Sotherly Hotels Inc. (Form: 10-Q, Received: 08/10/2017 06:07:49)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

SOTHERLY HOTELS INC.

(Exact name of registrant as specified in its charter)

MARYLAND

001-32379

20-1531029

(State or Other Jurisdiction of

Incorporation or Organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

SOTHERLY HOTELS LP

(Exact name of registrant as specified in its charter)

DELAWARE

001-36091

20-1965427

(State or Other Jurisdiction of

Incorporation or Organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

410 West Francis Street

Williamsburg, Virginia 23185

(757) 229-5648

(Address and Telephone Number of Principal Executive Offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Sotherly Hotels Inc. Yes ☒ No ☐ Sotherly Hotels LP Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)

Sotherly Hotels Inc. Yes ☒ No ☐ Sotherly Hotels LP Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act. (Check one):

Sotherly Hotels Inc.

Large Accelerated Filer	☐	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller Reporting Company	☒

Emerging Growth Company	☐

Sotherly Hotels LP

Large Accelerated Filer	☐	Accelerated Filer	☐

Non-accelerated Filer	☒	Smaller Reporting Company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Sotherly Hotels Inc . Yes ☐ No ☒ Sotherly Hotels LP Yes ☐ No ☒

As of August 4, 2017, there were 13,815,035 shares of Sotherly Hotels Inc.’s common stock issued and outstanding.

EXPLANATORY NOTE

We refer to Sotherly Hotels Inc. as the “Company,” Sotherly Hotels LP as the “Operating Partnership,” the Company’s common stock as “Common Stock,” the Company’s preferred stock as “Preferred Stock,” and the Operating Partnership’s preferred interest as the “Preferred Interest.” References to “we” and “our” mean the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated.

The Company conducts virtually all of its activities through the Operating Partnership and is its sole general partner. The partnership agreement provides that the Operating Partnership will assume and pay when due, or reimburse the Company for payment of, all costs and expenses relating to the ownership and operations of, or for the benefit of, the Operating Partnership. The partnership agreement further provides that all expenses of the Company are deemed to be incurred for the benefit of the Operating Partnership.

This report combines the Quarterly Reports on Form 10-Q for the period ended June 30, 2017 of the Company and the Operating Partnership. We believe combining the quarterly reports into this single report results in the following benefits:

•

combined reports better reflect how management and investors view the business as a single operating unit;

•

combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

•

combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and

•

combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

•

Consolidated Financial Statements;

•

the following Notes to Consolidated Financial Statements:

•

Note 7 – Preferred Stock and Units; and

•

Note 8 – Common Stock and Units; and

•

Note 9 – Related Party Transactions; and

•

Note 13 – Income Per Share and Per Unit;

•

Item 4 - Controls and Procedures; and

•

Item 6 - Certifications of CEO and CFO Pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.

SOTHERLY HOTELS INC.

SOTHERLY HOTELS LP

INDEX

		Page

PART I
Item 1.	Consolidated Financial Statements	4
	Sotherly Hotels Inc .	4
	Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016	4
	Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2017 and 2016	5
	Consolidated Statement of Changes in Equity (unaudited) for the Six Months Ended June 30, 2017	6
	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2017 and 2016	7
	Sotherly Hotels LP	8
	Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016	8
	Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2017 and 2016	9
	Consolidated Statement of Changes in Partners’ Capital (unaudited) for the Six Months Ended June 30, 2017	10
	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2017 and 2016	11
	Notes to Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4	Controls and Procedures	44

PART II
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47

PART I

Item 1.

Consolidated Financial Statements

SOTHERLY HOTELS INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Investment in hotel properties, net	$	357,466,632		$	348,593,912
Investment in hotel properties held for sale, net		-			5,333,000
Cash and cash equivalents		34,438,950			31,766,775
Restricted cash		4,617,495			4,596,145
Accounts receivable, net		3,287,118			4,127,748
Accounts receivable - affiliate		563,905			4,175
Prepaid expenses, inventory and other assets		5,927,753			4,648,469
Deferred income taxes		6,691,344			6,949,340
TOTAL ASSETS	$	412,993,197		$	406,019,564
LIABILITIES
Mortgage loans, net	$	294,437,781		$	282,708,289
Unsecured notes, net		24,476,728			24,308,713
Accounts payable and accrued liabilities		13,468,659			12,970,960
Advance deposits		2,270,227			2,315,787
Dividends and distributions payable		2,442,283			2,376,527
TOTAL LIABILITIES	$	337,095,678		$	324,680,276
Commitments and contingencies (See Note 6)		—			—
EQUITY
Sotherly Hotels Inc. stockholders’ equity
8% Series B cumulative redeemable perpetual preferred stock, par value $0.01, 11,000,000 shares authorized, liquidation preference $25 per share, 1,610,000 shares issued and outstanding at June 30, 2017 and December 31, 2016		16,100			16,100
Common stock, par value $0.01, 49,000,000 shares authorized, 13,815,035 shares and 14,468,551 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively		138,150			144,685
Additional paid-in capital		118,497,398			118,395,082
Unearned ESOP shares		(4,753,453	)		—
Distributions in excess of retained earnings		(40,229,144	)		(39,545,754	)
Total Sotherly Hotels Inc. stockholders’ equity		73,669,051			79,010,113
Noncontrolling interest		2,228,468			2,329,175
TOTAL EQUITY		75,897,519			81,339,288
TOTAL LIABILITIES AND EQUITY	$	412,993,197		$	406,019,564

The accompanying notes are an integral part of these consolidated financial statements.

SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016

REVENUE
Rooms department	$	28,906,872		$	29,909,287		$	56,273,506		$	57,231,700
Food and beverage department		8,583,358			9,578,410			16,907,117			17,828,089
Other operating departments		3,152,402			2,337,257			6,156,895			4,575,309
Total revenue		40,642,632			41,824,954			79,337,518			79,635,098
EXPENSES
Hotel operating expenses
Rooms department		6,743,788			7,354,387			13,426,067			14,204,240
Food and beverage department		6,151,495			6,490,681			11,879,968			12,430,542
Other operating departments		623,530			644,430			1,223,550			1,238,399
Indirect		15,605,262			14,857,886			29,810,493			29,224,260
Total hotel operating expenses		29,124,075			29,347,384			56,340,078			57,097,441
Depreciation and amortization		4,219,712			3,801,478			8,280,809			7,470,115
Corporate general and administrative		1,834,930			1,356,754			3,547,012			2,964,048
Total operating expenses		35,178,717			34,505,616			68,167,899			67,531,604
NET OPERATING INCOME		5,463,915			7,319,338			11,169,619			12,103,494
Other income (expense)
Interest expense		(3,874,076	)		(4,613,165	)		(7,687,793	)		(9,245,797	)
Interest income		13,294			10,207			72,925			19,038
Loss on early debt extinguishment		(228,087	)		(70,293	)		(228,087	)		(70,293	)
Unrealized loss on hedging activities		(11,261	)		(15,517	)		(27,206	)		(66,074	)
Gain (loss) on disposal of assets		(51,507	)		(140,193	)		48,900			(140,193	)
Gain on involuntary conversion of assets		—			—			1,041,815			—
Net income before income taxes		1,312,278			2,490,377			4,390,173			2,600,175
Income tax provision		(196,483	)		(512,827	)		(368,420	)		(76,747	)
Net income		1,115,795			1,977,550			4,021,753			2,523,428
Less: Net income attributable to noncontrolling interest		(33,869	)		(216,444	)		(263,811	)		(279,223	)
Net income attributable to the Company		1,081,926			1,761,106			3,757,942			2,244,205
Distributions to preferred stockholders		(805,000	)		—			(1,610,000	)		—
Net income available to common stockholders	$	276,926		$	1,761,106		$	2,147,942		$	2,244,205
Net income per share available to common stockholders
Basic	$	0.02		$	0.12		$	0.15		$	0.15
Diluted	$	0.02		$	0.12		$	0.15		$	0.15
Weighted average number of common shares outstanding
Basic		13,813,168			14,949,651			13,898,910			14,871,281
Diluted		13,815,035			14,949,651			13,908,359			14,871,281

The accompanying notes are an integral part of these consolidated financial statements.

SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

											Additional						Distributions
	Preferred Stock				Common Stock						Paid-			Unearned ESOP			in Excess of			Noncontrolling
	Shares		Par Value		Shares			Par Value			In Capital			Shares			Retained Earnings			Interest			Total
Balances at December 31, 2016		1,610,000	$	16,100		14,468,551		$	144,685		$	118,395,082		$	—		$	(39,545,754	)	$	2,329,175		$	81,339,288
Net income		—		—		—			—			—			—			3,757,942			263,811			4,021,753
Issuance of restricted common stock awards		—		—		12,000			120			89,040			—			—			—			89,160
Unearned ESOP shares and dividends		—		—		(682,500	)		(6,825	)		6,825			(4,874,758	)		—			—			(4,874,758	)
Allocated and committed to be released ESOP shares		—		—		16,984			170			(3,509	)		121,305			—			—			117,966
Amortization of restricted stock award		—		—		—			—			9,960			—			—			—			9,960
Preferred stock dividends declared		—		—		—			—			—			—			(1,610,000	)		—			(1,610,000	)
Common stockholders' dividends and distributions declared		—		—		—			—			—			—			(2,831,332	)		(364,518	)		(3,195,850	)
Balances at June 30, 2017 (Unaudited)		1,610,000	$	16,100		13,815,035		$	138,150		$	118,497,398		$	(4,753,453	)	$	(40,229,144	)	$	2,228,468		$	75,897,519

The accompanying notes are an integral part of these consolidated financial statements.

SOTHERLY HOTELS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended			Six Months Ended
	June 30, 2017			June 30, 2016

Cash flows from operating activities:
Net income	$	4,021,753		$	2,523,428
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,280,809			7,470,115
Amortization of deferred financing costs		414,366			626,807
Amortization of mortgage premium		(12,341	)		(12,958	)
Gain on involuntary conversion of assets		(1,041,815	)		—
Unrealized loss on derivative instrument		27,206			66,074
(Gain) loss on disposal of assets		(48,900	)		140,193
Loss on early extinguishment of debt		228,087			70,293
Share - based compensation		217,086			201,722
Changes in assets and liabilities:
Restricted cash		(1,260,345	)		37,066
Accounts receivable		840,630			6,853
Prepaid expenses, inventory and other assets		(1,377,186	)		(712,835	)
Deferred income taxes		257,996			(7,615	)
Accounts payable and other accrued liabilities		1,438,743			2,522,235
Advance deposits		(555,560	)		546,052
Accounts receivable - affiliate		(559,730	)		15,934
Net cash provided by operating activities		10,870,799			13,493,364
Cash flows from investing activities:
Acquisitions of hotel properties		(3,986,849	)		—
Improvements and additions to hotel properties		(12,480,207	)		(8,827,313	)
Funding of restricted cash reserves		(2,366,331	)		(4,272,057	)
Proceeds of restricted cash reserves		3,605,325			5,544,815
Proceeds from the sale of hotel property		5,434,856			—
Proceeds from insurance conversion		1,041,815			—
Proceeds from the sale of assets		3,355			—
Net cash used in investing activities		(8,748,036	)		(7,554,555	)
Cash flows from financing activities:
Proceeds of mortgage debt		35,500,000			28,453,664
Proceeds from mortgage loan receivable		—			2,600,711
Repurchase of common stock		(1,103,130	)		—
Payments on mortgage loans		(23,647,602	)		(19,100,406	)
Payments of deferred financing costs		(585,004	)		(544,015	)
Funding of ESOP stock purchase		(4,874,758	)		—
Dividends and distributions paid		(4,740,094	)		(2,757,189	)
Net cash provided by financing activities		549,412			8,652,765
Net increase in cash and cash equivalents		2,672,175			14,591,574
Cash and cash equivalents at the beginning of the period		31,766,775			11,493,914
Cash and cash equivalents at the end of the period	$	34,438,950		$	26,085,488
Supplemental disclosures:
Cash paid during the period for interest	$	7,311,583		$	8,071,068
Cash paid during the period for income taxes	$	271,961		$	59,490
Non-cash investing and financing activities:
Change in amount of hotel property improvements in accounts payable and accrued liabilities	$	(247,806	)	$	251,422

The accompanying notes are an integral part of these consolidated financial statements.

SOTHERLY H OTELS LP

CONSOLIDATED BALANCE SHEETS

	June 30, 2017		December 31, 2016
	(Unaudited)
ASSETS
Investment in hotel properties, net	$	357,466,632	$	348,593,912
Investment in hotel property held for sale, net		—		5,333,000
Cash and cash equivalents		34,438,950		31,766,775
Restricted cash		4,617,495		4,596,145
Accounts receivable, net		3,287,118		4,127,748
Accounts receivable - affiliate		563,905		4,175
Loan receivable - affiliate		4,744,079		—
Prepaid expenses, inventory and other assets		5,927,753		4,648,469
Deferred income taxes		6,691,344		6,949,340
TOTAL ASSETS	$	417,737,276	$	406,019,564
LIABILITIES
Mortgage loans, net	$	294,437,781	$	282,708,289
Unsecured notes, net		24,476,728		24,308,713
Accounts payable and other accrued liabilities		13,468,659		12,970,960
Advance deposits		2,270,227		2,315,787
Dividends and distributions payable		2,512,162		2,376,527
TOTAL LIABILITIES	$	337,165,557	$	324,680,276

Commitments and contingencies (see Note 6)		—		—

PARTNERS’ CAPITAL
8% Series B Cumulative Redeemable Perpetual Preferred units, liquidation preference $25 per unit, 1,610,000 units issued and outstanding at June 30, 2017 and December 31, 2016		37,766,531		37,766,531
General Partner: 162,587 units and 162,467 units issued and outstanding as of June 30, 2017 and December 31, 2016, respectively		689,267		681,389
Limited Partners: 16,096,104 units and 16,084,224 units issued and outstanding as of June 30, 2017 and December 31, 2016, respectively		42,115,921		42,891,368
TOTAL PARTNERS’ CAPITAL		80,571,719		81,339,288
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	417,737,276	$	406,019,564

The accompanying notes are an integral part of these consolidated financial statements.

SOTHERLY HOTELS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016

REVENUE
Rooms department	$	28,906,872		$	29,909,287		$	56,273,506		$	57,231,700
Food and beverage department		8,583,358			9,578,410			16,907,117			17,828,089
Other operating departments		3,152,402			2,337,257			6,156,895			4,575,309
Total revenue		40,642,632			41,824,954			79,337,518			79,635,098
EXPENSES
Hotel operating expenses
Rooms department		6,743,788			7,354,387			13,426,067			14,204,240
Food and beverage department		6,151,495			6,490,681			11,879,968			12,430,542
Other operating departments		623,530			644,430			1,223,550			1,238,399
Indirect		15,605,262			14,857,886			29,810,493			29,224,260
Total hotel operating expenses		29,124,075			29,347,384			56,340,078			57,097,441
Depreciation and amortization		4,219,712			3,801,478			8,280,809			7,470,115
Corporate general and administrative		1,834,930			1,356,754			3,547,012			2,964,048
Total operating expenses		35,178,717			34,505,616			68,167,899			67,531,604
NET OPERATING INCOME		5,463,915			7,319,338			11,169,619			12,103,494
Other income (expense)
Interest expense		(3,874,076	)		(4,613,165	)		(7,687,793	)		(9,245,797	)
Interest income		13,294			10,207			72,925			19,038
Loss on early debt extinguishment		(228,087	)		(70,293	)		(228,087	)		(70,293	)
Unrealized loss on hedging activities		(11,261	)		(15,517	)		(27,206	)		(66,074	)
Gain (loss) on disposal of assets		(51,507	)		(140,193	)		48,900			(140,193	)
Gain on involuntary conversion of assets		—			—			1,041,815			—
Net income before income taxes		1,312,278			2,490,377			4,390,173			2,600,175
Income tax provision		(196,483	)		(512,827	)		(368,420	)		(76,747	)
Net income		1,115,795			1,977,550			4,021,753			2,523,428
Distributions to preferred unit holders		(805,000	)		—			(1,610,000	)		—
Net income available to operating partnership unit holders	$	310,795		$	1,977,550		$	2,411,753		$	2,523,428
Net income attributable per operating partner unit
Basic and diluted	$	0.02		$	0.12		$	0.15		$	0.15

Weighted average number of operating partner units outstanding
Basic and diluted		16,258,691			16,727,791			16,255,708			16,721,417

The accompanying notes are an integral part of these consolidated financial statements.

SOTHERLY HOTELS LP

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

	Preferred Units					General Partner					Limited Partner
	Units		Amount			Units		Amount			Units		Amounts			Total
Balances at December 31, 2016		1,610,000	$	37,766,531			162,467	$	681,389			16,084,224	$	42,891,368		$	81,339,288
Issuance of common partnership units		—		—			120		892			11,880		88,268			89,160
Amortization of restricted units award		—		—			—		99			—		64,450			64,549
Preferred units distributions declared		—		(1,610,000	)		—		—			—		—			(1,610,000	)
Partnership units distributions declared		—		—			—		(33,331	)		—		(3,299,700	)		(3,333,031	)
Net income		—		1,610,000			—		40,218			—		2,371,535			4,021,753
Balances at June 30, 2017 (Unaudited)		1,610,000	$	37,766,531			162,587	$	689,267			16,096,104	$	42,115,921		$	80,571,719

The accompanying notes are an integral part of these consolidated financial statements.

SOTHERLY HOTELS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended			Six Months Ended
	June 30, 2017			June 30, 2016

Cash flows from operating activities:
Net income	$	4,021,753		$	2,523,428
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,280,809			7,470,115
Amortization of deferred financing costs		414,366			626,807
Amortization of mortgage premium		(12,341	)		(12,958	)
Gain on involuntary conversion of assets		(1,041,815	)		—
Unrealized loss on derivative instrument		27,206			66,074
(Gain) loss on disposal of assets		(48,900	)		140,193
Loss on early extinguishment of debt		228,087			70,293
Unit - based compensation		153,709			201,722
Changes in assets and liabilities:
Restricted cash		(1,260,345	)		37,066
Accounts receivable		840,630			6,853
Prepaid expenses, inventory and other assets		(1,377,186	)		(712,835	)
Deferred income taxes		257,996			(7,615	)
Accounts payable and other accrued liabilities		1,438,743			2,522,235
Advance deposits		(555,560	)		546,052
Accounts receivable - affiliate		(559,730	)		15,934
Net cash provided by operating activities		10,807,422			13,493,364
Cash flows from investing activities:
Acquisitions of hotel properties		(3,986,849	)		—
Improvements and additions to hotel properties		(12,480,207	)		(8,827,313	)
Proceeds from the sale of hotel property		5,434,856			—
ESOP loan advances		(4,874,758	)		—
ESOP loan payments		130,679			—
Funding of restricted cash reserves		(2,366,331	)		(4,272,057	)
Proceeds of restricted cash reserves		3,605,325			5,544,815
Proceeds from insurance conversion		1,041,815			—
Proceeds from the sale of assets		3,355			—
Net cash used in investing activities		(13,492,115	)		(7,554,555	)
Cash flows from financing activities:
Proceeds of mortgage debt		35,500,000			28,453,664
Proceeds from mortgage loan receivable		—			2,600,711
Repurchase of common units		(1,103,130	)		—
Payments on mortgage loans		(23,647,602	)		(19,100,406	)
Payments of deferred financing costs		(585,004	)		(544,015	)
Distributions and dividends paid		(4,807,396	)		(2,757,189	)
Net cash provided by financing activities		5,356,868			8,652,765
Net increase in cash and cash equivalents		2,672,175			14,591,574
Cash and cash equivalents at the beginning of the period		31,766,775			11,493,914
Cash and cash equivalents at the end of the period	$	34,438,950		$	26,085,488
Supplemental disclosures:
Cash paid during the period for interest	$	7,311,583		$	8,071,068
Cash paid during the period for income taxes	$	271,961		$	59,490
Non-cash investing and financing activities:
Change in amount of hotel property improvements in accounts payable and accrued liabilities	$	(247,806	)	$	251,422

The accompanying notes are an integral part of these consolidated financial statements.

SOTHERLY HOTELS INC.

SOTHERLY HOTELS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Description of Business

Sotherly Hotels Inc., (the “Company”), is a self-managed and self-administered lodging real estate investment trust (“REIT”) that was incorporated in Maryland on August 20, 2004 to own full-service, primarily upscale and upper-upscale hotels located in primary and secondary markets in the mid-Atlantic and southern United States. Currently, the Company is focused on the acquisition, renovation, upbranding and repositioning of upscale to upper-upscale full-service hotels in the southern United States. The Company’s portfolio consists of investments in eleven hotel properties, comprising 2,838 rooms, and the hotel commercial condominium unit of the Hyde Resort & Residences condominium hotel. All of the Company’s hotels, except for the Georgian Terrace, The Whitehall and the Hyde Resort & Residences, operate under the Hilton, Crowne Plaza, DoubleTree, and Sheraton brands.

The Company commenced operations on December 21, 2004 when it completed its initial public offering and thereafter consummated the acquisition of six hotel properties (the “initial properties”). Substantially all of the Company’s assets are held by, and all of its operations are conducted through, Sotherly Hotels LP, (the “Operating Partnership”).

Pursuant to the terms of the Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) of the Operating Partnership, the Company, as general partner, is not entitled to compensation for its services to the Operating Partnership. The Company, as general partner, conducts substantially all of its operations through the Operating Partnership and the Company’s administrative expenses are the obligations of the Operating Partnership. Additionally, the Company is entitled to reimbursement for any expenditure incurred by it on the Operating Partnership’s behalf.

For the Company to qualify as a REIT, it cannot operate hotels. Therefore, the Operating Partnership, which, at June 30, 2017, was approximately 89.1% owned by the Company, and its subsidiaries, lease the hotels to direct and indirect subsidiaries of MHI Hospitality TRS Holding, Inc., MHI Hospitality TRS, LLC and certain of its subsidiaries, (collectively, “MHI TRS”), each of which is a direct or indirect wholly-owned subsidiary of the Operating Partnership. MHI TRS then engages an eligible independent hotel management company, MHI Hotels Services, LLC, which does business as Chesapeake Hospitality (“Chesapeake Hospitality”), to operate the hotels under a management contract. MHI TRS is treated as a taxable REIT subsidiary for federal income tax purposes.

All references in this report to “we”, “us” and “our” refer to the Company, its Operating Partnership and its subsidiaries and predecessors, collectively, unless the context otherwise requires or where otherwise indicated.

Significant transactions occurring during the current and prior fiscal year include the following:

On March 21, 2016, we entered into an agreement with the existing lender to extend the maturity of the mortgage on The Whitehall until November 2017.

On June 27, 2016, we entered into a promissory note and other loan documents to secure a $35.0 million mortgage on The DeSoto with MONY Life Insurance Company. The mortgage term is ten years maturing July 1, 2026, subject to certain criteria. The mortgage bears a fixed interest rate of 4.25%. The mortgage amortizes on a 25-year schedule after a 1-year interest-only period. The Company used the proceeds to repay the existing first mortgage on The DeSoto and to pay closing costs, and will use the balance of the proceeds to fund ongoing renovations at the hotel and for general corporate purposes.

On June 30, 2016, we entered into a loan agreement and other loan documents, including a guaranty of payment by the Operating Partnership, to secure a $19.0 million mortgage on the Crowne Plaza Tampa Westshore with Fifth Third Bank. The mortgage term has an initial term of three years, and may be extended for two additional periods of one year each, subject to certain conditions. The mortgage bears a floating interest rate of the 30-day LIBOR plus 3.75%, subject to a floor rate of 3.75%. The mortgage amortizes on a 25-year schedule. The Company used the proceeds to repay the existing first mortgage on the Crowne Plaza Tampa Westshore and to pay closing costs, and will use the balance of the proceeds for general corporate purposes.

On August 23, 2016, the Company sold 1,610,000 shares of 8% Series B Cumulative Redeemable Perpetual Preferred stock, for net proceeds after all expenses of approximately $37.8 million, which it contributed to the Operating Partnership for an equivalent number of preferred units.

On September 30, 2016, the Operating Partnership redeemed the entire $27.6 million aggregate principal amount of its outstanding 8% Notes.

On October 12, 2016, we entered i nto a loan agreement to secure a $20.5 million mortgage on The Whitehall with the International Bank of Commerce. Pursuant to the loan documents, the loan provides initial proceeds of $15.0 million, with an additional $5.5 million available upon the satis faction of certain conditions, has a term of five years, bears a floating interest rate of the one month LIBOR plus 3.5%, subject to a floor rate of 4.0%, amortizes on an 18-year schedule after a 2-year interest only period, is subject to prepayment fees, and is guaranteed by Sotherly Hotels LP.

On November 3, 2016, we entered into a loan agreement to refinance the mortgage on the Sheraton Louisville Riverside with Symetra Life Insurance Company. Pursuant to the loan documents, the loan provides proceeds of $12.0 million, has a maturity date of December 1, 2026, bears a fixed interest rate of 4.27% for the first 5 years of the loan with an option for the lender to reset that rate after 5 years, amortizes on a 25-year schedule, is subject to prepayment fees, and is guaranteed by Sotherly Hotels LP up to 50% of the unpaid principal balance, interest, and other amounts owed.

On November 3, 2016, we entered into a loan agreement to modify and extend the mortgage on the Crowne Plaza Hampton Marina with TowneBank. Pursuant to the amended loan documents, the loan continues to bear a fixed interest rate of 5.00%, has a maturity date of November 1, 2019, and beginning on December 1, 2016 requires monthly principal payments of $15,367 plus interest.

On December 1, 2016, we entered into a promissory note and other loan documents to secure a $35.0 million mortgage on the Hilton Wilmington Riverside with MONY Life Insurance Company. Pursuant to the loan documents, the loan provides initial proceeds of $30.0 million, with an additional $5.0 million available upon the satisfaction of certain conditions. The mortgage term is ten years maturing November 30, 2026, subject to certain criteria. The mortgage bears a fixed interest rate of 4.25%. The mortgage amortizes on a 25-year schedule after a 1-year interest-only period. The Company used the proceeds to repay the existing first mortgage on the Hilton Wilmington Riverside and to pay closing costs, and will use the balance of the proceeds to fund ongoing renovations at the hotel and for general corporate purposes.

On December 2, 2016, the Company’s board of directors authorized a stock repurchase program under which the Company may purchase up to $10.0 million of its outstanding common stock, par value $0.01 per share, at prevailing prices on the open market or in privately negotiated transactions, at the discretion of management. Through December 31, 2016 the Company repurchased 481,100 shares of common stock for approximately $3.2 million and the repurchased shares have been returned to the status of authorized but unissued shares of common stock. The Company did not repurchase any shares under the stock repurchase program during the three and six months ended June 30, 2017, respectively. The Company used available working capital to fund purchases under the stock repurchase program and intends to complete the repurchase program prior to December 31, 2017, unless extended by the board of directors.

The Company’s board of directors adopted an Employee Stock Ownership Plan (“ESOP”) as of November 29, 2016, effective January 1, 2016. The Company sponsors and maintains the ESOP and related trust for the benefit of its eligible employees. The ESOP is funded by a loan from the Company, pursuant to which the ESOP may borrow up to $5.0 million to purchase shares of the Company’s common stock. From January 3, 2017 to February 28, 2017 the ESOP purchased 682,500 shares of common stock for approximately $4.9 million .

Coincident with the execution of the loan from the Company to the ESOP, the Operating Partnership committed to fund a loan to the Company to allow the Company to loan funds to the ESOP, for the purpose as stated above.

On January 30, 2017, we closed on the purchase of the commercial condominium unit of the Hyde Resort & Residences, a 400-unit condominium hotel located in the Hollywood, Florida market, for an aggregated price of approximately $4.8 million from 4111 South Ocean Drive, LLC. In connection with the closing of the transaction, the Company entered into a lease agreement for the 400-space parking garage and meeting rooms associated with the condominium hotel, agreements relating to the operation and management of the hotel condominium association and a condominium unit rental program, and a pre-opening services agreement whereby the seller paid the Company a fee of approximately $0.8 million for certain pre-opening related preparations.

On February 7, 2017, we closed on the sale of the Crowne Plaza Hampton Marina to Marina Hotels, LLC for an approximate price of $5.6 million.

On June 1, 2017, we entered into an agreement to purchase the commercial unit of the planned Hyde Beach House Resort & Residences, a condominium hotel under development in Hollywood, Florida, for a price of $5.1 million from 4000 South Ocean Property Owner, LLLP. In connection with the agreement, we also entered into a pre-opening services agreement whereby the seller has agreed to pay the Company approximately $0.8 million in connection with certain pre-opening activities to be undertaken prior to the closing. The Company has agreed to purchase inventories at closing consistent with the management and operation of the hotel and the related condominium association for an additional amount and has further agreed to enter into a lease agreement for the parking garage and poolside cabanas associated with the hotel; and to enter into a management agreement relating to the operation and

management of the hotel’s condominium association. The Company anticipates that the closing of the transaction an d the execution of related agreements will take place in the second quarter of 2019, once construction of the hotel has been substantially completed. The closing of the transaction is subject to various closing conditions as described in the purchase agre ement.

On June 29, 2017, we entered into a promissory note and other loan documents to secure a $35.5 million mortgage on the DoubleTree by Hilton Jacksonville Riverfront with Wells Fargo Bank, N.A. Pursuant to the loan documents, the loan has a maturity date of July 11, 2024, bears a fixed interest rate of 4.88%, amortizes on a 30-year schedule, and is subject to a prepayment premium following a prepayment lockout period. The Company used a portion of the proceeds to repay the existing first mortgage on the Hotel and to pay closing costs, and will use the balance of the proceeds for general corporate purposes.

2. Summary of Significant Accounting Policies

Basis of Presentation – The consolidated financial statements of the Company presented herein include all of the accounts of Sotherly Hotels Inc., the Operating Partnership, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The consolidated financial statements of the Operating Partnership presented herein include all of the accounts of Sotherly Hotels LP, MHI TRS and subsidiaries. All significant inter-company balances and transactions have been eliminated, with the exception of the ESOP, which records a charge for salaries expense based on allocated and committed to be released shares and the amount of dividends associated with the unallocated suspense shares. Additionally, all administrative expenses of the Company and those expenditures made by the Company on behalf of the Operating Partnership are reflected as the administrative expenses, expenditures and obligations thereto of the Operating Partnership, pursuant to the terms of the Partnership Agreement.

Investment in Hotel Properties – Investments in hotel properties include investments in operating properties which are recorded at acquisition cost and allocated to land, property and equipment and identifiable intangible assets. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from our accounts and any resulting gain or loss is included in the statements of operations. Expenditures under a renovation project which constitute additions or improvements that extend the life of the property are capitalized.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 7 to 39 years for buildings and building improvements and 3 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets.

We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse permanent changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel property exceed its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property’s estimated fair market value would be recorded and an impairment loss recognized.

Assets Held For Sale – We record assets as held for sale when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year.

Cash and Cash Equivalents – We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Concentration of Credit Risk – We hold cash accounts at several institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) protection limits of $250,000. Our exposure to credit loss in the event of the failure of these institutions is represented by the difference between the FDIC protection limit and the total amounts on deposit. Management monitors, on a regular basis, the financial condition of the financial institutions along with the balances there on deposit to minimize our potential risk.

Restricted Cash – Restricted cash includes real estate tax escrows, insurance escrows and reserves for replacements of furniture, fixtures and equipment pursuant to certain requirements in our various mortgage agreements.

Accounts Receivable – Accounts receivable consists primarily of hotel guest and banqueting receivables. Ongoing evaluations of c ollectability are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible.

Inventories – Inventories, consisting primarily of food and beverages, are stated at the lower of cost or market, with cost determined on a method that approximates first-in, first-out basis.

Franchise License Fees – Fees expended to obtain or renew a franchise license are amortized over the life of the license or renewal. The unamortized franchise fees as of June 30, 2017 and December 31, 2016 were $354,197 and $386,612, respectively. Amortization expense for the three-month periods ended June 30, 2017 and 2016 totaled $29,494 and $13,083, respectively, and for the six-month periods ended June 30, 2017 and 2016 totaled $60,946 and $30,262, respectively.

Deferred Financing and Offering Costs – Deferred financing costs are recorded at cost and consist of loan fees and other costs incurred in issuing debt and are reflected in mortgage loans, net on the consolidated balance sheets. Deferred offering costs are recorded at cost and consist of offering fees and other costs incurred in issuing equity and are reflected in prepaid expenses, inventory and other assets on the consolidated balance sheets. Amortization of deferred financing costs is computed using a method that approximates the effective interest method over the term of the related debt and is included in interest expense in the consolidated statements of operations. During the three and six months ended June 30, 2017 the Company wrote off approximately $0.5 million of deferred offering costs.

Our amortization of deferred offering costs occurs when one of our equity offerings is complete, whereby the costs are offset against the equity funds raised in the future and included in additional paid-in capital on the consolidated balance sheets, or if the offering expires and the offering costs exceed the funds raised in the offering then the excess will be included in corporate general and administrative expenses in the consolidated statements of operations.

Derivative Instruments – Our derivative instruments are reflected as assets or liabilities on the balance sheet and measured at fair value. Derivative instruments used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as an interest rate risk, are considered fair value hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For a derivative instrument designated as a cash flow hedge, the change in fair value each period is reported in accumulated other comprehensive income in stockholders’ equity and partners’ capital to the extent the hedge is effective. For a derivative instrument designated as a fair value hedge, the change in fair value each period is reported in earnings along with the change in fair value of the hedged item attributable to the risk being hedged. For a derivative instrument that does not qualify for hedge accounting or is not designated as a hedge, the change in fair value each period is reported in earnings.

We use derivative instruments to add stability to interest expense and to manage our exposure to interest-rate movements. To accomplish this objective, we primarily are using an interest rate cap which acts as a cash flow hedge and is not designated as a hedge. We value our interest-rate cap at fair value, which we define as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We also have used derivative instruments in the Company’s stock to obtain more favorable terms on our financing. We do not enter into contracts to purchase or sell derivative instruments for speculative trading purposes.

Fair Value Measurements –

We classify the inputs used to measure fair value into the following hierarchy:

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2

Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3

Unobservable inputs for the asset or liability.

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurem ent. The following table represents our interest rate cap, mortgage loans and unsecured notes measured at fair value and the basis for that measurement:

	Level 1			Level 2			Level 3
December 31, 2016
Interest Rate Cap ⁽¹⁾	$	—		$	33,597		$	—
Mortgage loans ⁽²⁾	$	—		$	(281,840,780	)	$	—
Unsecured notes ⁽³⁾	$	(26,241,160	)	$	—		$	—
June 30, 2017
Interest Rate Cap ⁽¹⁾	$	—		$	6,390		$	—
Mortgage loans ⁽²⁾	$	—		$	(290,996,165	)	$	—
Unsecured notes ⁽³⁾	$	(26,109,600	)	$	—		$	—

(1)	Interest rate cap for our loan on DoubleTree by Hilton Jacksonville Riverfront, which caps the 1-month LIBOR rate at 2.5%.

(2)	Mortgage loans are reflected at outstanding principal balance, net of deferred financing costs on our Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016.

(3)	Unsecured notes are recorded at outstanding principal balance on our Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016.

Noncontrolling Interest in Operating Partnership – Certain hotel properties were acquired, in part, by the Operating Partnership through the issuance of limited partnership units of the Operating Partnership. The noncontrolling interest in the Operating Partnership is: (i) increased or decreased by the limited partners’ pro-rata share of the Operating Partnership’s net income or net loss, respectively; (ii) decreased by distributions; (iii) decreased by redemption of partnership units for the Company’s common stock; and (iv) adjusted to equal the net equity of the Operating Partnership multiplied by the limited partners’ ownership percentage immediately after each issuance of units of the Operating Partnership and/or the Company’s common stock through an adjustment to additional paid-in capital. Net income or net loss is allocated to the noncontrolling interest in the Operating Partnership based on the weighted average percentage ownership throughout the period.

Revenue Recognition – Revenues from operations of the hotels and condominium hotel are recognized when the services are provided. Revenues consist of room sales, food and beverage sales, and other hotel department revenues, such as rental management fees, telephone, parking, gift shop sales and rentals from restaurant tenants, rooftop leases and gift shop operators. Revenues are reported net of occupancy and other taxes collected from customers and remitted to governmental authorities.

Lease Revenue – Several of our properties generate revenue from leasing commercial space adjacent to the hotel, the restaurant space within the hotel, apartment units and space on the roofs of our hotels for antennas and satellite dishes. We account for the lease income as revenue from other operating departments within the statement of operations pursuant to the terms of each lease. Lease revenue was approximately $0.4 million and $0.5 million, for the three months ended June 30, 2017 and 2016, respectively and approximately $0.9 million, for each of the six months ended June 30, 2017 and 2016, respectively .

A schedule of minimum future lease payments receivable for the remaining six and twelve-month lease periods is as follows:

For the remaining six months ending December 31, 2017	$	616,243
December 31, 2018		803,814
December 31, 2019		727,672
December 31, 2020		690,578
December 31, 2021		583,127
December 31, 2022 and thereafter		2,517,406
Total	$	5,938,840

Income Taxes – The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. MHI TRS, our wholly owned taxable REIT subsidiary which leases our hotels from subsidiaries of the Operating Partnership, is subject to federal and state income taxes.

We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. As of June 30, 2017, and December 31, 2016, deferred tax assets totaled approximately $6.7 million and $6.9 million, respectively, of which approximately $5.8 million and $6.0 million relate to net operating losses of our TRS

Lessee. A valuation allowance is required for deferred tax assets if, based on all available evidence, it is “more-lik ely-than-not” that all or a portion of the deferred tax asset will or will not be realized due to the inability to generate sufficient taxable income in certain financial statement periods. The “more-likely-than-not” analysis means the likelihood of reali zation is greater than 50%, that we will or will not be able to fully utilize the deferred tax assets against future taxable income. The net amount of deferred tax assets that are recorded on the financial statements must reflect the tax benefits that are expected to be realized using these criteria. We perform this analysis by evaluating future hotel revenues and expenses accounting for certain non-recurring costs and expenses during the current and prior two fiscal years as well as anticipated changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership. We have determined that it is more-likely-than-not that we will be able to fully utilize our deferred tax assets for future tax consequences, therefore no valuatio n allowance is required. As of June 30, 2017 and December 31, 2016, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2017, the tax years that rema in subject to examination by the major tax jurisdictions to which the Company is subject generally include 2010 through 2016. In addition, as of June 30, 2017, the tax years that remain subject to examination by the major tax jurisdictions to which MHI TRS is subject generally include 2004 through 2016.

The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership’s taxable income.

Stock-based Compensation – The Company’s 2004 Long Term Incentive Plan (the “2004 Plan”) and its 2013 Long-Term Incentive Plan (the “2013 Plan”), which the Company’s stockholders approved in April 2013, permit the grant of stock options, restricted stock and performance share compensation awards to its employees for up to 350,000 and 750,000 shares of common stock, respectively. The Company believes that such awards better align the interests of its employees with those of its stockholders.

Under the 2004 Plan, the Company made stock awards totaling 337,438 shares, including 255,938 shares issued to certain executives and employees and 81,500 restricted shares issued to its independent directors. Of the 255,938 shares issued to certain of our executives and employees, all have vested except 6,000 shares issued to the Chief Financial Officer upon execution of his employment contract which will vest pro rata on the next anniversary of the effective date of his employment agreement. All of the 81,500 restricted shares issued to the Company’s independent directors have vested. The 2004 Plan was terminated in 2013.

Under the 2013 Plan, the Company has made stock awards totaling 121,100 shares, including 74,600 non-restricted shares to certain executives and employees and 46,500 restricted shares issued to its independent directors. All awards have vested except for 12,000 shares issued to the Company’s independent directors in February 2017, which will vest on December 31, 2017.

Previously, under the 2004 Plan, and currently, under the 2013 Plan, the Company may issue a variety of performance-based stock awards, including nonqualified stock options. The value of the awards is charged to compensation expense on a straight-line basis over the vesting or service period based on the value of the award as determined by the Company’s stock price on the date of grant or issuance. As of June 30, 2017, no performance-based stock awards have been granted. Total compensation cost recognized under the 2013 Plan for each of the three months ended June 30, 2017 and 2016 was $4,980, and for the six months ended June 30, 2017 and 2016 was $99,120 and $201,722, respectively.

Additionally, the Company sponsors and maintains an ESOP and related trust for the benefit of its eligible employees. We reflect unearned ESOP shares as a reduction of stockholders’ equity. Dividends on unearned ESOP shares, when paid, will be considered to be compensation expense. The Company recognizes compensation expense equal to the fair value of the Company’s ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the differential is recognized as additional paid in capital. Because the ESOP is internally leveraged through a loan from the Company to the ESOP, the loan receivable by the Company from the ESOP is not reported as an asset nor is the debt of the ESOP shown as a liability in the consolidated financial statements.

Advertising – Advertising costs were $85,094 and $120,996 for the three months ended June 30, 2017 and 2016, respectively and were $150,104 and $195,059 for the six months ended June 30, 2017 and 2016, respectively . Advertising costs are expensed as incurred.

Involuntary Conversion of Assets – We record gains or losses on involuntary conversions of assets due to recovered insurance proceeds to the extent the undepreciated cost of a nonmonetary asset differs from the amount of monetary proceeds received. During the three and six month periods ending June 30, 2017, we recognized approximately $0 and $1.0 million gain on involuntary conversion of assets, respectively, which is reflected in the consolidated statements of operations.

Comprehensive Income – Comprehensive income as defined, includes all changes in equity during a period from non-owner sources. We do not have any items of comprehensive income other than net income.

Segment Information – We have determined that our business is conducted in one reportable segment: hotel ownership.

Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabili ties and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications – Certain reclassifications in the amount of approximately $0.2 million and approximately $0.5 million for the three and six month periods ending June 30, 2016, respectively, from rooms expense to indirect expense balances have been made to conform to the current period presentation.

Recent Accounting Pronouncements – In February 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). The FASB issued this update to clarify the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and to add guidance for partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments in this update also simplify GAAP by eliminating several accounting differences between transactions involving assets and transactions involving businesses in many transactions related to: a partial sale of real estate; a transfer of a nonfinancial asset within the scope of FASB ASC Topic 845, Nonmonetary Transactions ; a contribution of a nonfinancial asset to form a joint venture; and a transfer of a nonfinancial asset to an equity method investee. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. We will adopt this ASU as of January 1, 2018. We do not expect this ASU to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . This ASU addresses the diversity within entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early application of this ASU is permitted for all entities. We will adopt this ASU as of January 1, 2018. We do not expect this ASU to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . Current GAAP either is unclear or does not include specific guidance on the eight cash flow classification issues included in the amendments in this update. The amendments are an improvement to GAAP because they provide guidance for each of the eight issues, thereby reducing the current and potential future diversity in practice. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early application of this ASU is permitted for all entities. We will adopt this ASU as of January 1, 2018. We do not expect this ASU to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers – Narrow-Scope Improvements and Practical Expedients (Topic 606) . The amendments in this ASU provide clarification to certain core recognition principles related to ASU No. 2014-09 including collectability, sales tax presentation, noncash consideration, contract modifications and completed contracts at transition and disclosures no longer required if the full retrospective transition method is adopted. The amendments do not change the core principle of the guidance. We are continuing to evaluate all of our revenue related to contracts with customers to determine how to transition these requirements into our consolidated financial statements. We will adopt this ASU as of January 1, 2018.

In April 2016, the FASB issued ASU No. 2016-10 , Revenue from Contracts with Customers – Identifying Performance Obligations and Licensing (Topic 606) . This update clarifies guidance related to identifying performance obligations and licensing implementation contained in ASU No. 2014-09. The amendments do not change the core principle of the guidance. We have analyzed all of our revenue related to contracts with customers and have determined how to transition these requirements into our consolidated financial statements. We will adopt this ASU as of January 1, 2018. We do not expect this ASU to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early application of this ASU is permitted for all entities. We are continuing to evaluate all of our leases to determine how to transition these requirements into our consolidated financial statements. We will adopt this ASU as of January 1, 2019.

3. Acquisition of Hotel Property

Hyde Resort & Residences. On January 30, 2017, we acquired the hotel commercial condominium unit of the Hyde Resort & Residences condominium hotel, for an aggregate price including inventory and other assets of approximately $4.8 million. The allocation of the estimated purchase price based on fair values is as follows:

	Hyde Resort & Residences
Land and land improvements	$	500
Buildings and improvements		4,309,500
Furniture, fixtures and equipment		72,616
Investment in hotel properties		4,382,616
Accrued liabilities and other costs		(866,142	)
Prepaid expenses, inventory and other assets		470,375
Net cash	$	3,986,849

The results of operations of the hotel are included in our consolidated financial statements from the date of acquisition. The total revenue and net loss related to the acquisition for the period January 30, 2017 to June 30, 2017 are approximately $1.6 million and $0.3 million, respectively. There is no pro forma financial information, since this is a new operation without prior historical information.

4. Investment in Hotel Properties, Net and Investment in Hotel Properties Held for Sale, Net

Investment in hotel properties, net as of June 30, 2017 and December 31, 2016 consisted of the following:

	June 30, 2017			December 31, 2016
Land and land improvements	$	58,412,179		$	57,851,380
Buildings and improvements		338,922,481			336,996,876
Furniture, fixtures and equipment		52,285,115			43,458,781
		449,619,775			438,307,037
Less: accumulated depreciation and impairment		(92,153,143	)		(89,713,125	)
Investment in Hotel Properties, Net	$	357,466,632		$	348,593,912

Investment in hotel properties held for sale, net as of June 30, 2017 and December 31, 2016 consisted of the following:

	June 30, 2017		December 31, 2016
Land and land improvements	$	—	$	1,097,096
Buildings and improvements		—		6,242,504
Furniture, fixtures and equipment		—		2,289,008
		—		9,628,608
Less: accumulated depreciation and impairment		—		(4,295,608	)
Investment in Hotel Properties Held for Sale, Net	$	—	$	5,333,000

Investment in hotel properties held for sale, net represents the Crowne Plaza Hampton Marina property, which was sold on February 7, 2017 for approximately $5.6 million. After selling costs, mortgage loan payoff and associated fees we realized an approximate gain on the sale of assets of $0.1 million, as reflected in the consolidated statements of operations.

5. Debt

Mortgage Loans, Net . As of June 30, 2017 and December 31, 2016, we had approximately $294.4 million and approximately $282.7 million of outstanding mortgage debt, respectively. The following table sets forth our mortgage debt obligations on our hotels.

	Balance Outstanding as of
	June 30,			December 31,			Prepayment	Maturity	Amortization	Interest
Property	2017			2016			Penalties	Date	Provisions	Rate
Crowne Plaza Hampton Marina ⁽¹⁾	$	-		$	2,584,633		None	11/1/2019	3 years		5.00%
Crowne Plaza Hollywood Beach Resort ⁽²⁾	$	58,473,352			58,935,818		n/a	10/1/2025	30 years		4.913%
Crowne Plaza Tampa Westshore ⁽³⁾		15,422,800			15,561,400		None	6/30/2019	25 years	LIBOR plus 3.75 %
The DeSoto ⁽⁴⁾		30,000,000			30,000,000		Yes	7/1/2026	25 years		4.25%
DoubleTree by Hilton Jacksonville Riverfront ⁽⁵⁾		35,500,000			19,291,716		Yes	7/11/2024	30 years		4.88%
DoubleTree by Hilton Laurel ⁽⁶⁾		9,231,427			9,329,005		Yes	8/5/2021	25 years		5.25%
DoubleTree by Hilton Philadelphia Airport ⁽⁷⁾		30,861,395			31,261,991		None	4/1/2019	25 years	LIBOR plus 3.00 %
DoubleTree by Hilton Raleigh Brownstone University ⁽⁸⁾		14,637,611			14,773,885		n/a	8/1/2018	30 years		4.78%
Georgian Terrace ⁽⁹⁾		45,425,390			45,826,038		n/a	6/1/2025	30 years		4.42%
Hilton Wilmington Riverside ⁽¹⁰⁾		30,000,000			30,000,000		Yes	1/1/2027	25 years		4.25%
Sheraton Louisville Riverside ⁽¹¹⁾		11,842,466			11,977,557		Yes	12/1/2026	25 years		4.27%
The Whitehall ⁽¹²⁾		15,000,000			15,000,000		Yes	10/12/2021	18 years	LIBOR plus 3.50 %
Total Mortgage Principal Balance	$	296,394,441		$	284,542,043
Deferred financing costs, net		(2,159,974	)		(2,049,409	)
Unamortized premium on loan		203,314			215,655
Total Mortgage Loans, Net	$	294,437,781		$	282,708,289

(1)	As of February 7, 2017, the note is no longer outstanding due to the sale of the property.
(2)	With limited exception, the note may not be prepaid until June 2025.
(3)	The note provides initial proceeds of $15.7 million, with an additional $3.3 million available upon the satisfaction of certain conditions; bears a floating interest rate of the 30-day LIBOR plus 3.75%, subject to a floor rate of 3.75%; the note provides that the mortgage can be extended for two additional periods of one year each, subject to certain conditions.
(4)	The note provides initial proceeds of $30.0 million, with an additional $5.0 million available upon the satisfaction of certain conditions, namely, the completion of a renovation project; amortizes on a 25-year schedule after a 1-year interest-only period; and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date.
(5)	The note may not be prepaid until August 2019, after which it is subject to a pre-payment penalty until March 2024. Prepayment can be made without penalty thereafter.
(6)	The note is subject to a pre-payment penalty except for any pre-payments made either between April 2017 and August 2017, or from April 2021 through maturity of the note. The note provides that on January 5, 2018, the rate of interest will adjust to a rate of 3.00% per annum plus the then-current five-year U.S. Treasury rate of interest, with a floor of 5.25%.
(7)	The note bears a minimum interest rate of 3.50%.
(8)	With limited exception, the note may not be prepaid until two months before maturity.
(9)	With limited exception, the note may not be prepaid until February 2025.
(10)	The note provides initial proceeds of $30.0 million, with an additional $5.0 million available upon the satisfaction of certain conditions namely, the completion of a renovation project; amortizes on a 25-year schedule after a 1-year interest-only period; and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date.
(11)	The note bears a fixed interest rate of 4.27% for the first 5 years of the loan, with an option for the lender to reset the interest rate after 5 years.
(12)	The note was refinanced in October 2016, provides initial proceeds of $15.0 million, with an additional $5.5 million available upon the satisfaction of certain conditions; bears a floating interest rate of the 1-month LIBOR plus 3.5%, subject to a floor rate of 4.0% and is subject to prepayment penalties subject to a declining scale from 3.0% penalty on or before the first anniversary date, a 2.0% penalty during the second anniversary year and a 1.0% penalty after the third anniversary date.

We were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, as of June 30, 2017.

Total future mortgage debt maturities, without respect to any extension of loan maturity, as of June 30, 2017 were as follows:

For the remaining six months ending December 31, 2017	$	4,253,394
December 31, 2018		23,628,585
December 31, 2019		52,522,467
December 31, 2020		9,012,007
December 31, 2021		30,722,020
December 31, 2022 and thereafter		176,255,968
Total future maturities	$	296,394,441

7.0% Unsecured Notes. On November 21, 2014, the Operating Partnership issued 7.0% senior unsecured notes in the aggregate amount of $25.3 million (the “7% Notes”). The indenture requires quarterly payments of interest and matures on November 15, 2019. The 7% Notes are callable after November 15, 2017 at 101% of face value.

6. Commitments and Contingencies

Ground, Building and Submerged Land Leases – We lease 2,086 square feet of commercial space next to The DeSoto for use as an office, retail or conference space, or for any related or ancillary purposes for the hotel and/or atrium space. In December 2007, we signed an amendment to the lease to include rights to the outdoor esplanade adjacent to the leased commercial space. The areas are leased under a six-year operating lease, which expired October 31, 2006 and has been renewed for the third of three optional five-year renewal periods expiring October 31, 2011, October 31, 2016 and October 31, 2021, respectively. Rent expense for this operating lease for each of the three months ended June 30, 2017 and 2016 totaled $18,245 and for each of the six months ended June 30, 2017 and 2016, totaled $36,491 .

We lease, as landlord, the entire fourteenth floor of The DeSoto hotel property to The Chatham Club, Inc. under a ninety-nine year lease expiring July 31, 2086. This lease was assumed upon the purchase of the building under the terms and conditions agreed to by the previous owner of the property. No rental income is recognized under the terms of this lease as the original lump sum rent payment of $990 was received by the previous owner and not prorated over the life of the lease.

We lease a parking lot adjacent to the DoubleTree by Hilton Raleigh Brownstone-University in Raleigh, North Carolina. The land is leased under a second amendment, dated April 28, 1998, to a ground lease originally dated May 25, 1966. The original lease is a 50-year operating lease, which expired August 31, 2016. We exercised a renewal option for the first of three additional ten-year periods expiring August 31, 2026, August 31, 2036, and August 31, 2046, respectively. We hold an exclusive and irrevocable option to purchase the leased land at fair market value at August 1, 2018, or at the end of any 10-year renewal period, subject to the payment of an annual fee of $9,000, and other conditions. Rent expense for the three and six months ended June 30, 2017 and 2016, each totaled $23,871 and $47,741, respectively.

We lease land adjacent to the Crowne Plaza Tampa Westshore for use as parking under a five-year agreement with the Florida Department of Transportation that commenced in July 2009. In May 2014, we extended the agreement for an additional five years. The agreement expires in July 2019. The agreement requires annual payments of $2,432, plus tax, and may be renewed for an additional five years. Rent expense for the three and six months ended June 30, 2017 and 2016, each totaled $651 and $1,301, respectively.

We lease certain submerged land in the Saint Johns River in front of the DoubleTree by Hilton Jacksonville Riverfront from the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida. The submerged land was leased under a five-year operating lease requiring annual payments of $4,961, which expired September 18, 2012. A new operating lease was executed requiring annual payments of $6,020 and expires September 18, 2017. Rent expense for the three and six months ended June 30, 2017 and 2016, each totaled $1,505 and $3,010, respectively.

We lease 5,216 square feet of commercial office space in Williamsburg, Virginia under an agreement, as amended, that commenced September 1, 2009 and expires August 31, 2018. Rent expense for each of the three months ended June 30, 2017 and 2016 totaled $22,552, and for the six months ended June 30, 2017 and 2016 totaled $45,104 and $45,899, respectively .

We lease the parking garage adjacent to the Hyde Resort & Residences in Hollywood Beach, Florida. The parking garage is leased under a 20-year operating lease requiring monthly payments of $20,000, which expires in February, 2037. Rent expense for the three and six month ended June 30, 2017 totaled $60,000 and $80,000, respectively.

We also lease certain furniture and equipment under financing arrangements expiring between August 2017 and March 2019.

A schedule of minimum future lease payments for the following six and twelve-month periods is as follows:

For the remaining six months ending: December 31, 2017	$	319,068
December 31, 2018		575,987
December 31, 2019		387,097
December 31, 2020		351,464
December 31, 2021		351,464
December 31, 2022 and thereafter		4,271,629
Total	$	6,256,709

Employment Agreements - The Company has entered into various employment contracts with employees that could result in obligations to the Company in the event of a change in control or termination without cause.

Management Agreements – As of June 30, 2017, each of our wholly-owned hotels and the rental program and condominium association of the Hyde Resort & Residences operated under a management agreement with Chesapeake Hospitality (see Note 9). The management agreements expire between January 1, 2020 and January 30, 2022, and may be extended for up to two additional periods of five years each subject to the approval of both parties. Each of the individual hotel management agreements may be terminated earlier than the stated term upon the sale of the hotel covered by the respective management agreement, in which case we may incur early termination fees.

Franchise Agreements – As of June 30, 2017, most of our hotels operated under franchise licenses from national hotel companies. Under the franchise agreements, we are required to pay a franchise fee generally between 2.5% and 5.0% of room revenues, plus additional fees for marketing, central reservation systems, and other franchisor programs and services that amount to between 2.5% and 6.0% of room revenues from the hotels. The franchise agreements expire between July 2017 and October 2030. On April 12, 2016 we allowed the franchise agreement on the Crowne Plaza Houston Downtown to expire. The property has been rebranded as The Whitehall. Each of our franchise agreements provides for early termination fees in the event the agreement is terminated before the stated term.

Restricted Cash Reserves – Each month, we are required to escrow with the lenders on the Hilton Wilmington Riverside, The DeSoto, the DoubleTree by Hilton Raleigh Brownstone-University, the DoubleTree by Hilton Jacksonville Riverside, the Crowne Plaza Hollywood Beach Resort, and the Georgian Terrace an amount equal to one-twelfth (1/12) of the annual real estate taxes due for the properties. We are also required by several of our lenders to establish individual property improvement funds to cover the cost of replacing capital assets at our properties. Each month, those contributions equal 4.0% of gross revenues for the Hilton Wilmington Riverside, The DeSoto, DoubleTree by Hilton Raleigh Brownstone–University, the DoubleTree by Hilton Jacksonville Riverside, the Crowne Plaza Hollywood Beach Resort, The Whitehall, and the Georgian Terrace and equal 4.0% of room revenues for the DoubleTree by Hilton Philadelphia Airport.

ESOP Purchase Commitment – The Company’s board of directors approved the ESOP on November 29, 2016. The ESOP is a non-contributory defined contribution plan covering all employees of the Company. The ESOP is a leveraged ESOP, meaning funds are loaned to the ESOP from the Company. The Company entered into a loan agreement with the ESOP on December 29, 2016, pursuant to which the ESOP may borrow up to $5.0 million to purchase shares of the Company’s common stock on the open market. Shares purchased by the ESOP are held in a suspense account for allocation among participants as contributions are made to the ESOP by the Company. The share allocations will be accounted for at fair value at the date of allocation. As of June 30, 2017, the ESOP had purchased 682,500 shares of the Company’s common stock in the open market for approximately $4.9 million, which the ESOP borrowed from the Company pursuant to the loan agreement. A total of 16,984 shares with a fair value of $121,305 were allocated or committed to be released from the suspense account and recognized as compensation cost during the three and six months ended June 30, 2017. The remaining 665,516 unallocated shares have an approximate fair value of $4.5 million, as of June 30, 2017. At June 30, 2017, the ESOP held a total of 9,630 allocated shares, 7,354 committed-to-be-released shares and 665,516 suspense shares. Dividends on allocated shares are paid to the participants of the ESOP, while dividends on unallocated shares are used to pay down the ESOP loan from the Operating Partnership.

Litigation –To our knowledge, no material litigation has been threatened against us. We are involved in routine litigation arising out of the ordinary course of business, all of which we expect to be covered by insurance and we believe it is not reasonably possible such matters will have a material adverse impact on our financial condition or results of operations or cash flows.

7. Preferred Stock and Units

Preferred Stock and Units.

As of June 30, 2017, and December 31, 2016, there were 1,610,000 shares, respectively, of the Preferred Stock issued and outstanding.

The Company has increased its authorized shares of preferred stock to 11,000,000. On August 23, 2016, the Company issued 1,610,000 shares, $0.01 par value per share, of its 8% Series B Cumulative Redeemable Perpetual Preferred Stock for net proceeds after all expenses of approximately $37.8 million, which it contributed to the Operating Partnership for an equivalent number of preferred partnership units. Holders of the Company’s preferred stock are entitled to receive distributions when authorized by the Company’s board of directors out of assets legally available for the payment of distributions. The Company pays cumulative cash distributions on the preferred stock at a rate of 8.00% per annum of the $25.00 liquidation preference per share. The preferred stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of the Company or its affiliates.

The Company is the holder of the preferred partnership units issued by the Operating Partnership . As of June 30, 2017, and December 31, 2016, there were 1,610,000 units of the preferred partnership units issued and outstanding, respectively.

