels and Other Hotels; and allow advertising and promotion only of Affiliated Hotels and Other Hotels on the Hotel premises; 
 (22) treat as confidential the Manual, and all other information or materials concerning the methods, techniques, plans, specifications, procedures,
information, systems and knowledge of and experience in the development, operation, marketing and licensing of the System (the “Proprietary Information”). You acknowledge and agree that you: (i) do not acquire any interest in
Proprietary Information other than the right to utilize the same in the development and operation of the Hotel under the terms of this Agreement, (ii) will not use the Proprietary Information in any business or for any purpose other than in the
development and operation of the Hotel under the System, (iii) will maintain the absolute confidentiality of the Proprietary Information during and after the License Term, (iv) will not make unauthorized copies of any portion of the
Proprietary Information, and (v) will adopt and implement all reasonable procedures we may periodically establish to prevent unauthorized use or disclosure of the Proprietary Information, including restrictions on disclosure to employees and
the use of non-disclosure and non-competition clauses in agreements with employees, agents and independent contractors who have access to the Proprietary Information. These restrictions will not apply to any information that does not relate or refer
in any way or part to the System, Manual, Licensed Brand and/or Marks and that you can demonstrate came lawfully to your attention before our disclosure or which, at the time of or after our disclosure, becomes a part of the public domain through
lawful publication or communication by others; 
  

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 (23) not to become a “Competitor” without our prior written consent. For purposes of this
Agreement, a “Competitor” is any individual or entity that at any time during the term of this Agreement, whether directly or through an Affiliate (as defined in Subparagraph 1 l.b.(2)(a)), owns in whole or in part or is the
licensor or franchisor of a hotel brand or trade name that, in our sole judgment, competes with the System or any hotel owned, operated or franchised by us or one of our Affiliates. These restrictions apply irrespective of the number of hotels
owned, licensed or franchised by the Competitor under such brand name, but do not prohibit you (or your Affiliates) from: (i) owning a minority interest in a Competitor so long as neither you nor any of your Affiliates is a director or employee
of the Competitor, provides services (including as a consultant) to the Competitor, or exercises or has the right to exercise, control or influence over the business decisions of the Competitor; (ii) being a franchisee or licensee of a
Competitor; or (iii) managing a property for a Competitor; 
 (24) own fee simple title (or long-term ground leasehold interest,
provided that such interest has been granted to you by an unrelated third party ground lessor in an arms length transaction for a term equal to, or longer than, the License Term) to the real property and improvements that comprise the Hotel, or, at
our request, cause the fee simple owner or other third party acceptable to us, to provide its guarantee covering all of your obligations under this Agreement in form and substance acceptable to us; 
 (25) maintain legal possession and control of the Hotel and Hotel Site (as defined in Subparagraph 11.b. below) for the term of the Agreement, and
promptly deliver to us a copy of any notice of default you receive from any mortgagee, trustee under any deed of trust, or ground lessor for the Hotel, and upon our request, provide any additional information we may request related to any alleged
default or any subsequent action or proceeding in connection with any alleged default; 
 (26) refrain from directly or indirectly
conducting, or permitting by lease, concession arrangement or otherwise, gaming or casino operations in the Hotel or on its premises without our express written permission, which we may withhold at our sole option, and then only to the extent and
subject to the terms set forth in such permission; 
 (27) refrain from directly or indirectly conducting, or permitting the marketing or
sale of timeshares or condominiums at, or adjacent to, the Hotel without our express written permission, which we may withhold at our sole option, and then only to the extent and subject to the terms set forth in such permission; provided, however,
that this restriction will not prohibit you from directly or indirectly conducting timeshare or condominium sales or marketing at and for any property located adjacent to the Hotel that is owned or leased by you so long as (i) you do not use
any of the Marks in such sales or marketing efforts and (ii) you do not use the Hotel or its facilities in such sales, marketing efforts or business operations; 
 (28) obtain and maintain in full force and effect from and after the confirmed Opening Date of the Hotel as set forth in Attachment A (conditional or otherwise) all licenses required for the sale of alcoholic
beverages at the Hotel (unless no alcoholic beverages are offered at or from the premises of the Hotel); 
 (29) promptly provide to us or
Hilton all information we reasonably request about you and your affiliates, including your respective officers, directors, shareholders, partners or members, and/or the Hotel, title to the property on which the Hotel is constructed and any other
property used by the Hotel. The information requested may include, but not necessarily be limited to, financial condition, credit information, personal and family background, business background, litigation, indictments, and criminal proceedings and
the like; 
 (30) participate in, and pay, all charges related to (i) our and Hilton’s marketing programs (in addition to programs
covered by Monthly Program Fees), and (ii) all guest frequency programs we or Hilton require. You also agree to honor the terms of any discount or promotional programs (including any frequent guest program) that we or Hilton offer to the public
on your behalf, any room rate quoted to any guest at the time the guest makes an advance reservation, and any award guest certificates issued to Hotel guests participating in these programs; 
  

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 (31) operate the Hotel so as to maximize Gross Rooms Revenue (as defined in Subparagraph 7.b.) consistent
with sound marketing and industry practice and not engage in any conduct that is likely to reduce Gross Rooms Revenue in order to further other business activities; and 
 (32) maintain, at your expense, insurance, of the types, and in the minimum amounts, we specify in the Manual. All such insurance must (i) be with insurers having minimum ratings we specify, (ii) name as
additional insureds the parties we specify in the Manual, and (iii) carry the endorsements and notice requirements we specify in the Manual. If you fail or neglect to obtain or maintain the insurance or policy limits required by this Agreement,
we have the option, but not the obligation to obtain and maintain such insurance without notice to you, and you, will immediately upon our demand, pay us the premiums and cost we incur in obtaining this insurance. 
 b. Hotel Quality Assurance. We may from time to time require you to modernize, rehabilitate and/or upgrade the Hotel’s fixtures, equipment,
furnishings, furniture, signs, computer hardware and software and related equipment, supplies and other items to meet the then-current standards and specifications specified in the Manual. You will make these changes at your sole cost and expense.
Nothing in this paragraph will relieve you from the obligation to maintain acceptable product quality ratings at the Hotel and maintain the Hotel in accordance with the Manual at all times during the License Term. We may make limited exceptions to
some of our standards based on local conditions or special circumstances, but we are not required to do so. You may not make any change in the number of approved guest rooms (the “Guest Rooms”) set forth in the Rider or any other
significant change (including major changes in structure, design or decor) in the Hotel without our prior written approval. Minor redecoration and minor structural changes that comply with our standards and specifications will not be considered
significant. 
 c. Staff and Management. You are at all times responsible for the management of the Hotel’s business. You may
fulfill this responsibility only by providing (i) qualified and experienced management, which may be a third-party management company, and (ii) a general manager, (the “Management’), each approved by us in writing.
However, you represent and agree that you have not, and will not, enter into any lease, management agreement or other similar arrangement for the operation of the Hotel or any part of the Hotel with any person or entity without our prior written
consent. To be approved by us as the operator of the Hotel, you or any proposed Management must be qualified to manage the Hotel. We may refuse to approve you or any proposed Management which, in our reasonable business judgment, is inexperienced or
unqualified in managerial skills or operating capacity or capability, or is unable to adhere fully to the obligations and requirements of this Agreement. You understand that we reserve the right to not approve a Competitor, or any entity that
(through itself or an affiliate) is the exclusive manager for a Competitor, to manage the Hotel. If the Management becomes a Competitor or otherwise becomes unsuitable in our sole judgment to manage the Hotel at any time during the License Term, you
will have ninety (90) days to retain qualified substitute Management acceptable to us. Any Management must have the authority to perform all of your obligations under this Agreement, including all indemnity and insurance obligations. In the
case of any conflict between this Agreement and any agreement with Management, this Agreement prevails. 
 d. Hotel Direct Center
Program. From time to time we or an affiliate may, but are not obligated to, offer you the option to participate in the Hotel Direct Center Program (the “Program”) or a successor to the Program. If the Program is offered to you
and you want to participate in that Program, you must notify us in writing. That notification will be deemed an agreement on your part to comply with the terms and conditions of that Program that are in effect as of the date of your notification and
thereafter, and to pay all additional fees related to your participation in the Program. You or we may terminate your participation in the Program at any time upon thirty (30) days’ prior written notice. We may also terminate your
participation on shorter notice if you default under this Agreement, and we may terminate the Program for System licensees at any time. Whether or not you participate in the Program 

  

 9 

 
will not otherwise affect your obligations under this Agreement. You acknowledge and agree that the Program is not the Reservation Service referred to in
this Agreement, nor is it considered an outside reservation service or system, but rather, it is an optional, supplemental service whereby reservation calls to the Hotel will be referred to an offsite call center. Whether or not you participate in
the Program, you must continue participating in the Reservation Service. 
 7. Fees 
 a. Monthly Fees. Beginning on the Opening Date, you will pay to us for each month (or part of a month, including the final month you operate under
this Agreement) the Monthly Royalty Fees as set forth and defined in the Rider and a Monthly Program Fee as set forth and defined in the Rider. The amount of the Monthly Program Fee is subject to change by us from time to time. Any change will be
established in the Manual, but any increase in the Monthly Program Fee will not exceed one percent (1%) of the Hotel’s Gross Rooms Revenue in any calendar year, and the cumulative increases in the Monthly Program Fee, during the Term of
this Agreement, will not exceed five percent (5%) of Gross Rooms Revenue. 
 b. Calculation and Payment of Fees. The monthly fees
(described in Subparagraph 7.a.) will be calculated in accordance with the accounting methods of then current Uniform System of Accounts for the Lodging Industry (currently, the Ninth Revised Edition, 1996), or such other accounting methods as may
otherwise be specified by Licensor from time to time in the Manual. “Gross Rooms Revenue,” as used in the calculation of the Monthly Royalty Fee and the Monthly Program Fee under the Agreement, means all revenues derived from the
sale or rental of Guest Rooms (both transient and permanent) of the Hotel, including guaranteed no-show revenue and credit transactions, whether or not collected, at the actual rates charged, less allowances for any Guest Room rebates and
overcharges, and will not include federal, state and local taxes collected directly from patrons or guests. In the event of fire or other insured casualty that results in a reduction of Gross Rooms Revenue, Licensee shall determine and pay Licensor,
from the proceeds of any business interruption or other insurance applicable to loss of revenues, an amount equal to the forecasted Monthly Program Fee and forecasted Monthly Royalty Fee (based upon the Gross Rooms Revenue amount agreed upon between
Licensee and its insurance company(ies)) that would have been paid to Licensor in the absence of such casualty; provided however, Licensor has the right, at Licensor’s request to participate with Licensee in the determination of the forecasted
Gross Rooms Revenue amount for purposes of calculating the Monthly Program Fee and Monthly Royalty Fee. Group booking rebates, if any, paid by you or on your behalf to third party groups for group stays must be included, and not deducted, from the
calculation of Gross Room Revenues. The Monthly Royalty Fee and the Monthly Program Fee will be paid to us at the place we designate on or before the fifteenth (15th) day of each month and will be accompanied by our standard schedule setting
forth in reasonable detail the computation of the Monthly Royalty Fee and Monthly Program Fee for such month. There will be an annual adjustment within ninety (90) days after the end of each operating year so that the total Monthly Royalty Fees
and Monthly Program Fees paid annually will be the same as the amounts determined by audit. We reserve the right to require you to transmit the Monthly Royalty Fee and the Monthly Program Fee and all other payments required under this Agreement by
wire transfer or other form of electronic funds transfer. You agree to bear all costs of wire transfer or other form of electronic funds transfer. 
 c. Room Addition Fee. If you desire to add or construct additional Guest Rooms at the Hotel (the “Room Addition”) at any time after you Open the Hotel under the Licensed Brand, you will pay us a nonrefundable fee equal to
the prevailing per Guest Room initial fee charged to System hotels multiplied by the number of additional Guest Rooms (“Room Addition Fee”). You must pay the Room Addition Fee to us when you submit an application for the Room
Addition, and you must submit that application to us before you enter into any agreement to construct the Room Addition. As a condition to our granting approval of your Room Addition application, we may require you to modernize, rehabilitate or
upgrade the Hotel, subject to Subparagraph 6.b. of this Agreement and to pay us our then prevailing property improvement plan fee (“PIP Fee”) to determine the renovation requirements for the Hotel. We will apply the PIP Fee, if any,
towards payment of the Room Addition Fee. The Room Addition Fee will become non-refundable upon our approval of your Room Addition application. If we disapprove your application, we will refund your Room Addition Fee, less a processing fee and the
PIP Fee, if any. 
  

