Document:

Exhibit 10.1

 Exhibit 10.1 
  
 HOTEL LEASE AGREEMENT 
  
 DATED JANUARY 17, 2003, 
  
 EFFECTIVE AS OF JANUARY 3, 2003 
  
 BETWEEN 
  
 AHT REDMOND, INC. 
 A VIRGINIA CORPORATION 
  
 AS LESSOR 
  
 AND 
  
 AHM-SPE I, INC. 
 A VIRGINIA CORPORATION 
  
 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
 

 

 
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	  	  	 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
 

 

 
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	  	 	 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
 

 

 
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 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”), dated January 17, 2003, effective as of the 3rd day of January, 2003, by and between AHT Redmond, Inc., a Virginia corporation
(hereinafter called “Lessor”), and AHM-SPE I, Inc., a Virginia corporation (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 

 
 - 1 - 

  
 (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 Reccords.    Lessee shall keep full and adequate books of account and other records reflecting the results of operation of the Hotel on an accrual basis, all in
accordance with generally accepted accounting principles and the obligations of Lessee under this Lease. The books of account and all other records relating to or reflecting the operation of the Hotel shall be kept either at the Hotel or at
Lessee’s offices in Richmond, Virginia or at Manager’s central offices, and shall be available to Lessor and its representatives and its auditors or accountants, at all reasonable times, upon prior written notice to Lessee and Manager, for
examination, audit, inspection, and transcription; provided, however that Lessor may only inspect or audit records in Manager’s possession subject to the terms of Lessee’s access thereto under the Management Agreement. All of such books
and records pertaining to the Hotel including, without limitation, books of account, guest records and front office records, at all times shall be the property of Lessor and shall not be removed from the Hotel or Lessee’s offices or
Manager’s central offices (but may be moved among any of the foregoing) by Lessee without Lessor approval. 

 
 - 25 - 

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

 
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 (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 

 
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 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 

 
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 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 

 
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 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: 

 
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 (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, 

 
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 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 

 
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 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. 

 
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 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

 
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 (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 

 
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 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 

 
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 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 

 
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 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 

 
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 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

 
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 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. 

 
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 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, 

 
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 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 

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

 DEFAULT BY LESSEE; LESSOR’S REMEDIES 
  
 16.1.    Events of Default. If any one or more of the following events (individually, an “Event of Default”) occurs: 
  
 (a)    if an Event of Default occurs under any other lease between Lessor or any Affiliate of Lessor and Lessee or any
Affiliate of Lessee; or 
  
 (b)    if Lessee fails to make payment of the Base Rent within ten
(10) days after the same becomes due and payable; or 
  
 (c)    if Lessee fails to make payment
of Percentage Rent when the same becomes due and payable and such condition continues for a period of thirty (30) days after the end of the applicable quarter; or 
  
 (d)    if Lessee fails to observe or perform any other term, covenant or condition of this Lease and such failure is not cured by Lessee within a period
of thirty (30) days after receipt by Lessee of Notice thereof from Lessor, unless such failure cannot with due diligence be cured within a period of thirty (30) days, in which case it shall not be deemed an Event of Default if Lessee proceeds
promptly and with due diligence to cure the failure and diligently completes the curing thereof provided, however, in no event shall such cure period extend beyond ninety (90) days after such Notice; or 
  
 (e)    if Lessee shall file a petition in bankruptcy or reorganization for an arrangement pursuant to any federal or
state bankruptcy law or any similar federal or state law, or shall be adjudicated a bankrupt or shall make an assignment for the benefit of creditors or shall admit in writing its inability to pay its debts generally as they become due, or if a
petition or answer proposing the adjudication of Lessee as a bankrupt or its reorganization pursuant to any federal or 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

 
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 (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. 

 
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 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 

 
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 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, 

 
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 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 

 
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 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

 
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 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, 

 
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 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 returnsfor 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 

 
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 (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 

 
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 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 

 
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 (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 

 
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 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”
   
  AHT REDMOND, INC.
   

	  By:
	  	  /s/    GLADE M.
KNIGHT                

	  Name:
	  	  Glade M. Knight

	  Title:
	  	  President

 

	  “LESSEE”
   
  AHM-SPE I, INC.
   

	  By:
	  	  /s/    GLADE M.
KNIGHT                

	  Name:
	  	  Glade M. Knight

	  Title:
	  	  President

 

 EXHIBIT A-1 
  
 LEGAL DESCRIPTION 
  

 

  
 SCHEDULE 2.1(a) 
  
 COMMENCEMENT DATES 
  
 Redmond
Residence Inn—Washington 
  
 January 3, 2002 
  

 

  
 SCHEDULE 3.1(a)-1 
  

BASE RENTS 
  
 Redmond
Residence Inn—Washington 
  
 $3,153,333 
  

 

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

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

	 1st Quarter
 	  	 $
 	 189,134
 	  	 $
 	 192,916
 	  	 $
 	 196,775
 	  	 $
 	 200,710
 	  	 $
 	 204,724
 	  	 $
 	 208,819
 	  	 $
 	 212,995
 	  	 $
 	 217,255
 	  	 $
 	 221,600
 	  	 $
 	 226,032
 
	 2nd Quarter
 	  	 $
 	 378,267
 	  	 $
 	 385,832
 	  	 $
 	 393,549
 	  	 $
 	 401,420
 	  	 $
 	 409,448
 	  	 $
 	 417,637
 	  	 $
 	 425,990
 	  	 $
 	 434,510
 	  	 $
 	 443,200
 	  	 $
 	 452,064
 
	 3rd Quarter
 	  	 $
 	 567,401
 	  	 $
 	 578,749
 	  	 $
 	 590,324
 	  	 $
 	 602,130
 	  	 $
 	 614,173
 	  	 $
 	 626,456
 	  	 $
 	 638,985
 	  	 $
 	 651,765
 	  	 $
 	 664,800
 	  	 $
 	 678,096
 
	 4th Quarter
 	  	 $
 	 756,534
 	  	 $
 	 771,665
 	  	 $
 	 787,098
 	  	 $
 	 802,840
 	  	 $
 	 818,897
 	  	 $
 	 835,275
 	  	 $
 	 851,980
 	  	 $
 	 869,020
 	  	 $
 	 886,400
 	  	 $
 	 904,128Exhibit 10.2

 
Exhibit 10.2

 
SEATTLE/REDMOND, WASHINGTON 
 
MANAGEMENT AGREEMENT 
 
by and between 
 
RESIDENCE INN BY MARRIOTT, INC. 
 
as “MANAGER” 
 
and 
 
REDINN HOTEL, L.P. 
 
as “OWNER” 
 
Dated as of January 28, 1998 

 
TABLE OF
CONTENTS 
 

	  	   	  	   	  Page

	
	  ARTICLE I
	   	  APPOINTMENT OF MANAGER
	   	  1

	
	  1.01
	   	  Appointment
	   	  1

	
	  1.02
	   	  Management of the Inn
	   	  2

	
	  1.03
	   	  Services Provided by Manager
	   	  4

	
	  1.04
	   	  Employees
	   	  4

	
	  1.05
	   	  Owner's Right to Inspect
	   	  5

	
	  1.06
	   	  Quarterly Meetings
	   	  5

	
	  ARTICLE II
	   	  TERM
	   	  
	
	  2.01
	   	  Term
	   	  5

	
	  2.02
	   	  Owner’s Right to Early Termination
	   	  5

	
	  ARTICLE III
	   	  COMPENSATION OF MANAGER
	   	  
	
	  3.01
	   	  Management Fees
	   	  6

	
	  3.02
	   	  Operating Profit
	   	  7

	
	  ARTICLE IV
	   	  ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS
	   	  
	
	  4.01
	   	  Accounting, Interim Payment and Annual Reconciliation
	   	  7

	
	  4.02
	   	  Books and Records
	   	  8

	
	  4.03
	   	  Accounts, Expenditures
	   	  8

	
	  4.04
	   	  Annual Operating Projection
	   	  9

	
	  4.05
	   	  Working Capital
	   	  9

	
	  4.06
	   	  Fixed Asset Supplies
	   	  9

	
	  ARTICLE V
	   	  REPAIRS, MAINTENANCE AND REPLACEMENTS
	   	  
	
	  5.01
	   	  Repairs and Maintenance to be Paid from Gross Revenues
	   	  10

	
	  5.02
	   	  Repairs, Maintenance and Equipment Replacements to be Paid from
Reserve
	   	  10

	
	  5.03
	   	  Major Repairs, Alterations, Improvements, Renewals, and Replacements to be Funded by
Owner
	   	  11

	
	  5.04
	   	  Ownership of Replacements
	   	  12

	
	  ARTICLE VI
	   	  INSURANCE, DAMAGE, CONDEMNATION, AND FORCE MAJEURE
	   	  
	
	  6.01
	   	  Insurance
	   	  13

	
	  6.02
	   	  Damage and Repair
	   	  15

	
	  6.03
	   	  Condemnation
	   	  15

	
	  6.04
	   	  Force Majeure
	   	  15

	
	  ARTICLE VII
	   	  TAXES
	   	  
	
	  7.01
	   	  Real Estate and Personal Property Taxes
	   	  16

	
	  ARTICLE VIII
	   	  OWNERSHIP OF THE INN
	   	  
	
	  8.01
	   	  Ownership of the Inn
	   	  17

	
	  8.02
	   	  Subordination, Non-Disturbance and Attornment
	   	  18

	
	  8.03
	   	  Covenants, Conditions or Restrictions
	   	  19

	
	  8.04
	   	  Liens; Credit
	   	  20

	
	  ARTICLE IX
	   	  DEFAULTS
	   	  
	
	  9.01
	   	  Events of Default
	   	  20

	
	  9.02
	   	  Remedies
	   	  21

	
	  9.03
	   	  Additional Remedies
	   	  22

	
	  ARTICLE X
	   	  ASSIGNMENT AND SALE
	   	  
	
	  10.01
	   	  Assignment
	   	  22

	
	  10.02
	   	  Sale of the Inn
	   	  23

	
	  ARTICLE XI
	   	  MISCELLANEOUS
	   	  
	
	  11.01
	   	  Right to Make Agreement
	   	  26

 

i 

	
	  11.02
	   	  Consents
	   	  26

	
	  11.03
	   	  Agency
	   	  26

	
	  11.04
	   	  Applicable Law
	   	  27

	
	  11.05
	   	  Recordation
	   	  27

	
	  11.06
	   	  Headings
	   	  28

	
	  11.07
	   	  Notices
	   	  28

	
	  11.08
	   	  Environmental Matters
	   	  29

	
	  11.09
	   	  Confidentiality
	   	  29

	
	  11.10
	   	  Projections
	   	  30

	
	  11.11
	   	  Actions to be Taken Upon Termination
	   	  30

	
	  11.12
	   	  Trademarks, Trade Names and Service Marks
	   	  33

	
	  11.13
	   	  Waiver
	   	  33

	
	  11.14
	   	  Partial Invalidity
	   	  33

	
	  11.15
	   	  Survival
	   	  34

	
	  11.17
	   	  Approval by Manager's Board of Directors
	   	  34

	
	  11.18
	   	  Entire Agreement
	   	  34

	
	  ARTICLE XII
	   	  DEFINITION OF TERMS
	   	  34

	
	  12.01
	   	  Definition of Terms
	   	  34

 

	
	  Exhibit A
	   	  -
	   	  The “Site”

	
	  Exhibit B
	   	  -
	   	  Equity Interest in Owner

	
	  Exhibit C
	   	  -
	   	  Existing Covenants, Conditions and Restrictions

	
	  Addendum
	   	  -
	   	  Construction and Pre-Opening

 

ii 

 
MANAGEMENT AGREEMENT 
 
This Management Agreement (“Agreement”) is executed as of the 28th day of January, 1998
(“Effective Date”), by REDINN HOTEL, L.P., a Texas limited partnership, with a mailing address at One Spurling Plaza, 12850 Spurling Rd., #114, Dallas, Texas 75230 (“Owner”) and RESIDENCE INN BY MARRIOTT, INC., a Delaware
corporation, with a mailing address at c/o Marriott International, Inc., 10400 Fernwood Road, Bethesda, Maryland 20817 (“Manager”). 
 
RECITALS: 
 
A.    Owner is or will be the owner of fee title to the parcel of real property (the “Site”) described on
Exhibit A attached to this Agreement and incorporated herein. Owner will improve the Site with a building or buildings containing 180 Suites, a common area lobby, meeting rooms, administrative offices, and certain other amenities and related
facilities (the “Buildings”). The Site and the Buildings to be constructed thereon by Owner, in addition to certain other rights, improvements, and personal property as more particularly described in Section 12.01 hereof, are collectively
referred to as the “Inn”. 
 
B.    Owner desires to engage Manager to manage and operate the Inn for the account of Owner, and Manager desires to accept such engagement upon the terms and conditions set forth in this Agreement. 
 
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement and other good and valuable consideration, the receipt of which is hereby acknowledged, Owner and Manager agree as follows: 
 
ARTICLE I 
 
APPOINTMENT OF MANAGER 
 
1.01    Appointment 
 
Owner hereby appoints and employs Manager as Owner’s exclusive agent to supervise, direct and control the management and operation of
the Inn throughout the Term. Manager accepts said appointment and agrees to manage the Inn during the Term in accordance with the terms and conditions of this Agreement upon completion of construction of the Inn in accordance with the Plans (as
approved by Manager) and this Agreement. The performance of all activities by Manager under this Agreement shall be for the account of Owner. During the Term, the Inn shall be known as a “Residence Inn” or “Residence Inn by
Marriott” or “Marriott Residence Inn”, with such additional identification as may be necessary to provide local identification. If the 
 

- 1 - 

 name of the “Residence Inn by Marriott” System is changed, Manager will change the name of the Inn to conform thereto. All capitalized
terms shall have the meaning ascribed to them in Article XII hereof. 
  
 1.02    Management of
the Inn 
  
 A.    Owner and Manager agree that their rights and obligations under this
Agreement with respect to the construction and pre-opening stages of the Inn shall be governed by the Addendum attached hereto which is deemed to be an integral part of this Agreement, in addition to those provisions in this Agreement that are
otherwise generally applicable during the Term of this Agreement. 
  
 B.    Manager shall manage
the Inn under standards comparable to those prevailing in other inns in the System, including all activities in connection therewith which are customary and usual to such an operation; provided, however, that the determination to serve beer, wine
and/or liquor at the Inn shall be solely within the discretion of Manager and subject to compliance with applicable laws. Manager shall, in connection with the Inn and in accordance with standard’s comparable to those prevailing at other inns
in the System and other terms of this Agreement, perform each of the following functions (provided that in all cases, except as otherwise specifically set forth in this Agreement, the costs and expenses of performing such functions shall be
Deductions): 
  
 1.    Recruit, employ, supervise, direct and (when appropriate) discharge all of
the employees at the Inn. 
  
 2.    Establish prices, rates and charges for services provided in
the Inn, including Suite rates. 
  
 3.    Establish and revise, as necessary, administrative
policies and procedures, including policies and procedures for the control of revenue and expenditures, for the purchasing of supplies and services, for the control of credit, and for the scheduling of maintenance, and verify that the foregoing
procedures are operating in a sound manner. 
  
 4.    Manage expenditures to replenish
Inventories, Fixed Asset Supplies, payments on accounts payable and collections of accounts receivable. 
  
