exv10w35w1



 





Exhibit 10.35.1




 





LOAN AGREEMENT




Dated as of November 10, 2006




Between




FELCOR/JPM HOTELS, L.L.C. and DJONT/JPM LEASING, L.L.C.,

individually and collectively, as Borrower




and




BANK OF AMERICA, N.A.,

as Lender




 






 









 








TABLE OF CONTENTS




	 	 	 	 	 
	I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
	 	 	9	 
	Section 1.1 Definitions
	 	 	9	 
	Section 1.2 Principles of Construction
	 	 	34	 
	II. GENERAL TERMS
	 	 	35	 
	Section 2.1 Loan Commitment; Disbursement to Borrower
	 	 	35	 
	2.1.1 Agreement to Lend and Borrow
	 	 	35	 
	2.1.2 Single Disbursement to Borrower
	 	 	35	 
	2.1.3 The Note, Security Instruments and Loan Documents
	 	 	35	 
	2.1.4 Use of Proceeds
	 	 	35	 
	Section 2.2 Interest; Loan Payments; Late Payment Charge
	 	 	35	 
	2.2.1 Payments
	 	 	35	 
	2.2.2 Interest Calculation
	 	 	36	 
	2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs
	 	 	36	 
	2.2.4 Payment on Maturity Date
	 	 	38	 
	2.2.5 Payments after Default
	 	 	38	 
	2.2.6 Late Payment Charge
	 	 	39	 
	2.2.7 Usury Savings
	 	 	39	 
	2.2.8 Foreign Taxes
	 	 	39	 
	Section 2.3 Prepayments
	 	 	40	 
	2.3.1 Voluntary Prepayments
	 	 	40	 
	2.3.2 Mandatory Prepayments
	 	 	41	 
	2.3.3 Prepayments After Default
	 	 	42	 
	2.3.4 Making of Payments
	 	 	42	 
	2.3.5 Application of Prepayments
	 	 	42	 
	Section 2.4 Interest Rate Cap Agreement
	 	 	43	 
	Section 2.5 Release of Property
	 	 	44	 
	2.5.1 Release of Individual Property
	 	 	44	 
	2.5.2 Release on Payment in Full
	 	 	46	 
	Section 2.6 Substitution of Properties
	 	 	46	 
	Section 2.7 Releases of Certain Parcels
	 	 	53	 
	III. CASH MANAGEMENT
	 	 	53	 






 









 






	 	 	 	 	 
	Section 3.1 Establishment of Accounts
	 	 	53	 
	Section 3.2 Deposits into Lockbox Account
	 	 	54	 
	Section 3.3 Account Name
	 	 	55	 
	Section 3.4 Eligible Accounts
	 	 	55	 
	Section 3.5 Permitted Investments
	 	 	55	 
	Section 3.6 Intentionally Omitted
	 	 	56	 
	Section 3.7 Transfer To and Disbursements from the Lockbox Account
	 	 	56	 
	Section 3.8 Withdrawals From the Tax Account and the Insurance Premium Account
	 	 	57	 
	Section 3.9 Withdrawals from the Replacement Reserve Account
	 	 	57	 
	Section 3.10 Withdrawals from the Required Repair Account
	 	 	57	 
	Section 3.11 Withdrawals from the Debt Service Account
	 	 	57	 
	Section 3.12 Intentionally Omitted
	 	 	57	 
	Section 3.13 Intentionally Omitted
	 	 	57	 
	Section 3.14 Withdrawals from the Ground Rent Account
	 	 	57	 
	Section 3.15 Disbursement Upon Lockbox Trigger Event Cure
	 	 	57	 
	Section 3.16 Lockbox Trigger Event Cure
	 	 	57	 
	Section 3.17 Sole Dominion and Control
	 	 	58	 
	Section 3.18 Security Interest
	 	 	58	 
	Section 3.19 Rights on Default
	 	 	58	 
	Section 3.20 Financing Statement; Further Assurances
	 	 	58	 
	Section 3.21 Borrower’s Obligation Not Affected
	 	 	59	 
	Section 3.22 Payments Received Under this Agreement
	 	 	59	 
	IV. REPRESENTATIONS AND WARRANTIES
	 	 	59	 
	Section 4.1 Borrower Representations
	 	 	59	 
	4.1.1 Organization
	 	 	59	 
	4.1.2 Proceedings
	 	 	60	 
	4.1.3 No Conflicts
	 	 	60	 
	4.1.4 Litigation
	 	 	60	 
	4.1.5 Agreements
	 	 	60	 
	4.1.6 Solvency
	 	 	61	 
	4.1.7 Full and Accurate Disclosure
	 	 	61	 
	4.1.8 No Plan Assets
	 	 	61	 






3









 






	4.1.9 Compliance
	 	 	62	 
	4.1.10 Financial Information
	 	 	62	 
	4.1.11 Condemnation
	 	 	62	 
	4.1.12 Federal Reserve Regulations
	 	 	62	 
	4.1.13 Utilities and Public Access
	 	 	63	 
	4.1.14 Not a Foreign Person
	 	 	63	 
	4.1.15 Separate Lots
	 	 	63	 
	4.1.16 Assessments
	 	 	63	 
	4.1.17 Enforceability
	 	 	63	 
	4.1.18 No Prior Assignment
	 	 	63	 
	4.1.19 Insurance
	 	 	63	 
	4.1.20 Use of Property
	 	 	64	 
	4.1.21 Certificate of Occupancy; Licenses
	 	 	64	 
	4.1.22 Flood Zone
	 	 	64	 
	4.1.23 Physical Condition
	 	 	64	 
	4.1.24 Boundaries
	 	 	64	 
	4.1.25 Leases
	 	 	65	 
	4.1.26 Survey
	 	 	65	 
	4.1.27 Intentionally Omitted
	 	 	65	 
	4.1.28 Filing and Recording Taxes
	 	 	65	 
	4.1.29 Franchise Agreement; PIPs
	 	 	65	 
	4.1.30 Management Agreement/Operating Lease
	 	 	66	 
	4.1.31 Illegal Activity
	 	 	66	 
	4.1.32 No Change in Facts or Circumstances; Disclosure
	 	 	66	 
	4.1.33 Investment Company Act
	 	 	66	 
	4.1.34 Principal Place of Business; State of Organization
	 	 	67	 
	4.1.35 Single Purpose Entity
	 	 	67	 
	4.1.36 Business Purposes
	 	 	71	 
	4.1.37 Taxes
	 	 	71	 
	4.1.38 Intentionally Omitted
	 	 	72	 
	4.1.39 Environmental Representations and Warranties
	 	 	72	 
	4.1.40 Taxpayer Identification Number
	 	 	72	 
	4.1.41 Embargoed Person and Patriot Act
	 	 	72	 






4









 






	 	 	 	 	 
	4.1.42 Ground Lease Representations
	 	 	73	 
	4.1.43 Deposit Accounts
	 	 	75	 
	Section 4.2 Survival of Representations
	 	 	75	 
	V. BORROWER COVENANTS
	 	 	75	 
	Section 5.1 Affirmative Covenants
	 	 	75	 
	5.1.1 Existence; Compliance with Legal Requirements
	 	 	76	 
	5.1.2 Taxes and Other Charges
	 	 	77	 
	5.1.3 Litigation
	 	 	77	 
	5.1.4 Access to Properties
	 	 	77	 
	5.1.5 Notice of Default
	 	 	77	 
	5.1.6 Cooperate in Legal Proceedings
	 	 	78	 
	5.1.7 Award and Insurance Benefits
	 	 	78	 
	5.1.8 Further Assurances
	 	 	78	 
	5.1.9 Mortgage and Intangible Taxes
	 	 	78	 
	5.1.10 Financial Reporting
	 	 	79	 
	5.1.11 Business and Operations
	 	 	81	 
	5.1.12 Costs of Enforcement
	 	 	82	 
	5.1.13 Estoppel Statement
	 	 	82	 
	5.1.14 Loan Proceeds
	 	 	83	 
	5.1.15 Performance by Borrower
	 	 	83	 
	5.1.16 Confirmation of Representations
	 	 	83	 
	5.1.17 Leasing Matters
	 	 	83	 
	5.1.18 Management Agreement
	 	 	85	 
	5.1.19 Environmental Covenants
	 	 	87	 
	5.1.20 Alterations
	 	 	88	 
	5.1.21 Franchise Agreement
	 	 	89	 
	5.1.22 Operating Lease
	 	 	90	 
	5.1.23 OFAC
	 	 	91	 
	5.1.24 The Ground Lease
	 	 	91	 
	5.1.25 O&M Program
	 	 	93	 
	5.1.26 Condominium Provisions
	 	 	94	 
	Section 5.2 Negative Covenants
	 	 	94	 
	5.2.1 Liens
	 	 	95	 






5









 






	 	 	 	 	 
	5.2.2 Dissolution
	 	 	95	 
	5.2.3 Change In Business
	 	 	95	 
	5.2.4 Debt Cancellation
	 	 	95	 
	5.2.5 Zoning
	 	 	95	 
	5.2.6 No Joint Assessment
	 	 	95	 
	5.2.7 Name, Identity, Structure, or Principal Place of Business
	 	 	96	 
	5.2.8 ERISA
	 	 	96	 
	5.2.9 Affiliate Transactions
	 	 	97	 
	5.2.10 Transfers
	 	 	97	 
	VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
	 	 	99	 
	Section 6.1 Insurance
	 	 	99	 
	Section 6.2 Casualty
	 	 	104	 
	Section 6.3 Condemnation
	 	 	104	 
	Section 6.4 Restoration
	 	 	105	 
	VII. RESERVE FUNDS
	 	 	109	 
	Section 7.1 Required Repair Funds
	 	 	109	 
	7.1.1 Deposits
	 	 	109	 
	7.1.2 Release of Required Repair Funds
	 	 	110	 
	Section 7.2 Tax and Insurance Escrow Fund
	 	 	110	 
	Section 7.3 Replacements and Replacement Reserve
	 	 	111	 
	7.3.1 Replacement Reserve Fund
	 	 	111	 
	7.3.2 Disbursements from Replacement Reserve Account
	 	 	111	 
	7.3.3 Performance of Capital Expenditures
	 	 	112	 
	7.3.4 Failure to Make Capital Expenditures
	 	 	114	 
	7.3.5 Balance in the Replacement Reserve Account
	 	 	114	 
	Section 7.4 Ground Lease Escrow Fund
	 	 	115	 
	Section 7.5 Intentionally Omitted
	 	 	115	 
	Section 7.6 Reserve Funds, Generally
	 	 	115	 
	VIII. DEFAULTS
	 	 	116	 
	Section 8.1 Event of Default
	 	 	116	 
	Section 8.2 Remedies
	 	 	122	 
	Section 8.3 Remedies Cumulative; Waivers
	 	 	123	 
	IX. SPECIAL PROVISIONS
	 	 	123	 






6









 






	 	 	 	 	 
	Section 9.1 Sale of Notes and Securitization
	 	 	123	 
	Section 9.2 Securitization Indemnification
	 	 	125	 
	Section 9.3 Servicer
	 	 	127	 
	Section 9.4 Exculpation
	 	 	128	 
	Section 9.5 Contributions and Waivers
	 	 	130	 
	Section 9.6 Reallocation of Loan Amounts
	 	 	133	 
	X. MISCELLANEOUS
	 	 	134	 
	Section 10.1 Survival
	 	 	134	 
	Section 10.2 Lender’s Discretion
	 	 	134	 
	Section 10.3 Governing Law
	 	 	134	 
	Section 10.4 Modification, Waiver in Writing
	 	 	135	 
	Section 10.5 Delay Not a Waiver
	 	 	135	 
	Section 10.6 Notices
	 	 	136	 
	Section 10.7 Trial by Jury
	 	 	137	 
	Section 10.8 Headings
	 	 	137	 
	Section 10.9 Severability
	 	 	137	 
	Section 10.10 Preferences
	 	 	137	 
	Section 10.11 Waiver of Notice
	 	 	137	 
	Section 10.12 Remedies of Borrower
	 	 	138	 
	Section 10.13 Expenses; Indemnity
	 	 	138	 
	Section 10.14 Schedules and Exhibits Incorporated
	 	 	139	 
	Section 10.15 Offsets, Counterclaims and Defenses
	 	 	139	 
	Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries
	 	 	140	 
	Section 10.17 Publicity
	 	 	140	 
	Section 10.18 Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets
	 	 	140	 
	Section 10.19 Waiver of Counterclaim
	 	 	141	 
	Section 10.20 Conflict; Construction of Documents; Reliance
	 	 	141	 
	Section 10.21 Brokers and Financial Advisors
	 	 	142	 
	Section 10.22 Prior Agreements
	 	 	142	 
	Section 10.23 Counterparts
	 	 	142	 
	Section 10.24 Liability
	 	 	142	 
	 
	 	 	 	 






7









 






LIST OF SCHEDULES AND EXHIBITS




	 	 	 
	Schedule I:

	 	Allocated Loan Amounts
	Schedule II:

	 	FF&E Expenditures
	Schedule III:

	 	Required Repairs
	Schedule IV:

	 	Organizational Chart of Borrower
	Schedule V:

	 	List of Managers
	Schedule VI:

	 	Monthly Pegged Amounts
	Schedule VII:

	 	Franchise Agreement/Franchisor
	Schedule VIII:

	 	Operating Lease
	Schedule IX:

	 	Property Manager
	Schedule X:

	 	Property Account/Concentration Account Bank
	Schedule XI:

	 	Environmental Reports
	Schedule XII:

	 	Ground Leases
	Schedule XIII:

	 	Reserved
	Schedule XIV:

	 	O&M Program Properties
	Schedule XV:

	 	Form of Operating Statement
	Schedule XVI:

	 	Disclosure Schedule
	Schedule XVII:

	 	Information Schedule of Capital Expenditures
	 
	 	 
	Exhibit A:

	 	Property Account Agreement
	Exhibit B:

	 	Tenant Notice Letter
	Exhibit C:

	 	Assignment of Interest Rate Cap Agreement
	Exhibit D:

	 	Credit Card Company Notice Letter
	Exhibit E:

	 	Condemnation Proceedings
	Exhibit F:

	 	San Antonio Release Parcel







8










 





LOAN AGREEMENT




     THIS LOAN AGREEMENT, dated as of November 10, 2006 (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Agreement”), between BANK OF AMERICA,
N.A., a national banking association, having an address at Hearst Tower, 214 North Tryon Street,
Charlotte, North Carolina 28255 (“Lender”) and FELCOR/JPM HOTELS, L.L.C., a Delaware limited
liability company, and DJONT/JPM LEASING, L.L.C. a Delaware limited liability company, each having
its principal place of business at c/o FelCor Lodging Trust Incorporated, 545 E. John Carpenter
Freeway, Suite 1300, Irving, Texas 75062 (individually and collectively, as the context may require
“Borrower”).



WITNESSETH:




     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 “A+” (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) of any or all of the
foregoing.



     “Accounts” shall mean, collectively, the Property Account, the Concentration Account, the Tax
Account, the Insurance Premium Account, the Required Repair Account, the
Replacement Reserve Account, the Debt Service Account, the Ground Rent Account, and the
Lockbox Account.



 









 





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



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



     “Acquired Property Statements” shall have the meaning set forth in Section 5.1.10(h)(i)
hereof.



     “Act” shall have the meaning set forth in Section 4.1.35 hereof.



     “Adjusted Interest Rate” shall mean an interest rate per annum equal to the weighted average
of (i) with respect to Note A, the Prime Rate minus one half of one percent (0.5%) per annum and
(ii) with respect to Note B, the Prime Rate, minus one half of one percent (0.5%) 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.



     “Affiliated Loans” shall have the meaning set forth in Section 5.1.10(m) hereof.



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



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



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



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



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



     “Applicable Interest Rate” shall mean (A) for the Initial Interest Period, (i) with respect to
Note A, an interest rate per annum equal to 6.25% and (ii) with respect to Note B, an interest rate
per annum equal to 6.25%; and (B) for each successive Interest Period after the Initial 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 Interest Rate, if the Loan begins bearing
interest at the Adjusted Interest Rate in accordance with the provisions of Section 2.2.3 hereof.



10









 





     “Appraisal” shall mean an appraisal prepared in accordance with the requirements of FIRREA,
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 who is otherwise satisfactory to Lender.



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



     “Assignment of Interest Rate Cap” shall mean that certain Collateral Assignment of Interest
Rate Cap Agreement made by Borrower to Lender dated as of the date hereof required by this
Agreement as security for the Loan, consented to by the Counterparty, 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 Borrower, as
assignor, to MERS as nominee of Lender, as assignee, assigning to MERS as nominee of Lender all of
Borrower’s interest in and to the Leases and Rents of such Individual Property as security for the
Loan, 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 Conditional Assignment of Management Agreement dated the date hereof among Lender, Borrower
and Manager, as the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.



     “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, other than in connection
with the San Antonio Condemnation.



     “Bank of America” shall have the meaning set forth in Section 3.2(b) hereof.



     “Bank of America Group” shall have the meaning set forth in Section 3.2(b) hereof.



     “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.



     “Borrower” shall have the meaning set forth in the introductory paragraph hereto, together
with its 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 (i) a Saturday or a Sunday or (ii) a day on which
federally insured depository institutions in the States of New York or North Carolina or the state
in which the offices of the Servicer and the trustee in the Securitization are located are



11









 







authorized or obligated by law, governmental decree or executive order to be closed, except
that when used with respect to the determination of LIBOR, “Business Day” shall be a day on which
commercial banks are open for international business (including dealings in U.S. Dollar deposits)
in London, England.



     “Business Party” shall have the meaning set forth in Section 4.1.35(z) hereof.



     “By-Laws” shall mean those certain “By-Laws” (as defined in the Declaration) providing for the
operation of the Condominium, as the same may be amended, supplemented, replaced or otherwise
modified from time to time.



     “Capital Expenditures” shall mean, for any period, the amount expended for items capitalized
under GAAP (including, but not limited to, expenditures for building improvements or major repairs,
leasing commissions and tenant improvements).



     “Capital Plan” shall mean collectively the Detail Project Reports dated July 18, 2006 prepared
by FelCor Lodging Trust Incorporated, setting forth the detailed budgeted capital plans for each of
the Properties and previously delivered to Lender in connection with the Loan.



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



     “Casualty” shall have the meaning set forth in Section 6.2 hereof.



     “Casualty Consultant” shall have the meaning set forth in Section 6.4(b)(iii) hereof.



     “Casualty Retainage” shall have the meaning set forth in Section 6.4(b)(iv) hereof.



     “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.



     “Collateral” shall mean the Properties, the Accounts, the Reserve Funds, the Personal
Property, the Rents, the Account Collateral, and all other real or personal property of Borrower or
any Guarantor that is at any time pledged, mortgaged or otherwise given as security to Lender for
the payment of the Debt under the Security Instruments, this Agreement or any other Loan Document.



     “Collateral Accounts” shall have the meaning set forth in Section 4.1.43 hereof.



     “Common Charges” shall mean all common charges and special assessments imposed pursuant to the
Condominium Documents.



     “Common Elements” shall have the meaning set forth in the Condominium Documents.



     “Concentration Account” shall have the meaning set forth in Section 3.1(a) hereof.



12









 





     “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.



     “Condemnation Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.



     “Condo Property” shall mean the Individual Property located at 3880 W. Northwest Highway,
Dallas, Texas and known as Dallas Love Field Embassy Suites.



     “Condominium” shall mean the condominium located at the Condo Property.



     “Condominium Act” shall mean the Texas Condominium Act, Texas Property Code, Chapter 81, as
from time to time amended or superseded.



     “Condominium Board” shall mean the “Board”, (as described in the Declaration) managing the
Condominium by virtue of the Condominium Act, and the Condominium Documents, on behalf of all the
owners of the units comprising the Condominium.



     “Condominium Documents” shall mean, collectively, the Declaration and the By laws.



     “Condominium Management Agreement” shall mean any management agreement entered into by the
Condominium Board with respect to the management of the Common Elements.



     “Condominium Manager” shall mean any manager of the Common Elements.



     “Condominium Proxy” shall mean an irrevocable proxy given by Borrower to Lender in connection
with the Loan.



     “Consumer Price Index” shall have the meaning set forth in Section 5.1.10(d) hereof.



     “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.



     “Conveyance to Non-Affiliate” shall have the meaning set forth in Section 2.3.1 hereof.



     “Counterparty” shall mean Bank of America, N.A. or any other Person which is the issuer of the
Interest Rate Cap Agreement.



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



13









 





     “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 Security Instruments 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
due under the Note for such period.



     “Debt Service Account” shall have the meaning set forth in Section 3.1 hereof.



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



     (a) the numerator is the Net Operating Income for the most recently available 12 full calendar
month period preceding the date of calculation as set forth in the financial statements required
hereunder, without deduction for (i) actual management fees incurred in connection with the
operation of the Properties, or (ii) amounts paid to the Reserve Funds, less (A) management fees
equal to the greater of (1) assumed management fees of four percent (4%) of Gross Income from
Operations or (2) the actual management fees incurred and (B) the greater of (1) assumed
Replacement Reserve Fund contributions equal to 4% of Gross Income from Operations (without regard
to whether such contributions are suspended pursuant to the terms of Section 7.3 hereof), (2)
actual Replacement Reserve Fund contributions pursuant to the terms hereof and (3) contributions
for Capital Expenditures required pursuant to the Management Agreements and the Franchise
Agreements; and



     (b) the denominator is all the aggregate interest payments that would be due and payable for
such 12 full calendar month period on the Loan, assuming a principal and interest constant equal to
8.73%.



     “Declaration” shall mean that certain Declaration of Condominium Regime for The Plaza at
Bachman Creek dated February 24, 1986, and recorded in the Deed of Records of Dallas County, Texas
in volume 86037, page 3409, as the same may hereafter from time to time be further modified,
amended, restated or supplemented pursuant to the terms hereof.



     “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.



     “Disclosure Schedule” shall have the meaning set forth in Section 4.1 hereof.



     “Dow Jones Market Service Page 3750” means the display designated as page 3750 on the Dow
Jones Market Service (formerly Telerate) Page 3750 (or such other page as may replace page 3750 on
that service or such other service as may be nominated by the British Bankers-



14









 







Association as the information vendor for the purposes of displaying British
Bankers-Association Interest Settlement Rates for U.S. dollar deposits).



     “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 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 4.1.41 hereof.



     “Environmental Indemnity” shall mean that certain Environmental Indemnity Agreement executed
by Borrower and Indemnitor 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, standards, policies and other government directives or requirements, as well as common
law, that, at any time, apply to Borrower and/or Indemnitor or any Property and relate to Hazardous
Materials, 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).



     “Environmental Reports” shall have the meaning set forth in Section 4.1.39 hereof.



     “Equipment” shall have the meaning set forth in Section 5.2.10 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 an interest rate per annum equal to (i) with respect to Note A,
the Note A Eurodollar Rate and (ii) with respect to Note B, the Note B Eurodollar Rate.



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



15









 





     “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.



     “Extension Criteria” shall mean, with respect to each extension of the Maturity Date as
provided herein, (i) no Event of Default has occurred and is continuing under the Loan, (ii)
Borrower sends Lender written request at least thirty (30) days, but not more than one hundred
twenty (120) days, prior to the expiration of the initial or Extension Term, as applicable, (an
“Extension Notice”) and (iii) Borrower shall obtain and deliver to Lender prior to exercise of such
Extension Term, 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 Term and shall
have a maturity date not earlier than the Maturity Date.



     “FF&E” shall mean all furniture, furnishings, fixtures and equipment required for the
operation of the Property, including, without limitation, lobby furniture, carpeting, draperies,
paintings, bedspreads, television sets, office furniture and equipment such as safes, cash
registers, and accounting, duplicating and communication equipment, telephone systems, back and
front of the house computerized systems, guest room furniture, specialized hotel equipment such as
equipment required for the operation of kitchens, laundries, the front desk, dry cleaning
facilities, bar and cocktail lounges, restaurants, recreational facilities as they may exist from
time to time, and decorative lighting, material handling equipment and cleaning and engineering
equipment and all other fixtures, equipment, apparatus and personal property needed for such
purposes; but excluding, (i) Property building equipment and systems (including, but not limited
to, the heating, ventilating and air conditioning system, elevators, electrical distribution
system, life safety systems and plumbing), (ii) other fixtures attached to and forming part of the
Improvements (including, but not limited to, lighting fixtures and bars) installed during
construction of the Property (but replacements thereof shall be included) and (iii) Operating
Equipment and Supplies.



     “FF&E Deposit Event” shall mean the occurrence of any of the following events: (a) an Event of
Default and (b) an FF&E Expenditures Event.



     “FF&E Expenditures” shall mean amounts expended for the purchase, replacement and/or the
installation of FF&E at the Property or any Capital Expenditures at the Property.



     “FF&E Expenditures Event” shall mean, as of any date of determination, if Borrower and Manager
have failed to expend the FF&E Replacement Amount for FF&E Expenditures and/or FF&E Expenditures
Work.



     “FF&E Expenditures Work” shall mean any labor performed or materials installed in connection
with any FF&E Expenditures.



     “FF&E Replacement Amount” shall mean, as of the last day of the time periods set forth on
Schedule II attached hereto, the amounts set forth on Schedule II attached hereto.



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



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     “First Prepayment Period” shall mean the period commencing on the day after the Lockout Date
and ending on the last day of the twelfth (12th) Interest Period immediately following the Initial
Interest Period.



     “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.



     “Flood Insurance Act” shall have the meaning set forth in Section 6.1(a)(vii) hereof.



     “Foreign 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.



     “Franchise Agreement” shall mean those certain franchise agreements more specifically
identified on Schedule VII attached hereto or, if the context requires, the Replacement Franchise
Agreements executed in accordance with the terms and provisions of this Agreement.



     “Franchisor” shall mean each franchisor with respect to the applicable Franchise Agreement, as
same is identified on Schedule VII 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.



     “Gross Income from Operations” shall mean all income, room revenues, food and beverage
revenue, telephone revenue, 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, service fees or charges, license fees, parking fees, rent concessions or credits, and
other required pass-throughs, but excluding sales, use and occupancy or other taxes on receipts
required to be accounted for by Borrower to any Governmental Authority, interest on the Reserve
Funds, interest on credit accounts, refunds and uncollectible accounts, sales of furniture,
fixtures and equipment, Insurance Proceeds (other than business interruption or other loss of
income insurance), Awards, payments received under the Interest Rate Cap Agreement, unforfeited
security deposits, utility and other similar deposits, escalations, forfeited security deposits and
any disbursements to Borrower from the Reserve Funds. Gross income shall not be diminished as a
result of the Security Instruments 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 XII attached hereto and made a part hereof.



     “Ground Lease Escrow Fund” shall have the meaning set forth in Section 7.4 hereof.



17









 





     “Ground Lease Properties” shall mean the Individual Properties located in Tampa, Florida,
Jacksonville, Florida, Deerfield Beach, Florida and Anaheim, California.



     “Ground Lessor” shall mean the fee owner, as landlord, under each Ground Lease.



     “Ground Rent” shall have the meaning set forth in Section 7.4 hereof.



     “Ground Rent Account” shall have the meaning set forth in Section 3.1 hereof.



     “Guarantor” shall mean FelCor Lodging Limited Partnership 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 petroleum and petroleum products and compounds containing
them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive
materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based
paint; asbestos or asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any substance; toxic mold;
any substance the presence of which on any Property is prohibited by any federal, State or local
authority; any substance that requires special handling and/or disposal; and any other material or
substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous
waste,” “toxic substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of similar
import within the meaning of any Environmental Law.



     “Hilton Franchised Properties” shall mean the Individual Properties located at (i)
Bloomington, Minnesota, (ii) Dallas (DFW), Texas, (iii) Jacksonville, Florida, (iv) Lexington,
Kentucky, (v) Deerfield Beach, Florida, (vi) Phoenix, Arizona, (vii) Dallas (Love Field), Texas, ,
and (viii) Anaheim, California.



     “IHG” shall have the meaning set forth in Section 5.1.18 hereof.



     “IHG Managed Properties” shall have the meaning set forth in Section 5.1.10(d) hereof.



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



     “Indebtedness” of a Person, at a particular date, means 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.



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



     “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, servants, representatives, contractors, subcontractors, 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 or a substantial portion of Lender’s assets and business).



     “Indemnitor” shall mean FelCor Lodging Limited Partnership.



     “Independent Director” shall have the meaning set forth in Section 4.1.35(z) hereof.



     “Individual Property” shall mean each parcel of real property (including, without limitation,
any interest created pursuant to a Ground Lease), the Improvements thereon and all Personal
Property owned by Borrower and Ground Lessor 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”, including any Release
Property prior to its release or Substitute Property upon substitution.



     “Initial Interest Period” shall have the meaning set forth in the definition of “Interest
Period” herein.



     “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 Premium Account” shall have the meaning set forth in Section 3.1 hereof.



     “Insurance Premiums” shall have the meaning set forth in Section 6.1(b) hereof.



     “Insurance Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.



     “Interest Period” shall mean (a) with respect to the initial period for the accrual of
interest due under this Agreement, the period from and including the Closing Date through but
excluding the Selected Day first occurring after the Closing Date (the “Initial Interest Period”),
and (b) with respect to the Payment Date occurring in December, 2006 and each Payment Date
thereafter, the period from and including the Selected Day immediately preceding the applicable
Payment Date through but excluding the Selected Day next occurring after the applicable Payment
Date.



19









 





Notwithstanding the foregoing clause (b), if Lender so elects at any time, upon written notice
to Borrower, the “Interest Period” shall be the calendar month preceding each Payment Date.



     “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 and dated as of the date hereof. The Interest Rate Cap Agreement shall be
written on documentation reasonably acceptable to Lender, and shall provide for interest periods
and calculations consistent with the payment terms of this Agreement. After delivery of a
Replacement Interest Rate Cap Agreement to Lender, the term “Interest Rate Cap Agreement” shall be
deemed to mean such Replacement Interest Rate Cap Agreement.



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



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



     “Jacksonville Property” shall mean the Individual Property located at 9300 Baymeadows Road,
Jacksonville, Florida.



     “Leases” shall have the meaning set forth in Article 1 of the Security Instrument with respect
to each Individual Property, including, without limitation, the Operating Lease.



