EXHIBIT 10.24

 

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LOAN AGREEMENT

 

Dated as of September 12, 2005

 

Between

 

MERISTAR SECURED HOLDINGS LLC,

as Borrower

 

and

 

LEHMAN BROTHERS HOLDINGS INC.,

d/b/a LEHMAN CAPITAL,

a division of LEHMAN BROTHERS HOLDINGS INC.,

individually and as Agent for one or more Co-Lenders,

as Lender

 

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I.

   DEFINITIONS; PRINCIPLES OF CONSTRUCTION    1      Section 1.1   

Definitions.

   1      Section 1.2   

Principles of Construction.

   25

II.

   GENERAL TERMS    25      Section 2.1   

Loan Commitment; Disbursement to Borrower.

   25      2.1.1    Agreement to Lend and Borrow.    25      2.1.2    Single
Disbursement to Borrower.    25      2.1.3    The Note, Security Instrument and
Loan Documents.    25      2.1.4    Use of Proceeds.    26      Section 2.2   

Interest; Loan Payments; Late Payment Charge.

   26      2.2.1    Payments.    26      2.2.2    Interest Calculation.    27  
   2.2.3    Eurodollar Rate Unascertainable; Illegality; Increased Costs.    27
     2.2.4    Payment on Maturity Date.    30      2.2.5    Payments after
Default.    30      2.2.6    Late Payment Charge.    30      2.2.7    Usury
Savings.    30      2.2.8    Indemnified Taxes.    31      2.2.9    Replacement
of Lenders.    32      Section 2.3   

Prepayments.

   32      2.3.1    Voluntary Prepayments.    32      2.3.2    Mandatory
Prepayments.    33      2.3.3    Prepayments After Default.    33      2.3.4   
Making of Payments.    34      2.3.5    Application of Prepayments.    34     
Section 2.4   

Interest Rate Cap Agreement.

   34      Section 2.5   

Release on Payment in Full.

   36

III.

   CASH MANAGEMENT    36      Section 3.1   

Establishment of Accounts.

   36      Section 3.2   

Deposits into Lockbox Account.

   38      Section 3.3   

Account Name.

   39      Section 3.4   

Eligible Accounts.

   39      Section 3.5   

Permitted Investments.

   39

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     Section 3.6   

The Initial Deposits.

   40      Section 3.7   

Transfer To and Disbursements from the Lockbox Account.

   40      Section 3.8   

Withdrawals From the Tax Account and the Insurance Premium Account.

   41      Section 3.9   

Withdrawals from the Replacement Reserve Account.

   41      Section 3.10   

Withdrawals from the Required Repair Account.

   41      Section 3.11   

Withdrawals from the Debt Service Account.

   41      Section 3.12   

Intentionally Deleted.

   41      Section 3.13   

Intentionally Deleted.

   41      Section 3.14   

Intentionally Deleted.

   41      Section 3.15   

Intentionally Deleted.

   41      Section 3.16   

Withdrawals from the Borrower Expense Account.

   41      Section 3.17   

Sole Dominion and Control.

   42      Section 3.18   

Security Interest.

   42      Section 3.19   

Rights on Default.

   42      Section 3.20   

Financing Statement; Further Assurances.

   42      Section 3.21   

Borrower’s Obligation Not Affected.

   43      Section 3.22   

Payments Received Under this Agreement.

   43

IV.

   REPRESENTATIONS AND WARRANTIES    43      Section 4.1   

Borrower Representations.

   43      4.1.1      Organization.    43      4.1.2      Proceedings.    43  
   4.1.3      No Conflicts.    44      4.1.4      Litigation.    44      4.1.5  
   Agreements.    44      4.1.6      Solvency.    44      4.1.7      Full and
Accurate Disclosure.    45      4.1.8      No Plan Assets.    45      4.1.9     
Compliance.    45      4.1.10    Financial Information.    46      4.1.11   
Condemnation.    46      4.1.12    Federal Reserve Regulations.    46     
4.1.13    Utilities and Public Access.    46

 

ii

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4.1.14

   Not a Foreign Person.    46         

4.1.15

   Separate Lots.    47         

4.1.16

   Assessments.    47         

4.1.17

   Enforceability.    47         

4.1.18

   No Prior Assignment.    47         

4.1.19

   Insurance.    47         

4.1.20

   Use of Property.    47         

4.1.21

   Certificate of Occupancy; Licenses.    47         

4.1.22

   Flood Zone.    48         

4.1.23

   Physical Condition.    48         

4.1.24

   Boundaries.    48         

4.1.25

   Leases.    48         

4.1.26

   [Reserved]    49         

4.1.27

   [Reserved]    49         

4.1.28

   Filing and Recording Taxes.    49         

4.1.29

   Franchise Agreement.    49         

4.1.30

   Management Agreement.    49         

4.1.31

   Illegal Activity.    49         

4.1.32

   No Change in Facts or Circumstances; Disclosure.    50         

4.1.33

   Investment Company Act.    50         

4.1.34

   Principal Place of Business; State of Organization.    50         

4.1.35

   Single Purpose Entity.    50         

4.1.36

   Business Purposes.    54         

4.1.37

   Taxes.    54         

4.1.38

   Forfeiture.    54         

4.1.39

   Environmental Representations and Warranties.    55         

4.1.40

   Taxpayer Identification Number.    55         

4.1.41

   OFAC.    55         

4.1.42

   Intentionally Deleted.    55         

4.1.43

   Deposit Accounts.    56         

4.1.44

   Embargoed Person.    57         

4.1.45

   Personal Property.    57         

4.1.46

   Operating Lease.    57

 

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     Section 4.2   

Survival of Representations.

   58

V.

   BORROWER COVENANTS    58      Section 5.1   

Affirmative Covenants.

   58      5.1.1      Existence; Compliance with Legal Requirements.    58     
5.1.2      Taxes and Other Charges.    59      5.1.3      Litigation.    59     
5.1.4      Access to Property.    60      5.1.5      Notice of Default.    60  
   5.1.6      Cooperate in Legal Proceedings.    60      5.1.7      Award and
Insurance Benefits.    60      5.1.8      Further Assurances.    60      5.1.9  
   Mortgage and Intangible Taxes.    61      5.1.10    Financial Reporting.   
61      5.1.11    Business and Operations.    64      5.1.12    Costs of
Enforcement.    64      5.1.13    Estoppel Statement.    64      5.1.14    Loan
Proceeds.    65      5.1.15    Performance by Borrower.    66      5.1.16   
Confirmation of Representations.    66      5.1.17    Leasing Matters.    66  
   5.1.18    Management Agreement.    67      5.1.19    Environmental Covenants.
   69      5.1.20    Alterations.    71      5.1.21    Franchise Agreement.   
71      5.1.22    Intentionally Deleted.    73      5.1.23    OFAC.    73     
5.1.24    Operating Lease.    73      5.1.25    Maintenance of Personal
Property.    74      5.1.26    REIT Status.    75      5.1.27    O&M Program.   
75      Section 5.2   

Negative Covenants.

   75      5.2.1    Liens.    75      5.2.2    Dissolution.    76

 

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     5.2.3      Change In Business.    76      5.2.4      Debt Cancellation.   
76      5.2.5      Zoning.    76      5.2.6      No Joint Assessment.    77     
5.2.7      Name, Identity, Structure, or Principal Place of Business.    77     
5.2.8      ERISA.    77      5.2.9      Affiliate Transactions.    78     
5.2.10    Transfers.    78      5.2.11    Permitted Transfer.    80     
Section 5.3   

REIT.

   82

VI.

   INSURANCE; CASUALTY; CONDEMNATION    83      Section 6.1   

Insurance.

   83      Section 6.2   

Casualty.

   88      Section 6.3   

Condemnation.

   88      Section 6.4   

Restoration.

   89

VII.

   RESERVE FUNDS    93      Section 7.1   

Required Repair Funds.

   93      7.1.1      Required Repairs.    93      7.1.2      Deposits.    93  
   7.1.3      Release of Required Repair Funds.    94      Section 7.2   

Tax and Insurance Escrow Fund.

   94      Section 7.3   

Replacements and Replacement Reserve.

   95      7.3.1      Replacement Reserve Fund.    95      7.3.2     
Disbursements from Replacement Reserve Account.    96      7.3.3     
Performance of Replacements.    97      7.3.4      Balance in the Replacement
Reserve Account.    98      Section 7.4   

Intentionally Deleted.

   98      Section 7.5   

Intentionally Deleted.

   98      Section 7.6   

Intentionally Deleted.

   98      Section 7.7   

Reserve Funds, Generally.

   98      Section 7.8   

Letters of Credit.

   99

VIII.

   DEFAULTS    100      Section 8.1   

Event of Default.

   100

 

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     Section 8.2   

Remedies.

   104      Section 8.3   

Remedies Cumulative; Waivers.

   105

IX.

   SPECIAL PROVISIONS    106      Section 9.1   

Sale of Notes and Securitization

   106      Section 9.2   

Securitization Indemnification.

   108      Section 9.3   

Servicer.

   111      Section 9.4   

Exculpation.

   111      Section 9.5   

Reserved.

   112      Section 9.6   

Reserved.

   113      Section 9.7   

Syndication

   113      9.7.1    Syndication.    113      9.7.2    Sale of Loan, Co-Lenders,
Participations and Servicing.    113      9.7.3    Cooperation in Syndication.
   115      9.7.4   

Payment of Agent’s, and Co-Lender’s Expenses, Indemnity, etc.

Borrower and Guarantor shall:

   117      9.7.5    Limitation of Liability.    119      9.7.6    No Joint
Venture.    119      9.7.7    Voting Rights of Co-Lenders.    119 X.   
MISCELLANEOUS    119      Section 10.1   

Survival.

   119      Section 10.2   

Lender’s Discretion.

   120      Section 10.3   

Governing Law.

   120      Section 10.4   

Modification, Waiver in Writing.

   121      Section 10.5   

Delay Not a Waiver.

   121      Section 10.6   

Notices.

   121      Section 10.7   

Trial by Jury.

   122      Section 10.8   

Headings.

   122      Section 10.9   

Severability.

   123      Section 10.10   

Preferences.

   123      Section 10.11   

Waiver of Notice.

   123      Section 10.12   

Remedies of Borrower.

   123      Section 10.13   

Expenses; Indemnity.

   123      Section 10.14   

Schedules and Exhibits Incorporated.

   125

 

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Section 10.15

  

Offsets, Counterclaims and Defenses.

   125     

Section 10.16

  

No Joint Venture or Partnership; No Third Party Beneficiaries.

   125     

Section 10.17

  

Publicity.

   126     

Section 10.18

  

Waiver of Marshalling of Assets.

   126     

Section 10.19

  

Waiver of Counterclaim.

   126     

Section 10.20

  

Conflict; Construction of Documents; Reliance.

   127     

Section 10.21

  

Brokers and Financial Advisors.

   127     

Section 10.22

  

Prior Agreements.

   127

 

SCHEDULE I Reserved

SCHEDULE II Rent Roll / Leases

SCHEDULE III Required Repairs - Deadlines For Completion

SCHEDULE IV Organizational Chart of Borrower

SCHEDULE V Scheduled Amortization Payments

SCHEDULE VI Reserved

SCHEDULE VII O&M Program

SCHEDULE VIII Reserved

SCHEDULE IX Reserved

SCHEDULE X Franchise Agreement / Franchisor

SCHEDULE XI Management Agreement / Manager

SCHEDULE XII Operating Lease / Operating Tenant / Subordination and Attornment
Agreement

EXHIBIT A Property Account Bank Property Account Agreement

EXHIBIT B Tenant Notice Letter

EXHIBIT C Form of Assignment of Interest Rate Cap

EXHIBIT D Credit Card Company Notice Letter

 

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LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of September 12, 2005 (as amended, restated,
replaced, supplemented, extended or otherwise modified from time to time, this
“Agreement”), between LEHMAN BROTHERS HOLDINGS INC., d/b/a LEHMAN CAPITAL, a
division of LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation, having an
address at 399 Park Avenue, New York, New York 10022, individually and as Agent
for one or more Co-Lenders (“Lender”) and MERISTAR SECURED HOLDINGS LLC, a
Delaware limited liability company, having an office at 4501 N. Fairfax Drive,
Suite 500, Arlington, Virginia 22203 (“Borrower”).

 

W I T N E S S E T H:

 

WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
Lender; and

 

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).

 

NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:

 

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1 Definitions.

 

For all purposes of this Agreement, except as otherwise expressly required or
unless the context clearly indicates a contrary intent:

 

“Acceptable Counterparty” means any Counterparty to the Interest Rate Cap
Agreement that has and shall maintain, until the expiration of the applicable
Interest Rate Cap Agreement, a long-term unsecured debt rating of not less than
“AA-” (or the equivalent) by the Rating Agencies.

 

“Account Collateral” shall mean: (i) the Accounts, and all Cash, checks, drafts,
certificates and instruments, if any, from time to time deposited or held in the
Accounts from time to time; (ii) any and all amounts invested in Permitted
Investments; (iii) all interest, dividends, Cash, instruments and other property
from time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing; and (iv) to the extent not covered by
clauses (i) - (iii) above, all “proceeds” (as defined under the UCC as in effect
in the State in which the Accounts are located) of any or all of the foregoing.

 

“Accounts” shall mean, collectively, the Property Account, the Post-Termination
Property Account, the Tax Account, the Insurance Premium Account, the Required
Repair Account, the Replacement Reserve Account, the Debt Service Account, the
Borrower Expense Account, and the Lockbox Account and any other accounts
established pursuant to the Loan Documents.

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“Accounts Receivable” shall have the meaning set forth in Article 1 of the
Security Instrument with respect to the Property.

 

“ACM” shall have the meaning set forth in Section 5.1.27.

 

“Actual Amount” shall have the meaning set forth in the definition of
“Replacement Reserve Monthly Deposit” in this Section 1.1.

 

“Additional Indemnified Liabilities” shall have the meaning set forth in
Section 10.13(b) hereof.

 

“Adjusted Prime Rate” shall mean an interest rate per annum equal to the Prime
Rate in effect from time to time plus one percent (1%) per annum.

 

“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person. Such term shall include the Guarantor unless otherwise specified or
if the context may otherwise require.

 

“Affiliated Manager” shall mean any property manager which is an Affiliate of,
or in which Borrower, Principal, or any Guarantor has, directly or indirectly,
any legal, beneficial or economic interest.

 

“Agent” shall have the meaning set forth in Section 9.7.2(d) hereof.

 

“ALTA” shall mean American Land Title Association, or any successor thereto.

 

“Alteration Threshold Amount” shall have the meaning set forth in Section 5.1.20
hereof.

 

“Annual Budget” shall mean the operating budget, including all planned capital
expenditures, for the Property prepared by Borrower for the applicable Fiscal
Year or other period.

 

“Applicable Interest Rate” shall mean (A) from and including the date of this
Agreement through October 8, 2005, an interest rate per annum equal to 7.23%;
and (B) for each successive Interest Period through and including the date on
which the Debt is paid in full, an interest rate per annum equal to (I) the
Eurodollar Rate or (II) the Adjusted Prime Rate, if the Loan begins bearing
interest at the Adjusted Prime Rate in accordance with the provisions of
Section 2.2.3 hereof.

 

“Applicable Laws” shall mean all existing and future federal, state and local
laws, orders, ordinances, governmental rules and regulations and court orders.

 

“Appraisal” shall mean an appraisal prepared in accordance with the requirements
of FIRREA and USPAP, prepared by an independent third party appraiser holding an
MAI

 

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designation, who is State licensed or State certified if required under the laws
of the State where the Property is located, who meets the requirements of FIRREA
and USPAP and who is otherwise reasonably satisfactory to Lender.

 

“Approved Accountant” shall mean a “Big Four” accounting firm, or other
independent certified public accountant reasonably acceptable to Lender.

 

“Approved Annual Budget” shall have the meaning set forth in Section 5.1.10(d)
hereof.

 

“Approved Capital Budget” shall mean a Capital Budget that has been approved by
Lender.

 

“Approved Capital Budget Expenditure Amount” shall mean the annual amount
budgeted to be spent for FF&E and other Replacements pursuant to the Approved
Capital Budget.

 

“Approved Expenses” shall have the meaning set forth in Section 3.7(b)(vii)
hereof.

 

“Assignment and Assumption” shall have the meaning set forth in Section 9.7.2
hereof.

 

“Assignment of Interest Rate Cap” shall mean that certain Collateral Assignment
of Interest Rate Cap Agreement made by Borrower to Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

“Assignment of Leases” shall mean that certain first priority Assignment of
Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to
Lender, as assignee, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

“Assignment of Management Agreement” shall mean that certain Conditional
Assignment and Subordination of Management Agreement and Management Fees dated
the date hereof among Lender, Borrower, Operating Tenant and Manager, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

 

“Assignment of Security Agreement” shall mean, with respect to the Operating
Lease, that certain assignment of security agreement dated the date hereof given
by Borrower to Lender with respect to the Operating Lease Security Agreement.

 

“Award” shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of the Property.

 

“Bankruptcy Code” shall mean Title 11 U.S.C. § 101 et seq., and the regulations
adopted and promulgated pursuant thereto (as the same may be amended from time
to time).

 

“Basic Carrying Costs” shall mean the sum of the following costs associated with
the Property for the relevant Fiscal Year or payment period: (i) Taxes and
(ii) Insurance Premiums.

 

“Borrower” shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and assigns.

 

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“Borrower Expense Account” shall have the meaning set forth in Section 3.1(c)(x)
hereof.

 

“Breakage Costs” shall have the meaning set forth in Section 2.2.3(d) hereof.

 

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which national banks in New York, New York are not open for business.

 

“Business Party” shall have the meaning set forth in Section 4.1.35(z) hereof.

 

“Capital Budget” shall have the meaning set forth in the Operating Lease.

 

“Capital Expenditures” shall mean, for any period, the amount expended for items
capitalized under GAAP (including expenditures for building improvements or
major repairs, leasing commissions and tenant improvements).

 

“Cash” shall mean coin or currency of the United States of America or
immediately available federal funds, including such fund delivered by wire
transfer.

 

“Casualty” shall have the meaning set forth in Section 6.2 hereof.

 

“Casualty Consultant” shall have the meaning set forth in Section 6.4(b)(iii)
hereof.

 

“Casualty Retainage” shall have the meaning set forth in Section 6.4(b)(iv)
hereof.

 

“Closing Date” shall mean the date of the funding of the Loan.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be
further amended from time to time, and any successor statutes thereto, and all
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

 

“Co-Lender” shall have the meaning set forth in Section 9.7.2(a) hereof.

 

“Co-Lending Agreement” shall mean the Co-Lending Agreement entered into between
Lender, individually as a Co-Lender and as Agent and the other Co-Lenders in the
event of a Syndication, as the same may be further supplemented, modified,
amended or restated.

 

“Collateral” shall mean the Property, the Accounts, the Reserve Funds, the
Guaranty, the Personal Property, the Rents, the Account Collateral and all other
real or personal property of Borrower or any Guarantor that is at any time
pledged, mortgaged or otherwise given as security to Lender for the payment of
the Debt under the Security Instrument, this Agreement or any other Loan
Document.

 

“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of the Property, or
any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part thereof.

 

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“Condemnation Proceeds” shall have the meaning set forth in Section 6.4(b)
hereof.

 

“Control” (and the correlative terms “controlled by” and “controlling”) shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of the business and affairs of the entity
in question by reason of the ownership of beneficial interests, by contract or
otherwise.

 

“Counterparty” shall mean the issuer of the Interest Rate Cap Agreement.

 

“Creditors Rights Laws” shall mean with respect to any Person, any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to its debts or debtors.

 

“Debt” shall mean the outstanding principal amount set forth in, and evidenced
by, this Agreement and the Note together with all interest accrued and unpaid
thereon and all other sums due to Lender in respect of the Loan under the Note,
this Agreement, the Security Instrument or any other Loan Document, including,
without limitation, all Reserve Fund Deposits.

 

“Debt Service” shall mean, with respect to any particular period of time,
interest payments and all Scheduled Amortization Payments due under the Note for
such period.

 

“Debt Service Account” shall have the meaning set forth in Section 3.1(c)(iii)
hereof.

 

“Default” shall mean the occurrence of any event hereunder or under any other
Loan Document which, but for the giving of notice or passage of time, or both,
would constitute an Event of Default.

 

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to
the lesser of (a) the Maximum Legal Rate, or (b) five percent (5%) above the
Applicable Interest Rate.

 

“Disclosure Document” shall have the meaning set forth in Section 9.2(a) hereof.

 

“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (a) an account or accounts
maintained with a federal or State-chartered depository institution or trust
company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts maintained with a federal or State
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a State chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.§9.10(b),
having in either case a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal and State authority. An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.

 

“Eligible Institution” shall mean a depository institution or trust company,
insured by the Federal Deposit Insurance Corporation, (a) the short term
unsecured debt obligations or commercial paper of which are rated at least A-1
by S&P, P-1 by Moody’s and F-1 by Fitch in the case of accounts in which funds
are held for thirty (30) days or less, or (b) the long term unsecured debt
obligations of which are rated at least AA by Fitch and S&P and Aa2 by Moody’s
in the case of accounts in which funds are held for more than thirty (30) days.

 

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“Embargoed Person” shall have the meaning set forth in Section 4.1.44 hereof.

 

“Environmental Indemnity” shall mean that certain Environmental Indemnity
Agreement executed by Borrower and Guarantor in connection with the Loan for the
benefit of Lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

 

“Environmental Law” shall mean any federal, State and local laws, statutes,
ordinances, rules, regulations, and other legally enforceable standards,
policies, government directives or requirements, as well as common law, related
to the generation, manufacture, processing, use, treatment, storage, Release or
handling of Hazardous Materials, that, apply to Borrower and Guarantor or the
Property, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act.

 

“Environmental Liens” shall have the meaning set forth in Section 5.1.19(a)
hereof.

 

“Environmental Reports” shall have the meaning set forth in Section 4.1.39
hereof.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.

 

“Eurodollar Rate” shall mean, with respect to any Interest Period, an interest
rate per annum equal to LIBOR plus 3.50% per annum.

 

“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.

 

“Excess Cash Flow” shall mean for each Payment Date, an amount equal to the
difference between (a) the amount of funds on deposit in the Lockbox Account on
the date immediately preceding such Payment Date (and if such day is not a
Business Day then the preceding day which is a Business Day), less (b) the
amounts disbursed on such date into the Tax Account, the Insurance Premium
Account, the Debt Service Account, the Replacement Reserve Account, and the
Borrower Expense Account in accordance with Section 3.7 hereof.

 

“Excess Expenditure Amount” shall have the meaning set forth in Section 7.3.1
hereof.

 

“Exchange Act” shall have the meaning set forth in Section 9.2(a) hereof.

 

“Exchange Act Filing” shall have the meaning set forth in Section 9.2(a) hereof.

 

“Extended Maturity Date: shall have the meaning set forth in Section 2.2.1(c)
hereof.

 

“Extension Fee” shall mean one-half percent (0.50%) of the original principal
amount of the Loan.

 

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“Extraordinary Expense” shall mean an operating expense or capital expenditure
with respect to the Property that (i) is not set forth on the Approved Annual
Budget and (ii) is not subject to payment by withdrawals from the Replacement
Reserve Account or Required Repair Account. Borrower shall deliver promptly to
Lender a reasonably detailed explanation of such proposed Extraordinary Expense
for the approval of Lender.

 

“FF&E” shall mean, with respect to the Property, furnishings, fixtures and
equipment in the guest rooms, hallways, lobbies, restaurants, lounges, meeting
and banquet rooms, parking facilities and other public areas and other items
included in the term “FF&E” as defined in the Operating Lease.

 

“FF&E Limitation” shall have the meaning set forth in the Operating Lease.

 

“FF&E Note” shall have the meaning set forth in the Operating Lease.

 

“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act
of 1989, as the same may be amended from time to time.

 

“Fiscal Year” shall mean each twelve (12) month period commencing on January 1
and ending on December 31 during the term of the Loan.

 

“Fitch” shall mean Fitch, Inc.

 

“Flood Insurance Act” shall have the meaning set forth in Section 6.1(a)(vii)
hereof.

 

“Force Majeure Delay” shall mean any act of God or the elements, fire or other
casualty, strike or other labor dispute, inability to obtain materials, failure
of power or other necessary utilities, governmental pre-emption in a national
emergency, riot, insurrection and war, or any other event or circumstance
(excluding sufficiency of funds) which is beyond the reasonable control and not
due to the fault or negligence of Borrower, which delays, prevents or prohibits
Borrower’s Restoration of the Improvements for a period of at least three
consecutive days; provided, however, that (i) no such cause or event shall be
deemed to be a Force Majeure Delay unless Borrower shall have given Lender
reasonably prompt written notice of such delay, and (ii) Borrower shall continue
to make its monthly debt service, escrow and reserve payments pursuant to the
terms of this Agreement, the Note and the other Loan Documents, notwithstanding
the occurrence of such Force Majeure Delay.

 

“Franchise Agreement” shall mean that certain franchise agreement more
specifically identified on Schedule X attached hereto.

 

“Franchisor” shall mean the franchisor with respect to the Franchise Agreement,
as same is identified on Schedule X attached hereto.

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America as of the date of the applicable financial report.

 

“Governmental Authority” shall mean any court, board, agency, commission,
office, central bank or other authority of any nature whatsoever for any
governmental unit (federal,

 

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State, county, district, municipal, city, country or otherwise) or
quasi-governmental unit whether now or hereafter in existence having
jurisdiction over all or any portion of the Property, Borrower, Principal,
Operating Tenant, REIT or Guarantor.

 

“Gross Income from Operations” shall mean all income, computed in accordance
with GAAP, derived from the ownership and operation of the Property from
whatever source, including, but not limited to, the Rents, utility charges,
escalations, service fees or charges, license fees, parking fees, rent
concessions or credits, and other required pass-throughs and but excluding
sales, use and occupancy or other taxes on receipts required to be accounted for
by Borrower to any Governmental Authority, refunds and uncollectible accounts,
sales of furniture, fixtures and equipment, Insurance Proceeds (other than
business interruption or other loss of income insurance), Awards, security
deposits, utility and other similar deposits, payments received under the
Interest Rate Cap Agreement, interest on credit accounts, interest on the
Reserve Funds, and any disbursements to Borrower from the Reserve Funds. Gross
income shall not be diminished as a result of the Security Instrument or the
creation of any intervening estate or interest in the Property or any part
thereof.

 

“Guarantor” shall mean the Operating Partnership, jointly and severally, and any
other entity guaranteeing any payment or performance obligation of Borrower.

 

“Guaranty” shall mean that certain Guaranty of Recourse Obligations of Borrower,
dated as of the date hereof, from Guarantor to Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

“Hazardous Materials” shall mean any material or substance now or in the future
defined or regulated as a “hazardous substance,” “hazardous material,”
“hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,”
“pollutant” or other words of similar import within the meaning of applicable
Environmental Law, including; without limitation, petroleum and petroleum
by-products, gasoline, diesel fuel and oil; radioactive materials;
polychlorinated biphenyls (“PCBs”); lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could reasonably be
expected to become friable; and mold that could reasonably be expected to
adversely affect human health.

 

“Improvements” shall have the meaning set forth in Article 1 of the Security
Instrument.

 

“Indebtedness” of a Person, at a particular date, shall mean the sum (without
duplication) at such date of (a) all indebtedness or liability of such Person
(including, without limitation, amounts for borrowed money); (b) obligations
evidenced by bonds, debentures, notes, or other similar instruments;
(c) obligations for the deferred purchase price of property or services
(including trade obligations); (d) obligations under letters of credit; (e) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds, to invest in any Person or entity, or
otherwise to assure a creditor against loss; and (f) obligations secured by any
Liens, whether or not the obligations have been assumed.

 

“Indemnified Liabilities” shall have the meaning set forth in Section 9.7.4(c)
hereof.

 

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“Indemnified Parties” shall mean Lender, any Affiliate of Lender who is or will
have been involved in the origination of the Loan, any Person who is or will
have been involved in the servicing of the Loan, any Person in whose name the
encumbrance created by the Security Instrument is or will have been recorded,
Persons who may hold or acquire or will have held a full or partial interest in
the Loan, the holders of any Securities, as well as custodians, trustees and
other fiduciaries who hold or have held a full or partial interest in the Loan
for the benefit of third parties) as well as the respective directors, officers,
shareholders, partners, members, employees, agents, representatives, Affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan
or any Property, whether during the term of the Loan or as a part of or
following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all of Lender’s assets and
business).

 

“Indemnified Taxes” shall mean any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority.

 

“Indemnitee” shall have the meaning set forth in Section 9.7.4(c) hereof.

 

“Independent Director” shall have the meaning set forth in Section 4.1.35(z)
hereof.

 

“Information” shall have the meaning set forth in Section 9.7.3(b) hereof.

 

“Insolvency Opinion” shall mean, that certain bankruptcy non-consolidation
opinion letter delivered by counsel for Borrower in connection with a
Syndication and approved by Lender.

 

“Insurance Premium Account” shall have the meaning set forth in
Section 3.1(c)(ii) hereof.

 

“Insurance Premiums” shall have the meaning set forth in Section 6.1(b) hereof.

 

“Insurance Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.

 

“Interest Period” shall mean, in connection with the calculation of interest
accrued with respect to any specified Payment Date, the period from and
including the ninth (9th) day of the prior calendar month to and including the
eighth (8th) day of the calendar month in which the applicable Payment Date
occurs; provided, however, that with respect to the Payment Date occurring in
October, 2005, the Interest Period shall be the period commencing on the Closing
Date to and including October 8, 2005. Each Interest Period, except for the
Interest Period ending October 8, 2005, shall be a full month and shall not be
shortened by reason of any payment of the Loan prior to the expiration of such
Interest Period.

 

“Interest Rate Cap Agreement” shall mean the Interest Rate Cap Agreement
(together with the confirmation and schedules relating thereto), between an
Acceptable Counterparty and Borrower obtained by Borrower as and when required
under Section 2.4 hereof. After delivery of a Replacement Interest Rate Cap
Agreement to Lender, the term “Interest Rate Cap Agreement” shall be deemed to
mean such Replacement Interest Rate Cap Agreement.

 

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“Interest Shortfall” shall have the meaning set forth in Section 2.3.1(b)
hereof.

 

“Inventory” shall mean “Inventories” as such term is defined in the Operating
Lease.

 

“Investment Grade” shall mean a rating of BBB- or its equivalent by the Rating
Agencies.

 

“Investor” shall have the meaning set forth in Section 5.1.10(i) hereof.

 

“Leases” shall have the meaning set forth in Article 1 of the Security
Instrument.

 

“Legal Requirements” shall mean, with respect to the Property, all federal,
State, county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting the Property or any part thereof, or the zoning,
construction, use, alteration, occupancy or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Borrower, at any time in force affecting the Property or
any part thereof, including, without limitation, any which may (a) require
repairs, modifications or alterations in or to the Property or any part thereof,
or (b) in any way limit the use and enjoyment thereof.

 

“Lehman” shall have the meaning set forth in Section 9.2(b) hereof.

 

“Lehman Group” shall have the meaning set forth in Section 9.2(b) hereof.

 

“Lender” shall have the meaning set forth in the introductory paragraph hereto,
together with its successors and assigns.

 

“Letter of Credit” shall mean a clean, irrevocable, unconditional, transferable
letter of credit payable on sight draft only, with an initial expiration date of
not less than one (1) year and with automatic renewals for one (1) year periods,
for which Borrower shall have no reimbursement obligation and which
reimbursement obligation is not secured by the Property or any other property
pledged to secure the Note, in favor of Lender and entitling Lender to draw
thereon in New York, New York or in such other city as Lender may determine,
issued by a domestic bank or the U.S. agency or branch of a foreign bank,
provided such other bank has a long-term unsecured debt rating at the time such
letter of credit is delivered and throughout the term of such letter of credit,
of not less than “AA” or “Aa2”, as applicable, as assigned by the Rating
Agencies.

 

“Liabilities” shall have the meaning set forth in Section 9.2(b) hereof.

 

“LIBOR” shall mean, for the first Interest Period 3.73% per annum. For each
Interest Period thereafter LIBOR shall mean the quoted offered rate for
one-month United States dollar deposits with leading banks in the London
interbank market that appears as of 11:00 a.m. (London time) on the related
LIBOR Determination Date on the display page designated as Telerate Page 3750.

 

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If, as of such time on any LIBOR Determination Date, no quotation is given on
Telerate Page 3750, then the Lender shall establish LIBOR on such LIBOR
Determination Date by requesting four Reference Banks meeting the criteria set
forth herein to provide the quotation offered by its principal London office for
making one-month United States dollar deposits with leading banks in the London
interbank market as of 11:00 a.m., London time, on such LIBOR Determination
Date.

 

(i) If two or more Reference Banks provide such offered quotations, then LIBOR
for the next Interest Period shall be the arithmetic mean of such offered
quotations (rounded upward if necessary to the nearest whole multiple of
1/1,000%).

 

(ii) If only one or none of the Reference Banks provides such offered
quotations, then LIBOR for the next Interest Period shall be the Reserve Rate.

 

(iii) If on any LIBOR Determination Date, Lender is required but is unable to
determine LIBOR in the manner provided in paragraphs (i) and (ii) above, LIBOR
for the next Interest Period shall be LIBOR as determined on the preceding LIBOR
Determination Date.

 

The establishment of LIBOR on each LIBOR Determination Date by the Lender shall
be final and binding.

 

“LIBOR Business Day” shall mean a day upon which United States dollar deposits
may be dealt in on the London interbank markets and commercial banks and foreign
exchange markets are open in London, England.

 

“LIBOR Determination Date” shall mean, with respect to any Interest Period, the
date that is two (2) LIBOR Business Days prior to the fifteenth (15th) calendar
day of the month in which such Interest Period commenced.

 

“Licenses” shall have the meaning set forth in Section 4.1.21 hereof.

 

“Lien” shall mean, with respect to the Property, any mortgage, deed of trust,
lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting Borrower, the Property, any
portion thereof or any interest therein, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic’s, materialmen’s and other similar liens
and encumbrances.

 

“Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement
and the other Loan Documents as the same may be amended or split pursuant to the
terms hereof.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the
Security Instrument, the Assignment of Leases, the Environmental Indemnity, the
Assignment of

 

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Management Agreement, the Guaranty, the Subordination and Attornment Agreement,
the Assignment of Interest Rate Cap Agreement, the Assignment of Security
Agreement and all other documents executed and/or delivered in connection with
the Loan.

 

“Lockbox Account” shall have the meaning set forth in Section 3.1(b) hereof.

 

“Lockbox Bank” shall mean an Eligible Institution selected by Lender.

 

“Losses” shall mean any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, fines, penalties, charges, fees, expenses,
judgments, awards, amounts paid in settlement of whatever kind or nature
(including but not limited to reasonable attorneys’ fees and other costs of
defense).

 

“Major Lease” shall mean (i) any Lease which together with all other Leases to
the same tenant and to all Affiliates of such tenant, (A) provides for rental
income representing five percent (5%) or more of the annual hotel gross room
revenues for the Property, (B) covers more than 2,500 square feet of the total
space at the Property, in the aggregate, (C) provides for a lease term of more
than ten (10) years including options to renew or (D) is with an Affiliate of
Borrower and (ii) any instrument guaranteeing or providing credit support for
any Major Lease and (iii) the Operating Lease.

 

“Management Agreement” shall mean the management agreement entered into by and
between Operating Tenant and Manager, as more specifically identified on
Schedule XI attached hereto, or, if the context requires, the Replacement
Management Agreement executed in accordance with the terms and provisions of
this Agreement.

 

“Manager” shall mean the manager with respect to the Management Agreement as
more specifically identified on Schedule XI attached hereto or, if the context
requires, a Qualified Manager who is managing the Property in accordance with
the terms and provisions of this Agreement.

 

“Maturity Date” shall mean April 9, 2006, as such date may be extended pursuant
to the terms hereof, or such other date on which the final payment of the
principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise.

 

“Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or in the other Loan Documents, under the laws of such State or
States whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.

 

“Monthly Debt Service Payment Amount” shall mean the amount of interest and the
Scheduled Amortization Payment due and payable on each Payment Date, pursuant to
the Note and Section 2.2 hereof.

 

“Monthly Insurance Premium Deposit” shall have the meaning set forth in
Section 7.2 hereof.

 

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“Monthly Tax Deposit” shall have the meaning set forth in Section 7.2 hereof.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Net Cash Flow” for any period shall mean the amount obtained by subtracting
Operating Expenses and Capital Expenditures for such period from Gross Income
from Operations for such period.

 

“Net Cash Flow After Debt Service” for any period shall mean the amount obtained
by subtracting Debt Service for such period from Net Cash Flow for such period.

 

“Net Cash Flow Schedule” shall have the meaning set forth in Section 5.1.10(b)
hereof.

 

“Net Operating Income” shall mean the amount obtained by subtracting Operating
Expenses from Gross Income from Operations, excluding any payments received
under any Interest Rate Cap Agreement.

 

“Net Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.

 

“Net Proceeds Deficiency” shall have the meaning set forth in Section 6.4(b)(vi)
hereof.

 

“Non-U.S. Entity” shall have the meaning set forth in Section 2.2.8 hereof.

 

“Note” shall mean that certain promissory note of even date herewith in the
original principal amount of FIFTEEN MILLION AND 00/100 DOLLARS
($15,000,000.00), made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, extended, renewed, supplemented, severed, split, or
otherwise modified from time to time.

 

“O&M Program” shall mean the asbestos operations and maintenance program
developed by Borrower and approved by Lender, as the same may be amended,
replaced, supplemented or otherwise modified from time to time.

 

“Obligations” shall mean Borrower’s obligation to pay the Debt and perform its
obligations under the Note, this Agreement and the other Loan Documents.

 

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by a Responsible Officer of Borrower.

