Exhibit 10.1
EXECUTION VERSION
LOAN AGREEMENT
Dated as of December 10, 2010
between
ORANGEMEN OWNER LLC,
as Borrower,
and
GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P.,
as Lender

 

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TABLE OF CONTENTS

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

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      Page  
Section 4.14.
  Leases; Material Agreements     44  
Section 4.15.
  Full and Accurate Disclosure     45  
Section 4.16.
  Financial Condition     45  
Section 4.17.
  Single-Purpose Requirements     45  
Section 4.18.
  Use of Loan Proceeds     45  
Section 4.19.
  Not Foreign Person     45  
Section 4.20.
  Labor Matters     45  
Section 4.21.
  Title     46  
Section 4.22.
  No Encroachments     46  
Section 4.23.
  Physical Condition     46  
Section 4.24.
  Fraudulent Conveyance     46  
Section 4.25.
  Management     47  
Section 4.26.
  Condemnation     47  
Section 4.27.
  Utilities and Public Access     47  
Section 4.28.
  Environmental Matters     47  
Section 4.29.
  Assessments     48  
Section 4.30.
  No Joint Assessment     48  
Section 4.31.
  Separate Lots     48  
Section 4.32.
  Permits; Certificate of Occupancy     48  
Section 4.33.
  Flood Zone     48  
Section 4.34.
  Security Deposits     48  
Section 4.35.
  Acquisition Documents     49  
Section 4.36.
  Insurance     49  
Section 4.37.
  No Dealings     49  
Section 4.38.
  Estoppel Certificates     49  
Section 4.39.
  Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering
Laws     49  
Section 4.40.
  IDA Lease     50  
Section 4.41.
  Survival     50  
 
           
 
  ARTICLE V
AFFIRMATIVE COVENANTS        
 
           
Section 5.1.
  Existence     51  
Section 5.2.
  Maintenance of Property     51  
Section 5.3.
  Compliance with Legal Requirements     51  
Section 5.4.
  Impositions and Other Claims     52  
Section 5.5.
  Access to Property     52  
Section 5.6.
  Cooperate in Legal Proceedings     52  
Section 5.7.
  Leases     53  
Section 5.8.
  Plan Assets, etc.     54  
Section 5.9.
  Further Assurances     54  
Section 5.10.
  Management of Collateral     55  
Section 5.11.
  Notice of Material Event     56  
Section 5.12.
  Annual Financial Statements     56  
Section 5.13.
  Quarterly Financial Statements     56  
Section 5.14.
  Monthly Financial Statements; Non-Delivery of Financial Statements     57  

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      Page  
Section 5.15.
  Insurance     58  
Section 5.16.
  Casualty and Condemnation     63  
Section 5.17.
  Annual Budget     65  
Section 5.18.
  Nonbinding Consultation     66  
Section 5.19.
  Compliance with Encumbrances and Material Agreements     66  
Section 5.20.
  Prohibited Persons     66  
Section 5.21.
  Operating Lease     67  
 
           
 
  ARTICLE VI
NEGATIVE COVENANTS        
 
           
Section 6.1.
  Liens on the Collateral     67  
Section 6.2.
  Ownership     67  
Section 6.3.
  Transfer; Change of Control     67  
Section 6.4.
  Debt     67  
Section 6.5.
  Dissolution; Merger or Consolidation     67  
Section 6.6.
  Change in Business     68  
Section 6.7.
  Debt Cancellation     68  
Section 6.8.
  Affiliate Transactions     68  
Section 6.9.
  Misapplication of Funds     68  
Section 6.10.
  Jurisdiction of Formation; Name     68  
Section 6.11.
  Modifications and Waivers     68  
Section 6.12.
  ERISA     69  
Section 6.13.
  Alterations and Expansions     69  
Section 6.14.
  Advances and Investments     69  
Section 6.15.
  Single-Purpose Entity     69  
Section 6.16.
  Zoning and Uses     69  
Section 6.17.
  Waste     70  
 
           
 
  ARTICLE VII
DEFAULTS        
 
           
Section 7.1.
  Event of Default     70  
Section 7.2.
  Remedies     73  
Section 7.3.
  No Waiver     74  
Section 7.4.
  Application of Payments after an Event of Default     74  
 
           
 
  ARTICLE VIII
CONDITIONS PRECEDENT        
 
           
Section 8.1.
  Conditions Precedent to Closing     74  
 
           
 
  ARTICLE IX
MISCELLANEOUS        
 
           
Section 9.1.
  Successors     77  
Section 9.2.
  GOVERNING LAW     77  
Section 9.3.
  Modification, Waiver in Writing     78  
Section 9.4.
  Notices     78  
Section 9.5.
  TRIAL BY JURY     79  
Section 9.6.
  Headings     79  

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      Page  
Section 9.7.
  Assignment and Participation     79  
Section 9.8.
  Severability     80  
Section 9.9.
  Preferences; Waiver of Marshalling of Assets     81  
Section 9.10.
  Remedies of Borrower     81  
Section 9.11.
  Offsets, Counterclaims and Defenses     82  
Section 9.12.
  No Joint Venture     82  
Section 9.13.
  Conflict; Construction of Documents     82  
Section 9.14.
  Brokers and Financial Advisors     82  
Section 9.15.
  Counterparts     82  
Section 9.16.
  Estoppel Certificates     82  
Section 9.17.
  General Indemnity; Payment of Expenses; Mortgage Recording Taxes     83  
Section 9.18.
  No Third-Party Beneficiaries     85  
Section 9.19.
  Recourse     85  
Section 9.20.
  Right of Set-Off     88  
Section 9.21.
  Exculpation of Lender     88  
Section 9.22.
  Servicer     88  
Section 9.23.
  No Fiduciary Duty     88  
Section 9.24.
  Borrower Information     90  
Section 9.25.
  PATRIOT Act Records     90  
Section 9.26.
  Prior Agreements     90  
Section 9.27.
  Publicity     91  
Section 9.28.
  Delay Not a Waiver     91  
Section 9.29.
  Schedules and Exhibits Incorporated     91  
Section 9.30.
  Independence of Covenants     91  

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      Exhibits
 
   
A
  Organizational Chart
B
  Form of Tenant Notice
C
  Form of Uniform System of Accounts
 
    Schedules
 
   
A
  Property
B
  Exception Report
C
  Deferred Maintenance Conditions
D
  Unfunded Obligations
E
  Material Agreements
F
  Capital Plan
G
  Leases

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LOAN AGREEMENT
          This Loan Agreement (this “Agreement”) is dated December __, 2010 and
is between GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P., a Delaware limited
partnership, as lender (together with its successors and assigns, including any
lawful holder of any portion of the Indebtedness, as hereinafter defined,
“Lender”), and ORANGEMEN OWNER LLC, a Delaware limited liability company, as
borrower (together with its permitted successors and assigns, “Borrower”).
RECITALS
          Borrower desires to obtain from Lender the Loan (as hereinafter
defined) in connection with the financing of the property known as the
InterContinental Hotel Buckhead.
          Lender is willing to make the Loan on the terms and conditions set
forth in this Agreement if Borrower joins in the execution and delivery of this
Agreement, issues the Note and executes and delivers the other Loan Documents.
          In consideration of the premises and the agreements, provisions and
covenants contained herein, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, Lender and Borrower agree as
follows:
DEFINITIONS
          (a) When used in this Agreement, the following capitalized terms have
the following meanings:
          “Account Collateral” means, collectively, the Collateral Accounts and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all securities and investment property
credited thereto and all proceeds thereof (including proceeds of sales and other
dispositions), whether accounts, general intangibles, chattel paper, deposit
accounts, instruments, documents or securities.
          “Agreement” means this Loan Agreement, as the same may from time to
time hereafter be amended, restated, replaced, supplemented or otherwise
modified.
          “ALTA” means the American Land Title Association, or any successor
thereto.
          “Alteration” means any demolition, alteration, installation,
improvement or expansion of or to the Property or any portion thereof.
          “Annual Budget” means the Yearly Budget, as defined in the Approved
Management Agreement, which budget shall include, without limitation, a general
business plan, a capital replacement budget and such other items required under
Section 6.02(a) of the Approved Management Agreement.

 

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          “Appraisal” means an as-is appraisal of the Property that is prepared
by a member of the Appraisal Institute selected by Lender, meets the minimum
appraisal standards for national banks promulgated by the Comptroller of the
Currency pursuant to Title XI of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, as amended (FIRREA) and complies with the Uniform
Standards of Professional Appraisal Practice (USPAP).
          “Approved Annual Budget” means (i) so long as no Event of Default or
Trigger Period shall be continuing, the Annual Budget and (ii) during the
continuance of an Event of Default and/or Trigger Period, the Annual Budget, as
approved by Lender in accordance with Section 5.17.
          “Approved Management Agreement” means that certain Management
Agreement, dated as of July 1, 2010, between Operating Lessee and the initial
Approved Property Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified in accordance herewith with the consent of
Lender, and any other management agreement that is approved by Lender and with
respect to which the Rating Condition is satisfied, as the same may be amended,
restated, replaced, supplemented or otherwise modified in accordance herewith
with the consent of Lender.
          “Approved Property Manager” means InterContinental Hotels Group and,
so long as it is an affiliate of InterContinental Hotels Group, IHC Buckhead,
LLC, or any other management company approved by Lender and with respect to
which the Rating Condition is satisfied, in each case unless and until Lender
requests the termination of that management company pursuant to Section 5.10(d).
          “Assignment” has the meaning set forth in Section 9.7(b).
          “Assumption” has the meaning set forth in Section 2.2.
          “Bankruptcy Code” has the meaning set forth in Section 7.1(d).
          “Basic Carrying Costs Escrow Account” has the meaning set forth in
Section 3.4(a).
          “Blocked Account” has the meaning set forth in Section 3.1(b).
          “Blocked Account Agreement” has the meaning set forth in
Section 3.1(b).
          “Blocked Account Bank” means an Eligible Institution at which a
Blocked Account is maintained.
          “Borrower” has the meaning set forth in the first paragraph of this
Agreement.
          “Borrower FF&E Account” has the meaning set forth in Section 3.6(d).
          “Borrower FF&E Account Control Agreement” means an account control
agreement satisfactory to Lender which shall permit Borrower to have free access
to the amounts contained therein for the purposes permitted under the Approved
Management Agreement and

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the Loan Documents, provided that, during the continuance of a Trigger Period or
Event of Default all amounts contained therein shall be remitted to the FF&E
Reserve Account and shall be administered in accordance with Section 3.6.
          “Budgeted Operating Expenses” means, with respect to any calendar
month, (i) an amount equal to the Operating Expenses for such calendar month in
the then-applicable Approved Annual Budget, or (ii) such greater amount as shall
equal Borrower’s and/or Operating Lessee’s actual Operating Expenses for such
month, except that during the continuance of a Trigger Period such greater
amount may in no event exceed 105% of the amount specified in clause (i), with
no individual budget line item exceeding 110% of the amount set forth in the
then-applicable Approved Annual Budget with respect to such line item for such
month, in each case without the prior written consent of Lender, not to be
unreasonably withheld or delayed.
          “Business Day” means any day other than (i) a Saturday and a Sunday
and (ii) a day on which federally insured depository institutions in the State
of New York or the state in which the offices of Lender, its trustee, its
Servicer or its Servicer’s collection account are located are authorized or
obligated by law, governmental decree or executive order to be closed.
          “Capital Expenditure” means hard and soft costs incurred by Borrower
(or Operating Lessee) with respect to replacements and capital repairs made to
the Property (including repairs to, and replacements of, structural components,
roofs, building systems, parking garages and parking lots, but excluding
expenditures on FF&E), in each case to the extent capitalized in accordance with
GAAP.
          “Capital Plan” means the Capital Plan attached hereto as Schedule F.
          “Cash Management Account” has the meaning set forth in Section 3.1(a).
          “Cash Management Agreement” has the meaning set forth in
Section 3.1(a).
          “Cash Management Bank” means a depository institution selected by
Borrower and reasonably approved by Lender in which Eligible Accounts may be
maintained. The initial Cash Management Bank shall be U.S. Bank, National
Association.
          “Casualty” means a fire, explosion, flood, collapse, earthquake or
other casualty affecting all or any portion of the Property.
          “Cause” means, with respect to an Independent Director, (i) acts or
omissions by such Independent Director that constitute systematic and persistent
or willful disregard of such Independent Director’s duties, (ii) such
Independent Director has been indicted or convicted for any crime or crimes of
moral turpitude or dishonesty or for any violation of any Legal Requirements,
(iii) such Independent Director no longer satisfies the requirements set forth
in the definition of “Independent Director”, (iv) the fees charged for the
services of such Independent Director are materially in excess of the fees
charged by the other providers of Independent Directors listed in the definition
of “Independent Director “ or (v) any other reason for which the prior written
consent of Lender shall have been obtained .

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          “Certificates” means, collectively, any senior and/or subordinate
notes, debentures or pass-through certificates, or other evidence of
indebtedness, or debt or equity securities, or any combination of the foregoing,
representing a direct or beneficial interest, in whole or in part, in the Loan.
          “Change of Control” means the occurrence of any of the following:
(i) the failure of Borrower to be Controlled by one or more Qualified
Equityholders (individually or collectively), (ii) the failure of Operating
Lessee to be Controlled by the same Qualified Equityholders that Control
Borrower or (iii) the failure of the Single-Purpose Equityholder (if any) to be
Controlled by the same Qualified Equityholders that Control Borrower.
          “Closing Date” means the date of this Agreement.
          “Closing Date NOI” means $7,477,428.
          “Code” means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
          “Collateral” means (i) all assets owned from time to time by Borrower
and/or Operating Lessee including the Property, the FF&E, the Revenues, the IDA
Bonds and all other tangible and intangible property (including any Defeasance
Collateral and all of Borrower’s and Operating Lessee’s respective right, title
and interest in and to the Operating Lease and the Approved Management
Agreement) in respect of which Lender is granted a Lien under the Loan
Documents, and all proceeds thereof, (ii) the Operating Lessee Pledged
Collateral and (iii) the IDA Collateral.
          “Collateral Accounts” means, collectively, the Cash Management
Account, any Blocked Account, the Loss Proceeds Account, the Basic Carrying
Costs Escrow Account, the FF&E Reserve Account, the Borrower FF&E Account, the
Qualified Operating Expense Account, the Excess Cash Flow Reserve Account, the
Unfunded Obligations Account (if any) and the Deferred Maintenance and
Environmental Escrow Account (if any).
          “Completion Guaranty” means that certain Completion Guaranty dated as
of the Closing Date, executed by Borrower and Sponsor for the benefit of Lender,
as the same may be amended, restated, replaced, supplemented or otherwise
modified in accordance herewith.
          “Condemnation” means a taking or voluntary conveyance of all or part
of the Property or any interest therein or right accruing thereto or use
thereof, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding by any Governmental Authority.
          “Contingent Obligation” means, with respect to any Person, any
obligation of such Person directly or indirectly guaranteeing any Debt of any
other Person in any manner and any contingent obligation to purchase, to provide
funds for payment, to supply funds to invest in any other Person or otherwise to
assure a creditor against loss.

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          “Control” of any entity means the ownership, directly or indirectly,
of at least 51% of the equity interests in, and the right to at least 51% of the
distributions from, such entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such
entity, whether through the ability to exercise voting power, by contract or
otherwise (“Controlled” and “Controlling” each have the meanings correlative
thereto).
          “Cooperation Agreement” means that certain Mortgage Loan Cooperation
Agreement, dated as of the Closing Date, among Borrower, Lender and Sponsor, as
the same may from time to time be amended, restated, replaced, supplemented or
otherwise modified in accordance herewith.
          “Damages” to a party means any and all liabilities, obligations,
losses, demands, damages, penalties, assessments, actions, causes of action,
judgments, proceedings, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including reasonable attorneys’ fees and other costs
of defense and/or enforcement whether or not suit is brought), fines, charges,
fees, settlement costs and disbursements imposed on, incurred by or asserted
against such party, whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise.
          “DBRS” means DBRS, Inc. or its applicable affiliate.
          “Debt” means, with respect to any Person, without duplication:
     (i) all indebtedness of such Person to any other party (regardless of
whether such indebtedness is evidenced by a written instrument such as a note,
bond or debenture), including indebtedness for borrowed money or for the
deferred purchase price of property or services;
     (ii) all letters of credit issued for the account of such Person and all
unreimbursed amounts drawn thereunder;
     (iii) all indebtedness secured by a Lien on any property owned by such
Person (whether or not such indebtedness has been assumed) except obligations
for impositions that are not yet due and payable;
     (iv) all Contingent Obligations of such Person;
     (v) all payment obligations of such Person under any interest rate
protection agreement (including any interest rate swaps, floors, collars or
similar agreements) and similar agreements;
     (vi) all contractual indemnity obligations of such Person; and
     (vii) any material actual or contingent liability to any Person or
Governmental Authority with respect to any employee benefit plan (within the
meaning of Section 3(3)

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of ERISA) subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of
the Code.
          “Default” means the occurrence of any event that, but for the giving
of notice or the passage of time, or both, would be an Event of Default.
          “Default Interest” means, during the continuance of an Event of
Default, the amount by which interest accrued on the Notes at their respective
Default Rates exceeds the amount of interest that would have accrued on the
Notes at their respective Interest Rates.
          “Default Rate” means, with respect to any Note, the greater of (x) 4%
per annum in excess of the interest rate then applicable to such Note hereunder
and (y) 1% per annum in excess of the Prime Rate from time to time; provided
that, if the foregoing would result in an interest rate in excess of the maximum
rate permitted by applicable law, the Default Rate shall be limited to the
maximum rate permitted by applicable law.
          “Defeasance Borrower” has the meaning set forth in Section 2.1(b).
          “Defeasance Collateral” means direct, non-callable obligations that
are either the direct obligations of, or are fully guaranteed by the full faith
and credit of, the United States of America.
          “Defeasance Pledge Agreement” has the meaning set forth in
Section 2.1(a)(iii).
          “Defease” means to deliver Defeasance Collateral as substitute
Collateral for the Loan in accordance with Section 2.1 and to cause the Defeased
Note to be assumed by a Defeasance Borrower in accordance herewith; and the
terms “Defeased” and “Defeasance” have meanings correlative to the foregoing.
          “Deferred Maintenance Amount” means $0.
          “Deferred Maintenance Conditions” means those items described in
Schedule C.
          “Deferred Maintenance and Environmental Escrow Account” has the
meaning set forth in Section 3.7(a).
          “Eligible Account” means (i) a segregated account maintained with a
federal or state-chartered depository institution or trust company that complies
with the definition of Eligible Institution, or (ii) a segregated trust account
or accounts maintained with the corporate trust department of a federal
depository institution or state-chartered depository institution that has an
investment-grade rating and is subject to regulations regarding fiduciary funds
on deposit under, or similar to, Title 12 of the Code of Federal Regulations
Section 9.10(b) that, in either case, has corporate trust powers, acting in its
fiduciary capacity.
          “Eligible Institution” means an institution (i) whose commercial
paper, short-term debt obligations or other short-term deposits are rated at
least A-1 by S&P, Prime-1 by Moody’s and/or F-1 by Fitch, and whose long-term
senior unsecured debt obligations are rated at least A-

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by S&P, A by Fitch, and A2 by Moody’s and whose deposits are insured by the FDIC
or (ii) with respect to which the Rating Condition is satisfied.
          “Embargoed Person” has the meaning set forth in Section 4.40.
          “Engineering Report” means a structural and seismic engineering report
or reports (including a “probable maximum loss” calculation, if applicable) with
respect to the Property prepared by an independent engineer approved by Lender
and delivered to Lender in connection with the Loan, and any amendments or
supplements thereto delivered to Lender.
          “Environmental Claim” means any written notice, claim, proceeding,
notice of proceeding, investigation, demand, abatement order or other order or
directive by any Person or Governmental Authority alleging or asserting
liability with respect to Borrower, Operating Lessee or the Property arising out
of, based on, in connection with, or resulting from (i) the actual or alleged
presence, Use or Release of any Hazardous Substance, (ii) any actual or alleged
violation of any Environmental Law, or (iii) any actual or alleged injury or
threat of injury to property, health or safety, natural resources or to the
environment caused by Hazardous Substances.
          “Environmental Indemnity” means that certain environmental indemnity
agreement executed by Borrower and the Sponsor as of the Closing Date, as the
same may from time to time be amended, restated, replaced, supplemented or
otherwise modified in accordance herewith.
          “Environmental Laws” means any and all present and future federal,
state and local laws, statutes, ordinances, orders, rules, regulations and the
like, as well as common law, any judicial or administrative orders, decrees or
judgments thereunder, and any permits, approvals, licenses, registrations,
filings and authorizations, in each case as now or hereafter in effect, relating
to (i) the pollution, protection or cleanup of the environment, (ii) the impact
of Hazardous Substances on property, health or safety, (iii) the Use or Release
of Hazardous Substances, (iv) occupational safety and health, industrial hygiene
or the protection of human, plant or animal health or welfare or (v) the
liability for or costs of other actual or threatened danger to health or the
environment. The term “Environmental Law” includes, but is not limited to, the
following statutes, as amended, any successors thereto, and any regulations
promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency Planning
and Community Right-to-Know Act; the Hazardous Materials Transportation Act; the
Resource Conservation and Recovery Act (including Subtitle I relating to
underground storage tanks); the Clean Water Act; the Clean Air Act; the Toxic
Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and
Health Act; the Federal Water Pollution Control Act; the Federal Insecticide,
Fungicide and Rodenticide Act; the Endangered Species Act; the National
Environmental Policy Act; and the River and Harbors Appropriation Act. The term
“Environmental Law” also includes, but is not limited to, any present and future
federal state and local laws, statutes ordinances, rules, regulations and the
like, as well as common law, conditioning transfer of property upon a negative
declaration or other approval of a Governmental Authority of the environmental
condition of a property; or requiring notification or disclosure of Releases of
Hazardous Substances or other environmental conditions

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of a property to any Governmental Authority or other Person, whether or not in
connection with transfer of title to or interest in property.
          “Environmental Reports” means “Phase I Environmental Site Assessments”
as referred to in the ASTM Standards on Environmental Site Assessments for
Commercial Real Estate, E 1527-05 (and, if necessary, “Phase II Environmental
Site Assessments”), prepared by an independent environmental auditor approved by
Lender and delivered to Lender in connection with the Loan and any amendments or
supplements thereto delivered to Lender, and shall also include any other
environmental reports delivered to Lender pursuant to this Agreement and the
Environmental Indemnity.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
          “ERISA Affiliate,” at any time, means each trade or business (whether
or not incorporated) that would, at the time, be treated together with Borrower
or Operating Lessee as a single employer under Title IV or Section 302 of ERISA
or Section 412 of the Code.
          “Event of Default” has the meaning set forth in Section 7.1.
          “Excess Cash Flow Reserve Account” has the meaning set forth in
Section 3.9(a).
          “Exception Report” means the report prepared by Borrower and attached
to this Agreement as Schedule B, setting forth any exceptions to the
representations set forth in Article IV.
          “FF&E” means furniture, fixtures and equipment located in the
Property.
          “Fiscal Quarter” means the three-month period ending on March 31,
June 30, September 30 and December 31 of each year, or such other fiscal quarter
of Borrower as Borrower may select from time to time with the prior consent of
Lender, such consent not to be unreasonably withheld.
          “Fiscal Year” means the 12-month period ending on December 31 of each
year, or such other fiscal year of Borrower as Borrower may select from time to
time with the prior consent of Lender, not to be unreasonably withheld.
          “Fitch” means Fitch, Inc. and its successors.
          “Force Majeure” means a delay due to acts of God, governmental
restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion,
fire, casualty, strikes, work stoppage, shortages of labor or materials or
similar causes beyond the reasonable control of Borrower; provided that, with
respect to any of such circumstances, for the purposes of this Agreement, (1)
any period of Force Majeure shall apply only to performance of the obligations
necessarily affected by such circumstance and shall continue only so long as
Borrower is continuously and diligently using all reasonable efforts to minimize
the effect and duration thereof; and (2) Force Majeure shall not include the
unavailability or insufficiency of funds.

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          “Form W-8BEN” means Form W-8BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding) of the Department of
Treasury of the United States of America, and any successor form.
          “Form W-8ECI” means Form W-8ECI (Certificate of Foreign Person’s Claim
for Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America, and any successor form.
          “GAAP” means generally accepted accounting principles in the United
States of America, consistently applied.
          “Governmental Authority” means any federal, state, county, regional,
local or municipal government, any bureau, department, agency or political
subdivision thereof and any Person with jurisdiction exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including any court).
          “Guaranty” means that certain guaranty, dated as of the Closing Date,
executed by Sponsor for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified in accordance herewith.
          “Hazardous Substances” means any and all substances (whether solid,
liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous
wastes, hazardous substances, hazardous materials, extremely hazardous wastes,
toxic substances, toxic pollutants, contaminants, pollutants or words of similar
meaning or regulatory effect under any present or future Environmental Laws or
that may have a negative impact on human health or the indoor or outdoor
environment or the presence of which on, in or under the Property is prohibited
or requires investigation or remediation under Environmental Law, including
petroleum and petroleum by-products, asbestos and asbestos-containing materials,
toxic mold, polychlorinated biphenyls, lead and radon, and compounds containing
them (including gasoline, diesel fuel, oil and lead-based paint), pesticides and
radioactive materials, flammables and explosives and compounds containing them.
          “IDA” means the Development Authority of Fulton County.
          “IDA Bond R-2” means the R-2 Development Authority of Fulton County
Taxable Economic Development Revenue Bond (IHC Buckhead LLC Project),
Series 2002.
          “IDA Bond Pledge Agreement” means the Pledge and Security Agreement
(IDA Bonds) dated the date hereof, by Borrower for the benefit of Lender.
          “IDA Bonds” means IDA Bond R-2 and any other Development Authority of
Fulton County Taxable Economic Development Revenue Bond (IHC Buckhead LLC
Project), Series 2002, owned by Borrower at any time while any portion of the
Indebtedness remains outstanding.
          “IDA Collateral” means the fee interest of the IDA in the Property,
which shall be encumbered by the Mortgage.

