exv10w1






Exhibit
10.1




EXECUTION VERSION




 





$85,000,000




CREDIT AGREEMENT



among



CHATHAM LODGING TRUST,

as the REIT,



CHATHAM LODGING, L.P.,

as Borrower,



The Several Lenders

from Time to Time Parties Hereto,



BARCLAYS CAPITAL

and

REGIONS CAPITAL MARKETS,

as Joint Lead Arrangers,



REGIONS BANK,

as Syndication Agent,



CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK,

UBS SECURITIES LLC

and

U.S. BANK NATIONAL ASSOCIATION,

as Co-Documentation Agents,



and



BARCLAYS BANK PLC,

as Administrative Agent



Dated as of October 12, 2010



 




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	SECTION 1 DEFINITIONS
	 	 	3	 
	 
	 	 	 	 
	1.1 Defined Terms
	 	 	3	 
	1.2 Other Definitional Provisions
	 	 	43	 
	 
	 	 	 	 
	SECTION 2 AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENT
	 	 	44	 
	 
	 	 	 	 
	2.1 Revolving Credit Commitments
	 	 	44	 
	2.2 Procedure for Revolving Credit Borrowing
	 	 	44	 
	2.3 Swing Line Commitment
	 	 	45	 
	2.4 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans
	 	 	45	 
	2.5 Repayment of Loans; Evidence of Debt
	 	 	47	 
	2.6
Commitment Fees, etc.
	 	 	48	 
	2.7 Termination or Reduction of Revolving Credit Commitments
	 	 	48	 
	2.8 Optional Prepayments
	 	 	48	 
	2.9 Mandatory Prepayments
	 	 	49	 
	2.10 Conversion and Continuation Options
	 	 	49	 
	2.11 Minimum Amounts and Maximum Number of Eurodollar Tranches
	 	 	49	 
	2.12 Interest Rates and Payment Dates
	 	 	50	 
	2.13 Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin
	 	 	50	 
	2.14 Inability to Determine Interest Rate
	 	 	51	 
	2.15 Pro Rata Treatment and Payments
	 	 	51	 
	2.16 Requirements of Law
	 	 	53	 
	2.17 Taxes
	 	 	54	 
	2.18 Indemnity
	 	 	56	 
	2.19 Illegality
	 	 	57	 
	2.20 Change of Lending Office
	 	 	57	 
	2.21 Replacement of Lenders under Certain Circumstances
	 	 	57	 
	2.22 Increases in Revolving Credit Commitments
	 	 	58	 
	2.23 Defaulting Lender
	 	 	60	 
	 
	 	 	 	 
	SECTION 3 LETTERS OF CREDIT
	 	 	62	 
	 
	 	 	 	 
	3.1 L/C Commitment
	 	 	62	 
	3.2 Procedure for Issuance of Letter of Credit
	 	 	62	 
	3.3 Fees and Other Charges
	 	 	63	 
	3.4 L/C Participations
	 	 	63	 
	3.5 Reimbursement Obligation of the Borrower
	 	 	64	 
	3.6 Obligations Absolute
	 	 	65	 
	3.7 Letter of Credit Payments
	 	 	65	 
	3.8 Applications
	 	 	65	 
	 
	 	 	 	 
	SECTION 4 REPRESENTATIONS AND WARRANTIES
	 	 	66	 
	 
	 	 	 	 
	4.1 Financial Condition
	 	 	66	 
	4.2 No Change
	 	 	67	 






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	 	 	Page	 
	4.3 Corporate Existence; Compliance with Law
	 	 	67	 
	4.4 Corporate Power; Authorization; Enforceable Obligations
	 	 	67	 
	4.5 No Legal Bar
	 	 	68	 
	4.6 No Material Litigation
	 	 	68	 
	4.7 No Default
	 	 	68	 
	4.8 Ownership of Property; Liens
	 	 	68	 
	4.9 Intellectual Property
	 	 	68	 
	4.10 Taxes
	 	 	68	 
	4.11 Federal Regulations
	 	 	69	 
	4.12 Labor Matters
	 	 	69	 
	4.13 ERISA
	 	 	69	 
	4.14 Investment Company Act; Other Regulations
	 	 	70	 
	4.15 Subsidiaries
	 	 	70	 
	4.16 Use of Proceeds
	 	 	70	 
	4.17 Environmental Matters
	 	 	70	 
	4.18
Accuracy of Information, etc.
	 	 	71	 
	4.19 Security Documents
	 	 	72	 
	4.20 Solvency
	 	 	72	 
	4.21 Regulation H
	 	 	72	 
	4.22 REIT Status; Borrower Tax Status
	 	 	73	 
	4.23 Insurance
	 	 	73	 
	4.24 Casualty; Condemnation
	 	 	73	 
	4.25 Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws
	 	 	73	 
	4.26 Property Condition
	 	 	73	 
	4.27 Management Agreements; Franchise Agreements
	 	 	74	 
	4.28 Operating Leases
	 	 	75	 
	4.29 Acceptable Leases
	 	 	75	 
	 
	 	 	 	 
	SECTION 5 CONDITIONS PRECEDENT
	 	 	75	 
	 
	 	 	 	 
	5.1 Conditions to Initial Extension of Credit
	 	 	75	 
	5.2 Conditions to Each Extension of Credit
	 	 	80	 
	5.3 Conditions to the Addition of a Borrowing Base Property
	 	 	81	 
	5.4 Conditions to the Release of a Borrowing Base Property
	 	 	82	 
	 
	 	 	 	 
	SECTION 6 AFFIRMATIVE COVENANTS
	 	 	83	 
	 
	 	 	 	 
	6.1 Financial Statements
	 	 	83	 
	6.2 Certificates; Other Information
	 	 	84	 
	6.3 Payment of Obligations
	 	 	85	 
	6.4 Conduct of Business and Maintenance of Existence; Compliance; Hotel Licenses
	 	 	86	 
	6.5 Maintenance of Property; Insurance
	 	 	86	 
	6.6 Inspection of Property; Books and Records; Discussions
	 	 	90	 
	6.7 Notices
	 	 	90	 
	6.8 Environmental Laws; Environmental Reports
	 	 	92	 
	6.9
Additional Collateral, etc.
	 	 	93	 
	6.10 Further Assurances
	 	 	95	 
	6.11 Appraisals
	 	 	95	 






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	 	 	Page	 
	6.12 Borrowing Base Reports
	 	 	96	 
	6.13 Blocked Account Control Agreements
	 	 	96	 
	6.14 Taxes
	 	 	96	 
	6.15 Condemnation, Casualty and Restoration
	 	 	97	 
	6.16 Acceptable Leases
	 	 	98	 
	6.17 Borrowing Base Property Covenants
	 	 	100	 
	6.18 Material Mortgage Recording Tax Mortgaged Properties
	 	 	102	 
	6.19 Disclosable Events
	 	 	102	 
	6.20 Post-Closing Covenants
	 	 	102	 
	 
	 	 	 	 
	SECTION 7 NEGATIVE COVENANTS
	 	 	103	 
	 
	 	 	 	 
	7.1 Financial Condition Covenants
	 	 	103	 
	7.2 Limitation on Indebtedness
	 	 	104	 
	7.3 Limitation on Liens
	 	 	107	 
	7.4 Limitation on Fundamental Changes
	 	 	108	 
	7.5 Limitation on Disposition of Property
	 	 	108	 
	7.6 Limitation on Restricted Payments
	 	 	109	 
	7.7 Limitation on Investments
	 	 	111	 
	7.8 Limitation on Modifications of Organizational Documents
	 	 	111	 
	7.9 Limitation on Transactions with Affiliates
	 	 	111	 
	7.10 Limitation on Sales and Leasebacks
	 	 	112	 
	7.11 Limitation on Changes in Fiscal Periods
	 	 	112	 
	7.12 Limitation on Negative Pledge Clauses
	 	 	112	 
	7.13 Limitation on Restrictions on Subsidiary Distributions
	 	 	112	 
	7.14 Limitation on Lines of Business
	 	 	113	 
	7.15 Limitation on Activities of the REIT
	 	 	113	 
	7.16 Limitation on Hedge Agreements
	 	 	113	 
	7.17 REIT Status
	 	 	113	 
	7.18 Borrower Tax Status
	 	 	113	 
	7.19 Borrowing Base Properties
	 	 	113	 
	7.20 Environmental Matters
	 	 	116	 
	7.21 Disclosable Events
	 	 	116	 
	 
	 	 	 	 
	SECTION 8 EVENTS OF DEFAULT
	 	 	117	 
	 
	 	 	 	 
	8.1 Events of Default
	 	 	117	 
	8.2 Right to Cure
	 	 	120	 
	 
	 	 	 	 
	SECTION 9 THE AGENTS
	 	 	121	 
	 
	 	 	 	 
	9.1 Appointment
	 	 	121	 
	9.2 Delegation of Duties
	 	 	121	 
	9.3 Exculpatory Provisions
	 	 	121	 
	9.4 Reliance by Agents
	 	 	122	 
	9.5 Notice of Default
	 	 	122	 
	9.6 Non-Reliance on Agents and Other Lenders
	 	 	122	 
	9.7 Indemnification
	 	 	123	 
	9.8 Agent in Its Individual Capacity
	 	 	123	 






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	 	 	Page	 
	9.9 Successor Administrative Agent
	 	 	123	 
	9.10 Authorization to Release Liens and Guarantees
	 	 	124	 
	9.11 The Arrangers; the Syndication Agent; the Co-Documentation Agents
	 	 	124	 
	9.12 No Duty to Disclose
	 	 	124	 
	9.13 Waiver
	 	 	124	 
	 
	 	 	 	 
	SECTION 10 MISCELLANEOUS
	 	 	124	 
	 
	 	 	 	 
	10.1 Amendments and Waivers
	 	 	124	 
	10.2 Notices
	 	 	126	 
	10.3 No Waiver; Cumulative Remedies
	 	 	127	 
	10.4 Survival of Representations and Warranties
	 	 	127	 
	10.5 Payment of Expenses
	 	 	127	 
	10.6 Successors and Assigns; Participations and Assignments
	 	 	129	 
	10.7 Adjustments; Set-off
	 	 	132	 
	10.8 Counterparts
	 	 	133	 
	10.9 Severability
	 	 	133	 
	10.10 Integration
	 	 	133	 
	10.11 Governing Law
	 	 	133	 
	10.12 Submission To Jurisdiction; Waivers
	 	 	134	 
	10.13 Acknowledgments
	 	 	134	 
	10.14 Confidentiality
	 	 	135	 
	10.15 Release of Collateral and Guarantee Obligations
	 	 	135	 
	10.16 Accounting Changes
	 	 	136	 
	10.17 Waivers of Jury Trial
	 	 	137	 
	10.18 Effect of Consolidation, Amendment and Restatement of the Existing Notes
	 	 	137	 






-iv-









 






	 	 	 
	ANNEX:
	 
	 	 
	A

	 	Commitments
	B

	 	Qualified Managers
	 
	 	 
	SCHEDULES:
	 
	 	 
	1.1A

	 	Real Property
	1.1B

	 	Excluded Subsidiaries
	1.1C

	 	Franchise Agreements
	1.1D

	 	Management Agreements
	1.1E

	 	Excluded Pledged Subsidiaries
	1.1F

	 	TRS Subsidiaries
	4.3(b)

	 	Hotel Licenses
	4.4

	 	Consents, Authorizations, Filings and Notices
	4.15

	 	Subsidiaries
	4.19(a)

	 	UCC Filing Jurisdictions
	4.19(b)

	 	Mortgage Filing Jurisdictions
	7.2(d)

	 	Existing Indebtedness
	7.3(g)

	 	Existing Liens
	 
	 	 
	EXHIBITS:
	 
	 	 
	A

	 	Form of Guarantee and Collateral Agreement
	B

	 	Form of Compliance Certificate
	C

	 	Form of Closing Certificate
	D

	 	Form of Mortgage
	E

	 	Form of Assignment and Assumption
	F-1

	 	Form of Revolving Credit Note
	F-2

	 	Form of Swing Line Note
	G

	 	Form of Exemption Certificate
	H

	 	Form of Borrowing Notice
	I

	 	Form of New Lender Supplement
	J

	 	Form of Commitment Increase Supplement
	K

	 	Form of Borrowing Base Certificate






-v-









 






          CREDIT AGREEMENT, dated as of October 12, 2010, among CHATHAM LODGING TRUST, a Maryland real
estate investment trust (the “REIT”), CHATHAM LODGING, L.P., a Delaware limited partnership
(the “Borrower”), the several banks and other financial institutions or entities from time
to time parties to this Agreement (the “Lenders”), BARCLAYS CAPITAL, the investment banking
division of Barclays Bank PLC, and REGIONS CAPITAL MARKETS, as joint lead arrangers and bookrunners
(in such capacity, the “Arrangers”), REGIONS BANK, as syndication agent (in such capacity,
the “Syndication Agent”), CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, UBS SECURITIES LLC
and U.S. BANK NATIONAL ASSOCIATION, as co-documentation agents (in such capacity, the
“Co-Documentation Agents”), and BARCLAYS BANK PLC, as administrative agent (in such
capacity, the “Administrative Agent”).




W I T N E S S E T H:




          WHEREAS, New Roc Hotels, LLC, a New York limited liability company (the “Existing
Borrower”), is party to that certain Consolidated Amended and Restated Promissory Note, dated
as of March 28, 2008 (as amended, supplemented or otherwise modified from time to time, the
“Existing Note”), between the Existing Borrower and CIBC Inc. (the “Existing
Lender”);




          WHEREAS, pursuant to the Existing Note, the Existing Lender made term loans (collectively, the
“Existing Term Loans”) to the Existing Borrower;




          WHEREAS, prior to the Closing Date, the Existing Lender (i) assigned to TRS Holding (as
defined below), and TRS Holding assumed the Existing Term Loans pursuant to an allonge, (ii)
assigned to TRS Holding the Existing Lender’s interest in all Property (as defined in the New
Rochelle Mortgage (as defined below), the “Existing Collateral”) and (iii) assigned and
delivered to TRS Holding the New Rochelle Mortgage (together with any other security documents held
by TRS Holding under the Existing Note, the “Existing Security Documents”);




          WHEREAS, prior to the Closing Date, the Existing Borrower assigned to Chatham New Rochelle (as
defined below) and Chatham New Rochelle assumed the obligations of the Existing Borrower under the
Existing Note pursuant to an assignment and assumption agreement;




          WHEREAS, on the Closing Date, TRS Holding will assign to the Administrative Agent, for the
benefit of the Secured Parties, and the Administrative Agent, for the benefit of the Secured
Parties, will assume the Existing Term Loans pursuant to the New Rochelle Assignment and Acceptance
(as defined below);




          WHEREAS, on the Closing Date, concurrently with the consummation of the assignment to, and
assumption by, the Administrative Agent, for the benefit of the Secured Parties, described in the
preceding recital, the Borrower shall pay to TRS Holding an amount equal to the accrued and unpaid
interest on the Existing Term Loans to and including the Closing Date;





 









 








          WHEREAS, on the Closing Date, immediately following the consummation of the assignment to, and
assumption by, the Administrative Agent, for the benefit of the Secured Parties, described in the
second preceding recital, TRS Holding will (i) assign to the Administrative Agent, for the benefit
of the Secured Parties, TRS Holding’s interest in the Property and (ii) assign and deliver to the
Administrative Agent for the benefit of the Secured Parties, the Existing Security Documents;




          WHEREAS, on the Closing Date, immediately following the consummation of the assignment to, and
assumption by, the Chatham New Rochelle described in the fourth preceding recital, Chatham New
Rochelle will assign to the Borrower and the Borrower will assume the obligations of Chatham New
Rochelle under the Existing Notes pursuant to an assignment and assumption;




          WHEREAS, the Borrower has requested that each of the Existing Notes be consolidated, amended
and restated in their entirety as set forth herein;




          WHEREAS, on the Closing Date, immediately following the consummation of the transactions
described in the fifth preceding recital, (i) the Administrative Agent will assign to each of the
Lenders party hereto with a Revolving Credit Commitment hereunder, and each of such Lenders will
assume, a portion of the Existing Term Loans, equal to its Revolving Credit Percentage (as defined
below) multiplied by the aggregate amount of the Existing Term Loans (each such
assignment to be evidenced by the execution and delivery of this Agreement by the Administrative
Agent and the Lenders), and (ii) each of the Existing Notes will be consolidated, amended and
restated in their entirety by this Agreement;




          WHEREAS, from and after the Closing Date, after giving effect to the transactions described in
the foregoing recitals and to the amendment and restatement of the Existing Notes effected hereby,
(i) the Existing Term Loans shall become Revolving Credit Loans hereunder, (ii) all Existing
Collateral shall become Collateral hereunder and (iii) all Existing Security Documents, as amended,
restated, supplemented or otherwise modified as provided herein, shall become Security Documents
hereunder; and




          WHEREAS, the Lenders are willing to (1) make available a revolving credit loan facility to the
Borrower in an aggregate principal amount at any one time outstanding not to exceed $85,000,000 (as
may be increased pursuant to this Agreement), to provide for the general corporate purposes of the
Borrower and its Subsidiaries (as defined below), including to refinance existing indebtedness, and
funding acquisitions, redevelopment and expansion and (2) consolidate, amend and restate the
Existing Notes solely on the terms and conditions set forth herein;




          NOW, THEREFORE, in consideration of the premises and the agreements hereinafter set forth and
for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto hereby agree that on the Closing Date, as provided in Section 10.18, (1) the
Lenders shall make a revolving credit loan facility to the Borrower and (2) the Existing Notes
shall be consolidated, amended and restated in their entirety as follows:







2









 








SECTION 1. DEFINITIONS




          1.1 Defined Terms.
As used in this Agreement, the terms listed in this Section 1.1 shall have the respective
meanings set forth in this Section 1.1.




          “Acceptable Environmental Report”: with respect to any Real Property, an ASTM
compliant Environmental Site Assessment that is either (a) a Phase I Environmental Site Assessment
with respect to such Real Property stating, among other things, that such Real Property is free
from Hazardous Substances in violation of applicable Requirements of Law (other than commercially
reasonable amounts) or (b) a Phase II Environmental Site Assessment with respect to such Real
Property for which it has been suggested remediation work be performed on such Real Property and,
in each case, in form and substance acceptable to the Administrative Agent and including
information regarding whether (i) such Real Property contains or is within or near any area
designated as a hazardous waste site by any Governmental Authority, (ii) such Real Property
contains or has contained any Hazardous Substance under any Requirements of Law pertaining to
health or the environment, (iii) such Real Property or any use or activity thereon violates or
would reasonably be likely to be subject to any response, remediation, clean-up, or other
obligation under any Requirements of Law pertaining to health or the environment including a
written report of an environmental assessment of such Real Property or an update of such report,
made within six months prior to the date of the request for inclusion in the Borrowing Base (or
such earlier date as may be acceptable to the Administrative Agent), by an engineering firm, and of
a scope and in form and content satisfactory to the Administrative Agent, complying with the
Administrative Agent’s established guidelines, regarding evidence of any Hazardous Substance which
has been generated, treated, stored, released, or disposed of on such Real Property in violation of
Environmental Laws, and such additional information as may be required by the Administrative Agent,
and (iv) any circumstances described in clauses (i), (ii), or (iii) are being remediated or cleaned
up or will be remediated or cleaned up and information relating to any financial arrangements
relating thereto including insurance policies, escrows, or bond arrangements.




          “Acceptable Lease”: a ground lease or air rights lease with respect to a Borrowing
Base Property executed by a Loan Party, as lessee, that satisfies each of the conditions set forth
below, other than any such condition waived by the Supermajority Lenders in their discretion:





     (a) such lease is in full force and effect;




     (b) such lease has a remaining lease term of at least 30 years (excluding extension or
renewal rights), calculated as of the date such Borrowing Base Property is admitted into the
Borrowing Base;




     (c) (i) no default has occurred and is continuing and no terminating event has occurred
under such lease by any Loan Party thereunder, (ii) no event has occurred which but for the
passage of time, or notice, or both would constitute a default or terminating event under
such lease and (iii) to the Borrower’s and each other Loan Party’s knowledge, there is no
default or terminating event under such lease by any lessor thereunder, in each case, which
event, default or terminating event has caused or



3









 






otherwise resulted in or could reasonably be expected to cause or otherwise result in
any material interference with the applicable Loan Party’s occupancy under such lease or
adversely affect the Administrative Agent’s rights under the related Mortgage;




     (d) such lease requires (or the lessor thereunder agrees in writing for the benefit of
the Administrative Agent) that the lessor thereunder shall give the Administrative Agent (i)
a copy of each notice of default or event of default under such lease at the same time as it
gives notice of default to the applicable Loan Party, and no such notice of default or event
of default shall be deemed effective unless and until a copy thereof shall have been so
given to the Administrative Agent and (ii) notice if such lease is terminated by reason of
an event of default under such lease;




     (e) the Administrative Agent is permitted the opportunity to cure any default by any
Loan Party under such lease before any applicable lessor thereunder may terminate such
lease;




     (f) all rents, additional rents, and other sums due and payable under such lease have
been paid in full;




     (g) no Loan Party nor the lessor under such lease has commenced any action or given or
received any notice for the purpose of terminating such lease;




     (h) such lease or a memorandum thereof has been duly recorded and there have not been
any amendments or modifications to the terms of such lease since recordation of the lease
(or a memoranda thereof), that would cause such lease to fail to satisfy any other clause of
this definition;




     (i) such lease permits the interest of the applicable Loan Party to be encumbered by
the Security Documents or the necessary approval has been obtained in writing from the
lessor to permit such encumbrance;




     (j) no Loan Party’s interest in such lease is subject to any Liens or encumbrances
superior to, or of equal priority with, the related Mortgage other than the applicable
lessor’s related fee interest and the Liens set forth in Sections 7.3(a), 7.3(b) and 7.3(f),
and as otherwise set forth in the applicable title insurance policy;




     (k) each Loan Party’s interest in such lease is assignable to the Administrative Agent
or its designee upon notice to, but without the consent of, the applicable lessor thereunder
(or, if any such consent is required, then such consent has been obtained in writing prior
to the date hereof);




     (l) the Administrative Agent will be recognized by the applicable lessor as a permitted
mortgagee of such ground lease or air rights lease, as applicable; and




     (m) such lease requires the applicable lessor (or the applicable lessor thereunder
otherwise agrees in writing for the benefit of the Administrative Agent), to enter into a
new lease with the Administrative Agent or its designee upon termination of



4









 







such lease for any reason, including rejection or disaffirmation of such lease in a
bankruptcy proceeding.



          “Acquisition”: as to any Person, the acquisition by such Person of (a) Capital Stock
(other than the Capital Stock of the Unconsolidated Joint Ventures) of any other Person if, after
giving effect to the acquisition of such Capital Stock, such other Person would be a Subsidiary,
and (b) any other Property (other than Construction in Process) of any other Person.




          “Additional Borrowing Base Properties”: any property acquired after the Closing Date
by the Borrower and its Subsidiaries and approved by the Supermajority Lenders in accordance with
Section 5.3, as to which the Administrative Agent for the benefit of the Secured Parties shall be
granted a Lien pursuant to one or more Mortgages subject to, with respect to the Material Mortgage
Recording Tax Mortgaged Properties, Section 6.18.




          “Administrative Agent”: as defined in the preamble hereto.




          “Affiliate”: 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. For purposes of this
definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise; provided that, the right to
designate a member of a board or manager of a Person will not, by itself, be deemed to constitute
“control”.




          “Agents”: the collective reference to the Syndication Agent, the Co-Documentation
Agents and the Administrative Agent.




          “Agreement”: this Credit Agreement, as amended, restated, supplemented or otherwise
modified from time to time.




          “Applicable Margin”: for each Type of Loan, the rate per annum determined pursuant to
the pricing grid below:




	 	 	 	 	 
	Consolidated Leverage	 	Applicable Margin for	 	Applicable Margin for Base
	Ratio	 	Eurodollar Loans	 	Rate Loans
	£ 0.30 to 1.00
	 	3.25%	 	2.25%
	> 0.30 to 1.00 and
£ 0.40 to 1.00
	 	3.75%	 	2.75%
	> 0.40 to 1.00 and
£ 0.45 to 1.00
	 	4.00%	 	3.00%
	> 0.45 to 1.00
	 	4.25%	 	3.25%





Changes in the Applicable Margin resulting from changes in the Consolidated Leverage Ratio shall
become effective on the date on which financial statements are delivered to the Lenders pursuant to
Section 6.1 (but in any event not later than the 45th day after the end of each of the






5









 









first three quarterly periods of each fiscal year (or, in the case of the first quarter ending
after the Closing Date, such later date as may be permitted by the SEC) or the 90th day after the
end of each fiscal year, as the case may be) and shall remain in effect until the next change to be
effected pursuant to this paragraph. If any financial statements referred to above are not
delivered within the time periods specified above, then, until such financial statements are
delivered, the Consolidated Leverage Ratio as at the end of the fiscal period that would have been
covered thereby shall for the purposes of this definition be deemed to be greater than 0.45 to
1.00. In addition, at all times while an Event of Default shall have occurred and be continuing,
the Consolidated Leverage Ratio shall for the purposes of this pricing grid be deemed to be greater
than 0.45 to 1.00. Each determination of the Consolidated Leverage Ratio pursuant to this pricing
grid shall be made for the periods and in the manner contemplated by Section 7.1(a).




          “Application”: an application, in such form as the relevant Issuing Lender may
specify from time to time, requesting such Issuing Lender to issue a Letter of Credit.




          “Appraisal”: with respect to any Real Property, an MAI “Full Appraisal Report”
prepared in accordance with FIRREA and USPAP, undertaken by an Appraiser, and providing an
assessment of the value of such Real Property, subject to any Franchise Agreement, Management
Agreement, lease or any other agreement in place, which shall be commissioned by, and in form and
substance reasonably satisfactory to, the Administrative Agent at the sole expense of the Borrower;
provided that, such Appraisal such include all furniture, fixtures and equipment associated
with such Real Property owned by the Group Members.




          “Appraiser”: HVS, CB Richard Ellis or such other independent appraisal firm selected
by the Administrative Agent.




          “Arrangers”: as defined in the preamble hereto.




          “Assignee”: as defined in Section 10.6(c).




          “Assignor”: as defined in Section 10.6(c).




          “ASTM”: the American Society for Testing & Materials.




          “Available Revolving Credit Commitment”: with respect to any Revolving Credit Lender
at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Credit
Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding;
provided that, in calculating any Lender’s Revolving Extensions of Credit for the purpose
of determining such Lender’s Available Revolving Credit Commitment pursuant to Section 2.6(a), the
aggregate principal amount of Swing Line Loans then outstanding shall be deemed to be zero.




          “Average Daily Rate”: for any Real Property on any date of determination, total rooms
revenue for the twelve full calendar months most recently ended prior to such date, as determined
in accordance with the Uniform System of Accounts, divided by the total number of rooms occupied
during such period.







6









 








          “Award”: any compensation paid by any Governmental Authority in connection with a
Condemnation in respect of all or any part of any Borrowing Base Property.




          “Bankruptcy Code”: Title 11 of the United States Code, 11 U.S.C. § 101, et seq., as
the same may be amended from time to time, and any successor statute or statutes and all rules and
regulations from time to time promulgated thereunder, and any comparable foreign laws relating to
bankruptcy, insolvency or creditors’ rights or any other Federal or state bankruptcy or insolvency
law.




          “Bank Secrecy Act”: the Bank Secrecy Act, 31 CFR 103, as amended from time to time.




          “Base Rate”: for any day, a rate per annum equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1% and (c) 1.0% per annum plus the Eurodollar Rate (for avoidance of doubt after
giving effect to the proviso of the definition thereof) applicable to an Interest Period of one
month; provided that, in no event shall the Base Rate be less than 2.25%. For purposes
hereof: “Prime Rate” shall mean the prime lending rate as set forth on the Reuters Screen
RTRTSY1 (or such other comparable publicly available page as may, in the reasonable opinion of the
Administrative Agent after notice to the Borrower, replace such page for the purpose of displaying
such rate if such rate no longer appears on the Reuters Screen RTRTSY1), as in effect from time to
time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best
rate actually available. Any change in the Base Rate due to a change in the Prime Rate, the
Federal Funds Effective Rate or the one-month Eurodollar Rate shall be effective as of the opening
of business on the effective day of such change in the Prime Rate, the Federal Funds Effective Rate
or the one-month Eurodollar Rate, respectively.




          “Base Rate Loans”: Loans for which the applicable rate of interest is based upon the
Base Rate.




          “Benefited Lender”: as defined in Section 10.7.




          “Blocked Account Control Agreements”: as defined in Section 6.20(b).




          “Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).




          “Borrower”: as defined in the preamble hereto.




          “Borrower Common Units”: the Borrower’s “Common Units” as defined in the Borrower LP
Agreement.




          “Borrower LP Agreement”: the Agreement of Limited Partnership of Chatham Lodging,
L.P., a Delaware limited partnership, dated as of April 21, 2010, as amended, restated,
supplemented or otherwise modified from time to time in accordance with this Agreement.




          “Borrower LTIP Units”: the Borrower’s “LTIP Units” outstanding on the date hereof and
as defined in the Borrower LP Agreement as in effect on the date hereof.







7









 








          “Borrowing Base”: at any time, the aggregate Borrowing Base Values for the Borrowing
Base Properties, which shall be determined based on the most recent Borrowing Base Certificate
delivered pursuant to Section 5.2(c), 5.3 or 5.4 or Section 6.12; provided that, the
Borrowing Base shall be reduced by the following amounts, without duplication:





     (i) an amount equal to the aggregate Borrowing Base Value for the Restricted Borrowing
Base Properties in excess of 10% of the aggregate Borrowing Base Value for all the Borrowing
Base Properties;




     (ii) with respect to any non-Restricted Borrowing Base Property, an amount equal to the
Borrowing Base Value for such Borrowing Base Property in excess of 25% of the aggregate
Borrowing Base Value for all the Borrowing Base Properties;




     (iii) an amount equal to the aggregate Non-Recorded Borrowing Base Value for the
Material Mortgage Recording Tax Mortgaged Properties in excess of 20% of the aggregate
Borrowing Base Value for all the Borrowing Base Properties;




     (iv) an amount equal to the aggregate Borrowing Base Value for the Borrowing Base
Properties subject to Acceptable Leases in excess of 20% of the aggregate Borrowing Base
Value for all the Borrowing Base Properties; and




     (v) the Borrowing Base Value of any Borrowing Base Property (including any Initial
Borrowing Base Property) that ceases to be an Eligible Borrowing Base Property until the
Borrower has satisfied the conditions set forth in Section 5.3 with respect to such Real
Property.



          “Borrowing Base Group Member”: any Subsidiary of the REIT that is (a) the fee owner
or ground or air rights lessee of a Borrowing Base Property, (b) the lessee of a Borrowing Base
Property pursuant to an Operating Lease or (c) any direct or indirect parent of any Person
described in clause (a) or (b).




          “Borrowing Base Value”: with respect to each Borrowing Base Property at any time, the
lesser of (i) 45% of the MAI “as-is” appraised value of such Borrowing Base Property set forth in
the most recent Appraisal for such Borrowing Base Property and (ii) the Debt Service Coverage
Amount for such Borrowing Base Property as at such time; provided that, the Borrowing Base
Value for any Restricted Borrowing Base Property shall be determined pursuant to clause (i).




          “Borrowing Base Value Mortgage Deficit”: on any date of determination, with respect
to any Borrowing Base Property located in a Material Mortgage Recording Tax State for which a
Mortgage has been recorded, an amount equal to (i) the Borrowing Base Value for such Property on
such date minus (ii) the amount of Obligations secured by such Mortgage for which the
applicable mortgage recording tax has been paid, as determined by the Administrative Agent in its
sole discretion. For the avoidance of doubt at no time shall the Borrowing Base Value Mortgage
Deficit be less than zero.




          “Borrowing Base Certificate”: a certificate, appropriately completed and
substantially in the form of Exhibit K (with such modifications as to format and presentation as






8









 







may be reasonably requested by the Administrative Agent upon five Business Days’ notice)
together with all supporting documentation reasonably requested by the Administrative Agent.