 

“Operating Expenses” shall mean the total of all expenditures, computed in
accordance with GAAP, of whatever kind relating to the operation, maintenance
and management of the Property that are incurred on a regular monthly or other
periodic basis, including without limitation, utilities, ordinary repairs and
maintenance, insurance premiums, license fees, property taxes and assessments,
advertising and marketing expenses, franchise fees, management fees, payroll and
related taxes, computer processing charges, operational equipment or other lease
payments as approved by Lender, and other similar costs, but excluding
depreciation, Debt Service, Capital Expenditures and contributions to the
Reserve Funds.

 

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“Operating Lease” shall mean the operating lease between Borrower and Operating
Tenant as more specifically set forth on Schedule XII attached hereto as the
same may be modified, amended, supplemented or extended from time to time.

 

“Operating Lease Rent” shall mean “Rent” as defined in the Operating Lease.

 

“Operating Lease Security Agreement” shall mean, with respect to the Operating
Lease, the Security Agreement (as defined in the Operating Lease) between
Operating Tenant and Borrower with respect to Operating Tenant’s personal
property and any FF&E transferred to Operating Tenant in accordance with
Section 5.2.10(f) hereof and (ii) with respect to the Property Account and Gross
Income from Operations, the security interest granted by Operating Tenant to
Borrower in the Operating Lease.

 

“Operating Partnership” shall mean MeriStar Hospitality Operating Partnership
L.P., a Delaware limited partnership.

 

“Operating Tenant” shall mean the tenant under the Operating Lease, as more
specifically set forth on Schedule XII attached hereto.

 

“Other Charges” shall mean all maintenance charges, impositions other than
Taxes, and any other charges, including, without limitation, vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Property, now or hereafter levied or assessed or imposed against the Property or
any part thereof.

 

“Participant” shall have the meaning set forth in Section 9.7.2(i) hereof.

 

“Payment Date” shall mean the ninth (9th) day of each calendar month during the
term of the Loan or, if such day is not a Business Day, the immediately
preceding Business Day.

 

“Permitted Encumbrances” shall mean, collectively, (a) the Liens and security
interests created by the Loan Documents, (b) all Liens, encumbrances and other
matters disclosed in the Title Insurance Policy relating to the Property or any
part thereof, (c) Liens, if any, for Taxes imposed by any Governmental Authority
not yet delinquent, or which are being contested in good faith in accordance
with Section 5.1.2 hereof, (d) all easements, restrictions, covenants,
reservations and rights-of-way permitted pursuant to Section 5.2.10(g) hereof,
(e) Permitted Equipment Financing, (f) Liens being contested in good faith in
accordance with Section 5.2.1 hereof, and (g) such other title and survey
exceptions as Lender has approved or may approve in writing in Lender’s sole
discretion.

 

“Permitted Equipment Financing” shall have the meaning set forth in
Section 5.2.10(h) hereof.

 

“Permitted Investments” shall mean any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, including
those issued by Servicer, the trustee under any Securitization or any of their
respective Affiliates, payable on demand or having a maturity date not later
than the Business Day immediately prior to the first Payment Date following the
date of acquiring such investment and meeting one of the appropriate standards
set forth below:

 

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(i) obligations of, or obligations fully guaranteed as to payment of principal
and interest by, the United States or any agency or instrumentality thereof
provided such obligations are backed by the full faith and credit of the United
States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;

 

(ii) Federal Housing Administration debentures;

 

(iii) obligations of the following United States government sponsored agencies:
Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit System
(consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

(iv) federal funds, unsecured certificates of deposit, time deposits, bankers’
acceptances and repurchase agreements with maturities of not more than 365 days
of any bank, the short term obligations of which at all times are rated in the
highest short term rating category by each Rating Agency (or, if not rated by
all Rating Agencies, rated by at least one Rating Agency in the highest short
term rating category and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the then current ratings assigned to
the Securities); provided, however, that the investments described in this
clause must (A) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

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(v) fully Federal Deposit Insurance Corporation-insured demand and time deposits
in, or certificates of deposit of, or bankers’ acceptances with maturities of
not more than 365 days and issued by, any bank or trust company, savings and
loan association or savings bank, the short term obligations of which at all
times are rated in the highest short term rating category by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency in
the highest short term rating category and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the then current
ratings assigned to the Securities); provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (B) if rated by S&P, must not have
an “r” highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

(vi) debt obligations with maturities of not more than 365 days and at all times
rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the then current ratings assigned
to the Securities) in its highest long-term unsecured rating category; provided,
however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;

 

(vii) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) with maturities of not
more than 365 days and that at all times is rated by each Rating Agency (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Securities) in its highest short-term unsecured debt rating; provided, however,
that the investments described in this clause must (A) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if
such investments have a variable rate of interest, such interest rate must be
tied to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;

 

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(viii) units of taxable money market funds, with maturities of not more than 365
days and which funds are regulated investment companies, seek to maintain a
constant net asset value per share and invest solely in obligations backed by
the full faith and credit of the United States, which funds have the highest
rating available from each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable to each
other Rating Agency, as confirmed in writing that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to the Securities) for money market funds; and

 

(ix) any other security, obligation or investment which has been approved as a
Permitted Investment in writing by (a) Lender and (b) each Rating Agency, as
evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the then current ratings
assigned to the Securities by such Rating Agency;

 

provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.

 

“Permitted Transferee” shall have the meaning set forth in Section 5.2.11(a)(ii)
hereof.

 

“Person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, State, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

 

“Personal Property” shall have the meaning set forth in Article 1 of the
Security Instrument with respect to the Property.

 

“Physical Conditions Report” shall mean, with respect to the Property, a
structural engineering report prepared by a company satisfactory to Lender
regarding the physical condition of the Property, satisfactory in form and
substance to Lender in its sole discretion, which report shall, among other
things, (a) confirm that the Property and its use complies, in all material
respects, with all applicable Legal Requirements (including, without limitation,
zoning, subdivision and building laws) and (b) include a copy of a final
certificate of occupancy with respect to all Improvements on the Property.

 

“Plan” shall mean an employee benefit plan (as defined in section 3(3) of ERISA)
whether or not subject to ERISA or a plan or other arrangement within the
meaning of section 4975 of the Code.

 

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“Plan Assets” shall mean assets of a Plan within the meaning of section 29
C.F.R. section 2510.3-101 or similar law.

 

“Policies” shall have the meaning set forth in Section 6.1(b) hereof.

 

“Post-Termination Property Account” shall have the meaning set forth in
Section 3.1(b) hereof.

 

“Post-Termination Property Account Agreement” shall have the meaning set forth
in Section 3.1(b) hereof.

 

“Prepayment Date” shall have the meaning set forth in Section 2.3.1(a) hereof.

 

“Pre-Termination Property Account Agreement” shall have the meaning set forth in
Section 3.1(a) hereof.

 

“Prime Rate” shall mean, on a particular date, a rate per annum equal to the
rate of interest published in The Wall Street Journal as the “prime rate”, as in
effect on such day, with any change in the prime rate resulting from a change in
said prime rate to be effective as of the date of the relevant change in said
prime rate; provided, however, that if more than one prime rate is published in
The Wall Street Journal for a day, the average of the prime rates shall be used;
provided, further, however, that the Prime Rate (or the average of the prime
rates) will be rounded to the nearest 1/16 of 1% or, if there is no nearest 1/16
of 1%, to the next higher 1/16 of 1%. In the event that The Wall Street Journal
should cease or temporarily interrupt publication, then the Prime Rate shall
mean the daily average prime rate published in another business newspaper, or
business section of a newspaper, of national standing chosen by Lender. If The
Wall Street Journal resumes publication, the substitute index will immediately
be replaced by the prime rate published in The Wall Street Journal. In the event
that a prime rate is no longer generally published or is limited, regulated or
administered by a governmental or quasi-governmental body, then Lender shall
select a comparable interest rate index which is readily available to Borrower
and verifiable by Borrower but is beyond the control of Lender. Lender shall
give Borrower prompt written notice of its choice of a substitute index and when
the change became effective. Such substitute index will also be rounded to the
nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher
1/16 of 1%. The determination of the Prime Rate by Lender shall be conclusive
and binding absent manifest error.

 

“Principal” shall have the meaning set forth in Section 4.1.35 hereof, together
with its successors and assigns.

 

“Prior Financing” shall mean that certain mortgage loan made by Lehman Brothers
Holdings Inc., d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc.
to Borrower and certain affiliates of Borrower and being defeased in full on the
Closing Date.

 

“Pro Rata Share of the Loan” shall have the meaning set forth in
Section 9.7.2(a) hereof.

 

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“Prohibited Person” shall mean any Person:

 

(a) listed in the Annex to, or otherwise subject to the provisions of, the
Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,
and relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);

 

(b) that is owned or controlled by, or acting for or on behalf of, any person or
entity that is listed to the Annex to, or is otherwise subject to the provisions
of, the Executive Order;

 

(c) with whom Lender is prohibited from dealing or otherwise engaging in any
transaction by any terrorism or money laundering law, including the Executive
Order;

 

(d) who commits, threatens or conspires to commit or supports “terrorism” as
defined in the Executive Order;

 

(e) that is named as a “specially designated national and blocked person” on the
most current list published by the U.S. Treasury Department Office of Foreign
Assets Control at its official website, http://www.treas.gov.ofac/t11sdn.pdf or
at any replacement website or other replacement official publication of such
list; or

 

(f) who is an Affiliate of or affiliated with a Person listed above.

 

“Projections” shall have the meaning set forth in Section 9.7.3(b) hereof.

 

“Property” shall mean each parcel of real property, the Improvements thereon and
all Personal Property owned by Borrower and encumbered by a Security Instrument,
together with all rights pertaining to the Property and Improvements, as more
particularly described in Article 1 of each Security Instrument and referred to
therein as the “Property”.

 

“Property Account” shall have the meaning set forth in Section 3.1(a) hereof.

 

“Property Account Agreement” shall mean the Pre-Termination Property Account
Agreement and the Post-Termination Property Account Agreement.

 

“Property Account Bank” shall mean Wells Fargo Bank, provided that it remains an
Eligible Institution, and any successor Eligible Institution or other Eligible
Institution selected by Borrower, subject to Lender’s approval.

 

“Provided Information” shall have the meaning set forth in Section 9.1(a)
hereof.

 

“Qualified Franchisor” shall mean (a) any nationally recognized franchisor under
whose flag there are at least fifty (50) full-service hotels, exclusive of the
Property, and (b) prior to whose employment as franchisor of the Property
(i) prior to the occurrence of a Securitization, such employment shall have been
approved by Lender, in its reasonable discretion, and (ii) after the occurrence
of a Securitization, Lender shall have received a Rating Confirmation.

 

“Qualified Insurer” shall have the meaning set forth in Section 6.1(b) hereof.

 

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“Qualified Manager” shall mean a reputable and experienced professional
management organization (a) which manages, together with its Affiliates, ten
(10) full service hotels exclusive of the Property totaling in the aggregate no
less than 3,500 rooms and (b) prior to whose employment as manager of the
Property (i) prior to the occurrence of a Securitization, such employment shall
have been approved by Lender, in its reasonable discretion, and (ii) after the
occurrence of a Securitization, Lender shall have received a Rating
Confirmation.

 

“Qualified Transferee” shall mean any one of the following Persons:

 

  (i) a pension fund, pension trust or pension account that (a) has total real
estate assets of at least $1 Billion and (b) is managed by a Person who controls
at least $1 Billion of real estate equity assets; or

 

  (ii) a pension fund advisor who (a) immediately prior to such transfer,
controls at least $1 Billion of real estate equity assets and (b) is acting on
behalf of one or more pension funds that, in the aggregate, satisfy the
requirements of clause (i) of this definition; or

 

  (iii) an insurance company which is subject to supervision by the insurance
commissioner, or a similar official or agency, of a state or territory of the
United States (including the District of Columbia) (a) with a net worth, as of a
date no more than six (6) months prior to the date of the transfer, of at least
$500 Million and (b) who, immediately prior to such transfer, controls real
estate equity assets of at least $1 Billion; or

 

  (iv) a corporation organized under the banking laws of the United States or
any state or territory of the United States (including the District of Columbia)
(a) with a combined capital and surplus of at least $500 Million and (b) who,
immediately prior to such transfer, controls real estate equity assets of at
least $1 Billion; or

 

  (v) any Person (a) with a long-term unsecured debt rating from the Rating
Agencies of at least Investment Grade or (b) who (i) owns or operates at least
ten (10) full service hotels exclusive of the Property totaling in the aggregate
no less than 3,500 rooms, (ii) has a net worth, as of a date no more than six
(6) months prior to the date of such transfer, of at least $500 Million and
(iii) immediately prior to such transfer, controls real estate equity assets of
at least $1 Billion.

 

“Quality Assurance Reports” shall mean any quality assurance reports of
inspection or compliance from Franchisor under the Franchise Agreement with
respect to the Property.

 

“Rating Agencies” shall mean each of S&P, Moody’s, and Fitch, and any other
nationally-recognized statistical rating agency which has been approved by
Lender and has rated the Securities.

 

“Rating Confirmation” means each of the Rating Agencies which have assigned
ratings to any Securities shall have confirmed in writing that the occurrence of
the event with respect to which such Rating Confirmation is sought shall not
result in a downgrade, qualification or withdrawal of, the then current ratings
assigned to the Securities in connection with a

 

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Securitization. In the event that no Securities are outstanding or the Loan is
not part of a Securitization, any action that would otherwise require a Rating
Confirmation shall require the consent of the Lender.

 

“Real Estate Investment Trust” shall have the meaning set forth in
Section 5.1.26 hereof.

 

“Reference Bank” shall mean a leading bank engaged in transactions in Eurodollar
deposits in the international Eurocurrency market that has an established place
of business in London. If any such Reference Bank should be removed from the
Telerate Page 3750 or in any other way fail to meet the qualifications of a
Reference Bank, Lender may designate alternative Reference Banks meeting the
criteria specified above.

 

“Register” shall have the meaning set forth in Section 9.7.2(h) hereof.

 

“Registration Statement” shall have the meaning set forth in Section 9.2(b)
hereof.

 

“REIT” shall mean MeriStar Hospitality Corporation, a Maryland corporation,
together with its successors and permitted assigns.

 

“REIT Rules” shall have the meaning set forth in Section 5.1.26 hereof.

 

“Release of Hazardous Materials” shall mean any release, deposit, discharge,
emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring,
emptying, escaping, dumping, or disposing of Hazardous Materials into the
environment.

 

“REMIC Trust” shall mean a “real estate mortgage investment conduit” within the
meaning of Section 860D of the Code that holds the Note.

 

“Renewal Lease” shall have the meaning set forth in Section 5.1.17(a) hereof.

 

“Rents” shall have the meaning set forth in Article 1 of the Security Instrument
with respect to the Property.

 

“Replacement Franchise Agreement” shall mean, collectively, (a) either (i) a
franchise agreement with a Qualified Franchisor substantially in the same form
and substance as the Franchise Agreement, or (ii) a franchise agreement with a
Qualified Franchisor, which franchise agreement shall be reasonably acceptable
to Lender in form and substance, provided, with respect to this subclause (ii),
Lender, at its option, may require that (A) after the occurrence of a
Securitization, Borrower obtain a Rating Confirmation with respect to such
franchise agreement; and (B) a “comfort letter” reasonably satisfactory in form
and substance to Lender, be executed and delivered by the Qualified Franchisor
to Lender.

 

“Replacement Interest Rate Cap Agreement” means an interest rate cap agreement
from an Acceptable Counterparty with terms substantially identical to the
Interest Rate Cap Agreement.

 

“Replacement Management Agreement” shall mean, collectively, (a) either (i) a
management agreement with a Qualified Manager substantially in the same form and
substance

 

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as the Management Agreement, or (ii) a management agreement with a Qualified
Manager, which management agreement shall be acceptable to Lender in form and
substance, provided, with respect to this subclause (ii), Lender, at its option,
may require that (A) after the occurrence of a Securitization, Borrower obtain a
Rating Confirmation with respect to such management agreement; and (B) a
conditional assignment of management agreement substantially in the form of the
Assignment of Management Agreement (or such other form acceptable to Lender), be
executed and delivered to Lender by Borrower and such Qualified Manager at
Borrower’s expense.

 

“Replacement Operating Lease” shall have the meaning set forth in
Section 5.1.24(d) hereof.

 

“Replacement Reserve Account” shall have the meaning set forth in
Section 3.1(c)(iv) hereof.

 

“Replacement Reserve Fund” shall have the meaning set forth in Section 7.3.1
hereof.

 

“Replacement Reserve Monthly Deposit” shall mean the positive number obtained by
subtracting:

 

(i) the actual amount spent by Borrower for FF&E and other Replacements for the
calendar month (the “Subject Month”) which is two (2) months prior to the month
in which the applicable Replacement Reserve Monthly Deposit is due and payable
(such amount actually spent by Borrower hereinafter referred to as the “Actual
Amount”); from

 

(ii) (A) if the Approved Capital Budget Expenditure Amount is equal to or less
than the Required Expenditure Amount, one twelfth of the Required Expenditure
Amount; or (B) if the Approved Capital Budget Expenditure Amount is greater than
the Required Expenditure Amount, the amount budgeted to be spent in the Subject
Month pursuant to the Approved Capital Budget.

 

Lender shall determine at the beginning of each Fiscal Year which calculation in
clause (ii) above shall be applicable for such Fiscal Year and such calculation
shall be used to determine the Replacement Reserve Monthly Deposit for such
Fiscal Year.

 

“Replacements” shall have the meaning set forth in Section 7.3.1 hereof.

 

“Required Expenditure Amount” shall mean the greater of (a) an amount equal to
four percent (4%) of the annual Gross Income from Operations, (b) the annual
amounts required under the Operating Lease for FF&E and other Replacements, if
any, (c) the annual amounts required under the Management Agreement for FF&E and
other Replacements, if any, and (d) the annual amounts required under the
Franchise Agreement for FF&E and other Replacements, if any (including, without
limitation, any FF&E, Replacements or other improvements required pursuant to
any property improvement plans required by Franchisor).

 

“Required Repair Account” shall have the meaning set forth in Section 3.1(c)(v)
hereof.

 

“Required Repair Fund” shall have the meaning set forth in Section 7.1.1 hereof.

 

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“Required Repairs” shall have the meaning set forth in Section 7.1.1 hereof.

 

“Reserve Fund Deposits” shall mean the amounts to be deposited into the Reserve
Funds for any given month or at any other time as provided in this Agreement or
in the other Loan Documents.

 

“Reserve Funds” shall mean the Tax and Insurance Escrow Fund, the Replacement
Reserve Fund, the Required Repair Fund or any other escrow or reserve fund
established by the Loan Documents.

 

“Reserve Rate” shall mean the rate per annum which Lender determines to be
either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/1,000%) of the one-month United States dollar lending rates
that at least three major New York City banks selected by Lender are quoting, at
11:00 a.m. (New York time) on the relevant LIBOR Determination Date, to the
principal London offices of at least two of the Reference Banks, or (ii) in the
event that at least two such rates are not obtained, the lowest one-month United
States dollar lending rate which New York City banks selected by Lender are
quoting as of 11:00 a.m. (New York time) on such LIBOR Determination Date to
leading European banks.

 

“Responsible Officer” means with respect to a Person, the chairman of the board,
president, chief operating officer, chief financial officer, treasurer or vice
president-finance or the equivalent of such Person.

 

“Restoration” shall mean the repair and restoration of the Property after a
Casualty or Condemnation as nearly as possible to the condition the Property was
in immediately prior to such Casualty or Condemnation, with such alterations as
may be reasonably approved by Lender.

 

“Restricted Party” shall mean Borrower, Principal, any Guarantor, or any
Affiliated Manager or any shareholder, partner, member or non-member manager, or
any direct or indirect legal or beneficial owner of, Borrower, Principal, any
Guarantor, any Affiliated Manager or any non-member manager.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of McGraw-Hill,
Inc.

 

“Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance,
transfer or pledge of a direct or indirect legal or beneficial interest.

 

“Scheduled Amortization Payments” shall mean the amount of principal set forth
on Schedule V hereto to be paid on each Payment Date.

 

“Securities” shall have the meaning set forth in Section 9.1 hereof.

 

“Securitization” shall have the meaning set forth in Section 9.1 hereof.

 

“Securities Act” shall have the meaning set forth in Section 9.2(a) hereof.

 

“Security Instrument” shall mean that certain first priority Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, executed
and delivered by Borrower, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

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“Servicer” shall have the meaning set forth in Section 9.3 hereof.

 

“Servicing Agreement” shall have the meaning set forth in Section 9.3 hereof.

 

“Severed Loan Documents” shall have the meaning set forth in Section 8.2(c)
hereof.

 

“State” shall mean the State or Commonwealth in which the Property or any part
thereof is located.

 

“Strike Rate” shall mean 5.75%.

 

“Subject Month” shall have the meaning set forth in the definition of
“Replacement Reserve Monthly Deposit” in this Section 1.1.

 

“Subordination and Attornment Agreement” means the subordination and attornment
agreement dated the date hereof between Lender and Operating Tenant as more
specifically described on Schedule XII attached hereto.

 

“Survey” shall mean a survey prepared by a surveyor licensed in the State where
the Property is located and reasonably satisfactory to Lender and the company or
companies issuing the Title Insurance Policies, and containing a certification
of such surveyor reasonably satisfactory to Lender or an update or certificate
of no change with respect to the same, reasonably satisfactory to Lender.

 

“Syndication” shall have the meaning set forth in Section 9.7.2(a) hereof.

 

“Tax Account” shall have the meaning set forth in Section 3.1(c)(i) hereof.

 

“Tax and Insurance Escrow Fund” shall have the meaning set forth in Section 7.2
hereof.

 

“Taxes” shall mean all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against the Property or part thereof.

 

“Telerate Page 3750” means the display designated as page 3750 on the Dow Jones
Telerate Service (or such other page as may replace page 3750 on that service or
such other service as may be nominated by the British Bankers-Association as the
information vendor for the purposes of displaying British Bankers-Association
Interest Settlement Rates for U.S. dollar deposits).

 

“Termination Event” shall have the meaning set forth in Section 3.1(b) hereof.

 

“Terrorism Insurance” shall have the meaning set forth in Section 6.1(b) hereof.

 

“Terrorism Insurance Cap” shall have the meaning set forth in Section 6.1(b)
hereof.

 

“Threshold Amount” shall have the meaning set forth in Section 6.4(a) hereof.

 

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“Title Insurance Policy” shall mean an ALTA mortgagee title insurance policy in
a form reasonably acceptable to Lender (or, if the Property is located in a
State which does not permit the issuance of such ALTA policy, such form as shall
be permitted in such State and reasonably acceptable to Lender) issued with
respect to the Property and insuring the lien of the Security Instrument
encumbering the Property.

 

“Transfer” shall have the meaning set forth in Section 5.2.10(a) hereof.

 

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State in which the Property is located.

 

“Underwriter Group” shall have the meaning set forth in Section 9.2(b) hereof.

 

“U.S. Obligations” shall mean direct non-callable obligations of the United
States of America.

 

“USPAP” shall mean the Uniform Standard of Professional Appraisal Practice.

 

“Working Day” shall mean any day on which dealings in foreign currencies and
exchange are carried on in London, England and in New York, New York.

 

Section 1.2 Principles of Construction.

 

All references to sections and schedules are to sections and schedules in or to
this Agreement unless otherwise specified. All uses of the word “including”
shall mean “including, without limitation” unless the context shall indicate
otherwise. Unless otherwise specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.

 

II. GENERAL TERMS

 

Section 2.1 Loan Commitment; Disbursement to Borrower.

 

2.1.1 Agreement to Lend and Borrow.

 

Subject to and upon the terms and conditions set forth herein, Lender hereby
agrees to make and Borrower hereby agrees to accept the Loan on the Closing
Date.

 

2.1.2 Single Disbursement to Borrower.

 

Borrower may request and receive only one borrowing hereunder in respect of the
Loan and any amount borrowed and repaid hereunder in respect of the Loan may not
be reborrowed.

 

2.1.3 The Note, Security Instrument and Loan Documents.

 

The Loan shall be evidenced by the Note and secured by the Security Instrument,
the Assignment of Leases and the other Loan Documents.

 

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2.1.4 Use of Proceeds.

 

Borrower shall use the proceeds of the Loan to (a) repay and discharge any
existing loans relating to the Property, (b) pay all past-due Basic Carrying
Costs, if any, with respect to the Property, (c) make deposits into the Reserve
Funds on the Closing Date in the amounts provided herein or in the other Loan
Documents, (d) pay costs and expenses incurred in connection with the closing of
the Loan, as approved by Lender, and (e) fund any working capital requirements
of the Property. The balance, if any, shall be distributed to Borrower.

 

Section 2.2 Interest; Loan Payments; Late Payment Charge.

 

2.2.1 Payments.

 

(a) Interest. Interest on the outstanding principal balance of the Loan shall
accrue from the Closing Date to the end of the Interest Period in which the
Maturity Date occurs at the Applicable Interest Rate. Monthly installments of
interest only shall be paid on each Payment Date commencing on November 9, 2005
and on each subsequent Payment Date thereafter up to and including the Maturity
Date for the Interest Period in which such Payment Date or Maturity Date occurs.
Interest on the outstanding principal amount of the Loan for the period through
and including October 8, 2005 shall be paid by Borrower on the Closing Date. The
outstanding principal balance of the Loan together with all accrued and unpaid
interest thereon shall be due and payable on the Maturity Date (including,
without limitation, all interest that would accrue on the outstanding principal
balance of the Loan through the end of the Interest Period during which the
Maturity Date occurs (even if such period extends beyond the Maturity Date)).

 

(b) Principal. The Scheduled Amortization Payments shall be paid on November 9,
2005 and on each subsequent Payment Date thereafter.

 

(c) Extension of the Maturity Date. Borrower shall have the option to extend the
term of the Loan beyond the initial Maturity Date for one (1) term (the
“Extension Option”) of six (6) months (the “Extension Period”) to the Payment
Date occurring in October, 2006 (the “Extended Maturity Date”), and upon
satisfaction of the following terms and conditions:

 

(i) no Event of Default shall have occurred and be continuing at the time the
Extension Option is exercised and on the date that the Extension Period is
commenced;

 

(ii) Borrower shall notify Lender of its irrevocable election to extend the
Maturity Date as aforesaid not earlier than one hundred twenty (120) days and no
later than sixty (60) days prior to the Maturity Date;

 

(iii) Borrower shall obtain and deliver to Lender prior to exercise of the
Extension Option, one or more Replacement Interest Rate Cap Agreements, which
Replacement Interest Rate Cap Agreements shall be effective commencing on the
first day of the Extension Option and shall have a maturity date not earlier
than the Extended Maturity Date;

 

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(iv) in connection with the Extension Option, Borrower shall have delivered to
Lender together with its notice pursuant to subsection (c)(ii) of this
Section 2.2.1 and as of the commencement of the Extension Option, an Officer’s
Certificate in form reasonably acceptable to the Lender certifying that each of
the representations and warranties of Borrower contained in the Loan Documents
is true, complete and correct in all material respects as of the date of such
Officer’s Certificate except to the extent such representations and warranties
are matters which by their nature can no longer be true and correct (i) as a
result of the passage of time or (ii) as a result of changes permitted hereunder
or otherwise approved in writing by Lender;

 

(v) Borrower shall have paid to Lender the Extension Fee; and

 

(vi) Borrower shall have made a prepayment of $5,000,000.00 on the initial
Maturity Date and Borrower shall have paid to Lender, simultaneously with such
prepayment, (i) all accrued and unpaid interest calculated at the Applicable
Interest Rate on the amount of principal being prepaid through and including the
initial Maturity Date, and (ii) Breakage Costs, if any, without duplication of
any sums paid pursuant to the preceding clause (i).

 

(d) All references in this Agreement and in the other Loan Documents to the
Maturity Date shall mean the Extended Maturity Date in the event the Extension
Option is exercised.

 

(e) All payments and other amounts due under the Note, this Agreement and the
other Loan Documents shall be made without any setoff, defense or irrespective
of, and without deduction for, counterclaims.

 

2.2.2 Interest Calculation.

 

Interest on the outstanding principal balance of the Loan shall be calculated by
multiplying (a) the actual number of days elapsed in the period for which the
calculation is being made by (b) a daily rate equal to the Applicable Interest
Rate divided by three hundred sixty (360) by (c) the outstanding principal
balance on the first day of the applicable Interest Period.

 

2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs.

 

(a) (i) In the event that Lender shall have determined (which determination
shall be in Lender’s reasonable judgment and shall be conclusive and binding
upon Borrower absent manifest error) that by reason of circumstances affecting
the interbank eurodollar market, and reasonable means do not exist for
ascertaining LIBOR, then Lender shall forthwith give notice by telephone of such
determination, to Borrower at least one (1) Business Day prior to the last day
of the related Interest Period, with a written confirmation of such
determination promptly thereafter. If such notice is given, the Loan shall bear
interest at the Adjusted Prime Rate beginning on the first day of the next
succeeding Interest Period.

 

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(ii) If, pursuant to the terms of this Section 2.2.3, Loan is bearing interest
at the Adjusted Prime Rate and Lender shall determine (which determination shall
be in Lender’s reasonable judgment and shall be conclusive and binding upon
Borrower absent manifest error) that the event(s) or circumstance(s) which
resulted in such conversion shall no longer be applicable, Lender shall give
notice thereof to Borrower by telephone of such determination, confirmed in
writing, to Borrower as soon as reasonably practical, but in no event later than
one (1) Business Day prior to the last day of the then current Interest Period.
If such notice is given, the Loan shall bear interest at the Eurodollar Rate
beginning on the first day of the next succeeding Interest Period.
Notwithstanding any provision of this Agreement to the contrary, in no event
shall Borrower have the right to elect to have the Loan bear interest at either
the Eurodollar Rate or the Adjusted Prime Rate.

 

(b) If any requirement of law or any change therein or in the interpretation or
application thereof, shall hereafter make it unlawful for Lender or any
Co-Lender in good faith to make or maintain the portion of the Loan bearing
interest at the Eurodollar Rate, (I) the obligation of Lender or such Co-Lender
hereunder to make the Loan bearing interest at the Eurodollar Rate shall be
canceled forthwith and (II) the Loan shall automatically bear interest at the
Adjusted Prime Rate on the next succeeding Payment Date or within such earlier
period as required by Applicable Law. Borrower hereby agrees promptly to pay
Lender or any Co-Lender (within ten (10) days of Lender’s or any Co-Lender’s
written demand therefor), any additional amounts necessary to compensate Lender
or any Co-Lender for any reasonable costs incurred by Lender or such Co-Lender
in making any conversion in accordance with this Agreement, including, without
limitation, any interest or fees payable by Lender or such Co-Lender to lenders
of funds obtained by it in order to make or maintain the Loan hereunder. Upon
written demand from Borrower, Lender or the applicable Co-Lender shall
demonstrate in reasonable detail the circumstances giving rise to Lender’s or
such Co-Lender’s determination and the calculation substantiating the Adjusted
Prime Rate and any additional costs incurred by Lender or such Co-Lender in
making the conversion. Lender’s or Co-Lender’s written notice of such costs, as
certified to Borrower, shall be conclusive absent manifest error.

 

(c) In the event that any change in any requirement of any Applicable Law or in
the interpretation or application thereof, or compliance in good faith by Lender
or any Co-Lender with any request or directive (whether or not having the force
of law) hereafter issued from any Governmental Authority which is generally
applicable to all Lenders subject to such Governmental Authority’s jurisdiction:

 

(i) shall hereafter impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
Lender or any Co-Lender which is not otherwise included in the determination of
LIBOR hereunder;

 

(ii) shall, if the Loan is then bearing interest at the Eurodollar Rate,
hereafter have the effect of reducing the rate of return on Lender’s or any

 

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Co-Lender’s capital as a consequence of its obligations hereunder to a level
below that which Lender or any Co-Lender could have achieved but for such
adoption, change or compliance (taking into consideration Lender’s or any
Co-Lender’s policies with respect to capital adequacy) by any amount deemed by
Lender or any Co-Lender to be material; or

 

(iii) shall, if the Loan is then bearing interest at the Eurodollar Rate,
hereafter impose on Lender or any Co-Lender any other condition, the result of
which is to increase the cost to Lender or such Co-Lender of making, renewing or
maintaining loans or extensions of credit or to reduce any amount receivable
hereunder;

 

then, in any such case, Borrower shall promptly pay Lender or such Co-Lender
(within ten (10) days of Lender’s or such Co-Lender’s written demand therefor),
any additional amounts necessary to compensate Lender or such Co-Lender for such
additional cost or reduced amount receivable which Lender or such Co-Lender
reasonably deems to be material. If Lender or any Co-Lender becomes entitled to
claim any additional amounts pursuant to this Section 2.2.3(c), Lender and such
Co-Lender shall provide Borrower with written notice specifying in reasonable
detail the event or circumstance by reason of which it has become so entitled
and the additional amount required to fully compensate Lender and such Co-Lender
for such additional cost or reduced amount. A certificate as to any additional
costs or amounts payable pursuant to the foregoing sentence submitted by Lender
or such Co-Lender to Borrower shall be conclusive absent manifest error. This
provision shall survive payment of the Note and the satisfaction of all other
obligations of Borrower under the Note, this Agreement and the other Loan
Documents.

 

(d) Borrower agrees to indemnify Lender and the Co-Lenders and to hold Lender
and the Co-Lenders harmless from any loss or expense which Lender or any
Co-Lender sustains or incurs as a consequence of (I) any default by Borrower in
payment of the principal of or interest on the Loan while bearing interest at
the Eurodollar Rate, including, without limitation, any such loss or expense
arising from interest or fees payable by Lender or any Co-Lenders to lenders of
funds obtained by it in order to maintain the Eurodollar Rate, (II) any
prepayment (whether voluntary or mandatory) of the Loan on a day that is not the
day immediately following the last day of an Interest Period with respect
thereto, including, without limitation, such loss or expense arising from
interest or fees payable by Lender or any Co-Lender to lenders of funds obtained
by it in order to maintain the Eurodollar Rate hereunder and (III) the
conversion (for any reason whatsoever, whether voluntary or involuntary) of the
Applicable Interest Rate from the Eurodollar Rate to the Adjusted Prime Rate
with respect to any portion of the outstanding principal amount of the Loan then
bearing interest at the Eurodollar Rate on a date other than the day immediately
following the last day of an Interest Period, including, without limitation,
such loss or expenses arising from interest or fees payable by Lender or any
Co-Lender to lenders of funds obtained by it in order to maintain the Eurodollar
Rate hereunder (the amounts referred to in clauses (I), (II) and (III) are
herein referred to collectively as the “Breakage Costs”). This provision shall
survive payment of the Note and the satisfaction of all other obligations of
Borrower under this Agreement and the other Loan Documents.

 

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2.2.4 Payment on Maturity Date.

 

Borrower shall pay to Lender on the Maturity Date the outstanding principal
balance, all accrued and unpaid interest thereon, and all other amounts due
hereunder and under the Note, the Security Instrument and the other Loan
Documents, including, without limitation, all interest that would accrue on the
outstanding principal balance of the Loan through and including the Maturity
Date.

 

2.2.5 Payments after Default.

 

Upon the occurrence and during the continuance of an Event of Default,
(a) interest on the outstanding principal balance of the Loan and, to the extent
permitted by Applicable Law, overdue interest and other amounts due in respect
of the Loan, shall accrue at the Default Rate, calculated from the date such
payment was due without regard to any grace or cure periods contained herein and
(b) Lender shall be entitled to receive and Borrower shall pay to Lender on each
Payment Date an amount equal to the Net Cash Flow After Debt Service for the
prior month, such amount to be applied by Lender to the payment of the Debt in
such order as Lender shall determine in its sole discretion, including, without
limitation, alternating applications thereof between interest and principal.
Interest at the Default Rate and Net Cash Flow After Debt Service shall both be
computed from the occurrence of the Default which gave rise to the Event of
Default until the actual receipt and collection of the Debt (or that portion
thereof that is then due). To the extent permitted by Applicable Law, interest
at the Default Rate shall be added to the Debt, shall itself accrue interest at
the same rate as the Loan and shall be secured by the Security Instrument. This
paragraph shall not be construed as an agreement or privilege to extend the date
of the payment of the Debt, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default; the
acceptance of any payment of Net Cash Flow After Debt Service shall not be
deemed to cure or constitute a waiver of any Event of Default; and Lender
retains its rights under the Note to accelerate and to continue to demand
payment of the Debt upon the happening of any Event of Default, despite any
payment of Net Cash Flow After Debt Service.

 

2.2.6 Late Payment Charge.

 

If any principal, interest or any other sums due under the Loan Documents is not
paid by Borrower on the date on which it is due, Borrower shall pay to Lender
within three (3) Business Days after demand an amount equal to the lesser of
four percent (4%) of such unpaid sum or the maximum amount permitted by
Applicable Law in order to defray the expense incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of the
use of such delinquent payment. Any such amount shall be secured by the Security
Instrument and the other Loan Documents to the extent permitted by Applicable
Law.

 

2.2.7 Usury Savings.

 

This Agreement and the Note are subject to the express condition that at no time
shall Borrower be obligated or required to pay interest on the principal balance
of the Loan at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the Maximum Legal Rate. If, by the
terms of this Agreement or the other Loan Documents,

 

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Borrower is at any time required or obligated to pay interest on the principal
balance due hereunder at a rate in excess of the Maximum Legal Rate, the
Applicable Interest Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by Applicable Law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.

