Exhibit 10.3

Loan Number: 1002242

LOGO [g226408ex10_3pg001.jpg]

 

 

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of October 14, 2011

by and among

CHESAPEAKE LODGING, L.P.,

as Borrower,

THE FINANCIAL INSTITUTIONS PARTY HERETO

AND THEIR ASSIGNEES UNDER SECTION 13.6.,

as Lenders,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

and

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent

 

 

DEUTSCHE BANK SECURITIES INC,

as Documentation Agent

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I. Definitions

     1   

Section 1.1. Definitions.

     1   

Section 1.2. GAAP; General References; Pacific Time.

     34   

ARTICLE II. Credit Facility

     35   

Section 2.1. Loans.

     35   

Section 2.2. Requests for Loans.

     35   

Section 2.3. Funding of Loans.

     35   

Section 2.4. Assumptions Regarding Funding by Lenders.

     36   

Section 2.5. Purchase of Loans on the Effective Date.

     36   

Section 2.6. Rates and Payment of Interest on Loans.

     37   

Section 2.7. Number of Interest Periods.

     37   

Section 2.8. Repayment of Loans.

     37   

Section 2.9. Prepayments.

     38   

Section 2.10. Late Charges.

     38   

Section 2.11. Continuation.

     38   

Section 2.12. Conversion.

     39   

Section 2.13. Notes.

     40   

Section 2.14. Voluntary Reductions of the Commitment.

     40   

Section 2.15. Extension of Maturity Date.

     40   

Section 2.16. Amount Limitations.

     41   

Section 2.17. Funds Transfer Disbursements.

     41   

Section 2.18. Intentionally Omitted.

     42   

Section 2.19. Increase in Commitments.

     42   

ARTICLE III. Payments, Fees and Other General Provisions

     44   

Section 3.1. Payments.

     44   

Section 3.2. Pro Rata Treatment.

     44   

Section 3.3. Sharing of Payments, Etc.

     45   

Section 3.4. Several Obligations.

     46   

Section 3.5. Fees.

     46   

Section 3.6. Computations.

     47   

Section 3.7. Usury.

     47   

Section 3.8. Statements of Account.

     47   

Section 3.9. Defaulting Lenders.

     47   

Section 3.10. Taxes; Foreign Lenders.

     49   

Section 3.11. Lender Failure to Make Payment.

     51   

ARTICLE IV. Collateral Properties

     51   

Section 4.1. Eligibility of Properties.

     51   

Section 4.2. Release of Collateral Properties.

     54   

Section 4.3. Frequency of Appraisals.

     55   

 

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Section 4.4. Limitations on Collateral Pool Releases and Additions to Collateral
Pool.

     56   

Section 4.5. Substitution of Required Collateral Properties.

     57   

ARTICLE V. Yield Protection, Etc.

     57   

Section 5.1. Additional Costs; Capital Adequacy.

     57   

Section 5.2. Suspension of LIBOR Loans.

     59   

Section 5.3. Illegality.

     59   

Section 5.4. Compensation.

     59   

Section 5.5. Treatment of Affected Loans.

     60   

Section 5.6. Change of Lending Office.

     61   

Section 5.7. Assumptions Concerning Funding of LIBOR Loans.

     61   

ARTICLE VI. Conditions Precedent

     61   

Section 6.1. Initial Conditions Precedent.

     61   

Section 6.2. Conditions Precedent to All Loans.

     63   

Section 6.3. Conditions Precedent to a Property Becoming a Collateral Property.

     63   

Section 6.4. Conditions as Covenants.

     65   

ARTICLE VII. Representations and Warranties

     66   

Section 7.1. Representations and Warranties.

     66   

Section 7.2. Survival of Representations and Warranties, Etc.

     72   

ARTICLE VIII. Affirmative Covenants

     72   

Section 8.1. Preservation of Existence and Similar Matters.

     72   

Section 8.2. Compliance with Applicable Law.

     72   

Section 8.3. Maintenance of Property.

     72   

Section 8.4. Conduct of Business.

     73   

Section 8.5. Insurance.

     73   

Section 8.6. Payment of Taxes and Claims.

     74   

Section 8.7. Books and Records; Inspections.

     75   

Section 8.8. Use of Proceeds.

     75   

Section 8.9. Environmental Matters.

     75   

Section 8.10. Further Assurances.

     76   

Section 8.11. Intentionally Omitted.

     76   

Section 8.12. REIT Status.

     76   

Section 8.13. Exchange Listing.

     76   

Section 8.14. Operation of Collateral Property.

     76   

Section 8.15. Completion of Renovations.

     77   

Section 8.16. Mechanics Liens.

     78   

Section 8.17. Proceedings.

     78   

Section 8.18. Correction of Defects.

     78   

Section 8.19. Personal Property.

     79   

Section 8.20. FF&E Reserve Accounts.

     79   

 

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Section 8.21. Tax/Insurance Reserve Accounts.

     80   

Section 8.22. Approved Ground Leases.

     81   

ARTICLE IX. Information

     81   

Section 9.1. Quarterly Financial Statements.

     81   

Section 9.2. Year End Statements.

     81   

Section 9.3. Compliance Certificate.

     82   

Section 9.4. Other Information.

     82   

Section 9.5. Electronic Delivery of Certain Information.

     86   

Section 9.6. Public/Private Information.

     86   

Section 9.7. USA Patriot Act Notice; Compliance.

     87   

ARTICLE X. Negative Covenants

     87   

Section 10.1. Financial Covenants.

     87   

Section 10.2. Negative Pledge.

     89   

Section 10.3. Restrictions on Intercompany Transfers.

     90   

Section 10.4. Merger, Consolidation, Sales of Assets and Other Arrangements.

     90   

Section 10.5. Plans.

     91   

Section 10.6. Fiscal Year.

     91   

Section 10.7. Modifications of Organizational Documents.

     91   

Section 10.8. Material Contracts.

     92   

Section 10.9. Indebtedness.

     92   

Section 10.10. Transactions with Affiliates.

     93   

Section 10.11. Environmental Matters.

     93   

Section 10.12. Derivatives Contracts.

     94   

ARTICLE XI. Default

     94   

Section 11.1. Events of Default.

     94   

Section 11.2. Remedies Upon Event of Default.

     98   

Section 11.3. Reserved.

     98   

Section 11.4. Marshaling; Payments Set Aside.

     98   

Section 11.5. Allocation of Proceeds.

     99   

Section 11.6. Intentionally Omitted.

     99   

Section 11.7. Rescission of Acceleration by Requisite Lenders.

     99   

Section 11.8. Performance by Administrative Agent.

     100   

Section 11.9. Rights Cumulative.

     100   

Section 11.10. Breach of Operating Property Value Covenant

     100   

Section 11.11. Cash Collateral Account.

     101   

Section 11.12. Qualified Letter of Credit.

     102   

ARTICLE XII. The Administrative Agent

     102   

Section 12.1. Appointment and Authorization.

     102   

Section 12.2. Wells Fargo as Lender.

     103   

Section 12.3. Collateral Matters; Protective Advances.

     104   

 

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Section 12.4. Post Foreclosure Plans.

     105   

Section 12.5. Approvals of Lenders.

     106   

Section 12.6. Notice of Events of Default.

     106   

Section 12.7. Administrative Agent’s Reliance.

     107   

Section 12.8. Indemnification of Administrative Agent.

     107   

Section 12.9. Lender Credit Decision, Etc.

     108   

Section 12.10. Successor Administrative Agent.

     109   

Section 12.11. Syndication Agent.

     110   

Section 12.12. Documentation Agent.

     110   

ARTICLE XIII. Miscellaneous

     110   

Section 13.1. Notices.

     110   

Section 13.2. Expenses.

     112   

Section 13.3. Stamp, Intangible and Recording Taxes.

     112   

Section 13.4. Setoff.

     113   

Section 13.5. Litigation; Jurisdiction; Other Matters; Waivers.

     113   

Section 13.6. Successors and Assigns.

     114   

Section 13.7. Amendments and Waivers.

     116   

Section 13.8. Nonliability of Administrative Agent and Lenders.

     117   

Section 13.9. Confidentiality.

     118   

Section 13.10. Indemnification.

     118   

Section 13.11. Termination; Survival.

     120   

Section 13.12. Severability of Provisions.

     120   

Section 13.13. GOVERNING LAW.

     121   

Section 13.14. Counterparts.

     121   

Section 13.15. Obligations with Respect to Loan Parties.

     121   

Section 13.16. Intentionally Omitted.

     121   

Section 13.17. Limitation of Liability.

     121   

Section 13.18. Entire Agreement.

     121   

Section 13.19. Construction.

     122   

Section 13.20. Headings.

     122   

Section 13.21. Joinder by Parent Guarantor.

     122   

 

SCHEDULE I    Commitments SCHEDULE II    Initial Collateral Properties
SCHEDULE 7.1(b)    Ownership Structure SCHEDULE 7.1(f)    Properties
SCHEDULE 7.1(g)    Indebtedness and Guaranties SCHEDULE 7.1(h)    Material
Contracts SCHEDULE 7.1(i)    Litigation SCHEDULE 7.1(s)    Affiliate
Transactions SCHEDULE 7.1(t)    Intellectual Property SCHEDULE 13.1    Notices

 

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EXHIBIT A    Form of Assignment and Assumption Agreement EXHIBIT B    Form of
DSCR Certificate EXHIBIT C    Form of Note EXHIBIT D    Form of Notice of
Borrowing EXHIBIT E    Form of Notice of Continuation EXHIBIT F    Form of
Notice of Conversion EXHIBIT G    Form of Transfer Authorizer Designation Form
EXHIBIT H    Matters to be Addressed in Opinions of Counsel EXHIBIT I    Form of
Compliance Certificate

 

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THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as of
October 14, 2011 by and among CHESAPEAKE LODGING, L.P., a limited partnership
formed under the laws of the State of Delaware (the “Borrower”), each of the
financial institutions initially a signatory hereto together with their
successors and assignees under Section 13.6. (the “Lenders”) and WELLS FARGO
BANK, NATIONAL ASSOCIATION (the “Administrative Agent”) and joined in by
CHESAPEAKE LODGING TRUST, a Maryland real estate investment trust, for the
purposes set forth in Section 13.21.

WHEREAS, Borrower, certain of the Lenders and Administrative Agent entered into
that certain Credit Agreement dated July 30, 2010 (as amended by letter
agreement dated December 27, 2010, the “Original Credit Agreement”) providing
for a $115,000,000 revolving credit facility; and

WHEREAS, Borrower, the Lenders and Administrative Agent entered into that
certain Amended and Restated Credit Agreement dated January 21, 2011 (the “Prior
Credit Agreement”) amending and restating the Original Credit Agreement and
providing for (among other things) an increase in the maximum amount of the
revolving credit facility to $150,000,000; and

WHEREAS, the parties hereto desire to amend and restate the Prior Credit
Agreement to provide for (among other things) an increase in the maximum amount
of the revolving credit facility to $200,000,000 (which increase is being
effected by the increase of the Commitment of JPMorgan Chase Bank, N.A. from
$25,000,000 to $50,000,000 and of Deutsche Bank Trust Company Americas from
$25,000,000 to $50,000,000) and to provide for future increases up to a maximum
amount of $300,000,000, all on and subject to the terms and conditions set forth
herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto
hereby amend and restate the Prior Credit Agreement, and hereby agree, as
follows:

ARTICLE I. DEFINITIONS

Section 1.1. Definitions.

In addition to terms defined elsewhere herein, the following terms shall have
the following meanings for the purposes of this Agreement:

“Accession Agreement” means an Accession Agreement substantially in the form of
Annex I to the Subsidiary Guaranty.

“Account” shall have the meaning ascribed to such term in the Uniform Commercial
Code.

“Additional Costs” has the meaning given that term in Section 5.1.(b).

“Adjusted EBITDA” means EBITDA, less a reserve equal to four percent (4%) of the
aggregate amount of the Gross Operating Revenues of all Properties of the Parent
Guarantor and its Subsidiaries.

 

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“Adjusted NOI” means, as determined for any period of time with respect to any
one or more Hotel Properties, the Net Operating Income of such Hotel Property or
Hotel Properties, subject to the following adjustments:

(a) for each applicable Property management fees shall equal the greater of
(i) three percent (3%) of Gross Operating Revenues or (ii) the actual management
fees paid under the applicable Management Agreement;

(b) for each applicable Property reserves for FF&E and capital items shall equal
the greater of (i) four percent (4%) of Gross Operating Revenues or (ii) the
amount of reserves required under the applicable Management Agreement or
Franchise Agreement; and

(c) unless such Property is managed under a Management Agreement with a Major
Hotel Operator that does not require payment of franchise fees, for each
applicable Property franchise fees shall equal the greater of (i) four percent
(4%) of Gross Operating Revenues or (ii) the actual franchise fees payable under
the applicable Franchise Agreement.

For purposes of determining Adjusted NOI for any period of twelve months, Net
Operating Income of any Hotel Property that was acquired during such period
shall be included within such Adjusted NOI for the entirety of such twelve-month
period, including Net Operating Income of such Hotel Property during any portion
of such period that occurred prior to such acquisition (adjusted as provided
above), as determined by the Borrower (subject to the reasonable approval of the
Administrative Agent) based on the operating statements received from the prior
owner or operator.

If the NYC Hotel becomes a Collateral Property, then (x) solely for purposes of
determining Adjusted NOI for the NYC Hotel during the period that it is a New
Property, the Adjusted NOI shall be determined on a pro forma basis at
$3,262,500, which is an amount equal to the purchase price of $52,200,000
multiplied by 6.25% and (y) when the NYC Hotel becomes a Seasoned Property, the
Adjusted NOI therefor shall be calculated as provided in the preceding
paragraphs of this definition.

“Administrative Agent” means Wells Fargo Bank, National Association or any
successor Administrative Agent appointed pursuant to Section 12.10.

“Administrative Questionnaire” means the Administrative Questionnaire completed
by each Lender and delivered to the Administrative Agent in a form supplied by
the Administrative Agent to the Lenders from time to time.

“Advance Rate” means fifty-five percent (55%). Notwithstanding the foregoing, if
the NYC Hotel becomes a Collateral Property, then (a) during the period that it
is a New Property, the Advance Rate for the NYC Hotel shall be 50% and (b) when
the NYC Hotel becomes a Seasoned Property, the Advance Rate therefor shall be
55%.

“Advance Rate Value” means, with respect to any Collateral Property at any time,
(a) the Advance Rate applicable to such Collateral Property multiplied by
(b) the Operating Property Value of such Collateral Property. The parties
acknowledge that, except as otherwise provided with respect to the NYC Hotel in
the definition of “Advance Rate,” the Advance Rate for all Collateral Properties
is 55%.

 

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“Affiliate” means, with respect to any Person, (a) any Person which is directly
or indirectly controlled by, controls or is under common control with such
Person, (b) any other Person who is an officer, director, trustee or employee
of, or partner in, such Person or any Person referred to in the preceding clause
(a), (c) any other Person who is a member of the immediate family of such Person
or of any Person referred to in the preceding clauses (a) and (b), and (d) any
other Person that is a trust solely for the benefit of one or more Persons
referred to in clause (c) and of which such Person is sole trustee; provided,
however, in no event shall the Administrative Agent or any Lender or any of
their respective Affiliates be an Affiliate of Borrower. For purposes of this
definition, “control” (including with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

“Agreement Date” means the date as of which this Agreement is dated.

“Applicable Capitalization Rate” means (a) prior to September 30, 2013, 8.0% and
(b) from and after September 30, 2013, 8.5%.

“Applicable Law” means all constitutions, statutes, rules, regulations and
orders of any Governmental Authority, including all orders and decrees of all
courts, tribunals and arbitrators applicable to a Loan Party, any Collateral
Property, the Administrative Agent or any Lender, as the context requires.

“Applicable Margin” means the percentage rate set forth below corresponding to
the Leverage Ratio as set forth in the most recent Compliance Certificate
received by the Administrative Agent pursuant to Section 9.3. (subject to the
provisions of this definition) :

 

Applicable Margin

 

Pricing Level

  

Leverage Ratio

   Applicable Margin  

I

   < 35.0%      2.75 % 

II

   ³ 35.0% < 40.0%      3.00 % 

III

   ³ 40.0% < 50.0%      3.25 % 

IV

   ³50.0% < 55.0%      3.50 % 

V

   ³ 55.0%      3.75 % 

The Applicable Margin shall be determined and adjusted quarterly on the date
(each a “Calculation Date”) ten (10) Business Days after the day by which the
Borrower is required to provide a Compliance Certificate pursuant to
Section 9.3. for the most recently ended fiscal quarter of the Borrower;
provided that (a) the Applicable Margin shall be based on Level III until the
first Calculation Date occurring after the Effective Date, and thereafter the
Applicable Margin shall be determined by reference to the Leverage Ratio as of
the last day of the most recently ended fiscal quarter of the Borrower preceding
the applicable Calculation Date, and (b) if the Borrower fails to provide the
Compliance Certificate as required by Section 9.3. for the

 

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most recently ended fiscal quarter of the Borrower preceding the applicable
Calculation Date, then the Applicable Margin from such Calculation Date shall be
based on Level V until such time as an appropriate Compliance Certificate is
provided, at which time the Applicable Margin shall be determined by reference
to the Leverage Ratio as of the last day of the most recently ended fiscal
quarter of the Borrower preceding such Calculation Date. The Applicable Margin
shall be effective from and including one Calculation Date until but excluding
the next Calculation Date. Any adjustment in the Applicable Margin shall be
applicable to all Loans then outstanding or subsequently made.

Notwithstanding the foregoing paragraph, in the event that any financial
statement or Compliance Certificate delivered pursuant to Section 9.1., 9.2. or
9.3. is shown to be inaccurate (regardless of whether (i) this Agreement is in
effect, (ii) the Commitments are in effect, or (iii) any Loan is outstanding
when such inaccuracy is discovered or such financial statement or Compliance
Certificate was delivered), and such inaccuracy, if corrected, would have led to
the application of a higher Applicable Margin for any period (an “Applicable
Period”) than the Applicable Margin actually applied for such Applicable Period,
then (A) the Borrower shall immediately deliver to the Administrative Agent a
corrected Compliance Certificate for such Applicable Period, (B) the Applicable
Margin for such Applicable Period shall be determined as if the Leverage Ratio
in the corrected Compliance Certificate were applicable for such Applicable
Period, and (z) the Borrower shall immediately and retroactively be obligated to
pay to the Administrative Agent the accrued additional interest owing as a
result of such increased Applicable Margin for such Applicable Period, which
payment shall be promptly applied by the Administrative Agent in accordance with
Section 3.2. Nothing in this paragraph shall limit the rights of the
Administrative Agent and Lenders with respect to Section 2.6.(a) or
Section 11.2. nor any of their other rights under this Agreement. The Borrower’s
obligations under this paragraph shall survive the termination of the
Commitments and the repayment of all other Obligations hereunder.

“Appraisal” means, with respect to any Property, an M.A.I. appraisal
commissioned by and addressed to the Administrative Agent (acceptable to the
Administrative Agent as to form and substance), prepared by a qualified,
independent appraiser acceptable to the Administrative Agent, having at least
the minimum qualifications required under Applicable Law governing the
Administrative Agent and the Lenders, including without limitation, FIRREA, and
determining both the “as is” market value of such Property as between a willing
buyer and a willing seller and the “stabilized value” of such Property. Such
Appraisal shall appraise the applicable Property: (a) in the case of the
Appraisal of a Property proposed to be added to the Collateral Pool, as of a
date not earlier than sixty (60) days prior to the date on which such Property
became or becomes a Collateral Property, (b) in the case of an Appraisal under
Section 2.15.(g), as of a date not earlier than sixty (60) days prior to the
Original Maturity Date, and (c) otherwise as of a date reasonably satisfactory
to the Administrative Agent.

“Appraised Value” means, with respect to any Property, the “as is” market value
of such Property as reflected in the most recent Appraisal of such Property as
the same may have been reasonably adjusted (but not increased) by the
Administrative Agent based upon its internal review of such Appraisal which is
based on criteria and factors then generally used and considered by the
Administrative Agent in determining the value of similar real estate Properties,
which review shall be conducted prior to acceptance of such Appraisal by the
Administrative

 

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Agent. The Appraised Value of a Collateral Property shall be its Appraised Value
as determined on the basis of the most recent Appraisal thereof obtained by the
Administrative Agent pursuant to this Agreement.

“Approved Annual Budget” has the meaning given that term in Section 9.4.(h).

“Approved Brand” means any of the following hotel brands: (i) Hyatt,
(ii) Marriott, (iii) Hilton, (iv) Intercontinental Hotel Group or (v) Starwood.

“Approved Capital Budget” has the meaning given that term in Section 9.4.(h).

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender, or (c) an entity or an Affiliate of any entity
that administers or manages a Lender.

“Approved Ground Lease” means, with respect to a Hotel Property, a ground lease
that (a) has a remaining term (including renewal options that are exercisable
without condition) of not less than fifty (50) years at the time such Hotel
Property is first included as a Collateral Property, or in the event that such
remaining term is less than fifty (50) years, such ground lease either
(i) contains an unconditional end-of-term purchase option in favor of the lessee
for consideration that is, in the reasonable judgment of the Administrative
Agent, de minimus or (ii) provides that the lessee’s leasehold interest therein
automatically becomes a fee-owned interest at the end of the term, (b) permits a
leasehold mortgage that secures all of the Obligations on terms satisfactory to
Administrative Agent, (c) provides that such lease may not be terminated by the
ground lessor without prior notice to the leasehold mortgagee and an opportunity
for such leasehold mortgagee to cure any default by the lessee (including
adequate time for the leasehold mortgagee to obtain possession to effect such
cure), (d) does not place any material restrictions on Lenders’ ability to sell
or transfer such Hotel Property after foreclosure; and (e) is otherwise
satisfactory to the Administrative Agent in its reasonable judgment.

“Arrangers” means Wells Fargo Securities, LLC, J.P. Morgan Securities, Inc. and
Deutsche Bank Securities Inc. in their capacities as Lead Arrangers and (in the
case of Wells Fargo Securities, LLC and J.P. Morgan Securities, Inc.) as Joint
Bookrunners.

“Assignee” has the meaning given that term in Section 13.6.(c).

“Assignment and Assumption” means an Assignment and Assumption Agreement among a
Lender, an Assignee and the Administrative Agent, substantially in the form of
Exhibit A.

“Assignment of Leases and Rents” means an Assignment of Leases and Rents
executed by the Subsidiary Guarantor that owns, and the Operating Lessee that
leases, a Collateral Property, in favor of the Administrative Agent for its
benefit and the benefit of the Lenders, in form and substance satisfactory to
the Administrative Agent securing the Obligations (subject to Section 2.18.), as
the same may be supplemented, amended or otherwise modified from time to time.

 

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“Baby REIT” means a Subsidiary of the Borrower that has elected or will elect,
within the time period permitted under the Internal Revenue Code, to be taxed as
a REIT, and in which 100% of the common Equity Interests of such Subsidiary are
owned by the Borrower or a Wholly Owned Subsidiary of the Borrower, provided,
however, that such Subsidiary shall cease to be a Baby REIT if, at any time
after its election to be taxed as a REIT, it ceases to be taxed as a REIT.

“Bankruptcy Code” means the Bankruptcy Code of 1978, as amended.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the
subject of a bankruptcy or insolvency proceeding (under the Bankruptcy Code or
otherwise), or has had a receiver, conservator, trustee, administrator,
custodian, assignee for the benefit of creditors or similar Person charged with
the reorganization or liquidation of its business appointed for it, or, in the
good faith determination of the Administrative Agent, has taken any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any such proceeding or appointment, provided that a Bankruptcy Event shall not
result solely by virtue of any ownership interest, or the acquisition of any
ownership interest, in such Person by a Governmental Authority or
instrumentality thereof, provided, further, that such ownership interest does
not result in or provide such Person with immunity from the jurisdiction of
courts within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Person (or such Governmental Authority
or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or
agreements made by such Person.

“Base Rate” means the LIBOR Market Index Rate; provided, that if for any reason
the LIBOR Market Index Rate is unavailable, Base Rate shall mean the per annum
rate of interest equal to the Federal Funds Rate plus one and one-half of one
percent (1.50%).

“Base Rate Loan” means a Loan bearing interest at a rate based on the Base Rate.

“Benefit Arrangement” means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.

“Book Value” means, with respect to any asset, the book value of such asset as
determined in accordance with GAAP.

“Borrower” has the meaning set forth in the introductory Paragraph hereof and
shall include the Borrower’s permitted assigns.

“Borrower’s Agents” has the meaning given that term in Section 2.2.

“Business Day” means (i) a day of the week (but not a Saturday, Sunday or
holiday) on which the offices of the Administrative Agent in San Francisco,
California are open to the public for carrying on substantially all of the
Administrative Agent’s business functions, and (ii) if such day relates to a
LIBOR Loan, any such day that is also a day on which dealings in Dollars are
carried on in the London interbank market. Unless specifically referenced in
this Agreement as a Business Day, all references to “days” shall be to calendar
days.

 

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“Capitalized Lease Obligation” means obligations under a lease (to pay rent or
other amounts under any lease or other arrangement conveying the right to use)
that are required to be capitalized for financial reporting purposes in
accordance with GAAP. The amount of a Capitalized Lease Obligation is the
capitalized amount of such obligation determined in accordance with GAAP.

“Cash Collateral” means the deposit of money in the Cash Collateral Account in
accordance with Section 11.10.

“Cash Collateral Account” means a special deposit account maintained by the
Administrative Agent and under its sole dominion and control.

“Cash Equivalents” means: (a) securities issued, guaranteed or insured by the
United States of America or any of its agencies with maturities of not more than
one (1) year from the date acquired; (b) certificates of deposit with maturities
of not more than one (1) year from the date acquired issued by a United States
federal or state chartered commercial bank of recognized standing, or a
commercial bank organized under the laws of any other country which is a member
of the Organisation for Economic Cooperation and Development, or a political
subdivision of any such country, acting through a branch or agency, which bank
has capital and unimpaired surplus in excess of $500,000,000 and which bank or
its holding company has a short term commercial paper rating of at least A 2 or
the equivalent by S&P or at least P 2 or the equivalent by Moody’s; (c) reverse
repurchase agreements with terms of not more than seven days from the date
acquired, for securities of the type described in clause (a) above and entered
into only with commercial banks having the qualifications described in clause
(b) above; (d) commercial paper issued by any Person incorporated under the laws
of the United States of America or any State thereof and rated at least A 2 or
the equivalent thereof by S&P or at least P 2 or the equivalent thereof by
Moody’s, in each case with maturities of not more than one (1) year from the
date acquired; and (e) investments in money market funds registered under the
Investment Company Act of 1940, as amended, which have net assets of at least
$500,000,000 and at least 85% of whose assets consist of securities and other
obligations of the type described in clauses (a) through (d) above.

“Chattel Paper” shall have the meaning ascribed to such term in the Uniform
Commercial Code.

“Collateral” means any real or personal property directly or indirectly securing
any of the Obligations (subject to Section 2.18.) or any other obligation of a
Person under or in respect of any Loan Document to which it is a party, and
includes, without limitation, all “Mortgaged Property” under and as defined in
any Security Deed, all Management Agreements for the Collateral Properties and
all other property subject to a Lien created by a Security Document.

“Collateral Pool” means at any time all of the Properties that constitute
Collateral Properties, provided, that a Property shall cease to be included in
the Collateral Pool if (a) at any time such Property shall cease to be an
Eligible Property or (b) the Administrative Agent shall cease to hold a valid
and perfected first priority Lien in such Property.

 

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“Collateral Pool Availability” means at any time an amount, as determined by
Administrative Agent, equal to the lesser of (a) the sum of the Advance Rate
Values of all of the Collateral Properties and (b) the amount that would result
in a Debt Service Coverage Ratio equal to the Minimum DSCR Hurdle.

“Collateral Property” means an Eligible Property that the Administrative Agent
and the Required Approval Lenders have agreed to accept into the Collateral Pool
pursuant to Section 4.1. and with respect to which the conditions set forth in
Section 6.3. have been satisfied.

“Collateral Property Release” has the meaning given that term in Section 4.2.

“Commitment” means, as to each Lender, such Lender’s obligation to make Loans
pursuant to Section 2.1. in an amount up to, but not exceeding the amount set
forth for such Lender on Schedule I as such Lender’s “Commitment Amount” or
increases in any Commitment under Section 2.19., or the amount of any new
Commitment allocated to a new Lender under Section 2.19.) (as the same may be
assigned in accordance with this Agreement) in each case as the same may be
reduced from time to time pursuant to Section 2.14. or otherwise pursuant to the
terms of this Agreement.

“Commitment Percentage” means, as to each Lender the ratio, expressed as a
percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate
amount of the Commitments of all Lenders hereunder; provided, however, that if
at the time of determination the Commitments have been terminated or been
reduced to zero, the “Commitment Percentage” of each Lender with a Commitment
shall be the “Commitment Percentage” of such Lender in effect immediately prior
to such termination or reduction.

“Compliance Certificate” has the meaning given that term in Section 9.3.

“Continue”, “Continuation” and “Continued” each refers to the continuation of a
LIBOR Loan from one Interest Period to another Interest Period pursuant to
Section 2.11.

“Contracts” means all contracts, agreements and warranties relating to or
governing the use, occupancy, operation, management, hotel group, name or chain
affiliation and/or guest reservation, repair and service of a Property, and all
leases, occupancy agreements, concession agreements, and commitments to provide
rooms or facilities in the future, including all amendments, modifications and
supplements to any of the foregoing.

“Control Agreement” means a control agreement entered into by the applicable
Subsidiary Guarantor or Operating Lessee, the bank (which may, and if required
under Section 8.20. shall, be Wells Fargo) that holds the applicable FF&E
Reserve Account and the Administrative Agent, providing the Administrative Agent
with the right to exercise control over such account as provided therein,
provided, however, that if a Major Hotel Operator is the Manager of the
applicable Collateral Property, such Manager shall also be a party to such
control agreement.

“Convert”, “Conversion” and “Converted” each refers to the conversion of a Loan
of one Type into a Loan of another Type pursuant to Section 2.12.

 

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“Credit Event” means any of the following: (a) the making (or deemed making) of
any Loan, (b) the Conversion of a Loan and (c) the Continuation of a LIBOR Loan.

“Credit Party” means the Administrative Agent or any other Lender.

“Debt Service Coverage Ratio” means, as of the end of any twelve-month period,
the ratio of (a) Adjusted NOI for all Collateral Properties (or, in the case of
Section 4.2.(c), the Remaining Collateral Properties) for such twelve-month
period to (b) Pro Forma Debt Service determined as of the last day of such
twelve-month period.

“Default” means any event that, with the giving of notice, the lapse of time, or
both, would constitute an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed, within two
(2) Business Days of the date required to be funded or paid, to (i) fund any
portion of its Loans, or (ii) pay over to any Credit Party any other amount
required to be paid by it hereunder, unless, in the case of clause (i) above,
such Lender notifies the Administrative Agent in writing that such failure is
the result of such Lender’s good faith determination that a condition precedent
to funding (specifically identified and including the particular default, if
any) has not been satisfied, (b) has notified the Borrower or any Credit Party
in writing, or has made a public statement to the effect, that it does not
intend or expect to comply with any of its funding obligations under this
Agreement (unless such writing or public statement indicates that such position
is based on such Lender’s good faith determination that a condition precedent
(specifically identified and including the particular default, if any) to
funding a loan under this Agreement cannot be satisfied) or generally under
other agreements in which it commits to extend credit, (c) has failed, within
three Business Days after request by a Credit Party, acting in good faith, to
provide a certification in writing from an authorized officer of such Lender
that it will comply with its obligations (and is financially able to meet such
obligations) to fund prospective Loans, provided that such Lender shall cease to
be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s
receipt of such certification in form and substance satisfactory to it and the
Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

“Derivatives Contract” means (a) any transaction (including any master
agreement, confirmation or other agreement with respect to any such transaction)
now existing or hereafter entered into by the Borrower or any of its
Subsidiaries (i) which is a rate swap transaction, swap option, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option, credit protection transaction, credit swap, credit default
swap, credit default option, total return swap, credit spread transaction,
repurchase transaction, reverse repurchase transaction, buy/sell-back
transaction, securities lending transaction, weather index transaction or
forward purchase or sale of a security, commodity or other financial instrument
or interest (including any option with respect to any of these transactions) or
(ii) which is a type of transaction that is similar to any transaction referred
to in clause (i) above that is currently, or in the future becomes, recurrently
entered into in the financial markets (including terms and conditions
incorporated by reference in such agreement) and which is a forward, swap,
future, option or other derivative on one or more rates,

 

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currencies, commodities, equity securities or other equity instruments, debt
securities or other debt instruments, economic indices or measures of economic
risk or value, or other benchmarks against which payments or deliveries are to
be made, and (b) any combination of these transactions.

“Derivatives Termination Value” means, in respect of any one or more Derivatives
Contracts, after taking into account the effect of any legally enforceable
netting agreement or provision relating thereto, (a) for any date on or after
the date such Derivatives Contracts have been terminated or closed out, the
termination amount or value determined in accordance therewith, and (b) for any
date prior to the date such Derivatives Contracts have been terminated or closed
out, the then-current mark-to-market value for such Derivatives Contracts,
determined based upon one or more mid-market quotations or estimates provided by
any recognized dealer in Derivatives Contracts (which may include the
Administrative Agent, any Lender or any Affiliate of any thereof).

“Development/Redevelopment Property” means a Property that Parent Guarantor or
any of its Subsidiaries or Unconsolidated Affiliate is developing or renovating,
that upon completion will constitute a Hotel Property and that is currently
under development and not an operating property during such development and,
subject to the last sentence of this definition, on which the improvements
related to the development have not been completed. The term
“Development/Redevelopment Property” shall include, without limitation, real
property of the type described in the immediately preceding sentence that
satisfies both of the following conditions: (i) it is to be (but has not yet
been) acquired by the Parent Guarantor, any Subsidiary or any Unconsolidated
Affiliate upon completion of construction pursuant to a contract in which the
seller of such real property is required to develop or renovate prior to, and as
a condition precedent to, such acquisition and (ii) a third party is developing
such property using the proceeds of a loan that is Guaranteed by, or is
otherwise recourse to, the Parent Guarantor, any Subsidiary or any
Unconsolidated Affiliate. A Development/Redevelopment Property on which all
improvements (other than tenant improvements on unoccupied space) related to the
development of such Hotel Property have been completed for at least four
(4) full fiscal quarters shall cease to constitute a Development/Redevelopment
Property; provided, however, that Borrower shall be permitted to designate such
Property as a Seasoned Property at any earlier time.

“Documentation Agent” means Deutsche Bank Securities Inc.

“Dollars” or “$” means the lawful currency of the United States of America.

“DSCR Certificate” means a report in substantially the form of Exhibit B,
certified by a senior officer of the Borrower, setting forth the calculations
required to establish compliance with the Minimum DSCR Hurdle as of a specified
date, all in form and detail satisfactory to the Administrative Agent.

 

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“EBITDA” means, with respect to a Person for any period and without duplication,
the sum of:

(a) net income (or loss) before minority interests of such Person for such
period determined on a consolidated basis in accordance with GAAP, excluding the
following (but only to the extent included in determining net income (loss) for
such period): (i) depreciation and amortization; (ii) interest expense;
(iii) income tax expense; (iv) extraordinary or nonrecurring items, including,
without limitation, gains and losses from the sale of operating Hotel
Properties; (v) closing costs related to the acquisition of properties that were
capitalized prior to FAS 141-R which do not represent a recurring cash item in
such period or in any future period; (vi) other non-cash charges, including
share based compensation expense and impairment charges (other than non-cash
charges that constitute an accrual of a reserve for future cash payments); and
(vii) equity in net income (loss) of its Unconsolidated Affiliates; plus

(b) such Person’s Ownership Share of EBITDA of its Unconsolidated Affiliates.

“Effective Date” means the later of (a) the Agreement Date and (b) the date on
which all of the conditions precedent set forth in Section 6.1. shall have been
fulfilled or waived.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund and (d) any other Person (other than a natural person) approved by
(i) the Administrative Agent and (ii) unless a Default or Event of Default
exists, the Borrower (each such approval not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall
not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

“Eligible Property” means a Hotel Property which satisfies all of the following
requirements as confirmed by the Administrative Agent: (a) such Property is
owned in fee simple (or located on land leased under an Approved Ground Lease)
by an Eligible Subsidiary; (b) such Property is located in a Top 25 Market in a
state (other than Alaska or, unless approved by all Lenders, Hawaii) of the
United States of America or in the District of Columbia; (c) such Property is an
upscale (or better) full-service or select service Hotel Property with not less
than 150 keys; (d) such Property is operated under an Approved Brand; (e) the
Borrower has the right directly, or indirectly through an Eligible Subsidiary,
to take the following actions without the need to obtain the consent of any
Person: (i) to create Liens on such Property as security for Indebtedness of the
Borrower or such Eligible Subsidiary, and (ii) to sell, transfer or otherwise
dispose of such Property; (f) the Borrower’s direct or indirect ownership
interest in such Subsidiary is not subject to (i) any Lien other than Permitted
Liens or (ii) any Negative Pledge; and (g) any management contracts relating to
the management or operation of such Hotel Property are or may be subordinate to
a Security Document in favor of the Administrative Agent, as agent for the
Lenders.

“Eligible Subsidiary” means a Subsidiary of the Borrower that is either a
Wholly-Owned Subsidiary or a Baby REIT.

“Environmental Laws” means any Applicable Law relating to environmental
protection or the manufacture, storage, remediation, disposal or clean up of
Hazardous Materials including, without limitation, the following: Clean Air Act,
42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. § 1251
et seq.; Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; National Environmental
Policy Act, 42 U.S.C. § 4321 et seq.; regulations of the Environmental
Protection

 

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Agency, any applicable rule of common law and any judicial interpretation
thereof relating primarily to the environment or Hazardous Materials, and any
analogous or comparable state or local laws, regulations or ordinances that
concern Hazardous Materials or protection of the environment.

“Equipment” shall have the meaning ascribed to such term in the Uniform
Commercial Code.

“Equity Interest” means, with respect to any Person, any share of capital stock
of (or other ownership or profit interests in) such Person, any warrant, option
or other right for the purchase or other acquisition from such Person of any
share of capital stock of (or other ownership or profit interests in) such
Person whether or not certificated, any security convertible into or
exchangeable for any share of capital stock of (or other ownership or profit
interests in) such Person or warrant, right or option for the purchase or other
acquisition from such Person of such shares (or such other interests), and any
other ownership or profit interest in such Person (including, without
limitation, partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such share, warrant, option, right or other
interest is authorized or otherwise existing on any date of determination.

“Equity Issuance” means any issuance or sale by a Person of any Equity Interest
in such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Group” means the Borrower, any Subsidiary and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower or any Subsidiary, are
treated as a single employer under Section 414 of the Internal Revenue Code.

“Event of Default” means any of the events specified in Section 11.1., provided
that any requirement for notice or lapse of time or any other condition has been
satisfied.

“Extended Maturity Date” means October 14, 2015.

“Fair Market Value” means, with respect to any asset, the price which could be
negotiated in an arm’s-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction. Except as otherwise provided herein,
Fair Market Value shall be determined by the Board of Trustees of the Parent
Guarantor (or an authorized committee thereof) acting in good faith conclusively
evidenced by a board resolution thereof delivered to the Administrative Agent
or, with respect to any asset valued at no more than $5,000,000, such
determination may be made by the chief financial officer of the Borrower
evidenced by an officer’s certificate delivered to the Administrative Agent.

“FATCA” means Sections 1471 through 1474 of the Code (as of the date hereof) and
any regulations or official interpretations thereof (including any Revenue
Ruling, Revenue Procedure, Notice or similar guidance issued by the U.S.
Internal Revenue Service thereunder as a precondition to relief or exemption
from Taxes under such provisions); provided that FATCA

 

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shall also include any amendments to Sections 1471 through 1474 of the Code if,
as amended, FATCA provides a commercially reasonable mechanism to avoid the tax
imposed thereunder by satisfying the information reporting and other
requirements of FATCA.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the immediately preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three (3) Federal Funds
brokers of recognized standing selected by the Administrative Agent.

“Fee Letter” means that certain fee letter dated as of October 4, 2011, by and
among the Borrower, the Administrative Agent, the Syndication Agent and certain
of the Arrangers.

“Fees” means the fees and commissions provided for or referred to in
Section 3.5. and any other fees payable by the Borrower hereunder, under any
other Loan Document or under the Fee Letter.

“FF&E” means all fixtures, furnishings, equipment, furniture, and other items of
tangible personal property now or hereafter located on a Collateral Property or
used in connection with the use, occupancy, operation and maintenance of all or
any part of such Collateral Property, other than stocks of food and other
supplies held for consumption in normal operation but including, without
limitation, appliances, machinery, equipment, signs, artwork, office furnishings
and equipment, guest room furnishings, and specialized equipment for kitchens,
laundries, bars, restaurants, public rooms, health and recreational facilities,
dishware, all partitions, screens, awnings, shades, blinds, floor coverings,
hall and lobby equipment, heating, lighting, plumbing, ventilating,
refrigerating, incinerating, elevators, escalators, air conditioning and
communication plants or systems with appurtenant fixtures, vacuum cleaning
systems, call or beeper systems, security systems, sprinkler systems and other
fire prevention and extinguishing apparatus and materials; reservation system
computer and related equipment; all equipment, manual, mechanical or motorized,
for the construction, maintenance, repair and cleaning of parking areas, walks,
underground ways, truck ways, driveways, common areas, roadways, highways and
streets; and the vehicles; and as, further described in the Security Deed for
such Collateral Property and UCC filings.

“FF&E Reserve” means, for any calendar month for any Collateral Property, an
amount equal to the greater of (i) four percent (4%) of Gross Operating Revenues
for such calendar month or (ii) the amount of FF&E or capital reserves required
under the applicable Management Agreement or Franchise Agreement.

“FF&E Reserve Account” means, with respect to each Collateral Property, an
account into which the FF&E Reserve shall be deposited from time to time as
provided in Section 8.20.

“FIRREA” means the Financial Institution Recovery, Reform and Enforcement Act of
1989, as amended.

 

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“Fixed Charge Coverage Ratio” means the ratio of (i) Adjusted EBITDA of the
Parent Guarantor and its consolidated Subsidiaries for any period of four
consecutive fiscal quarters most recently ending to (ii) Fixed Charges of the
Parent Guarantor and its consolidated Subsidiaries for such period.

“Fixed Charges” means, with respect to a Person and for a given period, the sum
of (a) the Interest Expense of such Person for such period, plus (b) the
aggregate of all regularly scheduled principal payments on Indebtedness payable
by such Person during such period (excluding balloon, bullet or similar payments
of principal due upon the stated maturity of Indebtedness), plus (c) the
aggregate amount of all Preferred Dividends paid by such Person during such
period, plus (d) the aggregate of all payments by such Person in respect of
Capitalized Lease Obligations. The Parent Guarantor’s Ownership Share of the
Fixed Charges of its Unconsolidated Affiliates will be included when determining
the Fixed Charges of the Parent Guarantor.

“Franchise Agreement” means a license or franchise agreement between a
Subsidiary Guarantor or Operating Lessee and a Franchisor.

“Franchisor” means a Person that licenses or franchises its hotel brand to hotel
owners or operators.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“Funds From Operations” means net income available to common shareholders
(computed in accordance with GAAP), excluding gains (or losses) from sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnership and joint ventures will be calculated to reflect funds from
operations on the same basis. For purposes of this Agreement, Funds From
Operations shall be calculated consistent with the White Paper on Funds From
Operations dated October 1999 issued by National Association of Real Estate
Investments Trusts, Inc. (“NAREIT”), as supplemented by the National Policy
Bulletin dated November 8, 1999 issued by NAREIT, but without giving effect to
any supplements, amendments or other modifications promulgated after the
Agreement Date.

“GAAP” means United States generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.

“General Intangibles” shall have the meaning ascribed to such term in the
Uniform Commercial Code.

“Governmental Approvals” means all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.

