Exhibit 10.2

 

Recording Requested by

and when recorded return to:

 

WELLS FARGO BANK, N.A.

Commercial Mortgage Origination

MAC# A0194-093

45 Fremont Street, 9th Floor

San Francisco, California 94105

 

Attention:

  CMO Loan Admin.

Loan No. :

  51-0903198

MERS MIN #:

  8000101-0000001752-4

 

--------------------------------------------------------------------------------

 

LEASEHOLD MORTGAGE

and

ABSOLUTE ASSIGNMENT OF RENTS

AND LEASES

and

SECURITY AGREEMENT

(AND FIXTURE FILING)

 

City of Boston, County of Suffolk, Commonwealth of Massachusetts

 

The parties to this LEASEHOLD MORTGAGE AND ABSOLUTE ASSIGNMENT OF RENTS AND
LEASES AND SECURITY AGREEMENT (AND FIXTURE FILING) (“Mortgage”), dated as of
August 30, 2005, are LHO BACKSTREETS, L.L.C., a Delaware limited liability
company (“Mortgagor”), with a mailing address at c/o LaSalle Hotel Properties, 3
Bethesda Metro Center, Suite 1200, Bethesda, Maryland 20814, and MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware corporation (“MERS” or
“Mortgagee”), with a mailing address at MERS Commercial, P.O. Box 2300, Flint,
Michigan 48501-2300.

 

RECITALS

 

A. LHO BACKSTREETS, L.L.C. (“Mortgagor”) proposes to borrow from Wells Fargo
Bank, National Association (“Lender”) and Lender proposes to lend to Mortgagor,
the principal sum of TWO HUNDRED TEN MILLION AND NO/100THS DOLLARS
($210,000,000) (“Loan”). The Loan is evidenced by a promissory note (“Note”)
executed by Mortgagor, dated the date of this Mortgage, payable to the order of
Lender in the principal amount of the Loan. The maturity date of the Loan is
September 1, 2035.

 

B. The loan documents include this Mortgage, the Note and the other documents
described in the Note as Loan Documents (“Loan Documents”).

--------------------------------------------------------------------------------

ARTICLE 1. MORTGAGE

 

1.1. GRANT. For the purposes of and upon the terms and conditions of this
Mortgage and for consideration paid, Mortgagor hereby grants, conveys,
transfers, assigns and sets over to Mortgagee, with MORTGAGE COVENANTS, all of
the following:

 

  a. That real property (“Land”) located in city of Boston, county of Suffolk,
Commonwealth of Massachusetts, and more particularly described on Exhibit A
attached hereto;

 

  b. All appurtenances, easements, rights of way, water and water rights, pumps,
pipes, flumes and ditches, and ditch rights, water stock, ditch and/or reservoir
stock or interests, royalties, development rights and credits, air rights,
minerals, oil rights, and gas rights, no or later used or useful in connection
with appurtenant to or related to the Land;

 

  c. That certain ground lease agreement described on Exhibit B attached hereto.
The original lease, together with all amendments, modifications, extensions and
assignments heretofore now or hereafter entered into are hereinafter
collectively referred to as the “Ground Lease.”

 

  d. All buildings, structures, facilities, other improvements and Fixtures
(hereinafter defined) now or hereafter located on the Land;

 

  e. All equipment, as such term is defined in Article 9 of the Uniform
Commercial Code (as hereinafter defined), now owned or hereafter acquired by
Mortgagor, which is used at or in connection with the Improvements or the Land
or is located thereon or therein (including, but not limited to, all apparatus,
machinery, equipment, furnishings, and electronic data-processing and other
office equipment or other customary hotel equipment now owned or hereafter
acquired by Mortgagor and any and all additions, substitutions and replacements
of any of the foregoing), together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto (collectively,
the “Equipment”)), it being intended by the parties that all such items shall be
conclusively considered to be a part of the Land;

 

  f.

All fixtures (including without limitation, all Equipment now owned, or the
ownership of which is hereafter acquired, by Mortgagor which is so related to
the Land and Improvements forming part of the Property (as hereinafter defined)
that it is deemed fixtures or real property under the law of the particular
state in which the Equipment is located, including, without limitation, all
building or construction materials intended for construction, reconstruction,
alteration or repair of or installation on the Property (as hereinafter
defined), construction equipment, appliances, machinery, plant equipment,
fittings, apparatuses, fixtures and other items now or hereafter attached to,
installed in or used in connection with (temporarily or permanently) any of the
Improvements or the Land, including, but not limited to, engines, devices for
the operation of pumps, pipes,

 

- 2 -

--------------------------------------------------------------------------------

 

plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses
and equipment, heating, ventilating, plumbing, laundry, incinerating,
electrical, air conditioning and air cooling equipment and systems, gas and
electric machinery, appurtenances and equipment, pollution control equipment,
elevator fixtures, security systems, disposals, dishwashers, refrigerators and
ranges, recreational equipment and facilities of all kinds, and water, gas,
electrical, storm and sanitary sewer facilities, utility lines and equipment
(whether owned individually or jointly with others, and, if owned jointly, to
the extent of Mortgagor’s interest therein) and all other utilities whether or
not situated in easements, all water tanks, water supply, water power sites,
fuel stations, fuel tanks, fuel supply, and all other structures, together with
all accessions, appurtenances, additions, replacements, betterments and
substitutions for any of the foregoing and the proceeds thereof (collectively,
the “Fixtures”)), it being intended by the parties that all such items shall be
conclusively considered to be a part of the Land;

 

  g. All furniture, furnishings, objects of art, machinery, goods, tools,
supplies, work in process, appliances, general intangibles, contract rights,
accounts, deposit accounts, accounts receivable, franchises, licenses,
inventory, certificates and permits, and all other personal property of any kind
or character whatsoever (including, but not limited to, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs,
carpeting, drapes, draperies, curtains, shades, Venetian blinds, screens,
paintings, hangings, pictures, divans, couches, luggage carts, luggage racks,
stools, sofas, chinaware, linens, pillows, blankets, glassware, silverware, food
carts, cookware, dry cleaning facilities, dining room wagons, keys or other
entry systems, bars, bar fixtures, liquor and other drink dispensers, icemakers,
radios, television sets, intercom and paging equipment, electric and electronic
equipment, dictating equipment, private telephone systems, medical equipment,
potted plants, heating, lighting and plumbing fixtures, fire prevention and
extinguishing apparatus, cooling and air-conditioning systems, elevators,
escalators, fittings, plants, apparatus, stoves, ranges, refrigerators, laundry
machines, tools, machinery, engines, dynamos, motors, boilers, incinerators,
switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning,
waxing and polishing equipment, call systems, brackets, electrical signs (and
other signs at the Property), bulbs, bells, ash and fuel, conveyors, cabinets,
lockers, shelving, spotlighting equipment, dishwashers, garbage disposals,
washers and dryers), other customary hotel personalty and other tangible
property (as defined in and subject to the provisions of the Uniform Commercial
Code as hereinafter defined), other than Fixtures, which are now or hereafter
owned by Mortgagor and which are located within or about the Land and the
Improvements, together with all accessories, replacements and substitutions
thereto or therefor and the proceeds thereof (collectively, the “Personal
Property”), and the right, title and interest of Mortgagor in and to any of the
Personal Property which may be subject to any security interests, as defined in
the Uniform Commercial Code, as adopted and enacted by the state where any of
the Property (as hereinafter defined) is located (the “Uniform Commercial
Code”), superior in lien to the lien of this Mortgage;

 

- 3 -

--------------------------------------------------------------------------------

  h. All leases, subleases, all licenses and agreements relating to the
management, leasing, renting or operation of the property or any portion thereof
(including, without limitation, all rental agreements and registration cards and
agreements, if any), the Operating Lease (defined below) (subject to the terms
of the Subordination and Attornment Agreement executed by Operating Tenant and
Lender in connection with the Loan) and other agreements whether or not in
writing affecting the use, enjoyment or occupancy of the Land and/or the
Improvements heretofore or hereafter entered into and all extensions, amendments
and modifications thereto, whether before or after the filing by or against
Mortgagor of any petition for relief under any Debtor Relief Law (as defined in
Section 7.1(b)(i) herein) (the “Leases”) and all right, title and interest of
Mortgagor, its successors and assigns therein and thereunder, including, without
limitation, any guaranties of the lessees obligations thereunder, cash or
securities deposited thereunder to secure the performance by the lessees of
their obligations thereunder and all rents, additional rents, revenues, cash
receipts, issues, registration fees, if any, and profits (including, without
limitation, all oil and gas or other mineral royalties and bonuses) from the
Land and the Improvements, all income, rents, room rates, issues, profits,
revenues, deposits, accounts and other benefits from the operation of the hotel
on the Land and/or the Improvements, including, without limitation, all
revenues, cash and credit card receipts collected from guest rooms, restaurants,
bars, mini-bars, meeting rooms, banquet rooms and recreational facilities and
otherwise, all, receivables, customer obligations, installment payment
obligations and other obligations now existing or hereafter arising or created
out of sale, lease, sublease, license, concession, or other grant of the right
of the possession, use or occupancy of all or any portion of the Land and/or
Improvements or personalty located thereon, or rendering of services by
Mortgagor or any operator or manager of the hotel or the commercial space
located in the Improvements or acquired from others including, without
limitation, from the rental of any office space, retail space, commercial space,
guest room or other space, halls, stores or offices, including any deposits
securing reservations of such space, exhibit or sales space of every kind,
license, lease, sublease and concession fees and rentals, health club and/or spa
membership fees, food and beverage wholesale and retail sales, service charges,
vending machine sales, all deposits or other security now or hereafter made with
or given to any utility company by Mortgagor with respect to the Property, and
all proceeds, if any, from business interruption or other loss of income
insurance relating to the use, enjoyment or occupancy of the Land and/or the
Improvements whether paid or accruing before or after the filing by or against
Mortgagor of any petition for relief under any Debtor Relief Law (as defined in
Section 7.1(b)(i) herein) (the “Rents”) and all proceeds from the sale or other
disposition of the Leases and the right to receive and apply the Rents to the
payment of the Secured Obligations;

 

  i.

All right, title and interest of Mortgagor, if any, arising from the operation
of the Land and the Improvements in and to all payments for goods or property
sold or leased or for services rendered, whether or not yet earned by
performance, and whether or not evidenced by an instrument or chattel paper,
(hereinafter referred to as “Accounts Receivable”) including, without limiting
the generality of the

 

- 4 -

--------------------------------------------------------------------------------

 

foregoing, (i) all accounts (including, without limitation, any deposit
accounts), impounds, contract rights, book debts, letters of credit, letter of
credit rights, supporting obligations, drafts and notes arising from (A) the
operation of a hotel on the Land and the Improvements, or (B) the sale, lease or
exchange of goods or other property and/or the performance of services, (ii)
Mortgagor’s rights to payment from any consumer credit/charge card organization
or entities which sponsor and administer such cards as the American Express
card, the Visa card, Discover card, and the MasterCard, (iii) Mortgagor’s rights
in, to and under all purchase orders for goods, services or other property, (iv)
Mortgagor’s rights to any goods, services or other property represented by any
of the foregoing, (v) monies due to or to become due to Mortgagor under all
contracts for the sale, lease or exchange of goods or other property and/or the
performance of services including the right to payment of any interest or
finance charges in respect thereto (whether or not yet earned by performance on
the part of Mortgagor) and (vi) all collateral security and guaranties of any
kind given by any Person with respect to any of the foregoing. Accounts
Receivable shall include those now existing or hereafter created, substitutions
therefor, proceeds (whether cash or non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange, transfer, collection or other
disposition or substitution thereof and any and all of the foregoing and
proceeds therefrom;

 

  j. All land lying in the right of way of any street, road, avenue, alley, or
right-of-way opened, proposed or vacated, and all sidewalks, strips, and gores
of land adjacent to, or used in connection with, the Land;

 

  k. All additions and accretions to the property described above;

 

  l. All agreements, contracts, insurance policies, certificates, documents,
instruments, franchises, plans, specifications, licenses, authorizations,
variances, consents, approvals and other permits (including, without limitation,
any rights granted by, given by or obtained from, any governmental entity) now
or hereafter entered into, and all of Mortgagor’s rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Mortgagor therein and thereunder, including,
without limitation, the right, upon the happening of any default hereunder, to
receive and collect any sums payable to Mortgagor thereunder;

 

  m. All loan funds held by Lender, whether or not disbursed; all funds
deposited with Lender pursuant to any Loan Document, all reserves, deferred
payments, deposits, accounts, refunds, cost savings and payments of any kind
related to the Property or any portion thereof, including, without limitation,
all “Impounds” as defined herein; together with all replacements and proceeds
of, and additions and accessions to, any of the foregoing, and all books,
records and files relating to any of the foregoing;

 

- 5 -

--------------------------------------------------------------------------------

  n. All tradenames, trademarks, servicemarks, logos, copyrights, goodwill,
books and records, tenant or guest lists, advertising materials, telephone
exchange numbers identified in such materials, websites and all other general
intangibles relating to or used in connection with the operation of the
Property; and

 

  o. All proceeds of any of the foregoing (including, without limitation, all
proceeds of and any unearned premiums on any insurance policies covering the
Land and Improvements, the Personal Property and other collateral granted under
this Section 1.1, including, without limitation, the right to receive and apply
the proceeds of any insurance, judgments, or settlements made in lieu thereof,
for damage to the Property).

 

  p. All of the property described above is hereinafter collectively defined as
the “Property”. The listing of specific rights or property shall not be
interpreted as a limitation of general terms.

 

ARTICLE 2. OBLIGATIONS SECURED

 

2.1. OBLIGATIONS SECURED. This Mortgage is given for the purpose of securing the
following obligations (“Secured Obligations”):

 

  a. Full and punctual payment to Lender of all sums at any time owing under the
Note;

 

  b. Payment and performance of all covenants and obligations of Mortgagor under
this Mortgage including, without limitation, indemnification obligations and
advances made to protect the Property;

 

  c. Payment and performance of all additional covenants and obligations of
Mortgagor and Mortgagor under the Loan Documents;

 

  d. Payment and performance of all covenants and obligations, if any, which any
rider attached as an exhibit to this Mortgage recites, if any, are secured
hereby. As of the date hereof, no such rider is attached hereto;

 

  e. All interest and charges on all obligations secured hereby including,
without limitation, prepayment charges, late charges and loan fees;

 

  f. All modifications, extensions and renewals of any of the obligations
secured hereby, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment dates
or both, as the case may be, deferring or accelerating payment dates wholly or
partly; and (ii) modifications, extensions or renewals at a different rate of
interest whether or not any such modification, extension or renewal is evidenced
by a new or additional promissory note or notes; and

 

  g. Payment and performance of any other obligations which are defined as
“Secured Obligations” in the Note.

 

- 6 -

--------------------------------------------------------------------------------

2.2. OBLIGATIONS. The term “obligations” is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all
interest and charges, prepayment charges, late charges and loan fees at any time
accruing or assessed on any of the Secured Obligations in accordance with the
terms of the Loan Documents.

 

2.3. INCORPORATION. All terms and conditions of the documents which evidence any
of the Secured Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Property shall be deemed to
have notice of the terms of the Secured Obligations and to have notice that the
rate of interest on one or more Secured Obligation may vary from time to time.

 

ARTICLE 3. ABSOLUTE ASSIGNMENT OF RENTS AND LEASES

 

3.1. ASSIGNMENT. Mortgagor for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, grants, transfers and assigns to
Mortgagee all of Mortgagor’s right, title and interest in, to and under: (a) all
Leases; and (b) all rents, issues, deposits and profits of the Property,
including, without limitation, all Rents and Accounts Receivable (“Payments”).
This is a present and absolute assignment, not an assignment for security
purposes only, and Mortgagee’s right to the Leases and Payments is not
contingent upon, and may be exercised, either in person or by an agent, with or
without bringing any action or proceedings, or by a receiver appointed by a
court, and with or without possession of, the Property.

 

3.2. GRANT OF LICENSE. Mortgagee confers upon Mortgagor a revocable license
(“License”) to collect and retain the Payments as they become due and payable,
until the occurrence of a Default (as hereinafter defined). Upon a Default, the
License shall be automatically revoked and Mortgagee may collect and apply the
Payments pursuant to the terms hereof without notice, either in person or by
agent, with or without bringing any action or proceedings, or by a receiver
appointed by a court, and with or without possession of, the Property. All
Payments thereafter collected by Mortgagor shall be held by Mortgagor as trustee
under a constructive trust for the benefit of Mortgagee. Mortgagor hereby
irrevocably authorizes and directs the tenants under the Leases to rely upon and
comply with any notice or demand by Mortgagee for the payment to Mortgagee of
any rental or other sums which may at any time become due under the Leases, or
for the performance of any of the tenants’ undertakings under the Leases, and
the tenants shall have no right or duty to inquire as to whether any Default has
actually occurred or is then existing. Mortgagor hereby relieves the tenants
from any liability to Mortgagor by reason of relying upon and complying with any
such notice or demand by Mortgagee. Mortgagee may apply, in its sole discretion,
any Payments so collected by Mortgagee against any Secured Obligation or any
other obligation of Mortgagor, Mortgagor or any other person or entity, under
any document or instrument related to or executed in connection with the Loan
Documents, whether existing on the date hereof or hereafter arising. Collection
of any Payments by Mortgagee shall not cure or waive any Default or notice of
Default or invalidate any acts done pursuant to such notice. If and when no
Default exists, Mortgagee shall re-confer the License upon Mortgagor until the
occurrence of another Default.

 

- 7 -

--------------------------------------------------------------------------------

3.3. EFFECT OF ASSIGNMENT. The foregoing irrevocable assignment shall not cause
Mortgagee to be: (a) a mortgagee in possession; (b) responsible or liable for
the control, care, management or repair of the Property or for performing any of
the terms, agreements, undertakings, obligations, representations, warranties,
covenants and conditions of the Leases; (c) responsible or liable for any waste
committed on the Property by the tenants under any of the Leases or by any other
parties; for any dangerous or defective condition of the Property which was not
caused by the gross negligence or willful misconduct of Mortgagee or Lender; or
for any negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any tenant, licensee, employee, invitee
or other person; or (d) responsible for or impose upon Mortgagee any duty to
produce rents or profits. Mortgagee shall not directly or indirectly be liable
to Mortgagor or any other person as a consequence of: (e) the exercise or
failure to exercise any of the rights, remedies or powers granted to Mortgagee
hereunder; or (f) the failure or refusal of Mortgagee to perform or discharge
any obligation, duty or liability of Mortgagor arising under the Leases.

 

3.4. COVENANTS-LONG TERM LEASES.

 

  a. All Leases. Mortgagor shall, or shall cause Operating Tenant (defined
below) to, at Mortgagor’s sole cost and expense:

 

  (i) perform all obligations of the landlord under the Leases and use
reasonable efforts to enforce performance by the tenants of all obligations of
the tenants under the Leases;

 

  (ii) use reasonable efforts to keep the Property leased at all times to
tenants which Mortgagor reasonably and in good faith believes are creditworthy
at rents not less than the fair market rental value (including, but not limited
to, free or discounted rents to the extent the market so requires);

 

  (iii) promptly upon Mortgagee’s request, deliver to Mortgagee a copy of each
requested Lease and all amendments thereto and waivers thereof; and

 

  (iv) promptly upon Mortgagee’s request, execute and record any additional
assignments of landlord’s interest under any Lease to Mortgagee and specific
subordinations of any Lease to this Mortgage, in form and substance satisfactory
to Mortgagee.

 

Unless consented to in writing by Mortgagee or otherwise permitted under any
other provision of the Loan Documents, Mortgagor shall not:

 

  (v) grant any tenant under any Lease any option, right of first refusal or
other right to purchase all or any portion of the Property under any
circumstances;

 

  (vi) grant any tenant under any Lease any right to prepay rent more than 1
month in advance;

 

- 8 -

--------------------------------------------------------------------------------

  (vii) except upon Mortgagee’s request, execute any assignment of landlord’s
interest in any Lease; or

 

  (viii) collect rent or other sums due under any Lease in advance, other than
to collect rent 1 month in advance of the time when it becomes due.

 

Any such attempted action in violation of the provisions of this Section shall
be null and void.