 

2.2.8 Indemnified Taxes.

 

(a) All payments made by Borrower hereunder shall be made free and clear of, and
without reduction for or on account of, Indemnified Taxes, excluding
(i) Indemnified Taxes measured by Lender’s or any Co-Lender’s net income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
Lender or any Co-Lender is resident or organized, or any political subdivision
thereof, (ii) taxes measured by Lender’s or any Co-Lender’s overall net income,
and franchise taxes imposed on it, by the jurisdiction of Lender’s or such
Co-Lender’s applicable lending office or any political subdivision thereof or in
which Lender or such Co-Lender is resident or engaged in business, and
(iii) withholding taxes imposed by the United States of America, any state,
commonwealth, protectorate territory or any political subdivision or taxing
authority thereof or therein as a result of the failure of Lender or any
Co-Lender which is a Non-U.S. Entity to comply with the terms of paragraph
(b) below. If any non excluded Indemnified Taxes are required to be withheld
from any amounts payable to Lender or any Co-Lender hereunder, the amounts so
payable to Lender or such Co-Lender shall be increased to the extent necessary
to yield to Lender or such Co-Lender (after payment of all non excluded
Indemnified Taxes) interest or any such other amounts payable hereunder at the
rate or in the amounts specified hereunder. Whenever any non excluded
Indemnified Tax is payable pursuant to Applicable Law by Borrower, Borrower
shall send to Lender or the applicable Co-Lender an original official receipt
showing payment of such non excluded Indemnified Tax or other evidence of
payment reasonably satisfactory to Lender or the applicable Co-Lender. Borrower
hereby indemnifies Lender and each Co-Lender for any incremental taxes, interest
or penalties that may become payable by Lender or any Co-Lender which may result
from any failure by Borrower to pay any such non excluded Indemnified Tax when
due to the appropriate taxing authority or any failure by Borrower to remit to
Lender or any Co-Lender the required receipts or other required documentary
evidence.

 

(b) In the event that Lender or any Co-Lender or any successor and/or assign of
Lender or any Co-Lender is not incorporated under the laws of the United States
of America or a state thereof (a “Non-U.S. Entity”) Lender and such Co-Lender
agrees that, prior to the first date on which any payment is due from such
entity hereunder, it will deliver to Borrower two duly completed copies of
United States Internal Revenue Service Form W 8BEN or W 8ECI or successor
applicable form, as the case may be, certifying in

 

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each case that such entity is entitled to receive payments under the Note,
without deduction or withholding of any United States federal income taxes. Each
entity required to deliver to Borrower a Form W 8BEN or W 8ECI pursuant to the
preceding sentence further undertakes to deliver to Borrower two further copies
of such forms, or successor applicable forms, or other manner of certification,
as the case may be, on or before the date that any such form expires (which, in
the case of the Form W 8ECI, is the last day of each U.S. taxable year of the
Non-U.S. Entity) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to
Borrower, and such other extensions or renewals thereof as may reasonably be
requested by Borrower, certifying in the case of a Form W 8BEN or W 8ECI that
such entity is entitled to receive payments under the Note without deduction or
withholding of any United States federal income taxes, unless in any such case
an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such entity from duly completing and delivering any such form with
respect to it and such entity advises Borrower that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.

 

2.2.9 Replacement of Lenders.

 

Borrower shall be permitted to replace any Co-Lender that (i) requests
reimbursement for amounts owing pursuant to Section 2.2.3 or 2.2.8 or
(ii) defaults in its obligation to make Loans hereunder, with a replacement
financial institution, provided that (A) such replacement does not conflict with
any Applicable Law, (B) no Event of Default shall have occurred and be
continuing at the time of such replacement, (C) the replacement financial
institution shall purchase, at par, such Co-Lender’s Pro Rate Share of the Loan
and pay all other amounts owing to such replaced Co-Lender under this Agreement
and the other Loan Documents on or prior to the date of replacement, (E) the
Borrower shall be liable to such replaced Co-Lender under Section 2.2.3(d) if
the Loan owing to such replaced Co-Lender shall be purchased other than on the
last day of the Interest Period relating thereto, (F) the replacement financial
institution, if not already a Co-Lender, shall be reasonably satisfactory to
Lender, (G) until such time as such replacement shall be consummated, the
Borrower shall pay all additional amounts (if any) required pursuant to
Section 2.2.3 or 2.2.8, as the case may be, and (I) any such replacement shall
not be deemed to be a waiver of any rights that the Borrower, the Lender or any
Co-Lender shall have against the replaced Co-Lender.

 

Section 2.3 Prepayments.

 

2.3.1 Voluntary Prepayments.

 

Borrower may, at its option, prepay the Loan in whole or in part, upon
satisfaction of the following conditions:

 

(a) Borrower shall provide prior written notice to Lender (which notice shall be
irrevocable) specifying the date (the “Prepayment Date”) upon which the
prepayment is to be made, which notice shall be delivered to Lender not less
than twenty (20) Business Days prior to such payment;

 

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(b) Borrower shall pay to Lender, simultaneously with such prepayment, (i) all
accrued and unpaid interest calculated at the Applicable Interest Rate on the
amount of principal being prepaid through and including the Prepayment Date,
(ii) if such prepayment is not made on a Payment Date, all accrued and unpaid
interest on the amount of principal being prepaid through and including the
Prepayment Date, together with, if a Securitization has occurred, all interest
on the principal amount being prepaid which would have accrued from the
Prepayment Date through and including the immediately succeeding Payment Date,
in each case calculated at the Applicable Interest Rate for the Interest Period
in which the prepayment occurs (the “Interest Shortfall”), (iii) Breakage Costs,
if any, without duplication of any sums paid pursuant to the preceding clauses
(i) and (ii), (iv) [intentionally deleted], and (v) all other sums then due
under this Agreement, the Note or the other Loan Documents; and

 

(c) each prepayment shall be in an aggregate principal amount of $1,000,000.00
or any integral multiple of $100,000.00 in excess thereof.

 

If a notice of prepayment is given by Borrower to Lender pursuant to this
Section 2.3.1, the amount designated for prepayment and all other sums required
under this Section 2.3.1 shall be due and payable on the Prepayment Date.
Notwithstanding the foregoing, Borrower shall be permitted the right to rescind
and revoke or postpone its notice of prepayment given in accordance with this
Section 2.3.1, provided that (i) a written notice of such rescission and
revocation or postponement is received by Lender no later than three
(3) Business Days prior to the date of prepayment indicated by Borrower and
(ii) Borrower pays Lender’s reasonable out-of-pocket costs and expenses incurred
as a result of Lender’s receipt of such notice of prepayment and its rescission,
revocation or postponement.

 

2.3.2 Mandatory Prepayments.

 

On the next occurring Payment Date following the date on which Borrower actually
receives any Net Proceeds, if and to the extent Lender is not obligated to make
such Net Proceeds available to Borrower for the Restoration of the Property,
Borrower shall prepay the outstanding principal balance of the Note in an amount
equal to one hundred percent (100%) of such Net Proceeds. Such prepayment shall
be applied, first, to interest on the outstanding principal balance of the Loan
that would have accrued at the Applicable Interest Rate on the amount prepaid
through the end of the Interest Period in which such prepayment occurs,
notwithstanding that such Interest Period extends beyond the date of prepayment,
and then to all other amounts then due to Lender under this Agreement or any of
the other Loan Documents and then to the outstanding principal balance of the
Loan.

 

2.3.3 Prepayments After Default.

 

If, following an Event of Default, Borrower tenders payment of all or any part
of the Debt, or if all or any portion of the Debt is recovered by Lender after
such Event of Default, such tender or recovery shall be deemed a voluntary
prepayment hereunder and Borrower shall pay, in

 

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addition to the Debt, (i) all accrued and unpaid interest calculated at the
Applicable Interest Rate on the amount of principal being prepaid through and
including the Prepayment Date, (ii) the Interest Shortfall, if applicable, with
respect to the amount prepaid, (iii) Breakage Costs, if any, without duplication
of any sums paid pursuant to the preceding clause (ii), (iv) [intentionally
deleted], and (v) all other sums due under this Agreement, the Note or the other
Loan Documents in connection with a partial or total prepayment.

 

2.3.4 Making of Payments.

 

Each payment by Borrower hereunder or under the Note shall be made in funds
settled through the New York Clearing House Interbank Payments System or other
funds immediately available to Lender by 12:00 p.m., New York City time, on or
prior to the date such payment is due, to Lender by deposit to such account as
Lender may designate by written notice to Borrower. Whenever any payment
hereunder or under the Note shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the first Business Day succeeding
such scheduled due date.

 

2.3.5 Application of Prepayments.

 

All prepayments received pursuant to this Section 2.3 shall be applied first, to
interest on the outstanding principal balance being prepaid that accrued through
and including the Prepayment Date, second, to interest on the outstanding
principal balance being prepaid that would have accrued through the end of the
Interest Period in which the prepayment occurred, and if applicable, through the
end of the Succeeding Interest Period, notwithstanding that such Interest Period
or Succeeding Interest Period extends beyond the date of prepayment, and third,
to the payments of principal due under the Loan in the inverse order of
maturity.

 

Section 2.4 Interest Rate Cap Agreement.

 

(a) At least thirty (30) days prior to the occurrence of a Securitization or
Syndication, Borrower shall obtain, or cause to be obtained, and shall
thereafter maintain in effect, an Interest Rate Cap Agreement with an Acceptable
Counterparty, which shall be coterminous with the Loan and have a notional
amount which shall not at any time be less than the outstanding principal
balance of the Loan and which shall at all times have a strike rate equal to the
Strike Rate. The Interest Rate Cap Agreement shall be written on the then
current standard ISDA documentation, and shall provide for interest periods and
calculations consistent with the payment terms of this Agreement. The
Counterparty shall be obligated under the Interest Rate Cap Agreement to make
monthly payments equal to the excess of one (1) month LIBOR over the Strike
Rate, calculated on the notional amount. The notional amount of the Interest
Rate Cap Agreement may be reduced from time to time in amounts equal to any
prepayment of the principal of the Loan in accordance with Section 2.3 hereof.

 

(b) Borrower shall collaterally assign to Lender pursuant to an Assignment of
Interest Rate Cap Agreement substantially in the form annexed hereto as Exhibit
C, all of its right, title and interest to receive any and all payments under
the Interest Rate Cap Agreement (and any related guarantee, if any) and shall
deliver to Lender an executed

 

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counterpart of such Interest Rate Cap Agreement and notify the Counterparty of
such collateral assignment (either in such Interest Rate Cap Agreement or by
separate instrument). Borrower shall cause the Counterparty to agree in writing
to make all payments it is required to make under the Interest Rate Cap
Agreement directly to the Lockbox Account or if the Lockbox Account is not then
required to be in effect, into such account as specified by Lender. At such time
as the Loan is repaid in full, all of Lender’s right, title and interest in the
Interest Rate Cap Agreement shall terminate and Lender shall promptly execute
and deliver at Borrower’s sole cost and expense, such documents as may be
required to evidence Lender’s release of the Interest Rate Cap Agreement and to
notify the Counterparty of such release.

 

(c) Borrower shall comply with all of its material obligations under the terms
and provisions of the Interest Rate Cap Agreement. All amounts paid by the
Counterparty under the Interest Rate Cap Agreement shall be deposited
immediately into the Lockbox Account or if the Lockbox Account is not then
required to be in effect, into such account as specified by Lender. Borrower
shall take all actions reasonably requested by Lender to enforce Lender’s rights
under the Interest Rate Cap Agreement in the event of a default by the
Counterparty and shall not waive, amend or otherwise modify any of its rights
thereunder.

 

(d) In the event of any downgrade, withdrawal or qualification of the rating of
the Counterparty below “AA-” (or the equivalent) by the Rating Agencies,
Borrower shall replace the Interest Rate Cap Agreement with a Replacement
Interest Rate Cap Agreement with an Acceptable Counterparty not later than
thirty (30) Business Days following receipt of notice from Lender or Servicer of
such downgrade, withdrawal or qualification.

 

(e) In the event that Borrower fails to purchase and deliver to Lender the
Interest Rate Cap Agreement or any Replacement Interest Cap Agreement as and
when required hereunder, Lender may purchase such Interest Rate Cap Agreement
and the cost incurred by Lender in purchasing such Interest Rate Cap Agreement
shall be paid by Borrower to Lender with interest thereon at the Default Rate
from the date such cost was paid by Lender until such cost is paid by Borrower
to Lender.

 

(f) Each Interest Rate Cap Agreement shall contain the following language or its
equivalent: “In the event of any downgrade, withdrawal or qualification of the
rating of the Counterparty below “AA-” (or the equivalent) by the Rating
Agencies, the Counterparty must, within 30 Business Days, either (x) post
collateral on terms acceptable to each Rating Agency or (y) find a replacement
Acceptable Counterparty, at the Counterparty’s sole cost and expense, acceptable
to each Rating Agency (notwithstanding the foregoing, if the Counterparty’s
rating is downgraded to “A” or lower, only the option described in clause
(y) will be acceptable); provided that, notwithstanding such a downgrade,
withdrawal or qualification, unless and until the Counterparty transfers the
Interest Rate Cap Agreement to a replacement Acceptable Counterparty pursuant to
the foregoing clause (y), the Counterparty will continue to perform its
obligations under the Interest Rate Cap Agreement. Failure to satisfy the
foregoing shall constitute an Additional Termination Event as defined by
Section 5(b)(v) of the ISDA Master Agreement, with the Counterparty as the
Affected Party.”

 

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(g) In connection with an Interest Rate Cap Agreement, Borrower shall obtain and
deliver to Lender an opinion of counsel from counsel for the Counterparty (upon
which Lender and its successors and assigns may rely) which shall provide, in
relevant part, that:

 

(1) the Counterparty is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and has the organizational
power and authority to execute and deliver, and to perform its obligations
under, the Interest Rate Cap Agreement;

 

(2) the execution and delivery of the Interest Rate Cap Agreement by the
Counterparty, and any other agreement which the Counterparty has executed and
delivered pursuant thereto, and the performance of its obligations thereunder
have been and remain duly authorized by all necessary action and do not
contravene any provision of its certificate of incorporation or by-laws (or
equivalent organizational documents) or any law, regulation or contractual
restriction binding on or affecting it or its property; and

 

(3) all consents, authorizations and approvals required for the execution and
delivery by the Counterparty of the Interest Rate Cap Agreement, and any other
agreement which the Counterparty has executed and delivered pursuant thereto,
and the performance of its obligations thereunder have been obtained and remain
in full force and effect, all conditions thereof have been duly complied with,
and no other action by, and no notice to or filing with any governmental
authority or regulatory body is required for such execution, delivery or
performance.

 

Section 2.5 Release on Payment in Full.

 

Lender shall, upon the written request and at the expense of Borrower, upon
payment in full of all principal and interest due on the Loan and all other
amounts due and payable under the Loan Documents in accordance with the terms
and provisions of the Note and this Agreement, release the Lien of the Security
Instrument on the Property not theretofore released and remit any remaining
Reserve Funds to Borrower.

 

III. CASH MANAGEMENT

 

Section 3.1 Establishment of Accounts.

 

(a) Borrower shall, or shall cause Operating Tenant to, simultaneously herewith,
(i) establish, and hereby covenants to maintain, an account (the “Property
Account”) with Property Account Bank into which Borrower shall deposit, or cause
to be deposited, all Gross Income from Operations and forfeited security
deposits, (ii) execute an agreement with Operating Tenant and the Property
Account Bank providing for the control of the Property Account by Borrower
substantially in the form of Exhibit A attached herewith (the “Pre-Termination
Property Account Agreement”) and (iii) Borrower shall assign to, and grant a
security interest in favor of, Lender in Borrower’s

 

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security interest in each Property Account. So long as no default exists under
the Operating Lease beyond the expiration of any applicable notice and cure
periods, the Property Accounts shall be under the sole dominion and control of
the Operating Tenant which shall use the sums in such Property Accounts in
accordance with the provisions of the Operating Lease and the Management
Agreement.

 

(b) In the event that an Operating Lease is terminated for any reason whatsoever
and not simultaneously replaced with a Replacement Operating Lease in accordance
with Section 5.1.24 hereof (a “Termination Event”), Borrower shall promptly
establish and maintain an account for the receipt of all Gross Income from
Operations (each, a “Post-Termination Property Account”). Each Post-Termination
Property Account shall be an Eligible Account with the Property Account Bank in
the name of Lender as secured party and Borrower shall enter into a property
account agreement substantially in the form of the Pre-Termination Property
Account Agreement (the “Post-Termination Property Account Agreement”) between
Borrower, Lender and the Property Account Bank with respect to the
Post-Termination Property Account. Borrower hereby covenants and agrees that it
shall upon the occurrence of a Termination Event, (i) issue direction letters to
all credit card companies and other accounts receivable counterparties to make
all payments directly to the Lockbox Account, (ii) direct the Manager to
immediately transfer to the Post-Termination Property Account any funds received
by Manager in respect of the Property, (iii) immediately transfer to the
Post-Termination Property Account any funds received by Borrower in respect of
the Property, (iv) direct the Property Account Bank to immediately transfer all
funds in the Property Account to the Post-Termination Property Account and
(v) on the last Business Day of each month, transfer all funds on deposit in the
Post-Termination Property Accounts to the Lockbox Account.

 

(c) Borrower or Lender shall, simultaneously herewith, (i) establish accounts
with the Lockbox Bank (the “Lockbox Account”), into which Borrower shall deposit
or cause to be deposited all sums on deposit in the Property Account or any
Post-Termination Property Account, in accordance with Section 3.2(b) and
Section 3.6 hereof, and (ii) execute an agreement with the Lockbox Bank
providing for the control of the Lockbox Account by Lender and establishing the
following Accounts (which may be book entry sub-accounts) into which amounts in
the Property Account or Gross Income from Operations and forfeited security
deposits, as applicable, shall be deposited or allocated:

 

(i) An account with Lockbox Bank into which Borrower shall deposit, or cause to
be deposited, the Monthly Tax Deposit (the “Tax Account”);

 

(ii) An account with Lockbox Bank into which Borrower shall deposit, or cause to
be deposited, the Monthly Insurance Premium Deposit (the “Insurance Premium
Account”);

 

(iii) An account with Lockbox Bank into which Borrower shall deposit, or cause
to be deposited, the Monthly Debt Service Payment Amount (the “Debt Service
Account”);

 

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(iv) An account with Lockbox Bank into which Borrower shall deposit, or cause to
be deposited, the Replacement Reserve Monthly Deposit (the “Replacement Reserve
Account”);

 

(v) An account with Lockbox Bank into which Borrower shall deposit, or cause to
be deposited, the Required Repair Fund (the “Required Repair Account”);

 

(vi) [Intentionally Deleted];

 

(vii) [Intentionally Deleted];

 

(viii) [Intentionally Deleted];

 

(ix) [Intentionally Deleted]; and

 

(x) An Account with Lockbox Bank into which, following the occurrence of a
Termination Event, Borrower shall deposit, or cause to be deposited, Approved
Expenses (the “Borrower Expense Account”).

 

Section 3.2 Deposits into Lockbox Account.

 

(a) Borrower covenants that (i) Borrower shall, or shall cause Operating Tenant
or Manager to, promptly deposit all Gross Income from Operations and forfeited
security deposits into the Property Account, or, if applicable, the
Post-Termination Property Account, (ii) Borrower shall send a notice,
substantially in the form of Exhibit B, to all tenants (other than the Operating
Tenant) now or hereafter occupying space at the Property directing them to pay
all Rents and other sums due under the Lease to which they are a party into the
Property Account or the Post-Termination Property Account, as the case may be,
(iii) Borrower or Manager shall instruct the Franchisor to deposit all Accounts
Receivable for the Property and all other sums collected by Franchisor pursuant
to the Franchise Agreement into the Property Account or the Post-Termination
Property Account, as the case may be, (iv) Borrower or Manager shall deliver a
notice substantially in the form of Exhibit D hereto to all credit card
companies to pay all Accounts Receivable directly into the Property Account or
the Post-Termination Property Account, as the case may be, (v) Borrower shall
deposit, or shall cause the Counterparty to deposit, all sums paid under the
Interest Rate Cap Agreement directly into the Lockbox Account; (vi) Borrower
shall, or shall cause Operating Tenant to deposit all Operating Lease Rent due
under the Operating Lease directly into the Lockbox Account, (vii) other than
the Accounts, there shall be no other accounts maintained by Borrower or any
other Person into which revenues from the ownership and operation of the
Property are deposited, and (viii) neither Borrower nor any other Person shall
open any other such account with respect to the deposit of income in connection
with the Property. Until deposited into the Property Account or the
Post-Termination Property Account, as the case may be, any Gross Income from
Operations from the Property and forfeited security deposits held by Borrower
shall be deemed to be Collateral and shall be held in trust by it for the
benefit, and as the property, of Lender and shall not be commingled with any
other funds or property of Borrower.

 

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(b) (i) prior to the occurrence of a Termination Event, Borrower, or Lender on
behalf of Borrower, shall, or shall cause Operating Tenant to, direct the
Property Account Bank to transfer, two (2) Business Days prior to each Payment
Date, all funds on deposit in the Property Account, up to the amount of
Operating Lease Rent due for the month in which such Payment Date occurs, to the
Lockbox Account; and (ii) following the occurrence of a Termination Event,
Borrower, or Lender on behalf of Borrower, shall, direct the Property Account
Bank to transfer, on the last Business Day of each month, all funds on deposit
in the Post-Termination Property Accounts to the Lockbox Account.

 

(c) Borrower warrants and covenants that it shall not rescind, withdraw or
change any notices or instructions required to be sent by it pursuant to this
Section 3.2 without Lender’s prior written consent.

 

Section 3.3 Account Name.

 

(a) The Accounts (other than the Property Account) shall each be in the name of
Lender.

 

(b) In the event Lender transfers or assigns the Loan, Borrower acknowledges
that the Property Account Bank and Lockbox Bank, at Lender’s request, shall
change the name of each Account (other than the Property Account) to the name of
the transferee or assignee. In the event Lender retains a servicer to service
the Loan, Borrower acknowledges that the Property Account Bank and Lockbox Bank,
at Lender’s request, shall change the name of each account to the name of the
servicer, as agent for Lender.

 

Section 3.4 Eligible Accounts.

 

Borrower shall, and Borrower shall cause Property Account Bank and Lockbox
Account Bank to, maintain each Account as an Eligible Account.

 

Section 3.5 Permitted Investments.

 

Sums on deposit in any Account other than the Post-Termination Property Account
or Lockbox Account may be invested in Permitted Investments provided (i) such
investments are then regularly offered by Lockbox Bank for accounts of this
size, category and type, (ii) such investments are permitted by Applicable Law,
(iii) the maturity date of the Permitted Investment is not later than the date
on which sums in the applicable Account are anticipated by Lender to be required
for payment of an obligation for which such Account was created, and (iv) no
Event of Default shall have occurred and be continuing. All income earned from
Permitted Investments shall be the property of Borrower. Borrower hereby
irrevocably authorizes and directs Lockbox Bank, to hold any income earned from
Permitted Investments as part of the Accounts. Borrower shall be responsible for
payment of any federal, State or local income or other tax applicable to income
earned from Permitted Investments. No other investments of the sums on deposit
in the Accounts shall be permitted except as set forth in this Section 3.5.
Lender shall not be liable for any loss sustained on the investment of any funds
constituting the Reserve Funds or of any funds deposited in the related
Accounts.

 

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Section 3.6 The Initial Deposits.

 

Lender shall determine, in its reasonable discretion, the initial deposit
amounts (the “Initial Deposits”) required to be deposited in each of the Tax
Account, the Insurance Premium Account, the Replacement Reserve Account, the
Required Repair Account, and Borrower shall deposit the respective Initial
Deposits into each Account on the Closing Date.

 

Section 3.7 Transfer To and Disbursements from the Lockbox Account.

 

(a) Lockbox Bank shall withdraw all funds on deposit in the Lockbox Account on
the date immediately preceding each Payment Date (and if such day is not a
Business Day then the preceding day which is a Business Day),

 

(b) Lockbox Bank shall disburse the funds in the Lockbox Account in the
following order of priority:

 

(i) First, funds sufficient to pay the Monthly Tax Deposit shall be deposited in
the Tax Account;

 

(ii) Second, funds sufficient to pay the Monthly Insurance Premium Deposit shall
be deposited in the Insurance Premium Account;

 

(iii) Third, funds sufficient to pay the Monthly Debt Service Payment Amount
shall be deposited into the Debt Service Account to be applied (A) first, to the
payment of accrued and unpaid interest computed at the Applicable Interest Rate;
and (B) second to the payment of the Scheduled Amortization Payment and the
reduction of the principal sum (if such Scheduled Amortization Payment is due);

 

(iv) Fourth, funds sufficient to pay the Replacement Reserve Monthly Deposit
shall be deposited in the Replacement Reserve Account;

 

(v) Fifth, funds sufficient to pay any interest accruing at the Default Rate,
and late payment charges, if any, shall be deposited in the Debt Service
Account;

 

(vi) Sixth, to the payment of Lockbox Bank for fees and expenses incurred in
connection with this Agreement and the accounts established hereunder;

 

(vii) Seventh, if a Termination Event has occurred, funds sufficient to pay all
costs and expenses, calculated on a Cash basis, required to be paid during such
month by or on behalf of Borrower in connection with the ownership and operation
of the Property in accordance with the Approved Annual Budget (“Approved
Expenses”) shall be deposited in the Borrower Expense Account after deposits for
items (i) through (vi) above have been made (provided deposits to the Borrower
Expense Account shall not include amounts which have previously been paid
pursuant to items (i) through (vi) above);

 

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(viii) Eighth, if a Termination Event has occurred, funds sufficient to pay any
Extraordinary Expenses for such month which have been approved by Lender (and
that have not been previously paid pursuant to items (i) through (vii) above)
shall be deposited in the Borrower Expense Account after deposits for items
(i) through (viii) above have been made;

 

(ix) Ninth, provided no Event of Default shall exist under the Loan Documents,
all amounts remaining in the Lockbox Account after deposits for items
(i) through (viii) for the current month and all prior months shall be disbursed
to Borrower.

 

Section 3.8 Withdrawals From the Tax Account and the Insurance Premium Account.

 

Lender shall have the right to withdraw funds from the Tax Account to pay
current Taxes on or before the date Taxes are due and payable. Lender shall have
the right to withdraw funds from the Insurance Premium Account to pay current
Insurance Premiums on or before the date current Insurance Premiums are due and
payable. Lockbox Bank shall disburse funds from the Tax Account and the
Insurance Premium Account in accordance with Lender’s written request therefor
on the Business Day following Lockbox Bank’s receipt of such written request.

 

Section 3.9 Withdrawals from the Replacement Reserve Account.

 

Lender shall disburse funds on deposit in the Replacement Reserve Account in
accordance with the provisions of Section 7.3 hereof.

 

Section 3.10 Withdrawals from the Required Repair Account.

 

Lender shall disburse funds on deposit in the Required Repair Account in
accordance with the provisions of Section 7.1 hereof.

 

Section 3.11 Withdrawals from the Debt Service Account.

 

Lender shall have the right to withdraw funds from the Debt Service Account to
pay the Monthly Debt Service Payment Amount on or after the date when due,
together with any late payment charges or interest accruing at the Default Rate.

 

Section 3.12 Intentionally Deleted.

 

Section 3.13 Intentionally Deleted.

 

Section 3.14 Intentionally Deleted.

 

Section 3.15 Intentionally Deleted.

 

Section 3.16 Withdrawals from the Borrower Expense Account.

 

Provided that no Event of Default has occurred and is continuing, Lender shall
disburse funds from the Borrower Expense Account to Borrower following receipt
of Borrower’s written

 

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request for the payment of costs and expenses incurred in connection with the
operation of the Property and/or Extraordinary Expenses in accordance with
Section 3.7(b)(vii) and Section 3.7(b)(viii), respectively. Such disbursements
shall be in accordance with the Approved Annual Budget.

 

Section 3.17 Sole Dominion and Control.

 

Borrower acknowledges and agrees that the Accounts are subject to the sole
dominion, control and discretion of Lender, its authorized agents or designees,
including Property Account Bank and Lockbox Bank, subject to the terms hereof;
and Borrower shall have no right of withdrawal with respect to any Account
except with the prior written consent of Lender or as otherwise provided herein.

 

Section 3.18 Security Interest.

 

Borrower hereby grants to Lender a first priority security interest in each of
the Accounts and the Account Collateral as additional security for the Debt.

 

Section 3.19 Rights on Default.

 

Notwithstanding anything to the contrary in this Article 3, upon the occurrence
of an Event of Default, Lender shall promptly notify Property Account Bank and
Lockbox Bank in writing of such Event of Default and, without notice from
Property Account Bank, Lockbox Bank or Lender, (a) Borrower shall have no
further right in respect of (including, without limitation, the right to
instruct Lockbox Bank or Property Account Bank to transfer from) the Accounts,
(b) Lender may direct Lockbox Account to liquidate and transfer any amounts then
invested in Permitted Investments to the Accounts or reinvest such amounts in
other Permitted Investments as Lender may reasonably determine is necessary to
perfect or protect any security interest granted or purported to be granted
hereby or pursuant to the other Loan Documents or to enable Lockbox Bank, as
agent for Lender, or Lender to exercise and enforce Lender’s rights and remedies
hereunder or under any other Loan Document with respect to any Account or any
Account Collateral, and (c) Lender shall have all rights and remedies with
respect to the Accounts and the amounts on deposit therein and the Account
Collateral as described in this Agreement and in the Security Instrument, in
addition to all of the rights and remedies available to a secured party under
the UCC, and, notwithstanding anything to the contrary contained in this
Agreement or in the Security Instrument, Lender may apply the amounts of such
Accounts as Lender determines in its sole discretion including, but not limited
to, payment of the Debt.

 

Section 3.20 Financing Statement; Further Assurances.

 

Borrower hereby authorizes Lender to file, and upon Lender’s request, shall
execute and deliver to Lender for filing, a financing statement or statements
under the UCC in connection with any of the Accounts and the Account Collateral
with respect thereto in the form required to properly perfect Lender’s security
interest therein. Borrower agrees that at any time and from time to time, at the
expense of Borrower, Borrower will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Lender may request, in order to perfect and protect any
security interest granted or purported to be granted hereby (including, without
limitation, any security interest in and to any Permitted Investments) or to
enable Lockbox Bank or Lender to exercise and enforce its rights and remedies
hereunder with respect to any Account or Account Collateral.

 

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Section 3.21 Borrower’s Obligation Not Affected.

 

The insufficiency of funds on deposit in the Accounts shall not absolve Borrower
of the obligation to make any payments, as and when due pursuant to this
Agreement and the other Loan Documents, and such obligations shall be separate
and independent, and not conditioned on any event or circumstance whatsoever.

 

Section 3.22 Payments Received Under this Agreement.

 

Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower’s obligations with respect to the monthly payment of Debt
Service and amounts due for the Tax and Insurance Escrow Fund, Required Repair
Fund, Replacement Escrow Fund and any other payment reserves established
pursuant to this Agreement or any other Loan Document shall (provided Lender is
not prohibited from withdrawing or applying any funds in the Accounts by
Applicable Law or otherwise) be deemed satisfied to the extent sufficient
amounts are deposited in the Lockbox Account established pursuant to this
Agreement to satisfy such obligations on the dates each such payment is
required, regardless of whether any of such amounts are so applied by Lender.

 

IV. REPRESENTATIONS AND WARRANTIES

 

Section 4.1 Borrower Representations.

 

Each Borrower on its own behalf represents and warrants as of the Closing Date
that:

 

4.1.1 Organization.

 

Borrower is duly organized and is validly existing and in good standing in the
jurisdiction in which it is organized, with requisite power and authority to own
the Property and to transact the businesses in which it is now engaged. Borrower
is duly qualified to do business and is in good standing in each jurisdiction
where it is required to be so qualified in connection with the Property, its
businesses and operations. Borrower possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own the
Property and to transact the businesses in which it is now engaged. Attached
hereto as Schedule IV is an organizational chart of Borrower.

 

4.1.2 Proceedings.

 

Borrower has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents. This Agreement and
the other Loan Documents have been duly executed and delivered by or on behalf
of Borrower and constitute legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms, subject
only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).

 

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4.1.3 No Conflicts.

 

The execution, delivery and performance of this Agreement and the other Loan
Documents by Borrower will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any Lien, charge or encumbrance (other than pursuant to the
Loan Documents) upon any of the property or assets of Borrower pursuant to the
terms of any indenture, mortgage, deed of trust, loan agreement, partnership
agreement, management agreement, franchise agreement, or other material
agreement or instrument to which Borrower is a party or by which any of
Borrower’s property or assets is subject, nor to Borrower’s knowledge, will such
action result in any violation of the provisions of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower or the Property or any of Borrower’s other assets, or
any license or other approval required to operate the Property, and any consent,
approval, authorization, order, registration or qualification of or with any
Governmental Authority required for the execution, delivery and performance by
Borrower of this Agreement or any other Loan Documents have been obtained and is
in full force and effect.

 

4.1.4 Litigation.

 

There are no actions, suits or proceedings at law or in equity by or before any
Governmental Authority or other agency now pending or to Borrower’s knowledge,
threatened against or affecting Borrower or the Property, which actions, suits
or proceedings, if determined against Borrower or the Property, might materially
adversely affect the condition (financial or otherwise) or business of Borrower
or the condition or ownership of the Property.

 

4.1.5 Agreements.

 

Borrower is not a party to any agreement or instrument or subject to any
restriction which might materially and adversely affect Borrower or the
Property, or Borrower’s business, properties or assets, operations or condition,
financial or otherwise. Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower or the Property is bound. Borrower has no material financial
obligation under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Borrower is a party or by which Borrower is a
party or by which Borrower or any Property is otherwise bound, other than
(a) obligations incurred in the ordinary course of the operation of the Property
and (b) obligations under the Loan Documents.

 

4.1.6 Solvency.

 

Borrower (a) has not entered into the transaction or executed the Note, this
Agreement or any other Loan Documents with the actual intent to hinder, delay or
defraud any creditor and (b) has received reasonably equivalent value in
exchange for its obligations under the Loan Documents. Giving effect to the
Loan, the fair saleable value of Borrowers’ assets exceeds and will, immediately
following the making of the Loan, exceed Borrower’s total liabilities,

 

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including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. Borrower’s assets do not and, immediately following the
making of the Loan will not, constitute unreasonably small capital to carry out
its business as conducted or as proposed to be conducted. Borrower does not
intend to incur debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt and liabilities as they mature
(taking into account the timing and amounts of cash to be received by Borrower
and the amounts to be payable on or in respect of obligations of Borrower). No
petition under the Bankruptcy Code or similar state bankruptcy or insolvency law
has been filed against Borrower or any constituent Person in the last seven
(7) years, and neither Borrower nor any constituent Person in the last seven
(7) years has ever made an assignment for the benefit of creditors or taken
advantage of any insolvency act for the benefit of debtors. Neither Borrower nor
any of its constituent Persons are contemplating either the filing of a petition
by it under the Bankruptcy Code or similar state bankruptcy or insolvency law or
the liquidation of all or a major portion of Borrower’s assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it or such constituent Persons.

 

4.1.7 Full and Accurate Disclosure.

 

No statement of fact made by Borrower in this Agreement or in any of the other
Loan Documents contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained herein or therein
not misleading. There is no fact presently known to Borrower which has not been
disclosed to Lender which materially and adversely affects, or might materially
and adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower.

 

4.1.8 No Plan Assets.

 

Borrower is not, a Plan and none of the assets of Borrower constitute or will
constitute “Plan Assets” of one or more Plans. In addition, (a) Borrower is not
a “governmental plan” within the meaning of Section 3(32) of ERISA and
(b) transactions by or with Borrower are not subject to State statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code currently in effect, which prohibit or otherwise
restrict the transactions contemplated by this Agreement.

 

4.1.9 Compliance.

 

Borrower and the Property and the use thereof comply in all material respects
with all applicable Legal Requirements, including, without limitation, building
and zoning ordinances and codes. Borrower is in compliance with all notices of
violation of any order, writ, injunction, decree or demand of any Governmental
Authority in all material respects. There has not been committed by Borrower or
any other Person in occupancy of or involved with the operation or use of the
Property any act or omission affording the federal government or any other
Governmental Authority the right of forfeiture as against the Property or any
part thereof or any monies paid in performance of Borrower’s obligations under
any of the Loan Documents. The representations made in this Section 4.1.9 shall
not apply to matters arising under or pertaining to compliance with
Environmental Laws (which are addressed exclusively under Section 4.1.39 of this
Agreement).

 

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4.1.10 Financial Information.

 

All financial data, including, without limitation, the statements of cash flow
and income and operating expense, that have been delivered to Lender in respect
of Borrower, Operating Tenant and the Property (i) are true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of Borrower, Operating Tenant and the Property, as applicable, as of
the date of such reports, and (iii) have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. Except for
Permitted Encumbrances, neither Borrower nor Operating Tenant has any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses that are known to Borrower and reasonably
likely to have a materially adverse effect on the Property or the operation
thereof as a hotel except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no
materially adverse change in the financial condition, operations or business of
Borrower or Operating Tenant from that set forth in said financial statements.

 

4.1.11 Condemnation.

 

No Condemnation or other similar proceeding has been commenced or, to Borrower’s
knowledge, is threatened or contemplated with respect to all or any material
portion of the Property or for the relocation of roadways providing access to
the Property.

 

4.1.12 Federal Reserve Regulations.

 

No part of the proceeds of the Loan will be used for the purpose of purchasing
or acquiring any “margin stock” within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System or for any other purpose which would
be inconsistent with such Regulation U or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements or by the terms
and conditions of this Agreement or the other Loan Documents.

 

4.1.13 Utilities and Public Access.

 

The Property has rights of access to public ways and is served by public water,
sewer, sanitary sewer and storm drain facilities adequate to service the
Property for its intended use. All public utilities necessary or convenient to
the full use and enjoyment of the Property are located either in the public
right-of-way abutting the Property (which are connected so as to serve the
Property without passing over other property) or in recorded easements serving
the Property and such easements are set forth in and insured by the Title
Insurance Policy. All roads necessary for the use of the Property for its
current purpose have been completed, are physically open and are dedicated to
public use and have been accepted by all Governmental Authorities.

