Document:

CHARLOTTE/MATTHEWS
(FI&S)

 Exhibit 10.13

MANAGEMENT AGREEMENT

by and between

NEWPORT
CHARLOTTE MANAGEMENT, LLC

as “MANAGER”

and

APPLE
TEN HOSPITALITY MANAGEMENT, INC.

as “OWNER”

Dated as of March 25, 2011

i

CHARLOTTE/MATTHEWS
(FI&S)

Table of Contents

	
  
 	
  
 	
  
 	
  
 	
  
 	
  
 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE I

 	
  

 	
 APPOINTMENT OF MANAGER

 	
  

 	
 1

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.01.

 	
  

 	
 Appointment

 	
  

 	
 1

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.02.

 	
  

 	
 Management
 of the Hotel

 	
  

 	
 1

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.03.

 	
  

 	
 Employees

 	
  

 	
 3

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.04.

 	
  

 	
 Owner’s
 Right to Inspect

 	
  

 	
 4

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.05.

 	
  

 	
 Regular
 Meetings

 	
  

 	
 4

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.06.

 	
  

 	
 System
 Standards

 	
  

 	
 4

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.07.

 	
  

 	
 Limitations
 on Manager’s Authority

 	
  

 	
 4

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.08.

 	
  

 	
 Representations
 and Warranties of Manager

 	
  

 	
 5

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE II

 	
  

 	
 TERM

 	
  

 	
 5

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.01.

 	
  

 	
 Term

 	
  

 	
 5

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.02.

 	
  

 	
 Performance
 Termination

 	
  

 	
 5

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE III

 	
  

 	
 COMPENSATION OF MANAGER

 	
  

 	
 6

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.01.

 	
  

 	
 Management
 Fees

 	
  

 	
 6

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.02.

 	
  

 	
 Operating
 Profit

 	
  

 	
 6

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.03.

 	
  

 	
 Reimbursables

 	
  

 	
 7

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.04.

 	
  

 	
 Termination
 Fee

 	
  

 	
 7

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE IV

 	
  

 	
 ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS

 	
  

 	
 8

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.01.

 	
  

 	
 Accounting,
 Distributions and Annual Reconciliation

 	
  

 	
 8

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.02.

 	
  

 	
 Books and
 Records

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.03.

 	
  

 	
 Accounts,
 Expenditures

 	
  

 	
 10

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.04.

 	
  

 	
 Annual
 Operating Projection

 	
  

 	
 11

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.05.

 	
  

 	
 Working
 Capital

 	
  

 	
 11

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.06.

 	
  

 	
 Fixed Asset
 Supplies

 	
  

 	
 11

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.07.

 	
  

 	
 Real Estate
 and Personal Property Taxes

 	
  

 	
 11

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.08.

 	
  

 	
 Sarbanes-Oxley
 Certification

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE V

 	
  

 	
 REPAIRS, MAINTENANCE AND REPLACEMENTS

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.01.

 	
  

 	
 Repairs and
 Maintenance to be Paid from Gross Revenues

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.02.

 	
  

 	
 Repairs,
 Maintenance and Equipment Replacements to be Paid from Reserve

 	
  

 	
 14

 

i

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE VI

 	
  

 	
 INSURANCE

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.01.

 	
  

 	
 Property
 Insurance

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.02.

 	
  

 	
 Operational
 Insurance

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.03.

 	
  

 	
 Coverage

 	
  

 	
 16

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.04.

 	
  

 	
 Costs and
 Expenses

 	
  

 	
 16

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.05.

 	
  

 	
 Owner’s
 Right to Provide Insurance

 	
  

 	
 17

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE VII

 	
  

 	
 DAMAGE AND REPAIR

 	
  

 	
 17

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.01.

 	
  

 	
 Damage and
 Repair

 	
  

 	
 17

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.02.

 	
  

 	
 Condemnation

 	
  

 	
 18

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.03.

 	
  

 	
 Business
 Interruption

 	
  

 	
 18

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.04.

 	
  

 	
 Subordination
 to Mortgage

 	
  

 	
 18

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.05.

 	
  

 	
 Liens;
 Credit

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE VIII

 	
  

 	
 DEFAULTS

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.01.

 	
  

 	
 Events of
 Default

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.02.

 	
  

 	
 Remedies

 	
  

 	
 20

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.03.

 	
  

 	
 Additional
 Remedies

 	
  

 	
 20

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE IX

 	
  

 	
 ASSIGNMENT AND SALE

 	
  

 	
 21

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.01.

 	
  

 	
 Assignment

 	
  

 	
 21

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.02.

 	
  

 	
 Sale of the
 Hotel

 	
  

 	
 21

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE X

 	
  

 	
 MISCELLANEOUS

 	
  

 	
 22

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.01.

 	
  

 	
 Right to
 Make Agreement

 	
  

 	
 22

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.02.

 	
  

 	
 Consents and
 Cooperation

 	
  

 	
 22

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.03.

 	
  

 	
 Relationship

 	
  

 	
 22

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.04.

 	
  

 	
 Applicable
 Law; Jurisdiction

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.05.

 	
  

 	
 Recordation

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.06.

 	
  

 	
 Headings

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.07.

 	
  

 	
 Notices

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.08.

 	
  

 	
 Environmental
 Matters

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.09.

 	
  

 	
 Confidentiality;
 Projections

 	
  

 	
 25

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.10.

 	
  

 	
 Indemnification

 	
  

 	
 26

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.11.

 	
  

 	
 Actions to
 be Taken Upon Termination

 	
  

 	
 27

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.12.

 	
  

 	
 Waiver

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.13.

 	
  

 	
 Partial
 Invalidity

 	
  

 	
 29

 

ii

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.14.

 	
  

 	
 Survival

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.15.

 	
  

 	
 Negotiation
 of Agreement

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.16.

 	
  

 	
 Estoppel
 Certificates

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.17.

 	
  

 	
 Affiliates

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.18.

 	
  

 	
 Blocked
 Persons or Entities

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.19.

 	
  

 	
 Restrictions
 on Operating the Hotel in Accordance with System Standards

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.20.

 	
  

 	
 Counterparts

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.21.

 	
  

 	
 Entire
 Agreement

 	
  

 	
 31

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.22.

 	
  

 	
 Franchise
 Agreement

 	
  

 	
 31

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.23.

 	
  

 	
 Operation of
 Other Hotels

 	
  

 	
 31

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.24.

 	
  

 	
 Waiver of
 Jury Trial and Punitive Damages

 	
  

 	
 32

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.25. 

 	
  

 	
 Termination
 of the Hotel Lease

 	
  

 	
 32

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.26. 

 	
  

 	
 All Payments
 Subject to the Availability of Funds

 	
  

 	
 32

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE XI

 	
  

 	
 DEFINITION OF TERMS

 	
  

 	
 32

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.01.

 	
  

 	
 Definition
 of Terms

 	
  

 	
 32

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE XII

 	
  

 	
 SUPPLEMENTAL PROVISIONS

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Schedule 1

 	
  

 	
 -

 	
 Hotel
 Specific Data

 	
  

 	
  

 
	
 Schedule 2

 	
  

 	
 -

 	
 Supplemental
 Provisions

 	
  

 	
  

 
	
 Exhibit A

 	
  

 	
 -

 	
 Legal
 Description of Site

 	
  

 	
  

 

iii

MANAGEMENT AGREEMENT

          THIS
MANAGEMENT AGREEMENT (“Agreement”) is executed as of the 25th
day of March, 2011 (“Effective Date”), by APPLE TEN
HOSPITALITY MANAGEMENT, INC., a Virginia corporation (“Owner”),
with a mailing address at c/o Apple REIT Companies, 814 E. Main Street,
Richmond, Virginia 23219, Attention: Krissy Gathright, and NEWPORT CHARLOTTE MANAGEMENT, LLC,
a Virginia limited liability company (“Manager”), with a mailing address at
c/o 4290 New Town Avenue, Williamsburg, Virginia 23188.

          A.
The party identified as the “Landlord” in Schedule 1 attached hereto (“Landlord”)
is the owner of the hotel identified in Schedule 1, as more particularly
described in the definition of “Hotel” in Section 11.01 hereof.

          B.
Landlord and Owner have entered into that certain Hotel Lease Agreement dated
as of the Effective Date (the “Hotel Lease”) pursuant to which
Landlord leases the Hotel to Owner.

          C.
All capitalized terms used in this Agreement shall have the meaning set forth
in Section 11.01 hereof.

          D.
Owner desires to engage Manager to manage and operate the Hotel, and Manager
desires to accept such engagement, upon the terms and conditions set forth in
this Agreement.

          NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Owner and Manager agree as follows:

ARTICLE I

APPOINTMENT OF MANAGER

          1.01.
Appointment. 

          Owner
hereby appoints and employs Manager as Owner’s exclusive independent contractor
to supervise, direct and control the management and operation of the Hotel
throughout the Term. Manager accepts said appointment and agrees to manage the
Hotel during the Term in accordance with the terms and conditions of this
Agreement.

          1.02.
Management of the Hotel. 

          A.
Manager shall manage the Hotel, including, without limitation, performance of
the following functions, in accordance with Prudent Industry Practices, the
provisions of this Agreement and all standards imposed by the Franchise
Agreement (provided that in all cases, except as otherwise specifically set
forth in this Agreement, the costs and expenses of performing such functions
shall be Deductions):

                    1.
Recruit, employ, relocate, manage, supervise, direct and discharge all
employees at the Hotel and maintain adequate staff, consistent with Prudent
Industry Practices and the Annual Operating Projection, to carry out its duties
under this Agreement.

                    2.
Establish prices, rates and charges for services provided in the Hotel,
including Guest Room rates, subject to Owner’s prior approval or as set forth
in the Annual Operating Projection.

                    3.
Establish and revise, as necessary, administrative policies and procedures,
including employment policies and procedures and policies and procedures for
the control of revenue and expenditures, for the purchasing of supplies and
services, for the control of credit and for the scheduling of maintenance, and
verify that the foregoing procedures are operating in a sound manner.

                    4.
Make payments on accounts payable and collect accounts receivable.

                    5.
Procure (for Owner) all Inventories and replace Fixed Asset Supplies and
otherwise incur customary and reasonable expenses in the operation of the
Hotel, subject to the approved Annual Operating Projection.

                    6.
Prepare and deliver Annual Operating Projections, Accounting Period Statements,
Annual Operating Statements, and such other information as is required by this
Agreement.

                    7.
Plan, execute and supervise repairs and maintenance at the Hotel.

                    8.
Obtain the insurance required to be obtained by Manager pursuant to Article VI
of this Agreement, subject to the provisions of Section 6.05. 

                    9.
Obtain and keep in full force and effect, either in its own name or in Owner’s
or Owner’s affiliate’s name, as may be required by applicable law, any and all
licenses (including, without limitation, liquor licenses which shall be
maintained in the name of Manager to the extent permitted by law) and permits
to the extent same is within the control of Manager (or, if same is not within
the control of Manager, Manager shall use reasonable diligence and efforts to
obtain and keep same in full force and effect).

                    10.
Execute subordination agreements, estoppel certificates and other documentation
required by any purchaser or mortgagee and reasonably cooperate (provided that
Manager shall not be obligated to enter into any amendments of this Agreement)
with Owner or Landlord in any attempt(s) by Owner or Landlord to effectuate a
Sale of the Hotel or to obtain a Mortgage.

                    11.
At the direction and with the concurrence of Owner, arrange for and supervise
public relations and advertising and prepare marketing plans.

                    12.
Negotiate and enter into, on behalf of Owner, service contracts and other third
party agreements required in the ordinary course of operating the Hotel,
provided that each 

2

such
contract or agreement that requires expenditures in excess of $5,000 or is not
terminable without penalty or fee must first be approved in advance by Owner.

                    13.
Manage and operate the Hotel at all times in compliance with the Franchise
Agreement, including (without limitation) the Manual and the System Standards
(as such terms are defined in the Franchise Agreement).

          B.
The operation of the Hotel shall be under the exclusive supervision and control
of Manager, except as otherwise specifically provided in this Agreement, and
Manager shall be responsible for the proper and efficient operation of the Hotel.
In fulfilling its obligations under this Agreement, Manager will act as a
reasonable, prudent operator of the Hotel, having regard for the status of the
Hotel, operating the Hotel in accordance with Prudent Industry Practices and at
all times maintaining and complying with all standards imposed by the Franchise
Agreement, and subject to the foregoing and all other terms and conditions of
this Agreement, shall have discretion in the following: charges, terms and
conditions for Guest Rooms and commercial space; credit policies and services
provided by the Hotel; food and beverage services; employment policies;
granting of leases, subleases, licenses and concessions for shops and
businesses within the Hotel, provided that the term of any such lease, sublease,
license or concession shall not exceed the lesser of one (1) year or the Term
without the prior written approval of Owner; receipt, holding and disbursement
of funds; maintenance of bank accounts; procurement of Inventories, supplies
and services; promotion and publicity; payment of costs and expenses as are
specifically provided for in this Agreement or are otherwise reasonably
necessary for the proper and efficient operation of the Hotel; and, generally,
all activities necessary for operation of the Hotel. With respect to all
Material Management Decisions, Manager shall consult with Owner in advance of
making any such decisions. The term “Material Management Decisions” means a
decision to be made in connection with any expenditure of more than $10,000 for
each item or $50,000 in the aggregate for all such items in any Fiscal Year if
such expenditure is not included in the approved Annual Operating Projection
for such Fiscal Year or if such expenditure would result in an increase in the
overall Annual Operating Projection.

          C.
Manager shall comply with and abide by all applicable Legal Requirements
pertaining to its operation of the Hotel. Landlord or Owner shall have the
right, but not the obligation, in its reasonable discretion, to contest or
oppose, by appropriate proceedings, any such Legal Requirements. The reasonable
expenses of any such contest of a Legal Requirement shall be paid from Gross
Revenues as Deductions. Owner or Landlord, as applicable, shall indemnify and
hold Manager harmless from any loss, claim, fees or expenses (including
reasonable attorneys’ fees) arising from the noncompliance with any Legal
Requirement that Owner or Landlord chooses to contest or as to which Owner does
not fund the cost of compliance.

          1.03.
Employees 

          All personnel employed at the Hotel shall at all times be the employees
of Manager and not the employees of Owner. Manager shall have reasonable
discretion with respect to all personnel employed at the Hotel, including,
without limitation, decisions regarding hiring, promoting, transferring,
compensating, supervising, terminating, directing and training all 

3

employees at the Hotel, and, generally, establishing and maintaining
all policies relating to employment; provided, however, that (i) Owner shall
have the right to approve the hiring or termination of the persons who occupy
the position of General Manager for the Hotel and (ii) Manager shall not
negotiate or enter into any collective bargaining or other labor agreement with
employees or with any organization representing or claiming to represent
employees without Owner’s prior consent. No person shall be given gratuitous
accommodations or services without prior joint approval of Owner and Manager
except in accordance with policies agreed upon by Owner and Manager. Owner
shall not pay for the relocation costs of any employees except for the cost of
relocating the General Manager; provided, however, that (i) the relocation
costs for the General Manager shall be subject to Owner’s prior approval, which
approval shall not be unreasonably withheld or delayed, and (ii) Manager shall
reimburse Owner for the costs (including relocation costs) of hiring and
training General Managers who are employed at the Hotel for less than one (1)
year and are transferred or relocated except to a hotel owned by Owner or an
Affiliate of Owner. As is consistent with Prudent Industry Practices, Manager
shall be responsible and liable for all acts or omissions of the personnel
employed at the Hotel and all persons managing such employees. 

          1.04.
Owner’s Right to Inspect. 

          Owner, its
representatives, employees, agents, Affiliates and Mortgagees shall have access
to the Hotel at any and all reasonable times for the purpose of inspection,
exercising any of its rights under this Agreement or showing the Hotel to
prospective purchasers, tenants or Mortgagees and at any time in case of an
emergency.

          1.05.
Regular Meetings. 

          At
Owner’s request, Owner and Manager shall have meetings at the Hotel and at
mutually convenient times. Manager shall be represented at such meetings by the
General Manager of the Hotel and such other personnel as the Manager and/or
Owner may deem appropriate. The purpose of the meetings shall be, inter alia,
to discuss the performance of the Hotel and other related issues, including any
variations from the Annual Operating Projection for the preceding quarter.

          1.06.
System Standards 

          Subject to
the availability of adequate funds, Manager shall take such actions consistent
with this Agreement as are necessary for the Hotel to comply with the System
Standards, and Manager shall operate the Hotel so that the Hotel will at all
times comply with System Standards.

          1.07.
Limitations on Manager’s Authority 

          Manager
shall not, without Owner’s prior written approval, enter into any FF&E
Lease if (i) the fair market value of the FF&E subject to such FF&E
Lease at the time of entering into such FF&E Lease exceeds Ten Thousand
Dollars ($10,000); (ii) the fair market value of the FF&E subject to all
FF&E Leases at the time of entering into such FF&E Lease exceeds
Twenty-five Thousand Dollars ($25,000) in the aggregate; (iii) the FF&E
subject to such FF&E Lease is FF&E that is not, consistent with Prudent
Industry Practices, customarily leased; (iv) such FF&E 

4

Lease is with an Affiliate of Manager or is on payment terms (including
the amounts and schedule of payments) that would be materially more favorable
to the lessor thereof than payment terms customary under Prudent Industry
Practices for leases of similar FF&E; or (v) such FF&E Lease is not
terminable by Owner upon thirty (30) days’ notice.

          1.08.
Representations and Warranties of Manager. Manager hereby represents and warrants to Owner as
follows: 

          A.
Authority; No Conflicts. Manager is a limited liability company duly
formed, validly existing and in good standing in the state identified in Schedule
1. Manager has obtained all necessary consents to enter into and perform
this Agreement and is fully authorized to enter into and perform its
obligations under this Agreement. No consent or approval of any person, entity
or governmental authority is required for the execution, delivery or
performance by Manager of this Agreement, and this Agreement is hereby binding
and enforceable against Manager. Neither the execution nor the performance of,
or compliance with, this Agreement by Manager has resulted, or will result, in
any violation of, or default under, or acceleration of, any obligation under
any existing corporate charter, certificate of incorporation, bylaw, articles
of organization, limited liability company agreement or regulations,
partnership agreement or other organizational documents of Manager and under
any, mortgage indenture, lien agreement, promissory note, contract, or permit,
or any judgment, decree, order, restrictive covenant, statute, rule or
regulation, applicable to Manager or, to the best of Manager’s knowledge, to
the Hotel. 

          B.
Bankruptcy. Neither Manager nor any of its Affiliates, is insolvent or
the subject of any bankruptcy proceeding, receivership proceeding or other
insolvency, dissolution, reorganization or similar proceeding.

ARTICLE
II

TERM

          2.01.
Term. 

          The “Term”
of this Agreement shall begin on the Effective Date and shall continue until
the expiration date identified in Schedule 1. The Term will be
automatically renewed for up to two (2) one-year periods unless either party
provides notice not less than one hundred twenty (120) days prior to the
expiration of the Term or the initial renewal Term, as the case may be, in
which case this Agreement shall terminate as of the last day of the Term or the
initial renewal term, as applicable. Notwithstanding the foregoing, Manager or
Owner shall have the option to terminate this Agreement at any time from and
after the date that is one hundred eighty (180) days prior to the expiration of
the initial Term, with or without cause, by giving the other party not less
than one hundred eighty (180) days prior written notice of its election to
terminate.

          2.02.
Performance Termination. 

          A.
Owner shall have the option to terminate this Agreement following any
Performance Termination Period with respect to which the following occurs:

5

                    1.
The Operating Profit for the Performance Termination Period is less than the
Performance Termination Threshold; or

                    2.
The Revenue Index of the Hotel during the Performance Termination Period is
less than the Revenue Index Threshold for such Performance Termination Period.

          Owner shall
exercise such option to terminate by serving written notice thereof on Manager
no later than sixty (60) days after Owner’s receipt of the last Accounting
Period Statement for Performance Termination Period, and this Agreement shall
terminate as of the end of the second (2nd) full Accounting Period
following the date on which Manager receives the above-described notice from
Owner. Notwithstanding anything contained herein to the contrary, Manager at
its option may elect to void such Termination by so notifying Owner within such
sixty (60) day period; provided, however, that the amount that was necessary to
have achieved the Performance Termination Threshold or Revenue Index Threshold,
as applicable (the “Deficit Amount”) shall be made up to Owner by either
(i) Manager’s paying the Deficit Amount to Owner within ten (10) days after
such 60-day period (the “Cure Payment”) or (ii) offsetting
the Deficit Amount against the Base Management Fees, the Incentive Management
Fees and/or other amounts or reimbursements payable to Manager under this
Agreement, as Owner may direct.

          B.
Owner’s failure to exercise its right to terminate this Agreement pursuant to
this Section 2.02 shall not be deemed an estoppel or waiver of Owner’s right to
terminate this Agreement with respect to any subsequent event or circumstance
that could give Owner the right to terminate hereunder.

ARTICLE
III

COMPENSATION OF MANAGER

          3.01.
Management Fees. 

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

          A.
the Base Management Fee, which shall be retained by Manager from Gross Revenues
except as otherwise provided in this Agreement; plus

          B.
the Incentive Management Fee but only to the extent of available Operating
Profit after payment of Owner’s Priority as provided in Section 3.02 below.

          3.02.
Operating Profit. 

          A.
Operating Profit, to the extent available, shall be distributed to Owner and to
Manager in the following order of priority, except as otherwise provided in
this Agreement: 

                    1.
An amount up to the maximum amount of Owner’s Priority shall be paid to Owner;

                    2.
The Incentive Management Fee shall be paid to Manager; and

6

                    3.
Any remaining balance of Operating Profit shall be paid to Owner.

          Owner’s
Priority shall not be cumulative from one Fiscal Year to the next, and to the
extent the maximum amount of Owner’s Priority is unpaid in any Fiscal Year,
such unpaid amount shall not accrue and shall not be payable in any subsequent
Fiscal Year. Notwithstanding anything in this Agreement to the contrary,
Manager acknowledges and agrees that Incentive Management Fees are only payable
(i) annually within thirty (30) days after Owner’s receipt and acceptance of
the Annual Operating Statement, (ii) to the extent of available Operating
Profit after payment in full of Owner’s Priority and (iii) in no event shall
Incentive Management Fees accrue or be deemed to accrue.

          B.
To the extent of available Operating Profit with respect to each Accounting
Period, Manager shall distribute a prorated portion of the Owner’s Priority to
Owner for each such Accounting Period in accordance with Section 4.01. Any
Incentive Management Fee payable to Manager will be payable within thirty (30)
days after Owner’s receipt and acceptance of the Annual Operating Statement.

          3.03 Reimbursables.

          Although
Manager shall not be required to advance its own funds for any purpose under
this Agreement, Manager shall, nonetheless, be reimbursed from Gross Revenues
or by Owner for all reasonable amounts advanced by Manager, its employees, or
agents, including, but not limited to, costs paid to third parties for property
specific data processing, third party payroll processing, costs incurred in
complying with the requirements of Section 4.08 hereof, travel and
out-of-pocket expenses, such as postage, facsimile, express courier, and long
distance telephone expenses incurred in the performance of Manager’s duties and
obligations hereunder. Such expenses shall be set forth in the Annual Operating
Projection. The provisions of this Section 3.03 shall survive Termination.

          3.04. Termination
Fee.

          A. If this
Agreement is terminated by Owner for any reason prior to the expiration of the
Term (including, but not limited to, a termination by Owner incident to a Sale
of the Hotel as provided in Section 9.02 below), other than (i) a performance
termination as provided for in Section 2.02 above or (ii) in the case of an
Event of Default by Manager or (iii) a termination due to an Operating Loss or
(iv) termination as provided in Section 4.08 or (v) a termination permitted
under Article VII, Owner agrees to pay Manager a “Termination Fee,” as
liquidated damages, and not as a penalty, equal to the sum obtained by
multiplying: (1) one-twelfth (1/12) of the annual Base Management Fee in the
amount called for in the current Annual Operating Projection (but in no event
less than the Base Management Fee for the preceding full Fiscal Year) times (2)
the number of months remaining in the Term. Nothing in this paragraph is
intended to imply that Owner has any right to terminate this Agreement except
as is expressly set forth elsewhere herein. 

          B. The
parties recognize that if this Agreement is terminated under circumstances that
would entitle Manager to a Termination Fee in accordance with (A) above,
Manager would suffer an economic loss by virtue of the loss of management fees
that would otherwise have been 

7

earned under this Agreement. Because such fees vary in amount depending
upon the Gross Revenues of the Hotel and, accordingly, would be extremely
difficult and/or impractical to ascertain with certainty, the parties agree
that the Termination Fee constitutes a reasonable estimate of such economic
loss and is appropriately delineated as liquidated damages and not as a
penalty.

           C.
Notwithstanding the foregoing, if in the event of a termination for which a
Termination Fee would otherwise be due, Owner may, in its sole and absolute
discretion, avoid payment of such Termination Fee by, within sixty (60) days of
such termination, by naming Manager as manager for another hotel not already
managed by Manager, provided that such substitute hotel is reasonably
comparable to the Hotel in size, number of rooms, quality of franchise,
strength of geographic market, and gross revenue. If Manager is so appointed as
manager of a substitute hotel, such management shall be pursuant to the terms
and conditions of this Agreement.

          D. The
provisions of this Section 3.04 shall survive Termination.

ARTICLE
IV

ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS

          4.01.
Accounting, Distributions and Annual Reconciliation. 

          A.
Within fifteen (15) days after the close of each Accounting Period, Manager
shall deliver an interim accounting (the “Accounting Period Statement”) to Owner,
prepared in accordance with the Uniform System of Accounts, showing Gross
Revenues, Deductions, Operating Profit and applications and distributions
thereof for the preceding Accounting Period and any other information
reasonably requested by Owner. Manager shall transfer to Owner, with each
Accounting Period Statement, any interim amounts due Owner, subject to Working
Capital needs mutually agreed upon by Owner and Manager, and shall retain any
interim amounts payable to Manager pursuant to the terms of this Agreement. 

          B.
Calculations and payments of the Incentive Management Fee and the Base
Management Fee made with respect to each Accounting Period shall be accounted
for cumulatively within a Fiscal Year, but shall not be cumulative from one
Fiscal Year to the next. Within each SEC Filing Period, Manager shall deliver
to Owner (1) a statement (the “Annual Operating Statement”) in
reasonable detail summarizing the operations of the Hotel for the immediately
preceding Fiscal Year and a certificate of Manager’s chief accounting officer
(or comparable employee) certifying that, to the best of his or her knowledge,
such Annual Operating Statement is true and correct and (2) a statement (the “Quarterly
Operating Statement”) in reasonable detail summarizing the
operations of the Hotel for the immediately preceding calendar quarter and a
certificate of Manager’s chief accounting officer (or comparable employee)
certifying that, to the best of his or her knowledge, such Quarterly Operating
Statement is true and correct. The parties shall, within five (5) Business Days
after Owner’s receipt of such Annual Operating Statement, make any adjustments,
by cash payment, in the amounts paid or retained for such Fiscal Year as are
needed because of the final figures set forth 

8

in
such Annual Operating Statement. Such Annual Operating Statement shall be
controlling over the preceding Accounting Period Statements.

          C.
To the extent there is an Operating Loss for any Accounting Period, unless such
loss was due to a force majeure event, no Base Management Fee or Incentive
Management Fee shall be paid to or retained from Gross Revenues by Manager. Any
Base Management Fee that would have been payable to Manager had there been an
Operating Profit for such Accounting Period shall not accrue and shall not be
payable to Manager. In no event shall Incentive Management Fees accrue, nor
shall any Incentive Management Fee be payable to Manager in respect of any
Accounting Period (i) as to which there is an Operating Loss or (ii) as to
which accrued Base Management Fees are payable to Manager. 

          To the
extent there is an Operating Loss for any Accounting Period, additional funds
in the amount of any such Operating Loss (other than the amount of any Base
Management Fee) shall be provided by Owner within thirty (30) days after
Manager has delivered written notice thereof to Owner. If Owner does not fund
such Operating Loss within the thirty (30) day time period, Manager shall have
the right (without affecting Manager’s other remedies under this Agreement) to
withdraw an amount to cover such Operating Loss from future distributions of
funds otherwise due to Owner. In the event an Operating Loss occurs in respect
of a Fiscal Year, either Owner or Manager may elect to terminate this
Agreement. In no event shall Manager be obligated to invest its own funds to
cover any Operating Loss.

          4.02.
Books and Records. 

          Books of
control and account pertaining to operations at the Hotel shall be kept on the
accrual basis and in all material respects in accordance with GAAP. Owner may
at reasonable intervals and upon giving reasonable advance notice examine such
records during Manager’s normal business hours. If Owner desires to audit, examine
or review the Annual Operating Statement, Owner shall notify Manager in writing
within sixty (60) days after receipt of such Annual Operating Statement of its
intention to audit and begin such audit no sooner than ten (10) days after
Manager’s receipt of such notice. Owner shall use reasonable efforts to
complete such audit within one hundred twenty (120) days after commencement
thereof. If Owner does not make such an audit, then such Annual Operating
Statement shall be deemed to be conclusively accepted by Owner as being
correct, except in the event of manifest error or fraud, misrepresentation,
misconduct or negligence by Manager or its agents, employees, representatives
or contractors or other third parties. If any audit by an independent certified
professional accountant retained by Owner discloses an understatement of any
amounts due Owner, Manager shall promptly pay Owner such amounts found to be
due, plus interest thereon at the Prime Rate plus one percent (1%) per annum
from the date such amounts should originally have been paid. If any audit
discloses that Manager has not received any amounts due it, Owner shall pay
Manager such amounts. The cost of the audit shall be paid by Owner and be a
Deduction; provided, however, Manager shall pay for such cost if such audit
discloses an underpayment to Owner for the Fiscal Year so audited of five
percent (5%) or more of the amount that should have been paid to Owner for such
Fiscal Year. In addition, if the Franchise Agreement requires Owner to pay
interest and/or the cost of an audit to the franchisor on account of an
understatement in reports provided by Manager, Manager shall pay such interest
and costs 

9

in accordance with the Franchise Agreement without (either directly or
indirectly) passing such charges on to Owner.

          4.03.
Accounts, Expenditures. 

          A.
All funds derived from operation of the Hotel shall be deposited by Manager in
Owner’s bank accounts (the “Operating Accounts”) established by
Manager in a bank or banks designated by Manager with the concurrence of Owner.
Withdrawals by Manager from said Operating Accounts shall be made solely by the
General Manager or the Assistant General Manager of the Hotel, a senior officer
of Manager or such other representatives of Manager whose signatures have been
authorized by Manager with the concurrence of Owner. Reasonable petty cash
funds shall be maintained at the Hotel.

          B.
Except as otherwise provided in this Agreement, all payments made by Manager
hereunder shall be made from the Operating Accounts, petty cash funds, or from
the Reserve (in accordance with Section 5.02). Manager shall not be required to
make any advance or payment with respect to the Hotel except out of such funds,
and Manager shall not be obligated to incur any liability or obligation with
respect to the Hotel unless resulting from acts or omissions of Manager that
are in violation of or inconsistent with this Agreement or from Manager’s
negligence or misconduct (each, “Manager’s Liability” and, collectively,
“Manager’s
Liabilities”). 

          C.
Debts and liabilities (other than Manager’s Liabilities) incurred by Manager as
a result of its operation and management of the Hotel pursuant to the terms
hereof, whether asserted before or after Termination, will be paid by Owner to
the extent funds are not available for that purpose from Gross Revenues, and
Owner shall indemnify, defend and hold Manager harmless from and against all
loss, costs, liability, and damage (including, without limitation, reasonable
attorneys’ fees and expenses) arising from Owner’s failure to pay or perform
such debts and liabilities. Manager shall pay, indemnify, defend and hold Owner
harmless from and against all Manager’s Liabilities and all loss, costs,
liability and damage (including, without limitation, reasonable attorneys’ fees
and expenses) arising from Manager’s failure to pay or perform Manager’s
Liabilities. The provisions of this Section 4.03.C shall survive Termination.

          4.04.
Annual Operating Projection. 

          Manager
shall deliver to Owner for its review, at least forty-five (45) days prior to
the beginning of each Fiscal Year after the first Fiscal Year following the
Effective Date, a preliminary draft of the business plan (including a proposed
budget) and a projection of the estimated Gross Revenues, departmental profits,
Deductions, and Operating Profit for the forthcoming Fiscal Year for the Hotel
(the “Annual
Operating Projection”) for approval by Owner. Manager will
consider in good faith suggestions made by Owner with respect to the Annual
Operating Projection and make modifications thereto that are agreed upon by
Owner and Manager. In the case of the Fiscal Year beginning on the Effective
Date, Manager and Owner have already agreed upon the Annual Operating
Projection for such Fiscal Year. Upon approval of the Annual Operating
Projection by Owner and Manager, Manager in good faith shall use best efforts
to adhere to such Annual Operating Projection. In the event Owner and Manager
are unable to agree upon the Annual Operating Projection by the commencement of
the Fiscal Year 

10

to which it relates, the Manager shall be entitled to operate the Hotel
in accordance with this Agreement with the maximum approved amount of
expenditures to be equal to (i) the aggregate of all items in the proposed
budget which are not disputed by Owner, plus (ii) the sum of the actual
expenditures for the items in dispute in the previous Fiscal Year increased by
the increase (if any) in the CPI on January 1 of the year in question over the
CPI on January 1 of the previous year. 

          4.05.
Working Capital. 

          Owner, as
of the Effective Date, shall establish a level of Working Capital funds, which
shall be held in the Operating Accounts, that is reasonably believed to be reasonably
sufficient for the operations of the Hotel, subject at all times to seasonal
differences and changes in circumstances after the Effective Date. Manager may
from time to time during the Term request that Owner advance any additional
funds necessary to maintain Working Capital at levels reasonably determined by
Manager (with the concurrence of Owner) to be necessary to satisfy the needs of
the Hotel. In the event Owner and Manager are unable to agree upon the need for
and/or amount of additional Working Capital within thirty (30) days after
Owner’s receipt of such written notice from Manager, Manager may increase the
amount based on the CPI formula in Paragraph 4.04 above. If Owner and Manager
agree upon the need for and amount of additional Working Capital and thereafter
Owner does not so fund additional Working Capital within ten (10) Business Days
after Owner’s receipt of a written request from Manager to fund such additional
Working Capital, Manager shall have the right to withdraw an amount equal to
the funds requested by Manager for additional Working Capital from future
distribution of funds otherwise due to Owner. All funds so advanced for Working
Capital shall be utilized by Manager for the purposes of this Agreement. Upon
Termination, Manager shall immediately return the outstanding balance of the
Working Capital to Owner.

          4.06.
Fixed Asset Supplies. 

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

          4.07.
Real Estate and Personal Property Taxes. 

          A.
Except as specifically set forth in Section 4.07.B below, all real estate and
personal property taxes, levies, assessments (including special assessments
(regardless of when due or whether they are paid as a lump sum or in
installments over time) imposed because of facilities that are constructed by
or on behalf of the assessing jurisdiction (for example, roads, sidewalks,
sewers, culverts, etc.) which directly benefit the Hotel (regardless of whether
or not they also benefit other buildings)), “Impact Fees” (regardless of when
due or whether they are paid as a lump sum or in installments over time) which
are required of Owner as a condition to the issuance of zoning variances or building
permits, and similar charges on or relating to the 

11

Hotel
(collectively, “Impositions”) during the Term shall be
paid by Manager from Gross Revenues, before any fine, penalty, or interest is
added thereto or lien placed upon the Hotel or upon this Agreement, unless
payment thereof is in good faith being contested and enforcement thereof is
stayed. Any such payments shall be Deductions in determining Operating Profit.
Owner shall, within five (5) days after receipt, furnish Manager with copies of
official tax bills and assessments which it may receive with respect to the
Hotel. Either Landlord or Owner may, and at Owner’s request Manager shall,
initiate proceedings to contest any negotiations or proceedings with respect to
any Imposition, and all reasonable costs of any such contest shall be paid from
Gross Revenues and shall be a Deduction in determining Operating Profit.
Manager shall, as part of its contest or negotiation of any Imposition, be
entitled, on Owner’s behalf, to waive any applicable statute of limitations in
order to avoid paying the Imposition during the pendency of any proceedings or
negotiations with applicable authorities. Notwithstanding anything contained
herein to the contrary, at Owner’s option (i) Manager shall establish an escrow
account in the name of Owner in a bank or banks designated by Manager with the
concurrence of Owner and shall deposit monthly into such account from Gross
Revenues an amount that Manager reasonably estimates shall be sufficient to pay
the Impositions, in which case Manager shall pay the Impositions from funds in
the escrow account as and when the Impositions become due (and Owner shall
promptly deposit into the escrow account any deficiency if the estimated
monthly payments are not sufficient to pay all of the Impositions) or (ii) the
amounts that would otherwise be deposited into such escrow account shall be
included in the Operating Profit, not deducted from Gross Revenues and shall be
distributed in cash to Owner along with the remainder of the Owner’s Priority.
If Owner elects to retain such amounts pursuant to clause (ii) above, Manager
shall accrue such amounts as a reserve on the accounting records of the Hotel,
and Owner shall fund the same as and when the Impositions become due, but such
accrued and unfunded amounts shall be deducted from Gross Revenues for purposes
of calculating the Incentive Management Fee. In addition, if any Mortgagee
requires the establishment of an escrow account with respect to the
Impositions, Manager shall comply with such requirements.

          B.
The word “Impositions” as used in this Agreement shall not include
any franchise, corporate, estate, inheritance, succession, capital levy or
transfer tax or other assessment or payment in lieu thereof imposed on Owner or
Manager, or any income tax imposed on any income of Owner or Manager (including
distributions to Owner or Manager pursuant to Article III hereof), all of which
shall be paid solely by Owner or Manager, as applicable, not from Gross
Revenues nor from the Reserve.

          4.08.
Sarbanes-Oxley Certification. 

          A. Owner
may, in connection with its or any of its Affiliate’s annual or quarterly
Securities and Exchange Commission reporting requirements (and in any event no
more than four (4) times in any Fiscal Year), request that Manager deliver to
Owner or its Affiliate a certificate from an accounting officer (or equivalent
employee) of Manager, in a form approved by Manager’s accounting firm,
certifying that, to his or her knowledge, the information contained in the
Accounting Period Statements for the Accounting Periods contained within the
applicable Fiscal Year or quarter are true and correct in all material
respects, subject to final adjustment based on the annual review conducted by
Manager in preparing the Annual Operating Statement. Owner shall submit such
request in writing, along with the date by which such 

12

certificate is to be delivered, not less than five (5) business days
prior to the requested delivery date, and Manager shall deliver the certificate
by the requested date or, if later, within five (5) business days after
Manager’s receipt of Owner’s request. 

          B. In
connection with Owner’s or its Affiliates’ certifications under Section 404 (“Section
404”) of the Sarbanes-Oxley Act of 2002, Owner or such Affiliate
shall have the right, at its option: 

                    1.
Either (i) to require Manager to document its processes and related internal
controls for Owner or such Affiliate to use in its required documentation under
Section 404 or (ii) to have access to Manager’s books and records relating to
the Hotel (including, without limitation, reasonable access to Manager’s
premises) to document Manager’s processes and related internal controls; and

                    2.
Either (i) to require testing by Manager of the controls identified in clause 1
above or (ii) to have access to Manager’s books and records relating to the
Hotel (including, without limitation, reasonable access to Manager’s premises)
to permit Owner or such Affiliate to test the controls identified in clause 1
above. 

          Manager
shall provide Owner’s or such Affiliates’ independent auditors access to
Manager’s books and records relating to the Hotel (including, without
limitation, access to Manager’s premises) to conduct their audit of the testing
performed pursuant to this Section 4.08. If Owner or such Affiliate determine
such controls have weaknesses which should be mentioned in Owner’s or such
Affiliates’ report on internal controls under Section 404 or other
certifications under the Sarbanes-Oxley Act of 2002, Manager shall use
reasonable best efforts to remedy and/or correct identified weaknesses within
thirty (30) days after notice; provided, however, that in the event that
Manager does not so remedy and/or correct such weaknesses within the applicable
thirty (30) day cure period, Owner shall be entitled to terminate this
Agreement upon thirty (30) days prior notice to Manager. Manager shall be
responsible for any costs of Owner or its auditors associated with correcting
or retesting any such weaknesses.

ARTICLE
V

REPAIRS, MAINTENANCE AND REPLACEMENTS

          5.01.
Repairs and Maintenance to be Paid from Gross Revenues. 

          Subject to
the availability of adequate funds, Manager shall maintain the Hotel in good
repair and condition, comply with and abide by all applicable Legal
Requirements pertaining to its operation of the Hotel and shall make or cause
to be made such routine maintenance, repairs and minor alterations as it
determines are necessary for such purposes and as required pursuant to the
terms of the Franchise Agreement or by Owner. The phrase “routine maintenance, repairs, and
minor alterations” as used in this Section 5.01 shall include
only those which are normally expensed 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.

13

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

          A.
At Owner’s option and request, a reserve account in the name of Owner (the “Reserve”)
shall be established by Manager, in a bank or similar institution reasonably
acceptable to both Manager and Owner, to cover the cost of:

                    1.
Replacements, renewals and additions to the FF&E at the Hotel; and 

                    2.
Capital Expenditures.

          B.
During the Term, Manager shall transfer into the Reserve the amount(s)
specified in Schedule 1. Transfers into the Reserve shall be made at the
time of each interim accounting described in Section 4.01 hereof. All amounts
transferred to the Reserve shall be deducted from Gross Revenues in determining
Operating Profit and shall be deposited in the special Reserve account
described in Section 5.02.A.

          C.
Subject to the availability of adequate funds, Manager at Owner’s expense shall
from time to time make such (1) replacements and renewals to the FF&E of
the Hotel, and (2) Routine Capital Expenditures, as may be agreed upon by Owner
and Manager and as may be required by the Franchise Agreement. At the end of
each Fiscal Year, any amounts remaining in the Reserve shall be carried forward
to the next Fiscal Year. The Reserve will be kept in an interest-bearing
account, and any interest which accrues thereon shall be retained in the
Reserve. Interest which accrues on amounts held in the Reserve, shall not (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.
All repairs, alterations, improvements, renewals or replacements made pursuant
to this Article V, and all amounts kept in the Reserve, shall be the property
of Owner, subject to Manager’s rights to apply such funds as otherwise provided
in this Agreement. In addition and notwithstanding anything contained herein to
the contrary, no funds shall be expended for replacements, renewals and
additions to the FF&E, for Routine Capital Expenditures or for any other
capital expenditures unless each such expenditure is included in the Annual
Operating Projection approved by Owner. In the event that Owner requests that
Manager perform capital improvements that are not included in the Annual
Operating Projection, Manager will perform such improvements provided that
Owner and Manager have theretofore agreed upon a mutually satisfactory funding
mechanism to pay for the cost of such improvements. Notwithstanding the
foregoing, in case of threatened damage or destruction to the Hotel or persons
or property thereon due to force majeure or other comparable
emergency, Manager may at Owner’s expense make such repairs, replacements or
improvements to the Hotel as Manager reasonably deems necessary to avoid and/or
minimize any such injury, damage or destruction.

          E.
Notwithstanding anything contained herein to the contrary, at Owner’s option
the amounts that would otherwise be deposited into the Reserve pursuant to this
Section 5.02 shall be included in the Operating Profit, not deducted from Gross
Revenues and shall be distributed in cash to Owner along with the remainder of
the Owner’s Priority. In such case, Manager shall accrue such amounts as a
reserve on the accounting records of the Hotel, and Owner shall fund the same
only when required under this Agreement to cover the appropriate costs actually

14

incurred.
However, such accrued and unfunded reserves shall be deducted from Gross
Revenues for purposes of calculating the Incentive Management Fee. 

          F.
Unless otherwise expressly covered by this Article V (including without
limitation in case of emergency as provided in Section 5.02.D.), Manager shall
not make any capital expenditure or improvement without first obtaining Owner’s
prior written consent and approval.

ARTICLE
VI

INSURANCE

          6.01.
Property Insurance. 

          A.
Subject to Owner’s prior approval, which shall not be unreasonably withheld or
delayed, and the provisions of Section 6.05, Manager shall, commencing with the
Effective Date and for the duration of the Term, procure and maintain, using
funds deducted from Gross Revenues in determining Operating Profit, the
following insurance and/or such other insurance as may be required by the
Franchise Agreement or approved or required by Owner:

                    1.
Insurance on the Hotel (including contents) against loss or damage by all
perils included in “all risk” (as such term is commonly used in the insurance
industry) coverage, in an amount not less than one hundred percent (100%) of
the replacement cost thereof, except that if such 100% replacement cost
coverage is not available on reasonable rates and terms, then such insurance
shall be in an amount not less than ninety percent (90%) of the replacement
cost thereof (less excavation and foundation costs), of the Hotel; 

                    2.
Insurance against loss or damage from explosion of boilers, pressure vessels,
pressure pipes and sprinklers, to the extent applicable, installed in the
Hotel;

                    3.
Business interruption insurance covering loss of profits and necessary
continuing expenses for interruptions caused by any occurrence covered by the
insurance referred to in Section 6.0l.A.1 and 2, for a period of not less than
one (1) year after the occurrence, of a type and in amounts and with such
deductible limits as are agreed upon by Owner and Manager.

                    4.
If the Hotel is in an earthquake-prone area, earthquake insurance as is
customary in accordance with local practice.

          B.
All policies of insurance required under Section 6.01.A. 1, 2, 3, and 4 shall
insure Owner, Landlord, Manager, and any Mortgagee as named insureds, and any
losses thereunder shall be payable to the parties as and to the extent their
respective interests, if any, may appear.

          6.02.
Operational Insurance. 

          Subject to
Owner’s prior approval, which shall not be unreasonably withheld or delayed,
and the provisions of Section 6.05, Manager shall, commencing with the
Effective Date and for the duration of the Term, procure and maintain, using
funds deducted from Gross Revenues in 

15

determining Operating Profit, with insurance companies approved by
Owner the following insurance and/or such other insurance as may be required by
the Franchise Agreement or approved or required by Owner:

          A.
Workers compensation insurance as may be required under applicable laws
covering all of the employees at the Hotel, with such deductible limits or
self-insured retentions as are agreed upon by Owner and Manager;

          B.
Fidelity bonds or crime insurance with respect to Hotel employees and other
employees of Manager handling funds of the Hotel, in an amount approved by
Owner;

          C.
Comprehensive general public liability insurance against claims for all injury,
death or property damage occurring on, in, or about the Hotel, and automobile
insurance on vehicles owned or leased by owner and operated in conjunction with
the Hotel, with a combined single limit of not less than Twenty Million Dollars
($20,000,000) for each occurrence for personal injury, death and property
damage, with such deductible limits as are agreed upon by Owner and Manager;

          D.
Employment practices liability insurance covering employment-related claims and
the legal defense of such claims in amounts as Manager in its reasonable
judgment deems advisable (with the concurrence of Owner, which shall not be
unreasonably withheld or delayed);

          E.
Such other insurance, including excess/umbrella coverage, in amounts as Manager
in its reasonable judgment deems advisable (with the concurrence of Owner,
which shall not be unreasonable withheld or delayed) for protection against
claims, liabilities and losses arising out of or connected with the operation
of the Hotel or as reasonably required by a Mortgagee.

          Owner,
Manager and Landlord shall be the named insureds with respect to the insurance
described in Section 6.02.C and, to the extent applicable, Section 6.02.E.
Manager shall be the named insured and Owner and Landlord shall be additional
insureds on the policies described in Section 6.02.A, 6.02.B. and 6.02.D.