     “Legal Requirements” shall mean, with respect to each Individual Property, all federal, State,
county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities affecting Borrower, Ground Lessor
(and for which Borrower is liable under the Ground Lease) with respect to the Ground Lease
Properties 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 material permits, licenses and authorizations and regulations relating
thereto, and all material 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.



     “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 the rate per annum calculated as set forth below:



     (i) With respect to each Interest Period, the rate for deposits in U.S. Dollars, for a period
equal to one month, which appears on the Dow Jones Market Service (formerly Telerate) Page 3750 as
of 11:00 a.m., London time, on the related LIBOR Determination Date (rounded upwards to the nearest
1000th of 1%). If such rate does not appear on Dow Jones Market Service Page 3750, the
rate for that Interest Period shall be determined on the basis of the rates at which deposits in
Dollars are offered by any four major reference banks in the London interbank market selected by
Lender to provide such bank’s offered quotation of such rates at



20









 







approximately 11:00 a.m., London time, on the related LIBOR Determination Date to prime banks
in the London interbank market for a period of one month, commencing on the first day of such
Interest Period and in an amount that is representative for a single such transaction in the
relevant market at the relevant time. Lender shall request the principal London office of any four
major reference banks in the London interbank market selected by Lender to provide a quotation of
such rates, as offered by each such bank. If at least two such quotations are provided, the rate
for that Interest Period shall be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that Interest Period shall be the arithmetic
mean of the rates quoted by major banks in New York City selected by Lender, at approximately 11:00
a.m., New York City time, on the LIBOR Determination Date with respect to such Interest Period for
loans in Dollars to leading European banks for a period equal to one month, commencing on the first
day of such Interest Period and in an amount that is representative for a single transaction in the
relevant market at the relevant time. Lender shall determine LIBOR for each Interest Period and
the determination of LIBOR by Lender shall be binding upon Borrower absent manifest error.



     (ii) In the event that Lender shall have determined in its reasonable discretion that none of
the methods set forth in the definition of “LIBOR” herein are available, then Lender shall
forthwith give notice by telephone of such determination, confirmed in writing, to Borrower at
least one (1) day prior to the last day of the related Interest Period. If such notice is given,
LIBOR, commencing with such related Interest Period, shall be LIBOR in effect for the most recent
Interest Period.



     “LIBOR Determination Date” shall mean (a) with respect to any Interest Period prior to the
Interest Period that commences in the month during which the Securitization Closing Date occurs,
two (2) Business Days prior to the start of the applicable Interest Period; (b) with respect to the
Interest Period that commences in the month during which the Securitization Closing Date occurs,
the date that is two (2) Business Days prior to the Securitization Closing Date and (c) with
respect to each Interest Period thereafter, the date that is two (2) Business Days prior to the
beginning of such Interest Period.



     “Licenses” shall have the meaning set forth in Section 4.1.21 hereof.



     “Lien” shall mean, with respect to each Individual Property, any mortgage, deed of trust,
lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or
transfer of, on or affecting Borrower, Ground Lessor with respect to the Ground Lease Properties,
the 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.



     “LLC Agreement” shall have the meaning set forth in Section 4.1.35 hereof.



     “Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement and the other
Loan Documents.



21









 





     “Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instruments,
the Assignments of Leases, the Environmental Indemnity, the Assignments of Management Agreement,
the Guaranty, the Assignment of Interest Rate Cap Agreement, the Operating Lease Subordination
Agreement, the Condominium Proxy and all other documents executed and/or delivered in connection
with the Loan.



     “Lockbox Account” shall have the meaning set forth in Section 3.1(b) hereof.



     “Lockbox Bank” shall mean any Eligible Institution selected by Lender.



     “Lockbox Period” shall mean the period commencing upon the occurrence of a Lockbox Trigger
Event and ending upon the occurrence of a Lockbox Trigger Event Cure.



     “Lockbox Trigger Event” shall mean an Event of Default.



     “Lockbox Trigger Event Cure” shall have the meaning set forth in Section 3.16 hereof.



     “Lockout Date” shall mean the last day of the sixth (6th) Interest Period immediately
following the Initial Interest Period.



     “Lockout Period” shall have the meaning set forth in Section 2.3.1 hereof.



     “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 attorneys’ fees and other costs of defense).



     “Major Lease” shall mean (i) the Operating Lease, (ii) any Lease for sit-down restaurant
facilities at any Individual Property, (iii) any Lease which together with all other Leases to the
same tenant and to all Affiliates of such tenant, (A) provides for ten percent (10%) or more of the
total gross income for any Individual Property, (B) covers five percent (5%) or more 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 (iv) any
instrument guaranteeing or providing credit support for any Major Lease.



     “Management Agreement” shall mean, with respect to any Individual Property, the management
agreement entered into by and between Operating Lessee and Manager, pursuant to which the Manager
is to provide management and other services with respect to such Individual Property, or, if the
context requires, the Replacement Management Agreement executed in accordance with the terms and
provisions of this Agreement.



     “Manager” shall mean, for each Individual Property, that certain property manager set forth on
Schedule IX 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.



     “Manager Account” shall mean such account as Manager may from time to time designate by
written notice to Lender and the bank maintaining the Concentration Account.



22









 





     “Maturity Date” shall mean the Payment Date occurring in November, 2008, 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;
provided, however, upon compliance with the Extension Criteria, Borrower shall have the right to
extend the Maturity Date for three (3) additional periods of one (1) year each (each, an “Extension
Term”).



     “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.



     “Member” shall have the meaning set forth in Section 4.1.35 hereof.



     “MERS” shall mean Mortgage Electronic Mortgage Registration Systems, Inc., a Delaware stock
corporation.



     “Monthly Common Charge Amount” shall mean the amount due to the Condominium Board each month
for Common Charges with respect to the Condo Property.



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



     “Monthly Ground Rent Deposit” shall have the meaning set forth in Section 7.4 hereof.



     “Monthly Insurance Premium Deposit” shall have the meaning set forth in Section 7.2 hereof.



     “Monthly Pegged Amount” shall mean the aggregate of (i) an aggregate amount, which amount
shall be determined on April 1st of each Fiscal Year, equal to one hundred twenty-five percent
(125%) of one-twelfth (1/12) of the annual Operating Expenses for the Properties required to be
paid during the then current Fiscal Year by Manager, on behalf of Borrower, in accordance with the
Approved Annual Budget; provided however that such annual Operating Expenses shall not include
Taxes, Insurance Premiums, incentive management fees, sales and use taxes that are due and owing on
the Gross Income from Operations and revenues collected on behalf of unaffiliated operators of the
restaurants located at the Properties in the ordinary course of business, and (ii) Borrower’s
reasonable estimate of amounts which shall be due and owing during the immediately succeeding
monthly period for: (a) sales and use taxes on the Gross Income from Operations and (b) revenues
collected on behalf of unaffiliated operators of restaurants located at the Properties in the
ordinary course of business. The Monthly Pegged Amount shall be adjusted based upon the release
and/or substitution of Properties in accordance with the terms hereof. As of the date hereof, the
amount comprising clause (i) of this definition of Monthly Pegged Amount for each Individual
Property is set forth on Schedule VI hereof. If for any reason, a new amount comprising clause (i)
of this definition of Monthly Pegged Amount is not established on said April 1st, the
current amount comprising clause (i) of this definition of Monthly Pegged Amount shall be in effect
until such time as the new amount comprising clause (i) of this definition of Monthly Pegged Amount
is established.



23









 





     “Monthly Tax Deposit” shall have the meaning set forth in Section 7.2 hereof.



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



     “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 Operating Income” means the amount obtained by subtracting Operating Expenses from Gross
Income from Operations.



     “Net Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.



     “Net Proceeds Deficiency” shall have the meaning set forth in Section 6.4(b)(vi) hereof.



     “Note” shall mean, collectively, Note A and Note B, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.



     “Note A” shall mean, collectively Note A-1 and Note A-2, as same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.



     “Note A-1” shall mean that certain promissory note of even date herewith in the original
principal amount of Ninety-Six Million One Hundred Thousand and 00/100 Dollars ($96,100,000) 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.



     “Note A-2” shall mean that certain promissory note of even date herewith in the original
principal amount of Eighty-Eight Million Seven Hundred Seven Thousand Six Hundred Ninety-Two and
31/100 Dollars ($88,707,692.31) 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.



     “Note A Eurodollar Rate” shall mean with respect to any Interest Period, an interest rate per
annum equal to LIBOR plus ninety-three one hundreds of one percent (0.93%) per annum.



     “Note B” shall mean, collectively Note B-1 and Note B-2, as same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.



     “Note B-1” shall mean that certain promissory note of even date herewith in the original
principal amount of Thirty-Three Million Nine Hundred Thousand and 00/100 Dollars ($33,900,000)
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.



     “Note B-2” shall mean that certain promissory note of even date herewith in the original
principal amount of Thirty-One Million Two Hundred Ninety-Two Thousand Three Hundred Seven and
69/100 Dollars ($31,292,307.69) made by Borrower in favor of Lender, as the same



24









 







may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or
otherwise modified from time to time.



     “Note B Eurodollar Rate” shall mean with respect to any Interest Period, an interest rate per
annum equal to LIBOR plus ninety-three one hundreds of one percent (0.93%) per annum.



     “O&M Program” shall mean, with respect to each Individual Property listed on Schedule XIV
hereof, the asbestos operations and maintenance program developed by Borrower and approved by
Lender, as the same may be amended, replaced, supplemented or otherwise modified from time to time.



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



     “OFAC” shall have the meaning set forth in Section 4.1.41.



     “Offering Document Date” shall have the meaning set forth in Section 5.1.10(h)(iv) hereof.



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



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



     “Operating Equipment and Supplies” shall mean all chinaware, glassware, linens, silverware,
tools, kitchen utensils, uniforms, engineering and housekeeping tools and utensils, food and
beverage items, fuel, soap, mechanical stores, cleaning supplies and materials, matches,
stationary, paper supplies, laundry supplies, food service preparation utensils, housekeeping
supplies, accounting supplies and other immediately consumable items used in the operation of the
Property.



     “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 expenses, management fees, franchise 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.



     “Operating Lease” shall mean those certain Operating Leases described on Schedule VIII
attached hereto.



     “Operating Lease Subordination Agreement” shall mean those certain Operating Lease
Subordination Agreements with respect to the Properties.



     “Operating Lessee” shall mean DJONT/JPM Leasing, L.L.C.



25









 





     “Other Charges” shall mean all personal property taxes, Ground Rents, maintenance charges,
impositions other than Taxes, common charges, maintenance charges, assessments and similar charges
payable with respect to the Condo Property under the Condominium Documents 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” shall mean FelCor/JPM Hotels, L.L.C., a Delaware limited liability company.



     “Payment Date” shall mean the sixth (6) day of each calendar month.



     “Permitted Encumbrances” shall mean, with respect to an Individual Property, collectively, (a)
the Liens and security interests created by the 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, (d) Liens securing Permitted FF&E Financing and (e) such other title and survey
exceptions as Lender has approved or may approve in writing in Lender’s sole discretion.



     “Permitted FF&E Financing” shall have the meaning set forth in Section 5.2.10 hereof.



     “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 date it is anticipated
such funds will be needed to meet Borrower’s obligations hereunder 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



26









 







systemwide bonds and notes), the Federal Home Loan Banks (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 initial, or, if higher, 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 initial, or, if higher, 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, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, 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



27









 







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
initial, or, if higher, 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 initial, or, if higher, 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
initial, or, if higher, 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.



     “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.



28









 





     “Physical Conditions Report” shall mean, with respect to each Individual Property, a
structural engineering report prepared by a company satisfactory to Lender regarding the physical
condition of such Individual Property, satisfactory in form and substance to Lender in its sole
discretion, which report shall, among other things, (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.



     “Policies” shall have the meaning set forth in Section 6.1(b) hereof.



     “Prepayment Date” shall have the meaning set forth in Section 2.3.1 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 4.1.35 hereof, together with its
successors and assigns.



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



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



29









 





     “Property Account” shall have the meaning set forth in Section 3.1(a) hereof.



     “Property Account Agreement” shall have the meaning set forth in Section 3.1(a) hereof.



     “Property Account Bank” shall mean, for each Individual Property, that certain property
account bank and the bank maintaining the Concentration Account set forth on Schedule X, provided
that such bank remains an Eligible Institution, and any successor Eligible Institution or other
Eligible Institution selected by Borrower, subject to Lender’s approval.



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



     “Qualified Insurer” shall have the meaning set forth in Section 6.1(b) hereof.



     “Qualified Manager” shall mean a management company listed on Schedule V, or a reputable and
experienced professional management organization (a) which manages, together with its Affiliates,
one hundred fifty (150) properties of a type, quality and size similar to the Properties, totaling
in the aggregate no less than 30,000 guest rooms and (b) prior to whose employment as manager of
the Properties (i) prior to the occurrence of a Securitization, such employment shall have been
approved by Lender, which approval shall not be unreasonably withheld, delayed or conditioned or
(ii) after the occurrence of a Securitization, Lender shall have received written confirmation from
the Rating Agencies that the employment of such manager will not result in a downgrade, withdrawal
or qualification of the initial, or if higher, then current ratings of the Securities.



     “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.



     “Regulation S-X Reporting Requirements” shall have the meaning set forth in Section 5.1.10(o)
hereof.



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



     “Release Cap” shall mean an amount equal to $125,000,000.



     “Release Price” shall mean (a) with respect to each of the first two (2) Individual Properties
which shall be released pursuant to Section 2.5 hereof, one hundred percent (100%) of the Allocated
Loan Amount for such Individual Property and (b) with respect to each Individual Property which
shall thereafter be released pursuant to Section 2.5 hereof, one hundred ten percent (110%) of the
Allocated Loan Amount for such Individual Property.



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



30









 





     “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 Franchisor substantially in the same form and substance as the Franchise Agreement,
or (ii) a franchise agreement with Franchisor, which franchise agreement shall be acceptable to
Lender in form and substance, provided, with respect to this subclause (ii), Lender, at its option,
may require that Borrower obtain confirmation from the applicable Rating Agencies that such
franchise agreement will not result in a downgrade, withdrawal or qualification of the initial, or
if higher, then current rating of the Securities or any class thereof; and (b) a franchisor
estoppel and recognition agreement or other “comfort letter” substantially in the form delivered to
Lender on the date hereof (or such other form acceptable to Lender), executed and delivered to
Lender by Operating Lessee and Franchisor at Borrower’s expense, provided, with respect to this
clause (b), if such franchisor estoppel and recognition agreement is in a form that substantially
differs from the form delivered to Lender on the date hereof, Lender, at its option, may require
that Borrower obtain confirmation from the applicable Rating Agencies that such franchisor estoppel
and recognition agreement will not result in a downgrade, withdrawal or qualification of the
initial, or if higher, then current rating of the Securities or any class thereof; provided,
however, with respect to any expiring or replacement Franchise Agreement, Borrower shall not be
required to obtain Lender’s consent or a confirmation from the Rating Agencies in the event that
the Franchise Agreement in effect on the date hereof is extended on the same or more favorable
terms to Operating Lessee as prior to the expiration thereof.



     “Replacement Interest Rate Cap Agreement” means an interest rate cap agreement from an
Acceptable Counterparty with terms 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 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 Borrower obtain confirmation from the applicable Rating
Agencies that such management agreement will not result in a downgrade, withdrawal or qualification
of the initial, or if higher, then current rating of the Securities or any class thereof; and (b) a
conditional assignment of management agreement substantially in the form of the Assignment of
Management Agreement (or such other form acceptable to Lender), executed and delivered to Lender by
Operating Lessee and such Qualified Manager at Borrower’s expense, provided, with respect to this
clause (b), if such conditional assignment of management agreement is in a form that substantially
differs from the form delivered to Lender on the date hereof, Lender, at its option, may require
that Borrower obtain confirmation from the applicable Rating Agencies that such conditional
assignment of management agreement will not result in a downgrade, withdrawal or qualification of
the initial, or if higher, then current rating of the Securities or any class thereof; provided,
however, with



31









 







respect to any expiring or replacement Management Agreement, Borrower shall not be required to
obtain Lender’s consent or a confirmation from the Rating Agencies in the event that the Management
Agreement in effect on the date hereof is extended on the same or more favorable terms to Operating
Lessee as prior to the expiration thereof.



     “Replacement Reserve Account” shall have the meaning set forth in Section 3.1(b)(iv) hereof.



     “Replacement Reserve Fund” shall have the meaning set forth in Section 7.3.1 hereof.



     “Replacement Reserve Monthly Deposit” shall mean the greater of (i) such amounts as are
required under the Franchise Agreements to be reserved for FF&E, (ii) such amounts as are required
under the Management Agreements to be reserved for FF&E and (iii) the quotient obtained by dividing
(A) the aggregate Gross Income from Operations for the Properties still subject to the Lien of a
Security Instrument for the preceding calendar year (as reflected in Borrower’s annual operating
statements as approved and accepted by Lender) multiplied by four percent (4%) by (B) twelve (12).
The Replacement Reserve Monthly Deposit shall be adjusted annually and shall be effective for the
Replacement Reserve Monthly Deposit due on the Payment Date first occurring after the appropriate
financial statements have been delivered to Lender as required herein.



     “Required Repair Account” shall have the meaning set forth in Section 7.1.1 hereof.



     “Required Repair Fund” shall have the meaning set forth in Section 7.1.1 hereof.



     “Required Repairs” shall have the meaning set forth in Section 7.1.1 hereof.



     “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.



     “Responsible Officer” means with respect to a Person, the president, chief financial officer
or treasurer or controller of such Person.



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



     “Restricted Party” shall mean Borrower, Principal or any Affiliated Manager or any
shareholder, partner or member or any direct or indirect legal or beneficial owner of, Borrower,
Principal or any Affiliated Manager; provided, however, that in no event shall FelCor Lodging
Limited Partnership, FelCor Lodging Trust Incorporated or any Manager which is not an Affiliated
Manager be deemed a Restricted Party.



32









 





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



     “Sale of FelCor Lodging” shall have the meaning set forth in Section 5.2.10(c) hereof.



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



     “San Antonio Condemnation” shall mean the condemnation of a portion of the San Antonio
Property more particularly described in that certain Third Amended Petition for Condemnation in the
matter of the State of Texas v. Bristol Hotel Asset Co., et al, Cause No. 97-ED-0044 filed with
Texas State Probate Court No. 1 Bexar County, Texas.



     “San Antonio Property” shall mean the Individual Property known as the Holiday Inn Select San
Antonio International Airport and located at 77 NE Loop 410, San Antonio, Texas 78216.



     “Second Prepayment Period” shall mean the period commencing on the first day after the
expiration of the First Prepayment Period and ending on the last day of the eighteenth (18th)
Interest Period immediately following the Initial Interest Period.



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



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



     “Securitization Closing Date” shall mean the date upon which a Securitization closes.



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



     “Security Deposits” shall have the meaning set forth in Section 5.1.17(e) 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 Borrower and Ground Lessor with respect to the Ground Lease Properties as
security for the Loan and encumbering such Individual Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.



     “Selected Day” means the fifteenth (15th) day of each calendar month, provided that prior to
Securitization, Lender may in its sole discretion, with prior notice to Borrower, change the day of
the month that will constitute the Selected Day.



     “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 Section 8.2 (c) hereof.



     “Special Member” shall have the meaning set forth in Section 4.1.35 hereof.



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



33









 





     “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 7.8%.



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



     “Substitution Cap” shall mean an amount equal to $62,500.000.



     “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 satisfactory to Lender and the
company or companies issuing the Title Insurance Policies, and containing a certification of such
surveyor satisfactory to Lender.



     “Tax Account” shall have the meaning set forth in Section 3.1 hereof.



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



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



     “Title Insurance Policy” shall mean, with respect to each Individual Property, an ALTA
mortgagee title insurance policy in a form acceptable to Lender (or, if an Individual Property is
located in a State which does not permit the issuance of such ALTA policy, such form as shall be
permitted in such State and acceptable to Lender) issued with respect to such Individual Property
and insuring the lien of the Security Instrument encumbering such Individual Property.



     “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 in which an Individual Property is located or under the laws of which Borrower was organized,
as the context may require.



     “Underwriter Group” shall have the meaning set forth in Section 3.2(b) hereof.



     “Unit” or “Units” shall mean any condominium units created pursuant to the Condominium
Documents.



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



     Section 1.2 Principles of Construction. 



     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



34









 







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.



     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.



     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, Security Instruments and Loan Documents. 



     The Loan shall be evidenced by the Note and secured by the Security Instruments, the
Assignments of Leases and the other Loan Documents. Borrower hereby authorizes Lender to file a
financing statement or statements under the UCC in connection with the Properties in the form
required to properly perfect Lender’s security interest therein.



     2.1.4 Use of Proceeds. 



     Borrower shall use the proceeds of the Loan to (a) repay and discharge any existing loans
relating to the Properties, (b) pay all past-due Basic Carrying Costs, if any, with respect to the
Properties, (c) make deposits into the Reserve Funds on the Closing Date in the amounts provided
herein or in the Other Loan Documents or (d) pay costs and expenses incurred in connection with the
closing of the Loan, as approved by Lender. The balance, if any, shall be distributed to Borrower
and may be distributed by Borrower as it deems appropriate.



     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 the Payment Date occurring in December, 2006 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 November 14, 2006 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,




35









 







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) Intentionally Omitted.




          (c) Intentionally Omitted.




          (d) 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.




          (e) Provided no Event of Default has occurred and is continuing, all payments made in
accordance with this Section 2.21 shall be applied pro rata to sums due under Note A and Note B;
after the occurrence of an Event of Default, all payments received on account of the Debt shall be
applied in accordance with Section 2.2.5 hereof.




     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.



     2.2.3 Eurodollar Rate Unascertainable; Illegality; Increased Costs. 



          (a) (i) In the event that Lender shall have determined (which determination shall be
conclusive and binding upon Borrower absent manifest error) that by reason of circumstances
affecting the interbank eurodollar market, adequate 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 Interest Rate beginning on the first day of the next succeeding
Interest Period. (ii) If, pursuant to the terms of this Section 2.2.3(a), the Loan is bearing
interest at the Adjusted Interest Rate and Lender shall determine (which determination 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 Interest 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 in good faith to make or maintain the portion
of the Loan bearing interest at the Eurodollar Rate, (I) the obligation of Lender




36









 







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 Interest Rate on the next
succeeding Payment Date or within such earlier period as required by Applicable Law. Borrower
hereby agrees promptly to pay Lender (within ten (10) days of Lender’s written demand therefor),
any additional amounts necessary to compensate Lender for any reasonable costs incurred by Lender
in making any conversion in accordance with this Agreement, including, without limitation, any
interest or fees payable by Lender to lenders of funds obtained by it in order to make or maintain
the Loan hereunder. Upon written demand from Borrower, Lender shall demonstrate in reasonable
detail the circumstances giving rise to Lender’s determination and the calculation substantiating
the Adjusted Interest Rate and any additional costs incurred by Lender in making the conversion.
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 with any request or
directive (whether or not having the force of law) hereafter issued from any Governmental
Authority, in each such case, 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 U.S. office of 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 capital as a consequence of its
obligations hereunder to a level below that which Lender could have achieved but for such
adoption, change or compliance (taking into consideration Lender’s policies with respect to
capital adequacy) by any amount deemed by Lender to be material; or




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


then, in any such case, Borrower shall promptly pay Lender (within ten (10) days of Lender’s
written demand therefor), any additional amounts necessary to compensate Lender for such additional
cost or reduced amount receivable which Lender deems to be material. If Lender becomes entitled to
claim any additional amounts pursuant to this Section 2.2.3(c), 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 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 to Borrower shall be conclusive absent
manifest error. This provision shall survive payment of the Note and


37









 






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 to hold Lender harmless from any loss or expense
which Lender sustains or incurs to the extent it is 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 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 (A) is not the Payment Date
immediately following the last day of an Interest Period with respect thereto or (B) is the Payment
Date immediately following the last day of an Interest Period with respect thereto if Borrower did
not give the prior written notice of such prepayment required pursuant to the terms of this
Agreement, including, without limitation, such loss or expense arising from interest or fees
payable by Lender to lenders of funds obtained by it in order to maintain the 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 Interest 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 Payment Date immediately following the last day of an Interest
Period, including, without limitation, such loss or expenses arising from interest or fees payable
by 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 (or, to the extent permitted herein before) the Maturity Date
the outstanding principal balance, all accrued and unpaid interest thereon, and all other amounts
due hereunder and under the Note, the Security Instruments 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 end of the Interest Period in which the Maturity Date occurs (even if
such Interest Period extends beyond the Maturity Date).



     2.2.5 Payments after Default. 



     Upon the occurrence and during the continuance of an Event of Default, 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
Interest at the Default Rate shall be computed from the occurrence of 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 Security
Instruments; provided that no sums shall be applied to the payment of principal under Note B until
all principal and interest and other sums due under Note A have been paid in full. This paragraph
shall not be construed as an agreement or privilege to extend the date of the



38









 







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.



     2.2.6 Late Payment Charge. 



     If any principal, interest or any other sums due under the Loan Documents (including the sums
due on the Maturity Date) is not paid by Borrower on the date on which it is due, Borrower shall
pay to Lender upon demand an amount equal to the lesser of five percent (5%) 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 Security Instruments and the
other Loan Documents to the extent permitted by Applicable Law; provided, however, Borrower shall
have the option, not to be exercised more than three (3) times during the term of the Loan, to not
pay the late payment charge contemplated by this Section 2.2.6 in the event any Monthly Debt
Service Payment Amount is paid within one (1) Business Day after the date the same was due. Any
late payment charges received will be applied first to late charges accrued on Note A and then to
late charges accrued on Note B.



     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 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 Foreign Taxes. 



     If the Loan is bearing interest at the Eurodollar Rate, all payments made by Borrower
hereunder shall be made free and clear of, and without reduction for or on account of, Foreign
Taxes, excluding, in the case of Lender, Foreign Taxes measured by its net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which Lender is resident or organized,
or any political subdivision thereof and, in the case of Lender, taxes measured by its overall net
income, and franchise taxes imposed on it, by the jurisdiction of Lender’s lending office or any
political subdivision thereof or in which Lender is resident or engaged in business. If any
non-excluded Foreign Taxes are required to be withheld from any amounts payable to Lender
hereunder, the amounts so payable to Lender shall be increased to the extent necessary to yield to
Lender (after payment of all non-excluded Foreign Taxes) interest or any such other



39









 







amounts payable hereunder at the rate or in the amounts specified hereunder. Whenever any
non-excluded Foreign Tax is payable pursuant to Applicable Law by Borrower, Borrower shall send to
Lender an original official receipt showing payment of such non-excluded Foreign Tax or other
evidence of payment reasonably satisfactory to Lender. Borrower hereby indemnifies Lender for any
incremental taxes, interest or penalties that may become payable by Lender which may result from
any failure by Borrower to pay any such non-excluded Foreign Tax when due to the appropriate taxing
authority or any failure by Borrower to remit to Lender the required receipts or other required
documentary evidence, provided, however, in the event that Lender or any successor and/or assign of
Lender is not incorporated under the laws of the United States of America or a state thereof Lender
agrees that, prior to the first date on which any payment is due such entity hereunder, it will
deliver to Borrower (i) 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, or (ii) an Internal Revenue Service Form W-9 or successor
applicable form, as the case may be, to establish an exemption from United States backup
withholding tax. Each entity required to deliver to Borrower a Form W-8BEN or W-8ECI or Form W-9
pursuant to the preceding sentence further undertakes to deliver to Borrower two further copies of
the said letter and W-8BEN or W-8ECI or Form W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such letter or 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 letter and 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 letter
or 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, and in the case
of a Form W-9, establishing an exemption from United States backup withholding tax.
Notwithstanding the foregoing, if such entity fails to provide a duly completed Form W-8BEN or
W-8ECI or other applicable form and, under Applicable Law, in order to avoid liability for Foreign
Taxes, Borrower is required to withhold on payments made to such entity that has failed to provide
the applicable form, Borrower shall be entitled to withhold the appropriate amount of Foreign
Taxes. In such event, Borrower shall promptly provide to such entity evidence of payment of such
Foreign Taxes to the appropriate taxing authority and shall promptly forward to such entity any
official tax receipts or other documentation with respect to the payment of the Foreign Taxes as
may be issued by the taxing authority.



     Section 2.3 Prepayments.



     2.3.1 Voluntary Prepayments.



     Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan in
whole or in part prior to Lockout Date (the “Lockout Period”). On any Business Day



40









 







occurring after the expiration of the Lockout Period, Borrower may, at its option, prepay the
Loan in whole, but not in part, upon satisfaction of the following conditions:



          (a) Borrower shall provide prior written notice to Lender specifying the date (the “Prepayment
Date”) upon which the prepayment is to be made, which notice shall be delivered to Lender not less
than thirty (30) days prior to such payment; and




          (b) Borrower shall pay to Lender, simultaneously with such prepayment, (i) (a) if such
prepayment occurs during the First Prepayment Period, a prepayment premium equal to one percent
(1%) of then outstanding principal amount of the Loan (or in the case of a partial prepayment in
connection with a release pursuant to Section 2.5, the amount being prepaid) and (b) if such
prepayment occurs during the Second Prepayment Period, a prepayment premium equal to one half of
one percent (0.5%) of then outstanding principal amount of the Loan (or in the case of a partial
prepayment in connection with a release pursuant to Section 2.5, the amount being prepaid), and (c)
if such prepayment occurs after the Second Prepayment Period, no prepayment premium shall be due,
(ii) all accrued and unpaid interest calculated at the Applicable Interest Rate on the amount of
principal being prepaid through and including the Prepayment Date, (iii) in the event that any such
prepayment is made on a day other than a Payment Date, Borrower shall pay to Lender a sum equal to
the amount of interest which would have accrued under the Note on the amount of such prepayment
through the end of the Interest Period in which the next Payment Date occurs (the “Interest
Shortfall”), (iv) Breakage Costs, if any, without duplication of any sums paid pursuant to the
preceding clause (ii) and (iii); and (v) all other sums then due under this Agreement, the Note or
the other Loan Documents;




     If in connection with a release of an Individual Property in accordance with Section 2.5
hereof, the Individual Property to be released is conveyed to a Person other than Borrower,
Principal or any Person Affiliated with Borrower, Principal or Guarantor, (a “Conveyance to a
Non-Affiliate”), this Section 2.3.1 shall not apply to prepayments made in accordance with such
release.