 

Mortgagor shall (or shall cause Operating Tenant to) deposit with Mortgagee any
sums received by Mortgagor or Operating Tenant in consideration of any
termination, modification or amendment of any Lease or any release or discharge
of any tenant under any Lease from any obligation thereunder and any such sums
received by Mortgagor or Operating Tenant shall be held in trust by Mortgagor or
Operating Tenant for such purpose. Notwithstanding the foregoing, so long as no
Default exists, the portion of any such sum received by Mortgagor or Operating
Tenant with respect to any Lease which is less than $500,000 shall be payable to
Mortgagor or Operating Tenant. All such sums received by Mortgagee with respect
to any Lease shall be deemed “Impounds” (as defined in Section 6.12b) and shall
be deposited by Mortgagee into a pledged account in accordance with Section
6.12b. If no Default exists, Mortgagee shall release such Impounds to Mortgagor
or Operating Tenant from time to time as necessary to pay or reimburse Mortgagor
or Operating Tenant for such tenant improvements, brokerage commissions and
other leasing costs as may be required to re-tenant the affected space;
provided, however, Mortgagee shall have received and approved each of the
following for each tenant for which such costs were incurred; (1) Mortgagor’s or
Operating Tenant’s written request for such release, including the name of the
tenant, the location and net rentable area of the space and a description and
cost breakdown of the tenant improvements or other leasing costs covered by the
request; (2) Mortgagor’s or Operating Tenant’s certification that any tenant
improvements have been completed lien-free and in a workmanlike manner; (3) a
fully executed Lease, or extension or renewal of the current Lease; (4) an
estoppel certificate executed by the tenant including its acknowledgement that
all tenant improvements have been satisfactorily completed; and (5) such other
information with respect to such costs as Mortgagee may require. Following the
re-tenanting of all affected space (including, without limitation, the
completion of all tenant improvements), and provided no Default exists,
Mortgagee shall release any remaining such Impounds relating to the affected
space to Mortgagor or Operating Tenant. Mortgagor or Operating Tenant shall
construct all tenant improvements in a workmanlike manner and in accordance with
all applicable laws, ordinances, rules and regulations.

 

  b. Major Leases. Mortgagor shall, at Mortgagor’s sole cost and expense, give
Mortgagee prompt written notice of any material default by landlord or tenant
under any Major Lease (as defined below). Unless consented to in writing by
Mortgagee or otherwise permitted under any other provision of the Loan
Documents, Mortgagor shall not (and shall not permit Operating Tenant to):

 

- 9 -

--------------------------------------------------------------------------------

  (i) enter into any Major Lease which (aa) is not on fair market terms (which
terms may include free or discounted rent to the extent the market so requires);
(bb) does not contain a provision requiring the tenant to execute and deliver to
the landlord an estoppel certificate in form and substance satisfactory to the
landlord promptly upon the landlord’s request; or (cc) allows the tenant to
assign or sublet the premises without the landlord’s consent;

 

  (ii) reduce any rent or other sums due from the tenant under any Major Lease;

 

  (iii) terminate or materially modify or amend any Major Lease; or

 

  (iv) release or discharge the tenant or any guarantor under any Major Lease
from any material obligation thereunder.

 

Any such attempted action in violation of the provisions of this Section shall
be null and void.

 

“Major Lease” as used herein, shall mean any Lease (other than the Operating
Lease) the income or revenues from which constitutes two percent (2%) or more of
the annual gross revenue or income from the Property. Mortgagor’s obligations
with respect to Major Leases shall be governed by the provisions of Section
3.4(a) as well as by the provisions of this Section.

 

  c. Failure to Deny Request Mortgagee’s failure to deny any written request by
Mortgagor for Mortgagee’s consent under the provisions of Sections 3.4a or 3.4b
within 10 Business Days after Mortgagee’s receipt of such request (and all
documents and information reasonably related thereto) shall be deemed to
constitute Mortgagee’s consent to such request.

 

3.5. ESTOPPEL CERTIFICATES. Within 30 days after request by Mortgagee, Mortgagor
shall deliver (or shall cause delivery) to Mortgagee and to any party designated
by Mortgagee, estoppel certificates relating to the Major Leases executed by
Mortgagor or Operating Tenant and by each of the tenants, in form and substance
reasonably acceptable to Mortgagee; provided, however, if any tenant shall fail
or refuse to so execute and deliver any such estoppel certificate upon request,
Mortgagor shall use reasonable efforts to cause such tenant to execute and
deliver such estoppel certificate but such tenant’s continued failure or refusal
to do so, despite Mortgagor’s reasonable efforts, shall not constitute a default
by Mortgagor under this Section, nor shall Mortgagor be required to default such
Tenant under its Lease or institute legal proceedings against such Tenant if
such Tenant does not provide an estoppel certificate.

 

3.6 RIGHT OF SUBORDINATION. Mortgagee may at any time and from time to time by
specific written instrument intended for the purpose unilaterally subordinate
the lien of this Mortgage to any Lease, without joinder or consent of, or notice
to, Mortgagor, any tenant or any other person. Notice is hereby given to each
tenant under a Lease of such right to subordinate. No subordination referred to
in this Section shall constitute a subordination to any lien, mortgage or other
encumbrance, whenever arising, or improve the right of any junior lienholder.
Nothing herein shall be construed as subordinating this Mortgage to any Lease.

 

- 10 -

--------------------------------------------------------------------------------

ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING

 

4.1. SECURITY INTEREST. Mortgagor hereby grants to the Mortgagee a continuing
security interest in all of the Property in which a security interest may be
granted under the Uniform Commercial Code as such is in effect in the
Commonwealth of Massachusetts (“UCC”), including without limitation, all of the
following (“Collateral”):

 

All Fixtures, Equipment, Personal Property, goods, building and other materials,
supplies, work in process, equipment, machinery, fixtures, furniture,
furnishings, signs and other personal property, wherever situated, which are or
are to be incorporated into, used in connection with or appropriated for use on
the Property; all rents, issues, deposits and profits of the Property (to the
extent, if any, they are not subject to the Absolute Assignment of Rents and
Leases); all inventory, accounts, cash receipts, deposit accounts, impounds,
accounts receivable, contract rights, general intangibles, software, chattel
paper, instruments, documents, promissory notes, drafts, letters of credit,
letter of credit rights, supporting obligations, insurance policies, insurance
and condemnation awards and proceeds, any other rights to the payment of money,
trade names, trademarks and service marks arising from or related to the
Property or any business now or hereafter conducted thereon by Mortgagor; all
permits, consents, approvals, licenses, authorizations and other rights granted
by, given by or obtained from, any governmental entity with respect to the
Property; all deposits or other security now or hereafter made with or given to
utility companies by Mortgagor with respect to the Property; all advance
payments of insurance premiums made by Mortgagor with respect to the Property;
all plans, drawings and specifications relating to the Property; all loan funds
held by Mortgagee, whether or not disbursed; all funds deposited with Mortgagee
pursuant to any Loan Document, including, all reserves, deferred payments,
deposits, accounts, refunds, cost savings and payments of any kind related to
the Property or any portion thereof, including, without limitation, all
“Impounds” as defined herein; and all rights of Mortgagor under the Ground Lease
and as lessees under all personal property leases with respect to the Property;
together with all replacements and proceeds of, and additions and accessions to,
any of the foregoing, and all books, records and files relating to any of the
foregoing.

 

As to all of the above-described personal property which is or which hereafter
becomes a “fixture” under applicable law, this Mortgage constitutes a fixture
filing under the UCC, as amended or recodified from time to time (“UCC”).

 

4.2.

COVENANTS. Mortgagor agrees: (a) to execute and deliver such documents as
Mortgagee deems reasonably necessary to create, perfect and continue the
security interests contemplated hereby; (b) not to change its name, and, as
applicable, its chief executive offices, its principal residence or the
jurisdiction in which it is organized without giving Mortgagee at least 30 days’
prior written notice thereof; and (c) to cooperate with Mortgagee in perfecting
all security interests granted herein and in

 

- 11 -

--------------------------------------------------------------------------------

 

obtaining such agreements from third parties as Mortgagee deems necessary,
proper or convenient in connection with the preservation, perfection or
enforcement of any of Mortgagee’s rights hereunder.

 

4.3. RIGHTS OF MORTGAGEE. In addition to Mortgagee’s rights as a “Secured Party”
under the UCC, Mortgagee may, but shall not be obligated to, at any time without
notice and at the expense of Mortgagor: (a) give notice to any person of
Mortgagee’s rights hereunder and enforce such rights at law or in equity; (b)
insure, protect, defend and preserve the Collateral or any rights or interests
of Mortgagee therein; and (c) inspect the Collateral; Notwithstanding the above,
in no event shall Mortgagee be deemed to have accepted any property other than
cash in satisfaction of any obligation of Mortgagor to Mortgagee unless
Mortgagee shall make an express written election of said remedy under the UCC or
other applicable law.

 

4.4. RIGHTS OF MORTGAGEE UPON DEFAULT. Upon the occurrence of a Default, then in
addition to all of Mortgagee’s rights as a “Secured Party” under the UCC or
otherwise at law:

 

  a. Disposition of Collateral. Mortgagee may: (i) upon written notice, require
Mortgagor to assemble any or all of the Collateral and make it available to
Mortgagee at a place designated by Mortgagee; (ii) without prior notice, enter
upon the Property or other place where the Collateral may be located and take
possession of, collect, sell, lease, license and otherwise dispose of the
Collateral, and store the same at locations acceptable to Mortgagee at
Mortgagor’s expense; or (iii) sell, assign and deliver at any place or in any
lawful manner and bid and become purchaser at any such sales; and

 

  b. Other Rights. Mortgagee may, for the account of Mortgagor and at
Mortgagor’s expense: (i) operate, use, consume, sell, lease, license or
otherwise dispose of the Collateral as Mortgagee deems appropriate for the
purpose of performing any or all of the Secured Obligations; (ii) enter into any
agreement, compromise or settlement including insurance claims, which Mortgagee
may deem desirable or proper with respect to the Collateral; and (iii) endorse
and deliver evidences of title for, and receive, enforce and collect by legal
action or otherwise, all indebtedness and obligations now or hereafter owing to
Mortgagor in connection with or on account of the Collateral.

 

Mortgagor acknowledges and agrees that a disposition of the Collateral in
accordance with Mortgagee’s rights and remedies as heretofore provided is a
disposition thereof in a commercially reasonable manner and that 10 days’ prior
notice of such disposition is commercially reasonable notice. Mortgagee shall
have no obligation to process or prepare the Collateral for sale or other
disposition. In disposing of the Collateral, Mortgagee may disclaim all
warranties of title, possession, quiet enjoyment and the like. Any proceeds of
any sale or other disposition of the Collateral may be applied by Mortgagee
first to the reasonable expenses incurred by Mortgagee in connection therewith,
including, without limitations, reasonable attorneys’ fees and disbursements,
and then to the payment of the Secured Obligations, in such order of application
as Mortgagee may from time to time elect.

 

- 12 -

--------------------------------------------------------------------------------

4.5. POWER OF ATTORNEY. From and after a Default, Mortgagor will promptly cause
this Mortgage and any required financing statements to be recorded and
re-recorded, registered and re-registered, filed and re-filed at such times and
places as may be required by law or deemed advisable by Mortgagee to create,
preserve or protect the priority of the security interest created hereby; and
that it will from time to time do and cause to be done all such things as may be
required by Mortgagee or required by law, including all things which may from
time to time be necessary under the UCC fully to create, preserve and protect
the priority of the security interest created hereby. Mortgagor hereby
irrevocably appoints Mortgagee as Mortgagor’s attorney-in-fact (such agency
being coupled with an interest), and as such attorney-in-fact, Mortgagee may,
without the obligation to do so, in Mortgagee’s name or in the name of
Mortgagor, prepare, execute, file and record financing statements, continuation
statements, applications for registration and like papers necessary to create,
perfect or preserve any of Mortgagee’s security interests and rights in or to
the Collateral, and upon a Default, take any other action required of Mortgagor;
provided, however, that Mortgagee as such attorney-in-fact shall be accountable
only for such funds as are actually received by Mortgagee.

 

ARTICLE 5. REPRESENTATIONS AND WARRANTIES

 

5.1. REPRESENTATIONS AND WARRANTIES. Mortgagor and Operating Tenant represent
and warrant to Mortgagee that, to Mortgagor’s and Operating Tenant’s current
actual knowledge after reasonable investigation and inquiry, the following
statements are true and correct as of the Effective Date:

 

  a. Legal Status. Mortgagor and Operating Tenant are duly organized and
existing and in good standing under the laws of the state(s) in which Mortgagor
and Operating Tenant are organized. Mortgagor and Operating Tenant are qualified
or licensed to do business in all jurisdictions in which such qualification or
licensing is required.

 

  b. Permits. Mortgagor and Operating Tenant possess all permits, franchises and
licenses and all rights to all trademarks, trade names, patents and fictitious
names, if any, certificates or other approvals necessary to enable Mortgagor and
Operating Tenant to conduct the business(es) (including, without limitation, the
operation of a hotel) in which Mortgagor and Operating Tenant are now engaged in
compliance with applicable law.

 

  c. Authorization and Validity. The execution and delivery of the Loan
Documents have been duly authorized and the Loan Documents constitute valid and
binding obligations of Mortgagor, Operating Tenant, or the party which executed
the same, enforceable in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, moratorium or other laws
affecting the enforcement of creditors’ rights, or by the application of rules
of equity .

 

- 13 -

--------------------------------------------------------------------------------

  d. Violations. The execution, delivery and performance by Mortgagor and
Operating Tenant of each of the Loan Documents do not violate any provision of
any law or regulation, or result in any breach or default under any contract,
obligation, indenture or other instrument to which Mortgagor or Operating Tenant
is a party or by which Mortgagor or Operating Tenant is bound (including,
without limitation, the Management Agreement (as hereinafter defined)).

 

  e. Litigation. There are no pending or threatened actions, claims,
investigations, suits or proceedings before any governmental authority, court or
administrative agency which may adversely affect the financial condition or
operations of Mortgagor or Operating Tenant other than those previously
disclosed in writing by Mortgagor or Operating Tenant to Mortgagee.

 

  f. Financial Statements. The financial statements of Mortgagor and Mortgagor,
of each general partner (if Mortgagor or Operating Tenant is a partnership), of
each member (if Mortgagor or Operating Tenant is a limited liability company)
and of each guarantor, if any, previously delivered by Mortgagor or Operating
Tenant to Mortgagee: (i) are materially complete and correct; (ii) present
fairly the financial condition of such party; and (iii) have been prepared in
accordance with the same accounting standard used by Mortgagor or Operating
Tenant to prepare the financial statements delivered to and approved by
Mortgagee in connection with the making of the Loan, or other accounting
standards approved by Mortgagee. Since the date of such financial statements,
there has been no material adverse change in such financial condition, nor have
any assets or properties reflected on such financial statements been sold,
transferred, assigned, mortgaged, pledged or encumbered except as previously
disclosed in writing by Mortgagor or Operating Tenant to Mortgagee and approved
in writing by Mortgagee.

 

  g. Reports. All reports, documents, instruments and information delivered to
Mortgagee by Mortgagor or its agents (or that Mortgagee has provided to
Mortgagor to review) in connection with the Loan: (i) are correct and
sufficiently complete to give Mortgagee accurate knowledge of their subject
matter; and (ii) do not contain any misrepresentation of a material fact or
omission of a material fact which omission makes the provided information
misleading.

 

  h. Income Taxes. There are no pending assessments or adjustments of
Mortgagor’s or Operating Tenant’s income tax payable with respect to any year.

 

  i. Subordination. There is no agreement or instrument to which Mortgagor is a
party or by which Mortgagor is bound that would require the subordination in
right of payment of any of Mortgagor’s obligations under the Note to an
obligation owed to another party.

 

  j.

Title/Ground Lease. Mortgagor lawfully holds and possesses the entire
unencumbered leasehold estate in the Land created by the Ground Lease, and has
good and marketable title to all of the other Property, without limitation the
Equipment, Fixtures and the Personnel Property, and the right to encumber same

 

- 14 -

--------------------------------------------------------------------------------

 

and grant and convey this Mortgage. A true, correct, and complete copy of the
Ground Lease has been delivered to Mortgagee by (or on behalf of) Mortgagor.
This Mortgage is a first and prior mortgage on the Property prior and superior
to all other liens, mortgages and encumbrances on the Property except: (i) liens
for real estate taxes and assessments not yet due and payable; (ii) senior
exceptions previously approved by Mortgagee and shown in the title insurance
policy insuring the priority of this Mortgage; and (iii) other matters, if any,
previously disclosed to Mortgagee by Mortgagor in a writing specifically
referring to this representation and warranty ((i), (ii) and (iii) are
collectively referred to herein as the “Permitted Encumbrances”). (A) The Ground
Lease is in full force and effect and has not been modified or amended in any
manner whatsoever. (B) There are no material defaults by Mortgagor or, to the
best of Mortgagor’s knowledge, Ground Lessor (defined below) under the Ground
Lease, and to the best of Mortgagor’s knowledge, no event has occurred, which
but for the passage of time, or notice, or both, would constitute a default
under the Ground Lease. (C) All rents, additional rents and other sums due and
payable under the Ground Lease have been paid in full. (D) Neither Mortgagor nor
to the best of Mortgagor’s knowledge, Ground Lessor (defined below) has
commenced any action or given or received any notice for the purpose of
terminating the Ground Lease. (E) Except for the Ground Lease, there are no
agreements between Mortgagor and Ground Lessor in any way concerning the subject
matter of the Ground Lease or the occupancy or use of the Property. (F) The
interest of Mortgagor under the Ground Lease has not been assigned. No portion
of the Property has been sublet except as set forth in Schedule 5.1(j) attached.
(G) Mortgagor shall forever warrant, defend and preserve such title and the
validity and priority of the lien of this Mortgage to Mortgagee against the
claims of all persons claiming by, through or under it. (H) A memorandum of the
Ground Lease has been duly recorded. The Ground Lease permits the interest of
Mortgagor to be encumbered by a mortgage. There have not been amendments or
modifications to the terms of the Ground Lease since its recordation, with the
exception of written instruments which have been recorded. If Ground Lessor
(defined below) is given notice of this Mortgage, the Ground Lease may not be
canceled, terminated, surrendered or amended (including, without limitation, no
cancellation, termination or surrender upon the occurrence of a Casualty or
Condemnation) by Mortgagor without the prior written consent of Mortgagee. (I)
Mortgagor’s interest in the Ground Lease is assignable to Mortgagee upon notice
to, but without the consent of, the ground lessor (or, if any such consent is
required, it has been obtained prior to the Closing Date). The Ground Lease is
further assignable by Mortgagee, its successors and assigns without the consent
of the ground lessor. (J) If Ground Lessor (defined below) is given notice of
this Mortgage, the Ground Lease requires the ground lessor to give notice of any
default by Mortgagor to Mortgagee. If Ground Lessor (defined below) is given
notice of this Mortgage, the Ground Lease, or estoppel letters received by
Mortgagee from the ground lessor, further provides that notice of termination
given under the Ground Lease is not effective against Mortgagee unless a copy of
the notice has been delivered to Lender in the manner described in the Ground
Lease. (K) If Ground Lessor (defined below) is given notice of this

 

- 15 -

--------------------------------------------------------------------------------

Mortgage, Mortgagee is permitted the opportunity (including, where necessary,
sufficient time to gain possession of the interest of Mortgagor under the Ground
Lease) to cure any default under the Ground Lease, which is curable after the
receipt of notice of any of the default before the Ground Lessor thereunder may
terminate the Ground Lease. (L) The Ground Lease has a term, which expires on
December 13, 2077. (M) The Ground Lease requires the Ground Lessor to enter into
a new lease with Mortgagee upon termination of the Ground Lease for any reason,
including rejection of the Ground Lease in a bankruptcy proceeding. (N) Under
the terms of the Ground Lease and the Mortgage, taken together, any related
insurance and condemnation proceeds will be applied either to the repair or
restoration of all or part of the Property, with Mortgagee having the right to
hold and disburse the proceeds as the repair or restoration progresses, or to
the payment of the outstanding principal balance of the Loan together with any
accrued interest thereon other than the condemnation proceeds that are paid to
the Ground Lessor pursuant to the terms of the Ground Lease. (O) The Ground
Lease does not impose any restrictions on subleasing. (P) There is no mortgage
encumbering the fee estate of The Massachusetts Turnpike Authority (“Ground
Lessor”) in the Land. (Q) Urban Investment and Development Co. (“Urban”) has no
rights or to in the Ground Lease or the Property, including its Reconstitution
Rights (hereinafter defined) under the Notice of Direct Lease [to be defined in
definition of Ground Lease]. As used herein, “Reconstitution Rights” means any
right of Urban to reconstitute the Master Lease [to be defined in definition of
Ground Lease] as a lease between Landlord and Urban as such Master Lease affects
the Property or to reconstitute the Ground Lease as a sublease between Urban and
Mortgagor. (R) The Master Lease does not relate to or encumber the Property. (S)
The Ground Lease is a direct lease between Ground Lessor and Mortgagor, and
Urban has no rights thereunder. (T) All rent payable pursuant to Section 3.1 of
the Ground Lease has been paid through the end of the term of the Ground Lease.
(U) Ground Lessor cannot terminate the Ground Lease or evict Mortgagor from the
Property. The only remedy Ground Lessor has under the Ground Lease to remedy
Mortgagor’s breach of the Ground Lease is to pursue legal action through the
courts for specific performance or damage.

