Exhibit 10.1
EXECUTION COPY
LOAN AGREEMENT
Dated as of January 21, 2011
between
TAR HEEL BORROWER LLC,
as Borrower,
TAR HEEL OWNER LLC,
as Maryland Guarantor,
and
GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P.,
as Lender

 

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TABLE OF CONTENTS

              Page   ARTICLE I
GENERAL TERMS          
Section 1.1. The Loan
    25  
Section 1.2. Interest and Principal
    26  
Section 1.3. Method and Place of Payment
    27  
Section 1.4. Taxes; Regulatory Change
    27  
Section 1.5. Release
    29     ARTICLE II
DEFEASANCE AND ASSUMPTION          
Section 2.1. Defeasance
    29  
Section 2.2. Assumption
    31  
Section 2.3. Transfers of Equity Interests in Borrower
    32     ARTICLE III
ACCOUNTS          
Section 3.1. Cash Management Account
    33  
Section 3.2. Distributions from Cash Management Account
    34  
Section 3.3. Loss Proceeds Account
    35  
Section 3.4. Basic Carrying Costs Escrow Account
    36  
Section 3.5. [Intentionally Omitted]
    37  
Section 3.6. FF&E Reserve Account
    37  
Section 3.7. Deferred Maintenance and Environmental Escrow Account
    38  
Section 3.8. Unfunded Obligations Account
    39  
Section 3.9. Account Collateral
    40  
Section 3.10. Bankruptcy
    41     ARTICLE IV
REPRESENTATIONS          
Section 4.1. Organization
    41  
Section 4.2. Authorization
    42  
Section 4.3. No Conflicts
    42  
Section 4.4. Consents
    42  
Section 4.5. Enforceable Obligations
    42  
Section 4.6. No Default
    42  
Section 4.7. Payment of Taxes
    42  
Section 4.8. Compliance with Law
    42  
Section 4.9. ERISA
    43  
Section 4.10. Investment Company Act
    43  
Section 4.11. No Bankruptcy Filing
    43  
Section 4.12. Other Debt
    43  
Section 4.13. Litigation
    43  

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              Page  
Section 4.14. Leases; Material Agreements
    44  
Section 4.15. Full and Accurate Disclosure
    45  
Section 4.16. Financial Condition
    45  
Section 4.17. Single-Purpose Requirements
    45  
Section 4.18. Use of Loan Proceeds
    45  
Section 4.19. Not Foreign Person
    45  
Section 4.20. Labor Matters
    45  
Section 4.21. Title
    46  
Section 4.22. No Encroachments
    46  
Section 4.23. Physical Condition
    46  
Section 4.24. Fraudulent Conveyance
    46  
Section 4.25. Management
    47  
Section 4.26. Condemnation
    47  
Section 4.27. Utilities and Public Access
    47  
Section 4.28. Environmental Matters
    47  
Section 4.29. Assessments
    48  
Section 4.30. No Joint Assessment
    48  
Section 4.31. Separate Lots
    48  
Section 4.32. Permits; Certificate of Occupancy
    48  
Section 4.33. Flood Zone
    48  
Section 4.34. Security Deposits
    48  
Section 4.35. Acquisition Documents
    49  
Section 4.36. Insurance
    49  
Section 4.37. No Dealings
    49  
Section 4.38. Estoppel Certificates
    49  
Section 4.39. Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money
Laundering Laws
    49  
Section 4.40. Survival
    50     ARTICLE V
AFFIRMATIVE COVENANTS          
Section 5.1. Existence
    51  
Section 5.2. Maintenance of Property
    51  
Section 5.3. Compliance with Legal Requirements
    51  
Section 5.4. Impositions and Other Claims
    52  
Section 5.5. Access to Property
    52  
Section 5.6. Cooperate in Legal Proceedings
    52  
Section 5.7. Leases
    53  
Section 5.8. Plan Assets, etc.
    54  
Section 5.9. Further Assurances
    54  
Section 5.10. Management of Collateral
    55  
Section 5.11. Notice of Material Event
    56  
Section 5.12. Annual Financial Statements
    56  
Section 5.13. Quarterly Financial Statements
    56  
Section 5.14. Monthly Financial Statements; Non-Delivery of Financial Statements
    57  
Section 5.15. Insurance
    58  
Section 5.16. Casualty and Condemnation
    63  

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              Page  
Section 5.17. Annual Budget
    65  
Section 5.18. Nonbinding Consultation
    66  
Section 5.19. Compliance with Encumbrances and Material Agreements
    66  
Section 5.20. Prohibited Persons
    66  
Section 5.21. Operating Lease
    67     ARTICLE VI
NEGATIVE COVENANTS          
Section 6.1. Liens on the Collateral
    67  
Section 6.2. Ownership
    67  
Section 6.3. Transfer; Change of Control
    67  
Section 6.4. Debt
    67  
Section 6.5. Dissolution; Merger or Consolidation
    67  
Section 6.6. Change in Business
    68  
Section 6.7. Debt Cancellation
    68  
Section 6.8. Affiliate Transactions
    68  
Section 6.9. Misapplication of Funds
    68  
Section 6.10. Jurisdiction of Formation; Name
    68  
Section 6.11. Modifications and Waivers
    68  
Section 6.12. ERISA
    69  
Section 6.13. Alterations and Expansions
    69  
Section 6.14. Advances and Investments
    69  
Section 6.15. Single-Purpose Entity
    69  
Section 6.16. Zoning and Uses
    69  
Section 6.17. Waste
    70     ARTICLE VII
DEFAULTS          
Section 7.1. Event of Default
    70  
Section 7.2. Remedies
    73  
Section 7.3. No Waiver
    74  
Section 7.4. Application of Payments after an Event of Default
    74     ARTICLE VIII
CONDITIONS PRECEDENT          
Section 8.1. Conditions Precedent to Closing
    74     ARTICLE IX
MISCELLANEOUS          
Section 9.1. Successors
    77  
Section 9.2. GOVERNING LAW
    77  
Section 9.3. Modification, Waiver in Writing
    78  
Section 9.4. Notices
    78  
Section 9.5. TRIAL BY JURY
    79  
Section 9.6. Headings
    79  
Section 9.7. Assignment and Participation
    79  
Section 9.8. Severability
    80  

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              Page  
Section 9.9. Preferences; Waiver of Marshalling of Assets
    81  
Section 9.10. Remedies of Borrower
    81  
Section 9.11. Offsets, Counterclaims and Defenses
    82  
Section 9.12. No Joint Venture
    82  
Section 9.13. Conflict; Construction of Documents
    82  
Section 9.14. Brokers and Financial Advisors
    82  
Section 9.15. Counterparts
    82  
Section 9.16. Estoppel Certificates
    82  
Section 9.17. General Indemnity; Payment of Expenses; Mortgage Recording Taxes
    83  
Section 9.18. No Third-Party Beneficiaries
    85  
Section 9.19. Recourse
    85  
Section 9.20. Right of Set-Off
    88  
Section 9.21. Exculpation of Lender
    88  
Section 9.22. Servicer
    88  
Section 9.23. No Fiduciary Duty
    88  
Section 9.24. Borrower Information
    90  
Section 9.25. PATRIOT Act Records
    90  
Section 9.26. Prior Agreements
    90  
Section 9.27. Publicity
    91  
Section 9.28. Delay Not a Waiver
    91  
Section 9.29. Schedules and Exhibits Incorporated
    91  
Section 9.30. Independence of Covenants
    91  

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Exhibits

      A  
Organizational Chart
B  
Form of Tenant Notice
C  
Form of Uniform System of Accounts

Schedules

      A  
Property
B  
Exception Report
C  
Deferred Maintenance Conditions
D  
Unfunded Obligations
E  
Material Agreements
F-1  
Capital Plan — Parking Component
F-2  
Capital Plan — PIP Component
F-3  
Capital Plan — Other Capital Improvements Component
G  
Leases

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LOAN AGREEMENT
          This Loan Agreement (this “Agreement”) is dated January 21, 2011 and
is between GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P., a Delaware limited
partnership, as lender (together with its successors and assigns, including any
lawful holder of any portion of the Indebtedness, as hereinafter defined,
“Lender”), and TAR HEEL BORROWER LLC, a Delaware limited liability company, as
borrower (together with its permitted successors and assigns, “Borrower”) and
TAR HEEL OWNER LLC, a Delaware limited liability company, as guarantor (together
with its permitted successors and assigns, “Maryland Guarantor,” and together
with Borrower, individually or collectively, as the context may require,
“Obligor”).
RECITALS
          Borrower desires to obtain from Lender the Loan (as hereinafter
defined) in connection with the financing of the property known as the
Doubletree Hotel Bethesda.
          Lender is willing to make the Loan on the terms and conditions set
forth in this Agreement if Obligor joins in the execution and delivery of this
Agreement, issues the Note and executes and delivers the other Loan Documents.
          In consideration of the premises and the agreements, provisions and
covenants contained herein, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, Lender and Obligor agree as
follows:
DEFINITIONS
          (a) When used in this Agreement, the following capitalized terms have
the following meanings:
          “Account Collateral” means, collectively, the Collateral Accounts and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all securities and investment property
credited thereto and all proceeds thereof (including proceeds of sales and other
dispositions), whether accounts, general intangibles, chattel paper, deposit
accounts, instruments, documents or securities.
          “Agreement” means this Loan Agreement, as the same may from time to
time hereafter be amended, restated, replaced, supplemented or otherwise
modified.
          “ALTA” means the American Land Title Association, or any successor
thereto.
          “Alteration” means any demolition, alteration, installation,
improvement or expansion of or to the Property or any portion thereof.
          “Annual Budget” means, collectively, the Yearly Budgets and Annual
Plan, as defined in the Approved Management Agreement, which budget shall
include, without limitation, an operating plan, sales and marketing plan and a
capital budget.

 

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          “Appraisal” means an as-is appraisal of the Property that is prepared
by a member of the Appraisal Institute selected by Lender, meets the minimum
appraisal standards for national banks promulgated by the Comptroller of the
Currency pursuant to Title XI of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, as amended (FIRREA) and complies with the Uniform
Standards of Professional Appraisal Practice (USPAP).
          “Approved Annual Budget” means (i) so long as no Event of Default or
Trigger Period shall be continuing, the Annual Budget and (ii) during the
continuance of an Event of Default and/or Trigger Period, the Annual Budget, as
approved by Lender in accordance with Section 5.17.
          “Approved Franchise Agreement” means that certain Franchise License
Agreement, dated June 4, 2010, between Operating Lessee and the initial Approved
Franchisor, as the same may be amended, restated, replaced, supplemented or
otherwise modified in accordance herewith with the consent of Lender, and any
other franchise agreement that is approved by Lender and with respect to which
the Rating Condition is satisfied, as the same may be amended, restated,
replaced, supplemented or otherwise modified in accordance herewith with the
consent of Lender.
          “Approved Franchisor” means Doubletree Franchise LLC, Hilton Franchise
LLC (so long as it licenses the “Hilton” brand and no other brand) or any other
hotel franchisor approved by Lender and with respect to which the Rating
Condition is satisfied, in each case unless and until Lender requests the
termination of that franchisor pursuant to Section 5.10(f).
          “Approved Management Agreement” means that certain Management
Agreement, dated as of June 4, 2010, between Operating Lessee and the initial
Approved Property Manager, and acknowledged and guaranteed by Maryland
Guarantor, as the same may be amended, restated, replaced, supplemented or
otherwise modified in accordance herewith with the consent of Lender, and any
other management agreement that is approved by Lender and with respect to which
the Rating Condition is satisfied, as the same may be amended, restated,
replaced, supplemented or otherwise modified in accordance herewith with the
consent of Lender.
          “Approved Property Manager” means Thayer Lodging Group Inc., or any
other management company approved by Lender in accordance with Section 5.10(a)
and with respect to which the Rating Condition is satisfied, in each case unless
and until Lender requests the termination of that management company pursuant to
Section 5.10(e).
          “Assignment” has the meaning set forth in Section 9.7(b).
          “Assumption” has the meaning set forth in Section 2.2.
          “Bankruptcy Code” has the meaning set forth in Section 7.1(d).
          “Basic Carrying Costs Escrow Account” has the meaning set forth in
Section 3.4(a).
          “Blocked Account” has the meaning set forth in Section 3.1(b).

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          “Blocked Account Agreement” has the meaning set forth in
Section 3.1(b).
          “Blocked Account Bank” means an Eligible Institution at which a
Blocked Account is maintained.
          “Borrower” has the meaning set forth in the first paragraph of this
Agreement.
          “Budgeted Operating Expenses” means, with respect to any calendar
month, (i) an amount equal to the Operating Expenses for such calendar month in
the then-applicable Approved Annual Budget, or (ii) such greater amount as shall
equal Maryland Guarantor’s and/or Operating Lessee’s actual Operating Expenses
for such month, except that during the continuance of a Trigger Period such
greater amount may in no event exceed 105% of the amount specified in clause
(i), with no individual budget line item exceeding 110% of the amount set forth
in the then-applicable Approved Annual Budget with respect to such line item for
such month, in each case without the prior written consent of Lender, not to be
unreasonably withheld or delayed.
          “Business Day” means any day other than (i) a Saturday and a Sunday
and (ii) a day on which federally insured depository institutions in the State
of New York or the state in which the offices of Lender, its trustee, its
Servicer or its Servicer’s collection account are located are authorized or
obligated by law, governmental decree or executive order to be closed.
          “Capital Expenditure” means hard and soft costs incurred by Maryland
Guarantor (or Operating Lessee) with respect to replacements and capital repairs
made to the Property (including repairs to, and replacements of, structural
components, roofs, building systems, parking garages and parking lots, but
excluding expenditures on FF&E), in each case to the extent capitalized in
accordance with GAAP.
          “Capital Plan” means the plan by which Maryland Guarantor will expend
an aggregate amount equal to the Capital Plan Minimum Expenditure to complete
the capital improvements contemplated in each Capital Plan Component described
on Schedule F hereto, together with such other capital improvement expenditures
undertaken by Maryland Guarantor as a part thereof, prior to the applicable
Capital Plan Target Completion Date.
          “Capital Plan Completion Date” has the meaning set forth in
Section 5.22(c).
          “Capital Plan Component” means each separate component of the Capital
Plan, as described on Schedule F hereto.
          “Capital Plan Minimum Expenditure” means $5,000,000.
          “Capital Plan Monthly Report” means a reasonably detailed report,
accompanied by an Officer’s Certificate (which Officer’s Certificate, for the
avoidance of doubt, may be the same Officer’s Certificate contemplated in the
introductory paragraph of Section 5.14 of this Agreement) of Maryland
Guarantor’s progress on the Capital Plan, including (i) a narrative description
of the work conducted on the Capital Plan during the previous calendar month,
(ii) information regarding whether each Capital Plan Target Completion Date
falling during such calendar monthwas met, (iii) the updated projected
completion date for each remaining Capital

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Plan Component, (iv) if requested by Lender, copies of all invoices and canceled
checks (or other proof of expenditure acceptable to Lender) related to Capital
Plan expenditures during the previous calendar monthand (v) a certification of
the total aggregate amount of the Capital Plan expenditures made as of the end
of the previous calendar month.
          “Capital Plan Target Completion Date” means, with respect to each
Capital Plan Component, the target completion date set forth on Schedule F
hereto for such Capital Plan Component (notwithstanding any “Finish Date”
indicated in the PIP); provided that such Capital Plan Target Completion Date
(and the Capital Plan Completion Date) shall be extended to the extent of a
Force Majeure (including, for avoidance of doubt, the unavailability of goods
and services necessary for completion of the Capital Plan for reasons beyond the
reasonable control of Maryland Guarantor).
          “Cash Management Account” has the meaning set forth in Section 3.1(a).
          “Cash Management Agreement” has the meaning set forth in
Section 3.1(a).
          “Cash Management Bank” means a depository institution selected by
Maryland Guarantor and reasonably approved by Lender in which Eligible Accounts
may be maintained. The initial Cash Management Bank shall be U.S. Bank, National
Association.
          “Casualty” means a fire, explosion, flood, collapse, earthquake or
other casualty affecting all or any portion of the Property.
          “Cause” means, with respect to an Independent Director, (i) acts or
omissions by such Independent Director that constitute systematic and persistent
or willful disregard of such Independent Director’s duties, (ii) such
Independent Director has been indicted or convicted for any crime or crimes of
moral turpitude or dishonesty or for any violation of any Legal Requirements,
(iii) such Independent Director no longer satisfies the requirements set forth
in the definition of “Independent Director”, (iv) the fees charged for the
services of such Independent Director are materially in excess of the fees
charged by the other providers of Independent Directors listed in the definition
of “Independent Director “ or (v) any other reason for which the prior written
consent of Lender shall have been obtained .
          “Certificates” means, collectively, any senior and/or subordinate
notes, debentures or pass-through certificates, or other evidence of
indebtedness, or debt or equity securities, or any combination of the foregoing,
representing a direct or beneficial interest, in whole or in part, in the Loan.
          “Change of Control” means the occurrence of any of the following:
(i) the failure of Maryland Guarantor and Borrower to be 100% owned by the same
Qualified Equityholder, (ii) the failure of Operating Lessee to be Controlled by
the same Qualified Equityholders that Control Obligor or (iii) the failure of
the Single-Purpose Equityholder (if any) to be Controlled by the same Qualified
Equityholders that Control Obligor.
          “Closing Date” means the date of this Agreement.
          “Closing Date NOI” means $4,345,365.

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          “Code” means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
          “Collateral” means (i) all assets owned from time to time by Obligor
and Operating Lessee including the Property, the FF&E, the Revenues and all
other tangible and intangible property (including any Defeasance Collateral and
all of Maryland Guarantor’s and Operating Lessee’s respective right, title and
interest in and to the Operating Lease, the Approved Management Agreement and
Approved Franchise Agreement) in respect of which Lender is granted a Lien under
the Loan Documents, and all proceeds thereof and (ii) the Operating Lessee
Pledged Collateral.
          “Collateral Accounts” means, collectively, the Cash Management
Account, any Blocked Account, the Loss Proceeds Account, the Basic Carrying
Costs Escrow Account, the FF&E Reserve Account, the Maryland Guarantor FF&E
Account, the Qualified Operating Expense Account, the Excess Cash Flow Reserve
Account, the Unfunded Obligations Account (if any) and the Deferred Maintenance
and Environmental Escrow Account (if any).
          “Completion Guaranty” means that certain Completion Guaranty dated as
of the Closing Date, executed by Maryland Guarantor and Sponsor for the benefit
of Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified in accordance herewith.
          “Condemnation” means a taking or voluntary conveyance of all or part
of the Property or any interest therein or right accruing thereto or use
thereof, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding by any Governmental Authority.
          “Contingent Obligation” means, with respect to any Person, any
obligation of such Person directly or indirectly guaranteeing any Debt of any
other Person in any manner and any contingent obligation to purchase, to provide
funds for payment, to supply funds to invest in any other Person or otherwise to
assure a creditor against loss.
          “Control” of any entity means the ownership, directly or indirectly,
of at least 51% of the equity interests in, and the right to at least 51% of the
distributions from, such entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such
entity, whether through the ability to exercise voting power, by contract or
otherwise (“Controlled” and “Controlling” each have the meanings correlative
thereto).
          “Cooperation Agreement” means that certain Mortgage Loan Cooperation
Agreement, dated as of the Closing Date, among Borrower, Maryland Guarantor,
Lender and Sponsor, as the same may from time to time be amended, restated,
replaced, supplemented or otherwise modified in accordance herewith.
          “Damages” to a party means any and all liabilities, obligations,
losses, demands, damages, penalties, assessments, actions, causes of action,
judgments, proceedings, suits, claims,

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costs, expenses and disbursements of any kind or nature whatsoever (including
reasonable attorneys’ fees and other costs of defense and/or enforcement whether
or not suit is brought), fines, charges, fees, settlement costs and
disbursements imposed on, incurred by or asserted against such party, whether
based on any federal, state or foreign laws, statutes, rules or regulations
(including securities and commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or
otherwise.
          “DBRS” means DBRS, Inc. or its applicable affiliate.
          “Debt” means, with respect to any Person, without duplication:
     (i) all indebtedness of such Person to any other party (regardless of
whether such indebtedness is evidenced by a written instrument such as a note,
bond or debenture), including indebtedness for borrowed money or for the
deferred purchase price of property or services;
     (ii) all letters of credit issued for the account of such Person and all
unreimbursed amounts drawn thereunder;
     (iii) all indebtedness secured by a Lien on any property owned by such
Person (whether or not such indebtedness has been assumed) except obligations
for impositions that are not yet due and payable;
     (iv) all Contingent Obligations of such Person;
     (v) all payment obligations of such Person under any interest rate
protection agreement (including any interest rate swaps, floors, collars or
similar agreements) and similar agreements;
     (vi) all contractual indemnity obligations of such Person; and
     (vii) any material actual or contingent liability to any Person or
Governmental Authority with respect to any employee benefit plan (within the
meaning of Section 3(3) of ERISA) subject to Title IV of ERISA, Section 302 of
ERISA or Section 412 of the Code.
          “Default” means the occurrence of any event that, but for the giving
of notice or the passage of time, or both, would be an Event of Default.
          “Default Interest” means, during the continuance of an Event of
Default, the amount by which interest accrued on the Notes at their respective
Default Rates exceeds the amount of interest that would have accrued on the
Notes at their respective Interest Rates.
          “Default Rate” means, with respect to any Note, the greater of (x) 4%
per annum in excess of the interest rate then applicable to such Note hereunder
and (y) 1% per annum in excess of the Prime Rate from time to time; provided
that, if the foregoing would result in an interest rate in excess of the maximum
rate permitted by applicable law, the Default Rate shall be limited to the
maximum rate permitted by applicable law.

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          “Defeasance Borrower” has the meaning set forth in Section 2.1(b).
          “Defeasance Collateral” means direct, non-callable obligations that
are either the direct obligations of, or are fully guaranteed by the full faith
and credit of, the United States of America.
          “Defeasance Pledge Agreement” has the meaning set forth in
Section 2.1(a)(iii).
          “Defease” means to deliver Defeasance Collateral as substitute
Collateral for the Loan in accordance with Section 2.1 and to cause the Defeased
Note to be assumed by a Defeasance Borrower in accordance herewith; and the
terms “Defeased” and “Defeasance” have meanings correlative to the foregoing.
          “Deferred Maintenance Amount” means $0.
          “Deferred Maintenance Conditions” means those items described in
Schedule C.
          “Deferred Maintenance and Environmental Escrow Account” has the
meaning set forth in Section 3.7(a).
          “Eligible Account” means (i) a segregated account maintained with a
federal or state-chartered depository institution or trust company that complies
with the definition of Eligible Institution, or (ii) a segregated trust account
or accounts maintained with the corporate trust department of a federal
depository institution or state-chartered depository institution that has an
investment-grade rating and is subject to regulations regarding fiduciary funds
on deposit under, or similar to, Title 12 of the Code of Federal Regulations
Section 9.10(b) that, in either case, has corporate trust powers, acting in its
fiduciary capacity.
          “Eligible Institution” means an institution (i) whose commercial
paper, short-term debt obligations or other short-term deposits are rated at
least A—1 by S&P, Prime-1 by Moody’s and/or F-1 by Fitch, and whose long-term
senior unsecured debt obligations are rated at least A-by S&P, A by Fitch, and
A2 by Moody’s and whose deposits are insured by the FDIC or (ii) with respect to
which the Rating Condition is satisfied.
          “Embargoed Person” has the meaning set forth in Section 4.40.
          “Engineering Report” means a structural and seismic engineering report
or reports (including a “probable maximum loss” calculation, if applicable) with
respect to the Property prepared by an independent engineer approved by Lender
and delivered to Lender in connection with the Loan, and any amendments or
supplements thereto delivered to Lender.
          “Environmental Claim” means any written notice, claim, proceeding,
notice of proceeding, investigation, demand, abatement order or other order or
directive by any Person or Governmental Authority alleging or asserting
liability with respect to Obligor, Operating Lessee or the Property arising out
of, based on, in connection with, or resulting from (i) the actual or alleged
presence, Use or Release of any Hazardous Substance, (ii) any actual or alleged
violation of any Environmental Law, or (iii) any actual or alleged injury or
threat of injury to property, health or safety, natural resources or to the
environment caused by Hazardous Substances.

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          “Environmental Indemnity” means that certain environmental indemnity
agreement executed by Obligor and the Sponsor as of the Closing Date, as the
same may from time to time be amended, restated, replaced, supplemented or
otherwise modified in accordance herewith.
          “Environmental Laws” means any and all present and future federal,
state and local laws, statutes, ordinances, orders, rules, regulations and the
like, as well as common law, any judicial or administrative orders, decrees or
judgments thereunder, and any permits, approvals, licenses, registrations,
filings and authorizations, in each case as now or hereafter in effect, relating
to (i) the pollution, protection or cleanup of the environment, (ii) the impact
of Hazardous Substances on property, health or safety, (iii) the Use or Release
of Hazardous Substances, (iv) occupational safety and health, industrial hygiene
or the protection of human, plant or animal health or welfare or (v) the
liability for or costs of other actual or threatened danger to health or the
environment. The term “Environmental Law” includes, but is not limited to, the
following statutes, as amended, any successors thereto, and any regulations
promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency Planning
and Community Right-to-Know Act; the Hazardous Materials Transportation Act; the
Resource Conservation and Recovery Act (including Subtitle I relating to
underground storage tanks); the Clean Water Act; the Clean Air Act; the Toxic
Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and
Health Act; the Federal Water Pollution Control Act; the Federal Insecticide,
Fungicide and Rodenticide Act; the Endangered Species Act; the National
Environmental Policy Act; and the River and Harbors Appropriation Act. The term
“Environmental Law” also includes, but is not limited to, any present and future
federal state and local laws, statutes ordinances, rules, regulations and the
like, as well as common law, conditioning transfer of property upon a negative
declaration or other approval of a Governmental Authority of the environmental
condition of a property; or requiring notification or disclosure of Releases of
Hazardous Substances or other environmental conditions of a property to any
Governmental Authority or other Person, whether or not in connection with
transfer of title to or interest in property.
          “Environmental Reports” means “Phase I Environmental Site Assessments”
as referred to in the ASTM Standards on Environmental Site Assessments for
Commercial Real Estate, E 1527-05 (and, if necessary, “Phase II Environmental
Site Assessments”), prepared by an independent environmental auditor approved by
Lender and delivered to Lender in connection with the Loan and any amendments or
supplements thereto delivered to Lender, and shall also include any other
environmental reports delivered to Lender pursuant to this Agreement and the
Environmental Indemnity.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
          “ERISA Affiliate,” at any time, means each trade or business (whether
or not incorporated) that would, at the time, be treated together with any
Obligor or Operating Lessee as a single employer under Title IV or Section 302
of ERISA or Section 412 of the Code.
          “Event of Default” has the meaning set forth in Section 7.1.

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          “Excess Cash Flow Reserve Account” has the meaning set forth in
Section 3.9(a).
          “Exception Report” means the report prepared by Obligor and attached
to this Agreement as Schedule B, setting forth any exceptions to the
representations set forth in Article IV.
          “FF&E” means furniture, fixtures and equipment located in the
Property.
          “Fiscal Quarter” means the three-month period ending on March 31,
June 30, September 30 and December 31 of each year, or such other fiscal quarter
of Maryland Guarantor as Maryland Guarantor may select from time to time with
the prior consent of Lender, such consent not to be unreasonably withheld.
          “Fiscal Year” means the 12-month period ending on December 31 of each
year, or such other fiscal year of Maryland Guarantor as Maryland Guarantor may
select from time to time with the prior consent of Lender, not to be
unreasonably withheld.
          “Fitch” means Fitch, Inc. and its successors.
          “Force Majeure” means a delay due to acts of God, governmental
restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion,
fire, casualty, strikes, work stoppage, shortages or unavailability of labor or
materials or similar causes beyond the reasonable control of Obligor; provided
that, with respect to any of such circumstances, for the purposes of this
Agreement, (1) any period of Force Majeure shall apply only to performance of
the obligations necessarily affected by such circumstance and shall continue
only so long as Obligor is continuously and diligently using all reasonable
efforts to minimize the effect and duration thereof; and (2) Force Majeure shall
not include the unavailability or insufficiency of funds.
          “Form W-8BEN” means Form W-8BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding) of the Department of
Treasury of the United States of America, and any successor form.
          “Form W-8ECI” means Form W-8ECI (Certificate of Foreign Person’s Claim
for Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America, and any successor form.
          “Franchisor Comfort Letter” means that certain letter agreement from
the Approved Franchisor, for the benefit of Lender, as the same may from time to
time be amended, restated, replaced, supplemented or otherwise modified in
accordance therewith.
          “GAAP” means generally accepted accounting principles in the United
States of America, consistently applied.
          “Governmental Authority” means any federal, state, county, regional,
local or municipal government, any bureau, department, agency or political
subdivision thereof and any

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Person with jurisdiction exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government (including any
court).
          “Guaranty” means that certain guaranty, dated as of the Closing Date,
executed by Sponsor for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified in accordance herewith.
          “Hazardous Substances” means any and all substances (whether solid,
liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous
wastes, hazardous substances, hazardous materials, extremely hazardous wastes,
toxic substances, toxic pollutants, contaminants, pollutants or words of similar
meaning or regulatory effect under any present or future Environmental Laws or
that may have a negative impact on human health or the indoor or outdoor
environment or the presence of which on, in or under the Property is prohibited
or requires investigation or remediation under Environmental Law, including
petroleum and petroleum by-products, asbestos and asbestos-containing materials,
toxic mold, polychlorinated biphenyls, lead and radon, and compounds containing
them (including gasoline, diesel fuel, oil and lead-based paint), pesticides and
radioactive materials, flammables and explosives and compounds containing them.
          “Increased Costs” has the meaning set forth in Section 1.4(d).
          “Indebtedness” means the Principal Indebtedness, together with
interest and all other obligations and liabilities of Borrower under the Loan
Documents, including all transaction costs, Yield Maintenance Premiums and other
amounts due or to become due to Lender pursuant to this Agreement, under the
Notes (or in the case of Maryland Guarantor, the Maryland Guaranty) or in
accordance with any of the other Loan Documents, and all other amounts, sums and
expenses reimbursable by Obligor to Lender hereunder or pursuant to the Notes or
any of the other Loan Documents.
          “Indemnified Liabilities” has the meaning set forth in
Section 9.19(b).
          “Indemnified Parties” has the meaning set forth in Section 9.17.
          “Independent Director” of any corporation or limited liability company
means an individual who is provided by CT Corporation, Corporation Service
Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart
Management Company, Lord Securities Corporation or, if none of those companies
is then providing professional independent directors, another
nationally-recognized company reasonably approved by Lender, in each case that
is not an affiliate of Borrower and that provides professional independent
directors and other corporate services in the ordinary course of its business,
and which individual is duly appointed as a member of the board of directors or
board of managers of such corporation or limited liability company and is not,
and has never been, and will not while serving as Independent Director be, any
of the following:
     (i) a member (other than an independent, non-economic “springing” member),
partner, equityholder, manager, director, officer or employee of such
corporation or limited liability company or any of its equityholders or
affiliates (other

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than as an independent director or manager of an affiliate of such corporation
or limited liability company that is not in the direct chain of ownership of
such corporation or limited liability company and that is required by a creditor
to be a single purpose bankruptcy remote entity, provided that such independent
director or manager is employed by a company that routinely provides
professional independent directors or managers);
     (ii) a creditor, supplier or service provider (including provider of
professional services) to such corporation or limited liability company or any
of its equityholders or affiliates (other than a nationally recognized company
that routinely provides professional independent managers or directors and that
also provides lien search and other similar services to such corporation or
limited liability company or any of its equityholders or affiliates in the
ordinary course of business);
     (iii) a family member of any such member, partner, equityholder, manager,
director, officer, employee, creditor, supplier or service provider; or
     (iv) a Person that controls (whether directly, indirectly or otherwise) any
of (i), (ii) or (iii) above.
A natural person who otherwise satisfies the foregoing definition other than
subparagraph (i) by reason of being the Independent Director of a Single-Purpose
Entity affiliated with the corporation or limited liability company in question
shall not be disqualified from serving as an Independent Director of such
corporation or limited liability company, provided that the fees that such
natural person earns from serving as Independent Director of affiliates of such
the corporation or limited liability company in any given year constitute in the
aggregate less than five percent of such natural person’s annual income for that
year. The same natural persons may not serve as Independent Directors of a
corporation or limited liability company and, at the same time, serve as
Independent Directors of an equityholder or member of such corporation or
limited liability company.
          “Initial Interest Rate” means 5.2775% per annum.
          “Initial Principal Payment Date” means the Payment Date in March,
2012.
          “Insurance Requirements” means, collectively, (i) all material terms
of any insurance policy required pursuant to this Agreement and (ii) all
material regulations and then-current standards applicable to or affecting the
Property or any portion thereof or any use or condition thereof, which may, at
any time, be recommended by the board of fire underwriters, if any, having
jurisdiction over the Property, or any other body exercising similar functions.
          “Insurance Reserve Exemption Period” has the meaning set forth in
Section 3.4(d)(iii).
          “Interest Accrual Period” means each period from and including the
sixth day of a calendar month through and including the fifth day of the
immediately succeeding calendar month; provided, that, prior to a
Securitization, Lender shall have the right, in connection with a change in the
Payment Date in accordance with the definition thereof, to make a corresponding

