EXHIBIT 10.23

 

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MEZZANINE LOAN AGREEMENT

 

Dated as of September 12, 2005

 

Between

 

MERISTAR MEZZANINE BORROWER SPE, LLC

as Borrower

 

and

 

LEHMAN BROTHERS BANK, FSB,

individually and as Agent for one or more Co-Lenders,

as Lender

 

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I.    DEFINITIONS; PRINCIPLES OF CONSTRUCTION    1      Section 1.1   

Definitions.

   1      Section 1.2   

Principles of Construction.

   28 II.    GENERAL TERMS    28      Section 2.1   

Loan Commitment; Disbursement to Borrower.

   28      2.1.1    Agreement to Lend and Borrow.    28      2.1.2    Single
Disbursement to Borrower.    29      2.1.3    The Note, Pledge Agreement and
Loan Documents.    29      2.1.4    Use of Proceeds.    29      Section 2.2   

Interest; Loan Payments; Late Payment Charge.

   29      2.2.1    Payments.    29      2.2.2    Interest Calculation.    30  
   2.2.3    Eurodollar Rate Unascertainable; Illegality; Increased Costs.    31
     2.2.4    Payment on Maturity Date.    33      2.2.5    Payments after
Default.    33      2.2.6    Late Payment Charge.    33      2.2.7    Usury
Savings.    34      2.2.8    Indemnified Taxes.    34      2.2.9    Replacement
of Lenders.    35      Section 2.3   

Prepayments.

   36      2.3.1    Voluntary Prepayments.    36      2.3.2    Liquidation
Events.    37      2.3.3    Prepayments After Default.    37      2.3.4   
Making of Payments.    38      2.3.5    Application of Prepayments.    38     
Section 2.4   

Interest Rate Cap Agreement.

   38      Section 2.5   

Release of Property.

   40      2.5.1    Release of Individual Property.    40      2.5.2    Release
on Payment in Full.    43      Section 2.6   

Substitution of Properties.

   43 III.    CASH MANAGEMENT    51      Section 3.1   

Mortgage Loan Cash Management.

   51      Section 3.2   

Removal of Mortgage Loan Cash Management.

   51

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     Section 3.3   

Rights During Event of Default and Acceleration of the Debt.

   51      Section 3.4   

Application of Mezzanine Loan Account Funds.

   52 IV.    REPRESENTATIONS AND WARRANTIES    52      Section 4.1   

Borrower Representations.

   52      4.1.1      Organization.    52      4.1.2      Proceedings.    52  
   4.1.3      No Conflicts.    53      4.1.4      Litigation.    53      4.1.5  
   Agreements.    53      4.1.6      Title.    53      4.1.7      Solvency.   
54      4.1.8      Full and Accurate Disclosure.    55      4.1.9      No Plan
Assets.    55      4.1.10    Compliance.    55      4.1.11    Financial
Information.    55      4.1.12    Condemnation.    56      4.1.13    Federal
Reserve Regulations.    56      4.1.14    Utilities and Public Access.    56  
   4.1.15    Not a Foreign Person.    56      4.1.16    Separate Lots.    56  
   4.1.17    Assessments.    56      4.1.18    Enforceability.    57      4.1.19
   No Prior Assignment.    57      4.1.20    Insurance.    57      4.1.21    Use
of Property.    57      4.1.22    Certificate of Occupancy; Licenses.    57     
4.1.23    Flood Zone.    57      4.1.24    Physical Condition.    58      4.1.25
   Boundaries.    58      4.1.26    Leases.    58      4.1.27    [Reserved]   
59      4.1.28    [Reserved]    59      4.1.29    Filing and Recording Taxes.   
59

 

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     4.1.30    Franchise Agreement.    59      4.1.31    Management Agreement.
   59      4.1.32    Illegal Activity.    59      4.1.33    No Change in Facts
or Circumstances; Disclosure.    59      4.1.34    Investment Company Act.    60
     4.1.35    Principal Place of Business; State of Organization.    60     
4.1.36    Single Purpose Entity.    60      4.1.37    Business Purposes.    65  
   4.1.38    Taxes.    65      4.1.39    Forfeiture.    65      4.1.40   
Environmental Representations and Warranties.    66      4.1.41    Taxpayer
Identification Number.    66      4.1.42    OFAC.    66      4.1.43    Ground
Lease Representations.    67      4.1.44    Deposit Accounts.    68      4.1.45
   Embargoed Person.    68      4.1.46    Affiliates.    69      4.1.47   
Mortgage Borrower Representations.    69      4.1.48    List of Mortgage Loan
Documents.    69      4.1.49    Mortgage Loan Event of Default.    69     
4.1.50    Personal Property.    69      4.1.51    Operating Lease.    69     
Section 4.2   

Survival of Representations.

   69 V.    BORROWER COVENANTS    70      Section 5.1   

Affirmative Covenants.

   70      5.1.1    Existence; Compliance with Legal Requirements.    70     
5.1.2    Taxes and Other Charges.    71      5.1.3    Litigation.    72     
5.1.4    Access to Properties.    72      5.1.5    Notice of Default.    72     
5.1.6    Cooperate in Legal Proceedings.    72      5.1.7    Award and Insurance
Benefits.    72      5.1.8    Further Assurances.    72

 

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     5.1.9      Mortgage and Intangible Taxes.    73      5.1.10    Financial
Reporting.    73      5.1.11    Business and Operations.    75      5.1.12   
Costs of Enforcement.    75      5.1.13    Estoppel Statement.    76      5.1.14
   Loan Proceeds.    77      5.1.15    Performance by Borrower.    77     
5.1.16    Confirmation of Representations.    77      5.1.17    Leasing Matters.
   78      5.1.18    Management Agreement.    79      5.1.19    Environmental
Covenants.    81      5.1.20    Alterations.    82      5.1.21    Franchise
Agreement.    83      5.1.22    The Ground Lease.    84      5.1.23    OFAC.   
86      5.1.24    Operating Lease.    86      5.1.25    Maintenance of Personal
Property.    88      5.1.26    REIT Status.    88      5.1.27    O&M Program.   
88      5.1.28    Mortgage Loan Reserve Funds.    89      5.1.29    Notices.   
89      5.1.30    Special Distributions.    89      5.1.31    Mortgage Borrower
Covenants.    89      Section 5.2   

Negative Covenants.

   89      5.2.1      Liens.    90      5.2.2      Dissolution.    90     
5.2.3      Change In Business.    90      5.2.4      Debt Cancellation.    91  
   5.2.5      Zoning.    91      5.2.6      No Joint Assessment.    91     
5.2.7      Name, Identity, Structure, or Principal Place of Business.    91     
5.2.8      ERISA.    92      5.2.9      Affiliate Transactions.    92

 

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     5.2.10    Transfers.    93      5.2.11    Limitation on Securities
Issuances.    96      5.2.12    Distributions.    96      5.2.13    Refinancing
or Prepayment of the Mortgage Loan.    96      5.2.14    Acquisition of the
Mortgage Loan.    96      5.2.15    Material Agreements.    97      5.2.16   
Permitted Transfer.    98      Section 5.3   

REIT.

   100 VI.    INSURANCE; CASUALTY; CONDEMNATION    100      Section 6.1   

Insurance.

   100      Section 6.2   

Casualty.

   102      Section 6.3   

Condemnation.

   102      Section 6.4   

Restoration.

   102      Section 6.5   

Rights of Lender.

   103 VII.    RESERVE FUNDS    103      Section 7.1   

Required Repair Funds.

   103      Section 7.2   

Tax and Insurance Escrow Fund.

   103      Section 7.3   

Replacements and Replacement Reserve.

   103      Section 7.4   

Intentionally Deleted.

   104      Section 7.5   

Intentionally Deleted.

   104      Section 7.6   

Ground Lease Escrow Fund.

   104      Section 7.7   

Reserve Funds, Generally.

   104 VIII.    DEFAULTS    104      Section 8.1   

Event of Default.

   104      Section 8.2   

Remedies.

   110      Section 8.3   

Right to Cure Defaults.

   111      Section 8.4   

Remedies Cumulative; Waivers.

   111      Section 8.5   

Power of Attorney.

   112 IX.    SPECIAL PROVISIONS    112      Section 9.1   

Sale of Notes and Securitization

   112      Section 9.2   

Securitization Indemnification.

   114      Section 9.3   

Servicer.

   117      Section 9.4   

Exculpation.

   117

 

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     Section 9.5   

Reserved.

   119      Section 9.6   

Reserved.

   119      Section 9.7   

Syndication

   119      9.7.1    Syndication.    119      9.7.2    Sale of Loan, Co-Lenders,
Participations and Servicing.    119      9.7.3    Cooperation in Syndication.
   122      9.7.4   

Payment of Agent’s, and Co-Lender’s Expenses, Indemnity, etc.

Borrower and Guarantor shall:

   124      9.7.5    Limitation of Liability.    125      9.7.6    No Joint
Venture.    126      9.7.7    Voting Rights of Co-Lenders.    126      Section
9.8   

Reallocation of Loan Amounts.

   126      Section 9.9   

Certain Additional Rights to Lender.

   126      Section 9.10   

Mortgage Loan Defaults.

   127      Section 9.11   

Intercreditor Agreement.

   128      Section 9.12   

Discussions with Mortgage Lender.

   129      Section 9.13   

Independent Approval Rights.

   129 X.    MISCELLANEOUS    129      Section 10.1   

Survival.

   129      Section 10.2   

Lender’s Discretion.

   130      Section 10.3   

Governing Law.

   130      Section 10.4   

Modification, Waiver in Writing.

   130      Section 10.5   

Delay Not a Waiver.

   131      Section 10.6   

Notices.

   131      Section 10.7   

Trial by Jury.

   132      Section 10.8   

Headings.

   132      Section 10.9   

Severability.

   132      Section 10.10   

Preferences.

   133      Section 10.11   

Waiver of Notice.

   133      Section 10.12   

Remedies of Borrower.

   133      Section 10.13   

Expenses; Indemnity.

   133      Section 10.14   

Schedules and Exhibits Incorporated.

   135      Section 10.15   

Offsets, Counterclaims and Defenses.

   135

 

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     Section 10.16    No Joint Venture or Partnership; No Third Party
Beneficiaries.    135      Section 10.17    Publicity.    136      Section 10.18
   Waiver of Marshalling of Assets.    136      Section 10.19    Waiver of
Counterclaim.    136      Section 10.20    Conflict; Construction of Documents;
Reliance.    137      Section 10.21    Brokers and Financial Advisors.    137  
   Section 10.22    Prior Agreements.    137 SCHEDULE I Properties - Allocated
Loan Amounts      SCHEDULE II Rent Roll / Leases      SCHEDULE III Reserved     
SCHEDULE IV Organizational Chart of Borrower      SCHEDULE V Scheduled
Amortization Payments      SCHEDULE VI Ground Leases      SCHEDULE VII O&M
Program Properties      SCHEDULE VIII Reserved      SCHEDULE IX Reserved     
SCHEDULE X Franchise Agreement / Franchisor      SCHEDULE XI Management
Agreement / Manager      SCHEDULE XII Operating Lease / Operating Tenant /
Subordination and Attornment Agreement      SCHEDULE XIII Borrower’s Principal
Place of Business / Organizational ID Number / Tax ID Number      SCHEDULE XIV
Mortgage Loan Documents      EXHIBIT A Reserved      EXHIBIT B Reserved     
EXHIBIT C Form of Assignment of Interest Rate Cap     

 

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LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of September     , 2005 (as amended, restated,
replaced, supplemented, extended or otherwise modified from time to time, this
“Agreement”), between LEHMAN BROTHERS BANK, FSB, a federal stock savings bank,
having an address at 1000 West Street, Suite 200, Wilmington, Delaware 19801,
individually and as Agent for one or more Co-Lenders (“Lender”) and MERISTAR
MEZZANINE BORROWER SPE, LLC, a Delaware limited liability company, having an
office at 4501 N. Fairfax Drive, Suite 500, Arlington, Virginia 22203
(“Borrower”).

 

W I T N E S S E T H:

 

WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
Lender; and

 

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).

 

NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:

 

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1 Definitions.

 

For all purposes of this Agreement, except as otherwise expressly required or
unless the context clearly indicates a contrary intent:

 

“Acceptable Counterparty” means any Counterparty to the Interest Rate Cap
Agreement that has and shall maintain, until the expiration of the applicable
Interest Rate Cap Agreement, a long-term unsecured debt rating of not less than
“AA-” (or the equivalent) by the Rating Agencies.

 

“Account Collateral” shall mean: (i) the Accounts, and all Cash, checks, drafts,
certificates and instruments, if any, from time to time deposited or held in the
Accounts from time to time; (ii) any and all amounts invested in Permitted
Investments; (iii) all interest, dividends, Cash, instruments and other property
from time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing; and (iv) to the extent not covered by
clauses (i) - (iii) above, all “proceeds” (as defined under the UCC as in effect
in the State in which the Accounts are located) of any or all of the foregoing.

 

“Accounts” shall mean all reserve, escrow and security accounts which have been
or may be established by the Loan Documents.

 

“ACM” shall have the meaning set forth in Section 5.1.27.

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“Additional Indemnified Liabilities” shall have the meaning set forth in
Section 10.13(b) hereof.

 

“Adjusted Debt Service” shall mean, with respect to any particular period of
time, the payments of principal and interest that would be due on the
outstanding principal balance of the Loan assuming a loan constant equal to
8.558% for such period.

 

“Adjusted Prime Rate” shall mean an interest rate per annum equal to the Prime
Rate in effect from time to time plus one percent (1%) per annum.

 

“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person. Such term shall include the Guarantor unless otherwise specified or
if the context may otherwise require.

 

“Affiliated Manager” shall mean any property manager which is an Affiliate of,
or in which Borrower, Mortgage Borrower, Principal, or any Guarantor has,
directly or indirectly, any legal, beneficial or economic interest.

 

“Agent” shall have the meaning set forth in Section 9.7.2(d) hereof.

 

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

 

“ALTA” shall mean American Land Title Association, or any successor thereto.

 

“Alteration Threshold Amount” shall have the meaning set forth in Section 5.1.20
hereof.

 

“Annual Budget” shall mean the operating budget, including all planned capital
expenditures, for each Individual Property prepared by Mortgage Borrower for the
applicable Fiscal Year or other period.

 

“Applicable Contribution” shall have the meaning set forth in Section 9.6(f)
hereof.

 

“Applicable Interest Rate” shall mean (A) from and including the date of this
Agreement through October 8, 2005, an interest rate per annum equal to 5.08%;
and (B) for each successive Interest Period through and including the date on
which the Debt is paid in full, an interest rate per annum equal to (I) the
Eurodollar Rate or (II) the Adjusted Prime Rate, if the Loan begins bearing
interest at the Adjusted Prime Rate in accordance with the provisions of
Section 2.2.3 hereof.

 

“Applicable Laws” shall mean all existing and future federal, state and local
laws, orders, ordinances, governmental rules and regulations and court orders.

 

“Appraisal” shall mean an appraisal prepared in accordance with the requirements
of FIRREA and USPAP, prepared by an independent third party appraiser holding an
MAI designation, who is State licensed or State certified if required under the
laws of the State where the applicable Individual Property is located, who meets
the requirements of FIRREA and USPAP and who is otherwise reasonably
satisfactory to Lender.

 

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“Approved Accountant” shall mean a “Big Four” accounting firm, or other
independent certified public accountant reasonably acceptable to Lender.

 

“Approved Annual Budget” shall have the meaning set forth in Section 5.1.10(d)
hereof.

 

“Approved Capital Budget” shall mean a Capital Budget that has been approved by
Lender.

 

“Assignment and Assumption” shall have the meaning set forth in Section 9.7.2
hereof.

 

“Assignment of Interest Rate Cap” shall mean that certain Collateral Assignment
of Interest Rate Cap Agreement made by Borrower to Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

“Assignment of Leases” shall mean, with respect to each Individual Property,
that certain first priority Assignment of Leases and Rents, dated as of the date
hereof, from Mortgage Borrower, as assignor, to Mortgage Lender, as assignee, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.

 

“Assignment of Management Agreement” shall mean, with respect to each Individual
Property, that certain Subordination of Management Agreement and Management Fees
dated the date hereof among Lender, Borrower, Operating Tenant and Manager, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.

 

“Assignment of Security Agreement” shall mean, with respect to each Operating
Lease, that certain assignment of security agreement dated the date hereof given
by Borrower to Lender with respect to the related Operating Lease Security
Agreement.

 

“Austin Pledged Interests” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

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

 

“Bankruptcy Code” shall mean Title 11 U.S.C. § 101 et seq., and the regulations
adopted and promulgated pursuant thereto (as the same may be amended from time
to time).

 

“Basic Carrying Costs” shall mean, with respect to each Individual Property, the
sum of the following costs associated with such Individual Property for the
relevant Fiscal Year or payment period: (i) Taxes and (ii) Insurance Premiums
and (iii) if applicable to such Individual Property, Ground Rent.

 

“Benefit Amount” shall have the meaning set forth in Section 9.6(d) hereof.

 

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

 

“Breakage Costs” shall have the meaning set forth in Section 2.2.3(d) hereof.

 

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which national banks in New York, New York are not open for business.

 

“Business Party” shall have the meaning set forth in Section 4.1.36(aa) hereof.

 

“Capital Budget” shall have the meaning set forth in the Operating Lease.

 

“Capital Expenditures” shall mean, for any period, the amount expended with
respect to the Properties for items capitalized under GAAP (including
expenditures for building improvements or major repairs, leasing commissions and
tenant improvements).

 

“Cash” shall mean coin or currency of the United States of America or
immediately available federal funds, including such fund delivered by wire
transfer.

 

“Casualty” shall mean the occurrence of any casualty, damage or injury, by fire
or otherwise, to any Individual Property or any part thereof.

 

“Certificate of Sources and Uses” shall mean the Certificate of Sources and Uses
of Funds delivered to Lender in connection with the Loan.

 

“Closing Date” shall mean the date of the funding of the Loan.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be
further amended from time to time, and any successor statutes thereto, and all
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

 

“Co-Lender” shall have the meaning set forth in Section 9.7.2(a) hereof.

 

“Co-Lending Agreement” shall mean the Co-Lending Agreement entered into between
Lender, individually as a Co-Lender and as Agent and the other Co-Lenders in the
event of a Syndication, as the same may be further supplemented, modified,
amended or restated.

 

“Collateral” shall mean (i) the Collateral as defined in the Pledge Agreement,
and (ii) all other collateral for the Loan granted in the Loan Documents and
shall include all Substitute Collateral.

 

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

 

“Contribution” shall have the meaning set forth in Section 9.6(a) hereof.

 

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“Control” (and the correlative terms “controlled by” and “controlling”) shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of the business and affairs of the entity
in question by reason of the ownership of beneficial interests, by contract or
otherwise.

 

“Counterparty” shall mean the issuer of the Interest Rate Cap Agreement.

 

“Debt” shall mean the outstanding principal amount set forth in, and evidenced
by, this Agreement and the Note together with all interest accrued and unpaid
thereon and all other sums due to Lender in respect of the Loan under the Note,
this Agreement, the Pledge Agreement or any other Loan Document, including,
without limitation, all Reserve Fund Deposits.

 

“Debt Service” shall mean, with respect to any particular period of time,
interest payments and all Scheduled Amortization Payments due under the Note and
the Mortgage Note for such period.

 

“Debt Service Coverage Ratio” shall mean a ratio in which:

 

(a) the numerator is the Net Operating Income for the 12 full calendar month
period preceding the date of calculation as set forth in the financial
statements required hereunder, adjusted for (i) assumed management fees of three
percent (3%) of Gross Income from Operations and (ii) assumed Replacement
Reserve Fund contributions equal to four percent (4%) of Gross Income from
Operations; and

 

(b) the denominator is the greater of (i) the aggregate amount of Debt Service
and Mortgage Debt Service which would be due and payable for such period, and
(ii) the aggregate amount of Adjusted Debt Service and Mortgage Adjusted Debt
Service which would be due and payable for such period.

 

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

 

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to
the lesser of (a) the Maximum Legal Rate, or (b) five percent (5%) above the
Applicable Interest Rate.

 

“Disclosure Document” shall have the meaning set forth in Section 9.2(a) hereof.

 

“Doubletree Albuquerque Property” shall mean the Individual Property identified
as property number          on Schedule I attached hereto.

 

“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (a) an account or accounts
maintained with a federal or State-chartered depository institution or trust
company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts maintained with a federal or State
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a State chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.§9.10(b),
having in either case a combined capital and surplus

 

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of at least $50,000,000 and subject to supervision or examination by federal and
State authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.

 

“Eligible Institution” shall mean a depository institution or trust company,
insured by the Federal Deposit Insurance Corporation, (a) the short term
unsecured debt obligations or commercial paper of which are rated at least A-1
by S&P, P-1 by Moody’s and F-1 by Fitch in the case of accounts in which funds
are held for thirty (30) days or less, or (b) the long term unsecured debt
obligations of which are rated at least AA by Fitch and S&P and Aa2 by Moody’s
in the case of accounts in which funds are held for more than thirty (30) days.

 

“Embargoed Person” shall have the meaning set forth in Section 4.1.45 hereof.

 

“Environmental Indemnity” shall mean that certain Environmental Indemnity
Agreement executed by Borrower and Guarantor in connection with the Loan for the
benefit of Lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

 

“Environmental Law” shall mean any federal, State and local laws, statutes,
ordinances, rules, regulations, and other legally enforceable standards,
policies, government directives or requirements, as well as common law, related
to the generation, manufacture, processing, use, treatment, storage, Release or
handling of Hazardous Materials, that, apply to Borrower and Guarantor or any
Property, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act.

 

“Environmental Liens” shall have the meaning set forth in Section 5.1.19(a)
hereof.

 

“Environmental Reports” shall have the meaning set forth in Section 4.1.40
hereof.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.

 

“Eurodollar Rate” shall mean, with respect to any Interest Period, an interest
rate per annum equal to LIBOR plus 1.35% per annum.

 

“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.

 

“Exchange Act” shall have the meaning set forth in Section 9.2(a) hereof.

 

“Exchange Act Filing” shall have the meaning set forth in Section 9.2(a) hereof.

 

“Extended Maturity Date” shall have the meaning set forth in Section 2.2.1(c)
hereof.

 

“Extension Fee” shall mean one-quarter percent (0.25%) of the original principal
amount of the Loan.

 

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

 

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“Fee Estate” shall mean, with respect to any Ground Lease the fee interest of
the lessor under such Ground Lease in the Land and the Improvements demised
under such Ground Lease.

 

“Fee Owner” shall mean, with respect to any Ground Lease, the owner of the
lessor’s interest in such Ground Lease and the related Fee Estate.

 

“FF&E” shall mean, with respect to each Individual Property, furnishings,
fixtures and equipment in the guest rooms, hallways, lobbies, restaurants,
lounges, meeting and banquet rooms, parking facilities and other public areas
and other items included in the term “FF&E” as defined in the Operating Lease.

 

“FF&E Note” shall have the meaning set forth in the Operating Lease.

 

“FF&E Limitation” shall have the meaning set forth in the Operating Lease.

 

“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act
of 1989, as the same may be amended from time to time.

 

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

 

“Fitch” shall mean Fitch, Inc.

 

“Franchise Agreement” shall mean those certain franchise agreements more
specifically identified on Schedule X attached hereto.

 

“Franchisor” shall mean the franchisors with respect to the Franchise Agreement,
as same is identified on Schedule X attached hereto.

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America as of the date of the applicable financial report.

 

“Governmental Authority” shall mean any court, board, agency, commission,
office, central bank or other authority of any nature whatsoever for any
governmental unit (federal, State, county, district, municipal, city, country or
otherwise) or quasi-governmental unit whether now or hereafter in existence
having jurisdiction over all or any portion of an Individual Property, Borrower,
Principal, Operating Tenant, Mezzanine Borrower, REIT or Guarantor.

 

“Gross Income from Operations” shall mean all income, computed in accordance
with GAAP, derived from the ownership and operation of the Properties from
whatever source, including, but not limited to, the Rents, utility charges,
escalations, service fees or charges, license fees, parking fees, rent
concessions or credits, and other required pass-throughs and Mortgage Borrower
or Borrower, as applicable, but excluding sales, use and occupancy or other
taxes on receipts required to be accounted for by Mortgage Borrower to any
Governmental Authority, refunds and uncollectible accounts, sales of furniture,
fixtures and equipment, Insurance Proceeds (other than business interruption or
other loss of income insurance), Awards, security deposits, utility and other
similar deposits, payments received under the Mortgage Interest Rate Cap
Agreement or the Interest Rate Cap Agreement, as applicable, interest on credit

 

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accounts, interest on the Reserve Funds, and any disbursements to Mortgage
Borrower from the Mortgage Reserve Funds. Gross income shall not be diminished
as a result of the Pledge Agreement or the creation of any intervening estate or
interest in a Property or any part thereof.

 

“Ground Lease” shall mean, individually and collectively, as the context may
require, each ground lease described on Schedule VI attached hereto and made a
part hereof, if any, as such Schedule may be amended from time to time upon the
release and/or substitution of an Individual Property.

 

“Ground Lease Escrow Fund” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

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

 

“Guarantor” shall mean the Operating Partnership, jointly and severally, and any
other entity guaranteeing any payment or performance obligation of Borrower.

 

“Guaranty” shall mean that certain Guaranty of Recourse Obligations of Borrower,
dated as of the date hereof, from Guarantor to Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

“Hazardous Materials” shall mean any material or substance now or in the future
defined or regulated as a “hazardous substance,” “hazardous material,”
“hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,”
“pollutant” or other words of similar import within the meaning of applicable
Environmental Law, including; without limitation, petroleum and petroleum
by-products, gasoline, diesel fuel and oil; radioactive materials;
polychlorinated biphenyls (“PCBs”); lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could reasonably be
expected to become friable; and mold that could reasonably be expected to
adversely affect human health.

 

“Hilton Airport Grand Rapids Property” shall mean the Individual Property
identified as property number          on Schedule I attached hereto.

 

“Improvements” shall have the meaning set forth in Article 1 of the related
Pledge Agreements with respect to each Individual Property.

 

“Indebtedness” of a Person, at a particular date, shall mean the sum (without
duplication) at such date of (a) all indebtedness or liability of such Person
(including, without limitation, amounts for borrowed money); (b) obligations
evidenced by bonds, debentures, notes, or other similar instruments;
(c) obligations for the deferred purchase price of property or services
(including trade obligations); (d) obligations under letters of credit; (e) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds, to invest in any Person or entity, or
otherwise to assure a creditor against loss; and (f) obligations secured by any
Liens, whether or not the obligations have been assumed.

 

“Indemnified Liabilities” shall have the meaning set forth in Section 9.7.4(c)
hereof.

 

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“Indemnified Parties” shall mean Lender, any Affiliate of Lender who is or will
have been involved in the origination of the Loan, any Person who is or will
have been involved in the servicing of the Loan, any Person in whose name the
encumbrance created by the Security Instruments is or will have been recorded,
Persons who may hold or acquire or will have held a full or partial interest in
the Loan, the holders of any Securities, as well as custodians, trustees and
other fiduciaries who hold or have held a full or partial interest in the Loan
for the benefit of third parties) as well as the respective directors, officers,
shareholders, partners, members, employees, agents, representatives, Affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan
or any Property, whether during the term of the Loan or as a part of or
following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all of Lender’s assets and
business).

 

“Indemnified Taxes” shall mean any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority.

 

“Indemnitee” shall have the meaning set forth in Section 9.7.4(c) hereof.

 

“Independent Director” shall have the meaning set forth in Section 4.1.36(aa)
hereof.

 

“Individual Property” shall mean each parcel of real property, including any
Release Property prior to its release or Substitute Property upon substitution,
the Improvements thereon and all Personal Property owned by Mortgage Borrower
and encumbered by a Security Instrument, together with all rights pertaining to
such Property and Improvements, as more particularly described in Article 1 of
each Security Instrument and referred to therein as the “Property”.

 

“Information” shall have the meaning set forth in Section 9.7.3(b) hereof.

 

“Insolvency Opinion” shall mean, that certain bankruptcy non-consolidation
opinion letter delivered by counsel for Borrower in connection with the Loan and
approved by Lender or the Rating Agencies, as the case may be.

 

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

 

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

 

“Intercreditor Agreement” shall have the meaning set forth in Section 9.11
hereof.

 

“Interest Period” shall mean, in connection with the calculation of interest
accrued with respect to any specified Payment Date, the period from and
including the ninth (9th) day of the prior calendar month to and including the
eighth (8th) day of the calendar month in which the applicable Payment Date
occurs; provided, however, that with respect to the Payment Date occurring in
October, 2005, the Interest Period shall be the period commencing on the Closing
Date to and including October 8, 2005. Each Interest Period, except for the
Interest Period ending October 8, 2005, shall be a full month and shall not be
shortened by reason of any payment of the Loan prior to the expiration of such
Interest Period.

 

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“Interest Rate Cap Agreement” shall mean the Interest Rate Cap Agreement
(together with the confirmation and schedules relating thereto), between an
Acceptable Counterparty and Borrower obtained by Borrower as and when required
under Section 2.4 hereof. After delivery of a Replacement Interest Rate Cap
Agreement to Lender, the term “Interest Rate Cap Agreement” shall be deemed to
mean such Replacement Interest Rate Cap Agreement.

 

“Interest Shortfall” shall have the meaning set forth in Section 2.3.1(b)
hereof.

 

“Inventory” shall mean “Inventories” as such term is defined in the Operating
Lease.

 

“Investment Grade” shall mean a rating of BBB- or its equivalent by the Rating
Agencies.

 

“Investor” shall have the meaning set forth in Section 5.1.10(i) hereof.

 

“Leases” shall have the meaning set forth in Article 1 of the Security
Instrument with respect to each Individual Property.

 

“Legal Requirements” shall mean all federal, State, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Borrower, the
Collateral, Mortgage Borrower or any Individual Property or any part thereof, or
the zoning, construction, use, alteration, occupancy or operation thereof, or
any part thereof, whether now or hereafter enacted and in force, and all
permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting such Individual Property or any part thereof, including, without
limitation, any which may (a) require repairs, modifications or alterations in
or to such Individual Property or any part thereof, or (b) in any way limit the
use and enjoyment thereof.

 

“Lehman” shall have the meaning set forth in Section 9.2(b) hereof.

 

“Lehman Group” shall have the meaning set forth in Section 9.2(b) hereof.

 

“Lender” shall have the meaning set forth in the introductory paragraph hereto,
together with its successors and assigns.

 

“Liabilities” shall have the meaning set forth in Section 9.2(b) hereof.

 

“LIBOR” shall mean, for the first Interest Period 3.73% per annum. For each
Interest Period thereafter LIBOR shall mean the quoted offered rate for
one-month United States dollar deposits with leading banks in the London
interbank market that appears as of 11:00 a.m. (London time) on the related
LIBOR Determination Date on the display page designated as Telerate Page 3750.

 

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If, as of such time on any LIBOR Determination Date, no quotation is given on
Telerate Page 3750, then the Lender shall establish LIBOR on such LIBOR
Determination Date by requesting four Reference Banks meeting the criteria set
forth herein to provide the quotation offered by its principal London office for
making one-month United States dollar deposits with leading banks in the London
interbank market as of 11:00 a.m., London time, on such LIBOR Determination
Date.

 

(i) If two or more Reference Banks provide such offered quotations, then LIBOR
for the next Interest Period shall be the arithmetic mean of such offered
quotations (rounded upward if necessary to the nearest whole multiple of
1/1,000%).

 

(ii) If only one or none of the Reference Banks provides such offered
quotations, then LIBOR for the next Interest Period shall be the Reserve Rate.

 

(iii) If on any LIBOR Determination Date, Lender is required but is unable to
determine LIBOR in the manner provided in paragraphs (i) and (ii) above, LIBOR
for the next Interest Period shall be LIBOR as determined on the preceding LIBOR
Determination Date.

 

The establishment of LIBOR on each LIBOR Determination Date by the Lender shall
be final and binding.

 

“LIBOR Business Day” shall mean a day upon which United States dollar deposits
may be dealt in on the London interbank markets and commercial banks and foreign
exchange markets are open in London, England.

 

“LIBOR Determination Date” shall mean, with respect to any Interest Period, the
date that is two (2) LIBOR Business Days prior to the fifteenth (15th) calendar
day of the month in which such Interest Period commenced.

 

“Licenses” shall have the meaning set forth in Section 4.1.22 hereof.

 

“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting Borrower, the Mortgage Borrower, the Collateral or any related
Individual Property, any portion thereof or any interest therein, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic’s, materialmen’s
and other similar liens and encumbrances.

 

“Liquidation Event” shall have the meaning set forth in Section 2.3.2(a) hereof.

 

“Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement
and the other Loan Documents as the same may be amended or split pursuant to the
terms hereof.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Pledge
Agreement, the Environmental Indemnity, the Subordination of Management
Agreement, the

 

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Certificate of Source and Uses, the Guaranty, the Subordination Agreement, the
Assignment of Interest Rate Cap Agreement, the Assignment of Security Agreement,
and all other documents executed and/or delivered in connection with the Loan
now existing or hereinafter executed.

 

“Loan Party” shall mean individually and collectively, as the context requires,
Borrower, Principal, Mortgage Borrower and Mortgage Borrower’s Principal.

 

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

 

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

 

“Lockout Period” shall mean the period from the date hereof through and
including April 9, 2007.

 

“Losses” shall mean any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, fines, penalties, charges, fees, expenses,
judgments, awards, amounts paid in settlement of whatever kind or nature
(including but not limited to reasonable attorneys’ fees and other costs of
defense).

 

“Major Lease” shall mean (i) any Lease which together with all other Leases to
the same tenant and to all Affiliates of such tenant, (A) provides for rental
income representing five percent (5%) or more of the annual hotel gross room
revenues for any Individual Property, (B) covers more than 2,500 square feet of
the total space at any Individual Property, in the aggregate, (C) provides for a
lease term of more than ten (10) years including options to renew or (D) is with
an Affiliate of Borrower and (ii) any instrument guaranteeing or providing
credit support for any Major Lease and (iii) any Operating Lease.

 

“Management Agreement” shall mean, with respect to any Individual Property, the
management agreement entered into by and between Operating Tenant and Manager,
as more specifically identified on Schedule XI attached hereto, or, if the
context requires, the Replacement Management Agreement executed in accordance
with the terms and provisions of this Agreement.

 

“Manager” shall mean the manager with respect to the Management Agreements as
more specifically identified on Schedule XI attached hereto or, if the context
requires, a Qualified Manager who is managing the Properties or any Individual
Property in accordance with the terms and provisions of this Agreement.

 

“Material Agreement” means all agreements, other than the Management Agreement,
the Franchise Agreement, the Leases and the Operating Lease, entered into by any
Loan Party affecting or relating to the Property, the Collateral or any other
direct or indirect ownership interest of a Loan Party in Mortgage Borrower which
require the payment of more than $250,000.00, in payments or liability in any
annual period (on a per Individual Property basis) and which (i) do not have the
payments or liability thereunder reflected in the Approved Annual Budget; or
(ii) is not an Ordinary Contract which is not cancellable without penalty or
premium on no more than ninety (90) days notice.

 

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“Maturity Date” shall mean October 9, 2007, as such date may be extended
pursuant to the terms hereof, or such other date on which the final payment of
the principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise.

 

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

 

“Monthly Debt Service Payment Amount” shall mean the amount of interest and the
Scheduled Amortization Payment due and payable on each Payment Date, pursuant to
the Note and Section 2.2 hereof.

 

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

 

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

 

“Mortgage Adjusted Debt Service” shall mean “Adjusted Debt Service” as such term
is defined in the Mortgage Loan Agreement.

 

“Mortgage Borrower” shall have the meaning assigned to the term “Borrower” in
the Mortgage Loan Agreement.

 

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

 

“Mortgage Interest Rate Cap Agreement” shall mean the “Interest Rate Cap
Agreement” under and as defined in the Mortgage Loan Agreement.

 

“Mortgage Lender” shall mean Lehman Brothers Bank, FSB, a federal stock savings
bank, together with its successors and assigns.

 

“Mortgage Loan” shall mean that certain loan made by Mortgage Lender to Mortgage
Borrower in the principal amount of TWO HUNDRED THIRTY-ONE MILLION AND 00/100
DOLLARS ($231,000,000.00).

 

“Mortgage Loan Agreement” shall mean that certain Loan Agreement between
Mortgage Borrower and Mortgage Lender in connection with the Mortgage Loan,
dated as of the date hereof, as amended, restated, supplemented or otherwise
modified from time to time.

 

“Mortgage Loan Documents” shall mean, collectively, the Mortgage Note, the
Mortgage Loan Agreement, the Security Instruments, and any and all other
documents defined as “Loan Documents” in the Mortgage Loan Agreement, as
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

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

 

“Mortgage Loan Extension Notice” shall have the meaning set forth in
Section 2.2.10 hereof.

 

“Mortgage Loan Extension Option” shall have the meaning ascribed to the term
“Extension Option” in the Mortgage Loan Agreement.

 

“Mortgage Loan Extension Request” shall have the meaning set forth in
Section 2.2.10 hereof.

 

“Mortgage Note” shall mean that certain promissory note of even date herewith in
the original principal amount of TWO HUNDRED THIRTY-ONE MILLION AND 00/100
DOLLARS ($231,000,000.00), made by Mortgage Borrower in favor of Mortgage
Lender, as the same may be amended, restated, replaced, extended, renewed,
supplemented, severed, split, or otherwise modified from time to time.

 

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

 

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

 

“Net Liquidation Proceeds After Debt Service” shall mean, with respect to any
Liquidation Event, all amounts paid to or received by or on behalf of Mortgage
Borrower in connection with such Liquidation Event, including, without
limitation, proceeds of any sale, refinancing or other disposition or
liquidation, less (i) in the event of a Liquidation Event consisting of a
Casualty or Condemnation, Lender’s and/or Mortgage Lender’s reasonable costs
incurred in connection with the recovery thereof, (ii) in the event of a
Liquidation Event consisting of a Casualty or Condemnation, the costs incurred
by Mortgage Borrower in connection with a restoration of all or any portion of
the applicable Property made in accordance with the Mortgage Loan Documents,
(iii) in the event of a Liquidation Event consisting of a Casualty or
Condemnation or a Transfer, amounts required or permitted to be deducted
therefrom and amounts paid pursuant to the Mortgage Loan Documents to Mortgage
Lender, (iv) in the event of a Liquidation Event consisting of a Casualty or
Condemnation, those proceeds paid to Mortgage Borrower pursuant to
Section 6.4(b)(vii) of the Mortgage Loan Agreement, (v) in the case of a
foreclosure sale, disposition or transfer of a Property in connection with
realization thereon following an Event of Default under the Mortgage Loan, such
reasonable and customary costs and expenses of sale or other disposition
(including attorneys’ fees and brokerage commissions), (vi) in the case of a
foreclosure sale, such costs and expenses incurred by Mortgage Lender under the
Mortgage Loan Documents as Mortgage Lender shall be entitled to receive
reimbursement for under the terms of the Mortgage Loan Documents and (vii) in
the case of a refinancing of the Mortgage Loan, such costs and expenses
(including reasonable attorneys’ fees) of such refinancing, and (vii) the amount
of any prepayments required pursuant to the Mortgage Loan Documents in
connection with any such Liquidation Event.

 

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“Net Cash Flow” for any period shall mean the amount obtained by subtracting
Operating Expenses and Capital Expenditures for such period from Gross Income
from Operations for such period.

 

“Net Cash Flow After Debt Service” for any period shall mean the amount obtained
by subtracting Debt Service for such period from Net Cash Flow for such period.

 

“Net Liquidation Proceeds After Debt Service” shall have the meaning set forth
in the Mezzanine Loan Agreement.

 

“Net Operating Income” shall mean the amount obtained by subtracting Operating
Expenses from Gross Income from Operations (but excluding any payments received
by Mortgage Borrower, as applicable, under the Mortgage Interest Rate Cap
Agreement and the Interest Rate Cap Agreement, as applicable).

 

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

 

“New Borrower” shall have the meaning set forth in Section 5.2.16(iii) hereof.

 

“Non-U.S. Entity” shall have the meaning set forth in Section 2.2.8(b) hereof.

 

“Note” shall mean that certain promissory note of even date herewith in the
original principal amount of EIGHTY-ONE MILLION AND 00/100 DOLLARS
($81,000,000.00), made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, extended, renewed, supplemented, severed, split, or
otherwise modified from time to time.

 

“O&M Program” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“Obligations” shall mean Borrower’s obligation to pay the Debt and perform its
obligations under the Note, this Agreement and the other Loan Documents.

 

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by a Responsible Officer of Borrower.

 

“Operating Expenses” shall mean the total of all expenditures, computed in
accordance with GAAP, of whatever kind relating to the operation, maintenance
and management of the Properties that are incurred on a regular monthly or other
periodic basis, including without limitation, utilities, ordinary repairs and
maintenance, insurance premiums, license fees, property taxes and assessments,
advertising and marketing expenses, franchise fees, management fees, payroll and
related taxes, computer processing charges, operational equipment or other lease
payments as approved by Lender, and other similar costs, but excluding
depreciation, Debt Service, Capital Expenditures and contributions to the
Reserve Funds or the Mortgage Reserve Funds.

 

“Operating Lease” shall mean those certain operating leases between Borrower and
Operating Tenant as more specifically set forth on Schedule XII attached hereto
as the same may be modified, amended, supplemented or extended from time to
time.