          6.03.
Coverage. 

          All
insurance described in Sections 6.01 and 6.02 may be obtained by Manager by
endorsement or equivalent means under its blanket insurance policies, provided
that such blanket policies fulfill the requirements specified herein.
Deductible limits shall be as agreed upon by Owner and Manager. No coverage
required hereunder shall be self-insured by Manager or Owner without prior
written approval of Manager and Owner. Owner shall have the right to approve
the insurance policies to be obtained by Manager pursuant hereto and the
insurance companies issuing such policies.

          6.04.
Costs and Expenses. 

          Insurance
premiums and any costs or expenses with respect to the insurance described in
this Article VI shall be Deductions in determining Operating Profit. Premiums
on policies for more than one year shall be charged pro rata against Gross
Revenues over the period of the 

16

policies. Any reserves, losses, costs, damages or expenses which are
uninsured, or fall within deductible limits, shall be treated as a cost of
insurance and shall be Deductions in determining Operating Profit. 

          6.05.
Owner’s Right to Provide Insurance. Notwithstanding anything contained in this
Agreement to the contrary, Owner and/or its Affiliates (including, without
limitation, Landlord) shall have the right to procure and maintain any or all
of the property and operational insurance for the Hotel otherwise required to
be maintained by Manager under this Article VI and in lieu of Manager’s
procuring the same, provided that (i) Owner shall give Manager not less than
thirty (30) days notice of Owner’s intent to provide such insurance and shall
provide to Manager upon request certificates of insurance, naming Manager as an
additional insured, evidencing the same (ii) Owner’s insurance provides
reasonably equivalent coverage to Manager’s policies and (iii) such insurance
procured by Owner shall not become effective until the end of the then-current
term of the applicable policy or policies maintained by Manager. In such case,
all of the terms and conditions of this Article VI, to the extent applicable,
shall govern the insurance procured by Owner under this Section 6.05. Without
limiting the generality of the foregoing, all insurance premiums and any costs
or expenses with respect to such insurance shall be Deductions in determining
Operating Profit. 

          6.06 Waiver
of Subrogation. All policies of insurance carried by any party pursuant to
this Agreement shall expressly waive any right on the part of the insurer
against any other party to this Agreement, which right, is hereby expressly
waived to the extent that such waiver is not prohibited by or violative of any
such policy or does not otherwise cause a loss or reduction of coverage. The
parties to this Agreement agree that their policies will include such waiver
clause or endorsement so long as the same shall be obtainable without
unreasonable extra cost.

ARTICLE
VII

DAMAGE AND REPAIR

          7.01.
Damage and Repair. 

          A.
If, during the Term, the Hotel is damaged or destroyed by fire, casualty or
other cause, Owner and/or Landlord may elect, in its sole and absolute discretion,
to repair or replace the damaged or destroyed portion of the Hotel with such
modifications as Owner may deem appropriate or as may be required by law, and
Manager shall have the right to discontinue operating the Hotel to the extent
it deems necessary to comply with applicable law, ordinance, regulation or
order or as necessary for the safe and orderly operation of the Hotel. All
proceeds from the insurance described in this Agreement shall be paid to Owner
and/or Landlord, as the case may be. If Owner elects not to repair or replace
said damaged portion of the Hotel, Owner shall so notify Manager by written
notice as soon as reasonable practicable and no later than ninety (90) days
after the date of the casualty.

          B.
In the event damage or destruction to the Hotel from any cause materially and
adversely affects the operation of the Hotel and Owner notifies Manager that
Owner will not repair or replace such damage, either party may terminate this
Agreement by at least sixty (60) days prior written notice to the other party. 

17

          7.02.
Condemnation. 

          A.
In the event all or substantially all of the Hotel shall be taken in any
eminent domain, condemnation, compulsory acquisition, or similar proceeding by
any competent authority for any public or quasi-public use or purpose or in the
event a portion of the Hotel shall be so taken, but the result is that either
Owner or Manager reasonably determines that it is not feasible to continue to
operate the Hotel in accordance with the standards required by this Agreement,
Owner or Manager may terminate this Agreement as of the effective date of such
taking. All awards and proceeds of any such taking or proceeding shall belong
to Owner and/or Landlord, as the case may be. 

          B.
In the event this Agreement is not terminated pursuant to Section 7.02.A, such
portion of the Hotel that is not so taken shall be repaired or replaced, with
such modifications as Owner may deem appropriate or as may be required by law,
and this Agreement shall continue except as may be otherwise agreed by the
parties. All awards for any such partial taking or condemnation shall belong to
Owner and/or Landlord, as the case may be. Manager shall have the right to
discontinue temporarily operating the Hotel to the extent it deems necessary
for the safe and orderly operation of the Hotel.

          7.03.
Business Interruption. 

          In
the event that the operations of the Hotel are interrupted by the causes
described in Sections 7.01 and 7.02 above, Manager shall nonetheless be
entitled to be paid a Base Management Fee during the period of interruption
equal to one-twelfth (1/12) of the annual Base Management Fee in the
amount called for in the current Annual Operating Projection (but in no
event less than the Base Management Fee for the preceding full Fiscal Year).
The Base Management Fee shall be prorated for any partial period of
interruption.

          7.04.
Subordination to Mortgage. 

          Manager
shall provide to any Mortgagee an instrument (the “Subordination Agreement”),
reasonably satisfactory in all respects to Owner and such Mortgagee, which
shall be recordable in the jurisdiction where the Hotel is located, pursuant to
which:

                    1.
This Agreement and any extensions, renewals, replacements or modifications
thereto, and all right and interest of Manager in and to the Hotel, shall be
subject and subordinate to such Mortgagee’s Mortgage, with notice and
opportunity to cure rights and post-default cure rights in favor of Mortgagee;

                    2.
Manager shall be obligated to each of the Subsequent Owners (as defined below)
to perform all of the terms and conditions of this Agreement for the balance of
the remaining Term hereof, with the same force and effect as if such Subsequent
Owner were the Owner; and

                    3.
In the event that there is a Foreclosure of such Mortgage in connection with
which title or possession of the Hotel is transferred to the Mortgagee (or its
designee) or to a purchaser at foreclosure or to a subsequent purchaser from
the Mortgagee (or from its designee) (all of the foregoing shall collectively
be referred to as “Subsequent Owners”), this Agreement 

18

may
be terminated at the election of such Subsequent Owner as of the date of such
Foreclosure or upon thirty (30) days notice.

          7.05.
Liens; Credit. 

          Manager and
Owner shall use commercially reasonable efforts to prevent any liens from being
filed against the Hotel which arise from any maintenance, repairs, alterations,
improvements, renewals or replacements in or to the Hotel and shall cooperate
fully in obtaining the release of any such liens. If the lien was not
occasioned by the fault of either party, the cost of releasing any lien shall
be treated the same as the cost of the matter to which it relates. If the lien
arises as a result of the fault of either party, then the party at fault shall
bear the cost of obtaining the lien release. In no event shall either party
borrow money in the name of or pledge the credit of the other.

ARTICLE
VIII

DEFAULTS

          8.01.
Events of Default. 

          Each of the
following shall, to the extent permitted by applicable law, constitute an “Event of
Default” under this Agreement.

          A.
The filing of a voluntary petition in bankruptcy or insolvency or a petition
for reorganization under any bankruptcy law by either party, or the admission
by either party that it is unable to pay its debts as they become due. 

          B.
The consent to an involuntary petition in bankruptcy or the failure to vacate,
within ninety (90) days from the date of entry thereof, any order approving an
involuntary petition by either party. 

          C.
The entering of an order, judgment or decree by any court of competent
jurisdiction, on the application of a creditor, adjudicating either party as
bankrupt or insolvent or approving a petition seeking reorganization or
appointing a receiver, trustee, or liquidator of all or a substantial part of
such party’s assets, and such order, judgment or decree’s continuing unstayed
and in effect for an aggregate of sixty (60) days (whether or not consecutive).

          D.
The failure of either party to make any payment required to be made in
accordance with the terms of this Agreement, as of the due date as specified in
this Agreement and the failure to cure such default within ten (10) days after
receipt of written notice from the non-defaulting party demanding such cure,
provided that only a two (2) business day notice or cure period shall be
required in the case of payments by Manager of Owner’s Priority or other
distributions of Operating Profit payable to Owner.

          E.
Manager, any of its Affiliates or any employee at the Hotel is or becomes a
Specially Designated National or Blocked Person, unless, in the case of an
employee, Manager terminates any such employee promptly after becoming aware of
the same.

19

          F.
In carrying out its duties hereunder, Manager or an officer, director,
employee, or agent of Manager or its Affiliates commits any act involving
fraud, moral turpitude or willful misconduct relating to the business or
affairs of the Hotel, or commits an act which constitutes a felony.

          G.
Any representation or warranty by Manager or any of its Affiliates in this
Agreement or in any certificate or document or financial or other statement
furnished or delivered to Owner or any of its Affiliates at any time under or
in connection with this Agreement shall have been false or intentionally
misleading in any material respect on or as of the date made or deemed made.

          H.
The failure of either party to perform, keep or fulfill any of the other
covenants, undertakings, obligations or conditions set forth in this Agreement
that continues for a period of thirty (30) days after the defaulting party’s
receipt of written notice from the non-defaulting party of said failure, or, if
the default is such that it cannot reasonably be cured within said thirty (30)
day period of time, if the defaulting party fails to commence the cure of such
default within said thirty (30) day period of time or thereafter fails to
diligently pursue such efforts to completion., provided that (i) in the case
of any default by Manager such default is cured not later than ninety (90) days
after Manager’s receipt of such written notice and (ii) only a two (2) business
day notice or cure period shall be required in the case of Manager’s failure to
maintain the insurance required by Article VI. 

          8.02.
Remedies. 

          Upon the
occurrence of an Event of Default, the non-defaulting party shall have the
right to pursue any one or more of the following courses of action: (1) to
terminate this Agreement by written notice to the defaulting party, which
termination shall be effective as of the effective date which is set forth in
said notice, provided that said effective date shall be at least thirty (30)
days after the date of said notice in the case of an Event of Default by Owner;
(2) to institute forthwith any and all proceedings permitted by law or equity
including, without limitation (but subject to the provisions of Section 10.24
hereof), actions for specific performance and/or damages; and/or (3) to avail
itself of the remedies described in Section 8.03.

          8.03.
Additional Remedies. 

          A.
Upon the occurrence of a Default by either party under the provisions of
Section 8.0l.D, the amount owed to the non-defaulting party shall accrue
interest, at an annual rate equal to the Prime Rate plus three (3) percentage
points, from and after the date on which the Default occurred.

          B.
The remedies granted under Section 8.02 and Section 8.03 shall not be in
substitution for, but shall be in addition, to, any and all rights and remedies
available to the non-defaulting party (including, without limitation,
injunctive relief and damages) by reason of applicable provisions of law or
equity (except as specifically limited by this Agreement) and shall survive
Termination.

20

ARTICLE
IX

ASSIGNMENT AND SALE

          9.01.
Assignment. 

          A.
Manager shall not assign or transfer its interest in this Agreement without the
prior written consent of Owner and any franchisor under the Franchise
Agreement. Any assignee consented to by Owner and by such franchisor shall
agree in writing to be bound by and comply with the terms of this Agreement
(such written agreement to be acceptable in form and substance to Owner and
such franchisor). For purposes of the foregoing, a transfer of Manager’s
interest in this Agreement shall include (i) an assignment or pledge of this
Agreement as security for an obligation, (ii) a transfer of any controlling
ownership or beneficial interest, direct or indirect, in Manager, including any
such transfer by operation of law except to an Affiliate and (iii) a transfer
of Manager’s interest in this Agreement by operation of law, including by
merger or consolidation (other than such a transfer to an Affiliate approved by
Owner, which approval shall not be unreasonably withheld).

          B.
Owner shall have the right to assign or transfer its interest in this Agreement
without the prior written consent of the Manager (1) as security for a Mortgage
of the Hotel in accordance with this Agreement, (2) in connection with a sale,
assignment, transfer or other disposition of the Hotel by Owner or Landlord,
subject to Section 9.02, and (3) in connection with a merger or consolidation
or reorganization of, or a sale of all or substantially all of the assets of,
Apple REIT Ten, Inc., or any Affiliate thereof.

          C.
In the event Owner and the franchisor under the Franchise Agreement consent to
an assignment of this Agreement by Manager, no further assignment or transfer
shall be made without the express consent in writing of such parties. An
assignment by Manager of its interest in this Agreement shall not relieve
Manager from its obligations under this Agreement.

          D.
Notwithstanding anything contained herein to the contrary, Manager shall not
assign its interest in this Agreement to a Specially Designated National or
Blocked Person.

          9.02.
Sale of the Hotel. 

          Owner or
Landlord may, in its or their sole and absolute discretion, enter into any Sale
of the Hotel to any Person and, in connection with any such Sale of the Hotel,
may assign this Agreement as provided in Section 9.01. However, if Owner or
Landlord enters into a Sale of the Hotel, either Owner or Manager may, at its
option, terminate this Agreement upon thirty (30) days notice to the other
party upon completion of the Sale of the Hotel. Upon any such sale or
assignment, Owner shall be released of all liabilities and obligations arising
under and with respect to this Agreement on and after the date of such Sale of
the Hotel; provided, however, that Owner shall continue to be liable for all
obligations and amounts due which arise or accrue during the Term of this
Agreement before the date of such Sale of the Hotel, including, but not limited
to, the obligation to pay a Termination Fee as provided in Section 3.04 above
but such Termination Fee shall only be payable if Owner (not Manager)
terminates this Agreement upon Sale of the Hotel. Upon the termination of this
Agreement pursuant to this Section 9.02, 

21

Manager shall be released of all liabilities and obligations arising
under and with respect to this Agreement on and after the date of such
termination; provided, however, that Manager shall continue to be liable for
all obligations and amounts due which arise or accrue during the Term of this
Agreement before the date of such termination.

ARTICLE
X

MISCELLANEOUS

          10.01.
Right to Make Agreement. 

          Each party
warrants, with respect to itself, that neither the execution of this Agreement
nor the performance of the transactions contemplated hereby shall violate any
provision of law or judgment, writ, injunction, order or decree of any court or
governmental authority having jurisdiction over it; result in or constitute a
breach or default under any indenture, contract, other commitment or
restriction to which it is a party or by which it is bound; or, require any
consent, vote or approval which has not been taken, or at the time of the
transaction involved shall not have been given or taken. Each party covenants
that it has and will continue to have throughout the Term and any extensions
thereof, the full right to enter into this Agreement and perform its
obligations hereunder.

          10.02.
Consents and Cooperation. 

          Wherever in
this Agreement the consent or approval of Owner or Manager is required, except
as otherwise provided in this Agreement or agreed by the parties, such consent
or approval shall not be withheld, delayed or conditioned, shall be in writing
and shall be executed by a duly authorized officer or agent of such party.
Owner agrees to cooperate with Manager by executing such leases, subleases,
licenses, concessions, equipment leases, service contracts and other agreements
negotiated in good faith and at arm’s length by Manager and pertaining to the
Hotel that, in Manager’s reasonable judgment, should be made in the name of the
Owner, provided that all such agreements shall be subject to Owner’s prior
approval.

          10.03.
Relationship. 

          The
relationship of Owner and Manager shall be that of independent contractors, and
neither this Agreement nor any agreements, instruments, documents, or
transactions contemplated hereby shall in any respect be interpreted, deemed or
construed as making Manager an agent of or partner or joint venturer with
Owner. Owner and Manager agree that neither party will make any contrary
assertion, claim or counterclaim in any action, suit, arbitration or other
legal proceedings involving Owner and Manager. Any contract or agreement that
Manager enters into with an Affiliate of Manager or with a third party to
provide goods or services to the Hotel shall be entered into in the name of
Manager or Owner, provided that no such contract or agreement shall be entered
into in the name of Owner without Owner’s prior written consent and approval of
each such agreement and contract, and Owner shall have no liability with
respect to any contract or agreement entered into in the name of Manager other
than to pay any sums due thereunder which are Deductions or which Owner
otherwise agrees to pay. Notwithstanding anything contained herein to the contrary,
Manager shall defend, indemnify and 

22

hold Owner harmless from and against any claims by the third party
vendor or supplier under any contract entered into by Manager (a) in the name
of Owner without Owner’s prior written consent and approval or (b) in the name
of Manager without Owner’s prior written consent and/or approval if such
consent and/or approval is required by the terms of this Agreement.

          10.04.
Applicable Law; Jurisdiction. 

          This
Agreement shall be construed under and shall be governed by the laws of the
state in which the Hotel is located, without regard to that state’s conflict of
laws provisions. Each of Owner and Manager hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the state and (to the extent permitted by law) Federal courts
of such state, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such state court or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
Owner or Manager may otherwise have to bring any action or proceeding relating
to this Agreement against the other party in the courts of any other
jurisdiction. Each of Owner and Manager hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
court referred to above. Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.

          10.05.
Recordation. 

          The terms
and provisions of this Agreement shall not run with the parcel of land
designated as the Site, and neither this Agreement nor any memorandum or short
form hereof shall be recorded or registered without the prior written consent
of Owner.

          10.06.
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.

          10.07.
Notices. 

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

	
  

 	
  

 	
  

 
	
  

 	
 To Owner:

 	
 Apple Ten Hospitality Management, Inc.

 
	
  

 	
  

 	
 c/o Apple
 REIT Companies

 

23

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 814 E. Main
 Street

 
	
  

 	
  

 	
 Richmond,
 Virginia 23219

 
	
  

 	
  

 	
 Attn:
    Krissy Gathright

 
	
  

 	
  

 	
 Phone: (804)
 727-6323

 
	
  

 	
  

 	
 Fax:     (804)
 727-6353

 
	
  

 	
  

 	
  

 
	
  

 	
 To Manager:

 	
 c/o Newport
 Hospitality Group, Inc.

 
	
  

 	
  

 	
  4290 New Town Avenue

 
	
  

 	
  

 	
  Williamsburg, Virginia 23188

 
	
  

 	
  

 	
  Attn: Michael L. Pleninger 

 
	
  

 	
  

 	
  Fax No.: (757) 221-0400

 
	
  

 	
  

 	
  

 
	
  

 	
 and

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  c/o Newport Hospitality Group, Inc.

 
	
  

 	
  

 	
  116 Park Lane 

 
	
  

 	
  

 	
  Concord, Massachusetts 01742 

 
	
  

 	
  

 	
  Attn: Andrew T. Carey

 
	
  

 	
  

 	
  Fax No.: (978) 318-0332

 

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

          10.08.
Environmental Matters. 

          A.
Manager shall operate the Hotel in compliance with all applicable Environmental
Laws. Manager shall (i) not use, generate or store any Hazardous Materials in
or on the Hotel except as necessary for the operation and maintenance of the
Hotel and in compliance with the Environmental Laws, (ii) not allow, permit or
cause the release or threat of release of any Hazardous Materials in, on, under
or from the Hotel, except for the ordinary use of cleaning and maintenance
supplies in compliance with applicable Environmental Laws, (iii) not allow the
accumulation of tires, spent batteries, construction and demolition debris or
any other solid waste, except for solid waste generated from the operation of
the Hotel and stored in containers for normal scheduled pickup and disposal off
site in compliance with applicable Environmental Laws and (iv) use best efforts
to operate and maintain the Hotel in a manner to prevent mold, fungal or other
microbial growth or conditions that are favorable for such growth, including,
without limitation, the proper operation and maintenance of heating,
ventilation and air conditioning systems and removal of any mold, fungal or
microbial growth.

          B.
In the event of the discovery of a release or threat of release of Hazardous
Materials in, on, under or from any portion of the Hotel during the Term,
Manager shall 

24

promptly
notify Owner and shall take all appropriate actions with regard to such
Hazardous Materials as required of an owner or operator under applicable
Environmental Laws. Manager shall keep Owner apprised of the status of
addressing the release or threat of release of Hazardous Materials, and Owner
shall have the right at any time to assume control of the matter from Manager. 

          C.
Notwithstanding the foregoing paragraphs, the parties agree that Manager is not
and shall not be the insurer for the Hotel as to environmental matters and, to
that end, Manager shall only be responsible for environmental remediation
necessitated as a result of Manager’s negligence or acts or omissions (as
opposed to Owner’s or a third-party’s negligence, acts or omissions).

“Environmental Laws” shall mean all federal, state and
local environmental, health and safety laws, rules, regulations, ordinances,
permits, orders, common law or requirements of any governmental authority,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et. seq.,
as amended; Solid Waste Disposal Act, 42 U.S.C. §§ 6901, et. seq.,
as amended; Toxic Substances Control Act, 15 U.S.C. §§ 2601, et. seq.,
as amended; Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101, et.
seq., as amended; Federal Water Pollution Control Act, 33 U.S.C. §§
1251, et. seq.

“Hazardous Materials” shall mean any hazardous substances,
hazardous wastes, toxic substances, hazardous materials, petroleum or petroleum
products, pollutants or contaminants (as those terms are defined under
Environmental Laws), including, without limitation, polychlorinated biphenyls, lead
or lead-based paint, asbestos or mold in such concentrations or amounts as may
impose clean-up, removal, monitoring or other responsibility under the
Environmental Laws or which may present a significant risk of harm to guests,
invitees or employees of the Hotel.

          10.09.
Confidentiality; Projections. 

          A.
Owner and Manager agree that the terms of this Agreement (but not its
existence) are strictly confidential and will use their reasonable efforts to
ensure that the terms of this Agreement are not disclosed to any outside person
or entities without the prior written consent of the other party, except (1) as
Owner or Manager may determine is required by any law, rule, regulation or
judicial process, or by any regulatory or supervisory authority having
jurisdiction over the parties or any of their Affiliates or (2) to the extent
reasonably necessary, (i) to obtain licenses, permits and other public
approvals, (ii) in connection with a financing of the Hotel, Owner, or any
Affiliate thereof, (iii) in connection with a Sale of the Hotel or other sale
of Owner, or any Affiliate thereof or its or their corporate assets, (iv)
subject to the provisions of Section 4.02, in connection with an audit or other
investigation conducted pursuant to this Agreement or (v) in connection with
either party’s enforcement of its rights and remedies under this Agreement.
Notwithstanding the foregoing or anything to the contrary set forth herein, the
terms of this Agreement shall not be deemed confidential to the extent: (a)
such information becomes generally available to the public other than as a
result of unauthorized disclosure by the recipient or persons to whom such
recipient has made the information available; or (b) the party seeking to
disclose such confidential information can demonstrate to the reasonable
satisfaction 

25

of
the other party that the information sought to be disclosed is customarily
disclosed by at least 80% of all Persons directly or indirectly owning hotels
in the United States.

          B.
Owner acknowledges that any written or oral projections, pro formas, or other
similar information that has been (prior to execution of this Agreement) or
will (during the Term) be provided by Manager (or any Affiliate of either) to
Owner is for information purposes only, and that Manager, and any such
Affiliate do not guarantee that the Hotel will achieve the results set forth in
any such projections, pro formas, or other similar information. Owner further
acknowledges that any such projections, pro formas, or other similar
information are based on assumptions and estimates, unanticipated events may
occur subsequent to the date of preparation of such projections, pro formas,
and other similar information, and the actual results achieved by the Hotel are
likely to vary from the estimates contained in any such projections, pro
formas, or other similar information and such variations might be material.

          10.10.
Indemnification. 

          A.
Manager hereby agrees to indemnify, defend and hold harmless Owner, its
officers, directors, stockholders, employees, agents and their respective
successors and assigns from and against any and all claims, liabilities,
damages, losses, obligations and costs (including reasonable attorneys’ fees)
arising from (i) Manager’s or any of its Affiliate’s failure to comply with its
obligations under this Agreement and, to the extent provided herein, the
obligations of the franchisee under the Franchise Agreement, (ii) any negligent
act or omission, theft, fraud or willful misconduct of Manager or its
Affiliates and their respective employees or agents and (iii) any claim
asserted by any employee or agent of Manager or its Affiliates, including any
claim for employment discrimination, wrongful termination, violations of law
and other claims asserted by such employees, except, as to any of the items
listed in clauses (i) – (iii) above, to the extent of any costs properly
payable from Gross Revenues as Deductions, to the extent of any costs or claims
covered by insurance and to the extent that the loss or liability giving rise
to such claim was caused directly by Owner’s breach of its obligations under
this Agreement.

          B.
Owner hereby agrees to indemnify, defend and hold harmless Manager, its
officers, directors, stockholders, employees, agents and their respective
successors and assigns from and against any and all claims, liabilities,
damages, losses, obligations and costs (including reasonable attorneys’ fees)
arising from (i) Owner’s failure to comply with its obligations under this
Agreement, (ii) any theft, fraud or willful misconduct of Owner or its
Affiliates or their respective employees or agents and (iii) any claim asserted
by any employee or agent of Owner or its Affiliates except, as to any of the
items listed in clauses (i)-(iii) above, to the extent the loss or liability
giving rise to such claim was caused directly by Manager’s breach of its
obligations under this Agreement or is covered by insurance.

          
C. In agreeing to the provisions relating to liability and indemnity contained
in this Section 10.10, Owner, Landlord, and Manager recognize that simple
mistakes and/or errors in judgment by Manager and the employees of Manager are
ordinary risks of business in the operation of the Hotel and that Manager is
not assuming such risks and shall not be responsible for loss, liability, or
costs resulting therefrom. Further, Manager is not undertaking to be an insurer
against third party claims or the insurer of the profitability of the Hotel.
Furthermore, 

26

Manager is not
assuming any liability for work performed or materials or equipment supplied by
third parties.

          D.
Neither Owner, Landlord, nor Manager shall be liable for any special, indirect,
incidental, or consequential damages of any kind in connection with this
Agreement, including without limitation, damages resulting from loss of
profits, lost sales, business or goodwill, whether or not such party has been
advised of the possibility of such damages.

          E.
The provisions of this Section 10.10 shall survive Termination.

          10.11.
Actions to be Taken Upon Termination. 

          Upon a
Termination, the following shall be applicable:

          A.
All fees or expenses due to Manager for the period before such Termination
shall be paid to Manager. On the effective date of such Termination, Manager
shall cease all activities hereunder on behalf of Owner at the Hotel and shall
have no further obligations hereunder except as to matters arising before such
date and except as otherwise provided in this Agreement. However, Manager shall
cooperate with Owner in the orderly transfer of management to Owner or Owner’s
designated agent or manager. 

          B.
Manager shall, within forty-five (45) days after Termination, prepare and
deliver to Owner a final accounting statement with respect to the Hotel, as
more particularly described in Section 4.01 hereof, along with a statement of
any sums due from Owner to Manager pursuant hereto, dated as of the date of
Termination. Within thirty (30) days of the receipt by Owner of such final
accounting statement, the parties will make whatever cash adjustments are
necessary pursuant to such final statement. The cost of preparing such final
accounting statement shall be a Deduction, unless the Termination occurs as a
result of an Event of Default by either party, in which case the defaulting
party shall pay such cost. Manager and Owner acknowledge that there may be
certain adjustments for which the information will not be available at the time
of the final accounting and the parties agree to readjust such amounts and make
the necessary cash adjustments when such information becomes available;
provided, however, that all accounts shall be deemed final two (2) years after
Termination.

          C.
Manager shall immediately release and transfer to Owner any of Owner’s funds
which are held or controlled by Manager with respect to the Hotel.

          D.
Manager shall make available to Owner such books and records respecting the
Hotel (including those from prior years) as will be needed by Owner to prepare
the accounting statements, in accordance with the GAAP, for the Hotel for the
year in which the Termination occurs and for any subsequent year.

          E.
Manager shall (to the extent permitted by law) assign to Owner or to the new
manager all operating licenses and permits for the Hotel which have been issued
in Manager’s 

27

name
(including liquor and restaurant licenses, if any); provided that if Manager
has expended any of its own funds in the acquisition of any of any of such
licenses or permits, Owner shall reimburse Manager therefor if it has not done
so already unless such expenditure is a Manager’s Liability.

          F.
If this Agreement is terminated by reason of Owner’s Event of Default, a reasonable
reserve shall be established from Gross Revenues to reimburse Manager for all
costs and expenses incurred by Manager in terminating its employees at the
Hotel, such as severance pay, unemployment compensation, employment relocation
and other employee liability costs arising out of the termination of employment
of Manager’s employees at the Hotel. If Gross Revenues are insufficient to meet
the requirements of such reserve, then Owner shall deliver to Manager, within
ten (10) Business Days after receipt of Manager’s written request therefor, the
sums necessary to establish such reserve.

          G.
If this Agreement is terminated before the expiration of the Term for any
reason other than an Event of Default by Manager, Manager may submit to Owner
for its approval a budget with respect to expenses anticipated to be incurred
by Manager to terminate its activities at the Hotel. Upon approval of such
budget by Owner, Owner shall deposit the total amount of such budget into the
Hotel’s operating account, and Manager may use such deposit to pay such
expenses. Manager shall provide Owner a final accounting of the foregoing, and
any surplus remaining from such deposit shall be refunded to Owner.

          H.
Owner may, at its option, (i) provide Manager and/or the employees at the Hotel
(or require Manager to provide to the employees at the Hotel) at least sixty
(60) days’ notice of a Termination and/or (ii) cause the entity which shall
succeed Manager as the operator of the Hotel to offer employment to a sufficient
number of the employees at the Hotel to avoid the occurrence, in connection
with such Termination, of a “plant closing” or “mass layoff” within the meaning
of the WARN Act. If Owner elects to cause the entity which shall succeed
Manager as operator of the Hotel to offer employment to certain of Manager’s
employees, Manager shall not take any action that would cause such employees
not to continue as employees at the Hotel. 

          I.
Various other actions shall be taken, as described in this Agreement,
including, but not limited to, the actions described in Section 4.05.

          J.
Manager shall peacefully vacate and surrender the Hotel to Owner on the date of
termination unless otherwise agreed to by the parties.

          The
provisions of this Section 10.11 shall survive Termination.

28

          10.12.
Waiver. 

          The failure
of either party to insist upon a strict performance of any of the terms or
provisions of this Agreement, or to exercise any option, right or remedy
contained in this Agreement, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect. No waiver by
either party of any term or provision hereof shall be deemed to have been made
unless expressed in writing and signed by such party.

          10.13.
Partial Invalidity. 

          If any
portion of any term or provision of this Agreement, or the application thereof
to any person or circumstance shall be invalid or unenforceable, at any time or
to any extent, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and be enforced to the fullest
extent permitted by law.

          10.14.
Survival. 

          Except
as otherwise specifically provided in this Agreement or where required to give
effect to a provision of this Agreement or to avoid a forfeiture, the rights
and obligations of the parties herein shall not survive any Termination.

          10.15.
Negotiation of Agreement. 

          Owner
and Manager are both business entities having substantial experience with the
subject matter of this Agreement, and each has fully participated in the
negotiation and drafting of this Agreement. Accordingly, this Agreement shall
be construed without regard to the rule that ambiguities in a document are to
be construed against the draftsman. No inferences shall be drawn from the fact
that the final, duly executed Agreement differs in any respect from any
previous draft hereof.

          10.16.
Estoppel Certificates. 

          Each party
to this Agreement shall at any time and from time to time, upon not less than
fifteen (15) days’ prior notice from the other party, execute, acknowledge and
deliver to such other party, or to any third party specified by such other
party, a statement in writing: (a) certifying that this Agreement is unmodified
and in full force and effect (or if there have been modifications, that the
same, as modified, is in full force and effect and stating the modifications);
and (b) stating to the best knowledge of the certifying party (i) whether or
not there is a continuing Default or Event of Default by the non-certifying
party in the performance or observance of any covenant, agreement or condition
contained in this Agreement, (ii) the amount, if any, of any past due fees or
other past due amounts owed to Manager or Owner; and (iii) whether or not there
are any past due and unpaid obligations with respect to the Hotel, other than
in the ordinary course of business. Such statement shall be binding upon the
certifying party and may be relied upon by the non-certifying party and/or such third
party specified by the

29

non-certifying party as aforesaid. In addition, upon written request after a
Termination, each party agrees to execute and deliver to the non-certifying
party and to any such third party a statement certifying that this Agreement
has been terminated.

          10.17.
Affiliates. 

          Manager
shall not be entitled to contract with companies that are Affiliates (or
companies in which Manager has an ownership interest if such interest is not
sufficient to make such a company an Affiliate) or with third parties or their
Affiliates that have other contractual relationships with Manager and/or its
Affiliates to provide goods and/or services to the Hotel without the prior
written consent of Owner. Notwithstanding the foregoing, Manager may contract
with Affiliates to provide marketing, accounting and human resource services
subject to the conditions that (i) the costs of such services are included in
the Annual Operating Projection approved by Owner and (ii) at the time Manager
submits each Annual Operating Projection to Owner for its approval, Manager
specifically identifies the services to be provided by Manager’s Affiliates.

          10.18.
Blocked Persons or Entities.  

          Manager
represents and warrants to Owner and covenants for the benefit of Owner that
(i) neither Manager nor any of its Affiliates or any of the officers,
directors, partners or, to Manager’s knowledge, employees of Manager or its
Affiliates, or, to its knowledge, the funding sources for any of the foregoing,
is or will be identified on the list of the U. S. Treasury’s Office of Foreign
Asset Control (“OFAC”); (ii) neither Manager nor any of its Affiliates is or
will be directly or indirectly owned or controlled by the government of any
country that is subject to an embargo imposed by the United States government;
and (iii) neither Manager nor any of its Affiliates is acting or will act on
behalf of a government of, or is involved in business arrangements or other
transactions with, any country that is subject to such an embargo. Manager will
notify Owner in writing immediately upon the occurrence of any event which
would render the foregoing representations and warranties incorrect. 

          10.19.
Restrictions on Operating the Hotel in Accordance with System Standards. 

          In the
event of either (i) a Legal Requirement, including an order, judgment or
directive by a court or administrative body which is issued in connection with
any Litigation involving Owner, or (ii) any action taken by a Mortgagee in
connection with a Foreclosure, which in either case restricts or prevents
Manager, in a material and adverse manner, from operating the Hotel in
accordance with System Standards (including without limitation, any
restrictions on expenditures by Manager from the Operating Accounts or from the
Reserve, other than restrictions which are set forth in this Agreement),
Manager shall be entitled, at its option, to terminate this Agreement upon
sixty (60) days’ written notice to Owner. The foregoing shall not reduce or
otherwise affect the rights of the parties under Article VIII.

          10.20.
Counterparts. 

          This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which shall constitute one and the same
instrument. Such 

30

executed counterparts may be delivered by facsimile which, upon
transmission to the other party, shall have the same force and effect as
delivery of the original signed counterpart. The submission of an unsigned copy
of this Agreement or an electronic instrument with or without electronic
signature to either party shall not constitute an offer or acceptance. This
Agreement shall become effective and binding only upon execution and delivery
of this Agreement in non-electronic form by both parties in accordance with
this Section.

          10.21.
Entire Agreement. 

          This
Agreement, together with any other writings signed by the parties expressly
stated to be supplemental hereto and together with any instruments to be
executed and delivered pursuant to this Agreement, constitutes the entire
agreement between the parties and supersedes all prior understandings and
writings, and may be changed only by a written non-electronic instrument that
has been duly executed by the non-electronic (which shall not be deemed to
exclude facsimile) signature of an authorized representative of the parties
hereto.

          10.22.
Franchise Agreement.  

          During the
Term of this Agreement, subject to the availability of adequate funds, Manager
shall perform all of the obligations of Owner as “Franchisee” under the
Franchise Agreement to the extent such obligations relate to the management or
operation of the Hotel, including, without limitation, the obligations of
“Franchisee” under Sections XIII (Accounting and Records) and XIV (Insurance)
of the Franchise Agreement, and Manager shall not commit any act or omit to
take any action that would cause a default by the Franchisee under the
Franchise Agreement. In the event of any inconsistency between the provisions
of this Agreement and the provisions of the Franchise Agreement, the provisions
of the Franchise Agreement shall prevail. Manager shall send promptly to Owner
any and all notices that Manager receives from the Franchisor with respect to
the Hotel or the Franchise Agreement and shall keep Owner fully informed with
respect to all matters that come to Manager’s attention under the Franchise
Agreement. Notwithstanding the foregoing, Manager shall not have the right to
grant any consent, approval or other right reserved to the Franchisee under the
Franchise Agreement or to make any decision or agreement on behalf of Owner
under the Franchise Agreement. In the event the Franchise Agreement is
terminated for any reason, this Agreement shall also terminate effective as of
the date of termination of the Franchise Agreement, unless the parties hereto
agree otherwise. 

          10.23.
Operation of Other Hotels. 

          During the
Term and except for the Hotel and the other hotels described in Schedule 1,
neither Manager nor any of its Affiliates shall acquire, lease, own, manage or
operate, directly or indirectly, any hotel, inn, motel or other type of lodging
facility, regardless of whether similar to the Hotel or whether operated under
the same or a different brand, that is a Competing Hotel without Owner’s prior
written consent. In addition, if Manager or any of its Affiliates shall
acquire, lease, own, manage or operate, directly or indirectly, any hotel, inn,
motel or other type of lodging facility, regardless of whether similar to the
Hotel or whether operated under the same or a different brand, in the same
geographic area or market as the Hotel, Manager shall not permit unfair favoritism
in the operation and management of such other hotels that would 

31

disadvantage the operation or business of the Hotel (such as, by way of
example only, directing potential Hotel guests to such other hotels instead of
to the Hotel). At Owner’s request, Manager shall provide such information as
may reasonably be requested by Owner to determine if there has been any such
unfair favoritism and, in the event Owner, in its reasonable business judgment,
determines that any such unfair favoritism has occurred, Owner may terminate
this Agreement. For purposes of this Section, a “Competing Hotel” shall mean
any hotel, inn, motel or other type of lodging facility that markets directly
to or makes efforts to attract customers, guests and/or hotel business that
would otherwise do business with the Hotel.

          10.24.
Waiver of Jury Trial and Punitive Damages.  

          Owner and
Manager each hereby absolutely, irrevocably and unconditionally waive trial by
jury and the right to claim punitive damages in any litigation, action, claim,
suit or proceeding, at law or in equity, arising out of or pertaining to this
Agreement or any other agreement, instrument or document entered into in
connection herewith.

          10.25
Termination of the Hotel Lease.

          Landlord
represents and agrees that in the event of the cancellation or termination of
the Hotel Lease for any reason, this Agreement shall remain in full force and
effect with Landlord substituted as Owner hereunder.

          10.26
All Payments Subject to Availability of Funds.

          Whenever
Manager is required to make a payment hereunder, it is agreed that such
obligation is subject to the availability of adequate operating funds (or other
funds provided by Owner) after the payment of all operating expenses of the
Hotel.

ARTICLE
XI

DEFINITION OF TERMS

          11.01.
Definition of Terms. 

          The
following terms when used in this Agreement shall have the meanings indicated:

          “Accounting
Period” shall mean a calendar month.

          “Accounting
Period Statement” shall have the meaning ascribed to it in
Section 4.0l.A.

          “Accounting
Quarter” shall mean three consecutive Accounting Periods, the
first of which begins on the first day of the Fiscal Year.

          “Affiliate”
shall mean, as to any Person, any other Person that, directly or indirectly,
controls, is controlled by or is under common control with such Person. For
purposes of this 

32

definition, the term “control” (including the
terms “controlling,” “controlled by” and “under common control with”) of a
Person means the possession, directly or indirectly, of the power: (i) to vote
more than fifty percent (50%) of the voting stock or other beneficial interests
of such Person; or (ii) to direct or cause the direction of the management and
policies of such Person, whether through the Ownership of voting stock, by
contract or otherwise.

          “Agreement”
shall mean this Management Agreement between Owner and Manager, including the
exhibits attached hereto.

          “Annual
Operating Projection” shall have the meaning ascribed to it in
Section 4.04.

          “Annual
Operating Statement” shall have the meaning set forth in Section
4.0l.B.

          “Available
Cash Flow” shall mean an amount, with respect to each Fiscal
Year or portion thereof during the Term, equal to the excess, if any, of the
Operating Profit over the Owner’s Priority.

          “Base
Management Fee” shall mean an amount payable to Manager as a
Deduction from Gross Revenues for all services provided by Manager pursuant to
this Agreement, except as otherwise expressly provided herein. The Base
Management Fee shall be the percentage of Gross Revenues shown on Schedule 1
for each Fiscal Year during the Term.

          “Buildings”
shall mean the buildings and improvements constituting that certain hotel more
particularly described on Schedule 1 attached hereto and made a part
hereof which is located on the Site.

          “Business
Day” shall mean any day other than a Saturday, Sunday or legal
holiday in the Commonwealth of Virginia. 

          “Competitive
Set” shall mean the group of hotels which are closest in
geographical distance from the Hotel and which are generally within the same
hotel market segment as the Hotel, as described in Schedule 1. If any
such hotels, subsequent to the Effective Date, either changes its chain
affiliation or ceases to operate or otherwise ceases to reflect the general
criteria set forth in the first sentence of this definition, Owner and Manager
agree to mutually, reasonably and in good faith, discuss appropriate changes to
the foregoing list of the hotels that shall comprise the Competitive Set.

          “CPI”,
shall mean the Consumer Price Index for All Urban
Consumers (CPI-U) for the U.S. City Average for All Items (1982-1984=100) published by the Bureau of Labor
Statistics, United States Department of Labor; provided, however, that if such
index ceases to be published or is converted to a different standard or is
otherwise revised, the index shall be adjusted by any then applicable
conversion factor, or failing that, by any published price or cost indices or
other published data which are as comparable as possible to the Index prior to
its termination or revision.

          “Cure
Payment” shall have the meaning set forth in Section 2.02.A.

33

          “Deductions”
shall have the meaning ascribed to it in the definition of Operating Profit.

          “Default”
shall mean the occurrence of any event which, with the lapse of time, the
giving of notice or both, would constitute an Event of Default.

          “Effective
Date” shall have the meaning ascribed to it in the Preamble.

          “Environmental
Laws” shall have the meaning ascribed to it in Section 10.08.

          “Event of
Default” shall have the meaning ascribed to it in Section 8.01.

          “FF&E”
shall mean furniture, furnishings, fixtures, soft goods, case goods, signage,
audio-visual equipment, kitchen appliances, vehicles, carpeting and equipment,
including front desk and back-of-the-house computer equipment, that meet
Owner’s capitalization policy consistent with GAAP, but shall not include
Fixed Asset Supplies or Software.

          “FF&E
Lease” means a lease of any property other than real property.

          “Fiscal
Year” shall mean a calendar year commencing on January 1 and
ending on December 31; provided, however, the first fiscal year commences as of
the Effective Date and ends at midnight on December 31 of that same calendar
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 Fiscal Year is changed in the future, appropriate adjustment to this
Agreement’s reporting and accounting procedures shall be made; provided,
however, that no such change or adjustment shall alter the term of this
Agreement or in any way reduce the distributions of Operating Profit or other
payments due hereunder.

          “Fixed
Asset Supplies” shall mean items included within “Property and
Equipment” under the Uniform System of Accounts including, but not limited to,
linen, china, glassware, tableware, uniforms, and similar items, whether used
in connection with public space or Guest Rooms.

          “Foreclosure”
shall mean any exercise of the remedies available to a Mortgagee, upon a
default under the Mortgage held by such Mortgagee, which results in a transfer
of title to or possession of the Hotel. The term “foreclosure” shall include,
without limitation, any one or more of the following events, if they occur in
connection with a default under a Mortgage: (i) a transfer by judicial or
non-judicial foreclosure; (ii) a transfer by deed in lieu of foreclosure; (iii)
the appointment by a court of a receiver to assume possession of the Hotel;
(iv) a transfer of either ownership or control of the Owner, by exercise of a
stock pledge or otherwise; (vi) if title to the Hotel is held by a tenant under
a ground lease, an assignment of the tenant’s interest in such ground lease or
(vi) any similar judicial or non-judicial exercise of the remedies held by the
Mortgagee resulting in actual ownership or control of the Hotel by such
Mortgagee or its designee.

34

          “Franchise
Agreement” shall mean the franchise agreement described on Schedule
1 attached hereto and made a part hereof, as the same may be amended or
supplemented from time to time.

          “Gross
Revenues” shall mean all revenues and receipts of every kind
derived from operating the Hotel and all departments and parts thereof,
including, but not limited to: income (from both cash and credit transactions)
from rental of Guest Rooms, telephone charges, stores, offices, exhibit or
sales space of every kind; license, lease and concession fees and rentals (not
including gross receipts of licensees, lessees and concessionaires); income
from vending machines; income from parking; health club membership fees; food
and beverage sales; wholesale and retail sales of merchandise; and service
charges; provided, however, that Gross Revenues shall not include the
following: gratuities to employees of the Hotel; federal, state or municipal
excise, sales or use taxes or any other taxes collected directly from patrons
or guests or included as part of the sales price of any goods or services;
proceeds from the sale of FF&E; interest received or accrued with respect
to the funds in the Reserve or the other operating accounts of the Hotel; any
refunds, rebates, discounts and credits of a similar nature, given, paid or
returned in the course of obtaining Gross Revenues or components thereof;
insurance proceeds; condemnation proceeds (other than for a temporary taking);
or any proceeds from any Sale of the Hotel or from the financing or refinancing
of any debt encumbering the Hotel.

          “Guest
Room” shall mean a separately-keyed lodging unit in the Hotel.

          “Guest
Room Revenues” shall mean the portion of Gross Revenues of the
Hotel which is attributed to the rental of Guest Rooms.

          “Hazardous
Materials” shall have the meaning ascribed to it in Section
10.08.

          “Hotel”
shall mean the Site together with the Buildings and all other improvements
construed or to be constructed on the Site pursuant to this Agreement, all
FF&E and Fixed Asset Supplies installed or located on the Site or in the
Buildings, and all easements or other appurtenant rights thereto.

          “Hotel
Lease” shall have the meaning ascribed to it in Recital B.

          “Hotel
Purchase Contract” shall have the meaning ascribed to it in Schedule
1.

          “Impact
Fees” shall have the meaning ascribed to it in Section 4.07.A.

          “Impositions”
shall have the meaning ascribed to it in Section 4.07.

          “Incentive
Management Fee” shall mean an amount payable to Manager,
pursuant to Section 3.01 and Section 4.01, that is set forth in Schedule 1 of
Available Cash Flow in any Fiscal Year (or portion thereof) after payment to
Owner of Owner’s Priority. 

          “Initial
Term” shall have the meaning ascribed to it in Section 2.01.

35

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

          “Landlord”
shall mean the party identified as “Landlord” in Schedule 1.

          “Legal
Requirement(s)” shall mean any federal, state or local law,
code, rule, ordinance, regulation or order of any governmental authority or
agency having jurisdiction over the business or operation of the Hotel or the
matters which are the subject of this Agreement, including, without limitation,
the following: (i) any building, zoning or use laws, ordinances, regulations or
orders; and (ii) Environmental Laws.

          “Litigation”
shall mean: (i) any cause of action (including, without limitation, bankruptcy
or other debtor/creditor proceedings) commenced in a federal, state or local
court; or (ii) any claim brought before an administrative agency or body (for
example, without limitation, employment discrimination claims).

          “Manager”
shall have the meaning ascribed to it in the Preamble hereto or shall mean any
permitted successor or assign, as applicable.

          “Manager’s
Liability” and “Manager’s Liabilities” shall have the
meanings ascribed to such terms in Section 4.03.B.

          “Mortgage”
shall mean any mortgage, deed of trust or similar security instrument creating
a lien on the Hotel.

          “Mortgagee”
shall mean the holder of any Mortgage encumbering the Hotel or the Site.

          “Operating
Accounts” shall have the meaning ascribed to it in Section
4.03.A.

          “Operating
Loss” shall mean a negative Operating Profit.