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change to the Interest Accrual Period. Notwithstanding the foregoing, the first
Interest Accrual Period shall commence on and include the Closing Date.
          “Interest Rate” means (i) with respect to the initial Note, the
Initial Interest Rate, and (ii) with respect to each Note resulting from the
bifurcation of the initial Note into multiple Notes pursuant to Section 1.1(c),
the per annum interest rate of such Note as determined by Lender in accordance
with such Section.
          “Lease” means any lease (except the Operating Lease), license,
letting, concession, occupancy agreement or sublease to which Maryland Guarantor
and/or Operating Lessee is a party or has a consent right, or other agreement
(whether written or oral and whether now or hereafter in effect) under which
Maryland Guarantor and/or Operating Lessee is a lessor, sublessor, licensor or
other grantor existing as of the Closing Date or thereafter entered into by
Maryland Guarantor and/or Operating Lessee, in each case pursuant to which any
Person is granted a possessory interest in, or right to use or occupy all or any
portion of any space in the Property, and every modification or amendment
thereof, and every guarantee of the performance and observance of the covenants,
conditions and agreements to be performed and observed by the other party
thereto, excluding short-term agreements in the ordinary course of business
pursuant to which hotel rooms and facilities are made available to individual
hotel guests.
          “Leasing Commissions” means leasing commissions required to be paid by
Maryland Guarantor or Operating Lessee in connection with the leasing of space
to Tenants at the Property pursuant to Leases entered into by Maryland Guarantor
or Operating Lessee in accordance herewith and payable in accordance with
third-party/arm’s-length written brokerage agreements, provided that the
commissions payable pursuant thereto are commercially reasonable based upon the
then current brokerage market for property of a similar type and quality to the
Property in the geographic market in which the Property is located.
          “Legal Requirements” means all governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities (including Environmental Laws) affecting Borrower,
Maryland Guarantor, Sponsor, Operating Lessee, the Property or any other
Collateral or any portion thereof or the construction, ownership, use,
alteration or operation thereof, or any portion thereof (whether now or
hereafter enacted and in force), and all permits, licenses and authorizations
and regulations relating thereto.
          “Lender” has the meaning set forth in the first paragraph of this
Agreement and in Section 9.7.
          “Lender 80% Determination” means a reasonable determination by Lender
that, based on a current or updated appraisal by HVS (or such other appraiser
satisfactory to Lender should HVS no longer be actively engaged in the business
of real estate valuation), a broker’s price opinion by Jones Lang LaSalle or
Eastdil Secured (or such other broker satisfactory to Lender should neither
Jones Lang LaSalle or Eastdil Secured be actively engaged in the business of
real estate valuation) or other written determination of value using a
commercially reasonable valuation method satisfactory to Lender, the fair market
value of the Property securing the Indebtedness at the time of such
determination (but excluding any value attributable to property

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that is not an interest in real property within the meaning of section
860G(a)(3)(A) of the Code) is at least 80% of the amount of the Indebtedness
(including any accrued and unpaid interest) at the time of such determination.
          “Lien” means any mortgage, lien (statutory or other), pledge,
hypothecation, assignment, preference, priority, security interest, or any other
encumbrance or charge on or affecting any Collateral or any portion thereof, or
any interest therein (including any conditional sale or other title retention
agreement, any sale-leaseback, any financing lease or similar transaction having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement or similar instrument under the Uniform Commercial Code
or comparable law of any other jurisdiction, domestic or foreign, and
mechanics’, materialmen’s and other similar liens and encumbrances, as well as
any option to purchase, right of first refusal, right of first offer or similar
right).
          “Loan” has the meaning set forth in Section 1.1(a).
          “Loan Amount” means $36,000,000.
          “Loan Documents” means this Agreement, the Note, the Mortgage (and
related financing statements), the Environmental Indemnity, the Subordination of
Property Management Agreement, the Franchisor Comfort Letter, the Subordination
of Operating Lease, the Pledge and Security Agreement (Equity), the Cash
Management Agreement, any Blocked Account Agreement, the Cooperation Agreement,
the Guaranty, the Completion Guaranty, the Maryland Guaranty, any Defeasance
Pledge Agreement, the Qualified Operating Expense Account Agreement, the
Maryland Guarantor FF&E Account Control Agreement (if any), and all other
agreements, instruments, certificates and documents necessary to effectuate the
granting to Lender of first-priority Liens on the Collateral or otherwise in
satisfaction of the requirements of this Agreement or the other documents listed
above, as all of the aforesaid may be amended, restated, replaced, supplemented
or otherwise modified from time to time in accordance herewith.
          “Lockout Period” means the period from the Closing Date to but
excluding the first Payment Date following the earlier to occur of (i) the third
anniversary of the Closing Date and (ii) the second anniversary of the date on
which the entire Loan (including any subordinated interest therein) has been
Securitized pursuant to a Securitization or series of Securitizations.
          “Loss Proceeds” means amounts, awards or payments payable to Maryland
Guarantor, Operating Lessee or Lender in respect of all or any portion of the
Property in connection with a Casualty or Condemnation thereof (after the
deduction therefrom and payment to Maryland Guarantor, Operating Lessee and
Lender, respectively, of any and all reasonable expenses incurred by Maryland
Guarantor, Operating Lessee and Lender in the recovery thereof, including all
attorneys’ fees and disbursements, the fees of insurance experts and adjusters
and the costs incurred in any litigation or arbitration with respect to such
Casualty or Condemnation).
          “Loss Proceeds Account” has the meaning set forth in Section 3.3(a).

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          “Major Lease” means any Lease that (i) when aggregated with all other
Leases at the Property with the same Tenant (or affiliated Tenants), and
assuming the exercise of all expansion rights and all preferential rights to
lease additional space contained in such Lease, is expected to cover more than
7,500 rentable square feet, (ii) contains an option or preferential right to
purchase all or any portion of the Property, (iii) is with an affiliate of
Maryland Guarantor as Tenant or (iv) is entered into during the continuance of
an Event of Default.
          “Maryland Guarantor” has the meaning set forth in the first paragraph
of this Agreement.
          “Maryland Guarantor FF&E Account” has the meaning set forth in
Section 3.6(d).
          “Maryland Guarantor FF&E Account Control Agreement” means an account
control agreement satisfactory to Lender which shall permit Obligor to have free
access to the amounts contained therein for the purposes permitted under the
Approved Management Agreement and the Loan Documents, provided that, during the
continuance of a Trigger Period or Event of Default all amounts contained
therein shall be remitted to the FF&E Reserve Account and shall be administered
in accordance with Section 3.6.
          “Maryland Guaranty” means the Indemnity Guaranty of Payment dated the
date hereof, by Maryland Guarantor for the benefit of Lender.
          “Material Adverse Effect” means a material adverse effect upon (i) the
ability of Obligor or Sponsor to perform, or of Lender to enforce, any material
provision of any Loan Document, (ii) the enforceability of any material
provision of any Loan Document, or (iii) the value, Net Operating Income, use or
enjoyment of the Property or the operation or occupancy thereof.
          “Material Agreements” means (x) each contract and agreement (other
than Leases) relating to the Property, or otherwise imposing obligations on
Maryland Guarantor or Operating Lessee, under which Maryland Guarantor or
Operating Lessee would have the obligation to pay more than $250,000 per annum
or that cannot be terminated by Maryland Guarantor or Operating Lessee without
cause upon 60 days’ notice or less without payment of a termination fee in
excess of $10,000, or that is with an affiliate of Maryland Guarantor or
Operating Lessee, (y) any material reciprocal easement agreement, declaration of
covenants, condominium documents, ground lease, material parking agreement or
other material Permitted Encumbrance and (z) the Operating Lease.
          “Material Alteration” means any Alteration to be performed by or on
behalf of Maryland Guarantor or Operating Lessee at the Property that (a) is
reasonably expected to result in a Material Adverse Effect, (b) is reasonably
expected to cost in excess of $1,800,000, as determined by an independent
architect, or (c) is reasonably expected to permit (or is reasonably likely to
induce) any Tenant under a Major Lease to terminate its Lease or abate rent.
          “Maturity Date” means the Payment Date in February, 2016, or such
earlier date as may result from acceleration of the Loan in accordance with this
Agreement.
          “Minimum Balance” has the meaning set forth in Section 3.2(a).

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          “Monthly FF&E Amount” means, with respect to any calendar month, an
amount equal to 4% of Operating Income for the immediately preceding calendar
month.
          “Moody’s” means Moody’s Investors Service, Inc. and its successors.
          “Mortgage” means that certain indemnity deed of trust, assignment of
rents and leases, security agreement and fixture filing encumbering the Property
executed by Maryland Guarantor as of the Closing Date, as the same may from time
to time be amended, restated, replaced, supplemented or otherwise modified in
accordance herewith.
          “Net Operating Income” means, with respect to any Test Period, the
excess of (i) Operating Income for such Test Period, minus (ii) Operating
Expenses for such Test Period; provided, that, for purposes of establishing a
Trigger Period, Net Operating Income shall be calculated using Operating Income
and Operating Expenses from (x) December 2009, in lieu of those for
December 2010, so long as such Test Period includes December 2010, and
(y) January 2010, in lieu of those for January 2011, so long as such Test Period
includes January 2011.
          “Nonconsolidation Opinion” means the opinion letter, dated the Closing
Date, delivered by Obligor’s counsel to Lender and addressing issues relating to
substantive consolidation in bankruptcy.
          “Note(s)” means that certain promissory note, dated as of the Closing
Date, made by Borrower to the order of Lender to evidence the Loan, as such note
may be replaced by multiple Notes in accordance with Section 1.1(c) and as
otherwise assigned (in whole or in part), amended, restated, replaced,
supplemented or otherwise modified in accordance herewith.
          “Obligor” has the meaning set forth in the first paragraph of this
Agreement.
          “OFAC List” means the list of specially designated nationals and
blocked persons subject to financial sanctions that is maintained by the U.S.
Treasury Department, Office of Foreign Assets Control and any other similar list
maintained by the U.S. Treasury Department, Office of Foreign Assets Control
pursuant to any applicable governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities, including trade embargo, economic sanctions, or other prohibitions
imposed by Executive Order of the President of the United States. The OFAC List
currently is accessible through the internet website at
www.treas.gov/ofac/t11sdn.pdf.
          “Officer’s Certificate” means a certificate delivered to Lender that
is signed by an authorized officer of Maryland Guarantor and certifies the
information therein to the best of such officer’s knowledge.
          “Operating Expenses” means, for any period, all operating, renting,
administrative, management, legal and other ordinary expenses of Maryland
Guarantor and, without duplication, Operating Lessee, Approved Property Manager
and Approved Franchisor, during such period, determined in accordance with GAAP
and the Uniform System of Accounts (excluding reserves for or expenditures on
FF&E), plus a deemed expenditure in respect of FF&E in an amount equal to four
percent (4%) of Operating Income during such period; provided, however, that
such expenses shall not include (i) depreciation, amortization or other

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non-cash items (other than expenses that are due and payable but not yet paid),
(ii) interest, principal or any other sums due and owing with respect to the
Loan, (iii) income taxes or other taxes in the nature of income taxes,
(iv) Capital Expenditures, or (v) equity distributions.
          “Operating Income” means, for any period, all operating income of
Maryland Guarantor and, without duplication, Operating Lessee, and Approved
Property Manager, from the Property during such period, determined in accordance
with GAAP and the Uniform System of Accounts (but without straight-lining of
rents), including without limitation: (i) all income and proceeds received from
any lease, Operating Lease and rental of rooms, exhibit, sales, commercial,
meeting, conference or banquet space within such Property, including net parking
revenue, and net income from vending machines, health club fees and service
charges; (ii) all income and proceeds received from food and beverage operations
and from catering services conducted from such Property even though rendered
outside of such Property; (iii) all income and proceeds from business
interruption, rental interruption and use and occupancy insurance with respect
to the operation of such Property (after deducting therefrom all necessary costs
and expenses incurred in the adjustment or collection thereof and solely to the
extent that such income and/or proceeds are allocable to such period); (iv) all
awards for temporary use (after deducting therefrom all costs incurred in the
adjustment or collection thereof and in restoration of such Property and solely
to the extent that such award is allocable to such period); (v) all income and
proceeds from judgments, settlements and other resolutions of disputes with
respect to matters which would be includable in this definition of “Operating
Income” if received in the ordinary course of such Property’s operation (after
deducting therefrom all necessary costs and expenses incurred in the adjustment
or collection thereof); and (vi) interest on credit accounts, rent concessions
or credits, and other required pass-throughs; but excluding, (1) gross receipts
received by lessees, licensees or concessionaires of such Property;
(2) consideration received at such Property for hotel accommodations, goods and
services to be provided at other hotels, although arranged by, for or on behalf
of Maryland Guarantor, Operating Lessee or Approved Property Manager; (3) income
and proceeds from the sale or other disposition of goods, capital assets and
other items not in the ordinary course of such Property’s operation;
(4) federal, state and municipal excise, sales and use taxes collected directly
from patrons or guests of such Property as a part of or based on the sales price
of any goods, services or other items, such as gross receipts, room, admission,
cabaret or equivalent taxes; (5) awards (except to the extent provided in clause
(iv) above); (6) refunds of amounts not included in Operating Expenses at any
time and uncollectible accounts; (7) gratuities collected by employees at such
Property; (8) the proceeds of any financing; (9) other income or proceeds
resulting other than from the use or occupancy of such Property, or any part
thereof, or other than from the sale of goods, services or other items sold on
or provided from such Property in the ordinary course of business; (10) any
credits or refunds made to customers, guests or patrons in the form of
allowances or adjustments to previously recorded revenues; (11) any revenue
attributable to a Lease that is not a Qualifying Lease; (12) any revenue
attributable to a Lease to the extent it is paid more than 30 days prior to the
due date, (13) any interest income from any source (except to the extent
provided in clause (vi) above); (14) any repayments received from any third
party of principal loaned or advanced to such third party by Maryland Guarantor
or Operating Lessee; (15) any proceeds resulting from the Transfer of all or any
portion of such Property, (16) Loss Proceeds (except to the extent provided in
clause (iii) above); and (17) any other extraordinary or non-recurring items.

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          “Operating Lease” means that certain Agreement of Lease dated June 4,
2010 by and between Maryland Guarantor and Operating Lessee.
          “Operating Lease Monthly Rent” means the greater of (x) the monthly
rent payable by Operating Lessee pursuant to the Operating Lease and (y) the
sum, without duplication, of (i) the Minimum Balance and (ii) Budgeted Operating
Expenses for such month.
          “Operating Lessee” means Tar Heel Lessee, LLC.
          “Operating Lessee Pledged Collateral” means one hundred percent of the
equity interests in Operating Lessee, which shall be pledged by Pebblebrook
Hotel Lessee, Inc. to Lender as additional collateral for the Loan pursuant to
the Pledge and Security Agreement (Equity).
          “Participation” has the meaning set forth in Section 9.7(b).
          “PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001), as amended from time to time.
          “Payment Date” means, with respect to each Interest Accrual Period,
the sixth day of the calendar month in which such Interest Accrual Period ends
(or, if such day is not a Business Day, the first preceding Business Day);
provided, that prior to a Securitization, Lender shall have the right to change
the Payment Date so long as a corresponding change to the Interest Accrual
Period is also made.
          “Permits” means all licenses, permits, variances and certificates used
in connection with the ownership, operation, use or occupancy of the Property
(including certificates of occupancy, business licenses, state health department
licenses, licenses to conduct business and all such other permits, licenses and
rights, obtained from any Governmental Authority or private Person concerning
ownership, operation, use or occupancy of the Property).
          “Permitted Debt” means:
          (i) the Indebtedness;
          (ii) Taxes that are not yet due and payable;
     (iii) tenant allowances and Capital Expenditure and product improvement
plan costs required under the Approved Management Agreement, Approved Franchise
Agreement or any Leases or otherwise permitted to be incurred under the Loan
Documents that are paid on or prior to the date when due; and
     (iv) Trade Payables not represented by a note, customarily paid by Maryland
Guarantor or Operating Lessee within 60 days of incurrence and in fact not more
than 60 days outstanding, which are incurred in the ordinary course of Maryland
Guarantor ’s or Operating Lessee’s business with respect to the Property, in
amounts reasonable and

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customary for similar properties and not exceeding 3.0% of the Loan Amount in
the aggregate.
          “Permitted Encumbrances” means:
          (i) the Liens created by the Loan Documents;
     (ii) all Liens and other matters specifically disclosed on Schedule B of
the Qualified Title Insurance Policy;
     (iii) Liens, if any, for Taxes not yet delinquent;
     (iv) mechanics’, materialmen’s or similar Liens, if any, and Liens for
delinquent taxes or impositions, in each case only if being diligently contested
in good faith and by appropriate proceedings, provided that no such Lien is in
imminent danger of foreclosure and provided further that either (a) each such
Lien is released or discharged of record or fully insured over by the title
insurance company issuing the Qualified Title Insurance Policy within 30 days of
its creation, or (b) Maryland Guarantor deposits with Lender, by the expiration
of such 30-day period, an amount equal to 150% of the dollar amount of such Lien
or a bond in the aforementioned amount from such surety, and upon such terms and
conditions, as is reasonably satisfactory to Lender, as security for the payment
or release of such Lien;
     (v) rights of existing and future Tenants as tenants only pursuant to
written Leases entered into in conformity with the provisions of this Agreement;
and
     (vi) easements and other encroachments placed on the Property with the
prior written consent of Lender.
          “Permitted Investments” means the following, subject to the
qualifications hereinafter set forth:
     (i) direct obligations of, or obligations fully and unconditionally
guaranteed as to principal and interest by, the U.S. government or any agency or
instrumentality thereof, when such obligations are backed by the full faith and
credit of the United States of America and have maturities not in excess of one
year;
     (ii) federal funds, unsecured certificates of deposit, time deposits,
banker’s acceptances, and repurchase agreements, each having maturities of not
more than 90 days, of any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia, the
short-term debt obligations of which are rated A-1+ by S&P, F1+ by Fitch and P-1
by Moody’s (and if the term is between one and three months A1 by Moody’s) and,
if it has a term in excess of three months, the long-term debt obligations of
which are rated AAA (or the equivalent) by each of the Rating Agencies, and that
(a) is at least “adequately capitalized” (as defined in the regulations of its
primary Federal banking regulator) and (b) has Tier 1 capital (as defined in
such regulations) of not less than $1,000,000,000;

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     (iii) deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC);
     (iv) commercial paper rated A—1+ by S&P, F1+ by Fitch and P-1 Moody’s (and
if the term is between one and three months A1 by Moody’s) by each of the Rating
Agencies and having a maturity of not more than 90 days;
     (v) any money market funds that (a) has substantially all of its assets
invested continuously in the types of investments referred to in clause
(i) above, (b) has net assets of not less than $5,000,000,000, and (c) has a
rating of AAAm or AAAm-G from S&P, Aaa by Moody’s and the highest rating
obtainable from Fitch; and
     (vi) such other investments as to which the Rating Condition has been
satisfied.
Notwithstanding the foregoing, “Permitted Investments” (i) shall exclude any
security with the Standard & Poor’s “r” symbol (or any other Rating Agency’s
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
“strips”; (ii) shall not have maturities in excess of one year; (iii) shall be
limited to those instruments that have a predetermined fixed dollar of principal
due at maturity that cannot vary or change; and (iv) shall exclude any
investment where the right to receive principal and interest derived from the
underlying investment provides a yield to maturity in excess of 120% of the
yield to maturity at par of such underlying investment. Interest on Permitted
Investments may either be fixed or variable, and any variable interest must be
tied to a single interest rate index plus a single fixed spread (if any), and
move proportionately with that index. No Permitted Investments shall require a
payment above par for an obligation if the obligation may be prepaid at the
option of the issuer thereof prior to its maturity. All Permitted Investments
shall mature or be redeemable upon the option of the holder thereof on or prior
to the earlier of (x) three months from the date of their purchase or (y) the
Business Day preceding the day before the date such amounts are required to be
applied hereunder.
          “Person” means any natural person, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated association
or Governmental Authority and any fiduciary acting in such capacity on behalf of
any of the foregoing.
          “PIP” means the Product Improvement Plan attached as Exhibit A to the
Approved Franchise Agreement.
          “Plan Assets” means assets of any (i) employee benefit plan (as
defined in Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as
defined in Section 4975(e)(1) of the Code) subject to Section 4975 of the Code,
or (iii) governmental plan (as defined in Section 3(32) of ERISA) subject to
federal, state or local laws, rules or regulations substantially similar to
Title I of ERISA or Section 4975 of the Code.
          “Pledge and Security Agreement (Equity)” means that certain Pledge and
Security Agreement (Equity) dated the date hereof, by Pebblebrook Hotel Lessee,
Inc. in favor of Lender.

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          “Policies” has the meaning set forth in Section 5.15(b).
          “Prepayment Period” means the final three Interest Accrual Periods
prior to the Maturity Date.
          “Prime Rate” means the “prime rate” published in the “Money Rates”
section of The Wall Street Journal. If The Wall Street Journal ceases to publish
the “prime rate,” then Lender shall select an equivalent publication that
publishes such “prime rate,” and if such “prime rate” is no longer generally
published or is limited, regulated or administered by a governmental or
quasi-governmental body, then Lender shall reasonably select a comparable
interest rate index.
          “Principal Indebtedness” means the principal balance of the Loan
outstanding from time to time.
          “Prohibited Pledge” has the meaning set forth in Section 7.1(f).
          “Property” means the real property described on Schedule A, together
with all buildings and other improvements thereon and all personal property
encumbered by the Mortgage, together with all rights pertaining to such
property.
          “Qualified Equityholder” means (i) Sponsor (ii) any Person approved by
Lender with respect to which the Rating Condition is satisfied, (iii) a bank,
saving and loan association, investment bank, insurance company, trust company,
commercial credit corporation, pension plan, pension fund or pension advisory
firm, mutual fund, government entity or plan, real estate company, investment
fund or an institution substantially similar to any of the foregoing, provided
in each case under this clause (iii) that such Person (x) has total assets (in
name or under management) in excess of $500,000,000 and (except with respect to
a pension advisory firm or similar fiduciary) capital/statutory surplus or
shareholder’s equity in excess of $200,000,000 (in both cases, exclusive of the
Property), and (y) is regularly engaged in the business of owning and operating
comparable properties in major metropolitan areas or (iv) any Person Controlled
by a Person satisfying the requirements of clause (iii), but only during such
time period as such Person is so Controlled.
          “Qualified Operating Expense Account” means an Eligible Account
maintained by Operating Lessee and/or Maryland Guarantor at an Eligible
Institution, which account (i) shall only contain amounts in respect of
Operating Expenses for the Property (and no amounts unrelated to the Property
shall be deposited therein or otherwise commingled with the amounts on deposit
in such account) and (ii) is subject to a Qualified Operating Expense Account
Agreement.
          “Qualified Operating Expense Account Agreement” means an agreement
relating to the Qualified Operating Expense Account, dated as of the date
hereof, among Lender, Operating Lessee and/or Maryland Guarantor and the
Eligible Institution at which such account is maintained, pursuant to which such
account is pledged to the Lender and Operating Lessee is given full access to
the funds on deposit therein but provides for the discontinuance of such access
upon receipt by such Eligible Institution of written notice from Lender of the
occurrence

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of an Event of Default, as such agreement may be amended, restated, replaced,
supplemented or otherwise modified in accordance herewith.
          “Qualified Successor Borrower” means a Single-Purpose Entity that is
Controlled by one or more Qualified Equityholders.
          “Qualified Successor Operating Lessee” means a Single-Purpose Entity
that is Controlled by the same Qualified Equityholders that Control Qualified
Successor Borrower and is a successor to the Operating Lessee under the
Operating Lease.
          “Qualified Survey” means that certain ALTA/ACSM land title survey of
the Property dated March 4, 1997, as revised March 30, 2010 and last revised
December 29, 2010, prepared by Greenhorne and O’Mara and certified to Maryland
Guarantor, the title company issuing the Qualified Title Insurance Policy and
Lender and their respective successors and assigns, in form and substance
reasonably satisfactory to Lender.
          “Qualified Title Insurance Policy” means an ALTA extended coverage
mortgagee’s title insurance policy in form and substance reasonably satisfactory
to Lender.
          “Qualifying Lease” means all Leases other than (i) Leases to a Tenant
that is not in occupancy at the Property and open for business at the Property
and (ii) Leases to a Tenant that is in default under its Lease or is the subject
of bankruptcy or similar insolvency proceedings (to the extent that such Tenant
has not assumed such Lease in bankruptcy).
          “Rating Agency” shall mean, prior to the final Securitization of the
Loan, each of S&P, Moody’s, DBRS and Fitch, or any other nationally-recognized
statistical rating agency that has been designated by Lender and, after the
final Securitization of the Loan, shall mean any of the foregoing that have
rated and continue to rate any of the Certificates (excluding unsolicited
ratings).
          “Rating Condition” means, with respect to any proposed action, the
receipt by Lender of confirmation in writing from each of the Rating Agencies
that such action shall not result, in and of itself, in a downgrade, withdrawal,
or qualification of any rating then assigned to any outstanding Certificates;
except that if all or any portion of the Loan has not been Securitized pursuant
to a Securitization rated by the Rating Agencies, then “Rating Condition” shall
instead mean the receipt of prior written approval of both (x) the applicable
Rating Agencies (if and to the extent that any portion of the Loan has been
Securitized pursuant to a Securitization or series of Securitizations rated by
such Rating Agencies (excluding shadow ratings)), and (y) Lender in its sole
discretion. No Rating Condition shall be regarded as having been satisfied
unless and until any conditions imposed on the effectiveness of any confirmation
from any Rating Agency shall have been satisfied. Lender shall have the right in
its sole discretion to waive a Rating Condition requirement with respect to any
Rating Agency that Lender determines has declined to review the applicable
proposal; provided that if any Rating Agency affirmatively declines to review a
Defeasance, then the Rating Condition requirement shall not be waived but shall
instead be deemed satisfied as it relates to such Rating Agency for such
Defeasance.

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           “Regulatory Change” means any change after the Closing Date in
federal, state or foreign laws or regulations or the adoption or the making,
after such date, of any interpretations, directives or requests applying to a
class of banks or companies controlling banks, including Lender, of or under any
federal, state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
          “Release” with respect to any Hazardous Substance means any release,
deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating,
injecting, pumping, pouring, emptying, escaping, dumping, disposing or other
movement of Hazardous Substances into the indoor or outdoor environment
(including the movement of Hazardous Substances through ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata).
          “Rent Roll” has the meaning set forth in Section 4.14(a).
          “Revenues” means all rents (including percentage rent), rent
equivalents, moneys payable as damages pursuant to a Lease or in lieu of rent or
rent equivalents, royalties (including all oil and gas or other mineral
royalties and bonuses), income and (without duplication) Operating Income,
receivables, receipts, revenues, deposits (including security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for the
account of or benefit of Maryland Guarantor or (without duplication) Operating
Lessee or Approved Property Manager (only with respect to the Property) from any
and all sources including any obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the use and occupancy of property or rendering of services by
Maryland Guarantor or Operating Lessee and proceeds, if any, from business
interruption or other loss of income insurance.
          “S&P” means Standard & Poor’s Ratings Services, a division of the
McGraw-Hill Companies, Inc., and its successors.
          “Securitization” means a transaction in which all or any portion of
the Loan is deposited into one or more trusts or entities that issue
Certificates to investors, or a similar transaction; and the term “Securitize”
and “Securitized” have meanings correlative to the foregoing.
          “Securitization Vehicle” means the issuer of Certificates in a
Securitization of the Loan.
          “Service” means the Internal Revenue Service or any successor agency
thereto.
          “Servicer” means the entity or entities appointed by Lender from time
to time to serve as servicer and/or special servicer of the Loan. If at any time
no entity is so appointed, the term “Servicer” shall be deemed to refer to
Lender.
          “Single Member LLC” means a limited liability company that either
(x) has only one member, or (y) has multiple members, none of which is a
Single-Purpose Equityholder.

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           “Single-Purpose Entity” means a Person that (a) was formed under the
laws of the State of Delaware solely for the purpose of (i) acquiring and
holding an ownership or leasehold interest in the Property (or, if applicable,
Defeasance Collateral), (ii) in the case of Borrower, entering into and
incurring the Indebtedness and Obligations under this Agreement and the other
Loan Documents or (iii) in the case of a Single-Purpose Equityholder, acquiring
and holding an ownership interest in Borrower, Operating Lessee and/or Maryland
Guarantor (or, if applicable, Defeasance Collateral), (b) does not engage in any
business unrelated to (i) the Property (or, if applicable, Defeasance
Collateral), or (ii) in the case of a Single-Purpose Equityholder, its ownership
interest in Borrower, Operating Lessee and/or Maryland Guarantor (or, if
applicable, Defeasance Collateral), (c) does not have any assets other than
those related to (i) the Property (or, if applicable, Defeasance Collateral), or
(ii) in the case of a Single-Purpose Equityholder, its ownership interest in
Borrower, Operating Lessee and/or Maryland Guarantor (or, if applicable,
Defeasance Collateral), (d) does not have any Debt other than Permitted Debt,
(e) maintains books, accounts, records, financial statements, stationery,
invoices and checks that are separate and apart from those of any other Person
(except that such Person’s financial position, assets, results of operations and
cash flows may be included in the consolidated financial statements of an
affiliate of such Person in accordance with GAAP, provided that any such
consolidated financial statements shall contain a note indicating that such
Person and its affiliates are separate legal entities and maintain records,
books of account separate and apart from any other Person), (f) is subject to
and complies with all of the limitations on powers and separateness requirements
set forth in the organizational documentation of such Person as of the Closing
Date, (g) holds itself out as being a Person separate and apart from each other
Person and not as a division or part of another Person, (h) conducts its
business in its own name (except for services rendered under a management
agreement with an affiliate, so long as the manager, or equivalent thereof,
under such management agreement holds itself out as an agent of such Person),
(i) exercises reasonable efforts to correct any known misunderstanding actually
known to it regarding its separate identity, and maintains an arm’s-length
relationship with its affiliates, (j) pays its own liabilities out of its own
funds (including the salaries of its own employees) and reasonably allocates any
overhead that is shared with an affiliate, including paying for shared office
space and services performed by any officer or employee of an affiliate,
(k) maintains a sufficient number of employees in light of its contemplated
business operations, (l) conducts its business so that the assumptions made with
respect to it that are contained in the Nonconsolidation Opinion shall at all
times be true and correct in all material respects, (m) maintains its assets in
such a manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any other Person, (n) observes all
applicable entity-level formalities in all material respects, (o) does not
commingle its assets with those of any other Person and holds such assets in its
own name, (p) does not assume, guarantee or become obligated for the debts of
any other Person, and does not hold out its credit as being available to satisfy
the obligations or securities of others, (q) does not acquire obligations or
securities of its shareholders, members or partners, (r) does not pledge its
assets for the benefit of any other Person and does not make any loans or
advances to any Person, (s) intends to maintain adequate capital in light of its
contemplated business operations, (t) has two Independent Directors on its board
of directors or board of managers, or, in the case of a limited partnership, has
a Single-Purpose Equityholder with two Independent Directors on such
Single-Purpose Equityholder’s board of directors or board of managers, and has
organizational documents that prohibit replacing any Independent Director
without Cause and without giving at least two Business Days’ prior written
notice to Lender

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(except in the case of the death, legal incapacity, or voluntary non-collusive
resignation of an Independent Director, in which case no prior notice to Lender
or the Rating Agencies shall be required in connection with the replacement of
such Independent Director with a new Independent Director that is provided by
any of the companies listed in the definition of “Independent Director”),
(u) has by-laws or an operating agreement, or, in the case of a limited
partnership, has a Single-Purpose Equityholder with by-laws or an operating
agreement, which provides that, for so long as the Loan is outstanding, such
Person shall not take or consent to any of the following actions except to the
extent expressly permitted in this Agreement and the other Loan Documents:
     (i) the dissolution, liquidation, consolidation, merger or sale of all or
substantially all of its assets (and, in the case of a Single-Purpose
Equityholder, the assets of any Single-Purpose Entity in which such
Single-Purpose Equityholder holds an interest);
     (ii) the engagement by such Person (and, in the case of a Single-Purpose
Equityholder, the engagement by any Single-Purpose Entity in which such
Single-Purpose Equityholder holds an interest) in any business other than the
acquisition, development, management, leasing, ownership, maintenance and
operation of the Property and activities incidental thereto (and, in the case of
a Single-Purpose Equityholder, activities incidental to the acquisition and
ownership of its interest in each Single-Purpose Entity in which such
Single-Purpose Equityholder holds an interest);
     (iii) the filing, or consent to the filing, of a bankruptcy or insolvency
petition, any general assignment for the benefit of creditors or the institution
of any other insolvency proceeding, or the seeking or consenting to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official in respect of such Person without the
affirmative vote of both of its Independent Directors (and, in the case of a
Single-Purpose Equityholder, in respect of any Single-Purpose Entity in which
such Single-Purpose Equityholder holds an interest, without the affirmative vote
of both of such Single-Purpose Entities’ Independent Directors); and
     (iv) any amendment or modification of any provision of its (and, in the
case of a Single-Purpose Equityholder, any Single-Purpose Entity in which such
Single-Purpose Equityholder holds an interest) organizational documents relating
to qualification as a “Single-Purpose Entity”,
and (v) if such entity is a Single Member LLC, has organizational documents that
provide that upon the occurrence of any event (other than a permitted equity
transfer) that causes its sole member to cease to be a member while the Loan is
outstanding, at least one of its Independent Directors shall automatically be
admitted as the sole member of the Single Member LLC and shall preserve and
continue the existence of the Single Member LLC without dissolution.
          “Single-Purpose Equityholder” means a Single-Purpose Entity that
(x) is a limited liability company or corporation formed under the laws of the
State of Delaware, (y) owns at least a 1% direct equity interest in Maryland
Guarantor (or a lessor amount, providing that

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Lender receives appropriate legal opinions with respect thereto), and (z) serves
as the general partner or managing member of each Single-Purpose Entity in which
it holds an interest.
          “Smith Travel Reports” means a “STAR Program Report” with respect to
the Property prepared by Smith Travel Research, Inc, or its successors and
assigns.
          “Sponsor” means Pebblebrook Hotel Trust.
          “Subordination of Operating Lease” means that certain consent and
agreement of Operating Lessee and subordination of Operating Lease executed by
Operating Lessee and Maryland Guarantor as of the Closing Date, as the same may
from time to time be amended, restated, replaced, supplemented or otherwise
modified in accordance herewith.
          “Subordination of Property Management Agreement” means that certain
consent and agreement of manager and subordination and non-disturbance of
management agreement executed by Operating Lessee and the Approved Property
Manager as of the Closing Date, as the same may from time to time be amended,
restated, replaced, supplemented or otherwise modified in accordance herewith.
          “Taxes” means all real estate and personal property taxes,
assessments, fees, taxes on rents or rentals, water rates or sewer rents,
facilities and other governmental, municipal and utility district charges or
other similar taxes or assessments now or hereafter levied or assessed or
imposed against the Property, Maryland Guarantor or Operating Lessee with
respect to the Property or rents therefrom, or the Operating Lessee Pledged
Collateral or that may become Liens upon the Property, without deduction for any
amounts reimbursable to Maryland Guarantor or Operating Lessee by third parties.
          “Tax Reserve Exemption Period” has the meaning set forth in
Section 3.4(d)(i).
          “Tenant” means any Person liable by contract or otherwise to pay
monies (including a percentage of gross income, revenue or profits) pursuant to
a Lease.
          “Tenant Improvements” means, collectively, (i) tenant improvements to
be undertaken for any Tenant that are required to be completed by or on behalf
of Borrower or Operating Lessee pursuant to the terms of such Tenant’s Lease,
and (ii) tenant improvements paid or reimbursed through allowances to a Tenant
pursuant to such Tenant’s Lease.
          “Tenant Notice” has the meaning set forth in Section 3.1(b).
          “Test Period” means each 12-month period ending on the last day of a
Fiscal Quarter.
          “Trade Payables” means unsecured amounts payable by or on behalf of
Maryland Guarantor or Operating Lessee for or in respect of the operation of the
Property in the ordinary course and that would under GAAP and the Uniform System
of Accounts be regarded as ordinary expenses, including amounts payable to
suppliers, vendors, contractors, mechanics, materialmen or other Persons
providing property or services to the Property, Maryland Guarantor or Operating
Lessee and the capitalized amount of any ordinary-course financing leases.

