Document:

2003 Non-Employee Directors Stock Option Plan

  
 Exhibit 10.7 
  
 APPLE HOSPITALITY FIVE, INC. 
  
 2003
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN 
  
 EFFECTIVE JANUARY 2, 2003 
  
 1.    Purpose.  The purpose of this Apple Hospitality Five, Inc. 2003 Non-Employee Directors
Stock Option Plan (the “Plan”) is to encourage ownership in Apple Hospitality Five, Inc. (the “Company) by non-employee members of the Board, in order to promote long-term stockholder value and to provide non-employee members of the
Board with an incentive to continue as directors of the Company. 
  
 2.    Definitions.  As used in the Plan, the following terms have the meanings indicated: 
  
 (a)    “Act” means the Securities Exchange Act of 1934, as amended. 
  
 (b)    “Board” means the board of directors of the Company. 
  
 (c)    “Code” means the Internal Revenue Code of 1986, as amended. 
  
 (d)    “Company” means Apple Hospitality Five, Inc., a Virginia corporation. 
  
 (e)    “Date of Grant” means the date as of which an Eligible Director is automatically
awarded an Option pursuant to Section 7. 
  
 (f)    “Disability”
or “Disabled” means a physical or mental condition that prevents the director from performing his customary duties with the Company. The Board shall determine whether a Disability exists on the basis of competent medical evidence, and such
determination shall be conclusive. 

  
 (g)    “Eligible Director” means a
director described in Section 4. 
  
 (h)    “Employer” means the
Company. 
  
 (i)    “Fair Market Value” means, on any given date, (i)
if the Units are traded on an exchange, the closing registered sales prices of the Company Stock on such day on the exchange on which it generally has the greatest trading volume, (ii) if the Units are traded on the over-the-counter market, the
average between the closing bid and asked prices on such day as reported by NASDAQ, or (iii) if the Units are not traded on any exchange or over-the-counter market, the fair market value shall be determined by the Board using any reasonable method
in good faith. 
  
 (j)    “Initial Closing” means the first closing of
the Offering that will occur after the Minimum Offering is achieved. 
  
 (k)    “Insider” means a person subject to Section 16(b) of the Act. 
  
 (l)    “Minimum Offering” means the sale of 4,761,905 Units pursuant to the Offering. 
  
 (m)    “Offering” means, collectively, (1) the sale of up to $500,000,000 in Units to the public and the registration of such shares with the Securities and Exchange
Commission, as authorized by resolutions of the Board (the “Initial Offering”), and (2) the issuance of any additional Units as authorized by resolutions of the Board from time to time, which issuance occurs before the termination of this
Plan (the “Additional Offerings”). 
  
 (n)    “Option” means
a right to acquire Units granted under the Plan, at a price determined in accordance with the Plan. 

 
 2 

  
 (o)    “Unit” means one common
share and one Series A preferred share, no par value, of the Company. If the par value of the common shares or Series A preferred shares is changed, or in the event of a change in the capital structure of the Company (as provided in Section 12), the
Units resulting from such a change shall be deemed to be Units within the meaning of the Plan. 
  
 3.    Administration.  The Plan shall be administered by the Board. Options shall be granted as described in Section 7. However, the Board shall have all powers vested in it by the terms of the
Plan, including, without limitation, the authority (within the limitations described herein) to prescribe the form of the agreement embodying the grant of Options, to construe the Plan, to determine all questions arising under the Plan, and to adopt
and amend rules and regulations for the administration of the Plan as it may deem desirable. Any decision of the Board in the administration of the Plan, as described herein, shall be final and conclusive. The Board may act only by a majority of its
members in office, except that members thereof may authorize any one or more of their number or any officer of the Company to execute and deliver documents on behalf of the Board. No member of the Board shall be liable for anything done or omitted
to be done by him or any other member of the Board in connection with the Plan, except for his own willful misconduct or as expressly provided by statue. 
  
 4.    Participation in the Plan.  Each director of the Company who is not otherwise an employee of the Employer or any subsidiary of the Company and was not an
employee of the Employer or subsidiary for a period of at least one year before the Date of Grant shall be eligible to participate in the Plan. 
  
 5.    Securities Subject to the Plan.  Subject to Section 12 of the Plan, there shall be reserved for issuance under the Plan an aggregate of 45,000 Units plus 1.8%
of the total number 

 
 3 

 of Units issued in the Offering in excess of the Minimum Offering, which shall be authorized, but unissued Units. Units allocable to Options or
portions thereof granted under the Plan that expire or otherwise terminate unexercised may again be subjected to an Option under the Plan. 
  
 6.    Non-Statutory Stock Options.  All options granted under the Plan shall be non-statutory in nature and shall not be entitled to special tax treatment under Code section 422.

  
 7.    Award, Terms, Conditions and Form of Options.  Each Option shall be
evidenced by a written agreement in such form as the Board shall from time to time approve, which agreement shall comply with and be subject to the following terms and conditions: 
  
 (a)    Automatic Award of Option. 
  
 (i)    As of the 15th day following the Initial Closing, each Eligible Director shall automatically receive an Option to purchase 5,500 Units plus 0.0125% of the number of Units in excess of the Minimum Offering sold by the Initial
Closing. 
  
 (ii)    As of each June 1 during the years 2003 through 2008
(inclusive), each Eligible Director shall automatically receive an Option to purchase 0.02% of the total number of Units issued and outstanding on that date. 
  
 (iii)    As of the election as a director of any new person who qualifies as an Eligible Director, such Eligible Director shall
automatically receive an Option to purchase 5,500 Units. 
  
 (iv)    If at any
time under the Plan there are not sufficient Units available to fully permit the automatic Option grants described in this paragraph, the Option grants shall be reduced pro rate (to zero if necessary) so as not to exceed the number of Units
available. 
  

 
 4 

  
 (b)    Option Exercise
Price.  The Option exercise price shall be the Fair Market Value of the Units subject to the Option on the Date of Grant. 
  
 (c)    Options Not Transferable.  An Option shall not be transferable by the optionee otherwise than by will, or by the laws of descent and distribution, and shall
be exercised during the lifetime of the optionee only by him. An Option transferred by will or by the laws of descent and distribution may be exercised by the optionee’s personal representative within one year of the date of the optionee’s
death to the extent the optionee could have exercised the Option on the date of his death. No Option or interest therein may be transferred, assigned, pledged or hypothecated by the optionee during his lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process. 
  
 (d)    Exercise of Options.  In no event shall an Option be exercisable earlier than six months from the later of the Date of Grant or the date of approval of the Plan by shareholders of the
Company. Furthermore, no Option may be exercised: 
  
 (i)    Before any amendment
or restatement that requires shareholder approval pursuant to Section 13 of the Plan, is approved by shareholders of the Company; 
  
 (ii)    Unless at such time the optionee is a director of the Company, except that he may exercise the Option within three years of the date he ceases to be a director of the
Company if he ceased to be a director more than six months after the Date of Grant of the Option; 
  
 (iii)    After the expiration of ten years from the Date of Grant; and 

 
 5 

  
 (iv)    Except by written notice to the
Company at its principal office, stating the number of Units the optionee has elected to purchase, accompanied by payment in cash and/or by delivery to the Company of the Units (valued at Fair Market Value on the date of exercise) in the amount of
the full Option exercise price for the shares of Units being acquired thereunder. 
  
 8.    Withholding.  If the Company is required by law to withhold federal or state income taxes when an Option is exercised, the Company shall have the right to retain or sell without
notice Units having a Fair Market Value sufficient on such date or dates as may be determined by the Board (but not more than five business days prior to the date on which such Units would otherwise have been delivered) to cover the amount of any
federal or state income tax required to be withheld or otherwise deducted and paid with respect to such payment and the exercise of the Option, remitting any balance to the optionee; provided, however, that the optionee shall have the right to make
other arrangements satisfactory to the Company or to provide the Company with the funds to enable it to pay such tax. Notwithstanding the foregoing, the Company shall not sell Units if the Optionee is an Insider and such sale will cause the Optionee
to incur a liability under Section 16(b) of the Act. 
  
 9.    Modification, Extension
and Renewal of Options.  The Board shall have the power to modify, extend or renew outstanding Options and to authorize the grant of new options in substitution therefor, provided that any such action may not enhance the rights of the
optionee without shareholder approval or have the effect of altering, enhancing or impairing any rights or obligations of any person under any Option previously granted without the consent of the optionee. 
  
 10.    Termination.  The Plan shall terminate upon the earlier of: 

 
 6 

  
 (a)    The adoption of a resolution of the
Board terminating the Plan; or 
  
 (b)    The date on which the Company’s
existence terminates (provided, however, that if the existence of the Company is reinstated as permitted by law, the Plan shall continue during the effective period of any reinstatement, subject to earlier termination pursuant to Section 10(a)
above). 
  
 No termination of the Plan shall without his consent materially and adversely affect any of the rights or obligations of any
person under any Option previously granted under the Plan. 
  
 11.    Limitation of Rights.

  
 (a)    No Right to Continue as a Director.  Neither the
Plan nor any action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain any person as a director for any period of time. 
  
 (b)     No Shareholders Rights Under Options.  An optionee shall have no rights as a
shareholder with respect to Units covered by his Option until the date of exercise of the Option, and, except as provided in Section 12, no adjustment will be made for dividends or other rights for which the record date is prior to the date of such
exercise. 
  
 12.    Changes in Capital Structure 
  
 (a)    In the event of a stock dividend, stock split or combination of stock, recapitalization or
merger in which the Company is the surviving corporation or other change in the Company’s capital stock (including, but not limited to, the creation or issuance to shareholders generally of rights, options or warrants for the purchase of common
shares or preferred shares of the Company), the number of units to be subject to the Plan and to Options then outstanding or to be granted thereunder, the maximum 

 
 7 

  
 number of units or securities which may be delivered under the Plan, the exercise
price and other relevant provisions shall be appropriately adjusted by the Board, whose determination shall be binding on all persons. If the adjustment would produce fractional units with respect to any unexercised Option, the Board may adjust
appropriately the number of units covered by the Option so as to eliminate the fractional units. 
  
 (b)    If the Company is a party to a consolidation or a merger in which the Company is not the surviving corporation, a transaction that results in the acquisition of substantially all of the Company’s
outstanding stock by a single person or entity, or a sale or transfer of substantially all of the Company’s assets, the Board may take such actions with respect to outstanding Options as the Board deems appropriate. 
  
 (g)    Notwithstanding anything in the Plan to the contrary, the Board may take the foregoing actions
without the consent of any optionee and the Board’s determination shall be conclusive and binding on all persons for all purposes. 
  
 13.    Amendment of the Plan.  The Board (except as provided below) may suspend or discontinue the Plan or revise or amend the Plan in any respect; provided, however, that without
approval of the shareholders of the Company no revision or amendment shall increase the number of shares subject to the Plan (except as provided in Section 12) or materially increase the benefits accruing to participants under the Plan. The Plan
shall not be amended more than once every six months other than an amendment required to comply with changes in the Internal Revenue Code or the Employee Retirement Income Security Act of 1974 or regulations thereunder. Notwithstanding the
foregoing, the Board may unilaterally amend the Plan and the terms of Options granted hereunder to ensure compliance with Rule 16b-3 of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934, as amended.

 
 8 

 14.    Notice.  All notices and other communications required or permitted to be
given under this Plan shall be in writing and shall be deemed to have been duly given if delivered personally or mailed first class, postage prepaid, as follows: (a) if the Company – at its principal business address to the attention of the
President; (b) if to any participant – at the last address of the participant know to the sender at the time the notice or other communication is sent. 
  
 15.    Governing Law.  The terms of this Plan shall be governed by the laws of the Commonwealth of Virginia without regard to conflicts
of law. 
  
 IN WITNESS WHEREOF, the Company has caused this Plan to be executed this 2nd day of January 2003.

  
 
	 
	 APPLE HOSPITALITY FIVE, INC.
 
	 
	 By:
 	 	   /s/    Glade M. Knight
 

	  	 	 Glade M. Knight,
 
	  	 	 Chairman of the Board
 

 

 
 9Hotel Lease Agreement

  
 Exhibit 10.8 
  
 HOTEL LEASE AGREEMENT 
  
 EFFECTIVE AS OF
JANUARY 3, 2003 
  
 BETWEEN 
  
 AHF HOUSTON WESTCHASE LIMITED PARTNERSHIP 
 A VIRGINIA LIMITED PARTNERSHIP 
  
 AS LESSOR 
  
 AND 
  
 AHF SERVICES LIMITED PARTNERSHIP 
 A VIRGINIA LIMITED PARTNERSHIP 
  
 AS LESSEE 

 

  
 TABLE OF CONTENTS 
  

	  	  	  	  	 Page
 

	 ARTICLE 1 LEASED PROPERTY; OTHER DEFINITIONS
 	  	 1
 
	         1.2.
 	  	 Definitions
 	  	 2
 
	 ARTICLE 2 TERM; TERMINATION
 	  	 14
 
	         2.1.
 	  	 Term
 	  	 14
 
	         2.2.
 	  	 Lessor's Option to Terminate Lease
 	  	 15
 
	         2.3.
 	  	 Transition Procedures
 	  	 15
 
	         2.4.
 	  	 Holding Over
 	  	 16
 
	 ARTICLE 3 RENT; RENT ADJUSTMENTS
 	  	 17
 
	         3.1.
 	  	 Rent
 	  	 17
 
	         3.2.
 	  	 Confirmation of Percentage Rent and Sundry Rent
 	  	 21
 
	         3.3.
 	  	 Additional Charges
 	  	 22
 
	         3.4.
 	  	 Net Lease; No Termination, Abatement, Etc
 	  	 22
 
	         3.5.
 	  	 Material Changes in Economic Climate
 	  	 23
 
	         3.6.
 	  	 Rent Adjustment: Basic Assumptions Incorrect
 	  	 24
 
	 ARTICLE 4 ANNUAL BUDGETS; BOOKS AND RECORDS
 	  	 25
 
	         4.1.
 	  	 Annual Budget
 	  	 25
 
	         4.2.
 	  	 Books and Records
 	  	 25
 
	 ARTICLE 5 IMPOSITIONS; HOTEL COSTS
 	  	 26
 
	         5.1.
 	  	 Payment of Impositions
 	  	 26
 
	         5.2.
 	  	 Notice of Impositions.
 	  	 27
 
	         5.3.
 	  	 Adjustment of Impositions.
 	  	 27
 
	         5.4.
 	  	 Utility Charges
 	  	 27
 
	         5.5.
 	  	 Insurance Premiums
 	  	 27
 
	         5.6.
 	  	 Franchise Fees
 	  	 27
 
	         5.7.
 	  	 Ground Rent
 	  	 27
 
	 ARTICLE 6 LEASED PROPERTY; LESSEE'S PERSONAL PROPERTY
 	  	 27
 
	         6.1.
 	  	 Ownership of the Leased Property
 	  	 27
 
	         6.2.
 	  	 Lessee's Personal Property
 	  	 27
 
	         6.3.
 	  	 Lessor's Lien
 	  	 28
 
	         6.4.
 	  	 Lessor's Option to Purchase Assets of Lessee
 	  	 28
 
	 ARTICLE 7 CONDITION AND USE OF LEASED PROPERTY
 	  	 28
 
	         7.1.
 	  	 Condition of the Leased Property
 	  	 28
 
	         7.2.
 	  	 Use of the Leased Property
 	  	 29
 
	         7.3.
 	  	 Lessor to Grant Easements, Etc
 	  	 30
 
	 ARTICLE 8 LESSEE'S COMPLIANCE WITH LAW; ENVIRONMENTAL COVENANTS
 	  	 30
 
	         8.1.
 	  	 Compliance with Legal and Insurance Requirements, Etc.
 	  	 30
 
	         8.2.
 	  	 Legal Requirement Covenants.
 	  	 30
 
	         8.3.
 	  	 Environmental Covenants
 	  	 32
 
	 ARTICLE 9 MAINTENANCE AND REPAIRS; ENCROACHMENTS AND RESTRICTIONS
 	  	 34
 
	         9.1.
 	  	 Maintenance and Repairs
 	  	 34
 
	         9.2.
 	  	 Encroachments, Restrictions, Etc
 	  	 35
 
	 ARTICLE 10 ALTERATIONS AND IMPROVEMENTS; FF&E RESERVE
 	  	 36
 

 

