Exhibit 10.2

 

 

 

MEZZANINE A LOAN AGREEMENT

 

Dated as of May 1, 2019

 

Among

 

HIT Portfolio I Mezz, lP, as Borrower,

 

HIT PORTFOLIO I TRS HOLDCO, LLC

 

and

 

HIT 2PK TRS MEZZ, LLC, collectively, as Leasehold Pledgor,

 

and

 

MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,

 

CITIGROUP GLOBAL MARKETS REALTY CORP.,

 

DEUTSCHE BANK AG, NEW YORK BRANCH,

 

GOLDMAN SACHS MORTGAGE COMPANY, and

 

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

 

collectively, as Lender

 

 

 

 

Mezzanine Loan Agreement

 

 

TABLE OF CONTENTS

 

    Page       Article 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION 3 Section 1.1
Specific Definitions 3 Section 1.2 Index of Other Definitions 40 Section 1.3
Principles of Construction 43       Article 2 THE LOAN 44 Section 2.1 The Loan
44 2.1.1 Agreement to Lend and Borrow 44 2.1.2 Reserved 44 2.1.3 Single
Disbursement to Borrower 44 2.1.4 The Note 44 2.1.5 Use of Proceeds 45 Section
2.2 Interest Rate 45 2.2.1 Applicable Interest Rate 45 2.2.2 Default Rate 45
2.2.3 Interest Calculation 45 2.2.4 Conversion of Applicable Interest Rate 45
2.2.5 Usury Savings 49 Section 2.3 Loan Payments 49 2.3.1 Payments 49 2.3.2
Payments Generally 50 2.3.3 Payment on Maturity Date 50 2.3.4 Late Payment
Charge 50 2.3.5 Method and Place of Payment 50 Section 2.4 Prepayments 51 2.4.1
Prepayments 51 2.4.2 Voluntary Prepayments 51 2.4.3 Reserved 52 2.4.4 Mandatory
Prepayments; Option to Prepay Balance 52 2.4.5 Prepayments After Default 55
2.4.6 Prepayment/Repayment Conditions 55 Section 2.5 Release of Collateral 56
2.5.1 Release on Payment in Full 56 2.5.2 Release of Individual Property 56
2.5.3 Impaired Individual Property Release 60 Section 2.6 Interest Rate Cap
Agreement 61 2.6.1 Interest Rate Cap Agreement 61 2.6.2 Pledge and Collateral
Assignment of Interest Rate Cap Agreement 61 2.6.3 Covenants 62 2.6.4 Substitute
Interest Rate Protection Agreement 63 2.6.5 Representations and Warranties 64
2.6.6 [Reserved] 64 2.6.7 Remedies 64 2.6.8 Sales of Rate Cap Collateral 66

 

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Mezzanine Loan Agreement

 

  

2.6.9 Public Sales Not Possible 67 2.6.10 Receipt of Sale Proceeds 67 2.6.11
Replacement Interest Rate Cap Agreement 67 Section 2.7 Extension Options 67
2.7.1 Extension Options 67 2.7.2 Intentionally Omitted 69 Section 2.8 Regulatory
Change; Taxes 69 2.8.1 Increased Costs 69 2.8.2 Special Taxes 70 2.8.3 Other
Taxes 70 2.8.4 Tax Refund 70 2.8.5 Change of Office 71 Section 2.9 Letters of
Credit 71       Article 3 REPRESENTATIONS AND WARRANTIES 72 Section 3.1 Borrower
Representations 72 3.1.1 Organization; Special Purpose 72 3.1.2 Proceedings;
Enforceability 72 3.1.3 No Conflicts 73 3.1.4 Litigation 73 3.1.5 Agreements 73
3.1.6 Consents 73 3.1.7 Property; Title 74 3.1.8 ERISA; No Plan Assets 75 3.1.9
Compliance 75 3.1.10 Financial Information 76 3.1.11 Utilities and Public Access
76 3.1.12 Assignment of Leases 76 3.1.13 Insurance 77 3.1.14 Flood Zone 77
3.1.15 Physical Condition 77 3.1.16 Boundaries 77 3.1.17 Leases 78 3.1.18 Tax
Filings 78 3.1.19 No Fraudulent Transfer 79 3.1.20 Federal Reserve Regulations
79 3.1.21 Organizational Chart 79 3.1.22 Organizational Status 79 3.1.23 Entity
Diligence 79 3.1.24 No Casualty 80 3.1.25 Purchase Options 80 3.1.26 FIRPTA 80
3.1.27 Investment Company Act 80 3.1.28 Fiscal Year 80 3.1.29 Other Debt 80
3.1.30 Contracts 80 3.1.31 Full and Accurate Disclosure 81 3.1.32 Other
Obligations and Liabilities 82

 

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Mezzanine Loan Agreement

 

  

3.1.33 Intellectual Property/Websites 82 3.1.34 Ground Lease 82 3.1.35
Operations Agreement 83 3.1.36 Franchise Agreements 84 3.1.37 Illegal Activity
84 3.1.38 Property Improvement Plan 84 3.1.39 Pledged Collateral 84 3.1.40
Operating Lease 85 3.1.41 Mortgage Loan 85 3.1.42 Mortgage Borrower Company
Agreements 85 Section 3.2 Survival of Representations 85       Article 4
BORROWER COVENANTS 86 Section 4.1 Payment and Performance of Obligations 86
Section 4.2 Due on Sale and Encumbrance; Transfers of Interests 86 Section 4.3
Liens 87 Section 4.4 Special Purpose 88 Section 4.5 Existence; Compliance with
Legal Requirements 88 Section 4.6 Taxes and Other Charges; Use and Occupancy
Taxes 89 Section 4.7 Litigation 90 Section 4.8 Title to the Pledged Collateral;
Owner’s Title Policies 90 Section 4.9 Financial Reporting 91 4.9.1 Generally 91
4.9.2 Quarterly and Monthly Reports 91 4.9.3 Annual Reports 92 4.9.4 Other
Reports 92 4.9.5 Annual Budget 93 4.9.6 Excess Operating Expenses 94 4.9.7 Hotel
Accounting 95 Section 4.10 Access to Property 95 Section 4.11 Leases 95 Section
4.12 Repairs; Maintenance and Compliance; Alterations 96 4.12.1 Repairs;
Maintenance and Compliance 96 4.12.2 Alterations 97 Section 4.13 Approval of
Major Contracts 97 Section 4.14 Property Management 98 4.14.1 Management
Agreements 98 4.14.2 Prohibition Against Termination or Modification 98 4.14.3
Replacement of Manager 100 4.14.4 Brand Manager Rights 101 Section 4.15
Performance by Borrower; Compliance with Agreements 101 Section 4.16 Licenses;
Intellectual Property; Website 101 4.16.1 Licenses 101 4.16.2 Intellectual
Property 102 4.16.3 Website 102 Section 4.17 Further Assurances 102 Section 4.18
Estoppel Statement 103 Section 4.19 Notice of Default 104

 

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Mezzanine Loan Agreement

 

  

Section 4.20 Cooperate in Legal Proceedings 104 Section 4.21 Indebtedness 104
Section 4.22 Business and Operations 104 Section 4.23 Dissolution 104 Section
4.24 Debt Cancellation 105 Section 4.25 Affiliate Transactions 105 Section 4.26
No Joint Assessment 105 Section 4.27 Principal Place of Business 105 Section
4.28 Change of Name, Identity or Structure 105 Section 4.29 Costs and Expenses
106 Section 4.30 Indemnity 107 Section 4.31 ERISA 108 Section 4.32 Patriot Act
Compliance 108 Section 4.33 Ground Leases 109 Section 4.34 Hotel Covenants 112
Section 4.35 Bankruptcy Related Covenants 116 Section 4.37 Portland Property 116
Section 4.38 Non-Conforming Properties 116 Section 4.39 Notices 117      
Article 5 INSURANCE, CASUALTY AND CONDEMNATION 117 Section 5.1 Insurance 117
5.1.1 Insurance Policies 117 5.1.2 Insurance Company 122 Section 5.2 Casualty
123 Section 5.3 Condemnation 124 Section 5.4 Restoration 124       Article 6
CASH MANAGEMENT AND RESERVE FUNDS 125 Section 6.1 Cash Management Arrangements
125 Section 6.2 Reserves 125 Section 6.3 Income Taxes; Interest 125 Section 6.4
Prohibition Against Further Encumbrance 125 Section 6.5 Property Cash Flow
Allocation 125 6.5.1 Order of Priority of Funds in Deposit Account 125 6.5.2
Failure to Make Payments 126 6.5.3 Application After Event of Default 126
Section 6.6 Security Interest in Reserve Funds 126 Section 6.7 Cash Management
Agreement Upon Repayment of Mortgage Loan 126       Article 7 PERMITTED
TRANSFERS 127 Section 7.1 Loan Assumption 127 Section 7.2 Permitted Transfers
135 Section 7.3 Cost and Expenses; Copies 141 Section 7.4 Replacement Mezzanine
Loan 142       Article 8 DEFAULTS 142 Section 8.1 Events of Default 142 Section
8.2 Remedies 147

 

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Mezzanine Loan Agreement

 

  

8.2.1 Acceleration 147 8.2.2 Suspension of Lender’s Performance 147 8.2.3
Remedies Cumulative 148 8.2.4 Severance 148 8.2.5 Lender’s Right to Perform 149
      Article 9 SALE AND SECURITIZATION OF LOAN 149 Section 9.1 Sale of Loan and
Securitization 149 Section 9.2 Securitization Indemnification 153 Section 9.3
Severance 157 9.3.1 Severance Documentation 157 9.3.2 Intentionally Omitted 157
9.3.3 Cooperation; Execution; Delivery 157 Section 9.4 Uncross of Properties 158
Section 9.5 Costs and Expenses 158 Section 9.6 Confidentiality 158 Section 9.7
Compliance with Required Loan Restructurings 159       Article 10 MISCELLANEOUS
159 Section 10.1 Exculpation 159 Section 10.2 Survival; Successors and Assigns
163 Section 10.3 Lender’s Discretion; Rating Agency Review Waiver 163 Section
10.4 Governing Law 164 Section 10.5 Modification, Waiver in Writing 165 Section
10.6 Notices 165 Section 10.7 Waiver of Trial by Jury 167 Section 10.8 Headings,
Schedules and Exhibits 167 Section 10.9 Severability 167 Section 10.10
Preferences 167 Section 10.11 Waiver of Notice 168 Section 10.12 Deemed
Distributions 168 Section 10.13 Offsets, Counterclaims and Defenses 168 Section
10.14 No Joint Venture or Partnership; No Third Party Beneficiaries 168 Section
10.15 Publicity 169 Section 10.16 Waiver of Marshalling of Assets 169 Section
10.17 Certain Waivers 169 Section 10.18 Conflict; Construction of Documents;
Reliance 169 Section 10.19 Brokers and Financial Advisors 170 Section 10.20
Prior Agreements 170 Section 10.21 Servicer 170 Section 10.22 Intentionally
Omitted 171 Section 10.23 [Reserved] 171 Section 10.24 Creation of Security
Interest 171 Section 10.25 Assignments and Participations 171 Section 10.26
Counterparts 171 Section 10.27 Set-Off 172 Section 10.28 [Reserved] 172 Section
10.29 Intercreditor Agreement 172

 

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Mezzanine Loan Agreement

 

  

Section 10.30 Note Register; Participant Register 172 Section 10.31 Borrower
Affiliate Lender 173 Section 10.32 Acknowledgement and Consent to Bail-In of EEA
Financial Institutions 174 Section 10.33 Co-Lenders 175 Section 10.34 Patriot
Act Notice 175       Article 11 Mortgage Loan 176 Section 11.1 Compliance With
Mortgage Loan Documents 176 Section 11.2 Mortgage Loan Defaults 176 Section 11.3
Mortgage Loan Estoppels 177 Section 11.4 No Amendment to Mortgage Loan
Documents; Consents and Approvals 177 Section 11.5 Refinancing or Prepayment of
the Mortgage Loan 178 Section 11.6 Special Distributions 178 Section 11.7
Purchase of Mortgage Loan 178 Section 11.8 Communication with Mortgage Lender
178 Section 11.9 Duplicative Performance Not Required 178 Section 11.10
Compliance with Required Loan Restructurings 179 Section 11.11 Limitation on
Securities Issuance 179 Section 11.12 Other Limitations 179 Section 11.13
Independent Approval Rights 179

 

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Mezzanine Loan Agreement

 

 

SCHEDULES AND EXHIBITS

 

Schedules:

 

Schedule I - Individual Properties and Allocated Loan Amounts Schedule I-M1 -
Mortgage Loan Allocated Loan Amounts Schedule I-M2 - Mezzanine B Allocated Loan
Amounts Schedule I-M3 - Approved Mezzanine Allocated Loan Amounts Schedule II-A
- Owner Schedule II-B - Operating Lessee Schedule III - Organizational Chart of
Borrower and Tax ID Numbers Schedule IV - Exceptions to Representations and
Warranties Schedule V - Definition of Special Purpose Bankruptcy Remote Entity
Schedule V-I - Definition of Mortgage Loan Special Purpose Bankruptcy Remote
Entity Schedule VI - Intellectual Property/Websites Schedule VII - REAs Schedule
VIII - Ground Lease Schedule IX - Description of Prior Loans Schedule X -
Scheduled Managers Schedule XI - Rent Roll Schedule XII - Franchise Agreements
Schedule XIII - Pledged Collateral Schedule XIV - Hotel Companies/Approved
Brands Schedule XV - [Reserved] Schedule XVI - Non-Conforming Properties
Schedule XVII - [Reserved] Schedule XVIII - Scheduled PIP Schedule XIX -
Divested Properties Schedule XX - Major Contracts Schedule XXI - Red Zone
Properties

 

Exhibits:

 

Exhibit A - Secondary Market Transaction Information

 

 -7-

Mezzanine Loan Agreement

 

  

MEZZANINE A LOAN AGREEMENT

 

THIS MEZZANINE A LOAN AGREEMENT, dated as of May 1, 2019 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
“Agreement”), among MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York
limited liability company, having an address at 1585 Broadway, 25th Floor, New
York, New York 10036 (together with its successors and/or assigns, “MS”),
CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation, having an address
at 388 Greenwich Street, 6th Floor, New York, New York 10013 (together with its
successors and/or assigns, “Citi”), DEUTSCHE BANK AG, NEW YORK BRANCH, a branch
of Deutsche Bank AG, a German bank authorized by the New York Department of
Financial Services, having an address at 60 Wall Street, 10th Floor, New York,
New York 10005 (together with its successors and/or assigns, “DBNY”), GOLDMAN
SACHS MORTGAGE COMPANY, a New York limited partnership, having an address at 200
West Street, New York, New York 10282 (together with its successors and/or
assigns, “GS”), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a banking
association chartered under the laws of the United States of America, having an
address at 383 Madison Avenue, New York, New York 10179 ((together with its
successors and/or assigns, “JPM” and together with MS, Citi, DBNY and GS and
each of their respective successors and/or assigns, collectively, “Lender”), HIT
Portfolio I Mezz, lp, a Delaware limited partnership, having an address at c/o
Hospitality Investors Trust, Inc., 3950 University Drive, Fairfax, Virginia
22030 (together with its permitted successors and assigns, “Borrower), HIT
PORTFOLIO I TRS HOLDCO, LLC and HIT 2PK TRS MEZZ, LLC, each a Delaware limited
liability company, each having an address at c/o Hospitality Investors Trust,
Inc., 3950 University Drive, Fairfax, Virginia 22030 (together with their
respective permitted successors and assigns, collectively, “Leasehold Pledgor”,
and together with Borrower, individually or collectively, as the context may
require, “Pledgor”).

 

All capitalized terms used herein shall have the respective meanings set forth
in Article 1 hereof.

 

WITNESSETH:

 

WHEREAS, Morgan Stanley Bank, N.A., a national banking association, Citi Real
Estate Funding Inc., a New York corporation, Deutsche Bank AG, New York Branch,
a branch of Deutsche Bank AG, a German bank authorized by the New York
Department of Financial Services, Goldman Sachs Mortgage Company, a New York
limited partnership, and JPMorgan Chase Bank, National Association, a banking
association chartered under the laws of the United States of America (together
with their respective successors and/or assigns, collectively, “Mortgage
Lender”), has made a loan in the original principal amount of Eight Hundred
Seventy Million and No/100 Dollars ($870,000,000.00) (the “Mortgage Loan”) to
those certain entities listed on Schedule II-A attached hereto (individually and
collectively as the context may require, together with their respective
permitted successors and assigns “Owner”) pursuant to a Loan Agreement of even
date herewith (as amended, supplemented or otherwise modified from time to time,
the “Mortgage Loan Agreement”), which Mortgage Loan is evidenced by the Mortgage
Note (as defined below) and secured by, among other things, certain first
priority mortgages and deeds of trust, each of even date herewith (collectively,
as amended, supplemented or otherwise modified from time to time, the
“Mortgage”) by Operating Lessee (as defined herein) and each respective Owner in
favor of Mortgage Lender pursuant to which Operating Lessee and Owner have
granted the Mortgage Lender a first priority mortgage on, among other things,
the Properties (as defined below);

 

 -1-Mezzanine Loan Agreement

 

 

WHEREAS, Borrower is the legal and beneficial owner of (i) all of the issued and
outstanding limited liability company interests in HIT Portfolio I NTC Owner GP,
LLC, a Delaware limited liability company (“Fee General Partner”), and (ii) all
of the issued and outstanding limited partner interests and limited liability
company interests in Owner, representing 100% of the equity interests in the
Individual Owners that are limited liability companies and 99% of the equity
interests in the Individual Owners that are limited partnerships;

 

WHEREAS, Leasehold Pledgor is the legal and beneficial owner of (i) all of the
issued and outstanding limited liability company interests in HIT Portfolio I
NTC TRS GP, LLC (“NTC TRS GP”), (ii) all of the issued and outstanding limited
liability company interests in HIT Portfolio I 8PK NTC TRS GP, LLC (“8PK NTC TRS
GP” and together with NTC TRS GP, collectively, “Leasehold General Partner”),
and (iii) all of the issued and outstanding limited partner interests and
limited liability company interests in Operating Lessee, representing 100% of
the equity interests in the Individual Operating Lessees that are limited
liability companies and 99% of the equity interests in the Individual Operating
Lessees that are limited partnerships;

 

WHEREAS, Fee General Partner is the legal and beneficial owner of all of the
issued and outstanding general partner interests in Owner, representing 1% of
the equity interests in the Individual Owners that are limited partnerships;

 

WHEREAS, Leasehold General Partner is the legal and beneficial owner of all of
the issued and outstanding general partner interests in Operating Lessee,
representing 1% of the equity interests in the Individual Operating Lessees that
are limited partnerships;

 

WHEREAS, Borrower has requested Lender to make a loan to it in the original
principal amount of One Hundred Million and No/100 Dollars ($100,000,000.00)
(the “Loan”); and

 

WHEREAS, as a condition precedent to the obligation of Lender to make the Loan
to Borrower, Pledgor has entered into that certain Mezzanine A Pledge and
Security Agreement, dated as of the date hereof, in favor of Lender (as amended,
supplemented or otherwise modified from time to time, the “Pledge Agreement”),
pursuant to which Pledgor has granted to Lender a first priority security
interest in the Collateral (as hereinafter defined) as collateral security for
the Debt (as hereinafter defined).

 

NOW, THEREFORE, in consideration of the foregoing recitals, the making of the
Loan by Lender, the covenants, agreements, representations and warranties set
forth in this Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree, represent and warrant as follows:

 

 -2-Mezzanine Loan Agreement

 

 

Article 1

 

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1          Specific Definitions.

 

For all purposes of this Agreement, except as otherwise expressly provided:

 

“Acceptable Accounting Method” shall mean (i) GAAP, (ii) a federal income tax
basis of accounting, (iii) the Uniform System of Accounts, or (iv) such other
accounting basis reasonably acceptable to Lender, in each case consistently
applied.

 

“Acknowledgment” shall mean the Acknowledgment, dated on or about the date
hereof made by Counterparty, or as applicable, Approved Counterparty.

 

“Additional Insolvency Opinion” shall mean any bankruptcy non-consolidation
opinion that would be satisfactory to a prudent lender acting reasonably and is
required to be delivered subsequent to the Closing Date pursuant to, and in
connection with, the Loan Documents.

 

“Affiliate” shall mean, as to any Person, any other Person that either (or both)
(a) is in Control of, is Controlled by or is under common ownership or Control
with such Person or is a director or officer of such Person or of an Affiliate
of such Person, and/or (b) owns directly or indirectly thirty-five percent (35%)
or more of the equity interests in such Person.

 

“Aggregate Principal Balance” shall mean the sum of the Outstanding Principal
Balance, plus the Outstanding Mortgage Principal Balance, plus the Outstanding
Mezzanine B Principal Balance.

 

“Allocated Loan Amount” shall mean, for each Individual Property, the amount set
forth on Schedule I attached hereto.

 

“Alteration Threshold” shall mean (a) with respect to any Individual Property
undergoing an alteration and/or a Restoration and/or subject to Flagging Costs,
an amount equal to $1,000,000, and (b) with respect to all Individual Properties
undergoing alterations and/or Restorations and/or subject to Flagging Costs, an
aggregate amount equal to five percent (5%) of the Outstanding Principal
Balance, in each case excepting alterations made pursuant to an Approved Annual
Budget, Approved Alterations or as otherwise reasonably approved by the Lender.

 

“Annual Budget” shall mean the operating and capital budget for the Properties,
setting forth, on a month-by-month basis, in reasonable detail, each line item
of Owner’s good faith estimate of anticipated Operating Income, Operating
Expenses and Capital Expenditures for the Properties for the applicable Fiscal
Year.

 

“Annual Debt Service” shall mean, as of any date of determination, the Debt
Service payable during the one-year period occurring from and after such date of
determination calculated by assuming that (a) the Outstanding Principal Balance
at all times during such period is equal to the Outstanding Principal Balance as
of the date of determination (taking into account any prepayments that occur on
such date in accordance with this Agreement) and (b) LIBOR (or the Prime Rate or
the Substitute Base Rate, as applicable) at all times during such period is
equal to either (i) in connection with Borrower’s exercise of an Extension
Option hereunder, the Strike Price of the proposed Replacement Interest Rate Cap
Agreement (or the Substitute Interest Rate Protection Agreement, as applicable)
to be entered into by Borrower in connection with its exercise of such Extension
Option or (ii) otherwise, the Strike Price of the Interest Rate Cap Agreement in
place as of such date of determination.

 

 -3-Mezzanine Loan Agreement

 

 

“Applicable Interest Rate” shall mean a rate per annum equal to, as applicable,
(a) the LIBOR Interest Rate plus the Applicable Spread with respect to any
period when the Loan is a LIBOR Loan, (b) the Substitute Base Rate plus the
Substitute Rate Spread for the Loan with respect to any period when the Loan is
a Substitute Rate Loan and (c) the Prime Rate plus the Base Rate Spread for the
Loan with respect to any period when the Loan is a Base Rate Loan.

 

“Applicable Interest Rate Conversion” shall mean the conversion of the
Applicable Interest Rate for the Loan between the LIBOR Interest Rate, the Base
Rate and/or the Substitute Rate, as applicable.

 

“Applicable Lending Office” shall mean the “lending office” of Lender (or of an
Affiliate of Lender) designated for Lender on the signature page hereof or such
other office of Lender (or an Affiliate of Lender) as Lender may from time to
time specify to Borrower in writing as the office by which the Loan is to be
made and/or maintained by Lender.

 

“Applicable Spread” shall mean 5.6000%.

 

“Approved Alterations” shall have the meaning set forth in the definition of
“Material Alterations”.

 

“Approved Bank” shall mean a bank or other financial institution, the long-term
unsecured debt rating of which are at least “A” by S&P and Fitch and “A2” by
Moody’s and the short-term unsecured debt ratings of which are at least “A-1” by
S&P, “F1” by Fitch and “P-1” by Moody’s.

 

“Approved Brand” shall mean, for an Individual Property, any of the hotel brands
identified on Schedule XIV or such other brand as is approved by Lender and
Mortgage Lender with respect to such Individual Property, such approval not to
be unreasonably withheld, conditioned or delayed; provided, that in order for a
hotel brand to be deemed an Approved Brand with respect to any Individual
Property, such hotel brand shall also satisfy the Approved Brand Requirements
with respect to such Individual Property (unless expressly exempted from
satisfying the Approved Brand Requirements pursuant to the definition of such
term).

 

“Approved Brand Requirements” shall mean, with respect to any Individual
Property that is being reflagged under a new Franchise Agreement pursuant to
Section 4.34(d) or (e), that the hotel brand of the hotel located at such
Individual Property meets or exceeds the STR Chain Scale classification of the
hotel brand that was in place on the Closing Date with respect to such
Individual Property; provided, however, that the Approved Brand Requirements
need not be satisfied with respect to the following: up to an aggregate of 5% of
all Individual Properties as they exist as of the Closing Date, which 5% shall
include, without limitation, hotels reflagged as Red Roof Inn, Red Lion or La
Quinta, (measured by Mortgage Loan Allocated Loan Amount, i.e., the Approved
Brand Requirements need not be satisfied for an Individual Property if, after
such reflagging, the aggregate of the Mortgage Loan Allocated Loan Amounts for
all Individual Properties reflagged not in compliance with the Approved Brand
Requirements expressed as a percentage of the aggregate of the Mortgage Loan
Allocated Loan Amounts for all Individual Properties as they exist as of the
Closing Date, is less than or equal to, but not in excess of, 5%).

 

 -4-Mezzanine Loan Agreement

 

 

“Approved Capital Expenditures” shall mean Capital Expenditures incurred by
Owner and either (i) included in the Approved Annual Budget or (ii) approved by
Lender and Mortgage Lender, which approval shall not be unreasonably withheld,
conditioned or delayed, provided that any Capital Expenditures included in FF&E
Expenses or PIP Expenses shall not constitute Approved Capital Expenditures.

 

“Approved Counterparty” shall mean a bank or other financial institution which
either (I) has (or provides a guarantor of its obligations that has) a long-term
unsecured debt rating of not less than “A3” by Moody’s or such lower rating
which Moody’s shall acknowledge is credit neutral with respect to the
Securitization of the Loan or any portion thereof; or (II) is otherwise
acceptable to the Rating Agencies, as evidenced by a Rating Agency Confirmation
to the effect that such counterparty shall not cause a downgrade withdrawal or
qualification of the ratings assigned, or to be assigned, to the Securities or
any class thereof in any Securitization; provided however, that SMBC Capital
Markets, Inc. (with an Acceptable SMBC Credit Support Party as its credit
support party) will be an Approved Counterparty so long as the rating of its
credit support party (provided such credit support party shall be an Acceptable
SMBC Credit Support Party ) is not downgraded, withdrawn or qualified by S&P or
Moody’s or Fitch (if applicable) from the long and short term ratings issued by
such rating agencies below the lesser of the above rating (as applicable) or its
ratings as of the date hereof. As used herein, an “Acceptable SMBC Credit
Support Party” shall mean (i) Sumitomo Mitsui Banking Corporation or a
replacement guarantor that meets the foregoing rating requirements and provides
a guaranty on substantially the same form as the guaranty provided by Sumitomo
Mitsui Banking Corporation on the Closing Date and (ii) provided any such credit
support party guaranty guaranties all current and future obligations under the
Interest Rate Cap Agreement or Replacement Interest Rate Cap Agreement, as
applicable.

 

“Approved FF&E Expenses” shall mean FF&E Expenses incurred by Owner and either
(a) included in the Approved Annual Budget or (b) approved by Lender and
Mortgage Lender, which approval shall not be unreasonably withheld, conditioned
or delayed; provided that any FF&E Expenses included in Approved Scheduled PIP
Expenses shall not constitute Approved FF&E Expenses.

 

“Approved Flagging Budget” shall mean a budget of Flagging Costs for any
Individual Property under any Franchise Agreement which has been approved or
deemed approved by Lender, or for which approval is not required, in accordance
with Section 4.34(d) or (e).

 

“Approved Mezzanine Allocated Loan Amount” shall mean, as to any Individual
Property, the product of (a) the maximum stated principal amount of the Approved
Mezzanine Loan, multiplied by (b) a fraction, the numerator of which is the
Allocated Loan Amount for such Individual Property, and the denominator of which
is the sum of the Allocated Loan Amounts for all Individual Properties remaining
as of the Approved Mezzanine Closing Date. The Approved Mezzanine Allocated Loan
Amount for each Individual Property shall be established as of the Approved
Mezzanine Closing Date, and a copy of the schedule setting forth all Approved
Mezzanine Allocated Loan Amounts shall be attached hereto as Schedule I-M3 upon
the Approved Mezzanine Closing Date.

 

 -5-Mezzanine Loan Agreement

 

 

“Approved Mezzanine Closing Date” shall mean the earliest date on which any
portion of the Approved Mezzanine Loan is funded by Approved Mezzanine Lender.

 

“Approved Mezzanine Lender” shall mean a Person who, as of the Approved
Mezzanine Loan Closing Date, is a Qualified Mezzanine Lender (together with its
successors and assigns). If the Approved Mezzanine Loan has two or more
co-lenders, then “Approved Mezzanine Lender” shall mean, individually or
collectively as the context requires, each lender or co-lender under the
Approved Mezzanine Loan.

 

“Approved Mezzanine Loan” shall mean a loan from Approved Mezzanine Lender to
Mezzanine B Borrower, which Approved Mezzanine Loan, as of the Approved
Mezzanine Loan Closing Date, satisfies the following conditions: (a) the
Original Mezzanine B Loan has been paid in full, including the payment of any
Spread Maintenance Premium (as defined in the Original Mezzanine B Loan
Agreement), if any; (b) the Approved Mezzanine Loan will be in a maximum
principal amount not to exceed the Outstanding Mezzanine B Principal Balance on
the date immediately prior to the date of repayment in full of the Original
Mezzanine B Loan; (c) after taking into account the Approved Mezzanine Loan, the
Aggregate LTV shall be equal to or less than the Aggregate LTV on the Closing
Date which the parties agree is 80.9%, (d) after taking into account the
Approved Mezzanine Loan, the Debt Yield shall be equal to or greater than the
Debt Yield immediately prior to the time the Original Mezzanine B Loan was
repaid; (e) after taking into account the Approved Mezzanine Loan, the Debt
Service Coverage Ratio shall be equal to or greater than the Debt Service
Coverage Ratio immediately prior to the time the Original Mezzanine B Loan was
repaid; (f) if the Approved Mezzanine Loan bears a floating rate of interest,
Mezzanine B Borrower shall have obtained an interest rate cap agreement
consistent with the requirements of an Interest Rate Cap Agreement under the
Original Mezzanine B Loan Agreement and having a term that expires no earlier
than the initial maturity date of the Approved Mezzanine Loan, the strike price
of which shall be set so as to satisfy the applicable provisions of the Original
Mezzanine B Loan Agreement; (g) the Approved Mezzanine Loan will be secured by
an equity pledge encumbering the direct ownership interests of Mezzanine B
Borrower in Borrower, HIT Portfolio I Mezz GP, LLC, and Leasehold Pledgor, as
applicable, and such other assets of Mezzanine B Borrower as may be specified in
the Approved Mezzanine Loan Documents (but will not be secured by any collateral
securing the Loan or the Mortgage Loan); (h) the Approved Mezzanine Loan will be
coterminous with the Loan and the Mortgage Loan (including with respect to the
initial maturity date and all extended maturity dates hereunder and thereunder)
or shall be freely prepayable from and after the Initial Stated Maturity Date
and will have monthly payment dates on the same days as the Monthly Payment
Dates hereunder; (i) the material economic terms of the Approved Mezzanine Loan
shall be substantially similar to the economic terms of the Original Mezzanine B
Loan or otherwise reasonably acceptable to Lender, (j) Approved Mezzanine Lender
shall enter into an intercreditor agreement with Lender and Mortgage Lender
reasonably satisfactory in all respects to Lender and Mortgage Lender and
satisfactory in all respects to any Rating Agencies, (provided that an
intercreditor agreement substantially in the form as that entered into between
Lender, Mortgage Lender and Original Mezzanine B Lender with such changes as are
acceptable to Lender, Mortgage Lender and the Rating Agencies shall be deemed
reasonably satisfactory to Lender and Mortgage Lender and satisfactory to the
Rating Agencies) which intercreditor agreement shall, among other things,
provide that before Approved Mezzanine Lender (or its designee) may foreclose on
the pledged equity interests or otherwise take control of Borrower and Leasehold
Pledgor as applicable, an acceptable replacement guarantor (which replacement
guarantor shall be deemed acceptable if such replacement guarantor would satisfy
the requirements for a Replacement Guarantor under Section 7.1(a)(xiii) hereof
if such guaranty were being delivered in connection with a Permitted Direct
Assumption) shall deliver replacement environmental indemnity and guaranties of
recourse obligations (in form and substance substantially the same as the
Environmental Indemnity and the Guaranty) to Lender, (k) the Approved Mezzanine
Loan Documents shall be reasonably satisfactory to Lender (provided that
Approved Mezzanine Loan Documents substantially in the form as the Original
Mezzanine B Loan Documents shall be deemed reasonably satisfactory to Lender),
(l) Lender shall have obtained a Rating Agency Confirmation with respect to the
Approved Mezzanine Loan, (m) the Approved Mezzanine Loan shall be interest only,
(n) the Approved Mezzanine Lender shall be a Qualified Mezzanine Lender, and (o)
the Approved Mezzanine Loan shall be structured as no more than one tranche, and
in no event shall the Approved Mezzanine Loan be more senior in priority to the
Loan or the Mortgage Loan. All reasonable out-of-pocket costs and expenses
incurred by Lender in connection with any Approved Mezzanine Loan (including,
without limitation, reasonable legal fees) shall be the sole obligation of
Borrower.

 

 -6-Mezzanine Loan Agreement

 

 

“Approved Mezzanine Loan Agreement” shall mean the loan agreement to be entered
into between Approved Mezzanine Lender and Mezzanine B Borrower in connection
with the origination of the Approved Mezzanine Loan, which loan agreement shall
govern the terms and conditions of the Approved Mezzanine Loan, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

“Approved Mezzanine Loan Documents” shall mean all documents evidencing,
securing, guaranteeing and/or perfecting the Approved Mezzanine Loan (and all
tranches thereof) and all documents executed and/or delivered in connection
therewith.

 

“Approved Mezzanine Monthly Debt Service Payment Amount” shall mean, for each
Monthly Payment Date, an amount equal to the amount of (i) non-default interest
which is then due on the Approved Mezzanine Loan under the Approved Mezzanine
Loan Documents for the Interest Period during which such Monthly Payment Date
occurs, plus (ii) the amount of any default interest and/or late fees then due
and owing to Approved Mezzanine Lender by Mezzanine B Borrower under the
Approved Mezzanine Loan Documents.

 

“Approved Mezzanine Release Amount” shall mean, as to any Individual Property
that is subject to a release and associated partial prepayment of the Loan
pursuant to Section 2.4 and Section 2.5.2, the product of (x) the Release Amount
Percentage multiplied by (y) the Approved Mezzanine Allocated Loan Amount for
such Individual Property.

 

“Approved Operating Expenses” shall mean Operating Expenses incurred by Owner or
by any Manager on Owner’s behalf (excluding any Restricted Payments) which (i)
are included in the Approved Annual Budget for the current calendar month, (ii)
are for real estate taxes, insurance premiums, electric, gas, oil, water, sewer
or other utility service to the Properties, (iii) are for Management Fees, or
(iv) have been approved in writing by Lender and Mortgage Lender as Approved
Operating Expenses; provided, however, that Approved Operating Expenses shall
also include, for any calendar month in which Operating Expenses exceed the
Monthly Operating Expense Budgeted Amount, the amount of such excess Operating
Expenses up to and not to exceed ten percent (10%) of the Monthly Operating
Expense Budgeted Amount for such calendar month as to which Owner provides to
Lender a reasonably detailed explanation of the reasons for and expenditures
resulting in Operating Expenses exceeding the Monthly Operating Expense Amount.

 

 -7-Mezzanine Loan Agreement

 

 

“Approved Scheduled PIP Expenses” shall mean PIP Expenses incurred by Owner for
Scheduled PIP for any Individual Property in the amount not to exceed the amount
budgeted for PIP Expenses for such Individual Property as set forth on
Schedule XVIII (the foregoing budgets for Scheduled PIP for any Individual
Property, as modified from time to time with the approval of Lender and Mortgage
Lender, which approval shall not be unreasonably withheld, conditioned or
delayed, the “Approved Scheduled PIP Budget” for such Individual Property) and
Flagging Costs that are permitted hereunder.

 

“Assignment of Interest Rate Cap Agreement” shall mean that certain Mezzanine A
Collateral Assignment of Interest Rate Cap Agreement dated as of the date
hereof, from Borrower, as assignor, to Lender, as assignee, as the same may be
amended, restated, extended, renewed, supplemented or otherwise modified from
time to time.

 

“Assignment of Leases” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Assignment of Management Agreement” shall have the meaning given to such term
in the Mortgage Loan Agreement.

 

“Assignments of Title Insurance Proceeds” shall mean, that certain Mezzanine A
Assignment of Title Insurance Proceeds, dated as of the date hereof, by Borrower
to Lender, as the same may be amended, restated, extended, renewed, supplemented
or otherwise modified from time to time.

 

“Assumption” shall mean a Permitted Direct Assumption or a Permitted Indirect
Assumption.

 

“Assumption Fee” shall mean Borrower’s Allocation of (a) an assumption fee equal
to $250,000 if no material modifications to the Loan Documents are required in
connection with the Assumption or (b) $350,000 if material modifications to the
Loan Documents are required in connection with the Assumption.

 

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

 

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy”, as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
or any other federal or state bankruptcy or insolvency law, and any comparable
foreign laws relating to bankruptcy, insolvency or creditors’ rights.

 

“Base Management Fees” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

 -8-Mezzanine Loan Agreement

 

 

“Base Rate” shall mean, with respect to each Interest Period that occurs while
the Loan is a Base Rate Loan, a per annum interest rate equal to (a) the Prime
Rate as of the related Interest Determination Date plus (b) the Base Rate Spread
for the Loan; provided, however, in no event shall the Base Rate for the Loan be
less than the Index Floor plus the Applicable Spread for the Loan.

 

“Base Rate Loan” shall mean the Loan at any time in which the Applicable
Interest Rate for the Loan is calculated at the Base Rate.

 

“Base Rate Spread” shall mean, in connection with the conversion of the Loan
from a LIBOR Loan or a Substitute Rate Loan to a Base Rate Loan, the difference
(expressed as the number of basis points) between (a) LIBOR plus the Applicable
Spread or the Substitute Base Rate plus the Substitute Rate Spread, as
applicable, as of the Interest Determination Date that LIBOR or the Substitute
Base Rate, as applicable, was last utilized to determine the interest rate of
the Loan minus (b) the Prime Rate as of such Interest Determination Date;
provided, however, that if such difference is a negative number, then the Base
Rate Spread shall be zero.

 

“Birmingham Property” shall mean that certain Individual Property with an
address of 2731 US Highway 280, Birmingham, Alabama 35223.

 

“BK Cap” means the product of (i) the outstanding principal amount of the Loan
plus any interest accrued and unpaid on the Loan multiplied, by (ii) 0.20, plus
Lender’s actual out-of-pocket costs and expenses (including attorneys’ fees).

 

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

 

“Borrower Operating Agreement” shall mean that certain amended and restated
limited partnership agreement of Borrower, dated as of the date hereof, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.

 

“Borrower’s Allocation” shall mean a fraction, expressed as a percentage, the
numerator of which is the outstanding principal balance of the Loan and the
denominator of which is the aggregate principal balance of the Loan, the
Mortgage Loan and the Mezzanine B Loan.

 

Brand Manager” shall mean collectively, each of Embassy Suites Management LLC,
Hampton Inns Management LLC, Homewood Suites Management LLC, Hilton Worldwide or
any Affiliate of Hilton Worldwide, Marriott International Inc. or any Affiliate
of Marriott International, Inc., Hyatt Hotels Corporation or any Affiliate of
Hyatt Hotels Corporation or Starwood Hotels and Resorts Worldwide, Inc. or any
Affiliate of Starwood Hotels and Resorts Worldwide, Inc.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal
holiday on which national banks are not open for general business in (i) the
State of New York, (ii) the State where the corporate trust office of the
Trustee is located or (iii) the State where the servicing offices of the
Servicer are located.

 

“Calculation Date” shall mean the last day of each calendar quarter during the
Term.

 

 -9-Mezzanine Loan Agreement

 

 

“Capital Expenditures” shall mean, for any period, the amount incurred for items
capitalized under GAAP and the Uniform System of Accounts (including
expenditures for building improvements or major repairs).

 

“Capped LIBOR Rate” shall mean (i) during the initial term of the Loan, (A) for
such time the Loan is a LIBOR Loan, four percent (4.0%), (B) for such time the
Loan is a Base Rate Loan, a strike rate determined as of the date of purchase of
the Substitute Interest Rate Protection Agreement which is expressed as a
percentage equal to the difference between (1) the strike rate set forth in
clause (A) immediately preceding minus (2) the positive or negative difference
of (x) the weighted average of the Base Rate Spread minus (y) the weighted
average of the Applicable Spread (for the avoidance of doubt, it being agreed by
the parties that if this clause (2) results in a negative number, such amount is
added to the strike rate, and if this clause (2) results in a positive number,
such amount is subtracted from the strike rate), (C) for such time the Loan is a
Substitute Rate Loan, a strike rate determined as of the date of purchase of the
Interest Rate Cap Agreement which is expressed as a percentage equal to the
difference between (1) the strike rate set forth in clause (A) minus (2) the
positive or negative difference of (x) the weighted average of the Substitute
Rate Spread minus (y) the weighted average of the Applicable Spread (for the
avoidance of doubt, it being agreed by the parties that if this clause (2)
results in a negative number, such amount is added to the strike rate, and if
this clause (2) results in a positive number, such amount is subtracted from the
strike rate), and (ii) during each Extended Term, the strike price such that the
Debt Service Coverage Ratio as of the first day of such Extended Term is not
less than 1.05x.

 

“Cash Management Agreement” shall have the meaning set forth in the Mortgage
Loan Agreement.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority, (c) adjustments to the Regulation D reserve requirements
(including, without limitation, all basic, marginal, emergency, supplemental,
special or other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) announced by the Federal
Reserve Board of Governors, or (d) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (ii) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in the
case of both clauses (i) and (ii) be deemed to be a “Change in Law”, regardless
of the date enacted, adopted or issued (regardless of whether currently in force
and effect).

 

“Change of Control Flagging Costs” shall have the meaning set forth in the
Mortgage Loan Agreement.

 

“Closing Date” shall mean May 1, 2019.

 

 -10-Mezzanine Loan Agreement

 

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, and as it may
be further amended from time to time, any successor statutes thereto,
U.S. Department of Treasury regulations issued pursuant thereto in temporary or
final form, and other guidance published by the Internal Revenue Service on
which taxpayers may rely.

 

“Collateral” shall mean all collateral securing or intended to secure the Debt,
including the Pledged Collateral.

 

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

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Special Taxes
or branch profits Special Taxes.

 

“Contractual Obligation” shall mean as to any Person, any provision of any
security issued by such Person or of any other agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound, or any provision of the foregoing.

 

“Control” shall mean, with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, through the ownership of voting securities, by contract
or otherwise, and the terms Controlled, Controlling and Common Control shall
have correlative meanings.

 

“Control Party Asset Threshold” shall mean the ownership of total real estate
assets in the United States or Canada (in name or under management) in excess of
$1,000,000,000 and a capital/statutory surplus or shareholder equity in excess
of $400,000,000.

 

“Conversion Date” shall mean the effective date of the Applicable Interest Rate
Conversion.

 

“Conversion Notice” shall mean a notice given by Lender to Borrower in
accordance with Section 10.6 hereof notifying the Borrower of the occurrence of
an event triggering an Applicable Interest Rate Conversion and which notice:

 

(i)          sets forth the circumstances of the Applicable Interest Rate
Conversion in reasonable detail; and

 

(ii)         includes the requirements required to be satisfied in connection
with such Applicable Interest Rate Conversion as described in Section 2.2.4
hereof.

 

“Counterparty” shall mean, with respect to the Interest Rate Cap Agreement, SMBC
Capital Markets, Inc. and with respect to any Replacement Interest Rate Cap
Agreement, any Approved Counterparty thereunder.

 

“Dallas Courtyard Property” shall mean that certain Individual Property with an
address of 2150 Market Center Boulevard, Dallas, Texas 75207.

 

 -11-Mezzanine Loan Agreement

 

 

 

“Debt” shall mean the Outstanding Principal Balance together with all interest
accrued and unpaid thereon and all other sums (including any Spread Maintenance
Premium, if applicable) due to Lender from time to time in respect of the Loan
under the Note, this Agreement, the Pledge Agreement, the Environmental
Indemnity or any other Loan Document.

 

“Debt Service” shall mean, with respect to any particular period, the scheduled
interest payments due under the Note in such period.

 

“Debt Service Coverage Ratio” shall mean, as of any date of determination, a
ratio in which:

 

(a)          the numerator is the Underwritten Net Cash Flow as of such date of
determination; and

 

(b)          the denominator is the sum, as of such date of determination, of
the Annual Debt Service plus the Mortgage Annual Debt Service plus the Mezzanine
B Annual Debt Service.

 

“Debt Yield” shall mean, as of any date of determination, a fraction, expressed
as a percentage (i.e. 0.10 = 10%), which is obtained by dividing:

 

(a)          the Underwritten Net Cash Flow as of such date of determination; by

 

(b)          the Aggregate Principal Balance.

 

“Debt Yield Cure Level” shall mean a Debt Yield of (i) at any time prior to the
Initial Stated Maturity Date, eight percent (8.0%) and (ii) from and after the
Initial Stated Maturity Date, eight and one-half percent (8.50%).

 

“Debt Yield Trigger Level” shall mean a Debt Yield of (i) at any time prior to
the Initial Stated Maturity Date, eight percent (8.0%) and (ii) from and after
the Initial Stated Maturity Date, eight and one-half percent (8.50%).

 

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

 

“Default Rate” shall mean a rate per annum equal to the lesser of (i) the
Maximum Legal Rate or (ii) three percent (3%) above the Applicable Interest
Rate.

 

“Deposit Bank” shall mean the bank or banks selected by Lender to maintain the
Deposit Account. Lender may in its reasonable discretion change the Deposit Bank
from time to time.

 

“Divested Properties” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Divested Properties (Loan)” shall have the meaning set forth in the Mortgage
Loan Agreement.

 

“Divested Properties (Non-Loan)” shall have the meaning set forth in the
Mortgage Loan Agreement.

 

 -12-Mezzanine Loan Agreement

 

 

“Divested Property Liabilities” shall mean any and all actual, out-of-pocket
liabilities, losses, damages, costs and expenses of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel for
Borrower, Owner, Operating Lessee, Leasehold Pledgor, and/or Lender in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not Borrower, Owner, Operating Lessee,
Leasehold Pledgor, or Lender shall be designated a party thereto), that are
imposed on, incurred by, or asserted against Borrower, Owner, Operating Lessee,
Leasehold Pledgor, or Lender in any manner relating to or arising out of (i)
Owner’s and/or Operating Lessee’s ownership, leasing and/or operation of the
Divested Properties (Non-Loan); (ii) any accident, injury to or death of persons
or loss of or damage to property occurring in, on or about any Divested Property
(Non-Loan) 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 any Divested Property (Non-Loan) or on adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (iv) performance
of any labor or services or the furnishing of any materials or other property in
respect of any Divested Property (Non-Loan); (v) any failure of any Divested
Property (Non-Loan) to comply with any applicable Legal Requirement (including
any Environmental Laws); (vi) any claim by brokers, finders or similar persons
claiming to be entitled to a commission in connection with any lease or other
transaction involving any Divested Property (Non-Loan) or any part thereof, or
any liability asserted against Borrower, Owner, Operating Lessee, Leasehold
Pledgor, or Lender with respect thereto; (vii) any claims by any lessee of any
portion of any Divested Property (Non-Loan) or any Person acting through or
under any lessee or otherwise arising under or as a consequence of any such
lease; and (viii) any presence or release of Hazardous Substances at any
Divested Property (Non-Loan), in each case of clauses (i) through (viii) above,
with respect to each Divested Property (Non-Loan), to the extent such liability,
loss, damage, cost, or expense arises out of any circumstance, condition, action
or event that occurred or existed on or prior to the date on which such Divested
Property (Non-Loan) was conveyed by Owner (even to the extent that the
applicable liability, loss, damage, cost, or expense did not occur, or the
occurrence of the applicable circumstance, condition, action or event is not
discovered, until after such date of conveyance).

 

“Due and Payable” shall mean, with respect to Taxes and Other Charges, the date
upon which, if the applicable Taxes or Other Charges are not paid, such Taxes or
Other Charges become delinquent or begin accruing fees, charges, penalties
and/or interest or the payee thereof becomes entitled to exercise any right or
remedies for non-payment thereof.

 

“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (i) an account or accounts
(or subaccounts thereof) maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (ii) a segregated trust account or accounts (or subaccounts
thereof) maintained with the corporate trust department of a federal depository
institution or state chartered depository institution subject to regulations
regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal
Regulations §9.10(b), having in either case corporate trust powers, acting in
its fiduciary capacity, and a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by federal and state
authorities and having a long-term unsecured debt rating of “A” or higher by S&P
and “A2” or higher by Moody’s and a short-term unsecured debt rating of “A-1” or
higher by S&P and “P-1” or higher by Moody’s. An Eligible Account will be a
“deposit account” within the meaning of Section 9-102(a)(29) of the Uniform
Commercial Code of the State of New York and will not be evidenced by a
certificate of deposit, passbook or other instrument.

 

 -13-Mezzanine Loan Agreement

 

 

“Eligible Institution” shall mean a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1
by Moody’s, and F1+ by Fitch in the case of accounts in which funds are held for
thirty (30) days or less or, in the case of Letters of Credit or accounts in
which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least “A+” by Fitch and S&P and “Aa3” by
Moody’s.

 

“Emergency Expenses” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Environmental Indemnity” shall mean that certain Mezzanine A Environmental
Indemnity Agreement dated as of the date hereof, executed by Borrower and
Guarantors in connection with the Loan, for the benefit of Lender, or any
replacement thereof in accordance with the express terms thereof, as the same
may be amended, restated, replaced, extended, renewed, supplemented or otherwise
modified from time to time.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
which is a member of the same controlled group of corporations or group of
trades or businesses under common control with Borrower, Leasehold Pledgor,
Owner, Operating Lessee, Fee General Partner, Mezz General Partner, any SPC
Party, Leasehold General Partner or any Guarantor, or is treated as a single
employer together with Borrower, Leasehold Pledgor, Owner, Operating Lessee, Fee
General Partner, Leasehold General Partner, any SPC Party or any Guarantor under
Section 414 of the Code or Title IV of ERISA.

 

“Excluded Taxes” shall mean (a) Special Taxes imposed on or measured by net
income (however denominated) or net profits (including any branch profits or
franchise taxes) of, or required to be withheld or deducted from any payment to,
Lender or any of its Affiliates, divisions or branches by the jurisdiction (or
any political subdivision thereof) (i) as a result of Lender (or Affiliate,
divisions or branches of Lender) being a resident or deemed to be resident, is
organized, maintains an office, or carries on business or is deemed to carry on
business to which such payment relates, in the jurisdiction imposing such taxes
or (ii) that are Other Connection Taxes; (b) any U.S. federal or state
withholding Special Taxes that are imposed on amounts payable to or for the
account of Lender (or any transferee, successor or assignee thereof, including
any Person that is sold or assigned an interest in the Loan pursuant to
Article IX) under the law in effect at the time Lender (or such transferee,
successor or assignee) becomes a party to this Agreement or changes its lending
office, (c) any backup withholding taxes; (d) Special Taxes imposed on account
of Lender not providing documentation (including documentation regarding direct
or indirect owners) that would have reduced or eliminated such taxes, provided
that such Lender is legally entitled to provide such documentation; (e) Special
Taxes imposed on account of Lender not being eligible for the “portfolio
interest exception” in Section 871(h) or 881(c) of the Code, as set forth in
such Sections as of the date of this Agreement (or any successor provision that
is substantively comparable), and (f) any U.S. federal withholding Special Taxes
imposed under FATCA.

 

“Experience Threshold” shall mean the ownership (including indirect ownership)
and/or management of hospitality properties containing at least 7,500 guest
rooms (exclusive of the Property) with at least 5 years’ experience in the
ownership and/or management of such properties.

 

 -14-Mezzanine Loan Agreement

 

 

“Extended Term” shall mean the First Extended Term, the Second Extended Term or
the Third Extended Term, as applicable.

 

“Extension Option” shall mean the First Extension Option, the Second Extension
Option, or the Third Extension Option, as applicable.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or
future regulations or official interpretations thereof and any agreements
entered into pursuant to Section 1471(b)(1) of the Code (or any amended or
successor version described above) and any fiscal or regulatory legislation,
rules or practices adopted pursuant to any intergovernmental agreement, treaty
or convention among Governmental Authorities and implementing such Sections of
the Code.

 

“Fee General Partner” shall have the meaning set forth in the Recitals hereto.

 

“FF&E” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“FF&E Expense” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“FF&E Work” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“Financial Covenants” shall refer to the certain financial covenants which shall
be included in the Guaranty, and shall require that Guarantors:

 

(a)          maintain (x) an aggregate Net Worth (as defined below) (without
regard to the Properties or any equity therein) of not less than $250,000,000
and (y) an aggregate Net Worth (including the Properties and any equity therein)
of not less than $500,000,000 (collectively, the “Net Worth Threshold”); and

 

(b)          shall not, at any time while a default in the payment of the
obligations under the Guaranty has occurred and is continuing, either (i) enter
into or effectuate any transaction with any Affiliate of Guarantor that would
reduce any Guarantor’s Net Worth below the Net Worth Threshold (including the
payment of any dividend or distribution to a shareholder, or the redemption,
retirement, purchase or other acquisition for consideration of any stock or
other ownership interest in such guarantor) or (ii) sell, pledge, mortgage or
otherwise transfer to any Affiliate of Guarantor any of any Guarantor’s assets,
or any interest therein that would reduce any Guarantor’s Net Worth below the
Net Worth Threshold.

 

For purposes of the foregoing definition of Financial Covenants “Net Worth”
shall mean, as of a given date, (i) a Person’s total assets as of such date,
including Uncalled Commitments, and for the purposes of determining Net Worth
adding accumulated depreciation and amortization to the value of such assets
less (ii) such Person’s total liabilities as of such date, determined in
accordance with GAAP, exclusive of any liability under the Loan Documents, the
Mezzanine Loan Documents, and, for avoidance of doubt, treating the arrangements
with Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC as
equity and not debt.

 

 -15-Mezzanine Loan Agreement

 

 

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

 

“Fitch” shall mean Fitch, Inc.

 

“Franchise Agreements” shall mean individually or collectively, as the context
requires, the existing franchise agreements for the Individual Properties
identified on Schedule XII hereto, and any or all franchise, trademark and
license agreements, or similar agreements between one or more of the Individual
Owners or Operating Lessee, as applicable, and a hotel franchisor in effect from
time to time during the term of the Loan as the same may be replaced, amended or
modified from time to time in accordance with, and subject to, the terms and
provisions of this Agreement. Each or any of the Franchise Agreements may
sometimes be referred to herein, individually, as a “Franchise Agreement”.

 

“Franchisor” shall mean individually or collectively, as the context requires,
any entity that is a hotel franchisor or licensor pursuant to any Franchise
Agreement affecting any Individual Property.

 

“GAAP” shall mean generally accepted accounting principles as in effect from
time to time and set forth in the Financial Accounting Standards Board
Accounting Standards Codification.

 

“General Partner Company Agreement” shall mean, collectively, those certain
amended and restated limited liability company agreements of each Fee General
Partner and Leasehold General Partner, dated as of the date hereof, as the same
may be amended, restated, replaced or otherwise modified from time to time in
accordance with the terms of this Agreement.

 

“Governmental Authority” shall mean any court, board, agency, commission, office
or authority of any nature whatsoever or any governmental unit (federal, state,
commonwealth, county, district, municipal, city or otherwise) whether now or
hereafter in existence.

 

“Grantor Trust” shall mean a grantor trust under Subpart E of Part 1 of
Subchapter J of the Code.

 

“Gross Revenue” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“Ground Lease Property” shall mean, individually and collectively, as the
context requires, each Individual Property that is demised by one of the Ground
Leases.

 

“Ground Leases” shall mean those certain ground leases more particularly
described on Schedule VIII attached hereto and made a part hereof as the same
may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the terms of this Agreement. Each or any of the Ground Leases
may be referred to herein individually as a “Ground Lease”.

 

“Ground Lessor” shall mean individually and collectively, as the context
requires, the lessors under each of the Ground Leases.

 

“Ground Lease Purchase Option” shall mean any option, right of first refusal or
right of first offer contained in any Ground Lease and/or granted by any Ground
Lessor to the lessee under the Ground Lease (or any Individual Owner or
Affiliate thereof) to purchase the related Ground Lease Property.

 

 -16-Mezzanine Loan Agreement

 

 

“Ground Rent” shall mean any rent, additional rent or other charge payable by
the tenant under the Ground Leases.

 

“Guarantors” shall mean Hospitality Investors Trust Operating Partnership, L.P.
(“OP Guarantor”) and Hospitality Investors Trust, Inc. (“REIT Guarantor”),
jointly and severally, and/or any other Person that now or hereafter guarantees
any of Borrower’s obligations under any Loan Document.

 

“Guaranty” shall mean that certain Mezzanine A Guaranty of Recourse Obligations
of even date herewith from Guarantors for the benefit of Lender, or any
replacement thereof in accordance with the express terms hereof, as the same may
be amended, restated, replaced, extended, renewed, supplemented or otherwise
modified from time to time.

 

“Hotel Taxes” shall mean federal, state and municipal excise, occupancy, sales
and use taxes collected by or on behalf of Owner or any other Loan Party
directly from patrons or guests of the Properties as 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 and required to be paid to a Governmental
Authority.

 

“Incentive Management Fees” shall mean the property management fees paid to a
Manager for property management (as opposed to asset management) services
provided to the Individual Properties that are based on an override, profit
participation or other form of incentive for increased revenues or profits
generated by such Individual Properties. Incentive Management Fees shall not
include Base Management Fees, reimbursable expenses paid to a Manager, system
service charges, accounting fees, development fees, revenue management fees,
sales and marketing fees, information technology fees, human resources fees,
risk management fees, administration fees or other similar fees, expenses or
reimbursements, in each case, so long as the same are not calculated based on
increases in revenues or profits generated by such Individual Properties.

 

“Indebtedness” shall mean, for any Person, without duplication: (i) all
indebtedness or liability of such Person for borrowed money (whether or not
evidenced by bonds, debentures, notes or other instruments) or for the deferred
purchase price of or payment for goods, property or services (including trade
debt and trade payables) or mezzanine debt (except for the Mezzanine B Loan),
for which such Person or its assets are liable, (ii) obligations issued for, or
liabilities incurred on account of, such Person, (iii) obligations or
liabilities of such Person arising under or with respect to letters of credit
(including without limitation letter of credit facilities and agreements and for
amounts drawn upon letters of credit), credit facilities or other acceptance
facilities, (iv) all amounts required to be paid by such Person as a guaranteed
payment to partners or a preferred or special dividend, including any mandatory
redemption of shares or interests, (v) all indebtedness guaranteed by such
Person, directly or indirectly, (vi) all obligations under leases that
constitute capital leases for which such Person is liable, (vii) all obligations
of such Person under interest rate swaps, caps, floors, collars and other
interest hedge agreements, in each case for which such Person is liable or its
assets are liable, whether such Person (or its assets) is liable contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person otherwise assures a creditor against loss, and (viii)
all obligations under any PACE Loans.

 

 -17-Mezzanine Loan Agreement

 

 

“Indemnified Taxes” means Special Taxes, other than Excluded Taxes, imposed on
or with respect to any payment made by Borrower under any Loan Document.

 

“Independent” shall mean, when used with respect to any Person, a Person who:
(i) does not have any direct financial interest or any material indirect
financial interest in Borrower, Leasehold Pledgor, Owner or Operating Lessee or
in any Affiliate of Borrower, Leasehold Pledgor, Owner or Operating Lessee
(other than the receipt of fees payable for its services), (ii) is not connected
with Borrower, Leasehold Pledgor, Owner or Operating Lessee or any Affiliate of
Borrower, Leasehold Pledgor, Owner or Operating Lessee as an officer, employee,
promoter, underwriter, trustee, partner, member, manager, creditor, director,
supplier, customer or person performing similar functions and (iii) is not a
member of the immediate family of a Person defined in (i) or (ii) above.

 

“Independent Accountant” shall mean (i) a firm of nationally recognized,
certified public accountants which is Independent and which is selected by
Borrower and reasonably acceptable to Lender or (ii) such other certified public
accountant(s) selected by Borrower, which is Independent and reasonably
acceptable to Lender, it being agreed by Lender that any “Big Four” accounting
firm (including any successor entity thereto) is hereby approved by Lender as
long as such Person continues to be Independent and a nationally recognized
certified public accounting firm.

 

“Index Floor” shall mean 0.0%.

 

“Individual Owner” shall mean each “Individual Borrower” as defined in the
Mortgage Loan Agreement.

 

“Individual Property” shall mean, individually, any one of the properties
identified on Schedule I hereto and (and, with respect to each such property,
the Improvements, all Fixtures, all Equipment, all FF&E and all personal
property owned by Owner and used in connection with or incorporated into such
property), together with all rights pertaining to such property and
Improvements.

 

“Initial Stated Maturity Date” shall mean the Monthly Payment Date in November,
2021, as the same may be extended pursuant to Section 2.7 hereof.

 

“Insolvency Opinion” shall mean that certain bankruptcy non-consolidation
opinion letter dated the date hereof delivered by Berger Harris LLP in
connection with the Loan.

 

“Insurance Proceeds” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Interest Determination Date” shall mean, (a) with respect to each Interest
Period that occurs while the Loan is a LIBOR Loan, the date that is two (2)
Business Days (for purposes of this clause (a) only, “Business Day” is defined
as any day on which banks are open for dealing in foreign currency and exchange
in London) prior to the commencement date of such Interest Period, (b) with
respect to each Interest Period that occurs while the Loan is a Base Rate Loan,
the date that is two (2) Business Days prior to the commencement date of such
Interest Period, and (c) with respect to each Interest Period that occurs while
the Loan is a Substitute Rate Loan, the date that is two (2) Business Days prior
to the commencement date of such Interest Period; provided, however, if the
Interest Determination Date as defined in the Mortgage Loan Agreement shall be
adjusted by Mortgage Lender, then the Interest Determination Date hereunder
shall be likewise adjusted, so that the Interest Determination Date hereunder
and the Interest Determination Date under the Mortgage Loan Agreement shall
always be the same date.

 

 -18-Mezzanine Loan Agreement

 

 

“Interest Rate Cap Agreement” shall mean the Confirmation and Agreement
(together with the confirmation and schedules relating thereto), dated on or
about the date hereof, between the Counterparty and Borrower, obtained by
Borrower and collaterally assigned to Lender pursuant to the Assignment of
Interest Rate Cap Agreement. After delivery of a Replacement Interest Rate Cap
Agreement to Lender, the term Interest Rate Cap Agreement shall be deemed to
mean such Replacement Interest Rate Cap Agreement. At any time the Loan is a
Base Rate Loan or a Substitute Rate Loan and a Substitute Interest Rate
Protection Agreement is in effect in accordance with Section 2.2.4(e), all
references to the Interest Rate Cap Agreement in the Loan Documents shall be
deemed to refer to a Substitute Interest Rate Protection Agreement. The Interest
Rate Cap Agreement shall be governed by the laws of the State of New York and
shall contain each of the following:

 

(a)          the notional amount of the Interest Rate Cap Agreement shall be
equal to or exceed the Outstanding Principal Balance;

 

(b)          the remaining term of the Interest Rate Cap Agreement shall at all
times extend through the end of the Interest Period in which the Maturity Date
occurs as extended from time to time pursuant to this Agreement and the Loan
Documents;

 

(c)          the Interest Rate Cap Agreement shall be issued by the Counterparty
to Borrower and shall be pledged to Lender by Borrower in accordance with the
Assignment of Interest Rate Cap Agreement;

 

(d)          the Counterparty under the Interest Rate Cap Agreement shall be
obligated during the continuance of a Trigger Period to make a stream of
payments, directly to the Deposit Account (whether or not an Event of Default
has occurred) from time to time equal to the product of (i) the notional amount
of such Interest Rate Cap Agreement multiplied by (ii) the excess, if any, of
LIBOR (including any upward rounding under the definition of LIBOR) over the
Strike Price and shall provide that such payment shall be made on a monthly
basis in each case not later than (after giving effect to and assuming the
passage of any cure period afforded to such Counterparty under the Interest Rate
Cap Agreement, which cure period shall not in any event be more than three
Business Days) each Monthly Payment Date;

 

(e)          the Counterparty under the Interest Rate Cap Agreement shall
execute and deliver the Acknowledgment; and

 

 -19-Mezzanine Loan Agreement

 

 

(f)           the Interest Rate Cap Agreement shall impose no material
obligation on the beneficiary thereof (after payment of the acquisition cost)
and shall be in all material respects satisfactory in form and substance to
Lender (in Lender’s reasonable discretion) and shall satisfy applicable Rating
Agency standards and requirements, including, without limitation, provisions
satisfying Rating Agencies standards, requirements and criteria (i) that
incorporate representations by the Counterparty that no withholding taxes shall
apply to payments by the Counterparty as of the date of the Interest Rate Cap
Agreement, and provide for “gross up” payments by the Counterparty for any
withholding tax (except for any Excluded Taxes), (ii) whereby the Counterparty
agrees not to file or join in the filing of any petition against Borrower under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,
and (iii) that incorporate, if the Interest Rate Cap Agreement contemplates
collateral posting by the Counterparty, a credit support annex setting forth the
mechanics for collateral to be calculated and posted that are consistent with
Rating Agency standards, requirements and criteria.

 

“Inventory” shall mean, as defined in the UCC, and including items which would
be entered on a balance sheet under the line items for “Inventories” or “china,
glassware, silver, linen and uniforms” under the Uniform System of Accounts for
Hotels, current edition.

 

“Lease” shall mean any lease, sublease or sub-sublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) 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 any
Individual Property, and every modification, amendment or other agreement
relating to such lease, sublease, sub-sublease or other agreement entered into
in connection with such lease, sublease, sub-sublease or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.

 

“Leasehold General Partner” shall have the meaning set forth in the Recitals
hereto.

 

“Leasehold Pledgor” shall have the meaning set forth in the introductory
paragraph hereto, together with their respective successors and permitted
assigns.

 

“Leasehold Pledgor Operating Agreement” shall mean, collectively, those certain
amended and restated limited liability company agreements of Leasehold Pledgor,
dated as of the date hereof, as the same may be amended, restated, supplemented
or otherwise modified from time to time.

 

“Legal Requirements” shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting the Loan, any
Secondary Market Transaction with respect to the Loan, Borrower, Leasehold
Pledgor, the Collateral or any part thereof, Owner, Operating Lessee or any
Individual Property or any part thereof or the construction, use, alteration or
operation thereof, or any part thereof, whether now or hereafter enacted and in
force, including, without limitation, the Securities Act, the Exchange Act,
Regulation AB, the rules and regulations promulgated pursuant to the Dodd-Frank
Wall Street Reform and Consumer Protection Act, zoning and land use laws, the
Americans with Disabilities Act of 1990, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower, Leasehold Pledgor, Owner or Operating Lessee, at any time in
force affecting the Collateral or any part thereof, or such Individual Property
or any part thereof, including any which may (i) require repairs, modifications
or alterations in or to such Individual Property or any part thereof, or (ii) in
any way limit the use and enjoyment thereof.