Preferred Unit Distributions – The Company is the holder of the Operating Partnership’s preferred partnership units, and is entitled to receive distributions, when authorized by the general partner of the Operating Partnership out of assets legally available for the payment of distributions. The Operating Partnership pays cumulative cash dividends on the preferred partnership units at a rate of 8.00% per annum of the $25.00 liquidation preference per unit. For each of the quarters ended March 31, 2017 and June 30, 2017, the Operating Partnership has declared and has paid $0.50 per preferred unit, respectively, with no preferred distributions during the year ended December 31, 2016.

8. Common Stock and Units

Common Stock – The Company is authorized to issue up to 49,000,000 shares of common stock, $0.01 par value per share. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Holders of the Company’s common stock are entitled to receive distributions when authorized by the Company’s board of directors out of assets legally available for the payment of distributions. On December 2, 2016, the Company’s board of directors authorized a stock repurchase program under which the Company may purchase up to $10.0 million of its outstanding common stock, par value $0.01 per share, at prevailing prices on the open market or in privately negotiated transactions, at the discretion of management. The Company has and expects to continue to use available working capital to fund purchases under the stock repurchase program and intends to complete the repurchase program prior to December 31, 2017, unless extended by the board of directors. Through December 31, 2016 the Company repurchased 481,100 shares of common stock for approximately $3.2 million and the repurchased shares have been returned to the status of authorized but unissued shares of common stock. The Company did not repurchase any shares under the stock repurchase program during the three months ended June 30, 2017. Between January 3, 2017 and February 28, 2017, the ESOP purchased 682,500 shares of the Company’s common stock for approximately $4.9 million. Of the 682,500 ESOP shares purchased, 665,516 of these shares are considered unearned ESOP shares at June 30, 2017 and are excluded from the Company’s outstanding common stock on the consolidated balance sheets and the earnings per share calculations on the consolidated statements of operations.

The following is a schedule of issuances, since January 1, 2016, of the Company’s common stock and related units of the Operating Partnership:

On February 15, 2017, the Company was issued 12,000 units in the Operating Partnership and awarded 12,000 shares of restricted stock to its independent directors.

On February 2, 2016, the Company was issued 36,250 units in the Operating Partnership and awarded an aggregate of 22,000 shares of unrestricted stock to certain executives and employees as well as 12,000 shares of restricted stock and 2,250 shares of unrestricted stock to certain of its independent directors.

On February 1, 2016, two holders of units in the Operating Partnership redeemed 422,687 units for an equivalent number of shares of the Company’s common stock.

As of June 30, 2017 and December 31, 2016, the Company had 13,815,035 and 14,468,551 shares of common stock outstanding, respectively.

Operating Partnership Units – Holders of Operating Partnership units, other than the Company as general partner, have certain redemption rights, which enable them to cause the Operating Partnership to redeem their units in exchange for shares of the Company’s common stock on a one-for-one basis or, at the option of the Company, cash per unit equal to the average of the market price of the Company’s common stock for the 10 trading days immediately preceding the notice date of such redemption. The number

of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of the limited partners or the stockholders of the Company.

There were no issuances or redemptions, since January 1, 2016, of units in the Operating Partnership other than the redemptions and issuances of units in the Operating Partnership to the Company described above.

As of June 30, 2017 and December 31, 2016, the total number of Operating Partnership units outstanding was 16,258,691 and 16,246,691, respectively.

As of June 30, 2017 and December 31, 2016, the total number of outstanding Operating Partnership units not owned by the Company was 1,778,140 and 1,778,140, respectively, with a fair market value of approximately $12.1 million and $12.1 million, respectively, based on the price per share of the common stock on such respective dates.

9. Related Party Transactions

Chesapeake Hospitality . As of June 30, 2017, the members of Chesapeake Hospitality (a company that is majority-owned and controlled by the Company’s chairman and chief executive officer, the Company’s former chief financial officer, and two former members of the Company’s board of directors) owned 1,740,691 shares, approximately 12.0%, of the Company’s outstanding common stock as well as 870,271 Operating Partnership units. The following is a summary of the transactions between Chesapeake Hospitality and us:

Accounts Receivable – At June 30, 2017 and December 31, 2016, we were due $483,905 and $0, respectively, from Chesapeake Hospitality.

Management Agreements – As of June 30, 2017, each of our wholly-owned hotels and the Hyde Resort & Residences operated under various management agreements with Chesapeake Hospitality. The management agreements each provide for an initial term of 5 years and expire between January 1, 2020 and January 30, 2022, and may be extended for up to two additional periods of five years each subject to the approval of both parties. Each of the individual hotel management agreements may be terminated earlier than the stated term upon the sale of the hotel covered by the respective management agreement, in which case we may incur early termination fees. We also have a master agreement with Chesapeake Hospitality that has a five-year term, but may be extended for such additional periods as long as an individual management agreement remains in effect.

The base management fees for The Whitehall and the Georgian Terrace were 2.00% through 2015, increased to 2.25% in 2016, and increased to 2.50% in 2017 and for each year thereafter. The base management fee for the Crowne Plaza Hollywood Beach Resort was 2.00% from July 2015 through July 2016, increased to 2.25% in July 2016, and increases to 2.50% in July 2017 and each year thereafter. The base management fee for the Hyde Resort & Residences is 2.00% from January 2017 through January 2018, increases to 2.25% in January 2018, and increases to 2.50% in January 2019 and for each year thereafter. The base management fees for the remaining properties in the current portfolio are 2.65% through 2017 and decreases to 2.50% thereafter. For new individual hotel management agreements, Chesapeake Hospitality will receive a base management fee of 2.00% of gross revenues for the first full year from the commencement date through the anniversary date, 2.25% of gross revenues the second full year, and 2.50% of gross revenues for every year thereafter. The Company and Chesapeake Hospitality agreed to substitute the Hyde Resort & Residences for the Crowne Plaza Hampton Marina and there was no termination fee associated with the termination of the Crowne Plaza Hampton Marina management agreement. Each management agreement sets an incentive management fee equal to 10% of the amount by which gross operating profit, as defined in the management agreement, for a given year exceeds the budgeted gross operating profit for such year; provided, however, that the incentive management fee payable in respect of any such year shall not exceed 0.25% of the gross revenues of the hotel included in such calculation.

Base management and administrative fees earned by Chesapeake Hospitality for our properties totaled $1,089,464 and $1,050,008 for the three months ended June 30, 2017 and 2016, respectively and $2,062,532 and $1,982,394 for the six months ended June 30, 2017 and 2016, respectively . In addition, estimated incentive management fees of $1,824 and $33,305 were accrued for the three months ended June 30, 2017 and 2016, respectively and $28,117 and $47,002 were accrued for the six months ended June 30, 2017 and 2016, respectively .

Employee Medical Benefits – We purchase employee medical benefits through Maryland Hospitality, Inc. (d/b/a MHI Health), an affiliate of Chesapeake Hospitality for our employees as well as those employees that are employed by Chesapeake Hospitality that work exclusively for our hotel properties. Gross premiums for employee medical benefits paid by the Company (before offset of employee co-payments) were $1,345,837 and $2,673,778 for the three and six months ended June 30, 2017, respectively and were approximately $1,219,458 and $2,545,612 for the three and six months ended June 30, 2016, respectively.

Sotherly Foundation – During 2015, the Company loaned $180,000 to the Sotherly Foundation, a non-profit organization to benefit wounded American veterans living in communities near our hotels. As of June 30, 2017, and December 31, 2016, the balance of the loan was $80,000, respectively.

Loan Receivable - Affiliate – As of June 30, 2017, approximately $4.7 million was due the Operating Partnership for advances to the Company under a loan agreement dated December 29, 2016. The Company used the proceeds to make advances to the ESOP to purchase shares of the Company’s common stock.

Others. We employ Ashley S. Kirkland, the daughter of our Chief Executive Officer as a legal analyst and Robert E. Kirkland IV, her husband, as our compliance officer. We also employ Andrew M. Sims Jr., the son of our Chief Executive Officer, as a manager. Compensation for the three months ended June 30, 2017 and 2016 totaled $88,334 and $81,110, respectively and for the six months ended June 30 2017 and 2016 totaled approximately $179,642 and $164,848, respectively , for the three individuals.

On February 1, 2016, one current member of the Company’s board of directors redeemed 322,687 units for an equivalent number of shares of the Company’s common stock, and one previous member of the board of directors redeemed 100,000 units for an equivalent number of shares of the Company’s common stock, pursuant to the terms of the partnership agreement.

During the three-month period ending June 30, 2017 and 2016, the Company reimbursed $57,148 and $40,966, respectively and during the six-month period ending June 30, 2017 and 2016, the Company reimbursed $106,006 and $69,768, respectively , to a partnership controlled by the Chief Executive Officer for business-related air travel pursuant to the Company’s travel reimbursement policy.

10. Retirement Plans

We maintain a 401(k) plan for qualified employees which is subject to “safe harbor” provisions and which requires that we match 100.0% of the first 3.0% of employee contributions and 50.0% of the next 2.0% of employee contributions. All employer matching funds vest immediately in accordance with the “safe harbor” provision. Contributions to the plan totaled $21,618 and $45,856 for the three and six months ended June 30, 2017, respectively and $21,257 and $45,945 for the three and six months ended June 30, 2016, respectively .

The Company’s board of directors adopted an Employee Stock Ownership Plan (“ESOP”) on November 29, 2016, effective January 1, 2016. The ESOP is a non-contributory defined contribution plan covering all employees of the Company. The Company sponsors and maintains the ESOP and related trust for the benefit of its eligible employees. The ESOP is a leveraged ESOP, meaning funds are loaned to the ESOP from the Company. The Company entered into a loan agreement with the ESOP on December 29, 2016, pursuant to which the ESOP may borrow up to $5.0 million to purchase shares of the Company’s common stock on the open market, which serve as collateral for the loan. As of December 31, 2016, the ESOP had not purchased any shares of the Company’s common stock and had not drawn funds under the loan agreement with the Company. Between January 3, 2017 and February 28, 2017, the Company’s ESOP purchased 682,500 shares of the Company’s common stock for an approximate value of $4.9 million. Shares purchased by the ESOP are held in a suspense account for allocation among participants. As contributions are made into the ESOP by the Company they are reflected as unearned ESOP shares on the consolidated balance sheets of the Company. The share allocations are accounted for at fair value on the date of allocation and 16,984 shares have been allocated or committed-to-be-released from the suspense account, with a fair value of $121,305, as of June 30, 2017. The fair value of the unearned shares held by the ESOP on June 30, 2017 and December 31, 2016, was approximately $4.5 million and $0, respectively.

11. Indirect Hotel Operating Expenses

Indirect hotel operating expenses consists of the following expenses incurred by the hotels:

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
General and administrative	$	3,668,424	$	3,054,467	$	6,594,556	$	6,130,276
Sales and marketing		3,463,272		3,517,215		7,149,327		6,964,405
Repairs and maintenance		1,657,927		1,874,214		3,368,963		3,701,897
Utilities		1,451,410		1,518,805		2,826,307		3,047,767
Franchise fees		1,134,886		1,121,058		2,173,075		2,208,979
Management fees, including incentive		1,091,288		1,083,313		2,090,649		2,029,396
Property taxes		1,565,806		1,531,882		2,979,200		2,825,237
Insurance		619,023		671,468		1,225,459		1,365,670
Information and telecommunications		397,570		417,923		831,134		837,039
Other		555,656		67,541		571,823		113,593
Total indirect hotel operating expenses	$	15,605,262	$	14,857,886	$	29,810,493	$	29,224,260

12. Income Taxes

The components of the income tax provision for the three and six months ended June 30, 2017 and 2016 are as follows:

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Current:
Federal	$	4,699	$	—	$	10,184	$	—
State		51,838		32,972		100,240		84,362
		56,537		32,972		110,424		84,362
Deferred:
Federal		118,061		403,358		217,419		8,133
State		21,885		76,497		40,577		(15,748	)
		139,946		479,855		257,996		(7,615	)
	$	196,483	$	512,827	$	368,420	$	76,747

A reconciliation of the statutory federal income tax provision to the Company’s income tax provision is as follows:

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Statutory federal income tax provision	$	446,175		$	846,728		$	1,492,659		$	884,057
Effect of non-taxable REIT income		(323,416	)		(224,433	)		(1,265,057	)		(738,696	)
State income tax provision (benefit)		73,724			(109,468	)		140,818			(68,614	)
	$	196,483		$	512,827		$	368,420		$	76,747

As of June 30, 2017 and December 31, 2016, we had a net deferred tax asset of approximately $ 6.7 million and $6.9 million, respectively, of which, approxima tely $5. 8 million and $6.0 million, respectively, are due to accumulated net operating losses of our TRS Lessee. These loss carryforwards will begin to expire in 2028 if not utilized by such time. As of both June 30, 2017 and December 31, 2016, approximat ely $0.2 million of the net deferred tax asset is attributable to our share of start-up expenses related to the Crowne Plaza Hollywood Beach Resort, start-up expenses related to the opening of the Sheraton Louisville Riverside and the Crowne Plaza Tampa We stshore that were not deductible in the year incurred, but are being amortized over 15 years. The remainder of the net deferred tax asset is attributable to year-to-year timing differences including accrued, but not deductible, employee performance awards , vacation and sick pay, bad debt allowance and depreciation.

We record a valuation allowance to reduce deferred tax assets to an amount that we believe is more likely than not to be realized. Because of expected future taxable income of our TRS Lessee, we have not recorded a valuation allowance to reduce our net deferred tax asset as of June 30, 2017 and December 31, 2016, respectively. We regularly evaluate the likelihood that our TRS Lessee will be able to realize its deferred tax assets and the continuing need for a valuation allowance. At June 30, 2017 and December 31, 2016, we determined, based on all available positive and negative evidence, that it is more-likely-than-not that future taxable income will be available during the carryforward periods to absorb all of the consolidated federal and state net operating loss carryforward of our TRS Lessee. A number of factors played a critical role in this determination, including:

•

a demonstrated track record of past profitability and utilization of past NOL carryforwards,

•

reasonable forecasts of future taxable income, and

•

anticipated changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership.

13. Income Per Share and Per Unit

Income per Share . The limited partners’ outstanding limited partnership units in the Operating Partnership (which may be redeemed for common stock upon notice from the limited partners and following our election to redeem the units for stock rather than cash) have been excluded from the diluted earnings per share calculation as there would be no effect on the amounts since the limited partners’ share of income would also be added back to net income. The shares of Series B Preferred Stock are not convertible into or exchangeable for any other property or securities of the Company, except upon the occurrence of a change of control and have been excluded from the diluted earnings per share calculation, as there would be no impact on the current controlling stockholders. The 665,516 non-committed, unearned ESOP shares reduce the number of issued and outstanding common shares and similarly reduce the weighted average number of common shares outstanding. The allocated and committed to be released shares have been included in the weighted average diluted earnings per share calculation, and the amount of compensation for allocated shares is reflected in net income. There are no ESOP units, therefore there is no dilution on the calculation of earnings per unit. The computation of basic and diluted net income per share is presented below.

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Numerator
Net income available to common stockholders for basic computation	$	276,926	$	1,761,106	$	2,147,942	$	2,244,205
Denominator
Weighted average number of common shares outstanding for basic computation		13,813,168		14,949,651		13,898,910		14,871,281
Basic net income per share	$	0.02	$	0.12	$	0.15	$	0.15

Weighted average number of common shares outstanding for diluted computation		13,815,035		14,949,651		13,908,359		14,871,281
Diluted net income per share	$	0.02	$	0.12	$	0.15	$	0.15

Income Per Unit – The computation of basic and diluted net income per unit is presented below.

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Numerator
Net income available to operating partnership unit holders for basic computation	$	310,795	$	1,977,550	$	2,411,753	$	2,523,428
Denominator
Weighted average number of units outstanding		16,258,691		16,727,791		16,255,708		16,721,417
Basic and diluted net income per unit	$	0.02	$	0.12	$	0.15	$	0.15

14. Subsequent Events

On July 11, 2017, we paid a quarterly dividend (distribution) of $0.105 per common share (and unit) to those stockholders (and unitholders of the Operating Partnership) of record on June 15, 2017.

On July 17, 2017, we paid a quarterly dividend of $0.50 per preferred share (and unit) to the preferred stockholders (and preferred unitholders of the Operating Partnership) of record as of June 30, 2017.

On July 24, 2017, we authorized payment of a quarterly dividend (distribution) of $0.11 per common share (and unit) to the stockholders (and unitholders of the Operating Partnership) of record as of September 15, 2017. The dividend (distribution) is to be paid on October 11, 2017.

On July 24, 2017, we authorized payment of a quarterly dividend of $0.50 per preferred share (and unit) to the preferred stockholders (and preferred unitholders of the Operating Partnership) of record as of September 29, 2017. The dividend is to be paid on October 16, 2017.

Item 2.

Management’s Discussion and Analysis of Fin ancial Condition and Results of Operations

Overview

Sotherly Hotels Inc. is a self-managed and self-administered lodging REIT incorporated in Maryland in August 2004 to pursue opportunities in the full-service, primarily upscale and upper-upscale segments of the hotel industry located in primary and secondary markets in the mid-Atlantic and southern United States. Substantially all of the assets of Sotherly Hotels Inc. are held by, and all of its operations are conducted through, Sotherly Hotels LP, formerly MHI Hospitality, L.P. We commenced operations in December 2004 when we completed our initial public offering and thereafter consummated the acquisition of the initial properties.

Our hotel portfolio currently consists of eleven full-service, primarily upscale and upper-upscale hotels, comprising 2,838 rooms and the hotel commercial condominium unit of the Hyde Resort & Residences. All of our properties, except for The DeSoto, the Georgian Terrace, The Whitehall and the Hyde Resort & Residences operate under well-known brands such as Hilton, Crowne Plaza, DoubleTree and Sheraton. As of June 30, 2017, we owned the following hotel properties:

	Number
Property	of Rooms			Location	Date of Acquisition	Chain Designation
Wholly-owned Hotels
Crowne Plaza Hollywood Beach Resort		311		Hollywood, FL	August 9, 2007	Upscale
Crowne Plaza Tampa Westshore		222		Tampa, FL	October 29, 2007	Upscale
The DeSoto ⁽¹⁾		246		Savannah, GA	December 21, 2004	Independent ⁽²⁾
DoubleTree by Hilton Jacksonville Riverfront		293		Jacksonville, FL	July 22, 2005	Upscale
DoubleTree by Hilton Laurel		208		Laurel, MD	December 21, 2004	Upscale
DoubleTree by Hilton Philadelphia Airport		331		Philadelphia, PA	December 21, 2004	Upscale
DoubleTree by Hilton Raleigh Brownstone-University		190		Raleigh, NC	December 21, 2004	Upscale
Georgian Terrace		326		Atlanta, GA	March 27, 2014	Independent ⁽²⁾
Hilton Wilmington Riverside		272		Wilmington, NC	December 21, 2004	Upper Upscale
Sheraton Louisville Riverside		180		Jeffersonville, IN	September 20, 2006	Upper Upscale
The Whitehall		259		Houston, TX	November 13, 2013	Independent ⁽²⁾
Hotel Rooms Subtotal		2,838

Condominium Hotel
Hyde Resort & Residences		200	⁽³⁾	Hollywood, FL	January 30, 2017	Independent ⁽²⁾
Total Hotel & Participating Condominium Hotel Rooms		3,038

(1)

On July 31, 2017, the Company rebranded the Hilton Savannah DeSoto to The DeSoto.

(2)

We believe that The DeSoto, the Georgian Terrace and The Whitehall are equivalent to hotels that carry a chain scale designation of upper upscale, and that the Hyde Resort & Residences is equivalent to hotels that carry a chain scale designation of luxury.

(3)

Reflects only those rooms that were participating in the rental program as of June 30, 2017. At any given time, some portion of the rooms participating in our rental program may be occupied by the unit owner(s) and unavailable for rental to hotel guests. We sometimes refer to each participating condominium unit as a “room.”

We conduct substantially all our business through our Operating Partnership. We are the sole general partner of our Operating Partnership, and we own an approximate 89.1% interest in our Operating Partnership, as of the date of this filing, with the remaining interest being held by limited partners who were the contributors of our initial properties and related assets.

To qualify as a REIT, we cannot operate hotels. Therefore, our wholly-owned hotel properties are leased to our TRS Lessees, which are indirect wholly owned subsidiaries of the Operating Partnership. Our TRS Lessees then engage an eligible independent hotel management company to operate the hotels under a management agreement. Our TRS Lessees have engaged Chesapeake Hospitality to manage our wholly-owned hotels. Our TRS Lessees, and their parent, MHI Hospitality TRS Holding, Inc., are consolidated into our financial statements for accounting purposes. The earnings of MHI Hospitality TRS Holding, Inc. are subject to taxation similar to other C corporations.

Key Operating Metrics

In the hotel industry, room revenue is considered the most important category of revenue and drives other revenue categories such as food, beverage, catering, parking, and telephone. There are three key performance indicators used in the hotel industry to measure room revenues:

•

Occupancy, or the number of rooms sold, usually expressed as a percentage of total rooms available;

•

Average daily rate, or ADR, which is total room revenue divided by the number of rooms sold; and

•

Revenue per available room, or RevPAR, which is total room revenue divided by the total number of available rooms.

RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (such as housekeeping services, laundry, utilities, room supplies, franchise fees, management fees, credit card commissions and reservation expenses), but could also result in increased non-room revenue from the hotel’s restaurant, banquet or parking facilities. Changes in RevPAR that are primarily driven by changes in ADR typically have a greater impact on operating margins and profitability as they do not generate all of the additional variable operating costs associated with higher occupancy.

When calculating composite portfolio metrics, we include available rooms at the Hyde Resort & Residences that participate in our rental program and are not reserved for owner-occupancy.

We also use FFO, Adjusted FFO and Hotel EBITDA as a measure of our operating performance. See “Non-GAAP Financial Measures.”

Results of Operations

The following tables illustrate the key operating metrics for the three and six months ended June 30, 2017 and 2016, respectively, for the Company’s wholly-owned properties (“actual” portfolio metrics), as well as the eleven wholly-owned properties in the portfolio that were under the Company’s control during the three and six months ended June 30, 2017 and the corresponding period in 2016 (“same-store” portfolio metrics). Accordingly, the same-store data does not reflect the performance of the Crowne Plaza Hampton Marina which was sold in February 2017, or our interest in the Hyde Resort & Residences which was acquired on January 30, 2017. The composite portfolio metrics represent all of the Company’s wholly-owned properties and the participating condominium hotel rooms at the Hyde Resort & Residences during the three and six months ended June 30, 2017 and the corresponding period in 2016.

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Actual Portfolio Metrics
Occupancy %		76.5	%		76.0	%		73.3	%		72.3	%
ADR	$	146.32		$	143.65		$	147.65		$	144.47
RevPAR	$	111.93		$	109.16		$	108.20		$	104.44
Same-Store Portfolio Metrics
Occupancy %		76.5	%		76.6	%		73.8	%		73.3	%
ADR	$	146.32		$	145.62		$	148.02		$	146.71
RevPAR	$	111.93		$	111.56		$	109.18		$	107.50
Composite Portfolio Metrics
Occupancy %		74.1	%		76.0	%		72.0	%		72.3	%
ADR	$	149.39		$	143.65		$	149.99		$	144.47
RevPAR	$	110.67		$	109.16		$	107.93		$	104.44

Comparison of the Three Months Ended June 30, 2017 to the Three Months Ended June 30, 2016

Revenue . Total revenue for the three months ended June 30, 2017 decreased approximately $1.2 million, or 2.8%, to approximately $40.6 million compared to total revenue of approximately $41.8 million for the three months ended June 30, 2016. The decrease in revenue for the three months ended June 30, 2017 resulted mainly from the sale of our property in Hampton, Virginia which reduced revenues by approximately $1.7 million. In addition, our properties impacted by renovation activities in Wilmington, North Carolina, Savannah, Georgia and Hollywood Beach, Florida had reduced revenues of approximately $0.7 million. These

reductions were offset by the newer operations at the Hyde Resort & Residences, accounting for an increase of approximately $ 0.8 million for the period and were offset by a net i ncrease in revenues of approximately $ 0.4 million for the period with increas es our properties in Raleigh, North Carolina; Laurel, Maryland; Jackso nville, Florida; Tampa, Florida and Houston, Texa s, while other revenue decreases were reflected by our properties i n Philadelphia, Pennsylvania; Jeffersonville, Indiana and Atlanta, Geo rgia .

Room revenue decreased approximately $1.0 million, or 3.4%, to approximately $28.9 million for the three months ended June 30, 2017 compared to room revenue of approximately $29.9 million for the three months ended June 30, 2016. The decrease in room revenue for the three months ended June 30, 2017 resulted mainly from the sale of our property in Hampton, Virginia which reduced revenues by approximately $1.0 million and in addition our properties impacted by renovation activities in Wilmington, North Carolina, Savannah, Georgia and Hollywood Beach, Florida had reduced revenues of approximately $0.4 million, which reflected a 2.5% decrease in occupancy, as compared to the same period in 2016. These decreases in room revenue for the three months ended June 30, 2017 were offset by a net increase of approximately $0.5 million resulting from increases at our properties in Raleigh, North Carolina; Laurel, Maryland; Jacksonville, Florida; Tampa, Florida; Houston, Texas and Atlanta, Georgia of approximately $0.8 million that were in turn offset by decreases in revenues of approximately $0.3 million at our properties in Philadelphia, Pennsylvania and Jeffersonville, Indiana.

Food and beverage revenues decreased approximately $1.0 million, or 10.4%, to approximately $8.6 million for the three months ended June 30, 2017 compared to food and beverage revenues of approximately $9.6 million for the three months ended June 30, 2016. The decrease in food and beverage revenues for the three months ended June 30, 2017 resulted mainly from the sale of our property in Hampton, Virginia which reduced revenues by approximately $0.5 million. In addition, our properties impacted by renovation activities in Wilmington, North Carolina, Savannah, Georgia and Hollywood Beach, Florida had reduced revenues of approximately $0.3 million. The remaining portion of the net decrease in food and beverage revenues for the three months ended June 30, 2017 of approximately $0.2 million, resulted from increases in food and beverage revenues at our properties in Philadelphia, Pennsylvania; Laurel, Maryland; Jacksonville, Florida; Tampa, Florida and Houston, Texas, that were offset by decreases in revenue at our properties in Raleigh, North Carolina; Jeffersonville, Indiana and Atlanta, Georgia.

Revenue from other operating departments increased approximately $0.8 million, or 34.9%, to approximately $3.2 million for the three months ended June 30, 2017 compared to revenue from other operating departments of approximately $2.3 million for the three months ended June 30, 2016. The increase in revenue from other operating departments for the three months ended June 30, 2017 resulted mainly from the new operations at the Hyde Resort & Residences, accounting for an increase of approximately $0.8 million for the period.

Hotel Operating Expenses . Hotel operating expenses, which consist of room expenses, food and beverage expenses, other direct expenses, indirect expenses and management fees, were approximately $29.1 million for the three months ended June 30, 2017, a decrease of approximately $0.2 million, or 0.8%, compared to total hotel operating expenses of approximately $29.3 million for the three months ended June 30, 2016. The decrease in hotel operating expenses for the three months ended June 30, 2017 was substantially related to a decrease in expenses of approximately $1.4 million after the sale of our property in Hampton, Virginia. This decrease in hotel operating expenses was offset by a net increase in hotel operating expenses of approximately $1.2 million that resulted from increases in expenses at our properties in Raleigh, North Carolina; Laurel, Maryland; Jacksonville, Florida; Tampa, Florida and Houston, Texas and an increase in expenses from the start of operations at the Hyde Resort & Residences, which accounted for an increase in hotel operating expenses of approximately $1.6 million for the period, that were in turn offset by decreases in hotel operating expenses of approximately $0.4 million at our properties impacted by renovation activities in Wilmington, North Carolina and Hollywood Beach, Florida and decreases in expenses at our properties in Philadelphia, Pennsylvania: Jeffersonville, Indiana and Atlanta, Georgia.

Rooms expense for the three months ended June 30, 2017 decreased approximately $0.6 million, or 8.3%, to approximately $6.7 million compared to rooms expense for the three months ended June 30, 2016 of approximately $7.3 million. The net decrease in rooms expense for the three months ended June 30, 2017 partially resulted from a decrease in expenses of approximately $0.3 million after the sale of our property in Hampton, Virginia. The remaining net decrease in rooms expenses of approximately $0.3 million resulted from a reclassification of information and technology costs out of rooms expense and into indirect expenses by approximately $0.2 million, as well as an increase in rooms expenses at our property in Houston, Texas that was offset by decreases in rooms expenses at our properties impacted by renovation activities in Wilmington, North Carolina; Savannah, Georgia and Hollywood Beach, Florida and other rooms expense decreases at properties in Raleigh, North Carolina; Laurel, Maryland; Jacksonville, Florida; Tampa, Florida; Philadelphia, Pennsylvania; Jeffersonville, Indiana and Atlanta, Georgia.

Food and beverage expenses for the three months ended June 30, 2017 decreased approximately $0.3 million, or 5.2%, to approximately $6.2 million compared to food and beverage expenses of approximately $6.5 million for the three months ended June 30, 2016. The decrease in food and beverage expenses for the three months ended June 30, 2017, resulted mainly from a decrease in expenses of approximately $0.4 million after the sale of our property in Hampton, Virginia, offset by increases at other properties of $0.1 million.

Indirect expenses at our wholly-owned properties for the three months ended June 30 , 2017 increased approximately $ 0.7 m illion, or 5.0 %, to approximately $ 15.6 million compared to indirect expenses of approximately $ 14.9 million for the three months ended June 30 , 2016. The increase in indirect expenses for the three months ended June 30 , 2017 resulted from the new operati ons at the Hyde Resort & Residences, accounting for an increase in indirect expenses of approximately $ 0.7 million for the period, that was offset by a decrease in expenses of approximately $ 0.7 million after the sale of our property in Hampton, Virgi nia. The remaining net in crease in indirect expenses of approximately $ 0.7 million resulted from a reclassification of information and technology costs out of rooms expense and into indirec t expenses by approximately $0.2 million, as well as, in creases in gener al and administrative expenses at most of the other hotel properties of approximately $0.5 million .

Depreciation and Amortization . Depreciation and amortization expense for the three months ended June 30, 2017 increased approximately $0.4 million, or 11.0%, to $4.2 million compared to depreciation and amortization of approximately $3.8 million for the three months ended June 30, 2016. The increase was mostly attributable to increases in the depreciation related to our properties being renovated in Wilmington, North Carolina; Savannah, Georgia and Hollywood Beach, Florida, that accounted for increases of approximately $0.4 million for the period.

Corporate General and Administrative. Corporate general and administrative expenses for the three months ended June 30, 2017 increased approximately $0.5 million, or 35.2% to approximately $1.8 million compared to corporate general and administrative expenses of approximately $1.4 million for the three months ended June 30, 2016. The increase in corporate general and administrative expenses was mainly due to a one-time write down of deferred offering costs of approximately $0.5 million.

Interest Expense . Interest expense for the three months ended June 30, 2017 decreased approximately $0.7 million, or 16.0%, to approximately $3.9 million compared to interest expense of approximately $4.6 million for the three months ended June 30, 2016. The decrease in interest expense for the three months ended June 30, 2017, was substantially related to the redemption of the 8% unsecured notes in August 2016, that accounted for a decrease of approximately $0.5 million, compared to the three-month period ending June 30, 2016. We also reduced our average interest rate to 4.79% for the three months ended June 30, 2017, compared to 5.07% for the three months ended June 30, 2016, resulting in a decrease of approximately $0.2 million that accounted for the remaining portion of the net decrease.

Loss on Early Debt Extinguishment. During the three months ended June 30, 2017 we refinanced a variable rate mortgage loan, we had with Bank of the Ozarks on the DoubleTree by Hilton Jacksonville Riverfront, with a new fixed rate loan from Bank of America. The amount of accumulated un-amortized loan costs of $228,087 was written off during the period ending June 30, 2017.

Unrealized Loss on Hedging Activities. As of June 30, 2017, the fair market value of the interest rate cap is $6,390. The unrealized loss on hedging activities during the three months ended June 30, 2017 and 2016, was $11,261 and $15,517, respectively.

Income Taxes. We had an income tax provision of approximately $0.2 million for the three months ended June 30, 2017 compared to an income tax provision of approximately $0.5 million for the three months ended June 30, 2016. The income tax provision is primarily derived from the operations of our TRS Lessees. Our TRS Lessees realized operating income for each of the three months ended June 30, 2017 and 2016, respectively.

Net Income . We realized net income for the three months ended June 30, 2017 of approximately $1.1 million compared to net income of approximately $2.0 million for the three months ended June 30, 2016 as a result of the operating results discussed above.

Comparison of the Six Months Ended June 30, 2017 to the Six Months Ended June 30, 2016

Revenue . Total revenue for the six months ended June 30, 2017 decreased approximately $0.3 million, or 0.4%, to approximately $79.3 million compared to total revenue of approximately $79.6 million for the six months ended June 30, 2016. The decrease in revenue for the six months ended June 30, 2017 resulted mainly from the sale of our property in Hampton, Virginia which reduced revenues by approximately $2.3 million. In addition, our properties impacted by renovation activities in Wilmington, North Carolina; Savannah, Georgia and Hollywood Beach, Florida had reduced revenues of approximately $1.4 million. These reductions were offset by the newer operations at the Hyde Resort & Residences, accounting for an increase of approximately $1.6 million for the period and by an increase in revenues of approximately $1.8 million for the period at our properties in Raleigh, North Carolina; Laurel, Maryland; Jacksonville, Florida; Tampa, Florida; Houston, Texas and Atlanta, Georgia, while other revenue decreases were reflected by our properties in Philadelphia, Pennsylvania and Jeffersonville, Indiana.

Room revenue decreased approximately $0.9 million, or 1.7%, to approximately $56.3 million for the six months ended June 30, 2017 compared to room revenue of approximately $57.2 million for the six months ended June 30, 2016. The decrease in room revenue for the six months ended June 30, 2017 resulted mainly from the sale of our property in Hampton, Virginia which reduced revenues by approximately $1.5 million. In addition, our properties impacted by renovation activities in Wilmington, North Carolina; Savannah, Georgia and Hollywood Beach, Florida had reduced revenues of approximately $1.0 million, which reflected a 0.5%

decrease in occupancy, as compared to the same period in 2016. These decreases in room revenue for the three months ended June 30, 2017 were offset by a net increase of approximately $1.6 million resulting from increases at our properti es in Raleigh, North Carolina; Laurel, Maryland; Jacksonville, Florida; Tampa, Florida; Houston, Texas and Atlanta, Georgia of approximately $2.1 million that were in turn offset by decreases in revenues of approximately $0.5 million at our properties in P hiladelphia, Pennsylvania and Jeffersonville, Indiana.

Food and beverage revenues decreased approximately $0.9 million, or 5.2%, to approximately $16.9 million for the six months ended June 30, 2017 compared to food and beverage revenues of approximately $17.8 million for the six months ended June 30, 2016. The decrease in food and beverage expenses for the six months ended June 30, 2017, resulted mainly from a decrease in expenses of approximately $0.7 million after the sale of our property in Hampton, Virginia and from our properties impacted by renovation activities in Wilmington, North Carolina, Savannah, Georgia and Hollywood Beach, Florida that had reduced food and beverage revenues of approximately $0.5 million. These decreases were offset by a net increase in food and beverage revenues of approximately $0.3 million from increases at our properties in Raleigh, North Carolina; Philadelphia, Pennsylvania and Houston, Texas, that were in turn offset by decreases at our properties in Laurel, Maryland; Jacksonville, Florida; Jeffersonville, Indiana; Tampa, Florida; and Atlanta, Georgia.

Revenue from other operating departments increased approximately $1.6 million, or 34.6%, to approximately $6.2 million for the six months ended June 30, 2017 compared to revenue from other operating departments of approximately $4.6 million for the six months ended June 30, 2016. The increase in revenue from other operating departments for the six months ended June 30, 2017 resulted mainly from the start of operations at the Hyde Resort & Residences, accounting for an increase of approximately $1.6 million for the period.

Hotel Operating Expenses . Hotel operating expenses, which consist of room expenses, food and beverage expenses, other direct expenses, indirect expenses and management fees, were approximately $56.3 million for the six months ended June 30, 2017, a decrease of approximately $0.8 million, or 1.3%, compared to total hotel operating expenses of approximately $57.1 million for the six months ended June 30, 2016. The decrease in hotel operating expenses for the six months ended June 30, 2017 was substantially related to a decrease in expenses of approximately $2.1 million after the sale of our property in Hampton, Virginia. This decrease was offset by a net increase in hotel operating expenses of approximately $1.3 million that resulted from increases in expenses at our properties in Raleigh, North Carolina; Laurel, Maryland; Jacksonville, Florida; Tampa, Florida and Houston, Texas and from an increase in expenses from the new operations at the Hyde Resort & Residences, which accounted for an increase in hotel operating expenses of approximately $2.9 million for the period, that were in turn offset by decreases in hotel operating expenses of approximately $1.6 million at our properties impacted by renovation activities in Wilmington, North Carolina and Hollywood Beach, Florida and decreases in expenses at our properties in Philadelphia, Pennsylvania; Jeffersonville, Indiana and Atlanta, Georgia.

Rooms expense for the six months ended June 30, 2017 decreased approximately $0.8 million, or 5.5%, to approximately $13.4 million compared to rooms expense for the six months ended June 30, 2016 of approximately $14.2 million. The net decrease in rooms expense for the six months ended June 30, 2017 resulted from a decrease in expenses of approximately $0.5 million after the sale of our property in Hampton, Virginia. The remaining net decrease in rooms expenses of approximately $0.3 million resulted from a reclassification of information and technology costs out of rooms expense and into indirect expenses by approximately $0.5 million, as well as, an increase in rooms expenses at our property in Houston, Texas that was offset by decreases in rooms expenses at our properties impacted by renovation activities in Wilmington, North Carolina; Savannah, Georgia and Hollywood Beach, Florida and other rooms expense decreases at properties in Raleigh, North Carolina; Laurel, Maryland; Jacksonville, Florida; Tampa, Florida; Philadelphia, Pennsylvania; Jeffersonville, Indiana and Atlanta, Georgia.

Food and beverage expenses for the six months ended June 30, 2017 decreased approximately $0.6 million, or 4.4%, to approximately $11.9 million compared to food and beverage expenses of approximately $12.4 million for the six months ended June 30, 2016. The decrease in food and beverage expenses for the six months ended June 30, 2017, resulted mainly from a decrease in expenses of approximately $0.5 million after the sale of our property in Hampton, Virginia.

Indirect expenses at our wholly-owned properties for the six months ended June 30, 2017 increased approximately $0.6 million, or 2.0%, to approximately $29.8 million compared to indirect expenses of approximately $29.2 million for the six months ended June 30, 2016. The increase in indirect expenses for the six months ended June 30, 2017 resulted mainly from the new operations at the Hyde Resort & Residences, accounting for an increase in indirect expenses of approximately $1.4 million for the period. The net decrease in this amount of approximately $0.8 million that was substantially related to a decrease in indirect expenses of approximately $1.1 million after the sale of our property in Hampton, Virginia, which was in turn offset by increases in hotel operating expenses of approximately $0.03 million resulting mainly from a reclassification of information and technology costs out of rooms expense and into indirect expenses.

Depreciation and Amortization . Depreciation and amortization expense for the six months ended June 30, 2017 increased approximately $0.8 million, or 10.9%, to $8.3 million compared to depreciation and amortization of approximately $7.5 million for

the six months ended June 30, 2016. The increase was most ly attributable to increases in the depreciation related to our properties being renovated in Savannah, Georgia and Hollywood Beach, Florida, that accounted for increases of approximately $ 0.8 million for the period.

Corporate General and Administrative. Corporate general and administrative expenses for the six months ended June 30, 2017 increased approximately $0.6 million, or 19.7% to approximately $3.5 million compared to corporate general and administrative expenses of approximately $3.0 million for the six months ended June 30, 2016. The increase in corporate general and administrative expenses was mainly due to a one-time write down of deferred offering costs of approximately $0.5 million.

Interest Expense . Interest expense for the six months ended June 30, 2017 decreased approximately $1.6 million, or 16.9%, to approximately $7.7 million compared to interest expense of approximately $9.2 million for the six months ended June 30, 2016. The decrease in interest expense for the six months ended June 30, 2017, was substantially related to the redemption of the 8% unsecured notes in August 2016 that accounted for a decrease of approximately $1.0 million, compared to the six-month period ending June 30, 2016. We also reduced our average interest rate to 4.79% for the six months ended June 30, 2017, compared to 5.07% for the six months ended June 30, 2016, resulting in a decrease of approximately $0.6 million that accounted for the remaining portion of the net decrease.

Loss on Early Debt Extinguishment. During the six months ended June 30, 2017 we refinanced a variable rate mortgage loan, we had with Bank of the Ozarks on the DoubleTree by Hilton Jacksonville Riverfront, with a new fixed rate loan from Bank of America. The amount of accumulated un-amortized loan costs of $228,087 was written off during the period ending June 30, 2017.

Unrealized Loss on Hedging Activities. As of June 30, 2017, the fair market value of the interest rate cap is $6,390. The unrealized loss on hedging activities during the six months ended June 30, 2017 and 2016, was $27,206 and $66,074, respectively.

Gain on Involuntary Conversion of Asset s. Gain on involuntary conversion of assets for the six months ended June 30, 2017 increased approximately $1.0 million to approximately $1.0 million compared to gain on involuntary conversion of assets of $0 for the six months ended June 30, 2016. During October 2016, hurricane Matthew damaged real and personal property at our Crowne Plaza Hampton Marina and The DeSoto properties and we had a one-time involuntary conversion in the amount of approximately $1.0 million.

Income Taxes. We had an income tax provision of approximately $0.4 million for the six months ended June 30, 2017 compared to an income tax provision of approximately $0.1 million for the six months ended June 30, 2016. The income tax provision is primarily derived from the operations of our TRS Lessees. Our TRS Lessees realized operating income for both the six months ended June 30, 2017 and 2016, respectively.

Net Income . We realized net income for the six months ended June 30, 2017 of approximately $4.0 million compared to net income of approximately $2.5 million for the six months ended June 30, 2016 as a result of the operating results discussed above.

Non-GAAP Financial Measures

We consider FFO, Adjusted FFO and Hotel EBITDA, all of which are non-GAAP financial measures, to be key supplemental measures of our performance and could be considered along with, not alternatives to, net income (loss) as a measure of our performance. These measures do not represent cash generated from operating activities determined by generally accepted accounting principles (“GAAP”) or amounts available for our discretionary use and should not be considered alternative measures of net income, cash flows from operations or any other operating performance measure prescribed by GAAP.

FFO and Adjusted FFO. Industry analysts and investors use FFO as a supplemental operating performance measure of an equity REIT. FFO is calculated in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). FFO, as defined by NAREIT, represents net income or loss determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after adjustment for any noncontrolling interest from unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by itself.

We consider FFO to be a useful measure of adjusted net income (loss) for reviewing comparative operating and financial performance because we believe FFO is most directly comparable to net income (loss), which remains the primary measure of performance, because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of a company’s real estate between periods or as compared to different companies. Although FFO is intended to be a REIT industry standard, other companies may not calculate FFO in the same manner as we do, and investors should not assume that FFO as reported by us is comparable to FFO as reported by other REITs.

We further adjust FFO for certain additional items that are not in NAREIT’s definition of FFO, including changes in deferred income taxes, any unrealized gain (loss) on hedging instruments or warrant derivative, loan impairment losses, losses on early extinguishment of debt, aborted offering costs, loan modification fees, franchise termination costs, costs associated with the departure of executive officers, litigation settlement, over-assessed real estate taxes on appeal, change in control gains or losses and acquisition transaction costs. We exclude these items as we believe it allows for meaningful comparisons between periods and among other REITs and is more indicative than FFO of the on-going performance of our business and assets. Our calculation of Adjusted FFO may be different from similar measures calculated by other REITs.

The following is a reconciliation of net income to FFO and Adjusted FFO for the three and six months ended June 30 , 2017 and 2016:

	Three Months Ended		Three Months Ended		Six Months Ended			Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017			June 30, 2016
Net income available to common stockholders	$	276,926	$	1,761,106	$	2,147,942		$	2,244,205
Add: Net income attributable to noncontrolling interest		33,869		216,444		263,811			279,223
Depreciation and amortization		4,219,712		3,801,478		8,280,809			7,470,115
Gain on involuntary conversion of assets		—		—		(1,041,815	)		—
Loss (gain) on disposal of assets		51,507		140,193		(48,900	)		140,193
FFO	$	4,582,014	$	5,919,221	$	9,601,847		$	10,133,736
Decrease (increase) in deferred income taxes		139,946		479,854		257,996			(7,615	)
Loss on early debt extinguishment		228,087		70,293		228,087			70,293
Loan modification fees		—		30,235		—			30,235
Unrealized loss on hedging activities		11,261		15,517		27,206			66,074
Adjusted FFO available to common stockholders	$	4,961,308	$	6,515,120	$	10,115,136		$	10,292,723

Weighted average number of shares outstanding, basic		13,813,168		14,949,651		13,898,910			14,871,281

Weighted average number of non-controlling units		1,778,140		1,778,140		1,778,140			1,850,136

Weighted average number of shares and units outstanding, basic		15,591,308		16,727,791		15,677,050			16,721,417

FFO per share and unit	$	0.29	$	0.35	$	0.61		$	0.61

Adjusted FFO per share and unit	$	0.32	$	0.39	$	0.65		$	0.62

Hotel EBITDA . We define Hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) income tax provision or benefit, (4) equity in the income or loss of equity investees, (5) unrealized gains and losses on derivative instruments not included in other comprehensive income, (6) gains and losses on disposal of assets, (7) realized gains and losses on investments, (8) impairment of long-lived assets or investments, (9) loss on early debt extinguishment, (10) gains or losses on change in control, (11) corporate general and administrative expense, (12) depreciation and amortization, (13) gains and losses on involuntary conversions of assets and (14) other operating revenue not related to our wholly-owned portfolio. We believe this provides a more complete understanding of the operating results over which our wholly-owned hotels and its operators have direct control. We believe Hotel EBITDA provides investors with supplemental information on the on-going operational performance of our hotels and the effectiveness of third-party management companies operating our business on a property-level basis.

Our calculation of Hotel EBITDA may be different from similar measures calculated by other REITs.

The following is a reconciliation of net income to Hotel EBITDA for the three and six months ended June 30, 2017 and 2016:

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Net income available to common stockholders	$	276,926		$	1,761,106		$	2,147,942		$	2,244,205
Add: Net income attributable to noncontrolling interest		33,869			216,444			263,811			279,223
Interest expense		3,874,076			4,613,165			7,687,793			9,245,797
Interest income		(13,294	)		(10,207	)		(72,925	)		(19,038	)
Income tax provision		196,483			512,827			368,420			76,747
Depreciation and amortization		4,219,712			3,801,478			8,280,809			7,470,115
Loss on early debt extinguishment		228,087			70,293			228,087			70,293
Loss (gain) on disposal of assets		51,507			140,193			(48,900	)		140,193
Gain on involuntary conversion of assets		—			—			(1,041,815	)		—
Distributions to preferred stockholders		805,000			—			1,610,000			—
EBITDA		9,672,366			11,105,299			19,423,222			19,507,535
Corporate general and administrative		1,834,930			1,356,754			3,547,012			2,964,048
Unrealized loss on hedging activities		11,261			15,517			27,206			66,074
Hotel EBITDA	$	11,518,557		$	12,477,570		$	22,997,440		$	22,537,657

Sources and Uses of Cash

Operating Activities. Our principal source of cash to meet our operating requirements, including distributions to unitholders and stockholders as well as debt service (excluding debt maturities), is the operations of our hotels. Cash flow was provided by operating activities for the six months ended June 30, 2017 with a net decrease in cash provided by operating activities for the six months ended June 30, 2017 of approximately $2.6 million, compared to the six months ended June 30, 2016. The decrease is mainly attributable to a net decrease of adjustments to reconcile cash and changes in assets and liabilities of approximately $4.1 million, that was offset by an increase in net income of approximately $1.5 million. We expect that cash on hand and the net cash provided by operations will be adequate to fund our continuing operations, monthly and quarterly scheduled payments of principal and interest (excluding any balloon payments due upon maturity of a debt) and the payment of dividends (distributions) to the Company’s stockholders (and unitholders of the Operating Partnership) in accordance with federal income tax laws which require us to make annual distributions, as “qualifying distributions,” to the Company’s stockholders of at least 90% of its REIT taxable income (determined without regard to the dividends-paid deduction and by excluding its net capital gains, and reduced by certain non-cash items).

Investing Activities. During the six months ended June 30, 2017, we used approximately $4.0 million to acquire our interest in the Hyde Resort and Residences, $12.5 million on capital expenditures, of which, approximately $2.4 million related to the routine replacement of furniture, fixtures and equipment and $10.1 million related to renovation of our hotels in Wilmington, North Carolina, Savannah, Georgia and Hollywood Beach, Florida. We also contributed approximately $2.4 million during the six months ended June 30, 2017 into reserves required by the lenders for ten of our hotels according to the provisions of their respective loan agreements. During the six months ended June 30, 2017, we received reimbursements from those reserves of approximately $3.6 million for capital expenditures related to those properties. The Operating Partnership’s loan to the Company had a net balance after principle payments of approximately $4.7 million. We also received approximately $5.4 million for the sale of the Crowne Plaza Hampton Riverside and proceeds from insurance conversions of approximately $1.0 million.

Financing Activities . During the six months ended June 30, 2017, we received approximately $11.9 million for net mortgage proceeds, dividend and distribution payments of $4.7 million and the repurchase of common stock of the Company for approximately $1.1 million pursuant to the stock repurchase program and payments for deferred financing costs of approximately $0.6 million. Additionally, the Company provided approximately $4.9 million to the ESOP pursuant to the terms of its loan agreement with the ESOP.

Capital Expenditures

We anticipate that our need for recurring capital expenditures for the replacement and refurbishment of furniture, fixtures and equipment over the next 12 to 24 months will be at historical norms for our properties and the industry. Historically, we have aimed to maintain overall capital expenditures, except for those required by our franchisors as a condition to a franchise license or license renewal, at 4.0% of gross revenue. Below is a description of capital expenditures by property:

•

At the Company’s hotel in Wilmington, North Carolina, renovations of the guestrooms and public spaces totaling an estimated $8.5 million are underway. As of June 30, 2017, the Company had incurred costs totaling approximately $4.0 million toward this renovation. Renovations are expected to be completed in March 2018.

•

At the Company’s hotel in Savannah, Georgia, renovations of the guestrooms and public spaces totaling an estimated $9.4 million are nearing completion. As of June 30, 2017, the Company had incurred costs totaling approximately $8.5 million toward this renovation. Renovations are expected to be completed in August 2017.

•

At the Company’s hotel in Hollywood Beach, Florida, renovations of the guestrooms and public spaces totaling an estimated $7.0 million are underway. As of June 30, 2017, the Company had incurred costs totaling approximately $4.0 million toward this renovation. Renovations are expected to be completed in October 2017.

Given our desire to continue the renovation activities at our properties in Wilmington, North Carolina, Savannah, Georgia and Hollywood Beach, Florida, we aim to restrict all other capital expenditures at these hotels during the renovation period to the replacement of broken or damaged furniture and equipment and the acquisition of items mandated by our licensor that are necessary to maintain our brand affiliation. We anticipate that capital expenditures for the replacement and refurbishment of furniture, fixtures and equipment that are not related to these renovation activities to total 2.50% to 3.00% of gross revenues in 2017.

We expect a substantial portion of our capital expenditures for the recurring replacement or refurbishment of furniture, fixtures and equipment at our properties will be funded by our replacement reserve accounts, other than costs that we incur to make capital improvements required by our franchisors. Reserve accounts are escrowed accounts with funds deposited monthly and reserved for capital improvements or expenditures with respect to all of our hotels. We currently deposit an amount equal to 4.0% of gross revenue for The DeSoto, the Hilton Wilmington Riverside, the DoubleTree by Hilton Raleigh Brownstone-University, The Whitehall, the DoubleTree by Hilton Jacksonville Riverfront, the Crowne Plaza Hollywood Beach Resort and the Georgian Terrace as well as 4.0% of room revenues for the DoubleTree by Hilton Philadelphia Airport on a monthly basis.

Liquidity and Capital Resources

As of June 30, 2017, we had total cash of approximately $39.1 million, of which approximately $34.4 million was in cash and cash equivalents and approximately $4.6 million was restricted for real estate taxes, insurance, capital improvement and certain other expenses, or otherwise restricted. We expect that our cash on hand combined with our cash flow from the operations of our hotels should be adequate to fund continuing operations, recurring capital expenditures for the refurbishment and replacement of furniture, fixtures and equipment, and monthly and quarterly scheduled payments of principal and interest (excluding any balloon payments due upon maturity of the indentures or mortgage debt).

Other than monthly mortgage loan principal payments, we do not have any debt obligations maturing until August 2018. In August 2018, the mortgage on our DoubleTree by Hilton Raleigh Brownstone University matures at the amortized mortgage balance of approximately $14.4 million. We have approximately $69.2 million in debt obligations maturing in 2019, including $25.3 million of the Operating Partnership’s 7% Notes and approximately $43.9 million in mortgage debt maturities.

We intend to continue to invest in hotel properties as suitable opportunities arise. The success of our acquisition strategy depends, in part, on our ability to access additional capital. There can be no assurance that we will continue to make investments in properties that meet our investment criteria. Additionally, we may choose to dispose of certain hotels as a means to provide liquidity.

We expect to meet our liquidity requirements for hotel property acquisitions, property redevelopment, investments in new joint ventures and debt maturities, which include the repayment of the 7% Notes (which are callable after November 15, 2017) and the retirement of maturing mortgage debt, through net proceeds from additional issuances of common shares, additional issuances of preferred shares, issuances of units of limited partnership interest in our Operating Partnership, secured and unsecured borrowings, the selective disposition of non-core assets, and cash on hand. From time to time and subject to market conditions, we may also seek to refinance mortgage debt prior to maturity where appropriate. We remain committed to a flexible capital structure and strive to maintain prudent debt leverage.

Financial Covenants

Mortgage Loans

Our mortgage loan agreements contain various financial covenants. Failure to comply with these financial covenants could result from, among other things, changes in the local competitive environment, general economic conditions and disruption caused by renovation activity or major weather disturbances.

If we violate the financial covenants contained in these agreements, we may attempt to negotiate waivers of the violations or amend the terms of the applicable mortgage loan agreement with the lender; however, we can make no assurance that we would be successful in any such negotiation or that, if successful in obtaining waivers or amendments, such waivers or amendments would be on attractive terms. Some mortgage loan agreements provide alternate cure provisions which may allow us to otherwise comply with the financial covenants by obtaining an appraisal of the hotel, prepaying a portion of the outstanding indebtedness or by providing cash collateral until such time as the financial covenants are met by the collateralized property without consideration of the cash collateral. Alternate cure provisions which include prepaying a portion of the outstanding indebtedness or providing cash collateral may have a material impact on our liquidity.

If we are unable to negotiate a waiver or amendment or satisfy alternate cure provisions, if any, or unable to meet any alternate cure requirements and a default were to occur, we would possibly have to refinance the debt through additional debt financing, private or public offerings of debt securities, or additional equity financing.

Under the terms of our non-recourse secured mortgage loan agreements, failure to comply with the financial covenants in the loan agreement triggers cash flows from the property to be directed to the lender, which may limit our overall liquidity as that cash flow would not be available to us.

As of June 30, 2017, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans.

Unsecured Notes

The indenture for the 7% Notes contains certain covenants and restrictions that require us to meet certain financial ratios. We are not permitted to incur any Debt (other than intercompany Debt), as defined in the indenture, if, immediately after giving effect to the incurrence of such Debt and to the application of the proceeds thereof, the ratio of the aggregate principal amount of all outstanding Debt to Adjusted Total Asset Value, as defined in the indenture, would be greater than 0.65 to 1.0. In addition, we are not permitted to incur any Debt if the ratio of Stabilized Consolidated Income Available for Debt Service to Stabilized Consolidated Interest Expense, both as defined in the indenture, on the date on which such additional Debt is to be incurred, on a pro-forma basis, after giving effect to the incurrence of such Debt and to the application of the proceeds thereof, would be less than 1.50 to 1.0.

These financial measures are not calculated in accordance with GAAP and are presented below for the sole purpose of evaluating our compliance with the key financial covenants as they were applicable at June 30, 2017 and December 31, 2016, respectively.

	June 30,			December 31,
	2017			2016
Ratio of Stabilized Consolidated Income Available for Debt Service to Stabilized Consolidated Interest Expense
Net income ⁽¹⁾	$	2,398,478		$	900,149
Interest expense ⁽¹⁾		16,177,099			17,735,107
Loss on early debt extinguishment		1,575,700			1,417,905
Unrealized loss on hedging activities		(1,484	)		37,384
Gain on involuntary conversion		(1,041,815	)		—
Loss (Gain) on disposal of assets		176,226			365,319
Income tax benefit ⁽¹⁾		(1,075,961	)		(1,367,634	)
Depreciation and amortization ⁽¹⁾		15,829,764			15,019,071
Corporate general and administrative expenses ⁽¹⁾		6,604,029			6,021,065
Consolidated income available for debt service ⁽¹⁾		40,642,036			40,128,366
Less: income of non-stabilized assets ⁽¹⁾		(10,540,530	)		(10,203,893	)
Stabilized Consolidated Income Available for Debt Service ⁽¹⁾	$	30,101,506		$	29,924,473
Interest expense ^{(1) (2)}	$	16,453,099		$	18,011,107
Amortization of issuance costs ⁽¹⁾		(923,082	)		(1,147,864	)
Consolidated interest expense ⁽¹⁾		15,530,017			16,863,243
Less: interest expense of non-stabilized assets ⁽¹⁾		(3,318,089	)		(3,417,412	)
Stabilized Consolidated Interest Expense ⁽¹⁾	$	12,211,928		$	13,445,831
Ratio of Stabilized Consolidated Income Available for Debt Service to Stabilized Consolidated Interest Expense		2.46			2.23
Threshold Ratio Minimum		1.50			1.50

Ratio of Debt to Adjusted Total Asset Value:
Mortgage loans	$	296,394,441		$	284,542,043
Unsecured notes		25,300,000			25,300,000
Total debt	$	321,694,441		$	309,842,043
Stabilized Consolidated Income Available for Debt Service ⁽¹⁾	$	30,101,506		$	29,924,473
Capitalization rate		7.5	%		7.5	%
		401,353,413			398,992,973
Non-stabilized assets		154,100,000			145,400,000
Total cash		39,056,445			36,362,920
Adjusted Total Asset Value	$	594,509,858		$	580,755,893
Ratio of Debt to Adjusted Total Asset Value		0.54			0.53
Threshold Ratio Maximum		0.65			0.65

(1)	Represents the four preceding calendar quarters.

(2)

As permitted by the indentures, The DeSoto, DoubleTree by Hilton Laurel, DoubleTree by Hilton Jacksonville Riverfront and The Whitehall Resort, for the period ended June 30, 2017, and The DeSoto, DoubleTree by Hilton Laurel, DoubleTree by Hilton Jacksonville Riverfront and The Whitehall Resort, for the period ended December 31, 2016, are considered non-stabilized assets for purposes of the financial covenants.

Dividend Policy

We intend to continue to declare quarterly distributions to our stockholders. The amount of future common stock (and Operating Partnership unit) distributions will be based upon quarterly operating results, general economic conditions, requirements for capital improvements, the availability of debt and equity capital, the Internal Revenue Code’s annual distribution requirements and

other factors, which the Company’s board of directors deems relevant. The amount, timing and frequency of distributions will be authorized by the Company’s board of directors and declared by us based upon a variety of factors deemed relevant by our directors, and no assurance can be given that our distribution policy will not change in the future.

In January 2017, we increased the quarterly dividend (distribution) to $0.10 per common share (and unit).

In April 2017, we increased the quarterly dividend (distribution) to $0.105 per common share (and unit).

In July 2017, we increased the quarterly dividend (distribution) to $0.11 per common share (and unit).