          “Operating
Profit” shall mean the excess of Gross Revenues over the
following deductions (“Deductions”) incurred by Manager, on
behalf of Owner, in operating the Hotel:

                    1.
the cost of sales, including, without limitation, compensation, fringe
benefits, payroll taxes and other costs related to Hotel employees, provided
that the foregoing costs shall not include salaries and other employee costs of
executive personnel of Manager who do not work at the Hotel on a regular basis,
which salaries and costs shall be Manager’s Liability;

                    2.
departmental expenses incurred at departments within the Hotel; administrative
and general expenses; the cost of marketing incurred by the Hotel; advertising
and business promotion incurred by the Hotel; heat, light, and power; computer
line charges; and routine repairs, maintenance and minor alterations treated as
Deductions under Section 5.01;

36

                    3.
the cost of Inventories and Fixed Asset Supplies consumed in the operation of
the Hotel;

                    4.
a reasonable reserve for uncollectible accounts receivable as reasonably
determined by Manager with the concurrence of Owner;

                    5.
all costs and fees of independent professionals or other third parties who are
retained by Manager with the concurrence of Owner to perform services required
or permitted hereunder;

                    6.
all costs and fees of technical consultants and operational experts who are
retained or employed by Manager with the concurrence of Owner for specialized
services (including, without limitation, quality assurance inspectors) and the
reasonable cost of attendance by employees of the Hotel at training and
manpower development programs sponsored by Manager, provided Owner has approved
attendance at programs and the cost thereof;

                    7.
the Base Management Fee;

                    8.
all royalty, marketing fund, reservation, communication support, property
management system and other similar fees payable to the Franchisor under the
Franchise Agreement;

                    9.
insurance costs and expenses as provided in Section 6.04;

                    10.
taxes, if any, payable by or assessed against Manager, Owner or Landlord
related to this Agreement or to Manager’s operation of the Hotel and
Impositions (exclusive of Manager’s, Owner’s and Landlord’s income taxes or
franchise taxes and any other similar taxes payable by Manager and all other
taxes, assessments and payments excluded from the definition of Impositions);

                    11.
transfers to the Reserve required pursuant to Section 5.02;

                    12.
any costs paid by Manager pursuant to the Franchise Agreement; 

                    13.
payments pursuant to FF&E leases or other forms of financing obtained for
the FF&E located in or connected with the Hotel; and

                    14.
to the extent approved in advance by Owner, such other costs and expenses
incurred by Manager as are specifically provided for elsewhere in this
Agreement or are otherwise reasonably necessary for the proper and efficient
operation of the Hotel, including without limitation, travel expenses or
supervisory personnel of Manager incurred in connection with managing the
Hotel.

37

          The term “Deductions”
shall not include (a) debt service payments pursuant to a Mortgage or (b)
rental payments under any Hotel Lease, all of which shall be paid by Owner from
its own funds.

          “Owner”
shall have the meaning ascribed to it in the Preamble or shall mean any
successor or assign, as applicable.

          “Owner’s
Priority” shall mean the amount shown as Owner’s Priority on Schedule
1 attached hereto and made a part hereof, per Fiscal Year (prorated for any
partial Fiscal Year). Owner’s Priority for each Fiscal Year shall be paid to
the extent of Operating Profit available in such Fiscal Year, as provided in
Section 3.02 of this Agreement. In the event of any capital expenditures made
with respect to the Hotel after the date of this Agreement that are in excess
of the Reserve, the Owner’s Priority shall be increased (but not decreased) for
the remaining portion of the Fiscal Year in which such capital expenditures are
made and all subsequent Fiscal Years so as to equal a twelve percent (12%)
return on an amount equal to the sum of (i) the purchase price paid by Owner
for the Hotel plus (ii) closing costs (including, without limitation,
defeasance costs but excluding any brokerage fees or expenses incurred by
Owner’s parent in connection with its public equity raise) plus (iii) such
excess capital expenditures. 

          “Performance
Termination Period” shall have the meaning
ascribed to it in Schedule 1.

          “Performance
Termination Threshhold” shall have the meaning ascribed thereto
in Schedule 1.

          “Person”
means an individual (and the heirs, executors, administrators, or other legal
representatives of an individual), a partnership, a corporation, limited
liability company, a government or any department or agency thereof, a trustee,
a trust and any unincorporated organization.

          “Prime
Rate” shall mean the “prime rate” of interest announced from
time to time in the “Money Rates” section of The Wall Street Journal.

          “Prudent
Industry Practice” shall mean the customary practices of the
hotel industry in the United States for hotels comparable to the Hotel. To the
extent inconsistent with the requirements of the Franchise Agreement, such
practices shall be conformed to the requirements of the Franchise Agreement for
purposes of this Agreement.

          “Quarterly
Operating Statement” shall have the meaning set
forth in Section 4.0l.B.

          “Reserve”
shall have the meaning ascribed to it in Section 5.02A.

          “Revenue
Data Publication” shall mean Smith’s STAR Report, a monthly
publication distributed by Smith Travel Research, Inc. of Gallatin, Tennessee,
or an alternative source, reasonably satisfactory to both parties, of data
regarding the Revenue Per Available Room of hotels in the general trade area of
the Hotel. If such Smith’s STAR Report is discontinued in the 

38

future, or ceases (in the reasonable opinion of either Owner or
Manager) to be a satisfactory source of data regarding the Revenue Per
Available Room of various hotels in the general trade area of the Hotel, Owner
and Manager shall select an alternative source for such data. If the parties
fail to agree on such alternative source within a reasonable period of time,
either party may terminate this Agreement upon sixty (60) days prior written
notice to the other party.

          “Revenue
Index” shall mean that fraction that is equal to (a) the Revenue
Per Available Room for the Hotel divided by (b) the average Revenue Per
Available Room for the hotels in the Competitive Set, as set forth in the
Revenue Data Publication. Appropriate adjustments to the Revenue Index,
acceptable to Owner in its reasonable discretion, shall be made in the event of
a major renovation of the Hotel.

          “Revenue
Index Threshold” shall mean the number shown on Schedule 1
attached hereto and made a part hereof. However, if the entry of a new hotel
into the Competitive Set (or the removal of a hotel from the Competitive Set)
causes significant variations in the Revenue Index that do not reflect the
Hotel’s true position in the relevant market, appropriate adjustments shall be
made to the Revenue Index Threshold by mutual consent of Owner and Manager each
acting in good faith.

          “Revenue
Per Available Room” shall mean (i) the term “revenue per
available room” as defined by the Revenue Data Publication, or (ii) if the
Revenue Data Publication is no longer being used (as more particularly set
forth in the definition of “Revenue Data Publication”), the aggregate gross
room revenues of the hotel in question for a given period of time divided by the
total room nights for such period. If clause (ii) of the preceding sentence is
being used, a “room” shall be an available hotel guestroom that is keyed as a
single unit.

          “Routine
Capital Expenditures” shall mean certain routine, non-major
expenditures which are classified as “capital expenditures” under
generally-accepted accounting principles, and which will be funded from the
Reserve (pursuant to Section 5.02). Routine Capital Expenditures consist of the
following types of expenditures: exterior and interior painting; resurfacing
building walls and floors; resurfacing parking areas; and miscellaneous similar
expenditures. Routine Capital Expenditures are not non-routine capital
expenditures or major repairs or major alterations or improvements.

          “Sale of
the Hotel” shall mean any sale, assignment, transfer or other
disposition, for value or otherwise, voluntary or involuntary, of the Site
and/or the Hotel or any interest therein, in whole or part. For purposes of
this Agreement, a Sale of the Hotel shall also include a lease (or sublease) of
all or substantially all of the Hotel or Site or any interest therein. Sale of
the Hotel shall exclude related party transactions with Affiliates of Owner and
shall also exclude granting of security interests in the Hotel or any part
thereof in connection with financing.

          “SEC
Filing Period” shall mean such period of time (a) (not to exceed
thirty (30) days) after the close of each Fiscal Year within which Owner must
receive the Annual Operating Statement from Manager with respect to such Fiscal
Year and (b) (not to exceed twenty (20) days) after the close of each calendar
quarter of a Fiscal Year within which Owner must receive the Quarterly
Operating Statement from Manager with respect to such quarter, in each case in
order for Owner to have a reasonable period of time within which to prepare and
make all 

39

required filings with the Securities and Exchange Commission and other
applicable governmental agencies.

          “Site”
shall mean the real property described on Exhibit A attached hereto and
made a part hereof.

          “Software”
shall mean all computer software and accompanying documentation (including all
future upgrades, enhancements, additions, substitutions and modifications thereof),
other than computer software which is generally commercially available, which
are used by Manager in connection with operating or otherwise providing
services to the Hotel.

          “Specially
Designated National or Blocked Person” shall mean (i) a person
designated by the U.S. Department of Treasury’s Office of Foreign Assets
Control from time to time as a “specially designated national or blocked
person” or similar status, (ii) a person described in Section 1 of U.S.
Executive Order 13224 issued on September 23, 2001, or (iii) a person otherwise
identified by government or legal authority as a person with whom Manager or
its Affiliates are prohibited from transacting business. Currently, a listing
of such designations and the text of the Executive Order are published under
the internet website address www.ustreas.gov/offices/enforcement/ofac.

          “Subordination
Agreement” shall have the meaning ascribed to it in Section
7.04.

          “Subsequent
Owners” shall have the meaning ascribed to it in Section 7.04.

          “System”
shall have the meaning set forth in the Franchise Agreement.

          “System
Standards” shall mean any one or more (as the context requires)
of the following three (3) categories of standards: (i) operational standards
(for example, services offered to guests, quality of food and beverages,
cleanliness, staffing and employee compensation and benefits, frequent traveler
programs and other similar programs; (ii) physical standards (for example,
quality of the hotel, FF&E, and Fixed Asset Supplies, frequency of FF&E
replacements, etc.); and (iii) technology standards (for example, those
relating to software, hardware, telecommunications, systems security and
information technology); each of such standards shall be the standard which is
generally prevailing or in the process of being implemented at other hotels in
the System represented by the Franchise Agreement.

          “Term”
shall have the meaning ascribed to it in Section 2.01.

          “Termination”
shall mean the expiration or sooner cessation of this Agreement.

          “Trade
Name” shall mean any name, whether informal (such as a
fictitious name or d/b/a) or formal (such as the full legal name of a
corporation or partnership) which is used to identify an entity.

          “Uniform
System of Accounts” shall mean the Uniform System of Accounts
for the Lodging Industry, Ninth Revised Edition, 1996, as published by the
Educational Institute of the American Hotel & Motel Association, as
revised.

40

          “WARN Act”
shall mean the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
2101 et seq.

          “Working
Capital” shall mean funds that are used in the day-to-day
operation of the business of the Hotel, including, without limitation, amounts
sufficient for the maintenance of change and petty cash funds, amounts
deposited in operating bank accounts, receivables, amounts deposited in payroll
accounts, prepaid expenses and funds required to maintain Inventories, less
accounts payable and accrued current liabilities. 

ARTICLE
XII

SUPPLEMENTAL
PROVISIONS

          All of the
terms, conditions, representations, warranties, covenants and other provisions,
if any, set forth in the supplemental provisions attached hereto as Schedule
2 (the “Supplemental Provisions”) are hereby incorporated into this
Agreement and shall be considered a part hereof. In the event of any conflict
or inconsistency between the Supplemental Provisions and the other provisions
of this Agreement, the Supplemental Provisions shall control.

41

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

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 OWNER:

 
	
  

 	
  

 	
  

 
	
  

 	
 APPLE TEN
 HOSPITALITY MANAGEMENT, INC., a
Virginia corporation

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Justin
 G. Knight 

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Name: Justin
 G. Knight

 
	
  

 	
 Title: President

 
	
  

 	
  

 	
  

 
	
  

 	
 MANAGER:

 
	
  

 	
  

 	
  

 
	
  

 	
 NEWPORT
 CHARLOTTE MANAGEMENT, LLC,
 a Virginia limited liability company

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Michael
 L. Pleninger

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Name: Michael
 L. Pleninger

 
	
  

 	
 Title: Manager

 

SCHEDULE
1

HOTEL SPECIFIC DATA

1. Description of Hotel: That certain hotel known as the
Fairfield Inn & Suites Charlotte Matthews, containing 94 guestrooms and
guest suites, a lobby, meeting rooms, administrative offices, parking and
certain amenities and related facilities located on the Site, including the
following:

	
  

 	
  

 
	
  

 	
 a. Number of Guest Rooms: 94

 
	
  

 	
  

 
	
  

 	
 b. Other Improvements/Amenities: meeting space; full service
 business center; indoor swimming pool; whirlpool; exercise room; wireless
 high speed internet access.

 
	
  

 	
  

 
	
 2.

 	
 Franchise Agreement: Franchise Agreement
 between Apple Ten Hospitality Management, Inc. and Marriott International,
 Inc., dated March 25, 2011

 
	
  

 	
  

 
	
 3.

 	
 Competitive Set:

 

	
  

 	
  

 
	
 12283

 	
 Comfort Inn Matthews

 
	
 32347

 	
 Hampton Inn Charlotte Matthews

 
	
 35396

 	
 Courtyard Charlotte Matthews

 
	
 42419

 	
 Country Inn & Suites Matthews

 
	
 59714

 	
 Holiday Inn Express & Suites Charlotte SE Matthews

 

	
  

 	
  

 
	
 4.

 	
 Landlord: Apple Ten North Carolina, L.P.

 
	
  

 	
  

 
	
 5.

 	
 Base Management Fee: Three percent (3%)

 
	
  

 	
  

 
	
 6.

 	
 a. Incentive Management Fee: 20% of available cash flow after
 payment of Owner’s Priority

 
	
  

 	
  

 
	
  

 	
 b. Owner’s Priority: $1,200,000 (12% of Purchase Price
 [$10,000,000])

 
	
  

 	
  

 
	
 7.

 	
 a. Performance Termination Threshold: Year 1: $800,000 (8% of Purchase
 Price); Year 2: $900,000 (9% of Purchase Price); Year 3 and thereafter:
 $1,000,000 (10% of Purchase Price)

 
	
  

 	
  

 
	
  

 	
 b. Performance Termination Period: Any calendar year;
 provided, however, the initial
 Performance Termination Period shall begin on January 1, 2012.

 

2

	
  

 	
  

 
	
 8.

 	
 Revenue
 Index Threshold: 100%

 
	
  

 	
  

 
	
 9.

 	
 Hotel
 Purchase Contract: N/A

 
	
  

 	
  

 
	
 10.

 	
 Expiration
 Date of Term: Five (5) years from the Effective Date

 
	
  

 	
  

 
	
 11.

 	
 State in
 which Manager is Organized: Virginia

 
	
  

 	
  

 
	
 12.

 	
 FF&E
 Reserve: An amount equal to five percent (5%) of
 Gross Revenues for each Accounting
 Period. 

 
	
  

 	
  

 
	
 13.

 	
 Other Hotels:
 None

 

3

SCHEDULE
2

1. Franchise Agreement. During the Term of this Agreement,
subject to the availability of adequate funds, Manager shall perform all of the
obligations of Owner as “Franchisee” under the Franchise Agreement to the
extent such obligations relate to the management or operation of the Hotel,
including, without limitation, the obligations of “Franchisee” under Sections
XIII (Accounts and Receipts) and XIV (Insurance) of the Franchise Agreement,
and Manager shall not commit any act or omit to take any action that would
cause a default by the Franchisee under the Franchise Agreement. In the event
of any inconsistency between the provisions of this Agreement and the
provisions of the Franchise Agreement, the provisions of the Franchise
Agreement shall prevail. Manager shall send promptly to Owner any and all
notices that Manager receives from the Franchisor with respect to the Hotel or
the Franchise Agreement and shall keep Owner fully informed with respect to all
matters that come to Manager’s attention under the Franchise Agreement.
Likewise, Owner shall send promptly to Manager any and all notices that Owner
receives from the Franchisor with respect to the Hotel or the Franchise
Agreement that would require action or compliance on the part of Manager.
Notwithstanding the foregoing, Manager shall not have the right to grant any
consent, approval or other right reserved to the Franchisee under the Franchise
Agreement or to make any decision or agreement on behalf of Owner under the
Franchise Agreement. In the event the Franchise Agreement is terminated for any
reason, this Agreement shall also terminate effective as of the date of
termination of the Franchise Agreement, unless the parties hereto agree
otherwise.

[FOR HILTON BRANDS:] During the Term of this Agreement, subject to the
availability of adequate funds, Manager shall perform all of the obligations of
Owner as “Licensee” under the Franchise Agreement to the extent such
obligations relate to the management or operation of the Hotel, including,
without limitation, the obligations of “Licensee” under Paragraphs 6, 7 and 8
of the Franchise Agreement, and Manager shall not commit any act or omit to
take any action that would cause a default by the Licensee under the Franchise
Agreement. In the event of any inconsistency between the provisions of this
Agreement and the provisions of the Franchise Agreement, the provisions of the
Franchise Agreement shall prevail. Manager shall send promptly to Owner any and
all notices that Manager receives from the Franchisor with respect to the Hotel
or the Franchise Agreement and shall keep Owner fully informed with respect to
all matters that come to Manager’s attention under the Franchise Agreement.
Notwithstanding the foregoing, Manager shall not have the right to grant any
consent, approval or other right reserved to the Licensee under the Franchise
Agreement or to make any decision or agreement on behalf of Owner under the
Franchise Agreement. In the event the Franchise Agreement is terminated for any
reason, this Agreement shall also terminate effective as of the date of
termination of the Franchise Agreement, unless the parties hereto agree
otherwise. 

2. Accounting Period. For purposes of this Agreement, the term
“Accounting Periods” shall mean a calendar month, except that the first
Accounting Period shall begin on the Effective Date and shall end on the last
day of the calendar month in which the Effective Date occurs.

4

3. Fiscal Year. [FOR MARRIOTT BRANDS:] For purposes of this
Agreement, the term “Fiscal Year” shall mean the fiscal year as of the
Effective Date that ends at midnight on the Friday closest to December 31 in
each calendar year; the new Fiscal Year begins on the Saturday immediately
following said Friday. Any partial Fiscal Year between the Effective Date and
the commencement of the first full Fiscal Year shall constitute a separate
Fiscal Year and shall be deemed the first Fiscal Year. A partial Fiscal Year
between the end of the last full Fiscal Year and the Termination of this
Agreement shall also constitute a separate Fiscal Year. 

[FOR HILTON BRANDS:] For purposes of this Agreement, the term “Fiscal
Year” shall mean, initially, the period beginning as of the Effective Date and
ending at midnight on the following December 31 and thereafter each calendar
year during the Term. Any partial Fiscal Year between the Effective Date and
the commencement of the first full Fiscal Year shall constitute a separate
Fiscal Year and shall be deemed the first 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. 

5

EXHIBIT
A

LEGAL DESCRIPTION OF SITE

BEGINNING at a #5 rebar found in the southwest right-of-way line
of Independence Boulevard (a 200-foot existing I right-of-way),
and said beginning point being further described as the northeast comer of the
property of the Department of Transportation (now or formerly) known as P1D #193-112-04 as described in Deed Book 6336, Page 250,
Mecklenburg County Registry, and thence from said beginning point with the
northern boundary line of the said Department of Transportation property, South
61” 54’ 5]” West 166.66 feet to a #4 rebar found, said rebar being
the L northwest comer of the said Depar1ment of Transportation
property; thence with the southwest boundary line of the said Department of
Transportation property, along a curve to the left having a chord bearing and
distance of South 29” 21’ 48” East 157.24 feet (said curve having a radius of
3,429.02 feet and an arc length of 157.25 feet) to a #4 rebar found, said rebar
being a common comer of the Hiran Hospitality, Inc. property (now or formerly)
known as PID #193-112-02 as described ill Deed Book 19939,
Page 21, Mecklenburg County Registry; thence with the I northern boundary line of the said Hiran Hospitality, Inc.
property, South 55” 0&’ 31” West 408.95 feet to a #4 rebar found
(disturbed), said rebar being the westernmost comer of the said Hiran
Hospitality, Inc. property and said rebar being North 430 38’ 42” East 633.20 feet from a PK nail, and said #4 rebar being in
the eastern right-of-way line of an access easement; thence with the eastern
right-of-way line of said access easement, North 34° 51’ 29” West 268.19 feet to a PK nail found within said
access easement; thence on a line that is approximately the center line of the
said access easement, North 55° 08’ 31” East 589.44 feet to a PK nail in the
western right-of-way line of Independence Boulevard; thence with the western
right-of-way line of Independence Boulevard, South 34” 53’ 22” East 131.33 feet
to the POINT AND PLACE OF BEGINNING, and containing 3.043 acres as shown on a
survey p,
dated June 6, 2008 by Hugh E.
White, Jr., Professional Land Surveyor.  

Being the same property conveyed to the Grantor in Deed Book
23584, Page 304, Mecklenburg County Registry. 

6Exhibit 10.14

FAIRFIELD
INN & SUITES BY MARRIOTT HOTEL

RELICENSING
FRANCHISE AGREEMENT

BETWEEN

MARRIOTT
INTERNATIONAL, INC.

AND

APPLE
TEN HOSPITALITY MANAGEMENT, INC.

Location:
8540 East Independence Blvd., Charlotte, NC 28227

Dated
as of: March 25, 2011

TABLE
OF CONTENTS

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Page

 
	
  

 
	
 1.

 	
  

 	
 DEFINITIONS

 	
  

 	
 2

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
  

 	
 LICENSE

 	
  

 	
 10

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.1

 	
 Limited Grant

 	
  

 	
 10

 
	
  

 	
 2.2

 	
 Franchisor’s Reserved Rights

 	
  

 	
 10

 
	
  

 	
 2.3

 	
 Territory

 	
  

 	
 10

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3.

 	
  

 	
 FEES

 	
  

 	
 11

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.1

 	
 Application Fee

 	
  

 	
 11

 
	
  

 	
 3.2

 	
 Franchise Fees

 	
  

 	
 11

 
	
  

 	
 3.3

 	
 Marketing Fund Charges; Special Marketing
 Program Fees

 	
  

 	
 11

 
	
  

 	
 3.4

 	
 Electronic Systems Fees

 	
  

 	
 11

 
	
  

 	
 3.5

 	
 Other Charges

 	
  

 	
 12

 
	
  

 	
 3.6

 	
 Travel Expenses and Reimbursement

 	
  

 	
 12

 
	
  

 	
 3.7

 	
 Marriott Agreement Payments

 	
  

 	
 12

 
	
  

 	
 3.8

 	
 Making of Payments and Performance of
 Services

 	
  

 	
 12

 
	
  

 	
 3.9

 	
 Interest on Late Payments

 	
  

 	
 12

 
	
  

 	
 3.10

 	
 Taxes

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 4.

 	
  

 	
 TERM

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.1

 	
 Term

 	
  

 	
 13

 
	
  

 	
 4.2

 	
 Not Renewable

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 5.

 	
  

 	
 SIZE, FINANCING, CONSTRUCTION, AND
 RENOVATION

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.1

 	
 Size

 	
  

 	
 13

 
	
  

 	
 5.2

 	
 Financing of the Hotel

 	
  

 	
 14

 
	
  

 	
 5.3

 	
 Construction/Conversion/Renovation of the
 Hotel

 	
  

 	
 14

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 6. 

 	
  

 	
 SOURCING AND DESIGN APPROVALS

 	
  

 	
 14 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.1

 	
 Furniture, Fixtures, Equipment, Supplies,
 and Signage

 	
  

 	
 14

 
	
  

 	
 6.2

 	
 Design Approval

 	
  

 	
 15

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 7. 

 	
  

 	
 LOCAL ADVERTISING AND MARKETING, PRICING,
 AND MARKETING FUND ACTIVITIES

 	
  

 	
 16 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.1

 	
 Franchisee’s Local Advertising and
 Marketing Programs and Press Releases

 	
  

 	
 16

 
	
  

 	
 7.2

 	
 Reservations, Pricing, and Rates

 	
  

 	
 17

 
	
  

 	
 7.3

 	
 Marketing Fund Activities

 	
  

 	
 17

 
	
  

 	
 7.4

 	
 Special Marketing Programs

 	
  

 	
 18

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 8.

 	
  

 	
 PROPERTY SYSTEM, RESERVATION SYSTEM, AND
 OTHER ELECTRONIC SYSTEMS

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.1

 	
 Systems Installation

 	
  

 	
 19

 
	
  

 	
 8.2

 	
 Reservation System

 	
  

 	
 19

 
	
  

 	
 8.3

 	
 Optional System(s)

 	
  

 	
 19

 
	
  

 	
 8.4

 	
 System Communication Costs

 	
  

 	
 19

 
	
  

 	
 8.5

 	
 Electronic Systems Provided Under License

 	
  

 	
 19

 

i

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 9.

 	
  

 	
 OPERATIONS

 	
  

 	
 20

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.1

 	
 Operating the Hotel

 	
  

 	
 20

 
	
  

 	
 9.2

 	
 System Promotion and Diversion to Other
 Businesses

 	
  

 	
 21

 
	
  

 	
 9.3

 	
 Employees

 	
  

 	
 21

 
	
  

 	
 9.4

 	
 Management and Operation of the Hotel

 	
  

 	
 22

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 10.

 	
  

 	
 TRAINING, COUNSELING, AND ADVISORY SERVICES

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.1

 	
 Training

 	
  

 	
 23

 
	
  

 	
 10.2

 	
 Counseling and Advisory Services

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 11.

 	
  

 	
 PHYSICAL FACILITIES, SUPPLIES, AND GOODS

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.1

 	
 Repairs and Maintenance

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 12.

 	
  

 	
 SYSTEM AND STANDARDS; FRANCHISEE
 ASSOCIATION

 	
  

 	
 25

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.1

 	
 Compliance with System and Standards

 	
  

 	
 25

 
	
  

 	
 12.2

 	
 Modification of the System and Standards

 	
  

 	
 25

 
	
  

 	
 12.3

 	
 Franchisee Association

 	
  

 	
 26

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 13.

 	
  

 	
 PROPRIETARY MARKS AND INTELLECTUAL PROPERTY

 	
  

 	
 26

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.1

 	
 Franchisor’s Representations and
 Responsibility Regarding the Proprietary Marks

 	
  

 	
 26

 
	
  

 	
 13.2

 	
 Franchisee’s Use of System and Intellectual
 Property

 	
  

 	
 26

 
	
  

 	
 13.3

 	
 Franchisee’s Use of Other Marks

 	
  

 	
 29

 
	
  

 	
 13.4

 	
 Internet
 Website

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 14.

 	
  

 	
 CONFIDENTIAL INFORMATION; DATA PROTECTION
 LAWS

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 14.1

 	
 Confidential Information

 	
  

 	
 29

 
	
  

 	
 14.2

 	
 Data Protection Laws

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 15.

 	
  

 	
 ACCOUNTING AND REPORTS

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.1

 	
 Books, Records, and Accounts

 	
  

 	
 30

 
	
  

 	
 15.2

 	
 Reports

 	
  

 	
 30

 
	
  

 	
 15.3

 	
 Franchisor Examination and Audit of Hotel
 Records

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 16.

 	
  

 	
 INDEMNIFICATION AND INSURANCE

 	
  

 	
 31

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.1

 	
 Indemnification

 	
  

 	
 31

 
	
  

 	
 16.2

 	
 Insurance

 	
  

 	
 31

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 17.

 	
  

 	
 TRANSFERABILITY OF INTERESTS

 	
  

 	
 34

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 17.1

 	
 Transfers of Interests in the Hotel and
 Franchisee

 	
  

 	
 34

 
	
  

 	
 17.2

 	
 Transfers of Controlling Ownership
 Interests

 	
  

 	
 34

 
	
  

 	
 17.3

 	
 Transfers of Passive Investor Interests,
 Estate Planning, and Death or Mental Incompetency

 	
  

 	
 36

 
	
  

 	
 17.4

 	
 Proposed Transfer to Competitor and Right
 of First Refusal

 	
  

 	
 37

 
	
  

 	
 17.5

 	
 Interest in Real Estate and Injunctive
 Relief

 	
  

 	
 39

 
	
  

 	
 17.6

 	
 Survival of Right of First Refusal

 	
  

 	
 39

 
	
  

 	
 17.7

 	
 Security Interests in the Hotel or
 Franchisee

 	
  

 	
 40

 
	
  

 	
 17.8

 	
 Proposed Transfers to Specially Designated
 National or Blocked Person

 	
  

 	
 40

 
	
  

 	
 17.9

 	
 Transfers by Franchisor

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 18.

 	
  

 	
 PUBLICLY-TRADED SECURITIES AND SECURITIES
 OFFERINGS

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 18.1

 	
 Franchisee’s Obligations

 	
  

 	
 40

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 18.2

 	
 Limited Franchisor Consent

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 19.

 	
  

 	
 DEFAULT AND TERMINATION

 	
  

 	
 42

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 19.1

 	
 Immediate Termination

 	
  

 	
 42

 
	
  

 	
 19.2

 	
 Termination Upon Notice with Opportunity to
 Cure

 	
  

 	
 43

 
	
  

 	
 19.3

 	
 Termination by Franchisor and Liquidated
 Damages

 	
  

 	
 44

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 20.

 	
  

 	
 POST-TERMINATION

 	
  

 	
 47

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 20.1

 	
 Franchisee Obligations

 	
  

 	
 47

 
	
  

 	
 20.2

 	
 Franchisor’s Rights Upon Termination or
 Expiration

 	
  

 	
 48

 
	
  

 	
 20.3

 	
 Survival

 	
  

 	
 48

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 21.

 	
  

 	
 CONDEMNATION AND CASUALTY

 	
  

 	
 48

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 21.1

 	
 Condemnation

 	
  

 	
 48

 
	
  

 	
 21.2

 	
 Casualty

 	
  

 	
 49

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 22.

 	
  

 	
 COMPLIANCE WITH LAWS; LEGAL ACTIONS

 	
  

 	
 49

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 22.1

 	
 Compliance with Laws

 	
  

 	
 49

 
	
  

 	
 22.2

 	
 Notice Regarding Legal Actions

 	
  

 	
 49

 
	
  

 	
 22.3

 	
 WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES

 	
  

 	
 50

 
	
  

 	
 22.4

 	
 Specially Designated National or Blocked
 Person; Anti-Money Laundering

 	
  

 	
 50

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 23.

 	
  

 	
 RELATIONSHIP OF PARTIES

 	
  

 	
 50

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 23.1

 	
 Reasonable Business Judgment

 	
  

 	
 50

 
	
  

 	
 23.2

 	
 Independent Contractor

 	
  

 	
 51

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 24.

 	
  

 	
 GOVERNING LAW; INJUNCTIVE RELIEF; COSTS OF
 ENFORCEMENT

 	
  

 	
 51

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 24.1

 	
 Governing Law

 	
  

 	
 51

 
	
  

 	
 24.2

 	
 Injunctive Relief

 	
  

 	
 51

 
	
  

 	
 24.3

 	
 Costs of Enforcement

 	
  

 	
 51

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 25.

 	
  

 	
 NOTICES

 	
  

 	
 51

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 25.1

 	
 Notices

 	
  

 	
 51

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 26.

 	
  

 	
 CONSTRUCTION AND SEVERABILITY; APPROVALS,
 CONSENTS AND WAIVERS; ENTIRE AGREEMENT

 	
  

 	
 52

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 26.1

 	
 Construction and Severability

 	
  

 	
 52

 
	
  

 	
 26.2

 	
 Approvals, Consents and Waivers

 	
  

 	
 53

 
	
  

 	
 26.3

 	
 Entire Agreement

 	
  

 	
 53

 
	
  

 	
 26.4

 	
 Amendments

 	
  

 	
 54

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 27.

 	
  

 	
 REPRESENTATIONS, WARRANTIES AND COVENANTS

 	
  

 	
 54

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 27.1

 	
 Existence and Power; Authorization;
 Contravention

 	
  

 	
 54

 
	
  

 	
 27.2

 	
 Ownership of Franchisee

 	
  

 	
 54

 
	
  

 	
 27.3

 	
 Ownership of the Hotel

 	
  

 	
 54

 
	
  

 	
 27.4

 	
 Additional Franchisee Acknowledgments and
 Representations

 	
  

 	
 55

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 28.

 	
  

 	
 MISCELLANEOUS

 	
  

 	
 56

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 28.1

 	
 Confidential Negotiated Changes

 	
  

 	
 56

 
	
  

 	
 28.2

 	
 Multiple Counterparts

 	
  

 	
 56

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT A APPROVED LOCATION, NUMBER OF
 GUESTROOMS AND OWNERSHIP INTERESTS IN FRANCHISEE

 	
  

 	
 57

 
	
  

 	
  

 	
  

 
	
 EXHIBIT B CHANGE OF OWNERSHIP RIDER

 	
  

 	
 58

 
	
  

 	
  

 	
  

 
	
 PROPERTY IMPROVEMENT PLAN ADDENDUM

 	
  

 	
 60

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ATTACHMENT ONE TO PROPERTY IMPROVEMENT PLAN ADDENDUM

 	
  

 	
 63

 
	
  

 	
 ATTACHMENT TWO TO PROPERTY IMPROVEMENT PLAN ADDENDUM

 	
  

 	
 64

 
	
  

 	
  

 	
  

 	
  

 
	
 EXHIBIT C RESTRICTED TERRITORY MAP

 	
  

 	
 65

 

RELICENSING FRANCHISE AGREEMENT

          This
Relicensing Franchise Agreement is effective as of the 25th day of March, 2011
(“Effective Date”) by Marriott International, Inc., a Delaware corporation and
Apple Ten Hospitality Management, Inc., a Virginia corporation (“Franchisee”). 

RECITALS

          A.
Franchisor owns the System. 

          B.
Independence Hospitality, Inc. (“Existing Franchisee”) and Franchisor are
parties to a System Hotel franchise agreement dated June 25, 2008 (“Existing
Franchise Agreement”) for the operation of the Hotel (defined below). 

          C. Existing
Franchisee has entered into a Purchase Contract (“Purchase Agreement”) with
Apple Ten North Carolina, LP, a Virginia limited partnership (“Owner”), an
affiliate of Franchisee, pursuant to which Owner has purchased the Hotel from
Existing Franchisee (the “Hotel Purchase Transaction”). 

          D. Existing
Franchisee desires to terminate the Existing Franchise Agreement in connection
with the consummation of the Hotel Purchase Transaction. 

          E.
Franchisor has agreed to terminate the Existing Franchise Agreement on the
terms set forth in a Termination Agreement and Release between Existing
Franchisee and Franchisor (the “Termination Agreement”). 

          F. Pursuant
to the Termination Agreement, the termination of the Existing Franchise
Agreement is not effective unless, among other things, this Agreement has
become effective in accordance with its terms. 

          G.
Franchisee desires that the Hotel remain in the System after termination of the
Existing Franchise Agreement and Franchisee desires to operate the Hotel under
Franchisor’s System at the location specified herein and to obtain a franchise
from Franchisor for that purpose. 

          H. The
Hotel opened for business as a System Hotel on November 10, 2010 (the “Opening
Date”), and was operated under Franchisor’s System from the Opening Date until
termination of the Existing Franchise Agreement pursuant to the Termination
Agreement. 

          I. Certain
modifications to this Agreement are required in order to account for the fact
that the Hotel was opened and operating before the Effective Date, which are
set forth in the Change of Ownership Rider attached hereto as Exhibit B. 

          J.
Franchisee has entered into a lease dated March 25, 2011 (the “Lease”) with
Owner, pursuant to which Owner has leased the Hotel to Franchisee and
Franchisee has rights to operate the Hotel, and Franchisee desires to operate
the Hotel as a System Hotel and wishes to obtain a license to use the System
and the Proprietary Marks for that purpose. 

          K. Owner,
Franchisor and Franchisee are parties to that certain Owner Agreement dated as
of the date hereof with respect to the Hotel (the “Owner Agreement”). 

          L. It is
the intention of the parties that the Hotel, together with other System Hotels
will be part of a chain of hotels providing distinctive, high quality hotel
services. 

          M. It is
important that the Hotel be operated in strict conformity with the System in
order to enhance public acceptance of, and demand for, all System Hotels. 

          N. In
agreeing to grant the non-exclusive license under this Agreement to Franchisee,
Franchisor is relying upon the business skill, financial capacity, and character
of Franchisee and its principals and the guarantee by Guarantor under the
Guaranty. 

          NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are acknowledged, Franchisee and Franchisor agree as
follows: 

1. DEFINITIONS

          When used
in this Agreement the following terms have the meanings indicated: 

          “AAA
Rules” has the meaning stated in Section 17.4. 

          “Accounting
Period” means any one of the twelve (12) months in a calendar year or any
other fiscal accounting and reporting period used by Franchisee and approved by
Franchisor in writing. 

          “Affiliate”
means, for any Person, a Person that is directly (or indirectly through one or
more intermediaries) Controlling, Controlled by, or under common Control with,
such Person. 

          “Agreement”
means this Franchise Agreement, including any exhibits, attachments, and
addenda. 

          “Applicable
Law” means all laws, regulations, ordinances, rules, orders, decrees, and
requirements of any governmental authority having jurisdiction over the Hotel,
Franchisee, Guarantor or any of the Marriott Agreements. 

          “Application
Fee” has the meaning stated in Section 3.1. 

          “Approved
Location” means the site or parcel of land described under item 1 on
Exhibit A. 

          “Arbitrator” has the meaning stated in Section 17.4.  

          “Association”
has the meaning stated in Section 12.3.  

          “Brand” has the meaning stated in the
definition of “Competitor.”  

          “Case
Goods” means furniture and fixtures used in the Hotel, its Guestrooms, and
its Public Facilities, such as chests, armoires, chairs, beds, headboards,
desks, tables, television sets, mirrors, pictures, wall decorations, graphics
and all other unspecified items of the same class. 

          “Category”
means a group of System Hotels designated by Franchisor or its Affiliates, in
their sole discretion, based upon certain criteria, such as geographic (e.g.,
worldwide, regional, state-specific, country-specific) or other attributes
(e.g., resorts, urban, suburban). A Category may have specific physical and
operating standards and policies or may be a descriptive classification. 

2

          “Competitor”
means any Person that owns or has an interest in a hotel brand, trade name,
trademark, system, or chain (a “Brand”) or any Person that has, directly or
indirectly, an Ownership Interest in, or is an Affiliate, principal, director,
officer, or other individual with management responsibility of, a Person that
owns or has an interest in a Brand that is comprised of at least (i) twenty
(20) full-service hotels, or (ii) fifty (50) limited-service hotels. For the
purposes of defining “Competitor,” “full-service” hotels are hotels that
typically offer three (3) meals per day and have an average of three thousand
(3,000) square feet or more of meeting space per hotel, and “limited-service”
hotels are hotels that are not “full-service” hotels. No Person will be deemed
to be a Competitor if such Person has an interest in a Brand merely as a
franchisee or as a mere passive investor that has no Control or influence over
the business decisions concerning the Brand at issue, such as limited partners
in a partnership or as a mere non-Controlling stockholder in a corporation.

          “Competitor
Liquidated Damages” has the meaning stated in Section 19.3.C. 

          “Confidential
Information” means any or all of the following information: (i) any
Standards, documents, or trade secrets approved for use in the System or in the
design, construction, renovation or operation of the Hotel; (ii) any Electronic
Systems and accompanying documentation developed for the System or elements
thereof; (iii) Guest Profile Data; or (iv) any other confidential information,
knowledge, trade secrets, business information or know-how obtained (a) through
the use of any part of the System or concerning the System or the operation of
the Hotel or (b) under any Marriott Agreements. 

          “Control”
(and any form thereof, such as “Controlling” or “Controlled”) means, for any
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person. 

          “Control
Affiliate” means an Affiliate of Franchisee that directly or indirectly
Controls Franchisee. 

          “Data
Protection Laws” means data protection and privacy laws and regulations in
the United States. 

          “Design
Criteria” means those Standards that comprise the design criteria and such
other information that is necessary for planning and construction or renovation
and refurbishment of a System Hotel. 

          “Dispute”
means any dispute, controversy, or claim arising out of or relating to this Agreement
or any other Marriott Agreement, or the making, breach, termination, or
invalidity of this Agreement or any other Marriott Agreement, or the
relationship created by any of those agreements. 

          “Effective
Date” has the meaning stated in the preamble to this Agreement. 

          “Electronic
Systems” means all Software, Hardware and all electronic access to
Franchisor’s systems and data, licensed or made available to Franchisee
relating to the System, including the Reservation System, the Property System,
the Yield Management System, and any other system established under Section 8.3
or Section 12.2. 

          “Electronic
Systems Fees” means the Reservation System Fee, the Property System Fee,
the Yield Management System Fee, and the fees for any other system established
under Section 8.3 or Section 12.2. 

3

          “Electronic
Systems License Agreement” means the electronic systems license agreement
that must be executed by Franchisee as a condition to using the Electronic
Systems, the current form of which is set forth in the Franchise Disclosure
Document.

“Existing Franchisee” has the meaning stated in the Recitals. 

          “Existing
Franchise Agreement” has the meaning stated in the Recitals. 

          “FF&E”
means Case Goods, Soft Goods, signage, and equipment (including telephone
systems, facsimile machines, copiers, vending machines, games, and electronic
systems, such as equipment needed for the Electronic Systems), but does not
include any item included in Fixed Asset Supplies. 

          “Financed
Pool” has the meaning stated in Section 5.2. 

          “Fixed
Asset Supplies” means supply items included within “Property and Equipment”
under the Uniform System, including linen, china, glassware, silver, uniforms,
and similar items. 

          “Franchise
Disclosure Document” means that certain document provided by Franchisor to
prospective franchisees of System Hotels as required by the trade regulation
rule of the Federal Trade Commission entitled “Disclosure Requirements and Prohibitions
Concerning Franchising,” as such document may be updated from time to time by
Franchisor. 

          “Franchisee”
has the meaning stated in the preamble to this Agreement. 

          “Franchise
Fees” has the meaning stated in Section 3.2. 

          “Franchisor”
means Marriott International, Inc., a Delaware corporation, and its successors
and assigns. 

          “Franchisor
Lodging Facilities” means all hotels and other lodging facilities, chains,
brands, or hotel systems owned, leased, under development, or operated or
franchised, now or in the future, by Franchisor or any of its Affiliates,
including: (i) Marriott Hotels, Resorts and Suites; Marriott Marquis Hotels; JW
Marriott Hotels and Resorts; Marriott Conference Centers; Marriott Executive Apartments;
Courtyard by Marriott Hotels; Fairfield Inn by Marriott Hotels; Fairfield Inn
& Suites by Marriott Hotels; Nickelodeon Resorts by Marriott; Renaissance Hotels and Resorts;
Renaissance ClubSport; Autograph Collection Hotels; Residence Inn by Marriott
Hotels; Bvlgari Hotels and Resorts; Edition Hotels; Ritz-Carlton Hotels and
Resorts; SpringHill Suites by Marriott Hotels; and TownePlace Suites by
Marriott Hotels; (ii) other lodging products or concepts, including Marriott
ExecuStay; JW Marriott Residences; Marriott Marquis Residences; and The
Residences at The Ritz-Carlton; (iii) vacation, timesharing, interval or
fractional ownership facilities, including Marriott Vacation Club
International, The Ritz-Carlton Club, and Horizons by Marriott Vacation Club;
and (iv) any other lodging product or concept developed or utilized by
Franchisor or any of its Affiliates in the future. 

          “Frequent
Traveler Program(s)” means the frequent traveler appreciation program(s)
for System Hotels and such other Franchisor Lodging Facilities designated by
Franchisor or its Affiliates designed to increase the market share, length of
stay and frequency of usage of such Franchisor Lodging Facilities, and/or any
similar, complementary, or successor program. As of the Effective Date, such
programs include “Marriott Rewards.” 

          “Gross
Revenues” means gross revenues and receipts of every kind (without netting
for charge backs, credit card service charges, or uncollectible amounts), from
all parts of and in connection with the 

4

Hotel, including revenues from leases, rentals, memberships,
concessions, service charges, fees, sales, Gross Room Sales and revenues and
receipts from all other operations, but not including any: (a) tips, service
charges, or gratuities to Hotel employees to the extent actually received by
the Hotel employees; (b) proceeds from the sale of the Hotel’s FF&E; (c)
proceeds from insurance policies, other than business interruption, loss of
income or other similar insurance for the Hotel; or (d) any sales tax, value
added tax, or similar taxes. 

          “Gross
Room Sales” means: (i) gross sales and receipts of every kind that accrue
from the rental of Guestrooms (without netting for charge backs, credit card
service charges, or uncollectible amounts), including no-show revenue, early
departure fees, late check-out fees and other revenues allocable to rooms
revenue pursuant to the Uniform System, but not including any sales tax, value
added tax, or similar taxes; (ii) resort fees and mandatory surcharges for
facilities (although inclusion of such fees or surcharges does not constitute
approval by Franchisor of such fees and surcharges, which may be limited or
prohibited by Franchisor); (iii) attrition or cancellation fees that are
collected from groups that cancel or do not fulfill their guaranteed number of
reservations for Guestrooms; and (iv) the amount of all lost revenues and
receipts due to the non-availability of Guestrooms, upon which business
interruption, loss of income, or other similar insurance proceeds are
calculated. 

          “Guarantor”
means individually and collectively the Person(s) who guarantee(s) the
performance of Franchisee’s obligations under this Agreement and the other
Marriott Agreements under the Guaranty. 

          “Guaranty”
means a guaranty executed and delivered by Guarantor for the benefit of
Franchisor, the current form of which is set forth in the Franchise Disclosure
Document. 

          “Guest
Profile Data” means personal guest profiles and information regarding guest
preferences, including any information derived from or contained in any
Frequent Traveler Program. 

          “Guestroom”
means each rentable unit in the Hotel consisting of a room, suite or suite of
rooms generally used for overnight guest accommodation, entrance to which is
controlled by the same key; provided that adjacent rooms with connecting doors
that can be locked and rented as separate units are considered separate
Guestrooms. 

          “Hardware”
means all computer hardware and other equipment (including all future upgrades,
enhancements, additions, substitutions, and other modifications thereof)
required for the operation of and connection to any Electronic System. 

          “Hotel”
means the hotel and all land used in connection with the hotel located or to be
located at the Approved Location, including: (i) the freehold or long-term
leasehold title to the Approved Location; (ii) all improvements, structures,
facilities, entry and exit rights, parking, pools, landscaping, and other appurtenances
(including the hotel building, Public Facilities, and all operating systems)
located at the Approved Location; and (iii) all FF&E, Fixed Asset Supplies,
and Inventories installed or located in such improvements at the Approved
Location. 

          “Hotel
Purchase Transaction” has the meaning stated in the Recitals. 

          “Initial
Accounting Period” has the meaning stated in Section 3.11. 

          “Intellectual
Property” means all of the following items, regardless of the form or
medium involved (e.g., paper, electronic, tape, tangible or intangible): (i)
all Software, including the data and information processed or stored by such
Software; (ii) all Proprietary Marks; (iii) all Confidential Information; and
(iv) all other information, materials, and copyrightable or patentable subject
matter 

5

owned, developed, acquired, licensed, or used by Franchisor or any of
its Affiliates in connection with the System. 

          “Interestholders”
means, with respect to any Person, any Person that directly or indirectly holds
an Ownership Interest in that Person. 

          “Interest
Rate” means the lesser of eighteen percent (18%) per annum or the maximum
interest rate permitted by law. 

          “Inventories”
means “Inventories” as defined in the Uniform System, including: (i) provisions
in storerooms, refrigerators, pantries, and kitchens; (ii) beverages in wine
cellars and bars; (iii) other merchandise intended for sale; (iv) fuel; (v)
mechanical supplies; (vi) stationery; and (vii) other expensed supplies and
similar items. 

          “Inventory
Management” means those inventory management services made available by
Franchisor to Franchisee under optional revenue management consulting
arrangements. 