 

 -20-Mezzanine Loan Agreement

 

 

“Lender Documents” shall mean any agreement among any Mortgage Lender, any
Lender, any Mezzanine B Lender, and/or any participant or any fractional owner
of a beneficial interest in the Mortgage Loan, the Loan, or the Mezzanine B Loan
relating to the administration of the Mortgage Loan, the Loan or the Mezzanine B
Loan, the Mortgage Loan Documents, the Loan Documents, or the Mezzanine B Loan
Documents, including without limitation, any intercreditor agreements, co-lender
agreements and participation agreements.

 

“Letter of Credit” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“LIBOR” shall mean, with respect to each Interest Period and each Interest
Determination Date, the rate per annum (rounded to the nearest 1/1,000 of 1%)
calculated by the Lender as set forth below:

 

(a) The rate for deposits in U.S. Dollars for a one-month period that appears on
Reuters Screen LIBOR01 Page (or its equivalent) as of 11:00 a.m., London time,
on such Interest Determination Date.

 

(b) If such rate does not appear on Reuters Screen LIBOR01 Page (or its
equivalent) as of 11:00 a.m., London time, on the applicable Interest
Determination Date, the Lender shall request the principal London office of any
four major reference banks in the London interbank market selected by the Lender
to provide such reference bank’s offered quotation to prime banks in the London
interbank market for deposits in United States dollars for a one-month period as
of 11:00 a.m., London time, on such Interest Determination Date in a principal
amount of not less than $1,000,000 that is representative for a single
transaction in the relevant market at the relevant time. If at least two such
offered quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, the Lender shall
request any three major banks in New York City selected by the Lender to provide
such bank’s rates for loans in U.S. Dollars to leading European banks for a
one-month period as of 11:00 a.m., New York City time, on such Interest
Determination Date in a principal amount not less than $1,000,000 that is
representative for a single transaction in the relevant market at the relevant
time, and if at least two such rates are so provided, LIBOR shall be the
arithmetic mean of such rates. Promptly upon Borrower’s request, Lender shall
provide Borrower with the basis (in writing) for its determination of LIBOR.
Notwithstanding the foregoing, in no event shall LIBOR be less than zero.

 

“LIBOR Interest Rate” shall mean with respect to each Interest Period, LIBOR
applicable to the Interest Period.

 

“LIBOR Loan” shall mean at any time in which the Applicable Interest Rate is
calculated at the LIBOR Interest Rate plus the Applicable Spread in accordance
with the provisions of Article II hereof.

 

“Lien” shall mean any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, easement, restrictive covenant, preference, assignment,
security interest, PACE Loan or any other encumbrance, charge or transfer of, or
any agreement to enter into or create any of the foregoing, on or affecting (i)
all or any portion of any Individual Property or any interest therein, (ii) any
direct or indirect interest in Borrower or in any other Loan Party, or (iii) all
or any portion of the Collateral or any interest therein, including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic’s, materialmen’s and other similar liens
and encumbrances.

 

 -21-Mezzanine Loan Agreement

 

 

“Liquidation Event” shall mean (i) any Casualty to any Individual Property or
any material portion thereof, (ii) any Condemnation of any Individual Property
or any material portion thereof, (iii) a Transfer of any Individual Property in
connection with realization thereon following an Event of Default under the
Mortgage Loan, including, without limitation, a foreclosure sale, (iv) any
refinancing or payoff of any Individual Property or the Mortgage Loan permitted
hereunder (including any refund of reserves on deposit with Mortgage Lender (but
not disbursements therefrom)) or (v) the receipt by any Individual Owner of any
proceeds realized under such Individual Owner’s owner’s title insurance policy
after application of such proceeds by such Individual Owner to cure the
underlying title defect.

 

“Liquor Subsidiary” shall have the meaning given to such term in the Mortgage
Loan Agreement.

 

“Loan” shall have the meaning set forth in the Recitals hereto.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Pledge
Agreement, the Assignment of Interest Rate Cap Agreement, the Assignments of
Title Insurance Proceeds, the Environmental Indemnity, the Subordination of
Management Agreements, the Guaranty, the Post-Closing Agreement and any other
documents, agreements and instruments now or hereafter evidencing, securing or
delivered to Lender in connection with the Loan, as the same may be (and each of
the foregoing defined terms shall refer to such documents as they may be)
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

“Loan Party” shall mean, individually or collectively as the context requires,
Borrower, each Leasehold Pledgor, each General Partner, each Individual Owner,
each Operating Lessee, each Liquor Subsidiary, each SPC Party, Mezzanine B
Borrower and each Mezzanine B Leasehold Pledgor.

 

“Low Cash Flow Trigger” shall occur if, on any Calculation Date, the Debt Yield
shall be equal to or less than the Debt Yield Trigger Level.

 

“Low Cash Flow Trigger Period” shall commence upon the occurrence of a Low Cash
Flow Trigger and shall end when the Debt Yield shall exceed the applicable Debt
Yield Cure Level as of any subsequent Calculation Date; provided, however, that
if Borrower, Owner and Mezzanine B Borrower make the prepayments specified in
Section 2.4.2(c) (upon at least two (2) Business Days prior written notice),
then such Low Cash Flow Trigger Period shall cease immediately upon the making
of such prepayments (as opposed to waiting for the determination on the
subsequent Calculation Date that the Debt Yield exceeds the Debt Yield Cure
Level) (the “Immediate Low Cash Flow Trigger Cure”).

 

“LTV” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“Major Contract” shall mean any cleaning, maintenance, service or other contract
or agreement of any kind of a material nature (materiality for these purposes to
mean, contracts (a) which extend beyond one year (unless cancelable on sixty
(60) days or less notice without requiring the payment of termination fees or
payments of any kind) and (b) requiring the payment of more than $250,000 in any
calendar year with respect to an Individual Property), in either case relating
to the ownership, leasing, management, use, operation, maintenance, repair or
restoration of the Properties, or any Individual Property; excepting, however,
the Ground Leases, Franchise Agreements and Management Agreements, none of which
shall constitute Major Contracts for purposes of this Agreement.

 

 -22-Mezzanine Loan Agreement

 

 

“Management Agreements” shall mean the management agreement or management
agreements, as the context requires, entered into by and between Owner and/or
Operating Lessee and Manager or any replacement management agreement entered
into by and between Owner and/or Operating Lessee and the applicable Manager in
accordance with the terms of the Loan Documents, in each case, pursuant to which
such Manager is to provide management and other services with respect to the
Properties, or any Individual Property. Each or any of the Management Agreements
may sometimes be referred to herein, individually, as a “Management Agreement”.

 

“Management Fees” shall mean the Base Management Fees, Incentive Management
Fees, reimbursable expenses, system service charges and all other charges, fees
and expenses to be paid to Manager, from time to time under the Management
Agreements.

 

“Manager” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“Material Alteration” shall mean any alteration affecting structural elements,
utilities, HVAC or the exterior of any Individual Property, the cost of which
(a) exceeds the Alteration Threshold with respect to such Individual Property,
and/or (b) when aggregated with the costs of alterations then affecting
structural elements of all other Individual Properties (to the extent not
covered by security delivered to Lender pursuant to Section 4.12.2) plus any
outstanding Flagging Costs with respect to all Individual Properties that have
not been reserved for with Mortgage Lender to the extent required under
Section 4.34 of the Mortgage Loan Agreement, but excluding Approved Alterations
(defined below)), exceeds the aggregate Alteration Threshold; provided, however,
that in no event shall (i) [reserved], (ii) any work to be performed in
connection with any Emergency Expenses, (iii) any alterations performed as part
of a Restoration, (iv) any Approved Scheduled PIP Expenses, (v) tenant
improvement work or other alterations performed with respect to any Lease in
effect on the Closing Date or any Lease entered into subsequent to the Closing
Date in compliance with the terms of the Loan Documents, or (vi) decorative work
performed in the ordinary course of business, constitute a Material Alteration
(clauses (i) through (vi), collectively, the “Approved Alterations”).

 

“Maturity Date” shall mean either (a) the Initial Stated Maturity Date; provided
that (i) in the event of the exercise by Borrower of the First Extension Option
pursuant to Section 2.7, the Maturity Date shall be the First Extended Maturity
Date, (ii) in the event of the exercise by Borrower of the Second Extension
Option pursuant to Section 2.7, the Maturity Date shall be the Second Extended
Maturity Date or (iii) in the event of the exercise by Borrower of the Third
Extension Option pursuant to Section 2.7, the Maturity Date shall be the Third
Extended Maturity Date (the Initial Stated Maturity Date or, if and to the
extent the Maturity Date is extended in accordance with Section 2.7 hereof, such
applicable extended date, the “Stated Maturity Date”); or (b) such earlier date
on which the final payment of principal of the Note becomes due and payable as
herein or therein provided, whether at the Stated Maturity Date, by declaration
of acceleration, or otherwise.

 

 -23-Mezzanine Loan Agreement

 

 

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

 

“Mezzanine Annual Debt Service” shall mean, as the context requires, the
Original Mezzanine Annual Debt Service and, from and after the Approved
Mezzanine Closing Date, the Approved Annual Mezzanine Debt Service.

 

“Mezzanine B Allocated Loan Amount” shall mean, as to any Individual Property,
the “Allocated Loan Amount” (as defined in the Mezzanine B Loan Agreement) set
forth on Schedule I to the Mezzanine B Loan Agreement as to such Individual
Property (a copy of which Schedule is attached hereto as Schedule I-M2).

 

“Mezzanine B Annual Debt Service” shall mean, as of any date of determination,
the Mezzanine B Debt Service payable during the one-year period occurring from
and after such date of determination calculated by assuming that (a) the
Outstanding Mezzanine B Principal Balance at all times during such period is
equal to the Outstanding Mezzanine B Principal Balance as of the date of
determination (taking into account any prepayments that occur on such date in
accordance with this Agreement) and (b) LIBOR (or the Prime Rate or the
Substitute Base Rate, as applicable) at all times during such period is equal to
either (i) in connection with Mezzanine B Borrower’s exercise of an “Extension
Option” under the Mezzanine B Loan Documents, the “Strike Price” of the proposed
“Replacement Interest Rate Cap Agreement” to be entered into by Mezzanine
Borrower under the Mezzanine B Loan Documents in connection with its exercise of
such “Extension Option” or (ii) otherwise, the “Strike Price” of the “Interest
Rate Cap Agreement” in place under the Mezzanine B Loan Documents as of such
date of determination.

 

“Mezzanine B Borrower” shall mean HIT Portfolio I Mezz B, LLC, a Delaware
limited liability company.

 

“Mezzanine B Debt” shall mean the “Debt” as defined in the Mezzanine B Loan
Agreement.

 

“Mezzanine B Impaired Individual Property Release Amount” shall mean, as to any
Individual Property, (a) for the Mezzanine B Loan, the “Impaired Individual
Property Release Amount” (as defined in the Mezzanine B Loan Agreement) and (b)
for the Approved Mezzanine Loan, from and after the Approved Mezzanine Closing
Date, the Approved Mezzanine Release Amount as to such Individual Property.

 

“Mezzanine B Leasehold Pledgor” shall mean, individually or collectively as the
context may require: HIT 2PK TRS Mezz B, LLC, a Delaware limited liability
company, and HIT Portfolio I TRS Mezz B, LLC, a Delaware limited liability
company.

 

“Mezzanine B Lender” shall mean, individually or collectively as the context
requires, the Original Mezzanine B Lender and, from and after the Approved
Mezzanine Closing Date, the Approved Mezzanine Lender.

 

 -24-Mezzanine Loan Agreement

 

 

“Mezzanine B Loan” shall mean individually and collectively, as the context
requires, the Original Mezzanine B Loan and, from and after the Approved
Mezzanine Closing Date, the Approved Mezzanine Loan.

 

“Mezzanine B Loan Agreement” shall mean individually and collectively, as the
context requires, the Original B Mezzanine Loan Agreement and, from and after
the Approved Mezzanine Closing Date, the Approved Mezzanine Loan Agreement.

 

“Mezzanine B Loan Default” shall mean an “Event of Default” under the Mezzanine
B Loan and as defined in the Mezzanine B Loan Documents related to the Mezzanine
B Loan.

 

“Mezzanine B Monthly Debt Service Payment Amount” shall mean individually and
collectively, as the context requires, the Original Mezzanine B Monthly Debt
Service Payment Amount and, from and after the Approved Mezzanine Closing Date,
the Approved Mezzanine Monthly Debt Service Payment Amount.

 

“Mezzanine B Release Amount” shall mean, as to any Individual Property, (a) for
the Original Mezzanine B Loan, the Original Mezzanine B Release Amount as to
such Individual Property and (b) for the Approved Mezzanine Loan, from and after
the Approved Mezzanine Closing Date, the Approved Mezzanine Release Amount as to
such Individual Property.

 

“Monthly Debt Service Payment Amount” shall mean, for each Monthly Payment Date,
an amount equal to the amount of interest which is then due on the Loan for the
Interest Period ending in the month during which such Monthly Payment Date
occurs.

 

“Monthly Operating Expense Budgeted Amount” for any calendar month shall mean
the monthly amount set forth in the Approved Annual Budget for Operating
Expenses for such calendar month.

 

“Monthly Payment Date” shall mean the seventh (7th) day of every calendar month
occurring during the Term, as adjusted pursuant to Section 2.3.2. The first
Monthly Payment Date shall be June 7, 2019.

 

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

 

“Mortgage” shall have the meaning set forth in the Recitals hereto.

 

“Mortgage Annual Debt Service” shall mean, as of any date of determination, the
Mortgage Debt Service payable during the one-year period occurring from and
after such date of determination calculated by assuming that (a) the Outstanding
Mortgage Principal Balance at all times during such period is equal to the
Outstanding Mortgage Principal Balance as of the date of determination (taking
into account any prepayments that occur on such date in accordance with this
Agreement) and (b) LIBOR (or the Prime Rate or the Substitute Base Rate, as
applicable) at all times during such period is equal to either (i) in connection
with Owner’s exercise of an “Extension Option” under the Mortgage Loan
Documents, the “Strike Price” of the proposed “Replacement Interest Rate Cap
Agreement” to be entered into by Owner under the Mortgage Loan Documents in
connection with its exercise of such “Extension Option” or (ii) otherwise, the
“Strike Price” of the “Interest Rate Cap Agreement” in place under the Mortgage
Loan Documents as of such date of determination.

 

 -25-Mezzanine Loan Agreement

 

 

“Mortgage Borrower Company Agreement” shall mean, collectively, those certain
amended and restated limited liability company agreements and limited
partnership agreements of each Owner dated as of the date hereof, as each of the
same may be amended, restated, replaced or otherwise modified from time to time
in accordance with the terms of this Agreement.

 

“Mortgage Debt Service” shall mean, with respect to any particular period, the
aggregate scheduled interest payments due under the Mortgage Loan Documents in
such period.

 

“Mortgage Deposit Account” shall mean the “Deposit Account” as defined in the
Mortgage Loan Agreement.

 

“Mortgage Impaired Individual Property Release Amount” shall mean, as to any
Individual Property, the “Impaired Individual Property Release Amount” (as
defined in the Mortgage Loan Agreement) as to such Individual Property.

 

“Mortgage Lender” shall have the meaning set forth in the Recitals hereto.

 

“Mortgage Loan” shall have the meaning set forth in the Recitals hereto.

 

“Mortgage Loan Agreement” shall have the meaning set forth in the Recitals
hereto.

 

“Mortgage Loan Allocated Loan Amount” shall mean the “Allocated Loan Amount” (as
defined in the Mortgage Loan Agreement) set forth on Schedule I to the Mortgage
Loan Agreement, a copy of which Schedule is attached hereto as Schedule I-M1.

 

“Mortgage Loan Default” shall mean an “Event of Default” under the Mortgage Loan
and as defined in the Mortgage Loan Agreement.

 

“Mortgage Loan Documents” shall mean the “Loan Documents” as defined in the
Mortgage Loan Agreement.

 

“Mortgage Loan Release Amount” shall mean the “Release Amount” as such term is
defined in the Mortgage Loan Agreement.

 

“Mortgage Note” shall mean the “Note” as such term is defined in the Mortgage
Loan Agreement.

 

“Multi-Asset Person” means a (i) Qualified Equityholder or (ii) an entity in
respect of which, at the time the applicable pledge is made, such entity’s pro
rata share of net operating income from the Properties is less than 25% of such
entity’s aggregate net income.

 

 -26-Mezzanine Loan Agreement

 

 

“Net Liquidation Proceeds After Debt Service” shall mean with respect to any
Liquidation Event, all amounts paid to or received by or on behalf of Owner in
connection with such Liquidation Event, including, without limitation, proceeds
of any sale, refinancing or other disposition or liquidation, less (i) Lender’s
and/or Mortgage Lender’s reasonable costs incurred in connection with the
recovery thereof, (ii) in the case of Casualty or Condemnation, the costs
incurred by Owner in connection with a restoration of the Property made in
accordance with the Mortgage Loan Documents, (iii) amounts required or permitted
to be deducted therefrom pursuant to the Mortgage Loan Agreement and amounts
paid pursuant to the Mortgage Loan Documents to Mortgage Lender (including,
without limitation, amounts to which Owner is entitled pursuant to
Section 5.4(b)(vii) of the Mortgage Loan Agreement), (iv) in the case of a
foreclosure sale, disposition or Transfer of any Individual Property in
connection with realization thereon following a Mortgage Loan Default, such
reasonable and customary costs and expenses of sale or other disposition
(including attorneys’ fees and brokerage commissions), (v) in the case of a
foreclosure sale, such costs and expenses incurred by Mortgage Lender under the
Mortgage Loan Documents as Mortgage Lender shall be entitled to receive
reimbursement for under the terms of the Mortgage Loan Documents, (vi) in the
case of a refinancing of the Mortgage Loan, such costs and expenses (including
reasonable attorneys’ fees) of such refinancing as shall be reasonably approved
by Lender and (vii) in the case of the receipt by any Individual Owner of any
proceeds realized under such Individual Owner’s owner’s title insurance policy,
any amount required to cure the applicable title defect and Borrower’s or
Owner’s reasonable expenses incurred in connection with effectuating such claim
and curing such title defect.

 

“Net Operating Income” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Net Proceeds” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“New/Renewal Flagging Costs” shall have the meaning set forth in the Mortgage
Loan Agreement.

 

“Non-Conforming Properties” shall mean those certain Individual Properties set
forth on Schedule XVI.

 

“NRSRO” shall mean any credit rating agency that has elected to be treated as a
nationally recognized statistical rating organization for purposes of
Section 15E of the Exchange Act, without regard to whether or not such credit
rating agency has been engaged by Lender or its designees in connection with, or
in anticipation of, a Securitization.

 

“Obligations” shall mean, collectively, Borrower’s obligations for the payment
of the Debt and the performance of the Other Obligations by Borrower and
Leasehold Pledgor.

 

“OFAC” shall mean the Specially Designated Nationals and Blocked Persons Lists
maintained by the Office of Foreign Assets Control.

 

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized senior officer of the manager of Borrower (or
the manager of Borrower’s general partner, as applicable).

 

“Operating Expenses” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Operating Income” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Operating Lease” shall have the meaning given to such term in the Mortgage Loan
Agreement.

 

 -27-Mezzanine Loan Agreement

 

 

“Operating Lessee” shall mean, individually and collectively as the context may
require, those certain entities listed on Schedule II-B, together with their
respective permitted successors and assigns.

 

“Operating Lessee Company Agreement” shall mean, collectively, those certain
amended and restated limited liability company agreements and limited
partnership agreements of each Operating Lessee, dated as of the date hereof, as
the same may be amended, restated, replaced or otherwise modified from time to
time in accordance with the terms of this Agreement.

 

“Operating Rent” shall have the meaning given to such term in the Mortgage Loan
Agreement.

 

“Operations Agreements” shall mean the REAs and any other covenants,
restrictions, easements, declarations or agreements of record relating to the
construction, operation or use of the Properties.

 

“Original Mezzanine B Allocated Loan Amount” shall mean, as to any Individual
Property, the “Allocated Loan Amount” (as defined in the Mezzanine B Loan
Agreement) set forth on Schedule I to the Mezzanine B Loan Agreement as to such
Individual Property (a copy of which Schedule is attached hereto as
Schedule I-M2).

 

“Original Mezzanine B Annual Debt Service” shall mean, as of any date of
determination, the Mezzanine B Debt Service payable during the one-year period
occurring from and after such date of determination calculated by assuming that
(a) the Outstanding Mezzanine B Principal Balance at all times during such
period is equal to the Outstanding Mezzanine B Principal Balance as of the date
of determination (taking into account any prepayments that occur on such date in
accordance with this Agreement) and (b) LIBOR (or the Prime Rate or the
Substitute Base Rate, as applicable) at all times during such period is equal to
either (i) in connection with Mezzanine B Borrower’s exercise of an “Extension
Option” under the Mezzanine B Loan Documents, the “Strike Price” of the proposed
“Replacement Interest Rate Cap Agreement” to be entered into by Mezzanine
Borrower under the Mezzanine B Loan Documents in connection with its exercise of
such “Extension Option” or (ii) otherwise, the “Strike Price” of the “Interest
Rate Cap Agreement” in place under the Mezzanine B Loan Documents as of such
date of determination.

 

“Original Mezzanine B Lender” shall mean, collectively, Morgan Stanley Mortgage
Capital Holdings LLC, a New York limited liability company, together with its
successors and permitted assigns, Citigroup Global Markets Realty Corp., a New
York corporation, together with its successors and permitted assigns, Deutsche
Bank AG, New York Branch, a branch of Deutsche Bank AG, a German Bank authorized
by the New York Department of Financial Services, together with its successors
and permitted assigns, Goldman Sachs Mortgage Company, a New York limited
partnership, together with its successors and permitted assigns, and JPMorgan
Chase Bank, National Association, a banking association chartered under the laws
of the United States of America, together with its successors and permitted
assigns.

 

“Original Mezzanine B Loan” shall mean that certain loan in the original
principal amount of Seventy Million and No/100 Dollars ($70,000,000.00) by
Mezzanine B Lender to Mezzanine B Borrower pursuant to the Mezzanine B Loan
Agreement.

 

 -28-Mezzanine Loan Agreement

 

 

“Original Mezzanine B Loan Agreement” shall mean that certain Mezzanine B Loan
Agreement of even date herewith between Mezzanine B Lender, Mezzanine B Borrower
and Mezzanine B Leasehold Pledgor, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

 

“Original Mezzanine B Loan Documents” means all documents evidencing, securing,
guaranteeing and/or perfecting the Mezzanine B Loan and all documents executed
and/or delivered in connection therewith.

 

“Original Mezzanine B Monthly Debt Service Payment Amount” shall mean, for each
Monthly Payment Date, an amount equal to the amount of (i) non-default interest
which is then due on the Mezzanine B Loan under the Mezzanine B Loan Documents
for the Interest Period ending in the month during which such Monthly Payment
Date occurs, plus (ii) the amount of any default interest and/or late fees then
due and owing to Mezzanine B Lender by Mezzanine B Borrower under the Mezzanine
B Loan Documents.

 

“Original Mezzanine B Release Amount” shall mean, as to any Individual Property,
the “Release Amount” (as defined in the Mezzanine B Loan Agreement) as to such
Individual Property.

 

“Other Charges” shall mean all ground rents, including Ground Rent, maintenance
charges, impositions other than Taxes and any other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining any Individual Property, now or hereafter levied or assessed or
imposed against such Individual Property or any part thereof.

 

“Other Connection Taxes” means, with respect to Lender, Special Taxes imposed as
a result of a present or former connection between Lender and the jurisdiction
imposing such Special Tax (other than connections arising from such Lender
having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in any Loan or Loan Document).

 

“Other Obligations” shall mean (a) the performance of all obligations of
Borrower and Leasehold Pledgor contained herein; (b) the performance of each
obligation of Borrower and Leasehold Pledgor contained in any other Loan
Document; and (c) the performance of each obligation of Borrower and Leasehold
Pledgor contained in any renewal, extension, amendment, modification,
consolidation, change of, or substitution or replacement for, all or any part of
this Agreement, the Note or any other Loan Document.

 

“Outstanding Mezzanine B Principal Balance” shall mean, as of any date, the
outstanding principal balance of the Mezzanine B Loan.

 

“Outstanding Mortgage Principal Balance” shall mean, as of any date, the
outstanding principal balance of the Mortgage Loan.

 

“Outstanding Principal Balance” shall mean, as of any date, the outstanding
principal balance of the Loan.

 

“Owner” shall have the meaning set forth in the Recitals hereto.

 

 -29-Mezzanine Loan Agreement

 

 

“Owner’s Title Policies” shall mean, collectively, the “Policies” as such term
is defined in the Assignments of Title Insurance Proceeds.

 

“PACE Loan” shall mean (x) any “Property-Assessed Clean Energy loan” or (y) any
other indebtedness, without regard to the name given to such indebtedness, which
is (i) incurred for improvements to the Property for the purpose of increasing
energy efficiency, increasing use of renewable energy sources, resource
conservation, or a combination of the foregoing, and (ii) repaid through
multi-year assessments against the Property.

 

“PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT
Act) of 2001, as the same may be amended from time to time, and corresponding
provisions of future laws.

 

“Permitted Encumbrances” shall mean, collectively, (i) the Liens and security
interests created by the Loan Documents and (ii) Permitted Transfers.

 

“Permitted Encumbrances (Mortgage Loan)” shall mean, collectively, (i) the Liens
and security interests created by the Mortgage Loan Documents, (ii) all Liens,
encumbrances and other matters disclosed in the Title Insurance Policy, (iii)
Liens, if any, for Taxes or Other Charges imposed by any Governmental Authority
not yet delinquent or being contested in good faith and by appropriate
proceedings in accordance with Section 4.6, (iv) any workers’, mechanics’ or
other similar Liens on any Individual Property provided that any such Lien is
bonded or discharged within thirty (30) days after Borrower first receives
written notice of such Lien or which is being contested in good faith in
accordance with the requirements of Section 4.3, (v) Permitted Transfers, (vi)
such other title and survey exceptions as Lender has approved or may approve in
writing in Lender’s reasonable discretion, (vii) covenants, conditions,
restrictions on use of real property and other similar matters entered into in
the ordinary course of business that would not have a material adverse effect on
the use, occupancy or access to the applicable Individual Property, and (viii)
any other Liens expressly permitted pursuant to clauses (ii), (iv) or (v)(2) of
Section 4.2(b) hereof.

 

“Person” shall mean any individual, corporation, partnership, limited liability
company, joint venture, estate, trust, unincorporated association, any other
entity, any Governmental Authority and any fiduciary acting in such capacity on
behalf of any of the foregoing.

 

“Physical Conditions Report” shall mean, with respect to each Individual
Property, one or more reports prepared by companies reasonably satisfactory to
Lender regarding the physical condition of such Individual Property,
satisfactory in form and substance to Lender in its sole discretion, which
report shall, among other things, (i) confirm that such Individual Property and
its use comply, in all material respects, with all applicable Legal Requirements
(including zoning, subdivision and building laws), and (ii) include a copy of a
final certificate of occupancy with respect to all Improvements.

 

“PIP” shall mean any property improvement plan now or subsequently required by
any Franchisor under the applicable Franchise Agreement.

 

“PIP Expenses” shall mean FF&E Expenses and Capital Expenditures incurred by
Owner or Operating Lessee for PIP Work.

 

 -30-Mezzanine Loan Agreement

 

 

“PIP Work” shall mean the FF&E and other capital improvements required pursuant
to any PIP to be installed and/or completed by Owner or Operating Lessee.

 

“Pledge Agreement” shall have the meaning set forth in the Recitals hereto.

 

“Pledged Collateral” shall mean the 100% ownership interest of Borrower or
Leasehold Pledgor, as applicable, in the entities listed on Schedule XIII.

 

“Pledged Securities” shall have the meaning set forth in the Pledge Agreement.

 

“Pledgor” shall have the meaning set forth in the Preamble hereto.

 

“Portland Property” shall mean that certain Individual Property referred to as
the Residence Inn Portland Downtown/Lloyd Center having an address at 710 NE
Multnomah Street, Portland, Oregon 97232.

 

“Post-Closing Agreement” shall mean that certain Post-Closing Agreement dated as
of the Closing Date made by Borrower and Leasehold Pledgor for the benefit of
Lender.

 

“Pre-Approved Control Party” shall have the meaning set forth in the Mortgage
Loan Agreement.

 

“Prepayment Notice” shall mean a prior written notice to Lender specifying the
proposed Business Day on which a prepayment of the Debt is to be made pursuant
to Section 2.4 hereof, which date must be a Business Day and shall be no earlier
than fifteen (15) days after the date of such Prepayment Notice (other than any
prepayment of the Debt made at the closing and pursuant to the definitive
documentation of any Assumption, in which case such date shall be no earlier
than three (3) days after the date of such Prepayment Notice) and no later than
sixty (60) days after the date of such Prepayment Notice (unless in connection
with an Immediate Low Cash Flow Trigger Cure, in which case, the definition of
Low Cash Flow Trigger Period shall govern). Such Prepayment Notice shall be
revocable at any time and for any reason by Borrower and may be adjourned on a
day-to-day basis on reasonable notice to Lender, but Borrower shall pay Lender’s
actual expenses incurred in connection with such revocation and/or adjournment.

 

“Prime Rate” shall mean the rate of interest published in The Wall Street
Journal from time to time as the “Prime Rate”. If more than one “Prime Rate” is
published in The Wall Street Journal for a day, the average of such “Prime
Rates” will be used, and such average will be rounded up to the nearest 1/100th
of one percent (0.01%). If The Wall Street Journal ceases to publish the “Prime
Rate,” Lender will select an equivalent publication that publishes such “Prime
Rate,” and if such “Prime Rates” are no longer generally published or are
limited, regulated or administered by a governmental or quasi-governmental body,
then Lender will select a comparable interest rate index.

 

“Prime Rate Loan” shall mean the Loan at such time as interest thereon accrues
at a rate of interest based upon the Prime Rate.

 

“Prior Loans” shall mean, collectively, the loans described on Schedule IX.

 

 -31-Mezzanine Loan Agreement

 

 

“Properties” shall mean, collectively, each and every Individual Property which
is subject to the Mortgage Loan Agreement and has not theretofore been released
in accordance therewith.

 

“Qualified Equityholder” means (i) Guarantor or any successor thereto by merger,
acquisition, initial public offering or similar corporate transaction, (ii)
Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC or any of
its Affiliates, (iii) any entity approved by Lender and Mezzanine B Lender and
with respect to which Rating Agency Confirmation is received (or prior to a
Securitization, is approved by Mortgage Lender), or (iv) a Qualified Transferee
that is a Qualified Institution, provided in each case under this clause (iv)
that such Qualified Institution (A) has total assets in the United States or
Canada (in name or under management) in excess of $650,000,000 and a
capital/statutory surplus or shareholder equity in excess of $250,000,000, in
each case, exclusive of the Property, and (B) if the applicable transfer results
in a change of Control of Borrower, then following such transfer Borrower shall
be Controlled by a Qualified Institution that is in the business of regularly
investing in or operating hospitality real estate assets or other commercial
properties.

 

“Qualified Institution” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Qualified Manager” shall mean (i) each Manager as of the Closing Date with
respect to the Individual Properties managed by such Manager as of the Closing
Date, (ii) any property manager listed on Schedule X hereto (or that is
Controlled by or under common Control with any property management company on
such list), or (iii) any property manager that is reasonably approved by Lender
and Mortgage Lender.

 

“Qualified Transferee” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Rate Substitution Conditions” shall have the meaning specified in
Section 2.2.4(a).

 

“Rating Agencies” shall mean, prior to a Securitization, any
nationally-recognized statistical rating organization (e.g. Standard & Poor’s
Ratings Services, Moody’s Investor Service, Inc., Fitch, Inc., DBRS, Inc. or any
successor thereto) that has been or will be engaged by Lender or its designees
in connection with, or in anticipation of, a Securitization, and following a
Securitization, each of the Rating Agencies that has issued a credit rating for
the Securities. Prior to a Securitization of the Loan, any approval required of
a Rating Agency hereunder shall be deemed obtained if the corresponding approval
of a Rating Agency under the Mortgage Loan Agreement had been obtained in
respect of the same event.

 

“Rating Agency Confirmation” shall mean a written affirmation from each of the
Rating Agencies that has issued a credit rating for the Securities that the
credit rating of such Securities by such Rating Agency immediately prior to the
occurrence of the event with respect to which such Rating Agency Confirmation is
sought will not be qualified, downgraded or withdrawn as a result of the
occurrence of such event, which affirmation may be granted or withheld in such
Rating Agency’s sole and absolute discretion. Notwithstanding the foregoing, in
the event the Loan is not, but the Mortgage Loan is, included in a
Securitization, any Rating Agency Confirmation hereunder shall be deemed
obtained if Rating Agency Confirmation under the Mortgage Loan Agreement in
respect of the same event has been obtained.

 

 -32-Mezzanine Loan Agreement

 

 

“REAs” shall mean, collectively, those certain agreement(s) more particularly
described on Schedule VII attached hereto and made a part hereof, as the same
may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the terms of this Agreement.

 

“Red Zone Property” shall mean each Individual Property listed on Schedule XXI.

 

“Regulation AB” shall mean Regulation AB under the Securities Act and the
Exchange Act, as such Regulation may be amended from time to time.

 

“Related Loan” shall mean a loan to an Affiliate of Borrower, Leasehold Pledgor,
Owner, any Operating Lessee or any Guarantor or secured by a Related Property,
that is included in a Securitization with the Loan, and any other loan that is
cross-collateralized with the Loan.

 

“Related Property” shall mean a parcel of real property, together with
improvements thereon and personal property related thereto, that is “related”
within the meaning of the definition of Significant Obligor, to any Individual
Property.

 

“Release Amount” shall mean, as to any Individual Property that is subject to a
release and associated partial prepayment of the Loan pursuant to Section 2.4
and Section 2.5.2, the product of (x) the Release Amount Percentage multiplied
by (y) the Allocated Loan Amount for such Individual Property.

 

“Release Amount Factor” shall mean the percentage by which the Allocated Loan
Amount is multiplied to determine the Release Amount.

 

“Release Amount Percentage” shall be, with respect to any Individual Property
that is subject to a release and associated partial prepayment of the Loan
pursuant to Section 2.4 and Section 2.5.2:

 

(a) 105% if the Outstanding Principal Balance (after giving effect to the
reduction of the Outstanding Principal Balance by the Release Amount for such
Individual Property, assuming for purposes of this clause (a), a Release Amount
Factor of 105% is used to determine the Release Amount for such Individual
Property) equals or exceeds a floor of $75,000,000.00 (the “First Floor
Balance”); or

 

(b) 110% if the Outstanding Principal Balance (after giving effect to the
reduction of the Outstanding Principal Balance by the Release Amount for such
Individual Property, assuming for purposes of this clause (b) a Release Amount
Factor of 110% is used to determine the Release Amount for such Individual
Property) is less than the First Floor Balance;

 

provided (this proviso, the “Straddle Proviso”), that if the Outstanding
Principal Balance is above the First Floor Balance prior to prepayment of the
Release Amount for such Individual Property (determined using the Release Amount
Percentage derived by application of the terms of clauses (a)-(b) above and
without giving effect to this Straddle Proviso), and after application of such
Release Amount, the Outstanding Principal Balance would be reduced below the
First Floor Balance (a “Straddle Floor Balance”), the Release Amount Percentage
for such Individual Property then subject to release (the “Straddle Property”)
shall be a pro rata blended percentage, based upon the following:

 

 -33-Mezzanine Loan Agreement

 

 

(i) the Allocated Loan Amount for the Straddle Property shall be divided for
calculation purposes pursuant to this Straddle Proviso into two hypothetical
components, the first (the “First Hypothetical Component”) being equal to the
portion of such Allocated Loan Amount which, when multiplied by the Release
Amount Percentage applicable (without giving effect to this Straddle Proviso) if
the Outstanding Principal Balance were higher than the Straddle Floor Balance
(the “Above Straddle Percentage”), would result (upon application of the product
of such multiplication of the First Hypothetical Component by the Above Straddle
Percentage in reduction of the Outstanding Principal Balance) in an Outstanding
Principal Balance equal to the Straddle Floor Balance, and the second (the
“Second Hypothetical Component”) being equal to the Allocated Loan Amount for
such Straddle Property less the First Hypothetical Component;

 

(ii) the Second Hypothetical Component shall be assigned for calculation
purposes pursuant to this Straddle Proviso a Release Amount Percentage equal to
the Release Amount Percentage applicable (without giving effect to this Straddle
Proviso) if the Outstanding Principal Balance were less than the Straddle Floor
Balance (the “Below Straddle Percentage”); and

 

(iii) the Release Amount Percentage for the Straddle Property shall be equal to
the sum of (A) the Above Straddle Percentage multiplied by a fraction, the
numerator of which is the First Hypothetical Component and the denominator of
which is the Allocated Loan Amount for such Straddle Property plus (B) the Below
Straddle Percentage multiplied by a fraction, the numerator of which is the
Second Hypothetical Component and the denominator of which is the Allocated Loan
Amount for such Straddle Property.

 

By way of example of the foregoing, if the Outstanding Principal Balance were
$90,750,000 immediately prior to the release of an Individual Property with an
Allocated Loan Amount of $20,000,000, such Individual Property would be a
Straddle Property, to which this Straddle Proviso applies, and (x) the First
Hypothetical Component would be $15,000,000 (because $15,000,000 multiplied by
an Above Straddle Percentage of 105% equals $15,750,000), which when applied to
reduce the Outstanding Principal Balance results in the Outstanding Principal
Balance equal to the First Floor Balance, which is the Straddle Floor Balance in
this example, (y) the Second Hypothetical Component is $5,000,000 (the
$20,000,000 Allocated Loan Amount minus the First Hypothetical Component) and
the Below Straddle Percentage is 110%, and (z) the Release Amount Percentage is
106.25% (106.25% = (105% X $15,000,000/$20,000,000) + (110% X
$5,000,000/$20,000,000)).

 

“REMIC Opinion” shall mean, as to any matter, an opinion of nationally
recognized REMIC counsel as to the compliance of such matter with applicable
REMIC Requirements (which such opinion shall be, in form and substance and from
a provider, in each case, reasonably acceptable to Lender and acceptable to the
Rating Agencies).

 

 -34-Mezzanine Loan Agreement

 

 

“REMIC Requirements” shall mean any applicable legal requirements, as determined
under the Code, the regulations, revenue rulings, revenue procedures (such as
Rev. Proc. 2010-30) and other administrative, legislative and judicial guidance,
relating to the tax treatment of REMIC Trusts, including, without limitation,
the continued treatment of a Loan as a “qualified mortgage,” the continued
qualification of any REMIC Trust as a REMIC, the non-imposition of any tax on
any REMIC Trust, including without limitation the taxes on “prohibited
transactions” and “contributions,” and any other constraints, rules or other
regulations or requirements relating to the servicing, modification or other
similar matters with respect to a REMIC-held mortgage Loan (or any portion
thereof or interest therein) that may exist or be promulgated under the Code.

 

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

 

“Rents” shall mean all rents, rent equivalents, revenues from the rental of
rooms, guest suites, conference and banquet rooms, food and beverage facilities,
health clubs, spas or other amenities, telephone services, laundry, vending,
television and parking, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, Operating Rent
and other consideration of whatever form or nature received by or paid to or for
the account of or benefit of Owner, Operating Lessee or any of their respective
agents or employees from any and all sources arising from or attributable to the
Properties, all other items of revenue, receipts or other income as identified
in the Uniform System of Accounts, current edition, and Insurance Proceeds, if
any, from business interruption or other loss of income insurance, but only to
the extent Mortgage Lender elects to treat such Insurance Proceeds as business
or rental interruption Insurance Proceeds pursuant to Section 5.4(f) of the
Mortgage Loan Agreement.

 

“Repayment Date” shall mean the date of a prepayment of the Loan pursuant to the
provisions of Section 2.4 hereof.

 

“Replacement Interest Rate Cap Agreement” shall mean an interest rate cap
agreement from an Approved Counterparty with terms that are the same in all
material respects as the terms of the Interest Rate Cap Agreement except that
the same shall be effective as of (i) in connection with a replacement pursuant
to Section 2.6.3(c) or (ii) in connection with a replacement (or extension of
the then-existing Interest Rate Cap Agreement) in connection to an extension of
the Maturity Date pursuant to Section 2.7, the date required in Section 2.7;
provided that to the extent any such interest rate cap agreement does not meet
the foregoing requirements, a Replacement Interest Rate Cap Agreement shall be
such interest rate cap agreement approved in writing by Lender, and if the Loan
or any portion thereof is included in a Securitization, each of the Rating
Agencies with respect thereto.

 

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

 

 -35-Mezzanine Loan Agreement

 

 

“Restricted Payments” shall mean any payments to any Guarantor or any of its
respective Affiliates, or any payments of any “override” or “profit
participations”, asset management or incentive-based fees or expenses, or any
transition or termination fees, costs or expenses, or their equivalent;
provided, however, that “Restricted Payments” shall not include (i) any
Management Fees that are payable to any Manager (that is not an Affiliate of
Owner, Operating Lessee, Borrower or Leasehold Pledgor) pursuant to any
Management Agreement that has been approved by Lender (including approval of any
amendments thereto), (ii) any Base Management Fees that are payable to any
Manager that is an Affiliate of Owner, Operating Lessee, Borrower or Leasehold
Pledgor pursuant to any Management Agreement that has been entered into in
accordance with Section 4.14 (including any amendments thereto) (provided no
Event of Default exists) or (iii) any payments required to be made by the terms
of the Mortgage Loan Documents.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of the S&P
Global Inc.

 

“Securitization Vehicle” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Security Deposits” shall mean all security (whether cash, letters of credit or
otherwise) given to Owner or any agent or Person acting on behalf of Owner in
connection with any Leases.

 

“Security Documents” shall mean collectively, (i) the Pledge Agreement, (ii) a
notice of pledge to Owner, (iii) all Uniform Commercial Code financing
statements required by this Agreement to be filed with respect to the security
interests in personal property created pursuant to the Security Documents, and
(iv) all other documents and agreements executed or delivered to Lender by
Borrower and/or Leasehold Pledgor in connection with any of the foregoing
documents.

 

“Significant Obligor” shall have the meaning set forth in Item 1101(k) of
Regulation AB under the Securities Act.

 

“SPC Party” shall mean, collectively, the Borrower’s general partner, and each
Individual Owner’s and/or Operating Lessee’s general partner, if any.

 

“Special Purpose Bankruptcy Remote Entity” shall mean an entity that, at all
relevant times, has complied and will comply with (a) as to Borrower and
Leasehold Pledgor, the representations, warranties and covenants set forth in
Schedule V, and (b) as to each Owner and Operating Lessee, the representations,
warranties and covenants set forth in Schedule V to the Mortgage Loan Agreement
as in effect as of the Closing Date (a copy of which is attached hereto as
Schedule V-1).

 

“Special Taxes” shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

 

“Spread Maintenance Date” shall mean the Monthly Payment Date occurring in May,
2020.

 

“Spread Maintenance Premium” shall mean, with respect to any payment or
prepayment of the principal of the Loan (or acceleration of the Loan) prior to
and including the Spread Maintenance Date, an amount equal to the product of (i)
the Applicable Spread; (ii) the portion of the Loan that is being prepaid or
repaid that is subject to the Spread Maintenance Premium; and (iii) a fraction,
the numerator of which is the number of days following the date through which
interest on the prepaid amount has been paid to the end of the full accrual
period associated with the Spread Maintenance Date and the denominator of which
is 360.

 

 -36-Mezzanine Loan Agreement

 

 

“Star Report” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“State” shall mean New York State.

 

“Strike Price” shall mean the actual “strike price” of the Interest Rate Cap
Agreement or any Replacement Interest Rate Cap Agreement, which shall never
exceed the applicable Capped LIBOR Rate.

 

“Subordination of Management Agreements” shall mean those certain Subordinations
of Management Agreement dated as of the date hereof among Borrower, Leasehold
Pledgor, the applicable Manager and Lender.

 

“Substitute Base Rate” shall mean, for any Interest Period, the rate of the
Substitute Index determined as of the Interest Determination Date immediately
preceding the commencement of such Interest Period, provided, that, in no event
shall the Substitute Base Rate be less than the Index Floor.

 

“Substitute Index” shall mean a floating rate index (a) that is commonly
accepted by market participants in commercial mortgage backed securities
transactions as an alternative to LIBOR, as determined by Lender in good faith,
and (b) that is publicly recognized by the International Swaps and Derivatives
Association (ISDA) as an alternative to LIBOR.

 

“Substitute Interest Rate Protection Agreement” shall mean (a) an interest rate
cap agreement (together with the confirmation and schedules relating thereto) in
form and substance reasonably satisfactory to Lender between an Approved
Counterparty and Borrower, obtained by Borrower and collaterally assigned to
Lender as required pursuant to this Agreement that contains each of the
following:

 

i.     a term expiring no earlier than the end of the Interest Period related to
the then-applicable Maturity Date;

 

ii.    the notional amount of the Substitute Interest Rate Protection Agreement
shall be equal to or greater than the then outstanding principal balance of the
Loan;

 

iii.   it provides that the only obligation of Borrower thereunder is the making
of a single payment to the Counterparty thereunder upon the execution and
delivery thereof;

 

iv.   it provides for a strike rate equal to the Capped LIBOR Rate and complies
with the terms of Section 2.6 hereof; and

 

v.    without limiting any of the provisions of the preceding clauses (i)
through (iv) above, it satisfies all of the requirements set forth in
Section 2.6 hereof; or

 

 -37-Mezzanine Loan Agreement

 

  

(b) a modification or amendment to the then-existing Interest Rate Protection
Agreement entered into in writing by Borrower and an Approved Counterparty which
causes such Interest Rate Protection Agreement to satisfy the requirements of
clause (a) of this definition of “Substitute Interest Rate Protection
Agreement”.

 

“Substitute Rate” shall mean, with respect to each Interest Period that occurs
while the Loan is a Substitute Rate Loan, a per annum interest rate equal to the
Substitute Base Rate applicable to the Interest Period plus the Substitute Rate
Spread; provided, however, in no event shall the Substitute Rate be less than
the Index Floor plus the Applicable Spread.

 

“Substitute Rate Loan” shall mean the Loan at any time in which the Applicable
Interest Rate is calculated at the Substitute Rate.

 

“Substitute Rate Spread” shall mean, in connection with any conversion of the
Loan from (a) a LIBOR Loan to a Substitute Rate Loan the difference (expressed
as the number of basis points) between (i) LIBOR plus the Applicable Spread as
of the Interest Determination Date for which LIBOR was last utilized to
determine the interest rate of the Loan minus (ii) the Substitute Base Rate as
of such Interest Determination Date for which LIBOR was last utilized to
determine the interest rate of the Loan, or (b) a Base Rate Loan to a Substitute
Rate Loan the difference (expressed as the number of basis points) between (i)
the Base Rate in effect for the Interest Period prior to the Interest Period in
which the Substitute Rate is to be applied minus (ii) the Substitute Base Rate
in effect for the Interest Period prior to the Interest Period in which the
Substitute Rate is to be applied; provided, however, that if such difference is
a negative number, then the Substitute Rate Spread shall be zero.

 

“Surveys” shall mean the surveys of each Individual Property prepared by a
surveyor licensed in the state in which each Individual Property is located and
reasonably satisfactory to Lender and the company or companies issuing the
Title Insurance Policy, and containing a certification of such surveyor
reasonably satisfactory to Lender.

 

“Taxes” shall mean all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against the Properties, any Individual Property or part thereof, together with
all interest and penalties thereon. For the avoidance of doubt, “Taxes” shall
not include income, branch profits, franchise, sales, hotel room occupancy
taxes, commercial rent or occupancy taxes and other similar charges, taxes or
expenses. In no event shall any PACE Loan be considered a Tax for purposes of
this Agreement.

 

“Tenant” shall mean any Person obligated by contract or otherwise to pay monies
(including a percentage of gross income, revenue or profits) under any Lease now
or hereafter affecting all or any part of an Individual Property.

 

“Term” shall mean the entire term of this Agreement, which shall expire upon
repayment in full of the Debt.

 

“Title Insurance Policy” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“TRIPRA” shall mean the Terrorism Risk Insurance Program Reauthorization Act of
2002 or any extension, renewal or replacement thereof.

 

 -38-Mezzanine Loan Agreement

 

  

“Trigger Period” shall commence upon (i) the occurrence of a Mortgage Loan
Default, (ii) the occurrence of an Event of Default, (iii) the occurrence of a
Mezzanine B Loan Default or (iv) the commencement of a Low Cash Flow Trigger
Period; and shall end if, (A) with respect to a Trigger Period continuing
pursuant to clause (i), the Mortgage Loan Default commencing the Trigger Period
either (1) was a “Qualified Release Property Default” under the Mortgage Loan
Documents and has been cured by the release of the applicable Individual
Property and associated partial prepayment of the Mortgage Loan in accordance
with, and within the time period provided in, Section 2.5.2 of the Mortgage Loan
Agreement, or (2) has been waived in writing by Mortgage Lender or Mortgage
Lender has accepted a cure of such Mortgage Loan Event of Default (and no other
Mortgage Loan Default is then continuing) (and a copy of such written waiver
shall have been delivered by the Borrower or Mortgage Lender to Lender), (B)
with respect to a Trigger Period continuing pursuant to clause (ii), the Event
of Default commencing the Trigger Period either (1) was a Qualified Release
Property Default and has been cured by the release of the applicable Individual
Property and associated partial prepayment of the Loan in accordance with, and
within the time period provided, in Section 2.5.2 hereof, or (2) has been waived
in writing by Lender or Lender has accepted a cure of such Event of Default, and
a copy of such written waiver of acceptance of cure, as applicable, shall have
been delivered by Lender to Mortgage Lender (and no other Event of Default is
then continuing), (C) with respect to a Trigger Period continuing pursuant to
clause (iii), the Mezzanine B Loan Default commencing the Trigger Period either
(1) was a “Qualified Release Property Default” under the Mezzanine B Loan
Documents and has been cured by the release of the applicable Individual
Property and associated partial prepayment of the Mezzanine B Loan in accordance
with, and within the time period provided in, Section 2.5.2 of the Mezzanine B
Loan Agreement, or (2) has been waived in writing by Mezzanine B Lender or
Mezzanine B Lender has accepted a cure of such Mezzanine B Loan Event of Default
(and no other Mezzanine B Loan Default is then continuing) (and a copy of such
written waiver shall have been delivered by the Borrower or Mezzanine B Lender
to Lender), or (D) with respect to a Trigger Period continuing due to
clause (iii), the Low Cash Flow Trigger Period has ended pursuant to the terms
hereof.

 

“Trustee” shall mean any trustee holding the Loan in a Securitization.

 

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State of formation of Borrower and Leasehold Pledgor.

 

“UCC Title Insurance Policy” shall mean, with respect to the Collateral, a UCC
title insurance policy in the form reasonably acceptable to Lender issued with
respect to the Collateral and insuring the lien of the Pledge Agreement
encumbering such Collateral.

 

“Uncalled Commitments” means, with respect to a Person the capital commitments
of such Person that are unencumbered, have not yet been called and (a) are
eligible to be called (i.e., such Person has the right to call such commitments
under the investment fund constituent documents) without having to comply with
or satisfy any conditions precedent (other than notification that the required
portion of their commitments are being called) and (b) are made by institutional
investors or “Accredited Investors” (as defined under US securities laws) and in
the case of (a) and (b), that (i) are not subject to a proceeding under the
Bankruptcy Code or under federal, state or foreign insolvency law and (ii) are
not in default under a material provision of their respective subscription
agreements.

 

 -39-Mezzanine Loan Agreement

 

  

“Underwritten Net Cash Flow” shall have the meaning set forth in the Mortgage
Loan Agreement.

 

“Uniform System of Accounts” shall mean the most recent edition of the Uniform
System of Accounts for Hotels, as adopted by the American Hotel and Motel
Association, as from time to time amended.

 

“U.S. Obligations” shall mean securities evidencing an obligation to timely pay
principal and/or interest in a full and timely manner that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged, and (ii) not subject to prepayment, call or early
redemption.

 

“Waste” shall mean any material abuse or, other than demolition in connection
with a Restoration or Alteration conducted in accordance with the Loan
Documents, destructive use of any Individual Property.

 

Section 1.2           Index of Other Definitions. The following terms are
defined in the sections or Loan Documents as indicated below:

 

“Accounts” - 6.1

“Acquired Ground Lease” – Schedule V

“Act” - Schedule V

“Approved Annual Budget” - 4.9.5

“Approved Excess Operating Expense” - 4.9.6

“Approved Scheduled PIP Budget” – Section 1.1 - Definition of Approved Scheduled
PIP Expenses

“Assumption Agreement” – 7.1(a)

“Bail-In Action” – 10.32

“Bail-In Legislation” – 10.32

“Borrower’s Recourse Liabilities” - 10.1

“Breakage Costs” – 2.2.4(j)

“Broker” - 10.19

“Casualty” - 5.2

“Cause” - Schedule V

“Committee” – Schedule V

“Counterparty Opinion” - 2.6.3

“Covered Rating Agency Information” – 9.2

“Deposit Account” – 6.1

“Disclosure Document” - 9.2(a)

“Disposition Conditions” – 4.2(b)

“EEA Financial Institution” – 10.32

“EEA Member Country” – 10.32

“EEA Resolution Authority” – 10.32

“Embargoed Person” - 4.32(c)

“Equipment” – Mortgage

“ERISA” - 4.31

“EU Bail-In Legislation Schedule” – 10.32

“Event of Default” - 8.1

“Excess Operating Expenses” – 4.9.6

 

 -40-Mezzanine Loan Agreement

 

  

“Exchange Act” - 9.2(a)

“Exchange Act Filing” - 9.1(d)

“Existing Qualified Equityholder” – 7.2(j)

“FF&E Work” – Mortgage Loan Agreement

“First Extended Maturity Date” - 2.7.1

“First Extended Term” - 2.7.1

“First Extension Notice” - 2.7.1

“First Extension Option” - 2.7.1

“Fixtures” – Mortgage

“Flagging Costs” - 4.34(e)

“Full Replacement Cost” – 5.1.1(a)(i)

“Funds” – 6.6

“Furnished Information” – 9.5

“Immaterial Transfers” – 4.2

“Immediate Low Cash Flow Trigger Cure” Section 1.1 - Definition of Low Cash Flow
Trigger Period

“Impaired Individual Property” – 2.4.4(c)

“Impaired Individual Property Prepayment” – 2.4.4(c)

“Impaired Individual Property Prepayment Conditions” – 2.4.4(c)

“Impaired Individual Property Prepayment Outside Date” – 2.4.4(b)

“Impaired Individual Property Release Amount” – 2.4.4(c)

“Impaired Individual Property Release Conditions” 2.5.3

“Improvements” – Mortgage

“Increased Costs” - 2.8.1

“Indemnified Liabilities” - 4.30

“Independent Director” - Schedule V

“Independent Manager” – Schedule V

“Initial Interest Period” - 2.3.1

“Insurance Premiums” - 5.1.1(b)

“Intellectual Property” - 3.1.33

“Interest Period” - 2.3.2

“Lender Group” - 9.2(b)

“Liabilities” - 9.2(b)

“Licenses” - 3.1.9

“Liquidated Damages Amount” - 2.4.5(b)

“Manager’s Expenses” – 6.1

“Material Action” – Schedule V

“Material Adverse Effect” – 4.2

“Material Lease” – 4.1.11

“Nationally Recognized Service Company” - Schedule V

“Net Impaired Individual Property Release Amount” – 2.4.4(c)

“Net Proceeds Principal Prepayment” – 2.4.4(b)

“Note” – 2.1.4

“Note A-1” – 2.1.4

“Note A-2” – 2.1.4

“Note A-3” – 2.1.4

“Note A-4” – 2.1.4

“Note A-5” – 2.1.4

 

 -41-Mezzanine Loan Agreement

 

  

“Notice” - 10.6

“Other Exculpated Party” – 10.1

“Other Taxes” - 2.8.3

“Participant Register” – 10.30(b)

“Permitted Indebtedness” - 4.21

“Permitted Direction Assumption” – 7.1(a)

“Permitted Indirection Assumption” – 7.1(b)

“Permitted Transfer” - 7.2

“Policies” - 5.1.1(b)

“Preferred Guaranty” - 7.2(k)

“Property Uncross” – 9.3.4

“QEH Replacement Guarantor” - 7.2(j)(iii)

“QEH Transferee” - 7.2(j)

“Qualified Carrier” - 5.1.1(i)

“Qualified Release Property Default” – 2.5.2

“Rate Cap Collateral” - 2.6.2

“Rate Substitution Conditions” – 2.2.4(a)

“Register” – 10.30(a)

“Release Conditions” – 2.5.2

“Release Property” – 2.5.2

“Replacement Guarantor” – 7.1

“Replacement Cash Management Agreement” – 6.7

“Required Records” - 4.9.7

“Reserve Accounts” – 6.2

“Resizing” – 9.3.1

“Review Waiver” - 10.3(b)

“Scheduled PIP” – 3.1.38

“Second Extended Maturity Date” - 2.7.1

“Second Extended Term” - 2.7.1

“Second Extension Notice” - 2.7.1

“Second Extension Option” - 2.7.1

“Secondary Market Transaction” - 9.1(a)

“Securities” - 9.1(a)

“Securities Act - 9.2(a)

“Securitization” - 9.1(a)

“Servicer” - 10.21

“Servicing Agreement” - 10.21

“Sole Member” – Schedule V

“Special Member” - Schedule V

“Springing Recourse Event” - 10.1

“Stated Maturity Date” – Section 1.1 - Definition of Maturity Date

“Substitute Guarantor” – 7.1(h)

“Summary Financial Information” – 9.5(b)

“Third Extended Maturity Date” - 2.7.1

“Third Extended Term” - 2.7.1

“Third Extension Notice” - 2.7.1

“Third Extension Option” - 2.7.1

 

 -42-Mezzanine Loan Agreement

 

  

“Transfer” - 4.2

“Transferee Borrower” - 7.1(a)

“TRS Lessee” – 7.1(e)

“Underperforming Replacement” – 4.14.2(c)

“Underwriter Group” - 9.2(b)

“Updated Information” - 9.1(b)(i)

“Write-Down and Conversion Powers” – 10.32

 

Section 1.3           Principles of Construction.

 

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

 

1.3.2      Borrower and Lender hereby acknowledge and agree that, as to any
clause or provision contained in this Agreement or any of the other Loan
Documents to the effect that (i) Borrower or Leasehold Pledgor covenants on
behalf of or with respect to, Owner, Operating Lessee or any SPC Party thereto,
as applicable, or on behalf of or with respect to the Property or other related
matters, (ii) Borrower or Leasehold Pledgor shall cause or permit any Owner,
Operating Lessee or any SPC Party thereto as applicable, to act or to refrain
from acting, to comply with, to permit, to perform, to pay, to furnish, to cure,
to remove, to observe, to deliver, to suffer, to initiate, to provide, to
furnish in any manner or (iii) Borrower or Leasehold Pledgor shall or Borrower
or Leasehold Pledgor shall cause to occur or to not occur, or otherwise be
obligated in any manner with respect to any matters pertaining to, Owner,
Operating Lessee, any SPC Party as applicable, or the Property or other related
matters, such clause or provision is intended to mean, and shall be construed as
meaning, that Borrower or Leasehold Pledgor has undertaken any of the foregoing
only in Borrower’s or Leasehold’s Pledgor capacity as the sole member and
manager of Owner, Operating Lessee or the SPC Party, as applicable, and not in
any other capacity with respect to any Owner, Operating Lessee or the Property
or in any other manner which would violate any of the representations,
warranties or covenants contained in Section 3.1.1 of this Agreement, any other
similar separateness covenants contained in Borrower’s, Leasehold Pledgor’s or
the organizational documents of any Owner, Operating Lessee or SPC Party
thereto, or any other similar separateness covenants contained in the Mortgage
Loan Documents.

 

1.3.3      With respect to references to the Mortgage Loan Documents (including
without limitation terms defined by cross-reference to the Mortgage Loan
Documents), such references shall refer to the Mortgage Loan Documents as in
effect on the Closing Date (and any such defined terms shall have the
definitions set forth in the Mortgage Loan Documents as of the Closing Date) and
no amendments, restatements, replacements, supplements, waivers or other
modifications to or of the Mortgage Loan Documents shall have the effect of
changing such references (including without limitation any such definitions) for
the purposes of this Agreement unless Lender expressly agrees in writing that
such references or definitions, as appearing, incorporated into or used in this
Agreement, have been revised, such agreement not to be unreasonably withheld,
conditioned or delayed.

 

 -43-Mezzanine Loan Agreement

 

  

1.3.4      Notwithstanding anything stated herein to the contrary, any
provisions in this Agreement cross-referencing provisions of the Mortgage Loan
Documents shall be effective notwithstanding the termination of the Mortgage
Loan Documents by payment in full of the Mortgage Loan or otherwise. Upon such
termination, such provisions shall be automatically incorporated herein by
reference.

 

1.3.5      To the extent that any terms, provisions or definitions of any
Mortgage Loan Documents that are incorporated herein by reference are
incorporated into the Mortgage Loan Documents by reference to any other document
or instrument, such terms, provisions or definitions that are incorporated
herein by reference shall at all times be deemed to incorporate each such term,
provision and definition of the applicable other document or instrument as the
same is set forth in such other document or instrument as of the Closing Date,
without regard to any amendments, restatements, replacements, supplements,
waivers or other modifications to or of such other document or instrument
occurring after the Closing Date, unless Lender expressly agrees that such term,
provision or definition as appearing, incorporated into, or used in this
Agreement have been revised. At Borrower’s request from time to time, Lender
shall provide Borrower with the then-current Allocated Loan Amounts.

 

Article 2

 

THE LOAN

 

Section 2.1          The Loan.

 

2.1.1      Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender shall make the Loan to Borrower and Borrower
shall accept the Loan from Lender on the Closing Date.

 

2.1.2      Reserved.

 

2.1.3      Single Disbursement to Borrower. Borrower shall receive only one
borrowing hereunder in respect of the Loan and any amount borrowed and repaid
hereunder in respect of the Loan may not be reborrowed.

 

2.1.4      The Note. The Loan shall be evidenced by (a) that certain Mezzanine A
Promissory Note A-1 of even date herewith, in the stated principal amount of
Twenty Million and No/100 Dollars ($20,000,000.00) executed by Borrower and
payable to MS (as the same may hereafter be amended, supplemented, restated,
increased, extended or consolidated from time to time, “Note A-1”), (b) that
certain Mezzanine A Promissory Note A-2 of even date herewith, in the stated
principal amount of Twenty Million and No/100 Dollars ($20,000,000.00) executed
by Borrower and payable to Citi (as the same may hereafter be amended,
supplemented, restated, increased, extended or consolidated from time to time,
“Note A-2”), (c) that certain Mezzanine A Promissory Note A-3 of even date
herewith, in the stated principal amount of Twenty Million and No/100 Dollars
($20,000,000.00) executed by Borrower and payable to DBNY (as the same may
hereafter be amended, supplemented, restated, increased, extended or
consolidated from time to time, “Note A-3”), (d) that certain Mezzanine A
Promissory Note A-4 of even date herewith, in the stated principal amount of
Twenty Million and No/100 Dollars ($20,000,000.00) executed by Borrower and
payable to GS (as the same may hereafter be amended, supplemented, restated,
increased, extended or consolidated from time to time, “Note A-4”) and (e) that
certain Mezzanine A Promissory Note A-5 of even date herewith, in the stated
principal amount of Twenty Million and No/100 Dollars ($20,000,000.00) executed
by Borrower and payable to JPM (as the same may hereafter be amended,
supplemented, restated, increased, extended or consolidated from time to time,
“Note A-5”; and together with the Note A-1, the Note A-2, the Note A-3 and the
Note A-4, collectively, the “Note”), in the aggregate, in evidence of the Loan,
and shall be repaid in accordance with the terms of this Agreement, the Note and
the other Loan Documents.

 

 -44-Mezzanine Loan Agreement

 

  

2.1.5      Use of Proceeds. Borrower shall use proceeds of the Loan to (i) pay
and discharge any existing mortgage and mezzanine loans secured directly or
indirectly by the Collateral including, without limitation, the Prior Loans,
(ii) pay costs and expenses incurred in connection with the closing of the Loan,
(iii) make capital contributions to Owner and the general partner of certain
Owners and (iv) the extent any proceeds remain after satisfying clauses (i)
through (iii) above, for such lawful purpose as Borrower shall designate.

 

Section 2.2          Interest Rate.

 

2.2.1      Applicable Interest Rate. Subject to the terms and conditions of this
Section, interest on the Outstanding Principal Balance shall accrue throughout
the Term at the Applicable Interest Rate. Borrower shall pay to Lender on each
Monthly Payment Date the interest accrued or to be accrued on the Loan for the
related Interest Period.

 

2.2.2      Default Rate. In the event that, and for so long as, any Event of
Default shall have occurred and be continuing, the Outstanding Principal Balance
and, to the extent not prohibited by applicable law, all other portions of the
Debt, shall accrue interest at the Default Rate, calculated from the date such
payment was due or, if later, such Default shall have occurred without regard to
any grace or cure periods contained herein. Interest at the Default Rate shall
be paid immediately upon demand, which demand may be made as frequently as
Lender shall elect, to the extent not prohibited by applicable law.

 

2.2.3      Interest Calculation. Interest on the Outstanding Principal Balance
shall be calculated by multiplying (A) the actual number of days elapsed in the
period for which the calculation is being made by (B) a daily rate based on a
three hundred sixty (360) day year (that is, the Applicable Interest Rate or the
Default Rate, as then expressed as an annual rate divided by 360) by (C) the
Outstanding Principal Balance of the Loan. The accrual period for calculating
interest due on each Monthly Payment Date shall be the Interest Period ending
immediately prior to such Monthly Payment Date.

 

2.2.4      Conversion of Applicable Interest Rate.

 

(a)          In the event that Lender shall have determined that by reason of
circumstances affecting the interbank Eurodollar market or otherwise:

 

(i)          LIBOR ceases to be reported;

 

(ii)         adequate and reasonable means do not exist for ascertaining LIBOR
as provided in the definition of LIBOR as set forth in this Agreement; or

 

 -45-Mezzanine Loan Agreement

 

  

(iii)        LIBOR has been succeeded by a Substitute Index;

 

then, Lender shall deliver a Conversion Notice to Borrower at least one (1)
Business Day prior to the Interest Determination Date and the Loan shall convert
from a LIBOR Loan to a Substitute Rate Loan and establish the Applicable
Interest Rate for the Loan at the Substitute Rate effective as of the Conversion
Date, provided that, following a Securitization, such conversion shall be
subject to (A) Lender’s receipt of an opinion of nationally recognized REMIC
counsel as to the compliance of such conversion with applicable REMIC
requirements as determined under the Code, the regulations, revenue rulings,
revenue procedures and other administrative, legislative and judicial guidance
relating to the tax treatment of REMIC Trusts (which such opinion shall be, in
form and substance and from a provider, in each case, acceptable to Lender and
the Rating Agencies); provided, however, such condition may be satisfied with
the issuance of a general guidance, ruling, bulletin or decision by the Internal
Revenue Service reasonably acceptable to the Lender, and (B) if the Loan is in a
Securitization, a Rating Agency Confirmation with respect to such conversion
(which Rating Agency Confirmation may be specific to the Loan or in the form of
general guidance from the Rating Agencies that has issued a credit rating for
the Securities) (collectively, the “Rate Substitution Conditions”). Upon
satisfaction of the Rate Substitution Conditions, Lender shall notify Borrower
that the Rate Substitution Conditions have been satisfied. If such notice is
given, the Conversion Date shall be the first day of the next succeeding
Interest Period, and the Loan shall be converted to a Substitute Rate Loan and
the Applicable Interest Rate for the Loan shall be the Substitute Rate.