 5.    Arrange for and supervise public relations and advertising, and prepare marketing plans. 
  
 6.    Procure (as agent for Owner) all Inventories and replacement Fixed Asset Supplies. 

 
 - 2 - 

  
 7.    Prepare and deliver interim accountings, annual
accountings, Annual Operating Projections, Building Estimates, Repairs and Equipment Estimates, and such other information as is required by this Agreement. 
  
 8.    Plan, execute and supervise repairs and maintenance at the Inn. 
  
 9.    Provide, or cause to be provided, risk management services relating to the types of insurance required to be obtained or provided by Manager under this Agreement. 
  
 10.    Obtain and keep in full force and effect, either in its own name on behalf of Owner or in Owner’s name, as
may be required by applicable law, any and all licenses and permits to the extent same is within the control of Manager (or, if same is not within the control of Manager, Manager shall use all due diligence and reasonable efforts to obtain and keep
same in full force and effect). 
  
 11.    Reasonably cooperate (provided that Manager shall not
be obligated to enter into any amendments of this Agreement) with Owner in any attempt(s) by Owner to effectuate a Sale of the Inn (provided that nothing herein shall affect the provisions of Section 10.02), or to obtain any Mortgage. 

 
 C.    The operation of the Inn shall be under the exclusive supervision and control of Manager which,
except as otherwise specifically provided in the Agreement, shall be responsible for the proper and efficient operation of the Inn. Manager shall have discretion and control, free from interference, interruption or disturbance, in all matters
relating to management and operation of the Inn, including, without limitation, the following: charges for Suites and commercial space; credit policies; food and beverage services; employment policies; granting of leases, subleases, licenses and
concessions for shops and agencies within the Inn, provided that the term of any such lease, sublease, license or concession shall not exceed the Term of this Agreement; receipt, holding and disbursement of funds; maintenance of bank accounts;
procurement of Inventories (including initial inventories), supplies and services; promotion and publicity; payment of costs and expenses as are specifically provided for in this Agreement or are otherwise reasonably necessary for the proper and
efficient operation of the Inn; and, generally, all activities necessary for operation of the Inn. 
  
 D.    Manager shall use reasonable efforts to comply with and abide by all applicable laws and regulations pertaining to its operation of the Inn, provided that Manager shall have the right, but not the
obligation, in its reasonable discretion, to contest or oppose, by appropriate proceedings, any such laws and regulations. All costs and expenses of such compliance shall be paid from Gross Revenues as Deductions in the computation of Operating
Profit or from the Reserve, whichever is applicable, and the reasonable expenses of any such contest shall be paid from Gross Revenues as Deductions. 
  

 
 - 3 - 

 1.03    Services Provided by Manager 
  

Commencing with the Partial Opening Date and thereafter during the Term of this Agreement, Manager shall cause to be furnished the following services: 

 
 A.    System financial planning and policy services; product planning and development; human resources
management and planning for the System (but not any particular inn within the System); protection of the “Marriott Residence Inn”, “Residence Inn by Marriott,” and “Residence Inn” trade names, trademarks, logos and
servicemarks; and the development and implementation of Manager’s technical and operational programs designed for the periodic inspection and consultation visits to the inns in the System (but not the services of the personnel of the
Architecture and Construction Division of Marriott providing architectural, technical or procurement services for the Inn) (collectively, “System Services”); 
  
 B.    Marriott corporate planning and policy services, Marriott financial planning and corporate financial services, Marriott corporate executive
management, in-house legal services pertaining to Marriott corporate matters, and protection of the “Marriott” trade name, logos, trademarks, and service marks (“Central Office Services”); and 
  
 C.    certain services which are furnished generally on a central or regional basis to other inns in the System which
are managed by Manager, Marriott, or any Affiliate, and which benefit each Inn as a participant in the System as follows: (i) certain divisional executive management; (ii) programs for training and manpower development; computer payroll, accounts
payable, property and other accounting services; and (iii) such additional central or regional services as may from time to time be furnished for the benefit of inns in the “Residence Inn by Marriott” System or in substitution for services
required at individual inns which may be more efficiently performed on a group basis (“Chain Services”). 
  
 1.04    Employees 
  
 All personnel employed at the Inn shall at all times
be the employees of Manager. Manager shall have absolute discretion with respect to all personnel employed at the Inn, including, without limitation, decisions regarding hiring, promoting, transferring, compensating, supervising, terminating,
directing and training all employees at the Inn, and, generally, establishing and maintaining all policies relating to employment. Manager shall decide which, if any, of the employees of the Inn shall reside at the Inn, and shall be permitted to
provide free accommodations and amenities to its employees and representatives living at or visiting the Inn in connection with its management or operation. No person shall otherwise be given gratuitous accommodations or services without prior joint
approval of Owner and Manager except in accordance with usual practices of the hotel and travel industry. 

 
 - 4 - 

  
 1.05    Owner’s Right to Inspect 

 
 Owner and its agents shall have access to the Inn at any and all reasonable times for the purpose of inspection or showing the
Inn to prospective purchasers, tenants or Mortgagees. 
  
 1.06    Quarterly Meetings

  
 At Owner’s request, Manager shall make the Inn’s property manager team available to meet with Owner on
a quarterly basis to discuss the pre-opening budget, Annual Operating Projection, FF&E Reserve Repair and Equipment Budget, Fixed Asset Supplies, Working Capital and any other items reasonably related to the operation of the Inn which Owner
wishes to discuss. Manager agrees to give good faith consideration to any suggestion or request Owner may have. 
  
 ARTICLE II 
  
 TERM 
  
 2.01    Term 
  
 The term of this Agreement shall be from the Effective Date to the expiration of the Term. With respect to the Inn, the “Term” shall consist of an “Initial Term” and the “Renewal Term(s)”. The
“Initial Term” shall begin on the Effective Date, and, unless sooner terminated as provided in this Agreement, shall continue until the expiration of the twentieth (20th) Fiscal Year after the Opening Date. For purposes of the preceding
sentence, the first full Fiscal Year after the Opening Date occurs shall be counted as the first of such twenty (20) Fiscal Years. The Term may thereafter be renewed on the same terms and conditions contained in this Agreement, for each of two (2)
successive periods of ten (10) years each (“Renewal Terms”) upon the mutual consent of Owner and Manager. If the parties elect to exercise any such option to renew, Owner and Manager shall execute a written notice to that effect at least
twelve (12) months prior to the expiration of the Initial Term or the then-current Renewal Term, as the case may be. 
  
 2.02    Owner’s Right to Early Termination 
  
 A.    Subject to the provisions of Sections 2.02.B and 2.02.C, Owner shall have the right to terminate this Agreement if, in any period of two (2) consecutive Included Years commencing after the last day of the
third (3rd) full Fiscal Year after the Opening Date, annual Operating Profit for each of such consecutive Included Years shall be less than One Million Five Hundred Sixty-Five Thousand Three Hundred Seventy-Six Dollars ($1,565,376) 

 
 B.    Owner may exercise its right to terminate this Agreement as set forth in Section 2.02.A by sending
written notice to Manager within sixty (60) days after Owner receives the annual statement described in Section 4.01.B for the second consecutive Included Year in such biannual period. If Manager does not elect to avoid Termination pursuant to
Section 2.02.C 

 
 - 5 - 

 below, this Agreement shall terminate at the close of the sixth (6th) full Accounting Period following the date upon which Manager receives
written notice of Owner’s intent to terminate this Agreement. Owner’s failure to exercise its right to terminate the Agreement for such reason shall not be deemed an estoppel or a waiver of Owner’s right to terminate this Agreement at
any subsequent period of two (2) consecutive Included Years to which this Section 2.02 may apply. 
  
 C.    Upon receipt of Owner’s notice of its intention to terminate this Agreement for the reasons set forth in Section 2.02.A above, Manager shall have the option, subject to the limitation set forth in
Section 2.02.D, to avoid such Termination by paying to Owner the amount by which the amount set forth in Section 2.02.A for each of the two (2) Included Years exceeds Operating Profit for the two (2) Included Years in question (a “Cure
Amount”). Any amounts so paid by Manager shall not be recoverable by Manager. Manager shall pay such Cure Amount to Owner within thirty (30) days after receipt of Owner’s notice of intent to terminate this Agreement, in which event
Owner’s notice of intent to terminate shall be void and of no force and effect and this Agreement shall not terminate. The voiding of such notice to terminate, however, shall not affect the right of Owner, as to each subsequent Included Year to
which Section 2.02.A applies, to again elect to terminate this Agreement pursuant to the provisions of this Section 2.02 (which subsequent election shall again be subject to Manager’s rights under this Section 2.02.C); provided, however, that
neither of the two (2) Included Years for which Manager has paid a Cure Amount shall again be considered an Included Year for purposes of Section 2.02.A. If Manager does not exercise its option to make the payment permitted by this Section 2.02.C,
then this Agreement shall be terminated as of the date set forth in Section 2.02.B. 
  
 D.    Manager shall have the option to pay the Cure Amount and avoid Termination as set forth in Section 2.02.C. twice. If the conditions giving rise to Owner’s right to terminate as set forth in Section
2.02.A. occur again after Manager has paid the Cure Amount a second time, Manager shall have no further right to pay a Cure Amount and avoid any such Termination. 
  
 ARTICLE III 
  
 COMPENSATION OF MANAGER 

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

 
 A.    the Base Management Fee; plus 
  
 B.    the Residence Inn System Fee; plus 
  
 C.    the Incentive Management Fee. 

 
 - 6 - 

  
 Manager shall retain out of Gross Revenues an amount equal to the Base Management Fee plus the Residence
Inn System Fee. 
  
 3.02    Operating Profit 
  
 In each Fiscal Year, Operating Profit shall be distributed to Owner and to Manager in the following order of priority: 

 
 A.    An amount equal to Owner’s Priority shall be paid to Owner; thereafter 
  
 B.    The Incentive Management Fee shall be paid to Manager; and thereafter 
  
 C.    Any remaining balance of Operating Profit shall be paid to Owner. 
  
 ARTICLE IV 
  
 ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS 
  
 4.01    Accounting, Interim Payment and Annual Reconciliation 
  
 A.    Within twenty (20) days after the close of each Accounting Period, Manager shall deliver an interim accounting to Owner showing Gross Revenues, Deductions, Operating Profit, and applications and
distributions thereof. Manager shall transfer with each accounting any interim amounts due Owner and shall retain any interim amounts due Manager under Section 3.01. 
  
 B.    Calculations and payments of the Incentive Management Fee, the Base Management Fee, the Residence Inn System Fee, and distributions of Operating
Profit made with respect to each Accounting Period within a Fiscal Year shall be accounted for cumulatively. Within sixty (60) days after the end of each Fiscal Year, Manager shall deliver to Owner a statement in reasonable detail summarizing the
operations of the Inn for the immediately preceding Fiscal Year and a certificate of Manager’s chief accounting officer certifying that such year-end statement is true and correct. The parties shall, within five (5) business days after
Owner’s receipt of such statement, make any adjustments, by cash payment, in the amounts paid or retained for such Fiscal Year as are needed because of the final figures set forth in such statement. Such final accounting shall be controlling
over the interim accountings. No adjustment shall be made for any Operating Loss or Operating Profit in a preceding or subsequent Fiscal Year. 
  
 C.    To the extent there is an Operating Loss for any Accounting Period, additional funds in the amount of any such Operating Loss shall be provided by Owner within twenty (20)

 
 - 7 - 

 days after Manager has delivered written notice thereof to Owner. If Owner does not so fund such Operating Loss within the twenty (20) day time
period, Manager shall have the right (without affecting Manager’s other remedies under this Agreement) to withdraw an amount equal to such Operating Loss from future disbursements of funds otherwise due to Owner. Furthermore, if Owner fails to
fund a deficiency upon request by Manager, Manager may also withdraw interest upon such sum from the date payment was due until repayment to Manager at a rate equal to the Prime Rate plus three (3) percentage points. 
  
 4.02    Books and Records 
  
 Books of control and account pertaining to operations at the Inn shall be kept on the accrual basis and in all material respects in accordance with the Uniform System of
Accounts, with the exceptions provided in the Agreement. Owner may at reasonable intervals during Manager’s normal business hours examine such records. If Owner desires, at its own expense, to audit, examine, or review the annual operating
statement which is described in Section 4.01.B., Owner shall notify Manager in writing within sixty (60) days after receipt of such statement of its intention to audit and begin such audit no sooner than thirty (30) days and no later than sixty (60)
days after Manager’s receipt of such notice. Owner shall complete such audit within ninety (90) days after commencement thereof. If Owner does not make such an audit, then such statement shall be deemed to be conclusively accepted by Owner as
being correct, and Owner shall have no right thereafter, except in the event of fraud by Manager, to question or examine the same. If any audit by Owner discloses an understatement of any amounts due Owner, Manager shall promptly pay Owner such
amounts found to be due, plus interest thereon (at the Prime Rate plus one percent (1%) per annum) from the date such amounts should originally have been paid. If, however, the audit discloses that Manager has not received any amounts due it, Owner
shall pay Manager such amounts, plus interest thereon (at the Prime Rate plus one percent (1%) per annum) from the date such amounts should originally have been paid. Any dispute concerning the correctness of an audit shall be settled by
arbitration, in accordance with the then current rules of the American Arbitration Association. 
  
 4.03    Accounts, Expenditures 
  
 A.    All escrow
reserve accounts and funds derived from operation of the Inn shall be deposited by Manager in a bank account(s) in a bank designated by Manager. Withdrawals from said accounts shall be made solely by representatives of Manager whose signatures have
been authorized. Reasonable petty cash funds shall be maintained at the Inn. 
  
 B.    All
payments made by Manager hereunder shall be made from authorized bank accounts, petty cash funds, or from Working Capital. Manager shall not be required to make any advance or payment to or for the account of Owner except out of such funds, and
Manager shall not be obligated to incur any liability or obligation for Owner’s account without assurances satisfactory to Manager that necessary funds for the discharge thereof will be provided by Owner. In any event, if any such liability or
obligation is incurred by Manager for Owner’s account, 

 
 - 8 - 

 Manager shall have the option to deduct such amounts from Owner’s share of Operating Profit if Owner has not fully reimbursed Manager for
said amounts within ten (10) days after Owner’s receipt of notice from Manager that said amounts are due. 
  
 C.    Debts and liabilities incurred by Manager as a result of its operation and management of the Inn pursuant to the terms hereof, whether asserted before or after Termination, will be paid by Owner to the
extent funds are not available for that purpose from Gross Revenues; Owner shall indemnify, defend and hold Manager harmless from and against all loss, costs, liability, and damage (including, without limitation, attorneys’ fees and expenses)
arising from Owner’s failure to pay such debts and liabilities; and the provisions of this 4.03.C shall survive Termination. 
  
 4.04    Annual Operating Projection 
  
 Manager shall deliver to Owner for
its review, at least thirty (30) days prior to the beginning of each Fiscal Year after the first Fiscal Year following the Opening Date, an “Annual Operating Projection.” Such projection shall project the estimated Gross Revenues,
departmental profits, Deductions, and Operating Profit for the forthcoming Fiscal Year for the Inn. Manager shall endeavor to adhere to the Annual Operating Projection. It is understood, however, that the Annual Operating Projection is an estimate
only and that unforeseen circumstances such as, but not limited to, the costs of labor, material, services and supplies, casualty, operation of law, or economic and market conditions may make adherence to the Annual Operating Projection
impracticable, and Manager shall be entitled to depart therefrom due to causes of the foregoing nature. 
  