     2.3.2 Mandatory Prepayments.



     On the next occurring Payment Date following the date on which Borrower actually receives any
Net Proceeds, if and to the extent Lender is not obligated to make such Net Proceeds available to
Borrower for the Restoration of an Individual Property, Borrower shall prepay the outstanding
principal balance of the Note in an amount equal to one hundred percent (100%) of such Net
Proceeds. Such prepayment shall be applied, first, to interest on the outstanding principal
balance of the Loan that would have accrued at the Applicable Interest Rate on the amount prepaid
through the end of the Interest Period in which such prepayment occurs, notwithstanding that such
Interest Period extends beyond the date of prepayment, and then to all other amounts then due to
Lender under this Agreement or any of the other Loan Documents and then to the outstanding
principal balance of the Loan; provided, however, Borrower shall not be obligated to pay any
prepayment premium in connection with such prepayment.



41









 





     2.3.3 Prepayments After Default. 



     If, following an uncured 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 such
tender or recovery shall be deemed a voluntary prepayment by Borrower in violation of the
prohibition against prepayment of the Loan prior to the expiration of the Lockout Period 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) if such prepayment occurs prior to the expiration of the Lockout Period, a
prepayment consideration equal to three percent (3%) of the amount being prepaid, (iii) the
Interest Shortfall, if applicable, with respect to the amount prepaid, (iv) Breakage Costs, if any,
without duplication of any sums paid pursuant to the preceding clause (iii); and (v) all other sums
due under this Agreement, the Note or the other Loan Documents in connection with a partial or
total prepayment.



     2.3.4 Making of Payments. 



     Each payment by Borrower hereunder or under the Note shall be payable at P.O. Box 65585,
Charlotte, North Carolina 28265-0585, or by wire transfer to Bank of America Incoming Wires, ABA
#026009593, Account #4782779943 for credit to CMSG Servicing #3403777, or at such other place as
Lender may designate from time to time in writing, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower. 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. 



          (a) 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 the Interest Shortfall, if applicable, and third, to the
payments of principal due under the Loan, if any, in the inverse order of maturity.




          (b) Provided no Event of Default has occurred and is continuing, all payments made in
accordance with this Section 2.3 and Section 2.5 shall be applied pro rata to sums due under Note A
and Note B; after the occurrence of an Event of Default, all payments received on account of the
Debt shall be applied in accordance with Section 2.2.5 hereof.




42









 








     Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not be
permitted to prepay the principal balance of Note A or Note B unless (i) such prepayment is
expressly permitted or required by this Agreement and (ii) in connection with (A) a prepayment in
whole of Note A, Borrower simultaneously tenders a payment in whole of Note B and (B) a prepayment
in whole of Note B, Borrower simultaneously tenders a payment in whole of Note A.



     Section 2.4 Interest Rate Cap Agreement. 



          (a) Borrower shall 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 have a notional amount which shall not at any time be less than the outstanding principal
balance of the Loan and which shall at all times have a strike rate equal to the Strike Rate. 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 payment of the principal of the Loan in accordance with the terms 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). The Counterparty shall agree in writing to make all
payments it is required to make under the Interest Rate Cap Agreement directly to the Lockbox
Account or if the Lockbox Account is not then required to be in effect, into an Account controlled
by Borrower. 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 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 an Account controlled by Borrower. Borrower shall take all
actions reasonably requested by Lender to enforce Borrower’s and 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 “A+” (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) days following receipt of notice from Lender or Servicer of
such downgrade, withdrawal or qualification.




43









 








          (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, and such
failure shall continue for ten (10) days following written notice from Lender, 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 incurred by Lender until such cost is paid by Borrower to Lender.




          (f) In connection with an Interest Rate Cap Agreement, if requested by Lender in connection
with a Securitization, Borrower shall use commercially reasonable efforts (which shall not require
the expenditure of funds by Borrower) to obtain and deliver to Lender an opinion of counsel from
counsel for the Counterparty (upon which Lender and its successors and assigns may rely) which
shall provide, in relevant part, that:





          (i) 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;




          (ii) 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;




          (iii) 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; and




          (iv) the Interest Rate Cap Agreement, and any other agreement which the Counterparty
has executed and delivered pursuant thereto, has been duly executed and delivered by the
Counterparty and constitutes the legal, valid and binding obligation of the Counterparty,
enforceable against the Counterparty in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject,
as to enforceability, to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).



     Section 2.5 Release of Property.



     2.5.1 Release of Individual Property.



     Provided no Event of Default has occurred and is continuing, after the expiration of the
Lockout Period, Borrower may obtain the release of an Individual Property from the Lien of the



44









 







Security Instrument thereon (and related Loan Documents) and the release of Borrower’s
obligations under the Loan Documents with respect to such Individual Property (other than those
expressly stated to survive), but only upon the satisfaction of each of the following conditions:



          (a) Borrower shall provide Lender with at least thirty (30) days but no more than ninety (90)
days prior written notice of its request to obtain a release of the Individual Property;




          (b) Intentionally Omitted;




          (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, (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); and (iii) all other sums due under this
Agreement, the Note or the other Loan Documents in connection with such release;




          (d) Borrower shall submit to Lender, not less than five (5) days prior to the date of such
release, a release of Lien (and related Loan Documents) for such Individual Property for execution
by Lender. Such release shall be in a form appropriate in each State in which the Individual
Property is located and shall contain standard provisions, if any, protecting the rights of Lender.
In addition, Borrower shall provide all other documentation Lender reasonably requires to be
delivered by Borrower 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 Properties subject to the Loan Documents not being released);




          (e) After giving effect to such release, Lender shall have determined that the Debt Service
Coverage Ratio for the Properties then remaining subject to the Lien of a Security Instrument (not
including the Individual Property to be released) (but for the purpose of this calculation only,
assuming a Release Price equal to the Allocated Loan Amount) shall be at least equal to the Debt
Service Coverage Ratio for all of the Properties (including the Individual Property to be released)
for the twelve (12) full calendar months immediately preceding the release of the Individual
Property, which determination shall be made after giving effect to (i) such release and (ii) any
additional voluntary prepayment made by Borrower, but only to the extent necessary to meet such
minimum Debt Service Coverage Ratio. If Borrower shall make such voluntary prepayment, such
prepayment shall be made in accordance with Section 2.3.1(b); provided, however, that if the
Individual Property to be released is conveyed pursuant to a Conveyance to a Non-Affiliate, no
prepayment premium shall be due regardless of when such voluntary prepayment is made;




          (f) Lender shall have received evidence that the Individual Property to be released shall be
conveyed to a Person other than Borrower or Principal;





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          (g) In the event the Individual Property to be released is subject to an Operating Lease along
with one or more additional Properties, Lender shall have received a certified copy of an amendment
to the Operating Lease reflecting the deletion of the Individual Property to be released;




          (h) After giving effect to such release, Lender shall have determined that the aggregate
Allocated Loan Amounts for all Individual Properties released pursuant to this Section 2.5
(including the Individual Property to be released) shall not exceed the Release Cap; and




          (i) Lender shall have received payment of all Lender’s reasonable out of pocket costs and
expenses, including due diligence review costs and reasonable counsel fees and disbursements
incurred in connection with the release of the Individual Property from the lien of the related
Security Instrument and the review and approval of the documents and information required to be
delivered in connection therewith.




     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 Security Instrument on each Individual Property not theretofore released.



     Section 2.6 Substitution of Properties.



     Subject to the terms of this Section 2.6, Borrower may obtain a release of the Lien of a
Security Instrument (and the related Loan Documents) encumbering an Individual Property (a “Release
Property”) by substituting therefor another hotel property of like kind and quality acquired by
Borrower (individually, a “Substitute Property” and collectively, the “Substitute Properties”),
provided that the following conditions precedent are satisfied:



          (a) Intentionally Omitted.




          (b) Lender shall have received at least sixty (60) days prior written notice requesting the
substitution and identifying the Substitute Property and Release Property.




          (c) If the Borrower continues to own an Individual Property subject to the Lien of a Security
Instrument, Lender shall have received (i) a copy of a deed conveying all of Borrower’s right,
title and interest in and to the Release Property to a Person other than Borrower or Principal
pursuant to an arms length transaction and (ii) a letter from 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) Lender shall have received a current Appraisal of (i) the Substitute Property and (ii) the
Release Property, each prepared within sixty (60) days prior to the release and substitution,
showing an appraised value of the Substitute Property equal to or greater than one hundred percent
(100%) of the appraised value of the Release Property immediately prior to the date of the proposed
substitution.




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          (e) After giving effect to such release and substitution, Lender shall have determined that
the aggregate Allocated Loan Amounts for all Substitute Properties substituted as an Individual
Property pursuant to this Section 2.6 (including the Substitute Property proposed to be
substituted) shall not exceed the Substitution Cap.




          (f) Lender shall have received a certificate of Borrower certifying, that the Debt Service
Coverage Ratio for the twelve (12) months immediately preceding the substitution with respect to
the remaining Properties and the Substitute Property proposed to be substituted is equal to or
greater than the Debt Service Coverage Ratio for the twelve (12) full calendar months immediately
preceding the date of the proposed substitution with respect to the Properties.




          (g) If the Loan is part of a Securitization, Lender shall have received confirmation in
writing from the Rating Agencies to the effect that such release and substitution will not result
in a withdrawal, qualification or downgrade of the respective ratings in effect immediately prior
to such release and substitution for the Securities issued in connection with the Securitization
that are then outstanding.




          (h) Unless such event or condition relates solely to the Release Property and will be fully
cured by the release and substitution, 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 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.




          (i) Borrower shall (A) have executed, acknowledged and delivered to Lender (I) a Security
Instrument, an Assignment of Leases and Rents and two UCC-1 Financing Statements with respect to
the Substitute Property, together with a letter from Borrower countersigned by a title insurance
company acknowledging receipt of such Security Instrument, Assignment of Leases and Rents and UCC-1
Financing Statements and agreeing to record or file, as applicable, such Security Instrument,
Assignment of Leases and Rents and one of the UCC-1 Financing Statements in the real estate records
for the county in which the Substitute Property is located and to file one of the UCC-1 Financing
Statements in the office of the Secretary of State (or other central filing office) of the State
under the laws of which Borrower was organized, so as to effectively create upon such recording and
filing valid and enforceable first priority Liens upon the Substitute Property, in favor of Lender
(or such other trustee as may be desired under local law), subject only to the Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (II) an
Environmental Indemnity with respect to the Substitute Property from Indemnitor and (B) have caused
Guarantor to acknowledge and confirm its obligations under the Loan Documents. The Security
Instrument, Assignment of Leases and Rents, UCC-1 Financing Statements and Environmental Indemnity
shall be the same in form and

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substance as the counterparts of such documents 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. The Security Instrument encumbering the Substitute Property shall secure all
amounts then outstanding under the Note, provided that in the event that the jurisdiction in which
the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and
does not permit the allocation of indebtedness for the purpose of determining the amount of such
tax payable, the principal amount secured by such Security Instrument shall be equal to one hundred
twenty-five percent (125%) of the Allocated Loan Amount for the Substitute Property. The amount of
the Loan allocated to the Substitute Property (such amount being hereinafter referred to as the
“Substitute Allocated Loan Amount”) shall equal the Allocated Loan Amount of the related Release
Property.




          (j) Lender shall have received (A) to the extent available, any “tie-in” or similar
endorsement, together with a “first loss” endorsement, to each Title Insurance Policy insuring the
Lien of the existing Security Instruments as of the date of the substitution with respect to the
Title Insurance Policy insuring the Lien of the Security Instrument with respect to the Substitute
Property and (B) a Title Insurance Policy (or a marked, signed and redated commitment to issue such
Title Insurance Policy) insuring the Lien of the Security Instrument encumbering the Substitute
Property, issued by the title company that issued the Title Insurance Policies insuring the Lien of
the existing Security Instruments and dated as of the date of the substitution, with reinsurance
and direct access agreements that replace such agreements issued in connection with the Title
Insurance Policy insuring the Lien of the Security Instrument encumbering the Release Property. The
Title Insurance Policy issued with respect to the Substitute Property shall (1) provide coverage in
the amount of the Substitute Allocated Loan Amount if the “tie-in” or similar endorsement described
above is available or, if such endorsement is not available, in an amount equal to one hundred
twenty-five percent (125%) of the Substitute Allocated Loan Amount, together, if available, with
“last dollar endorsement,” (2) insure Lender that the relevant Security Instrument creates a valid
first lien on the Substitute Property encumbered thereby, 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 Title Insurance Policies insuring the Liens of the
existing Security Instruments, and such other endorsements or affirmative coverage that a prudent
institutional mortgage lender would require, and (4) name Lender as the insured. 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.




          (k) Lender shall have received a current 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 2005 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys. Such Survey shall reflect the same legal description contained in the Title
Insurance 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

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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.”




          (l) 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.




          (m) 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 mortgage loan lender and, if recommended under the Phase I environmental report, a
Phase II environmental report that would be acceptable to a prudent institutional mortgage loan
lender, which conclude that the Substitute Property does not contain any Hazardous Materials and is
not subject to any significant risk of contamination from any off site Hazardous Materials.




          (n) 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 Borrower or such Affiliate, as applicable, of all organizational documentation related to
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
Borrower or such Affiliate, as applicable, authorizing the substitution and any actions taken in
connection with such substitution.




          (o) Lender shall have received the following opinions of Borrower’s counsel: (A) an opinion or
opinions of counsel admitted to practice under the laws of the State in which the Substitute
Property is located stating that the Loan Documents delivered with respect to the Substitute
Property pursuant to clause (i) above are valid and enforceable in accordance with their terms,
subject to the laws applicable to creditors’ rights and equitable principles, and that Borrower is
qualified to do business and in good standing under the laws of the jurisdiction where the
Substitute Property is located or that Borrower is not required by Applicable Law to qualify to do
business in such jurisdiction; (B) an opinion 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, stating
that the Loan Documents delivered with respect to the Substitute Property pursuant to this Section,
among other things, duly authorized, executed and delivered by Borrower and that the execution and
delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will
not cause a breach of, or a default under, any agreement, document or instrument to which Borrower
is a party or to which it or its properties are bound; (C) an update of the Insolvency Opinion
indicating that the substitution does not affect the opinions set forth therein; (D) if the Loan is
part of a Securitization, an opinion of counsel acceptable to the Rating Agencies that the
substitution does not constitute a “significant modification” of the Loan under Section 1001 of the
Code or otherwise cause a tax to be imposed on a “prohibited transaction” by any REMIC Trust.

49









 









          (p) Borrower shall (i) have paid, (ii) have escrowed with Lender or (iii) be contesting in
accordance with the terms hereof, all Basic Carrying Costs relating to each of the Properties and
the Substitute Property, including without limitation, (x) accrued but unpaid Insurance Premiums
relating to each of the Properties and the Substitute Property, and (y) currently due and payable
Taxes (including any in arrears) relating to each of the Properties and the Substitute Property and
(z) currently due and payable Other Charges relating to each of the Properties and Substitute
Property.




          (q) Borrower shall (i) have paid or reimbursed Lender for all reasonable costs and expenses
incurred by Lender (including, without limitation, reasonable attorneys’ fees and disbursements) in
connection with the release and substitution, (ii) have paid all recording charges, filing fees,
taxes or other expenses (including, without limitation, mortgage and intangibles taxes and
documentary stamp taxes) payable in connection with the substitution, (iii) have paid all costs and
expenses of the Rating Agencies incurred in connection with the substitution and (iv) have paid to
Lender at the time of written notice of such substitution and release, a non-refundable processing
fee equal to $7,500 for each Substitute Property.




          (r) 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.




          (s) Upon the request of Lender, 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 and shall indicate that (1) the subject Major Lease is a valid and binding obligation of the
tenant thereunder, (2) to the best of the tenant’s knowledge, there are no defaults under such
Major 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 Major Lease, (4) no rent under
such Major Lease has been paid more than one (1) month in advance, (5) the tenant thereunder has no
option under such Major Lease to purchase all or any portion of the Substitute Property, and (6)
all tenant improvement work required under such Major Lease has been substantially completed and
the tenant under such Major Lease is in actual occupancy of its leased premises. If an estoppel
certificate indicates that all tenant improvement work required under the subject Major 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 Major Lease.




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




          (u) Upon the request of Lender, Lender shall have received subordination agreements in the
form approved by Lender in connection with the origination of the Loan (or such other form approved
by Lender, which approval shall not be unreasonably withheld, delayed or conditioned) with respect
to tenants under all Major Leases at the Substitute Property

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to the extent such Major Leases for such tenants are not automatically subordinate (in lien
and in terms) pursuant to the terms of the applicable Major Leases.




          (v) Lender shall have received (A) an endorsement to the Title Insurance Policy insuring the
Lien of the Security Instrument encumbering the Substitute Property 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 or (B) a
letter from the appropriate taxing authority stating that the Substitute Property constitutes a
separate tax lot.




          (w) 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 damage or waste
or in the event such report indicates the need for immediate or on-going repairs at the Substitute
Property, Lender shall have established a reserve in the amount of 125% of the estimated cost of
completing such immediate or on-going repairs, provided, however, in no event shall Lender be
obligated to accept a Substitute Property if the physical condition report relating to such
Substitute Property indicates any damage or deficiencies which in Lender’s reasonable judgment
create a risk to the safety or well-being to the occupants of such Substitute Property.




          (x) Lender shall have received evidence which would be satisfactory to a prudent institutional
mortgage 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) Lender shall have received an Operating Lease (i) in substantially the form as the
Operating Lease in effect on the date hereof or (ii) which would be satisfactory to a prudent
institutional mortgage loan lender encumbering only the Substitute Property or, in the event the
Release Property is subject to a Operating Lease along with one or more additional Properties,
Lender shall have received a certified copy of an amendment to the Operating Lease reflecting the
deletion of the Release Property and, if appropriate, the addition of the Substitute Property as a
property encumbered pursuant thereto.




          (z) 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, if appropriate, 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 Assignment 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
Replacement Management Agreement for the Substitute Property and the Manager thereunder shall have
executed and delivered to Lender an Assignment of Management Agreement with respect to such new
Management Agreement on

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substantially the same terms as used in connection with the Release Property or such other
terms as would be acceptable to a prudent institutional mortgage loan lender.




          (aa) Lender shall have received such other approvals, opinions, documents and information in
connection with the substitution as reasonably requested by Lender.




          (bb) Lender shall have received certified copies of all material 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 mortgage loan lender.




          (cc) Lender shall have received certified 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.




          (dd) 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 Borrower in the State where the Substitute Property is located and
in the States under the laws of which each such Person is organized.




          (ee) Lender shall have received a comfort letter from the franchisor under the Franchise
Agreement, if any, for the Substitute Property, in the form approved by Lender in connection with
the origination of the Loan (or such other form approved by Lender, which approval shall not be
unreasonably withheld) or in form and substance reasonably satisfactory to a prudent institutional
mortgage loan lender.




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




          (gg) Borrower shall submit to Lender, not less than ten (10) days prior to the date of such
substitution, a release of Lien (and related Loan Documents) for the Release Property for execution
by Lender. Such release shall be in a form appropriate for the jurisdiction in which the Release
Property is located and shall contain standard provisions, if any, protecting the rights of the
releasing lender.




          (hh) Borrower shall deliver an Officers Certificate certifying that the requirements set forth
in this Section 2.6 have been satisfied.




     Upon the satisfaction of the foregoing conditions precedent, Lender will release its Lien from
the Release Property 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.



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     All due diligence required to be delivered to Lender in connection with this Section 2.6 shall
be in form, scope and substance which would be satisfactory to a prudent institutional mortgage
loan lender.



     Section 2.7 Releases of Certain Parcels. Borrower may obtain the release (without any
prepayment of Debt or release fee other than the payment of expenses set forth below) from the
Security Instrument, the Assignment of Leases and the UCC financing statements of that portion of
the San Antonio Property more particularly described on Exhibit F attached hereto (the “Release
Parcel”) in connection with the transfer of the Release Parcel to the State of Texas pursuant to
the San Antonio Condemnation upon satisfaction of each of the following conditions precedent (such
release hereinafter referred to as the “release”):



          (a) receipt by Lender of at least ten (10) days’ prior written notice of Borrower’s request to
obtain the release setting forth, at a minimum, the anticipated date on which the release is to
occur; and




          (b) payment of all Lender’s reasonable out-of-pocket costs and expenses, including, without
limitation, due diligence review costs and reasonable counsel fees and disbursements, incurred in
connection with the release and the review and approval of the documents and information to be
delivered in connection therewith.




     III. CASH MANAGEMENT



     Section 3.1 Establishment of Accounts.



          (a) Borrower shall, simultaneously herewith, (i) establish one or more accounts (individually
and collectively, the “Property Account”) with one or more Property Account Banks into which
Borrower shall deposit, or cause to be deposited, all Gross Income from Operations not already
deposited directly into the Concentration Account, (ii) establish one or more accounts
(individually and collectively, the “Concentration Account”) with an Eligible Institution into
which Borrower shall deposit, or cause to be deposited, all of the funds on deposit in the
applicable Property Account and (iii) execute an agreement with Lender and each Property Account
Bank providing for the control of the applicable Property Account and Concentration Account
substantially in the form of Exhibit A attached herewith (the “Property Account Agreement”).




          (b) Lender (or Servicer on behalf of Lender) shall, simultaneously herewith establish an
account with the Lockbox Bank (the “Lockbox Account”), into which, during any Lockbox Period,
Borrower shall deposit or cause Manager to deposit all sums on deposit in the Concentration
Account, in accordance with Section 3.2 and Section 3.6 hereof. In addition, Lender shall
establish the following Accounts (which may be book entry sub-accounts) into which during any
Lockbox Period amounts in the Concentration Account shall be deposited or allocated:





               (i) An account with Lockbox Bank into which Borrower shall deposit, or cause to be
deposited, the Monthly Tax Deposit, if any (the “Tax Account”);



53









 






               (ii) An account with Lockbox Bank into which Borrower shall deposit, or cause to be
deposited, the Monthly Insurance Premium Deposit, if any (the “Insurance Premium Account”);




               (iii) An account with Lockbox Bank into which Borrower shall deposit, or cause to be
deposited, the Monthly Debt Service Payment Amount (the “Debt Service Account”);




               (iv) An account with Lockbox Bank into which Borrower shall deposit, or cause to be
deposited, the Replacement Reserve Monthly Deposit, if any (the “Replacement Reserve
Account”);




               (v) Intentionally Omitted;




               (vi) An account with Lockbox Bank into which Borrower shall deposit, or cause to be
deposited, the Monthly Ground Rent Deposit, if any (the “Ground Rent Account”);




               (vii)Intentionally Omitted.

(viii)Intentionally Omitted; and




               (ix)Intentionally Omitted.



     Section 3.2 Deposits into Lockbox Account.



          (a) Borrower represents, warrants and covenants that (i) Borrower shall, or shall cause
Manager to, immediately deposit all Gross Income from Operations into the applicable Property
Account or Concentration Account, (ii) Borrower shall send a notice, substantially in the form of
Exhibit B, to all tenants under any Major Lease (other than the Operating Lease) only now or
hereafter occupying space at each Individual Property directing them to pay all Rents and other
sums due under such Major Lease to which they are a party into the applicable Property Account or
Concentration Account, (iii) Borrower or Manager shall instruct the Franchisor to deposit all
Accounts Receivable for the Properties and any Gross Income from Operations collected by Franchisor
pursuant to the Franchise Agreement into the applicable Property Account or the Concentration
Account, (iv) Borrower or Manager shall deliver a notice substantially in the form of Exhibit D
hereto to all credit card companies to pay all Accounts Receivable directly into the applicable
Property Account or the Concentration Account, (v) during any Lockbox Period, Borrower shall
deposit, or shall cause the Counterparty to deposit, all sums paid under the Interest Rate Cap
Agreement directly into the Lockbox Account; (vi) other than the Accounts, there shall be no other
accounts (other than property level petty cash or similar type accounts) maintained by Borrower or
any other Person into which revenues from the ownership and operation of the Properties are
deposited, (vii) neither Borrower nor any other Person shall open any other such account with
respect to the deposit of income in connection with the Properties, (viii) no funds shall be
transferred to any Manager’s Account pursuant to Section 3.2(b) hereof unless and until the
Property Account Bank is advised of the proper Monthly Pegged Amount and (ix) during any Lockbox
Period, three (3) Business Days before each Payment Date, Borrower shall cause Manager to deposit,
or cause to be deposited, all remaining funds on deposit in the Manager Account into the
Concentration



54









 






Account. Until deposited into the applicable Property Account, any Gross Income from Operations
from the Properties held by Borrower shall be deemed to be Collateral and shall be held in trust by
it for the benefit, and as the property, of Lender and shall not be commingled with any other funds
or property of Borrower.




          (b) Borrower or Lender on behalf of Borrower shall direct each Property Account Bank to
transfer, on each Business Day, all funds on deposit in the applicable Property Account to the
Concentration Account and Borrower or Lender on behalf of Borrower, shall direct each Eligible
Institution maintaining a Concentration Account to transfer, on each Business Day, all funds on
deposit in the Concentration Account to (i) at all times other than during any Lockbox Period, such
account as shall be specified by Borrower in writing and (ii) during any Lockbox Period, (I) the
Manager Account until sums equal to the Monthly Pegged Amount have been transferred to the Manager
Account for the then current calendar month (notwithstanding that some or a portion of such Monthly
Pegged Amount for the current month shall have been previously deposited into the Manager Account
and such amount is returned into the Concentration Account in accordance with Section 3.2(a)(ix))
and (II) thereafter, the Lockbox Account.




          (c) Borrower warrants and covenants that they shall not rescind, withdraw or change any
notices or instructions required to be sent by it pursuant to this Section 3.2 without Lender’s
prior written consent.




     Section 3.3 Account Name. 



          (a) The Accounts (other than the Manager Account) shall each be in the name of Borrower for
the benefit Lender.




          (b) In the event Lender transfers or assigns the Loan, Borrower acknowledges that each
Property Account Bank, Lockbox Bank, at Lender’s request, shall change the name of each Account to
the name of Borrower for the benefit of the transferee or assignee. In the event Lender retains a
servicer to service the Loan, Borrower acknowledges that each Property Account Bank and Lockbox
Bank, at Lender’s request, shall be rename each account to be in the name of Borrower for the
benefit of the servicer, as agent for Lender.




     Section 3.4 Eligible Accounts. 



     Borrower shall, and Borrower shall cause each Property Account Bank, Lockbox Account Bank and
the Eligible Institution maintaining the Concentration Account to, maintain each Account as an
Eligible Account.




     Section 3.5 Permitted Investments. 



     Sums on deposit in any Account other than any Property Account, the Concentration Account or
Lockbox Account may be invested in Permitted Investments provided (i) such investments are then
regularly offered by Lockbox Bank for accounts of this size, category and type, (ii) such
investments are permitted by Applicable Law, (iii) the maturity date of the Permitted Investment is
not later than the date on which sums in the applicable Account are anticipated by Lender to be
required for payment of an obligation for which such Account was



55









 




created, and (iv) no Event of Default shall have occurred and be continuing. All income
earned from Permitted Investments shall be the property of Borrower. Borrower hereby irrevocably
authorizes and directs Lockbox Bank, to hold any income earned from Permitted Investments as part
of the Accounts. Borrower shall be responsible for payment of any federal, State or local income
or other tax applicable to income earned from Permitted Investments. No other investments of the
sums on deposit in the Accounts shall be permitted except as set forth in this Section 3.5. Lender
shall not be liable for any loss sustained on the investment of any funds constituting the Reserve
Funds or of any funds deposited in the related Accounts. Notwithstanding anything to the contrary
contained herein, Borrower acknowledges that the only Permitted Investment which Lockbox Bank may
only offer is an interest bearing escrow account (bearing interest at a money market rate as
determined by Lockbox Bank)




     Section 3.6 Intentionally Omitted.



     Section 3.7 Transfer To and Disbursements from the Lockbox Account.



          (a) Lockbox Bank shall withdraw all funds on deposit in the Lockbox Account on the date
immediately preceding each Payment Date (and if such day is not a Business Day then the preceding
day which is a Business Day).




          (b) Lockbox Bank shall disburse the funds in the Lockbox Account in the following order of
priority:





               (i) First, funds sufficient to pay the Monthly Ground Rent Deposit shall be deposited
in the Ground Rent Account;




               (ii) Second, funds sufficient to pay the Monthly Tax Deposit shall be deposited in the
Tax Account;




               (iii) Third, funds sufficient to pay the Monthly Insurance Premium Deposit, if any,
shall be deposited in the Insurance Premium Account;




               (iv) Fourth, funds sufficient to pay the Monthly Debt Service Payment Amount shall be
deposited into the Debt Service Account to be applied to the payment of accrued and unpaid
interest computed at the Applicable Interest Rate;




               (v) Fifth, funds sufficient to pay the Replacement Reserve Monthly Deposit shall be
deposited in the Replacement Reserve Account;




               (vi) Sixth, funds sufficient to pay any interest accruing at the Default Rate, and late
payment charges, if any, shall be deposited in the Debt Service Account;




               (vii) Seventh, to the payment of Lockbox Bank for customary and reasonable fees and
expenses incurred in connection with this Agreement and the accounts established hereunder;



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               (viii) Eighth, provided no Event of Default has occurred and is continuing all amounts
remaining in the Lockbox Account after deposits for items (i) through (vii) for the current
month and all prior months shall be disbursed to Borrower.



     Section 3.8 Withdrawals From the Tax Account and the Insurance Premium Account.



     Lender shall have the right to withdraw funds from the Tax Account to pay Taxes on or before
the date Taxes are delinquent. Lender shall have the right to withdraw funds from the Insurance
Premium Account to pay Insurance Premiums on or before the date Insurance Premiums are due and
payable. Lockbox Bank shall disburse funds from the Tax Account and the Insurance Premium Account
in accordance with Lender’s written request therefor on the Business Day following Lockbox Bank’s
receipt of such written request.



     Section 3.9 Withdrawals from the Replacement Reserve Account. 



     Lender shall disburse funds on deposit in the Replacement Reserve Account in accordance with
the provisions of Section 7.3 hereof.



     Section 3.10 Withdrawals from the Required Repair Account.