 

(b)          In the event that Lender shall have delivered a Conversion Notice
to Borrower and a Substitute Index is not available or the Rate Substitution
Conditions cannot be satisfied, then notwithstanding clause (a) above, upon
notice from Lender to Borrower at least one (1) Business Day prior to the
Interest Determination Date that the Substitute Index is not available or the
Rate Substitution Conditions cannot be satisfied, the Loan shall be converted,
from, after and including the first day of the next succeeding Interest Period,
to a Base Rate Loan bearing interest based on the Base Rate in effect on each
applicable Interest Determination Date.

 

(c)          If, pursuant to the terms of Section 2.2.4(b) above, the Loan has
been converted to a Base Rate Loan but thereafter LIBOR has been succeeded by a
Substitute Index and the Rate Substitution Conditions have been satisfied, then
Lender shall deliver a Conversion Notice to Borrower at least one (1) Business
Day prior to the Interest Determination Date and, thereafter, the Base Rate Loan
shall be converted to a Substitute Rate Loan from, after and including the first
day of the next succeeding Interest Period bearing interest based on the
Substitute Rate in effect on each applicable Interest Determination Date.
Further, if the Loan has been converted to a Substitute Rate Loan and thereafter
the Substitute Index becomes unavailable, then notwithstanding anything
contained herein to the contrary, the Loan shall convert from a Substitute Rate
Loan to a Base Rate Loan and establish the Applicable Interest Rate for the Loan
at the Base Rate effective as of the Conversion Date.

 

(d)          If the Loan is a Substitute Rate Loan or a Base Rate Loan and
Lender determines that the event(s) or circumstance(s) which resulted in such
conversion is no longer applicable, Lender shall deliver a Conversion Notice at
least one (1) Business Day prior to the Interest Determination Date to Borrower
converting the Loan to a LIBOR Loan and the Applicable Interest Rate shall be
calculated by reference to LIBOR as provided in the Conversion Notice.

 

 -46-Mezzanine Loan Agreement

 

  

(e)          Upon each conversion of the Loan into a Base Rate Loan or a
Substitute Rate Loan, Borrower shall enter into, make all payments under, and
satisfy all conditions precedent to the effectiveness of, a Substitute Interest
Rate Protection Agreement and deliver to Lender a new Assignment of Rate
Protection Agreement applicable to such Substitute Interest Rate Protection
Agreement within (i) with respect to conversion of the Loan into a Base Rate
Loan, sixty (60) days of the applicable Conversion Date, and (ii) with respect
to conversion of the Loan into a Substitute Rate Loan, thirty (30) days of the
applicable Conversion Date; provided, however, that if a Substitute Interest
Rate Protection Agreement is not then commercially available, Borrower shall
purchase a mutually agreeable alternative to a Substitute Interest Rate
Protection Agreement that would afford Lender substantially equivalent
protection from increases in the Applicable Interest Rate, as reasonably
determined by Lender. In connection with Borrower obtaining a new Substitute
Interest Rate Protection Agreement (in lieu of modifying an existing Interest
Rate Cap Agreement to serve as the Substitute Interest Rate Protection
Agreement), but not prior to Borrower taking all the actions described in this
clause (e), Borrower shall have the right to terminate any then-existing
Interest Rate Cap Agreement.

 

(f)           Notwithstanding any provision of this Agreement to the contrary,
in no event shall Borrower have the right to elect to convert a LIBOR Loan to a
Base Rate Loan or a Substitute Rate Loan, or to convert a Base Rate Loan to a
LIBOR Loan or a Substitute Rate Loan or to convert a Substitute Rate Loan to a
Base Rate Loan or a LIBOR Loan.

 

(g)          Each determination by Lender under this Section 2.2.4, including
the basis for a change in the Applicable Interest Rate for the Loan, the
identification of the Applicable Interest Rate for the Loan or the
identification of the Substitute Index, shall be conclusive and binding upon
Borrower for all purposes, absent manifest error.

 

(h)          In the event of any Change in Law or in the interpretation or
application thereof shall hereafter make it unlawful for Lender to make or
maintain a LIBOR Loan as contemplated hereunder, (i) the obligation of Lender
hereunder to make a LIBOR Loan or to convert a Base Rate Loan or a Substitute
Rate Loan to a LIBOR Loan shall be cancelled forthwith and (ii) any outstanding
LIBOR Loan shall be converted automatically to a Base Rate Loan or Substitute
Rate Loan, as applicable based on the provisions of this Section 2.2.4 on the
first day of the next succeeding Interest Period or within such earlier period
as required by law. Borrower hereby agrees promptly to pay Lender, upon demand,
any additional amounts reasonably necessary to compensate Lender for any
out-of-pocket costs reasonably incurred by Lender in making any conversion in
accordance with this Agreement, including, without limitation, any interest or
fees payable by Lender to lenders of funds obtained by it in order to make or
maintain the LIBOR Loan hereunder. Lender’s notice of such costs, as certified
to Borrower, shall be set forth in reasonable detail and Lender’s calculation
shall be conclusive absent manifest error.

 

(i)           Without limiting the provisions of clauses (a) – (f) above, in the
event of any Change in Law or in the interpretation or application thereof, or
compliance by Lender with any request or directive (whether or not having the
force of law) hereafter issued from any central bank or other Governmental
Authority:

 

 -47-Mezzanine Loan Agreement

 

  

(i)          shall hereafter have the effect of reducing the rate of return on
Lender’s capital (other than as a result of an increase in taxes) as a
consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance (taking into
consideration Lender’s policies with respect to capital adequacy) by any amount
reasonably deemed by Lender to be material;

 

(ii)         shall hereafter impose, modify, increase or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other acquisition of funds by, any
office of Lender which is not otherwise included in the determination of the
rate hereunder (other than as a result of an increase in taxes); or

 

(iii)        shall hereafter impose on Lender any other condition (other than an
increase in taxes) and the result of any of the foregoing is to increase the
cost to Lender of making, renewing or maintaining loans or extensions of credit
or to reduce any amount receivable hereunder;

 

then, in any such case, Borrower shall promptly pay Lender, upon demand, any
additional amounts necessary to compensate Lender for such additional cost or
reduced amount receivable which Lender deems to be material as reasonably
determined by Lender; provided, however, that Borrower shall not be required
under this Section 2.2.4 to pay Lender additional amounts for additional costs
or reduced amounts receivable that are attributable to an increase in taxes
imposed on Lender. If Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.2.4(i), Borrower shall not be required to pay same
unless they are the result of requirements imposed generally on lenders similar
to Lender and not the result of some specific reserve or similar requirement
imposed on Lender as a result of Lender’s special circumstances and such Lender
is charging the same amounts to similarly situated borrowers. If Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.2.4(i),
Lender shall provide Borrower with not less than thirty (30) days written notice
specifying in reasonable detail the event by reason of which it has become so
entitled and the additional amount required to fully compensate Lender for such
additional cost or reduced amount. A certificate as to any additional costs or
amounts payable pursuant to the foregoing sentence, executed by an authorized
signatory of Lender and submitted by Lender to Borrower shall be conclusive in
the absence of manifest error. Notwithstanding the foregoing, in no event shall
Borrower have any obligation to pay or otherwise compensate such Lender pursuant
to this Section 2.2.4(i) for any cost or amount in respect of a period occurring
more than six (6) months prior to the date that such Lender notifies Borrower of
such Lender’s intent to claim compensation thereunder. This provision shall
survive payment of the Note and the satisfaction of all other obligations of
Borrower under this Agreement and the Loan Documents.

 

 -48-Mezzanine Loan Agreement

 

  

(j)           Borrower agrees to indemnify Lender and to hold Lender harmless
from any actual out-of-pocket loss or expense (other than consequential and
punitive damages) which Lender sustains or incurs as a result of (i) any default
by Borrower in payment of the principal of or interest on a LIBOR Loan, a Base
Rate Loan or a Substitute Rate Loan, including, without limitation, any such
loss or expense arising from interest or fees payable by Lender to lenders of
funds obtained by it in order to maintain a LIBOR Loan, a Base Rate Loan or a
Substitute Rate Loan hereunder, (ii) any prepayment (whether voluntary or
mandatory) of the LIBOR Loan, the Base Rate Loan or the Substitute Rate Loan on
a day that (A) is not a Monthly Payment Date, unless Borrower pays interest
through the end of the applicable Interest Period as required hereunder or (B)
is a Monthly Payment Date if Borrower did not give the prior written notice of
such prepayment required pursuant to the terms of this Agreement, including,
without limitation, such loss or expense arising from interest or fees payable
by Lender to lenders of funds obtained by it in order to maintain the LIBOR
Loan, the Base Rate Loan or the Substitute Rate Loan hereunder, (iii) the
conversion (for any reason whatsoever, whether voluntary or involuntary) of the
Applicable Interest Rate for the Loan to the Base Rate or the Substitute Rate or
to a LIBOR Loan on a date other than the first day of an Interest Period and
(iv) any loss or expenses arising from interest or fees payable by Lender to
lenders of funds obtained by it in order to maintain a LIBOR Loan, a Base Rate
Loan or a Substitute Rate Loan hereunder (the amounts referred to in
clauses (i), (ii), (iii) and (iv) are herein referred to collectively as the
“Breakage Costs”); provided, however, Borrower shall not indemnify Lender from
any loss or expense arising from Lender’s willful misconduct or gross
negligence. Whenever in this Section 2.2.4 the term “interest or fees payable by
Lender to lenders of funds obtained by it” is used and no such funds were
actually obtained from such lenders, it shall include interest or fees which
would have been payable by Lender if it had obtained funds from lenders in order
to maintain a LIBOR Loan, a Base Rate Loan or a Substitute Rate Loan hereunder.
Lender will provide to Borrower a statement detailing such Breakage Costs and
the calculation thereof.

 

(k)          The provisions of this Section 2.2.4 shall survive payment of the
Note in full and the satisfaction of all other obligations of Borrower under
this Agreement and the other Loan Documents.

 

2.2.5      Usury Savings. This Agreement and the other Loan Documents are
subject to the express condition that at no time shall Borrower be required to
pay interest on the Outstanding Principal Balance at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
Outstanding Principal Balance at a rate in excess of the Maximum Legal Rate, the
Applicable Interest Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.

 

Section 2.3          Loan Payments.

 

2.3.1      Payments. On the date hereof, Borrower shall pay interest on the
Outstanding Principal Balance from and including the Closing Date through and
including May 6, 2019 (the “Initial Interest Period”).  On June 7, 2019, and on
each Monthly Payment Date thereafter, up to and including the Maturity Date,
Borrower shall make a payment to Lender of interest equal to the Monthly Debt
Service Payment Amount.  The Monthly Debt Service Payment Amount shall be
applied first to accrued and unpaid interest on the then Outstanding Principal
Balance and the balance, if any, to the Outstanding Principal Balance.

 

 -49-Mezzanine Loan Agreement

 

  

2.3.2      Payments Generally. After the Initial Interest Period, each interest
accrual period thereafter (each, an “Interest Period”) shall commence on the
seventh (7th) day of each calendar month during the Term and shall end on and
include the sixth (6th) day of the next occurring calendar month; provided, that
in the event that the Mortgage Lender elects to reset LIBOR as provided in the
definition of the term “Interest Determination Date” under the Mortgage Loan
Agreement, and the same results in an adjustment of the “Interest Period” under
and as defined in the Mortgage Loan Agreement, the Interest Period with respect
to the Loan shall be likewise adjusted, such that the “Interest Period” under
the Mortgage Loan Agreement and the Interest Period with respect to the Loan
shall always coincide. For purposes of making payments hereunder, but not for
purposes of calculating Interest Periods, if the Monthly Payment Date is not a
Business Day, then amounts due on such date shall be due on the immediately
preceding Business Day. Lender shall have the right from time to time, in its
reasonable discretion, upon not less than ten (10) days prior written notice to
Borrower, to change the Monthly Payment Date in connection with a Securitization
of the Loan or Mortgage Loan to a different calendar day and, if requested by
Lender, Borrower shall promptly execute an amendment to this Agreement to
evidence such change; provided, however, that notwithstanding anything to the
contrary herein, the Monthly Payment Date shall be the same calendar day as the
first day of the applicable Interest Period. With respect to payments of
principal due on the Maturity Date, interest shall be payable at the Interest
Rate, through and including the last day of the Interest Period applicable to
the Maturity Date. All amounts due pursuant to this Agreement and the other Loan
Documents shall be payable without setoff, counterclaim, defense or any other
deduction whatsoever other than as provided in Section 2.8.

 

2.3.3      Payment on Maturity Date. Borrower shall pay to Lender on the
Maturity Date the Outstanding Principal Balance, all accrued and unpaid interest
and all other amounts due hereunder and under the Note, the Pledge Agreement and
the other Loan Documents.

 

2.3.4      Late Payment Charge. If any principal, interest or any other sum due
under the Loan Documents (other than the Outstanding Principal Balance due and
payable on the Maturity Date) is not paid by Borrower within three (3) days of
the date on which it is due (or if such third (3rd) day is not a Business Day,
then the immediately preceding Business Day), Borrower shall pay to Lender upon
demand an amount equal to the lesser of three percent (3%) of such unpaid sum or
the maximum amount permitted by applicable law in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by the Pledge Agreement and the other Loan Documents to
the extent permitted by law.

 

2.3.5      Method and Place of Payment.

 

(a)          Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later
than 2:00 p.m., New York City time, on the date when due and shall be made in
lawful money of the United States of America in immediately available funds at
Lender’s office or at such other place as Lender shall from time to time
designate, and any funds received by Lender after such time shall, for all
purposes hereof, be deemed to have been paid on the next succeeding Business
Day.

 

(b)          Whenever any payment to be made hereunder or under any other Loan
Document shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be the immediately preceding Business Day.

 

 -50-Mezzanine Loan Agreement

 

  

(c)          All payments required to be made by Borrower hereunder or under the
Note or the other Loan Documents shall be made irrespective of, and without
deduction for, any setoff, claim or counterclaim and shall be made irrespective
of any defense thereto.

 

Section 2.4          Prepayments.

 

2.4.1      Prepayments. Borrower shall have the right to prepay the Loan in
whole or in part at any time prior to the Stated Maturity Date, so long as each
such prepayment is made in accordance with the terms of this Agreement.

 

2.4.2      Voluntary Prepayments.

 

(a)          Borrower may prepay, all or any portion of the Outstanding
Principal Balance on any Business Day, provided that the following conditions
are satisfied: (i) no Event of Default shall have occurred and be continuing
(other than in connection with a prepayment made with respect to a release of an
Individual Property subject to a Qualified Release Property Default); (ii)
Borrower shall timely deliver to Lender a Prepayment Notice; (iii) Mezzanine B
Borrower shall concurrently make a prepayment of all or a portion, as
applicable, of the outstanding principal balance of the Mezzanine B Loan, and
shall otherwise satisfy the applicable conditions in the Mezzanine B Loan
Documents with respect to such prepayment (as evidenced by an Officer’s
Certificate and, and in the case of a prepayment in full or the release of an
Individual Property, the delivery to Lender of a copy of a payoff letter from
the Mortgage Lender and the Mezzanine B Lender); (iv) Borrower shall comply with
the provisions and pay to Lender the applicable amounts set forth in
Section 2.4.6 and (v) if Borrower is prepaying the entire Outstanding Principal
Balance, then Borrower shall also pay to Lender (without duplication of amounts
paid under Section 2.4.6) any and all other amounts outstanding under the Note,
this Agreement, and any of the other Loan Documents. The aggregate amount
prepaid by Borrower under this paragraph (a) and concurrently by Mezzanine B
Borrower under the Mezzanine B Loan Documents shall be allocated among the Loan
and the Mezzanine B Loan pro rata in accordance with their respective
outstanding principal balances immediately prior to such prepayments. For the
avoidance of doubt, voluntary prepayments on the Loan, in whole or in part,
shall not be conditioned on pro-rata prepayments of the Mortgage Loan (except as
set forth herein in connection with releases of Net Liquidation Proceeds After
Debt Service, Property Releases and payments to cure a Low Cash Flow Trigger
Period).

 

(b)          On any Business Day, Borrower may prepay the Loan in part in
connection with the release of one or more Individual Properties under the
Mortgage Loan Documents in accordance with Section 2.5.2 hereof, provided that
the following conditions are satisfied: (i) Borrower shall timely deliver to
Lender a Prepayment Notice, (ii) the release of such Individual Property(ies)
under the Mortgage Loan Documents shall occur simultaneously with such
prepayment, (iii) the applicable conditions in the Mezzanine B Loan Documents
with respect to concurrent prepayments of the Mezzanine B Loan by Mezzanine B
Borrower shall have been satisfied (as evidenced by an Officer’s Certificate and
the delivery to Lender of a copy of a payoff letter from the Mezzanine B Lender)
and (iv) the Release Conditions shall have been satisfied in connection
therewith.

 

 -51-Mezzanine Loan Agreement

 

  

(c)          If (i) a Low Cash Flow Trigger Period exists, (ii) Borrower makes a
prepayment of the Outstanding Principal Balance hereunder in accordance with
paragraph (a) above (other than clause (ii) thereof) (which may be made by using
funds in the Cash Collateral Account only if such prepayment would cure the Low
Cash Flow Trigger Period), and Owner and Mezzanine B Borrower concurrently makes
prepayments of the Mortgage Loan and Mezzanine B Loan, respectively, in
accordance with paragraph (a) above (which Lender agrees may be made by using
funds in the Cash Collateral Account with respect to the Mezzanine B Loan only
if such prepayment would cure the Low Cash Flow Trigger Period), (iii) such
prepayments are made and upon at least two (2) Business Days prior written
notice, and (iv) the aggregate amount prepaid by Borrower under this paragraph
(c) and concurrently by Owner under the Mortgage Loan Documents and Mezzanine B
Borrower under the Mezzanine B Loan Documents is equal to or greater than the
amount that is required to increase the Debt Yield to the applicable Debt Yield
Cure Level, then such Low Cash Flow Trigger Period will immediately end.

 

(d)          Provided no Event of Default or Mortgage Loan Default has occurred
and is continuing and no Trigger Period exists, Borrower and Mezzanine B
Borrower may each make a voluntary prepayment of all or any portion of the
outstanding principal balance of the Loan and the Mezzanine B Loan,
respectively, at par in accordance with the Loan Documents and Mezzanine B Loan
Documents, respectively, without Owner making a corresponding payment of the
Mortgage Loan; and any such voluntary prepayment of the Loan and the Mezzanine B
Loan without a corresponding prepayment of the Mortgage Loan shall be made on a
pro rata basis among the Loan and the Mezzanine B Loan unless (i) otherwise
agreed to by Lender and Mezzanine B Lender or (ii) the prepaid Mezzanine B Loan
is simultaneously replaced by an Approved Mezzanine Loan.

 

(e)          Notwithstanding the foregoing, Borrower shall be permitted to
prepay a portion of the Outstanding Principal Balance, in connection with the
release of Individual Properties or otherwise, in an amount not to exceed, in
the aggregate, twenty-five percent (25%) of the original principal balance of
the Loan (the “Free Prepayment Amount”), at any time without any Spread
Maintenance Premium or other prepayment penalty, premium or charge, provided (i)
there is no Event of Default or Mortgage Loan Default continuing as of the date
of the applicable prepayment, (ii) Borrower provides a Prepayment Notice to
Lender in the manner specified in Section 2.4.2, (iv) Borrower pays Lender, in
addition to the amount to be prepaid, (x) all accrued interest as set forth in
Section 2.4.6; and (y) all other sums then due and payable under this Agreement,
the Note, and the other Loan Documents, including, but not limited to, all of
Lender’s third party reasonable costs and expenses (including reasonable
attorney’s fees and disbursements) incurred by Lender in connection with such
prepayment, including, without limitation, any actual Breakage Costs and costs
and expenses associated with any revoked or extended prepayment notice, (v) in
the case of a release of an Individual Property pursuant to Section 2.5.2
hereof, Borrower makes the necessary pro rata prepayment of the Mortgage Loan
and (vi) Mezzanine B Borrower makes the necessary pro rata prepayments of the
Mezzanine B Loan.

 

2.4.3      Reserved.

 

2.4.4      Mandatory Prepayments; Option to Prepay Balance.

 

(a)          In the event of any Liquidation Event, Borrower shall cause the
related Net Liquidation Proceeds After Debt Service to be deposited with Lender,
which proceeds shall then be applied by Lender on the next Business Day in
accordance with paragraphs (b), (d) and (e) below. Borrower shall notify Lender
of any Liquidation Event not later than one Business Day following the first
date on which Borrower has knowledge of such event. Borrower shall be deemed to
have knowledge of (i) a sale (other than a foreclosure sale) of any Individual
Property on the date on which a contract of sale for such sale is entered into,
and a foreclosure sale, on the date notice of such foreclosure sale is given,
and (ii) a refinancing of the Mortgage Loan, on the date on which a commitment
for such refinancing has been entered into or a binding or non-binding term
sheet has been executed. The provisions of this Section 2.4.4 shall not be
construed to contravene in any manner the restrictions and other provisions
regarding refinancing of the Mortgage Loan or Transfer of any Individual
Property or the Properties as a whole set forth in this Agreement and the other
Loan Documents.

 

 -52-Mezzanine Loan Agreement

 

  

(b)          Except during an Event of Default, any portion of the Net
Liquidation Proceeds After Debt Service paid over to Lender in connection with a
Liquidation Event pursuant to clauses (i) or (ii) of the definition of
Liquidation Event shall be applied by Lender as follows in the following order
of priority: First, to all amounts (other than principal and interest) then due
and payable under the Loan Documents, including any reasonable, actual, out of
pocket costs and expenses of Lender in connection with such prepayment (but
subject to Section 2.4.6(c)); Second; an amount equal to accrued and unpaid
interest at the Interest Rate on the amount prepaid through the last day of the
Interest Period in which the application of Net Proceeds occurs, notwithstanding
that such Interest Period extends beyond the date of such application; and
Third, to principal on the Loan up to the Impaired Individual Property Release
Amount in accordance with Section 2.4.4(c) below (the portion of the Net
Proceeds applied to the principal amount of the Loan, the “Net Proceeds
Principal Prepayment”; any remaining Net Liquidation Proceeds After Debt Service
after the foregoing applications pursuant to this sentence, the “Remaining Net
Proceeds”). Notwithstanding anything herein to the contrary, so long as no Event
of Default is continuing, no Spread Maintenance Premiums or other prepayment
premium, penalty or fee shall be due in connection with any prepayment made
pursuant to this Section 2.4.4(b). Provided no Event of Default is continuing,
Remaining Net Proceeds shall be disbursed, as deemed equity distributions, to
Mezzanine B Lender for application to the payment of the applicable Mezzanine B
Impaired Individual Property Release Amount(s) and the other amounts owing under
the Mezzanine B Loan under the Mezzanine B Loan Agreement in connection
therewith (any remaining Net Liquidation Proceeds After Debt Service after the
foregoing applications pursuant to this sentence, the “Mezzanine Remaining Net
Proceeds Amount”). Any Mezzanine Remaining Net Proceeds shall then be applied in
further reduction of the outstanding principal balances of the Mortgage Loan,
the Loan and the Mezzanine B Loan, pro rata in accordance with the outstanding
principal balances of the Mortgage Loan, the Loan and the Mezzanine B Loan
immediately prior to such application, reductions in the Outstanding Principal
Balance to be applied in accordance with Section 2.4.4(c) below.

 

 -53-Mezzanine Loan Agreement

 

  

(c)          In any instance where (i) the Mortgage Lender is not obligated to
make Net Proceeds available to Owner for Restoration of an Individual Property
and has elected to apply such Net Proceeds related to such Impaired Individual
Property to the Debt in accordance with Section 2.4.4(a) of the Mortgage Loan
Agreement, or (ii) an Individual Property is subject to a Casualty or
Condemnation of more than 60% of the Individual Property value based on such
Individual Property’s Allocated Loan Amount (such Individual Property being
sometimes referred to herein as an “Impaired Individual Property”), then
Borrower may elect and shall have the right, on or prior to the second (2nd)
Monthly Payment Date following the application of Net Proceeds in accordance
with Section 2.4.4(b) (the “Impaired Individual Property Prepayment Outside
Date”), to prepay the Loan (such prepayment an “Impaired Individual Property
Prepayment”) in an amount (the “Net Impaired Individual Property Release
Amount”) which is equal to (i) the Release Amount applicable to the Impaired
Individual Property (the “Impaired Individual Property Release Amount”), less
(ii) the amount of the Net Proceeds Principal Prepayment applicable to such
Impaired Individual Property that has been applied to the principal amount of
the Loan in accordance with Section 2.4.4(b) above (or zero if the amount in
clause (ii) is equal to or greater than the amount in clause (i)); provided each
of the following conditions (the “Impaired Individual Property Prepayment
Conditions”) have been satisfied: (1) no Event of Default (other than a
Qualified Release Property Default that is cured by the release of the Release
Property in accordance with Section 2.5.2 hereof) shall have occurred and be
continuing, (2) the Net Proceeds applicable to such Impaired Individual Property
shall have been applied in accordance with Section 2.4.4(b), (3) Borrower shall
have provided to Lender not less than five (5) Business Days prior written
notice of its intention to effect an Impaired Individual Property Prepayment,
and shall satisfy the Impaired Individual Property Prepayment Conditions on or
prior to the Impaired Individual Property Prepayment Outside Date, (4) all of
the conditions and requirements for the release of such Impaired Individual
Property set forth in Section 2.5.3 hereof, Section 2.5.3 of the Mortgage Loan
Agreement and Section 2.5.3 of the Mezzanine B Loan Agreement shall be satisfied
and the release of such Impaired Individual Property from the Mortgage Loan
shall occur simultaneously with the Impaired Individual Property Prepayment and
in compliance with all such conditions and requirements set forth in
Section 2.5.3 hereof, Section 2.5.3 of the Mortgage Loan Agreement and
Section 2.5.3 of the Mezzanine B Loan Agreement, (5) Borrower shall comply with
the provisions and pay to Lender the amounts set forth in Section 2.4.6, (6)
Mezzanine B Borrower makes the necessary pro rata prepayments of the Mezzanine B
Loan and (7) Owner makes the necessary pro rata prepayments of the Mortgage
Loan. Any prepayment made pursuant to this Section 2.4.4(c) shall not require a
payment of the Spread Maintenance Premium.

 

(d)          Except during an Event of Default, any portion of the Net
Liquidation Proceeds After Debt Service paid over to Lender in connection with a
Liquidation Event pursuant to clauses (iv) or (v) of the definition of
Liquidation Event shall be applied by Lender as follows in the following order
of priority: First, to all amounts (other than principal and interest) then due
and payable under the Loan Documents, including any reasonable, actual, out of
pocket costs and expenses of Lender in connection with such prepayment (but
subject to Section 2.4.6(c)); Second; an amount equal to accrued and unpaid
interest at the Interest Rate on the amount prepaid through the last day of the
Interest Period in which the application of Net Liquidation Proceeds After Debt
Service occurs, notwithstanding that such Interest Period extends beyond the
date of such application; and Third, to principal on the Loan up to (i) the
Release Amount applicable to the affected Individual Property(ies), less (ii)
the amount of the Net Proceeds Principal Prepayment, if any, applicable to such
Individual Property(ies) that has been applied to the principal amount of the
Loan in accordance with Section 2.4.4(b) above (or zero if the amount in
clause (ii) is equal to or greater than the amount in clause (i)) (the
collectively, the “Mezzanine A Mandatory Prepayment Amount”). Provided no Event
of Default is continuing, any such Net Liquidation Proceeds after Debt Service
in excess of the Mezzanine A Mandatory Prepayment Amount shall be disbursed, as
deemed equity distributions, (i) if the Mezzanine B Loan is then outstanding, to
Mezzanine B Lender to be applied in accordance with the Mezzanine B Loan
Agreement and (ii) otherwise, to Borrower. Any prepayment made with Net
Liquidation Proceeds After Debt Service received pursuant to clause (v) of the
definition of Liquidation Event pursuant to this Section 2.4.4(d) shall not
require a payment of the Spread Maintenance Premium.

 

 -54-Mezzanine Loan Agreement

 

  

(e)          After the occurrence and during the continuance of an Event of
Default, the Net Liquidation Proceeds After Debt Service may be applied to the
Debt in any order or priority in Lender’s sole discretion in accordance with
Section 2.4.5 hereof and any application thereof to principal shall not be
limited to the either the Impaired Individual Property Release Amount or the
Release Amount and no excess Net Liquidation Proceeds After Debt Service shall
be available for application to the Mezzanine B Loan or returned to Borrower
until payment in full of the Debt in which case such excess amounts shall be
paid to Mezzanine B Lender and deemed equity distributions to Mezzanine B
Borrower.

 

2.4.5      Prepayments After Default.

 

(a)          If, during the continuance of an Event of Default, payment of all
or any part of the Debt is tendered by Borrower (other than with respect to a
Qualified Release Property Default tendered in accordance with the provisions of
Section 2.5.2 or an Event of Default that arises solely as a direct result of
the Casualty or Condemnation in respect of which such Net Proceeds have been
paid) and accepted by Lender or is otherwise recovered by Lender (including
through application of any Reserve Funds), such tender or recovery shall be
deemed to be a voluntary prepayment by Borrower in violation of the requirements
of Section 2.4.1 hereof, and Borrower shall pay, as part of the Debt, all
amounts, if any, due pursuant to Section 2.4.6.

 

(b)          Notwithstanding anything contained herein to the contrary, upon the
occurrence and during the continuance of any Event of Default, any payment of
principal or interest from whatever source may be applied by Lender to the Debt
in its sole and absolute discretion.

 

2.4.6      Prepayment/Repayment Conditions.

 

(a)          On the date on which a prepayment, voluntary or mandatory, is made
under the Note or as required under this Agreement, which date must be a
Business Day, Borrower shall pay to Lender:

 

(i)          all accrued and unpaid interest calculated at the Applicable
Interest Rate on the amount of principal being prepaid through but excluding the
Repayment Date, and following a Securitization any prepayment of a securitized
portion of the Loan will also be paid together with an amount equal to the
interest that would have accrued at the Applicable Interest Rate on the amount
of principal being prepaid through the end of the Interest Period in which such
prepayment occurs, notwithstanding that such Interest Period extends beyond the
date of prepayment;

 

(ii)         intentionally omitted;

 

(iii)        the Spread Maintenance Premium, if any, applicable thereto;
provided, that so long as no Event of Default is continuing (other than an Event
of Default that arises solely as a direct result of the Casualty or Condemnation
in respect of which such Net Proceeds have been paid), no Spread Maintenance
Premium shall be due in connection with a prepayment made pursuant to
Section 2.4.4(a); and

 

 -55-Mezzanine Loan Agreement

 

  

(iv)        all other sums, then due under the Note, this Agreement, the Pledge
Agreement, and the other Loan Documents.

 

(b)          Intentionally Omitted.

 

(c)          Borrower shall pay all actual out of pocket reasonable costs and
expenses of Lender incurred in connection with the repayment or prepayment
(including without limitation, any reasonable, actual, out of pocket costs and
expenses associated with a release of the Lien of the Security Documents as set
forth in Section 2.5 below and reasonable attorneys’ fees and expenses),
provided, however that, notwithstanding anything to the contrary set forth in
the Loan Documents, no LIBOR breakage costs will be payable in connection with
any prepayment (voluntary or mandatory) of the Loan.

 

Section 2.5          Release of Collateral.

 

2.5.1      Release on Payment in Full. Lender shall, upon the written request
and at the expense of Borrower, upon payment in full of the Debt in accordance
with the terms and provisions of the Loan Documents, release the Lien of the
Security Documents. In connection with the release of the Lien of the Security
Documents, Borrower shall submit to Lender, not less than thirty (30) days prior
to the Repayment Date (or such shorter time as is acceptable to Lender in its
sole discretion), a UCC termination. In addition, Borrower shall provide all
other documentation Lender reasonably requires to be delivered by Borrower in
connection with such release. Borrower shall pay all reasonable, actual, out of
pocket costs, taxes and expenses associated with the release of the Lien of the
Security Documents, including Lender’s reasonable attorneys’ fees.

 

2.5.2      Release of Individual Property. Borrower may allow Owner to obtain
the release of an Individual Property under the Mortgage Loan Documents (the
Individual Property to be released is sometimes referred to herein as the
“Release Property”), provided that the following conditions precedent to such
release are satisfied (the “Release Conditions”): (i) Borrower prepays the Loan
in the amount of the applicable Release Amount and the requirements and
conditions of Section 2.4.2(b) are satisfied; (ii) no Event of Default has
occurred and is continuing (other than (A) a non-monetary Event of Default that
is specific to such Release Property (including without limitation, any breach
of a representation or warranty with respect to such Release Property), (B) a
default under a Ground Lease that was not caused by Owner in bad faith to
circumvent the requirements of Section 2.5.2, so long as Borrower has
demonstrated to Lender that Owner has diligently in good faith pursued a cure of
such default under the related Ground Lease, or (C) a material default under a
Franchise Agreement that permits the applicable Franchisor thereunder to
terminate the Franchise Agreement and pursuant to which Mortgage Lender and the
applicable Franchisor have delivered a default notice with respect to such
default provided that such default was not caused by Borrower in bad faith to
circumvent the requirements of Section 2.5.2 and has demonstrated to Lender that
Owner has diligently in good faith pursued a cure of such default and which
Event of Default or default would be cured as a result of the release of the
Release Property, so long as (x) the Event of Default was not caused by the
intentional act of Borrower, Owner, Operating Lessee, Leasehold Pledgor or
Guarantor and Borrower has demonstrated in good faith to Lender that it has
pursued a cure of the Event of Default, (y) within five (5) Business Days of the
occurrence of such Event of Default (after the expiration of any applicable cure
period with respect thereto other than a cure obtained by release under this
Section 2.5.2), Borrower gives notice to Lender of Borrower’s intent to cure
such Event of Default by causing Owner to obtain a release of the Release
Property and (z) such release occurs within forty-five (45) days following the
occurrence of such Event of Default (a “Qualified Release Property Default”));
and (iii) the following conditions are satisfied:

 

 -56-Mezzanine Loan Agreement

 

  

(a)          The Release Property shall be transferred and conveyed pursuant to
a bona fide all-cash sale of the Release Property to a Person other than
Borrower or any other Loan Party on arms-length terms and conditions, provided,
if the applicable Individual Property is transferred to an Affiliate of
Borrower, Borrower shall deliver an Additional Insolvency Opinion with respect
thereto;

 

(b)          the following amounts shall be paid:

 

(i)          the Outstanding Principal Balance shall be prepaid by an amount
equal to the Release Amount for the applicable Individual Property, and Borrower
shall comply with the provisions and pay to Lender the amounts set forth in
Section 2.4.6 (including with respect to any prepayments made under clause (iii)
below). With respect to a Qualified Release Property Default, the Release Amount
shall be calculated by using the Release Amount Percentage in clause (b) of such
definition regardless of the Outstanding Principal Balance;

 

(ii)         concurrently with the payment of the Release Amount, Owner shall
make a partial prepayment of the Mortgage Loan equal to the Mortgage Loan
Release Amount, together with any related interest, fees, prepayment premiums or
other amounts payable under the Mortgage Loan Documents in connection with such
prepayment, including, to the extent required under the Mortgage Loan Documents,
interest which would have accrued on the outstanding principal balance of the
Mortgage Loan pursuant to the Mortgage Loan Documents through the end of the
interest period set forth therein during which such prepayment occurs;

 

(iii)        concurrently with the payment of the Release Amount, Mezzanine B
Borrower shall make a partial prepayment of the Mezzanine B Loan equal to the
Mezzanine B Loan Release Amount, together with any related interest, fees,
prepayment premiums or other amounts payable under the Mezzanine B Loan
Documents in connection with such prepayment, including, to the extent required
under the Mezzanine B Loan Documents, interest which would have accrued on the
outstanding principal balance of the Mezzanine B Loan pursuant to the Mezzanine
B Loan Documents through the end of the interest period set forth therein during
which such prepayment occurs; and

 

 -57-Mezzanine Loan Agreement

 

  

(iv)        if following the application of the prepayments of the Loan, the
Mezzanine B Loan and the Mortgage Loan described in clauses (i), (ii) and (iii)
above, either (A) the Debt Yield (calculated based on the financial statements
most recently delivered to Lender) (exclusive of the Release Property) would be
less than the minimum Debt Yield required under clause (d) below, respectively,
and/or (B) additional prepayments would be required to comply with respect to
the REMIC Requirements pursuant to Section 2.5.2(g) of the Mortgage Loan
Agreement (with respect to the Mortgage Loan), then concurrently with and in
addition to the prepayments described in clauses (i), (ii) and (iii) above,
Borrower, Mezzanine B Borrower and/or Owner, as applicable, shall make
additional prepayments of the Loan in the aggregate amount(s) required (x) to
increase the Debt Yield (calculated based on the financial statements most
recently delivered to Lender) (exclusive of the Release Property) to the minimum
Debt Yield required under clause (d) below and/or (y) to comply with the REMIC
Requirements pursuant to Section 2.5.2(g) of the Mortgage Loan Agreement, such
excess prepayments to be made by Owner of the Mortgage Loan first, as required
to satisfy the REMIC Requirements for the Mortgage Loan. Notwithstanding the
foregoing, in connection with the sale of an Individual Property to an
unaffiliated third-party in an arms’-length transaction (with no direct or
indirect interest in such Individual Property retained by Borrower, Guarantor,
or their respective Affiliates), in the event that following the prepayment of
the Loan, Mezzanine B Loan and Mortgage Loan described in clauses (i) and (ii)
above, the Debt Yield is less than the Debt Yield required under clause (d)
below, Borrower shall be permitted to obtain a release of the Lien of the
related Mortgage, provided that (x) Borrower shall satisfy all of the conditions
set forth in Section 2.5.2 (other than the Debt Yield requirement in this
Section 2.5.2(b)(iv)) and (y) (i) in lieu of paying the applicable Release
Amount in connection with such release pursuant to Section 2.5.2(b), Borrower
shall pay to Lender, an amount equal to the greater of (A) the Release Amount
applicable to such Individual Property and (B) the lesser of (I) the amount of a
pro rata prepayment of the Loan, the Mezzanine B Loan and the Mortgage Loan in
an aggregate amount equal to (x) the gross sales proceeds actually received by
Owner from such Individual Property net of (y) all amounts owing to Lender,
Mortgage Lender and Mezzanine B Lender in respect of such sale and any
reasonable and customary closing costs associated with the sale of such
Individual Property, or (II) the amount of a pro rata prepayment of the Loan,
the Mezzanine B Loan and the Mortgage Loan that would be necessary to, after
giving effect to the requested release of the applicable Individual Property,
satisfy the applicable Debt Yield and (ii) Mezzanine B Borrower in lieu of
paying the applicable Mezzanine A Release Amount shall pay to Mezzanine A
Lender, and Owner in lieu of paying the Mortgage Release Amount shall pay to
Mortgage Lender, the amount required in accordance with Section 2.5.2(b)(iv) of
the Mezzanine B Loan Agreement and Section 2.5.2(b)(iii) of the Mortgage Loan
Agreement, respectively. Any such prepayment pursuant to this
Section 2.5.2(b)(iv) shall be deemed a voluntary prepayment for all purposes
hereunder, including, without limitation, the payment of any applicable Spread
Maintenance Premium;

 

(c)           All release provisions set forth in the Mortgage Loan Documents
shall have been satisfied or will be satisfied as of the release date (as
evidenced by an Officer’s Certificate and the delivery to Lender of a copy of a
payoff letter from Mortgage Lender). In addition, Borrower shall provide all
other documentation of a ministerial or administrative nature that Lender
reasonably requires to be delivered by Borrower in connection with such release
or assignment;

 

(d)          After giving effect to such release or assignment, and after the
application of any prepayments by Borrower, Mezzanine B Borrower and Owner
described in clause (b) above, the Debt Yield for the Properties then remaining
subject to the Liens of the Mortgages (calculated based on the financial
statements most recently delivered to Lender) shall be equal to or greater than
(A) with respect to a release of a Release Property prior to the first
$25,000,000.00 of principal of the Loan being prepaid, 9.20% and (B) with
respect to any release of a Release Property from and after the first
$25,000,000.00 having been prepaid, the greater of (i) the lesser of (x) the
Debt Yield (calculated based on the financial statements most recently delivered
to Lender) (inclusive of the Release Property) immediately prior to such release
or assignment and not taking into account any prepayments described in
clause (b) above and (y) 13% and (ii) 9.20%; provided further that the foregoing
shall not apply to a release effected to cure a Qualified Release Property
Default;

 

 -58-Mezzanine Loan Agreement

 

  

(e)          Intentionally Omitted;

 

(f)           Following such release or assignment, Borrower shall continue to
be a Special Purpose Bankruptcy Remote Entity and to comply with all provisions
of the Loan Documents pertaining to a Special Purpose Bankruptcy Remote Entity;

 

(g)          To the extent that the Franchisor party to the Franchise Agreement
affecting such Release Property is also a Franchisor under other Franchise
Agreements and/or to the extent that the Franchise Agreement affecting such
Release Property also affects other Properties which will not be released, such
release shall not result in a default under any of such Franchise Agreements or
give the Franchisor thereunder the right to terminate any of such Franchise
Agreements, and all requisite consents to such release shall have been obtained
from the applicable Franchisor and Lender shall have received reasonably
satisfactory evidence of same (which may be demonstrated by an Officer’s
Certificate certifying to the foregoing);

 

(h)          All other conditions to the release of such Individual Property set
forth in the Mortgage Loan Documents and Mezzanine B Loan Documents shall have
been satisfied or waived in accordance therewith (as evidenced by an Officer’s
Certificate and the delivery to Lender of a copy of a payoff letter from the
Mortgage Lender and Mezzanine B Lender);

 

(i)           Borrower shall have paid all reasonable third-party costs and
expenses incurred by Lender and/or its Servicer in connection with any such
release or assignment and, in addition, the current reasonable and customary fee
being assessed by Lender and/or its Servicer to effect such release or
assignment, not to exceed (in the aggregate for Lender and its Servicer) $2,500;

 

(j)           Borrower shall have caused Owner to pay (from Available Cash
distributed to Owner and/or from proceeds of sale of such Release Property
remaining after the payment of the Release Amount or other contributions, the
Mortgage Release Amount, the Mezzanine B Release Amount and all other amounts
payable by Owner, Borrower or Mezzanine B Borrower in connection with the
release of such Release Property) to the applicable Manager (or escrowed for
such Manager’s benefit if required under the applicable Management Agreement),
any transition or termination costs or expenses, termination fees, or their
equivalent, to which such Manager is entitled in connection with the sale of
such Individual Property; and

 

(k)          For the avoidance of doubt, any release of a Release Property to
which a Qualified Release Property Default relates that is effected within
forty-five (45) days after the occurrence of such Event of Default and in
accordance with the provisions of this Section 2.5.2, shall concurrently cure
such Event of Default and, if the Loan has been accelerated, the acceleration
shall be automatically rescinded (assuming no other Event of Default shall
thereafter be continuing).

 

Any release to cure a Qualified Release Property Default and corresponding
prepayment shall be accompanied by the Spread Maintenance Premium, if
applicable.

 

 -59-Mezzanine Loan Agreement

 

  

2.5.3      Impaired Individual Property Release. Borrower may permit Owner to
obtain the release of an Impaired Individual Property from the Mortgage thereon
(or at Borrower’s option, an assignment thereof to one or more third parties)
and from the Lien of the related Mortgage Loan Documents, provided that the
following conditions precedent to such release are satisfied (the “Impaired
Individual Property Release Conditions”): (i) Borrower shall then be entitled to
prepay the Loan subject and pursuant to the provisions of Section 2.4.4(b) and
in connection with and as a condition to completing such release, Borrower
prepays the Loan in the amount of the applicable Impaired Individual Property
Release Amount and the other amounts and the requirements and conditions of
Section 2.4.4(b) are satisfied, and (ii) the following conditions are satisfied:

 

(a)          The Impaired Individual Property shall be transferred and conveyed
to a Person other than Borrower, Owner or any other Loan Party, provided that
the transfer may be to an Affiliate of Borrower or of another Loan Party;

 

(b)          the following amounts shall be paid:

 

(i)          the Outstanding Principal Balance shall be prepaid by an amount
equal to the Impaired Individual Property Release Amount for the applicable
Individual Property, and Borrower shall comply with the provisions and pay to
Lender the amounts set forth in Section 2.4.6 (including with respect to any
prepayments made under clause (iii) below); and

 

(ii)         concurrently with the payment of the Impaired Individual Property
Release Amount, Owner shall make a partial prepayment of the Mortgage Loan equal
to the Mortgage Impaired Individual Property Release Amount, and Mezzanine B
Borrower shall make a partial prepayment of the Mezzanine B Loan equal to the
Mezzanine B Impaired Individual Property Release Amount, together with any
related interest including, to the extent required under the Mortgage Loan
Documents and/or Mezzanine B Loan Documents, as applicable, interest which would
have accrued on the outstanding principal balance of the Mortgage Loan pursuant
to the Mortgage Loan Documents and/or the Mezzanine B Loan pursuant to the
Mezzanine B Loan Documents through the end of the interest period set forth
therein during which such prepayment occurs.

 

(c)          All release provisions set forth in the Mortgage Loan Documents
shall have been satisfied or will be satisfied as of the release date (as
evidenced by an Officer’s Certificate and the delivery to Lender of a copy of a
payoff letter from Mortgage Lender). In addition, Borrower shall provide all
other documentation of a ministerial or administrative nature that Lender
reasonably requires to be delivered by Borrower in connection with such release
or assignment;

 

(d)          Following such release or assignment, Borrower shall continue to be
a Special Purpose Bankruptcy Remote Entity and to comply with all provisions of
the Loan Documents pertaining to a Special Purpose Bankruptcy Remote Entity;

 

(e)          Intentionally Omitted;

 

 -60-Mezzanine Loan Agreement

 

  

(f)           To the extent that the Franchisor party to the Franchise Agreement
affecting such Impaired Individual Property is also a Franchisor under other
Franchise Agreements and/or to the extent that the Franchise Agreement affecting
such Impaired Individual Property also affects other Properties which will not
be released, such release shall not result in a default under any of such
Franchise Agreements or give the Franchisor thereunder the right to terminate
any of such Franchise Agreements, and all requisite consents to such release
shall have been obtained from the applicable Franchisor and Lender shall have
received reasonably satisfactory evidence of same (which may be demonstrated by
an Officer’s Certificate certifying to the foregoing);

 

(g)          All other conditions to the release of such Impaired Individual
Property, Mezzanine B Impaired Individual Property and/or Mortgage Impaired
Individual Property set forth in the Loan Documents, Mezzanine B Loan Documents
and/or Mortgage Loan Documents, respectively, shall have been satisfied or
waived in accordance therewith (as evidenced by an Officer’s Certificate and the
delivery to Lender of a copy of a payoff letter from Mortgage Lender and/or
Mezzanine B Lender, as applicable; and

 

(h)          Borrower shall have paid all reasonable third-party costs and
expenses incurred by Lender and/or its Servicer in connection with any such
release or assignment and, in addition, the current reasonable and customary
fee, being assessed by Lender and/or its Servicer to effect such release or
assignment, not to exceed (in the aggregate for Lender and its Servicer) $2,500.

 

Section 2.6           Interest Rate Cap Agreement.

 

2.6.1      Interest Rate Cap Agreement. Prior to or contemporaneously with the
Closing Date, Borrower shall have obtained, and thereafter maintain in effect
(subject to Section 2.6.9), the Interest Rate Cap Agreement, which shall have a
term expiring no earlier than the Stated Maturity Date and have a notional
amount which shall not at any time be less than the Outstanding Principal
Balance. The Interest Rate Cap Agreement shall have a strike rate equal to the
Strike Price.

 

2.6.2      Pledge and Collateral Assignment of Interest Rate Cap Agreement. As
security for the full and punctual payment and performance of the Obligations
when due (whether upon stated maturity, by acceleration, early termination or
otherwise), pursuant to the terms of the Assignment of Interest Rate Cap
Agreement, Borrower has pledged (or is contemporaneously herewith pledging) and
collaterally assigned (or is assigning) to Lender all of the right, title and
interest of Borrower in and to the following (collectively, the “Rate Cap
Collateral”): (i) the Interest Rate Cap Agreement; (ii) all payments,
distributions, disbursements or proceeds due, owing, payable or required to be
delivered to Borrower in respect of the Interest Rate Cap Agreement or arising
out of the Interest Rate Cap Agreement, whether as contractual obligations,
damages or otherwise; and (iii) all of Borrower’s claims, rights, powers,
privileges, authority, options, security interests, liens and remedies, if any,
under or arising out of the Interest Rate Cap Agreement, in each case including
all accessions and additions to, substitutions for and replacements, products
and proceeds of any or all of the foregoing.

 

 -61-Mezzanine Loan Agreement

 

  

2.6.3      Covenants.

 

(a)          Borrower shall comply with all of its obligations under the terms
and provisions of the Interest Rate Cap Agreement. All amounts paid by the
Counterparty under the Interest Rate Cap Agreement to Borrower or Lender shall
during the continuance of an Event of Default or Trigger Period be deposited
immediately into the Deposit Account. Subject to terms hereof, provided no Event
of Default has occurred and is continuing, Borrower shall be entitled to
exercise all rights, powers and privileges of Borrower under, and to control the
prosecution of all claims with respect to, the Interest Rate Cap Agreement and
the other Rate Cap Collateral. Borrower shall take all actions reasonably
requested by Lender to enforce Borrower’s rights under the Interest Rate Cap
Agreement in the event of a default by the Counterparty thereunder and shall not
waive, amend or otherwise modify any of its rights thereunder.

 

(b)          Borrower shall defend Lender’s right, title and interest in and to
the Rate Cap Collateral pledged by Borrower pursuant to the Assignment of
Interest Rate Cap Agreement or in which it has granted a security interest
against the claims and demands of all other Persons.

 

(c)          In the event of any downgrade, withdrawal or qualification of the
rating of the Counterparty such that it ceases to qualify as an “Approved
Counterparty”, Borrower shall replace the Interest Rate Cap Agreement with a
Replacement Interest Rate Cap Agreement not later than ten (10) Business Days
following receipt of notice from Lender, Servicer or any other Person of such
downgrade, withdrawal or qualification.

 

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

 

(e)          Borrower shall not sell, assign, or otherwise dispose of, or
mortgage, pledge or grant a security interest in, any of the Rate Cap Collateral
or any interest therein (other than the assignment made under the Loan
Documents), and any sale, assignment, mortgage, pledge or security interest
whatsoever made in violation of this covenant shall be a nullity and of no force
and effect, and upon demand of Lender, shall forthwith be cancelled or satisfied
by an appropriate instrument in writing (except that notwithstanding anything
herein to the contrary, Borrower may sell or otherwise transfer the portion of
the Rate Cap Collateral that reflects a notional balance in excess of the
Outstanding Principal Amount following any prepayment).

 

(f)           Borrower shall not (i) without the prior written consent of
Lender, modify, amend or supplement the terms of the Interest Rate Cap
Agreement, (ii) without the prior written consent of Lender, except in
accordance with the terms of the Interest Rate Cap Agreement, cause the
termination of the Interest Rate Cap Agreement prior to its stated maturity date
(other than in accordance with Section 2.6.3(c) above), (iii) without the prior
written consent of Lender, except as aforesaid, waive or release any obligation
of the Counterparty (or any successor or substitute party to the Interest Rate
Cap Agreement) under the Interest Rate Cap Agreement, (iv) without the prior
written consent of Lender, consent or agree to any act or omission to act on the
part of the Counterparty (or any successor or substitute party to the Interest
Rate Cap Agreement) which, without such consent or agreement, would constitute a
default under the Interest Rate Cap Agreement, (v) fail to exercise promptly and
diligently each and every material right which it may have under the Interest
Rate Cap Agreement, (vi) take or intentionally omit to take any action or
intentionally suffer or permit any action to be omitted or taken, the taking or
omission of which would result in any right of offset against sums payable under
the Interest Rate Cap Agreement or any defense by the Counterparty (or any
successor or substitute party to the Interest Rate Cap Agreement) to payment or
(vii) fail to give prompt notice to Lender of any notice of default given by or
to Borrower under or with respect to the Interest Rate Cap Agreement, together
with a complete copy of such notice. If Borrower shall have received written
notice that the Securitization shall have occurred, no consent by Lender
provided for in this Section 2.6.3(f) shall be given by Lender unless Lender
shall have received a Rating Agency Confirmation.

 

 -62-Mezzanine Loan Agreement

 

  

(g)          In connection with an Interest Rate Cap Agreement, Borrower shall
obtain and deliver to Lender an opinion of counsel from counsel (which counsel
may be in-house counsel for the Counterparty) for the Counterparty upon which
Lender and its successors and assigns may rely (the “Counterparty Opinion”),
under New York law and, if the Counterparty is a non-U.S. entity, the applicable
foreign law, which shall provide in relevant part, that: (i) the issuer is duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has the organizational power and authority to
execute and deliver, and to perform its obligations under, the Interest Rate Cap
Agreement; (ii) the execution and delivery of the Interest Rate Cap Agreement by
the issuer, and any other agreement which the issuer has executed and delivered
pursuant thereto, and the performance of its obligations thereunder have been
and remain duly authorized by all necessary action and do not contravene any
provision of its certificate of incorporation or by-laws (or equivalent
organizational documents) or any law; (iii) all consents, authorizations and
approvals required for the execution and delivery by the issuer of the Interest
Rate Cap Agreement under law or the issuer’s organizational documents, and any
other agreement which the issuer has executed and delivered pursuant thereto,
and the performance of its obligations thereunder have been obtained and remain
in full force and effect, all conditions thereof have been duly complied with,
and no other action by, and no notice to or filing with any governmental
authority or regulatory body is required for such execution, delivery or
performance; and (iv) the Interest Rate Cap Agreement, and any other agreement
which the issuer has executed and delivered pursuant thereto, has been duly
executed and delivered by the issuer and constitutes the legal, valid and
binding obligation of the issuer, enforceable against the issuer in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). If the opinion of counsel from counsel for the
Counterparty obtained and delivered does not comply with the foregoing
requirements, Lender shall have the right to approve the opinion, which approval
shall not be unreasonably withheld, conditioned or delayed.

 

2.6.4      Substitute Interest Rate Protection Agreement. Subject to
Section 2.2.4(e), at any time that the Loan is a Base Rate Loan or a Substitute
Rate Loan, Borrower shall maintain a Substitute Interest Rate Protection
Agreement. All the provisions of this Section 2.6 applicable to the Interest
Rate Protection Agreement delivered on the Closing Date shall be applicable to
the Substitute Interest Rate Protection Agreement, and in connection with the
delivery of the Substitute Interest Rate Protection Agreement, Borrower shall
enter into a replacement collateral assignment of such Substitute Interest Rate
Protection Agreement, which collateral assignment shall be in the same form as
the Assignment of Interest Rate Cap Agreement.

 

 -63-Mezzanine Loan Agreement

 

  

2.6.5      Representations and Warranties. Borrower hereby covenants with, and
represents and warrants to, Lender as follows:

 

(a)          The Interest Rate Cap Agreement constitutes the legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, subject only to applicable bankruptcy, insolvency and similar laws
affecting rights of creditors generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

 

(b)          The Rate Cap Collateral is free and clear of all claims or security
interests of every nature whatsoever, except such as are created pursuant to
this Agreement and the other Loan Documents, and Borrower has the right to
pledge and grant a security interest in the same as herein provided without the
consent of any other Person other than any such consent that has been obtained
and is in full force and effect.

 

(c)          The Rate Cap Collateral has been duly and validly pledged pursuant
to the Assignment of Interest Rate Cap Agreement. All consents and approvals
required to be obtained by Borrower for the consummation of the transactions
contemplated by the Assignment of Interest Rate Cap Agreement have been
obtained.

 

(d)          Giving effect to the grant and assignment to Lender pursuant to the
Assignment of Interest Rate Cap Agreement, Lender has, as of the date of this
Agreement, and as to Rate Cap Collateral acquired from time to time after such
date, shall have, a valid, and upon proper filing, perfected and continuing
first priority lien upon and security interest in the Rate Cap Collateral;
provided that no representation or warranty is made with respect to the
perfected status of the security interest of Lender in the proceeds of Rate Cap
Collateral consisting of “cash proceeds” or “non-cash proceeds” as defined in
the UCC except if, and to the extent, the provisions of Section 9-306 of the UCC
shall be complied with.

 

(e)          Except for financing statements filed or to be filed in favor of
Lender as secured party, there are no financing statements under the UCC
covering any or all of the Rate Cap Collateral and Borrower shall not, without
the prior written consent of Lender, until payment in full of all of the
Obligations, execute and file in any public office, any enforceable financing
statement or statements covering any or all of the Rate Cap Collateral, except
financing statements filed or to be filed in favor of Lender as secured party.

 

2.6.6      [Reserved]

 

2.6.7      Remedies. Subject to the provisions of the Interest Rate Cap
Agreement, if an Event of Default shall occur and then be continuing:

 

(a)          Lender, without obligation to resort to any other security, right
or remedy granted under any other agreement or instrument, shall have the right
to, in addition to all rights, powers and remedies of a secured party pursuant
to the UCC, at any time and from time to time, sell, resell, assign and deliver,
in its sole discretion, any or all of the Rate Cap Collateral (in one or more
parcels and at the same or different times) and all right, title and interest,
claim and demand therein and right of redemption thereof, at public or private
sale, for cash, upon credit or for future delivery, and in connection therewith
Lender may grant options and may impose reasonable conditions such as requiring
any purchaser to represent that any “securities” constituting any part of the
Rate Cap Collateral are being purchased for investment only, Borrower hereby
waiving and releasing any and all equity or right of redemption to the fullest
extent permitted by the UCC and applicable law. If all or any of the Rate Cap
Collateral is sold by Lender upon credit or for future delivery, Lender shall
not be liable for the failure of the purchaser to purchase or pay for the same
and, in the event of any such failure, Lender may resell such Rate Cap
Collateral. It is expressly agreed that Lender may exercise its rights under the
Assignment of Interest Rate Cap Agreement with respect to less than all of the
Rate Cap Collateral, leaving unexercised its rights with respect to the
remainder of the Rate Cap Collateral, provided, however, that such partial
exercise shall in no way restrict or jeopardize Lender’s right to exercise its
rights with respect to all or any other portion of the Rate Cap Collateral at a
later time or times.

 

 -64-Mezzanine Loan Agreement

 

  

(b)          Lender may exercise, either by itself or by its nominee or
designee, in the name of Borrower, all of Lender’s rights, powers and remedies
in respect of the Rate Cap Collateral, under the Assignment of Interest Rate Cap
Agreement and under law.

 

(c)          Borrower hereby irrevocably, in the name of Borrower or otherwise,
authorizes and empowers Lender and assigns and transfers unto Lender, and
constitutes and appoints Lender its true and lawful attorney-in-fact, and as its
agent, irrevocably, with full power of substitution for Borrower and in the name
of Borrower, (i) to exercise and enforce every right, power, remedy, authority,
option and privilege of Borrower under the Interest Rate Cap Agreement,
including any power to subordinate or modify the Interest Rate Cap Agreement
(but not, unless an Event of Default exists and is continuing, the right to
terminate or cancel the Interest Rate Cap Agreement), or to give any notices, or
to take any action resulting in such subordination, termination, cancellation or
modification and (ii) in order to more fully vest in Lender the rights and
remedies provided for herein, to exercise all of the rights, remedies and powers
granted to Lender in this Agreement, and Borrower further authorizes and
empowers Lender, as Borrower’s attorney-in-fact, and as its agent, irrevocably,
with full power of substitution for Borrower and in the name of Borrower, to
give any authorization, to furnish any information, to make any demands, to
execute any instruments and to take any and all other action on behalf of and in
the name of Borrower which in the opinion of Lender may be necessary or
appropriate to be given, furnished, made, exercised or taken under the Interest
Rate Cap Agreement, in order to comply therewith, to perform the conditions
thereof or to prevent or remedy any default by Borrower thereunder or to enforce
any of the rights of Borrower thereunder. These powers-of-attorney are
irrevocable and coupled with an interest, and any similar or dissimilar powers
heretofore given by Borrower in respect of the Rate Cap Collateral to any other
Person are hereby revoked.

 

(d)          Lender may, without notice to, or assent by, Borrower or any other
Person (to the extent permitted by law), but without affecting any of the
Obligations, in the name of Borrower or in the name of Lender, notify the
Counterparty, or if applicable, any other counterparty to the Interest Rate Cap
Agreement, to make payment and performance directly to Lender; extend the time
of payment and performance of, compromise or settle for cash, credit or
otherwise, and upon any terms and conditions, any obligations owing to Borrower,
or claims of Borrower, under the Interest Rate Cap Agreement; file any claims,
commence, maintain or discontinue any actions, suits or other proceedings deemed
by Lender necessary or advisable for the purpose of collecting upon or enforcing
the Interest Rate Cap Agreement; and execute any instrument and do all other
things deemed necessary and proper by Lender to protect and preserve and realize
upon the Rate Cap Collateral and the other rights contemplated hereby.

 

 -65-Mezzanine Loan Agreement

 

  

(e)          Pursuant to the powers-of-attorney provided for above, Lender may
take any action and exercise and execute any instrument which it may deem
necessary or advisable to accomplish the purposes hereof; provided, however,
that Lender shall not be permitted to take any action pursuant to said
power-of-attorney that would conflict with any limitation on Lender’s rights
with respect to the Rate Cap Collateral. Without limiting the generality of the
foregoing, Lender, after the occurrence, and during the continuance, of an Event
of Default, shall have the right and power to receive, endorse and collect all
checks and other orders for the payment of money made payable to Borrower
representing: (i) any payment of obligations owed pursuant to the Interest Rate
Cap Agreement, (ii) interest accruing on any of the Rate Cap Collateral or (iii)
any other payment or distribution payable in respect of the Rate Cap Collateral
or any part thereof, and for and in the name, place and stead of Borrower, to
execute endorsements, assignments or other instruments of conveyance or transfer
in respect of any property which is or may become a part of the Rate Cap
Collateral hereunder.

 

(f)           Lender may exercise all of the rights and remedies of a secured
party under the UCC.

 

(g)          Without limiting any other provision of this Agreement or the
Assignment of Interest Rate Cap Agreement, or any of Borrower’s rights hereunder
under the Assignment of Interest Rate Cap Agreement, and without waiving or
releasing Borrower from any obligation or default hereunder under the Assignment
of Interest Rate Cap Agreement, Lender shall have the right, but not the
obligation, to perform any act or take any appropriate action, as it, in its
reasonable judgment, may deem necessary to protect the security of this
Agreement or the Assignment of Interest Rate Cap Agreement, to cure such Event
of Default or to cause any term, covenant, condition or obligation required
under this Agreement, the Assignment of Interest Rate Cap Agreement or the
Interest Rate Cap Agreement to be performed or observed by Borrower to be
promptly performed or observed on behalf of Borrower. All amounts advanced by,
or on behalf of, Lender in exercising its rights under this Section 2.6.7(g)
(including, but not limited to, reasonable legal expenses and disbursements
incurred in connection therewith), together with interest thereon at the Default
Rate from the date of each such advance, shall be payable by Borrower to Lender
upon demand and shall be secured by this Agreement.

 

2.6.8      Sales of Rate Cap Collateral. No demand, advertisement or notice, all
of which are, to the fullest extent permitted by law, hereby expressly waived by
Borrower, shall be required in connection with any sale or other disposition of
all or any part of the Rate Cap Collateral, except that Lender shall give
Borrower at least thirty (30) Business Days’ prior written notice of the time
and place of any public sale or of the time when and the place where any private
sale or other disposition is to be made, which notice Borrower hereby agrees is
reasonable, all other demands, advertisements and notices being hereby waived.
To the extent permitted by law, Lender shall not be obligated to make any sale
of the Rate Cap Collateral if it shall determine not to do so, regardless of the
fact that notice of sale may have been given, and Lender may without notice or
publication adjourn any public or private sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. Upon each private sale of the Rate Cap Collateral of a type
customarily sold in a recognized market and upon each public sale, unless
prohibited by any applicable statute which cannot be waived, Lender (or its
nominee or designee) may purchase any or all of the Rate Cap Collateral being
sold, free and discharged from any trusts, claims, equity or right of redemption
of Borrower, all of which are hereby waived and released to the extent permitted
by law, and may make payment therefor by credit against any of the Obligations
in lieu of cash or any other obligations. In the case of all sales of the Rate
Cap Collateral, public or private, Borrower shall pay all reasonable costs and
expenses of every kind for sale or delivery, including brokers’ and attorneys’
fees and disbursements and any tax imposed thereon. However, the proceeds of
sale of Rate Cap Collateral shall be available to cover such costs and expenses,
and, after deducting such costs and expenses from the proceeds of sale, Lender
shall apply any residue to the payment of the Obligations in the order of
priority as set forth in this Agreement.

 

 -66-Mezzanine Loan Agreement

 

  

2.6.9      Public Sales Not Possible. Borrower acknowledges that the terms of
the Interest Rate Cap Agreement may prohibit public sales, that the Rate Cap
Collateral may not be of the type appropriately sold at public sales, and that
such sales may be prohibited by law. In light of these considerations, Borrower
agrees that private sales of the Rate Cap Collateral under the Assignment of
Interest Rate Cap Agreement shall not be deemed to have been made in a
commercially unreasonably manner by mere virtue of having been made privately.

 

2.6.10    Receipt of Sale Proceeds. Upon any sale of the Rate Cap Collateral by
Lender under the Assignment of Interest Rate Cap Agreement (whether by virtue of
the power of sale herein granted, pursuant to judicial process or otherwise),
the receipt by Lender or the officer making the sale or the proceeds of such
sale shall be a sufficient discharge to the purchaser or purchasers of the Rate
Cap Collateral so sold, and such purchaser or purchasers shall not be obligated
to see to the application of any part of the purchase money paid over to Lender
or such officer or be answerable in any way for the misapplication or
non-application thereof.

 

2.6.11    Replacement Interest Rate Cap Agreement. If, in connection with
Borrower’s exercise of any Extension Option pursuant to Section 2.7 hereof,
Borrower delivers a Replacement Interest Rate Cap Agreement, all the provisions
of this Section 2.6 applicable to the Interest Rate Cap Agreement delivered on
the Closing Date shall be applicable to the Replacement Interest Rate Cap
Agreement, and in connection with the delivery of the Replacement Interest Rate
Cap Agreement, Borrower shall enter into a replacement collateral assignment of
such Replacement Interest Rate Cap Agreement, which collateral assignment shall
be in the same form as the Assignment of Interest Rate Cap Agreement.

 

Section 2.7           Extension Options.