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          “IDA Estoppel” means an estoppel certificate reasonably satisfactory
to Lender, executed and delivered by the IDA.
          “IDA Rent” means any and all rent and other amounts payable by
Borrower to the IDA under the IDA Lease.
          “IDA Lease” means that certain Lease Agreement dated as of December 1,
2002 by and between the IDA, as landlord and IHC Buckhead, LLC, as tenant, as
tenant’s interest was assigned to Borrower pursuant to that certain Assignment
and Assumption of Lease dated July 1, 2010.
          “Increased Costs” has the meaning set forth in Section 1.4(d).
          “Indebtedness” means the Principal Indebtedness, together with
interest and all other obligations and liabilities of Borrower under the Loan
Documents, including all transaction costs, Yield Maintenance Premiums and other
amounts due or to become due to Lender pursuant to this Agreement, under the
Notes or in accordance with any of the other Loan Documents, and all other
amounts, sums and expenses reimbursable by Borrower to Lender hereunder or
pursuant to the Notes or any of the other Loan Documents.
          “Indemnified Liabilities” has the meaning set forth in
Section 9.19(b).
          “Indemnified Parties” has the meaning set forth in Section 9.17.
          “Independent Director” of any corporation or limited liability company
means an individual who is provided by CT Corporation, Corporation Service
Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart
Management Company, Lord Securities Corporation or, if none of those companies
is then providing professional independent directors, another
nationally-recognized company reasonably approved by Lender, in each case that
is not an affiliate of Borrower and that provides professional independent
directors and other corporate services in the ordinary course of its business,
and which individual is duly appointed as a member of the board of directors or
board of managers of such corporation or limited liability company and is not,
and has never been, and will not while serving as Independent Director be, any
of the following:
     (i) a member (other than an independent, non-economic “springing” member),
partner, equityholder, manager, director, officer or employee of such
corporation or limited liability company or any of its equityholders or
affiliates (other than as an independent director or manager of an affiliate of
such corporation or limited liability company that is not in the direct chain of
ownership of such corporation or limited liability company and that is required
by a creditor to be a single purpose bankruptcy remote entity, provided that
such independent director or manager is employed by a company that routinely
provides professional independent directors or managers);
     (ii) a creditor, supplier or service provider (including provider of
professional services) to such corporation or limited liability company or any
of its equityholders or affiliates (other than a nationally recognized company
that routinely provides

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professional independent managers or directors and that also provides lien
search and other similar services to such corporation or limited liability
company or any of its equityholders or affiliates in the ordinary course of
business);
     (iii) a family member of any such member, partner, equityholder, manager,
director, officer, employee, creditor, supplier or service provider; or
     (iv) a Person that controls (whether directly, indirectly or otherwise) any
of (i), (ii) or (iii) above.
A natural person who otherwise satisfies the foregoing definition other than
subparagraph (i) by reason of being the Independent Director of a Single-Purpose
Entity affiliated with the corporation or limited liability company in question
shall not be disqualified from serving as an Independent Director of such
corporation or limited liability company, provided that the fees that such
natural person earns from serving as Independent Director of affiliates of such
the corporation or limited liability company in any given year constitute in the
aggregate less than five percent of such natural person’s annual income for that
year. The same natural persons may not serve as Independent Directors of a
corporation or limited liability company and, at the same time, serve as
Independent Directors of an equityholder or member of such corporation or
limited liability company.
          “Initial Interest Rate” means 4.883% per annum.
          “Insurance Requirements” means, collectively, (i) all material terms
of any insurance policy required pursuant to this Agreement and (ii) all
material regulations and then-current standards applicable to or affecting the
Property or any portion thereof or any use or condition thereof, which may, at
any time, be recommended by the board of fire underwriters, if any, having
jurisdiction over the Property, or any other body exercising similar functions.
          “Insurance Reserve Exemption Period” has the meaning set forth in
Section 3.4(d)(iii).
          “Interest Accrual Period” means each period from and including the
sixth day of a calendar month through and including the fifth day of the
immediately succeeding calendar month; provided, that, prior to a
Securitization, Lender shall have the right, in connection with a change in the
Payment Date in accordance with the definition thereof, to make a corresponding
change to the Interest Accrual Period. Notwithstanding the foregoing, the first
Interest Accrual Period shall commence on and include the Closing Date.
          “Interest Rate” means (i) with respect to the initial Note, the
Initial Interest Rate, and (ii) with respect to each Note resulting from the
bifurcation of the initial Note into multiple Notes pursuant to Section 1.1(c),
the per annum interest rate of such Note as determined by Lender in accordance
with such Section.
          “Lease” means any lease (except the Operating Lease), license,
letting, concession, occupancy agreement or sublease to which Borrower and/or
Operating Lessee is a party or has a consent right, or other agreement (whether
written or oral and whether now or hereafter in effect) under which Borrower
and/or Operating Lessee is a lessor, sublessor, licensor

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or other grantor existing as of the Closing Date or thereafter entered into by
Borrower and/or Operating Lessee, in each case pursuant to which any Person is
granted a possessory interest in, or right to use or occupy all or any portion
of any space in the Property, and every modification or amendment thereof, and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto,
excluding short-term agreements in the ordinary course of business pursuant to
which hotel rooms and facilities are made available to individual hotel guests.
          “Leasing Commissions” means leasing commissions required to be paid by
Borrower or Operating Lessee in connection with the leasing of space to Tenants
at the Property pursuant to Leases entered into by Borrower or Operating Lessee
in accordance herewith and payable in accordance with third-party/arm’s-length
written brokerage agreements, provided that the commissions payable pursuant
thereto are commercially reasonable based upon the then current brokerage market
for property of a similar type and quality to the Property in the geographic
market in which the Property is located.
          “Legal Requirements” means all governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities (including Environmental Laws) affecting Borrower,
Sponsor, Operating Lessee, the Property or any other Collateral or any portion
thereof or the construction, ownership, use, alteration or operation thereof, or
any portion thereof (whether now or hereafter enacted and in force), and all
permits, licenses and authorizations and regulations relating thereto.
          “Lender” has the meaning set forth in the first paragraph of this
Agreement and in Section 9.7.
          “Lender 80% Determination” means a reasonable determination by Lender
that, based on a current or updated appraisal by HVS (or such other appraiser
satisfactory to Lender should HVS no longer be actively engaged in the business
of real estate valuation), a broker’s price opinion by Jones Lang LaSalle or
Eastdil Secured (or such other broker satisfactory to Lender should neither
Jones Lang LaSalle or Eastdil Secured be actively engaged in the business of
real estate valuation) or other written determination of value using a
commercially reasonable valuation method satisfactory to Lender, the fair market
value of the Property securing the Indebtedness at the time of such
determination (but excluding any value attributable to property that is not an
interest in real property within the meaning of section 860G(a)(3)(A) of the
Code) is at least 80% of the amount of the Indebtedness (including any accrued
and unpaid interest) at the time of such determination.
          “Lien” means any mortgage, lien (statutory or other), pledge,
hypothecation, assignment, preference, priority, security interest, or any other
encumbrance or charge on or affecting any Collateral or any portion thereof, or
any interest therein (including any conditional sale or other title retention
agreement, any sale-leaseback, any financing lease or similar transaction having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement or similar instrument under the Uniform Commercial Code
or comparable law of any other jurisdiction, domestic or foreign, and
mechanics’, materialmen’s and other similar liens and encumbrances, as well as
any option to purchase, right of first refusal, right of first offer or similar
right).

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          “Loan” has the meaning set forth in Section 1.1(a).
          “Loan Amount” means $52,500,000.
          “Loan Documents” means this Agreement, the Note, the Mortgage (and
related financing statements), the Environmental Indemnity, the Subordination of
Property Management Agreement, the Subordination of Operating Lease, the Pledge
and Security Agreement (Equity), the Cash Management Agreement, any Blocked
Account Agreement, the Cooperation Agreement, the Guaranty, the Completion
Guaranty, any Defeasance Pledge Agreement, the Qualified Operating Expense
Account Agreement, the Borrower FF&E Account Control Agreement (if any, the IDA
Bond Pledge Agreement and all other agreements, instruments, certificates and
documents necessary to effectuate the granting to Lender of first-priority Liens
on the Collateral or otherwise in satisfaction of the requirements of this
Agreement or the other documents listed above, as all of the aforesaid may be
amended, restated, replaced, supplemented or otherwise modified from time to
time in accordance herewith.
          “Lockout Period” means the period from the Closing Date to but
excluding the first Payment Date following the earlier to occur of (i) the third
anniversary of the Closing Date and (ii) the second anniversary of the date on
which the entire Loan (including any subordinated interest therein) has been
Securitized pursuant to a Securitization or series of Securitizations.
          “Loss Proceeds” means amounts, awards or payments payable to Borrower,
Operating Lessee or Lender in respect of all or any portion of the Property in
connection with a Casualty or Condemnation thereof (after the deduction
therefrom and payment to Borrower, Operating Lessee and Lender, respectively, of
any and all reasonable expenses incurred by Borrower, Operating Lessee and
Lender in the recovery thereof, including all attorneys’ fees and disbursements,
the fees of insurance experts and adjusters and the costs incurred in any
litigation or arbitration with respect to such Casualty or Condemnation).
          “Loss Proceeds Account” has the meaning set forth in Section 3.3(a).
          “Major Lease” means any Lease that (i) when aggregated with all other
Leases at the Property with the same Tenant (or affiliated Tenants), and
assuming the exercise of all expansion rights and all preferential rights to
lease additional space contained in such Lease, is expected to cover more than
7,500 rentable square feet, (ii) contains an option or preferential right to
purchase all or any portion of the Property, (iii) is with an affiliate of
Borrower as Tenant or (iv) is entered into during the continuance of an Event of
Default.
          “Material Adverse Effect” means a material adverse effect upon (i) the
ability of Borrower or Sponsor to perform, or of Lender to enforce, any material
provision of any Loan Document, (ii) the enforceability of any material
provision of any Loan Document, or (iii) the value, Net Operating Income, use or
enjoyment of the Property or the operation or occupancy thereof.
          “Material Agreements” means (x) each contract and agreement (other
than Leases) relating to the Property, or otherwise imposing obligations on
Borrower or Operating Lessee, under which Borrower or Operating Lessee would
have the obligation to pay more than

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$250,000 per annum or that cannot be terminated by Borrower or Operating Lessee
without cause upon 60 days’ notice or less without payment of a termination fee
in excess of $10,000, or that is with an affiliate of Borrower or Operating
Lessee, (y) any material reciprocal easement agreement, declaration of
covenants, condominium documents, ground lease, material parking agreement or
other material Permitted Encumbrance and (z) the Operating Lease.
          “Material Alteration” means any Alteration to be performed by or on
behalf of Borrower or Operating Lessee at the Property that (a) is reasonably
expected to result in a Material Adverse Effect, (b) is reasonably expected to
cost in excess of $2,600,000, as determined by an independent architect, or
(c) is reasonably expected to permit (or is reasonably likely to induce) any
Tenant under a Major Lease to terminate its Lease or abate rent.
          “Maturity Date” means the Payment Date in January, 2016, or such
earlier date as may result from acceleration of the Loan in accordance with this
Agreement.
          “Minimum Balance” has the meaning set forth in Section 3.2(a).
          “Monthly FF&E Amount” means, with respect to any calendar month, an
amount equal to 4% of Operating Income for the immediately preceding calendar
month.
          “Moody’s” means Moody’s Investors Service, Inc. and its successors.
          “Mortgage” means that certain deed to secure debt, assignment of rents
and leases, security agreement and fixture filing encumbering the Property
executed by Borrower and the IDA as of the Closing Date, as the same may from
time to time be amended, restated, replaced, supplemented or otherwise modified
in accordance herewith.
          “Net Operating Income” means, with respect to any Test Period, the
excess of (i) Operating Income for such Test Period, minus (ii) Operating
Expenses for such Test Period.
          “Nonconsolidation Opinion” means the opinion letter, dated the Closing
Date, delivered by Borrower’s counsel to Lender and addressing issues relating
to substantive consolidation in bankruptcy.
          “Note(s)” means that certain promissory note, dated as of the Closing
Date, made by Borrower to the order of Lender to evidence the Loan, as such note
may be replaced by multiple Notes in accordance with Section 1.1(c) and as
otherwise assigned (in whole or in part), amended, restated, replaced,
supplemented or otherwise modified in accordance herewith.
          “OFAC List” means the list of specially designated nationals and
blocked persons subject to financial sanctions that is maintained by the U.S.
Treasury Department, Office of Foreign Assets Control and any other similar list
maintained by the U.S. Treasury Department, Office of Foreign Assets Control
pursuant to any applicable governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities, including trade embargo, economic sanctions, or other prohibitions
imposed by Executive Order of the President of the United States. The OFAC List
currently is accessible through the internet website at
www.treas.gov/ofac/t11sdn.pdf.

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          “Officer’s Certificate” means a certificate delivered to Lender that
is signed by an authorized officer of Borrower and certifies the information
therein to the best of such officer’s knowledge.
          “Operating Expenses” means, for any period, all operating, renting,
administrative, management, legal and other ordinary expenses of Borrower and,
without duplication, Operating Lessee and Approved Property Manager, during such
period, determined in accordance with GAAP and the Uniform System of Accounts
(excluding reserves for or expenditures on FF&E), plus a deemed expenditure in
respect of FF&E in an amount equal to four percent (4%) of Operating Income
during such period; provided, however, that such expenses shall not include (i)
depreciation, amortization or other non-cash items (other than expenses that are
due and payable but not yet paid), (ii) interest, principal or any other sums
due and owing with respect to the Loan, (iii) income taxes or other taxes in the
nature of income taxes, (iv) Capital Expenditures, or (v) equity distributions.
          “Operating Income” means, for any period, all operating income of
Borrower and, without duplication, Operating Lessee and Approved Property
Manager, from the Property during such period, determined in accordance with
GAAP and the Uniform System of Accounts (but without straight-lining of rents),
including without limitation: (i) all income and proceeds received from any
lease, Operating Lease and rental of rooms, exhibit, sales, commercial, meeting,
conference or banquet space within such Property, including net parking revenue,
and net income from vending machines, health club fees and service charges;
(ii) all income and proceeds received from food and beverage operations and from
catering services conducted from such Property even though rendered outside of
such Property; (iii) all income and proceeds from business interruption, rental
interruption and use and occupancy insurance with respect to the operation of
such Property (after deducting therefrom all necessary costs and expenses
incurred in the adjustment or collection thereof and solely to the extent that
such income and/or proceeds are allocable to such period); (iv) all awards for
temporary use (after deducting therefrom all costs incurred in the adjustment or
collection thereof and in restoration of such Property and solely to the extent
that such award is allocable to such period); (v) all income and proceeds from
judgments, settlements and other resolutions of disputes with respect to matters
which would be includable in this definition of “Operating Income” if received
in the ordinary course of such Property’s operation (after deducting therefrom
all necessary costs and expenses incurred in the adjustment or collection
thereof); and (vi) interest on credit accounts, rent concessions or credits, and
other required pass-throughs; but excluding, (1) gross receipts received by
lessees, licensees or concessionaires of such Property; (2) consideration
received at such Property for hotel accommodations, goods and services to be
provided at other hotels, although arranged by, for or on behalf of the
Borrower, Operating Lessee or Approved Property Manager; (3) income and proceeds
from the sale or other disposition of goods, capital assets and other items not
in the ordinary course of such Property’s operation; (4) federal, state and
municipal excise, sales and use taxes collected directly from patrons or guests
of such Property as a part of or based on the sales price of any goods, services
or other items, such as gross receipts, room, admission, cabaret or equivalent
taxes; (5) awards (except to the extent provided in clause (iv) above);
(6) refunds of amounts not included in Operating Expenses at any time and
uncollectible accounts; (7) gratuities collected by employees at such Property;
(8) the proceeds of any financing; (9) other income or proceeds resulting other
than from the use or occupancy of such Property, or any part thereof, or other
than from the sale of goods, services or other items sold on or provided

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from such Property in the ordinary course of business; (10) any credits or
refunds made to customers, guests or patrons in the form of allowances or
adjustments to previously recorded revenues; (11) any revenue attributable to a
Lease that is not a Qualifying Lease; (12) any revenue attributable to a Lease
to the extent it is paid more than 30 days prior to the due date, (13) any
interest income from any source (except to the extent provided in clause
(vi) above); (14) any repayments received from any third party of principal
loaned or advanced to such third party by Borrower or Operating Lessee; (15) any
proceeds resulting from the Transfer of all or any portion of such Property,
(16) Loss Proceeds (except to the extent provided in clause (iii) above); and
(17) any other extraordinary or non-recurring items.
          “Operating Lease” means that certain Agreement of Lease dated July 1,
2010 by and between Borrower and Operating Lessee.
          “Operating Lease Monthly Rent” means the greater of (x) the monthly
rent payable to Operating Lessee pursuant to the Operating Lease and (y) the
sum, without duplication, of (i) the Minimum Balance and (ii) Budgeted Operating
Expenses for such month.
          “Operating Lessee” means Orangemen Lessee, LLC.
          “Operating Lessee Pledged Collateral” means one hundred percent of the
equity interests in Operating Lessee, which shall be pledged by Pebblebrook
Hotel Lessee, Inc. to Lender as additional collateral for the Loan pursuant to
the Pledge and Security Agreement (Equity).
          “Participation” has the meaning set forth in Section 9.7(b).
          “PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001), as amended from time to time.
          “Payment Date” means, with respect to each Interest Accrual Period,
the sixth day of the calendar month in which such Interest Accrual Period ends
(or, if such day is not a Business Day, the first preceding Business Day);
provided, that prior to a Securitization, Lender shall have the right to change
the Payment Date so long as a corresponding change to the Interest Accrual
Period is also made.
          “Permits” means all licenses, permits, variances and certificates used
in connection with the ownership, operation, use or occupancy of the Property
(including certificates of occupancy, business licenses, state health department
licenses, licenses to conduct business and all such other permits, licenses and
rights, obtained from any Governmental Authority or private Person concerning
ownership, operation, use or occupancy of the Property).
          “Permitted Debt” means:
          (i) the Indebtedness;
          (ii) Taxes that are not yet due and payable;

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     (iii) tenant allowances and Capital Expenditure and product improvement
plan costs required under the Approved Management Agreement or any Leases or
otherwise permitted to be incurred under the Loan Documents that are paid on or
prior to the date when due; and
     (iv) Trade Payables not represented by a note, customarily paid by Borrower
or Operating Lessee within 60 days of incurrence and in fact not more than
60 days outstanding, which are incurred in the ordinary course of Borrower’s or
Operating Lessee’s business with respect to the Property, in amounts reasonable
and customary for similar properties and not exceeding 3.0% of the Loan Amount
in the aggregate.
          “Permitted Encumbrances” means:
     (i) the Liens created by the Loan Documents;
     (ii) all Liens and other matters specifically disclosed on Schedule B of
the Qualified Title Insurance Policy;
     (iii) Liens, if any, for Taxes not yet delinquent;
     (iv) mechanics’, materialmen’s or similar Liens, if any, and Liens for
delinquent taxes or impositions, in each case only if being diligently contested
in good faith and by appropriate proceedings, provided that no such Lien is in
imminent danger of foreclosure and provided further that either (a) each such
Lien is released or discharged of record or fully insured over by the title
insurance company issuing the Qualified Title Insurance Policy within 30 days of
its creation, or (b) Borrower deposits with Lender, by the expiration of such
30-day period, an amount equal to 150% of the dollar amount of such Lien or a
bond in the aforementioned amount from such surety, and upon such terms and
conditions, as is reasonably satisfactory to Lender, as security for the payment
or release of such Lien;
     (v) rights of existing and future Tenants as tenants only pursuant to
written Leases entered into in conformity with the provisions of this Agreement;
and
     (vi) easements and other encroachments placed on the Property with the
prior written consent of Lender.
          “Permitted Investments” means the following, subject to the
qualifications hereinafter set forth:
     (i) direct obligations of, or obligations fully and unconditionally
guaranteed as to principal and interest by, the U.S. government or any agency or
instrumentality thereof, when such obligations are backed by the full faith and
credit of the United States of America and have maturities not in excess of one
year;
     (ii) federal funds, unsecured certificates of deposit, time deposits,
banker’s acceptances, and repurchase agreements, each having maturities of not
more than 90 days, of any commercial bank organized under the laws of the United
States of America

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

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3(32) of ERISA) subject to federal, state or local laws, rules or regulations
substantially similar to Title I of ERISA or Section 4975 of the Code.
          “Pledge and Security Agreement (Equity)” means that certain Pledge and
Security Agreement (Equity) dated the date hereof, by Pebblebrook Hotel Lessee,
Inc. in favor of Lender.
          “Policies” has the meaning set forth in Section 5.15(b).
          “Prepayment Period” means the final three Interest Accrual Periods
prior to the Maturity Date.
          “Prime Rate” means the “prime rate” published in the “Money Rates”
section of The Wall Street Journal. If The Wall Street Journal ceases to publish
the “prime rate,” then Lender shall select an equivalent publication that
publishes such “prime rate,” and if such “prime rate” is no longer generally
published or is limited, regulated or administered by a governmental or
quasi-governmental body, then Lender shall reasonably select a comparable
interest rate index.
          “Principal Indebtedness” means the principal balance of the Loan
outstanding from time to time.
          “Prohibited Pledge” has the meaning set forth in Section 7.1(f).
          “Property” means the real property described on Schedule A, together
with all buildings and other improvements thereon and all personal property
encumbered by the Mortgage, together with all rights pertaining to such
property.
          “Qualified Equityholder” means (i) Sponsor (ii) any Person approved by
Lender with respect to which the Rating Condition is satisfied, (iii) a bank,
saving and loan association, investment bank, insurance company, trust company,
commercial credit corporation, pension plan, pension fund or pension advisory
firm, mutual fund, government entity or plan, real estate company, investment
fund or an institution substantially similar to any of the foregoing, provided
in each case under this clause (iii) that such Person (x) has total assets (in
name or under management) in excess of $500,000,000 and (except with respect to
a pension advisory firm or similar fiduciary) capital/statutory surplus or
shareholder’s equity in excess of $200,000,000 (in both cases, exclusive of the
Property), and (y) is regularly engaged in the business of owning and operating
comparable properties in major metropolitan areas or (iv) any Person Controlled
by a Person satisfying the requirements of clause (iii), but only during such
time period as such Person is so Controlled.
          “Qualified Operating Expense Account” means an Eligible Account
maintained by Operating Lessee at an Eligible Institution, which account
(i) shall only contain amounts in respect of Operating Expenses for the Property
(and no amounts unrelated to the Property shall be deposited therein or
otherwise commingled with the amounts on deposit in such account) and (ii) is
subject to a Qualified Operating Expense Account Agreement.

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          “Qualified Operating Expense Account Agreement” means an agreement
relating to the Qualified Operating Expense Account, dated as of the date
hereof, among Lender, Operating Lessee and the Eligible Institution at which
such account is maintained, pursuant to which such account is pledged to the
Lender and Operating Lessee is given full access to the funds on deposit therein
but provides for the discontinuance of such access upon receipt by such Eligible
Institution of written notice from Lender of the occurrence of an Event of
Default, as such agreement may be amended, restated, replaced, supplemented or
otherwise modified in accordance herewith.
          “Qualified Successor Borrower” means a Single-Purpose Entity that is
Controlled by one or more Qualified Equityholders.
          “Qualified Successor Operating Lessee” means a Single-Purpose Entity
that is Controlled by the same Qualified Equityholders that Control Qualified
Successor Borrower and is a successor to the Operating Lessee under the
Operating Lease.
          “Qualified Survey” means that certain ALTA land title survey of the
Property dated June 8, 2010, prepared by Armstrong Land Surveying, Inc. and
certified to Borrower, the title company issuing the Qualified Title Insurance
Policy and Lender and their respective successors and assigns, in form and
substance reasonably satisfactory to Lender.
          “Qualified Title Insurance Policy” means an ALTA extended coverage
mortgagee’s title insurance policy in form and substance reasonably satisfactory
to Lender.
          “Qualifying Lease” means all Leases other than (i) Leases to a Tenant
that is not in occupancy at the Property and open for business at the Property
and (ii) Leases to a Tenant that is in default under its Lease or is the subject
of bankruptcy or similar insolvency proceedings (to the extent that such Tenant
has not assumed such Lease in bankruptcy).
          “Rating Agency” shall mean, prior to the final Securitization of the
Loan, each of S&P, Moody’s, DBRS and Fitch, or any other nationally-recognized
statistical rating agency that has been designated by Lender and, after the
final Securitization of the Loan, shall mean any of the foregoing that have
rated and continue to rate any of the Certificates.
          “Rating Condition” means, with respect to any proposed action, the
receipt by Lender of confirmation in writing from each of the Rating Agencies
that such action shall not result, in and of itself, in a downgrade, withdrawal,
or qualification of any rating then assigned to any outstanding Certificates;
except that if all or any portion of the Loan has not been Securitized pursuant
to a Securitization rated by the Rating Agencies, then “Rating Condition” shall
instead mean the receipt of prior written approval of both (x) the applicable
Rating Agencies (if and to the extent that any portion of the Loan has been
Securitized pursuant to a Securitization or series of Securitizations rated by
such Rating Agencies (excluding shadow ratings)), and (y) Lender in its sole
discretion. No Rating Condition shall be regarded as having been satisfied
unless and until any conditions imposed on the effectiveness of any confirmation
from any Rating Agency shall have been satisfied. Lender shall have the right in
its sole discretion to waive a Rating Condition requirement with respect to any
Rating Agency that Lender determines has declined to review the applicable
proposal.

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

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          “Single-Purpose Entity” means a Person that (a) was formed under the
laws of the State of Delaware solely for the purpose of acquiring and holding
(i) an ownership or leasehold interest in the Property (or, if applicable,
Defeasance Collateral), or (ii) in the case of a Single-Purpose Equityholder, an
ownership interest in the Borrower (or, if applicable, Defeasance Collateral),
(b) does not engage in any business unrelated to (i) the Property (or, if
applicable, Defeasance Collateral), or (ii) in the case of a Single-Purpose
Equityholder, its ownership interest in the Borrower (or, if applicable,
Defeasance Collateral), (c) does not have any assets other than those related to
(i) the Property (or, if applicable, Defeasance Collateral), or (ii) in the case
of a Single-Purpose Equityholder, its ownership interest in the Borrower (or, if
applicable, Defeasance Collateral), (d) does not have any Debt other than
Permitted Debt, (e) maintains books, accounts, records, financial statements,
stationery, invoices and checks that are separate and apart from those of any
other Person (except that such Person’s financial position, assets, results of
operations and cash flows may be included in the consolidated financial
statements of an affiliate of such Person in accordance with GAAP, provided that
any such consolidated financial statements shall contain a note indicating that
such Person and its affiliates are separate legal entities and maintain records,
books of account separate and apart from any other Person), (f) is subject to
and complies with all of the limitations on powers and separateness requirements
set forth in the organizational documentation of such Person as of the Closing
Date, (g) holds itself out as being a Person separate and apart from each other
Person and not as a division or part of another Person, (h) conducts its
business in its own name (except for services rendered under a management
agreement with an affiliate, so long as the manager, or equivalent thereof,
under such management agreement holds itself out as an agent of such Person),
(i) exercises reasonable efforts to correct any known misunderstanding actually
known to it regarding its separate identity, and maintains an arm’s-length
relationship with its affiliates, (j) pays its own liabilities out of its own
funds (including the salaries of its own employees) and reasonably allocates any
overhead that is shared with an affiliate, including paying for shared office
space and services performed by any officer or employee of an affiliate,
(k) maintains a sufficient number of employees in light of its contemplated
business operations, (l) conducts its business so that the assumptions made with
respect to it that are contained in the Nonconsolidation Opinion shall at all
times be true and correct in all material respects, (m) maintains its assets in
such a manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any other Person, (n) observes all
applicable entity-level formalities in all material respects, (o) does not
commingle its assets with those of any other Person and holds such assets in its
own name, (p) does not assume, guarantee or become obligated for the debts of
any other Person, and does not hold out its credit as being available to satisfy
the obligations or securities of others, (q) does not acquire obligations or
securities of its shareholders, members or partners, (r) does not pledge its
assets for the benefit of any other Person (except, in the case of Operating
Lessee, a pledge of its assets for the benefit of Borrower pursuant to any Loan
Document) and does not make any loans or advances to any Person, (s) intends to
maintain adequate capital in light of its contemplated business operations,
(t) has two Independent Directors on its board of directors or board of
managers, or, in the case of a limited partnership, has a Single-Purpose
Equityholder with two Independent Directors on such Single-Purpose
Equityholder’s board of directors or board of managers, and has organizational
documents that prohibit replacing any Independent Director without Cause and
without giving at least two Business Days’ prior written notice to Lender
(except in the case of the death, legal incapacity, or voluntary non-collusive
resignation of an Independent Director, in which case no prior notice to Lender
or the Rating

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Agencies shall be required in connection with the replacement of such
Independent Director with a new Independent Director that is provided by any of
the companies listed in the definition of “Independent Director”), (u) has
by-laws or an operating agreement, or, in the case of a limited partnership, has
a Single-Purpose Equityholder with by-laws or an operating agreement, which
provides that, for so long as the Loan is outstanding, such Person shall not
take or consent to any of the following actions except to the extent expressly
permitted in this Agreement and the other Loan Documents:
     (i) the dissolution, liquidation, consolidation, merger or sale of all or
substantially all of its assets (and, in the case of a Single-Purpose
Equityholder, the assets of the Borrower);
     (ii) the engagement by such Person (and, in the case of a Single-Purpose
Equityholder, the engagement by the Borrower) in any business other than the
acquisition, development, management, leasing, ownership, maintenance and
operation of the Property and activities incidental thereto (and, in the case of
a Single-Purpose Equityholder, activities incidental to the acquisition and
ownership of its interest in the Borrower);
     (iii) the filing, or consent to the filing, of a bankruptcy or insolvency
petition, any general assignment for the benefit of creditors or the institution
of any other insolvency proceeding, or the seeking or consenting to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official in respect of such Person without the
affirmative vote of both of its Independent Directors (and, in the case of a
Single-Purpose Equityholder, in respect of the Borrower without the affirmative
vote of both of such Single-Purpose Equityholder’s Independent Directors); and
     (iv) any amendment or modification of any provision of its (and, in the
case of a Single-Purpose Equityholder, the Borrower’s) organizational documents
relating to qualification as a “Single-Purpose Entity”,
and (v) if such entity is a Single Member LLC, has organizational documents that
provide that upon the occurrence of any event (other than a permitted equity
transfer) that causes its sole member to cease to be a member while the Loan is
outstanding, at least one of its Independent Directors shall automatically be
admitted as the sole member of the Single Member LLC and shall preserve and
continue the existence of the Single Member LLC without dissolution. For the
avoidance of doubt, (i) the IDA Bonds shall be considered assets related to the
Property and (ii) ownership of the IDA Bonds shall be considered and activity
incidental to the ownership of the Property.
          “Single-Purpose Equityholder” means a Single-Purpose Entity that
(x) is a limited liability company or corporation formed under the laws of the
State of Delaware, (y) owns at least a 1% direct equity interest in Borrower (or
a lessor amount, providing that Lender receives appropriate legal opinions with
respect thereto), and (z) serves as the general partner or managing member of
Borrower.