Off-Balance Sheet Arrangements

None.

Inflation

We generate revenues primarily from lease payments from our TRS Lessees and net income from the operations of our TRS Lessees. Therefore, we rely primarily on the performance of the individual properties and the ability of the management company to increase revenues and to keep pace with inflation. Operators of hotels, in general, possess the ability to adjust room rates daily to keep pace with inflation. However, competitive pressures at some or all of our hotels may limit the ability of the management company to raise room rates.

Our expenses, including hotel operating expenses, administrative expenses, real estate taxes and property and casualty insurance are subject to inflation. These expenses are expected to grow with the general rate of inflation, except for energy, liability insurance, property and casualty insurance, property tax rates, employee benefits, and some wages, which are expected to increase at rates higher than inflation.

Geographic Concentration and Seasonality

Our hotels are located in Florida, Georgia, Indiana, Maryland, North Carolina, Pennsylvania, and Texas. As a result, we are particularly susceptible to adverse market conditions in these geographic areas, including industry downturns, relocation of businesses and any oversupply of hotel rooms or a reduction in lodging demand. Adverse economic developments in the markets in which we have a concentration of hotels, or in any of the other markets in which we operate, or any increase in hotel supply or decrease in lodging demand resulting from the local, regional or national business climate, could materially and adversely affect us.

The operations of our hotel properties have historically been seasonal. The months of April and May are traditionally strong, as is October. The periods from mid-November through mid-February are traditionally slow with the exception of hotels located in certain markets, namely Florida and Texas, which typically experience significant room demand during this period.

Critical Accounting Policies

The critical accounting policies are described below. We consider these policies critical because they involve difficult management judgments and assumptions, are subject to material change from external factors or are pervasive, and are significant to fully understand and evaluate our reported financial results.

Investment in Hotel Properties. Hotel properties are stated at cost, net of any impairment charges, and are depreciated using the straight-line method over an estimated useful life of 7-39 years for buildings and improvements and 3-10 years for furniture and equipment. In accordance with generally accepted accounting principles, the controlling interests in hotels comprising our accounting predecessor, MHI Hotels Services Group, and noncontrolling interests held by the controlling holders of our accounting predecessor in hotels acquired from third parties, which were contributed to us in connection with the Company’s initial public offering, are recorded at historical cost basis. Noncontrolling interests in those entities that comprise our accounting predecessor and the interests in hotels, other than those held by the controlling members of our accounting predecessor, acquired from third parties are recorded at fair value at the time of acquisition.

We review our hotel properties for impairment whenever events or changes in circumstances indicate the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause us to perform our review include, but are not limited to, adverse permanent changes in the demand for lodging at our properties due to declining national or local economic conditions and/or new hotel construction in markets where our hotels are located. When such conditions exist, management performs a recoverability analysis to determine if the estimated undiscounted future cash flows from operating activities and the estimated

proceeds from the ultimate disposition of a hotel property exceed its car rying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of a hotel property, an adjustment to reduce the carrying value to the related hotel property’s estimated fair market value would be recorded and an impairment loss is recognized.

There were no charges for impairment of hotel properties recorded for the six months ended June 30, 2017.

In performing the recoverability analysis, we project future operating cash flows based upon significant assumptions regarding growth rates, occupancy, room rates, economic trends, property-specific operating costs and future capital expenditures required to maintain the hotel in its current operating condition. We also project cash flows from the eventual disposition of the hotel based upon various factors including property-specific capitalization rates, ratio of selling price to gross hotel revenues and the selling price per room.

Revenue Recognition. Hotel revenues, including room, food, beverage and other hotel revenues, are recognized as the related services are delivered. We generally consider accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If we determine that amounts are uncollectible, which would generally be the result of a customer’s bankruptcy or other economic downturn, such amounts will be charged against operations when that determination is made. Revenues are reported net of occupancy and other taxes collected from customers and remitted to governmental authorities. Receivables for amounts earned under various contracts are subject to audit.

Income Taxes. We record a valuation allowance to reduce deferred tax assets to an amount that we believe is more likely than not to be realized. Because of expected future taxable income of our TRS Lessee, we have not recorded a valuation allowance to reduce our net deferred tax asset as of June 30, 2017 and December 31, 2016, respectively. We regularly evaluate the likelihood that our TRS Lessee will be able to realize its deferred tax assets and the continuing need for a valuation allowance. At each of June 30, 2017 and December 31, 2016, we determined, based on all available positive and negative evidence, that it is more-likely-than-not that future taxable income will be available during the carryforward periods to absorb all of the consolidated federal and state net operating loss carryforward. A number of factors played a critical role in this determination, including:

•

a demonstrated track record of past profitability and utilization of past NOL carryforwards,

•

reasonable forecasts of future taxable income, and

•

anticipated changes in the lease rental payments from the TRS Lessee to subsidiaries of the Operating Partnership.

Should unanticipated adverse financial trends occur, or other negative evidence develop, a valuation allowance may be necessary in the future against some or all of our deferred tax assets.

Recent Accounting Pronouncements

For a summary of recently adopted and newly issued accounting pronouncements, please refer to the Recent Accounting Pronouncements section of Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements.

Forward Looking Statements

Information included and incorporated by reference in this Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our current strategies, expectations, and future plans are generally identified by our use of words, such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and similar expressions, whether in the negative or affirmative, but the absence of these words does not necessarily mean that a statement is not forward-looking. All statements regarding our expected financial position, business and financing plans are forward-looking statements. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:

•

national and local economic and business conditions that affect occupancy rates and revenues at our hotels and the demand for hotel products and services;

•

risks associated with the hotel industry, including competition and new supply of hotel rooms, increases in wages, energy costs and other operating costs;

•

the availability and terms of financing and capital and the general volatility of the securities markets;

•

the Company’s intent to repurchase shares from time to time;

•

risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements and, if necessary, to refinance or seek an extension of the maturity of such indebtedness or modify such debt agreements;

•

management and performance of our hotels;

•

risks associated with maintaining our system of internal controls;

•

risks associated with the conflicts of interest of the Company’s officers and directors;

•

risks associated with redevelopment and repositioning projects, including delays and cost overruns;

•

supply and demand for hotel rooms in our current and proposed market areas;

•

risks associated with our ability to maintain our franchise agreements with our third party franchisors;

•

our ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations;

•

our ability to successfully expand into new markets;

•

legislative/regulatory changes, including changes to laws governing taxation of REITs;

•

the Company’s ability to maintain its qualification as a REIT; and

•

our ability to maintain adequate insurance coverage.

Additional factors that could cause actual results to vary from our forward-looking statements are set forth under the section titled “Risk Factors” in our Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission.

These risks and uncertainties should be considered in evaluating any forward-looking statement contained in this report or incorporated by reference herein. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. We undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report, except as required by law. In addition, our past results are not necessarily indicative of our future results.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

The effects of potential changes in interest rates are discussed below. Our market risk discussion includes “forward-looking statements” and represents an estimate of possible changes in fair value or future earnings that could occur assuming hypothetical future movements in interest rates. These disclosures are not precise indicators of expected future losses, but only indicators of reasonably possible losses. As a result, actual future results may differ materially from those presented. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.

To meet in part our long-term liquidity requirements, we will borrow funds at a combination of fixed and variable rates. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. From time to time we may enter into interest rate hedge contracts such as collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not intend to hold or issue derivative contracts for trading or speculative purposes.

As of June 30, 2017, we had approximately $260.4 million of fixed-rate debt and approximately $61.3 million of variable-rate debt. The weighted-average interest rate on the fixed-rate debt was 4.85%. A change in market interest rates on the fixed portion of our debt would impact the fair value of the debt, but have no impact on interest incurred or cash flows. Our variable-rate debt is exposed to changes in interest rates, specifically the changes in 1-month LIBOR. However, to the extent that 1-month LIBOR does not exceed the 1-month LIBOR floor on the mortgage on the DoubleTree by Hilton Philadelphia Airport of 0.50%, a portion of our variable-rate debt would not be exposed to changes in interest rates. Assuming that the aggregate amount outstanding on the mortgages on the Crowne Plaza Tampa Westshore, DoubleTree by Hilton Philadelphia Airport and the mortgage on The Whitehall remains at approximately $61.3 million, the balance at June 30, 2017, the impact on our annual interest incurred and cash flows of a one percent increase in 1-month LIBOR would be approximately $0.6 million.

As of December 31, 2016, we had approximately $228.7 million of fixed-rate debt and approximately $81.1 million of variable-rate debt. The weighte d-average interest rate on the fixed-rate debt was 4.84%. A change in market interest rates on the fixed portion of our debt would impact the fair value of the debt, but have no impact on interest incurred or cash flows. Our variable-rate debt is exposed to changes in interest rates, specifically the changes in 1-month LIBOR. However, to the extent that 1-month LIBOR does not exceed the 1-month LIBOR floor on the mortgage on the DoubleTree by Hilton Philadelphia Airport of 0.50%, a portion of our variabl e-rate debt would not be exposed to changes in interest rates. Assuming that the aggregate amount outstanding on the mortgages on the Crowne Plaza Tampa Westshore, DoubleTree by Hilton Philadelphia Airport, DoubleTree by Hilton Jacksonville Riverfront an d the mortgage on The Whitehall remains at approximately $81.1 million, the balance at December 31, 2016, the impact on our annual interest incurred and cash flows of a one percent increase in 1-month LIBOR would be approximately $0.8 million.

Item 4.

Cont rols and Procedures

Sotherly Hotels Inc.

Disclosure Controls and Procedures

The Company’s management, under the supervision and participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act), as of June 30, 2017. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2017, its disclosure controls and procedures were effective and designed to ensure that (i) information required to be disclosed in its reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions, and (ii) information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within Sotherly Hotels Inc. have been detected.

Changes in Internal Control over Financial Reporting

There was no change in Sotherly Hotels Inc.’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during Sotherly Hotels Inc.’s last fiscal quarter that materially affected, or is reasonably likely to materially affect, Sotherly Hotels Inc.’s internal control over financial reporting.

Sotherly Hotels LP

Disclosure Controls and Procedures

The Operating Partnership’s management, under the supervision and participation of the Chief Executive Officer and Chief Financial Officer of Sotherly Hotels Inc., as general partner, has evaluated the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act), as of June 30, 2017. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2017, the disclosure controls and procedures were effective and designed to ensure that (i) information required to be disclosed in the reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions, and (ii) information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of Sotherly Hotels Inc., as general partner, does not expect that the disclosure controls and procedures or the internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within Sotherly Hotels LP have been detected.

Changes in Internal Control over Financial Reporting

There was no change in Sotherly Hotels LP’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during Sotherly Hotels LP’s last fiscal quarter that materially affected, or is reasonably likely to materially affect, Sotherly Hotels LP’s internal control over financial reporting.

PART II

Item 1.

Legal Proceedings

We are not involved in any legal proceedings other than routine legal proceedings occurring in the ordinary course of business. We believe that these routine legal proceedings, in the aggregate, are not material to our financial condition and results of operations.

Item 1A.

Risk Factors

There have been no material changes in our risk factors from those disclosed in our annual report on Form 10-K for the year ended December 31, 2016.

I tem 2.

Unregistered Sales of Equity Securities and Use of Proceeds

On January 30, 2017, the Company used a portion of the proceeds from its offering of Series B Preferred Stock to purchase the commercial condominium unit of the Hyde Resort & Residences, a condominium hotel located in the Hollywood, Florida market, for an aggregated price of approximately $4.8 million from 4111 South Ocean Drive, LLC.

From time to time, the Operating Partnership issues limited partnership units to the Company, as required by the Partnership Agreement, to mirror the capital structure of the Company to reflect additional issuances by the Company and to preserve equitable ownership ratios.

Item 3.

Defaults upon Senior Securities

Not applicable.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

Not applicable.

Item 6.

E xhibits

The following exhibits are filed as part of this Form 10-Q:

Exhibit
Number		Description of Exhibit

3.1		Articles of Amendment and Restatement of the Company (incorporated by reference to the document previously filed as Exhibit 3.1 to the Company’s Pre-Effective Amendment No. 1 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on October 20, 2004 (File No. 333-118873)).

3.1A		Articles of Amendment to the Articles of Amendment and Restatement of the Company, effective as of April 16, 2013 (incorporated by reference to the document previously filed as Exhibit 3.7 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2013).

3.1B		Articles of Amendment to the Articles of Amendment and Restatement of the Company, effective as of August 12, 2016 (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 15, 2016).

3.2		Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.3 to the Company’s Pre-Effective Amendment No. 5 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on December 13, 2004 (File No. 333-118873)).

3.2A		Amendment No. 1 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.6 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011).

3.2B		Amendment No. 2 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.3 to the Operating Partnership’s Pre-Effective Amendment No. 1 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on August 9, 2013 (File No. 333-189821)).

3.2C		Amendment No. 3 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 23, 2016).

3.3		Articles Supplementary of the Company (incorporated by reference to the document previously filed as Exhibit 3.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011).

3.4		Second Amended and Restated Bylaws of the Company, effective as of April 16, 2013 (incorporated by reference to the document previously filed as Exhibit 3.8 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2013).

3.5		Articles Supplementary designating the Series B Preferred Stock of the Company, effective as of August 19, 2016 (incorporated by reference to the document previously filed as Exhibit 3.5 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on August 22, 2016).

4.0		Form of Common Stock Certificate (incorporated by reference to the document previously filed as Exhibit 4.0 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission on March 22, 2017).

4.1		Senior Unsecured Note issued by Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 4.6 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, filed with the Securities and Exchange Commission on November 7, 2013).

4.2		Indenture between Sotherly Hotels LP and Wilmington Trust, National Association, as trustee (incorporated by reference to the document previously filed as Exhibit 4.7 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, filed with the Securities and Exchange Commission on November 7, 2013).

4.3		Indenture by and among Sotherly Hotels Inc., Sotherly Hotels LP and Wilmington Trust, National Association, as trustee, dated November 21, 2014 (incorporated by reference to the document previously filed as Exhibit 4.8 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2014).

Exhibit
Number		Description of Exhibit

4.4		First Supplemental Indenture by and among Sotherly Hotels Inc., Sotherly Hotels LP and Wilmington Trust, National Association, as trustee, dated November 21, 2014 (incorporated by reference to the document previously filed as Exhibit 4.9 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2014).

4.5		7.00% Senior Unsecured Note due 2019, issued by Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 4.10 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the Securities and Exchange Commission on April 14, 2015).

4.6		Form of Specimen Certificate of Series B Preferred Stock of the Company (incorporated by reference to the document previously filed as Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on August 22, 2016).

10.29		Commercial Unit Purchase Agreement between Sotherly Hotels Inc. and 4000 South Ocean Property Owner, LLLP, dated as of June 1, 2017.

10.30		Addendum to Commercial Unit Purchase Agreement between Sotherly Hotels and 4000 South Ocean Property Owner, LLLP, dated as of June 1, 2017.

31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Company.

31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Company.

31.3		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.

31.4		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Company.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Company.

32.3		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.

32.4		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Denotes management contract and/or compensatory plan/arrangement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SOTHERLY HOTELS INC.

Date: August 9, 2017	By:	/s/ Andrew M. Sims
		Andrew M. Sims
		Chief Executive Officer

	By:	/s/ Anthony E. Domalski
		Anthony E. Domalski
		Chief Financial Officer

SIGNATURES

	SOTHERLY HOTELS LP

	By:	SOTHERLY HOTELS INC.
		Its General Partner

Date: August 9, 2017	By:	/s/ Andrew M. Sims
		Andrew M. Sims
		Chief Executive Officer

	By:	/s/ Anthony E. Domalski
		Anthony E. Domalski
		Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number		Description of Exhibit

3.1		Articles of Amendment and Restatement of the Company (incorporated by reference to the document previously filed as Exhibit 3.1 to the Company’s Pre-Effective Amendment No. 1 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on October 20, 2004 (File No. 333-118873)).

3.1A		Articles of Amendment to the Articles of Amendment and Restatement of the Company, effective as of April 16, 2013 (incorporated by reference to the document previously filed as Exhibit 3.7 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2013).

3.1B		Articles of Amendment to the Articles of Amendment and Restatement of the Company, effective as of August 12, 2016 (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 15, 2016).

3.2		Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.3 to the Company’s Pre-Effective Amendment No. 5 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on December 13, 2004 (File No. 333-118873)).

3.2A		Amendment No. 1 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.6 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011).

3.2B		Amendment No. 2 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.3 to the Operating Partnership’s Pre-Effective Amendment No. 1 to its Registration Statement on Form S-11 filed with the Securities and Exchange Commission on August 9, 2013 (File No. 333-189821)).

3.2C		Amendment No. 3 to the Amended and Restated Agreement of Limited Partnership of Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 23, 2016).

3.3		Articles Supplementary of the Company (incorporated by reference to the document previously filed as Exhibit 3.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011).

3.4		Second Amended and Restated Bylaws of the Company, effective as of April 16, 2013 (incorporated by reference to the document previously filed as Exhibit 3.8 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2013).

3.5		Articles Supplementary designating the Series B Preferred Stock of the Company, effective as of August 19, 2016 (incorporated by reference to the document previously filed as Exhibit 3.5 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on August 22, 2016).

4.0		Form of Common Stock Certificate (incorporated by reference to the document previously filed as Exhibit 4.0 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission on March 22, 2017).

4.1		Senior Unsecured Note issued by Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 4.6 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, filed with the Securities and Exchange Commission on November 7, 2013).

4.2		Indenture between Sotherly Hotels LP and Wilmington Trust, National Association, as trustee (incorporated by reference to the document previously filed as Exhibit 4.7 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, filed with the Securities and Exchange Commission on November 7, 2013).

4.3		Indenture by and among Sotherly Hotels Inc., Sotherly Hotels LP and Wilmington Trust, National Association, as trustee, dated November 21, 2014 (incorporated by reference to the document previously filed as Exhibit 4.8 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2014).

4.4		First Supplemental Indenture by and among Sotherly Hotels Inc., Sotherly Hotels LP and Wilmington Trust, National Association, as trustee, dated November 21, 2014 (incorporated by reference to the document previously filed as Exhibit 4.9 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2014).

Exhibit
Number		Description of Exhibit

4.5		7.00% Senior Unsecured Note due 2019, issued by Sotherly Hotels LP (incorporated by reference to the document previously filed as Exhibit 4.10 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the Securities and Exchange Commission on April 14, 2015).

4.6		Form of Specimen Certificate of Series B Preferred Stock of the Company (incorporated by reference to the document previously filed as Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on August 22, 2016).

10.29		Commercial Unit Purchase Agreement between Sotherly Hotels Inc. and 4000 South Ocean Property Owner, LLLP, dated as of June 1, 2017.

10.30		Addendum to Commercial Unit Purchase Agreement between Sotherly Hotels and 4000 South Ocean Property Owner, LLLP, dated as of June 1, 2017.

31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Company.

31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Company.

31.3		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.

31.4		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13(a)-14 and 15(d)-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Company.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Company.

32.3		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.

32.4		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Operating Partnership.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Denotes management contract and/or compensatory plan/arrangement.

Exhibit 10.29

4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD

COMMERCIAL UNIT PURCHASE AGREEMENT

ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE MADE TO THIS CONTRACT AND THE DOCUMENTS REFERENCED HEREIN

ANY PAYMENT IN EXCESS OF 10 PERCENT OF THE PURCHASE PRICE MADE TO DEVELOPER PRIOR TO CLOSING PURSUANT TO THIS CONTRACT MAY BE USED FOR CONSTRUCTION PURPOSES BY THE DEVELOPER.

Additionally, under certain circumstances more particularly described in Section 4, and provided that the Seller has posted “Alternative Assurances” with the Division of Florida Condominiums, Timeshares and Mobile Homes, Seller may use all of Buyer’s deposits (including those equal to the initial 10% of the Purchase Price, as hereinafter defined).

In this Agreement (including all addenda, or amendments hereto, collectively, the “Agreement” or the “Contract”), the term “Buyer” and/or “Purchaser” means or refers to the buyer or buyers listed below who have signed this Agreement. The word “Seller” and/or “Developer” means or refers to 4000 South Ocean Property Owner, LLLP, a Delaware limited liability limited partnership, and its successors and/or assigns. If the first letter of a word is capitalized in this Agreement, that word will have the meaning given to it in this Agreement or, if no definition of such word is given in this Agreement, then it shall have the meaning given to it in the Declaration (as defined in Section 1 of this Agreement).

Buyer(s):Sotherly Hotels Inc., (NASDAQ: “SOHO”), a publicly traded real estate investment trust

Name of Principal Owner of Buyer (if entity):

Name and Title of Authorized Signatory (if entity): Dave Folsom, President

Address:410 West Francis Street

City:Williamsburg

Country: USA

Home Phone:

Tax I.D. No.:

E-Mail Address:drewsims@sotherlyhotels.com

Registered Agent’s Name, Number, E-Mail and Address:

StateVirginia

Zip Code:23185

Office Phone: (757) 229-5648

Fax. No. (757) 564-8801

Cellular Phone No.

(BUYER TO PROVIDE)

1. Purchase and Sale .

(a) Buyer agrees to buy, and Seller agrees to sell the Unit (as hereinafter defined) on the terms and conditions contained in this Agreement. The legal description of the Unit is: Condominium Unit CU-2 (the “Unit”) in the proposed 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD (the “Condominium”). The Unit and the Condominium are described in greater detail in this Agreement and the proposed Declaration of Condominium (”Declaration”) included in the Prospectus for the Condominium and attached exhibits (collectively, the “Condominium Documents”). Buyer acknowledges receipt of the Condominium Documents and all documents required by Section 718.503, Florida Statues, to be furnished by a developer to a buyer on or before the date of this Agreement.

(b) The total purchase price for the Unit is F ive Million Four Hundred Fifty Thousand and No/100 Dollars ( $ 5,10 0, 000.00 ) USD (the “Purchase Price”). In addition to the Purchase Price, Buyer also agrees to pay the fees, costs, reimbursements, adjustments and other sums required to be paid by Buyer pursuant to Section 11 below. Buyer understands and agrees that the Purchase Price of the Unit is not based solely upon the size of the Unit, but is also based on a number of different factors, including, without limitation, any of the following or any combination of the following: current market conditions, the location of the Unit within the Building, the Unit configuration, the floor level of the Unit within the Building, ceiling heights within the Unit and/or sizes of balconies, terraces, and/or patios and/or any other special appurtenant rights attached to the Unit.

2. Payment of the Purchase Price . Buyer agrees to make the following payments against the Purchase Price:


Payment	Due Date	Amount
Initial Deposit	Upon Buyer’s execution of this Agreement	$510,000.00
Balance	At Closing	$4,590,000.00
Total Purchase Price		$5,100,000.00

(a) Buyer expressly understands and agrees that Seller reserves the right to use Buyer’s deposits (both up to, and provided that Seller has placed Alternative Assurances, approved by the Division, in excess of, ten percent (10%) of the Purchase Price of the Unit) in order to fund a significant portion of construction and development of the Condominium, all in accordance with the provisions of Section 4 hereof and applicable Florida law.

(b) All payments required to be made hereunder, including all Deposits and any balance due at closing, must be paid by wire transfer of immediately available federal funds only. Even though Seller is not obligated to do so, if Seller accepts a deposit from Buyer which is made by personal check and/or cashiers’ check, same shall be made in United States funds and all checks must be payable on a bank located in the United States. Additionally, even though Seller is not obligated to do so, if Seller accepts a deposit from Buyer drawn on a foreign bank and/or payable in a currency other than U.S. currency, Buyer shall be solely responsible for all costs of collection and/or conversion and agrees to pay same to Seller promptly upon demand or, in Seller’s sole and absolute discretion, Seller may permit such costs to be charged to Buyer at the time of closing. If Buyer fails to pay any deposit on time, and Seller agrees to accept it on a later date (which Seller is not obligated to do), Buyer will pay a late funding charge equal to interest on such deposit at the then applicable highest lawful rate from the date due until the date received by Seller and cleared by the bank on which it is drawn.

(c) Buyer also agrees to pay all fees, costs, expenses and/or other sums required to be paid by Buyer in this Agreement. At the present time, the costs for which dollar amounts can be computed are :

$N/A (See Addendum) - 1.70% Development Fee

$(See Addendum) -Initial Contribution to the Condominium Association These charges are subject to change as provided in Section 11 of this Agreement and are explained in more detail in that Section, as are other costs which cannot be computed at this time.

3. How Buyer Pays . Buyer understands and agrees that Buyer will be obligated to pay “all cash” at closing and this Agreement is not contingent or conditioned upon Buyer obtaining financing. This Agreement and Buyer’s obligations under this Agreement to purchase the Unit will not depend on whether or not Buyer qualifies for or obtains a mortgage from any lender. Buyer will be solely responsible for making Buyer’s own financial arrangements. Although Seller does not have to do so, if Seller agrees to delay closing until Buyer’s lender is ready, or to wait for funding from Buyer’s lender until after closing, or to accept a portion of the sums due at closing in the form of a personal check (which Seller shall have no obligation to do), Buyer agrees to pay Seller a late funding charge equal to interest, at the then highest applicable lawful rate on all funds due Seller which have not then been paid to Seller (and, with regard to personal checks, which have not then cleared the bank on which they are drawn) from the date Seller originally scheduled closing to the date of actual payment (and, with regard to personal checks, to the date of final clearance). This late funding charge may be estimated and charged by Seller at closing. Seller’s estimate will be adjusted after closing based on actual funding and clearance dates upon either Seller’s or Buyer’s written request. Without limiting the generality of Section 29 of this Agreement, the foregoing sentence will survive (continue to be effective after) closing.

4. Deposits .

(a) Developer has entered into an escrow agreement with Chicago Title Insurance Company (the “Escrow Agent”), with offices at 13800 N.W. 14th Street, Suite 190, Sunrise, Florida 33323, for the holding, disbursement and administration of Buyer’s deposits, all in accordance with the terms of the escrow agreement, this Agreement and the Florida Condominium Act (Chapter 718 of the Florida Statutes). A copy of the escrow agreement is included in the Condominium Documents. The escrow agreement is incorporated into this Agreement as if repeated at length herein, and Buyer agrees that the deposits may be held in any depository which meets the requirements of the Act, including, without limitation, a financial institution chartered and located out of the State of Florida.

(b) Buyer understands and agrees that all of Buyer’s deposits in excess of ten percent (10%) of the Purchase Price may be used by Seller for construction and development purposes as permitted by law. In addition to the foregoing, to the extent of any approved “Alternative Assurances”, Seller may, as permitted by law, and in lieu of holding deposits up to ten percent (10%) of the Purchase Price in escrow, cause the Escrow Agent to disburse such deposits to it for all uses permitted by law. Buyer agrees that the posting of Alternative Assurances or any change to the Alternative Assurances shall not be deemed a material or adverse change in the offering of the Condominium by reason of the fact that Buyer has already agreed to the use of Buyer’s deposits up to ten percent (10%) of the Purchase Price. Accordingly, Buyer understands and agrees that Seller reserves the right to utilize all of Buyer’s deposits (both up to, and in excess of, ten percent (10%) of the Purchase Price) as and to the extent permitted by law. Buyer should expect that its deposits up to, and in excess of ten percent (10%) of the Purchase Price may not remain in escrow.

(c) At closing, all deposits not previously disbursed to Seller will be released to Seller. Except where expressly provided herein to the contrary or otherwise required by law, all interest earned on Buyer’s deposits shall accrue solely to the benefit of Seller. Interest shall not be credited against the Purchase Price of the Unit. Buyer further understands and agrees that to the extent that deposit monies are removed from escrow and used as permitted herein, said monies are not available for investment and accordingly no interest shall be earned or deemed to be earned (even if Seller indirectly benefits from the use of said funds). No interest will be assumed to be earned, unless in fact said sums are invested in an interest bearing account and do in fact earn interest. Subject to the terms of Section 13 below, in the event of an uncured default by Buyer and the retention of the Deposit, or any portion thereof, by Seller, Seller shall also be entitled to retain any interest earned thereon. Seller may change escrow agents (as long as the new escrow agent is authorized to be an escrow agent under applicable

Florida law), in which case Buyers deposits, or the portions thereof then being held in escrow, and any interest actually earned on them, may be transferred to the new escrow agent at Seller’s direction. If Buyer so requests, Buyer may obtain a receipt for Buyer’s deposits from the Escrow Agent.

5. Seller’s Financing/Buyer’s Waiver and Subordination . Seller may borrow (or may have borrowed) money from lenders (each, a “Developer’s Lender”) for the acquisition, development, refinancing and/or construction of the Condominium and/or Unit (and any other units owned by Seller, if any). Buyer agrees that any and each Developer’s Lender will have, until closing, a prior, superior mortgage on or other interest in the Unit, and the Condominium (or the real property upon which the Condominium will be created), with greater priority than any rights or interest Buyer may have therein, if any, pursuant to this Agreement or under any principal of equity or otherwise. At closing, Seller shall cause the then applicable mortgages to be released as an encumbrance against the Unit and may use Buyer’s closing proceeds for such purpose. Without limiting the generality of the foregoing, Buyer’s rights and interest under this Agreement (and the deposits made hereunder) are and will be, automatically and without further action or instrument, subordinate to all mortgages, mezzanine and any other forms of financing (and all modifications made to those mortgages, mezzanine and any other forms of financing) affecting the Unit or the Condominium (or the real property upon which the Condominium is being developed) even if those mortgages, mezzanine and any other forms of financing provided by a Developer’s Lender (or modifications) are made or recorded after the date of this Agreement. Notwithstanding anything to the contrary contained in this Agreement, Buyer agrees that neither this Agreement, nor Buyer’s making the Deposits (and/or Seller’s use of deposits as permitted hereunder), will give Buyer any lien (equitable or otherwise) or claim against the Unit, the Condominium or the real property upon which the Condominium has been (or will be) created and Buyer knowingly, fully and unconditionally waives and releases any right to assert any such lien or claim. Buyer hereby acknowledges and agrees that (i) any and each Developer’s Lender is an express third party beneficiary of this Section 5, and (ii) this Section 5 and the rights of any and each Developer’s Lender under this Section 5 shall survive (continue to be effective dates) any termination, rescission or other voiding of this Agreement, and any default by Developer under this Agreement.

6. Insulation; Energy Efficiency . Seller has advised Buyer, as required by the rules of the Federal Trade Commission, that it intends, currently, to install in connection with the Unit, the following insulation: (a) R. Foil insulation on the exterior walls, having an R-Value of R-4.7 and a thickness of 1/8“ (b) Fiberglass Blanket insulation on the demising walls, having an R-Value of R-19 and a thickness of 6” and (c) Fiberglass Blanket insulation on the roof, having an average R-Value of R-19 and a thickness of 6”. This R-value information is based solely on the information given by the appropriate manufacturers and Buyer agrees that Seller is not responsible for the manufacturers’ errors. Pursuant to applicable law, Buyer shall have the option to obtain an energy efficiency rating on the Unit being purchased. Buyer hereby releases Seller from any responsibility or liability for the accuracy or level of the rating and Buyer understands and agrees that this Agreement is not contingent upon Buyer’s approval of the rating, that the rating is solely for Buyer’s own information and that Buyer will pay the total cost of obtaining the rating. All insulation and energy efficiency rating information is subject to Seller’s general right, under Sections 14, 28 and 30 below to make changes in Seller’s Plans and Specifications, and to applicable limitations of Seller’s liability to Buyer.

7. Completion Date .

(a) Seller estimates that it will substantially complete construction of the Unit, in the manner specified in this Agreement, by approximately December 31, 2019, subject, however, only to delays resulting from “Force Majeure” (such date as extended by events of Force Majeure, the “Outside Date”). The term “Force Majeure” as used in this Agreement shall mean “Acts of God”, labor disputes (whether lawful or not), work stoppages, material or labor shortages, restrictions or delays by any

governmental or utility authority or any court of law, civil riots, floods or other causes beyond Seller’s control.

(b) Notwithstanding the foregoing or any other contrary provision of this Agreement, Seller shall have the right, in Seller’s sole discretion, to cancel this Agreement and cause Buyer’s deposits to be refunded in the event that Seller does not enter into binding contracts to sell at least eighty percent (80%) of the Units in the Condominium within one (1) year following the date of this Agreement (the “Contingency Expiration Date). Seller must, however, notify Buyer of such a termination of the Agreement pursuant to this clause within thirty days following the Contingency Expiration Date. The foregoing presale contingency is a provision solely for the benefit of Seller, and may be waived unilaterally by Seller. Accordingly, Seller may elect to waive the contingency, whether or not the stated presales threshold has been met. In the event that Seller does elect to proceed without having met the threshold, Buyer will have no right to object thereto and shall remain bound by the terms of this Agreement. This Section shall not delay the effectiveness of this Agreement, which shall be immediate, but, rather, shall be deemed a “condition subsequent” to this Agreement. In the event of Seller’s termination of this Agreement pursuant to this Section, Buyer shall be entitled to an immediate refund of Buyer’s deposits and upon such termination and the return of Buyer’s deposits, Seller and Buyer will be fully relieved and released from all obligations and liabilities under and in connection with this Agreement (other than those which are intended to survive termination). Seller agrees to use its good faith efforts to meet the foregoing pre-sale requirement, provided, however, that while Seller recognizes that there may be some seasonal variations, Seller may reasonably anticipate sales to occur at a relatively consistent rate throughout the presale contingency period. As such, to the extent that, prior to the Contingency Expiration Date, Seller reasonably believes that the sales will not achieve the presales threshold set forth above, then Seller may terminate this Agreement prior to the Contingency Expiration Date, and such termination shall not be deemed a breach of Seller’s obligation to use its good faith efforts to achieve the pre-sale requirement.

8. Inspection Prior to Closing .

(a) Buyer will be given an opportunity prior to closing, on the date and at the time scheduled by Seller, to inspect the Unit with Seller’s representative. At that time, Buyer will sign an inspection statement listing any alleged defects in workmanship or materials (only within the boundaries of the Unit, itself) which Buyer discovers. If any item listed is actually defective in workmanship or materials (keeping in mind the construction standards applicable in Broward County, Florida for properties of similar, type, style and age), Seller shall, subject to the other provisions hereof, be obligated to repair those items at its cost within a reasonable period of time after closing, but Seller’s obligation to do so will not be grounds for deferring the closing, nor for imposing any condition on closing. No escrows or holdbacks of closing funds will be permitted. Buyer understands and agrees that Seller’s obligation to repair items in the Unit noted during the pre-closing inspection shall automatically terminate (with Seller having no further obligations for such items) upon the date that Buyer commences construction and/or improvement of the Unit, whether or not a permit has been obtained. If Buyer fails to take advantage of the right to a pre-closing inspection on the date and time scheduled, Seller will not be obligated to reschedule an inspection prior to closing and Buyer shall be deemed to have accepted the Unit in its “AS IS/WHERE-IS” condition (subject only to any warranty obligations of Seller to the extent applicable and not then expired).

(b) From and after the closing, Buyer hereby grants Seller and its agents, employees and contractors access to the Unit at reasonable times during normal business hours to complete any necessary repairs to the Unit. If Buyer cannot be present at the time such work is to be performed to facilitate completion of such work, Buyer hereby authorizes Seller, its agents, employees, contractors and sub-contractors to enter the Unit for such purposes using a master key or a key maintained by the

Association. If Buyer cannot or elects not to be present at the time that Seller performs any such work, Buyer hereby waives and releases Seller (its partners, members, managers, contractors, sub-contractors, employees, agents, designees and assigns) from any and all claims that Buyer may have against Seller (its partners, managers, members, contractors, sub-contractors, employees, agents, designees and assigns) relating to damage to or theft of property from the Unit that is not due to the negligence or intentional act of Seller or its partners, members, managers, contractors, sub-contractors, employees, agents, designees and/or assigns. Buyer acknowledges that all matters pertaining to the initial construction of the Unit will be handled by Seller and Seller’s representatives. Buyer agrees not to interfere with or interrupt any workers at the site of the Unit. No personal inspections (other than the one pre-closing inspection referred to above) will be permitted. Buyer may not commence any work on the Unit, other than prepaid options or extras that Seller agrees in writing to provide, until after closing. Buyer recognizes that Seller is not obligated to agree to provide extras or options.

(c) Buyer can examine Seller’s Plans and Specifications at Seller’s business office, located on site or otherwise at a location identified by the Seller, during regular business hours by making an appointment to do so in advance.

(d) The provisions of this Section 8 shall survive (continue to be effective after) closing.

9. Closing Date .

(a) Buyer understands and agrees that Seller has the right to schedule the date, time and place for closing, which shall in no event be scheduled later than one (1) year following the Outside Date, however Buyer understands and agrees that the closing may be scheduled sooner, with the exact time, date and place to be determined by seller.

(b) Before Seller can require Buyer to close, however, two things must be done: (i) Seller must record the Declaration and related documents in the Broward County Public Records; and (ii) Seller must obtain a temporary, partial or permanent certificate of completion for or covering the Unit from the proper governmental agency but, subject and subordinate to the provisions of Section 8 and 30 of this Agreement (without limiting the generality of those provisions by this specific reference), the Common Elements and other portions of the Condominium Property need not then have certificates of occupancy or completion, nor be completed. Seller does, however, agree to complete those amenities within a reasonable period of time following closing provided, however, that no closing shall occur until the certificate of substantial completion described in Section 718.104(4)(e), F.S. shall have first been recorded. Seller does however, agree to provide or complete, within a reasonable period of time following closing, those roads and facilities for water, sewer, gas, electricity and recreational amenities, which Seller or its agents have represented Seller will provide or complete, or Seller has committed to provide or complete in accordance with the terms of the Condominium Documents. The foregoing sentence shall survive (continue to be effective after) closing.

(c) Buyer will be given at least ten (10) days’ notice of the date, time and place of closing. Seller is authorized to postpone the closing for any reason and Buyer will close on the new date, time and place specified in a notice of postponement (as long as at least three (3) days’ notice of the new date, time and place is given). A change of time or place of closing only (one not involving a change of date) will not require any additional notice period. Any formal notice of closing, postponement or rescheduling may be given by Seller orally, by telephone, e-mail, facsimile, mail or other reasonable means of communication at Seller’s option. All of these notices will be sent or directed to the address, or given by use of the information specified on Page 1 of this Agreement unless Seller has received written notice from Buyer of any change prior to the date the notice is given. These notices will be effective on

the date given or mailed (as appropriate). An affidavit of one of Seller’s employees or agents stating that this notice was given or mailed will be conclusive. After the notice is given or mailed, and if requested in writing by Buyer, Seller will send a written confirmation of the closing, together with a draft closing statement and other pertinent information and instructions. This written confirmation is given merely as a courtesy and is not the formal notice to close. Accordingly, it does not need to be received by any particular date prior to closing. Buyer agrees, however, to follow all instructions given in any formal notice and written confirmation. If Buyer fails to receive any of these notices or the confirmation because Buyer failed to advise Seller of any change of mailing address, e-mail address, phone number or telecopy number, because Buyer has failed to pick up a letter when Buyer has been advised of an attempted delivery or because of any other reason, Buyer will not be relieved of Buyer’s obligation to close on the scheduled date unless Seller agrees in writing to postpone the scheduled date. If Seller agrees in writing to reschedule closing at Buyer’s request, or if Buyer is a corporation or other entity and Buyer fails to produce the necessary documentation Seller requests and, as a result, closing is delayed, or if closing is delayed for any other reason (except for a delay desired, requested or caused by Seller), Buyer agrees to pay at closing a late funding charge equal to interest, at the then highest applicable lawful rate, on that portion of the Purchase Price not then paid to Seller (and cleared), from the date Seller originally scheduled closing to the date of actual closing. Buyer agrees that the late funding charge is appropriate in order to cover, among other things, Seller’s administrative and other expenses resulting from a delay in closing. Buyer understands that Seller is not required to reschedule or to permit a delay in closing at Buyer’s request.

10. Closing .

(a) The term “closing” refers to the time when Seller delivers the deed to the Unit to Buyer and ownership changes hands. Buyer’s ownership is referred to as “title”. Seller promises that the title Buyer will receive at closing will be good, marketable and insurable (subject to the permitted exceptions listed or referred to below and the other provisions of this Agreement).

(b) Buyer agrees that Seller’s designee shall act as closing agent and shall issue the title insurance commitment (and subsequent title insurance policy), which shall be paid for by Seller as provided hereafter. Buyer will receive from Seller two (2) documents at closing which Buyer agrees to accept as proof that Buyer’s title is as represented above:

(i) A written commitment , from a title insurance company licensed in Florida agreeing to issue a policy insuring title or the policy itself. This commitment (or policy) will list any exceptions to title. Permitted exceptions (exceptions which Buyer agrees to take title subject to) are:

(1) Liability for all taxes or assessments affecting the Unit, which are not yet due and payable, starting the year Buyer receives title and continuing thereafter;

(2) All laws, and all restrictions, covenants, conditions, limitations, agreements, reservations and easements now or hereafter recorded in the public records, which may include, without limitation, zoning restrictions, property use limitations and obligations, easements (rights-of-way) and agreements relating to telephone lines, water and sewer lines, storm water management and other utilities;

(3) The restrictions, covenants, conditions, easements, terms and other provisions imposed by the documents contained or referred to in the

Condominium Documents (and any other documents which Seller, in its sole discretion, believes to be necessary or appropriate) which are recorded, now or at any time after the date of this Agreement, in the Public Records of Broward County;

(4) The rights of the public for use of the baywalk, if any, over portions of the Common Elements along the Intracoastal waterway;

(5) The restrictions, covenants, easements, conditions, terms and other provisions set forth in the Zoning Regulations and in the Development Covenants, including, without limitation, rights of third parties to construct, operate and maintain the marina located within the Common Elements, if any.

(6) The restrictions, covenants, easements, conditions, terms and other provisions set forth in any Brand Agreement.

(7) Standard exceptions for waterfront property and artificially filled in property which once was in navigable waters and all other standard exceptions for similar property;

(8) Any open Notice of Commencement related to Seller’s construction or development of, among other things, the Condominium (although Seller will provide an unsecured indemnification to the title insurer selected by Seller, on a form reasonably acceptable to Seller, to induce the title insurer selected by Seller to insure Buyer’s title without exception for unfiled construction liens relating to the Notice of Commencement);

(9) Pending governmental liens as of closing (Seller will be responsible, however, for certified governmental liens or special assessment liens as of closing, provided, however, that to the extent that any such certified liens are then due or are payable in installments, Seller shall only be responsible for those payments and/or installments due prior to closing, and Buyer hereby assumes all payments and/or installments coming due after closing);

(10) All standard printed exceptions contained in an ALTA Owner’s title insurance policy issued in Broward County, Florida; and

(11) Any matters not listed above as long as title insurance coverage is available for these matters from a nationally recognized title insurer.

(ii) A Special Warranty Deed . At closing, Seller promises to give Buyer a special warranty deed to the Unit. The special warranty deed will be subject to (that is, contain exceptions for) all of the matters described above.

(c) Buyer will receive at closing Seller’s form of owner’s (“no lien”) affidavit, closing agreement, FIRPTA (non-foreign) affidavit and an assignment of any appurtenances to the Unit, if any, as described herein. When Buyer receives the special warranty deed at closing, Buyer will sign Seller’s closing agreement, a settlement statement, if Buyer is a legal entity, an affidavit, and/or other evidence required by Seller or Seller’s closing agent, certifying the identity of the “beneficial owner(s)” (as such term is defined by the United States Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) of the entity and the authorized representative of the entity, and otherwise as may

be required to comply with any requirements of any orders now or hereafter issued by FinCEN (or any other governmental or quasi-governmental agencies), and all papers that Seller deems reasonably necessary or appropriate for transactions of this nature.

(d) If Seller cannot provide the quality of title described above, Seller will have a reasonable period of time (at least sixty (60) days) to correct any defects in title. If Seller cannot, after making reasonable efforts to do so (which shall not require the bringing of lawsuits or the payment or satisfaction of involuntary liens or judgments) correct the title defects, Buyer will have two options:

(i) Buyer can accept title in the condition Seller offers it (with defects) and pay the full Purchase Price for the Unit with exceptions for such title matters to be contained in the special warranty deed for the Unit. Buyer will not make any claims against Seller because of the defects; or

(ii) Buyer can cancel this Agreement and receive a full refund of Buyer’s deposits.

(e) At the same time Buyer receives the special warranty deed, Buyer agrees to pay the balance of the Purchase Price and any additional amounts owed under this Agreement. Seller has no obligation to accept funds other than as set forth in Section 3 above. Until all sums have been received and cleared, Seller will be entitled to a vendor’s lien on the Unit (which Buyer agrees Seller may unilaterally record in the Public Records of the County).

(f) At or prior to closing, Buyer must present written evidence to Seller that Buyer has established an account for electric service to the Unit with FP&L (or any successor supplier or electric service to the Unit) and that electric service to the unit is to commence (on Buyer’s account) as of closing.

(g) The provisions of this Section shall survive (continue to be effective after) closing.

11. Additional Fees and Costs .

(a) Buyer understands and agrees that, in addition to the Purchase Price for the Unit, Buyer must pay certain other fees, costs or other sums when the title is delivered to Buyer at closing. These include:

(i) A “development fee” equal to one and seven tenths percent (1.70%) of the Purchase Price (and of any charges for options or extras now or hereafter contracted for which are not included in the Purchase Price).

(ii) A working capital contribution in an amount equal to the aggregate of twice the regular monthly assessment for the Unit due to the Condominium Association, as determined at the time of closing, and which contribution is payable directly to the Association to provide it with funds. This contribution may be used by the Condominium Association for any purpose, including, payment of ordinary Common Expenses or operating costs, and will not be credited against regular assessments or charges. This amount of this contribution may change, however, if the monthly assessments change prior to closing (see Section 17). To the extent that Seller elects to fund deficits as provided in the Declaration, no portion of the contribution shall be used for payment of Common Expenses prior to the expiration of the period during which Seller is excused from payment of assessments.

(iii) Any and all sales tax due in connection with the acquisition of any furnishings, finishes and/or equipment.

(iv) A reimbursement to Seller for any utility, cable or interactive communication deposits or hook-up fees, and/or governmental impact fees, which Seller may have advanced prior to closing for the Unit or applicable to the Unit, together with any deposits charged by the utility provider in connection with opening accounts for utility services intended to be charged directly to the Unit. The amount of these charges is now unknown.

(v) Any remaining outstanding sums and/or any sales tax due for any options or upgrading of standard items included, or to be included, in the Unit as agreed to in writing by both Buyer and Seller.

(vi) Reimbursement to Seller, and/or Seller’s closing agents, for charges incurred in connection with any State, Federal or local rules, regulations or ordinances mandating reporting (including, without limitation, any targeting orders or equivalent issued by FinCEN or any governmental or quasi-governmental agencies) and/or coordinating the closing with Buyer and/or Buyer’s lender, including, without limitation, charges for messenger expenses, long distance telephone calls, photocopying expenses, telecopying charges and others. The amount of these charges is now unknown.

(vii) In the event of increases in either the recording fees imposed by the County, the documentary stamp tax rates or the promulgated title insurance premiums, subsequent to the date of this Agreement, or in the event of the imposition of any surcharge or any new governmental tax or charge on deeds or conveyances, Buyer agrees to pay all such increases, surcharges or new taxes or charges, in addition to the development fee.

(viii) All fees and charges payable to any attorney selected by Buyer to represent Buyer. The amount of any such charges is now unknown; and

(ix) The late funding charges provided for elsewhere in this Agreement. The amount of any such charges is now unknown.

(b) Seller agrees to pay the following closing costs at closing:

(i) the costs of officially recording the deed in the Public Records of the County (presently, recording fees are $10.00 for the first page of an instrument and $8.50 for each additional page);

(ii) documentary stamp taxes payable in connection with the deed conveying the Unit to Buyer (presently, documentary stamp taxes are $.70 for each $100.00 of consideration); and

(iii) the title insurance premium for any title insurance policy issued by Seller’s closing agent.

(c) Buyer understands and agrees that Seller may utilize the “development fee” for payment of the closing costs for which Seller is obligated, but that the balance of the “development fee” shall be retained by Seller to provide additional revenue and to offset certain of its construction and

development expenses, including without limitation, certain of Seller’s administration expenses and Seller’s attorneys’ fees in connection with development of the Condominium. Accordingly, Buyer understands and agrees that the development fee is not for payment of closing costs or settlement services (other than to the extent expressly provided above), but rather represents additional funds to Seller which are principally intended to provide additional revenue and to cover various out-of-pocket and internal costs and expenses of Seller associated with development of the Condominium.

(d) If Buyer obtains a loan for any portion of the Purchase Price, Buyer will be obligated to pay any loan fees, closing costs, escrows, appraisals, credit fees, lender’s title insurance premiums, prepayments and all other expenses charged by any lender giving Buyer a mortgage, if applicable. Additionally, if Buyer obtains a loan and elects to have Seller’s closing agent act as “loan” closing agent as well, Buyer agrees to pay, in addition to any other sums described in this Agreement, such closing agent an aggregate sum equal to $995.00, for a simultaneously issued mortgagee’s title insurance policy, the agent’s title examination, title searching and closing services related to acting as “loan closing agent”. In addition to that sum, Buyer shall be obligated to pay the premiums (at promulgated rate) for any title endorsements requested by Buyer’s lender. Notwithstanding any of the references in this paragraph to Buyer obtaining a loan, nothing herein shall be deemed to make this Agreement, or the Buyer’s obligations under this Agreement, conditional or contingent in any manner on the Buyer obtaining a loan to finance any portion of the Purchase Price; it being the agreement of the Buyer that the Buyer shall be obligated to close “all cash” and that no delays in closing shall be provided to accommodate loan closings. Notwithstanding the foregoing, nothing herein shall require Buyer to choose to elect Seller’s closing agent to act as loan closing agent, nor shall anything herein obligate Seller’s closing agent to act as loan closing agent (even if selected by Buyer).

(e) Current expenses of the Unit (for example, taxes and governmental assessments, levies and/or use fees and current monthly assessments of the Association and any interim service fees imposed by governmental authority) will be prorated between Buyer and Seller as of the date of closing. Additionally, at closing, Buyer shall be obligated to prepay the next month’s maintenance assessment to the Association. This prepayment is in addition to Buyer’s obligation to pay the working capital contribution, as described above. If taxes for the year of closing are assessed on the Condominium as a whole, Buyer shall pay Seller, at closing, the Unit’s allocable share of those taxes (as estimated by Seller and subject to reproration when the actual tax bill is available) from the date of closing through the end of the applicable calendar year of closing. Buyer should understand that during the year in which the Declaration of Condominium is recorded, it is likely that real property taxes may be assessed as a whole against the entire property comprising the Condominium (rather than on a unit-by-unit basis, which is how the Condominium will be assessed during all years following the year during which the Declaration is recorded). As such, if Buyer is closing in the calendar year during which the Declaration is recorded, Buyer should anticipate having to pay to Seller, at closing, the estimated prorated amount of real property taxes attributable to the Unit for the period from the date of closing through December 31 of the year of closing; and based upon the perceived value of the Unit, such amount will, in all likelihood, be a substantial sum. If taxes for the year of closing are assessed on a unit-by-unit basis, Buyer and Seller shall prorate taxes as of the closing date based upon the actual tax bill, if available, or an estimate by Seller, if not available, with Buyer responsible for paying the full amount of the tax bill and Seller reimbursing Buyer for Seller’s prorated share of those taxes. Buyer agrees that Seller’s prorated share of the taxes due as of closing need not be paid to Buyer, however, until the actual tax bill is presented to Seller, and any proration based on an estimate of the current year’s taxes shall be subject to reproration upon request of either party, provided, however, that any request for reproration is made within six (6) months following the issuance of the actual tax bill for the Unit (it being assumed, for purposes hereof, that tax bills are issued on November 1 of each tax year) or the date of the final determination of any property tax appeal (if the taxes for the year of proration have been appealed). No request for proration made beyond the six (6) month period shall be valid or enforceable. In addition, Buyer shall pay, or reimburse Seller if then

paid, for any interim proprietary and/or general service fees imposed by any governmental municipality or governmental authority having jurisdiction over the Unit. This paragraph shall survive (continue to be effective after) closing.

12. Adjustments with the Association . Buyer understands that Seller may advance money to the Condominium Association to permit it to pay for certain of its expenses (for example, but without limitation, insurance premiums, Common Element utility and/or cable or other interactive communication charges and deposits, permit and license fees, charges for service contracts, salaries of employees of the Condominium Association and other similar expenses). Seller is entitled to be reimbursed by the Condominium Association for all of these sums advanced by Seller, to the extent in excess of Seller’s assessment obligations (and/or deficit funding obligations, if any). To the extent that Seller is entitled to reimbursement, the Condominium Association will reimburse Seller out of regular assessments paid by Buyer and other owners as those contributions and assessments are collected, or as otherwise requested by Seller. Seller also, at its election, may receive reimbursement (to the extent that it is otherwise entitled to reimbursement) for these payments by way of a credit against any sums it may become obligated to pay to the Condominium Association. To the extent that there is any guarantee of assessments in place and in effect, no initial contributions of purchasers to the Condominium Association may be used for such purposes however. The provisions of this Section 12 will survive (continue to be effective after) closing.

13. Default .

(a) If Buyer fails to perform any of Buyer’s obligations under this Agreement (including making scheduled deposits and other payments) Buyer will be in “default”. If Buyer is still in default twenty (20) days after Seller sends Buyer written notice thereof, Seller shall be entitled to the remedies provided herein. If, however, Buyer’s default is as a result of failing to close on the scheduled date, then in addition to all other remedies provided herein (if any), Seller can cancel this Agreement without giving Buyer any prior (or subsequent) notification or opportunity to close at a later date.

(b) Upon Buyer’s default (and the expiration of any notice period, if applicable), all Buyer’s rights under this Agreement will end and Seller can terminate this Agreement and resell the Unit for a higher or lower price without any accounting to Buyer. Buyer understands that because Seller has taken the Unit off the market for Buyer, has spent money on sales, advertising, promotion and construction and has incurred other costs incident to this sale, Buyer’s default will damage Seller. As compensation for this damage, in the event Seller cancels this Agreement because of Buyer’s default, Buyer authorizes Seller to keep (or if not then paid by Buyer, Buyer will pay to Seller) all deposits and other pre-closing advance payments (including, without limitation, those on options, extras, upgrades and the like) Buyer has then made (and which would have been required to have been made had Buyer not defaulted) and all interest which was, or would have been, earned on them, all as liquidated damages (and not as a penalty). Buyer and Seller agree to this because there is no other precise method of determining Seller's damages. Any damage or loss that occurs to the Condominium Property and/or The Properties while Buyer is in default will not affect Seller's right to liquidated damages. Seller shall also have the right to seek to specifically enforce this Agreement against Buyer in the event of an uncured default by Buyer.

(c) If Seller fails to perform any of Seller’s obligations under this Agreement, Seller will be in “default”. If Seller is still in default ten (10) days after Buyer sends Seller notice thereof (or such longer time as may reasonably be necessary to cure the default if same cannot be reasonably cured within ten (10) days), Buyer may pursue such rights as may be available in equity and/or under applicable law, except that absent an intentional default by Seller, Buyer may not seek to specifically enforce this Agreement, and Seller is entitled to defend itself to the maximum lawful extent.

The provisions of this Section 13 will survive (continue to be effective after) termination of this Agreement and/or closing.

14. Construction Specifications .

(a) The Unit and the Condominium will be constructed in substantial accordance with the plans and specifications therefor kept in Seller’s construction office, as such plans and specifications are amended from time to time. Seller may make such changes in the plans and specifications that it deems appropriate at any time, to accommodate it in the field construction needs (as more fully discussed in this Section 14) and in response to recommendations or requirements of local, state or federal governmental or quasi-governmental agencies or applicable utility and/or insurance providers or Seller’s design professionals and/or contractors or suppliers. Such plans and specifications, as they are so amended, are referred to in this Agreement as “Seller’s Plans and Specifications”. Without limiting Seller’s general right to make changes, Buyer specifically agrees that the changes described above, changes to Units to cause same to be readily accessible for handicapped persons and/or to otherwise comply with applicable disability requirements of City, State or Federal law and changes in the location of utility (including, but not limited to, television, intranet, internet, antennae and telephone and other technologies, equipment and wiring) lead-ins and outlets, air-conditioning equipment, ducts and components, lighting fixtures and electric panel boxes, and in the general layout of the Unit and Condominium, may be made by Seller in its discretion. To the extent that Unit is constructed and finished in a manner to be readily accessible to handicapped persons and/or to otherwise comply with applicable disability requirements of City, State or Federal law, Buyer understands and agrees that the Unit must be maintained in that condition and that Buyer shall be precluded from altering those features of the Unit.

(b) In furtherance of the understanding and agreement stated above, Buyer acknowledges and agrees that it is a widely observed construction industry practice for pre-construction plans and specifications for any unit or building to be changed and adjusted from time to time in order to accommodate on-going, “in the field” construction needs. These changes and adjustments are essential in order to permit all components of the Unit and the Building to be integrated into a well-functioning and aesthetically pleasing product in an expeditious manner. Because of the foregoing, Buyer acknowledges and agrees that it is to Buyer’s benefit to allow Seller the flexibility to make such changes in the Unit and the Condominium.

(c) Buyer further understands and agrees that Seller may, in its sole and absolute discretion, determine to build- out certain units in the Condominium in a manner designed to be handicapped accessible, which may include, without limitation, the installation of grab bars and alterations to the standard floor plan for the Unit. In the event that Seller elects to build-out the Unit in such manner, Buyer shall be deemed to have authorized and agreed to same, and to accept same at closing, without claim against Seller. Buyer further understands and agrees that Buyer may not make any alteration to the Unit subsequent to closing that may affect its suitability for handicapped persons.

(d) Buyer further acknowledges and agrees that (i) the plans and specifications for the Unit and the Condominium on file with the applicable governmental authorities may not, initially, be identical in detail to Seller’s Plans and Specifications, and (ii) because of the day-to-day nature of the changes described in this Section 14, the plans and specifications on file with applicable governmental authorities may not include some or any of these changes (there being no legal requirement to file all changes with such authorities). As a result of the foregoing, Buyer and Seller both acknowledge and agree that the Unit and the Condominium may not be constructed in accordance with the plans and specifications on file with applicable governmental authorities. Without limiting the generality of Section 28, Seller disclaims and Buyer waives any and all express or implied warranties that construction will be accomplished in compliance with such plans and specifications. Seller has not given and Buyer has not

relied on or bargained for any such warranties. In furtherance of the foregoing, in the event of any conflict between the actual construction of the Unit and/or the Building, and that which is set forth on the plans, Buyer agrees that the actual construction shall prevail and to accept the Unit and Building as actually constructed (in lieu of what is set forth on the plans).

(e) Buyer understands and agrees that in designing the Condominium, the stairwells within the Condominium Property are intended primarily for ingress and egress in the event of emergency and, as such may be constructed and left unfinished solely as to be functional for said purpose, without regard to the aesthetic appearance of said stairwells. Similarly, the garage and utility pipes serving the Condominium are intended primarily for functional purposes, and as such may be left unfinished without regard to the aesthetic appearance of same. Further, Buyer hereby acknowledges and agrees that the potential for sound and/or odor transmission in a multi-story building is always a possibility, that noises and/or odors from nearby units and/or mechanical equipment can often be detected in other units. Without limiting the generality of Section 28, Seller does not make any representation or warranty as to the level of sound and/or odor transmission between and among Units, vibrations from HVAC and/or mechanical equipment and the other portions of the Condominium Property, and Buyer hereby waives and expressly releases any such warranty and claim for loss or damages resulting from vibration, sound and/or odor transmission. Lastly, Buyer understands and agrees that there are various methods for calculating the square footage and dimensions of a Unit and that depending on the method of calculation, the measured square footage of the Unit may be more or less than Buyer had anticipated. Typically, marketing materials will calculate the dimensions of the Unit from the exterior boundaries of the exterior walls to the centerline of interior demising walls, including common elements such as structural walls and other interior structural components of the building. Architectural or marketing size is larger than the size of the Unit determined strictly in accordance with the boundaries of the Unit set forth in the Declaration. Additionally, references in marketing materials to ceiling heights are generally taken from the top of the unfinished floor slab to the underside of the upper unfinished concrete slab, which is greater than the actual clearance that will result between the top of the finished floor coverings and the underside of the finished ceiling as same may be affected by any drop ceilings or soffits, including without limitation to accommodate mechanical equipment. Any listed ceiling heights are approximate and subject to change. Accordingly, during the pre-closing inspection, Buyer should, among other things, review the size and dimensions of the Unit. Buyer shall be deemed to have conclusively agreed to accept the size and dimensions of the Unit, regardless of any variances in the square footage from that which may have been disclosed to Buyer at any time prior to closing, whether included as part of the Condominium Documents, Seller’s promotional materials or otherwise. Without limiting the generality of any other provision of this Agreement, Seller does not make any representation or warranty as to the actual size, dimensions or square footage of the Unit, and Buyer hereby waives and expressly releases any such warranty.