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 d. Other Fees. You will timely pay all amounts due any of the Entities for any invoices or for
goods or services purchased by or provided to you or paid by any of the Entities on your behalf, including pre-opening sales and operations training. 
 e. Taxes. If any gross receipts, sales, use, excise or any similar tax (the “Gross Receipts Tax”) is imposed upon Hilton based on any payment(s) made by you to Hilton related to this Agreement,
then you must reimburse Hilton for any such Gross Receipts Tax to ensure that the amount of your payment(s) Hilton retains after paying the Gross Receipts Tax, equals the full amount of the payment(s) you are required to pay Hilton had such Gross
Receipts Tax not been imposed on Hilton. 
 This Subparagraph 7.e., does not apply to federal or state income taxes payable by us or Hilton
as a result of its net income relating to any fees collected under this Agreement. 
 f. Application of Fees. We may apply any amounts
received under this Paragraph 7 to any amounts due under this Agreement. If any amounts are not paid when due, such non-payment will constitute a material breach of this Agreement and, in addition, such unpaid amounts will accrue a service charge
beginning on the first day of the month following the due date of one and one-half percent (1 1/2%) per month or
the maximum amount permitted by applicable law, whichever is less. Should we hire counsel to collect any amounts due under this Agreement, and/or any late charges, you will pay our reasonable attorneys’ fees. 
 8. Records and Audits 
 a. Reports. At our
request, you will prepare and deliver to us daily, monthly, quarterly and annual operating statements, profit and loss statements, balance sheets, and other reports (the “Reports”) we require, prepared in the form, and by the
methods and within the time frames, we require. The reports will contain all information we require, including daily rate and room occupancy, and will be certified as accurate in the manner we require. You will also provide us any additional related
information and Reports we may periodically request and permit us to inspect your books and records at all reasonable times. At least monthly, you will prepare a statement that will include all information concerning Gross Rooms Revenue, other
revenues generated at the Hotel, room occupancy rates, reservation data and other information we require (the “Data”). By the fifteenth (15th) day of each month, you will submit to us a statement setting forth the Data for the
previous month and reflecting the computation of the amounts then due under Paragraph 7, in the form and detail we require. 
 b.
Maintenance of Records. You will, in a manner and form satisfactory to us and using accounting and reporting standards we reasonably require, prepare on a current basis (and preserve for no less than the greater of four (4) years or
our record retention requirements), complete and accurate records concerning Gross Rooms Revenue and all financial, operating, marketing and other aspects of the Hotel, and maintain an accounting system that fully and accurately reflects all
financial aspects of the Hotel and its business. These records will include books of account, tax returns, governmental reports, register tapes, daily reports, and complete quarterly and annual financial statements (including profit and loss
statements, balance sheets and cash flow statements). 
 c. Audit. We may require you to have the Gross Rooms Revenue or other monies
due to us computed and certified as accurate by a certified public accountant. During the License Term and for two (2) years thereafter, we and our authorized agents will have the right to verify information required under this Agreement by
requesting, receiving, inspecting and auditing, at all reasonable times, any and all records referred to above wherever they may be located (or elsewhere if we request). If any inspection or audit reveals that you understated or underpaid any
payment due to us that is not fully offset by overpayments, you will promptly pay to us the deficiency plus interest from the date each payment was due until paid at a rate of one and one-half percent (1 1/2%) per month or the maximum amount permitted by applicable law, whichever is less. If the audit or inspection reveals that the underpayment is either
willful, or is for five percent (5%) or more of the total amount owed for the period being inspected, you will also reimburse us for all inspection and audit costs (including reasonable travel, lodging, meals, salaries 

  

 11 

 
and other expenses of the inspecting or auditing personnel). Our acceptance of your payment of any deficiency will not condone your breach of this Agreement,
or waive that breach, or any rights we may have for your breach, including our right to terminate this Agreement as provided in Paragraph 14. If the audit discloses an overpayment, we will credit this overpayment against your future payments under
this Agreement, without interest, or if no future payments are due under this Agreement, we will promptly pay you the amount of the overpayment without interest. 
 d. Ownership of Information. All of the information we obtain from you or about the Hotel or its guests under this Agreement, or under any agreement ancillary to this Agreement (including agreements relating to
the computerized reservation, revenue management, property management, and other system(s) we provide or require), or otherwise related to the Hotel (the “Information”), and all revenues we derive from such lnformation will be our
property. You may use information that you acquire from third parties in operating the Hotel, such as customer data, at any time during or after the License Term to the extent lawful and at your sole risk and responsibility, but only in connection
with operating the Hotel. The Information (except for lnformation you provide to us or Hilton with respect to you and your affiliates, including your respective officers, directors, shareholders, partners or members) will become our Proprietary
lnformation which we may use for any reason as we deem necessary or appropriate, in our judgment, including making an earnings claim in our UFOC. You will abide by all applicable laws pertaining to the privacy and security of personal information,
including, without limitation, local, regional and national requirements applicable to the Hotel (“Privacy Laws”). In addition, you will comply with our standards and policies pertaining to the privacy and security of personal
information, customer relationships and Privacy Laws. 
 9. Indemnity 
 You agree, during and after the License Term, to indemnify us and the Entities, and our successors and assigns, and the members, officers, directors, employees, agents, predecessors, successors and assigns of each
such entity (the “lndemnified Parties”) against, and hold them harmless from, all losses, costs, liabilities, damages, claims, and expenses, including reasonable attorneys’ fees, arising out of or resulting from (i) any
claimed occurrence at the Hotel or arising from, as a result of, or in connection with the development, construction or operation of the Hotel (including the design, construction, financing, furnishing, equipment, acquisition of Supplies or
operation of the Hotel in any way); (ii) any bodily injury, personal injury, death or property damage suffered or claimed by any guest, customer, visitor or employee of the Hotel; (iii) your alleged or actual infringement or violation of
any patent, mark or copyright or other proprietary right owned or controlled by third parties; (iv) your alleged or actual violation or breach of any contract (including any system-wide group sales agreement), federal, state or local law,
regulation, ruling, standard or directive applicable to the Hotel, or of any industry standard; (v) any other business conducted by you or a third party in, on or about the Hotel or its grounds; (vi) any other of your acts, omissions or
obligations or those of anyone associated or affiliated with you or the Hotel or in any way arising out of or related to this Agreement. However, you do not have to indemnify us to the extent damages otherwise covered under this Paragraph 9 are
adjudged by a court of competent jurisdiction to have been the result of the gross negligence or willful misconduct of any of the lndemnified Parties so long as the claims are not asserted on the basis of (i) theories of vicarious liability,
including agency, apparent agency or employment or (ii) our failure to compel you to comply with the provisions of this Agreement. You will give us written notice of any action, suit, proceeding, claim, demand, inquiry or investigation
involving an lndemnified Party within five (5) days of your actual or constructive knowledge of it. At our election, you will defend us and/or the lndemnified Parties against the same, or we may elect to assume (but under no circumstance will
we be obligated to undertake) the defense and/or settlement of the action, suit, proceeding, claim, demand, inquiry or investigation at your expense and risk. We may obtain separate counsel of our choice if we believe your and our interests may
conflict. Our undertaking of defense and/or settlement will in no way diminish your obligation to indemnify the lndemnified Parties and to hold them harmless. You will also reimburse the lndemnified Parties upon demand for all expenses, including
reasonable attorneys’ fees and court costs the lndemnified Parties incur to protect themselves, or to remedy your defaults. Under no circumstances will the lndemnified Parties be required to seek recovery from third parties or otherwise
mitigate their losses to maintain a claim against you, and their failure to do so will in no way reduce the amounts recoverable 

  

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from you by the Indemnified Parties. Further, you will indemnify the lndemnified Parties for any claim for damages by reason of the failure of any
contractor, subcontractor, supplier or vendor doing business with you relating to the Hotel to maintain adequate insurance as required in the Manual. 
 You
agree and acknowledge that you are directly responsible for all fees and charges due and owing Hilton related to the prior franchise license agreement for this Hotel, if any such fees and charges remain outstanding as of the Effective Date.

 10. Right of First Offer: INTENTIONALLY DELETED 
 11. Transfer 
 a. Our Transfer of this Agreement. 
 We have the right to transfer or assign this Agreement or any of our rights, obligations, or assets under this Agreement to any person or legal entity.
You acknowledge and agree that this Agreement is a license for the Licensed Brand only, and the programs that are unique to the Licensed Brand. Therefore, if we transfer or assign this Agreement, your right to use any programs, rights or services
related to or provided by the Entities or their designees, including the Reservation Service, any guest frequency program not unique to the Licensed Brand, and any Marks (except the principal name identified in the Rider), may terminate. The
transferee must assume all of our other obligations to you under this Agreement. 
 b. Your Transfer. 
 We recognize that at some time, you or other persons associated with you or the Hotel may want to sell or transfer all or part of an interest in this
Agreement, in the Licensee, in the Hotel, or in the property on which the Hotel is located (“Hotel Site”). At the same time, you understand and acknowledge that the rights and duties set forth in this Agreement are personal to you,
and that we are entering into this Agreement in reliance on your business skill, financial capacity, and personal character (if you are an individual), and that of your officers, directors, partners, members, stockholders or trustees (if you are a
partnership, company, corporation, trust or other legal entity). As a result, you agree that if you or other persons associated with you or the Hotel desire to sell, transfer or lease an interest in this Agreement, in the Licensee, in the Hotel, or
in the Hotel Site, or in any entity that has an interest in this Agreement, the Licensee, the Hotel, or the Hotel Site, you will abide by the terms of this Subparagraph 11.b. 
 For purposes of this Subparagraph 11.b., the term “control” in all its forms, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of an entity, or of the power to veto major policy decisions of an entity, whether through the ownership of voting securities, by contract, or otherwise. References in this Agreement to
“Equity Interest” mean any direct or indirect beneficial interest in the Licensee, the Hotel and/or the Hotel Site. References in this Agreement to an “Equity Owner” mean the owner of a direct or indirect Equity
Interest. References in this Agreement to a “Publicly Traded Equity Interest” mean any Equity Interest that is traded on any securities exchange or is quoted in any publication or electronic reporting service maintained by the
National Association of Securities Dealers, Inc., or any of its successors, or (ii) any Equity lnterests sold in any offering under the Securities Act of 1933, as amended, so long as such Equity lnterests are held beneficially by no less
than one hundred (100) unrelated persons or entities. In computing changes of Equity Interests, limited partners will not be distinguished from general partners except as provided below. General partners, managing members and other
controlling interests in Licensee will be considered Equity Owners for purposes of this section, regardless whether they have any actual ownership interest in the Licensee. Non-voting equity interests may not qualify as an Equity Interest, in our
judgment. Our judgment will be final if there is any question as to the definition of Equity Interest or as to the computation of relative Equity Interests. You represent that as of the Effective Date the Equity Interests are directly and (if
applicable) indirectly owned as shown on the Rider. References in this Agreement to a “Transfer”, in all its forms, mean any sale, lease, assignment or transfer in any way of a direct or indirect Equity Interest. 
  