 
 i 

 
	         10.1.
 	  	 Alterations
 	  	 36
 
	         10.2.
 	  	 Salvage
 	  	 36
 
	         10.3.
 	  	 Joint Use Agreements
 	  	 36
 
	         10.4.
 	  	 [Reserved].
 	  	 36
 
	         10.5.
 	  	 Furniture, Fixture and Equipment Allowance.
 	  	 36
 
	 ARTICLE 11 COMPLIANCE WITH FRANCHISE
 	  	 37
 
	         11.1.
 	  	 Compliance with Franchise Agreement and Management Agreement
 	  	 37
 
	 ARTICLE 12 PERMITTED LIENS AND CONTESTS
 	  	 37
 
	         12.1.
 	  	 Liens
 	  	 37
 
	         12.2.
 	  	 Permitted Contests
 	  	 38
 
	 ARTICLE 13 INSURANCE REQUIREMENTS
 	  	 38
 
	         13.1.
 	  	 General Insurance Requirements
 	  	 38
 
	         13.2.
 	  	 Replacement Cost
 	  	 40
 
	         13.3.
 	  	 Waiver of Subrogation
 	  	 40
 
	         13.4.
 	  	 Form Satisfactory, Etc.
 	  	 40
 
	         13.5.
 	  	 Increase in Limits
 	  	 41
 
	         13.6.
 	  	 Blanket Policy
 	  	 41
 
	         13.7.
 	  	 No Separate Insurance
 	  	 41
 
	         13.8.
 	  	 Reports On Insurance Claims
 	  	 41
 
	 ARTICLE 14 CASUALTY INSURANCE PROCEEDS; RECONSTRUCTION
 	  	 42
 
	         14.1.
 	  	 Insurance Proceeds
 	  	 42
 
	         14.2.
 	  	 Reconstruction in the Event of Damage or Destruction Covered by Insurance
 	  	 42
 
	         14.3.
 	  	 Reconstruction in the Event of Damage or Destruction Not Covered by Insurance
 	  	 43
 
	         14.4.
 	  	 Lessee’s Property
 	  	 43
 
	         14.5.
 	  	 Abatement of Rent
 	  	 44
 
	         14.6.
 	  	 Damage Near End of Term
 	  	 44
 
	         14.7.
 	  	 Waiver
 	  	 44
 
	 ARTICLE 15 CONDEMNATION; AWARD ALLOCATION
 	  	 44
 
	         15.1.
 	  	 Definitions
 	  	 44
 
	         15.2.
 	  	 Parties’ Rights and Obligations
 	  	 44
 
	         15.3.
 	  	 Total Taking
 	  	 44
 
	         15.4.
 	  	 Allocation of Award
 	  	 45
 
	         15.5.
 	  	 Partial Taking
 	  	 45
 
	         15.6.
 	  	 Temporary Taking
 	  	 45
 
	 ARTICLE 16 DEFAULT BY LESSEE; LESSOR’S REMEDIES
 	  	 46
 
	         16.1.
 	  	 Events of Default
 	  	 46
 
	         16.2.
 	  	 Surrender
 	  	 47
 
	         16.3.
 	  	 Damages
 	  	 48
 
	         16.4.
 	  	 Waiver
 	  	 48
 
	         16.5.
 	  	 Application of Funds
 	  	 49
 
	         16.6.
 	  	 Lessor’s Right to Cure Lessee’s Default
 	  	 49
 
	 ARTICLE 17 DEFAULT BY LESSOR; LESSEE’S REMEDIES
 	  	 49
 
	         17.1.
 	  	 Breach by Lessor
 	  	 49
 
	         17.2.
 	  	 Lessee’s Right to Cure
 	  	 50
 
	         17.3.
 	  	 Provisions Relating to Purchase of the Leased Property by Lessee
 	  	 50
 
	 ARTICLE 18 INDEMNIFICATION
 	  	 50
 

 

 
 ii 

  
 
	         18.1.
 	  	 Indemnification
 	  	 50
 
	 ARTICLE 19 REIT REQUIREMENTS AND RESTRICTIONS
 	  	 52
 
	         19.1.
 	  	 Personal Property Limitation
 	  	 52
 
	         19.2.
 	  	 Sublease Rent Limitation
 	  	 52
 
	         19.3.
 	  	 Sublease Tenant Limitation
 	  	 52
 
	         19.4.
 	  	 Lessee Ownership Limitations
 	  	 52
 
	         19.5.
 	  	 Lessee Officer and Employee Limitation
 	  	 52
 
	         19.6.
 	  	 Payments to Affiliates of Lessee
 	  	 53
 
	 ARTICLE 20 SUBLETTING AND ASSIGNMENT
 	  	 53
 
	         20.1.
 	  	 Subletting and Assignment
 	  	 53
 
	         20.2.
 	  	 Attornment
 	  	 53
 
	         20.3.
 	  	 Conveyance by Lessor
 	  	 53
 
	 ARTICLE 21 QUIET ENJOYMENT; RISK OF LOSS
 	  	 54
 
	         21.1.
 	  	 Quiet Enjoyment
 	  	 54
 
	         21.2.
 	  	 Risk of Loss
 	  	 54
 
	 ARTICLE 22 LESSOR MORTGAGES; SUBORDINATION OF LEASE
 	  	 54
 
	         22.1.
 	  	 Lessor May Grant Liens
 	  	 54
 
	         22.2.
 	  	 Subordination of Lease
 	  	 54
 
	 ARTICLE 23 ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS; INSPECTION RIGHTS
 	  	 55
 
	         23.1.
 	  	 Estoppel Certificates; Financial Statements
 	  	 55
 
	         23.2.
 	  	 Lessor’s Right to Inspect
 	  	 56
 
	 ARTICLE 24 APPRAISERS
 	  	 56
 
	         24.1.
 	  	 Appraisers
 	  	 56
 
	 ARTICLE 25 ARBITRATION AND DISPUTE RESOLUTION PROCEDURES
 	  	 57
 
	         25.1.
 	  	 Arbitration
 	  	 57
 
	         25.2.
 	  	 Alternative Arbitration
 	  	 57
 
	         25.3.
 	  	 Arbitration Procedure
 	  	 58
 
	 ARTICLE 26 NOTICES
 	  	 58
 
	         26.1.
 	  	 Notices
 	  	 58
 
	 ARTICLE 27 MISCELLANEOUS
 	  	 58
 
	         27.1.
 	  	 No Waiver
 	  	 58
 
	         27.2.
 	  	 Remedies Cumulative
 	  	 59
 
	         27.3.
 	  	 Waiver of Trial by Jury
 	  	 59
 
	         27.4.
 	  	 Acceptance of Surrender
 	  	 59
 
	         27.5.
 	  	 No Merger of Title
 	  	 59
 
	         27.6.
 	  	 Waiver of Presentment, Etc.
 	  	 59
 
	         27.7.
 	  	 Action for Damages
 	  	 59
 
	         27.8.
 	  	 Lease Assumption in Bankruptcy Proceeding
 	  	 59
 
	         27.9.
 	  	 Enforceability
 	  	 59
 
	 27.10.
 	  	 Memorandum of Lease
 	  	 60
 

 

 
 iii 

  
 Exhibit A - Legal Description 
 Schedule 2.1 – Commencement Dates 
 Schedule 3.1(a) – Base Rents 
 Schedule
3.1(b) – Suite Revenue Breakpoint 

 
 iv 

  
 HOTEL LEASE AGREEMENT 
  
 THIS HOTEL LEASE AGREEMENT (hereinafter called “Lease”), effective as of the 3rd day of January, 2003, by and between AHF Houston Westchase Limited Partnership, a
Virginia limited partnership (hereinafter called “Lessor”), and AHF Services Limited Partnership, a Virginia limited partnership (hereinafter called “Lessee”), provides as follows: 
  
 AGREEMENT: 
  
 Lessor, for and in consideration of the payment of rent by Lessee to Lessor, the covenants and agreements to be performed by Lessee, and upon the terms and conditions hereinafter stated, does hereby rent and lease unto Lessee, and
Lessee does hereby rent and lease from Lessor, the Leased Property. 
  
 ARTICLE 1 
 LEASED PROPERTY; OTHER DEFINITIONS 
  
 1.1.     Leased Property.  The Leased Property shall mean and is comprised of Lessor’s interest in the following: 
  
 (a)  the land described in Exhibit A attached hereto and by reference incorporated herein (the “Land”); 
  
 (b)  all buildings, structures and other improvements of every kind including, but not limited to, alleyways and connecting
tunnels, sidewalks, utility pipes, conduits and lines (on-site and offsite), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Land (collectively, the “Leased Improvements”); 

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

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

 (f)  all existing leases of space within the Leased Property (including any security deposits or collateral
held by Lessor pursuant thereto). 
  
 THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION OR WARRANTY (EXPRESSED
OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS OF RECORD INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS AND
OTHER MATTERS WHICH WOULD BE DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN ACCURATE SURVEY THEREOF. 
  
 1.2.  Definitions.  For all purposes of this Lease, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as are at the time applicable, (c)
all references in this Lease to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Lease and (d) the words “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or other subdivision: 
  
 Additional Charges: As defined in Section 3.3. 
  
 Affiliate:  As used in this Lease the term “Affiliate” of a Person shall mean (a) any Person that, directly or indirectly, controls or is controlled by or is under common control with such Person, (b) any
other Person that owns, beneficially, directly or indirectly, ten percent (10%) or more of the outstanding capital stock, shares or equity interests of such Person, or (c) any officer, director, employee, partner, manager or trustee of such Person
or any Person controlling, controlled by or under common control with such Person or any Person that owns, beneficially, directly or indirectly, ten percent (10%) or more of the outstanding capital stock, shares or equity interests of such Person
(excluding trustees and Persons serving in similar capacities who are not otherwise an Affiliate of such Person). For the purposes of this definition, “control” (including the correlative meanings of the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of
voting securities, partnership interests or other equity interests. 
  
 Annual Budget:  As used in
this Lease, the term “Annual Budget” shall mean an operating and capital budget prepared by Lessee and delivered to Lessor in accordance with Section 4.1. 
  
 Award:  As defined in Subsection 15.1(a). 

 
 2 

 Base Rate:  The rate of interest announced publicly by Citibank, N.A., in New York, New York, from time
to time, as such bank’s base rate. If no such rate is announced or if such rate becomes discontinued, then such other rate as Lessor may reasonably designate. 
  
 Base Rent:  As defined in Subsection 3.1(a). 
  
 Business Day:  Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which national banks in the City of New York, New York, or in the municipality wherein the Leased Property is located
are closed. 
  
 CERCLA:  The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended. 
  
 Change of Control: The sale, conveyance, assignment, encumbering, pledging,
hypothecation, granting a security interest in, granting of options with respect to, or other disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration) of any class
stock or other equity interests in a Person (other than among existing holders of interests in such Person on the Commencement Date and/or family members of such holders and/or trusts for the benefit of any of the foregoing) that, upon a transfer of
any portion thereof, will create in the transferee thereof, directly or indirectly, a majority of any class of stock or other equity interests of such Person. 
  
 Claims:  As defined in Section 12.2. 
  
 COBRA:  As defined in Subsection 8.2(b). 
  
 Code:  The Internal
Revenue Code of 1986, as amended. 
  
 Commencement Date:  As defined in Section 2.1. 

 
 Competitive Set:  As defined in the STR Reports. Lessor and Lessee shall work in good faith to determine any
additions and deletions to the Hotel’s Competitive Set, on or before November 15th of each year, with such changes to be applicable for the following Fiscal Year. In the event Lessor and Lessee cannot agree to the Hotel’s Competitive Set
by November 15th of any year, such unagreed items shall be determined by Smith Travel Research (or, if it refuses or is unable to do so, by arbitration pursuant to Section 25.2). The costs of resetting the Hotel’s Competitive Set shall be borne
equally by the parties. 
  
 Comparison Month:  As defined in Subsection 3.1(d). 

 
 Condemnation, Condemnor:  As defined in Section 15.1 
  

Consolidated Financials:  For any fiscal year or other accounting period for Lessee and its consolidated subsidiaries, if any, statements of earnings
and retained earnings and of changes in financial position for such period and for the period from the beginning of the respective fiscal year to the end of such period and the related balance sheet as at the end of such period, 

 
 3 

  
 together with the notes thereto, all in reasonable detail and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year, and prepared in accordance with generally accepted accounting principles and audited by independent certified public accountants acceptable to Lessor in its sole
discretion. 
  
 Consumer Price Index:  The “U.S. City Average, All Items” Consumer Price
Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor (Base: 1982-1984=100), or any successor index thereto. If the Consumer Price Index is hereafter converted to a different standard
reference base or otherwise revised, any determination hereunder that uses the Consumer Price Index shall be made with the use of such conversion factor, formula or table for converting the Consumer Price Index as may be published by the Bureau of
Labor Statistics, or, if the Bureau shall no longer publish the same, then with the use of such conversion factor, formula or table as may be published by Prentice Hall, Inc., or, failing such publication, by any other nationally recognized
publisher of similar statistical information. 
  
 Date of Taking:  As defined in Subsection 15.1(d).

  
 Encumbrance:  As defined in Section 22.1. 
  

Environmental Audit:  As defined in Subsection 8.3(b). 
  
 Environmental Authority:  Any department, agency or other body or component of any Government that exercises any form of jurisdiction or authority under any Environmental Law.

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

 
 4 

 (a)    Failure of Lessee, Lessor, any Predecessor or the Leased Property to comply at any time with
all Environmental Laws; 
  
 (b)    Presence of any Hazardous Materials on, in, under, at or in
any way affecting the Leased Property; 
  
 (c)    A Release at any time of any Hazardous
Materials on, in, at, under or in any way affecting the Leased Property; 
  
 (d)    Identification of Lessee, Lessor or any Predecessor as a potentially responsible party under CERCLA or under any Environmental Law similar to CERCLA; 
  

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

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

 
 Fiscal Year:  The twelve (12) month period from January 1 to December 31, or any shorter period at the
beginning or end of the Term. 

 
 5 

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

 
 6 

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

  
 Hotel:  The hotel and/or other facility offering lodging and other services or amenities being
operated or proposed to be operated on the Leased Property. 
  
 Hotel Market Decline:  A period of
six (6) consecutive calendar months during which there is (i) a twenty percent (20%) decline in average hotel occupancy for the Hotel from the average hotel occupancy levels for same period during the prior calendar year and (ii) a twenty percent
(20%) decline in average hotel occupancy for the Hotel’s Competitive Set from the average 

 
 7 

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

 
 Inventory:  All “Inventories of Merchandise” and “Inventories of Supplies” as defined in
the Uniform System, including without limitation linens, china, silver, glassware and other non-depreciable personal property, and including any property of the type described in Section 1221(1) of the Code. 
  
 Land:  As defined in Section 1.1. 
  
 Lease:  This Lease. 