          “Local
Advertising Programs” means local advertising, marketing, promotional,
sales and public relations programs and activities for the Hotel, and Marketing
Materials used in connection therewith. 

           “Management
Company” has the meaning stated in Section 9.4.A. 

          “Management
Company Acknowledgment” means an acknowledgment signed by the Management
Company, Franchisee and Franchisor, the current form of which is set forth in
the Franchise Disclosure Document. 

          “Marketing
Fund Activities” means: (i) the creation, production, and administration of
Marketing Materials; (ii) the placement of Marketing Materials in magazines,
newspapers, and similar printed, digital or electronic media or social media
sites; (iii) the purchase of advertising on radio, television, the Internet,
and other electronic or digital media; (iv) advertising, marketing,
promotional, public relations, revenue management, reservations activities and
sales campaigns, programs, seminars and other activities designed to increase
sales or public awareness of the System, including publication and distribution
of directories (whether offline or online), pamphlets and other forms of
advertising media; (v) market research and oversight and management of the
guest satisfaction program and Frequent Traveler Programs; and (vi) the
retention or employment of personnel, advertising agencies, marketing
consultants, and other professionals or specialists to assist in the
development and implementation of any of the foregoing. 

          “Marketing
Fund Charge” has the meaning stated in Section 3.3.A. 

          “Marketing
Funds” means monies collected and used by Franchisor and its Affiliates for
Marketing Fund Activities. 

          “Marketing
Materials” means all advertising, marketing, promotional, sales and public
relations concepts, press releases, materials, copy, concepts, plans, programs,
brochures, or other information to be released to the public, whether in paper,
digital, electronic or computerized form, or in any form of media now or
hereafter developed. 

          “Marriott
Agreement(s)” means, collectively, this Agreement, any other agreements
executed in connection with this Agreement, and any other agreement related to
the Hotel to which Franchisee, 

6

Guarantor or any of their respective Affiliates is a party and to which
Franchisor or its Affiliates is also a party or beneficiary, as any may be
amended, modified, supplemented, or restated. 

          “Opening
Date” has the meaning stated in the Recitals. 

          “Other
Mark(s)” means any trademark, trade name, symbol, slogan, design, insignia,
emblem, device, or service mark that is not a Proprietary Mark. 

          “Ownership
Interest” means all forms of ownership of legal entities or property, both
legal and beneficial, voting and non-voting, including stock interests,
partnership interests, limited liability company interests, joint tenancy
interests, leasehold interests, proprietorship interests, trust beneficiary
interests, proxy interests, power-of-attorney interests, and all options,
warrants, and any other forms of interest evidencing ownership or Control. 

          “Passive
Investor Interests” has the meaning stated in Section 17.3. 

          “Person”
means an individual, a partnership, a corporation, a limited liability company,
a government, or any department or agency thereof, a trustee, a trust, an
unincorporated organization, or any other entity of any kind. 

          “PIP”
has the meaning stated in Section 17.2.A(1)(d). 

          “Property
System” means all property systems (including all Software, Hardware and
electronic access related thereto) designated by Franchisor for use by System
Hotels in the front office, back-of-the-house, or other operations of System
Hotels. 

          “Property
System Fee” means the fee Franchisee must pay as required by Franchisor
representing the Hotel’s share of the costs and expenses of the Property
System, including development and incremental operating costs, ongoing
maintenance, field support costs, and a reasonable return on capital. 

          “Proprietary
Marks” means any trademarks, trade names, trade dress, words, symbols,
logos, slogans, designs, insignia, emblems, devices, service marks, and indicia
of origin (including restaurant names, lounge names, or other outlet names), or
combinations thereof, that are registered by Franchisor or any of its
Affiliates, or are used to identify or are otherwise associated by virtue of
usage with System Hotels, all as may be changed, deleted, added to or otherwise
modified by Franchisor or its Affiliates in their sole discretion. The term
applies whether the Proprietary Marks are owned currently by Franchisor or any
of its Affiliates, or are later developed or acquired, and whether or not they
are registered in any state, foreign country or in the United States Patent and
Trademark Office. 

          “Prospectus”
means any registration statement, solicitation, prospectus (preliminary or
otherwise), memorandum, offering document, or similar documentation for the
sale or transfer of an Ownership Interest, including any related amendments. 

          “Public
Facilities” means any meeting rooms, conference rooms, convention or
banquet facilities, restaurants, bars, lounges, and all other similar public
facilities. 

          “Purchase
Agreement” has the meaning stated in the Recitals. 

7

          “Quality
Assurance Program” means the quality assurance program that Franchisor uses
to monitor guest satisfaction and the operations, facilities and services at
System Hotels. 

          “Reasonable
Business Judgment” has the meaning stated in Section 23.1. 

          “Renovation
Drawings” has the meaning stated in Section 6.2.A. 

          “Reservation
System” means any reservation system designated by Franchisor for System
Hotels (including all Software, Hardware and electronic access related
thereto). 

          “Reservation
System Fee” means the fee Franchisee must pay to Franchisor representing
the Hotel’s share of the costs and expenses of the Reservation System,
including development and incremental operating costs, ongoing maintenance,
field support costs, and a reasonable return on capital. 

          “Reserve”
means the reserve account established by Franchisee meeting the requirements of
Section 11.2.A. 

          “Restricted
Territory” has the meaning stated in Section 2.3. 

          “Sales
Agent” means Franchisor acting on behalf of Franchisee for purposes of (i)
Inventory Management, (ii) booking reservations at the Hotel or other booking
activities, including accessing the Reservation System, or (iii) sales
activities, including arranging group sales. Where Franchisor is Sales Agent
for Franchisee, Franchisee consigns hotel inventory to Franchisor and retains
all risk of loss of unsold or cheaply sold inventory. 

          “Soft
Goods” means textile, fabric and vinyl and similar products used in
finishing and decorating the Hotel, its Guestrooms, corridors and Public
Facilities, such as vinyl wall and floor coverings, drapes, sheers, cornice
coverings, carpeting, bedspreads, lamps, lamp shades, artwork, task chairs,
upholstery and all other unspecified items of the same class. 

          “Software”
means all computer software and accompanying documentation (including all
future enhancements, upgrades, additions, substitutions, and other
modifications) provided to Franchisee by or through Franchisor and/or third
parties designated by Franchisor or its Affiliates required for the operation
of and connection to any Electronic System. 

          “Special
Circumstances” has the meaning stated in Section 19.3.B. 

          “Special
Circumstances Liquidated Damages” has the meaning stated in Section 19.3.B.

          “Specially
Designated National or Blocked Person” means: (i) a Person designated by
the U.S. Department of Treasury’s Office of Foreign Assets Control from time to
time as a “specially designated national or blocked person” or similar status;
(ii) a Person described in Section 1 of U.S. Executive Order 13224, issued on
September 23, 2001; or (iii) a Person otherwise identified by government or
legal authority as a Person with whom Franchisor, or any of its Affiliates, are
prohibited from transacting business. 

          “Special
Marketing Programs” means, as further described in Section 7.4,
advertising, marketing, promotional, public relations, and sales programs and
activities that are not designated by Franchisor as Marketing Fund Activities. 

8

          “Standards”
means Franchisor’s operating rules, manuals, standard operating procedures and
other procedures, systems, guides, programs (including the Quality Assurance
Program), requirements, directives, standards, specifications, design criteria,
and such other information, initiatives and controls that are necessary for
planning, designing, constructing, renovating, refurbishing, and operating
System Hotels (including the Design Criteria), as such may be modified, amended
or supplemented by Franchisor or its Affiliates in accordance with Section 12.2
(and which may, with Franchisor’s prior approval, take into account specific
characteristics and conditions of the local market). The Standards may be in
paper or in electronic form. 

          “System”
means the Standards, Intellectual Property and other distinctive,
distinguishing elements or characteristics that Franchisor or its Affiliates
have developed, designated or authorized for the operation of System Hotels as
such may be modified, amended or supplemented by Franchisor or its Affiliates
in accordance with Section 12.2 including: the Reservation System, the Property
System, the Yield Management System, the Electronic Systems, the Software, the
Frequent Traveler Program(s), the Marketing Fund Activities, Special Marketing
Programs, Training Programs, and other advertising programs and training. 

          “System
Hotel” means a limited-service hotel operated by Franchisor, an Affiliate
of Franchisor, or a franchisee or licensee of Franchisor or its Affiliates
under the trade name Fairfield Inn by Marriott or Fairfield Inn & Suites by
Marriott in any of the fifty (50) states of the United States of America, the
District of Columbia or Canada, and does not include any other Franchisor
Lodging Facility or other business operation. 

          “Taxes”
means all taxes (including any sales, gross receipts, value-added or goods and
services taxes), levies, charges, impositions, stamp or other duties, fees,
deductions, withholdings or other payments levied or assessed by any competent
governmental authority, including by any federal, national, state, provincial,
local, or other tax authority. 

          “Technology
Fund” has the meaning stated in Section 7.3.E. 

          “Term”
has the meaning stated in Section 4.1. 

          “Term
Expiration Date” has the meaning stated in Section 21.2. 

          “Termination
Agreement” has the meaning stated in the Recitals. 

          “Transfer”
means any sale, conveyance, assignment, exchange, pledge, encumbrance, lease or
other transfer or disposition, directly or indirectly, voluntarily or
involuntarily, absolutely or conditionally, by operation of law or otherwise. 

          “Transfer
Fee” has the meaning stated in Section 17.2.A(1)(c). 

          “Travel
Expenses” means all travel, food and lodging, living, and other
out-of-pocket costs and expenses. 

          “Uniform
System” means the Uniform System of Accounts for the Lodging Industry,
Tenth Revised Edition, 2006, as published by the Educational Institute of the
American Hotel & Lodging Association, or any later edition, revision or
replacement that Franchisor approves or designates. 

9

          “Yield
Management System” means any yield management system (including all
Software, Hardware and electronic access related thereto) designated or
required by Franchisor for use by System Hotels. The Yield Management System
may be part of the Property System. 

          “Yield
Management System Fee” means the fee Franchisee must pay to Franchisor
representing the Hotel’s share of costs and expenses of the Yield Management
System, including development and incremental operating costs, ongoing
maintenance, field support costs, and a reasonable return on capital. 

2. LICENSE 

          2.1 Limited
Grant. 

                    Upon
the terms of this Agreement, Franchisor hereby grants to Franchisee a limited,
non-exclusive license to use the Proprietary Marks and the System and the right
to operate the Hotel as a Fairfield Inn & Suites by Marriott System Hotel
solely at the Approved Location. Franchisee agrees to identify and operate the
Hotel as a Fairfield Inn & Suites by Marriott System Hotel in accordance
with the System and this Agreement only as and when authorized by Franchisor. 

          2.2 Franchisor’s
Reserved Rights. 

                    A.
Franchisee agrees that except as set forth below at Section 2.3: (i) Franchisor
and its Affiliates retain the right, at any location other than the Approved
Location, to develop, promote, construct, own, lease, acquire and/or operate,
or authorize or otherwise license or franchise to other Persons the right to
develop, promote, construct, own, lease, acquire and/or operate Franchisor Lodging
Facilities (including other System Hotels) and other business operations; and
(ii) Franchisor or its Affiliates may exercise such right without notice to
Franchisee. Franchisee covenants that it will not do anything that may
interfere with the exercise of such right by Franchisor or any of its
Affiliates. 

                    B.
Nothing in this Agreement will prevent Franchisor from allowing other
Franchisor Lodging Facilities operated or franchised by Franchisor or its
Affiliates to use various components of the System, including the Reservation
System. Franchisor and its Affiliates also have the right to enter into
affiliation agreements with other lodging facilities to permit Frequent
Traveler Program members (or members of similar guest recognition programs) to
redeem awards for stays at such lodging facilities. 

          2.3 Territory.

                    Neither
Franchisor nor its Affiliates will open to the public for business or authorize
any other Person to open to the public for business a System Hotel for a period
of three (3) years after the Opening Date of the Hotel, but not to extend
beyond January 1, 2014, within a three (3) mile radius measured from the front
door of the Hotel (“Restricted Territory”). The Restricted Territory is the highlighted
bordered area as approximately set forth on the map attached hereto at Exhibit
C. Should a conflict exist between the map and the narrative description stated
above, the narrative will control. The restrictions set forth in this Section
2.3 will not apply to (i) any System Hotel existing or under development as of
the Effective Date within the Restricted Territory; (ii) any hotel or hotels
that are members of a chain of hotels (provided that such chain has a minimum
of four (4) or more hotels in operation), all or substantially all (but in no
event less than three (3) hotels) of which is acquired by, or merged with, or
franchised by or joined through marketing agreement with, Franchisor or one of
its Affiliates (or the operation of which is transferred to Franchisor or one
of its Affiliates); (iii) any hotel or hotels that are members of a group of
hotels that is (in a single transaction, or combination of related
transactions, with a single seller or transferor) acquired by, or merged with,
or franchised by or joined 

10

through marketing agreement with, Franchisor or one of its Affiliates,
or the operation of which is transferred to Franchisor or one of its
Affiliates, provided that such group of hotels contains no fewer than three (3)
hotels; (iv) any other Franchisor Lodging Facility that is not included within
the System; or (v) if any existing hotel described in (i) above ceases to
operate as a System Hotel, then for each such hotel (if any), an additional
hotel that may operate as a System Hotel. 

3. FEES

          3.1 Application
Fee. 

                    Before
the execution of this Agreement, Franchisee has paid to Franchisor an
application fee in the amount of Fifty Thousand Dollars ($50,000), whichever is
greater (“Application Fee”) in consideration of Franchisor’s investigation,
review and approval process and other administrative functions and undertakings
in connection with this Agreement. The Application Fee was earned by Franchisor
upon Franchisor’s conditional approval of Franchisee’s application and is
non-refundable. 

          3.2
Franchise Fees.  

                    Franchisee
must pay to Franchisor an amount equal to four and one-half percent (4.5%) of
Gross Room Sales during each Accounting Period (the “Franchise Fees”). Franchisee
must not discount or sacrifice Gross Room Sales (by methods including the
offering of complimentary or reduced-price rooms) in order to further any other
business at or outside of the Hotel. Gross Room Sales must be accounted for on
an accrual basis. 

          3.3
Marketing Fund Charges; Special Marketing Program Fees.  

                    A.
Franchisee must pay to Franchisor a fee (the “Marketing Fund Charge”), as the
Hotel’s contribution for Marketing Fund Activities. The Marketing Fund Charge
is currently two and one-half percent (2.5%) of Gross Room Sales for the
preceding Accounting Period. All sums Franchisor receives under this Section
3.3.A will be used as described in Section 7.3. Franchisor may modify the
Marketing Fund Charge for hotels in the System, including the Hotel, to reflect
the following, as determined by Franchisor: (i) any increase or decrease in the
cost of providing, or the scope of, Marketing Fund Activities; (ii) any change
in the method used to allocate the cost of Marketing Fund Activities; or (iii)
any change in the competitive needs of the System. Franchisee agrees to be
bound by any such increase or decrease; provided the total Marketing Fund
Charge in any fiscal year will not exceed three and one-half percent (3.5%) of
Gross Room Sales. System Hotels operated by Franchisor will make contributions
for Marketing Fund Activities at the same percentage of Gross Room Sales
required of franchisees within the System. 

                    B.
Franchisee must pay to Franchisor the Hotel’s share, as determined by
Franchisor, of the cost of any Special Marketing Program as described in
Section 7.4. 

          3.4 Electronic
Systems Fees. 

                    A.
Franchisee must pay to Franchisor the Electronic Systems Fees for any Electronic
Systems provided to Franchisee for use at the Hotel.

                    B.
Franchisor reserves the right to change the basis of the allocation of any
Electronic Systems Fee to reflect the following, as determined by Franchisor:
(i) any increase or decrease in the costs and expenses of providing the
applicable Electronic System to the Hotel; (ii) any change in the method
Franchisor uses to determine the applicable Electronic Systems Fee payment; or
(iii) any 

11

change in the competitive needs of the System, including the right to
change the basis for charging for such Electronic Systems Fee, so long as the
charges for the Electronic Systems Fees are computed on a fair and consistent
basis among similarly situated System Hotels or Franchisor Lodging Facilities
receiving the services or utilizing the applicable Electronic Systems at the
time such services and Electronic Systems are utilized. 

          3.5 Other
Charges.  

                    Franchisee
must pay to Franchisor or its Affiliates an amount specified by Franchisor to
pay for (i) any training or orientation (including tuition, supplies, and
Travel Expenses) required by Franchisor (including the general manager
conference regardless of whether Franchisee’s personnel attend) or in which Franchisee
elects to participate, (ii) purchasing, staging, programming, installing and
interfacing and upgrading of Hardware and Software for any Electronic Systems,
(iii) any goods or services purchased, leased or licensed by Franchisee from
Franchisor or an Affiliate of Franchisor, and (iv) any optional or mandatory
programs of Franchisor or its Affiliates in which Franchisee participates. 

          3.6 Travel
Expenses and Reimbursement. 

                    Franchisee
must pay to Franchisor all Travel Expenses for: (i) individuals designated by
Franchisor to provide training or services under this Agreement; and (ii)
Franchisor’s and its Affiliates’ corporate and regional representatives
visiting the Hotel on specific Hotel business. In addition to such Travel
Expenses, Franchisee must reimburse Franchisor, or such other Person designated
by Franchisor, for the salary and other compensation of any individuals
providing services to the Hotel, including training. 

          3.7 Marriott
Agreement Payments. 

                    Franchisee
must pay any other amounts due to Franchisor or its Affiliates under any
Marriott Agreement or other agreement or debt instrument between Franchisee and
Franchisor or its Affiliates. 

          3.8 Making
of Payments and Performance of Services. 

                    All
payments required by Sections 3.2 and 3.3 will be made for each Accounting
Period within fifteen (15) days after the end of each Accounting Period. All
other payments required by this Agreement will be made pursuant to the timing
set forth in the invoice forwarded to Franchisee, which will not be less than
ten (10) days after Franchisor issues such invoice. Payments due to Franchisor
or its Affiliates will be paid by wire transfer of immediately available funds
or such other method as Franchisor approves to the accounts designated by
Franchisor. Franchisor has the right to have any service or obligation of
Franchisor under this Agreement be performed by an Affiliate of Franchisor and
Franchisee agrees to accept performance by such Affiliate. Franchisor also has
the right to designate that payment be made to one of its Affiliates instead of
Franchisor, and Franchisee must make such payments as designated. 

          3.9 Interest
on Late Payments. 

                    If
any payment by Franchisee to Franchisor under this Agreement is not received on
or before its due date, such payment will be deemed overdue, and Franchisee
must pay to Franchisor, in addition to the overdue amount, interest on such
overdue amount which will accrue at a rate per annum equal to the Interest Rate
from the date such overdue amount was due until paid. Franchisor’s entitlement
to interest will be in addition to any other remedies Franchisor may have. 

12

          3.10 Taxes.

                    A.
Franchisee must promptly pay when due all Taxes levied or assessed by any Tax
authority relating to the Hotel, Franchisee, this Agreement, any other Marriott
Agreement or in connection with operating the Hotel. 

                    B.
Franchisee is responsible for payment of all Taxes, if any, levied on or
deducted from any amounts payable to Franchisor or its Affiliates under this
Agreement or any of the other Marriott Agreements. The amount of such Taxes
must be paid by Franchisee to Franchisor or such Affiliate together with the
payment to which it relates or as otherwise required by Applicable Law so that
the amount actually received by Franchisor or such Affiliate in respect of such
payment (after payment of such Taxes) equals the full amount stated to be
payable in respect of such payment. To the extent any Applicable Law requires
or allows any such deduction, payment or withholding to be paid by Franchisee
directly to a governmental authority Franchisee must account for and pay such
amounts promptly and provide to Franchisor receipts or other proof of such
payment promptly upon receipt. 

                    C.
If there is a bona fide Dispute by Franchisee as to liability for Taxes,
Franchisee may contest the validity of the amount of the Tax in accordance with
Applicable Law, provided that Franchisee will not permit a Tax sale or seizure
by levy of execution or similar writ or warrant, or attachment by creditor, to
occur against any part of the Hotel. If such Dispute involves payments of Taxes
that must be withheld, deducted, and paid by Franchisee related to payments to
Franchisor as described in Sections 3.10.A and 3.10.B, Franchisee must pay such
Taxes and submit to the withholding authority for reimbursement in connection
with such Dispute, and Franchisee will be responsible for any interest or
penalties assessed in connection with any delayed or non-payment. 

4. TERM

          4.1 Term.

                    The
term of this Agreement begins on the Effective Date and terminates on the
twentieth (20th) anniversary of the Opening Date (the “Term”). 

          4.2 Not
Renewable. 

                    This
Agreement and the rights granted by this Agreement are not renewable and
Franchisee has no expectation of any right to extend the Term. 

5. SIZE, FINANCING, CONSTRUCTION, AND
RENOVATION

          5.1 Size.

                    A.
The Hotel will consist of the number of Guestrooms stated in Exhibit A or such
other number approved by Franchisor. 

                    B.
Franchisee may expand the Hotel or construct additional Guestrooms at the
Hotel, but only with Franchisor’s prior approval and only in compliance with
Section 6. If Franchisor approves the proposed addition, Franchisee must pay
Franchisor, within fifteen (15) days after receiving notice of approval, a fee
equal to the per-room charge used in calculating the application fee for newly
developed System Hotels, as specified in the Franchise Disclosure Document,
multiplied by the number of such additional Guestrooms. 

13

          5.2 Financing
of the Hotel. 

                    Franchisee
will not, and will cause each Interestholder in Franchisee to not, incur or
replace any indebtedness that is secured by a lien on or mortgage of the Hotel
or pledge of Ownership Interests in Franchisee (whether such indebtedness is
incurred (i) individually on behalf of the Hotel or (ii) on a pooled basis with
other hotels or legal entities (a “Financed Pool”)) unless the following
conditions are met at the time the indebtedness is incurred or replaced: (1)
the terms of such indebtedness are commercially reasonable; (2) the debt
coverage ratio is equal to or greater than 1.3; and (3) the lender is not a
Competitor or an Affiliate of a Competitor. The condition set forth in clause
(2) of the immediately preceding sentence will not apply to indebtedness
incurred prior to the third anniversary of the Opening Date to finance the
construction of the Hotel (or the conversion of such construction financing to
permanent financing, if such permanent financing is obtained at the same
closing as the construction financing). The debt coverage ratio as of any
calculation date is the ratio of: (a) cash available for the payment of debt
service (interest and principal) for the Hotel (or hotels, including the Hotel,
that are part of the Financed Pool) from Gross Revenues (after deduction for
any management fee or reserve required under this Agreement, any management
agreement or under the terms of any financing) of the Hotel (or hotels,
including the Hotel, that are part of the Financed Pool) for the twelve (12)
months immediately preceding such calculation date, to (b) the greater of (x)
the actual contractual amount of debt service payments required to be made
during the twelve (12) month period after the calculation date for the Hotel
(or hotels, including the Hotel, that are part of the Financed Pool) or (y) the
amount of the debt service payments that would be required to be made during
the twelve (12) month period after the calculation date for the Hotel (or
hotels, including the Hotel, that are part of the Financed Pool) assuming the
indebtedness bears interest at an interest rate of 7.5% and has a 20-year
mortgage-style principal amortization. Franchisee will give notice to
Franchisor of the component hotels and legal entities in a Financed Pool before
incurring such indebtedness. 

          5.3 Construction/Conversion/Renovation
of the Hotel. 

                    Franchisee,
at its expense, must start and complete in a timely fashion and to Franchisor’s
satisfaction the construction, conversion or renovation, as the case may be, of
the Hotel in accordance with (i) Exhibit B and (ii) the Standards. 

6. SOURCING AND DESIGN APPROVALS

          6.1 Furniture,
Fixtures, Equipment, Supplies, and Signage. 

                    A.
Franchisee will use only such signs, FF&E, Inventories and Fixed Asset
Supplies that conform to the Standards and are purchased from a supplier or
manufacturer designated as “approved” by Franchisor (or as approved in
accordance with Section 6.1.B). Franchisor may designate approved suppliers,
including Franchisor or any of its Affiliates, as the only approved supplier
for certain items. Before seeking approval from Franchisor to purchase FF&E
to be used in constructing or renovating the Hotel Guestrooms, Franchisee will
prepare models of the basic types of rooms (double/double, king and/or single),
furnish the same with the proposed FF&E, and provide Franchisor an
opportunity to inspect the model rooms to determine whether such proposed
FF&E satisfies the Standards. Before seeking approval from Franchisor to
purchase FF&E to be used in constructing or renovating the Public
Facilities, Franchisee will prepare detailed drawings of the layout of the
Public Facilities and “color boards” with samples and specifications for Public
Facilities FF&E, and provide Franchisor an opportunity to review and
inspect the same to determine whether such proposed FF&E satisfies the
Standards. 

14

                    B.
The requirements of this Section 6.1 are to insure that items used at System
Hotels will be uniform and of high quality to maintain the identity, integrity
and reputation of the System. If Franchisee proposes to purchase or lease any
signs, FF&E, Inventories, Fixed Asset Supplies or other items not previously
approved by Franchisor as meeting the Standards, or from a supplier or
manufacturer that Franchisor has not previously approved, Franchisee and such
supplier or manufacturer will submit to Franchisor, at no cost to Franchisor,
sufficient specifications and other information and samples for Franchisor to
determine whether such items meet the Standards. Franchisor may require payment
of an amount not to exceed the cost of such inspection, and Franchisor will not
be liable for damage to any sample. Franchisor may require such supplier or
manufacturer to demonstrate to Franchisor’s satisfaction that such supplier
and/or manufacturer: (i) can manufacture such products to specifications that
meet the Standards; (ii) can deliver them in a timely manner and in sufficient
quantities to meet the needs of the Hotel; and (iii) has insurance protecting
Franchisor and its Affiliates against any relevant claims. If the proposed
arrangement involves the supplying or manufacturing of products utilizing
Franchisor’s Intellectual Property, Franchisor may also require the supplier or
manufacturer to: (a) enter into a written agreement with Franchisor concerning
the use of Franchisor’s Intellectual Property on terms acceptable to
Franchisor; and (b) demonstrate to Franchisor’s satisfaction that it can comply
with the terms of such agreement. Franchisor may revoke its approval as to
future purchases if the supplier or manufacturer at any time after such
approval fails to meet the requirements of this Section 6.1 or the Standards. 

          6.2 Design
Approval. 

                    A.
If Franchisee elects or is required by this Agreement (including, under Section
11.1) to perform construction work or renovations or refurbishment of the Hotel
affecting the design, character, or appearance of the Hotel, Franchisee will
obtain the prior approval of Franchisor that any such construction work or
significant renovations or refurbishment complies with the Standards and the
requirements set forth in this Section 6. Before commencing such construction,
renovation or refurbishment, Franchisee will engage a qualified registered
architect, interior designer, and other qualified consultants and cause them
to: (i) adapt the Design Criteria to the Approved Location and to Applicable
Law, including the Americans with Disabilities Act and/or other similar state
laws, codes, and/or regulations governing public accommodations for persons
with disabilities, (ii) prepare complete construction documents, including a
site plan and architectural, mechanical, electrical, civil engineering,
landscaping and interior design drawings and specifications, and material
samples, in each case, based on the Design Criteria (collectively, the
“Renovation Drawings”), and (iii) submit the Renovation Drawings to Franchisor to
review for compliance with the Design Criteria at least sixty (60) days prior
to commencing such construction, renovation or refurbishment. Franchisee will
not deviate from the Design Criteria in the Renovation Drawings; provided if,
due to unique circumstances disclosed to Franchisor prior to the date the
Renovation Drawings are submitted to Franchisor, it is necessary to deviate
from the Design Criteria, all deviations from the Design Criteria, including
those that are necessary to adapt the Design Criteria to the Approved Location,
must be clearly designated in a separate document and submitted to Franchisor
along with the Renovation Drawings. Based on the complexity of the design or
the Renovation Drawings, or the amount or type of services requested or needed
Franchisor may charge Franchisee an amount equal to One Hundred Thirty Dollars
($130) per hour for the additional time spent reviewing the Renovation Drawings
and inspecting the Hotel, in addition to Travel Expenses of personnel that
inspect the Hotel. 

                    B.
If requested by Franchisor, Franchisee will provide to Franchisor the name,
address, and relevant work experience on similar projects for any architect,
engineer, design firm or general contractor that Franchisee wishes to retain,
and Franchisor will have thirty (30) days after receipt of such information to
notify Franchisee of its election to consent or withhold its consent.
Franchisor’s election to consent or withhold its consent will be based on prior
experiences of Franchisor and its Affiliates with such Person, such Person’s
general business reputation, and such Person’s relevant work 

15

experience on similar projects. If Franchisor does not respond to
Franchisee within thirty (30) days after Franchisor’s receipt of such
information, then Franchisee may retain such Person. Neither Franchisor’s
failure to respond within the required time period nor Franchisor’s consent to
Franchisee’s use of such Person will be deemed an endorsement or recommendation
by Franchisor of any such Person. Franchisee acknowledges and agrees that
Franchisor is not liable for the unsatisfactory performance of any Person
retained by Franchisee. 

                    C.
Franchisor will promptly review the Renovation Drawings for compliance with the
Design Criteria. If Franchisor determines that the Renovation Drawings do not
comply with the Design Criteria, Franchisor will provide recommended changes to
Franchisee that Franchisee will incorporate into the Renovation Drawings and
resubmit to Franchisor for its review. Each party will act speedily and in good
faith in the preparation, submission, review and revision of the Renovation
Drawings. Franchisee will not begin the construction, renovation or
refurbishment until Franchisor notifies Franchisee that the Renovation Drawings
comply with the Design Criteria. As soon as reasonably possible after
Franchisor notifies Franchisee that the Renovation Drawings comply with the
Design Criteria, Franchisee will submit to Franchisor two (2) sets of the final
Renovation Drawings. 

                    D.
Once finalized, the Renovation Drawings will not be changed, including changes
required by governmental authorities, without the prior written consent of
Franchisor. 

                    E.
Franchisee agrees that Franchisee, and not Franchisor or its Affiliates, is
responsible for: (i) ensuring that any design, construction documents,
specifications, and any construction, renovation, or refurbishment complies
with any Applicable Law, including any requirements relating to disabled
persons; (ii) any errors or omissions; or (iii) discrepancies (of any nature)
in any drawings or specifications. Franchisee further acknowledges and agrees
that: (a) Franchisor’s review of the Renovation Drawings is limited solely to
determining whether the Renovation Drawings comply with the Design Criteria;
and (b) Franchisor will have no liability or obligation with respect to
renovation, upgrading or furnishing of the Hotel. Except for Franchisee’s own
uses related to its construction or operation of the Hotel, Franchisee will not
reproduce, use or permit the use of any of the design concepts, drawings, or
Standards. 

7. LOCAL ADVERTISING AND MARKETING,
PRICING, AND MARKETING FUND ACTIVITIES

          7.1 Franchisee’s
Local Advertising and Marketing Programs and Press Releases. 

                    A.
Franchisee will undertake Local Advertising Programs that will be (i) at
Franchisee’s expense, (ii) conducted to the extent that Franchisee deems
necessary, and (iii) in accordance with the Standards. 

                    B.
Franchisee will prominently use and display in, upon and in connection with the
Hotel: (i) signs and other Marketing Materials and the Proprietary Marks only
in the combination, arrangement, and manner approved or required by Franchisor
and in accordance with the Standards; and (ii) such other trade names,
trademarks, logos, and designs as may be provided, approved, or required by
Franchisor. All signs and Marketing Materials must comply with Applicable Law.
Franchisee must not display in or on the Hotel premises or elsewhere, any sign
or Marketing Materials of any kind that does not comply with the Standards or
that Franchisor has not approved or to which Franchisor objects. Franchisee
must submit samples of Marketing Materials not provided by Franchisor or its
Affiliates and obtain prior approval from Franchisor before any public use of
such Marketing Materials. If Franchisor, subsequent to its approval of
Marketing Materials or Local Advertising Programs, withdraws its approval,
Franchisee must immediately cease the use, distribution, and dissemination
thereof. Any Marketing 

16

Materials developed by Franchisee may be used by other Franchisor
Lodging Facilities without compensation to Franchisee. 

          7.2 Reservations,
Pricing, and Rates. 

                    A.
Franchisee must provide its prices and rates for use in the Reservation System
as requested by Franchisor or in accordance with the Standards. Franchisee
must: (i) honor any prices, rates, or discounts that appear in the Reservation
System, or any other publication, system, program, or promotion (written or
electronic); (ii) honor all reservations made through the Reservation System or
that are otherwise confirmed; and (iii) not charge any Hotel guest a rate higher
than the rate specified at the time that the Hotel guest’s reservation was
made, according to the records of the Reservation System or, if not made
through the Reservation System, the record of the reservation. Franchisee will
also honor all other contracts or pricing and terms for meeting rooms or any
other activity or service at or in connection with the Hotel. 

                    B.
Franchisee is responsible for setting its own prices and rates for Guestrooms
and other products and services at the Hotel and determining any prices or
rates that appear in the Reservation System or any other publication or system
(written or electronic) that lists any prices or rates for the Hotel.
Franchisor, however, may: (i) prohibit certain types of charges or billing
practices that Franchisor determines are misleading or otherwise detrimental to
the System, including price-gouging or incremental fees for services that
guests would normally expect to be included in the room charge; (ii) require
that Franchisee price consistently in various distribution channels; or (iii)
impose other pricing requirements permitted or required by Applicable Law. 

                    C.
Franchisor may recommend or suggest prices or rates for the products and
services offered by Franchisee or require participation in various sales or
revenue management programs or promotions offered by Franchisor and its
Affiliates. Franchisor’s recommendations or suggestions concerning prices or
rates are not mandatory; Franchisee is ultimately responsible for determining
the prices or rates at which it offers its products and services, and
Franchisor’s recommendations or suggestions are not a representation or
warranty by Franchisor that the use of such suggested or recommended prices or
rates will produce, increase, or optimize Franchisee’s profits and Franchisor
will not be liable for any such recommendations or suggestions. This provision
expressly includes any prices or rates for any bookings made by or for
Franchisee in connection with any sales activity or program of Franchisor or
its Affiliates in which Franchisee participates. 

                    D.
Franchisor may provide Inventory Management or sales services at the request
of, and as Sales Agent for, Franchisee. Franchisor does not represent or
warrant that Inventory Management or sales determinations made by Franchisor
will produce, increase, or optimize Franchisee’s profits, and Franchisor will
not be liable for any such determinations. This provision expressly includes
any prices, rates or bookings affected by any Inventory Management or sales
services provided by Franchisor or its Affiliates to Franchisee. 

          7.3 Marketing
Fund Activities. 

                    A.
Franchisor and its Affiliates and any of their designees will direct the
Marketing Fund Activities, including the placement and allocation thereof. Upon
the request of Franchisee, Franchisor will provide to Franchisee an unaudited
accounting of the uses of Marketing Funds in any fiscal year of Franchisor if
such request is made no earlier than ninety (90) days and no later than one
hundred and eighty (180) days after the end of such fiscal year. Marketing Fund
Activities are intended to promote general public recognition and acceptance of
the Proprietary Marks and use of System Hotels, and Franchisor and its
Affiliates, and their designees, are not obligated to make expenditures for the
Hotel 

17

on a basis equivalent or proportionate to the Hotel’s Marketing Fund
Charges or to ensure that any particular System Hotel benefits directly or
proportionately from Marketing Fund Activities or expenditures. Marketing Fund
Activities may not necessarily include all of the System Hotels and some
Marketing Fund Activities may benefit or include other Franchisor Lodging
Facilities in addition to System Hotels.

                    B.
Franchisor reserves the right to: (i) modify or reconstitute the local,
regional, national or international scope of the Marketing Fund Activities; and
(ii) terminate the Marketing Fund Activities and establish methods of funding
Marketing Fund Activities other than payment of the Marketing Fund Charge. 

                    C.
Franchisor and its Affiliates do not hold Marketing Funds as a trustee or as a
trust fund, and Franchisor and its Affiliates have no fiduciary duty to
Franchisee with regard to the administration, use, or expenditure of Marketing
Funds. Marketing Funds may be commingled with other money of Franchisor and its
Affiliates and used to pay: (i) all costs associated with developing, preparing,
producing, directing, administering, researching, conducting, and disseminating
Marketing Fund Activities, as well as the administrative costs and overhead
incurred by Franchisor, or any of its Affiliates, with respect to the foregoing
(including the cost of salaries and overhead for Franchisor’s and its
Affiliates’ personnel involved in Marketing Fund Activities); and (ii) the cost
of collecting and accounting for the Marketing Funds. Franchisor or its
Affiliates may (but will not be obligated to) (i) loan money to be used for
Marketing Fund Activities and Franchisor reserves the right to charge interest
at then-current market rates with respect to such loans, and (ii) use Marketing
Funds to repay any such loan plus interest. 

                    D.
When and if Marketing Materials are produced using Marketing Funds, all System
Hotels will receive a portion of such materials in quantities determined by
Franchisor. If Franchisee requests any Marketing Materials in excess of such
portion allocated to Franchisee, Franchisor will require Franchisee to pay for
the costs of such additional Marketing Materials. 

                    E.
Franchisor shall have the right, in its sole discretion, to use up to twenty
percent (20%) of the Marketing Funds to develop and enhance or improve the
computer systems designated by Franchisor for use by the System. Such portion
of the Fund shall be accounted for separately, and it shall be known as the
“Technology Fund”. If implemented, the Technology Fund may be used by
Franchisor to pay any costs or other expenses associated with the acquisition,
design, development, modification, improvement, replacement, installation,
implementation, training efforts and/or ongoing usage, maintenance or support
of and for any Electronic Systems used at or for the benefit of System Hotels.
If Franchisor determines, in its sole discretion, that any such costs or other
expenses shall not be paid from the Technology Fund, then such costs and
expenses shall remain the sole obligation of Franchisee outside the Technology
Fund. 

          7.4 Special
Marketing Programs. 

                    Franchisor
and its Affiliates may establish, coordinate, affiliate with, and require
Franchisee’s participation in Special Marketing Programs. Special Marketing
Programs may vary in duration, apply on a local, regional, national, or
Category basis, or involve clusters or groups of Franchisor Lodging Facilities
utilizing services on a shared basis. Examples of Special Marketing Programs
include cooperative advertising programs, sales and marketing programs,
customer satisfaction programs, travel agency programs, events and Frequent
Traveler Programs. Special Marketing Programs have a cost to Franchisee that is
in addition to the Marketing Fund Charge. If Franchisee participates in a
Special Marketing Program Franchisee will pay for such programs on the same
basis as paid by other 

18

participating System Hotels, as contemplated in Section 3.3.B.
Franchisee may elect to participate in such activities or Franchisor may require
participation. 

8. PROPERTY SYSTEM, RESERVATION SYSTEM,
AND OTHER ELECTRONIC SYSTEMS

          8.1 Systems
Installation. 

                    Franchisee
must, at its expense, purchase or lease, install, maintain, and use at the
Hotel all Electronic Systems in accordance with specifications provided by or
on behalf of Franchisor and may not use such Electronic Systems to process
administrative functions not specifically related to the System. 

          8.2 Reservation
System. 

                    Franchisor
will make the Reservation System available to the Hotel, provided if Franchisee
is in breach of this Agreement and if such breach is not cured within the time
period required for cure of such breach under this Agreement, Franchisor may,
in addition to any other remedies it may have, suspend the Hotel from using the
Reservation System for so long as such breach remains uncured. Franchisee
waives all claims against Franchisor and its Affiliates arising from
Franchisee’s suspension from the Reservation System under this Section 8.2,
other than claims that Franchisee is not in breach of this Agreement.
Franchisee will cause the Hotel to participate in the Reservation System, will
use the Reservation System only for the benefit of the Hotel, and will comply with
all Standards related to participation. 

          8.3 Optional
System(s). 

                    Franchisor
may provide to Franchisee the specifications for the Electronic Systems for
optional systems. If Franchisor makes available optional system(s) and
Franchisee elects to use such system(s), Franchisee must, at its expense,
purchase or lease, install, maintain, and use at the Hotel all Hardware and
Software necessary for the proper and efficient utilization and operation of
such system(s) in accordance with specification provided by or on behalf of
Franchisor and pay any fees associated therewith pursuant to Section 3.4. 

          8.4 System
Communication Costs. 

                    As
part of the Property System, Reservations System, Yield Management System and
other systems, Franchisee will: (i) at its cost and expense, use the
communication system (such as telephone or Internet systems) as specified or
otherwise approved by Franchisor for System Hotels; and (ii) be responsible for
and pay: (a) charges for any communication system (such as telephone or
Internet lines) that connects Franchisee’s equipment to the Property System,
Reservation System, Yield Management System or other systems; (b) the cost of
supplies used in the operation of such equipment; and (c) all other related
expenses. 

          8.5 Electronic
Systems Provided Under License. 

                    The
Electronic Systems will remain the sole property of Franchisor or any third
party vendors, as applicable. Franchisee will at all times treat the Electronic
Systems as confidential. As a condition to using the Electronic Systems,
Franchisee must execute the Electronic Systems License Agreement. Franchisee
acknowledges that the Electronic Systems will be modified, enhanced, replaced,
or become obsolete, and that new Electronic Systems will be created to meet the
needs of the System and System Hotels and the continual changes in technology
and that any such new Electronic Systems will be 

19

subject to the terms of the Electronic Systems License Agreement. If
from time to time Franchisor determines that it is advisable or necessary to
amend or replace the Electronic Systems License Agreement as a result of the
creation, modification, enhancement, replacement or obsolescence of any Electronic
Systems, Franchisee, upon the request of Franchisor, will execute the
then-current form of Electronic Systems License Agreement or an amendment to
the Electronic Systems License Agreement. 

9. OPERATIONS

          9.1 Operating
the Hotel. 

                    A.
Franchisee will operate the Hotel using the System, in compliance with the
Standards, and in such a manner as to provide courteous, uniform, respectable,
and high quality lodging and other services and conveniences to the public.
Franchisee will maintain a high moral and ethical standard and atmosphere at
the Hotel. Franchisee will: 

                              (1)
permit the duly authorized representatives of Franchisor to: (i) enter
Franchisee’s facilities and inspect same at all reasonable times to confirm
that Franchisee is complying with the terms of this Agreement and the
Standards; and (ii) test any and all equipment, food products, and supplies
located at the Hotel. Franchisee may be required to pay any costs related to
such inspections and provide free lodging to any such inspector or inspectors
on official duty for such time as may be reasonably necessary; 

                              (2)
not knowingly permit gambling to take place at the Hotel (except for a limited
number of reputable charitable events permitted by law) or use the Hotel for
any casino, lottery, or other type of gaming activities; 

                              
(3) not sell, display or use in the Hotel any vending machines, honor bars (in
Guestrooms), entertainment devices, or similar products that have not been
previously approved by Franchisor; 

                              (4)
fully participate in all customer surveys and guest satisfaction audits and
offer all guest services, which may include complimentary services, as
Franchisor may prescribe for System Hotels including programs and services for
senior citizens, children and frequent guests; 

                              (5)
fully participate in travel agent programs, any complaint resolution and other
programs as Franchisor may reasonably establish for System Hotels, which
programs may include providing complimentary rooms or refunds to guests; and 

                              (6)
except as otherwise set forth herein, make when due all payments in accordance
with the terms of all contracts, agreements, and invoices, except for payments
that are disputed by Franchisee in good faith. 

                    B.
Franchisee will provide food and beverage service in the Hotel in conformity
with the Standards to insure the highest degree of quality and service.
Franchisee agrees: 

                              (1)
to use any food and beverage service outlet solely for the operation of the
business franchised hereunder; keep any food and beverage service outlet open
and in normal operation for such minimum hours and days as Franchisor may
prescribe; 

20

                              (2)
to maintain in sufficient supply, and use at all times, only such food and
beverage products and ingredients, supplies, paper goods, dinnerware and
furnishings as conform with the Standards, and to refrain from deviating
therefrom without Franchisor’s prior written consent; and 

                              (3)
to sell or offer for sale only the menu items and beverages prescribed in the
Standards or otherwise approved in writing by Franchisor; to sell or offer for
sale all required menu and beverage items and prepare them in accordance with
the Standards; and to discontinue selling and offering for sale any items as
Franchisor may, in its discretion, disapprove in writing at any time. 

          9.2 System
Promotion and Diversion to Other Businesses. 

                    A.
Franchisee must use all reasonable means to encourage and promote the use of
System Hotels everywhere. If Franchisee receives a request for reservations or
hotel services or accommodations or use of Public Facilities in any area where
a System Hotel or other suitable Franchisor Lodging Facility is located,
Franchisee must promptly refer such request to Franchisor or such Franchisor
Lodging Facility. Franchisee will not, without obtaining Franchisor’s prior
consent, associate or affiliate with any other hotel business organization that
requires Franchisee to refer business to other members of that organization. 

                    B.
Unless Franchisee obtains Franchisor’s prior approval, which approval may be
withheld in Franchisor’s sole discretion, Franchisee will ensure that no part
of the Hotel or the System is used for or to further or promote or divert
business to: 

                              (1)
any lodging business (including any other hotel operated by Franchisee or its
Affiliates or in which Franchisee, its Affiliates or a principal of Franchisee
or its Affiliates owns or holds an Ownership Interest) not operated under a
trade name or trademark owned by Franchisor or any of its Affiliates, including
advertising or promotion of hotels, vacation or time-sharing facilities (or any
similar product sold on a fractional or other basis with use rights on a weekly
or other periodic basis), conference centers, or other lodging products; or 

                              (2)
any other business or concession. 

          9.3 Employees.

                    A.
Franchisee must employ suitable individuals as a general manager and other
managers (e.g., reservations manager, sales manager, and other department
managers or persons with different titles but similar duties to the foregoing)
and qualified personnel sufficient to staff all positions at the Hotel as
required by the Standards or Franchisor. Franchisee’s general manager and other
managers will devote their full time to the management and operation of the
Hotel, and such Persons will not be employed in any other capacity by
Franchisee or its Affiliates without the consent of Franchisor. Franchisee must
use its best efforts to ensure that Franchisee’s employees at all times: (i)
conduct themselves in a competent and courteous manner in accordance with the
image and reputation of Franchisor and the System; (ii) wear uniforms designated
or approved by Franchisor; and (iii) maintain a neat and clean appearance and
render competent, sober and courteous service to all Persons. 

                    B.
All hiring decisions at the Hotel will be made solely by Franchisee. Franchisor
does not exercise any direction or control over the employment policies or
employment decisions of Franchisee. All employees of Franchisee are solely
employees of Franchisee, not Franchisor, and Franchisee is not Franchisor’s
agent for any purpose with regard to Franchisee’s employees. 

21

                    C.
Franchisee agrees that Franchisor has the right to communicate directly with
the general manager and the other managers at the Hotel regarding day-to-day
operations of the Hotel, and such communications will be deemed made to
Franchisee. Franchisee authorizes Franchisor to rely on the statements of such
managers as to matters relating to the operation of the Hotel. 

          9.4
Management and Operation of the Hotel. 

                    A.
The Hotel will at all times be operated only by the Person consented to by
Franchisor in accordance with this Section 9.4. Such Person (i) may be either
(a) Franchisee or (b) if Franchisor in its sole discretion in connection with
the grant of the license in this Agreement determines that Franchisee does not
meet the requirements of this Section 9.4, a management company other than
Franchisee that would perform the day-to-day operations of the Hotel
(“Management Company”) and (ii) is identified in Paragraph 3 of Exhibit A.
Franchisee will at all times be responsible for complying with the obligations
of this Agreement regarding the management and operation of the Hotel
notwithstanding the retention of a Management Company. 