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          “Transaction” means, collectively, the transactions contemplated
and/or financed by the Loan Documents.
          “Transfer” means the sale or other whole or partial conveyance of all
or any portion of the Property or any direct or indirect interest therein to a
third party, including granting of any purchase options, rights of first
refusal, rights of first offer or similar rights in respect of any portion of
the Property or the subjecting of any portion of the Property to restrictions on
transfer; except that the conveyance of a space lease at the Property in
accordance herewith shall not constitute a Transfer.
          “Treasury Constant Yield” means the arithmetic mean of the rates
published as “Treasury Constant Maturities” as of 5:00 p.m., New York time, for
the five Business Days preceding the date on which acceleration has been
declared or, as applicable, the date on which the Casualty or Condemnation
occurred, as shown on the USD screen of Reuters (or such other page as may
replace that page on that service, or such other page or replacement therefor on
any successor service), or if such service is not available, the Bloomberg
Service (or any successor service), or if neither Reuters nor the Bloomberg
Service is available, under Section 504 in the weekly statistical release
designated H.15(519) (or any successor publication) published by the Board of
Governors of the Federal Reserve System, for “On the Run” U.S. Treasury
obligations corresponding to the third Payment Date prior to the scheduled
Maturity Date. If no such maturity shall so exactly correspond, yields for the
two most closely corresponding published maturities shall be calculated pursuant
to the foregoing sentence and the Treasury Constant Yield shall be interpolated
or extrapolated (as applicable) from such yields on a straight-line basis
(rounding, in the case of relevant periods, to the nearest month).
          “Trigger Level” means Closing Date NOI times 85%.
          “Trigger Period” means any period (i) from (a) the conclusion of any
Test Period during which Net Operating Income is less than the Trigger Level, to
(b) the conclusion of any Test Period thereafter during which Net Operating
Income is equal to or greater than the Trigger Level or (ii) from (a) the date
on which Lender determines, by written notice to Maryland Guarantor, that
Maryland Guarantor has failed to meet any applicable Capital Plan Target
Completion Date and failed to cure within 10 days after written notice from
Lender, or that Maryland Guarantor has failed to certify that such Capital Plan
Target Completion Date has been met pursuant to Section 5.13(iv), to (b) the
date on which the Capital Plan is completed, as determined by Lender in its
reasonable discretion. If any of the reports required under Sections 5.12, 5.13
or 5.14 are not delivered to Lender as and when required hereunder, a Trigger
Period shall (after notice and expiration of the cure periods as described in
Section 5.14(b)) be deemed to have commenced and be ongoing, unless and until
such reports are delivered and they indicate that, in fact, no Trigger Period is
ongoing.
          “Unfunded Obligations” means the items described in Schedule D.
          “Unfunded Obligations Account” has the meaning set forth in
Section 3.8(a).
          “Unfunded Obligations Amount” means $0.

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          “Uniform System of Accounts” means the “Uniform System of Accounts for
the Lodging Industry” (tenth edition) published by The American Hotel & Lodging
Association Educational Institute.
          “Use” means, with respect to any Hazardous Substance, the generation,
manufacture, processing, distribution, handling, possession, use, discharge,
placement, treatment, disposal, disposition, removal, abatement, recycling or
storage of such Hazardous Substance or transportation of such Hazardous
Substance.
          “U.S. Person” means a United States person within the meaning of
Section 7701(a)(30) of the Code.
          “U.S. Tax” means any present or future tax, assessment or other charge
or levy imposed by or on behalf of the United States of America or any taxing
authority thereof.
          “Waste” means any material abuse or destructive use (whether by action
or inaction) of the Property.
          “Yield Maintenance Premium” shall mean, with respect to any payment of
principal (or any portion thereof) during the continuance of an Event of Default
or, pursuant to Section 5.16(f), following any Casualty or Condemnation, the
product of:
     (A) a fraction whose numerator is the amount so paid and whose denominator
is the outstanding principal balance of the Loan before giving effect to such
payment, times
     (B) the excess of (1) the sum of the respective present values, computed as
of the date of such prepayment, of the remaining scheduled payments of principal
and interest with respect to the Loan (assuming no prepayments or acceleration
of the Loan), determined by discounting such payments to the date on which such
payments are made at the Treasury Constant Yield, over (2) the outstanding
principal balance of the Loan on such date immediately prior to such payment;
provided that, except in the case of a prepayment of principal (or any portion
thereof) pursuant to Section 5.16(f), the Yield Maintenance Premium shall not be
less than 3% of the amount prepaid.
          The calculation of the Yield Maintenance Premium shall be made by
Lender and shall, absent manifest error, be final, conclusive and binding upon
all parties.
          (b) Rules of Construction. All references to sections, schedules and
exhibits are to sections, schedules and exhibits in or to this Agreement unless
otherwise specified. Unless otherwise specified: (i) all meanings attributed to
defined terms in this Agreement shall be equally applicable to both the singular
and plural forms of the terms so defined, (ii) “including” means “including, but
not limited to”, (iii) “mortgage” means a mortgage, deed of trust, deed to
secure debt, indemnity deed of trust or similar instrument, as applicable, and
“mortgagee” means the secured party under a mortgage, deed of trust, deed to
secure debt, indemnity deed of trust or similar instrument and (iv) the words
“hereof,” “herein,” “hereby,” “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, article, section or other subdivision of this Agreement.
All accounting

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terms not specifically defined in this Agreement shall be construed in
accordance with GAAP, as the same may be modified in this Agreement. Each
covenant of Maryland Guarantor contained herein with respect to the operation
and maintenance of or otherwise relating to the Property shall be construed to
mean that Maryland Guarantor shall comply or use commercially reasonable efforts
to cause the Operating Lessee to comply with such covenant; and any failure by
the Operating Lessee to comply therewith shall constitute a Default hereunder
even though Operating Lessee is not a party to this Agreement.
ARTICLE I
GENERAL TERMS
          Section 1.1. The Loan.
          (a) On the Closing Date, subject to the terms and conditions of this
Agreement, Lender shall make a loan to Borrower (the “Loan”) in an amount equal
to the Loan Amount. The Loan shall initially be represented by a single Note
that shall bear interest as described in this Agreement at a per annum rate
equal to the Initial Interest Rate.
          (b) The Loan shall be secured by the Collateral pursuant to the
Mortgage and the other Loan Documents.
          (c) Lender shall have the right at any time, at Lender’s sole
discretion, to replace the initial Note with two or more replacement Notes, and
the holder of each replacement Note shall similarly have the right at any time,
at such holder’s sole discretion, to replace its Note with two or more
replacement Notes. Each replacement Note shall be in the form of the Note so
replaced, but for its principal amount and Interest Rate. The principal amount
of each Note shall be determined by the applicable holder in its sole
discretion, provided that the initial sum of the principal amounts of the
replacement Notes shall equal the then-outstanding principal balance of the
Notes that are so replaced. The Interest Rate of each replacement Note shall be
determined by the applicable holder in its sole discretion, provided that the
initial weighted average of such Interest Rates, weighted on the basis of the
principal balances of the respective Notes, shall initially equal the Interest
Rate of the Note so replaced. Borrower shall execute and return to Lender each
such Note within two Business Days after Borrower’s receipt of an execution copy
thereof, and Borrower’s failure to do so within such time period shall, at
Lender’s election, constitute an immediate Event of Default hereunder. Borrower
hereby authorizes and appoints Lender as its attorney-in-fact to execute such
replacement Notes on Borrower’s behalf should Borrower fail to do so. The
foregoing grant of authority is a power of attorney coupled with an interest and
such appointment shall be irrevocable for the term of this Agreement. Borrower
hereby ratifies all actions that such attorney shall lawfully take or cause to
be taken in accordance with this Section 1.1(c). If requested by Lender,
Borrower shall deliver to Lender, together with such replacement Notes, an
opinion of counsel with respect to the due authorization and enforceability of
such replacement Notes and confirming that the delivery of such replacement
Notes does not alter the conclusions reached in the legal opinions delivered to
Lender at Closing.

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          (d) To secure the full and timely payment of the Indebtedness,
Borrower hereby grants to Lender, its heirs, successors and assigns, a
first-priority Lien on all Collateral, wherever located, now or hereafter owned
from time to time by Borrower, including, without limitation, all “goods,”
“consumer goods,” “equipment,” “inventory,” “fixtures,” “farm products,”
“accounts,” “deposit accounts,” “chattel paper,” “general intangibles,”
“software,” “instruments” and “proceeds” of any of the foregoing (all as defined
under the Uniform Commercial Code as in effect from time to time in the State of
New York). Borrower hereby authorizes Lender to file any appropriate financing
statements with the Secretary of State of the State of Delaware or any other
applicable jurisdiction, which financing statements may include a description of
the collateral covered thereby as “all assets” or “all personal property” of the
Borrower.
          Section 1.2. Interest and Principal.
          (a) On each Payment Date prior to the Initial Principal Payment Date,
Borrower shall pay to Lender interest on each Note for the applicable Interest
Accrual Period at the applicable Interest Rate (except that in each case,
interest shall be payable on the Indebtedness, including due but unpaid
interest, at the Default Rate with respect to any portion of such Interest
Accrual Period falling during the continuance of an Event of Default, in which
case the monthly payment shall be increased by the amount of Default Interest
accrued on the Notes during the applicable Interest Accrual Period). On the
Closing Date, Borrower shall pay interest from and including the Closing Date
through the end of the first Interest Accrual Period. Interest payable hereunder
shall be computed on the basis of a 360-day year and the actual number of days
elapsed in the related Interest Accrual Period.
          (b) Commencing with the Initial Principal Payment Date, and on each
and every Payment Date thereafter, Borrower shall pay to Lender a constant
monthly payment of $199,406.96, which amount shall be applied first toward the
payment of interest on each Note for the applicable Interest Accrual Period at
the applicable Interest Rate (except that in each case, interest shall be
payable at the Default Rate with respect to any portion of such Interest Accrual
Period falling during the continuance of an Event of Default, in which case the
monthly payment shall be increased by the amount of Default Interest accrued on
the Notes during the applicable Interest Accrual Period), and the balance shall
be applied toward the reduction of the outstanding principal balances of the
Notes pro rata in accordance with their then outstanding principal balances.
          (c) No prepayments of the Loan shall be permitted except for
(i) prepayments resulting from Casualty or Condemnation as described in
Section 5.16(f), and (ii) a prepayment of the Loan in whole (but not in part)
during the Prepayment Period on not less than 15 days prior written notice;
provided that any prepayment hereunder shall be accompanied by all interest
accrued on the amount prepaid, plus the amount of interest that would have
accrued thereon if the Loan had remained outstanding through the end of the
Interest Accrual Period in which such prepayment occurs, plus all other amounts
then due under the Loan Documents. Borrower’s notice of prepayment shall create
an obligation of Borrower to prepay the Loan as set forth therein, but may be
rescinded with five days’ written notice to Lender (subject to payment of any
out-of-pocket costs and expenses resulting from such rescission). In addition,
Defeasance

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shall be permitted after the expiration of the Lockout Period as described in
Section 2.1. The entire outstanding principal balance of the Loan, together with
interest through the end of the applicable Interest Accrual Period and all other
amounts then due under the Loan Documents, shall be due and payable by Borrower
to Lender on the Maturity Date.
          (d) If all or any portion of the Principal Indebtedness is paid to
Lender following acceleration of the Loan or as a result of a Casualty or
Condemnation, Borrower shall pay to Lender an amount equal to the applicable
Yield Maintenance Premium. Amounts received in respect of the Indebtedness
during the continuance of an Event of Default shall be applied toward interest,
principal and other components of the Indebtedness (in such order as Lender
shall determine) before any such amounts are applied toward payment of Yield
Maintenance Premiums, with the result that Yield Maintenance Premiums shall
accrue as the Principal Indebtedness is repaid but no amount received from
Borrower shall constitute payment of a Yield Maintenance Premium until the
remainder of the Indebtedness shall have been paid in full. Borrower
acknowledges that (i) a prepayment will cause damage to Lender; (ii) the Yield
Maintenance Premium is intended to compensate Lender for the loss of its
investment and the expense incurred and time and effort associated with making
the Loan, which will not be fully repaid if the Loan is prepaid; (iii) it will
be extremely difficult and impractical to ascertain the extent of Lender’s
damages caused by a prepayment after an acceleration or any other prepayment not
permitted by the Loan Documents; and (iv) the Yield Maintenance Premium
represents Lender’s and Borrower’s reasonable estimate of Lender’s damages from
the prepayment and is not a penalty.
          (e) Any payments of interest and/or principal not paid when due
hereunder shall bear interest at the applicable Default Rate and, in the case of
all payments due hereunder other than the repayment of the Principal
Indebtedness on the Maturity Date or on any other earlier date as a result of an
acceleration of the Loan, when paid, shall be accompanied by a late fee in an
amount equal to the lesser of three percent of such unpaid sum and the maximum
amount permitted by applicable law in order to defray a portion of 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.
          Section 1.3. Method and Place of Payment. Except as otherwise
specifically provided in this Agreement, all payments and prepayments under this
Agreement and the Notes (including any deposit into the Cash Management Account
pursuant to Section 3.2(c)) shall be made to Lender not later than 1:00 p.m.,
New York City time, on the date when due (except in the case of the payment made
on the Maturity Date, which shall be made not later than 2:00 p.m., New York
City time) and shall be made in lawful money of the United States of America by
wire transfer in federal or other immediately available funds to the account
specified from time to time by Lender. Any funds received by Lender after such
time shall be deemed to have been paid on the next succeeding Business Day.
Lender shall notify Borrower in writing of any changes in the account to which
payments are to be made. If the amount received from Borrower (or from the Cash
Management Account pursuant to Section 3.2(b)) is less than the sum of all
amounts then due and payable hereunder, such amount shall be applied, at
Lender’s sole discretion, either toward the components of the Indebtedness
(e.g., interest, principal and other amounts payable hereunder) and the Notes,
in such sequence as Lender shall elect in its sole discretion, or toward the
payment of Property expenses.

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          Section 1.4. Taxes; Regulatory Change.
          (a) Obligor agrees to indemnify Lender against any present or future
stamp, documentary or other similar or related taxes or other similar or related
charges now or hereafter imposed, levied, collected, withheld or assessed by any
United States Governmental Authority by reason of the execution and delivery of
the Loan Documents and any consents, waivers, amendments and enforcement of
rights under the Loan Documents.
          (b) If Obligor is required by law to withhold or deduct any amount
from any payment hereunder in respect of any U.S. Tax, Obligor shall withhold or
deduct the appropriate amount, remit such amount to the appropriate Governmental
Authority and pay to each Person to whom there has been an Assignment or
Participation of a Loan and who is not a U.S. Person such additional amounts as
are necessary in order that the net payment of any amount due to such non-U.S.
Person hereunder after deduction for or withholding in respect of any U.S. Tax
imposed with respect to such payment (or in lieu thereof, payment of such U.S.
Tax by such non-U.S. Person), will not be less than the amount stated in this
Agreement to be then due and payable; except that the foregoing obligation to
pay such additional amounts shall not apply (i) to any assignee that has not
complied with the obligations contained in Section 9.7(c), (ii) to any U.S.
Taxes imposed solely by reason of the failure by such Person (or, if such Person
is not the beneficial owner of the relevant Loan, such beneficial owner) to
comply with applicable certification, information, documentation or other
reporting requirements concerning the nationality, residence, identity or
connections with the United States of America of such Person (or beneficial
owner, as the case may be) if such compliance is required by statute or
regulation of the United States of America as a precondition to relief or
exemption from such U.S. Taxes; or (iii) with respect to any Person who is a
fiduciary or partnership or other than the sole beneficial owner of such
payment, to any U.S. Tax imposed with respect to payments made under any Note to
a fiduciary or partnership to the extent that the beneficial owner or member of
the partnership would not have been entitled to the additional amounts if such
beneficial owner or member of the partnership had been the holder of the Note.
          (c) Within 30 days after paying any amount from which it is required
by law to make any deduction or withholding, and within 30 days after it is
required by law to remit such deduction or withholding to any relevant taxing or
other authority, Obligor shall deliver to such non-U.S. Person satisfactory
evidence of such deduction, withholding or payment (as the case may be).
          (d) If, as a result of any Regulatory Change, any reserve, special
deposit or similar requirements relating to any extensions of credit or other
assets of, or any deposits with, Lender or any holder of all or a portion of the
Loan is imposed, modified or deemed applicable and the result is to increase the
cost to such Lender or such holder of making or holding the Loan, or to reduce
the amount receivable by Lender or such holder hereunder in respect of any
portion of the Loan by an amount deemed by Lender or such holder to be material
(such increases in cost and reductions in amounts receivable, “Increased
Costs”), then Obligor agrees that it will pay to Lender or such holder upon
Lender’s or such holder’s request such additional amount or amounts as will
compensate Lender and/or such holder for such Increased Costs to the extent that
such Increased Costs are reasonably allocable to the Loan. Lender will notify
Obligor in writing of any event occurring after the Closing Date that will
entitle Lender or any holder of

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the Loan to compensation pursuant to this Section 1.4(d) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation and will designate a different lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the reasonable judgment of such Lender, be otherwise disadvantageous to
such Lender. If such Lender shall fail to notify Obligor of any such event
within 90 days following the end of the month during which such event occurred,
then Obligor’s liability for any amounts described in this Section incurred by
such Lender as a result of such event shall be limited to those attributable to
the period occurring subsequent to the 90th day prior to the date upon which
such Lender actually notified Obligor of the occurrence of such event.
Notwithstanding the foregoing, in no event shall Obligor be required to
compensate Lender or any holder of the Loan for any portion of the income or
franchise taxes of Lender or such holder, whether or not attributable to
payments made by Obligor. If Lender requests compensation under this
Section 1.4(d), Obligor may, by notice to Lender, require that such Lender
furnish to Obligor a statement setting forth in reasonable detail the basis for
requesting such compensation and the method for determining the amount thereof.
          Section 1.5. Release. Upon payment of the Indebtedness in full when
permitted or required hereunder, Lender shall execute instruments prepared by
Borrower and reasonably satisfactory to Lender, which, at Borrower’s election
and at Borrower’s sole cost and expense: (a) release and discharge all Liens on
all Collateral securing payment of the Indebtedness (subject to Borrower’s
obligation to pay any associated fees and expenses), including all balances in
the Collateral Accounts; or (b) assign such Liens (and the Loan Documents) to a
new lender designated by Borrower. Any release or assignment provided by Lender
pursuant to this Section 1.5 shall be without recourse, representation or
warranty of any kind.
ARTICLE II
DEFEASANCE AND ASSUMPTION
          Section 2.1. Defeasance.
          (a) On any date after the expiration of the Lockout Period, provided
no Event of Default is then continuing and subject to the notice requirement
described in Section 2.1(c), Obligor may obtain the release of the Collateral
(other than the Defeasance Collateral) from the Liens of the Loan Documents upon
the payment to Lender of all sums then due under the Loan Documents and the
delivery of the following to Lender:
     (i) Defeasance Collateral sufficient to provide payments on or prior to,
and in any event as close as possible to, all successive Payment Dates in an
amount sufficient to make all payments of interest and principal due hereunder,
including the then outstanding Principal Indebtedness, on the first Payment Date
in the Prepayment Period or such other Payment Date in the Prepayment Period as
Obligor shall elect;
     (ii) written confirmation from an independent certified public accounting
firm reasonably satisfactory to Lender that such Defeasance Collateral is
sufficient to provide the payments described in clause (i) above;

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     (iii) a security agreement, in form and substance reasonably satisfactory
to Lender, creating in favor of Lender a first priority perfected security
interest in such Defeasance Collateral (a “Defeasance Pledge Agreement”);
     (iv) an opinion of counsel for Obligor, in form and substance reasonably
satisfactory to Lender and delivered by counsel reasonably satisfactory to
Lender, opining that (1) the Defeasance Pledge Agreement has been duly
authorized and is enforceable against Obligor in accordance with its terms and
that Lender has a perfected first priority security interest in such Defeasance
Collateral; and (2) if the Loan has been Securitized, the Defeasance, including
any assumption under Section 2.1(b), does not cause a tax to be imposed on the
Securitization Vehicle or, if the Securitization Vehicle is a REMIC, does not
cause any portion of the Loan to cease to be a “qualified mortgage” within the
meaning of section 860G(a)(3) of the Code, and (3) that the Defeasance does not
constitute a “significant modification” of the Loan under Section 1001 of the
Code;
     (v) if the Loan has been Securitized, the Rating Condition with respect to
such Defeasance shall have been satisfied;
     (vi) instruments reasonably satisfactory to Lender releasing and
discharging or assigning to a third party Lender’s Liens on the Collateral
(other than the Defeasance Collateral);
     (vii) such other customary certificates, opinions, documents or instruments
as Lender and the Rating Agencies may reasonably request; and
     (viii) reimbursement for any costs and expenses incurred in connection with
this Section 2.1 (including Rating Agency and Servicer fees and expenses,
reasonable fees and expenses of legal counsel and any revenue, documentary stamp
or intangible taxes or any other tax or charge due in connection herewith).
Lender shall reasonably cooperate with Maryland Guarantor to avoid the
incurrence of mortgage recording taxes in connection with a Defeasance at
Maryland Guarantor’s sole cost and expense.
          (b) At the time of the Defeasance, the Loan shall be assumed by a
bankruptcy-remote entity established or designated by the initial Lender
hereunder or its designee, to which Obligor shall transfer all of the Defeasance
Collateral (a “Defeasance Borrower”). The right of the initial Lender hereunder
or its designee to establish or designate a Defeasance Borrower shall be
retained by the initial Lender notwithstanding the sale or transfer of the Loan
unless such obligation is specifically assigned to and assumed by the
transferee. Such Defeasance Borrower shall execute and deliver to Lender an
assumption agreement in form and substance reasonably satisfactory to Lender,
such Uniform Commercial Code financing statements as may be reasonably requested
by Lender and legal opinions of counsel reasonably acceptable to Lender that are
substantially equivalent to the opinions delivered to Lender on the Closing
Date, including new nonconsolidation opinions reasonably satisfactory to Lender
and satisfactory to the Rating Agencies; and Obligor and the Defeasance Borrower
shall deliver such other documents, certificates and legal opinions as Lender
shall reasonably request.

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          (c) Obligor must give Lender and each Rating Agency at least 30 days’
(and not more than 90 days’) prior written notice of any Defeasance under this
Section 2.1, specifying the date on which the Defeasance is to occur. If such
Defeasance is not made on such date (x) Obligor’s notice of Defeasance will be
deemed rescinded, and (y) Obligor shall on such date pay to Lender all
reasonable losses, costs and expenses suffered by Lender as a consequence of
such rescission.
          (d) Upon satisfaction of the requirements contained in this
Section 2.1, Lender will execute and deliver to Obligor such instruments,
prepared by Obligor and approved by Lender, as shall be necessary to release the
Property from the Liens of the Loan Documents.
          Section 2.2. Assumption. The initial Obligor shall have the right to
Transfer all of the Collateral to a Qualified Successor Borrower that will,
contemporaneously with such Transfer, assume all of the obligations of Obligor
hereunder and under the other Loan Documents (an “Assumption”), provided no
Event of Default or material monetary Default is then continuing or would result
therefrom and the following conditions are met to the reasonable satisfaction of
Lender:
     (i) such Qualified Successor Borrower shall have executed and delivered to
Lender an assumption agreement (including an assumption of the Mortgage in
recordable form, if requested by Lender), in form and substance reasonably
acceptable to Lender, evidencing its agreement to abide and be bound by the
terms of the Loan Documents and containing representations substantially
equivalent to those contained in Article IV (recast, as necessary, such that
representations that specifically relate to Closing Date are remade as of the
date of such assumption), and such other representations (and evidence of the
accuracy of such representations) as the Servicer shall reasonably request;
     (ii) the obligations of Operating Lessee under the Operating Lease shall
have been assumed by a Qualified Successor Operating Lessee pursuant to an
assumption agreement, in form and substance reasonably acceptable to Lender, and
such Qualified Successor Operating Lessee shall have delivered to Lender all
documents reasonably requested by Lender relating to the existence of such
Qualified Successor Operating Lessee and the due authorization of such Qualified
Operating Lessee to assume the obligations under the Operating Lease, each in
form and substance reasonably satisfactory to Lender, including a certified copy
of the applicable resolutions from all appropriate persons, certified copies of
the organizational documents of the Qualified Successor Operating Lessee,
together with all amendments thereto, and certificates of good standing or
existence for the Qualified Successor Operating Lessee issued as of a recent
date by its state of organization and each other state where such entity, by the
nature of its business, is required to qualify or register;
     (iii) such Uniform Commercial Code financing statements as may be
reasonably requested by Lender shall be filed;
     (iv) a party satisfactory to Lender in its sole discretion assumes all
obligations, liabilities, guarantees and indemnities of Sponsor and any other
guarantor under the Loan Documents pursuant to documentation satisfactory to
Lender (and upon such assumption

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by such party, Sponsor and any other such guarantor shall be released from such
obligations, liabilities, guarantees and indemnities);
     (v) such Qualified Successor Borrower shall have delivered to Lender legal
opinions of counsel reasonably acceptable to Lender that are equivalent to the
opinions delivered to Lender on the Closing Date, including new nonconsolidation
opinions that are reasonably satisfactory to Lender and satisfactory to each of
the Rating Agencies; and Obligor and the Qualified Successor Borrower shall have
delivered such other documents, certificates and legal opinions, including
relating to REMIC matters, as Lender shall reasonably request;
     (vi) such Qualified Successor Borrower shall have delivered to Lender all
documents reasonably requested by it relating to the existence of such Qualified
Successor Borrower and the due authorization of the Qualified Successor Borrower
to assume the Loan and to execute and deliver the documents described in this
Section 2.2, each in form and substance reasonably satisfactory to Lender,
including a certified copy of the applicable resolutions from all appropriate
persons, certified copies of the organizational documents of the Qualified
Successor Borrower, together with all amendments thereto, and certificates of
good standing or existence for the Qualified Successor Borrower issued as of a
recent date by its state of organization and each other state where such entity,
by the nature of its business, is required to qualify or register;
     (vii) the Qualified Title Insurance Policy shall have been properly
endorsed to reflect the Transfer of the Property to the Qualified Successor
Borrower;
     (viii) the Rating Condition shall have been satisfied with respect to the
legal structure of the Qualified Successor Borrower, the documentation of the
Assumption and the related legal opinions; and
     (ix) Obligor shall have paid to Lender a nonrefundable assumption fee in an
amount equal to 1.0% of the Principal Indebtedness, and Obligor shall have
reimbursed Lender for its reasonable out-of-pocket costs and expenses incurred
in connection with such assumption.
          Section 2.3. Transfers of Equity Interests in Obligor.
          (a) No direct or indirect equity interests in Obligor shall be
conveyed or otherwise transferred to any Person prior to the first anniversary
of the Closing Date. From and after the first anniversary of the Closing Date,
provided that no Event of Default is continuing, transfers (but not pledges,
except as permitted under Section 7.1(f)) of direct and indirect equity
interests in Obligor shall be permitted upon 10 days advance written notice
thereof to Lender, provided that:
          (i) no such transfer shall result in a Change of Control;
          (ii) as a condition to any such transfer that results in Obligor
ceasing to be Controlled by Sponsor, and each subsequent transfer that again
changes the identity of the Qualified Equityholder that Controls Obligor, shall
be conditioned upon payment to

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Lender of a transfer fee in an amount equal to 1.0% of the Principal
Indebtedness at the time of such transfer;
     (iii) as a condition to any such transfer that results in any Person
acquiring more than 49% of the direct or indirect equity interest in Obligor or
a Single-Purpose Equityholder (even if not constituting a Change of Control),
Obligor shall deliver to Lender with respect to such Person a new
non-consolidation opinion satisfactory to (A) prior to the occurrence of any
Securitization of the Loan, Lender (Lender’s approval of any such
non-consolidation opinion that is in substantially the form of the
Nonconsolidation Opinion not to be unreasonably withheld), and (B) at any time
following any Securitization or series of Securitizations of the Loan, each of
the Rating Agencies rating such Securitization or Securitizations; and
     (iv) Obligor shall have reimbursed Lender for its reasonable out-of-pocket
costs and expenses actually incurred in connection with any such transfer.
          (b) Notwithstanding Section 2.3(a) above, the following transactions
shall not be deemed prohibited transfers under this Agreement and shall not
require the consent of Lender:
     (i) the issuance of additional shares or the transfer of existing shares of
Sponsor on any public exchange or the issuance of new units or transfers of
existing units in Pebblebrook Hotel, L.P. (the “Operating Partnership”),
provided that it shall continue to be Controlled by Sponsor; and
     (ii) any merger of Sponsor or the Operating Partnership or a sale of all or
substantially all of the assets of Sponsor or the Operating Partnership,
provided that the new direct or indirect owner of Obligor resulting from such
transaction assumes all obligations of Sponsor under the Loan Documents.
ARTICLE III
ACCOUNTS
          Section 3.1. Cash Management Account.
          (a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank a cash management account into
which income from the Property payable to Maryland Guarantor or Operating Lessee
will be deposited (the “Cash Management Account”), which account shall be owned
by Borrower but remain under the sole and exclusive control (as defined in the
New York Uniform Commercial Code) of Lender. As a condition precedent to the
closing of the Loan, Borrower shall cause the Cash Management Bank to execute
and deliver an agreement (as amended, restated, replaced, supplemented or
otherwise modified in accordance herewith, a “Cash Management Agreement”) that
provides, inter alia, that no party other than Lender and Servicer shall have
the right to withdraw funds from the Cash Management Account and that the Cash
Management Bank shall comply with all instructions and entitlement orders of
Lender relating to the Cash Management Account and the other Collateral
Accounts, in each case, without the consent of Borrower, Operating Lessee or