     Lender shall disburse funds on deposit in the Required Repair Account in accordance with the
provisions of Section 7.1 hereof.



     Section 3.11 Withdrawals from the Debt Service Account. 



     Lender shall have the right to withdraw funds from the Debt Service Account to pay the Monthly
Debt Service Payment Amount on or after the date when due, together with any late payment charges
or interest accruing at the Default Rate.



     Section 3.12 Intentionally Omitted.



     Section 3.13 Intentionally Omitted.



     Section 3.14 Withdrawals from the Ground Rent Account



     Lender shall have the right to withdraw funds from the Ground Rent Account in accordance with
Section 7.4 hereof.



     Section 3.15 Disbursement Upon Lockbox Trigger Event Cure.



     Upon the occurrence of a Lockbox Trigger Event Cure all funds on deposit in the Lockbox
Account, not otherwise applied or disbursed by Lender in accordance with this Agreement or the
other Loan Documents, shall, provided no Event of Default has occurred and is continuing, be
disbursed to Borrower.



     Section 3.16 Lockbox Trigger Event Cure.



     Borrower shall have only two (2) opportunities during the term of the Loan to cure the Lockbox
Trigger Event upon the cure by Borrower and acceptance of such cure by Lender of the



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Event of Default that is the basis of such Lockbox Trigger Event (provided Lender has not
otherwise accelerated the Loan, moved for a receiver or commenced foreclosure proceedings) (a
“Lockbox Trigger Event Cure”). If during the term of the Loan, three (3) or more Events of Default
shall occur, no Lockbox Trigger Event Cure shall be permitted to occur (regardless of any cure of
such Event of Default)




     Section 3.17 Sole Dominion and Control.



     Borrower acknowledges and agrees that the Accounts are subject to the sole dominion, control
and discretion of Lender, its authorized agents or designees, including Property Account Bank and
Lockbox Bank, subject to the terms hereof; and Borrower shall have no right of withdrawal with
respect to any Account except with the prior written consent of Lender or as otherwise provided
herein.



     Section 3.18 Security Interest. 



     Borrower hereby grants to Lender a first priority security interest in each of the Accounts
and the Account Collateral as additional security for the Debt.



     Section 3.19 Rights on Default. 



     Notwithstanding anything to the contrary in this Article 3, upon the occurrence of an Event of
Default, Lender shall promptly notify Property Account Bank and Lockbox Bank in writing of such
Event of Default and, without notice from Property Account Bank, Lockbox Bank or Lender, (a)
Borrower shall have no further right in respect of (including, without limitation, the right to
instruct Lockbox Bank or Property Account Bank to transfer from) the Accounts, (b) Lender may
direct Lockbox Account to liquidate and transfer any amounts then invested in Permitted Investments
to the Accounts or reinvest such amounts in other Permitted Investments as Lender may reasonably
determine is necessary to perfect or protect any security interest granted or purported to be
granted hereby or pursuant to the other Loan Documents or to enable Lockbox Bank, as agent for
Lender, or Lender to exercise and enforce Lender’s rights and remedies hereunder or under any other
Loan Document with respect to any Account or any Account Collateral, and (c) 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 and in the Security Instruments, 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 or in the Security Instruments, Lender may apply the
amounts of such Accounts as Lender determines in its sole discretion including, but not limited to,
payment of the Debt.



     Section 3.20 Financing Statement; Further Assurances. 



     Borrower hereby authorizes Lender to file, and upon Lender’s request, shall execute and
deliver to Lender for filing, a financing statement or statements under the UCC in connection with
any of the Accounts and the Account Collateral with respect thereto in the form required to
properly perfect Lender’s security interest therein. Borrower agrees that at any time and from
time to time, at the expense of Borrower, Borrower will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or desirable, or that
Lender may request, in order to perfect and protect any security interest granted or purported



58









 




to be granted hereby (including, without limitation, any security interest in and to any
Permitted Investments) or to enable Lockbox Bank or Lender to exercise and enforce its rights and
remedies hereunder with respect to any Account or Account Collateral.




     Section 3.21 Borrower’s Obligation Not Affected. 



     The insufficiency of funds on deposit in the Accounts shall not absolve Borrower of the
obligation to make any payments, as and when due pursuant to this Agreement and the other Loan
Documents, and such obligations shall be separate and independent, and not conditioned on any event
or circumstance whatsoever.



     Section 3.22 Payments Received Under this Agreement. 



     Notwithstanding anything to the contrary contained in this Agreement or the other Loan
Documents, and provided no Event of Default has occurred and is continuing, Borrower’s obligations
with respect to the monthly payment of Debt Service and amounts due for the Tax and Insurance
Escrow Fund, Required Repair Fund, Ground Lease Escrow Fund, Replacement Escrow Fund, and any other
payment reserves established pursuant to this Agreement or any other Loan Document shall (provided
Lender is not prohibited from withdrawing or applying any funds in the Accounts by Applicable Law
or otherwise) be deemed satisfied to the extent sufficient amounts are deposited in the Lockbox
Account established pursuant to this Agreement to satisfy such obligations on the dates each such
payment is required, regardless of whether any of such amounts are so applied by Lender.



     IV. REPRESENTATIONS AND WARRANTIES



     Section 4.1 Borrower Representations.



     Except as otherwise provided in Schedule XVI hereto (the “Disclosure Schedule”), Borrower
represents and warrants as of the Closing Date, after giving effect to the closing and the
application of Loan proceeds, that:



     4.1.1 Organization.



          (a) Owner is duly formed and is validly existing and in good standing in the jurisdiction in
which it is organized, with requisite power and authority to own the Properties and to transact the
businesses in which it is now engaged. Operating Lessee is duly formed and is validly existing and
in good standing in the jurisdiction in which it is organized, with requisite power and authority
to own the lessee’s interest in the Operating Lease and to operate the Properties and to transact
the businesses in which it is now engaged.




          (b) 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 the Properties, its businesses and
operations. Borrower possesses all rights, licenses, permits and authorizations, governmental or
otherwise, necessary to entitle it to own the Properties and to transact the businesses in which it
is now engaged. Attached hereto as Schedule IV is an organizational chart of Borrower.




59









 








     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).



     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 agreement or instrument
to which Borrower is a party or by which any of Borrower’s property or assets is subject, nor will
such action result in any violation of the provisions of any statute or any order, rule or
regulation of any court or Governmental Authority or body having jurisdiction over Borrower or any
of the Properties or any of Borrower’s other assets, or any license or other approval required to
operate the 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, in each case if Borrower’s noncompliance with this Section 4.1.3 would
reasonably be expected to materially adversely affect the condition (financial or otherwise) or
business of Borrower or the condition or ownership of the Properties (taken as a whole).



     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 threatened against or affecting Borrower or any Individual
Property, which actions, suits or proceedings, if determined against Borrower or any Individual
Property, would reasonably be expected to materially adversely affect the condition (financial or
otherwise) or business of Borrower or the condition or ownership of the Properties (taken as a
whole).



     4.1.5 Agreements. 



     Borrower is not a party to any agreement or instrument or subject to any restriction which
would reasonably be expected to materially and adversely affect Borrower or any Individual
Property, or Borrower’s business, properties or assets, operations or condition, financial or
otherwise. Borrower is not 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



60









 




instrument to which it is a party or by which Borrower or any of the Properties are bound.
Borrower has no material financial obligation under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which Borrower is a party or by which Borrower
or any Property is otherwise bound, other than (a) obligations incurred in the ordinary course of
the operation of the Properties and (b) obligations under the Loan Documents.




     4.1.6 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
not received reasonably equivalent value in exchange for its obligations under the Loan Documents.
Giving effect to the Loan, the fair saleable value of Borrower’s 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 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.



     4.1.7 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 in any material respects. There is no
fact presently known to Borrower which has not been disclosed to Lender which materially and
adversely affects, or would reasonably be expected to materially and adversely affect, any
Individual Property or the business, operations or condition (financial or otherwise) of Borrower.



     4.1.8 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



61









 




Code currently in effect,
which prohibit or otherwise restrict the transactions contemplated by this Agreement.




     4.1.9 Compliance. 



     Borrower, Ground Lessor with respect to the Ground Lease Properties and the Properties and the
use thereof comply in all material respects with all applicable Legal Requirements, including,
without limitation, to the best of Borrower’s knowledge, all Environmental Laws, building and
zoning ordinances and codes. Borrower is not in default or violation in any material respect of
any order, writ, injunction, decree or demand of any Governmental Authority. There has not been
committed by 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.



     4.1.10 Financial Information. 



     All financial data, including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered to Lender by or on behalf of Borrower and the
Properties (i) considered in the aggregate, are true, complete and correct in all material
respects, (ii) fairly present the financial condition of Borrower 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 (but subject to normal year-end
adjustments). Except for Permitted Encumbrances, Borrower has no contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments that are known to Borrower and reasonably likely to have a
materially adverse effect on any Individual Property or the operation thereof as hotels except as
referred to or reflected in said financial statements. Since the date of the most recent such
financial statements, there has been no materially adverse change in the financial condition,
operations or business of Borrower from that set forth in said financial statements.



     4.1.11 Condemnation. 



     Except as provided on Exhibit E attached hereto, no Condemnation or other similar
proceeding has been commenced or, to the best of Borrower’s knowledge, is threatened or
contemplated with respect to all or any portion of any Individual Property or for the relocation of
roadways providing access to any Individual Property.



     4.1.12 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.



62









 





     4.1.13 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 Title Insurance Policy. All roads necessary for the use of
each Individual Property for their current respective purposes have been completed, are physically
open and except as disclosed on the Surveys, are dedicated to public use and have been accepted by
all Governmental Authorities.



     4.1.14 Not a Foreign Person.



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



     4.1.15 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.



     4.1.16 Assessments. 



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



     4.1.17 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 asserted no right of
rescission, set-off, counterclaim or defense with respect thereto.



     4.1.18 No Prior Assignment. 



     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.



     4.1.19 Insurance. 



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



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     4.1.20 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.



     4.1.21 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 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 keep and maintain all Licenses necessary for the operation of each
Individual Property as a hotel. The use being made of each Individual Property is in conformity
with the certificate of occupancy issued for such Individual Property.



     4.1.22 Flood Zone. 



     Except as disclosed on the Surveys, 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) is in full force and effect with respect to each such Individual Property.



     4.1.23 Physical Condition. 



     To the extent Borrower’s noncompliance with this Section 4.1.23 would reasonably be expected
to materially adversely affect the condition (financial or otherwise) or business of Borrower or
the condition or ownership of the Properties (taken as a whole): (i) 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.
(ii) Each Individual Property is free from damage caused by fire or other casualty. (iii) All
liquid and solid waste disposal, septic and sewer systems located on each Individual Property are,
in all material respects, in a good and safe condition and repair and in compliance with all Legal
Requirements.



     4.1.24 Boundaries. 



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



64









 





     4.1.25 Leases. 



     Owner is the owner and lessor of landlord’s interest in the Operating Leases. Operating
Lessee is the lessor under all other Leases. No Person (other than hotel guests) has any
possessory interest in any Individual Property or right to occupy the same except under and
pursuant to the provisions of the Leases and Management Agreements. The current Leases are in full
force and effect and, there are no defaults by Borrower or, to the best of Borrower’s knowledge,
any tenant under any Lease, and there are no conditions that, with the passage of time or the
giving of notice, or both, would constitute defaults under any 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. All work to be performed by Borrower under each 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
Borrower to any tenant has already been received by such tenant. There has been no prior sale,
transfer or assignment, hypothecation or pledge of any Lease or of the Rents received therein which
is still in effect. No tenant under any Lease has sublet all or any portion of the premises
demised thereby, nor does anyone except such tenant and its employees occupy such leased premises.
No tenant under any Lease has a right or option pursuant to such Lease or otherwise to purchase all
or any part of the leased premises or the building of which the leased premises are a part. Except
as set forth in the Leases, no tenant under any Lease has any right or option for additional space
in the Improvements.



     4.1.26 Survey. 



     To the best of Borrower’s knowledge, the Survey for each Individual Property delivered to
Lender in connection with this Agreement does not fail to reflect any material matter affecting
such Individual Property or the title thereto.



     4.1.27 Intentionally Omitted. 



     4.1.28 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 Properties to Borrower have been paid. All 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 of the Loan Documents,
including, without limitation, the Security Instruments, have been paid.



     4.1.29 Franchise Agreement; PIPs. 



          (a) The Franchise Agreement, if applicable, for each Individual Property is in full force and
effect, all franchise fees, reservation fees, royalties and other sums due and payable thereunder
have been paid in full to date, and neither Borrower nor, to the best of Borrower’s knowledge,
Franchisor is in default thereunder, if Borrower’s noncompliance with this Section 4.1.29 would
reasonably be expected to materially adversely affect the condition (financial or

65









 








otherwise) or business of Borrower or the condition or ownership of the Properties (taken as a
whole).




          (b) There exists no property improvement plan with respect to any Individual Property pursuant
to which improvements or repairs to such Property required by the applicable Franchisor shall
remain incomplete or unsatisfied in accordance with such plan or other requirements of such
Franchisor.




     4.1.30 Management Agreement/Operating Lease. 



          (a) The Management Agreement for each Individual Property is in full force and effect and
there is no default thereunder by Borrower or, to Borrower’s knowledge, Manager thereunder and, to
the best of Borrower’s knowledge, no event has occurred that, with the passage of time and/or the
giving of notice would constitute a default thereunder, if Borrower’s noncompliance with this
Section 4.1.30(a) would reasonably be expected to materially adversely affect the condition
(financial or otherwise) or business of Borrower or the condition or ownership of the Properties
(taken as a whole).




          (b) The Operating Lease for each Individual Property is in full force and effect and there is
no 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, if Borrower’s noncompliance with
this Section 4.1.30(b) would reasonably be expected to materially adversely affect the condition
(financial or otherwise) or business of Borrower or the condition or ownership of the Properties
(taken as a whole).




     4.1.31 Illegal Activity. 



     No portion of any Individual Property has been or will be purchased by Borrower 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.



     4.1.32 No Change in Facts or Circumstances; Disclosure. 



     All information submitted by Borrower 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 in this Agreement or in any other
Loan Document, considered in the aggregate, 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 would reasonably be expected to
materially and adversely affect the use, operation or value of the Properties or the business
operations or the financial condition of Borrower.



     4.1.33 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



66









 




“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.




     4.1.34 Principal Place of Business; State of Organization. 



     Borrower’s principal place of business as of the date hereof is the address set forth in the
introductory paragraph of this Agreement. Owner is formed under the laws of the State of Delaware
and its organizational identification number is 3643670. Operating Lessee is formed under the laws
of the State of Delaware and its organizational identification number is 3643665.



     4.1.35 Single Purpose Entity. 



     Each Borrower covenants and agrees that its organizational documents 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 (in each case,
“Principal”) provide that it has not and shall not:



          (a) with respect to Borrower, engage in any business or activity other than the acquisition,
development, ownership, operation, leasing, managing and maintenance of the Properties, 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) (A) in the
case of Owner, the Properties and (B) in the case of Operating Lessee, its interest in the
Operating Leases, and (ii) such incidental Personal Property as may be necessary for the operation
of the Individual Property or Properties, as the case may be 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 otherwise dispose of all or substantially all of its assets or change
its legal structure;




          (d) (i) fail to observe its organizational formalities or preserve its existence as an entity
duly formed, validly existing and in good standing (if applicable) under the laws of the
jurisdiction of its formation, and qualification to do business in the State where a Property or
Properties is located, if applicable, or (ii) without the prior written consent of Lender, amend,
modify, terminate or fail to comply with the special purpose entity/bankruptcy remoteness
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, whichever is applicable;




          (e) own any subsidiary or make any investment in, any Person without the prior written consent
of Lender;




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          (f) 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 (other than
pursuant to the Management Agreement) 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 (I) Permitted Encumbrances, (II) the Permitted
FF&E Financing and (III) the Debt, except for trade payables in the ordinary course of its business
of owning and operating the Individual Property or Properties as applicable, provided that such
trade debt (i) is not evidenced by a note, (ii) is paid within sixty (60) days of the date
incurred, (iii) does not exceed, in the aggregate, four percent (4%) of the outstanding principal
balance of the Note and (iv) is payable to trade creditors and in amounts as are normal and
reasonable under the circumstances and with respect to Principal, incur any debt secured or
unsecured, direct or contingent (including guaranteeing any obligations);




          (h) intentionally omitted;




          (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 for consolidated financial statements which contain a note indicating that
Borrower’s and Principal’s separate assets and liabilities are neither available to pay the debts
of the consolidated entity nor constitute obligations of the consolidated entity;




          (j) other than in connection with the Operating Leases, enter into any contract or agreement
with 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 (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, or any member, general
partner, principal or Affiliate thereof;




          (k) 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;




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          (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, other than with respect to the Loan or
any guaranty of any Management Agreement, Replacement Management Agreement, Franchise
Agreement or Replacement Franchise Agreement;




          (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 as required by Applicable Law;




          (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;




          (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 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




69









 







or reorganization statute, or make an assignment for the benefit of creditors without the
affirmative vote of the 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 required by Applicable Law;




          (y) have any of its obligations guaranteed by an Affiliate, other than with respect to 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 4.1.35(cc) below, fail at any time to have at least
one independent director/manager (an “Independent Director”) that is not and has not been for at
least five (5) years: (a) a stockholder, director (other than an independent director of an
Affiliate of Borrower), officer, employee, partner, member, attorney or counsel of 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 Borrower, 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; or




          (bb) with respect to Principal, or if Borrower is a single member limited liability company
that complies with the requirements of Section 4.1.35(cc) below, permit its board of
directors/managers to take any action which, under the terms of any applicable organizational
documents, requires the unanimous vote of one hundred percent (100%) of the members of the board
without the vote of the Independent Director.




          (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 4.1.35, 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 designated by 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




70









 







may not resign from Borrower or transfer its rights as Special Member unless a successor Special
Member has been admitted to Borrower as Special Member in accordance with requirements of
Delaware law. 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 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. 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.



     4.1.36 Business Purposes. 



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



     4.1.37 Taxes. 



     Borrower has filed all federal, State, county, municipal, and city income and other tax
returns required to have been filed by it and has paid, prior to delinquency thereof, 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.



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     4.1.38 Intentionally Omitted. 



     4.1.39 Environmental Representations and Warranties. 



     Borrower represents and warrants, except as disclosed on those certain written reports
identified on Schedule XI attached hereto and made a part hereof (collectively, the
“Environmental Report”) of each Individual Property 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
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, 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 violation of any Environmental Law and which would require
remediation by a Governmental Authority in, on, under or from any of the Properties; (c) there is
no threat of any Release of Hazardous Materials migrating to any of the Properties; (d) there is no
present or, to Borrower’s knowledge, prior non-compliance with Environmental Laws, or with permits
issued pursuant thereto, in connection with any of the Properties except as described in the
Environmental Reports; (e) Borrower does not know of, and has not received, any written or oral
notice or other communication from any Person (including but not limited to a Governmental
Authority) relating to Hazardous Materials in, on, under or from any of the Properties; and (f)
Borrower has truthfully and fully provided to Lender, in writing, any and all information relating
to environmental conditions in, on, under or from any of the Properties known to Borrower or
contained in Borrower’s files and records, including but not limited to any reports relating to
Hazardous Materials in, on, under or migrating to or from any of the Properties and/or to the
environmental condition of the Properties.



     4.1.40 Taxpayer Identification Number. 



     Owner’s United States taxpayer identification number is 51-0456443. Operating Lessee’s United
States taxpayer identification number is 51-0456441.



     4.1.41 Embargoed Person and Patriot Act



          (a) As of the date hereof and at all times throughout the term of the Loan, including after
giving effect to any transfers of interests permitted pursuant to the Loan Documents, (a) none of
the funds or other assets of Borrower, Guarantor or Indemnitor 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 with the result that the investment
in Borrower, Guarantor or Indemnitor, as applicable (whether directly or indirectly), is prohibited
by law or the Loan made by Lender is in violation of law (“Embargoed Person”); (b) no Embargoed
Person has any interest of any nature whatsoever in Borrower, Guarantor or Indemnitor, as
applicable, with the result that the investment in Borrower, Guarantor or

72









 








Indemnitor, as applicable
(whether directly or indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of Borrower, Guarantor or Indemnitor, as applicable, have been derived from any
unlawful activity with the result that the investment in Borrower, Guarantor or Indemnitor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law.




          (b) All capitalized words and phrases and all defined terms used in the USA Patriot Act of
2001, 107 Public Law 56 (October 26, 2001) and in other statutes and all orders, rules and
regulations of the United States government and its various executive departments, agencies and
offices related to the subject matter of the Patriot Act, including Executive Order 13224 effective
September 24, 2001 (collectively referred to in this Section only as the “Patriot Act”) and are
incorporated into this Section. Borrower, Guarantor and Indemnitor hereby represent and warrant
that Borrower, Guarantor or Indemnitor and each and every Person affiliated with Borrower,
Guarantor or Indemnitor or that to Borrower’s knowledge has an economic interest in Borrower, or,
to Borrower’s knowledge, that has or will have an interest in the transaction contemplated by this
Agreement or in the Property or will participate, in any manner whatsoever, in the Loan, is: (i)
not a “blocked” person listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and all
modifications thereto or thereof (as used in this Section only, the “Annex”); (ii) in full
compliance with the requirements of the Patriot Act and all other requirements contained in the
rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (as used
in this Section only, “OFAC”); (iii) operated under policies, procedures and practices, if any,
that are in compliance with the Patriot Act and available to Lender for Lender’s review and
inspection during normal business hours and upon reasonable prior notice; (iv) not in receipt of
any notice from the Secretary of State or the Attorney General of the United States or any other
department, agency or office of the United States claiming a violation or possible violation of the
Patriot Act; (v) not listed as a Specially Designated Terrorist or as a “blocked” person on any
lists maintained by the OFAC pursuant to the Patriot Act or any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations of the OFAC issued
pursuant to the Patriot Act or on any other list of terrorists or terrorist organizations
maintained pursuant to the Patriot Act; (vi) not a person who has been determined by competent
authority to be subject to any of the prohibitions contained in the Patriot Act; and (vii) not
owned or controlled by or now acting and or will in the future act for or on behalf of any person
named in the Annex or any other list promulgated under the Patriot Act or any other person who has
been determined to be subject to the prohibitions contained in the Patriot Act. Borrower covenants
and agrees that in the event Borrower receives any notice that Borrower, Guarantor or Indemnitor
(or any of its beneficial owners or affiliates or participants) become listed on the Annex or any
other list promulgated under the Patriot Act or is indicted, arraigned, or custodially detained on
charges involving money laundering or predicate crimes to money laundering, Borrower shall
immediately notify Lender. It shall be an Event of Default hereunder if Borrower, Guarantor or
Indemnitor or any other party to any Loan Document becomes listed on any list promulgated under the
Patriot Act or is indicted, arraigned or custodially detained on charges involving money laundering
or predicate crimes to money laundering.




     4.1.42 Ground Lease Representations. 



          (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 Borrower or the
landlord thereunder, and no event has occurred which but for the passage of

73









 








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 Borrower nor Ground Lessor under each Ground Lease has commenced any action
or given or received any notice for the purpose of terminating such Ground Lease;




          (b) Each Security Instrument which is secured by Borrower’s interest in a Ground Lease is also
secured by the related fee interest in the applicable Property, and the fee interest is subject and
subordinate of record to the applicable Security Instrument, and such Security Instrument does not
by its terms provide that it will be subordinated to the Lien of any other mortgage or other Lien
upon such fee interest, and upon the occurrence of an Event of Default, Lender has the right to
foreclose or otherwise exercise its rights with respect to the fee interest within a commercially
reasonable time;




          (c) The Ground Leases or a memorandum thereof have been duly recorded, the Ground Leases
permit 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 since their
recordation. The Ground Leases cannot be cancelled, terminated, surrendered or amended without the
prior written consent of Lender;




          (d) Borrower’s interest in the Ground Leases are not subject to any Liens superior to, or of
equal priority with, the applicable Security Instrument;




          (e) Borrower’s interest in the Ground Leases are 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;




          (f) The Ground Leases require the lessor thereunder to give notice of any default by Borrower
to Lender and the Ground Leases further provide that notice of termination given under the Ground
Leases are not effective against Lender unless a copy of the notice has been delivered to Lender in
the manner described in the applicable Ground Lease;




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




          (h) The Ground Leases have a term which extends not less than twenty (20) years beyond the
Maturity Date;




          (i) The Ground Leases require 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;




          (j) 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
Lender or a trustee appointed by 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 Loan
together with any accrued interest thereon; and




74









 








          (k) The Ground Leases do not impose restrictions on subletting.




     4.1.43 Deposit Accounts. With respect to the Property Account and the Concentration
Account and the Lockbox Account (collectively, the “Collateral Accounts”):



          (a) This Agreement and the Property Account Agreements create valid and continuing security
interests (as defined in the UCC) in the Collateral Accounts, in favor of Lender, which security
interests are prior to all other Liens and are enforceable as such against creditors of and
purchasers from Borrower;




          (b) The Collateral Accounts, each constitute “deposit accounts” within the meaning of the
applicable UCC;




          (c) Borrower owns and has good and marketable title to the Collateral Accounts, free and clear
of any Lien or claim of any Person (other than Lender);




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




          (e) Other than the security interest granted to Lender pursuant to this Agreement and the
Property Account Agreements, Borrower has not pledged, assigned, or sold, granted a security
interest in, or otherwise conveyed any of the Collateral Accounts; and




          (f) The Collateral Accounts are not in the name of any Person other than Borrower or Lender.
Borrower has not authorized the banks maintaining, the Collateral Accounts to comply with
instructions of any Person other than Lender.




     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 (as such
representations and warranties are modified by the Disclosure Schedule and other certificates and
instruments delivered to Lender pursuant to this Agreement) 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.



     V. BORROWER COVENANTS



     Section 5.1 Affirmative Covenants. 



     From the date hereof and until payment and performance in full of all obligations of Borrower
under the Loan Documents or the earlier release of the Liens of all Security Instruments
encumbering the Properties (and all related obligations) in accordance with the terms



75









 




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) There shall never be committed by 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 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 commit, permit or suffer to exist any act
or omission affording such right of forfeiture. To the extent that Borrower’s noncompliance with
this Section 5.1.1(a) would reasonably be expected to materially adversely affect the condition
(financial or otherwise) or business of Borrower or the condition or ownership of the Properties
(taken as a whole): (i) 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, in all material respects, with all Legal Requirements applicable to it and the
Properties; (ii) Borrower shall at all times 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, 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 Security Instruments; (iii) Borrower
shall 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; and (iv) Borrower shall 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) Borrower, at its own expense, may 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 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) no Individual Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall promptly upon final
determination thereof comply with any such Legal Requirement determined to be valid or applicable
or cure any violation of any Legal Requirement; (v) such proceeding shall suspend the enforcement
of the contested Legal Requirement against Borrower or any Individual Property; and (vi) Borrower
shall furnish such security as may be required in the proceeding, 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 judgment of Lender, the validity, applicability or
violation of such Legal Requirement is finally established or any Individual Property (or any part
thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or
lost.

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     5.1.2 Taxes and Other Charges. 



     Borrower shall pay all Taxes and Other Charges now or hereafter levied or assessed or imposed
against the Properties or any part thereof prior to delinquency thereof. Upon Lender’s request,
Borrower shall furnish 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 are
being paid by Lender pursuant to Section 7.2 hereof). Borrower shall not suffer and shall promptly
cause to be paid and discharged 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. Borrower, at its own expense, may 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 is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in accordance with all
Applicable Laws; (iii) no Individual Property nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall 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; and (vi) Borrower shall furnish such security as may be required in the
proceeding, to insure the payment of any such Taxes or Other Charges, together with all interest
and penalties thereon. Lender may apply such security or part thereof held by Lender at any time
when, in the judgment of Lender, the validity or applicability of such Taxes or Other Charges are
established or any Individual Property (or part thereof or interest therein) shall be in danger of
being sold, forfeited, terminated, cancelled or lost or there shall be any danger of the Lien of
any Security Instrument being primed by any related Lien.



     5.1.3 Litigation. 



     Borrower shall give prompt written notice to Lender of any litigation or governmental
proceedings pending or threatened against Borrower which might materially adversely affect
Borrower’s condition (financial or otherwise) or business or the Properties (taken as a whole).



     5.1.4 Access to Properties. 



     Borrower shall 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 condition,
financial or otherwise, or of the occurrence of any Default or Event of Default of which Borrower
has knowledge.



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     5.1.6 Cooperate in Legal Proceedings. 



     Borrower shall cooperate fully with Lender with respect to any proceedings relating to the
Borrower, the Properties or the Loan 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 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 expenses incurred in connection therewith (including 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, 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;




          (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 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 (to the extent permitted by Applicable Law) all State, county and municipal
recording, mortgage, intangible, and all other taxes imposed upon the execution and recordation of
the Security Instruments and/or upon the execution and delivery of the Note.



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     5.1.10 Financial Reporting. 



          (a) Borrower will keep and maintain or will cause to be kept and maintained on a Fiscal Year
basis, in accordance with GAAP (or such other accounting basis 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 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
or any other Person maintaining such books, records and accounts and to make such copies or
extracts thereof as Lender shall desire. Upon 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 Properties, as Lender shall determine to be
necessary or appropriate. All operating and profits and loss statements required pursuant to this
Section 5.1.10 shall be prepared for each Individual Property and for the Properties taken as a
whole. All other statements required pursuant to this Section 5.1.10 shall be prepared for the
Properties taken as a whole.