 

4.1.14 Not a Foreign Person.

 

Borrower is not a “foreign person” within the meaning of §1445(f)(3) of the
Code.

 

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4.1.15 Separate Lots.

 

The Property is comprised of one (1) or more parcels which constitute a separate
tax lot or lots and does not constitute a portion of any other tax lot not a
part of the Property.

 

4.1.16 Assessments.

 

There are no pending or, to Borrower’s knowledge, proposed special or other
assessments for public improvements or otherwise affecting the Property, nor are
there any contemplated improvements to the Property that may result in such
special or other assessments.

 

4.1.17 Enforceability.

 

The Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower, including the defense of usury, and
Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.

 

4.1.18 No Prior Assignment.

 

There are no prior assignments of the Leases or any portion of the Rents due and
payable or to become due and payable which are presently outstanding.

 

4.1.19 Insurance.

 

Borrower has obtained and has delivered to Lender certified copies of all
insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement. No Person, including Borrower, has
done, by act or omission, anything which would impair the coverage of any such
policy.

 

4.1.20 Use of Property.

 

The Property is used exclusively for hotel purposes and other appurtenant and
related uses including but not limited to restaurants and lounges.

 

4.1.21 Certificate of Occupancy; Licenses.

 

All material certifications, permits, licenses and approvals, including without
limitation, certificates of completion and occupancy permits required for the
legal use, occupancy and operation of the Property by Borrower as a hotel
(collectively, the “Licenses”), have been obtained and are in full force and
effect and are not subject to revocation, suspension or forfeiture. Borrower
shall keep and maintain all Licenses necessary for the operation of the Property
as a hotel. The use being made of the Property conforms in all material respects
with the certificate of occupancy issued for the Property.

 

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4.1.22 Flood Zone.

 

None of the Improvements on the Property are located in an area as identified by
the Federal Emergency Management Agency as an area having special flood hazards
and, if so located, the flood insurance required pursuant to Section 6.1(a)(vii)
is in full force and effect.

 

4.1.23 Physical Condition.

 

Except as disclosed to Lender in the Physical Conditions Report, the Property,
including, without limitation, all buildings, improvements, parking facilities,
sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire
protection systems, electrical systems, equipment, elevators, exterior sidings
and doors, landscaping, irrigation systems and all structural components, are in
good condition, order and repair in all material respects; there exists no
structural or other material defects or damages in the Property, whether latent
or otherwise, and Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond. Except as disclosed
to Lender in the Physical Conditions Report, the Property is free from damage
covered by fire or other casualty. Except as disclosed to Lender in the Physical
Conditions Report, all liquid and solid waste disposal, septic and sewer systems
located on the Property are in a good and safe condition and repair and in
compliance with all Legal Requirements.

 

4.1.24 Boundaries.

 

Except as disclosed to Lender in the Physical Conditions Report and the related
Survey, all of the Improvements which were included in determining the appraised
value of the Property lie wholly within the boundaries and building restriction
lines of the Property, and no improvements on adjoining properties encroach upon
the Property, and no easements or other encumbrances upon the Property encroach
upon any of the Improvements.

 

4.1.25 Leases.

 

The Property is not subject to any Leases other than the Leases described in
Schedule II attached hereto and made a part hereof. Borrower or Operating
Tenant, as the case may be, is the owner and lessor of landlord’s interest in
the Leases. No Person has any possessory interest in the Property or right to
occupy the same except under and pursuant to the provisions of the Leases. The
current Major Leases are in full force and effect and, there are no material
defaults by Borrower or Operating Tenant, as the case may be, or any tenant
under any Major Lease, and there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute material defaults under
any Major Lease. No Rent has been paid more than one (1) month in advance of its
due date. There are no offsets or defenses to the payment of any portion of the
Rents payable with respect to Major Leases. All work to be performed by Borrower
or Operating Tenant, as the case may be, under each Major Lease has been
performed as required and has been accepted by the applicable tenant, and any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower or Operating Tenant,
as the case may be, to any tenant has already been received by such tenant.
There has been no prior sale, transfer or assignment, hypothecation or pledge of
any Major Lease

 

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or of the Rents received therein which is still in effect. No tenant under any
Lease has a right or option pursuant to such Lease or otherwise to purchase all
or any part of the leased premises or the building of which the leased premises
are a part. To Borrower’s knowledge, no Hazardous Materials have been disposed,
stored or treated by any tenant under any Lease on or about the leased premises
nor does Borrower have any knowledge of any tenant’s intention to use its leased
premises for any activity which, directly or indirectly, involves the use,
generation, treatment, storage, disposal or transportation of any Hazardous
Materials, except those that are both (i) in material compliance with current
Environmental Laws and with permits issued pursuant thereto (if such permits are
required), and (ii) either (A) in amounts not in excess of that necessary to
operate, clean, repair and maintain the Property or each tenant’s respective
business at the Property as set forth in their respective Leases, (B) held by a
tenant for sale to the public in its ordinary course of business, or (C) fully
disclosed in the Environmental Reports or otherwise disclosed to and approved by
Lender in writing.

 

4.1.26 [Reserved]

 

4.1.27 [Reserved]

 

4.1.28 Filing and Recording Taxes.

 

All transfer taxes, deed stamps, intangible taxes or other amounts in the nature
of transfer taxes required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the transfer of the Property
to Borrower have been paid. All mortgage, mortgage recording, stamp, intangible
or other similar tax required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Security Instrument, have been
paid.

 

4.1.29 Franchise Agreement.

 

The Franchise Agreement is in full force and effect, all franchise fees,
reservation fees, royalties and other sums due thereunder have been paid in full
to date, and neither Borrower nor Franchisor is in default thereunder in any
material respect.

 

4.1.30 Management Agreement.

 

The Management Agreement is in full force and effect and there is no material
default thereunder by any party thereto and no event has occurred that, with the
passage of time and/or the giving of notice would constitute a default
thereunder.

 

4.1.31 Illegal Activity.

 

No portion of the Property has been or will be purchased with proceeds of any
illegal activity and to the best of Borrower’s knowledge, there are no illegal
activities or activities relating to any controlled substances at the Property.

 

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4.1.32 No Change in Facts or Circumstances; Disclosure.

 

All information submitted by Borrower and Operating Tenant to Lender and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower and Operating Tenant in this
Agreement or in any other Loan Document, are accurate, complete and correct in
all material respects. There has been no material adverse change in any
condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects or might materially and adversely
affect the use, operation or value of the Property or the business operations or
the financial condition of Borrower and Operating Tenant. Borrower has disclosed
to Lender all material facts and has not failed to disclose any material fact
that could cause any information described in this Section 4.1.32 or any
representation or warranty made herein to be materially misleading.

 

4.1.33 Investment Company Act.

 

Borrower is not (a) an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended; (b) a “holding company” or a “subsidiary company” of a “holding
company” or an “affiliate” of either a “holding company” or a “subsidiary
company” within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (c) subject to any other federal or State law or regulation which
purports to restrict or regulate its ability to borrow money.

 

4.1.34 Principal Place of Business; State of Organization.

 

Borrower’s principal place of business as of the date hereof is the address set
forth in the Preamble hereto. Borrower is organized under the laws of the State
of Delaware and its organizational identification number is 2926691.

 

4.1.35 Single Purpose Entity.

 

Borrower covenants and agrees that its organizational documents shall provide
that it has not, and shall not (except as expressly set forth below), and that
the organizational documents of its general partner(s), if Borrower is a
partnership, or its managing member(s), if Borrower is a limited liability
company with multiple members (in each case, “Principal”) shall provide that it
has not and shall not (except as expressly set forth below):

 

(a) with respect to Borrower, engage in any business or activity other than the
acquisition, development, ownership, operation, leasing, managing and
maintenance of the Property and the property owned by Borrower commonly known as
Holiday Inn Select – New Orleans Airport located in Kenner, Louisiana, and,
other than the Prior Financing (which such Prior Financing has been defeased in
full and there are no continuing liabilities or obligations thereunder other
than residual obligations and liabilities that expressly survive and are
customary and reasonable for securitized commercial mortgage loan transactions),
entering into the Loan, and activities incidental thereto and with respect to
Principal, engage in any business or activity other than the ownership of its
interest in Borrower, and activities incidental thereto;

 

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(b) with respect to Borrower, acquire or own any material assets other than
(i) the Property and the property owned by Borrower commonly known as Holiday
Inn Select – New Orleans Airport located in Kenner, Louisiana, and (ii) such
incidental Personal Property as may be necessary for the operation of the
Property, and with respect to Principal, acquire or own any material asset other
than its interest in Borrower;

 

(c) with respect to Borrower and other than the Prior Financing (which such
Prior Financing has been defeased in full and there are no continuing
liabilities or obligations thereunder other than residual obligations and
liabilities that expressly survive and are customary and reasonable for
securitized commercial mortgage loan transactions), borrow money or incur
indebtedness other than (i) normal trade accounts payable, provided that such
debt is not evidenced by a note and is paid within 60 days of the date when such
payment is due, (ii) lease obligations in the ordinary course of business,
(iii) consensual lines on its property or equipment leases for amounts
aggregating no more than $50,000, and with respect to Principal, incur any debt
secured or unsecured, direct or contingent (including guaranteeing any
obligations);

 

(d) dissolve or liquidate;

 

(e) sell or lease all or substantially all of the Properties, otherwise dispose
of the Property or all or substantially all of the assets of Borrower or
Principal, as applicable;

 

(f) file a voluntary petition or otherwise initiate proceedings to have itself
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against itself, or file a petition seeking or
consenting to reorganization or relief of itself as debtor under any applicable
federal or state law relating to bankruptcy, insolvency, or other relief for
debtors with respect to Borrower or Principal, as applicable; or seek or consent
to the appointment of any trustee, receiver, conservator, assignee,
sequestrator, custodian, liquidator (or other similar official) of itself or of
all or any substantial part of the properties and assets of Borrower or
Principal, as applicable, or make any general assignment for the benefit of
creditors of Borrower or Principal, as applicable, or admit in writing its
inability to pay its debts generally as they become due or declare or effect a
moratorium on its debt or take any action in furtherance of any such action;

 

(g) amend, modify or alter its formation documents;

 

(h) merge or consolidate with any other entity;

 

(i) fail to own all property owned by Borrower or Principal, as applicable, in
its own name;

 

(j) fail to maintain books, records, financial statements and bank accounts
separate from those of its affiliates and any other persons or entity (noting in
any consolidated financial statements its separate legal existence);

 

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(k) fail to maintain its assets in such a manner that it is not costly or
difficult to segregate, ascertain or identify such assets;

 

(l) fail to observe all organizational formalities and preserve its existence;

 

(m) fail to hold itself out as a legal entity separate and distinct from any
other entity;

 

(n) fail to allocate fairly and reasonably any overhead expenses that are shared
with an affiliate, including paying for office space and services performed by
any employee of an affiliate, and maintain a sufficient number of employees in
light of its contemplated business operations;

 

(o) fail to transact all business with affiliates on terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arm’s-length basis with third parties other than any such party;

 

(p) fail to conduct business in its own name, and maintain and utilize separate
stationery, invoices and checks;

 

(q) except as permitted under the Loan Documents and except with respect to
funds of Borrower which will be deposited into a central account for the sole
purpose of paying operating expenses of the Property, commingle its funds or
other assets with those of any affiliate or other person or entity;

 

(r) guarantee or become obligated for the debts of any other person or entity or
hold itself out to be responsible for the debts of any other person or entity,
other than with respect to the Loan;

 

(s) fail to pay its debts and liabilities out of its assets as the same shall
become due;

 

(t) make loans or advances to any third party (including any affiliate) and not
acquire obligations or securities of its members or affiliates;

 

(u) pledge its assets for the benefit of any other person or entity other than
with respect to the Loan;

 

(v) fail to correct any known misunderstanding regarding its separate identity;

 

(w) fail to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations;

 

(x) fail to maintain all required qualifications to do business in the states in
which the Property is located;

 

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(y) not share any common logo with or identify or hold itself out as or be
considered as a department or division of any other person or entity;

 

(z) with respect to Principal, or if Borrower is a single member limited
liability company that complies with the requirements of Section 4.1.35(bb)
below, fail at any time to have at least two independent directors (each an
“Independent Director”) that is not and has not been for at least five
(5) years: (a) a stockholder, director, officer, employee, partner, member,
attorney or counsel of Borrower or of Principal or any Affiliate of either of
them; (b) a customer, supplier or other Person who derives its purchases or
revenues (other than any fee paid to such director as compensation for such
director to serve as an Independent Director) from its activities with Borrower,
Principal or any Affiliate of either of them (a “Business Party”); (c) a person
or other entity controlling or under common control with any such stockholder,
partner, member, director, officer, attorney, counsel or Business Party; or
(d) a member of the immediate family of any such stockholder, director, officer,
employee, partner, member, attorney, counsel or Business Party. Notwithstanding
the foregoing, no Independent Director shall also serve as an Independent
Director (as such term is defined in the Subordination and Attornment Agreement)
for Operating Tenant or Principal (as such term is defined in the Subordination
and Attornment Agreement); or

 

(aa) with respect to Principal, or if Borrower is a single member limited
liability company that complies with the requirements of Section 4.1.35(bb)
below, permit its board of directors to take any action which, under the terms
of any certificate of incorporation, by-laws, voting trust agreement with
respect to any common stock or other applicable organizational documents,
requires the unanimous vote of one hundred percent (100%) of the members of the
board without the vote of each Independent Director.

 

(bb) In the event Borrower is a Delaware limited liability company that does not
have a managing member which complies with the requirements for a Principal
under this Section 4.1.35, the limited liability company agreement of Borrower
(the “LLC Agreement”) shall provide that (A) upon the occurrence of any event
that causes the last remaining member of Borrower (“Member”) to cease to be the
member of Borrower (other than (1) upon an assignment by Member of all of its
limited liability company interest in Borrower and the admission of the
transferee in accordance with the Loan Documents and the LLC Agreement, or
(2) the resignation of Member and the admission of an additional member of
Borrower in accordance with the terms of the Loan Documents and the LLC
Agreement), any person acting as Independent Director of Borrower shall, without
any action of any other Person and simultaneously with the Member ceasing to be
the member of Borrower, automatically be admitted to Borrower (“Special Member”)
and shall continue Borrower without dissolution and (B) Special Member may not
resign from Borrower or transfer its rights as Special Member unless (1) a
successor Special Member has been admitted to Borrower as Special Member in
accordance with requirements of Delaware law and (2) such successor Special
Member has also accepted its appointment as an Independent Director. The LLC
Agreement shall further provide that (v) Special Member shall automatically
cease to be a member of Borrower upon the admission to Borrower of a substitute
Member, (w) Special Member

 

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shall be a member of Borrower that has no interest in the profits, losses and
capital of Borrower and has no right to receive any distributions of Borrower
assets, (x) pursuant to Section 18-301 of the Delaware Limited Liability Company
Act (the “Act”), Special Member shall not be required to make any capital
contributions to Borrower and shall not receive a limited liability company
interest in Borrower, (y) Special Member, in its capacity as Special Member, may
not bind Borrower and (z) except as required by any mandatory provision of the
Act, Special Member, in its capacity as Special Member, shall have no right to
vote on, approve or otherwise consent to any action by, or matter relating to,
Borrower, including, without limitation, the merger, consolidation or conversion
of Borrower; provided, however, such prohibition shall not limit the obligations
of Special Member, in its capacity as Independent Director, to vote on such
matters required by the LLC Agreement. In order to implement the admission to
Borrower of Special Member, Special Member shall execute a counterpart to the
LLC Agreement. Prior to its admission to Borrower as Special Member, Special
Member shall not be a member of Borrower.

 

The bankruptcy, dissolution, liquidation or termination of any Member shall not
cause the termination or dissolution of Borrower, and the business of Borrower
shall continue. Upon the occurrence of a bankruptcy or the dissolution (without
reconstitution within sixty (60) days thereafter) of any Member, the membership
of such Member shall terminate, and the trustee, receiver, or legal
representative of such Member shall have all the rights of such Member for the
purpose of settling or managing its estate or property, subject to satisfying
conditions precedent to the admission of such assignee as a substitute Member
including the same right (subject to the same limitations) as the terminated
Members would have had to transfer its interest in Borrower or Principal, as
applicable. The LLC Agreement shall provide that each of Member and Special
Member waives any right it might have to agree in writing to dissolve Borrower
upon the occurrence of any action initiated by or brought against Member or
Special Member under any Creditors Rights Laws, or the occurrence of an event
that causes Member or Special Member to cease to be a member of Borrower.

 

4.1.36 Business Purposes.

 

The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.

 

4.1.37 Taxes.

 

Borrower has filed all federal, State, county, municipal, and city income tax
returns required to have been filed by it and has paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by it. Borrower knows of no basis for any additional
assessment in respect of any such taxes and related liabilities for prior years.

 

4.1.38 Forfeiture.

 

Neither Borrower nor to Borrower’s knowledge, any other Person in occupancy of
or involved with the operation or use of the Property has committed any act or
omission affording

 

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the federal government or any State or local government the right of forfeiture
as against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under the Note, this Agreement or the other Loan
Documents. Borrower hereby covenants and agrees not to commit, permit or suffer
to exist any act or omission affording such right of forfeiture.

 

4.1.39 Environmental Representations and Warranties.

 

Borrower represents and warrants, except as disclosed in the written reports
resulting from the environmental site assessments of the Property delivered to
and approved by Lender prior to the Closing Date (the “Environmental Report”)
and information that Borrower knows or should reasonably have known that:
(a) there are no Hazardous Materials or underground storage tanks in, on, or
under the Property, except those that are both (i) in material compliance with
current Environmental Laws and with permits issued pursuant thereto (if such
permits are required), and (ii) either (A) in amounts not in excess of that
necessary to operate, clean, repair and maintain the Property or each tenant’s
respective business at the Property, or (B) held by a tenant for sale to the
public in its ordinary course of business, (b) there are no past, present or
threatened Releases of Hazardous Materials in, on, under or from the Property in
material violation of any Environmental Law and which would be reasonably likely
to require remediation by a Governmental Authority; (c) there is no threat of
any Release of Hazardous Materials in material violation of Environmental Law
migrating to the Property from any adjoining property; (d) there is no past or
present material non-compliance with current Environmental Laws, or with permits
issued pursuant thereto, in connection with the Property; (e) Borrower has not
received, any written notice or other written communication from any Person
(including but not limited to a Governmental Authority) relating to potential
liability arising out of the release of Hazardous Materials in, on, under or
from the Property which matter remains pending or has not been resolved or
cured; and (f) Borrower has truthfully and fully made available to Lender copies
of any and all material reports relating to the environmental condition of the
Property contained in Borrower’s files and records or within Borrower’s custody
or control, including but not limited to any reports relating to Hazardous
Materials in, on, under or migrating to or from the Property.

 

4.1.40 Taxpayer Identification Number.

 

Borrower’s United States taxpayer identification number is
                            .

 

4.1.41 OFAC.

 

Borrower represents and warrants that neither Borrower, Guarantor, Operating
Tenant nor any of their respective Affiliates is a Prohibited Person, and
Borrower, Guarantor, and their respective Affiliates are in compliance with all
applicable orders, rules, regulations and recommendations of The Office of
Foreign Assets Control of the U.S. Department of the Treasury.

 

4.1.42 Intentionally Deleted.

 

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4.1.43 Deposit Accounts.

 

(a) The Property Account Agreements create valid and continuing security
interests (as defined in the UCC) in the Property Accounts in favor of Borrower
and Lender, and in the Post-Termination Property Accounts in favor of Lender,
and the control agreement for the Lockbox Agreement creates a valid and
continuing security interest in the Lockbox Account in favor of Lender, which
security interests are prior to all other Liens and are enforceable as such
against creditors of and purchasers from Borrower;

 

(b) Borrower and Lender agree that each Property Account and each
Post-Termination Property Account is and shall be maintained (i) as a “deposit
account” (as such term is defined in Section 9-102(a)(29) of the UCC), (ii) in
such a manner that Borrower shall have control (within the meaning of
Section 9-104(a)(2) of the UCC) over the Property Account (subject to Borrower’s
assignment of its security interest in such account to Lender as collateral for
the Loan pursuant to the Security Instrument) and Lender shall have control
(within the meaning of Section 9-104(a)(2) of the UCC) over the Post-Termination
Property Account, (iii) such that Manager shall have no right of withdrawal from
the Property Account or the Post-Termination Account. Without limiting
Borrower’s obligations under the immediately preceding sentence, Borrower shall
only establish and maintain the Property Account and each Post-Termination
Property Account with a financial institution that has executed an agreement
substantially in the form of the Property Account Agreement or in such other
form reasonably acceptable to Lender.

 

(c) Borrower and Lender agree that each Account other than the Property Account
is and shall be maintained (i) as a “securities account” (as such term is
defined in Section 8-501(a) of the UCC), (ii) in such a manner that Lender shall
have control (within the meaning of Section 8-106(d)(2) of the UCC) over each
such Account, (iii) such that neither Borrower nor Manager shall have any right
of withdrawal from such Accounts and, except as provided herein, no Account
Collateral shall be released to Borrower from such Accounts, (iv) in such a
manner that the Lockbox Bank shall agree to treat all property credited to each
Account other than the Property Accounts as “financial assets” and (v) such that
all securities or other property underlying any financial assets credited to
such Accounts shall be registered in the name of Lockbox Bank, indorsed to
Lockbox Bank or in blank or credited to another securities account maintained in
the name of Lockbox Bank and in no case will any financial asset credited to any
such Accounts be registered in the name of Borrower, payable to the order of
Borrower or specially indorsed to Borrower except to the extent the foregoing
have been specially indorsed to Lockbox Bank or in blank);

 

(d) Borrower owns and has good title to the Property Accounts, the
Post-Termination Property Accounts and the Lockbox Account free and clear of any
Lien or claim of any Person;

 

(e) Borrower has delivered to Lender fully executed agreements pursuant to which
the banks maintaining the Property Accounts have agreed to comply with all
instructions originated by Lender directing disposition of the funds in such
accounts without further consent by Borrower;

 

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(f) Other than the security interest granted to Lender pursuant to this
Agreement and the Property Account Agreements, Borrower has not pledged,
assigned, or sold, granted a security interest in, or otherwise conveyed any of
the Property Accounts or the Lockbox Account; and

 

(g) The Property Accounts and the Lockbox Account are not in the name of any
Person other than Borrower or Lender. Borrower has not consented to the banks
maintaining the Lockbox Account or the Property Accounts to comply with
instructions of any Person other than Lender.

 

4.1.44 Embargoed Person.

 

As of the date hereof and at all times throughout the term of the Loan,
including after giving effect to any Transfers permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Borrower, Principal,
Operating Tenant and Guarantor constitute property of, or are beneficially
owned, directly or indirectly, by any person, entity or government subject to
trade restrictions under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders
or regulations promulgated thereunder (“Embargoed Person”) with the result that
the investment in Borrower, Principal, or Guarantor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan made by the Lender is
in violation of law; (b) no Embargoed Person has any interest of any nature
whatsoever in Borrower, Principal, or Guarantor, as applicable, with the result
that the investment in Borrower, Principal, Operating Tenant or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law; and (c) to Borrower’s knowledge, none of the funds of
Borrower, Principal, Operating Tenant or Guarantor, as applicable, have been
derived from any unlawful activity with the result that the investment in
Borrower, Principal, Operating Tenant or Guarantor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law.

 

4.1.45 Personal Property.

 

Borrower owns, leases or licenses adequate Personal Property (other than
Inventory) and Operating Tenant owns adequate Inventory to maintain and operate
the Property as a hotel in accordance with the standards of this Agreement, the
Operating Lease, the Management Agreement and the Franchise Agreement. The
Personal Property is not subject to any liens, leases or financing arrangements
other than Permitted Encumbrances. The Personal Property (other than Inventory)
is leased to the Operating Tenant pursuant to the Operating Lease.

 

4.1.46 Operating Lease.

 

The Operating Lease is in full force and effect and there is no material default
thereunder by any party thereto and no event has occurred that, with the passage
of time and/or the giving of notice would constitute a material default
thereunder. The Operating Tenant is directly or indirectly, wholly owned and
controlled by the Operating Partnership.

 

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Section 4.2 Survival of Representations.

 

Borrower agrees that all of the representations and warranties of Borrower set
forth in Section 4.1 and elsewhere in this Agreement and in the other Loan
Documents shall survive for so long as any amount remains owing to Lender under
this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.

 

V. BORROWER COVENANTS

 

Section 5.1 Affirmative Covenants.

 

From the date hereof and until payment in full of the Debt or the earlier
release of the Liens of all Security Instrument encumbering the Property (and
all related obligations) in accordance with the terms of this Agreement and the
other Loan Documents, Borrower hereby covenants and agrees with Lender that:

 

5.1.1 Existence; Compliance with Legal Requirements.

 

(a) Borrower shall do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its existence, rights, licenses, permits
and franchises, and comply, in all material respects, with all Legal
Requirements applicable to it and the Property. There shall never be committed
by Borrower or Operating Tenant any act or omission affording the federal
government or any State or local government the right of forfeiture against the
Property or any part thereof or any monies paid in performance of Borrower’s
obligations under any of the Loan Documents. Borrower hereby covenants and
agrees not to commit or permit any act or omission affording such right of
forfeiture. Borrower shall at all times maintain, preserve and protect all
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and shall keep the Property in good
working order and repair, reasonable wear and tear excepted, and from time to
time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto, all as more fully provided
in the Security Instrument. Borrower shall keep the Property insured at all
times by financially sound and reputable insurers, to such extent and against
such risks, and maintain liability and such other insurance, as is more fully
provided in this Agreement. Borrower shall operate the Property that is the
subject of any O&M Program in accordance with the terms and provisions thereof
in all material respects.

 

(b) After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding promptly initiated and conducted in good
faith and with due diligence, the validity of any Legal Requirement, the
applicability of any Legal Requirement to Borrower or the Property or any
alleged violation of any Legal Requirement, provided that (i) no Event of
Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all

 

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Applicable Laws; (iii) neither the Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, cancelled or
lost; (iv) Borrower shall promptly upon final determination thereof comply with
any such Legal Requirement determined to be valid or applicable or cure any
violation of any Legal Requirement; (v) such proceeding shall suspend the
enforcement of the contested Legal Requirement against Borrower or the Property;
and (vi) Borrower shall furnish such security as may be required in the
proceeding, or as may be reasonably requested by Lender, to insure compliance
with such Legal Requirement, together with all interest and penalties payable in
connection therewith. Lender may apply any such security or part thereof, as
necessary to cause compliance with such Legal Requirement at any time when, in
the reasonable judgment of Lender, the validity, applicability or violation of
such Legal Requirement is finally established or the Property (or any part
thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost.

 

5.1.2 Taxes and Other Charges.

 

Borrower shall pay all Taxes and Other Charges now or hereafter levied or
assessed or imposed against the Property or any part thereof as the same become
due and payable. Borrower shall furnish to Lender receipts, or other evidence
for the payment of the Taxes and the Other Charges prior to the date the same
shall become delinquent (provided, however, that Borrower is not required to
furnish such receipts for payment of Taxes in the event that such Taxes have
been paid by Lender pursuant to Section 7.2 hereof). Borrower shall not suffer
and shall promptly cause to be paid and discharged any Lien or charge whatsoever
which may be or become a Lien or charge against the Property, and shall promptly
pay for all utility services provided to the Property. After prior written
notice to Lender, Borrower, at its own expense, may contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any
Taxes or Other Charges, provided that (i) no Event of Default has occurred and
remains uncured; (ii) such proceeding shall be permitted under and be conducted
in accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding shall
be conducted in accordance with all Applicable Laws; (iii) neither the Property
nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost; (iv) Borrower shall promptly upon
final determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Taxes or Other Charges from the Property; (vi) Borrower shall have
deposited with Lender adequate reserves for the payment of the Taxes, together
with all interest and penalties thereon, unless Borrower has paid all of the
Taxes under protest (provided, however, that Borrower shall not be required to
deposit such reserves with Lender, in the event that funds sufficient to pay
such Taxes shall theretofore have been deposited with or collected by Lender
pursuant to Section 3.7 hereof, and (vii) Borrower shall furnish such security
as may be required in the proceeding.

 

5.1.3 Litigation.

 

Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or threatened against Borrower which might
materially adversely affect Borrower’s condition (financial or otherwise) or
business or the condition or ownership of the Property.

 

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5.1.4 Access to Property.

 

Borrower shall permit agents, representatives and employees of Lender to inspect
the Property or any part thereof at reasonable hours upon reasonable advance
notice.

 

5.1.5 Notice of Default.

 

Borrower shall promptly advise Lender of any material adverse change in
Borrower’s condition, financial or otherwise, or of the occurrence of any Event
of Default of which Borrower has knowledge.

 

5.1.6 Cooperate in Legal Proceedings.

 

Borrower shall cooperate fully with Lender with respect to any proceedings
before any court, board or other Governmental Authority which may in any way
adversely affect the rights of Lender hereunder or any rights obtained by Lender
under any of the other Loan Documents and, in connection therewith, permit
Lender, at its election, to participate in any such proceedings.

 

5.1.7 Award and Insurance Benefits.

 

Borrower shall cooperate with Lender in obtaining for Borrower and Lender the
benefits of any Awards or Insurance Proceeds lawfully or equitably payable in
connection with the Property, and Lender shall be reimbursed for any reasonable
expenses incurred in connection therewith (including reasonable attorneys’ fees
and disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender in case of Casualty or Condemnation affecting the Property or
any part thereof) out of such Award or Insurance Proceeds.

 

5.1.8 Further Assurances.

 

Borrower shall, at Borrower’s sole cost and expense:

 

(a) furnish to Lender all instruments, documents, boundary surveys, footing or
foundation surveys, certificates, plans and specifications, appraisals, title
and other insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished by Borrower
pursuant to the terms of the Loan Documents or reasonably requested by Lender in
connection therewith;

 

(b) execute and deliver to Lender such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary or desirable,
to evidence, preserve and/or protect the collateral at any time securing or
intended to secure the obligations of Borrower under the Loan Documents, as
Lender may reasonably require including, without limitation, the authorization
of Lender to execute and/or the execution by Borrower of UCC financing
statements and the execution and delivery of all such writings necessary to
transfer any liquor licenses into the name of Lender or its designee after the
occurrence and continuance of any Event of Default; and

 

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(c) do and execute all and such further lawful and reasonable acts, conveyances
and assurances for the better and more effective carrying out of the intents and
purposes of this Agreement and the other Loan Documents, as Lender shall
reasonably require from time to time.

 

5.1.9 Mortgage and Intangible Taxes.

 

Borrower shall pay all State, county and municipal recording, mortgage,
intangible, and all other taxes imposed upon the execution and recordation of
the Security Instrument and/or upon the execution and delivery of the Note.

 

5.1.10 Financial Reporting.

 

(a) Borrower will keep and maintain or will cause to be kept and maintained on a
Fiscal Year basis, in accordance with GAAP (or such other accounting basis
reasonably acceptable to Lender), proper and accurate books, records and
accounts reflecting all of the financial affairs of Borrower and all items of
income and expense in connection with the operation of the Property. Lender
shall have the right from time to time at all times during normal business hours
upon reasonable notice to examine such books, records and accounts at the office
of Borrower, Operating Tenant and/or Manager or any other Person maintaining
such books, records and accounts and to make such copies or extracts thereof as
Lender shall desire. After the occurrence and during the continuance of an Event
of Default, Borrower shall pay any costs and expenses incurred by Lender to
examine Borrower’s accounting records with respect to the Property, as Lender
shall determine to be necessary or appropriate in the protection of Lender’s
interest. To the extent that any of the items described below in this
Section 5.1.10 are prepared by the Operating Tenant rather than by Borrower,
Borrower agrees to cause Operating Tenant to deliver such items to Lender in the
form and within the time periods set forth below.

 

(b) Borrower will furnish to Lender annually, within one hundred twenty
(120) days following the end of each Fiscal Year, a complete copy of Borrower’s
annual financial statements audited by an Approved Accountant in accordance with
GAAP (or such other accounting basis acceptable to Lender) covering the Property
for such Fiscal Year and containing statements of profit and loss for Borrower
and the Property (including the income and expenses maintained by the Operating
Tenant and adjusted for real estate taxes, insurance and other fixed charges,
through net operating income) and lease payment amounts and a balance sheet for
Borrower. Such statements shall set forth the financial condition and the
results of operations for the Property for such Fiscal Year, and shall include,
but not be limited to, amounts representing annual Net Cash Flow, Net Operating
Income, Gross Income from Operations and Operating Expenses and (including the
income and expenses maintained by the Operating Tenant and adjusted for real
estate taxes, insurance and other fixed charges, through net operating income)
and lease payment amounts. Borrower’s annual financial statements shall be
accompanied by

 

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(i) a comparison of the budgeted income and expenses and the actual income and
expenses for the prior Fiscal Year, (ii) a certificate executed by a Responsible
Officer or other appropriate officer of Borrower or Principal, as applicable,
stating that each such annual financial statement presents fairly the financial
condition and the results of operations of Borrower and the Property being
reported upon and has been prepared in accordance with GAAP, (iii) an opinion of
an Approved Accountant reasonably acceptable to Lender, (iv) a rent roll, (v) an
annual occupancy report for such year, including the average daily room rate for
such year; and (vi) a schedule audited by such Approved Accountant reconciling
Net Operating Income to Net Cash Flow (the “Net Cash Flow Schedule”), which
shall itemize all adjustments made to Net Operating Income to arrive at Net Cash
Flow deemed material by such independent certified public accountant. Together
with Borrower’s annual financial statements, Borrower shall furnish to Lender an
Officer’s Certificate certifying as of the date thereof whether there exists an
event or circumstance which, to Borrower’s knowledge, constitutes a Default or
Event of Default under the Loan Documents executed and delivered by, or
applicable to, Borrower, and if such Default or Event of Default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy the same.

 

(c) Borrower will furnish, or cause to be furnished, to Lender on or before
twenty (20) days after the end of each calendar month the following items,
accompanied by a certificate of a Responsible Officer or other appropriate
officer of Borrower or Principal, as applicable, stating that such items are
true, correct, accurate, and complete and fairly present the financial condition
and results of the operations of Borrower and the Property (subject to normal
year-end adjustments): (i) a report of occupancy for the subject month including
an average daily room rate, and any and all franchise inspection reports
received by Borrower or Operating Tenant during the subject month accompanied by
an Officer’s Certificate with respect thereto; (ii) monthly and year-to-date
operating statements (including Capital Expenditures) prepared for each calendar
month, noting Net Operating Income, Gross Income from Operations, and Operating
Expenses (not including any contributions to the Replacement Reserve Fund),
(including the income and expenses maintained by the Operating Tenant and
adjusted for real estate taxes, insurance and other fixed charges, through net
operating income) and lease payment amounts and other information necessary and
sufficient to fairly represent the financial position and results of operation
of the Property during such calendar month, and containing a comparison of
budgeted income and expenses and the actual income and expenses together with a
detailed explanation of any variances of (A) five percent (5%) or more between
budgeted and actual amounts for such periods on an aggregate basis; (B) ten
percent (10%) or more between budgeted and actual amounts for such periods with
respect to each line item; and (C) five percent (5%) or more between projected
and actual Gross Income from Operations for such periods on an aggregate basis
all in form satisfactory to Lender but only to the extent requested by Lender;
and (iii) a Net Cash Flow Schedule. In addition, such certificate shall also be
accompanied by a certificate of a Responsible Officer or other appropriate
officer of Borrower or Principal of Borrower stating that the representations
and warranties of Borrower set forth in Section 4.1.35 are true and correct as
of the date of such certificate and that there are no trade payables outstanding
for more than sixty (60) days.

 

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(d) For the partial year period commencing on the date hereof, and for each
Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget for the
Property not later than sixty (60) days prior to the commencement of such period
or Fiscal Year in form reasonably satisfactory to Lender, and shall be subject
to Lender’s written approval, such approval not to be unreasonably withheld,
notwithstanding any limitation in the Operating Lease on Borrower’s right to
approve the Operating Tenant’s operating budget (each such Annual Budget after
it has been approved in writing by Lender shall be hereinafter referred to as an
“Approved Annual Budget”). The Annual Budget defined in and required pursuant to
Section 17.3 of the Operating Lease shall satisfy the form of the required
Annual Budget. If Lender does not advise Borrower of any objections to the
proposed Annual Budget within twenty (20) Business Days after receipt thereof,
such proposed Annual Budget shall be deemed approved. In the event that Lender
objects to a proposed Annual Budget submitted by Borrower, Lender shall advise
Borrower of such objections within twenty (20) Business Days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower and Operating Tenant shall promptly revise such Annual
Budget and resubmit the same to Lender; Lender shall advise Borrower of any
objections to such revised Annual Budget within ten (10) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower and Operating Tenant shall promptly revise the same in
accordance with the process described in this subsection until Lender approves
the Annual Budget. Until such time that Lender approves or has been deemed to
approve a proposed Annual Budget, the most recently Approved Annual Budget shall
apply; provided that, such Approved Annual Budget shall be adjusted to reflect
actual increases in Taxes, Insurance Premiums and utilities expenses.

 

(e) Borrower shall furnish to Lender, within ten (10) Business Days after
request such further detailed information with respect to the operation of the
Property and the financial affairs of Borrower, Operating Tenant, the REIT, the
Operating Partnership or the Manager as may be reasonably requested by Lender,
including, without limitation, an annual operating budget for the Property.

 

(f) Borrower shall cause Operating Tenant to have Manager simultaneously deliver
to Lender all financial statements and reports required to be delivered to
Operating Tenant by Manager pursuant to the Management Agreement.