 4.05    Working Capital 
  
 Owner shall from time to time during the Term
promptly, but no later than ten (10) days after written request by Manager, advance any additional funds, over and above those required pursuant to the Addendum attached hereto, necessary to maintain Working Capital at levels determined by Manager
to be reasonably necessary to satisfy the needs of the Inn as its operation may from time to time require. All funds so advanced for Working Capital shall be utilized by Manager on behalf of Owner for the purposes of this Agreement pursuant to
cash-management policies established for the System. Upon Termination, Manager shall, except as otherwise provided in this Agreement, return to Owner any unused Working Capital. 
  
 4.06    Fixed Asset Supplies 
  
 Any additional funds, over and above those required pursuant to the Addendum attached hereto, which are necessary to maintain Fixed Asset Supplies at levels determined by Manager to be necessary to satisfy the needs of the
Inn, as its operation may from time to time require, shall be paid from Gross Revenues as Deductions. 

 
 - 9 - 

  
 ARTICLE V 
  
 REPAIRS, MAINTENANCE AND REPLACEMENTS 
  
 5.01    Repairs and Maintenance to be Paid from Gross Revenues 
  
 Manager
shall maintain the Inn in good repair and condition and in conformity with applicable laws and regulations and shall make or cause to be made such routine maintenance, repairs and minor alterations as it determines are necessary for such purposes.
The phrase “routine maintenance, repairs, and minor alterations” as used in this Section 5.01 shall include only those which are normally expensed under generally accepted accounting principles. The cost of such maintenance, repairs and
alterations shall be paid from Gross Revenues (and not from the Reserve) and shall be treated as a Deduction in determining Operating Profit. 
  
 5.02    Repairs, Maintenance and Equipment Replacements to be Paid from Reserve 
  
 A.    Manager shall establish an escrow reserve account (the “Reserve”), in a bank or similar institution reasonably acceptable to both Manager and Owner, to cover the
cost of: 
  
 1.    replacements and renewals related to the FF&E at the Inn; and

  
 2.    routine or non-major repairs and maintenance to the Buildings which are normally
capitalized (as opposed to expensed) under generally accepted accounting principles, such as exterior and interior repainting; resurfacing building walls, floors, roofs and parking areas; and replacing folding walls and the like. 

 
 B.    During the first Fiscal Year, Manager shall transfer into the Reserve an amount equal to one percent
(1%) of Gross Revenues for such Fiscal Year; during the second Fiscal Year, Manager shall transfer into the Reserve an amount equal to three percent (3%) of Gross Revenues for such Fiscal Year; commencing with the beginning of the third Fiscal Year
and for all Fiscal Years thereafter, subject to the provisions of Section 5.02.E below, Manager shall transfer into the Reserve an amount equal to five percent (5%) of Gross Revenues for each of such Fiscal Years. Transfers into the Reserve shall be
made at the time of each interim accounting described in Section 4.01 hereof. All amounts transferred to the Reserve shall be deducted from Gross Revenues in determining Operating Profit and shall be deposited in the special Reserve account
described in Section 5.02.A. 
  
 C.    Manager shall from time to time make such (1) replacements
and renewals to the FF&E of the Inn, and (2) repairs to each Building of the nature described in Section 5.02.A.2, as it deems necessary, up to the balance in the Reserve. No expenditures will be made in excess of said balance without the
approval of Owner. At the end of each Fiscal Year, any amounts remaining in the Reserve shall be carried forward to the next Fiscal Year. Proceeds from the sale 

 
 - 10 - 

 of FF&E no longer necessary to the operation of the Inn shall be added to the Reserve. The Reserve will be kept in an interest-bearing
account, and any interest which accrues thereon shall be retained in the Reserve. Neither (1) proceeds from the disposition of FF&E, nor (2) interest which accrues on amounts held in the Reserve, shall (a) result in any reduction in the required
contributions to the Reserve set forth in Section 5.02.B above, nor (b) be included in Gross Revenues. 
  
 D.    Manager shall prepare an estimate (“Repairs and Equipment Estimate”) of the expenditures necessary for (1) replacements and renewals to the FF&E of the Inn, and (2) repairs to each Building of
the nature described in Section 5.02.A.2, during the ensuing Fiscal Year and shall deliver the Repairs and Equipment Estimate to Owner at the same time it submits the Annual Operating Projection described in Section 4.05. The Repairs and Equipment
Estimate shall also indicate the estimated time schedule for making such replacements and renewals. 
  
 E.    As the Inn ages, these percentages may not be sufficient to keep the Reserve at the levels necessary to make the replacements and renewals to the FF&E of the Inn, or to make the repairs to the Buildings
of the nature described in Section 5.02.A.2, which are required to maintain the Inn in accordance with Manager’s standards therefor. If the Repairs and Equipment Estimate prepared in good faith by Manager exceeds the available funds in the
Reserve, Owner shall: 
  
 1.    agree in writing to increase the annual percentage in Section
5.02.B to provide the additional funds required, or 
  
 2.    make a lump sum contribution to the
Reserve in the necessary amount; such amount shall be fully repaid without interest to Owner from Gross Revenues in equal installments over the period of the next sixty-five (65) Accounting Periods, and such installment repayments shall be
Deductions. 
  
 A failure or refusal by Owner to either agree in writing to increase the annual percentage required
in accordance with Section 5.02.E.1 above, or to provide the additional funds required in accordance with Section 5.02.E.2 above, within sixty (60) days after Manager’s request therefor shall entitle Manager to notify Owner in writing that it
will terminate this Agreement and this Agreement shall terminate as of the date that is one hundred eighty (180) days after the date of Owner’s receipt of Manager’s notice. 
  
 5.03    Major Repairs, Alterations, Improvements, Renewals, and Replacements to be Funded by Owner 
  
 A.    Manager shall prepare an annual estimate (the “Building Estimate”) of the expenses necessary for
nonroutine or major repairs, alterations, improvements, renewals and replacements (which repairs, alterations, improvements, renewals and replacements are not among those referred to in Section 5.02.A.2) to the Inn including, without limitation, the

 
 - 11 - 

 structure, the exterior facade, the mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation elements
of each of the Inn buildings, and other nonroutine repairs and maintenance to the Buildings. Manager shall submit the Building Estimate to Owner for its approval at the same time the Annual Operating Projection is submitted. Manager shall not make
any expenditures for such purposes without the prior written consent of Owner unless otherwise permitted herein. Owner shall not unreasonably withhold its consent with respect to such changes, repairs, alterations, improvements, renewals or
replacements to the Inn as are (1) required, in Manager’s reasonable judgment, to keep the Inn in a first-class, competitive, efficient and economical operating condition, or (2) required by reason of any law, ordinance, regulation, or order of
a governmental authority having jurisdiction, or otherwise required for the continued safe and orderly operation of the Inn, including the removal of Hazardous Materials in compliance with all Environmental Laws (as more particularly described in
Section 11.08). In the event of the receipt by Manager of a governmental order or other circumstances described in (2) above, Manager shall give Owner notice thereof within five (5) business days thereafter or sooner if circumstances reasonably
warrant; Manager shall be authorized to take appropriate remedial action without receiving Owner’s prior consent as follows: (i) in an emergency threatening the Inn, its guests, invitees or employees; or (ii) if the continuation of the given
condition will subject Manager and/or Owner to civil or criminal liability, and Owner has either failed to remedy the situation or has failed to take appropriate legal action to stay the effectiveness of any such law, ordinance, regulation or order.
Manager shall cooperate with Owner in the pursuit of any such action and shall have the right to participate therein. 
  
 B.    The cost of all repairs, alterations, improvements, renewals or replacements referred to in this Section 5.03 (including the expenses incurred by either Owner or Manager in connection with any civil or
criminal proceeding described above) shall be borne solely by Owner, and shall not be paid from Gross Revenues nor from the Reserve. 
  
 C.    If Owner fails to approve and fund any proposed expenditures described in Section 5.03.A(1) or (2) within sixty (60) days after the submission to Owner of the request therefor, Manager shall have
the option of terminating this Agreement upon one hundred eighty (180) days’ written notice to Owner. 
  
 5.04    Ownership of Replacements 
  
 All repairs, alterations,
improvements, renewals or replacements made pursuant to Article V, and all amounts kept in the Reserve, shall, except as otherwise provided in this Agreement, be the property of Owner. 

 
 - 12 - 

  
 ARTICLE VI 
  
 INSURANCE, DAMAGE, CONDEMNATION, AND FORCE MAJEURE 
  
 6.01    Insurance 
  
 A.    Manager shall,
commencing with the Opening Date and thereafter during the Term of the Agreement, procure and maintain, either with insurance companies of recognized responsibility or by legally qualifying itself as a self insurer, a minimum of the following
insurance: 
  
 1.    Property insurance on the Building(s) and contents against loss or damage by
fire, lightning and all other risks covered by the usual extended coverage endorsement, all in an amount not less than ninety percent (90%) of the replacement cost thereof; 
  
 2.    Boiler and machinery insurance against loss or damage from explosion of boilers or pressure vessels to the extent applicable to the Inn;

  
 3.    Business interruption insurance covering loss of profits and necessary continuing
expenses for interruptions caused by any occurrence covered by the insurance referred to in Sections 6.01.A.1 and 6.01.A.2 of a type and in amounts as are generally established by Manager at similar inns it owns, leases or manages under the
Residence Inn name in the United States; 
  
 4.    General liability insurance against claims for
bodily injury, death or property damage occurring on, in, or about the Inn, and automobile liability insurance on vehicles operated in conjunction with the Inn, with a combined single limit for each occurrence of not less than Twenty-Five Million
Dollars ($25,000,000); 
  
 5.    Workers’ compensation and employer’s liability
insurance as may be required under applicable laws covering all of Manager’s employees at the Inn; 
  
 6.    Fidelity bonds, with reasonable limits to be determined by Manager, covering its employees in job classifications normally bonded in other similar inns it leases or manages under the Residence Inn name in
the United States or as otherwise required by law, and comprehensive crime insurance to the extent Manager and Owner mutually agree it is necessary for the Inn; and 
  
 7.    Such other insurance in amounts as Manager in its reasonable judgment deems advisable for protection against claims, liabilities and losses
arising out of or connected with the operation of the Inn. 
  
 B.    All insurance described in
Section 6.01.A may be obtained by Manager by endorsement or equivalent means under its blanket insurance policies, provided that such blanket policies substantially fulfill the requirements specified in this Agreement. 

 
 - 13 - 

  
 C.    Manager may self insure or otherwise retain such risks
or portions thereof as it does with respect to other similar inns it owns, leases or manages under the Residence Inn name in the United States. 
  
 D.    All policies of insurance required under Section 6.01.A shall be carried in the name of Manager. The policies required under Sections 6.01.A.1, 6.01.A.2, 6.01.A.3, and
6.01.A.4 shall include the Owner as an additional insured. Upon notice by the Owner, Manager shall also have the policies required under Sections 6.01.A.1, 6.01.A.2, and 6.01.A.3 include any Mortgagee on the Inn as an additional insured. Any
property losses thereunder shall be payable to the respective parties as their interests may appear. Any Mortgage on the Inn shall contain provisions to the effect that proceeds of the insurance policies required to be carried under Sections
6.01.A.1 and 6.01.A.2 shall be available for repair and restoration of the Inn. 
  
 E.    Manager
shall deliver to Owner certificates of insurance with respect to all policies so procured and, in the case of insurance policies about to expire, shall deliver certificates with respect to the renewal thereof. All certificates of insurance provided
for under this Section 9.01 shall, to the extent obtainable, state that the insurance shall not be canceled or materially changed without at least thirty (30) days’ prior written notice to the certificate holder. 
  
 F.    Insurance premiums and any other costs or expenses with respect to the insurance or self-insurance required
under Section 6.01.A, including any Insurance Retention (as defined below), shall be paid from Gross Revenues as Deductions. Such premiums and costs shall be allocated on an equitable basis to the inns participating under Manager’s blanket
insurance or self-insurance programs. Any additional reserves, losses, costs or expenses which are not covered by the insurance provided for in this Agreement shall be paid by Owner from its own funds and not from Gross Revenues or from the Reserve.
Upon Termination, an escrow fund in an amount acceptable to Manager shall be established from Gross Revenues to cover the amount of any Insurance Retention and all other costs which will eventually have to be paid by either Owner or Manager with
respect to pending or contingent claims, including those which arise after Termination for causes arising during the Term of the Agreement. If Gross Revenues are insufficient to meet the requirements of such escrow fund, then Owner shall deliver to
Manager, within ten (10) days after receipt of Manager’s written request therefor, the sums necessary to establish such escrow fund; and if Owner fails to timely deliver such sums to Manager, Manager shall have the right (without affecting
Manager’s other remedies under this Agreement) to withdraw the amount of such expenses from the Reserve, the Working Capital funds or any other funds of Owner held by or under the control of Manager. For purposes of this Section 6.01.F,
“Insurance Retention” shall mean the amount of any loss or reserve under Manager’s blanket insurance or self-insurance programs which is allocated to the Inn, not to exceed the higher of (A) the maximum per occurrence limit
established for similar hotels participating in such programs, or (B) the insurance policy deductible on any loss which may fall within high hazard classifications as mandated by the insurer (e.g., earthquake, flood, windstorm on coastal properties,
etc.). If the Inn is not a participant under Manager’s blanket insurance or 

 
 -14- 

 self-insurance programs, “Insurance Retention” shall mean the amount of any loss or reserve allocated to the Inn, not to exceed the
insurance policy deductible. 
  
 6.02    Damage and Repair 
  
 A.    If, during the Term, the Inn is damaged or destroyed by fire, casualty or other cause, Owner shall, at its cost
and expense and with all reasonable diligence, repair or replace the damaged or destroyed portion of the Inn to the same condition as existed previously and Manager shall have the right to discontinue operating the Inn to the extent it deems
necessary to comply with applicable law, ordinance, regulation or order or as necessary for the safe and orderly operation of the Inn. To the extent available, proceeds from the insurance described in this Agreement shall be applied to such repairs
or replacements. 
  
 B.    In the event damage or destruction to the Inn from any cause
materially and adversely affects the operation of the Inn and Owner fails to promptly commence and complete the repairing, rebuilding or replacement of the same so that the Inn shall be substantially the same as it was prior to such damage or
destruction, Manager may, at its option, elect to either undertake such work for the account of Owner or terminate the Agreement by written notice to Owner and this Agreement shall terminate on the date that is sixty (60) days after receipt of such
written notice by Owner. 
  
 6.03    Condemnation 
  
 A.    In the event all or substantially all of the Inn shall be taken in any eminent domain, condemnation, compulsory
acquisition, or similar proceeding by any competent authority for any public or quasi-public use or purpose, or in the event a portion of the Inn shall be so taken, but the result is that it is unreasonable to continue to operate the Inn in
accordance with the standards required by this Agreement, this Agreement shall terminate. Owner and Manager shall each have the right to initiate such proceedings as they deem advisable to recover any damages to which they may be entitled.

  
 B.    In the event a portion of the Inn shall be taken by the events described in Section
6.03.A, or the entire Inn is affected but on a temporary basis, and the result is not to make it unreasonable to continue to operate the Inn, this Agreement shall not terminate. However, so much of any award for any such partial taking or
condemnation as shall be necessary to render the Inn equivalent to its condition prior to such event shall be used for such purpose; and Manager shall have the right to discontinue operating the Inn to the extent it deems necessary for the safe and
orderly operation of the Inn. 
  