                    B.
Any Management Company retained by Franchisee must before taking over
operations of the Hotel: (i) be qualified and consented to by Franchisor; and
(ii) together with Franchisee, execute and deliver to Franchisor a Management
Company Acknowledgment. Franchisor’s consent to the Management Company will be
evidenced by its counter-execution of the Management Company Acknowledgment.
Franchisor may withhold its consent to any proposed Management Company that, in
Franchisor’s sole discretion: (a) is not financially capable or responsible;
(b) is not sufficiently experienced or qualified in managerial skills or
operational capacity or capability; (c) is otherwise unable to adhere fully to
the obligations and requirements of this Agreement; or (d) does not provide
Franchisor with all information that Franchisor reasonably requests or with
access to other businesses that Management Company operates. Franchisor will
have the right, at its option, to review any management agreement between
Franchisee and its proposed Management Company for the Hotel to confirm that
such management agreement is consistent with the terms of this Agreement and
the Management Company Acknowledgment. Franchisee agrees that Franchisor will
be under no obligation to consent to any proposed Management Company that is
(or is an Affiliate of any Person that is) a franchisor or owner of, is under
the common control of, is affiliated with, or manages lodging facilities
exclusively for the franchisor or owner of, a lodging facility trade name that
is competitive with Franchisor Lodging Facilities, irrespective of the number
of lodging facilities operating under such a trade name. If there is a change
in Control of the Management Company or if the Management Company becomes a
Competitor (or an Affiliate of a Competitor), or if there is a material adverse
change to the financial status or operational capacity of the Management
Company, Franchisee will, or will cause Management Company to, promptly notify
Franchisor of any such event and Franchisor may require Franchisee to terminate
its agreement with such Management Company and engage a replacement management
company that will be subject to Franchisor’s consent process under this Section
9.4.B. Franchisor will have at least thirty (30) days following Franchisor’s
receipt of notice and any information Franchisor requests to review and consent
to or reject any such replacement management company. 

                    C.
Franchisee agrees that Franchisor will have the right to communicate directly
with the Management Company and the managers at the Hotel on matters relating
to the operation of the Hotel, and Franchisee authorizes Franchisor to rely on
the communications of such managers or Management Company as being on behalf of
Franchisee. 

                    D.
Notwithstanding anything to the contrary set forth in this Agreement, the
Management Company Acknowledgment and/or Franchisor’s Quality Assurance
Program, if, during the Term of this Agreement, the Hotel is placed in the
Yellow Zone for any two consecutive tracking periods or in the Red Zone for any
single tracking period under Franchisor’s Quality Assurance Program, then 

22

Franchisor may require, in its sole discretion, Franchisee to replace
the Management Company with another management company that has been approved
by Franchisor to operate the Hotel. Such replacement shall occur within sixty
(60) days from the receipt by Franchisee (or first refusal of delivery) of a
written notice by Franchisor advising Franchisee that it must replace the
Management Company. If Franchisee fails to replace Management Company in
accordance with the terms of this Section 9.4.D., then Franchisee shall be in
material default under this Agreement. For purposes of this Section 9.4.D., the
terms “Yellow Zone” and “Red Zone” refer to the “Yellow Zone” and the “Red
Zone” (or any comparable replacement terms) as such terms are used in
Franchisor’s Quality Assurance Program. 

10. TRAINING, COUNSELING, AND ADVISORY
SERVICES

          10.1 Training.

                    A.
The Hotel must be managed by an individual or individuals who have timely and
successfully completed the training program(s) required by Franchisor.
Franchisor will have the right to require that the Hotel’s or Franchisee’s
management personnel attend or complete specific training program(s), including
before the opening or conversion of the Hotel or in connection with a Transfer
of Control of Franchisee or the Hotel. Such training courses will be conducted
at such time and place as Franchisor will designate. Franchisee will advise
Franchisor of all newly hired management personnel within thirty (30) days
after they commence employment, and such personnel will attend and successfully
complete such training program(s) within the time frame Franchisor specifies. 

                    B.
Franchisee must conduct such training for Franchisee’s employees as is required
for them to properly operate, administer and manage the Hotel in accordance
with the Standards. 

                    C.
Franchisor may offer, and Franchisee may elect to participate in, optional
training courses for personnel engaged in operating or managing System Hotels. 

                    D.
Franchisor will have the right to charge tuition, fees or reimbursements
described in Section 3.5 for all educational, training and orientation programs
that Franchisor offers, which must be paid before receiving training materials
or attending; provided, however, the tuition charge for courses conducted by
Franchisor will not be greater than the tuition charged for employees attending
from System Hotels operated by Franchisor. For all programs and activities
under this Section 10, whether mandatory or optional, Franchisee will be
responsible for paying all Travel Expenses, and the salary and other
compensation for individuals attending such training. Franchisor reserves the
right to require Franchisee to pay and/or reimburse Travel Expenses of the
providers of such training programs and services. Franchisor reserves the right
to require that Hotel employees execute confidentiality agreements in form and
substance satisfactory to Franchisor. 

          10.2 Counseling
and Advisory Services. 

                    Franchisor
will make its representatives available at Franchisor’s designated offices at
reasonable hours or to meet in person to consult with and advise (but not
provide legal counsel or advice to) Franchisee regarding the design, operation,
and management of the Hotel as a System Hotel. If Franchisor’s representative
travels to the Hotel to provide such services, Franchisee must pay the expenses
of such representative while at, going to, and coming from, the Hotel,
including Travel Expenses, and salary or other compensation, in accordance with
Section 3.6. 

23

11. PHYSICAL FACILITIES, SUPPLIES, AND
GOODS

          11.1 Repairs
and Maintenance. 

                    A.
Franchisee will maintain the Hotel in good repair and first-class condition and
in conformity with Applicable Law and the Standards. Franchisee or its
Affiliates must fund the cost of all repairs and alterations at the Hotel.
Franchisee will not make any major repairs, alterations, renewals,
replacements, or additions to the Hotel or carry out any material alterations
to the Hotel (including the design, character, or appearance thereof) without
first obtaining the prior consent of Franchisor, unless such repairs,
alterations, renewals, replacements, or additions are required by any
Applicable Law or are otherwise required for the continued safe and orderly
operation of the Hotel. 

                    B.
Franchisee must complete a significant renovation of Guestrooms, Guestroom
corridors and Public Facilities, including (i) replacement of Soft Goods at
least every five (5) to six (6) years after the date such Soft Goods were
installed and (ii) replacement of Case Goods at least every ten (10) to twelve
(12) years after the date such Case Goods were installed; provided, however
earlier or more frequent renovations or replacements may be necessary to
maintain the quality level of the Hotel in compliance with the Standards and to
comply with the Quality Assurance Program. In connection with replacements in
the immediately preceding sentence, the replacement of all Soft Goods or all
Case Goods, as the case may be, will be done at the same time rather than being
done in a piecemeal fashion or in phases. If Franchisee cannot demonstrate the
date of installation of Soft Goods or Case Goods, Franchisor will determine the
date of installation for purposes of the first sentence of this Section 11.1.B
after consultation with Franchisee. 

                    C.
In connection with any replacement of Soft Goods or Case Goods, Franchisor has
the right to require Franchisee to upgrade the rest of the Hotel to conform to
the building décor, trade dress, and FF&E required under then-current
Standards for System Hotels of similar age. Franchisee will submit its plans
for such upgrading and remodeling to Franchisor for its review and approval
prior to commencing same. Franchisor will promptly review the plans for the
limited purpose of determining whether the plans comply with the Standards and
the applicable renovation scope. Franchisee will not begin the upgrading and
remodeling until Franchisor notifies Franchisee that the plans comply with the
Standards and the applicable renovation scope. 

          11.2 Funding
and Reserve. 

                    A.
Franchisee or its Affiliates must fund the cost of all repairs and alterations
at the Hotel. In order to provide funds to accomplish the renovations described
in 11.1.B. above, and other necessary replacements and renewals of FF&E,
Franchisee will establish the Reserve, at a bank selected by Franchisee and
acceptable to Franchisor. All interest earned on funds in the Reserve will be
deposited in and credited to the Reserve in addition to the other funds already
in the Reserve. The Reserve will not be used for repairs, alterations,
improvements, renewals or replacements to the Hotel building’s structure or to
its mechanical, electrical, heating, ventilating, air conditioning, plumbing or
vertical transportation systems, which structure and operating systems will be
maintained in good repair and condition from other funds. 

                    B.
Commencing with the Opening Date and continuing throughout the Term,
Franchisee, within fifteen (15) days after the end of each month, will transfer
into the Reserve an amount equal to five percent (5%) of Gross Revenues for
such month. 

24

                    C.
At the end of each year, any amounts remaining in the Reserve will be carried
forward to the next year, and will not be credited against or decrease the
amount otherwise required to be deposited in the Reserve in the next year. 

                    D.
No later than fifteen (15) days before the beginning of each year, Franchisee
will prepare and submit to Franchisor for its review and approval (i) an
estimate of the expenditures necessary each year to maintain the Hotel and the
amounts necessary from the Reserve for the necessary replacements and renewals
of FF&E and the significant renovations described in Section 11.1 to be
made during the upcoming year; and (ii) plans covering the next succeeding five
(5) years that: (a) address renovations, replacements, and renewals of FF&E
required to comply with the Standards; and (b) identify the availability of
funding for same. 

                    E.
Franchisee agrees that the contributions to the Reserve required by Section
11.2.B. may not be sufficient to keep the Reserve at the levels necessary to
make all replacements and renewals of FF&E necessary to maintain the Hotel
as a high quality facility and in accordance with the Standards. If the funds
in the Reserve are insufficient for such purpose, Franchisee will promptly
provide the necessary funds in addition to the monthly contributions set forth
in Section 11.2.B. 

12. SYSTEM AND STANDARDS; FRANCHISEE
ASSOCIATION

          12.1 Compliance
with System and Standards. 

                    A.
Franchisee agrees that conformity with all aspects of the System and the
Standards is essential in order to maintain the uniform quality and guest
service of System Hotels and to enhance public acceptance of and demand for
System Hotels. Therefore, Franchisee agrees that it will comply with the
Standards in all matters involving the Hotel, and operate the Hotel in compliance
with the System, this Agreement, and the other Marriott Agreements. 

                    B.
Franchisor will make the Standards available to Franchisee either in paper copy
or in digital, electronic, or computerized form, or in some other form now existing
or hereafter developed. Franchisee must pay a fee to retrieve, review, use, or
access the Standards not in paper form. The Standards will at all times remain
the sole property of Franchisor and its Affiliates. Franchisee will at all
times ensure that Franchisee’s copy of the Standards is kept up-to-date, and if
there is any dispute as to the contents of the Standards, the then-current
Standards will control. 

          12.2 Modification
of the System and Standards. 

                    A.
Franchisor and its Affiliates expressly reserve the right, in their Reasonable
Business Judgment, to modify the System and Standards or any part of either and
such modifications may include materially changing, adding or deleting elements
of the System; provided, however, that any modification of the Proprietary
Marks under Section 13.2.B(3) may be made in Franchisor’s sole discretion.
Franchisee agrees that modifications to the System may be made for all System
Hotels or for any Category thereof. 

                    B.
Franchisee agrees that modifications to the System may require Franchisee to
contribute to the cost of such modifications on a fair and consistent basis
with other participating System Hotels or other hotels, as determined by
Franchisor. To the extent that such modification relates to an ongoing program
or system, such as the Reservation System, the Yield Management System, or
Property System, or to any new Electronic Systems or other program or system,
ongoing payments related to such modifications will be made in accordance with
Section 3. 

25

          12.3 Franchisee
Association. 

                    If
Franchisor should, during the Term, sanction the formation of an association to
consider topics relating to the operation of System Hotels and to make
recommendations to Franchisor regarding such topics and any and all other
appropriate matters (the “Association”), Franchisee, Franchisor and other
System Hotel franchisees and licensees will be eligible for membership and
Franchisee will pay to the Association all dues and assessments authorized by
the Association (which will be consistently applied to all franchisees in the
System). The Association will adopt such bylaws and elect officers as are
deemed appropriate. Recommendations of the Association will be transmitted to
Franchisor and regarded by Franchisor as expressing the consensus of members of
the Association. 

13. PROPRIETARY MARKS AND INTELLECTUAL
PROPERTY

          13.1 Franchisor’s
Representations and Responsibility Regarding the Proprietary Marks. 

                    A.
Franchisor represents with respect to the Proprietary Marks that: 

                              (1)
Franchisor and its Affiliates have the right to grant Franchisee the right to
use the Proprietary Marks in accordance with this Agreement; and 

                              (2)
Franchisor will take or will cause to be taken all steps reasonably necessary
to preserve and protect the ownership and validity of the Proprietary Marks;
provided Franchisor will not be required to maintain any registration for the
Proprietary Marks that Franchisor determines, in its sole discretion, cannot or
should not be maintained. 

                    B.
Subject to Franchisee’s compliance with the terms of this Agreement, Franchisor
will indemnify and hold Franchisee harmless against claims that Franchisee’s
use of the Proprietary Marks infringes upon the rights of any third party
unrelated to Franchisee, if Franchisee gives immediate notice of any such claim
to Franchisor, permits Franchisor to have sole control over the defense and
settlement of the claim, and cooperates fully with Franchisor in defending or
settling the claim. 

          13.2 Franchisee’s
Use of System and Intellectual Property. 

                    A.
With respect to Franchisee’s use of the System and Intellectual Property under
this Agreement: 

                              (1)
Franchisee will use the System and Intellectual Property only for such uses
regarding the operation of the Hotel as are expressly authorized under this Agreement
or otherwise authorized by Franchisor and only in the form and manner
authorized by Franchisor, and any use thereof not so authorized will constitute
an infringement of Franchisor’s rights as well as a material default of this
Agreement; 

                              (2)
Franchisee will use the Proprietary Marks only in substantially the same
places, combination, arrangement, and manner as provided in the Standards or
approved by Franchisor. Franchisee will use the symbol “®,” “TM,” “SM”
or such symbols or words as Franchisor may designate to protect the Proprietary
Marks; 

                              (3)
Franchisee must identify itself as a franchisee or licensee of Franchisor and
the owner and/or operator of the Hotel only as allowed or required by
Franchisor and only in a manner and form designated by Franchisor. Franchisee
will not use the Proprietary Marks in any manner that would or could imply that
Franchisee has an Ownership Interest in the Proprietary Marks, including, 

26

on Franchisee’s corporate letterhead, business forms, contracts, or
business cards, except as set forth in the Standards; 

                              (4)
Franchisee does not have any right to and will not Transfer, sublicense, or
allow any Person to use any of the Intellectual Property, except as expressly
permitted in this Agreement; 

                              (5)
Franchisee will not use the Intellectual Property to incur any obligation or
indebtedness on behalf of Franchisor or any of its Affiliates; 

                              (6)
Franchisee will not use any Proprietary Mark or marks or names that are
similar, in Franchisor’s sole opinion, as part of Franchisee’s corporate or
legal name or in connection with any business activity or venture (other than
the Hotel) or as a road name or address, or apply for trademark or service mark
registration of any Proprietary Mark, any variation thereof or any mark similar
to any Proprietary Mark, in the United States or any other jurisdiction,
whether alone or in combination with other trademarks, trade names, trade
dress, symbols, logos, slogans, designs, insignia, emblems, devices, or service
marks; 

                              (7)
Franchisee must: (i) comply with Franchisor’s instructions in filing and
maintaining any required business, trade, fictitious, assumed, or similar name
registrations; (ii) obtain Franchisor’s prior approval of any name to be so
registered; and (iii) indicate in the registration documents that Franchisee
has the right to use such name only subject to the terms of this Agreement.
Franchisee must also execute any documents and take such other action deemed
necessary by Franchisor or its counsel to protect the Proprietary Marks or
maintain their validity and enforceability; and 

                              (8)
if litigation involving the Intellectual Property is instituted or threatened
against Franchisee or any notice of such infringement is received by
Franchisee, or if Franchisee becomes aware of any infringement, Franchisee will
promptly notify Franchisor in writing and will cooperate fully with Franchisor
in Franchisor’s defense or settlement of such litigation. Franchisee will not
make any demand or serve any notice, orally or in writing, or institute any
legal action, or negotiate, litigate, compromise or settle any controversy with
respect to any such litigation, without first obtaining Franchisor’s prior
consent, which consent may be withheld in Franchisor’s sole discretion.
Franchisor will have the right to bring such action and to join Franchisee as a
party to any action in which Franchisor is or may be a party as to which
Franchisee is or would be a necessary or proper party. 

                    B.
Franchisee agrees that: 

                              (1)
Franchisor and its Affiliates are, in the aggregate, the owners or licensees of
all right, title, and interest in and to the System (other than Electronic
Systems provided by or licensed by third parties) and the goodwill associated
with and symbolized by the Proprietary Marks; 

                              (2)
the Proprietary Marks are valid and serve to identify the System and those who
hold rights to operate hotels under the System; 

                              (3)
the Proprietary Marks and other aspects of the System are subject to
replacement, addition, deletion, and other modification by Franchisor (or the
Affiliate that owns the Proprietary Marks) in its sole discretion. If any such
action is taken by Franchisor (or the Affiliate that owns the Proprietary
Marks), Franchisee will promptly accept and use such replacement, addition,
deletion, and other modification, and, in the case of the Proprietary Marks,
display such changed Proprietary Marks as if they were part of the System as of
the Effective Date (and replace, add, remove or 

27

modify the Proprietary Mark(s) that have been so changed), and
Franchisee will bear the cost of conforming the Hotel to any such replacement,
modification, addition, deletion, or other change; 

                              (4)
During the Term and thereafter, Franchisee will not directly or indirectly (i)
attack the ownership, title or rights of Franchisor or its Affiliates in and to
any part of the System; (ii) contest the validity of any part of the System or
the right of Franchisor to grant to Franchisee the use of any part of the
System(other than Electronic Systems provided by or licensed by third parties)
in accordance with this Agreement; (iii) take any action or refrain from taking
any action that could impair, jeopardize, violate, or infringe any part of the
System; (iv) claim adversely to Franchisor or its Affiliates any right, title,
or interest in and to the System; or (v) misuse or harm or bring into dispute
the System; 

                              (5)
Franchisee has no Ownership Interest in the System. Franchisee’s use of the
Intellectual Property and other aspects of the System under this Agreement
(including any modifications, derivatives or additions thereto proposed by or
on behalf of Franchisee or its Affiliates) will not give Franchisee any
Ownership Interest or other interest in or to the Intellectual Property or any
other aspect of the System, except the nonexclusive license granted by this
Agreement. Franchisee hereby assigns (and will cause each of its employees or
independent contractors who contributed to such modifications, derivatives or
additions to assign) to Franchisor, in perpetuity throughout the world, all
rights, title and interest (including the entire copyright and all renewals,
reversions and extensions thereof) in and to all modifications, derivatives and
additions to the Intellectual Property and other aspects of the System proposed
by or on behalf of Franchisee or its Affiliates. Franchisee waives (and will
cause each of its employees or independent contractors who contributed to such
modifications, derivatives or additions to waive) all “moral rights of authors”
or any similar rights that Franchisee (or its employees or independent
contractors) may now or hereafter have in the modifications, derivatives and additions
to the Intellectual Property and other aspects of the System proposed by or on
behalf of Franchisee or its Affiliates. Franchisee agrees to execute (or cause
to be executed) and deliver to Franchisor any documents and to do any acts that
may be deemed necessary by Franchisor to perfect or protect the title in the
modifications, derivatives or additions herein conveyed, or intended to be
conveyed now or in the future; 

                              (6)
all goodwill arising from Franchisee’s use of the System (other than Electronic
Systems provided by or licensed by third parties) and any other aspect of the
System will inure solely and exclusively to Franchisor’s benefit, and upon
expiration or termination of this Agreement, no monetary amount will be assigned
as attributable to any goodwill associated with Franchisee’s use of any aspect
of the System; and 

                              (7)
the rights in, and license of, the System granted hereunder to Franchisee are
nonexclusive, and thus Franchisor and its Affiliates may: 

                                   (a)
use and may grant franchises and/or licenses to others to use the System, and
otherwise profit from the System; and 

                                   (b)
establish, develop, franchise, and license other systems that use the
Intellectual Property and other aspects of the System, without offering or
providing Franchisee any rights in, to, or under such other systems. 

                    C.
The provisions of this Section 13.2 will survive the expiration or termination
of this Agreement. 

28

          13.3 Franchisee’s
Use of Other Marks.

                    A.
Franchisee will not use in any manner any of the System in connection with any
Other Mark(s), without Franchisor’s prior approval. 

                    B.
Franchisee will not use any name or Other Mark in connection with the Hotel
that may infringe upon or tend to be confused with a third party’s trade name,
trademark, or other rights in intellectual property. 

                    C.
Franchisee will not use or permit the use of any Other Mark in or at the Hotel
or in any Marketing Materials, advertising of, for, relating to or involving
the Hotel or its operation without Franchisor’s prior approval, which approval
may be granted or withheld in Franchisor’s sole discretion. 

          13.4 Internet
Website. 

                    A.
With the exception of a website that describes Franchisee’s franchise
relationship with Franchisor and as stated in this Section 13.4 or the
Standards, Franchisee will not display the Proprietary Marks on or associate
the System with (through a link or otherwise) any website, electronic Marketing
Materials, domain name, address, designation, or listing on the Internet or
other communication system without the express consent of Franchisor. If
Franchisor permits Franchisee to display or use the Proprietary Marks on
Franchisee’s Internet site, the form, content and appearance of Franchisee’s
Internet site, and any modifications thereto, must comply with the Standards
and be approved by Franchisor before it is posted on the Internet so that
Franchisor can maintain the common identity of the System Hotels and the
Proprietary Marks. 

                    B.
Franchisee acknowledges that the www.marriott.com domain name is the
sole property of Franchisor and its Affiliates. Franchisee will not, directly
or indirectly, use, register, obtain or maintain a registration for any
Internet domain name, address, or other designation that contains any
Proprietary Mark or any mark that is in Franchisor’s sole opinion confusingly
similar, including misspellings and acronyms. Upon Franchisor’s request,
Franchisee must promptly take all steps to cancel or transfer to Franchisor or
its designee any such domain name, address, or other designation under its
control. 

14. CONFIDENTIAL INFORMATION; DATA
PROTECTION LAWS

          14.1 Confidential
Information. 

                    Franchisee
will not, during the Term or thereafter, without Franchisor’s prior consent,
which consent may be granted or withheld in Franchisor’s sole discretion, copy,
duplicate, record, reproduce, in whole or in part, or otherwise transmit or
make available to any “unauthorized” Person any Confidential Information.
Franchisee may divulge such Confidential Information only to such of
Franchisee’s employees or agents as require access to it in order to operate
the Hotel, and only if such employees or agents are apprised of the
confidential nature of such information before it is divulged to them and they
are bound by confidentiality obligations substantially similar to those listed
above. All other Persons are “unauthorized” for purposes of this Agreement.
Franchisee agrees that the Confidential Information has commercial value and
that Franchisor and its Affiliates have taken reasonable measures to maintain
its confidentiality, and, as such, the Confidential Information is proprietary
and a trade secret of Franchisor and its Affiliates. Franchisee will be liable
to Franchisor for any breaches of the confidentiality obligations in this
Section 14.1 by its employees and agents. Franchisee will maintain the
Confidential Information in a safe and secure location and will immediately
report to Franchisor the theft or loss of all or any part of the Confidential
Information. 

29

          14.2 Data
Protection Laws. 

                    Franchisee
will: (i) comply with all applicable Data Protection Laws; (ii) comply with all
of Franchisor’s requirements regarding the Data Protection Laws contained in
the Standards or otherwise; (iii) refrain from any action or inaction that could
cause Franchisor or its Affiliates to breach any of the Data Protection Laws;
(iv) do and execute, or arrange to be done and executed, each act, document and
thing necessary or desirable to keep Franchisor and its Affiliates in
compliance with any of the Data Protection Laws; (v) reimburse Franchisor and
its Affiliates for any and all costs incurred in connection with the breach by
Franchisee of such Data Protection Laws or Standards; and (vi) permit
Franchisor and its Affiliates to use any data or other information each of them
gathers concerning Franchisee and its Affiliates in connection with the
establishment and operation of System Hotels by Franchisor and its Affiliates. 

15. ACCOUNTING AND REPORTS

          15.1 Books,
Records, and Accounts. 

                    Franchisee
at its expense must maintain and preserve for the Hotel for at least five (5)
years from the dates of their preparation, complete and accurate books, records,
and accounts in accordance with the Uniform System and United States generally
accepted accounting principles, consistently applied, Applicable Law and the
Standards. Franchisee’s obligation to preserve such books, records and accounts
will survive the expiration or termination of this Agreement. 

          15.2 Reports.

                    A.
Upon the request of Franchisor, Franchisee must, at its expense, submit to
Franchisor within fifteen (15) days after the close of each Accounting Period,
an operating statement containing such information required by Franchisor,
including the Gross Revenues and Gross Room Sales for such Accounting Period.
In addition, within sixty (60) days after the close of each calendar or fiscal
year, whichever is used by Franchisee for income tax purposes, Franchisee must
furnish Franchisor a full and complete statement of income and expense from the
operation of the Hotel for such preceding year, which will be prepared in
accordance with the Uniform System and
United States generally accepted accounting principles, consistently applied,
Applicable Law and the Standards. The statement must be prepared in accordance
with the Uniform System “Income Statement” with standard line items for those
specified by Franchisor. Such statement also will include a reasonably detailed
accounting (with such supporting documentation as Franchisor may reasonably
request) of the contributions to, and expenditures from, the Reserve during
such year, and such other information that Franchisor requires. 

                    B.
Franchisee must, at its expense, submit to Franchisor such other miscellaneous
forms, periodic and other reports, records, financial statements, and other
information relating to Franchisee, the Hotel and the Hotel’s marketing, sales
and guests as Franchisor may reasonably request, in the form and at the times
and places specified by Franchisor. Franchisor has the right to access
Franchisee’s Property System and Reservation System directly to obtain
marketing, sales and guest information, and Franchisee will take all actions
reasonably necessary to provide such access. 

          15.3 Franchisor
Examination and Audit of Hotel Records. 

                    A.
Franchisor and its authorized representatives have the right, at any time, but
upon reasonable notice to Franchisee, to: (i) examine and copy, at Franchisee’s
expense, all books, records, accounts, and tax returns of Franchisee related to
the operation of the Hotel during the five years preceding such examination;
and (ii) have an independent audit made of any of such books, records, 

30

accounts, and tax returns. Franchisee must provide lodging without
charge to Franchisor’s representatives or independent auditors while conducting
and completing such audits, and Franchisee must provide such other assistance
as may be reasonably requested related to the audit. If an examination or audit
reveals that Franchisee has made underpayments to Franchisor or any of its
Affiliates, Franchisee must immediately pay to Franchisor or such Affiliate
upon demand, the amount underpaid plus interest on the underpaid amount which
will accrue thereon at a rate per annum equal to the Interest Rate from the
date such amount was due until paid. 

                    B.
If an examination or audit discloses an understatement of payments due to
Franchisor of five percent (5%) or more for the period being examined or
audited, or if the examination or audit reveals that the accounting procedures
are insufficient to determine the accuracy of the calculation of any payments
due, Franchisee must reimburse Franchisor for all costs and expenses connected
with the examination or audit (including reasonable accounting and attorneys’
fees). If the examination or audit establishes a pattern of underreporting,
Franchisor has the right to require that the annual financial reports due under
Section 15.2.A be audited by an independent accounting firm consented to by
Franchisor. The foregoing remedies are in addition to any other remedies that
Franchisor may have under this Agreement, including the right to terminate this
Agreement in accordance with Section 19. 

                    C.
If an examination or audit reveals that Franchisee has made overpayments to
Franchisor or any of its Affiliates, the amount of any such overpayment,
without interest, will be promptly credited against future payments due and
payable by Franchisee to Franchisor or such Affiliate. 

16. INDEMNIFICATION AND INSURANCE

          16.1 Indemnification.

                    Franchisee
will, and hereby does, indemnify, defend, and hold harmless Franchisor and its
Affiliates, their officers, directors, agents and employees, and their
respective successors and assigns, from and against all losses, costs,
liabilities, damages, claims, and expenses of every kind and description,
including allegations of negligence by Franchisor and its Affiliates and their
officers, employees, and agents, to the fullest extent permitted by Applicable
Law, and including reasonable attorneys’ fees, arising out of or resulting
from: (i) the unauthorized use of the Proprietary Marks; (ii) the violation of
Applicable Law; or (iii) the construction, renovation, upgrading, alteration,
remodeling, repair, operation, ownership or use of the Hotel or the Approved
Location or of any other business conducted on, related to, or in connection
with the Hotel or the Approved Location. Franchisee must promptly give notice
to Franchisor of any action, suit, proceeding, claim, demand, inquiry, or
investigation related to the foregoing. Franchisor will in any event have the
right, through counsel of its choice, at Franchisee’s expense, to control the
defense or response to any such action to the extent such action affects the
interests of Franchisor, and such undertaking by Franchisor will not, in any
manner or form, diminish Franchisee’s obligations to Franchisor hereunder.
Under no circumstances will Franchisor or a Person indemnified hereunder be
required or obligated to seek recovery from third parties or otherwise mitigate
its losses in order to maintain a claim for indemnification against Franchisee
under this Agreement, and the failure to pursue such recovery or mitigate a
loss will in no way reduce the amounts recoverable from Franchisee by a Person
indemnified hereunder. Franchisee’s obligations under this Section 16.1 will
survive the termination or expiration of this Agreement. 

          16.2 Insurance.

                    A.
During the Term, Franchisee, at its expense, will procure and maintain such
insurance as may be required by the terms of any lease or mortgage on the
Approved Location, and in any event no less than the following: 

31

                              (1)
Property Insurance 

                                        (a)
Property insurance (or builder’s risk insurance during any period of
construction) including boiler and machinery coverage on the Hotel building(s)
and contents against loss or damage by fire, lightning, windstorm, and all
other risks covered by the usual all-risk policy form, all in an amount not
less than ninety percent (90%) of the full replacement cost thereof and a
waiver of co-insurance and agreed amount endorsement. Said policy will also
include coverage for landscape improvements and law and ordinance coverage in
reasonable amounts. 

                                        (b)
Business interruption insurance covering at least twelve (12) months’ loss of
profits and necessary continuing expenses (including Franchisee Fees) for
interruptions caused by any occurrence covered by the insurance referred to in
Sections 16.2.A(1)(a), (c) and (d). Such business interruption insurance will
name Franchisor as a loss payee as its interest may appear. 

                                        (c)
If the Hotel is located in whole or in part within an area identified by the
federal government as having a special flood hazard, flood insurance in an
amount not less than the maximum coverage available under the National Flood
Insurance Program and excess flood coverage with reasonable limits, but in no
event less than ten percent (10%) of the full replacement cost of the Hotel
building and contents, including business interruption coverage in an amount
not less than that set forth in Section 16.2.A(1)(b). 

                                        (d)
If the Hotel is located in an “earthquake prone zone” or “windstorm prone zone”
as determined by the U.S. Geological Survey or the insurance industry,
earthquake insurance and windstorm insurance in an amount not less than the
probable maximum loss less any applicable deductibles, including business
interruption coverage in an amount not less than that set forth in Section
16.2.A(1)(b), all as determined by a recognized earthquake or windstorm
engineering firm, as applicable. 

                              (2)
Workers’ compensation insurance in statutory amounts on all employees of the
Hotel and employer’s liability insurance in amounts not less than $1,000,000
per accident/disease. 

                              (3)
Comprehensive or commercial general liability insurance for any losses arising
or pertaining to the Hotel or its operation, with combined single limits of
$1,000,000 per each occurrence for bodily injury and property damage. If the
general liability coverages contain a general aggregate limit, such limit will
be not less than $2,000,000, and it will apply in total to this Hotel only.
Such insurance will be on an occurrence policy form and will include premises
and operations, independent contractors, blanket contractual, products and
completed operations, advertising injury, employees as additional insureds,
broad form property damage, personal injury, incidental medical malpractice,
severability of interests, innkeeper’s and safe deposit box liability, and
explosion, collapse and underground coverage during any construction,
renovation, upgrading and/or remodeling. 

                              (4)
Liquor Liability (applicable when Franchisee distributes, sells, serves, or
furnishes alcoholic beverages) for combined single limits of bodily injury and
property damage of not less than $1,000,000 each occurrence. 

                              (5)
Business Auto Liability including owned, non-owned and hired vehicles for
combined single limits of bodily injury and property damage of not less than
$1,000,000 each occurrence. 

32

                              (6)
Umbrella Excess Liability on a following form in excess of the liability
insurance required under subsections A(2) through (5) immediately above in not
less than the amount set forth opposite the number of stories in height that
the Hotel is above ground: 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Number of
 Stories

 Above Ground

 	
  

 	
 Umbrellas Excess

 Liability Amount

 	
  

 
	

 

 	
  

 	

 

 	
  

 
	
 3 or less

 	
  

 	
 $

 	
 9,000,000

 	
  

 
	
 4 or 5

 	
  

 	
 $

 	
 14,000,000

 	
  

 

                              Such
coverage will apply in total to the Hotel only by specific endorsement.
Franchisor will have the right to require Franchisee to increase the amount of
coverage if the number of stories of the Hotel above ground is greater than
five (5) or if, in Franchisor’s Reasonable Business Judgment, such an increase
is warranted. 

                              (7)
Fidelity insurance coverage or a fidelity bond in an amount not less than
$250,000 per occurrence. 

                              (8)
Such other insurance as may be customarily carried by other hotel operators on
hotels similar to the Hotel. 

                    B.
The following general insurance requirements will be satisfied by Franchisee: 

                              (1)
All insurance under subsection A(1)(b), and A(3) through (8) of this Section
will by endorsement specifically name as unrestricted additional insureds
Franchisor, any Affiliate of Franchisor designated by Franchisor, and their
employees and agents. All insurance required hereunder will be specifically
endorsed to provide that the coverages will be primary and that any insurance
carried by any additional insured will be excess and non-contributory. 

                              (2)
Any deductibles or self-insured retentions maintained by Franchisee (excluding
deductibles for high hazard risks in high hazard geological zones, such as
earthquake and windstorm, which will be as required by the insurance carrier)
will not exceed $25,000, or such higher amount as may be approved in advance in
writing by Franchisor. 

                              (3)
All insurance purchased in compliance herewith will be placed with insurance
companies reasonably acceptable to Franchisor and licensed to do business in
the state where the Hotel is located. Such licensing requirement will not apply
to those insurers providing umbrella excess liability above $5,000,000 under
subsection A(6) of this Section. 

                              (4)
All insurance required hereunder will contain an endorsement whereby the
policies will not be canceled, non-renewed, or materially changed without at
least thirty (30) days prior notice to Franchisor. Franchisee will deliver to
Franchisor a certificate of insurance (or certified copy of such insurance
policy if requested by Franchisor) evidencing the coverages required herein.
Renewal certificates of insurance (or certified copies of such insurance policy
if requested by Franchisor) will be delivered to Franchisor not less than ten
(10) days prior to their respective inception dates. 

                              (5)
All insurance required hereunder may be effected under policies of blanket
insurance that cover other properties of Franchisee and its Affiliates so long
as such blanket insurance fulfills the requirements herein. 

33

                              (6)
Franchisee’s obligation to maintain the insurance hereunder will not relieve
Franchisee of its obligations under Section 16.1. 

                              (7)
Should Franchisee for any reason fail to procure or maintain the insurance
required by this Agreement or as revised for substantially all franchisees or
licensees in the United States by the Standards or otherwise in writing,
Franchisor will have the right and authority (without however any obligation to
do so) to immediately procure such insurance and to charge the cost thereof to
Franchisee, which charges, together with a reasonable fee for Franchisor’s
expenses in so acting, will be payable by Franchisee immediately upon notice. 

17. TRANSFERABILITY OF INTERESTS

          17.1 Transfers
of Interests in the Hotel and Franchisee. 

                    Franchisee
agrees that its rights and duties in this Agreement are personal to Franchisee,
and that Franchisor entered into this Agreement in reliance on the business
skill, financial capacity, and character of Franchisee and its principals and
Affiliates. A Transfer of any Ownership Interest in Franchisee, the Hotel or
any Ownership Interest in the Hotel, any of Franchisee’s rights or obligations
under this Agreement, or a Transfer of, or change of Control in, Franchisee or
a Control Affiliate is prohibited without the prior written consent of
Franchisor except as otherwise set forth in Sections 17 or 18. Upon
Franchisor’s request, Franchisee will furnish Franchisor with a list of the
names and addresses of the Interestholders in Franchisee and any Control
Affiliate (other than holders of Ownership Interests that are publicly-traded
and were purchased on the open market). 

          17.2 Transfers
of Controlling Ownership Interests. 

                    A.
Except as set forth elsewhere in Sections 17 and 18, if Franchisee or any
Interestholder of Franchisee or a Control Affiliate wishes to Transfer the
Hotel, its Ownership Interest in the Hotel, a direct or indirect Controlling
Ownership Interest in Franchisee, or effect a transaction that otherwise
results in a direct or indirect change of Control in Franchisee, Franchisee
will provide notice of such proposed Transfer to Franchisor. The notice will
state the full name and identity of all of the parties to the proposed
Transfer, including Interestholders of such parties and the terms of the Transfer,
together with all other related information that is reasonably requested by
Franchisor. Prior Transfers of Ownership Interests by or to the same Person or
an Affiliate of such Person will be considered in determining whether a
Transfer of a Controlling Ownership Interest or change of Control has occurred.
Within thirty (30) days after Franchisor receives such notice and required
information, Franchisor will notify Franchisee of Franchisor’s election of one
of the following two alternatives: 

                              (1)
Franchisor’s election to consent to such Transfer, together with the conditions
to the Transfer, which include the following as conditions: 

                                        (a)
Franchisee must deliver to Franchisor all documents, information and
representations and warranties with respect to transferee’s corporate
organization, authority, and ownership requested by Franchisor, including a
complete copy of the sale and purchase agreement or similar document effecting
the Transfer; 

                                        (b)
Franchisee must satisfy all of its accrued monetary obligations to Franchisor
and its Affiliates, including an amount equal to a reasonable estimate of the
costs and fees not yet accumulated and/or invoiced, and will execute, in a form
prescribed by Franchisor, a general release of any and all claims against
Franchisor and its Affiliates, and their respective officers, directors, agents
and employees; 

34

                                        (c)
the proposed transferee must complete and submit to Franchisor a new franchise
application together with the then-current application fee being charged to
System Hotel franchisees (“Transfer Fee”). If Franchisor does not consent to
the Transfer application, Franchisor will refund the Transfer Fee, less Ten
Thousand Dollars ($10,000), which Franchisor will retain; 

                                        (d)
the transferee must enter into Franchisor’s then-current form franchise
agreement and relevant ancillary agreements, which will contain the standard
terms (except for duration, as provided below) then being issued for new
franchised hotels under the System, including the then-current fees and
charges. The new franchise agreement will be for a term that expires on or
after the last day of the Term and provide for the upgrade of the Hotel to
address any needed renovations and to bring the Hotel into compliance with
Franchisor’s then-current Standards (including Franchisor’s Fire Protection and
Life Safety Standards) pursuant to a property improvement plan (“PIP”).
Franchisee will pay Franchisor’s then-current, non-refundable property
improvement plan fee (currently, Ten Thousand Dollars ($10,000)) to cover
Franchisor’s costs associated with creating the PIP; 

                                        (e)
the transferee must retain a Management Company consented to by Franchisor to
control the day-to-day operations of the Hotel if Franchisor determines that
transferee is not qualified to operate the Hotel; 

                                        (f)
the transferee must certify in writing that: (i) Franchisor did not endorse,
recommend, or otherwise concur with the terms of the Transfer, (ii) Franchisor
did not comment upon any financial projections submitted by Franchisee to
transferee, and (iii) Franchisor did not participate in the determination of
the consideration to be paid; 

                                        (g)
Franchisor will have the right to require that the transferee pay Franchisor’s
outside counsel costs in connection with any such Transfer; 

                                        (h)
if the transferee is a subsidiary of a real estate investment trust or a
publicly-held entity, or if the Hotel will be operated by a Management Company,
Franchisor may require the transferee to establish and maintain a reserve to
support the cost of future repairs and replacements of FF&E, and the
transferee will deposit into such reserve each month throughout the term of the
franchise agreement an amount equal to five percent (5%) of Gross Revenues or
such other amount as determined by Franchisor; and 

                                        (i)
if due to the unique ownership structure of the transferee or the Hotel,
Franchisor’s limited involvement franchising hotels with such structure (unique
or not), the debt service on the Hotel, or the financial status of the
transferee and its owners, Franchisor determines that additional protections
are necessary, Franchisor may, among other things, require the transferee to
establish and maintain a reserve (in addition to the reserve referenced in
Section 17.2.A.1.(h) above) to support the cost of expenditures under the PIP
and capital improvements that are beyond the scope of the FF&E reserve
referenced in Section 17.2.A.1.(h) above, and the transferee will deposit into
such reserve the amount required by Franchisor at the time of the Transfer and
each month throughout the term of the franchise agreement. 

                              (2)
Franchisor’s election not to consent to the Transfer, and Franchisee will be in
breach of this Agreement if Franchisee consummates such Transfer. 

                    B.
Franchisor has the right, in its sole discretion, to elect not to consent to a
Transfer under Section 17.2.A(2) if: (i) Franchisor determines that such
transferee is not capable of successfully operating the Hotel under the
franchise agreement or the Standards (and requiring transferee to retain a
Management Company consented to by Franchisor is not an acceptable
alternative); (ii) Franchisor 

35

determines that the Management Company proposed by transferee is not
capable of successfully operating the Hotel under the franchise agreement or
the Standards or fails to meet Franchisor’s then-current criteria for
Management Companies; (iii) Franchisor determines that the proposed
transferee’s debt service or overall financial status will not permit the Hotel
to be operated pursuant to the Standards; (iv) an uncured breach or default of
a Marriott Agreement exists; (v) upon execution by transferee of a new
franchise agreement, the transferee would be in breach of such agreement; (vi)
the Hotel is not in good standing under the Quality Assurance Program; or (vii)
the Transfer is subject to Section 17.4 or violates Section 17.8. 

                    C.
Subject to Section 17.4 and 17.8 and compliance with the conditions set forth
in Section 17.2.A(1)(a), (b), (e), (f), (g), (h) and (i), Franchisor will
consent to a Transfer of the Hotel or Franchisee’s Ownership Interests in the
Hotel or the Ownership Interests in Franchisee or a Control Affiliate to a
Person (a) in which Franchisee has a Controlling Ownership Interest and in
which Franchisee owns, directly or indirectly, at least 50% of the economic
interests or (b) in which the Interestholder that Controls Franchisee has a
Controlling Ownership Interest and in which the Interestholder that Controls
Franchisee owns, directly or indirectly, at least 50% of the economic
interests, in either case provided that: (i) Franchisor is provided at least 30
days advance written notice of such Transfer; (ii) Franchisee provides to
Franchisor documentation acceptable to Franchisor evidencing the Transfer by
which such Person expressly assumes the obligations of Franchisee hereunder and
under each other Marriott Agreement; (iii) another party acceptable to
Franchisor has executed a guaranty substantially identical to the form of
guaranty set forth in the then-current Franchise Disclosure Document (which
party may be Franchisee or the transferee depending on the structure of the
transaction) and each and every Guarantor acknowledges the Transfer and
reaffirms and ratifies its obligations under the Guaranty; (iv) Franchisee is
not in breach or default under any of the Marriott Agreements; (v) the Hotel is
in good standing under the Quality Assurance Program; and (vi) each beneficial
owner of an Ownership Interest in such Person shall have passed Franchisor’s
then-current owner screen and paid any applicable fees in connection therewith.

          17.3 Transfers
of Passive Investor Interests, Estate Planning, and Death or Mental
Incompetency. 

                    A.
Subject to Sections 17.4 and 17.8, Transfers of direct or indirect,
non-Controlling Ownership Interests (“Passive Investor Interests”) will be
consented to by Franchisor if the following conditions are met: (a) the Passive
Investor Interests are not owned by a Guarantor; (b) such Transfer(s),
individually and in the aggregate, will not effect (i) a Transfer of or change
in direct or indirect Control of Franchisee or the Hotel (in which case, the
provisions of Section 17.2 will apply) or (ii) a Transfer of a majority of the
Passive Investor Interests; (c) Franchisee provides Franchisor notice of such
Transfer at least twenty (20) days prior to the consummation of such Transfer,
together with reasonably detailed information concerning the identity and
background of any such transferee and its Interestholders and the structure of
such Transfer, and a representation and warranty that such information is true,
correct and complete and that the requirements of this Section 17.3.A are met; and (d) Franchisee pays the
then-current fee for background checks for any such transferee and its
Interestholders and such background checks reveal that (x) each such Person has
not been convicted of a felony, (y) each such Person is not otherwise known to
have violated the law, and (z) each such Person’s character and reputation
otherwise complies with the Standards. If requested by Franchisor, Franchisee
will execute an amendment to this Agreement that updates the information on
Exhibit A regarding the ownership of Franchisee to reflect the ownership after
the Transfer. Franchisor will have the right to require that Franchisee pay
Franchisor’s outside counsel costs in connection with any such Transfer. 

                    B.
Subject to Sections 17.4 and 17.8, for estate planning, Transfers of an
Ownership Interest in Franchisee to a member of an Interestholder’s immediate
family or to a trust for the benefit of 

36

such immediate family member or to any Person in which the
Interestholder has and, during the Term continues to have, the Controlling
Ownership Interest may be completed in accordance with the requirements set
forth in Section 17.3.A above, so long as such Transfers do not in the
aggregate result in a change of Control of Franchisee. 

                    C.
Subject to Sections 17.4 and 17.8, if any Interestholder holding a Controlling
Ownership Interest in Franchisee dies or becomes mentally incompetent, the
interest of such person may be Transferred in accordance with and subject to
the terms of Section 17.2.A(1) provided that (i) any such Transfer will be made
within twelve (12) months of the date of death or mental incompetency, (ii) the
obligations of Franchisee under this Agreement are satisfied pending the
Transfer, and (iii) the Hotel will be continuously operated by Franchisee or a
Management Company as required under Section 9.4. If such death or mental
incompetency results in the temporary appointment of an executor, custodian or
other representative for a period not to exceed twelve (12) months, such
appointment will not be deemed a breach of this Section 17 if the conditions
above are satisfied, and (x) Franchisor is given notice of such appointment
within thirty (30) days of the date thereof; and (y) the appointee agrees to
cause the Hotel to be operated in compliance with this Agreement. 

          17.4 Proposed
Transfer to Competitor and Right of First Refusal. 

                    A.
If there is a proposed Transfer to a Competitor of (i) the Hotel (or any
interest therein), (ii) Franchisee’s Ownership Interest in this Agreement, or
(iii) an Ownership Interest or other interest in either Franchisee or a Control
Affiliate, Franchisee will give notice thereof to Franchisor, stating the full
name and identity of the prospective purchaser or tenant, as the case may be,
including the names and addresses of the Interestholders of such prospective
purchaser or tenant, the price or rental and all other terms of such proposed
transaction, together with all other related information that is reasonably
requested by Franchisor. Within thirty (30) days after receipt by Franchisor of
such notice and information from Franchisee, Franchisor will notify Franchisee
of Franchisor’s election, made in its sole discretion, of one (1) of the
immediately following four (4) alternatives: 

                              (1)
Acquisition of Control of Hotel for Cash. If the proposed Transfer is a
sale or lease of the Hotel for cash consideration, Franchisor (or its designee)
will have the right to purchase or lease the Hotel at the same price or rental
and upon the same terms (other than any terms relating to the Brand of the
Hotel) as those contained in such offer from (or to) a Competitor. In such
event, Franchisee and Franchisor (or its designee) will promptly enter into an
agreement for sale or lease at the price or rental and on terms consistent with
such offer. 