 

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“Operating Lease Rent” shall mean “Rent” as defined in the Operating Lease.

 

“Operating Lease Security Agreement” shall mean, with respect to each Operating
Lease, the Security Agreement (as defined in the Operating Lease) between
Operating Tenant and Borrower with respect to Operating Tenant’s personal
property and any FF&E transferred to Operating Tenant in accordance with
Section 5.2.10(f) hereof and (ii) with respect to the Property Account and Gross
Income from Operations, the security interest granted by Operating Tenant to
Borrower in the Operating Lease.

 

“Operating Partnership” shall mean MeriStar Hospitality Operating Partnership
L.P., a Delaware limited partnership.

 

“Operating Tenant” shall mean the tenants under the Operating Leases, as more
specifically set forth on Schedule XII attached hereto.

 

“Ordinary Contract” shall mean any trade or operational contracts entered into
in the ordinary course of business, in arm’s-length transactions, with trade
creditors and in amounts as are customary and reasonable under the
circumstances.

 

“Organizational Documents” shall mean (i) with respect to a corporation, such
Person’s certificate of incorporation and by laws, and any shareholder
agreement, voting trust or similar arrangement applicable to any of such
Person’s authorized shares of capital stock, (ii) with respect to a partnership,
such Person’s certificate of limited partnership, partnership agreement, voting
trusts or similar arrangements applicable to any of its partnership interests,
(iii) with respect to a limited liability company, such Person’s certificate of
formation, limited liability company agreement or other document affecting the
rights of holders of limited liability company interests, and (iv) any and all
agreements between any constituent member, partner or shareholder of the Person
in question, including any contribution agreement or indemnification agreements.
In each case, “Organizational Documents” shall include any indemnity,
contribution, shareholders or other agreement among any of the owners of the
entity in question.

 

“Other Charges” shall mean all Ground Rents, maintenance charges, impositions
other than Taxes, and any other charges, including, without limitation, vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining any Individual Property, now or hereafter levied or assessed or
imposed against such Individual Property or any part thereof.

 

“Owner’s Title Policy” shall mean that certain ALTA extended coverage owner’s
policy of title insurance issued in connection with the closing of the Mortgage
Loan insuring the Mortgage Borrower as the owner of each Individual Property.

 

“Ownership Interest” means (i) any interest in the Property or (ii) in the case
of any Loan Party, any ownership interest in such Loan Party, direct or
indirect, contingent or fixed, at any level or any tier, of any nature
whatsoever, whether in the form of a partnership interest, stock interest,
membership interest, equitable interest, beneficial interests, profit interest,
loss interest, voting rights, control rights, management rights or otherwise.

 

“Participant” shall have the meaning set forth in Section 9.7.2(i) hereof.

 

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“Payment Date” shall mean the ninth (9th) day of each calendar month during the
term of the Loan or, if such day is not a Business Day, the immediately
preceding Business Day.

 

“Permitted Encumbrances” shall mean, with respect to an Individual Property,
collectively, (a) the Liens and security interests created by the Mortgage Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy relating to such Individual Property or any part thereof,
(c) Liens, if any, for Taxes imposed by any Governmental Authority not yet
delinquent, or which are being contested in good faith in accordance with
Section 5.1.2 hereof, (d) all easements, restrictions, covenants, reservations
and rights-of-way permitted pursuant to Section 5.2.10(g) hereof, (e) Permitted
Equipment Financing, (f) Liens being contested in good faith in accordance with
Section 5.2.1 hereof , and (g) such other title and survey exceptions as Lender
has approved or may approve in writing in Lender’s sole discretion.

 

“Permitted Equipment Financing” shall have the meaning set forth in the Mortgage
Loan Agreement.

 

“Permitted Investments” shall mean any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, including
those issued by Servicer, the trustee under any Securitization or any of their
respective Affiliates, payable on demand or having a maturity date not later
than the Business Day immediately prior to the first Payment Date following the
date of acquiring such investment and meeting one of the appropriate standards
set forth below:

 

(i) obligations of, or obligations fully guaranteed as to payment of principal
and interest by, the United States or any agency or instrumentality thereof
provided such obligations are backed by the full faith and credit of the United
States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;

 

(ii) Federal Housing Administration debentures;

 

(iii) obligations of the following United States government sponsored agencies:
Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit System
(consolidated systemwide bonds and notes), the Federal Home Loan Banks

 

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(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

(iv) federal funds, unsecured certificates of deposit, time deposits, bankers’
acceptances and repurchase agreements with maturities of not more than 365 days
of any bank, the short term obligations of which at all times are rated in the
highest short term rating category by each Rating Agency (or, if not rated by
all Rating Agencies, rated by at least one Rating Agency in the highest short
term rating category and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the then current ratings assigned to
the Securities); provided, however, that the investments described in this
clause must (A) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

(v) fully Federal Deposit Insurance Corporation-insured demand and time deposits
in, or certificates of deposit of, or bankers’ acceptances with maturities of
not more than 365 days and issued by, any bank or trust company, savings and
loan association or savings bank, the short term obligations of which at all
times are rated in the highest short term rating category by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency in
the highest short term rating category and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the then current
ratings assigned to the Securities); provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (B) if rated by S&P, must not have
an “r” highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

(vi) debt obligations with maturities of not more than 365 days and at all times
rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself,

 

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result in a downgrade, qualification or withdrawal of the then current ratings
assigned to the Securities) in its highest long-term unsecured rating category;
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;

 

(vii) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) with maturities of not
more than 365 days and that at all times is rated by each Rating Agency (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Securities) in its highest short-term unsecured debt rating; provided, however,
that the investments described in this clause must (A) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if
such investments have a variable rate of interest, such interest rate must be
tied to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;

 

(viii) units of taxable money market funds, with maturities of not more than 365
days and which funds are regulated investment companies, seek to maintain a
constant net asset value per share and invest solely in obligations backed by
the full faith and credit of the United States, which funds have the highest
rating available from each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable to each
other Rating Agency, as confirmed in writing that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to the Securities) for money market funds; and

 

(ix) any other security, obligation or investment which has been approved as a
Permitted Investment in writing by (a) Lender and (b) each Rating Agency, as
evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the then current ratings
assigned to the Securities by such Rating Agency;

 

provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.

 

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

 

“Person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, State, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

 

“Personal Property” shall have the meaning set forth in Article 1 of the
Security Instrument with respect to each Individual Property.

 

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

 

“Physical Conditions Report” shall mean, with respect to each Individual
Property, a structural engineering report prepared by a company satisfactory to
Lender and Mortgage Lender regarding the physical condition of such Individual
Property, satisfactory in form and substance to Lender and Mortgage Lender in
their respective sole discretion, which report shall, among other things,
(a) confirm that such Individual Property and its use complies, in all material
respects, with all applicable Legal Requirements (including, without limitation,
zoning, subdivision and building laws) and (b) include a copy of a final
certificate of occupancy with respect to all Improvements on such Individual
Property.

 

“Plan” shall mean an employee benefit plan (as defined in section 3(3) of ERISA)
whether or not subject to ERISA or a plan or other arrangement within the
meaning of section 4975 of the Code.

 

“Plan Assets” shall mean assets of a Plan within the meaning of section 29
C.F.R. section 2510.3-101 or similar law.

 

“Pledge Agreement” shall mean, individually and collectively, as the context may
require, (i) that certain Pledge and Security Agreement, dated as of the date
hereof, executed and delivered by Borrower to Lender, and/or (ii) that certain
Pledge and Security Agreement, dated as of the date hereof, executed and
delivered by River Hotel Pledgor to Lender, each as security for the Loan, as
each may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

 

“Pledged Interests” shall mean all membership interests, partnership interests,
stock and any other equity interests owned by Borrower and River Hotel Pledgor
in each Mortgage Borrower and Mortgage Borrower’s Principal, if applicable, and
more fully described in the Pledge Agreement.

 

“Policies” shall have the meaning specified in the Mortgage Loan Agreement.

 

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“Post-Termination Property Account” shall have the meaning set forth in the
Mortgage Loan Agreement.

 

“Prepayment Date” shall have the meaning set forth in Section 2.3.1(a) hereof.

 

“Prime Rate” shall mean, on a particular date, a rate per annum equal to the
rate of interest published in The Wall Street Journal as the “prime rate”, as in
effect on such day, with any change in the prime rate resulting from a change in
said prime rate to be effective as of the date of the relevant change in said
prime rate; provided, however, that if more than one prime rate is published in
The Wall Street Journal for a day, the average of the prime rates shall be used;
provided, further, however, that the Prime Rate (or the average of the prime
rates) will be rounded to the nearest 1/16 of 1% or, if there is no nearest 1/16
of 1%, to the next higher 1/16 of 1%. In the event that The Wall Street Journal
should cease or temporarily interrupt publication, then the Prime Rate shall
mean the daily average prime rate published in another business newspaper, or
business section of a newspaper, of national standing chosen by Lender. If The
Wall Street Journal resumes publication, the substitute index will immediately
be replaced by the prime rate published in The Wall Street Journal. In the event
that a prime rate is no longer generally published or is limited, regulated or
administered by a governmental or quasi-governmental body, then Lender shall
select a comparable interest rate index which is readily available to Borrower
and verifiable by Borrower but is beyond the control of Lender. Lender shall
give Borrower prompt written notice of its choice of a substitute index and when
the change became effective. Such substitute index will also be rounded to the
nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher
1/16 of 1%. The determination of the Prime Rate by Lender shall be conclusive
and binding absent manifest error.

 

“Principal” shall have the meaning set forth in Section 4.1.36 hereof, together
with its successors and assigns.

 

“Pro Rata Share of the Loan” shall have the meaning set forth in
Section 9.7.2(a) hereof.

 

“Prohibited Person” shall mean any Person:

 

(a) listed in the Annex to, or otherwise subject to the provisions of, the
Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,
and relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);

 

(b) that is owned or controlled by, or acting for or on behalf of, any person or
entity that is listed to the Annex to, or is otherwise subject to the provisions
of, the Executive Order;

 

(c) with whom Lender is prohibited from dealing or otherwise engaging in any
transaction by any terrorism or money laundering law, including the Executive
Order;

 

(d) who commits, threatens or conspires to commit or supports “terrorism” as
defined in the Executive Order;

 

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(e) that is named as a “specially designated national and blocked person” on the
most current list published by the U.S. Treasury Department Office of Foreign
Assets Control at its official website, http://www.treas.gov.ofac/t11sdn.pdf or
at any replacement website or other replacement official publication of such
list; or

 

(f) who is an Affiliate of or affiliated with a Person listed above.

 

“Projections” shall have the meaning set forth in Section 9.7.3(b) hereof.

 

“Properties” shall mean, collectively, each and every Individual Property.

 

“Property” shall mean, as the context may require, the Properties or an
Individual Property.

 

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

 

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

 

“Property Account Bank” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Provided Information” shall have the meaning set forth in Section 9.1(a)
hereof.

 

“Qualified Franchisor” shall mean (a) any nationally recognized franchisor under
whose flag there are at least fifty (50) full-service hotels, exclusive of the
Properties, and (b) prior to whose employment as franchisor of the Property
(i) prior to the occurrence of a Securitization, such employment shall have been
approved by Lender, in its reasonable discretion, and (ii) after the occurrence
of a Securitization, Lender shall have received a Rating Confirmation.

 

“Qualified Manager” shall mean a reputable and experienced professional
management organization (a) which manages, together with its Affiliates, ten
(10) full service hotels exclusive of the Properties totaling in the aggregate
no less than 3,500 rooms and (b) prior to whose employment as manager of the
Property (i) prior to the occurrence of a Securitization, such employment shall
have been approved by Lender, in its reasonable discretion, and (ii) after the
occurrence of a Securitization, Lender shall have received a Rating
Confirmation.

 

“Qualified Transferee” shall mean any one of the following Persons:

 

  (i) a pension fund, pension trust or pension account that (a) has total real
estate assets of at least $1 Billion and (b) is managed by a Person who controls
at least $1 Billion of real estate equity assets; or

 

  (ii) a pension fund advisor who (a) immediately prior to such transfer,
controls at least $1 Billion of real estate equity assets and (b) is acting on
behalf of one or more pension funds that, in the aggregate, satisfy the
requirements of clause (i) of this definition; or

 

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  (iii) an insurance company which is subject to supervision by the insurance
commissioner, or a similar official or agency, of a state or territory of the
United States (including the District of Columbia) (a) with a net worth, as of a
date no more than six (6) months prior to the date of the transfer, of at least
$500 Million and (b) who, immediately prior to such transfer, controls real
estate equity assets of at least $1 Billion; or

 

  (iv) a corporation organized under the banking laws of the United States or
any state or territory of the United States (including the District of Columbia)
(a) with a combined capital and surplus of at least $500 Million and (b) who,
immediately prior to such transfer, controls real estate equity assets of at
least $1 Billion; or

 

  (v) any Person (a) with a long-term unsecured debt rating from the Rating
Agencies of at least Investment Grade or (b) who (i) owns or operates at least
ten (10) full service hotels exclusive of the Properties totaling in the
aggregate no less than 3,500 rooms, (ii) has a net worth, as of a date no more
than six (6) months prior to the date of such transfer, of at least $500 Million
and (iii) immediately prior to such transfer, controls real estate equity assets
of at least $1 Billion.

 

“Quality Assurance Reports” shall mean any quality assurance reports of
inspection or compliance from a Franchisor under a Franchise Agreement with
respect to any Individual Property.

 

“Rating Agencies” shall mean each of S&P, Moody’s, and Fitch, and any other
nationally-recognized statistical rating agency which has been approved by
Lender and has rated the Securities.

 

“Rating Confirmation” means each of the Rating Agencies which have assigned
ratings to any Securities shall have confirmed in writing that the occurrence of
the event with respect to which such Rating Confirmation is sought shall not
result in a downgrade, qualification or withdrawal of the then current ratings
assigned to the Securities in connection with a Securitization. In the event
that no Securities are outstanding or the Loan is not part of a Securitization,
any action that would otherwise require a Rating Confirmation shall require the
consent of the Lender.

 

“Real Estate Investment Trust” shall have the meaning set forth in
Section 5.1.26 hereof.

 

“Reference Bank” shall mean a leading bank engaged in transactions in Eurodollar
deposits in the international Eurocurrency market that has an established place
of business in London. If any such Reference Bank should be removed from the
Telerate Page 3750 or in any other way fail to meet the qualifications of a
Reference Bank, Lender may designate alternative Reference Banks meeting the
criteria specified above.

 

“Register” shall have the meaning set forth in Section 9.7.2(h) hereof.

 

“Registration Statement” shall have the meaning set forth in Section 9.2(b)
hereof.

 

“Reimbursement Contribution” shall have the meaning set forth in Section 9.6(c)
hereof.

 

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“REIT” shall mean MeriStar Hospitality Corporation, a Maryland corporation,
together with its successors and permitted assigns.

 

“REIT Rules” shall have the meaning set forth in Section 5.1.26 hereof.

 

“Release of Hazardous Materials” shall mean any release, deposit, discharge,
emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring,
emptying, escaping, dumping, or disposing of Hazardous Materials into the
environment.

 

“Release Price” shall mean, for each Individual Property, (i) prior to the
Payment Date occurring in [October], 2006, provided that the aggregate Allocated
Loan Amounts of all Individual Properties released pursuant to Section 2.5
hereof (including the Individual Property which is the subject of the release)
does not exceed ten percent (10%) of the original principal amount of the Loan,
one hundred five percent (105%) of the Allocated Loan Amount for such Individual
Property, and (ii) on or after the earlier to occur of (a) the Payment Date
occurring in [October], 2006 and (b) the date on which the aggregate Allocated
Loan Amounts of all Individual Properties released pursuant to Section 2.5
hereof (including the Individual Property which is the subject of the release)
would exceed ten percent (10%) of the original principal amount of the Loan, one
hundred twenty percent (120%) of the Allocated Loan Amount for such Individual
Property.

 

“Release Property” shall have the meaning set forth in Section 2.6 hereof.

 

“Release Property Transferor” shall have the meaning set forth in
Section 2.5.1(h) hereof.

 

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

 

“Renewal Lease” shall have the meaning set forth in Section 5.1.17(a) hereof.

 

“Rents” shall have the meaning set forth in Article 1 of the Security Instrument
with respect to each Individual Property.

 

“Replacement Franchise Agreement” shall mean, collectively, (a) either (i) a
franchise agreement with a Qualified Franchisor substantially in the same form
and substance as the Franchise Agreement, or (ii) a franchise agreement with a
Qualified Franchisor, which franchise agreement shall be reasonably acceptable
to Lender in form and substance, provided, with respect to this subclause (ii),
Lender, at its option, may require that (A) after the occurrence of a
Securitization, Borrower obtain a Rating Confirmation with respect to such
franchise agreement; and (B) a “comfort letter” reasonably satisfactory in form
and substance to Lender, be executed and delivered by the Qualified Franchisor
to Lender.

 

“Replacement Interest Rate Cap Agreement” means an interest rate cap agreement
from an Acceptable Counterparty with terms substantially identical to the
Interest Rate Cap Agreement.

 

“Replacement Management Agreement” shall mean, collectively, (a) either (i) a
management agreement with a Qualified Manager substantially in the same form and
substance

 

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as the Management Agreement, or (ii) a management agreement with a Qualified
Manager, which management agreement shall be acceptable to Lender in form and
substance, provided, with respect to this subclause (ii), Lender, at its option,
may require that (A) after the occurrence of a Securitization, Borrower obtain a
Rating Confirmation with respect to such management agreement; and (B) a
subordination of management agreement substantially in the form of the
Assignment of Management Agreement (or such other form acceptable to Lender), be
executed and delivered to Lender by Borrower, Mortgage Borrower and such
Qualified Manager at Borrower’s expense and (C) after the occurrence of a
Securitization, if such replacement manager is an Affiliated Manager, Borrower
shall have delivered, or cause to be delivered, to Lender, an updated Insolvency
Opinion acceptable to Lender with respect to such Affiliated Manager.

 

“Replacement Operating Lease” shall have the meaning set forth in
Section 5.1.24(c) hereof.

 

“Replacement Reserve Fund” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

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

 

“Required Repair Fund” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

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

 

“Reserve Fund Deposits” shall mean the amounts to be deposited into the Reserve
Funds for any given month or at any other time as provided in this Agreement or
in the other Loan Documents.

 

“Reserve Funds” shall mean the Tax and Insurance Escrow Fund, the Replacement
Reserve Fund, the Required Repair Fund, the Ground Lease Escrow Fund or any
other escrow or reserve fund established by the Loan Documents.

 

“Reserve Rate” shall mean the rate per annum which Lender determines to be
either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/1,000%) of the one-month United States dollar lending rates
that at least three major New York City banks selected by Lender are quoting, at
11:00 a.m. (New York time) on the relevant LIBOR Determination Date, to the
principal London offices of at least two of the Reference Banks, or (ii) in the
event that at least two such rates are not obtained, the lowest one-month United
States dollar lending rate which New York City banks selected by Lender are
quoting as of 11:00 a.m. (New York time) on such LIBOR Determination Date to
leading European banks.

 

“Responsible Officer” means with respect to a Person, the chairman of the board,
president, chief operating officer, chief financial officer, treasurer or vice
president-finance or the equivalent of such Person.

 

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

 

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“Restricted Party” shall mean Mortgage Borrower, Borrower, Principal, any
Guarantor, or any Affiliated Manager or any shareholder, partner, member or
non-member manager, or any direct or indirect legal or beneficial owner of,
Mortgage Borrower, Borrower, Principal, any Guarantor, any Affiliated Manager or
any non-member manager.

 

“River Hotel Pledgor” shall mean River Hotel Ltd. I, a Texas limited
partnership, together with its successors and assigns.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of McGraw-Hill,
Inc.

 

“Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance,
transfer or pledge of a direct or indirect legal or beneficial interest.

 

“Scheduled Amortization Payments” shall mean the amount of principal set forth
on Schedule V hereto to be paid on each Payment Date.

 

“Securities” shall have the meaning set forth in Section 9.1 hereof.

 

“Securitization” shall have the meaning set forth in Section 9.1 hereof.

 

“Securities Act” shall have the meaning set forth in Section 9.2(a) hereof.

 

“Security Instrument” shall mean, with respect to each Individual Property, that
certain first priority Mortgage (or Deed of Trust or Deed to Secure Debt, as
applicable) and Security Agreement, executed and delivered by Mortgage Borrower,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

 

“Servicer” shall have the meaning set forth in Section 9.3 hereof.

 

“Servicing Agreement” shall have the meaning set forth in Section 9.3 hereof.

 

“Severed Loan Documents” shall have the meaning set forth in 8.2.(c) hereof.

 

“Spread Maintenance Premium” means, with respect to any repayment of the
outstanding principal amount of the Loan prior to the end of the Lockout Period,
a payment to Lender in an amount equal to the sum of the present value of each
future installment of interest that would be payable under the Note on the
outstanding principal amount of the Loan from the date of such prepayment
through, but including, the end of the Lockout Period assuming an interest rate
equal to the Eurodollar Rate Margin, discounted at an interest rate per annum
equal to the LIBOR then in effect which such premium is payable for instruments
having a maturity coterminous with the end of the Lockout Period.

 

“State” shall mean, with respect to an Individual Property, the State or
Commonwealth in which such Individual Property or any part thereof is located.

 

“Strike Rate” shall mean 5.75%.

 

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“Subordination Agreement” means the subordination agreement dated the date
hereof between Lender and Operating Tenant as more specifically described on
Schedule XII attached hereto.

 

“Subordination of Management Agreement” shall mean those certain Subordination
of Management Agreement, dated as of the date hereof, among Lender, Borrower,
Mortgage Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

“Substitute Allocated Loan Amount” shall have the meaning set forth in
Section 2.6(ii) hereof.

 

“Substitute Collateral” shall have the meaning set forth in Section 2.6 (hh)
hereof.

 

“Substitute Property” shall have the meaning set forth in Section 2.6 hereof.

 

“Survey” shall mean, with respect to an Individual Property, a survey prepared
by a surveyor licensed in the State where such Individual Property is located
and reasonably satisfactory to Lender and the company or companies issuing the
Title Insurance Policies, and containing a certification of such surveyor
reasonably satisfactory to Lender or an update or certificate of no change with
respect to the same, reasonably satisfactory to Lender.

 

“Syndication” shall have the meaning set forth in Section 9.7.2(a) hereof.

 

“Tax and Insurance Escrow Fund” shall have the meaning set forth in Section 7.2
hereof.

 

“Taxes” shall mean all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against any Individual Property or part thereof.

 

“Telerate Page 3750” means the display designated as page 3750 on the Dow Jones
Telerate Service (or such other page as may replace page 3750 on that service or
such other service as may be nominated by the British Bankers-Association as the
information vendor for the purposes of displaying British Bankers-Association
Interest Settlement Rates for U.S. dollar deposits).

 

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

 

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

 

“Transfer” shall have the meaning set forth in Section 5.2.10(a) hereof.

 

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State of New York.

 

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“UCC Financing Statements” shall mean the UCC financing statement delivered in
connection with the Pledge Agreement and the other Loan Documents and filed in
the applicable filing offices.

 

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

 

“Underwriter Group” shall have the meaning set forth in Section 9.2(b) hereof.

 

“U.S. Obligations” shall mean direct non-callable obligations of the United
States of America.

 

“USPAP” shall mean the Uniform Standard of Professional Appraisal Practice.

 

“Working Day” shall mean any day on which dealings in foreign currencies and
exchange are carried on in London, England and in New York, New York.

 

Section 1.2 Principles of Construction.

 

(a) All references to sections and schedules are to sections and schedules in or
to this Agreement unless otherwise specified. All uses of the word “including”
shall mean “including, without limitation” unless the context shall indicate
otherwise. Unless otherwise specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined. All covenants, representations, terms and conditions contained
in this Agreement applicable to (i) Property or Properties shall be deemed to
apply to each Individual Property individually, (ii) Operating Tenant shall be
deemed to apply to each Operating Tenant individually, (iii) Operating Lease
shall be deemed to apply to each Operating Lease individually and (iv) Mortgage
Borrower shall be deemed to apply to each Mortgage Borrower, as applicable,
individually. With respect to terms defined by cross-reference to the Mortgage
Loan Documents, such defined terms shall have the definitions set forth in the
Mortgage Loan Documents as of the date hereof, and no modifications to the
Mortgage Loan Documents shall have the effect of changing such definitions for
the purpose of this Agreement unless Lender expressly agrees that such
definitions as used in this Agreement have been revised or Lender consents to
the modification documents. With respect to any provisions incorporated by
reference herein from the Mortgage Loan Agreement, such provisions shall be
deemed a part of this Agreement notwithstanding the fact that the Mortgage Loan
shall no longer be effective for any reason.

 

II. GENERAL TERMS

 

Section 2.1 Loan Commitment; Disbursement to Borrower.

 

2.1.1 Agreement to Lend and Borrow.

 

Subject to and upon the terms and conditions set forth herein, Lender hereby
agrees to make and Borrower hereby agrees to accept the Loan on the Closing
Date.

 

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2.1.2 Single Disbursement to Borrower.

 

Borrower may request and receive only one borrowing hereunder in respect of the
Loan and any amount borrowed and repaid hereunder in respect of the Loan may not
be reborrowed.

 

2.1.3 The Note, Pledge Agreement and Loan Documents.

 

The Loan shall be evidenced by the Note and secured by the Pledge Agreement and
the other Loan Documents.

 

2.1.4 Use of Proceeds.

 

Borrower shall use the proceeds of the Loan solely for the purposes set forth in
the Certificate of Sources and Uses. All of the Mortgage Loan proceeds advanced
to Mortgage Borrower have been and will be used solely in accordance with the
Mortgage Loan Documents.

 

Section 2.2 Interest; Loan Payments; Late Payment Charge.

 

2.2.1 Payments.

 

(a) Interest. Interest on the outstanding principal balance of the Loan shall
accrue from the Closing Date to the end of the Interest Period in which the
Maturity Date occurs at the Applicable Interest Rate. Monthly installments of
interest only shall be paid on each Payment Date commencing on November 9, 2005
and on each subsequent Payment Date thereafter up to and including the Maturity
Date for the Interest Period in which such Payment Date or Maturity Date occurs.
Interest on the outstanding principal amount of the Loan for the period through
and including October 8, 2005 shall be paid by Borrower on the Closing Date. The
outstanding principal balance of the Loan together with all accrued and unpaid
interest thereon shall be due and payable on the Maturity Date (including,
without limitation, all interest that would accrue on the outstanding principal
balance of the Loan through the end of the Interest Period during which the
Maturity Date occurs (even if such period extends beyond the Maturity Date)).

 

(b) Principal. The Scheduled Amortization Payments shall be paid on November 9,
2005 and on each subsequent Payment Date thereafter.

 

(c) Extension of the Maturity Date. Borrower shall have the option to extend the
term of the Loan beyond the initial Maturity Date for three (3) successive terms
(each, an “Extension Option”) of one (1) year each (each, an “Extension Period”)
to (x) the Payment Date occurring in October, 2008, (y) the Payment Date
occurring in October, 2009 and (z) the Payment Date occurring in October, 2010
(each such date, the “Extended Maturity Date”), respectively, and, as to each
Extension Option, upon satisfaction of the following terms and conditions:

 

(i) no Event of Default shall have occurred and be continuing at the time the
applicable Extension Option is exercised and on the date that the applicable
Extension Period is commenced;

 

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(ii) Borrower shall notify Lender of its irrevocable election to extend the
Maturity Date as aforesaid not earlier than one hundred twenty (120) days and no
later than sixty (60) days prior to the then applicable Maturity Date;

 

(iii) Borrower shall obtain and deliver to Lender prior to exercise of such
Extension Option, one or more Replacement Interest Rate Cap Agreements, which
Replacement Interest Rate Cap Agreements shall be effective commencing on the
first day of such Extension Option and shall have a maturity date not earlier
than the next succeeding Extended Maturity Date;

 

(iv) in connection with each Extension Option, Borrower shall have delivered to
Lender together with its notice pursuant to subsection (c)(ii) of this
Section 2.2.1 and as of the commencement of the applicable Extension Option, an
Officer’s Certificate in form reasonably acceptable to the Lender certifying
that each of the representations and warranties of Borrower contained in the
Loan Documents is true, complete and correct in all material respects as of the
date of such Officer’s Certificate except to the extent such representations and
warranties are matters which by their nature can no longer be true and correct
(i) as a result of the passage of time or (ii) as a result of changes permitted
hereunder or otherwise approved in writing by Lender;

 

(v) in connection with the exercise of the second and third Extension Option,
Borrower shall have paid to Lender the Extension Fee; no Extension Fee shall be
due in connection with the First Extension Option; and

 

(vi) the Mortgage Loan Extension Option corresponding to the applicable
Extension Period shall have been exercised in accordance with the terms of the
Mortgage Loan Agreement.

 

(d) All references in this Agreement and in the other Loan Documents to the
Maturity Date shall mean the applicable Extended Maturity Date in the event the
applicable Extension Option is exercised.

 

(e) All payments and other amounts due under the Note, this Agreement and the
other Loan Documents shall be made without any setoff, defense or irrespective
of, and without deduction for, counterclaims.

 

2.2.2 Interest Calculation.

 

Interest on the outstanding principal balance of the Loan shall be calculated by
multiplying (a) the actual number of days elapsed in the period for which the
calculation is being made by (b) a daily rate equal to the Applicable Interest
Rate divided by three hundred sixty (360) by (c) the outstanding principal
balance on the first day of the applicable Interest Period.

 

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2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs.

 

(a) (i) In the event that Lender shall have determined (which determination
shall be in Lender’s reasonable judgment and shall be conclusive and binding
upon Borrower absent manifest error) that by reason of circumstances affecting
the interbank eurodollar market, and reasonable means do not exist for
ascertaining LIBOR, then Lender shall forthwith give notice by telephone of such
determination, to Borrower at least one (1) Business Day prior to the last day
of the related Interest Period, with a written confirmation of such
determination promptly thereafter. If such notice is given, the Loan shall bear
interest at the Adjusted Prime Rate beginning on the first day of the next
succeeding Interest Period.

 

(ii) If, pursuant to the terms of this Section 2.2.3, Loan is bearing interest
at the Adjusted Prime Rate and Lender shall determine (which determination shall
be in Lender’s reasonable judgment and shall be conclusive and binding upon
Borrower absent manifest error) that the event(s) or circumstance(s) which
resulted in such conversion shall no longer be applicable, Lender shall give
notice thereof to Borrower by telephone of such determination, confirmed in
writing, to Borrower as soon as reasonably practical, but in no event later than
one (1) Business Day prior to the last day of the then current Interest Period.
If such notice is given, the Loan shall bear interest at the Eurodollar Rate
beginning on the first day of the next succeeding Interest Period.
Notwithstanding any provision of this Agreement to the contrary, in no event
shall Borrower have the right to elect to have the Loan bear interest at either
the Eurodollar Rate or the Adjusted Prime Rate.

 

(b) If any requirement of law or any change therein or in the interpretation or
application thereof, shall hereafter make it unlawful for Lender or any
Co-Lender in good faith to make or maintain the portion of the Loan bearing
interest at the Eurodollar Rate, (I) the obligation of Lender or such Co-Lender
hereunder to make the Loan bearing interest at the Eurodollar Rate shall be
canceled forthwith and (II) the Loan shall automatically bear interest at the
Adjusted Prime Rate on the next succeeding Payment Date or within such earlier
period as required by Applicable Law. Borrower hereby agrees promptly to pay
Lender or any Co-Lender (within ten (10) days of Lender’s or any Co-Lender’s
written demand therefor), any additional amounts necessary to compensate Lender
or any Co-Lender for any reasonable costs incurred by Lender or such Co-Lender
in making any conversion in accordance with this Agreement, including, without
limitation, any interest or fees payable by Lender or such Co-Lender to lenders
of funds obtained by it in order to make or maintain the Loan hereunder. Upon
written demand from Borrower, Lender or the applicable Co-Lender shall
demonstrate in reasonable detail the circumstances giving rise to Lender’s or
such Co-Lender’s determination and the calculation substantiating the Adjusted
Prime Rate and any additional costs incurred by Lender or such Co-Lender in
making the conversion. Lender’s or Co-Lender’s written notice of such costs, as
certified to Borrower, shall be conclusive absent manifest error.

 

(c) In the event that any change in any requirement of any Applicable Law or in
the interpretation or application thereof, or compliance in good faith by Lender
or any Co-Lender with any request or directive (whether or not having the force
of law)

 

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hereafter issued from any Governmental Authority which is generally applicable
to all Lenders subject to such Governmental Authority’s jurisdiction:

 

(i) shall hereafter impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
Lender or any Co-Lender which is not otherwise included in the determination of
LIBOR hereunder;

 

(ii) shall, if the Loan is then bearing interest at the Eurodollar Rate,
hereafter have the effect of reducing the rate of return on Lender’s or any
Co-Lender’s capital as a consequence of its obligations hereunder to a level
below that which Lender or any Co-Lender could have achieved but for such
adoption, change or compliance (taking into consideration Lender’s or any
Co-Lender’s policies with respect to capital adequacy) by any amount deemed by
Lender or any Co-Lender to be material; or

 

(iii) shall, if the Loan is then bearing interest at the Eurodollar Rate,
hereafter impose on Lender or any Co-Lender any other condition, the result of
which is to increase the cost to Lender or such Co-Lender of making, renewing or
maintaining loans or extensions of credit or to reduce any amount receivable
hereunder;

 

then, in any such case, Borrower shall promptly pay Lender or such Co-Lender
(within ten (10) days of Lender’s or such Co-Lender’s written demand therefor),
any additional amounts necessary to compensate Lender or such Co-Lender for such
additional cost or reduced amount receivable which Lender or such Co-Lender
reasonably deems to be material. If Lender or any Co-Lender becomes entitled to
claim any additional amounts pursuant to this Section 2.2.3(c), Lender and such
Co-Lender shall provide Borrower with written notice specifying in reasonable
detail the event or circumstance by reason of which it has become so entitled
and the additional amount required to fully compensate Lender and such Co-Lender
for such additional cost or reduced amount. A certificate as to any additional
costs or amounts payable pursuant to the foregoing sentence submitted by Lender
or such Co-Lender to Borrower shall be conclusive absent manifest error. This
provision shall survive payment of the Note and the satisfaction of all other
obligations of Borrower under the Note, this Agreement and the other Loan
Documents.

 

(d) Borrower agrees to indemnify Lender and the Co-Lenders and to hold Lender
and the Co-Lenders harmless from any loss or expense which Lender or any
Co-Lender sustains or incurs as a consequence of (I) any default by Borrower in
payment of the principal of or interest on the Loan while bearing interest at
the Eurodollar Rate, including, without limitation, any such loss or expense
arising from interest or fees payable by Lender or any Co-Lenders to lenders of
funds obtained by it in order to maintain the Eurodollar Rate, (II) any
prepayment (whether voluntary or mandatory) of the Loan on a day that is not the
day immediately following the last day of an Interest Period with respect
thereto, including, without limitation, such loss or expense arising from
interest or fees payable by Lender or any Co-Lender to lenders of funds obtained
by

 

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it in order to maintain the Eurodollar Rate hereunder and (III) the conversion
(for any reason whatsoever, whether voluntary or involuntary) of the Applicable
Interest Rate from the Eurodollar Rate to the Adjusted Prime Rate with respect
to any portion of the outstanding principal amount of the Loan then bearing
interest at the Eurodollar Rate on a date other than the day immediately
following the last day of an Interest Period, including, without limitation,
such loss or expenses arising from interest or fees payable by Lender or any
Co-Lender to lenders of funds obtained by it in order to maintain the Eurodollar
Rate hereunder (the amounts referred to in clauses (I), (II) and (III) are
herein referred to collectively as the “Breakage Costs”). This provision shall
survive payment of the Note and the satisfaction of all other obligations of
Borrower under this Agreement and the other Loan Documents.

 

2.2.4 Payment on Maturity Date.

 

Borrower shall pay to Lender on the Maturity Date the outstanding principal
balance, all accrued and unpaid interest thereon, and all other amounts due
hereunder and under the Note, the Pledge Agreement and the other Loan Documents,
including, without limitation, all interest that would accrue on the outstanding
principal balance of the Loan through and including the Maturity Date.

 

2.2.5 Payments after Default.

 

Upon the occurrence and during the continuance of an Event of Default,
(a) interest on the outstanding principal balance of the Loan and, to the extent
permitted by Applicable Law, overdue interest and other amounts due in respect
of the Loan, shall accrue at the Default Rate, calculated from the date such
payment was due without regard to any grace or cure periods contained herein and
(b) Lender shall be entitled to receive and Borrower shall pay to Lender on each
Payment Date an amount equal to the Net Cash Flow After Debt Service for the
prior month, such amount to be applied by Lender to the payment of the Debt in
such order as Lender shall determine in its sole discretion, including, without
limitation, alternating applications thereof between interest and principal.
Interest at the Default Rate and Net Cash Flow After Debt Service shall both be
computed from the occurrence of the Default which gave rise to the Event of
Default until the actual receipt and collection of the Debt (or that portion
thereof that is then due). To the extent permitted by Applicable Law, interest
at the Default Rate shall be added to the Debt, shall itself accrue interest at
the same rate as the Loan and shall be secured by the Pledge Agreement. This
paragraph shall not be construed as an agreement or privilege to extend the date
of the payment of the Debt, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default; the
acceptance of any payment of Net Cash Flow After Debt Service shall not be
deemed to cure or constitute a waiver of any Event of Default; and Lender
retains its rights under the Note to accelerate and to continue to demand
payment of the Debt upon the happening of any Event of Default, despite any
payment of Net Cash Flow After Debt Service.

 

2.2.6 Late Payment Charge.

 

If any principal, interest or any other sums due under the Loan Documents is not
paid by Borrower on the date on which it is due, Borrower shall pay to Lender
within three (3) Business

 

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Days after demand an amount equal to the lesser of four percent (4%) of such
unpaid sum or the maximum amount permitted by Applicable Law in order to defray
the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Pledge Agreement and the other
Loan Documents to the extent permitted by Applicable Law.

 

2.2.7 Usury Savings.

 

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

 

2.2.8 Indemnified Taxes.

 

(a) All payments made by Borrower hereunder shall be made free and clear of, and
without reduction for or on account of, Indemnified Taxes, excluding
(i) Indemnified Taxes measured by Lender’s or any Co-Lender’s net income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
Lender or any Co-Lender is resident or organized, or any political subdivision
thereof, (ii) taxes measured by Lender’s or any Co-Lender’s overall net income,
and franchise taxes imposed on it, by the jurisdiction of Lender’s or such
Co-Lender’s applicable lending office or any political subdivision thereof or in
which Lender or such Co-Lender is resident or engaged in business, and
(iii) withholding taxes imposed by the United States of America, any state,
commonwealth, protectorate territory or any political subdivision or taxing
authority thereof or therein as a result of the failure of Lender or any
Co-Lender which is a Non-U.S. Entity to comply with the terms of paragraph
(b) below. If any non excluded Indemnified Taxes are required to be withheld
from any amounts payable to Lender or any Co-Lender hereunder, the amounts so
payable to Lender or such Co-Lender shall be increased to the extent necessary
to yield to Lender or such Co-Lender (after payment of all non excluded
Indemnified Taxes) interest or any such other amounts payable hereunder at the
rate or in the amounts specified hereunder. Whenever any non excluded
Indemnified Tax is payable pursuant to Applicable Law by Borrower, Borrower
shall send to Lender or the applicable Co-Lender an original official receipt
showing payment of such non excluded Indemnified Tax or other evidence of
payment reasonably satisfactory to Lender or the applicable Co-Lender. Borrower
hereby indemnifies Lender

 

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and each Co-Lender for any incremental taxes, interest or penalties that may
become payable by Lender or any Co-Lender which may result from any failure by
Borrower to pay any such non excluded Indemnified Tax when due to the
appropriate taxing authority or any failure by Borrower to remit to Lender or
any Co-Lender the required receipts or other required documentary evidence.

 

(b) In the event that Lender or any Co-Lender or any successor and/or assign of
Lender or any Co-Lender is not incorporated under the laws of the United States
of America or a state thereof (a “Non-U.S. Entity”) Lender and such Co-Lender
agrees that, prior to the first date on which any payment is due from such
entity hereunder, it will deliver to Borrower two duly completed copies of
United States Internal Revenue Service Form W 8BEN or W 8ECI or successor
applicable form, as the case may be, certifying in each case that such entity is
entitled to receive payments under the Note, without deduction or withholding of
any United States federal income taxes. Each entity required to deliver to
Borrower a Form W 8BEN or W 8ECI pursuant to the preceding sentence further
undertakes to deliver to Borrower two further copies of such forms, or successor
applicable forms, or other manner of certification, as the case may be, on or
before the date that any such form expires (which, in the case of the Form W
8ECI, is the last day of each U.S. taxable year of the Non-U.S. Entity) or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent form previously delivered by it to Borrower, and such other
extensions or renewals thereof as may reasonably be requested by Borrower,
certifying in the case of a Form W 8BEN or W 8ECI that such entity is entitled
to receive payments under the Note without deduction or withholding of any
United States federal income taxes, unless in any such case an event (including,
without limitation, any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent such entity from duly
completing and delivering any such form with respect to it and such entity
advises Borrower that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.