 

2.7.1      Extension Options. Subject to the provisions of this Section 2.7,
Borrower shall have the option (the “First Extension Option”), by written notice
(the “First Extension Notice”) delivered to Lender no later than ten (10) days
prior to the Initial Stated Maturity Date, to extend the Maturity Date to
November 7, 2022 (the “First Extended Maturity Date”, and such extended term,
the “First Extended Term”). In the event Borrower shall have exercised the First
Extension Option, Borrower shall have the option (the “Second Extension
Option”), by written notice (the “Second Extension Notice”) delivered to Lender
no later than ten (10) days prior to the First Extended Maturity Date, to extend
the First Extended Maturity Date to November 7, 2023 (the “Second Extended
Maturity Date”, and such extended term, the “Second Extended Term”). In the
event Borrower shall have exercised each of the First Extension Option and the
Second Extension Option, Borrower shall have the option (the “Third Extension
Option”), by written notice (the “Third Extension Notice”) delivered to Lender
no later than ten (10) days prior to the Second Extended Maturity Date, to
extend the Second Extended Maturity Date to November 7, 2024 (the “Third
Extended Maturity Date”, and such extended term, the “Third Extended Term”). The
First Extension Notice shall be revocable at any time and for any reason by
Borrower prior to the Initial Stated Maturity Date, the Second Extension Notice
shall be revocable at any time and for any reason by Borrower prior to the then
First Extended Maturity Date and the Third Extension Notice shall be revocable
at any time and for any reason by Borrower prior to the then Second Extended
Maturity Date, but Borrower shall pay Lender’s actual out-of-pocket expenses
incurred in connection with such revocation (excluding breakage costs).
Borrower’s right to so extend the Maturity Date shall be subject to the
satisfaction of the following conditions precedent prior to each extension
hereunder:

 

 -67-Mezzanine Loan Agreement

 

  

(a)          (i) no Event of Default shall have occurred and be continuing on
the date Borrower delivers the First Extension Notice, the Second Extension
Notice or the Third Extension Notice, as applicable, and (ii) no Event of
Default shall have occurred and be continuing on the Initial Stated Maturity
Date, the First Extended Maturity Date or the Second Extended Maturity Date, as
applicable;

 

(b)          Borrower shall (i) obtain and deliver to Lender on the first day of
the term of the Loan as extended, one or more Replacement Interest Rate Cap
Agreements (provided that, following an Applicable Interest Rate Conversion,
Borrower shall instead deliver a replacement Substitute Interest Rate Protection
Agreement subject to and in accordance with Section 2.2.4(e)) and provided
further that if a Replacement Interest Rate Protection Agreement is not then
commercially available due to the unavailability or uncertainty in the
continuing availability of LIBOR as a reference rate, then Borrower may deliver
to Lender a mutually agreeable alternative to a Replacement Interest Rate
Protection Agreement that would afford Lender substantially equivalent
protection from increases in the Applicable Interest Rate, as reasonably
determined by Lender) from an Approved Counterparty, in a notional amount equal
to the Outstanding Principal Balance as of the first day of the applicable
Extended Term, which Replacement Interest Rate Cap Agreement(s) shall be (A)
effective for the period commencing on the day immediately following the then
applicable Maturity Date (prior to giving effect to the applicable Extension
Option) and ending on the last day of the Interest Period in which the
applicable extended Maturity Date occurs and (B) otherwise on same terms set
forth in Section 2.6, (ii) execute and deliver an Acknowledgement with respect
to each such Replacement Interest Rate Cap Agreement (or Substitute Interest
Rate Protection Agreement, as applicable), and (iii) execute and deliver a
collateral assignment of the Replacement Interest Rate Cap Agreement (or
Substitute Interest Rate Protection Agreement, as applicable), in the form of
the Assignment of Interest Rate Cap Agreement;

 

(c)          Borrower shall cause a Counterparty Opinion to be delivered with
respect to the Replacement Interest Rate Cap Agreement (or Substitute Interest
Rate Protection Agreement, as applicable) and the related Acknowledgment;

 

(d)          all amounts then due and payable (beyond the expiration of any
applicable notice and cure periods) by Borrower pursuant to this Agreement or
the other Loan Documents as of the Initial Stated Maturity Date, the First
Extended Maturity Date or the Second Extended Maturity Date, as applicable, and
all out-of-pocket costs and expenses of Lender, including reasonable fees and
expenses of Lender’s outside counsel, in connection with the applicable
extension of the Term shall have been paid in full;

 

(e)          intentionally omitted; and

 

(f)           If the Mortgage Loan and Mezzanine B Loan have not theretofore
been repaid in full, Owner and Mezzanine B Borrower, respectively, shall have
(i) timely exercised the extension option to extend the Mortgage Loan or
Mezzanine B Loan, as applicable, and (ii) been entitled pursuant to the terms of
the Mortgage Loan Documents or Mezzanine B Loan Documents, as applicable, to
exercise such extension option.

 

 -68-Mezzanine Loan Agreement

 

  

If Borrower is unable to satisfy all of the foregoing conditions within the
applicable time frames for each, Lender shall have no obligation to extend the
Maturity Date.

 

2.7.2      Intentionally Omitted.

 

Section 2.8          Regulatory Change; Taxes.

 

2.8.1      Increased Costs. If as a result of any Change in Law or compliance of
Lender therewith, Lender or the company Controlling Lender shall be subject to
(i) Special Taxes (other than (A) Indemnified Taxes, which shall be solely
covered by Section 2.8.2, (B) Other Taxes, which shall be solely covered by
Section 2.9.3, (C) Connection Income Taxes and (D) Special Taxes described in
clauses (b) through (f) of the definition of Excluded Taxes); or (ii) any
reserve, special deposit or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities, of Lender
or any company Controlling Lender is imposed, modified or deemed applicable; or
(iii) any other condition affecting loans to borrowers subject to LIBOR-based
interest rates is imposed on Lender or any company Controlling Lender and Lender
determines that, by reason thereof, the cost to Lender or any company
Controlling Lender of making, maintaining or extending the Loan to Borrower is
increased, or any amount receivable by Lender or any company Controlling Lender
hereunder in respect of any portion of the Loan to Borrower is reduced, in each
case by an amount deemed by Lender in good faith to be material (such increases
in cost and reductions in amounts receivable being herein called “Increased
Costs”), then Lender shall provide notice thereof to Borrower and Borrower
agrees that it will pay to Lender upon Lender’s written request such additional
amount or amounts as will compensate Lender or any company Controlling Lender
for such Increased Costs to the extent Lender determines that such Increased
Costs are allocable to the Loan. If Lender requests compensation under this
Section 2.8.1, Lender shall, if requested by notice by Borrower to Lender,
furnish to Borrower a statement setting forth the basis for requesting such
compensation and the method for determining the amount thereof. Notwithstanding
anything contained herein to the contrary, Borrower shall not be required to
compensate Lender pursuant to this Section 2.8.1 for any Increased Costs
actually paid by Lender more than one hundred eighty (180) days prior to the
date that Lender notifies Borrower of the change in any applicable Change in Law
giving rise to such Increased Costs and of Lender’s intention to claim
compensation or reimbursement therefor. Notwithstanding anything contained in
this Section 2.8.1 to the contrary, Lender shall not be permitted to make a
claim against Borrower under this Section 2.8.1 unless Lender is making similar
claims against other borrowers of Lender to the extent such borrowers are
similarly situated as Borrower after consideration of such factors as Lender
then reasonably determines to be relevant. Notwithstanding anything contained
herein to the contrary, if pursuant to this Section 2.8.1, Increased Costs are
payable, or will be payable, by Borrower, Borrower may, at its option and upon
not less than fifteen (15) days’ prior notice to Lender (which notice shall be
delivered to Lender no later than fifteen (15) days after Lender’s delivery to
Borrower of the above-referenced certificate regarding the payment of such
Increased Costs), prepay the Loan in whole, together with the amount of any such
Increased Costs that have at such time already been incurred by or paid by
Lender, any applicable Spread Maintenance Premium (if such prepayment occurs
prior to or on the Spread Maintenance Date) and all other amounts due and
payable under Section 2.4.6 in connection with such prepayment. Notwithstanding
anything to the contrary herein, no amount shall be payable to a Lender under
this Section 2.8.1 during the period in which the Loan is included in a
Securitization.

 

 -69-Mezzanine Loan Agreement

 

  

2.8.2      Special Taxes. Borrower shall make all payments hereunder free and
clear of and without deduction for Special Taxes, except as required by
applicable law. If Borrower shall be required by law to deduct any Indemnified
Taxes from or in respect of any sum payable hereunder or under any other Loan
Document to Lender, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.8.2) Lender receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
Borrower shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law. Notwithstanding anything contained herein to the contrary, if
pursuant to this Section 2.8.2, Borrower is, or will be, required to increase
any payment to Lender on account of Indemnified Taxes, Borrower may, at its
option and upon not less than fifteen (15) days’ prior notice to Lender (which
notice shall be delivered to Lender no later than fifteen (15) days after
Lender’s delivery to Borrower of written notice regarding the increase of
payments to Lender on account of Indemnified Taxes), prepay the Loan in whole,
together with the amount of any such Indemnified Taxes that have at such time
already been incurred by or paid by Lender, any applicable Spread Maintenance
Premium (if such prepayment occurs prior to or on the Spread Maintenance Date)
and all other amounts due and payable under Section 2.4.6 in connection with
such prepayment. Notwithstanding anything to the contrary herein, no amount
shall be payable to a Lender under this Section 2.8.2 during the period in which
the Loan is included in a Securitization.

 

2.8.3      Other Taxes. In addition, Borrower agrees to pay any present or
future stamp or documentary taxes or other excise or property taxes, charges, or
similar levies which arise from any payment made hereunder, or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the other Loan Documents, or the Loan other than such taxes, charges
or levies arising from any transfer by Lender pursuant to Article IX or a change
to the organizational structure of the Loan Parties and/or any of their
Affiliates requested by Lender in connection with the exercise of its rights
pursuant to Article IX (hereinafter referred to as “Other Taxes”).

 

2.8.4      Tax Refund. If any party determines, in its sole discretion exercised
in good faith, that it has received a refund of any Special Taxes as to which it
has been indemnified pursuant to Section 2.8.2 (including by the payment of
additional amounts pursuant to Section 2.8.2), it shall pay to the indemnifying
party an amount equal to such refund (but only to the extent of indemnity
payments made under this Section with respect to the Special Taxes giving rise
to such refund), net of all out-of-pocket expenses (including Special Taxes) of
such indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund).  Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this Section 2.8.4 (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority.  Notwithstanding anything to the contrary
in this Section 2.8.4, in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this Section 2.8.4 the payment
of which would place the indemnified party in a less favorable net after-tax
position than the indemnified party would have been in if the Special Tax
subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional
amounts with respect to such Special Tax had never been paid.  This paragraph
shall not be construed to require any indemnified party to make available its
Special Tax returns (or any other information relating to its Special Taxes that
it deems confidential) to the indemnifying party or any other Person.

 

 -70-Mezzanine Loan Agreement

 

  

2.8.5      Change of Office. To the extent that changing the jurisdiction of
Lender’s applicable office would have the effect of minimizing Indemnified
Taxes, Other Taxes or Increased Costs, Lender shall at the request of Borrower
use commercially reasonable efforts to make such a change, provided that same
would not otherwise be disadvantageous (as reasonably determined by Lender) or
involve any unreimbursed expense to Lender.

 

Section 2.9          Letters of Credit.

 

(a)          All Letters of Credit delivered to Lender in connection with this
Loan shall be held as collateral and additional security for the payment of the
Debt. Upon the occurrence and during the continuance of an Event of Default,
Lender shall have the right, at its option, to draw on all or any portion of any
such Letter of Credit and to apply such amount drawn to payment of the Debt in
such order, proportion or priority as Lender may determine. Any such application
to the Debt before or on the Spread Maintenance Date after an Event of Default
shall be subject to the Spread Maintenance Premium, if any, applicable thereto.
On the Maturity Date, if the Debt has not otherwise been paid in full, any or
all of such Letters of Credit may be applied to reduce the Debt.

 

(b)          With respect to any Letter of Credit delivered to Lender in
connection with this Loan, such Letter of Credit must be accompanied by an
instrument reasonably acceptable to Lender whereby the applicant/obligor under
such Letter of Credit shall have contributed to Borrower any and all draws under
such Letter of Credit and shall have waived all rights of subrogation against
Borrower thereunder until the Debt has been paid in full. Borrower shall also
pay to Lender all of Lender’s reasonable out-of-pocket costs and expenses in
connection therewith. Neither Borrower nor the applicant/obligor under the
Letter of Credit shall be entitled to draw upon the Letter of Credit. After the
Closing Date, the aggregate amount of any Letters of Credit delivered pursuant
to this Agreement or any other Loan Document shall not exceed ten percent (10%)
of the outstanding principal balance of the Loan unless Lender has been provided
with an Additional Insolvency Opinion with respect thereto, in form and
substance reasonably satisfactory to Lender and the Rating Agencies.

 

(c)          In addition to any other right Lender may have to draw upon any
Letter of Credit pursuant to the terms and conditions of this Agreement, Lender
shall have the additional rights to draw in full any Letter of Credit: (i) with
respect to any evergreen Letter of Credit, if Lender has received a notice from
the issuing bank that the applicable Letter of Credit will not be renewed and a
substitute Letter of Credit is not provided at least thirty (30) days prior to
the date on which the outstanding Letter of Credit is scheduled to expire; (ii)
with respect to any Letter of Credit with a stated expiration date, if Lender
has not received a notice from the issuing bank that it has renewed the Letter
of Credit at least thirty (30) days prior to the date on which such Letter of
Credit is scheduled to expire and a substitute Letter of Credit is not provided
at least ten (10) Business Days prior to the date on which the outstanding
Letter of Credit is scheduled to expire; (iii) upon receipt of notice from the
issuing bank that the Letter of Credit will be terminated (except if the
termination of such Letter of Credit is permitted pursuant to the terms and
conditions of this Agreement or a substitute Letter of Credit is provided at
least ten (10) Business Days prior to such termination); or (iv) if Lender has
received notice that the bank issuing the Letter of Credit shall cease to be an
Approved Bank and Borrower shall not have replaced such Letter of Credit with a
Letter of Credit issued by an Approved Bank within ten (10) Business Days after
notice thereof. Notwithstanding anything to the contrary contained in the above,
Lender is not obligated to draw any Letter of Credit upon the happening of an
event specified in clauses (i), (ii), (iii) or (iv) above and shall not be
liable for any losses sustained by Borrower or applicable/obligor due to the
insolvency of the bank issuing the Letter of Credit if Lender has not drawn the
applicable Letter of Credit.

 

 -71-Mezzanine Loan Agreement

 

  

Article 3

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.1          Borrower Representations. Borrower and Leasehold Pledgor
each represents and warrants that, except to the extent (if any) disclosed on
Schedule IV hereto with reference to a specific subsection of this Section 3.1:

 

3.1.1      Organization; Special Purpose. Each of Borrower, Leasehold Pledgor,
each Individual Owner, each Operating Lessee and each SPC Party is duly
organized, validly existing and in good standing with full power and authority
to own its assets and conduct its business, and is duly qualified and in good
standing in all jurisdictions in which the ownership or lease of its property or
the conduct of its business requires such qualification, and each of Borrower
and Leasehold Pledgor has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and the other Loan Documents by it,
and has the power and authority to execute, deliver and perform under this
Agreement, the other Loan Documents and all the transactions contemplated
hereby. Each of Borrower, Leasehold Pledgor, each Individual Owner, Operating
Lessee and each SPC Party is, and at all times since the date of its formation
has been (but only to the extent that the applicable requirements set forth in
Schedule V speak of a time prior to the Closing Date), a Special Purpose
Bankruptcy Remote Entity. Borrower has provided Lender with true, correct and
complete copies of Borrower’s, Leasehold Pledgor’s, each Individual Owner’s,
Operating Lessee’s and each SPC Party’s current (and since the date of its
inception) organizational documents.

 

3.1.2      Proceedings; Enforceability. This Agreement and the other Loan
Documents have been duly authorized, executed and delivered by Borrower and
Leasehold Pledgor and constitute a legal, valid and binding obligation of
Borrower and Leasehold Pledgor, enforceable against Borrower and Leasehold
Pledgor in accordance with their respective terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally, and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Loan Documents are not
subject to any right of rescission, set-off, counterclaim or defense by
Borrower, Leasehold Pledgor, any Individual Owner, any Operating Lessee, any SPC
Party or any Guarantor including the defense of usury, nor would the operation
of any of the terms of the Loan Documents, or the exercise of any right
thereunder, render the Loan Documents unenforceable, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally, and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and none of Borrower, Leasehold
Pledgor, any Individual Owner, any Operating Lessee, any SPC Party or any
Guarantor have asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.

 

 -72-Mezzanine Loan Agreement

 

  

3.1.3      No Conflicts. The execution and delivery of this Agreement and the
other Loan Documents by Borrower and Leasehold Pledgor and the performance of
its Obligations hereunder and thereunder will not conflict with any provision of
any law or regulation to which Borrower, Leasehold Pledgor, any Individual Owner
or any Operating Lessee is subject, or conflict with, result in a breach of, or
constitute a default under, any of the terms, conditions or provisions of any of
Borrower’s, Leasehold Pledgor, any Individual Owner’s or any Operating Lessee’s
organizational documents or any agreement or instrument to which Borrower,
Leasehold Pledgor, any Individual Owner or any Operating Lessee is a party or by
which it is bound, or any order or decree applicable to Borrower, Leasehold
Pledgor, any Individual Owner or any Operating Lessee, or result in the creation
or imposition of any Lien on any of Borrower’s, Leasehold Pledgor’s, any
Individual Owner’s or any Operating Lessee’s assets or property (other than
pursuant to the Loan Documents) (unless consents from all applicable parties
thereto have been obtained by Borrower and/or Leasehold Pledgor, as applicable).

 

3.1.4      Litigation. There is no action, suit, proceeding or investigation
pending or, to Borrower’s and Leasehold Pledgor’s knowledge, threatened in
writing against Borrower, Leasehold Pledgor, any Individual Owner, any Operating
Lessee, any SPC Party, any Guarantor, Manager (but only as it relates to any
Individual Property), the Collateral or any Individual Property in any court or
by or before any other Governmental Authority which, if adversely determined, is
reasonably likely to materially and adversely affect the condition (financial or
otherwise) or business of Borrower or Leasehold Pledgor (including the ability
of Borrower or Leasehold Pledgor to carry out the transactions contemplated by
this Agreement), such Individual Owner, such Operating Lessee, such SPC Party,
any Guarantor (including the ability of any Guarantor to perform its obligations
under the Guaranty), Manager (but only as it relates to any Individual Property,
including such Manager’s ability to perform its obligations under any Management
Agreement), the Collateral or the condition or ownership of such Individual
Property.

 

3.1.5      Agreements. None of Borrower, Leasehold Pledgor, Owner or Operating
Lessee is a party to any agreement or instrument or subject to any restriction
which might materially and adversely affect Borrower, Leasehold Pledgor, any
Individual Owner, any Operating Lessee, any Individual Property or the
Collateral, or Borrower’s, Leasehold Pledgor’s, Owner’s or Operating Lessee’s
business, properties or assets, operations or condition, financial or otherwise.
None of Borrower, Leasehold Pledgor, any Individual Owner or any Operating
Lessee is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or
Permitted Encumbrance (Mortgage Loan) or any other agreement or instrument to
which it is a party or by which it or any Individual Property or the Collateral
is bound, or with respect to any order or decree of any court or any order,
regulation or demand of any Governmental Authority, which default (individually
or when aggregated with any and all such defaults) is reasonably likely to have
consequences that would materially and adversely affect the condition (financial
or other) or operations of Borrower, Leasehold Pledgor, any Individual Owner,
any Operating Lessee or any Individual Property or any portion of the Collateral
or is reasonably likely to have consequences that would materially and adversely
affect its performance hereunder.

 

3.1.6      Consents. No consent, approval, authorization or order of any court
or Governmental Authority is required for the execution, delivery and
performance by Borrower or Leasehold Pledgor of this Agreement or the other Loan
Documents or the consummation of the transactions contemplated hereby, other
than those which have been obtained by Borrower or Leasehold Pledgor.

 

 -73-Mezzanine Loan Agreement

 

  

3.1.7      Property; Title.

 

(a)          Owner has good, marketable and insurable fee simple or leasehold
title to the real property comprising part of each Individual Property and good
title to the balance of such Individual Property owned by it, free and clear of
all Liens whatsoever except the Permitted Encumbrances (Mortgage Loan). Each of
Borrower and Leasehold Pledgor owns the Collateral free and clear of all Liens
whatsoever. The Pledge Agreement, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create a
valid, first priority, perfected Lien on Borrower’s and Leasehold Pledgor’s
interest in the Pledged Collateral, all in accordance with the terms thereof, in
each case subject only to the Permitted Encumbrances. Except for Permitted
Encumbrances (Mortgage Loan), there are no mechanics’, materialman’s or other
similar Liens or claims which have been filed for work, labor or materials
affecting any Individual Property which are or may be Liens prior to, or equal
or coordinate with, the Lien of the applicable Mortgage. None of the Permitted
Encumbrances or Permitted Encumbrances (Mortgage Loan), as applicable,
individually or in the aggregate, (a) materially interfere with the benefits of
the security intended to be provided by this Agreement and the other Loan
Documents, (b) materially and adversely affect the value of any Individual
Property or the Collateral, (c) materially impair the use or operations of any
Individual Property (as currently used), or (d) impair Borrower’s ability to pay
its Obligations in a timely manner.

 

(b)          All transfer taxes, deed stamps, intangible taxes or other amounts
in the nature of transfer taxes required to be paid under applicable Legal
Requirements in connection with the transfer of the Properties to Owner have
been paid or are being paid simultaneously herewith. All recording, intangible
or other similar tax required to be paid under applicable Legal Requirements in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents have been paid or are
being paid simultaneously herewith. All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid under
applicable Legal Requirements in connection with the transfer of the Collateral
to Borrower have been paid or are being paid simultaneously herewith. All taxes
and governmental assessments due and owing in respect of the Properties and the
Collateral have been paid, or an escrow of funds in an amount sufficient to
cover such payments has been established under the Mortgage Loan Documents or
the Loan Documents or are insured against by the Title Insurance Policy and the
UCC Policy, as applicable.

 

(c)          Each Individual Property is comprised of one (1) or more parcels
which constitute separate tax lots and do not constitute a portion of any other
tax lot not a part of such Individual Property.

 

(d)          No Condemnation or other proceeding has been commenced or, to
Borrower’s and Leasehold Pledgor’s knowledge, is contemplated with respect to
all or any portion of such Individual Property or for the relocation of roadways
providing access to any Individual Property.

 

(e)          To Borrower’s and Leasehold Pledgor’s knowledge, there are no
pending or proposed special or other assessments for public improvements or
otherwise affecting any Individual Property, nor are there any contemplated
improvements to any Individual Property that may result in such special or other
assessments.

 

 -74-Mezzanine Loan Agreement

 

  

3.1.8      ERISA; No Plan Assets. As of the date hereof and throughout the Term
(i) none of Borrower, Leasehold Pledgor, any Individual Owner, any Operating
Lessee nor any Guarantor, nor any ERISA Affiliate, sponsors, or is obligated to
contribute to, an “employee benefit plan,” as defined in Section 3(3) of ERISA,
that is subject to Title IV of ERISA, Section 303 of ERISA or Section 412 of the
Code, (ii) none of the assets of Borrower, Leasehold Pledgor, any Individual
Owner, any Operating Lessee or any Guarantor constitutes or will constitute
“plan assets” within the meaning of 29 C.F.R. Section 2510.3-101 as modified in
operation by Section 3(42) of ERISA, (iii) none of Borrower, Leasehold Pledgor
any Individual Owner, any Operating Lessee nor any Guarantor is or will be a
“governmental plan” within the meaning of Section 3(32) of ERISA, and (iv) none
of Borrower, Leasehold Pledgor, any Individual Owner, any Operating Lessee or
any Guarantor is subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans. As of the date
hereof, none of Borrower, Leasehold Pledgor, any Individual Owner, any Operating
Lessee or any ERISA Affiliate maintains, sponsors or contributes to or has any
obligations with respect to a “defined benefit plan” (within the meaning of
Section 3(35) of ERISA) or a “multiemployer pension plan” (within the meaning of
Section 3(37)(A) of ERISA). None of Borrower, Leasehold Pledgor, any Individual
Owner, any Operating Lessee has engaged in any transaction in connection with
which it could be subject to either a material civil penalty assessed pursuant
to the provisions of Section 502 of ERISA or a material tax imposed under the
provisions of Section 4975 of the Code.

 

3.1.9      Compliance. Except as expressly set forth on Schedule IV hereto,
Borrower, Leasehold Pledgor, each Individual Owner, each Operating Lessee, the
Collateral and each Individual Property (including, but not limited to the
Improvements) and the use thereof comply in all material respects with all
applicable Legal Requirements (except as disclosed in the environmental reports
or zoning reports provided to Lender on or prior to the Closing Date), including
parking, building and zoning and land use laws, ordinances, regulations and
codes, except for de minimis non-compliance that would not reasonably be likely
to have a material adverse effect on the applicable Individual Property or the
use or operation thereof or on Owner or Operating Lessee. None of Borrower,
Leasehold Pledgor, any Individual Owner, or any Operating Lessee nor to
Borrower’s and Leasehold Pledgor’s knowledge, any other Person in occupancy of
or involved with the operation or use of the Properties has committed, any act
which may give any Governmental Authority the right to cause Borrower, Leasehold
Pledgor, any Individual Owner or any Operating Lessee to forfeit the Collateral
or any Individual Property or any part thereof or any monies paid in performance
of Borrower’s Obligations under any of the Loan Documents. Each Individual
Property is used exclusively for the operation of a hotel and other appurtenant
and related uses. To Borrower’s and Leasehold Pledgor’s knowledge, in the event
that all or any part of the Improvements are destroyed or damaged, said
Improvements can be legally reconstructed to their condition prior to such
damage or destruction, and thereafter exist for the same use without violating
any zoning or other ordinances applicable thereto and without the necessity of
obtaining any variances or special permits, subject to customary rebuildability
statutes in the applicable jurisdictions. No legal proceedings are pending or,
to the knowledge of Borrower and Leasehold Pledgor, threatened with respect to
the zoning of any Individual Property. Neither the zoning nor any other right to
construct, use or operate each Individual Property is in any way dependent upon
or related to any property other than such Individual Property, other than
pursuant to any REA. To the Borrower’s and Leasehold Pledgor’s knowledge, all
material certifications, permits, licenses and approvals, including without
limitation, certificates of completion, occupancy permits and any applicable
liquor licenses required of Owner and/or Operating Lessee for the legal use,
occupancy and operation of each Individual Property for its current use
(collectively, the “Licenses”), have been obtained and are in full force and
effect. The use being made of each Individual Property is in conformity with the
certificate of occupancy issued for such individual Property and all other
restrictions, covenants and conditions affecting such Individual Property.

 

 -75-Mezzanine Loan Agreement

 

 

3.1.10    Financial Information. All financial data, including the statements of
financial condition and statements of cash flows and income and operating
expense, that have been delivered to Lender in connection with the Loan, (i) are
true, complete and correct in all material respects, (ii) accurately represent
the financial condition of each Individual Property and the Collateral as of the
date of such reports (subject to year-end adjustments), and (iii) have been
prepared in accordance with the Uniform System of Accounts and reconciled in
accordance with GAAP (or otherwise in accordance with an Acceptable Accounting
Method) throughout the periods covered. Except for Permitted Encumbrances,
neither Borrower nor Leasehold Pledgor has any material contingent liabilities,
liabilities for delinquent taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are known
to Borrower or Leasehold Pledgor and reasonably likely to have a materially
adverse effect on any Individual Property or the Collateral or the operation
thereof, except as referred to or reflected in said financial statements. Except
for Permitted Encumbrances (Mortgage Loan), neither Individual Owner nor any
Operating Lessee has any material contingent liabilities, liabilities for
delinquent taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Individual
Owner or Operating Lessee and reasonably likely to have a materially adverse
effect on any Individual Property or the operation thereof, except as referred
to or reflected in said financial statements. Since the date of the financial
statements, there has been no material adverse change in the financial
condition, operations or business of Borrower, Leasehold Pledgor, any Individual
Owner, any Operating Lessee or any Individual Property or the Collateral from
that set forth in said financial statements.

 

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

 

3.1.12    Assignment of Leases. The Assignment of Leases creates a valid
assignment of, or a valid security interest in, certain rights under the Leases,
in favor of Mortgage Lender subject only to a license granted to Owner and
Operating Lessee to exercise certain rights and to perform certain obligations
of the lessor under the Leases, including the right to operate each Individual
Property. No Person other than Mortgage Lender has any interest in or assignment
of the Leases or any portion of the Rent or other Gross Revenue from the
Properties.

 

 -76-Mezzanine Loan Agreement

 

  

3.1.13    Insurance. Borrower has obtained (or has caused Owner to obtain) and
maintains all Policies reflecting and satisfying the insurance coverages,
amounts and other requirements set forth in this Agreement and has delivered to
Lender certificates evidencing the insurance provided pursuant to the Policies.
No material claims are currently pending, outstanding or otherwise remain
unsatisfied under any Policy which would reasonably be expected to have a
material adverse effect on Borrower, Leasehold Pledgor, Owner or Operating
Lessee and none of Borrower, Leasehold Pledgor, any Individual Owner, any
Operating Lessee, or, to Borrower’s and Leasehold Pledgor’s knowledge, any other
Person has done, by act or omission, anything which would impair the coverage of
any of the Policies.

 

3.1.14    Flood Zone. None of the Improvements on any Individual Property is
located in an area identified by the Federal Emergency Management Agency as a
special flood hazard area, or, if so located the flood insurance required
pursuant to Section 5.1.1(a) hereof is in full force and effect with respect to
such Individual Property.

 

3.1.15    Physical Condition. To Borrower’s and Leasehold Pledgor’s knowledge,
except as may be expressly set forth in the applicable Physical Conditions
Report, each Individual Property, including all buildings, improvements, parking
facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC
systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects; to
Borrower’s and Leasehold Pledgor’s knowledge, and except as expressly disclosed
in any Physical Conditions Report, there exists no structural or other material
defects or damages in such Individual Property, whether latent or otherwise, and
none of Borrower, Leasehold Pledgor, any Individual Owner or any Operating
Lessee has received notice from any insurance company or bonding company of any
defects or inadequacies in such Individual Property, or any part thereof, which
would adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination any policy of insurance or bond.

 

3.1.16    Boundaries. Except as disclosed on the applicable Surveys, all of the
Improvements which were included in determining the appraised value of each
Individual Property lie wholly within the boundaries and building restriction
lines of such Individual Property, and no improvements on adjoining properties
encroach upon such Individual Property, and no easements or other encumbrances
affecting such Individual Property encroach upon any of the Improvements, so as
(in each of the foregoing cases) to materially and adversely affect the value or
marketability of such Individual Property, except those which are set forth on
the applicable Survey and insured against by the applicable Title Insurance
Policy.

 

 -77-Mezzanine Loan Agreement

 

  

3.1.17    Leases. The rent roll attached hereto as Schedule XI is true, complete
and correct in all material respects and no Individual Property is subject to
any material Leases other than the Leases described on Schedule XI. Either Owner
or Operating Lessee is the owner and lessor of landlord’s interest in the
Leases. No Person (other than Owner) has any possessory interest in any
Individual Property or right to occupy the same except under and pursuant to the
provisions of the Leases (other than typical short-term occupancy rights of
hotel guests). The Leases identified on Schedule XI are in full force and effect
and there are no material defaults thereunder by Owner, Operating Lessee or, to
Borrower’s and Leasehold Pledgor’s knowledge, the other party beyond any
applicable notice or cure period (except as disclosed on Schedule XI), and, to
Borrower’s and Leasehold Pledgor’s knowledge, there are no conditions that, with
the passage of time or the giving of notice, or both, would constitute defaults
thereunder. The copies of the Leases delivered to Lender are true and complete,
and there are no oral agreements with respect thereto. No Rent relating to the
Leases (including security deposits) has been paid more than one (1) month in
advance of its due date. All work to be performed by Owner or Operating Lessee
under each Lease has been performed as required and has been accepted by the
applicable tenant. Any payments, free rent, partial rent, rebate of rent or
other payments, credits, allowances or abatements required to be given by Owner
or Operating Lessee to any tenant has already been received by such tenant
except as otherwise set forth on Schedule XI. The tenants under the Leases have
accepted possession of and are in occupancy of all of their respective demised
Individual Property and have commenced the payment of full, unabated rent under
the Leases. Borrower or Leasehold Pledgor has delivered to Lender a true,
correct and complete list of all security deposits made to Owner or Operating
Lessee by tenants at the Properties which have not been applied (including
accrued interest thereon), all of which are held by Owner or Operating Lessee in
accordance with the terms of the applicable Lease and applicable Legal
Requirements. To Borrower’s and Leasehold Pledgor’s knowledge, each tenant is
free from bankruptcy or reorganization proceedings. No tenant under any Lease
(or any sublease) is an Affiliate of any Loan Party. To Borrower’s and Leasehold
Pledgor’s knowledge, the tenants under the Leases are open for business and
paying full, unabated rent. There are no brokerage fees or commissions due and
payable in connection with the leasing of space at any Individual Property,
except as set forth on Schedule XI. There has been no prior sale, transfer or
assignment, hypothecation or pledge of any Lease or of the Rents relating
thereto or other Gross Revenue received therein which will be outstanding
following the funding of the Loan (other than to Lender). No tenant listed on
Schedule XI has assigned its Lease or sublet all or any portion of the premises
demised thereby, no such tenant holds its leased premises under assignment or
sublease, nor, to Borrower’s and Leasehold Pledgor’s knowledge, does anyone
except such tenant and its employees, guests and invitees occupy such leased
premises. No tenant under any Lease has a right or option pursuant to such Lease
or otherwise to purchase all or any part of the leased premises or the building
of which the leased premises are a part. No tenant under any Lease has any right
or option for additional space in the Improvements, except as disclosed on
Schedule XI.

 

3.1.18    Tax Filings. To the extent required by law, Borrower, Leasehold
Pledgor and each Loan Party have filed (or have obtained effective extensions
for filing) all federal, state, commonwealth, district and local tax returns
required to be filed and has paid or made adequate provision for the payment of
all federal, state, commonwealth, district and local taxes, charges and
assessments payable by Borrower, Leasehold Pledgor or any Loan Party.
Borrower’s, Leasehold Pledgor’s and each Loan Party’s tax returns (if any)
properly reflect the income and taxes of Borrower, Leasehold Pledgor and such
Loan Party for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax
authority upon audit.

 

 -78-Mezzanine Loan Agreement

 

  

3.1.19    No Fraudulent Transfer. Neither Borrower nor Leasehold Pledgor (i) has
entered into the transaction or any Loan Document with the actual intent to
hinder, delay, or defraud any creditor, and (ii) received reasonably equivalent
value in exchange for its Obligations under the Loan Documents. Giving effect to
the Loan, the fair saleable value of Borrower’s and Leasehold Pledgor’s
respective assets exceeds and will, immediately following the making of the
Loan, exceed Borrower’s and Leasehold Pledgor’s respective total liabilities,
including subordinated, unliquidated, disputed and contingent liabilities. The
fair saleable value of Borrower’s and Leasehold Pledgor’s respective assets is,
and immediately following the making of the Loan, will be, greater than
Borrower’s and Leasehold Pledgor’s respective probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower’s and Leasehold Pledgor’s respective
assets do not and, immediately following the making of the Loan will not,
constitute unreasonably small capital to carry out its business as conducted or
as proposed to be conducted. Neither Borrower nor Leasehold Pledgor intends to,
and believes that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and Leasehold Pledgor and the amounts
to be payable on or in respect of the obligations of Borrower and Leasehold
Pledgor). No petition in bankruptcy has been filed against any Loan Party or any
Guarantor, and no Loan Party nor any Guarantor has ever made an assignment for
the benefit of creditors or taken advantage of any insolvency act for the
benefit of debtors. No Loan Party nor any Guarantor 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 properties,
and neither Borrower nor Leasehold Pledgor has knowledge of any Person
contemplating the filing of any such petition against it or any other Loan Party
or any Guarantor.

 

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

 

3.1.21   Organizational Chart. The organizational chart attached as
Schedule III, relating to Borrower, Leasehold Pledgor, Owner, Operating Lessee
and certain Affiliates and other parties, is true, complete and correct on and
as of the date hereof. No Person other than those Persons shown on Schedule III
have a ten percent (10%) or greater ownership interest in, or right of control,
directly or indirectly, in Borrower, Leasehold Pledgor, Owner or Operating
Lessee. Each of Borrower and Leasehold Pledgor represents and warrants to Lender
that no Manager is an Affiliate of Borrower, Leasehold Pledgor or any other Loan
Party.

 

3.1.22    Organizational Status. Each Borrower’s and Leasehold Pledgor’s exact
legal name, organizational type (e.g., corporation, limited liability company),
the jurisdiction of formation or organization, Tax I.D. and Delaware
Organizational I.D. numbers are set forth on Schedule III hereto.

 

3.1.23    Entity Diligence. Borrower hereby acknowledges receipt of copies of
the search results performed by Lender in connection with the closing of the
Loan. Borrower has no knowledge of any events, actions, claims, lawsuits,
bankruptcy filings or liabilities that exist other than those disclosed in the
search results which have, or would be reasonably likely to have, a Material
Adverse Effect and would have been disclosed in such search results if searches
were performed as of the date hereof.

 

 -79-Mezzanine Loan Agreement

 

 

3.1.24    No Casualty. The Improvements have suffered no material casualty or
damage which has not been fully repaired and the cost thereof fully paid.

 

3.1.25    Purchase Options. No Individual Property, the Collateral nor any part
thereof is subject to any purchase options, rights of first refusal, rights of
first offer or other similar rights in favor of third parties (although there
exist Ground Lease Purchase Options in favor of Individual Owners).

 

3.1.26    FIRPTA. Neither Borrower nor Leasehold Pledgor is a “foreign person”
within the meaning of Sections 1445 or 7701 of the Code.

 

3.1.27    Investment Company Act. None of Borrower, Leasehold Pledgor, Owner or
Operating Lessee is (i) an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, or (ii) subject to any other United States federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.

 

3.1.28    Fiscal Year. Each fiscal year of Borrower and Leasehold Pledgor
commences on January 1.

 

3.1.29    Other Debt. There is no Indebtedness with respect to any Collateral or
any excess cash flow or any residual interest therein, whether secured or
unsecured, other than Permitted Encumbrances and Permitted Indebtedness. There
is no Indebtedness with respect to any Individual Property or any excess cash
flow or any residual interest therein, whether secured or unsecured, other than
Permitted Encumbrances (Mortgage Loan) and “Permitted Indebtedness” (as defined
in the Mortgage Loan Agreement).

 

3.1.30    Contracts.

 

(a)          None of Borrower, Leasehold Pledgor, any Individual Owner, any
Operating Lessee nor any SPC Party has entered into, or is bound by, any Major
Contract which continues in existence, except those previously disclosed in
writing to Lender.

 

(b)          Other than the Loan Documents, the Mezzanine B Loan Documents, the
Borrower Operating Agreement and the Mortgage Borrower Company Agreement, as of
the date of this Agreement, Borrower (i) is not subject to any material
Contractual Obligations that are not (A) incidental to its activities as a
limited partner and/or member of Owner or Fee General Partner, or (B) tax
elections and (ii) has not entered into any material agreement, instrument or
undertaking by which it or its assets are bound (other than (x) certain service
agreements entered into by Borrower and its Independent Directors on or prior to
the Closing Date and certain registered agent service agreements entered into by
Borrower and its registered agent for service of process, (y) Contractual
Obligations that are incidental to its activities as a limited partner and/or
member of Owner or Fee General Partner and (z) tax elections),

 

 -80-Mezzanine Loan Agreement

 

  

(c)          Other than the Mortgage Loan Documents, the Loan Documents, the
General Partner Company Agreement and the Mortgage Borrower Company Agreement,
and any indirect Contractual Obligations entered into solely in its capacity as
the general partner of any Individual Owner or Individual Operating Lessee, as
applicable, on behalf of such Individual Owner or Individual Operating Lessee,
as of the date of this Agreement, neither Fee General Partner nor Leasehold
General Partner (i) is subject to any material Contractual Obligations that are
not (A) incidental to its activities as a general partner of the Individual
Owners and Individual Operating Lessees that are limited partnerships, or (B)
tax elections nor (ii) has entered into any material agreement, instrument or
undertaking by which it or its assets are bound (other than (x) certain service
agreements entered into by Fee General Partner or Leasehold General Partner and
its Independent Directors on or prior to the Closing Date and certain registered
agent service agreements entered into by Fee General Partner or Leasehold
General Partner and its registered agent for service of process, (y) Contractual
Obligations that are incidental to its activities as a general partner of the
Individual Owners and Individual Operating Lessees that are limited partnerships
and (z) tax elections).

 

(d)          Other than the Loan Documents, the Mortgage Loan Documents and the
Mezzanine B Loan Documents, Operating Lessee Company Agreements and the
Leasehold Pledgor Operating Agreement, as of the date of this Agreement,
Leasehold Pledgor (i) is not subject to any material Contractual Obligations
that are not (A) incidental to its activities as a limited partner and/or member
of Operating Lessee and Leasehold General Partner, or (B) tax elections and (ii)
has not entered into any material agreement, instrument or undertaking by which
it or its assets are bound (other than (x) certain service agreements entered
into by Leasehold Pledgor and its Independent Directors on or prior to the
Closing Date and certain registered agent service agreements entered into by
Leasehold Pledgor and its registered agent for service of process, (y)
Contractual Obligations that are incidental to its activities as a limited
partner and/or member of Operating Lessee and Leasehold General Partner and (z)
tax elections).

 

(e)          Each of the Major Contracts is in full force and effect, there are
no monetary or other material defaults by Borrower, Leasehold Pledgor, any
Individual Owner, any Operating Lessee or any SPC Party thereunder and, to the
best knowledge of Borrower and Leasehold Pledgor, there are no monetary or other
material defaults thereunder by any other party thereto. None of Borrower,
Leasehold Pledgor, any Individual Owner, any Operating Lessee, any SPC Party,
Manager, or any other Person authorized to act on Borrower’s, Leasehold
Pledgor’s, any Individual Owner’s, any Operating Lessee’s or any SPC Party’s
behalf has given or received any notice of default under any of the Major
Contracts that remains uncured or in dispute.

 

(f)           Borrower or Leasehold Pledgor has delivered true, correct and
complete copies of the Major Contracts (including all amendments and supplements
thereto) to Lender, which Major Contracts are described on Schedule XX attached
hereto.

 

(g)          No Major Contract has as a party an Affiliate of Borrower,
Leasehold Pledgor, any Individual Owner or any Operating Lessee or any SPC
Party. All fees and other compensation for services previously performed under
the Management Agreements have been paid in full in accordance with the terms
thereof.

 

3.1.31    Full and Accurate Disclosure. To Borrower’s and Leasehold Pledgor’s
knowledge, no statement of fact made by Borrower or Leasehold Pledgor in this
Agreement or in any of the other Loan Documents, or by Owner or Operating Lessee
in any Mortgage Loan Document, contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
herein or therein not misleading. There is no material fact presently known to
Borrower or Leasehold Pledgor which has not been disclosed to Lender which
materially adversely affects, nor as far as Borrower or Leasehold Pledgor can
foresee, reasonably could be expected to materially adversely affect, the
Collateral, any Individual Property or the business, operations or condition
(financial or otherwise) of Borrower, Leasehold Pledgor, any Individual Owner or
any Operating Lessee.

 

 -81-Mezzanine Loan Agreement

 

  

3.1.32    Other Obligations and Liabilities. None of Borrower, Leasehold
Pledgor, any Individual Owner or any Operating Lessee has any liabilities or
other obligations, contingent or otherwise, that arose or accrued prior to the
date hereof that, either individually or in the aggregate, are reasonably likely
to have a material adverse effect on Borrower, Leasehold Pledgor, any Individual
Owner, any operating Lessee, any Individual Property, the Collateral and/or
Borrower’s ability to pay the Debt, and/or the business, operations or condition
(financial or otherwise) of Borrower or Leasehold Pledgor.

 

3.1.33    Intellectual Property/Websites. Other than as set forth on
Schedule VI, none of Borrower, Leasehold Pledgor, any Individual Owner, any
Operating Lessee or any of their respective Affiliates (i) has or holds any
tradenames, trademarks, servicemarks, logos, copyrights, patents or other
intellectual property (collectively, (“Intellectual Property”) with respect to
the Collateral, any Individual Property or the use or operations thereof or is
(ii) is the registered holder of any website with respect to the Collateral or
any Individual Property (other than tenant websites).

 

3.1.34    Ground Lease. Each of Borrower and Leasehold Pledgor hereby represents
and warrants to Lender, other than set forth on Schedule IV, the following with
respect to the Ground Leases after giving effect to the related estoppels:

 

(a)          Recording; Modification. True, correct and complete copies of each
Ground Lease including all amendments and modifications thereto, have been
provided to Lender. The Ground Leases or a memorandum regarding each Ground
Lease (or any combination thereof) have been duly recorded. The Ground Leases
permit the interest of the applicable Individual Owner in the Ground Lease to be
encumbered by a mortgage and Borrower’s interest in the applicable Individual
Owner to be encumbered by a pledge of Individual Owner’s equity interest without
the consent of the Ground Lessor or the binding written approval and consent of
the applicable Ground Lessor(s) thereunder has been obtained. The Ground Leases
may not be canceled, surrendered or amended without the prior written consent of
Lender and Mortgage Lender.

 

(b)          No Liens. Except for Permitted Encumbrances (Mortgage Loan), the
applicable Individual Owner’s respective interests in the Ground Leases are not
subject to any Liens or encumbrances superior to, or of equal priority with, the
Mortgage other than the Ground Lessor’s related fee interest. Such Ground Leases
are prior to any mortgage or Lien upon (or benefit from a non-disturbance
agreement in form and substance reasonably satisfactory to Mortgage Lender from
the holder of any Lien or mortgage upon) each Ground Lessor’s related fee
interest.

 

(c)          Ground Lease Assignable. The applicable Individual Owner’s
respective interests in the Ground Leases are assignable to Mortgage Lender and
Borrower’s interest in the applicable Individual Owner are assignable to Lender
upon notice to, but without the consent of, the applicable Ground Lessors (or,
if any such consent is required, it has been obtained prior to the Closing
Date). Each Ground Lease is further assignable by Mortgage Lender, its
successors and assigns without the consent of the applicable Ground Lessor.

 

 -82-Mezzanine Loan Agreement

 

  

(d)          Default. As of the date hereof, each Ground Lease is in full force
and effect and no default has occurred and is continuing under any Ground Lease
and to Borrower’s and Leasehold Pledgor’s knowledge there is no existing
condition which, but for the passage of time and/or the giving of notice, could
result in a default under the terms of any Ground Lease. All rents, additional
rents and other sums due and payable under each Ground Lease have been paid in
full. Neither the applicable Individual Owners nor the applicable Ground Lessor
under any Ground Lease has commenced any action or given or received any written
notice for the purpose of terminating such Ground Lease.

 

(e)          Notice. Each Ground Lease, or estoppel letters received by Mortgage
Lender and Lender from the Ground Lessor thereunder, requires the Ground Lessor
thereunder to give notice of any default by the applicable Individual Owner to
Lender and Mortgage Lender. Each Ground Lease, or estoppel letters received by
Mortgage Lender and Lender from the Ground Lessor thereunder, further provides
that notice of termination given under such Ground Lease is not effective
against Mortgage Lender and Lender unless a copy of such notice has been
delivered to Mortgage Lender and Lender in the manner described in such Ground
Lease.

 

(f)           Cure. Mortgage Lender and/or Lender is permitted the opportunity
to cure any default under any Ground Lease which is curable, after the receipt
of notice of the default, before the Ground Lessor thereunder may terminate such
Ground Lease.

 

(g)          Term. Each Ground Lease has a term (or a term plus one or more
optional renewal terms, which under all circumstances may be exercised, and will
be enforceable, by the applicable Individual Owner or Mortgage Lender) which
extends not less than thirty (30) years beyond the Third Extended Maturity Date.

 

(h)          New Lease. Each Ground Lease requires the Ground Lessor thereunder
to enter into a new lease with Mortgage Lender and/or Lender upon termination of
such Ground Lease for any reason, including rejection of such Ground Lease in a
bankruptcy proceeding.

 

(i)          Insurance Proceeds. Under the terms of each Ground Lease and the
applicable Mortgage, taken together, any related insurance and condemnation
proceeds will be applied either to the repair or restoration of all or part of
the applicable Individual Property, with Mortgage Lender having the right to
hold and disburse the proceeds as the repair or restoration progresses, or to
the payment of the Outstanding Principal Balance together with any accrued
interest thereon.

 

(j)          Borrower Estoppel. To Borrower’s knowledge, each of the statements
set forth in the estoppels delivered by the Ground Lessors to Lender in
connection with the Loan remain true, complete and correct in all material
respects as of the date hereof.

 

3.1.35    Operations Agreement. Each Operations Agreement is in full force and
effect and none of Borrower, Leasehold Pledgor, any Individual Owner, any
Operating Lessee or, to Borrower’s and Leasehold Pledgor’s knowledge, any other
party to any Operations Agreement, is in material default thereunder, and to
Borrower’s and Leasehold Pledgor’s knowledge, there are no conditions which,
with the passage of time or the giving of notice, or both, would constitute a
material default thereunder. Except as described herein (including the Exhibits
and Schedules attached hereto), no Operations Agreement has been modified,
amended or supplemented.

 

 -83-Mezzanine Loan Agreement

 

  

3.1.36    Franchise Agreements.

 

(a)          Each Franchise Agreement, pursuant to which Operating Lessee has
the right to operate the hotel located on the applicable Individual Property
under a name and/or hotel system controlled by the applicable Franchisor, is in
full force and effect and there is no material default, breach or violation
existing thereunder by any party thereto and, to Borrower’s and Leasehold
Pledgor’s knowledge, no event has occurred (other than payments due but not yet
delinquent) that, with the passage of time or the giving of notice, or both,
would constitute a material default, breach or violation by any party thereunder
(except as disclosed on Schedule XII-A, none of which disclose a current
material default). Neither the execution and delivery of the Mortgage Loan
Documents or Owner’s or Operating Lessee’s performance thereunder, nor the
execution and delivery of the Loan Documents or Borrower’s and Leasehold
Pledgor’s performance thereunder, will adversely affect Owner’s or Operating
Lessee’s rights under any Franchise Agreement. None of Owner, Operating Lessee
or any Franchisor has exercised any termination option under the applicable
Franchise Agreement, neither Owner nor Operating Lessee has given any notice to
the applicable Franchisor of Owner’s or Operating Lessee’s election to terminate
such Franchise Agreement effective as of a date after the date hereof, and
neither Owner nor Operating Lessee has received from any Franchisor such
Franchisor’s notice of its election to terminate such Franchise Agreement
effective as of a date after the date hereof. Schedule XII contains a true and
correct list, by Individual Property, of (x) each Franchise Agreement under
which Operating Lessee has the right to operate the applicable Individual
Property, and (y) the expiration dates of each Franchise Agreements set forth on
Schedule XII.

 

3.1.37    Illegal Activity. No portion of any Individual Property or the
Collateral has been or will be purchased with proceeds of any illegal activity.

 

3.1.38    Property Improvement Plan. There is currently no PIP or similar
requirement imposed under any Franchise Agreement, for calendar year 2019, other
than as set forth on Schedule XVIII (the “Scheduled PIP”) and there is currently
no PIP or similar requirement imposed under any Franchise Agreement other than
Scheduled PIP, other than as set forth on Schedule XVIII.

 

3.1.39    Collateral.

 

(a)          Borrower and Leasehold Pledgor are the sole beneficial owners of
the Collateral and no Lien exists or will exist (except the Permitted
Encumbrances) upon the Collateral at any time (and no right or option to acquire
the same exists in favor of any other Person). The Collateral is not and will
not be subject to any contractual restriction upon the transfer thereof (except
for any such restriction contained in the Pledge Agreement or limited liability
company agreement or partnership agreement, as applicable, of the issuer
thereof).

 

(b)          The chief place of business of Borrower and Leasehold Pledgor and
the office where Borrower and Leasehold Pledgor keeps its records concerning the
Collateral will be located at all times at the address specified as Borrower’s
and Leasehold Pledgor’s, as applicable, address in Section 10.6.

 

(c)          The Pledged Securities have been validly issued and are not subject
to any options to purchase or similar rights of any Person.

 

 -84-Mezzanine Loan Agreement

 

  

(d)          The Security Documents create a valid security interest in the
Collateral, securing the payment of the Debt, and upon the filing in the
appropriate filing offices of the financing statements to be delivered pursuant
to this Agreement, such security interests will be perfected, first priority
security interests, and all filings and other actions necessary to perfect such
security interests will have been duly taken. Upon the exercise of its rights
and remedies under the Pledge Agreement, Lender will succeed to all of the
rights, titles and interest of Borrower and Leasehold Pledgor in each Individual
Owner and each Operating Lessee, as applicable, and the general partner of the
Individual Owners and Operating Lessees that are limited partnerships without
the consent of any other Person and will, without the consent of any other
Person, be admitted as a limited partner of such Individual Owner and a member
in the general partner of such Individual Owner.

 

(e)          No creditor of Borrower or Leasehold Pledgor has in its possession
any certificates that constitute or evidence the Pledged Collateral or the
possession of which would be required to perfect a security interest in the
Pledged Collateral.

 

3.1.40    Operating Lease. Owner is the owner and lessor of landlord’s interest
in the Operating Lease. The current Operating Lease is in full force and effect
and there are no material defaults thereunder by either party and, to Borrower’s
and Leasehold Pledgor’s knowledge, there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute defaults
thereunder.

 

3.1.41    Mortgage Loan. The Mortgage Loan has been fully funded and remains
outstanding in its original principal balance as of the Closing Date. To
Borrower’s and Leasehold Pledgor’s knowledge, no default, breach, violation or
event of default has occurred under any Mortgage Loan Document which remains
uncured or unwaived and no circumstance, event or condition has occurred or
exists which, with the giving of notice and/or the expiration of the applicable
period would constitute an Event of Default under the Mortgage Loan Documents.
Each and every representation and warranty of Owner and/or Operating Lessee made
to Mortgage Lender contained in any one or more of the Mortgage Loan Documents
is hereby incorporated into this Agreement by reference and deemed made
hereunder to the same extent and with the same force and effect as if fully set
forth herein and shall remain incorporated without regard to any waiver,
amendment or other modification thereof by the Mortgage Lender or to whether the
related Mortgage Loan Document has been repaid, defeased or otherwise
terminated, unless otherwise consented to in writing by Lender.

 

3.1.42    Mortgage Borrower Company Agreements. Borrower has delivered to Lender
a true, complete and accurate copy of each of the Mortgage Borrower Company
Agreements and there are no other agreements which amend, modify or supplement
any of the Mortgage Borrower Company Agreements. Further, none of the Mortgage
Borrower Company Agreements have been otherwise amended or modified and each of
the Mortgage Borrower Company Agreements are in full force and effect as of the
Closing Date.

 

Section 3.2         Survival of Representations. The representations and
warranties set forth in Section 3.1 and elsewhere in this Agreement and the
other Loan Documents shall (i) while not re-made, survive until the Obligations
have been paid and performed in full and (ii) be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf. Notwithstanding the foregoing, any representation or
warranty made with respect to an Individual Property shall not survive the
release of such Individual Property from the Lien of the applicable Mortgage in
accordance with Section 2.5.2 and Section 2.5.3 of the Mortgage Loan Agreement
and Section 2.5.2 and Section 2.5.3 hereof.

 

 -85-Mezzanine Loan Agreement

 

 

Article 4

 

BORROWER COVENANTS

 

Until the end of the Term, Borrower and Leasehold Pledgor hereby covenants and
agrees with Lender that:

 

Section 4.1          Payment and Performance of Obligations. Borrower and
Leasehold Pledgor shall pay and otherwise perform the Obligations in accordance
with the terms of this Agreement and the other Loan Documents.

 

Section 4.2          Due on Sale and Encumbrance; Transfers of Interests.

 

(a)          Each of Borrower and Leasehold Pledgor acknowledges that Lender has
examined and relied on the experience of Borrower and Leasehold Pledgor and
their respective stockholders, general partners and members, as applicable, and
principals of Borrower and Leasehold Pledgor in owning the Collateral in
agreeing to make the Loan, and will continue to rely on Borrower’s and Leasehold
Pledgor’s ownership of the Collateral as a means of maintaining the value of the
Collateral as security for repayment of the Debt and the performance of the
Other Obligations. Borrower and Leasehold Pledgor each acknowledge that Lender
has a valid interest in maintaining the value of the Collateral so as to ensure
that, should Borrower default in the repayment of the Debt or Borrower or
Leasehold Pledgor default in the performance of the Other Obligations, Lender
can recover the Debt by a sale of the Collateral. Therefore, without the prior
written consent of Lender, but, in each instance, subject to the express
provisions of Article 7, none of Borrower, Leasehold Pledgor nor any other Loan
Party nor any other Person having a direct or indirect ownership or beneficial
interest in Borrower, Leasehold Pledgor or in any other Loan Party shall sell,
convey, mortgage, grant, bargain, encumber, pledge, assign or transfer any
Individual Property or the Collateral or any part thereof, or any interest,
direct or indirect, common, preferred or otherwise, in Borrower, Leasehold
Pledgor or in any other Loan Party, or in any Person holding any direct or
indirect interest in Borrower, Leasehold Pledgor or in any other Loan Party,
whether voluntarily or involuntarily or enter into or subject any Individual
Property to a PACE Loan (a “Transfer”). A Transfer within the meaning of this
Section 4.2 shall be deemed to include, but not be limited to, (i) an
installment sales agreement wherein Owner agrees to sell any Individual Property
or any part thereof for a price to be paid in installments; (ii) an agreement by
Owner or Operating Lessee for the leasing of all or a substantial part of any
Individual Property for any purpose other than the actual occupancy by a space
tenant thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Owner’s right, title and interest in and to any Leases, or
any Gross Revenue; (iii) if Borrower, Leasehold Pledgor or any other Loan Party
or any general partner, managing member or controlling shareholder of Borrower,
Leasehold Pledgor or of any other Loan Party is a corporation, the voluntary or
involuntary sale, conveyance or transfer of such corporation’s stock (or the
stock of any corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock; (iv) if
Borrower, Leasehold Pledgor or any other Loan Party, or any general partner,
managing member or controlling shareholder of Borrower, Leasehold Pledgor or of
any other Loan Party is a limited or general partnership, joint venture or
limited liability company, the change, removal, resignation or addition of a
general partner, managing partner, limited partner, joint venturer or member or
the transfer of the partnership interest of any general partner, managing
partner or limited partner or the transfer of the interest of any joint venturer
or member, and (v) any pledge, hypothecation, assignment, transfer or other
encumbrance of any direct or indirect ownership interest in Borrower, Leasehold
Pledgor or in any other Loan Party.

 

 -86-Mezzanine Loan Agreement

 

  

(b)          Notwithstanding the foregoing, a Transfer within the meaning of
this Section 4.2 shall not include (i) dispositions of equipment and fixtures in
the ordinary course of Owner’s or Operating Lessee’s business (including
equipment or fixtures which are being replaced or which are no longer necessary
in connection with the operation of the Property, provided that (1) such
disposition in this parenthetical will not have a material adverse effect on or
materially impair the utility of the applicable Individual Property (a “Material
Adverse Effect”) and (2) any new equipment or fixtures acquired by Owner or
Operating Lessee (and not so disposed of) shall be subject to the Lien of the
Loan Documents (collectively, the “Disposition Conditions”)), (ii) Leases in
effect on the date hereof or otherwise permitted by this Agreement, (iii)
Permitted Transfers, (iv) easements and rights of way in the ordinary course of
business that would not have a material adverse effect on the use, occupancy or
access to the applicable Individual Property, and (v) subject to Section 5.3
hereof, transfers of portions of Individual Properties to Governmental
Authorities for (1) dedication of such portion to a public use or (2) easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for purposes of public access, the placement of water and sewer
lines, telephone and telegraph lines, electric lines or other utilities serving
such Individual Property; provided no such transfers shall have any adverse
effect on the first priority position of the Lien of the applicable Mortgage for
the benefit of Mortgage Lender or any other Material Adverse Effect. In
connection with any event specified in clause (i) above, Lender shall, from time
to time, upon receipt of an officer’s certificate requesting the same and
confirming satisfaction of the Disposition Conditions, execute a written
instrument in form and substance reasonably satisfactory to Lender to confirm
that such equipment or fixtures which are to be, or have been, sold or disposed
of are free from the Lien of the Loan Documents; provided, Borrower shall
reimburse Lender for its or its Servicer’s reasonable fees and expenses incurred
in reviewing such instrument and Borrower’s request.

 

Section 4.3          Liens. Neither Borrower nor Leasehold Pledgor shall create,
incur, assume, permit or suffer to exist any Lien on any portion of any
Individual Property or any Operating Lease, except for the Permitted
Encumbrances (Mortgage Loan), nor any portion of the Collateral, except for the
Permitted Encumbrances, nor any Lien on any direct or indirect interest in
Borrower or Leasehold Pledgor, except for (i) the pledges of the direct or
indirect equity interests in Borrower and the general partner of the Borrower by
Mezzanine B Borrower in favor of Mezzanine B Lender and in Leasehold Pledgor by
Mezzanine B Leasehold Pledgor pursuant to the Mezzanine B Loan Documents as
security for the Mezzanine B Loan and (ii) Permitted Transfers, if any. Subject
to the following, Borrower and Leasehold Pledgor shall promptly discharge any
Lien or charge against any of the Collateral or Individual Properties which is
not a Permitted Encumbrance nor a Permitted Encumbrance (Mortgage Loan) nor
otherwise expressly permitted hereunder. After prior notice to Lender, Borrower
or Leasehold Pledgor, at Owner’s or Operating Lessee’s expense, may cause Owner
or Operating Lessee to contest by appropriate legal proceeding, conducted in
good faith and with due diligence, the amount or validity of any Liens, provided
that (i) no Event of Default has occurred and remains uncured; (ii) such
proceeding shall be permitted under and be conducted in accordance with all
applicable statutes, laws and ordinances; (iii) no Individual Property nor the
Collateral, nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost; (iv) Borrower and Leasehold
Pledgor shall cause Owner or Operating Lessee promptly upon final determination
thereof to pay the amount of any such Liens, together with all costs, interest
and penalties which may be payable in connection therewith; (v) to insure the
payment of such Liens exceeding $1,000,000 in the aggregate at any one time,
Borrower and Leasehold Pledgor shall cause Owner to deliver to Lender either (A)
cash, or other security as may be approved by Lender, in an amount equal to one
hundred twenty-five percent (125%) of the contested amount, or (B) a payment and
performance bond in an amount equal to one hundred percent (100%) of the
contested amount from a surety acceptable to Lender in its reasonable
discretion, (vi) failure to pay such Liens will not subject Mortgage Lender or
Lender to any civil or criminal liability, (vii) such contest shall not affect
the ownership, use or occupancy of the Collateral or any Individual Property,
and (viii) Borrower and Leasehold Pledgor shall, upon request by Lender, cause
Owner or Operating Lessee to give Lender prompt notice of the status of such
proceedings and/or confirmation of the continuing satisfaction of the conditions
set forth in clauses (i) through (vii) of this Section 4.3. Lender may pay over
any such cash or other security held by Lender to the claimant entitled thereto
at any time when, in the reasonable judgment of Lender, the entitlement of such
claimant is established or the Collateral or any Individual Property (or any
part thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost or there shall be any danger of the Lien of the
applicable Mortgage or the Pledge Agreement being primed by any related Lien.

 

 -87-Mezzanine Loan Agreement

 

  

Section 4.4          Special Purpose. Without in any way limiting the provisions
of this Article 4, Borrower and Leasehold Pledgor hereby represent and warrant
to, and covenant with, Lender that since the date of Borrower’s, Leasehold
Pledgor’s, each Operating Lessee’s, each Individual Owner’s, each SPC Party’s,
and each Liquor Subsidiary’s formation and at all times on and after the date
hereof and until such time as the Obligations shall be paid and performed in
full, Borrower, Leasehold Pledgor, each Operating Lessee, each Individual Owner,
each SPC Party and each Liquor Subsidiary has at all times been and shall at all
times be a Special Purpose Bankruptcy Remote Entity. None of Borrower, Leasehold
Pledgor, any Operating Lessee, any Individual Owner, any SPC Party or any Liquor
Subsidiary shall directly or indirectly make any change, amendment or
modification to its or such SPC Party’s organizational documents, or otherwise
take any action which could result in Borrower, Leasehold Pledgor, any Operating
Lessee, any Individual Owner, any SPC Party, or any Liquor Subsidiary not being
a Special Purpose Bankruptcy Remote Entity.

 

Section 4.5          Existence; Compliance with Legal Requirements. Borrower,
Leasehold Pledgor, each Individual Owner, each Operating Lessee and each SPC
Party 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 all applicable governmental authorizations necessary for the
operation of the Properties and comply with all Legal Requirements applicable to
it, the Collateral and the Properties.

 -88-Mezzanine Loan Agreement

 

  

Section 4.6          Taxes and Other Charges; Use and Occupancy Taxes.

 

(a)          Borrower or Leasehold Pledgor shall (or shall cause Owner or
Operating Lessee to) pay all Taxes and Other Charges now or hereafter levied,
assessed or imposed at least five (5) Business Days before the same become Due
and Payable, and shall (or shall cause Owner or Operating Lessee to) furnish to
Lender receipts for the payment of the Taxes and the Other Charges prior to the
date the same shall become Due and Payable (provided, however, that provided no
Event of Default shall have occurred and be continuing neither Borrower nor
Leasehold Pledgor need pay (or cause Owner or Operating Lessee to pay) such
Taxes directly nor furnish (nor cause Owner or Operating Lessee to furnish) such
receipts for payment of Taxes have been paid by Mortgage Lender pursuant to the
Mortgage Loan Documents). Borrower or Leasehold Pledgor shall not permit or
suffer (and shall not permit Owner or Operating Lessee to permit or suffer), and
shall promptly discharge (or cause Owner or Operating Lessee to discharge), any
Lien or charge against the Properties, and shall promptly pay (or cause Owner or
Operating Lessee to pay) for all utility services provided to the Properties.
After prior notice to Lender, Borrower or Leasehold Pledgor may cause Owner or
Operating Lessee, at Owner’s or Operating Lessee’s expense, to contest by
appropriate legal proceeding, conducted in good faith and with due diligence,
the amount or validity of any Taxes or Other Charges, provided that (i) no
Default or Event of Default has occurred and remains uncured; (ii) such
proceeding shall be permitted under and be conducted in accordance with all
applicable statutes, laws and ordinances; (iii) no Individual Property or
Collateral nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost; (iv) Borrower or Leasehold
Pledgor shall promptly upon final determination thereof pay (or cause Owner or
Operating Lessee to pay) the amount of any such Taxes or Other Charges, together
with all costs, interest and penalties which may be payable in connection
therewith; (v) such proceeding shall suspend the collection of Taxes or Other
Charges from the applicable Individual Property; (vi) to insure the payment of
such Taxes and Other Charges exceeding $1,000,000 in the aggregate at any one
time, Borrower or Leasehold Pledgor shall cause Owner or Operating Lessee to
deposit with Mortgage Lender cash, or other security as may be approved by
Mortgage Lender, in an amount equal to one hundred twenty-five percent (125%) of
the contested amount, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon (provided, however, that no
such security will be required if Owner or Operating Lessee has provided
adequate security for the same to Mortgage Lender in accordance with the
Mortgage Loan Documents), (vii) failure to pay such Taxes or Other Charges will
not subject Lender to any civil or criminal liability, (viii) such contest shall
not affect the ownership, use or occupancy of the Properties, or of any
Individual Property, and (ix) Borrower or Leasehold Pledgor shall, upon request
by Lender, give Lender prompt notice of the status of such proceedings and/or
confirmation of the continuing satisfaction of the conditions set forth in
clauses (i) through (viii) of this Section 4.6. Lender may pay over any such
cash or other security held by Lender to the claimant entitled thereto at any
time when, in the judgment of Lender, the entitlement of such claimant is
established or any Individual Property (or any part thereof or interest therein)
or any Collateral (or any portion thereof) shall be in danger of being sold,
forfeited, terminated, cancelled or lost or there shall be any danger of the
Lien of any Mortgage secured by the applicable Individual Property or the Pledge
Agreement being primed by any related Lien.

 

(b)          Borrower or Leasehold Pledgor shall (or shall cause Owner or
Operating Lessee to) pay all Hotel Taxes now or hereafter payable to the
applicable Governmental Authority with respect the Individual Properties, as the
same become due and payable. Within forty-five (45) days following the end of
each calendar quarter, Borrower or Leasehold Pledgor shall provide an Officer’s
Certificate setting forth the actual amount of Hotel Taxes due and the actual
amount paid with respect to the Properties for the calendar quarter immediately
preceding the date of such certificate.