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 (1) Transfers That Do Not Require Our Consent or Notification. 
 (a) Privately Held Equity Interests: Less than 25% Change/No Change of Control. An Equity lnterest that is not a Publicly Traded Equity
lnterest may be Transferred without notice to us and without our consent, if after the transaction: (i) less than twenty-five percent (25%) of the Equity lnterest in the Licensee (excluding any Transfer under Subparagraph 11.b.(1)
(b) below) will have changed hands since the date of this Agreement, and (ii) any such Transfer will not result in a change in the controlling Equity Interest. 
 (b) Publicly Traded Equity Interests. A Publicly Traded Equity lnterest may be Transferred without notice to us and without our consent if the Transfer does not result in a change in the ownership of the
controlling Equity Interest. 
 (c) Commercial Leases. You may lease or sublease commercial space in the Hotel that is customarily
subject to lease, or enter into concession arrangements in the ordinary course of business at the Hotel, without notice to us and without our consent. 
 (d) Hotel Site. If the Hotel Site is owned by an unrelated third-party lessor, then such lessor may Transfer an Equity lnterest in the Hotel Site without notice to us and without our consent provided that,
after completion of such Transfer, you remain in compliance with the requirements of Subparagraphs 6.a (24) and 6.a.(25) of this Agreement. 
 (2) Permitted Transfers. Each Transfer of an Equity lnterest described in Subparagraphs 11.b.2.(a) – (e) below is referred to as a “Permitted Transfer.” We will consent to a Permitted Transfer, so long as you
(i) give us sixty (60) days advance written notice of any proposed Permitted Transfer (the “Permitted Transfer Consent Request”), and (ii) submit to us a nonrefundable processing fee of Three Thousand Dollars ($3,000)
with the Permitted Transfer Consent Request to cover our costs to review the Transfer (except that in the case of a Transfer of an Equity Interest which requires registration under any federal or state securities law, you may be required to pay us,
upon our request, an additional processing fee of Five Thousand Dollars ($5,000) as provided for in Subparagraph 11.b.(4) below), and meet the requirements for the particular Permitted Transfer as described below. 
 (a) Affiliate Transfer. You or any Equity Owner as of the Effective Date may sell, lease, transfer or otherwise convey any Equity lnterest to an
Affiliate (each an “Affiliate Transfer”); provided that: (i) such event does not, in our opinion, result in a change in the ownership of the controlling Equity Interest; (ii) you are not then in material default under this
Agreement; (iii) the Affiliate Transfer is not, directly or indirectly, to a Competitor: and (iv) you otherwise satisfy the conditions set forth in Subparagraphs 11.b.(3)(a) – (g), (i) and (j) below that we may require you
to satisfy. For purposes of this Agreement, “Affiliate” means, with respect to any entity, any natural person or firm, corporation, partnership, association, trust or other entity which, directly or indirectly, controls, is
controlled by, or is under common control with, you or any Equity Owners as of the Effective Date. A natural person or entity which has an entity as an Affiliate will also be deemed to be an Affiliate of that entity. 
 (b) Family Transfers. If you or any Equity Owner as of the Effective Date are a natural person. and desire to sell, lease, transfer or otherwise
convey any Equity lnterest to: (i) a member or member of your or any such Equity Owner’s immediate family i.e. spouse, children, parents, siblings (“Family Members”) or (ii) a trust or trusts for the benefit of Equity
Owner or the Equity Owner’s Family Member(s) (each, a “Family Transfer”), in either case, without causing a change of the controlling Equity Interest, we will not withhold our consent to a Family Transfer if you otherwise
satisfy the conditions set forth in Subparagraphs 11.b.(3)(a) - (g), (i), and (j) below that we may require you to satisfy. 
  

 14 

 (c) Transfer Upon Death. Upon the death of a Licensee or Equity Owner, the Equity lnterest may
pass in accordance with such person’s will or, if such person dies intestate, in accordance with laws of intestacy governing the distribution of such person’s estate, without our consent, provided that (i) the Transfer is to a Family
Member or to a legal entity formed by such Family Member(s), and (ii) within one (1) year after the death, such Family Member(s) or entity meets all of our then current requirements for an approved applicant. 
 (d) Bricks and Mortar Transfer. If you own the Hotel and/or Hotel Site, you may sell, lease, transfer or otherwise convey the Hotel and/or the
Hotel Site (a “Bricks and Mortar Transfer”), provided that: (i) if in our reasonable judgment, after completion of the Bricks and Mortar Transfer, you retain legal possession and control of the Hotel and/or the Hotel Site as
ground lessee under a long-term ground lease agreement with an unrelated third-party lessor; (ii) you retain the management control of the Hotel operations, and continue to comply with the requirements of Subparagraph 6.a.(24) and 6.a.(25) of
this Agreement; (iii) you are not then in material default under this Agreement; (iv) the Bricks and Mortar Transfer is not, directly or indirectly, to a Competitor; and (v) you otherwise satisfy the conditions as set forth in
Subparagraphs 11.b.(3)(a) - (g), (i) and (j) below that we may require you to satisfy. If, in our reasonable judgment, the Bricks and Mortar Transfer will result in your loss of possession or control of the Hotel or Hotel Site or
management of the Hotel, the sale will then be considered a Change of Ownership (as defined below) and you must comply with the provisions of Subparagraph 11.b.(3). 
 (e) Privately Held Equity Interests: 25% or Greater Change/No Change of Control. You or any Equity Owner as of the Effective Date may sell, lease, transfer or otherwise convey an Equity lnterest if, after the
completion of such conveyance; (i) twenty-five percent (25%) or more cumulative Equity lnterest in Licensee (excluding any Transfer under Subparagraph 11.b.(1) (b) above) will have changed hands since the Effective Date of this
Agreement; (ii) such event does not, in our opinion, result in a change in the ownership of the controlling Equity Interest; (iii) you are not then in material default under this Agreement; (iv) the Transfer is not, directly or
indirectly, to a Competitor; and (v) you otherwise satisfy the conditions as set forth in Subparagraphs 11.b.(3)(a) - (g), (i) and (j) below that we may require you to satisfy. 
 (3) Change of Ownership Transfer. Any proposed Transfer that does not otherwise qualify as a Transfer that does not require our consent or
notification pursuant to Subparagraph 11.b.(1) or a Permitted Transfer pursuant to Subparagraph 11.b.(2) above will be considered a change of ownership Transfer (a “Change of Ownership”). You must give us at least sixty
(60) days advance written notice of any proposed Change of Ownership. If there is a proposed Change of Ownership and the proposed new owner (the “Transferee Licensee”) desires to continue to operate the Hotel as a System hotel,
the Transferee Licensee must submit to us a complete application for a new franchise license agreement (the “Change of Ownership Application”) accompanied by payment of our then prevailing application fee. If we do not approve the
Change of Ownership Application, we will refund the application fee, less Five Thousand Dollars ($5,000) for processing costs. We may also require you or the Transferee Licensee to pay the then prevailing PIP Fee for us to determine the renovation
requirements for the Hotel. If we approve the Change of Ownership Application, we may require the Transferee Licensee to pay any other applicable fees and charges we then impose for new Licensed Brand franchise licenses. 
 We will process the Change of Ownership Application in accordance with our then current procedures, including review of criteria and requirements
regarding upgrading of the Hotel, credit, background investigation, operations abilities and capabilities, prior business dealings, market feasibility, guarantees, and other factors we consider relevant. We will have sixty (60) days from our
receipt of the completed and signed application to consent or withhold our consent to the Transferee Licensee and/or Change of Ownership. During that time you authorize us to communicate with the Transferee Licensee and to provide to the Transferee
Licensee any information we have about the Hotel and the market in which the Hotel operates. 
  

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 We may, at our option, or as applicable, make our consent subject to satisfaction of certain conditions,
including: 
 (a) You must cure any existing defaults or events that would become defaults with the giving of notice and passage of
time, including, the payment in full at the closing of the Transfer (the “Closing”) of all unpaid obligations owed to us and any Entities by you, and/or the renovation by you (or the Transferee Licensee for a Change of Ownership
Transfer) of all or part of the Hotel; 
 (b) We must receive evidence that insurance coverage, as required by this Agreement, is in
full force and effect on the date of Closing; 
 (c) We must receive payment of the amount of any fees and charges we estimate will
accrue to us or any of the Entities through the date of Closing; 
 (d) At all times pending the Closing, you must remain in
compliance with the terms of this Agreement; 
 (e) You must sign an estoppel and a general release in a form satisfactory to us, of
any and all claims, demands and causes of action that you and your partners, proprietors, directors, officers, shareholders, members, successors and assigns (as the case may be) may or might have against us or any of the Entities, and their
respective officers, directors, members, shareholders, agents, attorneys, contractors and employees in their corporate and individual capacities including claims arising under federal, state and local laws, rules and ordinances; 
 (f) You must submit to us all information related to the Transfer that we may reasonably require, including: (i) copies of any Transfer
agreement(s); (ii) copies of organizational documents; (iii) a description of the proposed ownership; and (iv) financial statements and business information for all participants in the proposed Transfer (collectively, the
“Transfer Information”); 
 (g) You must provide us with evidence and all adequate assurances we may request (as
determined by us in our sole and absolute discretion) of the Transferee Licensee’s (or any new Equity Owner’s) assumption of and ability to perform all, or its pro rata share, of your (or the Transferring Equity Owner’s) obligations
under this Agreement; 
 (h) You must execute our then-current standard form of voluntary termination agreement covering termination
of this Agreement, and cause the Transferee Licensee to execute a new franchise license agreement (“New License”) with us. The New License will (i) be on our then current form for the grant of new franchise licenses,
(ii) contain our then current license terms, and (iii) contain upgrading and other requirements, if any, that we impose; 
 (i) You must cause the guarantor, if any, to execute our then-current standard form of guarantee of franchise license agreement in accordance with the provisions of Subparagraph 6.a.(24) and 14.a.(c) of this Agreement or as otherwise
required under the provisions of the New License.; and 
 (j) The new Equity Owner(s), Transferee Licensee and new Management must
successfully complete any training and orientation programs we require. 
 We have the right to withhold our consent to any proposed Transfer
if any of these conditions are not met to our satisfaction, or if the Transferee Licensee is a Competitor. If we approve the Change of Ownership Application, you will not be liable for any liquidated damages for early termination of this Agreement
as long as the New License is signed by the Transferee Licensee no later than the Closing of the Change of Ownership transaction, and all conditions to our execution of the New License have been satisfied. If we do not approve the Change of
Ownership Application, or if you or the Transferee Licensee do not comply with all these conditions and the Transfer still occurs, then you will be in material default of this Agreement and we will be entitled to all of our remedies, including the
right to terminate this Agreement, and the right to payment of all amounts set forth in Subparagraph 14.c. 
  

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 (4) Public Offering. If you and/or any of the Equity Owners “offer to sell” or
“sell” any “securities” in the Licensee or in the Hotel, you must comply with the terms and conditions set forth in this Subparagraph 11.b.(4). All materials required by federal, state or other applicable law for the offer or
sale of those securities must be submitted to us for review at least twenty (20) days before the date you distribute those materials, or file them with any governmental agency, including any materials to be used in any offering exempt from
registration under federal or state securities laws. Upon our request, you must submit a non-refundable Five Thousand Dollar ($5,000) processing fee to us with the offering documents, and pay any additional costs we may incur in reviewing your
documents, including reasonable attorneys’ fees. You also may not use any of the Marks or otherwise imply Hilton’s or our participation in or endorsement of any securities or any securities offering. We will have the right to
approve any description of this Agreement or of your relationship with us, or any use of the Marks, contained in any “prospectus” or other communications or materials you use in the sale or offer of any “securities.” To the
extent we give you any comments to your documents, you must modify the documents to address those comments, satisfactory to us, before filing or distributing the documents. Our review of these documents will not in any way be considered our
agreement with any statements contained in those documents, including any projections, or our acknowledgment or agreement that the documents comply with any applicable laws. 
 You may not sell any “securities” unless you do so in compliance with all applicable federal and state securities laws, and unless you clearly
disclose to all purchasers and offerees that (i) neither we, nor any Entity, nor any of our or their respective officers, directors, agents or employees, will in any way be deemed an “issuer” or “underwriter” of the
“securities,” and that (ii) we, the Entities, and our respective officers, directors, agents and employees have not assumed and will not have any liability or responsibility for any financial statements, prospectuses or other
financial information contained in any “prospectus” or similar written or oral communication. You agree to indemnify, defend and hold the Indemnified Parties free and harmless of and from any and all liabilities, costs, damages, claims or
expenses arising out of or related to the “sale” or “offer” of any of your “securities” to the same extent as provided in Paragraph 9 of this Agreement. All terms used in this Subparagraph 11.b.(4) will have the same
meaning as in the Securities Act of 1933, as amended. 
 (5) Transfers Not in Accordance With This Agreement. Any purported
Transfer, by operation of law or otherwise, not in accordance with the provisions of this Agreement, will be null and void and will constitute a material breach of this Agreement, which will allow us to terminate this Agreement without giving you
any opportunity to cure. Further, we will have all other rights and remedies, including the right to specific performance or mandatory or prohibitory injunctive relief, to redress any attempt on your part to transfer this Agreement other than in
accordance with the provisions of this Agreement. 
 (6) Pledge to Lending Institution. Notwithstanding any other provision of
this Agreement, you do not need to notify us or obtain our approval if you want to pledge or mortgage the assets of the Hotel or any Equity Interest to a third-party bank or other commercial lending institution that is not a Competitor. However, you
do need to notify us and obtain our consent if you want to pledge or mortgage your interest in this Agreement. We have the right to charge a fee to you for our review of this request. As a condition to our giving our consent to a pledge or mortgage
of this Agreement we will require the lender to sign a lender comfort letter that describes our requirements on foreclosure, and includes an estoppel and general release of Claims that you may have against us, Hilton or the Entities, in a form
satisfactory to us. If it desires to continue to operate the Hotel as a System hotel, the lender will be required to conform to the lender comfort letter signed with us or, if no lender comfort letter was signed, then it must meet the terms and
conditions of this Agreement for a Transfer involving a Change of Ownership. 
  