 6.04    Force Majeure 
  
 If acts of God, acts of war, civil disturbance, or governmental action, including the withdrawal or revocation of any license or
revocation of any license or permit that materially affects the operation of the Inn when such withdrawal or revocation is not due to Manager’s fault, 

 
 - 15 - 

 or any other causes beyond the control of Manager (collectively, “Force Majeure”) shall, in Manager’s reasonable opinion, have a
significant adverse effect upon operations of the Inn, then Manager shall be entitled to terminate the Agreement on sixty (60) days written notice to Owner. 
  
 ARTICLE VII 
  
 TAXES 
  
 7.01    Real Estate and Personal Property Taxes 
  
 A.    Except as specifically set forth in Section 7.01.B below, all real estate and personal property taxes, levies, assessments and similar charges on
or relating to the Inn (“Impositions”) during the Term shall be paid by Manager from Gross Revenues, before any fine, penalty, or interest is added thereto or lien placed upon the Inn or upon the Agreement, unless payment thereof is in
good faith being contested and enforcement thereof is stayed. Any such payments shall be a Deduction in determining Operating Profit. Owner shall, within five (5) days after receipt, furnish Manager with copies of official tax bills and assessments
which it may receive with respect to the Inn. Either Owner or Manager (in which case Owner agrees to sign the required applications and otherwise cooperate with Manager in expediting the matter) may initiate proceedings to contest any negotiations
or proceedings with respect to any Imposition, and all reasonable costs of any such contest shall be paid from Gross Revenues and shall be a Deduction in determining Operating Profit. Manager shall, as part of its contest or negotiation of any
Imposition, be entitled, on Owner’s behalf, to waive any applicable statute of limitations in order to avoid paying the Imposition during the pendency of any proceedings or negotiations with applicable authorities. 
  
 B.    The word “Impositions” as used in this Agreement shall not include the following, all of which shall
be paid solely by Owner, not from Gross Revenues nor from the Reserve: 
  
 1.    Any franchise,
corporate, estate, inheritance, succession, capital levy or transfer tax imposed on Owner, or any income tax imposed on any income of Owner (including distributions to Owner pursuant to Article III hereof); 
  
 2.    Special assessments (regardless of when due or whether they are paid as a lump sum or in installments over time)
imposed because of facilities which are constructed by or on behalf of the assessing jurisdiction (for example, roads, sidewalks, sewers, culverts, etc.) which directly benefit the Inn (regardless of whether or not they also benefit other
buildings), which assessments shall be treated as capital costs of construction and not as Deductions; 
  
 3.    “Impact Fees” (regardless of when due or whether they are paid as a lump sum or in installments over time) which are required of Owner as a condition to the issuance of 

 
 - 16 - 

 site plan approval, zoning variances or building permits, which impact fees shall be treated as capital costs of construction and not as
Deductions; or 
  
 4.    “Tax-increment financing” or similar financing whereby the
municipality or other taxing authority has assisted in financing the construction of the Inn by temporarily reducing or abating normal Impositions in return for substantially higher levels of Impositions at later dates. 
  
 ARTICLE VIII 
  
 OWNERSHIP OF THE INN 
  
 8.01    Ownership of the Inn

  
 A.    Owner hereby covenants that it holds good and marketable fee title to the Site and
that, upon completion of the Inn, it will have, keep, and maintain good and marketable fee title to the Inn free and clear of any and all liens, encumbrances or other charges, except as follows: 
  

1.    easements or other encumbrances (other than those described in Sections 8.01.A.2 and 8.01.A.3 hereof) that do not adversely affect the
operation of the Inn by Manager and that are not prohibited pursuant to Section 8.03 of this Agreement; 
  
 2.    the First Mortgage or any replacement Mortgage and its related security instruments, provided that each of them contain a provision that has been previously approved in writing by Manager’s counsel that
this Agreement will not be subject to forfeiture or Termination other than in accordance with the terms hereof, notwithstanding a default under the First Mortgage or any replacement Mortgage; or 
  

3.    liens for taxes, assessments, levies or other public charges not yet due or due but not yet payable. 
  
 B.    Owner shall pay and discharge, on or before the due date, any and all (1) installments of principal and interest
due and payable upon the First Mortgage, and (2) payments due under any other Mortgage that Owner has, with the prior written consent of Manager, entered into with respect to the Inn. Owner shall indemnify, defend, and hold Manager harmless from and
against all claims, litigation and damages arising from the failure to make any such payments as and when required; and this obligation of Owner shall survive Termination. Manager shall have no responsibility for payment of debt service due with
respect to the Inn, from Gross Revenues or otherwise, and such responsibility shall be solely that of Owner. 
  
 C.    The parties recognize that, in the event of a foreclosure of any Mortgage encumbering the Inn, Manager will suffer damage to its reputation, notwithstanding the fact that 

 
 17 

  
 (a) Manager has no ownership interest in the Inn, or (b) Manager continues to operate the Inn after such
foreclosure pursuant to the provisions of the First Mortgage or any replacement Mortgage as described in Section 8.01.A.2 or the “Subordination Agreement” generally described in Section 8.02 below. Accordingly, Owner agrees that it will
not encumber the Inn with any mortgage indebtedness (including, but not limited to, the First Mortgage), nor any refinancing thereof, unless and until Manager has approved in writing the terms and conditions of such indebtedness, which approval
shall be based on Manager’s good faith judgment that the projected Operating Profit of the Inn in subsequent Fiscal Years will be adequate to pay the debt service with respect to all indebtedness encumbering the Inn. 
  
 Notwithstanding the foregoing, Manager shall not withhold its approval of the amount of proposed mortgage indebtedness if distributions of Operating Profit to
Owner for the most recent two (2) full Fiscal Years equaled or exceeded annual debt service on the proposed new mortgage indebtedness, plus annual debt service on any current mortgage indebtedness to remain on the Inn, by at least one hundred fifty
percent (150%). 
  
 D.    Owner covenants that, so long as Manager is not in Default under this
Agreement, Manager shall quietly hold, occupy and enjoy the Inn throughout the Term hereof free from hindrance, ejection or molestation by Owner or any other party claiming under, through or by right of Owner. Owner agrees to pay and discharge any
payments and charges and, at its expense, to prosecute all appropriate actions, judicial or otherwise, necessary to assure such free and quiet occupation. 
  
 8.02    Subordination, Non-Disturbance and Attornment 
  
 A.    It shall be a condition of Manager’s obligations under this Agreement that, prior to the Opening Date, Manager and the First Mortgagee shall execute an instrument (the “Subordination
Agreement”) satisfactory in all respects to both parties, which shall be recordable in the jurisdiction where the Inn is located, pursuant to which: 
  
 1.    This Agreement and any extensions, renewals, replacements or modifications thereto, and all right and interest or Manager in and to the Inn, shall be subject and subordinate
to the First Mortgage; 
  
 2.    Manager shall be obligated to each of the Subsequent Owners (as
defined below) to perform all of the terms and conditions of this Agreement for the balance of the remaining Term hereof, with the same force and effect as if such Subsequent Owner were the Owner; and 
  
 3.    In the event that there is a foreclosure of the First Mortgage (or a deed in lieu of foreclosure), or other
exercise by the First Mortgagee of its remedies in the event of default, in connection with which title or possession of the Inn is transferred to the First Mortgagee (or its designee) or to a purchaser at foreclosure or to a subsequent purchaser
from the 

 
 - 18 - 

 First Mortgagee (or from its designee) (all of the foregoing shall collectively be referred to as “Subsequent Owners”), Manager shall
not be disturbed in its rights under this Agreement so long as Manager is not in Default hereunder. 
  
 B.    In the event that the Subordination Agreement contains provisions requiring Manager (upon a default under the First Mortgage, or upon various other stipulated conditions) to pay certain amounts which are
otherwise due to Owner under this Agreement to the First Mortgagee or its designee (rather than to Owner), or if the Subordination Agreement contains other provisions under which Manager could be required to perform certain actions which are
inconsistent with the terms of this Agreement, Owner hereby gives its consent to such provisions, which consent shall be deemed to be irrevocable until the entire debt secured by the First Mortgage has been discharged. 
  
 C.    Prior to encumbering the Inn or the Site with any mortgage indebtedness other than the First Mortgage, Owner
shall be obligated to obtain from the Mortgagee an executed, recordable agreement in substantially the same form as the Subordination Agreement, which Manager agrees to execute for the benefit of such mortgagee. If Owner encumbers the Inn or the
Site with mortgage indebtedness without first obtaining such an agreement from the mortgagee, it shall be a Default of Owner under this Agreement, entitling Manager to all of the remedies set forth in Article IX. In addition, any mortgage
indebtedness described in the preceding sentence shall be subject and subordinate to Manager’s rights under this Agreement, and this fact shall be stated in the memorandum described in Section 11.05 of this Agreement. 
  
 8.03    Covenants, Conditions or Restrictions 
  
 A.    As of the Effective Date, there are existing covenants, conditions and restrictions (“CC&Rs”), including reciprocal easements or
cost-sharing arrangements, relating to the Site and the Inn (“Existing CC&Rs”), and such Existing CC&Rs are attached hereto as Exhibit C. Owner represents that the Existing CC&Rs are the only CC&Rs recorded against
the Site and affecting the Inn. 
  
 B.    Owner covenants that, as of the Opening Date and during
the Term of this Agreement, there will not be (unless Manager has given its prior written consent thereto) any future covenants, conditions or restrictions, including reciprocal easement agreements or cost-sharing arrangements (“Future
CC&Rs”) affecting the Site or the Inn (i) which would prohibit or limit Manager from operating the Inn in accordance with the standards of this Agreement, including related amenities proposed for the Inn; or (ii) which would allow Inn
facilities (for example, parking spaces) to be used by persons other than guests, invitees or employees of the Inn. 
  
 C.    All financial obligations imposed on Owner or on the Inn pursuant to any Future CC&Rs shall be paid by Owner from its own funds, and not from Gross Revenues or from the Reserve, unless Manager has given
its prior written consent to such CC&Rs. 

 
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 8.04    Liens; Credit 
  
 Manager and Owner shall use commercially reasonable efforts to prevent any liens from being filed against the Inn which arise from any
maintenance, repairs, alterations, improvements, renewals or replacements in or to the Inn. They shall cooperate fully in obtaining the release of any such liens, and the cost thereof, if the lien was not occasioned by the fault of either party,
shall be treated the same as the cost of the matter to which it relates. If the lien arises as a result of the fault of either party, then the party at fault shall bear the cost of obtaining the lien release. In no event shall either party borrow
money in the name of or pledge the credit of the other. 
  
 ARTICLE IX 
  
 DEFAULTS 
  
 9.01    Events of Default 
  
 Each of the following shall constitute an
“Event of Default” to the extent permitted by applicable law: 
  
 A.    The filing of a
voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law by either party, or the admission by either party that it is unable to pay its debts as they become due. Upon the occurrence of any Event of
Default by either party (referred to as the “defaulting party”) as described under this Section 9.01.A, said Event of Default shall be deemed a “Default” under this Agreement. 
  

B.    The consent to an involuntary petition in bankruptcy or the failure to vacate, within ninety (90) days from the date of entry thereof, any
order approving an involuntary petition by either party. Upon the occurrence of any Event of Default by either party as described under this Section 9.01.B, said Event of Default shall be deemed a “Default” under this Agreement.

  
 C.    The entering of an order, judgment or decree by any court of competent jurisdiction, on
the application of a creditor, adjudicating either party as bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee, or liquidator of all or a substantial part of such party’s assets, and such
order, judgment or decree’s continuing unstayed and in effect for an aggregate of sixty (60) days (whether or not consecutive). Upon the occurrence of any Event of Default by either party as described under this Section 9.01.C, said Event of
Default shall be deemed a “Default” under this Agreement. 
  
 D.    The failure of
either party to make any payment required to be made in accordance with the terms of this Agreement, as of the due date as specified in this Agreement. Upon the 

 
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 occurrence of any Event of Default by either party as described under this Section 9.01.D, said Event of Default shall be deemed a
“Default” under this Agreement if the defaulting party fails to cure such Event of Default within ten (10) days after receipt of written notice from the non-defaulting party demanding such cure. 
  
 E.    The failure of Owner to complete construction, furnishing and equipping of the Inn in the manner contemplated by
the Addendum attached hereto on or before the date set forth in the time schedules mutually approved by Owner and Manager pursuant to the Addendum attached hereto, subject to an extension not to exceed a total of ninety (90) days for each day that
Owner was prevented from meeting such schedules due to action or inaction of governmental authorities having jurisdiction over the Inn, strikes or like labor disturbances, casualty, weather, shortage of critical materials and supplies or other
similar causes beyond the control of Owner. Upon the occurrence of any Event of Default by Owner as described under this Section 9.01.E, said Event of Default shall be deemed a “Default” under this Agreement if Owner fails to cure the
Event of Default within thirty (30) days after receipt of written notice from Manager demanding such cure. 
  
 F.    The failure of either party to perform, keep or fulfill any of the other covenants, undertakings, obligations or conditions set forth in this Agreement, and the continuance of such default for a period of
thirty (30) days after the defaulting party’s receipt of written notice from the non-defaulting party of said failure. Upon the occurrence of any Event of Default by either party as described under this Section 9.01.F, said Event of Default
shall be deemed a “Default” under this Agreement if the defaulting party fails to cure the Event of Default within thirty (30) days after receipt of written notice from the non-defaulting party demanding such cure, or, if the Event of
Default is such that it cannot reasonably be cured within said thirty (30) day period of time, if the defaulting party fails to commence the cure of such Event of Default within said thirty (30) day period of time or thereafter fails to diligently
pursue such efforts to completion. 
  
 9.02    Remedies 
  
 A.    Upon the occurrence of a Default, the non-defaulting party shall have the right to pursue any one or more of the
following courses of action: (1) terminate this Agreement (subject to Sections 9.02.B and 9.02.C below) by written notice to the defaulting party, which termination shall be effective as of the effective date which is set forth in said notice,
provided that said effective date shall be at least thirty (30) days after the date of said notice; (2) institute forthwith any and all proceedings permitted by law or equity (provided they are not specifically barred under the terms of this
Agreement), including, without limitation, actions for specific performance and/or damages; and (3) avail itself of the remedies described in Section 9.03. 
  
 B.    Upon the occurrence of a Default as described under Section 9.01.F, the non-defaulting party shall be entitled to terminate this Agreement as described in Section 9.02.A above
only in the event of a material breach by the defaulting party of its obligations under this Agreement. 

 
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 C.    If Manager is the defaulting party with respect to a
Default as described under Section 9.01, Owner shall be entitled to terminate this Agreement pursuant to Section 9.02.A above (and subject to Section 9.02.B) only if a court of competent jurisdiction issues a final determination (subject to no
further appeal) that monetary damages alone are inadequate to compensate Owner for such Default. 
  
 9.03    Additional Remedies 
  
 A.    Upon the
occurrence of an Event of Default by either party under the provisions of Section 9.01.D, the amount owed to the non-defaulting party shall accrue interest, at an annual rate equal to the Prime Rate plus three (3) percentage points, from and after
the date on which such payment was originally due to the non-defaulting party. 
  