          “Borrowing Base Properties”: subject to a release of a Borrowing Base Property
pursuant to Section 5.4, (a) on the Closing Date, the Initial Borrowing Base Properties and (b)
after the Closing Date, the Initial Borrowing Base Properties, together with any Additional
Borrowing Base Properties added to the Borrowing Base in accordance with Section 5.3.




          “Borrowing Date”: any Business Day specified by the Borrower as a date on which the
Borrower requests the relevant Lenders to make Loans hereunder.




          “Borrowing Notice”: with respect to any request for borrowing of Loans hereunder, a
notice from the Borrower, substantially in the form of, and containing the information prescribed
by, Exhibit H, delivered to the Administrative Agent.




          “Business Day”: (a) for all purposes other than as covered by clause (b) below, a day
other than a Saturday, Sunday or other day on which commercial banks in New York City are
authorized or required by law to close and (b) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and between banks in
Dollar deposits in the interbank eurodollar market.




          “Capital Expenditures”: for any period, with respect to any Person, the aggregate of
all expenditures by such Person for the acquisition or leasing (pursuant to a capital lease) of
fixed or capital assets or additions to equipment (including replacements, capitalized repairs and
improvements during such period) which are required to be capitalized under the Uniform System of
Accounts and reconciled in accordance with GAAP on a balance sheet of such Person; provided
that, “Capital Expenditures” shall not include (x) expenditures made in connection with the
replacement, substitution or restoration of assets (i) to the extent financed from insurance
proceeds paid on account of the loss of or damage to the assets being replaced or restored or (ii)
with awards of compensation arising from the taking or the threat of taking by eminent domain or
Condemnation of the assets being replaced, (y) the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment but only to the extent that the gross amount
of such purchase price is reduced by the credit granted by the seller of such equipment for the
equipment being traded in at such time or (z) the purchase of plant, property and equipment made
within 270 days of the sale of any asset to the extent purchased with the proceeds of such sale.




          “Capital Lease Obligations”: with respect to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person under the Uniform
System of Accounts and reconciled in accordance with GAAP; and, for the purposes of this Agreement,
the amount of such obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with the Uniform System of Accounts and reconciled in accordance with
GAAP.







9









 








          “Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants, rights or options to purchase any
of the foregoing.




          “Capitalization Rate”: 9%.




          “Cash Collateralize”: to pledge and deposit with or deliver to the Administrative
Agent, for the benefit of the Administrative Agent, the Issuing Lender or the Swing Line Lender, as
applicable, and the Secured Parties, as collateral for the L/C Obligations, Swing Line Loans or
obligations of the Lenders to fund participations in respect thereof (as the context may require),
cash or deposit account balances or, if the Issuing Lender or Swing Line Lender, as applicable,
benefiting from such collateral shall agree in its sole discretion, other credit support, in each
case pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent
and (b) the Issuing Lender or the Swing Line Lender, as applicable. The term “Cash
Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of
such cash collateral and other credit support.




          “Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of one year or less from the date of acquisition issued by any Lender or
by any commercial bank organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of
an issuer rated at least A-2 by S&P or P-2 by Moody’s, or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within one year from the date of
acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30 days with respect
to securities issued or fully guaranteed or insured by the United States government; (e) securities
with maturities of one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign government, the securities
of which state, commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with
maturities of one year or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; and (g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this definition.




          “Casualty”: with respect to any Borrowing Base Property, that such Borrowing Base
Property is damaged or destroyed, in whole or in part, by fire or other casualty.




          “Change of Control”: the occurrence of any of the following events: (a) any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities






10









 







Exchange Act of 1934, as amended (the “Exchange Act”)), excluding the Permitted
Investors, shall become, or obtain rights (whether by means of warrants, options or otherwise) to
become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act),
directly or indirectly, of more than 25% of the outstanding common stock of the REIT; (b) the board
of directors of the REIT shall cease to consist of a majority of Continuing Directors; (c) the
Borrower shall cease to own, directly or indirectly, 100% of the equity interests of any Subsidiary
Guarantor free and clear of any Liens (other than Liens in favor of Administrative Agent) unless
the Borrowing Base Property owned by such Subsidiary Guarantor is removed from the Borrowing Base
in accordance with Section 5.4 of this Agreement; or (d) the REIT shall (i) fail to be sole general
partner of the Borrower or cease to own all the general partnership interests of the Borrower, (ii)
fail to control the management and policies of the Borrower or (iii) fail to own a majority of the
Capital Stock of the Borrower.




          “Chatham New Rochelle”: Chatham New Rochelle RI LLC, a Delaware limited liability
company.




          “Chatham Predecessor”: the real estate activity and holdings of the entities that
owned the following properties acquired by the REIT and its Subsidiaries: Homewood Boston
Billerica, Homewood Minneapolis Mall of America, Homewood Nashville Brentwood, Homewood Dallas
Market Center, Homewood Farmington Connecticut, Homewood Orlando Maitland and Hampton Inn & Suites
Houston Medical Center.




          “Closing Date”: the date on which the conditions precedent set forth in Section 5.1
shall have been satisfied, which date shall be no later than October 12, 2010.




          “Code”: the Internal Revenue Code of 1986, as amended from time to time.




          “Collateral”: all Property of the Loan Parties, now owned or hereafter acquired, upon
which a Lien is purported to be created by any Security Document.




          “Collateral Agreement”: the Collateral Agreement, dated as of October 12, 2010,
between each Subsidiary of the REIT that is a lessee party to an Operating Lease, each Subsidiary
of the REIT that is a lessor party to such Operating Lease, and Chatham Houston HAS LLC, as
collateral agent for the benefit of such lessor parties, as amended, restated, supplemented or
otherwise modified from time to time.




          “Comfort Letter”: with respect to any Franchisor for any Borrowing Base Property, a
customary comfort letter from such Franchisor to the Administrative Agent, for the benefit of the
Secured Parties, in form and substance reasonably satisfactory to the Administrative Agent, as the
same may be amended, restated, replaced, supplemented or otherwise modified from time to time.




          “Commitment Fee Rate”: 1/2 of 1% per annum.




          “Commitment Increase Supplement”: as defined in Section 2.22(c).




          “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with the Borrower within the meaning of Section 4001 of ERISA or is






11









 







part of a group that includes the Borrower and that is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Sections 412 or 430 of the Code,
Section 414(b), (c), (m) or (o) of the Code.




          “Compliance Certificate”: a certificate duly executed by a Responsible Officer,
substantially in the form of Exhibit B.




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




          “Consolidated EBITDA”: of the Group Members for any period, Consolidated Net Income
for such period plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b)
interest expense of such Group Members, amortization or write-off of debt discount and debt
issuance costs and commissions, discounts and other fees and charges associated with Indebtedness,
(c) depreciation and amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary, unusual or non-recurring
expenses or losses (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on sales of assets outside of the
ordinary course of business), (f) any other non-cash charges and (g) the Group Members’ pro rata
share of Consolidated EBITDA from their Unconsolidated Joint Ventures, minus, to the extent
included in the statement of such Consolidated Net Income for such period, the sum of (a) interest
income (except to the extent deducted in determining such Consolidated Net Income), (b) any
extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income for such period,
gains on the sales of assets outside of the ordinary course of business), (c) any other non-cash
income and (d) any cash payments made during such period in respect of items described in clause
(e) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were
reflected as a charge in the statement of Consolidated Net Income, all as determined on a
consolidated basis.




          “Consolidated Fixed Charge Coverage Ratio”: for any period, the ratio of (a)
Consolidated EBITDA of the Borrower and its Subsidiaries for such period to (b) Consolidated Fixed
Charges for such period.




          “Consolidated Fixed Charges”: for any period, the sum (without duplication) of (a)
Consolidated Interest Expense of the Group Members for such period, (b) provision for cash income
taxes made by the Group Members on a consolidated basis in respect of such period, (c) scheduled
payments (other than balloon payments) made during such period on account of principal of
Indebtedness of the Group Members, (d) all preferred dividends accrued or paid during such period
and (e) the Group Members’ pro rata share of all expenses, taxes, payments and dividends referred
to in the preceding clauses (a) to (d) from their Unconsolidated Joint Ventures.







12









 








          “Consolidated Floating Rate Debt”: Consolidated Total Debt bearing interest based on
an index that floats, or otherwise changes from time to time (excluding the Loans and any other
such Indebtedness subject to a fixed rate interest rate hedge, cap or collar).




          “Consolidated Interest Expense”: of the Group Members for any period, total interest
expense (including that attributable to Capital Lease Obligations) of the Group Members for such
period with respect to all outstanding Indebtedness of the Group Members (including, without
limitation, all commissions, discounts and other fees and charges owed by the Group Members with
respect to letters of credit and bankers’ acceptance financing and net costs of the Group Members
under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to
such period in accordance with the Uniform System of Accounts and reconciled in accordance with
GAAP).




          “Consolidated Leverage Ratio”: on any date of determination, the ratio of (a)
Consolidated Total Debt on such date to (b) Total Asset Value on such date; provided that
for purposes of calculating Total Asset Value on any date, the Total Asset Value of any Person
Disposed of by the Borrower or its Subsidiaries during such period shall be excluded for such
period (assuming the consummation of such Disposition and the repayment of any Indebtedness in
connection therewith occurred on the first day of such period).




          “Consolidated Net Income”: of the Group Members for any period, the consolidated net
income (or loss) of the Group Members for such period, determined on a consolidated basis;
provided that, in calculating Consolidated Net Income of the Group Members for any period,
there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it
becomes a Group Member or is merged into or consolidated with a Group Member, (b) the income (or
deficit) of any Person in which any Group Member has an ownership interest, except to the extent
that any such income is actually received by such Group Member in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of any Group Member to the
extent that the declaration or payment of dividends or similar distributions by such Subsidiary is
not at the time permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.




          “Consolidated Total Debt”: at any date, an amount equal to (i) the aggregate
outstanding face amount of all Indebtedness of the Group Members at such date, determined on a
consolidated basis in accordance with GAAP and (ii) the Group Members’ pro rata share of
Indebtedness of their Unconsolidated Joint Ventures at such date.




          “Construction in Process”: any Real Property owned by a Group Member consisting of
renovation or expansion of such Real Property in which greater than 35% of the aggregate rooms of
such Real Property is unavailable for occupancy due to renovation or expansion. A Real Property
will cease being classified as “Construction in Process” upon completion of such renovation
or expansion.




          “Continuing Directors”: the directors of the REIT on the Closing Date, after giving
effect to the transactions contemplated hereby, and each other director of the REIT, if, in each
case, such other director’s nomination for election to the board of directors of the REIT is






13









 








recommended by at least 66 2/3% of the then Continuing Directors or such other director receives
the vote of the Permitted Investors in his or her election by the shareholders of the REIT.




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




          “Control Investment Affiliate”: as to any Person, any other Person that (a) directly
or indirectly, is in control of, is controlled by, or is under common control with, such Person and
(b) is organized by such Person primarily for the purpose of making equity or debt investments in
one or more companies. For purposes of this definition, “control” of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.




          “Debtor Relief Laws”: the Bankruptcy Code and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership,
insolvency, reorganization, or otherwise available debtor relief laws of the United States, of any
State or of any other applicable jurisdictions from time to time in effect.




          “Debt Service”: with respect to any Borrowing Base Property during any period,
scheduled principal and interest payments due with respect to any Indebtedness incurred in
connection with such Borrowing Base Property.




          “Debt Service Coverage Amount”: with respect to any Borrowing Base Property on any
date of determination, (1) the Net Operating Income of such Borrowing Base Property for the period
of four fiscal quarters most recently ended for which financial statements are available divided by
2.25, divided by (2) the greater of (x) an interest rate of 8.0% per annum (assuming a 25-year
amortization) and (y) the 10-year treasury rate on the last day of such period plus 3.5%
(assuming a 25-year amortization).




          “Default”: any of the events specified in Section 8, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.




          “Defaulted Amount”: as defined in Section 2.15(g).




          “Defaulting Lender”: any Lender that has:





     (a) failed to fund any portion of its Loans within three Business Days of the date
required to be funded by it hereunder, unless the subject of a good faith dispute, or failed
to fund any portion of its participations in Letters of Credit or Swing Line Loans within
three Business Day of the date required to be funded by it hereunder,




     (b) notified the Borrower, the Administrative Agent or any other Lender in writing, or
has otherwise indicated through a public statement, that it does not intend to comply with
its funding obligations hereunder or generally under any agreement in which it commits to
extend credit,



14









 






     (c) failed, within three Business Days after receipt of a written request from the
Administrative Agent, to confirm that it will comply with the terms of this Agreement
relating to its obligations to fund prospective Revolving Credit Commitments, unless the
subject of a good faith dispute,




     (d) otherwise failed to pay over to the Administrative Agent or any other Lender any
other amount required to be paid by it hereunder, unless the subject of a good faith
dispute, or




     (e) has, or has a direct or indirect parent company that has, become the subject of a
proceeding under any Debtor Relief Law, or has had appointed for it a receiver, custodian,
conservator, trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or assets, including the Federal
Deposit Insurance Corporation or any other state or federal regulatory authority acting in
such a capacity, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment.


Notwithstanding the foregoing, (i) if the Borrower, the Administrative Agent, the Swing Line Lender
and the Issuing Lender agree in writing that a Defaulting Lender no longer qualifies as a
Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth therein (which may
include arrangements with respect to any cash collateralization of Letters of Credit and Swing Line
Loans), such Lender will, to the extent applicable, purchase that portion of outstanding Loans of
the other Lenders or take such other actions as the Administrative Agent may determine to be
necessary to cause the Swing Line Commitment and the L/C Commitment and funded and unfunded
participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the
Lenders in accordance with their Revolving Credit Percentages (without giving effect to Section
2.23(c)(i)), whereupon such Lender will cease to be a Defaulting Lender; provided that, (x)
no adjustments will be made retroactively with respect to fees accrued or payments made by or on
behalf of the Borrower while such Lender was a Defaulting Lender, and (y) except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to
Lender will constitute a waiver or release of any claim of any party hereunder arising from that
Lender’s having been a Defaulting Lender, and (ii) a Lender shall not be a Defaulting Lender solely
by virtue of the ownership or acquisition of voting stock or any other equity interest in such
Lender or a parent company thereof by a Governmental Authority or an instrumentality thereof.




          “Derivatives Counterparty”: as defined in Section 7.6.




          “Disclosable Event”: as defined in Section 6.19.




          “Disposition”: with respect to any Property, any sale, lease (other than an Operating
Lease), sale and leaseback, assignment, conveyance, transfer or other disposition thereof; and the
terms “Dispose” and “Disposed of” shall have correlative meanings.




          “Dollars” and “$”: dollars in lawful currency of the United States of
America.







15









 








          “Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of any
jurisdiction within the United States of America.




          “Eligible Account”: 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 Borrowing Base Property”: any Real Property that satisfies each of the
following conditions at all times:





     (i) such Real Property is a hotel property located in the continental United States,




     (ii) such Real Property is wholly-owned by the Borrower or a Subsidiary Guarantor in
fee simple or subject to a ground lease or air rights lease pursuant to an Acceptable Lease,




     (iii) such Real Property has an average Occupancy Rate greater than 60%,




     (iv) such Real Property has RevPAR greater than $60,




     (v) such Real Property (other than, prior to the Mortgage Recordation Trigger Date, any
Material Mortgage Recording Tax Mortgaged Property) is subject to a duly perfected, first
priority Lien in favor of the Administrative Agent for the benefit of the Secured Parties
pursuant to a Mortgage,




     (vi) with respect to any Material Mortgage Recording Tax Mortgaged Property or any
Borrowing Base Property located in a Material Mortgage Recording Tax State which has a
Borrowing Base Value Mortgage Deficit greater than zero, the Administrative Agent shall have
received (for delivery to the Escrow Agent to be held pursuant to the Escrow Agreement), a
Material Mortgage Recording Tax State Mortgage,




     (vii) the Group Member owner of such Real Property is a Loan Party and the Capital
Stock of each direct and indirect parent of such Group Member (other than the Borrower) is
subject to a duly perfected, first priority security interest in favor of the Administrative
Agent for the benefit of the Secured Parties, in each case, in compliance with Section 6.9,




     (viii) the Administrative Agent has received for such Real Property, in each case, in
form and substance reasonably satisfactory to the Administrative Agent:



16









 






     (A) evidence as to whether the applicable Real Property is a Flood Hazard
Property satisfying the requirements of Section 5.1(q),




     (B) certificates of insurance or insurance policies satisfying the requirements
of Section 6.5, with all premiums fully paid current,




     (C) a title insurance policy satisfying the requirements of Section 5.1(q),




     (D) a recent survey satisfying the requirements of Section 5.1(q),




     (E) a true, correct and complete copies of the Management Agreement and
Franchise Agreement for such Real Property,




     (F) a Comfort Letter from the Franchisor for such Real Property,




     (G) a true, correct and complete copy of the PIP Plan for such Real Property,




     (H) an Operating Lease and any other agreement relating to such Operating
Lease, including without limitation, an owner agreement, if any, for such Real
Property,




     (I) if such Real Property is held pursuant to an Acceptable Lease: (i) true,
correct, complete and complete copies of such Acceptable Lease and any guarantees
thereof and (ii) to the extent required by the Administrative Agent in its
discretion, (x) recognition agreements and estoppel certificates executed by any
lessor under such Acceptable Lease, and (y) with respect to any air rights lease,
any recorded reciprocal easement agreement which secures the access and supports
easements necessary to support such lease, each in form and content satisfactory to
the Administrative Agent,




     (J) copies of all Hotel Licenses for such Real Property and, to the extent
requested by the Administrative Agent, an assignment of such Hotel Licenses, and




     (K) documentation, certificates and opinions for such Real Property, including
without limitation, a Subordination Agreement and a Blocked Account Control
Agreement for each deposit and securities account for such Real Property,




     (ix) with respect to any Material Mortgage Recording Tax Mortgaged Property prior to
the Mortgage Recordation Trigger Date, the Administrative Agent has received an amendment to
the Escrow Agreement, in form and substance reasonably satisfactory to the Administrative
Agent including the Mortgage for such Real Property in escrow subject to release pursuant to
Section 6.18, and




     (x) such Real Property satisfies any other criteria required by the Administrative
Agent, as reasonably determined by the Administrative Agent.



17









 





          “Eligible Institution”: the Administrative Agent, the Syndication Agent, Morgan
Stanley, Wells Fargo Bank, N.A., City National Bank, KeyBank National Association or a depository
institution or trust company insured by the Federal Deposit Insurance Corporation, the short term
unsecured debt obligations or commercial paper of which are rated at least “A-1+” by S&P, “P-1” by
Moody’s and “F-1+” by Fitch in the case of accounts in which funds are held for 30 days or less
(or, in the case of accounts in which funds are held for more than 30 days, the long term unsecured
debt obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by Moody’s).




          “Environmental Claim”: any investigative, enforcement, cleanup, removal, containment,
remedial, or other private or governmental or regulatory action threatened, instituted, or
completed pursuant to any applicable Environmental Law against any Group Member or against or with
respect to any Real Property or facility.




          “Environmental Laws”: any and all laws, rules, orders, regulations, statutes,
ordinances, guidelines, codes, decrees, agreements or other legally enforceable requirements
(including, without limitation, common law) of any international authority, foreign government, the
United States, or any state, local, municipal or other governmental authority, regulating, relating
to or imposing liability or standards of conduct concerning protection of the environment or of
human health, or employee health and safety, as has been, is now, or may at any time hereafter be,
in effect.




          “Environmental Permits”: any and all permits, licenses, approvals, registrations,
notifications, exemptions and other authorizations required under any Environmental Law.




          “Environmental Requirement”: as defined in Section 6.8(g).




          “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time.




          “Escrow Agent”: Chicago Title Insurance Company, or any successor or assign
satisfactory to the Administrative Agent in its sole discretion.




          “Escrow Agreement”: as defined in Section 5.1(b).




          “Eurocurrency Reserve Requirements”: for any day, the aggregate (without duplication)
of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction with respect thereto
dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System.




          “Eurodollar Base Rate”: with respect to each day during each Interest Period, the
rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to
such Interest Period commencing on the first day of such Interest Period appearing on Reuters
Screen LIBOR01 Page (or such other page as may replace such page on such service for the purpose of
displaying the rates at which Dollar deposits are offered by lending banks in London






18









 







interbank deposit market) as of 11:00 A.M. (London time) two Business Days prior to the
beginning of such Interest Period. In the event that such rate does not appear on Reuters Screen
LIBOR01 Page (or such other page as may replace such page on such service for the purpose of
displaying the rates at which Dollar deposits are offered by lending banks in London interbank
deposit market) (or otherwise on such screen), the “Eurodollar Base Rate” for purposes of
this definition shall be determined by reference to such other comparable publicly available
service for displaying eurodollar rates as may be selected by the Administrative Agent.




          “Eurodollar Loans”: Loans for which the applicable rate of interest is based upon the
Eurodollar Rate.




          “Eurodollar Rate”: with respect to each day during each Interest Period, a rate per
annum determined for such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):




Eurodollar Base Rate

1.00 — Eurocurrency Reserve Requirements




; provided that, in no event shall the Eurodollar Rate be less than 1.25%.




          “Eurodollar Tranche”: the collective reference to Eurodollar Loans the then current
Interest Periods with respect to all of which begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same day).




          “Event of Default”: any of the events specified in Section 8, provided that
any requirement for the giving of notice, the lapse of time, or both, has been satisfied.




          “Exchange Act”: as defined in the definition of “Change of Control”.




          “Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect of which either (a)
the pledge of all of the Capital Stock or assets of such Subsidiary as Collateral or (b) the
guaranteeing by such Subsidiary of the Obligations, would, in the good faith judgment of the
Borrower, result in adverse tax consequences to the Borrower.




          “Excluded Pledged Subsidiary”: any (i) direct or indirect parent of a Non-Recourse
Subsidiary Borrower that is prohibited from having its Capital Stock pledged pursuant to
Indebtedness incurred by such Non-Recourse Subsidiary Borrower pursuant to Section 7.2(d), (g), (h)
or (i); provided that, the Administrative Agent shall have provided satisfactory evidence
of such prohibition and (ii) direct or indirect Subsidiary of a TRS Subsidiary. Schedule
1.1E sets forth each Excluded Pledged Subsidiary as of the Closing Date.




          “Excluded Subsidiary”: any (i) TRS Subsidiary or (ii) Subsidiary that is unable to
guarantee the Obligations of the Loan Parties under the Loan Documents because it is a party to one
or more agreements entered into in connection with Indebtedness listed on Schedule 7.2(d),
or incurred pursuant to Section 7.2(g), (h) or (i) that prohibit such Subsidiary from providing a
guarantee; provided that, the Administrative Agent shall have been provided satisfactory
evidence of such prohibition. Schedule 1.1B sets forth each Excluded Subsidiary as of the
Closing Date.







19









 








          “FCPA”: the Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., as
amended from time to time.




          “Federal Funds Effective Rate”: for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.




          “FIRREA”: Financial Institutions Reform, Recovery and Enforcement Act of 1989
(FIRREA), as amended from time to time.




          “Fitch”: Fitch, Inc. and its successors.




          “Flood Hazard Property”: as defined in Section 4.21.




          “Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic
Subsidiary.




          “Franchise Agreement”: with respect to the Borrowing Base Properties, each of the
Franchise Agreements listed on Schedule 1.1C, and each Franchise Agreement delivered
pursuant to Section 5.3, or, if the context requires in any case, a Replacement Franchise Agreement
executed in accordance with the terms and provisions of this Agreement, as each may be amended,
restated, supplemented or otherwise modified from time to time.




          “Franchisor”: (a) with respect to any Initial Borrowing Base Property, Hampton or a
Qualified Franchisor, (b) with respect to any Initial Borrowing Base Property (other than Hampton
Inn & Suites Houston Medical Center), Homewood Suites Franchise or a Qualified Franchisor, and (c)
with respect to any Additional Borrowing Base Property, a Qualified Franchisor.




          “Full Replacement Cost”: as defined in Section 6.5(c).




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




          “Funding Office”: the office specified from time to time by the Administrative Agent
as its funding office by notice to the Borrower and the Lenders.




          “Funds from Operations”: for any Person for any period, the sum of (a) Consolidated
Net Income for such period plus (b) depreciation and amortization expense determined in
accordance with the Uniform System of Accounts and reconciled in accordance with GAAP;
provided that there shall not be included in such calculation (i) any proceeds of any
insurance policy other than rental or business interruption insurance received by such Person, (ii)
any gain or loss which is classified as “extraordinary” in accordance with the Uniform






20









 







System of Accounts and reconciled in accordance with GAAP, or (iii) any capital gains and taxes on
capital gains.




          “GAAP”: generally accepted accounting principles in the United States of America as
in effect from time to time, as adopted by the Financial Accounting Standards Board and the SEC.




          “Governmental Authority”: any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).




          “Granting Lender”: as defined in Section 10.6(g).




          “Gross Income from Operations”: with respect to any Borrowing Base Property for any
period, without duplication, all income and proceeds (whether in cash or on credit, and computed on
an accrual basis) received by the Loan Parties or Manager for the use, occupancy or enjoyment of
such Borrowing Base Property, or any part thereof, or received by the Loan Parties or Manager for
the sale of any goods, services or other items sold on or provided from the such Borrowing Base
Property in the ordinary course of such Borrowing Base Property’s operation, during such period
including without limitation: (a) all income and proceeds received from any Lease, Operating Lease
and rental of rooms, exhibit, sales, commercial, meeting, conference or banquet space within such
Borrowing Base Property, including net parking revenue, and net income from vending machines,
health club fees and service charges; (b) all income and proceeds received from food and beverage
operations and from catering services conducted from such Borrowing Base Property even though
rendered outside of such Borrowing Base Property; (c) all income and proceeds from business
interruption, rental interruption and use and occupancy insurance with respect to the operation of
such Borrowing Base Property (after deducting therefrom all necessary costs and expenses incurred
in the adjustment or collection thereof); (d) all Awards for temporary use (after deducting
therefrom all costs incurred in the adjustment or collection thereof and in Restoration of such
Borrowing Base Property); (e) all income and proceeds from judgments, settlements and other
resolutions of disputes with respect to matters which would be includable in this definition of
“Gross Income from Operations” if received in the ordinary course of such Borrowing Base
Property’s operation (after deducting therefrom all necessary costs and expenses incurred in the
adjustment or collection thereof); and (f) interest on credit accounts, rent concessions or
credits, and other required pass-throughs; but excluding, (1) gross receipts received by lessees,
licensees or concessionaires of such Borrowing Base Property; (2) consideration received at such
Borrowing Base Property for hotel accommodations, goods and services to be provided at other
hotels, although arranged by, for or on behalf of the Loan Parties or Manager; (3) income and
proceeds from the sale or other disposition of goods, capital assets and other items not in the
ordinary course of such Borrowing Base Property’s operation; (4) federal, state and municipal
excise, sales and use taxes collected directly from patrons or guests of such Borrowing Base
Property as a part of or based on the sales price of any goods, services or other items, such as
gross receipts, room, admission, cabaret or equivalent taxes; (5) Awards (except to the extent
provided in clause (d) above); (6) refunds of amounts not included in Operating Expenses at any
time and uncollectible accounts;






21









 







(7) gratuities collected by employees at such Borrowing Base Property; (8) the proceeds of any
financing; (9) other income or proceeds resulting other than from the use or occupancy of such
Borrowing Base Property, or any part thereof, or other than from the sale of goods, services or
other items sold on or provided from such Borrowing Base Property in the ordinary course of
business; and (10) any credits or refunds made to customers, guests or patrons in the form of
allowances or adjustments to previously recorded revenues.




          “Group Members”: the REIT and all of its Subsidiaries, including, without limitation,
the Borrower.




          “Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to be
executed and delivered by the REIT, the Borrower and each Subsidiary Guarantor, substantially in
the form of Exhibit A, as the same may be amended, restated, supplemented or otherwise modified
from time to time.




          “Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation,
including a reimbursement, counterindemnity or similar obligation, of the guaranteeing person that
guarantees or in effect guarantees, or which is given to induce the creation of a separate
obligation by another Person (including any bank under any letter of credit) that guarantees or in
effect guarantees any Indebtedness, leases, dividends or other obligations (the “primary
obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or
indirectly, including, without limitation, any obligation of the guaranteeing person, whether or
not contingent, (i) to purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase
Property, securities or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of such primary obligation
or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary course of business.
The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation,
unless such primary obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall
be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith.




          “Guarantors”: the collective reference to the REIT and the Subsidiary Guarantors.




          “Hazardous Substances”: any and all substances (whether solid, liquid or gas)
defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances,
hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory






22









 







effect under any present or future Environmental Laws or that may have a negative impact on
human health or the environment, including but not limited to petroleum and petroleum products,
asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive
materials, flammables, explosives, mold, mycotoxins, microbial matter and airborne pathogens
(naturally occurring or otherwise), but excluding substances of kinds and in amounts ordinarily and
customarily used or stored in similar properties for the purpose of cleaning or other maintenance
or operations and otherwise in compliance with all Environmental Laws.




          “Hampton”: Hampton Inns Franchise LLC, a Delaware limited liability company.




          “Hampton Inn & Suites Houston Medical Center”: that certain 120 room hotel property
located in Houston, Texas.




          “Hedge Agreements”: all interest rate or currency swaps, caps or collar agreements,
foreign exchange agreements, commodity or currency futures contracts, options to purchase or sell a
commodity or currency, or option, warrant or other right with respect to a commodity or currency
futures contract or similar arrangements entered into by the Group Members providing for protection
against fluctuations in interest rates, currency exchange rates, commodity prices or the exchange
of nominal interest obligations, either generally or under specific contingencies.




          “Homewood Boston Billerica”: that certain 147 room hotel property located in
Billerica, Massachusetts.




          “Homewood Dallas Market Center”: that certain 137 room hotel property located in
Dallas, Texas.




          “Homewood Farmington Connecticut”: that certain 121 room hotel property located in
Farmington, Connecticut.




          “Homewood Minneapolis Mall of America”: that certain 144 room hotel property located
in Bloomington, Minnesota.




          “Homewood Nashville Brentwood”: that certain 121 room hotel property located in
Brentwood, Tennessee.




          “Homewood Orlando Maitland”: that certain 143 room hotel property located in
Maitland, Florida.




          “Homewood Suites Franchise”: Homewood Suites Franchise LLC, a Delaware limited
liability company.




          “Homewood Suites Management”: Homewood Suites Management LLC, a Delaware limited
liability company.




          “Hotel Employees”: as defined in Section 4.12.




          “Hotel Licenses”: as defined in Section 4.3(b).







23









 








          “Improvements”: any Loan Party’s interest in and to all on site and off site
improvements to the Borrowing Base Properties, together with all fixtures, Tenant improvements, and
appurtenances now or later to be located on the Borrowing Base Properties or in such improvements.




          “Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase
price of Property (excluding any obligations under a contract to purchase Property that has not
been consummated) or services (other than trade payables incurred in the ordinary course of such
Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to Property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such Property), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an account party or
applicant under acceptance, letter of credit, surety bond or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise
acquire for value any Capital Stock of such Person, (h) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all
obligations of others of the kind referred to in clauses (a) through (h) above secured by (or for
which the holder of such obligation has an existing right, contingent or otherwise, to be secured
by) any Lien on Property (including, without limitation, accounts and contract rights) owned by
such Person, whether or not such Person has assumed or become liable for the payment of such
obligation, but limited to the lesser of the fair market value of such property and the aggregate
amount of the obligations so secured, and (j) for the purposes of Section 8.1(e) only, all net
obligations of such Person in respect of Hedge Agreements. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which such Person is a
general partner) to the extent such Person is liable therefor as a result of such Person’s
ownership interest in or other relationship with such entity, except to the extent the terms of
such Indebtedness expressly provide that such Person is not liable therefor. For purposes of
clause (j) above, the principal amount of Indebtedness in respect of Hedge Agreements shall equal
the net amount that would be payable (giving effect to netting) at such time if such Hedge
Agreement were terminated.




          “Indemnified Liabilities”: as defined in Section 10.5.




          “Indemnitee”: as defined in Section 10.5.