 

 -89-Mezzanine Loan Agreement

 

 

Section 4.7          Litigation. Borrower or Leasehold Pledgor shall give prompt
notice to Lender of any litigation or governmental proceedings pending or
threatened in writing against any Individual Property, the Collateral, Borrower,
Leasehold Pledgor, any Individual Owner, any Operating Lessee or Manager (but
only as it relates to any Individual Property and only if Borrower or Leasehold
Pledgor has received notice of any such litigation or governmental proceedings)
or any SPC Party which might materially adversely affect such Individual
Property or the Collateral or Borrower’s, Leasehold Pledgor’s, such Individual
Owner’s, such Operating Lessee’s, Manager’s or such SPC Party’s condition
(financial or otherwise) or business (including Borrower’s or Leasehold
Pledgor’s ability to perform its Obligations hereunder or under the other Loan
Documents but, in the case of Manager’s condition or business, only to the
extent Borrower or Leasehold Pledgor has a reasonable belief that such
litigation or proceeding might materially adversely affect Manager’s condition
or business).

 

Section 4.8          Title to the Pledged Collateral; Owner’s Title Policies.

 

(a)          Each of Borrower and Leasehold Pledgor shall warrant and defend (i)
its title to the Collateral (and shall cause Owner and Operating Lessee to
warrant and defend its title to the Properties and Owner’s and Operating
Lessee’s title to the collateral pledged for the Mortgage Loan), and every part
thereof, subject only to Permitted Encumbrances (Mortgage Loan) and (ii) the
validity and priority of the Liens of the Pledge Agreement, the Security
Documents and this Agreement on the Collateral, subject only to Permitted
Encumbrances, in each case against the claims of all Persons whomsoever.
Borrower or Leasehold Pledgor shall (or shall cause Owner or Operating Lessee
to) reimburse Lender for any losses, costs, damages or expenses (including
reasonable attorneys’ fees and court costs) incurred by Lender if an interest in
any Individual Property or the Collateral, other than as permitted hereunder, is
claimed by another Person.

 

(b)          Borrower or Leasehold Pledgor shall cause Owner and Operating
Lessee to comply with the terms of the Owner’s Title Policies and following
Borrower’s, Leasehold Pledgor’s, Owner’s or Operating Lessee’s knowledge of a
claim or any state of facts which could reasonably give rise to a claim, to
promptly file a claim with the applicable title company in accordance with the
requirements therein. Borrower or Leasehold Pledgor shall, or shall cause Owner
or Operating Lessee to, promptly send to Lender copies of all claims filed under
any Owner’s Title Policy, or any notices, correspondences, or documents whether
sent or received with respect to the claim or any related litigation. To the
extent Owner or Operating Lessee does not file a claim within five (5) Business
Days following a written request from Lender, Borrower or Leasehold Pledgor
shall cause Owner and/or Operating Lessee to appoint Lender as its/their
attorney in fact, to file and enforce claims and all rights of the applicable
Owner and Operating Lessee under the applicable Owner’s Title Policy or Owner’s
Title Policies in the name of and upon behalf of such Owner and such Operating
Lessee (subject to the assignment of proceeds contained in the Assignments of
Title Insurance Proceeds and the rights of Mortgage Lender, if any, in such
proceeds), which power of attorney, once provided, shall be irrevocable and
shall be deemed to be coupled with an interest (but Lender shall not be
obligated to file such claim or take such action, nor shall Lender incur
liability to Borrower, Leasehold Pledgor, Owner or Operating Lessee for its
failure to do so) and Borrower and Leasehold Pledgor hereby irrevocably appoints
Lender as its attorney-in-fact, coupled with an interest, to enforce any of the
obligations of Owner or Operating Lessee arising under the Assignments of Title
Insurance Proceeds.

 

 -90-Mezzanine Loan Agreement

 

  

Section 4.9          Financial Reporting.

 

4.9.1       Generally. Borrower and Leasehold Pledgor shall keep and maintain or
will cause to be kept and maintained proper and accurate books and records, in
accordance with GAAP and the requirements of Regulation AB, reflecting the
financial affairs of Borrower, Leasehold Pledgor, Owner and Operating Lessee and
all items of income and expense in connection with the operation of the
Collateral and the Properties. Lender shall have the right from time to time
during normal business hours upon reasonable notice Borrower and Leasehold
Pledgor to examine such books and records at the office of Borrower, Leasehold
Pledgor, Owner, Operating Lessee or other Person maintaining such books and
records and to make such copies or extracts thereof as Lender shall desire.
After an Event of Default, Borrower or Leasehold Pledgor shall pay (or cause
Owner or Operating Lessee to pay) any reasonable and actual costs incurred by
Lender to examine such books, records and accounts, as Lender shall reasonably
determine to be necessary or appropriate in the protection of Lender’s interest.

 

4.9.2       Quarterly and Monthly Reports.

 

(a)          Not later than forty-five (45) days following the end of the first
three fiscal quarters, and within ninety (90) days after the end of the fourth
fiscal quarter, Borrower or Leasehold Pledgor shall deliver (or cause Owner or
Operating Lessee to deliver) to Lender unaudited consolidated financial
statements of Borrower, Leasehold Pledgor, Owner and Operating Lessee,
internally prepared on an accrual basis including a consolidated balance sheet
as of the end of such quarter and profit and loss statements for the quarter and
year then ended compared to the corresponding period of the previous Fiscal
Year, Individual Property-level profit and loss statements for the previous
twelve (12) months then ended, and a summary report detailing monthly occupancy,
including average daily rate, made available to Borrower or Leasehold Pledgor
for the subject quarter. Such statements for each quarter shall be accompanied
by an Officer’s Certificate certifying to the best of the signer’s knowledge,
(A) that such statements fairly represent the financial condition and results of
operations of Owner and Operating Lessee and the Properties on a combined basis
as well as each Individual Property (subject to normal year-end adjustments),
(B) that as of the date of such Officer’s Certificate, no Event of Default
exists under this Agreement, the Note or any other Loan Document or, if so,
specifying the nature and status of each such Event of Default and the action
then being taken by Borrower or proposed to be taken to remedy such Event of
Default, (C) that as of the date of each Officer’s Certificate, no litigation
exists involving Borrower, Leasehold Pledgor, Owner, the Collateral or any
Individual Property or the Properties in which the amount involved is $1,000,000
(in the aggregate) or more or in which all or substantially all of the potential
liability is not covered by insurance, or, if so, specifying such litigation and
the actions being taking in relation thereto, (D) the amount by which actual
Operating Expenses were greater than or less than the Operating Expenses
anticipated in the applicable Annual Budget, and (E) a calculation reflecting
the Debt Yield as of the last day of such fiscal quarter. Such financial
statements shall contain such other information as shall be reasonably requested
by Lender for purposes of calculations to be made by Lender pursuant to the
terms hereof. All calculations of the Debt Yield shall be subject to
verification by Lender; and

 

 -91-Mezzanine Loan Agreement

 

  

(b)          Prior to the occurrence of a Securitization of the Loan, Borrower
shall deliver to Lender, not later than thirty (30) days following the end of
each calendar month, a consolidated profit and loss statement for Borrower
(which, to the extent required by GAAP, shall separately denote any
“non-controlling” or “minority” interest in the earnings of any subsidiary of
HIT Portfolio I Holdco, LLC (“Holdco”)) for the month and year then ended
compared to the corresponding period of the previous Fiscal Year and for each
Individual Property, a profit and loss statement for the twelve (12) months then
ended and a summary report detailing monthly occupancy, including the daily
average rate during the subject month. Such statements for each month shall be
accompanied by an Officer’s Certificate certifying to the best of the signer’s
knowledge that such statements fairly represent the results of operations of
Owner (taking into account any “non-controlling” or “minority” interest in the
earnings of any subsidiary of Owner) and the Properties and a calculation
reflecting the Debt Yield as of the last day of such calendar month. All
calculations of the Debt Yield shall be subject to verification by Lender.

 

4.9.3       Annual Reports. Borrower or Operating Lessee shall deliver (or cause
Owner to deliver) to Lender:

 

(a)          Intentionally Omitted; and

 

(b)          Not later than one hundred twenty (120) days after the end of each
Fiscal Year of Owner’s operations, audited consolidated financial statements of
Owner, certified by an Independent Accountant in accordance with GAAP, covering
the Properties on a combined basis for such Fiscal Year, including a
consolidated balance sheet as of the end of such Fiscal Year and a consolidated
statement of operations, which shall be accompanied by an Officer’s Certificate
in the form required pursuant to Section 4.9.2(a) above; provided, that in no
event shall Borrower be required to provide audited financials for 2018 or any
year prior; and

 

(c)          Not later than one hundred twenty (120) days after the end of each
Fiscal Year of Owner’s operations, an annual summary of any and all FF&E Work,
PIP Work and Capital Expenditures made at the Properties on a combined basis, as
well as for each Individual Property where the cost of FF&E Work, PIP Work and
Capital Expenditures at such Individual Property exceeds $500,000, during the
prior twelve (12) month period.

 

4.9.4       Other Reports.

 

(a)          Borrower or Leasehold Pledgor shall deliver (or cause Owner or
Operating Lessee to deliver) to Lender, within ten (10) Business Days of
Lender’s reasonable request therefor, copies of reports prepared by Manager in
accordance with its obligations under the Management Agreement, including
without limitation, any financial reports, economic and operational trend
analyses, or such other information as Borrower, Leasehold Pledgor, Owner or
Operating Lessee is entitled to request from Manager from time to time.

 

(b)          Borrower and Leasehold Pledgor shall, within ten (10) Business Days
after request by Lender or, if all or part of the Loan is being or has been
included in a Securitization (in which case, at Lender’s expense), by the Rating
Agencies, furnish or cause to be furnished to Lender and, if applicable, the
Rating Agencies, in such manner and in such detail as may be reasonably
requested by Lender or the Rating Agencies, such reasonable additional
information as may be reasonably requested with respect to the Properties as
well as with respect to any Individual Property, including franchise inspection
reports and guest satisfaction scores.

 

 -92-Mezzanine Loan Agreement

 

  

(c)          Borrower and Leasehold Pledgor shall submit to Lender the financial
data and financial statements required, and within the time periods required,
under clauses (i) and (ii) of Section 9.1(f), if and when available.

 

4.9.5       Annual Budget.

 

(a)          Borrower or Leasehold Pledgor shall submit (or cause Owner or
Operating Lessee to submit) to Lender by December 31 of each year the Annual
Budget for the succeeding Fiscal Year; Borrower shall also submit any updates to
such Annual Budget; provided that during the continuance of any Trigger Period,
Borrower shall submit an Annual Budget to Lender by December 1 of each year.
Each Annual Budget shall include Operating Expenses and Capital Expenditure
which are based upon, and consistent with, what is reasonable and customary for
properties similar in size, location and nature to the Properties. During the
continuance of any Trigger Period, the Annual Budget then currently in place
which shall be deemed approved, but Lender shall have the right to approve any
amendment thereto and each subsequent Annual Budget (which approval shall not be
unreasonably withheld, conditioned or delayed so long as no Event of Default is
continuing) and shall further have the right to require Borrower to furnish
Lender on a biannual basis for its approval an update of such Annual Budget
(which update shall be subject to Lender’s approval, such approval not to be
unreasonably withheld, conditioned or delayed so long as no Event of Default is
continuing). Annual Budgets and/or updates thereof submitted to Lender in
accordance herewith and, if Lender approval is then required hereunder, approved
or deemed approved by Lender in accordance with Section 4.9.5(b) hereof, shall
hereinafter be referred to as an “Approved Annual Budget”. During the
continuance of a Trigger Period, until such time that any Annual Budget has been
approved by Lender, the prior Approved Annual Budget shall apply for all
purposes hereunder (with adjustments as reasonably determined by Lender to
reflect actual increases in Taxes, Insurance Premiums and utilities expenses and
variable Operating Expenses that directly relate to increases in revenue). None
of Borrower, Leasehold Pledgor nor Manager shall (nor shall they cause or permit
Owner or Operating Lessee to) change or modify an Approved Annual Budget, as it
may be updated in accordance herewith, that has been approved or deemed approved
by Lender without the prior written consent of Lender, not to be unreasonably
withheld, conditioned or delayed so long as there is no Event of Default then
continuing (until such time as the applicable Trigger Period ends, after which
unless and until a new Trigger Period shall begin), no Lender consent shall be
required and Borrower may change or modify (or permit Owner or Operating Lessee
to change or modify) an Approved Annual Budget in accordance with the terms of
this Section 4.9.5.

 

(b)          In the event Borrower is required to obtain Lender’s approval of a
proposed Annual Budget (or any proposed modification thereof) pursuant to this
Section 4.9.5, Lender’s approval shall be deemed given by Lender if (I) the
first correspondence from Borrower to Lender requesting such approval (A) is
enclosed in an envelope marked “PRIORITY”, (B) contains a legend, prominently
displayed at the top of each page thereof, in bold, all caps and fourteen (14)
point or larger font stating that Borrower is requesting the Lender’s approval
of the proposed Annual Budget (or the proposed modification thereof) under
Section 4.9.5 of the Loan Agreement and that Lender’s failure to respond to such
request within ten (10) Business Days following its receipt of such request may
result in such request being deemed granted, and (C) is accompanied by a copy of
the proposed Annual Budget (or the proposed modification thereof) and all
information and documentation (and in such detail) as is reasonably necessary to
allow Lender to adequately and completely evaluate the request (which
information may be provided electronically in the form of a CD Rom or other
portable electronic media enclosed with such notice), (II) Lender shall fail to
respond to such request within ten (10) Business Days following its receipt of
such request, (III) Borrower shall deliver to Lender a second written request
for approval, which request is delivered in the same form and manner as
contemplated in clause (I) above and states that Lender’s failure to respond to
such request within five (5) Business Days following its receipt of such second
request, shall result in such request being deemed granted, and (IV) Lender
shall fail to respond to such request in the manner contemplated in clause (III)
above within such five (5) Business Day period. In the event Lender timely
objects (stating the basis for its objection in reasonable detail) to a proposed
Annual Budget (or the proposed modification thereof) in accordance with the
foregoing, Borrower shall promptly revise, or cause to be revised, such Annual
Budget (or the proposed modification thereof) and resubmit the same to Lender.
Lender’s approval of a revised Annual Budget (or revised modification thereof)
shall be deemed given by Lender if such revision is submitted to Lender in
accordance with clauses (I) and (III) above and Lender shall fail to respond in
accordance with clauses (II) and (IV) above.

 

 -93-Mezzanine Loan Agreement

 

  

4.9.6       Excess Operating Expenses.

 

(a)          In the event that during a Trigger Period Owner or Operating Lessee
incurs any Operating Expenses in excess of Approved Operating Expenses
(excluding Restricted Payments and any Incentive Management Fees, and excluding
amounts permitted to be remitted to Borrower from Cash Collateral Funds pursuant
to Section 6.10(b) of the Mortgage Loan Agreement) (“Excess Operating
Expenses”), then Borrower or Leasehold Pledgor shall (or shall cause Owner or
Operating Lessee to) promptly deliver to Lender, for Lender’s information, upon
Lender’s request, a reasonably detailed explanation of such Excess Operating
Expenses. During the continuance of any Trigger Period, all Excess Operating
Expenses must be approved by Lender in writing (such expenses, if approved, or
deemed approved in accordance with Section 4.9.6(b) below, the “Approved Excess
Operating Expenses”) prior to the disbursement of any funds therefor, such
approval not to be unreasonably withheld, conditioned or delayed provided no
Event of Default shall then exist. During the continuance of any Trigger Period,
any funds distributed to Owner for the payment of Approved Excess Operating
Expenses pursuant to Section 6.11.1(a)(xi) of the Mortgage Loan Agreement shall
be used by Owner or Operating Lessee only to pay for such Approved Excess
Operating Expenses or to reimburse Owner or Operating Lessee for such Approved
Excess Operating Expenses, as applicable.

 

(b)          In the event Borrower is required to obtain Lender’s approval of
Excess Operating Expenses pursuant to this Section 4.9.6, Lender’s approval
shall be deemed given by Lender if (I) the first correspondence from Borrower to
Lender requesting such approval (A) is enclosed in an envelope marked
“PRIORITY”, (B) contains a legend, prominently displayed at the top of each page
thereof, in bold, all caps and fourteen (14) point or larger font stating that
Borrower is requesting the Lender’s approval of Excess Operating Expenses under
Section 4.9.6 of the Loan Agreement and that Lender’s failure to respond to such
request within ten (10) Business Days following its receipt of such request may
result in such request being deemed granted, and (C) is accompanied by an
explanation of such Excess Operating Expenses in reasonable detail as is
necessary to allow Lender to adequately and completely evaluate the request,
(II) Lender shall fail to respond to such request within ten (10) Business Days
following its receipt of such request, (III) Borrower shall deliver to Lender a
second written request for approval, which request is delivered in the same form
and manner as contemplated in clause (I) above and states that Lender’s failure
to respond to such request within five (5) Business Days following its receipt
of such second request, shall result in such request being deemed granted, and
(IV) Lender shall fail to respond to such request in the manner contemplated in
clause (III) above within such five (5) Business Day period.

 

 -94-Mezzanine Loan Agreement

 

  

4.9.7       Hotel Accounting. All property level (but not upper-tier or
consolidated) monthly and other operating statements to be delivered by or on
behalf of Borrower or Leasehold Pledgor hereunder shall be (and all accompanying
Officer’s Certificates shall state that they have been) prepared based upon the
Uniform System of Accounts for Hotels, current edition.

 

Section 4.10        Access to Property). Borrower or Leasehold Pledgor shall
cause Owner and Operating Lessee to permit agents, representatives, consultants
and employees of Lender to inspect any Individual Property or any part thereof
at reasonable hours upon reasonable advance notice. Lender or its agents,
representatives, consultants and employees as part of any inspection may
non-invasively (except as expressly permitted under the Environmental Indemnity)
take soil, air, water, building material and other samples from such Individual
Property, subject to the rights of tenants under Leases.

 

Section 4.11        Leases. Any Leases in excess of three thousand (3,000)
square feet (each such Lease a “Material Lease”) written after the date hereof
shall be subject to Lender’s prior written approval, which approval shall not be
unreasonably withheld, conditioned or delayed. Upon request, Borrower or
Leasehold Pledgor shall furnish Lender with executed copies of all Leases
entered into after the date hereof. All renewals of Leases and all proposed
Leases shall provide for rental rates comparable to existing local market rates.
All proposed Leases shall be on commercially reasonable terms and shall not
contain any terms which would materially adversely affect Lender’s rights under
the Loan Documents. Prior to entering into any Lease or any modification
thereof, Borrower or Leasehold Pledgor shall cause Owner or Operating Lessee to
obtain or cause the tenant to obtain all licenses, permits, approvals and
consents required as a condition to such Lease and/or to tenant’s operation
thereunder, including without limitation any and all consents and approvals
required under any applicable Franchise Agreement, Ground Lease, Operations
Agreement and/or License. All Leases executed after the date hereof shall
provide that they are subordinate to the Mortgage encumbering the applicable
Individual Property in favor of Mortgage Lender and that the lessee agrees to
attorn to Mortgage Lender or any purchaser at a sale by foreclosure or power of
sale. Borrower and Leasehold Pledgor shall, and shall cause the related Manager
to, (i) observe and perform the obligations imposed upon the lessor under the
Leases in a commercially reasonable manner; (ii) enforce (if and to the extent
commercially reasonable to do so under the circumstances) the terms, covenants
and conditions contained in the Leases upon the part of the lessee thereunder to
be observed or performed in a commercially reasonable manner or terminate or
amend such lease, in either case in a manner not to impair materially the value
of the Individual Property involved except that no termination by Owner or
Operating Lessee or acceptance of surrender by a tenant of any Material Lease
shall be permitted unless by reason of a tenant default and then only in a
commercially reasonable manner to preserve and protect the Individual Property;
provided, however, that no such termination or surrender of any Material Lease
will be permitted without the written consent of Lender; (iii) not collect any
of the Rents relating to the Leases more than one (1) month in advance (other
than security deposits); (iv) not execute any other assignment of lessor’s
interest in the Leases or the Rents or any other Gross Revenues (except as
contemplated by the Loan Documents and the Mortgage Loan Documents); (v) not
alter, modify or change the terms of the Leases in a manner inconsistent with
the provisions of the Loan Documents; and (vi) execute and deliver at the
request of Lender all such further assurances, confirmations and assignments in
connection with the Leases as Lender shall from time to time reasonably require.
Notwithstanding anything to the contrary contained herein, neither Borrower nor
Leasehold Pledgor shall permit Owner or Operating Lessee to enter into a lease
of all or substantially all of any Individual Property (other than the Operating
Lease) without Lender’s prior written consent, which consent may be withheld in
Lender’s sole and absolute discretion. Lender’s approval of a Material Lease
shall be deemed given by Lender if (I) the first correspondence from Borrower to
Lender requesting such approval (A) is enclosed in an envelope marked
“PRIORITY”, (B) contains a legend, prominently displayed at the top of each page
thereof, in bold, all caps and fourteen (14) point or larger font stating that
Borrower or Leasehold Pledgor is requesting Lender’s approval of a Material
Lease under Section 4.11 of the Loan Agreement and that Lender’s failure to
respond to such request within ten (10) Business Days following its receipt of
such request may result in such request being deemed granted, and (C) is
accompanied by an a copy of such proposed Material Lease together with an
explanation thereof in such reasonable detail as is necessary to allow Lender to
adequately and completely evaluate the request, (II) Lender shall fail to
respond to such request within ten (10) Business Days following its receipt of
such request, (III) Borrower or Leasehold Pledgor shall deliver to Lender a
second written request for approval, which request is delivered in the same
manner as contemplated in clause (I) above and states that Lender’s failure to
respond to such request within five (5) Business Days following its receipt of
such second request, shall result in such request being deemed granted, and (IV)
Lender shall fail to respond to such request in the manner contemplated in
clause (III) above within such five (5) Business Day period.

 

 -95-Mezzanine Loan Agreement

 

  

Section 4.12        Repairs; Maintenance and Compliance; Alterations.

 

4.12.1    Repairs; Maintenance and Compliance. Borrower and Leasehold Pledgor
shall at all times cause Owner and Operating Lessee to maintain, preserve and
protect all franchises and trade names, and Borrower and Leasehold Pledgor shall
cause Owner and Operating Lessee to cause each Individual Property to be
maintained in a good and safe condition and repair and shall not remove,
demolish or alter the Improvements or Equipment (except for alterations
performed in accordance with Section 4.12.2 below and normal replacement of
Equipment with Equipment of equivalent value and functionality). Borrower and
Leasehold Pledgor shall cause Owner and Operating Lessee to promptly comply with
all Legal Requirements and immediately cure properly any violation of a Legal
Requirement. Borrower and Leasehold Pledgor shall (or cause Owner or Operating
Lessee to) promptly notify Lender in writing after Borrower or Leasehold Pledgor
first receives notice of any such non-compliance. Borrower and Leasehold Pledgor
shall cause Owner and Operating Lessee to promptly repair, replace or rebuild
any part of any Individual Property that becomes damaged, worn or dilapidated
(subject to Article V) and shall complete and pay for any Improvements at any
time in the process of construction or repair. Borrower and Leasehold Pledgor
acknowledge and agree that, with respect to any Individual Properties that have
fewer parking spaces than are required under the applicable zoning regulations,
(a) each such Individual Property could be brought into compliance with the
applicable zoning regulations with respect to parking count solely by restriping
the parking lot(s) and/or parking garage(s) located at such Individual Property
and (b) Borrower and Leasehold Pledgor shall cause Owner and Operating Lessee to
bring each such Individual Property into compliance with applicable zoning
regulations with respect to parking count promptly following the request by any
Governmental Authority to do so.

 

 -96-Mezzanine Loan Agreement

 

  

4.12.2    Alterations. Borrower and Leasehold Pledgor may, without Lender’s
consent, permit Owner and Operating Lessee to perform alterations to the
Improvements and Equipment which (i) do not constitute a Material Alteration (or
are otherwise approved by Lender), (ii) do not materially adversely affect
Borrower’s, Leasehold Pledgor’s, Owner’s or Operating Lessee’s financial
condition or the value or net operating income of the Properties or of any
Individual Property, and (iii) are in the ordinary course of Owner’s and
Operating Lessee’s business (it being understood that nothing in this
clause (iii) shall prohibit Owner from carrying out FF&E Work to the extent the
same constitutes an Approved FF&E Expense or PIP Work to the extent the same
constitutes an Approved Scheduled PIP Expense). Neither Borrower nor Leasehold
Pledgor shall cause or permit Owner or Operating Lessee to perform any Material
Alteration without Lender’s prior written consent not to be unreasonably
withheld, conditioned or delayed. To the extent that the Mortgage Loan is no
longer outstanding or Mortgage Lender has waived the corresponding requirement
under the Mortgage Loan Documents, Lender may, as a condition to giving its
consent to a Material Alteration with respect to any one or more Individual
Properties, require that Borrower or Leasehold Pledgor deliver (or cause Owner
or Operating Lessee to deliver) to Lender security for payment of the cost of
such Material Alteration and as additional security for Borrower’s and Leasehold
Pledgor’s Obligations under the Loan Documents, which security may be any of the
following: (i) cash, (ii) a Letter of Credit, (iii) U.S. Obligations, or (iv)
other securities acceptable to Lender, provided that in the case of this
clause (iv), Lender shall have received a Rating Agency Confirmation as to the
form and issuer of same. Such security shall be in an amount equal to the total
unpaid amounts incurred and to be incurred with respect to such alterations to
the Improvements at such Individual Property(ies) (other than such amounts to be
paid or reimbursed by tenants under the Leases) in excess of the Alteration
Threshold. Not more than once per month during the course of the Material
Alteration, upon Borrower’s or Leasehold Pledgor’s written request and provided
each of the conditions below shall have been satisfied, Lender will disburse
funds from any Material Alteration security that is cash to fund (or reimburse
Borrower, Leasehold Pledgor, Owner or Operating Lessee, as applicable, for its
funding of) the cost of the Material Alterations or, to the extent applicable,
provide its written consent to the reduction of any Letter of Credit in
consideration of Borrower’s or Leasehold Pledgor’s funding of the cost of the
Material Alterations (such reduction being in the amount of such funding), in
each case, within twenty (20) days following Lender’s receipt of Borrower’s or
Leasehold Pledgor’s written request. Lender’s obligation to make disbursements
hereunder shall be subject to the satisfaction of each of the following
conditions: (x) as of the date of Borrower’s or Leasehold Pledgor’s request, and
as of the date of disbursement, no Event of Default shall have occurred and be
continuing, (y) Borrower’s or Leasehold Pledgor’s written request shall be
accompanied by: (1) copies of all bills and invoices evidencing such costs (and
the same shall be subject to Lender’s reasonable review), (2) an Officer’s
Certificate from Borrower (A) stating that the items to be funded by the
requested disbursement are costs of an approved Material Alteration, and a
description thereof, (B) stating that the portion of such approved Material
Alteration to be funded by the requested disbursement has been completed in a
good and workmanlike manner and in accordance with all applicable Legal
Requirements, (C) stating that the portion of such Material Alteration to be
funded has not been the subject of a previous disbursement and that all prior
releases, disbursement, or returns of security have been applied by Borrower,
Leasehold Pledgor, Owner or Operating Lessee to the costs of such Material
Alteration in accordance with Borrower’s or Leasehold Pledgor’s past requests,
(3) evidence satisfactory to Lender in its reasonable discretion that the
balance of the cash portion of the Material Alteration security or the undrawn
portion of any Letter of Credit given as security for such Material Alteration,
after giving effect to the requested disbursement, will be sufficient to cover
the remaining cost of such Material Alteration, (4) evidence that all contracts,
subcontractors and materialmen who provided work materials or services in
connection with such portion of the Material Alterations covered by such
disbursement have been paid in full (or will be paid in full from such
disbursement) and have delivered appropriate lien waivers and/or releases (or
will deliver them in connection with such disbursement); (5) at Lender’s option,
but no more frequently than once per calendar quarter, a title search for the
related Individual Property indicating that such Individual Property is free
from all Liens, claims and other encumbrances not previously approved by Lender
and which are not otherwise Permitted Encumbrances (Mortgage Loan), and (6) such
other evidence as Lender shall reasonably request to demonstrate that the
portion of such Material Alteration to be funded by the requested disbursement
has been completed and paid for or will be paid upon such disbursement to
Borrower or Leasehold Pledgor. Upon substantial completion of any Material
Alteration, Borrower or Leasehold Pledgor shall provide (or cause Owner or
Operating Lessee to provide) evidence satisfactory to Lender that (i) the
Material Alteration was constructed in accordance with applicable Legal
Requirements, (ii) all contractors, subcontractors, materialmen and
professionals who provided work, materials or services in connection with the
Material Alteration have been paid in full and have delivered unconditional
releases of liens, and (iii) all material licenses and permits necessary for the
use, operation and occupancy of the Material Alteration (other than those which
depend on the performance of tenant improvement work) have been issued. If
Borrower or Leasehold Pledgor has provided (or caused Owner or Operating Lessee
to provide) cash security, as provided above, except to the extent applied by
Lender to fund such Material Alterations, such cash shall be released by Lender
to fund such Material Alterations, and if Borrower or Leasehold Pledgor has
provided (or has caused Owner or Operating Lessee to provide) non-cash security,
as provided above, except to the extent applied by Lender to fund such Material
Alterations, Lender shall release and return such security upon Borrower’s
satisfaction of the requirements of the preceding sentence.

 

Section 4.13        Approval of Major Contracts. Borrower and Leasehold Pledgor
shall be required to obtain Lender’s prior written approval of any and all Major
Contracts affecting any Individual Property, which approval may be granted or
withheld in Lender’s reasonable discretion and which approval shall be deemed
given by Lender if (I) the first correspondence from Borrower to Lender
requesting such approval (A) is enclosed in an envelope marked “PRIORITY”, (B)
contains a legend, prominently displayed at the top of each page thereof, in
bold, all caps and fourteen (14) point or larger font stating that Borrower or
Leasehold Pledgor is requesting the Lender’s approval of a Major Contract under
Section 4.14 of the Loan Agreement and that Lender’s failure to respond to such
request within ten (10) Business Days following its receipt of such request may
result in such request being deemed granted, and (C) is accompanied by an a copy
of such proposed Major Contract together with an explanation thereof in such
reasonable detail as is necessary to allow Lender to adequately and completely
evaluate the request, (II) Lender shall fail to respond to such request within
ten (10) Business Days following its receipt of such request, (III) Borrower or
Leasehold Pledgor shall deliver to Lender a second written request for approval,
which request is delivered in the same manner as contemplated in clause (I)
above and states that Lender’s failure to respond to such request within five
(5) Business Days following its receipt of such second request, shall result in
such request being deemed granted, and (IV) Lender shall fail to respond to such
request in the manner contemplated in clause (III) above within such five (5)
Business Day period.

 

 -97-Mezzanine Loan Agreement

 

  

Section 4.14        Property Management.

 

4.14.1    Management Agreements. Borrower and Leasehold Pledgor shall or shall
cause Owner and Operating Lessee to (i) use commercially reasonable efforts to
cause Manager to manage the Properties in accordance with the applicable
Management Agreement and in accordance with all applicable Legal Requirements,
(ii) diligently perform and observe all of the terms, covenants and conditions
of each of the Management Agreements on the part of Owner and/or Operating
Lessee to be performed and observed, (iii) promptly notify (or cause Owner or
Operating Lessee to notify) Lender of any material default (after the expiration
of any applicable cure periods) under any Management Agreement of which it is
aware, (iv) in the event of and upon Lender’s reasonable request from time to
time, promptly deliver (or cause Owner or Operating Lessee to deliver) to Lender
a copy of any financial statements, business plans, capital expenditures plans,
reports and estimates received by it under the Management Agreements that are so
requested by Lender, and (v) promptly enforce the performance and observance of
all of the covenants required to be performed and observed by Manager under the
Management Agreements. Subject at all times to the rights of Mortgage Lender
under the Mortgage Loan Documents, if Owner or Operating Lessee shall default in
the performance or observance of any material term, covenant or condition of any
Management Agreement on the part of Owner or Operating Lessee, as applicable, to
be performed or observed and such default is not cured within thirty (30) days
of written notice from Lender (or if an Event of Default exists), then, without
limiting Lender’s other rights or remedies under this Agreement or the other
Loan Documents, and without waiving or releasing Borrower or Leasehold Pledgor
from any of its Obligations hereunder or under the Management Agreements, Lender
shall have the right, but shall be under no obligation, to pay any sums and to
perform any act as may be appropriate to cause all the material terms, covenants
and conditions of the Management Agreements on the part of Owner or Operating
Lessee, as applicable, to be performed or observed.

 

4.14.2    Prohibition Against Termination or Modification.

 

(a)          Except as set forth in clause (b) below, neither Borrower nor
Leasehold Pledgor shall cause or permit Owner or Operating Lessee, to (i)
surrender, terminate, cancel, materially modify, renew or extend any Management
Agreement (other than a renewal or extension of a Management Agreement in
accordance with its terms), (ii) enter into any other agreement relating to the
management or operation of any Individual Property with any Manager or any other
Person, (iii) consent to the assignment by any Manager of its interest under the
related Management Agreement, or (iv) waive or release any of its material
rights and remedies under any Management Agreement, in each case without the
express consent of Lender, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, with respect to the appointment of a
new manager, such consent may be conditioned upon Borrower or Leasehold Pledgor
delivering to Lender a Rating Agency Confirmation from each applicable Rating
Agency as to such new manager and evidence that such replacement will not
violate or cause a breach or default under any Franchise Agreement or Ground
Lease to the extent such violation, breach or default (with or without the
passage of time) would result in an Event of Default, and that any approvals
required under any Franchise Agreement or Ground Lease to the replacement of
Manager have been obtained. If at any time Lender consents to the appointment of
a new manager, such new manager and Owner and Operating Lessee shall, as a
condition of Lender’s consent, execute (i) a management agreement in form and
substance reasonably acceptable to Lender, and (ii) a subordination of
management agreement in a form reasonably acceptable to Lender.

 

 -98-Mezzanine Loan Agreement

 

  

(b)          Notwithstanding anything to the contrary herein or in the other
Loan Documents (and without limiting Borrower’s and Leasehold Pledgor’s right to
replace (or cause Owner or Operating Lessee to replace) a Manager with Lender’s
consent pursuant to clause (a) above), Borrower and Leasehold Pledgor shall have
the right in connection to cause Owner or Operating Lessee to replace one or
more Managers with one or more Qualified Managers without Lender’s consent and
without any Rating Agency Confirmation provided that each of the following
conditions shall have been satisfied:

 

(i)          Lender shall have received written notice of the intended
replacement(s) not less than fifteen (15) days prior to the date(s) on which
such proposed replacement(s) are to occur;

 

(ii)         As of the date of giving such notice and as of the effective date
of such replacement no Event of Default shall have occurred and be continuing;

 

(iii)        Such notice shall identify the Individual Property as to which
Owner wishes to replace the Manager and the Qualified Manager with whom Owner or
Operating Lessee intends to replace the applicable Manager and as of the date of
giving such notice and as of the effective date of such replacement, (x) no such
Qualified Manager shall be subject to any bankruptcy or similar insolvency
proceeding, and (y) there shall have been no material adverse change in the
condition of any such Qualified Manager, financial and otherwise, since the
Closing Date; provided, however, that the replacement property management
company identified by Owner shall be a “Qualified Manager” for purposes of this
subsection (b) only if such replacement property company does not manage more
than seventy-five percent (75%) of the total number of keys of the Individual
Properties;

 

(iv)        Each Qualified Manager identified by Borrower or Leasehold Pledgor
shall enter into one or more new Management Agreements, which agreements shall
(A) not provide for Base Management Fees in excess of three percent (3.0%) of
the monthly Operating Income for the Individual Properties managed by such
Qualified Manager unless otherwise reasonably agreed by Lender in writing, and
(B) otherwise be on terms and conditions approved by Lender (which approval will
not be unreasonably withheld, conditioned or delayed); provided that any new
Management Agreement which satisfies clause (A) above and is in form and
substance substantially the same as any existing Management Agreement by and
between a Qualified Manager and the applicable Owner or Operating Lessee that
exist as of the Closing Date shall be deemed to be approved by Lender;

 

(v)         Lender shall have received evidence reasonably satisfactory to it
(which may be in the form of an Officer’s Certificate) that such replacement(s)
of such Manager(s) are not prohibited by and would not permit the applicable
Franchisor or the applicable Ground Lessor to terminate any Franchise Agreement
or Ground Lease, and will not result in or cause any breach or default under any
Franchise Agreement or Ground Lease to the extent such violation, breach or
default (with or without the passage of time) would result in an Event of
Default, and that any approvals required under any Franchise Agreement or Ground
Lease to the replacement of such Manager(s) have been obtained;

 

 -99-Mezzanine Loan Agreement

 

  

(vi)        Concurrently with such replacement(s), Borrower or Leasehold Pledgor
shall have caused Owner or Operating Lessee to pay (or escrow in accordance with
the terms of the Management Agreement(s) being replaced), any termination or
transition costs and expenses, termination fees or their equivalent, to which
any Manager being replaced is entitled under its Management Agreement; and

 

(vii)       Each such Qualified Manager shall enter into an assignment of
management agreement and subordination of management fees which either is (A) in
form and substance substantially the same as the assignment of management
agreement and subordination of management fees entered into by any Qualified
Manager on the Closing Date or (B) in form and substance approved by Lender
(which approval will not be unreasonably withheld, conditioned or delayed).

 

4.14.3    Replacement of Manager. In each case to the extent permitted under the
applicable Assignment of Management Agreement, Lender shall have the right to
require Borrower or Leasehold Pledgor to cause Owner and Operating Lessee to
replace any Manager with a Person chosen by Owner or Operating Lessee and,
unless such replacement is a Qualified Manager, approved by Lender (provided,
that such approval of a Manager that is not a Qualified Manager may be
conditioned upon Borrower or Leasehold Pledgor delivering a Rating Agency
Confirmation as to such new manager and management agreement) upon the
occurrence of any one or more of the following events: (i) at any time after the
Loan has been accelerated in accordance with Section 8.2.1, the Maturity Date
has occurred, or Lender has commenced a foreclosure action, applied for the
appointment of a receiver or exercised other similar remedies with respect to an
Event of Default, (ii) if such Manager shall be in material default under the
Management Agreement that causes a material adverse effect (in Lender’s
reasonable determination) on Owner, Operating Lessee or their respective
business, net cash flow, operations or financial condition or on the Properties
then under management pursuant to such Management Agreement or the use, value,
operation or net cash flow thereof or Owner’s or Operating Lessee’s interest
therein or Lender’s security therein, and such default is not cured within
thirty (30) days after notice thereof from Lender to Borrower; provided if such
default cannot reasonably be cured within such thirty (30) day period Borrower
shall have an additional sixty (60) days in which to cure such default so long
as it is diligently pursuing a cure, (iii) if such Manager shall become
insolvent or a debtor in any bankruptcy or insolvency proceeding (provided that
if such proceeding is involuntary, the same shall not have been dismissed within
ninety (90) days of filing), or (iv) if at any time such Manager has engaged in
gross negligence, fraud, willful misconduct or misappropriation of funds (unless
such gross negligence, fraud, willful misconduct or misappropriation of funds is
the act of any employee of such Manager other than a senior officer or other
individual controlling such Manager and within thirty (30) days of such
Manager’s discovery thereof, such employee has been terminated by that Manager
and that Manager has fully compensated Borrower or Leasehold Pledgor, as
applicable, for any losses suffered as a result of such gross negligence, fraud,
willful misconduct or misappropriation of funds). If any of the events listed in
subparagraphs (i)-(iv) above has occurred, subject to the prior written consent
of the Mortgage Lender, Lender shall have the right to replace the applicable
Manager with any Qualified Manager if (A) neither Borrower nor Leasehold Pledgor
is diligently working (or causing Owner or Operating Lessee to diligently work)
to replace the Manager and keeping Lender reasonably apprised of its efforts in
connection therewith, and Borrower or Leasehold Pledgor fails to commence and
continue thereafter (or cause Owner or Operating Lessee to commence and continue
thereafter) diligently working to replace the applicable Manager within ten (10)
Business Days after written notice from Lender, or (B) Borrower or Leasehold
Pledgor fails to actually replace (or cause Owner or Operating Lessee to
actually replace) the Manager with a Manager approved by Lender within one
hundred twenty (120) days after Lender’s initial notice to Borrower or Leasehold
Pledgor to replace the Manager; provided that if Borrower or Leasehold Pledgor
is unable to replace the Manager within such one hundred twenty (120) days and
Borrower or Leasehold Pledgor continues to diligently work to do so, then
Borrower and Leasehold Pledgor shall have up to an additional sixty (60) days to
replace the Manager.

 

 -100-Mezzanine Loan Agreement

 

  

4.14.4    Brand Manager Rights. Lender acknowledges that pursuant to the
Management Agreements, the Brand Managers retain control and discretion over
certain matters customarily subject to Lender approval and have the right to
take certain actions that may be restricted under the Loan Documents (including
matters relating to FF&E, leases, casualty and condemnation, alterations,
leasing and budgets). Lender acknowledges that any restrictions herein or in the
other Loan Documents on the actions of Borrower and Leasehold Pledgor and any
approvals Borrower or Leasehold Pledgor is required to obtain from Lender shall
be subject to the rights and discretion of the applicable Brand Manager with
respect to such Individual Properties pursuant to the terms of the applicable
Management Agreements.

 

Section 4.15        Performance by Borrower; Compliance with Agreements.

 

(a)          Each of Borrower and Leasehold Pledgor shall in a timely manner
observe, perform and fulfill (and cause Owner and Operating Lessee to observe,
perform and fulfill) each and every covenant, term and provision of each Loan
Document and Mortgage Loan Document executed and delivered by, or applicable to,
Borrower, Leasehold Pledgor, Owner and/or Operating Lessee, and shall not enter
into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document or Mortgage Loan
Documents executed and delivered by, or applicable to, Borrower, Leasehold
Pledgor, Owner or Operating Lessee without the prior consent of Lender.

 

(b)          Each of Borrower and Leasehold Pledgor shall at all times comply
(and cause Owner to comply) in all material respects with all Operations
Agreements. Each of Borrower and Leasehold Pledgor agrees that without the prior
written consent of Lender, neither Borrower nor Leasehold Pledgor will cause or
permit Owner to amend, modify or terminate any of the Operations Agreements.

 

Section 4.16        Licenses; Intellectual Property; Website.

 

4.16.1    Licenses. Borrower or Leasehold Pledgor shall cause Owner or Operating
Lessee (or, as applicable, shall cause Owner or Operating Lessee to cause Liquor
Subsidiary) to keep and maintain all Licenses necessary for the operation of
each Individual Property as a hotel. Neither Borrower nor Leasehold Pledgor
shall permit Owner or Operating Lessee to transfer any Licenses required for the
operation of each Individual Property (except in connection with a Permitted
Direct Assumption). Subject to the rights of Mortgage Lender pursuant to the
Mortgage Loan Documents, following the occurrence and during the continuation of
any Event of Default, Borrower and Leasehold Pledgor shall, and shall cause
Owner and Operating Lessee to, upon any request of Lender cooperate with Lender
(and its nominees and successors and assigns) in (i) the transfer to Lender (or
such nominee, successor or assign) of any Licenses (including, without
limitation, liquor licenses) necessary or appropriate for the operation of any
of the Properties; (ii) the obtaining by Lender (or such nominee, successor or
assign) of any Licenses (including, without limitation, liquor licenses)
necessary or appropriate for the operation of any of the Properties; and (iii)
the continuation by Owner or Operating Lessee or any tenant under any Lease or
by any Manager on behalf of Owner or Operating Lessee of any existing licenses
and permits (including, without limitation, liquor licenses) and/or arrangements
for liquor sales and service to be conducted by third party vendors, under
catering licenses or otherwise, until new licenses and permits are obtained.

 

 -101-Mezzanine Loan Agreement

 

 

4.16.2    Intellectual Property. Borrower and Leasehold Pledgor shall keep and
maintain (and shall cause Owner or Operating Lessee to keep and maintain) all
Intellectual Property relating to the use or operation of each Individual
Property and all Intellectual Property shall be held by and (if applicable)
registered in the name of Borrower, Leasehold Pledgor, Owner or Operating
Lessee. Neither Borrower nor Leasehold Pledgor shall cause or permit Owner or
Operating Lessee to Transfer or let lapse any Intellectual Property without
Lender’s prior consent.

 

4.16.3    Website. Any website with respect to any Individual Property (other
than tenant websites), Owner, Borrower, Leasehold Pledgor or Operating Lessee
shall be maintained by or on behalf of Borrower, Leasehold Pledgor, Owner or
Operating Lessee, respectively, and any such website shall be registered in the
name of Borrower, Leasehold Pledgor, Owner or Operating Lessee, respectively.
Neither Borrower nor Leasehold Pledgor shall nor shall Borrower or Leasehold
Pledgor cause or permit Owner or Operating Lessee to Transfer any such website
without Lender’s prior consent.

 

Section 4.17        Further Assurances. Borrower and Leasehold Pledgor shall, at
Borrower’s and Leasehold Pledgor’s sole cost and expense:

 

(a)          furnish (or cause Owner or Operating Lessee to furnish) to Lender,
to the extent not already furnished to Lender on or before the Closing Date, all
instruments, documents, boundary surveys, footing or foundation surveys,
certificates, plans and specifications, appraisals, title and other insurance
reports and agreements, and each and every other document, certificate,
agreement and instrument required to be furnished by Borrower and Leasehold
Pledgor pursuant to the terms of the Loan Documents or which are reasonably
requested by Lender in connection therewith;

 

(b)          cure any defects in the execution and delivery of the Loan
Documents and execute and deliver, or cause to be executed and delivered, to
Lender such documents, instruments, certificates, assignments and other
writings, and do such other acts necessary or desirable to evidence, preserve
and/or protect the collateral at any time securing or intended to secure the
Obligations, as Lender may reasonably require including, without limitation, the
execution and delivery of all such writings necessary to transfer any licenses
identified by Lender in the name of Lender or its designee after the occurrence
and during the continuation of an Event of Default; provided that no such cure,
document, instrument, certificate, assignment or other writing reduces the
rights or increases the obligations of Borrower, Leasehold Pledgor or any
Guarantor under the Loan Documents; and

 

 -102-Mezzanine Loan Agreement

 

  

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

 

Section 4.18        Estoppel Statement.

 

(a)          After request by Lender, Borrower shall within ten (10) Business
Days furnish Lender with a statement, duly acknowledged and certified, stating
(i) the Outstanding Principal Balance of the Loan, (ii) the Applicable Interest
Rate, (iii) the date installments of interest and/or principal were last paid,
(iv) any known offsets or defenses to the payment and performance of the
Obligations, if any, and (v) that this Agreement and the other Loan Documents
have not been modified or if modified, giving particulars of such modification.

 

(b)          Borrower and Leasehold Pledgor shall use commercially reasonable
efforts to deliver (or cause Owner or Operating Lessee to deliver) to Lender,
within thirty (30) days of Lender’s request, an estoppel certificate from each
tenant under any Lease in form and substance reasonably satisfactory to Lender;
provided, that neither Borrower nor Leasehold Pledgor shall be required to
deliver (or cause Owner or Operating Lessee to deliver) such certificates more
frequently than the lesser of (x) two (2) times in any calendar year or (y) the
number of requests permitted to be made under the applicable Lease in any
calendar year; provided, however, that there will be no limit on the number of
times Owner and Operating Lessee may be required to use commercially reasonable
efforts to obtain such certificates if an Event of Default has occurred and is
continuing (subject to the applicable terms of each Lease).

 

(c)          Borrower and Leasehold Pledgor shall use commercially reasonable
efforts to deliver (or cause Owner or Operating Lessee to deliver) to Lender,
within thirty (30) days of Lender’s request, estoppel certificates from each
party under any Operations Agreement, in form and substance reasonably
satisfactory to Lender; provided, that neither Borrower nor Leasehold Pledgor
shall be required to deliver (or cause Owner or Operating Lessee to deliver)
such certificates more than three (3) times during the Term and not more
frequently than once per calendar year (or twice during any calendar year in
which a Securitization occurs).

 

(d)          Borrower and Leasehold Pledgor shall use commercially reasonable
efforts to deliver (or cause Owner or Operating Lessee to deliver) to Lender,
within thirty (30) days of Lender’s request, estoppel certificates from the
Ground Lessor, in form and substance reasonably satisfactory to Lender;
provided, that neither Borrower nor Leasehold Pledgor shall be required to
deliver (or cause Owner or Operating Lessee to deliver) such certificates more
than three (3) times during the Term and not more frequently than once per
calendar year (or twice during any calendar year in which a Securitization
occurs).

 

(e)          Borrower and Leasehold Pledgor shall use commercially reasonable
efforts to deliver to Lender (or cause Owner or Operating Lessee to deliver),
within thirty (30) days of Lender’s request, estoppel certificates from each
Franchisor, in form and substance reasonably satisfactory to Lender; provided,
that neither Borrower nor Leasehold Pledgor shall be required to deliver (or
cause Owner or Operating Lessee to deliver) such certificates more than three
(3) times during the Term and not more frequently than once per calendar year
(or twice during any calendar year in which a Securitization occurs).

 

 -103-Mezzanine Loan Agreement

 

  

Section 4.19        Notice of Default. Borrower shall promptly advise Lender of
the occurrence of any Default or Event of Default of which Borrower or Leasehold
Pledgor has knowledge.

 

Section 4.20        Cooperate in Legal Proceedings. Borrower and Leasehold
Pledgor shall cooperate fully with Lender with respect to any proceedings before
any court, board or other Governmental Authority which may in any way affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
other Loan Documents and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings.

 

Section 4.21        Indebtedness. Neither Borrower nor Leasehold Pledgor shall
permit Owner or Operating Lessee to, directly or indirectly, create, incur or
assume any Indebtedness other than “Permitted Indebtedness” (as such term is
defined in the Mortgage Loan Agreement). None of Fee General Partner, Leasehold
General Partner, Borrower or Leasehold Pledgor shall directly or indirectly
create, incur or assume any Indebtedness other than (i) the Debt and the Other
Obligations, (ii) intentionally omitted, (iii) unsecured trade payables incurred
in the ordinary course of business relating to the ownership of the Collateral,
which in the case of such unsecured trade payables (A) are not evidenced by a
note, (B) do not exceed, at any time, together with amounts payable under
clause (ii), a maximum aggregate amount of $250,000, and (C) are paid within
ninety (90) days of the date incurred, unless such amount is being contested in
good faith, (iv) Taxes and Other Charges not yet Due and Payable, unless
contested in good faith, (v) contractual indemnity obligations entered into in
the ordinary course of business, and (vi) indebtedness secured by Permitted
Encumbrances (collectively, “Permitted Indebtedness”).

 

Section 4.22        Business and Operations. Borrower and Leasehold Pledgor will
continue (and cause Owner and Operating Lessee to continue) to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of each Individual
Property. Borrower and Leasehold Pledgor will, and will cause Owner and
Operating Lessee to, qualify to do business and remain in good standing under
the laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of each Individual Property and
the Collateral.

 

Section 4.23        Dissolution. Neither Borrower nor Leasehold Pledgor shall,
nor shall Borrower or Leasehold Pledgor cause or permit Owner, any SPC Party or
Operating Lessee to, (i) engage in any dissolution, liquidation or
consolidation, division or merger with or into any other business entity, (ii)
engage in any business activity not related to the ownership and operation of
the Properties and the Collateral, (iii) transfer, lease or sell, in one
transaction or any combination of transactions, all or substantially all of the
property or assets of Borrower or Leasehold Pledgor, Owner, or Operating Lessee
or any SPC Party except to the extent expressly permitted by the Loan Documents
and the Mortgage Loan Documents, or (iv) cause, permit or suffer Owner,
Operating Lessee or any SPC Party to (A) dissolve, wind up or liquidate or take
any action, or omit to take any action, as a result of which Owner, Operating
Lessee or such SPC Party would be dissolved, wound up, divided or liquidated in
whole or in part, or (B) amend, modify, waive or terminate the certificate of
formation or operating agreement or certificate of limited partnership and
limited partnership agreement of Owner, Operating Lessee or such SPC Party, in
each case without obtaining the prior consent of Lender.

 

 -104-Mezzanine Loan Agreement

 

  

Section 4.24        Debt Cancellation. Neither Borrower nor Leasehold Pledgor
shall cancel or otherwise forgive or release (or cause or permit Owner or
Operating Lessee to cancel or otherwise forgive or release) any claim or debt
(other than the surrender or termination of Leases in accordance herewith) owed
to Borrower, Leasehold Pledgor, Owner or Operating Lessee by any Person, except
for adequate consideration and in the ordinary course of Borrower’s, Leasehold
Pledgor’s, Owner’s or Operating Lessee’s business.

 

Section 4.25        Affiliate Transactions. Neither Borrower nor Leasehold
Pledgor shall enter into, or be a party to (nor cause or permit Owner or
Operating Lessee to enter into or be a party to), any transaction with an
Affiliate of Borrower, Leasehold Pledgor, Owner or Operating Lessee or any of
the partners, members or shareholders, as applicable, of Borrower or Leasehold
Pledgor except in the ordinary course of business and on terms which are no less
favorable to Borrower, Leasehold Pledgor, Owner, Operating Lessee or such
Affiliate than would be obtained in a comparable arm’s-length transaction with
an unrelated third party.

 

Section 4.26        No Joint Assessment. Neither Borrower nor Leasehold Pledgor
shall suffer, permit or initiate (or cause or permit Owner or Operating Lessee
to suffer, permit or initiate) the joint assessment of any Individual Property
(i) with any other real property constituting a tax lot separate from such
Individual Property, and (ii) with any portion of such Individual Property which
may be deemed to constitute personal property, or any other procedure whereby
the Lien of any taxes which may be levied against such personal property shall
be assessed or levied or charged to such Individual Property.

 

Section 4.27        Principal Place of Business. Neither Borrower nor Leasehold
Pledgor shall change its principal place of business from the address set forth
on the first page of this Agreement without first giving Lender thirty (30) days
prior written notice. Neither Borrower nor Leasehold Pledgor shall cause or
permit Owner or Operating Lessee to change its principal place of business from
the address set forth on the first page of the Mortgage Loan Agreement without
first giving Lender thirty (30) days prior written notice.

 

Section 4.28        Change of Name, Identity or Structure. Neither Borrower nor
Leasehold Pledgor shall (nor cause or permit Owner or Operating Lessee to)
change Borrower’s, Leasehold Pledgor’s, Owner’s or Operating Lessee’s name,
identity (including its trade name or names) or convert from its current
business structure as a limited liability company or a limited partnership
structure, as applicable, without notifying Lender of such change in writing at
least thirty (30) days prior to the effective date of such change and without
first obtaining the prior written consent of Lender. Borrower and Leasehold
Pledgor shall (and shall cause Owner or Operating Lessee to) deliver to Lender,
prior to or contemporaneously with the effective date of any such change, any
financing statement or financing statement change required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower or Leasehold
Pledgor, as applicable, shall execute a certificate in form reasonably
satisfactory to Lender listing the trade names under which Owner or Operating
Lessee, as applicable, intends to operate each Individual Property, and
representing and warranting that Owner or Operating Lessee, as applicable, does
business under no other trade name with respect to such Individual Property.

 

 -105-Mezzanine Loan Agreement

 

  

Section 4.29        Costs and Expenses.

 

(a)          Except as otherwise expressed herein or in any of the other Loan
Documents, Borrower shall pay or, if Borrower fails to pay, reimburse Lender
upon receipt of notice from Lender, for all reasonable costs and expenses
(including reasonable attorneys’ fees and disbursements) incurred by Lender in
connection with (i) Borrower’s and Leasehold Pledgor’s ongoing performance of
and compliance with Borrower’s and Leasehold Pledgor’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; (ii) Lender’s ongoing
performance of and compliance with all 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; (iii) the negotiation, preparation,
execution and delivery 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 Leasehold Pledgor; (iv) filing and
recording of any Loan Documents; (v) title insurance, surveys, inspections and
appraisals (A) required in connection with the diligence preceding the Closing
Date or as a condition to the closing of the Loan, even if provided after the
date hereof if ordered in connection with such diligence or closing, or (B)
expressly required at other times in accordance with the terms of this Agreement
or the other Loan Documents; (vi) the creation, perfection or protection of
Lender’s Liens in the Collateral (including fees and expenses for title and lien
searches, intangibles taxes, due diligence expenses, travel expenses, accounting
firm fees, costs of appraisals, environmental reports and Lender’s Consultant,
surveys and engineering reports); (vii) enforcing or preserving any rights in
response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation, in each case against, under or affecting
Borrower, Leasehold Pledgor, Owner, Operating Lessee, the Loan Documents, the
Collateral, the Properties or any other security given for the Loan; and (viii)
fees charged by Servicer (except to the extent expressly provided in
Section 10.21 or as otherwise expressly limited hereunder; provided that if
another provision of this Agreement requires the payment of any fee to Lender
and/or Servicer with respect to any matter, no additional fee charged by
Servicer shall be payable by Borrower or Leasehold Pledgor with respect to such
matter), and if a Securitization has occurred, by the Rating Agencies, in
connection with the Loan or any modification thereof; and (ix) enforcing any
Obligations of or collecting any payments due from Borrower or Leasehold Pledgor
under this Agreement, the other Loan Documents or with respect to the Collateral
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or of
any insolvency or bankruptcy proceedings; provided, however, that neither
Borrower nor Leasehold Pledgor shall be liable for the payment of any such costs
and expenses to the extent the same arise by reason of the gross negligence,
illegal acts, fraud or willful misconduct of Lender.

 

(b)          In addition, in connection with any Rating Agency Confirmation,
Review Waiver or other Rating Agency consent, approval or review requested by
Borrower or Leasehold Pledgor or required hereunder (other than the initial
review of the Loan by the Rating Agencies in connection with a Securitization),
Borrower shall pay all of the reasonable costs and expenses of Lender and the
Servicer and the costs and expenses of each Rating Agency in connection
therewith, and, if applicable, shall pay any fees imposed by any Rating Agency
in connection therewith.

 

 -106-Mezzanine Loan Agreement

 

  

(c)          Any costs due and payable to Lender may be paid, at Lender’s
election in its sole discretion, from any amounts in the Deposit Account. Any
costs and expenses due and payable by Borrower or Leasehold Pledgor hereunder
which are not paid by Borrower within ten (10) days after written notice thereof
may be paid from any amounts in the Deposit Account, with notice thereof to
Borrower. The obligations and liabilities of Borrower and Leasehold Pledgor
under this Section 4.29 shall (i) become part of the Obligations, (ii) be
secured by the Loan Documents and (iii) survive the Term and the exercise by
Lender of any of its rights or remedies under the Loan Documents, including the
acquisition of the Collateral by foreclosure or a conveyance in lieu of
foreclosure.

 

Section 4.30        Indemnity. Borrower shall indemnify, defend and hold
harmless Lender from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), other than breakage costs, that may
be imposed on, incurred by, or asserted against Lender in any manner relating to
or arising out of (i) any breach by Borrower or Leasehold Pledgor of its
Obligations under, or any material misrepresentation by Borrower or Leasehold
Pledgor contained in, this Agreement or the other Loan Documents; (ii) the use
or intended use of the proceeds of the Loan; (iii) any information provided by
or on behalf of Borrower or Leasehold Pledgor, or contained in any documentation
approved by Borrower or Leasehold Pledgor, in either case, to the extent
delivered to Lender pursuant to or in connection with this Agreement or as a
condition to the Loan; (iv) ownership of the Security Documents, the Collateral
or any interest therein, or receipt of any Gross Revenue (including, subject to
Section 2.8, due to any Increased Costs, Special Taxes (other than Excluded
Taxes) or Other Taxes, excluding interest and penalties on any Tax if such
interest and penalties arose solely as a result of the negligence of Lender);
(v) any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about any Individual Property or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (vi) any
use, nonuse or condition in, on or about any Individual Property or on adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(vii) performance of any labor or services or the furnishing of any materials or
other property in respect of any Individual Property; (viii) any failure of any
Individual Property to comply with any Legal Requirement; (ix) any claim by
brokers, finders or similar persons claiming to be entitled to a commission in
connection with any Lease or other transaction involving any Individual Property
or any part thereof, or any liability asserted against Lender with respect
thereto; (x) the claims of any lessee of any portion of any Individual Property
or any Person acting through or under any lessee or otherwise arising under or
as a consequence of any Lease; (xi) the claims of any Manager or any Person
acting through or under such Manager or otherwise arising under or as a
consequence of any Management Agreement; and (xii) the claims of any Franchisor
or any Person acting through or under any Franchisor or otherwise arising under
or as a consequence of any Franchise Agreement (collectively, the “Indemnified
Liabilities”); provided, however, that Borrower shall not have any obligation to
Lender hereunder to the extent that such Indemnified Liabilities arise from the
active gross negligence, illegal acts, fraud or willful misconduct of Lender. To
the extent that the undertaking to indemnify, defend and hold harmless set forth
in the preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Lender; provided, further, that Borrower
shall not have any obligation to Lender hereunder for an Indemnified Liability
if all of the following apply: (a) the Loan is included in a Securitization
Vehicle, (b) the Indemnified Liability is caused by the Securitization Vehicle
failing to have, or maintain its, REMIC or Grantor Trust status, as applicable,
and (c) the reason for such failure is other than a breach by Borrower or
Leasehold Pledgor of its Obligations under, or any material misrepresentation by
Borrower or Leasehold Pledgor contained in, this Agreement or the other Loan
Documents.

 

 -107-Mezzanine Loan Agreement

 

  

Section 4.31        ERISA.

 

(a)          Neither Borrower nor Leasehold Pledgor shall engage or cause or
permit Owner or Operating Lessee to engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Lender or any assignee of any of its rights under the Note, this Agreement or
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) or Section 4975 of
the Code.

 

(b)          Neither Borrower nor Leasehold Pledgor shall, and shall not cause
or permit Owner or Operating Lessee to, maintain, sponsor, contribute to or
agree to contribute to, or suffer, cause or permit any ERISA Affiliate of
Borrower, Leasehold Pledgor, Owner or Operating Lessee to, maintain, sponsor,
contribute to or agree to 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 or permit the assets of Borrower, Leasehold Pledgor,
Owner or Operating Lessee to become “plan assets,” within the meaning of 29
C.F.R. 2510.3-101, as modified in application by Section 3(42) of ERISA.

 

(c)          Each of Borrower and Leasehold Pledgor shall deliver to Lender such
certifications or other evidence from time to time throughout the Term, as
requested by Lender in its sole discretion, that (A) none of Borrower, Leasehold
Pledgor, Owner, Operating Lessee or any Guarantor is or maintains an “employee
benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I
of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA;
(B) none of Borrower, Leasehold Pledgor, Owner, Operating Lessee or any
Guarantor is subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (C) the assets of Borrower,
Leasehold Pledgor, Owner, Operating Lessee and Guarantors do not constitute
“plan assets” within the meaning of 29 C.F.R §2510.3-101 as modified in
application by Section 3(42) of ERISA of any “benefit plan investor” as defined
in Section 3(42) of ERISA.

 

Section 4.32        Patriot Act Compliance.

 

(a)          Each of Borrower and Leasehold Pledgor will comply (and cause Owner
and Operating Lessee to comply) with the Patriot Act and all applicable
requirements of Governmental Authorities having jurisdiction over Borrower with
respect to money laundering and terrorism and will use its good faith and
commercially reasonable efforts to comply with all other applicable requirements
of Governmental Authorities having jurisdiction over Borrower, Leasehold
Pledgor, Owner, Operating Lessee, the Collateral and/or any Individual Property.
Lender shall have the right to audit Borrower’s and Leasehold Pledgor’s
compliance with the Patriot Act and all applicable requirements of Governmental
Authorities having jurisdiction over Borrower, Leasehold Pledgor, Owner,
Operating Lessee, the Collateral and/or any Individual Property, including those
relating to money laundering and terrorism. In the event that Borrower or
Leasehold Pledgor fails to comply with the Patriot Act or any such requirements
of Governmental Authorities, then Lender may, at its option, cause Borrower or
Leasehold Pledgor, as applicable, to comply therewith and any and all costs and
expenses incurred by Lender in connection therewith shall be secured by the
Pledge Agreement and the other Loan Documents and shall be immediately due and
payable.

 

 -108-Mezzanine Loan Agreement

 

  

(b)          None of the funds or other assets of Borrower, Leasehold Pledgor or
any other Loan Party constitute property of, or are beneficially owned, directly
or indirectly, by any person, entity or government subject to trade restrictions
under United States law, including but not limited to, the Patriot Act
(including anti-terrorism provisions thereof), 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 the investment in Borrower or any other Loan
Party (whether directly or indirectly), is prohibited by law or the Loan made by
the Lender is in violation of law (“Embargoed Person”).

 

(c)          None of the funds or other assets of any Borrower, Leasehold
Pledgor or any other Loan Party constitute property of, or are beneficially
owned, directly or indirectly, by any Embargoed Person.

 

(d)          No Embargoed Person has any interest of any nature whatsoever in
Borrower, Leasehold Pledgor or any other Loan Party with the result that the
investment in Borrower, Leasehold Pledgor or any other Loan Party (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law.

 

(e)          None of the funds of Borrower, Leasehold Pledgor or any other Loan
Party have been derived from or are the proceeds of, any unlawful activity with
the result that the investment in Borrower, Leasehold Pledgor or any other Loan
Party (whether directly or indirectly), is prohibited by law or the Loan is in
violation of law.

 

Nothing contained in this Section 4.32 shall apply, and no representation or
warranty is made with respect, to any public equity holder of any Person by
virtue of such public equity holder being a holder of publicly traded shares or
other publicly traded equity interests in any Person which is listed on the New
York Stock Exchange or another nationally or internationally recognized stock
exchange or is quoted on a national quotation system.

 

Section 4.33        Ground Leases.

 

(a)          Borrower shall cause Owner to:

 

(i)          pay all rents, additional rents and other sums required to be paid
by the applicable Individual Owner, as tenant under and pursuant to the
provisions of the Ground Leases, as and when such rent or other charge is
payable, subject to applicable grace periods afforded Owner under the Ground
Lease (but not, for the avoidance of doubt, any additional grace notice, or cure
periods afforded Lender under the Ground Lease or otherwise) and to Owner’s
right to contest (if expressly permitted under the Ground Lease and then in
strict accordance with the terms of such Ground Lease) the amount claimed by
Lessor to be due;

 

 -109-Mezzanine Loan Agreement

 

  

(ii)         diligently perform and observe all of the terms, covenants and
conditions of the Ground Leases on the part of the applicable Individual Owner,
as tenant thereunder, to be performed and observed, at least three (3) days
prior to the expiration of any applicable grace period therein provided; and

 

(iii)        promptly notify Lender of the giving of any written notice by the
lessor under the Ground Leases to Owner of any default by Owner in the
performance or observance of any of the terms, covenants or conditions of the
Ground Leases on the part of Owner, as tenant thereunder, to be performed or
observed, and deliver to Lender a true copy of each such notice.

 

(b)          Borrower shall not, without the prior consent of Lender (which
consent may be withheld by Lender in its sole and absolute discretion), cause
Owner to surrender or cause or permit Owner to surrender the leasehold estate
created by any of the Ground Leases or terminate or cancel the Ground Leases or
modify, change, supplement, alter or amend the Ground Leases, in any material
respect, either orally or in writing.