 
 8 

  
 Leased Improvements; Leased Property:  Each as defined in
Section 1.1. 
  
 Legal Requirements:  All federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting either the Leased Property or the maintenance, construction, use or alteration thereof (whether by Lessee or otherwise), whether now in force or
hereafter enacted and in force, including (a) all laws, rules or regulations pertaining to the environment, occupational health and safety and public health, safety or welfare, and (b) any laws, rules or regulations that may (1) require repairs,
modifications or alterations in or to the Leased Property or (2) in any way adversely affect the use and enjoyment thereof; and all permits, licenses and authorizations and regulations relating thereto and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to Lessee (other than encumbrances created by Lessor without the consent of Lessee), at any time in force affecting the Leased Property. 
  
 Lending Institution:  Any insurance company, credit company, federally-insured commercial or savings bank, national
banking association, savings and loan association, employees welfare, pension or retirement fund or system, corporate profit sharing or pension trust, college or university, or real estate investment trust, including any corporation qualified to be
treated for federal tax purposes as a real estate investment trust, such trust having a net worth of at least $10,000,000. 
  
 Lessee:  The Lessee designated on this Lease and its respective permitted successors and assigns. 
  
 Lessee Indemnified Party:  Lessee, any Affiliate of Lessee, any other Person against whom any claim for indemnification may be asserted hereunder as a result of a direct or indirect ownership interest
(including a stockholder’s or member’s interest) in Lessee, the officers, directors, stockholders, members, managers, employees, agents and representatives of Lessee, and the respective heirs, personal representatives, successors and
assigns of any such officer, director, stockholder, member, manager, employee, agent or representative. 
  
 Lessee’s Personal Property:  As defined in Section 6.2. 
  
 Lessor:  The Lessor designated In this Lease and its respective successors and assigns. 
  
 Lessor Indemnified Party:  Lessor, any Affiliate of Lessor, any other Person against whom any claim for indemnification may be asserted hereunder as a result of a direct or indirect ownership interest (including a
stockholder’s or partnership interest) in Lessor, the officers, directors, stockholders, members, managers, employees, agents and representatives of the general partner of Lessor and any partner, agent, or representative of Lessor, and the
respective heirs, personal representatives, successors and assigns of any such officer, director, stockholder, partner, member, manager, employee, agent or representative. 
  
 Licenses:  As defined in Subsection 2.3(a). 

 
 9 

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

 
 10 

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

 
 11 

  
 Repositioning:  As defined in Section 3.6. 

 
 SARA:  The Superfund Amendments and Reauthorization Act of 1986, as amended. 
  
 Solvent:  As to any Person, (a) the sum of the assets of such Person exceeds its liabilities and (b) such Person has
sufficient capital with which to conduct its business as presently conducted and as proposed to be conducted. 
  
 State:  The state or commonwealth in which the Hotel is located. 
  
 STR
Reports:  Reports compiled by Smith Travel Research, or its successor, which contain historical supply and demand, occupancy, and average rate information for the Hotel and hotels with which it competes (or, in the event that Smith
Travel Research discontinues providing such information, reports of similar nature compiled by an authority recognized nationally in the hospitality industry). 
  
 Subsidiaries:  Persons in which Lessee owns, directly or indirectly, more than fifty percent (50%) of the voting stock or control, as applicable. 
  
 Suite Revenue Breakpoint:  As defined in Subsection 3.1(b). 
  
 Suite Revenues:  All revenues, receipts, and income of any kind derived directly or indirectly by Lessee from or in connection with the rental of guest
rooms or suites, whether to individuals, groups or transients, at the Hotel, whether on a cash basis or credit, paid or collected, determined in accordance with generally accepted accounting principles, but excluding the following: 

 
 (a)    The amount of all credits, rebates or refunds to customers, guests or patrons, and all service
charges, finance charges, interest and discounts attributable to charge accounts and credit cards, to the extent the same are paid to Lessee by its customers, guests or patrons, or to the extent the same are paid for by Lessee to, or charged to
Lessee by, credit card companies; 
  
 (b)    All sales taxes or any other taxes imposed on the
rental of such guest rooms or suites; 
  
 (c)    Gratuities or service charges actually paid to
employees; 
  
 (d)    Proceeds of business interruption and other insurance; and 

 
 (e)    Sundry Revenues. 
  
 Sundry Rent:  As defined in Section 3.1(c). 
  
 Sundry Revenues:  All revenues, receipts, and income derived from the Hotel’s meeting rooms, telephones, TV and movie rentals, check room, washroom, laundry, valet, vending machines, and other sources
not specified herein as Suite Revenues. 

 
 12 

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

 
 13 

  
 WARN Act:  As defined in Subsection 8.2(b). 

 
 Working Capital:  Funds reasonably necessary for the day-to-day operation of the Hotel’s business for a
thirty (30) day period, including, without limitation, amounts sufficient for the maintenance of change and petty cash funds, operating bank accounts, payrolls, accounts payable, accrued current liabilities, and funds required to maintain
Inventories. 
  
 ARTICLE 2 
 TERM; TERMINATION 
  
 2.1.    Term. 
  
 (a)    The term of the Lease (the “Term”) shall commence on the date specified in Schedule 2.1 (the
“Commencement Date”), and shall end on the tenth (10th) anniversary of the Commencement Date, unless sooner terminated in accordance with the provisions hereof or extended to an anniversary of the initial expiration date pursuant to this
Article 2. 
  
 (b)    Lessee is granted the option to extend the Term of this Lease for a period
of five (5) years (the “First Extension”), provided that Lessee is not in default hereunder either at the time of deemed exercise of the option or at the end of the original Term, which option must be exercised by written notice to Lessor
at least one hundred twenty (120) days prior to the expiration of the original Term. The First Extension shall be upon the same terms, conditions and rentals as set forth herein for the original Term. 
  
 (c)    Lessee is granted an option to extend the Term for a period of five (5) years following the end of the First
Extension (the “Second Extension”), provided that Lessee is not in default hereunder either at the time of exercise of the option or at the end of the First Extension, which option must be exercised by written notice to Lessor at least one
hundred twenty (120) days prior to the expiration of the First Extension. If such option is exercised, Lessor and Lessee shall negotiate in good faith modifications to the Rent for the Second Extension to adjust such Rent to market rates for
arms-length hotel REIT leases between unrelated parties for similar hotel properties at that time. In the event Lessor and Lessee are unable to agree upon Rent terms for the Second Extension at least ninety (90) days prior to the expiration of the
Term, the Rent terms for the Second Extension shall be determined by a panel of three (3) persons who have generally recognized expertise in evaluating hotel REIT leases and who are not Affiliates of Lessor or Lessee. Lessee and the Lessor each
shall have the right to designate one panel member and the two (2) panel members so designated will designate the third panel member. Rent terms approved by at least two (2) of the three (3) panel members will be binding on Lessee and Lessor for the
Second Extension, which shall be otherwise on the terms set forth herein. In determining the market rates for the Second Extension, the panel members shall be instructed to consider hotel REIT lease terms with respect to similar hotel property
types. The Second Extension shall be otherwise upon the same terms and conditions as set forth herein for the original Term. 

 
 14 

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

 
 15 

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

  
 2.4.    Holding Over.  If Lessee for any reason remains in possession of the
Leased Property after the expiration or earlier termination of the Term, such possession shall be as a tenant at sufferance during which time Lessee shall pay as rental each month 150% of the aggregate of (a) one-twelfth of the aggregate Base Rent
and Percentage Rent payable with respect to the last Fiscal Year of the Term, (b) all Additional Charges accruing during the applicable month and (c) all other sums, if any, payable by Lessee under this Lease with respect to the Leased Property.
During such 

 
 16 

 period, Lessee shall be obligated to perform and observe all of the terms, covenants and conditions of this Lease, but shall have no rights
hereunder other than the right, to the extent given by law to tenancies at sufferance, to continue its occupancy and use of the Leased Property. Nothing contained herein shall constitute the consent, express or implied, of Lessor to the holding over
of Lessee after the expiration or earlier termination of this Lease. 
  
 ARTICLE 3 
 RENT; RENT ADJUSTMENTS 
  
 3.1.    Rent.  Lessee will pay to Lessor in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, in immediately available funds, at
Lessor’s address set forth in Article 26 hereof or at such other place or to such other Person as Lessor from time to time may designate in a Notice, all Base Rent, Percentage Rent, Sundry Rent and Additional Charges, during the Term, as
follows: 
  
 (a)     Base Rent:  The annual sum specified in Schedule
3.1(a) (prorated for fiscal year 2003), as adjusted pursuant to Subsection 3.1(d) hereof, payable in advance in equal, consecutive monthly installments, on or before the tenth day of each calendar month of the Term (“Base Rent”);
provided, however, that the first monthly payment of Base Rent shall be payable during the second calendar month of the Term, and that the first and last monthly payments of Base Rent shall be pro rated as to any partial month (subject to adjustment
as provided in Sections 14.5, 15.3 and 15.5). 
  
 (b)     Percentage Rent:  For
each calendar quarter during the Term commencing with the calendar quarter in which the Commencement Date falls and ending with the calendar quarter in which the Term (including any applicable extensions) ends, Lessee shall pay percentage rent
(“Percentage Rent”). 
  
 Percentage Rent for the applicable quarter shall be an amount equal to the
following formula: 
  
 The amount equal to the applicable Quarterly Revenues Computation (as defined
below) less the sum of 
  
 (i)   an amount equal to the Base Rent paid with respect to
such quarter and all prior calendar quarters of the               applicable Fiscal Year and 
  
 (ii)    an amount equal to Percentage Rent paid with respect to all prior calendar quarters of the applicable Fiscal
              Year. 
  
 For the purpose of the above formula:

  
 The quarterly revenues computation (“Quarterly Revenues Computation”) is equal to the amount obtained
by adding, for the applicable calendar quarter, an amount equal to the sum of (i) seventeen percent (17%) of all Fiscal Year to date Suite Revenues up to the applicable suite 

 
 17 

 revenue breakpoint (the “Suite Revenue Breakpoint”) described in Schedule 3.1(b), attached hereto, (prorated for the first and
last calendar quarters of the Term (including any applicable extensions)) and fifty-five percent (55%) of all Fiscal Year to date Suite Revenues in excess of the applicable Suite Revenue Breakpoint. At the beginning of each Fiscal Year, the Suite
Revenue Breakpoints shall be adjusted by the same percentage that the Base Rent is adjusted pursuant to Subsection 3.1(d). 
  
 The
Percentage Rent shall be payable as follows: 
  

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

 

  

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

  

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

  

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

	 	(i)
	 
	with respect to each calendar month of the Term, except for the calendar months in the first partial and next two full calendar quarters at the beginning of the
Term, on 
 

 
 18 

 or before the last day of the calendar month an amount equal to seventy-five percent (75%) of the amount of Lessee’s
budgeted Sundry Rent payable with respect to the then current calendar month (which budgeted amount shall be equal to one-third (1/3) of the quarterly estimate of Sundry Rent included in the Annual Budget for the calendar quarter in which the
calendar month occurs); and 
  

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

  

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

  
 (d)    Officer’s Certificates.  Additionally, an Officer’s Certificate shall be delivered to Lessor quarterly, together with
such quarterly Percentage Rent payment and quarterly Sundry Rent payment, setting forth the calculation of such rent payment for such quarter, within thirty (30) days after each of the first three quarters of each Fiscal Year (or part thereof) in
the Term. Such quarterly payments shall be based on the formula set forth in Subsection 3.1(b) and 3.1(c), as applicable. There shall be no reduction in the Base Rent regardless of the result of the Quarterly Revenues Computations. 

 
 In addition, on or before March 1 of each year, commencing with March 1, 2002, Lessee shall deliver to Lessor an Officer’s
Certificate reasonably acceptable to Lessor setting forth the computation of the actual Percentage Rent and Sundry Rent that accrued for each quarter of the Fiscal Year that ended on the immediately preceding December 31 and shall pay to Lessor
Percentage Rent and Sundry Rent, if due and payable, for the last quarter of the applicable Fiscal Year. Additionally, if the annual Percentage Rent or Sundry Rent due and payable for any Fiscal Year (as shown in the applicable Officer’s
Certificate) exceeds the amount actually paid as Percentage Rent or Sundry Rent by Lessee for such year, Lessee also shall pay such excess to Lessor at the time such certificate is delivered. If the Percentage Rent or Sundry Rent actually due and
payable for such Fiscal Year is shown by such certificate to be less than the amount actually paid as Percentage Rent or Sundry Rent for the applicable Fiscal Year, Lessor, at its option, shall reimburse such amount to Lessee or credit such amount
against subsequent months’ Base Rent or Sundry Rent, as applicable, and with respect to Percentage Rent, to the extent necessary, subsequent quarters’ Percentage Rent payments. Any such credit to Base Rent shall not be applied for purposes
of calculating Percentage Rent payable for any subsequent quarter. 
  
 Any difference between the annual Percentage
Rent or Sundry Rent due and payable for any Fiscal Year (as shown in the applicable Officer’s Certificate or as adjusted pursuant to Section 3.3) and the total amount of quarterly payments for such Fiscal Year actually paid by Lessee as
Percentage Rent or Sundry Rent, whether in favor of Lessor or Lessee, shall bear interest at the Overdue Rate, which interest shall accrue from the due date of the last quarterly payment for the 

 
 19 

  
 Fiscal Year until the amount of such difference shall be paid or otherwise discharged. Any such interest
payable to Lessor shall be deemed to be and shall be payable as Additional Charges. 
  
 The obligation to pay
Percentage Rent and Sundry Rent shall survive the expiration or earlier termination of the Term, and a final reconciliation, taking into account, among other relevant adjustments, any adjustments which are accrued after such expiration or
termination date but which related to Percentage Rent and Sundry Rent accrued prior to such termination date, and Lessee’s good faith best estimate of the amount of any unresolved contractual allowances, shall be made not later than two (2)
years after such expiration or termination date, but Lessee shall advise Lessor within sixty (60) days after such expiration or termination date of Lessee’s best estimate at that time of the approximate amount of such adjustments, which
estimate shall not be binding on Lessee or have any legal effect whatsoever. 
  
 (e)    CPI
Adjustments to Base Rent and Percentage Rent.  For each year of the Term beginning on or after January 1, 2004, the Base Rent shall be adjusted from time to time as follows: 
  
 (1)    If the most recently published Consumer Price Index as of the last day of the last month (the “Comparison Month”) of
any Fiscal Year is different than the average Consumer Price Index for the twelve (12) month period prior thereto, the Base Rent for the next Fiscal Year shall be adjusted by the percentage change in the Consumer Price Index calculated as follows:

  
 (A)    The difference between the Consumer Price Index for the most recent
Comparison Month and the average Consumer Price Index for the twelve (12) month period prior thereto shall be divided by the average Consumer Price Index for the twenty four (24) month period prior thereto. 
  
 (B)    The Base Rent shall be multiplied by the lesser of (i) seven percent (7%) or (ii) the quotient
obtained in subparagraph (d)(1)(A) above. 
  
 (C)    The product obtained in
subparagraph (d)(1)(B) above shall be added to the Base Rent. 
  
 Adjustments in the Base Rent shall be effective on
the first day of the first calendar month of the Fiscal Year to which such adjusted Base Rent applies. The Suite Revenue Breakpoint then included in the Quarterly Revenues Computation pursuant to Subsection 3.1(b) shall be similarly adjusted,
effective with any such adjustment in the Base Rent. 
  