                              (2)
Acquisition of Franchisee/Acquisition of Control of Hotel. If the
proposed Transfer is a purchase or lease of all or a portion of the Ownership
Interests or the assets (which includes the Hotel) of Franchisee or a Control
Affiliate, or a merger with or into Franchisee or a Control Affiliate, or the
acquisition of Franchisee’s Ownership Interest in the Hotel, or any sale or
lease of the Hotel involving non-cash consideration, or other form of Transfer,
Franchisor (or its designee) will have the right to purchase or lease the Hotel
at the purchase or lease price under terms consistent with such offer as agreed
to by the parties. If the parties are unable to agree as to a purchase or lease
price and terms within fourteen (14) days of Franchisor’s election, the
purchase or lease price of the Hotel will be determined as provided below. 

                                        (a)
Within thirty (30) days after the fourteen (14) day period in this Section
17.4.A(2) expires, Franchisor and Franchisee will each obtain, at its own
expense, an appraisal of the fair market value of the Hotel from a nationally
recognized appraiser of Hotel properties comparable to the Hotel. In
determining the fair market value, the appraisers will assume that the Hotel is
not subject to a management agreement but is subject to this Agreement. If,
after receiving such appraisals, the 

37

parties agree on the fair market value of the Hotel, such agreed fair
market value will constitute the purchase or lease price. 

                                        (b)
If within fourteen (14) days after receiving the appraisals the parties are not
able to agree on such fair market value, the purchase or lease price will be
determined by “baseball arbitration” in Washington, D.C. in accordance with the
Arbitration Rules for the Real Estate Industry of the American Arbitration
Association then in effect (“AAA Rules”) as modified by this Agreement. The
parties will jointly select a third party to act as the sole arbitrator (the
“Arbitrator”) to determine the fair market value of the Hotel, and such
Arbitrator will be a person having at least ten (10) years’ recent professional
experience as to the subject matter in question and will be qualified to act as
an Arbitrator in accordance with the AAA Rules. If the parties do not agree on
an Arbitrator with such qualifications within fifteen (15) days after the
expiration of such fourteen (14) day period referred to above, the Arbitrator
will be appointed by the American Arbitration Association in Washington, D.C.
in accordance with the AAA Rules. 

                                        (c)
The Arbitrator will be instructed and obligated to decide, within thirty (30)
days after appointment, whether the appraisal submitted by Franchisor or the
appraisal submitted by Franchisee most accurately reflects the fair market
value of the Hotel based upon the appraisals submitted and such information as
is normally relied upon by an appraiser of hotels and real estate. Each party
agrees to fully cooperate and provide all information requested by the
Arbitrator related to the Arbitrator’s determination of fair market value
hereunder. The Arbitrator’s choice of appraisal will be in writing, will
constitute the purchase price hereunder, and will be final, conclusive and
binding on the parties as an “award” under the AAA Rules, and may be enforced
by a court of competent jurisdiction. The expenses of the arbitration will be
borne equally by the parties to the arbitration. Franchisor (or its designee)
will have the right, at any time within thirty (30) days of being notified in
writing of the decision of the Arbitrator, to either (a) enter into an
agreement to purchase the Hotel premises and related property at the valuation
determined by the Arbitrator, or (b) give notice of its intent to terminate
this Agreement under Section 19.1.K within fourteen (14) days of such notice.
If Franchisor elects to give notice of its intent to terminate this Agreement
within fourteen (14) days of such notice, upon receipt of Franchisor’s election
to terminate, Franchisee must either: (i) cancel the Transfer to a Competitor
on or before the end of such fourteen (14) days or (ii) remove the Hotel from
the System, pay liquidated damages, and otherwise comply with Franchisee’s
post-termination obligations, in each case, as set forth in Sections 19.3 and
20 or, at Franchisor’s election, as may be set forth in a termination agreement
on terms acceptable to Franchisor. 

                              (3)
Termination of Franchise Agreement. Franchisor may place this Agreement
in default and give notice of its intent to terminate this Agreement under
Section 19.1.K within fourteen (14) days of such notice. If Franchisor elects
to give notice of its intent to terminate this Agreement within fourteen (14)
days of such notice, upon receipt of Franchisor’s election to terminate,
Franchisee must either: (i) cancel the Transfer to a Competitor on or before
the end of such fourteen (14) days or (ii) remove the Hotel from the System,
pay liquidated damages, and otherwise comply with Franchisee’s post-termination
obligations, in each case, as set forth in Sections 19.3 and 20 or, at
Franchisor’s election, as may be stated in a termination agreement on terms
acceptable to Franchisor. 

                              (4)
Consent. Franchisor may consent to such Transfer, which consent will be
on such terms as Franchisor may require, in its sole discretion. 

                    B.
If a Competitor proposes to acquire all of the Ownership Interests of an
Affiliate of Franchisee and the Affiliate does not directly or indirectly own,
lease, or operate any hotels operating under a trade name owned by Franchisor
or any of its Affiliates, Franchisor will not have any right of first 

38

refusal to purchase the Hotel or right to terminate this Agreement, as
provided above in Section 17.4.A with respect to such Transfer. 

                    C.
If the Transfer to a Competitor is by foreclosure, judicial or legal process,
or any other means, Franchisor (or its designee) will have the right to
purchase the Hotel upon notice to Franchisee. If the parties are unable to
agree as to a purchase price and terms within thirty (30) days of Franchisor’s
notice, the fair market value of the Hotel premises and related property will
be determined by arbitration in accordance with Section 17.4.A(2). This
provision will survive the termination of this Agreement under Section 19.1 in
connection with the Competitor’s actions under this Section 17.4.C. 

                    D.
If Franchisee or any of its Affiliates becomes a Competitor, Franchisee will
notify Franchisor in accordance with Section 17.4.A and provide all information
reasonably requested by Franchisor related to becoming a Competitor and
required thereby, or if Franchisor otherwise determines that Franchisee or any
of its Affiliates has become a Competitor, Franchisor will so notify Franchisee
and Franchisor will have the rights provided in Section 17.4.A(2) as if the
Hotel were subject to a non-cash offer from a third party except that
Franchisor will have thirty (30) days instead of fourteen (14) to agree on
purchase terms. 

          17.5 Interest
in Real Estate and Injunctive Relief. 

                    Franchisee
acknowledges that Franchisor’s rights under Section 17.4 are real estate rights
with respect to the Hotel. Franchisor is entitled to file a record of such
interest in and among the appropriate real estate records of the jurisdiction
in which the Hotel is located, and Franchisee will cooperate as requested by
Franchisor in such filing. Such filing will indicate that Franchisor’s rights
in real estate under Section 17.4 will be subordinate only to the exercise of
the rights of bona fide lenders under a mortgage or security deed secured by
the Hotel if and for so long as: (i) the lender is not a Competitor or
Affiliate of a Competitor; (ii) any such mortgage or security deed is and
remains validly recorded and in full force and effect; and (iii) the
indebtedness underlying such mortgage or security deed complies with the
requirements of Section 5.2. Franchisee agrees that damages are not an adequate
remedy if Franchisee breaches its obligations under such Section 17.4 and that
Franchisor will be entitled to injunctive relief to prevent or remedy such
breach without the necessity of proving the inadequacy of money damages as a remedy
and without the necessity of posting a bond. If this Agreement is terminated
and Franchisor’s rights under Sections 17.4, 17.5 and 17.6 are no longer in
effect, at the request of Franchisee or the transferee, Franchisor will deliver
upon request an instrument in recordable form to terminate any such recording
of interest in real estate. 

          17.6 Survival
of Right of First Refusal. 

                    Except
for termination of this Agreement under Section 17.4.A(3), Franchisee agrees
that Franchisor’s rights under Section 17.4 will survive early termination of
this Agreement (as opposed to expiration of this Agreement as provided in
Section 4.1) and will bind Franchisee and its Affiliates, if the events in
either Section 17.6.A or Section 17.6.B occur: 

                    A.
before or within six (6) months after termination of this Agreement, a proposed
Transfer to a Competitor occurs with respect to the Hotel, Franchisee or an
Affiliate, or an Ownership Interest in either Franchisee or such Affiliate; and

                              (1)
this Agreement is terminated under (x) Sections 19.1.K or L, (y) Section 19.2.B
or (z) Section 19.2.D based upon a violation of Section 13.2; or 

39

                              (2)
this Agreement is terminated under Sections 19.1.A, B, C, D or E and an
Affiliate, principal, or director of Franchisee obtains possession of the
Hotel, or such Affiliate, principal, or director is the party filing the suit
or seeking the execution or foreclosure referenced in Section 19.1. 

                    B.
there is a purported early termination of this Agreement (as opposed to
expiration of this Agreement as provided in Section 4.1) by Franchisee and
before or within six (6) months after such purported termination, a proposed
Transfer to a Competitor occurs with respect to the Hotel, the Franchisee or an
Affiliate of Franchisee, or an Ownership Interest in either Franchisee or such
Affiliate. 

          17.7 Security
Interests in the Hotel or Franchisee. 

                    In
connection with any financing benefiting the Hotel, Franchisee will not
mortgage, grant a security interest in, or otherwise pledge as collateral, the
Hotel, and will not permit a mortgaging, granting of a security interest in, or
otherwise pledging as collateral of an Ownership Interest in Franchisee, or in
a Person Controlling Franchisee to banks or other bona fide reputable lending
institutions that are not Competitors, unless: (i) such financing meets the
requirements of Section 5.2 or Franchisor otherwise consents to such financing
in writing; (ii) this Agreement will not be pledged, mortgaged, assigned as
collateral for any financing, or the subject of a security interest; and (iii)
if such lender forecloses on, or otherwise exercises its rights against, the
Hotel or such Ownership Interests, Franchisor will have the rights under
Section 19.1. 

          17.8 Proposed
Transfers to Specially Designated National or Blocked Person. 

                    No
Transfer of any direct or indirect Ownership Interest in Franchisee, the Hotel
or any Marriott Agreement will be made to a Specially Designated National or
Blocked Person or to a Person in which a Specially Designated National or
Blocked Person has an interest or provides funding. Any such Transfer will be a
material default under this Agreement. 

          17.9 Transfers
by Franchisor. 

                    Franchisor
will have the right to Transfer this Agreement to any Person without prior
notice to, or consent of, Franchisee, provided such Person (a) assumes
Franchisor’s obligations to Franchisee under this Agreement, (b) is an
Affiliate of Franchisor or acquires substantially all of Franchisor’s rights in
respect of System Hotels in the relevant Category, and (c) is a Person
reasonably capable of performing Franchisor’s obligations under this Agreement.
Franchisee agrees that any such Transfer will constitute a release and novation
of Franchisor with respect to this Agreement. This Agreement will be binding on
and inure to the benefit of Franchisor and the successors and assigns of
Franchisor. 

18. PUBLICLY-TRADED SECURITIES AND
SECURITIES OFFERINGS

          18.1 Franchisee’s
Obligations. 

                    A.
Publicly-traded securities in Franchisee or in any Control Affiliate may be
Transferred in compliance with Applicable Law without Franchisor’s consent if
the Transfer will not result in a Transfer of Control (as determined by
Franchisor) in Franchisee or a Control Affiliate. Any Transfer of Ownership
Interests in Franchisee or a Control Affiliate that will result in a Transfer
of Control of Franchisee or any Control Affiliate (as determined by Franchisor)
will be subject to Section 17.2. 

40

                    B.
Without limiting Franchisor’s rights under Section 17.2, in connection with any
Transfer of Ownership Interests in Franchisee or a Control Affiliate involving
any proposed public or private offering of securities that uses in any way the
Proprietary Marks, identifies the Hotel, Franchisor or its Affiliates, or
discusses the relationship between Franchisor or its Affiliates and franchisee
or its Affiliates, Franchisee must also: 

                              (1)
provide Franchisor with appropriate representation or information demonstrating
the lawfulness of the offering and obtain Franchisor’s consent to such use; 

                              (2)
fully and unconditionally indemnify and hold harmless Franchisor and its
Affiliates in connection with the Prospectus and the offering; 

                              (3)
use any Proprietary Marks in the Prospectus and in any supporting or related
materials only as approved by Franchisor in writing; and 

                              (4)
submit to Franchisor for its review at least thirty (30) days before the
earliest of the date on which any Prospectus is delivered to a potential
investor or filed with the Securities and Exchange Commission or any other
governmental authority responsible for the regulation of the sale of
securities, a copy of the proposed Prospectus, all supporting and related
materials and releases. Franchisor, in its sole discretion, may require
Franchisee to pay for its costs and expenses in performing the limited review
of the proposed Prospectus in accordance with this Section 18, including
attorneys’ fees and expenses. 

                    C.
If the indemnification provided for in Section 18.1.B(2) above will for any
reason be unavailable or insufficient to hold Franchisor and its Affiliates
harmless in respect of any claim, then Franchisee will, in lieu of indemnifying
Franchisor and its Affiliates, contribute to the amount paid or payable by
Franchisor and its Affiliates as a result of any such claim, action, loss
liability, cost, and expense of any kind, including reasonable attorneys’ fees,
in respect thereof, (i) in such proportion as will be appropriate to reflect
the relative benefits received by Franchisor and its Affiliates on the one hand
and Franchisee and its Affiliates on the other or (ii) if (but only if) the
allocation provided by clause (i) above is not permitted by Applicable Law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of Franchisor and
its Affiliates on the one hand and Franchisee and its Affiliates on the other
with respect to any claim, or action in respect thereof, as well as any other
relevant equitable considerations. Franchisee and Franchisor agree that it
would not be just and equitable if contributions under this Section 18.1 were
to be determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to
herein. Franchisee’s obligations under this Section 18.1 will survive the
termination or expiration of this Agreement. 

          18.2 Limited
Franchisor Consent. 

                    Franchisor’s
review of the Prospectus will be conducted solely for the benefit of Franchisor
to determine the accuracy and completeness of any description of Franchisor’s
relationship with Franchisee and compliance with the other requirements of
Section 18.1 and not to benefit or protect any other Person, and its consent
will not constitute any kind of authorization, acceptance or agreement,
endorsement, or ratification of the offering or Prospectus, either express or
implied. 

41

19. DEFAULT AND TERMINATION

          19.1 Immediate
Termination. 

                    Franchisor
may terminate this Agreement and all rights granted to Franchisee under this
Agreement without affording Franchisee any opportunity to cure the default,
effective immediately upon notice to Franchisee (or upon such notice period or
cure period given by Franchisor in its sole discretion or as required by
Applicable Law), if: 

                              A.
Franchisee or any Guarantor becomes insolvent, generally does not pay its debts
as they become due, admits that any of them is unable to pay its debts as they
become due, or makes a general assignment for the benefit of creditors; or
proceedings for a compromise with creditors are instituted by, against, or
consented to by Franchisee or any Guarantor; or 

                              B.
Franchisee or any Guarantor files a voluntary petition under any bankruptcy,
insolvency, or similar law, or consents to an involuntary petition under any
bankruptcy, insolvency, or similar law filed against it; or an order approving
an involuntary petition in bankruptcy, insolvency, or similar declaration filed
against Franchisee or any Guarantor remains unvacated ninety (90) days after
the date of entry thereof; or 

                              C.
a court of competent jurisdiction enters an order, judgment, or decree, on the
application of a creditor, adjudicating Franchisee or any Guarantor as
bankrupt, insolvent, or similar status or approving a petition seeking
reorganization or appointing a receiver, trustee, or liquidator of all or a
substantial part of Franchisee’s or any Guarantor’s assets, and such order,
judgment, or decree remains unstayed and in effect for a period of ninety (90) days
or will be consented to by Franchisee or such Guarantor; or 

                              D.
execution is levied against the Hotel, Franchisee, or any material real or
personal property comprising the Hotel in connection with a final judgment for
the payment of money; or 

                              E.
a suit to foreclose any lien, mortgage, or security interest in the Hotel or
any material real or personal property that is a part of the Hotel, or any
security interest in Franchisee is initiated and not vacated within sixty (60)
days; or 

                              F.
a threat or danger to public health or safety shall have occurred from the
construction, renovation, repair, refurbishment, upgrading, remodeling,
maintenance, or operation of the Hotel that, in the opinion of Franchisor,
could reasonably be expected to result in: (i) substantial liability or (ii) an
adverse effect on the Hotel, other System Hotels, the System, the Proprietary
Marks, or the goodwill associated therewith; provided, however, Franchisee may
request that Franchisor reinstate this Agreement, and Franchisor will
thereafter reinstate this Agreement, if, within six (6) months after
termination under this Section 19.1.F., the threat or danger to public health
or safety is eliminated and Franchisor has determined that such reinstatement
would not cause substantial liability or loss of goodwill; or 

                              G.
Franchisee or any principal, director, officer, shareholder, or agent of
Franchisee contrary to the provisions of this Agreement discloses or causes to
be disclosed any Confidential Information provided to Franchisee or fails to
exercise reasonable care to prevent such disclosure; or 

                              H.
(i) any of the representations and warranties by Franchisee under Sections 22.4
or 27 fails to be true and correct in any material respect when made, deemed
made, 

42

furnished or as of the date of this Agreement or (ii) any of the
representations and warranties by Franchisee under Sections 22.4 or 27 fails to
be true and correct at any time during the Term; or 

                              I.
an inspection of Franchisee’s books and records under Section 15.3.B establishes
a pattern of underreporting by Franchisee involving three (3) or more Accounting
Periods within any twenty-four (24) month period; or 

                              J.
Franchisee or any Interestholder of a Controlling Ownership Interest in
Franchisee is or has been convicted of a felony or other similar crime or
offense or has engaged in a pattern or practice of acts or conduct that is
likely in Franchisor’s judgment to, as a result of the adverse publicity that
has occurred in connection with such offense, acts, or conduct, adversely
affect the Hotel, other System Hotels, the System, the Proprietary Marks, the
goodwill associated therewith or Franchisor’s interests therein, any Franchisor
Lodging Facility or any other business conducted by Franchisor or any of its
Affiliates; or 

                              K.
Franchisee becomes a Competitor or an Affiliate of a Competitor or a Transfer
occurs that does not comply with the provisions of Section 17 or 18; or 

                              L.
(i) Franchisee dissolves or liquidates, (ii) Franchisee loses its right to
manage or operate the Hotel, (iii) Franchisee loses ownership or the right to
possession of the Hotel or the Approved Location, except as otherwise provided
in Section 21, or (iv) the Hotel ceases to operate as a System Hotel; or 

                              M.
Franchisee fails to achieve the thresholds of performance established by the
Quality Assurance Program and such failure has not been cured within the
applicable cure period for such failure under the Quality Assurance Program; or

                              N.
if Franchisee or Owner is in default under the Lease or Owner Agreement, or if
the Lease or Owner Agreement is terminated for any reason. 

          19.2 Termination
Upon Notice with Opportunity to Cure. 

                    Franchisor
may terminate this Agreement and all rights granted to Franchisee hereunder for
the reasons set forth below if (i) Franchisor gives Franchisee notice of
default that provides thirty (30) days for cure of the default (or such greater
number of days given by Franchisor in its sole discretion or required by
Applicable Law) and identifies the breach or breaches of this Agreement, and
(ii) Franchisee fails to cure in the time and manner specified in the notice of
default or as specifically provided in this Section 19.2: 

                              A.
Franchisee fails to do any of the following in a timely manner to Franchisor’s
satisfaction: (i) perform any of the requirements stated in Exhibit B by the
dates required for commencement or completion of such requirements; or (ii)
begin or complete any renovation, repair, refurbishment, upgrading or
remodeling of the Hotel as required by Franchisor under Section 11.1 or any
Standards for the renovation, repair, refurbishment, upgrading or remodeling of
the Hotel; or 

                              B.
Franchisee and its Affiliates fail to pay any indebtedness to Franchisor or any
of its Affiliates when same becomes due and payable; or 

                              C.
any Interestholder of a non-Controlling Ownership Interest in Franchisee, or
any officer, director, or employee of Franchisee is or has been convicted of a
felony or other crime or offense or has engaged in a pattern or practice of
acts or conduct that is likely, as a result of 

43

the adverse publicity that has occurred in connection with such
offense, acts or conduct, in Franchisor’s judgment, to adversely affect the
Hotel, other System Hotels, the System, the Proprietary Marks, the goodwill
associated therewith or Franchisor’s interests therein, any Franchisor Lodging
Facility or any other business conducted by Franchisor or any of its
Affiliates, and such Person is not terminated from its relationship with
Franchisee; or 

                              D.
Franchisee fails to fully comply with the Standards or there occurs any other
breach of this Agreement or any of the other Marriott Agreements. 

          19.3 Termination
by Franchisor and Liquidated Damages. 

                    A.
Franchisee has agreed to operate the Hotel as a System Hotel in compliance with
this Agreement for the Term. If Franchisee should fail to do so, Franchisee
acknowledges and agrees that Franchisor would be damaged in several ways,
including loss of future Franchise Fees and Marketing Fund Charges and injury
to the goodwill in the Proprietary Marks. Franchisee acknowledges and agrees
that it is difficult to estimate the revenues of the Hotel over a period of
years and that elements of Franchisor’s damages not directly calculated from
the Hotel’s revenues are inherently difficult to calculate and the proofs
thereof would be burdensome and costly (although such damages are real and
meaningful to Franchisor and the System). Franchisor and Franchisee agree that
liquidated damages (calculated as set forth in this Section 19.3) are not a
penalty and represent a reasonable estimate of just and fair compensation of
Franchisor for the damages that it would suffer if Franchisee should fail to
operate the Hotel as a System Hotel in compliance with this Agreement for the
Term. Upon termination of this Agreement under this Section 19, Franchisee will
promptly pay to Franchisor liquidated damages in an amount equal to (i) the
average monthly Franchise Fees and Marketing Fund Charges payable to Franchisor
during the previous two (2) years times (ii) the lesser of (x) thirty-six (36)
or (y) one-half (1/2) the number of months that would then otherwise remain in
the Term. If the Hotel has not opened with the approval of Franchisor or has
not been operating as a System Hotel pursuant to a franchise agreement for at
least two (2) years (whether pursuant to this Agreement or a franchise
agreement between Franchisor and a previous franchisee), the following will be
used instead of clause (i) in the above calculation: the greater of (a) the
average monthly Franchise Fees and Marketing Fund Charges payable to Franchisor
for the previous two (2) years for all United States System Hotels on a per
room basis times the number of rooms at the Hotel or (b) the average monthly
Franchise Fees and Marketing Fund Charges payable for the Hotel for the period
during which the Hotel was opened as a System Hotel; provided that if either
party believes that such calculation would not be representative of the
projected stabilized performance of the Hotel, the party will notify the other
in writing and clause (i) in the above calculation of liquidated damages will
be recalculated by multiplying the projected stabilized revenue for the Hotel
submitted by Franchisee in its franchise application by the highest percentage
rates used to calculate Marketing Fund Charges and any component of Franchise
Fees in this Agreement. 

                    B.
Franchisee further acknowledges and agrees that if this Agreement is terminated
with Special Circumstances (as defined below), Franchisor and the System will
suffer greater and fundamentally different damages due to the number or types
of Franchisor Lodging Facilities exiting the System, which practicably may not
be replaceable or, if replaceable, may take longer to replace due to the
Special Circumstances. The consequences of Special Circumstances include
significant loss of distribution in the markets served by the hotels, confusion
to customers and loss of customer confidence due to unavailability of
Franchisor Lodging Facilities in locations previously serviced by such
Franchisor Lodging Facilities, disadvantage to Franchisor in competing for
national accounts and other bookings, loss of foregone opportunities in markets
where the Franchisor Lodging Facilities were located and increased difficulty in
quality System growth. Therefore, Franchisor and Franchisee agree that if this
Agreement is terminated with Special Circumstances a distinct liquidated
damages calculation is warranted, as described below. If a termination occurs
with Special Circumstances, then Franchisee will 

44

pay to Franchisor the amount of liquidated damages that is due under
Section 19.3.A times the applicable percentage stated in the chart below
(“Special Circumstances Liquidated Damages”). “Special Circumstances” means
that, in addition to this Agreement, one or more franchise, license or owner
agreements between Franchisor and Franchisee, or the respective Affiliates of
either, are terminated within a twelve-month period that includes the
termination date of this Agreement and the termination of any of such
agreements together with the termination of this Agreement involve at least one
set of circumstances stated in the first column of the chart below: 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 2

 Agreements

 Terminated

 	
  

 	
 3-4

 Agreements

 Terminated

 	
  

 	
 5-8

 Agreements

 Terminated

 	
  

 	
 9-15

 Agreements

 Terminated

 	
  

 	
 16 –25

 Agreements

 Terminated

 	
  

 	
 >26

 Agreements

 Terminated

 
	
  

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 
	
 5 or More
 Agreements For Franchisor Lodging Facilities Are Terminated

 	
  

 	
 N/A

 	
  

 	
 N/A

 	
  

 	
 125%

 	
  

 	
 175%

 	
  

 	
 200%

 	
  

 	
 300%

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3 or More
 Agreements For Franchisor Lodging Facilities In Same State Are Terminated

 	
  

 	
 N/A

 	
  

 	
 125%

 	
  

 	
 150%

 	
  

 	
 200%

 	
  

 	
 250%

 	
  

 	
 300%

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3 or More
 Agreements For Franchisor Lodging Facilities in Top 20% of Room Count,
 Franchise Fees or GSS Score for Relevant System Are Terminated

 	
  

 	
 N/A

 	
  

 	
 125%

 	
  

 	
 150%

 	
  

 	
 200%

 	
  

 	
 250%

 	
  

 	
 300%

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3 or More
 Agreements For Franchisor Lodging Facilities in Same Metropolitan Statistical
 Area Are Terminated

 	
  

 	
 N/A

 	
  

 	
 175%

 	
  

 	
 250%

 	
  

 	
 300%

 	
  

 	
 300%

 	
  

 	
 300%

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2 or More
 Agreements For Franchisor Lodging Facilities With Over 400 Guestrooms that
 are the Major Group Representation in a Secondary or Tertiary Market Are
 Terminated

 	
  

 	
 150%

 	
  

 	
 175%

 	
  

 	
 250%

 	
  

 	
 300%

 	
  

 	
 300%

 	
  

 	
 300%

 

45

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 2

 Agreements

 Terminated

 	
  

 	
 3-4

 Agreements

 Terminated

 	
  

 	
 5-8

 Agreements

 Terminated

 	
  

 	
 9-15

 Agreements

 Terminated

 	
  

 	
 16 –25

 Agreements

 Terminated

 	
  

 	
 >26

 Agreements

 Terminated

 
	
  

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 
	
 2 or More
 Agreements For Franchisor Lodging Facilities Resorts or Hotels for Which at
 Least 50% of Guests are Leisure Travelers Are Terminated

 	
  

 	
 150%

 	
  

 	
 175%

 	
  

 	
 250%

 	
  

 	
 300%

 	
  

 	
 300%

 	
  

 	
 300%

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2 or More
 Agreements For JW Marriott Hotels Are Terminated

 	
  

 	
 150%

 	
  

 	
 175%

 	
  

 	
 250%

 	
  

 	
 300%

 	
  

 	
 300%

 	
  

 	
 300%

 

For each agreement terminated, Special Circumstances Liquidated Damages
will be calculated using the largest applicable percentage multiplier in the
chart. By way of example, if six agreements for Franchisor Lodging Facilities
are terminated, five of which are for hotels located in the same state (and the
five agreements do not have any other applicable Special Circumstances), and
the remaining agreement is for a hotel located in another state (and it does
not have any other applicable Special Circumstances), the percentage multiplier
for each of the five agreements for hotels located in the same state will be
150% (in the chart, see row entitled “3 or More Agreements For Franchisor
Lodging Facilities In Same State Are Terminated” and column entitled “5-8
Agreements Terminated”) and the percentage multiplier for the remaining
agreement will be 125% (in the chart, see row entitled “5 or More Agreements
For Franchisor Lodging Facilities Are Terminated” and column entitled “5-8
Agreements Terminated”). 

                    C.
If, in connection with the termination of this Agreement, the Hotel is
Transferred to a Competitor, or any other event specified in Section 17.4
occurs, as a result of which Franchisor has the rights provided therein, and
either (x) Franchisee does not comply with Franchisor’s right of first refusal
or comply with its other obligations relating to such right of first refusal
under Section 17.4 or (y) Franchisor elects to terminate this Agreement or
condition its consent to such Transfer on the payment of liquidated damages,
Franchisee will pay to Franchisor the amount of liquidated damages that is due
under Section 19.3.A times one hundred fifty percent (150%) (“Competitor
Liquidated Damages”). If the Transfer to a Competitor also involves Special
Circumstances for which the percentage multiplier is greater than 150%, as
determined under Section 19.3.B, Franchisee will promptly pay to Franchisor
Special Circumstances Liquidated Damages instead of Competitor Liquidated
Damages. 

                    D.
In addition to liquidated damages, Franchisor will have the right to recover
reasonable attorneys’ fees and court costs incurred in collecting such sums
plus interest on all amounts due under Section 19.3 which will accrue at a rate
per annum equal to the Interest Rate from the date such liquidated damages are
due until paid. Such legal remedies will not preclude Franchisor from any
equitable remedies to which it may be entitled under Applicable Law.
Franchisee’s obligation to pay Franchisor liquidated damages, if applicable,
and other sums pursuant to Section 19.3 will survive termination of this Agreement.
Payment of liquidated damages to Franchisor will not affect the obligations of
Franchisee to take action or abstain from taking action after the termination
of this Agreement as required by Section 19.3 and Section 20 or Franchisor’s
remedies in the event that Franchisee does not comply with its obligations
thereunder. 

46

20. POST-TERMINATION

          20.1 Franchisee
Obligations. 

                    A.
Upon expiration or other termination of this Agreement, all rights granted
under this Agreement to Franchisee will immediately terminate and Franchisee,
at its expense, will comply with each of the following obligations: 

                              (1)
Franchisee will immediately cease to operate the Hotel as a System Hotel and
will not directly or indirectly represent or give the impression that it is a
present or former franchisee or licensee of Franchisor or that the Hotel was
previously part of the System; 

                              (2)
Franchisee will immediately and permanently cease to use and remove from the
Hotel and any other place of business any Intellectual Property and any other
identifying characteristics and marks of the System, including any Electronic
Systems, signs, fixtures, furniture, furnishings, equipment, advertising materials,
stationery, supplies, forms, or other articles that display any Proprietary
Marks or any trade dress or other distinctive features or designs associated
with Franchisor or the System. Any signs containing any Proprietary Marks that
Franchisee is unable to remove from the Hotel despite its best efforts upon
termination or expiration of this Agreement will be completely covered by
Franchisee from view and physically removed within twenty-four (24) hours after
termination or expiration. Franchisee also will immediately remove all content
regarding Franchisor, the System, and the Proprietary Marks from any Internet
sites under its control and will take all necessary actions required by
Franchisor to disassociate itself from Franchisor on the Internet. Franchisee
will, at Franchisor’s option, cancel or assign to Franchisor or its designee,
any domain name owned by or under the control of Franchisee or its Affiliates
that contains any Proprietary Mark, or any mark that is in Franchisor’s sole
opinion confusingly similar, including misspellings and acronyms; 

                              (3)
Franchisee must take such action as may be necessary to cancel any fictitious,
trade, or assumed name or equivalent registration that contains any Proprietary
Mark or any variations thereof, and Franchisee must furnish Franchisor with
evidence satisfactory to Franchisor of compliance with this obligation within
thirty (30) days after termination or expiration of this Agreement; 

                              (4)
Franchisee will immediately turn over to Franchisor the originals and all
copies of any Confidential Information, Intellectual Property, and all other
System materials relating to the operation of the Hotel and the System, or such
other information generated by Franchisee through its use of the System that is
deemed confidential by Franchisor, all of which are acknowledged by Franchisee
to be Franchisor’s property. Franchisee will not retain a copy or record of any
of the foregoing, except for Franchisee’s copy of this Agreement, any
correspondence between the parties, and any other documents that Franchisee
reasonably needs for compliance with any provisions of Applicable Law. If
Franchisor permits Franchisee to continue to use any Intellectual Property
after the termination or expiration date (such permission to be explicit and
specific), such use by Franchisee will be in accordance with the terms of this
Agreement; 

                              (5)
Franchisee agrees that it will make no use of any of the Confidential
Information or System or disclose or reveal it or any portion thereof to anyone
not employed by Franchisor or its franchisees or licensees. Additionally,
Franchisee will not assist anyone not franchised or licensed to use the System
in constructing or equipping any hotel premises incorporating the distinctive
features or equipment layout that Franchisor (or any of its Affiliates) owns,
has originated, or developed and which are identifying characteristics of
businesses using the System; and 

47

                              (6)
Franchisee will immediately make such alterations as may be necessary to
distinguish the Hotel clearly from its former appearance and other System
Hotels in order to prevent any possibility of confusion by the public.
Franchisee will make such specific additional changes as Franchisor may
reasonably request for this purpose. Until all alterations required by this
Section 20.1.A are completed, Franchisee must maintain a conspicuous sign at
the registration desk in a form specified by Franchisor, stating that the Hotel
is no longer associated with System Hotels. Franchisee will advise all
customers and prospective customers telephoning the Hotel that the Hotel is no
longer associated with System Hotels. 

          Franchisee
agrees that its failure to comply with any of the requirements of this Section
20.1.A will cause irreparable injury to Franchisor. 

                    B.
Upon expiration or other termination of this Agreement, Franchisee will
promptly pay: (i) all amounts owing to Franchisor and any of its Affiliates;
(ii) any costs and expenses incurred by Franchisor, or fees charged by
Franchisor, in connection with removing the Hotel from the System; and (iii)
without limiting Franchisee’s obligations that relate to the period prior to
the date of such termination, an amount equal to a reasonable estimate of costs
and fees incurred or likely to be incurred, but not yet accumulated, billed
and/or invoiced, which will be due on the date Franchisee is notified of such
amount. Franchisor is entitled to receive interest on any amount not paid when
due hereunder which will accrue at a rate per annum equal to the Interest Rate
from the date such payment was due. 

          20.2 Franchisor’s
Rights Upon Termination or Expiration. 

                    Upon
or prior to the termination or expiration of this Agreement, Franchisor may
give notice of the pending expiration or termination of this Agreement to, and
take such other action relating to, customers, suppliers, travel agents,
wholesalers, concessionaires, and other Persons that might be affected by such
expiration or termination. 

          20.3 Survival.

                    The
rights and obligations of the parties under this Section 20 will survive
termination or expiration of this Agreement. 

21. CONDEMNATION AND CASUALTY 

          21.1 Condemnation.

                    Franchisee
will, at the earliest possible time, give Franchisor notice of any proposed
taking by eminent domain, condemnation, compulsory acquisition, or similar proceeding.
If such taking is substantial enough to render impractical the continued
operation of the Hotel in accordance with the System and guest expectations,
this Agreement will terminate upon notice by Franchisor or Franchisee to the
other party and the execution and delivery of a termination agreement and
release in form and substance acceptable to Franchisor, and Franchisor and
Franchisee will share equitably in the condemnation award; provided, however,
Franchisor’s portion of such award will be limited to compensating Franchisor
for Franchisor’s lost Franchise Fees under this Agreement, which amount will
not exceed the amount of the applicable liquidated damages due under Section
19.3. Further, if such condemnation is the sole basis for termination of this
Agreement, Franchisor’s portion of such award will be in lieu of payment of the
applicable liquidated damages due under Section 19.3. If such taking, in
Franchisor’s opinion, will not render the continued operation of the Hotel
impractical, Franchisee must promptly make whatever repairs and restorations
are necessary to make the Hotel conform substantially to 

48

its condition, character, and appearance immediately before such
taking, according to plans and specifications approved by Franchisor. Franchisee
will take all measures necessary to ensure that the resumption of normal
operation of the Hotel is not unreasonably delayed. 

          21.2 Casualty.

                    If the Hotel is damaged or destroyed by fire or other cause and such
damage or destruction is substantial and material, affecting over fifty percent
(50%) of the Hotel, and necessitates the closing of the Hotel for a period in
excess of ninety (90) days, Franchisee will have the right to terminate this
Agreement upon notice to Franchisor given within ninety (90) days of such
closing of the Hotel if it elects not to repair or rebuild the Hotel.
Franchisee will not be required to pay Franchisor the liquidated damages due
under Section 19.3 in connection with such termination if such casualty is the
sole basis for termination of this Agreement and Franchisee executes and
delivers to Franchisor a termination agreement and release in form and
substance acceptable to Franchisor; provided, however, if subsequent to such
notice and before the date on which the Term would otherwise have ended under
Section 4 if such notice of termination had not been given (the “Term
Expiration Date”), Franchisee or any of its Affiliates or any Interestholder in
Franchisee with an Ownership Interest of twenty percent (20%) or greater
operates a hotel; vacation, timesharing, interval or fractional ownership
facility; condominium; apartment; or other lodging product at the Approved
Location (the “Other Lodging Product”), which Other Lodging Product is not
operated under a license or franchise from Franchisor or one of its Affiliates,
then in such event, Franchisee will be obligated to promptly pay to Franchisor
an amount equal to the applicable liquidated damages set forth in Section 19.3,
but clause (ii) in the calculation of liquidated damages in Section 19.3 will
be the lesser of (a) thirty-six (36) or (b) one-half (1/2) the number of months
then remaining between (x) the date upon which the Other Lodging Product is
first operated, and (y) the Term Expiration Date. Franchisee’s obligation set
forth in this Section 21.2 will survive termination of this Agreement. If the
Hotel does not close for ninety (90) days or Franchisee does not elect to
terminate this Agreement in accordance with the provisions of this Section
21.2, the Hotel will be promptly renovated and reopened within a reasonable
time in accordance with the System and pursuant to plans and specifications
approved by Franchisor in accordance with Section 6.2. 

22. COMPLIANCE WITH LAWS; LEGAL ACTIONS

          22.1 Compliance
with Laws. 

                    Franchisee
will comply with all Applicable Law, and will obtain in a timely manner all
permits, certificates, and licenses necessary for the full and proper operation
of the Hotel and compliance with the Marriott Agreements. Franchisee will
forward to Franchisor within seven (7) days of Franchisee’s receipt copies of
all inspection reports, warnings, certificates, and ratings issued by any
governmental entity related to the Hotel that indicate a material failure to
meet or maintain governmental standards regarding health or life safety or any
other material violation of Applicable Law that may adversely affect the
operation or financial condition of the Hotel or Franchisee. 

          22.2 Notice
Regarding Legal Actions. 

                    Franchisee
will notify Franchisor within seven (7) days: (i) after the commencement of any
material action, suit, or other proceeding that involves the Hotel or
Franchisee; or (ii) after the commencement of any action, suit, or other proceeding
that involves Franchisor or Franchisor’s relationship with Franchisee or the
Hotel, and within seven (7) days of the issuance of any judgment, order, writ,
injunction, award, or other decree of any court, agency, or other governmental
instrumentality that may adversely affect the operation or financial condition
of the Hotel or Franchisee. Nothing in this 

49

Section 22.2, however, will abrogate any notice requirement that
Franchisee may have under any insurance program or contract. 

          22.3 WAIVER
OF JURY TRIAL AND PUNITIVE DAMAGES. 

                    FRANCHISEE
AND FRANCHISOR EACH HEREBY ABSOLUTELY, IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY AND THE RIGHT TO CLAIM OR RECEIVE PUNITIVE DAMAGES IN ANY
LITIGATION, ACTION, CLAIM, SUIT OR PROCEEDING, AT LAW OR IN EQUITY, ARISING OUT
OF, PERTAINING TO OR IN ANY WAY ASSOCIATED WITH
 THE COVENANTS,
 UNDERTAKINGS, REPRESENTATIONS OR
WARRANTIES SET FORTH HEREIN, THE RELATIONSHIPS OF THE PARTIES HERETO, WHETHER
AS “FRANCHISEE” OR “FRANCHISOR” OR OTHERWISE, THIS AGREEMENT OR ANY OTHER
MARRIOTT AGREEMENT, OR ANY ACTIONS OR OMISSIONS IN CONNECTION WITH ANY OF THE
FOREGOING. 

          22.4 Specially
Designated National or Blocked Person; Anti-Money Laundering. 

                    Franchisee
represents and warrants to Franchisor that: (i) neither Franchisee (including
any and all of its directors and officers), nor any of its Affiliates or the
funding sources for any of the foregoing is a Specially Designated National or
Blocked Person; (ii) neither Franchisee nor any of its Affiliates is directly
or indirectly owned or controlled by the government of any country that is
subject to an embargo by the United States government; and (iii) neither
Franchisee nor any of its Affiliates is acting on behalf of a government of any
country that is subject to such an embargo. Franchisee further represents and
warrants that it is in compliance with any applicable anti-money laundering
law, including the USA Patriot Act. Franchisee agrees that it will notify Franchisor
in writing immediately upon the occurrence of any event that would render the
foregoing representations and warranties of this Section 22.4 incorrect. 

23. RELATIONSHIP OF PARTIES

          23.1 Reasonable
Business Judgment. 

                    Except
where Franchisor has reserved “sole discretion” or as otherwise indicated in
this Agreement, Franchisor agrees to use “Reasonable Business Judgment” when
discharging its obligations or exercising its rights or discretion under this
Agreement, including with respect to any consents and approvals and the
administration of Franchisor’s relationship with Franchisee. “Reasonable
Business Judgment,” with respect to the System, means that Franchisor’s action
or inaction has a business basis that is intended to: (i) benefit the System or
the profitability of the System, including Franchisor, regardless of whether
some individual hotels may be unfavorably affected; (ii) increase the value of
the Proprietary Marks; (iii) increase or enhance overall hotel guest or
franchisee or owner satisfaction; or (iv) minimize possible brand
inconsistencies or customer confusion. If Franchisor’s action or exercise of
discretion is unrelated to the System (e.g., is related to a requested approval
with respect to the Hotel), as described above, Reasonable Business Judgment
means that Franchisor has a business basis and has not acted in bad faith.
Franchisee will have the burden of establishing that Franchisor failed to
exercise Reasonable Business Judgment, and neither the fact that Franchisor
benefited economically from an action nor the existence of other “reasonable”
alternatives will, by themselves, establish such failure. To the extent that
any implied covenant, such as the implied covenant of good faith and fair
dealing, or civil law duty of good faith is applied to this Agreement,
Franchisor and Franchisee intend that Franchisor will not have violated such
covenant or duty if Franchisor has exercised Reasonable Business Judgment. 

50

          23.2 Independent
Contractor. 

                    A.
This Agreement does not create a fiduciary relationship between Franchisor and
Franchisee. Franchisee is an independent contractor, and nothing in this
Agreement is intended to constitute either party as an agent, legal
representative, subsidiary, joint venturer, partner, employee, or servant of
the other for any purpose, except that Franchisor will have the right to act on
Franchisee’s behalf as Franchisee’s Sales Agent. 

                    B. Nothing
in this Agreement authorizes Franchisee to make any contract, agreement,
warranty, or representation on Franchisor’s behalf or to incur any debt or
other obligation in Franchisor’s name. 

24. GOVERNING LAW; INJUNCTIVE RELIEF;
COSTS OF ENFORCEMENT 

          24.1 Governing
Law. 

                    A.
This Agreement takes effect upon its acceptance and execution by Franchisor in
the State of Maryland, United States of America, and will be interpreted and
construed under the laws thereof, which laws will prevail in the event of any
conflict of law. Nothing in this Section 24.1 is intended, or will be deemed,
to make the Maryland Franchise Registration and Disclosure Law apply to this
Agreement, or the transactions or relationships contemplated hereby, if such law
otherwise would not be applicable. 

                    B.
Franchisee hereby expressly and irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of Maryland, United States of America
for the purpose of any Dispute. So far as is permitted under Maryland law, this
consent to personal jurisdiction will be self-operative. 

          24.2 Injunctive
Relief. 

                    Franchisor will be entitled to injunctive or other equitable or
judicial relief, without the necessity of proving the inadequacy of money
damages as a remedy, without the necessity of posting a bond, and without
waiving any other rights or remedies at law or in equity, for any actual or
threatened material breach or violation of this Agreement or the Standards. 

          24.3 Costs
of Enforcement.

                    If
for any reason it becomes necessary for either party to initiate any legal or
equitable action to secure or protect its rights under this Agreement, the
prevailing party will be entitled to recover all costs incurred by it in
successfully enforcing such rights, including reasonable attorneys’ fees. 

25. NOTICES

          25.1 Notices.

                    A.
 Subject to Section 25.1.B, all
notices, requests, demands, statements, and other communications required or
permitted to be given under the terms of this Agreement will be in writing and
delivered by hand against receipt, sent by certified mail (postage prepaid and
return receipt requested), or carried by reputable overnight courier service,
to the respective party at the following addresses: 

51

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 To
 Franchisor:

 	
  

 	
 Marriott
 International, Inc.

 
	
  

 	
  

 	
  

 	
 10400
 Fernwood Road

 
	
  

 	
  

 	
  

 	
 Bethesda, MD
 20817

 
	
  

 	
  

 	
  

 	
 Attn: Law
 Department 52/923.25

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 with a copy
 to:

 	
  

 	
 Marriott
 International, Inc.

 
	
  

 	
  

 	
  

 	
 10400
 Fernwood Road

 
	
  

 	
  

 	
  

 	
 Bethesda, MD
 20817

 
	
  

 	
  

 	
  

 	
 Attn: Vice
 President, Owner and Franchise Services

 
	
  

 	
  

 	
  

 	
           Department
 51/926.19

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 To
 Franchisee:

 	
  

 	
 APPLE TEN
 HOSPITALITY MANAGEMENT, INC.

 
	
  

 	
  

 	
  

 	
 814 East
 Main Street

 
	
  

 	
  

 	
  

 	
 Richmond, VA
 23219

 
	
  

 	
  

 	
  

 	
 Attn: Krissy
 Gathright, Vice President

 
	
  

 	
  

 	
  

 	
 Email:
 kgathright@applereit.com

 

or at such other address as designated by notice from the respective
party to the other party. Any such notice or communication will be deemed to
have been given at the date and time of: (A) receipt or first refusal of
delivery, if sent via certified mail or delivered by hand; or (B) one day after
the posting thereof, if sent via reputable overnight courier service. 

                    B.
Franchisor may provide Franchisee with routine information, invoices, the
Standards and other System requirements and programs, such as the Quality
Assurance Program, including any modifications thereto, by regular mail or by
e-mail, facsimile, or by making such information available to Franchisee on the
Internet, an extranet, or other electronic means. 

26. CONSTRUCTION AND SEVERABILITY;
APPROVALS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT 

          26.1 Construction
and Severability. 

                    A.
Except as expressly provided to the contrary in this Agreement, each section,
part, term and/or provision of this Agreement, including Section 16.1, will be
considered severable; and if, for any reason any section, part, term, or
provision is determined to be invalid, unenforceable or contrary to, or in
conflict with, any existing or future Applicable Law or by a court or agency
having valid jurisdiction, such will not impair the operation of, or have any
other effect upon, such other sections, parts, terms, and provisions of this
Agreement as may remain otherwise intelligible, and the latter will continue to
be given full force and effect and bind Franchisor and Franchisee. To the
extent possible, such invalid or unenforceable sections, parts, terms, or
provisions will be deemed to be replaced with a provision that is valid and
enforceable and most nearly reflects the original intent of the invalid or
unenforceable provision. 

                    B.
No right or remedy conferred upon or reserved to Franchisor or Franchisee by
this Agreement is intended to be, nor will be deemed, exclusive of any other
right or remedy herein or by law or equity provided or permitted, but each will
be cumulative of every other right or remedy. 