 

(c)          If any Individual Owner shall default in the performance or
observance of any material term, covenant or condition of any Ground Lease on
the part of such Individual Owner, as tenant thereunder, to be performed or
observed, then, without limiting the generality of the other provisions of the
Pledge Agreement, this Agreement and the other Loan Documents, and without
waiving or releasing Borrower from any of its Obligations hereunder (but subject
to the rights of Mortgage Lender), Lender shall have the right, but shall be
under no obligation, to pay any sums and to perform any act or take any action
as may be necessary or appropriate to cause all of the material terms, covenants
and conditions of the Ground Lease on the part of such Individual Owner, as
tenant thereunder, to be performed or observed or to be promptly performed or
observed on behalf of such Individual Owner, to the end that the rights of such
Individual Owner in, to and under the Ground Lease shall be kept unimpaired as a
result thereof and free from default, even though the existence of such event of
default or the nature thereof be questioned or denied by Owner or by any party
on behalf of Owner. If Lender shall make any payment or perform any act or take
action in accordance with the preceding sentence, provided Lender shall not have
received any notice of default from the ground lessor and no Event of Default
shall have occurred and be continuing, Lender will if practicable provide
reasonable advance notice, not to exceed five (5) days, to Borrower prior to,
and if not practicable then subsequent to, the making of any such payment, the
performance of any such act or the taking of any such action. In any such event,
subject to the rights of tenants, subtenants and other occupants under the
Leases or of parties to any Operations Agreement, Lender and any Person
designated as Lender’s agent by Lender shall have, and are hereby granted, the
right to enter upon any Individual Property at any reasonable time, on
reasonable notice and from time to time for the purpose of taking any such
action. Lender may pay and expend such sums of money as Lender reasonably deems
necessary for any such purpose and upon so doing shall be subrogated to any and
all rights of the landlord under the Ground Leases. Borrower hereby agrees to
pay to Lender within five (5) days after demand, all such sums so paid and
expended by Lender in accordance with this Section 4.33(c), together with
interest thereon from the day of such payment at the Default Rate. All sums so
paid and expended by Lender and the interest thereon shall be secured by the
legal operation and effect of the Pledge Agreement.

 

 -110-Mezzanine Loan Agreement

 

 

 

(d)          If any lessor under a Ground Lease shall deliver to Lender a copy
of any notice of default sent by said lessor to an Individual Owner, as tenant
under such Ground Lease, such notice shall constitute full protection to Lender
for any action taken or omitted to be taken by Lender, in good faith, in
reliance thereon and in accordance with Section 4.33(c). Borrower shall cause
Owner to exercise each individual option, if any, to extend or renew the term of
the Ground Leases upon demand by Lender or Mortgage Lender made at any time
within one (1) year prior to the last day upon which any such option may be
exercised, and if Borrower shall fail to do so, Borrower hereby expressly
authorizes and appoints Lender its attorney-in-fact to exercise any such option
in the name of and upon behalf of the applicable Individual Owner, which power
of attorney shall be irrevocable and shall be deemed to be coupled with an
interest. Borrower will not subordinate or consent to the subordination of the
Ground Leases to any mortgage, security deed, lease or other interest on or in
the landlord’s interest in all or any part of any Individual Property, unless,
in each such case, the written consent of Lender shall have been first had and
obtained.

 

(e)          Notwithstanding anything to the contrary contained in this
Agreement with respect to each Ground Lease:

 

(i)          Borrower shall not permit any Individual Owner to, without Lender’s
written consent, elect to treat any Ground Lease as terminated under Subsection
365(h)(1) of the U.S. Bankruptcy Code. Any such election made without Lender’s
prior written consent shall be void.

 

(ii)         If, pursuant to subsection 365(h) of the Bankruptcy Code, any
Individual Owner seeks to offset, against the rent reserved in any Ground Lease,
the amount of any damages caused by the nonperformance by the applicable Ground
Lessor of any of its obligations thereunder after the rejection by such Ground
Lessor of such Ground Lease under the U.S. Bankruptcy Code, then such Individual
Owner shall not affect any offset of such amounts unless it shall have provided
written notice to Mortgage Lender and Lender of its intent to do so and Mortgage
Lender and Lender shall have consented thereto.

 

(iii)        Borrower shall promptly, after obtaining knowledge of such filing
notify Lender orally of any filing by or against the Ground Lessor under such
Ground Lease of a petition under the U.S. Bankruptcy Code. Borrower shall
thereafter promptly give written notice of such filing to Lender, setting forth
any information available to Borrower as to the date of such filing, the court
in which such petition was filed, and the relief sought in such filing. Borrower
shall promptly deliver to Lender any and all notices, summonses, pleadings,
applications and other documents received by Borrower in connection with any
such petition and any proceedings relating to such petition.

 

(f)          Borrower may permit Owner to exercise any Ground Lease Purchase
Option with respect to any Ground Lease Property without Lender’s prior written
consent; provided each of the following conditions is satisfied:

 

(i)          No Event of Default shall have occurred and be continuing;

 

(ii)         Lender shall receive not less than forty-five (45) days advance
written notice of the related Individual Owner’s intention to exercise such
Ground Lease Purchase Option unless such Ground Lease sets forth a shorter time
period within which such Individual Owner is required to respond in order to
exercise such Ground Lease Purchase Option, in which case the advance notice
period hereunder shall instead be such shorter time period;

 

 -111-Mezzanine Loan Agreement

 

  

(iii)        The related Individual Owner shall comply with all of the terms and
conditions of the related Ground Lease with respect to such Ground Lease
Purchase Option;

 

(iv)        Fee title to the related Ground Lease Property shall be conveyed to
the Individual Owner who is the ground lessee under such Ground Lease pursuant a
bona fide arm’s length transaction and for fair consideration and such
acquisition shall not result in a merger of the fee and leasehold estates in
such Ground Lease Property;

 

(v)         Neither Borrower nor Owner shall incur any Indebtedness in order to
finance the exercise of such Ground Lease Purchase Option;

 

(vi)        All third party consents or approvals required in order to acquire
fee title to the Ground Lease Property, including without limitation, the
consent of any Franchisor, shall have been obtained (satisfaction of this
condition may be demonstrated by an Officer’s Certificate certifying to the
foregoing);

 

(vii)       Simultaneously with the Individual Owner’s acquisition of fee title
to the Ground Lease Property, such Individual Owner shall comply with all of the
terms and conditions of the Mortgage Loan Documents;

 

(viii)      Borrower shall cause Owner to obtain a new owner’s title insurance
policy together with a mezzanine endorsement thereto (or, if a mezzanine
endorsement is unavailable, an assignment of title proceeds letter) reasonably
satisfactory to Lender; and

 

(ix)         Lender and/or its Servicer shall be reimbursed for all costs and
expenses, including legal fees, incurred in connection with the exercise of such
Ground Lease Purchase Option.

 

(g)          Borrower shall not cause or permit the exercise of any Ground Lease
Purchase Option by or on behalf of any Affiliate of Borrower or any other Person
over whom Borrower has control other than the Individual Owner which is the
ground lessee under the related Ground Lease, and then only in compliance with
the preceding Subsection (f).

 

Section 4.34        Hotel Covenants.

 

(a)          Each of Borrower and Leasehold Pledgor shall cause each of Owner
and Operating Lessee to cause the hotel located on each Individual Property to
be operated pursuant to the applicable Franchise Agreement.

 

(b)          Borrower or Leasehold Pledgor shall cause each of Owner and
Operating Lessee to (i) promptly perform and/or observe all of the covenants and
agreements required to be performed and observed by Owner under each Franchise
Agreement and do all things necessary to preserve and to keep unimpaired its
material rights thereunder; (ii) promptly notify Lender of any default under any
Franchise Agreement of which it is aware; and (iii) promptly enforce the
performance and observance of all of the covenants and agreements required to be
performed and/or observed by each Franchisor under each Franchise Agreement.

 

 -112-Mezzanine Loan Agreement

 

  

(c)          Except as expressly set forth in Section 4.34(d) below, neither
Borrower nor Leasehold Pledgor shall, without Lender’s prior written consent
(which consent shall not be unreasonably withheld, conditioned or delayed) cause
or permit Owner or Operating Lessee to (1) surrender, terminate or cancel any
Franchise Agreement; (2) reduce the term of any Franchise Agreement; (3)
increase the amount of any charges under any Franchise Agreement; or (4)
otherwise materially modify, change, supplement, alter or amend, or waive or
release any of its rights and remedies under, any Franchise Agreement in a
manner adverse to Borrower, Leasehold Pledgor or Lender.

 

(d)          Notwithstanding the foregoing and without limiting Borrower’s and
Leasehold Pledgor’s rights under clause (c) above, from time to time after the
earlier of (1) the date that is six (6) months following the Closing Date and
(2) the final Securitization of the Loan, without the consent of Lender,
Borrower and Leasehold Pledgor may permit Owner and Operating Lessee to elect to
“reflag” one or more Individual Properties by terminating an existing Franchise
Agreement as to an Individual Property and entering into a replacement Franchise
Agreement as to such Individual Property; so long as (i) the Franchisor is an
Approved Brand, (ii) during the term of the Loan, not more than forty-three (43)
Individual Properties are replaced pursuant to this paragraph (d), (iii) Lender
shall have approved the replacement Franchise Agreement (which approval shall
not be unreasonably withheld, conditioned or delayed), except that such approval
shall not be required if the Individual Property is operated under an Approved
Brand and such replacement Franchise Agreement is (x) substantially in the same
form and substance as a Franchise Agreements in effect on the Closing Date or
(y) entered into on an arms’-length basis and otherwise on commercially
reasonable terms, with economic terms and franchise fees comparable to then
existing local market rates and otherwise approved by Lender, such approval not
to be unreasonably withheld, conditioned or delayed (provided that the
requirement for such approval and any other approval requested under this
subsection (d) shall be deemed to have been waived if (I) the correspondence
from Borrower to Lender requesting such approval (A) is enclosed in an envelope
marked “PRIORITY”, (B) contains a legend, prominently displayed at the top of
each page thereof, in bold, all caps and fourteen (14) point or larger font
stating that Borrower or Leasehold Pledgor is requesting the Lender’s approval
of the proposed Franchise Agreement under Section 4.34(d) hereof and that
Lender’s failure to respond to such request within five (5) Business Days
following its receipt of such request shall result in such request being deemed
granted, (C) is accompanied by a copy of the proposed replacement Franchise
Agreement, the PIP and the estimated PIP Expenses associated with the PIP (which
information may be provided electronically in the form of a CD Rom or other
portable electronic media enclosed with such notice) and (D) is also sent via
electronic mail to Lender’s e-mail address provided by Lender to Borrower from
time to time, and (II) Lender shall fail to respond to such request within five
(5) Business Days following its receipt of such request), (iv) the termination,
if applicable, of an existing Franchise Agreement as to an Individual Property
shall not violate or result in the termination of any other Franchise Agreements
with respect to other Individual Properties (unless such other Franchise
Agreements are being terminated in accordance with this Section 4.34) as
evidenced by an Officer’s Certificate, (v) no Event of Default shall have
occurred and be continuing, (vi) such reflagging shall not violate or be
prohibited by any applicable Ground Lease (unless the consent or waiver of the
Ground Lessor thereunder shall have been obtained in writing) as evidenced by an
Officer’s Certificate, (vii) the Franchisor of the Approved Brand party to such
replacement Franchise Agreement shall have delivered to Lender a comfort letter
reasonably satisfactory to Lender (it being agreed that in the case of a
Franchisor that franchises another Individual Property, the form of comfort
letter delivered with respect to such other Individual Property on the Closing
Date shall be deemed reasonably satisfactory), (viii) the replacement Franchise
Agreement shall be with a franchisor that is in no more than two categories of
hotels lower than the Franchisor being replaced as on the Closing Date, based on
the annual STR Chain Scale classification, (ix) the Approved Brand Requirements
shall be satisfied to the extent required under the definition thereof, unless
otherwise reasonably agreed by Lender, (x) if the replacement franchisor is an
Affiliate of Borrower, Borrower shall deliver an Additional Insolvency Opinion
in form and substance reasonably satisfactory to Lender and satisfactory to the
applicable Rating Agencies and (xi) if and to the extent required under the
provisions of paragraph (e)(ii) below, Borrower shall deliver to Lender, as
additional security for Borrower’s and Leasehold Pledgor’s Obligations under the
Loan Documents, security for payment of any New/Renewal Flagging Costs.

 

 -113-Mezzanine Loan Agreement

 

  

(e)          To the extent not previously provided to and approved by Lender in
the Approved Flagging Budget for an Individual Property, Borrower or Leasehold
Pledgor shall provide or cause Owner or Operating Lessee to provide to Lender a
budget for all New/Renewal Flagging Costs and Change of Control Flagging Costs
(collectively, the “Flagging Costs”). The budgeting and delivery of security for
Flagging Costs shall be governed by the following principles:

 

(i)          Budget Approval. With respect to any Flagging Costs for a
particular Individual Property, Borrower and Leasehold Pledgor shall (or shall
cause Owner or Operating Lessee to) provide a budget therefor for Lender’s
approval, which approval shall not be unreasonably withheld, conditioned or
delayed (provided that the requirement for such approval shall be deemed to have
been waived if (I) the correspondence from Borrower or Leasehold Pledgor to
Lender requesting such approval (A) is enclosed in an envelope marked
“PRIORITY”, (B) contains a legend, prominently displayed at the top of each page
thereof, in bold, all caps and fourteen (14) point or larger font stating that
Borrower is requesting the Lender’s approval of the proposed budget for the
Franchise Agreement under Section 4.34(d) or Section 4.34(e) hereof, as
applicable, and that Lender’s failure to respond to such request within five (5)
Business Days following its receipt of such request shall result in such request
being deemed granted, (C) is accompanied by a copy of the proposed budget (which
information may be provided electronically in the form of a CD Rom or other
portable electronic media enclosed with such notice) and (D) is also sent via
electronic mail to Lender’s e-mail address provided by Lender to Borrower from
time to time, (II) Lender shall fail to respond to such request within five (5)
Business Days following its receipt of such request, (III) Borrower shall
deliver to Lender a second written request for approval, which request is
delivered in the same form and manner as contemplated in clause (I) above and
states that Lender’s failure to respond to such request within two (2) Business
Days following its receipt of such second request, shall result in such request
being deemed granted, and (IV) Lender shall fail to respond to such request
within such two (2) Business Day period), and which upon Lender’s approval
thereof, shall constitute the Approved Flagging Budget for such Flagging Costs
for such Individual Property.

 

 -114-Mezzanine Loan Agreement

 

  

(ii)         New/Renewal Flagging Costs. Borrower or Leasehold Pledgor shall
cause Owner to post additional security with Mortgage Lender if (and only if)
the New/Renewal Flagging Costs for such Individual Property are greater than an
amount equal to (A) the Approved Scheduled PIP Expenses remaining for such
Individual Property plus (B) for the first three Individual Properties subject
to New/Renewal Flagging Costs, the Alteration Threshold applicable to an
Individual Property. Any additional security required to be posted by Owner
pursuant to this paragraph (ii) shall be posted pursuant to paragraph (iv) below
in an amount equal to the total New/Renewal Flagging Costs for such Individual
Property (to the extent exceeding the Alteration Threshold, in the case of such
first three Individual Properties subject to New/Renewal Flagging Costs).

 

(iii)        Change of Control Flagging Costs. Concurrently with the closing of
an Assumption or any other change of Control of Owner that results in any Change
of Control Flagging Costs, Borrower or Leasehold Pledgor shall cause Owner to
post additional security with Mortgage Lender in an amount equal to the portion
of the Change of Control Flagging Costs required to be incurred by Owner or
Operating Lessee in the 24-month period immediately following the Assumption or
such other change of Control of Owner (for the avoidance of doubt, the remaining
Change of Control Flagging Costs shall not be required to be reserved with
Lender) without duplication of any amounts previously reserved pursuant to
paragraph (ii) above, but only if (and only if): (1) the Change of Control
Flagging Costs with respect to all Individual Properties, plus the costs of all
alterations then affecting structural elements of all Individual Properties (to
the extent not covered by security delivered to Lender pursuant to
Section 4.12.2) exceed the aggregate Approved Scheduled PIP Expenses with
respect to all Individual Properties by more than $3,000,000. Any additional
security required to be posted by Owner pursuant to this paragraph (iii) shall
be posted pursuant to paragraph (iv) below.

 

(iv)        Posting of Security. Any security delivered by Owner pursuant to
paragraph (ii) or paragraph (iii) above shall be in cash or the form of security
required for Material Alterations under Section 4.12.2 hereof (and if cash,
shall be deposited into the Scheduled PIP Reserve Account and disbursed in
accordance with Section 6.6.2 of the Mortgage Loan Agreement). If such security
is in the form of a Letter of Credit or other non-cash security permitted under
Section 4.12.2, then, in lieu of disbursements from the Scheduled PIP Reserve
Account, Mortgage Lender shall grant approved reductions in the amount of such
Letter of Credit or other security upon satisfaction of the same conditions that
are applicable to disbursements of Scheduled PIP Reserve Funds from the
Scheduled PIP Reserve Account in accordance with Section 6.5.2 of the Mortgage
Loan Agreement. In no event shall there be any duplication of any reserve or
security requirements by reason of the obligations under Section 6.5.1(a),
paragraph (ii) above and paragraph (iii) above.

 

(f)          Subject to Borrower’s and Leasehold Pledgor rights under paragraph
(d) above, Borrower or Leasehold Pledgor shall cause Owner or Operating Lessee
to timely exercise each individual option, if any, to extend or renew the term
of any Franchise Agreement.

 

(g)          Borrower or Leasehold Pledgor shall cause Owner or Operating Lessee
to complete and pay for in full any PIP Work in a good, workmanlike and lien
free manner within the time-frame set forth in the applicable PIP, subject in
each case to any extensions permitted by the applicable Franchisor.

 

 -115-Mezzanine Loan Agreement

 

  

(h)          Without in any way limiting the covenants set forth in the Loan
Documents, Borrower or Leasehold Pledgor shall cause Owner and Operating Lessee
to: (i) cause the hotels located on the Properties to be operated, repaired and
maintained in a manner to provide commercially reasonable amenities, services
and facilities, taken as a whole for each such Individual Property,
substantially equivalent or superior in all material respects to hotels of
similar average room rate and targeted market segment from time to time
operating in the same or comparable geographic area of the Property, taking into
consideration the age and location of the hotels located on the Properties and
(ii) maintain Inventory in amounts sufficient to meet the hotel industry
standards in all material respects for hotels of similar average room rate and
targeted market segment from time to time operating in the same or comparable
geographic area of the Property, taking into consideration the age and location
of the hotels located on the Properties.

 

Section 4.35        Bankruptcy Related Covenants. To the extent permitted by
applicable Legal Requirements, neither Borrower nor Leasehold Pledgor shall, nor
shall Borrower cause or permit any other Loan Party to, seek substantive
consolidation into the bankrupt estate of any Guarantor in connection with a
proceeding under the Bankruptcy Code or under federal, state or foreign
insolvency law involving any Guarantor.

 

(a)          To the extent permitted by applicable Legal Requirements, neither
Borrower nor Leasehold Pledgor shall, nor shall Borrower or Leasehold Pledgor
cause or permit Guarantor, any other Loan Party, or any Affiliate of the
foregoing to, contest, oppose or object to any motion made by Lender to obtain
relief from the automatic stay or seek to reinstate the automatic stay in
connection with a proceeding under the Bankruptcy Code or under any other
federal, state or foreign insolvency law involving any Guarantor.

 

(b)          To the extent permitted by applicable Legal Requirements, neither
Borrower nor Leasehold Pledgor shall, nor cause or permit any Guarantor, or any
other Loan Party or any Affiliate of the foregoing to, provide, originate,
acquire an interest in or solicit (in writing) or accept from any Guarantor or
any Affiliate of any Guarantor, any debtor-in-possession financing on behalf of
any Guarantor in the event that any Guarantor is the subject of a proceeding
under the Bankruptcy Code or under federal, state or foreign insolvency law
involving any Guarantor.

 

Section 4.37        Portland Property. On or before December 31, 2020, Borrower
shall (a) release the Portland Property pursuant to Section 2.5.2, or (b) have
caused the applicable Owner to have extended the term of the Franchise Agreement
for the Portland Property for a term ending no earlier than February 27, 2027 or
(c) caused the applicable Owner to have entered into a replacement Franchise
Agreement with an Approved Brand for the Portland Property in accordance with
the terms of this Agreement and having a term ending no earlier than
February 27, 2027.

 

Section 4.38        Non-Conforming Properties. Borrower shall, or shall cause
Owner to, cause any Non-Conforming Properties to be classified as “conforming”
or “legal non-conforming” as to parking by the earlier to occur of (a) the
Maturity Date and (b) the date required by any applicable Governmental
Authority, which compliance may be evidenced by delivery of a zoning report
stating the same. Additionally, Borrower shall use commercially reasonable and
diligent efforts to promptly clear all use, zoning, fire or building code
violations at the Properties where any such violation(s) exist of which Borrower
has actual knowledge, except for such violations the failure to remediate which
would not have nor be reasonably likely to have a Material Adverse Effect.

 

 -116-Mezzanine Loan Agreement

 

  

Section 4.39        Notices. Borrower shall give notice, or cause notice to be
given, to Lender, promptly upon the occurrence of (a) any event of default
(beyond any applicable notice and cure periods contained therein) on the part of
any Individual Owner, any Operating Lessee, any SPC Party or any Leasehold
Pledgor, under any Major Contract or on the part of Borrower under any
Contractual Obligation (if any), or (b) Borrower obtaining knowledge of any
default under any Major Contract or Contractual Obligation (if any) that would
reasonably be expected to have an to have a material adverse effect on the
applicable Individual Property or the use or operation thereof or on Borrower,
any Leasehold Pledgor, any Individual Owner, any Operating Lessee or any SPC
Party.

 

Article 5

 

INSURANCE, CASUALTY AND CONDEMNATION

 

Section 5.1           Insurance.

 

5.1.1       Insurance Policies.

 

(a)          Borrower, at its sole cost and expense (or at Owner’s sole cost and
expense), shall cause Owner to obtain and maintain the insurance policies
required by the Mortgage Loan Documents (notwithstanding whether the Mortgage
Loan may have been repaid in full), which policies provide at least the
following coverages:

 

(i)          Property insurance against loss or damage by hail, wind (including
named storms), fire, lightning and such other perils as are included in a
standard “special form” policy or “all-risk” policy, and against loss or damage
by all other risks and hazards covered by a standard extended coverage insurance
policy, with no exclusion for damage or destruction caused by acts of terrorism
(or, subject to Section 5.1.1(i) below, standalone coverage with respect
thereto) riot and civil commotion, vandalism, malicious mischief, burglary and
theft (A) in an amount equal to one hundred percent (100%) of the “Full
Replacement Cost” of the Properties, which for purposes of this Agreement shall
mean actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation; (B) to be
written on a no coinsurance form or containing an agreed amount endorsement with
respect to the Improvements and personal property at the Properties waiving all
co-insurance provisions; (C) providing for no deductible in excess of $250,000,
except for windstorm, flood and earthquake, which shall not exceed 5% of the
total insurable value of the affected Properties; and (D) containing “Ordinance
or Law Coverage” if any of the Improvements or the use of the Properties or any
Individual Property shall at any time constitute legal non-conforming structures
or uses, and compensating for loss to the undamaged portion of the building
(with a limit equal to replacement cost), the cost of demolition and the
increased costs of construction, each in amounts as reasonably required by
Lender. In addition, Borrower shall cause Owner to obtain: (y) if any portion of
the Improvements or Personal Property is currently or at any time in the future
located in a federally designated special flood hazard area (“SFHA”), flood
hazard insurance covering all such Improvements and/or Personal Property located
in the SFHA in an amount equal to (1) the maximum amount of building and, if
applicable, contents insurance available under the National Flood Insurance Act
of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended plus (2) such additional
coverage as Lender shall require; and (z) earthquake insurance in amounts and in
form and substance satisfactory to Lender, provided that the insurance pursuant
to clauses (y) and (z) hereof shall otherwise be on terms consistent with the
comprehensive all risk insurance policy required under this subsection (i);

 

 -117-Mezzanine Loan Agreement

 

  

(ii)         commercial general liability insurance, coverages against claims
for personal injury, bodily injury, death or property damage occurring upon, in
or about each Individual Property, including liquor liability, such insurance
(A) to be on the so-called “occurrence” form and containing minimum limits per
occurrence of One Million and No/100 Dollars ($1,000,000.00) per location, with
a combined limit per policy year, excluding umbrella coverage, of not less than
Two Million and No/100 Dollars ($2,000,000.00) per location; and (B) to cover at
least the following hazards: (1) premises and operations; (2) products and
completed operations on an “if any” basis; (3) independent contractors; and (4)
contractual liability for all insured contracts to the extent the same is
available;

 

(iii)        rental loss and/or business income interruption insurance (A) with
loss payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above, subsection (vi) below and
Section 5.1.1(h) below; (C) covering a period of restoration of twenty-four (24)
months and containing an extended period of indemnity endorsement which provides
that after the physical loss to the Improvements and Personal Property has been
repaired, the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of
twelve (12) months from the date that the Individual Property is repaired or
replaced and operations are resumed, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period; and (D) in an amount
equal to one hundred percent (100%) of the projected Gross Revenue (less
non-continuing expenses) from the Individual Property for a period of
twenty-four (24) months. The amount of such business income insurance shall be
determined prior to the date hereof and at least once each year thereafter based
on Borrower’s reasonable estimate of the Gross Revenue (less non-continuing
expenses) from each Individual Property for the succeeding twenty-four (24)
month period;

 

(iv)        at all times during which structural construction, repairs or
alterations are being made with respect to any Improvements, and only if the
property and liability coverage forms do not otherwise apply, (A) commercial
general liability and umbrella liability insurance covering claims related to
the construction, repairs or alterations being made which are not covered by or
under the terms or provisions of the commercial general liability and umbrella
liability insurance policy required herein this Section 5.1.1(a); and (B) the
insurance provided for in subsection (i) above written in a so-called builder’s
risk completed value form (1) on a non-reporting basis, (2) against all risks
insured against pursuant to subsection (i) above, (3) including permission to
occupy the Individual Property, and (4) with an agreed amount endorsement
waiving co-insurance provisions;

 

 -118-Mezzanine Loan Agreement

 

  

(v)         workers’ compensation, subject to the statutory limits of the state
in which each Individual Property is located, and employer’s liability insurance
with limits which are required from time to time by Lender in respect of any
work or operations on or about any Individual Property, or in connection with
the Properties or their operation (if applicable);

 

(vi)        comprehensive boiler and machinery/equipment breakdown insurance, if
applicable, in amounts as shall be reasonably required by Lender on terms
consistent with the commercial property insurance policy required under
subsection (i) above;

 

(vii)       umbrella liability insurance in addition to primary coverage in an
amount not less than One Hundred Million and No/100 Dollars ($100,000,000.00)
per occurrence, per location, on terms consistent with the commercial general
liability insurance policy required under subsection (ii) above and subsection
(viii) below;

 

(viii)      motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles and including garage keeper
liability, containing minimum limits per occurrence, including umbrella
coverage, with limits which are reasonably required from time to time by Lender
(if applicable);

 

(ix)         [reserved];

 

(x)          insurance against employee dishonesty with respect to any employees
of Borrower in an amount acceptable to Lender with a deductible not greater than
Twenty Five Thousand and No/100 Dollars ($25,000.00); and

 

(xi)         upon sixty (60) days’ notice, such other reasonable insurance and
in such commercially reasonable amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the time are
commonly insured against for properties similar to the Properties located in or
around the regions in which the Properties are located.

 

(b)          All insurance provided for in Section 5.1.1(a) shall be obtained
under valid and enforceable policies (collectively, the “Policies” or in the
singular, the “Policy”) and shall be subject to the reasonable approval of
Lender as to form and substance, including insurance companies, amounts,
deductibles, loss payees and insureds. Not less than ten (10) days prior to the
expiration dates of the Policies theretofore furnished to Lender, certificates
of insurance evidencing the Policies (and, upon the written request of Lender,
copies of such Policies) accompanied by evidence satisfactory to Lender of
payment of the premiums then due thereunder (the “Insurance Premiums”), shall be
delivered by Borrower to Lender. Notwithstanding the foregoing, as a condition
of permitting the payment of the Insurance Premiums to be financed through a
third-party premium financing company under a premium finance agreement
(“Premium Finance Agreement”) (A) Borrower shall submit to Lender evidence of
payment of each and every installment due under the Premium Finance Agreement as
each installment becomes due and payable, and (B) in the event the Mortgage Loan
has been repaid in full, the premium financing company shall have agreed to
provide Lender with notice in the event of cancellation of the Policies that are
subject to the Premium Finance Agreement.

 

 -119-Mezzanine Loan Agreement

 

  

(c)          Any blanket insurance Policy shall be subject to Lender approval
and shall otherwise provide the same protection as would a separate Policy
insuring only the Properties in compliance with the provisions of
Section 5.1.1(a) (any such blanket policy, an “Acceptable Blanket Policy”);
provided further that, with respect to earthquake insurance required herein, if
the properties are insured under a blanket policy, such earthquake insurance
shall be in an amount equal to the aggregate exceedance probability gross loss
estimates for a 475-year return period as indicated by a portfolio seismic risk
analysis of all high risk locations covered by such earthquake insurance,
including the Properties. Such analysis shall be approved by Lender and secured
by the applicable Borrower utilizing the most current RMS software (or its
equivalent) and to include consideration of loss amplification and business
interruption. Borrower shall notify Lender of any material changes to the
blanket policy and associated limits under the policy as of Closing Date or an
aggregation of the insured values covered under the blanket policy, including
the addition of locations subject to the perils of flood, wind/named storm and
earthquake or the reduction of flood, wind/named storm and/or earthquake limits,
and such changes shall be subject Lender’s approval.

 

(d)          All Policies of insurance provided for or contemplated by
Section 5.1.1(a) shall name Borrower as a named insured and, with respect to the
Policies of liability insurance, except for the Policies referenced in
Section 5.1.1(a)(v) and (viii), shall name Lender and its successors and/or
assigns as the additional insured, as its interests may appear, and in the case
of Policies of property insurance, including but not limited to special
form/all-risk, boiler and machinery, terrorism, windstorm, flood and earthquake
insurance, shall contain a standard non-contributing mortgagee clause in favor
of Mortgage Lender providing that the loss thereunder shall be payable to
Mortgage Lender unless below the threshold for Borrower to handle such claim
without Lender intervention as provided in Section 5.2 below. Additionally, if
Owner obtains property insurance coverage in addition to or in excess of that
required by Section 5.1.1(a)(i), then such insurance policies shall also contain
a standard non-contributing mortgagee clause in favor of Mortgage Lender
providing that the loss thereunder shall be payable to Mortgage Lender.

 

(e)          All Policies of insurance provided for in Section 5.1.1(a) shall:

 

(i)          with respect to the Policies of property insurance, contain clauses
or endorsements to the effect that, (1) no act or negligence of Borrower, Owner
or anyone acting for Borrower, Owner or of any Tenant or other occupant, or
failure to comply with the provisions of any Policy, which might otherwise
result in a forfeiture of the insurance or any part thereof, or foreclosure or
similar action, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned, (2) the Policies shall not be
cancelled without at least 30 days’ written notice to Lender, except ten (10)
days’ notice for non-payment of premium and (3) the issuer(s) of the Policies
shall give written notice to Lender if the issuers elect not to renew the
Policies prior to its expiration;

 

 -120-Mezzanine Loan Agreement

 

  

(ii)         with respect to all Policies of liability insurance, if obtainable
by Borrower using commercially reasonable efforts, contain clauses or
endorsements to the effect that, (1) the Policy shall not be canceled without at
least thirty (30) days’ written notice to Lender and any other party named
therein as an additional insured (other than in the case of non-payment in which
case only ten days’ prior notice, or the shortest time allowed by applicable
Legal Requirement (whichever is longer), will be required) and (2) the issuers
thereof shall give notice to Lender if the issuers elect not to renew such
Policies prior to its expiration. If the issuers cannot or will not provide
notice, the Borrower shall be obligated to provide such notice; and

 

(iii)        not contain any clause or provision that would make Lender liable
for any Insurance Premiums thereon or subject to any assessments thereunder.

 

(f)           If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right without notice to Borrower, to take such action or obtain such
insurance as Lender reasonably deems necessary to protect its interest in the
Collateral and the Properties, including the obtaining of such insurance
coverage as Lender in its sole discretion deems appropriate, and 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 or Owner to Lender upon
demand and until paid shall be secured by the Pledge Agreement and shall bear
interest at the Default Rate.

 

(g)          In the event of foreclosure of the Pledge Agreement or other
transfer of title to the Collateral in extinguishment in whole or in part of the
Obligations, all right, title and interest of Borrower and Owner in and to the
Policies then in force concerning the Properties and all proceeds payable
thereunder with respect to the Properties shall thereupon vest in the purchaser
at such foreclosure, Mortgage Lender or Lender or other transferee in the event
of such other transfer of title.

 

(h)          The property insurance, commercial general liability, umbrella
liability insurance and rental loss and/or business interruption insurance
required under Sections 5.1.1(a)(i), (ii), (iii) and (vii) above shall cover
perils of terrorism and acts of terrorism (or at least not specifically exclude
same) and Borrower shall cause Owner to maintain property insurance, commercial
general liability, umbrella liability insurance and rental loss and/or business
interruption insurance for loss resulting from perils and acts of terrorism on
terms (including amounts) consistent with those required under
Sections 5.1.1(a)(i), (ii), (iii) and (vii) above (or at least not specifically
excluding same) at all times during the term of the Loan.

 

(i)           Notwithstanding anything in subsection (a)(i) or (h) above to the
contrary, Borrower shall be required to obtain and maintain (or cause Owner to
obtain and maintain) coverage in its property insurance Policy (or by a separate
Policy) against loss or damage by terrorist acts in an amount equal to 100% of
the “Full Replacement Cost” of the Properties plus the rental loss and/or
business interruption coverage under subsection (a)(iii) above; provided that
such coverage is commercially available. In the event that such coverage with
respect to terrorist acts is not included as part of the “all risk” property
policy required by subsection (a)(i) above, Borrower shall, nevertheless be
required to obtain (or cause Owner to obtain) coverage for terrorism (as
standalone coverage) in an amount equal to 100% of the “Full Replacement Cost”
of the Properties plus the rental loss and/or business interruption coverage
under subsection (a)(iii) above; provided that such coverage is commercially
available. Borrower shall obtain the coverage required under this clause (i)
from a carrier which otherwise satisfies the rating criteria specified in
Section 5.1.2 below (a “Qualified Carrier”) or in the event that such coverage
is not available from a Qualified Carrier, Borrower shall obtain (or cause Owner
to obtain) such coverage from the highest rated insurance company providing such
coverage. For so long TRIPRA is in effect and continues to cover both foreign
and domestic acts, Lender shall accept terrorism insurance with coverage against
acts which are “certified” within the meaning of TRIPRA.

 

 -121-Mezzanine Loan Agreement

 

  

(j)           Each commercial general liability or umbrella liability Policy
with respect to the Properties shall name Lender as an additional insured and
shall contain a cross liability/severability endorsement in form and substance
acceptable to Lender.

 

5.1.2       Insurance Company. All Policies required pursuant to Section 5.1.1
(i) shall be issued by companies approved to do business in the states where the
Properties are located, with (1) a financial strength and claims paying ability
rating of (x) “A” or better by S&P and (y) “A2” or better by Moody’s, to the
extent Moody’s rates the Securities and rates the applicable insurer (provided,
however for multi-layered policies, (A) if four (4) or fewer insurance companies
issue the Policies, then at least seventy-five percent (75%) of the insurance
coverage represented by the Policies must be provided by insurance companies
with a rating of “A” or better by S&P and “A2” or better by Moody’s, to the
extent Moody’s rates the Securities and rates the applicable insurer, with no
remaining carrier below “BBB” by S&P and “Baa2” or better by Moody’s, to the
extent Moody’s rates the Securities and rates the applicable insurer, or (B) if
five (5) or more insurance companies issue the Policies, then at least sixty
percent (60%) of the insurance coverage represented by the Policies must be
provided by insurance companies with a rating of “A” or better by S&P and “A2”
or better by Moody’s, to the extent Moody’s rates the Securities and rates the
applicable insurer, with no remaining carrier below “BBB” and “Baa2” or better
by Moody’s, to the extent Moody’s rates the Securities and rates the applicable
insurer, and (2) a rating of A:X or better by A.M. Best provided, that,
notwithstanding the foregoing, Lender accepts Starr Surplus Lines Insurance
Company, rated A XV with AM Best, provided that (1) the rating of Starr Surplus
Lines Insurance Company is not withdrawn or downgraded below the date hereof and
(2) at renewal of the current policy term, Borrower shall replace Starr Surplus
Lines Insurance Company with an insurance company meeting the rating
requirements set forth hereinabove;; (ii) shall, with respect to all property
insurance policies and rental loss and/or business interruption insurance
policies, contain a Standard Mortgagee Clause/Lender’s Loss Payable Endorsement,
or their equivalents, naming Lender as the person to whom all payments made by
such insurance company shall be paid; (iii) shall contain a waiver of
subrogation against Lender; (iv) shall contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest including endorsements
providing (A) that neither Borrower, Owner, Lender nor any other party shall be
a co-insurer under said Policies, and (B) except as otherwise permitted
herein, for a deductible per loss acceptable to Lender but in no event in an
amount greater than that which is customarily maintained by prudent owners of
properties with a standard of operation and maintenance comparable to and in the
general vicinity of the Properties and as is generally allowed by prudent
institutional commercial mortgage lenders originating comparable mortgage loans
for securitization; and (v) shall be satisfactory in form and substance to
Lender and shall be approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds. In addition to the insurance coverages
described in Section 5.1.1 above, Borrower shall obtain (or cause Owner to
obtain) such other insurance as may from time to time be required by Lender in
order to protect its interests. Complete copies of the Policies shall be
delivered to Lender at the address below (or to such other address or Person as
Lender shall designate from time to time by notice to Borrower) on the date
hereof with respect to the current Policies and within thirty (30) days after
the effective date thereof with respect to all renewal Policies:

 

 -122-Mezzanine Loan Agreement

 

  

Morgan Stanley Bank, N.A.
1585 Broadway, 25th Floor
New York, New York 10036
Attention: George Kok

 

Borrower shall cause Owner to pay the Insurance Premiums annually in advance as
the same become due and payable and shall furnish to Lender evidence of the
renewal of each of the Policies with receipts for the payment of the Insurance
Premiums or other evidence of such payment reasonably satisfactory to Lender
(provided, however, that Borrower shall not be required to pay such Insurance
Premiums nor furnish such evidence of payment to Lender in the event that the
amounts required to pay such Insurance Premiums have been deposited into the
Insurance Account pursuant to Section 6.4 of the Mortgage Loan Agreement).
Within thirty (30) days after request by Lender, Borrower shall obtain (or cause
Owner to 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.

 

Section 5.2          Casualty. If any Individual Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a “Casualty”),
Borrower or Leasehold Pledgor shall give prompt notice thereof to Lender.
Following the occurrence of a Casualty, subject to Borrower’s rights under
Section 2.4.4(c) and Section 2.5.3 hereof, Borrower or Leasehold Pledgor,
regardless of whether insurance proceeds are available, shall proceed to
restore, repair, replace or rebuild such Individual Property (or cause Owner to
restore, repair, replace or rebuild such Individual Property) in accordance with
Legal Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction as soon as reasonably
practicable (but in no event later than one hundred twenty (120) days after such
Casualty. Lender may, but shall not be obligated to make proof of loss if not
made promptly by Borrower or Owner. In addition, Lender may, subject to the
rights of Mortgage Lender, participate in any settlement discussions with any
insurance companies (and shall approve any final settlement) (i) if an Event of
Default is continuing or (ii) with respect to any Casualty in which the Net
Proceeds or the costs of completing the Restoration are equal to or greater than
the Alteration Threshold with respect to the affected Individual Property, and
Borrower shall deliver (or cause Owner to deliver) to Lender all instruments
required by Lender to permit such participation. Provided no Event of Default is
continuing, and subject to the rights of Mortgage Lender, in the event of a
Casualty where Net Proceeds or the costs of completing the Restoration are two
percent (2%) of the Allocated Loan Amount of any Individual Property or less,
Borrower, notwithstanding Section 5.4, may directly obtain and apply the Net
Proceeds; provided that such Net Proceeds must be used towards the Restoration
in accordance with the terms hereof. Except as set forth in the foregoing
sentence, any Insurance Proceeds in connection with any Casualty (whether or not
Lender elects to settle and adjust the claim or Borrower or Leasehold Pledgor
causes Owner or Operating Lessee to settle such claim) shall be due and payable
solely to Mortgage Lender and held by Mortgage Lender in accordance with the
terms of the Mortgage Loan Agreement. In the event Borrower, Leasehold Pledgor,
Owner, Operating Lessee or any party other than Lender is a payee on any check
representing Insurance Proceeds with respect to any Casualty, Borrower or
Leasehold Pledgor shall immediately endorse (or cause Owner or Operating Lessee,
as applicable, to immediately endorse), and cause all such third parties to
endorse, such check payable to the order of Lender, subject to the rights of
Mortgage Lender under the Mortgage Loan Documents. Borrower and Leasehold
Pledgor each hereby irrevocably appoints Lender as its attorney-in-fact, coupled
with an interest, to endorse any such check payable to the order of Lender,
subject to the rights of Mortgage Lender. Borrower and Leasehold Pledgor each
hereby release Lender from any and all liability with respect to the settlement
and adjustment by Lender of any claims in respect of any Casualty.

 

 -123-Mezzanine Loan Agreement

 

  

Section 5.3          Condemnation. Borrower shall promptly give Lender notice of
the actual or threatened (in writing) commencement of any proceeding for the
Condemnation of all or any portion of any Individual Property and shall deliver
to Lender copies of any and all papers served in connection with such
proceedings. Subject to the rights of Mortgage Lender under the Mortgage Loan
Documents, Lender may participate in any such proceedings, and Borrower shall
from time to time deliver to Lender all instruments requested by it to permit
such participation. Borrower shall, at its expense, diligently prosecute (or
cause Owner to diligently prosecute) any such proceedings, and shall consult
with Lender, its attorneys and experts, and cooperate with them in the carrying
on or defense of any such proceedings. Notwithstanding any taking by any public
or quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If any Individual Property or any portion thereof is taken by a condemning
authority, Borrower or Leasehold Pledgor shall promptly commence and diligently
prosecute the Restoration of such Individual Property (or cause Owner or
Operating Lessee to promptly commence and diligently prosecute the Restoration
of such Individual Property) and otherwise comply with the provisions of
Section 5.4, whether or not an Award is available to pay the costs of such
Restoration. If such Individual Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, subject to the rights of Mortgage Lender and whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive the
Award, or a portion thereof sufficient to pay the Debt.

 

Section 5.4          Restoration. In any case where Net Proceeds are applied
towards Restoration under the Mortgage Loan Agreement, Borrower or Leasehold
Pledgor shall provide, or cause Owner or Operating Lessee to provide, to Lender
copies of the plans and specifications, architect’s certificates, waivers of
lien, contractor’s sworn statements, plans, bonds, plats of survey and such
other documents as Lender may reasonably request, to the extent delivered to
Mortgage Lender. In the event the Mortgage Loan is paid in full, the provisions
of Section 5.4 of the Mortgage Loan Agreement as in effect on the date hereof
(subject to any amendments approved in writing by Lender) shall be deemed to
have been incorporated herein, and Borrower, Leasehold Pledgor and Lender shall
each have the same rights and obligations with respect to Net Proceeds,
availability of funds, claims adjustments and the Restoration of the Properties,
as previously existed between Owner, Operating Lessee and Mortgage Lender.

 

 -124-Mezzanine Loan Agreement

 

 

Article 6

 

CASH MANAGEMENT AND RESERVE FUNDS

 

Section 6.1          Cash Management Arrangements. Borrower or Leasehold Pledgor
shall cause Owner or Operating Lessee, as applicable, to cause all Rents to be
deposited and applied in accordance with the Mortgage Loan Documents, and to
otherwise fully comply with each of the covenants of Owner set forth in
Article 6 of the Mortgage Loan Agreement, as in effect as of the date hereof,
notwithstanding any waiver or future amendment of such covenants (unless Lender
shall have given its prior written consent to any such waiver or amendment).
Upon the occurrence and during the continuance of a Trigger Period, Borrower
shall deposit or cause to be deposited, on or prior to each Monthly Payment Date
all funds required to be paid to lender pursuant to Section 2.3.1 hereof in an
Eligible Account at the Deposit Bank (the “Deposit Account”) which shall be
under the sole dominion and control of Lender. All funds deposited by the
Deposit Bank into the Deposit Account shall be deemed to be a distribution from
(a) Owner to Borrower or Leasehold Pledgor, as applicable, or (b) to the extent
such Owner is a limited partnership, from such Owner to the general partner of
Owner and from the general partner of such Owner to Borrower or Leasehold
Pledgor, as applicable, and in each case shall be applied and disbursed in
accordance with this Agreement. Lender may also establish subaccounts of the
Deposit Account which shall at all times be Eligible Accounts (and may be ledger
or book entry accounts and not actual accounts) (the Deposit Account and such
subaccounts are collectively referred to herein as “Accounts”). The Deposit
Account and all other Accounts will be in the name of Lender. Borrower shall pay
for all expenses of opening and maintaining the Deposit Account and any
subaccount thereto.

 

Section 6.2          Reserves. If, at any time during the Term, Mortgage Lender
is not requiring Owner to make the required deposits required under Article 6 of
the Mortgage Loan Agreement (or the Mortgage Loan has been refinanced or
otherwise repaid in full in accordance with the terms of this Agreement), then
Lender shall have the right, at its option, to require Borrower to make such
required deposits to Lender to be held in Eligible Accounts (the “Reserve
Accounts”), in which case such deposits shall be made by Borrower and disbursed
by Lender substantially in accordance with the provisions of such applicable
sections of the Mortgage Loan Agreement as in effect as of the date hereof,
notwithstanding any waiver or future amendment of such covenants (unless Lender
shall have given its prior written consent to any such waiver or amendment).

 

Section 6.3          Income Taxes; Interest. Borrower shall report on its
federal, state, commonwealth, district and local income tax returns all interest
or income accrued on the Funds. The Funds shall earn interest at a rate
commensurate with the rate of interest paid from time to time on money market
accounts at a commercial bank selected by Lender in its sole discretion from
time to time, with interest credited monthly to such Funds. All earnings or
interest on each of the Funds shall be added to and disbursed in the same manner
and under the same conditions as the principal sum on which said interest
accrued.

 

Section 6.4          Prohibition Against Further Encumbrance. Borrower shall
not, without the prior consent of Lender, further pledge, assign or grant any
security interest in the Funds or the Accounts or permit any Lien or encumbrance
to attach thereto or any levy to be made thereon or any UCC-1 financing
statements to be filed with respect thereto, except those naming Lender as the
secured party.

 

Section 6.5          Property Cash Flow Allocation.

 

6.5.1       Order of Priority of Funds in Deposit Account. On each Business Day
during a Trigger Period, except during the continuance of an Event of Default,
all funds deposited into the Mortgage Deposit Account shall be applied as set
forth in the Mortgage Loan Agreement.

 

 -125-Mezzanine Loan Agreement

 

 

6.5.2       Failure to Make Payments. The failure of sufficient amounts to be
deposited into the Mortgage Deposit Account in order to be able to disburse all
amounts required under clause (xi) of Section 6.11.1 of the Mortgage Loan
Agreement in full on the following Monthly Payment Date shall, subject to
applicable cure periods set forth in Article VIII, constitute an Event of
Default under this Agreement; provided, however, if adequate funds are available
in the Deposit Account for such payments, the failure by the Deposit Bank to
allocate such funds into the appropriate Accounts shall not constitute an Event
of Default.

 

6.5.3       Application After Event of Default. Notwithstanding anything to the
contrary contained in this Article 6, upon the occurrence and during the
continuance of an Event of Default, Lender, at its option, may withdraw the
Funds and any other funds of Borrower then in the possession of Lender, Servicer
or on deposit in the Deposit Account with Deposit Bank and apply such funds to
the items to the payment of the Debt in such order, proportion and priority as
Lender may determine in its sole discretion. Lender’s right to withdraw and
apply any of the foregoing funds shall be in addition to all other rights and
remedies provided to Lender under the Loan Documents, but subject to the
limitations set forth in Section 6.11.3 of the Mortgage Loan Agreement.

 

Section 6.6          Security Interest in Reserve Funds. As security for payment
of the Debt and the performance by Borrower and Leasehold Pledgor of all other
terms, conditions and provisions of the Loan Documents, Borrower hereby pledges
and assigns to Lender, and grants to Lender a security interest in, all
Borrower’s right, title and interest in and to the funds in the Accounts and the
Reserve Accounts (the “Funds”). The Funds shall be under the sole dominion and
control of Lender. The Funds shall not constitute a trust fund and may be
commingled with other monies held by Lender. Upon repayment in full of the Debt,
all remaining funds in the Accounts, if any, shall be paid to the Borrower.

 

Section 6.7           Cash Management Agreement Upon Repayment of Mortgage Loan.
In the event that the Mortgage Loan has been fully repaid and the Loan has not
been fully repaid, then Borrower and Leasehold Pledgor shall, and shall cause
Owner and Operating Lessee to, enter into a cash management agreement with
Lender, in form and substance reasonably satisfactory to Lender (the
“Replacement Cash Management Agreement”), that shall require, among other
things, that Borrower, Leasehold Pledgor, Owner and Operating Lessee establish
certain accounts and reserves, and pledge such accounts and reserves to Lender
as additional collateral for the Loan, such that Lender has the same legal and
economic rights and remedies as Mortgage Lender has under the cash management
and reserve provisions of the Mortgage Loan Documents, including without
limitation, the Cash Management Agreement and Article 6 of the Mortgage Loan
Agreement. Until such time as the Replacement Cash Management Agreement has been
fully-executed, Borrower and Leasehold Pledgor shall cause Owner and Operating
Lessee to continue to comply with the cash management and reserve provisions of
the Mortgage Loan Documents notwithstanding the repayment of the Mortgage Loan,
provided that such performance by Owner and Operating Lessee shall be in favor
of Lender rather than Mortgage Lender.

 

 -126-Mezzanine Loan Agreement

 

  

Article 7

 

PERMITTED TRANSFERS

 

Section 7.1          Loan Assumption.

 

(a)          Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, from and after the earlier to
occur of (i) ten (10) Business Days after the Securitization of the Loan or (ii)
four (4) months after the Closing Date, Borrower shall have the right to convey
all of the Collateral to a new borrower (the “Transferee Borrower”) and have the
Transferee Borrower assume all of Borrower’s obligations under this Agreement
and the Loan Documents, and have one or more Replacement Guarantors assume all
of the obligations of Guarantor under the Loan Documents from and after the date
of such assumption (collectively, a “Permitted Direct Assumption”), provided
that the following conditions are satisfied (either prior to, or
contemporaneously with, the closing of such Permitted Direct Assumption):

 

(i)          No Event of Default shall be continuing as of the date of the
closing of the Permitted Direct Assumption;

 

(ii)         Borrower shall have provided Lender with not less than thirty (30)
days’ prior written notice of the Permitted Direct Assumption, and if Lender’s
consent and a Rating Agency Confirmation is not required pursuant to
clause (iii) below, such notice shall include information establishing and
Borrower and Transferee Borrower certifying that Transferee Borrower is (A) a
Qualified Transferee, (B) a Person who is Controlled by one or more Qualified
Equityholders that either (x) satisfy the Control Party Asset Threshold and the
Experience Threshold or (y) are Pre-Approved Control Parties, and (C) a Person
in whom no less than thirty-five percent (35%) of the equity interests in the
aggregate are directly or indirectly owned by one or more Qualified
Equityholders;

 

(iii)        Prior to a Securitization, Lender shall have provided its consent
to the Permitted Direct Assumption (not to be unreasonably withheld, conditioned
or delayed if the proposed Transferee Borrower satisfies the Control Party Asset
Threshold and the Experience Threshold) and, from and after a Securitization,
Lender shall have received a Rating Agency Confirmation with respect to such
Permitted Direct Assumption, provided that neither Lender’s consent nor a Rating
Agency Confirmation shall be required with respect to the identity of the
Transferee Borrower so long as the Transferee Borrower (A) is a Qualified
Transferee, (B) a Person who is Controlled by one or more Qualified
Equityholders described in clauses (i), (ii), (iii) or (iv) of the definition of
Qualified Equityholder that either (x) prior to, and immediately after, giving
effect to the Permitted Direct Assumption, satisfy the Control Party Asset
Threshold and the Experience Threshold or (y) are Pre-Approved Control Parties,
and (C) a Person in whom no less than thirty-five percent (35%) of the equity
interests in the aggregate are directly or indirectly owned by one or more
Qualified Equityholders. In the event that a proposed Transferee Borrower does
not meet the test described in the foregoing clauses (B) and (C), and therefore,
Lender’s consent and a Rating Agency Confirmation are required under this
clause (iii), then, for purposes of Lender’s decision whether to grant or
withhold its consent, the failure by the proposed Transferee Borrower to satisfy
such test will not be considered presumptive that such proposed Transferee
Borrower is not qualified to own and manage the Collateral; provided, however,
that Lender may consider in deciding whether to consent to such proposed
Transferee Borrower, among other things, the assets, net worth and experience of
such proposed Transferee Borrower, together with its constituent owners and
controlling parties, and any other matters that Lender reasonably deems
relevant;

 

 -127-Mezzanine Loan Agreement

 

  

(iv)        Transferee Borrower shall have executed and delivered to Lender
customary assumption agreements (the “Assumption Agreement”), whereby it assumes
and agrees to pay the Debt as and when due and shall have assumed the other
Obligations of Borrower under the Loan Documents, subject to the provisions of
Section 10.1, and, prior to or concurrently with the closing of such Permitted
Direct Assignment, Transferee Borrower and its direct constituent partners,
members or shareholders as Lender may reasonably require, shall have executed
and delivered, without any out-of-pocket cost or expense to Lender, such
customary documents, agreements and other customary deliverables as Lender shall
reasonably require to evidence and effectuate said assumption (it being
understood and agreed that none of the documents and agreements described in
this paragraph may expand the liabilities or obligations, or reduce the rights
and remedies, of Transferee Borrower relative to those of Borrower immediately
prior to the closing of the Permitted Direct Assumption);

 

(v)         Borrower and Transferee Borrower shall have furnished any
information reasonably requested by Lender related to and for the preparation
of, and shall authorize Lender to file, new fixture filings and financing
statements, and fixture filing and financing statement amendments, to the
fullest extent permitted by applicable law;

 

(vi)        Transferee Borrower shall have furnished to Lender customary
documents reasonably satisfactory to Lender evidencing the organization, good
standing, qualification and authority of Transferee Borrower, Replacement
Guarantor and the other parties executing the Assumption Agreement, the
replacement guaranty, the replacement environmental indemnity and/or the other
documents and agreements required to be delivered pursuant to the terms of this
Section 7.1(a), which documents shall include certified copies of all documents
relating to the organization, formation and good standing of Transferee Borrower
and Replacement Guarantor and of the entities, if any, which are constituent and
controlling shareholders, partners or members of Transferee Borrower or
Replacement Guarantor, as applicable;

 

(vii)       where Transferee Borrower has elected to have Owner exercise the
right to replace one or more Managers pursuant to Section 4.14.2(b) in
connection with the Permitted Direct Assumption, Transferee Borrower shall cause
Owner to have provided one or more new management agreements with one or more
new Managers with respect to the Individual Properties managed by such replaced
Manager(s) in accordance with the requirements of Section 4.14.2(b) hereof and
shall have collaterally assigned to Mortgage Lender as additional security and
subordinated to the Lien of the Mortgages each such new management agreement
pursuant to an Assignment of Management Agreement in form and substance
substantially similar to the Assignment of Management Agreement delivered on the
Closing Date or otherwise reasonably satisfactory to Mortgage Lender; and, in
any event, the Individual Properties shall be managed by one or more Qualified
Managers;

 

(viii)      Transferee Borrower shall have delivered to Lender, without any
out-of-pocket cost or expense to Lender, an endorsement to the UCC Title
Insurance Policy, as modified by the Assumption Agreement, insuring the Lien of
the Collateral and naming the Transferee Borrower as owner of the Collateral,
which endorsement must insure that, as of the date of the recording of the
Assumption Agreement, the Collateral will not be subject to any additional
exceptions or liens other than those contained in the UCC Title Insurance Policy
issued on the Closing Date and the Permitted Encumbrances;

 

 -128-Mezzanine Loan Agreement

 

  

(ix)         Transferee Borrower shall have furnished to Lender, if required by
Lender, (x) if the Loan is included in a REMIC Trust, a REMIC Opinion in form
and substance reasonably satisfactory to Lender, (y) an Additional Insolvency
Opinion, in form and substance reasonably satisfactory to Lender, and (z) one or
more opinions of counsel reasonably satisfactory to Lender (A) that Transferee
Borrower’s formation documents comply with the single purpose and bankruptcy
remote entity requirements set on forth Schedule V, (B) that the assumption of
the Loan has been duly authorized and that the Assumption Agreement and other
loan documents required to be delivered by Transferee Borrower and/or
Replacement Guarantor pursuant to this Section 7.1(a) have been duly authorized,
executed and delivered and are valid, binding and enforceable against Transferee
Borrower or Replacement Guarantor, as applicable, in accordance with their
terms, (C) that Transferee Borrower and Replacement Guarantor and any entity
which is a constituent and controlling stockholder, member or general partner of
Transferee Borrower or Replacement Guarantor, as applicable, have been duly
organized, and are in existence and good standing, (D) as to such other matters
as were required in connection with the origination of the Loan (but instead
with respect to the assumption transaction and documentation) and (E) such other
opinions as are reasonably required by Lender or required by any Rating Agency
and which are customary in connection with the transfer and assumption of
similar loans;

 

(x)          Transferee Borrower shall have delivered to Lender (A) Patriot Act,
OFAC and bankruptcy searches satisfactory to Lender and (B) pending litigation,
judgment, state and federal tax lien and UCC searches reasonably satisfactory to
Lender, with respect to (w) Transferee Borrower, (x) each Replacement Guarantor,
(y) any other Person that Controls Transferee Borrower or owns an equity
interest in Transferee Borrower which equals or exceeds ten percent (10%) that
did not own an equity interest in Borrower which equals or exceeds ten percent
(10%) on the Closing Date, and (z) any other Person reasonably required by
Lender in order for Lender to fulfill its regulatory compliance guidelines
(where such guidelines are of general applicability and are applied without
prejudice); provided, however, that (1) with respect to any bankruptcy search
under clauses (x), (y) or (z) above, such search shall be deemed satisfactory if
it evidences that the Replacement Guarantor or other Person, as applicable, is
not currently the subject of any bankruptcy proceeding and has not been subject
to any voluntary or involuntary bankruptcy proceeding in the past seven (7)
years (other than, in the case of an involuntary proceeding, as may have been
dismissed) and (2) UCC searches shall be deemed to be satisfactory so long as
they do not evidence any security interest in any collateral for the Loan or any
security interest in any direct or indirect equity interest in Transferee
Borrower;

 

(xi)         Transferee Borrower and the Persons that control Transferee
Borrower must be able to satisfy all Special Purpose Bankruptcy Remote Entity
(provided that this requirement will only be applicable to Transferee Borrower
and any Person, if any, that is a general partner or managing member of
Transferee), ERISA and embargoed persons representations, warranties and
covenants in this Agreement, and the Permitted Direct Assumption shall not
result in Borrower or any ERISA Affiliate incurring any liability under
Section 4201 of ERISA due to a complete or partial withdrawal, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA, from any Employee Plan
that is a “multiemployer plan,” as such term is defined in Section 4001(a)(3) of
ERISA;

 

(xii)        Transferee Borrower shall have paid Lender the Assumption Fee and
all reasonable, out-of-pocket expenses incurred by Lender in connection with the
Permitted Direct Assumption (whether or not the same is consummated), including
any Rating Agency fees (if applicable), but excluding any servicing or special
servicing fees (other than the Assumption Fee);

 

 -129-Mezzanine Loan Agreement

 

  

(xiii)       Lender shall have received a replacement guaranty and environmental
indemnity (in form and substance substantially the same as the Guaranty and
Environmental Indemnity, provided, however, that in the case of a Permitted
Direct Assumption, such replacement guaranty shall not include any recourse
liability under Section 10.1(ix) or for breach of the representations and
covenants set forth in Schedule V hereof by the predecessor borrower or any
affiliates of such predecessor borrower) by one or more replacement guarantors
and indemnitors (A) who in the aggregate, satisfy the Financial Covenants and at
least one of which is a Qualified Equityholder (provided that a replacement
guarantor and indemnitor otherwise satisfying clause (iv) of the definition of
Qualified Equityholder shall not be required to satisfy the requirements set
forth in clause (A) of the proviso thereto) and (B) each of whom satisfies the
applicable search criteria described in clause (x) above and (C) each of whom
owns a direct or indirect interest in Transferee Borrower and at least one of
whom Controls Transferee Borrower (collectively, the “Replacement Guarantor”),
where such Replacement Guarantor has undertaken at least the obligations as set
forth in the Guaranty and Environmental Indemnity arising only from acts,
conditions and events occurring from and after the closing date of the Permitted
Direct Assumption;

 

(xiv)      the Permitted Direct Assumption shall not cause Owner or Operating
Lessee to violate or result in a breach of or default under any Franchise
Agreement or Ground Lease where such breach or default, if not cured prior to
the expiration of any applicable cure period, would make the agreement or lease,
as applicable, terminable at the option of the franchisor or ground lessor
thereunder, and all requisite consents to such conveyance shall have been
obtained from the applicable parties to such Franchise Agreements and Ground
Leases and Lender shall have received satisfactory evidence of the same;
provided, however, that Borrower may, on the closing date of the Permitted
Direct Assumption, cause Owner or Operating Lessee to (A) replace any Franchise
Agreement by a new Franchise Agreement in accordance with Section 4.34 hereof
and/or (B) replace any Franchise Agreement with a new Franchise Agreement with
the same Franchisor under, and in a form and on the terms, in each case, not
materially different than the form and terms of, the replaced Franchise
Agreement if such new Franchise Agreement is required by such Franchisor in
connection with the Permitted Direct Assumption;

 

(xv)       Transferee Borrower shall make any deposits into the Scheduled PIP
Reserve Account as may be required under Section 4.34(e) of the Mortgage Loan
Agreement;

 

(xvi)      the assumption documentation, legal opinions and organizational
documents of Transferee Borrower and any other Person that is required to be a
Special Purpose Bankruptcy Remote Entity under this Agreement (but not the
identity of Transferee Borrower or such other Persons other than as required
under clause (iii) above) will be subject to a Rating Agency Confirmation; and

 

(xvii)     such conveyance is permitted under and consummated in compliance with
the Mortgage Loan Documents and the Mezzanine B Loan Documents, and Transferee
Borrower shall have delivered evidence reasonably satisfactory to Lender of the
same.

 

 -130-Mezzanine Loan Agreement

 

  

(b)          Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, from and after the earlier to
occur of (i) ten (10) Business Days after the Securitization of the Loan or (ii)
four (4) months after the Closing Date, a Transfer of more than sixty-five
percent (65%) of the direct or indirect equity interests in the Mezzanine B
Borrower to any entity that is not a Pre-Approved Control Party or a change of
Control in Borrower, in each case that is not otherwise permitted hereunder
(such entity, the “Indirect Transferee”), and the assumption by one or more
Replacement Guarantors of all of the obligations of Guarantor under the Loan
Documents from and after the date of such Transfer in connection with such
Transfer (collectively, a “Permitted Indirect Assumption”) shall be permitted
under this Agreement and the Loan Documents, provided that either such
transaction is a Permitted Transfer or otherwise the following conditions are
satisfied (either prior to, or contemporaneously with, the closing of such
Permitted Indirect Assumption):

 

(i)          No Event of Default shall be continuing as of the date of the
closing of the Permitted Indirect Assumption;

 

(ii)         Borrower shall have provided Lender with not less than thirty (30)
days’ prior written notice of the Permitted Indirect Assumption, and if Lender’s
consent and a Rating Agency Confirmation is not required pursuant to
clause (iii) below, such notice shall include information establishing and
Borrower and Indirect Transferee certifying that Indirect Transferee is (A) a
Qualified Transferee, (B) a Person who is Controlled by one or more Qualified
Equityholders that either (x) satisfy the Control Party Asset Threshold and the
Experience Threshold or (y) are Pre-Approved Control Parties, and (C) a Person
in whom no less than thirty-five percent (35%) of the equity interests in the
aggregate are directly or indirectly owned by one or more Qualified
Equityholders;

 

(iii)        Prior to a Securitization, Lender shall have provided its consent
to the Permitted Indirect Assumption (not to be unreasonably withheld,
conditioned or delayed if the proposed Indirect Transferee satisfies the Control
Party Asset Threshold and the Experience Threshold) and, from and after a
Securitization, Lender shall have received a Rating Agency Confirmation with
respect to such Permitted Indirect Assumption, provided that neither Lender’s
consent nor a Rating Agency Confirmation shall be required so long as the
Indirect Transferee is (A) a Qualified Transferee, (B) a Person who is
Controlled by one or more Qualified Equityholders described in clauses (i),
(ii), (iii) or (iv) of the definition of Qualified Equityholder that either (x)
prior to, and immediately after, giving effect to the Permitted Indirect
Assumption, satisfy the Control Party Asset Threshold and the Experience
Threshold or (y) are Pre-Approved Control Parties, and (C) a Person in whom no
less than thirty-five percent (35%) of the equity interests in the aggregate are
directly or indirectly owned by one or more Qualified Equityholders. In the
event that a proposed Indirect Transferee does not meet the test described in
the foregoing clause (B), and therefore, Lender’s reasonable consent or a Rating
Agency Confirmation are required under this clause (iii), then, for purposes of
Lender’s decision whether to grant or withhold its consent, the failure by the
proposed Indirect Transferee to satisfy such test will not be considered
presumptive that such proposed Indirect Transferee is not qualified to own a
direct or indirect equity interest in Borrower; provided, however, that Lender
may consider in deciding whether to consent to such proposed Indirect
Transferee, among other things, the assets, net worth and experience of such
proposed Indirect Transferee, together with its constituent owners and
controlling parties, and any other matters that Lender reasonably deems
relevant;

 

 -131-Mezzanine Loan Agreement

 

  

(iv)        Intentionally omitted;

 

(v)         Indirect Transferee shall have furnished to Lender customary
documents reasonably satisfactory to Lender evidencing the organization, good
standing, qualification and authority of Indirect Transferee, Replacement
Guarantor and the other parties executing the replacement guaranty, the
replacement environmental indemnity and/or the other documents and agreements
required to be delivered pursuant to the terms of this Section 7.1(b), which
documents shall include certified copies of all documents relating to the
organization, formation and good standing of Indirect Transferee and Replacement
Guarantor and of the entities, if any, which are constituent and controlling
shareholders, partners or members of Indirect Transferee or Replacement
Guarantor, as applicable;

 

(vi)        where Borrower has elected to cause Owner exercise the right to
replace one or more Managers pursuant to Section 4.14.2(b) in connection with
the Permitted Indirect Assumption, Borrower shall cause Owner to have provided
one or more new management agreements with one or more new Managers with respect
to the Individual Properties managed by such replaced Manager(s) in accordance
with the requirements of Section 4.14.2(b) hereof and shall have collaterally
assigned to Lender as additional security and subordinated to the Lien of the
Mortgages each such new management agreement pursuant to an Assignment of
Management Agreement in form and substance substantially similar to the
Assignment of Management Agreement delivered on the Closing Date or otherwise
reasonably satisfactory to Lender; and, in any event, the Individual Properties
shall be managed by one or more Qualified Managers;

 

(vii)       Borrower shall have furnished to Lender, (y) an Additional
Insolvency Opinion, in form and substance reasonably satisfactory to Lender, and
(z) one or more opinions of counsel reasonably satisfactory to Lender (A) that
the loan documents, if any, required to be delivered by Borrower, Indirect
Transferee and/or Replacement Guarantor pursuant to this Section 7.1(b) have
been duly authorized, executed and delivered and are valid, binding and
enforceable against Borrower, Indirect Transferee (if applicable) or Replacement
Guarantor, as applicable, in accordance with their terms, (B) that Indirect
Transferee and Replacement Guarantor and any entity which is a constituent and
controlling stockholder, member or general partner of Indirect Transferee or
Replacement Guarantor, as applicable, have been duly organized, and are in
existence and good standing, (C) as to such other matters as were required in
connection with the origination of the Loan with respect to Guarantor and the
direct owner of the Mezzanine B Borrower and (D) such other opinions as are
reasonably required by Lender or required by any Rating Agency and which are
customary in connection with the equity transfers of borrowers under similar
loans;

 

(viii)      Borrower shall have delivered to Lender (A) Patriot Act, OFAC and
bankruptcy searches satisfactory to Lender and (B) pending litigation, judgment,
state and federal tax lien and UCC searches reasonably satisfactory to Lender,
with respect to (w) Indirect Transferee, (x) each Replacement Guarantor, (y) any
other Person that Controls Borrower or owns an equity interest in Borrower which
equals or exceeds ten percent (10%) that did not own an equity interest in
Borrower which equals or exceeds ten percent (10%) on the Closing Date, and (z)
any other Person reasonably required by Lender in order for Lender to fulfill
its regulatory compliance guidelines (where such guidelines are of general
applicability and are applied without prejudice); provided, however, that (1)
with respect to any bankruptcy search under clauses (x), (y) or (z) above, such
search shall be deemed satisfactory if it evidences that the Replacement
Guarantor or other Person, as applicable, is not currently the subject of any
bankruptcy proceeding and has not been subject to any voluntary or involuntary
bankruptcy proceeding in the past seven (7) years (other than, in the case of an
involuntary proceeding, as may have been dismissed) and (2) UCC searches shall
be deemed to be satisfactory so long as they do not evidence any security
interest in any collateral for the Loan or any security interest in any direct
or indirect equity interest in Borrower;

 

 -132-Mezzanine Loan Agreement

 

  

(ix)         Borrower must continue to, and cause Owner to continue to, satisfy
all Special Purpose Bankruptcy Remote Entity representations, warranties and
covenants in this Agreement, and Indirect Transferee and the Persons that
control Indirect Transferee must be able to satisfy all ERISA and embargoed
persons representations, warranties and covenants in this Agreement, and the
Permitted Indirect Assumption shall not result in Borrower or any ERISA
Affiliate incurring any liability under Section 4201 of ERISA due to a complete
or partial withdrawal, as such terms are defined in Part I of Subtitle E of
Title IV of ERISA, from any Employee Plan that is a “multiemployer plan,” as
such term is defined in Section 4001(a)(3) of ERISA;

 

(x)          Borrower shall have paid Lender the Assumption Fee and all
reasonable, out-of-pocket expenses incurred by Lender in connection with the
Permitted Indirect Assumption (whether or not the same is consummated),
including any Rating Agency fees (if applicable), but excluding any servicing or
special servicing fees (other than the foregoing Assumption Fee);

 

(xi)         Lender shall have received a replacement guaranty and environmental
indemnity (in form and substance substantially the same as the Guaranty and
Environmental Indemnity) by one or more Replacement Guarantor(s) (A) who in the
aggregate, satisfy the Financial Covenants and at least one of which is a
Qualified Equityholder (provided that a replacement guarantor and indemnitor
otherwise satisfying clause (iv) of the definition of Qualified Equityholder
shall not be required to satisfy the requirements set forth in clause (A) of the
proviso thereto), (B) each of whom satisfies the applicable search criteria
described in clause (viii) above and (C) each of whom owns a direct or indirect
interest in Borrower and at least one of whom Controls Borrower, where such
Replacement Guarantor has undertaken at least the obligations as set forth in
the Guaranty and Environmental Indemnity arising only from acts, conditions and
events occurring from and after the closing date of the Permitted Indirect
Assumption; and

 

(xii)        the Permitted Indirect Assumption shall not violate or result in a
breach of or default under any Franchise Agreement or Ground Lease where such
breach or default, if not cured prior to the expiration of any applicable cure
period, would make the agreement or lease, as applicable, terminable at the
option of the franchisor or ground lessor thereunder, and all requisite consents
to such conveyance shall have been obtained from the applicable parties to such
Franchise Agreements and Ground Leases and Lender shall have received
satisfactory evidence of the same; provided, however, that Borrower may, on the
closing date of the Permitted Indirect Assumption, cause Owner to (A) replace
any Franchise Agreement by a new Franchise Agreement in accordance with
Section 4.34 hereof and/or (B) replace any Franchise Agreement with a new
Franchise Agreement with the same Franchisor under, and in a form and on the
terms, in each case, not materially different than the form and terms of, the
replaced Franchise Agreement if such new Franchise Agreement is required by such
Franchisor in connection with the Permitted Indirect Assumption;

 

 -133-Mezzanine Loan Agreement

 

  

(xiii)       Borrower shall cause Owner to make any deposits into the Scheduled
PIP Reserve Account as may be required under Section 4.34(e); and

 

(xiv)      such Transfer is permitted under and consummated in compliance with
the Mortgage Loan Documents and the Mezzanine B Loan Documents, and Borrower
shall have delivered evidence reasonably satisfactory to Lender of the same.