          “Initial Borrowing Base Properties”: each of Homewood Boston Billerica, Homewood
Minneapolis Mall of America, Homewood Nashville Brentwood, Homewood Dallas Market Center, Homewood
Farmington Connecticut, Homewood Orlando Maitland and Hampton Inn & Suites Houston Medical Center,
as to which the Administrative Agent for the benefit of the Secured Parties shall be granted a Lien
pursuant to one or more Mortgages subject to, with respect to the Material Mortgage Recording Tax
Mortgaged Properties, Section 6.18.




          “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.







24









 








          “Insolvent”: pertaining to a condition of Insolvency.




          “Insurance Premiums”: as defined in Section 6.5(j).




          “Insurance Proceeds”: the proceeds of any insurance to which any Group Member may be
entitled to, whether or not actually received, with respect to any Borrowing Base Property.




          “Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights
to sue at law or in equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.




          “Interest Payment Date”: (a) as to any Base Rate Loan, the last day of each March,
June, September and December to occur while such Loan is outstanding and the final maturity date of
such Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or shorter, the
last day of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof, after the first day
of such Interest Period and the last day of such Interest Period and (d) as to any Loan (other than
any Revolving Credit Loan that is a Base Rate Loan and any Swing Line Loan), the date of any
repayment or prepayment made in respect thereof.




          “Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on
the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the Borrower in its notice of
borrowing or notice of conversion, as the case may be, given with respect thereto; and (b)
thereafter, each period commencing on the last day of the next preceding Interest Period applicable
to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not later than 11:00 A.M., New York City
time, on the date that is three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:





     (1) if any Interest Period would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding Business Day;




     (2) any Interest Period that would otherwise extend beyond the Revolving Credit
Termination Date shall end on the Revolving Credit Termination Date or such due date, as
applicable; and




     (3) any Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar




25











 






month at the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period.



          “Investments”: as defined in Section 7.7.



          “Island Hospitality Management”: Island Hospitality Management III, Inc., a Florida
corporation.



          “Issuing Lender”: (a) Barclays Bank PLC or (b) any other Revolving Credit Lender from
time to time designated by the Borrower as an Issuing Lender with the consent of such Revolving
Credit Lender and the Administrative Agent.



          “Joint Venture”: any joint venture entity, whether a company, unincorporated firm,
association, partnership or any other entity which, in each case, in which the REIT and its
Subsidiaries has a direct or indirect equity or similar interest and which is not a Wholly Owned
Subsidiary of the Borrower.



          “L/C Commitment”: $10,000,000.



          “L/C Exposure”: for any Lender, at any time, its Revolving Credit Percentage of the
total L/C Obligations at such time.



          “L/C Fee Payment Date”: the last day of each March, June, September and December and
the last day of the Revolving Credit Commitment Period.



          “L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then
undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount
of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.5.



          “L/C Participants”: with respect to any Letter of Credit, the collective reference to
all the Revolving Credit Lenders other than the Issuing Lender that issued such Letter of Credit.



          “Lease”: excluding any Operating Lease or Acceptable Lease, each existing or future
lease, sublease (to the extent of any Loan Party’s rights thereunder), license, or other agreement
under the terms of which any Person has or acquires any right to occupy or use any Real Property of
any Loan Party, or any part thereof, or interest therein, and (a) every modification, amendment or
other agreement relating to such lease, sublease, subsublease or other agreement and (b) each
existing or future guaranty of payment or performance thereunder.



          “Leaseco Security Documents”: the collective reference to the Collateral
Agreement and all other security documents granting a Lien on any Property of any lessee under any
Operating Lease to secure the obligations and liabilities of such Person under such Operating
Lease, as each may be amended, restated, supplemented or otherwise modified from time to time.



          “Lender Payment Amount”: as defined in Section 2.15(g).



26









 





          “Lenders”: as defined in the preamble hereto.



          “Lessee”: Chatham Leaseco I, LLC, a Delaware limited liability company, Chatham
Houston HAS Leaseco LLC, a Delaware limited liability company, and any other Loan Party approved by
the Administrative Agent in its sole discretion, as applicable.



          “Letters of Credit”: as defined in Section 3.1(a).



          “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the foregoing).



          “Loan”: any loan made by any Lender pursuant to this Agreement.



          “Loan Documents”: this Agreement, the Security Documents, the Applications and the
Notes.



          “Loan Parties”: the REIT, the Borrower and each Subsidiary of the Borrower that is a
party to a Loan Document. For the avoidance of doubt, a Group Member shall not be a Loan Party
solely because it is a beneficiary to an Application.



          “Lockbox Account”: with respect to any Borrowing Base Property, an Eligible Account
held by the Subsidiary of the REIT that is a lessee party to the relevant Operating Lease in trust
for the benefit of the Subsidiary of the REIT that is a lessor party to such Operating Lease and
established for deposit of all Rents and other receipts from such Borrowing Base Property which
Eligible Account shall be subject to a Blocked Account Control Agreement pursuant to
Section 6.13(b); provided that, all interests of such Subsidiary that is a lessor party to
such Operating Lease in such Blocked Account Control Agreement, together with the related Lockbox
Account, shall be assigned to the Administrative Agent, for the benefit of the Secured Parties,
pursuant to the Guarantee and Collateral Agreement.



          “Management Agreement”: with respect to each Borrowing Base Property, unless such
Borrowing Base Property is managed by the Loan Party which owns such Borrowing Base Property, the
management agreement entered into by and between the Loan Party which owns or leases such Borrowing
Base Property and the Manager, pursuant to which the Manager is to provide management and other
services with respect to the Borrowing Base Properties, or, if the context requires, a Qualified
Manager who is managing the Borrowing Base Properties in accordance with the terms and provisions
of this Agreement pursuant to a Replacement Management Agreement, as each may be amended, restated,
supplemented or otherwise modified from time to time. Schedule 1.1D sets forth each
Management Agreement as of the Closing Date.



          “Manager”: (a) with respect to any Initial Borrowing Base Property, Homewood Suites
Management, Island Hospitality Management or a Qualified Manager, (b) with respect to any Initial
Borrowing Base Property (other than Hampton Inn and Suites Houston Medical



27









 




Center), Homewood Suites Management or a Qualified Manager, and (c) with respect to any Additional
Borrower Base Property, a Qualified Manager.




          “Material Adverse Effect”: (a) a material adverse effect on the business, assets,
operations or financial condition or prospects of the Loan Parties, taken as a whole, or in the
facts and information regarding such entities as represented to date; (b) a Material Property Event
with respect to the Borrowing Base Properties, taken as a whole; (c) a material impairment of the
ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan
Documents; or (d) a material adverse effect on the legality, validity, binding effect or
enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of
the Agents or the Lenders hereunder or thereunder.



          “Material Environmental Amount”: an amount or amounts payable by any of the Group
Members or in respect to any Real Property in the aggregate in excess of $5,000,000, for: costs to
comply with any Environmental Law; costs of any investigation, and any remediation, of any Material
of Environmental Concern; and compensatory damages (including, without limitation damages to
natural resources), punitive damages, fines, and penalties pursuant to any Environmental Law.



          “Material Mortgage Recording Tax Mortgaged Property”: until the Mortgage Recordation
Trigger Date, collectively, the Borrowing Base Properties located in the Material Mortgage
Recording Tax States that the Borrower has requested the Administrative Agent to hold in escrow all
fully executed Mortgages in connection with such Borrowing Base Properties by the Escrow Agent
pursuant to the Escrow Agreement.



          “Material Mortgage Recording Tax State Mortgage”: each Mortgage (1) for each of the
Material Mortgage Recording Tax Mortgaged Properties in an amount to cover the Borrowing Base Value
for such Property and (2) for any Borrowing Base Property located in a Material Mortgage Recording
Tax State which has a Borrowing Base Value Mortgage Deficit greater than zero, a Mortgage and
related documents reasonably requested by the Administrative Agent, in an amount to cover such
Borrowing Base Value Mortgage Deficit for such Property.



          “Material Mortgage Recording Tax State”: any of Florida, New York and any other state
that has a material mortgage recording tax, as determined by the Supermajority Lenders.



          “Material Property Event”: with respect to any Borrowing Base Property, the
occurrence of any event or circumstance occurring or arising after the date of this Agreement that
could reasonably be expected to have a (a) material adverse effect with respect to the financial
condition or the operations of such Borrowing Base Property, (b) material adverse effect on the
appraised value of such Borrowing Base Property, (c) material adverse effect on the ownership of
such Borrowing Base Property, or (d) result in a Material Environmental Amount.



          “Material Recording Tax Reserve Amount”: prior to the Mortgage Recordation Trigger
Date on any date of determination, the amount estimated by the Administrative Agent in its sole
discretion necessary to pay recording taxes, the cost of annual title bring downs and Title
Insurance Policies, and other recording costs and expenses (including the fees and expenses of



28









 




counsel) for all Material Mortgage Recording Tax Mortgaged Properties on such date, which amount
may be drawn by the Administrative Agent to pay such expenses pursuant to Section 6.18.




          “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products (virgin or used), polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity, and any other
materials, substances or forces of any kind, whether or not any such material, substance or force
is defined as hazardous or toxic under any Environmental Law, that is regulated pursuant to or
could reasonably be expected to give rise to liability under any Environmental Law.



          “Maximum Facility Availability”: at any date, an amount equal to (a) the lesser of
(i) the Total Revolving Credit Commitments on such date and (ii) the Borrowing Base on such date
minus (b) the Material Recording Tax Reserve Amount, as such amount may be adjusted by the
Administrative Agent pursuant to Section 2.2(b), on such date.



          “Money Laundering Control Act”: the Money Laundering Control Act of 1986, as amended
from time to time.



          “Moody’s”: Moody’s Investors Service, Inc. and its successors.



          “Mortgage Financing”: Indebtedness of the type permitted by Section 7.2(h).



          “Mortgage Notes Receivable”: any mortgage notes receivable, including interest
payments thereunder, issued in favor of any Group Member or any Joint Venture in which a Group
Member is a member by any Person (other than a Group Member).



          “Mortgage Recordation Trigger Date”: as defined in Section 6.18(a).



          “Mortgages”: each of the mortgage/deed of trust/deed to secure debt, assignment of
leases and rents, fixture filing and security agreements made by any Loan Party in favor of, or for
the benefit of, the Administrative Agent for the benefit of the Secured Parties (including without
limitation the Material Mortgage Recording Tax State Mortgages), substantially in the form of
Exhibit D (with such changes thereto as shall be advisable under the law of the jurisdiction in
which such mortgage or deed of trust is to be recorded), as the same may be amended, restated,
supplemented or otherwise modified from time to time.



          “Multiemployer Plan”: a Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.



          “Net Operating Income”: of any Borrowing Base Property for any period, an amount
equal to (a) the aggregate Gross Income from Operations of such Borrowing Base Property for such
period, minus (b) the sum of (i) all expenses and other proper charges incurred in
connection with the operation of such Borrowing Base Property during such period (including real
estate taxes, but excluding any management fees, franchise fees, debt service charges, income
taxes, depreciation, amortization and other noncash expenses), (ii) a management fee that is the
greater of (x) 3% of the aggregate Gross Income from Operations of such Borrowing Base



29









 







Property for such period and (y) the actual management fees incurred during such period,
(iii) a franchise fee that is the greater of 3% of the aggregate Gross Income from Operations of
such Borrowing Base Property for such period or the actual franchise fees incurred during such
period and (iv) a furniture, fixtures and equipment reserve of 5% of the aggregate Gross Income
from Operations of such Borrowing Base Property for such period.



          “New Revolving Credit Lender”: as defined in Section 2.22(b).



          “New Rochelle”: that certain 124 room hotel property located in New Rochelle, New
York.



          “New Rochelle Assignment and Acceptance”: that certain Assignment and Acceptance,
dated as of October 12, 2010, between TRS Holding and the Administrative Agent, for the benefit of
the Secured Parties, as amended, restated, supplemented or otherwise modified from time to time.



          “New Rochelle Mortgage”: the Amended and Restated Leasehold Mortgage, Assignment of
Leases and Rents and Security Agreement, dated as of December 18, 2009, by the Existing Borrower in
favor of the Existing Lender.



          “Non-Consenting Lender”: as defined in Section 2.21(b).



          “Non-Excluded Taxes”: as defined in Section 2.17(a).



          “Non-Recorded Borrowing Base Value”: at any date of determination, the aggregate
Borrowing Base Value of all Material Mortgage Recording Tax Mortgaged Properties on such date
plus an amount equal to the aggregate Borrowing Base Value Mortgage Deficit on such date.



          “Non-Recourse Indebtedness”: any Indebtedness other than Recourse Indebtedness.



          “Non-Recourse Subsidiary Borrower”: a Subsidiary of the Borrower (other than a
Borrowing Base Group Member) whose principal assets are the assets securing Indebtedness incurred
in accordance with Section 7.2(d), 7.2(g), 7.2(h) or 7.2(i).



          “Non-Recourse Parent Guarantor”: the Borrower and any direct or indirect parent of
the Borrower providing a guarantee permitted by Section 7.2(d), 7.2(g), 7.2(h) or 7.2(i).



          “Non-U.S. Lender”: as defined in Section 2.17(d).



          “Non-U.S. Participant”: as defined in Section 2.17(d).



          “Note”: any promissory note evidencing any Loan.



          “Obligations”: the unpaid principal of and interest on (including, without
limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the commencement of any



30









 




insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the Loans, the Reimbursement
Obligations and all other obligations and liabilities of the Borrower to the Administrative Agent
or to any Lender or any Qualified Counterparty, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified
Hedge Agreement or any other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto)
or otherwise; provided, that (i) obligations of the Borrower or any Subsidiary under any
Specified Hedge Agreement shall be secured and guaranteed pursuant to the Security Documents only
to the extent that, and for so long as, the other Obligations are so secured and guaranteed and
(ii) any release of Collateral or Guarantors effected in the manner permitted by this Agreement
shall not require the consent of holders of obligations under Specified Hedge Agreements.




          “Occupancy Rate”: for any Real Property on any date of determination, the total rooms
occupied for the period of four fiscal quarters most recently ended for which financial statements
are available (excluded complimentary rooms) divided by the total number of available rooms during
such period.



          “OFAC”: Office of Foreign Assets Control of the United States Department of the
Treasury.



          “OFAC List”: the list of specially designated nationals and blocked persons subject
to financial sanctions that is maintained by the U.S. Treasury Department, Office Foreign Assets
Control.



          “Operating Expenses”: with respect to any Borrowing Base Property for any
period, the sum of all costs and expenses of operating, maintaining, directing, managing and
supervising such Borrowing Base Property (excluding, (i) depreciation and amortization, (ii) any
Debt Service, (iii) any Capital Expenditures in connection with such Borrowing Base Property, or
(iv) the costs of any other things specified to be done or provided at the Loan Parties’ or the
Manager’s sole expense) incurred by the Loan Parties or the Manager pursuant to the applicable
Management Agreement, or as otherwise specifically provided therein, which are properly
attributable to the period under consideration under the REIT’s system of accounting, including
without limitation: (a) the cost of all food and beverages sold or consumed and of all necessary
chinaware, glassware, linens, flatware, uniforms, utensils and other items of a similar nature,
including such items bearing the name or identifying characteristics of the hotels as the Loan
Parties or the Manager shall reasonably consider appropriate (“Operating Equipment”) and
paper supplies, cleaning materials and similar consumable items (“Operating Supplies”)
placed in use (other than reserve stocks thereof in storerooms), Operating Equipment and Operating
Supplies shall be considered to have been placed in use when they are transferred from the
storerooms of such Borrowing Base Property to the appropriate operating departments; (b) salaries
and wages of personnel of such Borrowing Base Property, including costs of payroll taxes and
employee benefits; (c) the cost of all other goods and services obtained by any Loan Party or the
Manager



31









 







in connection with its operation of such Borrowing Base Property including, without
limitation, heat and utilities, office supplies and all services performed by third parties,
including leasing expenses in connection with telephone and data processing equipment, and all
existing and any future installations necessary for the operation of the Improvements for hotel
purposes (including, without limitation, heating, lighting, sanitary equipment, air conditioning,
laundry, refrigerating, built-in kitchen equipment, telephone equipment, communications systems,
computer equipment and elevators), Operating Equipment and existing and any future furniture,
furnishings, wall coverings, fixtures and hotel equipment necessary for the operation of the
building for hotel purposes which shall include all equipment required for the operation of
kitchens, bars, laundries (if any) and dry cleaning facilities (if any), office equipment, cleaning
and engineering equipment and vehicles; (d) the cost of repairs to and maintenance of such
Borrowing Base Property other than of a capital nature; (e) the allocated amount of insurance
premiums for general liability insurance, workers’ compensation insurance or insurance required by
similar employee benefits acts and such business interruption or other insurance as may be provided
for protection against claims, liabilities and losses arising from the operation of such Borrowing
Base Property (as distinguished from any property damage insurance on such Borrowing Base Property
building or its contents) and losses incurred on any self-insured risks of the foregoing types,
provided that, the Borrower and the Manager have specifically approved in advance such
self-insurance or insurance is unavailable to cover such risks; (f) all real estate and personal
property taxes, assessments, water rates or sewer rents, now hereafter levied or assessed or
imposed against such Borrowing Base Property or part thereof and Other Charges (other than federal,
state or local income taxes and franchise taxes or the equivalent) payable by or assessed against
the Loan Parties or the Manager with respect to the operation of such Borrowing Base Property;
(g) the allocated amount of legal fees and fees of any firm of independent certified public
accounts designated from time to time by the REIT for services directly related to the operation of
such Borrowing Base Property; (h) the costs and expenses of technical consultants and specialized
operational experts for specialized services in connection with non-recurring work on operational,
legal, functional, decorating, design or construction problems and activities; provided
that, if such costs and expenses have not been included in an approved budget, then if such costs
exceed $5,000 in any one instance the same shall be subject to approval by the Administrative
Agent; (i) the allocated amount all expenses for advertising such Borrowing Base Property and all
expenses of sales promotion and public relations activities; (j) the cost of any reservations
system, any accounting services or other group benefits, programs or services from time to time
made available to properties in the REIT’s system; (k) the cost associated with any retail Leases
or Operating Leases; (l) any management fees, basic and incentive fees or other fees and
reimbursables paid or payable to the Manager under the related Management Agreement; (m) any
franchise fees or other fees and reimbursables paid or payable to the Franchisor under the related
Franchise Agreement; and (n) all costs and expenses of owning, maintaining, conducting and
supervising the operation of such Borrowing Base Property to the extent such costs and expenses are
not included above.



          “Operating Lease”: with respect to each Borrowing Base Property, the lease agreement
entered into by and between the Loan Party which owns such Borrowing Base Property and the
applicable Lessee, as each may be amended, restated, supplemented or otherwise modified from time
to time.



32









 





          “Other Charges”: all ground rents, maintenance charges, impositions other than taxes,
and any other charges, including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Real Property, now or hereafter levied or assessed
or imposed against the Real Property or any part thereof.



          “Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.



          “Ownership Percentage”: with respect to any Person, the percentage of the total
outstanding Capital Stock of such Person held directly and indirectly by the REIT and its
Subsidiaries.



          “Participant”: as defined in Section 10.6(b).



          “Participation Amount”: as defined in Section 3.4(b).



          “Payment Amount”: as defined in Section 3.5.



          “Payment Office”: the office specified from time to time by the Administrative Agent
as its payment office by notice to the Borrower and the Lenders.



          “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).



          “Permitted Construction Financing”: Non-Recourse Indebtedness incurred to finance the
construction or improvement of Real Estate Under Construction (inclusive of Non-Recourse
Indebtedness incurred as part of such construction financing and applied to reimburse costs
previously paid to fund the related construction) and that is secured by such Real Estate Under
Construction.



          “Permitted Investors”: the collective reference to Jeffrey H. Fisher.



          “Permitted Limited Recourse Guarantees”: guarantees by any Non-Recourse Parent
Guarantor (i) for fraud, misrepresentation, misapplication of cash, waste, environmental claims and
liabilities, prohibited transfers, violations of special purpose entity covenants and other
circumstances customarily excluded by institutional lenders from exculpation provisions and/or
included in separate guarantee or indemnification agreements in non-recourse financing of real
estate and customary non-monetary completion and performance guarantees by any Non-Recourse Parent
Guarantor, in each case with respect to Indebtedness permitted by Sections 7.2(h) and 7.2(i), and
(ii) monetary completion guarantees and payment guarantees in connection with Indebtedness
permitted by Section 7.2(f) hereof.



          “Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.



33









 





          “PIP Plan”: with respect to each Borrowing Base Property, any property improvement
program that may be mandated or otherwise required under the applicable Franchise Agreement for
such Property or other applicable licensing agreement.



          “PIP Requirements”: collectively, the obligation of the Loan Parties to comply with
the PIP Plans.



          “Plan”: at a particular time, any employee benefit plan that is covered by ERISA and
(i) in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA or (ii) in which Hotel Employees participate by virtue of their
involvement in the operations of any of the Borrowing Base Properties.



          “Pledged Stock”: as defined in the Guarantee and Collateral Agreement.



          “Policies”: as defined in Section 6.5(d).



          “Preliminary Diligence Materials”: with respect to any Real Property which the
Borrower has submitted a written request to be included in as a Borrowing Base Property pursuant to
Section 5.3, each of the following documents:




     (i) a description of such Real Property, including the age, location and size of such
Real Property, the Manager and the Franchisor;




     (ii) an operating statement with respect to such Real Property for each of the two
prior fiscal years and for the current fiscal year through the fiscal quarter most recently
ending and for the current fiscal quarter, which shall be audited (to the extent available)
or certified by a representative of the Borrower to the best of such representative’s
knowledge as being correct and complete in all respects and presents accurately the results
of operations of such Property for the periods indicated; provided that, with
respect to any period such Real Property was not owned by the Borrower, such information
shall only be required to be delivered to the extent reasonably available to the Borrower;




     (iii) a pro forma operating statement or an operating budget for such Real
Property with respect to the current and immediately following fiscal years;




     (iv) a budget for capital expenditures for the immediately following twelve-month
period showing funding sources acceptable to the Administrative Agent, including any PIP
Requirements for such Real Property; and




     (v) a recent STAR Report for such Real Property.



          “Prime Rate”: as defined in the definition of “Base Rate”.



          “Principal Financial Officer”: the chief financial officer, any director (or
equivalent) or officer from time to time of the REIT with actual knowledge of the financial affairs
of the REIT and its Subsidiaries.



34









 





          “Pro Forma Balance Sheet”: as defined in Section 4.1(a).



          “Prohibited Person”: any Person identified on the OFAC List or any other Person with
whom a U.S. Person may not conduct business or transactions by prohibition of Federal law or
Executive Order of the President of the United States of America.



          “Projections”: as defined in Section 6.2(c).



          “Property”: any right or interest in or to property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible, including, without limitation, Capital
Stock.



          “Qualified Counterparty”: with respect to any Specified Hedge Agreement, any
counterparty thereto that, at the time such Specified Hedge Agreement was entered into, was a
Lender or an affiliate of a Lender.



          “Qualified Franchisor”: with respect to any Borrowing Base Property, a reputable and
experienced franchisor (which may be an Affiliate of the Borrower) possessing experience in
flagging hotel properties similar in size, scope, use and value as such Borrowing Base Property
approved by the Required Lenders.



          “Qualified Manager”: with respect to any Borrowing Base Property, any of (x) the
management organizations listed on Annex B or (y) a reputable and experienced management
organization (which may be an Affiliate of the Borrower) possessing experience in managing
properties similar in size, scope, use and value as such Borrowing Base Property approved by the
Required Lenders.



          “Rating Agency”: each of S&P, Moody’s and Fitch, or any other nationally recognized
statistical rating agency which has been approved by the Administrative Agent in its sole
discretion.



          “Real Estate Under Construction”: Real Property on which construction of material
improvements has commenced or shall concurrently commence with the incurrence of Indebtedness
financing such construction and is or shall be continuing to be performed, but has not yet been
completed (as such completion is evidenced by the issuance of a temporary or permanent certificate
of occupancy (whichever occurs first) for such Real Property.



          “Real Property”: with respect to any Person, all of the right, title, and interest of
such Person in and to land, improvements and fixtures, including ground leases.



          “REC”: as defined in Section 6.8(c).



          “Recourse Indebtedness”: any Indebtedness, to the extent that recourse of the
applicable lender for non-payment is not limited to such lender’s Liens on a particular asset or
group of assets (except to the extent the Property on which such lender has a Lien and to which its
recourse for non-payment is limited constitutes cash or Cash Equivalents, to which extent such
Indebtedness shall be deemed to be Recourse Indebtedness); provided that, personal recourse
of any Person for any such Indebtedness for fraud, misrepresentation, misapplication of



35









 







cash, waste, environmental claims and liabilities, prohibited transfers, violations of
single purpose entity covenants, failure to maintain insurance, failure to pay taxes, and other
circumstances customarily excluded by institutional lenders from exculpation provisions and
included in separate guaranty or indemnification agreements in non-recourse financing of real
estate shall not, by itself, cause such Indebtedness to be characterized as Recourse Indebtedness.
For the avoidance of doubt, Recourse Indebtedness shall not include the Obligations.



          “Refunded Swing Line Loans”: as defined in Section 2.4.



          “Refunding Date”: as defined in Section 2.4.



          “Register”: as defined in Section 10.6(d).



          “Regulation H”: Regulation H of the Board as in effect from time to time.



          “Regulation U”: Regulation U of the Board as in effect from time to time.



          “Reimbursement Obligation”: the obligation of the Borrower to reimburse each Issuing
Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit issued by such Issuing
Lender.



          “REIT”: as defined in the preamble hereto.



          “REIT Controlled Affiliate”: any Person that directly or indirectly, is controlled by
the REIT. For purposes of this definition, “control” of a Person means the power, directly or
indirectly, to direct or cause the direction of the management and policies of such Person, whether
by contract or otherwise.



          “REIT Permitted Investments”: Investments by the REIT or any Subsidiary of the REIT
in the following items at any one time outstanding; provided that, on any date of
determination, the aggregate value of such holdings of the REIT and its Subsidiaries shall not
exceed the following amounts as a percentage of Total Asset Value on such date:



	 	 	 	 	 	 	 

	(i)

	 	Mortgage Notes Receivables
	 	 	5	%
	 
	 	 	 	 	 	 
	(ii)

	 	Pro rata share of Unconsolidated Joint Ventures
	 	 	20	%
	 
	 	 	 	 	 	 
	(iii)

	 	Construction in Process
	 	 	10	%
	 
	 	 	 	 	 	 
	(iv)

	 	Aggregate of (i) to (iii)
	 	 	30	%






          “REIT Status”: with respect to any Person, (a) the qualification of such Person as a
real estate investment trust under Sections 856 through 860 of the Code, and (b) the applicability
to such Person and its shareholders of the method of taxation provided for in Section 857 et seq.
of the Code, including a deduction for dividends paid.



36









 





          “Related Fund”: with respect to any Lender, any fund that (x) invests in commercial
loans and (y) is managed or advised by the same investment advisor as such Lender, by such Lender
or an affiliate of such Lender.



          “Rents”: with respect to each Borrowing Base Property, all rents, rent equivalents,
moneys payable as damages or in lieu of rent or rent equivalents, royalties (including, without
limitation, all oil and gas or other mineral royalties and bonuses), income, receivables, receipts,
revenues, deposits (including, without limitation, security, utility and other deposits), accounts,
cash, issues, profits, charges for services rendered, and other consideration of whatever form or
nature received by or paid to or for the account of or benefit of the Loan Parties or their agents
or employees from any and all sources arising from or attributable to such Borrowing Base Property,
and proceeds, if any, from business interruption or other loss of income or insurance, including,
without limitation, all hotel receipts, revenues and credit card receipts collected from guest
rooms, restaurants, bars, meeting rooms, banquet rooms and recreational facilities, all
receivables, customer obligations, installment payment obligations and other obligations now
existing or hereafter arising or created out of the sale, lease, sublease, license, concession or
other grant of the right of the use and occupancy of property or rendering of services by the Loan
Parties or any operator or manager of the hotel or the commercial space located in the Improvements
or acquired from others (including, without limitation, from the rental of any office space, retail
space, guest rooms or other space, halls, stores, and offices, and deposits securing reservations
of such space), license, lease, sublease and concession fees and rentals, health club membership
fees, food and beverage wholesale and retail sales, service charges, vending machine sales and
proceeds, if any, from business interruption or other loss of income insurance.



          “Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.



          “Replacement Franchise Agreement”: collectively, (a) either (i) a franchise,
trademark and license agreement with a Qualified Franchisor substantially in the same form and
substance as the Franchise Agreement being replaced, or (ii) a franchise, trademark and license
agreement with a Qualified Franchisor, which franchise, trademark and license agreement shall be
reasonably acceptable to the Administrative Agent in form and substance and (b) an assignment of
franchise agreement substantially in the form then used by the Administrative Agent (or of such
other form and substance reasonably acceptable to the Administrative Agent), executed and delivered
to the Administrative Agent by the applicable Loan Party and such Qualified Franchisor at the
Borrower’s expense.



          “Replacement Management Agreement”: collectively, (a) either (i) a management
agreement with a Qualified Manager substantially in the same form and substance as the Management
Agreement being replaced, or (ii) a management agreement with a Qualified Manager, which management
agreement shall be in form and substance reasonably acceptable to the Administrative Agent and
(b) an assignment of management agreement and subordination of management fees substantially in the
form then used by the Administrative Agent (or of such other form and substance reasonably
acceptable to the Administrative Agent), executed and delivered to the Administrative Agent by the
applicable Loan Party and such Qualified Manager at the Borrower’s expense.



37









 





          “Reportable Event”: any of the events set forth in Section 4043(c) of ERISA,
other than those events as to which the 30-day notice period is waived under subsections. 27,. 28,.
29,. 30,. 31,. 32,. 34 or. 35 of PBGC Reg. § 4043.



          “Required Lenders”: at any time, the holders of more than 50% of the Total Revolving
Credit Commitments then in effect or, if the Revolving Credit Commitments have been terminated, the
Total Revolving Extensions of Credit then outstanding.



          “Requirements of Law”: as to any Person, the Certificate of Incorporation and By-Laws
or other organizational or governing documents of such Person, and any treaty, federal, state,
county, municipal and other governmental statutes, laws, orders, rules, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities or determination of an arbitrator or
a court, in each case applicable to or binding upon such Person or any of its Property or to which
such Person or any of its Property is subject, or the construction, use, alteration or operation of
any Real Property, or any part thereof, whether now or hereafter enacted and in force, and all
permits, licenses and authorizations and regulations relating thereto, and, with respect to any
Real Property, all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to the Group Members, at any time in force affecting such
Real Property or any part thereof.



          “Responsible Officer”: the chief executive officer, president or chief financial
officer of the REIT, but in any event, with respect to financial matters, the chief financial
officer of the REIT.



          “Restoration”: the repair and restoration of a Borrowing Base Property after a
Casualty or Condemnation as nearly as possible to the condition the Borrowing Base Property was in
immediately prior to such Casualty or Condemnation, with such alterations as may be reasonably
approved by the Administrative Agent.



          “Restricted Borrowing Base Property”: any Borrowing Base Property for which the Loan
Parties have not furnished to the Administrative Agent financial statements pursuant to
Section 6.1, in form and substance satisfactory to the Administrative Agent, demonstrating
operating results for such Borrowing Base Property for a period of twelve months or more.



          “Restricted Payments”: as defined in Section 7.6.



          “Revolving Commitment Increase Notice”: as defined in Section 2.22(a).



          “Revolving Credit Commitment”: as to any Lender, the obligation of such Lender, if
any, to make Revolving Credit Loans and participate in Swing Line Loans and Letters of Credit, in
an aggregate principal and/or face amount not to exceed the amount set forth under the heading
“Revolving Credit Commitment” opposite such Lender’s name on Annex A, or, as the case may be, in
the Assignment and Assumption substantially in the form of Exhibit E pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.
The original aggregate amount of the Total Revolving Credit Commitments is $85,000,000.



38









 





          “Revolving Credit Commitment Period”: the period from and including the Closing Date
to the Revolving Credit Termination Date.



          “Revolving Credit Increase Effective Date”: as defined in Section 2.22(f).



          “Revolving Credit Lender”: each Lender that has a Revolving Credit Commitment or that
is the holder of Revolving Credit Loans.



          “Revolving Credit Loans”: as defined in Section 2.1.