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any other Person. Notwithstanding any term herein or in the Cash Management
Agreement, at any time that (i) a Tax Reserve Exemption Period shall be
continuing, to the extent provided in Section 3.4(c), the amount remitted to the
Cash Management Account shall be net of any amounts needed to pay Taxes as and
when due and (ii) an Insurance Reserve Exemption Period shall be continuing, to
the extent provided in Section 3.4(c), the amount remitted to the Cash
Management Account shall be net of any amounts needed to pay insurance premiums
as and when due. The fees and expenses of the Cash Management Bank shall be paid
by Borrower.
          (b) Maryland Guarantor shall cause Approved Property Manager to remit
all amounts payable to Maryland Guarantor or Operating Lessee (other than tenant
security deposits required to be held in escrow accounts) to the Cash Management
Account or a Blocked Account immediately at such times as Maryland Guarantor or
Operating Lessee are entitled to receive such funds pursuant to the Approved
Management Agreement. Notwithstanding the foregoing, so long as no Trigger
Period or Event of Default is continuing, the amount remitted each month into
the Cash Management Account shall not be required to exceed the Operating Lease
Monthly Rent. “Blocked Account” means an Eligible Account maintained with a
financial institution satisfactory to Lender that enters into a blocked account
agreement in form and substance satisfactory to Lender (as amended, restated,
replaced, supplemented or otherwise modified in accordance herewith, the
“Blocked Account Agreement”) satisfactory to Lender pursuant to which such
financial institution will remit, at the end of each Business Day, all amounts
contained therein to an account specified by Lender (Lender hereby agreeing to
specify the Cash Management Account so long as no Event of Default has occurred
and is then continuing).
          (c) Lender shall have the right at any time, upon not less than
30 days’ prior written notice to Obligor, to replace the Cash Management Bank
with any Eligible Institution at which Eligible Accounts may be maintained that
will promptly execute and deliver to Lender a Cash Management Agreement
substantially identical to the Cash Management Agreement executed at Closing. In
addition, during the continuance of an Event of Default or if the Blocked
Account Bank fails to comply with the Blocked Account Agreement or ceases to be
an Eligible Institution, Lender shall have the right at any time, upon not less
than 30 days’ prior written notice to Obligor, to replace the Blocked Account
Bank with any Eligible Institution at which Eligible Accounts may be maintained
that will promptly execute and deliver to Lender a Blocked Account Agreement
satisfactory to Lender.
          (d) Maryland Guarantor shall cause Operating Lessee to maintain at all
times a Qualified Operating Expense Account. Maryland Guarantor shall not permit
any amounts unrelated to the Property to be commingled with amounts on deposit
in the Qualified Operating Expense Account and shall cause all amounts payable
with respect to Operating Expenses for the Property (to the extent such
Operating Expenses have not previously been paid by Approved Property Manager in
accordance with the Approved Management Agreement) to be paid from the Qualified
Operating Expense Account or the Cash Management Account (to the extent required
or permitted hereunder) and no other account. Maryland Guarantor shall, or shall
cause Operating Lessee to, deliver to Lender each month the monthly bank
statement related to such Qualified Operating Expense Account. Unless and until
an Event of Default shall occur, Operating Lessee shall have direct access to,
and shall be permitted to make withdrawals and, except during the continuance of
a Trigger Period, equity distributions from, the Qualified Operating Expense
Account, without the consent of Lender. During the continuance of an Event

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of Default, all amounts contained in the Qualified Operating Expense Account
shall be remitted to the Cash Management Account.
          Section 3.2. Distributions from Cash Management Account.
          (a) The Cash Management Agreement shall provide that the Cash
Management Bank shall remit to the Qualified Operating Expense Account, at the
end of each Business Day (or, at Borrower’s election, on a less frequent basis),
the amount, if any, by which amounts then contained in the Cash Management
Account exceed the aggregate amount required to be paid to or reserved with
Lender on the next Payment Date pursuant hereto (the “Minimum Balance”);
provided, however, that Lender shall terminate such remittances during the
continuance of an Event of Default or Trigger Period upon notice to the Cash
Management Bank. Lender may notify the Cash Management Bank at any time of any
change in the Minimum Balance.
          (b) On each Payment Date, provided no Event of Default is continuing,
Lender shall transfer amounts from the Cash Management Account, to the extent
available therein, to make the following payments in the following order of
priority:
     (i) to the Basic Carrying Costs Escrow Account, the amounts then required
to be deposited therein pursuant to Section 3.4;
     (ii) to Lender, the amount of all scheduled or delinquent interest and
principal on the Loan and all other amounts then due and payable under the Loan
Documents (with any amounts in respect of principal paid last);
     (iii) during the continuance of a Trigger Period, to the Qualified
Operating Expense Account, an amount equal to the Budgeted Operating Expenses
for the month in which such Payment Date occurs, to the extent such Budgeted
Operating Expenses have not previously been paid by Approved Property Manager in
accordance with the Approved Management Agreement, as certified by Maryland
Guarantor in an Officer’s Certificate delivered to Lender at least five Business
Days prior to such payment date, provided that the amounts disbursed to such
account pursuant to this clause (iii) shall be used solely to pay Budgeted
Operating Expenses for such month (Obligor agreeing that, in the event that such
Budgeted Operating Expenses exceed the actual operating expenses for such month,
such excess amounts shall be remitted to the Cash Management Account prior to
the next succeeding Payment Date);
     (iv) to the FF&E Reserve Account, the amounts, if any, required to be
deposited therein pursuant to Section 3.6;
     (v) during the continuance of a Trigger Period, all remaining amounts to
the Excess Cash Flow Reserve Account; and
     (vi) if no Trigger Period is continuing, all remaining amounts to the
Qualified Operating Expense Account.

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          (c) If on any Payment Date the amount in the Cash Management Account
shall be insufficient to make all of the transfers described in
Section 3.2(b)(i) through (iv), Borrower shall deposit into the Cash Management
Account on such Payment Date the amount of such deficiency. If Borrower shall
fail to make such deposit, the same shall constitute an Event of Default and, in
addition to all other rights and remedies provided for under the Loan Documents,
Lender may disburse and apply the amounts in the Collateral Accounts in
accordance with Section 3.10(c).
          Section 3.3. Loss Proceeds Account.
          (a) On or prior to the Closing Date, Maryland Guarantor shall
establish and thereafter maintain with the Cash Management Bank an account for
the purpose of depositing any Loss Proceeds (the “Loss Proceeds Account”).
          (b) Provided no Event of Default is continuing, funds in the Loss
Proceeds account shall be applied in accordance with Section 5.16.
          Section 3.4. Basic Carrying Costs Escrow Account.
          (a) On or prior to the Closing Date, Maryland Guarantor shall
establish and thereafter maintain with the Cash Management Bank an account for
the purpose of reserving amounts payable by Maryland Guarantor in respect of
Taxes and insurance premiums (the “Basic Carrying Costs Escrow Account”).
          (b) On the Closing Date, the Basic Carrying Costs Escrow Account shall
be funded in an amount equal to the sum of (i) an amount sufficient to pay all
Taxes by the 30th day prior to the date they come due, assuming subsequent
monthly fundings on Payment Dates of 1/12 of projected annual Taxes, plus
(ii) an amount sufficient to pay all insurance premiums by the 30th day prior to
the date they come due, assuming subsequent monthly fundings on Payment Dates of
1/12 of projected annual insurance premiums.
          (c) On each subsequent Payment Date, an additional deposit shall be
made therein in an amount equal to the sum of:
     (A) 1/12 of the Taxes that Lender reasonably estimates, based on
information provided by Maryland Guarantor, will be payable during the next
ensuing 12 months, plus
     (B) 1/12 of the insurance premiums that Lender reasonably estimates, based
on information provided by Maryland Guarantor, will be payable during the next
ensuing 12 months;
provided, however, that if at any time Lender reasonably determines that the
amount in the Basic Carrying Costs Escrow Account will not be sufficient to
accumulate (upon payment of subsequent monthly amounts in accordance with the
provisions of this Agreement) the full amount of all installments of Taxes and
insurance premiums by the date on which such amounts come due, then Lender shall
notify Maryland Guarantor of such determination and Maryland

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Guarantor shall increase its monthly payments to the Basic Carrying Costs Escrow
Account by the amount that Lender reasonably estimates is sufficient to achieve
such accumulation.
          (d) Notwithstanding the terms and provisions of the foregoing
paragraphs of this Section 3.4:
     (i) Maryland Guarantor shall have no obligation to comply with subclause
(i) of Section 3.4(b) and Section 3.4(c)(A) for so long as (i) no Event of
Default or Trigger Period shall be continuing, (ii) no Taxes that are currently
due and payable remain unpaid; and (iii) Maryland Guarantor shall maintain in
the Basic Carrying Costs Escrow Account funds sufficient to pay all of the Taxes
that Lender reasonably estimates, based on information provided by Maryland
Guarantor , will accrue or be payable during the next ensuing six months (such
estimate not to be reduced to the extent of any actual or proposed tax appeal)
(any such period, a “Tax Reserve Exemption Period”); and
     (ii) Maryland Guarantor shall have no obligation to comply with subclause
(iii) of Section 3.4(b) and Section 3.4(c)(C) for so long as (i) no Event of
Default or Trigger Period shall be continuing, (ii) no insurance premiums that
are currently due and payable remain unpaid; and (iii) Maryland Guarantor shall
maintain in the Basic Carrying Costs Escrow Account funds sufficient to pay all
of the insurance premiums that Lender reasonably estimates, based on information
provided by Maryland Guarantor, will accrue or be payable during the next
ensuing six months (such estimate not to be reduced to the extent of any actual
or proposed tax appeal) (any such period, a “Insurance Reserve Exemption
Period”).
          (e) Maryland Guarantor shall provide Lender with copies of all tax,
and insurance bills relating to the Property promptly after Maryland Guarantor’s
receipt thereof. During any Tax Reserve Exemption Period, Maryland Guarantor
shall make all Tax payments on or before the date due. During any Insurance
Reserve Exemption Period, Maryland Guarantor shall make all insurance premium
payments on or before the date due. At all other times, Lender will apply
amounts in the Basic Carrying Costs Escrow Account toward the purposes for which
such amounts are deposited therein, including, for the avoidance of doubt, Taxes
due and payable. In connection with the making of any payment from the Basic
Carrying Costs Escrow Account, Lender may cause such payment to be made
according to any bill, statement or estimate procured from the appropriate
public office or insurance carrier, 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 unless given written advance
notice by Maryland Guarantor of such inaccuracy, invalidity or other contest.
          Section 3.5. [Intentionally Omitted]. Section 3.6. FF&E Reserve
Account.
          (a) On or prior to the Closing Date, Maryland Guarantor shall
establish and thereafter maintain with the Cash Management Bank an account for
the purpose of reserving amounts in respect of FF&E expenditures (the “FF&E
Reserve Account”).

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          (b) On each Payment Date there shall be deposited into the FF&E
Reserve Account an amount equal to the Monthly FF&E Amount.
          (c) Upon the request of Maryland Guarantor at any time that no Event
of Default is continuing (but not more often than once per calendar month),
Lender shall cause disbursements to Maryland Guarantor from the FF&E Reserve
Account to reimburse Maryland Guarantor for FF&E expenditures that are
consistent with the Approved Annual Budget; provided that:
     (i) Maryland Guarantor shall deliver to Lender invoices evidencing that the
costs for which such disbursements are requested are due and payable;
     (ii) Maryland Guarantor shall deliver to Lender an Officer’s Certificate
confirming that all such costs have been previously paid by Maryland Guarantor
or will be paid from the proceeds of the requested disbursement and that all
conditions precedent to such disbursement required by the Loan Documents have
been satisfied;
     (iii) Lender may condition the making of a requested disbursement on
(1) reasonable evidence establishing that Maryland Guarantor has applied any
amounts previously received by it in accordance with this Section for the
expenses to which specific draws made hereunder relate, (2) a reasonably
satisfactory site inspection, and (3) receipt of lien releases and waivers from
any contractors, subcontractors and others with respect to such amounts; and
     (iv) No amounts reserved in the FF&E Reserve Account shall be used to pay
expenses in respect of the Capital Plan.
          (d) Notwithstanding the foregoing, Maryland Guarantor shall have no
obligation to comply with subclause (b) of this Section 3.6 for so long as
(i) no Event of Default or Trigger Period is continuing, (ii) Maryland Guarantor
maintains with an Eligible Institution a separate account (the “Maryland
Guarantor FF&E Account”) owned by Maryland Guarantor but subject to a Maryland
Guarantor FF&E Account Control Agreement, into which Maryland Guarantor shall
deposit, on a monthly basis, an amount equal to or greater than the Monthly FF&E
Amount and (iii) Maryland Guarantor’s chief financial officer shall deliver to
Lender within ten Business Days of the end of each Fiscal Quarter, an Officer’s
Certificate certifying as to the amount contained in the Maryland Guarantor FF&E
Account on the last day of such Fiscal Quarter and, upon Lender’s request,
further certifying that (1) no amount has been remitted from the Maryland
Guarantor FF&E Account for any purpose other than the payment of FF&E
expenditures pursuant to the Approved Annual Budget and (2) no amounts reserved
in the FF&E Reserve Account have been used to pay expenses in respect of the
Capital Plan. Upon the occurrence of a Trigger Period or an Event of Default all
amounts contained in the Maryland Guarantor FF&E Account shall be remitted into
the FF&E Reserve Account.
          Section 3.7. Deferred Maintenance and Environmental Escrow Account.
          (a) On or prior to the Closing Date, if the Deferred Maintenance
Amount is greater than zero, Maryland Guarantor shall establish and thereafter
maintain with the Cash

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Management Bank an account for the purpose of reserving amounts anticipated to
be required to correct Deferred Maintenance Conditions (the “Deferred
Maintenance and Environmental Escrow Account”).
          (b) On the Closing Date, Borrower shall deposit into the Deferred
Maintenance and Environmental Escrow Account, from the proceeds of the Loan, an
amount equal to the Deferred Maintenance Amount.
          (c) Upon the request of Maryland Guarantor at any time that no Event
of Default is continuing (but not more often than once per calendar month),
Lender shall cause disbursements to Maryland Guarantor from the Deferred
Maintenance and Environmental Escrow Account to reimburse Maryland Guarantor for
reasonable costs and expenses incurred in order to correct Deferred Maintenance
Conditions, provided that:
     (i) Maryland Guarantor shall deliver to Lender invoices evidencing that the
costs for which such disbursements are requested are due and payable;
     (ii) Maryland Guarantor shall deliver to Lender an Officer’s Certificate
confirming that all such costs have been previously paid by Maryland Guarantor
or will be paid from the proceeds of the requested disbursement and that all
conditions precedent to such disbursement required by the Loan Documents have
been satisfied; and
     (iii) Lender may condition the making of a requested disbursement on
(1) reasonable evidence establishing that Borrower has applied any amounts
previously received by it in accordance with this Section for the expenses to
which specific draws made hereunder relate, (2) a reasonably satisfactory site
inspection, and (3) receipt of lien releases and waivers from any contractors,
subcontractors and others with respect to such amounts.
     (iv) No amounts reserved in the Deferred Maintenance and Environmental
Escrow Account shall be used to pay expenses in respect of the Capital Plan,
except for any maintenance requirements called for in the Capital Plan which,
absent the Capital Plan, would ordinarily be funded from the Deferred
Maintenance and Environmental Escrow Account.
          (d) Upon substantial completion (as reasonably determined by Lender)
of the portion of the Deferred Maintenance Conditions identified on any line on
Schedule C, and provided no Event of Default is then continuing, the remainder
of the portion of the Deferred Maintenance Reserve Account held for such line
item (as shown adjacent to such line item on Schedule C) shall promptly be
remitted to Maryland Guarantor. Upon the correcting of all Deferred Maintenance
Conditions, provided no Event of Default or Trigger Period is then continuing,
any amounts then remaining in the Deferred Maintenance Reserve Account shall
promptly be remitted to Maryland Guarantor and the Deferred Maintenance Account
will no longer be maintained.
          Section 3.8. Unfunded Obligations Account.

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          (a) On or prior to the Closing Date, if the Unfunded Obligations
Amount is greater than zero, Maryland Guarantor shall establish and thereafter
maintain with the Cash Management Bank an account for the purpose of reserving
for Unfunded Obligations required to be funded by Maryland Guarantor (the
“Unfunded Obligations Account”).
          (b) On the Closing Date, Borrower shall deposit into the Unfunded
Obligations Account, from the proceeds of the Loan, an amount equal to the
Unfunded Obligations Amount.
          (c) Maryland Guarantor shall perform its obligations in respect of the
Unfunded Obligations when and as due under the respective Leases or other
applicable agreements. Upon the request of Maryland Guarantor at any time that
no Event of Default is continuing (but not more often than once per calendar
month), Lender shall cause disbursements to Maryland Guarantor from the Unfunded
Obligations Account to reimburse Maryland Guarantor for reasonable costs and
expenses incurred in the performance of Unfunded Obligations, provided that:
     (i) Maryland Guarantor shall deliver to Lender invoices evidencing that the
costs for which such disbursements are requested are due and payable;
     (ii) Maryland Guarantor shall deliver to Lender an Officer’s Certificate
confirming that all such costs have been previously paid by Maryland Guarantor
or will be paid from the proceeds of the requested disbursement and that all
conditions precedent to such disbursement required by the Loan Documents have
been satisfied; and
     (iii) Lender may condition the making of a requested disbursement on
(1) reasonable evidence establishing that Maryland Guarantor has applied any
amounts previously received by it in accordance with this Section for the
expenses to which specific draws made hereunder relate, (2) a reasonably
satisfactory site inspection, and (3) receipt of lien releases and waivers from
any contractors, subcontractors and others with respect to such amounts.
          (d) Upon payment or performance, as applicable, of the Unfunded
Obligations identified on any line on Schedule D, and provided no Event of
Default is then continuing, the remainder of the portion of the Unfunded
Obligations Account held for such line item (as shown adjacent to such line item
on Schedule D) shall promptly be remitted to Maryland Guarantor, except that any
amounts in respect of free rent shall be remitted to the Cash Management
Account. Upon the payment or performance in full of all Unfunded Obligations,
provided no Event of Default or Trigger Period is then continuing, any amounts
then remaining in the Unfunded Obligations Account shall promptly be remitted to
Maryland Guarantor and the Unfunded Obligations Account will no longer be
maintained.
          Section 3.9. Excess Cash Flow Reserve Account.
          (a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the deposit of
amounts required to be

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deposited therein in accordance with Section 3.2(b)(v) (the “Excess Cash Flow
Reserve Account”).
          (b) Provided that no Event of Default is then continuing, Lender shall
release to the Cash Management Account all amounts then contained in the Excess
Cash Flow Reserve Account on the first Payment Date after Borrower delivers to
Lender evidence reasonably satisfactory to Lender establishing that no Trigger
Period is then continuing. Such a release shall not preclude the subsequent
commencement of a Trigger Period and the deposit of amounts into the Excess Cash
Flow Reserve Account as set forth in Section 3.2(b)(v).
          Section 3.10. Account Collateral.
          (a) Obligor hereby grants a perfected first-priority security interest
in favor of Lender in and to the Account Collateral as security for the
Indebtedness, together with all rights of a secured party with respect thereto.
Each Collateral Account shall be an Eligible Account under the sole dominion and
control of Lender and shall be in the name of Obligor, as pledgor, and Lender,
as pledgee. Obligor shall have no right to make withdrawals from any of the
Collateral Accounts. Funds in the Collateral Accounts shall not be commingled
with any other monies at any time. Obligor shall execute any additional
documents that Lender in its reasonable discretion may require and shall provide
all other evidence reasonably requested by Lender to evidence or perfect its
first-priority security interest in the Account Collateral. Funds in the
Collateral Account shall be invested at Lender’s discretion only in Permitted
Investments, which Permitted Investments shall be credited to the related
Collateral Account. All income and gains from the investment of funds in the
Collateral Accounts other than the Basic Carrying Costs Escrow Account shall be
retained in the Collateral Accounts from which they were derived. Unless
otherwise required by applicable law, all income and gains from the investment
of funds in the Basic Carrying Costs Escrow Account shall be for the account of
Lender in consideration of its administration of such Collateral Account, and
Lender shall have the right at any time to cause the Cash Management Bank to
remit such amounts to Lender. After the Loan and all other Indebtedness have
been paid in full, the Collateral Accounts shall be closed and the balances
therein, if any, shall be paid to Borrower.
          (b) The insufficiency of amounts contained in the Collateral Accounts
shall not relieve Obligor from its obligation to fulfill all covenants contained
in the Loan Documents.
          (c) During the continuance of an Event of Default, Lender may, in its
sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, either toward the components of the Indebtedness (e.g., interest,
principal and other amounts payable hereunder), the Loan and the Notes in such
sequence as Lender shall elect in its sole discretion, and/or toward the payment
of Property expenses.
          Section 3.11. Bankruptcy. Borrower and Lender acknowledge and agree
that upon the filing of a bankruptcy petition by or against Obligor under the
Bankruptcy Code, the Account Collateral and the Revenues (whether then already
in the Collateral Accounts, or then due or becoming due thereafter) shall be
deemed not to be property of Obligor’s bankruptcy estate within the meaning of
Section 541 of the Bankruptcy Code. If, however, a court of

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competent jurisdiction determines that, notwithstanding the foregoing
characterization of the Account Collateral and the Revenues by Obligor and
Lender, the Account Collateral and/or the Revenues do constitute property of
Obligor’s bankruptcy estate, then Obligor and Lender further acknowledge and
agree that all such Revenues, whether due and payable before or after the filing
of the petition, are and shall be cash collateral of Lender. Obligor
acknowledges that Lender does not consent to Obligor’s use of such cash
collateral and that, in the event Lender elects (in its sole discretion) to give
such consent, such consent shall only be effective if given in writing signed by
Lender. Except as provided in the immediately preceding sentence, Obligor shall
not have the right to use or apply or require the use or application of such
cash collateral (i) unless Obligor shall have received a court order authorizing
the use of the same, and (ii) Obligor shall have provided such adequate
protection to Lender as shall be required by the bankruptcy court in accordance
with the Bankruptcy Code.
ARTICLE IV
REPRESENTATIONS
          Obligor represents to Lender solely with respect to itself, the
Property and the Leases and all other related agreements with respect to the
Property and Borrower represents to Lender solely with respect to itself that,
as of the Closing Date, except as set forth in the Exception Report:
          Section 4.1. Organization.
          (a) Obligor and Operating Lessee each are duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is in
good standing in each other jurisdiction where ownership of its properties or
the conduct of its business requires it to be so, and each has all power and
authority under such laws and its organizational documents and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
          (b) Borrower and Operating Lessee each have no subsidiaries and do not
own any equity interest in any other Person. Maryland Guarantor does not own any
equity interest in any Person.
          (c) The organizational chart contained in Exhibit A is true and
correct as of the date hereof.
          (d) The limited liability company interests of Obligor and Operating
Lessee are not represented by any limited liability company certificates, other
certificates or other instruments of any kind.
          Section 4.2. Authorization. Obligor has the power and authority to
enter into this Agreement and the other Loan Documents, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated by the Loan Documents and has by proper action duly authorized the
execution and delivery of the Loan Documents.

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          Section 4.3. No Conflicts. Neither the execution and delivery of the
Loan Documents, nor the consummation of the transactions contemplated therein,
nor performance of and compliance with the terms and provisions thereof will
(i) violate or conflict with any provision of its formation and governance
documents, (ii) violate any Legal Requirement, regulation (including
Regulation U, Regulation X or Regulation T), order, writ, judgment, injunction,
decree or permit applicable to it, (iii) violate or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, contract or other Material Agreement to which Obligor,
Operating Lessee or Sponsor is a party or by which Obligor, Operating Lessee or
Sponsor may be bound, or (iv) result in or require the creation of any Lien or
other charge or encumbrance upon or with respect to the Collateral in favor of
any party other than Lender.
          Section 4.4. Consents. No consent, approval, authorization or order
of, or qualification with, any court or Governmental Authority is required in
connection with the execution, delivery or performance by Obligor of this
Agreement or the other Loan Documents, except for any of the foregoing that have
already been obtained.
          Section 4.5. Enforceable Obligations. This Agreement and the other
Loan Documents have been duly executed and delivered by Obligor and constitute
Obligor’s legal, valid and binding obligations, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Obligor, including the defense
of usury.
          Section 4.6. No Default. No Default or Event of Default will exist
immediately following the making of the Loan.
          Section 4.7. Payment of Taxes. Obligor and Operating Lessee each have
filed, or caused to be filed, all tax returns (federal,state, local and foreign)
required to be filed and paid all amounts of taxes due (including interest and
penalties) except for taxes that are not yet delinquent and has paid all other
taxes, fees, assessments and other governmental charges (including mortgage
recording taxes, documentary stamp taxes and intangible taxes) owing by it
necessary to preserve the Liens in favor of Lender.
          Section 4.8. Compliance with Law. Maryland Guarantor, Operating
Lessee, the Property and the use thereof comply in all material respects with
all applicable Insurance Requirements and Legal Requirements, including building
and zoning ordinances and codes. The Property conforms to current zoning
requirements (including requirements relating to parking) and is neither an
illegal nor a legal nonconforming use. Neither Obligor nor Operating Lessee is
in default or violation of any order, writ, injunction, decree or demand of any
Governmental Authority the violation of which could adversely affect the
Property or the condition (financial or otherwise) or business of Obligor or
Operating Lessee. There has not been committed by or on behalf of Maryland
Guarantor, Operating Lessee or, to the best of Maryland Guarantor’s knowledge,
any other person in occupancy of or involved with the operation or use of the
Property, any act or omission affording any federal Governmental Authority or
any state or local Governmental Authority the right of forfeiture as against the
Property or any portion thereof or any monies paid in performance of its
obligations under any of

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the Loan Documents. None of Maryland Guarantor, Operating Lessee or Sponsor has
purchased any portion of the Property with proceeds of any illegal activity.
          Section 4.9. ERISA. None of Obligor, Operating Lessee, or any ERISA
Affiliate of Obligor or Operating Lessee has incurred or could be subjected to
any liability under Title IV or Section 302 of ERISA or Section 412 of the Code
or maintains or contributes to, or is or has been required to maintain or
contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA)
subject to Title IV or Section 302 of ERISA or Section 412 of the Code. The
consummation of the transactions contemplated by this Agreement will not
constitute or result in any non-exempt prohibited transaction under Section 406
of ERISA, Section 4975 of the Code or substantially similar provisions under
federal, state or local laws, rules or regulations.
          Section 4.10. Investment Company Act. Neither Obligor nor Operating
Lessee is an “investment company”, or a company “controlled” by an “investment
company”, registered or required to be registered under the Investment Company
Act of 1940, as amended.
          Section 4.11. No Bankruptcy Filing. Neither Obligor nor Operating
Lessee is contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of its assets or property. Neither Obligor nor Operating Lessee has
knowledge of any Person contemplating the filing of any such petition against
it. During the ten year period preceding the Closing Date, no petition in
bankruptcy has been filed by or against Obligor, Operating Lessee, any
Single-Purpose Equityholder or Sponsor, or any affiliate of any of the
aforementioned Persons, or any person who owns or controls, directly or
indirectly, ten percent or more of the beneficial ownership interests of any
such Person.
          Section 4.12. Other Debt. Neither Obligor nor Operating Lessee has
outstanding any Debt other than Permitted Debt.
          Section 4.13. Litigation. There are no actions, suits, proceedings,
arbitrations or governmental investigations by or before any Governmental
Authority or other court or agency now pending, and to the best of Obligor’s
knowledge there are no such actions, suits, proceedings, arbitrations or
governmental investigations threatened against or affecting Obligor, Operating
Lessee or the Collateral, in each case, except as listed in the Exception Report
(and none of the matters listed in the Exception Report, even if determined
against Obligor, Operating Lessee or the Collateral, could reasonably be
expected to result in a Material Adverse Effect).
          Section 4.14. Leases; Material Agreements.
          (a) There are no Leases and neither Maryland Guarantor nor Operating
Lessee is currently engaged in negotiations with any prospective tenant to enter
into a Major Lease.
          (b) There are no Material Agreements except as described in
Schedule E. Obligor has made available to Lender true and complete copies of all
Material Agreements. Each Material Agreement has been entered into at arm’s
length in the ordinary course of business by or on behalf of Maryland Guarantor
or Operating Lessee. The Material Agreements

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are in full force and effect and there are no defaults thereunder by Obligor,
Operating Lessee, or to Obligor’s knowledge, any other party thereto. Neither
Maryland Guarantor nor Operating Lessee is in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which it is a party or by which it or the Property is bound
(including, for the avoidance of doubt, the Operating Lease).
          (c) Other than as disclosed on Schedule E, Operating Lessee is not a
party to any Material Agreements related to the Property.
          Section 4.15. Full and Accurate Disclosure. No statement of fact
heretofore delivered by Obligor, Sponsor or Operating Lessee to Lender in
writing in respect of the Property, Obligor, Sponsor or Operating Lessee
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained therein not misleading unless
subsequently corrected. There is no fact, event or circumstance presently known
to Obligor, Sponsor or Operating Lessee that has not been disclosed to Lender
that has had or could reasonably be expected to result in a Material Adverse
Effect.
          Section 4.16. Financial Condition. All financial data concerning
Obligor, Operating Lessee and the Property heretofore provided to Lender fairly
presents in accordance with GAAP the financial position of Obligor and Operating
Lessee in all material respects, as of the date on which it was made, and does
not omit to state any fact necessary to make statements contained herein or
therein not misleading. Since the delivery of such data, except as otherwise
disclosed in writing to Lender,there have occurred no changes or circumstances
that have had or are reasonably expected to result in a Material Adverse Effect.
          Section 4.17. Single-Purpose Requirements.
          (a) Each of Obligor and Operating Lessee is now, and has always been
since its formation, a Single-Purpose Entity and has conducted its business in
substantial compliance with the provisions of its organizational documents.
Neither Obligor nor Operating Lessee has ever (i) owned any property other than
the Property and/or related personal property (ii) engaged in any business,
except the ownership and/or operation of the or (iii) had any material
contingent or actual obligations or liabilities unrelated to the Property.
          (b) Obligor has provided Lender with true, correct and complete copies
of (i) Obligor’s and Operating Lessee’s current financial statements; and
(ii) Obligor’s and Operating Lessee’s respective current operating agreements,
together with all amendments and modifications thereto.
          Section 4.18. Use of Loan Proceeds. 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 Regulations T, U or X of the Board of Governors of the
Federal Reserve System or for any other purpose that would be inconsistent with
such Regulations T, U or X or any other Regulations of such Board of Governors,
or for any purpose prohibited by Legal Requirements or by the terms and
conditions of the Loan Documents. The Loan is solely for the business purpose of
Borrower or for distribution to Borrower’s equityholders in accordance with
Legal Requirements.

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          Section 4.19. Not Foreign Person. Neither Obligor nor Operating Lessee
is a “foreign person” within the meaning of Section 1445(f)(3) of the Code.
          Section 4.20. Labor Matters. Neither Obligor nor Operating Lessee is a
party to any collective bargaining agreements.
          Section 4.21. Title. Maryland Guarantor owns good, marketable and
insurable fee title to the Property. Maryland Guarantor owns good and marketable
title to the FF&E. Maryland Guarantor and/or Operating Lessee own good and
marketable title to all personal property related to the Property (other than
the FF&E, which is owned solely by Maryland Guarantor), to the Collateral
Accounts and to any other Collateral, in each case free and clear of all Liens
whatsoever except the Permitted Encumbrances. The Mortgage, when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(i) a valid, perfected first priority Lien on the Property and the rents
therefrom, enforceable as such against creditors of and purchasers from Maryland
Guarantor or Operating Lessee and subject only to Permitted Encumbrances, and
(ii) perfected Liens (pursuant to the Uniform Commercial Code of the State of
New York) in and to all personalty, all in accordance with the terms thereof, in
each case subject only to any applicable Permitted Encumbrances. The Permitted
Encumbrances do not and will not materially and adversely affect or interfere
with the value, or current or contemplated use or operation, of the Property, or
the security intended to be provided by the Mortgage or Borrower’s ability to
repay the Indebtedness in accordance with the terms of the Loan Documents.
Except as insured over by a Qualified Title Insurance Policy, there are no
claims for payment for work, labor or materials affecting the Property that are
or may become a Lien prior to, or of equal priority with, the Liens created by
the Loan Documents. No creditor of Maryland Guarantor (other than Lender) or
Operating Lessee has in its possession any goods that constitute or evidence the
Collateral.
          Section 4.22. No Encroachments. Except as shown on the Qualified
Survey, all of the improvements on the Property lie wholly within the boundaries
and building restriction lines of the Property, and no improvements on adjoining
property encroach upon the Property, and no easements or other encumbrances upon
the Property encroach upon any of the improvements, so as, in either case, to
adversely affect the value or marketability of the Property, except those that
are insured against by a Qualified Title Insurance Policy.
          Section 4.23. Physical Condition.
          (a) Except for matters set forth in the Engineering Reports, the
Property (including sidewalks, storm drainage system, roof, plumbing system,
HVAC system, fire protection system, electrical system, equipment, elevators,
exterior sidings and doors, irrigation system and all structural components) is
in good condition, order and repair in all respects material to its use,
operation or value.
          (b) Maryland Guarantor is not aware of any material structural or
other material defect or damages in the Property, whether latent or otherwise.