 (2)      If
(i) a significant change is made in the number or nature (or both) of items used in determining the Consumer Price Index, or (ii) the Consumer Price Index shall be discontinued for any reason, the Bureau of Labor Statistics shall be requested to
furnish a new index comparable to the Consumer Price Index, together with information which will make possible a conversion to the new index in computing the adjusted Base Rent hereunder. If for any reason the Bureau of Labor Statistics does not
furnish such an index and such information, the parties will 

 
 20 

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

 
 21 

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

 
 22 

  
 composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Lessor or
any assignee or transferee of Lessor, or (e) for any other cause whether similar or dissimilar to any of the foregoing other than a discharge of Lessee from any such obligations as a matter of law. Lessee hereby specifically waives all rights,
arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law to (1) modify, surrender or terminate this Lease or quit or surrender the Leased Property or any portion thereof, or (2) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee hereunder, except as otherwise specifically provided in this Lease. The obligations of Lessee hereunder shall be separate and independent covenants and agreements and the
Rent and all other sums payable by Lessee hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the express provisions of this Lease or by termination of this Lease other than by
reason of an Event of Default. 
  
 3.5.    Material Changes in Economic Climate.

  
   (a)    In the event of the occurrence of a Force Majeure or a Hotel Market
Decline, Lessor and Lessee shall, in good faith, negotiate possible modifications to the Base Rent and Percentage Rent to reduce such Base Rent and Percentage Rent to recent market rates for hotel REIT leases for similar hotel properties in the
Hotel’s Competitive Set, retroactively effective as of the first calendar month of the Term following the last day of the six-month period during which such Hotel Market Decline has occurred with the excess of Base Rent and Percentage Rent
actually paid for such period over the reduced Base Rent and Percentage Rent, plus interest thereon at the Base Rate, to be credited to the next payments of Rent due and owing hereunder. If Lessor and Lessee are unable to agree that a Force Majeure
or a Hotel Market Decline has occurred, within thirty (30) days after the date of written certification from Lessee to Lessor that a Force Majeure and Hotel Market Decline has occurred (accompanied by reasonably detailed computations and
documentation to support such assertion), the matter may be submitted by either party to arbitration under Section 25.2 hereof for resolution (during which period Lessee shall continue to pay Base Rent and Percentage Rent as required under Section
3.1 of this Lease). If, within ninety (90) days (during which period Lessee shall continue to pay Base Rent and Percentage Rent as required under Section 3.1 of this Lease) following the date of such written certification from Lessee (or the date of
a decision of an arbitrator if required hereunder to determine that a Force Majeure and Hotel Market Decline has occurred), Lessor and Lessee are unable to agree upon the amount of reduction in Base Rent and Percentage Rent contemplated hereby,
Lessee shall have the option to terminate this Lease upon not less than thirty (30) days prior written notice to Lessor. 
  
   (b)    In the event of the occurrence of a National Economic Decline or a Regional Market Decline, Lessor and Lessee shall, in good faith, negotiate (i) possible modifications to the Base Rent and
Percentage Rent to reduce such Base Rent and Percentage Rent to recent market rates for hotel REIT leases for similar hotel properties in the Hotel’s Competitive Set, and (ii) possible modifications to the Base and Percentage Rent payable under
each of the Other Leases for Other Hotels in the same Region (as defined in the STR Reports) as the Hotel to reduce such Base Rent and Percentage Rent to recent market rates for hotel REIT leases for similar hotel properties in the Hotel’s
Competitive Set, in each case retroactively effective as of the first calendar month of the Term following the last day of the six month period during which such Regional Market Decline has occurred with the excess of Base Rent and Percentage Rent
actually paid for such 

 
 23 

  
 period over the reduced Base Rent and Percentage Rent, plus interest thereon at the Base Rent, to be
credited to the next payments of Rent due and owing hereunder. If, within thirty (30) days after the date of written certification from Lessee to Lessor that a National Economic Decline and Regional Market Decline has occurred (accompanied by
reasonably detailed computations and documentation to support such assertion), Lessor and Lessee are unable to agree that a National Economic Decline or Regional Market Decline has occurred, the matter may be submitted by either party to arbitration
under Section 25.2 hereof for resolution (during which period Lessee shall continue to pay Base Rent and Percentage Rent as required under Section 3.1 of this Lease). If, within ninety (90) days (during which period Lessee shall continue to pay Base
Rent and Percentage Rent as required under Section 3.1 of this Lease) following the date of such initial written certification from Lessee (or the date of a decision of an arbitrator if required hereunder to determine that a National Economic
Decline and Regional Market Decline has occurred), Lessor and Lessee are unable to agree upon the amount of reduction in Base Rent and Percentage Rent contemplated hereby, Lessee shall have the option, upon not less than sixty (60) days prior
written notice to Lessor, to terminate all (but not less than all) of the Existing Leases of hotels in the same Region as the Hotel, including this Lease. 
  
 3.6.    Rent Adjustment: Basic Assumptions Incorrect.  Except to the extent that doing so would cause Lessor to recognize income other than “rents from real
property” as defined in Section 856(d) of the Code, notwithstanding anything herein (other than Article 19) to the contrary, if (i) the facts and circumstances underlying the documented, basic assumptions upon which both Lessor and Lessee have
relied in determining the Base Rent, the Suite Revenue Breakpoint, and the Percentage Rent payable hereunder become materially incorrect solely as a result of (A) a decision to re-brand the Hotel that is made after the Commencement Date, (B) the
scope or cost of substantial renovations or other capital improvements to the Hotel, or (C) the implementation of any other hotel repositioning strategies (that were not planned as of the Commencement Date) resulting in significant disruption of the
operations of the Hotel (collectively, a “Repositioning”), and (ii) Lessor and Lessee so agree in writing, then Lessor and Lessee shall, in good faith, negotiate modifications to the Base Rent, Suite Revenue Breakpoint and Percentage Rent
to adjust (i.e., increase, decrease or reallocate among revenue categories) such Base Rent, Suite Revenue Breakpoint and Percentage Rent to reflect such change in basic assumptions for the affected periods, using the same methodology and other basic
assumptions as were initially utilized in determining the Base Rent, Suite Revenue Breakpoint and Percentage Rent hereunder. If Lessor and Lessee are unable to agree, within thirty (30) days after the date of written certification from either Lessee
or Lessor to the other party that a good faith dispute exists, as to the existence of the occurrence of a Repositioning or the adjustments to be made to the amounts or percentages for the Base Rent, Suite Revenue Breakpoint and Percentage Rent
hereunder as a result of any repositioning, the dispute may be submitted by either party to arbitration under Section 25.2 hereof for resolution (during which period Lessee shall continue to pay Base Rent and Percentage Rent as required under
Section 3.1 of this Lease); provided, however, that for purposes of applying the procedures in Section 25.3 to such arbitration, the target deadline therein for concluding the arbitration shall be shortened from ninety (90) days to thirty (30) days.

 
 24 

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

  
 (c)  An estimate of any amounts Lessor will be required to provide for required or desirable capital
improvements to the Hotel or any of its components. 
  
 (d)  A cash flow projection. 

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

 
 25 

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

 
 26 

  
 5.2.    Notice of Impositions.  Lessor shall
give prompt Notice to Lessee of all Impositions payable by Lessee hereunder of which Lessor at any time has knowledge, provided that Lessor’s failure to give any such Notice shall in no way diminish Lessee’s obligations hereunder to pay
such Impositions, but such failure shall obviate any default hereunder for a reasonable time after Lessee receives Notice of any Imposition which it is obligated to pay during the first taxing period applicable thereto. 
  
 5.3.    Adjustment of Impositions.  Impositions imposed in respect of the tax-fiscal period during
which the Term terminates shall be adjusted and prorated between Lessor and Lessee, whether or not such Imposition is imposed before or after such termination, and Lessee’s obligation to pay its prorated share thereof after termination shall
survive such termination. 
  
 5.4.    Utility Charges.  Lessee will be solely
responsible for obtaining and maintaining utility services to the Leased Property and will pay or cause to be paid all charges for electricity, gas, oil, water, sewer and other utilities used in the Leased Property during the Term. 

 
 5.5.    Insurance Premiums.  Lessee will pay or cause to be paid all premiums for the
insurance coverage’s required to be maintained by it under Article 13. 
  
 5.6.    Franchise Fees.  Lessee will maintain in full force and effect, and pay or cause to be paid all fees and other charges payable pursuant to, any Franchise Agreement with respect to the
Hotel. 
  
 5.7.    Ground Rent.  In the event that Lessor’s interest in the
Land is pursuant to a Ground Lease or sublease, Lessor shall be solely responsible for the payment of any ground rent, building rent or subrent, as the case may be, due with respect to the Leased Property. 
  
 ARTICLE 6 
 LEASED PROPERTY; LESSEE’S
PERSONAL PROPERTY 
  
 6.1.    Ownership of the Leased Property.  Lessee
acknowledges that the Leased Property is the property of Lessor and that Lessee has only the right to the possession and use of the Leased Property upon the terms and conditions of this Lease. 
  

6.2.    Lessee’s Personal Property.  Lessee will acquire and maintain throughout the Term such Inventory as is required to
operate the Leased Property in the manner contemplated by this Lease. Lessee may (and shall as provided hereinbelow), at its expense, install, affix or assemble or place on any parcels of the Land or in any of the Leased Improvements, any items of
personal property (including Inventory) owned by Lessee. Lessee, at the commencement of the Term, and from time to time thereafter, shall provide Lessor with an accurate list of all such items of Lessee’s personal property (collectively, the
“Lessee’s Personal Property”). Lessee may, subject to the first sentence of this Section 6.2 and the conditions set forth below, remove any of Lessee’s Personal Property set forth on such list at any time during the Term or upon
the expiration or any prior termination of the Term. All of Lessee’s Personal Property, other than Inventory, not removed by 

 
 27 

 Lessee within ten (10) days following the expiration or earlier termination of the Term shall be considered abandoned by Lessee and may be
appropriated, sold, destroyed or otherwise disposed of by Lessor without first giving Notice thereof to Lessee, without any payment to Lessee and without any obligation to account therefor. Lessee will, at its expense, restore the Leased Property to
the condition required by Subsection 2.3(g), including repair of all damage to the Leased Property caused by the removal of Lessee’s Personal Property, whether effected by Lessee or Lessor. Upon the expiration or earlier termination of the
Term, Lessor or its designee shall have the option to purchase all Inventory on hand at the Leased Property at the time of such expiration or termination for a sale price equal to the fair market value of such Inventory. Lessee may make such
financing arrangements, title retention agreements, leases or other agreements with respect to Lessee’s Personal Property as it sees fit provided that Lessee first advises Lessor of any such arrangement and such arrangement expressly provides
that in the event of Lessee’s default thereunder, Lessor (or its designee) may assume Lessee’s obligations and rights under such arrangement. 
  
 6.3.    Lessor’s Lien.  To the fullest extent permitted by applicable law, Lessor is granted a lien and security interest on all Lessee’s personal
property now or hereinafter placed in or upon the Leased Property, and such lien and security interest shall remain attached to such Lessee’s personal property until payment in full of all Rent and satisfaction of all of Lessee’s
obligations hereunder; provided, however, Lessor shall subordinate its lien and security interest to that of any non-Affiliate of Lessee which finances such Lessee’s personal property or any non-Affiliate conditional seller of such
Lessee’s personal property, the terms and conditions of such subordination to be satisfactory to Lessor in the exercise of reasonable discretion. Lessee shall, upon the request of Lessor, execute such financing statements or other documents or
instruments reasonably requested by Lessor to perfect the lien and security interests herein granted. Lessee hereby authorizes Lessor to execute and file financing statements signed only be a representative of Lessor covering the security interest
of Lessor in Lessee’s personal property. 
  
 6.4.    Lessor’s Option to Purchase
Assets of Lessee.  Effective on not less than ninety (90) days’ prior Notice given at any time within one hundred eighty (180) days before the expiration of the Term, but not later than ninety (90) days prior to such expiration,
or upon such shorter Notice period as shall be appropriate if this Lease is terminated prior to its expiration date, Lessor shall have the option to purchase all (but not less than all) of the assets of Lessee, tangible and intangible, relating to
the Leased Property (other than this Lease), at the expiration or termination of this Lease for an amount (payable in cash on the expiration date of this Lease) equal to the fair market value thereof as appraised in conformity with Article 24,
except that the appraisers need not be members of the American Institute of Real Estate Appraisers, but rather shall be appraisers having at least ten (10) years’ experience in valuing similar assets. Notwithstanding any such purchase, Lessor
shall obtain no rights to any trade name or logo used in connection with the Franchise Agreement unless separate agreement as to such use is reached with the applicable franchisor. 
  
 ARTICLE 7 
 CONDITION AND USE OF LEASED PROPERTY 
  
 7.1.    Condition of the Leased Property.  Lessee acknowledges receipt and delivery of possession of
the Leased Property. Lessee has examined and otherwise has knowledge of the 

 
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 condition of the Leased Property and has found the same to be satisfactory for its purposes hereunder. Lessee is leasing the Leased Property
“as is” in its present condition. Lessee waives any claim or action against Lessor in respect of the condition of the Leased Property. LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY, OR
ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE
BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT. Provided, however, to the extent permitted by law, Lessor hereby assigns to Lessee all of Lessor’s rights to proceed against any
predecessor in title (other than any Affiliate of Lessee, which conveyed the Property to Lessor) for breaches of warranties or representations or for latent defects in the Leased Property. Lessor shall fully cooperate with Lessee in the prosecution
of any such claim, in Lessor’s or Lessee’s name, all at Lessee’s sole cost and expense. Lessee hereby agrees to indemnify, defend and hold harmless Lessor from and against any claims, obligations and liabilities against or incurred by
Lessor in connection with such cooperation. 
  
 7.2.  Use of the Leased Property. 

 
 (a)  Lessee covenants that it will proceed with all due diligence and will exercise reasonable efforts to obtain and
to maintain all Licenses and other approvals needed to use and operate the Leased Property and the Hotel under applicable local, state and federal law. 
  
 (b)  Lessee shall use or cause to be used the Leased Property only as a Residence Inn by Marriott hotel facility, and for such other uses as may be necessary or incidental to such use or such
other use as otherwise approved by Lessor (the “Primary Intended Use”). Lessee shall not use the Leased Property or any portion thereof for any other use without the prior written consent of Lessor, which consent may be granted, denied or
conditioned in Lessor’s sole discretion. No use shall be made or permitted to be made of the Leased Property, and no acts shall be done, which will cause the cancellation or increase the premium of any insurance policy covering the Leased
Property or any part thereof (unless another adequate policy satisfactory to Lessor is available and Lessee pays any premium increase), nor shall Lessee sell or permit to be kept, used or sold in or about the Leased Property any article which may be
prohibited by law or fire underwriter’s regulations. Lessee shall, at its sole cost, comply with all of the requirements pertaining to the Leased Property of any insurance board, association, organization or company necessary for the
maintenance of insurance, as herein provided, covering the Leased Property and Lessee’s Personal Property. 
  
 (c)  Subject to the provisions of Articles 14, 15, 18 and 21, Lessee covenants and agrees that during the Term it will (1) operate continuously the Leased Property as a hotel facility, (2) keep in full force and effect and
comply with all the provisions of the Franchise Agreement and the Management Agreement, (3) not terminate or amend the Franchise Agreement or the Management Agreement without the consent of Lessor (which shall not be unreasonably withheld or
delayed), (4) maintain appropriate certifications and Licenses for such use and (5) seek to maximize the Gross Revenues generated therefrom consistent with sound business practices. 

 
 29 

  
 (d)    Lessee shall not commit or suffer to be committed any
waste on the Leased Property, or in the Hotel, nor shall Lessee cause or permit any nuisance thereon. 
  