(f) The agreements and waivers of Buyer contained in this Section 14 will survive (continue to be effective after) the closing.

15. Certain Items and Materials .

(a) Buyer understands and agrees that certain items, if included with the Unit, such as tile, marble, stone, granite, cabinets, wood, stain, grout, wall and ceiling textures, mica, carpeting, light fixtures, wall coverings, floor coverings and other improvements, are subject to size and color variations, grain and quality variations, and may vary in accordance with price, availability and changes by manufacturer from those shown in the models or in illustrations or included in Seller's Plans and Specifications or in the published list of standard items (if any). If circumstances arise which, in Seller’s opinion, warrant changes of suppliers, manufacturers, brand names, Standard Finishes (if applicable), models or items, design professionals, including, without limitation, any interior designer or architect, or if Seller elects to omit certain items, Seller may modify the interior design concepts and the list of

standard features and/or Standard Finishes (if applicable) or make substitutions for equipment, material, appliances, brands, models, etc., with items which in Seller’s opinion are of equal or better quality (regardless of cost). Buyer also understands and agrees that Seller has the right to substitute or change materials and/or stain colors utilized in wood decor (if any). Buyer recognizes that certain colors as shown in displays or in the models, including, but not limited to, stone, marble, granite, cabinetry, carpeting and wood stain, will weather and fade and may not be duplicated precisely.

(b) If Seller allows Buyer to select certain colors and/or materials in the Unit (which Seller is not obligated to do), Buyer understands and agrees that Buyer must submit Buyer's selections to Seller in writing within fourteen days after the date the list of selections (if any) is made available to Buyer. If these selections (if any) are not delivered to Seller in writing within the time period stated above, then it is agreed and understood that the choices will be made by Seller in Seller's sole discretion.

(c) The agreements and waivers of Buyer contained in this Section 15 will survive (continue to be effective after) closing.

16. Litigation .

(a) In the event of any litigation between the parties under this Agreement, the prevailing party shall be entitled to reasonable attorneys’, paralegals’ and para-professionals’ fees and court costs at all trial and appellate levels. In addition, in the event of any litigation between the parties related to this Purchase Agreement (i) the parties shall and hereby submit to the personal jurisdiction of the state and federal courts of the State of Florida and (ii) venue shall be laid exclusively in Miami-Dade County, Florida.

(b) SELLER AND BUYER AGREE THAT NEITHER SELLER, BUYER, NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF SELLER OR BUYER (ALL OF WHOM ARE HEREINAFTER REFERRED TO AS THE “PARTIES”) SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDINGS, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE CONDOMINIUM DOCUMENTS, ANY RULES OR REGULATIONS OF THE ASSOCIATION, OR ANY INSTRUMENT EVIDENCING OR RELATING TO ANY OF THE FOREGOING, OR ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY ACTIONS, DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE PARTIES, OR ANY OF THEM. NONE OF THE PARTIES WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY NEGOTIATED BY THE PARTIES AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. SELLER HAS NOT IN ANY WAY INDICATED THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

(c) Inasmuch as Buyer’s decision to purchase a Unit is personal and the circumstances regarding the offering of the Unit may unique to Buyer, Buyer agrees that BUYER SHALL NOT JOIN OR CONSOLIDATE CLAIMS WITH OTHER PURCHASERS OF UNITS OR LITIGATE IN COURT OR THROUGH OTHER FORMS OF PROCEEDINGS ANY CLAIMS AS A REPRESENTATIVE OR MEMBER OF A CLASS OR IN A PRIVATE ATTORNEY GENERAL CAPACITY.

(d) This Section will survive (continue to be effective after) any termination of this Agreement, but shall otherwise be deemed merged into the deed at closing.

17. Maintenance Fee . Buyer understands and agrees that the Estimated Operating Budget for the Association (the “Budget”) contained in the Condominium Documents provides only an estimate of what it will cost to run the Association during the period of time stated in the Budget. The Budget is not guaranteed to accurately predict actual expenditures. Actual expenditures may vary based upon a number of factors, many of which are out of Seller’s control. These factors include, without limitation, changes in costs, wages, environmental considerations and the effects of natural disasters. In making a decision to acquire the Unit, Buyer should factor in these potential increases in the Budget that may occur prior to closing, and after (and the resultant increases in the assessment amounts). Seller, as the sole Unit Owner upon the formation of the Condominium, may vote not to provide any reserves for the initial year of the Association following recording the Substantial Completion Certificate. Thereafter, on an annual basis, a majority of the Association’s members (which may include the Seller/Developer during the first and second years) may vote to continue not to provide any reserves. If an election is in fact made to waive reserves, the assessments per Unit payable to the Association will be as set forth in the Estimated Operating Budget as “Assessments per Unit-Without Reserves”. If no such election is made, the assessments per Unit payable to the Association will be as set forth in the Estimated Operating Budget as “Assessments per Unit - With Reserves”. The provisions of this Section 17 will survive (continue to be effective after) closing.

18. Condominium Association . This Agreement is also Buyer’s application for membership in the Association, which membership shall automatically take effect at closing. At that time, Buyer agrees to accept all of the liabilities and obligations of membership.

19. Seller’s Use of the Condominium Property . As long as Seller owns a unit or units and is offering same for sale in the ordinary course of business, it and its agents are hereby given full right and authority to place and maintain on, in and about the Condominium Property and/or Association Property (excluding the Unit after closing) model units, sales and leasing offices, administrative offices, signs and lighting related to construction and sales promotion purposes, for such period of time, at such locations and in such forms as shall be determined by Seller in its sole and absolute discretion. Seller, its employees, agents, contractors, sub-contractors and prospective buyers are also hereby given, for construction and sales promotion purposes, the right of entry upon, ingress to, egress from and other use of the Condominium and/or Association Property (excluding the Unit after closing), and the right to restrict and regulate access to the Common Elements and/or Association Property, subject to Buyer’s reasonable access to and from the Unit after closing, for the purposes of completing construction of the Common Elements, Association Property and/or other units within the Condominium. Seller’s salespeople can show units, the Association Property and/or the Common Elements, erect advertising signs and do whatever else is necessary in Seller’s opinion to help sell, resell, finance or lease units or other portions of any improvements to be constructed upon the Condominium Property or develop and manage the Condominium Property and/or Association Property and/or to provide management and administration and/or financial services, but Seller’s use of the Condominium Property and/or Association Property must be reasonable, and cannot unreasonably interfere with Buyer’s use and enjoyment of the Unit. This Section will survive (continue to be effective after) closing.

20. Sales Commissions . Seller will pay all sales commissions due its in-house sales personnel and/or exclusive listing agent and the co-broker, if any, identified on the last page of this Agreement (if such space is left blank, it shall mean that Seller has not agreed to pay any co-broker and that Buyer represents that there is no co-broker who can claim by, through or under Buyer), provided that such co-broker has properly registered with Seller as a participating co-broker. Seller has no responsibility to pay any sales commissions to any other broker or sales agent with whom Buyer has dealt. Buyer will be solely responsible to pay any such other brokers. By signing this Agreement, Buyer is representing and warranting to Seller that Buyer has not consulted or dealt with any broker, salesperson, agent or finder other than Seller’s sales personnel (and the co-broker, if any, named on the last page of this Agreement),

nor has the sale been procured by any real estate broker, salesperson, agent or finder other than Seller’s sales personnel (and the co-broker, if any, named on the last page of this Agreement). Buyer will defend (with counsel acceptable to Seller), indemnify and hold Seller harmless for and from any such person or company claiming otherwise. Buyer’s indemnity and agreement to hold Seller harmless includes, without limitation, Buyer’s obligation to pay or reimburse Seller for all commissions, damages and other sums for which Seller may be held liable and all attorneys’ fees and court costs actually incurred by Seller (including those for appeals), regardless of whether a lawsuit(s) is actually brought or whether Seller ultimately wins or loses. This Section 20 will survive (continue to be effective after) closing and any termination of this Agreement.

21. Notices .

(a) Whenever Buyer is required or desires to give notice to Seller, the notice must be in writing and it must be sent by: (i) certified mail, postage prepaid, with a return receipt requested (ii) hand delivery or (iii) a recognized overnight courier service (i.e., Fed Ex, United Parcel Service, etc.), to Seller at 315 S. Biscayne Boulevard, 4th Floor, Miami, Florida 33131, Attn: Hyde Beach House Resort & Residences Project Manager, or to such other address as Seller may otherwise direct.

(b) Unless this Agreement states other methods of giving notices, whenever Seller is required or desires to give notice to Buyer, the notice must be given either in person, by telephone ( to the telephone number indiated on page 1 of this Agreement) or in writing and, if in writing, it must be sent either by: (i) certified mail, postage prepaid, with a return receipt requested (unless sent outside of the United States, in which event written notices to Buyer may be sent by regular air mail); (ii) facsimile transmission if Buyer has indicated a telecopy number on Page 1 of this Agreement; (iii) electronic transmission, if Buyer has indicated an email address on Page 1 of this Agreement; or (iv) hand delivery or by recognized overnight courier service (i.e., Fed Ex, Express Mail, United Parcel Service, etc.), to the address for Buyer set forth on Page 1 of this Agreement. By giving the telephone number, telecopy number and/or email address on Page 1 of this Agreement, Buyer hereby consents to receiving telephonic, facsimile and/or email communications, including advertisements, as applicable, made or given by Seller hereunder.

(c) A change of address notice is effective when it is received. As to other notices, notices delivered by certified mail, shall be deemed received by Buyer on the date that the postal service first attempts delivery of the notice at the Buyer’s address (regardless of whether delivery is accepted). Notices delivered by facsimile transmission shall be deemed received on the date that Seller gets confirmation (from the sending machine) that the facsimile was transmitted to the receiving facsimile number. Notices delivered by electronic transmission (e-mail) shall be deemed received by Buyer on the date sent by Seller. Notices delivered by hand delivery or overnight courier service shall be deemed received on the date that the delivery service or overnight courier service first attempts delivery of the notice at the Buyer’s address (regardless of whether delivery is accepted). All permitted non-written notices to Buyer are deemed received on the date given by Seller. Further, Buyer expressly understands and agrees that all notices from Seller are and will be in English and to the extent that any person prepares a translation thereof, the English original version nevertheless is controlling.

22. Transfer or Assignment . Buyer shall not be entitled to assign this Agreement or its rights hereunder without the prior written consent of Seller, which may be withheld by Seller with or without cause (and even if Seller’s refusal to grant consent is unreasonable). To the extent that Seller consents to any such assignment, said consent may be conditioned in any manner whatsoever, including, without limitation, charging an assignment or transfer fee and requiring full disclosure of any beneficial owners or any proposed assignee that is an entity. Any such assignee that is consented to by Seller must fully assume all of the obligations of Buyer hereunder by written agreement for Seller’s benefit, a counterpart

original executed copy of which shall be delivered to Seller. If Buyer is a corporation, partnership, other business entity, trustee or nominee, a direct or indirect transfer of a majority interest in any stock, voting interest, partnership interest, membership interest, equity, beneficial or principal interest in Buyer will constitute an assignment of this Agreement requiring prior written consent by Seller. No assignment or transfer in violation of the restrictions set forth herein shall be valid or binding on Seller.Without limiting the generality of the foregoing, Buyer shall not, prior to closing on title to the Unit, unless first obtaining the prior written consent of Seller (which may be granted or withheld in Seller’s sole and absolute discretion) (i) advertise, market and/or list the Unit for lease, sale or resale, whether by placing an advertisement, listing the Unit with a broker, posting signs at the Unit or at the Condominium, allowing the Unit to be listed for sale on the internet or the Multiple Listing Service, hiring a broker, directly or indirectly, to solicit interest in a resale or otherwise, or (ii) enter into any contract or agreement, written or otherwise, for the sale or lease of the Unit with a third party. Notwithstanding any permitted assignment or transfer of any interest in this Agreement and/or the Unit, nothing shall relieve or release Buyer from any obligations or liabilities under this Agreement.

23. Others Bound by this Agreement . If Buyer dies or in any way loses legal control of Buyer’s affairs, this Agreement will bind Buyer’s heirs and personal representatives. If Buyer has received permission to assign or transfer Buyer’s interest in this Agreement, this Agreement will bind anyone receiving such interest. If Buyer is a corporation or other business entity, this Agreement will bind any successor corporation or entity resulting from merger, reorganization or operation of law. If more than one person signs this Agreement as Buyer, each will be equally liable, on a joint and several basis, for full performance of all Buyer’s duties and obligations under this Agreement and Seller can enforce this Agreement against either as individuals or together.

24. Public Records . Buyer authorizes Seller to record the documents needed to establish and operate the Condominium, as well as all other documents which Seller deems necessary or appropriate, in the Public Records of Broward County, Florida. Neither this Agreement, nor any notice or memorandum hereof (nor any Lis Pendens), may be recorded by Buyer. Buyer further agrees not to seek to impose any type of lien or other claim upon the Unit or all or any portion of the Condominium, equitable or otherwise, and any right to impose or seek any such lien or other claim is hereby knowingly, fully and unconditionally waived by Buyer.

25. Florida Law; Severability .

(a) Any disputes that develop under this Agreement and any issues that arise regarding the entering into, validity and/or execution of this Agreement will be settled according to Florida law. If any part of this Agreement violates a provision of applicable law, the applicable law will control. In such case, however, the rest of this Agreement (not in violation) will remain in force.

(b) Without limiting the generality of the foregoing, it is Buyer’s and Seller’s mutual desire and intention that all provisions of this Agreement be given full effect and be enforceable strictly in accordance with their terms. If, however, any part of this Agreement is not enforceable in accordance with its terms or would render other parts of this Agreement or this Agreement, in its entirety, unenforceable, the unenforceable part or parts are to be judicially modified, if at all possible, to come as close as possible to the expressed intent of such part or parts (and still be enforceable without jeopardy to other parts of this Agreement, or this Agreement in its entirety), and then are to be enforced as so modified. If the unenforceable part or parts cannot be so modified, such part or parts will be unenforceable and considered null and void in order that the mutual paramount goal (that this Agreement is to be enforced to the maximum extent possible strictly in accordance with its terms) can be achieved.

(c) Without limiting the generality of the foregoing, if the mere inclusion in this Agreement of language granting to Seller certain rights and powers, or waiving or limiting any of Buyer’s rights or powers or Seller’s obligations (which otherwise would be applicable in the absence of such language), results in a final conclusion (after giving effect to the above judicial modification, if possible) that Buyer has the right to cancel this Agreement and receive a refund of Buyer’s deposits, such offending rights, powers, limitations and/or waivers shall be struck, canceled, rendered unenforceable, ineffective and null and void. Under no circumstances shall either Buyer or Seller have the right to cancel this Agreement solely by reason of the inclusion of certain language in this Agreement (other than language which is intended specifically to create such a cancellation right).

(d) The provisions of this Section 25 will sirvivie ( continue to be effective) after closing.

26. Changes .

(a) Seller may make changes in the Condominium Documents in its sole discretion by providing Buyer with all such amendments that are made. Buyer will not be permitted to prevent Seller from making any change it wishes in its sole discretion.

(b) Without limiting the generality of the foregoing and other provisions of this Agreement, Seller is specifically authorized to: (i) substitute the final legal descriptions and as-built surveys for the proposed legal descriptions and plot plans contained in the Condominium Documents even though changes occur in the permitting stage and during construction, and/or (ii) combine and/or subdivide units prior to or after the recordation of the Declaration (and incorporate divider wall Common Elements in any such combination units or add Common Element divider walls in any such subdivision), provided that the percentage share of ownership of common elements of any unit not affected in the combination or subdivision is not affected. and/or (iii) update the Condominium Documents to reflect any changes in the Florida Condominium Act adopted by the Legislature (and/or changes to the Administrative Rules adopted by the Division) after the date of this Agreement. Buyer understands and agrees that Seller has no control over changes to the Act and/or Administrative Rules and as such, that Seller shall have no liability with respect to its incorporation of these changes.

27. Nearby Activities and Views .

(a) Buyer understands and agrees that for some time in the future Buyer may be disturbed by the noise, commotion and other unpleasant effects of the nearby activities and that Buyer may be impeded in using portions of the Condominium Property, any one or more of those activities. Demolition or construction of buildings and other structures within the immediate area or within the view lines of any particular Unit or of any part of the Condominium (the “Views”) may block, obstruct, shadow or otherwise affect Views, which may currently be visible from the Unit or from the Condominium.

(b) As a result of the foregoing, there is no guarantee of view, security, privacy, location, design, density or any other matter, except as is set forth herein or in the Condominium Documents. Buyer hereby agrees to release Seller, its partners and/or members and its and their officers, members, directors and employees and every affiliate and person related or affiliated in any way with any of them (collectively, “Seller’s Affiliates”) from and against any and all losses, claims, demands, damages, costs and expenses of whatever nature or kind, including attorneys’ fees and costs, including

those incurred through all arbitration and appellate proceedings, related to or arising out of any claim against the Seller or Seller’s Affiliates related to Views or the disruption, noise, commotion, and other unpleasant effects of nearby development or construction, or from any other inconveniences, disturbances, obligations and/or liabilities resulting therefrom.

(c) Additionally, inasmuch as the Commercial Units and the resort-type operations may attract customers, patrons and/or guests who are not members of the Condominium Association, such additional traffic over and upon the Condominium Property and other incidental effects of such operation shall not be deemed by the Buyer to be a nuisance hereunder. [Is this necessary the way it is drafted?]

(d) The provisions of this Section 27 shall survive (continue to be effective after) closing.

28. Disclaimer of Implied Warranties .

(a) All manufacturers’ warranties will be passed through to Buyer at closing.

(b) At closing, Buyer will receive the statutory warranties imposed by the Florida Condominium Act (to the extent applicable and not yet expired). To the maximum extent lawful, all implied warranties of fitness for a particular purpose, merchantability and habitability, all warranties imposed by statute (except only those imposed by the Florida Condominium Act to the extent they cannot be disclaimed and to the extent they have not expired by their terms) and all other implied or express warranties of any kind or character, including, without limitation, any imposed by statute, ordinance or common law, are specifically disclaimed. Without limiting the generality of the foregoing, Seller hereby disclaims any and all express or implied warranties as to design, construction, View, wind, sound and/or odor transmission, furnishing and equipping of the Condominium Property and the other improvements serving or in proximity to the Condominium, the existence of molds, mildew, spores, fungi and/or other toxins within the Condominium Property and the other improvements serving or in proximity to the Condominium, except only those set forth in Section 718.203 of the Act, to the extent applicable and to the extent that same have not expired by their terms. Seller has not given and Buyer has not relied on or bargained for any such warranties.

(c) As to any implied warranty which cannot be disclaimed entirely, all secondary, incidental and consequential damages are specifically excluded and disclaimed (claims for such secondary, incidental and/or consequential damages being clearly unavailable in the case of implied warranties which are disclaimed entirely above). Buyer acknowledges and agrees that Seller does not guarantee, warrant or otherwise assure, and expressly disclaims, any right to Views and/or Views and/or natural light.

(d) Additionally, properties in South Florida are subject to tropical conditions, which may include sudden, heavy rain storms, high blustery winds, hurricanes and/or flooding. These conditions may be extreme, creating sometimes unpleasant or uncomfortable conditions or even unsafe conditions, and can be expected to be more extreme at properties like the Condominium. At certain times, the conditions may be such where use and enjoyment of outdoor amenities such as the pool or pool deck and/or other areas may be unsafe and/or not comfortable or recommended near the water for use and/or occupancy. These conditions are to be expected at properties near the water for use and/or occupancy. Buyer understands and agrees to accept these risks and conditions and to assume all liabilities associated with same. By executing and delivering this Agreement and closing, Buyer shall be deemed to have released and indemnified Seller, Seller’s Affiliates and Seller’s third party consultants, including without limitation, Seller’s architect, contractors and engineers from and against any and all liability or claims

resulting from all matters disclosed or disclaimed in this Section, including, without limitation, any liability for incidental or consequential damages (which may result from, without limitation, inconvenience and/or personal injury and death to or suffered by Buyer or any of Buyer’s Guests as defined below and any other person or any pets). Buyer understands and agrees that neither Seller, Seller’s Affiliates, nor any of Seller’s third party consultants, including without limitation, Seller’s architect, contractors and engineers shall be responsible for any of the conditions described above, and Seller hereby disclaims any responsibility for same which may be experienced by Buyer, its pets, its family members and/or its or their guests, tenants and/or invitees (collectively “Buyer’s Guests”).

(e) Further, given the climate and humid conditions in South Florida, molds, mildew, spores, fungi and/or other toxins may exist and/or develop within the Unit and/or the Condominium Property. Buyer is hereby advised that certain molds, mildew, spores, fungi and/or other toxins may be, or if allowed to remain for a sufficient period may become, toxic and potentially pose a health risk. By executing and delivering this Agreement and closing, Buyer shall be deemed to have assumed the risks associated with molds, mildew, spores, fungi and/or other toxins and to have released and indemnified Seller, Seller’s Affiliates and Seller’s third party consultants, including without limitation, Seller’s architect, contractors and engineers from and against any and all liability or claims resulting from same, including, without limitation, any liability for incidental or consequential damages (which may result from, without limitation, the inability to occupy the Unit, inconvenience, moving costs, hotel costs, storage costs, loss of time, lost wages, lost opportunities and/or personal injury and death to or suffered by Buyer and/or any of Buyer’s Guests and any other person or any pets). Without limiting the generality of the foregoing, leaks, leaving exterior doors or windows open, wet flooring and moisture will contribute to the growth of mold, mildew, fungus or spores. Buyer understands and agrees that neither Seller, Seller’s Affiliates, nor any of Seller’s third party consultants, including without limitation, Seller’s architect, contractors and engineers shall be responsible, and Seller hereby disclaims any responsibility for any illness or allergic reactions which may be experienced by Buyer, and/or Buyer’s Guests as a result of mold, mildew, fungus or spores. It is solely the Buyer’s responsibility to keep the Unit clean, dry, well-ventilated and free of contamination.

(f) This Section will survive (continue to be effective after) closing.

29. Survival . Only those provisions and disclaimers in this Agreement which specifically state that they shall have effect after closing will survive (continue to be effective after) closing and delivery of the deed. All other provisions shall be deemed merged into the deed.

30. Substantial Completion . The Unit will not be considered complete for purposes of this Agreement unless the Unit (and such portion of the Building intended to be used exclusively by Buyer) is physically habitable and usable for the purpose for which the Unit was purchased (i.e., as the front desk of the Condo-Hotel). The Unit (and such portion of the Building intended to be used exclusively by Buyer) will be considered so useable if (i) the Unit is ready for occupancy and has all necessary and customary utilities required so that the same may operate as the front desk for the Condominium and (ii) access to the Unit from a readily accessible entrance to the Building is complete or substantially complete. The issuance of a temporary, partial or permanent certificate of completion (or its equivelent) for or covering the Unit from the proper governmental agency shall be deemed conclusive evidence that the Unit is considered substantially complete for purposes of this Agreement. Other units (and other portions of the Building, Common Elements and/or recreational facilities) may not necessarily be complete and/or useable. As to any roads, sewers, water, gas or electric service or recreational amenities represented by Seller or its agents to be provided or completed by Seller in connection with the Condominium, Seller agrees to provide or complete same within a reasonable period of time. Buyer and Seller agree that this is an agreement for the purchase and sale of an improved lot. Seller agrees that no closing shall occur until the certificate required by Section 718.104(4)(e), Florida Statutes is recorded.

31. Disclosures . Buyer is hereby advised as follows:

(a) RADON GAS: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county health department. The foregoing notice is provided in order to comply with state law and is for informational purposes only. Seller does not conduct radon testing with respect to the Units or the Condominium, and specifically disclaims any and all representations or warranties as to the absence of radon gas or radon producing conditions in connection with the Condominium.

(b) Buyer acknowledges, warrants, represents and agrees that this Agreement is being entered into by Buyer without reliance upon any representations concerning the applicable zoning affecting the Unit, the permitted uses of the Unit and/or any limitations imposed by the Condominium Documents and/or any applicable zoning, governmental or quasi-governmental codes, ordinances or regulations. Before entering into this Agreement, Buyer has made its own independent determination as to the permitted uses of the Unit and as to the suitability of the Unit for such uses.

(d) BUYER SHOULD NOT RELY ON THE SELLER’S CURRENT PROPERTY TAXES AS THE AMOUNT OF PROPERTY TAXES THAT THE BUYER MAY BE OBLIGATED TO PAY IN THE YEAR SUBSEQUENT TO PURCHASE. A CHANGE OF OWNERSHIP OR PROPERTY IMPROVEMENTS TRIGGERS REASSESSMENTS OF THE PROPERTY THAT COULD RESULT IN HIGHER PROPERTY TAXES. IF YOU HAVE ANY QUESTIONS CONCERNING VALUATION, CONTACT THE COUNTY PROPERTY APPRAISER’S OFFICE FOR INFORMATION.

(e) When a condominium is newly created, the full value of the units in the condominium are typically not reflected in the real estate taxes until the calendar year commencing after construction has been completed. The County Property Appraiser is responsible for determining the assessed value of the Unit for real estate taxes, and Seller has no control over the assessed value established by governmental authorities. Seller is not responsible for communicating any information regarding real estate taxes (current or future) and cannot and will not predict what taxes on the Unit may be. Buyer will confirm any information provided concerning appraisals, tax valuation, tax rates, or other tax-related questions with Buyer’s personal tax advisor and the local taxing authorities.

(f) THE BUDGET CONTAINED IN THIS OFFERING CIRCULAR HAS BEEN PREPARED IN ACCORDANCE WITH THE CONDOMINIUM ACT AND IS A GOOD FAITH ESTIMATE ONLY AND REPRESENTS AN APPROXIMATION OF FUTURE EXPENSES BASED ON FACTS AND CIRCUMSTANCES EXISTING AT THE TIME OF ITS PREPARATION. ACTUAL COSTS OF SUCH ITEMS MAY EXCEED THE ESTIMATED COSTS. SUCH CHANGES IN COST DO NOT CONSTITUTE MATERIAL ADVERSE CHANGES IN THE OFFERING.

(g) Buyer understands and agrees that a portion of the Building, which includes the lobby and other Common Elements may be located below the federal flood plain, and, accordingly, it is susceptible to damage from flooding. In the event of flooding, any furnishings, finishes, contents or personal property is susceptible to water damage. Additionally, insurance premiums for the Association in insuring the ground level and any furnishings, finishes, contents and/or personal properly therein may be higher than if the ground level was above the federal flood plain. Buyer assumes any responsibility for loss, damage or liability resulting therefrom.

(h) Buyer further agrees, prior to closing, not to seek to impose any type of lien or other claim upon the Unit, equitable or otherwise, and any right to impose or seek any such lien or other claim is hereby knowingly, fully and unconditionally waived by Buyer.

(i) Pursuant to the Zoning Regulations, restrictions exist on the Resort Units As such, pursuant to the Zoning Regulations, among other things, a portion of the Condominium is structured to operate as a Condo-Hotel and otherwise in accordance with the Zoning Regulations. In that regard, no Resort Unit may be occupied by their owner(s) for more than a total of 150 days in any consecutive 12 month period, except the resident manager room, if any, and no permanent occupancy is permitted in the Resort Units. Additionally, the costs to maintain the Condominium in such a manner, and otherwise in accordance with the Zoning Regulations, shall be part of the Common Expenses or Residential Limited Common Expenses.

(j) Buyer expressly understands and agrees that Seller intends to use Buyer’s deposits (both up to [provided that Seller has placed Alternative Assurances approved by the Division], and in excess of 10% of the Purchase Price of the Unit) in order to fund a significant portion of construction and development of the Condominium, all in accordance with the provisions of Section 4 hereof and applicable Florida law.

(k) In accordance with the Development Covenants, certain third parties who are not Members of the Association (the “Marina Third Parties”), have the right (but not the obligation), subject to obtaining applicable governmental approvals, to construct, operate, maintain and exclusively use a marina within and upon the Common Elements of the Condominium. To the extent that any marina is constructed, the maintenance, repair and replacement of same shall be the obligation of the Association, and the costs associated therewith shall be a Common Expense, however the Association may have the right to delegate such obligations and/or to seek reimbursement for same from, the Marina Third Parties. The use and operation of any marina shall be subject to the rules and regulations established by the Marina Third Parties, the provisions of the Development Covenants and rules and regulations otherwise established by the Association from time to time and there is no guarantee that same shall be made available to the Condominium. Seller is seeking to obtain approvals from the Marina Third Parties, to permit an Aqua Club (for the launching of paddle boards, jet skis and the like) to be operated from the marina, to the extent constructed, for the benefit of Unit Owners and their guests, tenants and invitees, however Seller makes no representation that such use rights will be obtained. Accordingly, Buyer, in making a decision to acquire a Unit, has not relied upon the availability of a marina and/or Aqua Club.

32. Representations and Confirmations . Buyer should initial where indicated to evidence its agreement to each of the following:

(a) _______ _______ Buyer acknowledges, warrants, represents and agrees that this Agreement is being entered into by Buyer without reliance upon any representations concerning any potential for future profit, any future appreciation in value, any rental income potential, tax advantages, depreciation or investment potential and without reliance upon any brand or hotel affiliation or any monetary or financial advantages.

(b) _______ _______ Buyer acknowledges, warrants, represents and agrees that no statements or representations have been made by Seller, Seller’s Affiliates or any of its agents, employees or representatives with respect to (i) the ability or willingness of Seller or Seller’s Affiliates to assist Buyer in financing, renting or selling the Unit (except only in response to a direct inquiry from Buyer), (ii) the economic or tax benefits to be derived from the managerial efforts of a third party as a result of renting the Unit or other units, or (iii) the economic or tax benefits to be derived from ownership of the Unit.

(c) _______ _______ Buyer acknowledges, warrants, represents and agrees that no such representations, including representations as to the ability or willingness of Seller or Seller’s Affiliates to assist Buyer in financing, renting or selling the Unit, have been made by Seller or Seller’s Affiliates, or any of its agents, employees or representatives. Buyer further represents and warrants to Seller that Buyer is entering into this Agreement with the full intention of complying with each and every of the obligations hereunder, including, without limitation, the obligation to close on the purchase of the Unit. Neither Seller, Seller’s Affiliates nor anyone working by, through or under Seller, has made any statement or suggestion that Buyer would not be obligated to fully comply with the terms of this Agreement and to close on the purchase of the Unit. Further, Buyer understands and agrees that neither Seller, Seller’s Affiliates nor any brokerage company, on site sales personnel and/or other persons working by, through or under Seller, are under any obligation whatsoever to assist Buyer with any financing or resale of the Unit.

(d) _______ _______ Buyer acknowledges, warrants, represents and agrees that Buyer has not relied upon any verbal representations, advertising, portrayals or promises other than as expressly contained herein and in the Condominium Documents, including, specifically, but without limitation, any representations as to: (a) potential appreciation in or resale value of the Unit, (b) the existence of any “view” from the Unit or that any existing “view” will not be obstructed in the future, (c) traffic conditions in, near or around the Condominium, (d) disturbance from nearby properties and/or operations within the Condominium, (e) disturbance from air or vehicular traffic and/or, (f) any particular brand affiliation or maintaining any existing brand or hotel affiliation or (g) any particular design professional, including, without limitation, any decorator or architect (it being understood that the Seller reserves the right to change and/or replace any and all members of its design team at any time, in Seller’s discretion).

(e) _______ _______ Neither The Related Group, Key International (“Key International”), 13th Floor Investment (“13th Floor”) nor Silverbeck Equity Partners LLC is the project developer. This Condominium is being developed by the Developer, 4000 South Ocean Property Owner, LLLP, a Delaware limited liability limited partnership, which has an affiliation with The Related Group, Key International, 13th Floor and Silverbeck Equity Partners LLC and a limited right to use the trademarked names and logos of RELATED, THE RELATED GROUP, TRG, ANOTHER RELATED PROJECT and associated marks, variations, logos and stylized forms pursuant to a license and marketing agreement with The Related Group. Any and all statements, disclosures and/or representations shall be deemed made by Developer and not by The Related Group, Key International, and Buyer agrees to look solely to Developer Key International, 13th Floor Investments or Silverbeck Equity Partners LLC and/or any of their affiliates) with respect to any and all matters relating to the marketing and/or development of the Condominium and with respect to the sales of units in the Condominium.

(f) Buyer represents and warrants to Seller and to Seller’s Affiliates, that neither Buyer (including any and all of its directors and officers and direct and indirect owners), nor any of its affiliates or the funding sources for either is a Specially Designated National or Blocked Person. Neither Buyer 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. Neither Buyer nor any of its affiliates is acting on behalf of a government of any country that is subject to such an embargo. Buyer further represents and warrants that it is in compliance with any applicable anti-money laundering laws, including without limitation, the USA Patriot Act. Buyer agrees it will notify Seller in writing immediately upon the occurrence of any event which would render the foregoing representations and warranties of this Section incorrect. For purposes hereof, a “Specially Designated National or Blocked Person” means: (i) a person designated by the U.S. Department of Treasury’s Office of Foreign Assets Control, or other governmental entity, 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 Seller or Seller’s Affiliates, is prohibited from transacting business. As of the Effective Date, a list of such designations and the text of the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac .

(g) The provisions of this Section shall survive (continue to be effective after) the closing.

33. Brand Disclaimers .

(a) _______ _______ Buyer understands and agrees that the Condominium Association intends (without creating any obligation) to enter into a Brand Agreement (initially with SBE Hotel Group, to allow the Condominium and resort operations therefrom to be referred to as “Hyde Beach House Resort & Residences”). The cost of any such Brand Agreement shall be part of the Common Expenses and/or Residential Limited Common Elements. The terms, parameters and conditions of the use of such licensing and/or branding privileges shall be governed by the Brand Agreement, under such terms and conditions as Seller and/or Association may agree, and that there is no assurance that the Brand Agreement will be perpetually afforded to Unit Owners. Accordingly, in making a decision to acquire a Unit, Buyer has not relied upon the perpetual availability of the use of the license and/or brand contemplated by any Brand Agreement. Additionally, Buyer further understands and agrees that if in fact the Condominium Association enters into a Brand Agreement and thereafter the Brand Agreement is terminated for any reason, all use of any licensed tradename, trademark or service marks shall cease and all indicia or connection between the Condominium and the licensed tradename, trademark or service marks, including signs or other materials bearing any of the licensed trademarks or servicemarks or tradenames shall be removed from the Condominium. Additionally, each Unit Owner acknowledges and agrees that any use of any Brand, licensed tradenames, trademarks or service marks, without proper licensing, is expressly prohibited.

(b) _________ __________Buyer acknowledges, warrants, represents and agrees that no activity permitted by the Declaration, including, without limitation, activities or businesses conducted from the Commercial Unit(s) and/or Limited Common Elements, shall be deemed a nuisance, regardless of any lights, noises and/or odors emanating therefrom. Buyer understands and agrees that if (without creating any obligation) restaurants, cafes, bakeries and/or other food service operations are operated from the Commercial Unit(s), such operations may result in the creation of noises and odors which may affect all portions of the Condominium Property. Accordingly, Buyer agrees (1) that such lights, noises and/or odors shall not be deemed a nuisance, (2) that neither Seller, any Commercial Unit Owner(s) nor any tenant and/or operator from the Commercial Unit(s) shall be liable for the emanation of such distracting lights, noises, odors and/or any damages resulting therefrom, and (3) to have released Seller, any Commercial Unit Owner(s) and any tenant and/or operator from the Commercial Unit(s) from any and all liability resulting from same. Similarly, inasmuch as the Commercial Unit(s) may attract customers, patrons and/or guests who are not members of the Association, such additional traffic over and upon the Common Elements shall not be deemed a nuisance.

34. Intentionally Deleted.

35. Offer . The submission by Seller of this Agreement to Buyer for examination does not constitute an offer by Seller to Buyer, or a reservation of or option for any Unit in the Condominium. This Agreement shall not become binding until executed and delivered by both Buyer and Seller. Upon execution by Seller, an executed copy of this Agreement shall be sent to Buyer or Seller shall otherwise demonstrate its acceptance of Buyer’s offer, otherwise the offer shall be considered rejected.

36. Interpretation . Notwithstanding that this Agreement was prepared by one party hereto, it shall not be construed more strongly against or more favorably for either party; it being known that both parties have had equal bargaining power, have been represented (or have had the opportunity to be represented) by their own independent counsel and have equal business acumen such that any rule of construction that a document is to be construed against the drafting party shall not be applicable.

37. Designation of Registered Agent . Buyer hereby agrees that the person designated as Registered Agent on Page 1 of this Agreement is hereby unconditionally and irrevocably qualified to accept service of process on behalf of Buyer in the State of Florida, which such designation shall be irrevocable unless Buyer effectively appoints a substitute local agent and notifies Seller in writing of such substituted designation. Accordingly, service of process for all purposes under this Agreement shall be deemed to be effective if served on Buyer or on Buyer’s Registered Agent, as identified on Page 1 of this Agreement.

38. Miscellaneous . The explanations, definitions, disclaimers and other provisions set forth in the Condominium Documents are incorporated into this Agreement as if repeated at length herein. When the words “this Agreement” are used, they shall include in their meaning all modifications, riders and addenda to it signed by Buyer and Seller. Buyer acknowledges that the primary inducement for Buyer to purchase under this Agreement, is the Unit, itself, and not the recreational amenities and other Common Elements. Seller’s waiver of any of its rights or remedies (which can only occur if Seller waives any right or remedy in writing) will not waive any other of Seller’s rights or remedies or prevent Seller from later enforcing all of Seller’s rights and remedies under other circumstances. The performance of all obligations by Buyer on the precise times stated in this Agreement is of absolute importance and failure of Buyer to so perform on time is a default, time being of the essence as to all of Buyer’s obligations hereunder. Buyer understands and agrees that Buyer is not acquiring any rights or license in and/or to the name of the Condominium and/or the Condominium Association and that the name of the Condominium is not a material consideration in connection with Buyer’s purchase of the Unit. Additionally, the name of the Condominium and/or the Condominium Association may be changed by Seller, in its sole discretion. If Buyer tenders a check to Seller as all or a portion of the Purchase Price or Buyer’s deposits under the Agreement (which Seller has no obligation to accept), which check was drawn on the account of a party other than Buyer (a “Third Party Check”), Buyer represents and warrants to Seller, in order to induce Seller to accept the Third Party Check, that: (i) the party issuing the Third Party Check is not the subject of a bankruptcy case, receivership or insolvency proceeding, (ii) the Third Party Check is being given on behalf of Buyer as reasonably equivalent value for services performed and/or products delivered to such third party from Buyer and (iii) the party issuing the Third Party Check has no right, title or interest in and to the Unit and/or the Agreement and/or any portion of the Deposits. Notwithstanding the foregoing or anything contained to the contrary in the Agreement, Buyer shall remain responsible for full payment of the Purchase Price at closing, including without limitation, the Deposits. Seller shall have the right to litigate ad valorem tax matters, impact charges, service fees and interim and/or special assessments concerning the Unit, the Common Elements or any other portion of the Condominium Property for prior years and/or the year of closing. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and said counterparts shall constitute but one and the same instrument. Signatures of the parties hereto on copies of this Agreement transmitted by facsimile machine or over the Internet shall be deemed originals for all purposes hereunder, and shall be binding upon the parties hereto. The counterparts of this Agreement and all ancillary documents executed or delivered in connection with this Agreement may be executed and signed by electronic signature by any of the parties to this Agreement, and delivered by electronic or digital communications to any other party to this Agreement, and the receiving party may rely on the receipt of such document so executed and delivered by electronic or digital communications signed by electronic signature as if the original has been received. For the purposes of this Agreement, electronic signature means, without limitation, an electronic act or acknowledgement (e.g., clicking an “I Accept” or similar button), sound, symbol (digitized signature

block), or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. Executive Order 13224 restricts activities with entities, countries and persons (specifically designated nationals) set forth by the Office of Foreign Asset Control (“OFAC”). In order to check the OFAC list, Buyer must provide Seller with a government-issued identification card (for example, a driver’s license, passport, or resident alien card). To the extent Buyer’s name (or to the extent Buyer is a corporation or other entity, any person or entity constituting a part of Buyer) matches a name or entity on any such OFAC list or publication, the transactions with Buyer contemplated under or in connection with this Agreement will be immediately suspended, and Buyer shall be reported as instructed by OFAC. Additionally, to the extent that Buyer is an entity and/or trust, Buyer shall provide the following to Seller, as applicable, within thirty (30) days following the execution of the Agreement (collectively, the “Entity Conditions”): (i) a copy of the entity’s formation documents and/or trust documents, (ii) a certificate of good standing from the State/Country of formation, incorporation and/or organization and/or trust certificate, (iii) proper corporate/entity resolutions regarding the signatory’s power and authority to complete the transaction, together with a designation of the individual specifically authorized to complete the transaction and execute all documents on behalf of Buyer, (iv) a sworn certificate or affidavit confirming the identity of all persons with authority to bind the entity, and the identity and address of all persons owning a 25% beneficial interest in the purchasing entity (with copies of picture identification of all such persons attached) and (v) an opinion from Buyer’s counsel addressed to Seller confirming that the Buyer is duly formed, in good standing, and that the signatory has the authority to enter into this Agreement and complete the purchase of the Unit without the necessity of any consents or joinders of any other party. Moreover, to the extent that Buyer has delegated signatory authority to an individual other than Buyer (by way of power of attorney or otherwise), Buyer shall deliver to Seller within thirty (30) days following the execution of this Agreement a copy of the document delegating such authority for Sellers review and approval (the “Delegation Conditions”). In the event that Buyer fails to meet the Entity Conditions and/or Delegation Conditions, as applicable, same shall constitute a default under this Agreement. Seller reserves the right to establish prices for units in the Condominium. Seller may, in Seller’s sole discretion, increase or decrease the price or price per square foot for any unit, or any offered option, if any, at any time, or offer incentives for the sale of units. Seller makes no representations or warranties that the price for the Unit or options in the Unit will be increased or decreased for other buyers of identical or similar units or options. Seller also makes no representations or warranties that changes made or options, extras or upgrades chosen by Buyer will or will not increase or decrease the market value of the Unit, and Buyer understands and agrees that such upgrades and options, if any, may not increase the market value of the Unit. Buyer shall, upon request from Seller from time to time, provide Seller with Buyer’s valid picture identification. This paragraph shall survive closing.

39. Entire Agreement . This Agreement is the entire agreement for sale and purchase of the Unit and once it is signed, it can only be amended by a written instrument signed by both Buyer and Seller which specifically states that it is amending this Agreement. This Agreement contains the entire understanding between Buyer and Seller, and Buyer hereby acknowledges that the displays, architectural models, brochures, artist renderings and other promotional materials contained in the sales office and/or the model suite are conceptual and are for promotional purposes only and may not be relied upon. Any current or prior agreements, representations, understandings or oral statements of sales representatives or others, if not expressed in this Agreement or the Condominium Documents, are void and have no effect. Buyer acknowledges and agrees that Buyer has not relied on them. Notwithstanding the foregoing, Seller shall not be excused from any liability under, or compliance with, the provisions of Section 718.506, Florida Statutes.

GENERAL INFORMATION:

Co-Broker Information:

(See Section 20 above; if the space for Co-Broker’s name is left blank, it shall mean that Seller has not agreed to pay any co-broker)

Co-Broker’s Name; NONE

Co-Broker’s Sales Agent

Co-Broker’s Address

Phone No. Fax No.

E-Mail License No.

ANY PAYMENT IN EXCESS OF 10 PERCENT OF THE PURCHASE PRICE MADE TO DEVELOPER PRIOR TO CLOSING PURSUANT TO THIS CONTRACT MAY BE USED FOR CONSTRUCTION PURPOSES BY THE DEVELOPER.


SELLER:	BUYER:

4000 South Ocean Property Owner, LLLP, a Delaware limited liability limited partnership By:4000 South Ocean GP, LLC, its general partner By: /s/ Matthew Allen Name: Matthew Allen Title: Vice President	Sotherly Hotels, Inc. By: /s/ Dave Folsom Name:Dave Folsom Title:President

Date of Signature: ___ June 1 ______, 2017

Date of Acceptance: __ June 1 _________, 2017

Exhibit 10.30

4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD

ADDENDUM TO COMMERCIAL UNIT AGREEMENT

THIS ADDENDUM TO COMMERCIAL UNIT PURCHASE AGREEMENT (this " Addendum ") is executed as of the 1 ^st day of June, 2017 (" Effective Date "), by and between 4000 South Ocean Property Owner, LLLP, a Delaware limited liability partnership , as " Seller ", and Sotherly Hotels, Inc. ( NASDAQ: "SOHO" ), a publicly traded real estate investment trust , as " Buyer ". Seller and Buyer shall be collectively referred to herein as the “ Parties " or individually, a " Party ".

RECITALS

Simultaneous with the execution of this Addendum, the Parties have entered into that certain Agreement (the " Agreement ") for the purchase and sale of Unit CU-2 (the " Unit ") in 4010 South Ocean Condominium Hollywood (the " Condominium ").

The Parties desire to amend the Agreement in certain respects as more particularly set forth below.

NOW, THEREFORE, in consideration of the execution and delivery of the Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. Recitals; Defined Terms; Conflicts . The foregoing recitals are true and correct and are incorporated herein as if repeated at length. Unless the context otherwise requires, all initial capitalized terms used but not defined in this Addendum shall have the meaning or meanings given to such terms in the Agreement. This Addendum shall be deemed a part of, but shall take precedence over and supersede any provisions to the contrary contained in the Agreement. All references in the Agreement or this Addendum to the Agreement shall be deemed to refer to the Agreement as modified by this Addendum, unless the context otherwise requires.

2. Unit Description . The Unit is described substantially as depicted on Exhibit "A" attached hereto and otherwise as set forth in the Declaration (collectively, the " Graphics "). Buyer agrees that the description of the Unit on Exhibit "A" and in the Declaration sufficiently identify the Unit and the boundaries thereof. Notwithstanding the foregoing, Buyer understands and agrees that prior to closing, Seller shall cause the Condominium Documents to be amended (the " Declaration Amendment ") to reflect the identified spaces as limited common elements appurtenant to the Unit, as applicable (substantially as described on Exhibit "A" ), with such Unit having, as an appurtenances thereto, the applicable percentage share attributable to same (based on the relative size of such Unit in relation to the overall size of all of the units in the Condominium), and the applicable obligation for maintenance assessments for such Unit. Except for modifications required by applicable Legal Requirements or the Florida Division of Condominiums, Timeshares and Mobile Homes, Seller shall make no changes to the Condominium Documents, including the Graphics, which will create more than four commercial units or that may negatively impair or materially minimize the rights, or materially increase the obligations, of Buyer with respect to the Unit or its limited common elements appurtenant thereto, the operation of a Condo-Hotel, the format, use or operation of the Garage, the Buyer's rights as Hotel Operator under the Declaration, or the existing restrictions regarding transient rentals, or any modifications or amendments to the Project Standards, without the express prior written consent of Buyer, which consent shall not be unreasonably withheld, delayed or conditioned.

3. Measurements . Buyer understands and agrees that any and all square footages shown on Exhibit "A" or any other Exhibit to this Addendum are measured to the exterior boundaries of the


	1

exterior walls and the centerline of interior demising walls and in fact vary from the square footage and dimensions that would be determined by using the description and definition of the "Unit" set forth in the Declaration (which generally only includes the interior airspace between the perimeter walls and excludes all interior structural components and other common elements). Measurements of rooms set forth on this floor plan are generally taken at the farthest points of each given room (as if the room were a perfect rectangle), without regard for any cutouts or variations. Accordingly, the area of the actual room will typically be smaller than the product obtained by multiplying the stated length and width.

4. Development Fee . Notwithstanding anything contained to the contrary in the Agreement, the Parties hereby agree that the Development Fee is waived with respect to the Unit.

5. Closing Costs . At closing, Seller shall pay (a) the fees of any counsel representing it in connection with this transaction, (b) one-half (½) of any escrow fee charged by Escrow Agent and (c) one-half (½) of the premium for the Title Policy and Title Commitment costs. Buyer shall pay all other closing costs, including (u) any and all transfer tax, documentary stamp tax or similar taxes imposed on account of the recordation of the Deed or the transfer of the Unit, (v) the fees of any counsel representing Buyer in connection with this transaction, (w) one-half (½) of any escrow fees charged by the Escrow Agent, (x) recording fees, (y) one-half (½) of the premium for the Title Policy and Title Commitment costs, (z) the cost of Buyer's inspections of the Unit. Except as otherwise provided in this Agreement, all other costs and expenses incident to this transaction and the closing thereof will be paid by the Party incurring such costs.

6. Delivery of Unit/ Pre-Occupancy/ Closing .

Buyer understands and agrees that the Seller shall deliver the following at Closing:

(a) the Unit in "turnkey” condition with all decorative finishes and furniture as selected by Seller, consistent with the Project Standard and tailored for the unique features of the Project (" Resort Design Standard ").

(b) Common Elements and/or Residential Limited Common Areas as follows: (i) the lobby area adjacent to the Unit shall be delivered in "turnkey" condition with all decorative finishes and furniture consistent with the Resort Design Standard; and (ii) the pool deck, cabanas and other amenities on the sixth floor of the Condominium shall be delivered in "turnkey" condition with all decorative finishes and furniture consistent with the Resort Design Standard including, without limitation, all furniture and decorative finishes for the meeting rooms located on the sixth (6 ^th ) floor of the Condominium pursuant to the Resort Design Standard, which meeting rooms shall be limited common elements appurtenant to the Unit.

(c) the limited common elements appurtenant to the Unit (collectively, " LCE Spaces ") in the following condition: (i) the housekeeping spaces adjacent to the trash and laundry chutes on floors 2-5 and 7- 42 and shown on the Graphics in "white box finish" (collectively, the " Maid's Closets "); (ii) the meeting rooms and board room located on the sixth floor will be delivered in "turnkey" condition and shall also include the decorative finishes and furniture consistent with the Resort Design Standard; (iii) the seven (7) cabanas located on the south side of the sixth floor as shown on the Graphics to be leased by Buyer pursuant to the Lease described in Section 9 hereof shall be delivered in turn key condition with all decorative finishes and furniture consistent with the Resort Design Standard; (iv) the storage space adjacent to the new retail space on the first floor as shown on page 11 of the Graphics as an LCE to CU-2 (" New Storage Area ") shall be delivered with (1) "white box finish" (2) climate controls and (3) two different sets of double doors with one set of doors opening into the Garage and the other set of doors opening into the Water Room located immediately adjacent to the New Storage Area, pursuant to the Tenant Finish Detail attached hereto as Exhibit "I" ('' Tenant Finish Detail "); (v) the linen room area located on the first floor of the Condominium pursuant to the Graphics shall be an LCE Space and delivered in "white box finish"; provided, however, the laundry chute shall be

installed and operable such that all items deposited in the laundry shoot will land in the linen room (vi) the storage areas located immediately adjacent to units 201, 301, 401 and 501 shall be delivered in "white box finish" however Seller shall construct improvements to such spaces in accordance with the Tenant Finish Detail and (vi) all other LCE Spaces shall be delivered in "white box condition."

It is anticipated, but not guaranteed, that closing may occur on or about December 31, 2019 , subject to day-forday extensions for Force Majeure, and that notice of closing shall be delivered in the manner described in Section 9 of the Agreement. Buyer agrees that it shall cause the resort operations in the Unit and appurtenances thereto to be open to the public by no later than the date that is fifteen (15) days after the Closing Date and Buyer shall continuously operate the same consistent with the Project Standard; such opening and operating obligations of Buyer shall expressly survive Closing. It is further understood between the Parties that the conveyance of the Unit from Seller to Buyer shall be the first closing of any sale of a unit in the Condominium; provided, however, Seller shall be under no obligation to delay closing of any other unit in the Condominium if Buyer is not prepared to close for any reason. Without limiting the foregoing, to the extent Seller's lender has not been paid off prior to TCO, Buyer shall still be the first purchaser to close provided such closing shall occur in escrow pursuant to the terms of the Escrow Agreement.

Simultaneous with the execution of the Agreement and this Addendum by both Parties, Buyer and Seller shall enter into a Pre-Opening Services Agreement in substantially the form attached hereto as Exhibit "F" . Notwithstanding the Pre-Opening Services Agreement, Buyer acknowledges that the Condominium Property is an active construction site, and agrees that any such access to the Condominium Property shall be subject to the requirements of the general contractor for the Condominium Property, the insurers of the Condominium Property and applicable laws and regulations. In no event shall Buyer's access to the Condominium Property as provided herein be at such times or in such a manner as to interfere with the construction work ongoing at the Condominium Property or violate applicable law. If Buyer wishes to access the Condominium Property during constriction, Buyer agrees to execute such releases or carry such insurance coverages as are reasonably required by Seller, the general contractor for Condominium Property and insurers thereof, or applicable laws or regulations.

To the extent that the construction loan for the Condominium has not been paid off prior to the scheduled closing, Buyer and Seller shall close in escrow pursuant to the terms of the escrow agreement substantially in the form attached hereto as Exhibit "H" (" Escrow Agreement "). The Escrow Agreement shall be executed simultaneously with this Agreement.

7. Inventory . Buyer shall purchase all personal property not otherwise required to be provided by Seller herein and inventory (collectively, the " Inventory ") for use by Buyer in conjunction with Buyer's rental management program to be operated on the Condominium Property (the " Rental Program ") and such personal property and inventory shall be owned by the Buyer. Seller shall use good faith efforts to provide Buyer with a secured space at the project site to store its personal property and inventory to the extent space allows and such storage will not cost the Seller any additional sum or otherwise impair the Seller's ability to complete the project in a timely fashion. Seller shall have no responsibility for the security or condition of any stored materials of Buyer and Buyer shall be responsible for insuring the storage area and its contents. This provision shall expressly survive Closing. Buyer's use of the same shall be at Buyer's sole risk. Any Buyer representative coming on to the project site to access the stored materials shall follow all construction rules implemented by Seller and its contractors. Without limiting the foregoing, Seller represents and warrants that each of the Resort Units shall be delivered to each purchaser thereof in "turn-key" condition, fully furnished in accordance with the Resort Design Standards, and otherwise be ready for immediate rental. Seller shall provide Buyer with additional information regarding the furniture and finishing packages for the Resort Units once determined by SBE.

8. Bill of Sale . To the extent Seller is obligated to convey to Buyer any personal property or furniture, fixtures or equipment hereunder, Seller and Buyer shall execute and deliver at Closing a Bill of Sale in substantially the form attached hereto as Exhibit "B" .

9. Lease Agreement . At or prior to closing, Seller agrees to cause the Association to enter into a long term lease agreement with Buyer for Buyer to manage and operate the parking facility (the "Garage" ) at the Condominium and for seven (7) pool cabanas and other designated areas referenced therein, if any (the " Lease Agreement ") for the provision of, among other services, parking services to serve the needs of the Condominium Property on a non-exclusive basis. Such Lease Agreement to be executed by the Association shall be substantially in the form attached hereto as Exhibit “C” . The Association's execution and delivery of the Lease Agreement at or prior to closing shall be a condition precedent to Buyer's obligation to close hereunder and Buyer agrees it will execute the Lease Agreement no later than closing. The Lease Agreement shall provide that (i) Buyer shall have exclusive right to provide valet parking services for the entire Condominium and all owners other than the Unit CU-3 Owner and their respective guest invitees, customers, all at Buyer, or its affiliate's, prevailing rates for valet parking spaces, which during the first year of the Lease is stipulated to be $271,000 per year and shall increase every five (5) years by 5% and (ii) no Unit owner shall be entitled to self-park; and (iii) no Unit Owner shall receive complimentary valet parking, except for (A) Owners of Units who are in residence as set forth in Section 3.3 or such other applicable provision of the Declaration, (B) the owner of Unit CU-1 who has the right to have twenty (20) cars valet parked for no additional charge other than as a part of Common Expenses and (C) the Owner of Unit CU-4 who has the right to have three (3) cars valet parked for no additional charge to the Owner of Unit CU-4 other than part of Common Expenses, and (D) a total of two (2) free valet parking spaces to the contract purchaser of Unit R-378 and up to four (4) more free valet parking spaces allocated to various contract purchasers at Seller's election (each, a " Complimentary Valet User "). Except as expressly provided in the immediately preceding sentence, Seller has not granted, and will not grant, any additional complimentary parking spaces to prospective purchasers. There shall be no additional rental charge in the Lease for the use of the cabanas. In connection with Seller obtaining its construction loan, Buyer has agreed execute and deliver to Seller's lender the side letter in substantially the form attached hereto as Exhibit "E" (" Side Letter "). The Side Letter shall be executed simultaneously with this Agreement.

10. HOA Management Agreement . At or prior to closing, Seller agrees to cause the Association to enter into a management agreement (the " Association Management Agreement ") with Buyer, or any affiliate of Buyer, for the operation and management of the Condominium and Association, which shall be managed at all times In accordance with all Legal Requirements and consistent with the Project Standard (as hereinafter defined), including, without limitation, the holding and conducting of meetings, the establishment of budgets, and all other customary services provided by a manager of a condominium and•its association. In addition, the Association Management Agreement shall further provide that the Association, to the extent lawful and otherwise permitted by the Declaration, shall take all action to maintain the License and Brand Agreement in full force and effect. Buyer and Seller agree that the Association Management Agreement shall contain such reasonable terms as may otherwise be agreed to by the Parties, but shall be subject at all times to the applicable provisions of Chapter 718, Florida Statutes. The Association Management Agreement shall be substantially in the form attached hereto as Exhibit "D" . In connection with the Association Management Agreement, Seller shall amend the Condominium Documents as required by Florida Statutes, Chapter 718 to incorporate the Association Management Agreement and the Manager named therein. The Association's execution and delivery of the Association Management Agreement shall be a condition precedent to Buyer's obligation to close hereunder and Buyer agrees it will execute the Association Management Agreement no later than closing. In connection with Seller obtaining its construction loan, Buyer has agreed execute and deliver to Seller's lender the Side Letter.

11. Buyer's Operations . Seller shall deliver to Buyer a full mailing list of all purchasers under contract to purchase a Resort Unit in the Condominium (the " Future Purchasers '') along with their respective contact information (the " Purchaser List "). Commencing thirty (30) days from the date hereof, Seller shall provide an updated Purchaser List and shall continue to provide updated Purchaser Lists on a monthly basis until such time as Buyer has been provided with the contact information for each Future Purchaser of a Resort Unit in the Condominium. Seller's failure to timely deliver such information shall not constitute a default under the Agreement.

12. Hotel Standards/Restaurant Operations . Seller shall cause the definition of the Project Standards to be revised pursuant to the Condo Amendment attached as Exhibit G .