 

(g) Borrower shall promptly send to Lender, and cause the Operating Tenant to
promptly send to Lender, all Quality Assurance Reports or other reports of
inspection delivered by Franchisor.

 

(h) Any reports, statements or other information required to be delivered under
this Agreement shall be delivered (i) in paper form, (ii) on a compact disk or a
diskette, and (iii) if requested by Lender and within the capabilities of
Borrower’s data systems without change or modification thereto, in electronic
form and prepared using a Microsoft Word for Windows or WordPerfect for Windows
files (which files may be prepared using a spreadsheet program and saved as word
processing files).

 

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(i) Borrower agrees that Lender may forward to each purchaser, transferee,
assignee, servicer, participant, Co-Lender or investor in all or any portion of
the Loan or any Securities (collectively, the “Investor”) or any Rating Agency
rating such participations and/or Securities and each prospective Investor, and
any organization maintaining databases on the underwriting and performance of
commercial mortgage loans, all documents and information which Lender now has or
may hereafter acquire relating to the Debt and to Borrower, any Guarantor, and
the Property, whether furnished by Borrower, any Guarantor, or otherwise, as
Lender determines necessary or desirable. Borrower irrevocably waives any and
all rights it may have under any Applicable Laws to prohibit such disclosure,
including, but not limited, to any right of privacy.

 

5.1.11 Business and Operations.

 

Borrower will continue to engage in the businesses presently conducted by it as
and to the extent the same are necessary for the ownership, maintenance,
management and operation of the Property. Borrower will remain in good standing
under the laws of each jurisdiction to the extent required for the ownership,
maintenance, management and operation of the Property.

 

5.1.12 Costs of Enforcement.

 

In the event (a) that the Security Instrument encumbering the Property is
foreclosed in whole or in part or that the Security Instrument is put into the
hands of an attorney for collection, suit, action or foreclosure, (b) of the
foreclosure of any mortgage prior to or subsequent to the Security Instrument
encumbering the Property in which proceeding Lender is made a party, or (c) of
the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors,
Borrower, its successors or assigns, shall be chargeable with and agrees to pay
all costs of collection and defense, including reasonable attorneys’ fees and
costs, incurred by Lender or Borrower in connection therewith and in connection
with any appellate proceeding or post-judgment action involved therein, together
with all required service or use taxes.

 

5.1.13 Estoppel Statement.

 

(a) After request by Lender, Borrower shall within ten (10) Business Days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the unpaid
principal amount of the Note, (iii) the Applicable Interest Rate of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, and (vi) that the Note, this
Agreement, the Security Instrument and the other Loan Documents are valid, legal
and binding obligations and have not been modified or if modified, giving
particulars of such modification.

 

(b) Borrower shall deliver to Lender upon request, (to be made no more
frequently than once in any consecutive twelve month period, unless such request
is made in connection with a Securitization or a Syndication) tenant estoppel
certificates from each tenant under a Major Lease at the Property in form and
substance reasonably satisfactory to Lender.

 

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(c) Borrower shall, promptly upon request of Lender (to be made no more
frequently than once in any consecutive twelve month period, unless such request
is made in connection with a Securitization or a Syndication) use commercially
reasonable efforts to deliver an estoppel certificate from Franchisor stating
that (i) the Franchise Agreement is in full force and effect and has not been
modified, amended or assigned, (ii) neither Franchisor nor Borrower nor
Operating Tenant is in default under any of the material terms, covenants or
provisions of the Franchise Agreement and Franchisor knows of no event which,
but for the passage of time or the giving of notice or both, would constitute an
event of default under the Franchise Agreement, (iii) neither Franchisor nor
Borrower nor Operating Tenant has commenced any action or given or received any
notice for the purpose of terminating the Franchise Agreement and (iv) all sums
due and payable to Franchisor under the Franchise Agreement have been paid in
full.

 

(d) Borrower shall, promptly upon request of Lender (to be made no more
frequently than once in any consecutive twelve month period, unless such request
is made in connection with a Securitization or a Syndication), deliver an
estoppel certificate from Operating Tenant stating that (i) the Operating Lease
is in full force and effect and has not been modified, amended or assigned (or
listing the modifications, amendments or assignments, if any), (ii) neither
Operating Tenant nor Borrower is in default under any of the material terms,
covenants or provisions of the Operating Lease and Operating Tenant knows of no
event which, but for the passage of time or the giving of notice or both, would
constitute an event of default under the Operating Lease, (iii) neither
Operating Tenant nor Borrower has commenced any action or given or received any
notice for the purpose of terminating the Operating Lease and (iv) all sums due
and payable to Operating Tenant under the Operating Lease has been paid in full.

 

(e) Borrower shall, promptly upon request of Lender (to be made no more
frequently than once in any consecutive twelve month period, unless such request
is made in connection with a Securitization or a Syndication), deliver an
estoppel certificate from Manager stating that (i) the Management Agreement is
in full force and effect and has not been modified, amended or assigned (or
listing the modifications, amendments or assignments, if any), (ii) neither
Manager nor Borrower nor Operating Tenant, as the case may be, is in default
under any of the material terms, covenants or provisions of the Management
Agreement and Manager knows of no event which, but for the passage of time or
the giving of notice or both, would constitute an event of default under the
Management Agreement, (iii) neither Manager nor Borrower nor Operating Tenant,
as the case may be, has commenced any action or given or received any notice for
the purpose of terminating the Management Agreement and (iv) all sums due and
payable to Manager under the Management Agreement has been paid in full.

 

5.1.14 Loan Proceeds.

 

Borrower shall use the proceeds of the Loan received by it on the Closing Date
only for the purposes set forth in Section 2.1.4.

 

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5.1.15 Performance by Borrower.

 

Borrower shall in a timely manner observe, perform and fulfill each and every
covenant, term and provision of each Loan Document executed and delivered by, or
applicable to, Borrower, and shall not enter into or otherwise suffer or permit
any amendment, waiver, supplement, termination or other modification of any Loan
Document executed and delivered by, or applicable to, Borrower without the prior
written consent of Lender.

 

5.1.16 Confirmation of Representations.

 

Borrower shall deliver, in connection with any Securitization or Syndication,
(a) one or more Officer’s Certificates certifying as to the accuracy of all
representations made by Borrower in the Loan Documents as of the date of the
closing of such Securitization or Syndication in all relevant jurisdictions, and
(b) certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Borrower and
Principal as of the date of the closing of such Securitization or Syndication.

 

5.1.17 Leasing Matters.

 

(a) With respect to the Property, Borrower or Operating Tenant may enter into a
proposed Lease (including the renewal or extension of an existing Lease, other
than an Operating Lease, (a “Renewal Lease”)) without the prior written consent
of Lender, provided that if such proposed Lease or Renewal Lease is a Major
Lease, such Major Lease (i) provides for rental rates and terms comparable to
existing local market rates and terms (taking into account the type and quality
of the tenant) as of the date such Major Lease is executed by Borrower (unless,
in the case of a Renewal Lease, the rent payable during such renewal, or a
formula or other method to compute such rent, is provided for in the original
Lease), (ii) is an arms-length transaction with a bona fide, independent third
party tenant, (iii) does not have a material adverse effect on the value or
quality of the Property, and (iv) is subject and subordinate to the Security
Instrument and the lessee thereunder agrees to attorn to Lender. All proposed
Major Leases which do not satisfy the requirements set forth in this
Section 5.1.17(a) shall be subject to the prior approval of Lender, which
approval shall not be unreasonably withheld. At Lender’s request, Borrower and
Operating Tenant, as applicable, shall promptly deliver to Lender copies of all
Major Leases which are entered into pursuant to this Subsection together with
Borrower’s certification that it has satisfied all of the conditions of this
Section.

 

(b) Borrower and Operating Tenant (i) shall observe and perform all the material
obligations imposed upon the lessor under the Major Leases and shall not do or
permit to be done anything to impair the value of any of the Major Leases as
security for the Debt; (ii) shall promptly send copies to Lender of all notices
of default or other material matters which Borrower shall send or receive with
respect to the Major Leases; (iii) shall enforce all of the material terms,
covenants and conditions contained in the Major Leases upon the part of the
tenant thereunder to be observed or performed (except for termination of a Major
Lease which shall require Lender’s prior written approval); (iv) shall not
collect any of the Rents more than one (1) month in advance (except security
deposits shall not be deemed Rents collected in advance); (v) shall not execute

 

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any other assignment of the lessor’s interest in any of the Major Leases or the
Rents; and (vi) shall not consent to any assignment of or subletting under any
Major Leases not in accordance with their terms, without the prior written
consent of Lender.

 

(c) Borrower and Operating Tenant may, without the consent of Lender, amend,
modify or waive the provisions of any Lease or terminate, reduce rents under,
accept a surrender of space under, or shorten the term of, any Lease (other than
the Operating Lease) (including any guaranty, letter of credit or other credit
support with respect thereto) provided that such Lease is not a Major Lease and
that such action (taking into account, in the case of a termination, reduction
in rent, surrender of space or shortening of term, the planned alternative use
of the affected space) does not have a material adverse effect on the value of
the Property taken as a whole, and provided that such Lease, as amended,
modified or waived, is otherwise in compliance with the requirements of this
Agreement and any lease subordination agreement binding upon Lender with respect
to such Lease. A termination of a Lease (other than a Major Lease) with a tenant
who is in default beyond applicable notice and grace periods shall not be
considered an action which has a material adverse effect on the value of the
Property taken as a whole. Any amendment, modification, waiver, termination,
rent reduction, space surrender or term shortening which does not satisfy the
requirements set forth in this Subsection shall be subject to the prior written
approval of Lender, which approval shall not be unreasonably withheld and its
counsel, at Borrower’s expense. At Lender’s request, Borrower and Operating
Tenant, as applicable, shall promptly deliver to Lender copies of all Leases,
amendments, modifications and waivers which are entered into pursuant to this
Section 5.1.17(c) together with Borrower’s certification that it has satisfied
all of the conditions of this Section 5.1.17(c).

 

(d) Notwithstanding anything contained herein to the contrary, with respect to
the Property, neither Borrower nor Operating Tenant shall, without the prior
written consent of Lender, which consent shall not be unreasonably withheld,
enter into, renew, extend, amend, modify, waive any provisions of, terminate,
reduce rents under, accept a surrender of space under, or shorten the term of,
any Major Lease or any instrument guaranteeing or providing credit support for
any Major Lease.

 

5.1.18 Management Agreement.

 

(a) The Improvements on the Property are operated under the terms and conditions
of the Management Agreement. In no event shall the base management fees under
the Management Agreement exceed three percent (3%) of the gross income derived
from the Property and any incentive management fees shall not accrue. All fees
(base, incentive, termination or otherwise) due under the Management Agreement
must be subordinate in lien and payment to the Security Instrument and this
Agreement (other than base management fees not in excess of three percent
(3%) of the gross income derived from the Property). Borrower shall, or shall
cause the Operating Tenant to (i) diligently perform and observe all of the
material terms, covenants and conditions of the Management Agreement, on the
part of Borrower or Operating Tenant to be performed and observed to the end
that all things shall be done which are necessary to keep unimpaired the rights
of Borrower and Operating Tenant under the Management

 

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Agreement and (ii) promptly notify Lender of the giving of any notice by Manager
to Borrower or Operating Tenant of any default by Borrower or Operating Tenant
in the performance or observance of any of the terms, covenants or conditions of
the Management Agreement on the part of Borrower or Operating Tenant to be
performed and observed and deliver to Lender a true copy of each such notice.
Neither Borrower nor Operating Tenant shall surrender the Management Agreement,
consent to the assignment by the Manager of its interest under the Management
Agreement, or terminate or cancel the Management Agreement, or modify, change,
supplement, alter or amend the Management Agreement, in any material respect,
either orally or in writing. Borrower and Operating Tenant hereby assign to
Lender as further security for the payment of the Debt and for the performance
and observance of the terms, covenants and conditions of this Agreement, all the
rights, privileges and prerogatives of Borrower and Operating Tenant to
surrender the Management Agreement, or to terminate, cancel, modify, change,
supplement, alter or amend the Management Agreement, in any material respect,
and any such surrender of the Management Agreement, or termination,
cancellation, modification, change, supplement, alteration or amendment of the
Management Agreement, without the prior consent of Lender shall be void and of
no force and effect. Notwithstanding the foregoing, Borrower or Operating Tenant
may terminate the Management Agreement provided that Borrower or Operating
Tenant simultaneously enters into a Replacement Management Agreement with a
Qualified Manager. If Borrower or Operating Tenant shall default in the
performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Borrower or Operating Tenant to be performed
or observed, then, without limiting the generality of the other provisions of
this Agreement, and without waiving or releasing Borrower from any of its
obligations hereunder, Lender shall have the right, but shall be under no
obligation, upon five (5) days prior notice to Borrower, to pay any sums and to
perform any act or take any action as may be appropriate to cause all the terms,
covenants and conditions of the Management Agreement on the part of Borrower or
Operating Tenant to be performed or observed to be promptly performed or
observed on behalf of Borrower or Operating Tenant, to the end that the rights
of Borrower or Operating Tenant in, to and under the Management Agreement shall
be kept unimpaired and free from default. Lender and any Person designated by
Lender shall have, and are hereby granted, the right to enter upon the Property
at any time and from time to time for the purpose of taking any such action. If
the Manager shall deliver to Lender a copy of any notice sent to Borrower or
Operating Tenant of default under the Management Agreement, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender in good faith, in reliance thereon. Neither Borrower nor Operating
Tenant shall, and shall not permit the Manager to, sub-contract any or all of
its management responsibilities under the Management Agreement to a third-party
without the prior written consent of Lender, which consent shall not be
unreasonably withheld. Borrower and Operating Tenant shall, from time to time,
obtain from the Manager such certificates of estoppel with respect to compliance
by Borrower and Operating Tenant with the terms of the Management Agreement as
may be requested by Lender (which requests shall be made no more frequently than
once in any consecutive twelve month period unless such request is made in
connection with a Securitization). Borrower and Operating Tenant shall exercise
each individual option, if any, to extend or renew the

 

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term of the Management Agreement upon demand by Lender made at any time within
or prior to the period within which any such option may be exercised, and
Borrower and Operating Tenant hereby expressly authorizes and appoints Lender
its attorney-in-fact to exercise any such option in the name of and upon behalf
of Borrower and Operating Tenant, which power of attorney shall be irrevocable
and shall be deemed to be coupled with an interest. Any sums expended by Lender
pursuant to this paragraph (i) shall bear interest at the Default Rate from the
date such cost is incurred to the date of payment to Lender, (ii) shall be
deemed to constitute a portion of the Debt, (iii) shall be secured by the lien
of the Security Instrument and the other Loan Documents and (iv) shall be
immediately due and payable upon demand by Lender therefor. Borrower represents
that Interstate Management Company, L.L.C., the current manager of the Property,
is not an Affiliate of, nor Affiliated with, Borrower or Guarantor.

 

(b) Without limitation of the foregoing, Borrower, upon the request of Lender,
shall cause the Operating Tenant to terminate the Management Agreement and
replace the Manager, without penalty or fee, if at any time during the Loan:
(a) the Manager shall become insolvent or a debtor in any bankruptcy or
insolvency proceeding, (b) there exists an Event of Default, (c) there exists a
material default by Manager under the Management Agreement. At such time as the
Manager may be removed, a Qualified Manager shall assume management of the
Property pursuant to a Replacement Management Agreement.

 

5.1.19 Environmental Covenants.

 

(a) Borrower covenants and agrees that so long as the Loan is outstanding
(i) Borrower’s uses and operations on or of the Property shall be in compliance
with applicable Environmental Laws and permits issued pursuant thereto in all
material respects; (ii) there shall be no Releases of Hazardous Materials by
Borrower in, on, under or from the Property in violation of Environmental Law;
(iii) Borrower shall not use, generate, treat, store, dispose or transport
Hazardous Materials in, on, or under the Property, except those that are both
(A) in material compliance with all Environmental Laws and with permits issued
pursuant thereto, if and to the extent required, and (B) (1) in amounts not in
excess of that necessary to operate the Property (including each tenant’s
respective business at the Property), (2) fully disclosed in the Environmental
Reports or otherwise disclosed to and approved by Lender in writing or (3) held
by a tenant for sale to the public in its ordinary course of business;
(iv) Borrower shall keep the Property free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other Person (the “Environmental Liens”), subject
to the provisions of Section 5.2.1 hereof; (v) Borrower shall, at its sole cost
and expense, fully and expeditiously cooperate in all activities pursuant to
paragraph (b) below, including but not limited to providing access to the
Property and all relevant information in its possession, custody or control and
making knowledgeable persons available for interviews at reasonable times;
(vi) Borrower shall, at its sole cost and expense, comply with all reasonable
written requests of Lender to (A) reasonably effectuate remediation of any
Hazardous Materials in, on, under or from the Property, and (B) comply with
Environmental Law; (vii) Borrower shall take all commercially reasonable
measures to require that each tenant complies in all material respects with
provisions (i) through (vi) of this Section 5.1.19(a);

 

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(b) Borrower covenants and agrees that so long as the Loan is outstanding,
Borrower shall promptly notify Lender in writing after it has become aware of:
(i) any presence or Release or threatened Releases of Hazardous Materials in,
on, under, from or migrating towards the Property; (ii) any non-compliance with
any Environmental Laws related in any way to the Property; (iii) any actual or
potential Environmental Lien; (iv) any required or proposed remediation of
environmental conditions relating to the Property; and (v) any written or oral
notice or other communication of which Borrower becomes aware from any source
whatsoever (including but not limited to a Governmental Authority) relating in
any way to Borrower’s liability for any Hazardous Materials in material
violation of any Environmental Laws.

 

(c) Lender and its designated agents or representatives, including but not
limited to any environmental consultant, and any receiver appointed by any court
of competent jurisdiction, shall have the right, but not the obligation, to
enter upon the Property at all reasonable times to assess any and all aspects of
the environmental condition of the Property and its use. If Lender reasonably
believes that Borrower has breached any environmental representation, warranty
or covenant contained in Sections 4.1.39 or 5.1.19(a) and (b) hereof, Lender may
request that Borrower undertake such tests and investigations of the
environmental condition of the Property (or portions thereof) that are
reasonably necessary under the circumstances to assess the alleged breach of the
representation, warranty or covenant. Any such tests or investigations shall be
conducted by a qualified environmental engineer or consultant, reasonably
acceptable to Lender, and if determined by the environmental engineer or
consultant to be reasonably necessary, may include invasive sampling (such as
any sampling of the soil, groundwater, surface water, air or building
materials). Borrower shall provide Lender with a copy of any reports of the
results of such tests and investigations and Lender and other Indemnified
Parties shall be entitled to rely on such reports. If an Event of Default has
occurred and is continuing, or if Borrower has not diligently pursued such tests
and investigations as are reasonably requested by Lender pursuant to this
Section 5.1.19(c), then Lender may hire its own environmental engineer or
consultant, at Borrower’s expense, to conduct such tests and investigations.
Lender shall make all reasonable efforts to conduct any such tests and
investigations so as to avoid interference with the operation of the Property.

 

(d) If counsel to Borrower reasonably determines that providing Lender with a
document otherwise required to be provided pursuant to this Section 5.1.19 (or
any other provision of this Agreement or any other Loan Document relating to
environmental matters) would jeopardize an applicable attorney-client or work
product privilege pertaining to such document, the Borrower shall not be
obligated to provide such document to Lender but shall provide Lender with a
notice identifying the author and recipient of such document and generally
describing the content of the documents. Upon request of Lender, Borrower shall
take all reasonable steps necessary to provide Lender with the factual
information contained in any such privileged documents. Nothing contained in
this Section 5.1.19(d) shall in any way limit lender’s rights under
Section 5.1.19(c) hereof.

 

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5.1.20 Alterations.

 

Borrower shall obtain Lender’s prior written consent to any alterations to any
Improvements, which consent shall not be unreasonably withheld except with
respect to alterations that may have a material adverse effect on Borrower’s
financial condition, the value of the Property or the Net Operating Income.
Notwithstanding the foregoing, Lender’s consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower’s financial condition, the value of the Property or the Net Operating
Income, provided that such alterations (a) are made in connection with work
performed pursuant to an Approved Capital Budget for the Property or (b) do not
adversely affect any structural component of any Improvements, any utility or
HVAC system contained in any Improvements or the exterior of any building
constituting a part of any Improvements and either (i) the cost of which is less
than $100,000.00, or (ii) are alterations performed in connection with the
Restoration of the Property in accordance with the terms and provisions of this
Agreement. If the total unpaid amounts with respect to alterations to the
Improvements at the Property (other than such amounts to be paid or reimbursed
by tenants under the Leases) shall at any time exceed $750,000.00 (the
“Alteration Threshold Amount”), Borrower shall promptly deliver to Lender as
security for the payment of such amounts and as additional security for
Borrower’s obligations under the Loan Documents any of the following: (A) cash,
(B) U.S. Obligations, (C) other securities having a rating acceptable to Lender
and for which Lender has received a Rating Confirmation, or (D) a completion
bond or letter of credit issued by a financial institution having a rating by
S&P of not less than A-1+ if the term of such bond or letter of credit is no
longer than three (3) months or, if such term is in excess of three (3) months,
issued by a financial institution having a rating that is acceptable to Lender
and for which Lender has received a Rating Confirmation. Such security shall be
in an amount equal to the excess of the total unpaid amounts with respect to
alterations to the Improvements on the Property (other than such amounts to be
paid or reimbursed by tenants under the Leases) over the Alteration Threshold
Amount and applied from time to time at the option of Lender to pay for such
alterations or to terminate any of the alterations and restore the Property to
the extent necessary to prevent any material adverse effect on the value of the
Property.

 

5.1.21 Franchise Agreement.

 

The Improvements on the Property shall be operated under the terms and
conditions of the Franchise Agreement. Borrower shall, or shall cause Operating
Tenant to (i) pay all sums required to be paid by Borrower under the Franchise
Agreement, (ii) diligently perform, observe and enforce all of the material
terms, covenants and conditions of the Franchise Agreement on the part of
Borrower or Operating Tenant to be performed, observed and enforced to the end
that all things shall be done which are necessary to keep unimpaired the rights
of Borrower and Operating Tenant under the Franchise Agreement, (iii) promptly
notify Lender of the giving of any notice to Borrower or Operating Tenant of any
default by Borrower or Operating Tenant in the performance or observance of any
of the terms, covenants or conditions of the Franchise Agreement on the part of
Borrower or Operating Tenant to be performed and observed and deliver to Lender
a true copy of each such notice, and (iv) promptly deliver to Lender a copy of

 

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each financial statement, business plan, capital expenditure plan, material
notice, report and estimate received by it under the Franchise Agreement.
Neither Borrower nor Operating Tenant shall, without the prior consent of
Lender, surrender the Franchise Agreement or terminate or cancel the Franchise
Agreement or modify, change, supplement, alter or amend the Franchise Agreement,
in any material respect, either orally or in writing, and Borrower hereby
assigns to Lender as further security for the payment of the Debt and for the
performance and observance of the terms, covenants and conditions of this
Agreement, all the rights, privileges and prerogatives of Borrower and Operating
Tenant to surrender the Franchise Agreement or to terminate, cancel, modify,
change, supplement, alter or amend the Franchise Agreement in any material
respect, and any such surrender of the Franchise Agreement or termination,
cancellation, modification, change, supplement, alteration or amendment of the
Franchise Agreement without the prior consent of Lender shall be void and of no
force and effect. Notwithstanding the foregoing, Borrower or Operating Tenant
may terminate the Franchise Agreement provided that Borrower simultaneously
enters into a Replacement Franchise Agreement with a Qualified Franchisor. If
Borrower or Operating Tenant shall default in the performance or observance of
any material term, covenant or condition of the Franchise Agreement on the part
of Borrower or Operating Tenant to be performed or observed, then, without
limiting the generality of the other provisions of this Agreement, and without
waiving or releasing Borrower from any of its obligations hereunder, Lender
shall have the right, but shall be under no obligation, to pay any sums and to
perform any act or take any action as may be appropriate to cause all the terms,
covenants and conditions of the Franchise Agreement on the part of Borrower or
Operating Tenant to be performed or observed to be promptly performed or
observed on behalf of Borrower or Operating Tenant, to the end that the rights
of Borrower and Operating Tenant in, to and under the Franchise Agreement shall
be kept unimpaired and free from default. Lender and any Person designated by
Lender shall have, and are hereby granted, the right to enter upon the Property
at any time and from time to time for the purpose of taking any such action. If
Franchisor shall deliver to Lender a copy of any notice sent to Borrower or
Operating Tenant of default under the Franchise Agreement, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender in good faith, in reliance thereon. Borrower shall, or shall cause
Operating Tenant, from time to time, to use its commercially reasonable efforts
to obtain from Franchisor such certificates of estoppel with respect to
compliance by Borrower and Operating Tenant with the terms of the Franchise
Agreement as may be requested by Lender. Borrower and Operating Tenant shall
exercise each individual option, if any, to extend or renew the term of the
Franchise Agreement upon demand by Lender made at any time prior to or within
the period in which any such option may be exercised, and Borrower hereby
expressly authorizes and appoints Lender as its attorney-in-fact to exercise any
such option in the name of and upon behalf of Borrower or Operating Tenant,
which power of attorney shall be irrevocable and shall be deemed to be coupled
with an interest, provided, however that Borrower shall not be required to
comply with such request of Lender so long as Borrower is entering into a
Replacement Franchise Agreement, the term of which shall begin upon the
expiration of the Franchise Agreement currently in effect at the time of
Lender’s request. Any sums expended by Lender pursuant to this paragraph shall
bear interest at the Default Rate from the date such cost is incurred to the
date of payment to Lender, shall be deemed to constitute a portion of the Debt,
shall be secured by the lien of the Security Instrument and the other Loan
Documents and shall be immediately due and payable upon demand by Lender
therefor.

 

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5.1.22 Intentionally Deleted.

 

5.1.23 OFAC.

 

At all times throughout the term of the Loan, Borrower, Guarantor and their
respective Affiliates shall be in compliance with all applicable orders, rules,
regulations and recommendations of The Office of Foreign Assets Control of the
U.S. Department of the Treasury.

 

5.1.24 Operating Lease.

 

(a) Lender acknowledges that Borrower has leased the Property and the operation
of the Property to the Operating Tenant pursuant to the Operating Lease. If
Borrower shall default in the performance or observance of any material term,
covenant or condition of the Operating Lease on the part of Borrower to be
performed or observed, then, without limiting the generality of the other
provisions of this Agreement, and without waiving or releasing Borrower from any
of its obligations hereunder, Lender shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take any action as may be
appropriate to cause all the terms, covenants and conditions of the Operating
Lease on the part of Borrower to be performed or observed to be promptly
performed or observed on behalf of Operating Tenant, to the end that the rights
of Borrower in, to and under the Operating Lease shall be kept unimpaired and
free from default. Lender and any person designated by Lender shall have, and
are hereby granted, the right to enter upon the Property at any time and from
time to time upon prior notice to Borrower and during business hours or such
other reasonable times only, for the purpose of taking any such action. If the
Operating Tenant under the Operating Lease shall deliver to Lender a copy of any
notice sent to Borrower of default under the Operating Lease, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender in good faith, in reliance thereon.

 

(b) Borrower and Operating Tenant hereby agree that any requirement of consent
on behalf of Borrower (as lessor) under the Operating Lease with respect to any
proposed action thereunder shall also be subject to the prior written consent of
Lender.

 

(c) Borrower shall promptly notify Lender of the giving of any notice to
Operating Tenant of any material default by Operating Tenant in the performance
or observance of any of the terms, covenants or conditions of the Operating
Lease on the part of Operating Tenant to be performed and observed and deliver
to Lender a true copy of each such notice. In addition, notwithstanding anything
contained herein to the contrary, Borrower shall not, without the prior written
consent of Lender and, after the occurrence of a Securitization, delivery of a
Rating Confirmation, (i) amend, modify or waive any provisions of the Operating
Lease other than amendments, modifications, or waivers of ministerial terms that
do not modify, amend or waive any material economic terms or any other material
terms of the Operating Lease, (ii) exercise its right to consent to any
assignment of the Operating Lease or sublet of the Property, except as set forth
in Section 5.1.17 hereof, or (iii) terminate, permit the termination of, or
accept surrender of all or any portion of the space demised under the Operating
Lease other than (A)

 

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[intentionally deleted], or (B) a termination by Borrower due to a payment
default by the Operating Tenant under the Operating Lease. In the event that the
Operating Lease has been terminated as permitted in this Section 5.1.24(c),
Borrower shall not enter into any new operating lease (a “Replacement Operating
Lease”) unless (1) the new operating tenant is a single purpose bankruptcy
remote entity satisfactory to Lender in its sole discretion, (2) the Property is
managed by a Qualified Manager pursuant to the Management Agreement, (3) the
terms and conditions of the new operating lease are satisfactory to Lender in
all respects, and the rent payable thereunder is equal to at least the greater
of the projected annual rent payable under the Operating Lease for the twelve
(12) month period (A) commencing on the date hereof and (B) commencing on the
date on which the Operating Lease is terminated, (4) the new operating lease is
subordinate in all respects to the Lien of Security Instrument and the other
Loan Documents, without the benefit of non- disturbance, and the new operating
tenant enters into a subordination agreement reasonably satisfactory to Lender,
(5) the Franchise Agreement is in full force and effect, (6) Borrower delivers
such other certificates, opinions (including, without limitation, an Insolvency
Opinion (to the extent required hereunder) with respect to the new operating
tenant), documents and instruments relating to the new operating lease
reasonably required by Lender or the Rating Agencies, and all corporate and
other proceedings and all other documents (including, without limitation, all
documents referred to herein and not appearing as exhibits hereto) and all legal
matters in connection with the new operating lease and new operating tenant
shall be satisfactory in form and substance to Lender, and (7) after the
occurrence of a Securitization, delivery of a Rating Confirmation.

 

(d) Except as may be permitted under the Operating Lease without the consent of
Borrower, the Operating Tenant shall not assign, sublet, convey, mortgage,
pledge or otherwise encumber or transfer its leasehold interest in the Operating
Lease without the prior written consent of Lender and, after the occurrence of a
Securitization, the delivery of a Rating Confirmation. The Operating Partnership
shall not assign, sublet, convey, mortgage, pledge or otherwise encumber or
transfer its direct or indirect equity interest in the Operating Tenant.

 

5.1.25 Maintenance of Personal Property.

 

Except as otherwise provided in Section 22.2 of the Operating Lease with respect
to the right to sell Personal Property to the Operating Tenant, and subject to
the conditions set forth in Section 5.1.20 hereof, Borrower shall own, lease or
license Personal Property (other than the Inventory), and the Operating Tenant
or Manager shall own Inventory, adequate to maintain and operate the Property as
a hotel in accordance with the standards of this Agreement, the other Loan
Documents, the Operating Lease, the Management Agreement, Replacement Management
Agreement, the Franchise Agreement and any Replacement Franchise Agreement.
Neither Borrower, the Operating Tenant nor Manager shall lease, license,
encumber or enter into any other financing arrangements with respect to any of
the Personal Property or Inventory, as the case may be, other than as may
expressly be permitted hereunder or under the other Loan Documents.

 

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5.1.26 REIT Status.

 

The parties acknowledge that the REIT is a publicly traded corporation qualified
as a real estate investment trust under the Internal Revenue Code (a “Real
Estate Investment Trust”). Under the Internal Revenue Code rules and regulations
relating to Real Estate Investment Trusts (the “REIT Rules”) and under
Borrower’s organizational documents, Borrower may not take or omit to take any
action, or engage in any business or business transaction or relationship, that
would or could result in the REIT being disqualified from treatment as a Real
Estate Investment Trust. In order to comply with the REIT Rules and Borrower’s
organizational documents, Borrower has entered into an Operating Lease with the
Operating Tenant for the operation and maintenance of each of the Property.
Pursuant to such Operating Lease, Operating Tenant has the right to operate the
Property, and directly or indirectly collects all income from room rentals,
credit card receipts, restaurant bars, recreational facilities and from other
sources relating to the Property. Operating Tenant pays to Borrower rent as more
particularly described in the Operating Lease. The provisions of this Section
shall not be construed to limit the provisions of this Agreement or any other
Loan Document in any manner whatsoever.

 

5.1.27 O&M Program.

 

With respect to the Property listed on Schedule VII hereof, Borrower shall cause
each the Property to be tested for the presence of asbestos-containing materials
(“ACMs”) by an assessment firm acceptable to Lender in all respects and if such
assessment firm recommends remediation of any ACM present at the Property,
Borrower shall enter into a contract with a licensed industrial hygienist to
develop a fully documented O&M Program which Borrower shall submit within ninety
(90) days of the date hereof to Lender for its approval. Borrower further
covenants and agrees to implement and follow the terms and conditions of such
O&M Program during the term of the Loan, including any extension or renewal
thereof. Lender’s requirement that Borrower develop and comply with the O&M
Program shall not be deemed to constitute a waiver or modification of any of
Borrower’s covenants and agreements with respect to Hazardous Materials or
Environmental Laws.

 

Section 5.2 Negative Covenants.

 

From the date hereof until payment in full of the Debt or the earlier release of
the Liens of all Security Instrument encumbering the Property in accordance with
the terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following:

 

5.2.1 Liens.

 

Borrower shall not create, incur, assume or suffer to exist any Lien on any
portion of the Property or permit any such action to be taken, except for
Permitted Encumbrances. After prior written notice to Lender, Borrower, at its
own expense, may contest by appropriate legal proceedings, promptly initiated
and conducted in good faith and with due diligence, any Environmental Lien or
mechanics’, materialmen’s or contractors’ Lien and the amount or validity or
application in whole or in part of any amounts due to such mechanics,
materialmen or contractors, provided (i) no Event of Default has occurred and is
continuing, (ii) such proceeding shall not violate the provisions of any other
mortgage, deed of trust or deed to secure debt affecting the Property,
(iii) such proceeding shall be permitted under and be conducted in

 

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accordance with the provisions of the Operating Lease or of any other instrument
to which Borrower is subject and shall not constitute a default thereunder,
(iv) neither the Property nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, cancelled or lost as a result of
such proceeding, (v) Borrower shall have deposited with Lender adequate reserves
for the payment of such amounts, together with all interest and penalties
thereon, unless Borrower has paid all of such amounts under protest, and
(vi) Borrower shall have furnished the security as may be required in such
proceeding, to insure the payment of any amounts due, together with all interest
and penalties thereon. Lender may apply any such reserves held by Lender at any
time when the Property (or part thereof or interest therein) shall be in danger
of being sold, forfeited, terminated, cancelled or lost or there shall be an
imminent danger of the Lien of the Security Instrument being primed by any
related Lien.

 

5.2.2 Dissolution.

 

Borrower shall not (a) engage in any dissolution, liquidation or consolidation
or merger with or into any other business entity, (b) transfer, lease or sell,
in one transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower except to the extent
expressly permitted by the Loan Documents, (c) except as expressly permitted
under the Loan Documents, modify, amend, waive or terminate its organizational
documents or its qualification and good standing in any jurisdiction or
(d) cause the Principal to (i) dissolve, wind up or liquidate or take any
action, or omit to take an action, as a result of which the Principal would be
dissolved, wound up or liquidated in whole or in part, or (ii) except as
expressly permitted under the Loan Documents, amend, modify, waive or terminate
the certificate of incorporation, bylaws or similar organizational documents of
the Principal, in each case, without obtaining the prior written consent of
Lender.

 

5.2.3 Change In Business.

 

Borrower shall not enter into any line of business other than the ownership,
acquisition, development, operation, leasing and management of the Property
(including providing services (e.g. fitness center, spa facilities, or
restaurant) in connection therewith), or make any material change in the scope
or nature of its business objectives, purposes or operations or undertake or
participate in activities other than the continuance of its present business.

 

5.2.4 Debt Cancellation.

 

Borrower shall not cancel or otherwise forgive or release any material claim or
debt (other than termination of Leases in accordance herewith) owed to Borrower
by any Person, except for adequate consideration and in the ordinary course of
Borrower’s business.

 

5.2.5 Zoning.

 

Borrower shall not initiate or consent to any zoning reclassification of any
portion of the Property or seek any variance under any existing zoning ordinance
or use or permit the use of any portion of the Property in any manner that could
result in such use becoming a non-conforming use under any zoning ordinance or
any other Applicable Law, without the prior written consent of Lender.

 

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5.2.6 No Joint Assessment.

 

Borrower shall not suffer, permit or initiate the joint assessment of the
Property with (a) any other real property constituting a tax lot separate from
the Property, or (b) any portion of the Property which may be deemed to
constitute personal property, or any other procedure whereby the Lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Property.

 

5.2.7 Name, Identity, Structure, or Principal Place of Business.

 

Borrower shall not change its name, identity (including its trade name or
names), or principal place of business set forth in the introductory paragraph
of this Agreement, without, in each case, first giving Lender thirty (30) days
prior written notice. Borrower shall not change its corporate, partnership or
other structure, or the place of its organization as set forth in
Section 4.1.34, without, in each case, the consent of Lender, which consent
shall not be unreasonably withheld. Upon Lender’s request, Borrower shall
execute and deliver additional financing statements, security agreements and
other instruments which may be necessary to effectively evidence or perfect
Lender’s security interest in the Property as a result of such change of
principal place of business or place of organization.

 

5.2.8 ERISA.

 

(a) During the term of the Loan or of any obligation or right hereunder, neither
Borrower nor Operating Tenant shall be a Plan and none of the assets of Borrower
or Operating Tenant shall constitute Plan Assets.