          “Revolving Credit Note”: as defined in Section 2.5.



          “Revolving Credit Percentage”: as to any Revolving Credit Lender at any time, the
percentage which such Lender’s Revolving Credit Commitment then constitutes of the Total Revolving
Credit Commitments (or, at any time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate amount of such Lender’s Revolving Extensions of
Credit then outstanding constitutes of the Total Revolving Extensions of Credit then outstanding).



          “Revolving Credit Termination Date”: October 12, 2013.



          “Revolving Extensions of Credit”: as to any Revolving Credit Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all Revolving Credit Loans made by
such Lender then outstanding, (b) such Lender’s Revolving Credit Percentage of the L/C Obligations
then outstanding and (c) such Lender’s Revolving Credit Percentage of the aggregate principal
amount of Swing Line Loans then outstanding.



          “Revolving Offered Increase Amount”: as defined in Section 2.22(a).



          “RevPAR”: on any date of determination for any Real Property, an amount equal to
(a) the Occupancy Rate for such Real Property for the period of four fiscal quarters most recently
ended for which financial statements are available multiplied
by (b) Average Daily Rate for such
Real Property for such period.



          “S&P”: Standard & Poor’s Ratings Services and its successors.



          “SEC”: the Securities and Exchange Commission (or successors thereto or an analogous
Governmental Authority).



          “Secured Parties”: as defined in the Guarantee and Collateral Agreement.



          “Security Documents”: the collective reference to the Guarantee and Collateral
Agreement, the Mortgages, the Subordination Agreements and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any Property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document, as each may be amended,
restated, supplemented or otherwise modified from time to time.



39









 





          “Single Employer Plan”: any Plan that is covered by Title IV of ERISA or Section 412
of the Code, other than a Multiemployer Plan.



          “Solvent”: with respect to any Person, as of any date of determination, (a) the
amount of the “present fair saleable value” of the assets of such Person will, as of such date,
exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as
such quoted terms are determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to
payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or
(y) right to an equitable remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.



          “SPC”: as defined in Section 10.6(g).



          “Specially Designated Nationals List”: the Specially Designated Nationals and Blocked
Persons List maintained by OFAC and available at http://www.ustreas.gov/offices/
enforcement/ofac/sdn/, or as otherwise published from time to time.



          “Specified Hedge Agreement”: any Hedge Agreement entered into by Borrower or any
Subsidiary Guarantor and any Qualified Counterparty.



          “STAR Report”: with respect to any Real Property, a Smith Travel Accommodation Report
(STAR) by Smith Travel Research or any other report which reflects market penetration and relevant
hotel properties competing with such Real Property, in each case in form and substance reasonably
satisfactory to the Administrative Agent.



          “State”: any state, commonwealth or territory of the United States of America, in
which the subject of such reference or any part thereof is located.



          “Subordination Agreement”: with respect to each Borrowing Base Property, a
Subordination of Management Fees and Non-Disturbance and Attornment Agreement, among the
Administrative Agent for the benefit of the Secured Parties, the Loan Party which owns or leases
such Borrowing Base Property pursuant to an Acceptable Lease and the Manager, as manager, in form
and substance acceptable to the Administrative Agent, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.



          “Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the



40









 




management of which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified, all references to a
“Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.




          “Subsidiary Guarantor”: each Subsidiary of the Borrower that is a party to the
Guarantee and Collateral Agreement.



          “Supermajority
Lenders”: at any time, the holders of more than 662/3% of the Total
Revolving Credit Commitments then in effect or, if the Revolving Credit Commitments have been
terminated, the Total Revolving Extensions of Credit then outstanding.



          “Survey”: as defined in Section 5.1(q).



          “Swing Line Commitment”: the obligation of the Swing Line Lender to make Swing Line
Loans pursuant to Section 2.3 in an aggregate principal amount at any one time outstanding not to
exceed $10,000,000.



          “Swing Line Exposure”: for any Lender, at any time, its Revolving Credit Percentage
of the aggregate amount of all Swing Line Loans outstanding at such time.



          “Swing Line Lender”: Barclays Bank PLC, in its capacity as the lender of Swing Line
Loans.



          “Swing Line Loans”: as defined in Section 2.3.



          “Swing Line Note”: as defined in Section 2.5.



          “Swing Line Participation Amount”: as defined in Section 2.4.



          “Syndication Agent”: as defined in the preamble hereto.



          “Tenant”: any Person leasing, subleasing or otherwise occupying any portion of a
Borrowing Base Property under a Lease or other occupancy agreement with the Loan Party that is the
direct owner of such Borrowing Base Property.



          “Third Party Reports”: with respect to any Real Property which the Borrower has
submitted a written request to be included in as a Borrowing Base Property pursuant to Section 5.3,
each of the following documents prepared for such Real Property:




     (i) an Acceptable Environmental Report;




     (ii) a property condition and structural reports;




     (iii) seismic reports;




     (iv) zoning reports satisfying the requirements of Section 5.1(c); and




     (v) an Appraisal.



41









 






     “Title Insurance Company”: as defined in Section 5.1(q).



          “Title Insurance Policy”: with respect to each Borrowing Base Property, an ALTA
mortgagee title insurance policy in a form reasonably acceptable to the Administrative Agent (or,
if a Borrowing Base Property is in a State which does not permit the issuance of such ALTA policy,
such form as shall be permitted in such State and reasonably acceptable to the Administrative
Agent) issued with respect to each Borrowing Base Property and insuring the Lien of the Mortgage
encumbering such Borrowing Base Property.



          “Total Asset Value”: as of any date of determination, without duplication, with
respect to the Group Members on a consolidated basis, the sum of (a) for Real Property assets owned
for four full consecutive fiscal quarters or more as of such date, an amount equal to
(x) Consolidated EBITDA for such Real Property assets for the four consecutive fiscal quarters most
recently ending on or prior to such date minus the aggregate amount of Consolidated EBITDA
attributable to each such Real Property asset acquired, sold or otherwise disposed of during such
period, divided by (y) the Capitalization Rate with respect to such Real Property assets, (b) the
acquisition cost of each Real Property asset (other than Construction in Process) acquired during
the most recent four consecutive fiscal quarters ending on or prior to such date, (c) cost of
Construction in Process (including the book value of the related Real Property) plus the
cost of improvements, (d) unrestricted cash and Cash Equivalents on the last day of the four
consecutive fiscal quarters ending on or prior to such date, (e) the Group Members’ pro rata share
of the foregoing items in clauses (a), (b) and (c) attributable to interests in Unconsolidated
Joint Ventures and (f) an amount equal to the aggregate book value of accounts receivable, Mortgage
Notes Receivable, construction loans, capital improvement loans and other loans not in default
owned by the Group Members.



          “Total Net Worth”: on any date of determination, (a) Total Asset Value on such
date minus (b) Consolidated Total Debt on such date.



          “Total Revolving Credit Commitments”: at any time, the aggregate amount of the
Revolving Credit Commitments then in effect.



          “Total Revolving Extensions of Credit”: at any time, the aggregate amount of the
Revolving Extensions of Credit of the Revolving Credit Lenders outstanding at such time.



          “Transferee”: as defined in Section 10.14.



          “TRS Holding”: Chatham TRS Holding, Inc., a Florida corporation.



          “TRS Subsidiary”: each Subsidiary listed on Schedule 1.1F and any other
Subsidiary of the Borrower that is a “taxable REIT subsidiary” within the meaning of section 856(l)
of the Code.



          “Type”: as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan.



          “Unconsolidated Joint Venture”: with respect to any Group Member, any Joint Venture
in which such Group Member has an interest that is not consolidated with such Group Member in
accordance with GAAP.



42









 





          “Uniform System of Accounts”: the most recent edition of the Uniform System of
Accounts for the Lodging Industry as published by the American Hotel & Lodging Association
Educational Institute, as amended from time to time.



          “USPAP”: the Uniform Standards for Professional Appraisal Practice (USPAP).



          “USA PATRIOT Act”: the United and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56), as amended from
time to time.



          “Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital
Stock of which (other than directors’ qualifying shares required by law) is owned by such Person
directly and/or through other Wholly Owned Subsidiaries.



          “Wholly Owned Subsidiary Guarantor”: any Subsidiary Guarantor that is a Wholly Owned
Subsidiary of the Borrower.



          1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the other Loan Documents or
any certificate or other document made or delivered pursuant hereto or thereto.



          (b) As used herein and in the other Loan Documents, and any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms relating to the REIT, the Borrower and
its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under the Uniform System
of Accounts and reconciled in accordance with GAAP, as applicable.



          (c) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.



          (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.



          (e) All calculations of financial ratios set forth in Section 7.1 and the calculation of the
Consolidated Leverage Ratio for purposes of determining the Applicable Margin shall be calculated
to the same number of decimal places as the relevant ratios are expressed in and shall be rounded
upward if the number in the decimal place immediately following the last calculated decimal place
is five or greater. For example, if the relevant ratio is to be calculated to the hundredth
decimal place and the calculation of the ratio is 5.126, the ratio will be rounded up to 5.13.



43









 





SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENT




          2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions hereof, the
Revolving Credit Lenders severally agree to make revolving credit loans (the “Revolving Credit
Loans”) to the Borrower from time to time during the Revolving Credit Commitment Period in an
aggregate principal amount at any one time outstanding (i) for each Revolving Credit Lender which,
when added to such Lender’s Revolving Credit Percentage of the sum of (x) the L/C Obligations then
outstanding and (y) the aggregate principal amount of the Swing Line Loans then outstanding does
not exceed the amount of such Lender’s Revolving Credit Commitment and (ii) the Total Revolving
Extensions of Credit shall at no time exceed the Maximum Facility Availability at such time.
During the Revolving Credit Commitment Period the Borrower may use the Revolving Credit Commitments
by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof. The Revolving Credit Loans may from time to time
be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 2.10, provided that no Revolving Credit
Loan shall be made as a Eurodollar Loan after the day that is one month prior to the Revolving
Credit Termination Date.



          (b) The Borrower shall repay all outstanding Revolving Credit Loans on the Revolving Credit
Termination Date.



          2.2 Procedure for Revolving Credit Borrowing. (a) The Borrower may borrow under the
Revolving Credit Commitments on any Business Day during the Revolving Credit Commitment Period,
provided that the Borrower shall deliver to the Administrative Agent a Borrowing Notice (which
Borrowing Notice must be received by the Administrative Agent prior to 12:00 Noon (New York City
time) (i) three Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (ii) one Business Day prior to the requested Borrowing Date, in the case of Base Rate
Loans). Any Revolving Credit Loans made on the Closing Date shall initially be Base Rate Loans.
Each borrowing of Revolving Credit Loans under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple in excess
thereof (or, if the then aggregate Available Revolving Credit Commitments are less than $1,000,000,
such lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof; provided, that the Swing Line Lender may request, on behalf of the
Borrower, borrowings of Base Rate Loans under the Revolving Credit Commitments in other amounts
pursuant to Section 2.4. Upon receipt of any such Borrowing Notice from the Borrower, the
Administrative Agent shall promptly notify each Revolving Credit Lender thereof. Each Revolving
Credit Lender will make its Revolving Credit Percentage of the amount of each borrowing of
Revolving Credit Loans available to the Administrative Agent for the account of the Borrower at the
Funding Office prior to 1:00 P.M. (New York City time) on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent in like funds as received by the
Administrative Agent.



          (b) Notwithstanding the foregoing, the Borrower hereby authorizes the Administrative
Agent to request Revolving Credit Loans on behalf of the Borrower (i) to pay the



44









 




annual cost of title bring downs required pursuant to Section 6.18(b) and (ii) after the occurrence
of the Mortgage Recordation Trigger Date, to the extent necessary or advisable to pay recording
taxes and the cost of annual title bring downs and Title Insurance Policies, and other recording
costs and expenses to record the Material Mortgage Recording Tax State Mortgages and obtain Title
Insurance Policies (including, without limitation, the fees and expenses of counsel incurred in
connection therewith) in accordance with Section 6.18(a), which Revolving Credit Loans may be Base
Rate Loans. Each Revolving Credit Lender’s obligation to make the Revolving Credit Loans referred
to in this Section 2.2(b) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment, defense or
other right which such Revolving Credit Lender may have against the Borrower or any other Person
for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default
or the failure to satisfy any of the other conditions specified in Section 5; (iii) any adverse
change in the condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement
or any other Loan Document by the Borrower, any other Loan Party or any other Revolving Credit
Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided that, the Lenders shall not have any obligation to make
Revolving Credit Loans pursuant to this Section 2.2(b) if, after giving effect to such Revolving
Credit Loans, the Total Revolving Extensions of Credit exceed the Total Revolving Credit
Commitments.




          2.3 Swing Line Commitment. (a) Subject to the terms and conditions hereof, the
Swing Line Lender agrees that, during the Revolving Credit Commitment Period, it will make
available to the Borrower in the form of swing line loans (“Swing Line Loans”) a portion of
the credit otherwise available to the Borrower under the Revolving Credit Commitments; provided
that (i) the aggregate principal amount of Swing Line Loans outstanding at any time shall not
exceed the Swing Line Commitment then in effect (notwithstanding that the Swing Line Loans
outstanding at any time, when aggregated with the Swing Line Lender’s other outstanding Revolving
Credit Loans hereunder, may exceed the Swing Line Commitment then in effect or such Swing Line
Lender’s Revolving Credit Commitment then in effect), (ii) the Borrower shall not request, and the
Swing Line Lender shall not make, any Swing Line Loan if, after giving effect to the making of such
Swing Line Loan, the aggregate amount of the Available Revolving Credit Commitments would be less
than zero and (iii) the Total Revolving Extensions of Credit shall at no time exceed the Maximum
Facility Availability at such time. During the Revolving Credit Commitment Period, the Borrower
may use the Swing Line Commitment by borrowing, repaying and reborrowing, all in accordance with
the terms and conditions hereof. Swing Line Loans shall be Base Rate Loans only.



          (b) The Borrower shall repay all outstanding Swing Line Loans on or before the day that
is ten days after the Borrowing Date of such Swing Line Loan.



          2.4 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans. (a) The
Borrower may borrow under the Swing Line Commitment on any Business Day during the Revolving Credit
Commitment Period, provided that, the Borrower shall give the Swing Line Lender irrevocable
telephonic notice confirmed promptly in writing (which telephonic notice must be received by the
Swing Line Lender not later than 1:00 P.M. (New York City time) on the proposed Borrowing Date),
specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date. Each borrowing
under the Swing Line Commitment shall be in an amount



45









 




equal to $500,000 or a whole multiple of $100,000 in excess thereof. Not later than 3:00 P.M.
(New York City time) on the Borrowing Date specified in the borrowing notice in respect of any
Swing Line Loan, the Swing Line Lender shall make available to the Administrative Agent at the
Funding Office an amount in immediately available funds equal to the amount of such Swing Line
Loan. The Administrative Agent shall make the proceeds of such Swing Line Loan available to the
Borrower on such Borrowing Date in like funds as received by the Administrative Agent.




          (b) The Swing Line Lender, at any time and from time to time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender
to act on its behalf), on one Business Day’s notice given by the Swing Line Lender no later than
12:00 Noon (New York City time) request each Revolving Credit Lender to make, and each Revolving
Credit Lender hereby agrees to make, a Revolving Credit Loan (which shall initially be a Base Rate
Loan), in an amount equal to such Revolving Credit Lender’s Revolving Credit Percentage of the
aggregate amount of the Swing Line Loans (the “Refunded Swing Line Loans”) outstanding on
the date of such notice, to repay the Swing Line Lender. Each Revolving Credit Lender shall make
the amount of such Revolving Credit Loan available to the Administrative Agent at the Funding
Office in immediately available funds, not later than 10:00 A.M. (New York City time) one Business
Day after the date of such notice. The proceeds of such Revolving Credit Loans shall be made
immediately available by the Administrative Agent to the Swing Line Lender for application by the
Swing Line Lender to the repayment of the Refunded Swing Line Loans.



          (c) If prior to the time a Revolving Credit Loan would have otherwise been made pursuant to
Section 2.4(b), one of the events described in Section 8.1(f) shall have occurred and be continuing
with respect to the Borrower, or if for any other reason, as determined by the Swing Line Lender in
its sole discretion, Revolving Credit Loans may not be made as contemplated by Section 2.4(b), each
Revolving Credit Lender shall, on the date such Revolving Credit Loan was to have been made
pursuant to the notice referred to in Section 2.4(b) (the “Refunding Date”), purchase for
cash an undivided participating interest in the then outstanding Swing Line Loans by paying to the
Swing Line Lender an amount (the “Swing Line Participation Amount”) equal to (i) such
Revolving Credit Lender’s Revolving Credit Percentage times (ii) the sum of the aggregate principal
amount of Swing Line Loans then outstanding which were to have been repaid with such Revolving
Credit Loans.



          (d) Whenever, at any time after the Swing Line Lender has received from any Revolving Credit
Lender such Lender’s Swing Line Participation Amount, the Swing Line Lender receives any payment on
account of the Swing Line Loans, the Swing Line Lender will distribute to such Lender its Swing
Line Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s participating interest was outstanding and funded and, in
the case of principal and interest payments, to reflect such Lender’s pro rata portion of such
payment if such payment is not sufficient to pay the principal of and interest on all Swing Line
Loans then due); provided, however, that in the event that such payment received by
the Swing Line Lender is required to be returned, such Revolving Credit Lender will return to the
Swing Line Lender any portion thereof previously distributed to it by the Swing Line Lender.



46









 





          (e) Each Revolving Credit Lender’s obligation to make the Loans referred to in Section 2.4(b)
and to purchase participating interests pursuant to Section 2.4(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without limitation, (i) any
setoff, counterclaim, recoupment, defense or other right which such Revolving Credit Lender or the
Borrower may have against the Swing Line Lender, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the failure
to satisfy any of the other conditions specified in Section 5; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement or any other
Loan Document by the Borrower, any other Loan Party or any other Revolving Credit Lender; or
(v) any other circumstance, happening or event whatsoever, whether or not similar to any of the
foregoing.



          2.5 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of the appropriate Revolving Credit
Lender, (i) the then unpaid principal amount of each Revolving Credit Loan of such Revolving Credit
Lender on the Revolving Credit Termination Date (or on such earlier date on which the Loans become
due and payable pursuant to Section 8) and (ii) the then unpaid principal amount of each Swing Line
Loan of such Swing Line Lender on the Revolving Credit Termination Date (or on such earlier date on
which the Loans become due and payable pursuant to Section 8.1). The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to time outstanding
from the date hereof until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.12.



          (b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from
time to time, including the amounts of principal and interest payable and paid to such Lender from
time to time under this Agreement.



          (c) The Administrative Agent, on behalf of the Borrower, shall maintain the Register
pursuant to Section 10.6(d), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Loan made hereunder and any Note evidencing such Loan, the Type of such Loan
and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the
amount of any sum received by the Administrative Agent hereunder from the Borrower and each
Lender’s share thereof.



          (d) The entries made in the Register and the accounts of each Lender maintained pursuant
to Section 2.5(b) shall, to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded; provided,
however, that the failure of any Lender or the Administrative Agent to maintain the
Register or any such account, or any error therein, shall not in any manner affect the obligation
of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender
in accordance with the terms of this Agreement.



          (e) The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the
Borrower will promptly execute and deliver to such Lender a promissory note of the Borrower
evidencing any Revolving Credit Loans or Swing Line Loans, as the case may be,



47









 




of such Lender, substantially in the forms of Exhibit F-1 or F-2, respectively (a “Revolving
Credit Note” or “Swing Line Note”, respectively), with appropriate insertions as to
date and principal amount; provided, that delivery of Notes shall not be a condition
precedent to the occurrence of the Closing Date or the making of the Loans or issuance of Letters
of Credit on the Closing Date.




          2.6 Commitment Fees, etc. (a) The Borrower agrees to pay to the Administrative Agent for
the account of each Revolving Credit Lender a commitment fee for the period from and including the
Closing Date to the last day of the Revolving Credit Commitment Period, computed at the Commitment
Fee Rate on the average daily amount of the Available Revolving Credit Commitment of such Lender
during the period for which payment is made, payable quarterly in arrears on the last day of each
March, June, September and December and on the Revolving Credit Termination Date, commencing on the
first of such dates to occur after the date hereof.



          (b) The Borrower agrees to pay to the Syndication Agent the fees in the amounts and on the
dates previously agreed to in writing by the Borrower and the Syndication Agent.



          (c) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the
dates from time to time agreed to in writing by the Borrower and the Administrative Agent.



          2.7 Termination or Reduction of Revolving Credit Commitments. The Borrower shall have
the right, upon not less than three Business Days’ notice to the Administrative Agent, to terminate
the Revolving Credit Commitments or, from time to time, to reduce the aggregate amount of the
Revolving Credit Commitments; provided that no such termination or reduction of Revolving Credit
Commitments shall be permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective date thereof, the Total Revolving
Extensions of Credit would exceed the Maximum Facility Availability. Any such reduction shall be
in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the
Revolving Credit Commitments then in effect.



          2.8 Optional Prepayments. (a) The Borrower may at any time and from time to time
prepay the Loans, in whole or in part, without premium or penalty (except as otherwise provided
herein), upon irrevocable notice delivered to the Administrative Agent no later than 11:00 A.M.
(New York City time) three Business Days prior thereto in the case of Eurodollar Loans and no later
than 11:00 A.M. (New York City time) one Business Day prior thereto in the case of Base Rate Loans,
which notice shall specify the date and amount of such prepayment and whether such prepayment is of
Eurodollar Loans or Base Rate Loans; provided, that (i) if a Eurodollar Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any
amounts owing pursuant to Section 2.18 and (ii) no prior notice is required for the prepayment of
Swing Line Loans. Upon receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with (except in the case of
Revolving Credit Loans that are Base Rate Loans and Swing



48









 




Line Loans) accrued interest to such date on the amount prepaid. Partial prepayments of Revolving
Credit Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.
Partial prepayments of Swing Line Loans shall be in an aggregate principal amount of $100,000 or a
whole multiple thereof.




          2.9 Mandatory Prepayments. If at any date the Total Revolving Extensions of Credit exceed
the Maximum Facility Availability calculated as of such date, the Borrower shall prepay the Loans
and the outstanding Letters of Credit shall be Cash Collateralized within three Business Days of
such date in an aggregate amount equal to or greater than such excess so that the Total Revolving
Extensions of Credit no longer exceed the Maximum Facility Availability as of such date. Amounts
to be applied in connection with prepayments made pursuant to this Section shall be applied,
first, to the prepayment of the Loans (without a corresponding reduction of the Revolving
Credit Commitments) and, second, to Cash Collateralize the outstanding Letters of Credit.



          2.10 Conversion and Continuation Options. (a) The Borrower may elect from time to time to
convert Eurodollar Loans to Base Rate Loans by giving the Administrative Agent at least two
Business Days’ prior irrevocable notice of such election, provided that any such conversion of
Eurodollar Loans may be made only on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving the
Administrative Agent at least three Business Days’ prior irrevocable notice of such election (which
notice shall specify the length of the initial Interest Period
therefor), provided that no
Base Rate Loan may be converted into a Eurodollar Loan (i) when any Event of Default has occurred
and is continuing and the Administrative Agent has, or the Required Lenders have, determined in its
or their sole discretion not to permit such conversions or (ii) after the date that is one month
prior to the final scheduled termination or maturity date of the Loan. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender thereof.



          (b) The Borrower may elect to continue any Eurodollar Loan as such upon the expiration of
the then current Interest Period with respect thereto by giving irrevocable notice to the
Administrative Agent, in accordance with the applicable provisions of the term “Interest
Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to
such Loan, provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent has, or the Required Lenders
have, determined in its or their sole discretion not to permit such continuations or (ii) after the
date that is one month prior to the Revolving Credit Termination Date, and provided,
further, that if the Borrower shall fail to give any required notice as described above in
this paragraph or if such continuation is not permitted pursuant to the preceding proviso, such
Loans shall be converted automatically to Base Rate Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof.



          2.11 Minimum Amounts and Maximum Number of Eurodollar Tranches. Notwithstanding
anything to the contrary in this Agreement, all borrowings, conversions, continuations and optional
prepayments of Eurodollar Loans and all selections of Interest Periods shall be in such amounts and
be made pursuant to such elections so that, (a) after giving effect



49









 




thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche
shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more
than five Eurodollar Tranches shall be outstanding at any one time.




          2.12 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for
each day during each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin in effect for such day.



          (b) Each Base Rate Loan shall bear interest for each day on which it is outstanding at a rate
per annum equal to the Base Rate in effect for such day plus the Applicable Margin in
effect for such day.



          (c) (i) At any time an Event of Default has occurred and is continuing, all outstanding
Loans and Reimbursement Obligations (whether or not overdue) (to the extent legally permitted)
shall bear interest at a rate per annum that is equal to (x) in the case of the Loans, the rate
that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section
plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to Base Rate
Loans plus 2% and (ii) if all or a portion of any interest payable on any Loan or
Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid
when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest at a rate per annum equal to the rate then applicable to Base Rate Loans plus
2%, in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment
until such amount is paid in full (after as well as before judgment).



          (d) Interest shall be payable in arrears on each Interest Payment Date, provided
that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time
on demand.



          2.13 Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin.
(a) Interest, fees and commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate Loans on which
interest is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of
each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from
a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective. The Administrative Agent
shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and
the amount of each such change in interest rate.



          (b) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the
absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver
to the Borrower a statement showing the quotations used by the Administrative Agent in determining
any interest rate pursuant to Section 2.12(a).



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          (c) If, as a result of any restatement of or other adjustment to the financial statements of
the REIT or for any other reason, the REIT, the Borrower, the Administrative Agent or the Lenders
determine that (i) the Consolidated Leverage Ratio as calculated by the REIT and the Borrower as of
any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio
would have resulted in a higher Applicable Margin for such period, the Borrower shall immediately
and retroactively be obligated to pay to the Administrative Agent for the account of the applicable
Lenders or Issuing Lender, as the case may be, promptly on demand by the Administrative Agent (or,
after the occurrence of an Event of Default specified in clause (i) or (ii) of 8.1(f) with respect
to the Borrower, automatically and without further action by the Administrative Agent, any Lender
or Issuing Lender) an amount equal to the excess of the amount of interest and fees that should
have been paid for such period over the amount of interest and fees actually paid for such period.
This paragraph shall not limit the rights of the Administrative Agent, any Lender or Issuing
Lender, as the case may be, under Section 2.12(c), 3.3(a) or 3.4(b) or under Section 8.1.



          2.14 Inability to Determine Interest Rate. If prior to the first day of any Interest
Period:




     (a) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period, or




     (b) the Administrative Agent shall have received notice from the Required Lenders that
the Eurodollar Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such Interest Period,


the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the
relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar
Loans requested to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar Loans
shall be converted, on the last day of the then current Interest Period with respect thereto, to
Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to
convert Loans to Eurodollar Loans.




          2.15 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the
Lenders hereunder, each payment by the Borrower on account of any commitment fee or Letter of
Credit fee, and any reduction of the Revolving Credit Commitments of the Lenders, shall be made pro
rata according to the Revolving Credit Percentages of the Lenders. Each payment of interest in
respect of the Loans and each payment in respect of fees payable hereunder shall be applied to the
amounts of such obligations owing to the Lenders pro rata according to the respective amounts then
due and owing to the Lenders.



51









 





          (b) Each payment (including each prepayment) by the Borrower on account of principal of
the Revolving Credit Loans shall be made pro rata according to the respective outstanding principal
amounts of the Revolving Credit Loans then held by the Revolving Credit Lenders. Each payment in
respect of Reimbursement Obligations in respect of any Letter of Credit shall be made to the
Issuing Lender that issued such Letter of Credit.



          (c) The application of any payment of Loans (including optional and mandatory prepayments)
shall be made, first, to Base Rate Loans and, second, to Eurodollar Loans. Each
payment of the Loans (except in the case of Swing Line Loans and Revolving Credit Loans that are
Base Rate Loans) shall be accompanied by accrued interest to the date of such payment on the amount
paid.



          (d) All payments (including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and
shall be made prior to 2:00 pm, New York City time, on the due date thereof to the Administrative
Agent, for the account of the relevant Lenders, at the Payment Office, in Dollars and in
immediately available funds. Any payment made by the Borrower after 2:00 pm, New York City time,
on any Business Day shall be deemed to have been on the next following Business Day. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next succeeding Business Day. If
any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day. In the case of any extension of any
payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at
the then applicable rate during such extension.



          (e) Unless the Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its share of such
borrowing available to the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If
such amount is not made available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation, for the period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest
error. If such Lender’s share of such borrowing is not made available to the Administrative Agent
by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall
also be entitled to recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans, on demand, from the Borrower.



52









 





          (f) Unless the Administrative Agent shall have been notified in writing by the Borrower
prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will
not make such payment to the Administrative Agent, the Administrative Agent may assume that the
Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Administrative Agent by the Borrower
within three Business Days after such due date, the Administrative Agent shall be entitled to
recover, on demand, from each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the
Administrative Agent or any Lender against the Borrower.



          (g) Upon receipt by the Administrative Agent of payments on behalf of Lenders, the
Administrative Agent shall promptly distribute such payments to the Lender or Lenders entitled
thereto, in like funds as received by the Administrative Agent. Notwithstanding the foregoing, if
the Administrative Agent receives any payment (whether voluntarily or involuntarily, pursuant to
events or proceedings of the nature referred to in 8.1(f), or otherwise) (the amount of such
payment, the “Lender Payment Amount”) for the account of any Lender (whether in such
Lender’s capacity as a Revolving Credit Lender or L/C Participant), and at the time of such receipt
such Lender, in its capacity as L/C Participant, is in default in any of its obligations pursuant
to Section 3.4(a) (the amount of such obligations in default, the “Defaulted Amount”), the
Administrative Agent may withhold from the Lender Payment Amount an amount up to the Defaulted
Amount, and apply the amount so withheld toward payment to the relevant Issuing Lender of the
Defaulted Amount or, if applicable, toward reimbursement of any other Person that has previously
reimbursed such Issuing Lender for the Defaulted Amount.



          2.16 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law
or in the interpretation or application thereof or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:




     (i) shall subject any Lender to any tax of any kind whatsoever with respect to this
Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes or Other Taxes covered by Section 2.17 and changes in the rate of tax on
the overall net income of such Lender);




     (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or




     (iii) shall impose on such Lender any other condition;



53









 




and the result of any of the foregoing is to increase the cost to such Lender, by an amount which
such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar
Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled.




          (b) If any Lender shall have determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any Governmental Authority
made subsequent to the date hereof shall have the effect of reducing the rate of return on such
Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in
respect of any Letter of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into consideration such Lender’s
or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, after submission by such Lender to the Borrower (with a
copy to the Administrative Agent) of a written request therefor, the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such corporation for
such reduction.



          (c) A certificate as to any additional amounts payable pursuant to this Section submitted
by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the
absence of manifest error. The obligations of the Borrower pursuant to this Section shall survive
the termination of this Agreement and the payment of the Loans and all other amounts payable
hereunder.



          2.17 Taxes. (a) All payments made by the Borrower under this Agreement shall be made free
and clear of, and without deduction or withholding for or on account of, 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,
excluding (i) net income taxes (however denominated), branch profit taxes, and franchise taxes
(imposed in lieu of net income taxes) imposed on any Agent or any Lender as a result of a present
or former connection between such Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from such Agent’s or such Lender’s having executed,
delivered or performed its obligations or received a payment under, or enforced, this Agreement or
any other Loan Document); (ii) taxes that are attributable to such Lender’s failure to comply with
the requirements of paragraph (d) or (e) of this Section; (iii) taxes that are United States
withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party
to this Agreement, except to the extent that such Lender’s assignor (if any) was entitled, at the
time of assignment, to receive additional amounts from the Borrower with respect to such deduction
or withholding pursuant to this paragraph (a); or (iv) with respect to any Loan not outstanding
before March 18, 2012, any U.S. federal withholding tax imposed on any “withholdable payment” (as
defined in section 1473 of



54









 




the Code) as a result of an Agent’s or Lender’s failure to satisfy the applicable requirements as
set forth in section 1472 of the Code or that is imposed under section 1471 of the Code, as
applicable (or regulation or administrative guidance promulgated thereunder). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings
(“Non-Excluded Taxes”) or any Other Taxes are required to be withheld from any amounts
payable to any Agent or any Lender hereunder, the amounts so payable to such Agent or such Lender
shall be increased to the extent necessary to yield to such Agent or such Lender (after payment of
all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement.