 

2.2.9 Replacement of Lenders.

 

Borrower shall be permitted to replace any Co-Lender that (i) requests
reimbursement for amounts owing pursuant to Section 2.2.3 or 2.2.8 or
(ii) defaults in its obligation to make Loans hereunder, with a replacement
financial institution, provided that (A) such replacement does not conflict with
any Applicable Law, (B) no Event of Default shall have occurred and be
continuing at the time of such replacement, (C) the replacement financial
institution shall purchase, at par, such Co-Lender’s Pro Rate Share of the Loan
and pay all other amounts owing to such replaced Co-Lender under this Agreement
and the other Loan Documents on or prior to the date of replacement, (E) the
Borrower shall be liable to such replaced Co-Lender under Section 2.2.3(d) if
the Loan owing to such replaced Co-Lender shall be purchased other than on the
last day of the Interest Period relating thereto, (F) the replacement financial
institution, if not already a Co-Lender, shall be reasonably satisfactory to
Lender and shall comply with the requirements of the Intercreditor Agreement
with respect to transfers of the Loan, (G) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.2.3 or 2.2.8, as the case may be, and (I) any
such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Lender or any Co-Lender shall have against the replaced Co-Lender.

 

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Section 2.3 Prepayments.

 

2.3.1 Voluntary Prepayments.

 

On any Payment Date, Borrower may, at its option, prepay the Loan in whole or in
part, upon satisfaction of the following conditions:

 

(a) Borrower shall provide prior written notice to Lender (which notice shall be
irrevocable) specifying the date (the “Prepayment Date”) upon which the
prepayment is to be made, which notice shall be delivered to Lender not less
than twenty (20) Business Days prior to such payment;

 

(b) Borrower shall pay to Lender, simultaneously with such prepayment, (i) all
accrued and unpaid interest calculated at the Applicable Interest Rate on the
amount of principal being prepaid through and including the Prepayment Date,
(ii) if such prepayment is not made on a Payment Date, all accrued and unpaid
interest on the amount of principal being prepaid through and including the
Prepayment Date, together with all interest on the principal amount being
prepaid which would have accrued from the Prepayment Date through and including
the immediately succeeding Payment Date, in each case calculated at the
Applicable Interest Rate for the Interest Period in which the prepayment occurs
(the “Interest Shortfall”), (iii) Breakage Costs, if any, without duplication of
any sums paid pursuant to the preceding clauses (i) and (ii), (iv) if such
prepayment occurs prior to the expiration of the Lockout Period, an amount equal
to the Spread Maintenance Premium, and (v) all other sums then due under this
Agreement, the Note or the other Loan Documents;

 

(c) each prepayment shall be in an aggregate principal amount of $1,000,000.00
or any integral multiple of $100,000.00 in excess thereof;

 

(d) Mortgage Borrower shall have simultaneously with such prepayment made a pro
rata prepayment of the Mortgage Loan pursuant to the Mortgage Loan Agreement;
and

 

(e) Such prepayment shall not be prohibited pursuant to the Mortgage Loan
Documents.

 

If a notice of prepayment is given by Borrower to Lender pursuant to this
Section 2.3.1, the amount designated for prepayment and all other sums required
under this Section 2.3.1 shall be due and payable on the Prepayment Date.
Notwithstanding the foregoing, Borrower shall be permitted the right to rescind
and revoke or postpone its notice of prepayment given in accordance with this
Section 2.3.1, provided that (i) a written notice of such rescission and
revocation or postponement is received by Lender no later than three
(3) Business Days prior to the date of prepayment indicated by Borrower and
(ii) Borrower pays Lender’s reasonable out-of-pocket costs and expenses incurred
as a result of Lender’s receipt of such notice of prepayment and its rescission,
revocation or postponement.

 

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2.3.2 Liquidation Events.

 

(a) In the event of (i) any Casualty to all or any portion of any Individual
Property, (ii) any Condemnation of all or any portion of any Individual
Property, (iii) a Transfer of any Individual Property in connection with
realization thereon by the Mortgage Lender following an Event of Default under
the Mortgage Loan, including without limitation a foreclosure sale, or (iv) any
refinancing of any Individual Property or the Mortgage Loan (each, a
“Liquidation Event”), Borrower shall cause the related Net Liquidation Proceeds
After Debt Service to be deposited directly into an account designated by
Lender. On each date on which Lender actually receives a distribution of Net
Liquidation Proceeds After Debt Service, if such date is a Payment Date, such
Net Liquidation Proceeds After Debt Service shall be applied to the outstanding
principal balance of the Note in an amount equal to one hundred percent
(100%) of such Net Liquidation Proceeds After Debt Service, together with
interest that would have accrued on such amount through the next Payment Date
and all other sums then due. In the event Lender receives a distribution of Net
Liquidation Proceeds After Debt Service on a date other than a Payment Date,
such amounts shall be held by Lender as collateral security for the Loan in an
interest bearing account, with such interest accruing to the benefit of
Borrower, and shall be applied by Lender on the next Payment Date.

 

(b) Borrower shall immediately notify Lender of any Liquidation Event once
Borrower has knowledge of such event. Borrower shall be deemed to have knowledge
of (i) a sale (other than a foreclosure sale) of any Individual Property on the
date on which a contract of sale for such sale is entered into, and a
foreclosure sale, on the date notice of such foreclosure sale is given, and
(ii) a refinancing of any Individual Property, on the date on which a commitment
for such refinancing is entered into. The provisions of this Section 2.3.2 shall
not be construed to contravene in any manner the restrictions and other
provisions regarding refinancing of the Mortgage Loan or Transfer of the
Property set forth in this Agreement and the other Loan Documents.

 

2.3.3 Prepayments After Default.

 

If, following an Event of Default, Borrower tenders payment of all or any part
of the Debt, or if all or any portion of the Debt is recovered by Lender after
such Event of Default (including, without limitation, through application of any
Net Liquidation Proceeds After Debt Service), such tender or recovery shall be
deemed a voluntary prepayment hereunder and Borrower shall pay, in addition to
the Debt, (i) all accrued and unpaid interest calculated at the Applicable
Interest Rate on the amount of principal being prepaid through and including the
Prepayment Date, (ii) the Interest Shortfall, if applicable, with respect to the
amount prepaid, (iii) Breakage Costs, if any, without duplication of any sums
paid pursuant to the preceding clause (ii), (iv) if such payment occurs prior to
the expiration of the Lockout Period, an amount equal to the Spread Maintenance
Premium, and (v) all other sums due under this Agreement, the Note or the other
Loan Documents in connection with a partial or total prepayment.

 

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2.3.4 Making of Payments.

 

Each payment by Borrower hereunder or under the Note shall be made in funds
settled through the New York Clearing House Interbank Payments System or other
funds immediately available to Lender by 12:00 p.m., New York City time, on or
prior to the date such payment is due, to Lender by deposit to such account as
Lender may designate by written notice to Borrower. Whenever any payment
hereunder or under the Note shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the first Business Day succeeding
such scheduled due date.

 

2.3.5 Application of Prepayments.

 

All prepayments received pursuant to this Section 2.3 and Section 2.5 shall be
applied first, to interest on the outstanding principal balance being prepaid
that accrued through and including the Prepayment Date, second, to interest on
the outstanding principal balance being prepaid that would have accrued through
the end of the Interest Period in which the prepayment occurred, and if
applicable, through the end of the Succeeding Interest Period, notwithstanding
that such Interest Period or Succeeding Interest Period extends beyond the date
of prepayment, and third, to the payments of principal due under the Loan in the
inverse order of maturity.

 

Section 2.4 Interest Rate Cap Agreement.

 

(a) In the event that Mortgage Lender waives the requirement for Mortgage
Borrower to obtain and maintain the Mortgage Interest Rate Cap Agreement in
accordance with the terms of Section 2.4 of the Mortgage Loan Agreement, the
Mortgage Loan has been paid in full, or Mortgage Borrower is in violation of its
obligations of Section 2.4 of the Mortgage Loan Agreement, Borrower shall,
simultaneously with the occurrence of any such event, obtain, or cause to be
obtained, and shall thereafter maintain in effect, an Interest Rate Cap
Agreement with an Acceptable Counterparty, which shall be coterminous with the
Loan and the Mortgage Loan, if applicable, and have a notional amount which
shall not at any time be less than the outstanding principal balance of the Loan
and the Mortgage Loan, if applicable, and which shall at all times have a strike
rate equal to the Strike Rate. The Interest Rate Cap Agreement shall be written
on the then current standard ISDA documentation, and shall provide for interest
periods and calculations consistent with the payment terms of this Agreement.
The Counterparty shall be obligated under the Interest Rate Cap Agreement to
make monthly payments equal to the excess of one (1) month LIBOR over the Strike
Rate, calculated on the notional amount. The notional amount of the Interest
Rate Cap Agreement may be reduced from time to time in amounts equal to any
prepayment of the principal of the Loan in accordance with Sections 2.3 and 2.5
hereof.

 

(b) Borrower shall collaterally assign to Lender pursuant to an Assignment of
Interest Rate Cap Agreement substantially in the form annexed hereto as Exhibit
C, all of its right, title and interest to receive any and all payments under
the Interest Rate Cap Agreement (and any related guarantee, if any) and shall
deliver to Lender an executed counterpart of such Interest Rate Cap Agreement
and notify the Counterparty of such collateral assignment (either in such
Interest Rate Cap Agreement or by separate instrument). Borrower shall cause the
Counterparty to agree in writing to make all payments it is required to make
under the Interest Rate Cap Agreement directly to the

 

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Lockbox Account or if the Lockbox Account is not then required to be in effect,
into such account as specified by Lender. At such time as the Loan is repaid in
full, all of Lender’s right, title and interest in the Interest Rate Cap
Agreement shall terminate and Lender shall promptly execute and deliver at
Borrower’s sole cost and expense, such documents as may be required to evidence
Lender’s release of the Interest Rate Cap Agreement and to notify the
Counterparty of such release.

 

(c) Borrower shall comply with all of its material obligations under the terms
and provisions of the Interest Rate Cap Agreement. All amounts paid by the
Counterparty under the Interest Rate Cap Agreement shall be deposited
immediately into the Lockbox Account or if the Lockbox Account is not then
required to be in effect, into such account as specified by Lender. Borrower
shall take all actions reasonably requested by Lender to enforce Lender’s rights
under the Interest Rate Cap Agreement in the event of a default by the
Counterparty and shall not waive, amend or otherwise modify any of its rights
thereunder.

 

(d) In the event of any downgrade, withdrawal or qualification of the rating of
the Counterparty below “AA-” (or the equivalent) by the Rating Agencies,
Borrower shall replace the Interest Rate Cap Agreement with a Replacement
Interest Rate Cap Agreement with an Acceptable Counterparty not later than
thirty (30) Business Days following receipt of notice from Lender or Servicer of
such downgrade, withdrawal or qualification.

 

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

 

(f) Each Interest Rate Cap Agreement shall contain the following language or its
equivalent: “In the event of any downgrade, withdrawal or qualification of the
rating of the Counterparty below “AA-” (or the equivalent) by the Rating
Agencies, the Counterparty must, within 30 Business Days, either (x) post
collateral on terms acceptable to each Rating Agency or (y) find a replacement
Acceptable Counterparty, at the Counterparty’s sole cost and expense, acceptable
to each Rating Agency (notwithstanding the foregoing, if the Counterparty’s
rating is downgraded to “A” or lower, only the option described in clause
(y) will be acceptable); provided that, notwithstanding such a downgrade,
withdrawal or qualification, unless and until the Counterparty transfers the
Interest Rate Cap Agreement to a replacement Acceptable Counterparty pursuant to
the foregoing clause (y), the Counterparty will continue to perform its
obligations under the Interest Rate Cap Agreement. Failure to satisfy the
foregoing shall constitute an Additional Termination Event as defined by
Section 5(b)(v) of the ISDA Master Agreement, with the Counterparty as the
Affected Party.”

 

(g) In connection with an Interest Rate Cap Agreement, Borrower shall obtain and
deliver to Lender an opinion of counsel from counsel for the Counterparty (upon

 

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which Lender and its successors and assigns may rely) which shall provide, in
relevant part, that:

 

(1) the Counterparty is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and has the organizational
power and authority to execute and deliver, and to perform its obligations
under, the Interest Rate Cap Agreement;

 

(2) the execution and delivery of the Interest Rate Cap Agreement by the
Counterparty, and any other agreement which the Counterparty has executed and
delivered pursuant thereto, and the performance of its obligations thereunder
have been and remain duly authorized by all necessary action and do not
contravene any provision of its certificate of incorporation or by-laws (or
equivalent Organizational Documents) or any law, regulation or contractual
restriction binding on or affecting it or its property;

 

(3) all consents, authorizations and approvals required for the execution and
delivery by the Counterparty of the Interest Rate Cap Agreement, and any other
agreement which the Counterparty has executed and delivered pursuant thereto,
and the performance of its obligations thereunder have been obtained and remain
in full force and effect, all conditions thereof have been duly complied with,
and no other action by, and no notice to or filing with any governmental
authority or regulatory body is required for such execution, delivery or
performance;

 

Section 2.5 Release of Property.

 

2.5.1 Release of Individual Property.

 

Provided no Event of Default has occurred and is continuing, unless such Event
of Default relates solely to an Individual Property and such Event of Default
would be cured by the release of such Individual Property, Borrower may
(A) obtain the release of (i) the security interest held by Lender in the
Pledged Interests in the applicable Mortgage Borrower owning the Individual
Property being simultaneously released from the Lien of the Security Instrument
thereon pursuant to Section 2.5.1 of the Mortgage Loan Agreement, provided that
such Mortgage Borrower shall not continue to own any other Individual Property
after giving effect to the release and Borrower shall not continue to own any
direct or indirect ownership interest in such Mortgage Borrower, and
(ii) Borrower’s obligations under the Loan Documents with respect to such
Pledged Interests (other than those expressly stated to survive), or (B) cause
Mortgage Borrower to obtain a release of an Individual Property from the Lien of
the related Security Instrument pursuant to the terms of Section 2.5.1 of the
Mortgage Loan Agreement in the event that such Mortgage Borrower shall continue
after such release to own any other Individual Property, but only upon the
satisfaction of each of the following conditions:

 

(a) Borrower shall provide Lender with at least twenty (20) days but no more
than ninety (90) days prior written notice of its request to obtain a release of
such security interest;

 

(b) Borrower shall have delivered to Lender evidence that would be satisfactory
to a prudent institutional mezzanine loan lender that (i) Mortgage Borrower

 

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has simultaneously complied with all of the terms and conditions set forth in
Section 2.5.1 of the Mortgage Loan Agreement in all material respects, with
respect to a release of the Security instrument corresponding to the release
requested pursuant to this Section 2.5.1 and (ii) Mortgage Lender has delivered
(or is simultaneously delivering) such release to Mortgage Borrower;

 

(c) Lender shall have received a wire transfer of immediately available federal
funds in an amount equal to the Release Price for the applicable Individual
Property, together with (i) all accrued and unpaid interest calculated at the
Applicable Interest Rate on the amount of principal being prepaid through and
including the Prepayment Date together with an amount equal to the interest that
would have accrued at the Applicable Interest Rate on the amount of principal
being prepaid through the end of the Interest Period in which such prepayment
occurs, notwithstanding that such Interest Period extends beyond the date of
prepayment, (ii) the Interest Shortfall, if applicable, with respect to the
amount prepaid, (iii) Breakage Costs, if any, without duplication of any sums
paid pursuant to the preceding clauses (i) and (ii), (iv) if such release occurs
prior to the expiration of the Lockout Period, an amount equal to the Spread
Maintenance Premium; notwithstanding the foregoing, no Spread Maintenance
Premium shall be due in connection with such release if such release occurs
prior to the Payment Date occurring in [October], 2006 and the aggregate
Allocated Loan Amounts of all Individual Properties released pursuant to this
Section 2.5 (including the Individual Property that is the subject of the
release) does not exceed ten percent (10%) of the original principal balance of
the Loan, and (v) all other sums due under this Agreement, the Note or the other
Loan Documents in connection with a partial prepayment;

 

(d) Borrower shall submit to Lender, not less than twenty (20) days prior to the
date of such release, a release of Lien of the Pledge Agreement (and related
Loan Documents) for such security interests for execution by Lender. In
addition, Borrower shall provide all other documents and affidavits that may be
required by Applicable Law in connection with such release, together with an
Officer’s Certificate certifying that (i) such documentation is in compliance
with all applicable Legal Requirements, and (ii) the release will not impair or
otherwise adversely affect the Liens, security interests and other rights of
Lender under the Loan Documents not being released (or as to the parties to the
Loan Documents and Collateral subject to the Loan Documents not being released);

 

(e) With respect to any partial prepayment of a portion of the outstanding
principal balance of the Loan in connection with a release of the applicable
Pledged Interests in accordance with all the conditions provided for in this
Section 2.5.1, Lender shall release its security interest in the Pledged
Interests in the applicable Mortgage Borrower owning the Individual Property
being simultaneously released from the Lien of the Security Instrument thereon
pursuant to Section 2.5.1 of the Mortgage Loan Agreement (but only in the event
that such Mortgage Borrower does not continue to own any other Individual
Property after giving effect to the release and Borrower does not continue to
own any direct or indirect ownership interest in such Mortgage Borrower) and the
other Loan Documents relating to such Pledged Interests and remit to Borrower
any remaining Reserve Funds held solely with respect to such Individual
Property;

 

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(f) After giving effect to such release, Lender shall have determined that the
Debt Service Coverage Ratio for the Properties then remaining subject to the
Liens of the Security Instruments shall be at least equal to the greater of
(i) the Debt Service Coverage Ratio for the twelve (12) full calendar months
immediately preceding the Closing Date, and (ii) the Debt Service Coverage Ratio
for all of the then remaining Properties (including the Individual Property to
be released) for the twelve (12) full calendar months immediately preceding the
release of the Individual Property; if the conditions set forth in this clause
(e) are not satisfied at the time of the proposed release, Borrower may satisfy
such conditions by prepaying, in accordance with the requirements of
Section 2.3.1 hereof, an amount of principal sufficient to cause each of the
required Debt Service Coverage Ratios set forth in this clause (f) to be
satisfied; notwithstanding the foregoing, if the Individual Property proposed to
be released is either the Doubletree Albuquerque Property or the Hilton Airport
Grand Rapids Property, and such release occurs prior to the Payment Date
occurring in [October], 2006, the conditions of this clause (f) do not have to
be satisfied as a condition to such release;

 

(g) After giving effect to such release, Lender shall have determined that the
aggregate Operating Lease Rents for the immediately preceding twelve (12) month
period for the Properties then remaining subject to the Liens of the Security
Instruments shall be sufficient to cover the Adjusted Debt Service, Mortgage
Adjusted Debt Service, deposits to the Reserve Funds and all other amounts
scheduled to become due and payable hereunder and under the Mortgage Loan
Agreement during the next succeeding twelve (12) month period; if the conditions
set forth in this clause (g) are not satisfied at the time of the proposed
release, Borrower may satisfy such conditions by prepaying, in accordance with
the requirements of Section 2.3.1 hereof, an amount of principal sufficient to
cause the conditions set forth in this clause (g) to be satisfied;

 

(h) Lender shall have received evidence that would be satisfactory to a prudent
institutional mezzanine loan lender that the Individual Property to be released
pursuant to the Mortgage Loan Agreement shall be conveyed to a Person other than
Mortgage Borrower, Borrower or Principal and that Borrower does not own any
direct or indirect ownership interest in such Person;

 

(i) If the Operating Tenant with respect to the Operating Lease for the
Individual Property to be released is also the Operating Tenant with respect to
an Operating Lease for any Individual Property that shall remain subject to the
Lien of a Security Instrument, then the Operating Lease for the Property to be
released shall have been terminated, and, after giving effect to such release,
the Mortgage Borrower that owned such Individual Property prior thereto (the
“Release Property Transferor”) is the owner of an Individual Property that
remains encumbered by the Lien of the Security Instruments, Borrower shall, or
cause Mortgage Borrower to, deliver an estoppel certificate from the Operating
Tenant in form that would be satisfactory to a prudent institutional mezzanine
loan lender stating that the Operating Lease has been terminated and that the
Operating Tenant has released the Release Property Transferor from all liability
and obligation to the Operating Tenant in connection with the Operating Lease
and that the Release Property Transferor has no liability for the payment of any
termination payments or any other payments due to the Operating Tenant and no
further liability or obligation in connection with said Operating Lease;

 

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(j) Lender shall have received payment of all Lender’s costs and expenses,
including due diligence review costs and reasonable counsel fees and
disbursements incurred in connection with the release of such Individual
Property from the Lien of the related Security Instrument and, if applicable, of
such Pledged Interests from the lien of the related Pledge Agreement, and the
review and approval of the documents and information required to be delivered in
connection therewith; and

 

(k) If the Individual Property to be released pursuant to the Mortgage Loan
Agreement is the Philadelphia Property, in addition to the above, Lender shall
have received evidence that would be satisfactory to a prudent institutional
mezzanine loan lender that the Austin Pledged Interests shall be conveyed to a
Person other than Mortgage Borrower, Borrower or Principal and that Borrower
does not own any direct or indirect ownership interest in such Person.

 

2.5.2 Release on Payment in Full.

 

Lender shall, upon the written request and at the expense of Borrower, upon
payment in full of all principal and interest due on the Loan and all other
amounts due and payable under the Loan Documents in accordance with the terms
and provisions of the Note and this Agreement, release the Lien of the Pledge
Agreement or the Collateral not theretofore released and remit any remaining
Reserve Funds to Borrower if the Loan has been paid in full.

 

Section 2.6 Substitution of Properties.

 

Subject to the terms of this Section 2.6, Borrower may cause Mortgage Borrower
to obtain from time to time a release of one or more Individual Properties from
the Lien of the related Security Instrument (each, a “Release Property”)
provided that the aggregate Allocated Loan Amounts of all the security interests
released under this Section 2.6 (including the security interest that is the
subject of the release), does not exceed 25% of the original principal amount of
the Loan, by substituting therefor another hotel property of substantially
similar kind and quality acquired by Mortgage Borrower or an Affiliate of
Mortgage Borrower (individually, a “Substitute Property” and collectively, the
“Substitute Properties”) (provided, however, if the Substitute Property shall be
owned by an Affiliate of Mortgage Borrower said Affiliate, (i) shall be wholly
owned and controlled directly by the Borrower, and if such Affiliate has a
Principal, such Principal shall be wholly owned and controlled directly by
Borrower, (ii) shall assume all the obligations of Mortgage Borrower under the
Mortgage Loan Documents and (iii) shall become a party to the Mortgage Note and
the other Loan Documents and shall be bound by the terms and provisions thereof
as if it had executed the Mortgage Note and the Mortgage Loan Documents and
shall have the rights and obligations of Mortgage Borrower thereunder), provided
that the following conditions precedent are satisfied:

 

(a) Lender shall have received at least thirty (30) days prior written notice
requesting the substitution and identifying the Substitute Property and Release
Property.

 

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(b) Borrower has delivered to Lender evidence satisfactory to a prudent
institutional mezzanine loan lender that all of the conditions set forth in the
Mortgage Loan Agreement for such release and substitution shall have been
satisfied.

 

(c) If the applicable Mortgage Borrower shall continue to own an Individual
Property after giving effect to the release and substitution, Lender shall have
received (i) a copy of a deed conveying all of Mortgage Borrower’s right, title
and interest in and to the Release Property to a Person other than Borrower,
Mortgage Borrower or Principal pursuant to an arms length transaction and
evidence that Borrower does not own any direct or indirect ownership interest in
such Person and (ii) a letter from Mortgage Borrower countersigned by a title
insurance company acknowledging receipt of such deed and agreeing to record such
deed in the real estate records for the county in which the Release Property is
located.

 

(d) If the Operating Tenant with respect to the Operating Lease for the Release
Property is also the Operating Tenant with respect to an Operating Lease for any
Individual Property that shall remain subject to the Lien of a Security
Instrument, then the Operating Lease for the Release Property shall have been
terminated, and, after giving effect to such Release, the Release Property
Transferor is the owner of an Individual Property that remains encumbered by the
Lien of the Security Instruments, an estoppel certificate from the Operating
Tenant in form that would be satisfactory to a prudent institutional mezzanine
loan lender stating that the Operating Lease has been terminated and that the
Operating Tenant has released the Release Property Transferor from all liability
for the payment of any and all termination payments or any other payments due to
the Operating Tenant pursuant to the terms of the Operating Lease and that the
Release Property Transferor has no further liability or obligation in connection
with said Operating Lease.

 

(e) Evidence of the qualification and good standing of the related Mortgage
Borrower and Operating Tenant (and the related Principals, if necessary) in the
state where the Substitute Property is located.

 

(f) A certified copy of (i) the Operating Lease for the Substitute Property
between the related Mortgage Borrower and Operating Tenant or (ii) an amendment
to the Operating Lease to include the Substitute Property, in either case in a
form and substance which would be satisfactory to a prudent institutional
mezzanine loan lender, together with a Subordination Agreement with respect to
such Operating Lease.

 

(g) Lender shall have received a current Appraisal of the Substitute Property
prepared within one hundred eighty (180) days prior to the release and
substitution showing an appraised value equal to or greater than the appraised
value of the Release Property as of the Closing Date.

 

(h) Lender shall have received a certificate of Borrower certifying, together
with other evidence that would be satisfactory to a prudent institutional
mezzanine loan lender that, after the substitution of a Substitute Property and
the release of the Release Property, (i) the Debt Service Coverage Ratio for the
twelve (12) full calendar months

 

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immediately preceding the date of the substitution with respect to all
Properties remaining subject to the lien of the Security Instruments after the
substitution shall be equal to or greater than (A) Debt Service Coverage Ratio
for the twelve (12) full calendar months immediately preceding the Closing Date
and (B) Debt Service Coverage Ratio for the twelve (12) full calendar months
immediately preceding the substitution (including the Release Property and
excluding the Substitute Property) and (ii) the Debt Service Coverage Ratio for
the twelve (12) months immediately preceding the substitution with respect to
the Substitute Property is equal or greater than the Debt Service Coverage Ratio
for the twelve (12) full calendar months immediately preceding the Closing Date
with respect to the Release Property. If the conditions set forth in this clause
(h) are not satisfied at the time of the proposed release and substitution,
Borrower may satisfy such conditions by prepaying, in accordance with the
requirements of Section 2.3.1 hereof, an amount of principal sufficient to cause
each of the required Debt Service Coverage Ratios set forth in this clause
(h) to be satisfied.

 

(i) If the Loan is part of a Securitization, Lender shall have received a Rating
Confirmation with respect to such release and substitution. If the Loan is not
part of a Securitization, Lender shall have consented in writing to such release
and substitution, which consent shall be given in Lender’s reasonable discretion
applying the requirements of a prudent institutional mezzanine loan lender with
respect to real estate collateral of similar size, scope and value of the
Substitute Property.

 

(j) No Event of Default shall have occurred and be continuing and Borrower shall
be in compliance in all material respects with all terms and conditions set
forth in this Agreement and in each other Loan Document on Borrower’s part to be
observed or performed. Lender shall have received a certificate from Borrower
confirming the foregoing, stating that the representations and warranties of
Borrower contained in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of the release and
substitution with respect to Borrower, the Properties and the Substitute
Property and containing any other representations and warranties with respect to
Borrower, the Properties, the Substitute Property or the Loan as (i) Lender, if
a Securitization has not occurred, or (ii) the Rating Agencies, if a
Securitization has occurred, may require, unless such certificate would be
inaccurate, such certificate to be in form and substance satisfactory to Lender
or the Rating Agencies, as applicable.

 

(k) Borrower shall (A) have executed, acknowledged and delivered to Lender an
Environmental Indemnity with respect to the Substitute Property from Borrower
and Guarantor and (B) have caused Guarantor to acknowledge and confirm its
obligations under the Loan Documents. The Environmental Indemnity shall be the
same in form and substance as the Environmental Indemnity executed and delivered
with respect to the related Release Property subject to modifications reflecting
only the Substitute Property as the Individual Property and such modifications
reflecting the laws of the State in which the Substitute Property is located.

 

(l) Mortgage Borrower shall have received an Owner’s Title Policy (or a marked,
signed and redated commitment to issue such Owner’s Title Policy) insuring the
Substitute Property, issued by the title company that issued the Owner’s Title
Policy

 

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insuring the existing Individual Properties and dated as of the date of the
substitution, with reinsurance and direct access agreements that replace such
agreements issued in connection with the Owner’s Title Policy insuring the
Release Property. The Owner’s Title Policy issued with respect to the Substitute
Property shall (1) provide coverage in the amount of the fair market value of
the Substitute Property, (2) insure the title on the Substitute Property, free
and clear of all exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the terms of
any endorsements), (3) contain such endorsements and affirmative coverages as
are then available and are contained in the Owner’s Policies insuring the
existing Individual Properties, and such other endorsements or affirmative
coverage that a prudent institutional property owner would require and
(4) contain an endorsement to the Owner’s Title Policy insuring that the
Substitute Property constitutes a separate tax lot or, if such an endorsement is
not available in the State in which the Substitute Property is located, a letter
from the title insurance company issuing such Title Insurance Policy stating
that the Substitute Property constitutes a separate tax lot; if such endorsement
or letter is not available, Borrower shall deliver a letter from the appropriate
taxing authority stating that the Substitute Property constitutes a separate tax
lot. Lender also shall have received copies of paid receipts or other evidence
showing that all premiums in respect of such endorsements and Title Insurance
Policies have been paid.

 

(m) Lender shall have received a current or updated Survey for each Substitute
Property, certified to the title company and Lender and its successors and
assigns, in the same form and having the same content as the certification of
the Survey of the Release Property prepared by a professional land surveyor
licensed in the State in which the Substitute Property is located and acceptable
to the Rating Agencies in accordance with the 1999 Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys. Such Survey shall reflect the
same legal description contained in the Owner’s Title Policy relating to such
Substitute Property and shall include, among other things, a metes and bounds
description of the real property comprising part of such Substitute Property
(unless such real property has been satisfactorily designated by lot number on a
recorded plat). The surveyor’s seal shall be affixed to each Survey and each
Survey shall certify whether or not the surveyed property is located in a
“one-hundred-year flood hazard area.”

 

(n) Lender shall have received valid certificates of insurance indicating that
the requirements for the policies of insurance required for an Individual
Property hereunder have been satisfied with respect to the Substitute Property
and evidence of the payment of all Insurance Premiums payable for the existing
policy period.

 

(o) Lender shall have received a Phase I environmental report dated not more
than one hundred eighty (180) days prior to the proposed date of substitution
and otherwise acceptable to a prudent institutional mezzanine loan lender and,
if warranted by the findings of the Phase I environmental report, a Phase II
environmental report that would be acceptable to a prudent institutional
mezzanine loan lender, which concludes that the Substitute Property (i) does not
contain any Hazardous Materials in contravention of Environmental Law in any
material respect and (ii) is not subject to any significant risk of
contamination from any off site Hazardous Materials in contravention of
Environmental Law in any material respect.

 

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(p) Borrower shall deliver or cause to be delivered to Lender (A) updates or, if
the Substitute Property is to be owned by an Affiliate of Borrower, originals,
in either case certified by Mortgage Borrower or such Affiliate, as applicable,
of all organizational documentation related to Mortgage Borrower or such
Affiliate, as applicable, and/or the formation, structure, existence, good
standing and/or qualification to do business delivered to Lender on the Closing
Date; (B) good standing certificates, certificates of qualification to do
business in the jurisdiction in which the Substitute Property is located (if
required in such jurisdiction); and (C) resolutions of Mortgage Borrower or such
Affiliate, as applicable, authorizing the substitution and any actions taken in
connection with such substitution.

 

(q) Lender shall have received the following opinions of Borrower’s counsel:
(A) an enforceability, due-execution, delivery and authority opinion or opinions
of counsel acceptable to the Rating Agencies if the Loan is part of a
Securitization, or Lender if the Loan is not part of a Securitization, in form
and substance substantially similar to the enforceability, due-execution,
delivery and authority opinions delivered to Lender on the Closing Date; and
(B) an update of the Insolvency Opinion indicating that the substitution does
not affect the opinions set forth therein.

 

(r) Borrower shall have paid or reimbursed Lender for all costs and expenses
incurred by Lender (including, without limitation, reasonable attorneys’ fees
and disbursements) in connection with the release and substitution and Borrower
shall have paid all recording charges, filing fees, taxes or other expenses
(including, without limitation, title insurance premiums, UCC insurance policy
premiums, mortgage and intangibles taxes and documentary stamp taxes) payable in
connection with the substitution. Borrower shall have paid all costs and
expenses of the Rating Agencies incurred in connection with the substitution.

 

(s) Lender shall have received annual operating statements and occupancy
statements for the Substitute Property for the most current completed fiscal
year and a current operating statement for the Release Property, each certified
by Borrower to Lender as being true and correct in all material respects and a
certificate from Borrower certifying that there has been no material adverse
change in the financial condition of the Substitute Property since the date of
such operating statements.

 

(t) Borrower shall have delivered to Lender estoppel certificates from all
tenants under Major Leases at the Substitute Property. All such estoppel
certificates shall be substantially in the form approved by Lender in connection
with the origination of the Loan or such other form approved by Lender, such
approval not to be unreasonably withheld, and shall indicate that (1) the
subject Lease is a valid and binding obligation of the tenant thereunder, (2) to
tenant’s knowledge, there are no defaults under such Lease on the part of the
landlord or tenant thereunder, (3) the tenant thereunder has no knowledge of any
defense or offset to the payment of rent under such Lease, (4) no rent under
such Lease has been paid more than one (1) month in advance, (5) the tenant

 

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thereunder has no option under such Lease to purchase all or any portion of the
Substitute Property, and (6) all tenant improvement work required under such
Lease has been substantially completed and the tenant under such Lease is in
actual occupancy of its leased premises. If an estoppel certificate indicates
that all tenant improvement work required under the subject Lease has not yet
been completed, Borrower shall deliver to Lender financial statements indicating
that Borrower has adequate funds to pay all costs related to such tenant
improvement work as required under such Lease.

 

(u) Lender shall have received copies of all Major Leases affecting the
Substitute Property certified by Borrower as being true and correct.

 

(v) Lender shall have received a Physical Conditions Report with respect to the
Substitute Property stating that the Substitute Property and its use comply in
all material respects with all applicable Legal Requirements (including, without
limitation, zoning, subdivision and building laws) and that the Substitute
Property is in good condition and repair and free of material damage or waste.

 

(w) If the Substitute Property is located in a seismic area designated as Zone 3
or 4 by S&P or Moody’s (Source: ICBC, 1994 Uniform Building Code), Lender shall
have received a seismic report indicating the seismic zone in which the
Substitute Property is located and otherwise acceptable to a prudent
institutional mezzanine loan lender.

 

(x) Lender shall have received evidence that would be satisfactory to a prudent
institutional mezzanine loan lender to the effect that all material building and
operating licenses and permits necessary for the use and occupancy of the
Substitute Property as a hotel including, but not limited to, current
certificates of occupancy, have been obtained and are in full force and effect.

 

(y) In the event the Release Property is subject to a Management Agreement along
with one or more additional Properties, Lender shall have received a certified
copy of an amendment to the Management Agreement reflecting the deletion of the
Release Property and the addition of the Substitute Property as a property
managed pursuant thereto and Manager shall have executed and delivered to Lender
an amendment to the Subordination of Management Agreement reflecting such
amendment to the Management Agreement. In the event that the Release Property is
subject to a Management Agreement relating only to such Release Property, Lender
shall have received a certified copy of a new Management Agreement for the
Substitute Property on substantially the same terms as the Management Agreement
for the Release Property and the Manager thereunder shall have executed and
delivered to Lender a Subordination of Management Agreement with respect to such
new Management Agreement on substantially the same terms as used in connection
with the Release Property or such other terms as would be acceptable to a
prudent institutional mezzanine loan lender.

 

(z) Lender shall have received such other approvals, opinions, documents and
information in connection with the substitution as requested by the Rating
Agencies if the Loan is part of a Securitization, or Lender if the Loan is not
part of a Securitization.

 

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(aa) Lender shall have received copies of all contracts and agreements relating
to the leasing and operation of the Substitute Property (other than the
Management Agreement), each of which shall be in a form and substance which
would be satisfactory to a prudent institutional mezzanine loan lender together
with a certification of Borrower attached to each such contract or agreement
certifying that the attached copy is a true and correct copy of such contract or
agreement and all amendments thereto.

 

(bb) Lender shall have received copies of all material consents, licenses and
approvals, if any, required in connection with the substitution of a Substitute
Property, including, without limitation, liquor licenses and evidence that such
consents, licenses and approvals are in full force and effect.

 

(cc) Lender shall have received satisfactory (i.e., showing no Liens other than
Permitted Encumbrances) UCC searches, together with tax lien, judgment and
litigation searches with respect to the Substitute Property, and Mortgage
Borrower (or the Affiliate of Mortgage Borrower taking title to the Substitute
Property, and the Guarantor, if applicable, in the State where the Substitute
Property is located and the jurisdictions where each such Person has its
principal place of business.

 

(dd) Lender shall have received copies of the Franchise Agreement for the
Substitute Property and a “comfort letter” from the Qualified Franchisor under
the Franchise Agreement, each in form and substance reasonably satisfactory to a
prudent institutional mezzanine loan lender.

 

(ee) Lender shall have received copies of the most recent Quality Assurance
Reports, if any which shall be reasonably satisfactory to a prudent
institutional mezzanine loan lender.

 

(ff) If the Substitute Property or any portion thereof is a leasehold estate,
Lender shall have received, (i) a certified copy of the Ground Lease for the
Substitute Property, together with all amendments and modifications thereto and
a recorded memorandum thereof, which Ground Lease would be reasonably
satisfactory in all respects to a prudent institutional mezzanine loan lender
and which contains mezzanine lender provisions and protections which are
comparable to customary leasehold mortgagee provisions and protections, and
which shall provide, among other things, (A) for a remaining term of no less
than the greater of (1) 20 years from the Maturity Date or (2) 10 years from the
end of the scheduled amortization term of the Loan, (B) that the Ground Lease
shall not be terminated until Lender has received notice of a default thereunder
and has had a reasonable opportunity to cure or complete foreclosure, and fails
to do so in a diligent manner, (C) for a new lease on the same terms to Lender
as tenant if the Ground Lease is terminated for any reason, (D) the non-merger
of fee and leasehold interests, and (E) that insurance proceeds and condemnation
awards (from the fee interest as well as the leasehold interest) will be applied
pursuant to the terms of this Agreement, and (ii) a ground lease estoppel
executed by the fee owner and ground lessor of the Substitute Property,
reasonably acceptable to a prudent institutional mezzanine loan lender.

 

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(gg) Borrower shall deliver an Officers Certificate certifying that (i) the
requirements set forth in this Section 2.6 have been satisfied, (ii) all of the
conditions set forth in the Mortgage Loan Agreement for such release and
substitution have been satisfied, and (iii) the aggregate Allocated Loan Amounts
applicable to the total number of Release Properties which have been or
currently are the subject of any Substitution pursuant to this Section shall not
exceed 25% of the original principal balance of the Note.

 

(hh) If the Substitute Property shall be owned by an Affiliate of a Mortgage
Borrower, (i) Borrower shall execute and deliver an amendment to the Pledge
Agreement which shall grant Lender a first priority perfected security interest
in Borrower’s 100% direct ownership interests in such Affiliate and, if
applicable, 100% of Borrower’s direct ownership interests in the Principal of
such Affiliate (such interests shall otherwise comply with the requirements of
the Loan Documents and be substantially identical in structure, form and
substance as the Collateral delivered at closing of the Loan (the “Substitute
Collateral”); (ii) Borrower shall authorize Lender to file such UCC Financing
Statements required by Lender with respect to the substitute Collateral;
(iii) Borrower shall deliver, at its sole cost and expense, an endorsement to
UCC Insurance Policy insuring the amended Pledge Agreement as a valid first lien
on the ownership interest pledged thereunder subject to no exceptions other than
those contained in the UCC Insurance Policy at the closing of the Loan;
(iv) Guarantor shall reaffirm in writing its obligations under the Environmental
Indemnity and Guaranty and confirm that the obligations thereunder shall also
relate to Substitute Collateral; and (v) Borrower shall provide opinion letters
in substantially the same form and substance as such opinion letters delivered
at the closing of the Loan (including enforcement and perfection opinions and a
substantive con-consolidation opinion of the such Affiliate and its constituent
entities, which law firms and opinions shall be reasonably satisfactory to
Lender.

 

(ii) Lender shall have received evidence that would be satisfactory to a prudent
institutional mezzanine loan lender that the Release Property to be released
pursuant to the Mortgage Loan Agreement shall be conveyed to a Person other than
Mortgage Borrower, Borrower or Principal and that Borrower does not own any
direct or indirect ownership interest in such Person.

 

(jj) Upon the satisfaction of the foregoing conditions precedent, Lender will
release its security interest held by Lender in the Pledged Interests in the
applicable Mortgage Borrower owning the Release Property (but only in the event
that such Mortgage Borrower does not continue to own any other Individual
Property after giving effect to the release and substitution and Borrower shall
not continue to own any direct or indirect ownership interest in such Mortgage
Borrower) and the Substitute Property shall be deemed to be an Individual
Property for purposes of this Agreement and the Substitute Allocated Loan Amount
with respect to such Substitute Property shall be deemed to be the Allocated
Loan Amount with respect to such Substitute Property for all purposes hereunder.
Concurrently with such release of its security interest in the Pledged Interests
in the applicable Mortgage Borrower owning the Release Property being released
from the Lien of the Security Instrument (but only in the event that such
Mortgage Borrower

 

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does not continue to own any other Individual Property after giving effect to
such release and substitution and Borrower shall not continue to own any direct
or indirect ownership interest in such Mortgage Borrower), Lender shall release
the Lien of the other Loan Documents on such Pledged Interests and remit to
Borrower any remaining Reserve Funds held solely with respect to such Individual
Property and which are not required to be held with respect to the applicable
Substitute Property.