 

(b) Borrower further covenants and agrees to deliver, and to cause Operating
Tenant to deliver, to Lender such certifications or other evidence from time to
time throughout the term of the Loan, as requested by Lender in its sole
discretion, and represents and covenants that (A) each Borrower and each
Operating Tenant is not and does not maintain an “employee benefit plan” as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a
“governmental plan” within the meaning of Section 3(32) of ERISA; (B) neither
Borrower nor Operating Tenant is subject to State statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(C) one or more of the following circumstances is true:

 

(i) Equity interests in Borrower and Operating Tenant are publicly offered
securities, within the meaning of 29 C.F.R. §2510.3 101(b)(2);

 

(ii) Less than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower and Operating Tenant are held by “benefit plan investors”
within the meaning of 29 C.F.R. §2510.3 101(f)(2); or

 

(iii) Borrower and Operating Tenant qualifies as an “operating company” or a
“real estate operating company” within the meaning of 29 C.F.R. §2510.3 101(c)
or (e).

 

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5.2.9 Affiliate Transactions.

 

Borrower shall not enter into, or be a party to, any transaction with an
Affiliate of Borrower, Principal or any of the partners of Borrower or Principal
except in the ordinary course of business and on terms no less favorable to
Borrower or such Affiliate than would be obtained in a comparable arm’s-length
transaction with an unrelated third party. Upon request of Lender, Borrower
shall provide Lender with a summary of the terms of, or copies of, such
agreements.

 

5.2.10 Transfers.

 

(a) Borrower shall not sell, convey, mortgage, grant, bargain, encumber, pledge,
assign, grant options with respect to, or otherwise transfer or dispose of
(directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) the Property or
any part thereof or any legal or beneficial interest therein or permit a Sale or
Pledge of an interest in any Restricted Party (collectively, a “Transfer”),
other than Permitted Encumbrances, Leases of space in the Improvements to
tenants in accordance with the provisions of Section 5.1.17 hereof, without
(i) the prior written consent of Lender and (ii) if a Securitization has
occurred, delivery to Lender of a Rating Confirmation.

 

(b) A Transfer shall include, but not be limited to: (i) an installment sales
agreement wherein Borrower agrees to sell the Property or any part thereof for a
price to be paid in installments; (ii) except as specifically permitted
hereunder, an agreement by Borrower leasing all or a substantial part of the
Property for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower’s right, title and interest in and to any Leases or any Rents; (iii) if
a Restricted Party is a corporation, any merger, consolidation or Sale or Pledge
of such corporation’s stock or the creation or issuance of new stock; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
partner or any profits or proceeds relating to such partnership interest, or the
Sale or Pledge of limited partnership interests or any profits or proceeds
relating to such limited partnership interests or the creation or issuance of
new limited partnership interests; (v) if a Restricted Party is a limited
liability company, any merger or consolidation or the change, removal,
resignation or addition of a managing member or non-member manager (or if no
managing member, any member) or the Sale or Pledge of the membership interest of
a managing member (or if no managing member, any member) or any profits or
proceeds relating to such membership interest, or the Sale or Pledge of
non-managing membership interests or the creation or issuance of new
non-managing membership interests; (vi) if a Restricted Party is a trust or
nominee trust, any merger, consolidation or the Sale or Pledge of the legal or
beneficial interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests; or (vii) the removal or the resignation of the
managing agent (including, without limitation, an Affiliated Manager) other than
in accordance with Section 5.1.18 hereof.

 

(c) Notwithstanding the provisions of Sections 5.2.10(a) and (b), the following
transfers shall not be deemed to be a Transfer: (i) a transfer by devise or
descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party or a Restricted Party itself; (ii) the Sale or
Pledge, in one or a series of

 

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transactions, of not more than forty-nine percent (49%) of the stock in a
Restricted Party; provided, however, no such transfers shall result in the
change of voting control in the Restricted Party, and as a condition to each
such transfer, Lender shall receive not less than thirty (30) days prior written
notice of such proposed transfer and the identity of the proposed transferee;
(iii) the Sale or Pledge, in one or a series of transactions, of not more than
forty-nine percent (49%) of the limited partnership interests or non-managing
membership interests (as the case may be) in a Restricted Party; provided,
however, as a condition to each such transfer, Lender shall receive not less
than thirty (30) days prior written notice of such proposed transfer;
(iv) [intentionally deleted]; and (v) the sale, transfer or issuance of shares
of stock in the REIT provided such shares of stock are listed on the New York
Stock Exchange or such other nationally recognized stock exchange and provided
the REIT complies with the provisions of Section 5.3 hereof.

 

(d) Notwithstanding anything to the contrary contained in this Section 5.2.10,
the REIT must continue to be the sole general partner of, and control, the
Operating Partnership and the Operating Partnership must continue to control
Borrower and own, directly or indirectly, at least a 100% interest in Borrower.

 

(e) Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon a Transfer in violation of this Section 5.2.10.
This provision shall apply to every Transfer regardless of whether voluntary or
not, or whether or not Lender has consented to any previous Transfer.
Notwithstanding anything to the contrary contained in this Section 5.2.10,
(a) no transfer (whether or not such transfer shall constitute a Transfer) shall
be made to any Prohibited Person, (b) in the event of any transfer (whether or
not such transfer shall constitute a Transfer, other than transfers of shares of
stock in the REIT, provided that such shares of stock are listed on the New York
Stock Exchange or such other nationally recognized stock exchange and provided
the REIT complies with the requirements of Section 5.3 hereof), results in any
Person and its Affiliates owning in excess of ten percent (10%) of the ownership
interest in a Restricted Party Borrower shall provide to Lender, not less than
thirty (30) days prior to such transfer, the name and identity of each proposed
transferee, together with the names of its controlling principals, the social
security number or employee identification number of such transferee and
controlling principals, and such transferee’s and controlling principal’s home
address or principal place of business, and home or business telephone number,
and (c) in the event any transfer (whether or not such transfer shall constitute
a Transfer), results in any Person and its Affiliates owning in excess of
forty-nine percent (49%) of the ownership interest in a Restricted Party,
Borrower shall, prior to such transfer, deliver an updated Insolvency Opinion
(to the extent an Insolvency Opinion had previously been issued) to Lender,
which opinion shall be in form, scope and substance acceptable in all respects
to Lender and the Rating Agencies.

 

(f) Notwithstanding the foregoing, Borrower shall have the right to transfer
Personal Property to the Operating Tenant pursuant to Section 22.2 of the
Operating Lease provided that (i) Borrower delivers to Lender an Officer’s
Certificate certifying that the FF&E Limitation has been exceeded, (ii) the
purchase price and value of the Personal Property transferred shall be the
minimum amount necessary to comply with the

 

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FF&E Limitation, (iii) the Operating Tenant shall confirm that the Personal
Property transferred to it is subject to the Operating Lease Security Agreement,
(iv) Borrower shall assign and pledge any FF&E Note and related security
agreement and security interest to Lender as additional security for the Debt
and Borrower shall take all action as may be necessary to effect and perfect
such assignment and security interest.

 

(g) Borrower may, without Lender’s consent, grant easements, restrictions,
covenants, reservations and rights of way in the ordinary course of business for
access, water and sewer lines, telephone and telegraph lines, electric lines or
other utilities or for other similar purposes or other purposes (which may
include amendments to existing reciprocal easement agreements), provided that no
such encumbrance or amendment set forth in this Section 5.2.10(g) shall
materially impair the utility, operation and use of the Property or otherwise
have a material adverse effect on the value of the Property or on the financial
condition or business of Borrower. In connection with any such grant permitted
pursuant to this Section 5.2.10(g), Lender shall execute and deliver any
instrument reasonably necessary or appropriate to subordinate the Lien of the
Security Instrument to such easements, restrictions, covenants, reservations and
rights of way or other similar grants upon receipt by Lender of: (a) twenty
(20) days prior written notice thereof; (b) a copy of the instrument or
instruments of such grant; (c) an Officer’s Certificate stating that such grant
does not materially impair the utility, operation and use of the Property or
have a material adverse effect on the value of the Property or the financial
condition or business of Borrower or the condition or ownership of the Property;
and (d) reimbursement of all of Lender’s reasonable out-of-pocket costs and
expenses incurred in connection with such grant.

 

(h) Notwithstanding the foregoing, Lender’s consent shall not be required for
the leasing of television sets, telephone equipment, audio-visual equipment, or
computer systems (“Equipment”) with respect to the Property, provided Lender has
received prior written notification of Borrower’s intent to lease such
Equipment, and provided, further, that (i) any such lease is subject to
commercially prudent terms and conditions, (ii) the Equipment leased is readily
replaceable without material interference or interruption to the operation of
the Property as required pursuant to the provisions of this Agreement, and
(iii) the aggregate maximum amount of liability under such lease of such
Equipment (whether in total lease payments then outstanding or due in the event
of a termination of such lease or otherwise) located on or used in connection
with the Property is less than (A) $300,000.00 and (B) together with all such
other leases of Equipment at the Property, in the aggregate, two percent (2%) of
the outstanding principal balance of the Note (collectively, the “Permitted
Equipment Financing”).

 

5.2.11 Permitted Transfer.

 

(a) Notwithstanding anything to the contrary contained in Section 5.2.10 hereof,
Lender shall not unreasonably withhold its consent to a one-time sale,
assignment, or other transfer of all of the Property to a Permitted Transferee
(defined below), provided that (x) Lender receives thirty (30) Business Days’
prior written notice of such transfer, (y) no Event of Default has occurred and
is continuing under this Agreement, the Security Instrument, or the other Loan
Documents and (z) upon the

 

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satisfaction of such conditions as may be imposed by Lender, which may include,
but shall not be limited to, the following matters:

 

(i) Borrower or such Permitted Transferee shall pay any and all reasonable
out-of-pocket costs incurred in connection with the transfer (including, without
limitation, Lender’s reasonable counsel fees and disbursements and all recording
fees, title insurance premiums and mortgage and intangible taxes);

 

(ii) The transferee shall be a newly formed entity, and shall comply with all of
the requirements of Section 4.1.35 hereof and shall be wholly owned and
controlled by a Qualified Transferee or shall itself be a Qualified Transferee,
and, in addition, Lender shall be reasonably satisfied that such Qualified
Transferee (1) is generally creditworthy and reputable, (2) is free from any
pending or existing bankruptcy, reorganization or insolvency proceedings in
which such party is the debtor, (3) is not, at the time of transfer or in the
past, a litigant, plaintiff or defendant in any suit brought against or by
Lender, (4) has not been found by a court of competent jurisdiction to have
committed a crime, fraud or similar malfeasance, (5) has not been indicted for
any crime, and (6) has experience and a track record in owning and operating
facilities similar to the Property, in each such case of clauses (1) through
(5) above, as reasonably determined by Lender based on a Lexis/Nexis or similar
background search of each such Person and its Affiliates (the “Permitted
Transferee”);

 

(iii) The Permitted Transferee shall assume all of the obligations of Borrower
under this Agreement, the Security Instrument and the other Loan Documents in a
manner reasonably satisfactory to Lender in all respects, including, without
limitation, by entering into an assumption agreement (the “Assumption
Agreement”) in form and substance reasonably satisfactory to Lender and
delivering such legal opinions as Lender may reasonably require;

 

(iv) The Qualified Transferee that owns and controls the Permitted Transferee or
another entity satisfactory to Lender and the Rating Agencies (the “New
Guarantor”) shall execute and deliver a Guaranty and an Environmental Indemnity
in the same form and substance as the Guaranty and the Environmental Indemnity
delivered in connection with the execution of this Agreement and otherwise
reasonably satisfactory to Lender;

 

(v) The Permitted Transferee and the New Guarantor shall deliver all
organizational documentation, which documentation shall be reasonably
satisfactory to Lender, and shall deliver an opinion of counsel of the Permitted
Transferee covering the Assumption Agreement and any other documents executed by
the Permitted Transferee and the New Guarantor in connection therewith in form
and substance similar to the due execution, delivery and enforcement opinions
delivered by counsel to Borrower in connection with the execution of this
Agreement, including, without limitation, an Insolvency Opinion in form and
substance similar to the Insolvency Opinion delivered in connection with the
Syndication of the Loan;

 

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(vi) The Permitted Transferee shall deliver certificates and enter into
agreements and covenants, or cause each of its principals to deliver
certificates and enter into agreements and covenants, which certificates,
agreements and covenants shall be similar in nature to those delivered, executed
or made by Borrower or Principal in connection with the execution of this
Agreement relating to the single purpose, bankruptcy remote nature of the
Permitted Transferee and its managing principals and the sufficient independence
of the Permitted Transferee and its managing principals to make the substantive
consolidation of the bankruptcy of such parties unlikely, and the Permitted
Transferee shall deliver opinions of counsel with respect to the foregoing
rendered by an independent law firm reasonably satisfactory to Lender or (if a
Securitization shall have occurred) the Rating Agencies;

 

(vii) The Property shall be managed by a Qualified Manager pursuant to a
Replacement Management Agreement following such transfer;

 

(viii) The Property shall be operated as first class full service hotel pursuant
to the Franchise Agreement or Replacement Franchise Agreement with a Qualified
Franchisor;

 

(ix) The Operating Leases shall have been terminated;

 

(x) Lender shall receive evidence of insurance policies in the name of the
Permitted Transferee and otherwise in compliance with the terms of this
Agreement;

 

(xi) If a Securitization shall have occurred, Borrower or the Permitted
Transferee shall deliver to Lender a Rating Confirmation; and

 

(xii) The Permitted Transferee shall deliver an endorsement to the existing
Title Insurance Policy insuring the Lien of the Security Instrument, as modified
by the Assumption Agreement, as a valid first lien on the Property and naming
the Permitted Transferee as owner of fee title to the Property, which
endorsement shall insure that, as of the recording of the Assumption Agreement,
the Property shall not be subject to any additional exceptions or liens other
than Permitted Encumbrances.

 

Section 5.3 REIT.

 

The REIT shall cause its issued and outstanding shares of stock to be listed for
public trading on the New York Stock Exchange or such other nationally
recognized stock exchange throughout the term of the Loan.

 

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VI. INSURANCE; CASUALTY; CONDEMNATION

 

Section 6.1 Insurance.

 

(a) Borrower shall obtain and maintain, or cause to be maintained, Policies for
Borrower and the Property providing at least the following coverages:

 

(i) comprehensive all risk insurance on the Improvements and the Personal
Property, in each case (A) in an amount equal to 100% of the “Full Replacement
Cost,” which for purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation, (B) containing an agreed amount
endorsement with respect to the Improvements and Personal Property waiving all
co-insurance provisions; (C) providing for no deductible in excess of
$100,000.00; and (D) providing coverage for contingent liability from Operation
of Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements together with an “Ordinance or Law Coverage” or “Enforcement”
endorsement if any of the Improvements or the use of the Property shall at any
time constitute legal non-conforming structures or uses. The Full Replacement
Cost shall be redetermined from time to time (but not more frequently than once
in any twenty-four (24) calendar months) at the request of Lender by an
appraiser or contractor designated and paid by Borrower and approved by Lender,
or by an engineer or appraiser in the regular employ of the insurer. After the
first appraisal, additional appraisals may be based on construction cost indices
customarily employed in the trade. No omission on the part of Lender to request
any such ascertainment shall relieve Borrower of any of its obligations under
this Subsection. Notwithstanding clause (C) of this Section 6.1(a)(i) to the
contrary, with respect to the comprehensive all risk insurance required by this
Section 6.1(a)(i), Borrower shall be permitted to maintain a deductible of no
more than $250,000.00 (the “Maximum Deductible”) provided Borrower delivers to
Lender a Letter of Credit in an amount equal to the difference between the
Maximum Deductible and $100,000.00, which Letter of Credit shall be held by
Lender as additional collateral for the Loan, and Borrower shall have no right
to request that Lender draw on the Letter of Credit. Upon the earlier of
(i) repayment of the Loan in full or (ii) delivery to Lender of evidence
reasonably satisfactory to Lender that the deductible for the all-risk insurance
policy required pursuant to this Section 6.1(a)(i) is $100,000.00 or less,
Lender shall return such Letter of Credit to Borrower and, to the extent
required by the bank issuing such Letter of Credit in order to terminate or
extinguish such Letter of Credit, Lender shall deliver to Borrower a letter
addressed to such issuing bank directing such issuing bank to terminate or
extinguish such Letter of Credit;

 

(ii) commercial general liability insurance against claims for personal injury,
bodily injury, death or property damage occurring upon, in or about the
Property, including “Dram Shop” or other liquor liability coverage if alcoholic
beverages are sold from or may be consumed at the Property such insurance (A) to
be on the so-called “occurrence” form with a combined single limit of not less
than $1,000,000.00; (B) to continue at not less than the aforesaid limit until
required to be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and completed

 

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operations on an “if any” basis; (3) independent contractors; (4) blanket
contractual liability for all written and oral contracts; and (5) contractual
liability covering the indemnities contained in Article 10 of the Security
Instrument to the extent the same is available;

 

(iii) business interruption/loss of rents insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the insurance provided
for in Section 6.1(a)(i); (C) in an amount equal to 100% of the projected gross
income, including all Rents and Accounts Receivable, from the Property (on an
actual loss sustained basis) for a period continuing until the Restoration of
the Property is completed; the amount of such business interruption/loss of
rents insurance shall be determined prior to the Closing Date and at least once
each year thereafter based on the greatest of: (x) Borrower’s reasonable
estimate of the gross income from the Property and the projected Rents under the
Operating Lease, if applicable, and (y) the highest gross income received during
the term of the Note for any full calendar year prior to the date the amount of
such insurance is being determined, in each case for the succeeding twenty-four
(24) month period and (D) containing an extended period of indemnity endorsement
which provides that after the physical loss to the Improvements and the Personal
Property has been repaired, the continued loss of income will be insured until
such income either returns to the same level it was at prior to the loss, or the
expiration of eighteen (18) months from the date that the Property is repaired
or replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period; all
insurance proceeds payable to Lender pursuant to this Section 6.1(a)(iii) shall
be held by Lender and shall be applied to the obligations secured hereunder from
time to time then due and payable hereunder and under the Note and this
Agreement; provided, however, that nothing herein contained shall be deemed to
relieve Borrower of its obligations to pay the obligations secured hereunder on
the respective dates of payment provided for in the Note and this Agreement
except to the extent such amounts are actually paid out of the proceeds of such
business interruption/loss of rents insurance;

 

(iv) at all times during which structural construction, repairs or alterations
are being made with respect to the Improvements (A) owner’s contingent or
protective liability insurance covering claims not covered by or under the terms
or provisions of the insurance provided for in Section 6.1(c)(ii); and (B) the
insurance provided for in Section 6.1(a)(i) shall be written in a so-called
builder’s risk completed value form (1) on a non-reporting basis, (2) against
all risks insured against pursuant to Section 6.1(a)(i), (3) shall include
permission to occupy the Property, and (4) shall contain an agreed amount
endorsement waiving co-insurance provisions;

 

(v) workers’ compensation, subject to the statutory limits of the State in which
the Property is located, and employer’s liability insurance with a limit of at
least $2,000,000.00 per accident and per disease per employee, and $2,000,000.00
for disease aggregate in respect of any work or operations on or about the
Property, or in connection with the Property or its operation (if applicable);

 

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(vi) comprehensive boiler and machinery insurance, if applicable, in amounts as
shall be reasonably required by Lender on terms consistent with the commercial
property insurance policy required under Section 6.1(a)(i);

 

(vii) if any portion of the Improvements is at any time located in an area
identified by the Secretary of Housing and Urban Development or any successor
thereto as an area having special flood hazards pursuant to the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National
Flood Insurance Reform Act of 1994, as each may be amended, or any successor law
(the “Flood Insurance Acts”), flood hazard insurance of the following types and
in the following amounts (A) coverage under Policies issued pursuant to the
Flood Insurance Acts (the “Flood Insurance Policies”) in an amount equal to the
maximum limit of coverage available for the Property under the Flood Insurance
Acts, subject only to customary deductibles under such Policies and (B) coverage
under supplemental private Policies in an amount, which when added to the
coverage provided under the Flood Act Policies is not less than the amount of
the Loan;

 

(viii) if the Property is located in a seismic area designated as Zone 3 or 4 by
S&P or Moody’s (Source ICBC, 1994 Uniform Building Code) earthquake, and, if
required by Lender, sinkhole and mine subsidence insurance in amounts equal to
two times (2x) the probable maximum loss of the Property as determined by Lender
in its sole discretion and in form and substance satisfactory to Lender,
provided that the insurance pursuant to this Section 6.1(a)(viii) hereof shall
be on terms consistent with the all risk insurance policy required under
Section 6.1(a)(i) hereof;

 

(ix) umbrella liability insurance in an amount not less than One Hundred Million
and No/100 Dollars ($100,000,000.00) per occurrence on terms consistent with the
commercial general liability insurance policy required under Section 6.1(a)(ii)
hereof;

 

(x) motor vehicle liability coverage for all owned and non-owned vehicles,
including rented and leased vehicles containing minimum limits per occurrence,
including umbrella coverage, of One Million and No/100 Dollars ($1,000,000.00);

 

(xi) a blanket fidelity bond and errors and omissions insurance coverage
insuring against losses resulting from dishonest or fraudulent acts committed by
(A) Borrower’s personnel; (B) any employees of outside firms that provide
appraisal, legal, data processing or other services for Borrower or
(C) temporary contract employees or student interns; and

 

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(xii) such other insurance and in such amounts as are required pursuant to the
Franchise Agreement or as Lender from time to time may reasonably request
against such other insurable hazards which at the time are commonly insured
against for property similar to the Property located in or around the region in
which the the Property is located.

 

(b) All insurance provided for in Section 6.1(a) hereof shall be obtained under
valid and enforceable policies (the “Policies” or in the singular, the
“Policy”), in such forms and, from time to time after the date hereof, in such
amounts as may be satisfactory to Lender, issued by financially sound and
responsible insurance companies authorized to do business in the State in which
the Property is located and approved by Lender. The insurance companies must
have a claims paying ability/financial strength rating equal to or better than
the Minimum Required Rating (as hereinafter defined) by at least two (2) Rating
Agencies (one of which will be S&P if they are rating the Securities and one of
which shall be Moody’s if they are rating the Securities), or if only one Rating
Agency is rating the Securities, then only by such Rating Agency (each such
insurer shall be referred to below as a “Qualified Insurer”). As used in this
Section 6.1(b), the insurance company or companies issuing any Policy shall be
deemed to have been assigned the “Minimum Required Rating” by a particular
Rating Agency if, (A) in the case of a Policy issued by four (4) or fewer
insurance companies, (1) at least seventy-five percent (75%) of such insurance
companies have been assigned a claims paying ability/financial strength rating
equal to or better than “A” (or its equivalent) by such Rating Agency, and
(2) no such insurance companies have been assigned a claims paying
ability/financial strength rating below Investment Grade by such Rating Agency,
and (B) in the case of a Policy issued by five (5) or more insurance companies,
(1) at least sixty percent (60%) of such insurance companies have been assigned
a claims paying ability/financial strength rating equal to or better than “A”
(or its equivalent) by such Rating Agency, and (2) no such insurance companies
have been assigned a claims paying ability/financial strength rating below
Investment Grade by such Rating Agency. Borrower will be required to maintain
insurance against terrorism, terrorist acts (including bio-terrorism) or similar
acts of sabotage (“Terrorism Insurance”) with coverage amounts of not less than
an amount equal to the full insurable value of the Improvements and the Personal
Property and eighteen (18) months of business interruption/loss of rents
insurance (the “Terrorism Insurance Required Amount”). Notwithstanding the
foregoing sentence, Borrower shall not be obligated to expend more than
$100,000.00 in any fiscal year on Insurance Premiums for Terrorism Insurance
(the “Terrorism Insurance Cap”) and if the cost of the Terrorism Insurance
Required Amount exceeds the Terrorism Insurance Cap, Borrower shall purchase the
maximum amount of Terrorism Insurance available with funds equal to the
Terrorism Insurance Cap; provided, however, in the event such Terrorism
Insurance is customarily maintained as part of the all risk coverage required
pursuant to Section 6.1(a)(i) hereof by owners of hotel properties in the United
States of similar type, size and quality as the Property, Borrower shall
maintain such Terrorism Insurance as a part thereof, regardless of the cost of
the related Insurance Premiums. Not less than thirty (30) days prior to the
expiration dates of the Policies theretofore furnished to Lender pursuant to
Section 6.1(a), Borrower shall deliver certified copies of the Policies marked
“premium paid” or accompanied by evidence satisfactory to Lender of payment of
the premiums due thereunder (the “Insurance Premiums”).

 

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(c) Borrower may obtain (i) any umbrella or blanket liability or casualty Policy
provided that, in each case, such Policy is approved in advance in writing by
Lender and Lender’s interest is included therein as provided in this Agreement
and such Policy is issued by a Qualified Insurer, or (ii) separate insurance
concurrent in form or contributing in the event of loss with that required in
Section 6.1(a) to be furnished by, or which may be reasonably required to be
furnished by, Borrower. In the event Borrower obtains separate insurance or an
umbrella or a blanket policy, Borrower shall notify Lender of the same and shall
cause certified copies of each Policy to be delivered as required in
Section 6.1(a). Any blanket insurance Policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Section 6.1(a).
Notwithstanding Lender’s approval of any umbrella or blanket liability or
casualty Policy hereunder, Lender reserves the right, in its sole discretion, to
require Borrower to obtain a separate Policy in compliance with this
Section 6.1.

 

(d) All Policies provided for or contemplated by Section 6.1(a) hereof, except
for the Policy referenced in Section 6.1(a)(v), shall name Lender and Borrower
as the insured or additional insured, as their respective interests may appear,
and in the case of property damage, boiler and machinery, and flood insurance,
shall contain a so-called New York standard non-contributing mortgagee clause in
favor of Lender providing that the loss thereunder shall be payable to Lender.

 

(e) All Policies provided for in Section 6.1(a) hereof shall contain clauses or
endorsements to the effect that:

 

(i) no act or negligence of Borrower, or anyone acting for Borrower, or failure
to comply with the provisions of any Policy which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way affect the
validity or enforceability of the insurance insofar as Lender is concerned;

 

(ii) the Policy shall not be materially changed (other than to increase the
coverage provided thereby) or cancelled without at least 30 days’ written notice
to Lender and any other party named therein as an insured;

 

(iii) each Policy shall provide that the issuers thereof shall give written
notice to Lender if the Policy has not been renewed thirty (30) days prior to
its expiration; and

 

(iv) Lender shall not be liable for any Insurance Premiums thereon or subject to
any assessments thereunder.

 

(f) Borrower shall furnish to Lender, on or before thirty (30) days after the
close of each of Borrower’s fiscal years, a statement certified by Borrower or a
duly authorized officer of Borrower of the amounts of insurance maintained in
compliance herewith, of the risks covered by such insurance and of the insurance
company or companies which carry such insurance and, if requested by Lender,
verification of the adequacy of such insurance by an independent insurance
broker or appraiser reasonably acceptable to Lender.

 

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(g) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower to take such action as Lender deems necessary
to protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate, and all expenses incurred by Lender in connection with such action
or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and until paid shall be secured by the Security
Instrument and shall bear interest at the Default Rate.

 

(h) In the event of a foreclosure of any of the Security Instrument, or other
transfer of title to the Property in extinguishment in whole or in part of the
Debt all right, title and interest of Borrower in and to the Policies then in
force and all proceeds payable thereunder shall thereupon vest in the purchaser
at such foreclosure or Lender or other transferee in the event of such other
transfer of title.

 

Section 6.2 Casualty.

 

If the Property shall be damaged or destroyed, in whole or in part, by fire or
other casualty (a “Casualty”), Borrower shall give prompt notice of any such
damage to Lender and, shall promptly commence and diligently prosecute the
completion of the Restoration of the Property as nearly as possible to the
condition the Property was in immediately prior to such Casualty, with such
alterations as may be reasonably approved by Lender except as permitted by and
otherwise in accordance with Section 6.4. Borrower shall pay all costs of such
Restoration whether or not such costs are covered by insurance provided,
however, that any Insurance Proceeds received by Lender in respect of such
damage or destruction shall be made available to pay the costs of such
Restoration at the time or times, and subject to satisfaction of the applicable
conditions precedent, specified in Section 6.4 hereof.. Lender may, but shall
not be obligated to make proof of loss if not made promptly by Borrower.

 

Section 6.3 Condemnation.

 

Borrower shall promptly give Lender notice of the actual or threatened in
writing commencement of any proceeding for the Condemnation of all or any part
of the Property and shall deliver to Lender copies of any and all papers served
in connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to

 

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the interest paid on the Award by the condemning authority but shall be entitled
to receive out of the Award interest at the rate or rates provided herein or in
the Note. If the Property or any portion thereof is taken by a condemning
authority, Borrower shall, promptly proceed to restore, repair, replace or
rebuild the Property in a workmanlike manner to the extent practicable (and
permitted by applicable zoning laws in effect at the time) to be of at least
equal value and substantially the same character as prior to such Condemnation
and otherwise comply with the provisions of Section 6.4 hereof. If the Property
is sold, through foreclosure or otherwise, prior to the receipt by Lender of the
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall have been sought, recovered or denied, to receive the Award, or a
portion thereof sufficient to pay the Debt.

 

Section 6.4 Restoration.

 

The following provisions shall apply in connection with the Restoration of the
Property:

 

(a) If the Net Proceeds shall be less than $750,000.00 (the “Threshold Amount”),
and the costs of completing the Restoration shall be less than the Threshold
Amount, the Net Proceeds will be disbursed by Lender to Borrower upon receipt,
provided that all of the conditions set forth in Section 6.4(b)(i) are met and
Borrower delivers to Lender a written undertaking to expeditiously commence and
to satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Agreement.

 

(b) If the Net Proceeds are equal to or greater than the Threshold Amount or the
costs of completing the Restoration is equal to or greater than the Threshold
Amount Lender shall make the Net Proceeds available for the Restoration in
accordance with the provisions of this Section 6.4. The term “Net Proceeds”
shall mean: (i) the net amount of all insurance proceeds received by Lender
pursuant to Section 6.1(a)(i), (iv), (vi), (vii) and (viii) as a result of such
damage or destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
same (“Insurance Proceeds”), or (ii) the net amount of the Award, after
deduction of its reasonable costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”),
whichever the case may be.

 

(i) The Net Proceeds shall be made available to Borrower for Restoration
provided that each of the following conditions are met:

 

(A) no Event of Default shall have occurred and be continuing;

 

(B) (1) in the event the Net Proceeds are Insurance Proceeds, less than forty
percent (40%) of the total floor area of the Improvements on the Property has
been damaged, destroyed or rendered unusable as a result of such Casualty or
(2) in the event the Net Proceeds are Condemnation Proceeds, less than twenty
percent (20%) of the land constituting the Property is taken, and such land is
located along the perimeter or periphery of the Property, and no portion of the
Improvements is located on such land;

 

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(C) The Operating Lease in effect as of the date of the occurrence of such
Casualty or Condemnation, whichever the case may be, shall remain in full force
and effect during the Restoration and shall not otherwise terminate as a direct
result of the Casualty or Condemnation;

 

(D) Borrower shall commence the Restoration as soon as reasonably practicable
(but in no event later than sixty (60) days after such Casualty or Condemnation,
whichever the case may be, occurs (subject to Force Majeure Delays and delays in
the claims adjustments process outside the control of Borrower, Operating
Tenant, Guarantor or any of their respective Affiliates) and shall diligently
pursue the same to satisfactory completion in compliance with all Applicable
Laws, including, without limitation, all applicable Environmental Laws and in
accordance with the terms and conditions of the Franchise Agreement;

 

(E) Lender shall be satisfied that any operating deficits, including all
scheduled payments of principal and interest under the Note, which will be
incurred with respect to the Property as a result of the occurrence of any such
Casualty or Condemnation, whichever the case may be, will be covered out of
(1) the Net Proceeds, (2) the insurance coverage referred to in
Section 6.1(a)(iii), if applicable, and (3) by other funds of Borrower;

 

(F) Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (1) six (6) months prior to the Maturity Date,
(2) subject to Force Majeure Delays, six (6) months after the occurrence of such
Casualty or Condemnation, (3) [intentionally deleted], (4) the date required for
such completion pursuant to the Operating Lease, (5) the date required for such
completion pursuant to the Franchise Agreement, (6) such time as may be required
under Applicable Law, in order to repair and restore the Property to the
condition it was in immediately prior to such Casualty or Condemnation or
(7) the expiration of the insurance coverage referred to in Section 6.1(a)(iii);

 

(G) the Property and the use thereof after the Restoration will be in compliance
with and permitted under all Applicable Laws;

 

(H) Lender shall be satisfied that the debt service coverage ratio after the
completion of the Restoration shall be equal to or greater than 1.30 to 1;

 

(I) such Condemnation does not result in the total loss of access to the
Property or the related Improvements;

 

(J) Borrower shall deliver, or cause to be delivered, to Lender a signed
detailed budget approved in writing by Borrower’s architect or engineer stating
the entire cost of completing the Restoration, which budget shall be acceptable
to Lender;

 

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(K) the Net Proceeds together with any Cash or Cash equivalent deposited by
Borrower with Lender are sufficient in Lender’s discretion to cover the cost of
the Restoration;

 

(L) the Management Agreement in effect as of the date of the occurrence of such
Casualty or Condemnation, whichever the case may be, shall (1) remain in full
force and effect during the Restoration and shall not otherwise terminate as a
result of the Casualty or Condemnation or the Restoration or (2) if terminated,
shall have been replaced with a Replacement Management Agreement with a
Qualified Manager in accordance with Section 5.1.18 hereof, prior to the opening
or reopening of the Property or any portion thereof for business with the
public; and

 

(M) the Franchise Agreement is not terminated as a result of such casualty, or
if terminated, shall have been replaced with a Replacement Franchise Agreement
with a Qualified Franchisor in accordance with Section 5.1.21 hereof, prior to
the opening or reopening of the Property or any portion thereof for business
with the public.

 

(ii) The Net Proceeds shall be held by Lender in an interest-bearing account
and, until disbursed in accordance with the provisions of this Section 6.4(b),
shall constitute additional security for the Debt and other obligations under
the Loan Documents. The Net Proceeds shall be disbursed by Lender to, or as
directed by, Borrower from time to time during the course of the Restoration,
upon receipt of evidence satisfactory to Lender that (A) all materials installed
and work and labor performed (except to the extent that they are to be paid for
out of the requested disbursement) in connection with the Restoration have been
paid for in full, and (B) there exist no notices of pendency, stop orders,
mechanic’s or materialman’s liens or notices of intention to file same, or any
other Liens or encumbrances of any nature whatsoever on the Property which have
not either been fully bonded to the satisfaction of Lender and discharged of
record, are being duly contested in accordance with Section 5.2.1 hereof, or in
the alternative fully insured to the satisfaction of Lender by the title company
issuing the Title Insurance Policy.

 

(iii) All plans and specifications required in connection with the Restoration,
the cost of which is greater than the Threshold Amount, shall be subject to
prior review and acceptance in all respects by Lender and by an independent
consulting engineer selected by Lender (the “Casualty Consultant”). Lender shall
have the use of the plans and specifications and all permits, licenses and
approvals required or obtained in connection with the Restoration. The identity
of the contractors, subcontractors and materialmen engaged in the Restoration
the cost of which is greater than the Threshold Amount, as well as the contracts
under which they have been engaged, shall be subject to prior review and
acceptance by Lender and the Casualty Consultant. All costs and expenses
incurred by Lender in connection with making the Net Proceeds available for the
Restoration including, without limitation, reasonable counsel fees and
disbursements and the Casualty Consultant’s fees, shall be paid by Borrower.

 

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(iv) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, minus the Casualty Retainage. The term “Casualty Retainage”
shall mean an amount equal to ten percent (10%) until such time as fifty percent
(50%) of the Restoration has been completed (as certified by the Casualty
Consultant), and thereafter, five percent (5%), of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 6.4(b), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Section 6.4(b) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
Governmental Authorities, and Lender receives evidence satisfactory to Lender
that the costs of the Restoration have been paid in full or will be paid in full
out of the Casualty Retainage; provided, however, that Lender will release the
portion of the Casualty Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date upon
which the Casualty Consultant certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the contractor’s,
subcontractor’s or materialman’s contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of all
sums due to the contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company issuing the Title Insurance Policy
for the Property, and Lender receives an endorsement to such Title Insurance
Policy insuring the continued priority of the Lien of the Security Instrument
and evidence of payment of any premium payable for such endorsement. If required
by Lender, the release of any such portion of the Casualty Retainage shall be
approved by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or materialman.

 

(v) Lender shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month.

 

(vi) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in the opinion of Lender in consultation with the Casualty Consultant, if
any, be sufficient to pay in full the balance of the costs which are estimated
by the Casualty Consultant to be incurred in connection with the completion of
the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds
Deficiency”) with Lender before any further disbursement of the Net Proceeds

 

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shall be made. The Net Proceeds Deficiency deposited with Lender shall be held
by Lender and shall be disbursed for costs actually incurred in connection with
the Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section 6.4(b) shall
constitute additional security for the Debt and other obligations under the Loan
Documents.

 

(vii) The excess, if any, of the Net Proceeds and the remaining balance, if any,
of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 6.4(b), and the receipt by Lender
of evidence satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing under
the Note, this Agreement or any of the other Loan Documents.

 

(c) All Net Proceeds not required (i) to be made available for the Restoration
or (ii) to be returned to Borrower as excess Net Proceeds pursuant to
Section 6.4(b)(vii) may be retained and applied by Lender toward the payment of
the Debt whether or not then due and payable in such order, priority and
proportions as Lender in its sole discretion shall deem proper, or, at the
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes as Lender shall approve, in its discretion. If Lender
shall receive and retain Net Proceeds, the Lien of the Security Instrument shall
be reduced only by the amount thereof received and retained by Lender and
actually applied by Lender in reduction of the Debt.

 

VII. RESERVE FUNDS

 

Section 7.1 Required Repair Funds.