          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.



          (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as
possible thereafter the Borrower shall send to the Administrative Agent for the account of the
relevant Agent or Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to the Administrative Agent. If the
Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agents and the Lenders for any incremental
taxes, interest or penalties that may become payable by any Agent or any Lender as a result of any
such failure, except to the extent that any such amounts are compensated for by an increased
payment under Section 2.17(a). The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable hereunder.



          (d) Any Lender (or Transferee) that is a “United States person” within the meaning of
Section 7701(a)(30) of the Code shall deliver to the Borrower and the Administrative Agent Internal
Revenue Service Form W-9. Each Lender (or Transferee) that in not a “U.S. Person” as defined in
Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant that would be Non-U.S. Lender if it were a
Lender (each, a “Non-U.S. Participant”), to the Lender from which the related participation
shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form
W-8ECI, Form W-81MY (together with all required supporting documentation), or, in the case of a
Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c)
of the Code with respect to payments of “portfolio interest” a statement substantially in the form
of Exhibit G and a Form W-8BEN, or any subsequent versions thereof or successors thereto properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date
it becomes a party to this Agreement (or, in the case of any Non-U.S. Participant, on or before the
date such Non-U.S. Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower (or, in
the case of a Non-U.S. Participant, the Lender from which the related



55









 




participation shall have been purchased) at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other
provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non-U.S. Lender is not legally able to deliver.




          (e) Each Lender shall deliver documentation and information to the Borrower and the
Administrative Agent, at the times and in form required by applicable law or reasonably requested
by the Borrower or the Administrative Agent, sufficient to permit the Borrower or the
Administrative Agent to determine whether or not payments made with respect to this Agreement or
any Loan Documents are subject to taxes, and, if applicable, the required rate of withholding or
deduction. However, a Lender shall not be required to deliver any documentation or information
pursuant to this paragraph that such Lender is not legally able to deliver. A Lender that is
entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by
the Borrower, such properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate, provided
that such Lender is legally entitled to complete, execute and deliver such documentation and in
such Lender’s reasonable judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.



          (f) Nothing in this Section 2.17 shall require the Lender to make available any of its tax
returns or any other information that it deems to be confidential or proprietary.



          2.18 Indemnity. The Borrower agrees to indemnify each Lender for, and to hold each
Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of
(a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance with the provisions
of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has
given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a
prepayment or conversion of Eurodollar Loans on a day that is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal to the excess, if
any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such prepayment or of such
failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans provided for herein
(excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of
interest (as reasonably determined by such Lender) that would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading banks in the
interbank Eurodollar market. A certificate as to any amounts payable pursuant to this Section
submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.



56









 





          2.19 Illegality. Notwithstanding any other provision herein, if the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof shall make it unlawful
for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b) such Lender’s Loans
then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to such Loans or
within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs
on a day which is not the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to
Section 2.18.



          2.20 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.16, 2.17(a) or 2.19 with respect to such Lender, it will,
if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no
economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.16, 2.17(a) or 2.19.



          2.21 Replacement of Lenders under Certain Circumstances. (a) The Borrower shall be
permitted to replace any Lender that (i) requests reimbursement for amounts owing pursuant to
Section 2.16 or 2.17 or gives a notice of illegality pursuant to Section 2.19, (ii) is a Defaulting
Lender or (iii) is a Non-Consenting Lender with a replacement financial institution;
provided that (A) such replacement does not conflict with any Requirement of Law, (B) no
Event of Default shall have occurred and be continuing at the time of such replacement, (C) prior
to any such replacement, such Lender shall have taken no action under Section 2.20 so as to
eliminate the continued need for payment of amounts owing pursuant to Section 2.16 or 2.17 or to
eliminate the illegality referred to in such notice of illegality given pursuant to Section 2.19,
(D) the replacement financial institution shall purchase, at par, all Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement, (E) the Borrower shall be liable to
such replaced Lender under Section 2.18 (as though Section 2.18 were applicable) if any Eurodollar
Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest
Period relating thereto, (F) the replacement financial institution, if not already a Lender, shall
be reasonably satisfactory to the Administrative Agent, (G) the replaced Lender shall be obligated
to make such replacement in accordance with the provisions of Section 10.6 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred to therein),
(H) the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.16 or
2.17, as the case may be, in respect of any period prior to the date on which such replacement
shall be consummated, and (I) any such replacement shall not be deemed to be a waiver of any rights
that the Borrower, the Administrative Agent or any other Lender shall have against the replaced
Lender.



          (b) In the event that (i) the Borrower or the Administrative Agent has requested that the
Lenders consent to a departure or waiver of any provisions of the Loan



57









 




Documents or agree to any amendment thereto, (ii) the consent, waiver or amendment requires
the agreement of the Supermajority Lenders, all Lenders or all affected Lenders in accordance with
the terms of Section 10.1 and (iii) the Required Lenders have agreed to such consent, waiver or
amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed
a “Non-Consenting Lender”.




          2.22 Increases in Revolving Credit Commitments. (a) At any time after the Closing Date
and prior to the date that is twelve months prior to the Revolving Credit Termination Date, so long
as no Default or Event of Default has occurred and is continuing, the Borrower may, by notice to
the Administrative Agent (a “Revolving Commitment Increase Notice”), which notice shall
promptly be copied by the Administrative Agent to each Lender, request an increase in the Total
Revolving Credit Commitments in an aggregate principal amount up to $25,000,000 (the “Revolving
Offered Increase Amount”); provided that, (x) each such Revolving Offered Increase
Amount shall be in a minimum amount of not less than $10,000,000 and (y) at no time shall the Total
Revolving Credit Commitments exceed $110,000,000. The Borrower shall (i) first, offer each
of the Revolving Credit Lenders the opportunity to provide a pro rata portion of any Revolving
Offered Increase Amount pursuant to Section 2.22(c) below, (ii) second, offer each of the
Revolving Credit Leaders the opportunity to provide all or a portion of any Revolving Offered
Increase Amount not otherwise accepted by the other Revolving Credit Lenders (pursuant to (i)
above) pursuant to Section 2.22(c) below and (iii) third, with the consent of the Swing
Line Lender and the Administrative Agent (which consent shall not be unreasonably withheld), offer
one or more additional banks, financial institutions or other entities the opportunity to provide
all or a portion of such Revolving Offered Increase Amount not accepted by the Revolving Credit
Lenders pursuant to Section 2.22(b) below. Each Revolving Commitment Increase Notice shall specify
which banks, financial institutions or other entities the Borrower desires to provide such
Revolving Offered Increase Amount not accepted by the Revolving Credit Lenders. The Borrower or,
if requested by the Borrower, the Administrative Agent, will notify the Revolving Credit Lenders,
and, if the Revolving Credit Lenders do not accept the entire Revolving Offered Increase Amount,
such banks, financial institutions or other entities.



          (b) Any additional bank, financial institution or other entity that the Borrower selects
to offer participation in any increased Total Revolving Credit Commitments and that elects to
become a party to this Agreement and provide a Revolving Credit Commitment in an amount so offered
and accepted by it pursuant to Section 2.22(a) shall execute a New Lender Supplement substantially
in the form of Exhibit I, with the Borrower, the Swing Line Lender and the Administrative Agent,
whereupon such bank, financial institution or other entity (herein called a “New Revolving
Credit Lender”) shall become a Revolving Credit Lender for all purposes and to the same extent
as if originally a party hereto and shall be bound by and entitled to the benefits of this
Agreement, provided that, the Revolving Credit Commitment of any such New Revolving Credit
Lender shall be in an amount not less than $5,000,000.



          (c) Any Revolving Credit Lender that accepts an offer to it by the Borrower to increase its
Revolving Credit Commitment pursuant to Section 2.22(a) shall, in each case, execute a Commitment
Increase Supplement substantially in the form of Exhibit J (each, a “Commitment Increase
Supplement”), with the Borrower, the Swing Line Lender and the Administrative Agent, whereupon
such Revolving Credit Lender shall be bound by and entitled



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to the benefits of this Agreement with respect to the full amount of its Revolving
Credit Commitment as so increased.



          (d) On any Revolving Credit Increase Effective Date, (i) each bank, financial institution or
other entity that is a New Revolving Credit Lender pursuant Section 2.22(b) or any Revolving Credit
Lender that has increased its Revolving Credit Commitment pursuant to Section 2.22(c) shall make
available to the Administrative Agent such amounts in immediately available funds as the
Administrative Agent shall determine, for the benefit of the other relevant Revolving Credit
Lenders, as being required in order to cause, after giving effect to such increase and the use of
such amounts to make payments to such other relevant Revolving Credit Lenders, each Revolving
Credit Lender’s portion of the outstanding Revolving Credit Loans of all the Lenders to equal its
Revolving Credit Percentage of such Revolving Credit Loans and (ii) the Borrower shall be deemed to
have repaid and reborrowed all outstanding Revolving Credit Loans of all the Revolving Credit
Lenders to equal its Revolving Credit Percentage of such outstanding Revolving Credit Loans as of
the date of any increase in the Revolving Credit Commitments (with such reborrowing to consist of
the Types of Loans, with related Interest Periods if applicable, specified in a notice delivered by
the Borrower in accordance with the requirements of Section 2.2). The deemed payments made
pursuant to clause (ii) of the immediately preceding sentence in respect of each Eurodollar Loan
shall be subject to indemnification by the Borrower pursuant to the provisions of Section 2.18 if
the deemed payment occurs other than on the last day of the related Interest Periods.



          (e) Notwithstanding anything to the contrary in this Section 2.22, (i) in no event may the
Borrower deliver more than three Revolving Commitment Increase Notices, (ii) in no event shall
there be more than three Revolving Credit Increase Effective Dates and (iii) no Lender shall have
any obligation to increase its Revolving Credit Commitment unless it agrees to do so in its sole
discretion.



          (f) The increase in the Revolving Credit Commitments provided pursuant to this Section 2.22
shall be effective on the date (the “Revolving Credit Increase Effective Date”) the
Administrative Agent receives satisfactory legal opinions, board resolutions and other closing
documents (including, without limitation, all documentation referred to in Section 5.1(q) necessary
to provide additional coverage in an amount equal to the related Revolving Offered Increase Amount)
deemed necessary by the Administrative Agent in connection with such increase; provided
that, immediately prior to and after giving effect to such increase, (i) no Default or Event of
Default shall have occurred and be continuing, (ii) each of the REIT and the Borrower is in pro
forma compliance with Section 7.1, such determination of pro forma compliance to be based on the
then outstanding principal amount of Loans and (iii) each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such date, provided that,
(x) to the extent that any such representation or warranty relates to a specific earlier date, they
shall be true and correct as of such earlier date and (y) any representation and warranty that is
qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and
correct in all respects on such respective dates. For the avoidance of doubt, no increase in the
Revolving Credit Commitments pursuant to this Section 2.22 shall require, as a condition to its
effectiveness, the signature of, or any consent or



59









 




approval from, any Lender that is not obligated to increase its Revolving Credit Commitments
pursuant to a Commitment Increase Supplement.




          2.23 Defaulting Lender. Notwithstanding any provision of this Agreement to the contrary,
if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as
such Lender is a Defaulting Lender:




     (a) fees shall cease to accrue on the unfunded portion of the Revolving Credit
Commitment of such Defaulting Lender pursuant to Sections 2.6 and 3.3;




     (b) the aggregate Revolving Credit Commitments (or, after the termination of the
Revolving Credit Commitment, the Revolving Credit Loans) of such Defaulting Lender shall not
be included in determining whether all Lenders, Required Lenders, Supermajority Lenders or
affected Lenders have taken or may take any action hereunder (including any consent to any
amendment or waiver pursuant to Section 10.1); provided that, (i) any waiver,
amendment or modification requiring the consent of all Lenders or each affected Lender which
affects such Defaulting Lender differently than other affected Lenders shall require the
consent of such Defaulting Lender, (ii) the principal amount of, or rate of interest on, any
Revolving Credit Loan made by such Defaulting Lender may not be reduced without the consent
of such Defaulting Lender, (iii) the payment dates of any Revolving Credit Loans made by
such Defaulting Lender may not be changed without the consent of such Defaulting Lender, and
(iv) the Revolving Credit Commitment of such Defaulting Lender may not be increased or
extended without the consent of such Defaulting Lender.




     (c) if any Refunded Swing Line Loan, Swing Line Participation Amount, Payment Amount or
Participation Amount shall be due and owing at the time a Lender becomes a Defaulting Lender
then:




     (i) all or any part of such Refunded Swing Line Loan, Swing Line
Participation Amount, Payment Amount or Participation Amount shall be reallocated
among the non-Defaulting Lenders in accordance with their respective Revolving
Credit Percentages but only to the extent that such reallocation does not cause the
aggregate Revolving Extensions of Credit of any non-Defaulting Lender to exceed such
non-Defaulting Lender’s Revolving Credit Commitment; and




     (ii) if the reallocation described in Section 2.23(c)(i) cannot, or can
only partially, be effected, the Borrower shall within one Business Day following
notice by the Administrative Agent (x) first, prepay such Swing Line
Exposure and (y) second, Cash Collateralize such Defaulting Lender’s
Refunded Swing Line Loan, Swing Line Participation Amount, Payment Amount or
Participation Amount (after giving effect to any partial reallocation pursuant to
clause (i) above) on terms and conditions satisfactory to the Administrative Agent
for so long as such Refunded Swing Line Loan, Swing Line Participation Amount,
Payment Amount or Participation Amount are outstanding;



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     (iii) if the Borrower Cash Collateralizes any portion of such Defaulting
Lender’s Participation Amount pursuant to Section 2.23(c)(ii), the Borrower shall
not be required to pay any fees to such Defaulting Lender pursuant to Section 3.3
with respect to such Defaulting Lender’s Participation Amount during the period such
Defaulting Lender’s Participation Amount is Cash Collateralized;




     (iv) if the Refunded Swing Line Loan, Swing Line Participation Amount, Payment
Amount or Participation Amount of the non-Defaulting Lenders is reallocated pursuant
to Section 2.23(c)(i), then the fees payable to the Lenders pursuant to Section 2.6
and Section 3.3 shall be adjusted in accordance with such non-Defaulting Lenders’
Revolving Credit Percentages; and




     (v) if any Defaulting Lender’s Payment Amount or Participation Amount is
neither cash collateralized nor reallocated pursuant to Section 2.23(c)(i) or (ii),
then, without prejudice to any rights or remedies of the Issuing Lender or any
Lender hereunder, all facility fees that otherwise would have been payable to such
Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s
L/C Commitment that was utilized by such Participation Amount, as applicable) and
Letter of Credit fees payable under Section 3.3 with respect to such Defaulting
Lender’s Payment Amount and Participation Amount shall be payable to the Issuing
Lender until such Payment Amount or Participation Amount is cash collateralized and
reallocated;




     (d) so long as any Lender is a Defaulting Lender, the Swing Line Lender shall not
be required to fund any Swing Line Loan and the Issuing Lender shall not be required to
issue, amend or increase any Letter of Credit, unless it is satisfied that the related
exposure will be 100% covered by the Revolving Credit Commitments of the non-Defaulting
Lenders or cash collateral will be provided by the Borrower in accordance with
Section 2.23(c), and participating interests in any such newly issued or increased Letter of
Credit or newly made Swing Line Loan shall be allocated among non-Defaulting Lenders in a
manner consistent with Section 2.23(c)(i) (and Defaulting Lenders shall not participate
therein); and




     (e) Any payment of principal, interest, fees or other amounts received by the
Administrative Agent for the account of such Defaulting Lender shall be applied at such time
or times as may be determined by the Administrative Agent as follows: (i) first, to
the payment of any amounts owing by such Defaulting Lender to the Administrative Agent
hereunder, (ii) second, to the payment on a pro rata basis of any amounts owing by
such Defaulting Lender to any Issuing Lender or Swing Line Lender, (iii) third, if
so determined by the Administrative Agent or requested by an Issuing Lender or Swing Line
Lender, held in such account as cash collateral for future funding obligations of the
Defaulting Lender in respect of any existing or future participating interest in any Swing
Line Loan or Letter of Credit, (iv) fourth, as the Borrower may request and so long
as no Default exists, to the funding of any Loan in respect of which that Defaulting Lender
has failed to fund its portion as required by this Agreement, as determined by the
Administrative Agent, (v) fifth, if so determined by the Administrative Agent and
the Borrower, to be held in a non-interest bearing deposit account and released in order to



61









 






satisfy obligations of such Defaulting Lender to fund future Loans under this Agreement,
(vi) sixth, to the payment of any amounts owing to the Lenders or the Issuing Lender
or Swing Line Lender as a result of any judgment of a court of competent jurisdiction
obtained by any Lender or such Issuing Lender or Swing Line Lender against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under this
Agreement, (vii) seventh, so long as no Default exists, to the payment of any
amounts owing to the Borrower as a result of any judgment of a court of competent
jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such
Defaulting Lender’s breach of its obligations under this Agreement, and
(viii) eighth, to such Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that, with respect to clause (viii), if such
payment is (x) a prepayment of the principal amount of any Loans which a Defaulting Lender
has funded its participation obligations and (y) made at a time when the conditions set
forth in Section 2.9 are satisfied, such payment shall be applied solely to prepay the Loans
of, and reimbursement obligations owed to, all non-Defaulting Lenders pro rata prior to
being applied to the prepayment of any Loans, or Reimbursement Obligations owed to, any
Defaulting Lender.



SECTION 3. LETTERS OF CREDIT




          3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, each Issuing Lender,
in reliance on the agreements of the other Revolving Credit Lenders set forth in Section 3.4(a),
agrees to issue letters of credit (the “Letters of Credit”) for the account of the Borrower
on any Business Day during the Revolving Credit Commitment Period in such form as may be approved
from time to time by such Issuing Lender; provided, that no Issuing Lender shall have any
obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or (ii) the Total Revolving Extensions of Credit would
exceed the Maximum Facility Availability at such time. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of
its date of issuance and (y) the date which is five Business Days prior to the Revolving Credit
Termination Date; provided that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).



          (b) No Issuing Lender shall at any time be obligated to issue any Letter of Credit
hereunder if such issuance would conflict with, or cause such Issuing Lender or any L/C Participant
to exceed any limits imposed by, any applicable Requirement of Law.



          3.2 Procedure for Issuance of Letter of Credit. The Borrower may from time to time
request that an Issuing Lender issue a Letter of Credit by delivering to such Issuing Lender at its
address for notices specified herein an Application therefor, completed to the satisfaction of such
Issuing Lender, and such other certificates, documents and other papers and information as such
Issuing Lender may request. Concurrently with the delivery of an Application to an Issuing Lender,
the Borrower shall deliver a copy thereof to the Administrative Agent. Upon receipt of any
Application, an Issuing Lender will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of



62









 




Credit requested thereby by issuing the original of such Letter of Credit to the beneficiary
thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower (but in no event
shall any Issuing Lender be required to issue any Letter of Credit earlier than three Business Days
after its receipt of the Application therefor and all such other certificates, documents and other
papers and information relating thereto). Promptly after issuance by an Issuing Lender of a Letter
of Credit, such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower. Each
Issuing Lender shall promptly give notice to the Administrative Agent of the issuance of each
Letter of Credit issued by such Issuing Lender (including the face amount thereof), and shall
provide a copy of such Letter of Credit to the Administrative Agent as soon as possible after the
date of issuance.




          3.3 Fees and Other Charges. (a) The Borrower will pay a fee on the aggregate drawable
amount of all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then
in effect with respect to Eurodollar Loans, shared ratably among the Revolving Credit Lenders in
accordance with their respective Revolving Credit Percentages and payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date. In addition, the Borrower shall pay to the
relevant Issuing Lender for its own account a fronting fee on the aggregate drawable amount of all
outstanding Letters of Credit issued by it of 1/4 of 1% per annum, payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date.



          (b) In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender
for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender
in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of
Credit.



          3.4 L/C Participations. (a) Each Issuing Lender irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce each Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts
and purchases from each Issuing Lender, on the terms and conditions hereinafter stated, for such
L/C Participant’s own account and risk, an undivided interest equal to such L/C Participant’s
Revolving Credit Percentage in each Issuing Lender’s obligations and rights under each Letter of
Credit issued by such Issuing Lender hereunder and the amount of each draft paid by such Issuing
Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with each Issuing
Lender that, if a draft is paid under any Letter of Credit issued by such Issuing Lender for which
such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Administrative Agent for the account of such
Issuing Lender upon demand at such Issuing Lender’s address for notices specified herein (and
thereafter the Administrative Agent shall promptly pay to such Issuing Lender) an amount equal to
such L/C Participant’s Revolving Credit Percentage of the amount of such draft, or any part
thereof, that is not so reimbursed. Each L/C Participant’s obligation to pay such amount shall be
absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff,
counterclaim, recoupment, defense or other right that such L/C Participant may have against any
Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5, (iii) any adverse change in the condition (financial or
otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the
Borrower, any other Loan Party or any other L/C Participant or



63









 




(v) any other circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.




          (b) If any amount (a “Participation Amount”) required to be paid by any L/C
Participant to an Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by such Issuing Lender under any Letter of Credit is paid to such Issuing
Lender within three Business Days after the date such payment is due, such Issuing Lender shall so
notify the Administrative Agent, which shall promptly notify the L/C Participants, and each L/C
Participant shall pay to the Administrative Agent, for the account of such Issuing Lender, on
demand (and thereafter the Administrative Agent shall promptly pay to such Issuing Lender) an
amount equal to the product of (i) such Participation Amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment is required to the
date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction
the numerator of which is the number of days that elapse during such period and the denominator of
which is 360. If any Participation Amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to the Administrative Agent for the account of the relevant
Issuing Lender by such L/C Participant within three Business Days after the date such payment is
due, the Administrative Agent on behalf of such Issuing Lender shall be entitled to recover from
such L/C Participant, on demand, such Participation Amount with interest thereon calculated from
such due date at the rate per annum applicable to Base Rate Loans. A certificate of the
Administrative Agent submitted on behalf of an Issuing Lender to any L/C Participant with respect
to any amounts owing under this Section shall be conclusive in the absence of manifest error.



          (c) Whenever, at any time after an Issuing Lender has made payment under any Letter of
Credit and has received from the Administrative Agent any L/C Participant’s pro rata share of such
payment in accordance with Section 3.4(a), such Issuing Lender receives any payment related to such
Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by such Issuing Lender), or any payment of interest on account thereof, such
Issuing Lender will distribute to the Administrative Agent for the account of such L/C Participant
(and thereafter the Administrative Agent will promptly distribute to such L/C Participant) its pro
rata share thereof; provided, however, that in the event that any such payment
received by such Issuing Lender shall be required to be returned by such Issuing Lender, such L/C
Participant shall return to the Administrative Agent for the account of such Issuing Lender (and
thereafter the Administrative Agent shall promptly return to such Issuing Lender) the portion
thereof previously distributed by such Issuing Lender.



          3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to reimburse each
Issuing Lender, on each date on which such Issuing Lender notifies the Borrower of the date and
amount of a draft presented under any Letter of Credit and paid by such Issuing Lender, for the
amount of (a) such draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment (the amounts described in the
foregoing clauses (a) and (b) in respect of any drawing, collectively, the “Payment
Amount”). Each such payment shall be made to such Issuing Lender at its address for notices
specified herein in lawful money of the United States of America and in immediately available
funds. Interest shall be payable on each Payment Amount from the date of the applicable drawing
until payment in full at the rate set forth in (i) until the second Business Day



64









 




following the date of the applicable drawing, Section 2.12(b) and (ii) thereafter, Section 2.12(c).
Each drawing under any Letter of Credit shall (unless an event of the type described in clause (i)
or (ii) of Section 8.1(f) shall have occurred and be continuing with respect to the Borrower, in
which case the procedures specified in Section 3.4 for funding by L/C Participants shall apply)
constitute a request by the Borrower to the Administrative Agent for a borrowing pursuant to
Section 2.2 of Base Rate Loans (or, at the option of the Administrative Agent and the Swing Line
Lender in their sole discretion, a borrowing pursuant to Section 2.4 of Swing Line Loans) in the
amount of such drawing. The Borrowing Date with respect to such borrowing shall be the first date
on which a borrowing of Revolving Credit Loans (or, if applicable, Swing Line Loans) could be made,
pursuant to Section 2.2 (or, if applicable, Section 2.4), if the Administrative Agent had received
a notice of such borrowing at the time the Administrative Agent receives notice from the relevant
Issuing Lender of such drawing under such Letter of Credit.




          3.6 Obligations Absolute. The Borrower’s obligations under this Section 3 shall be
absolute and unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment that the Borrower may have or have had against any Issuing
Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with
each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower’s
Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though such documents
shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the
Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee. No Issuing Lender shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of Credit, except for errors or omissions found
by a final and nonappealable decision of a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of such Issuing Lender. The Borrower agrees that any
action taken or omitted by an Issuing Lender under or in connection with any Letter of Credit
issued by it or the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not result in any
liability of such Issuing Lender to the Borrower.



          3.7 Letter of Credit Payments. If any draft shall be presented for payment under any
Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower and the
Administrative Agent of the date and amount thereof. The responsibility of the relevant Issuing
Lender to the Borrower in connection with any draft presented for payment under any Letter of
Credit, in addition to any payment obligation expressly provided for in such Letter of Credit
issued by such Issuing Lender, shall be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment appear on their
face to be in conformity with such Letter of Credit.



          3.8 Applications. To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this
Section 3 shall apply.



65









 





SECTION 4. REPRESENTATIONS AND WARRANTIES




          To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and
issue or participate in the Letters of Credit, the REIT and the Borrower hereby jointly and
severally represent and warrant to each Agent and each Lender that:



          4.1 Financial Condition. (a) The unaudited pro forma consolidated balance sheet of
the REIT and its consolidated Subsidiaries as at June 30, 2010 (including the notes thereto) (the
“Pro Forma Balance Sheet”), copies of which have heretofore been furnished to each Lender,
has been prepared giving effect (as if such events had occurred on such date) to (i) the Loans to
be made on the Closing Date and the use of proceeds thereof and (ii) the payment of fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet has been prepared based on
the best information available to the Borrower as of the date of delivery thereof, and presents
fairly on a pro forma basis the estimated financial position of the Borrower and its consolidated
Subsidiaries as at June 30, 2010, assuming that the events specified in the preceding sentence had
actually occurred at such date.



          (b) The audited consolidated balance sheets of Chatham Predecessor as at December 31,
2007, December 31, 2008 and December 31, 2009, and the related consolidated statements of income
and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from PricewaterhouseCoopers, copies of which have heretofore been furnished to
each Lender, present fairly the consolidated financial condition of Chatham Predecessor as at such
date, and the consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited consolidated balance sheet of Chatham
Predecessor as at June 30, 2010, and the related unaudited consolidated statements of income and
cash flows for the six-month period ended on such date, copies of which have heretofore been
furnished to each Lender, present fairly the consolidated financial condition of Chatham
Predecessor as at such date, and the consolidated results of its operations and its consolidated
cash flows for the six-month period then ended (subject to normal year-end audit adjustments). The
unaudited operating statements for each Borrowing Base Property for the fiscal years ended
December 31, 2007, December 31, 2008 and December 31, 2009, copies of which have heretofore been
furnished to each Lender, present fairly the operating cash flow of each Borrowing Base Property
for the respective fiscal years then ended. The unaudited operating statements for each Borrowing
Base Property for the six-month period ended June 30, 2010, copies of which have heretofore been
furnished to each Lender, presents fairly the operating cash flow of each Borrowing Base Property
for the six-month period ended on such date. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with the Uniform System of Accounts
and reconciled in accordance with GAAP applied consistently throughout the periods involved (except
as approved by the aforementioned firm of accountants and disclosed therein). The Group Members do
not have any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or
any long-term Leases or unusual forward or long-term commitments, including, without limitation,
any interest rate or foreign currency swap or exchange transaction or other obligation in respect
of derivatives, that are not reflected in the most recent financial statements referred to in this
paragraph. During the period from December 31, 2009 to and including the date hereof there has
been no Disposition by the REIT and its Subsidiaries of any material part of its business or
Property.



66









 





          4.2 No Change. Since December 31, 2009 there has been no development or event that has had or
could reasonably be expected to have a Material Adverse Effect.



          4.3 Corporate Existence; Compliance with Law. (a) Each of the Group Members (i) is duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority, and the legal right and all requisite
governmental licenses, authorizations, consents and approvals to own and operate its Property, to
lease the Property it operates as lessee and to conduct the business in which it is currently
engaged, (iii) is duly qualified as a foreign corporation or other organization and in good
standing under the laws of each jurisdiction where its ownership, lease or operation of Property or
the conduct of its business requires such qualification and (iv) is in compliance with all
Requirements of Law, except in the case of clauses (iii) and (iv) to the extent that the failure to
so qualify or comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.



          (b) All material certifications, permits, licenses and approvals, including without
limitation, certificates of completion and occupancy permits and any applicable liquor license and
hospitality license required for the legal use, occupancy and operation of each Borrowing Base
Property as a hotel (collectively, the “Hotel Licenses”), have been obtained and are in
full force and effect. Each Group Member is in compliance in all material respects with all Hotel
Licenses, and no event (including, without limitation, any material violation of any law, rule or
regulation) has occurred which would reasonably likely lead to the revocation or termination of any
Hotel License or the imposition of any material restriction thereon. The Hotel Licenses listed on
Schedule 4.3(b) constitute all Hotel Licenses of the Group Members. The use being made of
each Borrowing Base Property is in conformity with the certificate of occupancy issued for such
Borrowing Base Property.



          4.4 Corporate Power; Authorization; Enforceable Obligations. Each Group Member has
the corporate or other power and authority, and the legal right, to make, deliver and perform the
Loan Documents to which it is a party and, in the case of the Borrower, to borrow hereunder. Each
Group Member has taken all necessary corporate or other action to authorize the execution, delivery
and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No consent or
authorization of, filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the borrowings hereunder or the
execution, delivery, performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except (i) consents, authorizations, filings and notices described in
Schedule 4.4, which consents, authorizations, filings and notices have been obtained or
made and are in full force and effect and (ii) the filings referred to in Section 4.19. Each Loan
Document has been duly executed and delivered on behalf of each Loan Party that is a party thereto.
This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal,
valid and binding obligation of each Loan Party that is a party thereto, enforceable against each
such Loan Party in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).



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          4.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other
Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of any Group
Member and will not result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such Contractual
Obligation (other than the Liens created by the Security Documents). No Requirement of Law or
Contractual Obligation applicable to any Group Member could reasonably be expected to have a
Material Adverse Effect.



          4.6 No Material Litigation. No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of the REIT or the
Borrower, threatened by or against any Group Member or against any of their respective properties
or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) that could reasonably be expected to have a Material Adverse Effect.



          4.7 No Default. None of the Group Members is in default under or with respect to any of
its Contractual Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.



          4.8 Ownership of Property; Liens. (a) Each of the Group Members has good record
and marketable title, and with respect to the Borrowing Base Properties, title in fee simple to, or
a valid leasehold interest in, all its Real Property, and good title to, or a valid leasehold
interest in, all its other Property, and none of such Property is subject to any Lien except as
permitted by Section 7.3. Such Liens in the aggregate do not materially and adversely affect the
value, operation or use of the applicable Real Property (as currently used) or the Borrower’s
ability to repay the Loans. Except to the extent permitted by Section 7.3(b), there are no claims
for payment for work, labor or materials affecting any Real Property which are or may become a Lien
prior to, or of equal priority with, the Liens created by the Loan Documents.



          (b) (i) No Loan Party has received written notice of the assertion of any material valid claim
by anyone adverse to any Loan Party’s ownership, or leasehold rights in and to any Borrowing Base
Property and (ii) no Person has an option or right of first refusal to purchase all or part of any
Borrowing Base Property or any interest therein which has not been waived (except as disclosed in
writing and approved by the Required Lenders).



          4.9 Intellectual Property. Each of the Group Members owns, or is licensed to use,
all Intellectual Property necessary for the conduct of its business as currently conducted. No
material claim has been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does
the REIT or the Borrower know of any valid basis for any such claim. The use of Intellectual
Property by the Group Members does not infringe on the rights of any Person in any material
respect.