 

III. CASH MANAGEMENT

 

Section 3.1 Mortgage Loan Cash Management.

 

During the term of the Loan, Borrower shall cause Mortgage Borrower to comply
with the terms and conditions of Article 3 of the Mortgage Loan Agreement.
Subject to the terms of the Mortgage Loan Agreement, Borrower will not cause or
permit Mortgage Borrower to in any way alter or modify the Lockbox Account, the
Property Account or the Post-Termination Property Accounts without Lender’s
prior written consent, which consent shall not be unreasonably withheld, and
will notify Lender of the account number thereof. Borrower shall direct or cause
Mortgage Borrower to direct that all cash distributions from the Lockbox Account
which are required to be paid to Lender in accordance with the Mortgage Loan
Agreement (including the Net Liquidation Proceeds After Debt Service) to be
deposited into an account specified by Lender.

 

Section 3.2 Removal of Mortgage Loan Cash Management.

 

In the event Mortgage Lender waives the requirement of Mortgage Borrower to
maintain the Lockbox Account, the Property Account, Post-Termination Property
Account or any other Mortgage Account required to be maintained pursuant to the
applicable provisions of the Mortgage Loan Documents (or to make any deposits
into such Mortgage Accounts as required pursuant to the applicable provisions of
the Mortgage Loan Documents) or the Mortgage Loan has been repaid in full,
Lender shall have the right to require Borrower to establish and maintain a
lockbox account or property accounts, that would operate in the same way as the
Lockbox Account, the Property Account, the Post-Termination Property Account
and/or such other Mortgage Accounts, as applicable, provided that Lender has
obtained written consent from the Mortgage Lender in the event that the Mortgage
Loan is still outstanding. Any such Account established hereunder shall be
maintained at the applicable Property Bank or Lockbox Bank and the parties agree
to enter into an account agreement substantially the same as the Property
Account Agreement.

 

Section 3.3 Rights During Event of Default and Acceleration of the Debt.

 

Lender shall have all rights and remedies with respect to the Accounts and the
amounts on deposit therein and the Account Collateral as described in this
Agreement, in addition to all of the rights and remedies available to a secured
party under the UCC, and, notwithstanding anything to the contrary contained in
this Agreement, following acceleration of the Debt, Lender may apply the amounts
of such Accounts as Lender determines in its sole discretion including, but not
limited to, payment of the Debt.

 

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Section 3.4 Application of Mezzanine Loan Account Funds.

 

Provided no Event of Default exists, any funds in the Mezzanine Loan Account (as
defined in the Mortgage Loan Agreement), to the extent made available to Lender,
shall be applied by Lender in accordance with the terms of this Agreement.

 

IV. REPRESENTATIONS AND WARRANTIES

 

Section 4.1 Borrower Representations.

 

Each Borrower on its own behalf represents and warrants as of the Closing Date
that:

 

4.1.1 Organization.

 

(a) Borrower is duly organized and is validly existing and in good standing in
the jurisdiction in which it is organized, with requisite power and authority to
own its assets and to transact the businesses in which it is now engaged.
Borrower is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
assets, its businesses and operations. Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its assets and to transact the businesses in which it is now engaged.
Attached hereto as Schedule IV is an organizational chart of Borrower. Borrower
has delivered to Lender true and correct copies of the Mortgage Borrower
Organizational Documents for the Mortgage Borrower, Borrower and Principal, all
of which are in full force and effect.

 

(b) The organizational chart attached hereto as Schedule IV (the “Ownership
Chart”) is true, correct and complete as of the Closing Date.

 

(c) Borrower has the power and authority and the requisite Ownership Interests
to control the actions of Mortgage Borrower, and upon the realization of the
Collateral under the Pledge Agreement, Lender or any other party succeeding to
the Borrower’s interest in the Collateral described in the Pledge Agreement
would have such control. Without limiting the foregoing, Borrower has sufficient
control over Mortgage Borrower to cause Mortgage Borrower to (i) take any action
on Mortgage Borrower’s part required by the Loan Documents and (ii) refrain from
taking any action prohibited by the Loan Documents.

 

4.1.2 Proceedings.

 

Borrower has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents. This Agreement and
the other Loan Documents have been duly executed and delivered by or on behalf
of Borrower and constitute legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms, subject
only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).

 

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4.1.3 No Conflicts.

 

The execution, delivery and performance of this Agreement and the other Loan
Documents by Borrower will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any Lien, charge or encumbrance (other than pursuant to the
Loan Documents) upon any of the property or assets of Borrower pursuant to the
terms of any indenture, mortgage, deed of trust, loan agreement, partnership
agreement, management agreement, franchise agreement, or other material
agreement or instrument to which Borrower is a party or by which any of
Borrower’s property or assets is subject, nor to Borrower’s knowledge, will such
action result in any violation of the provisions of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower or any of Borrower’s property or other assets, or any
license or other approval required to own and manage its properties, and any
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Borrower of this Agreement or any other Loan Documents have been
obtained and is in full force and effect.

 

4.1.4 Litigation.

 

There are no actions, suits or proceedings at law or in equity by or before any
Governmental Authority or other agency now pending or to Borrower’s knowledge,
threatened against or affecting Borrower, Mortgage Borrower, the Collateral or
any Individual Property, which actions, suits or proceedings, if determined
against Borrower, Mortgage Borrower, the Collateral or any Individual Property,
might materially adversely affect the condition (financial or otherwise) or
business of Borrower, Mortgage Borrower, the Collateral or the condition or
ownership of any Individual Property.

 

4.1.5 Agreements.

 

Borrower is not a party to any agreement or instrument or subject to any
restriction which might materially and adversely affect Borrower, Mortgage
Borrower, the Collateral or any Individual Property, or Borrower’s or Mortgage
Borrower’s business, properties or assets, operations or condition, financial or
otherwise. Neither Borrower nor Mortgage Borrower is in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to which it is
a party or by which Borrower, Mortgage Borrower, the Collateral or any of the
Properties are bound. Neither Borrower nor Mortgage Borrower has any material
financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Borrower or Mortgage
Borrower is a party or by which Borrower, Mortgage Borrower, the Collateral or
any Property is otherwise bound, other than (a) obligations incurred in the
ordinary course of the business relating to Borrower’s ownership and operation
of the Collateral, (b) obligations incurred in the ordinary course of the
business relating to Mortgage Borrower’s ownership and operation of the Property
and (c) obligations under the Loan Documents and the Mortgage Loan Documents, as
applicable.

 

4.1.6 Title.

 

(a) Each Loan Party purporting to grant a Lien on any Collateral is the record
and beneficial owner of, and has good title to, the Collateral, free and clear
of all Liens

 

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whatsoever. The Pledge Agreement, together with the UCC Financing Statements
relating to the Collateral when properly filed in the appropriate records, will
create a valid, perfected first priority security interests in and to the
Collateral, all in accordance with the terms thereof for which a Lien can be
perfected by filing a UCC Financing Statement. For so long as the Lien of the
Pledge Agreement is outstanding, Borrower shall forever warrant, defend and
preserve such title and the validity and priority of the Lien of the Pledge
Agreement and shall forever warrant and defend such title, validity and priority
to Lender against the claims of all persons whomsoever.

 

(b) Mortgage Borrower has good title to the Properties and that Mortgage
Borrower possesses a fee simple absolute estate or a leasehold interest Property
pursuant to the Ground Lease, in each Individual Property and that it owns the
Properties free and clear of all liens, encumbrances and charges whatsoever
except for the Permitted Encumbrances. The Permitted Encumbrances do not and
will not materially adversely affect or interfere with the value, or materially
adversely affect or interfere with the current use or operation, of the Property
or the ability of Borrower to repay the Note or any other amount owing under the
Note, the Pledge Agreement, the Loan Agreement, or the other Loan Documents or
to perform its obligations thereunder in accordance with the terms of the Loan
Agreement, the Note, the Pledge Agreement or the other Loan Documents. Other
than Mortgage Lender, no Person other than Mortgage Borrower owns any interest
in any payments due under such Leases. Borrower shall cause Mortgage Borrower to
forever warrant, defend and preserve the title to the Property and to forever
warrant and defend the same to Lender against the claims of all persons
whomsoever.

 

4.1.7 Solvency.

 

Borrower (a) has not entered into the transaction or executed the Note, this
Agreement or any other Loan Documents with the actual intent to hinder, delay or
defraud any creditor and (b) has received reasonably equivalent value in
exchange for its obligations under the Loan Documents. Giving effect to the
Loan, the fair saleable value of Borrowers’ assets exceeds and will, immediately
following the making of the Loan, exceed Borrower’s total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. Borrower’s assets do not and, immediately following the
making of the Loan will not, constitute unreasonably small capital to carry out
its business as conducted or as proposed to be conducted. Borrower does not
intend to incur debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt and liabilities as they mature
(taking into account the timing and amounts of cash to be received by Borrower
and the amounts to be payable on or in respect of obligations of Borrower). No
petition under the Bankruptcy Code or similar state bankruptcy or insolvency law
has been filed against Borrower, Mortgage Borrower or any constituent Person in
the last seven (7) years, and neither Borrower nor any constituent Person in the
last seven (7) years has ever made an assignment for the benefit of creditors or
taken advantage of any insolvency act for the benefit of debtors. Neither
Borrower nor any of its constituent Persons are contemplating either the filing
of a petition by it under the Bankruptcy Code or similar state bankruptcy or
insolvency law or the liquidation of all or a major portion of Borrower’s assets
or property, and Borrower has no knowledge of any Person contemplating the
filing of any such petition against it or such constituent Persons.

 

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4.1.8 Full and Accurate Disclosure.

 

No statement of fact made by Borrower in this Agreement or in any of the other
Loan Documents contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained herein or therein
not misleading. There is no fact presently known to Borrower which has not been
disclosed to Lender which materially and adversely affects, or might materially
and adversely affect, the Collateral, any Individual Property or the business,
operations or condition (financial or otherwise) of Borrower or Mortgage
Borrower.

 

4.1.9 No Plan Assets.

 

Borrower is not, a Plan and none of the assets of Borrower constitute or will
constitute “Plan Assets” of one or more Plans. In addition, (a) Borrower is not
a “governmental plan” within the meaning of Section 3(32) of ERISA and
(b) transactions by or with Borrower are not subject to State statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code currently in effect, which prohibit or otherwise
restrict the transactions contemplated by this Agreement.

 

4.1.10 Compliance.

 

Borrower, Mortgage Borrower and the Properties and the use thereof comply in all
material respects with all applicable Legal Requirements, including, without
limitation, building and zoning ordinances and codes. Mortgage Borrower and
Borrower are in compliance with all notices of violation of any order, writ,
injunction, decree or demand of any Governmental Authority in all material
respects. There has not been committed by Borrower, Mortgage Borrower or any
other Person in occupancy of or involved with the operation or use of the
Properties any act or omission affording the federal government or any other
Governmental Authority the right of forfeiture as against any Individual
Property or any part thereof or any monies paid in performance of Borrower’s
obligations under any of the Loan Documents. The representations made in this
Section 4.1.9 shall not apply to matters arising under or pertaining to
compliance with Environmental Laws (which are addressed exclusively under
Section 4.1.39 of this Agreement).

 

4.1.11 Financial Information.

 

All financial data, including, without limitation, the statements of cash flow
and income and operating expense, that have been delivered to Lender in respect
of Borrower, Mortgage Borrower, the Collateral, Operating Tenant and the
Properties (i) are true, complete and correct in all material respects,
(ii) accurately represent the financial condition of Borrower, Mortgage
Borrower, the Collateral, Operating Tenant and the Properties, as applicable, as
of the date of such reports, and (iii) have been prepared in accordance with
GAAP throughout the periods covered, except as disclosed therein. Except for
Permitted Encumbrances, neither Borrower nor Operating Tenant has any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses that are known to Borrower and reasonably
likely to have a materially adverse effect on the Collateral or any Individual
Property or the

 

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operation of any Individual Property except as referred to or reflected in said
financial statements. Since the date of such financial statements, there has
been no materially adverse change in the financial condition, operations or
business of Borrower or Mortgage Borrower or Operating Tenant from that set
forth in said financial statements.

 

4.1.12 Condemnation.

 

No Condemnation or other similar proceeding has been commenced or, to Borrower’s
knowledge, is threatened or contemplated with respect to all or any material
portion of any Individual Property or for the relocation of roadways providing
access to any Individual Property.

 

4.1.13 Federal Reserve Regulations.

 

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

 

4.1.14 Utilities and Public Access.

 

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

 

4.1.15 Not a Foreign Person.

 

Borrower is not a “foreign person” within the meaning of §1445(f)(3) of the
Code.

 

4.1.16 Separate Lots.

 

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

 

4.1.17 Assessments.

 

There are no pending or, to Borrower’s knowledge, proposed special or other
assessments for public improvements or otherwise affecting any Individual
Property, nor are there any contemplated improvements to any Individual Property
that may result in such special or other assessments.

 

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4.1.18 Enforceability.

 

The Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower, including the defense of usury, and
Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.

 

4.1.19 No Prior Assignment.

 

Other than under the Mortgage Loan Documents, there are no prior assignments of
the Leases or any portion of the Rents due and payable or to become due and
payable which are presently outstanding. There are no prior assignments of the
Collateral which are presently outstanding except in accordance with the Loan
Documents.

 

4.1.20 Insurance.

 

Mortgage Borrower has obtained and Borrower has delivered to Lender certified
copies of all insurance policies reflecting the insurance coverages, amounts and
other requirements set forth in this Agreement. No Person, including Borrower,
has done, by act or omission, anything which would impair the coverage of any
such policy.

 

4.1.21 Use of Property.

 

Each Individual Property is used exclusively for hotel purposes and other
appurtenant and related uses including but not limited to restaurants and
lounges.

 

4.1.22 Certificate of Occupancy; Licenses.

 

All material certifications, permits, licenses and approvals, including without
limitation, certificates of completion and occupancy permits required for the
legal use, occupancy and operation of each Individual Property by Mortgage
Borrower as a hotel (collectively, the “Licenses”), have been obtained and are
in full force and effect and are not subject to revocation, suspension or
forfeiture. Borrower shall cause Mortgage Borrower to keep and maintain all
Licenses necessary for the operation of each Individual Property as a hotel. The
use being made of each Individual Property conforms in all material respects
with the certificate of occupancy issued for such Individual Property.

 

4.1.23 Flood Zone.

 

None of the Improvements on any Individual Property are located in an area as
identified by the Federal Emergency Management Agency as an area having special
flood hazards and, if so located, the flood insurance required pursuant to
Section 6.1(a)(vii) of the Mortgage Loan Agreement is in full force and effect
with respect to each such Individual Property.

 

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4.1.24 Physical Condition.

 

Except as disclosed to Lender in the Physical Conditions Report, each Individual
Property, including, without limitation, all buildings, improvements, parking
facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC
systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects;
there exists no structural or other material defects or damages in any
Individual Property, whether latent or otherwise, and Borrower has not received
notice from any insurance company or bonding company of any defects or
inadequacies in any Individual Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond. Except as disclosed to Lender in
the Physical Conditions Report, each Individual Property is free from damage
covered by fire or other casualty. Except as disclosed to Lender in the Physical
Conditions Report, all liquid and solid waste disposal, septic and sewer systems
located on each Individual Property are in a good and safe condition and repair
and in compliance with all Legal Requirements.

 

4.1.25 Boundaries.

 

Except as disclosed to Lender in the Physical Conditions Report, all of the
Improvements which were included in determining the appraised value of each
Individual Property lie wholly within the boundaries and building restriction
lines of such Individual Property, and no improvements on adjoining properties
encroach upon such Individual Property, and no easements or other encumbrances
upon the applicable Individual Property encroach upon any of the Improvements.

 

4.1.26 Leases.

 

The Properties are not subject to any Leases other than the Leases described in
Schedule II attached hereto and made a part hereof. Mortgage Borrower or
Operating Tenant, as the case may be, is the owner and lessor of landlord’s
interest in the Leases. No Person has any possessory interest in any Individual
Property or right to occupy the same except under and pursuant to the provisions
of the Leases. The current Major Leases are in full force and effect and, there
are no material defaults by Mortgage Borrower or Operating Tenant, as the case
may be, or any tenant under any Major Lease, and there are no conditions that,
with the passage of time or the giving of notice, or both, would constitute
material defaults under any Major Lease. No Rent has been paid more than one
(1) month in advance of its due date. There are no offsets or defenses to the
payment of any portion of the Rents payable with respect to Major Leases. All
work to be performed by Mortgage Borrower or Operating Tenant, as the case may
be, under each Major Lease has been performed as required and has been accepted
by the applicable tenant, and any payments, free rent, partial rent, rebate of
rent or other payments, credits, allowances or abatements required to be given
by Mortgage Borrower or Operating Tenant, as the case may be, to any tenant has
already been received by such tenant. There has been no prior sale, transfer or
assignment, hypothecation or pledge of any Major Lease or of the Rents received
therein which is still in effect. No tenant under any Lease has a right or
option pursuant to such Lease or otherwise to purchase all or any part of the
leased premises or the building of which the leased premises are a part. To
Borrower’s knowledge, no Hazardous Materials have been disposed, stored or
treated by any tenant under any Lease on or about the leased premises nor

 

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does Borrower have any knowledge of any tenant’s intention to use its leased
premises for any activity which, directly or indirectly, involves the use,
generation, treatment, storage, disposal or transportation of any Hazardous
Materials, except those that are both (i) in material compliance with current
Environmental Laws and with permits issued pursuant thereto (if such permits are
required), and (ii) either (A) in amounts not in excess of that necessary to
operate, clean, repair and maintain the applicable Individual Property or each
tenant’s respective business at such Individual Property as set forth in their
respective Leases, (B) held by a tenant for sale to the public in its ordinary
course of business, or (C) fully disclosed in the Environmental Reports or
otherwise disclosed to and approved by Lender in writing.

 

4.1.27 [Reserved]

 

4.1.28 [Reserved]

 

4.1.29 Filing and Recording Taxes.

 

All transfer taxes, deed stamps, intangible taxes or other amounts in the nature
of transfer taxes required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the transfer of the
Collateral to Borrower, the making of the Mortgage Loan, the Loan or the other
transactions contemplated by this Agreement have been paid. All recording,
stamp, intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Pledge Agreement, have been paid.

 

4.1.30 Franchise Agreement.

 

The Franchise Agreement is in full force and effect, all franchise fees,
reservation fees, royalties and other sums due thereunder have been paid in full
to date, and neither Borrower nor Franchisor is in default thereunder in any
material respect.

 

4.1.31 Management Agreement.

 

The Management Agreement is in full force and effect and there is no material
default thereunder by any party thereto and no event has occurred that, with the
passage of time and/or the giving of notice would constitute a default
thereunder.

 

4.1.32 Illegal Activity.

 

No portion of any Individual Property or the Collateral has been or will be
purchased with proceeds of any illegal activity and to the best of Borrower’s
knowledge, there are no illegal activities or activities relating to any
controlled substances at any Individual Property.

 

4.1.33 No Change in Facts or Circumstances; Disclosure.

 

All information submitted by Borrower and Operating Tenant to Lender and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower

 

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and Operating Tenant in this Agreement or in any other Loan Document, are
accurate, complete and correct in all material respects. There has been no
material adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise misleading in any
material respect or that otherwise materially and adversely affects or might
materially and adversely affect the use, operation or value of the Properties or
the business operations or the financial condition of Borrower, Mortgage
Borrower and Operating Tenant. Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could cause any
information described in this Section 4.1.32 or any representation or warranty
made herein to be materially misleading.

 

4.1.34 Investment Company Act.

 

Borrower is not (a) an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended; (b) a “holding company” or a “subsidiary company” of a “holding
company” or an “affiliate” of either a “holding company” or a “subsidiary
company” within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (c) subject to any other federal or State law or regulation which
purports to restrict or regulate its ability to borrow money.

 

4.1.35 Principal Place of Business; State of Organization.

 

Borrower’s principal place of business as of the date hereof is the address set
forth opposite its name on Schedule XIII attached hereto. Borrower is organized
under the laws of the State of Delaware and its organizational identification
number is set forth opposite its name on Schedule XIII attached hereto.

 

4.1.36 Single Purpose Entity.

 

Borrower covenants and agrees that its Organizational Documents shall provide
that it has not, and shall not, and that the Organizational Documents of its
general partner(s), if Borrower is a partnership, or its managing member(s), if
Borrower is a limited liability company with multiple members (in each case,
“Principal”) shall provide that it has not and shall not:

 

(a) with respect to Borrower, engage in any business or activity other than the
acquisition, ownership, and managing of the Collateral, and entering into the
Loan, and activities incidental thereto and with respect to Principal, engage in
any business or activity other than the ownership of its interest in Borrower,
and activities incidental thereto;

 

(b) with respect to Borrower, acquire or own any material assets other than
(i) the Collateral, and (ii) such incidental personal property as may be
necessary for the ownership of the Collateral and with respect to Principal,
acquire or own any material asset other than its interest in Borrower;

 

(c) merge into or consolidate with any person or entity or dissolve, terminate
or liquidate in whole or in part, transfer or, to the fullest extent permitted
by law, otherwise dispose of all or substantially all of its assets or change
its legal structure;

 

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(d) (i) fail to observe its organizational formalities or preserve its existence
as an entity duly organized, validly existing and in good standing (if
applicable) under the laws of the jurisdiction of its organization or formation,
or (ii) without the prior written consent of Lender, amend, modify, terminate or
fail to comply with the provisions of Borrower’s Partnership Agreement, Articles
of Organization or similar Organizational Documents, as the case may be, or of
Principal’s Certificate of Incorporation, Articles of Organization or similar
Organizational Documents, as the case may be as they relate to the separateness
and special purpose nature of such entities, whichever is applicable;

 

(e) other than Principal’s ownership interest in Borrower own any subsidiary or
make any investment in, any Person without the prior written consent of Lender;

 

(f) except as permitted under the Loan Documents, commingle its assets with the
assets of any of its members, general partners, Affiliates, principals or of any
other Person or entity, participate in a cash management system with any other
entity or Person or fail to use its own separate stationery, invoices and
checks;

 

(g) with respect to Borrower, incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than the Debt, except
for (i) liabilities incurred in the ordinary course of business relating to the
ownership of the Collateral and the routine administration of Borrower, in
amounts not to exceed $100,000 which liabilities are not more than sixty
(60) days past due, are due and owing solely to its attorneys, investment
advisors, accountants and consultants and are not evidenced by a note, and with
respect to Principal, incur any debt secured or unsecured, direct or contingent
(including guaranteeing any obligations), except for liabilities incurred in the
ordinary course of business relating to the ownership of its interest in
Borrower and the routine administration of Principal, in amounts not to exceed
$100,000 which liabilities are not more than sixty (60) days past due, are due
and owing solely to its attorneys, investment advisors, accountants and
consultants and are not evidenced by a note;

 

(h) become insolvent and fail to pay its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) from its assets as the same
shall become due, provided that this shall not require any member or partner of
Borrower or Principal, as applicable, to make additional capital contributions
to Borrower or Principal, as applicable;

 

(i) (i) fail to maintain its records (including financial statements), books of
account and bank accounts separate and apart from those of the members, general
partners, principals and Affiliates of Borrower or of Principal, as the case may
be, the Affiliates of a member, general partner or principal of Borrower or of
Principal, as the case may be, and any other Person, (ii) permit its assets or
liabilities to be listed as assets or liabilities on the financial statement of
any other Person or (iii) include the assets or liabilities of any other Person
on its financial statements (except where consolidated financial statements are
permitted or required by Applicable Law or GAAP, provided that such consolidated
statements shall reflect that such Persons are separate legal entities);

 

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(j) enter into any contract or agreement with any member, general partner,
principal or Affiliate of Borrower or of Principal, as the case may be,
Guarantor, or any member, general partner, principal or Affiliate thereof (other
than a business management services agreement with an Affiliate of Borrower,
provided that (i) such agreement is acceptable to Lender, (ii) the manager, or
equivalent thereof, under such agreement holds itself out as an agent of
Borrower and (iii) the agreement meets the standards set forth in this
subsection (j) following this parenthetical), except upon terms and conditions
that are commercially reasonable, intrinsically fair and substantially similar
to those that would be available on an arms-length basis with third parties
other than any member, general partner, principal or Affiliate of Borrower or of
Principal, as the case may be, Guarantor, or any member, general partner,
principal or Affiliate thereof;

 

(k) to the fullest extent permitted by law, seek the dissolution or winding up
in whole, or in part, of Borrower or of Principal, as the case may be;

 

(l) fail to correct any known misunderstandings regarding the separate identity
of Borrower, or of Principal, as the case may be, or any member, general
partner, principal or Affiliate thereof or any other Person;

 

(m) guarantee or become obligated for the debts of any other Person or hold
itself out to be responsible for the debts of another Person;

 

(n) make any loans or advances to any third party, including any member, general
partner, principal or Affiliate of Borrower or of Principal, as the case may be,
or any member, general partner, principal or Affiliate thereof, and shall not
acquire obligations or securities of any member, general partner, principal or
Affiliate of Borrower or Principal, as the case may be, or any member, general
partner, or Affiliate thereof;

 

(o) fail to file its own tax returns or be included on the tax returns of any
other Person (except where consolidated tax returns are permitted or required by
Applicable Law, provided that such consolidated returns shall reflect that such
Persons are separate legal entities);

 

(p) fail either to hold itself out to the public as a legal entity separate and
distinct from any other Person or to conduct its business solely in its own name
or a name franchised or licensed to it by an entity other than an Affiliate of
Borrower or of Principal, as the case may be, and not as a division or part of
any other entity in order not (i) to mislead others as to the identity with
which such other party is transacting business, or (ii) to suggest that Borrower
or Principal, as the case may be, is responsible for the debts of any third
party (including any member, general partner, principal or Affiliate of
Borrower, or of Principal, as the case may be, or any member, general partner,
principal or Affiliate thereof);

 

(q) fail to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations, provided that this shall not require any
member or partner of Borrower or Principal, as applicable, to make additional
capital contributions to Borrower or Principal, as applicable;

 

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(r) hold itself out as or be considered as a department or division of (i) any
general partner, principal, member or Affiliate of Borrower or of Principal, as
the case may be, (ii) any Affiliate of a general partner, principal or member of
Borrower or of Principal, as the case may be, or (iii) any other Person;

 

(s) fail to allocate fairly and reasonably any overhead expenses that are shared
with an Affiliate, including paying for office space and services performed by
any employee of an Affiliate;

 

(t) pledge its assets for the benefit of any other Person, and with respect to
Borrower, other than with respect to the Loan;

 

(u) fail to maintain a sufficient number of employees in light of its
contemplated business operations;

 

(v) fail to provide in its (i) Articles of Organization, Certificate of
Formation and/or Operating Agreement, as applicable, if it is a limited
liability company, (ii) Limited Partnership Agreement, if it is a limited
partnership or (iii) Certificate of Incorporation, if it is a corporation, that
for so long as the Loan is outstanding pursuant to the Note, this Agreement and
the other Loan Documents, it shall not file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage of any applicable
insolvency, bankruptcy, liquidation or reorganization statute, or make an
assignment for the benefit of creditors without the affirmative vote of each
Independent Director and of all other general partners/managing
members/directors;

 

(w) fail to hold its assets in its own name;

 

(x) if Borrower or Principal is a corporation, fail to consider the interests of
its creditors in connection with all corporate actions to the extent permitted
by Applicable Law;

 

(y) have any of its obligations guaranteed by an Affiliate except the Guarantor
in connection with the Loan;

 

(z) violate or cause to be violated the assumptions made with respect to
Borrower and Principal in the Insolvency Opinion;

 

(aa) with respect to Principal, or if Borrower is a single member limited
liability company that complies with the requirements of Section 4.1.36(cc)
below, fail at any time to have at least two independent directors (each an
“Independent Director”) that is not and has not been for at least five
(5) years: (a) a stockholder, director, officer, employee, partner, member,
attorney or counsel of Mortgage Borrower or of Principal or any Affiliate of
either of them; (b) a customer, supplier or other Person who derives its
purchases or revenues (other than any fee paid to such director as compensation
for such director to serve as an Independent Director) from its activities with
Mortgage Borrower,

 

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Principal or any Affiliate of either of them (a “Business Party”); (c) a person
or other entity controlling or under common control with any such stockholder,
partner, member, director, officer, attorney, counsel or Business Party; or
(d) a member of the immediate family of any such stockholder, director, officer,
employee, partner, member, attorney, counsel or Business Party; Notwithstanding
the foregoing, no Independent Director shall also serve as an Independent
Director (as such term is defined in the Mortgage Loan Agreement) for Mortgage
Borrower or any Principal (as such term is defined in the Mortgage Loan
Agreement) of Mortgage Borrower. Notwithstanding the foregoing, no Independent
Director shall also serve as an Independent Director (as such term is defined in
the Mortgage Loan Agreement and the Subordination Agreement) for Mortgage
Borrower, Operating Tenant or Principal (as such term is defined in the Mortgage
Loan Agreement and the Subordination Agreement);

 

(bb) with respect to Principal, or if Borrower is a single member limited
liability company that complies with the requirements of Section 4.1.36(cc)
below, permit its board of directors to take any action which, under the terms
of any certificate of incorporation, by-laws, voting trust agreement with
respect to any common stock or other applicable Organizational Documents,
requires the unanimous vote of one hundred percent (100%) of the members of the
board without the vote of each Independent Director; and

 

(cc) In the event Borrower is a Delaware limited liability company that does not
have a managing member which complies with the requirements for a Principal
under this Section 4.1.36, the limited liability company agreement of Borrower
(the “LLC Agreement”) shall provide that (A) upon the occurrence of any event
that causes the last remaining member of Borrower (“Member”) to cease to be the
member of Borrower (other than (1) upon an assignment by Member of all of its
limited liability company interest in Borrower and the admission of the
transferee in accordance with the Loan Documents and the LLC Agreement, or
(2) the resignation of Member and the admission of an additional member of
Borrower in accordance with the terms of the Loan Documents and the LLC
Agreement), any person acting as Independent Director of Borrower shall, without
any action of any other Person and simultaneously with the Member ceasing to be
the member of Borrower, automatically be admitted to Borrower (“Special Member”)
and shall continue Borrower without dissolution and (B) Special Member may not
resign from Borrower or transfer its rights as Special Member unless (1) a
successor Special Member has been admitted to Borrower as Special Member in
accordance with requirements of Delaware law and (2) such successor Special
Member has also accepted its appointment as an Independent Director. The LLC
Agreement shall further provide that (v) Special Member shall automatically
cease to be a member of Borrower upon the admission to Borrower of a substitute
Member, (w) Special Member shall be a member of Borrower that has no interest in
the profits, losses and capital of Borrower and has no right to receive any
distributions of Borrower assets, (x) pursuant to Section 18-301 of the Delaware
Limited Liability Company Act (the “Act”), Special Member shall not be required
to make any capital contributions to Borrower and shall not receive a limited
liability company interest in Borrower, (y) Special Member, in its capacity as
Special Member, may not bind Borrower and (z) except as required by any
mandatory provision of the Act, Special Member, in its capacity as Special
Member, shall

 

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have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, Borrower, including, without limitation, the merger,
consolidation or conversion of Borrower; provided, however, such prohibition
shall not limit the obligations of Special Member, in its capacity as
Independent Director, to vote on such matters required by the LLC Agreement. In
order to implement the admission to Borrower of Special Member, Special Member
shall execute a counterpart to the LLC Agreement. Prior to its admission to
Borrower as Special Member, Special Member shall not be a member of Borrower.

 

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

 

Mortgage Borrower is, shall be and shall continue to comply with the provisions
of Section 4.1.35 of the Mortgage Loan Agreement.

 

4.1.37 Business Purposes.

 

The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.

 

4.1.38 Taxes.

 

Borrower has filed all federal, State, county, municipal, and city income tax
returns required to have been filed by it and has paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by it. Borrower knows of no basis for any additional
assessment in respect of any such taxes and related liabilities for prior years.

 

4.1.39 Forfeiture.

 

Neither Borrower nor to Borrower’s knowledge, any other Person in occupancy of
or involved with the operation or use of any of the Properties has committed any
act or omission affording the federal government or any State or local
government the right of forfeiture as against any of the Collateral, the
Properties or any part thereof or any monies paid in performance of Borrower’s
obligations under the Note, this Agreement or the other Loan Documents. Borrower
hereby covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture.

 

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4.1.40 Environmental Representations and Warranties.

 

Borrower represents and warrants, except as disclosed in the written reports
resulting from the environmental site assessments of each Individual Property
delivered to and approved by Lender prior to the Closing Date (the
“Environmental Report”) and information that Borrower knows or should reasonably
have known that: (a) there are no Hazardous Materials or underground storage
tanks in, on, or under any of the Properties, except those that are both (i) in
material compliance with current Environmental Laws and with permits issued
pursuant thereto (if such permits are required), and (ii) either (A) in amounts
not in excess of that necessary to operate, clean, repair and maintain the
applicable Individual Property or each tenant’s respective business at such
Individual Property, or (B) held by a tenant for sale to the public in its
ordinary course of business, (b) there are no past, present or threatened
Releases of Hazardous Materials in, on, under or from any of the Properties in
material violation of any Environmental Law and which would be reasonably likely
to require remediation by a Governmental Authority; (c) there is no threat of
any Release of Hazardous Materials in material violation of Environmental Law
migrating to any of the Properties from any adjoining property; (d) there is no
past or present material non-compliance with current Environmental Laws, or with
permits issued pursuant thereto, in connection with any of the Properties;
(e) Borrower has not received and Mortgage Borrower has not received, any
written notice or other written communication from any Person (including but not
limited to a Governmental Authority) relating to potential liability arising out
of the release of Hazardous Materials in, on, under or from any of the
Properties which matter remains pending or has not be resolved or cured; and
(f) Borrower has truthfully and fully made available to Lender copies of any and
all material reports relating to the environmental condition of any of the
Properties contained in Borrower’s or Mortgage Borrower’s files and records or
within Borrower’s custody or control, including but not limited to any reports
relating to Hazardous Materials in, on, under or migrating to or from any of the
Properties.

 

4.1.41 Taxpayer Identification Number.

 

Borrower’s United States taxpayer identification number is set forth opposite
its name on Schedule XIII attached hereto.

 

4.1.42 OFAC.

 

Borrower represents and warrants that neither Borrower, Mortgage Borrower,
Guarantor, Operating Tenant nor any of their respective Affiliates is a
Prohibited Person, and Borrower, Mortgage Borrower, Guarantor, and their
respective Affiliates are in compliance with all applicable orders, rules,
regulations and recommendations of The Office of Foreign Assets Control of the
U.S. Department of the Treasury.

 

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4.1.43 Ground Lease Representations.

 

With respect to each Ground Lease:

 

(a) (i) Each Ground Lease is in full force and effect and has not been modified
or amended in any manner whatsoever, (ii) there are no defaults under any Ground
Lease by Mortgage Borrower, or, to the best of Borrower’s knowledge, landlord
thereunder, and, to Borrower’s knowledge, no event has occurred which but for
the passage of time, or notice, or both would constitute a default under such
Ground Lease, (iii) all rents, additional rents and other sums due and payable
under each Ground Lease have been paid in full, and (iv) neither Mortgage
Borrower nor the landlord under each Ground Lease has commenced any action or
given or received any notice for the purpose of terminating such Ground Lease.

 

(b) Each Ground Lease or a memorandum thereof (including any material amendment)
have been duly recorded, the Ground Leases permits the interest of the lessee
thereunder to be encumbered by the applicable Security Instrument, and there has
not been any change in the terms of the Ground Leases (as they may have been
amended) since the recordation of the Ground Lease or the most recent memorandum
or amendment thereof;

 

(c) Except as indicated in the related Title Insurance Policy, Mortgage
Borrower’s interest in the Ground Lease are not subject to any Liens superior
to, or of equal priority with, the applicable Security Instrument;

 

(d) Mortgage Borrower’s interest in the Ground Lease is assignable upon notice
to, but without the consent of, the lessor thereunder and, in the event that it
is so assigned, it is further assignable upon notice to, but without the need to
obtain the consent of, such lessor;

 

(e) The Ground Lease requires the lessor thereunder to give notice of any
default by Mortgage Borrower to Mortgage Lender and the Ground Lease further
provides that notice of termination given under the Ground Lease is not
effective against Lender unless a copy of the notice has been delivered to
Mortgage Lender in the manner described in the applicable Ground Lease;

 

(f) Mortgage Lender is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of Mortgage
Borrower under the Ground Lease) to cure any default under the Ground Lease,
which is curable after the receipt of notice of any default before the lessor
thereunder may terminate such Ground Lease;

 

(g) Each Ground Lease has a term which extends not less than twenty (20) years
beyond the Maturity Date;

 

(h) The Ground Lease requires the lessor to enter into a new lease upon
termination of the applicable Ground Lease for any reason, including rejection
of such Ground Lease in a bankruptcy proceeding; and

 

(i) Under the terms of each Ground Lease and the applicable Loan Documents,
taken together, any Net Proceeds will be applied either to the Restoration of
all or part of the Properties, with Mortgage Lender or a trustee appointed by
Mortgage

 

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Lender having the right to hold and disburse such Net Proceeds as the
Restoration progresses, or to the payment of the outstanding principal balance
of the Mortgage Loan together with any accrued interest thereon.

 

4.1.44 Deposit Accounts.

 

(a) Mortgage Borrower owns and has good title to the Property Accounts, the
Post-Termination Property Account and the Lockbox Account free and clear of any
Lien or claim of any Person;

 

(b) Mortgage Borrower has delivered to Mortgage Lender fully executed agreements
pursuant to which the banks maintaining the Property Accounts have agreed to
comply with all instructions originated by Mortgage Lender directing disposition
of the funds in such accounts without further consent by Mortgage Borrower;

 

(c) Other than the security interest granted to Mortgage Lender pursuant to the
Mortgage Loan Agreement and the Property Account Agreements, Mortgage Borrower
has not pledged, assigned, or sold, granted a security interest in, or otherwise
conveyed any of the Property Accounts, the Post-Termination Property Account or
the Lockbox Account; and

 

(d) The Property Accounts, the Post-Termination Property Account, and the
Lockbox Account are not in the name of any Person other than Mortgage Borrower
or Mortgage Lender. Mortgage Borrower has not consented to the banks maintaining
the Lockbox Account to comply with instructions of any Person other than
Mortgage Lender.

 

4.1.45 Embargoed Person.

 

As of the date hereof and at all times throughout the term of the Loan,
including after giving effect to any Transfers permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Mortgage Borrower, Borrower,
Principal, Operating Tenant and Guarantor constitute property of, or are
beneficially owned, directly or indirectly, by any person, entity or government
subject to trade restrictions under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders
or regulations promulgated thereunder (“Embargoed Person”) with the result that
the investment in Mortgage Borrower, Borrower, Principal, or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan
made by the Lender is in violation of law; (b) no Embargoed Person has any
interest of any nature whatsoever in Mortgage Borrower, Borrower, Principal, or
Guarantor, as applicable, with the result that the investment in Mortgage
Borrower, Borrower, Principal, Operating Tenant or Guarantor, as applicable
(whether directly or indirectly), is prohibited by law or the Loan is in
violation of law; and (c) to Borrower’s knowledge, none of the funds of Mortgage
Borrower, Borrower, Principal, Operating Tenant or Guarantor, as applicable,
have been derived from any unlawful activity with the result that the investment
in Mortgage Borrower, Borrower, Principal, Operating Tenant or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law.

 

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4.1.46 Affiliates.

 

Borrower does not own any equity interests in any other Person other than the
related Pledged Interests.

 

4.1.47 Mortgage Borrower Representations.

 

Borrower has reviewed the representations and warranties made by, and covenants
of, Mortgage Borrower to and for the benefit of Mortgage Lender contained in the
Mortgage Loan Documents and such representations and warranties are true,
correct and complete in all material respects.

 

4.1.48 List of Mortgage Loan Documents.

 

There are no Mortgage Loan Documents other than those set forth on Schedule XIV
attached hereto. Borrower has or has caused to be delivered to Lender true,
complete and correct copies of all Mortgage Loan Documents, and none of the
Mortgage Loan Documents has been amended or modified as of the date thereof.

 

4.1.49 Mortgage Loan Event of Default.

 

No Mortgage Loan Event of Default exists as of the date hereof.

 

4.1.50 Personal Property.

 

Borrower owns, leases or licenses adequate Personal Property (other than
Inventory) and Operating Tenant owns adequate Inventory to maintain and operate
the Property as a hotel in accordance with the standards of this Agreement, the
Operating Lease, the Management Agreement and the Franchise Agreement. The
Personal Property is not subject to any liens, leases or financing arrangements
other than Permitted Encumbrances. The Personal Property (other than Inventory)
is leased to the Operating Tenant pursuant to the related Operating Lease.