 

  k. Mechanics’ Liens. There are no mechanics’ or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to any such liens) affecting the Property which are or
may be prior to or equal to the conveyance granted hereunder.

 

  l. Encroachments. Except as shown in the survey, if any, previously delivered
to Mortgagee, none of the Improvements, the buildings, or other improvements
which were included for the purpose of determining the appraised value of the
Property lies outside of the boundaries or building restriction lines of the
Property and no buildings or other improvements located on adjoining properties
encroach upon the Property.

 

  m.

Leases. All existing Leases (including the Operating Lease) are in full force
and effect and are enforceable in accordance with their respective terms. No
material

 

- 16 -

--------------------------------------------------------------------------------

 

breach or default by any party, or event which would constitute a material
breach or default by any party after notice or the passage of time, or both,
exists under any existing Lease. None of the landlord’s interests under any of
the Leases, including, but not limited to, rents, additional rents, charges,
issues or profits, has been transferred or assigned. No rent or other payment
under any existing Lease has been paid by any tenant for more than one (1) month
in advance. All Leases (including the Operating Lease) are subject and
subordinate to the terms and lien of the Mortgage and are not entitled to the
benefit of any non-disturbance except as set forth on Schedule 5.1(m) attached.

 

  n. Collateral. Mortgagor has good title to the existing Collateral, free and
clear of all liens and encumbrances except those, if any, previously disclosed
to Mortgagee by Mortgagor in writing specifically referring to this
representation and warranty. Mortgagor’s chief executive office (or principal
residence, if applicable) is located at the address shown on page one of this
Mortgage. Mortgagor is an organization organized solely under the laws of the
State of Delaware. All organizational documents of Mortgagor delivered to
Mortgagee are complete and accurate in every respect. Mortgagor’s legal name is
exactly as shown on page one of this Mortgage. Operating Tenant is an
organization organized solely under the laws of the State of Delaware. All
organizational documents of Operating Tenant delivered to Mortgagee are complete
and accurate in every respect. Operating Tenant’s legal name is exactly as shown
on the applicable signature page of this Mortgage.

 

  o. Condition of Property. Except as shown in the property condition survey or
other engineering reports, if any, previously delivered to or obtained by
Mortgagee, the Property is in good condition and repair and is free from any
damage that would materially and adversely affect the value of the Property as
security for the Loan or the intended use of the Property.

 

  p. Hazardous Materials. Except as shown in the environmental assessment
report(s), if any, previously delivered to or obtained by Mortgagee, the
Property is not and has not been a site for the use, generation, manufacture,
storage, treatment, release, threatened release, discharge, disposal,
transportation or presence of Hazardous Materials (as hereinafter defined)
except as otherwise previously disclosed in writing by Mortgagor or Operating
Tenant to Mortgagee.

 

  q. Hazardous Materials Laws. The Property complies with all Hazardous
Materials Laws (as hereinafter defined).

 

  r. Hazardous Materials Claims. There are no pending or threatened Hazardous
Materials Claims (as hereinafter defined).

 

  s. Wetlands. No part of the Property consists of or is classified as wetlands,
tidelands or swamp and overflow lands.

 

- 17 -

--------------------------------------------------------------------------------

  t. Compliance With Laws. All federal, state and local laws, rules and
regulations applicable to the Property, including, without limitation, all
zoning and building requirements and all requirements of the Americans With
Disabilities Act of 1990, as amended from time to time (42 U. S. C. Section
12101 et seq.) have been satisfied or complied with in all material respects.
Mortgagor is in possession of all certificates of occupancy and all other
licenses, permits and other authorizations required by applicable law for the
existing use of the Property. All such certificates of occupancy and other
licenses, permits and authorizations are valid and in full force and effect.

 

  u. Property Taxes and Other Liabilities. All taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, and ground rents, if
any, which previously became due and owing in respect of the Property have been
paid.

 

  v. Condemnation. There is no proceeding pending or threatened for the total or
partial condemnation of the Property.

 

  w. Homestead. There is no homestead or other exemption available to Mortgagor
which would materially interfere with Mortgagee’s exercise of its right to the
STATUTORY POWER OF SALE granted hereunder.

 

  x. Solvency. None of the transactions contemplated by the Loan will be or have
been made with an actual intent to hinder, delay or defraud any present or
future creditors of Mortgagor, and Mortgagor, on the Effective Date, will have
received fair and reasonably equivalent value in good faith for the grant of the
liens or security interests effected by the Loan Documents. On the Effective
Date, Mortgagor and Operating Tenant will be solvent and will not be rendered
insolvent by the transactions contemplated by the Loan Documents. Mortgagor is
able to pay its debts as they become due.

 

  y. Separate Tax Parcel(s). The Property is assessed for real estate tax
purposes as one or more wholly independent tax parcels, separate from any other
real property, and no other real property is assessed and taxed together with
the Property or any portion thereof.

 

  z. Utilities; Water; Sewer. The Property is served by all utilities required
for the current or contemplated use thereof. All utility service is provided by
public utilities and the Property has accepted or is equipped to accept such
utility service. The Property is served by public water and sewer systems.

 

  aa.

ERISA Matters. Neither Mortgagor nor Operating Tenant is not an employee benefit
plan as defined in Section 3.(3) of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”), which is subject to Title I of ERISA, nor a plan
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (each of the foregoing hereinafter referred to collectively as “Plan”).
Neither Mortgagor’s nor Operating Tenant’s assets do not constitute

 

- 18 -

--------------------------------------------------------------------------------

 

“plan assets” of any plan within the meaning of Department of Labor Regulation
Section 2510.3-101. Mortgagor will not transfer or convey the Property to a Plan
or to a person or entity whose assets constitute such “plan assets,” and neither
Mortgagor nor Operating Tenant will be reconstituted as a Plan or as an entity
whose assets constitute “plan assets.” No Lease is with a Plan or an entity
whose assets constitute such “plan assets,” and neither Mortgagor nor Operating
Tenant will enter into any Lease with a Plan or an entity whose assets
constitute such “plan assets.” With respect to the Loan, Mortgagor and Operating
Tenant is acting on their own behalf and not on account of or for the benefit of
any Plan.

 

  bb. Management Agreement. (1) The Management Agreement is in full force and
effect, and all fees and other sums due thereunder have been paid in-full to
date, and neither Operating Tenant nor to the best of Mortgagor’s knowledge,
Manager is in default thereunder; (2) All Rents derived from the Hotel are
deposited into a separate, segregated account with Bank of America, N. A.,
located in Boston, Massachusetts. The name on the account is “Westin Management
Company East, as manager on behalf of LHO Backstreets, L. L. C., and LHO
Backstreets Lessee, L. L. C., owner and operating tenant, respectively, of the
Westin Copley Hotel.”

 

  cc. Franchise Agreement. Mortgagor acknowledges that there is no franchise
agreement currently in place at the Property. In the event that Mortgagor or
Operating Tenant shall elect to enter into a franchise agreement in the future,
Mortgagor agrees that it shall be a Qualified Franchise Agreement. Mortgagor
represents and warrants that there is no property improvement plan currently in
place at the Property.

 

“Qualified Franchisor” shall mean a reputable and experienced franchisor (which
may be an Affiliate of Mortgagor) satisfying the Prudent Lender Standard and
possessing experience in flagging hotel properties similar in scope, use and
value as the Property, provided, that Mortgagor shall have obtained (i) a Rating
Agency Confirmation with respect to such Person and (ii) if such Person is an
Affiliate of Mortgagor, a New Non-Consolidation Opinion with respect to
Mortgagor and such Person.

 

“Qualified Franchise Agreement” shall mean, collectively, a franchise, trademark
and license agreement with a Qualified Franchisor, which franchise, trademark
and license agreement shall be in customary form and substance and satisfy the
Prudent Lender Standard; provided, Lender, at its option, may require that
Mortgagor shall have obtained a Rating Agency Confirmation with respect to the
same; and (b) a franchisor comfort letter substantially in the form then used by
Lender (or of such other form and substance reasonably acceptable to Lender),
executed and delivered to Lender by Mortgagor and such Qualified Franchisor, at
Mortgagor’s expense.

 

“Prudent Lender Standard” shall, with respect to any matter, be deemed to have
been met if the matter in question (i) prior to a Securitization, is reasonably
acceptable to Lender and (ii) after a Securitization, would be acceptable to a
prudent lender of securitized commercial mortgage loans of a similar type and
size as the Loan.

 

- 19 -

--------------------------------------------------------------------------------

  dd. Personal Property/FF&E. All Personal Property used in connection with the
operation of the Property is owned by Mortgagor except the computer systems
router, which is owned by Manager.

 

  ee. REA. The REA is in full force and effect, and neither Borrower nor, to
Borrower’s knowledge, any other party to the REA, is in default thereunder, and
to the best of Borrower’ knowledge there are no conditions which, with the
passage of time or the giving of notice, or both, would constitute a default
thereunder. Except as set forth on Schedule V, the REA has not been modified,
amended, or supplemented.

 

“REA” shall mean, collectively, as the same may be amended, restated,
supplemented, or otherwise modified from time to time, those certain reciprocal
easement agreements and other agreements more specifically described on Exhibit
C attached hereto and made a part hereof.

 

  ff. Operating Lease/Assignment of Leases. Mortgagor, as landlord, under the
Operating Lease, hereby waives any right to a security interest in and to the
Rents and any Personal Property owned by Operating Tenant as set forth in
Section 7.2 of the Operating Lease. Mortgagor, as landlord under the Operating
Lease hereby consents to the execution and delivery of that certain assignment
of leases, rents, and contracts dated the date hereof by Operating Tenant.

 

5.2 REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING STATUS (LEVEL V SPE).

 

Mortgagor and Operating Tenant hereby represent, warrant, and covenant to
Mortgagee that with respect to both Mortgagor and Operating Tenant:

 

  (a) each such entity was organized with respect to Mortgage solely for the
purpose of owning the Property, and with respect to Operating Tenant, solely for
the purpose of leasing and operating the Property;

 

  (b) each such entity has not and will not engage in any business unrelated to,
with respect to Mortgagor, the ownership of the Property and, with respect to
Operating Tenant, its interest in the Operating Lease (and personal property
incidental to the leasing and operation of the Property;

 

  (c) such entity has not and will not have any assets other than with respect
to Mortgagor the Property (and personal property incidental to the ownership and
operation of the Property) and, with respect to Operating Tenant, the leasing
and operation of the Property;

 

  (d)

each such entity has not and will not engage in, seek or consent to any
dissolution, winding up, liquidation, consolidation, merger, asset sale,
transfer of partnership or

 

- 20 -

--------------------------------------------------------------------------------

 

membership interest, or amendment of its articles of incorporation, articles of
organization, certificate of formation, operating agreement or partnership
agreement, as applicable;

 

  (e) if such entity is a partnership, all of its general partners are
corporations that satisfy the requirements set forth in this Section 5.2;

 

  (f) if such entity is a limited liability company, it has at least one
managing member that is a corporation that satisfies the requirements set forth
in this Section 5.2;

 

  (g) such entity, without the unanimous consent of all of its general partners,
directors or members, as applicable, shall not file or consent to the filing of
any bankruptcy or insolvency petition or otherwise institute insolvency
proceedings with respect to itself or any other entity in which it has a direct
or indirect legal or beneficial ownership interest;

 

  (h) such entity has no indebtedness (and will have no indebtedness) other than
(i) the Loan (to the extent it is liable under the terms of the Loan Documents);
and (ii) unsecured trade debt not to exceed 3% of the loan amount in the
aggregate with respect to Mortgagor and Operating Tenant or $10,000 in the
aggregate with respect to each such other entity required to comply with this
Section 5.2, which is not evidenced by a note and is incurred in the ordinary
course of its business in connection with owning, operating and maintaining the
Property (or its interest in Mortgagor, as applicable) and is paid within 60
days from the date incurred;

 

  (i) such entity has not and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;

 

  (j) such entity has maintained and will maintain its accounts, books and
records separate from any other person or entity, or if part of a consolidated
group, is shown as a separate member of such group;

 

  (k) such entity has maintained and will maintain its books, records,
resolutions and agreements as official records;

 

  (l) such entity (i) has not and will not commingle its funds or assets with
those of any other entity; and (ii) has held and will hold its assets in its own
name;

 

  (m) such entity has conducted and will conduct its business in its own name;

 

  (n) such entity has maintained and will maintain its accounting records and
other entity documents separate from any other person or entity, or if part of a
consolidated group, is shown as a separate member of such group;

 

  (o) such entity has prepared and will prepare separate tax returns and
financial statements, or if part of a consolidated group, is shown as a separate
member of such group;

 

- 21 -

--------------------------------------------------------------------------------

  (p) such entity has paid and will pay its own liabilities and expenses out of
its own funds and assets;

 

  (q) such entity has held and will hold regular meetings, as appropriate, to
conducts its business and has observed and will observe all corporate,
partnership or limited liability company formalities and record keeping, as
applicable;

 

  (r) such entity has not and will not assume or guarantee or become obligated
for the debts of any other entity or hold out its credit as being available to
satisfy the obligations of any other entity;

 

  (s) such entity has not and will not acquire obligations or securities of its
partners, members or shareholders, as applicable;

 

  (t) such entity has allocated and will allocate fairly and reasonably the
costs associated with common employees and any overhead for shared office space
and each such entity has used and will use separate stationery, invoices and
checks;

 

  (u) such entity has not and will not pledge its assets for the benefit of any
other person or entity;

 

  (v) such entity has held and identified itself and will hold itself out and
identify itself as a separate and distinct entity under its own name and not as
a division or part of any other person or entity;

 

  (w) such entity has not made and will not make loans to any person or entity;

 

  (x) such entity has not and will not identify its partners, members or
shareholders as applicable, or any affiliates of any of the foregoing, as a
division or part of it;

 

  (y) such entity has not entered into and will not enter into or be a party to,
any transaction with its partners, members, shareholders, as applicable, or any
affiliates of any of the foregoing, except in the ordinary course of its
business pursuant to written agreements and on terms which are intrinsically
fair and are no less favorable to it than would be obtained in a comparable
arm’s-length transaction with an unrelated third party;

 

  (z) if such entity is a corporation, the directors of such entity shall
consider the interests of the creditors of such entity in connection with all
corporate action;

 

  (aa) such entity has paid and will pay the salaries of its own employees and
has maintained and will maintain a sufficient number of employees in light of
its contemplated business operations;

 

  (bb) such entity has maintained and will maintain adequate capital in light of
its contemplated business operations;

 

- 22 -

--------------------------------------------------------------------------------

  (cc) if such entity is a partnership with more than one general partner, its
partnership agreement requires the remaining partners to continue the
partnership as long as one solvent general partner exists;

 

  (dd) if such entity is a limited liability company, its operating agreement,
if any such entity is a partnership, its partnership agreement, and if any such
entity is a corporation, to the full extent permitted by applicable law, its
articles of incorporation, contain the provisions set forth in this Section 5.2
and any such entity shall conduct its business and operations in strict
compliance with the terms contained therein;

 

  (ee) such entity will, as a condition to the closing of the Loan, deliver to
Mortgagee a nonconsolidation opinion in form and substance acceptable to
Mortgagee;

 

  (ff) if any such entity is a corporation or a single-member Delaware limited
liability company (a “Delaware LLC”), it has maintained and will continue to
maintain at least one Independent Director (or Independent Manager, as
applicable (each as defined below); and

 

  (gg) if any such entity is a corporation, it has not caused or allowed and
will not cause or allow the board of directors of such entity to take any action
requiring the unanimous affirmative vote of 100% of the members of the board of
directors unless an Independent Director shall have participated in such vote;
and

 

  (hh)

In the event Mortgagor or Operating Tenant is a Delaware LLC, the limited
liability company agreement of Mortgagor or Operating Tenant (as applicable)
(the “LLC Agreement”) shall provide that (i) upon the occurrence of any event
that causes the sole member of Mortgagor or Operating Tenant (as applicable)
(“Member”) to cease to be the member of Mortgagor or Operating Tenant (as
applicable) (other than (A) upon an assignment by Member of all of its limited
liability company interest in Mortgagor or Operating Tenant (as applicable) and
the admission of the transferee, or (B) the resignation of Member and the
admission of an additional member, in either case in accordance with the terms
of the Loan Documents and the LLC Agreement), the person executing the LLC
Agreement as a “Special Member” (as such term is defined in the LLC Agreement)
(“Special Member”) shall, without any action of any other person or entity and
simultaneously with the Member ceasing to be the member of Mortgagor or
Operating Tenant (as applicable), automatically be admitted to Mortgagor or
Operating Tenant (as applicable) and shall continue Mortgagor or Operating
Tenant (as applicable) without dissolution and (ii) Special Member may not
resign from Mortgagor or Operating Tenant (as applicable) or transfer its rights
as Special Member unless a successor Special Member has been admitted to
Mortgagor or Operating Tenant (as applicable) as Special Member in accordance
with requirements of Delaware law. The LLC Agreement shall further provide that
(i) Special Member shall automatically cease to be a member of Mortgagor or
Operating Tenant (as applicable) upon the admission to Mortgagor or Operating
Tenant (as applicable) of a substitute Member, (ii) Special Member shall be a
member of Mortgagor or Operating Tenant (as applicable) that has no interest in
the profits, losses and capital of Mortgagor or Operating Tenant (as applicable)
and has no right

 

- 23 -

--------------------------------------------------------------------------------

 

to receive any distributions of Mortgagor’s or Operating Tenant’s (as
applicable) assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the “Act”), Special Member shall not be required to make
any capital contributions to Mortgagor or Operating Tenant (as applicable) and
shall not receive a limited liability company interest in Mortgagor or Operating
Tenant (as applicable), (iv) Special Member, in its capacity as Special Member,
may not bind Mortgagor or Operating Tenant (as applicable) and (v) except as
required by any mandatory provision of the Act, Special Member, in its capacity
as Special Member, shall have no right to vote on, approve or otherwise consent
to any action by, or matter relating to, Mortgagor or Operating Tenant (as
applicable), including, without limitation, the merger, consolidation or
conversion of Mortgagor or Operating Tenant (as applicable). In order to
implement the admission to Mortgagor or Operating Tenant (as applicable) of
Special Member, Special Member shall execute a counterpart to the LLC Agreement.
Prior to its admission to Mortgagor or Operating Tenant (as applicable) as
Special Member, Special Member shall not be a member of Mortgagor or Operating
Tenant (as applicable).

 

Upon the occurrence of any event that causes the Member to cease to be a member
of Mortgagor or Operating Tenant (as applicable), to the fullest extent
permitted by law, the personal representative of Member shall, within ninety
(90) days after the occurrence of the event that terminated the continued
membership of Member in Mortgagor or Operating Tenant (as applicable), agree in
writing (i) to continue Mortgagor or Operating Tenant (as applicable) and (ii)
to the admission of the personal representative or its nominee or designee, as
the case may be, as a substitute member of Mortgagor or Operating Tenant (as
applicable), effective as of the occurrence of the event that terminated the
continued membership of Member of Mortgagor or Operating Tenant (as applicable)
in Mortgagor or Operating Tenant (as applicable). Any action initiated by or
brought against Member or Special Member under any Creditors Rights Laws
(defined below) shall not cause Member or Special Member to cease to be a member
of Mortgagor or Operating Tenant (as applicable) and upon the occurrence of such
an event, the business of Mortgagor or Operating Tenant (as applicable) shall
continue without dissolution. The LLC Agreement shall provide that each of
Member and Special Member waives any right it might have to agree in writing to
dissolve Mortgagor or Operating Tenant (as applicable) upon the occurrence of
any action initiated by or brought against Member or Special Member under any
Creditors Rights Laws, or the occurrence of an event that causes Member or
Special Member to cease to be a member of Mortgagor or Operating Tenant (as
applicable).