 

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“Governmental Authority” means any national, state or local government (whether
domestic or foreign), any political subdivision thereof or any other
governmental, quasi governmental, judicial, administrative, public or statutory
instrumentality, authority, body, agency, bureau, commission, board, department
or other entity (including, without limitation, the Federal Deposit Insurance
Corporation, the Comptroller of the Currency or the Federal Reserve Board, any
central bank or any comparable authority) or any arbitrator with authority to
bind a party at law.

“Gross Operating Revenues” means, for any period of time for any Property,
without duplication, all income and proceeds of sales of every kind (whether in
cash or on credit and computed on an accrual basis) received by the applicable
Subsidiary Guarantor, Operating Lessee or Manager for the use, occupancy or
enjoyment of the Property or the sale of any goods, services or other items sold
on or provided from the Property in the ordinary course of operation of the
Property, including, without limitation, all income received from tenants,
transient guests, lessees (other than communications equipment lessees or
service providers), licensees and concessionaires and other services to guests
at the Property, and the proceeds from business interruption insurance, but
excluding the following: (i) any excise, sales or use taxes or similar
government charges collected directly from patrons or guests, or as a part of
the sales price of any goods, services or displays, such as gross receipts,
admission, cabaret or similar or equivalent taxes; (ii) receipts from
condemnation awards or sales in lieu of or under threat of condemnation;
(iii) proceeds of insurance (other than business interruption insurance);
(iv) other allowances and deductions as provided by the Uniform System in
determining the sum contemplated by this definition, by whatever name, it may be
called; (v) proceeds of sales, whether dispositions of capital assets, FF&E or
Equipment (other than sales of Inventory in the ordinary course of business);
(vi) gross receipts received by tenants, lessees (other than the Operating
Lessee), licensees or concessionaires of the Property; (vii) consideration
received at the Property for hotel accommodations, goods and services to be
provided at other hotels although arranged by, for or on behalf of, and paid
over to, Manager; (viii) tips, service charges and gratuities collected for the
benefit of employees; (ix) proceeds of any financing; (x) working capital
provided by the Borrower, Subsidiary Guarantor or Operating Lessee;
(xii) amounts collected from guests or patrons of the Property on behalf of
Property tenants and other third parties; (xii) the value of any goods or
services in excess of actual amounts paid (in cash or services) provided by the
Manager on a complimentary or discounted basis; and (xiii) other income or
proceeds resulting other than from the use or occupancy of the Property, or any
part thereof, or other than from the sale of goods, services or other items sold
on or provided from the Property in the ordinary course of business. Gross
Operating Revenues shall be reduced by credits or refunds to guests at the
Property.

“Guarantors” means the Parent Guarantor and Subsidiary Guarantors.

“Guaranty”, “Guaranteed” or to “Guarantee” as applied to any obligation means
and includes: (a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation, or (b) an
agreement, direct or indirect, contingent or otherwise, and whether or not
constituting a guaranty, the practical effect of which is to assure the payment
or performance (or payment of damages in the event of nonperformance) of any
part or all of such obligation whether by: (i) the purchase of securities or
obligations, (ii) the purchase, sale or lease (as lessee

 

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or lessor) of property or the purchase or sale of services primarily for the
purpose of enabling the obligor with respect to such obligation to make any
payment or performance (or payment of damages in the event of nonperformance) of
or on account of any part or all of such obligation, or to assure the owner of
such obligation against loss, (iii) the supplying of funds to or in any other
manner investing in the obligor with respect to such obligation, (iv) repayment
of amounts drawn down by beneficiaries of letters of credit, or (v) the
supplying of funds to or investing in a Person on account of all or any part of
such Person’s obligation under a Guaranty of any obligation or indemnifying or
holding harmless, in any way, such Person against any part or all of such
obligation. As the context requires, “Guaranty” shall also mean the Parent
Guaranty and the Subsidiary Guaranty.

“Hazardous Materials” means all or any of the following: (a) substances that are
defined or listed in, or otherwise classified pursuant to, any applicable
Environmental Laws as “hazardous substances”, “hazardous materials”, “hazardous
wastes”, “toxic substances” or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, “TCLP”
toxicity, or “EP toxicity”; (b) oil, petroleum or petroleum derived substances,
natural gas, natural gas liquids or synthetic gas and drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (c) any explosives
or any radioactive materials; (d) asbestos in any form; and (e) toxic mold.

“Hazardous Materials Indemnity Agreement” means that certain Hazardous Materials
Indemnity Agreement dated July 30, 2010 executed by the Borrower and the Parent
Guarantor in favor of the Administrative Agent for its benefit and the benefit
of the Lenders, as amended by that certain First Amendment to Repayment Guaranty
and Hazardous Materials Indemnity Agreement dated January 21, 2011 and by that
certain Second Amendment to Repayment Guaranty and Hazardous Materials Indemnity
Agreement dated as of the date hereof, and as the same may hereafter be
supplemented, amended or modified from time to time.

“Hotel Property” means a Property on which there is located an operating hotel.

“Indebtedness” means, with respect to a Person, at the time of computation
thereof, all of the following (without duplication):

(a) all obligations of such Person in respect of money borrowed or for the
deferred purchase price of property or services (other than trade debt incurred
in the ordinary course of business and not more than sixty (60) days past due
unless being contested in good faith and equipment leases entered into the
ordinary course of business);

(b) all obligations of such Person, whether or not for money borrowed
(i) represented by notes payable, or drafts accepted, in each case representing
extensions of credit, (ii) evidenced by bonds, debentures, notes or similar
instruments, or (iii) constituting purchase money indebtedness, conditional
sales contracts, title retention debt instruments or other similar instruments,
upon which interest charges are customarily paid or that are issued or assumed
as full or partial payment for property or for services rendered;

(c) Capitalized Lease Obligations of such Person;

 

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(d) all reimbursement obligations (contingent or otherwise) of such Person under
or in respect of any letters of credit or acceptances (whether or not the same
have been presented for payment);

(e) all Off-Balance Sheet Obligations of such Person;

(f) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment (excluding any such obligation to the extent the
obligation can be satisfied by the issuance of Equity Interests (other than
Mandatorily Redeemable Stock)) in respect of any Mandatorily Redeemable Stock
issued by such Person or any other Person, valued at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends;

(g) all obligations of such Person in respect of any purchase obligation,
repurchase obligation, takeout commitment or forward equity commitment, in each
case evidenced by a binding agreement (excluding any such obligation to the
extent the obligation can be satisfied by the issuance of Equity Interests
(other than Mandatorily Redeemable Stock)); provided, however, that purchase
obligations pursuant to this clause (g) shall be included only to the extent
that the amount of such Person’s liability for the purchase price is not limited
to the amount of any associated deposit given by such Person;

(h) net obligations under any Derivatives Contract (other than Derivatives
Contracts entered into as a hedge against Indebtedness that is secured by one or
more Properties), which shall be deemed to have an amount equal to the
Derivatives Termination Value thereof at such time but in no event shall be less
than zero;

(i) all Indebtedness of other Persons which such Person has guaranteed or is
otherwise recourse to such Person (except for guaranties of customary exceptions
for fraud, misapplication of funds, environmental indemnities, voluntary
bankruptcy, collusive involuntary bankruptcy and other similar customary
exceptions to non-recourse liability and except for guaranties of franchise
agreements and/or management agreements unless and to the extent that such
Person has admitted liability or a final, non-appealable judgment has been
entered against such Person);

(j) all Indebtedness of another Person secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property or assets owned by such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness or other
payment obligation; and

(k) such Person’s Ownership Share of the Indebtedness of any Unconsolidated
Affiliate of such Person.

“Indebtedness” of any Person shall include Indebtedness of any partnership or
joint venture in which such Person is a general partner or joint venturer to the
extent of such Person’s Ownership Share of such partnership or joint venture
(except if such Indebtedness, or portion thereof, is recourse to such Person
(other than with respect to customary non-recourse carve-outs described in
clause (i) above), in which case the greater of such Person’s Ownership Share of
such Indebtedness or the amount of the recourse portion of the Indebtedness,
shall be included as Indebtedness of such Person). All Loans under this
Agreement shall constitute Indebtedness of the Borrower.

 

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“Initial Collateral Properties” means the six (6) Collateral Properties
identified in Schedule II hereto.

“Initial Operating Lessees” means the Operating Lessees of the six Initial
Collateral Properties identified in Schedule II hereto.

“Initial Subsidiary Guarantors” means the Subsidiary Guarantors that are owners
of the six Initial Collateral Properties identified in Schedule II hereto.

“Intellectual Property” has the meaning given that term in Section 7.1.(t).

“Interest Expense” means, with respect to a Person and for any period, without
duplication, (a) all paid, accrued or capitalized interest expense (including,
without limitation, capitalized interest expense (other than capitalized
interest funded from a construction loan interest reserve account held by
another lender and not included in the calculation of cash for balance sheet
reporting purposes) and interest expense attributable to Capitalized Lease
Obligations) of such Person and in any event shall include all letter of credit
fees and all interest expense with respect to any Indebtedness in respect of
which such Person is wholly or partially liable whether pursuant to any
repayment, interest carry, performance guarantee or otherwise, plus (b) to the
extent not already included in the foregoing clause (a), such Person’s
applicable Ownership Share of all paid, accrued or capitalized interest expense
for such period of Unconsolidated Affiliates of such Person.

“Interest Period” means, with respect to each LIBOR Loan, each period commencing
on the date such LIBOR Loan is made, or in the case of the Continuation of a
LIBOR Loan the last day of the preceding Interest Period for such Loan, and
ending on the numerically corresponding day in the first, third or sixth
calendar month thereafter, as the Borrower may select in a Notice of Borrowing,
Notice of Continuation or Notice of Conversion, as the case may be, except that
each Interest Period that commences on the last Business Day of a calendar month
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (i) if any
Interest Period would otherwise end after the Maturity Date, such Interest
Period shall end on the Maturity Date; and (ii) each Interest Period that would
otherwise end on a day which is not a Business Day shall end on the immediately
following Business Day (or, if such immediately following Business Day falls in
the next calendar month, on the immediately preceding Business Day).

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Inventory” shall have the meaning ascribed to such term in the Uniform
Commercial Code, and including within the term 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 Systems of Accounts.

“Investment” means, with respect to any Person, any acquisition or investment
(whether or not of a controlling interest) by such Person, whether by means of
any of the following: (a) the purchase or other acquisition of any Equity
Interest in another Person, (b) a loan, advance or extension of credit to,
capital contribution to, Guaranty of Indebtedness of, or purchase or other

 

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acquisition of any Indebtedness of, another Person, including any partnership or
joint venture interest in such other Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute the business or a division or operating unit of
another Person. Any commitment to make an Investment in any other Person, as
well as any option of another Person to require an Investment in such Person,
shall constitute an Investment. Except as expressly provided otherwise, for
purposes of determining compliance with any covenant contained in a Loan
Document, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

“Lender” means each financial institution from time to time party hereto as a
“Lender,” together with its respective successors and permitted assigns. With
respect to matters requiring the consent or approval of all Lenders, at any
given time, all then existing Defaulting Lenders will be disregarded and
excluded, and, for voting purposes only, “all Lenders” shall be deemed to mean
“all Lenders other than Defaulting Lenders.”

“Lending Office” means, for each Lender and for each Type of Loan, the office of
such Lender specified in such Lender’s Administrative Questionnaire or in the
applicable Assignment and Assumption Agreement, or such other office of such
Lender as such Lender may notify the Administrative Agent in writing from time
to time.

“Leverage Ratio” means the ratio (stated as a percentage) of (a) Indebtedness of
the Parent Guarantor and its Subsidiaries on a consolidated basis to (b) Total
Asset Value.

“LIBOR” means, for the Interest Period for any LIBOR Loan, the rate of interest,
rounded up to the nearest whole multiple of one-hundredth of one percent (.01%),
obtained by dividing (i) the rate of interest, rounded upward to the nearest
whole multiple of one-sixteenth of one percent (0.0625%), referred to as the BBA
(British Bankers’ Association) LIBOR rate as set forth by any service selected
by the Administrative Agent that has been nominated by the British Bankers’
Association as an authorized information vendor for the purpose of displaying
such rate for deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time,
two (2) Business Days prior to the date of commencement of such Interest Period
for purposes of calculating effective rates of interest for loans or obligations
making reference thereto, for an amount approximately equal to the applicable
LIBOR Loan and for a period of time approximately equal to such Interest Period
by (ii) a percentage equal to 1 minus the stated maximum rate (stated as a
decimal) of all reserves, if any, required to be maintained with respect to
Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as
specified in Regulation D of the Board of Governors of the Federal Reserve
System (or against any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Loans is determined or any
applicable category of extensions of credit or other assets which includes loans
by an office of any Lender outside of the United States of America). Any change
in such stated maximum rate shall result in a change in LIBOR on the date on
which such change in such stated maximum rate becomes effective.

“LIBOR Loan” means a Loan bearing interest at a rate based on LIBOR.

 

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“LIBOR Market Index Rate” means, for any day, LIBOR as of that day for one-month
deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time for such day
(or if such day is not a Business Day, the immediately preceding Business Day).
The LIBOR Market Index Rate shall be determined on a daily basis.

“Licenses” means all certifications, permits, licenses and approvals, including
certificates of completion, certificates of occupancy, and food and beverage and
liquor licenses, required for the legal use, occupancy and operation of a
Collateral Property as used at the time at which it is added to the Collateral
Pool and from time to time thereafter.

“Lien” as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, assignment
of leases or rents, pledge, lien, hypothecation, assignment, charge or lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security title or encumbrance of any kind in
respect of any property of such Person, or upon the income, rents or profits
therefrom; (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person; (c) the filing of any financing statement under the UCC or its
equivalent in any jurisdiction (other than a financing statement filed by a
“true” lessor pursuant to Section 9408 (or a successor section) of the UCC); and
(d) any agreement by such Person to grant, give or otherwise convey any of the
foregoing.

“Loan” means a loan made by a Lender to the Borrower pursuant to Section 2.1.

“Loan Document” means this Agreement, each Note, the Parent Guaranty, the
Subsidiary Guaranty, each Security Document and each other document or
instrument now or hereafter executed and delivered by a Loan Party in connection
with, pursuant to or relating to this Agreement (other than the Fee Letter).

“Loan Party” means each of the Borrower, the Parent Guarantor, the Initial
Subsidiary Guarantors, the Initial Operating Lessees and each other Person who
guarantees all or a portion of the Obligations and/or who pledges any Collateral
to secure all or a portion of the Obligations.

“Major Hotel Operator” means a Manager that is the owner of or an Affiliate of
the owner of an Approved Brand under which a Collateral Property is operated.

“Major Renovations” means, with respect to a Hotel Property, Renovations
(including all Renovations that are part of an overall plan or that are similar
or related to other Renovations, even though not performed at the same time)
that (a) have resulted in, or are reasonably expected to result in, more than
twenty-five percent (25%) of the rooms in such Hotel Property not being
available for occupancy for a period of more than sixty (60) days, (b) have a
projected cost that exceeds forty percent (40%) of the Book Value of such Hotel
Property (as determined prior to the commencement of such Renovations) or
(c) have resulted in, or are reasonably expected to result in, a reduction of
Net Operating Income of such Hotel Property of thirty percent (30%) or more
during any period of twelve (12) consecutive months (as compared to the period
of twelve (12) consecutive months immediately prior to the commencement of such
Renovations).

 

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“Major Tenant Lease” means a Tenant Lease that demises more than 5,000 rentable
square feet of a Collateral Property.

“Majority Lenders” means, as of any date, Lenders having at least 50.1% of the
aggregate amount of the Commitments, or, if the Commitments have been terminated
or reduced to zero, Lenders holding at least 50.1% of the aggregate principal
amount of the outstanding Loans; provided that (i) in determining such
percentage at any given time, all then existing Defaulting Lenders will be
disregarded and excluded, and the Pro Rata Shares shall be redetermined, for
voting purposes only, to exclude the Pro Rata Shares of such Defaulting Lenders,
and (ii) at all times when two or more Lenders are party to this Agreement, the
term “Majority Lenders” shall in no event mean less than two Lenders.

“Management Agreement” means an agreement entered into by any Subsidiary
Guarantor or Operating Lessee pursuant to which it engages a Manager to manage
and operate a Collateral Property, as each said agreement may be amended,
supplemented, restated, replaced or otherwise modified from time to time in
accordance with the terms of this Agreement.

“Management Agreement Assignment/Subordination” means, with respect to any
Collateral Property, a document or documents, in form and substance satisfactory
to Administrative Agent, pursuant to which (a) the Subsidiary Guarantor that
owns such Collateral Property or the Operating Lessee that leases such
Collateral Property (as applicable) assigns the Management Agreement for such
Collateral Property to Administrative Agent for its benefit and the benefit of
the Lenders as Collateral (subject to Section 2.18.) and (b) the Manager
acknowledges and agrees to such assignment and subordinates the Management
Agreement to the applicable Security Deed on terms and conditions reasonably
satisfactory to Administrative Agent.

“Manager” means the management company that manages and operates a Collateral
Property pursuant to the Management Agreement for such Collateral Property.

“Mandatorily Redeemable Stock” means, with respect to any Person, any Equity
Interest of such Person which by the terms of such Equity Interest (or by the
terms of any security into which it is convertible or for which it is
exchangeable or exercisable), upon the happening of any event or otherwise,
(a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation
or otherwise (other than an Equity Interest to the extent redeemable in exchange
for common stock or other equivalent common Equity Interests at the option of
the issuer of such Equity Interest), (b) is convertible into or exchangeable or
exercisable for Indebtedness or Mandatorily Redeemable Stock, or (c) is
redeemable at the option of the holder thereof, in whole or part (other than an
Equity Interest which is redeemable solely in exchange for common stock or other
equivalent common Equity Interests), in each case on or prior to the date on
which all Loans are scheduled to be due and payable in full.

“Material Adverse Effect” means a materially adverse effect on (a) the business,
assets, liabilities, condition (financial or otherwise), results of operations
or business prospects of the Loan Parties taken as a whole, (b) the ability of
the Borrower or any other Loan Party to perform its material obligations under
any Loan Document to which it is a party, (c) the validity or enforceability of
any of the Loan Documents or (d) the rights and remedies of the Lenders and the
Administrative Agent under any of the Loan Documents.

 

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“Material Contract” means (a) each Management Agreement with respect to a
Collateral Property, (b) each Franchise Agreement, if any, with respect to a
Collateral Property, (c) the Operating Lease for a Collateral Property, (d) any
Major Tenant Lease of a Collateral Property, (e) any material agreement relating
to parking for a Collateral Property, (f) any ground lease with respect to a
Collateral Property and (g) any other contract or other arrangement (other than
Loan Documents), whether written or oral, to which the Borrower or any other
Loan Party is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.

“Material Plan” means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $5,000,000.

“Maturity Date” means the Original Maturity Date, as it may be extended to the
Extended Maturity Date pursuant to Section 2.15.

“Maximum Leverage Ratio” means (a) until the Original Maturity Date, sixty
percent (60%) and (b) as a condition under Section 2.15.(h) and from and after
the Original Maturity Date, fifty-five percent (55%).

“Maximum Loan Availability” means, at any time, the lesser of (a) the Collateral
Pool Availability and (b) the aggregate amount of the Commitments at such time.

“Minimum DSCR Hurdle” means a Debt Service Coverage Ratio of (a) 1.25 to 1.00
prior to March 31, 2013, and (b) 1.35 to 1.00 from and after March 31, 2013.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage” means a mortgage, deed of trust, deed to secure debt or similar
security instrument made or to be made by a Person owning an interest in real
estate granting a Lien on such interest in real estate as security for the
payment of Indebtedness.

“Multiemployer Plan” means at any time a multiemployer plan within the meaning
of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then
making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions, including for these purposes any
Person which ceased to be a member of the ERISA Group during such five year
period.

“Negative Pledge” means, with respect to a given asset, any provision of a
document, instrument or agreement (other than any Loan Document) which prohibits
or purports to prohibit the creation or assumption of any Lien on such asset as
security for Indebtedness of the Person owning such asset or any other Person;
provided, however, that an agreement that conditions a Person’s ability to
encumber its assets upon the maintenance of one or more specified ratios that
limit a Person’s ability to encumber its assets but that do not generally
prohibit the encumbrance of its assets, or the encumbrance of specific assets,
shall not constitute a Negative Pledge.

 

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“Net Operating Income” means, for any Property and for a given period, the
amount by which the Gross Operating Revenues for such Property exceed the
Operating Expenses for such Property.

“Net Proceeds” means with respect to an Equity Issuance by a Person, the
aggregate amount of all cash or the Fair Market Value of all other property
received by such Person in respect of such Equity Issuance net of investment
banking fees, legal fees, accountants fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred by such
Person in connection with such Equity Issuance.

“New Property” means each Hotel Property acquired by the Parent Guarantor or any
Subsidiary or Unconsolidated Affiliate from the date of acquisition until the
Seasoned Date in respect thereof, provided, however, that, upon the Seasoned
Date for any New Property, such New Property shall be converted to a Seasoned
Property and shall cease to be a New Property.

“Note” means a promissory note of the Borrower substantially in the form of
Exhibit C, payable to the order of a Lender in a principal amount equal to the
amount of such Lender’s Commitment.

“Notice of Borrowing” means a notice substantially in the form of Exhibit D (or
such other form reasonably acceptable to the Administrative Agent and containing
the information required in such Exhibit) to be delivered to the Administrative
Agent pursuant to Section 2.2. evidencing the Borrower’s request for a borrowing
of Loans.

“Notice of Continuation” means a notice substantially in the form of Exhibit E
(or such other form reasonably acceptable to the Administrative Agent and
containing the information required in such Exhibit) to be delivered to the
Administrative Agent pursuant to Section 2.11. evidencing the Borrower’s request
for the Continuation of a LIBOR Loan.

“Notice of Conversion” means a notice substantially in the form of Exhibit F (or
such other form reasonably acceptable to the Administrative Agent and containing
the information required in such Exhibit) to be delivered to the Administrative
Agent pursuant to Section 2.12. evidencing the Borrower’s request for the
Conversion of a Loan from one Type to another Type.

“Notice of Responsible Officers” means a certificate of incumbency or notice
from the Borrower to the Administrative Agent, in a form satisfactory to the
Administrative Agent, identifying the officers of the Borrower that have
authority to deliver Notices of Borrowing, Notices of Conversion, Notices of
Continuation and other notices or requests specified in this Agreement.

“NYC Hotel” means the hotel located at 30-32 West 31st Street. New York, New
York, which the Borrower intends to acquire, but which it has not yet requested
be approved as a Collateral Property. The inclusion in this Agreement of
references to the NYC Hotel does not imply that the Borrower is obligated to
request the Administrative Agent or the Lenders to approve it as a Collateral
Property or that the Administrative Agent or the Lenders are obligated to
approve it as a Collateral Property if requested.

 

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“Obligations” means, individually and collectively: (a) the aggregate principal
balance of, and all accrued and unpaid interest on, all Loans; and (b) all other
indebtedness, liabilities, obligations, covenants and duties of the Borrower or
any of the other Loan Parties owing to the Administrative Agent or any Lender of
every kind, nature and description, under or in respect of this Agreement or any
of the other Loan Documents, including, without limitation, the Fees and
indemnification obligations, whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any promissory note.

“Off-Balance Sheet Obligations” means liabilities and obligations of the Parent
Guarantor, Borrower, any Subsidiary or any other Person in respect of
“off-balance sheet arrangements” (as defined in Item 303(a)(4)(ii) of Regulation
S-K promulgated under the Securities Act) which the Parent Guarantor would be
required to disclose in the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” Section of the Parent Guarantor’s report on
Form 10 Q or Form 10 K (or their equivalents) which the Parent Guarantor is
required to file with the Securities and Exchange Commission (or any
Governmental Authority substituted therefor).

“Operating Expenses” means, for any period of time for any Property, all costs
and expenses of maintaining, conducting and supervising the operation of the
Property which are properly attributable to the period under consideration under
the Borrower’s system of accounting, including without limitation:

(i) the cost of all food and beverages sold or consumed and of all Inventory;

(ii) salaries and wages of personnel employed at the Property, including costs
of payroll taxes and employee benefits and all other expenses not otherwise
specifically referred to in this paragraph which are referred to as
“Administrative and General Expenses” in the Uniform System;

(iii) the cost of all other goods and services obtained by Manager in connection
with its operation of the Property including, without limitation, heat and
utilities, office supplies and all services performed by third parties,
including leasing expenses in connection with telephone and data processing
equipment;

(iv) the cost of repairs to and maintenance of the Property (excluding capital
expenditures);

(v) insurance premiums for all insurance maintained with respect to the
Property, including without limitation, property damage insurance, public
liability insurance, and such business interruption or other insurance as may be
provided for protection against claim, liabilities and losses arising from the
use and operation of the Property and losses incurred with respect to
deductibles applicable to the foregoing types of insurance;

(vi) workers’ compensation insurance or insurance required by similar employee
benefits acts;

 

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(vii) all personal property taxes, real estate taxes, assessments, and any other
ad valorem taxes imposed on or levied in connection with the Property (less
refunds, offsets or credits thereof, and interest thereon, if any, received
during the period in question) and all other taxes, assessments and other
charges (other than federal, state or local income taxes and franchise taxes or
the equivalent) payable by or assessed against Manager, Subsidiary Guarantor or
Operating Lessee with respect to the operation of the Property and water and
sewer charges;

(viii) all sums deposited into any maintenance or capital expenditure reserve,
including the amount of the applicable FF&E Reserve;

(ix) legal fees related to the operation of the Property;

(x) the costs and expenses of technical consultants and specialized operational
experts for specialized services in connection with non-recurring work on
operational, functional, decorating, design or construction problems and
activities, including the fees (if any) of Manager in connection therewith, such
as ADA studies, life safety reviews, and energy efficiency studies;

(xi) all expenses for marketing the Property, including all expenses of
advertising, sales promotion and public relations activities;

(xii) utility taxes and other taxes (as those terms are defined in the Uniform
System) and municipal, county and state license and permit fees;

(xiii) all fees (including base and incentive fees), assessments, royalties and
charges payable under the Management Agreement and Franchise Agreement (if any);

(xiv) reasonable reserves for uncollectible accounts receivable;

(xv) credit card fees, travel agent commissions and other third-party
reservation fees and charges;

(xvi) all parking charges and other expenses associated with revenues received
by the Manager related to parking operations, including valet services;

(xvii) common expenses charges, common area maintenance charges and similar
costs and expenses;

(xviii) rent payments under any ground lease; and

(xix) any other cost or charge classified as an Operating Expense or an
Administrative and General Expense under the Uniform System in the Management
Agreement unless specifically excluded under the provisions of this Agreement.

Operating Expenses shall not include (a) depreciation and amortization except as
otherwise provided in this Agreement; (b) the cost of any item specified in the
Management Agreement to be provided at Manager’s sole expense; (c) debt service;
(d) capital repairs and other

 

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expenditures which are normally treated as capital expenditures under the
Uniform System or GAAP; or (e) other recurring or non-recurring ownership costs
such as partnership or limited liability company administration and costs of
changes to business and liquor licenses.

“Operating Lease” means, with respect to any Property, the lease thereof between
the Subsidiary of the Borrower that is the owner thereof and the Subsidiary of
the Borrower that is the Operating Lessee.

“Operating Lessee” means any Subsidiary of the Borrower that is the lessee under
an Operating Lease.

“Operating Property Value” means, at any date of determination, the following:

(a) prior to March 31, 2013, the Operating Property Value for each Hotel
Property shall be:

(i) the purchase price thereof, or

(ii) in the case of each Collateral Property, the lesser of (x) the purchase
price thereof or (y) the Appraised Value thereof; and

(b) from and after March 31, 2013, the Operating Property Value for each Hotel
Property shall be:

(i) for each New Property (until the Seasoned Date) thereof, (x) the purchase
price thereof or (y) in the case of each Collateral Property, the lesser of
(1) the purchase price thereof or (2) the Appraised Value thereof; or

(ii) for each Seasoned Property, (A) the Adjusted NOI thereof for the period of
twelve (12) months ended on such date of determination divided by (B) the
Applicable Capitalization Rate; provided, however, that in the case of a
Collateral Property for which an Appraisal has been obtained after its Seasoned
Date, the Operating Property Value of such Collateral Property Value shall not
exceed its Appraised Value.

“Operating Property Value Shortfall” means, at any time of determination, the
amount (if any) by which (a) $250,000,000.00 exceeds (b) the sum of (i) the
Operating Property Values of the Collateral Properties in the aggregate,
(ii) the amount of any Cash Collateral then held in the Cash Collateral Account
and (iii) the stated amount of any Qualified Letters of Credit then held by the
Administrative Agent.

“Option to Extend” means the Borrower’s option to extend the Maturity Date as
provided in Section 2.15.

“Original Credit Agreement” has the meaning given that term in the recitals to
this Agreement.

“Original Maturity Date” means October 14, 2014.

 

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“Ownership Share” means, with respect to any Subsidiary of a Person (other than
a Wholly Owned Subsidiary) or any Unconsolidated Affiliate of a Person, the
greater of (a) such Person’s relative nominal direct and indirect ownership
interest (expressed as a percentage) in such Subsidiary or Unconsolidated
Affiliate or (b) subject to compliance with Section 9.4.(s), such Person’s
relative direct and indirect economic interest (calculated as a percentage) in
such Subsidiary or Unconsolidated Affiliate determined in accordance with the
applicable provisions of the declaration of trust, articles or certificate of
incorporation, articles of organization, partnership agreement, joint venture
agreement or other applicable organizational document of such Subsidiary or
Unconsolidated Affiliate.

“Parent Guarantor” means Chesapeake Lodging Trust, a Maryland real estate
investment trust.

“Parent Guaranty” means that certain Guaranty dated July 30, 2010, executed by
the Parent Guarantor in favor of the Administrative Agent for its benefit and
the benefit of the Lenders, as amended by that certain First Amendment to
Repayment Guaranty and Hazardous Materials Indemnity Agreement dated January 21,
2011 and that certain Second Amendment to Repayment Guaranty and Hazardous
Materials Indemnity Agreement dated as of the date hereof, as the same may
hereafter be supplemented, amended or otherwise modified from time to time.

“Participant” has the meaning given that term in Section 13.6.(b).

“PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.

“Permitted Liens” means, with respect to any asset or property of a Person,
(a) Liens securing taxes, assessments and other charges or levies imposed by any
Governmental Authority (excluding any Lien imposed pursuant to any of the
provisions of ERISA or pursuant to any Environmental Laws) which are not at the
time required to be paid or discharged under Section 8.6.; (b) Liens consisting
of deposits or pledges made, in the ordinary course of business, in connection
with, or to secure payment of, obligations under workers’ compensation,
unemployment insurance or similar Applicable Laws; (c) Liens consisting of
encumbrances in the nature of zoning restrictions, easements, and rights or
restrictions of record on the use of real property, which do not materially
detract from the value of such Property or impair the intended use thereof in
the business of such Person; (d) Liens imposed by laws, such as mechanics’ liens
and other similar liens, arising in the ordinary course of business which secure
payment of obligations not more than sixty (60) days past due; (e) the rights of
tenants under leases or subleases not interfering with the ordinary conduct of
business of such Person; (f) Liens in favor of the Administrative Agent for its
benefit and the benefit of the Lenders; (g) Liens permitted under any Security
Documents; (h) in the case of any Property that is not a Collateral Property,
Liens against such Property securing Indebtedness not otherwise prohibited
hereunder; (i) judgment Liens not in excess of $1,000,000 in the aggregate for
all Properties or $250,000 for any one Collateral Property (exclusive of (i) any
amounts that are duly bonded to the satisfaction of Administrative Agent in its
reasonable discretion or (ii) any amount covered by insurance to the
satisfaction of Administrative Agent in its reasonable discretion); (j) deposits
or pledges to secure bids, tenders, contracts (other than contracts for payment
of money), leases, regulatory or statutory obligations, surety and appeal bonds
and other obligations of like nature arising in the ordinary course of business;
(k) Liens on leased personal property to secure the lease obligations

 

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associated with such property; and (l) any other matters from time to time that
are not material and that are approved in writing by Administrative Agent (but
specifically excluding, in the case of any Collateral Property, Liens securing
monetary obligations).

“Person” means any natural person, corporation, limited partnership, general
partnership, joint stock company, limited liability company, limited liability
partnership, joint venture, association, company, trust, bank, trust company,
land trust, business trust or other organization, whether or not a legal entity,
or any other nongovernmental entity, or any Governmental Authority.

“Personal Property” shall mean the Accounts, Chattel Paper, Contracts,
Equipment, General Intangibles, Inventory, vehicles and cash on hand at or
related to a Collateral Property.

“PIP” means a property improvement plan for a Property prepared by a franchisor
or manager of such Property.

“Plan” means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.

“Post-Default Rate” means, in respect of any principal of any Loan that is not
paid when due, the rate otherwise applicable plus an additional four percent
(4%) per annum and with respect to any other Obligation that is not paid when
due (whether at stated maturity, by acceleration, by optional or mandatory
prepayment or otherwise) a rate per annum equal to Base Rate as in effect from
time to time plus the Applicable Margin, plus four percent (4%).

“Preferred Dividends” means, for any period and without duplication, all
Restricted Payments paid during such period on Preferred Stock issued by the
Parent Guarantor, the Borrower or a Subsidiary. Preferred Dividends shall not
include dividends or distributions (a) paid or payable solely in Equity
Interests (other than Mandatorily Redeemable Stock) payable to holders of such
class of Equity Interests, (b) paid or payable to the Parent Guarantor, the
Borrower or a Subsidiary, or (c) constituting or resulting in the redemption of
Preferred Stock, other than scheduled redemptions not constituting balloon,
bullet or similar redemptions in full.

“Preferred Stock” means, with respect to any Person, shares of capital stock of,
or other Equity Interests in, such Person which are entitled to preference or
priority over any other capital stock of, or other Equity Interest in, such
Person in respect of the payment of dividends or distribution of assets upon
liquidation or both.

“Principal Office” means the Administrative Agent’s office at Minneapolis Loan
Center, 608 2nd Avenue South, 11th Floor, Minneapolis, Minnesota 55402.

“Prior Credit Agreement” has the meaning given that term in the Recitals to this
Agreement.

 

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“Pro Forma Debt Service” means, on any day, the amount obtained by multiplying
(a) an amount equal to the outstanding principal balance of the Loans on such
day, by (b) the greater of (i) 10% or (ii) the highest actual rate at which
interest is then payable on the Loans or (c) the then prevailing rate on United
States Treasury bonds with a maturity of ten (10) years, plus 3.50%, and a
25-year amortization schedule.

“Pro Rata Share” means, as to each Lender, the ratio, expressed as a percentage
of (a) the amount of such Lender’s Commitment to (b) the sum of the aggregate
amount of the Commitments of all Lenders; provided, however, that if at the time
of determination the Commitments have terminated or been reduced to zero, the
“Pro Rata Share” of each Lender shall be the ratio, expressed as a percentage of
(A) the sum of the unpaid principal amount of all outstanding Loans owing to
such Lender as of such date to (B) the sum of the aggregate unpaid principal
amount of all outstanding Loans of all Lenders as of such date.

“Proceedings” has the meaning given that term in Section 8.16.

“Property” means a parcel of real property and the improvements thereon owned or
ground leased by the Parent Guarantor, the Borrower, any Loan Party or any of
their Subsidiaries (or, if applicable, Unconsolidated Affiliates). For purposes
of Section 4.1., the term “Property” may include a property to be acquired, but
not yet acquired, by a Subsidiary of the Borrower.

“Protective Advance” means all sums expended as determined by the Administrative
Agent to be necessary or appropriate after the Borrower fails to do so when
required: (a) to protect the validity, enforceability, perfection or priority of
the Liens in any of the Collateral and the instruments evidencing the
Obligations; (b) to prevent the value of any Collateral from being materially
diminished; or (c) to protect any of the Collateral from being materially
damaged, impaired, mismanaged or taken, including, without limitation, any
amounts expended in connection therewith in accordance with Section 13.2.

“Qualified Letter of Credit” means a standby letter of credit (a) issued by a
bank that has a long-term unsecured credit rating of “A” or better and that is
satisfactory to the Administrative Agent, (b) in the amount of the Operating
Property Value Shortfall, (c) having an expiry date not earlier than one year
after the date on which it is delivered and (d) providing that the same may be
drawn upon presentation of a sight draft by the Administrative Agent at a
location satisfactory to the Administrative Agent.

“Regulatory Change” means, with respect to any Lender, any change effective
after the Agreement Date in Applicable Law (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks, including such Lender, of or under any Applicable
Law (whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy. Notwithstanding
anything herein to the contrary, (a) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (b) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel

 

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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 each case be deemed to be a “Regulatory Change”, regardless of the
date enacted, adopted or issued.

“REIT” means a Person qualifying for treatment as a “real estate investment
trust” under the Internal Revenue Code.

“Remaining Collateral Properties” means, at the time of a Collateral Property
Release, those Collateral Properties that will continue to be included in the
Collateral Pool immediately following such Collateral Property Release.

“Renovations” means any renovations, remodeling or other capital improvements at
a Hotel Property (whether performed pursuant to a PIP or otherwise), but not
routine maintenance or repairs.

“Required Approval Lenders” means (a) at any time at which there are less than
eight (8) Collateral Properties in the Collateral Pool, the Requisite Lenders,
and (c) at all other times, the Majority Lenders.

“Required Collateral Property” means each of the Hilton Checkers Los Angeles
Hotel in Los Angeles, California and the Boston Marriott Newton Hotel in Newton,
Massachusetts (subject to the substitution of other Collateral Properties as
provided in Section 4.5.).

“Requisite Lenders” means, as of any date, Lenders having at least 66 2/3% of
the aggregate amount of the Commitments, or, if the Commitments have been
terminated or reduced to zero, Lenders holding at least 66 2/3% of the aggregate
principal amount of the outstanding Loans; provided that (i) in determining such
percentage at any given time, all then existing Defaulting Lenders will be
disregarded and excluded, and the Pro Rata Shares shall be redetermined, for
voting purposes only, to exclude the Pro Rata Shares of such Defaulting Lenders,
and (ii) at all times when two or more Lenders are party to this Agreement, the
term “Requisite Lenders” shall in no event mean less than two Lenders.

“Restricted Payment” means: (a) any dividend or other distribution, direct or
indirect, on account of any shares of any Equity Interest of the Parent
Guarantor or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in additional Equity Interests to the holders of that
class of Equity Interests; (b) any redemption, conversion, exchange, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any Equity Interest of the Parent Guarantor or any of its
Subsidiaries now or hereafter outstanding; (c) any prepayment of principal of or
premium, if any, on, or redemption, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Subordinated
Debt; and (d) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire any Equity Interests of
the Parent Guarantor or any of its Subsidiaries now or hereafter outstanding;
provided, however, that no payment of any type described in the foregoing
clauses (b) through (d) shall be deemed a “Restricted Payment” for any purposes
of this Agreement to the extent such payment is made (i) solely in the form of
an Equity Issuance of Equity Interests other than Mandatorily Redeemable Stock,
or (ii) with the net proceeds from an Equity Issuance of Equity Interests other
than Mandatorily Redeemable Stock, which net proceeds are, within 60 days
following the completion of such Equity Issuance, used to purchase Preferred
Stock.

 

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“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc.

“Seasoned Date” means the first day on which an acquired Hotel Property has been
owned for four (4) full fiscal quarters following the date of acquisition by
Parent Guarantor or one of its Subsidiaries or Unconsolidated Affiliates.

“Seasoned Property” means (a) each Hotel Property (other than a New Property)
owned by Parent Guarantor or any of its Subsidiaries or Unconsolidated
Affiliates and (b) upon the occurrence of the Seasoned Date of any New Property,
such Hotel Property.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
together with all rules and regulations issued thereunder.

“Security Deed” means a deed to secure debt, deed of trust or mortgage with
respect to a Collateral Property executed by the applicable Subsidiary Guarantor
and Operating Lessee in favor of the Administrative Agent for its benefit and
the benefit of the Lenders, in form and substance satisfactory to the
Administrative Agent, securing the Obligations (subject to Section 2.18.), as
the same may be supplemented, amended or otherwise modified from time to time.

“Security Document” means any Security Deed, any Assignment of Leases and Rents,
any Management Agreement Assignment/Subordination, any Control Agreement and any
security agreement, pledge agreement, financing statement, or other document,
instrument or agreement creating, evidencing or perfecting the Administrative
Agent’s Liens in any of the Collateral.

“Solvent” means, when used with respect to any Person, that (a) the fair value
and the fair salable value of its assets (excluding any Indebtedness due from
any affiliate of such Person) are each in excess of the fair valuation of its
total liabilities (including all contingent liabilities); (b) such Person is
able to pay its debts or other obligations in the ordinary course as they
mature; and (c) such Person has capital not unreasonably small to carry on its
business and all business in which it proposes to be engaged.

“Specified Loan Party” means each Loan Party other than the Parent Guarantor.

“Subordinated Debt” means Indebtedness for money borrowed of any of the Loan
Parties that is subordinated in right of payment and otherwise to the Loans and
the other Obligations in a manner satisfactory to the Administrative Agent in
its sole and absolute discretion.

“Subsidiary” means, for any Person, any corporation, partnership, limited
liability company or other entity of which at least a majority of the Equity
Interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other individuals performing similar functions of
such corporation, partnership, limited liability company or other entity
(without regard to the occurrence of any contingency) is at the time directly or
indirectly

 

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owned or controlled by such Person or one or more Subsidiaries of such Person or
by such Person and one or more Subsidiaries of such Person, and shall include
all Persons the accounts of which are consolidated with those of such Person
pursuant to GAAP.

“Subsidiary Guarantor” means each Subsidiary of Borrower that owns a Collateral
Property.

“Subsidiary Guaranty” means that certain Subsidiary Guaranty dated July 30, 2010
executed by the Initial Subsidiary Guarantors in favor of the Administrative
Agent for its benefit and the benefit of the Lenders (as such term was defined
in the Original Credit Agreement), and joined in from time to time thereafter by
other Subsidiary Guarantors by Accession Agreements executed pursuant to
Section 6.3.(j), as same was ratified pursuant to that certain Ratification of
Subsidiary Guaranty dated January 21, 2011 and that certain Ratification of
Subsidiary Guaranty dated as of the date hereof, and as the same may hereafter
be supplemented, amended or otherwise modified from time to time.

“Substantial Amount” means, at the time of determination thereof, an amount in
excess of ten percent (10%) of total consolidated assets (exclusive of
depreciation) at such time of the Parent Guarantor and its Subsidiaries
determined on a consolidated basis.

“Syndication Agent” means JPMorgan Chase Bank, N.A.

“Tangible Net Worth” means, as of a given date, stockholders’ equity of the
Parent Guarantor and its Subsidiaries determined on a consolidated basis plus
accumulated depreciation and amortization, minus (to the extent included when
determining stockholders’ equity of the Parent Guarantor and its Subsidiaries):
(a) the amount of any write-up in the Book Value of any assets reflected in any
balance sheet resulting from revaluation thereof or any write up in excess of
the cost of such assets acquired, and (b) the aggregate of all amounts appearing
on the assets side of any such balance sheet for franchises, licenses, permits,
patents, patent applications, copyrights, trademarks, service marks, trade
names, goodwill, treasury stock, experimental or organizational expenses and
other like assets which would be classified as intangible assets under GAAP
(subject to Section 1.2.(a)), all determined on a consolidated basis.

“Taxes” has the meaning given that term in Section 3.10.

“Tax/Insurance Reserve Account” means, with respect to each Collateral Property,
an account with the Administrative Agent into which funds shall be deposited and
withdrawn for the payment of personal property and real estate taxes and
assessments and insurance premiums in accordance with Section 8.21.

“Tenant Lease” means any lease, sublease or other similar occupancy agreement
for any portion of a Collateral Property.

“Tie-In Jurisdiction” means a jurisdiction in which a “tie-in” endorsement may
be obtained for a title insurance policy covering property located in such
jurisdiction which endorsement effectively ties coverage to other title
insurance policies covering properties located in other jurisdictions.

 

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“Top 25 Market” means the twenty-five (25) largest Metropolitan Statistical
Areas in the United States as published from time to time by the United States
Office of Management and Budget.