 

4.1.51 Operating Lease.

 

The Operating Lease is in full force and effect and there is no material default
thereunder by any party thereto and no event has occurred that, with the passage
of time and/or the giving of notice would constitute a material default
thereunder. The Operating Tenant is directly or indirectly, wholly owned and
controlled by the Operating Partnership.

 

Section 4.2 Survival of Representations.

 

Borrower agrees that all of the representations and warranties of Borrower set
forth in Section 4.1 and elsewhere in this Agreement and in the other Loan
Documents shall survive for so long as any amount remains owing to Lender under
this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.

 

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V. BORROWER COVENANTS

 

Section 5.1 Affirmative Covenants.

 

From the date hereof and until payment in full of the Debt or the earlier
release in full of Lender’s Liens encumbering the Collateral (and all related
obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:

 

5.1.1 Existence; Compliance with Legal Requirements.

 

(a) Borrower shall do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its existence, rights, licenses, permits
and franchises, and comply, or cause Mortgage Borrower to comply, in all
material respects, with all Legal Requirements applicable to it, the Collateral
and the Properties. There shall never be committed by Borrower or Operating
Tenant and Borrower shall not permit or cause Mortgage Borrower to permit any
act or omission affording the federal government or any State or local
government the right of forfeiture against any Individual Property or any part
thereof or any monies paid in performance of Borrower’s obligations under any of
the Loan Documents. Borrower hereby covenants and agrees not to permit or cause
Mortgage Borrower to commit or permit any act or omission affording such right
of forfeiture. Borrower shall at all times cause Mortgage Borrower to keep,
maintain, preserve and protect all franchises and trade names and preserve all
the remainder of its property used or useful in the conduct of its business and
shall keep the Properties in good working order and repair, reasonable wear and
tear excepted, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto,
all as more fully provided in the Loan Documents. Borrower shall keep, or shall
cause Mortgage Borrower to keep, the Properties insured at all times by
financially sound and reputable insurers, to such extent and against such risks,
and maintain liability and such other insurance, as is more fully provided in
this Agreement. Borrower shall cause Mortgage Borrower to operate any Individual
Property that is the subject of any O&M Program in accordance with the terms and
provisions thereof in all material respects.

 

(b) After prior written notice to Lender, Borrower, at its own expense, may, or
cause Mortgage Borrower to contest by appropriate legal proceeding promptly
initiated and conducted in good faith and with due diligence, the validity of
any Legal Requirement, the applicability of any Legal Requirement to Borrower,
Mortgage Borrower or any Individual Property or any alleged violation of any
Legal Requirement, provided that (i) no Event of Default has occurred and
remains uncured; (ii) such proceeding shall be permitted under and be conducted
in accordance with the provisions of any instrument to which Borrower is subject
and shall not constitute a default thereunder and such proceeding shall be
conducted in accordance with all Applicable Laws; (iii) neither any Individual
Property nor the Collateral, nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower
shall, and shall cause Mortgage Borrower to, promptly upon final determination
thereof comply with any such Legal Requirement determined to be valid or

 

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applicable or cure any violation of any Legal Requirement; (v) such proceeding
shall suspend the enforcement of the contested Legal Requirement against
Borrower, Mortgage Borrower, the Collateral or any Individual Property; and
(vi) Borrower shall, or cause Mortgage Borrower to furnish such security as may
be required in the proceeding, or as may be reasonably requested by Lender, to
insure compliance with such Legal Requirement, together with all interest and
penalties payable in connection therewith. Lender may apply any such security or
part thereof, as necessary to cause compliance with such Legal Requirement at
any time when, in the reasonable judgment of Lender, the validity, applicability
or violation of such Legal Requirement is finally established or any Individual
Property or the Collateral (or any part thereof or interest therein) shall be in
danger of being sold, forfeited, terminated, cancelled or lost.

 

5.1.2 Taxes and Other Charges.

 

Borrower shall pay, or cause Mortgage Borrower to pay, all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Properties or
any part thereof as the same become due and payable. Borrower shall furnish, or
cause to be furnished, to Lender receipts, or other evidence for the payment of
the Taxes and the Other Charges prior to the date the same shall become
delinquent (provided, however, that Borrower is not required to furnish such
receipts for payment of Taxes in the event that such Taxes have been paid by
Mortgage Lender pursuant to Section 7.2 of the Mortgage Loan Agreement).
Borrower shall not suffer and shall not permit Mortgage Borrower to suffer and
shall promptly cause Mortgage Borrower to promptly pay and discharge any Lien or
charge whatsoever which may be or become a Lien or charge against the
Properties, and shall promptly pay for all utility services provided to the
Properties. After prior written notice to Lender, Borrower, at its own expense,
may, or cause Mortgage Borrower to, contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any Taxes or Other
Charges, provided that (i) no Event of Default has occurred and remains uncured;
(ii) such proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Borrower and Mortgage
Borrower are subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all Applicable Laws;
(iii) neither the Collateral nor any Individual Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost; (iv) Borrower shall, or shall cause Mortgage Borrower to,
promptly upon final determination thereof pay the amount of any such Taxes or
Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the applicable
Individual Property or any asset of Borrower; (vi) Borrower shall, or shall
cause Mortgage Borrower to, have deposited with Lender or Mortgage Lender, as
applicable, adequate reserves for the payment of the Taxes, together with all
interest and penalties thereon, unless Borrower or Mortgage Borrower has paid
all of the Taxes under protest (provided, however, that Borrower shall not be
required to deposit such reserves with Lender or Mortgage Lender, as applicable,
in the event that funds sufficient to pay such Taxes shall theretofore have been
deposited with or collected by Lender or Mortgage Lender, as applicable,
pursuant to Section 3.7 of the Mortgage Loan Agreement or Section 7.2 hereof,
and (vii) Borrower shall, or shall cause Mortgage Borrower to, furnish such
security as may be required in the proceeding.

 

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5.1.3 Litigation.

 

Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or threatened against Borrower or Mortgage
Borrower which might materially adversely affect Borrower’s or Mortgage
Borrower’s condition (financial or otherwise) or business or the condition or
ownership of any Individual Property.

 

5.1.4 Access to Properties.

 

Borrower shall cause Mortgage Borrower to permit agents, representatives and
employees of Lender to inspect the Properties or any part thereof at reasonable
hours upon reasonable advance notice.

 

5.1.5 Notice of Default.

 

Borrower shall promptly advise Lender of any material adverse change in
Borrower’s or Mortgage Borrower’s condition, financial or otherwise, or of the
occurrence of any Event of Default of which Borrower has knowledge.

 

5.1.6 Cooperate in Legal Proceedings.

 

Borrower shall cooperate, and shall cause each Loan Party to cooperate, fully
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way adversely affect the rights of
Lender hereunder or any rights obtained by Lender under any of the other Loan
Documents and, in connection therewith, permit Lender, at its election, to
participate in any such proceedings.

 

5.1.7 Award and Insurance Benefits.

 

Borrower shall cooperate with Lender in obtaining for Borrower and Lender the
benefits of any Awards or Insurance Proceeds lawfully or equitably payable in
connection with any Individual Property, and Lender shall be reimbursed for any
reasonable expenses incurred in connection therewith (including reasonable
attorneys’ fees and disbursements, and the payment by Borrower of the expense of
an appraisal on behalf of Lender in case of Casualty or Condemnation affecting
any Individual Property or any part thereof) out of such Award or Insurance
Proceeds.

 

5.1.8 Further Assurances.

 

Borrower shall and shall cause each Loan Party, at Borrower’s sole cost and
expense:

 

(a) furnish to Lender all instruments, documents, boundary surveys, footing or
foundation surveys, certificates, plans and specifications, appraisals, title
and other insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished by Borrower
pursuant to the terms of the Loan Documents or reasonably requested by Lender in
connection therewith;

 

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(b) execute and deliver to Lender such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary or desirable,
to evidence, preserve and/or protect the collateral at any time securing or
intended to secure the obligations of Borrower under the Loan Documents, as
Lender may reasonably require including, without limitation, the authorization
of Lender to execute and/or the execution by Borrower of UCC financing
statements and the execution and delivery of all such writings necessary to
transfer any liquor licenses into the name of Lender or its designee after the
occurrence and continuance of any Event of Default; and

 

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

 

5.1.9 Mortgage and Intangible Taxes.

 

Borrower shall pay and shall cause each Loan Party to pay all State, county and
municipal recording, intangible, and all other taxes imposed upon the execution,
delivery and filing of the UCC Financing Statements and/or upon the execution
and delivery of the Note.

 

5.1.10 Financial Reporting.

 

(a) Borrower will keep and maintain on a Fiscal Year basis, in accordance with
GAAP (or such other accounting basis reasonably acceptable to Lender), proper
and accurate books, records and accounts reflecting all of the financial affairs
of Borrower and all items of income and expense with respect to the Collateral.
Borrower will cause Mortgage Borrower to keep and maintain on a Fiscal Year
basis, in accordance with GAAP (or such other accounting basis reasonably
acceptable to Lender), proper and accurate books, records and accounts
reflecting all of the financial affairs of Mortgage Borrower and all items of
income and expense in connection with the operation on an individual basis of
the Properties. Lender shall have the right from time to time at all times
during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of Borrower, Mortgage Borrower, Operating
Tenant and/or Manager or any other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as Lender shall desire.
After the occurrence and during the continuance of an Event of Default, Borrower
shall pay any costs and expenses incurred by Lender to examine Borrower’s
accounting records with respect to the Collateral and the Properties or any Loan
Party, as Lender shall determine to be necessary or appropriate in the
protection of Lender’s interest. To the extent that any of the items described
below in this Section 5.1.10 are prepared by the Operating Tenant rather than by
Borrower, Borrower agrees to cause Operating Tenant to deliver such items to
Lender in the form and within the time periods set forth below.

 

(b) Borrower will furnish, and cause to be furnished, to Lender annually, within
one hundred twenty (120) days following the end of each Fiscal Year, a complete
copy of Borrower’s annual financial statements audited by an Approved Accountant
in accordance with GAAP (or such other accounting basis acceptable to Lender)
covering

 

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the Collateral owned by Borrower for such Fiscal Year and containing statements
of profit and loss for Borrower and the Properties (including the income and
expenses maintained by the Operating Tenant and adjusted for real estate taxes,
insurance and other fixed charges, through net operating income) and lease
payment amounts and a balance sheet for Borrower.

 

(c) Borrower will furnish, or cause Mortgage Borrower to furnish, to Lender a
copy of the financial statements and all other materials Mortgage Borrower is
required to provide Mortgage Lender under Section 5.1.10 of the Mortgage Loan
Agreement within the time periods required under such Section.

 

(d) For the partial year period commencing on the date hereof, and for each
Fiscal Year thereafter, Borrower shall cause Mortgage Borrower to submit to
Lender an Annual Budget for each Individual Property not later than sixty
(60) days prior to the commencement of such period or Fiscal Year in form
reasonably satisfactory to Lender, and shall be subject to Lender’s written
approval, such approval not to be unreasonably withheld, notwithstanding any
limitation in the Operating Lease on Borrower’s right to approve the Operating
Tenant’s operating budget (each such Annual Budget after it has been approved in
writing by Lender shall be hereinafter referred to as an “Approved Annual
Budget”). The Annual Budget defined in and required pursuant to Section 17.3 of
the Operating Lease shall satisfy the form of the required Annual Budget. If
Lender does not advise Borrower of any objections to the proposed Annual Budget
within twenty (20) Business Days after receipt thereof, such proposed Annual
Budget shall be deemed approved. In the event that Lender objects to a proposed
Annual Budget submitted by Borrower, Lender shall advise Borrower of such
objections within twenty (20) Business Days after receipt thereof (and deliver
to Borrower a reasonably detailed description of such objections) and Borrower
shall cause Mortgage Borrower and Operating Tenant to promptly revise such
Annual Budget and resubmit the same to Lender. Lender shall advise Borrower of
any objections to such revised Annual Budget within ten (10) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall cause Mortgage Borrower and Operating Tenant to
promptly revise the same in accordance with the process described in this
subsection until Lender approves the Annual Budget. Until such time that Lender
approves or has been deemed to approve a proposed Annual Budget, the most
recently Approved Annual Budget shall apply; provided that, such Approved Annual
Budget shall be adjusted to reflect actual increases in Taxes, Insurance
Premiums and utilities expenses. In addition, following a Termination Event,
Lender shall have the right to approve any Extraordinary Expenses.

 

(e) Borrower shall furnish or cause Mortgage Borrower to furnish to Lender,
within ten (10) Business Days after request such further detailed information
with respect to the operation of the Properties and the financial affairs of
Borrower or Mortgage Borrower, Operating Tenant, the REIT, the Operating
Partnership or the Manager as may be reasonably requested by Lender, including,
without limitation, an annual operating budget for each Individual Property.

 

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(f) Borrower shall cause, or cause Mortgage Borrower to cause, Operating Tenant
to have Manager simultaneously deliver to Lender all financial statements and
reports required to be delivered to Operating Tenant by Manager pursuant to the
Management Agreement.

 

(g) Borrower shall promptly send to Lender, and cause, or cause Mortgage
Borrower to cause, the Operating Tenant to promptly send to Lender, all Quality
Assurance Reports or other reports of inspection delivered by Franchisor.

 

(h) Any reports, statements or other information required to be delivered under
this Agreement shall be delivered (i) in paper form, (ii) on a compact disk or a
diskette, and (iii) if requested by Lender and within the capabilities of
Borrower’s or Mortgage Borrower’s, as applicable, data systems without change or
modification thereto, in electronic form and prepared using a Microsoft Word for
Windows or WordPerfect for Windows files (which files may be prepared using a
spreadsheet program and saved as word processing files).

 

(i) Borrower agrees that Lender may forward to each purchaser, transferee,
assignee, servicer, participant, Co-Lender or investor in all or any portion of
the Loan or any Securities (collectively, the “Investor”) or any Rating Agency
rating such participations and/or Securities and each prospective Investor, and
any organization maintaining databases on the underwriting and performance of
commercial mortgage loans, all documents and information which Lender now has or
may hereafter acquire relating to the Debt and to Borrower, Mortgage Borrower,
any Guarantor, the Collateral, and the Properties, whether furnished by
Borrower, Mortgage Borrower, any Guarantor, or otherwise, as Lender determines
necessary or desirable. Borrower irrevocably waives any and all rights it may
have under any Applicable Laws to prohibit such disclosure, including, but not
limited, to any right of privacy.

 

5.1.11 Business and Operations.

 

Borrower will cause Mortgage Borrower to continue to be engaged in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Properties.
Borrower will and shall cause Mortgage Borrower to remain in good standing under
the laws of each jurisdiction to the extent required for the ownership,
maintenance, management and operation of the Properties.

 

5.1.12 Costs of Enforcement.

 

In the event (a) that Lender exercises any of its rights or remedies under the
Pledge Agreement or any other Loan Document as and when permitted thereby, or
(b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors, or
(c) Lender incurs any costs or expenses in connection with any refinancing or
restructuring of the Loan in the nature of a workout, Borrower, its successors
or assigns, shall be chargeable with and agrees to pay all costs of collection
and defense and all other expenses, including reasonable attorneys’ fees and
costs, incurred by Lender or Borrower in connection therewith and in connection
with any appellate proceeding or post-judgment action involved therein, together
with all required service or use taxes.

 

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5.1.13 Estoppel Statement.

 

(a) After request by Lender, Borrower shall within ten (10) Business Days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the unpaid
principal amount of the Note, (iii) the Applicable Interest Rate of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, and (vi) that the Note, this
Agreement, Pledge Agreement and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.

 

(b) Borrower shall deliver to Lender upon request, (to be made no more
frequently than once in any consecutive twelve month period, unless such request
is made in connection with a Securitization or a Syndication) tenant estoppel
certificates from each tenant under a Major Lease at each Individual Property in
form and substance reasonably satisfactory to Lender.

 

(c) Borrower shall, promptly upon request of Lender, (to be made no more
frequently than once in any consecutive twelve month period, unless such request
is made in connection with a Securitization or a Syndication) use commercially
reasonable efforts to deliver an estoppel certificate from Franchisor stating
that (i) the Franchise Agreement is in full force and effect and has not been
modified, amended or assigned, (ii) neither Franchisor nor Mortgage Borrower nor
Operating Tenant is in default under any of the material terms, covenants or
provisions of the Franchise Agreement and Franchisor knows of no event which,
but for the passage of time or the giving of notice or both, would constitute an
event of default under the Franchise Agreement, (iii) neither Franchisor nor
Mortgage Borrower nor Operating Tenant has commenced any action or given or
received any notice for the purpose of terminating the Franchise Agreement and
(iv) all sums due and payable to Franchisor under the Franchise Agreement have
been paid in full.

 

(d) Borrower shall, promptly upon request of Lender, (to be made no more
frequently than once in any consecutive twelve month period, unless such request
is made in connection with a Securitization or a Syndication), cause Mortgage
Borrower to deliver an estoppel certificate from Operating Tenant stating that
(i) the Operating Lease is in full force and effect and has not been modified,
amended or assigned (or listing the modifications, amendments or assignments, if
any), (ii) neither Operating Tenant nor Mortgage Borrower is in default under
any of the material terms, covenants or provisions of the Operating Lease and
Operating Tenant knows of no event which, but for the passage of time or the
giving of notice or both, would constitute an event of default under the
Operating Lease, (iii) neither Operating Tenant nor Mortgage Borrower has
commenced any action or given or received any notice for the purpose of
terminating the Operating Lease and (iv) all sums due and payable to Operating
Tenant under the Operating Lease has been paid in full.

 

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(e) Borrower shall, promptly upon request of Lender, (to be made no more
frequently than once in any consecutive twelve month period, unless such request
is made in connection with a Securitization or a Syndication), cause Mortgage
Borrower to deliver an estoppel certificate from Manager stating that (i) the
Management Agreement is in full force and effect and has not been modified,
amended or assigned (or listing the modifications, amendments or assignments, if
any), (ii) neither Manager nor Mortgage Borrower nor Operating Tenant, as the
case may be, is in default under any of the material terms, covenants or
provisions of the Management Agreement and Manager knows of no event which, but
for the passage of time or the giving of notice or both, would constitute an
event of default under the Management Agreement, (iii) neither Manager nor
Mortgage Borrower nor Operating Tenant, as the case may be, has commenced any
action or given or received any notice for the purpose of terminating the
Management Agreement and (iv) all sums due and payable to Manager under the
Management Agreement has been paid in full.

 

5.1.14 Loan Proceeds.

 

Borrower shall use the proceeds of the Loan received by it on the Closing Date
only for the purposes set forth in Section 2.1.4.

 

5.1.15 Performance by Borrower.

 

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

 

(b) Except as required pursuant to the Mortgage Loan Agreement, Borrower shall
not cause or request or permit Mortgage Borrower to enter into or otherwise
request any amendment, waiver, supplement, termination or other modification of
any Mortgage Loan Document executed and delivered by, or applicable to, Mortgage
Borrower as of the date hereof without the prior written consent of Lender.
Borrower shall cause Mortgage Borrower to provide Lender with a copy of any
amendment, waiver, supplement, termination or other modification to the Mortgage
Loan Documents within five (5) Business Days after the execution thereof.
Borrower shall not, and shall not permit any Loan Party to, amend or modify the
Organizational Documents of any Loan Party in any material respect without
Lender’s prior written consent.

 

5.1.16 Confirmation of Representations.

 

Borrower shall deliver, in connection with any Securitization or Syndication,
(a) one or more Officer’s Certificates certifying as to the accuracy of all
representations made by Borrower in the Loan Documents as of the date of the
closing of such Securitization or Syndication in all relevant jurisdictions, and
(b) certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Borrower and
Principal as of the date of the closing of such Securitization or Syndication.

 

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5.1.17 Leasing Matters.

 

(a) With respect to any Individual Property, Borrower may cause Mortgage
Borrower or Operating Tenant to enter into a proposed Lease (including the
renewal or extension of an existing Lease, other than an Operating Lease, (a
“Renewal Lease”)) without the prior written consent of Lender, provided that if
such proposed Lease or Renewal Lease is a Major Lease, such Major Lease
(i) provides for rental rates and terms comparable to existing local market
rates and terms (taking into account the type and quality of the tenant) as of
the date such Major Lease is executed by Mortgage Borrower (unless, in the case
of a Renewal Lease, the rent payable during such renewal, or a formula or other
method to compute such rent, is provided for in the original Lease), (ii) is an
arms-length transaction with a bona fide, independent third party tenant, and
(iii) does not have a material adverse effect on the value or quality of the
applicable Individual Property. All proposed Major Leases which do not satisfy
the requirements set forth in this Section 5.1.17(a) shall be subject to the
prior approval of Lender, which approval shall not be unreasonably withheld. At
Lender’s request, Borrower shall cause Mortgage Borrower and Operating Tenant,
as applicable, to promptly deliver to Lender copies of all Major Leases which
are entered into pursuant to this Subsection together with Borrower’s
certification that it has satisfied or caused Mortgage Borrower to have
satisfied all of the conditions of this Section.

 

(b) Borrower shall, or cause Mortgage Borrower to cause Operating Tenant to,
(i) observe and perform all the material obligations imposed upon the lessor
under the Major Leases and shall not do or permit to be done anything to impair
the value of any of the Major Leases as security for the Debt; (ii) promptly
send copies to Lender of all notices of default or other material matters which
Mortgage Borrower shall send or receive with respect to the Major Leases;
(iii) enforce all of the material terms, covenants and conditions contained in
the Major Leases upon the part of the tenant thereunder to be observed or
performed (except for termination of a Major Lease which shall require Lender’s
prior written approval); (iv) not collect any of the Rents more than one
(1) month in advance (except security deposits shall not be deemed Rents
collected in advance); (v) not execute any other assignment of the lessor’s
interest in any of the Major Leases or the Rents (except as contemplated by the
Mortgage Loan Documents); and (vi) not consent to any assignment of or
subletting under any Major Leases not in accordance with their terms, without
the prior written consent of Lender.

 

(c) Borrower may, or cause Mortgage Borrower to cause Operating Tenant to,
without the consent of Lender, cause Mortgage Borrower to amend, modify or waive
the provisions of any Lease or terminate, reduce rents under, accept a surrender
of space under, or shorten the term of, any Lease (other than the Operating
Lease) (including any guaranty, letter of credit or other credit support with
respect thereto) provided that such Lease is not a Major Lease and that such
action (taking into account, in the case of a termination, reduction in rent,
surrender of space or shortening of term, the planned alternative use of the
affected space) does not have a material adverse effect on the value

 

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of the applicable Individual Property taken as a whole, and provided that such
Lease, as amended, modified or waived, is otherwise in compliance with the
requirements of this Agreement. A termination of a Lease (other than a Major
Lease) with a tenant who is in default beyond applicable notice and grace
periods shall not be considered an action which has a material adverse effect on
the value of the applicable Individual Property taken as a whole. Any amendment,
modification, waiver, termination, rent reduction, space surrender or term
shortening which does not satisfy the requirements set forth in this Subsection
shall be subject to the prior written approval of Lender, which approval shall
not be unreasonably withheld and its counsel, at Borrower’s expense. At Lender’s
request, Borrower shall cause Mortgage Borrower or Operating Tenant, as
applicable, to promptly deliver to Lender copies of all Leases, amendments,
modifications and waivers which are entered into pursuant to this
Section 5.1.17(c) together with Borrower’s certification that it has satisfied
all of the conditions of this Section 5.1.17(c).

 

(d) Notwithstanding anything contained herein to the contrary, with respect to
any Individual Property, Borrower shall not cause or permit Mortgage Borrower or
Operating Tenant to, without the prior written consent of Lender, which consent
shall not be unreasonably withheld, enter into, renew, extend, amend, modify,
waive any provisions of, terminate, reduce rents under, accept a surrender of
space under, or shorten the term of, any Major Lease or any instrument
guaranteeing or providing credit support for any Major Lease.

 

5.1.18 Management Agreement.

 

(a) The Improvements on the Properties are operated under the terms and
conditions of the Management Agreement. In no event shall the base management
fees under the Management Agreement exceed three percent (3%) of the gross
income derived from the Property and any incentive management fees shall not
accrue. All fees (base, incentive, termination or otherwise) due under the
Management Agreement must be subordinate in lien and payment to this Agreement
(other than base management fees not in excess of three percent (3%) of the
gross income derived from the Property). Borrower shall cause Mortgage Borrower
to cause Operating Tenant to (i) diligently perform and observe all of the
material terms, covenants and conditions of the Management Agreement, on the
part of Mortgage Borrower or Operating Tenant to be performed and observed to
the end that all things shall be done which are necessary to keep unimpaired the
rights of Mortgage Borrower and Operating Tenant under the Management Agreement
and (ii) promptly notify Lender of the giving of any notice by Manager to
Mortgage Borrower or Operating Tenant of any default by Mortgage Borrower or
Operating Tenant in the performance or observance of any of the terms, covenants
or conditions of the Management Agreement on the part of Mortgage Borrower or
Operating Tenant to be performed and observed and deliver to Lender a true copy
of each such notice. Neither Borrower nor Mortgage Borrower shall cause
Operating Tenant to surrender the Management Agreement, consent to the
assignment by the Manager of its interest under the Management Agreement, or
terminate or cancel the Management Agreement, or modify, change, supplement,
alter or amend the Management Agreement, in any material respect, either orally
or in writing. Notwithstanding the foregoing, Mortgage Borrower or Operating
Tenant may terminate a

 

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Management Agreement provided that Borrower or Operating Tenant simultaneously
enters into a Replacement Management Agreement with a Qualified Manager. Subject
to the rights of Mortgage Lender, if Mortgage Borrower or Operating Tenant shall
default in the performance or observance of any material term, covenant or
condition of the Management Agreement on the part of Mortgage Borrower or
Operating Tenant to be performed or observed, then, without limiting the
generality of the other provisions of this Agreement, and without waiving or
releasing Borrower from any of its obligations hereunder, Borrower shall permit
Lender, upon five (5) days prior notice to Borrower, to pay any sums and to
perform any act or take any action as may be appropriate to cause all the terms,
covenants and conditions of the Management Agreement on the part of Mortgage
Borrower or Operating Tenant to be performed or observed to be promptly
performed or observed on behalf of Mortgage Borrower or Operating Tenant, to the
end that the rights of Mortgage Borrower or Operating Tenant in, to and under
the Management Agreement shall be kept unimpaired and free from default;
provided, however, that Lender shall have no such obligation to perform any such
action. Borrower shall cause Lender and any Person designated by Lender to have,
the right to enter upon the applicable Individual Property at any time and from
time to time for the purpose of taking any such action. If the Manager shall
deliver to Lender a copy of any notice sent to Mortgage Borrower or Operating
Tenant of default under the Management Agreement, such notice shall constitute
full protection to Lender for any action taken or omitted to be taken by Lender
in good faith, in reliance thereon. None of Borrower, Mortgage Borrower or
Operating Tenant shall, or permit, the Manager to, sub-contract any or all of
its management responsibilities under the Management Agreement to a third-party
without the prior written consent of Lender, which consent shall not be
unreasonably withheld. Borrower shall, or cause Mortgage Borrower to cause
Operating Tenant to, from time to time, obtain from the Manager such
certificates of estoppel with respect to compliance by Mortgage Borrower and
Operating Tenant with the terms of the Management Agreement as may be requested
by Lender (which requests shall be made no more frequently than once in any
consecutive twelve month period unless such request is made in connection with a
Securitization). Borrower and Mortgage Borrower shall cause Operating Tenant to
exercise each individual option, if any, to extend or renew the term of the
Management Agreement upon demand by Lender made at any time within or prior to
the period within which any such option may be exercised. Any sums expended by
Lender pursuant to this paragraph (i) shall bear interest at the Default Rate
from the date such cost is incurred to the date of payment to Lender, (ii) shall
be deemed to constitute a portion of the Debt, (iii) shall be secured by the
lien of the Pledge Agreement and the other Loan Documents and (iv) shall be
immediately due and payable upon demand by Lender therefor. Borrower represents
that Interstate Management Company, L.L.C., the current manager of the
Properties, is not an Affiliate of, nor Affiliated with, Borrower, Mortgage
Borrower or Guarantor.

 

(b) Without limitation of the foregoing, Borrower, upon the request of Lender,
shall cause Mortgage Borrower to, or cause Operating Tenant to, terminate the
Management Agreement and replace the Manager, without penalty or fee, if at any
time during the Loan: (a) the Manager shall become insolvent or a debtor in any
bankruptcy or insolvency proceeding, (b) there exists an Event of Default,
(c) there exists a material default by Manager under the Management Agreement.
At such time as the Manager may be removed, a Qualified Manager shall assume
management of the applicable Individual Property pursuant to a Replacement
Management Agreement.

 

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5.1.19 Environmental Covenants.

 

(a) Borrower covenants and agrees that so long as the Loan is outstanding
(i) Mortgage Borrower’s uses and operations on or of the Properties shall be in
compliance with applicable Environmental Laws and permits issued pursuant
thereto in all material respects; (ii) there shall be no Releases of Hazardous
Materials by Mortgage Borrower in, on, under or from any of the Properties in
violation of Environmental Law; (iii) Borrower shall not permit or cause
Mortgage Borrower to use, generate, treat, store, dispose or transport Hazardous
Materials in, on, or under any of the Properties, except those that are both
(A) in material compliance with all Environmental Laws and with permits issued
pursuant thereto, if and to the extent required, and (B) (1) in amounts not in
excess of that necessary to operate the applicable Individual Property
(including each tenant’s respective business at such Property), (2) fully
disclosed in the Environmental Reports or otherwise disclosed to and approved by
Lender in writing or (3) held by a tenant for sale to the public in its ordinary
course of business; (iv) Borrower shall cause Mortgage Borrower to keep the
Properties free and clear of all liens and other encumbrances imposed pursuant
to any Environmental Law, whether due to any act or omission of Borrower or any
other Person (the “Environmental Liens”), subject to the provisions of
Section 5.2.10 hereof; (v) Borrower shall cause Mortgage Borrower to, at its
sole cost and expense, fully and expeditiously cooperate in all activities
pursuant to paragraph (b) below, including but not limited to providing access
to the Individual Properties and all relevant information in its possession,
custody or control and making knowledgeable persons available for interviews at
reasonable times; (vi) Borrower shall cause Mortgage Borrower to, at its sole
cost and expense, comply with all reasonable written requests of Lender to
(A) reasonably effectuate remediation of any Hazardous Materials in, on, under
or from any Individual Property, and (B) comply with any Environmental Law; and
(vii) Borrower shall cause Mortgage Borrower to take all commercially reasonable
measures to require that each tenant complies in all material respects with
provisions (i) through (vi) of this Section 5.1.19(a);

 

(b) Borrower covenants and agrees that so long as the Loan is outstanding,
Borrower shall promptly notify Lender in writing after it has become aware of:
(i) any presence or Release or threatened Releases of Hazardous Materials in,
on, under, from or migrating towards any of the Properties; (ii) any non
compliance with any Environmental Laws related in any way to any of the
Properties; (iii) any actual or potential Environmental Lien; (iv) any required
or proposed remediation of environmental conditions relating to any of the
Properties; and (v) any written or oral notice or other communication of which
Borrower becomes aware from any source whatsoever (including but not limited to
a Governmental Authority) relating in any way to Borrower’s liability for any
Hazardous Materials in material violation of any Environmental Laws.

 

(c) Lender and its designated agents or representatives, including but not
limited to any environmental consultant, and any receiver appointed by any court
of

 

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competent jurisdiction, shall have the right, but not the obligation, to enter
upon any Individual Property at all reasonable times to assess any and all
aspects of the environmental condition of any Individual Property and its use.
If Lender reasonably believes that Borrower or Mortgage Borrower has breached
any environmental representation, warranty or covenant contained in Sections
4.1.39 or 5.1.19(a) and (b) hereof, Lender may request that Borrower undertake
such tests and investigations of the environmental condition of the Individual
Property (or portions thereof) that are reasonably necessary under the
circumstances to assess the alleged breach of the representation, warranty or
covenant. Any such tests or investigations shall be conducted by a qualified
environmental engineer or consultant, reasonably acceptable to Lender, and if
determined by the environmental engineer or consultant to be reasonably
necessary, may include invasive sampling (such as any sampling of the soil,
groundwater, surface water, air or building materials). Borrower shall provide
Lender with a copy of any reports of the results of such tests and
investigations and Lender and other Indemnified Parties shall be entitled to
rely on such reports. If an Event of Default has occurred and is continuing, or
if Borrower has not diligently pursued such tests and investigations as are
reasonably requested by Lender pursuant to this Section 5.1.19(c), then Lender
may hire its own environmental engineer or consultant, at Borrower’s expense, to
conduct such tests and investigations. Lender shall make all reasonable efforts
to conduct any such tests and investigations so as to avoid interference with
the operation of the Property.

 

(d) If counsel to Mortgage Borrower or Borrower reasonably determines that
providing Lender with a document otherwise required to be provided pursuant to
this Section 5.1.19 (or any other provision of this Agreement or any other Loan
Document relating to environmental matters) would jeopardize an applicable
attorney-client or work product privilege pertaining to such document, the
Borrower shall not be obligated to provide such document to Lender but shall
provide Lender with a notice identifying the author and recipient of such
document and generally describing the content of the documents. Upon request of
Lender, Borrower shall take all reasonable steps necessary to provide, or cause
Mortgage Borrower to provide, Lender with the factual information contained in
any such privileged documents. Nothing contained in this Section 5.1.19(d) shall
in any way limit lender’s rights under Section 5.1.19(c) hereof.

 

5.1.20 Alterations.

 

Borrower shall obtain Lender’s prior written consent to any alterations to any
Improvements, which consent shall not be unreasonably withheld except with
respect to alterations that may have a material adverse effect on Borrower’s or
Mortgage Borrower’s financial condition, the value of the related Individual
Property, the Collateral or the Net Operating Income. Notwithstanding the
foregoing, Lender’s consent shall not be required in connection with any
alterations that will not have a material adverse effect on Borrower’s or
Mortgage Borrower’s financial condition, the value of the related Individual
Property, the Collateral or the Net Operating Income, provided that such
alterations (a) are made in connection with work performed pursuant to an
Approved Capital Budget for the related Individual Property or (b) do not
adversely affect any structural component of any Improvements, any utility or
HVAC system contained in any Improvements or the exterior of any building
constituting a part

 

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of any Improvements and either (i) the cost of which is less than $1,000,000.00,
or (ii) are alterations performed in connection with the Restoration of the
related Individual Property in accordance with the terms and provisions of this
Agreement and the Mortgage Loan Agreement. If the total unpaid amounts with
respect to alterations to the Improvements at the related Individual Property
(other than such amounts to be paid or reimbursed by tenants under the Leases)
shall at any time exceed 5% of the Allocated Loan Amount for the related
Individual Property (the “Alteration Threshold Amount”), provided that, at no
time shall the total cost of all alterations then being undertaken on all of the
Properties exceed $10,000,000.00, Borrower shall promptly deliver or cause to be
delivered to Lender as security for the payment of such amounts and as
additional security for Borrower’s obligations under the Loan Documents any of
the following: (A) cash, (B) U.S. Obligations, (C) other securities having a
rating acceptable to Lender and for which Lender has received a Rating
Confirmation, or (D) a completion bond or letter of credit issued by a financial
institution having a rating by S&P of not less than A-1+ if the term of such
bond or letter of credit is no longer than three (3) months or, if such term is
in excess of three (3) months, issued by a financial institution having a rating
that is acceptable to Lender and for which Lender has received a Rating
Confirmation. Such security shall be in an amount equal to the excess of the
total unpaid amounts with respect to alterations to the Improvements on the
applicable Individual Property (other than such amounts to be paid or reimbursed
by tenants under the Leases) over the Alteration Threshold Amount and applied
from time to time at the option of Lender to pay for such alterations or to
terminate any of the alterations and restore the related Individual Property to
the extent necessary to prevent any material adverse effect on the value of the
related Individual Property. Notwithstanding the foregoing, Borrower shall be
relieved of its obligation to deposit the security for certain alterations
described above provided Mortgage Borrower is required to and does deliver such
security to Mortgage Lender in accordance with the Mortgage Loan Documents and
Lender received evidence acceptable to Lender of the delivery of such security.

 

5.1.21 Franchise Agreement.

 

The Improvements on the Properties shall be operated under the terms and
conditions of the Franchise Agreements. Borrower shall, or shall cause Mortgage
Borrower to, or cause Operating Tenant to, (i) pay all sums required to be paid
by Mortgage Borrower under the Franchise Agreement, (ii) diligently perform,
observe and enforce all of the material terms, covenants and conditions of the
Franchise Agreement on the part of Mortgage Borrower or Operating Tenant to be
performed, observed and enforced to the end that all things shall be done which
are necessary to keep unimpaired the rights of Mortgage Borrower and Operating
Tenant under the Franchise Agreement, (iii) promptly notify Lender of the giving
of any notice to Mortgage Borrower or Operating Tenant of any default by
Mortgage Borrower or Operating Tenant in the performance or observance of any of
the terms, covenants or conditions of the Franchise Agreement on the part of
Mortgage Borrower or Operating Tenant to be performed and observed and deliver
to Lender a true copy of each such notice, and (iv) promptly deliver to Lender a
copy of each financial statement, business plan, capital expenditure plan,
material notice, report and estimate received by it under the Franchise
Agreement. Neither Borrower nor Mortgage Borrower shall cause Operating Tenant
to, without the prior consent of Lender, surrender the Franchise Agreement or
terminate or cancel the Franchise Agreement or modify, change, supplement, alter
or amend the Franchise Agreement, in any material respect, either orally or in
writing. Notwithstanding the foregoing, Borrower or Operating Tenant may

 

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terminate a Franchise Agreement provided that Borrower simultaneously enters
into a Replacement Franchise Agreement with a Qualified Franchisor. Subject to
the rights of Mortgage Lender, if Mortgage Borrower or Operating Tenant shall
default in the performance or observance of any material term, covenant or
condition of the Franchise Agreement on the part of Mortgage Borrower or
Operating Tenant to be performed or observed, then, without limiting the
generality of the other provisions of this Agreement, and without waiving or
releasing Borrower from any of its obligations hereunder, Borrower shall permit
Lender to pay any sums and to perform any act or take any action as may be
appropriate to cause all the terms, covenants and conditions of the Franchise
Agreement on the part of Mortgage Borrower or Operating Tenant to be performed
or observed to be promptly performed or observed on behalf of Mortgage Borrower
or Operating Tenant, to the end that the rights of Mortgage Borrower and
Operating Tenant in, to and under the Franchise Agreement shall be kept
unimpaired and free from default; provided, however, that Lender shall have no
such obligation to perform any such action. Borrower shall cause Lender and any
Person designated by Lender shall have, and are hereby granted, the right to
enter upon the Properties at any time and from time to time for the purpose of
taking any such action. If Franchisor shall deliver to Lender a copy of any
notice sent to Borrower and Mortgage Borrower or Operating Tenant of default
under the Franchise Agreement, such notice shall constitute full protection to
Lender for any action taken or omitted to be taken by Lender in good faith, in
reliance thereon. Borrower shall cause Mortgage Borrower, or shall cause
Operating Tenant, from time to time, use its commercially reasonable efforts to
obtain from Franchisor such certificates of estoppel with respect to compliance
by Mortgage Borrower and Operating Tenant with the terms of the Franchise
Agreement as may be requested by Lender. Borrower shall cause Mortgage Borrower
and Operating Tenant shall exercise each individual option, if any, to extend or
renew the term of the Franchise Agreement upon demand by Lender made at any time
prior to or within the period in which any such option may be exercised,
provided, however that Borrower shall not be required to comply with such
request of Lender so long as Borrower is entering into a Replacement Franchise
Agreement, the term of which shall begin upon the expiration of the Franchise
Agreement currently in effect at the time of Lender’s request. Any sums expended
by Lender pursuant to this paragraph shall bear interest at the Default Rate
from the date such cost is incurred to the date of payment to Lender, shall be
deemed to constitute a portion of the Debt, shall be secured by the lien of the
Pledge Agreement and the other Loan Documents and shall be immediately due and
payable upon demand by Lender therefor.

 

5.1.22 The Ground Lease.

 

With respect to each Ground Lease,

 

(a) Borrower shall cause Mortgage Borrower to (i) pay all rents, additional
rents and other sums required to be paid by Mortgage Borrower, as tenant under
and pursuant to the provisions of each Ground Lease, (ii) diligently perform and
observe all of the terms, covenants and conditions of each Ground Lease on the
part of Mortgage Borrower, as tenant thereunder, (iii) promptly notify Lender of
the giving of any notice by the Fee Owner under the applicable Ground Lease to
Mortgage Borrower of any default by Mortgage Borrower, as tenant thereunder, and
deliver to Lender a true copy of each such notice within five (5) Business Days
of receipt and (iv) promptly notify Lender of any bankruptcy, reorganization or
insolvency of the Fee Owner under the applicable

 

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Ground Lease of which Borrower is aware or has received any notice thereof, and
deliver to Lender a true copy of such notice within five (5) Business Days of
Borrower’s receipt, together with copies of all notices, pleadings, schedules
and similar matters received by Borrower in connection with such bankruptcy,
reorganization or insolvency within five (5) Business Days after receipt.
Borrower shall not, without the prior consent of Lender, permit or cause
Mortgage Borrower to (x) surrender the leasehold estate created by the
applicable Ground Lease or terminate or cancel any Ground Lease or modify,
change, supplement, alter or amend any Ground Lease, either orally or in
writing, or (y) consent to, acquiesce in, or fail to object to, any attempt by
any Fee Owner, as debtor in possession or by a trustee for such Fee Owner, to
sell or transfer the Fee Estate with respect to any Ground Lease free and clear
of the Ground Lease under section 363(f) of the Bankruptcy Code or otherwise.
Borrower shall cause Mortgage Borrower to object to any such attempt by such Fee
Owner, as debtor in possession or by a trustee for such Fee Owner, to sell or
transfer the Fee Estate with respect to any Ground Lease free and clear of the
Ground Lease under section 363(f) of the Bankruptcy Code or otherwise, and in
such event shall affirmatively assert and pursue its right to adequate
protection under section 363(e) of the Bankruptcy Code. Borrower hereby grants
to Lender the right to object to any such sale or transfer on behalf of Borrower
and Mortgage Borrower, and Borrower shall not permit or cause Mortgage Borrower
to contest any pleadings, motions documents or other actions filed or taken on
Lender’s or Borrower’s or Mortgage Borrower’s behalf by Lender in the event that
any Fee Owner, as debtor in possession or by a trustee for such Fee Owner,
attempts to sell or transfer the Fee Estate with respect to any Ground Lease
free and clear of the Ground Lease under section 363(f) of the Bankruptcy Code
or otherwise.