          4.10 Taxes. Each of the Group Members has filed or caused to be filed all Federal, state
and other material tax returns that are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its



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Property and all other taxes, fees or other charges imposed on it or any of its Property by any
Governmental Authority (other than any taxes the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which reserves in conformity
with the Uniform System of Accounts and reconciled in accordance with GAAP have been provided on
the books of the applicable Group Member, as the case may be); and no tax Lien has been filed, and,
to the knowledge of the REIT and the Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge.




          4.11 Federal Regulations. No part of the proceeds of any Loans, and no other extensions of
credit hereunder, will be used for “purchasing” or “carrying” any “margin stock” within the
respective meanings of each of the quoted terms under Regulation U as now and from time to time
hereafter in effect or for any purpose that violates the provisions of the Regulations of the
Board. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.



          4.12 Labor Matters. There are no strikes or other labor disputes against any Group Member
or involving the operations of the Borrowing Base Properties pending or, to the knowledge of the
REIT or the Borrower, threatened that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the
Group Members and to employees of any Manager who are principally involved in the operations of any
of the Borrowing Base Properties (the “Hotel Employees”) have not been in violation of the
Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters that
(individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect.
All payments due from the Group Members on account of employee health and welfare insurance,
including payments in respect of the Hotel Employees, that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a
liability on the books of the Group Members.



          4.13 ERISA. Neither a Reportable Event nor a failure to meet the minimum funding
standards and benefit limitations of Section 412, 430 or 436 of the Code with respect to any Single
Employer Plan (whether or not waived) or the funding standards of Section 431 or 432 of the Code
with respect to any Multiemployer Plan has occurred during the period of ownership of any of the
Borrowing Base Properties by a Group Member or Affiliate, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the Code. No termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period. The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior
to the date on which this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan
that has resulted or could reasonably be expected to result in a material liability under ERISA,
and neither the Borrower nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw
completely from all Multiemployer Plans as of the valuation date most closely preceding the date on
which this



69









 




representation is made or deemed made. No such Multiemployer Plan is in Reorganization or, to
the knowledge of Borrower or any Commonly Controlled Entity, Insolvent.




          4.14 Investment Company Act; Other Regulations. No Loan Party is an “investment company”,
or a company “controlled” by an “investment company”, within the meaning of the Investment Company
Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law
(other than Regulation X of the Board) that limits its ability to incur Indebtedness.



          4.15 Subsidiaries. (a) The Subsidiaries listed on Schedule 4.15 constitute all
the Subsidiaries of the REIT at the date hereof. Schedule 4.15 sets forth as of the
Closing Date the name and jurisdiction of incorporation of each Subsidiary and, as to each
Subsidiary, the percentage of each class of Capital Stock owned by each Group Member.



          (b) There are no outstanding subscriptions, options, warrants, calls, rights or other
agreements or commitments (other than stock options granted to employees or directors and
directors’ qualifying shares) of any nature relating to any Capital Stock of any Group Member,
except as disclosed on Schedule 4.15.



          4.16 Use of Proceeds. The proceeds of the Revolving Credit Loans, the Swing Line Loans and
the Letters of Credit shall be used for general corporate purposes, including to refinance existing
indebtedness, and funding acquisitions, redevelopment and expansion.



          4.17 Environmental Matters. Other than exceptions to any of the following that could not,
individually or in the aggregate, reasonably be expected to result in the payment of a Material
Environmental Amount:




     (a) Each of the Group Members and all Real Property and facilities owned, leased,
or otherwise operated by them: (i) is, and within the period of all applicable statutes of
limitation has been to the knowledge of the Borrower, in compliance with all applicable
Environmental Laws; (ii) holds or as applicable is covered by all Environmental Permits
(each of which is in full force and effect) required for its current or intended operations;
(iii) is, and within the period of all applicable statutes of limitation has been, in
compliance with all applicable Environmental Permits; and (iv) to the extent within the
control of the Borrower and its Subsidiaries: each of such Environmental Permits will be
timely renewed and complied with and additional Environmental Permits that may be required
will be timely obtained and complied with, without material expense; and compliance with any
Environmental Law that is or is expected to become applicable to it will be timely attained
and maintained, without material expense.




     (b) Materials of Environmental Concern are not present at, on, under, in, or about
any Real Property or facilities now or formerly owned, leased or operated by any Group
Member, or at any other location (including, without limitation, any location to which
Materials of Environmental Concern have been sent for re-use or recycling or for treatment,
storage, or disposal) which could reasonably be expected to (i) give rise to liability of
any Group Member under any applicable Environmental Law or otherwise



70









 






result in costs to any Group Member, or (ii) interfere with the Borrower’s or any of its
Subsidiaries’ continued operations, or (iii) impair the fair saleable value of any Real
Property owned or leased by any Group Member.




     (c) There is no judicial, administrative, or arbitral proceeding (including any notice
of violation or alleged violation) under or relating to any Environmental Law to which any
Group Member is, or to the knowledge of any Group Member will be, named as a party that is
pending or, to the knowledge of any Group Member, threatened.




     (d) No Group Member has received any notice of, or has any knowledge of, any
Environmental Claim or any completed, pending, or to the knowledge of any Group Member,
proposed or threatened investigation or inquiry concerning the presence or release of any
Materials of Environmental Concern at any Real Property or facilities owned, leased, or
otherwise operated by them.




     (e) None of the Group Members has received any written request for information, or been
notified that it is a potentially responsible party under or relating to the federal
Comprehensive Environmental Response, Compensation, and Liability Act or any similar
Environmental Law, or with respect to any Materials of Environmental Concern, or with
respect to any Real Property or facilities owned, leased, or otherwise operated by them.




     (f) None of the Group Members, or as applicable any Real Property or facilities owned,
leased, or otherwise operated by them, has entered into or agreed to any consent decree,
order, or settlement or other agreement, or is subject to any judgment, decree, or order or
other agreement, in any judicial, administrative, arbitral, or other forum for dispute
resolution, relating to compliance with or liability under any Environmental Law.




     (g) None of the Group Members has expressly assumed or retained, by contract, conduct
or operation of law, any liabilities of any kind, fixed or contingent, known or unknown,
under any Environmental Law or with respect to any Materials of Environmental Concern.




     (h) No Borrowing Base Properties or any other Real Property are subject to any liens
imposed pursuant to Environmental Law.



          4.18 Accuracy of Information, etc. No statement or information contained in this
Agreement, any other Loan Document or any other document, certificate or statement furnished to the
Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate was so furnished, any
untrue statement of a material fact or omitted to state a material fact necessary to make the
statements contained herein or therein not misleading. The projections and pro forma financial
information contained in the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information



71









 




as it relates to future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the projected results set
forth therein by a material amount. There is no fact known to any Loan Party that could reasonably
be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents or in any other documents, certificates and statements furnished to the Agents
and the Lenders for use in connection with the transactions contemplated hereby and by the other
Loan Documents.




          4.19 Security Documents. (a) The Guarantee and Collateral Agreement is effective to
create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral described therein and proceeds thereof. In the
case of the Pledged Stock described in the Guarantee and Collateral Agreement, when stock
certificates representing such Pledged Stock are delivered to the Administrative Agent, and in the
case of the other Collateral described in the Guarantee and Collateral Agreement, when financing
statements in appropriate form are filed in the offices specified on Schedule 4.19(a)
(which financing statements have been duly completed and delivered to the Administrative Agent),
the Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in
each case prior and superior in right to any other Person (except, in the case of Collateral other
than Pledged Stock, Liens permitted by Section 7.3).



          (b) Each of the Mortgages is effective to create in favor of the Administrative Agent, for
the benefit of the Secured Parties, a legal, valid and enforceable Lien on the Borrowing Base
Properties described therein and proceeds thereof; and when the Mortgages are filed in the offices
specified on Schedule 4.19(b) (in the case of the Mortgages to be executed and delivered on
the Closing Date) or in the recording office designated by the Borrower, each Mortgage shall
constitute a fully perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in the Borrowing Base Properties described therein and the proceeds thereof, as
security for the Obligations (as defined in the relevant Mortgage), in each case prior and superior
in right to any other Person (other than Persons holding Liens or other encumbrances or rights
permitted by the relevant Mortgage). Schedule 1.1A lists, as of the Closing Date, each
parcel of owned Real Property and each leasehold interest in Real Property located in the United
States and held by the Borrower or any of its Subsidiaries.



          4.20 Solvency. Each Loan Party is, and after giving effect to the incurrence of all
Indebtedness and obligations being incurred in connection herewith and therewith will be and will
continue to be, Solvent.



          4.21 Regulation H. No Mortgage encumbers improved Real Property which is located in an
area that has been identified by the Secretary of Housing and Urban Development as an area having
special flood hazards and in which flood insurance has been made available under the National Flood
Insurance Act of 1968 (each, a “Flood Hazard Property”) (except any Borrowing Base
Properties as to which such flood insurance as required by Regulation H has been obtained and is in
full force and effect as required by this Agreement).



72









 





          4.22 REIT Status; Borrower Tax Status. The REIT has been organized and will be operated in a
manner that will allow it to qualify for REIT Status commencing with its taxable year ending
December 31, 2010 and it will meet the requirements for REIT Status. The Borrower is not an
association taxable as a corporation under the Code.



          4.23 Insurance. The Group Members obtained and has delivered to the Administrative Agent
certified copies of insurance certificates reflecting the insurance coverages, amounts and other
requirements for insurance policies set forth in this Agreement. No claims have been made under
any such policies, and no Person, including the Group Members, has done, by act or omission,
anything which would impair the coverage of any such policies.



          4.24 Casualty; Condemnation. (a) No material Condemnation has been commenced or, to
the REIT’s or the Borrower’s knowledge, is contemplated with respect to all or any part of any
Borrowing Base Property or for the relocation of roadways providing material access to any
Borrowing Base Property, other than any Condemnation for which the Administrative Agent shall have
received notice in accordance with Section 6.7 and the Borrowing Base Properties are not the
subject of any adverse zoning proceeding, except as could not reasonably be expected to cause a
Material Adverse Effect.



          (b) No material Casualty has occurred with respect to all or any part of any Borrowing Base
Property, other than any Casualty for which the Administrative Agent shall have received notice in
accordance with Section 6.7 and the Improvements have not been damaged (ordinary wear and tear
excepted) and not repaired, except as could not reasonably be expected to cause a Material Property
Event.



          4.25 Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws. (a) No Group
Member or REIT Controlled Affiliate has, directly or indirectly (i) engaged in business dealings
with any party listed on the Specially Designated Nationals List or other similar lists maintained
by OFAC, or in any related Executive Order issued by the President, (ii) conducted business
dealings with a party subject to sanctions administered by OFAC or (iii) derived income from
business dealings with a party subject to sanctions administered by OFAC.



          (b) No Group Member or REIT Controlled Affiliate has derived any of its assets in
violation of the anti-money laundering or anti-terrorism laws or regulations of the United States,
including but not limited to the USA PATRIOT Act, the Money Laundering Control Act, the Bank
Secrecy Act and any related Executive Order issued by the President.



          (c) No Group Member or REIT Controlled Affiliate has failed to comply with applicable
anti-bribery and anti-corruption laws and regulations (including the FCPA), including failing to
comply in any manner that may result in the forfeiture of the Collateral or the proceeds of the
Loans or a claim of forfeiture of the Collateral or the proceeds of the Loans.



          4.26 Property Condition. Except as could not reasonably be expected to have a Material
Adverse Effect, (a) all Borrowing Base Properties comply with all Requirements of Law, including
all subdivision and platting requirements, without reliance on any adjoining or



73









 







neighboring property; (b) the Improvements comply with all Requirements of Law regarding
access and facilities for handicapped or disabled persons; (c) no Group Member has directly or
indirectly conveyed, assigned, or otherwise disposed of, or transferred (or agreed to do so) any
development rights, air rights, or other similar rights, privileges, or attributes with respect to
any Borrowing Base Properties, including those arising under any zoning or property use ordinance
or other Requirements of Law; (d) all utility services necessary for the use of the Borrowing Base
Properties and the Improvements and the operation thereof for their intended purpose are available
at the Borrowing Base Property; (e) except as otherwise permitted in the Loan Documents, no Group
Member has made any contract or arrangement of any kind the performance of which by the other party
thereto would give rise to Liens on the Borrowing Base Properties; (f) no Borrowing Base Property
is part of a larger tract of Real Property owned by the Borrower or any other Group Member or
otherwise included under any unity of title or similar covenant with other Real Property not owned
by a Loan Party and each Borrowing Base Property constitutes a separate tax lot or lots with a
separate tax assessment or assessments for such Borrowing Base Property and the Improvements
thereon, independent of those for any other Real Property or improvements; (g) the current and
anticipated use of the Borrowing Base Properties complies in all material respects with all
applicable zoning ordinances, regulations, certificates of occupancy issued for the Borrowing Base
Properties and restrictive covenants affecting the Borrowing Base Properties without the existence
of any variance, non-complying use, nonconforming use, or other special exception, all use
restrictions of any Governmental Authority having jurisdiction have been satisfied, and no
violation of any Requirements of Law or regulation exists with respect thereto; (h) all
certifications, permits, licenses and approvals, including without limitation, certificates of
completion and occupancy permits, required for the legal use, occupancy and operation of the
Borrowing Base Properties have been obtained are in full force and effect; (i) the Borrowing Base
Properties, 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 the Borrowing Base
Properties, whether latent or otherwise, and Borrower has not received notice from any insurance
company or bonding company of any defects or inadequacies in the Borrowing Base Properties, 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; and (j) all of the Improvements which were included in determining the
appraised value of each Borrowing Base Property lie wholly within the boundaries and building
restriction lines of such Borrowing Base Property, and no improvements on adjoining properties
encroach upon the Borrowing Base Property, and no easements or other encumbrances upon the
Borrowing Base Property encroach upon any of the Improvements, so as to materially affect the value
or marketability of the Borrowing Base Property except those which are insured against by the
applicable Title Insurance Policy.



          4.27 Management Agreements; Franchise Agreements. Each Management Agreement and
Franchise Agreement 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 or giving of notice, would
constitute a default thereunder.



74









 





          4.28 Operating Leases. Each Operating Lease 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 or giving
of notice, would constitute a default thereunder.



          4.29 Acceptable Leases. Each applicable Loan Party has delivered true, correct and
complete copies of each Acceptable Lease, together with all related agreements, to the
Administrative Agent.



SECTION 5. CONDITIONS PRECEDENT




          5.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the
initial extension of credit requested to be made by it hereunder is subject to the satisfaction,
prior to or concurrently with the making of such extension of credit on the Closing Date, of the
following conditions precedent:




     (a) Loan Documents. The Administrative Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the REIT and the Borrower,
(ii) the Guarantee and Collateral Agreement, executed and delivered by a duly authorized
officer of the REIT, the Borrower and each Subsidiary (other than any Excluded Subsidiary,
any Excluded Foreign Subsidiary or any Subsidiary of an Excluded Foreign Subsidiary), (iii)
a Mortgage covering each of the Borrowing Base Properties, executed and delivered by a duly
authorized officer of each Loan Party party thereto and (iv) an executed counterpart to this
Agreement executed and delivered by each Lender.




     (b) New Rochelle Documents. The Administrative Agent shall have received
(i) the New Rochelle Assignment and Acceptance, executed and delivered by a duly authorized
officer of TRS Holding, (ii) true, correct and complete copies of all documentation relating
to the Existing Loan as the Administrative Agent shall request, (iii) with respect to New
Rochelle, a Mortgage which grants the Administrative Agent, for the benefit of the Secured
Parties, a first priority security interest in such Real Property and (iv) with respect to
New Rochelle, a title insurance policy and recent survey satisfying the requirements of
Section 5.1(q).




     (c) Zoning Reports. The Administrative Agent shall have received with
respect to each Initial Borrowing Base Property (i) letters or other evidence with respect
to each Initial Borrowing Base Property from the appropriate municipal authorities (or other
Persons) concerning applicable zoning and building laws, and (ii) either (A) an ALTA 3.1
zoning endorsement for the applicable Title Insurance Policy or (B) a zoning opinion letter,
in each case in substance reasonably satisfactory to the Administrative Agent.




     (d) Pro Forma Balance Sheet; Financial Statements. The Lenders shall have
received (i) the Pro Forma Balance Sheet, (ii) audited consolidated financial statements of
Chatham Predecessor for the 2007, 2008 and 2009 fiscal years and (iii) unaudited interim
consolidated financial statements of Chatham Predecessor for each quarterly period ended
subsequent to the date of the latest applicable financial statements delivered pursuant to
clause (ii) of this paragraph as to which such financial statements are



75









 






available; and such financial statements shall not, in the reasonable judgment of the
Lenders, reflect any material adverse change in the consolidated financial condition of the
REIT and its Subsidiaries, as reflected in the financial statements or projections delivered
to the Agents and the Lenders prior to the Closing Date.




     (e) Approvals. All governmental and third party approvals (including
landlords’ and other consents) necessary in connection with the continuing operations of the
Group Members and the transactions contemplated hereby shall have been obtained and be in
full force and effect, and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the financing contemplated hereby.




     (f) Licenses. The Administrative Agent shall have received for each Initial
Borrowing Base Property copies of all Hotel Licenses, including all liquor and hospitality
licenses.




     (g) Borrowing Base Property Agreements. The Administrative Agent shall have
received with respect to each Initial Borrowing Base Property (i) a true, correct and
complete copy of each Management Agreement and Franchise Agreement, (ii) a true, correct and
complete copy of each Operating Lease and any agreement relating to such Operating Lease,
including without limitation, an owner agreement, if any, and (iii) a true, correct and
complete copy of the PIP Plan for each Borrowing Base Property, if any, each of which shall
be satisfactory in form and substance to the Administrative Agent.




     (h) Appraisals. The Administrative Agent, the Arrangers and the Lenders shall
have received a recent Appraisal for each Initial Borrowing Base Property, and such
documents shall be satisfactory to the Administrative Agent, the Arrangers and the Lenders
in their sole discretion.




     (i) Fees. The Lenders, the Arrangers and the Administrative Agent shall have
received all fees required to be paid, and all expenses for which invoices have been
presented (including reasonable fees, disbursements and other charges of counsel to the
Agents), on or before the Closing Date. Unless otherwise consented by the Administrative
Agent, all such amounts shall be paid with proceeds of Loans made on the Closing Date and
will be reflected in the funding instructions given by the Borrower to the Administrative
Agent on or before the Closing Date.




     (j) Solvency Analysis. The Lenders shall have received a reasonably
satisfactory solvency analysis certified by the chief financial officer of the REIT which
shall document the solvency of the REIT and its Subsidiaries considered as a whole after
giving effect to the transactions contemplated hereby.




     (k) Lien Searches. The Administrative Agent shall have received the results of a recent
lien search in each of the jurisdictions in which Uniform Commercial Code financing statement or
other filings or recordations should be made to evidence or perfect security interests in all
assets of the Group Members, and such search shall reveal no




76











 






liens on any of the assets of the Group Members, except for Liens permitted by Section
7.3.




     (l) Environmental Matters. The Administrative Agent shall have received, with
a copy for each Lender, an Acceptable Environmental Report dated no earlier than the date
that is twelve months prior to the Closing Date for each Initial Borrowing Base Property,
prepared by an environmental consultant acceptable to the Administrative Agent, in form,
scope and substance satisfactory to the Administrative Agent, together with a letter or
equivalent from the environmental consultant permitting the Agents and the Lenders to rely
on the Acceptable Environmental Report as if addressed to and prepared for each of them.
Each such Acceptable Environmental Report shall identify no environmental condition
reasonably likely to result in a Material Environmental Amount.




     (m) Closing Certificate. The Administrative Agent shall have received a
certificate of each Loan Party, dated the Closing Date, substantially in the form of Exhibit
C, with appropriate insertions and attachments.




     (n) Legal Opinions. The Administrative Agent shall have received the following
executed legal opinions:




     (i) the legal opinion of Hunton & Williams LLP, counsel to the Group Members,
in form and substance acceptable to the Administrative Agent; and




     (ii) the legal opinion of local counsel in each of Connecticut, Florida,
Maryland, Massachusetts, Minnesota, New York, Tennessee and Texas and of such other
special and local counsel as may be required by the Administrative Agent.




Each such legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Administrative Agent may reasonably require and shall
be addressed to the Administrative Agent and the Lenders.




     (o) Pledged Stock; Stock Powers; Acknowledgment and Consent; Pledged Notes.
The Administrative Agent shall have received (i) the certificates representing the shares of
Capital Stock, if any, pledged pursuant to the Guarantee and Collateral Agreement, together
with an undated stock power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof, (ii) an Acknowledgment and Consent, substantially in the
form of Annex II to the Guarantee and Collateral Agreement, duly executed by any issuer of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement that is not itself
a party to the Guarantee and Collateral Agreement and (iii) each promissory note pledged
pursuant to the Guarantee and Collateral Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank satisfactory to the Administrative Agent)
by the pledgor thereof.




     (p) Filings, Registrations and Recordings. Each document (including, without
limitation, any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Administrative Agent to be filed,



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registered or recorded in order to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a perfected Lien on the Collateral described therein, prior
and superior in right to any other Person (other than with respect to Liens expressly
permitted by Section 7.3), shall have been filed, registered or recorded or shall have been
delivered to the Administrative Agent be in proper form for filing, registration or
recordation.




     (q) Title Insurance; Flood Insurance. (i) The Administrative Agent shall have
received, and the title insurance company issuing the policies referred to in clause (ii)
below (the “Title Insurance Company”) shall have received, maps or plats of an
as-built survey (each, a “Survey”) of the sites of the Borrowing Base Property
certified to the Administrative Agent and the Title Insurance Company in a manner
satisfactory to them, dated a date satisfactory to the Administrative Agent and the Title
Insurance Company by an independent professional licensed land surveyor satisfactory to the
Administrative Agent and the Title Insurance Company, which maps or plats and the surveys on
which they are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the American Land
Title Association and the American Congress on Surveying and Mapping in 2005, and, without
limiting the generality of the foregoing, there shall be surveyed and shown on such maps,
plats or surveys the following: (A) the locations on such sites of all the buildings,
structures and other improvements and the established building setback lines; (B) the lines
of streets abutting the sites and width thereof; (C) all access and other easements
appurtenant to the sites; (D) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building structures and improvements on the
sites; (F) if the site is described as being on a filed map, a legend relating the survey to
said map; and (G) the flood zone designations, if any, in which such Borrowing Base Property
are located.




     (ii) The Administrative Agent shall have received in respect of each Borrowing
Base Property (except for, until the Mortgage Recordation Trigger Date, the Material
Mortgage Recording Tax Mortgaged Properties) a mortgagee’s title insurance policy
(or policies) or marked up unconditional binder for such insurance. Each such
policy shall (A) be in an amount satisfactory to the Administrative Agent;
provided that, any policy for any Material Mortgage Recording Tax Mortgaged
Property shall not exceed the value of such Property, as determined by the most
recent Appraisal at the time of recordation; (B) be issued at ordinary rates; (C)
insure that the Mortgage insured thereby creates a valid first Lien on such
Borrowing Base Property free and clear of all defects and encumbrances, except as
disclosed therein; (D) name the Administrative Agent for the benefit of the Secured
Parties as the insured thereunder; (E) be in the form of ALTA Loan Policy — 2006
(or equivalent policies); (F) contain such endorsements and affirmative coverage as
the Administrative Agent may reasonably request and (G) be issued by title companies
satisfactory to the Administrative Agent (including any such title companies acting
as co-insurers or reinsurers, at the option of the Administrative Agent). The
Administrative Agent



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shall have received evidence satisfactory to it that all premiums in respect of
each such policy, all charges for mortgage recording tax, and all related expenses,
if any, have been paid.




     (iii) Evidence as to whether any Borrowing Base Property is a Flood Hazard
Property and if such Borrowing Base Property is a Flood Hazard Property, evidence of
compliance with federally-mandated flood insurance requirements, including (1) the
Borrower’s written acknowledgment of receipt of written notification required
pursuant to Section 208(e)(3) of Regulation H of the Board from the Administrative
Agent (x) as to the fact that such Property is a Flood Hazard Property and (y) as to
whether the community in which each such Flood Hazard Property is located is
participating in the National Flood Insurance Program and (2) copies of insurance
policies or certificates of insurance evidencing flood insurance satisfactory to the
Administrative Agent and naming the Administrative Agent as sole loss payee on
behalf of the Secured Parties under a standard mortgagee endorsement, that (A)
covers any parcel of improved Real Property that is encumbered by any Mortgage, (B)
is written in an amount which is commercially available at a reasonable cost, and
(C) has a term ending not later than the maturity of the indebtedness secured by
such Mortgage or that may be renewed to such maturity date.




     (iv) The Administrative Agent shall have received a copy of all recorded
documents referred to, or listed as exceptions to title in, the title policy or
policies referred to in clause (ii) above and a copy of all other material documents
affecting the Borrowing Base Properties.




     (r) Other Property Reports. The Administrative Agent, the Arrangers and the
Lenders shall have received for each Initial Borrowing Base Property, in form and substance
reasonably satisfactory to the Administrative Agent, the Arrangers and the Lenders, (i) a
current property condition and structural reports, (ii) seismic reports and (iii) a STAR
Report.




     (s) Insurance. (i) The Administrative Agent, the Arrangers and the Lenders
shall be satisfied with the amounts, types and terms and conditions of all insurance
maintained by the Group Members.




     (ii) The Administrative Agent shall have received insurance certificates
satisfying the requirements of Section 6.5.




     (t) USA PATRIOT Act. The Lenders shall have received, sufficiently in advance
of the Closing Date, all documentation and other information required by bank regulatory
authorities under applicable “know your customer” and anti-money laundering rules and
regulations, including without limitation the USA PATRIOT Act.




     (u) Escrow Agreement. The Administrative Agent shall have received an escrow
agreement (as amended, restated, supplemented or otherwise modified from time to time, the
“Escrow Agreement”), executed and delivered by the Escrow Agent and a



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duly authorized officer of each Loan Party party thereto, in form and substance
satisfactory to the Administrative Agent covering each Material Mortgage Recording Tax State
Mortgage.




     (v) Related Agreements. The Administrative Agent shall have received, to the
extent not previously delivered, true, correct and complete copies, certified as to
authenticity by the Borrower, a copy of any debt instrument, security agreement or other
material contract to which the Group Members may be a party that in each case is listed on
Schedule 7.2(d) (the “Existing Indebtedness”).




     (w) Leaseco Security Documents. The Administrative Agent shall have received
true, correct and complete copies of the Leaseco Security Documents, executed and delivered
by a duly authorized officer of each Group Member party thereto.




     (x) No Litigation. There shall exist no action, suit, investigation or
proceeding, pending or threatened, in any court or before any arbitrator or governmental
authority that purports to affect the Loan Parties in a materially adverse manner or any
transaction contemplated hereby, or that could reasonably be expected to have a Material
Adverse Effect or a material adverse effect on any transaction contemplated hereby or on the
ability of the Loan Parties to perform their obligations under the Loan Documents.




     (y) No Material Adverse Effect. No event or condition shall have occurred
since the date of the Group Members’ most recent audited financial statements delivered to
the Administrative Agent which has or could reasonably be expected to have a Material
Adverse Effect. No material adverse change in or material disruption of conditions in the
market for syndicated bank credit facilities or the financial, banking or capital markets
generally shall have occurred that, in the reasonable judgment of the Arrangers, would
impair the syndication of the Loans.



          5.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any
extension of credit requested to be made by it hereunder on any date (including, without
limitation, its initial extension of credit) is subject to the satisfaction of the following
conditions precedent:




     (a) Representations and Warranties. Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such date, provided
that, (w) to the extent that any such representation or warranty relates to a specific
earlier date, they shall be true and correct as of such earlier date, (x) to the extent that
such representation or warranty relates to a Borrowing Base Property being removed from the
Borrowing Base, the representation and warranties shall be true and correct without regard
to such removed Borrowing Base Property and (y) to the extent that any such representation
and warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar
language shall be true and correct in all respects on such respective dates.



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     (b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit requested to be
made on such date.




     (c) Borrowing Base Certificate. The Administrative Agent shall have received
and be satisfied in all respects with, a completed Borrowing Base Certificate as of the last
day of the fiscal quarter for which financial statements are available and signed by a
Principal Financial Officer.



          Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall
constitute a representation and warranty by the Borrower as of the date of such extension of credit
that the conditions contained in this Section 5.2 have been satisfied.



          5.3 Conditions to the Addition of a Borrowing Base Property. (a) The Borrower may request
the addition of any Real Property (other than the Initial Borrowing Base Properties) as a Borrowing
Base Property by submitting a request in writing to the Administrative Agent which request shall
instruct and authorize the Administrative Agent to obtain the Third Party Reports for such Real
Property (at the Borrower’s sole cost and expense). Each such written request shall be accompanied
by the Preliminary Diligence Materials for such Real Property.



          (b) The addition of any Real Property to the Borrowing Base pursuant to a request submitted
pursuant to Section 5.3(a) shall be subject to the satisfaction of each of the following
conditions:




     (i) the Administrative Agent shall have received each of the Preliminary Diligence
Materials and final Third Party Reports for such Real Property no later than the date that
is 30 days after the date of the Borrower’s written request delivered pursuant to Section
5.3(a) with respect to such Real Property,




     (ii) such Real Property shall be an Eligible Borrowing Base Property and the Borrower
shall have delivered to the Administrative Agent each of the documents described in the
definition of “Eligible Borrowing Base Property” no later than the date that is 30 days
after the date of the Borrower’s written request delivered pursuant to Section 5.3(a) with
respect to such Real Property, and




     (iii) subject to Section 5.3(c), the Supermajority Lenders shall have approved the
addition of such Real Property to the Borrowing Base.


For the avoidance of doubt, in the event that the Borrower has failed to deliver the Preliminary
Diligence Materials, the final Third Party Reports and all other documentation required to be
delivered pursuant to the definition of “Eligible Borrowing Base Property” for such Real Property
on or prior to the date that is 30 days after the date of the Borrower’s written request delivered
pursuant to Section 5.3(a) with respect to such Real Property, the Administrative Agent may in its
sole discretion require that the Borrower update any of such documents prior to submitting the
request to the Lenders for approval.







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          (c) Upon receipt by the Administrative Agent of the Preliminary Diligence Materials, the final
Third Party Reports and all other documentation required to be delivered pursuant to the definition
of “Eligible Borrowing Base Property” for such Real Property from the Borrower, the Administrative
Agent shall promptly distribute such materials to the Lenders (which distribution may be effected
by posting such materials to an Intralinks or SyndTrak workspace), together with a request that the
Lenders approve the addition of such Real Property to the Borrowing Base (the “Approval Request
Date”). If the Administrative Agent does not receive a written notice from a Lender objecting
to the inclusion of such Real Property as a Borrowing Base Property on or prior to the date that is
ten Business Days after the Approval Request Date, such Lender shall be deemed to have approved the
inclusion of such Real Property as a Borrowing Base Property.



          (d) Upon the effectiveness of any new Real Property added as a Borrowing Base Property, the
Borrower may deliver to the Administrative Agent an updated Borrowing Base Certificate giving pro
forma affect to such new Borrowing Base Property as of the date of the most recent Borrowing Base
Certificate previously delivered pursuant to Sections 5.2(c), 5.3, 5.4 and 6.12.