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

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

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

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and any failure by the Operating Lessee to comply therewith shall constitute a
Default hereunder even though Operating Lessee is not a party to this Agreement.
ARTICLE I
GENERAL TERMS
          Section 1.1. The Loan.
          (a) On the Closing Date, subject to the terms and conditions of this
Agreement, Lender shall make a loan to Borrower (the “Loan”) in an amount equal
to the Loan Amount. The Loan shall initially be represented by a single Note
that shall bear interest as described in this Agreement at a per annum rate
equal to the Initial Interest Rate.
          (b) The Loan shall be secured by the Collateral pursuant to the
Mortgage and the other Loan Documents.
          (c) Lender shall have the right at any time, at Lender’s sole
discretion, to replace the initial Note with two or more replacement Notes, and
the holder of each replacement Note shall similarly have the right at any time,
at such holder’s sole discretion, to replace its Note with two or more
replacement Notes. Each replacement Note shall be in the form of the Note so
replaced, but for its principal amount and Interest Rate. The principal amount
of each Note shall be determined by the applicable holder in its sole
discretion, provided that the initial sum of the principal amounts of the
replacement Notes shall equal the then-outstanding principal balance of the
Notes that are so replaced. The Interest Rate of each replacement Note shall be
determined by the applicable holder in its sole discretion, provided that the
initial weighted average of such Interest Rates, weighted on the basis of the
principal balances of the respective Notes, shall initially equal the Interest
Rate of the Note so replaced. Borrower shall execute and return to Lender each
such Note within two Business Days after Borrower’s receipt of an execution copy
thereof, and Borrower’s failure to do so within such time period shall, at
Lender’s election, constitute an immediate Event of Default hereunder. Borrower
hereby authorizes and appoints Lender as its attorney-in-fact to execute such
replacement Notes on Borrower’s behalf should Borrower fail to do so. The
foregoing grant of authority is a power of attorney coupled with an interest and
such appointment shall be irrevocable for the term of this Agreement. Borrower
hereby ratifies all actions that such attorney shall lawfully take or cause to
be taken in accordance with this Section 1.1(c). If requested by Lender,
Borrower shall deliver to Lender, together with such replacement Notes, an
opinion of counsel with respect to the due authorization and enforceability of
such replacement Notes and confirming that the delivery of such replacement
Notes does not alter the conclusions reached in the legal opinions delivered to
Lender at Closing.
          Section 1.2. Interest and Principal.
          (a) On each Payment Date Borrower shall pay to Lender a constant
monthly payment of $278,089.31, which amount shall be applied first toward the
payment of interest on each Note for the applicable Interest Accrual Period at
the applicable Interest Rate (except that in each case, interest shall be
payable on the Indebtedness, including due but unpaid interest, at the

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Default Rate with respect to any portion of such Interest Accrual Period falling
during the continuance of an Event of Default, in which case the monthly payment
shall be increased by the amount of Default Interest accrued on the Notes during
the applicable Interest Accrual Period), and the balance shall be applied toward
the reduction of the outstanding principal balances of the Notes pro rata in
accordance with their then outstanding principal balances. On the Closing Date,
Borrower shall pay interest from and including the Closing Date through the end
of the first Interest Accrual Period. Interest payable hereunder shall be
computed on the basis of a 360-day year and the actual number of days elapsed in
the related Interest Accrual Period.
          (b) No prepayments of the Loan shall be permitted except for
(i) prepayments resulting from Casualty or Condemnation as described in
Section 5.16(f), and (ii) a prepayment of the Loan in whole (but not in part)
during the Prepayment Period on not less than 15 days prior written notice;
provided that any prepayment hereunder shall be accompanied by all interest
accrued on the amount prepaid, plus the amount of interest that would have
accrued thereon if the Loan had remained outstanding through the end of the
Interest Accrual Period in which such prepayment occurs, plus all other amounts
then due under the Loan Documents. Borrower’s notice of prepayment shall create
an obligation of Borrower to prepay the Loan as set forth therein, but may be
rescinded with five days’ written notice to Lender (subject to payment of any
out-of-pocket costs and expenses resulting from such rescission). In addition,
Defeasance shall be permitted after the expiration of the Lockout Period as
described in Section 2.1. The entire outstanding principal balance of the Loan,
together with interest through the end of the applicable Interest Accrual Period
and all other amounts then due under the Loan Documents, shall be due and
payable by Borrower to Lender on the Maturity Date.
          (c) If all or any portion of the Principal Indebtedness is paid to
Lender following acceleration of the Loan or as a result of a Casualty or
Condemnation, Borrower shall pay to Lender an amount equal to the applicable
Yield Maintenance Premium. Amounts received in respect of the Indebtedness
during the continuance of an Event of Default shall be applied toward interest,
principal and other components of the Indebtedness (in such order as Lender
shall determine) before any such amounts are applied toward payment of Yield
Maintenance Premiums, with the result that Yield Maintenance Premiums shall
accrue as the Principal Indebtedness is repaid but no amount received from
Borrower shall constitute payment of a Yield Maintenance Premium until the
remainder of the Indebtedness shall have been paid in full. Borrower
acknowledges that (i) a prepayment will cause damage to Lender; (ii) the Yield
Maintenance Premium is intended to compensate Lender for the loss of its
investment and the expense incurred and time and effort associated with making
the Loan, which will not be fully repaid if the Loan is prepaid; (iii) it will
be extremely difficult and impractical to ascertain the extent of Lender’s
damages caused by a prepayment after an acceleration or any other prepayment not
permitted by the Loan Documents; and (iv) the Yield Maintenance Premium
represents Lender’s and Borrower’s reasonable estimate of Lender’s damages from
the prepayment and is not a penalty.
          (d) Any payments of interest and/or principal not paid when due
hereunder shall bear interest at the applicable Default Rate and, in the case of
all payments due hereunder other than the repayment of the Principal
Indebtedness on the Maturity Date or on any other earlier date as a result of an
acceleration of the Loan, when paid, shall be accompanied by a late fee in an
amount equal to the lesser of three percent of such unpaid sum and the maximum

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amount permitted by applicable law in order to defray a portion of the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment.
          Section 1.3. Method and Place of Payment. Except as otherwise
specifically provided in this Agreement, all payments and prepayments under this
Agreement and the Notes (including any deposit into the Cash Management Account
pursuant to Section 3.2(c)) shall be made to Lender not later than 1:00 p.m.,
New York City time, on the date when due (except in the case of the payment made
on the Maturity Date, which shall be made not later than 2:00 p.m., New York
City time) and shall be made in lawful money of the United States of America by
wire transfer in federal or other immediately available funds to the account
specified from time to time by Lender. Any funds received by Lender after such
time shall be deemed to have been paid on the next succeeding Business Day.
Lender shall notify Borrower in writing of any changes in the account to which
payments are to be made. If the amount received from Borrower (or from the Cash
Management Account pursuant to Section 3.2(b)) is less than the sum of all
amounts then due and payable hereunder, such amount shall be applied, at
Lender’s sole discretion, either toward the components of the Indebtedness
(e.g., interest, principal and other amounts payable hereunder) and the Notes,
in such sequence as Lender shall elect in its sole discretion, or toward the
payment of Property expenses.
          Section 1.4. Taxes; Regulatory Change.
          (a) Borrower agrees to indemnify Lender against any present or future
stamp, documentary or other similar or related taxes or other similar or related
charges now or hereafter imposed, levied, collected, withheld or assessed by any
United States Governmental Authority by reason of the execution and delivery of
the Loan Documents and any consents, waivers, amendments and enforcement of
rights under the Loan Documents.
          (b) If Borrower is required by law to withhold or deduct any amount
from any payment hereunder in respect of any U.S. Tax, Borrower shall withhold
or deduct the appropriate amount, remit such amount to the appropriate
Governmental Authority and pay to each Person to whom there has been an
Assignment or Participation of a Loan and who is not a U.S. Person such
additional amounts as are necessary in order that the net payment of any amount
due to such non-U.S. Person hereunder after deduction for or withholding in
respect of any U.S. Tax imposed with respect to such payment (or in lieu
thereof, payment of such U.S. Tax by such non-U.S. Person), will not be less
than the amount stated in this Agreement to be then due and payable; except that
the foregoing obligation to pay such additional amounts shall not apply (i) to
any assignee that has not complied with the obligations contained in
Section 9.7(c), (ii) to any U.S. Taxes imposed solely by reason of the failure
by such Person (or, if such Person is not the beneficial owner of the relevant
Loan, such beneficial owner) to comply with applicable certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States of
America of such Person (or beneficial owner, as the case may be) if such
compliance is required by statute or regulation of the United States of America
as a precondition to relief or exemption from such U.S. Taxes; or (iii) with
respect to any Person who is a fiduciary or partnership or other than the sole
beneficial owner of such payment, to any U.S. Tax imposed with respect to
payments made under any Note to a fiduciary or partnership to the extent that
the beneficial owner or member of

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the partnership would not have been entitled to the additional amounts if such
beneficial owner or member of the partnership had been the holder of the Note.
          (c) Within 30 days after paying any amount from which it is required
by law to make any deduction or withholding, and within 30 days after it is
required by law to remit such deduction or withholding to any relevant taxing or
other authority, Borrower shall deliver to such non-U.S. Person satisfactory
evidence of such deduction, withholding or payment (as the case may be).
          (d) If, as a result of any Regulatory Change, any reserve, special
deposit or similar requirements relating to any extensions of credit or other
assets of, or any deposits with, Lender or any holder of all or a portion of the
Loan is imposed, modified or deemed applicable and the result is to increase the
cost to such Lender or such holder of making or holding the Loan, or to reduce
the amount receivable by Lender or such holder hereunder in respect of any
portion of the Loan by an amount deemed by Lender or such holder to be material
(such increases in cost and reductions in amounts receivable, “Increased
Costs”), then Borrower agrees that it will pay to Lender or such holder upon
Lender’s or such holder’s request such additional amount or amounts as will
compensate Lender and/or such holder for such Increased Costs to the extent that
such Increased Costs are reasonably allocable to the Loan. Lender will notify
Borrower in writing of any event occurring after the Closing Date that will
entitle Lender or any holder of the Loan to compensation pursuant to this
Section 1.4(d) as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation and will designate a different lending
office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender. If such Lender shall fail to notify
Borrower of any such event within 90 days following the end of the month during
which such event occurred, then Borrower’s liability for any amounts described
in this Section incurred by such Lender as a result of such event shall be
limited to those attributable to the period occurring subsequent to the 90th day
prior to the date upon which such Lender actually notified Borrower of the
occurrence of such event. Notwithstanding the foregoing, in no event shall
Borrower be required to compensate Lender or any holder of the Loan for any
portion of the income or franchise taxes of Lender or such holder, whether or
not attributable to payments made by Borrower. If a Lender requests compensation
under this Section 1.4(d), Borrower may, by notice to Lender, require that such
Lender furnish to Borrower a statement setting forth in reasonable detail the
basis for requesting such compensation and the method for determining the amount
thereof.
          Section 1.5. Release. Upon payment of the Indebtedness in full when
permitted or required hereunder, Lender shall execute instruments prepared by
Borrower and reasonably satisfactory to Lender, which, at Borrower’s election
and at Borrower’s sole cost and expense: (a) release and discharge all Liens on
all Collateral securing payment of the Indebtedness (subject to Borrower’s
obligation to pay any associated fees and expenses), including all balances in
the Collateral Accounts; or (b) assign such Liens (and the Loan Documents) to a
new lender designated by Borrower. Any release or assignment provided by Lender
pursuant to this Section 1.5 shall be without recourse, representation or
warranty of any kind.

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ARTICLE II
DEFEASANCE AND ASSUMPTION
          Section 2.1. Defeasance.
          (a) On any date after the expiration of the Lockout Period, provided
no Event of Default is then continuing and subject to the notice requirement
described in Section 2.1(c), Borrower may obtain the release of the Collateral
(other than the Defeasance Collateral) from the Liens of the Loan Documents upon
the payment to Lender of all sums then due under the Loan Documents and the
delivery of the following to Lender:
     (i) Defeasance Collateral sufficient to provide payments on or prior to,
and in any event as close as possible to, all successive Payment Dates in an
amount sufficient to make all payments of interest and principal due hereunder,
including the then outstanding Principal Indebtedness, on the first Payment Date
in the Prepayment Period or such other Payment Date in the Prepayment Period as
Borrower shall elect;
     (ii) written confirmation from an independent certified public accounting
firm reasonably satisfactory to Lender that such Defeasance Collateral is
sufficient to provide the payments described in clause (i) above;
     (iii) a security agreement, in form and substance reasonably satisfactory
to Lender, creating in favor of Lender a first priority perfected security
interest in such Defeasance Collateral (a “Defeasance Pledge Agreement”);
     (iv) an opinion of counsel for Borrower, in form and substance reasonably
satisfactory to Lender and delivered by counsel reasonably satisfactory to
Lender, opining that (1) the Defeasance Pledge Agreement has been duly
authorized and is enforceable against Borrower in accordance with its terms and
that Lender has a perfected first priority security interest in such Defeasance
Collateral; and (2) if the Loan has been Securitized, the Defeasance, including
any assumption under Section2.1(b), does not cause a tax to be imposed on the
Securitization Vehicle or, if the Securitization Vehicle is a REMIC, does not
cause any portion of the Loan to cease to be a “qualified mortgage” within the
meaning of section 860G(a)(3) of the Code, and (3) that the Defeasance does not
constitute a “significant modification” of the Loan under Section 1001 of the
Code;
     (v) if the Loan has been Securitized, the Rating Condition with respect to
such Defeasance shall have been satisfied;
     (vi) instruments reasonably satisfactory to Lender releasing and
discharging or assigning to a third party Lender’s Liens on the Collateral
(other than the Defeasance Collateral);
     (vii) such other customary certificates, opinions, documents or instruments
as Lender and the Rating Agencies may reasonably request; and

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     (viii) reimbursement for any costs and expenses incurred in connection with
this Section 2.1 (including Rating Agency and Servicer fees and expenses,
reasonable fees and expenses of legal counsel and any revenue, documentary stamp
or intangible taxes or any other tax or charge due in connection herewith).
Lender shall reasonably cooperate with Borrower to avoid the incurrence of
mortgage recording taxes in connection with a Defeasance at Borrower’s sole cost
and expense.
          (b) At the time of the Defeasance, the Loan shall be assumed by a
bankruptcy-remote entity established or designated by the initial Lender
hereunder or its designee, to which Borrower shall transfer all of the
Defeasance Collateral (a “Defeasance Borrower”). The right of the initial Lender
hereunder or its designee to establish or designate a Defeasance Borrower shall
be retained by the initial Lender notwithstanding the sale or transfer of the
Loan unless such obligation is specifically assigned to and assumed by the
transferee. Such Defeasance Borrower shall execute and deliver to Lender an
assumption agreement in form and substance reasonably satisfactory to Lender,
such Uniform Commercial Code financing statements as may be reasonably requested
by Lender and legal opinions of counsel reasonably acceptable to Lender that are
substantially equivalent to the opinions delivered to Lender on the Closing
Date, including new nonconsolidation opinions reasonably satisfactory to Lender
and satisfactory to the Rating Agencies; and Borrower and the Defeasance
Borrower shall deliver such other documents, certificates and legal opinions as
Lender shall reasonably request.
          (c) Borrower must give Lender and each Rating Agency at least 30 days’
(and not more than 90 days’) prior written notice of any Defeasance under this
Section 2.1, specifying the date on which the Defeasance is to occur. If such
Defeasance is not made on such date (x) Borrower’s notice of Defeasance will be
deemed rescinded, and (y) Borrower shall on such date pay to Lender all
reasonable losses, costs and expenses suffered by Lender as a consequence of
such rescission.
          (d) Upon satisfaction of the requirements contained in this
Section 2.1, Lender will execute and deliver to Borrower such instruments,
prepared by Borrower and approved by Lender, as shall be necessary to release
the Property from the Liens of the Loan Documents.
          Section 2.2. Assumption. The initial Borrower shall have the right to
Transfer all of the Collateral to a Qualified Successor Borrower that will,
contemporaneously with such Transfer, assume all of the obligations of Borrower
hereunder and under the other Loan Documents (an “Assumption”), provided no
Event of Default or material monetary Default is then continuing or would result
therefrom and the following conditions are met to the reasonable satisfaction of
Lender:
     (i) such Qualified Successor Borrower shall have executed and delivered to
Lender an assumption agreement (including an assumption of the Mortgage in
recordable form, if requested by Lender), in form and substance reasonably
acceptable to Lender, evidencing its agreement to abide and be bound by the
terms of the Loan Documents and containing representations substantially
equivalent to those contained in Article IV (recast, as necessary, such that
representations that specifically relate to Closing Date are

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remade as of the date of such assumption), and such other representations (and
evidence of the accuracy of such representations) as the Servicer shall
reasonably request;
     (ii) the obligations of Operating Lessee under the Operating Lease shall
have been assumed by a Qualified Successor Operating Lessee pursuant to an
assumption agreement, in form and substance reasonably acceptable to Lender, and
such Qualified Successor Operating Lessee shall have delivered to Lender all
documents reasonably requested by Lender relating to the existence of such
Qualified Successor Operating Lessee and the due authorization of such Qualified
Operating Lessee to assume the obligations under the Operating Lease, each in
form and substance reasonably satisfactory to Lender, including a certified copy
of the applicable resolutions from all appropriate persons, certified copies of
the organizational documents of the Qualified Successor Operating Lessee,
together with all amendments thereto, and certificates of good standing or
existence for the Qualified Successor Operating Lessee issued as of a recent
date by its state of organization and each other state where such entity, by the
nature of its business, is required to qualify or register;
     (iii) such Uniform Commercial Code financing statements as may be
reasonably requested by Lender shall be filed;
     (iv) a party satisfactory to Lender in its sole discretion assumes all
obligations, liabilities, guarantees and indemnities of Sponsor and any other
guarantor under the Loan Documents pursuant to documentation satisfactory to
Lender (and upon such assumption by such party, Sponsor and any other such
guarantor shall be released from such obligations, liabilities, guarantees and
indemnities);
     (v) such Qualified Successor Borrower shall have delivered to Lender legal
opinions of counsel reasonably acceptable to Lender that are equivalent to the
opinions delivered to Lender on the Closing Date, including new nonconsolidation
opinions that are reasonably satisfactory to Lender and satisfactory to each of
the Rating Agencies; and Borrower and the Qualified Successor Borrower shall
have delivered such other documents, certificates and legal opinions, including
relating to REMIC matters, as Lender shall reasonably request;
     (vi) such Qualified Successor Borrower shall have delivered to Lender all
documents reasonably requested by it relating to the existence of such Qualified
Successor Borrower and the due authorization of the Qualified Successor Borrower
to assume the Loan and to execute and deliver the documents described in this
Section 2.2, each in form and substance reasonably satisfactory to Lender,
including a certified copy of the applicable resolutions from all appropriate
persons, certified copies of the organizational documents of the Qualified
Successor Borrower, together with all amendments thereto, and certificates of
good standing or existence for the Qualified Successor Borrower issued as of a
recent date by its state of organization and each other state where such entity,
by the nature of its business, is required to qualify or register;
     (vii) the Qualified Title Insurance Policy shall have been properly
endorsed to reflect the Transfer of the Property to the Qualified Successor
Borrower;

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     (viii) the Rating Condition shall have been satisfied with respect to the
legal structure of the Qualified Successor Borrower, the documentation of the
Assumption and the related legal opinions; and
     (ix) Borrower shall have paid to Lender a nonrefundable assumption fee in
an amount equal to 1.0% of the Principal Indebtedness, and Borrower shall have
reimbursed Lender for its reasonable out-of-pocket costs and expenses incurred
in connection with such assumption.
          Section 2.3. Transfers of Equity Interests in Borrower.
          (a) No direct or indirect equity interests in Borrower shall be
conveyed or otherwise transferred to any Person prior to the first anniversary
of the Closing Date. From and after the first anniversary of the Closing Date,
provided that no Event of Default is continuing, transfers (but not pledges,
except as permitted under Section 7.1(f)) of direct and indirect equity
interests in Borrower shall be permitted upon 10 days advance written notice
thereof to Lender, provided that:
     (i) no such transfer shall result in a Change of Control;
     (ii) as a condition to any such transfer that results in Borrower ceasing
to be Controlled by Sponsor, and each subsequent transfer that again changes the
identity of the Qualified Equityholder that Controls Borrower, shall be
conditioned upon payment to Lender of a transfer fee in an amount equal to 1.0%
of the Principal Indebtedness at the time of such transfer;
     (iii) as a condition to any such transfer that results in any Person
acquiring more than 49% of the direct or indirect equity interest in Borrower or
a Single-Purpose Equityholder (even if not constituting a Change of Control),
Borrower shall deliver to Lender with respect to such Person a new
non-consolidation opinion satisfactory to (A) prior to the occurrence of any
Securitization of the Loan, Lender (Lender’s approval of any such
non-consolidation opinion that is in substantially the form of the
Nonconsolidation Opinion not to be unreasonably withheld), and (B) at any time
following any Securitization or series of Securitizations of the Loan, each of
the Rating Agencies rating such Securitization or Securitizations; and
     (iv) Borrower shall have reimbursed Lender for its reasonable out-of-pocket
costs and expenses actually incurred in connection with any such transfer.
          (b) Notwithstanding Section 2.3(a) above, the following transactions
shall not be deemed prohibited transfers under this Agreement and shall not
require the consent of Lender:
     (i) the issuance of additional shares or the transfer of existing shares of
Sponsor on any public exchange or the issuance of new units or transfers of
existing units in Pebblebrook Hotel, L.P. (the “Operating Partnership”),
provided that it shall continue to be Controlled by Sponsor; and

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     (ii) any merger of Sponsor or the Operating Partnership or a sale of all or
substantially all of the assets of Sponsor or the Operating Partnership,
provided that the new direct or indirect owner of Borrower resulting from such
transaction assumes all obligations of Sponsor under the Loan Documents.
ARTICLE III
ACCOUNTS
          Section 3.1. Cash Management Account.
          (a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank a cash management account into
which income from the Property payable to Borrower or Operating Lessee will be
deposited (the “Cash Management Account”), which account shall be owned by
Borrower but remain under the sole and exclusive control (as defined in the New
York Uniform Commercial Code) of Lender. As a condition precedent to the closing
of the Loan, Borrower shall cause the Cash Management Bank to execute and
deliver an agreement (as amended, restated, replaced, supplemented or otherwise
modified in accordance herewith, a “Cash Management Agreement”) that provides,
inter alia, that no party other than Lender and Servicer shall have the right to
withdraw funds from the Cash Management Account and that the Cash Management
Bank shall comply with all instructions and entitlement orders of Lender
relating to the Cash Management Account and the other Collateral Accounts, in
each case, without the consent of Borrower, Operating Lessee or any other
Person. Notwithstanding any term herein or in the Cash Management Agreement, at
any time that (i) a Tax Reserve Exemption Period shall be continuing, to the
extent provided in Section 3.4(c), the amount remitted to the Cash Management
Account shall be net of any amounts needed to pay Taxes as and when due and
(ii) an Insurance Reserve Exemption Period shall be continuing, to the extent
provided in Section 3.4(c), the amount remitted to the Cash Management Account
shall be net of any amounts needed to pay insurance premiums as and when due.
The fees and expenses of the Cash Management Bank shall be paid by Borrower.
          (b) Borrower shall cause Approved Property Manager to remit all
amounts payable to Borrower or Operating Lessee (other than tenant security
deposits required to be held in escrow accounts) to the Cash Management Account
or a Blocked Account immediately at such times as Borrower or Operating Lessee
are entitled to receive such funds pursuant to the Approved Management
Agreement. Notwithstanding the foregoing, so long as no Trigger Period or Event
of Default is continuing, the amount remitted each month into the Cash
Management Account shall not be required to exceed the Operating Lease Monthly
Rent. “Blocked Account” means an Eligible Account maintained with a financial
institution satisfactory to Lender that enters into a blocked account agreement
in form and substance satisfactory to Lender (as amended, restated, replaced,
supplemented or otherwise modified in accordance herewith, the “Blocked Account
Agreement”) satisfactory to Lender pursuant to which such financial institution
will remit, at the end of each Business Day, all amounts contained therein to an
account specified by Lender (Lender hereby agreeing to specify the Cash
Management Account so long as no Event of Default has occurred and is then
continuing).