 B.    Upon the
occurrence of an Event of Default by Owner under the provisions of Section 9.01.D, Manager shall have the right (without affecting Manager’s other remedies under this Agreement) to withdraw the amount (plus accrued interest as described in
9.03.A above) owed to Manager by Owner from distributions otherwise payable to Owner pursuant to Sections 3.01 and 4.01 of this Agreement. 
  
 C.    Manager and/or any Affiliate shall be entitled, in case of any breach of the covenants of Sections 11.11.E, 11.11.F, 11.11.G or 11.12 by Owner or others claiming through it, to injunctive relief and
to any other right or remedy available at law. The provisions of this Section 9.03.C shall survive Termination. 
  
 D.    The rights granted under this Article IX shall not be in substitution for, but shall be in addition, to, any and all rights and remedies available to the non-defaulting party (including, without limitation,
injunctive relief and damages) by reason of applicable provisions of law or equity. 
  
 ARTICLE X 

 
 ASSIGNMENT AND SALE 
  
 10.01    Assignment 
  
 A.    Manager shall not assign or transfer its interest in this Agreement without the prior written consent of Owner; provided, however, that Manager shall have the right, without Owner’s consent, to (1)
assign its interest in this Agreement to Marriott or any Affiliate, (2) lease shops or grant concessions at the Inn so long as the terms of any such leases or concessions do not exceed the Term of this Agreement, (3) assign its interest in this
Agreement in connection with a merger or consolidation or a sale of all or substantially all of the assets of Manager or 

 
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 Marriott, and (4) assign its interest in this Agreement in connection with a merger or consolidation or
a sale of all or substantially all of the System assets owned by Manager, Marriott or any Affiliate. 
  
 B.    Owner shall not assign or transfer its interest in this Agreement without the prior written consent of the Manager; provided, however, that Owner shall have the right, without such consent, to (1)
conditionally assign this Agreement as security for a Mortgage of the Inn in accordance with this Agreement, and (2) assign its interest in this Agreement in connection with a Sale of the Inn which complies with the provisions of Section 10.02 of
this Agreement. 
  
 C.    In the event either party consents to an assignment of this Agreement
by the other, no further assignment shall be made without the express consent in writing of such party, unless such assignment may otherwise be made without such consent pursuant to the terms of this Agreement. An assignment by either Owner or
Manager of its interest in this Agreement shall not relieve Owner or Manager, as the case may be, from its respective obligations under this Agreement, and shall inure to the benefit of, and be binding upon, its respective successors, heirs, legal
representatives, or assigns. 
  
 10.02    Sale of the Inn 
  
 A.    Owner shall not enter into any Sale of the Inn to any individual or entity which: (1) does not, in
Manager’s reasonable judgment, have sufficient financial resources and liquidity to fulfill Owner’s obligations under this Agreement; (2) is known in the community as being of bad moral character, or is in control of or controlled by
persons who have been convicted of felonies in any state or federal court; or (3) is engaged in the business of operating (as distinguished from owning) hotels or other lodging facilities in competition with Manager, Marriott or any Affiliate. An
individual or entity shall not be deemed to be in the business of operating hotels or other lodging facilities in competition with Manager, Marriott or any Affiliate solely by virtue of (x) the ownership of such hotels or other lodging facilities,
either directly or indirectly through subsidiaries, affiliates and partnerships, or (y) holding a mortgage or mortgages secured by one or more hotels or other lodging facilities. Furthermore, Owner shall not enter into a Sale of the Inn if Owner is
at the time in Default under the terms of this Agreement. 
  
 B.    If Owner decides to sell the
Inn to a third party, then prior to offering the Inn for sale or negotiating a sale with any third party, Owner will give Manager notice of such decision and afford Manager forty-five (45) days in which to attempt to negotiate a mutually
satisfactory agreement for purchase of the Inn. For purposes of this Section 10.02.B, a sale to a third party shall not include any transfer, sale or assignment to an institutional lender or to a trustee for such lender to secure a loan, nor to a
sale at foreclosure under the First Mortgage or any replacement Mortgage. If, after expiration of forty-five (45) days following the date of Owner’s notice of its desire to sell the Inn, Owner and Manager are not willing or able to enter into a
mutually acceptable agreement for purchase of the Inn, Owner shall be free to sell the Inn to a third party 

 
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 on terms and conditions not more favorable to such third party than Owner was willing to sell the Inn to
Manager and subject to the following further conditions: 
  
 1.    Owner shall deliver written
notice of the proposed sale to Manager stating the name of the prospective purchaser or tenant, as the case may be, the price or rental, and the terms and conditions of such proposed Sale of the Inn, together with all other information thereafter
requested by Manager and reasonably available to Owner. 
  
 2.    Within thirty (30) days after
the date of receipt of Owner’s written notice and all such other information, Manager shall elect, by written notice to Owner, one of the following alternatives: 
  
 a.    to consent to such Sale of the Inn and to the assignment of the Agreement to such purchaser or tenant provided that concurrently with the closing
thereof, the purchaser or tenant, as the case may be, shall, by appropriate instrument in form satisfactory to Manager, assume all of Owner’s obligations under this Agreement. An executed original of such assumption agreement shall be delivered
to Manager; or 
  
 b.    to terminate this Agreement by written notice to Owner, which notice
will set an effective date for such Termination not earlier than thirty (30) days, nor more than one hundred twenty (120) days, following the date of the giving of such notice. Manager shall have the right to change such effective date of
Termination to coincide with the date of the closing of the proposed Sale of the Inn. Said notice of Termination shall not be effective if such Sale of the Inn is not closed. 
  
 C.    If Manager shall fail to elect either of the alternatives in Section 10.02.B.2 within said thirty (30) day period, such failure shall be
conclusively deemed to constitute an election and consent under Section 10.02.B.2.a. above, and the provisions thereof shall prevail as if Manager had consented in writing thereto. Any proposed Sale of the Inn, of which notice has been delivered by
Owner to Manager hereunder, must be closed within one hundred eighty (180) days following the delivery of such notice, unless an extension has been agreed to by the parties hereto. Failing such closing, such notice, and any response thereto given by
Manager, shall be null and void and all of the provisions of Section 10.02.B must again be complied with before Owner shall have the right to close a Sale of the Inn upon the terms contained in said notice, or otherwise. 
  
 D.    If Manager consents (or is deemed to have consented) to the proposed Sale of the Inn, then, Manager shall have
the option to require that such purchaser or tenant enter into a new management agreement with Manager, which new management agreement will be on all of the terms and conditions of this Agreement except that the Initial Term and Renewal Term of any
such new agreement shall consist only of the balance of the Initial Term and Renewal Term remaining under this Agreement at the time of execution of any such new agreement. Such new management agreement shall be executed by Manager and such new
owner at the time of closing 

 
 - 24 - 

 of the Sale of the Inn, and a memorandum of such new management agreement shall be executed by the parties and recorded immediately following
recording of the deed or memorandum of lease or assignment and prior to recordation of any other documents. 
  
 E.    Owner represents that its equity is directly and (if applicable) indirectly owned as shown on Exhibit B. In connection with the possibility of a Sale of the Inn achieved by means of a transfer of the
controlling interest in Owner, Owner shall, from time to time, within thirty (30) days after written request by Manager, furnish Manager with a list of the names and addresses of the owners of capital stock, partnership interest, or other
proprietary interest of Owner. 
  
 F.    Subject to Manager’s right of first negotiation as
set forth in Section 10.2.B., Owner shall have the right at any time after the fifth (5th) anniversary of the Opening Date to terminate this Agreement upon the closing of any Sale of the Inn to a third party which is not an Affiliate of Owner, but
only in accordance with all of the terms and conditions set forth below: 
  
 1.    Owner shall
first deliver to Manager written notice of a bona fide written contract for a Sale of the Inn, which written contract shall include a requirement that Owner terminate this Agreement as a condition to closing, together with all other information
requested by Manager and reasonably available to Owner in accordance with the requirements of this Section 10.02.F; 
  
 2.    This Agreement shall terminate on the date that is one hundred eighty (180) days after Manager’s receipt of the notice described in Section 10.02.F.1 above; provided, however, that Manager at its option
shall have the right to change such effective date of Termination to coincide with the date of the closing of the proposed Sale of the Inn. Any such Termination shall not be effective if such Sale of the Inn is not closed; and 

 
 3.    The proposed purchaser of the Inn (or an entity which said purchaser has retained to operate the Inn)
shall have entered into (having satisfied each of the then-current preconditions thereto) an effective “Franchise Agreement” with one of the Marriott Companies pertaining to the operation of the Inn as a franchised hotel within the System;
such “Franchise Agreement” shall be in such form as shall have been published by one of the Marriott Companies in its Franchise Offering Circular for that particular year, or is otherwise in effect for that particular year; and, as a
condition to the effectiveness of any such Termination, Owner shall have paid to Manager, with respect to any such Termination, a termination fee (in addition to all other fees due under this Agreement) equal to three (3) times the aggregate annual
total of the Base Management Fees and Incentive Management Fees paid and/or due to Manager, such annual total to be computed as the average annual total with respect to the preceding twenty-six (26) Accounting Periods. No Termination under this
Section 10.02.F. shall be effective until Manager has received payment of such amount. 
  
 ARTICLE XI 

 
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 MISCELLANEOUS 
  
 11.01    Right to Make Agreement 
  
 Each party warrants, with respect to itself, that neither the execution of the Agreement nor the finalization of the transactions contemplated hereby shall violate any provision of law or judgment, writ, injunction, order or
decree of any court or governmental authority having jurisdiction over it; result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; or, subject to
Section 11.17 of this Agreement, require any consent, vote or approval which has not been taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and will continue to have throughout the
Term of the Agreement and any extensions thereof, the full right to enter into the Agreement and perform its obligations hereunder. 
  
 11.02    Consents 
  
 Wherever in the Agreement the consent or
approval of Owner or Manager is required, such consent or approval shall not be unreasonably withheld, delayed or conditioned, shall be in writing and shall be executed by a duly authorized officer or agent of the party granting such consent or
approval. If either Owner or Manager fails to respond within thirty (30) days to a request by the other party for a consent or approval, such consent or approval shall be deemed to have been given (except as otherwise provided in this Agreement).

  
 11.03    Agency 
  
 A.    The relationship of Owner and Manager shall be that of principal and agent, and nothing contained in this Agreement shall be construed to create a
partnership or joint venture between them or their successors in interest. Manager’s agency established by this Agreement is coupled with an interest and may not be terminated by Owner until the expiration of the Term of this Agreement, except
as provided in Articles VI or IX. The agency coupled with an interest herein was created by a complex, single, integrated transaction. Among other considerations, Owner and Manager stipulate that their mutual decision to enter into this Agreement
was based on the following assumptions: (i) that one of the reasons why the System has succeeded in gaining the loyalty of its guests is that Residence Inn by Marriott hotels are located in a large number of geographical markets; (ii) that the
success of many of Manager’s promotional efforts depends on the expectation of its guests that there will be a Residence Inn by Marriott hotel in most destinations where they may choose to travel; and (iii) by executing this Agreement, Manager
intends to select this Inn to represent the System in the Inn’s market area, and, in so doing, Manager has foregone the opportunity to select other hotels in this market area. This agency is intended to provide security for the covenants,
promises and guarantees herein. The agency was purchased for valuable consideration and is not terminable except as specifically 

 
 - 26 - 

 
allowed by the express
provisions of this Agreement. The parties intend for this agency to be coupled with an interest, waive any right to claim that it is terminable at will, and further agree to be equitably estopped from asserting that the agency is not coupled with an
interest. 
 
B.    Notwithstanding the agency relationship created by this Agreement, neither this Agreement nor anything implied by the relationship between Manager and Owner shall prohibit the Marriott Companies from
constructing, operating, or promoting, and authorizing others to construct, operate, or promote Residence Inn by Marriott Hotels, Marriott Inns, Courtyard by Marriott Hotels, Marriott Suites Hotels, Fairfield Inns, other lodging concepts,
restaurants, or other business operations of any type, at any location, including a location proximate to the Site. Owner acknowledges, accepts and agrees further that (i) the Marriott Companies retain the right to construct or operate, or both, or
promote or acquire, or authorize or otherwise license others to construct or operate, or both, or promote or acquire any hotels, lodging concepts or products, restaurants or other business operations of any type whatsoever, including, but not by way
of limitation, Residence Inn by Marriott Hotels, Marriott Inns, Marriott Suites, Courtyard by Marriott Hotels, and Fairfield Inns at any location including one or more sites which may be adjacent, adjoining or proximate to the Site, which business
operations may be in direct competition with the Inn; (ii) the Marriott Companies may exercise such right from time to time without notice to Owner; (iii) any such exercise may adversely affect the operation of the Inn; and (iv) Owner covenants that
it shall not take any action, including a cause of action in a court of law or equity, which may be deemed to interfere with the exercise of this right by any of the Marriott Companies. 
 
11.04    Applicable Law 
 
The Agreement shall be construed under and shall be governed
by the laws of the State in which the Site is located. 
 
11.05    Recordation 
 
The terms and provisions of the Agreement shall run with the parcel of land designated as the Site, and with Owner’s interest therein, and shall be binding upon all successors to such interest. The parties shall execute
simultaneously with this Agreement sufficient copies of a “Memorandum of Management Agreement” in recordable form satisfactory to both parties. The Memorandum shall, if legally permitted, be recorded or registered (or such other steps
shall be taken by the parties as are necessary, to the extent legally permitted, to give official notice to all third parties that the Agreement binds the Inn) promptly following the Effective Date of this Agreement in the jurisdiction in which the
Inn is located. Any cost of such recordation shall be initially borne by Owner, reimbursed to Owner from Gross Revenues, and treated as a Deduction. 
 
 

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11.06    Headings 
 
Headings of articles and sections are inserted only for
convenience and are in no way to be construed as a limitation on the scope of the particular articles or sections to which they refer. 
 
11.07    Notices 
 
Notices, statements and other communications to be given under the terms of the Agreement shall be in writing and delivered by hand
against receipt or sent by certified or registered mail or Express Mail service, postage prepaid, return receipt requested or by nationally utilized overnight delivery service, addressed to the parties as follows: 
 
To Owner: 
 
Redinn Hotel, L.P. 
One Spurling Plaza 
12850 Spurling Rd., #114 
Dallas, Texas 75230 

	  	 Attn:	  	 Mr. B. Gene Carter or 

	  	   	  	 Mr. Jon W. Davis 

Phone: (972) 934-8699 
Fax:      (972) 934-8698 
 
To Manager: 
 
Residence Inn by Marriott, Inc. 
c/o Marriott International, Inc. 
10400 Fernwood Road 
Bethesda, Maryland 20817 

	  	 Attn:	  	 Vice President ­ Financial Analysis 

	  	   	  	 Department 51/911.10 

Phone: (301) 380-5421 
Fax:      (301) 380-3384 
 
With Copy To: 
 
Residence Inn by Marriott, Inc. 
c/o Marriott International, Inc. 
10400 Fernwood Road 
Bethesda, Maryland 20817 

	  	  Attn:	  	 Law Department 52.923 ­ Hotel Operations 

	  	  Phone:	  	 (301) 380-9555 

	  	 Fax:	  	 (301) 380-6727 

 

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

 
 11.08    Environmental Matters 
  
 A.    In the event of the discovery of Hazardous Materials (as defined below) on any portion of the Site or in the Inn during the Term of this
Agreement, Owner shall promptly remove such Hazardous Materials, together with all contaminated soil and containers, and shall otherwise remedy the problem in accordance with (1) the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., as amended; (2) the regulations promulgated thereunder, from time to time; (3) all federal, state and local laws, rules and regulations (now or hereafter in effect) dealing with the use, generation,
treatment, storage, disposal or abatement of Hazardous Materials; and (4) the regulations promulgated thereunder, from time to time (collectively referred to as “Environmental Laws”). Owner shall indemnify, defend and hold Manager harmless
from and against all loss, costs, liability and damage (including, without limitation, engineers’ and attorneys’ fees and expenses, and the cost of litigation) arising from the presence of Hazardous Materials on the Site or in the Inn; and
this obligation of Owner shall survive Termination of this Agreement. “Hazardous Materials” shall mean and include any substance or material containing one or more of any of the following: “hazardous material”, “hazardous
waste”, “hazardous substance”, “regulated substance”, “petroleum”, “pollutant”, “contaminant”, or “asbestos” as such terms are defined in any applicable Environmental Law in such
concentration(s) or amount(s) as may impose clean-up, removal, monitoring or other responsibility under the Environmental Laws, as the same may be amended from time to time, or which may present a significant risk of harm to guests, invitees or
employees of the Inn. 
  