 

As used herein, the terms “Independent Director” and “Independent Manager” shall
each mean an individual who, except in his or her capacity as an Independent
Director or Independent Manager of the corporation or Delaware LLC, as
applicable, is not, and has not been during the five (5) years immediately
before such individual’s appointment as an Independent Director or Independent
Manager, as applicable: (i) a stockholder, director, partner, officer or
employee of the corporation or the Delaware LLC, as applicable, or their
Affiliates ( as defined below); (ii) affiliated with a customer or supplier of
the corporation or the Delaware LLC, as applicable, or their Affiliates (other
than in connection with supplying ancillary corporate support); or (iii) a
spouse, parent, sibling, child or other family relative of any person described
by (i) or (ii) above. As used herein, the term

 

- 24 -

--------------------------------------------------------------------------------

“Affiliate” shall mean any person or entity other than the corporation or the
Delaware LLC, as applicable, which (iv) owns beneficially, directly or
indirectly, any outstanding shares of the corporation’s stock or the Delaware
LLC’s membership interests, as applicable, or (v) controls, is controlled by or
is under common control with the corporation or the Delaware LLC, as applicable.
The term “control” shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person or entity, whether through ownership of voting securities, by contract or
otherwise.

 

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

 

5.3 HOTEL OPERATION REPRESENTATIONS, WARRANTIES AND COVENANTS.

 

  a.

Management Agreement. The Improvements are operated under the terms and
conditions of that certain Management Agreement dated October 30, 1980, between
Operating Tenant (successor-in-interest to Westban Hotel Venture) and Westin
Management Company East (successor-in-interest to Westin Hotel Company)
(“Manager”) (together with any assignments, modifications, renewals or
replacements thereof, the “Management Agreement”), which Management Agreement
has been approved by Mortgagee. Mortgagor shall or shall cause and Operating
Tenant shall (i) pay all sums required to be paid by Operating Tenant under the
Management Agreement; (ii) diligently perform, observe and enforce all of the
terms, covenants and conditions of the Management Agreement on the part of
Operating Tenant to be performed, observed and enforced to the end that all
things shall be done which are necessary to keep unimpaired the rights of
Operating Tenant under the Management Agreement, and (iii) promptly notify
Mortgagee of the giving of any notice to Operating Tenant of any default by
Operating Tenant in the performance or observance of any of the terms, covenants
or conditions of the Management Agreement on the part of Operating Tenant to be
performed and observed and deliver to Mortgagee a true copy of each such notice.
Operating Tenant hereby assigns to Mortgagee as further security for the payment
of the Secured Obligations and for the performance, and observance of the terms,
covenants and conditions of this Mortgage, all the rights, privileges and
prerogatives of Operating Tenant to surrender the Management Agreement or to
terminate, cancel, modify, change, supplement, alter or amend the Management
Agreement in any respect, and any such surrender of the Management Agreement or
termination, cancellation, modification, change, supplement, alteration or
amendment of the Management Agreement without the prior consent of Mortgagee
shall be void and of no force and effect. If Operating Tenant shall default in
the performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Operating Tenant to be performed or
observed, then, without limiting the generality of the other provisions of this
Mortgage, and without waiving or releasing Mortgagor or

 

- 25 -

--------------------------------------------------------------------------------

 

Operating Tenant from any of their obligations hereunder, upon two (2) days’
notice to Mortgagor, Mortgagee shall have the right, but be under no obligation,
to pay any sums and to perform any act or take any action as may be appropriate
to cause all the terms, covenants and conditions of the Management Agreement on
the part of Operating Tenant to be performed or observed to be promptly
performed or observed on behalf of Operating Tenant, to the end that the rights
of Operating Tenant in, to and under the Management Agreement shall be kept
unimpaired and free from default. Mortgagee and any person designated by
Mortgagee shall have, and are hereby granted, the right to enter upon the
Property at any time and from time to time for the purpose of taking any such
action referred to in the preceding sentence. If the Manager under the
Management Agreement shall deliver to Mortgagee a copy of any notice sent to
Operating Tenant of default under the Management Agreement, such notice shall
constitute full protection to Mortgagee for any action taken or omitted to be
taken by Mortgagee in good faith, in reliance thereon. Mortgagor and/or
Operating Tenant shall notify Mortgagee if the Manager sub-contracts to a third
party or an affiliate of any or all of its management responsibilities under the
Management Agreement. Mortgagor and Operating Tenant shall, from time to time,
use commercially reasonable efforts to obtain from the Manager under the
Management Agreement such certificates of estoppel with respect to compliance by
Operating Tenant with the terms of the Management Agreement as may be requested
by Mortgagee; provided that Mortgagor and Operating Tenant are not required to
call a default under the Management Agreement or commence litigation against the
Manager if the Manager will not provide such certificates of estoppel. Operating
Tenant shall exercise each individual option, if any, to extend or renew the
terms of the Management Agreement upon demand by Mortgagee within fifteen (15)
days prior to the last day upon which any such option may be exercised (subject
to such notice periods as are set forth in the Management Agreement), and
Operating Tenant hereby expressly authorizes and appoints Mortgagee its
attorney-in-fact to exercise any such option in the name of and upon behalf of
Operating Tenant, which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest. Any sums expended by Mortgagee pursuant
to this paragraph shall bear interest at the Default Rate (defined in the Note)
from the date such cost is incurred to the date of payment to Mortgagee, shall
deemed to constitute a portion of the Secured Obligations, shall be secured by
the lien of this Mortgage and the other Loan Documents and shall be immediately
due and payable upon demand by Mortgagee therefore.

 

  b.

New Manager; Amendments to Management Agreement. Without limitation of the
foregoing, in the event that (i) Manager does not enter into an extension of the
current Management Agreement in 2008, or (ii) Mortgagee exercises its option,
pursuant to the Assignment of Management Contracts, to require Operating Tenant
to terminate the Management Agreement, then Mortgagee, at its option, may
require Mortgagor and Operating Tenant to engage a bona-fide, independent
third-party management agent that is a Qualified Manager (other than Westin
Management Company East (a successor-in-interest to Westin Hotel Company
(“Westin”)) (the “New Manager”) to manage the Property. The New

 

- 26 -

--------------------------------------------------------------------------------

 

Manager shall be engaged by Mortgagor and/or Operating Tenant pursuant to a
written management agreement that complies with the terms hereof and is
otherwise reasonably satisfactory to Mortgagee in all respects, and the New
Manager, Mortgagor and Operating Tenant shall execute an assignment of
management contracts and a consent, subordination and agreement of manager in
the form reasonably satisfactory to Mortgagee. Operating Tenant shall not,
without the prior written consent of Mortgagee (which consent shall not be
unreasonably withheld, conditioned or delayed): (i) surrender, terminate or
cancel the Management Agreement or otherwise replace Manager or enter into any
other management agreement with respect to the Property; (ii) reduce or consent
to the reduction of the term of the Management Agreement; (iii) increase or
consent to the increase of the amount of any charges under the Management
Agreement; or (iv) otherwise modify, change, supplement, alter or amend, or
waive or release any of its rights and remedies under, the Management Agreement
in any material respect. In the event that Mortgagor and/or Operating Tenant
replaces Manager at any time during the term of Loan pursuant to this
subsection, such Manager shall be a Qualified Manager (hereinafter defined).

 

  c. “Qualified Manager” shall mean (i) Westin or (ii) a reputable and
experienced professional management organization (A) which manages, together
with its Affiliates, at least five (5) first class hotels of a type and quality
similar to the Property, totaling in the aggregate no less than 1,500 guest
rooms and (b) prior to whose employment as manager of the Property (I) prior to
the occurrence of a securitization of the Loan, such employment shall have been
approved by Lender and (II) after the occurrence of a Securitization, Lender
shall have a Rating Agency Confirmation.

 

Mortgagor hereby agrees to protect, defend, indemnify and hold Mortgagee free
and harmless from and against any and all loss, cost, liability or expense
(including, but not limited to, attorneys’ fees, paralegals’ fees and
accountants’ fees) resulting from any failure by Operating Tenant to perform its
obligations under the Management Agreement.

 

  d. Operation of Hotel-Flag. Subject to and as otherwise provided for in
Section 3.10 to Exhibit A of the Note, Mortgagor shall, throughout the Loan
term, operate and brand the hotel Property as (1) a “Westin” hotel (the “Westin
Flag”) pursuant to the terms of the Management Agreement or (2) an Approved
Hotel Flag. The term “Approved Hotel Flag” shall mean any mark, trademark,
tradename, logotype and/or brand for a first-class hotel (“Hotel Flag”) of a
similar scope, quality, and prestige to the now current hotel Property, provided
(i) Mortgagor shall have obtained a Rating Agency Confirmation with respect to
such Hotel Flag and (ii) the hotel Property is operated/managed by a Qualified
Franchisor or a Qualified Manager.

 

ARTICLE 6. RIGHTS AND DUTIES OF THE PARTIES

 

6.1.

MAINTENANCE AND PRESERVATION OF THE PROPERTY. Mortgagor shall, and shall cause
Operating Tenant to: (a) keep the Property in good condition and repair

 

- 27 -

--------------------------------------------------------------------------------

 

and in the condition required under the Management Agreement; (b) complete or
restore promptly and in workmanlike manner the Property or any part thereof
which may be damaged or destroyed; (c) comply and cause the Property to comply
in all material respects with (i) all laws, ordinances, regulations and
standards, (ii) all covenants, conditions, restrictions and equitable
servitudes, whether public or private, of every kind and character and (iii) all
requirements of insurance companies and any bureau or agency which establishes
standards of insurability, which laws, covenants or requirements affect the
Property and pertain to acts committed or conditions existing thereon,
including, without limitation, any work of alteration, improvement or demolition
as such laws, covenants or requirements mandate; (d) operate and manage the
Property at all times in a professional manner and do all other acts which from
the character or use of the Property may be reasonably necessary to maintain and
preserve its value; (e) promptly after execution, deliver to Mortgagee a copy of
the Management Agreement concerning the Property and all amendments thereto and
waivers thereof; and (f) execute and acknowledge all further documents,
instruments and other papers as Mortgagee reasonably deems necessary or
appropriate to preserve, continue, perfect and enjoy the benefits of this
Mortgage and perform Mortgagor’s obligations, including, without limitation,
statements of the amount secured hereby then owing and statements of no offset
and the execution and delivery of all such writings necessary to transfer any
liquor licenses with respect to the Property into the name of Lender or its
designee after the occurrence of an Event of Default. Mortgagor shall not: (g)
remove or demolish all or any material part of the Property; (h) alter either
(i) the exterior of the Property in a manner which materially and adversely
affects the value of the Property or (ii) the roof or other structural elements
of the Property in a manner which requires a building permit except for tenant
improvements required under the Leases, and in the case of clauses (i) and (ii)
above, without the consent of Manager to the extent required by the Management
Agreement; (i) initiate or acquiesce in any change in any zoning or other land
classification which affects the Property; (j) materially alter the type of
occupancy or use of all or any part of the Property; or (k) commit or permit
waste of the Property.

 

6.2. HAZARDOUS MATERIALS. Without limiting any other provision of this Mortgage,
Mortgagor and Operating Tenant agree as follows:

 

  a. Prohibited Activities. Neither Mortgagor nor Operating Tenant shall not
cause or permit the Property to be used as a site for the use, generation,
manufacture, storage, treatment, release, discharge, disposal, transportation or
presence of any of the following (collectively, “Hazardous Materials”): oil or
other petroleum products; flammable explosives; asbestos; urea formaldehyde
insulation; radioactive materials; hazardous wastes; fungus, mold, mildew,
spores or other biological or microbial agents the presence of which may affect
human health, impair occupancy or materially affect the value or utility of the
Property; toxic or contaminated substances or similar materials, including,
without limitation, any substances which are “hazardous substances,” “hazardous
wastes,” “hazardous materials” or “toxic substances” under the Hazardous
Materials Laws (defined below) and/or other environmental laws, ordinances, or
regulations applicable to Mortgagor, Operating Tenant and the Property.

 

- 28 -

--------------------------------------------------------------------------------

The foregoing to the contrary notwithstanding, (i) Mortgagor and Operating
Tenant may store, maintain and use on the Property janitorial and maintenance
supplies, paint and other Hazardous Materials of a type and in a quantity
readily available for purchase by the general public and normally stored,
maintained and used by owners and managers of properties of a type similar to
the Property; and (ii) tenants of the Property may store, maintain and use on
the Property (and, if any tenant is a retail business, hold in inventory and
sell in the ordinary course of such tenant’s business) Hazardous Materials of a
type and quantity readily available for purchase by the general public and
normally stored, maintained and used (and, if tenant is a retail business, sold)
by tenants in similar lines of business on properties similar to the Property.]

 

  b. Statutory Requirement. Mortgagor shall not use, or permit the use of, all
or any portion of the Property for the Storage, treatment, use or disposal of
any substance for which a license or permit is required by Massachusetts General
Laws, Chapter 21C, as the same may be amended from time to time, unless all
required licenses and permits are obtained and complied with and such use is in
compliance with all applicable Hazardous Materials Laws (as hereinafter
defined).

 

  c. Hazardous Materials Laws. Mortgagor shall comply and cause Operating Tenant
to comply and cause the Property to comply with all federal, state and local
laws, ordinances and regulations relating to Hazardous Materials (“Hazardous
Materials Laws”), including, without limitation: the Clean Air Act, as amended,
42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery
Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”),
42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended,
29 U.S.C. Section 651; the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977,
as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of
other jurisdictions or orders and regulations.

 

  d. Notices. Mortgagor and Operating Tenant shall immediately notify Mortgagee
in writing of: (i) the discovery of any Hazardous Materials on, under or about
the Property (other than Hazardous Materials permitted under Section 6.2a); (ii)
any knowledge by Mortgagor or Operating Tenant that the Property does not comply
with any Hazardous Materials Laws; (iii) any claims or actions (“Hazardous
Materials Claims”) pending or threatened against Mortgagor, Operating Tenant or
the Property by any governmental entity or agency or any other person or entity
relating to Hazardous Materials or pursuant to the Hazardous Materials Laws; and
(iv) the discovery of any occurrence or condition on any real property adjoining
or in the vicinity of the Property that could cause the Property to become
contaminated with Hazardous Materials.

 

- 29 -

--------------------------------------------------------------------------------

  e. Remedial Action. In response to the presence of any Hazardous Materials on,
under or about the Property, Mortgagor and Operating Tenant shall immediately
take, at Mortgagor’s sole expense, all remedial action required by any Hazardous
Materials Laws or any judgment, consent decree, settlement or compromise in
respect to any Hazardous Materials Claims.

 

  f. Inspection By Mortgagee. Upon reasonable prior notice to Mortgagor and
Operating Tenant, Mortgagee, its employees and agents, may from time to time
(whether before or after the commencement of a nonjudicial or judicial
foreclosure proceeding), enter and inspect the Property for the purpose of
determining the existence, location, nature and magnitude of any past or present
release or threatened release of any Hazardous Materials into, onto, beneath or
from the Property.

 

  g. [Intentionally Deleted].

 

6.3. COMPLIANCE WITH LAWS. Mortgagor shall comply and shall cause Operating
Tenant to comply in all material respects with all federal, state and local
laws, rules and regulations applicable to the Property, including, without
limitation, all zoning and building requirements and all requirements of the
Americans With Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.), as
amended from time to time. Mortgagor shall possess and maintain or cause
Operating Tenant to possess and maintain in full force and effect at all times
(a) all certificates of occupancy and other licenses, permits and authorizations
required by applicable law for the existing use of the Property and (b) all
permits, franchises and licenses and all rights to all trademarks, trade names,
patents and fictitious names, if any, required by applicable law for Mortgagor
and Operating Tenant to conduct the business(es) in which Mortgagor and
Operating Tenant are now engaged, including, without limitation, any applicable
hotel business licenses, or liquor licenses.

 

6.4. LITIGATION. Mortgagor shall promptly notify Mortgagee in writing of any
litigation pending or threatened against Mortgagor or Operating Tenant claiming
damages in excess of $1,000,000 and of all pending or threatened litigation
against Mortgagor or Operating Tenant if the aggregate damage claims against
Mortgagor or Operating Tenant exceed $2,000,000.

 

6.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Mortgagor shall not and shall
cause Operating Tenant to not: (a) merge or consolidate with any other entity;
(b) make any substantial change in the nature of Mortgagor’s Operating Tenant’s
business or structure; (c) acquire all or substantially all of the assets of any
other entity; or (d) sell, lease, assign, transfer or otherwise dispose of a
material part of Mortgagor’s or Operating Tenant’s assets except in the ordinary
course of Mortgagor’s or Operating Tenant’s business.

 

6.6.

ACCOUNTING RECORDS. Mortgagor shall maintain and shall cause Operating Tenant to
maintain adequate books and records in accordance with the Uniform System of
Accounts for Hotels as approved by the American Hotel and Motel Association (as
in effect from time to time) (the “Uniform System of Accounts”) or such other
accounting standards approved by Mortgagee. Mortgagee acknowledges that, as of
the date hereof,

 

- 30 -

--------------------------------------------------------------------------------

 

the ninth (9th) version of the Uniform System of Accounts is acceptable to
Mortgagee. Mortgagor shall permit and shall cause Operating Tenant to permit any
representative of Mortgagee, at any reasonable upon reasonable advanced notice
and subject to the terms of the Management Agreement, and from time to time, to
inspect, audit and examine such books and records and make copies of same.

 

6.7. COSTS, EXPENSES AND ATTORNEYS’ FEES. Mortgagor shall pay to Mortgagee the
full amount of all costs and expenses, including, without limitation, reasonable
attorneys’ fees and expenses of Mortgagee’s in-house or outside counsel,
incurred by Mortgagee in connection with: (a) appraisals and inspections of the
Property or Collateral required by Mortgagee as a result of (i) a Transfer or
proposed Transfer (as defined below), or (ii) a Default; (b) appraisals and
inspections of the Property or Collateral required by applicable law, including,
without limitation, federal or state regulatory reporting requirements; and (c)
any acts performed by Mortgagee at Mortgagor’s request or wholly or partially
for the benefit of Mortgagor (including, without limitation, the preparation or
review of amendments, assumptions, waivers, releases, reconveyances, estoppel
certificates or statements of amounts owing under any Secured Obligation). In
connection with appraisals and inspections, Mortgagor specifically (but not by
way of limitation) acknowledges that: (aa) a formal written appraisal of the
Property by a state certified or licensed appraiser may be required by federal
regulatory reporting requirements on an annual or more frequent basis; and (bb)
Mortgagee may require inspection of the Property by an independent supervising
architect, a cost engineering specialist, or both. Mortgagor shall pay all
indebtedness arising under this Section immediately upon demand by Mortgagee
together with interest thereon following notice of such indebtedness at the rate
of interest then applicable to the principal balance of the Note as specified
therein. Notwithstanding the foregoing or anything herein to the contrary,
Mortgagee shall not require appraisals and inspections of the Property or
Collateral more than one (1) time each year unless in connection with a
securitization of the Loan or if there has been a Default.

 

6.8. LIENS, ENCUMBRANCES AND CHARGES. Mortgagor shall immediately discharge by
bonding or otherwise any lien, charge or other encumbrance which attaches to the
Property in violation of Section 6.15 that may now or hereafter be levied or
assessed against the Property or the estate created by this Mortgage. Subject to
Mortgagor’s right to contest such matters under this Mortgage or as expressly
permitted in the Loan Documents, Mortgagor shall pay when due all obligations
secured by or reducible to liens and encumbrances which shall now or hereafter
encumber or appear to encumber all or any part of the Property, or the estate
created by this Mortgage, or any other interest therein, whether senior or
subordinate hereto, including, without limitation, all claims for work or labor
performed, or materials or supplies furnished, in connection with any work of
demolition, alteration, repair, improvement or construction of or upon the
Property, except such as Mortgagor may in good faith contest or as to which a
bona fide dispute may arise (provided provision is made to the satisfaction of
Mortgagee for eventual payment thereof in the event that Mortgagor is obligated
to make such payment and that any recorded claim of lien, charge or other
encumbrance against the Property is immediately discharged by bonding or
otherwise).