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          (c) Lender shall have the right at any time, upon not less than
30 days’ prior written notice to Borrower, to replace the Cash Management Bank
with any Eligible Institution at which Eligible Accounts may be maintained that
will promptly execute and deliver to Lender a Cash Management Agreement
substantially identical to the Cash Management Agreement executed at Closing. In
addition, during the continuance of an Event of Default or if the Blocked
Account Bank fails to comply with the Blocked Account Agreement or ceases to be
an Eligible Institution, Lender shall have the right at any time, upon not less
than 30 days’ prior written notice to Borrower, to replace the Blocked Account
Bank with any Eligible Institution at which Eligible Accounts may be maintained
that will promptly execute and deliver to Lender a Blocked Account Agreement
satisfactory to Lender.
          (d) Borrower shall cause Operating Lessee to maintain at all times a
Qualified Operating Expense Account. Borrower shall not permit any amounts
unrelated to the Property to be commingled with amounts on deposit in the
Qualified Operating Expense Account and shall cause all amounts payable with
respect to Operating Expenses for the Property (to the extent such Operating
Expenses have not previously been paid by Approved Property Manager in
accordance with the Approved Management Agreement) to be paid from the Qualified
Operating Expense Account or the Cash Management Account (to the extent required
or permitted hereunder) and no other account. Borrower shall, or shall cause
Operating Lessee to, deliver to Lender each month the monthly bank statement
related to such Qualified Operating Expense Account. Unless and until an Event
of Default shall occur, Operating Lessee shall have direct access to, and shall
be permitted to make withdrawals and, except during the continuance of a Trigger
Period, equity distributions from, the Qualified Operating Expense Account,
without the consent of Lender. During the continuance of an Event of Default,
all amounts contained in the Qualified Operating Expense Account shall be
remitted to the Cash Management Account.
          Section 3.2. Distributions from Cash Management Account.
          (a) The Cash Management Agreement shall provide that the Cash
Management Bank shall remit to the Qualified Operating Expense Account, at the
end of each Business Day (or, at Borrower’s election, on a less frequent basis),
the amount, if any, by which amounts then contained in the Cash Management
Account exceed the aggregate amount required to be paid to or reserved with
Lender on the next Payment Date pursuant hereto (the “Minimum Balance”);
provided, however, that Lender shall terminate such remittances during the
continuance of an Event of Default or Trigger Period upon notice to the Cash
Management Bank. Lender may notify the Cash Management Bank at any time of any
change in the Minimum Balance.
          (b) On each Payment Date, provided no Event of Default is continuing,
Lender shall transfer amounts from the Cash Management Account, to the extent
available therein, to make the following payments in the following order of
priority:
     (i) to the Basic Carrying Costs Escrow Account, the amounts then required
to be deposited therein pursuant to Section 3.4;

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     (ii) to Lender, the amount of all scheduled or delinquent interest and
principal on the Loan and all other amounts then due and payable under the Loan
Documents (with any amounts in respect of principal paid last);
     (iii) during the continuance of a Trigger Period, to the Qualified
Operating Expense Account, an amount equal to the Budgeted Operating Expenses
for the month in which such Payment Date occurs, to the extent such Budgeted
Operating Expenses have not previously been paid by Approved Property Manager in
accordance with the Approved Management Agreement, as certified by Borrower in
an Officer’s Certificate delivered to Lender at least five Business Days prior
to such payment date, provided that the amounts disbursed to such account
pursuant to this clause (iii) shall be used solely to pay Budgeted Operating
Expenses for such month (Borrower agreeing that, in the event that such Budgeted
Operating Expenses exceed the actual operating expenses for such month, such
excess amounts shall be remitted to the Cash Management Account prior to the
next succeeding Payment Date);
     (iv) to the FF&E Reserve Account, the amounts, if any, required to be
deposited therein pursuant to Section 3.6;
     (v) during the continuance of a Trigger Period, all remaining amounts to
the Excess Cash Flow Reserve Account; and
     (vi) if no Trigger Period is continuing, all remaining amounts to the
Qualified Operating Expense Account.
          (c) If on any Payment Date the amount in the Cash Management Account
shall be insufficient to make all of the transfers described in
Section 3.2(b)(i) through (iv), Borrower shall deposit into the Cash Management
Account on such Payment Date the amount of such deficiency. If Borrower shall
fail to make such deposit, the same shall constitute an Event of Default and, in
addition to all other rights and remedies provided for under the Loan Documents,
Lender may disburse and apply the amounts in the Collateral Accounts in
accordance with Section 3.10(c).
          Section 3.3. Loss Proceeds Account.
          (a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
depositing any Loss Proceeds (the “Loss Proceeds Account”).
          (b) Provided no Event of Default is continuing, funds in the Loss
Proceeds account shall be applied in accordance with Section 5.16.
          Section 3.4. Basic Carrying Costs Escrow Account.
          (a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
reserving amounts payable by Borrower in respect of Taxes, IDA Rent and
insurance premiums (the “Basic Carrying Costs Escrow Account”).

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          (b) On the Closing Date, the Basic Carrying Costs Escrow Account shall
be funded in an amount equal to the sum of (i) an amount sufficient to pay all
Taxes by the 30th day prior to the date they come due, assuming subsequent
monthly fundings on Payment Dates of 1/12 of projected annual Taxes, plus
(ii) an amount sufficient to pay all IDA Rent by the 30th day prior to the date
they come due, assuming subsequent monthly fundings on Payment Dates of 1/12 of
projected annual IDA Rent, plus (iii) an amount sufficient to pay all insurance
premiums by the 30th day prior to the date they come due, assuming subsequent
monthly fundings on Payment Dates of 1/12 of projected annual insurance
premiums.
          (c) On each subsequent Payment Date, an additional deposit shall be
made therein in an amount equal to the sum of:
     (A) 1/12 of the Taxes that Lender reasonably estimates, based on
information provided by Borrower, will be payable during the next ensuing
12 months, plus
     (B) 1/12 of the IDA Rent that Lender reasonably estimates, based on
information provided by Borrower, will be payable during the next ensuing
12 months, plus
     (C) 1/12 of the insurance premiums that Lender reasonably estimates, based
on information provided by Borrower, will be payable during the next ensuing
12 months;
provided, however, that if at any time Lender reasonably determines that the
amount in the Basic Carrying Costs Escrow Account will not be sufficient to
accumulate (upon payment of subsequent monthly amounts in accordance with the
provisions of this Agreement) the full amount of all installments of Taxes, IDA
Rent and insurance premiums by the date on which such amounts come due, then
Lender shall notify Borrower of such determination and Borrower shall increase
its monthly payments to the Basic Carrying Costs Escrow Account by the amount
that Lender reasonably estimates is sufficient to achieve such accumulation.
          (d) Notwithstanding the terms and provisions of the foregoing
paragraphs of this Section 3.4:
     (i) Borrower shall have no obligation to comply with subclause (i) of
Section 3.4(b) and Section 3.4(c)(A) for so long as (i) no Event of Default or
Trigger Period shall be continuing, (ii) no Taxes that are currently due and
payable remain unpaid; and (iii) Borrower shall maintain in the Basic Carrying
Costs Escrow Account funds sufficient to pay all of the Taxes that Lender
reasonably estimates, based on information provided by Borrower, will accrue or
be payable during the next ensuing six months (such estimate not to be reduced
to the extent of any actual or proposed tax appeal) (any such period, a “Tax
Reserve Exemption Period”);
     (ii) Borrower shall have no obligation to comply with subclause (ii) of
Section 3.4(b) and Section 3.4(c)(B) for so long as the IDA Rent under the IDA
Lease is fully offset by payments made to Borrower as holder of the IDA Bonds;
provided that all IDA

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Bonds have been delivered to Lender and Lender shall have been granted a
perfected pledge thereof pursuant to the IDA Bond Pledge Agreement; and
     (iii) Borrower shall have no obligation to comply with subclause (iii) of
Section 3.4(b) and Section 3.4(c)(C) for so long as (i) no Event of Default or
Trigger Period shall be continuing, (ii) no insurance premiums that are
currently due and payable remain unpaid; and (iii) Borrower shall maintain in
the Basic Carrying Costs Escrow Account funds sufficient to pay all of the
insurance premiums that Lender reasonably estimates, based on information
provided by Borrower, will accrue or be payable during the next ensuing six
months (such estimate not to be reduced to the extent of any actual or proposed
tax appeal) (any such period, a “Insurance Reserve Exemption Period”).
          (e) Borrower shall provide Lender with copies of all tax, IDA Rent and
insurance bills relating to the Property promptly after Borrower’s receipt
thereof. During any Tax Reserve Exemption Period, Borrower shall make all Tax
payments on or before the date due. During any Insurance Reserve Exemption
Period, Borrower shall make all insurance premium payments on or before the date
due. At all other times, Lender will apply amounts in the Basic Carrying Costs
Escrow Account toward the purposes for which such amounts are deposited therein,
including, for the avoidance of doubt, Taxes due and payable. In connection with
the making of any payment from the Basic Carrying Costs Escrow Account, Lender
may cause such payment to be made according to any bill, statement or estimate
procured from, as applicable, the IDA or the appropriate public office or
insurance carrier, without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien
or title or claim thereof unless given written advance notice by Borrower of
such inaccuracy, invalidity or other contest
          Section 3.5. [Intentionally Omitted].
          Section 3.6. FF&E Reserve Account.
          (a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
reserving amounts in respect of FF&E expenditures (the “FF&E Reserve Account”).
          (b) On each Payment Date there shall be deposited into the FF&E
Reserve Account an amount equal to the Monthly FF&E Amount.
          (c) Upon the request of Borrower at any time that no Event of Default
is continuing (but not more often than once per calendar month), Lender shall
cause disbursements to Borrower from the FF&E Reserve Account to reimburse
Borrower for FF&E expenditures that are consistent with the Approved Annual
Budget; provided that:
     (i) Borrower shall deliver to Lender invoices evidencing that the costs for
which such disbursements are requested are due and payable;

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     (ii) Borrower shall deliver to Lender an Officer’s Certificate confirming
that all such costs have been previously paid by Borrower or will be paid from
the proceeds of the requested disbursement and that all conditions precedent to
such disbursement required by the Loan Documents have been satisfied;
     (iii) Lender may condition the making of a requested disbursement on
(1) reasonable evidence establishing that Borrower has applied any amounts
previously received by it in accordance with this Section for the expenses to
which specific draws made hereunder relate, (2) a reasonably satisfactory site
inspection, and (3) receipt of lien releases and waivers from any contractors,
subcontractors and others with respect to such amounts; and
     (iv) No amounts reserved in the FF&E Reserve Account shall be used to pay
expenses in respect of the Capital Plan unless and until Borrower shall first
have fulfilled its obligation under Section 5.07(e) of the Approved Management
Agreement to fund the first $5,500,000 in Capital Plan expenses.
          (d) Notwithstanding the foregoing, Borrower shall have no obligation
to comply with subclause (b) of this Section 3.6 for so long as (i) no Event of
Default or Trigger Period is continuing, (ii) Borrower maintains with an
Eligible Institution a separate account (the “Borrower FF&E Account”) owned by
Borrower but subject to a Borrower FF&E Account Control Agreement, into which
Borrower shall deposit, on a monthly basis, an amount equal to the Monthly FF&E
Amount and (iii) Borrower’s chief financial officer shall deliver to Lender
within ten Business Days of the end of each Fiscal Quarter, an Officer’s
Certificate certifying as to the amount contained in the Borrower FF&E Account
on the last day of such Fiscal Quarter and, upon Lender’s request, further
certifying that; (1) no amount has been remitted from the Borrower FF&E Account
for any purpose other than the payment of FF&E expenditures pursuant to the
Approved Annual Budget and (2) no amounts reserved in the FF&E Reserve Account
have been used to pay expenses in respect of the Capital Plan unless Borrower
shall have fulfilled its obligation under Section 5.07(e) of the Approved
Management Agreement to fund the first $5,500,000 in Capital Plan expenses. Upon
the occurrence of a Trigger Period or an Event of Default all amounts contained
in the Borrower FF&E Account shall be remitted into the FF&E Reserve Account.
          Section 3.7. Deferred Maintenance and Environmental Escrow Account.
          (a) On or prior to the Closing Date, if the Deferred Maintenance
Amount is greater than zero, Borrower shall establish and thereafter maintain
with the Cash Management Bank an account for the purpose of reserving amounts
anticipated to be required to correct Deferred Maintenance Conditions (the
“Deferred Maintenance and Environmental Escrow Account”).
          (b) On the Closing Date, Borrower shall deposit into the Deferred
Maintenance and Environmental Escrow Account, from the proceeds of the Loan, an
amount equal to the Deferred Maintenance Amount.

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

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          (c) Borrower shall perform its obligations in respect of the Unfunded
Obligations when and as due under the respective Leases or other applicable
agreements. Upon the request of Borrower at any time that no Event of Default is
continuing (but not more often than once per calendar month), Lender shall cause
disbursements to Borrower from the Unfunded Obligations Account to reimburse
Borrower for reasonable costs and expenses incurred in the performance of
Unfunded Obligations, provided that
     (i) Borrower shall deliver to Lender invoices evidencing that the costs for
which such disbursements are requested are due and payable;
     (ii) Borrower shall deliver to Lender an Officer’s Certificate confirming
that all such costs have been previously paid by Borrower or will be paid from
the proceeds of the requested disbursement and that all conditions precedent to
such disbursement required by the Loan Documents have been satisfied; and
     (iii) Lender may condition the making of a requested disbursement on
(1) reasonable evidence establishing that Borrower has applied any amounts
previously received by it in accordance with this Section for the expenses to
which specific draws made hereunder relate, (2) a reasonably satisfactory site
inspection, and (3) receipt of lien releases and waivers from any contractors,
subcontractors and others with respect to such amounts.
          (d) Upon payment or performance, as applicable, of the Unfunded
Obligations identified on any line on Schedule D, and provided no Event of
Default is then continuing, the remainder of the portion of the Unfunded
Obligations Account held for such line item (as shown adjacent to such line item
on Schedule D) shall promptly be remitted to Borrower, except that any amounts
in respect of free rent shall be remitted to the Cash Management Account. Upon
the payment or performance in full of all Unfunded Obligations, provided no
Event of Default or Trigger Period is then continuing, any amounts then
remaining in the Unfunded Obligations Account shall promptly be remitted to
Borrower and the Unfunded Obligations Account will no longer be maintained.
          Section 3.9. Excess Cash Flow Reserve Account.
          (a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the deposit of
amounts required to be deposited therein in accordance with Section 3.2(b)(v)
(the “Excess Cash Flow Reserve Account”).
          (b) Provided that no Event of Default is then continuing, Lender shall
release to the Cash Management Account all amounts then contained in the Excess
Cash Flow Reserve Account on the first Payment Date after Borrower delivers to
Lender evidence reasonably satisfactory to Lender establishing that no Trigger
Period is then continuing. Such a release shall not preclude the subsequent
commencement of a Trigger Period and the deposit of amounts into the Excess Cash
Flow Reserve Account as set forth in Section 3.2(b)(v).
          Section 3.10. Account Collateral.

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          (a) Borrower hereby grants a perfected first-priority security
interest in favor of Lender in and to the Account Collateral as security for the
Indebtedness, together with all rights of a secured party with respect thereto.
Each Collateral Account shall be an Eligible Account under the sole dominion and
control of Lender and shall be in the name of Borrower, as pledgor, and Lender,
as pledgee. Borrower shall have no right to make withdrawals from any of the
Collateral Accounts. Funds in the Collateral Accounts shall not be commingled
with any other monies at any time. Borrower shall execute any additional
documents that Lender in its reasonable discretion may require and shall provide
all other evidence reasonably requested by Lender to evidence or perfect its
first-priority security interest in the Account Collateral. Funds in the
Collateral Account shall be invested at Lender’s discretion only in Permitted
Investments, which Permitted Investments shall be credited to the related
Collateral Account. All income and gains from the investment of funds in the
Collateral Accounts other than the Basic Carrying Costs Escrow Account shall be
retained in the Collateral Accounts from which they were derived. Unless
otherwise required by applicable law, all income and gains from the investment
of funds in the Basic Carrying Costs Escrow Account shall be for the account of
Lender in consideration of its administration of such Collateral Account, and
Lender shall have the right at any time to cause the Cash Management Bank to
remit such amounts to Lender. After the Loan and all other Indebtedness have
been paid in full, the Collateral Accounts shall be closed and the balances
therein, if any, shall be paid to Borrower.
          (b) The insufficiency of amounts contained in the Collateral Accounts
shall not relieve Borrower from its obligation to fulfill all covenants
contained in the Loan Documents.
          (c) During the continuance of an Event of Default, Lender may, in its
sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, either toward the components of the Indebtedness (e.g., interest,
principal and other amounts payable hereunder), the Loan and the Notes in such
sequence as Lender shall elect in its sole discretion, and/or toward the payment
of Property expenses.
          Section 3.11. Bankruptcy. Borrower and Lender acknowledge and agree
that upon the filing of a bankruptcy petition by or against Borrower under the
Bankruptcy Code, the Account Collateral and the Revenues (whether then already
in the Collateral Accounts, or then due or becoming due thereafter) shall be
deemed not to be property of Borrower’s bankruptcy estate within the meaning of
Section 541 of the Bankruptcy Code. If, however, a court of competent
jurisdiction determines that, notwithstanding the foregoing characterization of
the Account Collateral and the Revenues by Borrower and Lender, the Account
Collateral and/or the Revenues do constitute property of Borrower’s bankruptcy
estate, then Borrower and Lender further acknowledge and agree that all such
Revenues, whether due and payable before or after the filing of the petition,
are and shall be cash collateral of Lender. Borrower acknowledges that Lender
does not consent to Borrower’s use of such cash collateral and that, in the
event Lender elects (in its sole discretion) to give such consent, such consent
shall only be effective if given in writing signed by Lender. Except as provided
in the immediately preceding sentence, Borrower shall not have the right to use
or apply or require the use or application of such cash collateral (i) unless
Borrower shall have received a court order authorizing the use of the same, and
(ii)

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Borrower shall have provided such adequate protection to Lender as shall be
required by the bankruptcy court in accordance with the Bankruptcy Code.
ARTICLE IV
REPRESENTATIONS
          Borrower represents to Lender that, as of the Closing Date, except as
set forth in the Exception Report:
          Section 4.1. Organization.
          (a) Borrower and Operating Lessee each are duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is in
good standing in each other jurisdiction where ownership of its properties or
the conduct of its business requires it to be so, and each has all power and
authority under such laws and its organizational documents and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
          (b) Borrower and Operating Lessee each have no subsidiaries and do not
own any equity interest in any other Person.
          (c) The organizational chart contained in Exhibit A is true and
correct as of the date hereof.
          (d) The limited liability company interests of Borrower and Operating
Lessee are not represented by any limited liability company certificates, other
certificates or other instruments of any kind.
          Section 4.2. Authorization. Borrower has the power and authority to
enter into this Agreement and the other Loan Documents, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated by the Loan Documents and has by proper action duly authorized the
execution and delivery of the Loan Documents.
          Section 4.3. No Conflicts. Neither the execution and delivery of the
Loan Documents, nor the consummation of the transactions contemplated therein,
nor performance of and compliance with the terms and provisions thereof will
(i) violate or conflict with any provision of its formation and governance
documents, (ii) violate any Legal Requirement, regulation (including
Regulation U, Regulation X or Regulation T), order, writ, judgment, injunction,
decree or permit applicable to it, (iii) violate or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, contract or other Material Agreement to which Borrower,
Operating Lessee or Sponsor is a party or by which Borrower, Operating Lessee or
Sponsor may be bound, or (iv) result in or require the creation of any Lien or
other charge or encumbrance upon or with respect to the Collateral in favor of
any party other than Lender.

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          Section 4.4. Consents. No consent, approval, authorization or order
of, or qualification with, any court or Governmental Authority is required in
connection with the execution, delivery or performance by Borrower of this
Agreement or the other Loan Documents, except for any of the foregoing that have
already been obtained.
          Section 4.5. Enforceable Obligations. This Agreement and the other
Loan Documents have been duly executed and delivered by Borrower and constitute
Borrower’s legal, valid and binding obligations, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury.
          Section 4.6. No Default. No Default or Event of Default will exist
immediately following the making of the Loan.
          Section 4.7. Payment of Taxes. Borrower and Operating Lessee each have
filed, or caused to be filed, all tax returns (federal, state, local and
foreign) required to be filed and paid all amounts of taxes due (including
interest and penalties) except for taxes that are not yet delinquent and has
paid all other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and intangible
taxes) owing by it necessary to preserve the Liens in favor of Lender.
          Section 4.8. Compliance with Law. Borrower, Operating Lessee, the
Property and the use thereof comply in all material respects with all applicable
Insurance Requirements and Legal Requirements, including building and zoning
ordinances and codes. The Property conforms to current zoning requirements
(including requirements relating to parking) and is neither an illegal nor a
legal nonconforming use. Neither Borrower nor Operating Lessee is in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority the violation of which could adversely affect the Property or the
condition (financial or otherwise) or business of Borrower or Operating Lessee.
There has not been committed by or on behalf of Borrower, Operating Lessee or,
to the best of Borrower’s knowledge, any other person in occupancy of or
involved with the operation or use of the Property, any act or omission
affording any federal Governmental Authority or any state or local Governmental
Authority the right of forfeiture as against the Property or any portion thereof
or any monies paid in performance of its obligations under any of the Loan
Documents. None of Borrower, Operating Lessee or Sponsor has purchased any
portion of the Property with proceeds of any illegal activity.
          Section 4.9. ERISA. None of Borrower, Operating Lessee, or any ERISA
Affiliate of Borrower or Operating Lessee has incurred or could be subjected to
any liability under Title IV or Section 302 of ERISA or Section 412 of the Code
or maintains or contributes to, or is or has been required to maintain or
contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA)
subject to Title IV or Section 302 of ERISA or Section 412 of the Code. The
consummation of the transactions contemplated by this Agreement will not
constitute or result in any non-exempt prohibited transaction under Section 406
of ERISA, Section 4975 of the Code or substantially similar provisions under
federal, state or local laws, rules or regulations.

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          Section 4.10. Investment Company Act. Neither Borrower nor Operating
Lessee is an “investment company”, or a company “controlled” by an “investment
company”, registered or required to be registered under the Investment Company
Act of 1940, as amended.
          Section 4.11. No Bankruptcy Filing. Neither Borrower nor Operating
Lessee is contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of its assets or property. Neither Borrower nor Operating Lessee has
knowledge of any Person contemplating the filing of any such petition against
it. During the ten year period preceding the Closing Date, no petition in
bankruptcy has been filed by or against Borrower, Operating Lessee, any
Single-Purpose Equityholder or Sponsor, or any affiliate of any of the
aforementioned Persons, or any person who owns or controls, directly or
indirectly, ten percent or more of the beneficial ownership interests of any
such Person.
          Section 4.12. Other Debt. Neither Borrower nor Operating Lessee has
outstanding any Debt other than Permitted Debt.
          Section 4.13. Litigation. There are no actions, suits, proceedings,
arbitrations or governmental investigations by or before any Governmental
Authority or other court or agency now pending, and to the best of Borrower’s
knowledge there are no such actions, suits, proceedings, arbitrations or
governmental investigations threatened against or affecting Borrower, Operating
Lessee or the Collateral, in each case, except as listed in the Exception Report
(and none of the matters listed in the Exception Report, even if determined
against Borrower, Operating Lessee or the Collateral, could reasonably be
expected to result in a Material Adverse Effect).
          Section 4.14. Leases; Material Agreements.
          (a) Except as set forth in Schedule G, there are no Leases and neither
Borrower nor Operating Lessee is currently engaged in negotiations with any
prospective tenant to enter into a Major Lease.
          (b) There are no Material Agreements except as described in
Schedule E. Borrower has made available to Lender true and complete copies of
all Material Agreements. Each Material Agreement has been entered into at arm’s
length in the ordinary course of business by or on behalf of Borrower or
Operating Lessee. The Material Agreements are in full force and effect and there
are no defaults thereunder by Borrower, Operating Lessee, or to Borrower’s
knowledge, any other party thereto. Neither Borrower nor Operating Lessee is in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any Permitted
Encumbrance or any other agreement or instrument to which it is a party or by
which it or the Property is bound (including, for the avoidance of doubt, the
Operating Lease).
          (c) Other than as disclosed on Schedule E, Operating Lessee is not a
party to any Material Agreements related to the Property.

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          Section 4.15. Full and Accurate Disclosure. No statement of fact
heretofore delivered by Borrower, Sponsor or Operating Lessee to Lender in
writing in respect of the Property or Borrower, Sponsor or Operating Lessee
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained therein not misleading unless
subsequently corrected. There is no fact, event or circumstance presently known
to Borrower, Sponsor or Operating Lessee that has not been disclosed to Lender
that has had or could reasonably be expected to result in a Material Adverse
Effect.
          Section 4.16. Financial Condition. All financial data concerning
Borrower, Operating Lessee and the Property heretofore provided to Lender fairly
presents in accordance with GAAP the financial position of Borrower and
Operating Lessee in all material respects, as of the date on which it was made,
and does not omit to state any fact necessary to make statements contained
herein or therein not misleading. Since the delivery of such data, except as
otherwise disclosed in writing to Lender, there have occurred no changes or
circumstances that have had or are reasonably expected to result in a Material
Adverse Effect.
          Section 4.17. Single-Purpose Requirements.
          (a) Each of Borrower and Operating Lessee is now, and has always been
since its formation, a Single-Purpose Entity and has conducted its business in
substantial compliance with the provisions of its organizational documents.
Neither Borrower nor Operating Lessee has ever (i) owned any property other than
the Property and/or related personal property and, in the case of Borrower, the
IDA Bonds, (ii) engaged in any business, except the ownership and/or operation
of the Property and, in the case of Borrower, the IDA Bonds or (iii) had any
material contingent or actual obligations or liabilities unrelated to the
Property.
          (b) Borrower has provided Lender with true, correct and complete
copies of (i) Borrower’s and Operating Lessee’s current financial statements;
and (ii) Borrower’s and Operating Lessee’s respective current operating
agreements, together with all amendments and modifications thereto.
          Section 4.18. Use of Loan Proceeds. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any “margin stock”
within the meaning of Regulations T, U or X of the Board of Governors of the
Federal Reserve System or for any other purpose that would be inconsistent with
such Regulations T, U or X or any other Regulations of such Board of Governors,
or for any purpose prohibited by Legal Requirements or by the terms and
conditions of the Loan Documents. The Loan is solely for the business purpose of
Borrower or for distribution to Borrower’s equityholders in accordance with
Legal Requirements.
          Section 4.19. Not Foreign Person. Neither Borrower nor Operating
Lessee is a “foreign person” within the meaning of Section 1445(f)(3) of the
Code.
          Section 4.20. Labor Matters. Neither Borrower nor Operating Lessee is
a party to any collective bargaining agreements.
          Section 4.21. Title. Borrower owns good, marketable and insurable
leasehold title to the Property. Borrower owns good and marketable title to the
FF&E and the IDA Bonds.