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 12. Condemnation and Casualty 
 a. Condemnation. You will, at the earliest possible time, give us notice of any proposed taking of any portion of the Hotel by eminent domain. If we agree that the Hotel or a substantial part of the Hotel is to
be taken, we may, at our option and within a reasonable time of the taking (within four months) transfer this Agreement to a nearby location you select. If we approve a new location, and if within one (1) year of the closing of the Hotel you
open a new hotel (or are diligently proceeding toward opening a new hotel and ultimately do so) at the new location in accordance with our specifications and in accordance with our timing requirements, then the new hotel will be deemed to be the
Hotel licensed under this Agreement. If a condemnation takes place and a new hotel does not, for whatever reason, become the Hotel under this Agreement in strict accordance with this Paragraph 12 (or if it is reasonably evident to us that this will
be the case), then we may terminate this Agreement immediately upon notice to you, and we will not require you to pay a Termination Fee under Subparagraph 14.c. 
 b. Casualty. If the Hotel is damaged by fire or other casualty, you will immediately notify us. If the damage or repair requires closing the Hotel, you may choose to repair or rebuild the Hotel according to our
standards, provided you (i) immediately notify us (ii) begin reconstruction within four (4) months after closing, and (iii) reopen the Hotel for continuous business operations as soon as practicable (but in any event within one
(1) year after the closing of the Hotel), giving us ample advance notice of the date of reopening. We may, in our sole discretion, extend the time for commencement of construction and re-opening of the Hotel. Until we determine that the Hotel
can be re-opened as a System hotel, the Hotel will not promote itself as a System hotel, or otherwise identify itself with any of the Marks without our prior written consent. You and we each have the right to terminate this Agreement if you elect
not to repair or rebuild the Hotel as set forth above in this Paragraph 12, provided the terminating party gives the other party sixty (60) days written notice, in which case we will not require you to pay a Termination Fee under Subparagraph
14.c; provided however, if after the termination notice and before the natural expiration of the License Term, you, or any of your Affiliates, have a controlling interest in and/or operate a hotel at this Hotel Site and that hotel is not operated
under a license or franchise from one of the Entities, then you must pay us the Termination Fee upon our demand. 
 c. No Extensions of
Term. Nothing in this Paragraph 12 will extend the License Term. 
 13. Term of License. Unless terminated earlier, this Agreement will expire
without notice on the date set forth on the Rider. You acknowledge and agree that this Agreement is non-renewable and that this Agreement confers upon you absolutely no rights of license renewal whatsoever following the expiration of the License
Term. 
 14. Termination 
 a.
Termination, Suspension or Other Interim Remedies by Us on Advance Notice. In addition to our right to immediately terminate this Agreement upon the occurrence of any of the events listed in Subparagraph 14.b, we have the right to terminate this
Agreement immediately upon notice to you if you fail to cure an Event of Default (as defined in Subparagraph 14.a.(1)) within thirty (30) days after we furnish notice of default to you based on the Event of Default, or, if there is a
non-monetary Event of Default that is incapable of cure within thirty (30) days, if you fail to begin to cure within such thirty (30) day period, or fail to diligently pursue cure of the default or fail to cure the default within the
additional time periods we set forth in the notice of default. In lieu of termination at our option, we may elect to postpone termination for a period of time we alone determine and impose one or more of the Interim Remedies listed below in
subsection (3), and you expressly agree that, we will continue to retain the right which we may exercise at any time we determine to terminate this Agreement. 
 (1) An “Event of Default” will occur if you fail to satisfy or comply with any of the obligations, requirements, conditions, or terms set forth in (i) this Agreement, the Manual (including the
standards in the Manual and minimum performance scores required by the Manual), or any attachment to this Agreement; or (ii) any other agreement you have with us, or any of the Entities, relating to the Hotel, including, any computer system
agreement, or any agreement to manage the Hotel. An Event of Default will also occur if you make any misrepresentations to us, whether in entering into this Agreement, or in performing your obligations to us. 
  

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 (2) Our notice of termination will not relieve you of your obligations under this Agreement or any of its
attachments. 
 (3) After expiration of the applicable notice and cure periods, if any, that would allow us to terminate this Agreement, we
may at anytime elect to postpone termination for a period of time we alone determine and impose any one or more of the following interim remedies (each, an “Interim Remedy”), including the suspension of our obligations under this
Agreement and/or Hilton’s obligations under the Hilton Information Technology System Agreement, and any other agreement between you and us or any of the Entities related to this Hotel and/or the property upon which the Hotel is located
(collectively, “Your Agreements”): 
 (a) We and/or Hilton may suspend the Hotel from any reservation and/or website
services. We may remove the listing of the Hotel from any directories we publish, and from any advertising we publish, and/or remove or suspend the Hotel from the Reservation Service. If we suspend the Hotel from the Reservation Service, we will
have the right to divert reservations previously made for the Hotel to other System hotels. 
 (b) We and/or Hilton may disable all or any
part of the software provided to you under Your Agreements, and/or may suspend any one or more of the information technology and/or network services that we and/or Hilton provide or support under Your Agreements. 
 (c) We and/or Hilton may charge you for: the cost of any computer hardware, computer software, other information technology and/or information
technology service which we and/or Hilton provided to you at no additional charge other than the fees you paid under Your Agreements; costs related to suspending or disabling your right to use any software systems or technology we and/or Hilton
provided to you, together with intervention or administration fees set forth in the Manual; and, the cost of any computer hardware, computer software, other information technology and/or information technology service we and/or Hilton determine to
provide you (at our and Hilton’s option) after the date of our notice of default (each, an “Information Technology Recapture Charge”). An Information Technology Recapture Charge may, at our sole option, take the form of one or
more specific dollar amounts and/or of a percentage increase to any of the fees charged based on a percentage of your Gross Room Revenues under this Agreement and/or Your Agreements (a “Percentage Fee”). If an Information Technology
Recapture Charge consists of one or more specific dollar amounts, then you must pay each such amount to us or Hilton immediately upon demand. If an Information Technology Recapture Charge consists of an increase to a Percentage Fee, you must pay the
increased Percentage Fee when and as Your Agreements required you to pay the original fee (as applicable). You understand and agree that these increases may be levied in any Percentage Fee notwithstanding any other provision of this Agreement and/or
any other of Your Agreements. 
 If, after we impose any Interim Remedy, but before we exercise our reserved right to terminate this
Agreement (as provided above), you completely cure to our satisfaction the subject Event(s) of Default, then we may either elect to terminate this Agreement despite your untimely cure, or, at our sole option, elect not to terminate this Agreement;
if the latter, we will withdraw the Interim Remedy on a going-forward basis. 
 You agree that our exercise of the right to elect Interim
Remedies will not result in actual or constructive termination or abandonment of this Agreement, and that the rights granted to us in this clause (3) to elect Interim Remedies are in addition to, and apart from, any other rights we may have in
this Agreement, including our reserved right to terminate this Agreement. If we exercise the right to elect Interim Remedies, the exercise will not be a waiver of any breach by you of any term, covenant or condition of this Agreement. You will not
be entitled to any compensation, including repayment, reimbursement, refund or offsets, for any fees, charges, expenses or losses you may directly or indirectly incur by reason of our exercise and/or withdrawal of any Interim Remedy. 
  

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 (4) In addition to the cure requirements specified in our written notice of an Event of Default, we may
also require you to cause person(s) or entity(ies) acceptable to us to guarantee all of your obligations under this Agreement by executing our then-current standard form guarantee. 
 b. Immediate Termination by Us. We have the right to terminate this Agreement immediately upon notice to you (or terminate it at the
earliest time permitted by applicable law) if one or more of the following breaches to this Agreement or any of its attachments occur: 
 (1)
After curing any material violation of this Agreement or the Manual, you engage in the same noncompliance within any consecutive twenty four (24) month period, whether or not the noncompliance is corrected after notice; or after we have
notified you of your noncompliance with any of the requirements imposed by this Agreement or the Manual, regardless of materiality, you engage in a pattern of noncompliance with any of those requirements, whether or not the noncompliance is
corrected after notice, which pattern of non-compliance in and of itself will be deemed material; 
 (2) You, or any guarantor of your
obligations under this Agreement: 
 (a) Generally fails to pay its debts as they become due or admits in writing its inability to pay its
debts, or makes a general assignment for the benefit of its creditors; 
 (b) Commences any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its property; 
 (c) Takes any corporate or other action to authorize
any of the actions set forth above in clauses (a) or (b); 
 (d) Suffers initiation of any case, proceeding or other action against it
seeking to have an order for relief entered against it as debtor, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, and such case, proceeding or other action (i) results in the entry of an order for
relief against it which is not fully stayed within seven (7) business days after the entry of the order or (ii) remains undismissed for forty-five (45) days; 
 (e) Allows an attachment to remain on all or a substantial part of the Hotel or of its assets for thirty (30) days; 
 (f) Fails within sixty (60) days of the entry of a final judgment against it in any amount exceeding One Hundred Thousand Dollars ($100,000) to
discharge, vacate or reverse the judgment, or to stay execution of it, or if appealed, to discharge the judgment within thirty (30) days after a final adverse decision in the appeal; 
 (g) Loses possession or the right to possession of all or a significant part of the Hotel or Hotel Site, whether through foreclosure, including, but not
limited to, foreclosure of any lien, trust deed, or mortgage. loss of lease, or for other reasons apart from those described in Paragraph 12; 
 (h) Fails to continue to identify the Hotel to the public as a System hotel, or abandons the operation of the Hotel by failing to operate the Hotel for five (5) consecutive days. or any shorter period after which it is not unreasonable
under the facts and circumstances for us to conclude that you do not intend to continue to operate the Hotel, unless the failure to operate is due to fire, flood, earthquake or similar causes beyond your control, provided that you have taken
reasonable steps to minimize the impact of such events; 
  

 20 

 (i) Contests in any court or proceeding our ownership of the System or any part of the System, or the
validity of any of the Marks; 
 (j) Takes any action toward dissolving or liquidating itself, if it is a corporation, limited liability
company or partnership, except for death of a partner; 
 (k) Or any of the owners of a controlling Equity Interest is or is discovered to
have been convicted of a felony (or any other offense or conduct if we reasonably determine it is likely to adversely reflect upon or affect the Hotel, the System, us and/or any Entity); 
 (l) Conceals revenues, maintains false books and records of accounts, submits false reports or information to us or otherwise attempts to defraud us;