 

(c)          Upon the closing of any Permitted Direct Assumption and
satisfaction of the requirements set forth above in Section 7.1(a), Borrower
shall be forever released from any further liability under this Agreement and
the other Loan Documents for acts or circumstances that first arise from and
after the date of the closing of the Permitted Direct Assumption, other than
those arising out of the acts of Borrower or its Affiliates.

 

(d)          Upon the provision of a replacement Guaranty and Environmental
Indemnity by a Replacement Guarantor and closing of any Assumption permitted by
this Section 7.1, Guarantor shall be forever released from any further liability
under the Guaranty and Environmental Indemnity on the terms set forth in the
Guaranty and Environmental Indemnity, respectively.

 

(e)          If following an Assumption permitted by this Section 7.1, all or
any portion of the equity interests in Borrower or Transferee Borrower, as
applicable, will be owned, directly or indirectly, by a real estate investment
trust (within the meaning of Section 856(a) of the Code), then concurrently with
such Assumption, Borrower or Transferee Borrower, as applicable, shall have the
right to cause Owner to enter into one or more subordinate or replacement
operating leases of the Properties that will produce “rents from real property”
for purposes of Section 856(d) of the Code and/or “real property rents” for
purposes of Section 7704 of the Code with one or more newly-formed Special
Purpose Bankruptcy Remote Entity(ies) (with appropriate changes to Schedule V
with respect to such entity to account for each such entity’s form of
organization, assets, purpose and business, provided that each such entity shall
be a Delaware limited partnership, a Delaware limited liability company or a
Delaware corporation) that will be under common ownership and Control with
Borrower and will elect to be treated as a “taxable REIT subsidiary” under
Section 856(l) of the Code (a “TRS Lessee”). In connection with Borrower or
Transferee Borrower, as applicable, causing Owner to enter into such subordinate
or replacement operating lease(s) of the Properties with a TRS Lessee, Borrower
or Transferee Borrower, as applicable, may elect notwithstanding any provisions
of the Loan Documents to the contrary, to cause Owner to transfer any applicable
Franchise Agreement(s), Management Agreement(s) and other contracts, agreements,
licenses, permits, instruments or other assets or obligations of the Owner, as
appropriate, to the TRS Lessee (without creating a breach or default
thereunder), or, to the extent such agreements are not transferrable, to cause
the TRS Lessee to enter into replacement Franchise Agreements(s) and/or
Management Agreement(s) (with the same third-parties under, and in a form and on
the terms, in each case, not materially different than the form and terms of,
the replaced agreements, except to the extent expressly permitted hereunder), or
other agreements (subject to the other terms of this Agreement). Borrower’s or
Transferee Borrower’s, as applicable, exercise of the rights set forth in this
paragraph (e) shall be subject to and conditioned upon (i) delivery to Lender of
(A) an unconditional subordination of each operating lease executed by Owner or
Transferee Borrower Affiliate subsidiary, as applicable, and TRS Lessee, (B) a
joinder executed by TRS Lessee with respect to the Loan Documents (other than
the Note and the Guaranty), (C) documents, instruments and certificates with
respect to TRS Lessee of the same type (with appropriate changes to account for
such entity’s form of organization, assets, purpose and business, provided that
each such entity shall be a Delaware limited partnership, a Delaware limited
liability company or a Delaware corporation) as are required to be delivered to
Lender with respect to a Transferee Borrower pursuant to Section 7.1(a) above
and (D) such additional documents, instruments and certificates customary for a
similar transaction involving a “taxable subsidiary” both as Lender may
reasonably request and in form and substance reasonably satisfactory to Lender
and subject to a Rating Agency Confirmation, and (ii) payment to Lender of its
reasonable out-of-pocket costs and expenses incurred in connection with the
foregoing. The parties to each operating lease shall have the right, from time
to time, to amend the percentage rent due thereunder.

 

 -134-Mezzanine Loan Agreement

 

  

(f)           In connection with any Assumption permitted by this Section 7.1,
upon Borrower’s written request, Lender shall provide a statement running to the
benefit of the Transferee Borrower or the Indirect Transferee, as applicable,
and their successors and assigns, duly acknowledged and certified, setting forth
(i) the Outstanding Principal Balance, (ii) the non-default interest rate, (iii)
any amounts due or owing and unpaid under the Loan Documents, (iv) each date
installments of interest and/or principal or any other amounts accruing under
the Loan Documents were last paid, as well as a list of any installments of
interest or other amounts accruing under the Loan Documents paid with respect to
any period in which the date of the Assumption falls, (v) any offsets or
defenses to the payment and performance of the Obligations, if any, actually
known to Lender and (vi) that this Agreement and the other Loan Documents have
not been modified or if modified, giving particulars of such modification.
Except with respect to Lender’s statements relating to clauses (i), (ii) and
(iv) above, which statements may be relied upon by Transferee Borrower or the
Indirect Transferee, as applicable, and their successors and assigns, compliance
by Lender with the requirements of this paragraph shall be for informational
purposes only and shall not be deemed to be an estoppel by Lender or a waiver of
any rights or remedies of Lender hereunder or under any other Loan Document.

 

Section 7.2         Permitted Transfers. Notwithstanding anything to the
contrary contained in Section 4.2 or elsewhere in this Agreement or any of the
other Loan Documents, the following Transfers (herein, the “Permitted
Transfers”) shall be permitted hereunder without Lender’s consent and without a
Rating Agency Confirmation (provided that, for the avoidance of doubt, and
notwithstanding anything to the contrary contained herein, except in connection
with the origination of the Mezzanine B Loan and the foreclosure of the
Mezzanine B Loan, the direct Transfer of an equity interests in any Person that
constitutes collateral for the Loan or the Mezzanine B Loan shall not be a
Permitted Transfer):

 

(a)          a Lease entered into in accordance with the Loan Documents;

 

(b)          an Assumption in accordance with Section 7.1;

 

(c)          a Permitted Encumbrance;

 

 -135-Mezzanine Loan Agreement

 

  

(d)          any listing of equity interests in any Guarantor or Qualified
Equityholder on the New York Stock Exchange, the Toronto Stock Exchange, NASDAQ
Global Select Market or any other nationally recognized stock exchange or
market, and any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer of publicly traded shares or other publicly traded
interests in any Guarantor or any indirect equity owner of any Guarantor;

 

(e)          a Transfer (but not a mortgage, pledge, hypothecation, encumbrance
or grant of a security interest, except as permitted under clause (g)) or
issuance of a direct or indirect interest in any Qualified Equityholder provided
that:

 

(i)          after giving effect to such Transfer, one or more Pre-Approved
Control Parties (and, after a Permitted Direct Assumption or Permitted Indirect
Assumption, one or more Qualified Equityholders that acquired their interest in
Borrower through such Permitted Direct Assumption or Permitted Indirect
Assumption) shall continue to own at least thirty-five percent (35%) of all
equity interests (direct or indirect) of Borrower, Leasehold Pledgor, Owner,
Operating Lessee and each SPC Party and Control Borrower, Leasehold Pledgor
Owner, Operating Lessee and each SPC Party; and

 

(ii)         if such Transfer would cause any Person (other than any
Pre-Approved Control Party), together with its Affiliates, to Control Borrower,
Leasehold Pledgor, Owner, Operating Lessee or any SPC Party that did not Control
Borrower, Leasehold Pledgor, Owner, Operating Lessee or such SPC Party prior to
such Transfer or to increase its direct or indirect interest in Borrower,
Leasehold Pledgor, Owner, Operating Lessee or any SPC Party to an amount which
equals or exceeds ten percent (10%) that did not own, together with its
Affiliates, an equity interest in Borrower, Leasehold Pledgor, Owner, Operating
Lessee or such SPC Party which equals or exceeds ten percent (10%) prior to such
Transfer, then such transferee is a Qualified Transferee and Lender shall
receive not less than fifteen (15) days advance written notice of such Transfer;

 

(iii)        such Transfer is not prohibited by and would not permit the
Franchisor or Ground Lessor to terminate any Franchise Agreement or Ground
Lease, and will not result in or cause any breach or default under any Franchise
Agreement or Ground Lease to the extent such violation, breach or default (with
or without the passage of time) would result in an Event of Default (in each
case unless the approval of such Franchisor or Ground Lessor has been obtained),
and any approvals required under any Franchise Agreement or Ground Lease to the
Transfer have been obtained;

 

(iv)        if such Transfer results in any Person acquiring more than 49% of
the direct or indirect equity interest in Borrower, Leasehold Pledgor, Owner,
Operating Lessee or any SPC Party and such Person did not together with its
Affiliates own more than 49% of the direct or indirect equity interest in
Borrower, Leasehold Pledgor, Owner, Operating Lessee or such SPC Party prior to
such Transfer, Borrower shall have delivered to Lender with respect to such
Person an Additional Insolvency Opinion in form and substance reasonably
satisfactory to Lender which Additional Insolvency Opinion satisfies all then
applicable Rating Agency criteria; and

 

(v)         Borrower shall reimburse Lender for any and all reasonable out of
pocket legal expenses incurred by it in connection with such Transfer;

 

 -136-Mezzanine Loan Agreement

 

  

(f)           provided that no Event of Default shall then exist, a Transfer
(but not a mortgage, pledge, hypothecation, encumbrance or grant of a security
interest, except as permitted under clause (g) below) of Control of Borrower,
Leasehold Pledgor, Owner or Operating Lessee or any SPC Party or of a direct or
indirect interest in the Mezzanine B Borrower, provided that:

 

(i)          after giving effect to such Transfer, one or more Qualified
Equityholders shall collectively own at least thirty-five percent (35%) of all
equity interests (direct or indirect) of Borrower, Leasehold Pledgor, Owner,
Operating Lessee and each SPC Party;

 

(ii)         after giving effect to such Transfer, one or more Pre-Approved
Control Parties shall collectively Control Borrower, Leasehold Pledgor, Owner,
Operating Lessee and each SPC Party and

 

(iii)        each of Borrower, Leasehold Pledgor, Owner, Operating Lessee and
each SPC Party shall continue to be a Special Purpose Bankruptcy Remote Entity;

 

(iv)        if such Transfer would cause the transferee (other than any
Pre-Approved Control Party), together with its Affiliates, to Control Borrower,
Leasehold, Owner, Operating Lessee or any SPC Party that did not Control
Borrower prior to such Transfer or to increase its direct or indirect interest
in Borrower, Leasehold Pledgor, Owner, Operating Lessee or any SPC Party to an
amount which equals or exceeds ten percent (10%) that did not own, together with
its Affiliates, an equity interest in Borrower, Leasehold Pledgor, Owner,
Operating Lessee or such SPC Party which equals or exceeds ten percent (10%)
prior to such Transfer, then such transferee is a Qualified Transferee and
Lender shall receive not less than thirty (30) days advance written notice of
such Transfer;

 

(v)         such Transfer is not prohibited by and would not permit the
Franchisor or Ground Lessor to terminate any Franchise Agreement or Ground
Lease, and will not result in or cause any breach or default under any Franchise
Agreement or Ground Lease to the extent such violation, breach or default (with
or without the passage of time) would result in an Event of Default (in each
case unless the approval of such Franchisor or Ground Lessor has been obtained),
and any approvals required under any Franchise Agreement or Ground Lease to the
Transfer have been obtained;

 

(vi)        intentionally omitted;

 

(vii)       if such Transfer results in any Person acquiring more than 49% of
the direct or indirect equity interest in Borrower, Leasehold Pledgor, Owner,
Operating Lessee or any SPC Party and such Person did not together with its
Affiliates own more than 49% of the direct or indirect equity interest in
Borrower, Leasehold Pledgor, Owner, Operating Lessee or any SPC Party prior to
such Transfer, Borrower shall have delivered to Lender with respect to such
Person an Additional Insolvency Opinion in form and substance reasonably
satisfactory to Lender which Additional Insolvency Opinion satisfies all then
applicable Rating Agency criteria; and

 

(viii)      Borrower shall reimburse Lender for any and all reasonable out of
pocket legal expenses incurred by it in connection with such Transfer;

 

 -137-Mezzanine Loan Agreement

 

  

(g)          (i) any pledge of an indirect equity interest in the Mezzanine B
Borrower by a Multi-Asset Person to secure an upper tier corporate or similar
loan facility that is secured by all or a substantial portion of such
Multi-Asset Person’s assets; and (ii) any pledge of a direct or indirect equity
interest in a Multi-Asset Person;

 

(h)          provided no Event of Default shall then exist (unless the
Substitute Guarantor arises in connection with a Permitted Transfer among
Pre-Approved Control Parties (or their respective wholly-owned subsidiaries)
pursuant to Section 7.2(i)), a Guarantor or a Replacement Guarantor may be
replaced by a Person (the “Substitute Guarantor”), whereupon such Substitute
Guarantor shall be a Replacement Guarantor hereunder, provided that:

 

(i)          there shall be no change of Control of Borrower, , Leasehold
Pledgor, Owner, Operating Lessee or any SPC Party as a result of such
replacement (unless such Change in Control is otherwise a Permitted Transfer);

 

(ii)         such Substitute Guarantor already has an indirect equity interest
in the Mezzanine B Borrower, or acquires an indirect equity interest in the
Mezzanine B Borrower pursuant to a Permitted Transfer;

 

(iii)        such Substitute Guarantor is a Pre-Approved Control Party or a
Qualified Transferee;

 

(iv)        such Substitute Guarantor, together with the remaining Guarantors
after such Transfer, satisfy the Financial Covenants as demonstrated to Lender’s
reasonable satisfaction (with such supporting evidence as Lender may reasonable
require), and the Guarantors (and Pre-Approved Control Parties or the related
Qualified Equityholder with respect to an Assumption (or Qualified
Equityholders, if there is more than one acquiring Qualified Equityholder at the
time of such Assumption)) continue to own at least thirty-five (35%) percent,
and Control Borrower, Leasehold Pledgor and each SPC Party;

 

(v)         such Substitute Guarantor executes and delivers to Lender a
replacement guaranty and environmental indemnity (in form and substance
substantially the same as the Guaranty and Environmental Indemnity, and
additionally including the joinder, agreement and reaffirmation of the
Substitute Guarantor and remaining Guarantors of the joint and several liability
of the Substitute Guarantor and the remaining Guarantors thereunder and under
the Guaranty and Environmental Indemnity to which they are party), where such
Substitute Guarantor has undertaken at least the obligations as set forth in the
Guaranty and Environmental Indemnity arising only from acts, conditions and
events occurring from and after the date of the replacement;

 

(vi)        Lender shall have received one or more opinions of counsel to the
Substitute Guarantor and remaining Guarantors in form and substance reasonably
satisfactory to Lender (A) that the replacement guaranty and environmental
indemnity have been duly authorized, executed and delivered and are valid,
binding and enforceable against each such Substitute Guarantor and remaining
Guarantors, in accordance with their terms, and (B) that such Substitute
Guarantor and each remaining Guarantor and any entity which is a constituent and
controlling stockholder, member or general partner of such Substitute Guarantor
and each remaining Guarantor, as applicable, have been duly organized, and are
in existence and good standing;

 

 -138-Mezzanine Loan Agreement

 

  

(vii)       Lender shall have received an Additional Insolvency Opinion with
respect to such Transfer (if one has occurred), replacement and replacement
guaranty and environmental indemnity, in form and substance reasonably
satisfactory to Lender and shall satisfy all then applicable Rating Agency
criteria; and

 

(viii)      Borrower shall reimburse Lender for any and all reasonable out of
pocket legal expenses incurred by it in connection with such Transfer (if one
has occurred) and such replacement including any Rating Agency fees;

 

Upon the execution and delivery of a replacement guaranty and environmental
indemnity by a Substitute Guarantor permitted by this Section 7.2(h), the
Guarantor(s) who have been replaced by the Substitute Guarantor shall be forever
released from any further liability under the Guaranty and Environmental
Indemnity arising from any circumstance, condition, action or event first
occurring after the effective date of such replacement to the extent the same is
not caused by such replaced Guarantor(s); provided, however, that such replaced
Guarantor(s) shall remain liable under the Guaranty and Environmental Indemnity
for any obligations thereunder arising from any action or event occurring prior
to the effective date of such replacement and for any actions of such replaced
Guarantor.

 

(i)           any Transfer of direct or indirect equity interests in, and/or
Control of, Borrower, Leasehold Pledgor, Owner, Operating Lessee and/or any SPC
Party among the Pre-Approved Control Parties (including any Transfer through one
or more of their respective wholly-owned and Controlled subsidiaries) provided
that:

 

(i)          after giving effect to such Transfer, one or more Pre-Approved
Control Parties shall collectively Control Borrower, Leasehold Pledgor, Owner,
Operating Lessee and each SPC Party;

 

(ii)         Borrower, Leasehold Pledgor, Owner, Operating Lessee and each SPC
Party shall continue to be a Special Purpose Bankruptcy Remote Entity;

 

(iii)        intentionally omitted;

 

(iv)        such Transfer is not prohibited by and would not permit the
Franchisor or Ground Lessor to terminate any Franchise Agreement or Ground
Lease, and will not result in or cause any breach or default under any Franchise
Agreement or Ground Lease to the extent such violation, breach or default (with
or without the passage of time) would result in an Event of Default (in each
case unless the approval of such Franchisor or Ground Lessor has been obtained),
and any approvals required under any Franchise Agreement or Ground Lease to the
Transfer have been obtained;

 

(v)         if such Transfer results in any Person acquiring more than 49% of
the direct or indirect equity interest in Borrower, Leasehold Pledgor, Owner,
Operating Lessee or any SPC Party and such Person did not own more than 49% of
the direct or indirect equity interest in Borrower, Leasehold Pledgor, Owner,
Operating Lessee or such SPC Party on the Closing Date, Borrower shall have
delivered to Lender with respect to such Person an Additional Insolvency Opinion
in form and substance reasonably satisfactory to Lender which Additional
Insolvency Opinion satisfies all then applicable Rating Agency criteria;

 

 -139-Mezzanine Loan Agreement

 

  

(vi)        Guarantor (or Substitute Guarantor) shall continue to have an
indirect equity interest in the Mezzanine B Borrower;

 

(vii)       The Guarantors (and/or one or more Substitute Guarantors) after such
Transfer, shall continue to satisfy the Financial Covenants as demonstrated to
Lender’s reasonable satisfaction (with such supporting evidence as Lender may
reasonably require), and the Pre-Approved Control Parties (which for purposes of
this clause (vii) shall include Qualified Equityholders that acquired their
interest in Borrower as a result of a Permitted Direct Assumption or a Permitted
Indirect Assumption) continue to own at least thirty-five (35%) percent, and
Control Borrower, Leasehold Pledgor, Owner, Operating Lessee and each SPC Party;
and

 

(viii)      Borrower shall reimburse Lender for any and all reasonable out of
pocket legal expenses incurred by it in connection with such Transfer;

 

(j)           following an Assumption resulting in two or more Qualified
Equityholders, in the aggregate, indirectly owning thirty-five percent (35%) or
more of and Controlling Borrower, Leasehold Pledgor, Owner, Operating Lessee or
any SPC Party (each, an “Existing Qualified Equityholder”), a Transfer (but not
a mortgage, pledge, hypothecation, encumbrance or grant of a security interest)
of a direct or indirect interest in the Mezzanine B Borrower from one Existing
Qualified Equityholder to another Existing Qualified Equityholder (the “QEH
Transferee”) that results in the QEH Transferee owning indirectly thirty-five
percent (35%) or more of Borrower, Leasehold Pledgor, Owner, Operating Lessee or
any SPC Party, and/or results in a change of Control of Borrower, Leasehold
Pledgor, Owner, Operating Lessee or any SPC Party, shall be permitted without
Lender’s consent provided that:

 

(i)          Intentionally omitted;

 

(ii)         such Transfer is not prohibited by and would not permit the
Franchisor or Ground Lessor to terminate any Franchise Agreement or Ground
Lease, and will not result in or cause any breach or default under any Franchise
Agreement or Ground Lease to the extent such violation, breach or default (with
or without the passage of time) would result in an Event of Default (in each
case unless the approval of such Franchisor or Ground Lessor has been obtained),
and that any approvals required under any Franchise Agreement or Ground Lease to
the Transfer have been obtained;

 

(iii)        If such Transfer results in no Guarantor Controlling Borrower,
Owner, Operating Lessee any each SPC Party or Guarantors not owning, directly or
indirectly, in the aggregate at least thirty-five percent (35%) of the equity
interests in Borrower, Leasehold Pledgor, Owner, Operating Lessee and each SPC
Party then Lender shall have received not less than fifteen (15) days’ notice of
such Transfer and a replacement guaranty and environmental indemnity (in form
and substance substantially the same as the Guaranty and Environmental
Indemnity) by one or more replacement guarantors and indemnitors (A) who in the
aggregate, satisfy the Financial Covenants and (B) each of whom satisfies the
applicable search criteria described in clause (iv) below and (C) each of whom
owns a direct or indirect interest in Transferee Borrower and at least one of
whom Controls Transferee Borrower (collectively, the “QEH Replacement
Guarantor”), where such QEH Replacement Guarantor has undertaken at least the
obligations as set forth in the Guaranty and Environmental Indemnity arising
only from acts, conditions and events occurring from and after the closing date
of the Transfer;

 

 -140-Mezzanine Loan Agreement

 

  

(iv)        Lender shall have received (A) Patriot Act, OFAC and bankruptcy
searches satisfactory to Lender and (B) pending litigation, judgment, state and
federal tax lien and UCC searches reasonably satisfactory to Lender, with
respect to each QEH Replacement Guarantor; provided, however, that (1) with
respect to any bankruptcy search, such search shall be deemed satisfactory if it
evidences that the QEH Replacement Guarantor, if any, is not currently the
subject of any bankruptcy proceeding and has not been subject to any voluntary
or involuntary bankruptcy proceeding in the past seven (7) years (other than, in
the case of an involuntary proceeding, as may have been dismissed) and (2) UCC
searches shall be deemed to be satisfactory so long as they do not evidence any
security interest in any collateral for the Loan or any security interest in any
direct or indirect equity interest in Borrower;

 

(v)         If a QEH Replacement Guarantor is required under paragraph (iii)
above Lender shall have received an opinion of counsel in form and substance
reasonably satisfactory to Lender (A) that the replacement guaranty and
environmental indemnity have been duly authorized, executed and delivered and
are valid, binding and enforceable against QEH Replacement Guarantor, in
accordance with their terms, and (B) that QEH Replacement Guarantor and any
entity which is a constituent and controlling stockholder, member or general
partner of QEH Replacement Guarantor, as applicable, have been duly organized,
and are in existence and good standing;

 

(vi)        If such Transfer results in any Person acquiring more than 49% of
the direct or indirect equity interests in Borrower, Leasehold Pledgor, Owner,
Operating Lessee or any SPC Party and such Person did not own more than 49% of
the direct or indirect equity interests in Borrower, Leasehold Pledgor, Owner,
Operating Lessee or such SPC Party prior to such Transfer, Lender shall have
received an Additional Insolvency Opinion with respect to the Transfer, in form
and substance reasonably satisfactory to Lender which Additional Insolvency
Opinion satisfies all then applicable Rating Agency criteria;

 

(vii)       Borrower shall reimburse Lender for any and all reasonable out of
pocket legal expenses incurred by it in connection with such Transfer including
any Rating Agency fees; and

 

Upon the execution and delivery of a replacement guaranty and environmental
indemnity by a QEH Replacement Guarantor required by this Section 7.2(j), the
Guarantor(s) who have been replaced by the QEH Replacement Guarantor shall be
forever released from any further liability under the Guaranty and Environmental
Indemnity arising from any circumstance, condition, action or event first
occurring after the closing date of the Transfer to the extent the same is not
caused by such replaced Guarantor(s); provided, however, that such replaced
Guarantor(s) shall remain liable under the Guaranty and Environmental Indemnity
for any obligations thereunder arising from any action or event occurring prior
to the closing date of the Transfer.

 

Section 7.3          Cost and Expenses; Copies.

 

(a)          Borrower shall pay all reasonable costs and expenses of Lender in
connection with any Transfer, including, without limitation, all reasonable fees
and expenses of Lender’s counsel, whether internal or outside, and the
reasonable cost of any required counsel opinions related to REMIC (if the Loan
is included in a REMIC Trust) or other securitization (if the Loan is otherwise
included in a Securitization) or tax issues and any Rating Agency fees (in the
case of any Transfer requiring Rating Agency Confirmation).

 

 -141-Mezzanine Loan Agreement

 

 

(b)          Borrower shall provide Lender with copies of all organizational
documents relating to any Permitted Transfer to the extent expressly required
hereunder.

 

Section 7.4          Replacement Mezzanine Loan. Mezzanine B Borrower shall have
a one-time right to enter into not more than one tranche of mezzanine financing
(a “Replacement Mezzanine Financing”) and Mezzanine B Borrower may pledge to the
Approved Mezzanine Lender under such Replacement Mezzanine Financing the direct
equity interests in Borrower, Leasehold Pledgor and Borrower’s general partner,
HIT Portfolio I Mezz GP, LLC, as collateral for any such Replacement Mezzanine
Financing; provided that the Replacement Mezzanine Financing is an Approved
Mezzanine Loan. In connection with such Replacement Mezzanine Financing, Lender
shall be required to enter into the intercreditor agreement satisfying the
requirements of clause (j) of the definition of Approved Mezzanine Loan
(including that such intercreditor is reasonably satisfactory in all respects to
Lender).

 

Article 8

DEFAULTS

 

Section 8.1          Events of Default. Each of the following events shall
constitute an event of default hereunder (an “Event of Default”):

 

(i)          if (A) the Obligations are not paid in full on the Maturity Date,
(B) any regularly scheduled monthly payment of interest, and, if applicable,
principal due under the Note is not paid in full within two (2) calendar days
following the applicable Monthly Payment Date, (C) any prepayment of principal
due under this Agreement or the Note is not paid when due, (D) the Spread
Maintenance Premium is not paid when due or (E) any deposit to the Reserve Funds
is not made within three (3) calendar days following the required deposit date
therefor (provided that it shall not be an Event of Default under clause (B) or
(E) if as of the applicable due date for the payment of such amounts there are
sufficient funds remaining in the Mortgage Deposit Account (other than funds
previously allocated to the various Accounts) to pay such amounts when due and
Mortgage Lender’s access to such funds has not been inhibited in any manner
whatsoever due to circumstances or events which are directly related to Borrower
or Leasehold Pledgor and no other monetary Event of Default is then continuing);

 

(ii)         if any other amount payable pursuant to this Agreement, the Note or
any other Loan Document (other than as set forth in the foregoing clause (i)) is
not paid in full when due and payable in accordance with the provisions of the
applicable Loan Document, with such failure continuing for ten (10) Business
Days after Lender delivers written notice thereof to Borrower (provided that it
shall not be an Event of Default under this clause (ii) if as of the applicable
due date for the payment of such amounts there are sufficient funds remaining in
the Mortgage Deposit Account (other than funds previously allocated to the
various Accounts (as defined in the Mortgage Loan Agreement)), to pay such
amounts when due, no other monetary Event of Default is then continuing, and the
servicer under the Mortgage Loan fails to make such payment in violation of the
Mortgage Loan Agreement);

 

 -142-Mezzanine Loan Agreement

 

 

(iii)        subject to Owner’s right to contest as set forth in Section 4.6 of
the Mortgage Loan Agreement, if any of the Taxes or Other Charges are not paid
when Due and Payable (provided that it shall not be an Event of Default if there
are sufficient funds in the Tax Account (as defined in the Mortgage Loan
Agreement) to pay such amounts when due, no other monetary Event of Default is
then continuing and the servicer under the Mortgage Loan fails to make such
payment in violation of the Mortgage Loan Agreement) and such default is not
remedied within ten (10) Business Days;

 

(iv)        if Owner fails to maintain in full force and effect Policies
reflecting and satisfying the insurance coverages, amounts and other
requirements set forth in this Agreement, or if certificates evidencing the
insurance provided pursuant to the Policies are not delivered to Lender within
five (5) days of Lender’s written request (provided that it shall not be an
Event of Default if (x) such failure results from the failure to timely pay any
premium and there are then sufficient funds in the Insurance Account (as defined
in the Mortgage Loan Agreement) to pay such premiums when due, no other monetary
Event of Default is then continuing and (y) the servicer under the Mortgage Loan
fails to make such payment in violation of the Mortgage Loan Agreement);

 

(v)         a voluntary Transfer other than a Permitted Transfer occurs, or any
other Transfer which is not a Permitted Transfer, and to which no other clause
of this Section 8.1(a) applies, occurs and is not cured within thirty (30) days
following Borrower’s receipt of written notice of such impermissible Transfer
from Lender;

 

(vi)        if any certification, representation or warranty made by Borrower,
Leasehold Pledgor or any Guarantor herein or in any other Loan Document, or in
any report, certificate, financial statement or other instrument, agreement or
document furnished to Lender shall have been false or misleading in any material
respect as of the date such representation or warranty was made; provided,
however, that as to any such false or misleading representation or warranty
which (a) was unintentionally made to Lender and (b) which can be made true and
correct by action of Borrower or Leasehold Pledgor, Borrower and Leasehold
Pledgor shall have a period of thirty (30) days following written notice thereof
to Borrower to undertake and complete all action necessary to make such
representation or warranty, true and correct in all material respects; provided,
further, that if the same cannot be cured within such thirty (30) day period, if
Borrower or Leasehold Pledgor commences to take action to cure such breach
within such thirty (30) day period and thereafter diligently and expeditiously
proceeds to cure the same, Borrower shall have such additional time as is
reasonably necessary to effect such cure, but in no event in excess of an
additional ninety (90) days;

 

(vii)       if Borrower, Leasehold Pledgor, Guarantor, any Individual Owner, any
Operating Lessee or any SPC Party shall make an assignment for the benefit of
creditors;

 

 -143-Mezzanine Loan Agreement

 

 

(viii)      if a receiver, liquidator or trustee shall be appointed for
Borrower, Leasehold Pledgor, any Guarantor, any Individual Owner, any Operating
Lessee or any SPC Party, or if Borrower, Leasehold Pledgor, any Guarantor, any
Individual Owner, any Operating Lessee or any SPC Party shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, Borrower,
Leasehold Pledgor, any Guarantor, any Individual Owner, any Operating Lessee or
any SPC Party or if any proceeding for the dissolution or liquidation of
Borrower, Leasehold Pledgor, any Guarantor, any Individual Owner, any Operating
Lessee or any SPC Party shall be instituted, or if Borrower, Leasehold Pledgor,
Owner, Operating Lessee or any SPC Party is substantively consolidated with any
other Person; provided, however, if such appointment, adjudication, petition,
proceeding or consolidation was involuntary and not consented to by Borrower,
Leasehold Pledgor, any Guarantor, such Individual Owner, such Operating Lessee
or such SPC Party upon the same not being discharged, stayed or dismissed within
ninety (90) days following its filing;

 

(ix)         if Borrower or Leasehold Pledgor attempts to assign its rights
under this Agreement or any of the other Loan Documents or any interest herein
or therein in contravention of the Loan Documents;

 

(x)          if any of the assumptions contained in the Insolvency Opinion, or
in any other non-consolidation opinion delivered to Lender in connection with
the Loan, or in any other non-consolidation opinion delivered subsequent to the
closing of the Loan, is or shall become untrue in any material respect, subject
to the cure periods set forth in clauses (xi) and (xii);

 

(xi)         a breach of the covenants set forth in Sections 4.4; provided,
however, such violation or breach shall not constitute an Event of Default in
the event that (1) such violation or breach is not intentional, (2) such
violation or breach is immaterial, (3) such violation or breach shall be
remedied in a timely and expedient manner and in any event within not more than
60 days, and (4) within fifteen (15) Business Days following the request of
Lender, but not prior to the date on which such violation or breach shall have
been remedied in accordance with the immediately foregoing clause (3), Borrower
delivers to Lender a substantive non-consolidation opinion, or a modification of
the Insolvency Opinion, to the effect that such breach or violation shall not in
any way impair, negate or adversely change the opinions rendered in the
Insolvency Opinion, which opinion or modification and any counsel delivering
such opinion or modification shall be acceptable to Lender in its reasonable
discretion;

 

(xii)        a breach by Liquor Subsidiary of the covenants set forth in
Section 4 of the Liquor Subsidiary Pledge; provided, however, such violation or
breach shall not constitute an Event of Default in the event that (1) such
violation or breach is not intentional, (2) such violation or breach is
immaterial, (3) such violation or breach shall be remedied in a timely and
expedient manner and in any event within not more than 60 days, and (4) within
fifteen (15) Business Days following the request of Lender, but not prior to the
date on which such violation or breach shall have been remedied in accordance
with the immediately foregoing clause (3), Borrower delivers to Lender a
substantive non-consolidation opinion, or a modification of the Insolvency
Opinion, to the effect that such breach or violation shall not in any way
impair, negate or adversely change the opinions rendered in the Insolvency
Opinion, which opinion or modification and any counsel delivering such opinion
or modification shall be acceptable to Lender in its reasonable discretion;

 

 -144-Mezzanine Loan Agreement

 

 

(xiii)       a breach of the covenants set forth in Sections 4.31 or 4.23
hereof;

 

(xiv)      if at any time the equity interests pledged by Borrower or Leasehold
Pledgor pursuant to the Pledge Agreement shall be evidenced by new, replacement
or additional certificates and Borrower or Leasehold Pledgor, as applicable,
shall fail to deliver such certificates to Lender, together with any powers of
attorney or membership powers required to be delivered in connection therewith
in accordance with the Pledge Agreement;

 

(xv)       subject to Borrower’s and Owner’s right to contest set forth in
Section 4.3 of this Agreement, if any Individual Property becomes subject to any
mechanic’s, materialman’s or other Lien except a Permitted Encumbrance that is
not bonded over or otherwise removed or paid within ten (10) Business Days
following notice of such breach;

 

(xvi)      the alteration, improvement, demolition or removal of any material
portion of the Improvements without the prior written consent of Lender, other
than in accordance with this Agreement and the Leases at the Individual
Properties entered into in accordance with the Loan Documents;

 

(xvii)     if, without Lender’s prior written consent, other than in accordance
with Section 4.14, (i) any Management Agreement is terminated, or (ii) there is
a material change in any Management Agreement;

 

(xviii)    a breach of any representation, warranty or covenant contained
Section 3.1.18 hereof that is not remedied within the thirty (30) days following
notice of such breach;

 

(xix)       if Borrower or Leasehold Pledgor breaches any covenant contained in
Section 4.9 hereof and such breach continues for ten (10) Business Days
following Lender’s delivery of notice of such breach;

 

(xx)        if (A) any Individual Owner shall fail in the payment of any rent,
additional rent or other charge mentioned in or made payable by any Ground Lease
as and when such rent or other charge is payable (after the expiration of any
grace periods afforded Owner under such Ground Lease (but not, for the avoidance
of doubt, any grace, notice or cure periods afforded to Lender under the Ground
Lease or otherwise)) (unless waived by the Ground Lessor), (B) there shall occur
any default (beyond any applicable cure periods afforded Owner under such Ground
Lease (but not, for the avoidance of doubt, any grace, notice or cure periods
afforded to Lender under the Ground Lease or otherwise)) by an Individual Owner,
as tenant under any Ground Lease, in the observance or performance of any term,
covenant or condition of a Ground Lease on the part of an Individual Owner, as
the tenant thereunder to be observed or performed (unless (a) waived by the
Ground Lessor or (b) of an immaterial nature and for which notice from Ground
Lessor is required and has not been given), (C) if any one or more of the events
referred to in a Ground Lease shall occur which would cause such Ground Lease to
terminate without notice or action by the landlord under such Ground Lease or
which would entitle the Ground Lessor to terminate such Ground Lease and the
term thereof by giving notice to the applicable Individual Owner, as tenant
thereunder (unless waived by the Ground Lessor), (D) if the leasehold estate
created by the Ground Lease shall be surrendered or the Ground Lease shall be
terminated or canceled for any reason or under any circumstances whatsoever, or
(E) if any of the terms, covenants or conditions of the Ground Lease shall in
any manner be modified, changed, supplemented, altered or amended without the
consent of Lender except as otherwise permitted by this Agreement;

 

 -145-Mezzanine Loan Agreement

 

 

(xxi)       if without Lender’s prior consent, there is any material change in
any Franchise Agreement (or any replacement Franchise Agreement), or a Franchise
Agreement shall be terminated or cancelled, unless Borrower or Leasehold Pledgor
shall then be entitled to and shall have replaced (or shall have caused Owner or
Operating Lessee to replace) such Franchise Agreement in accordance with the
terms of Section 4.34(d) within ninety (90) days;

 

(xxii)      if a default has occurred and continues beyond any applicable cure
period under any Franchise Agreement if such default permits the applicable
Franchisor to terminate or cancel such Franchise Agreement, unless Borrower or
Leasehold Pledgor shall then be entitled under Section 4.34(d) to replace such
Franchise Agreement and within ninety (90) days after such default shall replace
(or shall cause Owner or Operating Lessee to replace) such Franchise Agreement
in accordance with the terms of Section 4.34(d);

 

(xxiii)     if there shall be a default under any of the other Loan Documents
beyond any applicable cure periods contained therein, whether as to Borrower,
Leasehold Pledgor, Owner, Operating Lessee, any Guarantor, the Collateral or any
Individual Property, or if any other such event shall occur or condition shall
exist, if the effect of such event or condition is to accelerate the maturity of
any portion of the Obligations or to permit Lender to accelerate the maturity of
all or any portion of the Obligations;

 

(xxiv)    if Borrower or Leasehold Pledgor shall fail to comply with any of the
terms, covenants or conditions of Section 9.3 hereof and such failure shall
continue for ten (10) Business Days after notice thereof from Lender to Borrower
or Leasehold Pledgor, as applicable.

 

(xxv)     if Borrower fails to obtain or maintain an Interest Rate Cap Agreement
or replacement thereof in accordance with Section 2.6 and/or Section 2.7 hereof;
provided that with respect to a failure under Section 2.6 only, no Event of
Default shall occur under this clause (xxiv) unless such failures continues for
five (5) Business Days after Lender delivers notice to Borrower thereof (it
being agreed that such cure period shall not apply with respect to Borrower’s
delivery of a Replacement Interest Rate Cap Agreement in connection with its
exercise of an Extension Option under Section 2.7);

 

(xxvi)    (A) a Mortgage Loan Default occurs or (B) any other event shall occur
or condition shall exist, if the effect of such event or condition is to
accelerate or permit Mortgage Lender to accelerate the maturity or any portion
of the Mortgage Loan;

 

(xxvii)   if Guarantors breach the Financial Covenants, if any, under the
Guaranty and a Substitute Guarantor that satisfies the Financial Covenants, does
not assume the obligations of Guarantors under the Guaranty and the
Environmental Indemnity; or

 

 -146-Mezzanine Loan Agreement

 

 

(xxviii)   if Borrower or Leasehold Pledgor shall continue to be in Default
under any of the other terms, covenants or conditions of this Agreement or any
other Loan Document not specified in subsections (i) to (xxvi) above, for thirty
(30) days after notice to Borrower from Lender; provided, however, that if such
Default is a Default which cannot be cured by the payment of a sum of money and
is otherwise susceptible of cure but cannot reasonably be cured within such
30-day period, and provided further that Borrower shall have commenced to cure
such Default within such 30-day period and shall thereafter diligently and
expeditiously proceed to cure the same, such 30-day period shall be extended for
such time as is reasonably necessary for Borrower in the exercise of due
diligence to cure such Default, such additional period not to exceed ninety (90)
days; provided, however that such additional ninety (90) period shall be
extended for an additional thirty (30) days provided that Borrower shall have
continuously diligently and expeditiously proceeded to cure the applicable
Default and that notwithstanding the foregoing such Default has not been cured
and provided, further, that Borrower continues to diligently and expeditiously
proceed to cure the same and it is reasonably likely that such Default shall be
cured in such additional 30-day period.

 

Section 8.2          Remedies.

 

8.2.1       Acceleration. Upon the occurrence of an Event of Default (other than
an Event of Default described in clauses (vii), (viii) or (ix) of Section 8.1
above) and at any time thereafter, Lender may, in addition to any other rights
or remedies available to it pursuant to this Agreement and the other Loan
Documents or at law or in equity, take such action, without notice or demand
(and Borrower hereby expressly waives any such notice or demand), that Lender
deems advisable to protect and enforce its rights against Borrower and/or
Leasehold Pledgor and in and to the Collateral, including declaring the
Obligations to be immediately due and payable, and Lender may enforce or avail
itself of any or all rights or remedies provided in the Loan Documents against
Borrower and/or Leasehold Pledgor and the Collateral, including all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vii), (viii) or (ix) of Section 8.1 above, the Obligations of
Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable in full, without notice or demand, and each
of Borrower and Leasehold Pledgor hereby expressly waives any such notice or
demand, anything contained herein or in any other Loan Document to the contrary
notwithstanding. Notwithstanding the foregoing provisions of this Section 8.2.1,
if Borrower has cured a Qualified Release Property Default in accordance with
Section 2.5.2, an acceleration of the Loan arising from such Qualified Release
Property Default shall be rescinded provided no other Event of Default shall
then or thereafter be continuing.

 

8.2.2       Suspension of Lender’s Performance. Upon the occurrence of an Event
of Default, in addition to any other rights or remedies available to Lender
pursuant to this Agreement and the other Loan Documents or at law or in equity,
Lender may, at its option, cease or suspend any and all performance required of
Lender under the Loan Documents.

 

 -147-Mezzanine Loan Agreement

 

 

8.2.3       Remedies Cumulative. During the continuance of an Event of Default,
all or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower or Leasehold Pledgor under this Agreement
or any of the other Loan Documents executed and delivered by, or applicable to,
Borrower or Leasehold Pledgor or at law or in equity may be exercised by Lender
at any time and from time to time, whether or not all or any of the Obligations
shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Collateral. The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower or Leasehold Pledgor pursuant to this Agreement or the
other Loan Documents, or existing at law or in equity or otherwise. Lender’s
rights, powers and remedies 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
or contract or as set forth herein or in the other Loan Documents or by equity.
Without limiting the generality of the foregoing, if an Event of Default is
continuing (i) Lender shall not be subject to any “one action” or “election of
remedies” law or rule, and (ii) all Liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Collateral and the Pledge
Agreement and other Security Documents have been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Obligations or the Obligations
have been paid in full. No delay or omission to exercise any remedy, right or
power accruing upon an Event of Default shall impair any such remedy, right or
power or shall be construed as a waiver thereof, but any such remedy, right or
power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default with respect to Borrower
or Leasehold Pledgor shall not be construed to be a waiver of any subsequent
Default or Event of Default by Borrower or Leasehold Pledgor or to impair any
remedy, right or power consequent thereon.

 

8.2.4       Severance.

 

(a)          During the continuance of an Event of Default, Lender shall have
the right from time to time to partially foreclose the Collateral under the
Pledge Agreement in any manner and for any amounts secured by the Pledge
Agreement then due and payable as determined by Lender in its sole discretion,
including the following circumstances: (i) in the event Borrower defaults beyond
any applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose the Collateral under the Pledge
Agreement to recover such delinquent payments, or (ii) in the event Lender
elects to accelerate less than the entire Outstanding Principal Balance, Lender
may foreclose the Collateral under the Pledge Agreement to recover so much of
the principal balance of the Loan as Lender may accelerate and such other sums
secured by the Collateral under the Pledge Agreement as Lender may elect.
Notwithstanding one or more partial foreclosures, the Collateral shall remain
subject to the Pledge Agreement to secure payment of the sums secured by the
Collateral under the Pledge Agreement and not previously recovered.

 

 -148-Mezzanine Loan Agreement

 

 

(b)          During the continuance of an Event of Default, Lender shall have
the right from time to time to sever the Note and the other Loan Documents into
one or more separate notes, pledge agreements and other security documents in
such denominations as Lender shall determine in its sole discretion for purposes
of evidencing and enforcing its rights and remedies provided hereunder. Borrower
and Leasehold Pledgor shall execute and deliver to Lender from time to time,
promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower and Leasehold Pledgor each hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in
its name and stead to make and execute all documents necessary or desirable to
effect the aforesaid severance, Borrower and Leasehold Pledgor each ratifying
all that its said attorney shall do by virtue thereof; provided, however, Lender
shall not make or execute any such documents under such power until three (3)
days after notice has been given to Borrower by Lender of Lender’s intent to
exercise its rights under such power.

 

(c)          Any amounts recovered from the Collateral or any other collateral
for the Loan after an Event of Default may be applied by Lender toward the
payment of any interest and/or principal of the Loan and/or any other amounts
due under the Loan Documents, in such order, priority and proportions as Lender
in its sole discretion shall determine.

 

8.2.5       Lender’s Right to Perform. If Borrower or Leasehold Pledgor fails to
perform any covenant or obligation contained herein and such failure shall
continue for a period of five (5) Business Days after Borrower’s receipt of
written notice thereof from Lender, without in any way limiting Lender’s right
to exercise any of its rights, powers or remedies as provided hereunder, or
under any of the other Loan Documents, Lender may, but shall have no obligation
to, perform, or cause the performance of, such covenant or obligation, and all
costs, expenses, liabilities, penalties and fines of Lender incurred or paid in
connection therewith shall be payable by Borrower to Lender upon demand and if
not paid shall be added to the Obligations (and to the extent permitted under
applicable laws, secured by the Pledge Agreement and the other Loan Documents)
and shall bear interest thereafter at the Default Rate. Notwithstanding the
foregoing, Lender shall have no obligation to send notice to Borrower of any
such failure (provided that if Lender elects to exercise its right in the
preceding sentence it shall notify Borrower of such exercise; provided, that
Lender’s failure to so notify Borrower shall not invalidate such action or give
rise to any liability on the part of Lender or defense, effect or counterclaim
on the part of Borrower).

 

Article 9
SALE AND SECURITIZATION OF LOAN

 

Section 9.1          Sale of Loan and Securitization.

 

(a)          Lender shall have the right, at Lender’s cost and without the
consent of Borrower, any Guarantor or any Affiliate of Borrower or any
Guarantor, (i) to sell or otherwise transfer the Loan or any portion thereof as
a whole loan, (ii) to sell participation interests in the Loan, or (iii) to
securitize the Loan or any portion thereof in a single asset securitization or a
pooled loan securitization. The transactions referred to in clauses (i), (ii)
and (iii) are each hereinafter referred to as a “Secondary Market Transaction”
and the transactions referred to in clause (iii) shall hereinafter be referred
to as a “Securitization”. Any certificates, notes or other securities issued in
connection with a Secondary Market Transaction are hereinafter referred to as
“Securities”). At Lender’s election, each note and/or component comprising the
Loan may be subject to one or more Secondary Market Transactions. Lender agrees
to reasonably consult with Borrower with respect to the structure of any
Securitization that includes the Loan.

 

 -149-Mezzanine Loan Agreement

 

 

(b)          If requested by Lender, Borrower and Leasehold Pledgor shall use
commercially reasonable efforts to and shall cause Guarantors to use
commercially reasonable efforts to assist Lender, at Lender’s expense, in
satisfying the market standards to which Lender customarily adheres or which may
be required by prospective investors, the Rating Agencies, applicable Legal
Requirements and/or otherwise in the marketplace in connection with any
Secondary Market Transactions, and shall in any event upon Lender’s request, at
Lender’s expense:

 

(i)          (A) provide updated financial and other customary information with
respect to the Properties, the business operated at the Properties, the
Collateral, Owner, Operating Lessee, Borrower, Leasehold Pledgor and each
Manager, including, without limitation, the information set forth on Exhibit A
attached hereto, (B) provide updated budgets and rent rolls (including itemized
percentage of floor area occupied and percentage of aggregate base rent for each
tenant) relating to the Properties, and (C) provide updated appraisals, market
studies, property condition reports and other due diligence investigations of
the Properties (the “Updated Information”), together, if customary, with
appropriate verification of the Updated Information through letters of auditors
or opinions of counsel acceptable to Lender and the Rating Agencies;

 

(ii)         cause counsel to provide legal opinions of counsel, which may be
relied upon by Lender, trustee in any Securitization, underwriters, NRSROs and
their respective counsel, agents and representatives, as to non-consolidation,
matters of Delaware and federal bankruptcy law relating to limited partners
and/or limited liability companies, any other matters covered in the opinions
delivered to Lender at Closing or as required by the Rating Agencies with
respect to the Properties, the Collateral, the Loan Documents, Owner, Operating
Lessee, Borrower and Leasehold Pledgor and their respective Affiliates, which
counsel and opinions shall be reasonably satisfactory to Lender and satisfactory
to the Rating Agencies; and

 

(iii)        execute amendments to the Loan Documents and Borrower’s and
Leasehold Pledgor’s organizational documents requested by Lender; provided,
however, that Borrower shall not be required to modify or amend any Loan
Document if such modification or amendment would (A) change the interest rate as
set forth herein on in the Note, (B) change the outstanding principal balance of
the Loan, (C) require Borrower to make or remake any representations or
warranties, (D) require principal amortization of the Loan (other than repayment
in full on the Maturity Date), (E) change any Stated Maturity Date or (F)
otherwise increase the obligations or reduce the rights of Borrower or any
Guarantor under the Loan Documents other than to a de minimis extent.

 

(c)          If, at the time a Disclosure Document is being prepared for a
Securitization, Lender expects that Borrower alone or Borrower and one or more
Affiliates of Borrower (including any guarantor or other Person that is directly
or indirectly committed by contract or otherwise to make payments on all or a
part of the Loan) collectively, or the Properties alone or the Properties and
Related Properties collectively, will be a Significant Obligor, Borrower shall,
at Lender’s expense, furnish to Lender upon reasonable request the following
financial information:

 

(i)          if Lender reasonably expects that the principal amount of the Loan
together with any Related Loans, as of the cut-off date for such Securitization,
may equal or exceed ten percent (10%) (but less than twenty percent (20%)) of
the aggregate principal amount of all loans included or expected to be included
in the Securitization, net operating income for the Properties and the Related
Properties for the most recent Fiscal Year and interim period as required under
Item 1112(b)(1) of Regulation AB (or, if the Loan is not treated as a
non-recourse loan under Instruction 3 for Item 1101(k) of Regulation AB,
selected financial data meeting the requirements and covering the time periods
specified in Item 301 of Regulation S-K and Item 1112(b)(1) of Regulation AB),
or

 

 -150-Mezzanine Loan Agreement

 

 

(ii)         if Lender reasonably expects that the principal amount of the Loan
together with any Related Loans, as of the cut-off date for such Securitization,
may equal or exceed twenty percent (20%) of the aggregate principal amount of
all loans included or expected to be included in the Securitization, the
financial statements in respect of each Individual Owner and its respective
Properties required under Item 1112(b)(2) of Regulation AB (which includes, but
may not be limited to, a balance sheet with respect to the entity that Lender
reasonably determines to be a Significant Obligor) for the two most recent
Fiscal Years and applicable interim periods, meeting the requirements of
Rule 3-01 of Regulation S-X, and statements of income and statements of cash
flows with respect to the Properties for the three most recent Fiscal Years and
applicable interim periods, meeting the requirements of Rule 3-02 of Regulation
S-X.

 

(d)          Further, if reasonably requested by Lender, Borrower shall,
promptly at Lender’s expense, furnish to Lender financial data or financial
statements meeting the requirements of Item 1112(b)(1) or (2) of Regulation AB,
as specified by Lender, for any tenant of any Individual Property (if available
and not subject to requirements of confidentiality under the terms of the
applicable Lease) if, in connection with a Securitization, Lender expects there
to be, as of the cutoff date for such Securitization, a concentration with
respect to such tenant or group of Affiliated tenants within all of the loans
included or expected to be included in the Securitization such that such tenant
or group of Affiliated tenants would constitute a Significant Obligor. Borrower
shall, at Lender’s expense, use commercially reasonable efforts to furnish to
Lender, in connection with the preparation of the Disclosure Documents and on an
ongoing basis, financial data and/or financial statements with respect to such
tenants meeting (if available and not subject to requirements of confidentiality
under the terms of the applicable Lease) the requirements of Item 1112(b)(1) or
(2) of Regulation AB, as specified by Lender, but only for so long as such
entity or entities are a Significant Obligor and either (x) filings pursuant to
the Exchange Act in connection with or relating to the Securitization (an
“Exchange Act Filing”) are required to be made under applicable Legal
Requirements or (y) comparable information is required to otherwise be
“available” to holders of the Securities under Regulation AB or applicable Legal
Requirements.

 

(e)          If Lender reasonably determines in good faith that Borrower alone
or Borrower and one or more Affiliates of Borrower collectively, or the
Properties alone or the Properties and Related Properties collectively, are a
Significant Obligor, then Borrower shall, at Lender’s expense, furnish to
Lender, on an ongoing basis, selected financial data or financial statements
meeting the requirements of Item 1112(b)(1) or (2) of Regulation AB, as
specified by Lender, but only for so long as such entity or entities are a
Significant Obligor and either (x) Exchange Act Filings are required to be made
under applicable Legal Requirements or (y) comparable information is required to
otherwise be “available” to holders of the Securities under Regulation AB or
applicable Legal Requirements.

 

 -151-Mezzanine Loan Agreement

 

 

(f)          Any financial data or financial statements provided pursuant to
this Section 9.1 shall be furnished at Lender’s expense to Lender within the
following time periods:

 

(i)          with respect to information requested in connection with the
preparation of Disclosure Documents for a Securitization, within ten (10)
Business Days after notice from Lender; and

 

(ii)         with respect to ongoing information required under Section 9.1(d)
and (e) above, (1) not later than thirty (30) days after the end of each fiscal
quarter of Borrower and (2) not later than seventy-five (75) days after the end
of each Fiscal Year of Borrower.

 

(g)          If reasonably requested by Lender, Borrower shall, at Lender’s
expense, provide Lender, promptly following Lender’s reasonable request
therefor, with any other or additional financial statements, or financial,
statistical or operating information, as Lender shall reasonably determine to be
required pursuant to Regulation S-K or Regulation S-X, as applicable, Regulation
AB, or any amendment, modification or replacement thereto or other Legal
Requirements identified by Lender and relating to a Securitization or as shall
otherwise be reasonably requested by Lender or, in the case of a private
securitization such statements or information as Lender shall reasonably
determine to be necessary to be included.

 

(h)          If requested by Lender, whether in connection with a Securitization
or at any time thereafter during which the Loan and any Related Loans are
included in a Securitization, Borrower shall provide Lender, promptly upon
request, a list of tenants (including all affiliates of such tenants) that in
the aggregate (1) occupy 10% or more (but less than 20%) of the total floor area
of the improvements or represent 10% or more (but less than 20%) of aggregate
base rent, and (2) occupy 20% or more of the total floor area of the
improvements or represent 20% or more of aggregate base rent.

 

(i)          All financial statements provided by Borrower or Leasehold Pledgor
pursuant to this Section 9.1(c), (d), (e) or (f) shall be prepared in accordance
with the Uniform System of Accounts and reconciled in accordance with GAAP (or
otherwise in accordance with an Acceptable Accounting Method) and shall meet the
applicable requirements of Regulation S-K or Regulation S-X, as applicable,
Regulation AB, and other applicable Legal Requirements. All financial statements
provided by Borrower pursuant to clause (c) or (d) relating to a Fiscal Year
shall be audited by Independent Accountants in accordance with GAAP, Regulation
S-X or Regulation S-K, as applicable, Regulation AB, and all other applicable
Legal Requirements, shall be accompanied by the manually executed report of the
Independent Accountants thereon, which report shall meet the requirements of
Regulation S-K or Regulation S-X, as applicable, Regulation AB, and all other
applicable Legal Requirements, and shall be further accompanied by a manually
executed written consent of the Independent Accountants, in form and substance
acceptable to Lender, to the inclusion of such financial statements in any
Disclosure Document and any Exchange Act Filing and to the use of the name of
such Independent Accountants and the reference to such Independent Accountants
as “experts” in any Disclosure Document and Exchange Act Filing (or comparable
information is required to otherwise be available to holders of the Securities
under Regulation AB or applicable Legal Requirements), all of which shall be
provided at the same time as the related financial statements are required to be
provided. All other financial statements of the Borrower shall be certified by
the chief financial officer of Borrower, which certification shall state that
such financial statements meet the requirements set forth in the first sentence
of this paragraph.

 

 -152-Mezzanine Loan Agreement

 

 

(j)           If reasonably requested by Lender, Borrower shall review any
information regarding the Properties, tenants, Borrower, Leasehold Pledgor,
Owner, Operating Lessee and Guarantors which is contained in any Disclosure
Document (including any interim drafts thereof and any amendments or supplements
thereto) in order to confirm that to its knowledge, no such Disclosure Document
contains any untrue statement of a material fact or omits any material fact
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, and to the extent any such
Disclosure Document contains any such material misstatements or omissions to
correct any such material misstatements or omissions within five (5) Business
Days following Borrower’s receipt thereof. Borrower shall not be liable
hereunder for any material misstatement or omission contained in the Disclosure
Document due to Lender’s failure to incorporate Borrower’s requested changes or
modifications.

 

(k)          For all purposes under this Agreement, if any Securities are
offered pursuant to a “private” Securitization pursuant to an exemption under
Rule 144A or Regulation D under the Securities Act, the provisions of Regulation
AB, Regulation S-K, Regulation S-X and any other disclosure provisions of the
Securities Act and/or Exchange Act, as applicable, shall be deemed to apply to
such “private” Securitization as if such offering of Securities were being
conducted pursuant to a registered public offering under the Securities Act.

 

(l)           Notwithstanding anything contained herein, Borrower shall have the
right, at its option, to hold or designate the holder of any non-call protected
interest only bonds (or their economic equivalent) for no consideration ($0.00)
in connection with any Securitization.

 

Section 9.2          Securitization Indemnification.

 

(a)          Borrower understands that information about the Borrower, Leasehold
Pledgor, Owner, Operating Lessee and the Properties, tenants, Managers and
Guarantors provided to Lender by Borrower or Leasehold Pledgor and their agents,
counsel and representatives may be included in preliminary and final disclosure
documents in connection with a Securitization, including an offering circular,
any free writing prospectus, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, a “Disclosure Document”)
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and may be
made available to investors or prospective investors in the Securities,
investment banking firms, NRSROs, accounting firms, law firms and other
third-party advisory and service providers relating to a Securitization.
Borrower also understands that the findings and conclusions of any third-party
due diligence report obtained by Lender, the Issuer or the Securitization
placement agent or underwriter may be made publicly available if required, and
in the manner prescribed, by Section 15E(s)(4)(A) of the Exchange Act and any
rules promulgated thereunder.

 

 -153-Mezzanine Loan Agreement

 

 

(b)          Borrower hereby agrees to indemnify Lender (and for purposes of
this Section 9.2, Lender shall include the initial lender, its successors and
assigns, and their respective officers and directors) and each Person who
controls the Lender within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, the “Lender Group”), the issuer of
the Securities (the “Issuer” and for purposes of this Section 9.2, Issuer shall
include its officers, director and each Person who controls the Issuer within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act), and any placement agent or underwriter with respect to the Securitization,
each of their respective officers and directors and each Person who controls the
placement agent or underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the “Underwriter
Group”) for any actual losses (i.e., non-consequential), claims, damages or
liabilities (collectively, the “Liabilities”) to which Lender, the Lender Group,
the Issuer or the Underwriter Group may become subject insofar as the
Liabilities arise out of, or are based upon, (A) any untrue statement or alleged
untrue statement of any material fact contained in the information about the
Borrower, Leasehold Pledgor, Owner, Operating Lessee,the Properties, the
Collateral, Guarantors, tenants and Managers provided to Lender by Borrower and
its agents, counsel and representatives (it being agreed that no Manager is an
agent or representative of Borrower for the purpose of this sentence), (B) the
omission or alleged omission to state therein a material fact required to be
stated in such information or necessary in order to make the statements in such
information, in light of the circumstances under which they were made, not
misleading, or (C) a breach of the representations and warranties made by
Borrower or Leasehold Pledgor in Section 3.1.31 of this Agreement (Full and
Accurate Disclosure). Borrower also agrees to reimburse Lender, the Lender
Group, the Issuer and/or the Underwriter Group for any legal or other expenses
reasonably incurred by Lender, the Lender Group, the Issuer and/or the
Underwriter Group in connection with investigating or defending the Liabilities.
Borrower’s liability under this paragraph will be limited to Liability that
arises out of, or is based upon, an untrue statement or omission made in
reliance upon, and in conformity with, information furnished to Lender by or on
behalf of Borrower, Leasehold Pledgor, Owner or Operating Lessee in connection
with the preparation of the Disclosure Document or in connection with the
underwriting or closing of the Loan, including financial statements of Borrower
and Leasehold Pledgor, operating statements and rent rolls with respect to the
Properties, provided Borrower is given the opportunity to review and ensure the
accuracy of any information in the Disclosure Document provided by or on behalf
of Borrower or Leasehold Pledgor or in connection with the preparation of the
Disclosure Document and provided, further, that Borrower shall not have any
liability hereunder as a result of any untrue statement or alleged untrue
statement or omission or alleged omission contained in the Disclosure Document
due to Lender’s failure to incorporate therein Borrower’s requested changes or
modifications (in each case excluding (x) any underwritten financial
information, (y) any information (including financial information or forecasted
information) contained in any third party report commissioned by Lender, such as
appraisals, property condition reports and environmental reports, and (z) any
projections or forecasts). This indemnification provision will be in addition to
any liability which Borrower may otherwise have. Borrower acknowledges and
agrees that any Person that is included in the Lender Group, the Issuer and/or
the Underwriter Group that is not a direct party to this Agreement shall be
deemed to be a third-party beneficiary to this Agreement with respect to this
Section 9.2(b). Within five (5) Business Days after Lender’s written request,
Borrower shall execute and deliver to Lender a separate indemnification and
reimbursement agreement in favor of the Lender Group, the Issuer and the
Underwriter Group in form and substance consistent with the indemnification and
reimbursement obligations of Borrower under this Section 9.2(b).

 

 -154-Mezzanine Loan Agreement

 

 

(c)          In connection with any Exchange Act Filing or other reports
containing comparable information that is required to be made “available” to
holders of the Securities under Regulation AB or applicable Legal Requirements,
Borrower agrees to (i) indemnify Lender, the Lender Group, the Issuer and the
Underwriter Group for Liabilities to which Lender, the Lender Group, the Issuer
and/or the Underwriter Group may become subject insofar as the Liabilities arise
out of, or are based upon, an alleged untrue statement or alleged omission or an
untrue statement or omission made in reliance upon, and in conformity with,
information furnished to Lender by or on behalf of Borrower or Leasehold Pledgor
in connection with the preparation of the Disclosure Document or in connection
with the underwriting or closing of the Loan, including financial statements of
Borrower and Leasehold Pledgor, operating statements and rent rolls with respect
to the Properties, provided Borrower is given the opportunity to review and
ensure the accuracy of any information in the Disclosure Document provided by or
on behalf of Borrower in connection with the preparation of the Disclosure
Document and (ii) reimburse Lender, the Lender Group, the Issuer and/or the
Underwriter Group for any out-of-pocket legal or other expenses reasonably
incurred by Lender, the Lender Group, the Issuer and/or the Underwriter Group in
connection with defending or investigating the Liabilities.