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Borrower and/or Operating Lessee own good and marketable title to all personal
property related to the Property (other than the FF&E, which is owned solely by
Borrower), to the Collateral Accounts and to any other Collateral (other than
the IDA Collateral), in each case free and clear of all Liens whatsoever except
the Permitted Encumbrances. The IDA owns good, marketable and insurable fee
title to the Property. The Mortgage, when properly recorded in the appropriate
records, together with any Uniform Commercial Code financing statements required
to be filed in connection therewith, will create (i) a valid, perfected first
priority Lien on the Property and the rents therefrom, enforceable as such
against creditors of and purchasers from Borrower or Operating Lessee and
subject only to Permitted Encumbrances, and (ii) perfected Liens (pursuant to
the Uniform Commercial Code of the State of New York) in and to all personalty,
all in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances. The Permitted Encumbrances do not and will
not materially and adversely affect or interfere with the value, or current or
contemplated use or operation, of the Property, or the security intended to be
provided by the Mortgage or Borrower’s ability to repay the Indebtedness in
accordance with the terms of the Loan Documents. Except as insured over by a
Qualified Title Insurance Policy, there are no claims for payment for work,
labor or materials affecting the Property that are or may become a Lien prior
to, or of equal priority with, the Liens created by the Loan Documents. No
creditor of Borrower (other than Lender) or Operating Lessee has in its
possession any goods that constitute or evidence the Collateral.
          Section 4.22. No Encroachments. Except as shown on the Qualified
Survey, all of the improvements on the Property lie wholly within the boundaries
and building restriction lines of the Property, and no improvements on adjoining
property encroach upon the Property, and no easements or other encumbrances upon
the Property encroach upon any of the improvements, so as, in either case, to
adversely affect the value or marketability of the Property, except those that
are insured against by a Qualified Title Insurance Policy.
          Section 4.23. Physical Condition.
          (a) Except for matters set forth in the Engineering Reports, the
Property (including sidewalks, storm drainage system, roof, plumbing system,
HVAC system, fire protection system, electrical system, equipment, elevators,
exterior sidings and doors, irrigation system and all structural components) is
in good condition, order and repair in all respects material to its use,
operation or value.
          (b) Borrower is not aware of any material structural or other material
defect or damages in the Property, whether latent or otherwise.
          (c) Borrower has not received and is not aware of any other party’s
receipt of notice from any insurance company or bonding company of any defects
or inadequacies in the Property that would, alone or in the aggregate, adversely
affect in any material respect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
          Section 4.24. Fraudulent Conveyance. Borrower has not entered into the
Transaction or any of the Loan Documents with the actual intent to hinder, delay
or defraud any creditor. Borrower has received reasonably equivalent value in
exchange for its obligations

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under the Loan Documents. On the Closing Date, the fair salable value of
Borrower’s aggregate assets is and will, immediately following the making of the
Loan and the use and disbursement of the proceeds thereof, be greater than
Borrower’s probable aggregate liabilities (including subordinated, unliquidated,
disputed and Contingent Obligations). Borrower’s aggregate assets do not and,
immediately following the making of the Loan and the use and disbursement of the
proceeds thereof will not, constitute unreasonably small capital to carry out
its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur debts and liabilities
(including Contingent Obligations and other commitments) beyond its ability to
pay such debts as they mature (taking into account the timing and amounts to be
payable on or in respect of obligations of Borrower).
          Section 4.25. Management. Except for any Approved Management
Agreement, no property management agreements are in effect with respect to the
Property. The Approved Management Agreement is in full force and effect and
there is no event of default thereunder by any party thereto and no event has
occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder.
          Section 4.26. Condemnation. No Condemnation has been commenced or, to
Borrower’s knowledge, is contemplated with respect to all or any portion of the
Property or for the relocation of roadways providing access to the Property.
          Section 4.27. Utilities and Public Access. The Property has adequate
rights of access to dedicated public ways (and makes no material use of any
means of access or egress that is not pursuant to such dedicated public ways or
recorded, irrevocable rights-of-way or easements) and is adequately served by
all public utilities necessary to the continued use and enjoyment of the
Property as presently used and enjoyed.
          Section 4.28. Environmental Matters. Except as disclosed in the
Environmental Reports:
     (i) The Property is in compliance in all material respects with all
Environmental Laws applicable to the Property (which compliance includes, but is
not limited to, the possession of, and compliance with, all environmental,
health and safety permits, approvals, licenses, registrations and other
governmental authorizations required in connection with the ownership and
operation of the Property under all Environmental Laws).
     (ii) No Environmental Claim is pending with respect to the Property, nor,
to Borrower’s knowledge, is any threatened, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to Borrower, Operating Lessee or the Property.
     (iii) Without limiting the generality of the foregoing, there is not
present at, on, in or under the Property, any Hazardous Substances,
PCB-containing equipment, asbestos or asbestos containing materials, underground
storage tanks or surface impoundments for

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any Hazardous Substance, lead in drinking water (except in concentrations that
comply with all Environmental Laws), or lead-based paint.
     (iv) There have not been and are no past, present or threatened Releases of
any Hazardous Substance from or at the Property that are reasonably likely to
form the basis of any Environmental Claim, and, to Borrower’s knowledge, there
is no threat of any Release of any Hazardous Substance migrating to the
Property.
     (v) No Liens are presently recorded with the appropriate land records under
or pursuant to any Environmental Law with respect to the Property and, to
Borrower’s knowledge, no Governmental Authority has been taking any action to
subject the Property to Liens under any Environmental Law.
     (vi) There have been no material environmental investigations, studies,
audits, reviews or other analyses conducted by or that are in the possession of
Borrower or Operating Lessee in relation to the Property that have not been made
available to Lender.
          Section 4.29. Assessments. There are no pending or, to Borrower’s
knowledge, proposed special or other assessments for public improvements or
otherwise affecting the Property, nor are there any contemplated improvements to
the Property that may result in such special or other assessments. No extension
of time for assessment or payment of Taxes is in effect.
          Section 4.30. No Joint Assessment. Borrower has not suffered,
permitted or initiated the joint assessment of the Property (i) with any other
real property constituting a separate tax lot, or (ii) with any personal
property, or any other procedure whereby the Lien of any Taxes that may be
levied against such other real property or personal property shall be assessed
or levied or charged to the Property as a single Lien.
          Section 4.31. Separate Lots. No portion of the Property is part of a
tax lot that also includes any real property that is not Collateral.
          Section 4.32. Permits; Certificate of Occupancy. Borrower, Operating
Lessee and/or Approved Property Manager have obtained all Permits necessary for
the present and contemplated use and operation of the Property. The uses being
made of the Property are in conformity in all material respects with the
certificate of occupancy and/or Permits for the Property and any other
restrictions, covenants or conditions affecting the Property.
          Section 4.33. Flood Zone. None of the improvements on the Property is
located in an area identified by the Federal Emergency Management Agency or the
Federal Insurance Administration as a “100 year flood plain” or as having
special flood hazards (including Zones A and V), or, to the extent that any
portion of the Property is located in such an area, the Property is covered by
flood insurance meeting the requirements set forth in Section 5.15(a)(ii).
          Section 4.34. Security Deposits. Borrower and Operating Lessee are in
compliance in all material respects with all Legal Requirements relating to
security deposits.

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          Section 4.35. Acquisition Documents. Borrower has delivered to Lender
true and complete copies of all material agreements and instruments under which
Borrower, Operating Lessee or any of their affiliates or the seller of the
Property have remaining rights or obligations in respect of Borrower’s
acquisition of the Property.
          Section 4.36. Insurance. Borrower or Operating Lessee has obtained, or
caused to be obtained, insurance policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. All premiums on such
insurance policies required to be paid as of the Closing Date have been paid for
the current policy period. No Person, including Borrower and Operating Lessee,
has done, by act or omission, anything that would impair the coverage of any
such policy.
          Section 4.37. No Dealings. Borrower, Operating Lessee and the Sponsor
are not aware of any unlawful influence on the assessed value of the Property.
          Section 4.38. Estoppel Certificates. Borrower has delivered to Lender
true and complete copies of (a) the form(s) of estoppel certificate heretofore
sent by Borrower, Operating Lessee or any of their affiliates to every Tenant at
the Property, and (b) each estoppel certificate received back from any such
Tenant prior to the Closing Date.
          Section 4.39. Compliance with Anti-Terrorism, Embargo, Sanctions and
Anti-Money Laundering Laws. (a) None of the funds or other assets of any of
Borrower, Operating Lessee, any Single-Purpose Equityholder or Sponsor
constitute property of, or are beneficially owned, directly or indirectly, by
any person, entity or government subject to trade restrictions under federal
law, including the International Emergency Economic Powers Act, 50 U.S.C. §§
1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
executive orders or regulations promulgated thereunder, with the result that
(i) the investment in any of Borrower, Operating Lessee, any Single-Purpose
Equityholder or Sponsor, as applicable (whether directly or indirectly), is
prohibited by law or (ii) the Loan is in violation of law (any such person,
entity or government, an “Embargoed Person”); (b) no Embargoed Person has any
interest of any nature whatsoever in any of Borrower, Operating Lessee, any
Single-Purpose Equityholder or Sponsor, as applicable (whether directly or
indirectly), with the result that (i) the investment in any of Borrower,
Operating Lessee, any Single-Purpose Equityholder or Sponsor, as applicable
(whether directly or indirectly) is prohibited by law or (ii) the Loan is in
violation of law, (c) none of the funds of any of Borrower, Operating Lessee,
any Single-Purpose Equityholder or Sponsor, as applicable, have been derived
from any unlawful activity with the result that (i) the investment in any of
Borrower, Operating Lessee, any Single-Purpose Equityholder or Sponsor, as
applicable (whether directly or indirectly) is prohibited by law or (ii) the
Loan is in violation of law, (d) to the best of Borrower’s knowledge, no Tenant
at the Property is identified on the OFAC List and (e) Borrower, Operating
Lessee, any Single-Purpose Equityholder and Sponsor are in material compliance
with the PATRIOT Act. Borrower has implemented procedures, and will consistently
apply those procedures throughout the term of the Loan, to ensure the foregoing
representations and warranties remain true and correct during the term of the
Loan. Notwithstanding Section 4.41 to the contrary, the representations and
warranties contained in this Section 4.39 shall survive in perpetuity.

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          Section 4.40. IDA Lease. Each of the following is true with respect to
the IDA Lease:
     (i) the IDA Estoppel and a true and complete copy of the IDA Lease
(including all amendments and modifications thereto) have been delivered to
Lender, and the IDA Lease or a memorandum thereof has been duly recorded;
     (ii) the IDA Lease is part of a standard payment-in-lieu-of-taxes
structure;
     (iii) IDA Rent payable under the IDA Lease is fully offset by payments made
to Borrower as holder of the IDA Bonds;
     (iv) the IDA Lease is in full force and effect and no default has occurred
thereunder nor, to Borrower’s knowledge, is there any existing condition that,
but for the passage of time or the giving of notice or both, would result in a
default under the terms of the IDA Lease;
     (v) Borrower is the current tenant under the IDA Lease, and the IDA Lease
permits Borrower to be the tenant thereunder and permits Borrower’s interest
thereunder to be encumbered by the Mortgage;
     (vi) the IDA Lease is assignable by a holder of a mortgage encumbering the
lessee’s interest therein upon a foreclosure of mortgage without the consent of
the lessor thereunder;
     (vii) the IDA Lease does not restrict the use of the Property by Borrower,
its successors or assigns in a manner that would adversely affect in a material
respect the security provided to Lender by the Mortgage;
     (viii) upon the expiration or other termination of the IDA Lease and
payments of any amounts owed under the IDA Lease, Borrower shall receive a deed
conveying fee title in the applicable premises covered thereby; and
     (ix) the fee interest in the real property leased to Borrower pursuant to
the IDA Lease is encumbered by the Mortgage.
          Section 4.41. IDA Bonds.
     (i) IDA Bond R-2 is the only IDA Bond currently valid and outstanding;
     (ii) the IDA Bonds have been delivered to Lender and Lender has been
granted a perfected pledge thereof pursuant to the IDA Bond Pledge Agreement;
     (iii) Borrower is the sole owner of the IDA Bonds and the same have not
been transferred, assigned or pledged to any party other than Lender;

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     (iv) The R-1 Development Authority of Fulton County Taxable Economic
Development Revenue Bond (IHC Buckhead LLC Project), Series 2002, is no longer
valid and has been destroyed.
          Section 4.42. Survival. Borrower agrees that all of the
representations of Borrower set forth in this Agreement and in the other Loan
Documents shall survive for so long as any portion of the Indebtedness is
outstanding. All representations, covenants and agreements made by Borrower in
this Agreement or in the other Loan Documents shall be deemed to have been
relied upon by Lender notwithstanding any investigation heretofore or hereafter
made by Lender or on its behalf. On the date of any Securitization, on not less
than three days’ prior written notice, Borrower shall deliver to Lender a
certification (x) confirming that all of the representations contained in this
Agreement are true and correct as of the date of such Securitization, or (y)
otherwise specifying any changes in or qualifications to such representations as
of such date as may be necessary to make such representations consistent with
the facts as they exist on such date.
ARTICLE V
AFFIRMATIVE COVENANTS
          Section 5.1. Existence. Borrower, Operating Lessee and if applicable,
any Single-Purpose Equityholder shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence and
all rights, licenses, Permits, franchises and other agreements necessary for the
continued use and operation of its business. Borrower, Operating Lessee and, if
applicable, each Single-Purpose Equityholder shall deliver to Lender a copy of
each amendment or other modification to any of its organizational documents
promptly after the execution thereof.
          Section 5.2. Maintenance of Property.
          (a) Borrower shall cause the Property to be maintained in good and
safe working order and repair, reasonable wear and tear excepted, and in keeping
with the condition and repair of properties of a similar use, value, age, nature
and construction. Borrower shall not, and shall not cause or permit Operating
Lessee or Approved Property Manager to, use, maintain or operate the Property in
any manner that constitutes a public or private nuisance or that makes void,
voidable, or cancelable, or increases the premium of, any insurance then in
force with respect thereto. Subject to Section 6.13, without the prior written
consent of Lender, no improvements or equipment located at or on the Property
shall be removed, demolished or materially altered (except for replacement of
equipment in the ordinary course of Borrower’s or Operating Lessee’s business
with items of the same utility and of equal or greater value and sales of
obsolete equipment no longer needed for the operation of the Property). Subject
to Section 6.13, Borrower shall from time to time make, or cause to be made, all
reasonably necessary and desirable repairs, renewals, replacements, betterments
and improvements to the Property. Borrower shall not, and shall not cause or
permit Operating Lessee or Approved Property Manager to, make any change in the
use of the Property that would materially increase the risk of fire or other
hazard arising out of the operation of the Property, or do or permit to be done
thereon anything that may in any way impair the value of the Property in any
material respect or

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the Lien of the Mortgage or otherwise cause or reasonably be expected to result
in a Material Adverse Effect. Borrower shall not install or permit to be
installed on the Property any underground storage tank. Borrower shall not,
without the prior written consent of Lender, permit any drilling or exploration
for or extraction, removal, or production of any minerals from the surface or
the subsurface of the Property, regardless of the depth thereof or the method of
mining or extraction thereof.
          (b) Borrower shall remediate the Deferred Maintenance Conditions
within 12 months following the Closing Date, subject to Force Majeure, and upon
request from Lender after the expiration of such period shall deliver to Lender
an Officer’s Certificate confirming that such remediation has been completed and
that all associated expenses have been paid.
          Section 5.3. Compliance with Legal Requirements. Borrower shall, and
shall cause Operating Lessee to, comply with, and shall cause the Property to
comply with and be operated, maintained, repaired and improved in compliance
with, all Legal Requirements, Insurance Requirements and all material
contractual obligations by which Borrower is legally bound.
          Section 5.4. Impositions and Other Claims. Borrower shall pay and
discharge all taxes, assessments and governmental charges levied upon it, its
income and its assets as and when such taxes, assessments and charges are due
and payable, as well as all lawful claims for labor, materials and supplies or
otherwise, subject to any rights to contest contained in the definition of
Permitted Encumbrances. Borrower shall file all federal, state and local tax
returns and other reports that it is required by law to file. If any law or
regulation applicable to Lender, any Note, any of the Collateral or the Mortgage
is enacted that deducts from the value of property for the purpose of taxation
any Lien thereon, or imposes upon Lender the payment of the whole or any portion
of the taxes or assessments or charges or Liens required by this Agreement to be
paid by Borrower, or changes in any way the laws or regulations relating to the
taxation of mortgages or security agreements or debts secured by mortgages or
security agreements or the interest of the mortgagee or secured party in the
property covered thereby, or the manner of collection of such taxes, so as to
affect the Mortgage, the Indebtedness or Lender, then Borrower, upon demand by
Lender, shall pay such taxes, assessments, charges or Liens, or reimburse Lender
for any amounts paid by Lender. If in the opinion of Lender’s counsel it might
be unlawful to require Borrower to make such payment or the making of such
payment might result in the imposition of interest beyond the maximum amount
permitted by applicable Law, Lender may elect to declare all of the Indebtedness
to be due and payable 90 days from the giving of written notice by Lender to
Borrower.
          Section 5.5. Access to Property. Borrower shall, and shall cause
Operating Lessee and Approved Property Manager to permit agents, representatives
and employees of Lender and the Servicer to enter and inspect the Property or
any portion thereof, and/or inspect, examine, audit and copy the books and
records of Borrower, Operating Lessee and Approved Property Manager (including
all recorded data of any kind or nature, regardless of the medium of recording),
at such reasonable times as may be requested by Lender upon reasonable advance
notice ( all subject to the terms and conditions of the Approved Management
Agreement). If Lender shall determine that an Event of Default exists, the cost
of such inspections, examinations, copying or audits shall be borne by Borrower,
including the cost of all follow up

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or additional investigations, audits or inquiries deemed reasonably necessary by
Lender. The cost of such inspections, examinations, audits and copying, if not
paid for by Borrower following demand, may be added to the Indebtedness and
shall bear interest thereafter until paid at the Default Rate. If Borrower
prohibits, bars or fails to permit agents, representatives and employees of
Lender and Servicer from entering and inspecting the Property or from
inspecting, examining, auditing and copying the books and records of Borrower,
Operating Lessee and Approved Property Manager, as required by this Section, for
more than five days after a written request is made by Lender to do so, Borrower
agrees to pay Lender on demand the sum of $1,000.00 for each day after such
five-day period that Borrower so prohibits or bars such inspection, and such sum
or sums shall be part of the Indebtedness. Notwithstanding any of Lender’s or
Servicer’s rights in this Section, in no event shall Lender or Servicer have any
right to enter or inspect the Property or inspect, examine, audit or copy the
books and records of Approved Property Manager that is greater than or
inconsistent with the access afforded to Borrower under the terms of the
Approved Management Agreement.
          Section 5.6. Cooperate in Legal Proceedings. Except with respect to
any claim by Borrower against Lender, Borrower shall, and shall cause Operating
Lessee to, cooperate fully with Lender with respect to any proceedings before
any Governmental Authority that may in any way affect the rights of Lender
hereunder or under any of the Loan Documents and, in connection therewith,
Lender may, at its election, participate or designate a representative to
participate in any such proceedings.
          Section 5.7. Leases.
          (a) Borrower shall furnish Lender with executed copies of all Leases,
together with a detailed breakdown of income and cost associated therewith. All
new Leases and renewals or amendments of Leases must (i) be entered into on an
arms-length basis with Tenants that are not affiliates of Borrower and whose
identity and creditworthiness is appropriate for tenancy in property of
comparable quality, (ii) provide for rental rates and other economic terms that,
taken as a whole, are at least equivalent to then-existing market rates, based
on the applicable market, and otherwise contain terms and conditions that are
commercially reasonable, (iii) have an initial term of not more than 10 years,
(iv) not have or reasonably be expected to result in a Material Adverse Effect,
(v) be expressly subject and subordinate to the Mortgage and contain provisions
for the agreement by the Tenant thereunder to attorn to Lender and any purchaser
at a foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Property by any purchaser at a foreclosure sale and
(vi) require the Tenant thereunder to execute and deliver to Borrower an
estoppel certificate addressing the issues set forth in Section 9.16(b) of this
Agreement (in each case, unless Lender consents to such Lease in its sole
discretion).
          (b) All new Leases that are Major Leases, and all terminations,
renewals and amendments of Major Leases, and any surrender of rights under any
Major Lease, shall be subject to the prior written consent of Lender. If Lender
shall fail to respond to Borrower’s request for such consent within five
Business Days of Lender’s receipt thereof, Borrower may deliver to Lender a
second request for consent stating in bold and capitalized type that “LENDER’S
FAILURE TO RESPOND TO THE ENCLOSED REQUEST WITHIN TEN BUSINESS DAYS SHALL BE
DEEMED LENDER’S APPROVAL.” In the event Lender fails

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to approve or disapprove such request within ten Business Days of Lender’s
receipt of such second request, such request shall be deemed approved.
          (c) Borrower shall, and shall cause Operating Lessee to, (i) observe
and punctually perform all the material obligations imposed upon the lessor
under the Leases; (ii) enforce all of the material terms, covenants and
conditions contained in the Leases on the part of the lessee thereunder to be
observed or performed, short of termination thereof, except that the lessor may
terminate any Lease following a material default thereunder by the respective
Tenant; (iii) not collect any of the rents thereunder more than one month in
advance; (iv) not execute any assignment of lessor’s interest in the Leases or
associated rents other than the assignment of rents and leases under the
Mortgage; (v) not cancel or terminate any guarantee of any of the Major Leases
without the prior written consent of Lender; and (vi) not permit any subletting
of any space covered by a Lease or an assignment of the Tenant’s rights under a
Lease, except in strict accordance with the terms of such Lease. Borrower shall,
or shall cause Operating Lessee to, deliver to each new Tenant a Tenant Notice
upon execution of such Tenant’s Lease, and promptly thereafter deliver to Lender
a copy thereof and evidence of such Tenant’s receipt thereof.
          (d) Security deposits of Tenants under all Leases, whether held in
cash or any other form, shall not be commingled with any other funds of Borrower
or Operating Lessee and, if cash, shall be deposited by Borrower or Operating
Lessee in an account at such commercial or savings bank as may be reasonably
satisfactory to Lender, which account shall be pledged to Lender. Borrower
shall, or shall cause Operating Lessee to, maintain books and records of
sufficient detail to identify all security deposits of Tenants separate and
apart from any other payments received from Tenants. Any bond or other
instrument that Borrower or Operating Lessee is permitted to hold in lieu of
cash security deposits under any applicable Legal Requirements shall be
maintained in full force and effect unless replaced by cash deposits as
described above, shall be issued by an institution reasonably satisfactory to
Lender, shall (if not prohibited by any Legal Requirements) name Lender as payee
or mortgagee thereunder (or at Lender’s option, be fully assignable to Lender)
or may name Borrower or Operating Lessee as payee thereunder so long as such
bond or other instrument is pledged to Lender as security for the Indebtedness
and shall, in all respects, comply with any applicable Legal Requirements and
otherwise be reasonably satisfactory to Lender. Borrower shall, upon Lender’s
request, provide Lender with evidence reasonably satisfactory to Lender of
Borrower’s and Operating Lessee’s compliance with the foregoing. During the
continuance of any Trigger Period or Event of Default, Borrower shall, upon
Lender’s request, cause to be deposited with Lender in an Eligible Account
pledged to Lender an amount equal to the aggregate security deposits of the
Tenants (and any interest theretofore earned on such security deposits and
actually received by Borrower or Operating Lessee) that Borrower and Operating
Lessee had not returned to the applicable Tenants or applied in accordance with
the terms of the applicable Lease.
          (e) Borrower shall cause to be promptly delivered to Lender a copy of
each written notice from a Tenant under any Major Lease claiming that Borrower
or Operating Lessee is in default in the performance or observance of any of the
material terms, covenants or conditions thereof. Borrower shall cause each Major
Lease executed after the Closing Date to which Borrower or Operating Lessee is a
party to provide that any Tenant delivering any such notice shall send a copy of
such notice directly to Lender.

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          Section 5.8. Plan Assets, etc. Borrower will do, or cause to be done,
all things necessary to ensure that neither Borrower nor Operating Lessee will
be deemed to hold Plan Assets at any time.
          Section 5.9. Further Assurances. Borrower shall (and, as applicable,
shall cause Operating Lessee to), at Borrower’s sole cost and expense, from time
to time as reasonably requested by Lender, execute, acknowledge, record,
register, file and/or deliver to Lender such other instruments, agreements,
certificates and documents (including Uniform Commercial Code financing
statements and amended or replacement mortgages) as Lender may reasonably
request to evidence, confirm, perfect and maintain the Liens securing or
intended to secure the obligations of Borrower and the rights of Lender under
the Loan Documents or to facilitate a replacement of the Cash Management Bank
pursuant to Section 3.1(c) or a bifurcation of the Notes pursuant to
Sections 1.1(c) and/or 9.7(b) or a restructuring of the Loan pursuant to the
Cooperation Agreement, in each case if requested by Lender, and do and execute
all such further lawful and reasonable acts, conveyances and assurances for the
better and more effective carrying out of the intents and purposes of this
Agreement and the other Loan Documents as Lender shall reasonably request from
time to time. Upon foreclosure, the appointment of a receiver or any other
relevant action, Borrower shall (and, as applicable, shall cause Operating
Lessee or Approved Property Manager to), at Borrower’s sole cost and expense,
cooperate fully and completely to effect the assignment or transfer of any
license, permit, agreement or any other right necessary or useful to the
operation of the Collateral. Borrower hereby authorizes and appoints Lender as
its attorney-in-fact to execute, acknowledge, record, register and/or file such
instruments, agreements, certificates and documents, and to do and execute such
acts, conveyances and assurances, should Borrower fail to do so itself in
violation of this Agreement or the other Loan Documents following written
request from Lender, in each case without the signature of Borrower. The
foregoing grant of authority is a power of attorney coupled with an interest and
such appointment shall be irrevocable for the term of this Agreement. Borrower
hereby ratifies all actions that such attorney shall lawfully take or cause to
be taken in accordance with this Section 5.9.
          Section 5.10. Management of Collateral.
          (a) The Property shall be managed at all times by an Approved Property
Manager pursuant to an Approved Management Agreement. Pursuant to the
Subordination of Property Management Agreement, Approved Property Manager shall
agree that the Approved Management Agreement and the incentive fee payable
thereunder are subject and subordinate to the Indebtedness. Borrower may from
time to time appoint an Approved Property Manager to manage the Property
pursuant to an Approved Management Agreement, and such successor manager shall
execute for Lender’s benefit a Subordination of Property Management Agreement in
form and substance reasonably satisfactory to Lender. The per annum fees of the
Approved Property Manager (including any incentive fees) shall not exceed the
fees specified in the Approved Management Agreement.
          (b) Borrower shall cause each Approved Property Manager (including any
successor Approved Property Manager) to maintain at all times worker’s
compensation insurance as required by Governmental Authorities.

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          (c) Borrower shall notify Lender in writing of any default of
Borrower, Operating Lessee or the Approved Property Manager under the Approved
Management Agreement, after the expiration of any applicable cure periods, of
which Borrower has actual knowledge. Lender shall have the right, after
reasonable notice to Borrower and in accordance with the Subordination of
Management Agreement, to cure defaults of Borrower or Operating Lessee under the
Approved Management Agreement. Any out-of-pocket expenses incurred by Lender to
cure any such default shall constitute a part of the Indebtedness and shall be
due from Borrower upon demand by Lender.
          (d) During the continuance of an Event of Default and, simultaneously,
a material default by the Approved Property Manager under the Approved
Management Agreement after the expiration of any applicable cure period or upon
the filing of a bankruptcy petition or the occurrence of a similar event with
respect to the Approved Property Manager, Lender may, in its sole discretion,
require Borrower to cause the termination of the Approved Management Agreement
and the engagement of an Approved Property Manager selected by Lender to serve
as replacement Approved Property Manager pursuant to an Approved Management
Agreement.
          Section 5.11. Notice of Material Event.
     (i) Borrower shall give Lender prompt notice (containing reasonable detail)
of (i) any material change in the financial or physical condition of the
Property, as reasonably determined by Borrower, including the termination or
cancellation of any Major Lease and the termination or cancellation of terrorism
or other insurance required by this Agreement, (ii) any notice from the Approved
Property Manager, to the extent such notice relates to a matter that is
reasonably expected to result in a Material Adverse Effect, (iii) any litigation
or governmental proceedings pending or threatened in writing against Borrower,
Operating Lessee or the Property that is reasonably expected to result in a
Material Adverse Effect, (iv) the insolvency or bankruptcy filing of Borrower,
Operating Lessee, any Single-Purpose Equityholder, Sponsor or an affiliate of
any of the foregoing and (v) any other circumstance or event reasonably expected
to result in a Material Adverse Effect.
     (ii) Borrower shall deliver to Lender, within three Business Days of
receipt thereof, the periodic reports regarding the Property, if any, delivered
to Borrower and/or Operating Lessee by Approved Property Manager.
          Section 5.12. Annual Financial Statements. As soon as available, and
in any event within 90 days after the close of each Fiscal Year, Borrower shall
furnish to Lender, in an Excel spreadsheet file in electronic format (which may
be via an intralinks site at Borrower’s sole cost and expense), or, in the case
of predominantly text documents, in Adobe pdf format, a balance sheet of
Borrower as of the end of such year, together with related statements of income
and equityholders’ capital for such Fiscal Year, in each case either audited or
reviewed by a certified public accounting firm reasonably satisfactory to
Lender. Together with Borrower’s annual financial statements, Borrower shall
furnish to Lender, in an Excel spreadsheet file in electronic format (which may
be via an intralinks site at Borrower’s sole cost and expense), or, in the case
of predominantly text documents, in Adobe pdf format:

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     (i) a statement of cash flows and income and expenses in the format set
forth in the most recent Uniform System of Accounts (as shown on Exhibit C);
     (ii) average daily room rates, sales reports, Smith Travel Reports (to the
extent available) and occupancy reports;
     (iii) an annual report for the most recently completed fiscal year,
describing Capital Expenditures (stated separately with respect to any project
costing in excess of $100,000); and
     (iv) such other information as Lender shall reasonably request.
          Section 5.13. Quarterly Financial Statements. As soon as available,
and in any event within 45 days after the end of each Fiscal Quarter (including
year-end), Borrower shall furnish to Lender, in an Excel spreadsheet file in
electronic format (which may be via an intralinks site at Borrower’s sole cost
and expense), or, in the case of predominantly text documents, in Adobe pdf
format, quarterly and year-to-date unaudited financial statements prepared for
such fiscal quarter with respect to Borrower, including a balance sheet and
operating statement as of the end of such Fiscal Quarter, together with related
statements of income, equityholders’ capital and cash flows for such Fiscal
Quarter and for the portion of the Fiscal Year ending with such Fiscal Quarter,
which statements shall include income and expenses in the format set forth in
the most recent Uniform System of Accounts (as shown on Exhibit C) and be
accompanied by an Officer’s Certificate certifying that the same are true,
correct and complete and were prepared in accordance with GAAP applied on a
consistent basis, subject to changes resulting from audit and normal year-end
audit adjustments. Each such quarterly report shall be accompanied by the
following, in an Excel spreadsheet file in electronic format (which may be via
an intralinks site at Borrower’s sole cost and expense), or, in the case of
predominantly text documents, in Adobe pdf format:
     (i) a statement in reasonable detail that calculates Net Operating Income
for each of the Fiscal Quarters in the Test Period ending in such Fiscal
Quarter, in the case of each such Fiscal Quarter, ending at the end thereof;
     (ii) copies of each of the Leases signed during such quarter, together with
a summary thereof that shall include the Tenant’s name, lease term, base rent,
Tenant Improvements, leasing commissions paid, free rent and other material
tenant concessions;
     (iii) average daily room rates, sales reports, Smith Travel Reports (to the
extent available) and occupancy reports; and
     (iv) a reasonably detailed report of Borrower’s progress on the Capital
Plan, including information regarding whether the deadlines set forth therein
have been met.
     (v) such other information as Lender shall reasonably request.
          Section 5.14. Monthly Financial Statements; Non-Delivery of Financial
Statements.