 (m) Becomes a Competitor (as defined in Subparagraph 6.a.(23)) without our prior written consent; 
 (n) Transfers any interest in this Agreement or in the Hotel other than in a transaction that we have approved (unless the Transfer is of a type
described in Paragraph 11 where our approval is not required); 
 (o) Does not purchase or maintain insurance required by this Agreement, or
does not reimburse us for our purchase of insurance on its behalf; or 
 (p) Becomes a “Specially Designated National or Blocked
Person” as defined in Subparagraph 16.o. or fails to comply with the provisions of Subparagraph 16.o., including a breach of the representations set forth in Subparagraph 16.o. or we discover through notice from you or through our own
investigation that the representations set forth in Subparagraph 16.o. are or have become false. 
 (3) Information involving you or your
affiliates, whether provided by you under Subparagraph 6.a.(29) or obtained through Hilton’s or our own investigation, discloses facts concerning you or your affiliates, including your respective officers, directors, shareholders, partners or
members, and/or the Hotel, or title to the property over which the Hotel is constructed or any other property used by the Hotel, including leased commercial space, which, in the reasonable opinion of Hilton is likely to adversely reflect upon or
affect in any manner, any gaming licenses or permits held by the Entities or the then current stature of any of the Entities with any gaming commission, board, or similar governmental or regulatory agency, or the reputation or business of any of the
Entities; 
 (4) We make a reasonable determination that continued operation of the Hotel by you will result in an imminent danger to public
health or safety; or 
 (5) Any guarantor of your obligations under this Agreement breaches its guarantee, if any, or any guarantee fails to
be a continuing obligation fully enforceable against the person(s) signing the guarantee, or if there is any inadequacy of the guarantee or guarantor, and the guarantor fails to provide adequate assurances to us as we may reasonably request.

 c. Liquidated Damages upon Termination by Us. If we terminate the Agreement under Subparagraphs 14.a. or 14.b. above, you
acknowledge that your default will cause substantial damage to us, the actual amount of which will be difficult to determine. Therefore, you agree that if we terminate this Agreement under Subparagraphs 14.a. or 14.b. as a result of your default or
breach of this Agreement, or if you unilaterally terminate this Agreement without cause, which is not authorized and which would be a material breach of this Agreement, then, upon termination, we will be entitled to recover, and you must promptly
pay us upon demand: (i) all outstanding fees and charges owed to us, Hilton and the Entities under this Agreement for periods up to the date of termination, including amounts accrued but not yet billed; plus (ii) as liquidated damages for
the future Monthly Royalty Fees and Monthly Program Fees we will lose, a “Termination Fee” calculated by multiplying the average monthly Gross Rooms Revenue of the Hotel for the twenty-four (24) full calendar-month period
immediately preceding the month of 

  

 21 

 
termination by the sum of the Monthly Royalty Fee and Monthly Program Fee percentage under this Agreement excluding any percentage fee discount (this
product, the “Average Monthly Fees”), then multiplying the Average Monthly Fees by thirty-six (36), or by such lesser multiple as would represent the remaining full or partial months between the date of termination and the
expiration of the License Term. If the Hotel has been open and operating as a System hotel for less than twenty-four (24) months, then in calculating the Termination Fee we will multiply thirty-six (36) by the greater of a) the Average
Monthly Fees from the date the Hotel opened as a System hotel through the month immediately preceding the month of termination, and b) the average Monthly Royalty Fees and Monthly Program Fees per Guest Room owed to us by all System hotels in
operation over the twelve (12) full calendar-month period immediately preceding the month of termination, multiplied by the number of Guest Rooms in the Hotel. The Termination Fee is intended to compensate us only for the value lost in Monthly
Royalty Fees and Monthly Program Fees as a result of the early termination of the Agreement, and you agree that you remain liable for all other obligations and claims under the Agreement, including obligations following termination under
Subparagraphs 5.c., 5.d., 8.c., 14.d. and Paragraph 9 and liabilities arising out of your breach or default. 
 d. De-identification of
Hotel Upon Termination. Upon expiration or termination of this Agreement for any reason, you will immediately stop holding yourself out to the public as a System hotel, and will take whatever action is necessary to assure that no use is made of
any part of the System (including the Marks, all forms of advertising and other indicia of operation as a System hotel), and discontinue use of all distinguishing indicia of System and HHC hotels, including such indicia on exterior and interior
signs, stationery, operating equipment and supplies, Internet sites, brochures and other promotional material at or in connection with the Hotel or otherwise. You will return to us the Manual and all other proprietary materials, remove all
distinctive System features of the Hotel, including the primary freestanding sign down to the structural steel, and take all other actions (“De-identification Actions”) we require to preclude any possibility of confusion on the part
of the public that the Hotel is still using all or any part of the System or is otherwise holding itself out to the public as a System hotel. If within thirty (30) days after the termination or expiration of this Agreement, you fail to comply
with this paragraph, we and our agents, at your expense, may enter the premises of the Hotel to perform the De-identification Actions without being deemed guilty of or liable for trespass or any other tort, and make or cause to be made such changes
at your expense. You will pay all such expenses that we incur upon demand. If you fail to take all De-identification Actions, we and Hilton will be entitled to recover all losses, costs, expenses and damages caused by that failure. We and Hilton
will also be entitled to relief by injunction, and any other right or remedy at law or in equity to enforce our rights under this Agreement. 
 e. Special Termination. You recognize the additional harm by way of confusion for national accounts, greater difficulty in re-entering the market, and damage to goodwill of the Marks that we will suffer if (i) you (or any of
your Affiliates) cause two (2) or more franchise license agreements for the Licensed Brand between yourself (or any of your Affiliates) and us to be terminated prior to the expiration date of such agreements within twelve (12) months of
each other (if we terminate those agreements as a result of your breach or default, you (or your Affiliate) will be deemed to have caused the termination) or (ii) this Agreement terminates or is terminated by us following an unapproved Transfer
to a Competitor (each of these will be referred to as a “Special Termination”). In the case of a Special Termination, you must promptly pay us upon demand, as a substitute for the amount we may demand pursuant to Subparagraph 14.c.
(ii) above, two (2) times the Termination Fee payable under Subparagraph 14.c (ii) in addition to any other amounts you owe pursuant to Subparagraph 14.c. This Subparagraph 14.e. is not triggered upon mutual voluntary termination of
this Agreement. 
 15. Relationship of Parties 
 a. No Agency Relationship. You are an independent contractor. Neither of us is the legal representative or agent of the other, or has the power to obligate (or has the right to direct or supervise the daily affairs of) the other for
any purpose. You expressly acknowledge that we have a business relationship based entirely on, and defined by, the express provisions of this Agreement and that no partnership, joint venture, agency, fiduciary or employment relationship is intended
or created by reason of this Agreement. Neither we nor any of the Entities will have any responsibility to any person for any 

  

 22 

 
debts, liabilities, damages, claims or expenses related to the establishment, construction or operation of the Hotel or arising out of or related to your
policies, procedures, practices or alleged practices in the operation of the Hotel or any other business conducted at the Hotel. 
 b.
Notices to Public Concerning Your Independent Status. You will take all steps reasonably necessary to minimize the chance that a claim will be made against us for anything that occurs at the Hotel, or for the acts or omissions of you or
anyone associated or affiliated with you or the Hotel, including steps mandated by us in the Manual or otherwise. You will not incur any obligation or indebtedness on our behalf. All contracts for the Hotel’s operations and services at the
Hotel will be in your name or in the name of your management company. You will not enter into or sign any contracts in our name or using the Marks (including the name of the Licensed Brand) or any acronyms or variations of the Mark. You will
disclose in all dealings with suppliers and third parties that you are an independent entity and that we have no liability for your debts. 
 16.
Miscellaneous 
 a. Severability and Interpretation. The remedies provided in this Agreement are cumulative. These remedies are not
exclusive of any other remedies to which you or we may be entitled in case of any breach or threatened breach of the terms and provisions of this Agreement. If any provision of this Agreement is held to be unenforceable, void or voidable, that
provision will be ineffective to the extent of the prohibition without in any way invalidating or affecting the remaining provisions of this Agreement, and all remaining provisions will continue in effect. If any provision of this Agreement is held
unenforceable due to its scope, but may be made enforceable by limiting its scope, the provision will be considered amended to the minimum extent necessary to make it enforceable. This Agreement will be interpreted without interpreting any provision
in favor of or against either of us by reason of the drafting of the provision, or either of our positions relative to the other. Any covenant, term or provision of this Agreement that provides for continuing obligations after the expiration or
termination of this Agreement will survive any expiration or termination. To the extent that the provisions of this Agreement provide for periods of notice less than those required by applicable law, or provide for termination, cancellation,
non-renewal or the like other than in accordance with applicable law, those provisions will, to the extent they do not comply with applicable law, be superseded by said law, and we will comply with applicable law in connection with each of these
matters. 
 b. Controlling Law. This Agreement will become valid when signed by both of us. We each agree that the State of New York
has a deep and well developed history of business decisional law. For this reason, we each agree that except to the extent governed by the United States Trademark Act of 1946 (Lanham Act; 15 U.S.C. ¶ 1050 et seq.), as amended, this Agreement,
all relations between us, and any and all disputes between us, whether sounding in contract, tort, or otherwise, are to be exclusively construed in accordance with and/or governed by (as applicable) the laws of the State of New York without recourse
to New York (or any other) choice of law or conflicts of law principles. If, however, any provision of this Agreement would not be enforceable under the laws of New York, and if the Hotel is located outside of New York and the provision would be
enforceable under the laws of the state in which the Hotel is located, then the provision in question (and only that provision) will be interpreted and construed under the laws of that state. Nothing in this section is intended to invoke the
application of any franchise, business opportunity, antitrust, “implied covenant,” unfair competition, fiduciary or any other doctrine of law of the State of New York or any other state which would not otherwise apply absent this
Subparagraph 16.b. 
 Because, as stated above, the State of New York has a well developed history of business decisional law and because the
courts of the State of New York are best suited to interpret and apply that law, we each agree that any litigation arising out of or related to this Agreement, any breach of this Agreement, the relationship between us, and, any and all disputes
between us, whether sounding in contract, tort, or otherwise, will be submitted to and resolved exclusively by a court of competent jurisdiction located in the City and State of New York. You waive, and agree never to assert, move or otherwise claim
that this venue is for any reason improper, inconvenient, prejudicial or otherwise inappropriate (including, any claim under the judicial doctrine of forum non conveniens). 
  

 23 

 If our mutual choice of venue in the City and State of New York is not honored by the subject court(s),
then we each agree that any litigation arising out of or related to this Agreement; any breach of this Agreement; the relationship between us; and, any and all disputes between us, whether sounding in contract, tort, or otherwise, will instead be
submitted to and resolved exclusively by a court of competent jurisdiction located in the City and County of Los Angeles, California. You waive, and agree never to assert, move or otherwise claim that this substitute venue is for any reason
improper, inconvenient, prejudicial or otherwise inappropriate (including, any claim under the judicial doctrine of forum non conveniens). 
 c. Exclusive Benefit. This Agreement is exclusively for our and your benefit, and none of the obligations of either of us in this Agreement will run to, or be enforceable by, any other party (except for covenants in favor of the
Entities, which covenants will run to and be enforceable by the Entities or their successors and assigns), or give rise to liability to a third party, except as otherwise specifically set forth in this Agreement. 
 d. Entire Agreement. You and we acknowledge that we want all terms of this business relationship defined in this written Agreement, and that
neither of us wants to enter into a business relationship with the other in which any terms or obligations are subject to any oral statements or in which oral statements serve as the basis for creating rights or obligations different than or
supplementary to the rights and obligations set forth in this Agreement. Therefore, you and we agree that this Agreement and its attachments will be construed together and will supersede and cancel any prior and/or contemporaneous discussions or
writings (whether described as representations, inducements, promises, agreements or by any other term) between us. We each agree that we placed, and will place, no reliance on any such discussions or writings. You agree that no claims,
representations or warranties of earnings, sales, profits, success or failure of the Hotel have been made to you. This Agreement and its attachments is the entire agreement between us and contains all of the terms, conditions, rights and obligations
between us with respect to the Hotel and any other aspect of the relationship between us. No change, modification, amendment or waiver of any of the provisions of this Agreement will be effective or binding on us unless it is in writing,
specifically identified as an amendment to this Agreement, signed by one of our officers, and which may include an estoppel and general release of Claims that you may have against us, Hilton or the Entities, in a form satisfactory to us. If any
provision of this Agreement is inconsistent with the Manual, the provisions of this Agreement will prevail. No failure by us or by any of the Entities to exercise any power given us under this Agreement or to insist on strict compliance by you with
any of your obligations, and no custom or practice at variance with the terms of this Agreement, will be considered a waiver of our or any Entity’s right to demand exact compliance with the terms of this Agreement. 
 e. Consent; Business Judgment. Wherever our consent or approval is required in this Agreement, unless the provision specifically indicates
otherwise, we have the right to withhold our approval at our option taking into consideration our assessment of the long-term interests of the System overall. You and we recognize, and any arbitrator or judge is affirmatively advised that if those
decisions are supported by our business judgment, neither an arbitrator nor a judge nor any other person reviewing those decisions will substitute his, her or its judgment for our judgment. When the terms of this Agreement specifically require that
we not unreasonably withhold our approval or consent, if you are in default or breach under this Agreement, any withholding of our approval or consent will be considered reasonable. Our approvals and consents will not be effective unless given in
writing. In no event may you make any claim for money damages based on any claim that we have unreasonably withheld or delayed any consent or approval to a proposed act by you under the terms of this Agreement. You also may not claim damages by way
of set-off, counterclaim or defense for our withholding of consent. Your sole remedy for the claim will be an action or proceeding to enforce the provisions of this Agreement by specific performance or by declaratory judgment. 
 f. Notices. All notices must be in writing and will be effective on the earlier of (i) the day it is sent by facsimile with a
confirmation of receipt; or (ii) one business day after it is sent by next business day delivery service; or (iii) the third business day after it is sent by first-class or certified mail or other 