 

- 31 -

--------------------------------------------------------------------------------

6.9. TAXES AND OTHER LIABILITIES. Mortgagor shall (or shall cause Operating
Tenant to pay and discharge when due and prior to any late charges or interest
accruing any and all indebtedness, obligations, assessments and taxes, both real
and personal and including federal and state income taxes and state and local
property taxes and assessments. Mortgagor shall promptly provide to Mortgagee
copies of all tax and assessment notices pertaining to the Property. Mortgagor
hereby authorizes Mortgagee to obtain, at Mortgagor’s expense (which shall not
exceed $500 per year), a tax service contract which shall provide tax
information on the Property to Mortgagee for the term of the Loan and any
extensions or renewals of the Loan.

 

6.10. INSURANCE COVERAGE. Mortgagor shall or shall cause Operating Tenant to
obtain and maintain all insurance coverage required pursuant to that certain
Agreement Regarding Required Insurance dated the date hereof by and between
Mortgagor and Mortgagee.

 

6.11. CONDEMNATION AND INSURANCE PROCEEDS.

 

  a. Assignment of Claims. Mortgagor absolutely and irrevocably assigns to
Mortgagee all of the following rights, claims and amounts (collectively,
“Claims”), all of which shall be paid to Mortgagee: (i) all awards of damages
and all other compensation payable directly or indirectly by reason of a
condemnation or proposed condemnation for public or private use affecting all or
any part of, or any interest in, the Property; (ii) all other claims and awards
for damages to or decrease in value of all or any part of, or any interest in,
the Property; (iii) all proceeds of any insurance policies payable by reason of
loss sustained to all or any part of the Property; and (iv) all interest which
may accrue on any of the foregoing. Mortgagor shall give Mortgagee prompt
written notice of the occurrence of any casualty affecting, or the institution
of any proceedings for eminent domain or for the condemnation of, the Property
or any portion thereof. So long as no Default has occurred and is continuing at
the time, (i) Mortgagor shall have the right to adjust, compromise and settle
any Claim or group of related Claims of $4,600,000 or less without the
participation or consent of Mortgagee and (ii) Mortgagee shall have the right to
participate in and consent to any adjustment, compromise or settlement of any
Claim or group of related Claims exceeding $4,600,000. If a Default has occurred
and is continuing at the time, Mortgagor hereby irrevocably empowers Mortgagee,
in the name of Mortgagor, as Mortgagor’s true and lawful attorney in fact, to
commence, appear in, defend, prosecute, adjust, compromise and settle all
Claims; provided, however, Mortgagee shall not be responsible for any failure to
undertake any or all of such actions regardless of the cause of the failure. All
awards, proceeds and other sums described herein shall, in all cases, be payable
to Mortgagee.

 

  b.

Application of Proceeds; No Default. So long as no Default has occurred and is
continuing at the time of Mortgagee’s receipt of the proceeds of the Claims
(“Proceeds”) and no Default has occurred, and is continuing at the time of
application of such Proceeds, if the Proceeds of any Claim do not exceed
$4,600,000 and the cost of completing the restoration does not exceed
$4,600,000,

 

- 32 -

--------------------------------------------------------------------------------

 

provided the conditions set forth in Sections 6.11(b)(iii)(cc)(4)-(8) and
6.11(b)(iii)(dd) below are met and Mortgagor delivers to Lender a written
undertaking to expeditiously commence and satisfactorily complete the
restoration of the Property in accordance with this Mortgage and the other Loan
Documents, all such Proceeds shall be disbursed to Mortgagor promptly. If the
Proceeds of any Claim exceed $4,600,000 or the cost to complete the restoration
exceeds $4,600,000, the following provisions shall apply:, the following
provisions shall apply:

 

  (i) Condemnation. If the Proceeds are the result of Claims described in
clauses 6.11.a (i) or (ii) above, or interest accrued thereon, Mortgagee shall
apply the Proceeds in the following order of priority: First, to Mortgagee’s and
Mortgagor’s expenses (which expenses of Mortgagor shall have been approved by
Mortgagee) in settling, prosecuting or defending the Claims; Second, to the
repair or restoration of the portion of the Property, if any, not condemned or
proposed for condemnation and not otherwise the subject of a claim or award; and
Third, (aa) if the repair or restoration of the Property has been completed and
all costs incurred in connection with the repair or restoration have been paid
in full, to Mortgagor or (bb) in all other circumstances, to the Secured
Obligations in any order without suspending, extending or reducing any
obligation of Mortgagor to make installment payments.

 

  (ii) Insurance. If the Proceeds are the result of Claims described in clause
6.11.a (iii) above or interest accrued thereon, Mortgagee shall apply the
Proceeds in the following order of priority: first, to Mortgagee ‘s and
Mortgagor’s expenses (which expenses of Mortgagor shall have been approved by
Mortgagee) in settling, prosecuting or defending the Claims; Second, to the
repair or restoration of the Property; and Third, (aa) if the repair or
restoration of the Property has been completed and all costs incurred in
connection with the repair or restoration have been paid in full, to Mortgagor
or (bb) in all other circumstances, to the Secured Obligations in any order
without suspending, extending or reducing any obligation of Mortgagor to make
installment payments.

 

  (iii)

Restoration. Notwithstanding the foregoing Sections 6.11.b (i) and (ii),
Mortgagee shall have no obligation to make any Proceeds available for the repair
or restoration of all or any portion of the Property unless and until all the
following conditions have been satisfied: (aa) delivery to Mortgagee of the
Proceeds plus any additional amount which is needed to pay all costs of the
repair or restoration (including, without limitation, taxes, financing charges,
insurance and rent during the repair period); (bb) establishment of an
arrangement for lien releases and disbursement of funds reasonably acceptable to
Mortgagee; (cc) delivery to Mortgagee in form and content reasonably acceptable
to Mortgagee of all of the following: (1) plans and specifications for the work;
(2) a contract for the work, signed by a contractor reasonably acceptable to
Mortgagee; (3) a cost breakdown for

 

- 33 -

--------------------------------------------------------------------------------

 

the work; (4) if required by Mortgagee, a payment and performance bond for the
work; (5) evidence of the continuation of all Major Leases unless consented to
in writing by Mortgagee; (6) evidence that, upon completion of the work, the
size, capacity, value, and income coverage ratios for the Property will be at
least as great as those which existed as of the date hereof; (7) evidence that
the work can reasonably be completed on or before that date which is 6 months
prior to the Maturity Date; and (8) evidence of the satisfaction of any
additional conditions that Mortgagee may reasonably establish to protect
Mortgagee’s security; and (dd) the Management Agreement, the franchise
agreement, if applicable, and Ground Lease shall remain in full force and
effect. Mortgagor acknowledges that the specific conditions described above are
reasonable.

 

  c. Application of Proceeds; Default. If a Default has occurred and is
continuing at the time of Mortgagee’s receipt of the Proceeds or if a Default
occurs at any time thereafter, Mortgagee may, at Mortgagee’s absolute discretion
and regardless of any impairment of security or lack of impairment of security,
but subject to applicable law governing use of the Proceeds, if any, apply all
or any of the Proceeds to Mortgagee’s expenses in settling, prosecuting or
defending the Claims and then apply the balance to the Secured Obligations in
any order without suspending, extending or reducing any obligation of Mortgagor
to make installment payments, and may release all or any part of the Proceeds to
Mortgagor upon any conditions Mortgagee chooses.

 

6.12. IMPOUNDS.

 

  a. Post-Default Impounds. If required by Mortgagee at any time after a Default
occurs and continuing, Mortgagor shall deposit with Mortgagee such amounts
(“Post-Default Impounds”) on such dates (determined by Mortgagee as provided
below) as will be sufficient to pay any or all “Costs” (as defined below)
specified by Mortgagee. Mortgagee in its sole discretion shall estimate the
amount of such Costs that will be payable or required during any period selected
by Mortgagee not exceeding 1 year and shall determine the fractional portion
thereof that Mortgagor shall deposit with Mortgagee on each date specified by
Mortgagee during such period. If the Post-Default Impounds paid by Mortgagor are
not sufficient to pay the related Costs, Mortgagor shall deposit with Mortgagee
upon demand an amount equal to the deficiency. All Post-Default Impounds shall
be payable by Mortgagor in addition to (but without duplication of) any other
Impounds (as defined below).

 

  b.

All Impounds. Post-Default Impounds and any other impounds that may be payable
by Mortgagor under the Note are collectively called “Impounds”. All Impounds
shall be deposited into one or more segregated or commingled accounts maintained
by Mortgagee or its servicing agent. Except as otherwise provided in the Note,
such account(s) shall not bear interest. Mortgagee shall not be a trustee,
special depository or other fiduciary for Mortgagor with respect to such
account, and the existence of such account shall not limit Mortgagee’s rights
under this

 

- 34 -

--------------------------------------------------------------------------------

 

Mortgage, any other agreement or any provision of law. If no Default exists,
Mortgagee shall apply all Impounds to the payment of the related Costs, or in
Mortgagee’s sole discretion may release any or all Impounds to Mortgagor for
application to and payment of such Costs. If a Default exists, Mortgagee may
apply any or all Impounds to any Secured Obligation and/or to cure such Default,
whereupon Mortgagor shall restore all Impounds so applied and cure all Defaults
not cured by such application. The obligations of Mortgagor hereunder shall not
be diminished by deposits of Impounds made by Mortgagor, except to the extent
that such obligations have actually been met by application of such Impounds.
Upon any assignment of this Mortgage, Mortgagee may assign all Impounds in its
possession to Mortgagee’s assignee, whereupon Mortgagee shall be released from
all liability with respect to such Impounds. Within 60 days following full
repayment of the Secured Obligations (other than as a consequence of foreclosure
or conveyance in lieu of foreclosure) or at such earlier time as Mortgagee may
elect, Mortgagee shall pay to Mortgagor all Impounds in its possession, and no
other party shall have any right or claim thereto. “Costs” means (i) all taxes
and other liabilities payable by Mortgagor under Section 6.9, (ii) all insurance
premiums payable by Mortgagor under Section 6.10, (iii) all other costs and
expenses for which Impounds are required under the Note, and/or (iv) all other
amounts that will be reasonably required to preserve the value of the Property.
Mortgagor shall deliver to Mortgagee, promptly upon receipt, all bills for Costs
for which Mortgagee has required Post-Default Impounds.

 

6.13. DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. Mortgagor shall protect,
preserve and defend the Property and title to and right of possession of the
Property, the security of this Mortgage and the rights and powers of Mortgagee
hereunder at Mortgagor’s sole expense against all adverse claims, whether the
claim: (a) is against a possessory or non-possessory interest; (b) arose prior
or subsequent to the Effective Date; or (c) is senior or junior to Mortgagor’s
or Mortgagee’s rights. Mortgagor shall give Mortgagee prompt notice in writing
of the assertion of any claim, of the filing of any action or proceeding, of the
occurrence of any damage to the Property and of any condemnation offer or
action.

 

6.14. RIGHT OF INSPECTION. Mortgagee and its independent contractors, agents and
employees may enter the Property from time to time upon reasonably prior written
notice and subject to the terms of the Management Agreement at any reasonable
time for the purpose of inspecting the Property and ascertaining Mortgagor’s
compliance with the terms of this Mortgage. Mortgagee shall use reasonable
efforts to assure that Mortgagee’s entry upon and inspection of the Property
shall not materially and unreasonably interfere with the business or operations
of Mortgagor or Mortgagor’s tenants on the Property.

 

6.15. DUE ON SALE/ENCUMBRANCE.

 

  a. Definitions. The following terms shall have the meanings indicated:

 

- 35 -

--------------------------------------------------------------------------------

“Restricted Party” shall mean each of (i) Borrower, (ii) Mortgagor, (iii)
Operating Tenant, (iv) any entity obligated under any guaranty or indemnity made
in favor of Mortgagee in connection with the Loan and (v) any shareholder,
partner, member or non-member manager, or any direct or indirect legal or
beneficial owner of Borrower, Mortgagor,            , Operating Tenant, or any
entity obligated under a guaranty or indemnity made in favor of Mortgagee in
connection with the Loan (any such entity, a “Guarantor”) and (iv) any property
manager, asset manager, or other similar entity charged (in any capacity) with
management responsibilities relating to the Property in which Sponsor,
Guarantor, or any affiliate thereof has, directly or indirectly, any legal
beneficial or economic interest (an “Affiliated Manager”).

 

“Transfer” shall mean any sale, installment sale, exchange, mortgage, pledge,
hypothecation, assignment, encumbrance or other transfer, conveyance or
disposition, whether voluntarily, involuntarily or by operation of law or
otherwise.

 

Definitions. The following terms shall have the meanings indicated:

 

“New Non-Consolidation Opinion” shall mean a substantive non-consolidation
opinion provided by outside counsel acceptable to Mortgagee and the Rating
Agencies and otherwise in form and substance acceptable to Mortgagee and the
Rating Agencies.

 

“Sponsor” shall mean LaSalle Hotel Properties.

 

  b. Property Transfers.

 

  (i) Prohibited Property Transfers. Mortgagor shall not cause or permit any
Transfer of all or any part of or any direct or indirect legal or beneficial
interest in the Property or the Collateral (collectively, a “Prohibited Property
Transfer”), including, without limitation, (A) a Lease of all or a material part
of the Property for any purpose other than actual occupancy by a space tenant;
and (B) the Transfer of all or any part of Mortgagor’s right, title and interest
in and to any Leases or Payments.

 

  (ii) Permitted Property Transfers. Notwithstanding the foregoing, none of the
following Transfers shall be deemed to be a Prohibited Property Transfer: (A) a
Transfer which is expressly permitted under the Note; (B) a Lease which is
permitted under Article 3; and (C) the sale of inventory in the ordinary course
of business.

 

  c. Equity Transfers.

 

  (i)

Prohibited Equity Transfers. Mortgagor shall not cause or permit any Transfer of
any direct or indirect legal or beneficial interest in a Restricted Party
(collectively, a “Prohibited Equity Transfer”), including without limitation,
(A) if a Restricted Party is a corporation, any merger,

 

- 36 -

--------------------------------------------------------------------------------

 

consolidation or other Transfer of such corporation’s stock or the creation or
issuance of new stock in one or a series of transactions; (B) if a Restricted
Party is a limited partnership, limited liability partnership, general
partnership or joint venture, any merger or consolidation or the change,
removal, resignation or addition of a general partner or the Transfer of the
partnership interest of any general or limited partner or any profits or
proceeds relating to such partnership interests or the creation or issuance of
new limited partnership interests; (C) if a Restricted Party is a limited
liability company, any merger or consolidation or the change, removal,
resignation or addition of a managing member or non-member manager (or if no
managing member, any member) or any profits or proceeds relating to such
membership interest, or the Transfer of a non-managing membership interest or
the creation or issuance of new non-managing membership interests; or (D) if a
Restricted Party is a trust, any merger, consolidation or other Transfer of any
legal or beneficial interest in such Restricted Party or the creation or
issuance of new legal or beneficial interests.

 

  (ii) Permitted Equity Transfers. Notwithstanding the foregoing, none of the
following Transfers shall be deemed to be a Prohibited Equity Transfer so long
as the Minimum Equity Requirement (defined below) remains satisfied following
such Transfer: (A) a Transfer by a natural person who is a member, partner or
shareholder of a Restricted Party to a revocable inter vivos trust having such
natural person as both grantor and trustee of such trust and one or more
immediate family members of such natural person as the sole beneficiaries of
such trust (“Revocable Family Trust”); (B) a Transfer by devise or descent or by
operation of law upon the death of a member, partner or shareholder of a
Restricted Party; (C) a Transfer, in one or a series of transactions, of not
more than 49% of the stock, limited partnership interests or non-managing
membership interests (as the case may be) in a Restricted Party where such
Transfer does not result in a change in management control in the Restricted
Party; (D) a Transfer of stock in LaSalle Hotel Properties, a Maryland real
estate investment trust (“LaSalle”); provided such stock is listed on the New
York Stock Exchange or such other nationally recognized stock exchange; and (E)
a Qualifying Merger (defined below) of LaSalle. Subject to (e) of the definition
of “Qualifying Merger” below, it being understood that with respect to the
transfers listed in (ii)(C) above, Mortgagor shall deliver to Mortgagee at least
30 days’ prior written notice of such transfer and with respect to the transfers
listed in (ii)(A) and (B) above, Mortgagor shall deliver written notice to
Mortgagee of such transfer at least 30 days after such transfer. Mortgage shall
not require notice of the transfer listed in (ii)(D) above.

 

- 37 -

--------------------------------------------------------------------------------

As used herein “Minimum Equity Requirement” shall mean that (i) LaSalle must
own, at all time, directly or indirectly, at least a 51% interest in Mortgagor
and Operating Tenant, and (ii) LaSalle shall control Mortgagor and Operating
Tenant.

 

As used herein, the term “Qualifying Merger” shall mean any acquisition by,
merger with or consolidation with or into, or sale of substantially all of the
assets to (any such transaction, the “Merger”) an entity (the “Merged Entity”)
in which each of the following conditions have been satisfied as of the date of
consummation of the Merger:

 

  a. the Merged Entity owns, directly or indirectly, all of the assets which
LaSalle owned immediately prior to the effective date of the Merger (it being
understood that upon the occurrence of a Qualifying Merger and notwithstanding
the conditions set forth above in the definition of Minimum Equity Requirement,
the Minimum Equity Requirement shall be deemed satisfied upon the occurrence of
such Qualifying Merger);

 

  b. the Merged Entity agrees in writing to assume all of the obligations of
LaSalle under the Loan Documents (if any);

 

  c. control of the Merged Entity and at least fifty-one percent (51%) of the
direct or indirect ownership of the Merged Entity is vested in (A) a Qualified
Owner, (B) the executive management of LaSalle (as the same existed immediately
prior to the Merger), or (C) any other person or entity with respect to whom a
Ratings Confirmation has been obtained;

 

  d. (A) the Property shall continue to be managed by a Qualified Manager, (B)
in the case of the transfer of any direct equity ownership interests in
Mortgagor due to such Merger, such transfer shall be conditioned upon continued
compliance with the relevant provisions of Section 5.2 herein, (C) in the event
that there is a transfer of any equity ownership interests directly in Mortgagor
or any Restricted Party due to such Merger, such transfer shall be conditioned
upon delivery to Lender of a New Non-Consolidation Opinion, which such opinion
shall be provided by outside counsel reasonably acceptable to Lender and the
rating agencies; and (D) such Merger shall not trigger any right of first
refusal, option to purchase or default under any Major Lease, the Ground Lease,
the Operating Lease, the Management Agreement or Franchise Agreement, if
applicable; and

 

  e. Lender shall have received no less than sixty (60) days prior written
notice of such Merger.

 

As used herein “Qualified Owner” shall mean any one or more of the following:

 

  (i) a real estate investment trust, 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, provided that any such person or entity referred to
in this clause (A) satisfies the Eligibility Requirements;

 

- 38 -

--------------------------------------------------------------------------------

  (ii) an investment company, money management firm or “qualified institutional
buyer” within the meaning of Rule 144A under the Securities Act of 1933, as
amended, or an institutional “accredited investor” within the meaning of
Regulation D under the Securities Act of 1933, as amended, provided that any
such person or entity referred to in this clause (B) satisfies the Eligibility
Requirements;

 

  (iii) an institution substantially similar to any of the foregoing entities
described in clauses (A) or (B) that satisfies the Eligibility Requirements;

 

  (iv) any entity controlled by and 51% owned by any of the entities described
in (A), (B) or (C) above; or

 

  (v) an investment fund, limited liability company, limited partnership or
general partnership where a Permitted Fund Manager or an entity that is
otherwise a Qualified Owner under clauses (A), (B), (C) or (D) of this
definition acts as the general partner, managing member or fund manager and at
least 50% of the equity interests in such investment vehicle are owned, directly
or indirectly, by one or more entities that are otherwise Qualified Owners under
clauses (A), (B), (C) or (D) of this definition.

 

Notwithstanding the foregoing, no person or entity shall be deemed to be a
Qualified Owner if (y) such person or entity (or any other person or entity
owned or controlled by such person or entity or affiliated with such person or
entity) has been, within the last ten (10) years, (I) subject to any material,
uncured event of default in connection with a loan financing which resulted in
litigation or an acceleration of an indebtedness held by Lender or any other
secondary market or institutional lender or (II) the subject of any action or
proceeding under Creditor’s Rights Laws; or (z) any of the principals or
entities which control such person or entity or own a material direct or
indirect equity interest in such Person have ever been convicted of a felony.