 

(b) If Mortgage Borrower shall default in the performance or observance of any
term, covenant or condition of any Ground Lease on the part of Mortgage
Borrower, as tenant thereunder, and shall fail to cure the same prior to the
expiration of any applicable cure period provided thereunder, Lender shall have
the right, to the extent Lender has received notice of, or has otherwise become
aware of any such default, but shall be under no obligation, to pay any sums and
to perform any act or take any action as may be appropriate to cause all of the
terms, covenants and conditions of such Ground Lease on the part of Mortgage
Borrower to be performed or observed on behalf of Mortgage Borrower, to the end
that the rights of Mortgage Borrower in, to and under such Ground Lease shall be
kept unimpaired and free from default; provided, however, that Lender shall have
no such obligation to perform any such actions. If the landlord under the
applicable Ground Lease shall deliver to Lender a copy of any notice of default
under such Ground Lease, such notice shall constitute full protection to Lender
for any action taken or omitted to be taken by Lender, in good faith, in
reliance thereon. Borrower shall cause Mortgage Borrower to exercise each
individual option, if any, to extend or renew the term of each Ground Lease
prior to or within the period in which any such option may be exercised.

 

(c) Notwithstanding anything contained in any Ground Lease to the contrary,
Borrower shall not permit or cause Mortgage Borrower to further sublet any
portion of the related Individual Property (other than as permitted pursuant to
Section 5.1.17 hereof) without prior written consent of Lender. Each sublease
hereafter made shall provide that,

 

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(a) in the event of the termination of the Ground Lease, the sublease shall not
terminate or be terminable by the lessee thereunder; (b) in the event of any
action for the foreclosure of the Security Instrument with respect to the
related Individual Property, the sublease shall not terminate or be terminable
by the lessee thereunder by reason of the termination of the Ground Lease unless
such lessee is specifically named and joined in any such action and unless a
judgment is obtained therein against such lessee; and (c) in the event that the
Ground Lease is terminated as aforesaid, the lessee under the sublease shall
attorn to the lessor under the Ground Lease or to the purchaser at the sale of
the related Individual Property on such foreclosure, as the case may be. In the
event that any portion of such Individual Property shall be sublet pursuant to
the terms of this subsection, such sublease shall be deemed to be included in
the Individual Property.

 

5.1.23 OFAC.

 

At all times throughout the term of the Loan, Borrower, Mortgage Borrower,
Guarantor and their respective Affiliates shall be in compliance with all
applicable orders, rules, regulations and recommendations of The Office of
Foreign Assets Control of the U.S. Department of the Treasury.

 

5.1.24 Operating Lease.

 

(a) Lender acknowledges that Mortgage Borrower has leased the Property and the
operation of the Property to the Operating Tenant pursuant to the Operating
Lease. If Mortgage Borrower shall default in the performance or observance of
any material term, covenant or condition of the Operating Lease on the part of
Mortgage Borrower to be performed or observed, then, without limiting the
generality of the other provisions of this Agreement, and without waiving or
releasing Borrower from any of its obligations hereunder, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
or take any action as may be appropriate to cause all the terms, covenants and
conditions of the Operating Lease on the part of Mortgage Borrower to be
performed or observed to be promptly performed or observed on behalf of
Operating Tenant, to the end that the rights of Mortgage Borrower in, to and
under the Operating Lease shall be kept unimpaired and free from default. Lender
and any person designated by Lender shall have, and are hereby granted, the
right to enter upon the Property at any time and from time to time upon prior
notice to Borrower and Mortgage Borrower and during business hours or such other
reasonable times only, for the purpose of taking any such action. If the
Operating Tenant under the Operating Lease shall deliver to Lender a copy of any
notice sent to Mortgage Borrower of default under the Operating Lease, such
notice shall constitute full protection to Lender for any action taken or
omitted to be taken by Lender in good faith, in reliance thereon.

 

(b) Subject to the terms of the Mortgage Loan Agreement, Borrower and Operating
Tenant hereby agree that any requirement of consent on behalf of Mortgage
Borrower (as lessor) under the Operating Lease with respect to any proposed
action thereunder shall also be subject to the prior written consent of Lender.

 

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(c) Borrower shall, or shall cause Mortgage Borrower to, promptly notify Lender
of the giving of any notice to Operating Tenant of any material default by
Operating Tenant in the performance or observance of any of the terms, covenants
or conditions of the Operating Lease on the part of Operating Tenant to be
performed and observed and deliver to Lender a true copy of each such notice. In
addition, notwithstanding anything contained herein to the contrary, Borrower
shall not, and shall not permit or cause Mortgage Borrower to, without the prior
written consent of Lender and, after the occurrence of a Securitization,
delivery of a Rating Confirmation, (i) amend, modify or waive any provisions of
the Operating Lease other than amendments, modifications, or waivers of
ministerial terms that do not modify, amend or waive any material economic terms
or any other material terms of the Operating Lease, (ii) exercise its right to
consent to any assignment of the Operating Lease or sublet of the Property, or
(iii) terminate, permit the termination of, or accept surrender of all or any
portion of the space demised under the Operating Lease other than (A) a
termination in connection with a release of an Individual Property or a
substitution of a Substitution Property, pursuant to and as defined in Sections
2.5 and 2.6, respectively, hereof, and pursuant to the Mortgage Loan Agreement,
or (B) a termination by Mortgage Borrower due to a payment default by the
Operating Tenant under the Operating Lease. In the event that the Operating
Lease has been terminated as permitted in this Section 5.1.24(c), Borrower shall
not, and shall not permit or cause Mortgage Borrower to, enter into any new
operating lease (a “Replacement Operating Lease”) unless (1) the new operating
tenant is a single purpose bankruptcy remote entity satisfactory to Lender in
its sole discretion, (2) the Property is managed by a Qualified Manager pursuant
to the Management Agreement, (3) the terms and conditions of the new operating
lease are satisfactory to Lender in all respects, and the rent payable
thereunder is equal to at least the greater of the projected annual rent payable
under the Operating Lease for the twelve (12) month period (A) commencing on the
date hereof and (B) commencing on the date on which the Operating Lease is
terminated, (4) the new operating lease is subordinate in all respects to the
Lien of Security Instruments and the other Mortgage Loan Documents, without the
benefit of non- disturbance, and the new operating tenant enters into a
subordination agreement reasonably satisfactory to Lender, (5) the Franchise
Agreement is in full force and effect, (6) Borrower delivers, or causes Mortgage
Borrower to deliver, such other certificates, opinions (including, without
limitation, an insolvency opinion (in form acceptable to Lender in its
reasonable discretion and the Rating Agencies in their sole discretion) with
respect to the new operating tenant), documents and instruments relating to the
new operating lease reasonably required by Lender or the Rating Agencies, and
all corporate and other proceedings and all other documents (including, without
limitation, all documents referred to herein and not appearing as exhibits
hereto) and all legal matters in connection with the new operating lease and new
operating tenant shall be satisfactory in form and substance to Lender, and
(7) after the occurrence of a Securitization, delivery of a Rating Confirmation.

 

(d) Except as may be permitted under the Operating Lease without the consent of
Mortgage Borrower, the Operating Tenant shall not assign, sublet, convey,
mortgage, pledge or otherwise encumber or transfer its leasehold interest in the
Operating Lease without the prior written consent of Lender and, after the
occurrence of an Securitization, the delivery of a Rating Confirmation. The
Operating Partnership shall not assign, sublet, convey, mortgage, pledge or
otherwise encumber or transfer its direct or indirect equity interest in the
Operating Tenant.

 

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5.1.25 Maintenance of Personal Property.

 

Except as otherwise provided in Section 22.2 of the Operating Lease with respect
to the right to sell Personal Property to the Operating Tenant, and subject to
the conditions set forth in Section 5.1.20 hereof, Borrower shall cause Mortgage
Borrower to own, lease or license Personal Property (other than the Inventory),
and shall cause Mortgage Borrower to cause the Operating Tenant or Manager to
own Inventory, adequate to maintain and operate the Property as a hotel in
accordance with the standards of this Agreement, the other Loan Documents, the
Operating Lease, the Management Agreement, Replacement Management Agreement and
the Franchise Agreement. Neither Mortgage Borrower, the Operating Tenant or
Manager to lease, license, encumber or enter into any other financing
arrangements with respect to any of the Personal Property or Inventory, as the
case may be, other than as may expressly be permitted hereunder or under the
other Loan Documents.

 

5.1.26 REIT Status.

 

The parties acknowledge that the REIT is a publicly traded corporation qualified
as a real estate investment trust under the Internal Revenue Code (a “Real
Estate Investment Trust”). Under the Internal Revenue Code rules and regulations
relating to Real Estate Investment Trusts (the “REIT Rules”) and under Mortgage
Borrower’s Organizational Documents, Borrower may not take or omit to take any
action, or engage in any business or business transaction or relationship, that
would or could result in the REIT being disqualified from treatment as a Real
Estate Investment Trust. In order to comply with the REIT Rules and Mortgage
Borrower’s Organizational Documents, Mortgage Borrower has entered into an
Operating Lease with the Operating Tenant for the operation and maintenance of
each of the Properties. Pursuant to such Operating Lease, Operating Tenant has
the right to operate each respective Individual Property, and directly or
indirectly collects all income from room rentals, credit card receipts,
restaurant bars, recreational facilities and from other sources relating to the
Property. Operating Tenant pays to Mortgage Borrower rent as more particularly
described in the Operating Lease. The provisions of this Section shall not be
construed to limit the provisions of this Agreement or any other Loan Document
in any manner whatsoever.

 

5.1.27 O&M Program.

 

With respect to each Individual Property listed on Schedule VII hereof, Borrower
shall cause Mortgage Borrower to have each such Individual Property tested for
the presence of asbestos-containing materials (“ACMs”) by an assessment firm
acceptable to Lender in all respects and if such assessment firm recommends
remediation of any ACM present at such Individual Property, Borrower shall cause
Mortgage Borrower to enter into a contract with a licensed industrial hygienist
to develop a fully documented O&M Program which Borrower shall submit within
ninety (90) days of the date hereof to Lender for its approval. Borrower further
covenants and agrees to cause Mortgage Borrower to implement and follow the
terms and conditions of such O&M Program during the term of the Loan, including
any extension or renewal thereof. Lender’s requirement that Borrower cause
Mortgage Borrower to develop and

 

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comply with the O&M Program shall not be deemed to constitute a waiver or
modification of any of Borrower’s covenants and agreements with respect to
Hazardous Materials or Environmental Laws.

 

5.1.28 Mortgage Loan Reserve Funds.

 

Borrower shall cause Mortgage Borrower to deposit and maintain each of the
Mortgage Loan Reserve Funds as more particularly set forth in Article VII of the
Mortgage Loan Agreement and to perform and comply with all the terms and
provisions relating thereto.

 

5.1.29 Notices.

 

Borrower shall give notice, or cause notice to be given, to Lender promptly upon
the occurrence of any Mortgage Loan Event of Default.

 

5.1.30 Special Distributions.

 

On each date on which amounts are required to be disbursed to Lender pursuant to
Article 3 of the Mortgage Loan Agreement, Borrower shall exercise its rights
under the Organizational Documents of each Mortgage Borrower to cause Mortgage
Borrower to make to Borrower a distribution in an aggregate amount such that
Lender shall receive the amount required to be disbursed pursuant to Article 3
of the Mortgage Loan Agreement.

 

5.1.31 Mortgage Borrower Covenants.

 

Borrower shall cause Mortgage Borrower to comply with all obligations with which
Mortgage Borrower has covenanted to comply under the Mortgage Loan Agreement and
all other Mortgage Loan Documents (including, without limitation, those certain
covenants regarding the maintenance of the Mortgage Interest Rate Cap Agreement
and affirmative and negative covenants set forth in the Mortgage Loan Agreement)
whether the Mortgage Loan has been repaid or the related Mortgage Loan Document
has been otherwise terminated, unless otherwise consented to in writing by
Lender. Borrower shall cause Mortgage Borrower to promptly notify Lender of all
notices of a material nature received by Mortgage Borrower under or in
connection with the Mortgage Loan, including, without limitation, any notice by
the Mortgage Lender to Mortgage Borrower of any default by Mortgage Borrower in
the performance or observance of any of the terms, covenants or conditions of
the Mortgage Loan Documents on the part of Mortgage Borrower to be performed or
observed, and deliver to Lender a true copy of each such notice, together with
any other material consents, material notices, material requests or other
material written correspondence between Mortgage Borrower and Mortgage Lender
with respect to any material matters.

 

Section 5.2 Negative Covenants.

 

From the date hereof until payment in full of the Debt or the earlier release in
full of Lender’s Lien on the Collateral in accordance with the terms of this
Agreement and the other Loan Documents, Borrower covenants and agrees with
Lender that it will not do, directly or indirectly, any of the following:

 

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5.2.1 Liens.

 

Borrower shall not permit or cause Mortgage Borrower to create, incur, assume or
suffer to exist any Lien on any portion of any Individual Property or permit any
such action to be taken, except for Permitted Encumbrances. After prior written
notice to Lender, Borrower, at its own expense, may contest by appropriate legal
proceedings, promptly initiated and conducted in good faith and with due
diligence, any Environmental Lien or mechanics’, materialmen’s or contractors’
Lien and the amount or validity or application in whole or in part of any
amounts due to such mechanics, materialmen or contractors, provided (i) no Event
of Default has occurred and is continuing, (ii) such proceeding shall not
violate the provisions of any other mortgage, deed of trust or deed to secure
debt affecting the Individual Property, (iii) such proceeding shall be permitted
under and be conducted in accordance with the provisions of the Operating Lease
or of any other instrument to which Borrower is subject and shall not constitute
a default thereunder, (iv) neither the Individual Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost as a result of such proceeding, (v) Borrower shall have
deposited with Lender adequate reserves for the payment of such amounts,
together with all interest and penalties thereon, unless Borrower has paid all
of such amounts under protest, and (vi) Borrower shall have furnished the
security as may be required in such proceeding, to insure the payment of any
amounts due, together with all interest and penalties thereon. Lender may apply
any such reserves held by Lender at any time when the Individual Property (or
part thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost or there shall be an imminent danger of the Lien
of the related Security Instrument being primed by any related Lien.

 

5.2.2 Dissolution.

 

Borrower shall not (a) engage in any dissolution, liquidation or consolidation
or merger with or into any other business entity, (b) transfer, lease or sell,
in one transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower except to the extent
expressly permitted by the Loan Documents, (c) except as expressly permitted
under the Loan Documents, modify, amend, waive or terminate its Organizational
Documents or its qualification and good standing in any jurisdiction or
(d) cause the Principal or Mortgage Borrower to (i) dissolve, wind up or
liquidate or take any action, or omit to take an action, as a result of which
the Principal or Mortgage Borrower would be dissolved, wound up or liquidated in
whole or in part, or (ii) except as expressly permitted under the Loan
Documents, amend, modify, waive or terminate the certificate of incorporation,
bylaws or similar Organizational Documents of the Principal or the
Organizational Documents of Mortgage Borrower, in each case, without obtaining
the prior written consent of Lender. Nothing contained in this Section 5.2.2 is
intended to expand the rights of Borrower contained in Section 5.2.10 hereof.

 

5.2.3 Change In Business.

 

Borrower shall not enter into any line of business other than the ownership of
the Collateral, or make any material change in the scope or nature of its
business purposes, or undertake or participate in activities other than the
continuance of its present business.

 

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Borrower shall not permit or cause Mortgage Borrower to enter into any line of
business other than the ownership and operation of the Properties (e.g. fitness
center, spa facilities, or restaurant) or make any material change in the scope
or nature of its business objectives, purposes or operations or undertake or
participate in activities other than the continuance of its present business.

 

5.2.4 Debt Cancellation.

 

Borrower shall not cancel or otherwise forgive or release any material claim or
debt (other than termination of Leases in accordance herewith) owed to Borrower
by any Person, except for adequate consideration and in the ordinary course of
Borrower’s business. In addition, Borrower shall not permit or cause Mortgage
Borrower to cancel or otherwise forgive or release any material claim or debt
(other than termination of Leases in accordance with the Mortgage Loan
Agreement) owed to Mortgage Borrower by any Person, except for adequate
consideration and in the ordinary course of Mortgage Borrower’s business.

 

5.2.5 Zoning.

 

Borrower shall not permit or cause Mortgage Borrower to initiate or consent to
any zoning reclassification of any portion of any Individual Property or seek
any variance under any existing zoning ordinance or use or permit the use of any
portion of any Individual Property in any manner that could result in such use
becoming a non-conforming use under any zoning ordinance or any other Applicable
Law, without the prior written consent of Lender.

 

5.2.6 No Joint Assessment.

 

Borrower shall not cause or permit Mortgage Borrower to suffer, permit or
initiate the joint assessment of any Individual Property with (a) any other real
property constituting a tax lot separate from such Individual Property, or
(b) any portion of such Individual Property which may be deemed to constitute
personal property, or any other procedure whereby the Lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such Individual Property.

 

5.2.7 Name, Identity, Structure, or Principal Place of Business.

 

Borrower shall not, and shall not permit any Loan Party to, change its name,
identity (including its trade name or names), or principal place of business set
forth in the introductory paragraph of this Agreement, without, in each case,
first giving Lender thirty (30) days prior written notice. Borrower shall not
change its corporate, partnership or other structure, or the place of its
organization as set forth in Section 4.1.35, without, in each case, the consent
of Lender, which consent shall not be unreasonably withheld. Upon Lender’s
request, Borrower shall execute and deliver additional financing statements,
security agreements and other instruments which may be necessary to effectively
evidence or perfect Lender’s security interest in the Property as a result of
such change of principal place of business or place of organization.

 

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5.2.8 ERISA.

 

(a) During the term of the Loan or of any obligation or right hereunder, neither
Borrower nor Operating Tenant nor any Loan Party shall be a Plan and none of the
assets of Borrower or Operating Tenant or any Loan Party shall constitute Plan
Assets.

 

(b) Borrower further covenants and agrees to deliver, and to cause Operating
Tenant to deliver, to Lender such certifications or other evidence from time to
time throughout the term of the Loan, as requested by Lender in its sole
discretion, and represents and covenants that (A) neither Operating Tenant nor
any Loan Party is, and neither Operating Tenant nor any Loan Party maintains, an
“employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32)
of ERISA; (B) neither Operating Tenant nor any nor any Loan Party is subject to
State statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (C) one or more of the following circumstances is true:

 

(i) Equity interests in Operating Tenant or such Loan Party are publicly offered
securities, within the meaning of 29 C.F.R. §2510.3 101(b)(2);

 

(ii) Less than twenty-five percent (25%) of each outstanding class of equity
interests in Operating Tenant or such Loan Party are held by “benefit plan
investors” within the meaning of 29 C.F.R. §2510.3 101(f)(2); or

 

(iii) Operating Tenant or such Loan Party qualifies as an “operating company” or
a “real estate operating company” within the meaning of 29 C.F.R. §2510.3-101(c)
or (e).

 

5.2.9 Affiliate Transactions.

 

(a) Borrower shall not enter into, or be a party to, any transaction with an
Affiliate of Borrower, Principal or any of the partners of Borrower or Principal
except in the ordinary course of business and on terms no less favorable to
Borrower or such Affiliate than would be obtained in a comparable arm’s-length
transaction with an unrelated third party.

 

(b) Except in connection with payments made to Manager pursuant to and in
accordance with the Subordination of Management Agreement, no Loan Party shall
pay, or permit the payment of, development fees, management fees, brokerage or
leasing fees or commissions or any other compensation of any form whatsoever to
any Loan Party or any direct or indirect partner, member, shareholder or
Affiliate thereof, or request disbursement of funds from Lender or Mortgage
Lender for such purpose, without the prior written consent of Lender. Any
contracts or agreements relating to the Property in any manner between or among
any Loan Party and any other Loan Party or their respective direct or indirect
partners, members, shareholders or Affiliates, including the Management
Agreement and any other agreement specifically related to the Property, the
Collateral or any Loan Party (collectively, the “Affiliate Agreements”) shall be
made on an arm’s-length basis and shall be subject to the prior written approval
of Lender; and the

 

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parties to each Affiliate Agreement shall acknowledge and agree that such
agreement is terminable by Mortgage Borrower or Lender immediately upon notice,
without the payment of any fee, penalty, premium or liability for future or
accrued liabilities or obligations, if an Event of Default shall have occurred
and be continuing. Following an Event of Default, if requested by Lender in
writing, Borrower shall, or shall cause the applicable Loan Party to, terminate
any existing Affiliate Agreement specified by Lender within five (5) days after
delivery of Lender’s request without payment of any penalty, premium,
termination fee or any other amount which might be due and payable under such
Affiliate Agreement. If such Affiliate Agreement is not terminated in accordance
with the immediately preceding sentence, Lender shall have the right, and
Borrower hereby irrevocably authorizes Lender and irrevocably appoints Lender as
Borrower’s attorney-in-fact coupled with an interest, at Lender’s sole option,
to terminate such Affiliate Agreement on behalf of and in the name of the
applicable Loan Party, and Borrower hereby releases and waives any claims
against Lender arising out of Lender’s exercise of such authority. Upon request
of Lender, Borrower shall provide Lender with a summary of the terms of, or
copies of, such agreements.

 

5.2.10 Transfers.

 

(a) Borrower shall not sell, convey, mortgage, grant, bargain, encumber, pledge,
assign, grant options with respect to, or otherwise transfer or dispose of
(directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) any Individual
Property, the Collateral or any part thereof or any legal or beneficial interest
therein or permit a Sale or Pledge of an interest in any Restricted Party
(collectively, a “Transfer”), other than Permitted Encumbrances, pursuant to
pledges under the Mezzanine Loan, Leases of space in the Improvements to tenants
in accordance with the provisions of Section 5.1.17 hereof or a release or
substitution of an Individual Property in accordance with the provisions of
Section 2.5 or 2.6 hereof, without (i) the prior written consent of Lender and
(ii) if a Securitization has occurred, delivery to Lender of a Rating
Confirmation.

 

(b) A Transfer shall include, but not be limited to: (i) an installment sales
agreement wherein Borrower agrees to sell one or more Individual Properties, the
Collateral or any part thereof for a price to be paid in installments;
(ii) except as specifically permitted hereunder, an agreement by Mortgage
Borrower leasing all or a substantial part of any Individual Property for other
than actual occupancy by a space tenant thereunder or a sale, assignment or
other transfer of, or the grant of a security interest in, Mortgage Borrower’s
right, title and interest in and to any Leases or any Rents; (iii) if a
Restricted Party is a corporation, any merger, consolidation or Sale or Pledge
of such corporation’s stock or the creation or issuance of new stock; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
partner or any profits or proceeds relating to such partnership interest, or the
Sale or Pledge of limited partnership interests or any profits or proceeds
relating to such limited partnership interests or the creation or issuance of
new limited partnership interests; (v) if a Restricted Party is a limited
liability company, any merger or consolidation or the change, removal,
resignation or addition of

 

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a managing member or non-member manager (or if no managing member, any member)
or the Sale or Pledge of the membership interest of a managing member (or if no
managing member, any member) or any profits or proceeds relating to such
membership interest, or the Sale or Pledge of non-managing membership interests
or the creation or issuance of new non-managing membership interests; (vi) if a
Restricted Party is a trust or nominee trust, any merger, consolidation or the
Sale or Pledge of the legal or beneficial interest in a Restricted Party or the
creation or issuance of new legal or beneficial interests; or (vii) the removal
or the resignation of the Manager (including, without limitation, an Affiliated
Manager) other than in accordance with the Mortgage Loan Agreement and
Section 5.1.18 hereof, or (viii) any deed-in-lieu or consensual foreclosure
relating to any Individual Property with or for the benefit of Mortgage Lender
or any Affiliate thereof.

 

(c) Notwithstanding the provisions of Sections 5.2.10(a) and (b), the following
transfers shall not be deemed to be a Transfer: (i) a transfer by devise or
descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party (other than Mortgage Borrower or Borrower) or
a Restricted Party (other than Mortgage Borrower or Borrower) itself; (ii) the
Sale or Pledge, in one or a series of transactions, of not more than forty-nine
percent (49%) of the stock in a Restricted Party other than Mortgage Borrower or
Borrower; provided, however, no such transfers shall result in the change of
voting control in the Restricted Party, and as a condition to each such
transfer, Lender shall receive not less than thirty (30) days prior written
notice of such proposed transfer and the identity of the proposed transferee;
(iii) the Sale or Pledge, in one or a series of transactions, of not more than
forty-nine percent (49%) of the limited partnership interests or non-managing
membership interests (as the case may be) in a Restricted Party other than
Mortgage Borrower or Borrower; provided, however, as a condition to each such
transfer, Lender shall receive not less than thirty (30) days prior written
notice of such proposed transfer; (iv) the pledge of any interest in Borrower in
connection with the Mezzanine Loan and the exercise of any rights or remedies
Mezzanine Lender may have under the Mezzanine Loan Documents, as applicable; and
(v) the sale, transfer or issuance of shares of stock in the REIT provided such
shares of stock are listed on the New York Stock Exchange or such other
nationally recognized stock exchange and provided the REIT complies with the
provisions of Section 5.3 hereof.

 

(d) Notwithstanding anything to the contrary contained in this Section 5.2.10,
the REIT must continue to be the sole general partner of, and control, the
Operating Partnership and the Operating Partnership must continue to control
Mortgage Borrower and own, directly or indirectly, at least a 100% interest in
Mortgage Borrower.

 

(e) Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon a Transfer in violation of this Section 5.2.10.
This provision shall apply to every Transfer regardless of whether voluntary or
not, or whether or not Lender has consented to any previous Transfer.
Notwithstanding anything to the contrary contained in this Section 5.2.10,
(a) no transfer (whether or not such transfer shall constitute a Transfer) shall
be made to any Prohibited Person, (b) in the event of any

 

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transfer (whether or not such transfer shall constitute a Transfer, other than
transfers of shares of stock in the REIT, provided that such shares of stock are
listed on the New York Stock Exchange or such other nationally recognized stock
exchange and provided the REIT complies with the requirements of Section 5.3
hereof), results in any Person and its Affiliates owning in excess of ten
percent (10%) of the ownership interest in a Restricted Party Borrower shall
provide to Lender, not less than thirty (30) days prior to such transfer, the
name and identity of each proposed transferee, together with the names of its
controlling principals, the social security number or employee identification
number of such transferee and controlling principals, and such transferee’s and
controlling principal’s home address or principal place of business, and home or
business telephone number, and (c) in the event any transfer (whether or not
such transfer shall constitute a Transfer), results in any Person and its
Affiliates owning in excess of forty-nine percent (49%) of the ownership
interest in a Restricted Party, Borrower shall, prior to such transfer, deliver
an updated Insolvency Opinion to Lender, which opinion shall be in form, scope
and substance acceptable in all respects to Lender and the Rating Agencies.

 

(f) Notwithstanding the foregoing, Borrower shall have the right to permit or
cause Mortgage Borrower to transfer Personal Property to the Operating Tenant
pursuant to Section 22.2 of the Operating Lease provided that (i) Borrower
delivers to Lender an Officer’s Certificate certifying that the FF&E Limitation
has been exceeded, (ii) the purchase price and value of the Personal Property
transferred shall be the minimum amount necessary to comply with the FF&E
Limitation, (iii) the Operating Tenant shall confirm that the Personal Property
transferred to it is subject to the Operating Lease Security Agreement,
(v) Borrower shall cause Mortgage Borrower to assign and pledge any FF&E Note
and related security agreement and security interest to Mortgage Lender as
additional security for the Debt and take all action as may be necessary to
effect and perfect such assignment and security interest.

 

(g) Borrower may, without Lender’s consent, permit or cause Mortgage Borrower to
grant easements, restrictions, covenants, reservations and rights of way in the
ordinary course of business for access, water and sewer lines, telephone and
telegraph lines, electric lines or other utilities or for other similar purposes
or other purposes (which may include amendments to existing reciprocal easement
agreements), provided that no such encumbrance or amendment set forth in this
Section 5.2.10(g) shall materially impair the utility, operation and use of the
applicable Individual Property or otherwise have a material adverse effect on
the value of the Individual Property or on the financial condition or business
of Borrower. In connection with any such grant permitted pursuant to this
Section 5.2.10(g), Borrower shall cause Mortgage Borrower to deliver to Lender
(a) twenty (20) days prior written notice thereof; (b) a copy of the instrument
or instruments of such grant; (c) an Officer’s Certificate stating that such
grant does not materially impair the utility, operation and use of the Property
or have a material adverse effect on the value of the Property or the financial
condition or business of Borrower, Mortgage Borrower or the condition or
ownership of the Property; (d) copies of all documents and deliveries required
under of the Mortgage Loan Agreement with respect to such grants, and
(e) reimbursement of all of Lender’s reasonable out-of-pocket costs and expenses
incurred in connection with such grant.

 

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(h) Notwithstanding the foregoing, Lender’s consent shall not be required in
connection with Mortgage Borrower entering into any Permitted Equipment
Financing arrangements, provided Lender has received prior written notification
of Mortgage Borrower’s intent to enter into such Permitted Equipment Financing.

 

5.2.11 Limitation on Securities Issuances.

 

Borrower shall not issue any limited liability company interests or other
securities other than those that have been issued as of the date hereof.

 

5.2.12 Distributions.

 

(a) Any and all dividends, including capital dividends, stock or liquidating
dividends, distributions of property, redemptions or other distributions made by
Mortgage Borrower on or in respect of any interests in Mortgage Borrower, and
any and all cash and other property received in payment of the principal of or
in redemption of or in exchange for any such interests (collectively, the
“Distributions”), shall become part of the Collateral. Notwithstanding the
foregoing, Lender expressly agrees that Borrower shall be permitted to
distribute to its direct equity holders any Distributions Borrower receives only
upon the express condition that no Event of Default has occurred and is
continuing under the Loan.

 

(b) If any Distributions shall be received by Borrower or any Affiliate of
Borrower after the occurrence and during the continuance of an Event of Default,
Borrower shall hold, or shall cause the same to be held, in trust for the
benefit of Lender. Any and all revenue derived from the Properties paid directly
by tenants, subtenants or occupants of the Properties shall be held and applied
in accordance with the terms and provisions of the Mortgage Loan Agreement.

 

5.2.13 Refinancing or Prepayment of the Mortgage Loan.

 

Neither Borrower nor Mortgage Borrower shall be required to obtain the consent
of Lender to refinance the Mortgage Loan, provided that the Loan shall have been
(or shall simultaneously be) paid in full in accordance with the terms of this
Agreement (including any prepayment premiums and other amounts due and payable
to Lender under the Loan Documents). Borrower shall cause Mortgage Borrower to
obtain the prior written consent of Lender to enter into any other refinancing
of the Mortgage Loan.

 

5.2.14 Acquisition of the Mortgage Loan.

 

(a) No Loan Party, Guarantor or any Affiliate of any of them or any Person
acting at any such Person’s request or direction, shall acquire or agree to
acquire the lender’s interest in the Mortgage Loan, or any portion thereof or
any interest therein, or any direct or indirect ownership interest in the holder
of the Mortgage Loan, via purchase, transfer, exchange or otherwise, and any
breach or attempted breach of this provision shall constitute an Event of
Default hereunder. If, solely by operation of applicable subrogation law,
Borrower shall have failed to comply with the foregoing, then Borrower:
(i) shall promptly notify Lender of such failure; (ii) shall cause any and

 

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all such prohibited parties acquiring any interest in the Mortgage Loan
Documents: (A) not to enforce the Mortgage Loan Documents; and (B) upon the
request of Lender, to the extent any of such prohibited parties has or have the
power or authority to do so, to promptly: (1) cancel the promissory note
evidencing the Mortgage Loan, (2) reconvey and release the Lien securing the
Mortgage Loan and any other collateral under the Mortgage Loan Documents, and
(3) discontinue and terminate any enforcement proceeding(s) under the Mortgage
Loan Documents.

 

(b) Lender shall have the right at any time to acquire all or any portion of the
Mortgage Loan or any interest in any holder of, or participant in, the Mortgage
Loan without notice or consent of Borrower or any other Loan Party, in which
event Lender shall have and may exercise all rights of Mortgage Lender
thereunder (to the extent of its interest), including the right (i) to declare
that the Mortgage Loan is in default and (ii) to accelerate the Mortgage Loan
indebtedness, in accordance with the terms thereof and (iii) to pursue all
remedies against any obligor under the Mortgage Loan Documents. In addition,
Borrower hereby expressly agrees that any claims, counterclaims, defenses,
offsets, deductions or reductions of any kind which Mortgage Borrower or any
other Person may have against Mortgage Lender relating to or arising out of the
Mortgage Loan shall be the personal obligation of Mortgage Lender, and in no
event shall Mortgage Borrower be entitled to bring, pursue or raise any such
claims, counterclaims, defenses, offsets, deductions or reductions against
Lender or any Affiliate of Lender or any other Person as the successor holder of
the Mortgage Loan or any interest therein, provided that Mortgage Borrower may
seek specific performance of its contractual rights under the Mortgage Loan
Documents.

 

5.2.15 Material Agreements.

 

(a) Borrower shall not, and shall not permit any Loan Party to, enter into any
Material Agreement without the consent of Lender not to be unreasonably withheld
or delayed. Lender may condition its consent upon Mortgage Borrower also
obtaining the consent of the Senior Lender, if applicable. Upon the request of
Lender with respect to Material Agreements, Borrower shall use its commercially
reasonable efforts, or shall use its commercially reasonable efforts to cause
the applicable Loan Party to, deliver to Lender a recognition agreement from
such service or material provider in form and substance reasonably satisfactory
to Lender, among other things, providing for such Person’s continued performance
should Lender become the owner of the Collateral.

 

(b) Except as specifically set forth herein, Borrower will not, and will not
permit or cause any Loan Party to, amend, modify, supplement, rescind or
terminate any Material Agreement, without Lender’s approval, which such approval
shall not be unreasonably withheld or delayed, including the identity of the
party to perform services under such agreement.

 

(c) Borrower shall and shall cause each Loan Party, as applicable, to observe
and perform, in all material respects, each and every material term to be
observed or performed by such Loan Party under the Material Agreements (except
for termination of such Material Agreement which shall require Lender’s prior
written approval as provided in Section 5.2.15(b) hereof).

 

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5.2.16 Permitted Transfer.

 

(a) Notwithstanding anything to the contrary contained in Section 5.2.10 hereof,
in the event that Mortgage Borrower is permitted to transfer all of the
Properties pursuant to Section 5.2.11 of the Mortgage Loan Agreement, Lender
shall not unreasonably withhold its consent to a one-time sale, assignment, or
other transfer of all of the Properties to a Permitted Transferee, provided that
(x) Lender receives thirty (30) Business Days’ prior written notice of such
transfer, (y) no Event of Default has occurred and is continuing under this
Agreement, the Pledge Agreement, the Note or the other Loan Documents and
(z) upon the satisfaction of such conditions as may be imposed by Lender, which
may include, but shall not be limited to, the following matters:

 

(i) Borrower or such Permitted Transferee shall pay any and all reasonable
out-of-pocket costs incurred in connection with the transfer (including, without
limitation, Lender’s reasonable counsel fees and disbursements and all recording
fees, title insurance premiums and mortgage and intangible taxes);

 

(ii) Borrower shall cause Mortgage Borrower to satisfy the conditions set forth
in Section 5.2.11 of the Mortgage Loan Agreement to the reasonable satisfaction
of Lender (it being agreed that Lender shall have the same rights to approve
such transfer as the Mortgage Lender has);

 

(iii) Borrower shall cause the transferee of the Properties to create a new
parent company special purpose entity satisfying all of the requirements of
Section 4.1.36 hereof which shall assume all of the obligations of the Borrower
under the Loan (“New Borrower”), and shall own directly all of the Ownership
Interests in the Permitted Transferee and, if the Permitted Transferee has a
Principal, shall own directly all of the Ownership Interests in the Principal;
the New Borrower shall be wholly owned and controlled directly by a Qualified
Transferee and, if New Borrower has a Principal, such Principal shall be wholly
owned and controlled directly by such Qualified Transferee, and, in addition,
Lender shall be reasonably satisfied that such Qualified Transferee (1) is
generally creditworthy and reputable, (2) is free from any pending or existing
bankruptcy, reorganization or insolvency proceedings in which such party is the
debtor, (3) is not, at the time of transfer or in the past, a litigant,
plaintiff or defendant in any suit brought against or by Lender, (4) has not
been found by a court of competent jurisdiction to have committed a crime, fraud
or similar malfeasance, (5) has not been indicted for any crime, and (6) has
experience and a track record in owning and operating facilities similar to the
Property, in each such case of clauses (1) through (5) above, as reasonably
determined by Lender based on a Lexis/Nexis or similar background search of each
such Person and its Affiliates;

 

(iv) Borrower shall cause the New Borrower to execute and deliver a pledge
agreement in substantially the same form as the Pledge Agreement in

 

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respect of the direct Ownership Interests in the New Borrower and Principal, if
applicable (such interests shall otherwise comply with the requirements of the
Loan Documents and be substantially identical in structure, form and substance
as the Collateral delivered at closing of the Loan);

 

(v) Borrower shall cause the New Borrower to assume all of the obligations of
Borrower arising from and after the transfer of the Note, this Agreement and the
other Loan Documents in a manner reasonably satisfactory to Lender in all
respects, including, without limitation, by entering into an assumption
agreement (the “Assumption Agreement”) in form and substance reasonably
satisfactory to Lender and delivering such legal opinions as Lender may
reasonably require;

 

(vi) The Qualified Transferee that owns and controls the Permitted Transferee or
another entity satisfactory to Lender and the Rating Agencies (the “New
Guarantor”) shall execute and deliver a Guaranty and an Environmental Indemnity
in the same form and substance as the Guaranty and the Environmental Indemnity
delivered in connection with the execution of this Agreement and otherwise
reasonably satisfactory to Lender;

 

(vii) The New Borrower, the New Borrower’s Principal, if applicable, and the New
Guarantor shall deliver all organizational documentation, which documentation
shall be reasonably satisfactory to Lender, and shall deliver an opinion of
counsel of the New Borrower covering the Assumption Agreement and any other
documents executed by the New Borrower and the New Guarantor in connection
therewith in form and substance similar to the due execution, delivery and
enforcement opinions delivered by counsel to Borrower in connection with the
execution of this Agreement;

 

(viii) The New Borrower shall deliver certificates and enter into agreements and
covenants, or cause each of its Principals to deliver certificates and enter
into agreements and covenants, which certificates, agreements and covenants
shall be similar in nature to those delivered, executed or made by Borrower or
Principal in connection with the execution of this Agreement relating to the
single purpose, bankruptcy remote nature of the New Borrower and its Principals
and the sufficient independence of the New Borrower and its managing principals
to make the substantive consolidation of the bankruptcy of such parties
unlikely, and the Permitted Transferee shall deliver opinions of counsel with
respect to the foregoing rendered by an independent law firm reasonably
satisfactory to Lender or (if a Securitization shall have occurred) the Rating
Agencies;

 

(ix) The Properties shall be managed by a Qualified Manager pursuant to a
Replacement Management Agreement following such transfer;

 

(x) The Properties shall be operated as first class full service hotels pursuant
to Franchise Agreements or Replacement Franchise Agreements with a Qualified
Franchisor;

 

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(xi) The Operating Leases shall have been terminated;

 

(xii) Lender shall receive evidence of insurance policies in the name of the
Permitted Transferee and otherwise in compliance with the terms of this
Agreement;

 

(xiii) If a Securitization shall have occurred, Borrower or the New Borrower
shall deliver to Lender a Rating Confirmation;

 

(xiv) Borrower shall cause the New Borrower and the New Borrower’s Principal, if
applicable, to authorize Lender to file such UCC Financing Statements required
by Lender with respect to the substitute Collateral;

 

(xv) Borrower shall deliver, at its sole cost and expense, a UCC Insurance
Policy insuring the new pledge agreement as a valid first lien on the Ownership
Interest pledged thereunder and substantially identical to the UCC Insurance
Policy delivered at the closing of the Loan;

 

(xvi) The Permitted Transferee shall receive an Owner’s Title Policy reasonably
acceptable to Lender;

 

(xvii) Borrower shall cause the New Borrower to execute and deliver such other
replacement loan and closing documents in substantially the same forms as the
Loan Documents and such other closing documents as reasonably requested by
Lender; and

 

(xviii) If the Mortgage Loan is outstanding, Lender shall have received written
confirmation from Mortgage Lender that Mortgage Borrower has complied with all
of the requirements of the Mortgage Loan Documents with respect to a transfer of
all of the Properties.