“Total Asset Value” means, without duplication, the sum of (a) the following
amounts with respect to the following assets owned by Parent Guarantor or any of
its Subsidiaries: (i) the Operating Property Value of Hotel Properties; (ii) the
amount of all unrestricted cash and cash equivalents; (iii) the Book Value of
all unimproved land and all Indebtedness secured by Mortgages; (iv) the Book
Value of all Development/Redevelopment Properties; and (v) the contract purchase
price for all purchase assets (to the extent included in Indebtedness); plus
(b) the applicable Ownership Share of any Unconsolidated Affiliate of any asset
described in clause (a) above.

“Transfer Authorizer Designation Form” means a form substantially in the form
delivered to the Administrative Agent pursuant to the Original Credit Agreement
or Prior Credit Agreement or in the form of Exhibit G as the same may be
amended, restated or modified from time to time with the prior written approval
of the Administrative Agent.

“Type” with respect to any Loan, refers to whether such Loan is a LIBOR Loan or
a Base Rate Loan.

“UCC” means the Uniform Commercial Code as in effect in any applicable
jurisdiction.

“Unconsolidated Affiliate” means, with respect to any Person, any other Person
in whom such Person holds an Investment, which Investment is accounted for in
the financial statements of such Person on an equity basis of accounting and
whose financial results would not be consolidated under GAAP with the financial
results of such Person on the consolidated financial statements of such Person.

“Unfunded Liabilities” means, with respect to any Plan at any time, the amount
(if any) by which (a) the value of all benefit liabilities under such Plan,
determined on a plan termination basis using the assumptions prescribed by the
PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market value of
all Plan assets allocable to such liabilities under Title IV of ERISA (excluding
any accrued but unpaid contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the ERISA Group to the PBGC or any other
Person under Title IV of ERISA.

“Uniform System” means the Uniform System of Accounts for the Lodging Industry,
Tenth Revised Edition, 2006, as published by the Educations Institute of the
American Hotel & Motel Association, as revised from time to time to the extent
such revision has been or is in the process of being generally implemented
within such Uniform System of Accounts.

“Unrestricted Cash” means, with respect to any Person, cash and Cash Equivalents
of such Person that are free and clear of all Liens and not subject to any
restrictions (other than with respect to costs of liquidating certain Cash
Equivalents prior to maturity) on the use thereof to pay Indebtedness and other
obligations of the such Person.

 

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“Wells Fargo” means Wells Fargo Bank, National Association, and its successors
and assigns.

“Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which
all of the Equity Interests (other than, in the case of a corporation,
directors’ qualifying shares) are at the time directly or indirectly owned or
controlled by such Person or one or more other Subsidiaries of such Person or by
such Person and one or more other Subsidiaries of such Person.

Section 1.2. GAAP; General References; Pacific Time.

(a) Unless otherwise indicated, all accounting terms, ratios and measurements
shall be interpreted or determined in accordance with GAAP as in effect on the
Agreement Date; provided that, if at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Requisite Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Requisite Lenders);
provided further that, until so amended, (i) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein and
(ii) the Borrower shall provide to the Administrative Agent and the Lenders
financial statements and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect to
such change in GAAP. Notwithstanding the use of GAAP, the calculation of
liabilities shall NOT include any fair value adjustments to the carrying value
of liabilities to record such liabilities at fair value pursuant to electing the
fair value option election under FASB ASC 825-10-25 (formerly known as FAS 159,
The Fair Value Option for Financial Assets and Financial Liabilities) or other
FASB standards allowing entities to elect fair value option for financial
liabilities. Therefore, the amount of liabilities shall be the historical cost
basis, which generally is the contractual amount owed.

(b) References in this Agreement to “Sections”, “Articles”, “Exhibits” and
“Schedules” are to sections, articles, exhibits and schedules herein and hereto
unless otherwise indicated. References in this Agreement to any document,
instrument or agreement (i) shall include all exhibits, schedules and other
attachments thereto, (ii) shall include all documents, instruments or agreements
issued or executed in replacement thereof, to the extent permitted hereby and
(iii) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, supplemented, restated or otherwise modified
from time to time to the extent not otherwise stated herein or prohibited hereby
and in effect at any given time. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the
singular and plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter. Unless
explicitly set forth to the contrary, a reference to “Subsidiary” means a
Subsidiary of the Borrower or a Subsidiary of such Subsidiary and a reference to
an “Affiliate” means a reference to an Affiliate of the Borrower. Titles and
captions of Articles, Sections, subsections and clauses in this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement. Unless otherwise indicated, all references to time are references to
Pacific time.

 

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ARTICLE II. CREDIT FACILITY

Section 2.1. Loans.

Subject to the terms and conditions set forth in this Agreement, including
without limitation, Section 2.16. below, each Lender severally and not jointly
agrees to make Loans to the Borrower during the period from and including the
Effective Date to but excluding the Maturity Date, in an aggregate principal
amount at any one time outstanding up to, but not exceeding, such Lender’s
Commitment; provided, however Loans shall not be made in excess of amounts that
would cause a violation of the limitations set forth in Section 2.16. Each
borrowing of Loans hereunder shall be in an aggregate principal amount of
$1,000,000 and integral multiples of $100,000 in excess of that amount (except
that, subject to Section 2.16., any such borrowing of Loans may be in the
aggregate amount of the Commitments of all Lenders minus the sum of the
aggregate principal balance of all Loans, which Loans, if less than $1,000,000,
must be Base Rate Loans). Within the foregoing limits and subject to the terms
and conditions of this Agreement, the Borrower may borrow, repay and, prior to
the Maturity Date, reborrow Loans.

Section 2.2. Requests for Loans.

Not later than 9:00 a.m. at least one (1) Business Day prior to a borrowing of
Base Rate Loans and not later than 9:00 a.m. at least three (3) Business Days
prior to a borrowing of LIBOR Loans, the Borrower shall deliver to the
Administrative Agent a Notice of Borrowing. Each Notice of Borrowing shall
specify the aggregate principal amount of the Loans to be borrowed, the date
such Loans are to be borrowed (which must be a Business Day), the use of the
proceeds of such Loans, the Type of the requested Loans, and if such Loans are
to be LIBOR Loans, the initial Interest Period for such Loans. Each Notice of
Borrowing shall be irrevocable once given and binding on the Borrower.
Notwithstanding the foregoing, the Administrative Agent is authorized to rely
upon the telephonic request of Doug Vicari or Graham Wootten as the Borrower’s
duly authorized agents, or such other and/or additional authorized agents as the
Borrower shall designate in writing to Administrative Agent (collectively, the
“Borrower’s Agents”). The Borrower’s telephonic notices, requests and
acceptances shall be directed to such officers of the Administrative Agent as
the Administrative Agent may from time to time designate and shall be followed
promptly by the original or a facsimile or electronic mail Notice of Borrowing
required pursuant to the first sentence of this Section 2.2. Prior to delivering
a Notice of Borrowing, the Borrower may (without specifying whether a Loan will
be a Base Rate Loan or a LIBOR Loan) request that the Administrative Agent
provide the Borrower with the most recent LIBOR available to the Administrative
Agent. The Administrative Agent shall provide such quoted rate to the Borrower
on the date of such request or as soon as possible thereafter.

Section 2.3. Funding of Loans.

Promptly after receipt of a Notice of Borrowing under Section 2.2., the
Administrative Agent shall notify each Lender of the proposed borrowing. Each
Lender shall deposit an amount equal to the Loan to be made by such Lender to
the Borrower with the Administrative Agent at the Principal Office, in
immediately available funds not later than 9:00

 

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a.m. on the date such proposed Loans are to be made available to the Borrower.
Subject to fulfillment of all applicable conditions set forth herein, the
Administrative Agent shall make available to the Borrower at the Principal
Office, not later than 12:00 noon on the date of the requested borrowing of
Loans, the proceeds of such amounts received by the Administrative Agent. No
Lender shall be responsible for the failure of any other Lender to make a Loan
or to perform any other obligation to be made or performed by such other Lender
hereunder, and the failure of any Lender to make a Loan or to perform any other
obligation to be made or performed by it hereunder shall not relieve the
obligation of any other Lender to make any Loan or to perform any other
obligation to be made or performed by such other Lender.

Section 2.4. Assumptions Regarding Funding by Lenders.

With respect to Loans to be made after the Effective Date, unless the
Administrative Agent shall have been notified by any Lender that such Lender
will not make available to the Administrative Agent a Loan to be made by such
Lender in connection with any borrowing, the Administrative Agent may assume
that such Lender will make the proceeds of such Loan available to the
Administrative Agent in accordance with this Section, and the Administrative
Agent may (but shall not be obligated to), in reliance upon such assumption,
make available to the Borrower the amount of such Loan to be provided by such
Lender. In such event, if such Lender does not make available to the
Administrative Agent the proceeds of such Loan, then such Lender and the
Borrower severally agree to pay to the Administrative Agent on demand the amount
of such Loan with interest thereon, for each day from and including the date
such Loan is made available to the Borrower but excluding the date of payment to
the Administrative Agent, at (i) in the case of a payment to be made by such
Lender, the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation and (ii) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Loans. If the Borrower and such Lender
shall pay the amount of such interest to the Administrative Agent for the same
or overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. If
such Lender pays to the Administrative Agent the amount of such Loan, the amount
so paid shall constitute such Lender’s Loan included in the borrowing. Any
payment by the Borrower shall be without prejudice to any claim the Borrower may
have against a Lender that shall have failed to make available the proceeds of a
Loan to be made by such Lender.

Section 2.5. Purchase of Loans on the Effective Date.

Each Lender (if any) that is not a party to the Prior Credit Agreement and each
Lender that is increasing its Commitment hereunder above the amount of its
Commitment under the Prior Credit Agreement shall, on the Effective Date,
purchase from the other Lenders its Commitment Percentage or, in the case of a
Lender that is increasing its Commitment, a percentage equal to the increase of
its Commitment Percentage (determined in each case with respect to the Lender’s
relative Commitments and after giving effect to the increase of Commitments as a
result of this Agreement) of any outstanding Loans, by making available to the
Administrative Agent for the account of such other Lenders, in same day funds,
an amount equal to the portion of the outstanding principal amount of such Loans
to be purchased by such Lender. The Borrower shall pay to the Lenders amounts
payable, if any, to the Lenders under Section 5.4. as a result of the prepayment
of any such Loans.

 

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Section 2.6. Rates and Payment of Interest on Loans.

(a) Rates. The Borrower promises to pay to the Administrative Agent for the
account of each Lender interest on the unpaid principal amount of each Loan made
by such Lender for the period from and including the date of the making of such
Loan (including any Loans outstanding on the Effective Date) to but excluding
the date such Loan shall be paid in full, at the following per annum rates:

(i) during such periods as such Loan is a Base Rate Loan, at the Base Rate (as
in effect from time to time), plus the Applicable Margin; and

(ii) during such periods as such Loan is a LIBOR Loan, at LIBOR for such Loan
for the Interest Period therefore, plus the Applicable Margin.

Notwithstanding the foregoing, while an Event of Default exists, the Borrower
shall pay to the Administrative Agent for the account of each Lender interest at
the Post-Default Rate on the outstanding principal amount of any Loan made by
such Lender and on any other amount payable by the Borrower hereunder or under
the Notes held by such Lender to or for the account of such Lender (including
without limitation, accrued but unpaid interest to the extent permitted under
Applicable Law).

(b) Payment of Interest. All accrued and unpaid interest on the outstanding
principal amount of each Loan shall be payable (i) monthly in arrears on the
first day of each month, commencing with the first full calendar month occurring
after the Effective Date and (ii) on any date on which the principal balance of
such Loan is due and payable in full (whether at maturity, due to acceleration
or otherwise). Interest payable at the Post-Default Rate shall be payable from
time to time on demand. All determinations by the Administrative Agent of an
interest rate hereunder shall be conclusive and binding on the Lenders and the
Borrower for all purposes, absent manifest error. In the case of interest on
Loans outstanding on the Effective Date, interest accrued as of the Effective
Date shall be allocated among the Lenders based on their Commitment Percentages
under the Prior Credit Agreement, and interest accruing from and after the
Effective Date shall be allocated among the Lenders based on their Commitment
Percentages under this Agreement.

Section 2.7. Number of Interest Periods.

There may be no more than seven (7) different Interest Periods outstanding at
the same time.

Section 2.8. Repayment of Loans.

The Borrower shall repay the entire outstanding principal amount of, and all
accrued but unpaid interest on, the Loans on the Maturity Date.

 

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Section 2.9. Prepayments.

(a) Optional. Subject to Section 5.4., the Borrower may prepay any Loan at any
time without premium or penalty. The Borrower shall give the Administrative
Agent at least three (3) Business Days prior written notice of the prepayment of
any Loan. Each voluntary prepayment of Loans shall be either (i) in an aggregate
minimum amount of $1,000,000 and integral multiples of $100,000 in excess
thereof or (ii) the entire outstanding principal amount of the Loans (together
with all accrued but unpaid interest thereon).

(b) Mandatory.

(i) Commitment Overadvance. If at any time the aggregate principal amount of all
outstanding Loans exceeds the aggregate amount of the Commitments, the Borrower
shall immediately upon demand pay to the Administrative Agent for the account of
the Lenders the amount of such excess. All payments under this
Section 2.9.(b)(i) shall be applied in accordance with the last sentence of
Section 3.2.

(ii) Minimum DSCR Hurdle. If the Debt Service Coverage Ratio as determined at
the end of any fiscal quarter is less than the Minimum DSCR Hurdle, the Borrower
shall pay to the Administrative Agent for the account of the Lenders, as a
principal payment of the Loans, not later than fifteen (15) Business Days
following the day on which the DSCR Certificate for such fiscal quarter is
required to be delivered under Section 9.4.(d), the amount by which the
outstanding principal balance of the Loans would be required to be reduced to
cause the Debt Service Coverage Ratio to equal the Minimum DSCR Hurdle as of the
last day of such fiscal quarter. All payments under this
Section 2.9.(b)(ii) shall be applied in accordance with the last sentence of
Section 3.2.

Section 2.10. Late Charges.

If any payment required under this Agreement is not paid within ten (10) days
after it becomes due and payable, the Borrower shall pay a late charge for late
payment to compensate the Lenders for the loss of use of funds and for the
expenses of handling the delinquent payment, in an amount equal to four percent
(4%) of such delinquent payment. Such late charge shall be paid in any event not
later than the due date of the next subsequent installment of principal and/or
interest. In the event the maturity of the Obligations hereunder occurs or is
accelerated pursuant to Section 11.2., this Section shall apply only to payments
overdue prior to the time of such acceleration. This Section shall not be deemed
to be a waiver of the Lenders’ right to accelerate payment of any of the
Obligations as permitted under the terms of this Agreement.

Section 2.11. Continuation.

So long as no Default or Event of Default exists, the Borrower may on any
Business Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan
or any portion thereof as a LIBOR Loan by selecting a new Interest Period for
such LIBOR Loan. Each Continuation of a LIBOR Loan shall be in an aggregate
minimum amount of $1,000,000 and integral multiples of $100,000 in excess of
that amount, and each new Interest Period selected under this Section shall
commence on the last day of the immediately preceding Interest Period. Each
selection of a new

 

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Interest Period shall be made by the Borrower giving to the Administrative Agent
a Notice of Continuation not later than 9:00 a.m. on the third Business Day
prior to the date of any such Continuation. Such notice by the Borrower of a
Continuation shall be by telecopy, electronic mail or other similar form of
communication in the form of a Notice of Continuation, specifying (a) the
proposed date of such Continuation, (b) the LIBOR Loan and portion thereof
subject to such Continuation and (c) the duration of the selected Interest
Period, all of which shall be specified in such manner as is necessary to comply
with all limitations on Loans outstanding hereunder. Notwithstanding the
foregoing, the Administrative Agent is authorized to rely upon the telephonic
request of any of the Borrower’s Agents. The Borrower’s telephonic notices,
requests and acceptances shall be directed to such officers of the
Administrative Agent as the Administrative Agent may from time to time designate
and shall be followed promptly by the original or a facsimile or electronic mail
Notice of Continuation required pursuant to the third sentence of this
Section 2.11. Each Notice of Continuation shall be irrevocable by and binding on
the Borrower once given. Promptly after receipt of a Notice of Continuation, the
Administrative Agent shall notify each Lender of the proposed Continuation. If
the Borrower shall fail to select in a timely manner a new Interest Period for
any LIBOR Loan in accordance with this Section, such Loan will automatically, on
the last day of the current Interest Period therefore, continue as a LIBOR Loan
with an Interest Period of one month.

Section 2.12. Conversion.

So long as no Default or Event of Default exists, the Borrower may on any
Business Day, upon the Borrower’s giving of a Notice of Conversion to the
Administrative Agent by telecopy, electronic mail or other similar form of
communication, Convert all or a portion of a Loan of one Type into a Loan of
another Type. Each Conversion of Base Rate Loans into LIBOR Loans shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in
excess of that amount, and upon Conversion of a Base Rate Loan into a LIBOR
Loan, the Borrower shall pay accrued interest to the date of Conversion on the
principal amount so Converted in accordance with Section 2.6. Any Conversion of
a LIBOR Loan into a Base Rate Loan shall be made on, and only on, the last day
of an Interest Period for such LIBOR Loan. Each such Notice of Conversion shall
be given not later than 9:00 a.m. three (3) Business Days prior to the date of
any proposed Conversion into Base Rate or LIBOR Loans. Promptly after receipt of
a Notice of Conversion, the Administrative Agent shall notify each Lender of the
proposed Conversion. Subject to the restrictions specified above, each Notice of
Conversion shall be by telecopy, electronic mail or other similar form of
communication in the form of a Notice of Conversion specifying (a) the requested
date of such Conversion, (b) the Type of Loan to be Converted, (c) the portion
of such Type of Loan to be Converted, (d) the Type of Loan such Loan is to be
Converted into and (e) if such Conversion is into a LIBOR Loan, the requested
duration of the Interest Period of such Loan. Notwithstanding the foregoing, the
Administrative Agent is authorized to rely upon the telephonic request of any of
the Borrower’s Agents. The Borrower’s telephonic notices, requests and
acceptances shall be directed to such officers of the Administrative Agent as
the Administrative Agent may from time to time designate and shall be followed
promptly by the original or a facsimile or electronic mail Notice of Conversion
required pursuant to the first sentence of this Section 2.12. Each Notice of
Conversion shall be irrevocable by and binding on the Borrower once given.

 

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Section 2.13. Notes.

(a) Notes. The Loans made by each Lender shall, in addition to this Agreement,
also be evidenced by a Note, payable to the order of such Lender in a principal
amount equal to the amount of its Commitment as originally in effect and
otherwise duly completed.

(b) Lost, Stolen, Destroyed or Mutilated Notes. Upon receipt by the Borrower of
(i) written notice from a Lender that a Note of such Lender has been lost,
stolen, destroyed or mutilated, and (ii)(A) in the case of loss, theft or
destruction, an unsecured agreement of indemnity from such Lender in form
reasonably satisfactory to the Borrower, or (B) in the case of mutilation, upon
surrender and cancellation of such Note, the Borrower shall at its own expense
execute and deliver to such Lender a new Note dated the date of such lost,
stolen, destroyed or mutilated Note.

Section 2.14. Voluntary Reductions of the Commitment.

The Borrower may terminate or reduce the amount of the Commitments at any time
and from time to time without penalty or premium upon not less than five
(5) Business Days prior notice to the Administrative Agent of each such
termination or reduction, which notice shall specify the effective date thereof
and the amount of any such reduction (which in the case of any partial reduction
of the Commitments shall not be less that $5,000,000 and integral multiples of
$1,000,000 in excess of that amount in the aggregate) and shall be irrevocable
once given and effective only upon receipt by the Administrative Agent
(“Commitment Reduction Notice”); provided, however, (a) the Borrower may not
reduce the aggregate amount of the Commitments to an amount that is less than
the aggregate outstanding principal amount of the Loans unless, on or before the
effective date of such reduction, the Borrower complies with the provisions of
Section 2.9.(b)(i) and (b) the Borrower may not reduce the aggregate amount of
the Commitments below $100,000,000 unless the Borrower is fully terminating the
Commitments. Promptly after receipt of a Commitment Reduction Notice the
Administrative Agent shall notify each Lender of the proposed termination or
Commitment reduction. The Commitments, once reduced pursuant to this Section,
may not be increased. The Borrower shall pay all interest and fees, on the Loans
accrued to the date of such reduction or termination of the Commitments to the
Administrative Agent for the account of the Lenders, including but not limited
to any applicable compensation due to each Lender in accordance with
Section 5.4. of this Agreement.

Section 2.15. Extension of Maturity Date.

Borrower shall have the option to extend the Maturity Date from the Original
Maturity Date to the Extended Maturity Date, upon satisfaction of each of the
following conditions precedent:

(a) The Borrower shall provide the Administrative Agent with written notice of
the Borrower’s request to exercise the Option to Extend not more than one
hundred twenty (120) days but not less than forty-five (45) days prior to the
Original Maturity Date; and

(b) As of the date of the Borrower’s delivery of notice of request to exercise
the Option to Extend, and as of the Original Maturity Date, no Default or Event
of Default shall have occurred and be continuing, and Borrower shall so certify
in writing; and

 

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(c) The Borrower shall execute or cause the execution of all documents
reasonably required by the Administrative Agent to exercise the Option to Extend
and shall deliver to the Administrative Agent, at the Borrower’s sole cost and
expense, such title insurance endorsements reasonably required by the
Administrative Agent; and

(d) There shall not have occurred any change in any Collateral Property since
the date on which it first became a Collateral Property or the financial
condition of the Borrower or the Parent Guarantor from that which existed as of
December 31, 2010 that, in the determination of the Administrative Agent in its
sole discretion, has had a Material Adverse Effect; and

(e) On or before the Original Maturity Date, the Borrower shall pay to the
Administrative Agent all closing and recording costs, the costs of preparing any
extension documents, including reasonable attorney’s fees if any, and any other
reasonable costs and expense associated with the Borrower’s exercise of its
extension right; and

(f) On or before the Original Maturity Date, Borrower shall pay to the
Administrative Agent the fee provided for in Section 3.5.(c); and

(g) The Administrative Agent shall have received, at the Borrower’s sole cost,
new or updated Appraisals confirming to the satisfaction of the Administrative
Agent that the ratio of the aggregate amount of the Commitments to the aggregate
amount of the Appraised Values of the Collateral Properties does not exceed the
Advance Rate. If such ratio exceeds the Advance Rate, the Borrower may satisfy
the condition in this Section 2.15.(g) by reducing the aggregate amount of the
Commitments in accordance with Section 2.14. to the amount required to reduce
such ratio to the Advance Rate; and

(h) The Leverage Ratio (determined as of the last day of the fiscal quarter for
which a Compliance Certificate has then most recently been delivered hereunder)
shall not exceed 55%.

Section 2.16. Amount Limitations.

Notwithstanding any other term of this Agreement or any other Loan Document, no
Lender shall make any Loan in an amount which, immediately after the making of
such Loan, would cause the aggregate principal amount of all outstanding Loans
to exceed the Maximum Loan Availability.

Section 2.17. Funds Transfer Disbursements.

(a) Generally. The Borrower hereby authorizes the Administrative Agent to
disburse the proceeds of any Loan made by the Lenders or any of their Affiliates
pursuant to the Loan Documents as requested by any of Borrower’s Agents to any
of the accounts designated in the Transfer Authorizer Designation Form. The
Borrower agrees to be bound by any transfer request authorized or transmitted by
the Borrower or any of the Borrower’s Agents even if not properly authorized by
the Borrower. The Borrower further agrees and acknowledges that the
Administrative Agent may rely solely on any bank routing number or identifying
bank account number or name provided by the Borrower or any of the Borrower’s
Agents to effect a wire of funds transfer even if the information provided by
the Borrower or the Borrower’s Agents identifies a different bank or account
holder than named by the Borrower. The Administrative

 

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Agent is not obligated or required in any way to take any actions to detect
errors in information provided by the Borrower. If the Administrative Agent
takes any actions in an attempt to detect errors in the transmission or content
of transfer or requests or takes any actions in an attempt to detect
unauthorized funds transfer requests, the Borrower agrees that no matter how
many times the Administrative Agent takes these actions the Administrative Agent
will not in any situation be liable for failing to take or correctly perform
these actions in the future and such actions shall not become any part of the
transfer disbursement procedures authorized under this provision, the Loan
Documents, or any agreement between the Administrative Agent and the Borrower.
The Borrower agrees to notify the Administrative Agent of any errors in the
transfer of any funds or of any unauthorized or improperly authorized transfer
requests within fourteen (14) days after the Administrative Agent’s confirmation
to the Borrower of such transfer.

(b) Funds Transfer. The Administrative Agent will, in its sole discretion,
determine the funds transfer system and the means by which each transfer will be
made. The Administrative Agent may delay or refuse to accept a funds transfer
request if the transfer would: (i) violate the terms of this authorization
(ii) require use of a bank unacceptable to the Administrative Agent or any
Lender or prohibited by any Governmental Authority; provided, that the
Administrative Agent and the Lenders hereby acknowledge that KeyBank is
acceptable to the Administrative Agent and the Lenders; (iii) cause the
Administrative Agent or any Lender to violate any Federal Reserve or other
regulatory risk control program or guideline, or (iv) otherwise cause the
Administrative Agent or any Lender to violate any Applicable Law or regulation.

(c) Limitation of Liability. Neither the Administrative Agent nor any Lender
shall be liable to the Borrower or any other parties for (i) errors, acts or
failures to act of others, including other entities, banks, communications
carriers or clearinghouses, through which the Borrower’s transfers may be made
or information received or transmitted, and no such entity shall be deemed an
agent of the Administrative Agent or any Lender, (ii) any loss, liability or
delay caused by fires, earthquakes, wars, civil disturbances, power surges or
failures, acts of government, labor disputes, failures in communications
networks, legal constraints or other events beyond Administrative Agent’s or any
Lender’s reasonable control, or (iii) any special, consequential, indirect or
punitive damages, whether or not (x) any claim for these damages is based on
tort or contract or (y) the Administrative Agent, any Lender or the Borrower
knew or should have known the likelihood of these damages in any situation.
Neither the Administrative Agent nor any Lender makes any representations or
warranties other than those expressly made in this Agreement.

Section 2.18. Intentionally Omitted.

Section 2.19. Increase in Commitments.

(a) Request for and Conditions of Increase. The Borrower shall have the right to
request increases in the aggregate amount of the Commitments by providing
written notice to the Administrative Agent, which notice shall be irrevocable
once given; provided, however, that after giving effect to any such increases
the aggregate amount of the Commitments shall not exceed $300,000,000. Each such
increase in the Commitments must be an aggregate minimum amount of $25,000,000
and integral multiples of $5,000,000 in excess thereof. The

 

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Administrative Agent, in consultation with the Borrower, shall manage all
aspects of the syndication of such increase in the Commitments, including
decisions as to the selection of the existing Lenders and/or other banks,
financial institutions and other institutional lenders to be approached with
respect to such increase and the allocations of the increase in the Commitments
among such existing Lenders and/or other banks, financial institutions and other
institutional lenders. No Lender shall be obligated in any way whatsoever to
increase its Commitment. No Person shall become a Lender hereto pursuant to this
Section 2.19. without the approval of Borrower. If a new Lender becomes a party
to this Agreement, or if any existing Lender is increasing its Commitment, such
Lender shall on the date it becomes a Lender hereunder (or in the case of an
existing Lender, increases its Commitment hereunder) (and as a condition
thereto) purchase from the other Lenders its Commitment Percentage or, in the
case of a Lender that is increasing its Commitment, a percentage equal to the
increase of its Commitment Percentage (determined in each case with respect to
the Lenders’ relative Commitments and after giving effect to the increase of
Commitments) of any outstanding Loans, by making available to the Administrative
Agent for the account of such other Lenders, in same day funds, an amount equal
to the portion of the outstanding principal amount of such Loans to be purchased
by such Lender. The Borrower shall pay to the Lenders amounts payable, if any,
to such Lenders under Section 5.4. as a result of the prepayment of any such
Loans. Effecting the increase of the Commitments under this Section is subject
to the following conditions precedent: (x) no Default or Event of Default shall
be in existence on the effective date of such increase, (y) the representations
and warranties made or deemed made by the Borrower or any other Loan Party in
any Loan Document to which such Loan Party is a party shall be true or correct
on the effective date of such increase except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and except for changes in factual circumstances
specifically and expressly permitted hereunder, and (z) the Administrative Agent
shall have received each of the following, in form and substance reasonably
satisfactory to the Administrative Agent: (i) if not previously delivered to the
Administrative Agent, copies certified by the Secretary or Assistant Secretary
(or other individual performing similar functions) of (A) all corporate,
partnership or other necessary action taken by the Borrower to authorize such
increase and (B) all corporate, partnership, limited liability company or other
necessary action taken by each Guarantor authorizing the guaranty of such
increase; (ii) an opinion of counsel to the Borrower and the Guarantors, and
addressed to the Administrative Agent and the Lenders covering such matters as
reasonably requested by the Administrative Agent; (iii) a supplement to this
Agreement executed by the Borrower and by any new Lender and existing Lender
that is increasing its Commitment confirming the amount of such new or increased
Commitments; (iv) new Notes executed by the Borrower, payable to any new Lenders
and replacement Notes executed by the Borrower, payable to any existing Lenders
increasing their Commitments, in the amount of such Lender’s Commitment at the
time of the effectiveness of the applicable increase in the aggregate amount of
the Commitments; (v) ratification by the Parent Guarantor, Subsidiary Guarantors
and Operating Lessees of their obligations to which they are parties; (vi) such
amendments to the Security Documents as Administrative Agent shall reasonably
require; and (vii) such other documents, instruments, title insurance
endorsements and information as Administrative Agent shall reasonably request.

(b) Payment of Interest and Fees. Interest and fees accrued hereunder as of the
effective date of any increase in the Commitments shall be allocated among the
Lenders based

 

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on their Commitment Percentages prior to such increase in the Commitments, and
interest and fees accruing from and after the effective date of such increase in
the Commitments shall be allocated among the Lenders based on their Commitment
Percentages following such increase in the Commitments.

ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS

Section 3.1. Payments.

(a) Payments by Borrower. Except to the extent otherwise provided herein, all
payments of principal, interest, Fees and other amounts to be made by the
Borrower under this Agreement, the Notes or any other Loan Document shall be
made in Dollars, in immediately available funds, without setoff, deduction or
counterclaim, to the Administrative Agent at the Principal Office, not later
than 11:00 a.m. on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). Subject to Section 11.5., the Borrower shall,
at the time of making each payment under this Agreement or any other Loan
Document, specify to the Administrative Agent the amounts payable by the
Borrower hereunder to which such payment is to be applied. Each payment received
by the Administrative Agent for the account of a Lender under this Agreement or
any Note shall be paid to such Lender by wire transfer of immediately available
funds in accordance with the wiring instructions provided by such Lender to the
Administrative Agent from time to time, for the account of such Lender at the
applicable Lending Office of such Lender. In the event the Administrative Agent
fails to pay such amounts to such Lender within one (1) Business Day of receipt
of such amounts, the Administrative Agent shall pay interest on such amount at a
rate per annum equal to the Federal Funds Rate from time to time in effect. If
the due date of any payment under this Agreement or any other Loan Document
would otherwise fall on a day which is not a Business Day such date shall be
extended to the next succeeding Business Day and interest shall continue to
accrue at the rate, if any, applicable to such payment for the period of such
extension.

(b) Presumptions Regarding Payments by Borrower. Unless the Administrative Agent
shall have received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders
hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may (but shall not be obligated to), in reliance upon such
assumption, distribute to the Lenders, as the case may be, the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders, as the case may be, severally agrees to repay to the Administrative
Agent on demand that amount so distributed to such Lender, with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.

Section 3.2. Pro Rata Treatment.

Except to the extent otherwise provided herein: (a) each borrowing from Lenders
under Section 2.1. shall be made from the Lenders, each payment of the fees
under Sections 3.5.(a),

 

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3.5.(b) and 3.5.(c) shall be made for the account of the Lenders, and each
termination or reduction of the amount of the Commitments under Section 2.14.
shall be applied to the respective Commitments of the Lenders, pro rata
according to the amounts of their respective Commitments; (b) each payment or
prepayment of principal of Loans by the Borrower shall be made for the account
of the Lenders pro rata in accordance with the respective unpaid principal
amounts of the Loans held by them, provided that if immediately prior to giving
effect to any such payment in respect of any Loans the outstanding principal
amount of the Loans shall not be held by the Lenders pro rata in accordance with
their respective Commitments in effect at the time such Loans were made, then
such payment shall be applied to the Loans in such manner as shall result, as
nearly as is practicable, in the outstanding principal amount of the Loans being
held by the Lenders pro rata in accordance with their respective Commitments;
(c) each payment of interest on Loans by the Borrower shall be made for the
account of the Lenders pro rata in accordance with the amounts of interest on
such Loans then due and payable to the respective Lenders; and (d) the
Conversion and Continuation of Loans of a particular Type (other than
Conversions provided for by Section 5.1.) shall be made pro rata among the
Lenders according to the amounts of their respective Loans and the then current
Interest Period for each Lender’s portion of each Loan of such Type shall be
coterminous. Any payment or prepayment of principal or interest made (i)(A)
during the existence of a Default or Event of Default or (B) pursuant to
Section 2.9.(b)(ii), shall be made for the account of the Lenders in accordance
with the order set forth in Section 11.5. and (ii) pursuant to
Section 2.9.(b)(i), shall be made for the account of the Lenders holding
Commitments (or, if the Commitments have been terminated, holding Loans, in
accordance with the order set forth in Section 11.5.

Section 3.3. Sharing of Payments, Etc.

If a Lender shall obtain payment of any principal of, or interest on, any Loan
under this Agreement or shall obtain payment on any other Obligation owing by
the Borrower or any other Loan Party through the exercise of any right of
set-off, banker’s lien, counterclaim or similar right or otherwise or through
voluntary prepayments directly to a Lender or other payments made by the
Borrower or any other Loan Party to a Lender not in accordance with the terms of
this Agreement and such payment should be distributed to the Lenders in
accordance with Section 3.2. or Section 11.5., such Lender shall promptly
purchase from such other Lenders participations in (or, if and to the extent
specified by such Lender, direct interests in) the Loans made by the other
Lenders or other Obligations owed to such other Lenders in such amounts, and
make such other adjustments from time to time as shall be equitable, to the end
that all the Lenders shall share the benefit of such payment (net of any
reasonable expenses which may actually be incurred by such Lender in obtaining
or preserving such benefit) in accordance with the requirements of Section 3.2.
or Section 11.5., as applicable. To such end, all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans or other Obligations owed to such other Lenders may
exercise all rights of set-off, banker’s lien, counterclaim or similar rights
with the respect to such participation as fully as if such Lender were a direct
holder of Loans in the amount of such participation. Nothing contained herein
shall require any Lender to exercise any such right or shall affect the right of
any Lender to exercise and retain the benefits of exercising, any such right
with respect to any other indebtedness or obligation of the Borrower.

 

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Section 3.4. Several Obligations.

No Lender shall be responsible for the failure of any other Lender to make a
Loan or to perform any other obligation to be made or performed by such other
Lender hereunder, and the failure of any Lender to make a Loan or to perform any
other obligation to be made or performed by it hereunder shall not relieve the
obligation of any other Lender to make any Loan or to perform any other
obligation to be made or performed by such other Lender.

Section 3.5. Fees.

(a) Closing Fee. On the Effective Date, the Borrower agrees to pay to the
Administrative Agent and each Lender all loan and loan modification fees as have
been agreed to in writing by the Borrower and the Administrative Agent.

(b) Unused Fees. The Borrower agrees to pay to the Administrative Agent for the
account of the Lenders an unused fee equal to the sum of the daily amount by
which the aggregate amount of the Commitments exceeds the aggregate outstanding
principal balance of Loans set forth in the table below multiplied by the
corresponding per annum rate:

 

Amount by Which Commitments Exceed Loans

   Unused Fee  

$0 to and including an amount equal to 50% of the aggregate amount of the
Commitments

     0.30 % 

Greater than an amount equal to 50% of the aggregate amount of the Commitments

     0.50 % 

Such fee shall be computed on a daily basis and payable quarterly in arrears on
the first day of each January, April, July and October during the term of this
Agreement and on the Maturity Date or any earlier date of termination of the
Commitments or reduction of the Commitments to zero. The Borrower agrees that
the payment due on January 3, 2012 under this Section 3.5.(b) shall consist of
(i) fees payable under Section 3.5.(b) of the Prior Credit Agreement for the
period from October 1, 2011 to the Effective Date hereunder for the account of
the Lenders thereunder in the amount therein provided allocated among such
Lenders on the basis of their Commitments under the Prior Credit Agreement and
(ii) fees payable under this Section 3.5.(b) for the period from the Effective
Date through December 31, 2011 allocated among the Lenders on the basis of their
Commitments under this Agreement.

(c) Extension Fee. If the Borrower exercises its right to extend the Maturity
Date in accordance with Section 2.15., the Borrower agrees to pay to the
Administrative Agent for the account of each Lender a fee equal to 0.30% of the
amount of such Lender’s outstanding Loans as of the Original Maturity Date.

(d) Administrative and Other Fees. The Borrower agrees to pay the administrative
and other fees of the Administrative Agent, the Syndication Agent and the
Arrangers as provided in the Fee Letter and as may be otherwise agreed to in
writing from time to time.

 

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Section 3.6. Computations.

Unless otherwise expressly set forth herein, any accrued interest on any Loan,
any Fees or other Obligations due hereunder shall be computed on the basis of a
year of 360 days and the actual number of days elapsed.

Section 3.7. Usury.

In no event shall the amount of interest due or payable on the Loans or other
Obligations exceed the maximum rate of interest allowed by Applicable Law and,
if any such payment is paid by the Borrower or any other Loan Party or received
by any Lender, then such excess sum shall be credited as a payment of principal,
unless the Borrower shall notify the respective Lender in writing that the
Borrower elects to have such excess sum returned to it forthwith. It is the
express intent of the parties hereto that the Borrower not pay and the Lenders
not receive, directly or indirectly, in any manner whatsoever, interest in
excess of that which may be lawfully paid by the Borrower under Applicable Law.
The parties hereto hereby agree and stipulate that the only charge imposed upon
the Borrower for the use of money in connection with this Agreement is and shall
be the interest specifically described in Section 2.6.(a)(i) and (ii).
Notwithstanding the foregoing, the parties hereto further agree and stipulate
that all agency fees, syndication fees, facility fees, underwriting fees,
default charges, late charges, funding or “breakage” charges, increased cost
charges, attorneys’ fees and reimbursement for costs and expenses paid by the
Administrative Agent or any Lender to third parties or for damages incurred by
the Administrative Agent or any Lender, are charges made to compensate the
Administrative Agent or any such Lender for underwriting or administrative
services and costs or losses performed or incurred, and to be performed or
incurred, by the Administrative Agent and the Lenders in connection with this
Agreement and shall under no circumstances be deemed to be charges for the use
of money. All charges other than charges for the use of money shall be fully
earned and nonrefundable when due.

Section 3.8. Statements of Account.

The Administrative Agent will account to the Borrower monthly with a statement
of Loans, accrued interest and Fees, charges and payments made pursuant to this
Agreement and the other Loan Documents, and such account rendered by the
Administrative Agent shall be deemed conclusive upon the Borrower absent
manifest error. The failure of the Administrative Agent to deliver such a
statement of accounts shall not relieve or discharge the Borrower from any of
its obligations hereunder.

Section 3.9. Defaulting Lenders.

(a) Generally. Notwithstanding any provision of this Agreement to the contrary,
if any Lender becomes a Defaulting Lender, then, in addition to the rights and
remedies that may be available to the Administrative Agent or the Borrower under
this Agreement or Applicable Law, (i) fees shall cease to accrue on the unfunded
portion of the Commitment of such Defaulting Lender pursuant to Section 3.5.(b)
and (ii) the Commitment of such Defaulting Lender shall not be included in
determining whether the Requisite Lenders, Majority Lenders or all of Lenders
have taken or may take any action hereunder (including any consent to any

 

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amendment, waiver or other modification pursuant to Section 13.7., except as
otherwise provided therein). If for any reason a Lender fails to make timely
payment to the Administrative Agent of any amount required to be paid to the
Administrative Agent hereunder (without giving effect to any notice or cure
periods), in addition to other rights and remedies which the Administrative
Agent or the Borrower may have under the immediately preceding provisions or
otherwise, the Administrative Agent shall be entitled (A) to collect interest
from such Defaulting Lender on such delinquent payment for the period from the
date on which the payment was due until the date on which the payment is made at
the Federal Funds Rate, (B) to withhold or setoff and to apply in satisfaction
of the defaulted payment and any related interest, any amounts otherwise payable
to such Defaulting Lender under this Agreement or any other Loan Document and
(C) to bring an action or suit against such Defaulting Lender in a court of
competent jurisdiction to recover the defaulted amount and any related interest.
Any amounts received by the Administrative Agent in respect of a Defaulting
Lender’s Loans shall not be paid to such Defaulting Lender and shall be held
uninvested by the Administrative Agent and either applied against the purchase
price of such Loans under the following subsection (b) or paid to such
Defaulting Lender upon the Defaulting Lender’s curing of its default.

(b) Purchase or Cancellation of Defaulting Lender’s Commitment. Any Lender who
is not a Defaulting Lender shall have the right, but not the obligation, in its
sole discretion, to acquire by assignment all of a Defaulting Lender’s
Commitments. Any Lender desiring to exercise such right shall give written
notice thereof to the Administrative Agent and the Borrower no sooner than two
(2) Business Days and not later than five (5) Business Days after such
Defaulting Lender became a Defaulting Lender. If more than one (1) Lender
exercises such right, each such Lender shall have the right to acquire an amount
of such Defaulting Lender’s Commitments in proportion to the Commitments of the
other Lenders exercising such right. If after such fifth Business Day, the
Lenders have not elected to acquire all of the Commitments of such Defaulting
Lender, then the Borrower may, by giving written notice thereof to the
Administrative Agent, such Defaulting Lender and the other Lenders, either
(i) demand that such Defaulting Lender assign its Commitments to an Eligible
Assignee subject to and in accordance with the provisions of Section 13.6.(c)
for the purchase price provided for below or (ii) terminate the Commitments of
such Defaulting Lender, whereupon such Defaulting Lender shall no longer be a
party hereto or have any right or obligation whatsoever to initiate any such
replacement or to assist in finding an Eligible Assignee. Upon any such
assignment, the Defaulting Lender’s interest in the Loans and its rights
hereunder (but not its liability in respect thereof or under the Loan Documents
to the extent the same relate to the period prior to the effective date of the
purchase) shall terminate on the date of purchase, and the Defaulting Lender
shall promptly execute all documents reasonably requested to surrender and
transfer such interest to the purchaser or assignee thereof, including an
appropriate Assignment and Assumption Agreement and, notwithstanding
Section 13.6.(c), shall pay to the Administrative Agent an assignment fee in the
amount of $10,000. The purchase price for the Commitments of a Defaulting Lender
shall be equal to the amount of the principal balance of the Loans outstanding
and owed by the Borrower to the Defaulting Lender. Prior to payment of such
purchase price to a Defaulting Lender, the Administrative Agent shall apply
against such purchase price any amounts retained by the Administrative Agent
pursuant to the last sentence of the immediately preceding subsection (a). The
Defaulting Lender shall be entitled to receive any amount owed to it by the
Borrower under the Loan Documents which accrued prior to the date of the default
by the Defaulting Lender, to the extent the same are received by the
Administrative Agent from or on behalf of the Borrower.

 

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There shall be no recourse against any Lender or the Administrative Agent for
the payment of such sums except to the extent of the receipt of payments from
any other party or in respect of the Loans.

Section 3.10. Taxes; Foreign Lenders.