 

As used herein, the term “Eligibility Requirements” shall mean, with respect to
any person or entity, that such person or entity (i) has total assets (in name
or under management) in excess of $750,000,000 and (except with respect to a
pension advisory firm or similar fiduciary) capital/statutory surplus or
shareholder’s equity of $300,000,000, and (ii) is regularly engaged in the
business of making or owning commercial real estate loans or operating
commercial mortgage properties.

 

As used herein, the term “Permitted Fund Manager” shall mean any person or
entity that on the date of determination is (i) a nationally-recognized manager
of investment funds investing in debt or equity interests relating to commercial
real estate, (ii) investing through a fund with committed capital of at least
$300,000,000 and (iii) not subject to any action or proceeding under any
bankruptcy, insolvency, rehabilitation or other similar proceeding.

 

As used herein, a “Ratings Confirmation” shall mean, with respect to any
relevant event or matter in question, written confirmation from the rating
agencies that the consummation of such event or matter will not result in a
downgrade, withdrawal or qualification of the initial, or if

 

- 39 -

--------------------------------------------------------------------------------

higher, then current ratings issued in connection with a securitization of the
Loan, or if a securitization has not occurred, any ratings to be assigned in
connection with a securitization of the Loan.

 

(iii) SPE Status. Nothing contained in this Section 6.15c shall be construed to
permit any Transfer which would result in a breach of any representation,
warranty or covenant of Mortgagor under Section 5.2 above. Notwithstanding
anything to the contrary contained in this Section 6.15c, if such transfer in
Section 6.15(c)(ii) above results in a direct equity transfer in Mortgagor or in
any Restricted Party whose sole asset is a direct or indirect equity ownership
interest in Mortgagor, it shall be a condition precedent to any such transfer
that Mortgagor deliver to Mortgagee a New Non-Consolidation Opinion in form and
content and rendered by counsel satisfactory to Mortgagee in its sole and
absolute discretion and (C) such New Non-Consolidation Opinion shall be
delivered to Mortgagee, not less than 30 days’ prior to such transfer (except
with respect to a transfer pursuant to Section 6.15(ii)(B), a New Consolidation
Opinion shall be delivered to Mortgagee 30 days after such transfer).

 

  f. Certificates of Ownership. Mortgagor shall deliver to Mortgagee, at any
time and from time to time, not more than 5 days after Mortgagee’s written
request therefor, a certificate, in form reasonably acceptable to Mortgagee,
signed and dated by Mortgagor and Mortgagor, listing the names of all persons
and entities holding direct or indirect legal or beneficial interests in the
Property or any Restricted Party (other than LaSalle)and the type and amount of
each such interest.

 

6.16. REA. Mortgagor agrees that without the prior consent of Lender, Mortgagor
will not execute modifications to the REA is such modifications will have a
material adverse effect on the use, operation, or value of the Property, taken
as a whole, or the ability of Mortgagor to pay its obligations in respect of the
Loan. Mortgagor shall enforce, shall comply with, and shall use commercially
reasonable efforts to cause each of the parties to the REA to comply with all of
the terms and conditions contained in REA.

 

6.17. INTENTIONALLY OMITTED.

 

6.18. EXCULPATION. Mortgagee shall not directly or indirectly be liable to
Mortgagor or any other person as a consequence of: (a) the exercise of the
rights, remedies or powers granted to Mortgagee in this Mortgage; (b) the
failure or refusal of Mortgagee to perform or discharge any obligation or
liability of Mortgagor under any agreement related to the Property or under this
Mortgage; or (c) any loss sustained by Mortgagor or any third party resulting
from Mortgagee’s failure to lease the Property after a Default (hereafter
defined) or from any other act or omission of Mortgagee in managing the Property
after a Default unless the loss is caused by the willful misconduct, gross
negligence or bad faith of Mortgagee and no such liability shall be asserted or
enforced against Mortgagee, all such liability being expressly waived and
released by Mortgagor.

 

- 40 -

--------------------------------------------------------------------------------

6.19. INDEMNITY. Without in any way limiting any other indemnity contained in
this Mortgage, Mortgagor agrees to defend, indemnify and hold harmless the
Mortgagee Group from and against any claim, loss, damage, cost, expense or
liability directly or indirectly arising out of: (a) the making of the Loan,
except for violations of banking laws or regulations by the Mortgagee Group; (b)
this Mortgage; (c) the execution of this trust or the performance of any act
required or permitted hereunder or by law; (d) any failure of Mortgagor or
Operating Tenant to perform Mortgagor’s or Operating Tenant’s (as applicable)
obligations under this Mortgage or the other Loan Documents; (e) any alleged
obligation or undertaking on the Mortgagee Group’s part to perform or discharge
any of the representations, warranties, conditions, covenants or other
obligations contained in any other document related to the Property; (f) any act
or omission by Mortgagor or any contractor, agent, employee or representative of
Mortgagor with respect to the Property; or (g) any claim, loss, damage, cost,
expense or liability directly or indirectly arising out of: (i) the use,
generation, manufacture, storage, treatment, release, threatened release,
discharge, disposal, transportation or presence of any Hazardous Materials which
are found in, on, under or about the Property (including, without limitation,
underground contamination); or (ii) the breach of any covenant, representation
or warranty of Mortgagor or Operating Tenant under Sections 5.1.p, 5.1.q, 5.1.r,
or 6.2 above. The foregoing to the contrary notwithstanding, this indemnity
shall not include any claim, loss, damage, cost, expense or liability directly
or indirectly arising out of the gross negligence or willful misconduct of any
member of the Mortgagee Group, or any claim, loss, damage, cost, expense or
liability incurred by the Mortgagee Group arising from any act or incident on
the Property occurring after the full reconveyance and release of the lien of
this Mortgage on the Property, or with respect to the matters set forth in
clause (g) above, any claim, loss, damage, cost, expense or liability incurred
by the Mortgagee Group resulting from the introduction and initial release of
Hazardous Materials on the Property occurring after the transfer of title to the
Property at a foreclosure sale under this Mortgage, either pursuant to judicial
decree or the power of sale, or by deed in lieu of such foreclosure. This
indemnity shall include, without limitation: (aa) all consequential damages
(including, without limitation, any third party tort claims or governmental
claims, fines or penalties against the Mortgagee Group); (bb) all court costs
and reasonable attorneys’ fees (including, without limitation, expert witness
fees) paid or incurred by the Mortgagee Group; and (cc) the costs, whether
foreseeable or unforeseeable, of any investigation, repair, cleanup or
detoxification of the Property which is required by any governmental entity or
is otherwise necessary to render the Property in compliance with all laws and
regulations pertaining to Hazardous Materials. “Mortgagee Group”, as used
herein, shall mean (1) Mortgagee and Lender (including, without limitation, any
participant in the Loan), (2) any entity controlling, controlled by or under
common control with Mortgagee and Lender, (3) the directors, officers, employees
and agents of Mortgagee and Lender and such other entities, and (4) the
successors, heirs and assigns of the entities and persons described in foregoing
clauses (1) through (3). Mortgagor shall pay immediately upon Mortgagee’s demand
any amounts owing under this indemnity together with interest from the date the
indebtedness arises until paid at the rate of interest applicable to the
principal balance of the Note as specified therein. Mortgagor agrees to use
legal counsel reasonably acceptable to the Mortgagee Group in any action or
proceeding arising under this indemnity. THE

 

- 41 -

--------------------------------------------------------------------------------

 

PROVISIONS OF THIS SECTION SHALL SURVIVE THE DISCHARGE OF THIS MORTGAGE, BUT
MORTGAGOR’S LIABILITY UNDER THIS INDEMNITY SHALL BE SUBJECT TO THE PROVISIONS OF
THE SECTION IN THE NOTE ENTITLED “MORTGAGOR’S LIABILITY.”

 

6.20. INTENTIONALLY OMITTED.

 

6.21. RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without
notice to or the consent, approval or agreement of any persons or entities
having any interest at any time in the Property or in any manner obligated under
the Secured Obligations (“Interested Parties”) other than Mortgagor, Mortgagee
may, from time to time: (a) fully or partially release any person or entity from
liability for the payment or performance of any Secured Obligation; (b) extend
the maturity of any Secured Obligation; (c) make any agreement with Mortgagor
increasing the amount or otherwise altering the terms of any Secured Obligation;
(d) accept additional security for any Secured Obligation; or (e) release all or
any portion of the Property, Collateral and other security for any Secured
Obligation. None of the foregoing actions shall release or reduce the personal
liability of any of said Interested Parties, or release or impair the priority
of the lien of this Mortgage upon the Property.

 

6.22. SALE OR PARTICIPATION OF LOAN.

 

  a.

Mortgagee may at any time sell, assign, participate or securitize all or any
portion of Mortgagee’s rights and obligations under the Loan Documents, and that
any such sale, assignment, participation or Securitization may be to one or more
financial institutions or other entities, to private investors, or into the
public securities market, in Mortgagee’s sole discretion. Mortgagor further
agrees that Mortgagee may disseminate to any such actual or potential
purchaser(s), assignee(s) or participant(s) (and to any investment banking
firms, Rating Agencies, accounting firms, law firms and other third party
advisory firms and investors involved with the Loan and the Loan Documents or
the applicable sale, assignment, participation or Securitization) all documents
and financial and other information heretofore or hereafter provided to or known
to Mortgagee with respect to: (a) the Property and its operation; (b) any party
connected with the Loan (including, without limitation, Mortgagor, Operating
Tenant any partner or member of Mortgagor or Operating Tenant, any constituent
partner or member of Mortgagor or Operating Tenant, any guarantor and any
nonMortgagor Mortgagor) subject to applicable SEC regulations and as may be
restricted by law. In the event of any such sale, assignment, participation or
Securitization, Mortgagee and the other parties to the same shall share in the
rights and obligations of Mortgagee set forth in the Loan Documents as and to
the extent they shall agree among themselves. In connection with any such sale,
assignment, participation or Securitization, Mortgagor further agrees that the
Loan Documents shall be sufficient evidence of the obligations of Mortgagor to
each purchaser, assignee or participant, and Mortgagor shall, within 15 days
after request by Mortgagee at Mortgagor’s expense; (c) deliver to Mortgagee such
information and documents relating to Mortgagor, Operating Tenant, Guarantor,
Sponsor, the Property and its

 

- 42 -

--------------------------------------------------------------------------------

 

operation and any party connected with the Loan as Mortgagee or any Rating
Agency may request; (d) deliver to Mortgagee an estoppel certificate for the
benefit of Mortgagee and any other party designated by Mortgagee verifying the
status and terms of the Loan, in form and content reasonably satisfactory to
Mortgagee; (e) execute such amendments to the Loan Documents and Mortgagor’s or
any general partner’s or managing member’s organizational documents as may be
reasonably requested by Mortgagee or requested by the Rating Agencies including,
without limitation, such amendments as may be required in order to effect a
bifurcation of the Loan into two or more components and/or separate notes and/or
creating a senior/subordinate note structure (any of the foregoing, a “Loan
Bifurcation”); provided, however, that Mortgagor shall not be required to modify
or amend any Loan Document if such modification or amendment would change (x)
the interest rate, (y) the stated maturity or (z) the amortization of principal
set forth in the Note, except in connection with a Loan Bifurcation which may
result in varying fixed interest rates and amortization schedules, but which
shall (I) have the same initial weighted average coupon of the original Note,
(II) provide that, prior to a Default, any portion of the debt service due under
the Loan which amortizes the Loan shall be applied pro-rata to each bifurcated
note and/or component (as applicable) and (III) not change the stated maturity
date; and (f) provide Mortgagee with any amendments and restatements of the
Non-Consolidation Opinion or any other legal opinion delivered in connection
with the closing of the Loan as any Rating Agency may request. Mortgagor shall
not be responsible for any of Lender’s out-of-pocket costs in connection with
the Securitization of the Loan, provided, however, Mortgagor shall be
responsible for its costs in connection with complying with this Section 6.22.
The indemnity obligations of Mortgagor under the Loan Documents shall also apply
with respect to any purchaser, assignee or participant.

 

  b. [Intentionally Deleted]

 

6.23. SECURITIZATION INDEMNIFICATION.

 

  a. Mortgagor understands that information provided to Mortgagee by Mortgagor
and its agents, counsel and representatives may be included in disclosure
documents in connection with the Securitization, including, without limitation,
an offering circular, a prospectus, prospectus supplement, private placement
memorandum or other offering document (each, an “Disclosure Document”) and may
also be included in filings with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended (the “Securities Act”), or the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and may be
made available to investors or prospective investors in the Securities, the
Rating Agencies, and service providers relating to the Securitization.

 

  b.

Mortgagor shall provide in connection with each of (i) a preliminary and a final
private placement memorandum or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable, an agreement (A) certifying that Mortgagor
has examined such Disclosure Documents specified by Lender and that each such

 

- 43 -

--------------------------------------------------------------------------------

 

Disclosure Document, as it relates to Mortgagor, Mortgagor Affiliates, the
Property, Manager, Sponsor, Guarantor and all other aspects of the Loan, does
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 6.23, Lender hereunder shall include
its officers and directors), the Affiliate of Wells Fargo Bank, National
Association (“Wells Fargo”) that has filed the registration statement relating
to the Securitization (the “Registration Statement”), each of its directors,
each of its officers who have signed the Registration Statement and each Person
that controls the Affiliate within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, the “Wells Fargo Group”),
and Wells Fargo, and any other placement agent or underwriter with respect to
the Securitization, each of their respective directors and each Person who
controls Wells Fargo or any other placement agent or underwriter within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
(collectively, the “Underwriter Group”) for any losses, claims, damages or
liabilities (collectively, the “Liabilities”) to which Lender, the Wells Fargo
Group or the Underwriter Group may become subject insofar as the Liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such sections or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated in such sections or necessary in order to make the statements in
such sections, in light of the circumstances under which they were made, not
misleading and (C) agreeing to reimburse Lender, the Wells Fargo Group and/or
the Underwriter Group for any legal or other expenses reasonably incurred by
Lender, the Wells Fargo Group and the Underwriter Group in connection with
investigating or defending the Liabilities; provided, however, that Mortgagor
will be liable in any such case under clauses (B) or (C) above only to the
extent that any such loss claim, damage or liability arises out of or is based
upon any such untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Lender by or on behalf of Mortgagor in
connection with the preparation of the Disclosure Document or in connection with
the underwriting or closing of the Loan, including, without limitation,
financial statements of Mortgagor, operating statements and rent rolls with
respect to the Property. This indemnity agreement will be in addition to any
liability which Mortgagor may otherwise have.

 

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

 

- 44 -

--------------------------------------------------------------------------------

  d. Promptly after receipt by an indemnified party under this Section 6.23 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6.23, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party under this
Section 6.23, such indemnified party shall pay for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there are any legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party at
the cost of the indemnifying party. The indemnifying party shall not be liable
for the expenses of more than one separate counsel unless an indemnified party
shall have reasonably concluded that there may be legal defenses available to it
that are different from or additional to those available to another indemnified
party.

 

  e.

In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 6.23(b) or (c) is for any
reason held to be unenforceable as to an indemnified party in respect of any
losses, claims, damages or liabilities (or action in respect thereof) referred
to therein which would otherwise be indemnifiable under Section 6.23(b) or (c),
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
action in respect thereof); provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, the following factors
shall be considered: (i) Wells Fargo’s and Mortgagor’s relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted; (ii) the

 

- 45 -

--------------------------------------------------------------------------------

 

opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and
Mortgagor hereby agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.

 

  f. The liabilities and obligations of both Mortgagor and Lender under this
Section 6.23 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

 

6.24. RELEASE. Upon payment of all sums secured by this Mortgage, Mortgagee
shall discharge this Mortgage. Mortgagor shall pay Mortgagee’s reasonable costs
incurred in discharging this Mortgage.

 

6.25. SUBROGATION. Mortgagee shall be subrogated to the lien of all
encumbrances, whether released of record or not, paid in whole or in part by
Mortgagee pursuant to this Mortgage or by the proceeds of any loan secured by
this Mortgage.

 

6.26. [Intentionally Deleted]

 

6.27. CONVERSION TO REGISTERED FORM. At the request of Mortgagee, Mortgagor
shall appoint, as its agent, a registrar and transfer agent (the “Registrar”)
reasonably acceptable to Lender which shall maintain, subject to such reasonable
regulations as it shall provide, such books and records as are necessary for the
registration and transfer of the Note in a manner that shall cause the Note to
be considered to be in registered form for purposes of Section 163(f) of the
Code. The option to convert the Note into registered form once exercised may not
be revoked. Any agreement setting out the rights and obligation of the Registrar
shall be subject to the reasonable approval of Lender. Mortgagor may revoke the
appointment of any particular person as Registrar, effective upon the
effectiveness of the appointment of a replacement Registrar. The Registrar shall
not be entitled to any fee from Mortgagor or Lender or any other lender in
respect of transfers of the Note and other Loan Documents.

 

6.28. EXTENSION OF OPERATING LEASE. No later than six (6) months prior to the
current expiration date of the Operating Lease (August 30, 2010), and each
applicable expiration date of the Operating Lease thereafter through and
including the Maturity Date (as defined in the Note), Mortgagor shall (a) (i)
enter into an agreement with Operating Tenant to extend the term of the
Operating Lease for a term of no less than five (5) years and (ii) deliver to
Mortgagee a fully-executed copy of the agreement whereby the Operating Lease is
so extended to the next applicable expiration date; or (b) deliver evidence,
reasonably satisfactory to Mortgagee, that there shall be no material adverse
affect to Borrower, Guarantor, Sponsor, and the Property, if the Operating Lease
is terminated or not extended.

 

6.29. GROUND LEASE. With respect to the Ground Lease, Mortgagor agrees:

 

  a.

To perform all obligations of the tenant under the Ground Lease and any statute,
ordinance, rule or regulation relating thereto, and not to cause or permit any
breach thereof. If Mortgagor shall default under the Ground Lease, or if

 

- 46 -

--------------------------------------------------------------------------------

 

Mortgagee shall receive notice of any default by Mortgagor under the Ground
Lease, Mortgagee may, at its option but without any obligation to do so, take
any action necessary or desirable to cure any such default, Mortgagee being
authorized to enter upon the Land for such purposes with or without notice and
without becoming a mortgagee in possession; provided, however, Mortgagee will
not undertake to cure any default that Mortgagor has commenced and is diligently
and expeditiously proceeding to cure. Mortgagor shall, immediately on demand,
pay to Mortgagee all costs of Mortgagee incurred in curing any such default,
together with interest on such costs from the date of expenditure until said
sums have been paid, at the rate of interest applicable to the principal balance
of the Note as specified therein.

 

  b. To give prompt notice to Mortgagee of any default by any party under the
Ground Lease (which shall include, but not be limited to, copies of any default
notices sent to Landlord or received by Mortgagor), to give prompt notice to
Mortgagee of any litigation or arbitration with respect to the Ground Lease, and
to furnish to Mortgagee all information that it may reasonably request
concerning the performance by Mortgagor of Mortgagor’s obligations under the
Ground Lease.

 

  c. That the provisions hereof shall be deemed to be obligations of Mortgagor
in addition to Mortgagor’s obligations as tenant with respect to similar matters
contained in the Ground Lease; provided, however, the inclusion herein of any
obligations relating to similar matters as to which Mortgagor is obligated under
the Ground Lease shall not restrict or limit Mortgagor’s obligations to perform
promptly all of its obligations as tenant under the Ground Lease, and nothing in
this Mortgage shall be construed as requiring Mortgagor or Mortgagee to take or
omit to take any action which would cause a default under the Ground Lease.

 

  d. That so long as this Mortgage is in effect, there shall be no merger of the
Ground Lease, nor of the leasehold estate or other estate created thereby, with
the fee estate in the Land by reason of the fact that the Ground Lease, or the
leasehold estate or other estate created thereby, may be held directly or
indirectly by or for the account of any person or entity who or which also holds
the fee estate in the Land. If Mortgagor acquires the fee title or any other
estate, title or interest in the Land, this Mortgage shall attach to and be a
lien upon the fee title or such other estate so acquired, and such fee title or
other estate shall, without further assignment, mortgage or conveyance, become
and remain subject to the lien of and covered by this Mortgage. Mortgagor shall
notify Mortgagee of any such acquisition by Mortgagor and, on written request by
Mortgagee, shall cause to be executed and recorded all such documents and
instruments as may in the reasonable opinion of Mortgagee be required to carry
out the intent and meaning hereof.