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          (c) Maryland Guarantor has not received and is not aware of any other
party’s receipt of notice from any insurance company or bonding company of any
defects or inadequacies in the Property that would, alone or in the aggregate,
adversely affect in any material respect 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.
          Section 4.24. Fraudulent Conveyance. Obligor has not entered into the
Transaction or any of the Loan Documents with the actual intent to hinder, delay
or defraud any creditor. Obligor has received reasonably equivalent value in
exchange for its obligations under the Loan Documents. On the Closing Date, the
fair salable value of Obligor’s aggregate assets is and will, immediately
following the making of the Loan and the use and disbursement of the proceeds
thereof, be greater than Obligor’s probable aggregate liabilities (including
subordinated, unliquidated, disputed and Contingent Obligations and, in the case
of Borrower, taking into account Borrower’s right of contribution from Maryland
Guarantor, as set forth in Section 9.31of this Agreement). Obligor’s aggregate
assets do not and, immediately following the making of the Loan and the use and
disbursement of the proceeds thereof will not, constitute unreasonably small
capital to carry out its business as conducted or as proposed to be conducted.
Obligor does not intend to, and does not believe that it will, incur debts and
liabilities (including Contingent Obligations and other commitments) beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts to be payable on or in respect of obligations of Obligor).
          Section 4.25. Management; Franchise. Except for any Approved
Management Agreement, no property management agreements are in effect with
respect to the Property. The Approved Management Agreement is in full force and
effect and there is no event of 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. Except for any Approved Franchise
Agreement, no franchise license agreements are in effect with respect to the
Property. The Approved Franchise Agreement is in full force and effect and there
is no event of 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.
          Section 4.26. Condemnation. No Condemnation has been commenced or, to
Maryland Guarantor’s knowledge, is contemplated with respect to all or any
portion of the Property or for the relocation of roadways providing access to
the Property.
          Section 4.27. Utilities and Public Access. The Property has adequate
rights of access to dedicated public ways (and makes no material use of any
means of access or egress that is not pursuant to such dedicated public ways or
recorded, irrevocable rights-of-way or easements) and is adequately served by
all public utilities necessary to the continued use and enjoyment of the
Property as presently used and enjoyed.
          Section 4.28. Environmental Matters. Except as disclosed in the
Environmental Reports:

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     (i) The Property is in compliance in all material respects with all
Environmental Laws applicable to the Property (which compliance includes, but is
not limited to, the possession of, and compliance with, all environmental,
health and safety permits, approvals, licenses, registrations and other
governmental authorizations required in connection with the ownership and
operation of the Property under all Environmental Laws).
     (ii) No Environmental Claim is pending with respect to the Property, nor,
to Maryland Guarantor’s knowledge, is any threatened, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding under any
Environmental Law with respect to Maryland Guarantor, Operating Lessee or the
Property.
     (iii) Without limiting the generality of the foregoing, there is not
present at, on, in or under the Property, any Hazardous Substances,
PCB-containing equipment, asbestos or asbestos containing materials, underground
storage tanks or surface impoundments for any Hazardous Substance, lead in
drinking water (except in concentrations that comply with all Environmental
Laws), or lead-based paint.
     (iv) There have not been and are no past, present or threatened Releases of
any Hazardous Substance from or at the Property that are reasonably likely to
form the basis of any Environmental Claim, and, to Maryland Guarantor’s
knowledge, there is no threat of any Release of any Hazardous Substance
migrating to the Property.
     (v) No Liens are presently recorded with the appropriate land records under
or pursuant to any Environmental Law with respect to the Property and, to
Maryland Guarantor’s knowledge, no Governmental Authority has been taking any
action to subject the Property to Liens under any Environmental Law.
     (vi) There have been no material environmental investigations, studies,
audits, reviews or other analyses conducted by or that are in the possession of
Maryland Guarantor or Operating Lessee in relation to the Property that have not
been made available to Lender.
          Section 4.29. Assessments. There are no pending or, to Maryland
Guarantor’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. No extension of time for assessment or payment of Taxes is in
effect.
          Section 4.30. No Joint Assessment. Maryland Guarantor has not
suffered, permitted or initiated the joint assessment of the Property (i) with
any other real property constituting a separate tax lot, or (ii) with any
personal property, or any other procedure whereby the Lien of any Taxes that may
be levied against such other real property or personal property shall be
assessed or levied or charged to the Property as a single Lien.

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          Section 4.31. Separate Lots. No portion of the Property is part of a
tax lot that also includes any real property that is not Collateral.
          Section 4.32. Permits; Certificate of Occupancy. Maryland Guarantor,
Operating Lessee and/or Approved Property Manager have obtained all Permits
necessary for the present and contemplated use and operation of the Property.
The uses being made of the Property are in conformity in all material respects
with the certificate of occupancy and/or Permits for the Property and any other
restrictions, covenants or conditions affecting the Property.
          Section 4.33. Flood Zone. None of the improvements on the Property is
located in an area identified by the Federal Emergency Management Agency or the
Federal Insurance Administration as a “100 year flood plain” or as having
special flood hazards (including Zones A and V), or, to the extent that any
portion of the Property is located in such an area, the Property is covered by
flood insurance meeting the requirements set forth in Section 5.15(a)(ii).
          Section 4.34. Security Deposits. Maryland Guarantor and Operating
Lessee are in compliance in all material respects with all Legal Requirements
relating to security deposits.
          Section 4.35. Acquisition Documents. Maryland Guarantor has delivered
to Lender true and complete copies of all material agreements and instruments
under which Maryland Guarantor, Operating Lessee or any of their affiliates or
the seller of the Property have remaining rights or obligations in respect of
Maryland Guarantor’s acquisition of the Property.
          Section 4.36. Insurance. Maryland Guarantor or Operating Lessee has
obtained, or caused to be obtained, insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. All
premiums on such insurance policies required to be paid as of the Closing Date
have been paid for the current policy period. No Person, including Maryland
Guarantor and Operating Lessee, has done, by act or omission, anything that
would impair the coverage of any such policy.
          Section 4.37. No Dealings. Maryland Guarantor, Operating Lessee and
the Sponsor are not aware of any unlawful influence on the assessed value of the
Property.
          Section 4.38. Estoppel Certificates. Maryland Guarantor has delivered
to Lender true and complete copies of (a) the form(s) of estoppel certificate
heretofore sent by Maryland Guarantor, Operating Lessee or any of their
affiliates to every Tenant at the Property, and (b) each estoppel certificate
received back from any such Tenant prior to the Closing Date.
          Section 4.39. Compliance with Anti-Terrorism, Embargo, Sanctions and
Anti-Money Laundering Laws. (a) None of the funds or other assets of any
Obligor, Operating Lessee, any Single-Purpose Equityholder or Sponsor constitute
property of, or are beneficially owned, directly or indirectly, by any person,
entity or government subject to trade restrictions under federal law, including
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, with the result that (i) the investment
in any of Obligor, Operating Lessee, any Single-Purpose Equityholder or Sponsor,
as applicable (whether

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directly or indirectly), is prohibited by law or (ii) the Loan is in violation
of law (any such person, entity or government, an “Embargoed Person”); (b) no
Embargoed Person has any interest of any nature whatsoever in any of Obligor,
Operating Lessee, any Single-Purpose Equityholder or Sponsor, as applicable
(whether directly or indirectly), with the result that (i) the investment in any
of Obligor, Operating Lessee, any Single-Purpose Equityholder or Sponsor, as
applicable (whether directly or indirectly) is prohibited by law or (ii) the
Loan is in violation of law, (c) none of the funds of any of Obligor, Operating
Lessee, any Single-Purpose Equityholder or Sponsor, as applicable, have been
derived from any unlawful activity with the result that (i) the investment in
any of Obligor, Operating Lessee, any Single-Purpose Equityholder or Sponsor, as
applicable (whether directly or indirectly) is prohibited by law or (ii) the
Loan is in violation of law, (d) to the best of Obligor’s knowledge, no Tenant
at the Property is identified on the OFAC List and (e) Obligor, Operating
Lessee, any Single-Purpose Equityholder and Sponsor are in material compliance
with the PATRIOT Act. Obligor has implemented procedures, and will consistently
apply those procedures throughout the term of the Loan, to ensure the foregoing
representations and warranties remain true and correct during the term of the
Loan. Notwithstanding Section 4.42 to the contrary, the representations and
warranties contained in this Section 4.39 shall survive in perpetuity.
          Section 4.40. Survival. Obligor agrees that all of the representations
of Obligor set forth in this Agreement and in the other Loan Documents shall
survive for so long as any portion of the Indebtedness is outstanding. All
representations, covenants and agreements made by Obligor in this Agreement or
in the other Loan Documents shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf. On the date of any Securitization, on not less than three days’
prior written notice, Obligor shall deliver to Lender a certification
(x) confirming that all of the representations contained in this Agreement are
true and correct as of the date of such Securitization, or (y) otherwise
specifying any changes in or qualifications to such representations as of such
date as may be necessary to make such representations consistent with the facts
as they exist on such date.
          Section 4.41. Capital Plan. As of the Closing Date, $2,135,986 has
been expended towards the Capital Plan.
          Section 4.42. ADA Compliance. The Property is in compliance with
Americans with Disabilities Act of 1990 with respect to the required number of
accessible bathrooms
ARTICLE V
AFFIRMATIVE COVENANTS
          Section 5.1. Existence. Obligor, Operating Lessee and if applicable,
any Single-Purpose Equityholder shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence and
all rights, licenses, Permits, franchises and other agreements necessary for the
continued use and operation of its business. Obligor, Operating Lessee and, if
applicable, each Single-Purpose Equityholder shall deliver to Lender a copy of
each amendment or other modification to any of its organizational documents
promptly after the execution thereof.

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          Section 5.2. Maintenance of Property.
          (a) Maryland Guarantor shall cause the Property to be maintained in
good and safe working order and repair, reasonable wear and tear excepted, and
in keeping with the condition and repair of properties of a similar use, value,
age, nature and construction. Maryland Guarantor shall not, and shall not cause
or permit Operating Lessee or Approved Property Manager to, use, maintain or
operate the Property in any manner that constitutes a public or private nuisance
or that makes void, voidable, or cancelable, or increases the premium of, any
insurance then in force with respect thereto. Subject to Section 6.13, without
the prior written consent of Lender, no improvements or equipment located at or
on the Property shall be removed, demolished or materially altered (except for
replacement of equipment in the ordinary course of Maryland Guarantor’s or
Operating Lessee’s business with items of the same utility and of equal or
greater value and sales of obsolete equipment no longer needed for the operation
of the Property). Subject to Section 6.13, Maryland Guarantor shall from time to
time make, or cause to be made, all reasonably necessary and desirable repairs,
renewals, replacements, betterments and improvements to the Property. Maryland
Guarantor shall not, and shall not cause or permit Operating Lessee or Approved
Property Manager to, make any change in the use of the Property that would
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or do or permit to be done thereon anything that may
in any way impair the value of the Property in any material respect or the Lien
of the Mortgage or otherwise cause or reasonably be expected to result in a
Material Adverse Effect. Maryland Guarantor shall not install or permit to be
installed on the Property any underground storage tank. Maryland Guarantor shall
not, without the prior written consent of Lender, permit any drilling or
exploration for or extraction, removal, or production of any minerals from the
surface or the subsurface of the Property, regardless of the depth thereof or
the method of mining or extraction thereof.
          (b) Maryland Guarantor shall remediate the Deferred Maintenance
Conditions within 12 months following the Closing Date, subject to Force
Majeure, and upon request from Lender after the expiration of such period shall
deliver to Lender an Officer’s Certificate confirming that such remediation has
been completed and that all associated expenses have been paid.
          Section 5.3. Compliance with Legal Requirements. Maryland Guarantor
shall, and shall cause Operating Lessee to, comply with, and shall cause the
Property to comply with and be operated, maintained, repaired and improved in
compliance with, all Legal Requirements, Insurance Requirements and all material
contractual obligations by which Maryland Guarantor is legally bound.
          Section 5.4. Impositions and Other Claims. Maryland Guarantor shall
pay and discharge all taxes, assessments and governmental charges levied upon
it, its income and its assets as and when such taxes, assessments and charges
are due and payable, as well as all lawful claims for labor, materials and
supplies or otherwise, subject to any rights to contest contained in the
definition of Permitted Encumbrances. Maryland Guarantor shall file all federal,
state and local tax returns and other reports that it is required by law to
file. If any law or regulation applicable to Lender, any Note, any of the
Collateral or the Mortgage is enacted that deducts from the value of property
for the purpose of taxation any Lien thereon, or imposes upon Lender

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the payment of the whole or any portion of the taxes or assessments or charges
or Liens required by this Agreement to be paid by Maryland Guarantor, or changes
in any way the laws or regulations relating to the taxation of mortgages or
security agreements or debts secured by mortgages or security agreements or the
interest of the mortgagee or secured party in the property covered thereby, or
the manner of collection of such taxes, so as to affect the Mortgage, the
Indebtedness or Lender, then Maryland Guarantor, upon demand by Lender, shall
pay such taxes, assessments, charges or Liens, or reimburse Lender for any
amounts paid by Lender. If in the opinion of Lender’s counsel it might be
unlawful to require Maryland Guarantor to make such payment or the making of
such payment might result in the imposition of interest beyond the maximum
amount permitted by applicable Law, Lender may elect to declare all of the
Indebtedness to be due and payable 90 days from the giving of written notice by
Lender to Obligor.
          Section 5.5. Access to Property. Maryland Guarantor shall, and shall
cause Operating Lessee and Approved Property Manager to permit agents,
representatives and employees of Lender and the Servicer to enter and inspect
the Property or any portion thereof, and/or inspect, examine, audit and copy the
books and records of Maryland Guarantor, Operating Lessee and Approved Property
Manager (including all recorded data of any kind or nature, regardless of the
medium of recording), at such reasonable times as may be requested by Lender
upon reasonable advance notice ( all subject to the terms and conditions of the
Approved Management Agreement). The cost of such inspections, examinations,
copying or audits shall be borne by Maryland Guarantor, including the cost of
all follow up or additional investigations, audits or inquiries deemed
reasonably necessary by Lender (i) if Lender shall determine that an Event of
Default exists or (ii) such inspections, examinations, copying or audits are
conducted by Lender in connection with its verification of completion of any
Capital Plan Component pursuant to Section 5.22(b). The cost of such
inspections, examinations, audits and copying, if not paid for by Maryland
Guarantor following demand, may be added to the Indebtedness and shall bear
interest thereafter until paid at the Default Rate. If Maryland Guarantor
prohibits, bars or fails to permit agents, representatives and employees of
Lender and Servicer from entering and inspecting the Property or from
inspecting, examining, auditing and copying the books and records of Maryland
Guarantor, Operating Lessee and Approved Property Manager, as required by this
Section, for more than five days after a written request is made by Lender to do
so, Maryland Guarantor agrees to pay Lender on demand the sum of $1,000.00 for
each day after such five-day period that Maryland Guarantor so prohibits or bars
such inspection, and such sum or sums shall be part of the Indebtedness.
Notwithstanding any of Lender’s or Servicer’s rights in this Section, in no
event shall Lender or Servicer have any right to enter or inspect the Property
or inspect, examine, audit or copy the books and records of Approved Property
Manager that is greater than or inconsistent with the access afforded to
Maryland Guarantor and Operating Lessee under the terms of the Approved
Management Agreement.
          Section 5.6. Cooperate in Legal Proceedings. Except with respect to
any claim by Obligor against Lender, Obligor shall, and shall cause Operating
Lessee to, cooperate fully with Lender with respect to any proceedings before
any Governmental Authority that may in any way affect the rights of Lender
hereunder or under any of the Loan Documents and, in connection therewith,
Lender may, at its election, participate or designate a representative to
participate in any such proceedings.

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          Section 5.7. Leases.
          (a) Maryland Guarantor shall furnish Lender with executed copies of
all Leases, together with a detailed breakdown of income and cost associated
therewith. All new Leases and renewals or amendments of Leases must (i) be
entered into on an arms-length basis with Tenants that are not affiliates of
Maryland Guarantor and whose identity and creditworthiness is appropriate for
tenancy in property of comparable quality, (ii) provide for rental rates and
other economic terms that, taken as a whole, are at least equivalent to
then-existing market rates, based on the applicable market, and otherwise
contain terms and conditions that are commercially reasonable, (iii) have an
initial term of not more than 10 years, (iv) not have or reasonably be expected
to result in a Material Adverse Effect, (v) be expressly subject and subordinate
to the Mortgage and contain provisions for the agreement by the Tenant
thereunder to attorn to Lender and any purchaser at a foreclosure sale, such
attornment to be self-executing and effective upon acquisition of title to the
Property by any purchaser at a foreclosure sale and (vi) require the Tenant
thereunder to execute and deliver to Maryland Guarantor an estoppel certificate
addressing the issues set forth in Section 9.16(b) of this Agreement (in each
case, unless Lender consents to such Lease in its sole discretion).
          (b) All new Leases that are Major Leases, and all terminations,
renewals and amendments of Major Leases, and any surrender of rights under any
Major Lease, shall be subject to the prior written consent of Lender. If Lender
shall fail to respond to Maryland Guarantor’s request for such consent within
five Business Days of Lender’s receipt thereof, Maryland Guarantor may deliver
to Lender a second request for consent stating in bold and capitalized type that
“LENDER’S FAILURE TO RESPOND TO THE ENCLOSED REQUEST WITHIN TEN BUSINESS DAYS
SHALL BE DEEMED LENDER’S APPROVAL.” In the event Lender fails to approve or
disapprove such request within ten Business Days of Lender’s receipt of such
second request, such request shall be deemed approved.
          (c) Maryland Guarantor shall, and shall cause Operating Lessee to,
(i) observe and punctually perform all the material obligations imposed upon the
lessor under the Leases; (ii) enforce all of the material terms, covenants and
conditions contained in the Leases on the part of the lessee thereunder to be
observed or performed, short of termination thereof, except that the lessor may
terminate any Lease following a material default thereunder by the respective
Tenant; (iii) not collect any of the rents thereunder more than one month in
advance; (iv) not execute any assignment of lessor’s interest in the Leases or
associated rents other than the assignment of rents and leases under the
Mortgage; (v) not cancel or terminate any guarantee of any of the Major Leases
without the prior written consent of Lender; and (vi) not permit any subletting
of any space covered by a Lease or an assignment of the Tenant’s rights under a
Lease, except in strict accordance with the terms of such Lease. Maryland
Guarantor shall, or shall cause Operating Lessee to, deliver to each new Tenant
a Tenant Notice upon execution of such Tenant’s Lease, and promptly thereafter
deliver to Lender a copy thereof and evidence of such Tenant’s receipt thereof.
          (d) Security deposits of Tenants under all Leases, whether held in
cash or any other form, shall not be commingled with any other funds of Maryland
Guarantor or Operating Lessee and, if cash, shall be deposited by Maryland
Guarantor or Operating Lessee in an account at such commercial or savings bank
as may be reasonably satisfactory to Lender, which account

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shall be pledged to Lender. Maryland Guarantor shall, or shall cause Operating
Lessee to, maintain books and records of sufficient detail to identify all
security deposits of Tenants separate and apart from any other payments received
from Tenants. Any bond or other instrument that Maryland Guarantor or Operating
Lessee is permitted to hold in lieu of cash security deposits under any
applicable Legal Requirements shall be maintained in full force and effect
unless replaced by cash deposits as described above, shall be issued by an
institution reasonably satisfactory to Lender, shall (if not prohibited by any
Legal Requirements) name Lender as payee or mortgagee thereunder (or at Lender’s
option, be fully assignable to Lender) or may name Maryland Guarantor or
Operating Lessee as payee thereunder so long as such bond or other instrument is
pledged to Lender as security for the Indebtedness and shall, in all respects,
comply with any applicable Legal Requirements and otherwise be reasonably
satisfactory to Lender. Maryland Guarantor shall, upon Lender’s request, provide
Lender with evidence reasonably satisfactory to Lender of Maryland Guarantor’s
and Operating Lessee’s compliance with the foregoing. During the continuance of
any Trigger Period or Event of Default, Maryland Guarantor shall, upon Lender’s
request, cause to be deposited with Lender in an Eligible Account pledged to
Lender an amount equal to the aggregate security deposits of the Tenants (and
any interest theretofore earned on such security deposits and actually received
by Maryland Guarantor or Operating Lessee) that Maryland Guarantor and Operating
Lessee had not returned to the applicable Tenants or applied in accordance with
the terms of the applicable Lease.
          (e) Maryland Guarantor shall cause to be promptly delivered to Lender
a copy of each written notice from a Tenant under any Major Lease claiming that
Maryland Guarantor or Operating Lessee is in default in the performance or
observance of any of the material terms, covenants or conditions thereof.
Maryland Guarantor shall cause each Major Lease executed after the Closing Date
to which Maryland Guarantor or Operating Lessee is a party to provide that any
Tenant delivering any such notice shall send a copy of such notice directly to
Lender.
          Section 5.8. Plan Assets, etc. Obligor will do, or cause to be done,
all things necessary to ensure that neither Obligor nor Operating Lessee will be
deemed to hold Plan Assets at any time.
          Section 5.9. Further Assurances. Obligor shall (and, as applicable,
shall cause Operating Lessee to), at Obligor’s sole cost and expense, from time
to time as reasonably requested by Lender, execute, acknowledge, record,
register, file and/or deliver to Lender such other instruments, agreements,
certificates and documents (including Uniform Commercial Code financing
statements and amended or replacement mortgages) as Lender may reasonably
request to evidence, confirm, perfect and maintain the Liens securing or
intended to secure the obligations of Obligor and the rights of Lender under the
Loan Documents or to facilitate a replacement of the Cash Management Bank
pursuant to Section 3.1(c) or a bifurcation of the Notes pursuant to Sections
1.1(c) and/or 9.7(b) or a restructuring of the Loan pursuant to the Cooperation
Agreement, in each case if requested by Lender, and do and execute all 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 request from time to
time. Upon foreclosure, the appointment of a receiver or any other relevant
action, Maryland Guarantor shall (and, as applicable, shall cause Operating
Lessee or Approved Property Manager to), at Maryland Guarantor’s sole cost and

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expense, cooperate fully and completely to effect the assignment or transfer of
any license, permit, agreement or any other right necessary or useful to the
operation of the Collateral. Obligor hereby authorizes and appoints Lender as
its attorney-in-fact to execute, acknowledge, record, register and/or file such
instruments, agreements, certificates and documents, and to do and execute such
acts, conveyances and assurances, should Obligor fail to do so itself in
violation of this Agreement or the other Loan Documents following written
request from Lender, in each case without the signature of Obligor. The
foregoing grant of authority is a power of attorney coupled with an interest and
such appointment shall be irrevocable for the term of this Agreement. Obligor
hereby ratifies all actions that such attorney shall lawfully take or cause to
be taken in accordance with this Section 5.9.
          Section 5.10. Management of Collateral.
          (a) The Property shall be managed at all times by an Approved Property
Manager pursuant to an Approved Management Agreement. Pursuant to the
Subordination of Property Management Agreement, Approved Property Manager shall
agree that the Approved Management Agreement and the incentive fee payable
thereunder are subject and subordinate to the Indebtedness. Maryland Guarantor
may from time to time, with Lender’s consent (subject to the terms of this
Section 5.10(a)), appoint an Approved Property Manager to manage the Property
pursuant to an Approved Management Agreement, and such successor manager shall
execute for Lender’s benefit a Subordination of Property Management Agreement in
form and substance reasonably satisfactory to Lender. Lender shall not withhold
its consent to the appointment of any replacement property manager that (a) is a
reputable and experienced third-party management organization, (b) possesses no
less than ten years’ experience in managing hotel properties similar in size,
quality and value to the Property, (c) has been approved by the Approved
Franchisor, (d) manages at least 10 hotels in multiple states, with multiple
franchisors and with at least an aggregate of 2,000 rooms and (e) is appointed
pursuant to an Approved Management Agreement with substantially comparable
economics as the existing Approved Management Agreement, including (1) no
greater than a 3.0% base management fee and (2) per annum fees (including any
incentive fees) that do not exceed the fees specified in the Approved Management
Agreement. Lender shall confirm any proposed Approved Property Manager’s
compliance with the foregoing within 10 Business Days of Lender’s receipt of
Maryland Guarantor’s written request together with all information reasonably
necessary to make such determination. If Lender shall fail to respond within
such 10 Business Day period, Maryland Guarantor shall have the right to send
Lender a notice requesting Lender to respond within 5 Business Days in an
envelope and letter marked “LENDER’S IMMEDIATE ATTENTION REQUIRED — FAILURE TO
RESPOND WITHIN 5 BUSINESS DAYS SHALL CONSTITUTE A DEEMED CONSENT.” If Lender
shall fail to respond within such 5 Business Day period, Lender shall have been
deemed to have confirmed such proposed Approved Property Manager’s compliance
with the foregoing requirements.
          (b) The Property shall be branded at all times by an Approved
Franchisor pursuant to an Approved Franchise Agreement. Lender shall have the
rights and remedies granted to Lender under the Franchisor Comfort Letter.
Maryland Guarantor may from time to time appoint an Approved Franchisor to brand
the Property pursuant to an Approved Franchise Agreement, and such successor
franchisor shall execute for Lender’s benefit a franchisor comfort letter in
form and substance reasonably satisfactory to Lender. In no event shall it be
deemed

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unreasonable for Lender to require that the franchisor comfort letter delivered
by any successor franchisor be substantially in the form of the Franchisor
Comfort Letter. The per annum fees of the Approved Franchisor shall not exceed
the fees specified in the Approved Franchise Agreement.
          (c) Maryland Guarantor shall cause each Approved Property Manager
(including any successor Approved Property Manager) to maintain at all times
worker’s compensation insurance as required by Governmental Authorities.
          (d) Maryland Guarantor shall notify Lender in writing of any default
of (i) Maryland Guarantor, Operating Lessee or the Approved Property Manager
under the Approved Management Agreement and (ii) Maryland Guarantor, Operating
Lessee or the Approved Franchisor under the Approved Franchise Agreement, in
each case, after the expiration of any applicable cure periods, of which
Maryland Guarantor has actual knowledge. After reasonable notice to Maryland
Guarantor, Lender shall have the right to cure defaults of Maryland Guarantor or
Operating Lessee under (i) the Approved Management Agreement (in accordance with
the Subordination of Management Agreement) and (ii) the Approved Franchise
Agreement (in accordance with the Franchisor Comfort Letter). Any out-of-pocket
expenses incurred by Lender to cure any such default shall constitute a part of
the Indebtedness and shall be due from Borrower upon demand by Lender.
          (e) Upon an Event of Default followed by acceleration of the Loan,
Lender may, in its sole discretion (in accordance with Section 3(d) of the
Subordination of Management Agreement), require Maryland Guarantor to cause the
termination of the Approved Management Agreement and the engagement of an
Approved Property Manager selected by Lender to serve as replacement Approved
Property Manager pursuant to an Approved Management Agreement.
          (f) If Lender forecloses on the Property, Lender may, in its sole
discretion (and without any obligation to pay any related termination fee, which
termination fee, if any, shall be the sole obligation of Maryland Guarantor),
terminate or require Maryland Guarantor to cause the termination of the Approved
Franchise Agreement as provided in the Franchisor Comfort Letter and the
engagement of an Approved Franchisor selected by Lender to serve as replacement
Approved Franchisor pursuant to an Approved Franchise Agreement. In the event of
(i) a material default by the Approved Franchisor under the Approved Franchise
Agreement after the expiration of any applicable cure period or (ii) the filing
of a bankruptcy petition or the occurrence of a similar event with respect to
the Approved Franchisor, Lender may, in its sole discretion (and without any
obligation to pay any related termination fee, which termination fee shall be
the sole obligation of Maryland Guarantor ), require Maryland Guarantor to cause
the termination of the Approved Franchise Agreement (to the extent provided in
the Franchisor Comfort Letter) and the engagement of a new Approved Franchisor.
          (g) Maryland Guarantor shall promptly deliver to Approved Property
Manager, in accordance with Section 4.02(b) of the Approved Management
Agreement, any notice of default or Event of Default delivered to Obligor under
this Agreement.
          Section 5.11. Notice of Material Event.