 

Section 5.3 REIT.

 

The REIT shall cause its issued and outstanding shares of stock to be listed for
public trading on the New York Stock Exchange or such other nationally
recognized stock exchange throughout the term of the Loan.

 

VI. INSURANCE; CASUALTY; CONDEMNATION

 

Section 6.1 Insurance.

 

(a) Borrower shall cause Mortgage Borrower to maintain at all times during the
term of the Loan the insurance required under Section 6.1 of the Mortgage Loan
Agreement, including, without limitation, meeting all insurer requirements
thereunder. In addition, Borrower shall cause Lender to be named as an
additional named insured under each of the insurance policies described in
Section 6.1(a)(ii), (iii), (v), (ix), (xi) and (xii) of the Mortgage Loan
Agreement as their interests may appear. In addition, Borrower shall cause
Lender to be named as a named insured together with Mortgage Lender, as

 

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their interest may appear, under the insurance policies required under
Section 6.1(a)(i), (iv), (vi), (vii), (viii) and (x) of the Mortgage Loan
Agreement. Borrower shall also cause all insurance policies required under this
Section 6.1 to provide for at least thirty (30) days prior notice to Lender in
the event of policy cancellation or material changes. Not less than thirty
(30) days prior to the expiration dates of the Policies (as such term is defined
in the Security Instruments) theretofore furnished to Lender pursuant to the
terms hereof, certified copies of the Policies marked “premium paid” or
accompanied by evidence satisfactory to Lender of payment of the premiums due
thereunder shall be delivered by Borrower to Lender; provided, however, that in
the case of renewal Policies, Borrower may furnish Lender with binders therefor
to be followed by the original Policies when issued.

 

(b) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower (but subject to the last sentence of this
Section 6.1(b)), to take such action, not otherwise prohibited under the
Mortgage Loan Documents, as Lender reasonably deems necessary to protect its
interest in the Collateral, including, without limitation, the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate, and all
expenses incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Borrower to Lender upon
demand and until paid shall be secured by the Pledge Agreement and shall bear
interest at the Default Rate. Lender shall use commercially reasonable efforts
to give Borrower simultaneous notice of any action taken by Lender pursuant to
this Section 6.1(b); provided, however, that if Lender fails to deliver such
notice, its rights and remedies under this Agreement shall not be impaired.

 

(c) For purposes of this Agreement, Lender shall have the same approval rights
over the insurance referred to above (including, without limitation, the
insurers, deductibles and coverages thereunder, as well as the right to require
other reasonable insurance pursuant to Section 6.1(a)(xii) of the Mortgage Loan
Agreement) as are provided in favor of the Mortgage Lender in the Mortgage Loan
Agreement. All liability insurance provided for in the Mortgage Loan Agreement
shall provide insurance with respect to the liabilities of both the Mortgage
Borrower and the Borrower. The insurance policies delivered pursuant to the
Mortgage Loan Agreement shall include endorsements of the type described in
Section 6.1(e) thereof, but pursuant to which Lender shall have the same rights
as the Mortgage Lender as referred to in such Section 6.1(e).

 

(d) In the event that the Mortgage Loan has been paid in full, except upon the
occurrence and continuance of an Event of Default, Borrower shall permit
Mortgage Borrower to settle any insurance or condemnation claims with respect to
the insurance proceeds or condemnation awards which in the aggregate are less
than or equal to the Threshold Amount (as defined in the Security Instruments)
for the applicable Individual Property. Lender shall have the right to
participate in and reasonably approve any settlement for insurance or
condemnation claims with respect to the insurance proceeds or condemnation
awards which in the aggregate are equal to or greater than the Threshold Amount
for the applicable Individual Property. If an Event of Default shall have
occurred and be continuing, Borrower hereby irrevocably empowers Lender, in the
name of Mortgage Borrower as its true and lawful attorney-in-fact.

 

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Section 6.2 Casualty.

 

If an Individual Property shall sustain a Casualty, Borrower shall cause
Mortgage Borrower to give prompt notice of such Casualty to Lender and, shall
cause Mortgage Borrower to promptly commence and diligently prosecute to
completion of the repair and restoration of such Individual Property as nearly
as possible to the condition such Individual Property was in immediately prior
to such Casualty, with such alterations as may be reasonably approved by Lender
except as permitted by and otherwise in accordance with Section 6.4 of the
Mortgage Loan Agreement. Borrower shall cause Mortgage Borrower to pay all costs
of such Restoration whether or not such costs are covered by insurance,
provided, however, that any Insurance Proceeds received by Lender in respect of
such damage or destruction shall be made available to pay the costs of such
Restoration at the time or times, and subject to satisfaction of the applicable
conditions precedent, specified in Section 6.4 of the Mortgage Agreement.

 

Section 6.3 Condemnation.

 

Borrower shall cause Mortgage Borrower to give Lender prompt notice of any
actual or threatened in writing Condemnation by any Governmental Authority of
all or any part of any Individual Property and shall cause Mortgage Borrower to
deliver to Lender a copy of any and all papers served in connection with such
proceedings. Lender may participate in any such proceedings, and Borrower shall
from time to time cause Mortgage Borrower to deliver to Lender all instruments
requested by Lender to permit such participation. Borrower shall, at its
expense, cause Mortgage Borrower to diligently prosecute any such proceedings,
and shall consult with Lender, its attorneys and experts, and cooperate with
them in the carrying on or defense of any such proceedings. Notwithstanding any
Condemnation, Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement.

 

Section 6.4 Restoration.

 

(a) Borrower shall, or shall cause Mortgage Borrower to, deliver to Lender all
reports, plans, specifications, documents and other materials that are delivered
to Mortgage Lender under Section 6.4 of the Mortgage Loan Agreement in
connection with a restoration of the Property after a Casualty or Condemnation.
If any insurance proceeds or condemnation awards are to be disbursed by Mortgage
Lender for restoration, Borrower shall deliver or cause to be delivered to
Lender copies of all material written correspondence delivered to and received
from Mortgage Lender that relates to the restoration and release of the
insurance proceeds or condemnation awards.

 

(b) Notwithstanding any provision in this Agreement to the contrary, all
insurance proceeds and condemnation award will be made available to Mortgage
Borrower in accordance with the Mortgage Loan Agreement. In the event the
Mortgage Loan has been paid in full and Lender receives any insurance proceeds
or condemnation award, Lender shall either apply such proceeds to the Debt or
for the restoration of the applicable Individual Property in accordance with the
same terms and conditions contained in Section 6.4 of the Mortgage Loan
Agreement.

 

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Section 6.5 Rights of Lender.

 

For purposes of this Article 6, Borrower shall obtain the approval of Lender for
each matter requiring the approval of Mortgage Lender under the provisions of
Sections 6.4 of the Mortgage Loan Agreement, with each reference in any such
provisions to the “Loan” to include the Mortgage Loan and the Loan, and the
reference in any such provisions to the “Maturity Date” to mean the Maturity
Date, as defined herein. If the Mortgage Lender does not require the deposit by
the Mortgage Borrower of the “Proceeds Deficiency” pursuant to
Section 6.4(b)(vii) of the Mortgage Loan Agreement, Lender shall have the right
to demand that Borrower make a deposit of said “Proceeds Deficiency” in
accordance with the terms of such Section (as if each reference therein to
“Borrower” and “Lender” referred to Borrower and Lender, respectively).

 

VII. RESERVE FUNDS

 

Section 7.1 Required Repair Funds.

 

(a) Borrower shall, or shall cause Mortgage Borrower to, perform the Required
Repairs in accordance with all of the terms and conditions set forth in
Section 7.1 of the Mortgage Loan Agreement.

 

(b) In the event (i) Mortgage Lender waives the requirement of Mortgage Borrower
to maintain a Required Repair Escrow Fund (or to make deposits therein) pursuant
to the terms of Section 7.1 of the Mortgage Loan Agreement or (ii) the Mortgage
Loan has been repaid in full, Lender shall have the right to require Borrower to
establish and maintain an escrow that would operate in the same way as the
Required Repair Escrow Fund described in Section 7.1 of the Mortgage Loan
Agreement.

 

Section 7.2 Tax and Insurance Escrow Fund.

 

(a) Borrower shall cause Mortgage Borrower to comply with all of the terms and
conditions set forth in Section 7.2 of the Mortgage Loan Agreement.

 

(b) In the event (i) Mortgage Lender waives the requirement of Mortgage Borrower
to maintain a Tax and Insurance Escrow Fund (or to make deposits therein)
pursuant to the terms of Section 7.2 of the Mortgage Loan Agreement or (ii) the
Mortgage Loan has been repaid in full, Lender shall have the right to require
Borrower to establish and maintain an escrow that would operate in the same way
as the Tax and Insurance Escrow Fund described in Section 7.2 of the Mortgage
Loan Agreement.

 

Section 7.3 Replacements and Replacement Reserve.

 

(a) Borrower shall cause Mortgage Borrower to comply with all of the terms and
conditions set forth in Section 7.3 of the Mortgage Loan Agreement.

 

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(b) In the event (i) Mortgage Lender waives the requirement of Mortgage Borrower
to maintain any Replacement Reserve Fund (or to make deposits therein) pursuant
to the terms of Section 7.3 of the Mortgage Loan Agreement or (ii) the Mortgage
Loan has been repaid in full, Lender shall have the right to require Borrower to
establish and maintain an escrow that would operate in the same way as the
applicable Replacement Reserve Fund described in Section 7.3 of the Mortgage
Loan Agreement.

 

Section 7.4 Intentionally Deleted.

 

Section 7.5 Intentionally Deleted.

 

Section 7.6 Ground Lease Escrow Fund.

 

(a) Borrower shall cause Mortgage Borrower to comply with all of the terms and
conditions set forth in Section 7.6 of the Mortgage Loan Agreement.

 

(b) In the event (i) Mortgage Lender waives the requirement of Mortgage Borrower
to maintain the Ground Lease Reserve Fund (or to make deposits therein) pursuant
to the terms of Section 7.6 of the Mortgage Loan Agreement or (ii) the Mortgage
Loan has been repaid in full, Lender shall have the right to require Borrower to
establish and maintain an escrow that would operate in the same way as the
Ground Lease Reserve Fund described in Section 7.6 of the Mortgage Loan
Agreement.

 

Section 7.7 Reserve Funds, Generally.

 

(a) In the event that Mortgage Borrower is no longer required to deposit the
Reserve Funds and/or maintain the Accounts required under and pursuant to the
Mortgage Loan Agreement, Borrower and Lender shall promptly enter into a
property Account agreement substantially in the same forms as the Property
Account Agreement, for the benefit of Lender, or agree to modify any Property
Account and/or lockbox agreement with Lender existing at such time, for the
purpose of covering deposits to the required reserve accounts substantially
similar to the Article 3 of the Mortgage Loan Agreement.

 

(b) In the event that Lender requires the Account to be maintained pursuant to
this Article 7, (i) Lender agrees that it will have the same rights and
obligations with respect to such Accounts that Mortgage Lender would have with
the corresponding Mortgage Reserve Account pursuant to the Mortgage Loan
Agreement and (ii) such Accounts shall be maintained, held, applied and
disbursed on substantially the same terms and conditions applicable to the
corresponding Mortgage Reserve Account.

 

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VIII. DEFAULTS

 

Section 8.1 Event of Default.

 

(a) Each of the following events shall constitute an event of default hereunder
(an “Event of Default”):

 

(i) if (i) Borrower shall fail to make any payment of interest or principal or
default interest required hereunder or the monthly escrow or reserve deposits
required hereunder or under the other Loan Documents, and such failure shall
continue for more than three (3) days from the date such payment was due,
(ii) the late charges required under Section 2.2.6 hereof are not paid when due
or (iii) any portion of the Debt is not paid on the Maturity Date;

 

(ii) if any of the Taxes or Other Charges are not paid on or before the date
that they shall become delinquent, subject to Borrower’s right to contest Taxes
in accordance with Section 5.1.2 hereof, except to the extent sums sufficient to
pay such Taxes and Other Charges have been deposited with Mortgage Lender in
accordance with the terms of the Mortgage Loan Agreement or with Lender in
accordance with Article 3 hereof;

 

(iii) if the Policies are not kept in full force and effect;

 

(iv) if Borrower transfers or encumbers any portion of any of the Collateral in
violation of the provisions hereof or the Pledge Agreement or if any Transfer
prohibited under Section 5.2.10 occurs;

 

(v) if any representation or warranty made by Borrower, Principal, or Guarantor
herein or in any other Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished to Lender shall
have been false or misleading in any material respect as of the date the
representation or warranty was made;

 

(vi) if Borrower, Mortgage Borrower, Principal, or Guarantor shall make an
assignment for the benefit of creditors;

 

(vii) if a receiver, liquidator or trustee shall be appointed for Borrower,
Mortgage Borrower, Principal, Guarantor or any other Guarantor under any
guarantee issued in connection with the Loan or if Borrower, Mortgage Borrower,
Principal, Guarantor or such other Guarantor shall be adjudicated a bankrupt or
insolvent, or if any petition for bankruptcy, reorganization or arrangement
pursuant to the Bankruptcy Code, or any similar federal or State law, shall be
filed by or against, consented to, or acquiesced in by, Borrower, Mortgage
Borrower, Principal, Guarantor or such other Guarantor, or if any proceeding for
the dissolution or liquidation of Borrower, Mortgage Borrower, Principal,
Guarantor or such other Guarantor shall be instituted; provided, however, if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower, Mortgage Borrower, Principal, Guarantor or such other
Guarantor, upon the same not being discharged, stayed or dismissed within sixty
(60) days;

 

(viii) if Borrower assigns its rights under this Agreement or any of the other
Loan Documents or any interest herein or therein in contravention of the Loan
Documents;

 

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(ix) if Borrower breaches any of its respective negative covenants contained in
Section 5.2.2, 5.2.3, 5.2.4, 5.2.7 or 5.2.8 hereof;

 

(x) if a material default has occurred and continues beyond any applicable cure
period under the Management Agreement (or any Replacement Management Agreement)
if such default permits the Manager thereunder to terminate or cancel the
Management Agreement (or any Replacement Management Agreement);

 

(xi) if Borrower or Principal violates or does not comply with any of the
provisions of Section 4.1.36 hereof in any material respect;

 

(xii) if the Collateral becomes subject to any Lien (other than Liens created by
the Loan Documents) and, subject to Section 5.2.1 hereof, the Lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period of sixty
(60) days;

 

(xiii) if any Individual Property becomes subject to any mechanic’s,
materialman’s or other Lien other than a Lien for local real estate taxes and
assessments not then due and payable and, subject to Section 5.2.1 hereof, such
Lien shall remain undischarged of record (by payment, bonding or otherwise) for
a period of sixty (60) days;

 

(xiv) if any federal tax Lien or state or local income tax Lien is filed against
Borrower, Mortgage Borrower, Principal, any Guarantor, any Individual Property
or any Collateral and, subject to Section 5.1.2 hereof, the same is not
discharged of record within thirty (30) days after same is filed;

 

(xv) (A) Borrower is a Plan or its assets constitute Plan Assets; or
(B) Borrower consummates a transaction which would cause the Pledge Agreement or
Lender’s exercise of its rights under the Pledge Agreement, the Note, this
Agreement or the other Loan Documents to constitute a nonexempt prohibited
transaction under ERISA or result in a violation of a State statute regulating
governmental plans, subjecting Lender to liability for a violation of ERISA, the
Code, a State statute or other similar law;

 

(xvi) if any default occurs under any guaranty or indemnity executed in
connection herewith (including, without limitation, the Guaranty and the
Environmental Indemnity) and such default continues after the expiration of
applicable grace periods, if any;

 

(xvii) if Borrower shall be in default beyond applicable notice and grace
periods under any pledge agreement or other security agreement covering any part
of any portion of the Collateral whether it be superior or junior in lien to the
Pledge Agreement;

 

(xviii) if the Interest Rate Cap Agreement is required to be delivered pursuant
to Section 2.4 hereof and (i) Borrower fails to deliver the Interest Rate

 

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Cap Agreement and the related Assignment of Interest Rate Cap Agreement in
accordance with the terms of Section 2.4 hereof, (ii) the Interest Rate Cap
Agreement is terminated for any reason by Borrower or the Counterparty, or
(iii) the Counterparty defaults in the performance of its monetary obligations
under the Interest Rate Cap Agreement or (iv) the rating of the Counterparty is
subject to any downgrade, withdrawal or qualification by an Rating Agency, and
Borrower does not within thirty (30) Business Days (A) replace the Interest Rate
Cap Agreement with a Replacement Interest Rate Cap Agreement in accordance with
Section 2.4 hereof, and (B) deliver to Lender, in form and substance reasonably
satisfactory to Lender (x) an Assignment of Interest Rate Cap (y) a recognition
letter from the Counterparty thereto acknowledging the assignment of the
Replacement Interest Rate Cap Agreement and (z) any other opinions or documents
required pursuant to Section 2.4 hereof;

 

(xix) with respect to any term, covenant or provision set forth herein which
specifically contains a notice requirement or grace period, if Borrower shall be
in default under such term, covenant or condition after the giving of such
notice or the expiration of such grace period;

 

(xx) if Borrower shall permit or cause Mortgage Borrower to fail to pay the
Ground Rent or any additional rent or other charge mentioned in or made payable
by any Ground Lease when said rent or other charge is due and payable, after the
expiration of any applicable grace or cure period;

 

(xxi) if there shall occur any default by Mortgage Borrower, as tenant under any
Ground Lease, in the observance or performance of any term, covenant or
condition of such Ground Lease on the part of Mortgage Borrower to be observed
or performed and said default is not cured following the expiration of any
applicable grace and notice periods therein provided, or if the leasehold estate
created by such Ground Lease shall be surrendered or if such Ground Lease shall
cease to be in full force and effect or such Ground Lease shall be terminated or
canceled for any reason or under any circumstances whatsoever, or if any of the
terms, covenants or conditions of such Ground Lease shall in any manner be
modified, changed, supplemented, altered, or amended without the consent of
Lender;

 

(xxii) if any of the assumptions contained in the Insolvency Opinion, or in any
other “non-consolidation” opinion delivered to Lender in connection with the
Loan, or in any other “non-consolidation” opinion delivered subsequent to the
closing of the Loan, is, or becomes untrue in any material respect;

 

(xxiii) if a default has occurred and continues beyond any applicable notice and
cure period under the Franchise Agreement, and such default permits a party to
terminate or cancel the Franchise Agreement and Mortgage Borrower has not
entered into a Replacement Franchise Agreement pursuant to Section 5.1.21
hereof;

 

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(xxiv) if Mortgage Borrower ceases to operate a hotel on any Individual Property
or terminates such business for any reason whatsoever (other than temporary
cessation in connection with any renovations to an Individual Property or
restoration of the Individual Property after Casualty or Condemnation);

 

(xxv) if Borrower causes or permits Mortgage Borrower to terminate or cancel the
Franchise Agreement, or the Franchise Agreement expires pursuant to its terms,
and, in either case, Mortgage Borrower has not entered into a Replacement
Franchise Agreement pursuant to Section 5.1.21 hereof, or operates the Property
under the name of any franchisor or hotel chain or system other than that of a
Qualified Franchisor without Lender’s prior written consent;

 

(xxvi) if there shall be default under the Security Instruments or any of the
other Loan Documents beyond any applicable notice and cure periods contained in
such documents, whether as to Borrower or any Individual Property, or if any
other such event shall occur or condition shall exist, if the effect of such
event or condition is to accelerate the maturity of any portion of the Debt or
to permit Lender to accelerate the maturity of all or any portion of the Debt;

 

(xxvii) if there shall occur any default by the Operating Tenant, as lessee
under the Operating Lease, in the observance or performance of any term,
covenant or condition of the Operating Lease on the part of the Operating Tenant
to be observed or performed, and said default is not cured prior to the
expiration of any applicable grace period therein provided, or if any one or
more of the events referred to in the Operating Lease shall occur which would
cause the Operating Lease to terminate without notice or action by the landlord
thereunder or which would entitle the landlord to terminate the Operating Lease
(except with respect to such defaults for which Borrower may expressly terminate
the Operating Lease under Section 5.1.24 hereof) and the term thereof by giving
notice to the Operating Tenant, as tenant thereunder, or there shall be a sale,
pledge or encumbrance of the Operating Lease by Operating Tenant, or if the
Operating Lease expires pursuant to its terms or if any default occurs under the
Subordination Agreement made between Operating Tenant and Lender dated as of the
date hereof and such default continues after the expiration of applicable notice
and grace periods, if any, and under any of the foregoing circumstances the
Operating Lease is not replaced within thirty (30) days with a Replacement
Operating Lease in accordance with the terms and conditions of Section 5.1.24
hereof), or if the leasehold estate created by the Operating Lease shall be
surrendered or the Operating Lease shall be terminated or cancelled for any
reason or under any circumstances whatsoever and is not replaced within thirty
(30) days with a Replacement Operating Lease in accordance with the terms and
conditions of Section 5.1.24 hereof, or if any of the terms, covenants or
conditions of the Operating Lease shall in any manner be modified, changed,
supplemented, altered, or amended, other than in accordance with Section 5.1.24
hereof;

 

(xxviii) any assignment, subletting, conveyance, mortgage, pledge or other
encumbrance or transfer of the Operating Tenant’s leasehold interest in
Operating

 

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Lease (other than as permitted thereunder without the Borrower’s consent)
without (to the extent required hereunder) Lender’s prior written consent and a
Rating Confirmation;

 

(xxix) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement not specified in subsections (i) to
(xxviii) above, for ten (10) days after notice to Borrower from Lender, in the
case of any Default which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any other Default;
provided, however, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such 30 day period and provided further that
Borrower shall have commenced to cure such Default within such thirty (30) day
period and thereafter diligently and expeditiously proceeds to cure the same,
such thirty (30) day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such Default,
such additional period not to exceed one hundred twenty (120) days;

 

(xxx) if there shall be a default under the Pledge Agreement or any of the other
Loan Documents beyond any applicable notice and cure periods contained in such
documents, whether as to Borrower or the Collateral, or if any other such event
shall occur or condition shall exist, if the effect of such event or condition
is to accelerate the maturity of any portion of the Debt or to permit Lender to
accelerate the maturity of all or any portion of the Debt;

 

(xxxi) the Liens created pursuant to any Loan Document shall cease to be a fully
enforceable first priority security interest; or

 

(xxxii) a Mortgage Loan Event of Default shall occur, and shall not have been
waived or settled by Mortgage Lender or cured by Mortgage Borrower, or if
Mortgage Borrower enters into or otherwise suffers or permits any amendment,
waiver, supplement, termination, extension, renewal, replacement or other
modification of any Mortgage Loan Document without the prior written consent of
Lender.

 

(b) Upon the occurrence and during the continuance of an Event of Default (other
than an Event of Default described in clauses (vi) or (vii) above) and at any
time thereafter, in addition to any other rights or remedies available to it
pursuant to this Agreement and the other Loan Documents or at law or in equity,
and to the extent permitted by Applicable Law, Lender may take such action,
without notice or demand, that Lender deems advisable to protect and enforce its
rights against Borrower and the Collateral and any Individual Property,
including, without limitation, declaring the Debt to be immediately due and
payable, and Lender may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents and any or all of the Collateral and may exercise
all the rights and remedies of a secured party under the Uniform Commercial Code
against Borrower and any or all of the Collateral, including, without
limitation, all rights or remedies available at law or in equity; and upon the
occurrence and continuance of any Event of Default described in clauses (vi) or
(vii) above, the Debt

 

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and all other obligations of Borrower hereunder and under the other Loan
Documents shall immediately and automatically become due and payable, without
notice or demand, and Borrower hereby expressly waives any such notice or
demand, anything contained herein or in any other Loan Document to the contrary
notwithstanding.

 

Section 8.2 Remedies.

 

(a) Upon the occurrence and during the continuance of an Event of Default, all
or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under this Agreement or any of the other
Loan Documents executed and delivered by, or applicable to, Borrower or at law
or in equity may be exercised by Lender at any time and from time to time, to
the extent permitted by Applicable Law, whether or not all or any of the Debt
shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Collateral. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its sole discretion,
to the fullest extent permitted by Applicable Law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by
Applicable Law, equity or contract or as set forth herein or in the other Loan
Documents. Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing, to the extent permitted by Applicable
Law, all Liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
against the Collateral and the Collateral has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full.

 

(b) With respect to Borrower and the Collateral, nothing contained herein or in
any other Loan Document shall be construed as requiring Lender to resort to the
Collateral for the satisfaction of any of the Debt in preference or priority,
and Lender may seek satisfaction out of the Collateral or any other Collateral
or any part thereof, in its absolute discretion in respect of the Debt. In
addition, to the extent permitted by Applicable Law, Lender shall have the right
from time to time to partially foreclose upon the Collateral in any manner and
for any amounts secured by the Pledge Agreement then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following circumstances: (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose upon the Collateral to recover such
delinquent payments, or (ii) in the event Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Lender may foreclose upon
the Collateral to recover so much of the principal balance of the Loan as Lender
may accelerate and such other sums secured by the Pledge Agreement as Lender may
elect. Notwithstanding one or more partial foreclosures, the Collateral shall
remain subject to the Pledge Agreement to secure payment of sums secured by the
Pledge Agreement and not previously recovered.

 

(c) Lender shall have the right, from time to time, to sever the Note and the
other Loan Documents into one or more separate notes, pledges and other security

 

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documents (the “Severed Loan Documents”) in such denominations as Lender shall
determine in its sole discretion for purposes of evidencing and enforcing its
rights and remedies provided hereunder. Borrower shall execute and deliver to
Lender from time to time, promptly after the request of Lender, a severance
agreement and such other documents as Lender shall request in order to effect
the severance described in the preceding sentence, all in form and substance
reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in
its name and stead to make and execute all documents necessary or desirable to
effect the aforesaid severance, Borrower ratifying all that its said attorney
shall do by virtue thereof; provided, however, Lender shall not make or execute
any such documents under such power until five (5) Business Days after notice
has been given to Borrower by Lender of Lender’s intent to exercise its rights
under such power. The Severed Loan Documents shall not contain any
representations, warranties or covenants not contained in the Loan Documents and
any such representations and warranties contained in the Severed Loan Documents
will be given by Borrower only as of the Closing Date.

 

(d) Any amounts recovered from the Collateral after an Event of Default may be
applied by Lender toward the payment of any interest and/or principal of the
Loan and/or any other amounts due under the Loan Documents in such order,
priority and proportions as Lender in its sole discretion shall determine.

 

Section 8.3 Right to Cure Defaults.

 

Upon the occurrence and during the continuance of any Event of Default, Lender
may, but without any obligation to do so and without notice to or demand on
Borrower and without releasing Borrower from any obligation hereunder, make any
payment or do any act required of Borrower hereunder in such manner and to such
extent as Lender may deem necessary to protect the security hereof. Lender is
authorized to enter upon the Property for such purposes, or appear in, defend,
or bring any action or proceeding to protect its interest in the Property for
such purposes, and the cost and expense thereof (including reasonable attorneys’
fees to the extent permitted by law), with interest as provided in this
Section 8.3, shall constitute a portion of the Debt and shall be due and payable
to Lender upon demand. All such costs and expenses paid by Lender in remedying
such Event of Default or such failed payment or act or in appearing in,
defending, or bringing any action or proceeding shall bear interest at the
Default Rate, for the period after notice from Lender that such cost or expense
was incurred to the date of payment to Lender. All such costs and expenses paid
by Lender together with interest thereon calculated at the Default Rate, as the
case may be, shall be deemed to constitute a portion of the Debt and be secured
by the liens, claims and security interests provided to Lender under the Loan
Documents and shall be immediately due and payable upon demand by Lender
therefor.

 

Section 8.4 Remedies Cumulative; Waivers.

 

To the extent permitted by Applicable Law, the rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. To the extent permitted by Applicable

 

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Law, Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion. To the extent permitted by Applicable
Law, no delay or omission to exercise any remedy, right or power accruing upon
an Event of Default shall impair any such remedy, right or power or shall be
construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one or more Defaults or Events of Default with respect to Borrower shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Borrower or to impair any remedy, right or power consequent thereon.

 

Section 8.5 Power of Attorney.

 

For the purpose of carrying out the provisions and exercising the rights, powers
and privileges granted in this Section 8, Borrower hereby irrevocably appoints
the Lender as its true and lawful attorney-in-fact to execute, acknowledge and
deliver any instruments and do and perform any acts such as are referred to in
this subsection in the name and on behalf of Borrower. This power of attorney is
a power coupled with an interest and cannot be revoked.

 

IX. SPECIAL PROVISIONS

 

Section 9.1 Sale of Notes and Securitization

 

Lender may, at any time, sell, transfer, pledge or assign the Note, this
Agreement, the Pledge Agreement and the other Loan Documents, and any or all
servicing rights with respect thereto, or grant participations therein or issue
mortgage pass-through certificates or other securities (the “Securities”)
evidencing a beneficial interest in a rated or unrated public offering or
private placement (a “Securitization”). At the request of the holder of the Note
and, to the extent not already required to be provided by Borrower under this
Agreement, Borrower shall cooperate with Lender to satisfy the market standards
to which the holder of the Note customarily adheres or which may be reasonably
required in the marketplace or by the Rating Agencies in connection with a
Securitization or the sale of the Note or the participations or Securities,
including, without limitation, to:

 

(a) (i) provide such financial and other information with respect to the
Collateral, the Properties, Borrower, Mortgage Borrower, Guarantor, the REIT,
Operating Tenant, and the Manager, (ii) provide budgets relating to the
Properties and (iii) to perform or permit or cause to be performed or permitted
such site inspection, appraisals, market studies, environmental reviews and
reports (Phase I’s and, if appropriate, Phase II’s), engineering reports and
other due diligence investigations of the Properties, as may be reasonably
requested by the holder of the Note or the Rating Agencies or as may be
necessary or appropriate in connection with the Securitization (the “Provided
Information”), together, if customary, with appropriate verification and/or
consents of the Provided Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to Lender and the Rating Agencies;

 

(b) if required by the Rating Agencies, deliver (i) a revised Insolvency
Opinion, (ii) revised opinions of counsel as to due execution and enforceability
with

 

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respect to the Collateral, Borrower, Guarantor, Principal, and Operating Tenant
and the Loan Documents, and (iii) revised organizational documents for Borrower,
Guarantor, and Principal, and Operating Tenant (including, without limitation,
such revisions as are necessary to comply with the provisions of Section 4.1.36
hereof), which counsel, opinions and organizational documents shall be
reasonably satisfactory to Lender and the Rating Agencies;

 

(c) execute such amendments to the Loan Documents and organizational documents
as may be requested by the holder of the Note or the Rating Agencies or
otherwise to effect the Securitization; provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or
amendment would (except for modifications and amendments required to be made
pursuant to Section (e) and (f) below), (i) change the interest rate, the stated
maturity or the amortization of principal set forth in the Note, or (ii) modify
or amend any other material term of the Loan;

 

(d) if Lender elects, in its sole discretion, prior to or upon a Securitization,
to split the Loan into two or more parts, or the Note into multiple component
notes or tranches which may have different interest rates, amortization
payments, principal amounts, payment priorities, and maturities, Borrower agrees
to cooperate with Lender in connection with the foregoing and to execute the
required modifications and amendments to the Note, this Agreement and the Loan
Documents and to provide opinions necessary to effectuate the same. Such Notes
or components may be assigned different interest rates, so long as the initial
weighted average of such interest rates does not exceed the Applicable Interest
Rate and the scheduled amortization payments do not exceed the Scheduled
Amortization Payment;

 

(e) execute modifications to the Loan Documents changing the interest rate
and/or the amortization payments for the Loan and the Mezzanine Loan, provided
that the initial weighted average of the interest rate spreads for the Loan and
the Mezzanine Loan after such modification shall not exceed the weighted average
of the interest rate spreads for the Loan and the Mezzanine Loan immediately
prior to such modification and the scheduled amortization payments after such
modification will not exceed the Scheduled Amortization Payments, if any, due
under the Loan Agreement and the Mezzanine Loan Agreement immediately prior to
such modification and the scheduled amortization payments after such
modification will not exceed the Scheduled Amortization Payments due under the
Loan Agreement and Mezzanine Loan Agreement immediately prior to such
modification. The Borrower shall also provide opinions and title insurance
reasonably necessary to effectuate the same; and

 

(f) make such representations and warranties as of the closing date of the
Securitization with respect to the Collateral, the Properties, Borrower,
Mortgage Borrower, Principal, Operating Tenant, Guarantor, and the Loan
Documents as are customarily provided in securitization transactions and as may
be reasonably requested by the holder of the Note or the Rating Agencies and
consistent with the facts covered by such representations and warranties as they
exist on the date thereof, including the representations and warranties made in
the Loan Documents.

 

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All third party costs and expenses and out-of-pocket expenses incurred by Lender
in connection with this Section 9.1 and the Securitization shall be paid by
Lender (except as otherwise expressly set forth herein). These shall include,
but not be limited to, fees and disbursements of legal counsel, accountants, and
other professionals retained by Lender and fees and expenses incurred for
producing any offering documents or any other materials (including travel by
Lender and its agents, design, printing, photograph and documents production
costs). Solely for the purposes of this Section 9.1, Lender shall reimburse
Borrower for all of its reasonable out-of-pocket costs and expenses, including
the reasonable out-of-pocket fees and expenses of Borrower’s counsel in excess
of $25,000 (it being understood that Borrower shall be responsible for paying up
to $25,000 of such costs, fees and expenses), that Borrower incurs in connection
with complying with a request made by Lender under this Section 9.1 in
connection with a Securitization. Upon Lender’s request, Borrower shall deliver
to Lender such evidence required by Lender demonstrating that Borrower has
incurred such out-of-pocket costs, fees and expenses, including, delivery of
bills and invoices reflecting such fees, costs and expenses. Notwithstanding the
foregoing, the provisions of this paragraph shall in no way limit or affect any
Borrower obligation to pay any costs expressly required to be paid by Borrower
pursuant to any other Sections of this Agreement.

 

Section 9.2 Securitization Indemnification.

 

(a) Borrower and Guarantor understand that certain of the Provided Information
may be included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus supplement, private placement
memorandum, offering circular or other offering document (each a “Disclosure
Document”) and may also be included in filings (an “Exchange Act Filing”) with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended (the “Securities Act”), or the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”), or provided or made available to Investors or
prospective Investors in the Securities, the Rating Agencies, and service
providers relating to the Securitization. In the event that the Disclosure
Document is required to be revised prior to the sale of all Securities, Borrower
and Guarantor will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information necessary to keep the
Disclosure Document accurate and complete in all material respects with respect
to Borrower, Guarantor, the Property and the Operating Tenant.

 

(b) Borrower and Guarantor agree to provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, or (iii) collateral
and structured term sheets or similar materials, an indemnification certificate
(A) certifying that Borrower has carefully examined such memorandum or
prospectus or term sheets, as applicable, solely with respect to the factual
contents thereof related to the Loan, the Borrower, the Guarantor, the Operating
Tenant, the REIT, the Manager, the Franchisor, the Property, the Collateral and
the Provided Information and such sections (and any other sections reasonably
requested) do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading,
(B) indemnifying Lender (and for purposes of this Section 9.2, Lender hereunder
shall include its officers and

 

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directors), the Affiliate of Lehman Brothers Inc. (“Lehman”) that has filed the
registration statement relating to the Securitization (the “Registration
Statement”), each of its directors, each of its officers who have signed the
Registration Statement and each Person who controls the Affiliate within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the “Lehman Group”), and Lehman, each of its directors and each
Person who controls Lehman within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act (collectively, the “Underwriter Group”)
for any losses, claims, damages or liabilities (collectively, the “Liabilities”)
to which Lender, the Lehman Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such sections
described in clause (A) above (but solely with respect to the factual contents
thereof relating to the Loan, the Borrower, the Guarantor, the Operating Tenant,
the REIT, the Manager, the Franchisor, the Property, the Collateral and the
Provided Information), or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in such sections
or necessary in order to make the statements in such sections or in light of the
circumstances under which they were made, not misleading and (C) agreeing to
reimburse Lender, the Lehman Group and the Underwriter Group for any legal or
other expenses reasonably incurred by Lender the Lehman Group and the
Underwriter Group in connection with investigating or defending the Liabilities;
provided, however, that Borrower will be liable in any such case under clauses
(B) or (C) above only to the extent that any such Liability arises out of or is
based upon any such untrue statement or omission made therein in reliance upon
and in conformity with information furnished to Lender by or on behalf of
Borrower in connection with the preparation of the memorandum or prospectus or
in connection with the underwriting of the debt, including, without limitation,
financial statements of Borrower, operating statements, rent rolls,
environmental site assessment reports and property condition reports with
respect to the Property. This indemnification will be in addition to any
liability which Borrower may otherwise have. Moreover, the indemnification
provided for in clauses (B) and (C) above shall be effective whether or not an
indemnification certificate described in (A) above is provided and shall be
applicable based on information previously provided by Borrower or its
Affiliates if Borrower does not provide the indemnification certificate.

 

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

 

(d) Promptly after receipt by an indemnified party under this Section 9.2 of
notice of the commencement of any action, such indemnified party will, if a
claim in

 

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respect thereof is to be made against the indemnifying party under this
Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
The indemnifying party’s legal counsel shall control the defense of such action,
except that no settlement or compromise shall be accepted or entered into which
would bind any indemnified party unless such indemnified party has given its
prior written consent thereto, which consent will not be unreasonably withheld.
After notice from the indemnifying party to such indemnified party under this
Section 9.2 the indemnifying party shall not be responsible for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there are any legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. The indemnifying party shall not be liable for the expenses of more
than one such separate counsel unless an indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to another indemnified party. Prior to the
occurrence and the continuance of an Event of Default, in the event that any
indemnified party wishes to enter into a settlement agreement in connection with
such action which would give rise to an indemnified obligation of the
indemnifying party hereunder and such indemnifying party does not consent to
such settlement agreement, such indemnified party agrees not to enter into such
settlement agreement provided the indemnifying party delivers evidence
reasonably satisfactory to such indemnified party that the indemnifying party
shall be able to satisfy its indemnification obligations under this Section in
the event a judgment is rendered against the indemnifying party with respect to
such action. In such event, the indemnifying party shall pay or, at the
indemnified party’s option, reimburse it for the reasonable fees and expenses of
its legal counsel and other professionals.

 

(e) In order to provide for just and equitable contribution in circumstances in
which the indemnifications provided for in Section 9.2(b) or (c) is or are for
any reason held to be unenforceable by an indemnified party in respect of any
Liabilities (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under Section 9.2(b) or (c), the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such Liabilities (or action in respect thereof); provided, however,
that no Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from

 

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any Person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are
entitled, the following factors shall be considered: (i) Lehman’s and Borrower’s
relative knowledge and access to information concerning the matter with respect
to which claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances. Lender, Borrower, and Guarantor hereby agree that it would
not be equitable if the amount of such contribution were determined solely by
pro rata or per capita allocation.

 

(f) The liabilities and obligations of Borrower, Guarantor and Lender under this
Section 9.2 shall survive the termination of this Agreement and the satisfaction
and discharge of the Debt.

 

Section 9.3 Servicer.

 

At the option of Lender or Agent, and at the Lender’s or Agent’s expense, the
Loan may be serviced by a servicer/trustee (the “Servicer”) selected by Lender
or Agent and Lender or Agent may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between
Lender or Agent and Servicer.

 

Section 9.4 Exculpation.

 

(a) Except as otherwise provided herein, in the Pledge Agreement or in the other
Loan Documents, Lender shall not enforce the liability and obligation of
Borrower to perform and observe the obligations contained in this Agreement, the
Note or the Pledge Agreement by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding to enable Lender to enforce and realize upon this Agreement, the
Note, the Pledge Agreement, the other Loan Documents, and the Collateral, and
any other collateral given to Lender created by this Agreement, the Note, the
Pledge Agreement and the other Loan Documents; provided, however, that any
judgment in any such action or proceeding shall be enforceable against Borrower
only to the extent of Borrower’s interest in the Collateral and in any other
collateral given to Lender. Lender, by accepting this Agreement, the Note and
the Pledge Agreement, agrees that it shall not, except as otherwise provided
herein or in the Pledge Agreement, sue for, seek or demand any deficiency
judgment against Borrower in any such action or proceeding, under or by reason
of or under or in connection with this Agreement, the Note, the Pledge Agreement
or the other Loan Documents. The provisions of this Section shall not, however,
(i) constitute a waiver, release or impairment of any obligation evidenced or
secured by this Agreement, the Note, the Pledge Agreement or the other Loan
Documents; (ii) impair the right of Lender to name Borrower as a party defendant
in any action or suit for judicial foreclosure and sale under the Pledge
Agreement; (iii) affect the validity or enforceability of any indemnity
(including, without limitation, the Environmental Indemnity), guaranty
(including, without limitation, the Guaranty), master lease or similar
instrument made in connection with this Agreement, the Note, the Pledge
Agreement, or the other Loan Documents; (iv)

 

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impair the right of Lender to obtain the appointment of a receiver; (v) impair
the right of Lender to enforce Sections 4.1.9, 4.1.29, 5.1.9 and 5.2.8 hereof;
or (vii) impair the right of Lender to obtain a deficiency judgment or other
judgment on the Note against Borrower if necessary to (A) preserve or enforce
its rights and remedies against the Collateral or (B) obtain any Insurance
Proceeds or Awards to which Lender would otherwise be entitled under the terms
of this Agreement or the Pledge Agreement; provided however, Lender shall only
enforce such judgment to the extent of the Insurance Proceeds and/or Awards.