          (b) Borrower will furnish to Lender annually, within ninety (90) days following the end of
each Fiscal Year (provided that, with respect to Fiscal Year ending December 31, 2006, only upon
Lender’s request), a complete copy of (i) Borrower’s annual financial statements certified by a
Responsible Officer of Borrower, both in accordance with GAAP (or such other accounting basis
acceptable to Lender) covering the Properties for such Fiscal Year and containing statements of
profit and loss and a balance sheet and (ii) an operating statement certified by a Responsible
Officer of Borrower for each Individual Property and the Properties taken as a whole which present
the operating results of the Properties in a manner consistent with those operating statements
given by Borrower to Lender in connection with Lender’s underwriting of the Loan, which operating
statement shall be in substantially the form attached hereto as Schedule XV. Such statements
referred to in subsection (ii) above shall set forth the financial condition and the results of
operations of the Properties for such Fiscal Year, and shall include, but not be limited to,
amounts representing annual Net Cash Flow, Net Operating Income, Gross Income from Operations and
Operating Expenses. Borrower’s annual financial statements shall be accompanied by (1) a
comparison of the budgeted income and expenses and the actual income and expenses for the prior
Fiscal Year, (2) a certificate executed by a Responsible Officer or other appropriate officer of
Borrower or Principal, as applicable, stating that each such annual financial statement presents
fairly the financial condition and the results of operations of Borrower and the Properties being
reported upon and has been prepared in accordance with GAAP, (3) Intentionally Omitted and (4) an
annual occupancy report for such year, including the average daily room rate for such year.
Notwithstanding the foregoing, for calendar year 2006 only, the statements required pursuant to
Section 5.1.10(b)(i) and (ii) hereof if requested by Lender shall assume Borrower’s operations
commenced on November 1, 2006.




          (c) Borrower will furnish, or cause to be furnished, to Lender on or before forty-five (45)
days after the end of each calendar quarter the following items, accompanied by a certificate of a
Responsible Officer or other appropriate officer of Borrower or Principal, as applicable, stating
that such items are true, correct, accurate, and complete and fairly present the results of the
operations of Borrower and the Properties: (i) a report of occupancy for the subject quarter
including an average daily rate, accompanied by an Officer’s Certificate with respect

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thereto; (ii) quarterly and year-to-date operating statements (including Capital Expenditures)
presented for each Individual Property and the Properties taken as a whole in a form consistent
with the operating statements delivered by Borrower to Lender in connection with Lender’s
underwriting of the Loan) which operating statement shall be in substantially the form attached
hereto as Schedule XV) and prepared for each calendar quarter, noting Net Operating Income, Gross
Income from Operations, and Operating Expenses (not including any contributions to the Replacement
Reserve Fund), and other information necessary and sufficient to fairly present the results of
operation of the Properties during such calendar quarter, and containing a comparison of budgeted
income and expenses and the actual income and expenses, (iii) a detailed explanation of any
variances which are both (I) ten percent (10%) or more and (II) in excess of $50,000 between
budgeted and actual amounts for any Individual Property, all in form satisfactory to Lender; (iv) a
calculation reflecting the annual Debt Service Coverage Ratio for the immediately preceding twelve
(12) month period as of the last day of such quarter accompanied by an Officer’s Certificate with
respect thereto and (v) a Smith Travel Research STAR Report or similar market benchmarking service
for each Individual Property.




          (d) Beginning in Fiscal Year 2007, and for each Fiscal Year thereafter, (I) Borrower shall
submit to Lender a preliminary Annual Budget for each Individual Property not later than thirty
(30) days prior to the commencement of such Fiscal Year and (II) Borrower shall submit to Lender a
final proposed Annual Budget for each Individual Property not later than sixty (60) days after to
the commencement of such Fiscal Year. The final budget shall be in form reasonably satisfactory to
Lender, and shall be subject to Lender’s written approval, which approval shall not be reasonably
withheld or delayed (each such Annual Budget after it has been approved in writing by Lender shall
be hereinafter referred to as an “Approved Annual Budget”). In the event that Lender objects to
the final proposed Annual Budget submitted by Borrower, Lender shall advise Borrower of such
objections within fifteen (15) days after receipt respectively thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall 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 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 a proposed Annual Budget, the most recently Approved Annual
Budget shall apply; provided that, such Approved Annual Budget shall be adjusted to reflect (A)
actual increases in Taxes, Insurance Premiums and utilities expenses and, (B) with respect to the
IHG Managed Properties (defined below) only, employee related expenses shall be increased by a
percentage equal to the increase in the Consumer Price Index (defined below) during the prior
Fiscal Year. Any such final proposed Annual Budget submitted to Lender for Lender’s approval shall
be deemed approved if Lender shall have failed to notify Borrower of its approval or disapproval
within fifteen (15) Business Days following Lender’s receipt of Borrower’s written request together
with such final proposed Annual Budget, as the case may be, and any and all required information
and documentation reasonably required by Lender to reach a decision, provided, such request to
Lender is marked in bold lettering with the following language: “LENDER’S RESPONSE IS REQUIRED
WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN
AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER” and the envelope containing the request must be
marked “PRIORITY”. With respect to the Annual Budgets for the IHG Managed

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Properties only, to the extent that the approval process for such Annual Budgets as set forth
herein shall be inconsistent with the approval process set forth in the Management Agreements for
the IHG Managed Properties, the approval process set forth in such Management Agreements shall
control, provided however, that (i) until such time as proposed Annual Budgets for such IHG Managed
Properties are approved, the most recently Approved Annual Budgets for such Properties shall apply,
as adjusted to reflect increases only as set forth in this Agreement and (ii) the Borrower shall
not provide consent to any Annual Budget pursuant to the Management Agreements for the IHG Managed
Properties without Lender’s prior written consent.




     The term “IHG Managed Properties” shall mean those Individual Properties located at (i) 115
Meeting Street St., Charleston, SC 29401 and (ii) 77 NE Loop 410, San Antonio, TX 78216.



     The term “Consumer Price Index” shall mean the Consumer Price Index for all Urban Consumers,
U.S. City Average, published by the United States Bureau of Labor Statistics.



          (e) Borrower will (i) furnish to Lender, within thirty (30) days of the end of each time
period set forth on Schedule II attached hereto, a report for each Individual Property certified by
a Responsible Party of Borrower detailing all FF&E Expenditures at such Individual Property during
the time period set forth on Schedule II attached hereto, and (ii) provide such additional
information reasonably requested by Lender in connection with its confirmation of FF&E
Expenditures. Lender and/or any other Person designated by Lender, by written notice to Borrower,
shall have the right, but not the obligation, to enter upon any Individual Property at all
reasonable times to inspect and assess the FF&E Expenditures.




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




          (g) Borrower agrees that Lender may forward to each purchaser, transferee, assignee, servicer,
participant, 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, any Guarantor, any Indemnitor and the Properties,
whether furnished by Borrower, any Guarantor, any Indemnitor or otherwise, as Lender determines
necessary or desirable. To the fullest extent permitted by Applicable Laws, 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. 



     Each Borrower will continue to engage in the businesses presently conducted by them as and to
the extent the same are necessary for the ownership, maintenance, management and operation of the
Properties. Borrower will remain in good standing under the laws of each



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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 any Security Instrument encumbering any Individual Property is
foreclosed in whole or in part or that any such Security Instrument is put into the hands of an
attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage prior
to or subsequent to any Security Instrument encumbering any Individual Property in which proceeding
Lender is made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower, Ground Lessor or any of their constituent Persons or an
assignment by Borrower, Ground Lessor or any of their constituent Persons for the benefit of its
creditors, Borrower, Ground Lessor, their successors or assigns, shall be chargeable with and
agrees to pay all costs of collection and defense, including attorneys’ fees and costs, incurred by
Lender, Borrower or Ground Lessor in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required service or use
taxes.



     5.1.13 Estoppel Statement. 



          (a) After written 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, the Security Instruments 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 use commercially reasonable efforts to deliver to Lender upon request,
tenant estoppel certificates from each commercial tenant leasing space at the Properties in form
and substance reasonably satisfactory to Lender.




          (c) Borrower shall use commercially reasonable efforts, promptly upon request of Lender, 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
Operating Lessee is in default under any of the 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 Operating Lessee 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, deliver to Lender an estoppel certificate
from Operating Lessee stating that (i) the Operating Lease is in full force and effect and has not
been modified, amended or assigned, (ii) Borrower is not in default under any of the terms,
covenants or provisions of the Operating Lease and Operating Lessee knows of no event which, but
for the passage of time or the giving of notice or both, would constitute an event





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of default under
the Operating Lease, (iii) Borrower has not commenced any action or given or
received any notice for the purpose of terminating the Operating Lease and (iv) all sums due
and payable under the Operating Lease have been paid in full.




          (e) Borrower shall, promptly upon request of Lender, deliver to Lender an estoppel certificate
from each Ground Lessor stating that (i) the applicable Ground Lease is in full force and effect
and has not been modified, amended or assigned, (ii) neither Ground Lessor nor Borrower is in
default under any of the terms, covenants or provisions of the Ground Lease and Ground Lessor 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 Ground Lease, (iii) neither Ground Lessor nor Borrower has commenced any
action or given or received any notice for the purpose of terminating the Ground Lease and (iv) all
sums due and payable under the Ground Lease have 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. 



     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.



     5.1.16 Confirmation of Representations. 



     Borrower shall deliver, in connection with any Securitization, upon reasonable prior written
request from Lender, (a) one or more Officer’s Certificates certifying as to the accuracy in all
material respects of all representations made by Borrower in the Loan Documents (as such
representations are modified by the Disclosure Schedule, and other certificates and instruments
delivered to Lender pursuant to this Agreement) as of the date of the closing of such
Securitization 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.



     5.1.17 Leasing Matters. 



          (a) With respect to any Individual Property, Borrower may enter into a proposed Lease
(including the renewal or extension of an existing Lease (a “Renewal Lease”)) without the prior
written consent of Lender, provided such proposed Lease or Renewal 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 Lease is executed by 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, (iii does not have a material adverse




83









 




effect on the value or
quality of the applicable Individual Property, (iv) is subject and
subordinate to the related Security Instrument and, upon Lender’s reasonable request, the
lessee thereunder agrees to attorn to Lender and (v) is not a Major Lease. All proposed 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, delayed or
conditioned. At Lender’s request, Borrower shall promptly deliver to Lender copies of all Leases
which are entered into pursuant to this Subsection together with Borrower’s certification that it
has satisfied all of the conditions of this Section.




          (b) Borrower (i) shall observe and perform all the 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) shall promptly send copies to Lender of all notices of
default or other material matters which Borrower shall send or receive with respect to the Major
Leases; (iii) shall 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) shall 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) shall not execute any other assignment of the lessor’s
interest in any of the Leases or the Rents; and (vi) shall 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, which consent shall not be unreasonably withheld, delayed or conditioned.




          (c) Borrower may, without the consent of Lender, 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 (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 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 and any lease
subordination agreement binding upon Lender with respect to such Lease. 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 and its counsel,
at Borrower’s expense. At Lender’s request, Borrower shall 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, without the prior written consent of Lender (which consent shall not
be unreasonably withheld, delayed or conditioned), enter into, materially amend, materially modify,
waive any material provisions of, terminate, reduce rents under, accept a surrender of space under,
or shorten the term of, or renew or extend upon terms and




84









 




conditions less favorable to Borrower,
any Major Lease or any instrument guaranteeing or
providing credit support for any Major Lease; provided, however, Borrower shall not be
required to obtain Lender’s written consent to any immaterial, non-economic change or beneficial
economic change to a Major Lease.




          (e) To the extent actually received by Lender, Lender shall hold any and all monies
representing security deposits under the Leases (the “Security Deposits”) received by Lender, in
accordance with the terms of this Agreement and the respective Lease, and shall only release the
Security Deposits in order to return a tenant’s Security Deposit to such tenant if such tenant is
entitled to the return of the Security Deposit under the terms of the Lease.




          (f) To the extent that Lender’s consent or approval is required under this Section 5.1.17, any
such proposed modification, change, supplement, alteration, amendment, assignment or sublease of a
Lease or Major Lease submitted to Lender for approval shall be deemed approved if (i) Borrower
delivers to Lender a written request for such approval marked in bold lettering with the following
language: “LENDER’S RESPONSE IS REQUIRED WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS
NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER. FAILURE TO
RESPOND SHALL BE DEEMED AN APPROVAL.” and the envelope containing the request is marked “PRIORITY”;
and (ii) Lender shall have failed to notify Borrower of its approval or disapproval within such
fifteen (15) Business Days following Lender’s receipt of Borrower’s written request together with
such proposed modification, change, supplement, alteration, amendment, assignment or sublease of a
Lease or Major Lease, and any and all other information and documentation relating thereto
reasonably required by Lender to reach a decision. In no event shall Lender be deemed to have
approved any change having a material adverse effect on Borrower’s costs or obligations. Upon
Borrower’s request, Lender shall deliver to Borrower a reasonably detailed description of the
reasons for any disapprovals under this Section 5.1.17.




     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 (I) with respect to the Properties managed by Intercontinental Hotels Group Resources, Inc.,
successor to Bristol Management L.P. (“IHG”), the sum of (x) five percent (5%) of total room
revenue and (y) two percent (2%) of total revenue; provided, however, IHG shall not charge any
additional franchise fees in connection with such Properties and (II) with respect to the
Properties managed by any Person other than IHG, three percent (3%) of the gross income derived
from the Property (excluding any incentive management fees which are subordinate to the Loan).
Operating Lessee shall (i) diligently perform and observe all of the terms, covenants and
conditions of the Management Agreement, on the part of Operating Lessee to be performed and
observed to the end that all things shall be done which are necessary to keep unimpaired the rights
of Operating Lessee under the Management Agreement and (ii) promptly notify Lender of the giving of
any notice by Manager to Operating Lessee of any default by Operating Lessee in the performance or
observance of any of the terms, covenants or conditions of the Management Agreement on the part of
Operating Lessee to be performed and observed and deliver to Lender a true copy of each such
notice. Operating Lessee shall not surrender the




85









 




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. Borrower hereby assigns to Lender as further security for the payment of the Debt and for
the performance and observance of the terms, covenants and conditions of this Agreement, all the
rights, privileges and prerogatives of Borrower to surrender the Management Agreement, or to
terminate, cancel, modify, change, supplement, alter or amend the Management Agreement, in any
material respect, and any such surrender of the Management Agreement, or termination, cancellation,
modification, change, supplement, alteration or amendment of the Management Agreement in any
material respect, without the prior consent of Lender, shall be void and of no force and effect.
Any such proposed modification, change, supplement, alteration or amendment of the Management
Agreement submitted to Lender for approval shall be deemed approved if (i) Borrower delivers to
Lender a written request for such approval marked in bold lettering with the following language:
“LENDER’S RESPONSE IS REQUIRED WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT
TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER. FAILURE TO RESPOND SHALL BE
DEEMED AN APPROVAL” and the envelope containing the request is marked “PRIORITY”; and (ii) Lender
shall have failed to notify Borrower of its approval or disapproval within such fifteen (15)
Business Days following Lender’s receipt of Borrower’s written request together with such proposed
modification, change, supplement, alteration or amendment of the Management Agreement, and any and
all other information and documentation relating thereto reasonably required by Lender to reach a
decision. In no event shall Lender be deemed to have approved (1) a surrender, termination or
cancellation of the Management Agreement, (2) any change having a material adverse effect on
Borrower’s costs or obligations under the Management Agreement, or (3) or a new management
agreement with a new property manager. Upon Borrower’s request, Lender shall deliver to Borrower a
reasonably detailed description of the reasons for any disapprovals under this Section 5.1.18.




          (b) If Operating Lessee shall default in the performance or observance of any material term,
covenant or condition of the Management Agreement on the part of Operating Lessee to be performed
or observed, after expiration of any applicable notice and cure periods provided in the Management
Agreement, 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 Management Agreement
on the part of Operating Lessee to be performed or observed to be promptly performed or observed on
behalf of Operating Lessee to the end that the rights of Operating Lessee in, to and under the
Management Agreement shall be kept unimpaired and free from default in all material respects.
Lender and any Person designated by Lender by written notice to Borrower shall have, and are hereby
granted, 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 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.
Operating Lessee shall not, and shall not permit the Manager to, sub-contract all or any material
portion of its management responsibilities under the Management Agreement to a third-party without
the




86









 




prior written consent of Lender, which consent shall not be unreasonably withheld, delayed or
conditioned. Operating Lessee shall request of Manager and deliver to Lender upon receipt
such certificates of estoppel with respect to compliance by Operating Lessee with the terms of the
Management Agreement as may be reasonably requested by Lender. Operating Lessee shall exercise
each individual option, if any, to extend or renew the term of the Management Agreement to the
extent required to continue it in full force and effect until after the Maturity Date, and
Operating Lessee hereby authorizes and appoints Lender its attorney-in-fact to exercise any such
option in the name of and upon behalf of Operating Lessee, which power of attorney shall be
irrevocable and shall be deemed to be coupled with an interest. 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 Security Instruments and the other Loan Documents
and (iv) shall be immediately due and payable upon demand by Lender therefor.




          (c) Without limitation of the foregoing, the applicable Borrower shall, upon request of Lender
and in accordance with the provisions of the applicable Assignment of Management Agreement,
terminate the Management Agreement and replace the Manager, without penalty or fee payable by
Borrower or Lender, if at any time during the Loan: (i) the Manager shall become insolvent or a
debtor in bankruptcy or insolvency proceeding (ii) there exists an Event of Default, except that
the requirements of this Section 5.1.18(c)(ii) shall not apply, unless an event of default under
such Management Agreement shall simultaneously have occurred and be continuing or (iii) there
exists an event of default by Manager under the Management Agreement, except that the requirements
of this Section 5.1.18(c)(iii) shall not apply in the event each and all of the following
conditions shall be satisfied (1) the applicable Borrower shall be diligently prosecuting the
resolution of such default in a commercially reasonable manner, (2) Lender shall receive copies of
all notices and correspondence sent and/or received by the applicable Borrower with respect to such
default, (3) no Event of Default exists and is continuing and (4) there shall be no material
adverse affect to the condition (financial or otherwise) or business of Borrower or the condition,
ownership or value of the applicable Individual Property.




     5.1.19 Environmental Covenants.



          (a) Borrower covenants and agrees that so long as the Loan is outstanding (i) all uses and
operations on or of the Properties, whether by Borrower or any other Person, shall be in compliance
in all material respects with all Environmental Laws and permits issued pursuant thereto; (ii)
there shall be no Releases of Hazardous Materials in, on, under or from any of the Properties;
(iii) there shall be no Hazardous Materials in, on, or under any of the Properties, except those
that are both (A) in 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 or (2) fully disclosed to and approved by Lender in
writing; (iv) Borrower shall 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”); (v) Borrower shall, at its sole cost and expense, fully
and expeditiously cooperate in all activities pursuant to paragraph (b) below, including but not
limited to providing all relevant information and making knowledgeable




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persons available for
interviews; (vi) Borrower shall, at its sole cost and expense, perform any
environmental site assessment or other investigation of environmental conditions in connection
with any of the Properties, pursuant to any reasonable written request of Lender, upon Lender’s
reasonable belief that an Individual Property is not in full compliance with all Environmental
Laws, and share with Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof; (vii) Borrower shall,
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; (viii) Borrower shall not allow any tenant or
other user of any of the Properties to violate any Environmental Law; and (ix) Borrower shall
immediately notify Lender in writing after it has become aware of (A) any presence or Release or
threatened Releases of Hazardous Materials in, on, under, from or migrating towards any of the
Properties; (B) any non-compliance with any Environmental Laws related in any way to any of the
Properties; (C) any actual or potential Environmental Lien; (D) any required or proposed
remediation of environmental conditions relating to any of the Properties; and (E) 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 Hazardous Materials
in connection with the Properties.




          (b) Lender and any other Person designated by Lender by written notice to Borrower, including
but not limited to any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of 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,
including but not limited to conducting any environmental assessment or audit (the scope of which
shall be determined in Lender’s sole and absolute discretion) and taking samples of soil,
groundwater or other water, air, or building materials, and conducting other invasive testing.
Borrower shall cooperate with and provide access to Lender and any such Person or entity designated
by Lender by written notice to Borrower.




     5.1.20 Alterations. 



     Other than (i) the purchase, replacement and/or installation of FF&E contemplated by the
Capital Plan, or (ii) the work described on Schedule III attached hereto, Borrower shall obtain
Lender’s prior written consent to (i) any structural alteration or (ii) with respect to each
Individual Property, any other alteration to any Improvements thereon which is estimated to cost in
excess of four (4%) percent of the value of the Individual Property, which consent shall not be
unreasonably withheld, delayed or conditioned, except with respect to alterations that may have a
material adverse effect on Borrower’s financial condition, the value of the related Individual
Property or the Net Operating Income thereof. Any such proposed alterations to any Improvements
submitted to Lender for approval shall be deemed approved if (i) Borrower delivers to Lender a
written request for such approval marked in bold lettering with the following language: “LENDER’S
RESPONSE IS REQUIRED WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE
TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER. FAILURE TO RESPOND SHALL BE DEEMED
AN APPROVAL” and the envelope containing the request is marked “PRIORITY”; and (ii) Lender shall
have failed to notify Borrower of its approval or disapproval



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within such fifteen (15) Business
Days following Lender’s receipt of Borrower’s written request
together with a reasonably detailed description of such proposed alteration, and any and all
other information and documentation relating thereto reasonably required by Lender to reach a
decision. In no event shall Lender be deemed to have approved alterations that may have a material
adverse effect on Borrower’s financial condition, the value of any Individual Property or the Net
Operating Income thereof. Upon Borrower’s request, Lender shall deliver to Borrower a reasonably
detailed description of the reasons for any disapprovals under this Section 5.1.20.




     5.1.21 Franchise Agreement. 



          (a) The Improvements on the Properties shall be operated under the terms and conditions of the
Franchise Agreements, if applicable. Borrower shall (i) pay all sums required to be paid by
Operating Lessee under the Franchise Agreement, (ii) diligently perform, observe and enforce all of
the terms, covenants and conditions of the Franchise Agreement on the part of Operating Lessee to
be performed, observed and enforced to the end that all things shall be done which are necessary to
keep unimpaired the rights of Borrower and/or Operating Lessee under the Franchise Agreement, (iii)
promptly notify Lender of the giving of any notice to Operating Lessee of any default by Operating
Lessee in the performance or observance of any of the terms, covenants or conditions of the
Franchise Agreement on the part of Operating Lessee 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, notice, report and estimate received
by it under the Franchise Agreement. Borrower shall not, 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, and Borrower hereby assigns to Lender as further security for the payment of the Debt and
for the performance and observance of the terms, covenants and conditions of this Agreement, all
the rights, privileges and prerogatives of Borrower and Operating Lessee to surrender the Franchise
Agreement or to terminate, cancel, modify, change, supplement, alter or amend the Franchise
Agreement in any material respect, and any such surrender of the Franchise Agreement or
termination, cancellation, modification, change, supplement, alteration or amendment of the
Franchise Agreement in any material respect without the prior consent of Lender shall be void and
of no force and effect.




          (b) If Operating Lessee shall default in the performance or observance of any material term,
covenant or condition of the Franchise Agreement on the part of Operating Lessee to be performed or
observed after expiration of any applicable notice and cure periods provided in the Franchise
Agreement, 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 Franchise Agreement
on the part of Operating Lessee to be performed or observed to be promptly performed or observed on
behalf of Operating Lessee, to the end that the rights of Operating Lessee in, to and under the
Franchise Agreement shall be kept unimpaired and free from default in all material respects.
Lender and any Person designated by Lender by written notice to Borrower 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




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deliver to Lender a copy of any notice 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, from time to time, use its best efforts
to obtain from Franchisor such certificates of estoppel with respect to compliance by Operating
Lessee with the terms of the Franchise Agreement as may be requested by Lender. Operating Lessee
shall exercise each individual option, if any, to extend or renew the term of the Franchise
Agreement to the extent required to continue it in full force and effect until after the Maturity
Date, and Operating Lessee hereby expressly authorizes and appoints Lender as its attorney-in-fact
to exercise any such option in the name of and upon behalf of Operating Lessee, which power of
attorney shall be irrevocable and shall be deemed to be coupled with an interest. 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 Security Instruments and the other Loan Documents and
shall be immediately due and payable upon demand by Lender therefor.




          (c) Notwithstanding the foregoing, any such proposed modification, change, supplement,
alteration or amendment of the Franchise Agreement submitted to Lender for approval shall be deemed
approved if (i) Borrower delivers to Lender a written request for such approval marked in bold
lettering with the following language: “LENDER’S RESPONSE IS REQUIRED WITHIN FIFTEEN (15) BUSINESS
DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED
AND LENDER. FAILURE TO RESPOND SHALL BE DEEMED AN APPROVAL.” and the envelope containing the
request is marked “PRIORITY”; and (ii) Lender shall have failed to notify Borrower of its approval
or disapproval within such fifteen (15) Business Days following Lender’s receipt of Borrower’s
written request together with such proposed modification, change, supplement, alteration or
amendment of the Franchise Agreement, and any and all other information and documentation relating
thereto reasonably required by Lender to reach a decision. In no event shall Lender be deemed to
have approved (1) a surrender, termination or cancellation of the Franchise Agreement, (2) any
change having a material adverse effect on Borrower’s costs or obligations under the Franchise
Agreement, or (3) a new franchise agreement with a new franchisor. Upon Borrower’s request, Lender
shall deliver to Borrower a reasonably detailed description of the reasons for any disapprovals
under this Section 5.1.21.




     5.1.22 Operating Lease.



     Borrower shall:



          (a) promptly perform and/or observe all of the covenants and agreements required to be
performed and observed by it under the Operating Lease and do all things necessary to preserve and
to keep unimpaired its rights thereunder;




          (b) promptly notify Lender of any event of default under the Operating Lease;




          (c) promptly enforce the performance and observance of all of the covenants and agreements
required to be performed and/or observed by the Operating Lessee under the Operating Lease;




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          (d) maintain each Operating Lease in full force and effect during the term of the Loan.




     5.1.23 OFAC. 



     At all times throughout the term of the Loan, Borrower, Guarantor, Indemnitor and their
respective Affiliates shall be in compliance in all material respects 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 The Ground Lease. 



          (a) With respect to each Ground Lease, Borrower shall (i) pay all rents, additional rents and
other sums required to be paid by 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 Borrower, as tenant thereunder, (iii) promptly notify Lender of
the giving of any notice by the landlord under the applicable Ground Lease to Borrower of any
default by Borrower, as tenant thereunder, and deliver to Lender a true copy of each such notice
within five (5) days of receipt and (iv) promptly notify Lender of any bankruptcy, reorganization
or insolvency of the landlord under the applicable Ground Lease or of any notice thereof, and
deliver to Lender a true copy of such notice within five (5) days of Borrower’s receipt. Borrower
shall not, without the prior consent of Lender, surrender the leasehold estate created by the
applicable Ground Lease or terminate or cancel any Ground Lease or modify, change, supplement,
alter, amend or waive any material term of any Ground Lease, either orally or in writing, and if
Borrower shall default in the performance or observance of any term, covenant or condition of any
Ground Lease on the part of 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,
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 Borrower to be performed or observed on behalf of Borrower, to the end that the rights of
Borrower in, to and under such Ground Lease shall be kept unimpaired and free from default. 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
exercise each individual option, if any, to extend or renew the term of each Ground Lease upon
demand by Lender made at any time within one (1) year prior to the last day upon which any such
option may be exercised, and Borrower hereby expressly authorizes and appoints Lender its
attorney-in-fact to exercise any such option in the name of and upon behalf of Borrower, which
power of attorney shall be irrevocable and shall be deemed to be coupled with an interest.




          (b) Subleases. Notwithstanding anything contained in any Ground Lease to the contrary,
Borrower shall not 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, (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




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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. Any sublease submitted to Lender for
approval shall be deemed approved if (i) Borrower delivers to Lender a written request for such
approval marked in bold lettering with the following language: “LENDER’S RESPONSE IS REQUIRED
WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN
AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER. FAILURE TO RESPOND SHALL BE DEEMED AN APPROVAL” and
the envelope containing the request is marked “PRIORITY”; and (ii) Lender shall have failed to
notify Borrower of its approval or disapproval within such fifteen (15) Business Days following
Lender’s receipt of Borrower’s written request together with such proposed sublease and any and all
other information and documentation relating thereto reasonably required by Lender to reach a
decision. In no event shall Lender be deemed to have approved any sublease having a material
adverse effect on Borrower’s costs or obligations. Upon Borrower’s request, Lender shall deliver a
Borrower a reasonably detailed description of the reasons for any disapprovals under this Section
5.1.24(b).




          (c) Notwithstanding anything to the contrary contained herein with respect to any Ground
Lease:





               (i) The Lien of the Security Instruments attach to all of Borrower’s rights and
remedies at any time arising under or pursuant to subsection 365(h) of the Bankruptcy Code,
including, without limitation, all of Borrower’s rights, as debtor, to remain in possession
of the related Individual Property which is subject to a Ground Lease;




               (ii) Borrower shall not, without Lender’s written consent, elect to treat a Ground
Lease as terminated under subsection 365(h)(1) of the Bankruptcy Code. Any such election
made without Lender’s prior written consent shall be void;




               (iii) As security for the Debt, Borrower unconditionally assigns, transfers and sets
over to Lender all of Borrower’s claims and rights to the payment of damages arising from
any rejection by any Ground Lessor under the Bankruptcy Code. Lender and Borrower shall
proceed jointly or in the name of Borrower in respect of any claim, suit, action or
proceeding relating to the rejection of a Ground Lease, including, without limitation, the
right to file and prosecute any proofs of claim, complaints, motions, applications, notices
and other documents in any case in respect a Ground Lessor under the Bankruptcy Code. This
assignment constitutes a present, irrevocable and unconditional assignment of the foregoing
claims, rights and remedies, and shall continue in effect until all of the Debt shall have
been satisfied and discharged in full. Any amounts received by Lender or Borrower as
damages arising out of the rejection of a Ground Lease as aforesaid shall be applied to all
costs and expenses of Lender



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(including, without limitation, reasonable attorneys’ fees and costs) incurred in
connection with the exercise of any of its rights or remedies in accordance with the
applicable provisions hereof;




               (iv) If pursuant to subsection 365(h) of the Bankruptcy Code, Borrower seeks to offset,
against the rent reserved in a Ground Lease, the amount of any damages caused by the
nonperformance by the applicable Ground Lessor of any of its obligations thereunder after
the rejection by such Ground Lessor under the Bankruptcy Code, then Borrower shall not
effect any offset of the amounts so objected to by Lender. If Lender has failed to object
as aforesaid within ten (10) days after notice from Borrower in accordance with the first
sentence of this subsection, Borrower may proceed to offset the amounts set forth in
Borrower’s notice to Lender;




               (v) In any action, proceeding, motion or notice shall be commenced or filed in respect
of any Ground Lessor of all or any part any Individual Property subject to a Ground Lease in
connection with any case under the Bankruptcy Code, Lender and Borrower shall cooperatively
conduct and control any such litigation with counsel agreed upon between Borrower and Lender
in connection with such litigation. Borrower shall, upon demand, pay to Lender all costs
and expenses (including reasonable attorneys’ fees and costs) actually paid or actually
incurred by Lender in connection with the cooperative prosecution or conduct of any such
proceedings. All such costs and expenses shall be secured by the Lien of the applicable
Security Instrument; and




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



     5.1.25 O&M Program.



     With respect to each Individual Property listed on Schedule XIV hereof, Borrower shall enter
into a contract with a licensed industrial hygienist to develop a fully documented O&M Program
which Borrower shall submit within thirty (30) days of the date hereof to Lender for its approval.
Borrower further covenants and agrees 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 develop and 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.