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     (i) Maryland Guarantor shall give Lender prompt notice (containing
reasonable detail) of (i) any material change in the financial or physical
condition of the Property, as reasonably determined by Maryland Guarantor,
including the termination or cancellation of any Major Lease and the termination
or cancellation of terrorism or other insurance required by this Agreement,
(ii) any notice from the Approved Property Manager or Approved Franchisor, to
the extent such notice relates to a matter that is reasonably expected to result
in a Material Adverse Effect, (iii) any litigation or governmental proceedings
pending or threatened in writing against Obligor, Operating Lessee or the
Property that is reasonably expected to result in a Material Adverse Effect,
(iv) the insolvency or bankruptcy filing of Obligor, Operating Lessee, any
Single-Purpose Equityholder, Sponsor or an affiliate of any of the foregoing and
(v) any other circumstance or event reasonably expected to result in a Material
Adverse Effect.
     (ii) Maryland Guarantor shall deliver to Lender, within three Business Days
of receipt thereof, the periodic reports regarding the Property, if any,
delivered to Maryland Guarantor and/or Operating Lessee by Approved Property
Manager.
          Section 5.12. Annual Financial Statements. As soon as available, and
in any event within 90 days after the close of each Fiscal Year, Obligor shall
furnish to Lender, in an Excel spreadsheet file in electronic format (which may
be via an intralinks site at Obligor’s sole cost and expense), or, in the case
of predominantly text documents, in Adobe pdf format, a balance sheet of Obligor
as of the end of such year, together with related statements of income and
equityholders’ capital for such Fiscal Year, in each case either audited or
reviewed by a certified public accounting firm reasonably satisfactory to
Lender. Together with Obligor’s annual financial statements, Obligor shall
furnish to Lender, in an Excel spreadsheet file in electronic format (which may
be via an intralinks site at Obligor’s sole cost and expense), or, in the case
of predominantly text documents, in Adobe pdf format:
     (i) a statement of cash flows and income and expenses in the format set
forth in the most recent Uniform System of Accounts (as shown on Exhibit C);
     (ii) average daily room rates, sales reports, Smith Travel Reports (to the
extent available) and occupancy reports;
     (iii) an annual report for the most recently completed fiscal year,
describing Capital Expenditures (stated separately with respect to any project
costing in excess of $100,000); and
     (iv) such other information as Lender shall reasonably request.
          Section 5.13. Quarterly Financial Statements. As soon as available,
and in any event within 45 days after the end of each Fiscal Quarter (including
year-end), Obligor shall furnish to Lender, in an Excel spreadsheet file in
electronic format (which may be via an intralinks site at Obligor’s sole cost
and expense), or, in the case of predominantly text documents, in Adobe pdf
format, quarterly and year-to-date unaudited financial statements prepared for
such fiscal quarter with respect to Obligor, including a balance sheet and
operating statement as of the end of such Fiscal Quarter, together with related
statements of income,

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equityholders’ capital and cash flows for such Fiscal Quarter and for the
portion of the Fiscal Year ending with such Fiscal Quarter, which statements
shall include income and expenses in the format set forth in the most recent
Uniform System of Accounts (as shown on Exhibit C) and be accompanied by an
Officer’s Certificate certifying that the same are true, correct and complete
and were prepared in accordance with GAAP applied on a consistent basis, subject
to changes resulting from audit and normal year-end audit adjustments. Each such
quarterly report shall be accompanied by the following, in an Excel spreadsheet
file in electronic format (which may be via an intralinks site at Obligor’s sole
cost and expense), or, in the case of predominantly text documents, in Adobe pdf
format:
     (i) a statement in reasonable detail that calculates Net Operating Income
for each of the Fiscal Quarters in the Test Period ending in such Fiscal
Quarter, in the case of each such Fiscal Quarter, ending at the end thereof;
     (ii) copies of each of the Leases signed during such quarter, together with
a summary thereof that shall include the Tenant’s name, lease term, base rent,
Tenant Improvements, leasing commissions paid, free rent and other material
tenant concessions;
     (iii) the current franchise reports, average daily room rates, sales
reports, Smith Travel Reports (to the extent available) and occupancy reports;
and
     (iv) such other information as Lender shall reasonably request.
          Section 5.14. Monthly Financial Statements; Non-Delivery of Financial
Statements.
          (a) Until the occurrence of a Securitization and during the
continuance of a Trigger Period or an Event of Default (or, in the case of item
(iii) below, at all times), Obligor shall furnish within 30 days after the end
of each calendar month (other than the calendar month immediately following the
final calendar month of any Fiscal Year or Fiscal Quarter), in an Excel
spreadsheet file in electronic format (which may be via an intralinks site at
Obligor’s sole cost and expense), or, in the case of predominantly text
documents, in Adobe pdf format, monthly and year-to-date unaudited financial
statements prepared for the applicable month with respect to Obligor, including
a balance sheet and operating statement as of the end of such month, together
with related statements of income, equityholders’ capital and cash flows for
such month and for the portion of the Fiscal Year ending with such month , which
statements shall include income and expenses in the format set forth in the most
recent Uniform System of Accounts (as shown on Exhibit C) and be accompanied by
an Officer’s Certificate certifying that the same are true, correct and complete
and were prepared in accordance with GAAP applied on a consistent basis, subject
to changes resulting from audit and normal year-end audit adjustments. Each such
monthly report shall be accompanied by the following:
     (i) a summary of Leases signed during such month, which summary shall
include the Tenant’s name, lease term, base rent, escalations, Tenant
Improvements, leasing commissions paid, free rent and other concessions;

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     (ii) then current rent roll, average daily room rates, sales reports, Smith
Travel Reports (to the extent available) and occupancy reports;
     (iii) the Capital Plan Monthly Report; and
     (iv) such other information as Lender shall reasonably request.
          (b) If Obligor fails to provide to Lender any of the financial
statements and other information specified in Sections 5.12, 5.13 or this
Section 5.14 within the respective time period specified in such Sections,
Lender shall deliver to Obligor written notice of such failure. If Obligor fails
to provide such financial statements and other information within ten Business
Days after receipt of such notice such failure shall constitute a Trigger
Period.
          Section 5.15. Insurance.
          (a) Maryland Guarantor shall cause to be obtained and maintained with
respect to the Property, for the mutual benefit of Maryland Guarantor and Lender
at all times, the following policies of insurance:
     (i) insurance against loss or damage by standard perils included within the
classification “All Risks Special Form Cause of Loss” (including coverage for
damage caused by windstorm and hail). Such insurance shall (A) be in an amount
equal to the full replacement cost of the Property and fixtures (without
deduction for physical depreciation); (B) have deductibles acceptable to Lender
(but in any event not in excess of $50,000, except in the case of windstorm and
earthquake coverage, which shall have deductibles not in excess of 5% of the
total insurable value of the Property); (C) be paid annually in advance; (D)
contain a “Replacement Cost Endorsement” with a waiver of depreciation and an
“Agreed Upon Amount Endorsement” waiving all coinsurance provisions; (E) include
an ordinance or law coverage endorsement containing Coverage A: “Loss Due to
Operation of Law” (with a limit equal to replacement cost, provided that the
limit under the coverage in effect as of the Closing Date may be maintained so
long as the Property remains legal and conforming under all applicable zoning
requirements), Coverage B: “Demolition Cost” and Coverage C: “Increased Cost of
Construction” coverages each with limits of no less than 10% of replacement cost
or such lesser amounts as Lender may require in its sole discretion; (F) permit
that the improvements and other property covered by such insurance be rebuilt at
another location in the event that such improvements and other property cannot
be rebuilt at the location on which they are situated as of the date hereof. If
such insurance excludes mold, Maryland Guarantor shall implement a mold
prevention program satisfactory to Lender;
     (ii) flood insurance if the Property is located in a “100 Year Flood
Plain”, “special hazard area” (Zones A and V) in an amount equal to the maximum
limit of coverage available from FEMA/FIA, plus such excess limits requested by
Lender, with a deductible not in excess of $25,000;
     (iii) commercial general liability insurance, including broad form coverage
of property damage, blanket contractual liability and personal injury (including
death

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resulting therefrom), to be on the so-called “occurrence” form containing
minimum limits per occurrence of not less than $1,000,000 with not less than a
$2,000,000 general aggregate for any policy year (with a per location aggregate
if the Property is on a blanket policy). In addition, at least $50,000,000
excess and/or umbrella liability insurance shall be obtained and maintained for
any and all claims, including all legal liability imposed upon Maryland
Guarantor and all related court costs and attorneys’ fees and disbursements;
     (iv) rental loss and/or business interruption insurance covering all risks
required to be covered by the insurance provided for herein, including but not
limited to, clauses (i), (ii), (v), (vii), (viii) and (ix) of this
Section 5.15(a), and covering the 18month period commencing on the date of any
Casualty or Condemnation, and containing an extended period of indemnity
endorsement covering the 12 month period commencing on the date on which the
Property has been restored, as reasonably determined by the applicable insurer
(even if the policy will expire prior to the end of such period). The amount of
such insurance shall be increased from time to time as and when the gross
revenues from the Property increase;
     (v) insurance against loss or damage from (A) leakage of sprinkler systems,
if not provided by the policy required by Section 5.15(a)(i), and (B) explosion
of steam boilers, air conditioning equipment, high pressure piping, machinery
and equipment, pressure vessels or similar apparatus now or hereafter installed
in any of the improvements (without exclusion for explosions) and insurance
against loss of occupancy or use arising from any breakdown, in such amounts as
are generally available and are generally required by institutional lenders for
properties comparable to the Property;
     (vi) worker’s compensation insurance with respect to all employees of
Maryland Guarantor as and to the extent required by any Governmental Authority
or Legal Requirement and employer’s liability coverage of at least $1,000,000
(if applicable);
     (vii) during any period of repair or restoration, and only if the property
and liability coverage forms do not otherwise apply, 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 5.15(a)(iii). The
insurance provided for in Section 5.15(a) shall (1) be written in a so-called
builder’s risk completed value form or equivalent coverage, including coverage
for 100% of the total costs of construction on a non-reporting basis and against
all risks insured against pursuant to clauses (i), (ii), (iv), (v), (viii) and
(ix) of Section 5.15(a), (2) shall include permission to occupy the Property,
and (3) shall contain an agreed amount endorsement waiving co-insurance
provisions;
     (viii) if required by Lender, earthquake insurance (A) with minimum
coverage equivalent to the greater of 1.0x SUL (scenario upper loss) and 1.5x
SEL (scenario expected loss) multiplied by the full replacement cost of the
building plus business income, (B) having a deductible approved by Lender (but
in any event not be in excess of 5% of the total insurable value of the
Property), and (C) if the Property is legally

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nonconforming under applicable zoning ordinances and codes, containing ordinance
of law coverage in amounts as required by Lender;
     (ix) so long as the Terrorism Risk Insurance Program Reauthorization Act of
2007 (“TRIPRA”) or a similar statute is in effect, terrorism insurance for
Certified and Non-Certified acts (as such terms are defined in TRIPRA or similar
statute) in an amount equal to the full replacement cost of the Property (plus
twelve months of business interruption coverage). If TRIPRA or a similar statute
is not in effect, then provided that terrorism insurance is commercially
available, Maryland Guarantor shall be required to carry terrorism insurance
throughout the term of the Loan as required by the preceding sentence, but in
such event Maryland Guarantor shall not be required to spend on terrorism
insurance coverage more than two times the amount of the insurance premium that
is payable at such time in respect of the casualty and business
interruption/rental loss insurance required hereunder (without giving effect to
the cost of terrorism and earthquake components of such casualty and business
interruption/rental loss insurance), and if the cost of terrorism insurance
exceeds such amount, Maryland Guarantor shall purchase the maximum amount of
terrorism insurance available with funds equal to such amount;
     (x) liquor liability insurance in an amount of at least $10,000,000 or in
such greater amount as may be required by applicable Legal Requirements against
claims or liability arising directly or indirectly to persons or property on
account of the sale or dispensing of alcoholic beverages at the Property and
public liability insurance in an amount of at least $10,000,000 or in such
greater amount as may be required by applicable Legal Requirements providing
coverage against such claims or liability;
     (xi) crime coverage in an amount not less than $2,000,000 to protect
against employee dishonesty and related incidents, containing minimum limits per
occurrence of $1,000,000;
     (xii) motor vehicle liability coverage for all owned and non owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence of $1,000,000.00 (if applicable); and
     (xiii) such other insurance as may from time to time be requested by
Lender.
          (b) All policies of insurance (the “Policies”) required pursuant to
this Section 5.15 shall be issued by one or more primary insurers having a
claims-paying ability of at least “A” or “A2” by each of the Rating Agencies, or
by a syndicate of insurers through which at least 75% of the coverage (if there
are 4 or fewer members of the syndicate) or at least 60% of the coverage (if
there are 5 or more members of the syndicate) is with carriers having such
claims-paying ability ratings (provided that the first layers of coverage are
from carriers rated at least “A” or “A2” and all such carriers shall have
claims-paying ability ratings of not less than “BBB+” or “Baa1”).
Notwithstanding anything to the contrary herein, for purposes of determining
whether the insurer ratings requirements set forth above have been satisfied,
(1) any insurer that is not rated by Fitch will be regarded as having a Fitch
rating that is the equivalent of the rating given to such insurer by any of
Moody’s and S&P that does rate such insurer (or, if

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both such rating agencies rate such insurer, the lower of the two ratings),
(2) any insurer that is not rated by Moody’s will be regarded as having a
Moody’s rating of “Baa1” or better if it is rated “A-” or better by S&P and will
be regarded as having a Moody’s rating of “A2” or better if it is rated “A+” or
better by S&P, (3) RSUI Indemnity Company shall be deemed to have satisfied such
insurer ratings requirements with respect to insurance coverage provided by it
as of the Closing Date so long as it maintains a Moody’s rating of A3 and
(4) Ironshore Inc. shall be deemed to have satisfied such insurer ratings
requirements with respect to insurance coverage provided by it as of the Closing
Date so long as it maintains a Moody’s rating of Baa1.
          (c) All Policies required pursuant to this Section 5.15:
     (i) shall contain deductibles that, in addition to complying with any other
requirements expressly set forth in Section 5.15(a), are approved by Lender
(such approval not to be unreasonably withheld, delayed or conditioned, but
subject to the requirements of each Rating Agency) and are no larger than is
customary for similar policies covering similar properties in the geographic
market in which the Property is located, but in any event are not in excess of
$50,000 (except in the case of windstorm and earthquake coverage, which shall
have deductibles not in excess of 5% of the total insurable value of the
Property);
     (ii) shall be maintained throughout the term of the Loan without cost to
Lender and shall name Maryland Guarantor as the named insured;
     (iii) with respect to casualty policies, shall contain a standard
noncontributory mortgagee clause naming Lender and its successors and assigns as
their interests may appear as first mortgagee and loss payee;
     (iv) with respect to liability policies, shall name Lender and its
successors and assigns as their interests may appear as additional insureds;
     (v) with respect to rental or business interruption insurance policies,
shall name Lender and its successors and/or assigns as their interests may
appear as loss payee;
     (vi) shall contain an endorsement providing that neither Maryland Guarantor
nor Lender nor any other party shall be a co-insurer under said Policies;
     (vii) shall contain an endorsement providing that Lender shall receive at
least 30 days’ prior written notice of any modification, reduction or
cancellation thereof;
     (viii) shall contain an endorsement providing that no act or negligence of
Maryland Guarantor or of a Tenant or other occupant or any foreclosure or other
proceeding or notice of sale relating to the Property shall affect the validity
or enforceability of the insurance insofar as a mortgagee is concerned;
     (ix) shall provide that Lender shall not be liable for any insurance
premiums thereon or subject to any assessments thereunder;
     (x) shall contain a waiver of subrogation against Lender;

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     (xi) may be in the form of a blanket policy, provided that Maryland
Guarantor shall provide evidence satisfactory to Lender that the insurance
premiums for the Property are separately allocated under such Policy to the
Property and that (i) payment of such allocated amount shall maintain the
effectiveness of such Policy as to the Property notwithstanding the failure of
payment of any other portion of premiums, and (ii) overall insurance limits will
under no circumstance limit the amount that will be paid in respect of the
Property, and provided further that any such blanket policy shall specifically
allocate to the Property the amount of coverage from time to time required
hereunder or shall otherwise provide the same protection as would a separate
Policy in Lender’s discretion, subject to review and approval by Lender based on
the schedule of locations and values; and
     (xii) shall otherwise be reasonably satisfactory in form and substance to
Lender and shall contain such other provisions as Lender deems reasonably
necessary or desirable to protect its interests.
          (d) Maryland Guarantor shall pay the premiums for all Policies as the
same become due and payable. Copies of such Policies, certified as true and
correct by Maryland Guarantor, shall be delivered to Lender promptly upon
request. Not later than 30 days prior to the expiration date of each Policy,
Maryland Guarantor shall deliver to Lender evidence, reasonably satisfactory to
Lender, of its renewal. Maryland Guarantor shall promptly forward to Lender a
copy of each written notice received by Maryland Guarantor of any modification,
reduction or cancellation of any of the Policies or of any of the coverages
afforded under any of the Policies. Within 30 days after request by Lender,
Maryland Guarantor shall obtain such increases in the amounts of coverage
required hereunder as may be reasonably requested by Lender, taking into
consideration changes in the value of money over time, changes in liability
laws, changes in prudent customs and practices, and the like.
          (e) Maryland Guarantor shall not procure any other insurance coverage
that would be on the same level of payment as the Policies or would adversely
impact in any way the ability of Lender or Maryland Guarantor to collect any
proceeds under any of the Policies. If at any time Lender is not in receipt of
written evidence that all Policies are in full force and effect when and as
required hereunder, Lender shall have the right to take such action as Lender
deems necessary to protect its interest in the Property, including the obtaining
of such insurance coverage as Lender in its sole discretion deems appropriate
(but limited to the coverages and amounts required hereunder). All premiums
incurred by Lender in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by Maryland Guarantor to Lender upon
demand and, until paid, and shall bear interest at the Default Rate.
          (f) In the event of foreclosure of the Mortgage or other transfer of
title to the Property in extinguishment in whole or in part of the Indebtedness,
all right, title and interest of Maryland Guarantor in and to the Policies then
in force with respect to the Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or in Lender or other
transferee in the event of such other transfer of title.
          Section 5.16. Casualty and Condemnation.

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          (a) Maryland Guarantor shall give prompt notice to Lender of any
Casualty or Condemnation or of the actual or threatened commencement of
proceedings that would result in a Condemnation.
          (b) Lender may participate in any proceedings for any taking by any
public or quasi-public authority accomplished through a Condemnation or any
transfer made in lieu of or in anticipation of a Condemnation, to the extent
permitted by law. Upon Lender’s request, Maryland Guarantor shall deliver to
Lender all instruments reasonably requested by it to permit such participation.
Maryland Guarantor shall, at its sole cost and 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.
Maryland Guarantor shall not consent or agree to a Condemnation or action in
lieu thereof without the prior written consent of Lender in each instance, which
consent shall not be unreasonably withheld or delayed in the case of a taking of
an immaterial portion of the Property.
          (c) Lender may (x) jointly with Maryland Guarantor settle and adjust
any claims, (y) during the continuance of an Event of Default, settle and adjust
any claims without the consent or cooperation of Maryland Guarantor, or
(z) allow Maryland Guarantor to settle and adjust any claims; except that if no
Event of Default is continuing, Maryland Guarantor may settle and adjust claims
aggregating not in excess of $500,000 if such settlement or adjustment is
carried out in a competent and timely manner, but Lender shall be entitled to
collect and receive (as set forth below) any and all Loss Proceeds. The
reasonable expenses incurred by Lender in the adjustment and collection of Loss
Proceeds shall become part of the Indebtedness and shall be reimbursed by
Maryland Guarantor to Lender upon demand therefor.
          (d) All Loss Proceeds from any Casualty or Condemnation shall be
immediately deposited into the Loss Proceeds Account (monthly rental
loss/business interruption proceeds to be initially deposited into the Loss
Proceeds Account and subsequently deposited into the Cash Management Account in
installments as and when the lost rental income covered by such proceeds would
have been payable). Following the occurrence of a Casualty, Maryland Guarantor,
regardless of whether proceeds are available, shall in a reasonably prompt
manner proceed to restore, repair, replace or rebuild the Property to be of at
least equal value and of substantially the same character as prior to the
Casualty, all in accordance with the terms hereof applicable to Alterations. If
any Condemnation or Casualty occurs as to which, in the reasonable judgment of
Lender:
     (i) in the case of a Casualty, the cost of restoration would not exceed 25%
of the Loan Amount and the Casualty does not render untenantable, or result in
the cancellation of Leases covering, more than 25% of the gross rentable area of
the Property, or result in cancellation of Leases covering more than 25% of the
base contractual rental revenue of the Property;
     (ii) in the case of a Condemnation, the Condemnation does not render
untenantable, or result in the cancellation of Leases covering, more than 15% of
the gross rentable area of the Property;

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     (iii) restoration of the Property is reasonably expected to be completed
prior to the expiration of rental interruption insurance and at least six months
prior to the Maturity Date;
     (iv) after such restoration, the fair market value of the Property is
reasonably expected to equal at least the fair market value of the Property
immediately prior to such Condemnation or Casualty; and
     (v) all necessary approvals and consents from Governmental Authorities will
be obtained to allow the rebuilding and re-occupancy of the Property;
or if Lender otherwise elects to allow Maryland Guarantor to restore the
Property, then, provided no Event of Default is continuing, the Loss Proceeds
after receipt thereof by Lender and reimbursement of any reasonable expenses
incurred by Lender in connection therewith shall be applied to the cost of
restoring, repairing, replacing or rebuilding the Property or part thereof
subject to the Casualty or Condemnation, in the manner set forth below (and
Maryland Guarantor shall commence, as promptly and diligently as practicable, to
prosecute such restoring, repairing, replacing or rebuilding of the Property in
a workmanlike fashion and in accordance with applicable law to a status at least
equivalent to the quality and character of the Property immediately prior to the
Condemnation or Casualty). Provided that no Event of Default shall have occurred
and be then continuing, Lender shall disburse such Loss Proceeds to Maryland
Guarantor upon Lender’s being furnished with (i) evidence reasonably
satisfactory to it of the estimated cost of completion of the restoration,
(ii) funds, or assurances reasonably satisfactory to Lender that such funds are
available and sufficient in addition to any remaining Loss Proceeds, to complete
the proposed restoration (including for any reasonable costs and expenses of
Lender to be incurred in administering such restoration) and for payment of the
Indebtedness as it becomes due and payable during the restoration, and
(iii) such architect’s certificates, waivers of lien, contractor’s sworn
statements, title insurance endorsements, bonds, plats of survey and such other
evidences of cost, payment and performance as Lender may reasonably request; and
Lender may, in any event, require that all plans and specifications for
restoration reasonably estimated by Lender to exceed $500,000 be submitted to
and approved by Lender prior to commencement of work (which approval shall not
be unreasonably withheld). If Lender reasonably estimates that the cost to
restore will exceed $500,000, Lender may retain a local construction consultant
to inspect such work and review Maryland Guarantor’s request for payments and
Maryland Guarantor shall, on demand by Lender, reimburse Lender for the
reasonable fees and expenses of such consultant (which fees and expenses shall
constitute Indebtedness). No payment shall exceed 90% of the value of the work
performed from time to time until such time as 50% of the restoration
(calculated based on the anticipated aggregate cost of the work) has been
completed, and amounts retained prior to completion of 50% of the restoration
shall not be paid prior to the final completion of the restoration. Funds other
than Loss Proceeds shall be disbursed prior to disbursement of such Loss
Proceeds, and at all times the undisbursed balance of such proceeds remaining in
the Loss Proceeds Account, together with any additional funds irrevocably and
unconditionally deposited therein or irrevocably and unconditionally committed
for that purpose, shall be at least sufficient in the reasonable judgment of
Lender to pay for the cost of completion of the restoration free and clear of
all Liens or claims for Lien.

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          (e) Maryland Guarantor shall cooperate with Lender in obtaining for
Lender the benefits of any Loss Proceeds lawfully or equitably payable to Lender
in connection with the Property. Lender shall be reimbursed for any expenses
reasonably incurred in connection therewith (including reasonable attorneys’
fees and disbursements, and, if reasonably necessary to collect such proceeds,
the expense of an Appraisal on behalf of Lender) out of such Loss Proceeds or,
if insufficient for such purpose, by Maryland Guarantor. Maryland Guarantor
hereby irrevocably constitutes and appoints Lender as the attorney-in-fact of
Maryland Guarantor for matters in excess of $500,000.00 with respect to the
Property, with full power of substitution, subject to the terms of this
Section 5.16, to settle for, collect and receive all Loss Proceeds and any other
awards, damages, insurance proceeds, payments or other compensation from the
parties or authorities making the same, to appear in and prosecute any
proceedings therefor and to give receipts and acquittance therefor (which power
of attorney shall be irrevocable so long as any of the Indebtedness is
outstanding, shall be deemed coupled with an interest, and shall survive the
voluntary or involuntary dissolution of Maryland Guarantor).
          (f) If Maryland Guarantor is not entitled to apply Loss Proceeds
toward the restoration of the Property pursuant to Section 5.16(d) and Lender
elects not to permit such Loss Proceeds to be so applied, such Loss Proceeds
shall be applied on the first Payment Date following such election to the
prepayment of the principal of the Loan and shall be accompanied by interest
through the end of the applicable Interest Accrual Period (calculated as if the
amount prepaid were outstanding for the entire Interest Accrual Period). If the
Note has been bifurcated into multiple Notes pursuant to Section 1.1(c), all
prepayments of the Loan made by Obligor in accordance with this Section 5.16(f)
shall be applied to the Notes in ascending order of interest rate (i.e., first
to the Note with the lowest interest rate until its outstanding principal
balance has been reduced to zero, then to the Note with the second lowest
interest rate until its outstanding principal balance has been reduced to zero,
and so on) or in such other order as Lender shall determine.
          (g) Notwithstanding the foregoing provisions of this Section 5.16, if
the Loan is included in a REMIC and immediately following a release of any
portion of the applicable Property from the Lien of the Loan Documents in
connection with a Casualty or Condemnation the Loan would fail to satisfy a
Lender 80% Determination, then the principal of the Loan shall be prepaid in
accordance with Section 5.16(f) in an amount equal to either (i) so much of the
Loss Proceeds as are necessary to cause the Lender 80% Determination to be
satisfied, or if the aggregate Loss Proceeds are insufficient for such purpose,
then the amount realized by Maryland Guarantor from the Casualty or Condemnation
for purposes of computing gain or loss under section 1001 of the Code, or (ii) a
lesser amount provided Maryland Guarantor delivers to Lender an opinion of
counsel for Maryland Guarantor, in form and substance reasonably satisfactory to
Lender and delivered by counsel reasonably satisfactory to Lender, opining that
such release of Property from the Lien does not cause any portion of the Loan to
cease to be a “qualified mortgage” within the meaning of section 860G(a)(3) of
the Code.
          Section 5.17. Annual Budget. Each calendar year during the term of the
Loan, as soon as made available to Maryland Guarantor and/or Operating Lessee in
accordance with the terms of Section 7.02 of the Approved Management Agreement,
Maryland Guarantor or Operating Lessee shall deliver or shall cause Approved
Property Manager to deliver to Lender, for informational purposes only, the
Annual Budget and, promptly after preparation thereof, any

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subsequent revisions to the Annual Budget. If the budget approval process under
the Approved Management Agreement shall be ongoing during the continuance of a
Trigger Period or an Event of Default, neither Maryland Guarantor nor Operating
Lessee shall exercise any budget approval right they may have under the Approved
Management Agreement without the approval of Lender, such approval not to be
unreasonably conditioned, withheld or delayed. For so long as Lender shall
withhold its consent to any Annual Budget or any revisions thereto, the Annual
Budget in effect prior to any such request for approval shall remain in effect.
Without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed, during the continuance of a Trigger Period
neither Maryland Guarantor nor Operating Lessee shall make or approve any
expenditures that are either not provided for in the Approved Annual Budget or
that would, in the aggregate, cause any line item in the Approved Annual Budget
to be exceeded by 5% or more measured on an annual basis, other than
expenditures for non-discretionary items and expenditures required to be made by
reason of the occurrence of any emergency (i.e., an unexpected event that
threatens imminent harm to persons or property at the Property) and with respect
to which it would be impracticable, under the circumstances, to obtain Lender’s
prior consent thereto. For the avoidance of doubt, decreases made or approved to
any line item in the Approved Annual Budget shall not require Lender’s consent.
Borrower and/or Operating Lessee shall deliver, or cause to be delivered, the
2011 Annual Budget as soon as is practical.
          Section 5.18. Nonbinding Consultation. Lender shall have the right to
consult with and advise Obligor regarding significant business activities and
business and financial developments of Obligor and Operating Lessee, provided
that any such advice or consultation or the result thereof shall be completely
nonbinding on Obligor.
          Section 5.19. Compliance with Encumbrances and Material Agreements.
Maryland Guarantor covenants and agrees as follows:
     (i) Maryland Guarantor shall, and shall cause Operating Lessee to, comply
with all material terms, conditions and covenants of each Material Agreement and
each material Permitted Encumbrance, including any reciprocal easement
agreement, any declaration of covenants, conditions and restrictions, and any
condominium arrangements.
     (ii) Maryland Guarantor shall, and shall cause Operating Lessee to,
promptly deliver to Lender a true, correct and complete copy of each and every
notice of default received by Maryland Guarantor or Operating Lessee with
respect to any obligation of such Maryland Guarantor or Operating Lessee under
the provisions of any Material Agreement and/or Permitted Encumbrance.
     (iii) Maryland Guarantor shall, and shall cause Operating Lessee to,
deliver to Lender copies of any written notices of default or event of default
relating to any Material Agreement and/or Permitted Encumbrance served by
Maryland Guarantor or Operating Lessee.
     (iv) After the occurrence of an Event of Default, so long as the Loan is
outstanding, Maryland Guarantor shall not, and shall not cause Operating Lessee
to, grant

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or withhold any material consent, approval or waiver under any Material
Agreement or Permitted Encumbrance without the prior written consent of Lender.
     (v) Maryland Guarantor shall, and shall cause Operating Lessee to, deliver
to each other party to any Permitted Encumbrance and any Material Agreement
notice of the identity of Lender and each assignee of Lender of which Maryland
Guarantor is aware if such notice is required in order to protect Lender’s
interest thereunder.
     (vi) Maryland Guarantor shall, and shall cause Operating Lessee to,
enforce, short of termination thereof, the performance and observance of each
and every material term, covenant and provision of each Material Agreements to
be performed or observed, if any.
          Section 5.20. Prohibited Persons. None of Obligor, Operating Lessee,
Sponsor or any Person owning a direct or indirect beneficial interest in
Obligor, Operating Lessee, or Sponsor shall (i) knowingly conduct any business,
or engage in any transaction or dealing, with any Embargoed Person, including,
but not limited to, the making or receiving of any contribution of funds, goods,
or services, to or for the benefit of a Embargoed Person, or (ii) knowingly
engage in or conspire to engage in any transaction that evades or avoids, or has
the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order 13224. Obligor shall deliver to Lender
from time to time written certification or other evidence as may be reasonably
requested by Lender, confirming that (x) none of Obligor, Operating Lessee,
Sponsor or, to Obligor’s knowledge, any Person owning a direct or indirect
beneficial interest in Obligor, Operating Lessee, or Sponsor is an Embargoed
Person and (y) none of Obligor, Operating Lessee, Sponsor or, to Obligor’s
knowledge, any Person owning a direct or indirect beneficial interest in
Obligor, Operating Lessee, or Sponsor has knowingly engaged in any business,
transaction or dealings with a Embargoed Person, including, but not limited to,
the making or receiving of any contribution of funds, goods, or services, to or
for the benefit of a Embargoed Person.
          Section 5.21. Operating Lease.
          (i) Maryland Guarantor shall cause Operating Lessee to comply with the
affirmative and negative covenants contained in this Agreement as if Operating
Lessee were an Obligor hereunder and no Default hereunder shall be excused by
virtue of the fact that such Default was caused by Operating Lessee.
          (ii) Notwithstanding anything to the contrary herein or in any other
Loan Documents or in the Operating Lease, during the continuance of an Event of
Default (but only after Lender shall have exercised its rights and remedies
under the Mortgage), Lender may, at its sole option and regardless of whether
Operating Lessee is in default or compliance with the terms of the Operating
Lease, terminate the Operating Lease without payment of any termination fee,
penalty or other amount (the parties hereto agreeing that any such fee, penalty
or other amount shall be solely the obligation of Sponsor and shall be paid by
Sponsor or an affiliate of Sponsor other than Obligor or Operating Lessee).
          Section 5.22. Capital Plan.

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          (a) Maryland Guarantor shall do or cause to be done all things
necessary to cause each Capital Plan Component to be completed prior to the
applicable Capital Plan Target Completion Date.
          (b) Maryland Guarantor shall deliver to Lender, within ten (10) days
of completion of any Capital Plan Component, an Officer’s Certificate certifying
as to completion of such Capital Plan Component and the total cost of
completion. Lender shall have the right to (i) inspect the Property (in
accordance with Section 5.5 of this Agreement) to verify completion of such
Capital Plan Component and (ii) request backup documentation, including copies
of invoices and cancelled checks related to such Capital Plan Component and/or a
summary of such invoices and cancelled checks in a spreadsheet that also
indicates the associated line item identified for such Capital Plan Component on
Schedule F hereto.
          (c) Within three (3) Business Days of the date on which all Capital
Plan Components shall have been completed (such date, the “Capital Plan
Completion Date”), Maryland Guarantor shall deposit or cause to be deposited
into the Maryland Guarantor FF&E Account funds equal to the amount, if any, by
which the Capital Plan Minimum Expenditure exceeds the amount expended by
Maryland Guarantor in connection with the Capital Plan as of the Capital Plan
Completion Date.
          (d) Maryland Guarantor shall, if required to do so under applicable
Legal Requirements, obtain a new certificate of occupancy for the Property in
connection with the Capital Plan or any future renovations. Maryland Guarantor
shall deliver a copy of any such new certificate of occupancy, promptly, and in
no case later than three Business Days after receipt thereof.
ARTICLE VI
NEGATIVE COVENANTS
          Section 6.1. Liens on the Collateral. None of Maryland Guarantor,
Operating Lessee or, if applicable, any Single-Purpose Equityholder shall permit
or suffer the existence of any Lien on any of its assets, other than Permitted
Encumbrances.
          Section 6.2. Ownership. Operating Lessee shall not hold any interest
in any assets other than the Property and related personal property and fixtures
located therein or used in connection therewith. Maryland Guarantor shall not
own any assets other than (i) an equity interest in Borrower and (ii) the
Property and related personal property and fixtures located therein or used in
connection therewith. Borrower shall not own any assets.
          Section 6.3. Transfer; Change of Control. Neither Obligor nor
Operating Lessee shall Transfer any Collateral other than in compliance with
Article II and other than the replacement or other disposition of obsolete or
non-useful personal property and fixtures in the ordinary course of business,
and neither Maryland Guarantor nor Operating Lessee shall hereafter file a
declaration of condominium with respect to the Property. No Change of Control or
Prohibited Pledge shall occur.