(a) Taxes Generally. All payments by the Borrower of principal of, and interest
on, the Loans and all other Obligations shall be made free and clear of and
without deduction for any present or future excise, stamp or other taxes, fees,
duties, levies, imposts, charges, deductions, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise taxes, (ii) any taxes (other than withholding taxes) that would
not be imposed but for a connection between the Administrative Agent or a Lender
and the jurisdiction imposing such taxes (other than a connection arising solely
by virtue of the activities of the Administrative Agent or such Lender pursuant
to or in respect of this Agreement or any other Loan Document), (iii) any taxes
imposed on or measured by any Lender’s assets, net income, receipts or branch
profits, (iv) any taxes arising after the Agreement Date solely as a result of
or attributable to a Lender changing its designated Lending Office after the
date such Lender becomes a party hereto and (v) any taxes imposed under FATCA
(such non excluded items being collectively called “Taxes”). If any withholding
or deduction from any payment to be made by the Borrower hereunder is required
in respect of any Taxes pursuant to any Applicable Law, then the Borrower will:

(i) pay directly to the relevant Governmental Authority the full amount required
to be so withheld or deducted;

(ii) promptly forward to the Administrative Agent an official receipt or other
documentation satisfactory to the Administrative Agent evidencing such payment
to such Governmental Authority; and

(iii) pay to the Administrative Agent for its account or the account of the
applicable Lender such additional amount or amounts as is necessary to ensure
that the net amount actually received by the Administrative Agent or such Lender
will equal the full amount that the Administrative Agent or such Lender would
have received had no such withholding or deduction been required.

(b) Tax Indemnification. If the Borrower fails to pay any Taxes when due to the
appropriate Governmental Authority or fails to remit to the Administrative
Agent, for its account or the account of the respective Lender, as the case may
be, the required receipts or other required documentary evidence, the Borrower
shall indemnify the Administrative Agent and the Lenders for any incremental
Taxes, interest or penalties that may become payable by the Administrative Agent
or any Lender as a result of any such failure. For purposes of this Section, a
distribution hereunder by the Administrative Agent or any Lender to or for the
account of any Lender shall be deemed a payment by the Borrower.

(c) Tax Forms. Prior to the date that any Lender or Participant organized under
the laws of a jurisdiction outside the United States of America becomes a party
hereto, such Person shall deliver to the Borrower and the Administrative Agent
such certificates, documents or other

 

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evidence, as required by the Internal Revenue Code or Treasury Regulations
issued pursuant thereto (including Internal Revenue Service Forms W-8ECI and
W-8BEN, as applicable, or appropriate successor forms), properly completed,
currently effective and duly executed by such Lender or Participant establishing
that payments to it hereunder and under the Notes are (i) not subject to United
States Federal backup withholding tax and (ii) not subject to United States
Federal withholding tax under the Code. Each such Lender or Participant shall
(x) deliver further copies of such forms or other appropriate certifications on
or before the date that any such forms expire or become obsolete and after the
occurrence of any event requiring a change in the most recent form delivered to
the Borrower and (y) obtain such extensions of the time for filing, and renew
such forms and certifications thereof, as may be reasonably requested by the
Borrower or the Administrative Agent. The Borrower shall not be required to pay
any amount pursuant to last sentence of subsection (a) above to any Lender or
Participant that is organized under the laws of a jurisdiction outside of the
United States of America or the Administrative Agent, if it is organized under
the laws of a jurisdiction outside of the United States of America, if such
Lender, Participant or the Administrative Agent, as applicable, fails to comply
with the requirements of this subsection. If any such Lender or Participant
fails to deliver the above forms or other documentation, then the Administrative
Agent may withhold from such payment to such Lender such amounts as are required
by the Code. If any Governmental Authority asserts that the Administrative Agent
did not properly withhold or backup withhold, as the case may be, any tax or
other amount from payments made to or for the account of any Lender, such Lender
shall indemnify the Administrative Agent therefore, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, and costs and expenses (including all
fees and disbursements of any law firm or other external counsel and the
allocated cost of internal legal services and all disbursements of internal
counsel) of the Administrative Agent. The obligation of the Lenders under this
Section shall survive the termination of the Commitments, repayment of all
Obligations and the resignation or replacement of the Administrative Agent.

(d) FATCA. If a payment made to a Lender under any Loan Document would be
subject to U.S. Federal withholding Tax imposed by FATCA if such Lender fails to
comply with any requirements of FATCA (including those contained in
Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall
(A) enter into such agreements with the IRS as necessary to establish an
exemption from withholding under FATCA; (B) comply with any certification,
documentation, information, reporting or other requirement necessary to
establish an exemption from withholding under FATCA; (C) provide any
documentation reasonably requested by the Borrower or the Administrative Agent
sufficient for the Administrative Agent and the Borrower to comply with their
respective obligations, if any, under FATCA and to determine that such Lender
has complied such applicable requirements; and (D) provide a certification
signed by the chief financial officer, principal accounting officer, treasurer
or controller of such Lender certifying that such Lender has complied with any
necessary requirements to establish an exemption from withholding under
FATCA. To the extent that the relevant documentation provided pursuant to this
paragraph is rendered obsolete or inaccurate in any material respect as a result
of changes in circumstances with respect to the status of a Lender, such Lender
shall, to the extent permitted by Applicable Law, deliver to the Borrower and
the Administrative Agent revised and/or updated documentation sufficient for the
Borrower and the Administrative Agent to confirm such Lender’s compliance with
its obligations under FATCA.

 

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(e) USA Patriot Act Notice; Compliance. In order for the Administrative Agent to
comply with the USA Patriot Act of 2001 (Public Law 107-56), prior to any Lender
or Participant that is organized under the laws of a jurisdiction outside of the
United States of America becoming a party hereto, the Administrative Agent may
request, and such Lender or Participant shall provide to the Administrative
Agent, its name, address, tax identification number and/or such other
identification information as shall be necessary for the Administrative Agent to
comply with federal law.

Section 3.11. Lender Failure to Make Payment.

If any Lender shall fail to make any payment required to be made by it pursuant
to Sections 2.4., 3.1.(b) or 12.8., then the Administrative Agent may, in its
discretion and notwithstanding any contrary provision hereof, (i) apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender for the benefit of the Administrative Agent, to satisfy such Lender’s
obligations to it under such Section until all such unsatisfied obligations are
fully paid, and/or (ii) hold any such amounts in a segregated account as cash
collateral for, and application to, any future funding obligations of such
Lender under any such Section, in the case of each of clauses (i) and
(ii) above, in any order as determined by the Administrative Agent in its
discretion.

ARTICLE IV. COLLATERAL PROPERTIES

Section 4.1. Eligibility of Properties.

(a) Initial Collateral Properties. On the Effective Date, the Initial Collateral
Properties shall be the sole Collateral Properties.

(b) Additional Collateral Properties. If after the Effective Date the Borrower
desires that the Lenders include any additional Property in the Collateral Pool,
and provided the inclusion of such Property would comply with the provisions of
Section 4.4., the Borrower shall so notify the Administrative Agent in writing.
No Property will be evaluated by the Lenders unless and until the Borrower
delivers to the Administrative Agent the following, in form and substance
satisfactory to the Administrative Agent:

(i) An executive summary of the Property including, at a minimum, the following
information relating to such Property: (A) a description of such Property, such
description to include the age, location, site plan and physical condition of
such Property; (B) the purchase price paid or to be paid for such Property;
(C) the current and projected condition of the regional market and specific
submarket in which such Property is located; and (D) the current projected
capital plans and, if applicable, current renovation plans for such Property;

(ii) The purchase and sale agreement pursuant to which such Property was or is
being acquired;

(iii) An operating statement for such Property audited or certified by a
representative of the Borrower as being true and correct in all material
respects and prepared in accordance with GAAP for the previous three fiscal
years, as well as

 

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operating statements for the most recent month, the year-to-date and the
trailing twelve months, provided that, with respect to any period such Property
that was owned by the Borrower or a Subsidiary for less than three years, such
information shall only be required to be delivered to the extent reasonably
available to the Borrower and such certification may be based upon the
Borrower’s knowledge and provided further, that if such Property has been
operating for less than three years, the Borrower shall provide such projections
and other information concerning the anticipated operation of such Property as
the Administrative Agent may reasonably request;

(iv) To the extent available, three-year historical and pro forma capital
expenditure reports and projections;

(v) A copy of a recent ALTA Owner’s Policy of Title Insurance (“Owner’s
Policy”), or a current commitment therefor, covering such Property showing the
identity of the fee titleholder thereto and all matters of record;

(vi) Copies of all documents of record reflected in Schedule A and Schedule B of
the Owner’s Policy (including any ground lease, easements, covenants, conditions
and restrictions) and a copy of the most recent real estate tax bill and notice
of assessment;

(vii) A current or currently certified (within twelve (12) months, provided it
shows all improvements on or affecting the Property) survey of such Property
certified by a surveyor licensed in the applicable jurisdiction to have been
prepared in accordance with the then effective Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys;

(viii) If not adequately covered by the survey certification provided for above,
a certificate from a licensed engineer or other professional satisfactory to the
Administrative Agent that such Property is not located in a Special Flood Hazard
Area as defined by the Federal Insurance Administration;

(ix) A “Phase I” environmental assessment of such Property not more than
twelve months old, which report (1) has been prepared by an environmental
engineering firm acceptable to the Administrative Agent and (2) complies with
the requirements contained in the Administrative Agent’s guidelines adopted from
time to time by the Administrative Agent to be used in its lending practice
generally and any other environmental assessments or other reports relating to
such Property, including any “Phase II” environmental assessment prepared or
recommended by such environmental engineering firm to be prepared for such
Property;

(x) An engineering report for such Property not more than twelve months old and
prepared by an engineering firm acceptable to the Administrative Agent;

(xi) Copies of all Material Contracts for such Property;

(xii) The Smith Travel STAR Report for such Property and its primary competitive
set for the most current month available, along with the prior year-end report;

 

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(xiii) To the extent readily available, maps, photographs, site plans, broker
packages, market studies or third-party reports on the hotel property;

(xiv) Any PIP required to remain in compliance with the applicable Franchise
Agreement and Management Agreement;

(xv) Five-year financial pro forma projections, including a discounted cash flow
analysis, along with any submissions to the Parent Guarantor’s board of
trustees;

(xvi) Evidence that such Property complies with applicable zoning and land use
laws;

(xvii) UCC, tax, judgment and lien search reports with respect to the Subsidiary
that is the owner, and the Subsidiary that is the Operating Lessee, of such
Property in all necessary or appropriate jurisdictions indicating that there are
no Liens of record with respect to such Person or such Property other than
Permitted Liens;

(xviii) Plans and specifications for such Property, provided the same shall only
be required to the extent reasonably available to the Borrower;

(xix) Final certificates of occupancy and any other Governmental Approvals
relating to such Property;

(xx) Copies of all policies of insurance required by Section 8.5.; and

(xxi) Such other information the Administrative Agent may request in order to
evaluate the Property.

If, after receipt and review of the foregoing documents and information, the
Administrative Agent is, in its sole discretion, prepared to recommend
acceptance of such Property as a Collateral Property, the Administrative Agent
will so notify the Borrower and each Lender, provided, however, that the
Administrative Agent may elect to make such recommendation prior to receipt of
all of the foregoing documents and information, in which event such
recommendation shall be subject to its receipt and review of the documents and
information thereafter received. Within five (5) Business Days of the
Administrative Agent’s giving such notice to the Lenders, the Administrative
Agent will send the foregoing documents and information to each of the Lenders.

(c) Appraisal; Final Approval. Promptly upon (or, at the Borrower’s request,
prior to) giving notice to the Lenders under Section 4.1.(b) that the
Administrative Agent is prepared to recommend acceptance of such Property as a
Collateral Property, the Administrative Agent shall commission, at the
Administrative Agent’s discretion and the Borrower’s expense, an Appraisal of
such Property, to be in form and substance satisfactory to the Administrative
Agent. Within ten (10) Business Days of receipt of such Appraisal, the
Administrative Agent shall review such Appraisal and shall determine the
Appraised Value of such Property. If after such review and determination the
Administrative Agent is, in its sole discretion, unwilling to recommend
acceptance of such Property as a Collateral Property, the Administrative Agent
shall promptly notify the Borrower and the Lenders and the consideration by the
Administrative Agent

 

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and the Lenders of such Property shall cease. If after such review and
determination the Administrative Agent remains prepared to recommend acceptance
of such Property as a Collateral Property, the Administrative Agent shall
forward a copy of such Appraisal to the Lenders together with notice of such
Appraised Value. Each Lender shall use reasonable efforts to notify the
Administrative Agent in writing whether or not such Lender, in its sole
discretion, accepts such Property as a Collateral Property within ten
(10) Business Days of the date on which a Lender has received all of the items
referred to in this Section 4.1.(c) and the immediately preceding
Section 4.1.(b). Such Property shall become a Collateral Property only upon
written approval of the Required Approval Lenders and upon execution and
delivery by the Borrower to the Administrative Agent of (i) a certificate in
form and substance satisfactory to Administrative Agent showing the Collateral
Pool Availability after inclusion of such Property as a Collateral Property,
(ii) the documents and items described in Section 6.3., and (iii) such other
items or documents as the Administrative Agent may reasonably deem to be
appropriate under the circumstances, including updates of the documents
described in the immediately preceding subsections (b)(i), (b)(ii), (b)(vi),
(b)(xi), (b)(xii) and (b)(xvii), and satisfaction of all other closing
requirements reasonably imposed by the Administrative Agent.

Section 4.2. Release of Collateral Properties.

From time to time the Borrower may request, upon not less than ten (10) days’
prior written notice to the Administrative Agent or such shorter period as may
be acceptable to the Administrative Agent, that a Collateral Property be
released from the Liens created by the Security Documents applicable thereto,
which release (the “Collateral Property Release”) shall be effected by the
Administrative Agent if the Administrative Agent determines all of the following
conditions are satisfied as of the date of such Collateral Property Release:

(a) No Default or Event of Default exists or will exist immediately after giving
effect to such Collateral Property Release;

(b) Immediately prior to such Collateral Property Release (i) the Debt Service
Coverage Ratio is not less than the Minimum DSCR Hurdle, (ii) the outstanding
principal balance of the Loans does not exceed the sum of the Advance Rate
Values of all of the Collateral Properties, and (iii) the Borrower is in
compliance with the provisions of Section 10.1.;

(c) The Borrower shall have delivered to the Administrative Agent a certificate
demonstrating on a pro forma basis, and the Administrative Agent shall have
determined to its satisfaction, that upon such Collateral Property Release (and
taking into account any prepayment of the Loans to be made prior to or at the
time of such Collateral Property Release), (i) the Debt Service Coverage Ratio
for the Remaining Collateral Properties shall not be less than the Minimum DSCR
Hurdle, (ii) the outstanding principal balance of the Loans shall not exceed the
sum of the Advance Rate Values of all of the Remaining Collateral Properties,
and (iii) the Borrower shall be in compliance with the provisions of
Section 10.1.;

(d) Upon such Collateral Property Release, at least five Collateral Properties
(including two Required Collateral Properties) having an aggregate Operating
Property Value of not less than $250,000,000 shall remain in the Collateral
Pool;

 

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(e) Such Collateral Property Release shall be permitted under Section 4.4.; and

(f) The Borrower shall have delivered to the Administrative Agent all documents
and instruments reasonably requested by the Administrative agent in connection
with such Collateral Property Release.

Simultaneously with the Collateral Property Release, the Administrative Agent
shall release the Subsidiary Guarantor that owns such released Collateral
Property from its obligations under the Subsidiary Guaranty, provided such
Subsidiary Guarantor does not own any other Collateral Property. Except as set
forth in this Section 4.2., no Collateral Property shall be released from the
Liens created by the Security Documents applicable thereto and no Subsidiary
Guarantor shall be released from its obligations under the Subsidiary Guaranty.

Section 4.3. Frequency of Appraisals.

The Appraised Value of a Collateral Property shall be determined or
redetermined, as applicable, under each of the following circumstances:

(a) In connection with the acceptance of a Property as a Collateral Property the
Administrative Agent will determine the Appraised Value thereof as provided in
Section 4.1.; or

(b) From time to time upon at least five (5) Business Days written notice to the
Borrower and at the Borrower’s expense, the Administrative Agent may (and shall
at the direction of the Requisite Lenders) redetermine the Appraised Value of a
Collateral Property (based on a new Appraisal obtained by the Administrative
Agent) in any of the following circumstances:

(i) if a change occurs with respect to such Collateral Property that has a
Material Adverse Effect (as determined by the Administrative Agent or based on
the direction of the Requisite Lenders), including, without limitation, a
material deterioration in the Net Operating Income of such Collateral Property,
a major casualty at such Collateral Property that is not fully covered by
insurance, a material condemnation of any part of such Collateral Property or a
material change in the market conditions affecting such Collateral Property; or

(ii) if necessary in order to comply with FIRREA or other Applicable Law
relating to the Administrative Agent or the Lenders; or

(iii) if the Administrative Agent determines an Appraisal of such Property is
necessary in connection with its determination under Section 4.2.(b) regarding
the release of a Collateral Property; or

(c) At any time and from time to time but no more than once during any period of
one (1) year, the Administrative Agent may (and shall at the written direction
of all of the Lenders) redetermine the Appraised Value of a Collateral Property
(based on a new Appraisal obtained by the Administrative Agent), all at the
Borrower’s expense; or

 

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(d) At any time at which there exists an Event of Default, the Administrative
Agent may (and shall at the written direction of the Requisite Lenders) obtain
an Appraisal of any one or more of the Collateral Properties, all at the
Borrower’s expense; or

(e) At any time and from time to time, the Administrative Agent may (and shall
at the written direction of all of the Lenders) redetermine the Appraised Value
of any Collateral Property (based on a new Appraisal obtained by the
Administrative Agent), all at the Lenders’ expense.

Section 4.4. Limitations on Collateral Pool Releases and Additions to Collateral
Pool.

(a) No Property shall be added to the Collateral Pool and no Collateral Property
shall be released from the Collateral Pool if the addition of such Property to
the Collateral Pool or such Collateral Property Release would result in any of
the following:

(i) those Collateral Properties that are (A) ground-up development Hotel
Properties not operating for the prior four fiscal quarters,
(B) Development/Redevelopment Properties or (C) Collateral Properties scheduled
for Major Renovations within two years after the acquisition date having in the
aggregate Appraised Values that exceed 25% of the aggregate Appraised Values of
all Collateral Properties;

(ii) any single Collateral Property having (A) an Appraised Value that exceeds
thirty-five percent (35%) of the aggregate Appraised Values of all Collateral
Properties or (B) Adjusted NOI that exceeds 35% of the aggregate Adjusted NOI of
all Collateral Properties;

(iii) the aggregate Appraised Values of all of the Collateral Properties located
in a single metropolitan statistical area or Top 25 Market exceeding 35% of the
aggregate Appraised Values of all Collateral Properties; or

(iv) the Adjusted NOI of all of the Collateral Properties located in a single
metropolitan statistical area or Top 25 Market exceeding 35% of the Adjusted NOI
of all Collateral Properties.

(b) No Property that is subject to a ground lease shall be added to the
Collateral Pool, and no Collateral Property shall be released from the
Collateral Pool, in either case, if following the addition of such Property to
the Collateral Pool or such Collateral Property Release, Collateral Properties
that are subject to ground leases would have an aggregate Appraised Value that
exceeds 20% of the aggregate Appraised Values of all Collateral Properties.
Notwithstanding the foregoing, Borrower shall be permitted to exclude one ground
leased Property from the foregoing limitation, provided (i) such ground lease
(A) is an Approved Ground Lease, (B) provides for ground rent that is a de
minimus percentage of total operating expenses of such Property and (C) demises
only a portion of such Property that does not underlie any material improvements
or any material means of ingress and egress and (ii) such exclusion is approved
in writing by Administrative Agent in its sole and absolute discretion.

 

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Section 4.5. Substitution of Required Collateral Properties.

Borrower may at any time request, by notice to the Administrative Agent, that a
Collateral Property that is not a Required Collateral Property (the “Replacement
Collateral Property”) be designated a Required Collateral Property in
substitution for a then existing Required Collateral Property designated by
Borrower (the “Substituted Collateral Property”). Upon unanimous written
approval of such substitution by the Lenders, Administrative Agent and Borrower
shall enter into a written instrument confirming that the Replacement Collateral
Property is a Required Collateral Property and that the Substituted Collateral
Property no longer is a Required Collateral Property.

ARTICLE V. YIELD PROTECTION, ETC.

Section 5.1. Additional Costs; Capital Adequacy.

(a) Capital Adequacy. If any Lender or any Participant in the Loan determines
that compliance with any law or regulation or with any guideline or request from
any central bank or other Governmental Authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by such Lender or such Participant, or any corporation
controlling such Lender or such Participant, as a consequence of, or with
reference to, such Lender’s or such Participant’s or such corporation’s
Commitments or its making or maintaining Loans below the rate which such Lender
or such Participant or such corporation controlling such Lender or such
Participant could have achieved but for such compliance (taking into account the
policies of such Lender or such Participant or such corporation with regard to
capital), then (without duplication of any other obligations of the Borrower
under the Loan Documents) the Borrower shall, from time to time, within thirty
(30) days after written demand by such Lender or (subject to subsection
(f) below) such Participant, pay to such Lender or such Participant additional
amounts sufficient to compensate such Lender or such Participant or such
corporation controlling such Lender or such Participant to the extent that such
Lender or such Participant determines such increase in capital is allocable to
such Lender’s or such Participant’s obligations hereunder.

(b) Additional Costs. In addition to, and not in limitation of the immediately
preceding clause (a), the Borrower shall promptly pay to the Administrative
Agent for the account of a Lender from time to time such amounts as such Lender
may determine to be necessary to compensate such Lender for any costs incurred
by such Lender that it determines are attributable to its making or maintaining
of any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any
reduction in any amount receivable by such Lender under this Agreement or any of
the other Loan Documents in respect of any of such LIBOR Loans or such
obligation or the maintenance by such Lender of capital in respect of its LIBOR
Loans or its Commitments (such increases in costs and reductions in amounts
receivable being herein called “Additional Costs”), resulting from any
Regulatory Change that: (i) changes the basis of taxation of any amounts payable
to such Lender under this Agreement or any of the other Loan Documents in
respect of any of such LIBOR Loans or its Commitments (other than taxes imposed
on or measured by the overall net income of such Lender or of its Lending Office
for any of such LIBOR Loans by the jurisdiction in which such Lender has its
principal office or such Lending Office), or (ii) imposes or modifies any
reserve, special deposit or similar

 

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requirements (including without limitation, Regulation D of the Board of
Governors of the Federal Reserve System or other similar reserve requirement
applicable to any other category of liabilities or category of extensions of
credit or other assets by reference to which the interest rate on LIBOR Loans is
determined) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, or other credit extended by, or any other
acquisition of funds by such Lender (or its parent corporation), or any
commitment of such Lender (including, without limitation, the Commitment of such
Lender hereunder) or (iii) has or would have the effect of reducing the rate of
return on capital of such Lender to a level below that which such Lender could
have achieved but for such Regulatory Change (taking into consideration such
Lender’s policies with respect to capital adequacy).

(c) Lender’s Suspension of LIBOR Loans. Without limiting the effect of the
provisions of the immediately preceding subsection (a) and (b), if by reason of
any Regulatory Change, any Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the interest rate on LIBOR Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets that it may hold, then, if such
Lender so elects by notice to the Borrower (with a copy to the Administrative
Agent), the obligation of such Lender to make or Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 5.5. shall
apply).

(d) Intentionally Omitted.

(e) Notification and Determination of Additional Costs. Each of the
Administrative Agent, each Lender, and (subject to subsection (f) below) each
Participant, as the case may be, agrees to notify the Borrower of any event
occurring after the Agreement Date entitling the Administrative Agent, such
Lender or such Participant to compensation under any of the preceding
subsections of this Section as promptly as practicable; provided, however, that
the failure of the Administrative Agent, any Lender or any Participant to give
such notice shall not release the Borrower from any of its obligations
hereunder. The Administrative Agent, each Lender and (subject to subsection
(f) below) each Participant, as the case may be, agrees to furnish to the
Borrower (and in the case of a Lender or a Participant to the Administrative
Agent as well) a certificate setting forth the basis and amount of each request
for compensation under this Section. Determinations by the Administrative Agent,
such Lender, or such Participant, as the case may be, of the effect of any
Regulatory Change shall be conclusive and binding for all purposes, absent
manifest error.

(f) Participants. Any notice or certificate to be delivered by a Participant
under subsection (a) or (e) above shall be delivered by such Participant to the
Lender from which it purchased such participation interest, and such Lender
shall promptly deliver the same to the Administrative Agent and the Borrower.

 

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Section 5.2. Suspension of LIBOR Loans.

Anything herein to the contrary notwithstanding, if, on or prior to the
determination of LIBOR for any Interest Period:

(a) the Administrative Agent reasonably determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the definition of LIBOR are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of interest for
LIBOR Loans as provided herein or is otherwise unable to determine LIBOR, or

(b) the Administrative Agent reasonably determines (which determination shall be
conclusive) that the relevant rates of interest referred to in the definition of
LIBOR upon the basis of which the rate of interest for LIBOR Loans for such
Interest Period is to be determined are not likely to adequately cover the cost
to any Lender of making or maintaining LIBOR Loans for such Interest Period;

then the Administrative Agent shall give the Borrower and each Lender prompt
notice thereof and, so long as such condition remains in effect, (i) the Lenders
shall be under no obligation to, and shall not, make additional LIBOR Loans,
Continue LIBOR Loans or Convert Loans into LIBOR Loans and the Borrower shall,
on the last day of each current Interest Period for each outstanding LIBOR Loan,
either prepay such Loan or Convert such Loan into a Base Rate Loan.

Section 5.3. Illegality.

Notwithstanding any other provision of this Agreement, if any Lender shall
determine (which determination shall be conclusive and binding) that it is
unlawful for such Lender to honor its obligation to make or maintain LIBOR Loans
hereunder, then such Lender shall promptly notify the Borrower thereof (with a
copy of such notice to the Administrative Agent) and such Lender’s obligation to
make or Continue, or to Convert Loans of any other Type into, LIBOR Loans shall
be suspended, in each case, until such time as such Lender may again make and
maintain LIBOR Loans (in which case the provisions of Section 5.5. shall be
applicable).

Section 5.4. Compensation.

The Borrower shall pay to the Administrative Agent for the account of each
Lender, upon the request of the Administrative Agent, such amount or amounts as
the Administrative Agent shall determine in its sole discretion shall be
sufficient to compensate such Lender for any loss, cost or expense attributable
to:

(a) any payment or prepayment (whether mandatory or optional) of a LIBOR Loan,
or Conversion of a LIBOR Loan, made by such Lender for any reason (including,
without limitation, acceleration) on a date other than the last day of the
Interest Period for such Loan; or

(b) any failure by the Borrower for any reason (including, without limitation,
the failure of any of the applicable conditions precedent specified in
Section 6.2. to be satisfied) to borrow a LIBOR Loan from such Lender on the
date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Loan or
Continue a LIBOR Loan on the requested date of such Conversion or Continuation.

 

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Not in limitation of the foregoing, such compensation shall include, without
limitation, an amount equal to the then present value of (A) the amount of
interest that would have accrued on such LIBOR Loan for the remainder of the
Interest Period at the rate applicable to such LIBOR Loan, less (B) the amount
of interest that would accrue on the same LIBOR Loan for the same period if
LIBOR were set on the date on which such LIBOR Loan was repaid, prepaid or
Converted or the date on which the Borrower failed to borrow, Convert or
Continue such LIBOR Loan calculating present value by using as a discount rate
LIBOR quoted on such date, including without limitation any losses or expenses
incurred in obtaining, liquidating or employing deposits from third parties.
Upon the Borrower’s request, the Administrative Agent shall provide the Borrower
with a statement setting forth the basis for requesting such compensation and
the method for determining the amount thereof. Any such statement shall be
conclusive absent manifest error.

Section 5.5. Treatment of Affected Loans.

If the obligation of any Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to
Section 5.1.(c), Section 5.2., or Section 5.3. then such Lender’s LIBOR Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion
required by Section 5.1.(c), Section 5.2., or Section 5.3. on such earlier date
as such Lender may specify to the Borrower with a copy to the Administrative
Agent) and, unless and until such Lender gives notice as provided below that the
circumstances specified in Section 5.1.(e), Section 5.2., or Section 5.3. that
gave rise to such Conversion no longer exist:

(i) to the extent that such Lender’s LIBOR Loans have been so Converted, all
payments and prepayments of principal that would otherwise be applied to such
Lender’s LIBOR Loans shall be applied instead to its Base Rate Loans; and

(ii) all Loans that would otherwise be made or Continued by such Lender as LIBOR
Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate
Loans of such Lender that would otherwise be Converted into LIBOR Loans shall
remain as Base Rate Loans.

If such Lender gives notice to the Borrower (with a copy to the Administrative
Agent) that the circumstances specified in Section 5.1.(c) or 5.3. that gave
rise to the Conversion of such Lender’s LIBOR Loans pursuant to this Section no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when LIBOR Loans made by other Lenders are
outstanding, then such Lender’s Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding LIBOR Loans, to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding LIBOR Loans and by such
Lender are held pro rata (as to principal amounts, Types and Interest Periods)
in accordance with their respective Commitments.

 

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Section 5.6. Change of Lending Office.

Each Lender agrees that it will use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate an alternate
Lending Office with respect to any of its Loans affected by the matters or
circumstances described in Sections 3.10., 5.1. or 5.3. to reduce the liability
of the Borrower or avoid the results provided thereunder, so long as such
designation is not disadvantageous to such Lender as determined by such Lender
in its sole discretion, except that such Lender shall have no obligation to
designate a Lending Office located in the United States of America.

Section 5.7. Assumptions Concerning Funding of LIBOR Loans.

Calculation of all amounts payable to a Lender under this Article shall be made
as though such Lender had actually funded LIBOR Loans through the purchase of
deposits in the relevant market bearing interest at the rate applicable to such
LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a
maturity comparable to the relevant Interest Period; provided, however, that
each Lender may fund each of its LIBOR Loans in any manner it sees fit and the
foregoing assumption shall be used only for calculation of amounts payable under
this Article.

ARTICLE VI. CONDITIONS PRECEDENT

Section 6.1. Initial Conditions Precedent.

The effectiveness of this Agreement is subject to the satisfaction or waiver of
the following conditions precedent:

(a) The Administrative Agent shall have received each of the following, in form
and substance satisfactory to the Administrative Agent:

(i) counterparts of this Agreement executed by each of the parties hereto;

(ii) a Note payable to each Lender not party to the Prior Credit Agreement and a
replacement Note payable to each Lender whose Commitment is being increased
pursuant to this Agreement, in each case complying with the terms of
Section 2.13.(a);

(iii) ratification by the Guarantors and Operating Lessees of their obligations
under the Loan Documents to which they are parties;

(iv) such amendments to the Security Documents as Administrative Agent may
require;

(v) (A) an opinion of Hogan Lovells US LLP, counsel to the Borrower and the
other Loan Parties, and (B) to the extent required by Administrative Agent, an
opinion of local counsel reasonably satisfactory to Administrative Agent, as
special counsel to the Loan Parties, each addressed to the Administrative Agent
and the Lenders and collectively covering the matters set forth in Exhibit H;

 

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(vi) to the extent required by Administrative Agent, the certificate or articles
of incorporation, articles of organization, certificate of limited partnership,
declaration of trust or other comparable organizational instrument (if any) of
each Loan Party certified as of a recent date by the Secretary of State of the
state of organization or formation of such Person;

(vii) to the extent required by Administrative Agent, a certificate of good
standing (or certificate of similar meaning) with respect to each Loan Party
issued as of a recent date by the Secretary of State of the state of formation
of each such Person and certificates of qualification to transact business or
other comparable certificates issued by each Secretary of State (and any state
department of taxation, as applicable) of each state in which such Person is
required to be so qualified and where failure to be so qualified could
reasonably be expected to have a Material Adverse Effect;

(viii) to the extent required by Administrative Agent, a certificate of
incumbency signed by the Secretary or Assistant Secretary (or other individual
performing similar functions) of each Loan Party with respect to each of the
officers of such Person authorized to execute and deliver the Loan Documents to
which such Person is a party;

(ix) to the extent required by Administrative Agent, copies certified by the
Secretary or Assistant Secretary (or other individual performing similar
functions) of each Loan Party of (A) the by-laws of such Person, if a
corporation, the operating agreement, if a limited liability company, the
partnership agreement, if a limited or general partnership, or other comparable
document in the case of any other form of legal entity (or, in lieu of the
foregoing, a certificate of such Secretary or Assistant Secretary (or other
individual performing similar functions) that the applicable document or
documents delivered pursuant to the Original Credit Agreement or Prior Credit
Agreement have not been modified or amended and remain in full force and effect)
and (B) all corporate, partnership, member or other necessary action taken by
such Person to authorize the execution, delivery and performance of the Loan
Documents to which it is a party;

(x) a Compliance Certificate for the Parent Guarantor’s fiscal quarter ended
June 30, 2011;

(xi) Intentionally Omitted;

(xii) to the extent required by Administrative Agent, title insurance
endorsements to the title insurance policies previously issued to Administrative
Agent.

(xiii) to the extent required by Administrative Agent, UCC, tax, judgment and
lien search reports with respect to each Loan Party in all necessary or
appropriate jurisdictions indicating that there are no Liens of record with
respect to the assets of each such Loan Party other than Permitted Liens;

(xiv) evidence that the Fees, if any, then due and payable under Section 3.5.,
together with all other fees, expenses and reimbursement amounts due and payable
to the Administrative Agent and any of the Lenders, including without
limitation, the fees and expenses of counsel to the Administrative Agent, have
been paid; and

 

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(xv) such other documents and instruments as the Administrative Agent, or any
Lender through the Administrative Agent, may reasonably request; and

(b) No Default or Event of Default shall exist; and

(c) The representations and warranties made or deemed made by the Borrower and
each other Loan Party in this Agreement and in the other Loan Documents
delivered pursuant to Section 6.1. shall be true and correct.

Section 6.2. Conditions Precedent to All Loans.

The obligations of the Lenders to make any Loans are subject to the further
conditions precedent that: (a) no Default or Event of Default shall exist as of
the date of the making of such Loan or would exist immediately after giving
effect thereto, and no violation of the limits described in Section 2.16. would
occur after giving effect thereto; (b) the representations and warranties made
or deemed made by the Borrower and each other Loan Party in the Loan Documents
to which any of them is a party, shall be true and correct on and as of the date
of the making of such Loan with the same force and effect as if made on and as
of such date except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier date)
and except for changes in factual circumstances specifically and expressly
permitted under the Loan Documents and (c) in the case of the borrowing of
Loans, the Administrative Agent shall have received (i) a timely Notice of
Borrowing, (ii) a certificate (as of the last day of the most recent calendar
quarter) establishing sufficient Collateral Pool Availability for such borrowing
and (iii) a certificate of Borrower confirming that the applicable Subsidiary
Guarantor or Operating Lessee is in compliance with the requirements of any
Franchise Agreement relating to the Loan and the execution and delivery of the
Security Instrument with respect to the Collateral Property which is the subject
thereof, pursuant to the Loan Documents. Each Credit Event shall constitute a
certification by the Borrower to the effect set forth in the preceding sentence
(both as of the date of the giving of notice relating to such Credit Event and,
unless the Borrower otherwise notifies the Administrative Agent prior to the
date of such Credit Event, as of the date of the occurrence of such Credit
Event). In addition, the Borrower shall be deemed to have represented to the
Administrative Agent and the Lenders at the time such Loan is made that all
conditions to the making of such Loan contained in this Article VI. have been
satisfied.

Section 6.3. Conditions Precedent to a Property Becoming a Collateral Property.

No Property shall become a Collateral Property until the Borrower shall have (or
shall have caused to be) executed and delivered to the Administrative Agent all
documents and instruments required under Section 4.1., and the Administrative
Agent and the Required Approval Lenders shall have approved such Property as
provided in Section 4.1., and the Borrower shall have (or shall cause to be)
executed and delivered to the Administrative Agent the following instruments,
documents and agreements in respect of such Property, each to be in form and
substance satisfactory to the Administrative Agent:

(a) A Security Deed with respect to such Property, the form of such Security
Deed to be modified as appropriate to conform to the Applicable Laws of the
jurisdiction in which such Property is located;

 

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(b) An Assignment of Leases and Rents with respect to such Property, the form of
such Assignment of Leases and Rents to be modified as appropriate to conform to
the Applicable Laws of the jurisdiction in which such Property is located;

(c) A Management Agreement Assignment/Subordination with respect to the
Management Agreement for such Property and (if such Property is subject to a
Franchise Agreement) a “comfort letter” from the Franchisor, unless waived by
the Administrative Agent;

(d) A Control Agreement with respect to the applicable FF&E Reserve Account;

(e) Copies of the Material Contracts for such Property (to the extent not
theretofore delivered) and, if requested by the Administrative Agent, collateral
assignments executed by the applicable Subsidiary Guarantor and Operating Lessee
in favor of the Administrative Agent for its benefit and the benefit of the
Lenders, of the other Material Contracts relating to the use, occupancy,
operation, maintenance, enjoyment or ownership of such Property;

(f) A commitment for an ALTA 2006 Form Loan Policy of Title Insurance or other
form acceptable to the Administrative Agent in favor of the Administrative Agent
for its benefit and the benefit of the Lenders, with respect to such Property,
including endorsements with respect to such items of coverage as the
Administrative Agent may request and which endorsements are available and
customary in the jurisdiction where the Property is located, in the amount of
coverage required in the following sentence, issued by a title insurance company
acceptable to the Administrative Agent and with reinsurance (with direct access
agreements) with title insurance companies acceptable to the Administrative
Agent, showing the fee simple title to the land (or, in the case of a Property
that is subject to an Approved Ground Lease, the leasehold interest in the Land)
and improvements described in the applicable Security Deed as vested in the
applicable Subsidiary Guarantor, and insuring that the Lien granted by such
Security Deed is a valid Lien against said Property, subject only to the
Permitted Liens and such other restrictions, encumbrances, easements and
reservations as are acceptable to the Administrative Agent. The issuance of the
title insurance policy pursuant to such Commitment satisfactory to the
Administrative Agent shall be a condition under this Section 6.3., and the
amount of coverage under such policy must equal the Appraised Value of such
Property;

(g) Copies of all documents of record reflected in Schedule A and Schedule B of
such title insurance commitment;

(h) If such Property is located in a Tie-In Jurisdiction, endorsements to all
other existing title insurance policies issued to the Administrative Agent with
respect to all other Properties located in Tie-In Jurisdictions reflecting an
increase in the aggregate insured amount under the “Tie-In” Endorsements to an
amount equal to the aggregate amount of the Appraised Values of all such
Collateral Properties (including the Property to be added to the Collateral
Pool) but in no event in an amount in excess of the aggregate amount of the
Commitments;

 

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(i) Estoppel certificates from any party to any Material Contract and estoppels
certificates and subordination, non-disturbance and attornment agreements from
each tenant leasing any of such Property, all as may be reasonably requested by
the Administrative Agent;

(j) An Accession Agreement executed by the Subsidiary Guarantor that is the
owner of such Property (unless it is already a party to the Subsidiary
Guaranty);

(k) With respect to the applicable Subsidiary Guarantor and Operating Lessee,
the items that would have been delivered under subsections (v) through (ix),
(xiii) and (xv) of Section 6.1.(a) if they had been Loan Parties on the
Agreement Date.

(l) An opinion of counsel admitted to practice law in the jurisdiction in which
such Property is located and acceptable to the Administrative Agent, addressed
to the Administrative Agent and each Lender covering such legal matters relating
to the transactions contemplated hereby as the Administrative Agent may
reasonably request;

(m) An opinion of counsel admitted to practice law in the jurisdictions in which
each of the Loan Parties (including the Subsidiary Guarantor that is the owner,
and the Operating Lessee that is the lessee, of such Property) is formed
acceptable to the Administrative Agent, addressed to the Administrative Agent
and each Lender covering such legal matters relating to the formation and
existence and power of the Person executing documents, and the due
authorization, execution and delivery of the Security Documents and other
documents for consummating the transactions contemplated hereby as the
Administrative Agent may reasonably request;

(n) Documents required to establish, or evidencing the establishment of, the
FF&E Reserve Account, Insurance Reserve Account and Tax Reserve Account (as
applicable); and

(o) Such other instruments, documents, agreements, financing statements,
certificates, opinions and other Security Documents as the Administrative Agent
may reasonably request.

Section 6.4. Conditions as Covenants.

If the Lenders permit the making of any Loans prior to the satisfaction of all
conditions precedent set forth in Sections 6.1., 6.2. or 6.3. but require the
Borrower to cause such condition or conditions to be satisfied after the date of
the making of such Loans, the Borrower shall enter into a supplementary
agreement establishing the conditions to be satisfied thereafter and the time by
which they must be satisfied, as reasonably required by the Administrative
Agent. Unless set forth in writing to the contrary, the making of its initial
Loan by a Lender shall constitute a confirmation by such Lender to the
Administrative Agent and the other Lenders that insofar as such Lender is
concerned the Borrower has satisfied the conditions precedent for initial Loans
set forth in Sections 6.1. and 6.2.

 

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ARTICLE VII. REPRESENTATIONS AND WARRANTIES

Section 7.1. Representations and Warranties.

In order to induce the Administrative Agent and each Lender to enter into this
Agreement and to make Loans, the Borrower represents and warrants to the
Administrative Agent and each Lender as follows:

(a) Organization; Power; Qualification. Each of the Loan Parties is a
corporation, partnership or other legal entity, duly organized or formed,
validly existing and in good standing under the jurisdiction of its
incorporation or formation, has the requisite corporate, partnership or limited
liability company power and authority to own or lease its respective properties
and to carry on its respective business and is duly qualified as, and is in good
standing as a foreign corporation, partnership or other legal entity and
authorized to do business, in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification or
authorization and where the failure to be so qualified or authorized could
reasonably be expected to have, in each instance, a Material Adverse Effect.

(b) Ownership Structure. Part I of Schedule 7.1(b) is, as of the Agreement Date,
a complete and correct list of the Parent Guarantor and all of its Subsidiaries
setting forth for each such Subsidiary, (i) the jurisdiction of organization of
such Person, (ii) each Person holding any Equity Interest in such Person,
(iii) the nature of the Equity Interests held by each such Person and (iv) the
percentage of ownership of such Person represented by such Equity Interests. As
of the Agreement Date, except as disclosed in such Schedule (A), each of the
Parent Guarantor, the Borrower and their Subsidiaries owns, free and clear of
all Liens, and has the unencumbered right to vote, all outstanding Equity
Interests in each Person shown to be held by it on such Schedule, (B) all of the
issued and outstanding capital stock of each such Person organized as a
corporation is validly issued, fully paid and nonassessable and (C) there are no
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders’ or
voting trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, any
such Person. As of the Agreement Date, Part II of Schedule 7.1(b) correctly sets
forth all Unconsolidated Affiliates of the Parent Guarantor and its
Subsidiaries, including the correct legal name of such Person, the type of legal
entity which each such Person is, and all Equity Interests in such Person held
directly or indirectly by the Parent Guarantor or the Borrower. Part I of
Schedule 7.1(b) may be updated from time to time in accordance with the terms of
this Agreement.

(c) Authorization of Agreement, Notes, Loan Documents and Borrowings. The
Borrower has the requisite partnership power, and has taken all necessary
limited partnership action, and the Parent Guarantor has taken all necessary
action, to authorize the Borrower, to borrow and obtain other extensions of
credit hereunder. The Borrower and each other Loan Party has the requisite
corporate, partnership or limited liability company power, and has taken all
necessary corporate, partnership or limited liability company action, and the
Parent Guarantor has taken all necessary action, to authorize each Loan Party,
to execute, deliver and perform each of the Loan Documents and the Fee Letter to
which it is a party in accordance with their

 

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respective terms and perform its respective obligations thereunder. The Loan
Documents and the Fee Letter to which the Borrower or any other Loan Party is a
party have been duly executed and delivered by the duly authorized officers of
such Person and each is a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its respective terms, except
as the same may be limited by bankruptcy, insolvency, and other similar laws
affecting the rights of creditors generally and the availability of equitable
remedies for the enforcement of certain obligations contained herein or therein
and as may be limited by equitable principles generally.