 (e)    Lessee shall neither suffer nor permit the Leased Property or any portion thereof, or Lessee’s Personal Property, to be used in such a manner as (1) might reasonably tend to impair Lessor’s (or
Lessee’s, as the case may be) title thereto or to any portion thereof, or (2) may reasonably make possible a claim or claims of adverse usage or adverse possession by the public, as such, or of implied dedication of the Leased Property or any
portion thereof, except as necessary in the ordinary and prudent operation of the Hotel on the Leased Property. 
  
 7.3.  Lessor to Grant Easements, Etc. Lessor will, from time to time, so long as no Event of Default has occurred and is continuing, at the request of Lessee and at Lessee’s cost and expense (but subject to the
approval of Lessor, which approval shall not be unreasonably withheld or delayed), (a) grant easements and other rights in the nature of easements with respect to the Leased Property to third parties, (b) release existing easements or other rights
in the nature of easements which are for the benefit of the Leased Property, (c) dedicate or transfer unimproved portions of the Leased Property for road, highway or other public purposes, (d) execute petitions to have the Leased Property annexed to
any municipal corporation or utility district, (e) execute amendments to any covenants and restrictions affecting the Leased Property and (f) execute and deliver to any Person any instrument appropriate to confirm or effect such grants, releases,
dedications, transfers, petitions and amendments (to the extent of its interests in the Leased Property), but only upon delivery to Lessor of an Officer’s Certificate stating that such grant, release, dedication, transfer, petition or amendment
does not interfere with the proper conduct of the business of Lessee on the Leased Property and does not materially reduce the value of the Leased Property. 
  
 ARTICLE 8 
 LESSEE’S COMPLIANCE WITH LAW; ENVIRONMENTAL COVENANTS 

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

 
 8.2.  Legal Requirement Covenants. 
  
 (a)    Subject to Subsection 8.3(b) and Subsection 9.1(b) below, Lessee covenants and agrees that the Leased Property and Lessee’s Personal
Property shall not be used for any unlawful purpose, and that Lessee shall not permit or suffer to exist any unlawful use of the Leased Property by others. Lessee shall acquire and maintain all appropriate licenses, certifications, permits and other
authorizations and approvals needed to operate the Leased Property in its 

 
 30 

 customary manner for the Primary Intended Use, and any other lawful use conducted on the Leased Property as may be permitted from time to time
hereunder. Lessee further covenants and agrees that Lessee’s use of the Leased Property and maintenance, alteration, and operation of the same, and all parts thereof, shall at all times conform to all Legal Requirements, unless the same are
finally determined by a court of competent jurisdiction to be unlawful (and Lessee shall cause all sub-tenants, invitees or others within its control so to comply with all Legal Requirements). Lessee may, however, upon prior Notice to Lessor,
contest the legality or applicability of any such Legal Requirement or any licensure or certification decision if Lessee maintains such action in good faith, with due diligence, without prejudice to Lessor’s rights hereunder, and at
Lessee’s sole expense. If by the terms of any such Legal Requirement compliance therewith pending the prosecution of any such proceeding may legally be delayed without the occurrence of any charge or liability of any kind, or the filing of any
lien, against the Hotel or Lessee’s leasehold interest therein and without subjecting Lessee or Lessor to any liability, civil or criminal, for failure so to comply therewith, Lessee may delay compliance therewith until the final determination
of such proceeding. If any lien, charge or civil or criminal liability would be incurred by reason of any such delay, Lessee, on the prior written consent of Lessor, which consent shall not be unreasonably withheld or delayed, may nonetheless
contest as aforesaid and delay as aforesaid provided that such delay would not subject Lessor to criminal liability and Lessee both (a) furnishes to Lessor security reasonably satisfactory to Lessor against any loss or injury by reason of such
contest or delay and (b) prosecutes the contest with due diligence and in good faith. 
  
 (b)    As between Lessor and Lessee, Lessee is solely responsible for all liabilities or obligations of any kind with respect to employees at the Leased Property during the Term. Without limiting the generality of
the foregoing sentence, Lessee is solely responsible for any required compliance with the Worker Adjustment, Retraining and Notification Act of 1988 (the “WARN Act”) or any similar state law applicable to the Leased Property; any required
compliance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”); and all alleged and actual obligations and claims arising from or relating to any employment agreement, collective bargaining agreement or
employee benefit plans, any grievances, arbitration’s, or unfair labor practice charges, and relating to compliance with any applicable state or federal labor employment law, including but not limited to all laws pertaining to discrimination,
workers’ compensation, unemployment compensation, occupational safety and health, unfair labor practices, family and medical leave, and wages, hours or employee benefits. Lessee agrees to indemnify and defend and hold harmless Lessor from and
against any claims relating to any of the foregoing matters. Lessee further agrees to reimburse Lessor for any and all losses, damages, costs, expenses, liabilities and obligations of any kind, including without limitation reasonable attorney’s
fees and other legal costs and expenses, incurred by Lessor in connection with any of the foregoing matters. 
  
 (c)    Notwithstanding the Lessee’s obligations under Section 8.1 to obtain and maintain all permits and licenses required for the use of the Leased Property, and without limiting any obligations of Lessee
hereunder, if (i) applicable law requires that the owner (rather than a lessee) of a hotel be the licensee under the required liquor license for the Hotel or (ii) the former owner of the Hotel is holding the liquor license and continuing to exercise
management and supervision of the liquor services at the Hotel pending transfer of the license to Lessor or Lessee, the Lessee shall indemnify and hold Lessor harmless from any liability, damages or claims (a) arising in connection with liquor
operations at the Hotel during such period of time following the 

 
 31 

 Commencement Date, except to the extent caused by Lessor’s gross negligence or willful misconduct or (b) made by or through the former
owner with respect to liquor operations at the Hotel following the Commencement Date. 
  
 8.3.  Environmental Covenants.  Lessor and Lessee (in addition to, and not in diminution of, Lessee’s covenants and undertakings in Sections 8.1 and 8.2 hereof) covenant and agree as follows:

  
 (a)    At all times hereafter until the later of (i) such time as all liabilities, duties or
obligations of Lessee to Lessor under the Lease have been satisfied in full and (ii) such time as Lessee completely vacates the Leased Property and surrenders possession of the same to Lessor, Lessee shall fully comply with all Environmental Laws
applicable to the Leased Property and the operations thereon. Lessee agrees to give Lessor prompt Notice of (1) all Environmental Liabilities; (2) all pending, threatened or anticipated Proceedings, and all notices, demands, requests or
investigations, relating to any Environmental Liability or relating to the issuance, revocation or change in any Environmental Authorization required for operation of the Leased Property; (3) all Releases at, on, in, under or in any way affecting
the Leased Property, or any Release known by Lessee at, on, in or under any property adjacent to the Leased Property; and (4) all facts, events or conditions that could reasonably lead to the occurrence of any of the above-referenced matters.

  
 (b)    Lessor hereby agrees to defend, indemnify and save harmless any and all Lessee
Indemnified Parties from and against any and all Environmental Liabilities other than (i) Environmental Liabilities resulting from conditions disclosed in any environmental audit obtained by Lessor and provided to Lessee prior to the execution of
this Lease (the “Environmental Audit”), and (ii) Environmental Liabilities which were caused by the acts or negligent failures to act of Lessee. 
  
 (c)    Lessee hereby agrees to defend, indemnify and save harmless any and all Lessor Indemnified Parties from and against any and all Environmental Liabilities which were (i)
resulting from conditions disclosed in the Environmental Audit, and (ii) caused by the acts or negligent failures to act of Lessee. 
  
 (d)    If any Proceeding is brought against any Indemnified Party in respect of an Environmental Liability with respect to which such Indemnified Party may claim indemnification under either Subsection
8.3(b) or (c), the Indemnifying Party, upon request, shall at its sole expense resist and defend such Proceeding, or cause the same to be resisted and defended by counsel designated by the Indemnified Party and approved by the Indemnifying Party,
which approval shall not be unreasonably withheld or delayed; provided, however, that such approval shall not be required in the case of defense by counsel designated by any insurance company undertaking such defense pursuant to any applicable
policy of insurance. Each Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel will be at the sole expense of such Indemnified
Party unless such counsel has been approved by the Indemnifying Party, which approval shall not be unreasonably withheld or delayed. The Indemnifying Party shall not be liable for any settlement of any such Proceeding made without its consent, which
shall not be unreasonably withheld or delayed, but if 

 
 32 

 settled with the consent of the Indemnifying Party, or if settled without its consent (if its consent shall be unreasonably withheld or
delayed), or if there be a final, nonappealable judgment for an adversary party in any such Proceeding, the Indemnifying Party shall indemnify and hold harmless the Indemnified Parties from and against any liabilities and loss incurred by such
Indemnified Parties by reason of such settlement or judgement. 
  
 (e)    At any time any
Indemnified Party has reason to believe circumstances exist which could reasonably result in an Environmental Liability, upon reasonable prior Notice to Lessee and Manager stating such Indemnified Party’s basis for such belief, an Indemnified
Party shall be given immediate access to the Leased Property (including, but not limited to, the right to enter upon, investigate, drill wells, take soil borings, excavate, monitor, test, cap and use available land for the testing of remedial
technologies), Lessee’s employees, and to all relevant documents and records regarding the matter as to which a responsibility, liability or obligation is asserted or which is the subject of any Proceeding; provided that such access may he
conditioned or restricted as may be reasonably necessary to ensure compliance with law and the safety of personnel and facilities or to protect confidential or privileged information. All Indemnified Parties requesting such immediate access and
cooperation shall endeavor to coordinate such efforts to result in as minimal interruption of the operation of the Leased Property as practicable. 
  
 (f)    The indemnification rights and obligations provided for in this Article 8 shall be in addition to any indemnification rights and obligations provided for elsewhere in this
Lease. 
  
 (g)    The indemnification rights and obligations provided for in this Article 8 shall
survive the termination of this Lease. 
  
 For purposes of this Section 8.3, all amounts for which any Indemnified
Party seeks indemnification shall be computed net of (a) any actual income tax benefit resulting therefrom to such Indemnified Party, (b) any insurance proceeds received (net of tax effects) with respect thereto, and (c) any amounts recovered (net
of tax effects) from any third parties based on claims the Indemnified Party has against such third parties which reduce the damages that would otherwise be sustained; provided that in all cases, the timing of the receipt or realization of insurance
proceeds or income tax benefits or recoveries from third parties shall be taken into account in determining the amount of reduction of damages. Each Indemnified Party agrees to use its reasonable efforts to pursue, or assign to Lessee or Lessor, as
the case may be, any claims or rights it may have against any third party which would materially reduce the amount of damages otherwise incurred by such Indemnified Party. 
  
 Notwithstanding anything to the contrary contained in this Lease, if Lessor shall become entitled to the possession of the Leased Property by virtue of the termination of
the Lease or repossession of the Leased Property, then Lessor may assign its indemnification rights under this Section 8.3 (but not any other rights under this Section 8.3) to any Person to whom Lessor subsequently transfers the Leased Property,
subject to the following conditions and limitations, each of which shall be deemed to be incorporated into the terms of such assignment, whether or not specifically referred to therein: 

 
 33 

  
 (i)  The indemnification rights referred to in this
section may be assigned only if a known Environmental Liability then exists or if a Proceeding is then pending or, to the knowledge of Lessee or Lessor, then threatened with respect to the Leased Property; 
  
 (ii)  Such indemnification rights shall be limited to Environmental Liabilities relating to or specifically
affecting the Leased Property; and 
  
 (iii)  Any assignment of such indemnification rights
shall be limited to the immediate transferee of Lessor, and shall not extend to any such transferee’s successors or assigns. 
  
 ARTICLE 9 
 MAINTENANCE AND REPAIRS; ENCROACHMENTS AND RESTRICTIONS 
  
 9.1.  Maintenance and Repairs. 
  
 (a)    Lessee, at its sole expense, will keep the Leased Property, and all private roadways, sidewalks and curbs appurtenant thereto that are under Lessee’s control, including windows and plate glass,
mechanical, electrical and plumbing systems and equipment (including conduit and ductware), and non-load bearing interior walls, and parking lot surfaces, in good order and repair, except (i) for ordinary wear and tear (whether or not the need for
such repairs occurred as a result of Lessee’s use, any prior use, the elements or the age of the Leased Property, or any portion thereof) and (ii) to the extent of damage caused by Lessor’s gross negligence or willful misconduct or that of
its employees or agents, and, except as otherwise provided in Subsection 9.1(b), Article 14 or Article 15, with reasonable promptness, make all necessary and appropriate repairs replacements, and improvements thereto of every kind and nature,
whether interior or exterior ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term of this Lease (concealed or otherwise), or required by any governmental agency having
jurisdiction over the Leased Property, except as to the structural elements of the Leased Improvements. Lessee, however, shall be permitted to prosecute claims against Lessor’s predecessors in title for breach of any representation or warranty
or for any latent defects in the Leased Property to be maintained by Lessee unless Lessor is already diligently pursuing such a claim. All repairs shall, to the extent reasonably achievable, be at least equivalent in quality to the original work.
Lessee will not take or omit to take any action, the taking or omission of which might materially impair the value or the usefulness of the Leased Property or any part thereof for its Primary Intended Use. 
  
 (b)    Notwithstanding Lessee’s obligations under Subsection 9.1(a) above, except to the extent of damage caused
by Lessee’s negligence or willful misconduct or that of its employees or agents, Lessor shall be required to bear the cost of maintaining any underground utilities and the structural elements of the Leased Improvements, including exterior walls
and the roof of the Hotel (but excluding windows and plate glass, mechanical, electrical and plumbing systems and equipment, including conduit and ductware, and non-load bearing walls, and parking lot surfaces). Except as set forth in the preceding
sentence and in Section 10.5, Lessor shall not under any circumstances be required to build or rebuild any improvement on the Leased Property, 

 
 34 

 or to make any repairs, replacements, alterations, restorations or renewals of any nature or description to the Leased Property, whether
ordinary or extraordinary, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, in connection with this Lease, or to maintain the Leased Property in any way. Lessee hereby waives, to the extent permitted by law, the
right to make repairs at the expense of Lessor, pursuant to any law in effect at the time of the execution of this Lease or hereafter enacted, except following default by Lessor under this Lease, to the extent of repairs (for which Lessor is
obligated hereunder) required to be made in order for the Hotel, and Lessee’s use thereof, to comply with Lessee’s obligations under the Franchise Agreement and the Management Agreement. Lessor shall have the right to give, record and
post, as appropriate, notices of nonresponsibility under any mechanic’s lien laws now or hereafter existing. 
  
 (c)  Nothing contained in this Lease and no action or inaction by Lessor shall be construed as (1) constituting the request of Lessor, expressed or implied, to any contractor, subcontractor, laborer, materialman or vendor
to or for the performance of any labor or services or the furnishing of any materials or other property for the construction, alteration, addition, repair or demolition of or to the Leased Property or any part thereof, or (2) giving Lessee any
right, power or permission to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Lessor in respect thereof or to make
any agreement that may create, or in any way be the basis for any right, title, interest, lien, claim or other encumbrance upon the estate of Lessor in the Leased Property, or any portion thereof. 
  