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          Section 6.4. Debt. Neither Obligor nor Operating Lessee shall have any
Debt, other than Permitted Debt.
          Section 6.5. Dissolution; Merger or Consolidation. None of Obligor,
Operating Lessee or, if applicable, any Single-Purpose Equityholder shall
dissolve, terminate, liquidate, merge with or consolidate into another Person
without first causing the Loan to be assumed by a Qualified Successor Borrower
pursuant to Section 2.2.
          Section 6.6. Change in Business. Neither Obligor nor Operating Lessee
shall 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.
          Section 6.7. Debt Cancellation. Neither Obligor nor Operating Lessee
shall cancel or otherwise forgive or release any material claim or Debt owed to
it by any Person, except for adequate consideration or in the ordinary course of
its business.
          Section 6.8. Affiliate Transactions. Neither Obligor nor Operating
Lessee shall enter into, or be a party to, any transaction with any affiliate of
Obligor and/or Operating Lessee, except on terms that are no less favorable to
Obligor or Operating Lessee than would be obtained in a comparable arm’s length
transaction with an unrelated third party.
          Section 6.9. Misapplication of Funds. Neither Obligor nor Operating
Lessee shall (a) distribute any Revenue or Loss Proceeds in violation of the
provisions of this Agreement (and shall promptly cause the reversal of any such
distributions made in error of which Obligor becomes aware), (b) fail to remit
amounts to the Cash Management Account as required by Section 3.1, or
(c) misappropriate any security deposit or portion thereof.
          Section 6.10. Jurisdiction of Formation; Name. Neither Obligor nor
Operating Lessee shall change its jurisdiction of formation or name without
receiving Lender’s prior written consent and promptly providing Lender such
information and replacement Uniform Commercial Code financing statements and
legal opinions as Lender may reasonably request in connection therewith.
          Section 6.11. Modifications and Waivers. Unless otherwise consented to
in writing by Lender, none of Maryland Guarantor, Operating Lessee or, in the
case of clause (ii) below, any Single-Purpose Equityholder (if applicable)
shall:
     (i) amend, modify, terminate, renew, or surrender any rights or remedies
under any Lease, or enter into any Lease, except in compliance with Section 5.7;
     (ii) terminate, amend or modify its organizational documents (including any
operating agreement, limited partnership agreement, by-laws, certificate of
formation, certificate of limited partnership or certificate of incorporation);
     (iii) terminate, amend or modify the Approved Management Agreement, except
immaterial amendments and modifications that have no adverse effect on Lender
and do not alter any economic term of the Approved Management Agreement;

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     (iv) terminate, amend or modify the Approved Franchise Agreement, except
immaterial amendments and modifications that have no adverse effect on Lender
and do not alter any economic term of the Approved Franchise Agreement; and
     (v) amend, modify, surrender or waive any material rights or remedies
under, or enter into or terminate, or default in its obligations under, any
Material Agreement.
          Section 6.12. ERISA.
          (a) Neither Obligor nor Operating Lessee shall maintain or contribute
to, or agree to maintain or contribute to, or permit any ERISA Affiliate to
maintain or contribute to or agree to maintain or contribute to, any employee
benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or
Section 302 of ERISA or Section 412 of the Code.
          (b) Neither Obligor nor Operating Lessee shall engage in a non-exempt
prohibited transaction under Section 406 of ERISA, Section 4975 of the Code, or
substantially similar provisions under federal, state or local laws, rules or
regulations or in any transaction that would cause any obligation or action
taken or to be taken hereunder (or the exercise by Lender of any of its rights
under the Notes, this Agreement, the Mortgage or any other Loan Document) to be
a non-exempt prohibited transaction under such provisions.
          Section 6.13. Alterations and Expansions. During the continuance of
any Trigger Period or Event of Default, Maryland Guarantor shall not, and shall
not permit Operating Lessee to, perform or contract to perform any capital
improvements requiring Capital Expenditures that are not consistent with the
Approved Annual Budget. Maryland Guarantor shall not, and shall not permit
Operating Lessee to, perform, undertake, contract to perform or consent to any
Material Alteration without the prior written consent of Lender, which consent
(in the absence of an Event of Default) shall not be unreasonably withheld, but
such consent may be conditioned on the delivery of additional collateral
acceptable to Lender in respect of the unpaid cost of any such Material
Alteration. If Lender’s consent is requested hereunder with respect to a
Material Alteration, Lender may retain a construction consultant to review such
request and, if such request is granted, Lender may retain a construction
consultant to inspect the work from time to time. Obligor shall, on demand by
Lender, reimburse Lender for the reasonable fees and disbursements of such
consultant.
          Section 6.14. Advances and Investments. Neither Obligor nor Operating
Lessee shall lend money or make advances to any Person, or purchase or acquire
any stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any Person, except for Permitted Investments.
          Section 6.15. Single-Purpose Entity. Neither Obligor nor Operating
Lessee shall cease to be a Single-Purpose Entity. Neither Obligor nor Operating
Lessee shall remove or replace any Independent Director without Cause and
without providing at least two Business Days’ advance written notice thereof to
Lender and the Rating Agencies.
          Section 6.16. Zoning and Uses. Neither Maryland Guarantor nor
Operating Lessee shall do any of the following:

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     (i) initiate or support any limiting change in the permitted uses of the
Property (or to the extent applicable, zoning reclassification of the Property)
or any portion thereof, seek any variance under existing land use restrictions,
laws, rules or regulations (or, to the extent applicable, zoning ordinances)
applicable to the Property, or use or permit the use of the Property in a manner
that would result in the use of the Property becoming a nonconforming use under
applicable land-use restrictions or zoning ordinances or that would violate the
terms of any Lease, Material Agreement or Legal Requirement (and if under
applicable zoning ordinances the use of all or any portion of the Property is a
nonconforming use, Maryland Guarantor shall not cause or permit such
nonconforming use to be discontinued or abandoned without the express written
consent of Lender);
     (ii) consent to any modification, amendment or supplement to any of the
terms of, or materially default in its obligations under, any Permitted
Encumbrance;
     (iii) impose or consent to the imposition of any restrictive covenants,
easements or encumbrances upon the Property in any manner that adversely affects
in any material respect its value, utility or transferability;
     (iv) execute or file any subdivision plat affecting the Property, or
institute, or permit the institution of, proceedings to alter any tax lot
comprising the Property;
     (v) amend or cause to be amended any Material Agreement in any manner that
might (x) diminish the value of the Property, (y) diminish the rights of
Maryland Guarantor or Lender thereunder or (z) or otherwise cause or reasonably
be expected to result in a Material Adverse Effect, or terminate the same for
any reason or purpose whatsoever, in each case, without the prior written
consent of Lender; or
     (vi) permit or consent to the Property’s being used by the public or any
Person in such manner as might make possible a claim of adverse usage or
possession or of any implied dedication or easement.
          Section 6.17. Waste. Neither Obligor nor Operating Lessee shall commit
or permit any Waste on the Property, nor take any actions that might invalidate
any insurance carried on the Property (and Obligor shall promptly correct any
such actions of which Obligor becomes aware).
ARTICLE VII
DEFAULTS
          Section 7.1. Event of Default. The occurrence of any one or more of
the following events shall be, and shall constitute the commencement of, an
“Event of Default” hereunder (any Event of Default that has occurred shall
continue unless and until waived by Lender in writing in its sole discretion):
          (a) Payment.

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     (i) Borrower shall default in the payment when due of any principal or
interest owing hereunder or under the Notes (including any mandatory prepayment
required hereunder) provided that the Default Rate shall not apply to any amount
owing hereunder or under the Notes unless and until Borrower and Borrower’s
counsel shall have received email notification at the email addresses provided
in Section 9.4, or any other form of notice permitted under this Agreement,
setting forth the payment amount and the due date thereof; or
     (ii) Borrower shall default, and such default shall continue for at least
five Business Days after notice to Borrower that such amounts are owing, in the
payment when due of fees, expenses or other amounts owing hereunder, under the
Notes or under any of the other Loan Documents (other than principal and
interest owing hereunder or under the Note).
          (b) Representations. Any representation made by any Obligor, Sponsor
or Operating Lessee in any of the Loan Documents, or in any report, certificate,
financial statement or other instrument, agreement or document furnished to
Lender proves to be untrue in any material respect (or, with respect to any
representation that itself contains a materiality qualifier, in any respect) as
of the date such representation was made.
          (c) Other Loan Documents. Any Loan Document shall fail to be in full
force and effect or to convey the material Liens, rights, powers and privileges
purported to be created thereby; or a default shall occur under any of the other
Loan Documents or Material Agreements, or a default by Maryland Guarantor or
Operating Lessee, as applicable, shall occur under the Approved Management
Agreement, Approved Franchise Agreement or the Operating Lease, in each case,
beyond the expiration of any applicable cure period.
          (d) Bankruptcy; Reorganization; Receivership; and Insolvency.
     (i) Any Obligor, Operating Lessee or, if applicable, any Single-Purpose
Equityholder shall commence a voluntary case concerning itself under Title 11 of
the United States Code (as amended, modified, succeeded or replaced, from time
to time, the “Bankruptcy Code”);
     (ii) any Obligor, Operating Lessee or, if applicable, any Single-Purpose
Equityholder shall commence any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of creditors, dissolution, insolvency or
similar law of any jurisdiction whether now or hereafter in effect relating to
any Obligor, Operating Lessee or such Single-Purpose Equityholder, or shall
dissolve or otherwise cease to exist;
     (iii) there is commenced against any Obligor, Operating Lessee or, if
applicable, any Single-Purpose Equityholder an involuntary case under the
Bankruptcy Code, or any such other proceeding, which remains undismissed for a
period of 60 days after commencement;
     (iv) any Obligor, Operating Lessee or, if applicable, any Single-Purpose
Equityholder is adjudicated insolvent or bankrupt;

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     (v) any Obligor, Operating Lessee or, if applicable, any Single-Purpose
Equityholder suffers appointment of any custodian or the like for it or for any
substantial portion of its property and such appointment continues unchanged or
unstayed for a period of 60 days after commencement of such appointment;
     (vi) any Obligor, Operating Lessee or, if applicable, any Single-Purpose
Equityholder makes a general assignment for the benefit of creditors; or
     (vii) any action is taken by any Obligor, Operating Lessee or, if
applicable, any Single-Purpose Equityholder for the purpose of effecting any of
the foregoing.
          (e) Change of Control.
     (i) A Change of Control shall occur; or
     (ii) the failure to deliver any Nonconsolidation Opinion required pursuant
to Section 2.3.
          (f) Equity Pledge; Preferred Equity. Any direct or indirect equity
interest in or right to distributions from any Obligor or Operating Lessee shall
be subject to a Lien in favor of any Person, or any Obligor, Operating Lessee or
any holder of a direct or indirect interest in any Obligor or Operating Lessee
shall issue preferred equity (or debt granting the holder thereof rights
substantially similar to those generally associated with preferred equity);
except that the following shall be permitted:
     (i) any pledge of direct and indirect equity interests in and rights to
distributions from a Qualified Equityholder meeting the requirements of
subclauses (i), (ii) or (iii) of the definition of Qualified Equityholder; and
     (ii) the issuance of preferred equity interests in a Qualified Equityholder
meeting the requirements of subclauses (i), (ii) or (iii) of the definition of
Qualified Equityholder.
Any act, action or state of affairs that would result in an Event of Default
pursuant to this Section 7.1(f) shall be referred to in this Agreement as a
“Prohibited Pledge”.
          (g) Insurance. Any of the Policies required hereunder shall not be
maintained in full force and effect.
          (h) ERISA; Negative Covenants. A default shall occur in the due
performance or observance by any Obligor or Operating Lessee of any term,
covenant or agreement contained in Section 5.8 or in Article VI.
          (i) Legal Requirements. If Maryland Guarantor fails to cure or cause
the cure of any violations of Legal Requirements affecting all or any portion of
the Property within 30 days after Maryland Guarantor first receives written
notice of any such violations; provided, however, if any such violation is
reasonably susceptible of cure, but not within such 30 day period, then Maryland
Guarantor shall be permitted up to an additional 30 days to cure such

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violation provided that cure is commenced within such initial 30 day period and
thereafter diligently and continuously pursued.
          (j) Other Covenants. A default shall occur in the due performance or
observance by any Obligor of any term, covenant or agreement (other than those
referred to in any other subsection of this Section 7.1) contained in this
Agreement or in any of the other Loan Documents, except that in the case of a
default that can be cured by the payment of money, such default shall not
constitute an Event of Default unless and until it shall remain uncured for 10
days after Obligor receives written notice thereof; and in the case of a default
that cannot be cured by the payment of money but is susceptible of being cured
within 30 days, such default shall not constitute an Event of Default unless and
until it remains uncured for 30 days after Obligor receives written notice
thereof, provided that within 5 days of its receipt of such written notice,
Obligor delivers written notice to Lender of its intention and ability to effect
such cure within such 30 day period; and if such non-monetary default is not
cured within such 30 day period despite Obligor’s diligent efforts but is
susceptible of being cured within 90 days of Obligor’s receipt of Lender’s
original notice, then Obligor shall have such additional time as is reasonably
necessary to effect such cure, but in no event in excess of 90 days from
Obligor’s receipt of Lender’s original notice, provided that prior to the
expiration of the initial 30 day period, Obligor delivers written notice to
Lender of its intention and ability to effect such cure prior to the expiration
of such 90 day period.
          (k) Operating Lease. The Operating Lease shall no longer be in effect
for any reason whatsoever, including, without limitation, expiration of the
Operating Lease by its terms absent renewal or extension of the Operating Lease.
          Section 7.2. Remedies.
          (a) During the continuance of an Event of Default, Lender may by
written notice to Borrower, in addition to any other rights or remedies
available pursuant to this Agreement, the Notes (or, with respect to Maryland
Guarantor, the Maryland Guaranty), the Mortgage and the other Loan Documents, at
law or in equity, declare by written notice to Borrower all or any portion of
the Indebtedness to be immediately due and payable, whereupon all or such
portion of the Indebtedness shall so become due and payable, and Lender may
enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Obligor and the Collateral (including all rights or remedies
available at law or in equity); provided, however, that, notwithstanding the
foregoing, if an Event of Default specified in paragraph 7.1(d) shall occur,
then the Indebtedness shall immediately become due and payable without the
giving of any notice or other action by Lender. Any 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 law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth in this Agreement or in the
other Loan Documents.
          (b) If Lender forecloses on the Property, Lender shall apply all net
proceeds of such foreclosure to repay the Indebtedness, the Indebtedness shall
be reduced to the extent of such net proceeds and the remaining portion of the
Indebtedness shall remain outstanding and

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secured by the Property and the other Loan Documents, it being understood and
agreed by Borrower that Borrower is liable for the repayment of all the
Indebtedness; provided, however, that at the election of Lender, the Notes shall
be deemed to have been accelerated only to the extent of the net proceeds
actually received by Lender with respect to the Property and applied in
reduction of the Indebtedness.
          (c) During the continuance of any Event of Default (including an Event
of Default resulting from a failure to satisfy the insurance requirements
specified herein), Lender may, but without any obligation to do so and without
notice to or demand on Obligor and without releasing Obligor from any obligation
hereunder, take any action to cure such Event of Default. Lender may enter upon
any or all of the Property upon reasonable notice to Maryland Guarantor for such
purposes or appear in, defend, or bring any action or proceeding to protect its
interest in the Collateral or to foreclose the Mortgage or collect the
Indebtedness. The costs and expenses incurred by Lender in exercising rights
under this Section (including reasonable attorneys’ fees), with interest at the
Default Rate for the period after notice from Lender that such costs or expenses
were incurred to the date of payment to Lender, shall constitute a portion of
the Indebtedness, shall be secured by the Mortgage and other Loan Documents and
shall be due and payable to Lender upon demand therefor.
          (d) Interest shall accrue on any judgment obtained by Lender in
connection with its enforcement of the Loan at a rate of interest equal to the
Default Rate.
          Section 7.3. No Waiver. 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
by Lender to be expedient. A waiver of any Default or Event of Default shall not
be construed to be a waiver of any subsequent Default or Event of Default or to
impair any remedy, right or power consequent thereon.
          Section 7.4. Application of Payments after an Event of Default.
Notwithstanding anything to the contrary contained herein, during the
continuance of an Event of Default, all amounts received by Lender in respect of
the Loan shall be applied at Lender’s sole discretion either toward the
components of the Indebtedness (e.g., Lender’s expenses in enforcing the Loan,
interest, principal and other amounts payable hereunder) and the Notes in such
sequence as Lender shall elect in its sole discretion, or toward the payment of
Property expenses.
ARTICLE VIII
CONDITIONS PRECEDENT
          Section 8.1. Conditions Precedent to Closing. This Agreement shall
become effective on the date that all of the following conditions shall have
been satisfied (or waived in accordance with Section 9.3):

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          (a) Loan Documents. Lender shall have received a duly executed copy of
each Loan Document. Each Loan Document that is to be recorded in the public
records shall be in form suitable for recording.
          (b) Collateral Accounts. Each of the Collateral Accounts shall have
been established with the Cash Management Bank and funded to the extent required
under Article III.
          (c) Opinions of Counsel. Lender shall have received, in each case in
form and substance satisfactory to Lender, (i) a New York legal opinion, (ii) a
legal opinion with respect to the laws of the state in which the Property is
located, (iii) a bankruptcy nonconsolidation opinion with respect to each Person
owning at least a 49% direct or indirect equity interest in Obligor, if
applicable, any Single-Purpose Equityholder and any affiliated property manager,
and (iv) a Delaware legal opinion regarding matters related to Single Member
LLC’s.
          (d) Organizational Documents. Lender shall have received all documents
reasonably requested by Lender relating to the existence of Sponsor, Obligor and
Operating Lessee, the validity of the Loan Documents and other matters relating
thereto, in form and substance satisfactory to Lender, including:
     (i) Authorizing Resolutions. A certified copy of the resolutions approving
and adopting the Loan Documents to be executed by Obligor, Operating Lessee and
Sponsor and authorizing the execution and delivery thereof.
     (ii) Organizational Documents. Certified copies of the organizational
documents of Sponsor, Obligor, Operating Lessee and, if applicable, any
Single-Purpose Equityholder (including any certificate of formation, certificate
of limited partnership, certificate of incorporation, operating agreement,
limited partnership agreement or by-laws), in each case together with all
amendments thereto.
     (iii) Certificates of Good Standing or Existence. Certificates of good
standing or existence for Sponsor, Obligor, Operating Lessee and, if applicable,
any Single-Purpose Equityholder issued as of a recent date by its state of
organization and by the state in which the Property is located.
     (iv) Recycled Entity Certificate. A recycled entity certificate acceptable
to Lender, to the extent that Obligor was formed more than 60 days prior to the
date hereof.
          (e) Lease; Material Agreements. Lender shall have received true,
correct and complete copies of all Leases and all Material Agreements.
          (f) Lien Search Reports. Lender shall have received satisfactory
reports of Uniform Commercial Code, tax lien, bankruptcy and judgment searches
conducted by a search firm acceptable to Lender with respect to the Property and
Borrower, such searches to be conducted in such locations as Lender shall have
requested.

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          (g) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date either before or after the
execution and delivery of this Agreement.
          (h) No Injunction. No Legal Requirement shall exist, and no litigation
shall be pending or threatened, which in the good faith judgment of Lender would
enjoin, prohibit or restrain, or impose or result in the imposition of any
material adverse condition upon, the making or repayment of the Loan or the
consummation of the Transaction.
          (i) Representations. The representations in this Agreement and in the
other Loan Documents shall be true and correct in all respects on and as of the
Closing Date with the same effect as if made on such date.
          (j) [Intentionally Omitted].
          (k) No Material Adverse Effect. No event or series of events shall
have occurred, affecting Obligor, Operating Lessee, or Sponsor, that Lender
reasonably believes has had or is reasonably expected to result in a Material
Adverse Effect.
          (l) Transaction Costs. Borrower shall have paid all transaction costs
(or provided for the direct payment of such transaction costs by Lender from the
proceeds of the Loan).
          (m) Insurance. Lender shall have received certificates of insurance on
ACORD Form 25 for liability insurance and ACORD Form 28 for casualty insurance
demonstrating insurance coverage in respect of the Property of types, in
amounts, with insurers and otherwise in compliance with the terms, provisions
and conditions set forth in this Agreement. Such certificates shall indicate
that Lender and its successors and assigns are named as additional insured on
each liability policy, and that each casualty policy and rental interruption
policy contains a loss payee and mortgagee endorsement in favor of Lender, its
successors and assigns.
          (n) Title. Lender shall have received a marked, signed commitment to
issue, or a signed pro-forma version of, a Qualified Title Insurance Policy in
respect of the Property, listing only such exceptions as are reasonably
satisfactory to Lender. If the Qualified Title Insurance Policy is to be issued
by, or if disbursement of the proceeds of the Loan are to be made through, an
agent of the actual insurer under the Qualified Title Insurance Policy (as
opposed to the insurer itself), the actual insurer shall have issued to Lender
for Lender’s benefit a so-called “Insured Closing Letter.”
          (o) Zoning. Lender shall have received evidence reasonably
satisfactory to Lender that the Property is in compliance with all applicable
zoning requirements (including a zoning report, a zoning endorsement if
obtainable and a letter from the applicable municipality if obtainable).
          (p) Permits; Certificate of Occupancy. Lender shall have received a
copy of all Permits necessary for the use and operation of the Property and the
certificate(s) of

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occupancy, if required, for the Property, all of which shall be in form and
substance reasonably satisfactory to Lender.
          (q) Engineering Report. Lender shall have received a current
Engineering Report with respect to the Property, which report shall be in form
and substance reasonably satisfactory to Lender.
          (r) Environmental Report. Lender shall have received an Environmental
Report (not more than six months old) with respect to the Property that
discloses no material environmental contingencies with respect to the Property.
          (s) Qualified Survey. Lender shall have received a Qualified Survey
with respect to the Property in form and substance reasonably satisfactory to
Lender.
          (t) Appraisal. Lender shall have obtained an Appraisal of the Property
satisfactory to Lender.
          (u) Consents, Licenses, Approvals, etc. Lender shall have received
copies of all consents, licenses and approvals, if any, required in connection
with the execution, delivery and performance by Obligor, Sponsor and Operating
Lessee, and the validity and enforceability, of the Loan Documents, and such
consents, licenses and approvals shall be in full force and effect.
          (v) Financial Information. Lender shall have received financial
information relating to the Sponsor, Obligor and the Property that is
satisfactory to Lender, including, without limitation, financial statements and
operating statements with respect to the Property (audited to the extent
available), in each case for the prior three calendar years and trailing
twelve-month operating statements certified by the Chief Financial Officer of
Sponsor.
          (w) [Intentionally Omitted].
          (x) Know Your Customer Rules. At least 10 days prior to the Closing
Date, the Lender shall have received all documentation and other information
required by bank regulatory authorities under applicable “know-your-customer”
and anti-money laundering rules and regulations, including the PATRIOT Act.
          (y) Capital Plan. Lender shall have received and approved the Capital
Plan.
          (z) Additional Matters. Lender shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Lender. All corporate and other proceedings,
all other documents (including all documents referred to in this Agreement and
not appearing as exhibits to this Agreement) and all legal matters in connection
with the Loan shall be reasonably satisfactory in form and substance to Lender.

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ARTICLE IX
MISCELLANEOUS
          Section 9.1. Successors. Except as otherwise provided in this
Agreement, whenever in this Agreement any of the parties to this Agreement is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party. All covenants, promises and agreements in this
Agreement contained, by or on behalf of Obligor, shall inure to the benefit of
Lender and its successors and assigns.
          Section 9.2. GOVERNING LAW.
     (A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW RULES TO THE
EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
     (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, OBLIGOR, OPERATING
LESSEE OR SPONSOR ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS (OTHER THAN ANY ACTION IN RESPECT OF THE CREATION,
PERFECTION OR ENFORCEMENT OF A LIEN OR SECURITY INTEREST CREATED PURSUANT TO ANY
LOAN DOCUMENTS NOT GOVERNED BY THE LAWS OF THE STATE OF NEW YORK) SHALL BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK. OBLIGOR,
OPERATING LESSEE AND SPONSOR HEREBY (i) IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM, (ii) IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND (iii) IRREVOCABLY
CONSENT TO SERVICE OF PROCESS BY MAIL, PERSONAL SERVICE OR IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW, AT THE ADDRESS SPECIFIED IN SECTION 9.4 (AND AGREES
THAT SUCH SERVICE AT SUCH ADDRESS IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER ITSELF IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT).
          Section 9.3. Modification, Waiver in Writing. Neither this Agreement
nor any other Loan Document may be amended, changed, waived, discharged or
terminated, nor shall any consent or approval of Lender be granted hereunder,
unless such amendment, change, waiver, discharge, termination, consent or
approval is in writing signed by Lender.
          Section 9.4. Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
either (i) in writing by

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expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of delivery or attempted delivery, addressed as follows (or
at such other address and person as shall be designated from time to time by any
party to this Agreement, as the case may be, in a written notice to the other
parties to this Agreement in the manner provided for in this Section) or (ii) by
email at the email addresses provided below, provided that such email
notification is followed by an additional written notice delivered in accordance
with clause (i) of this paragraph, provided, however, that no such additional
notification shall be required in the case of email notice of a payment default,
as provided for in Section 7.1(a). A notice shall be deemed to have been given
when delivered or upon refusal to accept delivery.
If to Lender:
Goldman Sachs Commercial Mortgage Capital, L.P.
6011 Connection Drive, Suite 550
Irving, Texas 75039
Attention: Michael Forbes
Email: michael.forbes@archongroup.com
with copies to:
Goldman Sachs Mortgage Company
200 West Street
New York, New York 10282
Attention: Daniel Bennett and Rene J. Theriault
Email: daniel.bennett@gs.com and rene.theriault@gs.com
and
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
Attention: Michael Weinberger, Esq.
Email: mweinberger@cgsh.com
If to and Obligor:
Tar Heel Borrower LLC and Tar Heel Owner LLC
c/o Pebblebrook Hotel Trust
2 Bethesda Metro Center
Suite 1530
Bethesda, MD 20814
Attention: Raymond D. Martz
Email: rmartz@pebblebrookhotels.com
with a copy to:

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Hunton & Williams LLP
1900 K Street, NW
Suite 1200
Washington, D.C. 20006
Attention: Thomas F. Kaufman
Email: tkaufman@hunton.com
          Section 9.5. TRIAL BY JURY. LENDER, OBLIGOR, OPERATING LESSEE AND
SPONSOR, TO THE FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY AGREE NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE 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 LENDER, OBLIGOR, OPERATING LESSEE AND SPONSOR
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, OBLIGOR,
OPERATING LESSEE AND/OR SPONSOR ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY OBLIGOR,
OPERATING LESSEE AND SPONSOR.
          Section 9.6. Headings. The Article and Section headings in this
Agreement are included in this Agreement for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
          Section 9.7. Assignment and Participation.
          (a) Except as explicitly set forth in Sections 2.1 and 2.2, Obligor
may not sell, assign or transfer any interest in the Loan Documents or any
portion thereof (including Obligor’s rights, title, interests, remedies, powers
and duties hereunder and thereunder).
          (b) Lender and each assignee of all or a portion of the Loan shall
have the right from time to time in its discretion to sell one or more of the
Notes or any interest therein (an “Assignment”) and/or sell a participation
interest in one or more of the Notes (a “Participation”). Obligor agrees to
reasonably cooperate with Lender, at Lender’s request, in order to effectuate
any such Assignment or Participation, and Obligor shall promptly provide such
information, legal opinions and documents relating to Obligor, any
Single-Purpose Equityholder, Sponsor, the Property, the Approved Property
Manager and any Tenants as Lender may reasonably request in connection with such
Assignment or Participation. In the case of an Assignment, (i) each assignee
shall have, to the extent of such Assignment, the rights, benefits and
obligations of the assigning Lender as a “Lender” hereunder and under the other
Loan Documents, (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to an Assignment,
relinquish its rights and be released from its obligations under this Agreement,
and (iii) one Lender shall serve as agent for all Lenders and shall be the sole
Lender to whom notices, requests and other communications shall be addressed and
the sole party authorized to grant or withhold consents hereunder on behalf of
the Lenders (subject, in each

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case, to appointment of a Servicer, pursuant to Section 9.22, to receive such
notices, requests and other communications and/or to grant or withhold consents,
as the case may be) and to be the sole Lender to designate the account to which
payments shall be made by Borrower to the Lenders hereunder. Goldman Sachs
Mortgage Company or, upon the appointment of a Servicer, such Servicer, shall
maintain, or cause to be maintained, as agent for Borrower, a register on which
it shall enter the name or names of the registered owner or owners from time to
time of the Notes. Borrower agrees that upon effectiveness of any Assignment of
any Note in part, Borrower will promptly provide to the assignor and the
assignee separate promissory notes in the amount of their respective interests
(but, if applicable, with a notation thereon that it is given in substitution
for and replacement of an original Note or any replacement thereof), and
otherwise in the form of such Note, upon return of the Note then being replaced.
The assigning Lender shall notify in writing each of the other Lenders of any
Assignment. Each potential or actual assignee, participant or investor in a
Securitization, and each Rating Agency, shall be entitled to receive all
information received by Lender under this Agreement. After the effectiveness of
any Assignment, the party conveying the Assignment shall provide notice to
Borrower and each Lender of the identity and address of the assignee.
Notwithstanding anything in this Agreement to the contrary, after an Assignment,
the assigning Lender (in addition to the assignee) shall continue to have the
benefits of any indemnifications contained in this Agreement that such assigning
Lender had prior to such assignment with respect to matters occurring prior to
the date of such assignment.
          (c) If, pursuant to this Section 9.7, any interest in this Agreement
or any Note is transferred to any transferee that is not a U.S. Person, the
transferor Lender shall cause such transferee, concurrently with the
effectiveness of such transfer, (i) to furnish to the transferor Lender either
Form W-8BEN or Form W-8ECI or any other form in order to establish an exemption
from, or reduction in the rate of, U.S. withholding tax on all interest payments
hereunder, and (ii) to agree (for the benefit of Lender and Obligor) to provide
the transferor Lender a new Form W-8BEN or Form W-8ECI or any forms reasonably
requested in order to establish an exemption from, or reduction in the rate of,
U.S. withholding tax upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such transferee,
and to comply from time to time with all applicable U.S. laws and regulations
with regard to such withholding tax exemption.
          Section 9.8. 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 9.9. Preferences; Waiver of Marshalling of Assets. Lender
shall have no obligation to marshal any assets in favor of Obligor or any other
party or against or in payment of any or all of the obligations of Obligor
pursuant to this Agreement, the Notes, the Maryland Guaranty or any other Loan
Document. Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Obligor to any portion of the
obligations of Obligor hereunder and under the Loan Documents. To the extent
Obligor makes a payment or payments to Lender, which payment or proceeds or any
portion thereof are

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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
portion 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. To the fullest extent permitted by law, Obligor, for itself and its
permitted successors and assigns, waives all rights to a marshalling of the
assets of Obligor, and Obligor’s partners and others with interests in Obligor,
or to a sale in inverse order of alienation in the event of foreclosure of the
Mortgage, 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 Indebtedness
without any prior or different resort for collection or of the right of Lender
to the payment of the Indebtedness out of the net proceeds of the Properties in
preference to every other claimant whatsoever. In addition, to the fullest
extent permitted by law, Obligor, for itself and its successors and assigns,
waives in the event of foreclosure of the Mortgage, any legal right otherwise
available to Obligor that would require the separate sale of any Collateral or
require Lender to exhaust its remedies against any Collateral before proceeding
against any other Collateral; and further in the event of such foreclosure,
Obligor does hereby expressly consent to and authorize, at the option of Lender,
the foreclosure and sale either separately or together of any combination of the
Collateral.
          Section 9.10. Remedies of Obligor. If a claim is made that Lender or
its agents have unreasonably delayed acting or acted unreasonably in any case
where by law or under this Agreement, the Notes, the Mortgage or the other Loan
Documents, any of such Persons has an obligation to act promptly or reasonably,
Obligor agrees that no such Person shall be liable for any monetary damages, and
Obligor’s sole remedy shall be limited to commencing an action seeking specific
performance, injunctive relief and/or declaratory judgment. Without in any way
limiting the foregoing, Obligor shall not assert, and hereby waives, any claim
against Lender and/or its affiliates, directors, employees, attorneys, agents or
sub-agents, on any theory of liability, for direct, special, indirect,
consequential or punitive damages (whether or not the claim therefor is based on
contract, tort or duty imposed by any applicable legal requirement) arising out
of, as a result of, or in any way related to, the Loan Agreement or any other
Loan Document or any agreement or instrument contemplated hereby or thereby or
referred to herein or therein, the transactions contemplated hereby or thereby,
the Loan or the use of the proceeds thereof or any act or omission or event
occurring in connection therewith, and Obligor hereby waives, releases and
agrees not to sue upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
          Section 9.11. Offsets, Counterclaims and Defenses. All payments made
by Borrower hereunder or under the other Loan Documents (or made by Maryland
Guarantor under the Maryland Guaranty) shall be made irrespective of, and
without any deduction for, any setoffs or counterclaims. Obligor waives the
right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender arising
out of or in any way connected with the Notes, the Maryland Guaranty (with
respect to Maryland Guarantor), this Agreement, the other Loan Documents or the
Indebtedness. Any assignee of

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Lender’s interest in the Loan shall take the same free and clear of all offsets,
counterclaims or defenses that are unrelated to the Loan.
          Section 9.12. No Joint Venture. Nothing in this Agreement is intended
to create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Obligor and Lender, nor to grant Lender any interest in the
Property other than that of mortgagee or lender.
          Section 9.13. Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Agreement and the provisions of the
Notes, the Mortgage or any of the other Loan Documents, the provisions of this
Agreement shall prevail.
          Section 9.14. Brokers and Financial Advisors. Obligor and Sponsor each
represent that they have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Obligor and Sponsor each agree,
jointly and severally, to indemnify and hold Lender harmless from and against
any and all claims, liabilities, costs and expenses of any kind in any way
relating to or arising from a claim by any Person that such Person acted on
behalf of Obligor in connection with the transactions contemplated in this
Agreement. The provisions of this Section 9.14 shall survive the expiration and
termination of this Agreement and the repayment of the Indebtedness.
          Section 9.15. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. Any counterpart delivered by facsimile, pdf or other electronic
means shall have the same import and effect as original counterparts and shall
be valid, enforceable and binding for the purposes of this Agreement.
          Section 9.16. Estoppel Certificates.
          (a) Obligor agrees at any time and from time to time, to execute,
acknowledge and deliver to Lender, within five days after receipt of Lender’s
written request therefor, a statement in writing setting forth (A) the Principal
Indebtedness, (B) the date on which installments of interest and/or principal
were last paid, (C) any offsets or defenses to the payment of the Indebtedness,
(D) that the Notes, this Agreement, the Mortgage and the other Loan Documents
are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification, (E) that neither Obligor nor,
to Obligor’s knowledge, Lender, is in default under the Loan Documents (or
specifying any such default), (F) that all Leases are in full force and effect
and have not been modified (except in accordance with the Loan Documents),
(G) whether or not any of the Tenants under the Leases are in material default
under the Leases (setting forth the specific nature of any such material
defaults) and (H) such other matters as Lender may reasonably request. Any
prospective purchaser of any interest in a Loan shall be permitted to rely on
such certificate.
          (b) Upon Lender’s written request, Maryland Guarantor shall use
commercially reasonable efforts to obtain from each Tenant whose Lease requires
such Tenant to execute and deliver an estoppel certificate, and shall thereafter
promptly deliver to Lender duly