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     5.1.26 Condominium Provisions.



          (a) Borrower shall observe and perform each and every material term to be observed or
performed by Borrower pursuant to the Condominium Documents in all material respects.




          (b) After request by Lender (which request, provided no Event of Default has occurred and is
continuing, shall not be made more than twice in any calendar year), Borrower will use commercially
reasonable efforts to promptly to obtain from the Condominium Board and deliver to Lender an
estoppel certificate which shall include without limitation (i) the amount of the unpaid Common
Charges, if any, accrued against the Condo Property, (ii) that the Condominium Documents have not
been modified or amended or setting forth the amendments or modifications, (iii) that all payments
due and payable by Borrower under the Condominium Documents have been paid in full, (iv) that
neither Borrower nor the Condominium Board is in default under the Condominium Documents.




          (c) Borrower shall promptly deliver to Lender a true and full copy of all notices of default
received by Borrower with respect to any obligation or duty of Borrower under the Condominium
Documents.




          (d) Borrower shall not, except with the prior written consent of the Lender, which consent
shall not be unreasonably withheld, conditioned or delayed, (a) institute any action or proceeding
for partition of the Condo Property; (b) vote for or consent to any modification of, or amendment
to or material relaxation in the enforcement of the Condominium Documents or the termination of the
Condominium; and (c) in the event of damage to or destruction of the Condo Property, vote not to
repair, restore or rebuild the Condo Property if Borrower shall have such a voting right.




          (e) Borrower shall not revoke any proxy delivered to Lender in connection with the Loan and
relating to any voting rights Borrower may have as a unit owner in the Condominium.




          (f) To the extent that any approval rights, consent rights or other rights or privileges
granted to a holder of a mortgage entitled to rights under Article XXII of the Declaration are
conditioned upon such approval rights, consent rights or other rights or privileges being required
or contained in any mortgage, then such approval rights, consent rights or other rights or
privileges shall be deemed to be required by this Agreement.




     Section 5.2 Negative Covenants. 



     From the date hereof until payment and performance in full of all obligations of Borrower
under the Loan Documents or the earlier release of the Liens of all Security Instruments
encumbering the Properties 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 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.



     5.2.2 Dissolution. 



          (a) 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 Principal to (i) dissolve,
wind up or liquidate or take any action, or omit to take an action, as a result of which Principal
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 Principal, in each case, without
obtaining the prior written consent of Lender, which consent (with respect to (d)(ii) only) shall
not be unreasonably withheld, delayed or conditioned.




     5.2.3 Change In Business. 



     Borrower shall not enter into any line of business other than the ownership, acquisition,
development, operation, leasing and management of the Properties (including providing services in
connection therewith), 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.



     5.2.5 Zoning. 



     Borrower shall not 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 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



95









 




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 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 4.1.34, without, in each case, the consent of Lender. Any such proposed change submitted
to Lender for approval shall be deemed approved if (i) Borrower delivers to Lender a written
request for such approval marked in bold lettering with the following language: “LENDER’S RESPONSE
IS REQUIRED WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A
LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER. FAILURE TO RESPOND SHALL BE DEEMED AN APPROVAL”
and the envelope containing the request is marked “PRIORITY”; and (ii) Lender shall have failed to
notify Borrower of its approval or disapproval within such fifteen (15) Business Days following
Lender’s receipt of Borrower’s written request together with a description of the nature of such
proposed change, and any and all other information and documentation relating thereto reasonably
required by Lender to reach a decision. 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 Collateral as a result of such
change of principal place of business or place of organization.



     5.2.8 ERISA. 



          (a) During the term of the Loan or of any obligation or right hereunder, Borrower shall not be
a Plan and none of the assets of Borrower shall constitute Plan Assets.




          (b) Borrower further covenants and agrees 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) Borrower is not and does not maintain an
“employee benefit plan” as defined in Section 3(32) of ERISA, which is subject to Title I of ERISA,
or a “governmental plan” within the meaning of Section 3(3) of ERISA; (B) Borrower is not 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 Borrower 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 Borrower are held by “benefit plan investors” within the meaning of 29 C.F.R.
§2510.3-101(f)(2); or




               (iii) Borrower 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).



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     5.2.9 Affiliate Transactions. 



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



     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 or any part thereof or any legal or beneficial interest therein
(other than in connection with a Condemnation) or permit or suffer a Sale or Pledge of an interest
in any Restricted Party (collectively, a “Transfer”), other than pursuant to Leases of space in the
Improvements to tenants in accordance with the provisions of Section 5.1.17 hereof or a release 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 written confirmation from the Rating Agencies that the Transfer will not result in the
downgrade, withdrawal or qualification of the then current ratings assigned to any Securities or
the proposed rating of any Securities.




          (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 or any part thereof for a price
to be paid in installments; (ii) an agreement by 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, 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 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; or (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.




          (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




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operation of law upon the death of a member, partner or shareholder of a Restricted Party or a
Restricted Party 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 Borrower); provided,
however, no such transfers shall result in the change of voting control in the Restricted Party,
(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 Borrower, and (iv) a merger, consolidation or sale of all or
substantially all of the assets of FelCor Lodging Trust Incorporated, a Maryland corporation or
FelCor Lodging Limited Partnership, a Delaware limited partnership (a “Sale of FelCor Lodging”);
provided, however, as a condition to each such transfer described in clauses (i), (ii), (iii) and
(iv), Lender shall receive not less than thirty (30) days prior written notice of such proposed
transfer.




          (d) 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 Embargoed
Person and (b) in the event any transfer (whether or not such transfer shall constitute a Transfer)
results in any Person 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.




          (e) Notwithstanding anything to the contrary contained in this Section 5.2.10, Lender’s
consent shall not be required for the financing or leasing of personal property, including, without
limitation, furniture, fixtures and equipment owned or to be purchased by Borrower that is used in
connection with the operation of the any Individual Property (“Equipment”), provided that (i) any
such financing or leasing is subject to commercially prudent terms and conditions and at a market
rate of interest, (ii) the Equipment financed or leased is readily replaceable without material
interference or interruption to the operation of any Individual Property, and (iii) the aggregate
amount of debt service or lease payments in connection with such financing and leasing for
Equipment located on or used in connection with each Individual Property is at all times less than
$400,000 per annum (“Permitted FF&E Financing”) and (iv) the financing does not create a Lien on
any Individual Property other than on the Equipment financed or leased thereunder.




          (f) Notwithstanding anything to the contrary contained in this Section 5.2.10, a transfer of
direct or indirect limited partnership interests and/or non-managing membership interests in a
Restricted Party (other than Borrower, Principal or any Affiliated Manager) shall be permitted
provided that (i) FelCor Lodging Limited Partnership (or its successor-in-interest following a
Sale of FelCor Lodging) shall, at all times, own, directly or indirectly, at least fifty-one
percent (51%) of the equity interests in, and Control, all Restricted Parties and (ii) FelCor
Lodging Trust Incorporated (or its successor-in-interest following a Sale of FelCor Lodging) must
at all times be the sole general partner of FelCor Lodging Limited Partnership (or its
successor-in-interest following a Sale of FelCor Lodging).




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     VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS



     Section 6.1 Insurance. 



          (a) Borrower shall obtain and maintain, or cause to be maintained, Policies for Borrower and
the Properties providing at least the following coverages:





               (i) so called “All Risk” or Special Form insurance on the Improvements and the Personal
Property, in each case (ii) in an amount equal to 100% of the “Full Replacement Cost,” which
for purposes of this Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of depreciation,
(iii) containing an agreed amount endorsement or its equivalent with respect to the
Improvements, business income, rent loss and Personal Property waiving all co-insurance
provisions; (iv) providing for no deductible in excess of $100,000, other than deductibles
for windstorm and earthquake coverage, which shall with respect to each Individual Property,
be no more than 5% of the insurable value of each Individual Property; and (v) providing
coverage for contingent liability from Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements together with customary “Ordinance or Law
Coverage” if any of the Improvements or the use of each Individual Property shall constitute
legal non-conforming structures or uses. The Full Replacement Cost shall be redetermined
from time to time (but not more frequently than once in any thirty-six (36) calendar months)
at the request of Lender by an appraiser or contractor designated and paid by Borrower and
approved by Lender, or by an engineer or appraiser in the regular employ of the insurer.
After the first appraisal, additional appraisals may be based on construction cost indices
customarily employed in the trade. No omission on the part of Lender to request any such
ascertainment shall relieve Borrower of any of its obligations under this Subsection;




               (ii) commercial general liability insurance against claims for personal injury, bodily
injury, death or property damage occurring upon, in or about each Individual Property,
including “Dram Shop” or other liquor liability coverage if alcoholic beverages are sold
from or may be consumed at the Individual Property such insurance (A) to be on the so-called
“occurrence” form with a combined single limit of not less than $1,000,000.00; (B) to
continue at not less than the aforesaid limit until required to be changed by Lender in
writing by reason of changed economic conditions making such protection inadequate; and (C)
to cover at least the following hazards: (1) premises and operations; (2) products and
completed operations on an “if any” basis; (3) independent contractors; (4) blanket
contractual liability for all written and oral contracts; and (5) contractual liability
covering the indemnities contained in Article 10 of the Security Instruments to the extent
the same is available;




               (iii) business interruption/loss of rents insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided for in Section
6.1(a)(i); (C) in an amount equal to 100% of the projected gross income from each Individual
Property (on an actual loss sustained basis) for a period continuing until the Restoration
of the Individual Property is completed; the amount of such business



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interruption/loss of rents insurance shall be determined prior to the Closing Date and
at least once each year thereafter based on the greatest of: (x) Borrower’s reasonable
estimate of the gross income from each Individual Property and (y) the highest gross income
received during the term of the Note for any full calendar year prior to the date the amount
of such insurance is being determined, in each case for the succeeding eighteen (18) month
period and (D) containing an extended period of indemnity endorsement which provides that
after the physical loss to the Improvements and the Personal Property has been repaired, the
continued loss of income will be insured until such income either returns to the same level
it was at prior to the loss, or the expiration of twelve (12) months from the date that the
applicable Individual Property is repaired or replaced and operations are resumed, whichever
first occurs, and notwithstanding that the policy may expire prior to the end of such
period; All insurance proceeds payable to Lender pursuant to this Section 6.1(a)(iii) shall
be held by Lender and shall be applied to the obligations secured hereunder from time to
time due and payable hereunder and under the Note and this Agreement; provided, however,
that nothing herein contained shall be deemed to relieve Borrower of its obligations to pay
the obligations secured hereunder on the respective dates of payment provided for in the
Note and this Agreement except to the extent such amounts are actually paid out of the
proceeds of such business interruption/loss of rents insurance.





               (iv) at all times during which structural construction, repairs or alterations are
being made with respect to the Improvements (A) owner’s contingent or protective liability
insurance covering claims not covered by or under the terms or provisions of the insurance
provided for in Section 6.1(c)(ii); and (B) the insurance provided for in Section 6.1(a)(i)
shall be written in a so-called builder’s risk completed value form (1) on a non-reporting
basis, (2) against all risks insured against pursuant to Section 6.1(a)(i), (3) shall
include permission to occupy each Individual Property, and (4) shall contain an agreed
amount endorsement waiving co-insurance provisions; provided, however, the insurance
required pursuant to this Section 6.1(a)(iv) may be obtained by the Manager for the benefit
of Borrower and the applicable Individual Property.




               (v) workers’ compensation, subject to the statutory limits of the State in which each
Individual Property is located, and employer’s liability insurance with a limit of at least
$1,000,000.00 per accident and per disease per employee, and $1,000,000.00 for disease
aggregate in respect of any work or operations on or about each Individual Property, or in
connection with such Individual Property or its operation (if applicable);




               (vi) comprehensive boiler and machinery insurance covering all mechanical and
electrical equipment and boilers and pressure valves, if applicable, in amounts as shall be
reasonably required by Lender on terms consistent with the commercial property insurance
policy required under Section 6.1(a)(i);




               (vii) if any portion of the Improvements is at any time located in an area identified
by the Secretary of Housing and Urban Development or any successor thereto as an area having
special flood hazards pursuant to the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform



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Act of 1994, as each may be amended, or any successor law (the “Flood Insurance Acts”),
flood hazard insurance of the following types and in the following amounts (A) coverage
under Policies issued pursuant to the Flood Insurance Acts (the “Flood Insurance Policies”)
in an amount equal to the maximum limit of coverage available for the applicable Individual
Property under the Flood Insurance Acts, subject only to customary deductibles under such
Policies and (B) coverage under supplemental private Policies in an amount, which when added
to the coverage provided under the Flood Act Policies with respect to an Individual
Property, is not less than the Allocated Loan Amount for such Individual Property;





               (viii) if required by Lender, earthquake, sinkhole and mine subsidence insurance in
amounts as determined by Lender in its sole discretion and in form and substance
satisfactory to Lender, provided that the insurance pursuant to this Section 6.1(a)(vii)
hereof shall be on terms consistent with the all risk insurance policy required under
Section 6.1(a)(i) hereof;




               (ix) umbrella liability insurance in an amount not less than Fifty Million and No/100
Dollars ($50,000,000.00) per occurrence on terms consistent with the commercial general
liability insurance policy required under Section 6.1(a)(ii) hereof;




               (x) insurance against terrorism, terrorist acts or similar acts of sabotage (“Terrorism
Insurance”) pursuant to a (A) blanket insurance policy with aggregate limits of not less
than $50,000,000.00 or (B) a stand-alone insurance policy covering only the Properties with
coverage of not less than $50,000,000.00, and, in either case with a deductible of not more
than $100,000.00 (the “Terrorism Insurance Required Amount”). Notwithstanding the foregoing
sentence, in the event Borrower has obtained a stand-alone insurance policy pursuant to
subsection (B) above, Borrower shall not be obligated to expend more than $400,000.00 in any
fiscal year on Insurance Premiums for Terrorism Insurance (the “Terrorism Insurance Cap”)
and if the cost of the Terrorism Insurance Required Amount exceeds the Terrorism Insurance
Cap, Borrower shall purchase the maximum amount of Terrorism Insurance available with funds
equal to the Terrorism Insurance Cap; provided, however, in the event it is customary among
owners of Class A hotel properties in the United States to have “All Risk” coverage without
any exclusion (a “Terrorism Exclusion”) from coverage under such Policy for loss or damage
incurred as a result of an act of terrorism, terrorist acts or similar acts of sabotage,
Borrower shall (provided the same does not add any material cost to Borrower’s Insurance
Premiums) obtain a Policy without any such Terrorism Exclusion. After the occurrence of any
event which reduces the amount of insurance available under the Terrorism Insurance required
hereunder (whether due to a claim or otherwise), Borrower shall be obligated to immediately
increase the coverage of such Terrorism Insurance so that at least $50,000,000.00 of
coverage is available thereunder at all times;




               (xi) a blanket fidelity bond and errors and omissions insurance coverage insuring
against losses resulting from dishonest or fraudulent acts committed by (A) Borrower’s
personnel; (B) any employees of outside firms that provide appraisal, legal, data processing
or other services for Borrower or (C) temporary contract employees or student interns;
provided, however, the insurance required pursuant to this



101









 






Section 6.1(a)(xi) may be obtained by the Manager for the benefit of Borrower and the
applicable Individual Property;




               (xii) such other insurance and in such amounts as are required pursuant to the
Franchise Agreement or as Lender from time to time may reasonably request against such other
insurable hazards which at the time are commonly insured against for property similar to
each Individual Property located in or around the region in which the each Individual
Property is located; and




               (xiii) Notwithstanding the foregoing provisions, to the extent that the Condominium
Board maintains a “master” or “blanket” policy (the “Condominium Board Policy”) on the
Improvements relating to the Condo Property and/or the Common Elements which provides
insurance coverage in the amounts, for the periods, by companies and against the hazards
described in this Section 6.1, including fire and hazards included within the term “extended
coverage”, and is otherwise in form and substance reasonably satisfactory to Lender, then
Borrower’s obligation under this Section 6.1 to maintain hazard insurance coverage on the
Condo Property (including, but not limited to all Common Elements) is deemed satisfied to
the extent that the required coverage is provided by the Condominium Board Policy.



          (b) All insurance provided for in Section 6.1(a) hereof shall be obtained under valid and
enforceable policies (the “Policies” or in the singular, the “Policy”), in such forms and, from
time to time after the date hereof, in such amounts as may be satisfactory to Lender, issued by
financially sound and responsible insurance companies authorized to do business in the State in
which the Property is located, and approved by Lender. The primary $15,000,000 in coverage shall
be provided by carriers having a claims paying ability rating of A- or better by at least two
approved Rating Agencies. The excess layers up to $50,000,000 in coverage shall be provided by
carriers having a claims paying ability rating of A- or better by S & P, or such other Rating
Agency approved by Lender. At least 75% of the remaining coverage shall be provided by carriers
having a claims paying ability rating of A- or better by S & P, or such other Rating Agency
approved by Lender. All carriers providing insurance at any level shall have a general policy
rating of A- XI or better by A.M. Best Company Inc. (each such insurer shall be referred to as a
“Qualified Insurer”). Not less than thirty (30) days prior to the expiration dates of the Policies
theretofore furnished to Lender pursuant to Section 6.1(a), Borrower shall deliver certified copies
of the Policies marked “premium paid” or accompanied by evidence satisfactory to Lender of payment
of the premiums due thereunder (the “Insurance Premiums”). In the event Borrower desires to obtain
the insurance required hereunder from an insurer not meeting the requirements of this Section
6.1(b), Borrower may request, in writing, Lender’s approval of such insurer, which approval may not
be unreasonably withheld.




          (c) Borrower shall not obtain (i) any umbrella or blanket liability or casualty Policy unless,
in each case, such Policy is at least equal in scope of coverage as if a “stand-alone” Policy
meeting all of the requirement noted above is provided as such Policy is approved in advance in
writing by Lender and Lender’s interest is included therein as provided in this Agreement and such
Policy is issued by a Qualified Insurer, or (ii) separate insurance concurrent in form or
contributing in the event of loss with that required in Section 6.1(a) to be furnished by, or which
may be reasonably required to be furnished by, Borrower. In the event Borrower




102









 




obtains separate insurance or an umbrella or a blanket policy, Borrower shall notify Lender of
the same and shall cause certified copies of each Policy to be delivered as required in Section
6.1(a). Any blanket insurance Policy shall specifically allocate to the Individual Property the
amount of coverage from time to time required hereunder and shall otherwise provide the same
protection as would a separate Policy insuring only the Individual Property in compliance with the
provisions of Section 6.1(a). Notwithstanding Lender’s approval of any umbrella or blanket
liability or casualty Policy hereunder, Lender reserves the right, in its sole discretion, to
require Borrower to obtain a separate Policy in compliance with this Section 6.1.




          (d) All Policies provided for or contemplated by Section 6.1(a) hereof (including, without
limitation by the Condominium), except for the Policy referenced in Section 6.1(a)(v), shall name
Lender and Borrower as the insured or additional insured, as their respective interests may appear,
and in the case of property damage, boiler and machinery, and flood insurance, shall contain a
so-called New York standard non-contributing mortgagee clause in favor of Lender providing that the
loss thereunder shall be payable to Lender.




          (e) All Policies provided for in Section 6.1(a) hereof shall contain clauses or endorsements
to the effect that:





               (i) no act or negligence of Borrower, or anyone acting for Borrower, or failure to
comply with the provisions of any Policy which might otherwise result in a forfeiture of the
insurance or any part thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;




               (ii) the Policy shall not be materially changed (other than to increase the coverage
provided thereby) or cancelled without at least 30 days’ written notice to Lender and any
other party named therein as an insured;




               (iii) each Policy shall provide that the issuers thereof shall give written notice to
Lender if the Policy has not been renewed thirty (30) days prior to its expiration; and




               (iv) Lender shall not be liable for any Insurance Premiums thereon or subject to any
assessments thereunder.



          (f) Borrower shall furnish to Lender, on or before thirty (30) days after the close of each of
Borrower’s fiscal years, a statement certified by Borrower or a duly authorized officer of Borrower
of the amounts of insurance maintained in compliance herewith, of the risks covered by such
insurance and of the insurance company or companies which carry such insurance and, if requested by
Lender, verification of the adequacy of such insurance by an independent insurance broker or
appraiser acceptable to Lender.




          (g) 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, with prior notice to Borrower,
to take such action as Lender deems necessary to protect its interest in the Properties, 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




103









 




demand and until paid shall be secured by the Security Instruments and shall bear interest at
the Default Rate.




          (h) In the event of a foreclosure of any of the Security Instruments, or other transfer of
title to any Individual Property in extinguishment in whole or in part of the Debt all right, title
and interest of Borrower in and to the Policies then in force and all proceeds payable thereunder
shall thereupon vest in the purchaser at such foreclosure or Lender or other transferee in the
event of such other transfer of title.




     Section 6.2 Casualty. 



     If an Individual Property shall be damaged or destroyed, in whole or in part, by fire or other
casualty (a “Casualty”), Borrower shall give prompt notice of such damage to Lender and shall
promptly commence and diligently prosecute the completion of the Restoration of the Individual
Property as nearly as possible to the condition the Individual Property was in immediately prior to
such Casualty, with such alterations as may be reasonably approved by Lender and otherwise in
accordance with Section 6.4. Borrower shall pay all costs of such Restoration whether or not such
costs are covered by insurance. Lender may, but shall not be obligated to make proof of loss if
not made promptly by Borrower.



     Section 6.3 Condemnation. 



     Borrower shall promptly give Lender notice of the actual or threatened commencement of any
proceeding for the Condemnation of all or any part of any Individual Property (including, without
limitation any portion of the Condominium) and shall deliver to Lender copies 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 deliver to Lender all instruments requested by it to permit such
participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or quasi-public
authority through Condemnation or otherwise (including, but not limited to, any transfer made in
lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt
at the time and in the manner provided for its payment in the Note and in this Agreement and the
Debt shall not be reduced until any Award shall have been actually received and applied by Lender,
after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender
shall not be limited to the interest paid on the Award by the condemning authority but shall be
entitled to receive out of the Award interest at the rate or rates provided herein or in the Note.
If any Individual Property or any portion thereof is taken by a condemning authority, Borrower
shall, promptly commence and diligently prosecute the Restoration of the applicable Individual
Property and otherwise comply with the provisions of Section 6.4. If any Individual Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall
have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered
or denied, to receive the Award, or a portion thereof sufficient to pay the Debt.



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     Section 6.4 Restoration. 



     The following provisions shall apply in connection with the Restoration of any Individual
Property:



          (a) If the Net Proceeds shall be less than Two Million Five Hundred Thousand and 00/100
Dollars ($2,500,000.00) and the costs of completing the Restoration shall be less than Two Million
Five Hundred Thousand and 00/100 Dollars ($2,500,000.00), the Net Proceeds will be disbursed by
Lender to Borrower upon receipt, provided that all of the conditions set forth in Sections
6.4(b)(i)(A) and (C) are met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in accordance with the
terms of this Agreement.




          (b) If the Net Proceeds are equal to or greater than Two Million Five Hundred Thousand and
00/100 Dollars ($2,500,000.00) or the costs of completing the Restoration is equal to or greater
than Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) Lender shall make the Net
Proceeds available for the Restoration in accordance with the provisions of this Section 6.4.
Notwithstanding the immediately preceeding sentence, a portion of the Net Proceeds not to exceed
Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) shall be made available to
Borrower after receipt thereof by Lender to pay or reimburse Borrower for any immediate and
necessary repair or work required (i) to prevent further damage to the Property, (ii) to protect
life or to provide safety or (iii) to restore hotel operations at the Property (collectively, the
“Emergency Repairs”) provided all the conditions set forth in Sections 6.4(b)(i)(A) and (C) are met
and Borrower delivers to Lender a written undertaking to expeditiously commence and to
satisfactorily complete with due diligence the Emergency Repairs in accordance with the terms of
this Agreement. The term “Net Proceeds” shall mean: (i) the net amount of all insurance proceeds
received by Lender pursuant to Section 6.1(a)(i), (iv), (vi), (vii) and (viii) as a result of such
damage or destruction, after deduction of its reasonable costs and expenses (including, but not
limited to, reasonable counsel fees), if any, in collecting same (“Insurance Proceeds”), or (ii)
the net amount of the Award, after deduction of its reasonable costs and expenses (including, but
not limited to, reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”),
whichever the case may be.





               (i) The Net Proceeds shall be made available to Borrower for Restoration provided that
each of the following conditions are met:




               (A) no Default or Event of Default (unless caused solely by the Condemnation or
Casualty) shall have occurred and be continuing;




               (B) (1) in the event the Net Proceeds are Insurance Proceeds, less than thirty percent
(30%) of the total floor area of the Improvements on the Individual Property has been
damaged, destroyed or rendered unusable as a result of such Casualty or (2) in the event
the Net Proceeds are Condemnation Proceeds, less than ten percent (10%) of the land
constituting the Individual Property is taken, and such land is located along the perimeter
or periphery of the Individual Property, and no portion of the Improvements is located on
such land;



105









 






               (C) The Operating Lease shall remain in full force and effect during and after the
completion of the Restoration;




               (D) Borrower shall commence the Restoration as soon as reasonably practicable (but in
no event later than thirty (30) days after such Casualty or Condemnation, whichever the
case may be, occurs) and shall diligently pursue the same to satisfactory completion in
compliance with all Applicable Laws, including, without limitation, all applicable
Environmental Laws and in accordance with the terms and conditions of the Franchise
Agreement;




               (E) Lender shall be satisfied that any operating deficits, including all scheduled
payments of principal and interest under the Note, which will be incurred with respect to
the Individual Property as a result of the occurrence of any such Casualty or Condemnation,
whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance
coverage referred to in Section 6.1(a)(iii), if applicable, or (3) by other funds of
Borrower;




               (F) Lender shall be satisfied that the Restoration will be completed on or before the
earliest to occur of (1) nine (9) months prior to the Maturity Date, (2) twelve (12) months
after the occurrence of such Casualty or Condemnation, or (3) the earliest date required
for such completion under the terms of any Leases which are required in accordance with the
provisions of this Section 6.4(b) to remain in effect subsequent to the occurrence of such
Casualty or Condemnation and the completion of the Restoration, or (4) the date required
for such completion pursuant to the Franchise Agreement, (5) such time as may be required
under Applicable Law, in order to repair and restore the applicable Individual Property to
the condition it was in immediately prior to such Casualty or Condemnation or (6) the
expiration of the insurance coverage referred to in Section 6.1(a)(ii);




               (G) the Individual Property and the use thereof after the Restoration will be in
compliance with and permitted under all Applicable Laws;




               (H) Lender shall be satisfied that the Debt Service Coverage Ratio for the twelve (12)
month period immediately succeeding the completion of the Restoration shall be equal to or
greater than 1.15 to 1.00;




               (I) Such Casualty or Condemnation, as applicable, does not result in the loss of
access in any material respect to the Individual Property or the related Improvements;




               (J) Borrower shall deliver, or cause to be delivered, to Lender a signed detailed
scope of damages and repairs, including cost estimates for each repair item, approved in
writing by Borrower’s architect, engineer or project manager stating the entire cost of
completing the Restoration, which scope shall be acceptable to Lender;




               (K) the Net Proceeds together with any Cash or Cash equivalent deposited by Borrower
with Lender are sufficient in Lender’s discretion to cover the cost of the Restoration;



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               (L) the Management Agreement in effect as of the date of the occurrence of such
Casualty or Condemnation, whichever the case may be, shall (1) remain in full force and
effect during the Restoration and shall not otherwise terminate as a result of the Casualty
or Condemnation or the Restoration or (2) if terminated, shall have been replaced with a
Replacement Management Agreement with a Qualified Manager, prior to the opening or
reopening of the applicable Individual Property or any portion thereof for business with
the public;




               (M) the Franchise Agreement is not terminated as a result of such Casualty or
Condemnation; and




               (N) the Condominium is not terminated as a result of such casualty or condemnation.




               (ii) The Net Proceeds shall be held by Lender in an interest-bearing account and, until
disbursed in accordance with the provisions of this Section 6.4(b), shall constitute
additional security for the Debt and other obligations under the Loan Documents. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time
during the course of the Restoration, upon receipt of evidence satisfactory to Lender that
(A) all materials installed and work and labor performed (except to the extent that they are
to be paid for out of the requested disbursement) in connection with the Restoration have
been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s
or materialman’s liens or notices of intention to file same, or any other Liens or
encumbrances of any nature whatsoever on the Individual Property which have not either been
fully bonded to the satisfaction of Lender and discharged of record or in the alternative
fully insured to the satisfaction of Lender by the title company issuing the Title Insurance
Policy.




               (iii) All plans and specifications required in connection with the Restoration, the
cost of which is greater than $2,500,000.00, shall be subject to prior review and acceptance
in all respects by Lender and by an independent consulting engineer selected by Lender (the
“Casualty Consultant”), which acceptance shall not be unreasonably withheld, conditioned or
delayed. Lender shall have the use of the plans and specifications and all permits,
licenses and approvals required or obtained in connection with the Restoration. The
identity of the contractors, subcontractors and materialmen engaged in the Restoration the
cost of which is greater than $2,500,000.00, as well as the contracts under which they have
been engaged, shall be subject to prior review and acceptance by Lender and the Casualty
Consultant, which acceptance shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, Lender’s prior review and acceptance of plans and
specifications, identity of contractors and contracts shall not be required in connection
with Restoration which shall be required on an emergency basis (i) to prevent further damage
to the Property, (ii) to protect life or to provide safety or (iii) to restore hotel
operations at the Property; provided that in such cases, such plans, specifications,
identity of contractors and contracts shall be made available to Lender and the Casualty
Consultant as soon as practicable. All costs and expenses incurred by Lender in connection
with making the Net Proceeds available for



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the Restoration including, without limitation, reasonable counsel fees and
disbursements and the Casualty Consultant’s fees, shall be paid by Borrower.