          5.4 Conditions to the Release of a Borrowing Base Property. The release of any Borrowing
Base Property at the written request of the Borrower delivered to the Administrative Agent shall be
subject to the satisfaction of each of the following conditions:



          (a) if at any time there are less than five Borrowing Base Properties (or after giving effect
to any release, there would be less than five Borrowing Base Properties), the consent of the
Supermajority Lenders is obtained to release such Real Property;



          (b) if at any time there are less than four Borrowing Base Properties (or after giving effect
to any release, there would be less than four Borrower Base Properties), the consent of all Lenders
is obtained to release such Real Property;



          (c) no Default or Event of Default shall have occurred and be continuing on such date
immediately prior to or after giving effect to the release of such Real Property from the Borrowing
Base;



          (d) the Administrative Agent shall have received a certificate of a Principal Financial
Officer (x) certifying that after giving pro forma effect to the release of such Real Property from
the Borrowing Base, the Total Revolving Extensions of Credit shall not exceed the Maximum Facility
Availability and (y) containing all information and calculations necessary, after giving pro forma
effect to the release of such Real Property from the Borrowing Base, for determining pro forma
compliance with the provisions of Section 7.1 hereof;



          (e) the removal occurs in connection with either (x) a sale, financing or other transaction
involving the Borrowing Base Property being removed from the Borrowing Base or (y) a transaction
undertaken by the Borrower pursuant to which the removal of the Borrowing Base Property is
necessary or advisable to facilitate such transaction;



          (f) all representations and warranties in the Loan Documents are true and accurate in all
material respects at the time of such release and immediately after giving effect to



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such release, (x) to the extent that any such representation or warranty relates to a specific
earlier date, they shall be true and correct as of such earlier date, (y) to the extent that such
representation or warranty relates to a Borrowing Base Property being removed from the Borrowing
Base, the representation and warranties shall be true and correct without regard to such removed
Borrowing Base Property, and (z) any representation and warranty that is qualified as to
“materiality”, “Material Adverse Effect” or similar language shall be true and correct in all
respects on such respective dates; and




          (g) the Administrative Agent shall have received an updated Borrowing Base Certificate giving
pro forma affect to the release of such Borrowing Base Property from the Borrowing Base as of the
date of the most recent Borrowing Base Certificate previously delivered pursuant to Sections
5.2(c), 5.3, 5.4 and 6.12.



SECTION 6. AFFIRMATIVE COVENANTS




          The REIT and the Borrower hereby jointly and severally agree that, so long as the Revolving
Credit Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, each of the REIT and the Borrower shall and
shall cause each of its Subsidiaries to:



          6.1 Financial Statements. Furnish to each Agent and each Lender:




     (a) as soon as available, but in any event within 90 days after the end of each fiscal
year of the REIT, a copy of the audited consolidated balance sheet of the REIT and its
consolidated Subsidiaries as at the end of such year and the related audited consolidated
statements of income and of cash flows for such year, setting forth in each case in
comparative form the figures as of the end of such year and for the previous year, reported
on without a “going concern” or like qualification or exception, or qualification arising
out of the scope of the audit, by PricewaterhouseCoopers or other independent certified
public accountants of nationally recognized standing;




     (b) as soon as available, but in any event within 90 days after the end of each fiscal
year of the REIT, a copy of the unaudited operating statement for each Borrowing Base
Property for such year, setting forth in each case in comparative form the figures as of the
end of such year and for the previous year;




     (c) as soon as available, but in any event not later than 45 days after the end of each
of the first three quarterly periods of each fiscal year of the REIT, the unaudited
consolidated balance sheet of the REIT and its consolidated Subsidiaries as at the end of
such quarter and the related unaudited consolidated statements of income and of cash flows
for such quarter and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures as of the end of such quarter and for the
corresponding period in the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit adjustments); and



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     (d) as soon as available, but in any event within 45 days after the end of each of the
first three quarterly periods of each fiscal year of the REIT, a copy of the unaudited
operating statement for each Borrowing Base Property for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each case in comparative form
the figures as of the end of such quarter and for the corresponding period in the previous
year;


all such financial statements to be complete and correct in all material respects and to be
prepared in reasonable detail and in accordance with the Uniform System of Accounts and reconciled
in accordance with GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case may be, and disclosed
therein).




          6.2 Certificates; Other Information. Furnish to each Agent and each Lender, or, in the
case of clause (h), to the relevant Lender:




     (a) concurrently with the delivery of the financial statements referred to in Section
6.1(a), a certificate of the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in such certificate (it
being understood that such certificate shall be limited to the items that independent
certified public accountants are permitted to cover in such certificates pursuant to their
professional standards and customs of the profession);




     (b) concurrently with the delivery of any financial statements pursuant to Section 6.1,
(i) a certificate of a Responsible Officer stating that, to the best of such Responsible
Officer’s knowledge, each Loan Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in this Agreement
and the other Loan Documents to which it is a party to be observed, performed or satisfied
by it, and that such Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate and (ii)(x) a Compliance Certificate
containing all information and calculations necessary for determining compliance by the
Group Members with the provisions of this Agreement referred to therein as of the last day
of the fiscal quarter or fiscal year of the REIT, as the case may be, (y) to the extent not
previously disclosed to the Administrative Agent, a listing of any Intellectual Property
acquired by any Loan Party since the date of the most recent list delivered pursuant to this
clause (y) (or, in the case of the first such list so delivered, since the Closing Date) and
(z) any UCC financing statements or other filings specified in such Compliance Certificate
as being required to be delivered therewith;




     (c) as soon as available, and in any event no later than 60 days after the end of each
fiscal year of the REIT, a detailed consolidated budget for the following fiscal year
(including a projected consolidated balance sheet of the REIT and its Subsidiaries as of the
end of the following fiscal year, and the related consolidated statements of projected cash
flow, projected changes in financial position and projected income and a description of the
underlying assumptions applicable thereto), and, as soon as available, significant
revisions, if any, of such budget and projections with respect to such fiscal year



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(collectively, the “Projections”), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such Projections are
based on reasonable estimates, information and assumptions and that such Responsible Officer
has no reason to believe that such Projections are incorrect or misleading in any material
respect;




     (d) within 60 days after the end of each fiscal quarter of the Borrower, a narrative
discussion and analysis of the financial condition and results of operations of the REIT and
its Subsidiaries for such fiscal quarter and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter, as compared to the portion of the
Projections covering such periods and to the comparable periods of the previous year;




     (e) (i) within five days after the same are sent, copies, including copies sent
electronically, of all financial statements and reports that the REIT or the Borrower sends
to the holders of any class of its debt securities or public equity securities and, within
five days after the same are filed, copies of all financial statements and reports that the
REIT or the Borrower may make to, or file with, the SEC; and (ii) within five days after the
receipt thereof, copies of all correspondence received from the SEC concerning any material
investigation or inquiry regarding financial or other operational results of any Group
Member;




     (f) on or before the date which is 45 days after the end of each fiscal quarter of the
Borrower, (i) the most current STAR Reports for each of the immediately preceding three
consecutive months ending during such quarter in the form then available to the Borrower
reflecting market penetration and relevant hotel properties competing with each Borrowing
Base Property and (ii) occupancy statistics for the Borrowing Base Properties on a combined
basis as well as for each individual Borrowing Base Property, including Average Daily Rate,
Occupancy Rate and RevPAR;




     (g) at the request of the Administrative Agent, the Borrower shall execute a
certificate in form satisfactory to the Administrative Agent listing the trade names under
which the Loan Parties intend to operate each Borrowing Base Property, and representing and
warranting that the Loan Parties do business under no other trade name with respect to such
Borrowing Base Property; and




     (h) promptly, such additional financial and other information as any Lender may from
time to time reasonably request.



          6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its material obligations of whatever nature,
except where the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with the Uniform System of Accounts and
reconciled in accordance with GAAP with respect thereto have been provided on the books of the
relevant Group Member.



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          6.4 Conduct of Business and Maintenance of Existence; Compliance; Hotel Licenses. (a)(i)
Preserve, renew and keep in full force and effect its organizational existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business, except, in each case, as otherwise permitted by Section 7.4 and
except, in the case of clause (ii) above, to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect; (b) comply with all Contractual Obligations and
Requirements of Law, except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; and (c) preserve and maintain
all Hotel Licenses necessary for the operation of each Borrowing Base Property as a hotel with
related retail uses.



          6.5 Maintenance of Property; Insurance. (a)(i) Maintain, preserve and protect all of its
material Property and equipment necessary in the operation of its business in good working order
and condition, ordinary wear and tear excepted; (ii) make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect; (iii) use the standard of care typical in the industry
in the operation and maintenance of its facilities; and (iv) keep the Borrowing Base Properties in
good order, repair, operating condition, and appearance, causing all necessary repairs, renewals,
replacements, additions, and improvements to be promptly made, and not allow any of the Borrowing
Base Properties to be misused, abused or wasted or to deteriorate (ordinary wear and tear
excepted).



          (b) 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 with all Requirements of
Law applicable to the Loan Parties and the Borrowing Base Properties (and the Improvements thereon
and the use thereof), including, without limitation, building and zoning ordinances and codes and
certificates of occupancy. There shall never be committed by any Group Member, and neither the
REIT nor the Borrower shall permit any other Person in occupancy of or involved with the operation
or use of the Borrowing Base Properties to commit any act or omission affording the federal
government or any state or local government the right of forfeiture against any Borrowing Base
Property or any part thereof or any monies paid in performance of any Loan Party’s obligations
under any of the Loan Documents. Each of the REIT and the Borrower hereby covenants and agrees not
to commit, permit or suffer to exist any act or omission affording such right of forfeiture. Each
of the REIT and the 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.



          (c) Obtain and maintain, or cause to be maintained, insurance for the Group Members and the
Borrowing Base Properties providing at least the following coverages:




     (i) property insurance with respect to all insurable property, against loss or damage
by fire, lightning, windstorm, explosion, hail, tornado and such additional hazards as are
presently included in special form (also known as “all-risk”) coverage and against any and
all acts of terrorism and such other insurable hazards as the Administrative Agent may
require, (A) in an amount equal to 100% of the full replacement cost (the “Full
Replacement Cost”) which for purposes of this Agreement shall mean actual replacement
value (exclusive of costs of excavations, foundations,



86









 






underground utilities and footings) with a waiver of depreciation; (B) containing an
agreed value coverage waiving all co-insurance provisions; (C) providing for no deductible
in excess of $25,000 for all such insurance coverage; provided, however,
with respect to named windstorm, earthquake, flood and terrorism coverage, providing for a
deductible satisfactory to the Administrative Agent in its sole discretion; and (D) if any
of the Borrowing Base Properties or the use of the Borrowing Base Properties shall at any
time constitute legal non-conforming structures or uses, coverage for loss due to operation
of law in an amount equal to the Full Replacement Cost, coverage for demolition costs and
coverage for increased costs of construction. In addition, the Borrower shall obtain: (y)
if any portion of any Borrowing Base Property is currently or at any time in the future
located in a federally designated “special flood hazard area”, flood hazard insurance in an
amount equal to the lesser of (1) the outstanding amount of the Obligations or (2) the
maximum amount of such insurance available under the National Flood Insurance Act of 1968,
the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of
1994, as each may be amended from time to time or such greater amount as the Administrative
Agent shall require, and (z) earthquake insurance in amounts and in form and substance
satisfactory to the Administrative Agent in the event the Borrowing Base Property is located
in an area with a high degree of seismic activity; provided that the insurance
pursuant to clauses (y) and (z) hereof shall be on terms consistent with the comprehensive
all risk insurance policy required under this subsection (i);




     (ii) business income or rental loss insurance (A) with loss payable to the
Administrative Agent, for the benefit of the Secured Parties; (B) covering all risks
required to be covered by the insurance provided for in subsection (i) above; (C) in an
amount equal to 100% of the gross revenue less non-continuing expenses from the
operation of any Borrowing Base Property for a period of at least 18 months after the date
of the Casualty; and (D) containing an extended period of indemnity endorsement which
provides that after the physical loss to any Borrowing Base 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 365 days from the date that such Borrowing
Base 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. The amount
of such business income or rental loss insurance shall be determined prior to the date
hereof and at least once each year thereafter based on the Borrower’s reasonable estimate of
the gross revenues from the Property for the succeeding twelve month period. All proceeds
payable to the Administrative Agent, for the benefit of the Secured Parties, pursuant to
this subsection shall be held by the Administrative Agent and shall be applied to the
obligations secured by the Loan Documents from time to time due and payable hereunder;
provided, however, that nothing herein contained shall be deemed to relieve
the Borrower of its obligations to pay the obligations secured by the Loan Documents on the
respective dates of payment provided for in this Agreement and the other Loan Documents
except to the extent such amounts are actually paid out of the proceeds of such business
income insurance;




     (iii) at all times during which structural construction, repairs or alterations are
being made with respect to any Borrowing Base Property, and only if such Borrowing



87









 






Base Property coverage form does not otherwise apply, (A) owner’s contingent or
protective liability insurance, otherwise known as Owner Contractor’s Protective Liability,
covering claims not covered by or under the terms or provisions of the below-mentioned
commercial general liability insurance policy and (B) the insurance provided for in
subsection (i) above written in a so-called builder’s risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to subsection (i) above,
(3) including permission to occupy any Borrowing Base Property and (4) with an agreed amount
endorsement waiving co-insurance provisions;




     (iv) comprehensive boiler and machinery insurance, if steam boilers or other
pressure-fixed vessels are in operation, in amounts as shall be reasonably required by the
Administrative Agent on terms consistent with the commercial property insurance policy
required under subsection (i) above providing no deductible in excess of $100,000;




     (v) commercial general liability insurance against claims for personal injury, bodily
injury, death or property damage occurring upon, in or about any Borrowing Base Property,
such insurance (A) to be on the so-called “occurrence” form with a combined limit of not
less than $2,000,000.00 in the aggregate per location and $1,000,000.00 per occurrence; (B)
to continue at not less than the aforesaid limit until required to be changed by the
Administrative Agent 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 contracts and (5) contractual
liability covering the indemnities contained in Article 33 of the Mortgages to the extent
the same is available;




     (vi) automobile liability coverage for all owned and non-owned vehicles, including
rented and leased vehicles containing minimum limits per occurrence of $1,000,000.00;




     (vii) worker’s compensation subject to the worker’s compensation laws of the applicable
state and employer’s liability with minimum limits per incident of $1,000,000;




     (viii) umbrella and excess liability insurance in an amount not less than
$25,000,000.00 per occurrence affording excess coverage on terms consistent with the
commercial general liability, employer liability and automobile liability required under
subsections (v), (vi) and (vii); and




     (ix) upon 60 days’ written notice, such other reasonable insurance, including, but not
limited to, sinkhole or land subsidence insurance, and in such reasonable amounts as Lender
from time to time may reasonably request against such other insurable hazards which at the
time are commonly insured against for property similar to the such Borrowing Base Property
located in or around the region in which the such Borrowing Base Property is located.



          (d) All insurance provided for in Section 6.5(c) hereof, shall be obtained under valid and
enforceable policies (collectively, the “Policies” or in the singular, the
“Policy”),



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and shall be subject to the approval of the Administrative Agent as to insurance companies,
amounts, deductibles, loss payees and insureds. Unless approved by the Administrative Agent, the
Policies shall be issued by financially sound and responsible insurance companies authorized to do
business in the State and having a rating of “A:VII” or better in the current Best’s Insurance
Reports and a claims paying ability rating of “A” or better by at least two of the Rating Agencies
including, (i) S&P, (ii) Fitch, and (iii) Moody’s. The Policies described in Section 6.5(c) hereof
(other than those strictly limited to liability protection) shall designate the Administrative
Agent as loss payee.




          (e) Any blanket insurance Policy shall specifically allocate to each Borrowing Base 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 Borrowing Base Property in compliance with
the provisions of Section 6.5(c) hereof.



          (f) All Policies provided for or contemplated by Section 6.5(c) hereof, except for the Policy
referenced in Section 6.5(c)(vii) of this Agreement, shall name the Borrower as the insured and the
Administrative Agent, for the benefit of the Secured Parties, as the additional insured, as its
interests may appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard non-contributing mortgagee clause
in favor of Administrative Agent, for the benefit of the Secured Parties, providing that the loss
thereunder shall be payable to the Administrative Agent, for the benefit of the Secured Parties.



          (g) All Policies shall contain clauses or endorsements to the effect that:




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




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




     (iii) to the extent commercially available, the issuers thereof shall give written
notice to the Administrative Agent if the Policy has not been renewed 30 days prior to its
expiration; and




     (iv) the Administrative Agent shall not be liable for any Insurance Premiums or
retentions (including deductibles) of the Policies thereon or subject to any assessments
thereunder.



          (h) If at any time the Administrative Agent is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, the Administrative Agent shall have the
right, without notice to the Borrower, to take such action as the Administrative Agent deems
necessary to protect its interest in any Borrowing Base Property, including, without limitation,
the obtaining of such insurance coverage as the Administrative



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Agent in its sole discretion deems appropriate after three Business Days’ notice to the
Borrower if prior to the date upon which any such coverage will lapse or at any time the
Administrative Agent deems necessary (regardless of prior notice to the Borrower) to avoid the
lapse of any such coverage. All premiums incurred by the Administrative Agent in connection with
such action or in obtaining such insurance and keeping it in effect shall be paid by the Borrower
to the Administrative Agent upon demand and, until paid, shall be secured by the Mortgage and shall
bear interest at the rate specified in Section 2.12(c)(ii).




          (i) All Policies maintained, or caused to be maintained, with respect to any Borrowing Base
Property, shall be primary without right of contribution from any other insurance that may be
carried by the Administrative Agent and that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy covering each
insured. If any insurer which has issued a Policy required under this Section 6.5 becomes
insolvent or is the subject of any petition, case, proceeding or other action pursuant to any
Debtor Relief Law, or if in the Administrative Agent’s reasonable opinion the financial
responsibility of such insurer is or becomes inadequate, then the Borrower shall in each instance
promptly upon its discovery thereof or upon the request of the Administrative Agent therefor,
promptly obtain and deliver to the Administrative Agent a like policy (or, if and to the extent
permitted by the Administrative Agent, acceptable evidence of insurance) issued by another insurer,
which insurer and policy meet the requirements of this Section 6.5.



          (j) All certificates of insurance evidencing the Borrower’s compliance to the insurance
required under this Section 6.5 shall be delivered to the Administrative Agent on or prior to the
Closing Date, with all premiums fully paid current and each renewal or substitute policy (or
evidence of insurance) shall be delivered to the Administrative Agent, at least ten days before the
termination of the policy it renews or replaces, with all premiums to be fully paid current in the
ordinary course (the “Insurance Premiums”).



          6.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of
records and account in which full, true and correct entries in conformity with the Uniform System
of Accounts and reconciled in accordance with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b) permit representatives
of any Lender to visit and inspect any of its properties and examine and make abstracts from any of
its books and records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition of the Group Members
with officers and employees of the Group Members and with its independent certified public
accountants.



          6.7 Notices. Promptly (unless otherwise specified below) give notice to the Administrative
Agent and each Lender of:




     (a) the occurrence of any Default or Event of Default;




     (b) any (i) default or event of default under any Contractual Obligation of any Group
Member or (ii) litigation, investigation or proceeding which may exist at any time between
any Group Member and any Governmental Authority, that in either case, if not



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cured or if adversely determined, as the case may be, could reasonably be expected to
have a Material Adverse Effect;




     (c) any litigation or proceeding affecting any Group Member (i) in which the aggregate
actual or estimated liability of the Group Members is $5,000,000 or more and not covered by
insurance, (ii) in which injunctive or similar relief is sought or (iii) which relates to
any Loan Document;




     (d) the following events, as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event
with respect to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan;




     (e) as soon as a Responsible Officer of any Group Member first obtains knowledge
thereof: (i) any Environmental Claim or other development, event, or condition that,
individually or in the aggregate with other developments, events or conditions, could
reasonably be expected to result in the payment by the Group Members, in the aggregate, of a
Material Environmental Amount; and (ii) any notice that any governmental authority may deny
any application for an Environmental Permit sought by, or revoke or refuse to renew any
Environmental Permit held by, any Group Member, in each case including a full description of
the nature and extent of the matter for which notice is given and all relevant
circumstances;




     (f) as soon as possible and in any event within five days after a Responsible Officer
of any Group Member has knowledge, or should have had knowledge thereof, of any development
or event that has had or could reasonably be expected to have a Material Adverse Effect;




     (g) (i) any Casualty to the extent required by Section 6.15(b) and (ii) any actual or
threatened Condemnation of any material portion of any Borrowing Base Property (including
copies of any and all papers served in connection with such proceeding), any negotiations
with respect to any such taking, or any loss of or substantial damage to any Borrowing Base
Property;




     (h) the failure of the REIT to maintain REIT Status;




     (i) any notice received by any Group Member with respect to the cancellation,
alteration or non-renewal of any insurance coverage required by this Agreement to be
maintained with respect to any Borrowing Base Property;




     (j) if any required permit, license, certificate or approval or Hotel License with
respect to any Borrowing Base Property that is material to the operation of such Borrowing
Base Property lapses or ceases to be in full force and effect or claim from any Person that
any Borrowing Base Property, or any use, activity, operation or maintenance



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thereof or thereon, is not in compliance with any Requirement of Law that would
materially interfere with the use or operation of such Borrowing Base Property;




     (k) (i) concurrently with the giving thereof, and within five Business Days of receipt
thereof, (i) any notice of any default by such Loan Party under any Acceptable Lease, (ii)
any notice of the occurrence of any material default by any related lessor of which any Loan
Party is aware or the occurrence of any event of which any Loan Party is aware that, with
the passage of time or service of notice, or both, would constitute a material default by
any related lessor, (iii) any bankruptcy, reorganization, or insolvency of the lessor under
any Acceptable Lease or of any notice thereof and (iv) copies of all material notices, other
than routine correspondence, given or received by any Loan Party with respect to any
Acceptable Lease with respect to a Borrowing Base Property; and




     (l) within five Business Days of obtaining knowledge or receiving any notice of any
action, proceeding, motion or notice being commenced or filed in respect of any related
lessor of all or any part of any Acceptable Lease in connection with any case under the
Bankruptcy Code, which notice shall set forth any information available to such Loan Party
as to the date of such filing, the court in which such petition was filed, and the relief
sought in such filing and copies of any and all notices, summonses, pleadings, applications
and other documents received by such Loan Party in connection with any such petition and any
proceedings relating to such petition.


Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer
setting forth details of the occurrence referred to therein and stating what action the relevant
Group Member proposes to take with respect thereto.




          6.8 Environmental Laws; Environmental Reports. (a) Comply in all material respects with,
and ensure compliance in all material respects by all Tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply in all material respects with and maintain,
and ensure that all Tenants and subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.



          (b) Promptly conduct and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.



          (c) If any Acceptable Environmental Report or update delivered pursuant to Section 5.1(l) or
5.3 identifies a Recognized Environmental Condition (“REC”), as defined under ASTM
guidelines then in effect, the Borrower shall, within six months of the delivery of such Acceptable
Environmental Report or update to the Administrative Agent, conduct such follow up testing, provide
such reports, and take such other actions as required or approved by the applicable Governmental
Authority to mitigate such REC.



          (d) Within 30 days of completion of such actions required pursuant to subsections (b) and (c)
above, the applicable Loan Party shall obtain and deliver to the



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Administrative Agent an Acceptable Environmental Report of the applicable Borrowing Base
Property made after such completion and confirming to the Administrative Agent’s satisfaction that
all required investigation and other action has been successfully completed.




          (e) Keep the Borrowing Base Properties and other Real Property free of Materials of
Environmental Concern to the extent such conditions could reasonably be expected to cause a
Material Property Event.



          (f) Keep the Borrowing Base Properties and other Real Property free of any liens imposed
pursuant to Environmental Law.



          (g) Promptly deliver to the Administrative Agent a copy of any update to an Acceptable
Environmental Report and each report pertaining to any Borrowing Base Property or to any Group
Member prepared by or on behalf of such Group Member pursuant to any Environmental Requirement.
“Environmental Requirement” shall mean any Environmental Law, agreement or restriction
(including any condition or requirement imposed by any insurance or surety company) pertaining to
Environmental Law.



          (h) Immediately advise the Administrative Agent in writing of any Environmental Claim, or of
the discovery of any Materials of Environmental Concern other than in material compliance with
Environmental Law, on any Borrowing Base Property and other Real Property as soon as any Group
Member first obtains knowledge thereof, including a full description of the nature and extent of
the Environmental Claim or Materials of Environmental Concern and all relevant circumstances.



          (i) If the Administrative Agent shall ever have reason to believe that any Materials of
Environmental Concern adversely affects any Borrowing Base Property and other Real Property, or if
any Environmental Claim is made or threatened, or if a Default or Event of Default shall have
occurred and be continuing, then if requested by the Administrative Agent, at Borrower’s expense,
deliver to the Administrative Agent from time to time, in each case within 30 days after the
Administrative Agent’s request, an Acceptable Environmental Report prepared after the date of the
Administrative Agent’s request. If any applicable Loan Party fails to furnish to the
Administrative Agent such Acceptable Environmental Report within 30 days after the Administrative
Agent’s request, the Administrative Agent may cause any such Acceptable Environmental Report to be
prepared at Borrower’s expense and risk, and each applicable Loan Party shall cooperate and provide
access and information as requested. The Administrative Agent and its designees are hereby granted
access to the Borrowing Base Properties at any time or times, upon reasonable notice (which may be
written or oral), and a license which is coupled with an interest and irrevocable, to observe
environmental conditions and compliance and as may be necessary to prepare or cause to be prepared
such ESAs. The Administrative Agent may disclose to interested parties any information about the
environmental condition or compliance of the Borrowing Base Properties, but assumes no obligation
and shall be under no duty to disclose any such information to any Person.



          6.9 Additional Collateral, etc. (a) With respect to any Property acquired after the
Closing Date by any Loan Party (other than (w) any Real Property or any Property described in
paragraph (b) or (c) of this Section, (x) any Property subject to a Lien expressly permitted by



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Section 7.3(h), 7.3(k) or 7.3(l), (y) any Property acquired by an Excluded Subsidiary or an
Excluded Foreign Subsidiary and (z) any Excluded Asset (as defined in the Guarantee and Collateral
Agreement)) as to which the Administrative Agent, for the benefit of the Secured Parties, does not
have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments
to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems
necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured
Parties, a security interest in such Property and (ii) take all actions necessary or advisable to
grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in such Property, including without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Administrative Agent.




          (b) With respect to any new Subsidiary (other than (1) an Excluded Foreign Subsidiary or (2)
an Excluded Pledged Subsidiary) created or acquired after the Closing Date (which, for the purposes
of this paragraph, shall include any existing Subsidiary that ceases to be an Excluded Foreign
Subsidiary or Excluded Pledged Subsidiary, as applicable), by any Group Member, promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative
Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the
Capital Stock of such new Subsidiary that is owned by any Group Member, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of such Group Member, (iii)
cause such new Subsidiary (other than an Excluded Subsidiary) (A) to become a party to the
Guarantee and Collateral Agreement and (B) to take such actions necessary or advisable to grant to
the Administrative Agent for the benefit of the Secured Parties a perfected first priority security
interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such
new Subsidiary, including, without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent, and (iv) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent, provided that, in the event any Subsidiary ceases to be an Excluded
Subsidiary as a result of the termination or lapse of the prohibition described in the definition
of “Excluded Subsidiary”, the Borrower shall cause the compliance with this Section 6.9(b) with
respect to such Subsidiary on or prior to the date that is 30 days after such termination or lapse.



          (c) With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing
Date by any Group Member (other than any Excluded Foreign Subsidiaries), promptly (i) execute and
deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or
such other documents as the Administrative Agent deems necessary or advisable in order to grant to
the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority
security interest in the Capital Stock of such new Subsidiary that is owned by such Group Member
(other than any Excluded Foreign Subsidiaries), (provided that, in no event shall (x) more
than 65% of the total outstanding Capital Stock of any such new Excluded Foreign Subsidiary be
required to be so pledged and (y) any Capital Stock or assets of



94









 




any Subsidiary (or other entity) owned by such new Excluded Foreign Subsidiary be required to
be so pledged), (ii) deliver to the Administrative Agent the certificates representing such Capital
Stock, if any, together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of such Group Member, as the case may be, and take such other action as may be
necessary or, in the opinion of the Administrative Agent, desirable to perfect the Lien of the
Administrative Agent thereon, and (iii) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above, which opinions shall
be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.




          6.10 Further Assurances. From time to time execute and deliver, or cause to be executed and
delivered, such additional instruments, certificates or documents, and take such actions, as the
Administrative Agent may reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing
the rights of the Administrative Agent and the Lenders with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds thereof or with respect to any other
property or assets hereafter acquired by the Borrower or any Subsidiary which may be deemed to be
part of the Collateral) pursuant hereto or thereto including, without limitation, the execution and
delivery of (x) all such documents necessary to transfer any liquor licenses or hospitality
licenses with respect to the Borrowing Base Property into the name of the Administrative Agent or
its designee after the occurrence of an Event of Default and (y) concurrently with any increase in
the Obligations to be secured by any Borrowing Base Property, (i) an amendment to the Mortgage of
such Borrowing Base Property reflecting an increase in coverage amount to the extent necessary with
respect to such increase and (ii) an endorsement to the Title Insurance Policy for each Borrowing
Base Property whose Mortgage has been recorded reflecting an increase in coverage amount to the
extent necessary with respect to such increase, each in form and substance acceptable to the
Administrative Agent; provided that, the Administrative Agent shall have received evidence
satisfactory to it that all premiums in respect of each such endorsement, all charges for mortgage
recording tax, and all related expenses, if any, have been paid. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy pursuant to this
Agreement or the other Loan Documents which requires any consent, approval, recording,
qualification or authorization of any Governmental Authority, the REIT and the Borrower will
execute and deliver, or will cause the execution and delivery of, all applications, certifications,
instruments and other documents and papers that the Administrative Agent or such Lender may be
required to obtain from any Group Member for such governmental consent, approval, recording,
qualification or authorization.



          6.11 Appraisals. (a) The Supermajority Lenders may request a new Appraisal for all or any
Borrowing Base Property (i) once during any period of twelve months or (ii) at any time and from
time to time after the occurrence and during the continuation of an Event of Default.



          (b) The Administrative Agent shall have the right to request an Appraisal for any Borrowing
Base Property on a quarterly basis from time to time if any of the following events has occurred
and is continuing at the time of such request:



95









 






     (i) if such Borrowing Base Property suffers a Material Environmental Event after the
date of this Agreement; or




     (ii) the Administrative Agent determines that such Borrowing Base Property has suffered
a Material Property Event after the date such Borrowing Base Property was admitted into the
Borrowing Base (or in the case of a Casualty, in respect of such Borrowing Base Property, is
reasonably likely to become a Material Property Event).



          (c) The Administrative Agent shall receive an Appraisal for each Borrowing Base Property on or
prior to the 24-month anniversary of the Closing Date.



          6.12 Borrowing Base Reports. (a) Beginning with the quarter ended September 30, 2010,
deliver to the Administrative Agent (and the Administrative Agent shall thereafter deliver to each
Lender), as soon as available and in any event concurrently with the delivery of the financial
statements referred to in Sections 6.1(a) and (c), a completed Borrowing Base Certificate
calculating and certifying the Borrowing Base as of the end of such quarter, signed on behalf of
the Borrower by a Principal Financial Officer.



          (b) Furnish to the Administrative Agent (and the Administrative Agent shall thereafter deliver
to each Lender) as soon as practicable and in any event within five Business Days after any
Disposition outside the ordinary course of business (including by way of Casualty or Condemnation)
of any Collateral having a book value exceeding $1,000,000, an updated Borrowing Base Certificate
calculating (on a pro forma basis, after giving effect to such Disposition and reflecting only the
changes to the affected component of the Borrowing Base Property) and certifying such pro forma
Borrowing Base as of the end of the most recent fiscal quarter for which a Borrowing Base
Certificate was delivered pursuant to Section 5.2(c), 5.3, 5.4 or 6.12(a), as applicable. The
Borrowing Base set forth in each Borrowing Base Certificate delivered with respect to each fiscal
quarter occurring after the fiscal quarter covered by the updated Borrowing Base Certificate
described in the preceding sentence and ending prior to any such Disposition shall be calculated on
a pro forma basis, after giving effect to such Disposition.



          6.13 Blocked Account Control Agreements. (a) Cause each Manager to, (i) deliver
irrevocable written instructions to all Tenants to deliver all Rents and other receipts payable
thereunder directly to the applicable Lockbox Account, (ii) deliver irrevocable written
instructions to each of the credit card companies or credit card clearing banks with which any
Group Member or such Manager has entered into merchant’s agreements to deliver all receipts payable
with respect to the applicable Borrowing Base Property directly to the applicable Lockbox Account
and (iii) deposit all amounts received by any Group Member or the Manager constituting Rents into
the Lockbox Account within one Business Day after receipt thereof.