 9.2.  Encroachments, Restrictions, Etc.  Lessor represents and warrants that the Leased Improvements do not
materially encroach upon any property, street or right-of-way adjacent to the Leased Property, or violate the agreements or conditions contained in any lawful restrictive covenant or other agreement affecting the Leased Property, or any part
thereof, or impair the rights of others under any easement or right-of-way to which the Leased Property is subject. Except to the extent that such representation and warranty is breached by Lessor, if any of the Leased Improvements, at any time
hereafter, materially encroach upon any property, street or right-of-way adjacent to the Leased Property, or violate the agreements or conditions contained in any lawful restrictive covenant or other agreement affecting the Leased Property, or any
part thereof, or impair the rights of others under any easement or right-of-way to which the Leased Property is subject, then promptly upon the request of Lessor or at the behest of any Person affected by any such encroachment, violation or
impairment, Lessee shall, at its expense, subject to its right to contest the existence of any encroachment, violation or impairment and in such case, in the event of an adverse final determination, either (a) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each such encroachment, violation or impairment, whether the same shall affect Lessor or Lessee or (b) make such changes in the Leased Improvements, and take such other actions, as
Lessee in the good faith exercise of its judgment deems reasonably practicable to remove such encroachment, and to end such violation or impairment, including, if necessary, the alteration of any of the Leased Improvements, and in any event take all
such actions as may be necessary in order to be able to continue the operation of the Leased Improvements for the Primary Intended Use substantially in the manner and to the extent the Leased Improvements were operated prior to the assertion of such
violation, impairment or encroachment. Any such alteration shall be made in conformity with the applicable requirements 

 
 35 

 of Article 10. Lessee’s obligations under this Section 9.2 shall be in addition to and shall in no way discharge or diminish any obligation
of any insurer under any policy of title or other insurance held by Lessor. 
  
 ARTICLE 10 
 ALTERATIONS AND IMPROVEMENTS; FF&E RESERVE 
  
 10.1.    Alterations.  After receiving approval of Lessor, which approval shall not be unreasonably withheld or delayed, Lessee shall have the right to make such additions, modifications or
improvements to the Leased Property from time to time as Lessee deems desirable for its permitted uses and purposes, provided that such action will not significantly alter the character or purposes or significantly detract from the value or
operating efficiency thereof and will not significantly impair the revenue-producing capability of the Leased Property or adversely affect the ability of Lessee to comply with the provisions of this Lease. The cost of such additions, modifications
or improvements to the Leased Property shall be paid by Lessee, and all such additions, modifications and improvements shall, without payment by Lessor at any time, be included under the terms of this Lease and upon expiration or earlier termination
of this Lease shall pass to and become the property of Lessor. 
  
 10.2.    Salvage.  All materials which are scrapped or removed in connection with the making of repairs required by Articles 9 or 10 shall be or become the property of Lessor or Lessee depending
on which party is paying for or providing the financing for such work. 
  
 10.3.    Joint Use
Agreements.  If Lessee constructs additional improvements that are connected to the Leased Property or share maintenance facilities, HVAC, electrical, plumbing or other systems, utilities, parking or other amenities, the parties shall
enter into a mutually agreeable cross-easement or joint use agreement, the form of which has been approved in advance by Lessor, to make available necessary services and facilities in connection with such additional improvements, to protect each of
their respective interests in the properties affected, and to provide for separate ownership, use, and/or financing of such improvements. 
  
 10.4.    [Reserved]. 
  
 10.5.    Furniture, Fixture and Equipment Allowance.  Lessor shall be obligated to pay Lessee, when and as required to meet the requirements of the Franchise Agreement and the Management Agreement
for a reserve for periodic repair, replacement or refurbishing of furniture, fixtures and equipment that constitute Leased Property, an amount equal up to five percent (5%) of Suite Revenues monthly. Upon written request by Lessee to Lessor stating
the specific use to be made and the reasonable approval thereof by Lessor (or as otherwise required by the franchisor under the Franchise Agreement or Manager under the Management Agreement), such reserve funds (and additional funds of Lessor, if
necessary) shall be made available by Lessor for use by Lessee for replacement or refurbishing of furniture, fixtures and equipment that constitute Leased Property in connection with the Primary Intended Use; provided, however, that no amounts made
available under this Article shall be used to purchase property (other than “real property” within the meaning of Treasury Regulations Section 1.856-3(d)), to the extent that doing so would cause Lessor to recognize income other than
“rents from real property” as defined in Section 856(d) of the Code. 

 
 36 

 Lessor’s obligation shall be cumulative, but not compounded, and any amounts that have accrued hereunder shall be payable in future periods
for such uses and in accordance with the procedure set forth herein. Lessee shall have no interest in any accrued obligation of Lessor hereunder after the termination of this Lease. 
  
 ARTICLE 11 
 COMPLIANCE WITH FRANCHISE 
  
 11.1.    Compliance with Franchise Agreement and Management Agreement.  To the extent any of the
provisions of the Franchise Agreement or Management Agreement impose a greater obligation on Lessee than the corresponding provisions of the Lease, then Lessee shall be obligated to comply with, and to take all reasonable actions necessary to
prevent breaches or defaults under, the provisions of the Franchise Agreement and the Management Agreement. It is the intent of the parties hereto that Lessee shall comply in every respect with the provisions of the Franchise Agreement and the
Management Agreement so as to avoid any material default thereunder during the term of this Lease. Lessee shall not terminate, extend or enter into any material modification of the Franchise Agreement or the Management Agreement without in each
instance first obtaining Lessor’s prior written consent, which shall not be unreasonably withheld. Lessor and Lessee agree to cooperate with each other in the event it becomes necessary to obtain a franchise extension or modification (or, at
Lessor’s option, a new franchise) for the Leased Property, and in any transfer of the Franchise Agreement or Management Agreement to Lessor or any designee of Lessor or any successor to Lessee upon the termination of this Lease. In the event of
expiration or termination of a Franchise Agreement or Management Agreement, for whatever reason, Lessor will have the right, in the exercise of its sole discretion, to approve any new Franchise Agreement or Management Agreement for the Hotel.

  
 ARTICLE 12 
 PERMITTED LIENS AND CONTESTS 
  
 12.1.    Liens.  Subject
to the provisions of Section 12.2 relating to permitted contests, Lessee will not directly or indirectly create or allow to remain and will promptly discharge at its expense any lien, encumbrance, attachment, title retention agreement or claim upon
the Leased Property or any attachment, levy, claim or encumbrance in respect of the Rent, not including, however, (a) this Lease, (b) the matters included as exceptions in the title policy insuring Lessor’s interest in the Leased Property, (c)
restrictions, liens and other encumbrances which are consented to in writing by Lessor or any easements granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens for those taxes upon Lessor or the Leased Property which Lessee is not
required to pay hereunder, (e) subleases permitted by Article 20 hereof, (f) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (1) the same are not yet payable or are payable without the addition of
any fine or penalty or (2) such liens are in the process of being contested as permitted by Section 12.2, (g) liens of mechanics, laborers, materialmen, suppliers or vendors for sums either disputed or not yet due provided that (1) the payment of
such sums shall not be postponed under any related contract for more than sixty (60) days after the completion of the action giving rise to such lien and such reserve or other appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor or (2) any such liens are in the process of being contested as permitted by Section 12.2 hereof, and 

 
 37 

  
 (h) any liens which are the responsibility of Lessor pursuant to the provisions of Article 22 of this
Lease. 
  
 12.2.    Permitted Contests.  Lessee shall have the right to contest
the amount or validity of any Imposition to be paid by Lessee or any Legal Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance, charge or claim (“Claims”) not otherwise permitted by Section 12.1, by appropriate
legal proceedings in good faith and with due diligence (but this shall not be deemed or construed in any way to relieve, modify or extend Lessee’s covenants to pay or its covenants to cause to be paid any such charges at the time and in the
manner as in this Section provided), on condition, however, that such legal proceedings shall not operate to relieve Lessee from its obligations hereunder and shall not cause the sale or risk the loss of any portion of the Leased Property, or any
part thereof, or cause Lessor or Lessee to be in default under any mortgage, deed of trust, security deed or other agreement encumbering the Leased Property or any interest therein. Upon the request of Lessor, Lessee shall either (a) provide a bond
or other assurance reasonably satisfactory to Lessor that all Claims which may be assessed against the Leased Property together with interest and penalties, if any, thereon will be paid, or (b) deposit within the time otherwise required for payment
with a bank or trust company as trustee upon terms reasonably satisfactory to Lessor, as security for the payment of such Claims, money in an amount sufficient to pay the same, together with interest and penalties in connection therewith, as to all
Claims which may be assessed against or become a Claim on the Leased Property, or any part thereof, in said legal proceedings. Lessee shall furnish Lessor and any lender of Lessor with reasonable evidence of such deposit within five (5) days of the
same. Lessor agrees to join in any such proceedings if the same be required legally to prosecute such contest of the validity of such Claims; provided, however, that Lessor shall not thereby be subjected to any liability or loss for the payment of
any costs or expenses in connection with any proceedings brought by Lessee; and Lessee covenants to indemnify and save harmless Lessor from any such liabilities, losses, costs or expenses. Lessee shall be entitled to any refund of any Claims and
such charges and penalties or interest thereon which have been paid by Lessee or paid by Lessor and for which Lessor has been fully reimbursed. In the event that Lessee fails to pay any Claims when due or to provide the security therefor as provided
in this Section and diligently to prosecute any contest of the same, Lessor may, upon ten (10) days’ advance Notice to Lessee, and Lessee’s failure to correct the same within such ten (10) day period, pay such charges together with any
interest and penalties and the same shall be repayable by Lessee to Lessor as Additional Charges at the next Payment Date provided for in this Lease; provided, however, that should Lessor reasonably determine that the giving of such Notice would
risk loss to the Leased Property or cause damage to Lessor, then Lessor shall give such Notice as is practical under the circumstances. Lessor reserves the right to contest any of the Claims at its expense not pursued by Lessee. Lessor and Lessee
agree to cooperate in coordinating the contest of any Claims. 
  
 ARTICLE 13 
 INSURANCE REQUIREMENTS 
  
 13.1.    General Insurance Requirements.  During the Term of this Lease, Lessor and Lessee shall at all times keep the Leased Property insured with the kinds and amounts of insurance described
below, or such other insurance coverage(s) as may be required by the Franchise Agreement. This insurance shall be written by companies authorized to issue insurance in the 

 
 38 

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

  
 (iii)    Insurance covering such other hazards and in such amounts as may be
customary for comparable properties in the area of the Leased Property and is available from insurance companies, insurance pools or other appropriate companies authorized to do business in the State at rates which are economically practicable in
relation to the risks covered, as may be reasonably requested by Lessor; 
  
 (iv)    Fidelity bonds with limits and deductibles as may be reasonably requested by Lessor, covering Lessee’s employees in job classifications normally 

 
 39 

  
 bonded under prudent hotel management practices in the United
States or otherwise required by law; 
  
 (v)    Worker’s compensation
insurance coverage for all persons, if any, employed by Lessee on the Leased Premises, to the extent necessary to protect Lessor and the Leased Property against Lessee’s worker’s compensation claims, such worker’s compensation
insurance to be in accordance with the requirements of applicable local, state and federal law; 
  
 (vi)    Vehicle liability insurance for owned, non-owned, and hired vehicles, in the amount of $5,000,000; and 
  
 (vii)    Such other insurance as Lessor may reasonably request for facilities such as the Leased Property and the operation thereof.

  
 13.2.      Replacement Cost.  The term “full replacement
cost” as used herein shall mean the actual replacement cost of the Leased Property requiring replacement from time to time including an increased cost of construction endorsement, if available, and the cost of debris removal. In the event
either party believes that full replacement cost (the then-replacement cost less such exclusions) has increased or decreased at any time during the Lease Term, it shall have the right to have such full replacement cost re-determined. 

 
 13.3.      Waiver of Subrogation.  All insurance policies carried by Lessor or
Lessee covering the Leased Property, the Fixtures, the Hotel or Lessee’s Personal Property, including, without limitation, contents, fire and casualty insurance, shall expressly waive any right of subrogation on the part of the insurer against
the other party. The parties hereto agree that their policies will include such waiver clause or endorsement so long as the same are obtainable without extra cost, and in the event of such an extra charge the other party, at its election, may pay
the same, but shall not be obligated to do so. 
  
 13.4.      Form Satisfactory,
Etc. 
  
 (a)    All of the policies of insurance referred to in this Article 13 to be
maintained by Lessee shall be written in a form, with deductibles and by insurance companies satisfactory to Lessor. Lessee shall pay all of the premiums therefor, and deliver such policies or certificates thereof to Lessor prior to their effective
date (and, with respect to any renewal policy, thirty (30) days prior to the expiration of the existing policy), and in the event of the failure of Lessee either to effect such insurance as herein called for or to pay the premiums therefor, or to
deliver such policies or certificates thereof to Lessor at the times required, Lessor shall be entitled, but shall have no obligation, to effect such insurance and pay the premiums therefor, and Lessee shall reimburse Lessor for any premium or
premiums paid by Lessor for the coverages required of Lessee under this Article 13 upon written demand therefor, and Lessee’s failure to repay the same within thirty (30) days after Notice of such failure from Lessor shall constitute an Event
of Default within the meaning of Section 16.1. Each insurer mentioned in this Article 13 shall agree, by endorsement to the policy or policies issued by it, or by independent instrument furnished to 

 
 40 

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

 
 41 

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

 
 42 

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

14.4.      Lessee’s Property.  All insurance proceeds payable by reason of any loss of or damage to any of
Lessee’s Personal Property shall be paid to Lessee; provided, however, no such payments shall diminish or reduce the insurance payments otherwise payable to or for the benefit of Lessor hereunder. 

 
 43 

  
 14.5.    Abatement of Rent.  Any damage or
destruction due to casualty notwithstanding, this Lease shall remain in full force and effect and Lessee’s obligation to make rental payments and to pay all other charges required by this Lease shall remain unabated during the first three (3)
months of any period required for the applicable repair and restoration. Thereafter, Base Rent shall be equitably abated. 
  
 14.6.    Damage Near End of Term.  Notwithstanding any provisions of Section 14.2 or 14.3 appearing to the contrary, if damage to or destruction of the Hotel rendering it unsuitable for its
Primary Intended Use occurs during the last twenty-four (24) months of the Term, then Lessor or Lessee shall have the right to terminate this Lease by giving Notice, respectively, to Lessee or Lessor within thirty (30) days after the date of damage
or destruction, whereupon all accrued Rent shall be paid immediately, and this Lease shall automatically terminate five (5) days after the date of such Notice. 
  
 14.7.    Waiver.  Lessee hereby waives any statutory rights of termination that may arise by reason of any damage or destruction of the Hotel that Lessor is
obligated to restore or may restore under any of the provisions of this Lease. 
  
 ARTICLE 15 

CONDEMNATION; AWARD ALLOCATION 
  
 15.1.    Definitions. 
  
 (a)    “Award” means all compensation, sums or anything of value awarded, paid or received on a total or partial Condemnation. 
  
 (b)    “Condemnation” means a Taking resulting from (1) the exercise of any governmental power, whether by legal proceedings or
otherwise, by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending. 
  
 (c)    “Condemnor” means any public or quasi-public authority, or private corporation or individual, having the power of Condemnation.

  
 (d)    “Date of Taking” means the date the Condemnor has the right to
possession of the property being condemned. 
  
 15.2.    Parties’ Rights and
Obligations.  If during the Term there is any Condemnation of all or any part of the Leased Property or any interest in this Lease, the rights and obligations of Lessor and Lessee shall be determined by this Article 15. 