  

 24 

 
form of express delivery to the appropriate patty at the following single address, or such other single address as may be designated by the party to be
notified (which, in no event is a P.O. Box). If to us, the notice should be sent to our principal executive offices, addressed to “General Counsel.” The current address of our principal executive offices is as follows: 9336 Civic Center
Drive, Beverly Hills, CA 90210. If to you, then to the address set forth for you in the Rider. Notice to you is deemed given if 1) delivered in writing by one of the delivery methods set forth above and 2) addressed to the principal correspondent
for notice (“Principal Legal Correspondent”) at the address you designate in the Rider. If you want to change your address or the Principal Legal Correspondent, you must notify us in writing in accordance with the delivery procedure
set forth in this Subparagraph 16.f. If, however, you designate a change in the Principal Legal Correspondent, and the person providing the notice is other than the then currently designated Principal Legal Correspondent, we reserve the right to
require evidence, acceptable to us in our sole discretion, that the person requesting the change has the authority to do so. Except for notices of actions to be taken pursuant to Paragraph 14, you hereby grant us permission to send communications to
you by facsimile for the purposes of notices under this Agreement, including this Subparagraph 16.f., and/or to provide information from us to you by facsimile or email, subject to any applicable laws. To the extent there are any regulations or laws
prohibiting such mass communications and to the extent they are waivable, you hereby waive them. 
 g. General Release. You and your
heirs, administrators, executors, agents and representatives and their respective successors and assigns release, remise, acquit and forever discharge us and the Entities and their officers, directors, employees, agents, representatives and their
respective successors and assigns from any and all actions, claims, causes of action, suits, rights, debts, liabilities, accounts, agreements, covenants, contracts, promises, warranties, judgments, executions, demands, damages, costs and expenses,
whether known or unknown at this time, of any kind or nature, absolute or contingent, at law or in equity, on account of any matter, cause or thing whatsoever that has happened, developed or occurred before you sign and deliver this Agreement to us
(collectively, “Claims”). This release will survive the termination of this Agreement. 
 h. Estoppel Certificate.
Whenever we reasonably request it, you will deliver to us an estoppel certificate in the form we require as to the matters described in this Agreement. 
 i. Descriptive Headings. The descriptive headings in this Agreement are for convenience only and will not control or affect the meaning or construction of any provision in this Agreement. 
 j. Representations and Warranties. You warrant, represent and agree that all statements you made in the Application you submitted to us in
anticipation of this Agreement and all other documents and information you submitted to us are true, correct and complete as of the date of this Agreement and that you will continue to update them so that they are always true, correct and complete.
You further represent and warrant to us that (i) you have the full legal power and authority to enter into this Agreement and that by entering into this Agreement you will not be breaching any agreement to which you are a party, and
(ii) if you are a corporation, limited liability company, or other entity, (x) you are, and throughout the term of this Agreement will be, duly formed and validly existing, in good standing in the state in which you are organized, and are
and will be authorized to do business in the state in which the Hotel is located and (y) the individual who executed this Agreement on your behalf has the authority to do so. You hereby indemnify and hold us harmless from any breach of these
representations and warranties. These warranties and representations will survive the termination of this Agreement. 
 k.
Time. Time is of the essence in this Agreement. 
 I. Counterparts. This Agreement may be signed in counterparts, each of
which will be considered an original. 
 m. Performance Requirements/Responsibilities. Attachment A, setting forth certain of
your performance conditions and requirements, is incorporated by reference and made a part of this Agreement. 
  

 25 

 n. Informational Copies. You acknowledge that we may provide, but are not required to provide,
copies of any information we provide to you concerning the Hotel (such as quality assurance reports and default notices) to the owner and/or lessor of the Hotel. 
 o. Blocked Persons or Entities. You represent and warrant to us and to Hilton that to your actual or constructive knowledge: (1) neither you (including your directors and officers), nor any of your
Affiliates, or any of your funding sources we require you to specify, is identified on the list of the U.S. Treasury’s Office of Foreign Assets Control (OFAC); (2) neither you nor any of your Affiliates, is directly or indirectly owned or
controlled by the government of any country that is subject to an embargo imposed by the United States government; or by any individual that is subject to an embargo imposed by the United States government; and (3) neither you nor any of your
Affiliates is (a) acting on behalf of any country or individual that is subject to such an embargo, or (b) is involved in business arrangements or other transactions with, any country or individual that is subject to such an embargo. You
agree that you will notify Hilton in writing immediately upon the occurrence of any event which would render the foregoing representations and warranties of this Subparagraph 16.o. incorrect. Notwithstanding anything to the contrary in this
Agreement, you may not allow or sustain a Transfer to a Specially Designated National or Blocked Person (as herein defined below) or to an entity in which a Specially Designated National or Blocked Person has an interest. For purposes of this
Agreement, “Specially Designated National or Blocked Person” means (i) a person or entity designated by OFAC (or any successor office or agency of the U.S. government) from time to time as a “specially designated national
or blocked person” or similar status, (ii) a person or entity described in Section 1 of U.S. Executive Order 13224, issued on September 23, 2001, or (iii) a person or entity otherwise identified by government or legal
authority as a person with whom we or Hilton are prohibited from transacting business. For your information, the U.S. government has published a list of such designations, and the text of the Executive Order, under the internet website address
www.ustreas.gov/offices/enforcement/ofac. 
 17. WAIVER OF JURY TRIAL 
 TO THE EXTENT EITHER PARTY INITIATES LITIGATION INVOLVING THIS AGREEMENT OR ANY ASPECT OF THE RELATIONSHIP BETWEEN US (EVEN IF OTHER PARTIES OR OTHER
CLAIMS ARE INCLUDED IN SUCH LITIGATION), ALL THE PARTIES WAIVE THEIR RIGHT TO A TRIAL BY JURY. THIS WAIVER WILL APPLY TO ALL CAUSES OF ACTION THAT ARE OR MIGHT BE INCLUDED IN SUCH ACTION, INCLUDING CLAIMS RELATED TO THE ENFORCEMENT OR INTERPRETATION
OF THIS AGREEMENT, ALLEGATIONS OF STATE OR FEDERAL STATUTORY VIOLATIONS. FRAUD, MISREPRESENTATION, OR SIMILAR CAUSES OF ACTION, AND IN CONNECTION WITH ANY LEGAL ACTION INITIATED FOR THE RECOVERY OF DAMAGES BETWEEN OR AMONG US OR BETWEEN OR AMONG ANY
OF OUR OWNERS, AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS. 
 [THIS AGREEMENT CONTINUES WITH AN ATTACHMENT A AND ATTACHMENT B, WHICH ARE A
PART OF THIS AGREEMENT.] 
  

 26 

 ATTACHMENT A - PERFORMANCE CONDITIONS: 
 CHANGE OF OWNERSHIP 
  

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

  

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

  

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

  

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

 You are responsible for making certain that the Hotel and the Renovation Work complies in all respects with all Legal Requirements. For purposes of this
Agreement, “Legal Requirements” means all public laws, statutes, ordinances, orders, rules, regulations, permits, licenses, authorizations, directions and requirements of all governments and governmental authorities, which, now or
hereafter, may apply to the construction, completion, equipping and Opening of the Hotel and the operation of the Hotel, including environmental, zoning, building, and life safety. We and Hilton will have the right to, and you will arrange for us
and Hilton to, participate in all progress meetings during the development and construction of the Hotel, to have access to all 

  

 Attachment A - 1 

 
contract and construction documents relating to the Hotel, and to have access to the Hotel during reasonable business hours to visit the Hotel and the
Renovation Work. However, neither we nor Hilton are obligated to participate in progress meetings, or visit the Hotel and the Renovation Work, and our and Hilton’s participation and site visits are not to be considered as a representation of
the adequacy of the construction, the structural integrity, or the sufficiency of mechanical and electrical systems for the Hotel. Before we approve your Plans, your architect or other certified professional must certify to us that the Plans either
comply with, or do not require compliance with, the Americans with Disabilities Act and its architectural guidelines as well as all applicable state and local codes for accessible facilities. Within ten (10) days after completion of the
Renovation Work, your architect, general contractor or other certified professional must provide us with a certificate stating that the as-built premises either comply with, or are not required to comply with, the Americans with Disabilities Act and
its architectural guidelines and all applicable state and local codes for accessible facilities. 
 The Manual may not be used by you or any
design or construction professional for any hotel project other than the Hotel. 
  

	E.	Commencement; Completion. You will begin the Renovation Work on or before the date specified on the Rider and will continue the Renovation Work uninterrupted (except to the
extent continuation is prevented by events beyond Licensee’s control, such as acts of God, third party strikes, acts of terrorism, war, or general governmental restrictions (“Force Majeure”)) until it is completed. For purposes
of this Paragraph E, Force Majeure does not include your own financial inability, inability to obtain financing, inability to obtain permits or any other events unique to you or the Hotel. Notwithstanding any Force Majeure, or any other matter, the
Renovation Work must be completed and the Hotel must be furnished, equipped, and comply with this Agreement no later than the date specified in the Rider (the “Renovation Work Completion Date”). We will have the sole right to
determine whether the Renovation Work has been completed in accordance with this Agreement, the approved Plans and Designs, the Manual and the PIP. 

  

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

  

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

  

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

  

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

  

	J.	 Limitation of Liability. We will have no liability or obligation with respect to design and construction of the Hotel. We have furnished to you that portion
of the Manual which contains the technical standards and specifications to assist you in completing the Renovation Work. You acknowledge you have studied these standards and specifications and satisfied yourself that the Hotel can be designed,
furnished and equipped in accordance with these standards and specifications and that you and your design and construction consultants and contractors have 

  

 Attachment A - 2 

	 	 
the necessary resources and skills to do so. The Manual does not encompass the architectural, structural, mechanical or electrical safety, adequacy,
integrity or efficiency of the design or compliance with applicable Legal Requirements. We do not undertake to approve the Hotel as complying with governmental requirements or as being safe for guests or other third parties and we have no
responsibilities in these areas. You must indemnify us with regard to compliance with these matters to the extent provided in Paragraph 9 of this Agreement. 

  

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

  

	L.	Performance of Agreement. You agree to satisfy all of the terms and conditions of this Agreement, and to equip, supply, staff and otherwise make the Hotel ready to continue
to operate under our standards. As a result of your efforts to comply with the terms and conditions of this Agreement, you will incur significant expense and expend substantial time and effort. You acknowledge and agree that we will have no
liability or obligation to you for any losses, obligations, liabilities or expenses you incur if we terminate this Agreement because you have not complied with the terms and conditions of this Agreement. 

 (Remainder of page left intentionally blank.) 
  