 

(d)          Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9.2, notify the indemnifying party in writing of the
commencement thereof, but the failure to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party under Sections 9.2(b) and 9.2(c) hereof
except to the extent that failure to notify causes prejudice to the indemnifying
party. If any action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled, jointly with any other indemnifying party, to participate therein
and, to the extent that it (or they) may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party pursuant to the immediately preceding sentence of this
Section 9.2(d), such indemnifying party shall pay for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, or the indemnifying party shall have
failed to designate within a reasonable period of time counsel reasonably
satisfactory to the indemnified party, the indemnified party or parties shall
have the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party at the cost of the indemnifying party. The indemnifying party
shall not be liable for the expenses of more than one separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party. Without the prior written consent of Lender
(which consent shall not be unreasonably withheld or delayed), no indemnifying
party shall settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action, suit or proceeding) unless
the indemnifying party shall have given Lender reasonable prior written notice
thereof and shall have obtained an unconditional release of each indemnified
party hereunder from all liability arising out of such claim, action, suit or
proceedings, and such settlement requires no statement as to, or an admission
of, fault, culpability or a failure to act, by or on behalf of the indemnified
party.

 

 -155-Mezzanine Loan Agreement

 

 

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

 

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

 

(g)          Borrower shall jointly and severally indemnify Lender and its
officers, directors, partners, employees, representatives, agents and Affiliates
against any Losses to which Lender or its officers, directors, partners,
employees, representatives, agents and Affiliates, may become subject in
connection with any indemnification to the Rating Agencies in connection with
issuing, monitoring or maintaining the Securities insofar as the Losses arise
out of or are based upon any untrue statement of any material fact in any
information provided by or on behalf of Borrower to the Rating Agencies (the
“Covered Rating Agency Information”) or arise out of or are based upon the
omission to state a material fact in the Covered Rating Agency Information
required to be stated therein or necessary in order to make the statements in
Covered Rating Agency Information, in light of the circumstances under which
they were made, not misleading.

 

 -156-Mezzanine Loan Agreement

 

 

Section 9.3          Severance.

 

9.3.1       Severance Documentation. Lender, without in any way limiting
Lender’s other rights hereunder, in its sole and absolute discretion, shall have
the right, at any time (whether prior to or after any sale, participation or
other Secondary Market Transaction with respect to all or any portion of the
Loan), to require Borrower or Leasehold Pledgor (at Lender’s expense) to execute
and deliver (i) “component” notes and/or modify the Loan in order to create one
or more senior and subordinate notes (i.e., an A/B or A/B/C structure) and/or
one or more additional components of the Note or Notes), or make any other
change to the Loan or the Note including but not limited to: reducing the number
of components of the Note or Notes, revising the interest rate for each
component, reallocating the principal balances of the Notes and/or the
components, increasing or decreasing the monthly debt service payments for each
component or eliminating the component structure and/or the multiple note
structure of the Loan (including the elimination of the related allocations of
principal and interest payments), and/or (ii) in conjunction with, and with the
corresponding agreement of, the Mortgage Lender and Lender, “resize” the Loan
and the Mortgage Loan to revise the interest rates for the Loan and the Mortgage
Loan, reallocate the principal balances of the Loan and the Mortgage Loan and/or
increasing or decreasing the monthly debt service payments for the Loan and the
Mortgage Loan (such resizing under this clause (ii), a “Resizing”), provided
that, subject to Section 9.3.2, (A) the Outstanding Principal Balance of the
Loan, or of all components of the Loan if it is componentized (together with, in
the case of a Resizing, the outstanding principal balance of the Mortgage Loan
subject to such Resizing) in the aggregate immediately after the effective date
of such modification equals the outstanding principal balance (when aggregated,
in the case of a Resizing, with the outstanding principal balance of the
Mortgage Loan subject to such Resizing) immediately prior to such modification,
(B) the initial weighted average of the interest rates for all components of the
Loan in the aggregate (when aggregated, in the case of a Resizing, with the
interest rates of the Mortgage Loan subject to such Resizing) immediately after
the effective date of such modification equals the interest rate of the original
Note (when aggregated, in the case of a Resizing, on a weighted average basis
with the interest rate of the Mortgage Loan subject to such Resizing)
immediately prior to such modification, except that the weighted average
interest rate may subsequently change as a result of (I) any voluntary
prepayment of the Mortgage Loan permitted by the terms of this Agreement, (II)
any prepayment during the continuance of an Event of Default or resulting from a
Casualty or Condemnation, and (III) any voluntary prepayment of any portion of
the Loan, (C) no principal amortization of the Loan (or any components thereof)
or the Mortgage Loan shall be required (other than repayment in full on the
Maturity Date), (D) there shall be no change to any Stated Maturity Date and (E)
Borrower, Leasehold Pledgor and Guarantors shall not be required to amend any
Loan Documents that would otherwise increase the obligations or reduce the
rights of Borrower, Leasehold Pledgor or any Guarantor under the Loan Documents
other than to a de minimis extent, and provided, further, that in all events the
aggregate principal balance of the Loan and the Mortgage Loan following a
Resizing may not exceed the aggregate principal balance of the Loan and the
Mortgage Loan immediately prior to the Resizing, and the initial weighted
average interest rate of the Loan and the Mortgage Loan, on a combined basis,
following a Resizing may not exceed the weighted average interest rate of the
Loan and the Mortgage Loan, on a combined basis, immediately before the
Resizing. At Lender’s election, each note comprising the Loan may be subject to
one or more Secondary Market Transactions. Lender shall have the right to modify
the Note and/or Notes in accordance with this Section 9.3 and, provided that
such modification shall comply with the terms of this Section 9.3, it shall
become immediately effective. The provisions of this Section 9.3 shall not be
applicable to any Approved Mezzanine Loan.

 

9.3.2       Intentionally Omitted.

 

9.3.3       Cooperation; Execution; Delivery. Borrower and Leasehold Pledgor
shall use reasonable efforts to cooperate (at Lender’s expense) with all
reasonable requests of Lender in connection with this Section 9.3. Subject to
Section 9.3.2, if reasonably requested by Lender, Borrower and Leasehold Pledgor
shall promptly execute and deliver such documents as shall be required by Lender
and any Rating Agency in connection with any modification pursuant to this
Section 9.3, all in form and substance reasonably satisfactory to Lender and
satisfactory to any applicable Rating Agency, including, the severance of
security documents if requested: (i) execution and delivery of a promissory note
and loan documents necessary to evidence such modification, (ii) execution and
delivery of such amendments to the Loan Documents as are necessary in connection
with such modification, (iii) delivery of opinions of legal counsel with respect
to due execution, authority and enforceability of any modification documents or
documents evidencing or securing the modification, as applicable and (iv) with
respect to the modification, delivery of an additional Insolvency Opinion for
the Loan and a substantive non-consolidation opinion; each as reasonably
acceptable to Lender, prospective investors and/or the Rating Agencies. In the
event Borrower and/or Leasehold Pledgor fails to execute and deliver such
documents to Lender within five (5) Business Days following such request by
Lender, Borrower and Leasehold Pledgor each hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in
its name and stead to make and execute all documents necessary or desirable to
effect such transactions, Borrower and Leasehold Pledgor each hereby ratifying
all that such attorney shall do by virtue thereof.

 

 -157-Mezzanine Loan Agreement

 

 

Section 9.4           Uncross of Properties. If pursuant to Section 9.3.4 of the
Mortgage Loan Agreement any Affected Property is uncrossed from the Mortgage
Loan with the consent of Mortgage Lender as required thereunder (a “Property
Uncross”), Borrower shall reasonably cooperate with Lender in connection with
any corresponding uncrossing or severing of a pro rata portion of the Loan
and/or such other modifications to the Loan as Lender may reasonably require in
connection with any Property Uncross. In no event shall Borrower be obligated in
connection with a Property Uncross to satisfy any requirement of the Rating
Agencies or enter into any amendment or modification of the Loan Documents which
would, in the aggregate, increase any monetary or other material obligation of
Borrower under the Loan Documents. Lender shall cause all reasonable costs and
expenses incurred by Borrower in connection with this Section 9.3.4 (including,
without limitation, any costs and expenses incurred by Borrower in connection
with the transfer of the portion of the Collateral to a Special Purpose
Bankruptcy Remote Entity and the maintenance and operation of such Special
Purpose Bankruptcy Remote Entity) and any costs incurred in connection with
necessary modifications to the Mortgage Loan or the Mezzanine B Loan and/or the
Owner and/or the Mezzanine B Borrower, but without duplication of any amounts
paid by Lender, Mortgage Lender and/or Mezzanine B Lender (pursuant to the
Mortgage Loan Documents and/or Mezzanine B Loan Documents) to be paid by Lender.

 

Section 9.5          Costs and Expenses. Notwithstanding anything to the
contrary contained in this Article 9, no Loan Party shall be required to incur
(and Lender shall be required to pay and/or reimburse) any out-of-pocket costs
or expenses in the performance of its obligations under Sections 9.1 or 9.2
(excluding Borrower’s legal fees and the indemnity obligations set forth
therein) or Section 9.3 above (excluding Borrower’s legal fees), including,
without limitation, any transfer taxes incurred as a result of any required
restructuring.

 

Section 9.6           Confidentiality. Borrower and Leasehold Pledgor each
agrees for itself and on behalf of Guarantors that except as expressly provided
below, any reports, statements or other information required to be delivered or
provided under this Agreement or any of the other Loan Documents and furnished
at any time and from time to time by Borrower, Leasehold Pledgor or Guarantors
and relating to any Guarantor (“Furnished Information”) may be included in any
Disclosure Document and may be forwarded by Lender to any actual or prospective
investor in the Loan or the Mortgage Loan, any actual or prospective assignee of
the Loan or the Mortgage Loan, or beneficial interests in the Loan or the
Mortgage Loan, including investors in Securities, any actual or prospective
participant in the Loan or the Mortgage Loan, any Rating Agency rating any
participations in the Loan and/or Securities, any NRSRO, any underwriter, any
organization maintaining databases on the underwriting and performance of
commercial mortgage loans, any of Lender’s Affiliates involved from time to time
in the transactions contemplated by this Agreement and/or in any Securitization
and/or in any assignment of all or any portion of the Loan or the Mortgage Loan,
any of Lender or such Affiliates’ respective employees, directors, agents,
attorneys, accountants, or other professional advisors, any servicers of the
Loan, and/or any Governmental Authorities, in all cases as Lender determines
necessary or desirable in its sole discretion.  Borrower and Leasehold Pledgor
each irrevocably waives any and all rights it may have under any applicable
Legal Requirements to prohibit such disclosure, including but not limited to any
right of privacy.

 

 -158-Mezzanine Loan Agreement

 

 

Section 9.7          Compliance with Required Loan Restructurings.
Notwithstanding anything to the contrary set forth in the Loan Documents (a)
Mezzanine B Borrower or Mezzanine B Leasehold Pledgor may comply in all respects
with any requirements to restructure the Mezzanine B Loan pursuant to Article 9
of the Mezzanine B Loan Agreement (or any other similar provision in the
Mezzanine B Loan Documents), and (b) no actions taken by Mezzanine B Borrower or
Mezzanine B Pledgor or any future mezzanine borrower in furtherance of the
foregoing, including without limitation, any transfers, pledges or amendments to
organizational documents, shall constitute a breach of any provisions of the
Loan Documents, or result in a Default or Event of Default hereunder; (c) Owner
and Operating Lessee may comply in all respects with any requirements to
restructure the Mortgage Loan pursuant to Article 9 of the Mortgage Loan
Agreement (or any other similar provision in the Mortgage Loan Documents), and
(d) no actions taken by Owner or Operating Lessee or any future mortgage
borrower in furtherance of the foregoing, including without limitation, any
transfers, pledges or amendments to organizational documents, shall constitute a
breach of any provisions of the Loan Documents, or result in a Default or Event
of Default hereunder.

 

Article 10

MISCELLANEOUS

 

Section 10.1        Exculpation. Subject to the qualifications below, Lender
shall not enforce the liability and obligation of Borrower or Leasehold Pledgor
to perform and observe the Obligations contained in the Note, this Agreement,
the Pledge Agreement or the other Loan Documents by any action or proceeding
wherein a money judgment shall be sought against Borrower, Leasehold Pledgor, or
against Owner, Operating Lessee, any SPC Party, any Guarantor, any Affiliates of
the foregoing or any of their respective direct or indirect principals,
directors, officers, employees, beneficiaries, shareholders, partners, members,
trustees or agents (each, exclusive of the Borrower and Leasehold Pledgor, an
“Other Exculpated Party”), except that (1) any Other Exculpated Party that is
party to any Loan Document or any other separate written guaranty, indemnity or
other agreement given by such Other Exculpated Party in connection with the Loan
(including, without limitation, the Subordination of Management Agreement or any
other Loan Document to which such Other Exculpated Party is a party) shall
remain fully liable therefor and the foregoing provisions shall not operate to
limit or impair the liabilities and obligations of such Other Exculpated Party
thereunder, and (2) Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Pledge Agreement and the other Loan Documents, or in all or any portion of
the Collateral or any other collateral given to Lender pursuant to the Loan
Documents; provided, however, that, except as specifically provided herein, any
judgment in any such action or proceeding shall be enforceable against Borrower
or Leasehold Pledgor only to the extent of Borrower’s and Leasehold Pledgor’s
interest in the Collateral and in any other collateral given to Lender, and
Lender, by accepting the Note, this Agreement, the Pledge Agreement and the
other Loan Documents, shall not sue for, seek or demand any deficiency judgment
against any of the Exculpated Parties in any such action or proceeding under or
by reason of or under or in connection with the Note, this Agreement, the Pledge
Agreement or the other Loan Documents. The provisions of this Section 10.1 shall
not, however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the right of
Lender to name Borrower or Leasehold Pledgor as a party defendant in any action
or suit for foreclosure and sale under the Pledge Agreement; (c) affect the
validity or enforceability of any of the Loan Documents or any guaranty made in
connection with the Loan or any of the rights and remedies of Lender thereunder;
(d) impair the right of Lender to obtain the appointment of a receiver; (e)
impair the enforcement of the Environmental Indemnity; (f) constitute a
prohibition against Lender to seek a deficiency judgment against Borrower or
Leasehold Pledgor in order to fully realize the security granted by the Pledge
Agreement or the other Security Documents or to commence any other appropriate
action or proceeding in order for Lender to exercise its remedies against all or
any portion of the Collateral; (g) waive or impair the liability of any Other
Exculpated Party under any Loan Document or any other separate written guaranty,
indemnity or other agreement to which such Other Exculpated Party is a party
(including, without limitation, the Subordination of Management Agreement or any
other Loan Document to which such Other Exculpated Party is a party); or (h)
constitute a waiver of the right of Lender to enforce the liability and
obligation of Borrower or Leasehold Pledgor, by money judgment or otherwise, to
the extent of any actual loss, damage, out-of-pocket cost or expense, liability,
claim or other obligation incurred by Lender (including reasonable outside
attorneys’ fees and costs reasonably incurred) arising out of or in connection
with the following (all such liability and obligation of Borrower or Leasehold
Pledgor for any or all of the following being referred to herein as “Borrower’s
Recourse Liabilities”):

 

 -159-Mezzanine Loan Agreement

 

 

(i)          fraud or intentional material misrepresentation committed by
Borrower, Leasehold Pledgor, any Guarantor, any Individual Owner, any Operating
Lessee or any Affiliate of Borrower, any Individual Owner, any Operating Lessee
or any Guarantor in connection with the Loan;

 

(ii)         Borrower or Leasehold Pledgor incurs any Indebtedness in violation
of the Loan Documents not otherwise set forth in clause (i) in the definition of
“Springing Recourse Event” below (unless such debt was permitted when incurred
but was not repaid due to the Property’s failure to generate sufficient cash
flow or the failure of Lender to release funds from the Accounts);

 

(iii)        Borrower or Leasehold Pledgor fails to obtain Lender’s prior
consent to (a) any Transfer of any Individual Property or (b) any Transfer of a
direct or indirect interest in Borrower, in each case not otherwise set forth in
clause (ii) in the definition of “Springing Recourse Event” below;

 

(iv)        removal of personal property from the Properties during an Event of
Default by Borrower or Leasehold Pledgor or on behalf of Borrower, Leasehold
Pledgor, any Individual Owner or any Operating Lessee by any Guarantor or any
Affiliate of Borrower, Leasehold Pledgor, any Individual Owner, any Operating
Lessee or any Guarantor, unless replaced with personal property of substantially
the same or greater utility and of the same or greater value;

 

(v)         any intentional material physical Waste at any Individual Property
committed by Borrower or Leasehold Pledgor or on behalf of Borrower, Leasehold
Pledgor, any Individual Owner or any Operating Lessee by any Guarantor or any
Affiliate of Borrower, Leasehold Pledgor, any Individual Owner, any Operating
Lessee or any Guarantor;

 

 -160-Mezzanine Loan Agreement

 

 

(vi)        the material misappropriation by Borrower or Leasehold Pledgor or on
behalf of Borrower, Leasehold Pledgor, any Individual Owner or any Operating
Lessee by any Guarantor or any Affiliate of Borrower, Leasehold Pledgor, any
Individual Owner, any Operating Lessee or any Guarantor of (A) any Insurance
Proceeds paid by reason of any Casualty to any Individual Property, (B) any
Awards in connection with the Condemnation of any Individual Property and (C)
any Gross Revenues after (or that results in) a Trigger Period or an Event of
Default, in each case, in violation of the Loan Documents;

 

(vii)       any defaults under the Franchise Agreement for failure to complete
any PIP, which results in the termination or cancellation of the applicable
Franchise Agreement or any other termination or cancellation of a Franchise
Agreement; provided, there shall not be Borrower’s Recourse Liability if
Borrower or Leasehold Pledgor delivers (or causes Owner or Operating Lessee to
deliver) a replacement Franchise Agreement in compliance with the
Section 4.34(d) within 90 days of such termination or cancellation or if the
Allocated Loan Amount for the Individual Property subject to such terminated
Franchise Agreement together with the Allocated Loan Amount for all other
Individual Properties that have had their Franchise Agreements terminated
accounts for less than five percent (5%) of the aggregate Allocated Loan Amounts
of all of the Properties; provided that with respect to the Red Zone Properties
any default under the Franchise Agreement with respect to such Red Zone Property
shall result in Borrower’s Recourse Liability notwithstanding that less than
five percent (5%) of the aggregate Allocated Loan Amount have been terminated
until such time as such Red Zone Property ceases to be classified as a “Red” or
“Progress” property by the applicable Franchisor;

 

(viii)      any breach of any provision of Section 4.4 or Schedule V of this
Agreement (other than with respect to clause (d) of Schedule V (with respect to
trade payables only), clause (f) of Schedule V, clause (j) of Schedule V,
clause (o) of Schedule V (with respect to trade payables only), clause (v) of
Schedule V and clause (w) of Schedule V) other than a Springing Recourse Event
described in clause (b)(viii) below;

 

(ix)         any and all Divested Property Liabilities; and/or

 

(x)          the modification, surrender or termination of any Ground Lease if
such modification or termination is prohibited under this Agreement or under any
Mortgage.

 

 -161-Mezzanine Loan Agreement

 

 

Notwithstanding anything to the contrary in this Agreement or any of the other
Loan Documents, (A) Lender shall not be deemed to have waived any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the Bankruptcy Code to file a claim for the full amount of the Obligations or to
require that all collateral shall continue to secure all of the Obligations
owing to Lender in accordance with the Loan Documents, and (B) the Obligations
shall be fully recourse to Borrower (and guaranteed by any Guarantor pursuant to
the Guaranty) in the event that any of the following occur (each, a “Springing
Recourse Event”): (i) Borrower, Leasehold Pledgor, Owner or Operating Lessee
fails to obtain Lender’s prior consent to any financing for borrowed money
secured by the Collateral or any Individual Property, or any voluntary
conveyance of a mortgage, deed of trust, security deed, security agreement or
similar grant by Borrower, Leasehold Pledgor, Owner or Operating Lessee of a
voluntary Lien upon any Individual Property or the Collateral, or Borrower,
Leasehold Pledgor, Owner or Operating Lessee fails to obtain Lender’s prior
consent to any voluntary granting of a security interest in, voluntary pledge of
or other voluntary Lien upon any direct or indirect equity interest in any
Individual Owner, any Operating Lessee, any SPC Party or Mezzanine B Borrower,
in each case, as security for any obligations or liabilities that is not
permitted under the Loan Documents (excluding, for the avoidance of doubt, the
security interests, pledges or Liens granted under the Mortgage Loan Documents
securing the Mortgage Loan, the Mezzanine B Loan Documents securing the
Mezzanine B Loan or the Loan Documents securing the Loan), in each case under
this clause (i) that is not permitted under the Loan Documents or otherwise
cured; (ii) Borrower, Leasehold Pledgor, Owner or any SPC Party fails to obtain
Lender’s prior consent to (a) any voluntary transfer of fee (or ground
leasehold) title to any Individual Property or the Collateral that is not
permitted under the Loan Documents or otherwise cured or (b) any voluntary
transfer of a direct or indirect interest in Borrower, Leasehold Pledgor, Owner
or Operating Lessee that results in a change of control of Borrower, Leasehold
Pledgor, Owner or Operating Lessee that is not permitted under the Loan
Documents; (iii) Borrower, Leasehold Pledgor, any Individual Owner, any
Operating Lessee and/or any SPC Party, files a voluntary petition under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,;
(iv) the filing of an involuntary petition against Borrower, Leasehold Pledgor,
any Individual Owner, any Operating Lessee and/or any SPC Party under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by
any other Person in which Borrower, Leasehold Pledgor, any Individual Owner, any
Operating Lessee and/or SPC Party colludes with or otherwise assists such
Person, and/or Borrower, Leasehold Pledgor, any Individual Owner, any Operating
Lessee and/or any SPC Party solicits or causes to be solicited petitioning
creditors for any involuntary petition against Borrower, Leasehold Pledgor, any
Individual Owner, any Operating Lessee and/or any SPC Party by any Person; (v)
Borrower, Leasehold Pledgor, any Individual Owner, any Operating Lessee and/or
any SPC Party fails to oppose any involuntary petition filed against it by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law (unless there is no good faith defense to such involuntary
petition); (vi) Borrower, Leasehold Pledgor, any Individual Owner or any
Operating Lessee or any Affiliate, officer, director or representative which
controls Borrower, Leasehold Pledgor, such Individual Owner or such Operating
Lessee, as the case may be, consents to, or joins in, an application for the
appointment of a custodian, receiver, trustee or examiner for Borrower,
Leasehold Pledgor, such Individual Owner, such Operating Lessee and/or any
portion of any Individual Property or the Collateral, as the case may be; (vii)
Borrower, Leasehold Pledgor, any Individual Owner, any Operating Lessee and/or
any SPC Party makes an assignment for the benefit of creditors or admits, in any
legal proceeding, its insolvency or inability to pay its debts as they become
due (in each case except to the extent required by applicable law); (viii)
Borrower or Leasehold Pledgor fails to comply with the provisions of Section 4.4
or Schedule V of this Agreement (other than those relating to solvency or
adequacy of capital or adequacy of cash flow), and such failure results in an
order of substantive consolidation of Borrower or Leasehold Pledgor or one (1)
or more of the Individual Owners or Operating Lessee with any other Person
(other than another Individual Owner, Operating Lessee or the Liquor Subsidiary)
in a bankruptcy or similar proceeding under the Bankruptcy Code or any other
federal or state bankruptcy or insolvency law; (ix) such third party's claim of
ownership of, or a Lien upon, the Pledged Securities is fully and finally
disposed of in favor of such third party, whether such disposition shall occur
prior to or after a foreclosure on the Collateral by Lender, or (ix) in the
event that the leasehold estate created by the Ground Lease with respect to the
Dallas Courtyard Property shall be surrendered by or on behalf of Owner of such
Ground Lease shall be terminated or cancelled or otherwise rendered ineffective,
in either case, as a result of the applicable Individual Owner’s rejection of
such Ground Lease in a bankruptcy proceeding; provided that liability pursuant
to this clause (ix) shall not exceed the Allocated Loan Amount for the Dallas
Courtyard Property.

 

 -162-Mezzanine Loan Agreement

 

 

Section 10.2        Survival; Successors and Assigns. This Agreement and all
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by Lender of the
Loan and the execution and delivery to Lender of the Note, and shall continue in
full force and effect so long as all or any of the Obligations are outstanding
and unpaid unless a longer period is expressly set forth herein or in the other
Loan Documents. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the legal representatives,
successors and assigns of such party. All covenants, promises and agreements in
this Agreement, by or on behalf of Borrower, shall inure to the benefit of the
legal representatives, successors and assigns of Lender.

 

Section 10.3        Lender’s Discretion; Rating Agency Review Waiver.

 

(a)          Whenever pursuant to this Agreement Lender exercises any right
given to it to approve or disapprove any matter, or any arrangement or term is
to be satisfactory to Lender, the decision of Lender to approve or disapprove
such matter or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole discretion of Lender and shall be final and conclusive. Prior to a
Securitization, whenever pursuant to this Agreement the Rating Agencies are
given any right to approve or disapprove any matter, or any arrangement or term
is to be satisfactory to the Rating Agencies, the reasonable decision of Lender
to approve or disapprove such matter or to decide whether arrangements or terms
are satisfactory or not satisfactory, based upon Lender’s determination of
Rating Agency criteria, shall be substituted therefor except as otherwise
specifically herein provided.

 

(b)          Whenever, pursuant to this Agreement or any other Loan Documents, a
Rating Agency Confirmation is required from each applicable Rating Agency, in
the event that any applicable Rating Agency “declines review”, “waives review”
or otherwise indicates in writing or otherwise to Lender’s or Servicer’s
satisfaction that no Rating Agency Confirmation will or needs to be issued with
respect to the matter in question (each, a “Review Waiver”), then the Rating
Agency Confirmation requirement shall be deemed to be satisfied with respect to
such matter. It is expressly agreed and understood, however, that receipt of a
Review Waiver (i) from any one Rating Agency shall not be binding or apply with
respect to any other Rating Agency and (ii) with respect to one matter shall not
apply or be deemed to apply to any subsequent matter for which Rating Agency
Confirmation is required.

 

 -163-Mezzanine Loan Agreement

 

 

Section 10.4        Governing Law.

 

(a)          THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY
LENDER AND ACCEPTED BY BORROWER AND LEASEHOLD PLEDGOR IN THE STATE OF NEW YORK,
AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE
STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP
TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL
RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER AND LENDER EACH HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM
TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE
NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.

 

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER OR LEASEHOLD
PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER’S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND
BORROWER AND LEASEHOLD PLEDGOR EACH WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING DOES HEREBY
DESIGNATE AND APPOINT:

 

Corporation Service company
1180 Avenue of the Americas
suite 210
new york, new york 10036-8401

 

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND BORROWER AND LEASEHOLD
PLEDGOR EACH AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER
PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON BORROWER OR LEASEHOLD PLEDGOR IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE
STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGE
IN THE ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM
TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK,
NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON
AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A
SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW
YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

 -164-Mezzanine Loan Agreement

 

 

Section 10.5        Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by Borrower or
Leasehold Pledgor therefrom, shall in any event be effective unless the same
shall be in a writing signed by the party or parties against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on Borrower or Leasehold Pledgor, shall
entitle Borrower or Leasehold Pledgor to any other or future notice or demand in
the same, similar or other circumstances. 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 any other Loan Document, 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 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 or the
other Loan Documents, or to declare a default for failure to effect prompt
payment of any such other amount. Lender shall have the right to waive or reduce
any time periods that Lender is entitled to under the Loan Documents in its sole
and absolute discretion.

 

Section 10.6        Notices. All notices, demands, requests, consents, approvals
or other communications (any of the foregoing, a “Notice”) required, permitted
or desired to be given hereunder shall be in writing and shall be sent by
facsimile (with answer back acknowledged) or by registered or certified mail,
postage prepaid, return receipt requested, or delivered by hand or by reputable
overnight courier, addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party may hereafter,
from time to time, specify in accordance with the provisions of this
Section 10.6. Any Notice shall be deemed to have been received: (a) three (3)
days after the date such Notice is mailed, (b) on the date of sending by
facsimile if sent during business hours on a Business Day (otherwise on the next
Business Day), (c) on the date of delivery by hand if delivered during business
hours on a Business Day (otherwise on the next Business Day), and (d) on the
next Business Day if sent by an overnight commercial courier, in each case
addressed to the parties as follows:

 

If to Lender: Morgan Stanley Mortgage Capital Holdings LLC.   1585 Broadway,
25th Floor   New York, New York 10036   Attention:  George Kok     with a copy
to: Cadwalader, Wickersham & Taft LLP   227 West Trade Street, Suite 2400  
Charlotte, North Carolina 28202   Attention: Holly M. Chamberlain, Esq.  
Facsimile No. (704) 348-5200

 

 -165-Mezzanine Loan Agreement

 

 

and to: Citigroup Global Markets Realty Corp.   388 Greenwich Street   6th Floor
  New York, New York 10013   Attention:  Ana Rosu Marmann   Facsimile
No.:  (646) 328-2938       Deutsche Bank AG, New York Branch   60 Wall Street,
10th Floor   New York, NY  10005   Attention:  General Counsel   Facsimile No.
(646) 736-5721     and to: Deutsche Bank AG, New York Branch   60 Wall Street,
10th Floor   New York, NY  10005   Attention:  Robert W. Pettinato, Jr.  
Facsimile No. (212) 797-4489     and to: Goldman Sachs Mortgage Company   200
West Street   New York, New York 10282   Attention:  J. Theodore Borter and
Miriam Wheeler     and to: Goldman Sachs Mortgage Company   200 West Street  
New York, New York 10282   Attention:  General Counsel   Facsimile No.:  (212)
291-5318     and to: JPMorgan Chase Bank, National Association   383 Madison
Avenue   New York, New York 10179   Attention:  Thomas N. Cassino   Facsimile
No.:  (212) 834-6029     with a copy to: JPMorgan Chase Bank, National
Association   SPG Middle Office/CIB   4 Chase Metrotech Center, 4th Floor  
Brooklyn, New York 11245-0001   Attention:  Nancy S. Alto   Facsimile
No.:  (917) 546-2564     If to Borrower: c/o Hospitality Investors Trust, Inc.  
3950 University Drive   Fairfax, Virginia   Attention:  General Counsel

 

 -166-Mezzanine Loan Agreement

 

 

with a copy to: Cleary Gottlieb Steen & Hamilton LLP   One Liberty Plaza   New
York, New York 10006   Attention:  Michael Weinberger, Esq.   Facsimile
No. (212) 225-3999

 

Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days written notice of such change to the other parties in
accordance with the provisions of this Section 10.6. Notices shall be deemed to
have been given on the date as set forth above, even if there is an inability to
actually deliver any such Notice because of a changed address of which no Notice
was given, or there is a rejection or refusal to accept any Notice offered for
delivery. Notice for any party may be given by its respective counsel.
Additionally, Notice from Lender may also be given by Servicer and Lender hereby
acknowledges and agrees that Borrower shall be entitled to rely on any Notice
given by Servicer as if it had been sent by Lender.

 

Section 10.7       Waiver of Trial by Jury. BORROWER, LEASEHOLD PLEDGOR AND
LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS OR
ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER,
LEASEHOLD PLEDGOR AND LENDER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

 

Section 10.8       Headings, Schedules and Exhibits. The Article and/or Section
headings and the Table of Contents in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. The Schedules and Exhibits annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.

 

Section 10.9       Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

 

Section 10.10      Preferences. Lender shall have the continuing and exclusive
right to apply or reverse and reapply any and all payments by Borrower or
Leasehold Pledgor to any portion of the Obligations of Borrower hereunder. To
the extent Borrower or Leasehold Pledgor makes a payment or payments to Lender,
which payment or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.

 

 -167-Mezzanine Loan Agreement

 

 

Section 10.11     Waiver of Notice. Neither Borrower nor Leasehold Pledgor shall
be entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents
specifically and expressly provide for the giving of notice by Lender to
Borrower or Leasehold Pledgor and except with respect to matters for which
Borrower and Leasehold Pledgor are not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Borrower and Leasehold
Pledgor hereby expressly waives the right to receive any notice from Lender with
respect to any matter for which this Agreement or the other Loan Documents do
not specifically and expressly provide for the giving of notice by Lender to
Borrower.

 

Section 10.12     Deemed Distributions Borrower represents that any transfer by
Mortgage Lender of Owner’s funds (whether pursuant to Section 2.4.4,
Section 6.11 or otherwise under the Mortgage Loan Agreement) to Lender pursuant
to the Mortgage Loan Agreement or any other Mortgage Loan Document is intended
by Borrower to constitute, and Borrower represents that such transfers shall
constitute, distributions from Owner to Borrower and shall be treated as such on
the books and records of Borrower and Owner. Borrower agrees that all such
distributions shall comply with the requirements of Section 18-607 of the
Delaware Limited Liability Company Act. Borrower agrees that no provision herein
or in any other Loan Document is intended by Borrower to, nor shall any such
provision be construed to create, a debtor-creditor relationship between Owner
and Borrower.

 

Section 10.13     Offsets, Counterclaims and Defenses. Any assignee of Lender’s
interest in and to this Agreement and the other Loan Documents shall take the
same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower or Leasehold Pledgor may otherwise
have against any assignor of such documents, and no such unrelated counterclaim
(other than a counterclaim which can only be asserted in the suit, action or
proceeding by such assignee on this Agreement, the Note, the Pledge Agreement
and any Loan Document and cannot be maintained in a separate action) or defense
shall be interposed or asserted by Borrower in any action or proceeding brought
by any such assignee upon such documents and any such right to interpose or
assert any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Borrower and Leasehold Pledgor.

 

Section 10.14      No Joint Venture or Partnership; No Third Party
Beneficiaries.

 

(a)          Borrower, Leasehold Pledgor and Lender intend that the
relationships created hereunder and under the other Loan Documents be solely
that of borrower and lender. Nothing herein or therein is intended to create a
joint venture, partnership, tenancy-in-common or joint tenancy relationship
among Borrower, Leasehold Pledgor and Lender nor to grant Lender any interest in
the Collateral other than that of lender.

 

(b)          The Loan Documents are solely for the benefit of Lender, Leasehold
Pledgor and Borrower (and the Lender Group, the Issuer and the Underwriter Group
with respect to Section 9.2(b)) and nothing contained in any Loan Document shall
be deemed to confer upon anyone other than Lender, Leasehold Pledgor and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained therein.

 

 -168-Mezzanine Loan Agreement

 

 

Section 10.15    Publicity. All news releases, publicity or advertising by
Borrower, Leasehold Pledgor or their respective Affiliates through any media
intended to reach the general public which refers to the Loan Documents or the
financing evidenced by the Loan Documents, to Lender, the Affiliate of Lender
that acts as the issuer with respect to a Securitization or any of their other
Affiliates shall be subject to the prior written approval of Lender.

 

Section 10.16     Waiver of Marshalling of Assets. To the fullest extent
permitted by law, Borrower, for itself and its successors and assigns, waives
all rights to a marshalling of the assets of Borrower, Borrower’s members or
partners, as applicable, and others with interests in Borrower, and of the
Collateral, and shall not assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Collateral for the collection of the Obligations
without any prior or different resort for collection, or of the right of Lender
to the payment of the Obligations out of the net proceeds of the Collateral in
preference to every other claimant whatsoever.

 

Section 10.17    Certain Waivers. Borrower and Leasehold Pledgor each hereby
waives the right to assert a counterclaim, other than a compulsory counterclaim,
in any action or proceeding brought against it by Lender or its agents or
otherwise to offset any obligations to make the payments required by the Loan
Documents. No failure by Lender to perform any of its obligations hereunder
shall be a valid defense to, or result in any offset against, any payments which
Borrower is obligated to make under any of the Loan Documents. Without limiting
any of the other provisions contained herein, Borrower hereby unconditionally
and irrevocably waives, to the maximum extent not prohibited by applicable law,
any rights it may have to claim or recover against Lender in any legal action or
proceeding any special, exemplary, punitive or consequential damages.

 

Section 10.18     Conflict; Construction of Documents; Reliance. In the event of
any conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by competent counsel in connection with
the negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan, without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
affiliate of Lender. Lender shall not be subject to any limitation whatsoever in
the exercise of any rights or remedies available to it under any of the Loan
Documents or any other agreements or instruments which govern the Loan by virtue
of the ownership by it or any parent, subsidiary or affiliate of Lender of any
equity interest any of them may acquire in Borrower, and Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Lender’s exercise of any such rights or
remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.

 

 -169-Mezzanine Loan Agreement

 

 

Section 10.19     Brokers and Financial Advisors. Borrower hereby represents
that it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the transactions contemplated by
this Agreement. Borrower shall indemnify, defend and hold Lender harmless from
and against any and all claims, liabilities, losses, costs and expenses of any
kind (including Lender’s reasonable attorneys’ fees and expenses) in any way
relating to or arising out of a claim by any Person that such Person acted on
behalf of Borrower or Lender in connection with the transactions contemplated
herein. The provisions of this Section 10.19 shall survive the expiration and
termination of this Agreement and the payment of the Obligations.

 

Section 10.20     Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto and their
respective affiliates in respect of the transactions contemplated hereby and
thereby, and all prior agreements among or between such parties, including any
confidentiality agreements or any similar agreements between or among any such
parties, whether oral or written, are superseded by the terms of this Agreement
and the other Loan Documents.

 

Section 10.21      Servicer.

 

(a)          At the option of Lender, the Loan may be serviced by a master
servicer, primary servicer, special servicer and/or trustee (any such master
servicer, primary servicer, special servicer and trustee, together with its
agents, nominees or designees, are collectively referred to as the “Servicer”)
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between
Lender and Servicer. Borrower shall not be responsible for any set-up fees or
any other initial costs relating to or arising under the Servicing Agreement.
Borrower shall not be responsible for payment of the annual master servicing fee
due to the Servicer under the Servicing Agreement.

 

(b)          Notwithstanding the foregoing, following a Securitization, Borrower
shall reimburse Lender on demand for (a) all actual out-of-pocket reasonable
costs and expenses, liquidation fees, workout fees or special servicing fees as
a result of an Event of Default under the Loan Documents or the Loan becoming
specially serviced, or any enforcement, refinancing or restructuring of the
credit arrangements provided for under the Loan Documents in the nature of a
“work-out” of the Loan Documents or any insolvency or bankruptcy of Borrower, in
each case without duplication, to the extent default interest paid by Borrower
under the Loan Documents is insufficient to pay the same (after payment of
interest payable on advances made by the Servicer) (provided that in any event
annual special servicing fees shall not exceed 0.1875% of the then Outstanding
Principal Balance amount per annum, workout fees shall not exceed 0.375% of each
collection of interest and principal collections of the Loan, and liquidation
fees shall not exceed the amount, if any, by which 0.375% of liquidation
proceeds exceeds the amount previously paid in respect of workout fees) and (b)
during the continuance of an Event of Default or at any time the Loan is
specially serviced, the reasonable costs of all customary property inspections
and/or appraisals of the Properties (or updates to any existing inspection or
appraisal) that Servicer may be required to obtain pursuant to the applicable
trust and servicing or pooling and servicing agreement (other than the cost of
regular annual inspections required to be borne by Servicer under such servicing
agreement). Additionally, Borrower shall pay all reasonable out-of-pocket costs
and expenses (but not any additional servicing fee) in connection with any
consent requests made by Borrower during the term of the Loan. For avoidance of
doubt, no modification fee or other amount (other than Lender’s reasonable
out-of-pocket costs) shall be payable in connection with (i) any transaction for
which a workout fee is paid, or (ii) any assumption of the Loan, except as
expressly provided in Section 7.1. To the extent late charges and default
interest under the Loan Documents paid by Borrower are insufficient to pay the
same (and all actual out-of-pocket reasonable costs and expenses, liquidation
fees, workout fees or special servicing fees as a result of an Event of Default
under the Loan Documents or the Loan becoming specially serviced, or any
enforcement, refinancing or restructuring of the credit arrangements provided
for under the Loan Documents in the nature of a “work-out” of the Loan Documents
or any insolvency or bankruptcy of Borrower, subject to the caps specified
herein), Borrower shall pay the interest payable on advances made by Servicer or
the trustee with respect to any delinquent debt service payments and any
protective advances.

 

 -170-Mezzanine Loan Agreement

 

 

Section 10.22      Intentionally Omitted.

 

Section 10.23      [Reserved].

 

Section 10.24     Creation of Security Interest. Notwithstanding any other
provision set forth in this Agreement, the Note, the Pledge Agreement or any of
the other Loan Documents, Lender may at any time create a security interest in
all or any portion of its rights under this Agreement, the Note, the Pledge
Agreement and any other Loan Document (including the advances owing to it) in
favor of any Federal Reserve Bank, any Federal Home Loan Bank or the central
reserve bank or similar authority of any other country to secure any obligation
of Lender to such bank or similar authority (a “Central Bank Pledge”). In the
event that the interest of Lender that is assigned in connection with a Central
Bank Pledge is foreclosed upon and transferred to the pledge thereof, Lender
shall have no further liability hereunder with respect to the interest that was
the subject of such transfer and the assignee shall be Lender with respect to
such interest. Lender shall not be required to notify Borrower of any Central
Bank Pledge.

 

Section 10.25     Assignments and Participations. In addition to any other
rights of Lender hereunder, the Loan, the Note, the Loan Documents and/or
Lender’s rights, title, obligations and interests therein may be sold, assigned,
participated or otherwise transferred by Lender and any of its successors and
assigns to any Person at any time in its sole and absolute discretion, in whole
or in part, whether by operation of law (pursuant to a merger or other successor
in interest) or otherwise without notice to or consent from Borrower or any
other Person. Upon such assignment, all references to Lender in this Agreement
and in any Loan Document (or to an individual assigning co-lender in the event
an individual co-lender make such assignment rather than an assignment in whole
by Lender) shall be deemed to refer to such assignee or successor in interest
and such assignee or successor in interest shall thereafter stand in the place
of Lender (or in the case of an individual assigning co-lender in the event an
individual co-lender make such assignment rather than an assignment in whole by
Lender, such assignee of or successor in interest to such co-lender) in all
respects. Except as expressly permitted herein, neither Borrower nor Leasehold
Pledgor may assign its rights, title, interests or obligations under this
Agreement or under any of the Loan Documents. In the event that the Loan is
syndicated to five (5) or more co-lenders, then such co-lenders shall appoint an
administrative agent or lead lender to act on behalf of such co-lenders and to
serve as Borrower’s single point of contact with respect to the Loan Documents.

 

Section 10.26     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.

 

 -171-Mezzanine Loan Agreement

 

 

Section 10.27         Set-Off. In addition to any rights and remedies of Lender
provided by this Agreement and by law, Lender shall have the right in its sole
discretion, without prior notice to Borrower, any such notice being expressly
waived by Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by Borrower hereunder (whether at the stated maturity,
by acceleration or otherwise), to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by Lender or any Affiliate
thereof to or for the credit or the account of Borrower; provided however,
Lender may only exercise such right during the continuance of an Event of
Default. Lender agrees promptly to notify Borrower after any such set-off and
application made by Lender; provided that the failure to give such notice shall
not affect the validity of such set-off and application.

 

Section 10.28      [Reserved].

 

Section 10.29      Intercreditor Agreement. Lender, Mezzanine B Lender and
Mortgage Lender are or will be parties to a certain intercreditor agreement (the
“Intercreditor Agreement”) memorializing their relative rights and obligations
with respect to the Loan, the Mezzanine B Loan, the Mortgage Loan, Borrower,
Leasehold Pledgor, Mezzanine B Borrower, Mezzanine B Leasehold Pledgor, Owner,
Operating Lessee, the Properties, and the Collateral. Borrower hereby
acknowledges and agrees that (i) such Intercreditor Agreement is intended solely
for the benefit of Lender, Mezzanine B Lender and Mortgage Lender and (ii) none
of Borrower, Leasehold Pledgor, Mezzanine B Borrower, Mezzanine B Leasehold
Pledgor, Operating Lessee or Owner are intended third-party beneficiaries of any
of the provisions therein and shall not be entitled to rely on any of the
provisions contained therein. Lender, Mezzanine B Lender and Mortgage Lender
shall have no obligation to disclose to Borrower the contents of the
Intercreditor Agreement. Borrower’s obligations hereunder are independent of
such Intercreditor Agreement and remain unmodified by the terms and provisions
thereof.

 

Section 10.30      Note Register; Participant Register.

 

(a)          Servicer, as non-fiduciary agent of Borrower, or if there is no
Servicer, the administrative agent or lead lender, as non-fiduciary agent of
Borrower, or if there is no administrative agent or lead lender, Borrower (or in
the case of assignments to participants, the applicable Lender pursuant to
paragraph (b) below), shall maintain a record within the meaning of U.S.
Treasury Regulation 5f.103-1(c) that identifies each owner (including
successors, assignees and participants) of an interest in the Loan, including
the name and address of the owner, and each owner’s rights to principal and
stated interest (the “Register”) and shall record all transfers of an interest
in the Loan, including each assignment and participation, in the Register.  The
entries in the Register shall be conclusive, absent manifest error, and
Borrower, Lender and Servicer may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement.  The parties intend for the Loan to be in registered form for
tax purposes and to the extent of any conflict with this Section 10.30, this
Section 10.30 shall be construed in accordance with that intent. The Register
shall be available for inspection by Borrower and any Lender at any reasonable
time and from time to time upon reasonable prior notice. Failure to make any
such recordation, or any error in such recordation, however, shall not affect
Borrower’s obligations in respect of the Loan. Borrower acknowledges that the
Notes are in registered form and may not be transferred except by register.

 

 -172-Mezzanine Loan Agreement

 

 

(b)          Each Lender that sells a participation hereunder shall, acting
solely for this purpose as an agent of Borrower, maintain a register on which it
enters the name and address of each participant and the principal amounts (and
stated interest) of each participant’s interest  in  the  Loan  or  other
 obligations  under  the  Loan  Documents  (the  “Participant Register”);
provided, however, that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
participant or any information relating to a participant’s interest in any
obligations under any Loan Document) to any Person except to the extent that
such disclosure is necessary to establish that such obligation is in registered
form under U.S. Treasury Regulation 5f.103-1(c).  The entries in the Participant
Register shall be conclusive absent manifest error, and such Lender shall treat
each Person whose name is recorded in the Participant Register as the owner of
such participation for all purposes of this Agreement notwithstanding any notice
to the contrary. For the avoidance of doubt, Servicer shall have no
responsibility for maintaining a Participant Register.

 

Section 10.31     Borrower Affiliate Lender. Lender agrees that the Lender
Documents shall not prohibit or restrict Affiliates of Borrower from purchasing
or otherwise acquiring and owning (a) beneficial interests in the Mortgage Loan
as evidenced by any single or multi class non-voting Securities in respect of
any private or public securitization of the Mortgage Loan or (b) any direct or
indirect interests in the Mezzanine B Loan (or otherwise impose additional
restrictions or requirements on a transfer to such Affiliate of Borrower),
provided, however, that the Lender Documents may include customary restrictions
on the exercise of the rights and remedies by such Affiliates of Borrower under
the Loan, the Mezzanine B Loan, and the Mortgage Loan including, without
limitation, (i) restrictions on any such Affiliate having the right to, or
exercising, directly or indirectly, any control, decision-making power, voting
rights, notice and cure rights, or other rights that would otherwise benefit a
holder by virtue of its ownership or control of any interest with respect to the
Loan, the Mezzanine B Loan, or the Mortgage Loan, (ii) restrictions on any such
Affiliate’s approval and consent rights under any intercreditor agreement,
co-lender agreement or similar agreement, (iii) restrictions on such Affiliate’s
initiation of enforcement actions against equity collateral, (iv) restrictions
on the making of protective advances, (v) restrictions on such Affiliate from
making or bringing any claim, in its capacity as a holder of any direct or
indirect interest in the Loan, the Mezzanine B Loan or the Mortgage Loan,
against Lender, any Mezzanine B Lender or any Mortgage Lender or any agent of
any of the foregoing with respect to the duties and obligations of such Person
under the Loan Documents, any Mezzanine B Loan Documents or any Mortgage Loan
Documents, any intercreditor agreement or any applicable co-lender agreement or
similar agreement and (vi) restrictions on such Affiliate’s access to any
electronic platform for the distribution of materials or information among the
Mortgage Lender, Lender or Mezzanine B Lender, “asset status reports” or any
correspondence or materials or notices of or participation in any discussions,
meetings or conference calls (among Mortgage Lender, Lender and Mezzanine B
Lender, any of their respective co-lenders or participants, or otherwise)
regarding or relating to any workout discussions or litigation or foreclosure
strategy (or potential litigation strategy) involving the Loan, the Mezzanine B
Loan or the Mortgage Loan, other than in its capacity as Borrower, Mezzanine B
Borrower or Owner, to the extent discussions and negotiations are being
conducted with Borrower, Mezzanine B Borrower, or Owner (as distinct from
internal discussions and negotiations among the various creditors).

 

 -173-Mezzanine Loan Agreement

 

 

Section 10.32      Acknowledgement and Consent to Bail-In of EEA Financial
Institutions.

 

(a)          Notwithstanding anything to the contrary in any Loan Document or in
any other agreement, arrangement or understanding among the respective parties
thereto, each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

 

(i)          the application of any Write-Down and Conversion Powers by an EEA
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an EEA Financial Institution; and

 

(ii)         the effects of any Bail-In Action on any such liability, including,
if applicable:

 

(A)         a reduction in full or in part or cancellation of any such
liability;

 

(B)         a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document; or

 

(C)         the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

 

(b)          As used in this Section 10.32 the following terms have the
following meanings ascribed thereto: (i) “Bail-In Action” means the exercise of
any Write-Down and Conversion Powers by the applicable EEA Resolution Authority
in respect of any liability of an EEA Financial Institution; (ii) “Bail-In
Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule; (iii)
“EEA Financial Institution” means (x) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority; (y) any entity established in an EEA Member Country
which is a parent of an institution described in clause (x) of this definition,
or (x) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (x) or (y) of this definition
and is subject to consolidated supervision with its parent; (iv) “EEA Member
Country” means any of the member states of the European Union, Iceland,
Liechtenstein, and Norway or any other member state of the European Economic
Area; (v) “EEA Resolution Authority” means any public administrative authority
or any person entrusted with public administrative authority of any EEA Member
Country (including any delegee) having responsibility for the resolution of any
EEA Financial Institution; (vi) “EU Bail-In Legislation Schedule” means the EU
Bail-In Legislation Schedule published by the Loan Market Association (or any
successor person), as in effect from time to time; and (vii) “Write-Down and
Conversion Powers” means, with respect to any EEA Resolution Authority, the
write-down and conversion powers of such EEA Resolution Authority from time to
time under the Bail-In Legislation for the applicable EEA Member Country, which
write-down and conversion powers are described in the EU Bail-In Legislation
Schedule.

 

 -174-Mezzanine Loan Agreement

 

 

Section 10.33     Co-Lenders.

 

(a)          Borrower and Lender hereby acknowledge and agree that
notwithstanding the fact that the Loan may be serviced by Servicer, prior to a
Securitization of the entire Loan, all requests for approval and consents
hereunder and in every instance in which Lender’s consent or approval is
required, Borrower shall only be required to obtain the consent and approval of
Morgan Stanley Mortgage Capital Holdings LLC (or its successors or assigns) and
all copies of documents, reports, requests and other delivery obligations of
Borrower required hereunder shall be delivered by Borrower to Morgan Stanley
Mortgage Capital Holdings LLC (or its successors or assigns).

 

(b)          Following the Closing Date (i) the liabilities of Lender shall be
several and not joint, (ii) neither Co-Lender shall be responsible for the
obligations of the other Co-Lender, and (iii) each Co-Lender shall be liable to
Borrower only for their respective Ratable Share of the Loan. Notwithstanding
anything to the contrary herein, all indemnities by Borrower and obligations for
costs, expenses, damages or advances set forth herein shall run to and benefit
each Co-Lender in accordance with its Ratable Share.

 

(c)          Each Co-Lender agrees that it has, independently and without
reliance on any other Co-Lender, and based on such documents and information as
it has deemed appropriate, made its own credit analysis of Borrower and its
Affiliates and decision to enter into this Agreement and that it will,
independently and without reliance upon the other Co-Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement or under any other Loan Document.

 

Section 10.34         Patriot Act Notice. The Patriot Act requires all financial
institutions to obtain, verify and record certain information that identifies
individuals or business entities which open an “account” with such financial
institution. Consequently, Lender may from time-to-time request, and Borrower
shall provide to Lender, Borrower’s name, address, tax identification number
and/or such other identification information as shall be necessary for Lender to
comply with federal law. An “account” for this purpose may include, without
limitation, a deposit account, cash management service, a transaction or asset
account, a credit account, a loan or other extension of credit and/or other
financial services product.

 

 -175-Mezzanine Loan Agreement

 

 

Article 11

Mortgage Loan

 

Section 11.1         Compliance With Mortgage Loan Documents. Borrower shall (or
shall cause Owner or Operating Lessee, as applicable, to): (a) pay all
principal, interest and reserve deposits required to be paid by Owner under and
pursuant to the provisions of the Mortgage Loan Documents; (b) diligently
perform and observe all of the terms, covenants and conditions of the Mortgage
Loan Documents on the part of Owner and Operating Lessee to be performed and
observed, unless such performance or observance shall be waived in writing by
Mortgage Lender; (c) promptly notify Lender of the giving of any notice by
Mortgage Lender to Owner, Operating Lessee or Borrower of any default by Owner
or Operating Lessee in the performance or observance of any of the terms,
covenants or conditions of the Mortgage Loan Documents on the part of Owner or
Operating Lessee to be performed or observed and deliver to Lender a true copy
of each such notice; and (d) not enter into or be bound by any Mortgage Loan
Documents that are not approved by Lender. Without limiting the foregoing,
Borrower shall cause Owner to fund all reserves required to be funded pursuant
to the Mortgage Loan Documents. In the event of a refinancing of the Mortgage
Loan permitted by the terms of this Agreement, Borrower will cause all reserves
on deposit with Mortgage Lender to be utilized by Owner to reduce the amount due
and payable to the Mortgage Lender or alternatively shall be remitted to Lender
as a mandatory prepayment of the Loan.

 

Section 11.2         Mortgage Loan Defaults.

 

(a)          Without limiting the generality of the other provisions of this
Agreement, and without waiving or releasing Borrower or Leasehold Pledgor from
any of its obligations hereunder, if there shall occur any default under the
Mortgage Loan Documents, Borrower and Leasehold Pledgor each hereby expressly
agrees that Lender shall have the immediate right, without prior notice to
Borrower or Leasehold Pledgor, but shall be under no obligation: (i) to pay all
or any part of the Mortgage Loan and any other sums that are then due and
payable, and to perform any act or take any action on behalf of Borrower,
Leasehold Pledgor, Owner and/or Operating Lessee as may be appropriate, to cause
all of the terms, covenants and conditions of the Mortgage Loan Documents on the
part of Owner or Operating Lessee to be performed or observed thereunder to be
promptly performed or observed; and (ii) to pay any other amounts and take any
other action as Lender, in its sole and absolute discretion, shall deem
advisable to protect or preserve the rights and interests of Lender in the Loan
and/or the Collateral. All sums so paid and the costs and expenses incurred by
Lender in exercising rights under this Section 11.2 (including attorneys’ fees)
(i) shall constitute additional advances of the Loan to Borrower, (ii) shall
increase the then unpaid Outstanding Principal Balance, (iii) shall bear
interest at the Default Rate for the period from the date that such costs or
expenses were incurred to the date of payment to Lender, (iv) shall constitute a
portion of the Debt, (v) shall be secured by the Pledge Agreement and (vi) shall
be due and payable to Lender within five Business Days following written demand
therefor. Subject to the rights of tenants and hotel guests, Borrower hereby
grants, and shall cause Owner and Operating Lessee to grant, Lender and any
Person designated by Lender the right to enter upon any Individual Property at
any time for the purpose of carrying out the rights granted to Lender under this
Section 11.2.

 

(b)          Borrower and Leasehold Pledgor hereby indemnifies Lender from and
against all liabilities, obligations, losses, damages, penalties, assessments,
actions, or causes of action, judgments, suits, claims, demands, costs, expenses
(including attorneys’ and other professional fees, whether or not suit is
brought, and settlement costs) and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against Lender as a
result of the foregoing actions. Lender shall have no obligation to Borrower,
Leasehold Pledgor, Owner, Operating Lessee or any other party to make any such
payment or performance. Neither Borrower nor Leasehold Pledgor shall impede,
interfere with, hinder or delay, nor permit Owner or Operating Lessee to impede,
interfere with, hinder or delay, any effort or action on the part of Lender to
cure any default or asserted default under the Mortgage Loan, or to otherwise
protect or preserve Lender’s interests in the Loan and the Collateral following
a default or asserted default under the Mortgage Loan. Lender shall have no
obligation to complete any cure or attempted cure undertaken or commenced by
Lender.

 

 -176-Mezzanine Loan Agreement

 

 

(c)          If Lender shall receive a copy of any notice of default under the
Mortgage Loan Documents sent by Mortgage Lender to Owner or Operating Lessee,
such notice shall constitute full protection to Lender for any action taken or
omitted to be taken by Lender, in good faith, in reliance thereon. As a material
inducement to Lender’s making the Loan, each of Borrower and Leasehold Pledgor
hereby absolutely and unconditionally releases and waives all claims against
Lender arising out of Lender’s exercise of its rights and remedies provided in
this Section 11.2, except for Lender’s gross negligence or willful misconduct.

 

(d)          If, on account of the subordination of the Loan to the Mortgage
Loan, Lender is required to remit to Mortgage Lender any amount theretofore paid
to Lender hereunder, and such amount is credited towards Owner’s obligations
under the Mortgage Loan, then such amount shall continue to be owing pursuant to
this Agreement and the other Loan Documents as part of the Indebtedness,
notwithstanding the prior receipt of such payment by Lender.

 

Section 11.3         Mortgage Loan Estoppels. Borrower and Leasehold Pledgor
shall (or shall cause Owner or Operating Lessee to), from time to time, use
reasonable efforts to obtain from Mortgage Lender such certificates of estoppel
with respect to compliance by Owner and Operating Lessee with the terms of the
Mortgage Loan Documents as may be reasonably requested by Lender. In the event
or to the extent that Mortgage Lender is not legally obligated to deliver such
certificates of estoppel and is unwilling to deliver the same, or is legally
obligated to deliver such certificates of estoppel but breaches such obligation,
then neither Borrower nor Leasehold Pledgor shall be in breach of this provision
so long as Borrower furnishes to Lender an estoppel executed by Borrower,
Leasehold Pledgor, Owner and Operating Lessee expressly representing to Lender
the information requested by Lender regarding compliance by Owner and Operating
Lessee with the terms of the Mortgage Loan Documents. Each of Borrower and
Leasehold Pledgor hereby indemnifies Lender from and against all liabilities,
obligations, losses, damages, penalties, assessments, actions, or causes of
action, judgments, suits, claims, demands, costs, expenses (including attorneys’
and other professional fees, whether or not suit is brought and settlement
costs) and disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Lender based in whole or in part upon any
fact, event, condition, or circumstances relating to the Mortgage Loan which was
misrepresented in, or which warrants disclosure and was omitted from such
estoppel executed by Borrower, Leasehold Pledgor Owner and Operating Lessee.

 

Section 11.4        No Amendment to Mortgage Loan Documents; Consents and
Approvals. Without obtaining the prior written consent of Lender, neither
Borrower nor Leasehold Pledgor shall cause or permit Owner or Operating Lessee
to enter into any amendment or modification of any of the Mortgage Loan
Documents. Borrower or Leasehold Pledgor shall cause Owner or Operating Lessee
to provide Lender with a copy of any amendment or modification to the Mortgage
Loan Documents promptly after the execution thereof. If any action, proposed
action or other decision is consented to or approved by Mortgage Lender, such
consent or approval shall not be binding or controlling on Lender. Borrower and
Leasehold Pledgor each hereby acknowledges and agrees that (i) the risks of
Mortgage Lender in making the Mortgage Loan are different from the risks of
Lender in making the Loan and (ii) in determining whether to grant, deny,
withhold or condition any requested consent or approval, Mortgage Lender and
Lender may reasonably reach different conclusions. In addition, except as
otherwise provided in this Agreement, the denial by Lender of a requested
consent or approval in accordance with the terms of the Loan Documents shall not
result in any liability or other obligation of Lender, if such denial results
directly or indirectly in a default under any Senior Loan, and each of Borrower
and Leasehold Pledgor hereby waives any claim of liability against Lender
arising from any such denial.

 

 -177-Mezzanine Loan Agreement

 

 

Section 11.5        Refinancing or Prepayment of the Mortgage Loan. Neither
Borrower nor Owner shall make any partial or full prepayments of amounts owing
under the Mortgage Loan (other than any partial or full prepayments permitted by
and made in accordance with the terms of the Mortgage Loan Agreement and this
Agreement) or refinance the Mortgage Loan without the prior written consent of
Lender, unless such refinancing results in the concurrent payment in full of the
Debt.

 

Section 11.6         Intentionally Omitted. 

 

Section 11.7         Purchase of Mortgage Loan. Except as permitted under
Section 10.31, none of Borrower, Leasehold Pledgor, Owner, Operating Lessee,
Guarantor or any Affiliate of any of the foregoing shall acquire or agree to
acquire the Mortgage Loan, or any portion thereof or any interest therein, via
purchase, transfer, exchange, operation of law or otherwise. If Borrower,
Leasehold Pledgor, Owner, Operating Lessee, Guarantor or any Affiliate of any of
the foregoing shall have failed to comply with the foregoing, then Borrower or
Leasehold Pledgor shall (i) immediately notify Lender of such failure and (ii)
cause any and all such Persons acquiring any interest in the Mortgage Loan
Documents (A) not to enforce the Mortgage Loan Documents, and (B) upon the
request of Lender, to the extent any of such Persons has or have the power or
authority to do so, to promptly (1) cancel the promissory note evidencing the
portion of the Mortgage Loan so acquired, (2) if the entire Mortgage Loan was so
acquired, reconvey and release the liens securing the Mortgage Loan, and (3)
discontinue and terminate any enforcement proceeding(s) under the Mortgage Loan
Documents being taken by Borrower, Leasehold Pledgor, Owner, Operating Lessee,
Guarantor or any Affiliate of any of the foregoing. Notwithstanding the
foregoing, it shall not constitute a breach of the foregoing covenants if
Guarantor acquires any subrogation claim in respect of the Mortgage Loan solely
by operation of law as a result of a payment under the guaranty executed in
connection with the Mortgage Loan.

 

Section 11.8        Communication with Mortgage Lender. Lender shall have the
right at any time to discuss the Properties, the Collateral, the Mortgage Loan,
the Loan or any other matter directly with Mortgage Lender or their its
consultants, agents or representatives, without notice to or permission from
Borrower or Leasehold Pledgor or any of their respective Affiliates. Lender
shall have no obligation to disclose such discussions or the contents thereof
with Borrower or Leasehold Pledgor or any of their respective affiliates.

 

Section 11.9         Duplicative Performance Not Required. To the extent that
any provisions of this Agreement require the Borrower to post additional
collateral or security for the performance of Borrower’s or Leasehold Pledgor’s
(or Owner’s or Operating Lessee’s) obligations hereunder or Owner’s and/or
Operating Lessee’s obligations under the Mortgage Loan Documents, and Owner or
Operating Lessee shall have posted collateral or security in respect of the same
obligations pursuant to the Mortgage Loan Agreement, then Borrower shall have no
obligation under this Agreement to post such additional collateral or security
in connection therewith; provided, however, in the event the Mortgage Loan has
been paid in full, any and all obligations of Owner and Operating Lessee under
the Mortgage Loan Documents to have posted additional collateral or security in
respect of the obligations of Owner and Operating Lessee pursuant to the
Mortgage Loan Agreement shall instead be deemed to require that such additional
collateral or security be posted in favor of Lender in respect of Borrower’s and
Leasehold Pledgor’s obligations pursuant to this Agreement.

 

 -178-Mezzanine Loan Agreement

 

 

Section 11.10      Compliance with Required Loan Restructurings. Notwithstanding
anything to the contrary set forth in the Loan Documents (a) Owner and Operating
Lessee may comply in all respects with any requirements to restructure the
Mortgage Loan pursuant to Article 9 of the Mortgage Loan Agreement (or any other
similar provision in the Mortgage Loan Documents), (b) any borrower under any
future mezzanine loan that is made or created in accordance with Article 9 of
the Mortgage Loan Agreement may comply in all respects with any requirements to
restructure the applicable loan as required under its respective loan documents,
and (d) no actions taken by the Owner, Operating Lessee or any future mezzanine
borrower in furtherance of the foregoing, including, without limitation, any
transfers, pledges or amendments to organizational documents shall constitute a
breach of any provisions of the Loan Documents, or result in a default or Event
of Default hereunder.

 

Section 11.11       Limitation on Securities Issuance. No Individual Owner,
Operating Lessee, Fee General Partner, Leasehold General Partner, Leasehold
Pledgor or Borrower shall issue any limited liability company interests, limited
partnership interests, general partnership interests, capital stock interests or
other securities other than those that have been issued as of the date hereof.

 

Section 11.12     Independent Approval Rights. If any action, proposed action or
other decision is consented to or approved by Mortgage Lender, such consent or
approval shall not be binding or controlling on Lender. Borrower hereby
acknowledges and agrees that (a) the risks of Mortgage Lender in making the
Mortgage Loan are different from the risks of Lender in making the Loan, (b) in
determining whether to grant, deny, withhold or condition any requested consent
or approval Mortgage Lender and Lender may reasonably reach different
conclusions, and (c) Lender has an absolute independent right to grant, deny,
withhold or condition any requested consent or approval based on its own point
of view. Further, the denial by Lender of a requested consent or approval shall
not create any liability or other obligation of Lender if the denial of such
consent or approval results directly or indirectly in a default under the
Mortgage Loan, and Borrower hereby waives any claim of liability against Lender
arising from any such denial.

 

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 -179-Mezzanine Loan Agreement

 

 

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

 

LENDER:       MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited
liability company         By: /s/ Cynthia Eckes     Name: Cynthia Eckes    
Title: Authorized Signatory           CITIGROUP GLOBAL MARKETS REALTY CORP., a
New York corporation         By: /s/ Harry Kramer     Name: Harry Krarner    
Title: Vice President           DEUTSCHE BANK AG, NEW YORK BRANCH, a branch of
Deutsche Bank AG, a German bank authorized by the New York Department of
Financial Services         By: /s/ Peter Castro     Name: Peter Castro    
Title: Director           By: /s/ David Goodman     Name: David Goodman    
Title: Managing Director           GOLDMAN SACHS MORTGAGE COMPANY, a New York
limited partnership         By: /s/ David A. Brown     Name: David A. Brown    
Title: Authorized Signatory  

  

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a banking association chartered under
the laws of the United States of America       By: /s/ Simon B. Burce     Name:
Simon B. Burce     Title: Vice President  

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

 

SIGNATURE PAGE

Mezzanine Loan Agreement

 

 

  BORROWER:        HIT PORTFOLIO I MEZZ, LP, a Delaware limited partnership    
    By: HIT Portfolio I Mezz GP, LLC, a Delaware limited liability company, its
general partner             By: /s/ Paul C. Hughes       Name: Paul C. Hughes  
    Title: General Counsel and Secretary

 

  LEASEHOLD PLEDGOR:        HIT PORTFOLIO I TRS HOLDCO, LLC, a Delaware limited
liability company         By: /s/ Paul C. Hughes     Name: Paul C. Hughes    
Title: General Counsel and Secretary         HIT 2PK TRS MEZZ, LLC, a Delaware
limited liability company         By: /s/ Paul C. Hughes     Name: Paul C.
Hughes     Title: General Counsel and Secretary

 

 

SIGNATURE PAGE

Mezzanine Loan Agreement