13. Brand Agreement . The Seller has entered into a Marketing License and Development Agreement with SBE Hotel Licensing, LLC, a Nevada limited liability company (" SBE ") that requires SBE to enter into a Brand License Agreement with the Association substantially in the form attached thereto (the " Brand Agreement ”) to operate the Condominium using the "Hyde Beach House" and "Hyde Beach House Resort & Residences" names (the " License "), and that the Condominium is subject to such Brand Agreement and License. Accordingly, Buyer acknowledges and agrees that the Unit and any resort operations conducted by Buyer within the Unit are subject to the terms and conditions of such Brand Agreement and the License. The Brand Agreement shall specify that Buyer, or its affiliate, acting in its capacity as Hotel Operator, possess all rights to use the trademarks, indicators or other intellectual property contained therein in its capacity as the Hotel Operator for so long as Buyer or such affiliate is acting in the capacity as the Hotel Operator.

14. Alcoholic Beverage License . As soon as reasonably practical, Seller shall cause the Restaurant Owner to apply for and obtain a license (or licenses) for the service of alcoholic beverages at the Condominium (the " Beverage Licenses "), such that at or prior to the Restaurant Opening Date, the Florida Division of Alcoholic Beverages and Tobacco will issue the Beverage Licenses (or a temporary license until such permanent Beverage Licenses is/are issued) to permit the service of alcoholic beverages at the Condominium. The Beverage Licenses shall be required to permit the Restaurant Owner to serve alcoholic beverages at the cabanas comprising LCE Spaces of the Unit on the sixth (6th) floor of the Condominium Property pursuant to the Graphics. Buyer or its Affiliate that is the Lessee under the Lease agrees to cause the Lease to be modified to the extent necessary in order for the Restaurant Owner to serve alcoholic beverages to the leased cabanas provided that the Buyer or its affiliate has the right to use such cabanas as contemplated in the Lease.

15. Buyer Representations . Section 32 of the Agreement is hereby deleted in its entirety. Buyer hereby represents and warrants to Seller as of the date hereof that:

(a)

Buyer is a publicly traded real estate investment trust duly organized and validly existing under the laws of the State of Maryland and is in good standing under the laws of the State of Florida.

(b)

Buyer is a sophisticated purchaser with substantial experience in purchasing in assets of this type and has such knowledge and experience in financial and business matters that Buyer is capable of evaluating the merits and risks of this purchase and the operation of a resort-style, condo-hotel with anticipated transient lodging.

(c)

The execution by Buyer of the Agreement, this Addendum and of all documents contemplated by the Agreement (collectively " Transfer Documents "), delivery of this Agreement and the Transfer Documents and performance of all obligations arising under this Agreement and such Transfer Documents are authorized under the organizational documents of Buyer or have otherwise been approved in the matter described in such organizational documents. This Agreement and the Transfer Documents, upon such execution and delivery, constitute the legal, valid and binding obligations of Buyer, enforceable in accordance with their respective terms. To Buyer's knowledge there are no claims, defenses, personal or otherwise, against Buyer or offsets to the validity or enforceability of this Agreement or the Transfer Documents.

(d)

Buyer (or its affiliate that will enter into the Association Management Agreement) has, or will have as of closing, a community association manager's license issued by the State of Florida, and such license is or will be in good standing as of closing.

16. Seller Representations . Seller represents and warrants to Buyer that:

(a)

The execution by Seller of this Agreement and the Transfer Documents, delivery of this Agreement and the Transfer Documents and performance of all obligations arising under this Agreement and such Transfer Documents are authorized under the organizational documents of Seller or have otherwise been approved in the matter described in such organizational documents. This Agreement and the Transfer Documents, upon such execution and delivery, constitute the legal, valid and binding obligations of Seller, enforceable in accordance with their respective terms. To Seller's knowledge there are no claims, defenses, personal or otherwise, against Seller or offsets to the validity or enforceability of this Agreement or the Transfer Documents.

(b)

Seller has been duly and validly organized under the laws of the State of Florida and as of closing is validly existing in good standing as a limited liability company under the laws of Florida.

(c)

As of the Effective Date, other than with respect to Unit CU-1 and Unit CU-4, Seller has not (i) granted or otherwise agreed to provide free parking in the Garage or otherwise (i.e., valet parking), (ii) agreed to assign any parking space(s) in the Garage to prospective purchasers as limited common elements to their Unit(s), (iii) assigned any parking spaces to any prospective purchaser of a unit in the Condominium other than a total of two (2) free valet parking spaces to the contract purchaser of Unit R- 378 and will not grant more than four (4) additional free valet parking spaces to any contract purchasers. Except as otherwise provided in this Section 16(c) and those one hundred eighty (180) parking spaces which have been assigned to the owner of the Ballroom Unit, Seller has not, and shall not, assign any additional parking spaces to any entity, purchaser or otherwise.

(d)

As of the Effective Date at least seventy percent (70%) of the Units are under contract for sale to bona fide third party purchasers.

(e)

As of the Effective Date Seller anticipates that the construction financing for the Project will be closed on or before June 12, 2017.

(f)

Pursuant to the Commercial Unit Purchase Agreement between Seller and the buyer of Unit C-1, in existence as of the Effective Date, such buyer is contractually obligated to open the restaurant for business within ninety (90) days after the completion of the contemplated construction within, and delivery of, Unit CU-1 to the buyer thereof (the " Restaurant Opening Date ") and Seller will use commercially reasonable efforts to enforce the terms of said agreement.

The foregoing representations and warranties shall survive the Closing for a period of one (1) year.

17. Intentionally Deleted .

18. Further Assurances . Seller and Buyer agree, at any time and from time to time after the closing, to execute, acknowledge, where appropriate, and deliver such further instruments and documents and to take such other action as the other party may reasonably request in order to carry out the intent and purpose of this Agreement. The provisions of this section shall survive the Closing.

19. Conditions Precedent . Without in any way limiting any terms or conditions contained hereof, each the following shall also be conditions precedent to the Closing:

(a)

That Unit CU-3 in the Condominium (the " Ballroom Unit ") shall be completed, available for immediate use by the intended third party owner thereof on or before the conveyance of the Unit to the Buyer.

(b)

That construction of the A1A improvements shall have been substantially completed such that the same are available for immediate use including, without limitation, construction of the deceleration lane along A1A and the new curb cut leading to the Condominium Property pursuant to the terms of the Covenant and Easement Agreement among Seller, Hollywood Hotel Associates LLC and Apogee Beach Condominium Association, Inc recorded in the public records of Broward County, Florida in Official Records Book 44463, Page 1730, as amended from time to time.

(c)

The construction of the Garage, and all parking lifts contained therein, shall be completed such that at least 461 parking spaces are fully operational and available for use by Buyer.

(d)

Substantial completion of the Condominium and the Common Elements, as evidenced by the issuance of a temporary certificate of occupancy (" TCO ") shall have occurred.

(e)

Substantially all of the security features of the Condominium shall be installed and fully operational including, without limitation, closed circuit security monitoring in order for Buyer, as Hotel Operator, to reasonably monitor the entrances to the Unit, the Garage, the Common Elements and LCE Spaces on the 6th floor.

(f)

To the extent Seller has any units in the Condominium that are not otherwise under contract for sale to third parties, Seller shall provide a minimum of twenty (20) units in the Condominium ( or such lesser amount of Units not subject to contracts for sale) for use by Buyer in the Rental Program, which units shall be available for immediate use to hotel guests upon TCO and be fully equipped with all Seller Inventory required therein (collectively, the "Immediate Rental Units"). At Closing, Seller shall execute Buyer's standard Rental Management Agreement (the "RMA") which shall submit the Immediate Rental Units to the Rental Program; provided, however, the RMA will provide that (i) upon the sale of an Immediate Rental Unit to its end purchaser, the RMA will terminate and be of no further force and effect; (ii) Buyer will be fully responsible for any wear and tear such that each Immediate Rental Unit shall be delivered to its end purchaser in the same condition as it was provided to Buyer for inclusion in the Rental Program; and (iii) Seller or the then Owner of Immediate Rental Units shall have the right to show such units to prospective end purchasers.

20. Declaration Amendment . Buyer hereby consents to the form of the proposed Amendment to Condominium Declaration attached hereto as Exhibit "G" ("Condo Amendment") and, as a condition precedent to Buyer's obligation to close hereunder, Seller shall cause such Condo Amendment to be recorded in the Public Records of Broward County, Florida on or before the Closing. Seller shall not cause any changes to the following provisions of the Condo Amendment without the Buyer's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed:

(a)

Section 17.1 of the Declaration regarding operating requirements or restrictions of Commercial Unit CU-2;

(b)

The definition of Project Standard or the elimination of the requirement of each Commercial Unit Owner to operate its respective Commercial Unit in accordance with the Project Standard; or

(c)

the elimination of any requirement with respect to the owner of Unit CU-1 to operate a full service food establishment selling alcoholic beverages in Unit CU-1.

21. Electric Service . Notwithstanding anything to the contrary in Section 10(f) of the Agreement, Seller shall not be required to establish an account for electric service to the Units with FP&L (or provide written notice thereof) to the extent the Unit is not separately metered.

22. Buyer Remedies . Notwithstanding anything to the contrary in Section 13(c) of the Agreement, in the event Seller is in default under the Agreement, Buyer shall, after a TCO is issued, be entitled to seek specific performance of Seller's obligations in addition to the other remedies set forth in such Section.

23 Notices . Notwithstanding anything to the contrary in Section 21(b) of the Agreement, notices may only be given in writing (i.e., notices in person and by telephone are not effective) using the addresses and methods set forth in such Section.

24. Assignment . Notwithstanding anything to the contrary in Section 22 of the Agreement, Buyer shall be entitled to assign the Agreement, in whole or in part, to any affiliated entities of Buyer without obtaining the consent of Seller, provided that such Assignment occur and Buyer provide notice thereof to Seller not less than five (5) business days prior to the Closing Date and such assignee shall assume all of Buyer's obligations hereunder and otherwise comply with all of Buyer's conditions to Closing set forth herein. Buyer is prohibited from making any other assignment of the Agreement without the express prior written consent of the Seller, which consent maybe withheld in Seller's sole and absolute discretion

25. Miscellaneous . Notwithstanding anything to the contrary in clauses (iv) and (v) of Section 36 of the Agreement, Buyer shall only be obligated to provide the certificate or affidavit in clause (iv) to the extent required by FinCEN, and may provide a certification containing such information from Buyer's counsel in lieu of the opinion described in clause (v).

26. Headings . The section or paragraph headings contained herein are for convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Addendum.

27. Proviso . This Agreement may be executed in any number of counterparts and by the separate parties hereto in separate counterparts, each of which when taken together shall be deemed to be one and the same instrument. Signatures of the parties hereto on copies of this Addendum transmitted by facsimile machine shall be deemed originals for all purposes hereunder, and shall be binding upon the parties hereto.

28. Full Force and Effect. Except as specifically modified hereby, all of the provisions of the Agreement which are not in conflict with the terms of this Addendum shall remain in full force and effect. Buyer represents and warrants to Seller that it does not have any claims, defenses or setoffs under the Agreement.

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SELLER :		BUYER :

4000 South Ocean Property Owner, LLLP		Sotherly Hotels, Inc.

By:	4000 South Ocean GP, LLC , its general partner

By:		By:
		Name: Title	David Folsom President

Date of Acceptance:

Date of Signature:

SELLER :		BUYER :

4000 South Ocean Property Owner, LLLP		Sotherly Hotels, Inc.

By:	4000 South Ocean GP, LLC , its general partner

By:
	Authorized Representative

Date of Acceptance:

Date of Signature:

EXHIBIT "A"

Graphics

EXHIBIT A-1

Legal Description: A portion of Indigo Beach Resort Plat according to the Plat thereof as recorded in Plat Book 176, at Page 168 of the Public Records of Broward County, Florida being more particularly described as follows: Commencing at the Northeast corner of section 26, township 51 South, range 42 East; thence running westerly along the North line of said section 26, a distance of 297.15 feet to a point on the West line of the right of way of U.S. road A-1-A (State road #140, known as Ocean Beach Road) as described in easement deed from Hallandale Beach Improvements co., a Florida corporation to the state of Florida, dated April 13, 1932, and recorded in Deed Book 232, Page 265, of the Public Records of Broward County, Florida; thence southerly along the West right of way line of the aforesaid U.S. road A-1-A South 04 degrees 45 minutes 45 seconds West, a distance of 796.36 feet to a point, said point being the northeast corner of said Indigo Beach Resort Plat according to the Plat thereof, as recorded in the Public Records of Broward County, Florida also being the southeast corner of Lot 18 Seacrest Park, according to the plat thereof, as recorded in Plat Book 23, Page 16 of the Public Records of Broward County, Florida; thence continue southerly along the West right of way line of the aforesaid U.S. road A-1-A South 04 degrees 45 minutes 45 seconds West, a distance of 273.23 feet to a point; thence South 87 degrees 05 minutes 03 seconds West 3.03 feet to a point being the point of beginning of the following parcel of land; thence South 04 degrees 45 minutes 45 seconds West a distance of 28.63 feet to a point; thence South 87 degrees 09 minutes 08 seconds West for a distance of 121.74 feet to a point; thence South 02 degrees 50 minutes 52 seconds East for a distance of 207.50 feet to a point; thence North 74 degrees 30 minutes 30 seconds West for a distance of 109.36 feet to a point; thence North 78 degrees 48 minutes 04 seconds West for a distance of 62.07 feet to a point; thence South 87 degrees 09 minutes 08 seconds West for a distance of 312.87 feet to a point; thence North 06 degrees 38 minutes 56 seconds East for a distance of 252.35 feet to a point; thence North 87 degrees 05 minutes 03 seconds East for a distance of 159.82 feet to a point; thence South 02 degrees 54 minutes 57 seconds East for a distance of 60.00 feet to a point; thence North 87 degrees 05 minutes 03 seconds East for a distance of 401.85 feet to the Point of Beginning. The above reference parcel contains 104,820 sq. feet more or less, 2.41 acres more or less. Surveyor’s Certification: The undersigned, a Professional Land Surveyor, duly authorized to practice under the laws of the State of Florida, hereby certifies that this Exhibit “2”, all pages inclusive, which are annexed and expressly made a part of this Declaration of Condominium of the “4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD”, together with provisions of the Declaration describing the condominium property, in addition to rights and restrictions, as they relate to matters of survey, are an accurate representation of the proposed location and proposed dimensions of the improvements, and so that the identification, location and dimensions of the proposed Units, Common Elements and Limited Common Elements can be determined from these materials. This certification relates to matters of survey only, and is not intended to certify that the improvements have been constructed in accordance with any applicable governmental or building code requirement(s). Schwebke-Shiskin and Associates, Inc. Mark Steven Johnson, Sec’y & Treas. Professional Land Surveyor No. 4775 State of Florida Date: Authentic copies shall bear the raised seal of the attesting Professional Surveyor’s Certification 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, Fl 33131 On September 24, 2015 Page 1 Exhibit 2

SURVEYOR'S NOTES: 1. Areas within a Unit cantaining canduits, wiring, ducts, plumbing, bearing walls, structural supports and other such items serving Common Elements and/or other Unit(s) and/or the Unit in which they are located, together with the contents therein, regardless of lacation, canstitute parts of the Common Elements (C.E.) and may be omitted from these Exhibits for the purposes of grophical clarity. 2. Bolconies are Limited Cammon Elements (L.C.E) reserved for the exclusive use of the Unit to which they ore appurtenont. Private Roof Terraces are Limited Cammon Elements (L.C.E.) reserved for the exclusive use of the Unit to which they are appurtenant, as indicated. 3. Mechonicol equipment (C.E. and/or L.C.E.), not graphically depicted in these exhibits, may be instolled on the roof of the building, subject to provisions, conditions and restrictions of the Declorotion. 4. Porking spoces may be Camman Elements (C.E.) or Limited Cammon Elements (L.C.E.) subject to ossignment, in accordonce with provisions of the Declaration. Parking spaces may hove vertical lifts installed to ollow for stacked vertical storage. 5. Corridors may be Comman Elements (C.E.) or Residential Limited Common Elements (R.L.C.E.) in accordonce with provisians of the Declaration. 6. Subject ta provisions af the Declaration and to notes 2 through 5, all of those areas that are nat otherwise lobeled os Units (U), Limited Common Elements (L.C.E.), Residential Limited Common Elements (R.L.C.E.), ore Cammon Elements (C.E.). 7. The limits af Units are shown ta the interiar undecorated finished surfaces of the walls of the Unit ot the perimetric limit ond include the drywall. The elevations shown are the average elevations of the limiting vertical ronges af the Unit established by the interior undecorated finished surfaces of the floor ond ceiling and include drywall, where applicaple. Both the harizontal limits ond elevotions are subject ta normal canstruction tolerances. 8. The londs within these Exhibits and the improvements therean may be subject to easements, encumbrances ond/ar restrictions nat disclosed herein, as they may appear in an abstract of title. 9. All elevations, as shawn, are referenced ta NGVD (National Geadetic Vertical Datum, 1929 Adjustment) 10. The Aquo Club and Morina ore subject to development approvals from DERM and to exclusive use rights of certain third parties pursuant to that certain Covenant and Easement Agreement in Officiol Record Book 44463, Page 1730, as amended. 11. To the extent required as part of the development approvals for the Condominium, a public boywolk may be constructed upon portions of the Common Elements along the Intracoastal woterwoy. 12. Resart Units must be operoted in accordance with definition of a Condo-Hotel, all as further described in the Declorotion. See Section 17.1 of the Declaration and elsewhere therein for further details. Surveyor’s Notes 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwbke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On September 24, 2015 Page 2 Exhibit 2

Location Map Not to scale Legal Description: A portion of Indigo Beach Resort Plat according to the Plat thereof as recorded in Plat Book 176, at Page 168 of the Public Records of Broward County, Florida being more particularly described as follows: Commencing at the Northeast corner of section 26, township 51 South, range 42 East; thence running westerly along the North line of said section 26, a distance of 297.15 feet to a point on the West line of the right of way of U.S. road A-1-A (State road #140, known as Ocean Beach Road) as described in easement deed from Hallandale Beach Improvements co., a Florida corporation to the state of Florida, dated April 13, 1932, and recorded in Deed Book 232, Page 265, of the Public Records of Broward County, Florida; thence southerly along the West right of way line of the aforesaid U.S. road A-1-A South 04 degrees 45 minutes 45 seconds West, a distance of 796.36 feet to a point, said point being the northeast corner of said Indigo Beach Resort Plat according to the Plat thereof, as recorded in the Public Records of Broward County, Florida also being the southeast corner of Lot 18 Seacrest Park, according to the plat thereof, as recorded in Plat Book 23, Page 16 of the Public Records of Broward County, Florida; thence continue southerly along the West right of way line of the aforesaid U.S. road A-1-A South 04 degrees 45 minutes 45 seconds West, a distance of 273.23 feet to a point; thence South 87 degrees 05 minutes 03 seconds West 3.03 feet to a point being the point of beginning of the following parcel of land; thence South 04 degrees 45 minutes 45 Seconds West a distance of 28.63 feet to a point; thence South 87 degrees 09 minutes 08 seconds West for a distance of 121.74 feet to a point; thence South 02 degrees 50 minutes 52 seconds East for a distance of 207.50 feet to a point; thence North 78 degrees 30 minutes 30 seconds West for a distance of 109.36 feet to a point; thence North 74 degrees 48 minutes 04 seconds West for a distance of 62.07 feet to a point; thence South 87 degrees 09 minutes 08 seconds West for a distance of 312.87 feet to a point; thence North 06 degrees 38 minutes 56 seconds East for a distance of 252.35 feet to a point; thence North 87 degrees 05 minutes 03 seconds east for a distance of 159.82 feet to a pint; thence South 02 degrees 54 minutes 57 seconds East for a distance of 60.00 feet to a point; thence North 87 degrees 05 minutes 03 seconds East for a distance of 401.85 feet to the Point of Beginning. The above reference parcel contains 104,820 sq. feet more or less, 2.41 acres more or less. I hereby certify: That the attached “BOUNDARY SURVEY” of the lands shown hereon is true and correct to the best of my knowledge and belief as recently surveyed and prepared under my supervision and direction. This survey complies with the applicable Minimum Technical Standards adopted by the Florida State Board of Professional Surveyors and Mappers as contained in Chapter 5J-17, Florida Administrative Code, pursuant to Chapter 472.027, Florida Statutes. Schwebke-Shiskin and Associates, Inc. Authentic copies shall bear the raised seal of the attesting professional By: Mark Steven Johnson Sec’y & Treas. Professional Land Surveyor No. 4775 State of Florida Boundary Survey 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwbke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On September 24, 2015 Page 3 Exhibit 2

Boundary Survey 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On September 24, 2015 Page 4 Exhibit 2

Boundary Survey 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke -Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On September 24, 2015 Page 6 Exhibit 2

Notes: 1) Bearings shown heron refer to an assumed bearing of S04’45’45’’W, along the center line of Ocean Boulevard (State Road A1A), as referenced by the westerly right-of-way thereof as shown heron. 2) Unless otherwise noted, this firm has not attempted to locate footings and/or foundations. 3) This survey was prepared for the exclusive use of the entities named hereon. the attached certification does not extend to any unnamed parties. 4) Property shown hereon falls within federal flood zone “x”, federal flood hazard zone “AE (EL 7)” and “AE (EL 8)” per flood insurance rate map number 12011c0751h, map dated august 18, 2014, community no 125110. 5) Visible indicators of utilities are shown hereon, however, no attempt has been made to locate underground items. 6) Distances along boundary of subject property are record and/or measured unless otherwise stated. 7) Shown hereon are plottable easements and rights of way reflected as exception in the title insurance commitment no. 4766381, issued by chicago title insurance company, with an effective date of april 1, 2014 at 11:00 p.m. 8) Elevations shown hereon refer to North American Vertical Datum of 1988 (N.A.V.D. 88) 9) Benchmarks a) Broward county bench mark number 3959: cap at E end of N parking lot of W edge of E seawall of “hemisphere”, #1950 S Ocean Drive (Hwy A1A). Cap 33’ NNE of inside SE corner of parking lot. cap 27.5’ SE of inside NE corner of parking lot. Cap is a standard dnr brass disk and is flush w/surface of seawall. Found good 12-18-2006. Elevation 9.27’ N.G.V.D. b) Broward county bench mark number 3959: cap at E end of N parking lot of W edge of E seawall of “hemisphere”, #1950 S Ocean Drive (Hwy A1A). Cap 33’ NNE of inside SE corner of parking lot. Cap 27.5’ SE of inside NE corner of parking lot. Cap is a standard dnr brass disk and is flush w/surface of seawall. Found good 12-18-2006 Elevation 9.27’ N.G.V.D. 10) Folio number: 514226220010 broward property appraiser. 11) Property as described heron contains 104,820 sq. ft. (2.41 acres) 12) Property address 4000 S Ocean Dr., Hollywood. 13) The subject parcel has legal and physical vehicular access to ocean boulevard by way of a platted access easement across the northerly ad joiner. A constructed non-exclusive entrance and drive lie within the platted easement. Legend: denotes aluminum light post denotes bench mark denotes centerline denotes double detector check valve denotes elevations (see notes for datum) denotes monitor well denotes EXISTING ASPHALT denotes EXISTING PAVERS denotes EXISTING BUILDING denotes EXISTING CONCRETE CI denotes CURB INLET PB denotes PLAT BOOK PG denotes PAGE POC denotes POINT OF COMMENCEMENT POB denotes POINT OF BEGINNING OHW denotes OVERHEAD UTILITY WIRES ORB denotes OFFICIAL RECORDS BOOK PC denotes POINT OF CURVATURE CBS denotes CONCRETE BLOCK STRUCTURE CONC denotes CONCRETE CLF denotes CHAINLINK FENCE WF denotes WOOD FENCE F.I.P. denotes FOUND IRON PIPE S.I.P. denotes SET IRON PIPE & LB-87 CAP F.N.D. denotes FOUND NAIL & BRASS DISC S.N.D. denotes SET LB-87 NAIL & BRASS DISC CL. denotes CLEAR ENCR. denotes ENCROACHMENT (M.P.B.) denotes MISCELLANEOUS PLAT BOOK GPM denotes GAS PAINT MARK C.C.C.L. denotes COASTAL CONSTRUCTION CONTROL LINE E.C.L. denotes EROSION CONTROL LINE SEC. denotes SECTION F.D.O.T. denotes FLORIDA DEPARTMENT OF TRANSPORTATION O/S denotes OFFSET B.C.R. denotes BROWARD COUNTY RECORDS sq.ft. denotes SQUARE FEET. (C) denotes CALCULATED (D) denotes DEED DISTANCE (L) denotes DISTANCE BY LEGAL DESCRIPTION (M) denotes MEASURED DISTANCE (R) denotes RECORD OR PLATTED DISTANCE Boundary Survey 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On September 24, 2015 Page 7 Exhibit 2

Site Plan 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On September 24, 2015 Page 8 Exhibit 2

East Elevation 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On September 24, 2015 Page 8A Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.L.C.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. First Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 9 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.L.C.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for a stacked vertical storage. First Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 10 Exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. FIRST FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwekke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 11 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. SECOND FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwekke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 city of Hollywood, florida page 14 exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. SECOND FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwekke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 city of Hollywood, florida page 15 exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. SECOND FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwekke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 city of Hollywood, florida page 16 exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. THIRD FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwekke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 city of Hollywood, florida page 17 exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. THIRD FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwekke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 city of Hollywood, florida page 18 exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. THIRD FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwekke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 city of Hollywood, florida page 19 exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. FOURTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwekke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 city of Hollywood, florida page 20 exhibit 2

Key Map This Page Lift Stairs C.E. Match Line Parking Garage (C.E.) Ramp Up (C.E.) Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 44.58' and 56.58' (NGVD29) Fourth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 21 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Key Map This Page Lift Stairs C.E. Parking Garage (C.E.) Match Line Ramp Down (C.E.) Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 44.58' and 56.58' (NGVD29) Fourth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 22 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Key Map This Page Balcony (L.C.E.) Unit 502 Unit 501 Model B2 Model B3 Stairs (C.E.) Trash Corridor (C.E.) Unit 504 Model C1 (L.C.E. To CU-2) Lift Elev Elev (C.E.) Elev (R.L.C.E.) Unit 506 Model A1 Unit 508 Unit 509 Model C2 Model B3-rev Legend Denotes Limits of the Condominium Unit Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 57.25' and 75.25' (NGVD29) Fifth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 23 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Key Map This Page Lift Parking Garage (C.E.) Match Line Stairs (C.E.) Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 57.25' and 75.25' (NGVD29) Fifth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 24 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Key Map This Page Lift Stairs (C.E.) Parking Garage (C.E.) Ramp Down (C.E.) Match Line Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 57.25' and 75.25' (NGVD29) Fifth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 25 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Key Map Terrace Meeting Room (L.C.E. To CU-2) A/C Room Storage Stairs (C.E.) Corridor (C.E.) Trash (R.L.C.E.) Unisex Toilet Room Board Room (L.C.E. To CU-1) Mens Lockers (R.I.C.E.) Womens Lockers Elect. Health Club Match Line Pool Lobby Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 75.92' and 96.33' (NGVD29) Sixth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 26 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Key Map This Page Stairs (C.E.) Screen (R.L.C.E.) Match Line Cabana (L.C.E. To CU) Raquet Court (R.L.C.E.) Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 75.92' and 96.33' (NGVD29) Sixth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 27 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Key Map This Page Match Line Pool (R.L.C.E.) Spa Cabana Tennis Court Stairs (C.E.) (L.C.E. To CU-2) Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 75.92' and 96.33' (NGVD29) Sixth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 28 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Balcony (L.C.E.) Unit 702 Model B2 1.33' 31.57' 23.37' 3.00' 12.17' 0.70' 3.33' 0.50' 5.51' 0.67' 14.67' 33.54' 6.83' 12.00' 34.98' 17.16' 36.87' 7.23' 3.67' 3.26' 9.33' 11.63' 5.83' 6.21' 65.66' 13.66' 32.76' 19.83' 10.17' 6.50' 2.17' 9.03' 32.75' 12.93' 4.10' 48.82' 24.98' 26.00' 5.33' 7.17' Unit 701 Model B3 Unit 703 Model B1 Unit 705 Model B1-rev Unit 707 Model B1 Unit 709 Model B3-rev Unit 708 Model C2 Unit 706 Model A1 Unit 704 Model C1 Corridor (R.L.C.E.) Elev (C.E.) Stairs Elec. Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 97.00' and 106.00' (NGVD29) Seventh Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 29 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

Corridor (R.L.C.E.) Elev (C.E.) Stairs Elec. Unit 802 Unit 801 Model B2 Model B3 Unit 804 Unit 803 Model B1 Model C1 Unit 805 Model B1-rev Unit 807 Model B1 Unit 809 Model B3-rev Unit 808 Model C2 Unit 806 Model A1 Unit 804 Model C1 1.33' 31.57' 23.37' 3.00' 12.17' 0.70' 3.33' 0.50' 5.51' 0.67' 14.67' 33.54' 6.83' 12.00' 34.98' 17.16' 36.87' 7.23' 3.67' 3.26' 9.33' 11.63' 5.83' 6.21' 65.66' 13.66' 32.76' 19.83' 10.17' 6.50' 2.17' 9.03' 32.75' 12.93' 4.10' 48.82' 24.98' 26.00' 5.33' 7.17' Graphic Scale 0 20 1 inch = 20 feet Lying Generally Between Elevations 97.00' and 106.00' (NGVD29) Eighth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Page 30 Exhibit 2 Prepared By: Schwebke Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 SURVEYOR'S NOTES: 1. Unless otherwise designated as a "Unit", "L.C.E." (Limited Common Element), "R.L.C.E." (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage.

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. NINTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 31 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. TENTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 32 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. ELEVENTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 33 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. TWELFTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 34 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. FOURTEENTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 35 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. FIFTEENTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 36 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. SIXTEENTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 37 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. SEVENTEENTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 38 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. EIGHTEENTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 39 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.” (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. NINETEENTH FLOOR UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD prepared by schwebke shiskin and associates, inc. engineers, surveyors, planners 3240 Corporate Way, Miramar, Fl 33025 Ph.(954)435-7010 prepared for 4010 south ocean property owner, L.L.P. 315 S. Biscayne Blvd Miami, FL 33131 on May 5, 2017 page 40 exhibit 2 city of Hollywood, florida

SURVEYOR'S NOTES :1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 213.00and 222.00' (NGVD29) TWENTIETH FLOOR 1 inch =20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 41 Exhibit 2

SURVEYOR'S NOTES :1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 222.67' and 231.66' (NGVD29) TWENTY FIRST FLOOR 1 inch =20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 42 Exhibit 2

SURVEYOR'S NOTES :1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 232.33' and 241.33' (NGVD29) TWENTY SECOND FLOOR 1 inch =20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 43 Exhibit 2

SURVEYOR'S NOTES :1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 242.00' and 251.00' (NGVD29) TWENTY THIRD FLOOR 1 inch =20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 44 Exhibit 2

SURVEYOR'S NOTES :1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 251.67' and 260.66' (NGVD29) TWENTY FOURTH FLOOR 1 inch =20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 45 Exhibit 2

SURVEYOR'S NOTES :1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 261.33' and 270.33' (NGVD29) TWENTY FIFTH FLOOR 1 inch =20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 46 Exhibit 2

SURVEYOR'S NOTES :1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 271.00' and 280.00' (NGVD29) TWENTY SIXTH FLOOR 1 inch =20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 47 Exhibit 2

SURVEYOR'S NOTES :1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 280.67' and 289.66' (NGVD29) TWENTY SEVENTH FLOOR 1 inch =20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 48 Exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 290.33' and 299.33' (NGVD29) TWENTY EIGHTH FLOOR 1 inch = 20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 401 0 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 49 Exhibit 2

SURVEYOR'S NOTES : 1. Unless otherwise designated as a “Unit”, "L.C.E." (Limited Common Element), "R.L.C.E.R (Residential Limited Common Element), "CU" (Commercial Unit), all areas and spaces within the Condominium are "C.E."s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 300.00' and 309.00' (NGVD29) TWENTY NINTH FLOOR 1 inch = 20 feet UNIT BOUNDARIES 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD Prepared For 401 0 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 city of Hollywood, Florida Prepared by Schwebke-Shiskin and associates, Inc Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33205 Ph. (954)435-7010 page 50 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirtieth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 51 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty First Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 52 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty Second Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 53 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty Third Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 54 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty Fourth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 55 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty Fifth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 56 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty Sixth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 57 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty Seventh Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 58 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty Eighth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 59 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.LC.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Thirty Ninth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 60 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.L.C.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 406.33’ and 415.33’ (NGVD29) Fortieth Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 61 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.L.C.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 416.00’ and 425.00’ (NGVD29) Forty First Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 62 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.L.C.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 425.67’ and 434.66’ (NGVD29) Forty Second Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 63 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.L.C.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 435.33’ and 447.33’ (NGVD29) Forty Third Floor Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On May 5, 2017 Page 64 Exhibit 2

Surveyor’s Notes: 1. Unless otherwise designated as a “Unit”, “L.C.E.” (Limited Common Element), “R.L.C.E.” (Residential Limited Common Element), “CU” (Commercial Unit), all areas and spaces within the Condominium are “C.E.”s (Common Elements). 2. Parking spaces may be Common Elements (C.E.) or Limited Common Elements (L.C.E.) subject to assignment, in accordance with provisions of the Declaration. Parking spaces may have vertical lifts installed (not depicted herein) to allow for stacked vertical storage. Lying Generally Between Elevations 448.00’ and 483.08’ (NGVD29) Roof Unit Boundaries 4010 South Ocean Condominium Hollywood City of Hollywood, Florida Prepared By: Schwebke-Shiskin & Associates, Inc. Engineers, Surveyors, Planners 3240 Corporate Way, Miramar, Fl 33025 Ph. (954) 435-7010 Prepared For: 4010 South Ocean. Property Owner, L.L.P. 315 S. Biscayne Blvd. Miami, FL 33131 On September 24, 2015 Page 65 Exhibit 2

EXHIBIT “B”

Form of Bill of Sale

EXHIBIT B -1

Bill of Sale

For good and valuable consideration, the receipt of which is hereby acknowledged, 4000 SOUTH OCEAN PROPERTY OWNER, LLLP , a Florida limited liability limited partnership (“ Seller ”), does hereby sell, transfer, and convey to LLC , a Delaware limited liability company (“ Buyer ”), any and all personal property owned by Seller and used exclusively in connection with the operation of that certain real property more particularly described in Exhibit “A” attached hereto (the “ Personal Property ”), as such Personal Property is more particularly described in the attached Schedule 1.

Seller has executed this Bill of Sale and BARGAINED, SOLD, TRANSFERRED, CONVEYED and ASSIGNED the Personal Property and Buyer has accepted this Bill of Sale and purchased the Personal Property. Seller represents and warrants that it is the true and lawful owner of the Personal Property and the Personal Property is being sold free and clear of any liens, claims, interests, pledges or encumbrances of any kind or nature whatsoever. Without in any way limiting the foregoing, Buyer acknowledges that it is purchasing the Personal Property AS IS AND WHEREVER LOCATED, WITH ALL FAULTS AND, EXCEPT AS OTHERWISE PROVIDED HEREIN, WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF WHATSOEVER NATURE, EXPRESS, IMPLIED, OR STATUTORY, AND THE WARRANTIES SET FORTH HEREIN, IT BEING THE INTENTION OF SELLER AND BUYER TO EXPRESSLY NEGATE AND EXCLUDE ALL WARRANTIES WHATSOEVER NOT OTHERWISE EXPRESSLY PROVIDED FOR HEREIN, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, ANY RIGHTS OF BUYER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, ANY CLAIM BY BUYER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN WITH RESPECT TO THE PERSONAL PROPERTY, WARRANTIES CREATED BY AFFIRMATION OF FACT OR PROMISE AND ANY OTHER WARRANTIES CONTAINED IN OR CREATED BY THE UNIFORM COMMERCIAL CODE AS NOW OR HEREAFTER IN EFFECT IN THE STATE IN WHICH THE PERSONAL PROPERTY IS LOCATED, OR CONTAINED IN OR CREATED BY ANY OTHER LAW.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

EXHIBIT “C”

Form of Lease

EXHIBIT C -1

LEASE AGREEMENT

(For Parking Garage and Cabanas)

THIS LEASE AGREEMENT (this " Agreement ") is entered into as of __ day of ______________ 2017 (the " Effective Date ") between 4010 South Ocean Condominium Hollywood Association, Inc., a Florida not-for-profit corporation (the " Association " or " Landlord ") and _______________________, a _______________________, (" Lessee "). The Association and the Lessee shall hereinafter each be referred to as a " Party " or together, collectively, the " Parties ."

RECITALS:

A. Association is the entity responsible for the operation of the 4010 South Ocean Condominium Hollywood (the " Condominium "), located at 4010 South Ocean Drive, Hallandale, Florida 33019 established by that certain Declaration of Condominium, to be recorded in the Public Records of Broward County, Florida (as modified or amended from time to time, collectively the " Declaration "). Any capitalized term used herein but not otherwise defined shall have the meaning given to it in the Declaration, unless the context otherwise requires.

B. The Association desires to provide valet parking services for the parking garage within the Condominium (as shown on Exhibit "2" to the Declaration, the " Parking Garage ") for the benefit of the Association and its members, together with their guests, tenants and invitees, as well as members of the general public in connection with the Condominium being operated as a Condo-Hotel. As such, the Association wishes to hire Lessee to manage and operate the Parking Garage and in connection therewith, to lease to Lessee 461 assigned parking spaces located therein (the " Leased Parking Spaces ") during the term hereof, all pursuant to the terms of this Agreement.

C. In addition to the Leased Parking Spaces, Association desires to lease to Lessee those certain Common Elements shown as cabanas on the 6th floor of the Condominium (as shown on the graphics attached hereto as Schedule "1", collectively, the " Cabanas") for use as pool cabanas for benefit of the Association and its members, together with their guests, tenants and invitees, and Lessee, as well as members of the general public in connection with the Condominium being operated as a Condo-Hotel, all as further detailed in this Agreement.

D. Lessee will also provide for the exclusive management and operation of the Parking Garage and the Cabanas (which are all portions of the Common Elements) as more fully described herein; provided, however the Association shall be obligated to maintain all areas of the Parking Garage and Cabanas (under the supervision and direction of Lessee) at Association's sole cost and expense.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Recitals : The forgoing recitals are true and correct and are hereby incorporated to this Agreement by this reference.

2. Grant: Engagement . The Association hereby leases to Lessee and Lessee hereby leases from the Association the Cabanas and the Leased Parking Spaces. Additionally,subject to the provisions of this Agreement, the Association hereby engages the Lessee, and the Lessee hereby agrees to be engaged by the Association, to control, manage and operate the Parking Garage, including, without limitation, the Leased Parking Spaces and the Cabanas pursuant to the terms of this Agreement. Collectively, the Cabanas and Leased Parking Spaces and Parking Garage may sometimes be referred to herein as the " Premises ".

3. Services . Lessee shall perform the services (the " Services ") set forth in Exhibit "A" attached to this Agreement and otherwise described in this Agreement in connection with the management and operation of the Premises. In performing the Services, Lessee agrees to at all times furnish Lessee's reasonable skill and judgment, and efficient business administration and to further the interest of the Association and Condominium. Further, Lessee warrants to Association that at all times Lessee shall maintain and operate the Premises in a manner consistent with the following: (i) the Project Quality Standard (as defined in the Declaration), (ii) the Brand Agreement (as defined in the Declaration), and (iii) a service level equivalent to those Preferred Hotels and Resorts standards or equivalent upper upscale hotel standards evidenced by those brands so designated by Smith Travel Research (" STR ") or a similarly situated national hospitality benchmarking company, if STR is no longer issuing such designations (collectively the " Standard ").

4. Compliance . Lessee agrees to comply with all governmental laws, ordinances and regulations pertaining to the conduct of Lessee's business operations under this Agreement. Further, Lessee shall not use the Premises, or knowingly permit the Premises to be used, in any manner, or do or suffer any act in or about the Premises which: (i) violates or conflicts with any federal, state, county and municipal law; (ii) causes or is reasonably likely to cause damage to the Condominium; (iii) violates a requirement or condition of any policy of insurance covering the Common Elements of the Condominium, or directly increases the cost of such policy; (iv) constitutes or is reasonably likely to constitute a nuisance to other occupants or its equipment, facilities or systems; or (v) violates the Rules and Regulations (as defined below).

5. Term/Fee/Termination/Definitions .

5.1. Term: The initial term of this Agreement shall be for a period of twenty (20) years, with the Services commencing on the _________________ ("Rent Commencement Date") and terminating on the 20th anniversary date of the Rent Commencement Date (the " Initial Term "). Following the Initial Term, this Agreement shall automatically renew for four (4) consecutive periods of five (5) years each (each a " Renewal Term "). The Initial Term together with the Renewal Term shall be collectively referred to herein as the " Term ". The Parties agree that the Association shall not have the right to terminate this Agreement during the Initial Term or any Renewal Term except for an Uncured Event of Default (as defined in Section 21 hereof) or as otherwise set forth in Section authorized under Section 718.302, F.S. The Association acknowledges and agrees that the length of the Term is a material inducement for Lessee entering this Agreement and providing the Services.

5.2. Effect of Termination. The termination of this Agreement shall (except as otherwise provided herein) terminate all rights and obligations of the Association and Lessee hereunder, including, without limitation the lease of the Leased Parking Spaces to Lessee, except that such termination shall not prejudice the rights of any Party against the other for any breach of this Agreement occurring prior to termination.

5.3. Final Accounting. Upon any termination of this Agreement as herein provided, Lessee shall forthwith (i) deliver to Association all materials and supplies, keys,contracts and documents, and such other accounting papers and records relating to this Agreement which are in Lessee's possession, if any, as Association may reasonably request, including, without limitation, copies of computer files; and (il) deliver to Association all books and records, warranties, contracts, documents in Lessee's possession, if any, relating to the Parking Garage. Without limiting the generality of the foregoing, upon any termination of this Agreement as herein provided, Association and Lessee shall make a final reconciliation of the amount of Rent Payment (as hereinafter defined) and Lessee shall pay to Association, within fifteen (15) days following agreement on such reconciliation, any portion of the Rent Payment then owing, but unpaid. In determining the Rent Payment, Association and Lessee shall view gross revenues on a cash (and not accrual) basis.

5.4. Surrender; Holdover . At the expiration or termination of this Agreement, Lessee shall remove Lessee's personal property from the Premises, and quit and surrender the Premises to the Association broom clean, and in good order, condition and repair, ordinary wear and tear, casualty and

damage caused by the Association excepted. If Lessee, or anyone claiming under Lessee, shall remain in possession of the Premises or any part thereof after the expiration or prior termination of the Term without any agreement in writing between the Association and Lessee with respect thereto, then Lessee shall be deemed a tenant-at sufferance.

5.5. Compensation . The sole compensation for Lessee under this Agreement shall be the right to retain all revenues generated from the Parking Garage (including, without limitation, any and all valet fees or other charges associated with the parking of vehicles) and all revenues generated from the Cabanas, less and except the " Rent Payment " as hereafter defined. For purposes hereof, the " Rent Payment " shall mean the aggregate of: (i) the annual sum of Two Hundred Seventy One Thousand and No/100 Dollars ($271, 000) for the Parking Garage, payable in monthly installments of $ 22,583.33. There shall be no additional charge for the Cabanas. On the fifth anniversary of the Rent Commencement Date and on each fifth anniversary thereafter the Rent shall be adjusted with a five percent (5%) fixed escalation. For avoidance of doubt, the Rent Payment shall be payable in full each month during the Term of this Agreement irrespective of the amount of revenues generated by Lessee with respect to the Parking Garage and Cabanas. Lessee shall not be entitled to a management fee or compensation other than its right to retain the Gross Revenues (as hereafter defined) generated from the operation of the Parking Garage and Cabanas, subject to the limitations set forth below (provided, however, Lessee shall be entitled to fees for services provided to the Association which are outside the scope of the Services in this Agreement and are otherwise pursuant to any separate agreements by the Parties including, without limitation, property management services, as well as through any separate agreements for services directly with owners and/or under other agreements with the Association). Lessee agrees to pay all Rent Payments due under this Agreement at the time and in the manner set forth in this Agreement, without any prior demand therefor in immediately available funds and without any deduction or offset whatsoever. Rent shall be paid in equal monthly installments, in advance, on the first day of each month of the Term. Rent shall be prorated for partial months within the Term based upon the actual number of days in such partial month. Lessee's covenant to pay the Rent Payment is independent of every other covenant in this Agreement. Notwithstanding the foregoing, any and all costs of maintenance, repair, and/or replacement of the Parking Garage and Cabanas shall be at the Association's sole cost as Common Expenses to the members. The term " Gross Revenues " shall mean the total amount of all monthly, daily transit and/or other parking receipts including, without limitation valet operations, and any and all other receipts (including, without limitation, interest income} collected and derived from or related to the operation and management of the Parking Garage and Cabanas. Gross Revenues shall not include any sales, use, excise, occupancy, gross receipts, or parking tax, nor any other tax or charge collected by Lessee on behalf of and payable to the tax collector.

Lessee shall have the right to charge fees to any parties other than the Association, including, without limitation, individual members of the Association, their invitees or guests, guests of the hotel and/or the public in connection with the operation of the Condominium as a Condo-Hotel, for the exclusive use by said persons and that Lessee shall be entitled to retain any and all such fees and/or other revenue generated from the exclusive use of the Cabanas and/or from valet parking fees and or in connection with the Parking Garage other than the applicable portion of the Rent Payment

An unpaid Rent Payment shall accrue interest at a rate of fifteen percent (15%) per annum, from the date which is fifteen (15) days following the date due until paid. In addition, in the event Lessor does not receive any Rent Payment due under this Agreement within three (3) business days following the day that each such Rent Payment is due hereunder, Lessee shall pay the Association a late charge equal to three percent (3%) of the delinquent Rent Payment.

5.6. Definitions

(a)

Any capitalized terms not otherwise defined herein shall have the meaning set forth in the Declaration.

(b)

"Leased Parking Spaces" shall mean 461 parking spaces located in the Parking Garage. The Parking Garage has a total of 641 parking spaces however Lessee

acknowledges that 180 of such parking spaces are designated for the exclusive use by the owner of Unit CU-3 (the " CU-3 Spaces "), the CU-3 Spaces are not a part of this Lease and the owner of Unit CU-3 will provide its own valet parking services for the CU-3 Spaces and the owner of Unit CU-3 or its designee shall have the right to collect all income generated from the CU-3 Spaces. It is the intent of the Parties that the Lessee shall have access to 461 spaces in the Parking Garage; provided however, that at all times, Lessee shall make available: (i) twenty (20) parking spaces at no charge, for the benefit of the users of the CU-1 Unit; (ii) three (3) parking spaces at no charge for the benefit of users of the CU-4 Unit and (iii) up to five (5) parking spaces for certain Unit Owners from time to time, including but not limited to Unit R -378 of the Units listed on Exhibit "B" attached hereto{the " Committed Parking Spaces "), and each of their guests, tenants and invitees or others who are issued parking stickers, decals or other personal or vehicle identification in connection with such Units (the " Committed Rights Beneficiaries "), it being understood and agreed that the Committed Rights Beneficiaries shall have the right to valet parking services within the Committed Parking Spaces at no charge (collectively, " Parking Privileges "). The Association hereby covenants and agrees that it shall not grant licenses to any other party whatsoever, other than Lessee, for the Leased Parking Spaces or the Cabanas during the Term of this Agreement; provided, however, Lessee shall be entitled to use any Committed Parking Space to the extent any such space is unoccupied or otherwise not in use by the Commercial and/or other Unit Owners on as available basis at no additional charge to Lessee.

(c)

"Parking Garage" shall mean the portion of the Common Elements shown on Exhibit "2" to the Declaration consisting of parking facilities containing approximately 461 parking spaces, a parking/valet office, together with garage equipment installed or to be installed by Lessee for the purposes of operating the Parking Garage and valet parking drop-off/pickup points as further described below. The Parking Garage is intended to serve the Unit Owners, and their guests, tenants and invitees, the Association and its guests, tenants and invitees, and the tenants, customers or invitees of the Commercial Units, Lessee, and the general public visiting the Condominium. The Parking Garage shall also include all associated Common Elements including, by way of example, those areas within the exterior walls of the Parking Garage devoted to corridors, elevator foyers, lobby areas, stairwells, entry gates, valet stations, and management systems, as well as ramps, driveways and sidewalks within, leading into or leading out of the Parking Garage provided for the common use or benefit of Unit Owners, the Association, Lessees, customers or invitees of the Commercial Units and/or the general public visiting the Condominium.

(d)

"Valet Service Hours" shall mean twenty-four (24) hours per day, seven (7) days a week, three hundred sixty-five (365) days a year.

6. Use .

6.1. Use of the Parking Garage – Generally

(a)

The Parking Garage shall be used as a commercial and residential garage to provide valet service parking for Unit Owners, together with their guests and invitees, the Association, the Commercial Unit Owners, together with their respective employees, customers and business invitees as well as the general public visiting or staying at the Condominium. Notwithstanding the foregoing, limited rights to self-park may be granted by the Lessee or the Association to third parties, including, without limitation, other Unit Owners and/or for Lessee's authorized staff. Lessee shall make no long term rentals of parking spaces on a

weekly or month-to-month basis other than to Commercial Unit Owners and their employees. Lessee shall operate the valet service operation of the Parking Garage in accordance with the terms of this Agreement. Lessee acknowledges and agrees to honor the Parking Privileges granted by the Developer to the Committed Rights Beneficiaries and to at all times throughout the Term of this Agreement make available the Committed Parking Spaces to the Committed Rights Beneficiaries at no charge. Additionally, each Unit Owner, when in residence, shall have the right to valet parking services for the parking of one (1) vehicle at no additional charge by Lessee and Lessee shall not be entitled to seek any sums from the Association or Unit Owner for such right. For the avoidance of doubt, the Association acknowledges and agrees that regardless of the Parking Privileges, Lessee retains the management rights of the Parking Garage at all times during the Term and that any such Parking Privileges granted by the Association pursuant to this Section are still subject to the Standard at all times.

(b)

Lessee shall maintain sufficient staff at all times to avoid any unreasonable delay in picking up or delivering vehicles from or to the valet station(s) and shall establish and enforce among its employees operational procedures for the valet station(s), consistent with the Standard.

(c)

Lessee agrees not to use or permit the use of the Parking Garage for any purpose which is illegal, dangerous to life, limb, or property or which, in Association's commercially reasonable opinion, creates a nuisance or which would directly increase the cost of insurance coverage with respect to the Condominium. Lessee shall operate the Parking Garage in accordance with all laws and governmental regulations (including without limitation those related to the generation, storage, disposal, release, or transportation of Hazardous Materials (as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended).

6.2. Use of the Cabanas – Generally

The Cabanas shall be used a pool cabanas in accordance with the Standard. Unit Owners, residents, and/or each of their guests, tenants and invitees may reserve the Cabanas for private and exclusive usage pursuant to the payment of a fee established by Lessee from time to time, in accordance with a fee structure similar to other hotels in Broward County that meet the Standard, as well as any rules established from time to time by Lessee and/or the Association. Subject to the prior approval of the Association, Lessee may adopt and implement from time to time, rules and regulations regarding the use of the Cabanas including, without limitation, rules and regulations regarding the reservation of private usage of the Cabanas, the costs for usage, and the permitted hours of use in keeping with the Standard.

7. Operating Standards and Requirements; Condominium Rules .

7.1. Operating Standards and Requirements.

(a)

Lessee represents and warrants to the Association that all Services provided by the Lessee under this Agreement in connection with the Parking Garage will be commensurate with the Standard. Lessee shall provide valet service for the Parking Garage during all Valet Service Hours.

(b)

Lessee represents and warrants to the Association that all Services provided by the Lessee under this Agreement in connection with the Cabanas will be commensurate with the Standard

(c)

Association agrees that its security vendor will be solely responsible for any and all security services relating to the Parking Garage and Cabanas including, without limitation, vandalism, thefts from vehicles, and assaults on or robberies of customers. Further, the Association expressly acknowledges that Lessee does not have knowledge or expertise as a guard or security service, and does not employ personnel for that purpose, nor do Lessee's employees undertake the obligation to guard or protect customers against the intentional acts of third parties. However, based on Lessee's experience as a commercial parking operator, Lessee shall help the Association to determine whether and to what extent any precautionary warnings, security devices, or security services may be required to protect patrons in and about the Parking Garage.

(d)

Lessee is solely responsible for hiring and firing its employees working in connection with the Parking Garage and Cabanas. Lessee shall establish reasonable standards, in accordance with Project Quality Standards and/or Brand Standards for the personal appearance of Lessee's employees, which will not be inconsistent with standards established by Association from time to time. All on site employees of Lessee shall wear Lessee's standard uniform attire unless otherwise agreed to by the Parties. Lessee will be responsible for enforcing such standards with its employees. The Association acknowledges and agrees Lessee may utilize its related companies (i.e., Chesapeake Hospitality) and/or a reputable third party garage operator to provide employees and/or operate the Parking Garage.

(e)

Association acknowledges and agrees that it shall be solely responsible to ensure that the Parking Garage and Cabanas comply with all applicable local, state, and federal laws at all times including, without limitation, ADA Title Ill compliance and that in the event any such compliance issues arise during the Term that Association shall remedy the same as quickly as is reasonably possible at the Association's sole cost and expense. Lessee shall be solely responsible for requirements under Title I of the ADA relating to Lessee's employees.

7.2. Condominium Rules and Regulations; Consultation . Lessee will comply to the extent applicable to the Parking Garage, with the reasonably and uniformly enforced rules and regulations of the Association (the " Rules and Regulations ") as adopted by Association from time to time and will use reasonable efforts to cause its agents, employees, invitees and visitors to do so. Association shall give Lessee written notice of the Rules and Regulations as adapted and revised from time to time, and Lessee shall be obligated to comply with them as of the date of Lessee's receipt of such notice. The Rules and Regulations of the Association are attached to this Agreement as Exhibit "C" and are incorporated herein by reference.

8. Assignment/Subletting . This Agreement shall not be assigned or sublet by Lessee or the obligations set forth herein be subcontracted in whole or in part by Lessee without the prior written consent of the Association, which may be withheld in Association's reasonable discretion. Notwithstanding the foregoing, Lessee may, without the prior written consent of the Association, assign or subcontract the obligations set forth in this Agreement to an Affiliate. The term "Affiliate" for purposes of this Agreement shall mean an affiliate or subsidiary of Lessee, performing services similar to those performed by Lessee at the Standard or with respect to the Parking Garage, a third-party nationally reputable garage operator that meets the Standard. If Lessee proposes an assignment or sublease that does not meet the above requirements, then at any time within twenty (20) business days after the Association's receipt of Lessee's request for the Associations' consent to the non-conforming transfer, the Parties shall meet to determine a good faith resolution to such issue.

9. Parking Rates . Lessee agrees that the parking rates will be commensurate with other similar resort-style hotels consistent with the Standard.

10. Nature of Relationship . For purposes of this Agreement, Lessee shall be independently engaged in the business of performing management and operation of the Parking Garage on its own behalf as an independent contractor. Further it is understood and agreed that in no event shall the relationship between the Parties be construed or deemed to be a partnership, joint venture or any other business combination. It is further understood and agreed by and between the Parties that nothing in this Agreement shall constitute or be construed to be an employment or joint employer relationship between the Association, its successors or assigns on the one part, and the Lessee, its successors or assigns on the other part. The Lessee shall, subject to the terms and provisions of this Agreement, have complete and independent control and discretion over the operation of the Parking Garage. Without limiting the foregoing, all matters pertaining to the employment, supervision, compensation, promotion, and discharge (except as expressly provided herein) of employees are the responsibility of Lessee, who is in all respects, except as required under or dictated by applicable union agreements, the employer of such employees. Lessee agrees to fully comply with all applicable laws and regulations related to workers' compensation, social security, ERISA, and other applicable pension matters, unemployment insurance, hours of labor, wages, working conditions, and other employer-employee related subjects.

11. Maintenance Obligations of Lessee . Lessee agrees to: (a) keep the Parking Garage and Cabanas in clean and presentable condition at all times and not to permit anything thereon which would vitiate, void, or directly increase the cost of any insurance carried by Association on the Parking Garage or the Condominium and (b) ensure that the Parking Garage, appurtenances thereto, and all machinery, equipment and facilities used in connection with and located in the Parking Garage, are kept in good repair and condition at all times; provided, however, the costs of any such cleaning, repair, replacement or any other costs relating to the upkeep of the Parking Garage and Cabanas shall be at the Association's sole cost and expense as Common Expenses to the members.

12. Insurance .

Association shall maintain commercially reasonable levels of insurance with respect to the Parking Garage and Cabanas at all times during the Term at Association's sole cost and expense. All policies shall be issued to the Association as the first named insured and name Lessee (and/or its affiliated or related entities) as an additional insured.

Lessee shall maintain or cause to maintain insurance with respect to the Parking Garage and Cabanas as set forth below at all times during the Term. All policies shall be issued to the Lessee as the first named insured. Each policy evidencing insurance required to be carried by Lessee pursuant to this Section shall contain the following clauses and provisions: (i) a provision that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Association and that any coverage carried by Association be excess insurance; (ii) a waiver by the insurer of any right to subrogation against the Indemnified Parties which could arise by reason of any payment under such policy or by reason of any act or omission of any of the Indemnified Parties; (iii) a severability of interest clause or endorsement; (iv) a provision (in endorsement form if requested by Landlord) that the insurer or insured will not cancel or change the coverage provided by such policy without giving Association thirty (30) days' prior written notice:

(1)

Worker's Compensation & Employers Liability Insurance covering statutory workers compensation benefits in each state where the parties contemplate the performance of services under this Agreement. Such insurance shall include the employers liability coverage part, including stop gap coverage for the monopolistic states, with limits of not less than $1,000,000 each accident for bodily injury by accident and $1,000,000 each employee and policy limit for bodily injury by disease. Lessee shall maintain workers compensation

insurance regardless of eligibility for waiver or exemption of coverage under state statute.

(2)

Employment Practices Liability Insurance with limits of not less than One Million Dollars ($1,000,000) each insured event and One Million Dollars ($1,000,000) annual aggregate covering claims of discrimination, sexual harassment, wrongful termination, and workplace torts brought by Parking Lessee's employees with respect to their employment at the Parking Garage. Workplace torts shall include but not be limited to retaliation, defamation, infliction of emotional distress, invasion of privacy, negligent evaluation, wrongful discipline, wrongful failure to employ, and wrongful demotion. Policy shall be endorsed with a third party endorsement covering discrimination and sexual harassment to non-employees.

(3)

Commercial General Liability Insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury and property damage, $1,000,000 each person or organization for personal and advertising injury, One Million Dollars ($1,000,000) any one premises for fire legal liability, Two Million Dollars ($2,000,000) general aggregate, and Two Million Dollars ($2,000,000) products completed operations aggregate covering (i) premises/operations liability, (ii) products/completed operations liability, (iii) personal and advertising injury liability, (iv) independent contractors liability, and (v) broad form contractual liability.

(4)

Umbrella Liability Insurance in excess of the commercial general liability, and business automobile liability coverages required herein with limits of not less than Two Million Dollars ($2,000,000) per occurrence, Two Million Dollars ($2,000,000) general aggregate, and Two Million Dollars ($2,000,000) products and completed operations aggregate. Policies shall be excess to the primary commercial general liability, employers liability, and business automobile liability coverage and shall be written as follow form or alternatively with a form that provides coverage that is at least as broad as the primary insurance policies.

(5)

Crime insurance covering employee, dishonesty coverage throughout the term of this Agreement covering money, securities, and other property owned by, held by, or the legal responsibility of Lessee in connection with the Parking Facilities with a limit of not less than One Million Dollars ($1,000,000) each occurrence. The policy shall be endorsed to extend coverage for money, securities or other property of Association which is held by, or the legal responsibility of Lessee in connection with the Parking Facilities. Employment Practices Liability Insurance with limits of not less than Two Million Dollars ($2,000,000) each insured event and Two Million Dollars ($2,000,000) annual aggregate covering claims of discrimination, sexual harassment, wrongful termination, and workplace torts brought by Lessee's employees with respect to their employments at the Parking Garage.