 
 15.3.    Total Taking.  If title to the fee of the whole of the Leased Property is
condemned by any Condemnor, this Lease shall cease and terminate as of the Date of Taking by the Condemnor. If title to the fee of less than the whole of the Leased Property is so taken or condemned, which nevertheless renders the Leased Property
Unsuitable or Uneconomic for its Primary Intended Use, 

 
 44 

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

 
 45 

 will, at its sole cost and expense (subject to Lessor’s contribution as set forth below), restore the Leased Property as nearly as may be
reasonably possible to the condition in which the same was immediately prior to such Condemnation, unless such period of temporary use or occupancy extends beyond the expiration of the Term, in which case Lessee shall not be required to make such
restoration. If restoration is required hereunder, Lessor shall contribute to the cost of such restoration that portion of its entire Award that is specifically allocated to such restoration in thejudgment or order of the court, if any, and Lessee
shall fund the balance of such costs in a manner reasonably satisfactory to Lessor. 
  
 ARTICLE 16

 DEFAULT BY LESSEE; LESSOR’S REMEDIES 
  
 16.1.    Events of Default.    If any one or more of the following events (individually, an “Event of Default”) occurs: 
  
             (a)    if an Event of Default occurs under any
other lease between Lessor or any Affiliate of Lessor and Lessee or any Affiliate of Lessee; or 
  
             (b)    if Lessee fails to make payment of the Base Rent within ten (10) days after the same becomes due and payable; or 

 
             (c)    if Lessee fails to make
payment of Percentage Rent when the same becomes due and payable and such condition continues for a period of thirty (30) days after the end of the applicable quarter; or 
  
             (d)    if Lessee fails to observe or perform any other term, covenant or
condition of this Lease and such failure is not cured by Lessee within a period of thirty (30) days after receipt by Lessee of Notice thereof from Lessor, unless such failure cannot with due diligence be cured within a period of thirty (30) days, in
which case it shall not be deemed an Event of Default if Lessee proceeds promptly and with due diligence to cure the failure and diligently completes the curing thereof provided, however, in no event shall such cure period extend beyond ninety (90)
days after such Notice; or 
  
             (e)    if Lessee shall file a petition in bankruptcy or reorganization for an arrangement pursuant to any federal or state bankruptcy law or
any similar federal or state law, or shall be adjudicated a bankrupt or shall make an assignment for the benefit of creditors or shall admit in writing its inability to pay its debts generally as they become due, or if a petition or answer proposing
the adjudication of Lessee as a bankrupt or its reorganization pursuant to any federal or state bankruptcy law or any similar federal or state law shall be filed in any court and Lessee shall be adjudicated a bankrupt and such adjudication shall not
be vacated or set aside or stayed within sixty (60) days after the entry of an order in respect thereof, or if a receiver of Lessee or of the whole or substantially all of the assets of Lessee shall be appointed in any proceeding brought by Lessee
or if any such receiver, trustee or liquidator shall be appointed in any proceeding brought against Lessee and shall not be vacated or set aside or stayed within sixty (60) days after such appointment; or 

 
 46 

  
             (f)    if Lessee is liquidated or dissolved, or begins proceedings toward such liquidation or dissolution, or, in any manner, permits the
sale or divestiture of substantially all of its assets; or 
  
             (g)    if, except as expressly permitted herein, the estate or interest of Lessee in the Leased Property or any part thereof is voluntarily
or involuntarily transferred, assigned, conveyed,levied upon or attached in any proceeding (unless Lessee is contesting such lien or attachment in good faith in accordance with Section 12.2 hereof) or there is a Change of Control of Lessee; or

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

 
 47 

  
 16.3.    Damages.    Neither (a)
the termination of this Lease, (b) the repossession of the Leased Property, (c) the failure of Lessor to relet the Leased Property, nor (d) the reletting of all or any portion thereof, shall relieve Lessee of its liability and obligations hereunder,
all of which shall survive any such termination, repossession or reletting. In the event of any such termination, Lessee shall forthwith pay to Lessor all Rent due and payable with respect to the Leased Property to and including the date of such
termination. 
  
             Lessee shall forthwith pay
to Lessor, at Lessor’s option, as and for liquidated and agreed current damages for Lessee’s default, either: 
  
 (i)    Without termination of Lessee’s right to possession of the Leased Property, each installment of Rent (including Percentage Rent as determined below) and other sums payable by Lessee to Lessor
under the Lease as the same becomes due and payable, which Rent and other sums shall bear interest at the Overdue Rate, and Lessor may enforce, by action or otherwise, any other term or covenant of this Lease; or 
  
 (ii)    the sum of: 
  
 (A)    the unpaid Rent which had been earned at the time of termination, repossession or reletting, and 
  
 (B)    the worth at the time of termination, repossession or reletting of the amount by which the
unpaid Rent for the balance of the Term after the time of termination, repossession or reletting, exceeds the amount of such rental loss that Lessee proves could be reasonably avoided and as reduced for rentals received after the time of
termination, repossession or reletting, if and to the extent required by applicable law, and 
  
 (C)    any other amount necessary to compensate Lessor for all the detriment proximately caused by Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things, would
be likely to result therefrom. 
  
             The worth
at the time of termination, repossession or reletting of the amount referred to in subparagraph (B) is computed by discounting such amount at the discount rate of the Federal Reserve Bank of New York at the time of award plus one percent (1%).
Percentage Rent for the purposes of this Section 16.3 shall be a sum equal to (i) the average of the annual amounts of the Percentage Rent for the three (3) Fiscal Years immediately preceding the Fiscal Year in which the termination, re-entry or
repossession takes place, or (ii) if three (3) Fiscal Years shall not have elapsed, the average of the Percentage Rent during the preceding Fiscal Years during which the Lease was in effect, or (iii) if one Fiscal Year has not elapsed, the amount
derived by annualizing the Percentage Rent from the effective date of this Lease. 
  
 16.4.    Waiver.    If this Lease is terminated pursuant to Section 16.1, Lessee waives, to the extent permitted by applicable law, (a) any right to a trial by jury in the event of
summary 

 
 48 

  
 proceedings to enforce the remedies set forth in this Article 16, and (b) the benefit of any laws now or
hereafter in force exempting property from liability for rent or for debt and Lessor waives any right to “pierce the corporate veil” of Lessee other than to the extent funds shall have been fraudulently paid by Lessee to any Affiliate of
Lessee following a default resulting in an Event of Default. 
  
 16.5.    Application of
Funds.    Any payments received by Lessor under any of the provisions of this Lease during the existence or continuance of any Event of Default shall be applied to Lessee’s obligations in the order that Lessor may
determine or as may be prescribed by the laws of the State. 
  
 16.6.    Lessor’s Right
to Cure Lessee’s Default.    If Lessee fails to make any payment or to perform any act required to be made or performed under this Lease, including, without limitation, Lessee’s failure to comply with the terms of
any Franchise Agreement, and fails to cure the same within the relevant time periods provided in Section 16.1, Lessor, without waiving or releasing any obligation of Lessee, and without waiving or releasing any obligation or default, may (but shall
be under no obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of Lessee, and may, to the extent permitted by law, enter upon the Leased Property for such purpose and, subject to Section
16.4, take all such action thereon as, in Lessor’s opinion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses, in each case to the extent permitted by law) so incurred, together with a late charge thereon (to the extent permitted by law) at the Overdue Rate from the date on which such sums or expenses are paid or
incurred by Lessors, shall be paid by Lessee to Lessor on demand. The obligations of Lessee and rights of Lessor contained in this Article shall survive the expiration or earlier termination of this Lease. 
  
 ARTICLE 17 
 DEFAULT BY LESSOR;
LESSEE’S REMEDIES 
  
 17.1.    Breach by Lessor.    It shall
be a breach of this Lease if Lessor fails to observe or perform any term, covenant or condition of this Lease on its part to be performed and such failure continues for a period of thirty (30) days after Notice thereof from Lessee, unless such
failure cannot with due diligence be cured within a period of thirty (30) days, in which case such failure shall not be deemed to continue if Lessor, within such thirty (30) day period, proceeds promptly and with due diligence to cure the failure
and diligently completes the curing thereof; provided, however, that such default shall be cured by Lessor in any event prior to the date on which the default becomes an event of default under the terms of the Franchise Agreement for the Hotel. The
time within which Lessor shall be obligated to cure any such failure also shall be subject to extension of time due to the occurrence of any Unavoidable Delay. If Lessor fails to cure any such breach within the grace period described above, Lessee,
without waiving or releasing any obligations hereunder, and in addition to all other remedies available to Lessee at law or in equity, may purchase the Leased Property from Lessor for a purchase price equal to the then Fair Market Value. If Lessee
elects to purchase the Leased Property it shall deliver a Notice thereof to Lessor specifying a settlement date to occur not less than ninety (90) days subsequent to the date of such Notice on which it shall purchase the Leased Property, and the
same shall be thereupon conveyed 

 
 49 

 in accordance with the provisions of Section 17.3; provided, however, that Lessor shall pay the cost of Lessee’s title insurance and all
closing costs associated with such purchase by Lessee following default by Lessor. 
  
 17.2.    Lessee’s Right to Cure.    Subject to the provisions of Section 17.1, if Lessor breaches any covenant to be performed by it under this Lease, Lessee, after Notice to and
demand upon Lessor, without waiving or releasing any obligation hereunder, and in addition to all other remedies available to Lessee, may (but shall be under no obligation at any time thereafter to) make such payment or perform such act for the
account and at the expense of Lessor. All sums so paid by Lessee and all costs and expenses (including, without limitation, reasonable attorneys’ fees) so incurred, together with interest thereon at the Overdue Rate from the date on which such
sums or expenses are paid or incurred by Lessee, shall be paid by Lessor to Lessee on demand or, following entry of a final, nonappealable judgment against Lessor for such sums, may be offset by Lessee against the Base Rent and/or Percentage Rent
payments next accruing or coming due. The rights of Lessee hereunder to cure and to secure payment from Lessor in accordance with this Section 17.2 shall survive the termination of this Lease with respect to the Leased Property. 

 
 17.3.    Provisions Relating to Purchase of the Leased Property by Lessee.    If
Lessee purchases the Leased Property from Lessor pursuant to any of the terms of this Lease, Lessor shall, upon receipt from Lessee of the applicable purchase price, together with full payment of any unpaid Rent due and payable with respect to any
period ending on or before the date of the purchase, deliver to Lessee an appropriate limited or special warranty deed or other conveyance conveying the entire interest of Lessor in and to the Leased Property to Lessee free and clear of all
encumbrances other than (a) those that Lessee has agreed hereunder to pay or discharge, (b) those mortgage liens, if any, that Lessee has agreed in writing to accept and to take title subject to, (c) those liens and encumbrances subject to which the
Leased Property was conveyed to Lessor, to the extent not released in connection with the transactions contemplated by this Lease, (d) encumbrances, easements, licenses or rights of way required to be imposed on the Leased Property under Section
7.3, and (e) any other encumbrances permitted to be imposed on the Leased Property under the provisions of Article 22 that are assumable at no cost to Lessee or to which Lessee may take subject without cost to Lessee. The difference between the
applicable purchase price and the total of the encumbrances assumed or taken subject to shall be paid in cash to Lessor or as Lessor may direct, in federal or other immediately available funds, except as otherwise mutually agreed by Lessor and
Lessee. All expenses of such conveyance, including, without limitation, the cost of title examination or title insurance, if desired by Lessee, Lessee’s attorneys’ fees incurred in connection with such conveyance and release, and one-half
of any transfer taxes and recording fees, shall be paid by Lessee. Lessor shall pay one-half of any transfer taxes and recording fees and its attorney’s fees. 
  
 ARTICLE 18 
 INDEMNIFICATION 
  
 18.1.    Indemnification. 
  
             (a)    Notwithstanding the existence of any insurance, and without regard to the policy limits of any such insurance or self-insurance, but
subject to Section 13.3 and Section 8.3, 

 
 50 

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

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

  
 19.5.    Lessee Officer and Employee Limitation.  If a Person serves as both
(a) a director of Lessee (or any Person who furnishes or renders services to the tenants of the Leased Property, or manages or operates the Leased Property) and (b) an officer (or employee) of the Lessor that Person shall not receive any
compensation for serving as a director of Lessee (or any Person who furnishes or renders services to the tenants of the Leased Property, or manages or operates the Leased Property). Furthermore, if a Person serves as both (a) a director of the
Lessor and (b) an officer (or employee) of Lessee (or any Person who furnishes or renders services to the tenants of the Leased Property, or manages or operates the Leased Property), that Person shall not receive any 

 
 52 

 compensation for serving as a director of the Lessor. No Person, other than Glade M. Knight, shall serve as an officer (or employee) of both
Lessor and Lessee. 
  
 19.6.    Payments to Affiliates of Lessee.  During the
Term, Lessee shall not pay, or become obligated to pay, any fees to any Affiliate of Lessee in connection with the Hotel, other than fees that are subordinated to the payments that are required to be made to Lessor pursuant to this Lease.

  
 ARTICLE 20 
 SUBLETTING AND ASSIGNMENT 
  
 20.1.    Subletting and
Assignment.  Subject to the provisions of Article 19 and Section 20.2 and any other express conditions or limitations set forth herein, Lessee may, but only with the consent of Lessor (which shall not be unreasonably withheld or
delayed), (a) assign this Lease or sublet all or any part of the Leased Property to an Affiliate of Lessee, or (b) sublet any retail or restaurant portion of the Leased Improvements in the normal course of the Primary Intended Use; provided that any
subletting to any party other than an Affiliate of Lessee shall not individually as to any one such subletting, or in the aggregate, materially diminish the actual or potential Percentage Rent payable under this Lease. In the case of a subletting,
the sublessee shall comply with the provisions of Section 20.2, and in the case of an assignment, the assignee shall assume in writing and agree to keep and perform all of the terms of this Lease on the part of Lessee to be kept and performed and
shall be, and become, jointly and severally liable with Lessee for the performance thereof. Notwithstanding the above, Lessee may assign the Lease to an Affiliate without the consent of Lessor; provided that any such assignee assumes in writing and
agrees to keep and perform all of the terms of the Lease on the part of Lessee to be kept and performed and shall be and become jointly and severally liable with Lessee for the performance thereof. In case of either an assignment or subletting made
during the Term, Lessee shall remain primarily liable, as principal rather than as surety, for the prompt payment of the Rent and for the performance and observance of all of the covenants and conditions to be performed by Lessee hereunder. An
original counterpart of each such sublease and assignment and assumption, duly executed by Lessee and such sublessee or assignee, as the case may be, in form and substance satisfactory to Lessor, shall be delivered promptly to Lessor. 

 
 20.2.    Attornment.  Lessee shall insert in each sublease permitted under Section 20.1
provisions to the effect that (a) such sublease is subject and subordinate to all of the terms and provisions of this Lease and to the rights of Lessor hereunder, (b) if this Lease terminates before the expiration of such sublease, the sublessee
thereunder will, at Lessor’s option, attorn to Lessor and waive any right the sublessee may have to terminate the sublease or to surrender possession thereunder as a result of the termination of this Lease, and (c) if the sublessee receives a
Notice from Lessor or Lessor’s assignees, if any, stating that an uncured Event of Default exists under this Lease, the sublessee shall thereafter be obligated to pay all rentals accruing under said sublease directly to the party giving such
Notice, or as such party may direct. All rentals received from the sublessee by Lessor or Lessor’s assignees, if any, as the case may be, shall be credited against the amounts owing by Lessee under this Lease. 
  
 20.3.    Conveyance by Lessor.  Lessor may assign this Lease to any purchaser of the Leased Property.
If Lessor or any successor owner of the Leased Property conveys the Leased 

 
 53 

 Property in accordance with the terms hereof other than as security for a debt, and the grantee or transferee of the Leased Property expressly
assumes all obligations of Lessor hereunder arising or accruing from and after the date of such conveyance or transfer, Lessor or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of
Lessor under this Lease arising or accruing from and after the date of such conveyance or other transfer as to the Leased Property and all such future liabilities and obligations shall thereupon be binding upon the new owner. 