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executed estoppel certificates from any one or more Tenants under the Leases as
requested by Lender, attesting to such facts regarding the Leases as Lender may
reasonably require, including, but not limited to, attestations that each Lease
covered thereby is in full force and effect with no material defaults thereunder
on the part of any party, that rent has not been paid more than one month in
advance, except as security, and that the Tenant claims no defense or offset
against the full and timely performance of its obligations under the Lease.
Maryland Guarantor shall not be required to deliver such certificates more
frequently than one time in any 12-month period, other than the 12-month period
during which a Securitization occurs or is attempted.
          Section 9.17. General Indemnity; Payment of Expenses; Mortgage
Recording Taxes.
          (a) Obligor, at its sole cost and expense, shall protect, indemnify,
reimburse, defend and hold harmless Lender and its officers, partners, members,
directors, trustees, advisors, employees, agents, sub-agents, affiliates,
successors, participants and assigns of any and all of the foregoing
(collectively, the “Indemnified Parties”) for, from and against, and shall be
responsible for, any and all Damages of any kind or nature whatsoever that may
be imposed on, incurred by, or asserted against any of the Indemnified Parties
arising out of (i) any negligence or tortious act or omission on the part of
Obligor, Operating Lessee, Sponsor or any of their respective agents,
contractors, servants, employees, sublessees, licensees or invitees; (ii) any
accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(iii) any use, nonuse or condition in, on or about the Property any part thereof
or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (iv) any failure on the part of Obligor, Operating Lessee or
Sponsor to perform or comply with any of the terms of the Loan Documents;
(v) performance of any labor or services or the furnishing of any materials or
other property in respect of the Property or any part thereof; (vi) any failure
of the Property, Maryland Guarantor, Operating Lessee or Sponsor to comply with
any Legal Requirements; (vii) any claim by brokers, finders or similar persons
claiming to be entitled to a commission in connection with any lease or other
transaction involving the Property or any part thereof under any legal
requirement or any liability asserted against any Indemnified Party with respect
thereto; and (viii) any and all claims and demands whatsoever that may be
asserted against any Indemnified Party by reason of any alleged obligations or
undertakings on such party’s part to perform or discharge any of the terms,
covenants, or agreements contained in any Lease, in each case, to the extent
resulting, directly or indirectly, from any claim (including any Environmental
Claim) made (whether or not in connection with any legal action, suit, or
proceeding) by or on behalf of any Person; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder to the extent
that such Damages have been found by a final, non-appealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnified Party.
          (b) If for any reason (including violation of law or public policy)
the undertakings to defend, indemnify, pay and hold harmless set forth in this
Section 9.17 are unenforceable in whole or in part or are otherwise unavailable
to Lender or insufficient to hold it harmless, then Obligor shall contribute to
the amount paid or payable by Lender as a result of any Damages the maximum
amount Obligor is permitted to pay under Legal Requirements. The

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obligations of Obligor under this Section 9.17 will be in addition to any
liability that Obligor may otherwise have hereunder and under the other Loan
Documents, will extend upon the same terms and conditions to any affiliate of
Lender and the partners, members, directors, agents, employees and controlling
persons (if any), as the case may be, of Lender and any such affiliate, and will
be binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of Obligor, Lender, any such affiliate and any such
person.
          (c) At the option of the Indemnified Parties and in their sole
discretion, upon written request by any Indemnified Party, Obligor shall defend
such Indemnified Party (if requested by any Indemnified Party, in the name of
the Indemnified Party) by attorneys and other professionals reasonably approved
by such Indemnified Party. Notwithstanding the foregoing, any Indemnified Party
may engage its own attorneys and other professionals to defend or assist it
(chosen at Lender’s sole discretion), and, at the option of such Indemnified
Party, its attorneys shall control the resolution of any claim or proceeding.
Upon demand, Obligor shall pay or, in the sole discretion of the Indemnified
Parties, reimburse, the Indemnified Parties for the payment of reasonable and
actual fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
          (d) Any amounts payable to Lender by reason of the application of this
Section 9.17 shall be secured by the Mortgage and shall become immediately due
and payable and shall bear interest at the Default Rate from the date Damages
are sustained by the Indemnified Parties until paid.
          (e) The provisions of and undertakings and indemnification set forth
in this Section 9.17 shall survive the satisfaction and payment in full of the
Indebtedness and termination of this Agreement.
          (f) Obligor shall reimburse Lender upon receipt of written notice from
Lender for (i) all out-of-pocket costs and expenses incurred by Lender (or any
of its affiliates) in connection with the Transaction and the origination of the
Loan, including legal fees and disbursements, fees of auditors and consultants,
accounting fees, and the costs of the Appraisal, the Engineering Report, the
Qualified Title Insurance Policy, the Qualified Survey, the Environmental Report
and any other third-party diligence materials; (ii) all out-of-pocket costs and
expenses incurred by Lender (or any of its affiliates) in connection with
(A) monitoring Obligor’s ongoing performance of and compliance with Obligor’s
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 confirming compliance with environmental and insurance requirements,
(B) 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 Obligor or
by Lender (including Leases, Material Agreements, and Permitted Encumbrances),
(C) filing, registration or recording fees and expenses and other similar
expenses incurred in creating and perfecting the Liens in favor of Lender
pursuant to this Agreement and the other Loan Documents (including the filing,
registration or recording of any instrument of further assurance) and all
federal, state, county and municipal, taxes (including, if applicable,
intangible taxes), search fees, title insurance premiums, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of the Loan Documents, any mortgage supplemental thereto, any

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security instrument with respect to the Collateral or any instrument of further
assurance, (D) 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 Obligor, this Agreement,
the other Loan Documents or any Collateral and (E) the satisfaction of the
Rating Condition required or requested by Obligor hereunder; and (iii) all
actual out-of-pocket costs and expenses (including attorney’s fees and, if the
Loan has been Securitized, special servicing fees) incurred by Lender (or any of
its affiliates) in connection with the enforcement of any obligations of
Obligor, or a Default by Obligor, under the Loan Documents, including any actual
or attempted foreclosure, deed-in-lieu of foreclosure, refinancing,
restructuring, settlement or workout and any insolvency or bankruptcy
proceedings (including any applicable transfer taxes).
          Section 9.18. No Third-Party Beneficiaries. This Agreement and the
other Loan Documents are solely for the benefit of Lender and Obligor, and
nothing contained in this Agreement or the other Loan Documents shall be deemed
to confer upon anyone other than Lender, Obligor and Indemnified Parties 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 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 9.19. Recourse.
          (a) Except for any indemnification by Obligor under this Agreement,
the Maryland Guaranty or any of the other Loan Documents, the Loan shall not be
recourse to Maryland Guarantor and, subject to Section 9.19(c), Lender’s
recourse shall be solely to Borrower, the Property and the Collateral, except as
set forth below. In addition, no recourse shall be had for the Loan against any
other Person, including any affiliate of Obligor or any officer, director,
partner or equityholder of Obligor or any such affiliate, unless expressly set
forth in a Loan Document or other written agreement to which such Person is a
party.
          (b) Obligor shall indemnify Lender and hold Lender harmless from and
against any and all Damages to Lender (including the legal and other expenses of
enforcing the obligations of Obligor under this Section 9.19, Maryland Guarantor
under the Maryland Guaranty and the Sponsor under the Guaranty and the
Completion Guaranty) resulting from or arising out of any of the following (the
“Indemnified Liabilities”), which Indemnified Liabilities shall be guaranteed by
Sponsor pursuant to the Guaranty:
     (i) any intentional or grossly negligent physical Waste with respect to the
Property or FF&E committed or permitted by Obligor, Operating Lessee, the
Sponsor or any of their respective affiliates;

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     (ii) any fraud or intentional misrepresentation committed by Obligor,
Operating Lessee, the Sponsor or any of their respective affiliates;
     (iii) any willful misconduct by Obligor, Operating Lessee, the Sponsor or
any of their respective affiliates in violation of the Loan Documents (including
wrongful interference by any such Person with the exercise of remedies by Lender
during the continuance of an Event of Default);
     (iv) the misappropriation or misapplication by Obligor, Operating Lessee,
the Sponsor or any of their respective affiliates of any funds in violation of
the Loan Documents (including misappropriation or misapplication of Revenues,
security deposits and/or Loss Proceeds and the violation of the last sentence of
Section 5.7(d));
     (v) voluntary Debt prohibited hereunder, provided that, for the purpose of
this clause (v), Debt will be regarded as voluntary if such Debt is incurred
voluntarily or incurred involuntarily and not repaid despite the availability of
sufficient cash flow from the Property;
     (vi) any breach by Obligor, Operating Lessee or the Sponsor of any
representation or covenant regarding environmental matters contained in this
Agreement or in the Environmental Indemnity;
     (vii) the failure to pay or maintain the Policies or pay the amount of any
deductible required thereunder following a Casualty or other insurance claim,
provided Lender permits cash flow from the Property to be applied for such
purpose;
     (viii) the failure of any Obligor or Operating Lessee to be, and to at all
times have been, a Single-Purpose Entity;
     (ix) removal of personal property or FF&E from the Property during or in
anticipation of an Event of Default, unless replaced with personal property or
FF&E, as applicable, of the same utility and of the same or greater value and
utility;
     (x) any fees or commissions paid by Obligor or Operating Lessee to any
affiliate in violation of the terms of the Loan Documents;
     (xi) any bankruptcy of any Obligor or Operating Lessee, provided that, for
the purpose of this clause (xi) “Damages” shall be limited to the amount by
which such costs and expenses exceed the costs and expenses Lender would have
incurred in an uncontested foreclosure on the Property (for the avoidance of
doubt, the recourse described in this clause shall be in addition to the full
recourse for bankruptcy described below);
     (xii) the failure of Maryland Guarantor to maintain the required account
balance in the Maryland Guarantor FF&E Account (it being agreed that Damages in
such event shall include the amount of any funds not deposited to the Maryland
Guarantor FF&E Account);

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     (xiii) any and all liabilities, contingent or otherwise, arising from or
related to (x) the actions, conduct and/or operating history of Obligor (or any
Person merged into Obligor) prior to the Closing Date and (y) Obligor’s
ownership (or the ownership of any Person merged into Obligor) of assets prior
to the Closing Date that do not constitute a portion of the Collateral;
     (xiv) the use of an IDOT structure (i.e., the ownership of the Property by
Maryland Guarantor rather than by Borrower) in the origination of the Loan (it
being agreed that Damages in such event shall include any increased costs and
expenses of Lender in connection with foreclosure on the Property due to the
IDOT structure); and
     (xv) any breach by Maryland Guarantor or Operating Lessee of any
representation or covenant contained in the Subordination of Operating Lease.
     In addition to the foregoing, the Loan shall be fully recourse to Obligor
and Sponsor, jointly and severally, upon (i) any unauthorized Transfer of the
Property, unauthorized transfer of any of the Collateral (including unauthorized
Liens and encumbrances on the Collateral) or Change of Control, in each case, in
violation of the Loan Documents, (ii) the occurrence of any filing by any
Obligor or Operating Lessee under the Bankruptcy Code or any joining or
colluding by any Obligor, Operating Lessee or any of their respective affiliates
(including Sponsor) in the filing of an involuntary case in respect of any
Obligor or Operating Lessee under the Bankruptcy Code (provided, however, that
if such involuntary case is dismissed within 60 days of such filing the Loan
shall not be fully recourse to Obligor and Sponsor, however Obligor and Sponsor
shall indemnify Lender and hold Lender harmless from and against any and all
Damages to Lender arising from or related to the filing of such involuntary
case) or (iii) the failure of any Obligor to be, and to at all times have been,
a Single-Purpose Entity, which failure results in a substantive consolidation of
such Obligor with any affiliate in a bankruptcy or similar proceeding (or the
filing of a motion for substantive consolidation in bankruptcy citing any such
failure, provided, however, that if such motion is dismissed within 60 days of
filing the Loan shall not be fully recourse to Obligor and Sponsor, however
Obligor and Sponsor shall indemnify Lender and hold Lender harmless from and
against any and all Damages to Lender arising from or related to such motion).
The Loan shall be fully recourse to Sponsor in an amount equal to its unpaid
Guaranteed Obligations (as such term is defined in the Completion Guaranty)
under the Completion Guaranty.
          (c) The foregoing limitations on personal liability shall in no way
impair or constitute a waiver of the validity of the Notes, the Indebtedness
secured by the Collateral, or the Liens on the Collateral, or the right of
Lender, as mortgagee or secured party, to foreclose and/or enforce its rights
with respect to the Collateral after an Event of Default. Nothing in this
Agreement shall be deemed to be a waiver of any right which Lender may have
under the Bankruptcy Code to file a claim for the full amount of the debt owing
to Lender by Borrower or to require that all Collateral shall continue to secure
all of the Indebtedness owing to Lender in accordance with the Loan Documents.
Lender may seek a judgment on the Note (and, if necessary, name Borrower in such
suit) as part of judicial proceedings to foreclose under the Mortgage or to
foreclose pursuant to any other Loan Documents, or as a prerequisite to any such
foreclosure or to confirm any foreclosure or sale pursuant to power of sale
thereunder, and in the event any suit is brought on the Notes, or with respect
to any Indebtedness or any judgment

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rendered in such judicial proceedings, such judgment shall constitute a Lien on
and will be and can be enforced on and against the Collateral and the rents,
profits, issues, products and proceeds thereof. Nothing in this Agreement shall
impair the right of Lender to accelerate the maturity of the Note upon the
occurrence of an Event of Default, nor shall anything in this Agreement impair
or be construed to impair the right of Lender to seek personal judgments, and to
enforce all rights and remedies under applicable law, jointly and severally
against any guarantors to the extent allowed by any applicable guarantees. The
provisions set forth in this Section 9.19 are not intended as a release or
discharge of the obligations due under the Note or under any Loan Documents, but
are intended as a limitation, to the extent provided in this Section, on
Lender’s right to sue for a deficiency or seek a personal judgment against
Borrower or Sponsor except as required in order to realize on the Collateral.
          Section 9.20. Right of Set-Off. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, during the continuance of an Event of Default,
Lender may from time to time, without presentment, demand, protest or other
notice of any kind (all of such rights being hereby expressly waived), set-off
and appropriate and apply any and all deposits (general or special) and any
other indebtedness at any time held or owing by Lender (including branches,
agencies or affiliates of Lender wherever located) to or for the credit or the
account of Obligor against the obligations and liabilities of Obligor to Lender
hereunder, under the Notes, the Maryland Guaranty, the other Loan Documents or
otherwise, irrespective of whether Lender shall have made any demand hereunder
and although such obligations, liabilities or claims, or any of them, may be
contingent or unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such charge
is made or entered on the books of Lender subsequent thereto.
          Section 9.21. Exculpation of Lender. Lender neither undertakes nor
assumes any responsibility or duty to Obligor or any other party to select,
review, inspect, examine, supervise, pass judgment upon or inform Obligor or any
third party of (a) the existence, quality, adequacy or suitability of Appraisals
of the Property or other Collateral, (b) any environmental report, or (c) any
other matters or items, including engineering, soils and seismic reports that
are contemplated in the Loan Documents. Any such selection, review, inspection,
examination and the like, and any other due diligence conducted by Lender, is
solely for the purpose of protecting Lender’s rights under the Loan Documents,
and shall not render Lender liable to Obligor or any third party for the
existence, sufficiency, accuracy, completeness or legality thereof.
          Section 9.22. Servicer. Lender may delegate any and all rights and
obligations of Lender hereunder and under the other Loan Documents to the
Servicer upon notice by Lender to Borrower, whereupon any notice or consent from
the Servicer to Borrower, and any action by Servicer on Lender’s behalf, shall
have the same force and effect as if Servicer were Lender.
          Section 9.23. No Fiduciary Duty.
          (a) Obligor acknowledges that, in connection with this Agreement, the
other Loan Documents and the Transaction, Lender has relied upon and assumed the
accuracy and completeness of all of the financial, legal, regulatory,
accounting, tax and other information provided to, discussed with or reviewed by
Lender for such purposes, and Lender does not

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assume any liability therefor or responsibility for the accuracy, completeness
or independent verification thereof. Lender, its affiliates and their respective
stockholders and employees (for purposes of this Section, the “Lending Parties”)
have no obligation to conduct any independent evaluation or appraisal of the
assets or liabilities (including any contingent, derivative or off-balance sheet
assets and liabilities) of Sponsor, Obligor or any other Person or any of their
respective affiliates or to advise or opine on any related solvency or viability
issues.
          (b) It is understood and agreed that (i) the Lending Parties shall act
under this Agreement and the other Loan Documents as an independent contractor,
(ii) the Transaction is an arm’s-length commercial transactions between the
Lending Parties, on the one hand, and Obligor, on the other, (iii) each Lending
Party is acting solely as principal and not as the agent or fiduciary of
Obligor, Sponsor or their respective affiliates, stockholders, employees or
creditors or any other Person and (iv) nothing in this Agreement, the other Loan
Documents, the Transaction or otherwise shall be deemed to create (a) a
fiduciary duty (or other implied duty) on the party of any Lending Party to
Sponsor, Obligor, any of their respective affiliates, stockholders, employees or
creditors, or any other Person or (b) a fiduciary or agency relationship between
Sponsor, Obligor or any of their respective affiliates, stockholders, employees
or creditors, on the one hand, and the Lending Parties, on the other. Obligor
agrees that neither it nor Sponsor nor any of their respective affiliates shall
make, and hereby waives, any claim against the Lending Parties based on an
assertion that any Lending Party has rendered advisory services of any nature or
respect, or owes a fiduciary or similar duty to Obligor, Sponsor of their
respective affiliates, stockholders, employees or creditors. Nothing in this
Agreement or the other Loan Documents is intended to confer upon any other
Person (including affiliates, stockholders, employees or creditors of Obligor
and Sponsor) any rights or remedies by reason of any fiduciary or similar duty.
          (c) Obligor acknowledges that it has been advised that the Lending
Parties are a full service financial services firm engaged, either directly or
through affiliates in various activities, including securities trading,
investment banking and financial advisory, investment management, principal
investment, hedging, financing and brokerage activities and financial planning
and benefits counseling for both companies and individuals. In the ordinary
course of these activities, the Lending Parties may make or hold a broad array
of investments and actively trade debt and equity securities (or related
derivative securities) and/or financial instruments (including loans) for their
own account and for the accounts of their customers and may at any time hold
long and short positions in such securities and/or instruments. Such investment
and other activities may involve securities and instruments of affiliates of
Obligor, including Sponsor, as well as of other Persons that may (i) be involved
in transactions arising from or relating to the Transaction, (ii) be customers
or competitors of Obligor, Sponsor and/or their respective affiliates, or
(iii) have other relationships with Obligor, Sponsor and/or their respective
affiliates. In addition, the Lending Parties may provide investment banking,
underwriting and financial advisory services to such other Persons. The Lending
Parties may also co-invest with, make direct investments in, and invest or
co-invest client monies in or with funds or other investment vehicles managed by
other parties, and such funds or other investment vehicles may trade or make
investments in securities of affiliates of Obligor, including Sponsor, or such
other Persons. The Transaction may have a direct or indirect impact on the
investments, securities or instruments referred to in this paragraph. Although
the Lending Parties in the course of such other activities and relationships may
acquire information about the Transaction

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or other Persons that may be the subject of the Transaction, the Lending Parties
shall have no obligation to disclose such information, or the fact that the
Lending Parties are in possession of such information, to Obligor, Sponsor or
any of their respective affiliates or to use such information on behalf of
Obligor, Sponsor or any of their respective affiliates.
          (d) Obligor acknowledges and agrees that Obligor has consulted its own
legal and financial advisors to the extent it deemed appropriate and that it is
responsible for making its own independent judgment with respect to this
Agreement, the other Loan Documents, the Transaction and the process leading
thereto.
          Section 9.24. Obligor Information. Obligor shall make available to
Lender all information concerning its business and operations that Lender may
reasonably request, provided that disclosure of such information does not and
will not violate any securities laws or violate the terms of any confidentiality
agreement between Obligor and/or any affiliate of Obligor on the one hand, and
any third party, on the other hand. Lender shall have the right to disclose any
and all information provided to Lender by Obligor or Sponsor regarding Obligor,
Sponsor, the Loan and the Property (i) to affiliates of Lender and to Lender’s
agents and advisors, (ii) to any bona fide or potential assignee, transferee or
participant in connection with the contemplated assignment, transfer,
participation or Securitization of all or any portion of the Loan or any
participations therein or by any direct or indirect contractual counterparties
(or the professional advisors thereto) to any swap or derivative transaction
relating to Obligor and its obligations, in each case, to the extent reasonably
required by such Person, (iii) to any Rating Agency in connection with a
Securitization or as otherwise required in connection with a disposition of the
Loan, (iv) to any Person necessary or desirable in connection with the exercise
of any remedies hereunder or under any other Loan Document, (v) to any
governmental agency or representative thereof or by the National Association of
Insurance Commissioners or pursuant to legal or judicial process and (vi) in any
Disclosure Document (as defined in the Cooperation Agreement). In addition,
Lender may disclose the existence of this Agreement and the information about
this Agreement to market data collectors, similar services providers to the
lending industry, and service providers to Lender in connection with the
administration and management of this Agreement and the other Loan Documents.
Each party hereto (and each of their respective affiliates, employees,
representatives or other agents) may disclose to any and all Persons, without
limitation of any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind (including opinions and other tax analyses) that
are provided to any such party relating to such tax treatment and tax structure.
For the purpose of this Section 9.24, “tax structure” means any facts relevant
to the federal income tax treatment of the Transaction but does not include
information relating to the identity of any of the parties hereto or any of
their respective affiliates.
          Section 9.25. PATRIOT Act Records. Lender hereby notifies Obligor that
pursuant to the requirements of the PATRIOT Act, it is required to obtain,
verify and record information that identifies Obligor and Sponsor, which
information includes the name and address of Obligor and Sponsor and other
information that will allow Lender to identify Obligor or Sponsor in accordance
with the PATRIOT Act.
          Section 9.26. Prior Agreements. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES HERETO

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AND THERETO IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND
ALL PRIOR AGREEMENTS AMONG OR BETWEEN SUCH PARTIES, WHETHER ORAL OR WRITTEN,
INCLUDING ANY TERM SHEETS, CONFIDENTIALITY AGREEMENTS AND COMMITMENT LETTERS,
ARE SUPERSEDED BY THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(EXCEPT THAT ANY ORIGINATION FEE SPECIFIED IN ANY TERM SHEET, COMMITMENT LETTER
OR FEE LETTER SHALL BE AN OBLIGATION OF OBLIGOR AND SHALL BE PAID AT CLOSING,
AND ANY INDEMNIFICATIONS, FLEX PROVISION, EXIT FEES AND THE LIKE PROVIDED FOR
THEREIN SHALL SURVIVE THE CLOSING).
          Section 9.27. Publicity. If the Loan is made, Lender may issue press
releases, advertisements and other promotional materials describing in general
terms or in detail Lender’s participation in such transaction, and may utilize
photographs of the Property in such promotional materials. Obligor shall not
make any references to Lender in any press release, advertisement or promotional
material issued by Obligor or Sponsor, unless Lender shall have approved of the
same in writing prior to the issuance of such press release, advertisement or
promotional material.
          Section 9.28. 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 under 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 9.29. 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 9.30. Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
          Section 9.31. Joint and Several Liability; Contribution. The
representations, covenants, warranties and obligations of Obligor hereunder are
joint and several. In the event of any payment by Borrower of any amount due to
Lender under this Agreement, Borrower shall be entitled, after payment in full
of the Note and the satisfaction of all the Obligor’s other obligations to the
Lender under the Loan Documents, to contribution from Maryland Guarantor

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for the amounts so paid. Borrower’s right to such contribution shall be
subordinate in all respects to the Loan.
[The remainder of this page is intentionally blank; signatures follow]

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          Lender, Borrower and Maryland Guarantor are executing this Agreement
as of the date first above written.

            LENDER:
      GOLDMAN SACHS COMMERCIAL MORTGAGE
CAPITAL, L.P., a Delaware limited partnership
      By:   /s/ Rene Theriault         Name:   Rene Theriault         Title:  
Director        BORROWER:

TAR HEEL BORROWER LLC,
a Delaware limited liability company
      By:   /s/ Raymond D. Martz         Name:   Raymond D. Martz       
Title:   President        MARYLAND GUARANTOR:

TAR HEEL OWNER LLC,
a Delaware limited liability company
      By:   /s/ Raymond D. Martz         Name:   Raymond D. Martz       
Title:   President   

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Exhibit A
Organizational Chart
OWNER ORGANIZATIONAL CHART
Bethesda Doubletree Hotel
(OWNER ORGANIZATIONAL CHART) [w81333w8133300.gif]

 

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Exhibit B
Form of Tenant Notice
[BORROWER’S LETTERHEAD]
                    , 20___

         
 
  Re:   Lease dated [                    ], 200___between
[                    ],
 
      as Landlord, and [                    ], as Tenant,
 
      concerning premises known as [                    ] (the “Building”).

Dear Tenant:
     [As of                     , 200_,                     , the owner of the
Building, has transferred the Building to                      (the “New
Landlord”).] The undersigned hereby directs and authorizes you to make all
rental payments and other amounts payable by you pursuant to your lease as
follows:
(x) If the payment is made by wire transfer, you shall transfer the applicable
funds to the following account::
Bank:
Account Name
Account No.:
ABA No.:
Contact:
(y) If the payment is made by check, you shall deliver your payment to the
following address: [LOCKBOX ADDRESS].
     [In addition, please amend the insurance policies that you are required to
maintain under your lease to include the new owner as an additional insured
thereon.]
     The instructions set forth herein are irrevocable and are not subject to
modification by us or the New Landlord in any manner. Only [name of then-current
Lender], or its successors and assigns, may by written notice to you rescind or
modify the instructions contained herein.
     Thank you in advance for your cooperation and if you have any questions,
please call                      at (___) ___-                    .
Very truly yours,

 

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Exhibit C
Summary Operating Statement
10th Edition USALI Summary Operating Statement
Revenue
Rooms
Food and Beverage
Other Operated Departments
Rentals and Other Income
Total Revenue
Departmental Expenses
Rooms
Food and Beverage
Other Operated Departments
Total Departmental Expenses
Total Departmental Income
Undistributed Operating Expenses
Administrative and General
Sales and Marketing
Property Operations and Maintenance
Utilities
Total Undistributed Expenses
Gross Operating Profit
Management Fees
Income Before Fixed Charges
Fixed Charges
Rent
Property and Other Taxes
Insurance
Fixed Charges
Net Operating Income
Less: Replacement Reserves
Adjusted Net Operating Income

 

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Schedule A
Property
All that lot of ground situated in Montgomery County, State of Maryland and
described as follows:
BEING all that tract or parcel of land shown as Lot 622 on a plat of Subdivision
entitled “Woodmont”, recorded among the Land Records of Montgomery County,
Maryland in Plat Book 88 at Plat Number 9370, and being more particularly
described as follows:
BEGINNING FOR THE SAME at a point at the southwest corner of the aforesaid Lot
622, said point also lying on the easterly right-of-way line of Woodmont Avenue;
thence with the outline of said Lot 622 for the next 4 courses and distances,
and with said right-of-way.
1. North 09 degrees 29 minutes 20 seconds West, 125.00 feet to a point thence
leaving said right-of-way line
2. North 80 degrees 30 minutes 40 seconds East, 202.77 feet to a point on the
westerly right-of-way line of Wisconsin Avenue; thence with said right-of-way
line
3. South 09 degrees 20 minutes 00 seconds East, 125.00 feet to a point; thence
leaving said right-of-way line
4. South 80 degrees 30 minutes 40 seconds West, 202.43 feet to a point of
beginning, containing 25,325 square feet or 0.5841 acres of land.
The improvements thereon being known as 8120 Wisconsin Avenue, Bethesda,
Maryland 20814.
Tax Account No. 07-00550732

 

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Schedule B
Exception Report
None.

 

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Schedule C
Deferred Maintenance Conditions

1.   Repair hydraulic leak in the hydraulic elevator equipment room associated
with elevator number 5 and observed in the Environmental Report. Remove all
spilled hydraulic fluid and clean staining observed in the Environmental Report.
Following completion of the Capital Plan, re-inspect elevator equipment room to
confirm successful remediation of environmental issues.   2.   Update and
maintain an O&M Plan to reflect any known asbestos containing materials at the
Hotel. Should future renovation/demolition activities impact the remaining
asbestos containing materials, a contractor holding a current Maryland Asbestos
Abatement license should perform abatement of all identified asbestos-containing
materials. The abatement contractor must comply with Maryland laws, regulations
and standards.   3.   Remediate water damage and mold identified in services
areas, vending machine areas, parking garage, certain guest bathrooms and
certain exterior features, as observed in the Environmental Report. Following
completion of the Capital Plan, re-inspect subject areas to confirm remediation
of water damage and mold.

 

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Schedule D
Unfunded Obligations
None.

 

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Schedule E
Material Agreements

1.   Management Agreement dated June 4, 2010 by Tar Heel Lessee LLC and Thayer
Lodging Group, Inc.   2.   Franchise License Agreement dated June 4, 2010 by Tar
Heel Lessee LLC and Doubletree Franchise LLC.

 

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Schedule F
Capital Plan
Schedule F-1 — Parking Component
Target Completion Date: June 20, 2011.
Construction generally in accordance with November 24, 2010 Project Manual for
Doubletree Hotel Parking Garage Repairs, prepared by Ares Engineering,
Inc./Building Evaluations, LLC (the “Project Manual”) per the completion
schedules described on page L101 therein. Items marked as “Alternate #1,
Alternate #2, and Alternate #3 shall not be required, but may be completed at
Borrower’s option. For the avoidance of doubt, the plans and specifications are
included in the following sections of Project Manual:

  a.   Cover Page     b.   L101 — L106     c.   A100, A110, A120, A130, A140,
A150, A160, A170     d.   B100, B110, B120, B130, B140     e.   C100, C110,
C120, C130     f.   D100, D110, D120, D130, D140, D150, D160     g.  
Section 01040-1 & 2     h.   Section 01100-1     i.   Section 01400-1     j.  
Section 01500-1 & 2     k.   Section 01700-1 & 2     l.   Section 02140-1     m.
  Section 02150-1 & 2     n.   Section 02761-1 & 2     o.   Section 02780-1 & 2
    p.   Section 03010-1 & 2     q.   Section 03100-1 & 2     r.  
Section 03325-1 thru 4     s.   Section 03730-1 thru 3     t.   Section 03910-1
& 2     u.   Section 07570-1 thru 3     v.   Section 07901-1 thru 3     w.  
Section 15010-1 & 2     x.   Section 15140-1 & 2     y.   Section 15410-1 & 2  
  z.   Section 16050-1 thru 3

 

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Schedule F-2 — PIP Component
Target Completion Date: May 20, 2011.
All items described in the Product Improvement Plan for the Doubletree Hotel
Bethesda, MD dated with a “Final PIP Approval Date” of April 6, 2010 attached as
Exhibit A to the Franchise License Agreement for the Doubletree Hotel Bethesda,
dated June 4, 2010, between Tar Heel Lessee LLC and Doubletree Franchise LLC.

 

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Schedule F-3 — Other Capital Improvements Component
Target Completion Date: May 20, 2011.
The following additional projects, in each case in the manner approved by
Approved Franchisor and in compliance with Franchise Agreement and PIP
requirements:

  a.   With respect to corridors:

  1.   Paint millwork and ceilings.     2.   Paint and repair exterior/corridor
side of guestroom and other corridor doors.

  b.   With respect to guestrooms:

  1.   Conversion of 9 hotel rooms to extended stay product with a quality of
construction, FF&E and amenities consistent with the majority of other 260 rooms
in the hotel and additionally with kitchen facilities appropriate to an extended
stay product.     2.   Conversion of room #1218 to the 270th hotel room with a
quality of construction, FF&E and amenities consistent with the majority of
other 269 rooms in the hotel.     3.   Cover PTAC units.

  c.   With respect to guest bathrooms:

  1.   Paint/repair ceilings.

  d.   With respect to the lobby area:

  1.   Removal of the current breakfast counter and construction of a soft
seating area adjacent to the lobby with a quality of construction, FF&E and
amenities consistent with other hotel public areas.     2.   Construction and
fit out of the former sushi bar area to a coffee kiosk with a quality of
construction consistent with other hotel public areas.     3.   Construction of
main entrance with a quality of construction, FF&E and amenities consistent with
other hotel public areas.

  e.   With respect to ADA compliance:

  1.   Install compliant call alarms in the accessible unisex bathrooms.     2.
  Acquire four additional hearing impaired loaner kits.

  f.   With respect to pool:

  1.   Resurface pool.

  g.   With respect to exterior facade:

  1.   Repair water damage to section of soffit at southwest corner of the
building.

  h.   With respect to interior finishes:

  1.   Repair water damage in the third floor men’s bathroom.     2.   Patch
ceiling in third floor men’s bathroom.

 

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Schedule G
Leases
None.