 B.    All costs and expenses of the aforesaid removal of Hazardous
Materials from the Site or the Inn, and of the aforesaid compliance with all Environmental Laws, and any amounts paid to Manager pursuant to the indemnity set forth in Section 11.08.A, shall be paid by Owner from its own funds, not as a Deduction
nor from the Reserve, and shall be treated as an expenditure by Owner pursuant to Section 5.03. 
  
 11.09    Confidentiality 
  
 A.    The parties hereto
agree that the matters set forth in this Agreement are strictly confidential and each party will make every effort to ensure that the information is not disclosed to any outside person or entities (including the press) without the prior written
consent of the other party except may be required by law and as may be reasonably necessary to obtain licenses, 

 
 - 29 - 

 permits, and other public approvals necessary for the refurbishment or operation of the Inn, or in connection with Owner’s financing of the
Inn, a Sale of the Inn, or a sale of a controlling interest in Owner, Manager, or Marriott. 
  
 B.    No reference to Manager or to any Affiliate will be made in any prospectus, private placement memorandum, offering circular or offering documentation related thereto (collectively referred to as the
“Prospectus”), issued by Owner or one of its affiliates, which is designated to interest potential investors in the Inn, unless Manager has previously received a copy of all such references. However, regardless of whether Manager does or
does not so receive a copy of all such references, neither Manager nor any Affiliate will be deemed a sponsor of the offering described in the Prospectus, nor will it have any responsibility for the Prospectus, and the Prospectus will so state.
Unless Manager agrees in advance, the Prospectus will not include any trademark, symbols, logos or designs of Manager or any Affiliates. Owner shall indemnify, defend and hold Manager harmless from and against all loss, costs, liability and damage
(including attorneys’ fees and expenses, and the cost of litigation) arising out of any Prospectus or the offering described therein; and this obligation of Owner shall survive Termination of this Agreement. 
  
 11.10    Projections 
  
 Owner acknowledges that any written or oral projections, proformas, or other similar information that has been, prior to execution of this Agreement, or will, during the Term of this Agreement, be
provided by Manager, Marriott, or any Affiliate to Owner is for information purposes only and that Manager, Marriott, and any such Affiliate do not guarantee that the Inn will achieve the results set forth in any such projections, proformas, or
other similar information. Any such projections, proformas, or other similar information are based on assumptions and estimates; and unanticipated events may occur subsequent to the date of preparation of such projections, proformas, and other
similar information. Therefore, the actual results achieved by the Inn are likely to vary from the estimates contained in any such projections, proformas, or other similar information and such variations might be material. 
  
 11.11    Actions to be Taken Upon Termination 
  
 Upon a Termination of this Agreement, the following shall be applicable: 
  
 A.    Manager shall, within ninety (90) days after Termination of this Agreement, prepare and deliver to Owner a final accounting statement with respect to the Inn, as more
particularly described in Section 4.02 hereof, along with a statement of any sums due from Owner to Manager pursuant hereto, dated as of the date of Termination. Within thirty (30) days of the receipt by Owner of such final accounting statement, the
parties will make whatever cash adjustments are necessary pursuant to such final statement. The cost of preparing such final accounting statement shall be a Deduction, unless the Termination occurs as a result of a Default by either party, in which
case the defaulting party shall pay such cost. Manager and Owner 

 
 - 30 - 

 acknowledge that there may be certain adjustments for which the information will not be available at the time of the final accounting and the
parties agree to readjust such amounts and make the necessary cash adjustments when such information becomes available; provided, however, that all accounts shall be deemed final two (2) years after Termination. 
  
 B.    Manager shall release and transfer to Owner (or to any purchaser as may be provided in this Agreement) any of
Owner’s funds which are held or controlled by Manager with respect to the Inn with the exception of funds to be held in escrow pursuant to Sections 6.01.F and 11.11.I and otherwise in accordance herewith. 
  
 C.    Manager shall make available to Owner such books and records respecting the Inn (including those from prior
years, subject to Manager’s reasonable records retention policies) as will be needed by Owner to prepare the accounting statements, in accordance with the Uniform System of Accounts, for the Inn for the year in which the Termination occurs and
for any subsequent year. 
  
 D.    Manager shall (to the extent permitted by law) assign to Owner
or to the new manager all operating licenses and permits for the Inn which have been issued in Manager’s name (including liquor and restaurant licenses, if any); provided that if Manager has expended any of its own funds in the acquisition of
any of such licenses or permits, Owner shall reimburse Manager therefor if it has not done so already. 
  
 E.    Manager shall have the option, to be exercised within thirty (30) days after Termination, to purchase, at their then book value, any items of the Inn’s Inventories and Fixed Asset Supplies as may be
marked with any Trade Name, or any Marriott or Residence Inn trademark, other trade name, symbol, logo or design. In the event Manager does not exercise such option, Owner agrees that it will use any such items not so purchased exclusively in
connection with the Inn until they are consumed. 
  
 F.    Owner shall have the right to operate
the improvements on the Site without modifying the architectural design of same, notwithstanding the fact that such design or certain features thereof may be proprietary to Manager and/or protected by trade marks or service marks held by Manager or
an Affiliate, provided that such use shall be confined to the Site. 
  
 G.    Any computer
software (including upgrades and replacements) at the Inn owned by Manager, Marriott, an Affiliate, or the licensor of any of them is proprietary to Manager, Marriott, such Affiliate, or the licensor of any of them and shall in all events remain the
exclusive property of Manager, Marriott, the Affiliate or the licensor of any of them, as the case may be, and nothing contained in this Agreement shall confer on Owner the right to use any of such software. Manager shall have the right to remove
from the Inn without compensation to Owner any computer software (including upgrades and replacements), including, without limitation, the RICHIE System software, owned by Manager, Marriott, any Affiliate or the licensor of any of them. Furthermore,
upon Termination, Manager shall be entitled to remove from the Inn without 

 
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compensation to Owner any computer equipment utilized as part of a centralized reservation system or owned
by a party other than Owner. 
 
H.    If this Agreement is terminated in accordance with the provisions hereof for any reason other than (1) Default by Manager or (2) expiration of the Term, then Owner shall, within ten (10) days after
Manager’s request therefor, pay to Manager, as compensation for Manager’s lost revenue and expenses and not as a penalty, an amount equal to whichever of the following is applicable: (i) five (5) times the average annual Base Management
Fees, Residence Inn System Fees and Incentive Management Fees due to Manager during the number of full Fiscal Years preceding the Fiscal Year in which the Termination occurred, if such Termination occurs on or prior to the expiration of the third
(3rd) full Fiscal Year after the Opening Date; (ii) four (4) times the average annual Base Management Fees, Residence Inn System Fees and Incentive Management Fees due to Manager during the four (4) full Fiscal Years preceding the Fiscal Year in
which the Termination occurred if such Termination occurs in the fourth (4th) full Fiscal Year after the Opening Date; or (iii) three (3) times the average annual Base Management Fees, Residence Inn System Fees and Incentive Management Fees due to
Manager during the five (5) full Fiscal Years preceding the full Fiscal Year in which the Termination occurred if such Termination occurs after the beginning of the fifth (5th) full Fiscal Year after the Opening Date or during the Renewal Term. If
Owner fails to pay such fee within the time period set forth herein, then Manager shall have the right (without affecting Manager’s other remedies under this Agreement) to withhold the amount of such fee from the Reserve, the Working Capital
funds or any other funds of Owner held by or under the control of Manager. 
 
I.    If this Agreement is terminated for any reason, other than a Termination by reason of a Default of Manager hereunder, an escrow fund shall be established from Gross Revenues
to reimburse Manager for all costs and expenses incurred by Manager in terminating its employees at the Inn, such as severance pay, unemployment compensation, employment relocation, and other employee liability costs arising out of the termination
of employment of Manager’s employees at the Inn all of which shall be in accordance with Marriott’s then standard corporate lodging policy for such items. If Gross Revenues are insufficient to meet the requirements of such escrow fund,
then Owner shall deliver to Manager, within ten (10) days after receipt of Manager’s written request therefor, the sums necessary to establish such escrow fund; and if Owner fails to timely deliver such sums to Manager, Manager shall have the
right (without affecting Manager’s other remedies under this Agreement) to withdraw the amount of such expenses from the Reserve, the Working Capital funds or any other funds of Owner held by or under the control of Manager. 
 
J.    Various other actions shall be
taken, as described in this Agreement, including, but not limited to, the actions described in Sections 4.05 and 6.01.F. 
 
K.    Manager shall peacefully vacate and surrender the Inn to Owner. 
 
The provisions of this Section 11.11 shall survive
Termination. 
 

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 11.12    Trademarks, Trade Names and Service Marks

  
 The names “Marriott,” “Residence Inn,” “Residence Inn by Marriott” and
“Marriott Residence Inn” (each of the foregoing names, together with any combination thereof, are collectively referred to as the “Trade Names”) when used alone or in connection with another word or words, and the Marriott or
Residence Inn trademarks, service marks, other trade names, symbols, logos and designs shall in all events remain the exclusive property of Marriott, and nothing contained in this Agreement shall confer on Owner the right to use any of the Trade
Names, or the Marriott or Residence Inn trademarks, service marks, other trade names, symbols, logos or designs otherwise than in strict accordance with the terms of this Agreement. Except as provided in Section 11.11.E, upon Termination, any use of
or right to use any of the Trade Names, or any of the Marriott or Residence Inn trademarks, service marks, other trade names, symbols, logos or designs by Owner shall cease forthwith and Owner shall promptly remove from the Inn any signs or similar
items which contain any of said Trade Names, trademarks, service marks, other trade names, symbols, logos or designs. If Owner has not removed such signs or similar items within ten (10) days after Termination, Manager shall have the right to do so
at Owner’s expense; and if Owner fails to reimburse Manager for such expense within ten (10) days after receipt of written notice thereof from Manager to Owner, then Manager shall have the right (without affecting Manager’s other remedies
under this Agreement) to withdraw the amount of such expenses from the Reserve, the Working Capital funds or any other funds of Owner held by or under the control of Manager. Included under the terms of this section are all trademarks, service
marks, trade names, symbols, logos or designs used in conjunction with the Inn, including but not limited to restaurant names, lounge names, etc., whether or not the marks contain the “Marriott” name or the “Residence Inn” name.
The right to use such trademarks, service marks, trade names, symbols, logos or designs belongs exclusively to Manager, and the use thereof inures to the benefit of Manager whether or not the same are registered and regardless of the source of the
same. The provisions of this Section 11.12 shall survive Termination. 
  
 11.13    Waiver

  
 The failure of either party to insist upon a strict performance of any of the terms or provisions of the
Agreement, or to exercise any option, right or remedy contained in this Agreement, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in
full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. 
  
 11.14    Partial Invalidity 
  
 If any portion of the Agreement shall be declared invalid by order, decree or judgment of a court, the Agreement shall be construed as if such portion had not been so inserted except when such construction would operate as
an undue hardship on Manager or Owner or constitute a
 

 
 - 33 - 

 
substantial deviation from the general intent and purpose of said parties as reflected in the Agreement. 
  
 11.15    Survival 
  
 All of the rights
and obligations of the parties which, by their terms or by their nature, extend beyond Termination or that accrued but were not discharged prior to Termination shall automatically survive any Termination regardless of whether the applicable section
so states. 
  
 11.16     Negotiation of Agreement 
  
 Owner is a business entity having substantial experience with the subject matter of this Agreement and has fully participated in the
negotiation and drafting of this Agreement. Accordingly, this Agreement shall be construed without regard to the rule that ambiguities in a document are to be construed against the draftsman. No inferences shall be drawn from the fact that the
final, duly executed Agreement differs in any respect from any previous draft hereof. 
  
 11.17    Approval by Manager’s Board of Directors 
  
 It shall be a
condition to Manager’s obligations hereunder that Manager has obtained the approval of its Board of Directors for this transaction. If Manager’s Board of Directors has not approved this transaction within thirty (30) days after the
Effective Date, this Agreement shall automatically terminate and the parties shall have no further rights or obligations hereunder or against each other pursuant hereto. 
  
 11.18    Entire Agreement 
  
 The Agreement, together with any other writings signed by the parties expressly stated to be supplemental hereto and together with any instruments to be executed and delivered pursuant to the Agreement, constitutes the entire
agreement between the parties and supersedes all prior understandings and writings, and may be changed only by a writing signed by the parties hereto. 
  
 ARTICLE XII 
  
 DEFINITION OF TERMS 

 
 12.01    Definition of Terms 
  
 The following terms when used in the Agreement and the Addendum attached hereto shall have the meanings indicated: 

 
 - 34 - 

  
 “Accounting Period” shall mean the four (4) week accounting
periods having the same beginning and ending dates as Manager’s four (4) week accounting periods, except that an Accounting Period may occasionally contain five (5) weeks when necessary to conform Manager’s accounting system to the
calendar. 
  
 “Affiliate” shall mean (a) any subsidiary or affiliate of Manager or Marriott or (b) a
partnership in which Manager or Marriott, as the case may be, or subsidiary or affiliate of either, is a general partner. 
  
 “Agreement” shall mean this Management Agreement between Owner and Manager. 
  
 “Annual Operating Projection” shall have the meaning ascribed to it in Section 4.04. 
  
 “Available Cash Flow” shall mean an amount, with respect to each Fiscal Year or portion thereof during the Term of this Agreement, equal to the excess, if any, of the Operating Profit less Owner’s Priority.

  
 “Average Annual Effective Rate” shall mean, for any hotel, in any Fiscal Year (i) the gross sum
actually billed to guests as room occupancy charges exclusive of occupancy taxes, sales taxes, room service, valet service, in room movies and other charges for services other than the provision of overnight sleeping accommodations, divided by (ii)
the product of the number of days in such Fiscal Year multiplied by the number of guest rooms in such hotel. 
  
 “Base Management Fee” shall mean an amount payable to Manager as a Deduction from Gross Revenues for Central Office Services and Chain Services (except as provided in the definition of Chain Services), pursuant to
Sections 3.01 and 4.01. The Base Management Fee shall, during any given Fiscal Year (or portion thereof), be equal to two percent (2%) of Gross Revenues. 
  