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          (a) Until the occurrence of a Securitization and during the
continuance of a Trigger Period or an Event of Default (or, in the case of item
(iii) below, at all times), Borrower shall furnish within 30 days after the end
of each calendar month (other than the calendar month immediately following the
final calendar month of any Fiscal Year or Fiscal Quarter), in an Excel
spreadsheet file in electronic format (which may be via an intralinks site at
Borrower’s sole cost and expense), or, in the case of predominantly text
documents, in Adobe pdf format, monthly and year-to-date unaudited financial
statements prepared for the applicable month with respect to Borrower, including
a balance sheet and operating statement as of the end of such month, together
with related statements of income, equityholders’ capital and cash flows for
such month and for the portion of the Fiscal Year ending with such month , which
statements shall include income and expenses in the format set forth in the most
recent Uniform System of Accounts (as shown on Exhibit C) and be accompanied by
an Officer’s Certificate certifying that the same are true, correct and complete
and were prepared in accordance with GAAP applied on a consistent basis, subject
to changes resulting from audit and normal year-end audit adjustments. Each such
monthly report shall be accompanied by the following:
     (i) a summary of Leases signed during such month, which summary shall
include the Tenant’s name, lease term, base rent, escalations, Tenant
Improvements, leasing commissions paid, free rent and other concessions;
     (ii) then current rent roll, average daily room rates, sales reports, Smith
Travel Reports (to the extent available) and occupancy reports; and
     (iii) such other information as Lender shall reasonably request.
          (b) If Borrower fails to provide to Lender any of the financial
statements and other information specified in Sections 5.12, 5.13 or this
Section 5.14 within the respective time period specified in such Sections,
Lender shall deliver to Borrower written notice of such failure. If Borrower
fails to provide such financial statements and other information within ten
Business Days after receipt of such notice such failure shall constitute a
Trigger Period.
          Section 5.15. Insurance.
          (a) Borrower shall cause to be obtained and maintained with respect to
the Property, for the mutual benefit of Borrower and Lender at all times, the
following policies of insurance:
     (i) insurance against loss or damage by standard perils included within the
classification “All Risks Special Form Cause of Loss” (including coverage for
damage caused by windstorm and hail). Such insurance shall (A) be in an amount
equal to the full replacement cost of the Property and fixtures (without
deduction for physical depreciation); (B) have deductibles acceptable to Lender
(but in any event not in excess of $50,000, except in the case of windstorm and
earthquake coverage, which shall have deductibles not in excess of 5% of the
total insurable value of the Property); (C) be paid annually in advance;
(D) contain a “Replacement Cost Endorsement” with a waiver of depreciation and
an “Agreed Upon Amount Endorsement” waiving all coinsurance provisions; (E)
include an ordinance or law coverage endorsement containing Coverage

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A: “Loss Due to Operation of Law” (with a limit equal to replacement cost,
provided, that, the limit under the coverage in effect as of the Closing Date
may be maintained so long as the Property remains legal and conforming under all
applicable zoning requirements), Coverage B: “Demolition Cost” and Coverage C:
“Increased Cost of Construction” coverages each with limits of no less than 10%
of replacement cost or such lesser amounts as Lender may require in its sole
discretion; (F) permit that the improvements and other property covered by such
insurance be rebuilt at another location in the event that such improvements and
other property cannot be rebuilt at the location on which they are situated as
of the date hereof. If such insurance excludes mold, Borrower shall implement a
mold prevention program satisfactory to Lender;
     (ii) flood insurance if the Property is located in a “100 Year Flood
Plain”, “special hazard area” (Zones A and V) in an amount equal to the maximum
limit of coverage available from FEMA/FIA, plus such excess limits requested by
Lender, with a deductible not in excess of $25,000;
     (iii) commercial general liability insurance, including broad form coverage
of property damage, blanket contractual liability and personal injury (including
death resulting therefrom), to be on the so-called “occurrence” form containing
minimum limits per occurrence of not less than $1,000,000 with not less than a
$2,000,000 general aggregate for any policy year (with a per location aggregate
if the Property is on a blanket policy). In addition, at least $50,000,000
excess and/or umbrella liability insurance shall be obtained and maintained for
any and all claims, including all legal liability imposed upon Borrower and all
related court costs and attorneys’ fees and disbursements;
     (iv) rental loss and/or business interruption insurance covering all risks
required to be covered by the insurance provided for herein, including but not
limited to, clauses (i), (ii), (v), (vii), (viii) and (ix) of this
Section 5.15(a), and covering the 18month period commencing on the date of any
Casualty or Condemnation, and containing an extended period of indemnity
endorsement covering the 12 month period commencing on the date on which the
Property has been restored, as reasonably determined by the applicable insurer
(even if the policy will expire prior to the end of such period). The amount of
such insurance shall be increased from time to time as and when the gross
revenues from the Property increase;
     (v) insurance against loss or damage from (A) leakage of sprinkler systems,
if not provided by the policy required by Section 5.15(a)(i), and (B) explosion
of steam boilers, air conditioning equipment, high pressure piping, machinery
and equipment, pressure vessels or similar apparatus now or hereafter installed
in any of the improvements (without exclusion for explosions) and insurance
against loss of occupancy or use arising from any breakdown, in such amounts as
are generally available and are generally required by institutional lenders for
properties comparable to the Property;
     (vi) worker’s compensation insurance with respect to all employees of
Borrower as and to the extent required by any Governmental Authority or Legal
Requirement and employer’s liability coverage of at least $1,000,000 (if
applicable);

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     (vii) during any period of repair or restoration, and only if the property
and liability coverage forms do not otherwise apply, owner’s contingent or
protective liability insurance covering claims not covered by or under the terms
or provisions of the insurance provided for in Section 5.15(a)(iii). The
insurance provided for in Section 5.15(a) shall (1) be written in a so-called
builder’s risk completed value form or equivalent coverage, including coverage
for 100% of the total costs of construction on a non-reporting basis and against
all risks insured against pursuant to clauses (i), (ii), (iv), (v), (viii) and
(ix) of Section 5.15(a), (2) shall include permission to occupy the Property,
and (3) shall contain an agreed amount endorsement waiving co-insurance
provisions;
     (viii) if required by Lender, earthquake insurance (A) with minimum
coverage equivalent to the greater of 1.0x SUL (scenario upper loss) and 1.5x
SEL (scenario expected loss) multiplied by the full replacement cost of the
building plus business income, (B) having a deductible approved by Lender (but
in any event not be in excess of 5% of the total insurable value of the
Property), and (C) if the Property is legally nonconforming under applicable
zoning ordinances and codes, containing ordinance of law coverage in amounts as
required by Lender;
     (ix) so long as the Terrorism Risk Insurance Program Reauthorization Act of
2007 (“TRIPRA”) or a similar statute is in effect, terrorism insurance for
Certified and Non-Certified acts (as such terms are defined in TRIPRA or similar
statute) in an amount equal to the full replacement cost of the Property (plus
twelve months of business interruption coverage). If TRIPRA or a similar statute
is not in effect, then provided that terrorism insurance is commercially
available, Borrower shall be required to carry terrorism insurance throughout
the term of the Loan as required by the preceding sentence, but in such event
Borrower shall not be required to spend on terrorism insurance coverage more
than two times the amount of the insurance premium that is payable at such time
in respect of the casualty and business interruption/rental loss insurance
required hereunder (without giving effect to the cost of terrorism and
earthquake components of such casualty and business interruption/rental loss
insurance), and if the cost of terrorism insurance exceeds such amount, Borrower
shall purchase the maximum amount of terrorism insurance available with funds
equal to such amount;
     (x) liquor liability insurance in an amount of at least $10,000,000 or in
such greater amount as may be required by applicable Legal Requirements against
claims or liability arising directly or indirectly to persons or property on
account of the sale or dispensing of alcoholic beverages at the Property and
public liability insurance in an amount of at least $10,000,000 or in such
greater amount as may be required by applicable Legal Requirements providing
coverage against such claims or liability;
     (xi) crime coverage in an amount not less than $2,000,000 to protect
against employee dishonesty and related incidents, containing minimum limits per
occurrence of $1,000,000;
     (xii) motor vehicle liability coverage for all owned and non owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence of $1,000,000.00 (if applicable); and

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     (xiii) such other insurance as may from time to time be requested by
Lender.
          (b) All policies of insurance (the “Policies”) required pursuant to
this Section 5.15 shall be issued by one or more primary insurers having a
claims-paying ability of at least “A” or “A2” by each of the Rating Agencies, or
by a syndicate of insurers through which at least 75% of the coverage (if there
are 4 or fewer members of the syndicate) or at least 60% of the coverage (if
there are 5 or more members of the syndicate) is with carriers having such
claims-paying ability ratings (provided that the first layers of coverage are
from carriers rated at least “A” or “A2” and all such carriers shall have
claims-paying ability ratings of not less than “BBB+” or “Baa1”).
Notwithstanding anything to the contrary herein, for purposes of determining
whether the insurer ratings requirements set forth above have been satisfied,
(1) any insurer that is not rated by Fitch will be regarded as having a Fitch
rating that is the equivalent of the rating given to such insurer by any of
Moody’s and S&P that does rate such insurer (or, if both such rating agencies
rate such insurer, the lower of the two ratings), (2) any insurer that is not
rated by Moody’s will be regarded as having a Moody’s rating of “Baa1” or better
if it is rated “A-” or better by S&P and will be regarded as having a Moody’s
rating of “A2” or better if it is rated “A+” or better by S&P, (3) RSUI
Indemnity Company shall be deemed to have satisfied such insurer ratings
requirements with respect to insurance coverage provided by it as of the Closing
Date so long as it maintains a Moody’s rating of A3 and (4) Ironshore Inc. shall
be deemed to have satisfied such insurer ratings requirements with respect to
insurance coverage provided by it as of the Closing Date so long as it maintains
a Moody’s rating of Baa1.
          (c) All Policies required pursuant to this Section 5.15:
     (i) shall contain deductibles that, in addition to complying with any other
requirements expressly set forth in Section 5.15(a), are approved by Lender
(such approval not to be unreasonably withheld, delayed or conditioned, but
subject to the requirements of each Rating Agency) and are no larger than is
customary for similar policies covering similar properties in the geographic
market in which the Property is located, but in any event are not in excess of
$50,000 (except in the case of windstorm and earthquake coverage, which shall
have deductibles not in excess of 5% of the total insurable value of the
Property);
     (ii) shall be maintained throughout the term of the Loan without cost to
Lender and shall name Borrower as the named insured;
     (iii) with respect to casualty policies, shall contain a standard
noncontributory mortgagee clause naming Lender and its successors and assigns as
their interests may appear as first mortgagee and loss payee;
     (iv) with respect to liability policies, shall name Lender and its
successors and assigns as their interests may appear as additional insureds;
     (v) with respect to rental or business interruption insurance policies,
shall name Lender and its successors and/or assigns as their interests may
appear as loss payee;

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     (vi) shall contain an endorsement providing that neither Borrower nor
Lender nor any other party shall be a co-insurer under said Policies;
     (vii) shall contain an endorsement providing that Lender shall receive at
least 30 days’ prior written notice of any modification, reduction or
cancellation thereof;
     (viii) shall contain an endorsement providing that no act or negligence of
Borrower or of a Tenant or other occupant or any foreclosure or other proceeding
or notice of sale relating to the Property shall affect the validity or
enforceability of the insurance insofar as a mortgagee is concerned;
     (ix) shall provide that Lender shall not be liable for any insurance
premiums thereon or subject to any assessments thereunder;
     (x) shall contain a waiver of subrogation against Lender;
     (xi) may be in the form of a blanket policy, provided that Borrower shall
provide evidence satisfactory to Lender that the insurance premiums for the
Property are separately allocated under such Policy to the Property and that
(i) payment of such allocated amount shall maintain the effectiveness of such
Policy as to the Property notwithstanding the failure of payment of any other
portion of premiums, and (ii) overall insurance limits will under no
circumstance limit the amount that will be paid in respect of the Property, and
provided further that any such blanket policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder or shall
otherwise provide the same protection as would a separate Policy in Lender’s
discretion, subject to review and approval by Lender based on the schedule of
locations and values; and
     (xii) shall otherwise be reasonably satisfactory in form and substance to
Lender and shall contain such other provisions as Lender deems reasonably
necessary or desirable to protect its interests.
          (d) Borrower shall pay the premiums for all Policies as the same
become due and payable. Copies of such Policies, certified as true and correct
by Borrower, shall be delivered to Lender promptly upon request. Not later than
30 days prior to the expiration date of each Policy, Borrower shall deliver to
Lender evidence, reasonably satisfactory to Lender, of its renewal. Borrower
shall promptly forward to Lender a copy of each written notice received by
Borrower of any modification, reduction or cancellation of any of the Policies
or of any of the coverages afforded under any of the Policies. Within 30 days
after request by Lender, Borrower shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested by Lender, taking
into consideration changes in the value of money over time, changes in liability
laws, changes in prudent customs and practices, and the like.
          (e) Borrower shall not procure any other insurance coverage that would
be on the same level of payment as the Policies or would adversely impact in any
way the ability of Lender or Borrower to collect any proceeds under any of the
Policies. If at any time Lender is not in receipt of written evidence that all
Policies are in full force and effect when and as

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required hereunder, Lender shall have the right to take such action as Lender
deems necessary to protect its interest in the Property, including the obtaining
of such insurance coverage as Lender in its sole discretion deems appropriate
(but limited to the coverages and amounts required hereunder). All premiums
incurred by Lender in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by Borrower to Lender upon demand and,
until paid, and shall bear interest at the Default Rate.
          (f) In the event of foreclosure of the Mortgage or other transfer of
title to the Property in extinguishment in whole or in part of the Indebtedness,
all right, title and interest of Borrower in and to the Policies then in force
with respect to the Property and all proceeds payable thereunder shall thereupon
vest in the purchaser at such foreclosure or in Lender or other transferee in
the event of such other transfer of title.
          Section 5.16. Casualty and Condemnation.
          (a) Borrower shall give prompt notice to Lender of any Casualty or
Condemnation or of the actual or threatened commencement of proceedings that
would result in a Condemnation
          (b) Lender may participate in any proceedings for any taking by any
public or quasi-public authority accomplished through a Condemnation or any
transfer made in lieu of or in anticipation of a Condemnation, to the extent
permitted by law. Upon Lender’s request, Borrower shall deliver to Lender all
instruments reasonably requested by it to permit such participation. Borrower
shall, at its sole cost and expense, diligently prosecute any such proceedings,
and shall consult with Lender, its attorneys and experts, and cooperate with
them in the carrying on or defense of any such proceedings. Borrower shall not
consent or agree to a Condemnation or action in lieu thereof without the prior
written consent of Lender in each instance, which consent shall not be
unreasonably withheld or delayed in the case of a taking of an immaterial
portion of the Property.
          (c) Lender may (x) jointly with Borrower settle and adjust any claims,
(y) during the continuance of an Event of Default, settle and adjust any claims
without the consent or cooperation of Borrower, or (z) allow Borrower to settle
and adjust any claims; except that if no Event of Default is continuing,
Borrower may settle and adjust claims aggregating not in excess of $500,000 if
such settlement or adjustment is carried out in a competent and timely manner,
but Lender shall be entitled to collect and receive (as set forth below) any and
all Loss Proceeds. The reasonable expenses incurred by Lender in the adjustment
and collection of Loss Proceeds shall become part of the Indebtedness and shall
be reimbursed by Borrower to Lender upon demand therefor.
          (d) All Loss Proceeds from any Casualty or Condemnation shall be
immediately deposited into the Loss Proceeds Account (monthly rental
loss/business interruption proceeds to be initially deposited into the Loss
Proceeds Account and subsequently deposited into the Cash Management Account in
installments as and when the lost rental income covered by such proceeds would
have been payable). Following the occurrence of a Casualty, Borrower, regardless
of whether proceeds are available, shall in a reasonably prompt manner proceed
to restore, repair, replace or rebuild the Property to be of at least equal
value and of substantially

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the same character as prior to the Casualty, all in accordance with the terms
hereof applicable to Alterations. If any Condemnation or Casualty occurs as to
which, in the reasonable judgment of Lender:
     (i) in the case of a Casualty, the cost of restoration would not exceed 25%
of the Loan Amount and the Casualty does not render untenantable, or result in
the cancellation of Leases covering, more than 25% of the gross rentable area of
the Property, or result in cancellation of Leases covering more than 25% of the
base contractual rental revenue of the Property;
     (ii) in the case of a Condemnation, the Condemnation does not render
untenantable, or result in the cancellation of Leases covering, more than 15% of
the gross rentable area of the Property;
     (iii) restoration of the Property is reasonably expected to be completed
prior to the expiration of rental interruption insurance and at least six months
prior to the Maturity Date;
     (iv) after such restoration, the fair market value of the Property is
reasonably expected to equal at least the fair market value of the Property
immediately prior to such Condemnation or Casualty; and
     (v) all necessary approvals and consents from Governmental Authorities will
be obtained to allow the rebuilding and re-occupancy of the Property;
or if Lender otherwise elects to allow Borrower to restore the Property, then,
provided no Event of Default is continuing, the Loss Proceeds after receipt
thereof by Lender and reimbursement of any reasonable expenses incurred by
Lender in connection therewith shall be applied to the cost of restoring,
repairing, replacing or rebuilding the Property or part thereof subject to the
Casualty or Condemnation, in the manner set forth below (and Borrower shall
commence, as promptly and diligently as practicable, to prosecute such
restoring, repairing, replacing or rebuilding of the Property in a workmanlike
fashion and in accordance with applicable law to a status at least equivalent to
the quality and character of the Property immediately prior to the Condemnation
or Casualty). Provided that no Event of Default shall have occurred and be then
continuing, Lender shall disburse such Loss Proceeds to Borrower upon Lender’s
being furnished with (i) evidence reasonably satisfactory to it of the estimated
cost of completion of the restoration, (ii) funds, or assurances reasonably
satisfactory to Lender that such funds are available and sufficient in addition
to any remaining Loss Proceeds, to complete the proposed restoration (including
for any reasonable costs and expenses of Lender to be incurred in administering
such restoration) and for payment of the Indebtedness as it becomes due and
payable during the restoration, and (iii) such architect’s certificates, waivers
of lien, contractor’s sworn statements, title insurance endorsements, bonds,
plats of survey and such other evidences of cost, payment and performance as
Lender may reasonably request; and Lender may, in any event, require that all
plans and specifications for restoration reasonably estimated by Lender to
exceed $500,000 be submitted to and approved by Lender prior to commencement of
work (which approval shall not be unreasonably withheld). If Lender reasonably
estimates that the cost to restore will exceed $500,000, Lender may retain a
local construction consultant to inspect such work and review

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Borrower’s request for payments and Borrower shall, on demand by Lender,
reimburse Lender for the reasonable fees and expenses of such consultant (which
fees and expenses shall constitute Indebtedness). No payment shall exceed 90% of
the value of the work performed from time to time until such time as 50% of the
restoration (calculated based on the anticipated aggregate cost of the work) has
been completed, and amounts retained prior to completion of 50% of the
restoration shall not be paid prior to the final completion of the restoration.
Funds other than Loss Proceeds shall be disbursed prior to disbursement of such
Loss Proceeds, and at all times the undisbursed balance of such proceeds
remaining in the Loss Proceeds Account, together with any additional funds
irrevocably and unconditionally deposited therein or irrevocably and
unconditionally committed for that purpose, shall be at least sufficient in the
reasonable judgment of Lender to pay for the cost of completion of the
restoration free and clear of all Liens or claims for Lien.
          (e) Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any Loss Proceeds lawfully or equitably payable to Lender in
connection with the Property. Lender shall be reimbursed for any expenses
reasonably incurred in connection therewith (including reasonable attorneys’
fees and disbursements, and, if reasonably necessary to collect such proceeds,
the expense of an Appraisal on behalf of Lender) out of such Loss Proceeds or,
if insufficient for such purpose, by Borrower. Borrower hereby irrevocably
constitutes and appoints Lender as the attorney-in-fact of Borrower for matters
in excess of $500,000.00 with respect to the Property, with full power of
substitution, subject to the terms of this Section 5.16, to settle for, collect
and receive all Loss Proceeds and any other awards, damages, insurance proceeds,
payments or other compensation from the parties or authorities making the same,
to appear in and prosecute any proceedings therefor and to give receipts and
acquittance therefor (which power of attorney shall be irrevocable so long as
any of the Indebtedness is outstanding, shall be deemed coupled with an
interest, and shall survive the voluntary or involuntary dissolution of
Borrower).
          (f) If Borrower is not entitled to apply Loss Proceeds toward the
restoration of the Property pursuant to Section 5.16(d) and Lender elects not to
permit such Loss Proceeds to be so applied, such Loss Proceeds shall be applied
on the first Payment Date following such election to the prepayment of the
principal of the Loan and shall be accompanied by interest through the end of
the applicable Interest Accrual Period (calculated as if the amount prepaid were
outstanding for the entire Interest Accrual Period). If the Note has been
bifurcated into multiple Notes pursuant to Section 1.1(c), all prepayments of
the Loan made by Borrower in accordance with this Section 5.16(f) shall be
applied to the Notes in ascending order of interest rate (i.e., first to the
Note with the lowest interest rate until its outstanding principal balance has
been reduced to zero, then to the Note with the second lowest interest rate
until its outstanding principal balance has been reduced to zero, and so on) or
in such other order as Lender shall determine.
          (g) Notwithstanding the foregoing provisions of this Section 5.16, if
the Loan is included in a REMIC and immediately following a release of any
portion of the applicable Property from the Lien of the Loan Documents in
connection with a Casualty or Condemnation the Loan would fail to satisfy a
Lender 80% Determination, then the principal of the Loan shall be prepaid in
accordance with Section 5.16(f) in an amount equal to either (i) so much of the
Loss Proceeds as are necessary to cause the Lender 80% Determination to be
satisfied, or if the

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aggregate Loss Proceeds are insufficient for such purpose, then the amount
realized by Borrower from the Casualty or Condemnation for purposes of computing
gain or loss under section 1001 of the Code, or (ii) a lesser amount provided
the Borrower delivers to Lender an opinion of counsel for Borrower, in form and
substance reasonably satisfactory to Lender and delivered by counsel reasonably
satisfactory to Lender, opining that such release of Property from the Lien does
not cause any portion of the Loan to cease to be a “qualified mortgage” within
the meaning of section 860G(a)(3) of the Code.
          Section 5.17. Annual Budget. Each calendar year during the term of the
Loan, as soon as made available to Borrower and/or Operating Lessee in
accordance with the terms of Sections 6.02 and 6.03 of the Approved Management
Agreement, Borrower or Operating Lessee shall deliver or shall cause Approved
Property Manager to deliver to Lender, for informational purposes only, the
Annual Budget and, promptly after preparation thereof, any subsequent revisions
to the Annual Budget. If the budget approval process under the Approved
Management Agreement shall be ongoing during the continuance of a Trigger Period
or an Event of Default, neither Borrower nor Operating Lessee shall exercise any
budget approval right they may have under the Approved Management Agreement
without the approval of Lender, such approval not to be unreasonably
conditioned, withheld or delayed. For so long as Lender shall withhold its
consent to any Annual Budget or any revisions thereto, the Annual Budget in
effect prior to any such request for approval shall remain in effect. Without
the prior written consent of Lender, which consent shall not be unreasonably
withheld or delayed, during the continuance of a Trigger Period neither Borrower
nor Operating Lessee shall make or approve any expenditures that are either not
provided for in the Approved Annual Budget or that would, in the aggregate,
cause any line item in the Approved Annual Budget to be exceeded by 5% or more
measured on an annual basis, other than expenditures for non-discretionary items
and expenditures required to be made by reason of the occurrence of any
emergency (i.e., an unexpected event that threatens imminent harm to persons or
property at the Property) and with respect to which it would be impracticable,
under the circumstances, to obtain Lender’s prior consent thereto. For the
avoidance of doubt, decreases made or approved to any line item in the Approved
Annual Budget shall not require Lender’s consent. Borrower and/or Operating
Lessee shall deliver, or cause to be delivered, the 2011 Annual Budget as soon
as is practical.
          Section 5.18. Nonbinding Consultation. Lender shall have the right to
consult with and advise Borrower regarding significant business activities and
business and financial developments of Borrower and Operating Lessee, provided
that any such advice or consultation or the result thereof shall be completely
nonbinding on Borrower.
          Section 5.19. Compliance with Encumbrances and Material Agreements.
Borrower covenants and agrees as follows:
     (i) Borrower shall, and shall cause Operating Lessee to, comply with all
material terms, conditions and covenants of each Material Agreement and each
material Permitted Encumbrance, including any reciprocal easement agreement, any
declaration of covenants, conditions and restrictions, and any condominium
arrangements.
     (ii) Borrower shall, and shall cause Operating Lessee to, promptly deliver
to Lender a true, correct and complete copy of each and every notice of default
received by

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Borrower or Operating Lessee with respect to any obligation of such Borrower or
Operating Lessee under the provisions of any Material Agreement and/or Permitted
Encumbrance.
     (iii) Borrower shall, and shall cause Operating Lessee to, deliver to
Lender copies of any written notices of default or event of default relating to
any Material Agreement and/or Permitted Encumbrance served by Borrower or
Operating Lessee.
     (iv) After the occurrence of an Event of Default, so long as the Loan is
outstanding, Borrower shall not, and shall not cause Operating Lessee to, grant
or withhold any material consent, approval or waiver under any Material
Agreement or Permitted Encumbrance without the prior written consent of Lender.
     (v) Borrower shall, and shall cause Operating Lessee to, deliver to each
other party to any Permitted Encumbrance and any Material Agreement notice of
the identity of Lender and each assignee of Lender of which Borrower is aware if
such notice is required in order to protect Lender’s interest thereunder.
     (vi) Borrower shall, and shall cause Operating Lessee to, enforce, short of
termination thereof, the performance and observance of each and every material
term, covenant and provision of each Material Agreements to be performed or
observed, if any.
          Section 5.20. Prohibited Persons. None of Borrower, Operating Lessee,
Sponsor or any Person owning a direct or indirect beneficial interest in
Borrower, Operating Lessee, or Sponsor shall (i) knowingly conduct any business,
or engage in any transaction or dealing, with any Embargoed Person, including,
but not limited to, the making or receiving of any contribution of funds, goods,
or services, to or for the benefit of a Embargoed Person, or (ii) knowingly
engage in or conspire to engage in any transaction that evades or avoids, or has
the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order 13224. Borrower shall deliver to
Lender from time to time written certification or other evidence as may be
reasonably requested by Lender, confirming that (x) none of Borrower, Operating
Lessee, Sponsor or, to Borrower’s knowledge, any Person owning a direct or
indirect beneficial interest in Borrower, Operating Lessee, or Sponsor is an
Embargoed Person and (y) none of Borrower, Operating Lessee, Sponsor or, to
Borrower’s knowledge, any Person owning a direct or indirect beneficial interest
in Borrower, Operating Lessee, or Sponsor has knowingly engaged in any business,
transaction or dealings with a Embargoed Person, including, but not limited to,
the making or receiving of any contribution of funds, goods, or services, to or
for the benefit of a Embargoed Person.
          Section 5.21. Operating Lease.
     (i) Borrower shall cause Operating Lessee to comply with the affirmative
and negative covenants contained in this Agreement as if Operating Lessee were
the Borrower hereunder and no Default hereunder shall be excused by virtue of
the fact that such Default was caused by Operating Lessee.