 Attachment A - 3 

 ATTACHMENT B - 
 RIDER TO FRANCHISE LICENSE AGREEMENT 
 Effective Date: MAY 9, 2006 
 Licensor Name: HILTON INNS, INC., a Delaware corporation 
 Licensed
Brand: Hilton Garden Inn 
 Initial Approved Hotel Name (Trade Name): Hilton Garden Inn San Diego/Rancho Bernardo 
 Principal Name in Licensed Brand: Hilton 
  

			
	Licensee Name and Address:	  	Apple Seven Hospitality Management, Inc.
		  	814 East Main Street
		  	Richmond, VA 23219
		
	Principal Legal Correspondent:	  	Attn: Krissy Gathright
		  	Phone: 804/344-8121
		  	Fax: 804/344-8129
		  	Email: kgathright@applereit.com

 Address of Hotel: 17240 Bernardo Center Drive, San Diego, CA 92128 
 Initial Number of Approved Guest Rooms: 200 
 Plans Submission Dates:
N/A 
  

			
	Renovation Commencement Date:	  	On the Effective Date
		
	Renovation Work Completion Date:	  	In accordance with the PIP attached hereto as Exhibit A

 Licensee agrees that the Renovation Commencement Date and Renovation Work Completion Date may be extended by
written notice from Licensor in its discretion. 
 Expiration of Term: At midnight on August 13, 2023 
 Monthly Program Fee: Four and Three-Tenths percent (4.3%) of the Hotel’s Gross Rooms Revenue, as defined in Subparagraph 7.b. of the Agreement, for the preceding
calendar month. The Monthly Program Fee may be subject to change in accordance with Subparagraph 7.a. above. 
 Monthly Royalty Fee: FIVE percent
(5%) of the Hotel’s Gross Rooms Revenue, as defined in Subparagraph 7.b. of the Agreement, for the preceding calendar month. 
 Additional
Requirements/Special Provisions: 
  

	•	 	All references to Opening Date in this Agreement are hereby amended to read “Effective Date.” 

  

	•	 	Paragraph 10 – Right of First Offer: Intentionally deleted 

  

	•	 	Paragraph 11.b. – Your Transfer: See insert 

  

 Attachment B - 1 

	•	 	Paragraph 11.b.(1)(a) – Privately Held Equity Interests: See insert 

 Your Ownership Structure: APPLE SEVEN HOSPITALITY MANAGEMENT, INC. 
  

					
	 Name (Shareholder, Partner, Member, and Manager)
	  	 Nature of
Ownership Interest
	  	%
Interest
	 Apple Seven Hospitality, Inc.
	  	Sole Shareholder	  	100%
			
	 •      Apple REIT Seven, Inc., sole shareholder 100% (a public REIT)
	  		  	
	TOTAL	  		  	100%

 IN WITNESS WHEREOF, the parties have executed this Agreement, which has an effective date as of the date
set forth in this Rider (the “Effective Date”). 
  

							
	LICENSEE:	 	LICENSOR:
		
	 APPLE SEVEN HOSPITALITY MANAGEMENT, INC.,
 a
Virginia corporation
	 	 HILTON INNS, INC.,
 a Delaware
corporation

				
	By:	 	 /s/ Justin G. Knight
	 	By:	 	 /s/ Dawn P. Beghi

	Name:	 	Justin G. Knight	 	Name:	 	Dawn P. Beghi
	Title:	 	President	 	Title:	 	Vice President – Franchise Administration
	Executed on:	 	5/3/06	 		 	

  

 Attachment B - 2 

 PRODUCT IMPROVEMENT REPORT 
 SAN DIEGO/RANCHO BERNARDO, CA 
 Conducted On: 03/21/2006 by Jay Eubank

 Desktop 
 THE IMPROVEMENTS
IDENTIFIED IN THIS REPORT ARE BASED ON CONDITIONS EXISTING ON THE ABOVE DATE. PROPERTY TRANSACTIONS OCCURRING AFTER 180 DAYS WILL REQUIRE AN UPDATED REPORT. ANY WAIVERS AND/OR VARIANCES ISSUED ARE CANCELLED AND NO LONGER EFFECTIVE AT TIME OF
SALE. CLOSING OR ANY OTHER AMENDMENT TO THE ORIGINAL FRANCHISE AGREEMENT. HILTON HOTELS DOES NOT AND CANNOT WARRANT CONFORMANCE WITH INTERPRETATION OF THE AMERICANS WITH DISABILITIES ACT (“ADA”) AND THE ADA ACCESSIBILITY GUIDELINES.
OWNERSHIP IS RESPONSIBLE FOR COMPLIANCE WITH APPLICABLE PROVISIONS OF THE ADA. APPROPRIATE COUNSEL TO ENSURE COMPLIANCE IS URGED. 
  

									
	Commercial Facilities
					
	 	  	 Start Date
	  	 Scope of work
	  	 Finish Date
	  	 Status

					
		  		  	Corridors/Elevators/Stairwells	  		  	
					
	1	  	 FLA Effective Date
	  	[Stairwells - Stairwell doors must have the word “Exit” at the bottom of the corridor side of the doors.	  	180 Days	  	BRAND REQUIREMENT
					
		  		  	Pavilion	  		  	
					
	2	  	 FLA Effective Date
	  	Pavilion - TV lounge requires a 27” TV as a minimum.	  	180 Days	  	BRAND REQUIREMENT
					
		  		  	Recreation Facilities	  		  	
					
	3	  	 FLA Effective Date
	  	pool - repair the pool bottom to remove all discoloration and present a “like new” condition or resurface the pool bottom paint is not acceptable	  	180 Days	  	CONDITION
					
	4	  	 FLA Effective Date
	  	pool - repair the pool furniture to a “like new” condition or install new pool furniture	  	180 Days	  	CONDITION
	
	Food and Beverage Facilities
					
	 	  	 Start Date
	  	 Scope of work
	  	 Finish Date
	  	 Status

					
		  		  	Restaurant Facilities	  		  	
					
	5	  	 FLA Effective Date
	  	restaurant - clean the carpet to remove stains and discoloration or install new carpet and carpet pad.	  	180 Days	  	CONDITION
					
	6	  	 FLA Effective Date
	  	restaurant - clean all upholstered seating to remove stains or install new chairs and booths, re-upholstery is an acceptable alternative.	  	180 Days	  	CONDITION
					
	7  	  	 FLA Effective Date
	  	Restaurant - scrub, refinish, paint or replace the door leading to the kitchen to remove scuffs and scars.	  	180 Days	  	CONDITION

  

 4 

									
	
	Guest Rooms
					
	 	  	 Start Date
	  	 Scope of work
	  	 Finish Date
	  	 Status

	 8
	  	 FLA Effective Date
	  	Bedroom - Provide a protective plastic bag in the closet for storage of an extra pillow and blanket for rooms with sofa sleeper.	  	180 Days	  	BRAND REQUIREMENT
					
	 9
	  	 FLA Effective Date
	  	Bedroom - Install the Hilton Garden Inn Duvet program for all beds, remove the blanket, add the required duvet, duvet cover and decorative pillow. Install 2 Brentwood pillows and 2 Down pillows
on all king beds. In all Q/Q rooms install 2 Brentwood pillows and 1 Down pillow on one bed and the opposite configuration on the accompanying bed (6 pillows per room, 3 each style).	  	180 Days	  	BRAND REQUIREMENT
					
	 10
	  	 FLA Effective Date
	  	Bedroom - Replace bed mattresses with GSS Sleep System Mattress (brand standard). 10 King Rooms or 10% of King Room Inventory (whichever is greater) Initial 10% to be completed no later than
12.31.06 with the balance of the King rooms to be completed no later than December 31, 2008.	  	12/31/2006	  	BRAND REQUIREMENT
					
	 11
	  	 FLA Effective Date
	  	Bedroom - Install Herman Miller Mirra ergonomic desk chairs in 10 king rooms or 10% of king rooms (whichever is greater). Item to be completed no later than 12.31.06.	  	12/31/2006	  	BRAND REQUIREMENT
					
	 12
	  	 FLA Effective Date
	  	Bedroom - The new desk chair, bedding system and television required in the ten king rooms must be installed in the same ten guest rooms.	  	6/30/2007	  	BRAND REQUIREMENT
					
	 13
	  	 FLA Effective Date
	  	Bedroom - Install 26” Flat screen Tube televisions, as approved by Hilton Garden Inn, in 10 King rooms or 10% of King Std inventory (whichever is greater) no later than
6/30/2007	  	6/30/2007	  	BRAND REQUIREMENT

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

 5 

 GUARANTEE OF FRANCHISE LICENSE AGREEMENT 
 HILTON GARDEN INN SAN DlEGO/RANCHO BERNARDO 
 THIS DOCUMENT AFFECTS AND WAIVES
IMPORTANT RIGHTS OF THE PERSONS AND ENTITIES SIGNING IT. 
 THIS GUARANTEE OF FRANCHISE LICENSE AGREEMENT (the “Guarantee”) is
made by APPLE SEVEN HOSPITALITY OWNERSHIP, INC. (the “Guarantor”), as of the 9TH day of MAY, 2006, in connection with that certain Franchise License Agreement dated as of MAY 9 2006, (referred to herein
collectively, along with all applicable amendments, addenda, riders, supplemental agreements and assignments as the “License Agreement”), by and between HILTON INNS, INC. (“Licensor”) and APPLE SEVEN HOSPITALITY
MANAGEMENT, INC. (“Licensee”) covering that certain Hilton Garden Inn San Diego/Rancho Bernardo located at 17240 Bernardo Center Drive, San Diego, CA 92128 (the “Hotel”). 
 WHEREAS, Guarantor has represented that it owns all right, title and interest in the Hotel and the real property where the Hotel is or will be
located; 
 WHEREAS, Guarantor has represented that it has a direct or indirect ownership interest in, or is an affiliate of,
Licensee; 
 WHEREAS, Licensor would not have entered into the License Agreement absent Guarantor’s commitment to deliver this
Guarantee; and 
 WHEREAS, Guarantor acknowledges that it will receive considerable benefits as a result of Licensee holding the
license pursuant to the License Agreement. 
 NOW, THEREFORE, for good and valuable consideration, including but not limited to the
execution of the License Agreement by Licensor, the undersigned hereby unconditionally and irrevocably guarantees the following: (i) the full and prompt payment of all sums owed by Licensee to Licensor, and to Licensor’s affiliates, under
the License Agreement at the times and according to the terms expressed therein, including, but not limited to, all fees and charges, interest, default interest, and other costs and fees (including, without limitation, attorneys’ fees in
connection with enforcement of the License Agreement); and (ii) the performance of all other obligations of Licensee arising under the License Agreement (Items (i) and (ii) are hereinafter collectively referred to as the
“Obligations”). 
 By signing this Guarantee, Guarantor also agrees that: 
 1. Guarantee of Payment and Performance. Guarantor’s liability under this Guarantee is a guarantee of payment and performance of the License
Agreement and not of collectibility. Guarantor’s liability hereunder will continue until all Obligations under the License Agreement have been satisfied in full and will not be limited or affected in any way by transfer of the Hotel or any
disability of Licensee. Guarantor further agrees that should Licensee cease to exist or become unable to perform its obligations under the License Agreement, Guarantor will be deemed Licensee under the License Agreement and will perform all
obligations of Licensee existing or accruing thereunder. 
 Upon default under the License Agreement by Licensee and notice of such default
from Licensor to Guarantor, Guarantor will immediately make each payment and perform each obligation required by Licensee under the License Agreement, without any requirement that Licensor first send a notice of default to Licensee under the License
Agreement, and Guarantor hereby waives any and all rights it may otherwise have under statutory or common law relating to any notice requirements thereunder. 
 2. Waivers of Certain Rights and Defenses. This Guarantee is absolute and unconditional. Guarantor hereby waives the rights or benefits otherwise provided to sureties or guarantors under any state or federal
law, except as provided in this Guarantee. This waiver is expressly intended to waive any and all benefits and defenses under California Civil Code (“CC”) Sections 2819, 

  