(d) Compliance of Agreement, Etc. with Laws. The execution, delivery and
performance of this Agreement and the other Loan Documents to which any Loan
Party is a party and the Fee Letter in accordance with their respective terms
and the borrowings and other extensions of credit hereunder do not and will not,
by the passage of time, the giving of notice, or both: (i) require any
Governmental Approval that has not been obtained or violate any Applicable Law
(including any Environmental Law) relating to any Loan Party; (ii) conflict
with, result in a breach of or constitute a default under the organizational
documents of any Loan Party, or any indenture, agreement or other instrument to
which any Loan Party is a party or by which it or any of its respective
properties may be bound; or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any Property now owned or
hereafter acquired by any Loan Party other than in favor of the Administrative
Agent for its benefit and the benefit of the Lenders.

(e) Compliance with Law; Governmental Approvals. Each Loan Party and each
Subsidiary of any Loan Party is in compliance with each Governmental Approval
and all other Applicable Laws relating to it except for noncompliances which,
and Governmental Approvals the failure to possess which, could not, individually
or in the aggregate, reasonably be expected to cause a Default or Event of
Default or have a Material Adverse Effect.

(f) Title to Properties; Liens. Schedule 7.1(f) is, as of the Agreement Date, a
complete and correct listing of all real estate assets of the Loan Parties. Each
of the Loan Parties holds good, marketable and insurable title each Property
purported to be owned by it (or, in the case of the leasehold estate under a
ground lease, a good, valid and insurable leasehold estate), subject only to
Permitted Liens, and has good and sufficient title to, or a valid leasehold
interest in, all FF&E and other personal property (except such as may be owned
by the Manager as provided in the applicable Management Agreement) necessary for
the continued operating of such Property in the ordinary course. No Collateral
Property or other Collateral is subject to any Lien other than Permitted Liens.
Each of the Collateral Pool Properties satisfies all of the requirements under
the Loan Documents for being an Eligible Property.

(g) Existing Indebtedness. Schedule 7.1(g) is, as of the Agreement Date, a
complete and correct listing of all Indebtedness (including all Guarantees) of
each of the Loan Parties and the other Subsidiaries, and if such Indebtedness is
secured by any Lien, a description of all of the property subject to such Lien.
As of the Agreement Date, the Loan Parties and the other Subsidiaries are in
compliance in all material respects with all of the terms of such Indebtedness
and all instruments and agreements relating thereto, and no default or event of
default, or event or condition which with the giving of notice, the lapse of
time, or both, would constitute a default or event of default, exists with
respect to any such Indebtedness.

 

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(h) Material Contracts. Schedule 7.1(h) is, as of the Agreement Date, a true,
correct and complete listing of all Material Contracts. Each of the Loan Parties
that is party to any Material Contract has performed and is in compliance in all
material respects with all of the terms of such Material Contract, and no
default or event of default, or event or condition which with the giving of
notice, the lapse of time, or both, would constitute such a default or event of
default, exists with respect to any such Material Contract.

(i) Litigation. Except as set forth on Schedule 7.1(i), there are no actions,
suits or proceedings pending (nor, to the knowledge of Borrower, are there any
actions, suits or proceedings threatened, nor is there any basis therefor)
against or in any other way relating adversely to or affecting, any Loan Party,
any Subsidiary of any Loan Party or any of their respective properties (except
for claims for personal injury or property damage that are covered by insurance
and, in the case of actions or proceedings that have been commenced, have been
tendered to the insurer for defense and with respect to which the insurer has
not denied coverage) in any court or before any arbitrator of any kind or before
or by any other Governmental Authority which, (i) if adversely determined, could
reasonably be expected to have a Material Adverse Effect or (ii) in any manner
draws into question the validity or enforceability of any Loan Documents or the
Fee Letter. There are no strikes, slow downs, work stoppages or walkouts or
other labor disputes in progress or threatened relating to, any Loan Party or
any Subsidiary of any Loan Party.

(j) Taxes. All federal, state and other tax returns of, each Loan Party required
by Applicable Law to be filed have been duly filed, and all federal, state and
other taxes, assessments and other governmental charges or levies upon, each
Loan Party and its respective Properties, income and other assets which are
material in amount are due and payable have been paid, except any such
nonpayment or non-filing which is at the time permitted under Section 8.6. As of
the Agreement Date, none of the United States income tax returns of, any Loan
Party is under audit.

(k) Financial Statements. The Borrower has furnished to each Lender copies of
the audited consolidated balance sheet of the Parent Guarantor and its
consolidated Subsidiaries for the fiscal year ended December 31, 2010 and the
unaudited consolidated balance sheet of the Parent Guarantor and its
consolidated Subsidiaries for the quarter ended June 30, 2011, together with (in
each case) the related consolidated statements of operations, shareholders’
equity and cash flow for the fiscal quarter ended on such date. Such balance
sheet and statements (including in each case related schedules and notes) are
complete and correct in all material respects and present fairly, in accordance
with GAAP (subject to Section 1.2.(a)) consistently applied throughout the
periods involved, the consolidated financial position of the Parent Guarantor
and its consolidated Subsidiaries as at such date and the results of operations
and the cash flow for such period (subject, in the case of the unaudited
statements, to changes resulting from normal year end audit adjustments).

(l) No Material Adverse Effect. Since December 31, 2010, there has been no
event, change, circumstance or occurrence that could reasonably be expected to
have a Material Adverse Effect. Each of the Loan Parties is Solvent.

 

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(m) Operating Statements. The operating statements and other information for
each Collateral Property delivered by the Borrower to the Administrative Agent
fairly present the Operating Expenses, Gross Operating Revenues, Net Operating
Income and Adjusted NOI for each Collateral Property and all Collateral
Properties, collectively, for the period then ended.

(n) ERISA. Each member of the ERISA Group has fulfilled its obligations under
the contribution requirements of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or payment to any Plan
or Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security under
ERISA or the Internal Revenue Code or (iii) incurred any liability under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.

(o) Absence of Default. None of the Loan Parties or their Subsidiaries is in
default under its articles of incorporation, bylaws, partnership agreement or
other similar organizational documents, and no event has occurred, which has not
been remedied, cured or waived: (i) which constitutes a Default or an Event of
Default; or (ii) which constitutes, or which with the passage of time, the
giving of notice, or both, would constitute, a default or event of default by,
such Person under any agreement (other than this Agreement) or judgment, decree
or order to which any such Person is a party or by which any such Person or any
of its respective properties may be bound where such default or event of default
could, individually or in the aggregate, have a Material Adverse Effect.

(p) Environmental Laws. Each of the Loan Parties and their Subsidiaries: (i) is
in compliance with all Environmental Laws applicable to its business, operations
and the Properties, (ii) has obtained all Governmental Approvals which are
required under Environmental Laws, and each such Governmental Approval is in
full force and effect, and (iii) is in compliance with all terms and conditions
of such Governmental Approvals, where with respect to each of the immediately
preceding clauses (i) through (iii) the failure to obtain or to comply with
could be reasonably expected to have a Material Adverse Effect. Except for any
of the following matters that could not be reasonably expected to have a
Material Adverse Effect, no Loan Party has any knowledge of, nor has received
notice of, any past present or pending releases, events, conditions,
circumstances, activities, practices, incidents, facts, occurrences, actions, or
plans that, with respect to any Loan Party or any Subsidiary of any Loan Party,
its respective businesses or operations or with respect to its Properties, may:
(i) cause or contribute to an actual or alleged violation of or noncompliance
with Environmental Laws, (ii) cause or contribute to any other potential common
law or legal claim or other liability, or (iii) cause any of its Properties to
become subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law or require the filing or recording
of any notice, approval or disclosure document under any Environmental Law and,
with respect to the immediately preceding clauses (i) through (iii) is based on
or related to the on-site or off-site manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transport, removal, clean up or
handling, or the emission, discharge, release or threatened release of any

 

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wastes or Hazardous Material, or any other requirement under Environmental Law.
There is no civil, criminal, or administrative action, suit, demand, claim,
hearing, notice, or demand letter, mandate, order, lien, request, investigation,
or proceeding pending or, to the Borrower’s knowledge after due inquiry,
threatened, against any Loan Party or any Subsidiary of any Loan Party relating
in any way to Environmental Laws which, reasonably could be expected to have a
Material Adverse Effect. None of the Properties of the Loan Parties or any of
their Subsidiaries is listed on or proposed for listing on the National Priority
List promulgated pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 and its implementing regulations, or any
state or local priority list promulgated pursuant to any analogous state or
local law. To the Borrower’s knowledge, no Hazardous Materials generated at or
transported from any Property of any Loan Party or any Subsidiary of any Loan
Party is or has been transported to, or disposed of at, any location that is
listed or proposed for listing on the National Priority List or any analogous
state or local priority list, or any other location that is or has been the
subject of a clean-up, removal or remedial action pursuant to any Environmental
Law, except to the extent that such transportation or disposal could not
reasonably be expected to result in a Material Adverse Effect.

(q) Investment Company. No Loan Party 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
Applicable Law which purports to regulate or restrict its ability to borrow
money or obtain other extensions of credit or to consummate the transactions
contemplated by this Agreement or to perform its obligations under any Loan
Document to which it is a party.

(r) Margin Stock. No Loan Party is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose,
whether immediate, incidental or ultimate, of buying or carrying “margin stock”
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System.

(s) Affiliate Transactions. Except as permitted by Section 10.9. or as otherwise
set forth on Schedule 7.1(s), no Loan Party is a party to or bound by any
agreement or arrangement (whether oral or written) with any Affiliate.

(t) Intellectual Property. Each of the Loan Parties owns or has the right to
use, under valid license agreements or otherwise, all patents, licenses,
franchises, trademarks, trademark rights, trade names, trade name rights, trade
secrets and copyrights (collectively, “Intellectual Property”), if any,
necessary to the conduct of its businesses, without known conflict with any
patent, license, franchise, trademark, trade secret, trade name, copyright, or
other proprietary right of any other Person.

(u) Business. As of the Agreement Date, the principal business of the Parent
Guarantor, the Borrower and their Subsidiaries is the ownership and/or leasing
of hotels.

(v) Broker’s Fees. No broker’s or finder’s fee, commission or similar
compensation will be payable with respect to the transactions contemplated
hereby. No other similar fees or commissions will be payable by any Loan Party
for any other services rendered to any Loan Party or any Subsidiary of any Loan
Party ancillary to the transactions contemplated hereby.

 

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(w) Accuracy and Completeness of Information. All written information, reports
and other papers and data furnished to the Administrative Agent or any Lender
by, on behalf of, or at the direction of, any Loan Party were, at the time the
same were so furnished, complete and correct in all material respects, or, in
the case of financial statements, present fairly, in accordance with GAAP
(subject to Section 1.2.(a)) consistently applied throughout the periods
involved, the financial position of the Persons involved as at the date thereof
and the results of operations for such periods. To Borrower’s knowledge, there
is no fact is known to any Loan Party which has had, or may in the future have
(so far as the Borrower can reasonably foresee), a Material Adverse Effect which
has not been set forth in the financial statements referred to in
Section 7.1.(k) or in such information, reports or other papers or data or
otherwise disclosed in writing to the Administrative Agent and the Lenders prior
to the Effective Date. No document furnished or written statement made to the
Administrative Agent or any Lender in connection with the negotiation,
preparation or execution of, or pursuant to, this Agreement or any of the other
Loan Documents contains or will contain any untrue statement of a fact material
to the creditworthiness of any Loan Party or omits or will omit to state a
material fact necessary in order to make the statements contained therein not
misleading.

(x) Not Plan Assets; No Prohibited Transactions. For purposes of ERISA and the
Internal Revenue Code, none of the assets of any Loan Party or any of their
Subsidiaries constitutes “plan assets”, within the meaning of ERISA and the
regulations promulgated thereunder, of any Plan. The execution, delivery and
performance of the Loan Documents and the Fee Letter by the Loan Parties, and
the borrowing, other credit extensions and repayment of amounts thereunder, do
not and will not constitute “prohibited transactions” under ERISA or the
Internal Revenue Code.

(y) OFAC. None of the Borrower, any of the other Loan Parties, any of their
Subsidiaries, or any of their Affiliates: (i) is a person named on the list of
Specially Designated Nationals or Blocked Persons maintained by the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) available
at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise
published from time to time; (ii) is (A) an agency of the government of a
country, (B) an organization controlled by a country, or (C) a person resident
in a country that is subject to a sanctions program identified on the list
maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time, as such program may be applicable to such agency,
organization or person; or (iii) derives any of its assets or operating income
from investments in or transactions with any such country, agency, organization
or person; and none of the proceeds from the Loan will be used to finance any
operations, investments or activities in, or make any payments to, any such
country, agency, organization, or person.

(z) Security Interests. Borrower is not aware of any fact or circumstance that
would prevent the Security Documents from creating, as security for the
Obligations, a valid and enforceable Lien on all of the Collateral, superior to
and prior to the rights of all third Persons and subject to no other Liens
(except for Permitted Liens), in favor of the Administrative Agent for its
benefit and the benefit of the Lenders.

 

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Section 7.2. Survival of Representations and Warranties, Etc.

All statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of any Loan Party to the Administrative
Agent or any Lender pursuant to or in connection with this Agreement or any of
the other Loan Documents (including, but not limited to, any such statement made
in or in connection with any amendment thereto or any statement contained in any
certificate, financial statement or other instrument delivered by or on behalf
of any Loan Party prior to the Agreement Date and delivered to the
Administrative Agent or any Lender in connection with the underwriting or
closing the transactions contemplated hereby) shall constitute representations
and warranties made by the Borrower under this Agreement. All representations
and warranties made under this Agreement and the other Loan Documents shall be
deemed to be made at and as of the Agreement Date, the Effective Date and at and
as of the date of the occurrence of each Credit Event, except to the extent that
such representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true and
accurate on and as of such earlier date) and except for changes in factual
circumstances expressly and specifically permitted hereunder. All such
representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the Loan Documents and the making of
the Loans.

ARTICLE VIII. AFFIRMATIVE COVENANTS

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if
required pursuant to Section 13.7., all of the Lenders) shall otherwise consent
in the manner provided for in Section 13.7., the Borrower shall comply with the
following covenants:

Section 8.1. Preservation of Existence and Similar Matters.

Except as otherwise permitted under Section 10.4., the Borrower shall, and shall
cause each other Specified Loan Party and each of its and their respective
Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it
shall and shall cause each of its Subsidiaries to, preserve and maintain its
respective existence, rights, franchises, licenses and privileges in the
jurisdiction of its incorporation or formation and qualify and remain qualified
and authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization and where the failure to be so authorized and qualified could
reasonably be expected to have a Material Adverse Effect.

Section 8.2. Compliance with Applicable Law.

The Borrower shall, and shall cause each other Specified Loan Party and each of
its and their respective Subsidiaries to, and by its execution hereof the Parent
Guarantor agrees that it shall and shall cause each of its Subsidiaries to,
comply with all Applicable Laws, including the obtaining of all Governmental
Approvals, where the failure to comply could reasonably be expected to have a
Material Adverse Effect.

Section 8.3. Maintenance of Property.

The Borrower shall, and shall cause each other Specified Loan Party to, and by
its execution hereof the Parent Guarantor agrees that it shall and shall cause
each of its Subsidiaries

 

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to, keep in all material respects all Properties owned or leased by it in good
repair and working order, condition and appearance (ordinary wear and tear
excepted), free of any structural defects and otherwise in a manner consistent
with industry standards in the area in which such Property is located.

Section 8.4. Conduct of Business.

The Borrower shall, and shall cause each other Specified Loan Party and each of
its or their respective Subsidiaries to, and by its execution hereof the Parent
Guarantor agrees that it shall and shall cause each of its Subsidiaries to,
carry on its respective principal business activities as described in
Section 7.1.(u) and not enter into any other principal line of business that is
not otherwise engaged in by such Person as of the Agreement Date.

Section 8.5. Insurance.

The Borrower shall, and shall cause each other Specified Loan Party and each of
its and their respective Subsidiaries to, and by its execution hereof the Parent
Guarantor agrees that it shall and shall cause each of its Subsidiaries to,
maintain insurance with financially sound and reputable insurance companies
against such risks and in such amounts as is customarily maintained by similar
businesses or as may be required by Applicable Law. The Borrower shall from time
to time deliver to the Administrative Agent upon request a certificate of
insurance, stating the names of the insurance companies, the amounts and rates
of the insurance, the dates of the expiration thereof and the properties and
risks covered thereby and/or insurance certificates, in form acceptable to the
Administrative Agent, providing that the insurance coverage required under this
Section 8.5. (including without limitation, both property and liability
insurance) is in full force and effect and stating that coverage shall not be
cancelable or materially changed without ten (10) days prior written notice to
the Administrative Agent of any cancelation for nonpayment or premiums, and not
less than thirty (30) days prior written notice to the Administrative Agent of
any other cancellation or any modification (including a reduction in coverage),
together with appropriate evidence that the Administrative Agent, for the
benefit of the Lenders, is named as lender’s loss payee and additional insured,
as appropriate, on all insurance policies that the Borrower or any Loan Party
actually maintains with respect to any Collateral Property. Such insurance
shall, in any event, include terrorism coverage and all of the following:

(A) Insurance against loss to such Collateral Properties on an “All Risk” policy
form, covering insurance risks no less broad than those covered under a Special
Multi Peril (SMP) policy form, which contains a Commercial ISO “Causes of
Loss-Special Form,” in the then current form, and such other risks as
Administrative Agent may reasonably require, in amounts equal to the full
replacement cost of each of the Collateral Properties including fixtures and
equipment, the applicable Loan Party’s interest in leasehold improvements, and
the cost of debris removal, with, if required by the Administrative Agent, an
agreed amount endorsement, and with deductibles approved by Administrative
Agent, except that any deductibles for any insurance covering damage by
windstorm may be in amounts up to 5% of the value of the Collateral Property
insured;

 

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(B) Business income insurance in amounts sufficient to pay during any period in
which a Property may be damaged or destroyed, for a period of twelve
(12) months; (i) at least 100% of projected Net Operating Income and (ii) all
amounts (including, but not limited to, all taxes, assessments, utility charges
and insurance premiums) required to be paid by any tenants of the Collateral
Property;

(C) During the making of any alterations or improvements to a Collateral
Property, carry or cause to be carried builder’s completed value risk insurance
against “all risks of physical loss” for the full replacement cost of such
Collateral Property;

(D) Insurance against loss or damage by flood or mud slide in compliance with
The Flood Disaster Protection Act of 1973, as amended from time to time, if any
Property is now, or at any time while the Obligations or any portion thereof
remains unpaid shall be, situated in any area which an appropriate Governmental
Authority designates as a special flood hazard area, in amounts equal to the
full replacement value of all above grade structures on such Collateral
Property, or as such lesser amounts as may be available under Federal Flood
Insurance Programs;

(E) Commercial general public liability insurance, with the location of the
Collateral Properties designated thereon, against death, bodily injury and
property damage arising on, about or in connection with the Collateral
Properties, with applicable Subsidiary Guarantor listed as an insured, with such
limits as Borrower or the applicable Subsidiary Guarantor may reasonably require
(but in no event less than $5,000,000; and

(F) Such other insurance, including, without limitation, earthquake and
environmental coverages, relating to the Collateral Properties and the uses and
operation thereof as Administrative Agent may, from time to time, reasonably
require.

Section 8.6. Payment of Taxes and Claims.

The Borrower shall, and shall cause each other Specified Loan Party to, and by
its execution hereof the Parent Guarantor agrees that it shall and shall cause
each of its Subsidiaries to, pay and discharge when due (a) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any properties belonging to it, and (b) all lawful
claims of materialmen, mechanics, carriers, warehousemen and landlords for
labor, materials, supplies and rentals which, if unpaid, might by Applicable Law
become a Lien on any properties of such Person that is not a Permitted Lien;
provided, however, that (subject to Section 8.16.) this Section shall not
require the payment or discharge of any such tax, assessment, charge, levy or
claim (i) that is being contested in good faith and by appropriate proceedings,
(ii) with respect to which reserves in conformity with GAAP have been provided,
(iii) if such charge, levy or claim does not constitute and is not secured by
any choate Lien on any portion of any Property and no portion of any Property is
in jeopardy of being sold, forfeited or lost during or as a result of such
contest, (iv) neither Administrative Agent nor any Lender could become subject
to any civil or criminal fine or penalty, in each case as a result of
non-payment of such charge or claim and (v) such contest does not, and could not
reasonably be expected to, result in a Material Adverse Effect.

 

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Section 8.7. Books and Records; Inspections.

The Borrower shall, and shall cause each other Specified Loan Party to, and by
its execution hereof the Parent Guarantor agrees that it shall and shall cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries shall be made of all dealings and transactions in
relation to its business and activities. The Borrower shall, and shall cause
each other Specified Loan Party to, and by its execution hereof the Parent
Guarantor agrees that it shall and shall cause each of its Subsidiaries to,
permit representatives of the Administrative Agent or any Lender to visit and
inspect any of their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants, all at such reasonable times during business
hours and as often as may reasonably be requested and, as long as no Event of
Default exists, with reasonable prior notice. The Borrower shall be obligated to
reimburse the Administrative Agent and the Lenders for their costs and expenses
incurred in connection with the exercise of their rights under this Section 8.7.
only if such exercise occurs while a Default or Event of Default exists.

Section 8.8. Use of Proceeds.

The Borrower shall use the proceeds of Loans only for the general corporate
purposes or in the ordinary course of business of the Borrower and its
Subsidiaries, including the acquisition of Properties, repayment of
Indebtedness, payment of Restricted Payments permitted under this Agreement,
repurchases of common shares of the Parent Guarantor permitted under this
Agreement, Investments not prohibited under any Loan Document, and capital
expenditures. The Borrower shall not, and shall not permit any other Specified
Loan Party or any of its or their respective Subsidiaries to, and by its
execution hereby the Parent Guarantor agrees that it shall not and shall not
permit any of its Subsidiaries to, use any part of such proceeds to purchase or
carry, or to reduce or retire or refinance any credit incurred to purchase or
carry, any margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any such margin stock.

Section 8.9. Environmental Matters.

The Borrower shall, and shall cause each other Specified Loan Party and each of
its and their respective Subsidiaries to, and by its execution hereof the Parent
Guarantor agrees that it shall and shall cause each of its Subsidiaries to,
comply with all Environmental Laws the failure with which to comply could
reasonably be expected to have a Material Adverse Effect. The Borrower shall
comply, and shall cause each other Specified Loan Party to comply, and by its
execution hereof the Parent Guarantor agrees that it shall and shall cause each
of its Subsidiaries to comply, and the Borrower shall use, and shall cause each
other Specified Loan Party to use, and by its execution hereof the Parent
Guarantor agrees that it shall and shall cause each of its Subsidiaries to use,
commercially reasonable efforts to cause all other Persons occupying, using or
present on its Properties to comply, with all Environmental Laws in all material
respects. The Borrower shall, and shall cause each other Specified Loan Party
to, and by its execution hereof the Parent Guarantor agrees that it shall and
shall cause each of its Subsidiaries to, promptly take all actions and pay or
arrange to pay all costs necessary for it and for its Properties to comply in

 

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all material respects with all Environmental Laws and all Governmental
Approvals, including actions to remove and dispose of all Hazardous Materials
and to clean up the Properties as required under Environmental Laws. The
Borrower shall, and shall cause each other Specified Loan Party to, and by its
execution hereof the Parent Guarantor agrees that it shall and shall cause each
of its Subsidiaries to, promptly take all actions necessary to prevent the
imposition of any Liens on any of their respective properties arising out of or
related to any Environmental Laws. Nothing in this Section shall impose any
obligation or liability whatsoever on the Administrative Agent or any Lender.

Section 8.10. Further Assurances.

At the Borrower’s cost and expense and upon request of the Administrative Agent,
the Borrower shall, and shall cause each other Specified Loan Party to, and by
its execution hereof the Parent Guarantor agrees that it shall and shall cause
each of its Subsidiaries to, duly execute and deliver or cause to be duly
executed and delivered, to the Administrative Agent such further instruments,
documents and certificates, and perform or cause to be performed such further
acts reasonably necessary, as determined by Administrative Agent in its
reasonable judgment, to carry out the purposes of this Agreement and the other
Loan Documents.

Section 8.11. Intentionally Omitted.

Section 8.12. REIT Status.

By its execution hereof, the Parent Guarantor agrees to maintain its status and
elect to be treated as a REIT.

Section 8.13. Exchange Listing.

By its execution hereof, the Parent Guarantor agrees to maintain at least one
class of common shares of the Parent Guarantor having trading privileges on the
New York Stock Exchange or any exchange registered as a national securities
exchange with the Securities and Exchange Commission in accordance with the
provisions of Section 6 of the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder.

Section 8.14. Operation of Collateral Property.

The Borrower shall cause each Subsidiary Guarantor and Operating Lessee to:

(a) operate each Collateral Property in compliance with Applicable Law in all
material respects;

(b) promptly perform and/or observe (or cause to be performed and/or observed)
in all material respects the covenants and agreements required to be performed
and observed by it under the Material Contracts to which it is a party and do
all things necessary to preserve and to keep unimpaired their material rights
thereunder;

 

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(c) promptly notify the Administrative Agent of any material default under any
Management Agreement or Franchise Agreement of which it is aware;

(d) promptly deliver to the Administrative Agent a copy of each PIP, inspection
report and any other written notice or report received by it under any
Management Agreement or Franchise Agreement;

(e) maintain Inventory at the applicable Collateral Property in amounts required
to meet the standards from time to time required by the applicable Manager and
Franchisor;

(f) maintain all material Licenses for the applicable Collateral Property in
full force and effect and promptly comply with all conditions thereof; and

(g) reasonably cooperate in obtaining from each Franchisor under a Franchise
Agreement for each proposed Collateral Property (whether before or after such
Property becomes a Collateral Property) a “comfort letter” from such Franchisor
with respect to such Franchise Agreement, including if required by such
Franchisor the execution by the applicable Operating Lessee and Subsidiary
Guarantor of such comfort letter; provided, however, that Borrower or such
Subsidiary Guarantor or Operating Lessee, as the case may be, shall not be
required to (i) make any amendments or other modifications to any Franchise
Agreement once entered into; (ii) pay any fees to any Franchisor in connection
with the foregoing (except for standard, commercially reasonable issuance fees)
or (iii) make any other concessions in connection with the foregoing (except for
standard requirements in such Franchisor’s comfort letters).

Section 8.15. Completion of Renovations.

(a) In the event that any Subsidiary Guarantor or Operating Lessee shall
undertake any Renovations to a Collateral Property pursuant to a PIP or
otherwise, the Borrower shall (i) cause the same to be performed diligently and
promptly and to be commenced, performed and completed within the time limits set
forth in the PIP (if applicable); (b) cause to be obtained all governmental
permits required for such Renovations; (c) cause such Renovations to be
constructed, performed and completed in compliance, in all material respects,
with Applicable Law and all applicable requirements of the Manager and
Franchisor, in a good and workmanlike manner, with materials of high quality,
free of defects, and in accordance with the plans and specifications therefor
and the PIP (if applicable), without substantial deviation therefrom unless
approved by the Manager or Franchisor that issued the PIP; (d) cause such
Renovations to be constructed and completed free and clear of any mechanic’s
liens, materialman’s liens and equitable liens (subject to Section 8.16.);
(e) pay or cause to be paid all costs of such Renovations when due; (f) fully
pay and discharge, or cause to be fully paid and discharged, all claims for
labor performed and material and services furnished in connection with such
Renovations; and (g) promptly release and discharge, or cause to be released and
discharged, all claims of stop notices, mechanic’s liens, materialman’s liens
and equitable liens that may arise in connection with such Renovations (subject
to Section 8.16.).

(b) Borrower shall notify the Administrative Agent of any Major Renovations that
are scheduled or planned for any Collateral Property and shall, if requested by
the Administrative

 

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Agent, promptly furnish or cause to be furnished to the Administrative Agent
(i) copies of any plans and specifications, contracts and governmental permits
for such Major Renovations, and (ii) upon substantial completion of such Major
Renovations (A) a written statement or certificate executed by the architect
designated or shown on the plans and specifications (or, if no architect has
been retained, from the general contractor for such Major Renovations
certifying, without qualification or exception, that such Major Renovations are
substantially completed, (B) all required occupancy permit(s) for the Collateral
Property issued by the local government agency having jurisdiction and authority
to issue same, and (C) such other evidence of lien free completion as the
Administrative Agent deems satisfactory in its reasonable discretion.

Section 8.16. Mechanics Liens.

The Borrower shall not suffer or permit any mechanics’, suppliers’ or other Lien
claims (including without limitation any Liens arising from environmental or
other legal proceedings (“Proceedings”)) to be filed or otherwise asserted
against any Collateral Property. If a claim of lien is recorded which affects
any Collateral Property, the Borrower shall, within thirty (30) days of such
recording, or within ten (10) days of the Administrative Agent’s demand,
whichever occurs first: (a) pay and discharge, or cause to be paid and
discharged, the claim of Lien; or (b) provide the Administrative Agent with
other assurances (which may include a title insurance endorsement) which the
Administrative Agent deems, in its sole and absolute discretion, to be
satisfactory for the payment of such claim of Lien and for the full and
continuous protection of the Administrative Agent and the Lenders from the
effect of such lien.

Section 8.17. Proceedings.

If any Proceedings are commenced seeking to enjoin or otherwise prevent or
declare unlawful the use, occupancy, operation or maintenance of any Collateral
Property or any portion thereof, or if any other Proceedings are filed with
respect to any Collateral Property or any Loan Party, the Borrower shall give
prompt notice thereof to the Administrative Agent and to the extent permitted by
law and at the Borrower’s or such Loan Party’s sole expense, (i) cause the
Proceedings to be vigorously contested in good faith and (ii) in the event of an
adverse ruling or decision, prosecute all allowable appeals therefrom. Without
limiting the generality of the foregoing, the Borrower shall, or shall cause the
applicable Loan Party to, resist the entry or seek the stay of any temporary or
permanent injunction that may be entered and use its best efforts to bring about
a favorable and speedy disposition of all such Proceedings.

Section 8.18. Correction of Defects.

Within a commercially reasonable period of time after any Loan Party acquires
knowledge of or is given notice of a material defect in any Collateral Property
or any departure by any Loan Party from other requirements of this Agreement or
the other Loan Documents, Borrower shall, or shall cause the applicable
Specified Loan Party to, commence and continue with diligence to correct, or
cause to be corrected, all such defects and departures. Upon any Loan Party
acquiring knowledge of such defect or departure, the Borrower shall promptly
advise the Administrative Agent in writing of such matter and the measures being
taken to make such corrections, along with an estimate of the time of
completion.

 

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Section 8.19. Personal Property.

The tangible Personal Property of each Subsidiary Guarantor and Operating Lessee
used in connection with any Collateral Property shall be located at such
Collateral Property and shall be kept free and clear of all Liens other than
Permitted Liens, and Borrower shall, from time to time upon request by the
Administrative Agent, furnish the Administrative Agent with evidence of such
ownership satisfactory to the Administrative Agent, including searches of
applicable public records.

Section 8.20. FF&E Reserve Accounts.

The Borrower shall cause each Subsidiary Guarantor or Operating Lessee to
maintain a FF&E Reserve Account with respect to each Collateral Property, to
pledge such FF&E Reserve Account to the Administrative Agent for its benefit and
the benefit of the Lenders as Collateral, and to deposit funds therein and to
withdraw funds therefrom on and subject to the following terms and conditions:

(a) Except as otherwise provided in subsection (d), each FF&E Reserve Account
shall be held by the Administrative Agent. There shall be executed and delivered
with respect to each FF&E Reserve Account (whether or not held by the
Administrative Agent) a Control Agreement. Except as otherwise provided in
subsection (d), the Administrative Agent may, at any time that there exists an
Event of Default, exercise its right under the Control Agreement to control the
FF&E Reserve Accounts.

(b) Monthly deposits into the FF&E Reserve Account in an amount equal to the
FF&E Reserve for any month shall be made not later than 15th day of the
succeeding month if the FF&E Reserve Account is held by the Administrative Agent
or otherwise when required by the Management Agreement.

(c) Funds may be withdrawn from the FF&E Reserve Account (whether held by the
Administrative Agent or otherwise), and the Borrower agrees that it shall cause
each Subsidiary Guarantor and Operating Lessee to withdraw and use such funds,
solely for the payment of expenditures for FF&E and other capital items in
accordance with the applicable Approved Capital Budget.

(d) If the Manager of a Collateral Property is, or is an Affiliate of, a Major
Hotel Operator, (i) the FF&E Reserve Account shall not be required to be held by
the Administrative Agent, and (ii) the Management Agreement
Assignment/Subordination and Control Agreement with respect to such Collateral
Property may provide that the Administrative Agent shall not interfere with such
Manager’s ability to access funds in such FF&E Reserve Account during the term
of its Management Agreement for purposes permitted under such Management
Agreement.

(e) The Administrative Agent shall have the right (to be exercised from time to
time at its election) to audit the Loan Parties’ books and records in order to
determine whether or not the funds withdrawn or disbursed from the FF&E Reserve
Account have been spent only for the

 

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purpose for which they were withdrawn or disbursed. The Borrower shall, and
shall cause each other Specified Loan Party to, cooperate with the
Administrative Agent in connection with any such audit.

Section 8.21. Tax/Insurance Reserve Accounts.

(a) There shall be maintained with respect to each Collateral Property a
Tax/Insurance Reserve Account held by Administrative Agent and pledged to
Administrative Agent for its benefit and the benefit of the Lenders as
Collateral. The Administrative Agent shall have sole dominion and control over
each such Tax/Insurance Reserve Account, and no Loan Party shall have any right
to withdraw funds therefrom except in accordance with the provisions of this
Section 8.21.

(b) On the first day of each month, the Borrower shall deposit or cause to be
deposited in the Tax/Insurance Reserve Account for such Collateral Property
(i) a sum, as reasonably determined by Administrative Agent from time to time
based on the most recent tax bills available for such Collateral Property, that,
together with other sums on deposit in such Tax Reserve Account or required to
be deposited thereafter for such purpose, will be sufficient to pay in full each
installment of personal property and real estate taxes and assessments accruing
with respect to such Collateral Property at least thirty (30) days prior to the
date on which the same is due and payable without penalty therefore, and
(ii) subject to subsection (d) below, a sum, as reasonably determined by
Administrative Agent from time to time based on the most recent bills for
insurance premiums available for such Collateral Property, that, together with
other sums on deposit in such Insurance Reserve Account or required to be
deposited thereafter for such purpose, will be sufficient to pay in full the
insurance premiums accruing with respect to such Collateral Property at least
thirty (30) days prior to the date on which the same is due and payable without
penalty therefor. The Administrative Agent shall have the right from time to
time to audit the amounts in each Tax/Insurance Reserve Account and reconcile
such amounts with the anticipated amount of the personal property and real
estate taxes and assessments and (subject to subsection (d) below) insurance
premiums coming due for the applicable Collateral Property and may, in its
reasonable discretion, upon notice to Borrower, require additional amounts to be
deposited therein and adjust the monthly deposits required therein.

(c) Provided no Event of Default exists, the Borrower may present to the
Administrative Agent a request for disbursement of amounts held in the
applicable Tax/Insurance Reserve Account for the payment of personal property
and real estate taxes and assessments anticipated to be due and payable with
respect to the applicable Collateral Property within thirty (30) days of such
request and (subject to subsection (d) below) amounts held in the Tax/Insurance
Reserve Account for insurance premiums anticipated to be due and payable with
respect to the applicable Collateral Property within thirty (30) days of such
request. Unless otherwise approved by the Administrative Agent, funds in a
Tax/Insurance Reserve Account for a Collateral Property may not be used to pay
any costs or expenses other than personal property and real estate taxes and
assessments for such Collateral Property, and than insurance premiums for such
Collateral Property. Subject to the limitations and conditions contained herein,
all requests for a disbursement from a Tax/Insurance Reserve Account shall be
made (in writing) by one of the persons set forth in the Notice of Responsible
Officers most recently delivered to the Administrative Agent. The Administrative
Agent is authorized to rely on a notice signed by one

 

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of the persons set forth on a Notice of Responsible Officers until such time as
the Administrative Agent is notified (in writing) by the Borrower of a change to
such Notice of Responsible Officers. Within ten (10) days of the Borrower’s
delivery of its request for disbursement of amounts held in the applicable
Tax/Insurance Reserve Account, the Administrative Agent shall disburse such
amounts to the Borrower for application to the amounts then due and owing
therefor.

(d) Notwithstanding the foregoing, deposits for insurance premiums shall not be
required to be made into a Tax/Insurance Reserve Account for any Collateral
Property managed by a Major Hotel Operator to which the applicable Loan Party is
making monthly payments for insurance premiums for insurance that is carried by
such Major Hotel Operator and that complies with the terms of this Agreement.

Section 8.22. Approved Ground Leases.

Without limitation of any other provision of the Loan Documents, the Borrower
shall (a) cause the applicable Subsidiary Guarantor to perform its obligations
under each Approved Ground Lease in accordance with the terms and provisions
thereof; (b) promptly give notice to Administrative Agent of any event or
occurrence that, with notice or passage of time or both, would constitute an
event of default under any Approved Ground Lease; and (c) promptly furnish to
Administrative Agent a copy of any notice given or received by any Loan Party
pursuant to any Approved Ground Lease alleging any breach or default by either
party thereunder.

ARTICLE IX. INFORMATION

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if
required pursuant to Section 13.7., all of the Lenders) shall otherwise consent
in the manner set forth in Section 13.7., the Borrower shall furnish to the
Administrative Agent for distribution to each of the Lenders:

Section 9.1. Quarterly Financial Statements.

As soon as available and in any event within forty-five (45) days after the
close of each of the first, second and third fiscal quarters of the Parent
Guarantor, the unaudited consolidated balance sheet of the Parent Guarantor and
its Subsidiaries as at the end of such period and the related unaudited
consolidated statements of operations, stockholders’ equity and cash flows of
the Parent Guarantor and its Subsidiaries for such period, setting forth in each
case in comparative form the figures as of the end of and for the corresponding
periods of the previous fiscal year, all of which shall be certified by the
chief financial officer of the Parent Guarantor, in his or her opinion, to
present fairly, in accordance with GAAP (subject to Section 1.2.(a)), the
consolidated financial position of the Parent Guarantor and its Subsidiaries as
at the date thereof and the results of operations for such period (subject to
normal year end audit adjustments).

Section 9.2. Year End Statements.

As soon as available and in any event within ninety (90) days after the end of
each fiscal year of the Parent Guarantor, the audited consolidated balance sheet
of the Parent Guarantor and

 

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its Subsidiaries as at the end of such fiscal year and the related audited
consolidated statements of operations, stockholders’ equity and cash flows of
the Parent Guarantor and its Subsidiaries for such fiscal year, setting forth in
comparative form the figures as at the end of and for the previous fiscal year,
all of which shall be certified by (a) the chief financial officer of the Parent
Guarantor, in his or her opinion, to present fairly, in accordance with GAAP
(subject to Section 1.2.(a)), the financial position of the Parent Guarantor and
its Subsidiaries as at the date thereof and the result of operations for such
period and (b) Ernst & Young LLP or any other independent certified public
accountants of recognized national standing acceptable to the Requisite Lenders,
whose certificate shall be unqualified and in scope and substance satisfactory
to the Requisite Lenders and who shall have authorized the Parent Guarantor to
deliver such financial statements and certification thereof to the
Administrative Agent and the Lenders pursuant to this Agreement.

Section 9.3. Compliance Certificate.

At the time the financial statements are furnished pursuant to the immediately
preceding Sections 9.1. and 9.2., a certificate substantially in the form of
Exhibit I (a “Compliance Certificate”) executed on behalf of the Borrower by a
senior officer of the Borrower (a) setting forth as of the end of such quarterly
accounting period or fiscal year, as the case may be, the calculations required
to establish whether the Borrower was in compliance with the covenants contained
in Section 10.1.; and (b) stating that no Default or Event of Default exists,
or, if such is not the case, specifying such Default or Event of Default and its
nature, when it occurred and the steps being taken by the Borrower with respect
to such event, condition or failure.

Section 9.4. Other Information.

(a) Within ten (10) days of receipt thereof, copies of all reports, if any,
submitted to the Parent Guarantor or its Board of Trustees by its independent
public accountants including, without limitation, any management report;

(b) Within five (5) Business Days of the filing thereof, copies of all
registration statements (excluding the exhibits thereto and any registration
statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K
(or their equivalents) and all other periodic reports which any Loan Party or
any other Subsidiary shall file with the Securities and Exchange Commission (or
any Governmental Authority substituted therefor) or any national securities
exchange;

(c) Promptly upon the mailing thereof to the shareholders of the Parent
Guarantor generally, copies of all financial statements, reports and proxy
statements so mailed and promptly upon the issuance thereof copies of all press
releases issued by the Parent Guarantor, the Borrower, any Subsidiary or any
other Loan Party;

(d) Within forty-five (45) days after the end of each calendar quarter, a DSCR
Certificate certifying compliance with the Minimum DSCR Hurdle, as of the last
day of such fiscal quarter.

(e) Within twenty-five (25) days after the end of each calendar quarter, an
operating statement for each Collateral Property, and for all Collateral
Properties on a consolidated basis,

 

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for the preceding calendar quarter (and for each month in such quarter),
detailing the Gross Operating Revenues and Operating Expenses, along with the
average daily rate, occupancy levels and revenue per available room for each
Collateral Property, certified as true, correct and complete by a senior officer
of the Borrower, together with: (A) a comparison of the results for such quarter
(and for each month in such quarter) with (1) the projections for such quarter
(and for each month in such quarter) contained in the Approved Annual Budget and
(2) the actual results for the same calendar quarter (and for each month in such
quarter) in the immediately preceding calendar year; (B) an operating statement
for the twelve-month period ending with such quarter; (C) an operating statement
showing year-to-date results for the period ending with such quarter, together
with a comparison of such operating statement with (1) the projections for such
year-to-date period contained in the Approved Annual Budget and (2) the actual
results for the year-to-date period ending with the same calendar quarter in the
immediately preceding calendar year; (D) budget reforecasts (showing
year-to-date actual and remainder of year budget); and (E) a calculation of
Adjusted NOI.

(f) Within twenty-five (25) days after the end of each calendar quarter, for
each Collateral Property, (i) a group booking pace report and market
segmentation report (if requested by the Administrative Agent and available) and
(ii) the most current Smith Travel Research STAR Report available, comparing
such Collateral Property to its primary competitive set.

(g) No later than thirty (30) days after the beginning of each fiscal year of
the Parent Guarantor, projected balance sheets, operating statements, profit and
loss projections, sources and uses of cash statement and statements of EBITDA
and Funds From Operations, for the Parent Guarantor and its Subsidiaries on a
consolidated basis for such fiscal year and the two succeeding fiscal years, all
itemized in reasonable detail. The foregoing shall be accompanied by pro forma
calculations, together with detailed assumptions, required to establish whether
or not the Parent Guarantor, the Borrower, and when appropriate their
consolidated Subsidiaries (as applicable), will be in compliance with the
covenants contained in Section 10.1. at the end of each fiscal quarter of the
first year of such three-year period.

(h) No later than thirty (30) days after the beginning of each fiscal year of
the Borrower (i) the proposed annual operating budget for each Collateral
Property, which shall be subject to approval of the Administrative Agent (as so
approved, with respect to each Collateral Property, the “Approved Operating
Budget”), and (ii) the proposed annual FF&E and capital budget for each
Collateral Property, which shall be subject to the approval of the
Administrative Agent (as so approved, with respect to each Collateral Property,
the “Approved Capital Budget”).

(i) Within ninety (90) days following the end of each fiscal year of the Parent
Guarantor, operating statements, current operating and capital budgets (on both
an individual basis and a consolidated basis) for each Hotel Property of the
Parent Guarantor and its Subsidiaries and a marketing plan for each Hotel
Property.