(6)

Garage Liability Insurance and Garagekeepers Liability Insurance on an occurrence form basis with limits of not less than $1,000,000 per occurrence with an annual aggregate limit of $2,000,000 per location. Garagekeepers Liability Insurance insuring any and all automobiles that are parked at the Parking Garage by Lessee's attendants or for which a bailment otherwise is created, with such limits of liability on a per vehicle basis as are established by the insurer and approved by Association. Lessee's General Liability Insurance shall name Association as additional insured.

Lessee agrees:

(7)

All insurance shall be with companies as shall be reasonably satisfactory to Association and all such policies shall provide that the insurer shall provide at least thirty (30) days' prior written notice to Association of any cancellation or reduction in coverage. Lessee shall deliver satisfactory certificates of insurance to Association (or other evidence of insurance required by Association) and renewal policies shall be obtained, and certificates delivered to Association, at least thirty (30) days prior to expiration.

(8)

If at any time the Association is not in receipt of a Certificate of Insurance or other written evidence confirming that all insurance required of Lessee hereunder is in full force and effect, the Association shall have the right, following five (5) business day's written notice to the Lessee and Lessee's failure to provide a Certificate of Insurance within said five (5) business day period, to take such action as Association deems necessary to protect its interest in the Parking Garage, including, without limitation, obtaining such insurance coverage as Association in its reasonable discretion deems appropriate.

(9)

Each insurance company listed in the Certificate shall be (i) admitted to do business in the state where the Project is located and (ii) rated by AM Best Company as having a financial strength rating of "B+" or better and a financial size category of "Vll" or greater.

(10)

Lessee shall cause all subcontractors engaged by Lessee to be insured consistent with the requirements recited in this Section 12 . To the extent a subcontractor requests waiver of the umbrella requirements, Association's prior approval must be obtained.

13. Indemnities . Except as otherwise set forth in this Agreement, Lessee shall defend, indemnify and hold Association, and Association 's agents, members, officers, directors, and employees (collectively, " Association Related Parties ") harmless from and against any and all actions, costs, claims, losses, expenses, and/or damages, sustained by Association and/or any such Association Related Parties attributable to (a) the willful acts, misconduct, or gross negligence of Lessee or its affiliate or any of their agents, officers, servants, or employees from any cause, including, without limitation by specification, property damage and/or injury or death to any person or persons, and (b) to any death, physical injury, and/or loss or damage to property of a type covered by valid and collectible insurance which Lessee is required to maintain pursuant to the terms of this Agreement. Association shall defend, indemnify and hold Lessee and its shareholders, directors, officers, employees, affiliates, related parties, and agents (collectively " Lessee Related Parties ") harmless from and against any and all actions, costs, claims, losses, expenses and/or damages sustained by Lessee and/or any such Lessee Related Parties arising from any damage and/or injury to the extent caused by the gross negligence or willful misconduct of Association or its agents, employees, contractors, and subcontractors; provided, however, that Association shall not be liable for that portion of any damages or injury caused by direct failure of Lessee to comply with its obligations hereunder or by reason of the willful acts or omissions of Lessee, its employees, contractors or agents. The rights and obligations of this Section shall survive the termination or expiration of this Agreement

14. Waiver of Subrogation . To the extent permitted by their respective insurance policies, the Parties shall obtain and maintain throughout the term of this Agreement, in their respective insurance policies and other policies required to be maintained hereunder, provisions to the effect that such policies shall not be invalidated should the insured waive, in writing, before loss, any or all right of recovery against any party for loss occurring. Assuming such or similar provisions are included in the respective party's insurance policies then in force and other policies required to be maintained hereunder, that Party hereby waives any right of recovery against the other Party for any loss occasioned by fire or other casualty that is

an insured risk covered under such policies, irrespective of applicable deductibles. The rights and obligations of this Section shall survive the termination or expiration of this Agreement. The Association shall not be liable to Lessee for any damage by or from any act or negligence of any owner or occupant of adjoining or contiguous property.

15. Entry . Association and its agents, employees, and authorized representatives shall have the right during reasonable business hours (except in the case of an emergency or to ensure the safety of the Common Elements, wherein the Association shall have unfettered access) to inspect the Parking Garage and Cabanas or access the Parking Garage and Cabanas for such purposes as Association deems fit in its reasonable discretion and such parties shall further have the right during reasonable business hours to affect such maintenance, repairs, replacements, alterations, and improvements to the Parking Garage and Cabanas as Association deems fit in its reasonable discretion (collectively, the " Repairs ") ; provided, however, that any such inspections or Repairs must be done in a way to best minimize the impact to Lessee's business operations contemplated hereunder and further that any such areas shall be fully restored, cleaned and otherwise left in the same or better condition than originally found by the Parties. In no event shall Association be liable to Lessee for economic damages, or shall Lessee be relieved from full performance of its obligations under the Agreement, as a result of such inspections, access, or Repairs, except to the extent Lessee's performance hereunder is prevented as a direct result of such inspections, access, or the Repairs.

16. Notices . All notices required or desired to be given under this Agreement shall be in writing and shall be deemed given when either delivered personally or deposited in the United States mail, certified mail, postage prepaid, return receipt requested, or by overnight courier with tracking (such as FedEx) to the Parties at the following addresses, or such other addresses as hereinafter indicated by appropriate written notice:

If to Association:	4010 South Ocean Condominium Hollywood Association, Inc. 315 S. Biscayne Boulevard, 4 ^th Floor Miami, Florida 33131 Attention: President

If to Lessee:
	410 West Francis Street Williamsburg, Virginia 23185 Attention: David Folsom, President

17. No Recording . The Parties acknowledge and agree that this Agreement shall not be recorded in the public records; This Agreement shall also constitute an official record of the Association pursuant to F.S. 718. 111.

18. Sales Tax . The Parties acknowledge and agree that all Rent Payments due by Lessee to the Association hereunder include any applicable sales and use taxes or other similar taxes, if any, now or hereafter levied or imposed by any city, state, county or other governmental body having authority on Rent and that Lessee shall not be responsible for any such additional amounts and/or to remit the same.

19. Radon Gas . Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county health department. [Note: This paragraph is provided for informational purposes pursuant to section 404.056(5), Florida Statutes.]

20. Florida Chapter 713.10 . In accordance with the applicable provisions of Chapter 713 of the Florida Statutes, Lessee has no authority to and shall not create any liens for labor or material on or against the Condominium or any interest therein, and no such liens shall extend to the interest of the Association in the Condominium under any circumstances. Lessee agrees to notify all materialmen,

suppliers, contractors, mechanics, or laborers involved with demolition, construction, installation, alteration or repair of any improvements on, within or about the Condominium at Lessee's request, that such party must look only to Lessee or Lessee's other property interests for payment. All such materialmen, suppliers, contractors, mechanics and laborers may be put on notice that they must look only to Lessee and to Lessee's interest in the Premises for such work or improvements as provided in this Section by the recordation, at the Association's option, of a notice in accordance with Florida Statutes 713.10 in the Public Records of Broward County, Florida. Additionally, Association has no authority to and shall not create any liens for labor or material on or against the Unit, the Parking Garage and/or Cabanas, or any interest therein. Association agrees to notify all materialmen, suppliers, contractors, mechanics, or laborers involved with demolition, construction, installation, alteration or repair of any improvements on, within or about the Condominium at Lessee's request, that such party must look only to the Association or Association's other property interests for payment. All such materialmen, suppliers, contractors, mechanics and laborers may be put on notice that they must look only to the Association for such work or improvements as provided in this Section by the recordation, at the Lessee's option, of a notice in accordance with Florida Statutes 713.10 in the Public Records of Broward County, Florida

21. Uncured Event of Default; Landlord Remedies: Lessee Termination Right .

(a)

The happening of any of the following events shall constitute an "Uncured Event of Default": (a) Lessee has failed to pay when due any Rent Payment, and such failure has continued for more than sixty (60) days after receipt of written notice from the Association regarding same, or (b) Lessee has materially failed to comply' with its obligations under this Agreement (other than the failure to pay any Rent Payment) or the Association has materially failed to comply with its obligations under this Agreement, and in each event such material non-compliance has continued for a period of thirty (30) days or more after written notice of such material non-compliance is delivered to the defaulting party by the non-defaulting party; provided, however that if the defaulting party commenced reasonable actions to cure such material non-compliance within the thirty (30) day period, and the defaulting party is thereafter is diligently and continuously working to cure such material non-compliance and keeping the non-defaulting party reasonably informed of its actions to attempt to cure the material non-compliance, the defaulting party shall have an additional sixty (60) days after the expiration of the thirty (30) day period to cure such material non-compliance; provided further, that if such material non-compliance is capable of being cured but could not reasonably be cured within the previous sixty (60) day cure period, the defaulting party commenced reasonable actions to cure such material non-compliance within the thirty (30) day period and thereafter continued to diligently and continuously work to cure the material non-compliance within the additional sixty (60) day cure period, and the defaulting party is thereafter is diligently and continuously working to cure such material non-compliance and keeping the non-defaulting party reasonable informed of its actions to attempt to cure the material non-compliance, the defaulting party shall have such additional period of time after the expiration of the previous additional sixty (60) day cure period as is reasonably necessary to cure such material non-compliance however such additional time shall not exceed thirty (30) additional days. Upon the occurrence and during the continuance of an "Uncured Event of Default" the non-defaulting party shall have the right, but not the obligation, to terminate this Agreement by providing written notice of termination to the defaulting party in addition to all other rights and remedies now or hereafter allowed by law, whether legal or equitable, and all rights and remedies shall be cumulative and none shall exclude any other right or remedy.

(b)

Notwithstanding anything contained herein to the contrary, in the event the Association Management Agreement between the Association and Lessee or an affiliate of Lessee is terminated, Lessee may terminate this Agreement by providing written notice thereof to Association.

22. Miscellaneous . The unenforceability, invalidity or illegality of any provision of this Agreement shall not render the other provisions unenforceable, invalid or illegal. This Agreement shall be construed and interpreted in accordance with the laws of the State of Florida, without giving effect to conflict-of-law rules and principles of said State. This Agreement constitutes the entire agreement of the Parties with respect to the subject matter hereof, and there are no prior or contemporaneous oral or written representations, promises or agreements not expressly referred to herein. This Agreement may not be amended or modified hereafter except by a written agreement signed by the Parties. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective legal representatives, and permitted successors, transferees and assigns. Paragraph headings are included solely for convenience, are not to be considered part of this Agreement and are not intended to modify, explain or to be a full or accurate description of the content thereof. This Agreement may be executed in counterparts with the same effect as if both Parties had executed the same document. Both counterparts shall be construed together and shall constitute a single Agreement. This Agreement embodies the entire agreement between the Parties hereto with relation to the transaction contemplated hereby, and there have been and are no covenants, agreements, representations, warranties or restriction between the Parties hereto with regard thereto other than those specifically set forth herein. It is understood and agreed that this Agreement shall be binding upon and inure to the benefits of the heirs, personal representatives, successors and assigns of the Parties. In the event that either Party should retain counsel and/or institute any suit against the other for violation of or to enforce any of the covenants or conditions of this Agreement, or should either Party intervene in any suit in which the other is a Party to enforce or protect its interest or rights hereunder, the prevailing Party in any such suit shall be entitled to all of its costs, expenses and reasonable fees of its attorney(s) (if and to the extent permitted by law) in connection therewith. This Agreement shall be governed by the law of the State of Florida. All judicial proceedings brought by or against any Party, shall be brought in the courts of the State of Florida sitting in Broward County, Florida, and, by execution and delivery of this Agreement. The Parties each acknowledge and agree that the undersigned representative of each Party has the legal requisite authority to bind the applicable Party to the terms of this Agreement and that such Party does so knowingly with a full understanding of the nature and meaning of each provision of this Agreement. Additionally, that each Party had the benefit of professional advice rendered by independent legal counsel of their own selection prior to entering into this Agreement (or knowingly waived same) and has executed this Agreement only after carefully considering each term of this Agreement and fully discussing the same with counsel of their choice. The Parties further acknowledge and agree that each of them and their respective counsel have reviewed and revised this Agreement and that this Agreement has been voluntary and consensually negotiated at "arm's length." Accordingly, this Agreement shall be deemed to have been written jointly by the Parties, and the Parties agree and acknowledge that no rule of construction which would result in an interpretation or construction of this Agreement in favor or to the detriment of one of the Parties or the other shall apply in construing or interpreting this Agreement or any part of it.

THE PARTIES EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH PARTY AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH PARTY. The rights and obligations of this Section shall survive the termination or expiration of this Agreement.

[SIGNATURES FOLLOW ON NEXT PAGE]

IN WITNESS WHEREOF, the Parties hereto have each caused this instrument to be executed in its respective corporate name by its duly authorized officer as of the day and date first above written.

WITNESSES:				ASSOCIATION:

By:				4010 SOUTH OCEAN CONDOMINIUM
				HOLLYWOOD ASSOCIATION, INC., a
Name:				Florida not for profit corporation

By:				By:

Name:				Name:

				Title:


WITNESSES:				LESSEE:

By:

Name:				By:

By:				Name:

Name:				Title:

EXHIBIT "A"

SERVICES

EXHIBIT "B"

UNITS WITH

COMMITTED PARKING SPACES

CU-1

CU-4

R-378

TO BE UPDATED AT CLOSING

EXHIBIT "C"

RULES AND REGULATIONS

EXHIBIT "D"

Form of Association Management Agreement

EXHIBIT D -1

ASSOCIATION MANAGEMENT AGREEMENT

THIS ASSOCIATION MANAGEMENT AGREEMENT (this "Agreement") is made effective as of this _______ of _________________, 2017, by and between 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD ASSOCIATION, INC. , a Florida not-for-profit corporation (the "Association") and __________________________________ (collectively, the "Management Company"). The Association and the Management Company may hereinafter each be referred to as a "Party" or, collectively, as the "Parties."

WITNESSETH:

A. WHEREAS, the Association is the entity responsible for the operation of 4010 SOUTH OCEAN CONDOMINIUM HOLLYWOOD (the "Condominium") located in Hollywood, Florida, pursuant to that certain Declaration of Condominium to be recorded in the Public Records of Broward County, Florida (as modified or amended from time to time, collectively the "Declaration"), which Condominium consists of a total of 342 Residential Units (consisting of 265 Resort Units, 77 Traditional Units and 4 Commercial Units) (collectively, the "Units"); and

B. WHEREAS, the Association desires to retain the Management Company, and the Management Company desires to be so retained, to operate and manage the Association, the Common Elements (as defined in the Declaration) and the Condominium and to furnish management services to the Condominium for the Association.

C. WHEREAS, the Management Company consists of a group of companies formed in the customary UPREIT structure inclusive of its independent management company, Chesapeake Hospitality, and it is acknowledged and agreed to by the Parties that the services to be provided hereunder by the Management Company may be provided by any one or more of such entities.

NOW, THEREFORE, for and in consideration of the mutual promises contained herein and Ten and No/100 dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed by and between the Parties as follows:

1. Recitals and Terms . The above recitals are true and correct and are incorporated herein by this reference. Unless otherwise defined in this Agreement, any defined terms used herein shall have the meaning set forth in the Declaration, unless the context otherwise requires.

2. Engagement . The Association does hereby engage the Management Company as the manager of the Condominium and the Association, and the Management Company hereby accepts such engagement, on the terms and conditions hereinafter set forth. The Management Company, by the execution of this Agreement, assumes and undertakes to perform, carry out and administer all management, operational and maintenance responsibilities set forth in Section 5 and Section 6 hereof and otherwise in this Agreement, in accordance with the Condominium Documents (as hereafter defined), this Agreement and applicable laws. Such assumption of obligations is limited, however, to operation and management of the Association and maintenance of the Condominium, as agent and does not require the Management Company to pay any of the costs and expenses which are the obligation of the Association, except as specifically assumed by the Management Company in this Agreement.

3. Term . The term of this Agreement shall commence as of the date that 4000 South Ocean Property Owner, LLP, a Florida limited liability limited partnership (the "Developer") obtains a temporary certificate of occupancy for the Condominium, or such earlier date as may be mutually agreed upon in writing by the Parties (the "Commencement Date"), and shall be for a period of twenty (20) years, with the services described herein commencing on the Commencement Date and terminating on the 20th anniversary date of the Commencement Date (the "Initial Term"). Following the Initial Term, this Agreement shall automatically renew for four (4) consecutive periods of five (5) years each (each a "Renewal Term"). The Initial Term together with the Renewal Term shall be collectively referred to herein as the "Term". The

Schedule 2

Parties agree that the Association shall not have the right to terminate this Agreement during the Term or any Renewal Term except for: (i) an uncured Event of Default as set forth in Section 17 hereof, (ii) as otherwise authorized under Section 718.302, F.S, . or (iii) upon the mutual written agreement of the Parties. Without limiting the foregoing, the Management Company may also cancel this Lease (i) its sole discretion (i) upon written notice to the Association if the Lease Agreement for the parking facilities and the cabanas between the Association and the Management Company or any affiliate thereof is also terminated or (ii) at any time for any reason or no reason upon providing ninety (90) days written notice to the Association.

4. Materials . The Parties acknowledge that all of the Management Company's personal and intellectual property related to its operation of the Association and the Condominium including, but not limited to, the Management Company's trade name, trademarks, service marks, and software programs and the trade names, trademarks, service marks, equipment, inventory, the License Agreement (hereinafter defined) and software programs of the Management Company's affiliates or subsidiaries (collectively, the "Materials") are, and always shall be, the personal property of the Management Company. The Parties further expressly agree that upon termination of this Agreement for any reason hereunder, the Association shall abstain from using the Materials and shall return any Materials in its possession to the Management Company within fifteen (15) days after termination of this Agreement, and similarly the Management Company shall within the same time period leave or return all materials that are the personal property of the Association. Immediately upon such termination, all interior and exterior signs and graphics bearing any of the Materials, shall be physically removed from the premises or otherwise covered or obliterated so as not to be visible to the public, all at the Association's sole cost and expense. After termination of this Agreement, under no circumstances shall the Association, or any person acting on behalf of the Association, directly or indirectly hold itself or the Condominium out to the public as being or remaining affiliated with the Management Company. Notwithstanding the foregoing, any turnover of management responsibility shall be conducted in a professional manner so as not to unreasonably interfere with ongoing management of the Condominium, including such matters as reservation systems and the like (giving respect and operation to the ownership of any proprietary software or hardware systems that may belong solely to the Management Company), and to this end the Management Company shall sign any and all consents, assurances and assignments or similar agreements reasonably necessary to permit the Board to continue or replace any nonproprietary reservation systems provided by third parties under lease, license or other agreement. Notwithstanding anything to the contrary in this Agreement, within thirty (30) days of any termination of this Agreement, the Association shall pay to the Management Company any and all accrued management fees, costs and/or other reimbursements due under this Agreement without delay.

5. Management Company's Responsibilities . The Management Company shall be responsible for the efficient and satisfactory proper management and operation of the Association and maintenance of the Condominium in accordance with the Agreed Standard (as hereinafter defined) and otherwise as required by this Agreement, subject to the limitations of the Association's budget established from time to time pursuant to Section 6(d) below. The Association hereby acknowledges and agrees that pursuant to the terms of this Agreement and in consideration of the Management Fee described in Section 12 below, the Management Company shall perform itself, hire personnel to perform, or procure providers to perform all services necessary for the performance of the Management Company's obligations hereunder, and shall supervise the performance of all services provided to, or on behalf of, the Association pursuant to this Agreement. Such services shall include, but not be limited to, management information systems services provided by or through the Management Company, which shall be reimbursed to the Management Company in an amount provided in the Association's budget.

(a)

Employees . The Management Company shall, on behalf of the Association, hire, pay and supervise the necessary employees (which shall not be less than one (1) employee) to properly, efficiently, and prudently perform the duties and responsibilities of the Management Company set forth herein; and the Management Company shall hire, pay and supervise employees to provide for services not obtained by a separate provider pursuant to Section 5(b) below. Any persons actually hired by the Management Company shall be the employees of the Management Company, the expense of such employees being included as an expense in the Association's budget, such expense not to exceed the limits set forth in Schedule "1".

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The Management Company, subject to the approved budget, shall hire and supervise such employees as may be required from time to time to perform its duties pursuant to this Agreement in its sole discretion. All matters pertaining to the employment, interviewing and screening process, supervision, compensation, promotion and discharge of employees of the Management Company required to provide the services hereunder are the responsibility of the Management Company. The Management Company shall carry workers compensation insurance, and any other insurance, for such employees as required by law. The Association acknowledges that with respect to employees who are needed only on a part-time basis in connection with the management, operation and maintenance of the Association and the Condominium, if any, such employees may also be used by the Management Company, or a corporation or person controlled by, under common control or affiliated with the Management Company at other projects managed by the Management Company, or a corporation or person controlled by, under common control or affiliated with the Management Company (and such employees will be paid by the Management Company or such affiliate as to such other work); provided that the Association shall only be responsible for payment of expenses relating to such employees incurred from performing services on behalf of the Association and/or at the Condominium in accordance herewith.

(b)

Procurement of Separate Providers of Services . The Parties expressly agree that the Management Company may procure necessary services for the Condominium from third parties or may provide such services itself. The Management Company shall deal at arm's length with all third parties and shall serve the Association's interests at all times; provided, however, that nothing contained herein shall prevent the Management Company from procuring necessary services from an affiliate of the Management Company including, without limitation, Chesapeake Hospitality, or a procurement services company in which an affiliate of the Management Company has an ownership interest, on terms and conditions no less favorable to the Association than those that would be generally required by unaffiliated persons or entities for comparable services, if applicable, or for the sale or lease of comparable goods, provided that the Management Company provides prior written notice to the Board disclosing the affiliation and it is otherwise commercially reasonable to enter into the transaction and all discounts or incentives of any kind or nature received by the Management Company or its affiliate inure to the benefit of the Association pursuant to Section 7 below. For purposes of this Agreement, the term "affiliate" shall mean all partnerships, corporations, limited liability companies or other entities controlling, controlled by, or under common control with the Management Company or one of its members including, without limitation, Chesapeake Hospitality. "Control" for these purposes shall mean the ability to influence, direct or otherwise significantly affect the major policies, activities or actions of any person or entity.

In procuring providers of specific services from any source pursuant to its authority hereunder, the Management Company shall enter into service agreements on behalf of the Association based upon the following factors:

(i)

the quality of work obtainable for the desired level of service, and

(ii)

a reasonable, practicable price for the service obtainable in the local market.

The Management Company shall use its reasonable judgment in good faith in evaluating these factors with respect to each proposed service; provided, however, if it is commercially reasonable in the given instance, nothing contained herein shall require the Management Company to obtain the lowest price available as to any service, material or purchase, or in instances where bids are obtained, to accept the lowest bid.

To the extent permitted by law, the Management Company shall have the authority to enter into (and cancel) any service agreements contemplated pursuant to this Section,

Schedule 2

in either the Association's or the Management Company's name, as determined by the Management Company in its reasonable discretion, subject to the requirements of the Board. Furthermore, subject to the constraints of the Association's budget, the Association hereby agrees to execute on its own behalf such service agreements as are deemed necessary or desirable by the Management Company from time to time to effectuate the obligations set forth in this Agreement. Subject to the constraints of the Association's budget, the costs of any agreements entered into by the Management Company pursuant to this Section shall be a "Common Expense" of the Association.

6. Power and Duties . To meet its obligations set forth herein, the Management Company shall have all the powers and duties of the Association as set forth in the Declaration, Bylaws for the Association, and the Rules and Regulations for the Condominium (collectively, the "Condominium Documents") (except such thereof as are specifically required to be exercised by the Board, the Association or Unit Owners or that are non-delegable under the Condominium Documents or applicable law). By way of illustration and not of limitation, subject to the foregoing, the Management Company's powers and duties hereunder shall include the following:

(a)

Condo-Hotel . The Management Company shall be responsible, subject to the reasonable cooperation of the Board, for ensuring that the operation of the Condominium is in compliance with the requirements and obligations of the requirements of the definition of "Condo-Hotel" set forth in Section 2.2 of the City of Hollywood's Zoning and Land Development Regulations (as same may be renumbered) and other applicable zoning regulations and the requirements of Chapter 509, Florida Statutes.

(b)

Condominium Operations . The Management Company shall select and facilitate the engagement of third parties on behalf of the Association for, among other things: (i) the general operation of the Association and Condominium; (ii) security; (iii) front desk check-in and check-out services; valet services; and (iv) any other operational matters relating to the Association and/or Condominium including, without limitation, legal counsel. To the extent that the Association is so permitted; the Management Company, and persons designated by the Management Company, shall hereby be permitted to enter into Condominium Units for the purposes of fulfilling any provisions of this Agreement. The Management Company shall ensure that Condominium operation services are performed as required.

(c)

Accounting and Financial Reporting . The Management Company shall have the following powers and shall be responsible for the following duties concerning accounting and financial reporting services for the Association:

(i)

The Management Company shall provide the day-to-day bookkeeping services, as needed or monthly, necessary to pay the bills of the Association. This service shall include, but not be limited to, keeping all records of and performing all services in connection with the payment of bills, payrolls and such other items as may be provided for in the budget. Notwithstanding the foregoing, the Association acknowledges and agrees that the Management Company is not the accountant for the Association and that the Management Company will facilitate hiring (at Association's sole cost) an outside independent certified public accountant to perform reviews of the Association's financial records including, without limitation, providing an annual audit, as may be required by law.

(ii )

The Management Company shall bill and collect, on behalf of the Association, all regular and special assessments, as needed or monthly, from the Association's members and other revenues, which may be due the Association. The Association hereby authorizes the Management Company to request, demand, collect, receive and receipt for any and all assessments and charges which may be due the Association and to advise the Association's attorney to take such action in the

Schedule 2

name, and on behalf, of the Association by way of making, recording, satisfying or foreclosing the Association's liens therefor, initiating legal process or taking such other action as the Management Company shall deem necessary or appropriate, in its reasonable judgment, subject to the Board's approval (which approval shall not be unreasonably withheld or delayed), for the collection of such assessments and/or other charges or to enforce the rights of Association.

(iii)

The Management Company shall ensure that all funds collected from the assessments of Unit Owners or otherwise accruing to the Association are timely deposited into operating and reserve bank accounts, as applicable (the "Account(s)") established by the Association, as custodian for the Association, so that said funds may be withdrawn therefrom to pay all expenses of operation and maintenance of the Condominium and the Association as needed and/or contemplated in the budget. The Account(s) will be styled so as to indicate the custodial nature thereof and the Management Company shall ensure that all such funds collected are kept separately, and not commingled with other funds collected by the Management Company as agents for other parties or otherwise. The Management Company shall not be liable for any loss resulting from the insolvency of any depository or the loss from any investment in connection with Association's funds.

The Management Company is authorized to draw on the Association's Account(s) for any payments to be made by the Management Company to discharge any liabilities or obligations incurred pursuant to this Agreement and in accordance with the Association's budget, for the payment of the Management Fee (as defined herein), legal fees, or any other disbursements properly incurred on the Association's behalf. Services to be performed pursuant to this subparagraph shall be performed as required. Notwithstanding the above, the Management Company must be authorized by the President of the Board, or by another Officer of the Board if the President of the Board cannot be contacted, prior to paying or authorizing emergency expenses exceeding [$10,000.00. CORRECT?]

(iv)

The Management Company shall ensure that tile Association's financial record books, accounts and other records and Unit Owner roster are kept pursuant to the Association's By-Laws and pursuant to Chapter 718, Florida Statutes and issue certificates of account to Unit Owners and their mortgagees and lienors without liability of the Management Company for errors unless as a result solely of its gross negligence or willful misconduct. Such records shall be kept at the Management Company's offices or at a location designated by the Management Company in accordance with Chapter 718, Florida Statutes, and shall be available for inspection pursuant to Section 718.111 (12), Florida Statutes, and for review and audit pursuant to Section 718.111(13), Florida Statutes. Services to be performed pursuant to this subparagraph shall be performed quarterly, and the Management Company shall use commercially reasonable efforts to produce reports more frequently upon the reasonable request of the Board, with the exception of the issuance of certificates of account which shall be performed as required (with fees for issuance of certificates and involvement in closings and other transfers to be customary and reasonable).

(v )

The Management Company shall ensure that an annual compilation, review or audit of the financial records shall be made by an independent certified public accountant employed by, and at the sole cost and approval of the Association and at such times as determined by the Management Company and/or Board. The Association agrees to cooperate in the preparation of such financial statements and use all reasonable efforts to have the annual audited statement completed within 120 days after the end of the year (or as otherwise stated in the Bylaws).

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Services to be performed pursuant to this subparagraph shall be performed annually or as may be otherwise required by applicable law.

(vi)

The Management Company shall ensure that a certified public accountant is engaged, as necessary, for the preparation of any tax returns or forms or other filings required by any local, state or federal agency, and the Management Company will provide any assistance necessary or requested in the compilation of financial data from the books and records of the Association required for the completion of these filings and returns. Services to be performed pursuant to this subparagraph shall be performed no less than annually.

(vii)

The Management Company shall prepare, as needed, all payrolls and file the necessary forms, as needed, for employment insurance, withholding any social security taxes and all other forms relating to employment of the Management Company's and/or Association's employees, if any, required by federal, state or municipal authorities. All expenses incurred in providing this service shall be a direct pass through cost to the Association and shall be charged in accordance with the provisions set forth in Section 12 of this Agreement.

(d) Annual Budget . Annual budget services shall include the preparation of a recommended estimated annual operating budget and reserve budget, if applicable, for the Association setting forth an itemized statement of anticipated receipts and disbursements based upon the then current schedule for assessments and taking into account the Association's financial needs and the general condition of Condominium. Said estimated budget, together with an explanatory statement, shall be submitted to the Association for final draft at least thirty (30) days prior to the budget meeting. The estimated operating budget shall serve as a supporting document for the schedule of assessments. The annual budget may be revised from time to time during the year. Should a special assessment be required during the year, it shall be recommended and presented by the Board for adoption in compliance with the Condominium Documents and applicable law. Services to be performed pursuant to this subparagraph shall be performed annually or as needed.

The Parties acknowledge that the Association budget's Common Expenses are based upon, among other factors, estimated projected monthly and annual expenses and will fluctuate based upon the actual versus projected expenses. Accordingly, the Parties recognize and acknowledge that all references to the Association budget and the "limitations of the Association budget" throughout this Agreement imply that, from time to time, reasonable adjustments and fluctuations, especially in labor costs, insurance and other areas will occur and should be part of the budget process consideration.

(e)

Operational Matters . The Management Company shall prepare and send, as needed, all letters, reports and notices as may be reasonably requested by the Board of the Association, or as required by the Condominium Documents and Chapter 718, Florida Statutes (and regulations thereunder) with respect to letters, documents, budgets, and notices to the Unit Owners and Board members, and attend monthly meetings of the Board of Directors, annual meeting, budget meeting and any other general membership meeting of the Association and file minutes thereof, which minutes shall be prepared and recorded by the Association or its designee. Notwithstanding the forgoing, the Parties acknowledge and agree that all legal notices to the Unit Owners, Board members, and/or other parties shall be prepared by the Association's legal counsel, at Association's cost, and shall not be the responsibility of the Management Company to draft. Additionally, in the event the Management Company representative(s) is(are) required to attend more than one (1) afterhours night meeting per month, the Management Company may charge reasonably additional hourly rates for such overtime services.

Schedule 2

(i)

Coordination of Annual and Special Meetings of Unit Owners .

The Management Company shall ensure that a representative of the Management Company attends all meetings of the Unit Owners (unless excused from attendance by the Board) and that notices of all such meetings are delivered via mall or personal delivery (and/or email, to the extent permitted) to all Unit Owners at the last address shown in the Association's official records and in accordance with the Condominium Documents (or otherwise given in accordance with the Bylaws and the Act).

The Management Company shall be responsible for providing assistance to the Board in preparing an agenda for all such meetings and in preparing any reports, charts or other materials for presentation at such meetings that are requested by the Board. The Management Company shall also be responsible for preparing a draft of the minutes of all such meetings for review and approval by the Association's secretary and/or legal counsel.

Services to be performed pursuant to this subparagraph shall be performed as reasonably required.

(ii)

Coordination of All Board Meetings .

The Management Company shall ensure that a representative of the Management Company attends all meetings of the Board (unless excused from attendance by the Board) and that notices of all such meetings are delivered via mail, email or personal delivery to all members of the Board.

The Management Company shall be responsible for providing assistance to the Board in preparing an agenda for all such meetings and any reports, charts or other material for presentation at such meetings that are reasonably requested by the Board. The Management Company shall also be responsible for preparing a draft of the minutes of all such meetings for review and approval by the Association's secretary and/or legal counsel.

Services to be performed pursuant to this subparagraph shall be performed as reasonably required.

(iii)

The Management Company shall provide regular quarterly reports to the Board of the status of pending and completed operations affecting the Association.

(f)

Concierge Services . Management Company shall provide concierge services such as those described below:

(i )

Base Concierge Services . Management Company shall provide concierge services to Unit Owners pursuant to the Brand Agreement, STR (as hereafter defined), and the Standard, all at the Association's sole cost as a Common Expense and/or Residential Limited Common Expense. Additionally, any other services (e.g., seamstress, laundry, dry cleaning, spa, restaurant, transportation, etc.) that may be facilitated by the Management Company from time to time to third parties invitees and/or Unit Owners, their guest and invitees, shall be paid for directly by such respective third party and/or Unit Owner, their invitees and guests and the Management Company shall not be responsible for any charges or costs relating to the same unless caused by the grossly negligent or willful failure of the

Schedule 2

Management Company to comply in all material respects with its obligations under this Agreement.

(ii)

Valet Parking Service . Management Company shall provide valet parking services for Unit Owners who own a Unit or Condominium tenants who lease parking spaces in the Condominium garage (in lieu of the Unit Owner) and may assess such Unit Owners and/or their tenants guests and invitees a valet parking fee to cover the cost of the valet parking service, subject to the terms of the Condominium Documents and/or may charge any costs of same as a Common Expense and/or Residential Limited Common Expense. The Parties acknowledge the existence of a separate lease agreement between the Parties regarding the garage area, associated facilities, and valet operations (the "Lease"). The Parties agree that in the event of a conflict between the Lease and this Agreement, the terms of the Lease shall control.

(iii)

Additional Services . Management Company agrees to make available to each Unit Owner certain additional services for which no price list is at this time established, such as housekeeping and linen services, and maintenance and repair services (collectively, "Additional Services"). In such event, each Unit Owner will pay the Management Company directly for all costs and expenses associated with providing and billing for the Additional Services to that Unit Owner on a monthly or more frequent basis, as determined by the Management Company; Management Company shall have no responsibility for the costs and expenses thereof, nor shall any such cost be a Common Expense or Residential Limited Common Expenses. Management Company shall require a valid credit card on file for each Unit Owner to which such expenses may be charged in connection with any such Additional Services.

(iv)

Revision of Services/Termination of Services . The Management Company shall have the right to revise from time to time the Additional Services. Additionally, Management Company shall have the right to terminate Additional Services to any Unit Owner that fails to provide Management Company with a valid credit card.

(v)

Unit Owners' Responsibility . Each Unit Owner shall be directly liable to Management Company for payment of Additional Services provided to that Unit Owner, or such Unit Owner's guests, invitees and/or tenants. Nothing in this Agreement or in the Condominium Documents is intended to prevent or shall be used by the Association to prevent the Management Company from seeking recovery from any delinquent Unit Owner. The Management Company shall not be obligated to provide Additional Services to any Unit Owner that fails to pay charges for such services on time or otherwise abuses the use of those services in Management Company's reasonable discretion.

(g)

Engagement of Professionals . The Management Company shall, as needed, at the Board's reasonable approval and at Association's expense and as agents of the Association, retain and engage such attorneys, accountants, insurance consultants, tax consultants and other experts and professionals whose services may be reasonably required to effectively perform its duties and exercise its powers hereunder and shall engage same on such basis as it deems most beneficial as fiduciary for the Association. Services to be performed pursuant to this subparagraph shall be performed as required.

(h)

Licenses and Permits . The Management Company shall maintain in the Condominium Association's name (unless required to be maintained in the Management Company's name on behalf of the Association), all licenses and permits required to be obtained in connection with the management and operation of the Condominium. The Association shall execute and deliver any applications and other documents and otherwise cooperate to the

Schedule 2

fullest extent with the Management Company in applying for, obtaining, and maintaining such licenses and permits. The cost of obtaining and maintaining any of the foregoing licenses or permits, including satisfaction of any requirements therefor, shall be a Common Expense at the sole cost of Association, except that the Management Company shall bear the costs of the community association management (CAM) license required to be maintained by the Management Company for management of the Association.

(i)

Compliance with Laws . The Management Company is authorized to and shall be responsible for taking such action as may be reasonably necessary for Association to materially comply with all laws, statutes, ordinances, and rules of all appropriate governmental authorities. Services to be performed pursuant to this subparagraph shall be performed as required. Notwithstanding the foregoing, the Management Company shall not be responsible for any non-compliance issues relating to the Condominium and/or the costs relating to Association curing the same including, without limitation ADA compliance.

Additionally, the Management Company shall take such actions, as may be reasonably prudent in the Management Company's opinion, to timely report to the Board any violations actually known by the Management Company of, all pertinent laws, statutes, ordinances and rules of all appropriate governmental authorities having jurisdiction, and to advise Unit Owners and occupants of Units of the need to comply with, any of any violations actually known by the Management Company of, the Declaration, Articles of Incorporation and By-Laws of the Association and applicable rules and regulations (the "Condominium Documents"), in connection with the operation of the Association and/or conditions relating to the Condominium; provided, however, that notwithstanding anything contained in this Agreement to the contrary, in no event shall the Management Company be liable for the failure of the Association, the Board, the Unit owners, their invitees or guests, occupants of Units, and/or third parties to comply with all laws, statutes, ordinances and rules of governmental authorities and the Declaration, Articles of Incorporation, By-Laws of the Association and applicable rules and regulations of the Condominium.

( j)

Condominium Documents and Rules and Regulations . The Management Company may, from time to time, suggest to the Board amendments to the Condominium Documents and Rules and Regulations as the Management Company deems advisable and shall be consulted by the Board prior to adoption of any amendments to the Condominium Documents and/or Rules and Regulations. Management Company shall provide (or make available) to the Unit Owners a copy of the Rules and Regulations as adopted by the Board from time to time in accordance with the Condominium Documents. Management Company shall use commercially reasonable efforts to enforce the Rules and Regulations and to enforce the same in a non-discriminatory manner.

(k)

Maintenance and Repair . The Management Company shall cause the Common Elements to be maintained and repaired including, but not limited to, landscaping, painting, cleaning and such other normal and extraordinary maintenance and repair work as may be necessary (all such maintenance and repairs to be at the sole cost of the Association). The Management Company shall have the right. without first obtaining the approval of the Association, to make emergency repairs and replacements to the Common Elements which, according to the Management Company's reasonable belief, are required to eliminate or avoid danger to persons or to property, or as are necessary in the Management Company's reasonable belief for the preservation of the Condominium and Association or for the welfare of persons or in order to avoid suspension of any necessary service to the Association. To the extent that the Association is so permitted, the Management Company, and persons designated by the Management Company, shall hereby be permitted to enter into Condominium Units for the purposes set forth in this subparagraph. Maintenance and repair services shall be performed as required.

Schedule 2

(I)

Alterations and Additions . The Management Company shall coordinate all alterations or additions to the Common Elements or Limited Common Elements of the Condominium as authorized by the Board from time to time, pursuant to and in accordance with the Condominium Documents, and as permitted by law. Services to be performed pursuant to this subparagraph shall be performed as required.

(m)

Damage to Property . If repair or restoration of the Condominium, or any portion thereof, including any Unit, Units or the Common Elements, is required due to loss by act of God,.or by other cause, which is other than normal wear and tear, and which loss is less than "Major Damage," as defined in the Condominium Documents, then in such event the Management Company shall perform such tasks as the Board may specifically authorize and empower the Management Company to perform in connection with repairing and restoring such loss consistent with the provisions in the Condominium Declaration and By-laws, including any requirements as to repair after casualty. Services to be performed pursuant to this subparagraph shall be performed as required.

(n)

Insurance . The Management Company shall be responsible for obtaining and maintaining, as needed, all insurance policies required to be obtained and maintained by the Association pursuant to the Condominium Documents and applicable law, including, directors' and officers' liability insurance. To the extent permitted by law, the Management Company is hereby authorized to act as agent for the Association, each Unit Owner, and for each owner of any other insured interest and, further, if authorized by the Board, to adjust all claims arising under the insurance policies, subject to the provisions of the Condominium Documents. The Management Company, if authorized by the Board, may also file lawsuits and deliver releases upon payments of claims; to otherwise exercise all of the rights, powers and privileges of the insured parties, and to receive on behalf of the insured parties, all insurance proceeds, subject to the provisions of the Condominium Documents. The cost of all insurance obtained hereunder shall be a Common Expense of the Association. Services to be performed pursuant to this subparagraph shall be performed as required. The Management Company will name the Association as an additional insured on appropriate policies and the Association will name the Management Company as additional insured on its insurance policies.

(o)

Board Authority . Notwithstanding the provisions of this Section 6 or other provisions of this Agreement to the contrary, management of the Condominium shall be at the discretion of the Board and subject to the requirements of the Board that do not conflict with this Agreement. No provision of this Agreement shall operate to amend or supersede any conflicting provision of the Condominium Documents, and in the event of any conflict between this Agreement and the Condominium Documents the Condominium Documents shall control.

7. Right of Access . The Management Company shall have access to the Common Elements at all times, and to the Units to the extent permitted by law, as may be necessary to perform any of its obligations hereunder for the maintenance, repair or replacement of any portion of the Condominium and/or any Common Element contained therein or accessible therefrom, or for the making of emergency repairs therein necessary to prevent damage to any portion of the Condominium, Units and/or the Common Elements.

8. Fiduciary Duty . The Management Company shall act in a fiduciary capacity with respect to the proper protection of and accounting for the Association's assets. In this capacity, the Management Company shall deal at arm's length with all third parties and shall serve the Association's interests at all times; provided, however, that nothing contained herein shall prevent the Management Company from procuring necessary services from an affiliate of the Management Company or a procurement services company in which an affiliate of the Management Company has a minority ownership interest, on terms and conditions no less favorable to the Association than those that would be generally required by unaffiliated persons or entities for comparable services, if applicable, or for the sale or lease of comparable

Schedule 2

goods, provided that the Management Company provides prior written notice to the Board disclosing the affiliation and it is otherwise commercially reasonable to enter into the transaction.

Inasmuch as the Management Company has a fiduciary relationship to the Association, the Management Company shall not solicit, offer to accept, or accept anything or service of value from any person providing or proposing to provide goods or services to the Association and/or propose or enter into any agreement and/or arrangement wherein Management Company (or any affiliate of Management Company) may benefit, directly or indirectly ("self-dealing"), without first fully disclosing the potential relationship and benefit to the Board and then obtaining the President of the Association's written authorization, which authorization shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, however, Association recognizes and agrees that the Management Company may at times give to its direct guests, and/or receive, a complimentary meal, spa service, rental unit stay, and/or other potential service for promotional and/or other reasons, and that the Management Company need not receive prior authorization to receive a benefit of less than $500 per instance (although the receipt of such benefit, just in each instance, be reported to Association in writing within ten (10) business days following Management Company's knowledge of the receipt of such benefit) because the same shall be considered de minimus; provided further, however, that any such benefits given or received by the Management Company shall in no way cost the Association any cost or expense whatsoever or be self-dealing in nature.

This Agreement shall not be construed as prohibiting the Management Company, or any firm or corporation or any related person or entity controlled by the Management Company, from conducting or possessing an interest in any other business or activity, including, but not limited to, the ownership, financing, leasing, operation, development, management, advisory services and brokerage of real property, hotels, resorts and other hospitality businesses.

9. Authority to Purchase Materials and Supplies . The Management Company shall have the authority to purchase or lease, as needed, on behalf of the Association, all supplies, equipment, tools, vehicles, appliances, goods, and materials as may be necessary or desirable for the maintenance, upkeep, repair, replacement and preservation of the Condominium, the Common Elements and/or Units and to otherwise perform its duties and responsibilities for the Association pursuant to this Agreement; provided, however, any and all such purchases shall be made in the name of and at the expense of the Association.

The Management Company may contract with its affiliates, provided that such contracts are commercially reasonable, subject to the requirements of Sections 5(b) and 7 hereof. Provided that it Is otherwise commercially reasonable to do so, nothing contained herein shall be construed to require the Management Company to accept the lowest bid. Purchases shall be in the name of the Association and shall be a Common Expense of the Association. All purchases made pursuant to this paragraph shall be made on an as required or desirable basis. The Management Company may purchase such materials from an affiliate of the Management Company or a procurement services company in which an affiliate of the Management Company has a minority ownership interest, on terms and conditions no less favorable to the Association than those that would be generally required by unaffiliated persons or entities for comparable services, if applicable, or for the sale or lease of comparable goods, provided that the Management Company provides prior written notice to the Board disclosing the affiliation and it is otherwise commercially reasonable to enter into the transaction. Notwithstanding anything contained herein to the contrary, all personal property of the Management Company, including property acquired by the Management Company with its own funds, during the term of this Agreement, shall remain the property of the Management Company regardless of the use of such property in carrying out the Management Company's duties and obligations under this Agreement.

Discounts or incentives of any kind or nature obtained by the Management Company or an affiliate of the Management Company for such purchases of goods or services shall inure to the benefit of the Association in equal proportion to the other properties benefiting from the purchasing relationship in the reasonable discretion of the Management Company.

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By not later than two (2) months after the Commencement Date, the Management Company shall establish for the Association, to the Board's satisfaction, a clearly defined program and policy for identifying, tracking, and inventorying all existing and after-acquired personal property and materials.

10. Agency . All actions taken by the Management Company with respect to management and maintenance under the provisions of this Agreement shall be taken as agent for the Association and all obligations or expenses incurred in the performance of the Management Company's duties and obligations shall be, to the extent incurred in accordance with this Agreement, for the account, on behalf, in assistance and at the expense of the Association, except as is otherwise expressly provided herein.

Notwithstanding any provision contained in this Agreement or the Condominium Documents to the contrary, the Management Company shall not be required to undertake to pay any costs or expenses for the benefit of the Association or Unit Owners from its own funds, and shall only be required to perform its services and make disbursements to the extent that, and as long as, the payments of assessments received from the Unit Owners are sufficient to pay said costs and expenses in full. If it shall appear to the Management Company that said assessments are insufficient to pay the same and to adequately provide full reserves, if budgeted for, then the Management Company shall forthwith notify the Board and request a special assessment to be levied upon the Unit Owners, and such request is to be promptly and reasonably approved by the Board.

The Management Company agrees to indemnify and hold the Association, its officers, directors, employees, agents, and attorneys harmless and to save and defend them from and against all liabilities, including associated attorneys' fees and costs on the trial and appellate levels, for injury, damage or accident to person or property and/or arising out of (a) the gross negligence, fraud or willful misconduct of the Management Company, (b) a breach of Management Company's representations and warranties under this Agreement and/or (c) a material breach of this Agreement by Management Company. Similarly, the Association agrees to indemnify and hold the Management Company, its officers, directors, agents, employees, affiliated entities, and attorneys harmless and to save and defend them from and against all liabilities, including associated attorneys' fees and costs on the trial and appellate levels, for injury, damage or accident to person or property and/or arising out of the gross negligence, fraud or willful misconduct of the Association.

The covenants to indemnify hereunder shall survive the expiration or earlier termination of this Agreement.

11. Independent Contractor . The Parties hereby agree and acknowledge that the Management Company is an independent contractor of the Association.

12. Management Fee . The Management Company shall provide the services required of it hereunder, for which services the Association shall pay to the Management Company an annual management fee of Eighty Six Thousand One Hundred Eighty Four Dollars ($86,184) (the "Management Fee”). Payment of the annual Management Fee shall be in addition to any other Reimbursable Costs (as defined below) paid to the Management Company by the Association pursuant to the terms of this Agreement. The Management Fee shall be payable by the payment on the first of each month in advance of an amount equal to one-twelfth (1/12th) of the annual fee (e.g., $7,182.00 per month). The Management Fee shall after the second calendar year following the issuance of the Certificate of Occupancy for the Condominium, be increased by 3% per annum over the fee for the immediately preceding calendar year, and shall continue to increase by 3% per annum each year thereafter.

Notwithstanding the provisions of the foregoing, the Parties understand and agree that (i) the provisions of this paragraph which, subject to its terms, fix the fees hereunder for a specified time, are made in recognition of the fact that virtually all of the management functions of the Association have been delegated to the Management Company hereunder, and (ii) if the term is renewed pursuant to the provisions of Section 3 hereof, the Management Fee shall be such fee as is mutually agreed to in advance by the Parties or if no such fee is mutually agreed to, then the fee shall be increased by three percent (3.0%) in each calendar year over the fee for the immediately preceding calendar year. Additionally, if the Association

Schedule 2

undertakes any action or incurs any expense in addition to those actions or expenses incurred by the Management Company, or as set forth in the• budget prepared by the Management Company, the same shall be paid solely by the Association. If this Agreement is terminated pursuant to Section 3 above, then the Association shall continue to make the monthly payments of the Management Fee, together with any Reimbursable Costs (as hereafter defined) to be paid to the Management Company, on the first day of each month in advance during any termination or wind-up period, but in no event shall such period exceed sixty {60) days from the date of such termination or any prorated portion of the final month during which the Management Company continues to provide services to the Association.

13. Cost Reimbursement .

(a)

To the extent provided for in the Association's budget, and except as is otherwise expressly provided herein, to the extent incurred in accordance with this Agreement, the Association shall pay or reimburse the Management Company for the reasonable costs which may be incurred by the Management Company in providing services, materials and/or supplies (as are more particularly set forth by illustration in Exhibit "A" hereto, made a part hereof by the reference, the "Reimbursable Costs"), within fifteen (15) days of receipt of an invoice therefor. However, the Management Company shall not be entitled to reimbursement for salaries of the officers of the Management Company and corporate office overhead of the Management Company, as said items are actually included within the Management Fee.

(b)

Without limiting the provisions of Section 13(a) above, for restoration of Common Elements after Acts of God and/or other insurable claims such as, without limitation, hurricanes, fire or floods, the Association agrees to reimburse the Management Company five percent (5%) of the total costs of the project for overseeing the project to completion.

(c)

Notwithstanding anything contained herein or in the Agreement to the contrary, to the extent that any Reimbursable Cost or other expenditure will exceed the line item amount allocated in the budget by an amount greater than $10,000, the Management Company shall receive written approval of the President of the Board prior to incurring such expense, except in the case of emergency.

14. Grievance Procedure . If the Board in its commercially reasonable opinion has a grievance relating to the management and operations of the Association or Condominium by the Management Company, then the Board shall promptly bring such matter to the attention of the general manager of the Management Company (the "General Manager") in writing with copy to the Management Company. The Management Company will take such steps as are commercially reasonable in its discretion to promptly and appropriately address the grievance while complying with Federal, State and local laws. If the Board makes the recommendation that an individual employee be removed, then the General Manager shall conduct an investigation into the allegations and, if the grievance has merit, then the General Manager shall work with the Board to take such appropriate actions that are permitted by Federal, State and local laws to mitigate the problem to the reasonable satisfaction of the Board, if possible.

15. Interference . For so long as this Agreement remains in effect and is not properly terminated by the Association as herein provided, the Association shall not unreasonably interfere nor permit, allow or cause any of its officers, managers or Unit Owners to unreasonably interfere with the Management Company in the performance of its duties or the exercise of any of its powers hereunder. Conversely, while this Agreement is in effect, the Management Company will not interfere with the Board's and Unit Owners' rights of access to the books and records and budget information relating to the Condominium.

16. Indemnification . The Management Company agrees to indemnify and hold the Association, its officers and directors harmless and to save and defend them from and against all liabilities (including reasonable attorneys' fees and costs whether pre-trial, at trial, mediation or arbitration and/or in connection with any appeal), for injury, damage, or accident to persons or property to the extent resulting

Schedule 2

from the gross negligence or willful misconduct of Management Company, or from Management Company's material breach of this Agreement

The Association shall defend, indemnify and hold the Management Company (and its officers, directors, managers, members and employees) harmless from any liability (including reasonable attorneys' fees and costs whether pre-trial, at trial, mediation or arbitration and/or in connection with any appeal) for any claim including but not limited to injury, damage or accident to any member of the Association, a guest, lessee or invitee or to any other party, and for damage to property arising out of, or in the course of the performance of the duties contemplated hereunder, except such liabilities arising from the gross negligence or willful misconduct of the Management Company, or resulting from Management Company's default of this Agreement.

All personal property moved into the Condominium shall be at the sole risk of the Association or the Unit Owner(s) as the case may be. The Management Company shall not be liable to the Association or others for any damage or injury to persons or property whatsoever including, without limitation, real or personal, arising from theft, vandalism, HVAC malfunction, bursting or leaking of water pipes, the presence of mold, mildew or any pollutant and any act or omission of any Unit Owner or occupant of the property, or of any other person,except if such damages or injuries are a result of gross negligence or willful misconduct of the Management Company. To the extent that such liability results from the Management Company's gross negligence or willful misconduct, Management Company shall indemnify and hold harmless the Association, its officers, directors and members. The provisions set forth in this Section shall survive the expiration or earlier termination of this Agreement.

17. Default :

(a)

Default by Association . If the Board, Association or Unit Owners shall materially interfere with the Management Company in the performance of its duties or exercise of its powers hereunder, or if the Association has materially failed to comply with its obligations under this and such material non-compliance has continued for a period of thirty (30) days or more after written notice of such material non-compliance is delivered to the Association by the Management Company; provided, however that if the Association commenced reasonable actions to cure such material noncompliance within the thirty (30) day period, and the Association is thereafter is diligently and continuously working to cure such material non-compliance and keeping the Management Company reasonably informed of its actions to attempt to cure the material non-compliance, the Association shall have an additional sixty (60) days after the expiration of the thirty (30) day period to cure such material non-compliance; provided further, that if such material non-compliance is capable of being cured but could not reasonably be cured within the previous sixty (60) day cure period, the Association commenced reasonable actions to cure such material non-compliance within the thirty (30) day period and thereafter continued to diligently and continuously work to cure the material non-compliance within the additional sixty (60) day cure period, and the Association is thereafter is diligently and continuously working to cure such material non-compliance and keeping the Management Company reasonably informed of its actions to attempt to cure the material noncompliance, the Association shall have such additional period of time after the expiration of the previous additional sixty (60) day cure period as is reasonably necessary to cure such material non-compliance. Upon a default by the Association past all cure periods as set forth herein, the Management Company shall be entitled to pursue any adequate remedy at law or in equity Including, without limitation, injunctive relief.

(b)

Default by Management Company . If the Management Company has materially failed to comply with its obligations under this Agreement and such material non-compliance has continued for a period of thirty (30) days or more after written notice of such material non-compliance is delivered to the Management Company by the Association; provided, however that if the Management Company commenced reasonable actions to cure such material non-compliance within the thirty (30) day period, and the Management Company

Schedule 2

is thereafter is diligently and continuously working to cure such material non-compliance and keeping the Association reasonably informed of its actions to attempt to cure the material non-compliance, the Management Company shall have an additional sixty (60) days after the expiration of the thirty (30) day period to cure such material non compliance; provided further, that if such material non-compliance is capable of being cured but could not reasonably be cured within the previous sixty (60) day cure period, the Management Company commenced reasonable actions to cure such material non-compliance within the thirty (30) day period and thereafter continued to diligently and continuously work to cure the material non-compliance within the additional sixty {60) day cure period, and the Management Company is thereafter is diligently and continuously working to cure such material non-compliance and keeping the Association reasonably informed of its actions to attempt to cure the material non-compliance, the Management Company shall have such additional period of time after the expiration of the previous additional sixty (60) day cure period as is reasonably necessary to cure such material non-compliance; however such additional time shall not exceed thirty {30) additional days. In the event the Association terminates this Agreement, Management Company shall only be entitled to Management Fees through the date of termination (which fees will be prorated in the event the termination date occurs on a date other than the last day of a calendar month), and the Management Company shall reimburse the Association for any excess Management Fees that may have been previously paid to the Management Company.

(c)

Remedies . Upon the occurrence of an uncured default by either Party, the non-defaulting Party may, in addition to any other remedy given it by agreement or in law or in equity, bring an action against the defaulting Party for damages, specific performance, injunctive relief, and/or such other rights and remedies as it may have in law or in equity. The non-prevailing Party shall be liable for the reasonable attorneys' fees and costs incurred by the prevailing Party. All of such rights of the Parties on default shall be cumulative, and the exercise of one or more remedies shall not be deemed to exclude or constitute a waiver of any other or additional remedy.

18. Miscellaneous .

(a)

Assignment . This Agreement shall not be assigned by the Management Company without the prior written consent of the Association, which approval shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, the Management Company may, without the prior written consent of the Association, assign or subcontract the obligations set forth in this Agreement to an Affiliate of the Management Company including, without limitation, Chesapeake Hospitality. The term "Affiliate" for purposes of this Agreement shall mean an affiliate or subsidiary of Lessee, performing services similar to those performed by Management Company at the Agreed Standard.

(b)

Governing Law: Waiver of Jury Trial; Venue of Actions . This Agreement shall be governed by, and shall be construed in accordance with, the laws of Florida. The Parties hereby waive any right they may have under any applicable law to a trial by jury with respect to any suit or legal action which may be commenced by or against the other concerning the interpretation, construction, validity, enforcement or performance of this Agreement or any other agreement or instrument executed in connection with this Agreement. In the event any such suit or legal action is commenced by either Party, the other Party hereby agrees, consents and submits to the personal jurisdiction of the courts in and for the county in which the Condominium is located ("Courts"), with respect to such suit or legal action, and each Party also hereby consents and submits to and agrees that venue in any such suit or legal action is proper in said Courts, and each Party hereby waives any and all personal rights under applicable law or in equity to object to the jurisdiction and venue in said Courts. Such jurisdiction and venue shall be exclusive of any other jurisdiction and venue.

Schedule 2

(c)

Waiver . No waiver of a breach of any of the covenants contained in this Agreement shall be construed to be a waiver of any succeeding breach of the same or any other covenant.

(d)

Modification . No modification, release, discharge or waiver of any provision hereof shall be of any force, effect or value unless in writing and signed by the parties to this Agreement.

(e)

Entire Agreement . This Agreement constitutes the entire agreement between the Parties with regards to the subject matter contained herein, and neither Party has been induced by the other by representations, promises or understandings not expressed herein, and there are no collateral agreements, stipulations, promises or understandings whatsoever, in any way touching the subject matter of this instrument, or the instruments referred to herein that are not expressly contained herein or in the Condominium Documents.

(f)

Partial Invalidation . The invalidity in whole or in part of any covenant, promise or undertaking, or any paragraph, subparagraph, section, subsection, sentence, clause, phrase or words, or of any provision of this Agreement shall not affect the validity of the remaining portions hereof.

(g)

Gender and Number . Whenever the context hereof so permits, the use of plural will include the singular, the singular the plural, and the use of any gender will be deemed to include all genders.

(h)

Notices . Except as may be otherwise provided herein, any notice, demand, request, consent, approval or communication under this Agreement shall be in writing and shall be deemed duly given or made: (i) three days after being deposited, postage prepaid, in the U.S. mail, certified or registered mail with a return receipt requested, addressed to the Party at the address shown below; (ii) when delivered personally to the Party at the address specified below; (iii) when delivered by a reliable overnight courier service, fee prepaid, with receipt of confirmation requested, addressed to the Party as specified below; or (iv) when delivered by facsimile transmission with confirmed receipt of transmission. A Party may designate a different address or preference for transmittal of notice including email for receiving notices hereunder by notice to the other parties.