 1 

 
2845, 2849, and 2850 and any benefits or defenses available under the laws of any other state that may be deemed to be applicable to this Guarantee,
including, without limitation, the right to require Licensor to (i) obtain Guarantor’s consent to any modification of the License Agreement or any other agreement between Licensor and any party other than Guarantor, (ii) proceed
against any collateral that may be given for any of the Obligations, or (iii) pursue any other right or remedy for Guarantor’s benefit, and agrees that Licensor may proceed against Guarantor for the Obligations guaranteed herein without
taking any action against Licensee or any other guarantor or pledgor. Guarantor agrees that Licensor may unqualifiedly exercise, in its sole discretion, any or all rights and remedies available to it against Licensee or any other guarantor or
pledgor without impairing Licensor’s’ rights and remedies in enforcing the Guarantee, under which Guarantor’s liabilities will remain independent and unconditional. Guarantor acknowledges that Licensor’s exercise of certain of
such rights or remedies may affect, or eliminate Guarantor’s right of subrogation or recovery against Licensee and that Guarantor may incur a partially or totally nonreimbursable liability under this Guarantee. 
 3. Additional Waivers. No failure or delay on Licensor’s part in exercising any power or privilege hereunder will impair any such power,
right, or privilege or be construed as a waiver of or an acquiescence therein. 
 4. Guarantee Made With Full Knowledge. Guarantor has
had the opportunity to review the matters discussed and contemplated by the License Agreement, including the remedies Licensor may pursue against Licensee in the event of a default under the License Agreement and Licensee’s financial condition
and ability to perform under the License Agreement. Guarantor further agrees to keep Licensor fully informed on all aspects of Licensee’s financial condition and the performance of Licensee’s obligations to Licensor and that Licensor has
no duty to disclose to Guarantor any information pertaining to Licensee or to notify Guarantor of Licensee’s default under the License Agreement. 
 5. Guarantee Continues if Payments Are Avoided or Recovered from Licensor. If all or any portion of the Obligations guaranteed hereunder are paid or performed, Guarantor’s obligations hereunder will
continue and remain in full force and effect if all or any part of such payment or performance is avoided or recovered directly or indirectly from Licensor as a preference, fraudulent transfer or otherwise, irrespective of any notice of revocation
given by Guarantor prior to such avoidance or recovery. 
 6. Financial Information. Upon Licensor’s’ request, Guarantor
will promptly deliver to Licensor complete and current financial statements and tax returns and such other financial information about Guarantor as Licensor may reasonably request. 
 7. Changes, Waivers, Revocations, and Amendments in Writing. No terms or provisions of this Guarantee may be changed, waived, revoked, or amended
without Licensor’s prior written consent. Should any provision of this Guarantee be determined by a court of competent jurisdiction to be unenforceable, all of the other provisions will remain effective. This Guarantee embodies the entire
agreement among the parties hereto with respect to the matters set forth herein and supersedes all prior agreements among the parties with respect to the matters set forth herein. No course of prior dealing among the parties, no usage of trade, and
no parol or extrinsic evidence of any nature will be used to supplement, modify, or vary any of the terms hereof. There are no conditions to the full effectiveness of this Guarantee. Notwithstanding the foregoing, Licensor is willing to enter into
its then-current standard form termination of guarantee agreement in order to release the Guarantor from future obligations under the Licensee Agreement upon the following conditions: (i) Licensor receives evidence that Licensee owns fee simple
title to the real property on which the Hotel will be sited (i.e., a conformed copy of the deed submitted for recording or like document bearing recording information) or that the Licensee is a tenant under a long-term ground lease with an unrelated
third party ground lessor in an arms length transaction for a term equal to, or longer than, the term of the License Agreement, (ii) Licensor receives a written request by Guarantor to enter into our standard form termination of guarantee
agreement, and (iii) Licensee has not been in default at any time twenty-four (24) months prior to the date of Licensee’s request for termination of guarantee; and (iv) Licensee, at the time of Guarantor’s request to
terminate the Guarantee, is in good standing under the License Agreement. 
  

 2 

 8. Other Guarantees. This Guarantee is in addition to the guarantees of any other guarantors and
any and all of Guarantor’s other guarantees of Licensee’s liabilities to Licensor. This Guarantee will in no way limit or lessen any other liability, howsoever arising, Guarantor may have for the payment of any other obligation of Licensee
to Licensor. 
 9. Representations and Warranties. The following representations and warranties will be continuing representations and
warranties so long as any Obligations remain unpaid or unperformed: 
 (a) Guarantor has the requisite power to execute, deliver, and perform
the terms and provisions of the Guarantee and has taken all necessary corporate actions to authorize the execution, delivery and performance by it of the Guarantee. This Guarantee is a valid, binding, and legally enforceable obligation of Guarantor
in accordance with its terms. 
 (b) The execution and delivery of this Guarantee are not, and the performance of this Guarantee will not be,
in contravention of, or in conflict with, any agreement, indenture, or undertaking to which Guarantor is a party or by which it or any of its property is or may be bound or affected. 
 (c) Guarantor owns all rights, title, and interest in and to the Hotel [and the real property where the Hotel is or will be located. 
 (d) Guarantor has a direct or indirect interest in, or is an affiliate of, Licensee. 
 10. Additional Provisions. 
 (a) If
there is more than one Guarantor named herein, any reference to Guarantor will mean any one and all of them and the singular will include the plural. All obligations of each such Guarantor to Licensor of whatever nature are hereby jointly and
severally guaranteed by each Guarantor. 
 (b) Each Guarantor hereby jointly and severally holds harmless, and agrees to defend, protect, and
indemnify Licensor from any actions, causes of action, liabilities, damages, losses, and fees (including attorneys’ fees) and all other claims of every nature which may arise as a result of any dispute between or among any of Guarantor and any
other persons or entities. 
 (c) Licensor may assign this Guarantee without in any way affecting Guarantor’s liability. Licensor will
endeavor to give Guarantor notice of such assignment, but the failure to do so will not affect Guarantor’s liability. This Guarantee will inure to the benefit of Licensor and its successors and assigns and will bind Guarantor and
Guarantor’s heirs, executors, administrators, successors, and assigns. 
 (d) Any notices, requests and demands to be made hereunder
will be in writing and will be effective on the earlier of (i) the day it is sent by facsimile with a confirmation of receipt; or (ii) the day it is delivered by express delivery service; or (iii) the third business day after it is
sent by first class or certified mail, to the appropriate party at the address, or to the fax number, set forth below, or such other address or fax number of which the notifying party has been notified: 
  

			
	If to Licensor:	  	HILTON INNS, INC.
		  	9336 Civic Center Drive
		  	Beverly Hills, CA 90210
		  	Attention: General Counsel
		  	Phone: (310) 278-4321
		  	Fax: (310) 278-9218
		
	If to Guarantor:	  	APPLE SEVEN HOSPITALITY OWNERSHIP, INC.
		  	814 East Main Street
		  	Richmond, VA 23219
		  	Attn: Krissy Gathright
		  	Phone: (804) 344-8121
		  	Fax: (804) 344-8129

  

 3 

 (e) If Guarantor is a partnership, limited liability company, or other unincorporated association, its
liability will not be affected by changes in the name of the entity or in its membership. 
 (f) This Guarantee is executed in accordance
with, and pursuant to, the terms of the License Agreement and any default hereunder will be a default under the License Agreement. 
 (g)
Guarantor represents and warrants to Hilton Hotels Corporation and its subsidiaries and affiliates (collectively, “Hilton”) that to Guarantor’s actual or constructive knowledge: (1) neither Guarantor (including its directors and
officers), nor any of its Affiliates (as defined in the License Agreement), or, the funding sources that Hilton requires you to specify for any of the foregoing is identified on the list of “Specially Designated Nationals or Blocked
Persons” maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”); (2) neither Guarantor nor any of its Affiliates is directly or indirectly owned or controlled by the government of any
country that is subject to an embargo imposed by the United States government; or by any individual that is subject to an embargo imposed by the United States government; (3) neither Guarantor nor any of its Affiliates is (a) acting on
behalf of any country or individual that is subject to such an embargo, or (b) is involved in business arrangements or other transactions with, any country or individual that is subject to such an embargo. Guarantor agrees that it will notify
Hilton in writing immediately upon the occurrence of any event which would render the foregoing representations and warranties of this Subparagraph 10.g. incorrect. For purposes of this Guarantee, “Specially Designated National or Blocked
Person” means (i) a person or entity designated by OFAC from time to time as a “specially designated national or blocked person” or similar status, (ii) a person or entity described in Section 1 of U.S. Executive Order
13224, issued on September 23, 2001, or (iii) a person or entity otherwise identified by government or legal authority as a person with whom Hilton is prohibited from transacting business. Note to Guarantor: The U.S. government has
published a list of such designations and the text of the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac. 
 11. Controlling Law. This Guarantee will become valid when signed by both parties. Both parties hereby agree that the State of New York has a deep and well developed history of business decisional law. For this
reason, both parties agree that except to the extent governed by the United States Trademark Act of 1946 (Lanham Act; 15 U.S.C. ¶ 1050 et seq), as amended, this Guarantee, all relations between Licensor, Guarantor and Licensee, and any
and all disputes between Licensor, Guarantor and Licensee, whether sounding in contract, tort, or otherwise, are to be exclusively construed in accordance with and/or governed by (as applicable) the laws of the State of New York without recourse to
New York (or any other) choice of law or conflicts of law principles. If, however, any provision of this Guarantee would not be enforceable under the laws of New York, and if the Hotel is located outside of New York and the provision would be
enforceable under the laws of the state in which the Hotel is located, then the provision in question (and only that provision) will be interpreted and construed under the laws of that state. Nothing in this section is intended to invoke the
application of any franchise, business opportunity, antitrust, “implied covenant,” unfair competition, fiduciary or any other doctrine of law of the State of New York or any other state which would not otherwise apply absent this
paragraph. 
 Because, as stated above, the State of New York has a well developed history of business decisional law and because the courts
of the State of New York are best suited to interpret and apply that law, each party hereby agrees that any litigation arising out of or related to this Guarantee, any breach of this Guarantee, the relationship between Licensor, Guarantor and
Licensee, and, any and all disputes between Licensor, Guarantor and Licensee, whether sounding in contract, tort, or otherwise, will be submitted to and resolved exclusively by a court of competent jurisdiction located in the City and State of New
York. Guarantor hereby waives, and agrees never to assert, move or otherwise claim that this venue is for any reason improper, inconvenient, prejudicial or otherwise inappropriate (including, any claim under the judicial doctrine of forum non
conveniens). 
  

 4 

 If the parties’ mutual choice of venue in the City and State of New York is not honored by the
subject court(s), then the parties hereby agree that any litigation arising out of or related to this Guarantee; any breach of this Guarantee; the relationship between Licensor, Guarantor and Licensee; and, any and all disputes between Licensor,
Guarantor and Licensee, whether sounding in contract, tort, or otherwise, will instead be submitted to and resolved exclusively by a court of competent jurisdiction located in the City and County of Los Angeles, California. Guarantor hereby waives,
and agrees never to assert, move or otherwise claim that this substitute venue is for any reason improper, inconvenient, prejudicial or otherwise inappropriate (including, any claim under the judicial doctrine of forum non conveniens). 

12. WAIVER OF JURY TRIAL. GUARANTOR HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY WITH RESPECT TO THE ENFORCEMENT OF THIS GUARANTEE. THIS WAIVER
WILL APPLY TO ALL CAUSES OF ACTION THAT ARE OR MIGHT BE INCLUDED IN SUCH ACTION, INCLUDING BUT NOT LIMITED TO CLAIMS RELATING TO THE ENFORCEMENT OR INTERPRETATION OF THIS GUARANTEE, ALLEGATIONS OF STATE OR FEDERAL STATUTORY VIOLATIONS, FRAUD,
MISREPRESENTATION, OR SIMILAR CAUSES OF ACTION, AND A CONNECTION WITH ANY LEGAL ACTION INITIATED FOR THE RECOVERY OF DAMAGES ARISING UNDER THIS GUARANTEE. 
 THE UNDERSIGNED GUARANTOR ACKNOWLEDGES THAT IT WAS AFFORDED THE OPPORTUNITY TO READ THIS DOCUMENT CAREFULLY AND TO REVIEW IT WITH AN ATTORNEY OF ITS CHOICE BEFORE SIGNING IT. GUARANTOR ACKNOWLEDGES HAVING READ AND
UNDERSTOOD THE MEANING AND EFFECT OF THIS DOCUMENT BEFORE SIGNING IT. 
 IN WITNESS WHEREOF, the parties have executed this Guarantee which
has an effective date as of the date first written above. 
  

							
	GUARANTOR:	 	LICENSOR:
		
	 APPLE SEVEN HOSPITALITY OWNERSHIP, INC.,
 a
Virginia corporation
	 	 HILTON INNS, INC.,
 a Delaware
corporation

				
	By:	 	 /s/ Justin G. Knight
	 	By:	 	 /s/ Dawn P. Beghi

	Name:	 	Justin G. Knight	 	Name:	 	Dawn P. Beghi
	Title:	 	President	 	Title:	 	Vice President - Franchise Administration

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