(j) If and when any member of the ERISA Group (i) gives or is required to give
notice to the PBGC of any “reportable event” (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give

 

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notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Internal Revenue Code, a copy
of such application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed with
the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063
of ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the controller of the Parent Guarantor setting
forth details as to such occurrence and action, if any, which the Parent
Guarantor or applicable member of the ERISA Group is required or proposes to
take;

(k) To the extent any Loan Party or any Subsidiary of any Loan Party is aware of
the same, prompt notice of the commencement of any proceeding or investigation
by or before any Governmental Authority and any action or proceeding in any
court or other tribunal or before any arbitrator against or in any other way
relating adversely to, or adversely affecting, any Loan Party or any Subsidiary
of any Loan Party or any of their respective properties, assets or businesses
which, if determined or resolved adversely to such Person, could reasonably be
expected to have a Material Adverse Effect, and prompt notice of the receipt of
notice that any United States income tax returns of any Loan Party or any
Subsidiary of any Loan Party are being audited;

(l) A copy of any amendment to the articles of incorporation, bylaws,
partnership agreement or other similar organizational documents of any Loan
Party within five (5) Business Days after the effectiveness thereof;

(m) Prompt notice of (i) any change in the senior management of the Parent
Guarantor or the Borrower and (ii) any change in the business, assets,
liabilities, financial condition, results of operations or business prospects of
any Loan Party or any Subsidiary of any Loan Party which has had or could have a
Material Adverse Effect;

(n) Prompt notice of the occurrence of any Default or Event of Default or any
event which constitutes or which with the passage of time, the giving of notice,
or otherwise, would constitute a default or event of default by any Loan Party
under any Material Contract to which any such Person is a party or by which any
such Person or any of its respective properties may be bound;

(o) Promptly upon any Loan Party entering into any Material Contract or any
Tenant Lease, a copy thereof;

(p) Prompt notice of any order, judgment or decree (i) in excess of $250,000
having been entered against any Loan Party or any Subsidiary of any Loan Party
or any of their respective properties or assets or (ii) in excess of $1,000,000
having been entered against any Subsidiary that is not a Loan Party or any of
its properties or assets;

 

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(q) Any notification of a material violation of any Applicable Law or any
inquiry shall have been received by any Loan Party or any Subsidiary of any Loan
Party from any Governmental Authority;

(r) Prompt notice of the acquisition, incorporation or other creation of any
Subsidiary of any Loan Party, the purpose for such Subsidiary, the nature of the
assets and liabilities thereof and whether such Subsidiary is an Eligible
Subsidiary;

(s) Promptly upon the request of the Administrative Agent, evidence of the
Parent Guarantor’s calculation of the Ownership Share with respect to a
Subsidiary or an Unconsolidated Affiliate, such evidence to be in form and
detail satisfactory to the Administrative Agent;

(t) Promptly, upon each request, such information regarding the Borrower as a
Lender may require in order to comply with the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001));

(u) Promptly, and in any event within three (3) business days after the Borrower
obtains knowledge thereof, the Borrower shall provide the Administrative Agent
with written notice of the occurrence of any of the following: (i) any Loan
Party or any Subsidiary of any Loan Party shall receive notice that any
violation of or noncompliance with any Environmental Law has or may have been
committed or is threatened; (ii) any Loan Party or any Subsidiary of any Loan
Party shall receive notice that any administrative or judicial complaint, order
or petition has been filed or other proceeding has been initiated, or is about
to be filed or initiated against any such Person alleging any violation of or
noncompliance with any Environmental Law or requiring any such Person to take
any action in connection with the release or threatened release of Hazardous
Materials; (iii) any Loan Party or any Subsidiary of any Loan Party shall
receive any notice from a Governmental Authority or private party alleging that
any such Person may be liable or responsible for any costs associated with a
response to, or remediation or cleanup of, a release or threatened release of
Hazardous Materials or any damages caused thereby; or (iv) any Loan Party or any
Subsidiary of any Loan Party shall receive notice of any other fact,
circumstance or condition that could reasonably be expected to form the basis of
an environmental claim, and such notice(s), whether individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;

(v) Within forty-five (45) days after the end of each calendar quarter, Borrower
shall deliver to the Administrative Agent a report in form and substance
reasonably satisfactory to the Administrative Agent summarizing the status of
the compliance with and performance of the obligations under each PIP for any
Collateral Property, including in such report a statement of the amounts
expended through the end of such quarter with respect to such PIP and amounts
projected to be expended thereafter to complete the obligations under such PIP;
and

(w) From time to time and promptly upon each request, such data, certificates,
reports, statements, opinions of counsel, documents or further information
regarding any Property or the

 

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business, assets, liabilities, financial condition, results of operations or
business prospects of any Loan Party or any Subsidiary of any Loan Party as the
Administrative Agent or any Lender may reasonably request.

Section 9.5. Electronic Delivery of Certain Information.

(a) Documents required to be delivered pursuant to the Loan Documents shall be
delivered by electronic communication and delivery, including, the Internet,
e-mail or intranet websites to which the Administrative Agent and each Lender
have access (including a commercial, third-party website such as www.Edgar.com
<http://www.Edgar.com> or a website sponsored or hosted by the Administrative
Agent or the Borrower) provided that (A) the foregoing shall not apply to
notices to any Lender pursuant to Article II. and (B) the Lender has not
notified the Administrative Agent or Borrower that it cannot or does not want to
receive electronic communications. The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic delivery pursuant to procedures approved by it for all
or particular notices or communications. Documents or notices delivered
electronically shall be deemed to have been delivered twenty-four (24) hours
after the date and time on which the Administrative Agent or the Borrower posts
such documents or the documents become available on a commercial website and the
Administrative Agent or Borrower notifies each Lender of said posting and
provides a link thereto provided if such notice or other communication is not
sent or posted during the normal business hours of the recipient, said posting
date and time shall be deemed to have commenced as of 9:00 a.m. on the opening
of business on the next business day for the recipient. Notwithstanding anything
contained herein, in every instance the Borrower shall be required to provide
paper copies of the certificate required by Section 9.3. to the Administrative
Agent and shall deliver paper copies of any documents to the Administrative
Agent or to any Lender that requests such paper copies until a written request
to cease delivering paper copies is given by the Administrative Agent or such
Lender. Except for the certificates required by Section 9.3., the Administrative
Agent shall have no obligation to request the delivery of or to maintain paper
copies of the documents delivered electronically, and in any event shall have no
responsibility to monitor compliance by the Borrower with any such request for
delivery. Each Lender shall be solely responsible for requesting delivery to it
of paper copies and maintaining its paper or electronic documents.

(b) Documents required to be delivered pursuant to Article II. may be delivered
electronically to a website provided for such purpose by the Administrative
Agent pursuant to the procedures provided to the Borrower by the Administrative
Agent.

Section 9.6. Public/Private Information.

The Borrower shall, and shall cause each other Specified Loan Party to, and by
its execution hereof the Parent Guarantor agrees that it shall and shall cause
each of its Subsidiaries to, cooperate, with the Administrative Agent in
connection with the publication of certain materials and/or information provided
by or on behalf of the Borrower or the other Loan Parties. Documents required to
be delivered pursuant to the Loan Documents shall be delivered by or on behalf
of the Borrower or the other Loan Parties to the Administrative Agent and the
Lenders (collectively, “Information Materials”) pursuant to this Article and
shall designate Information Materials (a) that are either available to the
public or not material with respect to the Borrower,

 

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the other Loan Parties and their Subsidiaries or any of their respective
securities for purposes of United States federal and state securities laws, as
“Public Information” and (b) that are not Public Information as “Private
Information”.

Section 9.7. USA Patriot Act Notice; Compliance.

The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued
with respect thereto require 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, a Lender
(for itself and/or as Administrative Agent for all Lenders hereunder) may from
time-to-time request, and the Borrower shall, and shall cause each other Loan
Party to, and by its execution hereof the Parent Guarantor agrees that it shall,
provide to such Lender, such Loan Party’s name, address, tax identification
number and/or such other identification information as shall be necessary for
such 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.

ARTICLE X. NEGATIVE COVENANTS

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if
required pursuant to Section 13.7., all of the Lenders) shall otherwise consent
in the manner set forth in Section 13.7., the Borrower shall, and by its
execution hereof the Parent Guarantor agrees that it shall (as applicable),
comply with the following covenants:

Section 10.1. Financial Covenants.

(a) Minimum Tangible Net Worth. Tangible Net Worth shall not at any time be less
than (i) $458,667,000 plus (ii) 85% of the Net Proceeds of all Equity Issuances
effected at any time after June 30, 2011 by the Parent Guarantor or any of its
Subsidiaries.

(b) Leverage Ratio. The Leverage Ratio shall at all times be less than or equal
to the Maximum Leverage Ratio.

(c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio shall not at
any time be less than 1.50 to 1.00.

(d) Permitted Investments. At no time from and after the Effective Date shall
any of the Loan Parties or any of their Subsidiaries make an Investment in or
otherwise own the following items which would cause the aggregate value of such
holdings of such Persons to exceed the following percentages of Total Asset
Value at any such time:

(A) Equity Interests in Persons (other than consolidated Subsidiaries) such that
the aggregate Book Value of such Equity Interests exceeds 15% of Total Asset
Value;

 

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(B) Indebtedness secured by Mortgages in favor of the Parent Guarantor or any of
its Subsidiaries such that the aggregate Book Value of such Indebtedness exceeds
10% of Total Asset Value;

(C) Development/Redevelopment Properties having a value (based on the total
budgeted construction costs for restoration or redevelopment) that exceeds in
the aggregate 15% of Total Asset Value; or

(D) Unimproved land such that the aggregate Book Value of all such unimproved
land exceeds 2.5% of Total Asset Value.

In addition to the foregoing limitations, the aggregate Book Value (or, in the
case of item (C), a value (based on the total budgeted construction cost)) of
items (A), (B), (C) and (D) above from after the Effective Date shall not exceed
25% of Total Asset Value.

(e) Dividends and Other Restricted Payments. If a Default or an Event of Default
under Section 11.1.(a), 11.1.(e) or 11.1.(f) shall exist or, if as a result of
the occurrence of any other Event of Default any of the Obligations have been
accelerated pursuant to Section 11.2.(a), neither Borrower nor any Specified
Loan Party nor any of their respective Subsidiaries, and by its execution hereof
the Parent Guarantor agrees that neither it nor any of its Subsidiaries (other
than, in the case of any of the foregoing, any Eligible Subsidiaries), shall
directly or indirectly declare or make, or incur any liability to make, any
Restricted Payments. In all other circumstances except as described in the
immediately preceding sentence, neither Borrower nor any Specified Loan Party
nor any of their respective Subsidiaries, and by its execution hereof the Parent
Guarantor agrees that neither it nor any of its Subsidiaries (other than, in the
case of any of the foregoing, any Eligible Subsidiaries) shall declare or make,
or incur any liability to make, any Restricted Payments, except that:

(A) The Borrower may pay cash dividends to the Parent Guarantor and other
holders of partnership interests in the Borrower with respect to any period of
four (4) fiscal quarters to the extent necessary for the Parent Guarantor to
distribute, and the Parent Guarantor may so distribute, cash dividends or
distributions to holders of its common Equity Interests in an aggregate amount
not to exceed the greatest of (i) 90% of Funds From Operations, (ii) the amount
required for the Parent Guarantor to maintain its status as a REIT (including
the right to distribute 100% of net capital gain) under Sections 856 through 860
of the Internal Revenue Code, and (iii) the amount necessary for the Parent
Guarantor to avoid income or excise tax under the Internal Revenue Code;

(B) As long as no Event of Default exists or would result therefrom, the Parent
Guarantor, the Borrower and any Subsidiary, each as applicable, may make cash
payments:

(1) to redeem Equity Interests in the Borrower or any Subsidiary in accordance
with the terms of the charter, articles of incorporation or by-laws, operating
agreement, partnership agreement or other organizational document of such
entity;

 

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(2) of Preferred Dividends as required to be paid to holders of Preferred Stock;

(3) to purchase Equity Interests from employees of the Parent Guarantor, the
Borrower or any Subsidiary in amounts required to satisfy their withholding tax
obligations in respect of non-cash compensation received by such employees in
respect of such employment;

(4) to purchase the interests of joint venture partners of the Borrower or its
Subsidiaries;

(5) to the extent contractually required to be made to holders of minority
interests in non-Wholly Owned Subsidiaries; and

(6) to the Borrower or the Parent Guarantor, as applicable, in amounts
sufficient to permit the recipient of such funds to make any of the payments
permitted under the foregoing clauses of this Section 10.1.(e)(B); and

(C) As long as no Event of Default or Default exists or would result therefrom
(including, without limitation, that Borrower and the Parent Guarantor are, and
following such repurchase would be, in compliance with the covenants in
Section 10.1.), the Parent Guarantor may repurchase from time to time not more
than 3,000,000 of its common Equity Interests (in the aggregate for all such
repurchases) for a purchase price of not more than $35,000,000 (in the aggregate
for all such repurchases) and the Borrower may repurchase Equity Interests in
the Borrower held by the Parent Guarantor, or make other cash payments or
distributions, in amounts sufficient to permit the Parent Guarantor to effect
such repurchases of its common Equity Interests.

(f) Minimum Debt Service Coverage. The Borrower shall not at any time permit the
Debt Service Coverage Ratio to be less than the Minimum DSCR Hurdle.

(g) Operating Property Value. The Borrower shall not at any time permit the
Operating Property Values of the Collateral Properties in the aggregate to be
less than $250,000,000, subject to the provisions of Section 11.10.

Section 10.2. Negative Pledge.

The Borrower shall not, and shall not permit any other Specified Loan Party or
any of its or their respective Subsidiaries to, and by its execution hereof the
Parent Guarantor agrees that it shall not and shall not permit any of its
Subsidiaries to, (a) create, assume, incur, permit or suffer to exist any Lien
on (i) any Collateral, (ii) any direct or indirect ownership interest in any
Subsidiary Guarantor or Operating Lessee, except for Permitted Liens or
(b) permit any Collateral or any direct or indirect ownership interest of the
Borrower or any Person owning a Collateral Property to be subject to a Negative
Pledge. By its execution hereof, the Parent Guarantor agrees that it shall not
create, assume, incur, permit or suffer to exist any Lien on the Parent
Guarantor’s ownership interests in the Borrower or cause or permit its ownership
interests in the Borrower to be subject to a Negative Pledge.

 

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Section 10.3. Restrictions on Intercompany Transfers.

The Borrower shall not, and shall not permit any other Specified Loan Party or
any of its or their respective Subsidiaries to, and by its execution hereof the
Parent Guarantor agrees that it shall not and shall not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Loan Party or any Subsidiary of any Loan Party to: (a) pay dividends or
make any other distribution on any Loan Party’s or Subsidiary’s capital stock or
other equity interests owned by the Borrower or any other Subsidiary; (b) pay
any Indebtedness owed to the Parent Guarantor, the Borrower or any other
Subsidiary; (c) make loans or advances to the Parent Guarantor, the Borrower or
any other Subsidiary; or (d) transfer any of its property or assets to the
Borrower or any other Subsidiary; other than (i) with respect to clauses (a) –
(d) those encumbrances or restrictions contained in any Loan Document, (ii) with
respect to clauses (a) – (d), customary encumbrances or restrictions on any
Subsidiary (other than a Loan Party) in instruments evidencing or securing
Indebtedness of such Subsidiary otherwise permitted under this Agreement or
(iii) with respect to clause (d), customary provisions restricting assignment of
any agreement entered into by the Borrower, any other Loan Party or any
Subsidiary of any Loan Party in the ordinary course of business.

Section 10.4. Merger, Consolidation, Sales of Assets and Other Arrangements.

Except as otherwise permitted below, the Borrower shall not, and shall not
permit any other Specified Loan Party or any of its or their respective
Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it
shall not and shall not permit any of its Subsidiaries to, (a) enter into any
transaction of merger or consolidation; (b) liquidate, windup or dissolve itself
(or suffer any liquidation or dissolution); (c) convey, sell, lease, sublease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business or assets, or the
capital stock of or other Equity Interests in any of its Subsidiaries, whether
now owned or hereafter acquired; or (d) acquire a Substantial Amount of the
assets of, or make an Investment of a Substantial Amount in, any other Person;
provided, however, that:

(i) any Subsidiary may merge with a Loan Party (other than an Operating Lessee)
so long as such Loan Party is the survivor;

(ii) any Subsidiary may sell, transfer or dispose of its assets to a Loan Party
(other than an Operating Lessee);

(iii) the Parent Guarantor, the Borrower or any Subsidiary that is not a Loan
Party may, directly or indirectly, (A) acquire (whether by purchase, acquisition
of Equity Interests of a Person, or as a result of a merger or consolidation) a
Substantial Amount of the assets of, or make an Investment of a Substantial
Amount in, any other Person and (B) sell, lease or otherwise transfer, whether
by one or a series of transactions, a Substantial Amount of assets (including
capital stock or other securities of Subsidiaries) to any other Person, so long
as, in each case, (1) the Borrower shall have given the

 

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Administrative Agent and the Lenders at least thirty (30) days prior written
notice of such consolidation, merger, acquisition, Investment, sale, lease or
other transfer; (2) immediately prior thereto, and immediately thereafter and
after giving effect thereto, no Default or Event of Default is or would be in
existence, including, without limitation, a Default or Event of Default
resulting from a breach of Section 10.1.; (3) in the case of a consolidation or
merger to which the Parent Guarantor or the Borrower is a party, the Parent
Guarantor or the Borrower shall be the survivor thereof and (4) at the time the
Borrower gives notice pursuant to clause (1) of this subsection, the Borrower
shall have delivered to the Administrative Agent for distribution to each of the
Lenders a Compliance Certificate, calculated on a pro forma basis, evidencing
the continued compliance by the Loan Parties with the terms and conditions of
this Agreement and the other Loan Documents, including without limitation, the
financial covenants contained in Section 10.1., after giving effect to such
consolidation, merger, acquisition, Investment, sale, lease or other transfer;
and

(iv) the Loan Parties and their Subsidiaries may (except as otherwise provided
in the Loan Documents with respect to Collateral Properties) lease and sublease
their respective assets, as lessor or sublessor (as the case may be), in the
ordinary course of their business.

Further, the Borrower shall not, and shall not permit any other Specified Loan
Party or any of its or their respective Subsidiaries, to, and by its execution
hereof the Parent Guarantor agrees that it shall not and shall not permit any of
its Subsidiaries to, enter into any sale leaseback transactions or other
transaction by which such Person shall remain liable as lessee (or the economic
equivalent thereof) of any real or personal property that it has sold or leased
to another Person.

Section 10.5. Plans.

The Borrower shall not, and shall not permit any other Specified Loan Party or
any of its or their respective Subsidiaries to, and by its execution hereof the
Parent Guarantor agrees that it shall not and shall not permit any of its
Subsidiaries to, permit any of its respective assets to become or be deemed to
be “plan assets” within the meaning of ERISA and the regulations promulgated
thereunder for purposes of ERISA and the Internal Revenue Code.

Section 10.6. Fiscal Year.

The Borrower shall not, and shall not permit any other Specified Loan Party or
any of its or their respective Subsidiaries to, and by its execution hereof the
Parent Guarantor agrees that it shall not and shall not permit any of its
Subsidiaries to, change its fiscal year from that in effect as of the Agreement
Date.

Section 10.7. Modifications of Organizational Documents.

The Borrower shall not, and shall not permit any other Specified Loan Party to,
and by its execution hereof the Parent Guarantor agrees that it shall not,
amend, supplement, restate or otherwise modify in any material respect its
charter, articles of incorporation or by-laws, operating agreement, partnership
agreement or other organizational document without the prior written consent of
the Administrative Agent (which shall not be unreasonably withheld) unless

 

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such amendment, supplement, restatement or other modification is (a) required
under or as a result of the Internal Revenue Code or other Applicable Law,
(b) required to maintain the Parent Guarantor’s status as a REIT, or
(c) modifications made to reflect changes necessary in connection with
transactions permitted by the provisions of this Agreement (such as an issuance
of Preferred Stock, or an issuance of Equity Interests in the Borrower or any of
its Subsidiaries in connection with the acquisition of assets) and which do not
adversely affect the rights of the Administrative Agent or the Lenders under
this Agreement or the Loan Documents.

Section 10.8. Material Contracts.

(a) The Borrower shall not permit any other Specified Loan Party to, and by its
execution hereof the Parent Guarantor agrees that it shall not, do any of the
following without the Administrative Agent’s prior written consent: (i) enter
into, surrender or terminate any Material Contract, including any new or
replacement Franchise Agreement or Management Agreement; (ii) be or become a
party to a Management Agreement that provides for base management fees in excess
of 3.5% (or, in the case of suburban select service Hotel Properties, 4.0%);
(iii) reduce or extend the term of, increase the charges or fees payable by such
Loan Party under, decrease the charges or fees payable to such Loan Party under,
or otherwise modify or amend in any material respect, any Material Contract
(other than an Approved Ground Lease, with respect to which the provisions of
subsection (b) shall apply, or organizational documents, with respect to which
the provisions of Section 10.7. shall apply); or (iv) terminate, or modify or
amend, in any material respect, any Operating Lease of a Collateral Property.

(b) The Borrower shall not cause or permit (i) any amendment or modification of
any Approved Ground Lease without the prior written consent of Administrative
Agent (which shall not be unreasonably withheld, construed or delayed) or
(ii) the termination of any Approved Ground Lease.

Section 10.9. Indebtedness.

(a) The Borrower (i) shall not, and shall not permit any other Specified Loan
Party to, and by its execution hereof the Parent Guarantor agrees that it shall
not, assume, create, incur or suffer to exist any Indebtedness to the Parent
Guarantor or any of its Subsidiaries unless such Indebtedness is fully
subordinated to the Obligations on terms satisfactory to the Administrative
Agent and (ii) shall not permit any Subsidiary Guarantor or Operating Lessee to
create, assume, incur or suffer to exist any Indebtedness other than (A) as
permitted in clause (i), (B) the Obligations, (C) trade payables and equipment
leases that are normal and customary both as to their terms and as to their
amounts and (D) Guaranties of Franchise Agreements entered into in the ordinary
course of business.

(b) The Borrower shall not, and shall not permit any other Specified Loan Party
or any of its or their respective Subsidiaries to, and by its execution hereof
the Parent Guarantor agrees that it shall not and shall not permit any of its
Subsidiaries to, prepay any principal of, or accrued interest on, any
Subordinated Debt or otherwise make any voluntary or optional payment with
respect to any principal of, or accrued interest on, any Subordinated Debt prior
to the originally scheduled maturity date thereof or otherwise redeem or acquire
for value any Subordinated Debt. Further, the Borrower shall not, and shall not
permit any other Specified

 

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Loan Party or any of its or their respective Subsidiaries to, and by its
execution hereof the Parent Guarantor agrees that it shall not and shall not
permit any of its Subsidiaries to, amend or modify, or permit the amendment or
modification of, any agreement or instrument evidencing any Subordinated Debt
where such amendment or modification provides for the following or which has any
of the following effects:

(i) increases the rate of interest accruing on such Subordinated Debt;

(ii) increases the amount of any scheduled installment of principal or interest,
or shortens the date on which any such installment or principal or interest
becomes due;

(iii) shortens the final maturity date of such Subordinated Debt;

(iv) increases the principal amount of such Subordinated Debt;

(v) amends any financial or other covenant contained in any document or
instrument evidencing any Subordinated Debt in a manner which is more onerous to
the Borrower, such Loan Party or such Subsidiary or which requires the Borrower,
such Loan Party or such Subsidiary to improve its financial performance;

(vi) provides for the payment of additional fees or the increase in existing
fees; and/or

(vii) otherwise could reasonably be expected to be adverse to the interests of
the Administrative Agent or the Lenders.

Section 10.10. Transactions with Affiliates.

The Borrower shall not permit to exist or enter into, and will not permit any
other Specified Loan Party or any of its or their respective Subsidiaries to,
and by its execution hereof the Parent Guarantor agrees that it shall not and
shall not permit any of its Subsidiaries to, permit to exist or enter into, any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of any Loan Party or any
Subsidiary, except (a) as set forth on Schedule 7.1(s) or (b) transactions in
the ordinary course of and pursuant to the reasonable requirements of the
business of the Borrower or such Loan Party or Subsidiary and upon fair and
reasonable terms which are no less favorable to the Borrower or such Loan Party
or Subsidiary than would be obtained in a comparable arm’s length transaction
with a Person that is not an Affiliate. Notwithstanding the forgoing, no
payments may be made with respect to any items set forth on such Schedule 7.1(s)
if a Default or Event of Default exists or would result therefrom.

Section 10.11. Environmental Matters.

The Borrower shall not, and shall not permit any other Specified Loan Party or
any other Person to, use, generate, discharge, emit, manufacture, handle,
process, store, release, transport, remove, dispose of or clean up any Hazardous
Materials on, under or from the Collateral Properties in material violation of
any Environmental Law or in a manner that could reasonably be expected to lead
to any material environmental claim or pose a material risk to human health,
safety or the environment. Nothing in this Section shall impose any obligation
or liability whatsoever on the Administrative Agent or any Lender.

 

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Section 10.12. Derivatives Contracts.

The Borrower shall not, and shall not permit any other Loan Party or any
Subsidiary of any Loan Party to enter into or become obligated in respect of,
Derivatives Contracts, other than Derivatives Contracts entered into by the
Borrower, or such Loan Party or Subsidiary in the ordinary course of business
and which establish an effective hedge in respect of liabilities, commitments or
assets held or reasonably anticipated by the Borrower or such Loan Party or
Subsidiary.

ARTICLE XI. DEFAULT

Section 11.1. Events of Default.

Each of the following shall constitute an Event of Default, whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected
by operation of Applicable Law or pursuant to any judgment or order of any
Governmental Authority:

(a) Default in Payment. The Borrower shall fail to pay when due under this
Agreement or any other Loan Document (whether upon demand, at maturity, by
reason of acceleration or otherwise) the principal of, or any interest on, any
of the Loans, or shall fail to pay any of the other payment Obligations owing by
the Borrower under this Agreement, any other Loan Document or the Fee Letter, or
any other Loan Party shall fail to pay when due any payment obligation owing by
such Loan Party under any Loan Document to which it is a party.

(b) Default in Performance.

(i) The Borrower or any Loan Party shall fail to perform or observe any term,
covenant, condition or agreement on its part to be performed or observed and
contained in Article IX. and such failure shall continue for a period of five
(5) days; or

(ii) The Borrower or any Loan Party shall fail to perform or observe any term,
covenant, condition or agreement on its part to be performed or observed and
contained in Article X.(other than Section 10.1.(g) with respect to which clause
(iv) below shall apply); or

(iii) The Borrower or any Loan Party shall fail to perform or observe any term,
covenant, condition or agreement contained in this Agreement or any other Loan
Document to which it is a party and not otherwise mentioned in this Section and
such failure shall continue for a period of thirty (30) days after the earlier
of (x) the date upon which any Loan Party obtains knowledge of such failure or
(y) the date upon which the Borrower has received written notice of such failure
from the Administrative Agent; provided, however, that: (i) if such default is
not susceptible of cure within such thirty (30)-day period, such thirty (30)-day
period shall be extended to a ninety (90)-day period, but only if (A) such Loan
Party shall commence such cure within such thirty (30)-day period and shall
thereafter prosecute such cure to completion, diligently and without

 

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delay, and (B) no other Default or Event of Default shall have occurred; and
(ii) the grace period provided in this section shall in no event apply to any
default relating to any other Default for which this Agreement or the applicable
Loan Document specifically provides that no period of grace shall be applicable;
or

(iv) A breach of the covenant set forth in Section 10.1.(g) shall occur that is
not remedied in accordance with Section 11.10.

(c) Misrepresentations. Any written statement, representation or warranty made
or deemed made by or on behalf of the Borrower or any other Loan Party under
this Agreement or under any other Loan Document, or any amendment hereto or
thereto, or in any other writing or statement at any time furnished by, or at
the direction of, the Borrower or any other Loan Party to the Administrative
Agent or any Lender, shall at any time prove to have been incorrect or
misleading in any material respect when furnished or made or deemed made.

(d) Indebtedness Cross-Default.

(i) Any Loan Party or any Subsidiary of any Loan Party shall fail to make any
payment when due and payable in respect of any Indebtedness (other than the
Loans) having an aggregate outstanding principal amount (or, in the case of any
Derivatives Contract, having, without regard to the effect of any close-out
netting provision, a Derivatives Termination Value) equal to or exceeding
$5,000,000 (“Material Indebtedness”); or

(ii) (x) The maturity of any Material Indebtedness shall have been accelerated
in accordance with the provisions of any indenture, contract or instrument
evidencing, providing for the creation of or otherwise concerning such Material
Indebtedness or (y) any Material Indebtedness shall have been required to be
prepaid or repurchased prior to the stated maturity thereof; or

(iii) Any other event shall have occurred and be continuing which, with or
without the passage of time, the giving of notice, or otherwise, would permit
any holder or holders of any Material Indebtedness, any trustee or agent acting
on behalf of such holder or holders or any other Person, to accelerate the
maturity of any Material Indebtedness or require any Material Indebtedness to be
prepaid or repurchased prior to its stated maturity.

(e) Voluntary Bankruptcy Proceeding. Any Loan Party or any Subsidiary of any
Loan Party shall: (i) commence a voluntary case under the Bankruptcy Code or
other federal bankruptcy laws (as now or hereafter in effect); (ii) file a
petition seeking to take advantage of any other Applicable Laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts; (iii) consent to, or fail to contest in a
timely and appropriate manner, any petition filed against it in an involuntary
case under such bankruptcy laws or other Applicable Laws or consent to any
proceeding or action described in the immediately following Section 11.1.(f);
(iv) apply for or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a substantial part of its
property, domestic

 

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or foreign; (v) admit in writing its inability to pay its debts as they become
due; (vi) make a general assignment for the benefit of creditors; (vii) make a
conveyance fraudulent as to creditors under any Applicable Law; or (viii) take
any corporate, partnership or other organizational action for the purpose of
effecting any of the foregoing.

(f) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against any Loan Party or any Subsidiary of any Loan Party in any
court of competent jurisdiction seeking: (i) relief under the Bankruptcy Code or
other federal bankruptcy laws (as now or hereafter in effect) or under any other
Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up, or composition or adjustment of debts; or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of such
Person, or of all or any substantial part of the assets, domestic or foreign, of
such Person, and in the case of either clause (i) or (ii) such case or
proceeding shall continue undismissed or unstayed for a period of sixty
(60) consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
Bankruptcy Code or such other federal bankruptcy laws) shall be entered.

(g) Revocation of Loan Documents. Any Loan Party shall (or shall attempt to)
disavow, revoke or terminate any Loan Document to which it is a party or the Fee
Letter or shall otherwise challenge or contest in any action, suit or proceeding
in any court or before any Governmental Authority the validity or enforceability
of any Loan Document or the Fee Letter.

(h) Judgment. A judgment or order for the payment of money shall be entered
against any Loan Party or any Subsidiary of any Loan Party by any court or other
tribunal and (i) such judgment or order shall continue for a period of twenty
(20) days without being paid, stayed or dismissed through appropriate appellate
proceedings and (ii) either (A) the amount for which insurance has not been
acknowledged in writing by the applicable insurance carrier (or the amount as to
which the insurer has denied liability) exceeds, individually or together with
all other such judgments or orders entered against such Persons, $1,000,000 or
(B) such judgment or order could reasonably be expected to have a Material
Adverse Effect.

(i) Attachment. A warrant, writ of attachment, execution or similar process
shall be issued against any property of any Loan Party or any Subsidiary of any
Loan Party, which exceeds, individually or together with all other such
warrants, writs, executions and processes, $1,000,000 in amount and such
warrant, writ, execution or process shall not be paid, discharged, vacated,
stayed or bonded for a period of twenty (20) days.

(j) ERISA. Any member of the ERISA Group shall fail to pay when due an amount or
amounts aggregating in excess of $5,000,000 which it shall have become liable to
pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur withdrawal
liability or a current payment obligation in excess of $5,000,000.

 

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(k) Loan Documents. An Event of Default (as defined therein) shall occur under
any of the other Loan Documents;

(l) Change of Control/Change in Management.

(i) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is or
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person will be deemed to have “beneficial ownership”
of all securities that such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 19.9% of the total voting power of the then outstanding
voting stock of the Parent Guarantor;

(ii) During any period of twelve (12) consecutive months ending after the
Agreement Date, individuals who at the beginning of any such 12-month period
constituted the Board of Trustees of the Parent Guarantor (together with any new
trustees whose election by such Board or whose nomination for election by the
shareholders of the Parent Guarantor was approved by a vote of a majority of the
trustees then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Trustees of the
Parent Guarantor then in office; or

(iii) The Parent Guarantor shall cease to be the sole general partner of the
Borrower or shall cease to own at least 80.1% of the partnership interests in
the Borrower; or

(iv) Any Subsidiary Guarantor or Operating Lessee shall cease to be an Eligible
Subsidiary of the Borrower.

(m) Damage; Strike; Casualty. Any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty which causes, for more than thirty (30) consecutive days beyond the
coverage period of any applicable business interruption insurance, the cessation
or substantial curtailment of revenue producing activities of the Borrower or
any other Loan Party.

(n) Security Documents. Any provision of any Security Documents shall for any
reason cease to be valid and binding on, enforceable against, any Loan Party, or
any Lien created under any Security Document ceases to be a valid and perfected
first priority Lien in any of the Collateral purported to be covered thereby.

 

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Section 11.2. Remedies Upon Event of Default.

Upon the occurrence of an Event of Default the following provisions shall apply:

(a) Acceleration; Termination of Facilities.

(i) Automatic. Upon the occurrence of an Event of Default specified in Sections
11.1.(e) or 11.1.(f), (1)(A) the principal of, and all accrued interest on, the
Loans and the Notes at the time outstanding, and (B) all of the other
Obligations of the Borrower, including, but not limited to, the other amounts
owed to the Lenders and the Administrative Agent under this Agreement, the Notes
or any of the other Loan Documents shall become immediately and automatically
due and payable by the Borrower without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived by the Borrower, and
(2) the Commitments and the obligation of the Lenders to make Loans hereunder
shall all immediately and automatically terminate.

(ii) Optional. If any other Event of Default shall exist, the Administrative
Agent may, and at the direction of the Requisite Lenders shall: (1) declare
(A) the principal of, and accrued interest on, the Loans and the Notes at the
time outstanding and (B) all of the other Obligations, including, but not
limited to, the other amounts owed to the Lenders and the Administrative Agent
under this Agreement, the Notes or any of the other Loan Documents to be
forthwith due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are expressly waived by the Borrower, and (2) terminate the Commitments
and the obligation of the Lenders to make Loans hereunder.

(b) Loan Documents. The Requisite Lenders may direct the Administrative Agent
to, and the Administrative Agent if so directed shall, exercise any and all of
its rights under any and all of the other Loan Documents.

(c) Applicable Law. The Requisite Lenders may direct the Administrative Agent
to, and the Administrative Agent if so directed shall, exercise all other rights
and remedies it may have under any Applicable Law.

(d) Appointment of Receiver. To the extent permitted by Applicable Law, the
Administrative Agent and the Lenders shall be entitled to the appointment of a
receiver for the assets and properties of the Borrower and its Subsidiaries,
without notice of any kind whatsoever and without regard to the adequacy of any
security for the Obligations or the solvency of any party bound for its payment,
to take possession of all or any portion of the Collateral, the property and/or
the business operations of the Borrower and its Subsidiaries and to exercise
such power as the court shall confer upon such receiver.

Section 11.3. Reserved.

Section 11.4. Marshaling; Payments Set Aside.

None of the Administrative Agent or any Lender shall be under any obligation to
marshal any assets in favor of any Loan Party or any other party or against or
in payment of any or all of the Obligations. To the extent that any Loan Party
makes a payment or payments to the Administrative Agent and/or any Lender, or
the Administrative Agent and/or any Lender enforce their security interests or
exercise their rights of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared

 

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to be fraudulent or preferential, set aside and/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 recovery, the
Obligations, or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefore, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.

Section 11.5. Allocation of Proceeds.

If an Event of Default exists and maturity of any of the Obligations has been
accelerated or the Maturity Date has occurred, all payments received by the
Administrative Agent under any of the Loan Documents, in respect of any
principal of or interest on the Obligations or any other amounts payable by the
Borrower hereunder or thereunder, shall be applied in the following order and
priority:

(a) amounts due to the Administrative Agent, and the Lenders in respect of
expenses due under Section 13.2. until paid in full, and then Fees;

(b) amounts due to the Administrative Agent and the Lenders in respect of
Protective Advances;

(c) payments of interest on the Loans, to be applied for the ratable benefit of
the Lenders, in such order as the Lenders may determine in their sole
discretion;

(d) payments of principal of the Loans, to be applied for the ratable benefit of
the Lenders, in such order as the Lenders may determine in their sole
discretion;

(e) amounts due to the Administrative Agent and the Lenders pursuant to Sections
12.8. and 13.10.;

(f) payments of all other amounts due under any of the Loan Documents, if any,
to be applied for the ratable benefit of the Lenders; and

(g) any amount remaining after application as provided above, shall be paid to
the Borrower or whomever else may be legally entitled thereto.

Section 11.6. Intentionally Omitted.

Section 11.7. Rescission of Acceleration by Requisite Lenders.

If at any time after acceleration of the maturity of the Loans and the other
Obligations, the Borrower shall pay all arrears of interest and all payments on
account of principal of the Obligations which shall have become due otherwise
than by acceleration (with interest on principal and, to the extent permitted by
Applicable Law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Defaults (other than nonpayment of principal of
and accrued interest on the Obligations due and payable solely by virtue of
acceleration) shall become remedied or waived to the satisfaction of the
Requisite Lenders (or, if the matter that resulted in such Event of Default may
be waived only by all of Lenders, then waived to the satisfaction of all of the
Lenders), then by written notice to the Borrower, the

 

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Requisite Lenders may elect, in the sole discretion of such Requisite Lenders,
to rescind and annul the acceleration and its consequences. The provisions of
the preceding sentence are intended merely to bind all of the Lenders to a
decision which may be made at the election of the Requisite Lenders, and are not
intended to benefit the Borrower and do not give the Borrower the right to
require the Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are satisfied.

Section 11.8. Performance by Administrative Agent.

If the Borrower or any other Loan Party shall fail to perform any covenant, duty
or agreement contained in any of the Loan Documents, the Administrative Agent
may perform or attempt to perform such covenant, duty or agreement on behalf of
the Borrower or such Loan Party after the expiration of any cure or grace
periods set forth herein. In such event, the Borrower shall, at the request of
the Administrative Agent, promptly pay any amount reasonably expended by the
Administrative Agent in such performance or attempted performance to the
Administrative Agent, together with interest thereon at the applicable
Post-Default Rate from the date of such expenditure until paid. Notwithstanding
the foregoing, neither the Administrative Agent nor any Lender shall have any
liability or responsibility whatsoever for the performance of any obligation of
the Borrower or such Loan Party under this Agreement or any other Loan Document.

Section 11.9. Rights Cumulative.

The rights and remedies of the Administrative Agent and the Lenders under this
Agreement, each of the other Loan Documents and the Fee Letter shall be
cumulative and not exclusive of any rights or remedies which any of them may
otherwise have under Applicable Law. In exercising their respective rights and
remedies the Administrative Agent and the Lenders may be selective and no
failure or delay by the Administrative Agent or any of the Lenders in exercising
any right shall operate as a waiver of it, nor shall any single or partial
exercise of any power or right preclude its other or further exercise or the
exercise of any other power or right.

Section 11.10. Breach of Operating Property Value Covenant.

In the event that there shall occur a breach of the covenant in
Section 10.1.(g), such breach shall constitute a Default which Borrower may cure
solely by taking either of the following actions not later than 25 days after
the first to occur of (i) the Borrower’s determination that an Operating
Property Value Shortfall exists or (ii) the Administrative Agent’s written
notice to the Borrower that an Operating Property Value Shortfall exists:

(a) Payment to Administrative Agent of Cash Collateral in the amount of the
Operating Property Value Shortfall for deposit into the Cash Collateral Account
(which shall at such time be established); or

(b) Delivery to the Administrative Agent of a Qualified Letter of Credit in the
amount of the Operating Property Value Shortfall; or

 

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(c) The addition of a Property to the Collateral Pool, in accordance with the
provisions of this Agreement (including without limitation the approvals of the
Administrative Agent and the Required Approval Lenders), which Property has an
Operating Property Value that equals or exceeds the amount of the Operating
Property Value Shortfall.

Section 11.11. Cash Collateral Account.

(a) As collateral security for the prompt payment in full when due of the
Obligations, the Borrower hereby pledges and grants to the Administrative Agent,
for the benefit of the Administrative Agent and the Lenders, a security interest
in all of its right, title and interest in and to the Cash Collateral Account
(if any) established pursuant to the provisions of Section 11.10. and the
balances from time to time in the Cash Collateral Account (including the
investments and reinvestments therein provided for below). Anything in this
Agreement to the contrary notwithstanding, funds held in the Cash Collateral
Account shall be subject to withdrawal only as provided in this Section 11.11.

(b) Amounts on deposit in the Cash Collateral Account shall not be invested
without the consent of the Borrower and shall only be invested in Cash
Equivalents approved by Administrative Agent in its sole discretion. All such
investments and reinvestments shall be held in the name of and be under the sole
dominion and control of the Administrative Agent, provided, that all earnings on
such investments will be credited to and retained in the Cash Collateral
Account. The Administrative Agent shall exercise reasonable care in the custody
and preservation of any funds held in the Cash Collateral Account and shall be
deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Administrative Agent accords other
funds deposited with the Administrative Agent, it being understood that the
Administrative Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any funds held in
the Cash Collateral Account.

(c) If an Event of Default exists, the Administrative Agent may at any time and
from time to time elect to liquidate any such investments and reinvestments and
credit the proceeds thereof to the Cash Collateral Account and apply or cause to
be applied such proceeds and any other balances in the Cash Collateral Account
to the payment of any of the Obligations due and payable.

(d) So long as no Default or Event of Default exists, the Administrative Agent
shall, from time to time, at the request of the Borrower, deliver to the
Borrower, against receipt but without any recourse, warranty or representation
whatsoever, such of the balances in the Cash Collateral Account as exceed the
Operating Property Value Shortfall at such time (determined without inclusion of
the Cash Collateral to be so delivered to the Borrower). When all of the
Obligations shall have been indefeasibly paid in full and all Commitments have
expired or otherwise terminated, the Administrative Agent shall deliver to the
Borrower, against receipt but without any recourse, warranty or representation
whatsoever, the balances remaining in the Cash Collateral Account.

(e) The Borrower shall pay to the Administrative Agent from time to time such
fees as the Administrative Agent normally charges for similar services in
connection with the Administrative Agent’s administration of the Cash Collateral
Account and investments and reinvestments of funds therein.

 

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Section 11.12. Qualified Letter of Credit.

(a) The Borrower shall cause the expiry date of any Qualified Letter of Credit
delivered pursuant hereto to be extended from time to time such that at least
sixty (60) days remain until its expiry date. If at any time less than sixty
(60) days remain until the expiration of a Qualified Letter of Credit, then,
unless Administrative Agent is required to cancel and return such Qualified
Letter of Credit under the provisions of paragraph (b) below, Administrative
Agent may draw upon such Qualified Letter of Credit and apply the amount so
drawn as provided in paragraph (c) below.

(b) If the Borrower shall deliver to the Administrative Agent a Qualified Letter
of Credit pursuant to Section 11.10.(b), then, at the request of the Borrower
and upon the Administrative Agent’s determination that no Operating Property
Value Shortfall would exist if such Qualified Letter of Credit were cancelled,
and provided no Default or Event of Default then exists, the Administrative
Agent shall cancel and return to the issuing bank such Qualified Letter of
Credit. When all of the Obligations have been indefeasibly paid in full and all
Commitments have expired or otherwise terminated, the Administrative Agent shall
cancel and return to the issuing bank or banks all Qualified Letters of Credit
then held by the Administrative Agent.

(c) Qualified Letters of Credit delivered to the Administrative Agent pursuant
to this Agreement shall secure the prompt payment in full when due of the
Obligations. Upon the occurrence of an Event of Default, the Administrative
Agent may draw upon any Qualified Letter of Credit and, at its election, either
deposit the amount so drawn in a Cash Collateral Account or apply the same to
the payment of the Obligations due and payable.