 “Buildings” shall have the meaning ascribed to it in Section A of the Recitals. 
  
 “Building Estimate” shall have the meaning ascribed to it in Section 5.03. 
  
 “CC&Rs” shall have the meaning ascribed to it in Section 8.03. 
  
 “Central Office Services” shall have the meaning ascribed to it in Section 1.03. 
  
 “Chain Services” shall have the meaning ascribed to it in Section 1.03; provided, however, that the Base Management Fee is intended to cover only the services currently listed (as of the Effective Date) in items (i)
and (ii) of the definition of Chain Services in Section 1.03. Accordingly, if there are expenditures that were originally treated as Deductions but that are later determined to be more properly treated as Chain Services, the Inn’s allocable
share of such expenditures shall be treated as Deductions (over and above the Deductions listed as items 7 and 

 
 - 35 - 

 8 of the definition of Deductions) and shall not be covered by the Base Management Fee. Conversely, if there are expenditures that were (as of
the Effective Date) listed in item (i) or (ii) of the definition of Chain Services and included in Chain Services (as of the Effective Date) but that are later determined to be more properly furnished at the Inn instead of on a central or regional
basis, such expenditures shall not later be treated as Deductions (over and above the Deductions listed as items 7 and 8 of the definition of Deductions) but shall continue to be covered by the Base Management Fee. 
  
 “Cure Amount” shall have the meaning ascribed to it in Section 2.02.C. 
  
 “Deductions” shall have the meaning ascribed to it in the definition of Operating Profit. 
  
 “Default” shall have the meaning ascribed to it in Section 9.01. 
  

“Effective Date” shall have the meaning ascribed to it in the Preamble. 
  
 “Environmental Laws” shall have the meaning ascribed to it in Section 11.08. 
  
 “Event of Default” shall have the meaning ascribed to it in Section 9.01. 
  
 “Existing CC&Rs” shall have the meaning ascribed to it in Section 8.03.A. 
  
 “FF&E” shall mean furniture, furnishings, fixtures, kitchen appliances, vehicles, carpeting and equipment, including front desk and back-of-the house
computer equipment, but shall not include Fixed Asset Supplies or any computer software of any type (including upgrades and replacements) owned by Manager, Marriott, an Affiliate of Manager of Marriott, or the licensor of any of them. 

 
 “First Mortgage” shall mean the initial mortgage indebtedness obtained by Owner to finance the Inn (that
replaces the construction financing of the Inn), and may take the form of a mortgage, deed of trust or security document customarily in use in the jurisdiction in which the Site is located. 
  
 “First Mortgagee” shall mean the holder of the First Mortgage. 
  
 “Fiscal Year” shall mean Manager’s Fiscal Year which as of the Effective Date ends at midnight on the Friday closest to December 31 in each calendar year; the new Fiscal Year
begins on the Saturday immediately following said Friday. Any partial Fiscal Year between the Opening Date and the commencement of the first full Fiscal Year shall constitute a separate Fiscal Year. A partial Fiscal Year between the end of the last
full Fiscal Year and the Termination of this Agreement shall also constitute a separate Fiscal Year. If Manager’s Fiscal Year is changed in the future, appropriate adjustment to this Agreement’s reporting and accounting procedures shall be
made; provided, however, that no such change or adjustment shall 

 
 - 36 - 

 alter the term of this Agreement or in any way reduce the distributions of Operating Profit or other payments due hereunder. 

 
 “Fixed Asset Supplies” shall mean items included within “Property and Equipment” under the Uniform
System of Accounts including, but not limited to, linen, china, glassware, tableware, uniforms, and similar items, whether used in connection with public space or Suites. 
  
 “Force Majeure” shall have the meaning ascribed to it in Section 6.04 hereof. 
  
 “Future CC&Rs” shall have the meaning ascribed to it in Section 8.03.B. 
  
 “Gross Revenues” shall mean all revenues and receipts of every kind derived from operating the Inn and all departments and parts thereof, including, but
not limited to: income (from both cash and credit transactions) from rental of Suites, telephone charges, stores, offices, exhibit or sales space of every kind; license, lease and concession fees and rentals (not including gross receipts of
licensees, lessees and concessionaires); income from vending machines; health club membership fees; food and beverage sales; wholesale and retail sales of merchandise; service charges; and proceeds, if any, from business interruption or other loss
of income insurance; provided, however, that Gross Revenues shall not include the following: gratuities to employees of the Inn; federal, state or municipal excise, sales or use taxes or any other taxes collected directly from patrons or guests or
included as part of the sales price of any goods or services; proceeds from the sale of FF&E; interest received or accrued with respect to the funds in the Reserve or the other operating accounts of the Inn; any refunds, rebates, discounts and
credits of a similar nature, given, paid or returned in the course of obtaining Gross Revenues or components thereof; insurance proceeds (other than proceeds from business interruption or other loss of income insurance; condemnation proceeds (other
than for a temporary taking); or any proceeds from any Sale of the Inn or from the refinancing of any debt encumbering the Inn. 
  
 “Hazardous Materials” shall have the meaning ascribed to it in Section 11.08. 
  
 “Impositions” shall have the meaning ascribed to it in Section 7.01. 
  
 “Incentive Management Fee” shall mean an amount payable to Manager, pursuant to Sections 3.01 and 4.01, that is equal to twenty-five percent (25%) of Available Cash Flow in any Fiscal Year (or portion thereof).

  
 “Included Year” shall mean any full Fiscal Year other than a full Fiscal Year in which either
(i) as a result of Force Majeure (including the revocation of a material permit or license unless such revocation is the fault of Manager), Manager is unable to operate the Inn substantially in the ordinary course, or (ii) the Average Annual
Effective Rate for the Inn is greater than or equal to ninety percent (90%) of the Average Annual Effective Rate being achieved by other operators of comparable hotels in the trade area as established by an independent hotel accounting or consulting
company reasonably acceptable to Owner and 

 
 - 37 - 

 Manager. The parties agree that once every other year they shall meet to determine which hotels are “comparable hotels in the Trade
Area” for purposes of this definition. 
  
 “Initial Term” shall have the meaning ascribed to it
in Section 2.01.B. 
  
 “Inn” shall mean the Site together with the Buildings and all other
improvements constructed or to be constructed on the Site pursuant to this Agreement, all FF&E and Fixed Asset Supplies installed or located on the Site or in the Buildings, and all easements or other appurtenant rights thereto. 

 
 “Insurance Retention” shall have the meaning ascribed to it in Section 6.01.F. 
  
 “Inventories” shall mean “Inventories” as defined in the Uniform System of Accounts, such as, but not limited
to, provisions in storerooms, refrigerators, pantries and kitchens; beverages in wine cellars and bars; other merchandise intended for sale; fuel; mechanical supplies; stationery; and other expensed supplies and similar items. 

 
 “Manager” shall have the meaning ascribed to it in the Preamble hereto or shall mean any successor or
permitted assign, as applicable. 
  
 “Marketing Fund” shall mean that certain fund (or any successor
to such fund) maintained by Manager or one of its Affiliates, in its capacity as franchisor of the System, to pay for the following System costs: all costs associated with developing, preparing, producing, directing, administering, conducting,
maintaining and disseminating advertising, marketing, promotional and public relations materials, programs, campaigns, sales and marketing seminars and training programs, and similar activities of every kind and nature, including the Residence Inn
directory; conducting market research; and paying the central operational costs of the Residence Inn reservation system; provided, however, that any costs described in this definition of Marketing Fund may, at the option of the Manager and The
Residence Inn Association, whose membership is currently limited to Residence Inn franchisees, be charged directly to each inn in the System on the basis of actual use by or benefit to each inn and, in such event, shall become Deductions.

  
 “Marriott” shall mean Marriott International, Inc., a Delaware corporation. 

 
 “Marriott Companies” shall mean Manager, Marriott, and any Affiliate of Manager or Marriott. 

 
 “Mortgage” shall mean any mortgage, deed of trust, or security document customarily in use in the jurisdiction
in which the Site is located. 
  
 “Mortgagee” shall mean the holder of any Mortgage encumbering the
Site or the Inn. 

 
 - 38 - 

  
 “Opening Date” shall mean the opening date of the full number of
Suites at the Inn for business to the public (along with the common area lobby and administrative offices) which date shall be established and certified by Manager. 
  
 “Operating Loss” shall mean a negative Operating Profit. 
  
 “Operating Profit” shall mean the excess of Gross Revenues over the following deductions (“Deductions”) incurred by Manager, on behalf of Owner, in operating the Inn:

  
 1.    the cost of sales, including, without limitation, compensation, fringe benefits,
payroll taxes and other costs related to Inn employees (the foregoing costs shall not include salaries and other employee costs of executive personnel of Manager who do not work at the Inn on a regular basis; except that the foregoing costs shall
include the allocable portion of the salary and other employee costs of any general manager or other supervisory personnel (not including regional vice-presidents or regional salespeople) assigned to a “cluster” of hotels and inns which
includes the Inn); 
  
 2.    departmental expenses incurred at departments within the Inn,
administrative and general expenses and the cost of marketing incurred by the Inn, advertising and business promotion incurred by the Inn, heat, light, power, computer line charges and routine repairs, maintenance and minor alterations treated as
Deductions under Section 5.01; 
  
 3.    the cost of Inventories and Fixed Asset Supplies
consumed in the operation of the Inn; 
  
 4.    a reasonable reserve for uncollectible accounts
receivable as determined by Manager; 
  
 5.    all costs and fees of independent professionals or
other third parties who are retained by Manager to perform services required or permitted hereunder; 
  
 6.    all costs and fees of technical consultants and operational experts who are retained or employed by Manager and/or Affiliates of the Manager for specialized services (including, without limitation, quality
assurance inspectors) and the cost of attendance by employees of the Inn at training and manpower development programs sponsored by Manager; 
  
 7.    the Residence Inn System Fee; 
  
 8.    the Base Management Fee; 
  
 9.    insurance costs and
expenses as provided in Section 6.01; 

 
 - 39 - 

  
 10.    taxes, if any, payable by or assessed against Manager
related to this Agreement or to Manager’s operation of the Inn (exclusive of Manager’s income taxes) and all Impositions; 
  
 11.    transfers to the Reserve required pursuant to Section 5.02; 
  
 12.    transfers required to be made, as they may change from time to time, to the Marketing Fund in order for the Inn to remain a member of the System (such contributions are presently two and one-half percent (2
1⁄2%) of Suite Revenues); 
  
 13.    all sums charged to the Inn for room reservation obtained
for the Inn through the reservation system used by Manager (the current system-wide charge is approximately $6.22 per reservation made through the reservation system, but is subject to change); and 
  
 14.    such other costs and expenses incurred by Manager as are specifically provided for elsewhere in this Agreement
or are otherwise reasonably necessary for the proper and efficient operation of the Inn. 
  
 The term
“Deductions” shall not include (a) debt service payments pursuant to the First Mortgage or any other mortgage financing on the Inn, (b) payments pursuant to equipment leases or other forms of financing obtained for the FF&E located in
or connected with the Inn, or (c) rental payments pursuant to any ground lease of the Site, all of which shall be paid by Owner from its own funds. 
  
 “Owner” shall have the meaning ascribed to it in the Preamble or shall mean any successor or permitted assign, as applicable. 
  
 “Owner’s Priority” shall be equal to the sum of One Million Nine Hundred Fifty-Six Thousand Seven Hundred Twenty Dollars ($1,956,720). 

 
 “Partial Opening Date” shall mean the date the Inn is first opened for business to the public although fewer
than all of the Suites are available for occupancy by guests, which date shall be established and certified by Manager; and if there is no Partial Opening Date, then all references thereto shall be deemed to be references to the “Opening
Date”. 
  
 “Plans” shall have the meaning ascribed to it in the Addendum. 

 
 “Pre-Opening Expenses” shall have the meaning ascribed to it in the Addendum. 
  
 “Prime Rate” shall mean the “base rate” of interest announced from time to time by Bankers Trust Company, New
York, New York. 

 
 - 40 - 

  
 “Renewal Term” shall have the meaning ascribed to it in Section
2.01.B. 
  
 “Repairs and Equipment Estimate” shall have the meaning ascribed to it in Section
5.02.D. 
  
 “Reserve” shall have the meaning ascribed to it in Section 5.02.A. 

 
 “Residence Inn System Fee” shall mean an amount payable to Manager as a Deduction from Gross Revenues for
System Services, pursuant to Sections 3.01 and 4.01, that is an amount equal to (i) four percent (4%) of Suite Revenues for each Accounting Period through the end of the first twenty-six (26) full Accounting Periods, and (ii) five percent (5%) of
Suite Revenues for each Accounting Period thereafter. 
  
 “Sale of the Inn” shall mean any sale,
assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, of the fee simple title to the Site and/or the Inn [or assignment of the leasehold interest of Owner in the Site and Owner’s rights in the Buildings
and other improvements located on the Site]. For purposes of this Agreement, a Sale of the Inn shall also include a lease (or sublease) of all or substantially all of the Inn or Site and any sale, assignment, transfer or other disposition, for value
or otherwise, voluntary or involuntary, in a single transaction or a series of transactions, of the controlling interest in Owner. If Owner is a corporation, the phrase “controlling interest” shall mean the right to exercise, directly or
indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of Owner (through ownership of such shares or by contract). If Owner is not a corporation, the phrase “controlling interest” shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of Owner. 
  
 “Site” shall have the meaning ascribed to it in Section A of the Recitals. 
  
 “System Services” shall have the meaning ascribed to it in Section 1.03. 
  
 “Subordination Agreement” shall have the meaning ascribed to it in Section 8.02.A. 
  
 “Subsequent Owners” shall have the meaning ascribed to it in Section 8.02.A. 
  
 “Suite” shall mean a lodging unit in the Inn. 
  
 “Suite Revenues”
shall mean that portion of the Gross Revenues of the Inn which is attributable to the rental of the Suites. 
  
 “System” shall mean all inns which are operated under the “Residence Inn by Marriott,” “Residence Inn” or “Marriott Residence Inn” Trade Names. 
  
 “Term” shall have the meaning ascribed to it in Section 2.01.B. 

 
 - 41 - 

  
 “Termination” shall mean the expiration or sooner cessation of
this Agreement. 
  
 “Trade Names” shall have the meaning ascribed to it in Section 11.12.

  
 “Uniform System of Accounts” shall mean the Uniform System of Accounts for the Lodging Industry,
Ninth Revised Edition, 1996, as published by the Hotel Association of New York City, Inc. 
  
 “Working
Capital” shall mean funds which are reasonably necessary for the day-to-day operation of the business of the Inn, including, without limitation, amounts sufficient for the maintenance of change and petty cash funds, operating bank accounts,
receivables, payrolls, prepaid expenses and funds required to maintain Inventories, less accounts payable and accrued current liabilities. 

 
 - 42 - 

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

	  	  	  	  	  OWNER:

	
	  Attest:
	  	  	  	  REDINN HOTEL, L.P.,
 
a Texas limited partnership

	
	  By:
	  	   
  /s/    illegible

	  	  By:
	  	   
  /s/    JON W. DAVIS

	
	  	  	  Witness
	  	  	  	  Print Name:
	  	   
  Jon W. Davis

 
 

	  STATE OF TEXAS
	   	  )

	  	   	  ) ss.