 

  e.

That, so long as this Mortgage is in effect, no termination or surrender by
Mortgagor as tenant under the Ground Lease to Landlord thereunder, shall be
valid or effective. The terms of the Ground Lease may not be amended or modified
or terminated or subordinated to any mortgage, deed of trust, lease or

 

- 47 -

--------------------------------------------------------------------------------

 

other interest, either orally or in writing, without the prior written consent
of Mortgagee which consent shall not be unreasonably withheld, conditioned or
delayed.

 

  f. That if the Ground Lease is for any reason whatsoever terminated prior to
the expiration of its term and, if pursuant to any provision of the Ground Lease
or otherwise, Mortgagee or its designee shall acquire from Landlord a new lease
or other agreement for the use of the Land, Mortgagor shall have no right, title
or interest in or to such new lease or other agreement or the estate created
thereby.

 

  g. That, so long as this Mortgage is in effect, Mortgagor shall timely
exercise all renewal and extension options under the Ground Lease and comply
with all conditions precedent to the exercise thereof.

 

  h. That from time to time upon the written request of Mortgagee, Mortgagor
shall deliver to Mortgagee estoppel certificates from Landlord in form and
substance reasonably acceptable to Mortgagee to the extent Landlord is obligated
to deliver such certificates pursuant to the terms of the Ground Lease.

 

  i. Notwithstanding anything contained in the Ground Lease to the contrary,
Mortgagor shall not further sublet any portion of the Property (other than as
permitted pursuant to Section 3.4 hereof) without prior written consent of
Mortgagee. Each such sublease hereafter made shall provide that (i) in the event
of the termination of the Ground Lease, the sublease shall not terminate or be
terminable by the lessee thereunder; (ii) in the event of any action for the
foreclosure of the Mortgage, the sublease shall not terminate or be terminable
by the lessee thereunder by reason of the termination of the Ground Lease unless
such lessee is specifically named and joined in any such action and unless a
judgment is obtained therein against such lessee; and (iii) in the event that
the Ground Lease is terminated as aforesaid, the lessee under the sublease shall
attorn to the lessor under the Ground Lease or to the purchaser at the sale of
the Property on such foreclosure, as the case may be. In the event that any
portion of the Property shall be sublet pursuant to the terms of this
subsection, such sublease shall be deemed to be included in the Property.

 

6.30. LANDLORD’S BANKRUPTCY.

 

  a.

Mortgagor acknowledges that pursuant to Section 365 of the Bankruptcy Reform Act
of 1978 (as the same may be amended from time to time, “Bankruptcy Act”) it is
possible that a trustee in bankruptcy of Landlord or Landlord as a
debtor-in-possession could reject the Ground Lease, in which case Mortgagor, as
tenant, would have the election described in Section 365(h) of the Bankruptcy
Act (which election, as the same may be amended from time to time, and together
with any comparable right under any other state or federal law relating to
bankruptcy, reorganization or other relief for debtors, whether now or hereafter
in effect, is herein called the “Election”) to treat the Ground Lease as
terminated by such rejection or, in the alternative, to remain in possession for
the balance of the term

 

- 48 -

--------------------------------------------------------------------------------

 

of the Ground Lease and any renewal or extension thereof that is enforceable by
the tenant under applicable nonbankruptcy law. Mortgagor shall not permit the
termination of the Ground Lease by exercise of the Election or otherwise without
the prior written consent of Mortgagee, which consent may be withheld,
conditioned or delayed for any reason in Mortgagee’s sole and absolute
discretion. Mortgagor acknowledges that since the Ground Lease is a primary part
of the security for the Secured Obligations, it is not anticipated that
Mortgagee would consent to termination of the Ground Lease.

 

  b. In order to secure the covenant made in this Section 6.30 and as security
for the other Secured Obligations, Mortgagor assigns the Election and all rights
related thereto to Mortgagee. Mortgagor acknowledges and agrees that the
foregoing assignment of the Election and related rights is one of the rights
which Mortgagee may use at any time in order to protect and preserve the other
rights and interests of Mortgagee under this Mortgage, since exercise of the
Election in favor of terminating the Ground Lease would constitute waste
hereunder. Mortgagor agrees that exercise of the Election in favor of preserving
the right to possession under the Ground Lease shall not be deemed to constitute
a taking or sale of the Property by Mortgagee and shall not entitle Mortgagor to
any credit against the Secured Obligations.

 

  c. Mortgagor acknowledges and agrees that in the event the Election is
exercised in favor of Mortgagor remaining in possession, Mortgagor’s resulting
rights under the Ground Lease, as adjusted by the effect of Section 365 of the
Bankruptcy Act, shall then be part of the Property and shall be subject to the
lien created by this Mortgage.

 

6.31. MORTGAGOR’S (TENANT’S) BANKRUPTCY.

 

  a. If there shall be filed by or against Mortgagor a petition under the
Bankruptcy Act, and Mortgagor, as the tenant under the Ground Lease, shall
determine to reject the Ground Lease pursuant to Section 365(a) of the
Bankruptcy Act, then Mortgagor shall give Mortgagee not less than ten (10) days’
prior notice of the date on which Mortgagor shall apply to the bankruptcy court
for authority to reject the Ground Lease. Mortgagee shall have the right, but
not the obligation, to serve upon Mortgagor within such 10-day period a notice
stating that (i) Mortgagee demands that Mortgagor assume and assign the Ground
Lease to Mortgagee pursuant to Section 365 of the Bankruptcy Act and (ii)
Mortgagee agrees to cure or provide adequate assurance of prompt cure of all
defaults and provide adequate assurance of future performance under the Ground
Lease. If Mortgagee serves upon Mortgagor the notice described in the preceding
sentence, Mortgagor shall not seek to reject the Ground Lease and shall comply
with the demand provided for in clause (i) of the preceding sentence within
thirty (30) days after the notice shall have been given, subject to the
performance by Mortgagee of the agreement provided for in clause (ii) of the
preceding sentence.

 

- 49 -

--------------------------------------------------------------------------------

  b. Effective upon the entry of an order for relief in respect of Mortgagor
under the Bankruptcy Act, Mortgagor hereby assigns and transfers to Mortgagee a
non-exclusive right to apply to the bankruptcy court under Section 365(d)(4) of
the Bankruptcy Act for an order extending the period during which the Ground
Lease may be rejected or assumed.

 

ARTICLE 7. DEFAULT

 

7.1. DEFAULT. For all purposes hereof, “Default” shall mean either an “Optional
Default” (as defined below) or an “Automatic Default” (as defined below).

 

  a. Optional Default. An “Optional Default” shall occur, at Mortgagee’s option,
upon the occurrence of any of the following events:

 

  (i) Monetary. Mortgagor or Mortgagor shall fail to (aa) pay when due any sums
which by their express terms require immediate payment without any grace period
or sums which are payable on the Maturity Date, or (bb) pay within 5 days when
due any other sums payable under the Note, this Mortgage or any of the other
Loan Documents, including without limitation, any monthly payment due under the
Note.

 

  (ii) Failure to Perform. Operating Tenant or Mortgagor shall fail to observe,
perform or discharge any of Operating Tenant’s or Mortgagor’s obligations,
covenants, conditions or agreements, other than Operating Tenant’s or
Mortgagor’s payment obligations, under the Note, this Mortgage or any of the
other Loan Documents, and (aa) such failure shall remain uncured for 30 days
after written notice thereof shall have been given to Operating Tenant or
Mortgagor, as the case may be, by Mortgagee or (bb) if such failure is of such a
nature that it cannot be cured within such 30 day period, Operating Tenant or
Mortgagor shall fail to commence to cure such failure within such 30 day period
or shall fail to diligently prosecute such curative action thereafter.

 

  (iii) Representations and Warranties. Any representation, warranty,
certificate or other statement (financial or otherwise) made or furnished by or
on behalf of Mortgagor, Mortgagor, or a guarantor, if any, to Mortgagee or in
connection with any of the Loan Documents, or as an inducement to Mortgagee to
make the Loan, shall be false, incorrect, incomplete or misleading in any
material respect when made or furnished.

 

  (iv) Attachment. The sequestration or attachment of, or levy or execution upon
any of the Property, the Collateral or any other collateral provided by
Mortgagor or Mortgagor under any of the Loan Documents, or any material portion
of the other assets of Mortgagor or Mortgagor, which sequestration, attachment,
levy or execution is not released or dismissed within 45 days after its
occurrence; or the sale of any assets affected by any of the foregoing.

 

- 50 -

--------------------------------------------------------------------------------

  (v) Uninsured Casualty. The occurrence of an uninsured casualty with respect
to any material portion (as reasonably determined by Mortgagee) of the Property
unless: (aa) no other Default has occurred and is continuing at the time of such
casualty or occurs thereafter; (bb) Mortgagor promptly notifies Mortgagee of the
occurrence of such casualty; and (cc) not more than 45 days after the occurrence
of such casualty, Mortgagor delivers to Mortgagee immediately available funds in
an amount sufficient, in Mortgagee’s reasonable opinion, to pay all costs of the
repair or restoration (including, without limitation, taxes, financing charges,
insurance and rent during the repair period). So long as no Default has occurred
and is continuing at the time of Mortgagee’s receipt of such funds and no
Default occurs thereafter, Mortgagee shall make such funds available for the
repair or restoration of the Property. Notwithstanding the foregoing, Mortgagee
shall have no obligation to make any funds available for repair or restoration
of the Property unless and until all the conditions set forth in clauses (bb)
and (cc) of Section 6.11 (b) iii of this Mortgage have been satisfied. Mortgagor
acknowledges that the specific conditions described above are reasonable.

 

  (vi) Management Agreement Default. If a default has occurred and continues
beyond any applicable cure period under the Management Agreement, provided such
default permits a party to terminate or cancel the Management Agreement .

 

  (vii) Cancellation of Management Agreement. Except as set forth in the Loan
Documents, if Mortgagor or Operating Tenant terminates or cancels the Management
Agreement.

 

  (viii) Franchise Agreement. If Mortgagor fails to comply within the provisions
of Section 5.1(cc) hereof.

 

  (ix) Hotel Flag. If (A) Manager, Mortgagor, or Operating Tenant fails to
operate and brand the hotel as a Westin Flag or an Approved Hotel Flag in
accordance with the terms of Section 5.3(d) of this Mortgage and (B) fails to
comply with Section 3.10 of Exhibit A to the Note.

 

  (x) Ceasing to Operate Hotel. If the Property ceases to be operated as a hotel
or such business is terminated for any reason whatsoever (other than temporary
cessation in connection with any renovations to the Property or restoration of
the Property after casualty or condemnation).

 

  (xi) Ground Lease. If at any time (aa) the Ground Lease is modified or
surrendered by Mortgagor without Mortgagee’s prior written consent, or (bb) if
the Ground Lease is terminated without Mortgagee’s consent.

 

- 51 -

--------------------------------------------------------------------------------

  b. Automatic Default. An “Automatic Default” shall occur automatically upon
the occurrence of any of the following events:

 

  (i) Voluntary Bankruptcy, Insolvency, Dissolution. (aa) Mortgagor’s or
Operating Tenant’s filing a petition for relief under the Bankruptcy Reform Act
of 1978, as amended or recodified (“Bankruptcy Code”), or under any other
present or future state or federal law regarding bankruptcy, reorganization or
other relief to debtors (collectively, “Debtor Relief Law”); or (bb) Mortgagor’s
or Operating Tenant’s filing any pleading in any involuntary proceeding under
the Bankruptcy Code or other Debtor Relief Law which admits the jurisdiction of
a court to regulate Mortgagor or the Property or the petition’s material
allegations regarding Mortgagor’s or Operating Tenant’s insolvency; or (cc)
Mortgagor’s or Operating Tenant’s making a general assignment for the benefit of
creditors; or (dd) Mortgagor’s or Operating Tenant’s applying for, or the
appointment of, a receiver, trustee, custodian or liquidator of Mortgagor,
Operating Tenant or any of their property; or (ee) the filing by or against
Mortgagor or Operating Tenant of a petition seeking the liquidation or
dissolution of Mortgagor or Operating Tenant or the commencement of any other
procedure to liquidate or dissolve Mortgagor or Operating Tenant.

 

  (ii) Involuntary Bankruptcy. Mortgagor’s or Operating Tenant’s failure to
effect a full dismissal of any involuntary petition under the Bankruptcy Code or
other Debtor Relief Law that is filed against Mortgagor or Operating Tenant or
in any way restrains or limits Mortgagor, Operating Tenant, or Mortgagee
regarding the Loan or the Property, prior to the earlier of the entry of any
order granting relief sought in the involuntary petition or 45 days after the
date of filing of the petition.

 

  (iii) Partners, Guarantors. The occurrence of an event specified in Sections
(i) or (ii) as to Mortgagor, Operating Tenant, or any guarantor or other person
or entity in any manner obligated to Mortgagee under the Loan Documents unless,
with respect to any guarantor, within thirty (30) days from such event a
substitute guarantor reasonably acceptable to Mortgagee executes and delivers a
replacement guaranty in form and substance reasonably acceptable to Lender.

 

7.2. ACCELERATION. Upon the occurrence of an Optional Default, Mortgagee may, at
its option, declare all sums owing to Mortgagee under the Note and the other
Loan Documents immediately due and payable. Upon the occurrence of an Automatic
Default, all sums owing to Mortgagee under the Note and the other Loan Documents
shall automatically become immediately due and payable.

 

7.3. RIGHTS AND REMEDIES. In addition to the rights and remedies in Section 7.2
above, at any time after a Default, Mortgagee shall have all of the following
rights and remedies:

 

  a.

Entry on Property. With or without notice, and without releasing Mortgagor from
any Secured Obligation, and without becoming a mortgagee in possession,

 

- 52 -

--------------------------------------------------------------------------------

 

to enter upon the Property from time to time and to do such acts and things as
Mortgagee deems necessary or desirable in order to inspect, investigate, assess
and protect the security hereof or to cure any Default, including, without
limitation: (i) to take and possess all documents, books, records, papers and
accounts of Mortgagor, Mortgagor or the then owner of the Property which relate
to the Property; (ii) to make, terminate, enforce or modify leases of the
Property upon such terms and conditions as Mortgagee deems proper; (iii) to make
repairs, alterations and improvements to the Property necessary, in Mortgagee’s
sole judgment, to protect or enhance the security hereof; (iv) to appear in and
defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Mortgagee hereunder; (v) to pay, purchase, contest or
compromise any encumbrance, charge, lien or claim of lien which, in the sole
judgment of Mortgagee, is or may be senior in priority hereto, the judgment of
Mortgagee being conclusive as between the parties hereto; (vi) to obtain
insurance; (vii) to pay any premiums or charges with respect to insurance
required to be carried hereunder or under any other Loan Document; (viii) to
obtain a court order to enforce Mortgagee’s right to enter and inspect the
Property for Hazardous Materials, in which regard the decision of Mortgagee as
to whether there exists a release or threatened release of Hazardous Materials
onto the Property shall be deemed reasonable and conclusive as between the
parties hereto; (ix) to have a receiver appointed pursuant to applicable law to
enforce Mortgagee’s rights to enter and inspect the Property for Hazardous
Materials; and/or (x) to employ legal counsel, accountants, engineers,
consultants, contractors and other appropriate persons to assist them;

 

  b. Appointment of Receiver. With or without notice or hearing to apply to a
court of competent jurisdiction for and obtain appointment of a receiver,
trustee, liquidator or conservator of the Property, for any purpose, including,
without limitation, to enforce Mortgagee’s rights to collect Payments and to
enter on and inspect the Property for Hazardous Materials, as a matter of strict
right and without regard to: (i) the adequacy of the security for the repayment
of the Secured Obligations; (ii) the existence of a declaration that the Secured
Obligations are immediately due and payable; (iii) the filing of a notice of
default; or (iv) the solvency of Mortgagor, Mortgagor or any other guarantor or
other person or entity in any manner obligated to Mortgagee under the Loan
Documents.

 

  c. Statutory Power of Sale.

 

  (i)

This Mortgage is upon the STATUTORY CONDITION and upon the further condition
that all covenants and agreements of, and conditions imposed upon, Mortgagor
contained herein and in the Note and the other instruments and agreements
evidencing or securing the Secured Obligations shall be kept and fully
performed, for any breach of which Mortgagee shall have the STATUTORY POWER OF
SALE, and upon the further condition that upon a Default, Mortgagee shall have
as to the Collateral all the remedies of a secured party under the UCC,
including

 

- 53 -

--------------------------------------------------------------------------------

 

but not limited to, the option to proceed as to both the Property and the
Collateral under the law relating to the foreclosure of real estate mortgages as
enacted by the Commonwealth of Massachusetts, and such further remedies as from
time to time may hereafter be provided in the Commonwealth of Massachusetts for
a secured party, and upon the further condition that all rights of Mortgagee
under this Mortgagee under this Mortgage as to the Collateral and the Property
may be exercised together or separately and, at Mortgagee’s discretion, in
connection with the exercise by Mortgagee of its other rights under any one or
more of the Loan Documents. In case of a foreclosure sale Mortgagee shall be
entitled to retain 1% of the purchase money in addition to the costs, charges
and expenses allowed under the Statutory Power of Sale or under this Mortgage.
In case redemption is had by Mortgagor after foreclosure proceedings have begun,
Mortgagee shall be entitled to collect all costs, charges and expenses,
including reasonable attorneys’ fees, incurred up to and including the time of
redemption.

 

  (ii) In exercising its power of sale under this instrument, Mortgagee may sell
the Collateral either separately from or together with the Property and the
balance of the Property or any part thereof, either as one parcel or unit or in
such separate parcels or units, all as Mortgagee may in its discretion elect;
and may so sell the Property, as one parcel or unit or in such separate parcels
or units, all as Mortgagee may in its discretion elect; and may so sell the
Property or any part thereof either separately from or together with the whole
or any part of other collateral which may constitute security for any obligation
secured by the Property, also as Mortgagee may in its discretion elect. In the
event of any separate sale of the Collateral, Mortgagee will give to Mortgagor
reasonable notice of the time and place of any public sale or of the time after
which any private sale or other intended disposition thereof is to be made, and
such requirement of reasonable notice shall be met if such notice is mailed
postage prepaid to the address of Mortgagor as provided in this Mortgage at
least 10 days before the time of the sale or other disposition.

 

  d. Other Rights. To exercise such other rights as Mortgagee may have at law or
in equity or pursuant to the terms and conditions of this Mortgage or any of the
other Loan Documents.

 

In connection with any sale or sales hereunder, Mortgagee may elect to treat any
of the Property which consists of a right in action or which is property that
can be severed from the Property (including, without limitation, any Improvement
and any other improvements forming a part thereof) without causing structural
damage thereto as if the same were personal property or a fixture, as the case
may be, and dispose of the same in accordance with applicable law, separate and
apart from the sale of the Property. Any sale of Collateral hereunder shall be
conducted in any manner permitted by the UCC.

 

- 54 -

--------------------------------------------------------------------------------

7.4. STATUTORY POWER OF SALE PROCEEDS. If Mortgagee invokes the STATUTORY POWER
OF SALE, the proceeds of such sale shall be applied in the following order: (a)
to all costs and expenses of the sale, including, but not limited to, attorneys’
fees and costs of title evidence; (b) to all sums secured by this Mortgage in
such order as Mortgage, in Mortgagee’s sole discretion, directs; and (c) the
excess, if any, to the person or persons legally entitled thereto.

 

7.5. WAIVER BY MORTGAGOR. Mortgagor, to the fullest extent that Mortgagor may do
so, hereby; (a) agrees that Mortgagor will not at any time insist upon, plead,
claim or take the benefit or advantage of any law now or hereafter in force
providing for any appraisement, valuation, stay, extension or redemption, and
waives and releases all rights of redemption, valuation, appraisement, stay or
execution, notice of election to mature or declare due the debt secured hereby;
and (b) waives all rights to marshalling of the assets of Mortgagor, including
the Property, and agrees not to assert any right under any statute or rule of
law pertaining to the marshalling of assets, or other matters whatever to
defeat, reduce or affect the right of Mortgagee under the terms of this Mortgage
or the Note to a sale of the Property for the collection of the Secured
Obligations evidenced by the Note without any prior or different resort for
collection, or the right of Mortgagee to the payment of such indebtedness out of
the proceeds of the sale of the Property in preference to every other claimant
whatever.