ARTICLE XII. THE ADMINISTRATIVE AGENT

Section 12.1. Appointment and Authorization.

Each Lender hereby irrevocably appoints and authorizes the Administrative Agent
to take such action as contractual representative on such Lender’s behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
specifically delegated to the Administrative Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto. Not in
limitation of the foregoing, each Lender authorizes and directs the
Administrative Agent to enter into the Loan Documents for the benefit of the
Lenders. Each Lender hereby agrees that, except as otherwise set forth herein,
any action taken by the Requisite Lenders in accordance with the provisions of
this Agreement or the Loan Documents, and the exercise by the Requisite Lenders
of the powers set forth herein or therein, together with such other powers as
are reasonably incidental thereto, shall be authorized and binding upon all of
the Lenders. Nothing herein shall be construed to deem the Administrative Agent
a trustee or fiduciary for any Lender or to impose on the Administrative Agent
duties or obligations other than those expressly provided for herein. Without
limiting the generality of the foregoing, the use of the terms “Agent”,
“Administrative Agent”, “agent” and similar terms in the Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary

 

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or other implied (or express) obligations arising under agency doctrine of any
Applicable Law. Instead, use of such terms is merely a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties. The Administrative Agent shall deliver to each
Lender, promptly upon receipt thereof by the Administrative Agent, copies of
each of the financial statements, certificates, notices and other documents
delivered to the Administrative Agent pursuant to Article IX. that the Borrower
is not otherwise required to deliver directly to the Lenders. The Administrative
Agent will furnish to any Lender, upon the request of such Lender, a copy (or,
where appropriate, an original) of any document, instrument, agreement,
certificate or notice furnished to the Administrative Agent by the Borrower, any
Loan Party or any other Affiliate of the Borrower, pursuant to this Agreement or
any other Loan Document not already delivered to such Lender pursuant to the
terms of this Agreement or any such other Loan Document. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of any of the Obligations), the Administrative Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Requisite Lenders
(or the Majority Lenders or all of the Lenders if explicitly required under any
other provision of this Agreement), and such instructions shall be binding upon
all Lenders and all holders of any of the Obligations; provided, however, that,
notwithstanding anything in this Agreement to the contrary, the Administrative
Agent shall not be required to take any action which exposes the Administrative
Agent to personal liability or which is contrary to this Agreement or any other
Loan Document or Applicable Law. Not in limitation of the foregoing, the
Administrative Agent may exercise any right or remedy it or the Lenders may have
under any Loan Document upon the occurrence of a Default or an Event of Default
unless the Requisite Lenders have directed the Administrative Agent otherwise.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Administrative Agent as a result of the Administrative
Agent acting or refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of the Requisite Lenders (or
the Majority Lenders or all of the Lenders if explicitly required under any
other provision of this Agreement).

Section 12.2. Wells Fargo as Lender.

Wells Fargo, as a Lender, shall have the same rights and powers under this
Agreement and any other Loan Document, as any other Lender and may exercise the
same as though it were not the Administrative Agent; and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated, include Wells Fargo in
each case in its individual capacity. Wells Fargo and its Affiliates may each
accept deposits from, maintain deposits or credit balances for, invest in, lend
money to, act as trustee under indentures of, serve as financial advisor to, and
generally engage in any kind of business with the Borrower, any other Loan Party
or any other Affiliate thereof as if it were any other bank and without any duty
to account therefore to the other Lenders. Further, the Administrative Agent and
any Affiliate may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the other Lenders. The Lenders acknowledge that,
pursuant to such activities, Wells Fargo or its affiliates may receive
information regarding the Borrower, other Loan Parties, other Subsidiaries and
other Affiliates (including information that may be subject to confidentiality
obligations in favor of such Person) and acknowledge that the Administrative
Agent shall be under no obligation to provide such information to them.

 

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Section 12.3. Collateral Matters; Protective Advances.

(a) Each Lender hereby authorizes the Administrative Agent, without the
necessity of any notice to or further consent from any Lender, from time to time
prior to an Event of Default, to take any action with respect to any Collateral
or Loan Documents which may be necessary to perfect and maintain perfected the
Liens upon the Collateral granted pursuant to any of the Loan Documents.

(b) The Lenders hereby authorize the Administrative Agent, at its option and in
its discretion, to release any Lien granted to or held by the Administrative
Agent upon any Collateral (i) upon termination of the Commitments and
indefeasible payment and satisfaction in full of all of the Obligations; (ii) as
expressly permitted by, but only in accordance with, the terms of the applicable
Loan Document; and (iii) if approved, authorized or ratified in writing by the
Requisite Lenders (or such greater number of Lenders as this Agreement or any
other Loan Document may expressly provide). Upon request by the Administrative
Agent at any time, the Lenders will confirm in writing the Administrative
Agent’s authority to release particular types or items of Collateral pursuant to
this Section.

(c) The Administrative Agent shall (and is hereby irrevocably authorized by the
Lenders to) execute such documents as may be necessary to evidence the release
of the Liens granted to the Administrative Agent for its benefit and the benefit
of the Lenders herein or pursuant hereto upon any Collateral Property for which
with the Borrower satisfies the conditions for a Collateral Property Release;
provided, however, that (i) the Administrative Agent shall not be required to
execute any such document on terms which, in the Administrative Agent’s opinion,
would expose the Administrative Agent or any Lender to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
the Borrower or any other Loan Party in respect of) all interests retained by
the Borrower or any other Loan Party, all of which shall continue to constitute
part of the Collateral. In the event of any sale or transfer of Collateral, or
any foreclosure with respect to any of the collateral, the Administrative Agent
shall be authorized to deduct all of the expenses reasonably incurred by the
Administrative Agent from the proceeds of any such sale, transfer or
foreclosure.

(d) The Administrative Agent shall have no obligation whatsoever to the Lenders
or to any other Person to assure that the Collateral exists or is owned by the
Borrower, any other Loan Party or any other Subsidiary or is cared for,
protected or insured or that the Liens granted to the Administrative Agent
herein or pursuant hereto have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any manner or
under any duty of care, disclosure or fidelity any of the rights, authorities
and powers granted or available to the Administrative Agent in this Section or
in any of the Loan Documents, it being understood and agreed that in respect of
the Collateral, or any act, omission or event related thereto, the
Administrative Agent may act in any manner it may deem appropriate, in its sole
discretion, and that the Administrative Agent shall have no duty or liability
whatsoever to the Lenders, except to the extent resulting from its gross
negligence or willful misconduct.

 

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(e) The Administrative Agent may make, and shall be reimbursed by the Lenders
(in accordance with their Pro Rata Shares) to the extent not reimbursed by the
Borrower for, Protective Advances during any one calendar year with respect to
each Collateral Property up to the sum of (i) amounts expended to pay real
estate taxes, assessments and governmental charges or levies imposed upon such
Collateral Property; (ii) amounts expended to pay insurance premiums for
policies of insurance related to such Collateral Property; and
(iii) $500,000.00. Protective Advances in excess of said sum during any calendar
year for any Collateral Property shall require the consent of the Requisite
Lenders. The Borrower agrees to pay on demand all Protective Advances.

Section 12.4. Post Foreclosure Plans.

If all or any portion of the Collateral is acquired by the Administrative Agent
as a result of a foreclosure or the acceptance of a deed or assignment in lieu
of foreclosure, or is retained in satisfaction of all or any part of the
Obligations, the title to any such Collateral, or any portion thereof, shall be
held in the name of the Administrative Agent or a nominee or Subsidiary of the
Administrative Agent, as Administrative Agent, for the ratable benefit of all
Lenders. The Administrative Agent shall prepare a recommended course of action
for such Collateral (a “Post-Foreclosure Plan”), which shall be subject to the
approval of the Requisite Lenders. In accordance with the approved
Post-Foreclosure Plan, the Administrative Agent shall manage, operate, repair,
administer, complete, construct, restore or otherwise deal with the Collateral
acquired, and shall administer all transactions relating thereto, including,
without limitation, employing a management agent, leasing agent and other
agents, contractors and employees, including agents for the sale of such
Collateral, and the collecting of rents, revenues and other sums from such
Collateral and paying the expenses of such Collateral. Actions taken by the
Administrative Agent with respect to the Collateral, which are not specifically
provided for in the approved Post-Foreclosure Plan or reasonably incidental
thereto, shall require the written consent of the Requisite Lenders by way of
supplement to such Post-Foreclosure Plan. Upon demand therefor from time to
time, each Lender will contribute its share (based on its Pro Rata Share) of all
reasonable costs and expenses incurred by the administrative agent pursuant to
the approved Post-Foreclosure Plan in connection with the construction,
operation, management, maintenance, leasing and sale of such Collateral. In
addition, the Administrative Agent shall render or cause to be rendered to each
Lender, on a monthly basis, an income and expense statement for such Collateral,
and each Lender shall promptly contribute its Pro Rata Share of any operating
loss for such Collateral, and such other expenses and operating reserves as the
Administrative Agent shall deem reasonably necessary pursuant to and in
accordance with the approved Post-Foreclosure Plan. To the extent there is Net
Operating Income from such Collateral (after establishment of reserves in
accordance with the Post-Foreclosure Plan), the Administrative Agent shall, in
accordance with the approved Post-Foreclosure Plan, determine the amount and
timing of distributions to the Lenders. All such distributions shall be made to
the Lenders in accordance with their respective Pro Rata Shares. The Lenders
acknowledge and agree that if title to any Collateral is obtained by the
Administrative Agent or its nominee, such Collateral will not be held as a
permanent investment but will be liquidated and the proceeds of such liquidation
will be distributed in accordance with Section 11.5. as soon as practicable. The

 

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Administrative Agent shall undertake to sell such Collateral, at such price and
upon such terms and conditions as the Requisite Lenders reasonably shall
determine to be most advantageous to the Lenders. Any purchase money mortgage or
deed of trust taken in connection with the disposition of such Collateral in
accordance with the immediately preceding sentence shall name the Administrative
Agent, as Administrative Agent for the Lenders, as the beneficiary or mortgagee.
In such case, the Administrative Agent and the Lenders shall enter into an
agreement with respect to such purchase money mortgage or deed of trust defining
the rights of the Lenders in the same Pro Rata Shares as provided hereunder,
which agreement shall be in all material respects similar to this Article
insofar as the same is appropriate or applicable.

Section 12.5. Approvals of Lenders.

All communications from the Administrative Agent to any Lender requesting such
Lender’s determination, consent, approval or disapproval (a) shall be given in
the form of a written notice to such Lender, (b) shall be accompanied by a
description of the matter or issue as to which such determination, approval,
consent or disapproval is requested, or shall advise such Lender where
information, if any, regarding such matter or issue may be inspected, or shall
otherwise describe the matter or issue to be resolved, (c) shall include a
legend substantially as follows, printed in capital letters or boldface type:
“THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE. FAILURE TO RESPOND WITHIN TEN
(10) BUSINESS DAYS AFTER THE DELIVERY OF THIS COMMUNICATION SHALL CONSTITUTE A
DEEMED APPROVAL BY THE ADDRESSEE OF THE MATTER DESCRIBED ABOVE.”, (d) shall
include, if reasonably requested by such Lender and to the extent not previously
provided to such Lender, written materials and a summary of all oral information
provided to the Administrative Agent by the Borrower in respect of the matter or
issue to be resolved, and (e) shall include the Administrative Agent’s
recommended course of action or determination in respect thereof. Unless a
Lender shall give written notice to the Administrative Agent that it
specifically objects to the recommendation or determination of the
Administrative Agent (together with a reasonable written explanation of the
reasons behind such objection) within ten (10) Business Days (or such lesser or
greater period as may be specifically required under the express terms of the
Loan Documents) of receipt of such communication (“Lender Reply Period”), such
Lender shall be deemed to have conclusively approved of or consented to such
recommendation or determination. With respect to decisions requiring the
approval of the Requisite Lenders, Administrative Agent shall timely submit any
required written notices to all Lenders and upon receiving the required approval
or consent shall follow the course of action or determination recommended by
Administrative Agent or such other course of action recommended by the Requisite
Lenders, and each non-responding Lender shall be deemed to have concurred with
such recommended course of action. Notwithstanding the foregoing, any matter
requiring all Lenders’ approval or consent shall not be deemed given by any
Lender’s failure to respond within any such Lender’s Reply Period.

Section 12.6. Notice of Events of Default.

The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Administrative Agent has
received notice from a Lender or the Borrower referring to this Agreement,
describing with reasonable specificity such Default or Event of Default and
stating that such notice is a “notice of default.”

 

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If any Lender (excluding the Lender which is also serving as the Administrative
Agent) becomes aware of any Default or Event of Default, it shall promptly send
to the Administrative Agent such a “notice of default”, but nothing herein
contained shall impose upon any Lender an obligation to determine whether there
has been or is a Default or Event of Default. Further, if the Administrative
Agent receives such a “notice of default,” the Administrative Agent shall give
prompt notice thereof to the Lenders.

Section 12.7. Administrative Agent’s Reliance.

Notwithstanding any other provisions of this Agreement or any other Loan
Documents, neither the Administrative Agent nor any of its directors, officers,
agents, employees or counsel shall be liable for any action taken or not taken
by it under or in connection with this Agreement or any other Loan Document,
except for its or their own gross negligence or willful misconduct in connection
with its duties expressly set forth herein or therein. Without limiting the
generality of the foregoing, the Administrative Agent may consult with legal
counsel (including its own counsel or counsel for the Borrower or any other Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts.
Neither the Administrative Agent nor any of its directors, officers, agents,
employees or counsel: (a) makes any warranty or representation to any Lender or
any other Person and shall be responsible to any Lender or any other Person for
any statement, warranty or representation made or deemed made by the Borrower,
any other Loan Party or any other Person in or in connection with this Agreement
or any other Loan Document; (b) shall have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of this Agreement or any other Loan Document or the satisfaction of any
conditions precedent under this Agreement or any Loan Document on the part of
the Borrower or other Persons or inspect the property, books or records of the
Borrower or any other Person; (c) shall be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Document, any other instrument or document
furnished pursuant thereto or any Collateral covered thereby or the perfection
or priority of any Lien in favor of the Administrative Agent on behalf of the
Lenders in any such Collateral; (d) shall have any liability in respect of any
recitals, statements, certifications, representations or warranties contained in
any of the Loan Documents or any other document, instrument, agreement,
certificate or statement delivered in connection therewith; and (e) shall incur
any liability under or in respect of this Agreement or any other Loan Document
by acting upon any notice, consent, certificate or other instrument or writing
(which may be by telephone, telecopy or electronic mail) believed by it to be
genuine and signed, sent or given by the proper party or parties. The
Administrative Agent may execute any of its duties under the Loan Documents by
or through agents, employees or attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects in the absence of gross negligence or willful misconduct.

Section 12.8. Indemnification of Administrative Agent.

Regardless of whether the transactions contemplated by this Agreement and the
other Loan Documents are consummated, each Lender agrees to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower and without
limiting the obligation of the

 

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Borrower to do so) pro rata in accordance with such Lender’s respective Pro Rata
Share, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against the Administrative Agent (in its capacity as Administrative
Agent but not as a “Lender”) in any way relating to or arising out of the Loan
Documents, any transaction contemplated hereby or thereby or any action taken or
omitted by the Administrative Agent under the Loan Documents (collectively,
“Indemnifiable Amounts”); provided, however, that no Lender shall be liable for
any portion of such Indemnifiable Amounts to the extent resulting from the
Administrative Agent’s gross negligence or willful misconduct as determined by a
court of competent jurisdiction in a final, non-appealable judgment; provided,
however, that no action taken in accordance with the directions of the Requisite
Lenders (or the Majority Lenders or all of the Lenders, if expressly required
hereunder) shall be deemed to constitute gross negligence or willful misconduct
for purposes of this Section. Without limiting the generality of the foregoing,
each Lender agrees to reimburse the Administrative Agent (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so) promptly upon demand for its ratable share of any out-of-pocket
expenses (including the reasonable fees and expenses of the counsel to the
Administrative Agent) incurred by the Administrative Agent (except to the extent
resulting from the Administrative Agent’s gross negligence or willful misconduct
as determined by a court of competent jurisdiction in a final, non-appealable
judgment) in connection with the preparation, negotiation, execution,
administration, or enforcement (whether through negotiations, legal proceedings,
or otherwise) of, or legal advice with respect to the rights or responsibilities
of the parties under, the Loan Documents, any suit or action brought by the
Administrative Agent to enforce the terms of the Loan Documents and/or collect
any Obligations, any “lender liability” suit or claim brought against the
Administrative Agent and/or the Lenders, and any claim or suit brought against
the Administrative Agent and/or the Lenders arising under any Environmental
Laws. Such out-of-pocket expenses (including counsel fees) shall be advanced by
the Lenders on the request of the Administrative Agent notwithstanding any claim
or assertion that the Administrative Agent is not entitled to indemnification
hereunder upon receipt of an undertaking by the Administrative Agent that the
Administrative Agent will reimburse the Lenders if it is actually and finally
determined by a court of competent jurisdiction that the Administrative Agent is
not so entitled to indemnification. The agreements in this Section shall survive
the payment of the Loans and all other amounts payable hereunder or under the
other Loan Documents and the termination of this Agreement. If the Borrower
shall reimburse the Administrative Agent for any Indemnifiable Amount following
payment by any Lender to the Administrative Agent in respect of such
Indemnifiable Amount pursuant to this Section, the Administrative Agent shall
share such reimbursement on a ratable basis with each Lender making any such
payment.

Section 12.9. Lender Credit Decision, Etc.

Each of the Lenders expressly acknowledges and agrees that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
counsel, attorneys in fact or other affiliates has made any representations or
warranties to such Lender and that no act by the Administrative Agent hereafter
taken, including any review of the affairs of the Borrower, any other Loan Party
or any other Subsidiary or Affiliate, shall be deemed to constitute any such
representation or warranty by the Administrative Agent or any Lender. Each of
the Lenders acknowledges that it has, independently and without reliance upon
the Administrative Agent, any

 

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other Lender or counsel to the Administrative Agent, or any of their respective
officers, directors, employees, agents or counsel, and based on the financial
statements of the Borrower, the other Loan Parties, the other Subsidiaries and
other Affiliates, and inquiries of such Persons, its independent due diligence
of the business and affairs of the Borrower, the other Loan Parties, the other
Subsidiaries and other Persons, its review of the Loan Documents, the legal
opinions required to be delivered to it hereunder, the advice of its own counsel
and such other documents and information as it has deemed appropriate, made its
own credit and legal analysis and decision to enter into this Agreement and the
transactions contemplated hereby. Each of the Lenders also acknowledges that it
will, independently and without reliance upon the Administrative Agent, any
other Lender or counsel to the Administrative Agent or any of their respective
officers, directors, employees and agents, and based on such review, advice,
documents and information as it shall deem appropriate at the time, continue to
make its own decisions in taking or not taking action under the Loan Documents.
The Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any other Loan Party of the Loan
Documents or any other document referred to or provided for therein or to
inspect the properties or books of, or make any other investigation of, the
Borrower, any other Loan Party or any other Subsidiary. Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Administrative Agent under this Agreement or any of the
other Loan Documents, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower, any other Loan Party or any other Affiliate
thereof which may come into possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys in fact or other Affiliates.
Each of the Lenders acknowledges that the Administrative Agent’s legal counsel
in connection with the transactions contemplated by this Agreement is only
acting as counsel to the Administrative Agent and is not acting as counsel to
any Lender.

Section 12.10. Successor Administrative Agent.

The Administrative Agent may resign at any time as Administrative Agent under
the Loan Documents by giving written notice thereof to the Lenders and the
Borrower. In addition, in the event of a material breach of its duties
hereunder, the Administrative Agent may be removed as Administrative Agent under
the Loan Documents at any time by all Lenders (other than the Lender then acting
as Administrative Agent) and, provided no Default or Event of Default exists,
the Borrower upon 30-days’ prior notice. Upon any such resignation or removal,
the Requisite Lenders (which, in the case of the removal of the Administrative
Agent as provided in the immediately preceding sentence, shall be determined
without regard to the Commitment of the Lender then acting as Administrative
Agent) shall have the right to appoint a successor Administrative Agent which
appointment shall, provided no Default or Event of Default exists, be subject to
the Borrower’s approval, which approval shall not be unreasonably withheld or
delayed (except that the Borrower shall, in all events, be deemed to have
approved each Lender and any of its affiliates as a successor Administrative
Agent). If no successor Administrative Agent shall have been so appointed in
accordance with the immediately preceding sentence, and shall have accepted such
appointment, within thirty (30) days after the current Administrative Agent’s
giving of notice of resignation, then the current Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which shall be
a Lender, if any Lender

 

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shall be willing to serve, and otherwise shall be an Eligible Assignee. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the current Administrative Agent, and the current Administrative Agent shall
be discharged from its duties and obligations under the Loan Documents. After
any Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Article XII. shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under the Loan Documents. Notwithstanding anything contained herein to the
contrary, the Administrative Agent may assign its rights and duties under the
Loan Documents to any of its affiliates by giving the Borrower and each Lender
prior written notice.

Section 12.11. Syndication Agent.

JPMorgan Chase Bank, N.A. is the Syndication Agent and in such capacity assumes
no responsibility or obligation hereunder, including, without limitation, for
servicing, enforcement or collection of any of the Loans, nor any duties as an
agent hereunder for the Lenders. The title given to the Syndication Agent is
solely honorific and implies no fiduciary responsibility on the part of the
Syndication Agent to the Administrative Agent, any Lender, the Borrower or any
other Loan Party and the use of such titles does not impose on the Syndication
Agent any duties or obligations greater than those of any other Lender or
entitle the Syndication Agent to any rights other than those to which any other
Lender is entitled.

Section 12.12. Documentation Agent.

Deutsche Bank Securities Inc. is the Documentation Agent and in such capacity
assumes no responsibility or obligation hereunder, including, without
limitation, for servicing, enforcement or collection of any of the Loans, nor
any duties as an agent hereunder for the Lenders. The title given to the
Documentation Agent is solely honorific and implies no fiduciary responsibility
on the part of the Documentation Agent to the Administrative Agent, any Lender,
the Borrower or any other Loan Party and the use of such titles does not impose
on the Documentation Agent any duties or obligations greater than those of any
other Lender or entitle the Documentation Agent to any rights other than those
to which any other Lender is entitled. Without limitation of the foregoing, the
Documentation Agent does not have any of the duties, rights or obligations of a
Lender under this Agreement or any of the Loan Documents.

ARTICLE XIII. MISCELLANEOUS

Section 13.1. Notices.

Unless otherwise provided herein (including without limitation as provided in
Section 9.5.), communications provided for hereunder shall be in writing and
shall be mailed, telecopied, or delivered as follows:

If to the Borrower:

Chesapeake Lodging, L.P.

1997 Annapolis Exchange Parkway

 

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Suite 410

Annapolis, MD 21401

Attention: Doug Vicari

Telecopy Number:        (410) 972-4180

Telephone Number:      (410) 972-4142

If to the Administrative Agent:

Wells Fargo Bank, N.A.

1750 H Street, NW, Suite 550

Washington, D.C. 20006

Attn: Mark F. Monahan

Telecopy Number: (202) 429-2985

Telephone: (202) 303-3017

With a copy to:

Wells Fargo Bank, N.A.

Hospitality Finance Group

2030 Main Street, Suite 500

Irvine, CA 92614

Attn: Rhonda Friedly

Telecopy Number: (949) 251-4983

Telephone: (949) 261-4383

If to any other Lender:

To such Lender’s address or telecopy number as set forth on Schedule 13.1
attached hereto

or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section; provided, a Lender shall only be required to give notice of any such
other address to the Administrative Agent and the Borrower. All such notices and
other communications shall be effective (i) if mailed, upon the first to occur
of receipt or the expiration of three (3) days after the deposit in the United
States Postal Service mail, postage prepaid and addressed to the address of the
Borrower or the Administrative Agent and Lenders at the addresses specified;
(ii) if telecopied, when transmitted; (iii) if hand delivered, when delivered;
or (iv) if delivered in accordance with Section 9.5. to the extent applicable;
provided, however, that, in the case of the immediately preceding clauses (i),
(ii) and (iii), non-receipt of any communication as of the result of any change
of address of which the sending party was not notified or as the result of a
refusal to accept delivery shall be deemed receipt of such communication.
Notwithstanding the immediately preceding sentence, all notices or
communications to the Administrative Agent or any Lender under Article II. shall
be effective only when actually received. None of the Administrative Agent or
any Lender shall incur any liability to the Borrower (nor shall the
Administrative Agent incur any liability to the Lenders) for acting upon any
telephonic or electronic notice referred to in this Agreement which the

 

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Administrative Agent or such Lender, as the case may be, believes in good faith
to have been given by a Person authorized to deliver such notice or for
otherwise acting in good faith hereunder.

Section 13.2. Expenses.

The Borrower agrees (a) to pay or reimburse the Administrative Agent for all of
its reasonable out-of-pocket costs and reasonable expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, any of the Loan Documents (including
due diligence expense and reasonable travel expenses related to closing), and
the consummation of the transactions contemplated thereby, including the
reasonable fees and disbursements of counsel to the Administrative Agent and all
costs and expenses of the Administrative Agent in connection with the review of
Properties for inclusion in the Collateral Pool and the Administrative Agent’s
other activities under Article IV., including the cost of all Appraisals (except
for Appraisals ordered under Section 4.3.(d)) and the reasonable fees and
disbursements of counsel to the Administrative Agent relating to all such
activities, (b) to pay or reimburse the Administrative Agent and the Lenders for
all their costs and expenses incurred in connection with the enforcement or
preservation of any rights under the Loan Documents and the Fee Letter,
including the reasonable fees and disbursements of their respective counsel
(including the allocated fees and expenses of in-house counsel) and any payments
in indemnification or otherwise payable by the Lenders to the Administrative
Agent pursuant to the Loan Documents, (c) to pay, and indemnify and hold
harmless the Administrative Agent and the Lenders from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any failure to pay or delay in paying, documentary, stamp, excise and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of any of the Loan Documents, or
consummation of any amendment, supplement or modification of, or any waiver or
consent under or in respect of, any Loan Document and (d) to the extent not
already covered by any of the preceding subsections, to pay the fees and
disbursements of counsel to the Administrative Agent and any Lender incurred in
connection with the representation of the Administrative Agent or such Lender in
any matter relating to or arising out of any bankruptcy or other proceeding of
the type described in Sections 11.1.(e) or 11.1.(f), including, without
limitation (i) any motion for relief from any stay or similar order, (ii) the
negotiation, preparation, execution and delivery of any document relating to the
Obligations and (iii) the negotiation and preparation of any debtor in
possession financing or any plan of reorganization of the Borrower or any other
Loan Party, whether proposed by the Borrower, such Loan Party, the Lenders or
any other Person, and whether such fees and expenses are incurred prior to,
during or after the commencement of such proceeding or the confirmation or
conclusion of any such proceeding.

Section 13.3. Stamp, Intangible and Recording Taxes.

The Borrower will pay any and all stamp, excise, intangible, registration,
recordation and similar taxes, fees or charges and shall indemnify the
Administrative Agent and each Lender against any and all liabilities with
respect to or resulting from any delay in the payment or omission to pay any
such taxes, fees or charges, which may be payable or determined to be payable in
connection with the execution, delivery, recording, performance or enforcement
of this Agreement, the Notes and any of the other Loan Documents, the amendment,
supplement,

 

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modification or waiver of or consent under this Agreement, the Notes or any of
the other Loan Documents or the perfection of any rights or Liens under this
Agreement, the Notes or any of the other Loan Documents.

Section 13.4. Setoff.

Subject to Section 3.3. and in addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, the
Administrative Agent and each Lender and each Participant is hereby authorized
by the Borrower, at any time or from time to time while an Event of Default
exists, without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, but in the case of a Lender or a Participant
subject to receipt of the prior written consent of the Administrative Agent and
the Requisite Lenders exercised in their sole discretion, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Administrative Agent, such Lender, such Participant or any affiliate of the
Administrative Agent or such Lender, to or for the credit or the account of the
Borrower against and on account of any of the Obligations, irrespective of
whether or not any or all of the Loans and all other Obligations have been
declared to be, or have otherwise become, due and payable as permitted by
Section 11.2., and although such Obligations shall be contingent or unmatured.

Section 13.5. Litigation; Jurisdiction; Other Matters; Waivers.

(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR
AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS WOULD BE
BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY
AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE LENDERS, THE ADMINISTRATIVE AGENT AND THE BORROWER HEREBY
WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR
NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR
AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER
LOAN DOCUMENT OR THE FEE LETTER OR IN CONNECTION WITH ANY COLLATERAL OR ANY LIEN
OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR
AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS OF ANY KIND
OR NATURE.

(b) EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY AGREES
THAT THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR OF THE
DISTRICT OF COLUMBIA OR, AT THE OPTION OF THE ADMINISTRATIVE AGENT, ANY STATE
COURT LOCATED IN NEW YORK, NEW YORK SHALL HAVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE
ADMINISTRATIVE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO
THIS AGREEMENT, THE LOANS, THE NOTES OR ANY OTHER LOAN DOCUMENT OR THE FEE
LETTER OR TO ANY MATTER ARISING HEREFROM

 

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OR THEREFROM OR THE COLLATERAL. THE BORROWER AND EACH OF THE LENDERS EXPRESSLY
SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS. THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT ITS ADDRESS
FOR NOTICES PROVIDED FOR HEREIN. SHOULD THE BORROWER FAIL TO APPEAR OR ANSWER
ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY (30) DAYS
AFTER THE MAILING THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH
SUMMONS, COMPLAINT, PROCESS OR PAPERS. EACH PARTY FURTHER WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF
FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF
ANY ACTION BY THE ADMINISTRATIVE AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE
ADMINISTRATIVE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY
OTHER APPROPRIATE JURISDICTION.

(c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH THE
ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES
THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR
EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS AGREEMENT.

Section 13.6. Successors and Assigns.

(a) Generally. The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign or otherwise transfer any of is
rights under this Agreement without the prior written consent of all the Lenders
(and any such assignment or transfer to which all of the Lenders have not
consented shall be void).

(b) Participations. Any Lender may at any time grant to an affiliate of such
Lender, or one or more banks or other financial institutions (each a
“Participant”) participating interests in its Commitment or the Obligations
owing to such Lender. Except as otherwise provided in Section 13.4. or as
otherwise expressly stated herein, no Participant shall have any rights or
benefits under this Agreement or any other Loan Document. In the event of any
such grant by a Lender of a participating interest to a Participant, such Lender
shall remain responsible for the performance of its obligations hereunder, and
the Borrower and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights

 

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and obligations under this Agreement. Any agreement pursuant to which any Lender
may grant such a participating interest shall provide that such Lender shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided,
however, such Lender may agree with the Participant that it will not, without
the consent of the Participant, agree to (i) increase such Lender’s Commitment
or the aggregate amount of the Commitments, (ii) extend the date fixed for the
payment of principal on the Loans or portions thereof owing to such Lender,
(iii) reduce the rate at which interest is payable thereon, (iv) release all or
substantially all of the Collateral except as permitted in this Agreement,
(v) change the definitions of “Advance Rate,” or “Minimum DSCR Hurdle,” or
(vi) modify the definition of the term “Requisite Lenders” or “Majority Lenders”
or modify in any other manner the number or percentage of the Lenders required
to make any determinations or waive any rights hereunder or to modify any
provision hereof. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection (b).

(c) Assignments. Any Lender may with the prior written consent of the
Administrative Agent at any time assign to one or more Eligible Assignees (each
an “Assignee”) all or a portion of its rights and obligations under this
Agreement and the Notes; provided, however, (i) any partial assignment shall be
in an amount at least equal to $10,000,000 and (except in the case of an
assignment made at a time at which there exists an Event of Default) after
giving effect to such assignment the assigning Lender retains a Commitment, or
if the Commitments have been terminated, holds Notes having an aggregate
outstanding principal balance, of at least $10,000,000, (ii) the Administrative
Agent and (provided no Event of Default has occurred that is continuing) the
Borrower shall have approved such assignment, which approvals shall not be
unreasonably withheld, and (iii) each such assignment shall be effected by means
of an Assignment and Assumption Agreement. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Lender of an amount
equal to the purchase price agreed between such transferor Lender and such
Assignee, such Assignee shall be deemed to be a Lender party to this Agreement
and shall have all the rights and obligations of a Lender with a Commitment
and/or Loans, as the case may be, as set forth in such Assignment and Assumption
Agreement, and the transferor Lender shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this subsection (c), the transferor Lender, the Administrative Agent and the
Borrower shall make appropriate arrangements so the new Notes are issued to the
Assignee and such transferor Lender, as appropriate, and shall update Schedule I
attached hereto. In connection with any such assignment, the transferor Lender
shall pay to the Administrative Agent an administrative fee for processing such
assignment in the amount of $4,500.00. Anything in this Section to the contrary
notwithstanding, no Lender may assign or participate any interest in any Loan
held by it hereunder to the Borrower, or any of its respective affiliates or
Subsidiaries.

(d) Federal Reserve Bank Assignments. In addition to the assignments and
participations permitted under the foregoing provisions of the Section, and
without the need to comply with any of the formal or procedural requirements of
this Section, any Lender may at any time and from time to time, pledge and
assign all or any portion of its rights under all or any of

 

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the Loan Documents to a Federal Reserve Bank; provided that no such pledge of
assignment shall release such Lender from its obligations thereunder. No such
pledge or assignment shall release the assigning Lender from its obligations
hereunder.

(e) Information to Assignee, Etc. A Lender may furnish any information
concerning the Borrower, any Subsidiary or any other Loan Party in the
possession of such Lender from time to time to Assignees and Participants
(including prospective Assignees and Participants but shall advise them that any
such information that is not publicly available is confidential).

Section 13.7. Amendments and Waivers.

(a) Generally. Except as otherwise expressly provided in this Agreement, (i) any
consent or approval required or permitted by this Agreement or in any Loan
Document to be given by the Lenders may be given, (ii) any term of this
Agreement or of any other Loan Document may be amended, (iii) the performance or
observance by the Borrower or any other Loan Party of any terms of this
Agreement or such other Loan Document may be waived, and (iv) the continuance of
any Default or Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the written consent of the Requisite Lenders (or the Administrative Agent
at the written direction of the Requisite Lenders), and, in the case of an
amendment to any Loan Document, the written consent of each Loan Party which is
party thereto. Notwithstanding the previous sentence, the Administrative Agent,
shall be authorized on behalf of all the Lenders, without the necessity of any
notice to, or further consent from, any Lender, to waive the imposition of the
late fees provided in Section 2.10., up to a maximum of three (3) times per
calendar year.

(b) Unanimous Consent. Notwithstanding the foregoing, no amendment, waiver or
consent shall, unless in writing, and signed by all of the Lenders directly
affected thereby (or the Administrative Agent at the written direction of the
Lenders), do any of the following:

(i) increase the Commitments of the Lenders (excluding any increase as a result
of an assignment of Commitments permitted under Section 13.6.) or subject the
Lenders to any additional obligations;

(ii) reduce the principal of, or interest rates that have accrued or that will
be charged on the outstanding principal amount of, any Loans or other
Obligations;

(iii) reduce the amount of any Fees payable to the Lenders hereunder (except
that any change in Fees payable to the Administrative Agent for its own account
shall not require the consent of any Lender other than the Administrative
Agent);

(iv) except for waivers permitted under the last sentence of Section 13.7.(a),
postpone any date fixed for any payment of principal of, or interest on, any
Loans or for the payment of Fees or any other Obligations (including without
limitation any extension of the Maturity Date except in accordance with
Section 2.15.);

(v) change the definitions of Commitment Percentage or Pro Rata Share;

 

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(vi) amend this Section or amend the definitions of the terms used in this
Agreement or the other Loan Documents insofar as such definitions affect the
substance of this Section;

(vii) modify the definition of the terms “Required Approval Lenders,” “Requisite
Lenders” or “Majority Lenders” or modify in any other manner the number or
percentage of the Lenders required to make any determinations or waive any
rights hereunder or to modify any provision hereof;

(viii) release any Guarantor from its obligations under the Guaranty except as
contemplated by Section 4.2.;

(ix) waive a Default or Event of Default under Section 11.1.(a);

(x) amend, or waive the Borrower’s compliance with, Section 2.16.; or

(xi) release or dispose of any collateral unless released or disposed of as
permitted by, and in accordance with, Section 12.3. or Section 4.2.

Notwithstanding the provisions of Section 3.9.(a)(ii), no action shall be taken
under clauses (i), (ii), (iii) or (iv) above that would affect a Defaulting
Lender without its written consent.

(c) Amendment of Administrative Agent’s Duties, Etc. No amendment, waiver or
consent unless in writing and signed by the Administrative Agent, in addition to
the Lenders required hereinabove to take such action, shall affect the rights or
duties of the Administrative Agent under this Agreement or any of the other Loan
Documents. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon and any amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose set forth therein. No course of dealing or delay or omission on the part
of the Administrative Agent or any Lender in exercising any right shall operate
as a waiver thereof or otherwise be prejudicial thereto. Any Event of Default
occurring hereunder shall continue to exist until such time as such Event of
Default is waived in writing in accordance with the terms of this Section,
notwithstanding any attempted cure or other action by the Borrower, any other
Loan Party or any other Person subsequent to the occurrence of such Event of
Default. Except as otherwise explicitly provided for herein or in any other Loan
Document, no notice to or demand upon the Borrower shall entitle the Borrower to
other or further notice or demand in similar or other circumstances.

Section 13.8. Nonliability of Administrative Agent and Lenders.

The relationship between the Borrower, on the one hand, and the Lenders and the
Administrative Agent, on the other hand, shall be solely that of borrower and
lender. Neither the Administrative Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower and no provision in this Agreement or in any of
the other Loan Documents, and no course of dealing between or among any of the
parties hereto, shall be deemed to create any fiduciary duty owing by the
Administrative Agent or any Lender to any Lender, the Borrower, any Subsidiary
or any other Loan Party. Neither the Administrative Agent nor any Lender
undertakes any responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower’s business or
operations.

 

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Section 13.9. Confidentiality.

Except as otherwise provided by Applicable Law, the Administrative Agent and
each Lender shall utilize all non public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential or
proprietary by the Borrower in accordance with its customary procedure for
handling confidential information of this nature and in accordance with safe and
sound banking practices but in any event may make disclosure: (a) to any of
their respective Affiliates (provided any such Affiliate shall agree to keep
such information confidential in accordance with the terms of this
Section 13.9.); (b) as reasonably requested by any bona fide actual or proposed
pledgee, Assignee, Participant or other transferee in connection with the
contemplated transfer of any Commitment or participations therein as permitted
hereunder (provided they shall agree to keep such information confidential in
accordance with the terms of this Section 13.9.); (c) as required or requested
by any Governmental Authority, self-regulatory body or representative thereof or
pursuant to legal process or in connection with any legal proceedings, as and to
the extent so required or requested; (d) to the Administrative Agent’s or such
Lender’s independent auditors and other professional advisors (provided they
shall be notified of the confidential nature of the information); (e) if an
Event of Default exists, to any other Person, in connection with the exercise by
the Administrative Agent or the Lenders of rights hereunder or under any of the
other Loan Documents; and (f) to the extent such information (x) becomes
publicly available other than as a result of a breach of this Section or
(y) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower or any Affiliate,
the disclosure of which is not made in violation of any confidentiality
agreement pertaining to such information that is known to the Administrative
Agent or such Lender, as applicable.

Section 13.10. Indemnification.

(a) The Borrower shall and hereby agrees to indemnify, defend and hold harmless
the Administrative Agent, any affiliate of the Administrative Agent, each of the
Lenders and their respective directors, officers, shareholders, agents,
employees and counsel (each referred to herein as an “Indemnified Party”) from
and against any and all losses, costs, claims, damages, liabilities,
deficiencies, judgments or expenses of every kind and nature (including, without
limitation, amounts paid in settlement, court costs and the fees and
disbursements of counsel incurred in connection with any litigation,
investigation, claim or proceeding or any advice rendered in connection
therewith, but excluding losses, costs, claims, damages, liabilities,
deficiencies, judgments or expenses indemnification in respect of which is
specifically covered by Section 3.10. or 5.1. or expressly excluded from the
coverage of such Sections) incurred by an Indemnified Party in connection with,
arising out of, or by reason of, any suit, cause of action, claim, arbitration,
investigation or settlement, consent decree or other proceeding (the foregoing
referred to herein as an “Indemnity Proceeding”) which is in any way related
directly or indirectly to: (i) this Agreement or any other Loan Document or the
transactions contemplated thereby; (ii) the making of any Loans hereunder;
(iii) any actual or proposed use by the Borrower of the proceeds of the Loans;
(iv) the Administrative Agent’s or any Lender’s entering into this Agreement;
(v) the fact that the Administrative Agent and the Lenders have established the
credit

 

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facility evidenced hereby in favor of the Borrower; (vi) the fact that the
Administrative Agent and the Lenders are creditors of the Borrower and have or
are alleged to have information regarding the financial condition, strategic
plans or business operations of the Parent Guarantor, the Borrower and their
Subsidiaries; (vii) the fact that the Administrative Agent and the Lenders are
material creditors of the Borrower and are alleged to influence directly or
indirectly the business decisions or affairs of the Borrower and the
Subsidiaries or their financial condition; (viii) the exercise of any right or
remedy the Administrative Agent or the Lenders may have under this Agreement or
the other Loan Documents including, but not limited to, the foreclosure upon, or
seizure of, any Collateral or the exercise of any other rights of a secured
party; or (ix) any violation or non compliance by the Borrower, any other Loan
Party or any Subsidiary of any Applicable Law (including any Environmental Law)
including, but not limited to, any Indemnity Proceeding commenced by (A) the
Internal Revenue Service or state taxing authority or (B) any Governmental
Authority or other Person under any Environmental Law, including any Indemnity
Proceeding commenced by a Governmental Authority or other Person seeking
remedial or other action to cause the Borrower, any other Loan Party or any
Subsidiaries of any of the foregoing (or its respective properties) (or the
Administrative Agent and/or the Lenders as successors to the Borrower) to be in
compliance with such Environmental Laws; provided, however, that the Borrower
shall not be obligated to indemnify any Indemnified Party to the extent that any
losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by such Indemnified Party (1) arise from such Indemnified Party’s gross
negligence or willful misconduct or (2) arise from acts or events that occur at
a Property after foreclosure or other taking of title to such Property by an
Indemnified Party or any successor to or assignee of an Indemnified Party.

(b) The Borrower’s indemnification obligations under this Section shall apply to
all Indemnity Proceedings arising out of, or related to, the foregoing whether
or not an Indemnified Party is a named party in such Indemnity Proceeding. In
this connection, this indemnification shall cover all costs and expenses of any
Indemnified Party in connection with any deposition of any Indemnified Party or
compliance with any subpoena (including any subpoena requesting the production
of documents). This indemnification shall, among other things, apply to any
Indemnity Proceeding commenced by other creditors of the Borrower, any other
Loan Party or any Subsidiary of any of the foregoing, any shareholder of the
Borrower, any other Loan Party or any Subsidiary of any of the foregoing
(whether such shareholder(s) are prosecuting such Indemnity Proceeding in their
individual capacity or derivatively on behalf of the Borrower, any other Loan
Party or any Subsidiary of any of the foregoing), any account debtor of the
Borrower, any other Loan Party or any Subsidiary of any of the foregoing or by
any Governmental Authority.

(c) This indemnification shall apply to any Indemnity Proceeding arising during
the pendency of any bankruptcy proceeding filed by or against the Borrower, any
other Loan Party and/or any Subsidiary of any of the foregoing.

(d) Out-of-pocket fees and expenses of, and all amounts paid to third persons
by, an Indemnified Party in an amount up to Fifty Thousand and 00/100 Dollars
($50,000.00) shall be advanced by the Borrower at the request of such
Indemnified Party notwithstanding any claim or assertion by the Borrower that
such Indemnified Party is not entitled to indemnification hereunder upon receipt
of an undertaking by such Indemnified Party that such Indemnified Party

 

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will reimburse the Borrower if it is actually and finally determined by a court
of competent jurisdiction that such Indemnified Party is not so entitled to
indemnification hereunder. The foregoing limitation on amounts required to be
advanced under this paragraph (d) shall not otherwise limit the Borrower’s
obligations to the Indemnified Parties.