	  COUNTY OF    Dallas                    
	   	  )

 
This
instrument was acknowledged before me on this 26 day of January, 1998, by Jon W. Davis, on behalf of REDINN ASSOCIATES, L.L.C., as general partner of REDINN HOTEL, L.P., a Texas limited partnership. 
 
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal. 
 

	  By:
	  	   
  /s/    BEVERLY BEACH

	  	  	  Notary Public

	
	  Print Name:
	  	   
  Beverly
Beach

	
	  My Commission Expires:
	  	   
  December 23,
2000

 

43 

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

	  	  	  	  	  MANAGER:

	
	  Attest:
	  	  	  	  RESIDENCE INN BY MARRIOTT, INC.,
  a Delaware corporation

	
	  By:
	  	   
  /s/    CAROL BRUFF

	  	  By:
	  	   
  /s/    DAVID J. GRISSEN

	  	  	  Assistant Secretary
	  	  	  	  Vice President

	
	  	  	  	  	  	  	  Print Name:
	  	   
  David J.
Grissen

 

	  STATE OF MARYLAND
	   	  )

	  	   	  ) ss.

	  COUNTY OF MONTGOMERY
	   	  )

 
On this
the 26th day of January, 1998, before me, the undersigned officer, personally appeared David J. Grissen who
acknowledged himself to be the Vice President of RESIDENCE INN BY MARRIOTT, INC., a corporation, and that he as such officer being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the
Corporation by himself as Vice President. 
 
IN
WITNESS WHEREOF, I have hereunto set my hand and official seal. 
 

	  By:
	  	   
  /s/    SYLVIA A. JARUTON

	  	  	  Notary Public

	
	  Print Name:
	  	   
  Sylvia A.
Jaruton

	
	  My Commission Expires:
	  	   
  Mar. 05,
2001

 
 
 
 

44 

  
 EXHIBIT A 
  
 THE SITE 
  
 Parcel 2-A of Redmond Town Center, a binding
site plan, as per plat recorded in Volume 176 of Plats, pages 56 through 67, records of King County; situate in the City of Redmond, County of King, State of Washington. 

  
 EXHIBIT B 
  
 EQUITY INTEREST IN OWNER 
  
  
 
	 
	 Redinn Associates, L.L.C.,
 a Texas limited liability company,
 general partner
 	  	 35
 	 %
 
	 
	 MRIRW, Ltd.,
 a Texas limited partnership
 	  	 21.66666
 	 %
 
	 
	 SVP RPC Joint Venture,
 a Texas joint venture
 	  	 21.66666
 	 %
 
	 
	 2 MRI, Ltd.,
 a Texas limited partnership
 	  	 21.66666
 	 %
 

 

  
 EXHIBIT C 
  
 EXISTING COVENANTS, CONDITIONS AND RESTRICTIONS 
  
 [SEE NEXT PAGES] 

  
 ADDENDUM 
  
 CONSTRUCTION AND PRE-OPENING 
  
 The following provisions shall, as supplemented by the terms and provisions set forth in the Agreement, govern the rights and obligations of Owner and Manager during the construction and pre-opening stages of the Inn. 

 
 I.    Construction and Financing 
  
 A.    Owner shall, at its sole cost and expense, develop the Inn on the Site under a financing plan mutually agreed upon by Owner and Manager no later
than sixty (60) days after the Effective Date. Owner shall prepare and submit a financing plan to Manager no later than thirty (30) days after the Effective Date. The financing plan shall contain at a minimum (1) a current financial statement for
Owner and all individuals or entities comprising Owner, and (2) with respect to funds to be borrowed from a construction lender, and with respect to funds which are applied to replace said construction financing, the type of lender that will provide
the funds and the identity of the lender (if known), the amount of such funds, and the terms of the loan. 
  
 B.    Manager shall make available, if not previously provided to Owner, a set of prototypical plans and specifications (not including construction drawings or specifications) for the Inn and the current edition
of the “Residence Inn Design Guide.” Owner shall, after receiving said materials from Manager, cause Owner’s architect to produce plans, specifications and complete working drawings, including, without limitation, architectural,
electrical, plumbing, HVAC, structural, civil engineering and landscape drawings (collectively, the “Plans”) which shall be properly sealed by Owner’s architect. The Plans shall adapt Manager’s prototypical plans and
specifications to the Site and to local and state laws, regulations and ordinances and shall incorporate Manager’s fire and life safety standards and other standards of quality and efficiency set by Manager for the design and construction of a
Residence Inn. The Plans along with a current geotechnical report shall be submitted to Manager for approval at least sixty (60) days prior to commencement of construction of the Inn. Following Manager’s approval of the Plans, no changes in
such Plans shall be made which materially affect the operation, cost or aesthetics of the Inn without the prior written consent of Manager. 
  
 C.    Owner shall construct, furnish and fully equip the Inn in accordance with the Plans which have been previously approved by Manager. During the course of construction, Owner
shall cooperate fully with Manager for the purpose of permitting Manager, at Manager’s option, to inspect the construction of the Inn at a minimum (1) just prior to the installation of the drywall, (2) upon completion of the model suite
and (3) upon completion of the Inn, to determine whether construction is proceeding in accordance with Manager’s standards and specifications and the approved Plans. Owner shall give Manager at least thirty (30) days notice prior to each

 
 1 

 of the events described in the sentence immediately above to enable Manager to schedule its inspection; it is understood that Manager is not
obligated to inspect the construction of the Inn. Manager’s exercise of its rights to approve the Plans and any proposed changes thereto and to inspect construction of the Inn shall be solely for the purpose of assuring compliance with the
terms and conditions of this Agreement, and Manager shall have no liability or obligations with respect to the Plans or construction of the Inn. Upon completion of the Inn, Owner shall submit to Manager an architect’s certification that the Inn
has been constructed and completed in accordance with the Plans which were approved by Manager (or, if any changes in the Plans, as approved by Manager as required hereunder) and a copy of the Certificate of Occupancy for the Inn. To the extent that
Manager determines that the Inn as constructed does not conform to the approved Plans, Owner shall promptly correct such nonconforming work; any nonconforming work discovered prior to the opening of the Inn shall be corrected by Owner prior to the
Opening Date. 
  
 D.    Owner shall be responsible for obtaining all licenses, permits, and other
approvals required for construction and operation of the Inn and agrees upon request by Manager to sign promptly and without charge applications for any such licenses, permits and other documents as may be required by the applicable authority.

  
 E.    Unless Manager specifically approves in writing to the contrary, all FF&E installed
in the Inn as of the Opening Date and at any time thereafter will be purchased (not leased) by Owner, free and clear of all liens and security interests other than the First Mortgage. 
  
 F.    Manager will have the option of terminating the Agreement by written notice to be delivered to Owner if: 
  
 1.    within ninety (90) days after the Effective Date Owner has not obtained all necessary written commitments for
the construction and long term debt financing of the Inn; or 
  
 2.    construction of the
Buildings and other improvements constituting the Inn has not commenced within one hundred eighty (180) days after the Effective Date, with construction being deemed to have commenced upon the pouring of the footings for the Inn; or 

 
 3.    construction, furnishing and equipping of the Buildings and other improvements constituting the Inn
has not been completed in accordance with the Plans approved by Manager, or all permits and licenses necessary for operation of the Inn have not been obtained within twelve (12) months after construction has commenced. 
  
 II.    Pre-Opening Activities and Expenses 

 
 2 

  
 A.    It is recognized that certain activities must be
undertaken so that Inn can function properly on the Partial Opening Date and thereafter. Accordingly, from time to time at the appropriate time both prior to and after the Opening Date, Manager shall: 
  
 1.    Recruit, train and employ the staff required for the Inn; 
  

2.    Undertake pre-opening promotion and advertising, including opening celebrations; 
  
 3.    Test the operations of the Inn; 
  
 4.    Provide, for a period to end not later than one hundred twenty (120) days after the Opening Date, a task force of experts and personnel to supervise and assist with certain pre-opening and opening
operations; 
  
 5.    Apply for the initial licenses and permits required for the operation of
the Inn as contemplated by the Agreement; and 
  
 6.    In general, render such other
miscellaneous services incidental to the preparation and organization of the Inn’s operations as may be required for the Inn to be adequately staffed and capable of operating on the Partial Opening Date and during the first Fiscal Year.

  
 The expenses relating to such activities (“Pre-Opening Expenses”) shall include, but not be limited to,
the types of items listed on Schedule A attached hereto, such as salaries and wages (including those of personnel of Marriott and Affiliates), costs of interim office space, professional fees, telephone expenses, staff hiring and training costs,
travel and moving expenses, costs of opening celebrations, the cost of heat, light and power not chargeable to the cost of constructing the Inn, advertising and promotion expenses, and miscellaneous expenses. 
  
 B.    Approximately six (6) months prior to the projected Partial Opening Date, and thereafter as necessary, Manager
shall prepare and submit an estimate (or revised estimates, as the case may be) of the total Pre-Opening Expenses to Owner. In the event the Partial Opening Date or the Opening Date is delayed or postponed from the original date established
therefor, such estimates shall be subject to revision to reflect any increases in Pre-Opening Expenses occasioned by such delay or postponement. Owner shall notify Manager in advance of any impending delay or postponement of the Partial Opening Date
or the Opening Date, to enable Manager (to the extent reasonably practicable) to reduce the increases in Pre-Opening Expenses occasioned thereby. It is understood, however, that to the extent that such a delay or postponement of the Partial Opening
Date or the Opening Date causes increased Pre-Opening Expenses that cannot reasonably be avoided, Owner shall promptly pay such increased Pre-Opening Expenses pursuant to Section II.C of this Addendum, regardless of the fact that such 

 
 3 

 delay or postponement may be the result of Force Majeure. For purposes of the preceding sentence, the term “increased Pre-Opening
Expenses” shall include all out-of-pocket cancellation penalties in the event Manager must cancel reservations made for Suites, meeting rooms and other Inn facilities as a result of such delay or postponement of the Partial Opening Date or the
Opening Date. 
  
 C.    Pre-Opening Expenses shall be borne by Owner and advanced to Manager
within fifteen (15) days after Owner’s receipt of the above-described estimates or revised estimates, as the case may be. At the time of delivering to Owner any revised estimate of Pre-Opening Expenses, Manager shall also deliver an accounting
of any funds expended to date for Pre-Opening Expenses. Within ninety (90) days after the final expenditure of funds for Pre-Opening Expenses, Manager shall deliver to Owner an itemized accounting of funds so expended along with payment to Owner of
any surplus of estimated Pre-Opening Expenses previously funded by Owner and not spent by Manager. If, following the Partial Opening Date, Owner has failed to provide funds for Pre-Opening Expenses in accordance with Manager’s estimates,
Manager shall have the option to deduct such amounts (plus interest from the date of expenditure until repayment to Manager at an annual rate equal to the Prime Rate plus three (3) percentage points) from Owner’s share of Operating Profit.

  
 III.    Opening Date 
  
 A.    The projected Partial Opening Date, if any, and the Opening Date shall be set forth in time schedules which will be mutually approved by Owner and
Manager pursuant to Section I.B of this Addendum. However, the actual Partial Opening Date and the Opening Date shall in no event be earlier than the date upon which all elements of the Inn (but, in the case of a Partial Opening Date, not including
those elements related strictly to the Suites that are not to be opened on the Partial Opening Date) have been substantially completed in accordance with the Plans and ready for their intended use and occupancy, and in compliance with the provisions
of Section III.B below. Manager’s agreement to delay the Partial Opening Date or the Opening Date pursuant to the preceding sentence shall not prejudice Manager’s rights under Section 9.01.E of the Agreement. 
  
 B.    Owner agrees that on the Partial Opening Date and on the Opening Date there will be no ongoing construction on
any portion of the Inn which would materially adversely affect access to the Inn (including all parts of the Inn scheduled to be opened on the Partial Opening Date or Opening Date, whichever is applicable) or which would otherwise materially
adversely limit, restrict, disturb or interfere with Manager’s operation of the Inn in accordance with its usual high standards. If, as of the Partial Opening Date or the Opening Date, there remain to be completed minor unfinished “punch
list” items or installation of incidental FF&E and supplies in the common area, lobby, administrative offices or any Suites to be opened on the Partial Opening Date or Opening Date, whichever is applicable, none of which preclude Manager
(in Manager’s reasonable judgment) from operating the Inn in accordance with the standards of this Agreement, 

 
 4 

 the Partial Opening Date or Opening Date, whichever is applicable, shall not be delayed for such reasons but Owner shall be obligated to
promptly finish such items. 
  
 IV.    Initial Working Capital and Fixed Asset Supplies

  
 At least sixty (60) days prior to the anticipated Partial Opening Date, Owner shall provide to Manager the
initial Working Capital for the Inn in the amount of Sixty-Three Thousand Dollars ($63,000). Additionally, Owner shall provide to Manager at least sixty (60) days prior to the anticipated Partial Opening Date the initial Fixed Asset Supplies for the
Inn (or the funds necessary to supply the Inn with the initial Fixed Asset Supplies) in accordance with specifications to be provided by Manager. 
  
 V.    Interim Insurance 
  
 Owner shall,
at its expense, at all times during the period of construction, furnishing and equipping of the Inn, procure and maintain adequate property, general liability and automobile liability insurance (with limits and coverage to be mutually agreed upon)
fully protecting Owner and Manager against loss or damage arising in connection with the preparation, construction, furnishing and equipping of the Inn and pre-opening activities. All policies required under this Section V shall include Manager as
an additional insured. Owner shall deliver to Manager, upon execution of the Agreement, certificates of insurance with respect to all policies so procured and, in the case of insurance policies about to expire, shall deliver certificates with
respect to the renewal thereof. All certificates of insurance provided for under this Section V shall, to the extent obtainable, state that the insurance shall not be canceled or materially changed without at least thirty (30) days prior written
notice to the certificate holder. Insurance premiums and any other costs or expenses with respect to the insurance required under this Section V shall be paid by Owner from its own funds and not as a Deduction. 
  
 VI.    Conditions to Manager’s Obligations 
  
 The obligations of Manager under the Agreement shall be conditioned upon the following: 
  
 A.    timely completion of the Inn in accordance with the requirements set forth in Section I of this Addendum; and 
  
 B.    receipt, prior to the Opening Date as projected under Section III of this Addendum, of all licenses, permits,
decrees, acts, orders or other approvals necessary for the operation of the Inn. 
  
 Any default by either Owner or
Manager of its obligations under this Addendum shall be governed by Article IX of the Agreement. 

 
 5 

  
 [END OF ADDENDUM] 

 
 6 

  
 SCHEDULE A 
 to 
 ADDENDUM 
  
 ILLUSTRATIVE EXAMPLE OF 
 PRE-OPENING EXPENSES 
  
 
	  	    	 PERCENTAGE OF TOTAL
 	 
	 
	 Administrative
 	    	 3.9
 	 %
 
	 
	 Human Resources
 	    	 61.6
 	 %
 
	 
	 Engineering
 	    	 8.3
 	 %
 
	 
	 Front Office
 	    	 3.7
 	 %
 
	 
	 Housekeeping
 	    	 6.4
 	 %
 
	 
	 Guest Services
 	    	 0.9
 	 %
 
	 
	 Marketing/Sales
 	    	 15.2
 	 %
 
	 
	 TOTAL PRE-OPENING
 	    	 100.0
 	 %

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