 

(b) Notwithstanding the provisions of this Section 9.4 to the contrary, Borrower
shall be personally liable to Lender for the Losses it incurs due to: (i) fraud
or intentional misrepresentation in connection with the execution and the
delivery of this Agreement, the Note, the Pledge Agreement, the other Loan
Documents or any Mortgage Loan Documents; (ii) Borrower’s or Mortgage Borrower’s
misappropriation or intentional misapplication of Rents received by Borrower or
Mortgage Borrower after the occurrence and during the continuance of an Event of
Default; (iii) Borrower’s or Mortgage Borrower’s misappropriation or intentional
misapplication of security deposits or Rents collected more than thirty
(30) days in advance; (iv) Borrower’s or Mortgage Borrower’s misappropriation or
intentional misapplication of Insurance Proceeds or Awards; (v) Borrower’s or
Mortgage Borrower’s misappropriation or intentional misapplication of Net
Liquidation After Debt Service or any distributions or other payments made in
respect of any part of the Property or the Collateral; (vi) Borrower’s making a
distribution to its equity owners after the occurrence and during the
continuance of an Event of Default; (vii) Mortgage Borrower’s failure to pay
Taxes, Other Charges (except to the extent that sums sufficient to pay such
amounts have been deposited in escrow with Mortgage Lender pursuant to the terms
of Section 7.2 of the Mortgage Loan Agreement, charges for labor or materials or
other charges that can create Liens on the Properties (except to the extent that
there is insufficient cash flow from the operation of the Property;
(viii) Borrower’s failure to return or to reimburse Lender for all Personal
Property taken from any Properties by or on behalf of Mortgage Borrower (other
than Personal Property that is obsolete or removed or disposed in the ordinary
course of business of owning and operating the Property) and not replaced with
Personal Property of the same utility and of the same or greater value;
(vii) any act of intentional waste or arson by Borrower, Mortgage Borrower,
Principal, or any Affiliate thereof or Guarantor; (viii) [intentionally
deleted]; (ix) Borrower’s failure to comply with the provisions of
Section 5.1.10 hereof (provided Borrower shall have an additional ten (10) day
after written notice of such failure to deliver the required financial
statements or reports pursuant to Section 5.1.10 hereof before recourse is
sought); (x) Borrower’s failure to comply with the provisions of Sections 4.1.39
and 5.1.19 of this Agreement; (xi) Borrower’s or Principal’s default under
Section 4.1.36 hereof; or (xii) Operating Tenant’s or Principal’s (as defined in
the Subordination Agreement) default under Section 11 of the Subordination
Agreement.

 

(c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability as set forth in Subsection (a) above SHALL BECOME NULL AND
VOID and shall be of no further force and effect (i) in the event of Borrower’s
default under Section5.2.10 hereof or Article 7 of the Security Instruments,
(ii) if any Individual

 

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Property, the Collateral or any part thereof shall become an asset in (A) a
voluntary bankruptcy or insolvency proceeding or (B) an involuntary bankruptcy
or insolvency proceeding commenced by any Person (other than Lender) and
Borrower or Mortgage Borrower, as applicable, fails to use its commercially
reasonable efforts to obtain a dismissal of such proceedings.

 

(d) Nothing herein shall be deemed to be a waiver of any right which Lender may
have under Section 506(a), 506(b), 1111(b) or any other provision of the
Bankruptcy Code to file a claim for the full amount of the indebtedness secured
by the Pledge Agreement or to require that all collateral shall continue to
secure all of the indebtedness owing to Lender in accordance with this
Agreement, the Note, the Pledge Agreement and the other Loan Documents.

 

Section 9.5 Reserved.

 

Section 9.6 Reserved.

 

Section 9.7 Syndication

 

9.7.1 Syndication.

 

The provisions of this Section 9.7 shall only apply in the event that the Loan
is syndicated in accordance with the provisions of this Section 9.7 set forth
below.

 

9.7.2 Sale of Loan, Co-Lenders, Participations and Servicing.

 

(a) Lender and any Co-Lender may, at their option, without Borrower’s consent
(but with notice to Borrower), sell with novation all or any part of their
right, title and interest in, and to, and under the Loan (the “Syndication”), to
one or more additional lenders (each a “Co-Lender”). Each additional Co-Lender
shall enter into an assignment and assumption agreement (the “Assignment and
Assumption”) assigning a portion of Lender’s or Co-Lender’s rights and
obligations under the Loan, and pursuant to which the additional Co-Lender
accepts such assignment and assumes the assigned obligations (a “Pro Rata Share
of the Loan”). From and after the effective date specified in the Assignment and
Assumption (i) each Co-Lender shall be a party hereto and to each Loan Document
to the extent of the applicable percentage or percentages set forth in the
Assignment and Assumption and, except as specified otherwise herein, shall
succeed to the rights and obligations of Lender and the Co-Lenders hereunder and
thereunder in respect of the Loan, and (ii) Lender, as lender and each
Co-Lender, as applicable, shall, to the extent such rights and obligations have
been assigned by it pursuant to such Assignment and Assumption, relinquish its
rights and be released from its obligations hereunder and under the Loan
Documents.

 

(b) The liabilities of Lender and each of the Co-Lenders shall be several and
not joint, and Lender’s and each Co-Lender’s obligations to Borrower under this
Agreement shall be reduced by the amount of each such Assignment and Assumption.
Neither Lender nor any Co-Lender shall be responsible for the obligations of any
other Co-Lender. Lender and each Co-Lender shall be liable to Borrower only for
their

 

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respective proportionate shares of the Loan. If for any reason any of the
Co-Lenders shall fail or refuse to abide by their obligations under this
Agreement, Lender and the other Co-Lenders shall not be relieved of their
obligations, if any, hereunder, including their obligations to make their pro
rata share of any advance; notwithstanding the foregoing, Lender and the
Co-Lenders shall have the right, but not the obligation, at their sole option,
to make the defaulting Co- Lender’s pro rata share of such advance pursuant to
the Co-Lending Agreement.

 

(c) Borrower agrees that it shall, in connection with any sale of all or any
portion of the Loan, whether in whole or to an additional Co-Lender or
Participant, within ten (10) Business Days after requested by Agent, furnish
Agent with the certificates required under Sections 5.1.10 and 5.1.13 hereof and
such other information as reasonably requested by any additional Co-Lender or
Participant in performing its due diligence in connection with its purchase of
an interest in the Loan.

 

(d) Lender (or an Affiliate of Lender) shall act as administrative agent for
itself and the Co-Lenders (together with any successor administrative agent, the
“Agent”) pursuant to this Section 9.7. Borrower acknowledges that Lender, as
Agent, shall have the sole and exclusive authority to execute and perform this
Agreement and each Loan Document on behalf of itself, as Lender and as agent for
itself and the Co-Lenders subject to the terms of the Co-Lending Agreement.
Lender acknowledges that Lender, as Agent, shall retain the exclusive right to
grant approvals and give consents with respect to the operating budgets required
to be delivered hereunder and with respect to matters concerning the
establishment and administration of the Lockbox Account and the other Accounts.
Except as otherwise provided herein, Borrower shall have no obligation to
recognize or deal directly with any Co-Lender, and no Co-Lender shall have any
right to deal directly with Borrower with respect to the rights, benefits and
obligations of Borrower under this Agreement, the Loan Documents or any one or
more documents or instruments in respect thereof. Borrower may rely conclusively
on the actions of Lender as Agent to bind Lender and the Co-Lenders,
notwithstanding that the particular action in question may, pursuant to this
Agreement or the Co-Lending Agreement be subject to the consent or direction of
some or all of the Co-Lenders. Lender may resign as Agent of the Co-Lenders, in
its sole discretion, or if required to by the Co-Lenders in accordance with the
term of the Co-Lending Agreement, in each case without the consent of Borrower.
Upon any such resignation, a successor Agent shall be determined pursuant to the
terms of the Co-Lending Agreement. The term Agent shall mean any successor
Agent.

 

(e) Notwithstanding any provision to the contrary in this Agreement, the Agent
shall not have any duties or responsibilities except those expressly set forth
herein (and in the Co-Lending Agreement) and no covenants, functions,
responsibilities, duties, obligations or liabilities of Agent shall be implied
by or inferred from this Agreement, the Co-Lending Agreement, or any other Loan
Document, or otherwise exist against Agent.

 

(f) Except to the extent its obligations hereunder and its interest in the Loan
have been assigned pursuant to one or more Assignments and Assumption, Lender,
as Agent, shall have the same rights and powers under this Agreement as any
other Co-Lender and may exercise the same as though it were not Agent,
respectively. The term

 

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“Co-Lender” or “Co-Lenders” shall, unless otherwise expressly indicated, include
Lender in its individual capacity. Lender and the other Co-Lenders and their
respective Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with,
Borrower, or any Affiliate of Borrower and any Person who may do business with
or own securities of Borrower or any Affiliate of Borrower, all as if they were
not serving in such capacities hereunder and without any duty to account
therefor to each other.

 

(g) If required by any Co-Lender, each Borrower hereby agrees to execute
supplemental notes in the principal amount of such Co-Lender’s pro rata share of
the Loan substantially in the form of the Note, and such supplemental note shall
(i) be payable to order of such Co-Lender, (ii) be dated as of the Closing Date,
and (iii) mature on the Maturity Date. Such supplemental note shall provide that
it evidences a portion of the existing indebtedness hereunder and under the Note
and not any new or additional indebtedness of Borrower. The term “Note” as used
in this Agreement and in all the other Loan Documents shall include all such
supplemental notes.

 

(h) Lender, as Agent, shall maintain at its domestic lending office or at such
other location as Lender, as Agent, shall designate in writing to each Co-Lender
and Borrower a copy of each Assignment and Assumption delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Co-Lenders, the amount of each Co-Lender’s proportionate share of the Loan and
the name and address of each Co-Lender’s agent for service of process (the
“Register”). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Lender, as Agent, and the
Co-Lenders may treat each person or entity whose name is recorded in the
Register as a Co-Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection and copying by Borrower or any
Co-Lender during normal business hours upon reasonable prior notice to the
Agent. A Co-Lender may change its address and its agent for service of process
upon written notice to Lender, as Agent, which notice shall only be effective
upon actual receipt by Lender, as Agent, which receipt will be acknowledged by
Lender, as Agent, upon request.

 

(i) Notwithstanding anything herein to the contrary, any financial institution
or other entity may be sold a participation interest in the Loan by Lender or
any Co-Lender without Borrower’s consent (such financial institution or entity,
a “Participant”) (x) if such sale is without novation and (y) if the other
conditions set forth in this paragraph are met. No Participant shall be
considered a Co-Lender hereunder or under the Note or the Loan Documents. No
Participant shall have any rights under this Agreement, the Note or any of the
Loan Documents and the Participant’s rights in respect of such participation
shall be solely against Lender or Co-Lender, as the case may be, as set forth in
the participation agreement executed by and between Lender or Co-Lender, as the
case may be, and such Participant. No participation shall relieve Lender or
Co-Lender, as the case may be, from its obligations hereunder or under the Note
or the Loan Documents and Lender or Co- Lender, as the case may be, shall remain
solely responsible for the performance of its obligations hereunder.

 

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(j) Notwithstanding any other provision set forth in this Agreement, Lender or
any Co-Lender may at any time create a security interest in all or any portion
of its rights under this Agreement (including, without limitation, amounts owing
to it in favor of any Federal Reserve Bank in accordance with Regulation A of
the Board of Governors of the Federal Reserve System), provided that no such
security interest or the exercise by the secured party of any of its rights
thereunder shall release Lender or Co-Lender from its funding obligations
hereunder.

 

9.7.3 Cooperation in Syndication.

 

(a) Borrower and Guarantor agree to assist Lender in completing a Syndication
satisfactory to Lender. Such assistance shall include (i) direct contact between
senior management and advisors of Borrower and the proposed Co-Lenders,
(ii) assistance in the preparation of a confidential information memorandum and
other marketing materials to be used in connection with the Syndication,
(iii) the hosting, with Lender, of one or more meetings of prospective
Co-Lenders or with the Rating Agencies, (iv) the delivery of appraisals
satisfactory to Lender if required, and (v) working with Lender to procure a
rating for the Loan by the Rating Agencies.

 

(b) Lender shall manage all aspects of the Syndication of the Loan, including
decisions as to the selection of institutions to be approached and when they
will be approached, when their commitments will be accepted, which institutions
will participate, the allocations of the commitments among the Co-Lenders and
the amount and distribution of fees among the Co-Lenders. To assist Lender in
its Syndication efforts, Borrower and Guarantor agree promptly to prepare and
provide to Lender all information with respect to Borrower, Manager, Guarantor,
Principal, Operating Tenant and the Properties contemplated hereby, including
all financial information and projections (the “Projections”), as Lender may
reasonably request in connection with the Syndication of the Loan. Borrower
hereby represents and covenants that (i) all information other than the
Projections (the “Information”) that has been or will be made available to
Lender by Borrower or any of their representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements are made and (ii) the Projections that have been or will be made
available to Lender by Borrower or any of their representatives have been or
will be prepared in good faith based upon reasonable assumptions. Borrower
understands that in arranging and syndicating the Loan, Lender, the Co-Lenders
and, if applicable, the Rating Agencies, may use and rely on the Information and
Projections without independent verification thereof.

 

(c) If required in connection with the Syndication, Borrower and Guarantor
hereby agrees to:

 

(i) amend the Loan Documents to give Lender the right, at Borrower’s sole cost
and expense, to have one or more of the Properties reappraised on an annual
basis;

 

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(ii) deliver updated financial and operating statements and other information
reasonably required by Lender to facilitate the Syndication;

 

(iii) deliver reliance letters reasonably satisfactory to Lender with respect to
the environmental assessments and reports delivered to Lender prior to the
Closing Date, which will run to Lender and its successors and assigns; and

 

(iv) execute modifications to the Loan Documents required by the Co- Lenders,
provided that such modification will not (except as set forth in (v) and
(vi) below) change any material or economic terms of the Loan Documents, or
otherwise materially increase the obligations or materially decrease the rights
of Borrower pursuant to the Loan Documents;

 

(v) if Lender elects, in its sole discretion, prior to or upon a Syndication, to
split the Loan into two or more parts, or the Note into multiple component notes
or tranches which may have different interest rates, principal amounts, payment
priorities, and maturities, Borrower agrees to cooperate with Lender in
connection with the foregoing and to execute the required modifications and
amendments to the Note, this Agreement and the Loan Documents and to provide
opinions necessary to effectuate the same. Such Notes or components may be
assigned different interest rates, so long as the initial weighted average of
such interest rates does not exceed the Applicable Interest Rate; and

 

(vi) execute modifications to the Loan Documents changing the interest rate for
the Loan and the Mortgage Loan, provided that the initial weighted average of
the interest rate spreads for the Loan and the Mortgage Loan after such
modification shall not exceed the weighted average of the interest rate spreads
for the Loan and the Mortgage Loan immediately prior to such modification and
the scheduled amortization payments after such modification will not exceed the
Scheduled Amortization Payments due under the Loan Agreement and Mezzanine Loan
Agreement immediately prior to such modification. The Borrower shall also
provide opinions and title insurance reasonably necessary to effectuate the
same.

 

All third party costs and expenses and out-of-pocket expenses incurred by Lender
in connection with this Section 9.7.3 and the Syndication shall be paid by
Lender (except as otherwise expressly set forth herein). These shall include,
but not be limited to, fees and disbursements of legal counsel, accountants, and
other professionals retained by Lender and fees and expenses incurred for
producing any offering documents or any other materials (including travel by
Lender and its agents, design, printing, photograph and documents production
costs). Solely for the purposes of this Section 9.7.3, Lender shall reimburse
Borrower for all of its reasonable out-of-pocket costs and expenses, including
the reasonable out-of-pocket fees and expenses of Borrower’s counsel in excess
of $25,000 (it being understood that Borrower shall be responsible for paying up
to $25,000 of such costs, fees and expenses), that Borrower incurs in connection
with complying with a request made by Lender under this Section 9.7.3 in
connection with a Securitization. Upon Lender’s request, Borrower shall deliver
to Lender such evidence required by Lender demonstrating that Borrower has
incurred such out-of-pocket costs, fees and expenses, including, delivery of
bills and invoices reflecting such fees, costs and expenses.

 

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Notwithstanding the foregoing, the provisions of this paragraph shall in no way
limit or affect any Borrower obligation to pay any costs expressly required to
be paid by Borrower pursuant to any other Sections of this Agreement.

 

9.7.4 Payment of Agent’s, and Co-Lender’s Expenses, Indemnity, etc. Borrower and
Guarantor shall:

 

(a) whether or not the transactions contemplated in this Section 9.7 are
consummated, pay all reasonable out-of-pocket costs and expenses (A) of Agent’s
counsel fees and expenses relating to the negotiation, preparation, execution
and delivery of the Note, this Agreement, the Pledge Agreement, and the other
Loan Documents and the documents and instruments referred to therein, the
creation, perfection or protection of Lender’s and Co-Lender’s liens on the
Properties (including, without limitation, fees and expenses for title
insurance, property inspections, appraisals, if required for Syndication,
surveys, lien searches, filing and recording fees, and escrow fees and
expenses), and any amendment, waiver or consent relating to any of the Loan
Documents including releases, (but Agent and the Co-Lender’s shall pay their own
respective counsel fees) and (B) of Agent and Co-Lenders in connection with the
preservation of rights under, any amendment, waiver or consent relating to, and
enforcement of, the Loan Documents and the documents and instruments referred to
therein or in connection with any restructuring or rescheduling of the
Obligations (including, without limitation, the reasonable fees and
disbursements of counsel for Agent and the Co-Lenders);

 

(b) pay, and hold Agent and each Co-Lender harmless from and against, any and
all present and future stamp, excise and other similar taxes with respect to the
foregoing matters and hold Agent and each Co-Lender harmless from and against
any and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to Agent or such Co-Lender) to pay such
taxes; and

 

(c) indemnify Agent, (in its capacity as Lender and as Agent), and each Co-
Lender, its officers, directors, employees, representatives and agents and any
persons or entities owned or Controlled by, owning or Controlling, or under
common Control or Affiliated with Agent, Agent, or each Co-Lender (each an
“Indemnitee”) from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitee in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) that may at any time (including, without
limitation, at any time following the payment of the Obligations) be imposed on,
asserted against or incurred by any Indemnitee as a result of, or arising in any
manner out of, or in any way related to or by reason of, (i) the execution,
delivery or performance of any Loan Document by Borrower, (ii) the breach of any
of Borrower’s representations and warranties or of any of Borrower’s
Obligations, (iii) a default under Section 5.2.8 hereof, including, without
limitation, reasonable attorneys’ fees and costs incurred in the investigation,
defense, and settlement of losses incurred in correcting any prohibited
transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited

 

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transaction exemption under ERISA, the Code, any State statute or other similar
law that may be required, and (iv) the exercise by Agent and the Co-Lenders of
their rights and remedies (including, without limitation, foreclosure) under any
Loan Documents, but excluding, as to any Indemnitee, any such losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements incurred solely by reason of the gross
negligence or willful misconduct of such Indemnitee as finally determined by a
court of competent jurisdiction (collectively, “Indemnified Liabilities”).
Borrower and Guarantor further agree that, without Agent’s or the Co-Lenders’
prior written consent, it will not enter into any settlement of a lawsuit, claim
or other proceeding arising or relating to any Indemnified Liability unless such
settlement includes an explicit and unconditional release from the party
bringing such lawsuit, claim or other proceeding of each Indemnitee. Borrower’s
and Guarantor’s obligations under this Section shall survive the termination of
this Agreement and the payment of the Obligations. Borrower and Guarantor shall
have the right to undertake, conduct and control through counsel of its own
choosing (which counsel shall be acceptable to the Indemnitee acting
reasonably), the conduct and settlement of the Indemnified Liabilities, and the
Indemnitee shall cooperate with Borrower and Guarantor in connection therewith;
provided that Borrower and Guarantor shall permit the Indemnitee to participate
in such conduct and settlement through counsel chosen by the Indemnitee, but
reasonable fees and expenses of such counsel shall be borne by the Indemnitee.
Notwithstanding the foregoing, the Indemnitee shall have the right to employ its
own counsel, and the reasonable fees and expenses of such counsel shall be at
Borrower’s and Guarantor’s cost and expense if the Indemnitee reasonably
determines that (i) Borrower’s and Guarantor’s counsel is not adequately
defending any claim or proceeding in a manner reasonably acceptable to
Indemnitee or (ii) the interests of Borrower and Guarantor and the Indemnitee
have become adverse in any such claim or course of action; provided, however
Borrower, in such event, shall only be liable for the reasonable legal expenses
of one counsel for all such Indemnitees. None of Borrower, Guarantor or any
Indemnitee shall be liable for any settlement of any Indemnified Liability
effected without its prior written consent, such consent not to be unreasonably
withheld. No Indemnitee shall be liable for any indirect or consequential
damages in connection with its activities related to the Loan, the
Securitization or the Syndication.

 

9.7.5 Limitation of Liability.

 

No claim may be made by Borrower, or any other Person against Agent, or any
Co-Lenders or the Affiliates, directors, officers, employees, attorneys or agent
of any of such Persons for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement or any act, omission or event occurring in connection therewith; and
Borrower hereby waives, releases and agrees not to sue upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.

 

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9.7.6 No Joint Venture.

 

Notwithstanding anything to the contrary herein contained, neither Agent, nor
any Co-Lender by entering into this Agreement or by taking any action pursuant
hereto, will be deemed a partner or joint venturer with Borrower.

 

9.7.7 Voting Rights of Co-Lenders.

 

Borrower acknowledges that the Co-Lending Agreement may contain provisions which
require that amendments, waivers, extensions, modifications, and other decisions
with respect to the Loan Documents shall require the approval of all or a number
of the Co-Lenders holding in the aggregate a specified percentage of the Loan or
any one or more Co-Lenders that are specifically affected by such amendment,
waiver, extension, modification or other decision.

 

Section 9.8 Reallocation of Loan Amounts.

 

In the event Mortgage Lender exercises its right to reallocate the amount of the
Loan and the Mortgage Loan pursuant to Section 9.8 of the Mortgage Loan
Agreement, Borrower agrees to cooperate to facilitate such reallocation provided
that (i) the aggregate principal amount of the Loan and the Mortgage Loan
immediately following such reallocation shall equal the outstanding principal
balance of the Loan and the Mortgage Loan and immediately prior to such
reallocation, (ii) the aggregate Scheduled Amortization Payments immediately
following such reallocation shall not exceed the aggregate Scheduled
Amortization Payments immediately prior to the reallocation, and (iii) the
weighted average interest rate of the Note and the Mortgage Note immediately
following such reallocation shall equal the initial weighted average interest
rate which was applicable to the Note and the Mortgage Note immediately prior to
such reallocation and (iii) Lender has agreed to the allocation as required by
the Mortgage Lender. Borrower shall cooperate with all reasonable requests of
Lender in order to reallocate the amount of the Loan and the Mortgage Loan and
shall execute and deliver such documents as shall reasonably be required by
Lender in connection therewith, all in form and substance reasonably
satisfactory to Lender. Lender shall pay all costs and expenses in connection
such reallocation pursuant to this Section 9.8, except that Borrower shall pay
the costs and expenses of its legal counsel and the costs of any additional
title insurance and UCC insurance premiums and any additional mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable Legal Requirements currently in effect in connection
with the execution, delivery, recordation, filing, registration, perfection or
enforcement of any amendments of the Loan Documents or the Mezzanine Loan
Documents in connection with the reallocation. It shall be an Event of Default
under this Agreement, the Note, the Pledge Agreement and the other Loan
Documents if Borrower fails to comply with any of the terms, covenants or
conditions of this Section 9.8 after expiration of ten (10) Business Days after
notice thereof.

 

Section 9.9 Certain Additional Rights to Lender.

 

Subject to the terms hereof, Lender shall have the right:

 

(a) to routinely consult with Borrower’s management regarding the significant
business activities and business and financial developments of Borrower;
provided, however, that such consultations shall not include discussions of
environmental compliance programs or disposal of hazardous substances. Routine
consultation

 

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meetings may occur no more frequently than quarterly, with Lender having the
right to call special meetings at any reasonable time (but not more frequently
than once per quarter) and upon reasonable advance notice. Borrower shall have
no obligation to adhere to any advice proposed by Lender, except as the same may
be otherwise specifically required elsewhere in the Loan Documents;

 

(b) in accordance with but subject to the terms of this Agreement, to examine
the books and records of Borrower at any reasonable times upon reasonable
notice;

 

(c) in accordance with but subject to the terms of this Agreement, to receive
financial reports and other statements as provided in Section 5.1.10 hereof;

 

(d) in accordance with but subject to the terms of this Agreement, but without
restricting any other rights of Lender under this Agreement (including any
similar right), to approve any acquisition by Borrower of any Substitute
Property; and

 

(e) in accordance with but subject to the terms of this Agreement, but without
restricting any other right of Lender under this Agreement, to exercise certain
approval rights with respect to the proposed annual operating budgets as
provided in Section 5.1.10(d) hereof.

 

The rights described above may be exercised by any entity which owns and
controls, directly or indirectly, substantially all of the interests in Lender.
Nothing contained in this Section 9.9 is intended (i) to confer upon Lender any
rights or privileges greater than those inuring to Lender under the other
provisions of this Agreement, (ii) to impose upon Borrower any duties,
obligations or liabilities greater than or in addition to those owed by Borrower
under the other provisions of this Agreement, or (iii) to constitute Lender a
partner or member of Borrower or a third-party beneficiary of Borrower’s
Organizational Documents.

 

Section 9.10 Mortgage Loan Defaults.

 

(a) Without limiting the generality of the other provisions of this Agreement,
and without waiving or releasing Borrower from any of its obligations hereunder,
if there shall occur any Mortgage Loan Event of Default, Borrower hereby
expressly agrees that Lender shall have the immediate right, without notice to
or demand on Borrower or Mortgage Borrower, but shall be under no obligation, to
the extent necessary to remediate such Mortgage Loan Event of Default: (i) to
pay all or any part of the Mortgage Loan, and any other sums, that are then due
and payable and to perform any act or take any action on behalf of Mortgage
Borrower, as may be appropriate, to cause all of the terms, covenants and
conditions of the Mortgage Loan Documents on the part of Mortgage Borrower to be
performed or observed thereunder to be promptly performed or observed; and
(ii) to pay any other amounts and take any other action as Lender, in its sole
and absolute discretion, shall deem advisable to protect or preserve the rights
and interests of Lender in the Loan and/or the Collateral. Lender shall have no
obligation to complete any cure or attempted cure undertaken or commenced by
Lender. All sums so paid and the costs and expenses incurred by Lender in
exercising rights under this Section (including, without limitation, reasonable
attorneys’ and other professional fees), with

 

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interest at the Default Rate, for the period from the date of demand by Lender
to Borrower for such payments to the date of payment to Lender, shall constitute
a portion of the Debt, shall be secured by the Pledge Agreement and shall be due
and payable to Lender within two Business Days following demand therefor.

 

(b) Subject to the rights of tenants and the Operating Tenant, Borrower hereby
grants, and shall cause Mortgage Borrower to grant, Lender and any Person
designated by Lender the right to enter upon the Property at any time for the
purpose of carrying out the rights granted to Lender under this Section 9.10.
Borrower shall not, and shall not cause or permit Mortgage Borrower or any other
Person to impede, interfere with, hinder or delay, any effort or action on the
part of Lender to cure any default or asserted default under the Mortgage Loan,
or to otherwise protect or preserve Lender’s interests in the Loan and the
Collateral, including the Property in accordance with the provisions of this
Agreement and the other Loan Documents.

 

(c) Borrower hereby indemnifies Lender from and against all out-of-pocket
liabilities, obligations, losses, damages, penalties, assessments, actions, or
causes of action, judgments, suits, claims, demands, costs, expenses (including,
without limitation, reasonable attorneys’ and other professional fees, whether
or not suit is brought, and settlement costs), and disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against
Lender as a result of any actions taken by Lender to remediate any Mortgage Loan
Event of Default. Lender shall have no obligation to Borrower, Mortgage Borrower
or any other party to make any such payment or performance.

 

(d) If Lender shall receive a copy of any notice of any Mortgage Loan Event of
Default sent by Mortgage Lender to Mortgage Borrower, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender, in good faith, in reliance thereon. As a material inducement to
Lender’s making the Loan, Borrower hereby absolutely and unconditionally release
and waive all claims against Lender arising out of Lender’s exercise of its
rights and remedies provided in this Section other than claims arising out of
the fraud, illegal acts, gross negligence or willful misconduct of Lender.

 

(e) In the event that Lender makes any payment in respect of the Mortgage Loan,
Lender shall be subrogated to all of the rights of Mortgage Lender under the
Mortgage Loan Documents against the Property and Mortgage Borrower in addition
to all other rights Lender may have under the Loan Documents or applicable law.

 

Section 9.11 Intercreditor Agreement.

 

(a) Lender and Mortgage Lender are parties to a certain intercreditor agreement
dated as of the date hereof (the “Intercreditor Agreement”) memorializing their
relative rights and obligations with respect to the Mortgage Loan, the Loan,
Mortgage Borrower, Borrower and the Properties. Borrower and Mortgage Borrower
hereby acknowledge and agree that (i) such Intercreditor Agreement is intended
solely for the benefit of Lender and Mortgage Lender and (ii) Borrower and
Mortgagor are not intended third-party beneficiaries of any of the provisions

 

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therein and shall not be entitled to rely on any of the provisions contained
therein. Lender and Mortgage Lender shall have no obligation to disclose to
Borrower the contents of the Intercreditor Agreement. Borrower’s obligations
hereunder are independent of such Intercreditor Agreement and remain unmodified
by the terms and provisions thereof.

 

(b) In the event the Lender is required pursuant to the terms of the
Intercreditor Agreement to pay over any payment or distribution of assets,
whether in cash, property or securities which is applied to the Debt, including,
without limitation, any proceeds of the Properties previously received by Lender
on account of the Loan to the Mortgage Lender, then Borrower agrees to indemnify
Lender for any amounts so paid, and any amount so paid shall continue to be
owing pursuant to the Loan Documents as part of the Debt notwithstanding the
prior receipt of such payment by Lender.

 

Section 9.12 Discussions with Mortgage Lender.

 

In connection with the exercise of its rights set forth in the Loan Documents,
Lender shall have the right at any time to discuss the Properties, the Mortgage
Loan, the Loan or any other matter directly with Mortgage Lender or Mortgage
Lender’s consultants, agents or representatives without notice to or permission
from Borrower or any other Loan Party, nor shall Lender have any obligation to
disclose such discussions or the contents thereof with Borrower or any other
Loan Party.

 

Section 9.13 Independent Approval Rights.

 

If any action, proposed action or other decision is consented to or approved by
Mortgage Lender, such consent or approval shall not be binding or controlling on
Lender. Borrower hereby acknowledges and agrees that (i) the risks of Mortgage
Lender in making the Mortgage Loan are different from the risks of Lender in
making the Loan, (ii) in determining whether to grant, deny, withhold or
condition any requested consent or approval Mortgage Lender and Lender may
reasonably reach different conclusions, and (iii) Lender has an absolute
independent right to grant, deny, withhold or condition any requested consent or
approval based on its own point of view. Further, the denial by Lender of a
requested consent or approval shall not create any liability or other obligation
of Lender if the denial of such consent or approval results directly or
indirectly in a default under the Mortgage Loan, and Borrower hereby waives any
claim of liability against Lender arising from any such denial.

 

X. MISCELLANEOUS

 

Section 10.1 Survival.

 

This Agreement and all covenants, agreements, representations and warranties
made herein and in the certificates delivered pursuant hereto shall survive the
making by Lender of the Loan and the execution and delivery to Lender of the
Note, and shall continue in full force and effect so long as all or any of the
Debt is outstanding and unpaid unless a longer period is expressly set forth
herein or in the other Loan Documents. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.

 

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Section 10.2 Lender’s Discretion.

 

Whenever pursuant to this Agreement, Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.

 

Section 10.3 Governing Law.

 

(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE
LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED,
APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).

 

(b) WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR UNDER THIS
AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS, BORROWER (A) IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
YORK, NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT, THE NOTE OR
THE OTHER LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM
BRINGING AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.

 

Section 10.4 Modification, Waiver in Writing.

 

No modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.

 

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Section 10.5 Delay Not a Waiver.

 

Neither any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege hereunder, or under the Note or under any
other Loan Document, or any other instrument given as security therefor, shall
operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.

 

Section 10.6 Notices.

 

All notices or other written communications hereunder shall be deemed to have
been properly given (i) upon delivery, if delivered in person or by facsimile
transmission with receipt acknowledged by the recipient thereof and confirmed by
telephone by sender, (ii) one (1) Business Day after having been deposited for
overnight delivery with any reputable overnight courier service, or (iii) three
(3) Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

 

If to Borrower:   MeriStar Mezzanine Borrower SPE, LLC     c/o MeriStar
Hospitality Corporation     4501 N. Fairfax Drive, Suite 500     Arlington,
Virginia 22203     Attention: Jerome J. Kraisinger, Esq. (General Counsel)    
Facsimile No.: (703) 812-7235 With a copy to:   Latham & Watkins LLP     885
Third Avenue, Suite 1000     New York, New York 10022-4834     Attention: James
I. Hisiger     Facsimile No.: (212) 751-4864 If to Lender / Agent:   Lehman
Brothers Bank, FSB    

c/o Lehman Brothers Holdings

399 Park Avenue

    New York, New York 10022    

Attention: Jeffrey Peltier

Facsimile No.: (212) 758-3128

With a copy to:   Lehman Brothers Bank, FSB    

c/o Lehman Brothers Holdings

399 Park Avenue

    New York, New York 10022     Attention: Gary Taylor     Facsimile No.: (646)
758-2256

 

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     and      Thacher Proffitt & Wood LLP     

Two World Financial Center

New York, New York 10281

     Attention: Mitchell G. Williams, Esq.      Facsimile No.: (212) 912-7751
With a copy of all notices,    _______________________________
certificates, and other    _______________________________ information under
Section    _______________________________ 5.1.10 to:   
_______________________________      Attention:_______________________________  
   Facsimile No.:_______________________________

 

or addressed as such party may from time to time designate by written notice to
the other parties.

 

Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.

 

Section 10.7 Trial by Jury.

 

BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS,
OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY BORROWER.

 

Section 10.8 Headings.

 

The Article and/or Section headings and the Table of Contents in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

 

Section 10.9 Severability.

 

Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under Applicable Law, but if any provision
of this Agreement shall

 

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be prohibited by or invalid under Applicable Law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

 

Section 10.10 Preferences.

 

Lender shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments by Borrower to any portion of the obligations of
Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
State or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the obligations hereunder or part thereof intended
to be satisfied shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by Lender.

 

Section 10.11 Waiver of Notice.

 

Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.

 

Section 10.12 Remedies of Borrower.

 

In the event that a claim or adjudication is made that Lender or its agents have
acted unreasonably or unreasonably delayed acting in any case where by law or
under this Agreement or the other Loan Documents, Lender or such agent, as the
case may be, has an obligation to act reasonably or promptly, Borrower agrees
that neither Lender nor its agents shall be liable for any monetary damages, and
Borrower’s sole remedies shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. The parties hereto agree that any
action or proceeding to determine whether Lender has acted reasonably shall be
determined by an action seeking declaratory judgment.

 

Section 10.13 Expenses; Indemnity.

 

(a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender within five (5) days of receipt of written notice from Lender
for all reasonable costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with

 

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respect to the Properties); (ii) Borrower’s ongoing performance of and
compliance with Borrower’s respective agreements and covenants contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date, including, without limitation, confirming
compliance with environmental and insurance requirements; (iii) Lender’s ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date; (iv) the negotiation, preparation, execution,
delivery and administration of any consents, amendments, waivers or other
modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Lender; (v) securing Borrower’s compliance
with any requests made pursuant to the provisions of this Agreement; (vi) the
filing and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred in creating and perfecting the Liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Collateral, or any other security given for the Loan; and (viii) enforcing
any obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Collateral or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a “work-out” or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender. Any cost and expenses due and payable to Lender shall be payable to
Lender’s designee.

 

(b) Borrower shall indemnify, defend and hold harmless Lender from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of
(i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Additional Indemnified Liabilities”); provided, however,
that Borrower shall not have any obligation to Lender hereunder to the extent
that such Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under Applicable Law
to the payment and satisfaction of all Additional Indemnified Liabilities
incurred by Lender.

 

(c) Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless Lender and the Indemnified Parties from and against
any and

 

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all losses (including, without limitation, reasonable attorneys’ fees and costs
incurred in the investigation, defense, and settlement of losses incurred in
correcting any prohibited transaction or in the sale of a prohibited loan, and
in obtaining any individual prohibited transaction exemption under ERISA, the
Code, any State statute or other similar law that may be required, in Lender’s
sole discretion) that Lender may incur, directly or indirectly, as a result of a
default under Sections 4.1.9 or 5.2.8 hereof.

 

(d) Borrower covenants and agrees to pay for or, if Borrower fails to pay, to
reimburse Lender for any fees and expenses incurred by any Rating Agency in
connection with any consent, approval, waiver or confirmation obtained from such
Rating Agency pursuant to the terms and conditions of this Agreement or any
other Loan Document and Lender shall be entitled to require payment of such fees
and expenses as a condition precedent to the obtaining of any such consent,
approval, waiver or confirmation.

 

Section 10.14 Schedules and Exhibits Incorporated.

 

The Schedules and Exhibits annexed hereto are hereby incorporated herein as a
part of this Agreement with the same effect as if set forth in the body hereof.

 

Section 10.15 Offsets, Counterclaims and Defenses.

 

Any assignee of Lender’s interest in and to this Agreement, the Note and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.

 

Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries.

 

(a) Borrower and Lender intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lender. Nothing
herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender or
to grant Lender any interest in the Collateral other than that of lender.

 

(b) This Agreement and the other Loan Documents are solely for the benefit of
Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
any right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations
of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

 

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Section 10.17 Publicity.

 

All news releases, publicity or advertising by Borrower or their Affiliates
through any media intended to reach the general public which refers to the Loan
Documents or the financing evidenced by the Loan Documents, to Lender, Lehman,
or any of their Affiliates shall be subject to the prior written approval of
Lender, which shall not be unreasonably withheld. All news releases, publicity
or advertising by Lender or its Affiliates (other than in connection with a
Securitization or a Syndication) through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Borrower, or any of their Affiliates shall be subject to the prior
written approval of Borrower or Guarantor, which shall not be unreasonably
withheld. Notwithstanding the foregoing, disclosure required by any federal or
State securities laws, rules or regulations, as determined by Borrower’s or
Lender’s counsel, respectively, shall not be subject to the prior written
approval of Lender or Borrower, as applicable.

 

Section 10.18 Waiver of Marshalling of Assets.

 

(a) Intentionally Deleted.

 

(b) To the fullest extent permitted by Applicable Law, Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower’s partners and others with interests in Borrower, and of the
Collateral, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Pledge Agreement, and agrees not to assert any
right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Collateral for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Properties in preference to every other claimant whatsoever. In addition,
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of the Pledge Agreement, any equitable right otherwise available to
Borrower which would require the separate sale of the Collateral or require
Lender to exhaust its remedies against any portion of the Collateral before
proceeding against any other portion of the Collateral; and further in the event
of such foreclosure Borrower does hereby expressly consents to and authorizes,
at the option of Lender, the foreclosure and sale either separately or together
of any combination of the Collateral.

 

Section 10.19 Waiver of Counterclaim.

 

Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.

 

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Section 10.20 Conflict; Construction of Documents; Reliance.

 

In the event of any conflict between the provisions of this Agreement and any of
the other Loan Documents, the provisions of this Agreement shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender’s exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.

 

Section 10.21 Brokers and Financial Advisors.

 

Borrower hereby represents that it has dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Borrower hereby agrees to
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 10.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.

 

Section 10.22 Prior Agreements.

 

This Agreement and the other Loan Documents contain the entire agreement of the
parties hereto and thereto in respect of the transactions contemplated hereby
and thereby, and all prior agreements among or between such parties, whether
oral or written, between Borrower and/or its Affiliates and Lender are
superseded by the terms of this Agreement and the other Loan Documents.

 

[NO FURTHER TEXT ON THIS PAGE]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.

 

BORROWER:

MERISTAR MEZZANINE BORROWER SPE, LLC, a Delaware limited liability company By:  

/s/ Kevin J. Welch

   

Name: Kevin J. Welch

   

Title:    Authorized Signatory

LENDER:

LEHMAN BROTHERS BANK FSB, a federal stock savings bank, individually and as
Agent for one or more Co-Lenders By:  

/s/ Charlene Thomas

   

Name: Charlene Thomas

   

Title:    Vice President

WITH RESPECT TO SECTIONS 9.1, 9.2, 9.7.3, AND 9.7.4 ONLY: GUARANTOR: MERISTAR
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership By:  
MeriStar Hospitality Corporation, a Maryland corporation, its general partner  
   

By:

  /s/ Donald D. Olinger     Name: Donald D. Olinger     Title:  Authorized
Signatory