To Association:	4010 South Ocean Condominium Hollywood
	Association, Inc.
	315 S. Biscayne Boulevard, 4th Floor
	Miami, Florida 33131
	Attn: President



To Management Company:	[____________________________]
	410 West Francis Street
	Williamsburg, Virginia 23185
	Attention: David Folsom, President

	and a copy that does not constitute Notice to:


	Solomon & Furshman, LLP
	1200 Brickell Avenue, PH 2000
	Miami, Florida 33131
	Attn: Ben Solomon, Esq.

Schedule 2

(i)

Excusable Delays . In the event that a Party shall be delayed, hindered in or prevented from the performance of any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war, Act of God, or any other reason beyond the Party's control, then performance of such act shall be excused for the period of the delay, and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay.

(j)

Termination of Condominium . If the Condominium is ever legally terminated as set forth in the Declaration, then this Agreement shall automatically terminate.

(k)

Agreed Standard . For so long as this Agreement remains in effect, the Parties agree that the Condominium shall be maintained in a manner consistent with the Project Quality Standards, as described in the First Amendment to the Declaration, and with the Zoning Regulations The Management Company shall be excused from its obligation to manage, operate and maintain the Association and Condominium Property in conformity with this agreed standard (i) to the extent and whenever the Management Company shall be prevented from compliance with such standard by causes beyond the reasonable control of the Management Company, including, without limitation, casualties, war, insurrection, strikes, lockouts, Acts of God and governmental actions; and (ii) to the extent and whenever budget limitations will not reasonably permit the Management Company to comply with such Agreed Standard, including limitations relating to the nature, quality, and quantity of services and support personnel. Any failure of the Association to maintain the Condominium in accordance with said agreed standard, which failure is not caused by the acts or omissions of the Management Company, shall constitute a default under this Agreement as contemplated by Section 17 above.

(I)

Employment Matters upon Termination . The Association acknowledges that the termination of this Agreement by the Association will result in the termination of the employment of any employees hired by the Management Company to perform the duties and responsibilities of the Management Company set forth herein; provided, however, that the Association acknowledges that the Management Company shall have the right to make offers of employment to any management personnel then employed for employment at other resorts managed by the Management Company or its affiliates. The Association agrees that with respect to termination it shall indemnify, defend and hold the Management Company, and each of the Management, it Company's shareholders, officers, directors, employees, agents, and attorneys completely free and harmless from any and all manner of liability, claim, loss, damage or expense of any employees of the Management Company (notwithstanding the continuation of their employment at the Condominium as employees of the Association or a successor manager), including, without limitation, accrued payroll, accrued benefits such as paid time off and other employment liabilities (including severance obligations) up to the date of such termination.

(m)

Affiliation . The Association acknowledges and agrees that the Management Company may have an affiliation and/or other contractual relationships with the Developer and/or certain affiliates of the Developer including, without limitation, the spa, restaurant, and/or beach club owner(s) and operators(s) and that the same is permitted.

(n)

Reasonableness Standard for Consents . Under any circumstance in which this Agreement requires one Party to consent to the actions of the other Party, the Party whose consent is required shall not withhold or delay such consent unreasonably, unless explicitly permitted to do so by a particular provision.

(o)

Attorney's Fees . In the event any Party initiates action to enforce its rights hereunder, the prevailing Party shall recover from the non-prevailing Party or parties its reasonable expenses, court costs and reasonable attorneys' and paralegal fees and disbursements,

Schedule 2

whether suit be brought or not. As used herein, expenses, court costs and attorneys' and paralegal fees include expenses, court costs and attorneys' fees incurred in any appellate proceeding. All such expenses shall bear interest at the legal rate provided by the Florida Civil Practice Law and Rules from the date the prevailing Party pays such expenses until the date the non-prevailing Party repays such expenses. Expenses incurred in enforcing this paragraph shall be covered by this paragraph.

(p)

Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

(q)

No Liability of Board Members . It is agreed that with respect to this Agreement, the Board of Directors and the members of the Board of Directors of the Condominium are acting and shall act only as agents for the Unit Owners and shall have no personal liability hereunder, except to the extent such liability arises from the gross negligence or willful misconduct of any such member of the Board of Directors and that each Unit Owner's liability hereunder shall be limited to such proportion of the total liability hereunder as such Unit Owner's Common Interest in the Common Elements bears to the Common Interest of all Unit Owners in the Common Elements.

(r)

License Agreement . The Association has entered into that certain Brand License Agreement dated March _, 2017 (the "License Agreement") with SBE Hotel Licensing, LLC, a Nevada limited liability company to operate the Condominium using the "Hyde Beach House Resort" and "Hyde Beach House Resort & Residences" names, and that the Condominium is subject to such License Agreement. Accordingly, Association and the Management Company shall cooperate with each other at all times to ensure operation of the Condominium in accordance with the License Agreement.

Schedule 2

IN WITNESS WHEREOF, the Parties have caused these presents to be executed on the day and year first above written.

"Association"

4010 South Ocean Condominium Hollywood, Inc., on behalf of the Unit Owners


By:_______________________________________
Name:____________________________________
Title:	President

By:_______________________________________
Name:____________________________________
Title:	Secretary

"Management Company"

_________________________________________


By:_______________________________________
Name:____________________________________
Title:_____________________________________

Schedule 2

EXHIBIT “E”

Form of Lender Side Letter

EXHIBIT E - 1

LETTER AGREEMENT

June 1, 2017

Guggenheim Corporate Funding, LLC,

as agent for the Lender (“Agent”)

Re:

4010 South Ocean Condominium Hollywood - Management Agreement, Lease Agreement, Purchase Agreement and Pre- Opening Services Agreement

To Whom It May Concern:

Midland National Life Insurance Company, an Iowa insurance company, HB Lender, LLC, a Delaware limited liability company, Loco Condo LLC, a Florida limited liability company, and JMP HBH Lender, LLC, a Florida limited liability company, together with the lenders from to time a party to the Loan Agreement executed in connection with the Loan and their respective successors and assigns (collectively, the “Lender” ) has given a construction loan (the “Loan” ) to 4000 South Ocean Property Owner, LLLP ( “Developer” ), the developer of the 4010 South Ocean Condominium Hollywood (the “Condominium” ), which loan will be secured in part by a Mortgage, Security Agreement and Fixture Filing executed by Developer in favor of Agent to be recorded in the Public Records of Broward County, Florida (the "Mortgage" ) and that certain Pledge and Security Agreement made by 4000 South Ocean, LLC and 4000 South Ocean GP, LLC in favor of Agent (the "Pledge" and collectively with the Mortgage and all other documents evidencing the Loan, the “Loan Documents” ).

Sotherly Hotels, Inc. ( "Sotherly" ) has entered into that certain 4010 South Ocean Condominium Hollywood Commercial Unit Purchase Agreement dated as of May _ 2017 with Developer, together with that certain Addendum to Commercial Unit Agreement of even date therewith, for the purchase of Commercial Unit CU-2 in the Condominium ( "Purchase Agreement " ). Simultaneously with the execution of the Purchase Agreement, Sotherly hasentered into that certain Pre-Opening Services Agreement with Developer ( "Pre-Opening Services Agreement" ) with respect to certain services to be provided by Sotherly with respect to Unit CU-2 and the condominium hotel that Sotherly will operate at the Condominium prior to closing. The Purchase Agreement requires that certain affiliates of Sotherly enter into an Association Management Agreement with 4010 South Ocean Condominium Hollywood Association, Inc. ( “Association” ) for the operation and maintenance of the Condominium in the form attached to the Purchase Agreement (the “Management Agreement’ ) and that certain Lease Agreement with the Association for the operation of the parking garage and certain cabanas in the form attached to the Purchase Agreement ( "Lease" ).

Pursuant to the Management Agreement, Sotherly (or its affiliate), as the Management Company thereunder, has the right to cancel the Management Agreement in its discretion by providing ten (10) days' written notice to the Association in the event Agent commences a foreclosure action on the Mortgage, accepts a deed-in-lieu of foreclosure or exercises its default remedies under the Pledge, and (b) pursuant to the Lease, Sotherly (or its affiliate), as the Lessee thereunder, has the right to cancel the Lease in its discretion upon providing written notice to the Association in the event Agent commences a foreclosure action on the Mortgage, accepts a deed in-lieu of foreclosure or exercises its

default remedies under the Pledge provided Sotherly concurrently terminates the Management Agreement.

As a material inducement for Lender making the Loan and for Agent consenting to the Association, which is currently controlled by the Developer, entering into the Management Agreement and the Lease, and for $100.00 and other good and valuable consideration, Agent has requested and Sotherly has agreed that in the event that (each a “ Lender Enforcement Action ”): (i) Agent commences a foreclosure action on the Mortgage (as evidenced by the filing of a foreclosure complaint in a legal action) or on the Pledge, or (ii) Agent accepts a deed-in-lieu of foreclosure with respect to the Mortgage or an assignment-in-lieu of foreclosure with respect to the Pledge or (iii) Agent or its nominee or designee or any other individual or entity acquires title to, or assumes or obtains possession or control of, the collateral set forth in the Mortgage or the Pledge (the acquiring entity, together with its successors and assigns, “ Subsequent Owner ") at, during or by a foreclosure, then Subsequent Owner shall have the right, in its sole and absolute discretion, exercisable during the sixty (60) day period following Subsequent Owner's acquisition of title, possession or control of the collateral (the " Election Period "), to either (a) terminate the Purchase Agreement (and unwind the escrow closing of Unit CU-2 if it has already occurred under the Purchase Agreement) and Pre-Opening Services Agreement and cause Sotherly to terminate the Management Agreement (if executed) and Lease (if executed) (collectively, the " Sotherly Agreements "), or (b) assume the obligations of Developer under the Purchase Agreement and Pre-Opening Services Agreement and not require Sotherly to terminate the Management Agreement and Lease; however, Subsequent Owner shall not have the right to terminate (or cause to be terminated) only some of the Sotherly Agreements and not all of the Sotherly Agreements (the “ Termination Right ”). Lender shall use commercially reasonable efforts to provide a copy to Sotherly of any notice of default delivered by Lender to Developer pursuant to the Loan Documents within ten (10) days following delivery of such notice to Developer.

If Subsequent Owner elects to terminate the Sotherly Agreements, it shall provide written notice to Sotherly during the Election Period, with a simultaneous copy to the Funds Escrow Agent and Closing Documents Escrow Agent (as defined in the Escrow Agreement) if the escrow closing of Unit CU-2 has occurred, terminating the Purchase Agreement and the Pre-Opening Services Agreement, and directing Sotherly to terminate the Management Agreement and Lease with the Association, if executed and in effect at that time (the " Termination Notice ").

If at the time the Termination Notice is sent by Subsequent Owner, the purchase of Unit CU-2 has been closed in escrow as contemplated by the Purchase Agreement, (a) Sotherly and Subsequent Owner shall cause the applicable funds deposited by Sotherly into escrow to be returned to Sotherly pursuant to the terms of the Escrow Agreement executed and delivered on or before the date hereof by Sotherly, Developer, the Funds Escrow Agent and Closing Documents Escrow Agent (as such terms are defined therein) (the " Escrow Agreement ") and the escrowed closing documents to be destroyed pursuant to the terms of the Escrow Agreement, including without limitation the deed, bill of sale and partial release of mortgage for Unit CU-2, (b) the Purchase Agreement shall terminate, and (c) Sotherly and its affiliates shall promptly vacate Unit CU-2 and all other portions of the Condominium in accordance with the terms of this Agreement, the Escrow Agreement and the Pre-Opening Services Agreement.

Southerly will exercise its termination right under the Management Agreement and Lease within ten (1 0) days after its receipt of the Termination Notice from Subsequent Owner in item 1 above.

Within the thirty (30) day period following receipt of the Termination Notice from Subsequent Owner, Sotherly and its affiliates shall (even if they are not otherwise in default under the applicable Sotherly Agreement(s)) (a) cause the Sotherly Agreements to be terminated, (b) turn over to Subsequent Owner exclusive possession of Unit CU-2 and all other portions of the Condominium property that were being used, occupied, controlled or operated by Sotherly and/or its affiliates and vacate the same, (c) remove all of the personal property, equipment and inventory belonging to Sotherly, (d) cooperate with and use good faith efforts to facilitate a smooth transition to the successor operator(s) of the condominium hotel, parking garage and cabanas, and the successor manager of the Association, and (e) comply with all other post-termination requirements set forth in the Sotherly Agreements.

If Subsequent Owner elects not to terminate the Sotherly Agreements, it shall deliver written notice to Sotherly during the Election Period, with a simultaneous copy to the Funds Escrow Agent and Closing Documents Escrow Agent (as defined in the Escrow Agreement) if the escrow closing of Unit CU-2 has occurred, informing Sotherly of such election (the " Non-Termination Notice "). After delivery of the Non-Termination Notice, Sotherly and its affiliates and Subsequent Owner shall take such actions as are reasonably necessary to effectuate the purpose and intent of the Sotherly Agreements.

Agent, on behalf of Lender and Subsequent Owner, acknowledges and agrees that at no time shall Agent, Lender or Subsequent Owner have any right, claim or entitlement to the Pre-Opening Services Payment or the Construction Disruption Payments (as such terms are defined in the Escrow Agreement), nor shall Agent, Lender or any Subsequent Owner have any obligation to Sotherly or any affiliate of Sotherly or to HHA (as defined in the Escrow Agreement) or their respective successors or assigns to pay any such amounts.

For purposes of this paragraph, Agent, Sotherly and the Sotherly affiliate(s) signing below shall be collectively referred to as the " Parties " and singly as a " Party. " The unenforceability, invalidity or illegality of any provision of this letter agreement (this " Agreement ") shall not render the other provisions unenforceable, invalid or illegal. This Agreement shall be construed and interpreted in accordance with the laws of the State of Florida, without giving effect to conflict-of.law rules and principles of said State. This Agreement constitutes the entire agreement of the Parties hereto with respect to the subject matter hereof, and there are no prior or contemporaneous oral or written representations, promises or agreements not expressly referred to herein. This Agreement may not be amended or modified hereafter except by a written agreement signed by the Parties. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective legal representatives, and permitted successors, transferees and assigns. This Agreement may be executed in counterparts with the same effect as if the Parties had executed the same document. The counterparts shall be construed together and shall constitute a single Agreement. In the event that any Party should retain counsel and/or institute any suit against the other for violation of or to enforce any of the covenants or conditions of this Agreement, or should a Party intervene in any suit in which the other is a party to enforce or protect its interest or rights hereunder, the prevailing Party in any such suit shall be entitled to all of its costs, expenses and

reasonable fees of its attorney(s) (if and to the extent permitted by law) in connection therewith. All judicial proceedings brought by or against any Party, shall be brought in the courts of the State of Florida sitting in Broward County, Florida. The Parties each acknowledge and agree that the undersigned representative of each Party has the legal requisite authority to bind the applicable Party to the terms of this Agreement and that such Party does so knowingly with a full understanding of the nature and meaning of each provision of this Agreement. Additionally, that each Party had the benefit of professional advice rendered by independent legal counsel of their own selection prior to entering into this Agreement (or knowingly waived same) and has executed this Agreement only after carefully considering each term of this Agreement and fully discussing the same with counsel of their choice. The Parties further acknowledge and agree that each of them and their respective counsel have reviewed and revised this Agreement and that this Agreement has been voluntary and consensually negotiated at ''arm's length." Accordingly, this Agreement shall be deemed to have been written jointly by the Parties, and the Parties agree and acknowledge that no rule of construction which would result in an interpretation or construction of this Agreement in favor or to the detriment of one of the Parties or the other shall apply in construing or interpreting this Agreement or any part of it. The Parties each acknowledge and agree that all of the Sotherly Agreements, including this Agreement, are subject and subordinate to the lien of the Mortgage given to Agent on behalf of the Lender to secure the Loan and to the rights of Agent and_Lender under the Loan and all of the documents executed in connection with the Loan. This Agreement shall not be recorded in the public records.

[SIGNATURE PAGES TO FOLLOW]

By executing below, Agent and Sotherly and its affiliates signing below hereby agree to the above terms and to be bound by the terms of this letter.

	Very truly yours,

	Sotherly Hotels, Inc.

	By:
		David Folsom, President

(SIGNATURE PAGE TO LETTER AGREEMENT #MIAMI 5405327)

HEREBY ACCEPTED, AGREED AND ACKNOWLEDGED

THIS______DAY OF MAY, 2017

Guggenheim Corporate Funding, LLC,
as Agent


By:
Name:
Title:

(SIGNATURE PAGE TO LETTER AGREEMENT #MIAMI 5405327)

Exhibit "F'

Form of Pre-Opening Services Agreement

PRE-OPENING SERVICES AGREEMENT

THIS PRE-OPENING SERVICES AGREEMENT (this "Agreement") is made as of the 1st day of June, 2017, by and between 4000 South Ocean Property Owner, LLLP, a Florida limited liability limited partnership ("Seller") and Sotherly Hotels, Inc. (NASDAQ: "SOHO"), a publicly traded real estate investment trust ("Buyer"). Seller and Buyer may hereinafter each be referred to as a "Party" or collectively, the "Parties."

RECITALS

A. Seller is the developer of 4010 South Ocean Condominium Hollywood (the "Condominium"), a condominium to be located upon the real property having an address of 4000 South Ocean Drive, Hollywood, Florida 33019 (the "Condominium Property"). In connection with the development of the Condominium, Seller obtained a construction loan (the "Loan") from Guggenheim Corporate Funding, LLC ("Agent"), as Agent for Midland National Life Insurance Company, an Iowa insurance company, HB Lender, LLC, a Delaware limited liability company, Loco Condo LLC, a Florida limited liability company, and JMP HBH Lender, LLC, a Florida limited liability company (together with the lenders from to time a party to the Loan Agreement executed in connection with the Loan and their respective successors and assigns, collectively "Lender"), which Loan is secured in part by (i) a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing to be recorded in the Public Records of Broward County, Florida (the "Mortgage") and (ii) that certain Pledge and Security Agreement made by 4000 South Ocean, LLC and 4000 South Ocean GP, LLC in favor of Lender.

B. The Parties have entered into that certain Commercial Unit Purchase Agreement and Addendum to Commercial Unit Purchase Agreement (the ''Purchase Agreement") of even date herewith with respect to the purchase and sale of Unit CU-2 (the "Unit") in the Condominium. All references to the Purchase Agreement shall be deemed to refer to the Purchase Agreement as modified by the Parties from time to time.

C. The Purchase Agreement provides that the closing of the purchase and sale of the Unit will occur in escrow pursuant to the terms of that certain Escrow Agreement of even date herewith (the "Escrow Agreement") between Seller and Buyer and the escrow agents named thereunder.

D. Buyer is a hotel owner/operator with significant experience in hotel management, valet operations, and implementing rental programs for units.

E. The Condominium is subject to certain land use and zoning restrictions (the "zoning Requirements") that require the Condominium to be operated as a Condo-Hotel (as defined by applicable zoning regulations) and limit unit owners to only occupying their units for 150 days or less per year, making it convenient for such unit owners to subject their units to a rental program that will be created and operated by Buyer.

F. Buyer or an affiliate of Buyer will be responsible for, among other services, operating the valet parking facilities and some of the cabanas at the Condominium pursuant to a Lease agreement (the "Lease") with 4010 South Ocean Hollywood Association, Inc. ("Association"), managing the Association pursuant to a Management Agreement (the "Management Agreement") with the Association and running the rental program associated with the Condominium at significant cost and expense to Buyer.

G. Creation and implementation of the valet operations, management of the Association, hotel operations, and the rental program is an integral part of the Condominium.

H. As such, Seller agrees to pay Buyer the Pre-Opening Services Fee (as defined below) for the pre- opening services described in this Agreement in consideration for Buyer commencing operations early, prior to closing, in order to ensure that, among other things, the rental program, hotel operations, and

garage facilities including valet operations, are ready to be offered to purchasers of Seller upon (or shortly after) their respective closings.

I. The Parties desire to enter into this Agreement as more particularly set forth below.

NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00), the execution and delivery of the Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. The foregoing recitals are true and correct and are incorporated herein as if repeated at length.

2. Subject to the terms hereof, Seller hereby grants Buyer a non-exclusive license to occupy the Unit, the limited common elements appurtenant thereto, and the various common elements of the Condominium (the "Common Elements"), from and after the Pre-Occupancy Date (as hereafter defined), for the limited purpose of Buyer conducting certain pre-opening preparations including, without limitation: training of staff; pre-opening payroll; housekeeping and operational inventory (i.e., cleaning supplies, linens, kitchen and bathroom consumables); stocking of staff uniforms: valet operation set up; meeting room operation set up and the like; and creation and implementation of a rental program for all units (collectively, the "Pre-Opening Activities") commencing approximately 180 days prior to the Seller’s estimated receipt of the temporary certificate of occupancy for the Condominium (the "Pre-Occupancy Date") and continuing until expiration or termination of the term of this Agreement. Additionally, from and after the time that Seller receives a TCO for the Condominium, the Pre-Opening Activities shall also include the touring of prospective vendors, Seller's purchasers, and other clients and prospective clients of Buyer and prospective rental program participants through the Unit and Common Elements and, from and after the Opening Date, operating the rental program and offering the Condo-Hotel services in compliance with the Zoning Requirements. Seller agrees to pay Buyer a fee in the amount of $750,000 (the "Pre-Opening Services Fee") in consideration for Buyer’s performance of the Pre-Opening Activities.

3. Buyer agrees, at Buyer's sole cost and expense, to diligently perform the Pre-Opening Activities and, within ten (10) days after the closing of the Unit in escrow (the "Opening Date"), commence operating Buyer's rental program and condominium hotel activities. Buyer shall be required to operate in accordance with the applicable condominium documents and all applicable laws and regulations. Without limiting the foregoing, Buyer shall operate the Unit at all times after the Opening Date as a condominium hotel in accordance with the Project Standards and in compliance with the Condo-Hotel Requirements (as such terms are defined in Exhibit G to the Addendum to the Purchase Agreement), including having a hotel front desk/concierge on the ground floor at all times, serving Unit Owners in compliance with the Condo-Hotel Requirements. The Pre-Opening Services Payment shall be paid by Seller to Buyer upon the later of: (i) the Buyer depositing all of the Buyer Closing Documents and funds for the purchase of Unit CU-2 in escrow in accordance with the terms of the Escrow Agreement among Seller, Buyer, Lender and the escrow agents named therein (the "Escrow Agreement") and (ii} Seller’s receipt of the TCO for the Condominium. For avoidance of doubt, Seller's obligation to pay such amount (or any portion thereof} is expressly conditioned on the Buyer depositing the necessary funds to close the purchase of Unit CU-2 under the Escrow Agreement

4. The term of this license shall commence on the date the Purchase Agreement is fully executed and terminate upon the earlier of: (i) Buyer's closing upon title to the Unit and the breaking of any escrow in connection therewith; or (iii) any default by Buyer under (or performance of an act, or the failure to perform an act, which with the passage of time shall constitute a default under} the Purchase Agreement or any termination of the Purchase Agreement, or {ii) the termination of this Agreement (the "Term"). Buyer shall gain access to the Condominium Property on the Pre- Occupancy Date.

Upon the expiration of the Term (other than as a result of Buyer's closing upon title to the Unit and the breaking of the escrow in connection therewith), Buyer and all Buyer Parties (as hereafter defined) shall promptly vacate the Unit and all other areas of the Condominium within thirty (30) days after expiration of the Term, hereby waiving any notice to quit or vacate, leave the Unit and all such other areas in the same

condition same were in immediately prior to expiration of the Term (including all improvements made by Seller from and after commencement of the Term) and remove any and all supplies, inventory, and other items of personal effect (collectively, the "Buyer's Personal Items"). Any such items remaining at the Unit, or other areas of the Condominium after the expiration of the Term shall be deemed abandoned by Buyer if left for more than thirty (30) days after the expiration of the Term and Seller shall have the right to dispose of such items in any manner it so chooses (without any accounting to Buyer for same). The occupancy rights herein granted to Buyer are personal, and may not be assigned or transferred, other than to affiliates of Buyer or other parties expressly permitted in writing by Seller in Seller's discretion.

5. Buyer expressly understands and agrees that other than for purposes of the Pre-Opening Activities, Buyer shall not be permitted to occupy the Unit (or any other portion of the Condominium), including without limitation, keep or store anything therein, during the Term for any other purpose unless otherwise agreed to in writing by Seller in Seller's discretion. Buyer further understands and agrees that the license granted herein is nonexclusive to Buyer, and that Seller and its contractors, subcontractors, employees, suppliers, and other personnel and/or workers shall have the unfettered right to access the Unit and any other portion of the Condominium at any time and all times as Seller shall desire during the Term.

6. Buyer hereby assumes all risks of any damage or loss to any of the Buyer's Personal Items and all risks of any injury to Buyer or any of Buyer's agents, employees, vendors, clients, guests, tenants or invitees (collectively, the "Buyer Parties") that may enter into the Unit and/or on to the Condominium Property unless the same is a result of the gross negligence or willful misconduct of Seller and/or Seller's contractors, subcontractors, employees and/or agents. Buyer shall be responsible for insuring the Buyer's Personal Items and carrying appropriate general liability, personal property, employment practices liability, crime insurance and workers' compensation insurance in the same amounts and upon the same terms as Buyer's affiliate is {or will be) required to carry under the Lease with Association, and Seller shall have no responsibility for insuring same or for any casualty or theft of any kind with respect to the Buyer's Personal Items and/or the Buyer Parties. A copy of such insurance policies shall be provided to Seller prior to the Pre-Occupancy Date, and shall name the Seller, the Seller's construction lender and (after it has been formed) the Association as additional insureds.

7. Buyer shall, at its cost and expense, keep and maintain the Unit and other portions of the Condominium Property being occupied in connection with the Pre-Opening Activities in good repair throughout the Term. Buyer understands and agrees the Buyer shall not be permitted to make any improvements, changes and/or alterations to the Unit or other portions of the Condominium prior to closing (notwithstanding the limited occupancy pursuant hereto). Buyer shall not record, permit, or cause any lien or other encumbrance to be recorded against the Unit. Buyer agrees to conduct his/her/their occupancy of the Unit and other portions of the Condominium in such a manner as to maintain such areas in the same good order and repair as originally constructed by Seller, including improvements made by Seller subsequent to Buyer taking occupancy. Buyer further agrees that Buyer will commit no act of damage (and will not permit any Buyer Parties to commit any act of damage), knowingly or unknowingly, which may impact the Unit and/or any other portion of the Condominium and/or the Seller's ability to obtain a temporary and/or permanent certificate of occupancy for the Unit and/or the Condominium. Buyer agrees that in taking occupancy of the Unit, Buyer shall be responsible for all costs incurred by Seller due to any damage caused by Buyer or any Buyer Party. Buyer agrees to cooperate with Seller at all times (at Seller's sole cost) with regard to any matters pertaining to the Seller's obtaining a temporary and/or permanent certificate of occupancy for the Unit and/or the Condominium.

8. Notwithstanding anything to the contrary in the Purchase Agreement, Buyer agrees that Seller shall not be responsible for any damage to the Unit and/or any limited common element appurtenant thereto caused as a result of the Pre-Opening Activities, and shall not be responsible for any repairs to the Unit and/or its limited common elements

9. Buyer shall at all times maintain and operate the Unit, as well as the limited common elements appurtenant thereto and the other parts of the Condominium occupied or utilized by Buyer, in a manner consistent with the following: (i) the Project Quality Standard (as defined in the First Amendment to the Declaration of Condominium attached to the Purchase Agreement), and (ii) the License Agreement

(as defined in the Management Agreement. In addition, until the Lease is executed by Buyer's affiliate and the Association, the Operating Standards and Requirements set forth in Section 7.1 of the form of Lease attached to the Purchase Agreement are hereby incorporated by this reference and shall be binding on Buyer and Seller, with the modification that the term "Seller" shall be substituted for the term "Association" wherever it appears in such provisions and the term "Parking Garage and Cabanas and the Unit and its appurtenances" shall be substituted for the term "Parking Garage and Cabanas" wherever it appears in such provisions. Buyer shall comply during the Term with all applicable laws and Condominium documents with respect to this Agreement and its activities under this Agreement.

10. Buyer hereby indemnifies and agrees to hold Seller harmless from and against any and all liens, losses, costs, claims, demands, damages, judgments, liabilities, expenses, interest and penalties (including reasonable attorneys' and paralegals' fees and costs, whether suit be brought or any appeal be taken therefrom), threatened, incurred or sustained by Seller resulting from, arising out of, or related to, directly or indirectly, the performance of the Pre-Occupancy Activities, Buyer's use of the Unit and/or its limited common elements, or Buyer's operation of the rental program or condominium hotel or other business activities from the Unit and/or its limited common elements. Buyer further agrees to defend, at its sole cost and expense, any and all suits or actions instituted against Seller resulting from, arising out of, or related to, directly or indirectly, such activities. For purposes of this paragraph, Seller shall be deemed to include all of its partners, and its and their partners, members, officers, directors, shareholders, employees and others who may have liability by or through Seller, including Seller's construction lender. This paragraph shall survive the expiration of the term and any termination of this Agreement but only with respect to incidences occurring during the pendency of this Agreement.

11. Signatures of the Parties hereto on copies of this Agreement transmitted by facsimile machine, email or PDF shall be deemed originals for all purposes hereunder, and shall be binding upon the Parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be considered an original and a complete set of which taken together shall constitute one and the same agreement.

12. The unenforceability, invalidity or illegality of any provision of this Agreement shall not render the other provisions unenforceable, invalid or illegal. This Agreement shall be construed and interpreted in accordance with the laws of the State of Florida, without giving effect to conflict-of-law rules and principles of said State. This Agreement constitutes the entire agreement of the Parties hereto with respect to the subject matter hereof, and there are no prior or contemporaneous oral or written representations, promises or agreements not expressly referred to herein. This Agreement may not be amended or modified hereafter except by a written agreement signed by the Parties. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective legal representatives, and permitted successors, transferees and assigns. This Agreement may be executed in counterparts with the same effect as if the Parties had executed the same document. The counterparts shall be construed together and shall constitute a single Agreement. In the event that any Party should retain counsel and/or institute any suit against the other for violation of or to enforce any of the covenants or conditions of this Agreement, or should a Party intervene in any suit in which the other is a party to enforce or protect its interest or rights hereunder, the prevailing Party in any such suit shall be entitled to all of its costs, expenses and reasonable fees of its attorney(s) (if and to the extent permitted by law) in connection therewith. All judicial proceedings brought by or against any Party, shall be brought in the courts of the State of Florida sitting in Broward County, Florida. The Parties each acknowledge and agree that the undersigned representative of each Party has the legal requisite authority to bind the applicable Party to the terms of this Agreement and that such Party does so knowingly with a full understanding of the nature and meaning of each provision of this Agreement. Additionally, that each Party had the benefit of professional advice rendered by independent legal counsel of their own selection prior to entering into this Agreement (or knowingly waived same) and has executed this Agreement only after carefully considering each term of this Agreement and fully discussing the same with counsel of their choice. The Parties further acknowledge and agree that each of them and their respective counsel have reviewed and revised this Agreement and that this Agreement has been voluntary and consensually negotiated at "arm's length.” Accordingly, this Agreement shall be deemed to have been written jointly by the Parties, and the Parties agree and acknowledge that no rule of construction which would result in an interpretation or

construction of this Agreement in favor or to the detriment of one of the Parties or the other shall apply in construing or interpreting this Agreement or any part of it. The Parties each acknowledge and agree that this Agreement is subject and subordinate to the lien of the Mortgage given to Agent on behalf of the Lender to secure the Loan and to the rights of Agent and_Lender under the Loan and all of the documents executed in connection with the Loan. This Agreement shall not be recorded in the public records.

[SIGNATURES

FOLLOWING

PAGE]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.

Buyer:	Seller:

Sotherly Hotels, Inc., a publicly traded real estate investment trust	4000 South Ocean Property Owner, LLLP, a Florida limited liability limited partnership

	By: 4000 South Ocean GP, LLC, its general partner


By:______________________________	By:______________________________
Name:___________________________	Name:___________________________
Title:____________________________	Title:____________________________

Exhibit “ G”

Form of Condominium Declaration Amendment

(s)

Any and all costs, expenses, obligations (financial or otherwise) and/or liabilities of the Association in connection with any Brand Agreement, including without limitation, branding and/or licensing fees and costs associated with maintaining the Condominium Property in accordance with the Project Standards;

(t)

Any and all costs, expenses, obligations (financial or otherwise) and/or liabilities of the Association and/or running with the Land in connection with the operation of the Condominium (or any portion thereof) as a Condo-Hotel (as hereinafter defined) in accordance with the Zoning Regulations (as hereinafter defined);

(u)

the costs and expenses of maintaining, repairing and/or replacing as necessary the seawall located upon or adjacent to (even if beyond the legal boundaries of) the Condominium Property, if any, and the costs and expenses of installing, maintaining, repairing, restoring and/or replacing of any crosswalk or crossover structures and access easements to and from the Intracoastal located upon or adjacent to (even if beyond the legal boundaries of) the Condominium Property, and

(v)

expenses incurred by the Association in connection with any bulk contract or other fees incurred in connection with any agreement for beach club services, if any, and/or any beach club memberships and/or use of any beach club facilities, if any, not within the Common Elements.

Common Expenses shall not include any separate obligations of individual Unit Owners. References herein to Common Expenses also shall include Residential Limited Common Expenses, unless the context would prohibit or it is otherwise expressly provided.

2.23

“Common Surplus” means the amount of all receipts or revenues, including Assessments, rents or profits, collected by the Association which exceeds Common Expenses.

2.24

“Communication Services" shall have the meaning set forth in Section 2.21 above.

2.25

"Condo-Hotel" shall have the meaning given to it in Section 2.2 of the Zoning Regulations.

2.26

"Condo-Hotel Requirements" shall mean and refer to each and every of the requirements to maintain the Condominium as a Condo-Hotel under the Zoning Regulations.

2.27

~~2.26~~ “Condominium" shall have the meaning given to it in Subsection 1.3 above.

2.28

~~2.27~~ “Condominium Parcel" means a Unit together with the undivided share in the Common Elements which is appurtenant to said Unit.

2.29

~~2.28~~ "Condominium Property" means the Land, Improvements and other property or property rights described in Subsection 1.2 hereof, subject to the limitations thereof and exclusions therefrom, including, without limitation, any and all easements and rights appurtenant thereto intended for use in connection with the Condominium.

2.30

~~2.29~~ “County'' means the County of Broward, State of Florida.

2.31

~~2.30~~ "Declaration" or "Declaration of Condominium" means this instrument and all exhibits attached hereto, as same may be amended from time to time.

2.32

~~2.31~~ "Developer" means 4000 South Ocean Property Owner, LLLP, a Delaware limited liability limited partnership , its successors, nominees, affiliates and such of its assigns as to which the rights of Developer hereunder are specifically assigned. Developer may assign all or a portion of its rights hereunder, or all or a portion of such rights in connection with specific portions of the Condominium. In the event of any partial assignment, the assignee shall not assume any obligations of the Developer (unless expressly assumed in writing), but may exercise such rights of Developer as are specifically assigned to it. Any such assignment may be made on a nonexclusive basis. Additionally, the Developer's rights hereunder may be assigned

Declaration

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and/or exercised by a Bulk Buyer or Bulk Assignee (each as defined in the Act) without otherwise making them a developer for purposes of the Act. Notwithstanding any assignment of the Developer's rights hereunder (whether partially or in full), the assignee shall not be deemed to have assumed any of the obligations of the Developer unless, and only to the extent that, it expressly agrees to do so in writing. The rights of Developer under this Declaration are independent of the Developer's rights to control the Board of Directors of the Association, and, accordingly, shall not be deemed waived, transferred or assigned to the Unit Owners, the Board or the Association upon the transfer of control of the Association.

2.33

~~2.32~~ "Developer's Affiliates" shall mean and refer to Developer, its members, managers and officers, and its and their, as applicable, partners, officers, managers, members, directors, shareholders, employees and/or other person who may be liable by, through or under Developer.

2.34

~~2.33~~ "Developer's Mortgagee" shall mean and refer to any lender and/or mortgagee having a mortgage upon any portion of the Condominium Property at the time of the recordation of this Declaration, for as long as they hold a mortgage or mortgages on any portion of the Condominium Property owned by Developer, and thereafter such mortgagee as Developer shall designate by notice to the Association as being "Developer's Mortgagee"

2.35

~~2.34~~ "Development Covenants" shall mean terms, conditions, provisions, obligations, liabilities, rights and restrictions set forth in the instruments set forth below (any and all easements, maintenance agreements and other instruments and agreements identified therein), and/or otherwise required in connection with the development of the Condominium, benefiting and/or burdening the Land, all as recorded (or to be recorded) in the Public Records of Broward County, Florida:

(a)

AGREEMENT REGARDING DEVELOPMENT, dated as of _______________, 201___, by and between PRH 4000 South Ocean LLC, a Florida limited liability company and MHI/CARLYLE SIAN OWNER I, L.L.C., a Delaware limited liability company, recorded, or to be recorded, in the Public Records of the County, as same may be amended, supplemented and/or modified from time to time, providing for, among other things, modification of the Master Development Plan (as such term is defined in the Covenant and Easement Agreement referenced in Section ~~2.34~~ 2.35 (b) below);

(b)

COVENANT AND EASEMENT AGREEMENT, recorded in Official Records Book 44463, Page 1730, by and between the MCZ/Centrum Florida VI Owner, L.L.C. and MHI/Carlyle Sian Owner I, L.L.C, as amended by that certain AMENDMENT TO COVENANT AND EASEMENT AGREEMENT recorded, or to be recorded, in the Public Records of the County, all as same may be further amended, supplemented and/or modified from time to time; providing for, among other things, a master development plan for the Condominium Property (known as the "Development Parcel" there under) and certain other properties located adjacent to and across State Road A1A from the Condominium Property (known as the Hotel Parcel and the Satori Parcel, respectively, thereunder), certain valet parking requirements, an easement in favor of the Hotel Parcel for use of 180 valet parking spaces located within the Condominium Property, certain reciprocal access, maintenance and utilities easements between and among the Parcels described therein, certain reciprocal easements for drainage or storm water and irrigation between and among the Parcels described therein, certain reciprocal roadway easements between and among the Hotel Parcel and the Condominium Property, an easement over a portion of the Common Elements in favor of the Hotel for ingress and egress to and from the loading dock of the Hotel and certain easements over the Common Elements in favor of the Hotel and the Satori Parcel for construction, operation and use of a Marina within the Condominium Property, together with certain maintenance and insurance responsibilities and the obligation for the payment of certain costs (including without limitation, maintenance, repair, replacement, taxes, assessments, insurance, operating costs and/or utility charges);

(c)

Easement Agreement recorded in Official Records Book 42355, Page 1653, by and between SIAN OCEAN RESIDENCES CONDOMINIUM ASSOCIATION, INC., and MCZ/CENTRUM FLOIRDA VI OWNER, LLC, as amended by that certain AMENDMENT TO EASEMENT AGREEMENT, recorded in Official Records Book 44448, page 1227, as further amended by that certain SECOND AMENDMENT TO EASEMENT AGREEMENT, recorded in Official Records Book 44739, Page 286, all of the Public Records of the County, and all as same may be further amended,

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supplemented and/or modified from time to time, providing for, among other things, an easement in favor of the beneficiaries under same for access to and use of up to 150 valet parking spaces located within the Condominium Property, imposing certain maintenance obligations in connection with such easement and referencing third party rights to operate a marina upon and/or adjacent to the Condominium Property, all as more particularly described in the Easement Agreement;

(d)

Easement recorded in Official Records Book 44744, Page 801, by and between SIAN OCEAN RESIDENCES CONDOMINIUM ASSOCIATION, INC., and MCZ/CENTUM FLORIDA VI OWNER, LLC., of the public Records of the County, as same may be amended, supplemented and/or modified from time to time;

(e)

Beach Easement Agreement recorded in Official Records Book 44463, Page 1810, by and between MCZ/CENTRUM FLORIDA VI OWNER, L.L.C. and SIAN OCEAN RESIDENCES CONDOMINIUM ASSOCIATION, INC., of the Public Records of the County, as same may be amended, supplemented and/or modified from time to time, providing for non-exclusive easements in favor of the Condominium Property for beach access, together with certain obligations for the payment (or reimbursement) of certain costs associated with the beach access easement and improvements constructed therein; and

(f)

Declaration of Covenant recorded in Official Records Book, 44463, Page 1722 of the Public Records of the County, as same may be amended, supplemented and/or modified from time to time.

2.36

~~2.35~~ "Dispute", for purposes of Subsection 18.1, means any disagreement between two or more parties that involves: (a) . the authority of the Board, under any law or under this Declaration, the Articles or By-Laws to: (1) require any Owner to take any action, or not to take any action, involving that Owner's Unit or the appurtenances thereto; or (2) alter or add to a common area or Common Element; or (b) the failure of the Association, when required by law or this Declaration, the Articles or By-Laws to: (1) property conduct elections; (2) give adequate notice of meetings or other actions; (3) properly conduct meetings; or (4) allow inspection of books and records, “Dispute” shall not include any disagreement that primarily involves title to any Unit or Common Element; the interpretation or enforcement of any warranty; the levy of a fee or Assessment or the collection of an Assessment levied against a party; the eviction or other removal of a tenant from a Unit, alleged breaches of fiduciary duty by one or more directors; or claims for damages to a Unit based upon the alleged failure of the Association to maintain the Common Elements or Condominium Property

2.37

~~2.36~~ "District” shall have the meaning given to it in Subsection 6.4 below.

2.38

~~2.37~~ “Division” means the Division of Florida Condominiums, Timeshares and Mobile Homes of the Department of Business and Professional Regulation, State of Florida, or its successor.

2.39

~~2.38~~ “Electric Vehicle Charging Station" or "EVCS” means a station that is designed in compliance with applicable Federal, State and local building codes and delivers electricity from a source outside an electric vehicle into one or more electric vehicles. An electric vehicle charging station includes any related equipment needed to facilitate charging plug-in electric vehicles.

2.40

~~2.39~~ ”Extraordinary Financial Event" shall mean Common Expenses resulting from a natural disaster or Act of God, which are not covered by insurance proceeds from the insurance maintained by the Association.

2.41

~~2.40~~ “First Mortgagee” shall have the meaning given to it in Subsection 13.6 below.

2.42

~~2.41~~ “Function Space Improvements" shall have the meaning given to such terms in Section 3.4(l) below.

Declaration

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2.43

"Hotel Operator" shall mean the owner from time to time of Unit CU -2. or its designee.

2.44

~~2.42~~ "lmprovements" mean all structures and artificial changes to the natural environment (exclusive of landscaping) located or to be located on the Condominium Property, including, but not limited to, the Building.

2.45

~~2.43~~ ”Institutional First Mortgagee" means a bank, savings and loan association, insurance company, mortgage company, real estate or mortgage investment trust, pension fund, an agency of the United States Government, mortgage banker, a government sponsored entity, the Federal National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), any lender advancing funds to Developer (or any subsequent Bulk Buyer or Bulk Assignee, as each is defined in the Act) secured by an interest in any portion of the Condominium Property or any other lender generally recognized as an institutional lender, or the Developer, holding a first mortgage on a Unit or Units. A "Majority of Institutional First Mortgagees" shall mean and refer to Institutional First Mortgagees of Units to which at least fifty-one percent (51%) of the voting interests of Units subject to mortgages held by Institutional First Mortgagees are appurtenant.

2.46

~~2.44~~ "lnsured Property'' shall have the meaning given to it in Subsection 14.2(a) below.

2.47

~~2.45~~ “Land" shall have the meaning given to it in Subsection 1.1 above.

2.48

~~2.46~~ "Life Safety Systems" mean and refer to any and all emergency lighting, emergency generators audio and visual signals, safety systems, sprinklers and smoke detection systems, which are now or hereafter installed in the Building, whether or not within the Units. All such Life Safety Systems, together with all conduits, wiring, electrical connections and systems related thereto, regardless of where located, shall be deemed Common Elements hereunder. Without limiting the generality of the foregoing, when the context shall so allow, the Life Safety Systems shall also be deemed to include all means of emergency ingress and egress, which shall include all stairways and stair landings. Notwithstanding the breadth of the foregoing definition, nothing herein shall be deemed to suggest or imply that the Building or the Condominium contains all such Life Safety Systems.

2.49

~~2.47~~ “Limited Common Elements" mean those Common Elements the use of which is reserved to a certain Unit or Units to the exclusion of other Units, as specified in this Declaration. References herein to Common Elements also shall include all Limited Common Elements unless the context would prohibit or it is otherwise expressly provided.

2.50

~~2.48~~ "Material Amendment" shall have the meaning given to it in Subsection 6.2 below.

2.51

~~2.49~~ “Optional Property" shall have the meaning given to it in Subsection 14.5(b) below

2.52

~~2.50~~ "Permitted User" shall mean any person who occupies a Unit or any part thereof with the permission of the Unit Owner, including, without limitation, Tenants (as hereinafter defined), members of such Unit Owner's or Tenant's family and his, her or its guests, licensees, employees, customers, business invitees and personal invitees.

2.53

~~2.51~~ "Primary Institutional First Mortgagee" means the Developer's Mortgagee for as long as it holds a mortgage on any Unit, and thereafter, the Institutional First Mortgagee which owns, at the relevant time, Unit mortgages securing a greater aggregate indebtedness than is owed to any other Institutional First Mortgagee.

2.54

~~2.52~~ “Project Standard" shall have the meaning given to it in Section 7.5 below.

2.55

~~2.53~~ "Residential Limited Common Elements" means and refers to: (a) those elevators of the Building identified as "RLCE" on Exhibit “2", (b) all hallways of the Building located on Level Seven and above, as identified on Exhibit "2", (c) any mechanical rooms not serving the Commercial Units, (d) the recreational facilities and other Improvements located on Level 6, Level 42 and otherwise as identified as "RLCE" on Exhibit "2" and (e) any other portions of the Condominium Property identified as such on Exhibit "2" attached hereto.

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2.56

~~2.54~~ ”Residential Limited Common Expenses" shall have the meaning given to it in Subsection 3.3(a) below, and shall include, without limitation, (a) all expenses incurred by the Association for the operation, maintenance, repair, replacement or protection of the Residential Limited Common Elements, (b) all reserves required by the Act (to the extent not properly waived) or otherwise established by the Association with respect to any Residential Limited Common Elements, (c) the cost of a master antenna television system or duly franchised cable television service obtained pursuant to a bulk contract, to the extent that same serves the Residential Units only; (d) the cost of any bulk contract for broadband, telecommunications, satellite and/or internet services, if any, to the extent that same serves the Residential Units only; (e) any costs incurred by the Association to operate the Residential Units (or any of them) as a Condo-Hotel in accordance with the Zoning Regulations, (f) the costs of utilities serving the Residential Units, to the exclusion of the Commercial Units, which are not separately metered, and (g) any other cost or expense associated with the Residential Units and/or the provision of services thereto, to the exclusion or substantial exclusion of the Commercial Units, as may be determined by the Board from time to time.

2.57

~~2.55~~ “Residential Units". References herein to Residential Units shall be deemed to mean and refer to all Units other than the Commercial Units (i.e., the Resort Units and the Traditional Units, collectively).

2.58

~~2.56~~ "Resort Unit" means and refers to each of the Units other than the Traditional Units and the Commercial Units and which are identified with the prefix "R-" on Exhibit "2” attached hereto. References herein to "Units" or "Parcels" shall include Resort Units unless the context prohibits or it is otherwise expressly provided.

2.59

~~2.57~~ ”Substantial Completion Certificate" shall have the meaning given to it in Subsection 13.1 below.

2.60

~~2.58~~ "Tandem Spaces" shall have the meaning given to it in Section 3.3 below.

2.61

~~2.59~~ "Tenant" shall mean any person who is legally entitled to the use and enjoyment of all or any portion of a Unit under a lease, rental or tenancy agreement, exchange arrangement, concession agreement, or similar entitlement with or from a Unit Owner. Tenant is included in the definition of Permitted User.

2.62

~~2.60~~ “Traditional Unit" means and refers to each of the Units other than the Resort Units and the Commercial Units and which are identified with the prefix "T-" on Exhibit "2" attached hereto. References herein to "Units" or "Parcels" shall include Traditional Units unless the context prohibits or it is otherwise expressly provided.

2.63

~~2.61~~ "Unit” means a part of the Condominium Property which is subject to exclusive ownership, and except where specifically excluded, or the context otherwise requires, shall be deemed to include the Resort Units, the Traditional Units and the Commercial Units. References herein to "Parcels" shall include Units unless the context prohibits or it is otherwise expressly provided.

2.64

~~2.62~~ ”Unit Owner" or "Owner of a Unit" or "Owner" means a record owner of legal title to a Condominium Parcel.

2.65

~~2.63~~ "Zoning Regulations" shall mean the City of Hollywood Zoning and Land Development Regulations (as they exist on the date hereof and as same may be re-numbered).

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Description of Condominium

3.1

Identification of Units . The Land has constructed thereon one (1) Building containing a total of three hundred forty ~~five~~ six ( ~~345~~ 346 ) Units consisting of a total of three hundred forty-two (342) Residential Units (consisting of two hundred sixty-five (265) Resort Units, seventy-seven (77) Traditional Units) and ~~three~~ four ( 3 4 ) Commercial Units. Each such Unit is identified by a separate numerical and/or alpha-numerical designation. The designation of each of such Units is set forth on Exhibit "2" attached hereto. Exhibit "2" consists of a survey of the Land, a graphic description of the Improvements located thereon, including, but not limited to, the Building in which the Units are located, and a plot plan thereof. Said Exhibit "2", together with this Declaration, is sufficient in detail to identify the Common Elements and each Unit and their relative locations and dimensions. There shall pass with a Unit as appurtenances thereto: (a) an undivided share in the Common Elements and Common Surplus; (b) the exclusive right to use such portion of the Common Elements as may be provided in this Declaration, including, without limitation, the right to transfer such right to other Units or Unit Owners; (c) an exclusive easement for the use of the airspace occupied by the Unit as it exists at any particular time and as the Unit may lawfully be altered or reconstructed from time to time, provided that an easement in airspace which is vacated shall be terminated automatically; (d) membership in the Association with the full voting rights appurtenant thereto; and (e) other appurtenances as may be provided by this Declaration.

3.2

Unit Boundaries . Each Unit shall include that part of the Building containing the Unit that lies within the following boundaries:

(a)

Upper and Lower Boundaries . The upper and lower boundaries of the Unit shall be the following boundaries extended to their planar intersections with the perimetrical boundaries:

(i)

Upper Boundaries . The horizontal plane of the unfinished lower surface of the ceiling (which will be deemed to be the ceiling of the upper story if the Unit is a multi-story Unit, provided that in multi-story Units where the lower boundary extends beyond the upper boundary, the upper boundary shall include that portion of the ceiling of the lower floor for which there is no corresponding ceiling on the upper floor directly above such bottom floor ceiling).

(ii)

Lower Boundaries . The horizontal plane of the unfinished upper surface of the floor of the Unit (which will be deemed to be the floor of the first story if the Unit is a multi-story Unit, provided that in multi-story Units where the upper boundary extends beyond the lower boundary, the lower boundary shall include that portion of the floor of the upper floor for which there is no corresponding floor on the bottom floor directly below the floor of such top floor).

(iii)

Interior Divisions . Except as provided in Subsections 3.2(a)(i) and 3.2(a)(ii) above, no part of the floor of the top floor, ceiling of the bottom floor, stairwell adjoining the multi-floors, in all cases of a multi-story Unit, if any, or nonstructural interior walls shall be considered a boundary of the Unit.

(b)

Perimetrical Boundaries . The perimetrical boundaries of the Unit shall be as applicable; (i) as to the boundary between horizontally adjoining Units that are not separated by a wall, the vertical plane lying on the survey line defining the Unit perpendicular to the upper and lower boundaries as shown on Exhibit "2" hereof, as amended or supplemented, extended to their planar intersections with each other and with the upper and lower boundaries; and (ii) as to all other perimetrical boundaries of the Unit, the vertical planes of the unfinished interior surfaces of the walls bounding the Unit extended to their planar intersections with each other and with the upper and lower boundaries (and to the extent that the walls are drywall and/or gypsum board, the Unit boundaries shall be deemed to be the area immediately behind the drywall and/or gypsum board, so that for all purposes hereunder the drywall and/or gypsum board shall be deemed part of the Unit and not part of the Common Elements).

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(c)

Apertures . Where there are apertures in any boundary, including, but not limited to, windows, doors, bay windows and skylights, such boundaries shall be extended to include the windows, doors and other fixtures located in such apertures, including all frameworks, window casings and weather stripping thereof, together with exterior surfaces made of glass or other transparent materials; provided, however, that the exteriors of doors facing interior Common Element hallways, If any, shall not be included In the boundaries of the Unit and shall therefore be Common Elements. Notwithstanding anything herein contained to the contrary, any elevators (including all mechanical equipment serving, and housing for the elevators) wholly contained within and solely serving a Unit (to the exclusion of all other Units), if any, shall be deemed part of the Unit. Further, notwithstanding anything to the contrary, the structural components of the Building, and the Life Safety Systems, regardless of where located, are expressly excluded from the Units and are instead deemed Common Elements. For purposes hereof, to the extent that the Building includes a curtain and/or window wall, then any glass and/or transparent surfaces incorporated into the curtain and/or window wall system (and any installations or other portions of the curtain and/or window wall system) shall be deemed excluded from the Unit, considered part of the structural components of the Building and be deemed Common Elements hereunder. NOTWITHSTANDING ANYTHING HEREIN CONTAINED TO THE CONTRARY, NO POST TENSION CABLES AND/ OR REINFORCEMENT BARS CONTAINED IN THE BUILDING SHALL BE CONSIDERED A PART OF A UNIT. AS SUCH POST TENSIONED CABLES AND/OR REINFORCEMENT BARS ARE ESSENTIAL TO THE STRUCTURE AND SUPPORT OF THE BUILDING, ALL POST TENSIONED CABLES AND/OR REINFORCEMENT BARS SHALL BE DEEMED COMMON ELEMENTS OF THE CONDOMINIUM AND MAY NOT BE DISTURBED OR ALTERED WITHOUT THE PRIOR WRITTEN CONSENT OF THE BOARD.

(d)

Exceptions . In cases not specifically covered above, and/or in any case of conflict or ambiguity, the survey of the Units set forth as Exhibit "2" hereto shall control in determining the boundaries of a Unit, except that the provisions of Subsection 3.2(c) above shall control unless specifically depleted and labeled otherwise on such survey.

3.3

Limited Common Elements . Each Unit may have, to the extent applicable and subject to the provisions of this Declaration, as Limited Common Elements appurtenant thereto:

(a)

Residential Limited Common Elements . The Residential Limited Common Elements shall be deemed Limited Common Elements appurtenant to each and every of the Residential Units (to the exclusion of the Commercial Units). Except only as provided below, all of the costs of operating, maintaining, insuring, repairing, replacing and altering the Residential Limited Common Elements (the "Residential Limited Common Expenses”) shall be borne solely by the Residential Unit Owners. Without limiting the generality of the foregoing, the Residential Limited Common Expanses shall include, without limitation, all sums described in Subsection ~~2.54~~ 2.56 above, any and all utility charges associated with the Residential Limited Common Elements (and if same are not separately metered, the Association shall make a reasonable allocation for such purposes), costs for landscaping maintenance and replacements in, on and around the Residential Limited Common Elements, costs for repairs to pavers or other ground or floor coverings in, on and around the Residential Limited Common Elements, any and all pool and/or spa related expenses (including, without limitation, resurfacing, chemical treatments and monitoring, etc.) and the costs of all personnel assisting in the operation and/or maintenance of the Residential Limited Common Elements. The Residential Limited Common Expenses shall not however, Include, any necessary repairs, maintenance, replacements or alterations to the structural components of the Building or any roofing or waterproofing membranes of the Building. The Residential Limited Common Expenses shall be assessed against each of the Residential Units, with each bearing a fractional portion thereof, with the numerator thereof being the percentage allocable to the applicable Residential Unit on Exhibit "3•1" to this Declaration and the denominator being the aggregate of all percentages allocated to the Residential Units on said Exhibit "3•1", all as set forth on Exhibit "3•2" attached hereto. The Residential Limited Common Elements shall be maintained by the Association.

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Accordingly, a specific assigned Limited Common Element parking space is subject to change. The maintenance, repair and replacement of any parking space so assigned shall be the responsibility of the Association (provided however, that the contents placed in any such parking space, including, without limitation, any vehicle maintained therein, and the insurance thereof, shall be the sole responsibility of the Unit Owner).

As to any parking spaces which are Limited Common Elements appurtenant to Unit CU-1, the Owner of Unit CU-1 shall have the right to use such parking spaces in any lawful manner, including, without limitation, leasing them and/or otherwise granting, licensing and/or otherwise delegating use or them (or any of them) to any other party whether a Unit Owner or otherwise.

The mere assignment of a parking space does not include the right to self-park. ~~Most, if~~ ~~not at all,~~ AIl parking spaces will be restricted ~~for~~ to valet parking . services at all times. Each Owner, while in residence, shall have the right to have one (1) vehicle valet parked within the Common Elements of the Condominium at no additional charge (other than the valet and parking related expenses included as part of the Assessments charged by the Association or otherwise in accordance with the valet parking contract entered into by the Association). In the absence of an express grant of a right to self-park, any assignment of parking space shall be restricted for valet parking only. Additionally, certain parking spaces may contain Car Lifts which enable a parking space to accommodate two (2) cars stacked one on top of the other (the “Car Lift Spaces''). Notwithstanding anything contained herein to the contrary and unless otherwise determined by the Association acting through its Board, the Car Lifts shall at all times be operated by valet only and no self-parking shall be permitted in any parking space containing a Car Lift. Additionally, certain parking spaces may be tandem spaces which accommodate two (2) cars, stacked one in front of the other (the "Tandem Spaces"). Notwithstanding anything contained herein to the contrary and except as otherwise Indicated in the form of assignment of a parking space, all assignments of parking spaces shall provide only the right to have a vehicle valet parked in the assigned parking space (and shall authorize the Association or any valet company retained by the Association to utilize the assigned parking space when the space is vacant). To the extent not covered by the valet providers insurance, the Owner of the Unit to which the parking space is appurtenant shall insure the parking space and be liable for any loss, damage or liability which may result from the existence and use of such parking space, be it loss or damage to property and/or injury or death to persons, and shall indemnify and hold the Association, Developer and Developer's Affiliates, and its and their respective directors, officers, employees, contractors, agents or affiliates harmless from and against any and all actions, claims, judgments, and other liabilities in any way whatsoever connected with the use of the assigned parking space as contemplated herein.

Each Owner, for itself and/or its successors and/or assigns, understands and agrees that certain vehicle model types of certain sizes, heights, weights, and dimensions (including, without limitation, certain SUVs) may not be suitable for use with Car Lifts or within a Car Lift Space. The Condominium Association may establish regulations and guidelines governing the Car lift use which may identify approved manufacturers and specifications for Car Lifts and restrict the size and type of vehicles approved for using such Car Lifts within Car Lift Spaces. Further, the Condominium Association may also restrict the size and type of vehicles approved for parking in Tandem Spaces. Neither the Developer, Developer's Affiliates nor the Condominium Association shall be responsible or liable for damages or injury resulting from improper use of a Car Lift, a Car Lift Space or a Tandem Space by a Unit Owner. A Unit Owner holding an assignment of a parking space shall be financially responsible for any personal injury, property damages, or other losses that may result from the use of a Car Lift, Car Lift Space and/or Tandem Space and each Unit Owner holds harmless the Developer, Developer's Affiliates and the Association, and it's and their respective officers, directors, managers, employees and agents, successors and assigns, in the event of any damage or personal injury arising from the use of a Car Lift Space or any mechanism which is a part of such Car Lift. Car lifts are part of the

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governmentally-approved means and methods chosen from time to time by the Owner of Commercial Unit CU-3 to control cooking and food odors, which means and methods would achieve a result customarily achieved by a scrubber system.