 

7.6. NO CURE OR WAIVER. Neither Mortgagee’s nor any receiver’s entry upon and
taking possession of all or any part of the Property, nor any collection of
rents, issues, profits, insurance proceeds, condemnation proceeds or damages,
other security or proceeds of other security, or other sums, nor the application
of any collected sum to any Secured Obligation, nor the exercise of any other
right or remedy by Mortgagee or any receiver shall cure or waive any Default or
notice of default under this Mortgage, or nullify the effect of any notice of
default or sale (unless all Secured Obligations then due have been paid or
performed and Mortgagor has cured all other Defaults hereunder), or impair the
status of the security, or prejudice Mortgagee in the exercise of any right or
remedy, or be construed as an affirmation by Mortgagee of any tenancy, lease or
option or a subordination of the lien of this Mortgage.

 

7.7. PAYMENT OF COSTS, EXPENSES AND ATTORNEYS’ FEES. Mortgagor agrees to pay to
Mortgagee immediately and upon demand all costs and expenses incurred by
Mortgagee in the enforcement of the terms and conditions of this Mortgage
(including, without limitation, costs associated with the STATUTORY POWER OF
SALE granted hereunder, court costs and attorneys’ fees, whether incurred in
litigation or not) with interest from the date of expenditure until said sums
have been paid at the rate of interest applicable to the principal balance of
the Note as specified therein.

 

7.8. POWER TO FILE NOTICES AND CURE DEFAULTS. Mortgagor hereby irrevocably
appoints Mortgagee and its successors and assigns, as its attorney-in-fact,
which agency is coupled with an interest, to perform any obligation of Mortgagor
hereunder upon the occurrence of an event, act or omission which, with notice or
passage of time or both, would constitute a Default, provided, however, that:
(a) Mortgagee as such attorney-in-fact shall only be accountable for such funds
as are actually received by Mortgagee; and (b) Mortgagee shall not be liable to
Mortgagor or any other person or entity for any failure to act under this
Section.

 

- 55 -

--------------------------------------------------------------------------------

7.9. REMEDIES CUMULATIVE. All rights and remedies of Mortgagee under this
Mortgage and the other Loan Documents are cumulative and are in addition to all
rights and remedies provided by applicable law (including specifically that of
foreclosure of this Mortgage as though it were a mortgage). Mortgagee may
enforce any one or more remedies or rights under the Loan Documents either
successively or concurrently.

 

ARTICLE 8. MISCELLANEOUS PROVISIONS

 

8.1. ADDITIONAL PROVISIONS. The Loan Documents contain or incorporate by
reference the entire agreement of the parties with respect to matters
contemplated herein and supersede all prior negotiations. The Loan Documents
grant further rights to Mortgagee and contain further agreements and affirmative
and negative covenants by Mortgagor which apply to this Mortgage and to the
Property and such further rights and agreements are incorporated herein by this
reference. THE OBLIGATIONS AND LIABILITIES OF MORTGAGOR UNDER THIS MORTGAGE AND
THE OTHER LOAN DOCUMENTS ARE SUBJECT TO THE PROVISIONS OF THE SECTION IN THE
NOTE ENTITLED “MORTGAGOR’S LIABILITY.”

 

8.2. NON-WAIVER. By accepting payment of any amount secured hereby after its due
date or late performance of any other Secured Obligation, Mortgagee shall not
waive its right against any person obligated directly or indirectly hereunder or
on any Secured Obligation, either to require prompt payment or performance when
due of all other sums and obligations so secured or to declare default for
failure to make such prompt payment or performance. No exercise of any right or
remedy by Mortgagee hereunder shall constitute a waiver of any other right or
remedy herein contained or provided by law. No failure by Mortgagee to exercise
any right or remedy hereunder arising upon any Default shall be construed to
prejudice Mortgagee’s rights or remedies upon the occurrence of any other or
subsequent Default. No delay by Mortgagee in exercising any such right or remedy
shall be construed to preclude Mortgagee from the exercise thereof at any time
while that Default is continuing. No notice to nor demand on Mortgagor shall of
itself entitle Mortgagor to any other or further notice or demand in similar or
other circumstances.

 

8.3. CONSENTS AND APPROVALS. Wherever Mortgagee’s consent, approval, acceptance
or satisfaction is required under any provision of this Mortgage or any of the
other Loan Documents, such consent, approval, acceptance or satisfaction shall
not be unreasonably withheld, conditioned or delayed by Mortgagee unless such
provision expressly so provides.

 

8.4.

PERMITTED CONTESTS. After prior written notice to Mortgagee, Mortgagor may
contest, by appropriate legal or other proceedings conducted in good faith and
with due diligence, the amount, validity or application, in whole or in part, of
any lien, levy, tax or assessment, or any lien of any laborer, mechanic,
materialman, supplier or vendor, or the application to Mortgagor or the Property
of any law or the validity thereof, the assertion

 

- 56 -

--------------------------------------------------------------------------------

 

or imposition of which, or the failure to pay when due, would constitute a
Default; provided that (a) Mortgagor pursues the contest diligently, in a manner
which Mortgagee determines is not prejudicial to Mortgagee, and does not impair
the priority of this Mortgage; (b) the Property, or any part hereof or estate or
interest therein, shall not be in any danger of being sold, forfeited or lost by
reason of such proceedings; (c) in the case of the contest of any law or other
legal requirement, Mortgagee shall not be in any danger of any civil or criminal
liability; and (d) if required by Mortgagee, Mortgagor deposits with Mortgagee
any funds or other forms of assurance (including a bond or letter of credit)
satisfactory to Mortgagee to protect Mortgagee from the consequences of the
contest being unsuccessful. Mortgagor’s right to contest pursuant to the terms
of this provision shall in no way relieve Mortgagor or Mortgagor of its
obligations under the Loan or to make payments to Mortgagee as and when due.

 

8.5. FURTHER ASSURANCES. Mortgagor shall, upon demand by Mortgagee, execute,
acknowledge (if appropriate) and deliver any and all documents and instruments
and do or cause to be done all further acts reasonably necessary or appropriate
to effectuate the purposes of the Loan Documents and to perfect any assignments
contained therein.

 

8.6. ATTORNEYS’ FEES. If any legal action, suit or proceeding is commenced
between Mortgagor and Mortgagee regarding their respective rights and
obligations under this Mortgage or any of the other Loan Documents, the
prevailing party shall be entitled to recover, in addition to damages or other
relief, costs and expenses, reasonable attorneys’ fees and court costs
(including, without limitation, expert witness fees). As used herein the term
“prevailing party” shall mean the party which obtains the principal relief it
has sought, whether by compromise settlement or judgment. If the party which
commenced or instituted the action, suit or proceeding shall dismiss or
discontinue it without the concurrence of the other party, such other party
shall be deemed the prevailing party.

 

8.7. MORTGAGOR AND MORTGAGEE DEFINED. The term “Mortgagor” includes both the
original Mortgagor and any subsequent owner or owners of any of the Property,
and the term “Mortgagee” includes the original Mortgagee and any future owner or
holder, including assignees, pledges and participants, of the Note or any
interest therein.

 

8.8. DISCLAIMERS.

 

  a.

Nominee Capacity of MERS. MERS serves as mortgagee of record and secured party
solely as nominee, in an administrative capacity, for Lender and its successors
and assigns and only holds legal title to the interests granted, assigned, and
transferred herein. All payments or deposits with respect to the Secured
Obligations shall be made to Lender, all advances under the Loan Documents shall
be made by Lender, and all consents, approvals, or other determinations required
or permitted of Mortgagee herein shall be made by Lender. MERS shall at all
times comply with the instructions of Lender and its successors and assigns. If
necessary to comply with law or custom, MERS (for the benefit of Lender and its
successors and assigns) may be directed by Lender to exercise any or all of
those interests, including without limitation, the right to foreclose and sell
the Property, and take any action required of Lender, including without
limitation, a

 

- 57 -

--------------------------------------------------------------------------------

 

release, discharge or reconveyance of this Mortgage. Subject to the foregoing,
all references herein to “Mortgagee” (including, but not limited to, any
deliveries to Mortgagee) shall include Lender and its successors and assigns.

 

  b. Relationship. The relationship of Mortgagor and Mortgagee under this
Mortgage and the other Loan Documents is, and shall at all times remain, solely
that of Mortgagor and lender (the role of MERS hereunder being solely that of
nominee as set forth in subsection (a) above and not that of a lender), and
Mortgagee neither undertakes nor assumes any responsibility or duty to Mortgagor
or to any third party with respect to the Property. Notwithstanding any other
provisions of this Mortgage and the other Loan Documents: (i) Mortgagee is not,
and shall not be construed to be, a partner, joint venturer, member, alter ego,
manager, controlling person or other business associate or participant of any
kind of Mortgagor, and Mortgagee does not intend to ever assume such status; and
(ii) Mortgagee shall not be deemed responsible for or a participant in any acts,
omissions or decisions of Mortgagor.

 

  c. No Liability. Mortgagee shall not be directly or indirectly liable or
responsible for any loss, claim, cause of action, liability, indebtedness,
damage or injury of any kind or character to any person or property arising from
any construction on, or occupancy or use of, the Property, whether caused by or
arising from: (i) any defect in the Improvements, any building, structure,
grading, fill, landscaping or other improvements thereon or in any on-site or
off-site improvement or other facility therein or thereon; (ii) any act or
omission of Mortgagor or any of Mortgagor’s agents, employees, independent
contractors, licensees or invitees; (iii) any accident in or on the Property or
any fire, flood or other casualty or hazard thereon; (iv) the failure of
Mortgagor or any of Mortgagor’s licensees, employees, invitees, agents,
independent contractors or other representatives to maintain the Property in a
safe condition; or (v) any nuisance made or suffered on any part of the
Property.

 

8.9. SEVERABILITY. If any term of this Mortgage or any other Loan Document, or
the application thereof to any person or circumstances, shall, to any extent, be
invalid or unenforceable, the remainder of this Mortgage or such other Loan
Document, or the application of such term to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby,
and each term of this Mortgage or such other Loan Document shall be valid and
enforceable to the fullest extent permitted by law.

 

8.10. RELATIONSHIP OF ARTICLES. The rights, remedies and interests of Mortgagee
under the mortgage established by Article 1 and the security agreement
established by Article 4 are independent and cumulative, and there shall be no
merger of the mortgage granted hereunder with any security interest created by
the security agreement. Subject to the terms of Articles 2 and 4 hereof,
Mortgagee may elect to exercise or enforce any of its rights, remedies or
interests under either or both the mortgage or the security agreement as
Mortgagee may from time to time deem appropriate. The absolute assignment of
rents and leases established by Article 3 is similarly independent of and
separate from the mortgage and the security agreement.

 

- 58 -

--------------------------------------------------------------------------------

8.11. MERGER. No merger shall occur as a result of Mortgagee’s acquiring any
other estate in, or any other lien on, the Property unless Mortgagee consents to
a merger in writing.

 

8.12. OBLIGATIONS OF MORTGAGOR, JOINT AND SEVERAL. If more than one person has
executed this Mortgage as “Mortgagor”, the obligations of all such persons
hereunder shall be joint and several.

 

8.13. SEPARATE AND COMMUNITY PROPERTY. Any married person who executes this
Mortgage as a “Mortgagor” agrees that any money judgment which Mortgagee obtains
pursuant to the terms of this Mortgage or any other obligation of that married
person secured by this Mortgage may be collected by execution upon any separate
property or community property of that person.

 

8.14. INTEGRATION; INTERPRETATION. The Loan Documents contain or expressly
incorporate by reference the entire agreement of the parties with respect to the
matters contemplated therein and supersede all prior negotiations or agreements,
written or oral. The Loan Documents shall not be modified except by written
instrument executed by all parties. Any reference in any of the Loan Documents
to the Property or Collateral shall include all or any part of the Property or
Collateral. Any reference to the Loan Documents includes any amendments,
renewals or extensions now or hereafter approved by Mortgagee in writing. When
the identity of the parties or other circumstances make it appropriate, the
masculine gender includes the feminine and/or neuter, and the singular number
includes the plural.

 

8.15. CAPITALIZED TERMS. Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Note.

 

8.16. SUCCESSORS IN INTEREST. The terms, covenants, and conditions contained
herein and in the other Loan Documents shall be binding upon and inure to the
benefit of the heirs, successors and assigns of the parties. The foregoing
sentence shall not be construed to permit Mortgagor to assign the Loan except as
otherwise permitted under the Note or the other Loan Documents.

 

8.17.

GOVERNING LAW. This Mortgage was accepted by Mortgagee in the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
construction, validity, enforceability and performance, this Mortgage, the Note
and the other Loan Documents and the obligations arising hereunder and
thereunder shall be governed by, and construed in accordance with, the laws of
the state of New York applicable to contracts made and performed in such state
and any applicable law of the United States of America, except that at all times
the provisions for enforcement of Mortgagee’s STATUTORY POWER OF SALE and all
other remedies granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant hereto and pursuant to the other

 

- 59 -

--------------------------------------------------------------------------------

 

Loan Documents in any Collateral which is located in the state where the
Property is located shall be governed by and construed according to the law of
the state where the Property is located. Except as provided in the immediately
preceding sentence, Mortgagor hereby unconditionally and irrevocably waives, to
the fullest extent permitted by law, any claim to assert that the law of any
jurisdiction other than New York governs this Mortgage, the Note and other Loan
Documents.

 

8.18. CONSENT TO JURISDICTION. Mortgagor irrevocably submits to the jurisdiction
of: (a) any state or federal court sitting in the state of New York over any
suit, action, or proceeding, brought by Mortgagor against Mortgagee, arising out
of or relating to this Mortgage, the Note or the Loan; (b) any state or federal
court sitting in the state where the Property is located or the state in which
Mortgagor’s principal place of business is located over any suit, action or
proceeding, brought by Mortgagee against Mortgagor, arising out of or relating
to this Mortgage, the Note or the Loan; and (c) any state court sitting in the
county of the state where the Property is located over any suit, action, or
proceeding, brought by Mortgagee to exercise its STATUTORY POWER OF SALE under
this Mortgage or any action brought by Mortgagee to enforce its rights with
respect to the Collateral. Mortgagor irrevocably waives, to the fullest extent
permitted by law, any objection that Mortgagor may now or hereafter have to the
laying of venue of any such suit, action, or proceeding brought in any such
court and any claim that any such suit, action, or proceeding brought in any
such court has been brought in an inconvenient forum.

 

8.19. EXHIBITS. Exhibit A is incorporated into this Mortgage by this reference.

 

- 60 -

--------------------------------------------------------------------------------

8.20. ADDRESSES; REQUEST FOR NOTICE. All notices and other communications that
are required or permitted to be given to a party under this Mortgage or the
other Loan Documents shall be in writing, refer to the Loan number, and shall be
sent to such party, either by personal delivery, by overnight delivery service,
by certified first class mail, return receipt requested, or by facsimile
transmission to the addressee or facsimile number below. All such notices and
communications shall be effective upon receipt of such delivery or facsimile
transmission. The addresses of the parties are set forth on page 1 of this
Mortgage and the facsimile numbers for the parties are as follows:

 

Mortgagee:

 

MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.

FAX No.: (703) 748-0183

 

Mortgagor:

 

LHO BACKSTREETS, L.L.C.

c/o LaSalle Hotel Properties

3 Bethesda Metro Center Suite 1200

Bethesda, Maryland 20814

FAX No.: (301) 941-1553

 

Mortgagor’s principal place of business is at the address set forth on page 1 of
this Mortgage.

 

Any Mortgagor whose address is set forth on page 1 of this Mortgage hereby
requests that a copy of notice of default and notice of sale be delivered to it
at that address. Failure to insert an address shall constitute a designation of
Mortgagor’s last known address as the address for such notice. Any party shall
have the right to change its address for notice hereunder to any other location
within the continental United States by giving 30 days notice to the other
parties in the manner set forth above.

 

8.21. COUNTERPARTS. This Mortgage may be executed in any number of counterparts,
each of which, when executed and delivered, will be deemed an original and all
of which taken together, will be deemed to be one and the same instrument.

 

8.22. BUSINESS LOAN; NOT PERSONAL RESIDENCE. Mortgagor covenants, warrants and
represents that all of the proceeds of the loan shall be used for business or
commercial purposes, none of the proceeds of the Loan shall be used for
personal, family or household purposes, and no individual liable for the loan
resides or intends to reside in any portion of the Property.

 

8.23.

WAIVER OF JURY TRIAL. MORTGAGEE AND MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION

 

- 61 -

--------------------------------------------------------------------------------

 

BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS MORTGAGE OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF MORTGAGEE OR MORTGAGOR. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR MORTGAGEE TO ENTER INTO THIS MORTGAGE.

 

8.24. OPERATING TENANT - NO LIABILITY. Mortgagee hereby acknowledges that
Operating Tenant is not liable for the indebtedness evidenced by the Note.

 

8.25. DEFINED TERMS. Any capitalized terms that are used herein and not defined
shall have the meaning set forth in the Note.

 

8.26. RECOURSE: This Mortgage is subject to Section 8 of the Note, and the
provisions of Section 8 are hereby incorporated herein by reference.

 

8.27. Notwithstanding anything to the contrary contained herein, to the extent
Lender’s prior approval is required for any matters relating to the Ground Lease
or the Management Agreement as provided for in this Mortgage, Lender shall have
ten (10) Business Days from receipt of written request and all required
information and documentation relating thereto in which to approve or disapprove
such matter, provided that such request to Lender is marked in bold lettering
with the following language: “LENDER’S RESPONSE IS REQUIRED WITHIN TEN (10)
BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A MORTGAGE
BETWEEN THE UNDERSIGNED AND LENDER” and the envelope containing the request must
be marked “PRIORITY”. In the event that Lender fails to respond to the Ground
Lease or Management Agreement matter in question within such time (which may be
a request for additional information or documentation by Lender), Lender’s
approval shall be deemed given for all purposes. Borrower shall provide Lender
with such information and documentation as may be reasonably required by Lender.

 

[NO FURTHER TEXT ON THIS PAGE]

 

- 62 -

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as a sealed instrument
as of the date first above written.

 

MORTGAGOR:

LHO BACKSTREETS, L.L.C.,

a Delaware limited liability company

By:  

/s/ Pat Meara

--------------------------------------------------------------------------------

    Pat Meara, Authorized Signatory

 

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

- 63 -

--------------------------------------------------------------------------------

ACKNOWLEDGED AND AGREED TO

WITH RESPECT TO ITS OBLIGATIONS UNDER

ARTICLE 5 AND SECTION 6.2 HEREIN:

 

OPERATING TENANT:

 

LHO BACKSTREETS LESSEE, L.L.C., a Delaware limited liability company By:  
LaSalle Hotel Lessee, Inc.,     an Illinois corporation, its sole member     By:
 

/s/ Hans S. Weger

--------------------------------------------------------------------------------

    Name:   Hans S. Weger     Title:   Chief Financial Officer

 

- 64 -

--------------------------------------------------------------------------------

ACKNOWLEDGMENT

 

STATE OF New York                           )         )  ss:
COUNTY OF New York                       )

 

Then personally appeared before me the above-named Pat Meara, being the
Authorized Signatory of LHO BACKSTREETS, L.L.C., a Delaware limited liability
company, and acknowledged the foregoing to be the signatory’s free act and deed.

 

/s/ Victoria M. Freedman

--------------------------------------------------------------------------------

Notary Public My Commission Expires: 3/18/07 VICTORIA M. FREEDMAN Notary Public,
State of New York No. 01FR6089202 Qualified in New York County Commission
Expires March 18, 2007

 

- 65 -

--------------------------------------------------------------------------------

ACKNOWLEDGMENT

 

STATE OF Maryland                               )         )  ss:
COUNTY OF Montgomery                           )

 

Then personally appeared before me the above-named Hans S. Weger, being the
Chief Financial Officer of LaSalle Hotel Lessee, Inc., an Illinois corporation,
the sole member of LHO BACKSTREETS LESSEE, L.L.C., a Delaware limited liability
company, and acknowledged the foregoing to be the signatory’s free act and deed.

 

/s/ Karen A. Pietrowski

--------------------------------------------------------------------------------

Notary Public My Commission Expires: 7/8/08

 

KAREN A. PIETROWSKI

NOTARY PUBLIC

MONTGOMERY COUNTY

MARYLAND

MY COMMISSION EXPIRES July 8, 2008