 

7.1.1 Required Repairs.

 

Borrower shall, within thirty (30) days of the required deadline for each repair
as set forth on Schedule III, deliver evidence reasonably satisfactory to Lender
that, the repairs at the Property, as more particularly set forth on Schedule
III hereto (the “Required Repairs”), have been completed in a good and
workmanlike manner, in accordance with all Legal Requirements and Environmental
Laws, and free from all Liens, claims and other encumbrances not previously
approved by Lender. It shall be an Event of Default under this Agreement if
Borrower does not deliver such evidence to Lender within such time period.

 

7.1.2 Deposits.

 

Within thirty (30) days of Borrower’s receipt of notice from Lender that Lender
intends to securitize or syndicate all or a portion of the Loan in accordance
with Sections 9.1 or 9.7 respectively hereof, and that the Required Repair
Account must be funded, Borrower shall (i) deliver evidence reasonably
satisfactory to Lender of the Required Repairs that have been completed (or if
not completed, the status of the completion of such Required Repairs), and
(ii) deposit an amount equal to 125% of Lender’s estimated cost to complete the
Required Repairs as set forth on Schedule III attached hereto (the “Required
Repair Funds”) into the Required Repair

 

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Account. Amounts so deposited with Lender shall be held by Lender in accordance
with Section 7.7 hereof. Upon the occurrence of an Event of Default, Lender, at
its option, may withdraw all Required Repair Funds from the Required Repair
Account and Lender may apply such funds either to completion of the Required
Repairs at the Property or toward payment of the Debt in such order, proportion
and priority as Lender may determine in its sole discretion. Lender’s right to
withdraw and apply Required Repair Funds shall be in addition to all other
rights and remedies provided to Lender under this Agreement and the other Loan
Documents.

 

7.1.3 Release of Required Repair Funds.

 

Lender shall disburse to Borrower the Required Repair Funds from the Required
Repair Account from time to time upon satisfaction by Borrower of each of the
following conditions: (a) Borrower shall submit a written request for payment to
Lender at least ten (10) Business Days prior to the date on which Borrower
requests such payment be made and specifies the Required Repairs to be paid,
(b) on the date such request is received by Lender and on the date such payment
is to be made, no Event of Default shall exist and remain uncured, (c) Lender
shall have received an Officers’ Certificate (i) stating that all Required
Repairs at the Property to be funded by the requested disbursement have been
completed in good and workmanlike manner and, to the best of Borrower’s
knowledge, in accordance with all Legal Requirements and Environmental Laws,
such certificate to be accompanied by a copy of any license, permit or other
approval by any Governmental Authority required to commence and/or complete the
Required Repairs, (ii) identifying each Person that supplied materials or labor
in connection with the Required Repairs performed at the Property with respect
to the reimbursement to be funded by the requested disbursement, and
(iii) stating that each such Person has been paid in full or will be paid in
full upon such disbursement, such Officers’ Certificate to be accompanied by
lien waivers or other evidence of payment satisfactory to Lender, (d) in
connection with any requested disbursement in excess of $250,000, at Lender’s
option, a title search for the Property indicating that the Property is free
from all Liens, claims and other encumbrances not previously approved by Lender,
(e) Borrower shall have delivered to Lender, if required by Lender in connection
with any requested disbursement, (i) evidence reasonably satisfactory to Lender
that Borrower has applied any Required Repair Funds previously disbursed to it
pursuant to this Section 7.1.2 toward the Required Repair costs and expenses for
which such Required Repair Funds were disbursed, and (f) Lender shall have
received such other evidence as Lender shall reasonably request that the
Required Repairs at the Property to be funded by the requested disbursement have
been completed and are paid for upon such disbursement to Borrower. Lender shall
not be required to make disbursements from the Required Repair Account with
respect to the Property unless such requested disbursement is in an amount
greater than $10,000 (or a lesser amount if the total amount in the Required
Repair Account is less than $10,000, in which case only one disbursement of the
amount remaining in the account shall be made).

 

Section 7.2 Tax and Insurance Escrow Fund.

 

Borrower shall pay to Lender on each Payment Date (a) one-twelfth of the Taxes
(the “Monthly Tax Deposit”) that Lender estimates will be payable during the
next ensuing twelve (12) months in order to accumulate with Lender sufficient
funds to pay all such Taxes at least thirty (30) days prior to their respective
due dates; and (b) at the option of Lender, if the liability or casualty Policy
maintained by Borrower covering the Property shall not constitute an

 

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approved blanket or umbrella Policy pursuant to Section 6.1(c) hereof, or Lender
shall require Borrower to obtain a separate Policy pursuant to Section 6.1(c)
hereof, one-twelfth of the Insurance Premiums (the “Monthly Insurance Premium
Deposit”) that Lender estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof in order to accumulate with
Lender sufficient funds to pay all such Insurance Premiums at least thirty
(30) days prior to the expiration of the Policies (said amounts in (a) and
(b) above hereinafter called the “Tax and Insurance Escrow Fund”). In the event
Lender shall elect to collect payments in escrow for Insurance Premiums pursuant
to clause (b) above, Borrower shall pay to Lender an initial deposit to be
determined by Lender, in its sole discretion, to increase the amounts in the Tax
and Insurance Escrow Fund to an amount which, together with anticipated Monthly
Insurance Premium Deposits, shall be sufficient to pay all Insurance Premiums as
they become due. The Tax and Insurance Escrow Fund and the payments of interest
or principal or both, payable pursuant to the Note and this Agreement, shall be
added together and shall be paid as an aggregate sum by Borrower to Lender.
Lender will apply the Tax and Insurance Escrow Fund to payments of Taxes and
Insurance Premiums required to be made by Borrower pursuant to Sections 5.1.2
and 6.1, respectively, hereof. In making any payment relating to the Tax and
Insurance Escrow Fund, Lender may do so according to any bill, statement or
estimate procured from the appropriate public office (with respect to Taxes) or
insurer or agent (with respect to Insurance Premiums), without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount
of the Tax and Insurance Escrow Fund shall exceed the amounts due for Taxes and
Insurance Premiums pursuant to Sections 5.1.2 and 6.1, respectively, hereof,
Lender shall, in its sole discretion, return any excess to Borrower or credit
such excess against future payments to be made to the Tax and Insurance Escrow
Fund. In allocating such excess, Lender may deal with the Person shown on the
records of Lender to be the owner of the Property. Any amount remaining in the
Tax and Insurance Escrow Fund after the Debt has been paid in full shall be
returned to Borrower. If at any time Lender reasonably determines that the Tax
and Insurance Escrow Fund is not or will not be sufficient to pay Taxes and
Insurance Premiums by the dates set forth in (a) and (b) above, Lender shall
notify Borrower of such determination and Borrower shall increase its monthly
payments to Lender by the amount that Lender estimates is sufficient to make up
the deficiency at least thirty (30) days prior to delinquency of the Taxes
and/or thirty (30) days prior to expiration of the Policies, as the case may be.

 

Section 7.3 Replacements and Replacement Reserve.

 

7.3.1 Replacement Reserve Fund.

 

(a) Borrower shall pay to Lender on each Payment Date following the occurrence
of a Securitization or Syndication, the Replacement Reserve Monthly Deposit for
(i) replacement of FF&E and (ii) capital repairs, replacements and improvements
necessary to keep the Property in the same order and repair as of the date
hereof or in the condition required pursuant to the Operating Lease, the
Management Agreement, Franchise Agreement or Approved Capital Budget or prevent
deterioration of the Property, including but not limited to the performance of
work to the roofs, chimneys, gutters, downspouts, paving, curbs, ramps,
driveways, balconies, porches, patios, exterior walls, exterior doors and door
ways, windows, elevators and mechanical and HVAC equipment (collectively, the
“Replacements”). Borrower covenants and agrees to provide

 

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Lender evidence reasonably acceptable to Lender, within thirty (30) days after
the start of each calendar month, of the Actual Amount for the Property for the
immediately preceding calendar month (for example, with respect to the
Replacement Reserve Monthly Deposit payable on the Payment Date occurring in
June, Borrower shall provide Lender evidence of the Actual Amount for the month
of April on or prior to May 30).

 

(b) In the event the Actual Amount spent by Borrower for FF&E and other
Replacements to the Property in any given Subject Month exceeds one twelfth of
the Required Expenditure Amount or the amount budgeted to be spent in the
Subject Month pursuant to the Approved Capital Budget, as applicable pursuant to
the last paragraph of the definition of “Replacement Reserve Monthly Deposit”
(such amount, the “Excess Expenditure Amount”), Borrower shall be permitted to
carry forward the amount of the Excess Expenditure Amount (to the extent that
such amount has not been reimbursed from the Replacement Reserve Account or
otherwise credited to any subsequent Replacement Reserve Monthly Deposits) as a
reduction to subsequent Replacement Reserve Monthly Deposits in the applicable
Fiscal Year, until such Excess Expenditure Amount has been exhausted, it being
understood that, to the extent that any portion of such Excess Expenditure
Amount remains to be credited, such portion of the Excess Expenditure Amount
shall not be credited once a new Fiscal Year has commenced.

 

(c) Amounts so deposited shall hereinafter be referred to as Borrower’s
“Replacement Reserve Fund”.

 

7.3.2 Disbursements from Replacement Reserve Account.

 

(a) Lender shall make disbursements from the Replacement Reserve Account to
reimburse Borrower only for the costs of the Replacements. Lender shall not be
obligated to make disbursements from the Replacement Reserve Account to
reimburse Borrower for the costs of routine maintenance (i.e., work not included
in the definition of Replacements) to the Property or for the costs which are to
be reimbursed from the Required Repair Fund. Lender shall not be obligated to
make disbursements from the Replacement Reserve Account with respect to the
Property in excess of the amount deposited for the Property pursuant to
Section 7.3.1 hereof.

 

(b) With respect to Replacements that are FF&E, Lender shall disburse to
Borrower Replacement Reserve Funds from the Replacement Reserve Account from
time to time upon delivery to Lender of an Officer’s Certificate (i) specifying
the FF&E for which Borrower is seeking a disbursement from the Replacement
Reserve Account and (ii) certifying (A) the amount of FF&E expenditures (with
copies of invoices and receipts, with respect to invoices in excess of $25,000
attached to such Officer’s Certificate) actually paid or to be paid by Borrower
for such FF&E and (B) that Borrower had not previously received any
disbursements from the Replacement Reserve Account or any other Reserve Account
for any or all of such FF&E.

 

(c) With respect to Replacements that are not FF&E, Lender shall disburse to
Borrower the Replacement Reserve Funds from the Replacement Reserve Account from
time to time upon satisfaction by Borrower of each of the following conditions:
(i)

 

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Borrower shall submit a written request for payment to Lender at least twenty
(20) days prior to the date on which Borrower requests such payment be made and
specifies the Replacements the cost of which is required to be paid, (ii) on the
date such request is received by Lender and on the date such payment is to be
made, no Event of Default shall exist and remain uncured, (iii) Lender shall
have received an Officers’ Certificate (A) stating that all Replacements at the
Property to be funded by the requested disbursement have been completed in good
and workmanlike manner and, to Borrower’s knowledge, in accordance with all
Legal Requirements and Environmental Laws, such certificate to be accompanied by
a copy of any license, permit or other approval by any Governmental Authority
required to commence and/or complete the Replacements, (B) identifying the
general contractor and/or each other Person that has a direct contract with
Borrower or Operating Tenant and that supplied materials or labor in connection
with the Replacements performed at the Property with respect to the
reimbursement to be funded by the requested disbursement, (C) stating that each
such Person has been paid or will be paid in full upon such disbursement, such
Officers’ Certificate to be accompanied by lien waivers or other evidence of
payment satisfactory to Lender if such payment is in excess of $250,000.00, and
(D) certifying that all funds previously disbursed from the Replacement Reserve
Account have been applied by Borrower toward the expenses for which they were
disbursed and the Replacement Reserve Funds being requested will be applied to
pay or reimburse for materials or work permitted hereunder and done in
accordance herewith, (iv) at Lender’s option, a title search for the Property
indicating that the Property is free from all Liens, claims and other
encumbrances not previously approved by Lender, (v) Lender shall have received
such other evidence as Lender shall reasonably request that the Replacements at
the Property to be funded by the requested disbursement have been completed and
are paid for upon such disbursement to Borrower and (vi) Lender has received
evidence reasonably satisfactory to Lender that the materials for which the
request is made (x) are on-site at the applicable Property and are properly
secured or have been installed in the Property or (y) if stored off-site, are
properly secured and adequately insured against theft, casualty or other loss
thereof.

 

(d) Borrower shall not make a request for disbursement from the Replacement
Reserve Account more frequently than once in any calendar month and (except in
connection with the final disbursement) the total cost of all Replacements in
any request shall not be less than $25,000.

 

7.3.3 Performance of Replacements.

 

(a) Borrower shall make Replacements when required in order to keep the Property
in condition and repair consistent with other first class, full service hotels
in the same market segment and under the same franchisor in the geographic area
in which the Property is located, and to keep the Property or any portion
thereof from deteriorating. Borrower shall complete all Replacements in a good
and workmanlike manner as soon as practicable following the commencement of
making each such Replacement.

 

(b) Lender may require an inspection of the Property at Borrower’s expense prior
to making a monthly disbursement from the Replacement Reserve Account, with
respect to the Property, in order to verify completion of the Replacements for
which

 

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reimbursement is sought. Lender may require that such inspection be conducted by
an appropriate independent qualified professional selected by Lender and/or may
require a copy of a certificate of completion by an independent qualified
professional acceptable to Lender prior to the disbursement of any amounts from
the Replacement Reserve Account with respect to any request for disbursement in
excess of $25,000. Borrower shall pay the expense of the inspection as required
hereunder, whether such inspection is conducted by Lender or by an independent
qualified professional.

 

(c) The Replacements and all materials, equipment, fixtures, or any other item
comprising a part of any Replacement shall be constructed, installed or
completed, as applicable, free and clear of all mechanic’s, materialmen’s or
other Liens and in a good and workmanlike manner.

 

(d) All Replacements shall comply with all applicable Legal Requirements of all
Governmental Authorities having jurisdiction over the Property and applicable
insurance requirements including, without limitation, applicable building codes,
special use permits, environmental regulations, and requirements of insurance
underwriters.

 

(e) Nothing in this Agreement shall obligate Lender to apply all or any portion
of the Replacement Reserve Fund on account of an Event of Default to payment of
the Debt or in any specific order or priority.

 

7.3.4 Balance in the Replacement Reserve Account.

 

The insufficiency of any balance in the Replacement Reserve Account shall not
relieve Borrower from its obligation to fulfill all preservation and maintenance
covenants in the Loan Documents.

 

Section 7.4 Intentionally Deleted.

 

Section 7.5 Intentionally Deleted.

 

Section 7.6 Intentionally Deleted.

 

Section 7.7 Reserve Funds, Generally.

 

(a) Borrower grants to Lender a first-priority perfected security interest in
each of the Reserve Funds and the related Accounts and any and all monies now or
hereafter deposited in each Reserve Fund and related Account as additional
security for payment of the Debt. Until expended or applied in accordance
herewith, the Reserve Funds and the related Accounts shall constitute additional
security for the Debt.

 

(b) Upon the occurrence and during the continuance of an Event of Default,
Lender may, in addition to any and all other rights and remedies available to
Lender, apply any sums then present in any or all of the Reserve Funds to the
payment of the Debt in any order in its sole discretion.

 

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(c) The Reserve Funds shall not constitute trust funds and may be commingled
with other monies held by Lender.

 

(d) The Reserve Funds shall be held in interest bearing accounts and all
earnings or interest on a Reserve Fund shall be added to and become a part of
such Reserve Fund and shall be disbursed in the same manner as other monies
deposited in such Reserve Fund.

 

(e) Borrower shall not, without obtaining the prior written consent of Lender,
further pledge, assign or grant any security interest in any Reserve Fund or
related Account or the monies deposited therein or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.

 

(f) Borrower shall indemnify Lender and hold Lender harmless from and against
any and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable
attorneys fees and expenses) arising from or in any way connected with the
Reserve Funds or the related Accounts or the performance of the obligations for
which the Reserve Funds or the related Accounts were established, except to the
extent arising from the gross negligence or willful misconduct of Lender, its
agents or employees. Borrower shall assign to Lender all rights and claims
Borrower may have against all Persons supplying labor, materials or other
services which are to be paid from or secured by the Reserve Funds or the
related Accounts; provided, however, that Lender may not pursue any such right
or claim unless an Event of Default has occurred and remains uncured.

 

Section 7.8 Letters of Credit.

 

(a) Each Letter of Credit delivered under Section 6.1(a) hereof shall be
additional security for the payment of the Debt. Upon the occurrence and during
the continuation of an Event of Default, Lender shall have the right, at its
option, to draw on any Letter of Credit and to apply all or any part thereof to
the payment of the items for which such Letter of Credit was established or to
apply such Letter of Credit to payment of the Debt in such order, proportion or
priority as Lender may determine. On the Maturity Date, if the Debt is not paid
in full, any such Letter of Credit may be applied to reduce the Debt.

 

(b) In addition to any other right Lender may have to draw upon a Letter of
Credit pursuant to the specific terms and conditions of this Agreement, Lender
shall have the additional rights to draw in full on any Letter of Credit: (i) if
Lender has received a notice from the issuing bank that such Letter of Credit
will not be renewed and either (y) a substitute Letter of Credit or (z) cash in
the amount of the Letter of Credit is not provided at least ten (10) Business
Days prior to the date on which the outstanding Letter of Credit is scheduled to
expire; (ii) upon receipt of notice from the issuing bank that the Letter of
Credit will be terminated (except if the termination of such Letter of Credit is
permitted pursuant to the terms and conditions of this Agreement or a substitute
Letter of Credit is provided); or (iii) if Lender has received notice that the
bank issuing the Letter

 

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of Credit shall cease to meet the long-term unsecured debt rating set forth in
the definition of “Letter of Credit” in Section 1.1 hereof, and Borrower has
failed to deliver to Lender either (y) a substitute Letter of Credit or (z) cash
in the amount of the Letter of Credit. Notwithstanding anything to the contrary
contained herein, Lender shall not be obligated to draw down on any Letter of
Credit upon the happening of an event specified in clause (i), (ii) or
(iii) above and shall not be liable for any losses sustained by Borrower due to
the insolvency of the bank issuing the Letter of Credit if Lender has not drawn
the Letter of Credit, and in the event of the insolvency of the bank issuing the
Letter of Credit or if the bank issuing the Letter of Credit ceases to meet the
long-term unsecured debt rating described above, Borrower shall promptly provide
to Lender either (y) a substitute Letter of Credit or (z) cash in the amount of
the Letter of Credit.

 

VIII. DEFAULTS

 

Section 8.1 Event of Default.

 

(a) Each of the following events shall constitute an event of default hereunder
(an “Event of Default”):

 

(i) if (i) Borrower shall fail to make any payment of interest or principal or
default interest required hereunder or the monthly escrow or reserve deposits
required hereunder or under the other Loan Documents, and such failure shall
continue for more than three (3) days from the date such payment was due,
(ii) the late charges required under Section 2.2.6 hereof are not paid when due
or (iii) any portion of the Debt is not paid on the Maturity Date;

 

(ii) if any of the Taxes or Other Charges are not paid on or before the date
that they shall become delinquent, subject to Borrower’s right to contest Taxes
in accordance with Section 5.1.2 hereof, except to the extent sums sufficient to
pay such Taxes and Other Charges have been deposited with Lender in accordance
with the terms of Article 3 hereof;

 

(iii) if the Policies are not kept in full force and effect;

 

(iv) if Borrower transfers or encumbers any portion of the Property in violation
of the provisions of Section 5.2.10 hereof or Article 7 of the Security
Instrument;

 

(v) if any representation or warranty made by Borrower, Principal, or Guarantor
herein or in any other Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished to Lender shall
have been false or misleading in any material respect as of the date the
representation or warranty was made;

 

(vi) if Borrower, Principal, or Guarantor shall make an assignment for the
benefit of creditors;

 

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(vii) if a receiver, liquidator or trustee shall be appointed for Borrower,
Principal, Guarantor or any other Guarantor under any guarantee issued in
connection with the Loan or if Borrower, Principal, Guarantor or such other
Guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to the Bankruptcy Code, or
any similar federal or State law, shall be filed by or against, consented to, or
acquiesced in by, Borrower, Principal, Guarantor or such other Guarantor, or if
any proceeding for the dissolution or liquidation of Borrower, Principal,
Guarantor or such other Guarantor shall be instituted; provided, however, if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower, Principal, Guarantor or such other Guarantor, upon the
same not being discharged, stayed or dismissed within sixty (60) days;

 

(viii) if Borrower assigns its rights under this Agreement or any of the other
Loan Documents or any interest herein or therein in contravention of the Loan
Documents;

 

(ix) if Borrower breaches any of its respective negative covenants contained in
Section 5.2.2, 5.2.3, 5.2.4, 5.2.7 or 5.2.8 hereof;

 

(x) if a material default has occurred and continues beyond any applicable
notice and cure period under the Management Agreement (or any Replacement
Management Agreement) if such default permits the Manager thereunder to
terminate or cancel the Management Agreement (or any Replacement Management
Agreement);

 

(xi) if Borrower or Principal violates or does not comply with any of the
provisions of Section 4.1.35 hereof in any material respect;

 

(xii) if the Property becomes subject to any mechanic’s, materialman’s or other
Lien other than a Lien for local real estate taxes and assessments not then due
and payable and, subject to Section 5.2.1 hereof, such Lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period of sixty
(60) days;

 

(xiii) if any federal tax Lien or state or local income tax Lien is filed
against Borrower, Principal, any Guarantor, or the Property and, subject to
Section 5.1.2 hereof, the same is not discharged of record within thirty
(30) days after same is filed;

 

(xiv) (A) Borrower is a Plan or its assets constitute Plan Assets; or
(B) Borrower consummates a transaction which would cause the Security Instrument
or Lender’s exercise of its rights under the Security Instrument, the Note, this
Agreement or the other Loan Documents to constitute a nonexempt prohibited
transaction under ERISA or result in a violation of a State statute regulating
governmental plans, subjecting Lender to liability for a violation of ERISA, the
Code, a State statute or other similar law;

 

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(xv) if any default occurs under any guaranty or indemnity executed in
connection herewith (including, without limitation, the Guaranty and the
Environmental Indemnity) and such default continues after the expiration of
applicable grace periods, if any;

 

(xvi) if (i) the Interest Rate Cap Agreement is terminated for any reason by
Borrower or the Counterparty, or (ii) the Counterparty defaults in the
performance of its monetary obligations under the Interest Rate Cap Agreement or
(iii) the rating of the Counterparty is subject to any downgrade, withdrawal or
qualification by an Rating Agency, and Borrower does not within thirty
(30) Business Days (A) replace the Interest Rate Cap Agreement with a
Replacement Interest Rate Cap Agreement in accordance with Section 2.4 hereof,
and (B) deliver to Lender, in form and substance reasonably satisfactory to
Lender (x) an Assignment of Interest Rate Cap (y) a recognition letter from the
Counterparty thereto acknowledging the assignment of the Replacement Interest
Rate Cap Agreement and (z) any other opinions or documents required pursuant to
Section 2.4 hereof;

 

(xvii) with respect to any term, covenant or provision set forth herein which
specifically contains a notice requirement or grace period, if Borrower shall be
in default under such term, covenant or condition after the giving of such
notice or the expiration of such grace period;

 

(xviii) [intentionally deleted];

 

(xix) [intentionally deleted];

 

(xx) if any of the assumptions contained in the Insolvency Opinion, or in any
other “non-consolidation” opinion delivered to Lender in connection with the
Loan, if any, or in any other “non-consolidation” opinion delivered subsequent
to the closing of the Loan, if any, is, or becomes untrue in any material
respect;

 

(xxi) if a default has occurred and continues beyond any applicable notice and
cure period under the Franchise Agreement, and such default permits a party to
terminate or cancel the Franchise Agreement and Borrower has not entered into a
Replacement Franchise Agreement pursuant to Section 5.1.21 hereof;

 

(xxii) if Borrower ceases to operate a hotel on the Property or terminates such
business for any reason whatsoever (other than temporary cessation in connection
with any renovations to the Property or restoration of the Property after
Casualty or Condemnation);

 

(xxiii) if Borrower terminates or cancels the Franchise Agreement, or the
Franchise Agreement expires pursuant to its terms, and, in either case, Borrower
has not entered into a Replacement Franchise Agreement pursuant to
Section 5.1.21 hereof, or operates the Property under the name of any franchisor
or hotel chain or system other than that of a Qualified Franchisor without
Lender’s prior written consent;

 

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(xxiv) if there shall be default under the Security Instrument or any of the
other Loan Documents beyond any applicable notice and cure periods contained in
such documents, whether as to Borrower or the Property, or if any other such
event shall occur or condition shall exist, if the effect of such event or
condition is to accelerate the maturity of any portion of the Debt or to permit
Lender to accelerate the maturity of all or any portion of the Debt;

 

(xxv) if there shall occur any default by the Operating Tenant, as lessee under
the Operating Lease, in the observance or performance of any term, covenant or
condition of the Operating Lease on the part of the Operating Tenant to be
observed or performed, and said default is not cured prior to the expiration of
any applicable grace period therein provided, or if any one or more of the
events referred to in the Operating Lease shall occur which would cause the
Operating Lease to terminate without notice or action by the landlord thereunder
or which would entitle the landlord to terminate the Operating Lease (except
with respect to such defaults for which Borrower may expressly terminate the
Operating Lease under Section 5.1.24 hereof) and the term thereof by giving
notice to the Operating Tenant, as tenant thereunder, or there shall be a sale,
pledge or encumbrance of the Operating Lease by Operating Tenant, or if the
Operating Lease expires pursuant to its terms or if any default occurs under the
Subordination and Attornment Agreement made between Operating Tenant and Lender
dated as of the date hereof and such default continues after the expiration of
applicable notice and grace periods, if any, and under any of the foregoing
circumstances the Operating Lease is not replaced within thirty (30) days with a
Replacement Operating Lease in accordance with the terms and conditions of
Section 5.1.24 hereof), or if the leasehold estate created by the Operating
Lease shall be surrendered or the Operating Lease shall be terminated or
cancelled for any reason or under any circumstances whatsoever and is not
replaced within thirty (30) days with a replacement Operating Lease in
accordance with the terms and conditions of Section 5.1.24 hereof, or if any of
the terms, covenants or conditions of the Operating Lease shall in any manner be
modified, changed, supplemented, altered, or amended, other than in accordance
with Section 5.1.24 hereof;

 

(xxvi) any assignment, subletting, conveyance, mortgage, pledge or other
encumbrance or transfer of the Operating Tenant’s leasehold interest in
Operating Lease (other than as permitted thereunder without the Borrower’s
consent) without (to the extent required hereunder) Lender’s prior written
consent and a Rating Confirmation; or

 

(xxvii) if Borrower shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement not specified in subsections
(i) to (xxvi) above, for ten (10) days after notice to Borrower from Lender, in
the case of any Default which can be cured by the payment of a sum of money, or
for

 

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thirty (30) days after notice from Lender in the case of any other Default;
provided, however, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such 30 day period and provided further that
Borrower shall have commenced to cure such Default within such thirty (30) day
period and thereafter diligently and expeditiously proceeds to cure the same,
such thirty (30) day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such Default,
such additional period not to exceed one hundred twenty (120) days.

 

(b) Upon the occurrence and during the continuance of an Event of Default (other
than an Event of Default described in clauses (vi) or (vii) above) and at any
time thereafter, in addition to any other rights or remedies available to it
pursuant to this Agreement and the other Loan Documents or at law or in equity,
and to the extent permitted by Applicable Law, Lender may take such action,
without notice or demand, that Lender deems advisable to protect and enforce its
rights against Borrower and in and to all or the Property, including, without
limitation, declaring the Debt to be immediately due and payable, and Lender may
enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower and any or all of the Property, including, without
limitation, all rights or remedies available at law or in equity; and upon the
occurrence and continuance of any Event of Default described in clauses (vi) or
(vii) above, the Debt and all other obligations of Borrower hereunder and under
the other Loan Documents shall immediately and automatically become due and
payable, without notice or demand, and Borrower hereby expressly waives any such
notice or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.

 

Section 8.2 Remedies.

 

(a) Upon the occurrence and during the continuance of an Event of Default, all
or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under this Agreement or any of the other
Loan Documents executed and delivered by, or applicable to, Borrower or at law
or in equity may be exercised by Lender at any time and from time to time, to
the extent permitted by Applicable Law, whether or not all or any of the Debt
shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to all or any
part of the Property or any other Collateral. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by
Applicable Law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by Applicable Law, equity or contract or as set
forth herein or in the other Loan Documents. Without limiting the generality of
the foregoing, Borrower agrees that if an Event of Default is continuing, to the
extent permitted by Applicable Law, (i) Lender is not subject to any “one
action” or “election of remedies” law or rule, and (ii) all Liens and other
rights, remedies or privileges provided to Lender shall remain in full force and
effect until Lender has exhausted all of its remedies against the Property and
the other Collateral and each Security Instrument has been foreclosed, sold
and/or otherwise realized upon in satisfaction of the Debt or the Debt has been
paid in full.

 

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(b) With respect to Borrower and the Property, nothing contained herein or in
any other Loan Document shall be construed as requiring Lender to resort to the
Property or Collateral for the satisfaction of any of the Debt in preference or
priority to any other Collateral, and Lender may seek satisfaction out of all of
the Property or any other Collateral or any part thereof, in its absolute
discretion in respect of the Debt. In addition, to the extent permitted by
Applicable Law, Lender shall have the right from time to time to partially
foreclose the Security Instrument in any manner and for any amounts secured by
the Security Instrument then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i) in
the event Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled payments of principal and interest, Lender may foreclose
the Security Instrument to recover such delinquent payments, or (ii) in the
event Lender elects to accelerate less than the entire outstanding principal
balance of the Loan, Lender may foreclose the Security Instrument to recover so
much of the principal balance of the Loan as Lender may accelerate and such
other sums secured by the Security Instrument as Lender may elect.
Notwithstanding one or more partial foreclosures, the Property shall remain
subject to the Security Instrument to secure payment of sums secured by the
Security Instrument and not previously recovered.

 

(c) Lender shall have the right, from time to time, to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other
security documents (the “Severed Loan Documents”) in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until five (5) Business Days
after notice has been given to Borrower by Lender of Lender’s intent to exercise
its rights under such power. The Severed Loan Documents shall not contain any
representations, warranties or covenants not contained in the Loan Documents and
any such representations and warranties contained in the Severed Loan Documents
will be given by Borrower only as of the Closing Date.

 

Section 8.3 Remedies Cumulative; Waivers.

 

To the extent permitted by Applicable Law, the rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. To the extent permitted by Applicable

 

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Law, Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion. To the extent permitted by Applicable
Law, no delay or omission to exercise any remedy, right or power accruing upon
an Event of Default shall impair any such remedy, right or power or shall be
construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one or more Defaults or Events of Default with respect to Borrower shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Borrower or to impair any remedy, right or power consequent thereon.

 

IX. SPECIAL PROVISIONS

 

Section 9.1 Sale of Notes and Securitization

 

Lender may, at any time, sell, transfer or assign the Note, this Agreement, the
Security Instrument and the other Loan Documents, and any or all servicing
rights with respect thereto, or grant participations therein or issue mortgage
pass-through certificates or other securities (the “Securities”) evidencing a
beneficial interest in a rated or unrated public offering or private placement
(a “Securitization”). At the request of the holder of the Note and, to the
extent not already required to be provided by Borrower under this Agreement,
Borrower shall cooperate with Lender to satisfy the market standards to which
the holder of the Note customarily adheres or which may be reasonably required
in the marketplace or by the Rating Agencies in connection with a Securitization
or the sale of the Note or the participations or Securities, including, without
limitation, to:

 

(a) (i) provide such financial and other information with respect to the
Property, Borrower, Guarantor, the REIT, Operating Tenant, and the Manager,
(ii) provide budgets relating to the Property and (iii) to perform or permit or
cause to be performed or permitted such site inspection, appraisals, market
studies, environmental reviews and reports (Phase I’s and, if appropriate, Phase
II’s), engineering reports and other due diligence investigations of the
Property, as may be reasonably requested by the holder of the Note or the Rating
Agencies or as may be necessary or appropriate in connection with the
Securitization (the “Provided Information”), together, if customary, with
appropriate verification and/or consents of the Provided Information through
letters of auditors or opinions of counsel of independent attorneys acceptable
to Lender and the Rating Agencies;

 

(b) if required by the Rating Agencies, deliver (i) [intentionally deleted],
(ii) revised opinions of counsel as to due execution and enforceability with
respect to the Property, Borrower, Guarantor, Principal, and Operating Tenant
and the Loan Documents, and (iii) revised organizational documents for Borrower,
Guarantor, and Principal, and Operating Tenant (including, without limitation,
such revisions as are necessary to comply with the provisions of Section 4.1.35
hereof), which counsel, opinions and organizational documents shall be
reasonably satisfactory to Lender and the Rating Agencies;

 

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(c) execute such amendments to the Loan Documents and organizational documents
as may be requested by the holder of the Note or the Rating Agencies or
otherwise to effect the Securitization; provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or
amendment would (except for modifications and amendments required to be made
pursuant to Section (e) and (f) below), (i) change the interest rate, the stated
maturity or the amortization of principal set forth in the Note, or (ii) modify
or amend any other material term of the Loan;

 

(d) if Lender elects, in its sole discretion, prior to or upon a Securitization,
to split the Loan into two or more parts, or the Note into multiple component
notes or tranches which may have different interest rates, amortization
payments, principal amounts, payment priorities, and maturities, Borrower agrees
to cooperate with Lender in connection with the foregoing and to execute the
required modifications and amendments to the Note, this Agreement and the Loan
Documents and to provide opinions necessary to effectuate the same. Such Notes
or components may be assigned different interest rates, so long as the initial
weighted average of such interest rates does not exceed the Applicable Interest
Rate and the scheduled amortization payments do not exceed the Scheduled
Amortization Payment;

 

(e) execute modifications to the Loan Documents changing the interest rate
and/or the amortization payments for the Loan, provided that the initial
weighted average of the interest rate spreads for the Loan after such
modification shall not exceed the weighted average of the interest rate spreads
for the Loan immediately prior to such modification and the scheduled
amortization payments after such modification will not exceed the Scheduled
Amortization Payments, if any, due under the Loan Agreement immediately prior to
such modification and the scheduled amortization payments after such
modification will not exceed the Scheduled Amortization Payments due under the
Loan Agreement immediately prior to such modification. The Borrower shall also
provide opinions and title insurance reasonably necessary to effectuate the
same; and

 

(f) make such representations and warranties as of the closing date of the
Securitization with respect to the Property, Borrower, Principal, Operating
Tenant, Guarantor, and the Loan Documents as are customarily provided in
securitization transactions and as may be reasonably requested by the holder of
the Note or the Rating Agencies and consistent with the facts covered by such
representations and warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents.

 

All third party costs and expenses and out-of-pocket expenses incurred by Lender
in connection with this Section 9.1 and the Securitization shall be paid by
Lender (except as otherwise expressly set forth herein). These shall include,
but not be limited to, fees and disbursements of legal counsel, accountants, and
other professionals retained by Lender and fees and expenses incurred for
producing any offering documents or any other materials (including travel by
Lender and its agents, design, printing, photograph and documents production
costs). Solely for the purposes of this Section 9.1, Lender shall reimburse
Borrower for all of its reasonable out-of-pocket costs and expenses, including
the reasonable out-of-pocket fees and

 

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expenses of Borrower’s counsel in excess of $25,000 (it being understood that
Borrower shall be responsible for paying up to $25,000 of such costs, fees and
expenses), that Borrower incurs in connection with complying with a request made
by Lender under this Section 9.1 in connection with a Securitization. Upon
Lender’s request, Borrower shall deliver to Lender such evidence required by
Lender demonstrating that Borrower has incurred such out-of-pocket costs, fees
and expenses, including, delivery of bills and invoices reflecting such fees,
costs and expenses. Notwithstanding the foregoing, the provisions of this
paragraph shall in no way limit or affect any Borrower obligation to pay any
costs expressly required to be paid by Borrower pursuant to any other Sections
of this Agreement.

 

Section 9.2 Securitization Indemnification.

 

(a) Borrower and Guarantor understand that certain of the Provided Information
may be included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus supplement, private placement
memorandum, offering circular or other offering document (each a “Disclosure
Document”) and may also be included in filings (an “Exchange Act Filing”) with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended (the “Securities Act”), or the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”), or provided or made available to Investors or
prospective Investors in the Securities, the Rating Agencies, and service
providers relating to the Securitization. In the event that the Disclosure
Document is required to be revised prior to the sale of all Securities, Borrower
and Guarantor will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information necessary to keep the
Disclosure Document accurate and complete in all material respects with respect
to Borrower, Guarantor, the Property and the Operating Tenant.