               (iv) In no event shall Lender be obligated to make disbursements of the Net Proceeds in
excess of an amount equal to the costs actually incurred from time to time for work in place
as part of the Restoration, as certified by the Casualty Consultant, minus the Casualty
Retainage. The term “Casualty Retainage” shall mean an amount equal to ten percent (10%),
of the costs actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary set forth above in this
Section 6.4(b), be less than the amount actually held back by Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not
be released until the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 6.4(b) and that all approvals
necessary for the re-occupancy and use of the Individual Property have been obtained from
all appropriate Governmental Authorities, and Lender receives evidence satisfactory to
Lender that the costs of the Restoration have been paid in full or will be paid in full out
of the Casualty Retainage; provided, however, that Lender will release the portion of the
Casualty Retainage being held with respect to any contractor, subcontractor or materialman
engaged in the Restoration as of the date upon which the Casualty Consultant certifies to
Lender that the contractor, subcontractor or materialman has satisfactorily completed all
work and has supplied all materials in accordance with the provisions of the contractor’s,
subcontractor’s or materialman’s contract, the contractor, subcontractor or materialman
delivers the lien waivers and evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or by the title
company issuing the Title Insurance Policy for the related Individual Property, and Lender
receives an endorsement to such Title Insurance Policy insuring the continued priority of
the Lien of the related Security Instrument and evidence of payment of any premium payable
for such endorsement. If required by Lender, the release of any such portion of the
Casualty Retainage shall be approved by the surety company, if any, which has issued a
payment or performance bond with respect to the contractor, subcontractor or materialman.




               (v) Lender shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month.




               (vi) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the opinion of Lender in consultation with the Casualty Consultant, if any, be sufficient to
pay in full the balance of the costs which are estimated by the Casualty Consultant to be
incurred in connection with the completion of the Restoration, Borrower shall deposit the
deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of
the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be
held by Lender and shall be disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and
until so disbursed pursuant to this Section 6.4(b)



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shall constitute additional security for the Debt and other obligations under the Loan
Documents.




               (vii) The excess, if any, of the Net Proceeds and the remaining balance, if any, of the
Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with the provisions of this
Section 6.4(b), and the receipt by Lender of evidence satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full, shall be remitted by
Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing
under the Note, this Agreement or any of the other Loan Documents.



          (c) All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be
returned to Borrower as excess Net Proceeds pursuant to Section 6.4(b)(vii) may be retained and
applied by Lender toward the payment of the Debt whether or not then due and payable in such order,
priority and proportions as Lender in its sole discretion shall deem proper, or, at the discretion
of Lender, the same may be paid, either in whole or in part, to Borrower for such purposes as
Lender shall approve, in its discretion. If Lender shall receive and retain Net Proceeds, the Lien
of the Security Instruments shall be reduced only by the amount thereof received and retained by
Lender and actually applied by Lender in reduction of the Debt.




     VII. RESERVE FUNDS



     Section 7.1 Required Repair Funds.



     7.1.1 Deposits.



     On the Closing Date, Borrower shall deposit into an escrow account with Lender (the “Required
Repair Account”) the amount for each Individual Property set forth on such Schedule III hereto to
perform the Required Repairs for such Individual Property. Amounts so deposited with Lender shall
be held by Lender in accordance with Section 7.7 hereof. Amounts so deposited shall hereinafter be
referred to as Borrower’s “Required Repair Fund.” Borrower shall perform the repairs at the
Properties, as more particularly set forth on Schedule III hereto (such repairs hereinafter
referred to as “Required Repairs”). Borrower shall complete the Required Repairs on or before the
date set forth on Schedule III hereof with respect to the applicable repair, provided that such
date may be extended upon request by Borrower subject to Lender’s approval in its sole discretion.
It shall be an Event of Default under this Agreement if (a) Borrower does not complete the Required
Repairs at each Individual Property within the time period set forth on Schedule III hereof with
respect to the applicable repair, as such date may be extended, or (b) Borrower does not satisfy
each condition contained in Section 7.1.2 hereof. Upon the occurrence of an Event of Default,
Lender, at its option, may withdraw all Required Repair Funds from the Required Repair Account and
Lender may apply such funds either to completion of the Required Repairs at one or more of the
Properties or toward payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Lender’s right to withdraw and apply Required Repair Funds shall
be in addition to all other rights and remedies provided to Lender under this Agreement and the
other Loan Documents.



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     7.1.2 Release of Required Repair Funds. 



     Lender shall disburse to Borrower the Required Repair Funds from the Required Repair Account
from time to time upon satisfaction by Borrower of each of the following conditions: (a) Borrower
shall submit a written request for payment to Lender at least fifteen (15) days prior to the date
on which Borrower requests such payment be made and specifies the Required Repairs to be paid, (b)
on the date such request is received by Lender and on the date such payment is to be made, no Event
of Default shall exist and remain uncured, (c) Lender shall have received an Officers’ Certificate
(i) stating that all Required Repairs at the applicable Individual Property to be funded by the
requested disbursement have been completed in good and workmanlike manner and, to the best of
Borrower’s knowledge, in accordance with all Legal Requirements and Environmental Laws, (ii)
identifying each Person that supplied materials or labor in connection with the Required Repairs
performed at such Individual Property with respect to the reimbursement to be funded by the
requested disbursement, and (iii) stating that each such Person has been paid in full upon such
disbursement, such Officers’ Certificate to be accompanied by lien waivers or other evidence of
payment satisfactory to Lender, (d) at Lender’s option, a title search for such Individual Property
indicating that such Individual Property is free from all Liens, claims and other encumbrances not
previously approved by Lender, and (e) Lender shall have received such other evidence as Lender
shall reasonably request that the Required Repairs at such Individual Property to be funded by the
requested disbursement have been completed and are paid for upon such disbursement to Borrower.
Lender shall not be required to make disbursements from the Required Repair Account with respect to
any Individual Property unless such requested disbursement is in an amount greater than $25,000 (or
a lesser amount if the total amount in the Required Repair Account is less than $25,000, in which
case only one disbursement of the amount remaining in the account shall be made). Lender shall not
be obligated to make disbursements from the Required Repair Account with respect to an Individual
Property in excess of the amount allocated for such Individual Property as set forth on Schedule
III hereof. Upon Lender’s receipt of evidence of completion of all Required Repairs in accordance
with the terms hereof, any remaining Required Repair Funds shall be disbursed to Borrower.



     Section 7.2 Tax and Insurance Escrow Fund. 



          (a) Borrower shall pay to Lender on each Payment Date (a) one-twelfth of the Taxes (the
“Monthly Tax Deposit”) that Lender estimates will be payable during the next ensuing twelve (12)
months in order to accumulate with Lender sufficient funds to pay all such Taxes at least thirty
(30) days prior to their respective due dates; and (b) at the option of Lender, if the liability or
casualty Policy maintained by Borrower covering the Properties shall not constitute an approved
blanket or umbrella Policy pursuant to Section 6.1(c) hereof, or Lender shall require Borrower to
obtain a separate Policy pursuant to Section 6.1(c) hereof, one-twelfth of the Insurance Premiums
(the “Monthly Insurance Premium Deposit”) that Lender estimates will be payable for the renewal of
the coverage afforded by the Policies upon the expiration thereof in order to accumulate with
Lender sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies (said amounts in (a) and (b) above hereinafter called the “Tax and
Insurance Escrow Fund”). In the event Lender shall elect to collect payments in escrow for
Insurance Premiums pursuant to clause (b) above, Borrower shall pay to Lender an initial deposit to
be determined by Lender, in its sole discretion, to increase the




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amounts in the Tax and Insurance Escrow Fund to an amount which, together with anticipated
Monthly Insurance Premium Deposits, shall be sufficient to pay all Insurance Premiums as they
become due. The Tax and Insurance Escrow Fund and the payments of interest or principal or both,
payable pursuant to the Note and this Agreement, shall be added together and shall be paid as an
aggregate sum by Borrower to Lender. Lender will apply the Tax and Insurance Escrow Fund to
payments of Taxes and Insurance Premiums required to be made by Borrower pursuant to Section 5.1.2
hereof. In making any payment relating to the Tax and Insurance Escrow Fund, Lender may do so
according to any bill, statement or estimate procured from the appropriate public office (with
respect to Taxes) or insurer or agent (with respect to Insurance Premiums), without inquiry into
the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and Insurance Escrow Fund
shall exceed the amounts due for Taxes and Insurance Premiums pursuant to Section 5.1.2 hereof,
Lender shall, in its sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Tax and Insurance Escrow Fund. In allocating such excess, Lender
may deal with the Person shown on the records of Lender to be the owner of the Properties. Any
amount remaining in the Tax and Insurance Escrow Fund after the Debt has been paid in full shall be
returned to Borrower. If at any time Lender reasonably determines that the Tax and Insurance
Escrow Fund is not or will not be sufficient to pay Taxes and Insurance Premiums by the dates set
forth in (a) and (b) above, Lender shall notify Borrower of such determination and Borrower shall
increase its monthly payments to Lender by the amount that Lender estimates is sufficient to make
up the deficiency at least thirty (30) days prior to delinquency of the Taxes and/or thirty (30)
days prior to expiration of the Policies, as the case may be.




          (b) Notwithstanding the foregoing, Borrower’s obligation to make deposits for Taxes and
Insurance Premiums into the Tax and Insurance Escrow Fund is hereby suspended, provided that no
Event of Default shall have occurred and be continuing.




     Section 7.3 Replacements and Replacement Reserve.



     7.3.1  Replacement Reserve Fund.



     From and after the occurrence of a FF&E Deposit Event, Borrower shall pay to Lender on each
Payment Date, the Replacement Reserve Monthly Deposit for Capital Expenditures to the Properties
during the calendar year. Amounts so deposited shall hereinafter be referred to as Borrower’s
“Replacement Reserve Fund”.



     7.3.2 Disbursements from Replacement Reserve Account. 



          (a) Lender shall make disbursements from the Replacement Reserve Account to reimburse Borrower
only for the costs of the Capital Expenditures. Lender shall not be obligated to make
disbursements from the Replacement Reserve Account to reimburse Borrower for the costs of routine
maintenance (other than Capital Expenditures) to an Individual Property or for costs which are to
be reimbursed from the Required Repair Fund.




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          (b) Lender shall, upon written request from Borrower and satisfaction of the requirements set
forth in this Section 7.3.2, disburse to Borrower amounts from the Replacement Reserve Account
necessary to reimburse Borrower for the actual costs of Capital Expenditures.




          (c) Each request for disbursement from the Replacement Reserve Account shall be in a form
reasonably acceptable to Lender and shall contain such additional information as set forth in
Schedule XVII attached hereto, and as may be reasonably requested by Lender. With each request
Borrower shall certify that, to the best of Borrower’s knowledge, all Capital Expenditures have
been made in accordance with all applicable Legal Requirements of any Governmental Authority having
jurisdiction over the applicable Individual Property to which the Capital Expenditures are being
provided. Upon request of Lender in connection with each request for disbursement in excess of
$200,000, Borrower shall provide Lender with copies of invoices for amounts in excess of $100,000
for items or materials purchased or contracted labor or services. Borrower shall provide Lender
evidence of completion satisfactory to Lender in its reasonable judgment.




          (d) Borrower shall pay all invoices in connection with the Capital Expenditures with respect
to each request for disbursement prior to submitting such request for disbursement from the
Replacement Reserve Account or, at the request of Borrower, Lender will issue joint checks, payable
to Borrower and the contractor, supplier, materialman, mechanic, subcontractor or other party to
whom payment is due in connection with a Replacement. In the case of payments made by joint check,
Lender may require a waiver of lien from each Person receiving payment prior to Lender’s
disbursement from the Replacement Reserve Account. In addition, as a condition to any
disbursement, Lender may require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an amount equal to or greater than
$100,000 for completion of its work or delivery of its materials. Any lien waiver delivered
hereunder shall conform to the requirements of Applicable Law and shall cover all work performed
and materials supplied (including equipment and fixtures) for the applicable Individual Property by
that contractor, supplier, subcontractor, mechanic or materialman through the date covered by the
current reimbursement request (or, in the event that payment to such contractor, supplier,
subcontractor, mechanic or materialmen is to be made by a joint check, the release of lien shall be
effective through the date covered by the previous release of funds request).




          (e) Borrower shall not make a request for disbursement from the Replacement Reserve Account
more frequently than once in any calendar month and (except in connection with the final
disbursement) the total cost of all Capital Expenditures in any request shall not be less than
$25,000.




     7.3.3 Performance of Capital Expenditures. 



          (a) Intentionally Omitted.




          (b) Intentionally Omitted.




          (c) In order to facilitate Lender’s completion or making of the Capital Expenditures pursuant
to Section 7.3.3(c) above, upon the occurrence and during the continuance




112









 




of an Event of Default,
Borrower grants Lender the right to enter onto any Individual Property and perform any and all work
and labor necessary to complete or make the Capital Expenditures and/or employ watchmen to protect
such Individual Property from damage. All sums so expended by Lender, to the extent not from the
Replacement Reserve Fund, shall be deemed to have been advanced under the Loan to Borrower and
secured by the Security Instruments. For this purpose, Borrower constitutes and appoints Lender its true and lawful attorney-in-fact
with full power of substitution to complete or undertake the Capital Expenditures in the name of
Borrower. Such power of attorney shall be deemed to be a power coupled with an interest and cannot
be revoked. Borrower empowers said attorney-in-fact as follows: (i) to use any funds in the
Replacement Reserve Account for the purpose of making or completing the Capital Expenditures; (ii)
to make such additions, changes and corrections to the Replacements as shall be necessary or
desirable to complete the Capital Expenditures; (iii) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for such purposes; (iv) to pay, settle or
compromise all existing bills and claims which are or may become Liens against any Individual
Property, or as may be necessary or desirable for the completion of the Capital Expenditures, or
for clearance of title; (v) to execute all applications and certificates in the name of Borrower
which may be required by any of the contract documents; (vi) to prosecute and defend all actions or
proceedings in connection with any Individual Property or the rehabilitation and repair of any
Individual Property; and (vii) to do any and every act which Borrower might do in its own behalf to
fulfill the terms of this Agreement.




          (d) Nothing in this Section 7.3.3 shall: (i) make Lender responsible for making or completing
the Capital Expenditures; (ii) require Lender to expend funds in addition to the Replacement
Reserve Fund to make or complete any Capital Expenditure; (iii) obligate Lender to proceed with the
Capital Expenditures; or (iv) obligate Lender to demand from Borrower additional sums to make or
complete any Capital Expenditures.




          (e) Borrower shall permit Lender and Lender’s agents and representatives (including, without
limitation, Lender’s engineer, architect, or inspector) or third parties making Capital
Expenditures pursuant to this Section 7.3.3 to enter onto each Individual Property during normal
business hours (subject to the rights of tenants under their Leases) to inspect the progress of any
Capital Expenditures and all materials being used in connection therewith, to examine all plans and
shop drawings relating to such Capital Expenditures which are or may be kept at each Individual
Property, and to complete any Capital Expenditures made pursuant to this Section 7.3.3. Borrower
shall cause all contractors and subcontractors to cooperate with Lender or Lender’s representatives
or such other persons described above in connection with inspections described in this Section
7.3.3(f) or the completion of Capital Expenditures pursuant to this Section 7.3.3.




          (f) Upon the occurrence and during the continuance of an Event of Default, Lender may require
an inspection of an Individual Property at Borrower’s expense prior to making a monthly
disbursement from the Replacement Reserve Account, with respect to each Individual Property, in
order to verify completion of the Capital Expenditures for which reimbursement is sought. Lender
may require that such inspection be conducted by an appropriate independent qualified professional
selected by Lender and/or may require a copy of a certificate of completion by an independent
qualified professional acceptable to Lender prior to the disbursement of any amounts from the
Replacement Reserve Account. Borrower shall pay




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the expense of the inspection as required
hereunder, whether such inspection is conducted by Lender or by an independent qualified
professional.




          (g) The Capital Expenditures and all materials, equipment, fixtures, or any other item
comprising a part of any Capital Expenditures shall be constructed, installed or completed, as
applicable, free and clear of all mechanic’s, materialmen’s or other Liens.




          (h) [Intentionally Omitted.]




          (i) All Capital Expenditures shall comply with all applicable Legal Requirements of all
Governmental Authorities having jurisdiction over the applicable Individual Property and applicable
insurance requirements including, without limitation, applicable building codes, special use
permits, environmental regulations, and requirements of insurance underwriters.




          (j) In addition to any insurance required under the Loan Documents, Borrower shall provide or
cause to be provided workmen’s compensation insurance, builder’s risk, and public liability
insurance and other insurance to the extent required under Applicable Law in connection with a
particular Capital Expenditures. All such policies shall be in form and amount reasonably
satisfactory to Lender. All such policies which can be endorsed with standard mortgagee clauses
making loss payable to Lender or its assigns shall be so endorsed. Certified copies of such
policies shall be delivered to Lender upon Lender’s request.




     7.3.4 Failure to Make Capital Expenditures. 



          (a) It shall be an Event of Default under this Agreement if Borrower fails to comply with any
provision of this Section 7.3 in any material respect and such failure is not cured within thirty
(30) days after written notice from Lender. Upon the occurrence of an Event of Default, Lender may
use the Replacement Reserve Fund (or any portion thereof) for any purpose, including but not
limited to completion of the Capital Expenditures as provided in Sections 7.3.3(c) and 7.3.3(d), or
for any other repair or replacement to any Individual Property or toward payment of the Debt in
such order, proportion and priority as Lender may determine in its sole discretion. Lender’s right
to withdraw and apply the Replacement Reserve Funds shall be in addition to all other rights and
remedies provided to Lender under this Agreement and the other Loan Documents.




          (b) Nothing in this Agreement shall obligate Lender to apply all or any portion of the
Replacement Reserve Fund on account of an Event of Default to payment of the Debt or in any
specific order or priority.




     7.3.5 Balance in the Replacement Reserve Account. 



          The insufficiency of any balance in the Replacement Reserve Account shall not relieve Borrower
from its obligation to fulfill all preservation and maintenance covenants in the Loan Documents.




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     Section 7.4 Ground Lease Escrow Fund.



     In the event that the annual Ground Rent due pursuant to a Ground Lease is in excess of
$100.00, Borrower shall pay to Lender on each Payment Date an amount (the “Monthly Ground Rent
Deposit”) that is estimated by Lender to be due and payable by Borrower under the Ground
Lease for all rent and any and all other charges (the “Ground Rent”) which may be due by
Borrower under the Ground Lease in order to accumulate with Lender sufficient funds to pay all sums
payable under the Ground Lease at least fifteen (15) Business Days prior to the dates due (said
amounts, hereinafter called the “Ground Lease Escrow Fund”). The Ground Lease Escrow Fund is for
the purpose of paying all sums due under the Ground Lease. Upon Borrower’s failure to pay any
Ground Rents pursuant to the Ground Lease, Lender may, in its discretion, apply any amounts held in
the Ground Lease Escrow Fund to the payment of such Ground Rent; provided however, that the
provisions of this Section 7.4 shall not be deemed to create any obligation on the part of Lender
to pay any such Ground Rent from amounts on deposit in the Ground Lease Escrow Fund. Such deposit
may be increased by Lender in the amount Lender deems is necessary in its reasonable discretion
based on any increases in the Ground Rent due under the Ground Lease.



     Section 7.5 Intentionally Omitted.



     Section 7.6 Reserve Funds, Generally.



          (a) Borrower grants to Lender a first-priority perfected security interest in each of the
Reserve Funds and the related Accounts and any and all monies now or hereafter deposited in each
Reserve Fund and related Account as additional security for payment of the Debt. Until expended or
applied in accordance herewith, the Reserve Funds and the related Accounts shall constitute
additional security for the Debt.




          (b) Upon the occurrence of an Event of Default, Lender may, in addition to any and all other
rights and remedies available to Lender, apply any sums then present in any or all of the Reserve
Funds to the payment of the Debt in any order in its sole discretion.




          (c) The Reserve Funds shall not constitute trust funds and may be commingled with other monies
held by Lender.




          (d) The Reserve Funds shall be held in interest bearing accounts and all earnings or interest
on a Reserve Fund shall be added to and become a part of such Reserve Fund and shall be disbursed
in the same manner as other monies deposited in such Reserve Fund, except that earnings or interest
on the Tax and Insurance Escrow Fund shall not be added to or become a part thereof and shall be
the sole property of and shall be paid to Lender.




          (e) Borrower shall not, without obtaining the prior written consent of Lender, further pledge,
assign or grant any security interest in any Reserve Fund or related Account or the monies
deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC-1 Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.




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          (f) Borrower shall indemnify Lender and hold Lender harmless from and against any and all
actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses
(including litigation costs and reasonable attorneys fees and expenses) arising from or in any way
connected with the Reserve Funds or the related Accounts or the performance of the obligations for
which the Reserve Funds or the related Accounts were established, except to the extent arising from
the fraud, illegal acts, gross negligence or willful
misconduct of Lender, its agents or employees. Borrower shall assign to Lender all rights and
claims Borrower may have against all Persons supplying labor, materials or other services which are
to be paid from or secured by the Reserve Funds or the related Accounts; provided, however, that
Lender may not pursue any such right or claim unless an Event of Default has occurred and remains
uncured.




     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 any portion of the Debt is not paid on or before the date the same is due and
payable; provided, however, with respect to any failure by Borrower to pay any regularly
scheduled installment of interest hereunder when due (other than any installment of interest
or any other amount due on the Maturity Date), and up to one (1) time during any twelve
month and not more than three (3) times during the term of the Loan, Borrower shall have two
(2) Business Days in which to cure such Event of Default (which cure shall include payment
of the late payment charge, if applicable, and interest on such past due amount calculated
at the Default Rate from the date such amount was originally due), after which time Lender
may, at its option, exercise any of its rights and remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity;




               (ii) if any of the Taxes or Other Charges are not paid prior to delinquency;




               (iii) if (i) the Policies are not kept in full force and effect or if (ii) certified
copies of the Policies are not delivered to Lender promptly on request;




               (iv) if a Transfer occurs in violation of the provisions of Section 5.2.10 hereof or
Article 7 of the Security Instruments;




               (v) if any representation or warranty made by Borrower, Principal, any Ground Lessor
which is Affiliated with Borrower, Indemnitor 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;



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               (vi) if Borrower, Principal, any Ground Lessor which is Affiliated with Borrower,
Indemnitor, Guarantor or any other guarantor under any guaranty issued in connection with
the Loan shall make an assignment for the benefit of creditors;




               (vii) if a receiver, liquidator or trustee shall be appointed for Borrower, Principal,
any Ground Lessor which is Affiliated with Borrower, Indemnitor, Guarantor or any other
guarantor under any guarantee issued in connection with the Loan or if
Borrower, Principal, any Ground Lessor which is Affiliated with Borrower, Indemnitor,
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, Principal, any Ground Lessor which is Affiliated with Borrower, Indemnitor,
Guarantor or such other guarantor, or if any proceeding for the dissolution or liquidation
of Borrower, Principal, any Ground Lessor which is Affiliated with Borrower, Indemnitor,
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, Principal, any Ground Lessor which is Affiliated with Borrower, Indemnitor,
Guarantor or such other guarantor, upon the same not being discharged, stayed or dismissed
within ninety (90) days;




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




               (ix) other than for with respect to a default which is expressly contemplated by
another subsection of this Section 8.1(a), if Borrower breaches any of its respective
negative covenants contained in Sections 5.2.1, 5.2.2, 5.2.6, 5.2.7, 5.2.8 and 5.2.10;




               (x) if Borrower violates or does not comply in any material respect with any of the
provisions of Section 5.1.17 hereof, that results in a material adverse effect on Borrower,
its condition (financial or otherwise), business or Properties (taken as a whole);




               (xi) if a (a) 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) or (b) any Management Agreement (or Replacement Management
Agreement) expires or otherwise terminates and is not replaced with a Replacement Management
Agreement or (c) if any Individual Property operates for any time without the Management
Agreement or a Replacement Management Agreement;




               (xii) if Borrower or Principal violates or does not comply in all material respects
with the provisions of Section 4.1.35 hereof; provided, however, that such violation or
failure to comply shall not constitute an Event of Default if (A) such violation or failure
to comply was inadvertent, immaterial and non-recurring, (B) such



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violation or failure to
comply is curable and Borrower shall promptly cure such violation or failure to comply
within fifteen (15) calendar days of notice from Lender and (C) within fifteen (15) Business
Days of the request by Lender, Borrower causes its legal counsel to deliver a revised or
updated Insolvency Opinion to the effect that such violation or failure to comply shall not
impair, negate or amend the opinions rendered in the Insolvency Opinion delivered in
connection with the closing of the Loan, which opinion shall be acceptable to Lender in its
reasonable discretion;




               (xiii) if any Individual Property becomes subject to any mechanic’s, materialman’s or
other Lien in excess of $2,000,000 other than a Lien for local real estate taxes
and assessments not then due and payable and the 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 in excess of $2,000,000
is filed against Borrower, Principal, any Guarantor, Indemnitor or any Individual Property
and 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 Asset; or (B) Borrower
consummates a transaction which would cause the Security Instruments or Lender’s exercise of
its rights under the Security Instruments, 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) Intentionally Omitted;




               (xvii) 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;




               (xviii) other than in connection with the Permitted FF&E Financing, if Borrower shall
be in default in any material respect beyond applicable notice and grace periods under any
other mortgage, deed of trust, deed to secure debt or other security agreement covering any
part of any Individual Property whether it be superior or junior in lien to the related
Security Instrument;




               (xix) if (i) the Interest Rate Cap Agreement is terminated for any reason by Borrower,
or (ii) (A) the Counterparty terminates, or defaults in the performance of its monetary
obligations under the Interest Rate Cap Agreement or (B) the rating of the Counterparty is
subject to any downgrade, withdrawal or qualification by an Rating Agency, and Borrower does
not within thirty (30) days (1) replace the Interest Rate Cap Agreement with a Replacement
Interest Rate Cap Agreement in accordance with Section 2.4 hereof, and (2) 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



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Cap Agreement and (z) any other opinions or
documents required pursuant to Section 2.4 hereof;



          (xx) 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;




          (xxi) Intentionally Omitted.;




          (xxii) Intentionally Omitted.;




          (xxiii) if any of the assumptions contained in the Insolvency Opinion, or in any other
“non-consolidation” opinion delivered to Lender in connection with the Loan, or in any other
“non-consolidation” opinion delivered subsequent to the closing of the Loan, is or shall
become untrue in any material respect; provided, however, that any such assumption becoming
untrue shall not constitute an Event of Default if (A) the event(s) underlying any
assumption becoming untrue (the “Event”) was inadvertent, immaterial and non-recurring, (B)
such Event is curable and Borrower shall promptly cure such Event within fifteen (15)
calendar days of notice from Lender and (C) within fifteen (15) Business Days of the request
by Lender, Borrower causes its legal counsel to deliver a revised or updated Insolvency
Opinion to the effect that such Event shall not impair, negate or amend the opinions
rendered in the Insolvency Opinion delivered in connection with the closing of the Loan or
subsequent to the closing, which opinion shall be acceptable to Lender in its reasonable
discretion;




          (xxiv) if (a) a material default has occurred and continues beyond any applicable cure
period under the Franchise Agreement, and such default permits a party to terminate or
cancel the Franchise Agreement or (b) any Franchise Agreement expires or otherwise
terminates without Lender’s prior written consent and is not replaced with a Replacement
Franchise Agreement;




          (xxv) if 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);




          (xxvi) intentionally omitted;




          (xxvii) if Borrower shall fail to pay the Ground Rent or any additional rent or other
charge mentioned in or made payable by the Ground Lease when said rent or other charge is
due and payable after the expiration of all applicable notice and grace periods contained in
such Ground Lease;




          (xxviii) if there shall occur any default by Borrower, as tenant under the Ground
Lease, in the observance or performance of any material term, covenant or condition of the
Ground Lease on the part of Borrower to be observed or performed and said default is not
cured following the expiration of any applicable grace and notice




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periods therein provided,
or if the leasehold estate created by the Ground Lease shall be surrendered or if the Ground
Lease shall cease to be in full force and effect or the Ground Lease shall be terminated or
canceled for any reason or under any circumstances whatsoever, or if any of the material
terms, covenants or conditions of the Ground Lease shall in any manner be modified, changed,
supplemented, altered, or amended without the consent of Lender;




               (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) Business Days after written 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 written 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 sixty (60) days;




               (xxx) 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;




               (xxxi) if any of the Common Charges to be paid by Borrower pursuant to the Condominium
Documents are not paid by Borrower prior to delinquency and such default shall continue for
ten (10) Business Days after written notice thereof;




               (xxxii) if the Condominium Board fails after the applicable notice and cure periods set
forth in the Declaration (a) to promptly comply in all material respects with all laws,
orders, and ordinances affecting the Condo Property or the use thereof, or (b) to
substantially complete and pay for, within a reasonable time, any structure at any time in
the process of construction or repair on the Condo Property, all to the extent that the
Condominium Board is authorized to so maintain, repair, replace, rebuild and complete the
Condo Property by the Declaration and the By laws, and such default shall continue for a
period of sixty (60) days after written notice thereof to the Condominium Board specifying
such default and requiring the same to be remedied shall have been given to the person
designated from time to time on behalf of the Borrower in accordance with the Declaration to
receive service of process; provided, however, such sixty (60) day period shall be extended
indefinitely so long as there is no material adverse effect on the value on the Condo
Property as a result of such failure;




               (xxxiii) if the Condominium Board fails, in accordance with the terms of the
Condominium Documents, (a) to keep the Common Elements and/or the Condo Property, as
applicable, insured against the hazards specified in the Condominium Documents in the
amounts and pursuant to policies in the form specified therein, and Borrower has not
delivered to Lender a satisfactory Unit Policy in accordance with Section 6.1(a) and (b)
hereof, and (b) to pay, as and when the same becomes due and



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payable, any charge or
encumbrance which, if unpaid, would become a lien against the Property or any part thereof
prior to or on a parity with the lien of the Security Instrument and, if such failure shall
result in the imposition of a lien against the Condo Property and such lien shall not be
discharged, dismissed or bonded by the Condominium Association or Borrower within sixty (60)
days of such imposition and, in either case, the default shall continue for an additional
thirty (30) days after written notice thereof to Borrower;




               (xxxiv) if, without the prior written consent of Lender, Borrower votes for, or fails
to vote against, permitting the Condominium Board to effectuate, any material modification
or amendment to any of the terms or provisions of the
Condominium Documents so as to decrease the value of the Condo Property in any material
respect (including but not limited to any modification or amendment that decreases
Borrower’s voting rights with respect to the Condominium Board);




               (xxxv) if, without prior written consent of Lender, Borrower fails to comply with any
of its obligations (other than its obligations to pay Common Charges) under the Condominium
Documents and any of the laws which created the Condominium and such default continues for
thirty (30) days after written notice; provided, however, such thirty (30) day period shall
be extended in Lender’s reasonable discretion so long as there is no material adverse effect
on the value of the Condo Property, or use or operation thereof, as a result of such
failure;




               (xxxvi) if the Condominium is partitioned pursuant to any action for partition by any
Unit owner;




               (xxxvii) if, without the prior written consent of Lender, which consent shall not be
unreasonably withheld, the Borrower, such other party as may in writing be designated by
Borrower, or any other party, as the case may be, expands or causes the expansion of the
Condominium and annexes to the land covered by the Condominium additional land and
improvements thereon, if the result shall be to have a material adverse effect on the value
of the Condo Property, or use or operation thereof;




               (xxxviii) if the Condo Property is withdrawn from the condominium regime established by
the Condominium Act in connection with any condemnation, any casualty or otherwise, in
accordance with the Condominium Act without Lender’s written consent, which consent shall
not be unreasonably withheld, delayed or conditioned; or




               (xxxix) if the Condominium is terminated without Lender’s written consent.