(g)

Miscellaneous Areas, Equipment: Utility Consumption . Except to the extent that same are located within the boundaries of a Unit, any fixtures or equipment (e.g., an air conditioning compressor, other portions of any air conditioning systems, and/or heater, if any, or hot water heater) serving a Unit or Units exclusively and any area (e.g., a closet, roof space or ground slab) upon/within which such fixtures or equipment are located shall be Limited Common Elements of such Unit(s). Without limiting the foregoing, each air conditioning unit (and all equipment and fixtures constituting an individual air conditioning system) located on the roof of the Building which serves only one Unit shall be deemed a limited Common Element of the Unit it serves. The maintenance (and cost) of any such fixtures and/or equipment and/or areas so assigned shall be the sole responsibility of the Owner of the Unit(s) to which the fixtures and/or equipment are appurtenant. Additionally, notwithstanding anything to the contrary, to the extent that utility service (e.g., electric, water, sewer, gas etc.) to a Unit (to the exclusion of other Units and/or the Common Elements) is separately submetered to identify consumption by said Unit, same shall be deemed a Limited Common Element of the Unit with the Association to assess each Unit Owner for the costs of such utility service measured and paid for in direct relation to the consumption identified by the applicable submeter. Such charges may be enforced and shall be collectible by the Association in the same manner as “Assessments” hereunder.

(h)

Other . If applicable, any other portion of the Common Elements which, by its nature, cannot serve all Units but serves one Unit or more than one Unit (i.e., any hallway and/or elevator landing serving a single Unit or more than one (1) Unit owned by the same Owner) shall be deemed a Limited Common Element of the Unit(s) served and shall be maintained by said Owner. In the event of any doubt or dispute as to whether any portion of the Common Elements constitutes a Limited Common Element or in the event of any question as to which Units are served thereby, a decision shall be made by a majority vote of the Board of Directors and shall be binding and conclusive when so made. To the extent of any area deemed a Limited Common Element under this Subsection 3.3(h), the Owner of the Unit(s) to which the Limited Common Element is appurtenant shall have the right to alter same as if the Limited Common Element were part of the Owner's Unit, rather than as required for alteration of Common Elements. Notwithstanding the foregoing, the designation of any portion of the Common Elements as a Limited Common Element under this Subsection 3.3(h) shall not allow the Owner of the Unit to which the Limited Common Element is appurtenant to preclude, or in any way interfere with the passage through such areas as may be needed from time to time for emergency ingress and egress, and for the maintenance, repair, replacement, alteration and/or operation of the elevators, Life Safety Systems, mechanical equipment and/or other Common Elements which are most conveniently serviced (in the sole determination of the Board) by accessing such areas (and an easement is hereby reserved for such purposes).

Except for those portions of the Common Elements designed and intended to be used by all Unit Owners, a portion of the Common Elements serving only one (1) Unit or a group of Units (but not all Units) may be reclassified as a Limited Common Element upon the vote required to amend the Declaration under either Section 6.1 or 6.5 hereof (and any such amendment shall not be deemed a Material Amendment governed by Section 6.2). _ Notwithstanding anything contained to the contrary in this Declaration, no commercial activities may be operated from the Common Element space located adjacent to Unit 201 as depicted on Exhibit "2" attached hereto Including without limitation, the provision of rental services.

3.4

Easements . The following easements are hereby created (in addition to any easements created under the Act and any easements affecting the Condominium Property and recorded in the Public Records of the County, including, without limitation, those Imposed, created, referenced and/or reserved by the Development Covenants and/or the Zoning Regulations):

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portions thereof to be maintained by the Unit Owners as provided above), the Residential limited Common Elements and Association Property shall be performed by the Association and the cost and expense thereof shall be Assessed to all Unit Owners as a Common Expense, except (a) to the extent arising from or necessitated by the negligence, misuse or neglect of specific Unit Owners, in which case such cost and expense shall be paid solely by such Unit Owners as a Charge or (b) with respect to the Residential Limited Common Elements, as to which, anything herein to the contrary notwithstanding, all costs and expenses shall be paid solely by the Residential Unit Owners as an Assessment. If, in order to effect repairs to the Common Elements (including, without limitation, the Residential Limited Common Elements), the Association removes, destroys and/or otherwise alters any floor, wall or ceiling coverings, or other items of personal property, then, in such instance, the Association shall only be obligated for the restoration of the Common Elements (or Residential Limited Common Elements, as applicable), without any obligation to restore the disrupted and/or altered floor, wall or ceiling coverings, or other items of personal property. Replacement of said items shall be the responsibility and obligation of the Unit Owner or Tenant, as applicable.

7.3

Specific Unit Owner Responsibility . The obligation to maintain and repair any drywall or gypsum board within or surrounding a Unit, any air conditioning and heating equipment, plumbing or electrical feeds, water heaters, appliances, fixtures, sliding glass doors (including all tracks and hardware), screens (whether on windows or doors), screened enclosures and screen doors serving the Unit, or other items of property which service a particular Unit or Units (to the exclusion of other Units), including, without limitation, any exterior storm shutters protecting doors or windows for a particular Unit, shall be the responsibility of the applicable Unit Owners, individually, and not the Association, without regard to whether such items are included within the boundaries of the Units. Additionally, all work performed on any portion of the Condominium Property shall be in compliance with all applicable governmental building and zoning requirements. All plumbing and electrical maintenance, repairs, and replacements shall be made only by plumbers or electricians duly licensed and qualified to perform such services in the State of Florida and, if applicable, in the County.

7.4

Minimum Standard . Except as otherwise provided below, all maintenance required under this Declaration shall be performed to the standards established by the Board from time to time. The minimum (though not sole) standard for the foregoing shall be the general appearance of the Condominium as initially constructed and otherwise improved by Developer, and as to landscaping, as initially landscaped by Developer (such standard being subject to being raised by virtue of the natural and orderly growth and maturation of applicable landscaping, as properly trimmed and maintained), or such other standard as may be established by the Board from time to time.

7.5

Project Standard . Notwithstanding anything herein contained to the contrary, to the extent that the Association enters into a Brand Agreement, and if, in order to maintain the rights and licenses to use the Brand granted thereunder, the Condominium must meet or exceed specified maintenance and/or quality standards (the “ Project Standards ”), then, in such event, any and all maintenance obligations of the Association or a Unit Owner and/or any improvements, additions, alterations and repairs of the Condominium Property, including, without limitation, the Common Elements (including the Limited Common Elements and Residential Limited Common Elements), shall be undertaken in such a manner as to maintain and be in accordance with all Project Standards. In addition to the foregoing, the Project Standards shall also include (I) all specified maintenance and/or quality standards required under the Brand Agreement if any (ll) any standards required in order for the Condominium Property to qualify for Preferred Hotels and Resorts status or equivalent upper upscale hotel standards evidenced by those brands so designated by Smith Travel Research ("STR") or. to the extent that STR does not then exist, such other equivalent hospitality industry brand designator and (III) hotel lodging pricing standards whereby each Unit Owner and rental agent shall be required to price and advertise nightly rental rates pursuant to standard hotel Industry practices, which requires, in part, that nightly rental rates includes all fees and costs charged by the Unit Owner and/or its rental agent and/or rental platform to the transient guest for the rental of the Unit (e.g.. nightly rental rates advertised must be inclusive of cleaning fees and any other fee charged by the Unit Owner or its rental agent. All leasing of Units Including Transient Rentals (as hereinafter defined). shall comply at all times with the Project Standards, and with respect to Transient

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Rentals, shall Include, without limitation, the requirement (i) that all on-site employees, workers and agents comply with any reasonable dress code established by the Hotel Operator from time to time, (ii) that all transient guests of a Unit Owner (who are not staying In the Unit with the Owner) register at the front desk upon arrival for their stay and that the Unit Owner, or their agent, provides the Hotel Operator with the transient guest’s information prior to their arrival, (iii) that all on-site employees, workers or agents engaged to perform regular maintenance and housekeeping services at the Condominium pass reasonable background checks established by the Hotel Operator prior to conducting any work in the Condominium, (iv) that all employees, workers and agents wear identification badges while at the Condominium, such identification badges to be reasonably provided by the Association Manager and limit their use of elevators to the service elevators, if available and (v) that all cleaning and maintenance of a Unit be done during the hours when such work is typically performed in the lodging industry, (i.e.. after the established check-out time but prior to the established check-in time, which times shall be set by the Hotel Operator for the Condominium and shall be consistent with industry standards), The Project Standards, and adherence thereto by each Unit Owner and their employees, workers and agents shall be strictly enforced by the Association. The restrictions in the Brand Agreement pertaining to use by Unit Owners and their agents of the licensed trademarks and copyrighted materials shall also be strictly enforced by the Association. In the event the Association fails to enforce the Project Standards or license restrictions within thirty (30) days after receipt of written notice from a Unit Owner (or the Hotel Operator on behalf of a Unit Owner) describing the non-compliance and requesting enforcement, the Unit Owner may, but shall have no obligation to, seek an injunction or other remedy against the Association to cause it to enforce the Project Standards against the party violating the same, it to take action against the party using the licensed trademarks or copyrighted materials in a manner not permitted by the Brand Agreement. In addition, any Unit owner, including without limitation, the Owner of Unit CU-2, shall have the right to enforce the provisions of this Section, and/or any other provision of this Declarations. In accordance with its rights under Section 718.303, Florida Statutes. It is understood and acknowledged by each Unit Owner that the maintenance of the Project Standards is essential to the overall Condominium and that a Unit Owner’s failure to comply with the Project Standards may result in fines and/or disciplinary action by the Association. For purposes hereof, the term “Transient Rental” means any instance where a Unit Owner (whether directly, indirectly, through an agent, exchange service, or any other means) allows occupancy of his or her Unit by any party not occupying the Unit with the Owner of the Unit for a period of less than thirty (30) days.

7.6

Maintenance Under the Zoning Regulations and Development Covenants . All maintenance obligations established by the Zoning Regulations and Development Covenants are hereby assumed by the Association, with the costs associated with same to be part of the Common Expenses. All maintenance shall be performed to the standards required by the Zoning Regulations, Development Covenants, the Minimum Standard, any Brand Agreement, the Project Standards, if any, and as otherwise required by the City (including, without limitation, any conditions established in connection with the issuance of the approvals for the development of the Condominium).

Additions, Improvements or Alterations by the Association . Except only as provided below to the contrary, whenever in the judgment of the Board of Directors, the Common Elements, the Association Property, or any part of either, shall require capital additions, alterations or improvements (as distinguished from repairs and replacements) costing in excess of ten percent (10%) of the then applicable budget of the Association in the aggregate in any calendar year, the Association may proceed with such additions, alterations or Improvements only if the making of such additions, alterations or improvements shall have been approved by an affirmative vote representing a majority of the voting Interests represented at a meeting at which a quorum is attained. Any such additions, alterations or Improvements to such Common Elements, the Association Property, or any part of either, costing in the aggregate ten percent (10%) of the then applicable budget of the Association or less in a calendar year may be made by the Association without approval of the Unit Owners. The cost and expense of any such additions, alterations or improvements to such Common Elements or Association Property shall constitute a part of the Common Expenses and shall be assessed to the Unit Owners as Common Expenses. In addition, whenever in the judgment of the Board of Directors, the Residential Limited Common Elements shall require capital additions, alterations or improvements (as

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Bathrooms, as more particularly depicted on Exhibit '2" attached hereto are intended to be used exclusively by Unit Owners, and their guests and invitees (when accompanied by a Unit Owner), but not by tenants of Unit Owners or guests of the condo-hotel operated from the Condominium._

17.16

Operation of Commercial Units.

(a)

Notwithstanding anything contained to the contrary herein, Commercial Unit CU-2 and any appurtenances thereto shall be operated at all times as a condominium hotel in accordance with the Project Standards and in compliance with the Condo-Hotel Requirements, and shall contain a hotel front desk/concierge on the ground floor at all times, serving Unit Owners in accordance with the Condo-Hotel Requirements. Additionally, the Hotel Operator shall at all times assure that Condo-Hotel Requirements are met (including without limitation, the receipt and disbursement of keys, provision of daily maid service, back of the house services and other hospitality services are made available to all Resort Units (provided, however that nothing herein shall preclude the Hotel Operator from charging reasonable fees for such services). In the event that the Hotel Operator fails to comply with the provisions of this Section, the Association shall be obligated for ensuring that such Condo-Hotel Requirements are met (provided however, that the Association shall use reasonable efforts to cause the costs and expenses associated with the same to be borne solely by the Owners of the Units availing themselves of such services). Notwithstanding the forgoing, nothing herein shall be construed as relieving the Hotel Operator of such obligations.

(b)

Notwithstanding anything contained to the contrary herein, CU-1 and any appurtenances thereto may only be operated as a full service food and beverage service establishment (“Restaurant”) and must be open for business consistent with the hours of operation that are typical of a Restaurant in comparable hotels in the market area. Additionally, the Restaurant shall: (i) meet the Project Standards and (ii) provide room service to Unit Owners and guests 24 hours a day, 7 days a week ( the “Restaurant Standards”), From and after the date that the Restaurant is first open to the public, in the events the Restaurant Standards are not satisfied for a period of seven (7) days or, in the event the Restaurant is closed for a period of time in excess of seven (7) days, the Association shall have the option to operate the Restaurant from Unit CU-1 or anywhere else on the Condominium Property where food and beverage operations are permitted without paying any rent or expenses to the Owner or tenant thereof other than the “Operating Costs” until such time that either Owner or Owner’s tenant reopens the Restaurant in CU-1. For purposes hereof, “Operating Costs” shall mean 3.5% of gross revenue generated from the Restaurant while operated by the Association plus an amount equal to the utilities (electric, gas and water) consumed by the Association while operating the Restaurant, to the extent that same are submetered and can be reasonably determined.

(c)

Unit CU-1, Unit CU-2 and CU-4 must at all times operate in accordance with the Project Standards established from time to time.

17. 17

~~17.16~~ Recorded Agreements: Development Approvals . The use of the Units, the Condominium Property and the Association Property shall at all times comply with all conditions and/or limitations imposed in connection with the approvals and permits issued by the City for the development of the Improvements, and all restrictions, covenants, conditions, limitations, agreements, reservations and easement now or hereafter recorded in the public records, including, without limitation, the Zoning Regulations and the Development Covenants.

17.18

~~17.17~~ Relief by Association . The Association shall have the power (but not the obligation) to grant relief in particular circumstances from the provisions of specific restrictions contained in this Section 17 for good cause shown, as determined by the Association in its sole discretion.

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17.19

~~17.18~~ Effect on Developer and Commercial Unit Owners . Subject to the following exceptions, the restrictions and limitations set forth in this Section 17 shall not apply to the Developer nor to Units owned by the Developer. The Developer shall not be exempt from the restrictions, if any, relating to requirements that leases or lessees be approved by the Association, pet restrictions, occupancy of Units based on age and vehicular restrictions, except as such vehicular restrictions relate to the Developer's construction, maintenance, sales, re-sales, leasing and other marketing and financing activities, which activities the Developer can perform without the prior consent of the Unit Owners. Further, notwithstanding anything herein contained to the contrary, the provisions of this Section 17 shall not be amended, altered or modified in any manner affecting the Commercial Units, without the prior consent of four fifths of all voting interests.

17.20

Provisions Applicable to Unit CU-1.

(a)

Trash Removal/Trash Facilities, The Owner of the Unit shall be solely responsible for trash and garbage removal from such Owner’s Unit.

(b)

Operation of a Commercial Unit. The Unit may be used only in accordance with applicable zoning requirements and for the purposes described in Section 17.16(b) above by the Owners thereof and their quests, tenants and invites. Additionally, no immoral, improper, offensive, hazardous or unlawful use shall be made of the Unit. No use of the Unit shall be made which is disruptive to the operation of the Condominium or which is objectionable to the owners of other Units in the Condominium or which results in emissions of noises or odors that are not consistent with those at similar mixed use buildings. Further, the Unit must be operated and maintained in a manner that does not result in, or is conducive to the development of, Infestation by insects, rodents or other vermin. All valid laws, zoning ordinances and regulations of all governmental bodies having jurisdiction shall be observed. Violations laws, orders, rules, regulations or requirements of any governmental agency having jurisdiction relating to the Unit shall be corrected by and at the sole expense of the Owner of the Unit.

(i)

Without limiting the generality of Section 17.16(b) above, Unit CU-1 shall in no event be uses as a (collectively, the “Prohibited Uses”) (i) manufacturing facility of any sort: (ii) facility which produces hazardous materials (i.e.. dry cleaner or hair salon)(it being understood and agreed that medical and/or medical offices which do not perform surgical procedures shall be permitted): (iii) automobile rental, parts, fuel or repair business: ((iv) arcade: (v) second-hand store, rummage shop, thrift shop, flea market and/or pawn shop: (vi) taxidermist office: ((vii) laundromat: (viii) undertaking establishment: (ix) abortion clinic: (x) adult entertainment, adult movie theatre and/or adult retail facility: (xi) tattoo parlor: (xii) skating rink, (xiii) bowling alley, (xiv) discotheque, dance hall, night club and/or ballroom: (xv) pool room or billiard hall: (xvi) massage parlor: (xvii) “head shop” selling or displaying drug paraphernalia: (xviii) mortuary, funeral parlor and/or cremation facility: (xix) bingo parlor: (xx) automobile/RV/trailer and/or boat dealer: (xxi) pinball and/or video game arcade (except that this provision shall not prohibit a restaurant from including five (5) or fewer video games as an incidental use to its operations or impose any restriction upon video games within a movie theater): (xxxii) off track betting or gambling parlor: (xxiii) a warehouse or storage facility: (xxiv) fire, going out of business, relocation , bankruptcy or similar sales (unless pursuant to court order): (xxv) pet store, veterinary hospital or animal raising facility (except that this provision shall not prohibit pet shops or pet supply superstores and veterinary services which are incidental thereto): or (xxvi) any other business which is not in keeping with the operation of a mixed-use Condominium in the Hollywood/Hallandale Beach area of Broward County, Florida.

(ii)

Additionally, the owner of Unit CU-1 shall at all times:

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(a)

pay before delinquency any and all taxes, assessments and public charges levied, assessed or Imposed upon any business operated in the Unit, or upon the fixtures, furnishings or equipment in the Unit, or upon any leasehold interest or personal property of any kind, owned by or placed in, on or about such Unit.

(b)

observe, in addition to the requirements set forth in the Declaration of Condominium and the rules and regulations of the Condominium Association (as same may be amended from time to time), all reasonable requirements promulgated by the Association at any time, from time to time relating to delivery vehicles, the delivery of merchandise, and the storage and removal of trash and garbage;

(c)

except only for purposes of outdoor café/restaurant seating, and provided only that same is in accordance with the Condominium’s governing documents and applicable law, not use any space outside such Unit for sale, storage or any other undertaking;

(d)

not use the plumbing facilities in the Unit, if any, for any purpose other than that for which they were constructed, nor dispose of any foreign substances therein;

(e)

except otherwise permitted under the Condominium’s governing documents and by applicable law, not use any advertising medium or sound devices inside or adjacent to the Unit which produce or transmit sounds which are audible beyond the interior of such Unit;

(f)

contract for and utilize termite and pest extermination services for the Unit on and on-going basis;

(g)

not interfere with the transmission or reception of microwave, televisions, radio communications signals by antennae located anywhere on Condominium Property;

(h)

conduct any business in the Unit in a lawful manner and in good faith during all days and hours reasonably specified by the Condominium Association.

(i)

retain and provide its own security system and/or personnel;

(j)

provide such equipment and/or ventilation as is reasonably necessary (and satisfactory to Association) to eliminate any resultant odors.

(c)

Utilities. The Owner of the Unit shall, at such Owner’s sole cost and expense, cause meters or submeters to be installed, to measure the consumption of all electricity, gas and water in the Unit and in any areas maintained by such Owner. Such Owner shall keep any and all such meters and related equipment In good working order and repair at such Owner’s own cost and expense. In default of which the Association may cause such meters and equipment to be replaced or repaired, as applicable, and collect the reasonable cost thereof from the Owner of the Unit.

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17.21

Provisions Applicable to Unit CU-4:

(a)

Trash Removal/Trash Facilities. The Owner of the Unit shall be solely responsible for trash and garbage removal from such Owner’s Unit.

(b)

Construction Insurance. In the event that the Owner of Unit CU-4 makes any alterations, repairs, additions or improvements in or to Unit CU-4., the Owner of such Unit agrees to carry “Builder’s All Risk” insurance in an amount reasonably acceptable to the Condominium Association covering the performance of the same and such other insurance as the Association may reasonably require.

(c)

Maintenance Requirements. Unit CU-4 shall, at all times, be maintained in a good, slightly and clean condition and repair, and, after initial commencement of business operations in the Unit, and, regardless of actual vacancy, shall never appear to be vacant or unoccupied when viewed from the exterior thereof. The exterior and visible portions of the interior of Unit CU-4 shall be illuminated after dark during normal business hours. After commencement of business operations in any store in Unit CU-4, all areas of the interior which are visible from the outside shall be properly finished and stocked with merchandise or displays so that such store maintains the appearance of an operating business.

(d)

Operation of a Commercial Unit. Unit CU-4 shall at all times operate in accordance with the Project Standards established from time to time.

(e)

No immoral, improper, offensive, hazardous or unlawful use shall be made of Unit CU-4. No use of Unit CU-4 shall be made which is disruptive to the operation of the Condominium or which is objectionable to the owners of the other Units in the Condominium or which results in the emission of noises and odors that are not consistent with those at other similar residential or mixed-use buildings. Further, Unit CU-4 must be operated and maintained in a manner that does not result in, or is conducive to the development of, infestation by insects, rodents or other vermin. All valid laws, zoning ordinances and regulations of all governmental bodies having jurisdiction shall be observed. Violations of laws, orders, rules, regulations or requirements of any governmental agency having jurisdiction relating to Unit CU-4. In addition, the Owner of Unit CU-4 shall:

(i)

not permit any odor or noise to emanate from Unit CU-4 which is objected by the Association or by any other Unit Owner (and, upon written notice from the Association, the Owner of Unit CU-4 shall immediately cease and desist from causing such odor or noise).

(ii)

pay before delinquency any and all taxes, assessments and public charges levied, assessed or imposed upon any business operated in Unit CU-4, or upon any leasehold interest or personal property of any kind, owned by or placed in on or about such Unit.

(iii)

observe, in addition to the requirements set forth in the Condominium Documents and the rules and regulations of the Association (as same may be amended from time to time) and all reasonable requirements promulgated by the Association and at any time, from time to time relating to delivery vehicles, the delivery of merchandise, and the storage and removal of trash and garbage:

(iv)

not use any space outside such Unit for sales, storage or any other undertaking, other than as may be permitted in accordance with the provisions of Section 3.3 of the Declaration:

(v)

not use the plumbing facilities in Unit CU-4 for any purpose other than that for which they were constructed, nor dispose of any foreign substances therein:

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(vi)

not use any advertising medium or sound devices inside or adjacent to Unit CU-4 which produce or transmit sounds which are audible beyond the interior of such Unit;

(vii)

not use any portion of the Condominium Property, except only for the interior of Unit CU4, for display, sale, handbilling, advertising, solicitation or any other similar undertaking (provided, however, that no such interior use may be visible from the exterior of the Building, from any Residential Unit;

(viii)

contract for and utilize termite and pest extermination services for the Unit on an on-going basis;

(ix)

not operate or permit to be operated in Unit CU-4 any coin or token operated vending machine, video games, or similar device including, without limitation, telephones, amusement devices and machines for sales of beverages, foods, candy, cigarettes or any other goods (however nothing herein shall preclude the sale of such times outside of a vending machine);

(x)

not permit any improper, immoral or objectionable uses, as determined by the Association, of the Unit including without limitation, the presentation or sale of “adult” entertainment or nudity in Unit CU-4 and shall not sell, distribute or display any paraphernalia commonly used in the use or ingestion of illicit drugs, or any x-rated, pornographic or so-called “adult” newspaper, book, magazine, film, picture, video tape, video disk or other similar representation or merchandise of any kind;

(xi)

not permit the operation of any pawn shop, thrift shop, soup kitchen, homeless shelter, or other similar facility, mental health facility, substance abuse facility or other rehabilitation center, gambling or bingo facility, auction or "flea market" facility, pet store, funeral home, laundromat, automobile, recreational vehicle or mobile home sales, rentals or repairs, trade school, manufacturing facilities, warehouse or any other business which is pot in keeping with the operation of a high-end retail store in a luxury condominium in the Country;

(xii)

not interfere with the transmission or reception of microwave, televisions, radio communications signals by antennae located anywhere on the Condominium Property;

(xiii)

not conduct or advertise any auction, fire, going out of business, or bankruptcy sale in, on or about the Condominium without the Association's prior written consent in each instance which consent may be withheld by the Association in its sole and absolute discretion;

(xiv)

conduct any business in Unit CU-4 in a lawful manner and in good faith during all days and hours specified by the Association;

(xv)

retain and provide its own security system and/or personnel;

(xvi)

retain and provide its own traffic management system and/or personnel; and

(xvii)

provide such equipment and/or ventilation as is reasonably necessary (and satisfactory to Association) to eliminate any resultant odors.

(f)

Utilities The Owner of Unit CU-4shall, at such Owner's sole cost and expense, cause meters or submeters to be installed, to measure the consumption of all electricity, gas and water in the applicable Unit and in any areas maintained by such Owner. Such Owner shall keep any and all such meters and related equipment in

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candy, cigarettes or other goods (however nothing herein shall preclude the sale of such times outside of a vending machine);

(x)

not permit any improper, immoral or objectionable uses, as determined by the Association, of the Unit including without limitation, the presentation or sale of "adult' entertainment or nudity in Unit CU-4 and shall not sell, distribute or display any paraphernalia commonly used in the use or ingestion of illicit drugs, or any x-rated, pornographic or so-called "adult' newspaper, book, magazine, film, picture, video tape, video disk or other similar representation or merchandise of any kind;

(xi)

not permit the operation of any pawn shop, thrift shop, soup kitchen, homeless shelter or other similar facility, mental health facility, substance abuse facility or other rehabilitation center, gambling or bingo facility, auction or "flea market” facility, pet store, funeral home, laundromat, automobile, recreational vehicle or mobile home sales, rentals or repairs, trade school, manufacturing facilities, warehouse or any other business which is not in keeping with the operation of a high-end retail store in a luxury condominium in the County;

(xii)

not interfere with the transmission or reception of microwave, televisions, radio communications signals by antennae located anywhere on the Condominium Property;

(xiii)

not conduct or advertise any auction, fire, going out of business, or bankruptcy sale in, on or about the Condominium without the Association's prior written consent in each instance, which consent may be withheld by the Association in its sole and absolute discretion;

(xiv)

conduct any business in Unit CU-4 in a lawful manner and in good faith during all days and hours specified by the Association;

(xv)

retain and provide its own security system and/or personnel;

(xvi)

not use the Unit for the provision of real estate rental services.

(xvii)

~~(xvi)~~ retain and provide its own traffic management system and/or personnel; and

(xviii)

~~(xvii)~~ provide such equipment and/or ventilation as is reasonably necessary (and satisfactory to Association) to eliminate any resultant odors.

(f)

Utilities . The Owner of Unit CU-4shall, at such Owner's sole cost and expense, cause meters or submeters to be installed, to measure the consumption of all electricity, gas and water in the applicable Unit and in any areas maintained by such Owner. Such Owner shall keep any and all such meters and related equipment in good working order and repair at such Owner's own cost and expense, in default of which the Association may cause such meters and equipment to be replaced or repaired, as applicable, and collect the reasonable cost thereof from the Owner of Unit CU-4.

(g)

Leases The leasing restrictions set forth In Section 17.8 herein shall not apply to Unit CU-4 but instead leasing of Unit CU-4 shall be subject to the provisions of this Section 17.20(f).

(i)

Security Deposit. At the Association's option, the Association may require any tenant of Unit CU-4 to provide the Association with a security deposit in an amount to be reasonably determined by the Association. Such security deposit shall be payable by any such tenant to the Association upon the execution of the applicable lease and shall be held by the Association as security against any default by tenant in the performance of the covenants, conditions and agreements of the Condominium Documents and/or the rules and regulations of

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good working order and repair at such Owner's own cost and expense, in default of which the Association may cause such meters and equipment to be replaced or repaired, as applicable. and collect the reasonable cost thereof from the Owner of Unit CU-4.

(g)

Leases The leasing restrictions set forth in Section 17.8 herein shall not apply to Unit CU-4, but instead leasing of Unit CU-4 shall be subject to the provisions of this Section 17.20(f).

(i)

Security Deposit. At the Association’s option. the Association may require any tenant of Unit CU-4 to provide the Association with a security deposit in an amount to be reasonably determined by the Association Such security deposit shall be payable by any such tenant to the Association upon the execution of the applicable lease and shall be held by the Association as security against any default by tenant in the performance of the covenants, conditions and agreements of the Condominium Documents and/or the rules and regulations of the Condominium. as may be amended from time to time. The security deposit may, at the Association's option, be applied by the Association against all default in any of the terms, provisions, or conditions of the Condominium documents and/or the rules and regulations of the Condominium. The security deposit shall not be deemed to be liquidated damages for such default. The Association shall not be obligated to keep the security deposit In a separate fund but may commingle the security deposit with the Association's own funds, to the extent permitted by law.

18 .

Compliance and Default . The Association, each Unit Owner, occupant of a Unit, tenant and other invitee of a Unit Owner is governed by and must comply with the terms of this Declaration and all exhibits annexed hereto, and the rules and regulations adopted pursuant to those documents, as the same may be amended from time to time and the provisions of all of such documents shall be deemed incorporated into any lease of a Unit whether or not expressly stated in such lease. The Association (and Unit Owners, if appropriate) shall be entitled to the following relief in addition to the remedies provided by the Act:

18.1

Mandatory Nonbinding Arbitration of Disputes . Prior to the institution of court litigation, the parties to a Dispute shall petition the Division for nonbinding arbitration and pay the arbitration fee required by Section 718.1255(4)(a), Florida Statutes. The arbitration shall be conducted according to rules promulgated by the Division and before arbitrators employed by the Division. The filing of a petition for arbitration shall toll the applicable statute of limitation for the applicable Dispute, until the arbitration proceedings are completed. Any arbitration decision shall be presented to the parties in writing, and shall be deemed final if a complaint for trial de novo is not filed in a court of competent jurisdiction in which the Condominium is located within thirty (30) days following the issuance of the arbitration decision. The prevailing party in the arbitration proceeding shall be awarded the costs of the arbitration, and reasonable attorneys' fees and costs incurred in connection with the proceedings. The party who files a complaint for a trial de novo shall be charged the other party's arbitration costs, courts costs and other reasonable costs, including, without limitation, attorneys' fees, investigation expenses and expenses for expert or other testimony or evidence incurred after the arbitration decision, if the judgment upon the trial de novo is not more favorable than the arbitration decision. If the judgment is more favorable, the party who filed a complaint for trial de novo shall be awarded reasonable court costs and attorneys' fees. My party to an arbitration proceeding may enforce an arbitration award by filing a petition in a court of competent jurisdiction in which the Condominium is located. A petition may not be granted unless the time for appeal by the filing of a complaint for a trial de novo has expired. If a complaint for a trial de novo has been filed, a petition may not be granted with respect to an arbitration award that has been stayed. If the petition is granted, the petitioner may recover reasonable attorneys' fees and costs incurred in enforcing the arbitration award.

18.2

Negligence and Compliance . A Unit Owner and/or tenant of a Unit shall be liable for the expense of any maintenance, repair or replacement made necessary by the Owner's negligence or by that of any member of the Owner's family or the Owner's guests, employees, agents, invitees or lessees,

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Exhibit “H”

Form of Escrow Agreement

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this " Agreement ”) is made as of the 1st day of June, 2017 by and among SOTHERLY HOTELS, INC. (NASDAQ: “SOHO"), a publicly traded real estate investment trust (the " Buyer .), 4000 SOUTH OCEAN PROPERTY OWNER, LLLP, a Delaware limited liability limited partnership (the " Seller "), SOLOMON, FURSHMAN & COOPERMAN, LLP (the " Funds Escrow Agent ”) and GREENBERG TRAURlG P.A. (the " Closing Documents Escrow Agent ") (Funds Escrow Agent and Closing Documents Escrow Agent are at times collectively referred to herein as the " Escrow Agents ") (the "Buyer, Seller and Escrow Agents are at times collectively referred to herein as the " Parties " and individually as a " Party ").

RECITALS

A. Seller is the developer of 4010 South Ocean Condominium Hollywood (the " Condominium "). In connection with the development of the Condominium, Seller obtained a construction loan (the " Loan ") from Guggenheim Corporate Funding, LLC (" Agent "), as Agent for Midland National Life Insurance Company, an Iowa insurance company, HB Lender, LLC, a Delaware limited liability company, Loco Condo LLC, a Florida limited liability company, and JMP HBH Lender, LLC, a Florida limited liability company (together with the lenders from to time a party to the Loan Agreement executed in connection with the Loan and their respective successors and assigns, collectively " Lender "), which Loan is secured in part by (i) a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture .Filing to be recorded in the Public Records of Broward County, Florida (the " Mortgage ") and (ii) that certain Pledge and Security Agreement made by 4000 South Ocean, LLC and 4000 South Ocean GP, LLC in favor of Lender (the " Pledge ").

B. Buyer and Seller entered into that certain Pre-Opening Services Agreement of even date herewith (the " Pre-Opening Services Agreement ") which provides for, among other things, the provision of certain pre-opening services within portions of the Condominium.

C. Section 3 of the Pre-Opening Services Agreement provides that Seller will pay to Buyer a fee of $750,000 (the " Pre-Opening Services Payment ") in connection with Buyer's rendering of certain services as detailed in the Pre-Opening Services Agreement.

D. Buyer and Seller are also parties to that certain Commercial Unit Purchase Agreement and Addendum to Commercial Unit Purchase Agreement dated June 1, 2017 (including all addenda and amendments thereto, the " Purchase Agreement ") for the purchase and sale of Unit CU-2 (the " Unit ") of the Condominium.

E. The Purchase Agreement provides that if the Loan has not been paid off prior to the scheduled closing of the purchase and sale of the Unit, the closing will be conducted in escrow pursuant to the terms of this Agreement, which provides for all of the executed closing documents (the " Closing Documents "), including without limitation the executed deed, bill of sale, partial release (releasing the Mortgage from the Unit), settlement statement and all other documents referenced in Section 10(c) of the Purchase Agreement, and all closing funds to be held in escrow and disbursed in accordance with the terms and conditions of this Agreement (the date that such closing occurs in escrow shall be referred to in this Agreement as the " Escrow Date ").

F. Buyer and Seller desire that all closing funds due from Buyer, as reflected on the executed settlement statement, as well as any unused portion of the escrow deposit delivered pursuant to the Purchase Agreement (collectively, the " Escrow Deposit "), be delivered on the Escrow Date to the Funds Escrow Agent to hold in escrow pursuant to the terms of this Agreement, and the Funds Escrow Agent is willing to hold the Escrow Amount in escrow in accordance with the terms of this Agreement.

G. Buyer and Seller desire that all of the Closing Documents be delivered on the Escrow Date to the Closing Documents Escrow Agent to hold in escrow pursuant to the terms of this Agreement, and the Closing Documents Escrow Agent is willing to hold the Closing Documents in escrow in accordance with the terms of this Agreement.

H. Escrow Agents, Buyer, and Seller desire to enter into this Agreement to provide for the holding and disbursement of the Escrow Deposit and the Closing Documents, as further set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. The foregoing recitals are true and correct and are incorporated herein as if repeated at length.

2. Buyer and Seller agree to deliver all of the Closing Documents on the Escrow Date to the Closing Documents Escrow Agent, and the Closing Documents Escrow Agent agrees that it shall receive and hold all of the Closing Documents in escrow in accordance with the terms of this Agreement and shall not release or disburse the Closing Documents from escrow except in compliance with the terms of this Agreement. Buyer and Seller further agree to deliver the Escrow Deposit on the Escrow Date to Funds Escrow Agent, and Funds Escrow Agent agrees that it shall receive and hold the Escrow Deposit in escrow in accordance with the terms of this Agreement and shall not release or disburse the Escrow Deposit except in compliance with the terms of this Agreement. Funds Escrow Agent shall not be obligated to Buyer, Seller, or any other entity for interest on the Escrow Deposit.

3. Funds Escrow Agent shall, and is hereby unconditionally and irrevocably authorized and directed to, release the Escrow Deposit or the applicable portion thereof from escrow as follows:

3.1 Upon (i) proof that a TCO has been received for the Condominium and (ii) confirmation from Funds Escrow Agent that Buyer has deposited with Funds Escrow Agent all funds necessary to complete the purchase of Unit CU-2 in accordance with the settlement statement (i.e. the purchase price of $5,100,000 adjusted as shown on the settlement statement), Funds Escrow Agent shall disburse the Pre-Opening Services Payment in the amount of $750,000 from the Escrow Deposit to Buyer or Buyer's designated affiliate, representing the Pre-Opening Services Payment due under the Pre-Opening Services Agreement, after which Funds Escrow Agent shall immediately provide written confirmation to Agent, Closing Documents Escrow Agent, Buyer and Seller confirming the date, amount and recipient of the released funds.

3.2 Upon (i) proof that a TCO has been received for the Condominium and (ii) confirmation from Funds Escrow Agent that Buyer has deposited with Funds Escrow Agent all funds necessary to complete the purchase of Unit CU-2 in accordance with the settlement statement (i.e. the purchase price of $5,100,000 adjusted as shown on the settlement statement), Funds Escrow Agent shall disburse $1,200,000 of the Escrow Deposit to Hollywood Hotel Associates LLC, formerly known as MHI/CARLYLE SIAN OWNER I, L.L.C., a Delaware limited liability company (" HHA "), using wire instructions provided by HHA, representing the accrued construction disruption payments that will be owed by Seller to HHA pursuant to Section 3(a)(ii) of the Agreement Regarding Development, as amended by Amendment to Agreement Regarding Developer of even date herewith (" Construction Disruption Payments ") , which payments Buyer agrees will be made to HHA on Seller's behalf using Buyer's Escrow Deposit funds, irrespective of whether the escrow ultimately breaks and title to the Unit is conveyed to Buyer or whether the escrow is unwound per Sections 6 and 7 hereof and the Purchase Agreement terminated. Funds Escrow Agent shall provide written confirmation to Agent, Closing Documents Escrow Agent, Buyer and Seller confirming the date, amount and recipient of the released Construction Disruption Payments immediately upon making the disbursement.

3.3 Funds Escrow Agent shall disburse the remaining portion of the Escrow Deposit to Closing Documents Escrow Agent upon Funds Escrow Agent's receipt of written confirmation from Agent that the Loan has been fully satisfied by Seller with all amounts owing thereunder being paid in full.

Notwithstanding anything to the contrary set forth in this Agreement, if Agent commences a foreclosure action or exercises any of the other default remedies under the Loan as referenced in Section 6 of this Agreement, then the provisions of Sections 6 and 7 of this Agreement shall govern with respect to Funds Escrow Agent's release of the Escrow Deposit (or remaining portion of the Escrow Deposit, if a portion has previously been disbursed hereunder).

4. Closing Documents Escrow Agent shall, and is hereby unconditionally and irrevocably authorized and directed to, release from escrow and record, as applicable, the Closing Documents upon receipt from Funds Escrow Agent of the Escrow Deposit (or remaining portion of the Escrow Deposit, if a portion has previously been disbursed hereunder), in cleared funds, and a copy of the written confirmation from Agent that the Loan has been fully satisfied by Seller with all amounts owing thereunder being paid in full. Closing Documents Escrow Agent shall then disburse the Escrow Deposit in accordance with the executed settlement statement included in the Closing Documents. Notwithstanding anything to the contrary set forth in this Agreement, if Agent commences a foreclosure action or exercises any of the other default remedies under the Loan as referenced in Section 6 of this Agreement, then the provisions of Sections 6 and 7 of this Agreement shall govern with respect to Closing Documents Escrow Agent's release and recording of the Closing Documents and disbursement of the Escrow Deposit (or remaining portion of the Escrow Deposit, if a portion has previously been disbursed hereunder).

5. Buyer hereby irrevocably and unconditionally waives any requirement that Buyer close on the Unit before any other Unit in the Condominium closes. All prorations shall be calculated as of the Escrow Date.

6. In the event: (i) Lender commences a foreclosure action on the Mortgage (as evidenced by the filing of a foreclosure complaint in a legal action) or on the Pledge, (ii) Lender accepts a deed-in-lieu of foreclosure with respect to the Mortgage or an assignment-in-lieu of foreclosure with respect to the Pledge or (iii) Lender, its nominee or designee or any other individual or entity acquires title to, or assumes or obtains possession or control of, the collateral set forth in the Mortgage or the Pledge at, during or by a foreclosure (Lender or such other individual or entity acquiring title, possession or control of the collateral, together with their respective successors or assigns, shall be referred to in this Agreement as " Subsequent Owner "), then Subsequent Owner will have the right pursuant to that certain Letter Agreement between Agent and Buyer of even date herewith, in its sole and absolute discretion, exercisable during the sixty (60) day period following Subsequent Owner's acquisition of title, possession or control of the collateral (the " Election Period "), to either terminate the Purchase Agreement and unwind the escrow closing of the Unit occurring hereunder or assume the obligations of Seller under the Purchase Agreement and convey the Unit to Buyer. If Subsequent Owner elects to terminate the Purchase Agreement, it is required by the Letter Agreement to deliver a termination notice (the “ Termination Notice ”) to Buyer, with a copy to Funds Escrow Agent and Closing Documents Escrow Agent, by no later than the expiration the Election Period. Upon receipt by Funds Escrow Agent of a copy of the Termination Notice, Funds Escrow Agent shall, and is hereby unconditionally and irrevocably authorized and directed to, release the remaining portion of the Escrow Deposit to Buyer but only after disbursing the $1,200,000 Construction Disruption Payments to HHA (in accordance with wire instruction provided by HHA) if not previously disbursed to HHA. Buyer specifically acknowledges and agrees that the amount it will receive back in the event the escrow closing is unwound will be less than the original Escrow Deposit because Buyer has irrevocably agreed that $1,200,000 of the Escrow Deposit will be paid to HHA, and because Funds Escrow Agent may have already disbursed the Pre Opening Services Payment to Buyer or its affiliates in accordance with the provisions of Section 3.1. Buyer hereby acknowledges and agrees that if the Purchase Agreement is terminated as provided in this Section 6 and certain disbursement(s) have been made in accordance with Section 3.1 or 3.2 or this Section 6, that Buyer shall not be entitled to seek any additional sums or compensation from any party hereto or Subsequent Owner and that Buyer's receipt of the remaining Escrow Deposit shall be in full satisfaction of the termination of the Purchase Agreement. Funds Escrow Agent shall deliver written notification to Buyer, Subsequent Owner and Closing Documents Escrow Agent immediately upon its release of the remaining Escrow Deposit to Buyer. Upon the release of the remaining Escrow Deposit to Buyer, the Purchase Agreement shall terminate and be of no further force and effect with Buyer and Seller and Subsequent Owner having no further obligations to each other under the Purchase Agreement. Upon receipt of written notification from Funds Escrow Agent that it has released the remaining Escrow Deposit to Buyer as required herein, Closing Documents Escrow Agent shall promptly destroy all of the Closing Documents and send written confirmation to all parties to this Agreement and Subsequent Owner that they have been destroyed.

7. If Subsequent Owner elects not to terminate the Purchase Agreement, it is required by the Letter Agreement to deliver notice to Buyer that it is not terminating (the " Non-Termination Notice "), with a copy to Funds Escrow Agent and Closing Documents Escrow Agent, by no later than the expiration the Election Period. Funds Escrow Agent shall, and is hereby unconditionally and irrevocably authorized and

directed to, release the all of the remaining Escrow Deposit from escrow and deliver it to Closing Documents Escrow Agent upon Funds Escrow Agent's receipt of a copy of the Non-Termination Notice. Closing Documents Escrow Agent shall, and is hereby unconditionally and irrevocably authorized and directed to, release from escrow and record, as applicable, the Closing Documents (unless Buyer and Subsequent Owner direct Closing Documents Escrow Agent to the contrary in writing) upon receipt from Funds Escrow Agent of all the remaining Escrow Deposit and a copy of the Non Termination Notice. Closing Documents Escrow Agent shall then disburse the remaining portion of the Escrow Deposit to Subsequent Owner in accordance with the executed settlement statement included in the Closing Documents.

8. Buyer and Seller agree and acknowledge that Buyer shall enjoy immediate and exclusive possession of the Unit as of the Escrow Date; provided that Buyer shall not record, permit, or cause any lien or other encumbrance to be recorded against the Unit. Additionally, Buyer agrees that provided that Closing Documents Escrow Agent has not received a Termination Notice and until such time as the Closing Documents Escrow Agent has received, in cleared funds, the remaining portion of the Escrow Deposit and has released and, as applicable, recorded, the Closing Documents in accordance with this Agreement, Buyer does not have any ownership or landlord interest in the Unit or the Condominium Property. Buyer hereby represents, covenants and warrants that Buyer shall at all times maintain commercially reasonable liability insurance and other coverage insuring any and all liability arising in connection with Buyer's use of the Unit and its appurtenances and any services being performed by Buyer or its affiliates in connection therewith on or from the Unit or any other portion of the Condominium property. Buyer's right to possession of the Unit under this Agreement shall continue until such time as (a) the Escrow Deposit (or remaining portion of the Escrow Deposit, if a portion has previously been disbursed hereunder) is released to Seller and the deed to the Unit is recorded, or (b) the Escrow Deposit (or remaining portion of the Escrow Deposit, if a portion has previously been disbursed hereunder) is released to Buyer and the Purchase Agreement is terminated. Buyer hereby assumes all risks of any damage or loss to any of the Buyer's Personal Items and all risks of any injury to Buyer or any of Buyer's agents, employees, vendors, clients, guests, tenants or invitees (collectively, the " Buyer Parties ") that may enter into the Unit and/or on to the Condominium property unless the same is a result of the gross negligence or willful misconduct of Seller and/or Seller's contractors, subcontractors, employees and/or agents. Buyer shall be responsible for insuring the Buyer's Personal Items and carrying appropriate general liability, personal property, employment practices liability, crime insurance and workers' compensation insurance in the same amounts and upon the same terms as Buyer's affiliate is required to carry under the Lease Agreement between Buyer's affiliate and the Condominium Association, and Seller shall have no responsibility for insuring same or for any casualty or theft of any kind with respect to the Buyer's Personal Items and/or the Buyer Parties. A copy of such insurance policies shall be provided to Seller prior to the Escrow Date, and shall name the Seller and the Condominium Association as additional insureds thereunder.

During the pendency of the Escrow arrangement Buyer shall, at its cost and expense, keep and maintain the Unit and other portions of the Condominium Property being occupied in good repair throughout the Term. Buyer understands and agrees the Buyer shall not be permitted to make any improvements, changes and/or alterations to the Unit or other portions of the Condominium prior to conveyance of title to the Unit to Buyer (notwithstanding the limited occupancy pursuant hereto). Buyer agrees to conduct his/her/their occupancy of the Unit and other portions of the Condominium in such a manner as to maintain such areas in the same good order and repair as when Buyer took occupancy. Buyer further agrees that Buyer will commit no act of damage, knowingly or unknowingly, which may impact the Unit and/or any other portion of the Condominium and/or the Seller's ability to obtain a temporary and/or permanent certificate of occupancy for the Unit and/or the Condominium. Buyer agrees that in taking occupancy of the Unit, Buyer shall be responsible for all costs incurred by Seller due to any damage caused by Buyer. Buyer agrees to cooperate with Seller at all times (at Seller's sole cost) with regard to any matters pertaining to the Seller's obtaining a temporary and/or permanent certificate of occupancy for the Unit and/or the Condominium.

Notwithstanding anything to the contrary in the Purchase Agreement, Buyer agrees that Seller shall not be responsible for any damage to the Unit and/or any limited common element appurtenant thereto caused as a result of the Buyer's use of the Unit while the Escrow arrangement remains in place, and Seller shall not be responsible for any repairs to the Unit and/or its limited common elements.

Buyer hereby indemnifies and agrees to hold Seller harmless from and against any and all liens, losses, costs, claims, demands, damages, judgments, liabilities, expenses, interest and penalties (including reasonable attorneys' and paralegals' fees and costs, whether suit be brought or any appeal be taken therefrom), threatened, incurred or sustained by Seller resulting from, arising out of, or related to, directly or indirectly, the use of the Unit and/or its limited common elements or any other part of the Condominium or the performance of services in connection therewith by Buyer or any other Buyer Parties occurring during the pendency of this Agreement. Buyer further agrees to defend, at its sole cost and expense, any and all suits or actions instituted against Seller resulting from, arising out of, or related to, directly or indirectly, the use of the Unit and/or its limited common elements or any other part of the Condominium or the performance of services in connection therewith by Buyer or any other Buyer Parties. For purposes of this paragraph, Seller shall be deemed to include all of its partners, and its and their partners, members, officers, directors, shareholders, employees or other who may have liability by or through Seller.

9. All notices given or made pursuant hereto, or for the purposes of invoking or enforcing any of the provisions of this Agreement, shall be in writing and shall be sent by certified mail, return receipt requested, or by hand delivery, or federal express, or similar reputable overnight courier service, addressed as follows:

	If to Seller:	4000 South Ocean Property Owner, LLLP
		315 S. Biscayne Boulevard, 4th Floor
		Miami, Florida 33131
		Attn: Hyde Beach House Resort Project Manager

	If to Funds Escrow Agent:	Solomon, Furshman & Cooperman, LLP
		1200 Brickell Avenue, PH 2000
		Miami, Florida 33131

		Attn: Victor Recondo, Esq.

	If to Closing Documents Escrow Agent:
		Greenberg Traurig, P.A, .
		333 Southeast Second Avenue
		Miami, FL 33131
		44th Floor
		Attn: Meredith Singer, Esq.

	If to Buyer:	Southerly Hotels, Inc.
		410 West Francis Street
		Williamsburg, VA 23185
		Attn: Dave Folsom, President

	With a copy to:	Solomon, Furshman & Cooperman, LLP
		1200 Brickell Avenue, PH 2000
		Miami, Florida 33131
		Attn: Victor Recondo, Esq.

Any notice required hereunder to be delivered by a date which is a holiday or Saturday or Sunday shall be deemed to be due on the next business day following such date.

10. The respective Escrow Agents shall not be liable for any actions taken in good faith, but only for its gross negligence or willful misconduct. The Parties hereby indemnify and hold harmless the respective Escrow Agents from and against any loss, liability, damage, claim, cost, fee or expense whatsoever (including reasonable attorney's fees at all trial and appellate levels) the respective Escrow Agents may incur or be exposed to in its capacity as escrow agents hereunder, except for those resulting from its/their gross negligence or willful misconduct. If there is, at any time, any dispute as to disposition of any proceeds or documents held by the respective Escrow Agents pursuant to the terms of this Agreement, the respective Escrow Agents are each hereby authorized to interplead said amount with any court of competent jurisdiction and thereby be released from all obligations hereunder. The Parties recognize that the Closing Documents Escrow Agent is a law firm that represents Seller, and hereby agree that such law firm may continue to represent Seller in any litigation pursuant to this Agreement or otherwise. Similarly, the Parties recognize that the Funds Escrow Agent is a law firm that represents Buyer, and hereby agree that such law firm may continue to represent Buyer in any litigation pursuant to this Agreement or otherwise.

11. Signatures of the parties hereto on copies of this Agreement transmitted by facsimile machine, email or PDF shall be deemed originals for all purposes hereunder, and shall be binding upon the parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be considered an original and a complete set of which taken together shall constitute one and the same agreement.

hereunder, the prevailing Party in any such suit shall be entitled to all of its costs, expenses and reasonable fees of its attorney(s) (if and to the extent permitted by law) in connection therewith. All judicial proceedings brought by or against any Party, shall be brought in the courts of the State of Florida sitting in Miami- Dade County, Florida. The Parties each acknowledge and agree that the undersigned representative of each Party has the legal requisite authority to bind the applicable Party to the terms of this Agreement and that such Party does so knowingly with a full understanding of the nature and meaning of each provision of this Agreement. Additionally, that each Party had the benefit of professional advice rendered by independent legal counsel of their own selection prior to entering into this Agreement (or knowingly waived same) and has executed this Agreement only after carefully considering each term of this Agreement and fully discussing the same with counsel of their choice. The Parties further acknowledge and agree that each of them and their respective counsel have reviewed and revised this Agreement and that this Agreement has been voluntary and consensually negotiated at "arm's length." Accordingly, this Agreement shall be deemed to have been written jointly by the Parties, and the Parties agree and acknowledge that no rule of construction which would result in an interpretation or construction of this Agreement in favor or to the detriment of one of the Parties or the other shall apply in construing or interpreting this Agreement or any part of it. The Parties each acknowledge and agree that this Agreement is subject and subordinate to the lien of the Mortgage given to Agent on behalf of the Lender to secure the Loan and to the rights of Agent and Lender under the Loan and all of the documents executed in connection with the Loan. This Agreement shall not be recorded in the public records.

13. This Agreement shall survive closing.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE)

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and

year first above written.

"BUYER"

SOTHERLY HOTELS, INC., a publicly traded real estate investment trust



By:
Name:		Dave Folsom
Title:		President

"SELLER"

4000 SOUTH OCEAN PROPERTY OWNER, LLLP, a Delaware limited liability limited partnership

By:	4000 South Ocean GP, LLC, a Delaware limited liability company, its general partner



	By:
	Name:
	Title:

"FUNDS ESCROW AGENT"

Solomon, Furshman & Cooperman, LLP

By:
Name:
Title:

"CLOSING DOCUMENTS ESCROW AGENT"

GREENBERG TRAURIG, P.A.

By:
Name:
Title:

EXHIBIT "I"

ADDITIONAL TENANT FINISHES

LCE storage/retail on graphics distributed 3/11/2016

• Ground Floor LCE: Currently designated as "Future Retail" on the drawings- Becomes "Maintenance/Engineering” space/work area

o Divide space equally in half with new wall.

o LCE to be designated on the "northern" half. Approx. area 25' x 25'

o White Box "plus" with painted walls, drop ceiling, and commercial vinyl tile flooring and base

o To code electrical and lighting (install12 outlets, cat6 cable for internet/communications (3 connections); provide/install ceiling mounted lighting)

o HVAC sized to space

o Provide telephone and cabling to phone room; smoke detector

o 3 desks/chairs, inventory of supplies

o Provide shelving for materials storage and inventory (9 sets 4'w x 8' h with shelves)

o Plumbing; run hot and cold water to and provide a work sink and hand sink

o Two sets of large double doors: First opening to the north into the "Domestic Water Room" and second set opening to the east into the garage (lockable doors)

o Eye Wash station

o OSHA/Fed qualified HazMat/Paint locker

• 2nd floor LCE: Currently designated as Maintenance Office - Becomes Employee Break Room/Lounge/Cafeteria

o Approx. area 32' x 18'

o White Box "plus" with painted walls, drop ceiling with 2x2 ACT, smoke detector, and commercial vinyl tile flooring and base

o To code electrical and lighting (8 outlets, cat 6 cable, telephone cable to phone room)

o HVAC sized to space

o Hand sink with hot/cold water

o FF&E package: 16 Chairs/4 tables/ 2 banquet tables, 1 sofa, waste receptacles, refrigerator/full size, microwave

o Cable connection

• 3rd floor LCE: Currently designated as Housekeeping - Becomes Employee Locker Room/restroom

o Approx. Area 38' x 33'

o White Box "plus" with painted walls, drop ceiling, and commercial vinyl tile flooring and base, smoke detectors, ACT

o To code electrical and lighting (four outlets in each bathroom, 2 at the sink)

o HVAC sized to space ducted separately for restrooms and remainder of space

o Divided interior walls for separate male/female locker rooms

o Divided interior walls for separate male/female restrooms

o Entry doors (2), partitions/doors for water closets, one in each meeting ADA code, hot and cold water brought into the space; install one mop sink

o Locker rooms FF&E – typical 24 lockers, benches, mirrors, etc.

o Restrooms – Ceiling lighting, six can lights in each bathroom, vanity lights at each sink; mirror at sink and full length mirror on wall; towel dispenser and trash receptacle in each bathroom; smoke detector

☐ Male – toilet, urinal and shower stalls with all plumbing, fixtures, and commercial stall dividers

☐ Female – two toilets and one shower stall with all plumbing, fixtures, and commercial stall dividers

☐ Sink/vanity in each with standard plumbing and lighting fixtures

☐ Tile flooring and painted walls in all

• 4th floor LCE: Currently designated as Locker Room – Becomes "Office and Storage Area”

o Approx. Area 38' x 33' includes lockable doors, reception entry/hallway and 3 offices each+/- 10'x10'

o White Box "plus" with painted walls, drop ceiling, and commercial CARPETING and base in each space

o To code electrical and lighting (12 outlets, 3 in each space; Cat6 to each space; phone and wiring to each space; TV in reception wired, copier)

o FF&E: Furnish; 4 desks, 4 chairs, 4 file cabinets, 8 guest chairs, 4 end table, 4 lamps, 4 floor lamps,

o HVAC sized to space/offices ducted separately

o Remaining areas for clerical and other storage. White box

o Area includes Wi-Fi/internet connectivity

• 5th Floor LCE: Currently designated as Break Room - Becomes additional storage/office space/housekeeping

o Approx. Area 38 x 32' (door with secure lock)

o White Box "plus" with painted walls, drop ceiling, and commercial CARPETING and base

o To code electrical and lighting

o HVAC sized to space; 8 outlets, 8 ceiling lights

o Area includes Wi-Fi/internet connectivity

o 4 shelves (4'w x 8' high )

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF EXECUTIVE OFFICER

I, Andrew M. Sims, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sotherly Hotels Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2017

	By:	/s/ Andrew M. Sims
	Name:	Andrew M. Sims
	Title:	Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF FINANCIAL OFFICER

I, Anthony E. Domalski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sotherly Hotels Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2017

	By:	/s/ Anthony E. Domalski
	Name:	Anthony E. Domalski
	Title:	Chief Financial Officer

EXHIBIT 31.3

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF EXECUTIVE OFFICER

I, Andrew M. Sims, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sotherly Hotels LP;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2017

	By:	/s/ Andrew M. Sims
	Name:	Andrew M. Sims
	Title:	Chief Executive Officer
		Sotherly Hotels, Inc., sole general partner of Sotherly Hotels LP

EXHIBIT 31.4

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF FINANCIAL OFFICER

I, Anthony E. Domalski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sotherly Hotels LP;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2017

	By:	/s/ Anthony E. Domalski
	Name:	Anthony E. Domalski
	Title:	Chief Financial Officer
		Sotherly Hotels, Inc., sole general partner of Sotherly Hotels LP

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotherly Hotels Inc. (the “Corporation”) on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew M. Sims, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: August 9, 2017

	By:	/s/ Andrew M. Sims
	Name:	Andrew M. Sims
	Title:	Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotherly Hotels Inc. (the “Corporation”) on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony E. Domalski, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: August 9, 2017

	By:	/s/ Anthony E. Domalski
	Name:	Anthony E. Domalski
	Title:	Chief Financial Officer

EXHIBIT 32.3

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotherly Hotels LP (the “Operating Partnership”) on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew M. Sims, Chief Executive Officer of the Sotherly Hotels Inc., sole general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.

Date: August 9, 2017

	By:	/s/ Andrew M. Sims
	Name:	Andrew M. Sims
	Title:	Chief Executive Officer
		Sotherly Hotels Inc., sole general partner of Sotherly Hotels LP

EXHIBIT 32.4

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotherly Hotels LP (the “Operating Partnership”) on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony E. Domalski, Chief Financial Officer of Sotherly Hotels Inc., sole general partner of the Operating Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.


Date: August 9, 2017

	By:	/s/ Anthony E. Domalski
	Name:	Anthony E. Domalski
	Title:	Chief Financial Officer
		Sotherly Hotels, Inc., sole general partner of Sotherly Hotels LP