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     (ii) Borrower shall use best efforts to cause the Operating Lease to remain
in effect so long as any portion of the Indebtedness is outstanding.
     (iii) Notwithstanding anything to the contrary herein or in any other Loan
Documents or in the Operating Lease, during the continuance of an Event of
Default (but only after Lender shall have exercised its rights and remedies
under the Mortgage), Lender may, at its sole option and regardless of whether
Operating Lessee is in default or compliance with the terms of the Operating
Lease, terminate the Operating Lease without payment of any termination fee,
penalty or other amount (the parties hereto agreeing that any such fee, penalty
or other amount shall be solely the obligation of Sponsor and shall be paid by
Sponsor or an affiliate of Sponsor other than Borrower or Operating Lessee).
          Section 5.22. Capital Plan. Borrower shall do or cause to be done all
things necessary to cause the timely completion of the Capital Plan.
ARTICLE VI
NEGATIVE COVENANTS
          Section 6.1. Liens on the Collateral. None of Borrower, Operating
Lessee or, if applicable, any Single-Purpose Equityholder shall permit or suffer
the existence of any Lien on any of its assets, other than Permitted
Encumbrances.
          Section 6.2. Ownership. Neither Borrower nor Operating Lessee shall
hold any interest in any assets other than the Property and related personal
property and fixtures located therein or used in connection therewith, and, in
the case of Borrower, the IDA Bonds.
          Section 6.3. Transfer; Change of Control. Neither Borrower nor
Operating Lessee shall Transfer any Collateral other than in compliance with
Article II and other than the replacement or other disposition of obsolete or
non-useful personal property and fixtures in the ordinary course of business,
and neither Borrower nor Operating Lessee shall hereafter file a declaration of
condominium with respect to the Property. No Change of Control or Prohibited
Pledge shall occur.
          Section 6.4. Debt. Neither Borrower nor Operating Lessee shall have
any Debt, other than Permitted Debt.
          Section 6.5. Dissolution; Merger or Consolidation. None of Borrower,
Operating Lessee or, if applicable, any Single-Purpose Equityholder shall
dissolve, terminate, liquidate, merge with or consolidate into another Person
without first causing the Loan to be assumed by a Qualified Successor Borrower
pursuant to Section 2.2.
          Section 6.6. Change in Business. Neither Borrower nor Operating Lessee
shall make any material change in the scope or nature of its business
objectives, purposes or operations or undertake or participate in activities
other than the continuance of its present business.

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          Section 6.7. Debt Cancellation. Neither Borrower nor Operating Lessee
shall cancel or otherwise forgive or release any material claim or Debt owed to
it by any Person, except for adequate consideration or in the ordinary course of
its business.
          Section 6.8. Affiliate Transactions. Neither Borrower nor Operating
Lessee shall enter into, or be a party to, any transaction with any affiliate of
Borrower and/or Operating Lessee, except on terms that are no less favorable to
Borrower or Operating Lessee than would be obtained in a comparable arm’s length
transaction with an unrelated third party.
          Section 6.9. Misapplication of Funds. Neither Borrower nor Operating
Lessee shall (a) distribute any Revenue or Loss Proceeds in violation of the
provisions of this Agreement (and shall promptly cause the reversal of any such
distributions made in error of which Borrower becomes aware), (b) fail to remit
amounts to the Cash Management Account as required by Section 3.1, or
(c) misappropriate any security deposit or portion thereof.
          Section 6.10. Jurisdiction of Formation; Name. Neither Borrower nor
Operating Lessee shall change its jurisdiction of formation or name without
receiving Lender’s prior written consent and promptly providing Lender such
information and replacement Uniform Commercial Code financing statements and
legal opinions as Lender may reasonably request in connection therewith.
          Section 6.11. Modifications and Waivers. Unless otherwise consented to
in writing by Lender, none of Borrower, Operating Lessee or, in the case of
clause (ii) below, any Single-Purpose Equityholder (if applicable) shall:
     (i) amend, modify, terminate, renew, or surrender any rights or remedies
under any Lease, or enter into any Lease, except in compliance with Section 5.7;
     (ii) terminate, amend or modify its organizational documents (including any
operating agreement, limited partnership agreement, by-laws, certificate of
formation, certificate of limited partnership or certificate of incorporation);
     (iii) terminate, amend or modify the Approved Management Agreement, except
immaterial amendments and modifications that have no adverse effect on Lender
and do not alter any economic term of the Approved Management Agreement;
     (iv) amend, modify, surrender or waive any material rights or remedies
under, or enter into or terminate, or default in its obligations under, any
Material Agreement; and
     (v) amend, modify, surrender or waive any material rights or remedies
under, or terminate, the IDA Lease.
          Section 6.12. ERISA.
          (a) Neither Borrower nor Operating Lessee shall maintain or contribute
to, or agree to maintain or contribute to, or permit any ERISA Affiliate to
maintain or contribute to or

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agree to maintain or contribute to, any employee benefit plan (as defined in
Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or
Section 412 of the Code.
          (b) Neither Borrower nor Operating Lessee shall engage in a non-exempt
prohibited transaction under Section 406 of ERISA, Section 4975 of the Code, or
substantially similar provisions under federal, state or local laws, rules or
regulations or in any transaction that would cause any obligation or action
taken or to be taken hereunder (or the exercise by Lender of any of its rights
under the Notes, this Agreement, the Mortgage or any other Loan Document) to be
a non-exempt prohibited transaction under such provisions.
          Section 6.13. Alterations and Expansions. During the continuance of
any Trigger Period or Event of Default, Borrower shall not, and shall not permit
Operating Lessee to, perform or contract to perform any capital improvements
requiring Capital Expenditures that are not consistent with the Approved Annual
Budget. Borrower shall not, and shall not permit Operating Lessee to, perform,
undertake, contract to perform or consent to any Material Alteration without the
prior written consent of Lender, which consent (in the absence of an Event of
Default) shall not be unreasonably withheld, but such consent may be conditioned
on the delivery of additional collateral acceptable to Lender in respect of the
unpaid cost of any such Material Alteration. If Lender’s consent is requested
hereunder with respect to a Material Alteration, Lender may retain a
construction consultant to review such request and, if such request is granted,
Lender may retain a construction consultant to inspect the work from time to
time. Borrower shall, on demand by Lender, reimburse Lender for the reasonable
fees and disbursements of such consultant.
          Section 6.14. Advances and Investments. Neither Borrower nor Operating
Lessee shall lend money or make advances to any Person, or purchase or acquire
any stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any Person, except for Permitted Investments.
          Section 6.15. Single-Purpose Entity. Neither Borrower nor Operating
Lessee shall cease to be a Single-Purpose Entity. Neither Borrower nor Operating
Lessee shall remove or replace any Independent Director without Cause and
without providing at least two Business Days’ advance written notice thereof to
Lender and the Rating Agencies.
          Section 6.16. Zoning and Uses. Neither Borrower nor Operating Lessee
shall do any of the following:
     (i) initiate or support any limiting change in the permitted uses of the
Property (or to the extent applicable, zoning reclassification of the Property)
or any portion thereof, seek any variance under existing land use restrictions,
laws, rules or regulations (or, to the extent applicable, zoning ordinances)
applicable to the Property, or use or permit the use of the Property in a manner
that would result in the use of the Property becoming a nonconforming use under
applicable land-use restrictions or zoning ordinances or that would violate the
terms of any Lease, Material Agreement or Legal Requirement (and if under
applicable zoning ordinances the use of all or any portion of the Property is a
nonconforming use, Borrower shall not cause or permit such

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nonconforming use to be discontinued or abandoned without the express written
consent of Lender);
     (ii) consent to any modification, amendment or supplement to any of the
terms of, or materially default in its obligations under, any Permitted
Encumbrance;
     (iii) impose or consent to the imposition of any restrictive covenants,
easements or encumbrances upon the Property in any manner that adversely affects
in any material respect its value, utility or transferability;
     (iv) execute or file any subdivision plat affecting the Property, or
institute, or permit the institution of, proceedings to alter any tax lot
comprising the Property;
     (v) amend or cause to be amended any Material Agreement in any manner that
might (x) diminish the value of the Property, (y) diminish the rights of
Borrower or Lender thereunder or (z) or otherwise cause or reasonably be
expected to result in a Material Adverse Effect, or terminate the same for any
reason or purpose whatsoever, in each case, without the prior written consent of
Lender; or
     (vi) permit or consent to the Property’s being used by the public or any
Person in such manner as might make possible a claim of adverse usage or
possession or of any implied dedication or easement.
          Section 6.17. Waste. Neither Borrower nor Operating Lessee shall
commit or permit any Waste on the Property, nor take any actions that might
invalidate any insurance carried on the Property (and Borrower shall promptly
correct any such actions of which Borrower becomes aware).
          Section 6.18. IDA Bonds. Borrower shall not, without the express
written consent of Lender, sell, transfer or redeem any of the IDA Bonds.
ARTICLE VII
DEFAULTS
          Section 7.1. Event of Default. The occurrence of any one or more of
the following events shall be, and shall constitute the commencement of, an
“Event of Default” hereunder (any Event of Default that has occurred shall
continue unless and until waived by Lender in writing in its sole discretion):
          (a) Payment.
     (i) Borrower shall default in the payment when due of any principal or
interest owing hereunder or under the Notes (including any mandatory prepayment
required hereunder) provided that the Default Rate shall not apply to any amount
owing hereunder or under the Notes unless and until Borrower and Borrower’s
counsel shall have received email notification at the email addresses provided
in Section 9.4, or any

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other form of notice permitted under this Agreement, setting forth the payment
amount and the due date thereof; or
     (ii) Borrower shall default, and such default shall continue for at least
five Business Days after notice to Borrower that such amounts are owing, in the
payment when due of fees, expenses or other amounts owing hereunder, under the
Notes or under any of the other Loan Documents (other than principal and
interest owing hereunder or under the Note).
          (b) Representations. Any representation made by Borrower, Sponsor or
Operating Lessee in any of the Loan Documents, or in any report, certificate,
financial statement or other instrument, agreement or document furnished to
Lender proves to be untrue in any material respect (or, with respect to any
representation that itself contains a materiality qualifier, in any respect) as
of the date such representation was made.
          (c) Other Loan Documents. Any Loan Document shall fail to be in full
force and effect or to convey the material Liens, rights, powers and privileges
purported to be created thereby; or a default shall occur under any of the other
Loan Documents or Material Agreements, or a default by Borrower or Operating
Lessee, as applicable, shall occur under the Approved Management Agreement, the
Operating Lease or the IDA Lease, in each case, beyond the expiration of any
applicable cure period.
          (d) Bankruptcy; Reorganization; Receivership; and Insolvency.
     (i) Borrower, Operating Lessee or, if applicable, any Single-Purpose
Equityholder shall commence a voluntary case concerning itself under Title 11 of
the United States Code (as amended, modified, succeeded or replaced, from time
to time, the “Bankruptcy Code”);
     (ii) Borrower, Operating Lessee or, if applicable, any Single-Purpose
Equityholder shall commence any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of creditors, dissolution, insolvency or
similar law of any jurisdiction whether now or hereafter in effect relating to
Borrower, Operating Lessee or such Single-Purpose Equityholder, or shall
dissolve or otherwise cease to exist;
     (iii) there is commenced against Borrower, Operating Lessee or, if
applicable, any Single-Purpose Equityholder an involuntary case under the
Bankruptcy Code, or any such other proceeding, which remains undismissed for a
period of 60 days after commencement;
     (iv) Borrower, Operating Lessee or, if applicable, any Single-Purpose
Equityholder is adjudicated insolvent or bankrupt;
     (v) Borrower, Operating Lessee or, if applicable, any Single-Purpose
Equityholder suffers appointment of any custodian or the like for it or for any
substantial portion of its property and such appointment continues unchanged or
unstayed for a period of 60 days after commencement of such appointment;

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

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Documents, except that in the case of a default that can be cured by the payment
of money, such default shall not constitute an Event of Default unless and until
it shall remain uncured for 10 days after Borrower receives written notice
thereof; and in the case of a default that cannot be cured by the payment of
money but is susceptible of being cured within 30 days, such default shall not
constitute an Event of Default unless and until it remains uncured for 30 days
after Borrower receives written notice thereof, provided that within 5 days of
its receipt of such written notice, Borrower delivers written notice to Lender
of its intention and ability to effect such cure within such 30 day period; and
if such non-monetary default is not cured within such 30 day period despite
Borrower’s diligent efforts but is susceptible of being cured within 90 days of
Borrower’s receipt of Lender’s original notice, then Borrower shall have such
additional time as is reasonably necessary to effect such cure, but in no event
in excess of 90 days from Borrower’s receipt of Lender’s original notice,
provided that prior to the expiration of the initial 30 day period, Borrower
delivers written notice to Lender of its intention and ability to effect such
cure prior to the expiration of such 90 day period.
          (k) IDA Lease. Any termination of the IDA Lease due to the expiration
thereof or a default by Borrower thereunder if such termination does not occur
simultaneously with the reconveyance of the fee interest in the Property to
Borrower.
          (l) Operating Lease. The Operating Lease shall no longer be in effect
for any reason whatsoever, including, without limitation, expiration of the
Operating Lease by its terms absent renewal or extension of the Operating Lease.
          Section 7.2. Remedies.
          (a) During the continuance of an Event of Default, Lender may by
written notice to Borrower, in addition to any other rights or remedies
available pursuant to this Agreement, the Notes, the Mortgage and the other Loan
Documents, at law or in equity, declare by written notice to Borrower all or any
portion of the Indebtedness to be immediately due and payable, whereupon all or
such portion of the Indebtedness shall so become due and payable, and Lender may
enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower and the Collateral (including all rights or remedies
available at law or in equity); provided, however, that, notwithstanding the
foregoing, if an Event of Default specified in paragraph 7.1(d) shall occur,
then the Indebtedness shall immediately become due and payable without the
giving of any notice or other action by Lender. Any actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth in this Agreement or in the
other Loan Documents.
          (b) If Lender forecloses on the Property, Lender shall apply all net
proceeds of such foreclosure to repay the Indebtedness, the Indebtedness shall
be reduced to the extent of such net proceeds and the remaining portion of the
Indebtedness shall remain outstanding and secured by the Property and the other
Loan Documents, it being understood and agreed by Borrower that Borrower is
liable for the repayment of all the Indebtedness; provided, however, that at the
election of Lender, the Notes shall be deemed to have been accelerated only to
the

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

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          (b) Collateral Accounts. Each of the Collateral Accounts shall have
been established with the Cash Management Bank and funded to the extent required
under Article III.
          (c) Opinions of Counsel. Lender shall have received, in each case in
form and substance satisfactory to Lender, (i) a New York legal opinion, (ii) a
legal opinion with respect to the laws of the state in which the Property is
located, (iii) a bankruptcy nonconsolidation opinion with respect to each Person
owning at least a 49% direct or indirect equity interest in Borrower, if
applicable, any Single-Purpose Equityholder and any affiliated property manager,
and (iv) a Delaware legal opinion regarding matters related to Single Member
LLC’s.
          (d) Organizational Documents. Lender shall have received all documents
reasonably requested by Lender relating to the existence of Sponsor, Borrower
and Operating Lessee, the validity of the Loan Documents and other matters
relating thereto, in form and substance satisfactory to Lender, including:
     (i) Authorizing Resolutions. A certified copy of the resolutions approving
and adopting the Loan Documents to be executed by Borrower, Operating Lessee and
Sponsor and authorizing the execution and delivery thereof.
     (ii) Organizational Documents. Certified copies of the organizational
documents of Sponsor, Borrower, Operating Lessee and, if applicable, any
Single-Purpose Equityholder (including any certificate of formation, certificate
of limited partnership, certificate of incorporation, operating agreement,
limited partnership agreement or by-laws), in each case together with all
amendments thereto.
     (iii) Certificates of Good Standing or Existence. Certificates of good
standing or existence for Sponsor, Borrower, Operating Lessee and, if
applicable, any Single-Purpose Equityholder issued as of a recent date by its
state of organization and by the state in which the Property is located.
     (iv) Recycled Entity Certificate. A recycled entity certificate acceptable
to Lender, to the extent that Borrower was formed more than 60 days prior to the
date hereof.
          (e) Lease; Material Agreements. Lender shall have received true,
correct and complete copies of all Leases and all Material Agreements.
          (f) Lien Search Reports. Lender shall have received satisfactory
reports of Uniform Commercial Code, tax lien, bankruptcy and judgment searches
conducted by a search firm acceptable to Lender with respect to the Property and
Borrower, such searches to be conducted in such locations as Lender shall have
requested.
          (g) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date either before or after the
execution and delivery of this Agreement.

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

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          (q) Engineering Report. Lender shall have received a current
Engineering Report with respect to the Property, which report shall be in form
and substance reasonably satisfactory to Lender.
          (r) Environmental Report. Lender shall have received an Environmental
Report (not more than six months old) with respect to the Property that
discloses no material environmental contingencies with respect to the Property.
          (s) Qualified Survey. Lender shall have received a Qualified Survey
with respect to the Property in form and substance reasonably satisfactory to
Lender.
          (t) Appraisal. Lender shall have obtained an Appraisal of the Property
satisfactory to Lender.
          (u) Consents, Licenses, Approvals, etc. Lender shall have received
copies of all consents, licenses and approvals, if any, required in connection
with the execution, delivery and performance by Borrower, Sponsor and Operating
Lessee, and the validity and enforceability, of the Loan Documents, and such
consents, licenses and approvals shall be in full force and effect.
          (v) Financial Information. Lender shall have received financial
information relating to the Sponsor, Borrower and the Property that is
satisfactory to Lender.
          (w) [Intentionally Omitted].
          (x) Know Your Customer Rules. At least 10 days prior to the Closing
Date, the Lender shall have received all documentation and other information
required by bank regulatory authorities under applicable “know-your-customer”
and anti-money laundering rules and regulations, including the PATRIOT Act.
          (y) Capital Plan. Lender shall have received and approved the Capital
Plan.
          (z) Additional Matters. Lender shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Lender. All corporate and other proceedings,
all other documents (including all documents referred to in this Agreement and
not appearing as exhibits to this Agreement) and all legal matters in connection
with the Loan shall be reasonably satisfactory in form and substance to Lender.
ARTICLE IX
MISCELLANEOUS
          Section 9.1. Successors. Except as otherwise provided in this
Agreement, whenever in this Agreement any of the parties to this Agreement is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party. All covenants, promises and agreements in this
Agreement contained, by or on behalf of Borrower, shall inure to the benefit of
Lender and its successors and assigns.

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          Section 9.2. GOVERNING LAW
     (A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW RULES TO THE
EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
     (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, BORROWER,
OPERATING LESSEE OR SPONSOR ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS (OTHER THAN ANY ACTION IN RESPECT OF THE CREATION,
PERFECTION OR ENFORCEMENT OF A LIEN OR SECURITY INTEREST CREATED PURSUANT TO ANY
LOAN DOCUMENTS NOT GOVERNED BY THE LAWS OF THE STATE OF NEW YORK) SHALL BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK. BORROWER,
OPERATING LESSEE AND SPONSOR HEREBY (i) IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM, (ii) IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND (iii) IRREVOCABLY
CONSENT TO SERVICE OF PROCESS BY MAIL, PERSONAL SERVICE OR IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW, AT THE ADDRESS SPECIFIED IN SECTION 9.4 (AND AGREES
THAT SUCH SERVICE AT SUCH ADDRESS IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER ITSELF IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT).
          Section 9.3. Modification, Waiver in Writing. Neither this Agreement
nor any other Loan Document may be amended, changed, waived, discharged or
terminated, nor shall any consent or approval of Lender be granted hereunder,
unless such amendment, change, waiver, discharge, termination, consent or
approval is in writing signed by Lender.
          Section 9.4. Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
either (i) in writing by expedited prepaid delivery service, either commercial
or United States Postal Service, with proof of delivery or attempted delivery,
addressed as follows (or at such other address and person as shall be designated
from time to time by any party to this Agreement, as the case may be, in a
written notice to the other parties to this Agreement in the manner provided for
in this Section) or (ii) by email at the email addresses provided below,
provided that such email notification is followed by an additional written
notice delivered in accordance with clause (i) of this paragraph, provided,
however, that no such additional notification shall be required in the case of
email notice of a payment default, as provided for in Section 7.1(a). A notice
shall be deemed to have been given when delivered or upon refusal to accept
delivery.

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If to Lender:
Goldman Sachs Commercial Mortgage Capital, L.P.
6011 Connection Drive, Suite 550
Irving, Texas 75039
Attention: Michael Forbes
Email: michael.forbes@archongroup.com
with copies to:
Goldman Sachs Mortgage Company
200 West Street
New York, New York 10282
Attention: Daniel Bennett and Rene J. Theriault
Email: daniel.bennett@gs.com and rene.theriault@gs.com
and
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
Attention: Michael Weinberger, Esq.
Email: mweinberger@cgsh.com
If to Borrower:
Orangemen Owner LLC
c/o Pebblebrook Hotel Trust
2 Bethesda Metro Center
Suite 1530
Bethesda, MD 20814
Attention: Raymond D. Martz
Email: rmartz@pebblebrookhotels.com
with a copy to:
Hunton & Williams LLP
1900 K Street, NW
Suite 1200
Washington, D.C. 20006
Attention: Thomas F. Kaufman
Email: tkaufman@hunton.com
          Section 9.5. TRIAL BY JURY. LENDER, BORROWER, OPERATING LESSEE AND
SPONSOR, TO THE FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY AGREE NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT
TO TRIAL BY JURY FULLY TO THE

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EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY LENDER, BORROWER, OPERATING LESSEE AND SPONSOR AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER, BORROWER, OPERATING LESSEE AND/OR
SPONSOR ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER, OPERATING LESSEE AND SPONSOR.
          Section 9.6. Headings. The Article and Section headings in this
Agreement are included in this Agreement for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
          Section 9.7. Assignment and Participation.
          (a) Except as explicitly set forth in Sections 2.1 and 2.2, Borrower
may not sell, assign or transfer any interest in the Loan Documents or any
portion thereof (including Borrower’s rights, title, interests, remedies, powers
and duties hereunder and thereunder).
          (b) Lender and each assignee of all or a portion of the Loan shall
have the right from time to time in its discretion to sell one or more of the
Notes or any interest therein (an “Assignment”) and/or sell a participation
interest in one or more of the Notes (a “Participation”). Borrower agrees to
reasonably cooperate with Lender, at Lender’s request, in order to effectuate
any such Assignment or Participation, and Borrower shall promptly provide such
information, legal opinions and documents relating to Borrower, any
Single-Purpose Equityholder, Sponsor, the Property, the Approved Property
Manager and any Tenants as Lender may reasonably request in connection with such
Assignment or Participation. In the case of an Assignment, (i) each assignee
shall have, to the extent of such Assignment, the rights, benefits and
obligations of the assigning Lender as a “Lender” hereunder and under the other
Loan Documents, (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to an Assignment,
relinquish its rights and be released from its obligations under this Agreement,
and (iii) one Lender shall serve as agent for all Lenders and shall be the sole
Lender to whom notices, requests and other communications shall be addressed and
the sole party authorized to grant or withhold consents hereunder on behalf of
the Lenders (subject, in each case, to appointment of a Servicer, pursuant to
Section 9.22, to receive such notices, requests and other communications and/or
to grant or withhold consents, as the case may be) and to be the sole Lender to
designate the account to which payments shall be made by Borrower to the Lenders
hereunder. Goldman Sachs Mortgage Company or, upon the appointment of a
Servicer, such Servicer, shall maintain, or cause to be maintained, as agent for
Borrower, a register on which it shall enter the name or names of the registered
owner or owners from time to time of the Notes. Borrower agrees that upon
effectiveness of any Assignment of any Note in part, Borrower will promptly
provide to the assignor and the assignee separate promissory notes in the amount
of their respective interests (but, if applicable, with a notation thereon that
it is given in substitution for and replacement of an original Note or any
replacement thereof), and otherwise in the form of such Note, upon return of the
Note then being replaced. The assigning Lender

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shall notify in writing each of the other Lenders of any Assignment. Each
potential or actual assignee, participant or investor in a Securitization, and
each Rating Agency, shall be entitled to receive all information received by
Lender under this Agreement. After the effectiveness of any Assignment, the
party conveying the Assignment shall provide notice to Borrower and each Lender
of the identity and address of the assignee. Notwithstanding anything in this
Agreement to the contrary, after an Assignment, the assigning Lender (in
addition to the assignee) shall continue to have the benefits of any
indemnifications contained in this Agreement that such assigning Lender had
prior to such assignment with respect to matters occurring prior to the date of
such assignment.
          (c) If, pursuant to this Section 9.7, any interest in this Agreement
or any Note is transferred to any transferee that is not a U.S. Person, the
transferor Lender shall cause such transferee, concurrently with the
effectiveness of such transfer, (i) to furnish to the transferor Lender either
Form W-8BEN or Form W-8ECI or any other form in order to establish an exemption
from, or reduction in the rate of, U.S. withholding tax on all interest payments
hereunder, and (ii) to agree (for the benefit of Lender and Borrower) to provide
the transferor Lender a new Form W-8BEN or Form W-8ECI or any forms reasonably
requested in order to establish an exemption from, or reduction in the rate of,
U.S. withholding tax upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such transferee,
and to comply from time to time with all applicable U.S. laws and regulations
with regard to such withholding tax exemption.
          Section 9.8. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
          Section 9.9. Preferences; Waiver of Marshalling of Assets. Lender
shall have no obligation to marshal any assets in favor of Borrower or any other
party or against or in payment of any or all of the obligations of Borrower
pursuant to this Agreement, the Notes or any other Loan Document. Lender shall
have the continuing and exclusive right to apply or reverse and reapply any and
all payments by Borrower to any portion of the obligations of Borrower hereunder
and under the Loan Documents. To the extent Borrower makes a payment or payments
to Lender, which payment or proceeds or any portion thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the obligations hereunder or portion thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender. To the fullest
extent permitted by law, Borrower, for itself and its permitted successors and
assigns, waives all rights to a marshalling of the assets of Borrower, and
Borrower’s partners and others with interests in Borrower, or to a sale in
inverse order of alienation in the event of foreclosure of the Mortgage, and
agrees not to assert any right under any laws pertaining to the marshalling of
assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan

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Documents to a sale of the Property for the collection of the Indebtedness
without any prior or different resort for collection or of the right of Lender
to the payment of the Indebtedness out of the net proceeds of the Properties in
preference to every other claimant whatsoever. In addition, to the fullest
extent permitted by law, Borrower, for itself and its successors and assigns,
waives in the event of foreclosure of the Mortgage, any legal right otherwise
available to Borrower that would require the separate sale of any Collateral or
require Lender to exhaust its remedies against any Collateral before proceeding
against any other Collateral; and further in the event of such foreclosure,
Borrower does hereby expressly consent to and authorize, at the option of
Lender, the foreclosure and sale either separately or together of any
combination of the Collateral.
          Section 9.10. Remedies of Borrower. If a claim is made that Lender or
its agents have unreasonably delayed acting or acted unreasonably in any case
where by law or under this Agreement, the Notes, the Mortgage or the other Loan
Documents, any of such Persons has an obligation to act promptly or reasonably,
Borrower agrees that no such Person shall be liable for any monetary damages,
and Borrower’s sole remedy shall be limited to commencing an action seeking
specific performance, injunctive relief and/or declaratory judgment. Without in
any way limiting the foregoing, Borrower shall not assert, and hereby waives,
any claim against Lender and/or its affiliates, directors, employees, attorneys,
agents or sub-agents, on any theory of liability, for direct, special, indirect,
consequential or punitive damages (whether or not the claim therefor is based on
contract, tort or duty imposed by any applicable legal requirement) arising out
of, as a result of, or in any way related to, the Loan Agreement or any other
Loan Document or any agreement or instrument contemplated hereby or thereby or
referred to herein or therein, the transactions contemplated hereby or thereby,
the Loan or the use of the proceeds thereof or any act or omission or event
occurring in connection therewith, and Borrower hereby waives, releases and
agrees not to sue upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
          Section 9.11. Offsets, Counterclaims and Defenses. All payments made
by Borrower hereunder or under the other Loan Documents shall be made
irrespective of, and without any deduction for, any setoffs or counterclaims.
Borrower waives the right to assert a counterclaim, other than a mandatory or
compulsory counterclaim, in any action or proceeding brought against it by
Lender arising out of or in any way connected with the Notes, this Agreement,
the other Loan Documents or the Indebtedness. Any assignee of Lender’s interest
in the Loan shall take the same free and clear of all offsets, counterclaims or
defenses that are unrelated to the Loan.
          Section 9.12. No Joint Venture. Nothing in this Agreement is intended
to create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Borrower and Lender, nor to grant Lender any interest in
the Property other than that of mortgagee or lender.
          Section 9.13. Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Agreement and the provisions of the
Notes, the Mortgage or any of the other Loan Documents, the provisions of this
Agreement shall prevail.