(e) An Indemnified Party may conduct its own investigation and defense of, and
may formulate its own strategy with respect to, any Indemnity Proceeding covered
by this Section and, as provided above, all costs and expenses incurred by such
Indemnified Party shall be reimbursed by the Borrower. No action taken by legal
counsel chosen by an Indemnified Party in investigating or defending against any
such Indemnity Proceeding shall vitiate or in any way impair the obligations and
duties of the Borrower hereunder to indemnify and hold harmless each such
Indemnified Party; provided, however, that (i) if the Borrower is required to
indemnify an Indemnified Party pursuant hereto and (ii) the Borrower has
provided evidence reasonably satisfactory to such Indemnified Party that the
Borrower has the financial wherewithal to reimburse such Indemnified Party for
any amount paid by such Indemnified Party with respect to such Indemnity
Proceeding, such Indemnified Party shall not settle or compromise any such
Indemnity Proceeding without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed).

(f) If and to the extent that the obligations of the Borrower hereunder are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law.

(g) The Borrower’s obligations hereunder shall survive any termination of this
Agreement and the other Loan Documents and the payment in full in cash of the
Obligations, and are in addition to, and not in substitution of, any of the
other obligations set forth in this Agreement or any other Loan Document to
which it is a party.

Section 13.11. Termination; Survival.

At such time as (a) all of the Commitments have been terminated, (b) none of the
Lenders is obligated any longer under this Agreement to make any Loans and
(c) all Obligations (other than obligations which survive as provided in the
following sentence) have been paid and satisfied in full, this Agreement shall
terminate. The indemnities to which the Administrative Agent and the Lenders are
entitled under the provisions of Sections 5.1., 5.4., 12.8., 13.2. and 13.10.
and any other provision of this Agreement and the other Loan Documents, and the
provisions of Section 13.5., shall continue in full force and effect and shall
protect the Administrative Agent and the Lenders (i) notwithstanding any
termination of this Agreement, or of the other Loan Documents, against events
arising after such termination as well as before and (ii) at all times after any
such party ceases to be a party to this Agreement with respect to all matters
and events existing on or prior to the date such party ceased to be a party to
this Agreement.

Section 13.12. Severability of Provisions.

If any provision under this Agreement or the other Loan Documents shall be
determined by a court of competent jurisdiction to be invalid or unenforceable,
that provision shall be

 

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deemed severed from the Loan Documents, and the validity, legality and
enforceability of the remaining provisions shall remain in full force as thought
the invalid, illegal, or unenforceable provision had never been part of the Loan
Documents.

Section 13.13. GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.

Section 13.14. Counterparts.

To facilitate execution, this Agreement and any amendments, waivers, consents or
supplements may be executed in any number of counterparts as may be convenient
or required. It shall not be necessary that the signature of, or on behalf of,
each party, or that the signature of all persons required to bind any party,
appear on each counterpart. All counterparts shall collectively constitute a
single document. It shall not be necessary in making proof of this document to
produce or account for more than a single counterpart containing the respective
signatures of, or on behalf of, each of the parties hereto.

Section 13.15. Obligations with Respect to Loan Parties.

The obligations of the Borrower to direct or prohibit the taking of certain
actions by the other Loan Parties as specified herein shall be absolute and not
subject to any defense the Borrower may have that the Borrower does not control
such Loan Parties.

Section 13.16. Intentionally Omitted.

Section 13.17. Limitation of Liability.

None of the Administrative Agent or any Lender, or any affiliate, officer,
director, employee, attorney, or agent of the Administrative Agent or any Lender
shall have any liability with respect to, and the Borrower hereby waives,
releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, or consequential damages suffered or incurred by the
Borrower in connection with, arising out of, or in any way related to, this
Agreement, any of the other Loan Documents or the Fee Letter, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
The Borrower hereby waives, releases, and agrees not to sue the Administrative
Agent or any Lender or any of the Administrative Agent’s or any Lender’s
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement, any of the other Loan Documents, the Fee Letter,
or any of the transactions contemplated by this Agreement or financed hereby.

Section 13.18. Entire Agreement.

This Agreement, the Notes, the other Loan Documents and the Fee Letter embody
the final, entire agreement among the parties hereto and supersede any and all
prior commitments,

 

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agreements, representations, and understandings, whether written or oral,
relating to the subject matter hereof and thereof and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto. There are no oral agreements among the
parties hereto.

Section 13.19. Construction.

The Administrative Agent, the Borrower and each Lender acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by the Administrative Agent, the
Borrower and each Lender.

Section 13.20. Headings.

The Paragraph and Section headings in this Agreement are provided for
convenience of reference only and shall not affect its construction or
interpretation.

Section 13.21. Joinder by Parent Guarantor.

By its execution of this Agreement, the Parent Guarantor agrees to comply with
the covenants applicable to it as set forth in this Agreement.

[Signatures on Following Pages]

 

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

 

BORROWER:

CHESAPEAKE LODGING, L.P.,

a Delaware limited partnership

By:        Chesapeake Lodging Trust,        its general partner By:  

/s/ Graham Wootten

       Graham Wootten        Secretary

[Signatures Continued on Next Page]

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

Signature Page to Second Amended and Restated Credit Agreement dated as of

October 14, 2011 with Chesapeake Lodging, L.P.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender
By:  

/s/ Mark F. Monahan

  Mark F. Monahan   Senior Vice President

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

Signature Page to Second Amended and Restated Credit Agreement dated as of

October 14, 2011 with Chesapeake Lodging, L.P.

 

JPMORGAN CHASE BANK, N.A., as Syndication Agent and as a Lender

By:  

/s/ Marc Costantino

  Name:  

Marc Costantino

  Title:  

Executive Director

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

Signature Page to Second Amended and Restated Credit Agreement dated as of

October 14, 2011 with Chesapeake Lodging, L.P.

 

KEYBANK NATIONAL ASSOCIATION, as a Lender By:  

/s/ Kevin P. Murray

  Name:  

Kevin P. Murray

  Title:  

Senior Vice President

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

Signature Page to Second Amended and Restated Credit Agreement dated as of

October 14, 2011 with Chesapeake Lodging, L.P.

 

DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Lender

By:  

/s/ George R. Reynolds

  Name:  

George R. Reynolds

  Title:  

Director

By:  

/s/ James Rolison

  Name:  

James Rolison

  Title:  

Managing Director

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

Signature Page to Second Amended and Restated Credit Agreement dated as of

October 14, 2011 with Chesapeake Lodging, L.P.

 

ROYAL BANK OF CANADA, as a Lender By:  

/s/ Joshua Freedman

  Name:  

Joshua Freedman

  Title:  

Authorized Signatory

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

JOINDER BY PARENT GUARANTOR

The undersigned, as the Parent Guarantor under the foregoing Agreement, hereby
joins in and executes this Agreement for the purposes set forth in
Section 13.21.

 

CHESAPEAKE LODGING TRUST, a Maryland real estate investment trust By:  

/s/ Graham Wootten

       Graham Wootten        Secretary

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

SCHEDULE I

COMMITMENTS

 

Lender

   Commitment  

Wells Fargo Bank, National Association

   $ 50,000,000   

JPMorgan Chase Bank, N.A.

     50,000,000   

Deutsche Bank Trust Company Americas

     50,000,000   

KeyBank National Association

     25,000,000   

Royal Bank of Canada

     25,000,000   

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

SCHEDULE II

INITIAL COLLATERAL PROPERTIES

 

Collateral Property

  

Subsidiary Guarantor

  

Operating Lessee

Hilton Checkers, Los Angeles, CA

   CHSP Los Angeles LLC    CHSP TRS Los Angeles LLC

Courtyard by Marriott Anaheim, Anaheim, CA

   CHSP Anaheim LLC    CHSP TRS Anaheim LLC

Boston Marriott Newton, Newton, MA

   CHSP Newton LLC    CHSP TRS Newton LLC

Homewood Suites Seattle, Seattle, WA

   CHSP Seattle LLC    CHSP TRS Seattle LLC

Hotel Indigo, San Diego, CA

   CHSP San Diego LLC    CHSP TRS San Diego LLC

Hotel Adagio, San Francisco, CA

   CHSP Union Square LLC    CHSP TRS Union Square LLC

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

SCHEDULE 7.1(b)

OWNERSHIP STRUCTURE

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

SCHEDULE 7.1(f)

PROPERTIES

Each of the Initial Subsidiary Guarantors owns its respective Initial Collateral
Property identified in Schedule II.

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

SCHEDULE 7.1(g)

INDEBTEDNESS AND GUARANTIES

Indebtedness and Guaranties

 

  a) Guarantee of Franchise License Agreement, dated as of July 30, 2010, by and
between Borrower and Hilton Franchise LLC, a Delaware limited liability company.

 

  b) Guaranty, dated as of July 30, 2010, from Parent Guarantor and Borrower, in
favor of Marriott International, Inc., a Delaware corporation (“Marriott”), of
that certain Courtyard by Marriott Hotel Relicensing Franchise Agreement, dated
as of July 30, 2010, between CHSP Anaheim LLC, a Delaware limited liability
company, and Marriott.

 

  c) Guaranty, dated as of July 30, 2010, from Parent Guarantor and Borrower, in
favor of Marriott, of that certain Marriott Hotel Relicensing Franchise
Agreement, dated as of July 30, 2010, between CHSP Newton LLC, a Delaware
limited liability company, and Marriott.

 

  d) Guarantee of Franchise License Agreement, dated as of June 28, 2011, from
Parent Guarantor in favor of Homewood Suites Franchise LLC, a Delaware limited
liability company, of that certain Franchise License Agreement having an
effective date of May 2, 2011, by and between Homewood Suites Franchise LLC and
CHSP TRS Seattle LLC, a Delaware limited liability company.

 

  e) Loan Agreement dated June 30, 2011 with Goldman Sachs Commercial Mortgage
Capital, L.P., evidencing a loan in the original principal amount of
$95,000,000, secured by the Hyatt Regency Boston. In connection with this loan,
(i) Borrower executed and delivered a Guaranty dated June 30, 2011 for the
benefit of Goldman Sachs Commercial Mortgage Capital, L.P., and (ii) Borrower
and CHSP Boston II LLLC executed and delivered a Completion Guaranty dated
June 30, 2011 for the benefit of Goldman Sachs Commercial Mortgage Capital, L.P.

 

  f) Assumption and Release Agreement dated June 30, 2011, pursuant to which
CHSP Navy Yard LLC, as new borrower, assumed the obligations of NJA Hotel LLC,
as original borrower, to repay a loan with outstanding principal balance of
$37,549,146.86 owed to Wells Fargo Bank, N.A., as Trustee for Morgan Stanley
Capital I Inc., Commercial Mortgage Pass Through Certificates, Series 2006-1Q12,
as lender; such loan is secured by the Courtyard Washington Capitol Hill/Navy
Yard, and such loan is further supported by that certain Guaranty of Recourse
Obligations delivered by Parent Guarantor and Borrower, for purposes set forth
therein.

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

  g) Amended and Restated Loan Agreement, dated as of July 8, 2011, by and among
CHSP San Francisco LLC, as borrower, CHSP Chicago LLC, as borrower, Wells Fargo
Bank, National Association, as administrative agent, and the lenders signatory
thereto, evidencing a $130.0 million term loan, secured by the Le Meridien San
Francisco and the W Chicago-City Center, and related equipment, fixtures,
personal property and other assets. In connection with the W Chicago City
Center, the Parent Guarantor and Borrower executed and delivered a Guaranty for
the benefit of W Hotel Management Inc. and Starwood Hotels & Resorts Worldwide,
Inc., guarantying, on a joint and several basis, all of the obligations of CHSP
Chicago LLC and CHSP TRS Chicago LLC under the Operating Agreement dated May 10,
2011 between CHSP TRS Chicago LLC and W Hotel Management Inc. (and joined in by
CHSP Chicago LLC) and under the Centralized Services Agreement dated May 10,
2011 between CHSP TRS Chicago LLC and Starwood Hotels & Resorts Worldwide, Inc.

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

SCHEDULE 7.1(h)

MATERIAL CONTRACTS

 

1. Checkers Hilton Hotel, Los Angeles, California

 

  a) Management Agreement, dated as of June 1, 2010, by and between CHSP TRS Los
Angeles LLC, a Delaware limited liability company (“Los Angeles Lessee”) and
Crestline Hotels & Resorts, Inc., a Delaware corporation.

 

  b) Franchise License Agreement, dated as of June 1, 2010, by and between Los
Angeles Lessee and Hilton Franchise LLC, a Delaware limited liability company.

 

  c) Operating Lease, dated as of June 1, 2010, by and between CHSP Los Angeles
LLC, a Delaware limited liability company, and Los Angeles Lessee.

 

2. Courtyard by Marriott Hotel, Anaheim, California

 

  a) Hotel Management Agreement, dated as of July 30, 2010, by and between CHSP
TRS Anaheim LLC, a Delaware limited liability company (“Anaheim Lessee”) and
Tarsadia Hotels, a California corporation, as same was assigned from Tarsadia
Hotels to Evolution Hospitality, LLC, a California limited liability company
effective March 1, 2011.

 

  b) Courtyard by Marriott Hotel Relicensing Franchise Agreement, dated as of
July 30, 2010, by and between Marriott International, Inc., a Delaware
corporation, and Anaheim Lessee.

 

  c) Operating Lease, dated as of July 30, 2010, by and between CHSP Anaheim
LLC, a Delaware limited liability company, and Anaheim Lessee.

 

3. Marriott Hotel, Newton, Massachusetts

 

  a) Hotel Management Agreement, dated as of July 30, 2010, by and between CHSP
TRS Newton LLC, a Delaware limited liability company (“Newton Lessee”) and TPG
Hospitality, Inc., a Rhode Island corporation.

 

  b) Marriott Hotel Relicensing Franchise Agreement, dated as of July 30, 2010,
by and between Marriott International, Inc., a Delaware corporation, and Newton
Lessee.

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

  c) Operating Lease, dated as of July 30, 2010, by and between CHSP Newton LLC,
a Delaware limited liability company, and Newton Lessee.

 

4. Homewood Suites, Seattle, Washington

 

  a) Hotel Management Agreement, dated as of January 25, 2011, by and between
CHSP TRS Seattle LLC, a Delaware limited liability company (“Seattle Lessee”)
and Evolution Hospitality, LLC, a California limited liability company, as
amended by that First Amendment of Hotel Management Agreement dated April 11,
2011, as same may be further amended.

 

  b) Franchise Agreement, dated as of May 2, 2011, by and between Homewood
Suites Franchise LLC, a Delaware limited liability company, and Seattle Lessee.

 

  c) Operating Lease, dated as of May 3, 2011, by and between CHSP Seattle LLC,
a Delaware limited liability company, and Seattle Lessee.

 

5. Hotel Indigo, San Diego, California

 

  a) Hotel Management Agreement, dated as of June 17, 2011, by and between CHSP
TRS San Diego LLC, a Delaware limited liability company (“San Diego Lessee”) and
IHG Management (Maryland) LLC, a Maryland limited liability company.

 

  b) Operating Lease, dated as of June 17, 2011 by and between CHSP San Diego
LLC, a Delaware limited liability company, and San Diego Lessee.

 

6. Hotel Adagio, San Francisco, California

 

  a) Management Agreement, dated as of October 22, 2001, by and between CHSP TRS
Union Square LLC, a Delaware limited liability company (“Union Square Lessee”)
(as successor-in-interest to SC Hotel Partners, L.L.C.) and Joie de Vivre
Hospitality, LLC, a Delaware limited liability company (as successor-in-interest
to Joie de Vivre Hospitality, Inc.), as amended by that First Amendment to
Management Agreement dated October 22, 2006, as further amended by that Second
Amendment to Management Agreement dated September 30, 2009, as further amended
by that Third Amendment to Management Agreement dated July 8, 2011, as same may
be further amended.

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

  b) Operating Lease, dated as of July 8, 2011, by and between CHSP Union Square
LLC, a Delaware limited liability company, and Union Square Lessee.

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

SCHEDULE 7.1(i)

LITIGATION

None.

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

SCHEDULE 7.1(s)

AFFILIATE TRANSACTIONS

Affiliate Transactions

The Operating Leases identified in Schedule 7.1(h).

Agreements for payments that are permitted under Section 10.1.(e)

Employment agreements and relationships, employee benefits, and compensation
arrangements associated therewith, including without limitation: (i) Employment
Agreements between Chesapeake Lodging Trust and each of James L. Francis,
Douglas W. Vicari, D. Rick Adams, and Graham J. Wootten; (ii) Restricted Share
Award Agreement for Executive Officers; (iii) Restricted Share Agreement for
Trustees; and (iv) Indemnification Agreement between Chesapeake Lodging Trust
and its Trustees and Executive Officers.

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

SCHEDULE 7.1(t)

INTELLECTUAL PROPERTY

Intellectual Property

www.chesapeakelodgingtrust.com

www.cltreit.com

www.chesapeakereit.com

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

SCHEDULE 13.1

NOTICES

JPMorgan Chase Bank, N.A.

383 Madison Avenue – 24th Floor

New York, NY 10179

Attention: Marc Costantino

Telecopy Number: (212) 270-2157

Telephone Number: (212) 622-8167

KeyBank National Association

1200 Abernathy Rd.

Atlanta, GA 30328

Attention: Kevin Murray

Telecopy Number: (770) 510-2195

Telephone Number: (770) 510-2168

Deutsche Bank Trust Company Americas

60 Wall Street, M/S NYC60-1005

New York, NY 10005

Attention: George Reynolds

Telecopy Number: (212) 797-4996

Telephone Number: (212) 250-2362

Royal Bank of Canada

New York Branch

One Liberty Plaza, 3rd Floor

New York, NY 10006-1404

Attention: Manager, Loans Administration

Telecopy Number: (212) 438-2372

With copy to:

Royal Bank of Canada

Corporate Banking

3 World Financial Center

200 Vesey Street, 12th Floor

New York, NY 10281-8098

Attention: Connie Lee

Telecopy Number: (212) 428-6459

Telephone Number: (212) 437-9234

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

EXHIBIT A

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of             , 20     (the
“Agreement”) by and among                                  (the “Assignor”),
                                 (the “Assignee”), CHESAPEAKE LODGING, L.P. (the
“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent
(the “Administrative Agent”).

WHEREAS, the Assignor is a Lender under that certain Second Amended and Restated
Credit Agreement dated as of October 14, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among the Borrower, the financial institutions party thereto and their
assignees under Section 13.6. thereof, the Administrative Agent, and the other
parties thereto;

WHEREAS, the Assignor desires to assign to the Assignee all or a portion of the
Assignor’s Commitment under the Credit Agreement, all on the terms and
conditions set forth herein; and

WHEREAS, the [Borrower and the] Administrative Agent consent[s] to such
assignment on the terms and conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which hereby are acknowledged by the parties hereto, the parties hereto
hereby agree as follows:

Section 1. Assignment.

(a) Subject to the terms and conditions of this Agreement and in consideration
of the payment to be made by the Assignee to the Assignor pursuant to Section 2
of this Agreement, effective as of             , 20     (the “Assignment Date”)
the Assignor hereby irrevocably sells, transfers and assigns to the Assignee,
without recourse, a $          interest (such interest being the “Assigned
Commitment”) in and to the Assignor’s Commitment, and all of the other rights
and obligations of the Assignor under the Credit Agreement, such Assignor’s
Note, and the other Loan Documents representing     % in respect of the
aggregate amount of all Lenders’ Commitments, including without limitation, a
principal amount of outstanding Loans equal to $         , all voting rights of
the Assignor associated with The Assigned Commitment all rights to receive
interest on such amount of Loans and all Fees with respect to the Assigned
Commitment and other rights of the Assignor under the Credit Agreement and the
other Loan Documents with respect to the Assigned Commitment, all as if the
Assignee were an original Lender under and signatory to the Credit Agreement
having a Commitment equal to the amount of the Assigned Commitment. The
Assignee, subject to the terms and conditions hereof, hereby assumes all
obligations of the Assignor with respect to the Assigned Commitment as if the
Assignee were an original Lender under and signatory to the Credit Agreement
having a Commitment equal to the Assigned Commitment, which obligations shall
include, but shall not be limited to, the obligation of the Assignor to make
Loans to the Borrower with respect to the Assigned Commitment and] the
obligation to indemnify the Administrative Agent as provided in the Credit
Agreement (the foregoing obligations, together with all other similar
obligations more particularly set forth in the Credit Agreement and the other
Loan Documents, shall be referred to hereinafter, collectively, as the “Assigned
Obligations”). The Assignor shall have no further duties or obligations with
respect to, and shall have no further interest in, the Assigned Obligations or
the Assigned Commitment from and after the Assignment Date.

 

A-1

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(b) The assignment by the Assignor to the Assignee hereunder is without recourse
to the Assignor. The Assignee makes and confirms to the Administrative Agent,
the Assignor, and the other Lenders all of the representations, warranties and
covenants of a Lender under Article XII of the Credit Agreement. Not in
limitation of the foregoing, the Assignee acknowledges and agrees that, except
as set forth in Section 4. below, the Assignor is making no representations or
warranties with respect to, and the Assignee hereby releases and discharges the
Assignor for any responsibility or liability for: (i) the present or future
solvency or financial condition of the Borrower, any other Loan Party or any
other Subsidiary, (ii) any representations, warranties, statements or
information made or furnished by the Borrower, any other Loan Party or any other
Subsidiary in connection with the Credit Agreement or otherwise, (iii) the
validity, efficacy, sufficiency, or enforceability of the Credit Agreement, any
Loan Document or any other document or instrument executed in connection
therewith, or the collectibility of the Assigned Obligations, (iv) the
perfection, priority or validity of any Lien with respect to any collateral at
any time securing the Obligations or the Assigned Obligations under the Notes or
the Credit Agreement and (v) the performance or failure to perform by the
Borrower or any other Loan Party of any obligation under the Credit Agreement or
any other Loan Document. Further, the Assignee acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Lender or counsel to the Administrative Agent or any of their respective
officers, directors, employees and agents and based on the financial statements
supplied by the Borrower and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to become a Lender
under the Credit Agreement. The Assignee also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement or any Note or pursuant to any other
obligation. The Administrative Agent shall have no duty or responsibility
whatsoever, either initially or on a continuing basis, to provide the Assignee
with any credit or other information with respect to the Borrower, any other
Loan Party or any other Subsidiary or to notify the undersigned of any Default
or Event of Default except as expressly provided in the Credit Agreement. The
Assignee has not relied on the Administrative Agent as to any legal or factual
matter in connection therewith or in connection with the transactions
contemplated thereunder.

Section 2. Payment by Assignee. In consideration of the assignment made pursuant
to Section 1. of this Agreement, the Assignee agrees to pay to the Assignor on
the Assignment Date, an amount equal to $          representing the aggregate
principal amount outstanding of the Loans owing to the Assignor under the Credit
Agreement and the other Loan Documents being assigned hereby.

Section 3. Payments by Assignor. The Assignor agrees to pay to the
Administrative Agent on the Assignment Date the administrative fee payable under
Section 13.6.(c) of the Credit Agreement.

Section 4. Representations and Warranties of Assignor. The Assignor hereby
represents and warrants to the Assignee that (a) as of the Assignment Date
(i) the Assignor is a Lender under the Credit Agreement having a Commitment
under the Credit Agreement immediately prior to the Assignment Date, equal to $
         and that the Assignor is not in default of its obligations under the
Credit Agreement; and (ii) the outstanding balance of Loans owing to the
Assignor (without reduction by any assignments thereof which have not yet become
effective) is $         , and (b) it is the legal and beneficial owner of the
Assigned Commitment which is free and clear of any adverse claim created by the
Assignor.

Section 5. Representations, Warranties and Agreements of Assignee. The Assignee
(a) represents and warrants that it is (i) legally authorized to enter into this
Agreement; (ii) an “accredited investor” (as such term is used in Regulation D
of the Securities Act) and (iii) an Eligible Assignee; (b) confirms that it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant thereto and such other documents and
information (including

 

A-2

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

without limitation the Loan Documents) as it has deemed appropriate to make its
own credit analysis and decision to enter into this Agreement; (c) appoints and
authorizes the Administrative Agent to take such action as contractual
representative on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Administrative Agent by the terms thereof
together with such powers as are reasonably incidental thereto; (d) agrees that
it will become a party to and shall be bound by the Credit Agreement and the
other Loan Documents to which the other Lenders are a party on the Assignment
Date and will perform in accordance therewith all of the obligations which are
required to be performed by it as a Lender; and (e) is either (i) not organized
under the laws of a jurisdiction outside the United States of America or
(ii) has delivered to the Administrative Agent (with an additional copy for the
Borrower) such items required under Section 3.10. of the Credit Agreement.

Section 6. Recording and Acknowledgment by the Administrative Agent. Following
the execution of this Agreement, the Assignor will deliver to the Administrative
Agent (a) a duly executed copy of this Agreement for acknowledgment and
recording by the Administrative Agent and (b) the Assignor’s Note. Upon such
acknowledgment and recording, from and after the Assignment Date, the
Administrative Agent shall make all payments in respect of the interest assigned
hereby (including payments of principal, interest, fees and other amounts) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments under the Credit Agreement for periods prior to the Assignment Date
directly between themselves.

Section 7. Addresses. The Assignee specifies as its address for notices and its
Lending Office for all Loans, the offices set forth below:

 

 

        

 

         Attention:  

 

        

Telephone No.:  

 

          

Telecopy No.:  

 

        

Section 8. Payment Instructions. All payments to be made to the Assignee under
this Agreement by the Assignor, and all payments to be made to the Assignee
under the Credit Agreement, shall be made as provided in the Credit Agreement in
accordance with the following instructions:

 

 

     

 

     

 

     

 

     

Section 9. Effectiveness of Assignment. This Agreement, and the assignment and
assumption contemplated herein, shall not be effective until (a) this Agreement
is executed and delivered by each of the Assignor, the Assignee, the
Administrative Agent and if required, the Borrower, and (b) the payment to the
Assignor of the amounts owing by the Assignee pursuant to Section 2. hereof and
(c) the payment to the Administrative Agent of the amounts owing by the Assignor
pursuant to Section 3 hereof. Upon recording and acknowledgment of this
Agreement by the Administrative Agent, from and after the Assignment Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Agreement, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Agreement, relinquish its rights (except as otherwise provided in Section 13.11.
of the Credit Agreement) and be released from its obligations under the Credit
Agreement; provided, however, that if the Assignor does not assign its entire
interest under the Loan Documents, it shall remain a Lender entitled to all of
the benefits and subject to all of the obligations thereunder with respect to
its Commitment.

 

A-3

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

Section 10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

Section 11. Counterparts. This Agreement may be executed in any number of
counterparts each of which, when taken together, shall constitute one and the
same agreement.

Section 12. Headings. Section headings have been inserted herein for convenience
only and shall not be construed to be a part hereof.

Section 13. Amendments; Waivers. This Agreement may not be amended, changed,
waived or modified except by a writing executed by the Assignee and the
Assignor.

Section 14. Entire Agreement. This Agreement embodies the entire agreement
between the Assignor and the Assignee with respect to the subject matter hereof
and supersedes all other prior arrangements and understandings relating to the
subject matter hereof.

Section 15. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.

Section 16. Definitions. Terms not otherwise defined herein are used herein with
the respective meanings given them in the Credit Agreement.

[Include this Section only if the Borrower’s consent is required under
Section 13.6.(c) of the Credit Agreement] Section 17. Agreements of the
Borrower. The Borrower hereby agrees that the Assignee shall be a Lender under
the Credit Agreement having a Commitment equal to the Assigned Commitment. The
Borrower agrees that the Assignee shall have all of the rights and remedies of a
Lender under the Credit Agreement and the other Loan Documents as if the
Assignee were an original Lender under and signatory to the Credit Agreement,
including, but not limited to, the right of a Lender to receive payments of
principal and interest with respect to the Assigned Obligations, if any, and to
the Loans made by the Lenders after the date hereof and to receive the Fees
payable to the Lenders as provided in the Credit Agreement. Further, the
Assignee shall be entitled to the benefit of the indemnification provisions from
the Borrower in favor of the Lenders as provided in the Credit Agreement and the
other Loan Documents. The Borrower further agrees, upon the execution and
delivery of this Agreement, to execute in favor of the Assignee a Note in an
initial amount equal to the Assigned Commitment. Further, the Borrower agrees
that, upon the execution and delivery of this Agreement, the Borrower shall owe
the Assigned Obligations to the Assignee as if the Assignee were the Lender
originally making such Loans and entering into such other obligations.

[Signatures on Following Page]

 

A-4

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

IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment and
Assumption Agreement as of the date and year first written above.

 

ASSIGNOR: [NAME OF ASSIGNOR] By:  

 

  Name:  

 

  Title:  

 

Payment Instructions [Bank] [Address] ABA No. : Account No.: Account Name:
Reference: ASSIGNEE: [NAME OF ASSIGNEE] By:  

 

  Name:  

 

  Title:  

 

Payment Instructions [Bank] [Address] ABA No. : Account No.: Account Name:
Reference:

[Signatures continued on Following Page]

 

A-5

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

Agreed and Consented to as of the date first written above.

[Include signature of the Borrower only if required under Section 13.6.(c) of
the Credit Agreement]

  BORROWER:  

CHESAPEAKE LODGING, L.P.,

a Delaware limited partnership

  By:   Chesapeake Lodging Trust,     its general partner   By:  

 

  Name:  

 

  Title:  

 

 

Accepted as of the date first written above. ADMINISTRATIVE AGENT: WELLS FARGO
BANK, NATIONAL ASSOCIATION, as Administrative Agent By:  

 

  Name:  

 

  Title:  

 

 

A-6

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

EXHIBIT B

FORM OF DSCR CERTIFICATE

Reference is made to the Second Amended and Restated Credit Agreement dated as
of October 14, 2011 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), by and among Chesapeake Lodging,
L.P. (the “Borrower”), the financial institutions party thereto and their
assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank,
National Association, as Administrative Agent (the “Administrative Agent”), and
the other parties thereto. Capitalized terms used herein, and not otherwise
defined herein, have their respective meanings given to them in the Credit
Agreement.

Pursuant to the Credit Agreement, the undersigned hereby certifies to the
Administrative Agent and the Lenders that Schedule 1 attached hereto accurately
and completely sets forth the calculations required to establish compliance with
the Minimum DSCR Hurdle as of the date set forth on Schedule I.

IN WITNESS WHEREOF, the undersigned has signed this Compliance Certificate on
and as of             , 20    .

 

BORROWER:

CHESAPEAKE LODGING, L.P.,

a Delaware limited partnership

By:   Chesapeake Lodging Trust,   its general partner By:  

 

Name:  

 

Title:  

 

 

B-1

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

EXHIBIT C

FORM OF NOTE

 

$                         , 20    

FOR VALUE RECEIVED, the undersigned, Chesapeake Lodging, L.P., a Delaware
limited partnership (the “Borrower”) hereby unconditionally promises to pay to
the order of                                  (the “Lender”), in care of Wells
Fargo Bank, National Association, as Administrative Agent (the “Administrative
Agent”), to Wells Fargo Bank, Minneapolis Loan Center of Administrative Agent,
608 2nd Avenue S., 11th Floor, Minneapolis, MN 55402, Attention: Jennifer
Noonan, or at such other address as may be specified by the Administrative Agent
to the Borrower, the principal sum of                      AND     /100 DOLLARS
($         ), or such lesser amount as may be the then outstanding and unpaid
balance of all Loans made by the Lender to the Borrower pursuant to, and in
accordance with the terms of, the Credit Agreement.

The Borrower further agrees to pay interest at said office, in like money, on
the unpaid principal amount owing hereunder from time to time on the dates and
at the rates and at the times specified in the Credit Agreement.

This Note is one of the “Notes” referred to in the Second Amended and Restated
Credit Agreement dated as of October 14, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among the Borrower, the financial institutions party thereto and their
assignees under Section 13.6. thereof, the Administrative Agent, and the other
parties thereto, and is subject to, and entitled to, all provisions and benefits
thereof. Capitalized terms used herein and not defined herein shall have the
respective meanings given to such terms in the Credit Agreement. The Credit
Agreement, among other things, (a) provides for the making of Loans by the
Lender to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the Dollar amount first above mentioned, (b) permits the
prepayment of the Loans by the Borrower subject to certain terms and conditions
and (c) provides for the acceleration of the Loans upon the occurrence of
certain specified events.

The Borrower hereby waives presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.

Time is of the essence for this Note.

[This Note is given in replacement of the Note dated              , 2011, in the
original principal amount of $          previously delivered to the Lender under
the Credit Agreement. THIS NOTE IS NOT INTENDED TO BE, AND SHALL NOT BE
CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING UNDER OR IN
CONNECTION WITH THE OTHER NOTE.]1

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.

 

1 

Language to be included in case of an assignment and need to issue a replacement
note to an existing Lender, either because such Lender’s Commitment has
increased or decreased from what it was initially.

 

C-1

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

IN WITNESS WHEREOF, the undersigned has executed and delivered this Note under
seal as of the date written above.

 

CHESAPEAKE LODGING, L.P., a Delaware limited partnership By:   Chesapeake
Lodging Trust,   its general partner By:  

 

Name:  

 

Title:  

 

 

C-2

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EXHIBIT D

FORM OF NOTICE OF BORROWING

            , 20    

Wells Fargo Bank

Minneapolis Loan Center

608 2nd Avenue S., 11th Floor

Minneapolis, MN 55402

Attention: Jennifer Noonan

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Credit Agreement
dated as of October 14, 2011 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), by and among Chesapeake
Lodging, L.P., a Delaware limited partnership (the “Borrower”), the financial
institutions party thereto and their assignees under Section 13.6. thereof (the
“Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the
“Administrative Agent”), and the other parties thereto. Capitalized terms used
herein, and not otherwise defined herein, have their respective meanings given
them in the Credit Agreement.

 

  1. Pursuant to Section 2.2. of the Credit Agreement, the Borrower hereby
requests that the Lenders make Loans to the Borrower in an aggregate amount
equal to $         .

 

  2. The Borrower requests that such Loans be made available to the Borrower on
            , 20    .

 

  3. The Borrower hereby requests that such Loans be of the following Type:

[Check one box only]

¨ ¨ ¨ Base Rate Loan

¨ ¨ ¨ LIBOR Loan, with an initial Interest Period for a duration of:

[Check one box only]

 

  ¨ ¨ one month

 

  ¨ ¨ three months

 

  ¨ ¨ six months

The Borrower hereby certifies to the Administrative Agent and the Lenders that
as of the date hereof, as of the date of the making of the requested Loans, and
after making such Loans, (a) no Default or Event of Default exists or would
exist, and none of the limits specified in Section 2.17. would be violated; and
(b) the representations and warranties made or deemed made by the Borrower and
each other Loan Party in the Loan Documents to which any of them is a party, are
and shall be true and correct with the same force and effect as if made on and
as of such date except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier date)
and except for changes in factual circumstances specifically and expressly
permitted under the Loan Documents. In

 

D-1

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

addition, the Borrower certifies to the Administrative Agent and the Lenders
that all conditions to the making of the requested Loans contained in
Article VI. of the Credit Agreement will have been satisfied at the time such
Loans are made.

 

CHESAPEAKE LODGING, L.P., a Delaware limited partnership By:   Chesapeake
Lodging Trust,   its general partner By:  

 

Name:  

 

Title:  

 

 

D-2

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

EXHIBIT E

FORM OF NOTICE OF CONTINUATION

            , 20    

Wells Fargo Bank

Minneapolis Loan Center

608 2nd Avenue S., 11th Floor

Minneapolis, MN 55402

Attention: Jennifer Noonan

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Credit Agreement
dated as of October 14, 2011 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), by and among Chesapeake
Lodging, L.P., a Delaware limited partnership (the “Borrower”), the financial
institutions party thereto and their assignees under Section 13.6. thereof (the
“Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the
“Administrative Agent”), and the other parties thereto. Capitalized terms used
herein, and not otherwise defined herein, have their respective meanings given
them in the Credit Agreement.

Pursuant to Section 2.11. of the Credit Agreement, the Borrower hereby requests
a Continuation of Loans under the Credit Agreement, and in that connection sets
forth below the information relating to such Continuation as required by such
Section of the Credit Agreement:

 

  1. The requested date of such Continuation is             , 20    .

 

  2. The aggregate principal amount of the Loans subject to the requested
Continuation is $          and the portion of such principal amount subject to
such Continuation is $         .

 

  3. The current Interest Period of the Loans subject to such Continuation ends
on             , 20    .

 

  4. The duration of the Interest Period for the Loans or portion thereof
subject to such Continuation is:

[Check one box only]

 

  ¨ ¨ one month

 

  ¨ ¨ three months

 

  ¨ ¨ six months

[Continued on next page]

 

E-1

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

The Borrower hereby certifies to the Administrative Agent and the Lenders that
as of the date hereof, as of the proposed date of the requested Continuation,
and after giving effect to such Continuation, no Default or Event of Default
exists or will exist.

 

CHESAPEAKE LODGING, L.P., a Delaware limited partnership By:   Chesapeake
Lodging Trust,   its general partner By:  

 

Name:  

 

Title:  

 

 

E-2

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

EXHIBIT F

FORM OF NOTICE OF CONVERSION

            , 20    

Wells Fargo Bank

Minneapolis Loan Center

608 2nd Avenue S., 11th Floor

Minneapolis, MN 55402

Attention: Jennifer Noonan

Ladies and Gentlemen:

Reference is made to the Second Amended and Restated Credit Agreement dated as
of October 14, 2011 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), by and among Chesapeake Lodging,
L.P., a Delaware limited partnership (the “Borrower”), the financial
institutions party thereto and their assignees under Section 13.6. thereof (the
“Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the
“Administrative Agent”), and the other parties thereto. Capitalized terms used
herein, and not otherwise defined herein, have their respective meanings given
them in the Credit Agreement.

Pursuant to Section 2.12. of the Credit Agreement, the Borrower hereby requests
a Conversion of Loans of one Type into Loans of another Type under the Credit
Agreement, and in that connection sets forth below the information relating to
such Conversion as required by such Section of the Credit Agreement:

 

  1. The requested date of such Conversion is             , 20    .

 

  2. The Type of Loans to be Converted pursuant hereto is currently:

[Check one box only]

 

  ¨ ¨ Base Rate Loan

 

  ¨ ¨ LIBOR Loan

 

  3. The aggregate principal amount of the Loans subject to the requested
Conversion is $          and the portion of such principal amount subject to
such Conversion is $         .

 

F-1

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  4. The amount of such Loans to be so Converted is to be converted into Loans
of the following Type:

[Check one box only]

 

  ¨ ¨ Base Rate Loan

 

  ¨ ¨ LIBOR Loan, with an initial Interest Period for a duration of:

[Check one box only]

 

  ¨ ¨ one month

 

  ¨ ¨ three months

 

  ¨ ¨ six months

The Borrower hereby certifies to the Administrative Agent and the Lenders that
as of the date hereof, as of the proposed date of the requested Conversion, and
after giving effect to such Conversion, no Default or Event of Default exists or
will exist.

 

CHESAPEAKE LODGING, L.P., a Delaware limited partnership By:   Chesapeake
Lodging Trust,   its general partner By:  

 

Name:  

 

Title:  

 

 

F-2

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Loan No. 1002242

EXHIBIT G

TRANSFER AUTHORIZER DESIGNATION

(For Disbursement of Loan Proceeds by Funds Transfer)

¨  NEW    ¨  REPLACE PREVIOUS DESIGNATION    ¨  ADD    ¨  CHANGE    ¨  DELETE
LINE NUMBER                

The following representatives of Chesapeake Lodging, L.P., a Delaware limited
partnership (“Borrower”) are authorized to request the disbursement of Loan
Proceeds and initiate funds transfers for Loan Number 1002242 assigned to the
secured credit facility evidenced by the Second Amended and Restated Credit
Agreement dated October 14, 2011 among the Borrower, each of the financial
institutions initially a signatory thereto together with their assignees under
Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association,
as the Administrative Agent for the Lenders (the “Administrative Agent”) and the
other parties thereto. The Administrative Agent is authorized to rely on this
Transfer Authorizer Designation until it has received a new Transfer Authorizer
Designation signed by Borrower, even in the event that any or all of the
foregoing information may have changed.

 

    

Name

  

Title

   Maximum
Wire
Amount(1)                                             

[Continued on next page]

 

1 

Maximum Wire Amount may not exceed the Loan Amount.

 

G-1

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

 

Beneficiary Bank and Account Holder Information

1.

Transfer Funds to (Receiving Party Account Name):

 

Receiving Party Account Number:

 

Receiving Bank Name, City and State:

 

   Receiving Bank Routing (ABA)  Number

Maximum Transfer Amount:

 

    

Further Credit Information/Instructions:

 

    

2.

Transfer Funds to (Receiving Party Account Name):

 

Receiving Party Account Number:

 

Receiving Bank Name, City and State:

 

   Receiving Bank Routing (ABA)  Number

Maximum Transfer Amount:

 

    

Further Credit Information/Instructions:

 

    

 

G-2

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

3.

Transfer Funds to (Receiving Party Account Name):

 

Receiving Party Account Number:

 

Receiving Bank Name, City and State:

 

   Receiving Bank Routing (ABA)  Number

Maximum Transfer Amount:

 

    

Further Credit Information/Instructions:

 

    

 

G-3

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

Date:             , 20    

 

BORROWER:

CHESAPEAKE LODGING, L.P.,

a Delaware limited partnership

By:   Chesapeake Lodging Trust,   its general partner By:  

 

Name:  

 

Title:  

 

 

G-4

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

EXHIBIT H

MATTERS TO BE ADDRESSED IN OPINIONS OF COUNSEL

 

  •  

The matters set forth in Sections 7.1.(a), 7.1.(c), 7.1.(d), the first sentence
of Section 7.1.(i), and Section 7.1.(q)

 

  •  

The perfection of Liens in personal property

 

  •  

Usury

 

H-1

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

EXHIBIT I

FORM OF COMPLIANCE CERTIFICATE

Reference is made to the Second Amended and Restated Credit Agreement dated as
of October 14, 2011 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), by and among Chesapeake Lodging,
L.P. (the “Borrower”), the financial institutions party thereto and their
assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank,
National Association, as Administrative Agent (the “Administrative Agent”), and
the other parties thereto. Capitalized terms used herein, and not otherwise
defined herein, have their respective meanings given to them in the Credit
Agreement.

Pursuant to Section 9.3. of the Credit Agreement, the undersigned hereby
certifies to the Administrative Agent and the Lenders that:

1. (a) The undersigned has reviewed the terms of the Credit Agreement and has
made a review of the transactions, financial condition and other affairs of the
Parent Guarantor and its Subsidiaries as of, and during the relevant accounting
period ending on,             , 20     and (b) such review has not disclosed the
existence during such accounting period, and the undersigned does not have
knowledge of the existence, as of the date hereof, of any condition or event
constituting a Default or Event of Default [except as set forth on Attachment A
hereto, which accurately describes the nature of the conditions(s) or event(s)
that constitute (a) Default(s) or (an) Event(s) of Default and the actions which
the Borrower (is taking)(is planning to take) with respect to such condition(s)
or event(s)].

2. Schedule 1 attached hereto accurately and completely sets forth the
calculations required to establish compliance with Section 10.1. of the Credit
Agreement on the date of the financial statements for the accounting period set
forth above.

3. As of the date hereof the aggregate outstanding principal amount of all
outstanding Loans is less than or equal to the Maximum Loan Availability at such
time.

4. (a) No Default or Event of Default exists, and (b) the representations and
warranties of the Borrower and the other Loan Parties contained in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects, except to the extent such representations or warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier date) and
except for changes in factual circumstances specifically and expressly permitted
under the Credit Agreement or the other Loan Documents.

IN WITNESS WHEREOF, the undersigned has signed this Compliance Certificate on
and as of             , 20    .

 

I-1

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

BORROWER:

CHESAPEAKE LODGING, L.P.,

a Delaware limited partnership

By:   Chesapeake Lodging Trust,   its general partner By:  

 

Name:  

 

Title:  

 

 

I-2