                    C.
Nothing in this Agreement is intended, or will be deemed, to create any third
party beneficiary or confer any rights or remedies under or by reason of this
Agreement upon any Person other than Franchisor (and its Affiliates) or
Franchisee, and their respective permitted successors and assigns.

52

                    D.
When this Agreement provides that Franchisor may take or refrain from taking
any action or exercise discretion, such as rights of approval or consent, or to
modify the System or any part of it, or to make other determinations or
modifications under this Agreement, Franchisor may do so from time to time. 

                    E.
Unless otherwise stated, references to Sections are to Sections of this
Agreement. 

                    F.
Unless otherwise stated, references to Exhibits, Attachments or Addenda are to
Exhibits, Attachments and Addenda to this Agreement, and all of such are
incorporated by reference into this Agreement. 

                    G.
Words importing the singular include the plural and vice versa as the context
may imply. Words importing a gender include each gender as the context may
imply. 

                    H.
References to days, months, and years are to calendar days, calendar months,
and calendar years, respectively. 

                    I.
The words “include,” “included” and “including” will be terms of enlargement or
example (meaning that, for instance, “including” will be read as “including but
not limited to”) and will not imply any restriction or limitation unless the
context clearly requires otherwise. 

                    J.
Captions and section headings are used for convenience only. They are not part
of this Agreement and will not be used in construing it. 

          26.2 Approvals,
Consents and Waivers. 

                    Except
as specifically provided in Sections 9.3.C and 9.4.C, the Management Company
Acknowledgment, or in Exhibit B, approvals, designations, and consents required
under this Agreement will not be effective unless evidenced by a writing signed
by the duly authorized officer or agent of the party giving such approval or consent.
No waiver, delay, omission, or forbearance on the part of Franchisor or
Franchisee to exercise any right, option or power arising from any default or
breach by the other party, or to insist upon strict compliance by the other
party with any obligation or condition hereunder, will affect or impair the
rights of Franchisor or Franchisee, respectively, with respect to any such
default or breach or subsequent default or breach of the same or of a different
kind. Any delay or omission of either party to exercise any right arising from
any such default or breach will not affect or impair such party’s rights with
respect to such default or breach or any future default or breach. Franchisor
will not be liable to Franchisee for providing (or denying) any waiver,
approval, consent, or suggestion to Franchisee in connection with this
Agreement or by reason of any delay or denial of any request. 

          26.3 Entire
Agreement. 

                    As
of the date of this Agreement, this Agreement, including, all exhibits,
attachments, and addenda, and the Marriott Agreements contain the entire
agreement between the parties as it relates to the Hotel and the Approved
Location. Nothing in this Agreement, however, is intended to require Franchisee
to waive reliance on any representations contained in the Franchise Disclosure
Document referred to in Section 27.4.C. This is a fully integrated agreement. 

53

          26.4 Amendments.

                    No
agreement of any kind relating to the matters covered by this Agreement will be
binding upon either party unless and until the same has been made in a written,
non-electronic instrument that has been duly executed by the non-electronic
signature of all interested parties. This Agreement may only be amended in a written,
non-electronic instrument that has been duly executed by the non-electronic
signature of all interested parties and may not be amended or modified by
conduct manifesting assent, or by electronic signature, and each party is
hereby put on notice that any individual purporting to amend or modify this
Agreement by conduct manifesting assent or by electronic signature is not
authorized to do so. 

27. REPRESENTATIONS, WARRANTIES AND
COVENANTS 

          27.1 Existence
and Power; Authorization; Contravention. 

                    A.
Each party represents, warrants and covenants that: (i) it is a legal entity
duly formed, validly existing, and in good standing under the laws of the
jurisdiction of its formation; (ii) it and its Affiliates have and will continue
to have the ability to perform its obligations under this Agreement; and (iii)
it has and will continue to have all necessary power and authority to execute
and deliver this Agreement. 

                    B.
Each party represents, warrants and covenants that the execution and delivery
of this Agreement and the performance by such party of its obligations
hereunder: (i) have been duly authorized by all necessary action; (ii) do not
require the consent, vote, or approval of any third parties (including lenders)
except for such consents as have been properly obtained; and (iii) do not and
will not contravene, violate, result in a breach of, or constitute a default
under (a) its certificate of formation, operating agreement, articles of
incorporation, by-laws, or other governing documents, (b) any Applicable Law;
or (c) any agreement, indenture, contract, commitment, restriction or other
instrument to which it or any of its Affiliates is a party or by which it or
any of its Affiliates is bound. 

                    C.
Franchisee represents and warrants that all of the representations and
warranties made in the application or any other information provided in
connection with this Agreement are true, correct and complete as of the time
made and as of the date hereof, regardless of whether such representations and
warranties were provided by Franchisee, one of its Affiliates, or by a third
party on behalf of Franchisee, unless Franchisee has notified Franchisor of a
change in the representations and warranties or the information and Franchisor
has approved the change. 

          27.2 Ownership
of Franchisee. 

                    Franchisee
represents and warrants to Franchisor that Franchisee is owned directly and
indirectly as set forth on Exhibit A. Upon the request of Franchisor,
Franchisee will submit to Franchisor evidence, in form and substance
satisfactory to Franchisor, confirming that Franchisee is owned directly and
indirectly as set forth on Exhibit A. 

          27.3 Ownership
of the Hotel. 

                    Franchisee hereby represents, warrants and covenants to Franchisor that
(i) Franchisee is the sole owner of the Hotel and (ii) Franchisee holds good
and marketable fee title to the Approved Location. 

54

          27.4 Additional
Franchisee Acknowledgments and Representations. 

                    A.
IN ENTERING THIS AGREEMENT, FRANCHISEE REPRESENTS AND WARRANTS THAT IT DID NOT
RELY ON, AND FRANCHISOR AND FRANCHISOR’S REPRESENTATIVES HAVE NOT MADE, ANY
PROMISES, REPRESENTATIONS, WARRANTIES OR AGREEMENTS RELATING TO FRANCHISING THE
HOTEL OR THE APPROVED LOCATION, EXCEPT AS EXPRESSLY CONTAINED IN THIS AGREEMENT
AND IN THE FRANCHISE DISCLOSURE DOCUMENT REFERRED TO IN SECTION 27.4.C.

                    B.
FRANCHISEE AGREES THAT THE BUSINESS VENTURE CONTEMPLATED BY THIS AGREEMENT
INVOLVES SUBSTANTIAL BUSINESS RISKS, IS A VENTURE WITH WHICH FRANCHISEE IS
FAMILIAR AND HAS RELEVANT EXPERIENCE AND ITS SUCCESS WILL BE LARGELY DEPENDENT
UPON THE ABILITY OF FRANCHISEE AS AN INDEPENDENT BUSINESS. FRANCHISOR EXPRESSLY
DISCLAIMS THE MAKING OF, AND FRANCHISEE AGREES FRANCHISEE HAS NOT RECEIVED, ANY
INFORMATION, WARRANTY OR GUARANTEE, EXPRESS OR IMPLIED, AS TO THE POTENTIAL
VOLUME, PROFITS, OR SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED BY THIS
AGREEMENT. IF FRANCHISOR FURNISHES ADVICE, CONSULTATION, TRAINING, OR OTHER
FORMS OF ASSISTANCE IN CONNECTION WITH THE HOTEL OR THE APPROVED LOCATION WITH
REGARD TO MATTERS SUCH AS FINANCING, DESIGN, CONSTRUCTION, RENOVATION, MENU
PLANNING, OPERATION AND MANAGEMENT OF THE HOTEL, FRANCHISOR DOES NOT GUARANTEE
OR ASSURE THE SUCCESS OR SATISFACTORY RESULT OF SUCH MATTERS AND FRANCHISOR
WILL NOT THEREBY INCUR ANY LIABILITY OR BE RESPONSIBLE IN ANY WAY FOR ANY
ERROR, OMISSION OR FAILURE OF WHATEVER NATURE IN SUCH FINANCING, DESIGN,
CONSTRUCTION, RENOVATION, MENU PLANNING, OPERATION OR MANAGEMENT OF THE HOTEL
OR THE APPROVED LOCATION. 

                    C.
FRANCHISEE ACKNOWLEDGES THAT FRANCHISEE RECEIVED A COPY OF THIS AGREEMENT, THE
EXHIBITS AND ATTACHMENTS HERETO, IF ANY, AND AGREEMENTS RELATING THERETO, IF
ANY, AT LEAST SEVEN (7) CALENDAR DAYS BEFORE THE DATE ON WHICH THIS AGREEMENT
WAS EXECUTED. FRANCHISEE FURTHER ACKNOWLEDGES THAT FRANCHISEE HAS RECEIVED THE
FRANCHISE DISCLOSURE DOCUMENT REQUIRED BY THE TRADE REGULATION RULE OF THE
FEDERAL TRADE COMMISSION ENTITLED “DISCLOSURE REQUIREMENTS AND PROHIBITIONS
CONCERNING FRANCHISING,” AT LEAST FOURTEEN (14) CALENDAR DAYS BEFORE THE DATE
ON WHICH FRANCHISEE EXECUTED THIS AGREEMENT OR MADE ANY PAYMENT TO FRANCHISOR
IN CONNECTION WITH THIS AGREEMENT. 

                    D.
FRANCHISEE ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD THE FRANCHISE
DISCLOSURE DOCUMENT REFERRED TO IN SECTION 27.4.C. PROVIDED TO FRANCHISEE, THIS
AGREEMENT, INCLUDING THE EXHIBITS AND ATTACHMENTS AND ADDENDA HERETO, IF ANY,
AND RELATED AGREEMENTS, IF ANY, AND FRANCHISEE HAS HAD AMPLE TIME AND
OPPORTUNITY TO CONSULT WITH ADVISORS AND LEGAL COUNSEL OF FRANCHISEE’S OWN
CHOOSING ABOUT THE POTENTIAL BENEFITS AND RISKS OF ENTERING INTO THIS
AGREEMENT. FRANCHISEE AGREES THAT FRANCHISEE HAS HAD AN OPPORTUNITY TO
NEGOTIATE THIS AGREEMENT. 

                    E.
NOTWITHSTANDING FRANCHISEE’S ACKNOWLEDGMENT IN SECTION 27.4.C ABOVE, FRANCHISEE
REPRESENTS THAT FRANCHISEE’S INITIAL 

55

INVESTMENT IN THE FRANCHISED BUSINESS IS IN EXCESS OF ONE MILLION
DOLLARS ($1,000,000), EXCLUDING THE COST OF UNIMPROVED LAND AND ANY FINANCING
RECEIVED FROM FRANCHISOR OR ITS AFFILIATES AND THUS IS EXEMPTED FROM THE
FEDERAL TRADE COMMISSION’S FRANCHISE RULE DISCLOSURE REQUIREMENTS PURSUANT TO
16 CFR 436.8(a)(5)(i). 

28. MISCELLANEOUS 

          28.1 Confidential
Negotiated Changes. 

                    Franchisee
acknowledges and agrees that the terms of this Agreement and all exhibits,
attachments or addenda or other agreements ancillary to, or executed in
connection with this agreement, that have been negotiated (“negotiated terms”)
from the standard form of agreements set forth in the Franchise Disclosure
Document referred to in Section 27.4.C are strictly confidential and Franchisee
will not disclose such negotiated terms to any Person without the prior consent
of Franchisor except (1) as required by law, (2) as may be necessary to enforce
this Agreement in any legal proceedings, or (3) to those of Franchisee’s
managers, members, officers, directors, employees, attorneys, accountants,
agents or lenders as is necessary for the operation or financing of the Hotel.
It will be a material default hereunder if Franchisee, its managers, members,
officers, directors, employees, attorneys, accountants, agents or lenders disclose
the negotiated terms to any unauthorized Person without the prior consent of
Franchisor. 

          28.2 Multiple
Counterparts. 

                    This
Agreement may be executed in a number of identical counterparts, each of which
will be deemed an original for all purposes and all of which will constitute,
collectively, one agreement. Delivery of an executed signature page to this
Agreement by electronic transmission will be effective as delivery of a
manually signed counterpart of this Agreement. 

          IN WITNESS
WHEREOF, the parties hereto have duly executed and delivered this Relicensing
Franchise Agreement, under seal, as of the Effective Date. 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 FRANCHISOR:

 
	
  

 	
  

 	
  

 
	
 ATTEST:

 	
  

 	
 MARRIOTT
 INTERNATIONAL, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By: /s/
 James C. Fisher (SEAL)

 
	
 

 	
  

 	
  

 	

 

 	
  

 
	
 Assistant
 Secretary

 	
  

 	
 Name: James
 C. Fisher

 
	
  

 	
  

 	
 Title:
 Senior Vice President

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 FRANCHISEE:

 
	
  

 	
  

 	
  

 
	
 ATTEST:

 	
  

 	
 APPLE TEN
 HOSPITALITY

 
	
  

 	
  

 	
 MANAGEMENT,
 INC.

 
	
  

 	
  

 	
 a Virginia
 corporation

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 /s/ Amy D.
 Kramer

 	
  

 	
 By:

 	
 /s/ Justin
 G. Knight (SEAL)

 
	

 

 	
  

 	
  

 	
  

 	

 

 	
  

 
	
 (Assistant)
 Secretary

 	
  

 	
 Name: Justin
 G. Knight

 
	
  

 	
  

 	
 Title:
 President

 

56

EXHIBIT A

APPROVED LOCATION, NUMBER OF GUESTROOMS AND 

OWNERSHIP INTERESTS IN FRANCHISEE

	
  

 	
  

 
	
 1.

 	
 Approved
 Location of the Hotel: 

 
	
  

 	
  

 
	
  

 	
 8540 East
 Independence Blvd., Charlotte, NC 28227

 
	
  

 	
  

 
	
 2.

 	
 Approved
 Number of Guestrooms:

 
	
  

 	
  

 
	
  

 	
 94

 
	
  

 	
  

 
	
 3.

 	
 Name of
 Entity That Will Operate the Hotel: 

 
	
  

 	
  

 
	
  

 	
 Newport
 Charlotte Management, LLC

 
	
  

 	
  

 
	
 4.

 	
 Ownership
 Interest(s) in Franchisee: 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
      Ownership of Apple Ten Hospitality
 Management, Inc. 

 	
  

 	
 % Interest

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Apple Ten Hospitality Management, Inc.

 	
  

 	
 100% 

 
	
  

 	
 814 East
 Main Street 

 	
  

 	
  

 
	
  

 	
 Richmond, VA
 23219

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
                     Ownership
 of Apple Ten Hospitality, Inc.

 	
  

 	
 % Interest

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Apple REIT Ten, Inc.

 	
  

 	
 100% 

 
	
  

 	
 814 East
 Main Street

 	
  

 	
  

 
	
  

 	
 Richmond, VA
 23219

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
                     Ownership
 of Apple REIT Ten, Inc. 

 	
  

 	
 % Interest

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Publicly-Held
 Company

 	
  

 	
      100% 

 

57

EXHIBIT B

CHANGE OF OWNERSHIP RIDER

Franchisee desires that the Hotel continue to be operated as a System
Hotel and the following additional terms and provisions and modifications to
the Agreement will apply, which are an integral part of the Agreement: 

	
  

 	
  

 
	
 1.

 	
 Section 2.1 is hereby amended by inserting the following sentence at
 the beginning of such Section: 

 
	
  

 	
  

 
	
  

 	
           “On or
 before the Effective Date, Franchisee has (i) caused Existing Franchisee to
 deliver to Franchisor the Termination Agreement duly executed by all parties
 thereto other than Franchisor and (ii) paid Franchisor’s outside legal
 counsel fees and expenses incurred in connection with the review, preparation
 and negotiation of this Agreement and ancillary documents related thereto.” 

 
	
  

 	
  

 
	
 2.

 	
 Section 3 is hereby amended by adding a new Section 3.11 at the end
 of such Section, which reads as follows: 

 
	
  

 	
  

 
	
  

 	
           “3.11 Initial
 Accounting Period Charges. 

 
	
  

 	
  

 
	
  

 	
           Franchisee
 agrees that, except for amounts due pursuant to Sections 3.2 or 3.3.A above,
 if the Effective Date is not the first day of an Accounting Period then, for
 the Accounting Period in which the Effective Date occurs (the “Initial
 Accounting Period”), Franchisee must pay to Franchisor all amounts due to
 Franchisor or its Affiliates with respect to the operation of the Hotel for
 the entire Initial Accounting Period as though the term of this Agreement had
 begun on the first day of the Initial Accounting Period, and that any dispute
 between Franchisee and Existing Franchisee concerning the allocation of
 payments for the Initial Accounting Period will be no defense to Franchisee’s
 obligations pursuant to this Section 3.11.” 

 
	
  

 	
  

 
	
 3.

 	
 The reference to the “Opening Date” in the first sentence of Section
 11.2.B is amended to be a reference to the “Effective Date.” 

 
	
  

 	
  

 
	
 4.

 	
 Section 27.4 is hereby amended by adding the following new Paragraphs
 F and G after Paragraph E: 

 
	
  

 	
  

 
	
  

 	
           “F.
 FRANCHISEE ACKNOWLEDGES THAT FRANCHISOR (i) DID NOT ENDORSE, RECOMMEND, OR
 OTHERWISE CONCUR WITH THE TERMS OF ANY TRANSACTION PURSUANT TO WHICH
 FRANCHISEE MAY HAVE ACQUIRED THE RIGHT TO OPERATE THE HOTEL FROM A PRIOR
 FRANCHISEE OF FRANCHISOR; (ii) DID NOT PARTICIPATE IN THE DECISION REGARDING
 THE PRICE OR COMPENSATION TO BE PAID BY FRANCHISEE TO ANY THIRD PARTY FOR
 SUCH RIGHT, WHICH DECISION WAS MADE WITHOUT ANY INTERVENTION, SUPPORT OR
 PARTICIPATION BY FRANCHISOR; AND (iii) DID NOT COMMENT UPON ANY FINANCIAL
 PROJECTIONS SUBMITTED TO FRANCHISEE BY OR ON BEHALF OF ANY PRIOR FRANCHISEE. 

 

58

	
  

 	
  

 
	
  

 	
           G. FRANCHISEE
 ACKNOWLEDGES AND AGREES TO BE BOUND BY ALL ANCILLARY AGREEMENTS BETWEEN
 EXISTING FRANCHISEE AND FRANCHISOR, INCLUDING, BUT NOT LIMITED TO, ANY
 LICENSING AGREEMENTS, COST SHARING AGREEMENTS, CLUSTER REVENUE AGREEMENTS,
 AND ANY OTHER AGREEMENTS RELATING TO THE EXISTING FRANCHISE AGREEMENT.
 FRANCHISEE AGREES TO EXECUTE ANY SEPARATE ACKNOWLEDGEMENTS OR AMENDMENTS TO
 SUCH AGREEMENTS SIGNIFYING FRANCHISEE’S AGREEMENT TO BE BOUND BY SUCH
 AGREEMENTS AS FRANCHISOR MAY REASONABLY REQUEST.” 

 

59

PROPERTY IMPROVEMENT PLAN ADDENDUM

Franchisee agrees to upgrade and renovate the Hotel at the Approved
Location in accordance with the following terms and provisions in order for
Franchisee to use the System and continue to operate the Hotel as a System
Hotel: 

          1. Scope
of Work; Drawings and Specifications. 

          A.
Franchisor and Franchisee have agreed to the construction, upgrading, and
renovation requirements set forth in Attachment One to this Property
Improvement Plan Addendum (the “Scope of Work”) in order for Franchisee to use
the System and continue to operate the Hotel as a System Hotel. All work, including,
furniture, fixtures, equipment, furnishings, materials and signs in the Scope
of Work must comply with the Standards and this Agreement. The Scope of Work is
in addition to, and the completion of such work does not satisfy, Franchisee’s
obligation to periodically upgrade and renovate the Hotel pursuant to Section
11.1.B of this Agreement, which obligation is independent of Franchisee’s
obligation to complete the Scope of Work. 

          B. If any
material changes to the Hotel occur after [date
walk-through performed] but before completion of the Scope of Work,
then the Hotel will be subject to reinspection by Franchisor (“Material Change
Review”) and Franchisor reserves the right to modify the Scope of Work,
including by adding additional requirements to the Scope of Work, to address
the material changes to the Hotel and Franchisee agrees that it will be
required to complete the requirements in the modified Scope of Work to
Franchisor’s satisfaction in the time period required by Franchisor, in addition
to the other requirements in this Property Improvement Plan Addendum.
Franchisee must cooperate fully, and must cause its contractor and
subcontractors to cooperate fully, with any inspections conducted by Franchisor
pursuant to a Material Change Review. If a Material Change Review is performed,
Franchisor reserves the right to charge Franchisee its then-current fee for
such reinspection. 

          C. Within
ten (10) days of the Effective Date, Franchisee will obtain from Franchisor the
Design Criteria. Upon receipt thereof, Franchisee will engage a qualified
registered architect, interior designer, and other qualified consultants and
cause them to: (i) adapt the Design Criteria to the Approved Location and to
Applicable Law, including the Americans with Disabilities Act and/or other
similar state laws, codes, and/or regulations governing public accommodations
for persons with disabilities, (ii) prepare complete construction documents,
including a site plan and architectural, mechanical, electrical, civil engineering,
landscaping and interior design drawings and specifications, and material
samples, in each case, based on the Design Criteria and the Scope of Work
(collectively, the “Plans”), and (iii) submit the Plans to Franchisor to review
for compliance with the Design Criteria and Scope of Work at least sixty (60)
days prior to commencing work on the items in the Scope of Work. Franchisee
will not deviate from the Design Criteria in the Plans. Franchisor may charge
Franchisee an amount equal to One Hundred Thirty Dollars ($130) multiplied by
the number of hours required to review the Plans. 

          D. If
requested by Franchisor, Franchisee will provide to Franchisor the name,
address, and relevant work experience on similar projects for any architect, engineer,
design firm or general contractor that Franchisee wishes to retain, and
Franchisor will have thirty (30) days after receipt of such information to
notify Franchisee of its election to consent or withhold its consent.
Franchisor’s election to consent or withhold its consent will be based on prior
experiences of Franchisor and its Affiliates with such Person, such Person’s
general business reputation, and such Person’s relevant work experience on
similar projects. If Franchisor does not respond to Franchisee within thirty
(30) days after Franchisor’s receipt of such information, then Franchisee may
retain such Person. Neither Franchisor’s failure to respond within the required
time period nor Franchisor’s consent to Franchisee’s use of such Person will be
deemed an endorsement or recommendation by Franchisor of any such Person.
Franchisee 

60

acknowledges and agrees that Franchisor is not liable for the
unsatisfactory performance of any Person retained by Franchisee.

          E.
Franchisor will promptly review the Plans for compliance with the Design
Criteria and the Scope of Work. If Franchisor determines that the Plans do not
satisfy such requirements, Franchisor will provide recommended changes to
Franchisee that Franchisee will incorporate into the Plans and resubmit to
Franchisor for its review. Each party will act speedily and in good faith in
the preparation, submission, review and revision of the Plans. Franchisee will
not begin work on the Scope of Work until Franchisor notifies Franchisee that
the Plans satisfy such requirements. As soon as reasonably possible after
Franchisor notifies Franchisee that the Plans comply with the Design Criteria
Franchisee will submit to Franchisor two (2) sets of the final Plans and a cost
estimate for the Scope of Work. Once finalized, the Plans will not be changed,
including changes required by governmental authorities, without the prior
written consent of Franchisor. 

          F.
Franchisee agrees that Franchisee, and not Franchisor or its Affiliates, is responsible
for: (i) ensuring that any design, construction documents, specifications, and
any construction, renovation, or refurbishment complies with any Applicable
Law, including any requirements relating to disabled persons; (ii) any errors
or omissions; or (iii) discrepancies (of any nature) in any drawings or
specifications. Franchisee further acknowledges and agrees that: (a)
Franchisor’s review of the Plans is limited solely to determining whether the
Plans comply with the Design Criteria and the Scope of Work; and (b) Franchisor
will have no liability or obligation with respect to renovation, upgrading or
furnishing of the Hotel. Except for Franchisee’s own uses related to its
construction or operation of the Hotel, Franchisee will not reproduce, use or
permit the use of any of the design concepts, drawings, or Standards. 

          2. Renovation
of the Hotel. 

          A.
Franchisee agrees to perform each item in the Scope of Work by the date set
forth in the Scope of Work with respect to such item and Franchisee agrees that
it will not use any portion of the Reserve to pay for the Scope of Work. Time
is of the essence, but the deadline for completion of items in the Scope of
Work will be equitably extended by reason of any delay caused by acts of God,
the public enemy, strikes, war, governmental restrictions, or other causes
beyond Franchisee’s control (excluding for the avoidance of doubt,
unavailability of financing), except that no such extension will be made for
aggregate delays in excess of thirty (30) days unless a request for additional
time is made in writing to Franchisor giving reasons for the delay, and under
no circumstances will such extension exceed one hundred and eighty (180) days.
In addition, upon Franchisee’s written request and provided Franchisee has
diligently pursued renovation of the Hotel, Franchisor may, in its sole
discretion, extend the deadlines any item in the Scope of Work. Extension
requests will be considered in increments of one or more months, provided,
however, no more than two (2) extensions totaling six (6) months in the
aggregate will be considered. For any extension, Franchisor will have the right
to require Franchisee to pay to Franchisor a nonrefundable extension fee not to
exceed Two Thousand Dollars ($2,000) per month for each month of the extension.
The extension fee will be paid to Franchisor with the written request for the
extension and will be fully refunded in the event Franchisor declines to grant
the requested extension. 

          B.
Franchisee will obtain all permits and certifications required for lawful
renovation, upgrading and operation of the Hotel, including zoning, access,
sign, building permits and fire requirements, and will certify in writing to
Franchisor, if requested, that all such permits and certifications have been
obtained. 

          C.
Franchisee will possess or obtain adequate financing for renovation, upgrading
and furnishing the Hotel and Franchisee will bear the entire cost of
renovation, upgrading, equipping, 

61

supplying and furnishing the Hotel, including all FF&E, Electronic
Systems and other items and equipment as specified by Franchisor for the
System. 

          D.
Franchisee will ensure that the Hotel complies with Applicable Law and the
Standards, including Franchisor’s Fire Protection and Life Safety standards
(even if such standards exceed federal, state or local code requirements). 

          E. During
the renovation and upgrading period, Franchisor or its representatives will
have the right to visit the job site at any time in order to observe the work
and Franchisee will cooperate fully, and will cause its contractors and
subcontractors to cooperate fully, with any site visits conducted by
Franchisor. 

          F.
Franchisee must, upon the earlier of (i) completion of the work or (ii) the
first anniversary of the Effective Date, provide to Franchisor a written
certificate or opinion from its architect, licensed professional engineer, or
recognized expert consultant on the Americans with Disabilities Act stating
that the Hotel conforms to the requirements of the Americans with Disabilities
Act, the related federal regulations, and all other applicable state and local
laws, regulations and other requirements governing public accommodations for
persons with disabilities. If the completion date for any item or items set
forth in the Scope of Work extends beyond the first anniversary of the
Effective Date, Franchisee must provide an additional certificate to Franchisor
with respect to such item or items upon final completion of all work related to
any and all such items. The certificate or opinion will be in the form attached
to this Change of Ownership Rider as Attachment Two. 

          G. The
Hotel is subject to further review by Franchisor to, among other things, ensure
that the Hotel complies with the requirements of this Property Improvement Plan
Addendum (“PIP Review”). Franchisee must ensure that the Hotel complies with
all requirements specified by Franchisor following any PIP Review. Franchisee
must cooperate fully, and must cause its contractors and subcontractors to
cooperate fully, with any inspections conducted by Franchisor pursuant to any
PIP Review. If Franchisor determines that the Scope of Work was not completed
to Franchisor’s satisfaction, Franchisee will be charged Franchisor’s
then-current fee to perform a re-inspection, which may increase for any
subsequent re-inspections until Franchisor determines that the Scope of Work is
completed to its satisfaction. 

          H.
Franchisor will not be deemed to have approved any work done pursuant to this
Property Improvement Plan Addendum unless such approval is set forth in writing
and signed by Franchisor’s authorized representative. If such approval is
partial or contingent, Franchisee hereby authorizes its general manager of the
Hotel or Franchisee’s director of operations (or a person with a different
title but similar duties) to acknowledge in writing the additional work to be
performed and the time within which such work will be performed, and such
written acknowledgement will be binding on Franchisee. 

62

ATTACHMENT ONE

TO PROPERTY IMPROVEMENT PLAN ADDENDUM

SCOPE OF WORK

          All
items must be completed within ______ months of the Effective Date, unless
otherwise noted with respect to a particular item. 

[INSERT SCOPE OF WORK]

63

ATTACHMENT TWO

TO PROPERTY IMPROVEMENT PLAN ADDENDUM

ADA CERTIFICATION

 (TO BE COMPLETED BY FRANCHISEE’S ARCHITECT,
ENGINEER, ADA

CONSULTANT, OR OTHER LICENSED PROFESSIONAL)

          In
connection with the Fairfield Inn & Suites by Marriott Charlotte/Matthews,
NC (the “Hotel”), I hereby represent and certify to Apple Ten Hospitality
Management, Inc. and to Marriott International, Inc. that:

	
  

 	
  

 
	
 (i)

 	
 I have used professionally reasonable efforts to ensure that the
 Hotel conforms to and complies with the design standards and requirements of
 the Americans with Disabilities Act (“ADA”), the ADA Architectural Guidelines
 (“ADAAG”), and all other related or similar state and local laws,
 regulations, and other requirements governing public accommodations for
 persons with disabilities in effect at the time that this certification is
 made, and 

 
	
  

 	
  

 
	
 (ii)

 	
 In my
 professional judgment, the Hotel does in fact conform to and comply with such
 design standards and requirements.

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Print Name:

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Firm:

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Date:

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 

64

EXHIBIT C

RESTRICTED TERRITORY MAP

65

GUARANTY

          This
GUARANTY (“Guaranty”) is executed as of ___________________, 2011, by Apple Ten
Hospitality, Inc., a corporation organized and existing under the laws of
Virginia (“Guarantor”), in favor of and for the benefit of Marriott
International, Inc., a Delaware corporation (“Franchisor”). In consideration of
and as an inducement to Franchisor to execute the Relicensing Franchise
Agreement dated as of __________________, 2011 (as such agreement may be amended,
supplemented, restated or otherwise modified, the “Agreement”), by and between
Franchisor and Apple Ten Hospitality Management, Inc., a Virginia corporation
(“Franchisee”), Guarantor hereby agrees as follows:

          1.
Guarantor hereby unconditionally warrants to Franchisor and its successors and
assigns that all of Franchisee’s representations and warranties (i) in any
application submitted by or on behalf of Franchisee to Franchisor in connection
with any Marriott Agreement and (ii) in any Marriott Agreement are true,
accurate and complete as of the time made and as of the date hereof. Further,
Guarantor unconditionally guarantees that all of Franchisee’s obligations under
the Agreement and any other Marriott Agreement will be punctually paid and
performed.

          2. Upon
default by Franchisee and notice from Franchisor, Guarantor will immediately
make each payment and perform each obligation required by Franchisee under the
Agreement and any other Marriott Agreement. Franchisor may extend, modify or
release any indebtedness or obligation of Franchisee, or settle, adjust or
compromise any claims against Franchisee without notice to Guarantor and any
such action will not affect the obligations of Guarantor under this Guaranty.
Guarantor hereby waives notice of any amendment, supplement, restatement or
other modification of the Agreement and any other Marriott Agreement and notice
of demand for payment or performance by Franchisee. Guarantor’s guarantee
hereunder will extend to any extension or renewal of the Agreement and any
other Marriott Agreement.

          3.
Guarantor hereby agrees that the obligations of Guarantor under this Guaranty
will not be reduced, limited, terminated, discharged, impaired or otherwise
affected by: (i) Franchisee’s failure to pay a fee or provide other
consideration to Guarantor in consideration for the issuance of this Guaranty;
(ii) the occurrence or continuance of a default under the Agreement or any
other Marriott Agreement; (iii) any assignment of the Agreement or any other
Marriott Agreement; (iv) any modification or amendment of, or waiver or consent
or other action taken with respect to, the Agreement or any other Marriott
Agreement, including any indulgence in or extension of time for the payment of
any amounts payable of Franchisee under or in connection with the Agreement or
any other Marriott Agreement or for the performance of any other obligation of
Franchisee under the Agreement or any other Marriott Agreement (any of which
modifications, amendments, waivers or consents may be agreed to or granted
without the approval or consent of Guarantor); (v) the voluntary or involuntary
liquidation, sale or other disposition of all or any portion of Franchisee’s
assets, or the receivership, insolvency, bankruptcy, reorganization or similar
proceedings affecting Franchisee or its assets or the release or discharge of
Franchisee from any of its obligations under the Agreement or any other
Marriott Agreement or (vi) any change of circumstances, whether or not
foreseeable, and whether or not any such change does or might vary the risk of
Guarantor hereunder. No failure of Franchisor to exercise any power or right
hereunder, or to insist upon compliance by Guarantor with any term hereof will
constitute a waiver of Franchisor’s right thereafter to demand full compliance
with any term herein.

          4. This
Guaranty constitutes a guaranty of payment and performance and not of
collection, and Guarantor specifically waives any obligation of Franchisor to
proceed against Franchisee on any money or property held by Franchisee or by
any other Person as collateral security, by way of set-off or otherwise or
against any other guarantor. Guarantor further agrees that this Guaranty will
continue to be effective or be reinstated as the case may be, if at any time
payment of any of the guaranteed obligations 

66

is rescinded or must otherwise be restored or returned by Franchisor
upon the insolvency, bankruptcy or reorganization of Franchisee or Guarantor,
all as though such payment has not been made.

          5. Except
as otherwise expressly set forth herein, all notices, requests, demands,
statements and other communications required or permitted to be given hereunder
will be in writing and will be delivered by nationally recognized overnight
courier service to Franchisor at the address set forth in the Agreement and to
Guarantor at the address set forth below or for either at such other address as
may be designated by Guarantor or by Franchisor, and such communication will be
effective three days after the day sent. This Guaranty may be amended only by a
written instrument signed by a duly authorized representative of each of
Guarantor and Franchisor.

          6.
Guarantor hereby unconditionally and irrevocably waives notice of acceptance of
this Guaranty, presentment, demand, diligence, protest and notice of dishonor
or of any other kind to which Guarantor otherwise might be entitled under
applicable law.

          7.
Guarantor agrees to pay Franchisor all expenses, including reasonable
attorneys’ fees and court costs, incurred by Franchisor, its subsidiaries,
Affiliates, or any of their respective successors and assigns, to remedy any
defaults of or enforce any rights under this Guaranty, the Agreement or any
other Marriott Agreement, effect termination of this Guaranty, the Agreement or
any other Marriott Agreement, or to collect any amounts due under this
Guaranty, the Agreement or any other Marriott Agreement.

          8. If more
than one Person has executed this Guaranty as a Guarantor hereunder, the
liability of each such Guarantor will be joint, several and primary. This
Guaranty may be executed in any number of counterparts, each of which will be
deemed an original, but all of which, when taken together, will constitute one
and the same instrument. Delivery of an executed signature page to this
Guaranty by facsimile transmission will be effective as delivery of a manually
signed counterpart of this Guaranty.

          9. Upon the
death of any individual Guarantor, the estate of such Guarantor will be bound
by this Guaranty but only for defaults and obligations hereunder existing at
the time of death, and the obligations of any other Guarantors will continue in
full force and effect.

           10. Guarantor represents and warrants to
Franchisor that: (i) neither Guarantor
(including any and all of its directors and officers), nor any of its
Affiliates or the funding sources for any of the foregoing is a Specially
Designated National or Blocked Person; (ii) neither Guarantor nor any of its Affiliates is directly or indirectly
owned or controlled by the government of any country that is subject to an
embargo by the United States government; and (iii) neither Guarantor nor any of its Affiliates is
acting on behalf of a government of any country that is subject to such an
embargo. Guarantor further
represents and warrants that it is in compliance with any applicable anti-money
laundering law, including the USA Patriot Act. Guarantor agrees that it will notify Franchisor in writing immediately
upon the occurrence of any event that would render the foregoing
representations and warranties of this Section 10 incorrect.

          11.
This Guaranty is executed pursuant to, and will be construed under and governed
by, the laws of the State of Maryland, without regard to its conflict of laws
provisions. Guarantor hereby submits itself to the non-exclusive jurisdiction
of the courts of the State of Maryland, United States of America, in any suit,
action, or proceeding arising, directly or indirectly, out of or relating to
this Guaranty; and so far as is permitted under applicable law, this consent to
personal jurisdiction will be self-operative. Unless specifically defined
herein, all capitalized terms used in this Guaranty will have the same meanings
set forth in the Agreement.

          12.
GUARANTOR HEREBY ABSOLUTELY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY AND THE RIGHT TO CLAIM OR 

67

RECEIVE
PUNITIVE DAMAGES IN ANY LITIGATION, ACTION, CLAIM, SUIT OR PROCEEDING, AT LAW
OR IN EQUITY, ARISING OUT OF, PERTAINING TO OR IN ANY WAY ASSOCIATED WITH THE
COVENANTS, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES SET FORTH IN THIS
GUARANTY, THE RELATIONSHIPS OF THE PARTIES HERETO, WHETHER AS “GUARANTOR” OR
OTHERWISE, THE AGREEMENT OR ANY OTHER MARRIOTT AGREEMENT, OR ANY ACTIONS OR
OMISSIONS IN CONNECTION WITH ANY OF THE FOREGOING.

          IN WITNESS
WHEREOF, the undersigned has executed this Guaranty, under seal, as of the date
first above written.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 GUARANTOR:

 
	
  

 	
  

 	
  

 	
  

 
	
 ATTEST:

 	
  

 	
 APPLE TEN
 HOSPITALITY, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
 (SEAL)

 
	

 

 	
  

 	
  

 	

 

 	
  

 
	
 (Assistant)
 Secretary

 	
  

 	
 Name: 

 	
  

 
	
  

 	
  

 	
 Title:

 	
  

 

	
  

 
	
 ADDRESS FOR
 NOTICES TO GUARANTOR:

 
	
  

 
	
 814 East
 Main Street

 
	
 Richmond, VA
 23219

 

68

MANAGEMENT COMPANY ACKNOWLEDGMENT

          This
Management Company Acknowledgment (“Management Company Acknowledgment”) is
executed as of ___________________, 2011, by and among Newport Charlotte Management, LLC, a [state] limited liability company
(“Management Company”), Apple Ten Hospitality Management, Inc., a Virginia
corporation (“Franchisee”), and Marriott International, Inc., a Delaware
corporation (“Franchisor”).

          WHEREAS,
Management Company has entered into an agreement (“Management Agreement”) with
Franchisee, pursuant to which Management Company will operate that certain
Fairfield Inn & Suites hotel located at 8540 East Independence Boulevard,
Charlotte, NC 28222 (the “Hotel”), in accordance with the terms of that certain
Relicensing Franchise Agreement dated _________________, 2011 (as such
agreement may be amended, supplemented, restated or otherwise modified, the
“Franchise Agreement”) between Franchisor and Franchisee; and

          WHEREAS,
Franchisee has requested that Franchisor consent to the operation of the Hotel
by Management Company in accordance with the Franchise Agreement.

          NOW,
THEREFORE, in consideration of the mutual undertakings and benefits to be
derived herefrom, the receipt and sufficiency of which are acknowledged by each
of the parties hereto, it is hereby agreed as follows:

          1.
Franchisor’s Consent. Subject to and in accordance with the terms and conditions of this
Management Company Acknowledgment and the Franchise Agreement, Franchisor
hereby consents to the operation of the Hotel by Management Company and grants
to Management Company the right to operate the Hotel in accordance with the
Standards and to use the System, at, and only at, the Approved Location during
the term of the Franchise Agreement on behalf of Franchisee. Franchisor’s
grant in the immediately preceding sentence will terminate without notice to
Management Company contemporaneously with the occurrence of any of the
following events: (a) any termination of the Franchise Agreement, (b) the
execution of another management company acknowledgment among Franchisor,
Franchisee and another management company or (c) the execution of an amendment
to the Franchise Agreement consenting to the operation of the Hotel by
Franchisee; provided that the duties and obligations of Management Company that
by their nature or express language survive such termination, including
Sections 3.b. and c. below, will continue in full force and effect
notwithstanding the termination of Franchisor’s grant in the immediately
preceding sentence.

          2.
Management Company Representations and Covenants. Management Company represents
and warrants to Franchisor that:

                    a.
Management Company is not in control of or controlled by Persons who have been
convicted of any felony or a crime involving moral turpitude, or been convicted
of any other crime or offense or committed any acts, or engaged in any conduct
that is reasonably likely to have an adverse effect on the System, the
Proprietary Marks, the goodwill associated therewith, or Franchisor’s interests
therein;

                    b.
neither Management Company nor any Affiliate of Management Company is a
Competitor; 

                    c.
the Management Agreement is valid, binding and enforceable; contains no terms,
conditions, or provisions that are, or through any act or omission of
Franchisee or Management Company, 

69

may be or may cause a breach of or default under the Franchise
Agreement; and is for a term of not less than ten (10) years; and

                    d.
neither Management Company nor any Affiliate of Management Company is a Person
with whom United States persons are prohibited from transacting business.

          3.
Management Company and Franchisee Acknowledgments. Management Company and
Franchisee covenant and agree to the following: 

                    a.
Management Company will have the exclusive authority and responsibility for the
day-to-day management of the Hotel on behalf of, and for the benefit of,
Franchisee with respect to and in accordance with the terms of the Franchise
Agreement. The general manager of the Hotel will be an employee of Management
Company and devote his or her full time and attention to the management and
operation of the Hotel and will have successfully completed Franchisor’s
management training program as required under the Franchise Agreement. The
general manager and other department managers of the Hotel will be employees of
the Management Company, while other staff at the Hotel may be employed by
Franchisee;

                    b.
The Hotel will be operated in strict compliance with the requirements of the
Franchise Agreement, and Management Company will observe fully and be bound by
all terms, conditions and restrictions regarding the management and operation
of the Hotel set forth in the Franchise Agreement, including those related to
Intellectual Property, as if and as though Management Company had executed the
Franchise Agreement as “Franchisee,” provided that Management Company obtains
no rights under the terms of the Franchise Agreement except as specifically set
forth herein and the rights granted hereunder do not constitute a franchise or
sub-franchise to Management Company. Management Company will comply with all
Applicable Laws, and will obtain in a timely manner all permits, certificates,
and licenses necessary for the full and proper operation of the Hotel;

                    c.
Franchisor may enforce directly against Management Company all terms in the
Franchise Agreement regarding Intellectual Property and the management and
operation of the Hotel during and subsequent to Management Company’s tenure as
operator of the Hotel. Franchisor will have the right to seek and obtain all
available legal and equitable remedies from Management Company based on
Management Company’s failure to comply with the terms of this Management
Company Acknowledgment, in addition to any remedies Franchisor may obtain from
Franchisee under the Franchise Agreement;

                    d.
Management Company hereby assigns (and will cause each of its employees or
independent contractors who contributed to such modifications,
derivatives or additions to
assign) to Franchisor, in perpetuity throughout the world, all rights, title
and interest (including the entire copyright and all renewals, reversions and
extensions thereof) in and to all modifications, derivatives or
additions to the Intellectual Property
and other aspects of the System proposed by or on behalf of Management Company
or its Affiliates. Management Company waives (and will cause each of its
employees or independent contractors who contributed to such modifications,
derivatives or additions to waive) all
“moral rights of authors” or any similar rights that Management Company (or its
employees or independent contractors) may now or hereafter have in the
modifications, derivatives or additions to the Intellectual Property and other aspects of the System proposed
by or on behalf of Management Company or its Affiliates. Management Company
agrees to execute (or cause to be executed) and deliver to Franchisor any
documents and to do any acts that may be deemed necessary by Franchisor to
perfect or protect the title in the modifications, derivatives and additions
herein conveyed, or intended to be conveyed now or in the future;

70

                    e.
Any default under the terms of the Franchise Agreement caused wholly or
partially by Management Company will constitute a default under the terms of
the Management Agreement, for which Franchisee will have the right to terminate
the Management Agreement; 

                    f.
Franchisee and Management Company will not modify or amend the Management
Agreement in such a way as to create a conflict or other inconsistency with the
terms of the Franchise Agreement or this Management Company Acknowledgment; 

                    g.
Except in extraordinary circumstances, such as theft or fraud on the part of
Management Company or a default by Franchisee under the Franchise Agreement
caused by Management Company for which Franchisee needs to promptly remove
Management Company from the Hotel, the Management Agreement will not be
terminated or permitted to expire without at least thirty (30) days’ prior
notice to Franchisor; and 

                    h.
Management Company will perform the day-to-day operations of the Hotel.
Franchisor has the right to communicate directly with Management Company and
the managers at the Hotel regarding day-to-day operations of the Hotel and such
communications will be deemed made to Franchisee because Management Company and
the managers at the Hotel are acting on behalf of Franchisee and Management
Company as their authorized representatives. Franchisor has the right to rely
on instructions of Management Company and the managers at the Hotel as to
matters relating to the operation and promotion of the Hotel, and the
agreements of such managers are binding on Management Company and Franchisee.

          4.
Existence and Power. Each of Management Company and Franchisee represents and
warrants with respect to itself that (i) it is a legal entity duly formed,
validly existing, and in good standing under the laws of the jurisdiction of
its formation, (ii) it has the ability to perform its obligations under this
Management Company Acknowledgment and under the Management Agreement, and (iii)
it has all necessary power and authority to execute and deliver this Management
Company Acknowledgment.

          5.
Authorization; Contravention. 

                    a.
Management Company and Franchisee each represents and warrants with respect to
itself that the execution and delivery of this Management Company
Acknowledgment and the performance by Management Company and Franchisee of its
respective obligations hereunder and under the Management Agreement: (i) have
been duly authorized by all necessary action; (ii) do not require the consent
of any third parties (including lenders) except for such consents as have been
properly obtained; and (iii) do not and will not contravene, violate, result in
a breach of, or constitute a default under (a) its certificate of formation,
operating agreement, articles of incorporation, by-laws, or other governing
documents, (b) any regulation of any governmental body or any decision, ruling,
order, or award by which each may be bound or affected, or (c) any agreement,
indenture or other instrument to which each is a party; and

                    b.
Management Company represents and warrants to Franchisor that: (i) neither
Management Company (including any and all of its directors and officers), nor
any of its Affiliates or the funding sources for any of the foregoing is a
Specially Designated National or Blocked Person (as defined in the Franchise
Agreement); (ii) neither Management Company nor any of its Affiliates is
directly or indirectly owned or controlled by the government of any country
that is subject to an embargo by the United States government; and (iii)
neither Management Company nor any of its Affiliates is acting on behalf of a
government of any country that is subject to such an embargo. Management
Company further

71

 represents and warrants that it
is in compliance with any applicable anti-money laundering law, including the
USA Patriot Act. Management Company agrees that it will notify Franchisor in
writing immediately upon the occurrence of any event which would render the
foregoing representations and warranties of this Section 5.b. incorrect.

          6.
Controlling Agreement. If there are conflicts between any provision(s) of the
Franchise Agreement and this Management Company Acknowledgment on the one hand
and the Management Agreement on the other hand, the provision(s) of the
Franchise Agreement and this Management Company Acknowledgment will control.

          7. No
Release. This Management Company Acknowledgment will not release or discharge
Franchisee from any liability or obligation under the Franchise Agreement and
Franchisee will remain liable and responsible for the full performance and
observance of all of the provisions, covenants, and conditions set forth in the
Franchise Agreement.