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

 
 54 

 mortgages, or other Encumbrances heretofore or hereafter granted by Lessor or which otherwise encumber or affect the Leased Property and to any
and all advances to be made thereunder and to all renewals, modifications, consolidations, replacements, substitutions, and extensions thereof (all of which are herein called the “Mortgage”); provided, however, that with respect to any
Mortgage hereafter granted, such subordination is conditioned upon delivery to Lessee of a non-disturbance agreement which provides that Lessee shall not be disturbed in its possession of the Leased Property hereunder following a foreclosure of such
Mortgage (or delivery of a deed-in-lieu-of-foreclosure) and that the holder of such Mortgage or the purchaser at a foreclosure sale (or grantee under such deed-in-lieu-of-foreclosure) shall perform all obligations of Lessor under this Lease. In
confirmation of such subordination, however, Lessee shall, at Lessor’s request, promptly execute, acknowledge and deliver any instrument which may be required to evidence subordination to any Mortgage and to the holder thereof. In the event of
Lessee’s failure to deliver such subordination and if the Mortgage does not change any term of the Lease, Lessor may, in addition to any other remedies for breach of covenant hereunder, execute, acknowledge, and deliver the instrument as the
agent or attorney-in-fact of Lessee, and Lessee hereby irrevocably constitutes Lessor its attorney-in-fact for such purpose, Lessee acknowledging that the appointment is coupled with an interest and is irrevocable. 
  
 ARTICLE 23 
 ESTOPPEL CERTIFICATES;
FINANCIAL STATEMENTS; INSPECTION RIGHTS 
  
 23.1.    Estoppel Certificates; Financial
Statements. 
  
 (a)    At any time and from time to time upon not less than ten (10) days
Notice by Lessor, Lessee will furnish to Lessor an Officer’s Certificate certifying that this Lease is unmodified and in full force and effect (or that this Lease is in full force and effect as modified and setting forth the modifications), the
date to which the Rent has been paid, whether to the knowledge of Lessee there is any existing default or Event of Default exists thereunder by Lessor or Lessee, and such other information as may be reasonably requested by Lessor. Any such
certificate furnished pursuant to this Section may be relied upon by Lessor, any lender and any prospective purchaser of the Leased Property. 
  
 (b)    Lessee will furnish the following statements to Lessor: 
  
 (i)    with reasonable promptness, such information respecting the financial condition and affairs of Lessee including audited financial statements prepared by the same certified
independent accounting firm that prepares the returns for Lessor or such other accounting firm as may be approved by Lessor, as Lessor may request from time to time; and 
  
 (ii)    the most recent Consolidated Financials of Lessee within forty-five (45) days after each quarter of any Fiscal Year (or, in the
case of the final quarter in any Fiscal Year, the most recent audited Consolidated Financials of Lessee within ninety (90) days); and 

 
 55 

  
 (iii) on or about the 20th day of each month, a detailed profit
and loss statement for the Leased Property for the preceding month, a balance sheet for the Leased Property as of the end of the preceding month, and a detailed accounting of revenues for the Leased Property for the preceding month, each in form
acceptable to Lessor. 
  
 Lessee will permit the inclusion of such statements in any filings required to be made by Lessor under the
Securities Act of 1933 and the Securities Exchange Act of 1934. 
  
 (c)    At any time and from
time to time upon not less than ten (10) days Notice by Lessee, Lessor will furnish to Lessee or to any Person designated by Lessee an estoppel certificate certifying that this Lease is unmodified and in full force and effect (or that this Lease is
in full force and effect as modified and setting forth the modifications), the date to which Rent has been paid, whether to the knowledge of Lessor there is any existing default or Event of Default on Lessee’s part hereunder, and such other
information as may be reasonably requested by Lessee. 
  
 (d)    Lessee shall at all times be
Solvent. Furthermore, as of the date of this Agreement, Lessee agrees to establish and maintain, in a form satisfactory to Lessor, a funding commitment in an amount equal to $2,000,000 upon which Lessee may draw upon to pay to Lessor Base Rent,
Percentage Rent and Additional Charges. Repayment of the funding commitment shall be subordinated to all payments of Base Rent, Percentage Rent and additional charges under all Leases between Lessor and Lessee. 
  
 23.2.    Lessor’s Right to Inspect.  Lessee shall permit Lessor and its authorized
representatives as frequently as reasonably requested by Lessor to inspect the Leased Property and Lessee’s accounts and records pertaining thereto and make copies thereof, during usual business hours upon reasonable advance Notice, subject
only to any business confidentiality requirements reasonably requested by Lessee. 
  
 ARTICLE 24 

APPRAISERS 
  
 24.1.    Appraisers.  If it becomes necessary to determine the Fair Market Value or Fair Market Rental of the Leased Property for any purpose of this Lease, the party required or permitted to give
Notice of such required determination shall include in the Notice the name of a Person selected to act as appraiser on its behalf. Within ten (10) days after Notice, Lessor (or Lessee, as the case may be) shall by Notice to Lessee (or Lessor, as the
case may be) appoint a second Person as appraiser on its behalf. The appraisers thus appointed, each of whom must be a member of the American Institute of Real Estate Appraisers (or any successor organization thereto) with at least five (5)
years’ experience in the State appraising property similar to the Leased Property, shall, within forty-five (45) days after the date of the Notice appointing the first appraiser, proceed to appraise the Leased Property to determine the Fair
Market Value or Fair Market Rental thereof as of the relevant date (giving effect to the impact, if any, of inflation from the date of their decision to the relevant date); provided, however, that if only one appraiser shall have been so appointed,
then the determination of such appraiser shall be final and binding upon the parties. To the extent consistent with sound appraisal practice as then existing at the time of any such appraisal, such 

 
 56 

 appraisal shall be made on a basis consistent with the basis on which the Leased Property was appraised for purposes of determining its Fair
Market Value at the time the Leased Property was acquired by Lessor. If two (2) appraisers are appointed and if the difference between the amounts so determined does not exceed five percent (5%) of the lesser of such amounts, then the Fair Market
Value or Fair Market Rental shall be an amount equal to fifty percent (50%) of the sum of the amounts so determined. If the difference between the amounts so determined exceeds five percent (5%) of the lesser of such amounts, then such two
appraisers shall have twenty (20) days to appoint a third appraiser. If no such appraiser shall have been appointed within such twenty (20) days or within ninety (90) days of the original request for a determination of Fair Market Value or Fair
Market Rental, whichever is earlier, either Lessor or Lessee may apply to any court having jurisdiction to have such appointment made by such court. Any appraiser appointed by the original appraisers or by such court shall be instructed to determine
the Fair Market Value or Fair Market Rental within forty-five (45) days after appointment of such appraiser. The determination of the appraiser which differs most in the terms of dollar amount from the determinations of the other two appraisers
shall be excluded, and fifty percent (50%) of the sum of the remaining two determinations shall be final and binding upon Lessor and Lessee as the Fair Market Value or Fair Market Rental of the Leased Property, as the case may be. This provision for
determining by appraisal shall be specifically enforceable to the extent such remedy is available under applicable law, and any determination hereunder shall be final and binding upon the parties except as otherwise provided by applicable law.
Lessor and Lessee shall each pay the fees and expenses of the appraiser appointed by it and each shall pay one-half of the fees and expenses of the third appraiser and one-half of all other costs and expenses incurred in connection with each
appraisal. 
  
 ARTICLE 25 
 ARBITRATION AND DISPUTE RESOLUTION PROCEDURES 
  
 25.1.    Arbitration.  Except as set forth in Section 25.2, in each case specified in this Lease in which it shall become necessary to resort to arbitration, such arbitration shall be determined
as provided in this Section 25.1. The party desiring such arbitration shall give Notice to that effect to the other party, and an arbitrator shall be selected by mutual agreement of the parties, or if they cannot agree within thirty (30) days of
such notice, by appointment made by the American Arbitration Association (“AAA”) from among the members of its panels who are qualified and who have experience in resolving matters of a nature similar to the matter to be resolved by
arbitration. 
  
 25.2.    Alternative Arbitration.  In each case specified in
this Lease for a matter to be submitted to arbitration pursuant to the provisions of this Section 25.2, Lessor and Lessee will agree upon a nationally recognized accounting firm with a hospitality division of which neither party nor their Affiliates
of Lessor is a significant client to serve as arbitrator of such dispute within fifteen (15) days after written demand for arbitration is received or sent by either party. In the event the parties fail to make such designation within such fifteen
(15) day period, Lessor shall be entitled to designate any nationally recognized accounting firm with a hospitality division of which Lessor or an Affiliate of Lessor is not a significant client to serve as arbitrator of such dispute within fifteen
(15) days after the parties fail to timely make such designation. In the event Lessor fails to make such designation within such fifteen (15) day period, Lessee shall be entitled to designate any nationally recognized accounting firm with
hospitality division of which Lessee or an Affiliate of Lessee is not a significant client to serve as arbitrator of such dispute within fifteen 

 
 57 

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

 
 26.1.    Notices.  All notices, demands, requests, consents approvals and other
communications (“Notice” or “Notices”) hereunder shall be in writing and hand-delivered, sent by FedEx or other nationally recognized overnight courier service, or mailed (by registered or certified mail, return receipt requested
and postage prepaid), if to Lessor at 10 South Third Street, Richmond, Virginia 23219, Attn: Glade M. Knight and if to Lessee at 10 South Third Street, Richmond, Virginia 23219, Attn: Glade M. Knight or to such other address or addresses as either
party may hereafter designate. Personally delivered Notice shall be effective upon receipt, and Notice given by overnight courier service or by mail shall be complete at the time of deposit with the courier service or in the U.S. Mail system,
respectively, but any prescribed period of Notice and any right or duty to do any act or make any response within any prescribed period or on a date certain after the service of such Notice given by overnight courier service shall be extended one
(1) day and by mail shall be extended five (5) days. 
  
 ARTICLE 27 
 MISCELLANEOUS 
  
 27.1.    No
Waiver.  No failure by Lessor or Lessee to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during
the continuance of any such breach, shall constitute a waiver of any such breach or of any such term. To the extent permitted by law, no 

 
 58 

 waiver of any breach shall affect or alter this Lease, which shall continue in full force and effect with respect to any other then existing or
subsequent breach. 
  
 27.2.    Remedies Cumulative.  To the extent permitted by
law and unless otherwise provided herein to the contrary, each legal, equitable or contractual right, power and remedy of Lessor or Lessee now or hereafter provided either in this Lease or by statute or otherwise shall be cumulative and concurrent
and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Lessor or Lessee of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by
Lessor or Lessee of any or all of such other rights, powers and remedies. 
  
 27.3.    Waiver
of Trial by Jury.  LESSOR AND LESSEE EACH WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF A PROCEEDING WITH RESPECT TO THIS LEASE, INCLUDING, WITHOUT LIMITATION, SUMMARY
PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN ARTICLE 16. 
  
 27.4.    Acceptance of
Surrender.  No surrender to Lessor of this Lease or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written acceptance by Lessor, shall constitute an acceptance of any such surrender. 
  
 27.5.    No Merger of Title.  There shall be no merger of this Lease or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold,
directly or indirectly: (a) this Lease or the leasehold estate created hereby or any interest in this Lease or such leasehold estate and (b) the fee estate in the Leased Property. 
  
 27.6.    Waiver of Presentment, Etc.  Lessee waives all presentments, demands for payment and for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance and waives all notices of the existence, creation, or incurring of new or additional obligations, except as expressly granted herein. 

 
 27.7.    Action for Damages.  Except as otherwise expressly provided herein, in any suit
or other claim brought by either party seeking damages against the other party for breach of its obligations under this Lease, the party against whom such claim is made shall be liable to the other party only for actual damages and not for
consequential, punitive or exemplary damages. 
  
 27.8.    Lease Assumption in Bankruptcy
Proceeding.  If an Event of Default occurs and Lessee has filed or has had filed against it a petition in bankruptcy or for reorganization or other relief pursuant to the federal bankruptcy code, Lessee shall promptly move the court
presiding over the proceeding to assume this Lease pursuant to 11 U.S.C. §365, without seeking an extension of the time to file said motion. 
  
 27.9.    Enforceability.  Anything contained in this Lease to the contrary notwithstanding, all claims against, and liabilities of, Lessee or Lessor arising prior
to any date of termination of this 

 
 59 

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

 
 60 

  
 IN WITNESS WHEREOF, the parties have executed this Lease by their duly authorized
officers as of the date first above written. 
  
 
	 “LESSOR”
 
	 
	 AHF HOUSTON WESTCHASE
     LIMITED PARTERNSHIP
 
	 
	 by:
 	 	 AHF HOUSTON WESTCHASE GP, INC.,
     its General Partner
 

 
  
 
	 By:
 	 	 /s/ Glade M. Knight
 

	  	 	  
	 Name:
 	 	 Glade M. Knight
 

	  	 	  
	 Title:
 	 	 President
 

	  	 	  

 
  
 
	 “LESSEE”
 
	 
	 AHF SERVICES LIMITED PARTNERSHIP
 
	 
	 by:
 	 	 AHF SERVICES GENERAL, INC.,
     its General Partner
 

 
  
 
	 By:
 	 	 /s/ Glade M. Knight
 

	  	 	  
	 Name:
 	 	 Glade M. Knight
 

	  	 	  
	 Title:
 	 	 President
 

	  	 	  

 

  
 EXHIBIT A-1 
  
 LEGAL DESCRIPTION 
  
 [omitted]

 SCHEDULE 2.1(a) 
  
 COMMENCEMENT DATES 
  
 Houston Residence Inn - Texas 
  
 January 3, 2002 

  
 SCHEDULE 3.1(a)-1 
  

BASE RENTS 
  
 Houston Residence Inn - Texas

  
 $1,483,772 

  
 SCHEDULE 3.1(b)-1 
 SUITE REVENUE BREAKPOINT 
  
 Houston Residence Inn

 Texas 
  
 
	 Quarters
 
	  	 2003
 
	  	 2004
 
	  	 2005
 
	  	 2006
 
	  	 2007
 
	  	 2008
 
	  	 2009
 
	  	 2010
 
	  	 2011
 
	  	 2012
 

	 1st Quarter
 	  	 $
 	 144,617
 	  	 $
 	 147,509
 	  	 $
 	 150,459
 	  	 $
 	 153,469
 	  	 $
 	 156,538
 	  	 $
 	 159,669
 	  	 $
 	 162,862
 	  	 $
 	 166,119
 	  	 $
 	 169,442
 	  	 $
 	 172,831
 
	 2nd Quarter
 	  	 $
 	 289,234
 	  	 $
 	 295,018
 	  	 $
 	 300,919
 	  	 $
 	 306,937
 	  	 $
 	 313,076
 	  	 $
 	 319,337
 	  	 $
 	 325,724
 	  	 $
 	 332,239
 	  	 $
 	 338,883
 	  	 $
 	 345,661
 
	 3rd Quarter
 	  	 $
 	 433,851
 	  	 $
 	 442,528
 	  	 $
 	 451,378
 	  	 $
 	 460,406
 	  	 $
 	 469,614
 	  	 $
 	 479,006
 	  	 $
 	 488,586
 	  	 $
 	 498,358
 	  	 $
 	 508,325
 	  	 $
 	 518,492
 
	 4th Quarter
 	  	 $
 	 578,467
 	  	 $
 	 590,037
 	  	 $
 	 601,837
 	  	 $
 	 613,874
 	  	 $
 	 626,152
 	  	 $
 	 638,675
 	  	 $
 	 651,448
 	  	 $
 	 664,477
 	  	 $
 	 677,767
 	  	 $
 	 691,322

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