 

(b) Borrower and Guarantor agree to provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, or (iii) collateral
and structured term sheets or similar materials, an indemnification certificate
(A) certifying that Borrower has carefully examined such memorandum or
prospectus or term sheets, as applicable, solely with respect to the factual
contents thereof related to the Loan, the Borrower, the Guarantor, the Operating
Tenant, the REIT, the Manager, the Franchisor, the Property and the Provided
Information and such sections (and any other sections reasonably requested) do
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 9.2, Lender hereunder shall include its
officers and directors), the Affiliate of Lehman Brothers Inc. (“Lehman”) that
has filed the registration statement relating to the Securitization (the
“Registration Statement”), each of its directors, each of its officers who have
signed the Registration Statement and each Person who controls the Affiliate
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the “Lehman Group”), and Lehman, each of its
directors and each Person who controls Lehman within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act (collectively, the
“Underwriter Group”) for any losses, claims, damages or liabilities
(collectively, the

 

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“Liabilities”) to which Lender, the Lehman Group or the Underwriter Group may
become subject insofar as the Liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
such sections described in clause (A) above (but solely with respect to the
factual contents thereof relating to the Loan, the Borrower, the Guarantor, the
Operating Tenant, the REIT, the Manager, the Franchisor, and the Property and
the Provided Information), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated in such
sections or necessary in order to make the statements in such sections or in
light of the circumstances under which they were made, not misleading and
(C) agreeing to reimburse Lender, the Lehman Group and the Underwriter Group for
any legal or other expenses reasonably incurred by Lender the Lehman Group and
the Underwriter Group in connection with investigating or defending the
Liabilities; provided, however, that Borrower will be liable in any such case
under clauses (B) or (C) above only to the extent that any such Liability arises
out of or is based upon any such untrue statement or omission made therein in
reliance upon and in conformity with information furnished to Lender by or on
behalf of Borrower in connection with the preparation of the memorandum or
prospectus or in connection with the underwriting of the debt, including,
without limitation, financial statements of Borrower, operating statements, rent
rolls, environmental site assessment reports and property condition reports with
respect to the Property. This indemnification will be in addition to any
liability which Borrower may otherwise have. Moreover, the indemnification
provided for in clauses (B) and (C) above shall be effective whether or not an
indemnification certificate described in (A) above is provided and shall be
applicable based on information previously provided by Borrower or its
Affiliates if Borrower does not provide the indemnification certificate.

 

(c) In connection with filings under the Exchange Act, Borrower and Guarantor
agree to indemnify (i) Lender, the Lehman Group and the Underwriter Group for
Liabilities to which Lender, the Lehman Group or the Underwriter Group may
become subject insofar as the Liabilities arise out of or are based upon the
omission or alleged omission to state in the Provided Information a material
fact required to be stated in the Provided Information in order to make the
statements in the Provided Information, in light of the circumstances under
which they were made not misleading and (ii) reimburse Lender, the Lehman Group
or the Underwriter Group for any reasonable legal or other expenses reasonably
incurred by Lender, the Lehman Group or the Underwriter Group in connection with
defending or investigating the Liabilities.

 

(d) Promptly after receipt by an indemnified party under this Section 9.2 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the

 

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aforesaid notice from such indemnified party, to assume the defense thereof with
counsel satisfactory to such indemnified party. The indemnifying party’s legal
counsel shall control the defense of such action, except that no settlement or
compromise shall be accepted or entered into which would bind any indemnified
party unless such indemnified party has given its prior written consent thereto,
which consent will not be unreasonably withheld. After notice from the
indemnifying party to such indemnified party under this Section 9.2 the
indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there are any legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. The indemnifying party shall not be liable for the expenses of more
than one such separate counsel unless an indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to another indemnified party. Prior to the
occurrence and the continuance of an Event of Default, in the event that any
indemnified party wishes to enter into a settlement agreement in connection with
such action which would give rise to an indemnified obligation of the
indemnifying party hereunder and such indemnifying party does not consent to
such settlement agreement, such indemnified party agrees not to enter into such
settlement agreement provided the indemnifying party delivers evidence
reasonably satisfactory to such indemnified party that the indemnifying party
shall be able to satisfy its indemnification obligations under this Section in
the event a judgment is rendered against the indemnifying party with respect to
such action. In such event, the indemnifying party shall pay or, at the
indemnified party’s option, reimburse it for the reasonable fees and expenses of
its legal counsel and other professionals.

 

(e) In order to provide for just and equitable contribution in circumstances in
which the indemnifications provided for in Section 9.2(b) or (c) is or are for
any reason held to be unenforceable by an indemnified party in respect of any
Liabilities (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under Section 9.2(b) or (c), the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such Liabilities (or action in respect thereof); provided, however,
that no Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. In determining
the amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) Lehman’s and Borrower’s relative
knowledge and access to information concerning the matter with respect to which
claim was asserted; (ii) the opportunity to correct and prevent any statement or
omission; and (iii) any other equitable considerations appropriate in the
circumstances. Lender, Borrower, and Guarantor hereby agree that it would not be
equitable if the amount of such contribution were determined solely by pro rata
or per capita allocation.

 

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(f) The liabilities and obligations of Borrower, Guarantor and Lender under this
Section 9.2 shall survive the termination of this Agreement and the satisfaction
and discharge of the Debt.

 

Section 9.3 Servicer.

 

At the option of Lender or Agent, and at the Lender’s or Agent’s expense, the
Loan may be serviced by a servicer/trustee (the “Servicer”) selected by Lender
or Agent and Lender or Agent may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between
Lender or Agent and Servicer.

 

Section 9.4 Exculpation.

 

(a) Except as otherwise provided herein, in the Security Instrument or in the
other Loan Documents, Lender shall not enforce the liability and obligation of
Borrower to perform and observe the obligations contained in this Agreement, the
Note or the Security Instrument by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding to enable Lender to enforce and realize upon this Agreement, the
Note, the Security Instrument, the other Loan Documents, and the interest in the
Property, the Rents and any other collateral given to Lender created by this
Agreement, the Note, the Security Instrument and the other Loan Documents;
provided, however, that any judgment in any such action or proceeding shall be
enforceable against Borrower only to the extent of Borrower’s interest in the
Property, in the Rents and in any other collateral given to Lender. Lender, by
accepting this Agreement, the Note and the Security Instrument, agrees that it
shall not, except as otherwise provided herein or in the Security Instrument,
sue for, seek or demand any deficiency judgment against Borrower in any such
action or proceeding, under or by reason of or under or in connection with this
Agreement, the Note, the Security Instrument or the other Loan Documents. The
provisions of this Section shall not, however, (i) constitute a waiver, release
or impairment of any obligation evidenced or secured by this Agreement, the
Note, the Security Instrument or the other Loan Documents; (ii) impair the right
of Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under the Security Instrument; (iii) affect the
validity or enforceability of any indemnity (including, without limitation, the
Environmental Indemnity), guaranty (including, without limitation, the
Guaranty), master lease or similar instrument made in connection with this
Agreement, the Note, the Security Instrument, or the other Loan Documents;
(iv) impair the right of Lender to obtain the appointment of a receiver;
(v) impair the enforcement of the Assignment of Leases; (vi) impair the right of
Lender to enforce the provisions of Section 10.2 of the Security Instrument or
Sections 4.1.8, 4.1.28, 5.1.9 and 5.2.8 hereof; or (vii) impair the right of
Lender to obtain a deficiency judgment or other judgment on the Note against
Borrower if necessary to (A) preserve or enforce its rights and remedies against
the Property or (B) obtain any Insurance Proceeds or Awards to which Lender
would otherwise be entitled under the terms of this Agreement or the Security
Instrument; provided however, Lender shall only enforce such judgment to the
extent of the Insurance Proceeds and/or Awards.

 

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(b) Notwithstanding the provisions of this Section 9.4 to the contrary, Borrower
shall be personally liable to Lender for the Losses it incurs due to: (i) fraud
or intentional misrepresentation in connection with the execution and the
delivery of this Agreement, the Note, the Security Instrument, or the other Loan
Documents; (ii) Borrower’s misappropriation or intentional misapplication of
Rents received by Borrower after the occurrence and during the continuance of an
Event of Default; (iii) Borrower’s misappropriation or intentional
misapplication of security deposits or Rents collected more than thirty
(30) days in advance; (iv) Borrower’s misappropriation or intentional
misapplication of Insurance Proceeds or Awards; (v) Borrower’s failure to pay
Taxes, Other Charges (except to the extent that sums sufficient to pay such
amounts have been deposited in escrow with Lender pursuant to the terms of
Section 7.2 hereof), and charges for labor or materials or other charges that
can create Liens on the Property (except to the extent that there is
insufficient cash flow from the operation of the Property); (vi) Borrower’s
failure to return or to reimburse Lender for all Personal Property taken from
the Property by or on behalf of Borrower (other than Personal Property that is
obsolete or removed or disposed in the ordinary course of business of owning and
operating the Property) and not replaced with Personal Property of the same
utility and of the same or greater value; (vii) any act of intentional waste or
arson by Borrower, Principal, or any Affiliate thereof or Guarantor;
(viii) [intentionally deleted]; (ix) Borrower’s failure to comply with the
provisions of Section 5.1.10 hereof (provided Borrower shall have an additional
ten (10) days after written notice of such failure to deliver the required
financial statements or reports pursuant to Section 5.1.10 hereof before
recourse is sought); (x) Borrower’s failure to comply with the provisions of
Sections 4.1.39 or 5.1.19 of this Agreement; (xi) Borrower’s or Principal’s
default under Section 4.1.35 hereof; or (xii) Operating Tenant’s or Principal’s
(as defined in the Subordination and Attornment Agreement) default under
Section 11 of the Subordination and Attornment Agreement.

 

(c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability as set forth in Subsection (a) above SHALL BECOME NULL AND
VOID and shall be of no further force and effect (i) in the event of Borrower’s
default under Section 5.2.10 hereof or Article 7 of the Security Instrument,
(ii) if the Property or any part thereof shall become an asset in (A) a
voluntary bankruptcy or insolvency proceeding or (B) an involuntary bankruptcy
or insolvency proceeding commenced by any Person (other than Lender) and
Borrower fails to use its commercially reasonable efforts to obtain a dismissal
of such proceedings.

 

(d) Nothing herein shall be deemed to be a waiver of any right which Lender may
have under Section 506(a), 506(b), 1111(b) or any other provision of the
Bankruptcy Code to file a claim for the full amount of the indebtedness secured
by the Security Instrument or to require that all collateral shall continue to
secure all of the indebtedness owing to Lender in accordance with this
Agreement, the Note, the Security Instrument and the other Loan Documents.

 

Section 9.5 Reserved.

 

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Section 9.6 Reserved.

 

Section 9.7 Syndication

 

9.7.1 Syndication.

 

The provisions of this Section 9.7 shall only apply in the event that the Loan
is syndicated in accordance with the provisions of this Section 9.7 set forth
below.

 

9.7.2 Sale of Loan, Co-Lenders, Participations and Servicing.

 

(a) Lender and any Co-Lender may, at their option, without Borrower’s consent
(but with notice to Borrower), sell with novation all or any part of their
right, title and interest in, and to, and under the Loan (the “Syndication”), to
one or more additional lenders (each a “Co-Lender”). Each additional Co-Lender
shall enter into an assignment and assumption agreement (the “Assignment and
Assumption”) assigning a portion of Lender’s or Co-Lender’s rights and
obligations under the Loan, and pursuant to which the additional Co-Lender
accepts such assignment and assumes the assigned obligations (a “Pro Rata Share
of the Loan”). From and after the effective date specified in the Assignment and
Assumption (i) each Co-Lender shall be a party hereto and to each Loan Document
to the extent of the applicable percentage or percentages set forth in the
Assignment and Assumption and, except as specified otherwise herein, shall
succeed to the rights and obligations of Lender and the Co-Lenders hereunder and
thereunder in respect of the Loan, and (ii) Lender, as lender and each
Co-Lender, as applicable, shall, to the extent such rights and obligations have
been assigned by it pursuant to such Assignment and Assumption, relinquish its
rights and be released from its obligations hereunder and under the Loan
Documents.

 

(b) The liabilities of Lender and each of the Co-Lenders shall be several and
not joint, and Lender’s and each Co-Lender’s obligations to Borrower under this
Agreement shall be reduced by the amount of each such Assignment and Assumption.
Neither Lender nor any Co-Lender shall be responsible for the obligations of any
other Co-Lender. Lender and each Co-Lender shall be liable to Borrower only for
their respective proportionate shares of the Loan. If for any reason any of the
Co-Lenders shall fail or refuse to abide by their obligations under this
Agreement, Lender and the other Co-Lenders shall not be relieved of their
obligations, if any, hereunder, including their obligations to make their pro
rata share of any advance; notwithstanding the foregoing, Lender and the
Co-Lenders shall have the right, but not the obligation, at their sole option,
to make the defaulting Co- Lender’s pro rata share of such advance pursuant to
the Co-Lending Agreement.

 

(c) Borrower agrees that it shall, in connection with any sale of all or any
portion of the Loan, whether in whole or to an additional Co-Lender or
Participant, within ten (10) Business Days after requested by Agent, furnish
Agent with the certificates required under Sections 5.1.10 and 5.1.13 hereof and
such other information as reasonably requested by any additional Co-Lender or
Participant in performing its due diligence in connection with its purchase of
an interest in the Loan.

 

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(d) Lender (or an Affiliate of Lender) shall act as administrative agent for
itself and the Co-Lenders (together with any successor administrative agent, the
“Agent”) pursuant to this Section 9.7. Borrower acknowledges that Lender, as
Agent, shall have the sole and exclusive authority to execute and perform this
Agreement and each Loan Document on behalf of itself, as Lender and as agent for
itself and the Co-Lenders subject to the terms of the Co-Lending Agreement.
Lender acknowledges that Lender, as Agent, shall retain the exclusive right to
grant approvals and give consents with respect to the operating budgets required
to be delivered hereunder and with respect to matters concerning the
establishment and administration of the Lockbox Account and the other Accounts.
Except as otherwise provided herein, Borrower shall have no obligation to
recognize or deal directly with any Co-Lender, and no Co-Lender shall have any
right to deal directly with Borrower with respect to the rights, benefits and
obligations of Borrower under this Agreement, the Loan Documents or any one or
more documents or instruments in respect thereof. Borrower may rely conclusively
on the actions of Lender as Agent to bind Lender and the Co-Lenders,
notwithstanding that the particular action in question may, pursuant to this
Agreement or the Co-Lending Agreement be subject to the consent or direction of
some or all of the Co-Lenders. Lender may resign as Agent of the Co-Lenders, in
its sole discretion, or if required to by the Co-Lenders in accordance with the
term of the Co-Lending Agreement, in each case without the consent of Borrower.
Upon any such resignation, a successor Agent shall be determined pursuant to the
terms of the Co-Lending Agreement. The term Agent shall mean any successor
Agent.

 

(e) Notwithstanding any provision to the contrary in this Agreement, the Agent
shall not have any duties or responsibilities except those expressly set forth
herein (and in the Co-Lending Agreement) and no covenants, functions,
responsibilities, duties, obligations or liabilities of Agent shall be implied
by or inferred from this Agreement, the Co-Lending Agreement, or any other Loan
Document, or otherwise exist against Agent.

 

(f) Except to the extent its obligations hereunder and its interest in the Loan
have been assigned pursuant to one or more Assignments and Assumption, Lender,
as Agent, shall have the same rights and powers under this Agreement as any
other Co-Lender and may exercise the same as though it were not Agent,
respectively. The term “Co-Lender” or “Co-Lenders” shall, unless otherwise
expressly indicated, include Lender in its individual capacity. Lender and the
other Co-Lenders and their respective Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, Borrower, or any Affiliate of Borrower and any Person who may
do business with or own securities of Borrower or any Affiliate of Borrower, all
as if they were not serving in such capacities hereunder and without any duty to
account therefor to each other.

 

(g) If required by any Co-Lender, each Borrower hereby agrees to execute
supplemental notes in the principal amount of such Co-Lender’s pro rata share of
the Loan substantially in the form of the Note, and such supplemental note shall
(i) be payable to order of such Co-Lender, (ii) be dated as of the Closing Date,
and (iii) mature on the Maturity Date. Such supplemental note shall provide that
it evidences a portion of the existing indebtedness hereunder and under the Note
and not any new or additional indebtedness of Borrower. The term “Note” as used
in this Agreement and in all the other Loan Documents shall include all such
supplemental notes.

 

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(h) Lender, as Agent, shall maintain at its domestic lending office or at such
other location as Lender, as Agent, shall designate in writing to each Co-Lender
and Borrower a copy of each Assignment and Assumption delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Co-Lenders, the amount of each Co-Lender’s proportionate share of the Loan and
the name and address of each Co-Lender’s agent for service of process (the
“Register”). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Lender, as Agent, and the
Co-Lenders may treat each person or entity whose name is recorded in the
Register as a Co-Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection and copying by Borrower or any
Co-Lender during normal business hours upon reasonable prior notice to the
Agent. A Co-Lender may change its address and its agent for service of process
upon written notice to Lender, as Agent, which notice shall only be effective
upon actual receipt by Lender, as Agent, which receipt will be acknowledged by
Lender, as Agent, upon request.

 

(i) Notwithstanding anything herein to the contrary, any financial institution
or other entity may be sold a participation interest in the Loan by Lender or
any Co-Lender without Borrower’s consent (such financial institution or entity,
a “Participant”) (x) if such sale is without novation and (y) if the other
conditions set forth in this paragraph are met. No Participant shall be
considered a Co-Lender hereunder or under the Note or the Loan Documents. No
Participant shall have any rights under this Agreement, the Note or any of the
Loan Documents and the Participant’s rights in respect of such participation
shall be solely against Lender or Co-Lender, as the case may be, as set forth in
the participation agreement executed by and between Lender or Co-Lender, as the
case may be, and such Participant. No participation shall relieve Lender or
Co-Lender, as the case may be, from its obligations hereunder or under the Note
or the Loan Documents and Lender or Co- Lender, as the case may be, shall remain
solely responsible for the performance of its obligations hereunder.

 

(j) Notwithstanding any other provision set forth in this Agreement, Lender or
any Co-Lender may at any time create a security interest in all or any portion
of its rights under this Agreement (including, without limitation, amounts owing
to it in favor of any Federal Reserve Bank in accordance with Regulation A of
the Board of Governors of the Federal Reserve System), provided that no such
security interest or the exercise by the secured party of any of its rights
thereunder shall release Lender or Co-Lender from its funding obligations
hereunder.

 

9.7.3 Cooperation in Syndication.

 

(a) Borrower and Guarantor agree to assist Lender in completing a Syndication
satisfactory to Lender. Such assistance shall include (i) direct contact between
senior management and advisors of Borrower and the proposed Co-Lenders,
(ii) assistance in the preparation of a confidential information memorandum and
other marketing materials to be used in connection with the Syndication,
(iii) the hosting, with

 

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Lender, of one or more meetings of prospective Co-Lenders or with the Rating
Agencies, (iv) the delivery of appraisals satisfactory to Lender if required,
and (v) working with Lender to procure a rating for the Loan by the Rating
Agencies.

 

(b) Lender shall manage all aspects of the Syndication of the Loan, including
decisions as to the selection of institutions to be approached and when they
will be approached, when their commitments will be accepted, which institutions
will participate, the allocations of the commitments among the Co-Lenders and
the amount and distribution of fees among the Co-Lenders. To assist Lender in
its Syndication efforts, Borrower and Guarantor agree promptly to prepare and
provide to Lender all information with respect to Borrower, Manager, Guarantor,
Principal, Operating Tenant, and the Property contemplated hereby, including all
financial information and projections (the “Projections”), as Lender may
reasonably request in connection with the Syndication of the Loan. Borrower
hereby represents and covenants that (i) all information other than the
Projections (the “Information”) that has been or will be made available to
Lender by Borrower or any of their representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements are made and (ii) the Projections that have been or will be made
available to Lender by Borrower or any of their representatives have been or
will be prepared in good faith based upon reasonable assumptions. Borrower
understands that in arranging and syndicating the Loan, Lender, the Co-Lenders
and, if applicable, the Rating Agencies, may use and rely on the Information and
Projections without independent verification thereof.

 

(c) If required in connection with the Syndication, Borrower and Guarantor
hereby agrees to:

 

(i) amend the Loan Documents to give Lender the right, at Borrower’s sole cost
and expense, to have the Property reappraised on an annual basis;

 

(ii) deliver updated financial and operating statements and other information
reasonably required by Lender to facilitate the Syndication;

 

(iii) deliver reliance letters reasonably satisfactory to Lender with respect to
the environmental assessments and reports delivered to Lender prior to the
Closing Date, which will run to Lender and its successors and assigns; and

 

(iv) execute modifications to the Loan Documents required by the Co- Lenders,
provided that such modification will not (except as set forth in (v) and
(vi) below) change any material or economic terms of the Loan Documents, or
otherwise materially increase the obligations or materially decrease the rights
of Borrower pursuant to the Loan Documents;

 

(v) if Lender elects, in its sole discretion, prior to or upon a Syndication, to
split the Loan into two or more parts, or the Note into multiple

 

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component notes or tranches which may have different interest rates, principal
amounts, payment priorities, and maturities, Borrower agrees to cooperate with
Lender in connection with the foregoing and to execute the required
modifications and amendments to the Note, this Agreement and the Loan Documents
and to provide opinions necessary to effectuate the same. Such Notes or
components may be assigned different interest rates, so long as the initial
weighted average of such interest rates does not exceed the Applicable Interest
Rate;

 

(vi) execute modifications to the Loan Documents changing the interest rate for
the Loan provided that the initial weighted average of the interest rate spreads
for the Loan after such modification shall not exceed the weighted average of
the interest rate spreads for the Loan immediately prior to such modification
and the scheduled amortization payments after such modification will not exceed
the Scheduled Amortization Payments due under the Loan Agreement immediately
prior to such modification. The Borrower shall also provide opinions and title
insurance reasonably necessary to effectuate the same; and

 

(vii) deliver an Insolvency Opinion (at the sole cost and expense of Borrower).

 

All third party costs and expenses and out-of-pocket expenses incurred by Lender
in connection with this Section 9.7.3 and the Syndication shall be paid by
Lender (except as otherwise expressly set forth herein). These shall include,
but not be limited to, fees and disbursements of legal counsel, accountants, and
other professionals retained by Lender and fees and expenses incurred for
producing any offering documents or any other materials (including travel by
Lender and its agents, design, printing, photograph and documents production
costs). Solely for the purposes of this Section 9.7.3, Lender shall reimburse
Borrower for all of its reasonable out-of-pocket costs and expenses, including
the reasonable out-of-pocket fees and expenses of Borrower’s counsel in excess
of $25,000 (it being understood that Borrower shall be responsible for paying up
to $25,000 of such costs, fees and expenses), that Borrower incurs in connection
with complying with a request made by Lender under this Section 9.7.3 in
connection with a Syndication. Upon Lender’s request, Borrower shall deliver to
Lender such evidence required by Lender demonstrating that Borrower has incurred
such out-of-pocket costs, fees and expenses, including, delivery of bills and
invoices reflecting such fees, costs and expenses. Notwithstanding the
foregoing, the provisions of this paragraph shall in no way limit or affect any
Borrower obligation to pay any costs expressly required to be paid by Borrower
pursuant to any other Sections of this Agreement.

 

9.7.4 Payment of Agent’s, and Co-Lender’s Expenses, Indemnity, etc. Borrower and
Guarantor shall:

 

(a) whether or not the transactions contemplated in this Section 9.7 are
consummated, pay all reasonable out-of-pocket costs and expenses (A) of Agent’s
counsel fees and expenses relating to the negotiation, preparation, execution
and delivery of the Note, this Agreement, the Security Instrument, and the other
Loan Documents and the documents and instruments referred to therein, the
creation, perfection or protection

 

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of Lender’s and Co-Lender’s liens on the Property (including, without
limitation, fees and expenses for title insurance, property inspections,
appraisals, if required for Syndication, surveys, lien searches, filing and
recording fees, and escrow fees and expenses), and any amendment, waiver or
consent relating to any of the Loan Documents including releases, (but Agent and
the Co-Lender’s shall pay their own respective counsel fees) and (B) of Agent
and Co-Lenders in connection with the preservation of rights under, any
amendment, waiver or consent relating to, and enforcement of, the Loan Documents
and the documents and instruments referred to therein or in connection with any
restructuring or rescheduling of the Obligations (including, without limitation,
the reasonable fees and disbursements of counsel for Agent and the Co-Lenders);

 

(b) pay, and hold Agent and each Co-Lender harmless from and against, any and
all present and future stamp, excise and other similar taxes with respect to the
foregoing matters and hold Agent and each Co-Lender harmless from and against
any and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to Agent or such Co-Lender) to pay such
taxes; and

 

(c) indemnify Agent, (in its capacity as Lender and as Agent), and each Co-
Lender, its officers, directors, employees, representatives and agents and any
persons or entities owned or Controlled by, owning or Controlling, or under
common Control or Affiliated with Agent, Agent, or each Co-Lender (each an
“Indemnitee”) from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitee in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) that may at any time (including, without
limitation, at any time following the payment of the Obligations) be imposed on,
asserted against or incurred by any Indemnitee as a result of, or arising in any
manner out of, or in any way related to or by reason of, (i) the execution,
delivery or performance of any Loan Document by Borrower, (ii) the breach of any
of Borrower’s representations and warranties or of any of Borrower’s
Obligations, (iii) a default under Section 5.2.8 hereof, including, without
limitation, reasonable attorneys’ fees and costs incurred in the investigation,
defense, and settlement of losses incurred in correcting any prohibited
transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA, the Code, any State statute or
other similar law that may be required, and (iv) the exercise by Agent and the
Co-Lenders of their rights and remedies (including, without limitation,
foreclosure) under any Loan Documents, but excluding, as to any Indemnitee, any
such losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements incurred solely by reason of
the gross negligence or willful misconduct of such Indemnitee as finally
determined by a court of competent jurisdiction (collectively, “Indemnified
Liabilities”). Borrower and Guarantor further agree that, without Agent’s or the
Co-Lenders’ prior written consent, it will not enter into any settlement of a
lawsuit, claim or other proceeding arising or relating to any Indemnified
Liability unless such settlement includes an explicit and unconditional release
from the party bringing such lawsuit, claim or other proceeding of each
Indemnitee. Borrower’s and Guarantor’s obligations under

 

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this Section shall survive the termination of this Agreement and the payment of
the Obligations. Borrower and Guarantor shall have the right to undertake,
conduct and control through counsel of its own choosing (which counsel shall be
acceptable to the Indemnitee acting reasonably), the conduct and settlement of
the Indemnified Liabilities, and the Indemnitee shall cooperate with Borrower
and Guarantor in connection therewith; provided that Borrower and Guarantor
shall permit the Indemnitee to participate in such conduct and settlement
through counsel chosen by the Indemnitee, but reasonable fees and expenses of
such counsel shall be borne by the Indemnitee. Notwithstanding the foregoing,
the Indemnitee shall have the right to employ its own counsel, and the
reasonable fees and expenses of such counsel shall be at Borrower’s and
Guarantor’s cost and expense if the Indemnitee reasonably determines that
(i) Borrower’s and Guarantor’s counsel is not adequately defending any claim or
proceeding in a manner reasonably acceptable to Indemnitee or (ii) the interests
of Borrower and Guarantor and the Indemnitee have become adverse in any such
claim or course of action; provided, however Borrower, in such event, shall only
be liable for the reasonable legal expenses of one counsel for all such
Indemnitees. None of Borrower, Guarantor or any Indemnitee shall be liable for
any settlement of any Indemnified Liability effected without its prior written
consent, such consent not to be unreasonably withheld. No Indemnitee shall be
liable for any indirect or consequential damages in connection with its
activities related to the Loan, the Securitization or the Syndication.

 

9.7.5 Limitation of Liability.

 

No claim may be made by Borrower, or any other Person against Agent, or any
Co-Lenders or the Affiliates, directors, officers, employees, attorneys or agent
of any of such Persons for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement or any act, omission or event occurring in connection therewith; and
Borrower hereby waives, releases and agrees not to sue upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.

 

9.7.6 No Joint Venture.

 

Notwithstanding anything to the contrary herein contained, neither Agent, nor
any Co-Lender by entering into this Agreement or by taking any action pursuant
hereto, will be deemed a partner or joint venturer with Borrower.

 

9.7.7 Voting Rights of Co-Lenders.

 

Borrower acknowledges that the Co-Lending Agreement may contain provisions which
require that amendments, waivers, extensions, modifications, and other decisions
with respect to the Loan Documents shall require the approval of all or a number
of the Co-Lenders holding in the aggregate a specified percentage of the Loan or
any one or more Co-Lenders that are specifically affected by such amendment,
waiver, extension, modification or other decision.

 

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X. MISCELLANEOUS

 

Section 10.1 Survival.

 

This Agreement and all covenants, agreements, representations and warranties
made herein and in the certificates delivered pursuant hereto shall survive the
making by Lender of the Loan and the execution and delivery to Lender of the
Note, and shall continue in full force and effect so long as all or any of the
Debt is outstanding and unpaid unless a longer period is expressly set forth
herein or in the other Loan Documents. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.

 

Section 10.2 Lender’s Discretion.

 

Whenever pursuant to this Agreement, Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.

 

Section 10.3 Governing Law.

 

(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE
LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED,
APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS), PROVIDED HOWEVER, THAT WITH
RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED BY THIS AGREEMENT, THE SECURITY INSTRUMENT AND THE
OTHER LOAN DOCUMENTS, AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, THE LAWS OF
THE STATE WHERE THE PROPERTY IS LOCATED SHALL APPLY.

 

(b) WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR UNDER THIS
AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS, BORROWER (A) IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
YORK, NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT, THE NOTE OR
THE OTHER LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM
BRINGING AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.

 

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Section 10.4 Modification, Waiver in Writing.

 

No modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.

 

Section 10.5 Delay Not a Waiver.

 

Neither any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege hereunder, or under the Note or under any
other Loan Document, or any other instrument given as security therefor, shall
operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.

 

Section 10.6 Notices.

 

All notices or other written communications hereunder shall be deemed to have
been properly given (i) upon delivery, if delivered in person or by facsimile
transmission with receipt acknowledged by the recipient thereof and confirmed by
telephone by sender, (ii) one (1) Business Day after having been deposited for
overnight delivery with any reputable overnight courier service, or (iii) three
(3) Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

 

If to Borrower:

   MeriStar Secured Holdings LLC      c/o MeriStar Hospitality Corporation     
4501 N. Fairfax Drive, Suite 500      Arlington, Virginia 22203      Attention:
Jerome J. Kraisinger, Esq. (General Counsel)      Facsimile No.: (703) 812-7235

With a copy to:

   Latham & Watkins LLP      885 Third Avenue, Suite 1000      New York, New
York 10022-4834      Attention: James I. Hisiger      Facsimile No.: (212)
751-4864

 

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If to Lender / Agent:

   Lehman Brothers Holdings Inc.      399 Park Avenue      New York, New York
10022     

Attention: Jeffrey Peltier

Facsimile No.: (212) 758-3128

With a copy to:

   Thacher Proffitt & Wood LLP      Two World Financial Center New York, New
York 10281      Attention: Mitchell G. Williams, Esq.      Facsimile No.: (212)
912-7751

With a copy of all notices,

   Midland Loan Services

certificates, and other

   10851 Mastin Street, Suite 300

information under Section

   Overland Park, Kansas 66210

5.1.10 to:

  

Attention: Jeff Wagner

    

Facsimile No.: (913) 253-9001

 

or addressed as such party may from time to time designate by written notice to
the other parties.

 

Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.

 

Section 10.7 Trial by Jury.

 

BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS,
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 BORROWER,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY BORROWER.

 

Section 10.8 Headings.

 

The Article and/or Section headings and the Table of Contents in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

 

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Section 10.9 Severability.

 

Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under Applicable Law, but if any provision
of this Agreement shall be prohibited by or invalid under Applicable Law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.

 

Section 10.10 Preferences.

 

Lender shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments by Borrower to any portion of the obligations of
Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
State or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the obligations hereunder or part thereof intended
to be satisfied shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by Lender.

 

Section 10.11 Waiver of Notice.

 

Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.

 

Section 10.12 Remedies of Borrower.

 

In the event that a claim or adjudication is made that Lender or its agents have
acted unreasonably or unreasonably delayed acting in any case where by law or
under this Agreement or the other Loan Documents, Lender or such agent, as the
case may be, has an obligation to act reasonably or promptly, Borrower agrees
that neither Lender nor its agents shall be liable for any monetary damages, and
Borrower’s sole remedies shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. The parties hereto agree that any
action or proceeding to determine whether Lender has acted reasonably shall be
determined by an action seeking declaratory judgment.

 

Section 10.13 Expenses; Indemnity.

 

(a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender within five (5) days of receipt of written notice from Lender
for all reasonable costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and

 

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delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby and all the costs of furnishing
all opinions by counsel for Borrower (including without limitation any opinions
requested by Lender as to any legal matters arising under this Agreement or the
other Loan Documents with respect to the Property); (ii) Borrower’s ongoing
performance of and compliance with Borrower’s respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance requirements;
(iii) Lender’s ongoing performance and compliance with all agreements and
conditions contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iv) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Lender; (v) securing Borrower’s
compliance with any requests made pursuant to the provisions of this Agreement;
(vi) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (vii) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents, the Property, or any other security given for the
Loan; and (viii) enforcing any obligations of or collecting any payments due
from Borrower under this Agreement, the other Loan Documents or with respect to
the Property or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a “work-out”
or of any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Any cost and expenses due and payable to Lender may be
paid from any amounts in the Lockbox Account.

 

(b) Borrower shall indemnify, defend and hold harmless Lender from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of
(i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Additional Indemnified Liabilities”); provided, however,
that Borrower shall not have any obligation to Lender hereunder to the extent
that such Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under Applicable Law
to the payment and satisfaction of all Additional Indemnified Liabilities
incurred by Lender.

 

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(c) Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless Lender and the Indemnified Parties from and against
any and all losses (including, without limitation, reasonable attorneys’ fees
and costs incurred in the investigation, defense, and settlement of losses
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA, the Code, any State statute or other similar law that may be required, in
Lender’s sole discretion) that Lender may incur, directly or indirectly, as a
result of a default under Sections 4.1.8 or 5.2.8 hereof.

 

(d) Borrower covenants and agrees to pay for or, if Borrower fails to pay, to
reimburse Lender for any fees and expenses incurred by any Rating Agency in
connection with any consent, approval, waiver or confirmation obtained from such
Rating Agency pursuant to the terms and conditions of this Agreement or any
other Loan Document and Lender shall be entitled to require payment of such fees
and expenses as a condition precedent to the obtaining of any such consent,
approval, waiver or confirmation.

 

Section 10.14 Schedules and Exhibits Incorporated.

 

The Schedules and Exhibits annexed hereto are hereby incorporated herein as a
part of this Agreement with the same effect as if set forth in the body hereof.

 

Section 10.15 Offsets, Counterclaims and Defenses.

 

Any assignee of Lender’s interest in and to this Agreement, the Note and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.

 

Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries.

 

(a) Borrower and Lender intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lender. Nothing
herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender or
to grant Lender any interest in the Property other than that of mortgagee,
beneficiary or lender.

 

(b) This Agreement and the other Loan Documents are solely for the benefit of
Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
any right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations
of Lender to make the Loan

 

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hereunder are imposed solely and exclusively for the benefit of Lender and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will refuse to
make the Loan in the absence of strict compliance with any or all thereof and no
other Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable
to do so.

 

Section 10.17 Publicity.

 

All news releases, publicity or advertising by Borrower or their Affiliates
through any media intended to reach the general public which refers to the Loan
Documents or the financing evidenced by the Loan Documents, to Lender, Lehman,
or any of their Affiliates shall be subject to the prior written approval of
Lender, which shall not be unreasonably withheld. All news releases, publicity
or advertising by Lender or its Affiliates (other than in connection with a
Securitization or a Syndication) through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Borrower, or any of their Affiliates shall be subject to the prior
written approval of Borrower or Guarantor, which shall not be unreasonably
withheld. Notwithstanding the foregoing, disclosure required by any federal or
State securities laws, rules or regulations, as determined by Borrower’s or
Lender’s counsel, respectively, shall not be subject to the prior written
approval of Lender or Borrower, as applicable.

 

Section 10.18 Waiver of Marshalling of Assets.

 

To the fullest extent permitted by Applicable Law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower’s partners and others with interests in Borrower, and of the
Property, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Security Instrument, and agrees not to assert
any right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Property for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Property in preference to every other claimant whatsoever. In addition,
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or part of the Security Instrument, any equitable right
otherwise available to Borrower which would require the separate sale of the
Property or require Lender to exhaust its remedies against the Property before
proceeding against any other Collateral; and further in the event of such
foreclosure Borrower does hereby expressly consents to and authorizes, at the
option of Lender, the foreclosure and sale either separately or together of any
combination of the Property.

 

Section 10.19 Waiver of Counterclaim.

 

Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.

 

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Section 10.20 Conflict; Construction of Documents; Reliance.

 

In the event of any conflict between the provisions of this Agreement and any of
the other Loan Documents, the provisions of this Agreement shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender’s exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.

 

Section 10.21 Brokers and Financial Advisors.

 

Borrower hereby represents that it has dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Borrower hereby agrees to
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 10.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.

 

Section 10.22 Prior Agreements.

 

This Agreement and the other Loan Documents contain the entire agreement of the
parties hereto and thereto in respect of the transactions contemplated hereby
and thereby, and all prior agreements among or between such parties, whether
oral or written, between Borrower and/or its Affiliates and Lender are
superseded by the terms of this Agreement and the other Loan Documents.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.

 

BORROWER:

MERISTAR SECURED HOLDINGS, LLC,

a Delaware limited liability company

 

    By:  

/s/ Kevin J. Welch

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        Name: Kevin J. Welch         Title: Authorized Signatory LENDER: LEHMAN
BROTHERS HOLDINGS INC., d/b/a LEHMAN CAPITAL, a division of LEHMAN BROTHERS
HOLDINGS INC., a Delaware corporation, individually and as Agent for one or more
Co-Lenders By:  

/s/ Charlene Thomas

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    Name:   Charlene Thomas     Title:   Vice President WITH RESPECT TO SECTIONS
9.1, 9.2, 9.7.3, AND 9.7.4 ONLY: GUARANTOR:

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.,

a Delaware limited partnership

 

By:   MeriStar Hospitality Corporation, a Maryland corporation, its general
partner     By:  

/s/ Donald D. Olinger

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        Name: Donald D. Olinger         Title: Authorized Signatory