          8. Limited
Consent. Franchisor’s consent to Management Company operating the Hotel and
Franchisor’s grant to Management Company of the right to operate the Hotel are
personal to Management Company, and this Management Company Acknowledgment is
not assignable by Franchisee or Management Company. If there is a change in
control of Management Company or if Management Company becomes, is acquired by,
comes under the control of, or merges with or into a Competitor, or if there is
a material adverse change to the financial status or operational capacity of Management
Company, Franchisee will promptly notify Franchisor of any such change and
Management Company will be subject to the consent process under the Franchise
Agreement as a new operator of the Hotel.

          9. Defined
Terms. Unless specifically defined herein, all capitalized terms used in this
Management Company Acknowledgment will have the same meanings set forth in the
Franchise Agreement.

          10.
Counterparts. This Management Company Acknowledgment may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which, when taken together, will constitute one and the same instrument.
Delivery of an executed signature page to this Management Company
Acknowledgment by facsimile transmission will be effective as delivery of a
manually signed counterpart of this Management Company Acknowledgment.

          11.
Governing Law. This Management Company Acknowledgment will be construed in
accordance with the laws of the State of Maryland without regard to the conflict
of laws principles thereof, and contains the entire agreement of the parties
hereto. Management Company hereby submits itself to the non-exclusive
jurisdiction of the courts of the State of Maryland, United States of America,
in any suit, action, or proceeding arising, directly or indirectly, out of or
relating to this Management Company Acknowledgment; and so far as is permitted
under applicable law, this consent to personal jurisdiction will be
self-operative.

          12.
Management Company’s Address. Management Company’s mailing address is 4290 New Town Avenue, Williamsburg, VA 23188.
Management Company agrees to provide notice to both Franchisee and Franchisor
if there is any change in Management Company’s mailing address.

          13.
WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES. MANAGEMENT COMPANY, FRANCHISEE AND FRANCHISOR EACH HEREBY ABSOLUTELY, IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY AND THE RIGHT TO CLAIM OR RECEIVE
PUNITIVE DAMAGES IN ANY LITIGATION, ACTION, CLAIM, SUIT 

72

OR PROCEEDING,
AT LAW OR IN EQUITY, ARISING OUT OF, PERTAINING TO OR IN ANY WAY ASSOCIATED
WITH THE COVENANTS, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES SET FORTH
HEREIN, THE RELATIONSHIPS OF THE PARTIES HERETO, WHETHER AS “MANAGEMENT
COMPANY,” “FRANCHISEE” OR “FRANCHISOR” OR OTHERWISE, THIS AGREEMENT OR ANY
OTHER MARRIOTT AGREEMENT, OR ANY ACTIONS OR OMISSIONS IN CONNECTION WITH ANY OF
THE FOREGOING.

          IN WITNESS
WHEREOF, the parties hereto have duly executed and delivered this Management
Company Acknowledgment, under seal, as of the date first above written.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 FRANCHISOR:

 
	
  

 	
  

 	
  

 	
  

 
	
 ATTEST:

 	
  

 	
 MARRIOTT
 INTERNATIONAL, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
 (SEAL)

 
	

 

 	
  

 	
  

 	

 

 	
  

 
	
 Assistant
 Secretary

 	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	
 Title:

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 FRANCHISEE:

 
	
  

 	
  

 	
  

 	
  

 
	
 ATTEST:

 	
  

 	
 APPLE TEN
 HOSPITALITY

 
	
  

 	
  

 	
 MANAGEMENT,
 INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
 (SEAL)

 
	

 

 	
  

 	
  

 	

 

 	
  

 
	
 (Assistant)
 Secretary

 	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	
 Title:

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 MANAGEMENT
 COMPANY:

 
	
  

 	
  

 	
  

 	
  

 
	
 WITNESS:

 	
  

 	
 NEWPORT
 CHARLOTTE MANAGEMENT, LLC

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
 (SEAL)

 
	

 

 	
  

 	
  

 	

 

 	
  

 
	
 Witness

 	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	
 Title:

 	
  

 

73

ELECTRONIC SYSTEMS LICENSE AGREEMENT

          This
Electronic Systems License Agreement (this “License Agreement”) is made and
entered into effective as of the ____ day of ___________________, 2011
(“Effective Date”), between Marriott International, Inc., a Delaware
corporation (“Franchisor”), and Apple Ten Hospitality Management, Inc., a
Virginia corporation (“Franchisee”).

WITNESSETH:

          WHEREAS,
Franchisor and Franchisee have entered into a Franchise Agreement dated as of
the date hereof (the “Franchise Agreement”) under which Franchisee will
establish and operate the Hotel under Franchisor’s System at the location
specified in the Franchise Agreement; and

          WHEREAS,
under the terms of the Franchise Agreement, Franchisee is required to use
certain Electronic Systems in connection with, and as a condition of operating
the Hotel, and Franchisor desires to make available to Franchisee such
Electronic Systems under the terms of this License Agreement.

          NOW,
THEREFORE, in consideration of the premises and the undertakings and
commitments of each party to the other party set forth herein, the parties
agree as follows:

          1. Defined
Terms. Capitalized terms not defined in this License Agreement will have
the meaning given to them in the Franchise Agreement.

          2. License
Grant. Subject to the terms of this License Agreement, Franchisor hereby
grants to Franchisee a nonexclusive, non-transferable right and license to use
the Electronic Systems made available by Franchisor. For each Electronic
System, the license will commence on the installation date thereof, and will
extend until termination of this License Agreement or such time as Franchisor
ceases to make such Electronic System available in accordance with Franchisor’s
operation of the System.

          3. Ownership;
Use Restrictions. All Electronic Systems will at all times remain the sole
property of Franchisor or any third-party vendors, as applicable. Franchisee
will at all times treat the Electronic Systems as confidential. Franchisee will
not at any time, without Franchisor’s or such third party’s prior consent
(which may be withheld in Franchisor’s or such third party’s sole discretion),
copy, modify, reverse engineer, or otherwise duplicate the Electronic Systems
or any component thereof, in whole or in part, or otherwise make the same
available to any third party. Franchisee will use the Electronic Systems for
the exclusive purpose of operating the Hotel in accordance with the Franchise
Agreement. Franchisee will take reasonable measures to ensure that only
authorized employees of Franchisee at the Hotel have access to the Electronic
Systems, and only for permitted purposes hereunder. Such measures will be
subject to review and inspection by Franchisor. Franchisee will not attempt to
modify, delete or circumvent any measures used by Franchisor to safeguard the
Electronic Systems and the Intellectual Property therein. Franchisor reserves
the right to suspend Franchisee’s access to any Electronic System in order to
protect Franchisor’s Intellectual Property or other systems, data or property
of Franchisor or its vendors.

          4. Third
Party Vendors; Preferred Vendors. If any Electronic System is provided by a
third party vendor, Franchisee will comply with the terms provided by such
vendors in connection therewith. Franchisee acknowledges and agrees that such
third party vendors will have the right to enforce such terms directly against
Franchisee, and Franchisor will have no liability in connection with
Franchisee’s use of any third party Electronic System. Franchisor may also
require Franchisee to execute license or similar agreements directly with such
third party vendors in order to obtain access to Electronic Systems that are
required under Franchisor’s System. Franchisee will be deemed to be in direct
privity of contract 

with any third party provider of Electronic Systems. From time to time
Franchisor may designate a third party vendor of Electronic Systems as a
“preferred vendor” based on Franchisor’s reasonable judgment that such third
party Electronic System is suitable or desirable for Franchisor’s System.
Franchisee acknowledges and agrees that Franchisor neither endorses nor makes
any representations or warranties in connection with any third party’s Electronic
Systems, including any Electronic System provided by a preferred vendor.

          5. Support
Services. Franchisor will use commercially reasonable efforts to maintain
and support the Electronic Systems (the “Services”) during the term of this
License Agreement either by itself or through third party vendors as deemed
appropriate by Franchisor.

          6. Term
and Termination. This License Agreement will commence on the Effective Date
and remain in force until termination of the Franchise Agreement.

          7. DISCLAIMERS.
FRANCHISEE ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS
LICENSE AGREEMENT, FRANCHISOR PROVIDES THE ELECTRONIC SYSTEMS AND ANY
ASSOCIATED SERVICES ON AN AS-IS BASIS, AND FRANCHISOR DISCLAIMS ALL WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CUSTOM OR USAGE IN THE
TRADE, IN CONNECTION WITH FRANCHISEE’S USE OF THE ELECTRONIC SYSTEMS AND THE
PROVISION OF THE SERVICES UNDER THIS LICENSE AGREEMENT.

          8. Limitation
on Liability. Franchisor will not be liable for any damage arising out of
or in connection with the use or failure of any Electronic Systems or Services,
including, but not limited to, corruption of data, and Franchisee hereby waives
any right to or claim of any exemplary, incidental, indirect, special,
consequential, or other similar damages (including loss of profits) in
connection with the use or failure of Electronic Systems or Services, even if
Franchisor has been advised of the possibility of same. Franchisor will use
reasonable efforts, to the extent legally permissible, to pass through to
Franchisee any warranties or other similar protections provided to Franchisor
by Franchisor’s vendors with respect to Electronic Systems.

          9. Indemnification.
Franchisee agrees to indemnify, defend and hold harmless Franchisor and its
respective officers, directors, employees, agents, successors, and assigns,
from any losses, fines, liabilities, damages and claims, and all related costs
and expenses, including reasonable legal fees, disbursements and costs of
investigation, litigation, settlement, judgment, interest and penalties
(collectively, “Losses”) incurred by Franchisor in connection with Franchisee’s
use of the Electronic Systems or any failure by Franchisee to comply with the
terms of this License Agreement. Such indemnification and hold harmless
obligations will be subject to and incorporated into the Section of the
Franchise Agreement delineating Franchisee’s indemnification obligations.

          10. Software
License Rights Upon Termination. Franchisee acknowledges and agrees that
most Software purchased by Franchisees through Franchisor’s procurement process
is purchased in Franchisor’s name, and is not assignable to Franchisee upon
termination of this License Agreement (“Non-Assignable Software”). As such,
upon termination of this License Agreement, Franchisee’s right to use such
Non-Assignable Software will automatically cease. With respect to software
purchased through Franchisor’s procurement process that is assignable to
Franchisee upon termination of this License Agreement (“Assignable Software”),
upon the request of Franchisee, Franchisor will provide reasonable assistance
in helping to facilitate assignment of such software, including obtaining
consent of the vendor where necessary. Upon termination of this License
Agreement, Franchisee will delete both Assignable Software and Non-Assignable
Software obtained through Franchisor’s procurement process 

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and, with respect to Assignable Software, Franchisee may reinstall such
software on the applicable computing equipment using software copies obtained
by Franchisee directly from the applicable vendor.

          11. Miscellaneous.
All notices and other communications hereunder will be in writing and will be
delivered in accordance with the terms of the Franchise Agreement. This License
Agreement may not be modified or amended except by an agreement in writing
signed by the parties hereto. Waiver of any provision hereof in one or more
instances will not preclude enforcement thereof on future occasions. This
License Agreement may not be assigned by Franchisee to any third party, except
in connection with an assignment of the Franchise Agreement as expressly
permitted therein. This License Agreement and the legal relations between the
parties hereto will be governed by and construed in accordance with the laws of
the jurisdiction set forth in the Franchise Agreement. This License Agreement
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof, and supersedes all other communications, whether written
or oral.

          12. WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES.
FRANCHISEE AND FRANCHISOR EACH HEREBY ABSOLUTELY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY AND THE RIGHT TO CLAIM OR RECEIVE PUNITIVE
DAMAGES IN ANY LITIGATION, ACTION, CLAIM, SUIT OR PROCEEDING, AT LAW OR IN
EQUITY, ARISING OUT OF, PERTAINING TO OR IN ANY WAY ASSOCIATED WITH THE
COVENANTS, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES SET FORTH HEREIN, THE
RELATIONSHIPS OF THE PARTIES HERETO, WHETHER AS “FRANCHISEE” OR “FRANCHISOR” OR
OTHERWISE, THIS AGREEMENT OR ANY OTHER MARRIOTT AGREEMENT, OR ANY ACTIONS OR
OMISSIONS IN CONNECTION WITH ANY OF THE FOREGOING. 

          IN WITNESS
WHEREOF, the parties hereto have caused this License Agreement to be duly
executed and delivered, under seal, as of the date first above written.

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 FRANCHISOR:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ATTEST:

 	
 MARRIOTT
 INTERNATIONAL, INC.

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	

  

 	
  

 	
 By:

 	
  

 	
  

 	
  (SEAL)

 
	
 

 	
  

 	
  

 	

 

 	
 

 
	
 Assistant Secretary

 	
 Name:

 	
  

 	
  

 
	
  

 	
 Title:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 FRANCHISEE:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ATTEST:

 	
 APPLE TEN HOSPITALITY

 	
  

 
	
  

 	
 MANAGEMENT, INC.

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	

  

 	
  

 	
 By:

 	
  

 	
  

 	
  (SEAL)

 
	
 

 	
  

 	
  

 	

 

 	
 

 
	
 (Assistant) Secretary

 	
 Name:

 	
  

 	
  

 
	
  

 	
 Title:

 	
  

 	
  

 

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3

OWNER AGREEMENT

          This
AGREEMENT (“Agreement”) is entered into as of the ____ day of _________, 2011,
by and among Marriott International, Inc., a Delaware corporation
(“Franchisor”), Apple Ten Hospitality Management, Inc., a Virginia corporation
(“Franchisee”), and Apple Ten North Carolina, L.P., a [state] limited
partnership (“Owner”).

W I T N E S S E T H:

          WHEREAS,
Franchisor and Franchisee are parties to that certain Relicensing Franchise
Agreement dated as of __________, 2011 (as may be amended from time to time,
the “Franchise Agreement”) relating to the Hotel (as defined in the Franchise
Agreement); and

          WHEREAS,
Franchisee and Owner have entered into a lease (the “Lease”) pursuant to which
Franchisee will lease the Hotel from Owner and will operate the Hotel; and

          WHEREAS,
Owner, Franchisee and Franchisor desire that the Hotel be operated as a System
Hotel pursuant to the terms and conditions of the Franchise Agreement and this
Agreement.

          NOW,
THEREFORE, the parties, in consideration of the premises and the undertakings
and commitments of each party set forth herein, agree as follows:

	
  

 	
  

 
	
 1.

 	
 [Intentionally
 Omitted.]

 
	
  

 	
  

 
	
 2.

 	
 Termination
 of the Franchise Agreement.

 
	
  

 	
  

 
	
           Franchisor
 will have the right to terminate this Agreement immediately upon termination
 of the Franchise Agreement by delivering written notice to Owner.

 
	
  

 
	
 3.

 	
 Termination
 of the Lease.

 

          Owner will
notify Franchisor immediately of any pending or actual termination or
expiration of the Lease that is to occur or has occurred prior to expiration of
the Franchise Agreement, and Franchisor will have the right to terminate this
Agreement and the Franchise Agreement in connection with any such expiration or
termination. If there is a dispute between Owner and Franchisee relating to the
termination of the Lease, Franchisor will have the right to permit Franchisee
to operate the Hotel pursuant to the Franchise Agreement as long as Franchisee
has possession of the Hotel, and all of Franchisor’s rights under this
Agreement will be reserved pending resolution of such dispute whether by final
court or administrative order or negotiated settlement.

	
  

 	
  

 
	
 4.

 	
 Transfers
 Not Involving Competitors.

 

          Section 17
of the Franchise Agreement will apply hereunder to any Transfer of the Hotel,
any Ownership Interest in the Hotel, the Owner, this Agreement or the Lease, or
a change of Control in Owner, Franchisee or Owner, as if Owner were a party
thereto; any such Transfer(s) by Owner as described above will be made only in
strict compliance with Section 17 as the context requires.

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 5.

 	
 Transfers
 Involving a Competitor and Right of First Refusal.

 

          A. No
Transfers to a Competitor. If there is a proposed Transfer to a Competitor
of the Hotel, any Ownership Interest in the Hotel, Owner’s Ownership Interest
in this Agreement or in the Lease, or an Ownership Interest in either Owner or
a Control Affiliate of Owner, and Owner wishes to accept such proposed
Transfer, Owner will give notice thereof to Franchisor, stating the full name
and identity of the prospective purchaser or tenant, as the case may be,
including the names and addresses of the Interestholders of such prospective
purchaser or tenant, the price or rental and all terms of such proposed
transaction, together with all other related information that is reasonably
requested by Franchisor and reasonably available to Owner. Within thirty (30)
days after receipt by Franchisor of such notice and information from Owner,
Franchisor will notify Owner of Franchisor’s election, made in its sole
discretion, of one (1) of the immediately following four (4) alternatives:

                    (1)
Acquisition of Control of Hotel for Cash. If the proposed Transfer is a sale or
lease of the Hotel for cash consideration, Franchisor (or its designee) will
have the right to purchase or lease the Hotel at the same price or rental and
upon the same terms (other than any terms relating to the Brand of the Hotel)
as those contained in such offer from (or to) a Competitor. In such event,
Owner and Franchisor (or its designee) will promptly enter into an agreement
for sale or lease at the price or rental and on terms consistent with such
offer.

                    (2)
Acquisition of Owner/Acquisition of Control of Hotel. If the proposed Transfer
is a purchase or lease of all or a portion of the Ownership Interests or the
assets (which includes the Hotel) of Owner or an Affiliate of Owner, or a
merger with or into Owner or an Affiliate of Owner, or the acquisition of
Owner’s Ownership Interest in this Agreement or the Lease, or any sale or lease
of the Hotel involving non-cash consideration, or other form of Transfer,
Franchisor (or its designee) will have the right to purchase or lease the Hotel
at the purchase or lease price under terms consistent with such offer as agreed
to by the parties. If the parties are unable to agree as to purchase or lease
price and terms within fourteen (14) days of Franchisor’s election, the
purchase or lease price of the Hotel will be determined as provided below.

                              (a)
Within thirty (30) days after the fourteen (14) day period in this Section
5.A.(2) expires, Franchisor and Owner will each obtain, at its own expense, an
appraisal of the fair market value of the Hotel from a nationally recognized
appraiser of Hotel properties comparable to the Hotel. In determining the fair
market value, the appraisers will assume that the Hotel is not subject to a
management agreement but is subject to the existing Franchise Agreement. If,
after receiving such appraisals, the parties agree on the fair market value of
the Hotel, such agreed fair market value will constitute the purchase or lease
price.

                              (b)
If, within fourteen (14) days after receiving the appraisals the parties are
not able to agree on such fair market value, the purchase or lease price will
be determined by “baseball arbitration” in Washington, D.C. in accordance with
the Arbitration Rules for the Real Estate Industry of the American Arbitration
Association then in effect (“AAA Rules”) as modified by this Agreement. The
parties will jointly select a third party to act as the sole arbitrator (the
“Arbitrator”) to determine the fair market value of the Hotel, and such
Arbitrator will be a person having at least ten (10) years’ recent professional
experience as to the subject matter in question and will be qualified to act as
an Arbitrator in accordance with the AAA Rules. If the parties do not agree on
an Arbitrator with such qualifications within fifteen (15) days after the
expiration of such fourteen (14) day period referred to above, the Arbitrator
will be appointed by the American Arbitration Association in Washington, D.C.
in accordance with the AAA Rules.

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                              (c)
The Arbitrator will be instructed and obligated to decide, within thirty (30)
days after appointment, whether the appraisal submitted by Franchisor or the
appraisal submitted by Owner more accurately reflects the fair market value of
the Hotel based upon the appraisals submitted and such information as is
normally relied upon by an appraiser of hotels and real estate. Each party
agrees to fully cooperate and provide all information requested by the
Arbitrator related to the Arbitrator’s determination of the fair market value
of the Hotel. The Arbitrator’s choice of appraisal will be in writing, will
constitute the purchase price hereunder, and will be final, conclusive and
binding on the parties as an “award” under the AAA Rules, and may be enforced
by a court of competent jurisdiction. The expenses of the arbitration will be
borne equally by the parties to the arbitration. Franchisor (or its designee)
will have the right, at any time within thirty (30) days of being notified in
writing of the decision of the Arbitrator, to either (a) purchase the Hotel
premises and related property at the valuation determined by the Arbitrator, or
(b) terminate this Agreement pursuant to clause (3) below.

                    (3)
Termination of Owner Agreement and Franchise Agreement. Franchisor may place Owner and
Franchisee in default and terminate this Agreement and the Franchise Agreement,
respectively, in which event Owner and Franchisee will be obligated, jointly
and severally, to pay Franchisor the applicable liquidated
damages and otherwise comply with the obligations referenced in Section 9.B of
this Agreement.

                    (4)
Consent. Franchisor may consent to such Transfer, which consent will be on such
terms as Franchisor may require, in its sole discretion.

          This
Section 5.A will survive termination of this Agreement for any reason if,
before such termination, any event specified in Section 5 occurs, as a result
of which Franchisor has exercised (or has the right to exercise) such right of
first refusal, notwithstanding Section 5.G.

          B. Affiliates.
If a Competitor proposes to acquire all of the Ownership Interests of an
Affiliate of Owner and such Affiliate does not directly or indirectly own,
lease, or operate any hotels operating under a trade name owned by Franchisor
or any of its Affiliates, Franchisor will not have any right of first refusal
to purchase the Hotel or right to terminate this Agreement, as provided above
in Section 5.A. with respect to such Transfer.

          C. Foreclosure.
If the Transfer to a Competitor is by foreclosure, judicial or legal process,
or any other means, Franchisor (or its designee) will have the right to
purchase the Hotel upon notice to Owner. If the parties are unable to agree as
to a purchase price and terms within thirty (30) days of Franchisor’s notice,
the fair market value of the Hotel premises and related property will be
determined by arbitration in accordance with Section 5.A.(2) above. This
provision will survive the termination of this Agreement and the termination of
the Franchise Agreement under Section 19.1 thereof in connection with the
Competitor’s actions under Section 17.4.C of the Franchise Agreement or this Section
5.C.

          D. Owner
Becomes a Competitor. If Owner or any of its Affiliates becomes a
Competitor, Owner will notify Franchisor in accordance with Section 5.A., and
provide all information reasonably requested by Franchisor related to becoming
a Competitor and requested thereby and provide the data required pursuant to
Section 5.A, or if Franchisor otherwise determines that Owner or any of its
Affiliates has become a Competitor, Franchisor will so notify Owner and
Franchisor will have the rights provided in Section 5.A., as if the Hotel were
subject to a non-cash offer from a third party except that Franchisor will have
thirty (30) days instead of fourteen (14) to agree on purchase terms. 

          E. Right
of First Refusal. In addition to the events specified in Section 5.A,
Franchisor will have the rights set forth in Section 5.A. if any event occurs
granting Franchisor a right of first refusal under Section 17 of the Franchise
Agreement, and, in connection with such event, Owner fails to 

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terminate the Lease and enter into, or cause a Substitute Operator to
enter into, an Interim Franchise Agreement and/or a New Franchise Agreement, as
applicable, in accordance with this Agreement.

          F. Real
Estate Rights. Owner acknowledges that Franchisor’s rights under this
Section 5 are real estate rights with respect to the Hotel. Franchisor is
entitled to file a record of such interest in and among the appropriate real
estate records of the jurisdiction in which the Hotel is located, and Owner
will cooperate as requested by Franchisor in such filing. Such filing will
indicate that Franchisor’s rights in real estate under Section 17.4 of the
Franchise Agreement and Section 5 of this Agreement will be subordinate only to
the exercise of the rights of bona fide lenders under a mortgage or security
deed secured by the Hotel, only if and for so long as: (i) the lender is not a
Competitor or Affiliate of a Competitor; (ii) any such mortgage or security
deed is and remains validly recorded and in full force and effect; and (iii)
the indebtedness underlying such mortgage or security deed complies with the
requirements of Section 7 hereof. Owner agrees that damages are not an adequate
remedy if Owner breaches its obligations under this Section 5 and that
Franchisor will be entitled to injunctive relief to prevent or remedy such
breach without the necessity of proving the inadequacy of money damages as a
remedy and without the necessity of posting a bond. If this Agreement is
terminated and Owner’s rights under this Section 5 are no longer in effect, at
the request of Owner or the transferee, Franchisor will deliver an instrument
in recordable form to terminate any such recording of interest in real estate.

          G. Survival
of Right of First Refusal. Except for termination of this Agreement
pursuant to Section 5.A.(3) above, Owner agrees that Franchisor’s rights under
Section 5 will survive early termination of this Agreement (as opposed to
expiration of this Agreement as provided in Section 12 hereof) and will bind
Owner and its Affiliates, if the events in either Section 5.G.(1) or Section
5.G.(2) occur:

                    (1)
before or within six (6) months after termination of this Agreement, a proposed
Transfer to a Competitor occurs with respect to the Hotel, Owner or an
Affiliate, or an Ownership Interest in either Owner or such Affiliate; and

                              (a)
the Franchise Agreement is terminated under (x) Sections 19.1.K or L; or (y)
Section 19.2.B; or (z) Section 19.2.D based upon a violation of Section 13.2;
or

                              (b)
the Franchise Agreement is terminated under Section 19.1.A, B, C, D or E and an
Affiliate, principal, or director of Owner obtains possession of the Hotel, or
such Affiliate, principal, or director is the party filing the suit or seeking
the execution or foreclosure referenced in Section 19.1.

                    (2)
there is a purported early termination of this Agreement (as opposed to
expiration of this Agreement as provided in Section 12 of this Agreement) by
Owner and before or within six (6) months after such purported
termination, a proposed Transfer to a Competitor occurs with respect to the
Hotel, the Owner or an Affiliate of Owner, or an Ownership Interest in either
Owner or such Affiliate.

	
  

 	
  

 
	
 6.

 	
 [Intentionally
 Omitted.]

 
	
  

 	
  

 
	
 7.

 	
 Financing of
 the Hotel. 

 

          Owner will
not, and will cause each Interestholder in Owner to not, incur or replace any
indebtedness that is secured by a lien on or mortgage of the Hotel or pledge of
Ownership Interests in Owner (whether such indebtedness is incurred (i)
individually on behalf of the Hotel or (ii) on a pooled basis with other hotels
or legal entities (a “Financed Pool”)) unless the following conditions are met
at the time the indebtedness is incurred or replaced: (1) the terms of such
indebtedness are commercially 

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reasonable; (2) the debt coverage ratio is equal to or greater than
1.3; and (3) the lender is not a Competitor or an Affiliate of a Competitor.
The condition set forth in clause (2) of the immediately preceding sentence
will not apply to indebtedness incurred prior to the third anniversary of the
Opening Date to finance the construction of the Hotel (or the conversion of
such construction financing to permanent financing, if such permanent financing
is obtained at the same closing as the construction financing). The debt
coverage ratio as of any calculation date is the ratio of: (a) cash available
for the payment of debt service (interest and principal) for the Hotel (or
hotels, including the Hotel, that are part of the Financed Pool) from Gross
Revenues (after deduction for any management fee or reserve required under the
Franchise Agreement, any management agreement, or under the terms of any
financing) of the Hotel (or hotels, including the Hotel, that are part of the
Financed Pool) for the twelve (12) months immediately preceding such
calculation date, to (b) the greater of (x) the actual contractual amount of
debt service payments required to be made during the twelve (12) month period
after the calculation date for the Hotel (or hotels, including the Hotel, that
are part of the Financed Pool) or (y) the amount of debt service payments that
would be required to be made during the twelve (12) month period after the
calculation date for the Hotel (or hotels, including the Hotel, that are part
of the Financed Pool) assuming the indebtedness bears interest at an interest
rate of 7.5% and has a 20-year mortgage-style principal amortization. Owner
will give notice to Franchisor of the component hotels and legal entities in a
Financed Pool before incurring such indebtedness.

	
  

 	
  

 
	
 8.

 	
 Operation of
 the Hotel.

 

          The Hotel
will be operated as a System Hotel for the term hereof. Owner shall cause
Franchisee to operate the Hotel in accordance with the terms of the Franchise
Agreement. Failure of Owner to comply with the provisions of this Section 8
will be a material default by Owner hereunder giving Franchisor the right to
terminate this Agreement and the Franchise Agreement.

	
  

 	
  

 
	
 9.

 	
 Owner’s
 Obligations under the Franchise Agreement.

 

          A. Franchisee
Default. If Franchisor declares Franchisee to be in default under the
Franchise Agreement, Franchisor may (after providing the notice and applicable
cure period, if any, required in Section 1 above) enforce the Franchise
Agreement directly against Owner as if Owner were the Franchisee under the
Franchise Agreement, and Owner will perform, or cause to be performed, the
provisions of the Franchise Agreement including, without limitation, Section 3
on fees, Section 9 on operations of the Hotel, Section 11.2 on the Reserve,
and Section 16 on indemnification and insurance.

          B. Termination
of Franchise Agreement. If the Franchise Agreement is terminated and
Franchisee fails to perform any post-termination obligation under the Franchise
Agreement, Franchisor may enforce the Franchise Agreement directly against
Owner as if Owner were the Franchisee under the Franchise Agreement, and Owner
will perform, or cause to be performed, all post-termination obligations of
Franchisee under the Franchise Agreement, including, without limitation,
Section 16.1 on indemnification, Section 19.3 on liquidated damages, Section
20.1.A. on de-identifying the Hotel as part of the System and cessation of the
use of the System and Proprietary Marks, and Section 20.1.B. on paying other costs
and amounts.

	
  

 	
  

 
	
 10.

 	
 Provisions
 of the Lease.

 

          Any lease
governing the lease and operation of the Hotel (including the Lease) will
include the substance of the immediately following provisions or such other
provisions and requirements as set forth in the Franchise Agreement or in
Franchisor’s then-current disclosure document. 

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          A.
Franchisee will have exclusive possession of the Hotel and exclusive
control of the day-to-day operations of the Hotel;

          B. The
Hotel will be operated in full compliance with the provisions of the Franchise
Agreement. The Franchise Agreement will control in case of conflict with the
lease;

          C. A default
by Franchisee under the terms of the Franchise Agreement will constitute a
default under the terms of the lease;

          D. In the
event of an uncured default caused by Franchisee that leads to termination of
the Franchise Agreement, the lease will be terminated; and

          E. The
provisions in the lease that reflect this Section 10 and any other provisions
in the lease affecting, or for the benefit of, Franchisor will not be amended
or modified without Franchisor’s prior written consent.

	
  

 	
  

 
	
 11.

 	
 Surrender by
 Franchisee.

 

          Upon the
occurrence of the events described herein for the replacement of Franchisee as
possessor and operator of the Hotel, Franchisee will surrender its rights and
interest in the Franchise Agreement to Franchisor and peaceably turn over
possession of the Hotel to Owner without need for legal or judicial process.

	
  

 	
  

 
	
 12.

 	
 Term.

 

          The term of
this Agreement will commence on the date first set forth above and will expire
upon the expiration of the term of the Franchise Agreement unless this
Agreement is terminated prior thereto in accordance with this Agreement. If the
term of the Franchise Agreement is renewed or otherwise extended, the term of
this Agreement automatically will be extended to be coterminous with the
extended term of the Franchise Agreement.

	
  

 	
  

 
	
 13.

 	
 Survival.

 

          Notwithstanding
any provision to the contrary contained herein, Sections 9, 16 and 17 of this
Agreement will survive and remain in full force and effect after termination or
expiration of this Agreement for any reason, and Sections 5 and 14 will survive
the termination or expiration of this Agreement for any reason to the extent
provided in such Sections.

	
  

 	
  

 
	
 14.

 	
 Casualty.

 

          If the
Hotel is damaged or destroyed by fire or other cause and such damage or
destruction is substantial and material, affecting over fifty percent (50%) of
the Hotel, and necessitates the closing of the Hotel for a period in excess of
ninety (90) days, Owner will have the right to terminate this Agreement and to
cause the Franchise Agreement to be terminated upon notice to Franchisor given
within ninety (90) days of such closing of the Hotel if it elects not to repair
or rebuild the Hotel. Owner and Franchisee will not be required to pay
Franchisor the liquidated damages due under Section 19.3 of the Franchise
Agreement in connection with such termination if such casualty is the sole
basis for termination of this Agreement and Owner and Franchisee execute and
deliver to Franchisor a termination agreement and release in form and substance
acceptable to Franchisor; provided, however, if subsequent to such notice and
before the date on which the Term of the Franchise Agreement would otherwise
have ended under Section 4 of the Franchise Agreement if such notice of termination
had not been given (the “Term

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Expiration Date”), Owner, or any of its Affiliates or Interestholder
with an Ownership Interest of twenty-percent (20%) or greater (the “Owner
Entity”) operates a hotel; vacation, timesharing, interval or fractional
ownership facility; condominium; apartment; or other lodging product at the
Approved Location (the “Other Lodging Product”), which Other Lodging Product is
not operated under a license or franchise from Franchisor or one of its
Affiliates, then in such event, Owner will be obligated to promptly pay to
Franchisor an amount equal to the applicable liquidated damages set forth in
Section 19.3 of the Franchise Agreement, but clause (ii) in the calculation of
liquidated damages will be the lesser of (a) thirty-six (36) or
(b) one-half (1⁄2) the number of months then remaining between (x) the date
on which the Other Lodging Product is first operated by or for the Owner Entity
or Franchisee Entity, and (y) the Term Expiration Date. Owner’s obligations set
forth in this Section 14 will survive termination of this Agreement. If the
Hotel does not close for ninety (90) days or the Owner does not elect to
terminate this Agreement in accordance with the provisions of this Section 14,
the Hotel will be promptly renovated and reopened within a reasonable time in accordance
with the System and pursuant to plans and specifications approved by Franchisor
in accordance with Section 6.2 of the Franchise Agreement.

15. Condemnation.

          Owner will,
at the earliest possible time, give Franchisor notice of any proposed taking of
the Hotel by eminent domain, condemnation, compulsory acquisition, or similar
proceeding. If such taking is substantial enough to render impractical the
continued operation of the Hotel in accordance with the System and guest
expectations, this Agreement will terminate upon notice by Franchisor, Owner,
or Franchisee to the other parties and the execution and delivery of a
termination agreement and release in form and substance acceptable to
Franchisor (and the Franchise Agreement will terminate upon notice by
Franchisor or Franchisee to the other party and the execution and delivery of a
termination agreement and release in form and substance acceptable to
Franchisor), and Franchisor will share equitably in the condemnation award;
provided, however, Franchisor’s portion of such award will be limited to
compensating Franchisor for Franchisor’s lost Franchise Fees, which amount will
not exceed the amount of the applicable liquidated damages due under Section
19.3 of the Franchise Agreement. Further, if such condemnation is the sole
basis for termination of this Agreement and the Franchise Agreement,
Franchisor’s portion of such award will be in lieu of payment of the applicable
liquidated damages due under Section 19.3 of the Franchise Agreement. If such
taking, in Franchisor’s opinion, will not render the continued operation of the
Hotel impractical, Owner must promptly make whatever repairs and restorations
are necessary to make the Hotel conform substantially to its condition,
character, and appearance immediately before such taking, according to plans
and specifications approved by Franchisor. Owner will take all measures
necessary to ensure that the resumption of normal operation of the Hotel is not
unreasonably delayed.

16. Notices.

          A. Subject
to Section 16.B., all notices, requests, demands, statements, and other
communications required or permitted to be given under the terms of this
Agreement will be in writing and delivered by hand against receipt, sent by
certified mail (postage prepaid and return receipt requested), or carried by
reputable overnight courier service, to the respective party at the following
addresses:

	
  

 	
  

 
	
           To Franchisor:

 	
 Marriott International,
 Inc.

 
	
  

 	
 10400 Fernwood Road

 
	
  

 	
 Bethesda, MD 20817

 
	
  

 	
 Attn: Law Department 52/923.25

 

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           With
 a copy to:

 	
 Marriott
 International, Inc.

 
	
  

 	
 10400
 Fernwood Road

 
	
  

 	
 Bethesda,
 MD 20817

 
	
  

 	
 Attn:
 Vice President, Owner and Franchise Services

 
	
  

 	
  

 
	
           To
 Franchisee:

 	
 Apple
 Ten Hospitality Management, Inc.

 
	
  

 	
 814
 East Main Street

 
	
  

 	
 Richmond,
 VA 23219

 
	
  

 	
 Attn:
 Krissy Gathright, Vice President

 
	
  

 	
 Email:
 kgathright@applereit.com

 
	
  

 	
  

 
	
           To
 Owner:

 	
 Apple
 Ten North Carolina, L.P.

 
	
  

 	
 814
 East Main Street

 
	
  

 	
 Richmond,
 VA 23219

 
	
  

 	
 Attn:
 Krissy Gathright, Vice President

 
	
  

 	
 Email:
 kgathright@applereit.com

 

or at such other address as designated by notice from the respective
party to the other parties. Any such notice or communication will be deemed to
have been given at the date and time of: (A) receipt or first refusal of
delivery, if sent via certified mail or delivered by hand; or (B) one day after
the posting thereof, if sent via reputable overnight courier service.

          B.
Franchisor may provide Franchisee and Owner with routine information, invoices,
the Standards and other System requirements and programs, such as the Quality
Assurance Program, including any modifications thereto, by regular mail or by
e-mail, facsimile, or by making such information available to Franchisee and
Owner on the Internet, an extranet, or other electronic means.

17. Successors and Assigns.

          Franchisor
will have the right to Transfer this Agreement to any Person without prior
notice to, or consent of, Owner or Franchisee, provided the transferee assumes
Franchisor’s obligations to Owner and Franchisee under this Agreement. Owner
and Franchisee hereby acknowledge and agree that any such Transfer will
constitute a release and novation of Franchisor with respect to this Agreement.
This Agreement may not be assigned by Owner or Franchisee without the consent
of Franchisor.

18. Governing Law.

          This
Agreement is executed pursuant to, and will be interpreted and construed under
and governed exclusively by, the laws of the State of Maryland, United States
of America, which laws will prevail in the event of any conflict of law. Each
party hereby expressly and irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of Maryland, United States of America,
in any suit, action, or proceeding arising, directly or indirectly, out of or
relating to this Agreement; and so far as is permitted under applicable law,
this consent to personal jurisdiction will be self-operative. Nothing in this
Section 18 is intended, or will be deemed, to make the Maryland Franchise
Registration and Disclosure Law apply to this Agreement, or the transactions or
relationships contemplated hereby, if such law otherwise would not be
applicable.

19. Hotel Ownership and Ownership Structure.

          A. Owner
represents, warrants, and covenants to Franchisor that (i) Owner is the sole
owner of the Hotel and holds good and marketable fee title to the Approved
Location of the Hotel; and (ii) 

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Owner is owned directly and indirectly as set forth on Attachment A.
Upon the request of Franchisor, Owner will submit to Franchisor evidence, in
form and substance satisfactory to Franchisor, confirming that Owner is owned
directly and indirectly as set forth on Attachment A.

          B. Owner
represents, warrants, and covenants to Franchisor that: (i) neither Owner (including
any and all of its directors and officers), nor any of its Affiliates or the
funding sources for any of the foregoing is a Specially Designated National or
Blocked Person; (ii) neither Owner nor any of its Affiliates is directly or
indirectly owned or controlled by the government of any country that is subject
to an embargo by the United States government; and (iii) neither Owner nor any
of its Affiliates is acting on behalf of a government of any country that is
subject to such an embargo. Owner further represents and warrants that it is in
compliance with any applicable anti-money laundering law, including the USA
Patriot Act. Owner agrees that it will notify Franchisor in writing immediately
upon the occurrence of any event that would render the foregoing
representations and warranties of this Section 19.B. incorrect.

20. Entire Agreement; Counterparts.

          A. This
Agreement, including the attachments hereto, and the agreements executed
simultaneously herewith, or pursuant to, or in connection with, this Agreement
(including, without limitation, the Franchise Agreement), contains the entire
agreement between the parties hereto as it relates to the Hotel as of the date
hereof. The Franchise Agreement is attached hereto as Attachment B; Owner hereby
acknowledges that it has read and fully understands Attachment B as it applies
hereunder.

          B. This
Agreement may be executed in a number of identical counterparts, each of which
will be deemed an original for all purposes and all of which will constitute,
collectively, one agreement. Delivery of an executed signature page to this
Agreement by facsimile transmission will be effective as delivery of a manually
signed counterpart of this Agreement. This is a fully integrated agreement. No
agreement of any kind relating to the matters covered by this Agreement will be
binding upon any party unless and until the same has been made in a written,
non-electronic instrument that has been duly executed by the non-electronic
signature of all interested parties. This Agreement may not be amended or
modified by conduct manifesting assent, or by electronic signature, and each
party is hereby put on notice that any individual purporting to amend or modify
this Agreement by conduct manifesting assent or by electronic signature is not
authorized to do so.

21. Effects of Waivers.

          No waiver,
delay, omission, or forbearance on the part of Franchisor or Owner to exercise
any right, option or power arising from any default or breach by the other
party, or to insist upon strict compliance by the other party with any
obligation or condition hereunder, will affect or impair the rights of
Franchisor or Owner, respectively, with respect to any such default or breach
or subsequent default or breach of the same or of a different kind. Any delay,
forbearance, or omission of either party to exercise any right arising from any
such default or breach will not affect or impair such party’s rights with
respect to such default or breach or any future default or breach. Franchisor
will not be liable to Owner for providing (or denying) any waiver, approval,
consent, or suggestion to Owner in connection with this Agreement or by reason
of any delay or denial of any request.

22. Construction and Severability.

          A. Except
as expressly provided to the contrary herein, each section, part, term and/or
provision of this Agreement will be considered severable; and if, for any
reason any section, part, term of provision herein is determined to be invalid
and contrary to, or in conflict with, any existing or future law or regulation
by a court or agency having valid jurisdiction, such will not impair the
operation of, or have 

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any other effect upon, such other sections, parts, terms and provisions
of this Agreement as may remain otherwise intelligible, and the latter will
continue to be given full force and effect and bind the parties hereto. To the
extent possible, such invalid or unenforceable sections, parts, terms or
provisions will be deemed to be replaced with a provision that is valid and
enforceable and most nearly reflects the original intent of the invalid or
unenforceable provision.

          B. Nothing
in this Agreement is intended, or will be deemed, to create any third party
beneficiary or confer any rights or remedies under or by reason of this
Agreement upon any Person other than Franchisor (and its Affiliates),
Franchisee, or Owner, and their respective permitted successors and assigns.

23. Captions.

          Captions
and section headings are used for convenience only. They are not part of this
Agreement and will not be used in construing it.

24. Owner Representations, Warranties and Covenants.

          Owner
represents, warrants and covenants that (i) it is a legal entity duly formed,
validly existing, and in good standing under the laws of the jurisdiction of
its formation, (ii) it and its Affiliates have and will continue to have
throughout the term hereof the ability to perform their obligations under this
Agreement, (iii) it has all necessary power and authority to execute and
deliver this Agreement, (iv) it has read and fully understands the Franchise
Agreement as it applies hereunder, and (v) during the term of the Franchise
Agreement it will not enter into an agreement for the management of the Hotel
that does not comply with the provisions of the Franchise Agreement, unless
otherwise approved by Franchisor.

25. Cost of Enforcement.

          If for any
reason it becomes necessary for Franchisor or Owner to initiate any legal or
equitable action to secure or protect its rights under this Agreement, the
prevailing party will be entitled to recover all costs incurred by it in
successfully enforcing such rights, including reasonable attorneys’ fees.

26. Capitalized Terms.

          Unless the
context requires otherwise, capitalized terms not defined herein will have the
meaning stated in the Franchise Agreement.

27. WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES.

          OWNER,
FRANCHISEE AND FRANCHISOR EACH HEREBY ABSOLUTELY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY AND THE RIGHT TO CLAIM OR RECEIVE PUNITIVE
DAMAGES IN ANY LITIGATION, ACTION, CLAIM, SUIT OR PROCEEDING, AT LAW OR IN
EQUITY, ARISING OUT OF, PERTAINING TO OR IN ANY WAY ASSOCIATED WITH THE
COVENANTS, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES SET FORTH HEREIN, THE
RELATIONSHIPS OF THE PARTIES HERETO, WHETHER AS “OWNER”, “FRANCHISEE,” OR
“FRANCHISOR” OR OTHERWISE, THIS AGREEMENT OR ANY OTHER MARRIOTT AGREEMENT, OR
ANY ACTIONS OR OMISSIONS IN CONNECTION WITH ANY OF THE FOREGOING.  

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          IN WITNESS
WHEREOF, the parties have caused their duly authorized representatives to
execute this Owner Agreement, under seal, as of the date first above written.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 FRANCHISOR:

 
	
  

 	
  

 
	
 ATTEST:

 	
 MARRIOTT INTERNATIONAL,
 INC. 

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 	
  (SEAL)

 
	

 

 	
  

 	
  

 	

 

 	
  

 
	
 Assistant Secretary

 	
 Name:

 
	
  

 	
 Title:

 
	
  

 	
  

 
	
  

 	
 FRANCHISEE:

 
	
  

 	
  

 
	
 ATTEST:

 	
 APPLE TEN HOSPITALITY
 MANAGEMENT, INC.

 
	
  

 	
 a Virginia corporation

 
	
  

 	
  

 
	
  

 	
 By: 

 	
  

 	
  (SEAL)

 
	

 

 	
  

 	
  

 	

 

 	
  

 
	
 (Assistant) Secretary

 	
 Name: 

 
	
  

 	
 Title:

 
	
  

 	
  

 
	
  

 	
 OWNER:

 
	
  

 	
  

 
	
 WITNESS:

 	
 APPLE TEN NORTH CAROLINA,
 L.P.

 
	
  

 	
 a limited partnership

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 	
  (SEAL)

 
	

 

 	
  

 	
  

 	

 

 	
  

 
	
 Witness

 	
 Name: 

 
	
  

 	
 Title: 

 

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ATTACHMENT A

Equity Interest(s) in Owner

	
  

 	
  

 	
  

 
	
                Ownership
 of Apple Ten North Carolina, L.P.

 	
  

 	
 % Interest

 
	
  

 	
  

 	
  

 
	
 Apple Ten NC LP, Inc.

 	
  

 	
 99%

 
	
 814 East
 Main Street

 	
  

 	
  

 
	
 Richmond, VA
 23219

 	
  

 	
  

 
	
 Apple Ten NC LP, Inc.

 	
  

 	
1%

 
	
 814 East
 Main Street

 	
  

 	
  

 
	
 Richmond, VA
 23219

 	
  

 	
   

 
	
  

 	
  

 	
  

 
	
 Ownership
 of both: Apple Ten NC LP, Inc.

 	
  

 	
 % Interest

 
	
 and

 	
  

 	
  

 
	
 Apple Ten
 NC LP, Inc.

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 Apple Ten Hospitality Ownership, Inc.

 	
  

 	
 100%

 
	
 814 East
 Main Street

 	
  

 	
  

 
	
 Richmond, VA
 23219

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
           Ownership
 of Apple Ten Hospitality Ownership, Inc.

 	
  

 	
 % Interest

 
	
  

 	
  

 	
  

 
	
 Apple Ten Hospitality Management, Inc.

 	
  

 	
 100%

 
	
 814 East
 Main Street

 	
  

 	
  

 
	
 Richmond, VA
 23219

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
                Ownership
 of Apple Ten Hospitality, Inc.

 	
  

 	
 % Interest

 
	
  

 	
  

 	
  

 
	
 Apple REIT Ten, Inc.

 	
  

 	
 100%

 
	
 814 East Main
 Street

 	
  

 	
  

 
	
 Richmond, VA
 23219

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
           
          Ownership
 of Apple REIT Ten, Inc.

 	
  

 	
 % Interest

 
	
  

 	
  

 	
  

 
	
 Publicly-Held Company

 	
  

 	
 100%

 

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ATTACHMENT
B

FRANCHISE AGREEMENT

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