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          Section 9.14. Brokers and Financial Advisors. Borrower and Sponsor
each represent that they have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Borrower and Sponsor each agree,
jointly and severally, to indemnify and hold Lender harmless from and against
any and all claims, liabilities, costs and expenses of any kind in any way
relating to or arising from a claim by any Person that such Person acted on
behalf of Borrower in connection with the transactions contemplated in this
Agreement. The provisions of this Section 9.14 shall survive the expiration and
termination of this Agreement and the repayment of the Indebtedness.
          Section 9.15. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. Any counterpart delivered by facsimile, pdf or other electronic
means shall have the same import and effect as original counterparts and shall
be valid, enforceable and binding for the purposes of this Agreement.
          Section 9.16. Estoppel Certificates.
          (a) Borrower agrees at any time and from time to time, to execute,
acknowledge and deliver to Lender, within five days after receipt of Lender’s
written request therefor, a statement in writing setting forth (A) the Principal
Indebtedness, (B) the date on which installments of interest and/or principal
were last paid, (C) any offsets or defenses to the payment of the Indebtedness,
(D) that the Notes, this Agreement, the Mortgage and the other Loan Documents
are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification, (E) that neither Borrower
nor, to Borrower’s knowledge, Lender, is in default under the Loan Documents (or
specifying any such default), (F) that all Leases are in full force and effect
and have not been modified (except in accordance with the Loan Documents),
(G) whether or not any of the Tenants under the Leases are in material default
under the Leases (setting forth the specific nature of any such material
defaults) and (H) such other matters as Lender may reasonably request. Any
prospective purchaser of any interest in a Loan shall be permitted to rely on
such certificate.
          (b) Upon Lender’s written request, Borrower shall use commercially
reasonable efforts to obtain from each Tenant whose Lease requires such Tenant
to execute and deliver an estoppel certificate, and shall thereafter promptly
deliver to Lender duly executed estoppel certificates from any one or more
Tenants under the Leases as requested by Lender, attesting to such facts
regarding the Leases as Lender may reasonably require, including, but not
limited to, attestations that each Lease covered thereby is in full force and
effect with no material defaults thereunder on the part of any party, that rent
has not been paid more than one month in advance, except as security, and that
the Tenant claims no defense or offset against the full and timely performance
of its obligations under the Lease. Borrower shall not be required to deliver
such certificates more frequently than one time in any 12-month period, other
than the 12-month period during which a Securitization occurs or is attempted.
          Section 9.17. General Indemnity; Payment of Expenses; Mortgage
Recording Taxes.

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          (a) Borrower, at its sole cost and expense, shall protect, indemnify,
reimburse, defend and hold harmless Lender and its officers, partners, members,
directors, trustees, advisors, employees, agents, sub-agents, affiliates,
successors, participants and assigns of any and all of the foregoing
(collectively, the “Indemnified Parties”) for, from and against, and shall be
responsible for, any and all Damages of any kind or nature whatsoever that may
be imposed on, incurred by, or asserted against any of the Indemnified Parties
arising out of (i) any negligence or tortious act or omission on the part of
Borrower, Operating Lessee, Sponsor or any of their respective agents,
contractors, servants, employees, sublessees, licensees or invitees; (ii) any
accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(iii) any use, nonuse or condition in, on or about the Property any part thereof
or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (iv) any failure on the part of Borrower, Operating Lessee or
Sponsor to perform or comply with any of the terms of the Loan Documents;
(v) performance of any labor or services or the furnishing of any materials or
other property in respect of the Property or any part thereof; (vi) any failure
of the Property, Borrower, Operating Lessee or Sponsor to comply with any Legal
Requirements; (vii) any claim by brokers, finders or similar persons claiming to
be entitled to a commission in connection with any lease or other transaction
involving the Property or any part thereof under any legal requirement or any
liability asserted against any Indemnified Party with respect thereto; and
(viii) any and all claims and demands whatsoever that may be asserted against
any Indemnified Party by reason of any alleged obligations or undertakings on
such party’s part to perform or discharge any of the terms, covenants, or
agreements contained in any Lease, in each case, to the extent resulting,
directly or indirectly, from any claim (including any Environmental Claim) made
(whether or not in connection with any legal action, suit, or proceeding) by or
on behalf of any Person; provided, however, that no Indemnified Party shall have
the right to be indemnified hereunder to the extent that such Damages have been
found by a final, non-appealable judgment of a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of such
Indemnified Party.
          (b) If for any reason (including violation of law or public policy)
the undertakings to defend, indemnify, pay and hold harmless set forth in this
Section 9.17 are unenforceable in whole or in part or are otherwise unavailable
to Lender or insufficient to hold it harmless, then Borrower shall contribute to
the amount paid or payable by Lender as a result of any Damages the maximum
amount Borrower is permitted to pay under Legal Requirements. The obligations of
Borrower under this Section 9.17 will be in addition to any liability that
Borrower may otherwise have hereunder and under the other Loan Documents, will
extend upon the same terms and conditions to any affiliate of Lender and the
partners, members, directors, agents, employees and controlling persons (if
any), as the case may be, of Lender and any such affiliate, and will be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of Borrower, Lender, any such affiliate and any such person.
          (c) At the option of the Indemnified Parties and in their sole
discretion, upon written request by any Indemnified Party, Borrower shall defend
such Indemnified Party (if requested by any Indemnified Party, in the name of
the Indemnified Party) by attorneys and other professionals reasonably approved
by such Indemnified Party. Notwithstanding the foregoing, any Indemnified Party
may engage its own attorneys and other professionals to defend or assist it

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(chosen at Lender’s sole discretion), and, at the option of such Indemnified
Party, its attorneys shall control the resolution of any claim or proceeding.
Upon demand, Borrower shall pay or, in the sole discretion of the Indemnified
Parties, reimburse, the Indemnified Parties for the payment of reasonable and
actual fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
          (d) Any amounts payable to Lender by reason of the application of this
Section 9.17 shall be secured by the Mortgage and shall become immediately due
and payable and shall bear interest at the Default Rate from the date Damages
are sustained by the Indemnified Parties until paid.
          (e) The provisions of and undertakings and indemnification set forth
in this Section 9.17 shall survive the satisfaction and payment in full of the
Indebtedness and termination of this Agreement.
          (f) Borrower shall reimburse Lender upon receipt of written notice
from Lender for (i) all out-of-pocket costs and expenses incurred by Lender (or
any of its affiliates) in connection with the Transaction and the origination of
the Loan, including legal fees and disbursements, fees of auditors and
consultants, accounting fees, and the costs of the Appraisal, the Engineering
Report, the Qualified Title Insurance Policy, the Qualified Survey, the
Environmental Report and any other third-party diligence materials; (ii) all
out-of-pocket costs and expenses incurred by Lender (or any of its affiliates)
in connection with (A) monitoring Borrower’s ongoing performance of and
compliance with Borrower’s agreements and covenants contained in this Agreement
and the other Loan Documents on its part to be performed or complied with after
the Closing Date, including confirming compliance with environmental and
insurance requirements, (B) the negotiation, preparation, execution, delivery
and administration of any consents, amendments, waivers or other modifications
to this Agreement and the other Loan Documents and any other documents or
matters requested by Borrower or by Lender (including Leases, Material
Agreements, and Permitted Encumbrances), (C) filing, registration or recording
fees and expenses and other similar expenses incurred in creating and perfecting
the Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents (including the filing, registration or recording of any instrument of
further assurance) and all federal, state, county and municipal, taxes
(including, if applicable, intangible taxes), search fees, title insurance
premiums, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of the Loan Documents, any mortgage
supplemental thereto, any security instrument with respect to the Collateral or
any instrument of further assurance, (D) enforcing or preserving any rights, in
response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents or any Collateral and (E) the
satisfaction of the Rating Condition required or requested by Borrower
hereunder; and (iii) all actual out-of-pocket costs and expenses (including
attorney’s fees and, if the Loan has been Securitized, special servicing fees)
incurred by Lender (or any of its affiliates) in connection with the enforcement
of any obligations of Borrower, or a Default by Borrower, under the Loan
Documents, including any actual or attempted foreclosure, deed-in-lieu of
foreclosure, refinancing, restructuring, settlement or workout and any
insolvency or bankruptcy proceedings (including any applicable transfer taxes).

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          Section 9.18. No Third-Party Beneficiaries. This Agreement and the
other Loan Documents are solely for the benefit of Lender and Borrower, and
nothing contained in this Agreement or the other Loan Documents shall be deemed
to confer upon anyone other than Lender, Borrower and Indemnified Parties any
right to insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender, and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof, and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.
          Section 9.19. Recourse.
          (a) Except for any indemnification by Borrower under this Agreement or
any of the other Loan Documents, the Loan shall not be recourse to Borrower and,
subject to Section 9.19(c), Lender’s recourse shall be solely to the Property
and the Collateral, except as set forth below. In addition, no recourse shall be
had for the Loan against any other Person, including any affiliate of Borrower
or any officer, director, partner or equityholder of Borrower or any such
affiliate, unless expressly set forth in a Loan Document or other written
agreement to which such Person is a party.
          (b) Borrower shall indemnify Lender and hold Lender harmless from and
against any and all Damages to Lender (including the legal and other expenses of
enforcing the obligations of Borrower under this Section 9.19 and the Sponsor
under the Guaranty) resulting from or arising out of any of the following (the
“Indemnified Liabilities”), which Indemnified Liabilities shall be guaranteed by
Sponsor pursuant to the Guaranty:
     (i) any intentional or grossly negligent physical Waste with respect to the
Property or FF&E committed or permitted by Borrower, Operating Lessee, the
Sponsor or any of their respective affiliates;
     (ii) any fraud or intentional misrepresentation committed by Borrower,
Operating Lessee, the Sponsor or any of their respective affiliates;
     (iii) any willful misconduct by Borrower, Operating Lessee, the Sponsor or
any of their respective affiliates in violation of the Loan Documents (including
wrongful interference by any such Person with the exercise of remedies by Lender
during the continuance of an Event of Default);
     (iv) the misappropriation or misapplication by Borrower, Operating Lessee,
the Sponsor or any of their respective affiliates of any funds in violation of
the Loan Documents (including misappropriation or misapplication of Revenues,
security deposits and/or Loss Proceeds and the violation of the last sentence of
Section 5.7(d));

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     (v) voluntary Debt prohibited hereunder, provided that, for the purpose of
this clause (v), Debt will be regarded as voluntary if such Debt is incurred
voluntarily or incurred involuntarily and not repaid despite the availability of
sufficient cash flow from the Property;
     (vi) any breach by Borrower, Operating Lessee or the Sponsor of any
representation or covenant regarding environmental matters contained in this
Agreement or in the Environmental Indemnity;
     (vii) the failure to pay or maintain the Policies or pay the amount of any
deductible required thereunder following a Casualty or other insurance claim,
provided Lender permits cash flow from the Property to be applied for such
purpose;
     (viii) the failure of Borrower or Operating Lessee to be, and to at all
times have been, a Single-Purpose Entity;
     (ix) removal of personal property or FF&E from the Property during or in
anticipation of an Event of Default, unless replaced with personal property or
FF&E, as applicable, of the same utility and of the same or greater value and
utility;
     (x) any fees or commissions paid by Borrower or Operating Lessee to any
affiliate in violation of the terms of the Loan Documents;
     (xi) any bankruptcy of Borrower or Operating Lessee, provided that, for the
purpose of this clause (xi) “Damages” shall be limited to the amount by which
such costs and expenses exceed the costs and expenses Lender would have incurred
in an uncontested foreclosure on the Property (for the avoidance of doubt, the
recourse described in this clause shall be in addition to the full recourse for
bankruptcy described below);
     (xii) the failure of Borrower to maintain the required account balance in
the Borrower FF&E Account (it being agreed that Damages in such event shall
include the amount of any funds not deposited to the Borrower FF&E Account); and
     (xiii) any and all liabilities, contingent or otherwise, arising from or
related to (x) the actions, conduct and/or operating history of Borrower (or any
Person merged into Borrower) prior to the Closing Date and (y) Borrower’s
ownership (or the ownership of any Person merged into Borrower) of assets prior
to the Closing Date that do not constitute a portion of the Collateral; and
     (xiv) any breach by Borrower or Operating Lessee of any representation or
covenant contained in the Subordination of Operating Lease.
          In addition to the foregoing, the Loan shall be fully recourse to
Borrower and Sponsor, jointly and severally, upon (i) any unauthorized Transfer
of the Property, unauthorized transfer of any of the Collateral (including
unauthorized Liens and encumbrances on the Collateral) or Change of Control, in
each case, in violation of the Loan Documents, (ii) the occurrence of any filing
by Borrower or Operating Lessee under the Bankruptcy Code or any joining or
colluding

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by Borrower, Operating Lessee or any of their respective affiliates (including
Sponsor) in the filing of an involuntary case in respect of Borrower or
Operating Lessee under the Bankruptcy Code (provided, however, that if such
involuntary case is dismissed within 60 days of such filing the Loan shall not
be fully recourse to Borrower and Sponsor, however Borrower and Sponsor shall
indemnify Lender and hold Lender harmless from and against any and all Damages
to Lender arising from or related to the filing of such involuntary case) or
(iii) the failure of Borrower to be, and to at all times have been, a
Single-Purpose Entity, which failure results in a substantive consolidation of
Borrower with any affiliate in a bankruptcy or similar proceeding (or the filing
of a motion for substantive consolidation in bankruptcy citing any such failure,
provided, however, that if such motion is dismissed within 60 days of filing the
Loan shall not be fully recourse to Borrower and Sponsor, however Borrower and
Sponsor shall indemnify Lender and hold Lender harmless from and against any and
all Damages to Lender arising from or related to such motion). The Loan shall be
fully recourse to Sponsor in an amount equal to its unpaid Guaranteed
Obligations (as such term is defined in the Completion Guaranty) under the
Completion Guaranty.
          (c) The foregoing limitations on personal liability shall in no way
impair or constitute a waiver of the validity of the Notes, the Indebtedness
secured by the Collateral, or the Liens on the Collateral, or the right of
Lender, as mortgagee or secured party, to foreclose and/or enforce its rights
with respect to the Collateral after an Event of Default. Nothing in this
Agreement shall be deemed to be a waiver of any right which Lender may have
under the Bankruptcy Code to file a claim for the full amount of the debt owing
to Lender by Borrower or to require that all Collateral shall continue to secure
all of the Indebtedness owing to Lender in accordance with the Loan Documents.
Lender may seek a judgment on the Note (and, if necessary, name Borrower in such
suit) as part of judicial proceedings to foreclose under the Mortgage or to
foreclose pursuant to any other Loan Documents, or as a prerequisite to any such
foreclosure or to confirm any foreclosure or sale pursuant to power of sale
thereunder, and in the event any suit is brought on the Notes, or with respect
to any Indebtedness or any judgment rendered in such judicial proceedings, such
judgment shall constitute a Lien on and will be and can be enforced on and
against the Collateral and the rents, profits, issues, products and proceeds
thereof. Nothing in this Agreement shall impair the right of Lender to
accelerate the maturity of the Note upon the occurrence of an Event of Default,
nor shall anything in this Agreement impair or be construed to impair the right
of Lender to seek personal judgments, and to enforce all rights and remedies
under applicable law, jointly and severally against any guarantors to the extent
allowed by any applicable guarantees. The provisions set forth in this
Section 9.19 are not intended as a release or discharge of the obligations due
under the Note or under any Loan Documents, but are intended as a limitation, to
the extent provided in this Section, on Lender’s right to sue for a deficiency
or seek a personal judgment against Borrower or Sponsor except as required in
order to realize on the Collateral.
          Section 9.20. Right of Set-Off. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, during the continuance of an Event of Default,
Lender may from time to time, without presentment, demand, protest or other
notice of any kind (all of such rights being hereby expressly waived), set-off
and appropriate and apply any and all deposits (general or special) and any
other indebtedness at any time held or owing by Lender (including branches,
agencies or affiliates of Lender wherever located) to or for the credit or the
account of Borrower against the

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obligations and liabilities of Borrower to Lender hereunder, under the Notes,
the other Loan Documents or otherwise, irrespective of whether Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of Lender subsequent
thereto.
          Section 9.21. Exculpation of Lender. Lender neither undertakes nor
assumes any responsibility or duty to Borrower or any other party to select,
review, inspect, examine, supervise, pass judgment upon or inform Borrower or
any third party of (a) the existence, quality, adequacy or suitability of
Appraisals of the Property or other Collateral, (b) any environmental report, or
(c) any other matters or items, including engineering, soils and seismic reports
that are contemplated in the Loan Documents. Any such selection, review,
inspection, examination and the like, and any other due diligence conducted by
Lender, is solely for the purpose of protecting Lender’s rights under the Loan
Documents, and shall not render Lender liable to Borrower or any third party for
the existence, sufficiency, accuracy, completeness or legality thereof.
          Section 9.22. Servicer. Lender may delegate any and all rights and
obligations of Lender hereunder and under the other Loan Documents to the
Servicer upon notice by Lender to Borrower, whereupon any notice or consent from
the Servicer to Borrower, and any action by Servicer on Lender’s behalf, shall
have the same force and effect as if Servicer were Lender.
          Section 9.23. No Fiduciary Duty.
          (a) Borrower acknowledges that, in connection with this Agreement, the
other Loan Documents and the Transaction, Lender has relied upon and assumed the
accuracy and completeness of all of the financial, legal, regulatory,
accounting, tax and other information provided to, discussed with or reviewed by
Lender for such purposes, and Lender does not assume any liability therefor or
responsibility for the accuracy, completeness or independent verification
thereof. Lender, its affiliates and their respective stockholders and employees
(for purposes of this Section, the “Lending Parties”) have no obligation to
conduct any independent evaluation or appraisal of the assets or liabilities
(including any contingent, derivative or off-balance sheet assets and
liabilities) of Sponsor, Borrower or any other Person or any of their respective
affiliates or to advise or opine on any related solvency or viability issues.
          (b) It is understood and agreed that (i) the Lending Parties shall act
under this Agreement and the other Loan Documents as an independent contractor,
(ii) the Transaction is an arm’s-length commercial transactions between the
Lending Parties, on the one hand, and Borrower, on the other, (iii) each Lending
Party is acting solely as principal and not as the agent or fiduciary of
Borrower, Sponsor or their respective affiliates, stockholders, employees or
creditors or any other Person and (iv) nothing in this Agreement, the other Loan
Documents, the Transaction or otherwise shall be deemed to create (a) a
fiduciary duty (or other implied duty) on the party of any Lending Party to
Sponsor, Borrower, any of their respective affiliates, stockholders, employees
or creditors, or any other Person or (b) a fiduciary or agency relationship
between Sponsor, Borrower or any of their respective affiliates, stockholders,
employees or creditors, on the one hand, and the Lending Parties, on the other.
Borrower agrees

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that neither it nor Sponsor nor any of their respective affiliates shall make,
and hereby waives, any claim against the Lending Parties based on an assertion
that any Lending Party has rendered advisory services of any nature or respect,
or owes a fiduciary or similar duty to Borrower, Sponsor of their respective
affiliates, stockholders, employees or creditors. Nothing in this Agreement or
the other Loan Documents is intended to confer upon any other Person (including
affiliates, stockholders, employees or creditors of Borrower and Sponsor) any
rights or remedies by reason of any fiduciary or similar duty.
          (c) Borrower acknowledges that it has been advised that the Lending
Parties are a full service financial services firm engaged, either directly or
through affiliates in various activities, including securities trading,
investment banking and financial advisory, investment management, principal
investment, hedging, financing and brokerage activities and financial planning
and benefits counseling for both companies and individuals. In the ordinary
course of these activities, the Lending Parties may make or hold a broad array
of investments and actively trade debt and equity securities (or related
derivative securities) and/or financial instruments (including loans) for their
own account and for the accounts of their customers and may at any time hold
long and short positions in such securities and/or instruments. Such investment
and other activities may involve securities and instruments of affiliates of
Borrower, including Sponsor, as well as of other Persons that may (i) be
involved in transactions arising from or relating to the Transaction, (ii) be
customers or competitors of Borrower, Sponsor and/or their respective
affiliates, or (iii) have other relationships with Borrower, Sponsor and/or
their respective affiliates. In addition, the Lending Parties may provide
investment banking, underwriting and financial advisory services to such other
Persons. The Lending Parties may also co-invest with, make direct investments
in, and invest or co-invest client monies in or with funds or other investment
vehicles managed by other parties, and such funds or other investment vehicles
may trade or make investments in securities of affiliates of Borrower, including
Sponsor, or such other Persons. The Transaction may have a direct or indirect
impact on the investments, securities or instruments referred to in this
paragraph. Although the Lending Parties in the course of such other activities
and relationships may acquire information about the Transaction or other Persons
that may be the subject of the Transaction, the Lending Parties shall have no
obligation to disclose such information, or the fact that the Lending Parties
are in possession of such information, to Borrower, Sponsor or any of their
respective affiliates or to use such information on behalf of Borrower, Sponsor
or any of their respective affiliates.
          (d) Borrower acknowledges and agrees that Borrower has consulted its
own legal and financial advisors to the extent it deemed appropriate and that it
is responsible for making its own independent judgment with respect to this
Agreement, the other Loan Documents, the Transaction and the process leading
thereto.
          Section 9.24. Borrower Information. Borrower shall make available to
Lender all information concerning its business and operations that Lender may
reasonably request, provided that disclosure of such information does not and
will not violate any securities laws or violate the terms of any confidentiality
agreement between Borrower and/or any affiliate of Borrower on the one hand, and
any third party, on the other hand. Lender shall have the right to disclose any
and all information provided to Lender by Borrower or Sponsor regarding
Borrower, Sponsor, the Loan and the Property (i) to affiliates of Lender and to
Lender’s agents and advisors, (ii) to any bona fide or potential assignee,
transferee or participant in connection

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with the contemplated assignment, transfer, participation or Securitization of
all or any portion of the Loan or any participations therein or by any direct or
indirect contractual counterparties (or the professional advisors thereto) to
any swap or derivative transaction relating to Borrower and its obligations, in
each case, to the extent reasonably required by such Person, (iii) to any Rating
Agency in connection with a Securitization or as otherwise required in
connection with a disposition of the Loan, (iv) to any Person necessary or
desirable in connection with the exercise of any remedies hereunder or under any
other Loan Document, (v) to any governmental agency or representative thereof or
by the National Association of Insurance Commissioners or pursuant to legal or
judicial process and (vi) in any Disclosure Document (as defined in the
Cooperation Agreement). In addition, Lender may disclose the existence of this
Agreement and the information about this Agreement to market data collectors,
similar services providers to the lending industry, and service providers to
Lender in connection with the administration and management of this Agreement
and the other Loan Documents. Each party hereto (and each of their respective
affiliates, employees, representatives or other agents) may disclose to any and
all Persons, without limitation of any kind, the tax treatment and tax structure
of the Transaction and all materials of any kind (including opinions and other
tax analyses) that are provided to any such party relating to such tax treatment
and tax structure. For the purpose of this Section 9.24, “tax structure” means
any facts relevant to the federal income tax treatment of the Transaction but
does not include information relating to the identity of any of the parties
hereto or any of their respective affiliates.
          Section 9.25. PATRIOT Act Records. Lender hereby notifies Borrower
that pursuant to the requirements of the PATRIOT Act, it is required to obtain,
verify and record information that identifies Borrower and Sponsor, which
information includes the name and address of Borrower and Sponsor and other
information that will allow Lender to identify Borrower or Sponsor in accordance
with the PATRIOT Act.
          Section 9.26. Prior Agreements. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND THERETO IN
RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND ALL PRIOR
AGREEMENTS AMONG OR BETWEEN SUCH PARTIES, WHETHER ORAL OR WRITTEN, INCLUDING ANY
TERM SHEETS, CONFIDENTIALITY AGREEMENTS AND COMMITMENT LETTERS, ARE SUPERSEDED
BY THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT THAT ANY
ORIGINATION FEE SPECIFIED IN ANY TERM SHEET, COMMITMENT LETTER OR FEE LETTER
SHALL BE AN OBLIGATION OF BORROWER AND SHALL BE PAID AT CLOSING, AND ANY
INDEMNIFICATIONS, FLEX PROVISION, EXIT FEES AND THE LIKE PROVIDED FOR THEREIN
SHALL SURVIVE THE CLOSING).
          Section 9.27. Publicity. If the Loan is made, Lender may issue press
releases, advertisements and other promotional materials describing in general
terms or in detail Lender’s participation in such transaction, and may utilize
photographs of the Property in such promotional materials. Borrower shall not
make any references to Lender in any press release, advertisement or promotional
material issued by Borrower or Sponsor, unless Lender shall have approved of the
same in writing prior to the issuance of such press release, advertisement or
promotional material.

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          Section 9.28. Delay Not a Waiver. Neither any failure nor any delay on
the part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note or under any other Loan Document, or under any
other instrument given as security therefor, shall operate as or constitute a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement, the Note or any
other Loan Document, Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
          Section 9.29. Schedules and Exhibits Incorporated. The Schedules and
Exhibits annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.
          Section 9.30. Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.

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

            LENDER:

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

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

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