          (b) Upon the occurrence 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, Lender may take such action, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and in and to all or 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




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Documents against
Borrower and any or all of the Properties, including, without limitation, all rights or remedies
available at law or in equity; and upon any Event of Default described in clauses (vi) or (vii)
above, the Debt 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 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,
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 all or any Individual Property or any
other 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
(i) Lender is not subject to any “one action” or “election of remedies” law or rule, and (ii) all
Liens and other rights, remedies or privileges provided to Lender shall remain in full force and
effect until Lender has exhausted all of its remedies against the Properties and the other
Collateral and each Security Instrument 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 Properties, nothing contained herein or in any other Loan
Document shall be construed as requiring Lender to resort to any Individual Property or Collateral
for the satisfaction of any of the Debt in preference or priority to any other Individual Property
or Collateral, and Lender may seek satisfaction out of all of the Properties or any other
Collateral or any part thereof, in its absolute discretion in respect of the Debt. In addition,
Lender shall have the right from time to time to partially foreclose the Security Instruments in
any manner and for any amounts secured by the Security Instruments 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 one or
more of the Security Instruments 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 one or more of the Security Instruments to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by one or more of the Security
Instruments as Lender may elect. Notwithstanding one or more partial foreclosures, the Properties
shall remain subject to the Security Instruments to secure payment of sums secured by the Security
Instruments and not previously recovered.




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          (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, Security Instruments and other security 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 ten (10) 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.




     Section 8.3 Remedies Cumulative; Waivers. 



     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. 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. 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.



     IX. SPECIAL PROVISIONS



     Section 9.1  Sale of Notes and Securitization



     Lender may, at any time, sell, pledge, transfer or assign the Note, this Agreement, the
Security Instruments 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
(subject to the limitations set forth at the end of this Section 9.1) shall use its commercially
reasonable efforts to satisfy the market standards to which Lender 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:



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          (a) (i) provide such financial and other information with respect to the Properties, Borrower
and the Manager, (ii) provide budgets relating to the Properties and (iii) permit Lender or
Lender’s designees 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 accountants 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 respect to
the Properties, Borrower, Guarantor, Indemnitor, Principal, and their respective Affiliates
and the Loan Documents, and (iii) revised organizational documents for Borrower, Guarantor,
Indemnitor, Principal and their respective Affiliates (including, without limitation, such
revisions as are necessary to comply with the provisions of Section 4.1.35 hereof), which counsel,
opinions and organizational documents shall be reasonably satisfactory to Lender and satisfactory
to the Rating Agencies;




          (c) if required by the Rating Agencies, deliver such additional tenant estoppel letters,
subordination agreements or other agreements from parties to agreements that affect the Properties,
reasonably requested by Lender and the Rating Agencies




          (d) execute such amendments to the Loan Documents and organizational documents as may be
reasonably 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 (i) materially increase Borrower’s obligations or
out-of-pocket costs related to compliance with this Agreement, (except for modifications and
amendments required to be made pursuant to Section 9.1 (e) below), (ii) change the interest rate,
the stated maturity or the amortization of principal set forth in the Note or (iii) modify or amend
any other economic, financial or payment term (or otherwise modify or amend in any material respect
any of the terms) of the Loan, or (iv) otherwise be materially adverse to Borrower.




          (e) 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 and principal amounts, 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




          (f) make such representations and warranties as of the closing date of the Securitization with
respect to the Properties, Borrower, and the Loan Documents as are necessary and customarily
provided in securitization transactions and as may be reasonably





124










 




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.




          Other than costs and expenses which are otherwise the responsibility of Borrower pursuant to
the terms of the Loan Documents, in connection with Borrower’s complying with requests made under
this Section 9.1, Borrower shall only be responsible for the payment of (i) Borrower’s legal
counsel and accountants and (ii) any internal, administrative or clerical cost and expenses
incurred by Borrower.



     Section 9.2 Securitization Indemnification. 



          (a) Borrower understands 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 will cooperate
with the holder of the Note in updating the Provided Information in the Disclosure Document by
providing all current information necessary to keep the Provided Information in the Disclosure
Document accurate and complete in all material respects.



          (b) Borrower agrees 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, as it relates to the Provided Information or the
descriptions of the Properties, Borrower, Guarantor, the Manager, Principal or any Affiliates
thereof contained therein, including without limitation, the sections entitled “Special
Considerations,” “Description of the Mortgages,” “Description of the Mortgage Loans and Mortgaged
Property,” “The Manager,” “The Borrower” and “Certain Legal Aspects of the Mortgage Loan,” and such
sections (and any other sections reasonably requested), to the extent they relate to the Provided
Information or the descriptions of the Properties, Borrower, Guarantor, the Manager, Principal or
any Affiliates thereof, 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 in any material respect, (B) indemnifying Lender (and
for purposes of this Section 9.2, Lender hereunder shall include its officers and directors), the
Affiliate of Bank of America, N.A. (“Bank of America”) 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



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meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, the “Bank of America”), and Bank of
America, each of its directors and each Person who controls Bank of America 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 Bank of America 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, to the extent they relate
to the Provided Information or the descriptions of the Properties, Borrower, Guarantor, the
Principal, Manager or any Affiliate thereof 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 in any material respect, to the extent they relate to the
Provided Information or the descriptions of the Properties, Borrower, Guarantor, the Principal,
Manager or any Affiliate thereof and (C) agreeing to reimburse Lender, the Bank of America Group
and the Underwriter Group for any legal or other expenses reasonably incurred by Lender the Bank of
America 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 Properties. 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 agrees to indemnify (i)
Lender, the Bank of America Group and the Underwriter Group for Liabilities to which Lender, the
Bank of America 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
in any material respect and (ii) reimburse Lender, the Bank of America Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Bank of America 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 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



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thereof,
the indemnifying party will be entitled, jointly with any other indemnifying party, to participate
therein and, to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party. After notice from
the indemnifying party to such indemnified party under this Section 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 to 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.



          (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 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) Bank of America’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 and Borrower 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 both Borrower and Lender under this Section 9.2 shall
survive the termination of this Agreement and the satisfaction and discharge of the Debt.



          (g) Notwithstanding anything contained in this Section 9.2 to the contrary, the aggregate
amount of Borrower’s liability or obligation for all claims hereunder shall not exceed the original
Loan Amount.



     Section 9.3 Servicer.



     At the option of Lender, the Loan may be serviced by a servicer/trustee (the “Servicer”)
selected by Lender and Lender may delegate all or any portion of its responsibilities under this



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Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement (the
“Servicing Agreement”) between Lender and Servicer.



     Section 9.4 Exculpation. 



          (a) Except as otherwise provided in this Section 9.4 and comparable provisions in the Security
Instruments or in the other Loan Documents, Lender shall not enforce the liability and obligation
of Borrower or any of Borrower’s Affiliates to perform and observe the obligations contained in
this Agreement, the Note or the Security Instruments by any action or proceeding wherein a money
judgment shall be sought against Borrower or any of Borrower’s Affiliates, 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 Security
Instruments, the other Loan Documents, and the interest in the Properties, the Rents and any other
Collateral created by this Agreement, the Note, the Security Instruments 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 Properties, in the
Rents and in any other Collateral. Lender, by accepting this Agreement, the Note and the Security
Instruments, agrees that it shall not, except as otherwise provided in this Section 9.4 and
comparable provisions in the Security Instruments, sue for, seek or demand any deficiency judgment
against Borrower or any of Borrower’s Affiliates in any such action or proceeding, under or by
reason of or under or in connection with this Agreement, the Note, the Security Instruments 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
Security Instruments 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 Security
Instruments; (iii) except as set forth in this Section 9.4, 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 Security Instruments, or the other Loan Documents; (iv) impair the right
of Lender to obtain the appointment of a receiver; (v) except as set forth in this Section 9.4,
impair the enforcement of the Assignment of Leases; (vi) impair the right of Lender to enforce the
provisions of Section 10.2 of the Security Instruments or Sections 4.1.8, 4.1.28, 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 to the extent necessary to (A) preserve or enforce its rights and
remedies against any Individual Property or (B) obtain any Insurance Proceeds or Awards to which
Lender would otherwise be entitled under the terms of this Agreement or the Security Instruments;
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 Lender incurs to the extent due to: (i) fraud or
material misrepresentation in connection with the execution and the delivery of this
Agreement, the Note, the Security Instrument, or the other Loan Documents; (ii) Borrower’s
misapplication or misappropriation of Rents received by Borrower or Operating Lessee after the
occurrence of an Event of Default; (iii) Borrower’s misapplication or misappropriation of Security
Deposits or Rents collected more than thirty (30) days in advance; (iv) Borrower’s



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misapplication
or the misappropriation of Insurance Proceeds or Awards; (v) 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 Lender pursuant to the terms of Section 7.2 hereof), charges for labor or materials or
other charges that can create Liens on the Properties; (vi) Borrower’s failure to return or to
reimburse Lender for all Personal Property taken from any Properties by or on behalf of Borrower
and not replaced with Personal Property of comparable utility and value; (vii) any act of
intentional waste or arson to the Collateral by Borrower, Principal or any Affiliate or thereof or
by any Indemnitor or Guarantor; (viii) any fees or commissions paid by Borrower to Principal or any
Affiliate of Borrower, Principal, Indemnitor, or Guarantor in violation of the terms of this
Agreement, the Note, the Security Instruments or the other Loan Documents; (ix) Borrower’s failure
to comply with the provisions of Sections 4.1.39 and 5.1.19 of this Agreement; (x) any Loss
resulting from a Casualty due to Borrower’s failure to obtain the insurance required pursuant to
Section 6.1; (xi) Borrower’s default under Section 5.1.10 hereof (after ten (10) Business Days
prior written notice to Borrower), (xii) if any Ground Lease is modified or terminated other than
in accordance with the terms hereof, (xiii) any Loss resulting from the Jacksonville Property’s
failure to comply with applicable zoning ordinances relating to density or number of hotel rooms
and (xiv) any Loss paid to Hilton Inns, Inc. or any Affiliate thereof (including, without
limitation, any termination or similar fees by, or on behalf of, Operating Lessee) resulting from a
termination of the franchise license agreement(s) relating to the Hilton Franchised Properties.



          (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 and the obligation to repay the Debt shall become a personal recourse obligation of Borrower
(i) in the event of Borrower’s or Principal’s default under Section 4.1.35 hereof (such that such
failure was considered by a court as a factor in the court’s finding for a consolidation of the
assets of Borrower or Principal with the assets of another Person) or any Transfer in violation of
the provisions of Section 5.2.10 hereof or Article 7 of the Security Instruments, (ii) if any
Individual Property or any part thereof shall become an asset, or if Borrower, Principal or any
Ground Lessor Affiliated with Borrower shall be a debtor, in (A) a voluntary bankruptcy or
insolvency proceeding or (B) an involuntary bankruptcy or insolvency proceeding commenced by any
Person (other than Lender) and, with respect to such involuntary proceeding, Borrower consents or
fails to object to such proceedings) or if Borrower, Principal or Ground Lessor, has acted in
concert with, colluded or conspired with the party to cause the filing of such involuntary
proceeding or (iii) an Event of Default contemplated by Section 8.1(xi)(b), 8.1(xi)(c) or
8.1(xxiv)(b) hereof has occurred (unless caused by, or at the request of Lender); provided,
however, with respect to this Section 9.4(c)(iii) only, Borrower shall only be liable on a recourse
basis for the Allocated Loan Amounts (plus interest thereon and costs and expenses relating
thereto) of the Individual Properties that were the cause of such Event of Default.



          (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 against Borrower or Principal for the full amount of the indebtedness secured
by the Security Instruments 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 Security Instruments
and the other Loan Documents.



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     Section 9.5 Contributions and Waivers.



          (a) As a result of the transactions contemplated by this Agreement, each Borrower will
benefit, directly and indirectly, from each Borrower’s obligation to pay the Debt and perform its
Obligations and in consideration therefore each Borrower desires to enter into an allocation and
contribution agreement among themselves as set forth in this Section 9.5 to allocate such benefits
among themselves and to provide a fair and equitable agreement to make contributions among each of
the Borrowers in the event any payment is made by any individual Borrower hereunder to Lender (such
payment being referred to herein as a “Contribution,” and for purposes of this Section 9.5,
includes any exercise of recourse by Lender against any Collateral of a Borrower and application of
proceeds of such Collateral in satisfaction of such Borrower’s obligations, to Lender under the
Loan Documents).



          (b) Each Borrower shall be liable hereunder with respect to the Obligations only for such
total maximum amount (if any) that would not render its Obligations hereunder or under any of the
Loan Documents subject to avoidance under Section 548 of the Bankruptcy Code or any comparable
provisions of any State law.



          (c) In order to provide for a fair and equitable contribution among each Borrower in the event
that any Contribution is made by an individual Borrower (a “Funding Borrower”), such Funding
Borrower shall be entitled to a reimbursement Contribution (“Reimbursement Contribution”) from all
other Borrowers for all payments, damages and expenses incurred by that Funding Borrower in
discharging any of the Obligations, in the manner and to the extent set forth in this Section 9.5.



          (d) For purposes hereof, the “Benefit Amount” of any individual Borrower as of any date of
determination shall be the net value of the benefits to such Borrower and its Affiliates from
extensions of credit made by Lender (a) to such Borrower and (b) to the other Borrowers hereunder
and the Loan Documents to the extent such other Borrowers have guaranteed or mortgaged their
Properties to secure the Obligations of such Borrower to Lender.



          (e) Each Borrower shall be liable to a Funding Borrower in an amount equal to the greater of
(A) the (i) ratio of the Benefit Amount of such Borrower to the total amount of Obligations,
multiplied by (ii) the amount of Obligations paid by such Funding Borrower, or (B) ninety-five
percent (95%) of the excess of the fair saleable value of the property of such Borrower over the
total liabilities of such Borrower (including the maximum amount reasonably expected to become due
in respect of contingent liabilities) determined as of the date on which the payment made by a
Funding Borrower is deemed made for purposes hereof (giving effect to all payments made by other
Funding Borrowers as of such date in a manner to maximize the amount of such Contributions).



          (f) In the event that at any time there exists more than one Funding Borrower with respect to
any Contribution (in any such case, the “Applicable Contribution”), then
Reimbursement Contributions from other Borrowers pursuant hereto shall be allocated among such
Funding Borrowers in proportion to the total amount of the Contribution made for or on account of
the other Borrowers by each such Funding Borrower pursuant to the Applicable Contribution. In the
event that at any time any Borrower pays an amount hereunder in excess of



130









 







the amount calculated
pursuant to this Section 9.5 above, that Borrower shall be deemed to be a Funding Borrower to the
extent of such excess and shall be entitled to a Reimbursement Contribution from the other
Borrowers in accordance with the provisions of this Section.



          (g) Each Borrower acknowledges that the right to Reimbursement Contribution hereunder shall
constitute an asset in favor of Borrower to which such Reimbursement Contribution is owing.



          (h) No Reimbursement Contribution payments payable by a Borrower pursuant to the terms of this
Section 9.5 shall be paid until all amounts then due and payable by all of Borrowers to Lender,
pursuant to the terms of the Loan Documents, are paid in full in Cash. Nothing contained in this
Section 9.5 shall limit or affect in any way the Obligations of any Borrower to Lender under this
Note or any other Loan Documents.



          (i) Each Borrower waives:




          (A) any right to require Lender to proceed against any other Borrower or any other
person or to proceed against or exhaust any security held by Lender at any time or to
pursue any other remedy in Lender’s power before proceeding against Borrower;




          (B) the defense of the statute of limitations in any action against any other Borrower
or for the collection of any indebtedness or the performance of any obligation under the
Loan;




          (C) any defense based upon any legal disability or other defense of any other
Borrower, any Guarantor or Indemnitor of any other person or by reason of the cessation or
limitation of the liability of any other Borrower or any Guarantor or Indemnitor from any
cause other than full payment of all sums payable under the Note, this Agreement and any of
the other Loan Documents;




          (D) any defense based upon any lack of authority of the officers, directors, partners
or agents acting or purporting to act on behalf of any other Borrower or any principal of
any other Borrower or any defect in the formation of any other Borrower or any principal of
any other Borrower;




          (E) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in any other respects more
burdensome than that of a principal;




          (F) any defense based upon any failure by Lender to obtain collateral for the
indebtedness or failure by Lender to perfect a lien on any collateral;




          (G) presentment, demand, protest and notice of any kind;




          (H) any defense based upon any failure of Lender to give notice of sale or other
disposition of any collateral to any other Borrower or to any other person or



131









 







entity or any
defect in any notice that may be given in connection with any sale or disposition of any
collateral;




          (I) any defense based upon any failure of Lender to comply with Applicable Laws in
connection with the sale or other disposition of any collateral, including, without
limitation, any failure of Lender to conduct a commercially reasonable sale or other
disposition of any collateral;




          (J) any defense based upon any election by Lender, in any bankruptcy proceeding, of
the application or non-application of Section 1111(6)(2) of the Bankruptcy Code or any
successor statute;




          (K) any defense based upon any use of cash collateral under Section 363 of the
Bankruptcy Code;




          (L) any defense based upon any agreement or stipulation entered into by Lender with
respect to the provision of adequate protection in any bankruptcy proceeding;




          (M) any defense based upon any borrowing or any grant of a security interest under
Section 364 of the Bankruptcy Code;




          (N) any defense based upon the avoidance of any security interest in favor of Lender
for any reason;




          (O) any defense based upon any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding, including any discharge of, or
bar or stay against collecting, all or any of the obligations evidenced by the Note or
owing under any of the Loan Documents; and




          (P) any defense or benefit based upon Borrower’s, or any other party’s, resignation of
the portion of any obligation secured by the applicable Security Instruments to be
satisfied by any payment from any other Borrower or any such party.



          (j) Each Borrower waives:





          (A) all rights and defenses arising out of an election of remedies by Lender even
though the election of remedies, such as nonjudicial foreclosure with respect to security
for the Loan or any other amounts owing under the Loan Documents, has destroyed Borrower’s
rights of subrogation and reimbursement against any other Borrower;




          (B) all rights and defenses that Borrower may have because any of Debt is secured by
real property. This means, among other things: (i) Lender may collect from Borrower without
first foreclosing on any real or personal property collateral pledged by any other
Borrower, (ii) if Lender forecloses on any real property collateral
pledged by any other Borrower, (a) the amount of the Debt may be reduced only by the
price for which that collateral is
sold at the foreclosure sale, even if the collateral is



132









 







worth more than the sale price, (b) Lender may collect from Borrower even if any other
Borrower, by foreclosing on the real property collateral, has destroyed any right Borrower
may have to collect from any other Borrower. This is an unconditional and irrevocable
waiver of any rights and defenses Borrower may have because any of the Debt is secured by
real property; and




          (C) any claim or other right which Borrower might now have or hereafter acquire
against any other Borrower or any other person that arises from the existence or
performance of any obligations under the Note, this Agreement, the Security Instruments or
the other Loan Documents, including, without limitation, any of the following: (i) any
right of subrogation, reimbursement, exoneration, contribution, or indemnification; or (ii)
any right to participate in any claim or remedy of Lender against any other Borrower or any
collateral security therefor, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law.




          (D) Any rights of Borrowers of subrogation, reimbursement, indemnification, and/or
contribution against any other Borrower or any other person or entity, and any other rights
and defenses that are or may become available to any Borrower or any other person or entity
by reasons of Sections 2787-2855, inclusive of the California Civil Code;




          (E) Any rights or defenses that may be available by reason of any election of remedies
by any Borrower (including, without limitation, any such election which in any manner
impairs, effects, reduces, releases, destroys or extinguishes any Borrower’s subrogation
rights, rights to proceed against any other Borrower for reimbursement, or any other rights
of Borrowers to proceed against any other person, entity or security, including but not
limited to any defense based upon an election of remedies by any Borrower under the
provisions of Section 580(d) of the California Code of Civil Procedure or any similar law
of California or of any other State or of the United States); and




          (F) Any rights or defenses Borrowers may have because the Obligations are secured by
real property or any estate for years. These rights or defenses include, but are not
limited to, any rights or defenses that are based upon, directly or indirectly, the
application of Section 580(a), Section 580(b), Section 580(d) or Section 726 of the
California Code of Civil Procedure to the Obligations.



     Section 9.6 Reallocation of Loan Amounts.



     Lender, without in any way limiting its other rights hereunder, in its sole and absolute
discretion, shall have the right, at any time prior to a Securitization, to reallocate the amount
of the Note A and Note B and/or adjust the interest rate rates thereon provided that (i) the
aggregate principal amount of Note A and Note B immediately
following such reallocation shall equal
the outstanding principal balance of Note A and Note B immediately prior to such reallocation, (ii)
the aggregate Monthly Debt Service Payment Amount immediately
following such reallocation shall not
exceed the aggregate Monthly Debt Service Payment Amount immediately prior to the
reallocation, and (iii) the weighted average interest rate of Note A and Note B immediately



133









 







following such reallocation shall equal the weighted average interest rate which was applicable to
Note A and Note B immediately prior to such reallocation. Borrower shall cooperate with all
reasonable requests of Lender in order to reallocate the amount of Note A and Note B 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.



     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, and all covenants, promises and agreements in this Agreement, by or on behalf of Lender,
shall be binding upon the legal representatives successors and assigns of Lender.



     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 (OTHER THAN THOSE CONFLICT OF LAW PROVISIONS THAT
WOULD DEFER TO THE SUBSTANTIVE LAWS OF ANOTHER JURISDICTION). WITHOUT IN ANY WAY LIMITING THE
PRECEDING CHOICE OF LAW, THE PARTIES ELECT TO BE GOVERNED BY NEW YORK LAW IN ACCORDANCE WITH, AND
ARE RELYING (AT LEAST IN PART) ON, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK; PROVIDED HOWEVER, THAT WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT
OF THE LIENS AND SECURITY INTERESTS CREATED BY THIS AGREEMENT, THE SECURITY INSTRUMENTS AND THE
OTHER LOAN DOCUMENTS, AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, THE LAWS OF THE STATE WHERE
EACH INDIVIDUAL PROPERTY IS LOCATED SHALL APPLY.



134









 





          (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 WILL BE DEEMED TO PRECLUDE LENDER FROM BRINGING AN ACTION OR
PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION. WITHOUT IN ANY WAY LIMITING THE
PRECEDING CONSENTS TO JURISDICTION AND VENUE, THE PARTIES AGREE TO SUBMIT TO THE JURISDICTION OF
SUCH NEW YORK COURTS IN ACCORDANCE WITH SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK OR ANY CORRESPONDING OR SUCCEEDING PROVISIONS THEREOF.



     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.



     Section 10.5 Delay Not a Waiver. 



     Neither any failure nor any delay on the part of Lender or Borrower 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.



135









 





     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:
	 	c/o FelCor Lodging Trust Incorporated
	 

	 	 	 	545 E. John Carpenter Freeway, Suite 1300
	 

	 	 	 	Irving, Texas 75062
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Facsimile No.: (972) 444-4949
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Jenkens & Gilchrist
	 

	 	 	 	1445 Ross Avenue, Suite 3200
	 

	 	 	 	Dallas, Texas 75202
	 

	 	 	 	Attention: Robert W. Dockery, Esq.
	 

	 	 	 	Facsimile No.: (214) 855-4300
	 
	 	 	 	 
	 

	 	If to Lender:
	 	Bank of America, N.A.
	 

	 	 	 	Capital Markets Servicing Group
	 

	 	 	 	900 West Trade Street, Suite 650
	 

	 	 	 	Mail Code: NC1-026-06-01
	 

	 	 	 	Charlotte, North Carolina 28255
	 

	 	 	 	Telephone No.: (866) 531-0957
	 

	 	 	 	Facsimile No.: (704) 317-4501
	 
	 	 	 	 
	 

	 	and	 	 
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Thacher Proffitt & Wood LLP
	 

	 	 	 	Two World Financial Center
	 

	 	 	 	New York, New York 10281
	 

	 	 	 	Attention: David S. Hall, Esq.
	 

	 	 	 	Facsimile No.: (212) 912-7751






     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.



136









 





     Section 10.7 Trial by Jury.



     BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE 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 LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND
EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER
ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER BY BORROWER AND LENDER, AS APPLICABLE.



     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 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. 



     Except as otherwise expressly provided herein, 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



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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) Except as otherwise expressly provided herein, 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 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
Properties, 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 Properties 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,



138









 







fraud or willful misconduct of Lender. Any cost and expenses due and payable to Lender may be
paid from any amounts in the Lockbox Account.



          (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 “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 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 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 4.1.8 or
5.2.8 hereof.



          (d) Other than in connection with a Securitization, Borrower covenants and agrees to pay for
or, if Borrower fails to pay, to reimburse Lender for, (i) any fees and expenses incurred by any
Rating Agency in connection with any Rating Agency review of the Loan, the Loan Documents or any
transaction contemplated thereby or (ii) 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



139









 







unrelated to the Loan Documents which Borrower may otherwise have against any assignor of
the Loan 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 nor to grant Lender any interest in the Properties other than that of
mortgagee, beneficiary or 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 (or an Affiliate of either of the foregoing
acting on behalf of Borrower or Lender, as applicable) any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or therein. All conditions to
the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that Lender will refuse to make
the Loan in the absence of strict compliance with any or all thereof and no other Person shall
under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may
be freely waived in whole or in part by Lender if, in Lender’s sole discretion, Lender deems it
advisable or desirable to do so.



     Section 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, Bank of America, or any of their Affiliates shall be subject to
the prior written approval of Lender, which shall not be unreasonably withheld, delayed or
conditioned. Notwithstanding the foregoing, disclosure required by any federal or State securities
laws, rules or regulations, as determined by Borrower’s counsel, shall not be subject to the prior
written approval of Lender.



     Section 10.18 Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets.




          (a) Borrower acknowledges that Lender has made the Loan to Borrower upon the security of its
collective interest in the Properties and in reliance upon the aggregate of the Properties taken
together being of greater value as collateral security than the sum of each Individual Property
taken separately. Borrower agrees that the Security Instruments are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event of Default under any
of the Security Instruments shall constitute an Event of Default under each of the other Security
Instruments which secure the Note; (ii) an Event of Default under the Note or this Agreement shall
constitute an Event of Default under each Security Instrument; (iii) each



140









 







Security Instrument shall
constitute security for the Note as if a single blanket lien were placed
on all of the Properties as security for the Note; and (iv) such cross-collateralization shall
in no event be deemed to constitute a fraudulent conveyance.



          (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 and of the Properties, or
to a sale in inverse order of alienation in the event of foreclosure of all or any of the Security
Instruments, 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 Properties 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 any or
all of the Security Instruments, any equitable right otherwise available to Borrower which would
require the separate sale of the Properties or require Lender to exhaust its remedies against any
Individual Property or any combination of the Properties before proceeding against any other
Individual Property or combination of Properties; and further in the event of such foreclosure
Borrower does hereby expressly consent to and authorize, at the option of Lender, the foreclosure
and sale either separately or together of any combination of the Properties.



     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.



     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.



141









 





     Section 10.21 Brokers and Financial Advisors. 



     Borrower and Lender hereby represent that they have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the transactions contemplated
by this Agreement. Borrower 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
reasonable 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 in connection with the transactions
contemplated herein. The provisions of this Section 4.21 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.



Section 10.23 Counterparts.




     This Agreement may be executed in any number of duplicate originals and each duplicate
original shall be deemed to be an original. This Agreement may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement.



     Section 10.24 Liability.



     This Agreement shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns forever.



[NO FURTHER TEXT ON THIS PAGE]




142









 





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



	 	 	 	 	 	 	 	 	 
	 	 	FELCOR/JPM HOTELS, L.L.C., a Delaware limited
liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Joel M. Eastman	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Joel M. Eastman	 	 
	 	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	DJONT/JPM LEASING, L.L.C., a Delaware limited
liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Joel M. Eastman	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Joel M. Eastman	 	 
	 	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., a national banking association	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Michael S. Birajiclian	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Michael S. Birajiclian	 	 
	 	 	 	 	Title: Principal	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Acknowledged and agreed to with respect to its
obligations set forth in Article 9 hereof:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FELCOR LODGING LIMITED PARTNERSHIP a

Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	FelCor Lodging Trust Incorporated, a

Maryland corporation, its generalpartner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Jonathan H. Yellen	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Jonathan H. Yellen	 	 
	 

	 	 	 	 	 	Title: Executive Vice President