          (b) Execute and deliver and cause each depository bank holding each Lockbox Account
established after the Closing Date to execute and deliver Blocked Account Control Agreements
covering each such Lockbox Account together with legal opinions satisfactory to the Administrative
Agent.



          6.14 Taxes. (a) Timely file or cause to be filed all Federal, state and other material tax
returns that are required to be filed and shall timely pay all taxes shown to be due



96









 




and payable on said returns or on any assessments made against it or any of its Property and
all other material taxes, fees or other charges imposed on it or any of its Property by any
Governmental Authority (other than any taxes the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which reserves in conformity
with the Uniform System of Accounts and reconciled in accordance with GAAP have been provided on
the books of the applicable Group Member, as the case may be).




          (b) The Loan Parties shall pay all taxes and Other Charges now or hereafter levied or assessed
or imposed against any Borrowing Base Property or any part thereof as the same become due and
payable. At the request of the Administrative Agent, each Loan Party will deliver to the
Administrative Agent receipts for payment or other evidence satisfactory to the Administrative
Agent that the taxes and Other Charges have been so paid or are not then delinquent no later than
ten days prior to the date on which the taxes or Other Charges would otherwise be delinquent if not
paid. At the request of the Administrative Agent, each Loan Party shall furnish to the
Administrative Agent receipts for the payment of the taxes and the Other Charges prior to the date
the same shall become delinquent. Except Liens set forth in Sections 7.3(a), 7.3(b) and 7.3(f),
the Loan Parties 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 any Borrowing Base Property, and
shall promptly pay for all utility services provided to each Borrowing Base Property.



          6.15 Condemnation, Casualty and Restoration. (a) The Administrative Agent has the right
(but not the obligation) to participate in any proceeding for the Condemnation of a Borrowing Base
Property that would materially interfere with the use or operation of such Borrowing Base Property
and to be represented by counsel of its own choice, and the applicable Loan Parties shall from time
to time deliver to the Administrative Agent all instruments requested by it to permit such
participation. Each applicable Loan Party shall, at its expense, diligently prosecute any such
proceedings, and shall consult with the Administrative Agent, 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 any
transfer made in lieu of or in anticipation of the exercise of such taking), the Borrower shall
continue to pay the Obligations at the time and in the manner provided for in this Agreement and
the Obligations shall not be reduced until any award shall have been actually received and applied
by the Administrative Agent, after the deduction of expenses of collection, to the reduction or
discharge of the Obligations. All costs and expenses (including attorney’s fees and costs)
incurred by the Administrative Agent in connection with any Condemnation shall be a demand
obligation owing by the Borrower (which the Borrower hereby promises to pay) to the Administrative
Agent pursuant to this Agreement.



          (b) If any Borrowing Base Property shall be damaged or destroyed, in whole or in part, by a
Casualty, and either (i) the aggregate cost of repair of such damage or destruction shall be equal
to or in excess of 5% of value as reflected in the most-recent Appraisal for such Borrowing Base
Property or (ii) such Casualty is reasonably expected to cause a Material Property Event, give
prompt notice of such Casualty to the Administrative Agent and in the case of clause (ii) above,
the Administrative Agent shall have the right to request a new Appraisal pursuant to Section
6.11(b)(ii) and adjust the Borrowing Base. The applicable Loan Party shall pay or cause to be
paid, all restoration costs whether or not such costs are covered by insurance.



97









 




The Administrative Agent may, but shall not be obligated to, make proof of loss if not made
promptly by the applicable Loan Party. If an Event of Default has occurred and is then continuing,
then the applicable Loan Party shall adjust all claims for Insurance Proceeds in consultation with,
and approval of, the Administrative Agent.




          (c) The Administrative Agent, for the benefit of the Secured Parties, shall be entitled to
receive all sums which may be awarded or become payable to a Loan Party for the Condemnation of any
Borrowing Base Property, or any part thereof, and any Insurance Proceeds of a Casualty and the
applicable Loan Party shall, upon request of the Administrative Agent, promptly execute such
additional assignments and other documents as may be necessary from time to time to permit such
participation and to enable the Administrative Agent to collect and receipt for any such sums,
provided that, in the event the Insurance Proceeds shall be less than $250,000, such
Insurance Proceeds shall be paid by the insurance company directly to the Borrower and the Borrower
shall use such Insurance Proceeds to commence and satisfactorily complete with due diligence the
restoration of the applicable Borrowing Base Property in accordance with the terms of this
Agreement. All such sums are hereby assigned to the Administrative Agent, for the benefit of the
Secured Parties, and shall, after deduction therefrom of all reasonable expenses actually incurred
by the Administrative Agent, including attorneys’ fees and costs, at the Administrative Agent’s
option be (i) released to the applicable Loan Party, or (ii) applied to the restoration of the
affected Borrowing Base Property, or (iii) applied to the payment of the Obligations in such order
and manner as the Administrative Agent, in its sole discretion, may elect, whether or not due. Any
amounts not applied in accordance with clause (i), (ii) or (iii) of the foregoing sentence shall be
remitted to the applicable Loan Party. In any event the unpaid portion of the Obligations shall
remain in full force and effect and the payment thereof shall not be excused. The Administrative
Agent shall not be, under any circumstances, liable or responsible for failure to collect or to
exercise diligence in the collection of any such sum or for failure to see to the proper
application of any amount paid over to the applicable Loan Party.



          6.16 Acceptable Leases. (a) Each lease that is a Borrowing Base Property or a portion
thereof, shall at all times be an Acceptable Lease;



          (b) within ten days after receipt of request by the Administrative Agent, the applicable Loan
Party shall use commercially reasonable efforts to obtain from each lessor related to each
Acceptable Lease and furnish to the Administrative Agent the estoppel certificate of such lessor
stating the date through which rent has been paid and whether or not there are any defaults
thereunder and specifying the nature of such claimed defaults, if any;



          (c) promptly execute, acknowledge and deliver to the Administrative Agent such instruments as
may be required to permit the Administrative Agent to cure any default under any Acceptable Lease
or permit the Administrative Agent to take such other action required to enable the Administrative
Agent to cure or remedy the matter in default and preserve the security interest of the
Administrative Agent under the Loan Documents with respect to the applicable Acceptable Lease and
each Loan Party irrevocably appoints the Administrative Agent as its true and lawful
attorney-in-fact to do, in its name or otherwise, any and all acts and to execute any and all
documents that are necessary to preserve any rights of such Loan Party under or with respect to
each Acceptable Lease, including, without limitation, the right to effectuate



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any extension or renewal of such Acceptable Lease, or to preserve any rights of such Loan
Party whatsoever in respect of any part of such Acceptable Lease (and the above powers granted to
the Administrative Agent are coupled with an interest and shall be irrevocable);




          (d) the actions or payments of the Administrative Agent to cure any default by any Loan Party
under any Acceptable Lease shall not remove or waive, as between such Loan Party and the
Administrative Agent, the default that occurred under this Agreement by virtue of the default by a
Loan Party under such Acceptable Lease. All sums expended by the Administrative Agent to cure any
such default in accordance with this Section 6.16, shall be paid by the applicable Loan Party to
the Administrative Agent, upon demand, with interest on such sum at the rate set forth in this
Agreement from the date such sum is expended to and including the date the reimbursement payment is
made to the Administrative Agent. All such indebtedness shall be deemed to be Obligations secured
by the Security Documents;



          (e) if the applicable Loan Party shall default in the performance or observance of any term,
covenant, or condition of any Acceptable Lease on the part of such Loan Party and shall fail to
cure the same prior to the expiration of any applicable cure period provided thereunder, then the
Administrative Agent 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 Acceptable Lease on the part of such Loan Party to be performed or observed on
behalf of such Loan Party and subject to the rights of Tenants under the Acceptable Leases, the
Administrative Agent shall have the right to enter all or any portion of the applicable Real
Property at such times and in such manner as the Administrative Agent deems necessary, to prevent
or to cure any such default, to the end that the rights of such Loan Party in, to, and under such
Acceptable Lease shall be kept unimpaired and free from default. If the lessor under any
Acceptable Lease shall deliver to the Administrative Agent a copy of any notice of default under
such Acceptable Lease, then such notice shall constitute full protection to the Administrative
Agent for any action taken or omitted to be taken by the Administrative Agent, in good faith, in
reliance thereon; and



          (f) notwithstanding anything to the contrary contained in the Loan Documents with respect to
any Acceptable Lease:




     (i) the Lien of the related Mortgage attaches to all of such Loan Party’s rights and
remedies at any time arising under or pursuant to subsection 365(h) of the Bankruptcy Code,
including, without limitation, all of the Loan Party’s rights, as lessee, to remain in
possession of any applicable Acceptable Lease;




     (ii) each Loan Party shall not, without the Administrative Agent’s prior written
consent, elect to treat any Acceptable Lease as terminated under subsection 365(h)(l)(A)(l)
of the Bankruptcy Code. Any such election made without the Administrative Agent’s prior
written consent shall be void;




     (iii) as security for the Obligations, each Loan Party unconditionally assigns,
transfers and sets over to the Administrative Agent all of such Loan Party’s claims and
rights to the payment of damages arising from any rejection of any Acceptable Lease by any
lessor under such Acceptable Lease under the Bankruptcy Code. The Administrative



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Agent and each Loan Party shall proceed jointly or in the name of such Loan Party in
respect of any claim, suit, action or proceeding relating to the rejection of any Acceptable
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 of any
ground lessor, or air rights lessor, as applicable, 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 Obligations shall
have been satisfied and discharged in full. Any amounts received by the Administrative
Agent or any Loan Party as damages arising out of the rejection of any Acceptable Lease as
aforesaid shall be applied to all reasonable costs and expenses of the Administrative Agent
(including, without limitation, reasonable attorney’s fees and costs) incurred in connection
with the exercise of any of its rights or remedies in accordance with the applicable
provisions of the Loan Documents;




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




     (v) if any action, proceeding, motion or notice shall be commenced or filed in respect
of any lessor of all or any part of any Acceptable Lease in connection with any case under
the Bankruptcy Code, the Administrative Agent and the Loan Parties shall cooperatively
conduct and control any such litigation with counsel agreed upon between the Loan Parties
and the Administrative Agent in connection with such litigation. Each Loan Party shall,
upon demand, pay to the Administrative Agent all reasonable costs and expenses (including
reasonable attorneys’ fees and costs) actually paid or actually incurred by the
Administrative Agent in connection with the cooperative prosecution or conduct of any such
proceedings. All such costs and expenses shall be Obligations secured by the Lien of the
Mortgages.



          6.17 Borrowing Base Property Covenants.



          (a) Reports and Testing. (i) Deliver to the Administrative Agent copies of all
material reports, studies, inspections, and tests made on the Borrowing Base Properties, the
Improvements, or any materials to be incorporated into the Improvements, (ii) immediately notify
the Administrative Agent of any report, study, inspection, or test that indicates any material
adverse condition relating to the Borrowing Base Properties, the Improvements, or any such
materials which could reasonably be expected to have a Material Property Event and (iii) make such
additional tests as the Administrative Agent may require.



          (b) Business Strategy. Maintain ownership of each Borrowing Base Property at all
times consistent with the Borrower’s business strategy, and each Borrowing Base Property



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shall at all times be of an asset quality consistent in all material respects with or better
than the quality of Borrowing Base Properties owned by the Loan Parties as of the date hereof.




          (c) Management Agreements; Franchise Agreements. (i) Promptly (A) perform and
observe all of the covenants and agreements required to be performed and observed under the
Management Agreements and the Franchise Agreements, including, without limitation, any PIP
Requirements, and do all things necessary to preserve and to keep unimpaired the Loan Parties’
rights thereunder; (B) notify the Administrative Agent of any default under the Management
Agreements and the Franchise Agreements of which any Loan Party is aware; (C) deliver to the
Administrative Agent a copy of each financial statement, business plan, annual budget and capital
expenditures plan, notice, report, estimate, notice of default or other notice received by the Loan
Parties under the Management Agreements and the Franchise Agreements; and (D) enforce in all
respects the performance and observance of all of the covenants and agreements required to be
performed or observed by the applicable Manager under the Management Agreements and the applicable
Franchisor under the Franchise Agreements.




          (ii)

    If (A) an Event of Default hereunder has occurred and remains uncured, (B) a
Manager or Franchisor shall become insolvent or is the subject of any petition, case,
proceeding or other action pursuant to any Debtor Relief Law, (C) a default occurs under any
Management Agreement or Franchise Agreement or (D) a Manager or Franchisor engages in gross
negligence, fraud or willful misconduct, the Borrower shall, and shall cause each relevant
Subsidiary to, at the request of the Administrative Agent, terminate such Management
Agreement or Franchise Agreement and replace such Manager with a Qualified Manager pursuant
to a Replacement Management Agreement or the Franchisor with a Qualified Franchisor pursuant
to a Replacement Franchise Agreement, as applicable, it being understood and agreed that the
management fee for such Qualified Manager or the franchise fee for such Qualified
Franchisor, as applicable, shall not exceed then prevailing market rates. In the event that
a Management Agreement or Franchise Agreement expires or is terminated (without limiting any
obligation of the Borrower to obtain the Administrative Agent’s consent to any termination
or modification of such Management Agreement or Franchise Agreement in accordance with the
terms and provisions of this Agreement), the Borrower shall, or shall cause each relevant
Subsidiary, to promptly enter, or cause to be entered, into a Replacement Management
Agreement with the Manager or another Qualified Manager or a Replacement Franchise Agreement
with the Franchisor or another Qualified Franchisor, as applicable.





          (d) Operating Leases. Promptly (A) perform and observe all of the covenants and
agreements required to be performed and observed under the Operating Leases and do all things
necessary to preserve and to keep unimpaired the Loan Parties’ rights thereunder; (B) notify the
Administrative Agent of any default under the Operating Leases of which any Loan Party is aware;
(C) deliver to the Administrative Agent a copy of any notice of default or other notice received by
the Loan Parties under the Operating Leases; and (D) enforce in all respects the performance and
observance of all of the covenants and agreements required to be performed or observed by the
applicable lessor under each Operating Lease.



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          6.18 Material Mortgage Recording Tax Mortgaged Properties. (a) If on the last day of any
fiscal quarter of the Borrower either (i) the Consolidated Leverage Ratio exceeds 45% or (ii) the
Consolidated Fixed Charge Coverage Ratio for the immediately preceding four consecutive fiscal
quarters ending on such date is less than 2.50 to 1.00 (the first such date to occur, the
“Mortgage Recordation Trigger Date”), then (x) all Material Mortgage Recording Tax State
Mortgages shall be released from escrow pursuant to the Escrow Agreement and recorded in each of
the offices that the Administrative Agent may deem necessary or desirable in order to create in
favor of the Administrative Agent for the benefit of the Secured Parties a duly perfected security
interest in the Property described in such Material Mortgage Recording Tax State Mortgages and (y)
the Administrative Agent shall receive for each Material Mortgage Recording Tax Mortgaged Property
a title insurance policy satisfying the requirements of Section 5.1(q) (subject to any intervening
Liens of record), provided that, notwithstanding the foregoing, in the event that the Borrower has
failed to deliver the financial statements in accordance with Section 6.1 on the date specified for
such delivery, the Administrative Agent may (or, at the request of the Required Lenders, shall)
deliver a notice to the Borrower that the Mortgage Recordation Trigger Event has occurred. For the
avoidance of doubt, in the event that the Borrower has failed to comply with the requirements of
either clause (x) or (y) with respect to any Material Mortgage Recording Tax Mortgaged Property,
such Property shall cease to be a Borrowing Base Property. With respect to a Material Mortgage
Recording Tax Mortgaged Property, the maximum amount of the Mortgage for such Property shall be the
value of such Property as determined by the most recent Appraisal.



          (b) Until the Mortgage Recordation Trigger Date, the Borrower shall deliver to the
Administrative Agent and the Lenders the results of a title search for each Material Mortgage
Recording Tax State Mortgage on or prior to each anniversary of the Closing Date.



          6.19 Disclosable Events. If the REIT or the Borrower obtains knowledge or receives any
notice that any Group Member or REIT Controlled Affiliate is in violation of Section 7.21(a), (b)
or (c), including any such violation that could result in the forfeiture of any Collateral or the
proceeds of the Loans or a claim of forfeiture of any Collateral or the proceeds of the Loans (any
such violation, a “Disclosable Event”), the Borrower shall promptly (i) give written notice
to the Administrative Agent of such Disclosable Event and (ii) comply with all applicable laws with
respect to such Disclosable Event. The Borrower hereby authorizes and consents to the
Administrative Agent and each Lender taking any and all steps the Administrative Agent or such
Lender deems necessary, in its sole but reasonable discretion, to avoid a violation of all
applicable laws with respect to any such Disclosable Event.



          6.20 Post-Closing Covenants. (a) On or before the day that is 10 days after the Closing
Date, the Administrative Agent shall have received a Subordination Agreement covering each of the
Borrowing Base Properties, executed and delivered by a duly authorized officer and each Loan Party
thereto.



          (b) On or before the day that is 30 days after the Closing Date, the Administrative Agent
shall have received deposit account control agreements in form and substance reasonably
satisfactory to the Administrative Agent granting, with respect to each Borrowing Base Property,
the Subsidiary of the REIT that is a lessor under the relevant Operating Lease “control” for
purposes of Article 9 of the Uniform Commercial Code or as



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necessary to perfect such security interest under any other applicable law (such agreements,
each as amended, restated, supplemented or otherwise modified from time to time, the “Blocked
Account Control Agreements”), executed and delivered by a duly authorized officer of each party
a party thereto, covering each Lockbox Account, together with legal opinions satisfactory to the
Administrative Agent; provided that, all interests of such Subsidiary in such Blocked
Account Control Agreements, together with each related Lockbox Account, shall be assigned to the
Administrative Agent, for the benefit of the Secured Parties, pursuant to the Guarantee and
Collateral Agreement.




          (c) On or before the day that is 30 days after the Closing Date, the Administrative Agent
shall have received with respect to each Borrowing Base Property, a Comfort Letter from each
Franchisor, each of which shall be satisfactory in form and substance to the Administrative Agent.



          (d) On or before the day that is 45 days after the Closing Date, the Administrative Agent
shall have received with respect to Homewood Dallas Market Center an updated certificate of
occupancy in form and substance reasonably satisfactory to the Administrative Agent.



          (e) On or before the day that is the first anniversary of the Closing Date, the Administrative
Agent shall have received with respect to Hampton Inn & Suites Houston Medical Center a zoning
report reasonably satisfactory to the Administrative Agent stating that such Borrowing Base
Property is in compliance with all applicable zoning and building laws without qualification or
need to take further action.



SECTION 7. NEGATIVE COVENANTS




          The REIT and the Borrower hereby jointly and severally agree that, so long as the Revolving
Credit Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, each of the REIT and the Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly:



          7.1 Financial Condition Covenants.



          (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as of the
last day of any fiscal quarter of the Borrower to exceed 50%.



          (b) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge
Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower (or, if less, the
number of full fiscal quarters subsequent to the Closing Date) to be less than 2.30 to 1.00.



          (c) Maintenance of Total Net Worth. Permit Total Net Worth as of the last day of any
fiscal quarter to be less than the sum of (i) 85% of the Total Net Worth as of the Closing Date,
plus (ii) 75% of net cash proceeds of any issuance or sale of Capital Stock by the REIT
after the Closing Date.



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          (d) Consolidated Floating Rate Debt. Permit Consolidated Floating Rate Debt as of the
last day of any fiscal quarter of the Borrower at any time to exceed 35% of the Total Asset Value
on such date.



          7.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
except:




     (a) Indebtedness of any Loan Party pursuant to any Loan Document;




     (b) Indebtedness of (i) the Borrower to any Subsidiary and (ii) any Wholly Owned
Subsidiary Guarantor to the Borrower or any other Subsidiary; provided that, the
aggregate amount of any Indebtedness of any Subsidiary that is not a Loan Party to any Loan
Party shall not exceed $5,000,000 at any one time outstanding;




     (c) Indebtedness (including, without limitation, Capital Lease Obligations) secured by
Liens permitted by Section 7.3(h) in an aggregate principal amount not to exceed $5,000,000
at any one time outstanding;




     (d) Indebtedness outstanding on the date hereof and listed on Schedule 7.2(d)
and any refinancings, refundings, renewals or extensions thereof (without any increase in
the principal amount thereof (other than by the refinancing costs thereof including premiums
and make whole payments) or any shortening of the maturity of any principal amount thereof);




     (e) Guarantee Obligations made in the ordinary course of business by the Borrower or
any of its Subsidiaries of obligations of the Borrower or any Subsidiary Guarantor;




     (f) unsecured Recourse Indebtedness of the REIT and its Subsidiaries which (i) shall
mature at least one year after the Revolving Credit Termination Date and (ii) shall not
exceed on any date of determination, an amount equal to 10% of Total Asset Value on such
date at any one time outstanding;




     (g) Non-Recourse Indebtedness of any Subsidiary that becomes a Subsidiary of the
Borrower (other than a Borrowing Base Group Member) after the date hereof in accordance with
Section 7.7(g), which exists at the time such Person becomes a Subsidiary; provided
that, (x) such Indebtedness existed at the time of such acquisition and was not created in
connection therewith or in contemplation thereof, and (y) the Borrower shall deliver to the
Administrative Agent a pro forma Compliance Certificate (i) certifying that, immediately
prior to and after giving effect to such additional Indebtedness, no Default or Event of
Default shall exist and (ii) containing all information and calculations necessary, and
taking into consideration such additional Indebtedness, for determining pro forma compliance
with the provisions of Section 7.1 hereof;




     (h) Non-Recourse Indebtedness (other than Permitted Construction Financing) in respect
of the Non-Recourse Subsidiary Borrowers that is secured by either (i) Real Property owned
or leased by such Non-Recourse Subsidiary Borrowers and any related



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Property permitted by Section 7.3(k) or (ii) the Capital Stock of any Subsidiary of
such Non-Recourse Subsidiary Borrower that is also a Non-Recourse Subsidiary Borrower,
including, in either case, any refinancing of any Indebtedness incurred pursuant to Section
7.2(d); provided that, with respect to any of the foregoing Indebtedness:




     (A) none of the Group Members provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness) or is
directly or indirectly liable (as guarantor or otherwise), other than (i) any
Subsidiary of the Borrower that is a direct or indirect parent or Subsidiary of such
Non-Recourse Subsidiary Borrower or (ii) the Non-Recourse Parent Guarantor as
guarantor (x) to the extent permitted by Section 7.2(j) for fraud,
misrepresentation, misapplication of cash, waste, environmental claims and
liabilities, prohibited transfers, violations of special purpose entity covenants
and other circumstances customarily excluded by institutional lenders from
exculpation provisions and included in separate guarantee or indemnification
agreements in non-recourse financing of real estate or (y) to the extent otherwise
permitted by Section 7.2(f); and




     (B) as to which the lenders thereunder will not have any recourse to the
Capital Stock or assets of the Group Members other than the assets securing such
Indebtedness, additions, accessions and improvements thereto and proceeds thereof,
the Capital Stock of the Non-Recourse Subsidiary Borrower that is the borrower under
such Indebtedness or the Capital Stock of any direct or indirect parent of such
Non-Recourse Subsidiary Borrower and, in the case of a Non-Recourse Parent
Guarantor, recourse against such Non-Recourse Parent Guarantor for fraud,
misrepresentation, misapplication of cash, waste, environmental claims and
liabilities, prohibited transfers, violations of special purpose entity covenants
and other circumstances customarily excluded by institutional lenders from
exculpation provisions and included in separate guarantee or indemnification
agreements in non-recourse financings of real estate, and Guarantee Obligations
permitted by Section 7.2(f); and




provided, further, that, (x) immediately prior to and after giving effect to
the incurrence of such Indebtedness, no Default or Event of Default shall have occurred and
be continuing, and (y) after giving pro forma effect to such Indebtedness and the use of
proceeds therefrom, the Borrower shall be in compliance with the provisions of Section 7.1
hereof. For the avoidance of doubt, if at any time following the Closing Date any Group
Member acquires the remaining Capital Stock of any Joint Venture not owned by the Group
Members on the Closing Date, any Real Property owned by such Joint Venture shall be included
in clause (i) of this Section 7.2(h);




     (i) Permitted Construction Financing of any Non-Recourse Subsidiary Borrower;
provided that, with respect to any of the foregoing Indebtedness:




     (A) none of the Group Members provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness) or is
directly or indirectly liable (as guarantor or otherwise), other



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than (i) any Subsidiary of the Borrower that is a direct or indirect parent or
Subsidiary of such Non-Recourse Subsidiary Borrower or (ii) the Non-Recourse Parent
Guarantor as guarantor (x) to the extent permitted by Section 7.2(j) for fraud,
misrepresentation, misapplication of cash, waste, environmental claims and
liabilities, prohibited transfers, violations of special purpose entity covenants
and other circumstances customarily excluded by institutional lenders from
exculpation provisions and included in separate non-monetary completion guarantee or
indemnification agreements in construction financing of real estate or (y) to the
extent otherwise permitted by Section 7.2(f), including customary monetary
completion and repayment guarantees; and




     (B) as to which the lenders thereunder will not have any recourse to the
Capital Stock or assets of the Group Members other than the assets securing such
Indebtedness, additions, accessions and improvements thereto and proceeds thereof
and, in the case of a Non-Recourse Parent Guarantor, recourse against such
Non-Recourse Parent Guarantor for (x) fraud, misrepresentation, misapplication of
cash, waste, environmental claims and liabilities, prohibited transfers, violations
of special purpose entity covenants and other circumstances customarily excluded by
institutional lenders from exculpation provisions and included in separate
non-monetary completion guarantee or indemnification agreements in construction
financing of real estate, and or (y) to the extent otherwise permitted by Section
7.2(f), including customary monetary completion and repayment guarantees;




provided, further, that, (x) immediately prior to and after giving effect to
the incurrence of such Indebtedness, no Default or Event of Default shall have occurred and
be continuing, and (y) after giving pro forma effect to such Indebtedness and the use of
proceeds therefrom, the Borrower shall be in compliance with the provisions of Section 7.1
hereof;




     (j) Permitted Limited Recourse Guarantees of Indebtedness permitted by Sections 7.2(h)
and (i), provided that, the sum of, without duplication, (x) the aggregate amount of
Permitted Limited Recourse Guarantees comprised of monetary completion or payment guarantees
plus (y) the aggregate amount of Permitted Limited Recourse Guarantees required by
GAAP to be reflected as a liability on the consolidated balance sheet of the Group Members
shall not exceed the amount permitted to be incurred under Section 7.2(f) (together with all
other Indebtedness incurred pursuant to such Section at such time) at any one time
outstanding; and




     (k) Guarantee Obligations made by the REIT or any Loan Party which owns a Borrowing
Base Property for the payment and performance of the Franchise Agreement with respect to
such Borrowing Base Property.



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          7.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, except for:




     (a) Liens for taxes not yet due or that are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Subsidiaries, as the case may be, in
conformity with the Uniform System of Accounts and reconciled in accordance with GAAP;




     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business that are not overdue for a period of more
than 30 days or that are being contested in good faith by appropriate proceedings;




     (c) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;




     (d) any attachment or judgment liens not resulting in an Event of Default under Section
8.1(h);




     (e) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of business;




     (f) easements, rights-of-way, restrictions and other similar encumbrances incurred in
the ordinary course of business that, in the aggregate, are not substantial in amount and
that do not in any case materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;




     (g) Liens in existence on the date hereof listed on Schedule 7.3(g), securing
Indebtedness permitted by Section 7.2(d), provided that, no such Lien is spread to
cover any additional Property after the Closing Date and that the amount of Indebtedness
secured thereby is not increased except as permitted by Section 7.2(d);




     (h) Liens securing Indebtedness of the Borrower or any other Subsidiary incurred
pursuant to Section 7.2(c) to finance the acquisition of fixed or capital assets, including
Real Property, provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such Liens do not
at any time encumber any Property other than the Property financed by such Indebtedness and
(iii) the amount of Indebtedness secured thereby is not increased;




     (i) Liens created pursuant to the Security Documents;




     (j) any interest or title of a lessor under any Lease entered into by the Borrower or
any other Subsidiary in the ordinary course of its business and covering only the assets so
leased;



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     (k) Liens on (x) fee-owned property or Real Property leases of the Non-Recourse
Subsidiary Borrowers and any related Property (other than the Capital Stock of any Group
Member that is not a Non-Recourse Subsidiary Borrower or a direct or indirect parent of a
Non-Recourse Subsidiary Borrower) customarily granted or pledged by a borrower to its lender
in connection with non-recourse real estate financing or construction financing, as
applicable, including, without limitation, any personal property located on or related to
such Property, any contracts, accounts receivables and general intangibles related to such
Real Property and any Hedge Agreements relating to the Indebtedness, or (y) in the case of
any Mortgage Financing, the Capital Stock of any Non-Recourse Subsidiary Borrower or a
direct or indirect parent of a Non-Recourse Subsidiary Borrower (and, in each case, any
proceeds from any of the foregoing) which Liens secure Indebtedness permitted by Sections
7.2(h) and (i), provided that, no such Lien shall encumber any Collateral; and




     (l) Liens securing Indebtedness of any Subsidiary that becomes a Subsidiary after the
date hereof incurred pursuant to Section 7.2(g), which exists at the time such Person
becomes a Subsidiary, provided that, (x) such Liens are created substantially
simultaneously with the incurrence of such Indebtedness and (y) such Liens do not at any
time encumber any Property other than the Property financed by such Indebtedness, other
than, in each case, in connection with any consolidations of such Indebtedness.


Notwithstanding the foregoing, in no event shall any Lien be created, incurred, assumed or suffered
to exist on (x) any Borrowing Base Property (except Liens pursuant to Section 7.3(a), (b) or (f))
or (y) the Capital Stock of any Person that is the direct or indirect owner of any Borrowing Base
Property, except Liens created pursuant to the Security Documents.




          7.4 Limitation on Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution),
or Dispose of all or substantially all of its Property or business, except that:




     (a) any Subsidiary of the Borrower may be merged or consolidated with (or liquidated or
dissolved into) or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Wholly Owned Subsidiary Guarantor
(provided that (i) the Wholly Owned Subsidiary Guarantor shall be the continuing or
surviving corporation or (ii) simultaneously with such transaction, the continuing or
surviving corporation shall become a Wholly Owned Subsidiary Guarantor and the Borrower
shall comply with Section 6.9 in connection therewith);




     (b) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon
voluntary liquidation, dissolution or otherwise) to the Borrower or any Subsidiary
Guarantor; and




     (c) the Borrower and any Subsidiary of the Borrower may Dispose of any or all of its
assets pursuant to Section 7.5(e) or (f).



          7.5 Limitation on Disposition of Property. Dispose of any of its Property (including,
without limitation, receivables and leasehold interests), whether now owned or



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hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary’s Capital Stock to any Person, except:





     (a) the Disposition of obsolete or worn out property in the ordinary course of
business;




     (b) the sale of inventory in the ordinary course of business;




     (c) Dispositions permitted by Section 7.4(b);




     (d) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any
Subsidiary Guarantor;




     (e) the Disposition of any Borrowing Base Property (including the Capital Stock of the
direct or indirect owner of such Borrowing Base Property (other than the REIT and the
Borrower)); provided that, the Borrower shall have complied with each of the
requirements set forth in Section 5.4; and




     (f) the Disposition of other assets (including the Capital Stock of the direct or
indirect owner of such Borrowing Base Property (other than the Borrower and the REIT));
provided that, for each such Disposition, the Administrative Agent shall have
received (i) a certificate of a Principal Financial Officer certifying that after giving pro
forma effect to the Disposition of such asset, the Total Revolving Extensions of Credit
shall not exceed the Maximum Facility Availability and (ii) a pro forma Compliance
Certificate (x) containing all information and calculations necessary, after giving pro
forma effect to the Disposition of such asset, for determining pro forma compliance with the
provisions of Section 7.1 hereof and (y) certifying that immediately prior to and after
giving effect to such Disposition, no Default or Event of Default shall have occurred or be
continuing.



          7.6 Limitation on Restricted Payments. Declare or pay any dividend on, or make any payment
on account of, or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock of any Group Member,
whether now or hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of any Group Member, or enter
into any derivatives or other transaction with any financial institution, commodities or stock
exchange or clearinghouse (a “Derivatives Counterparty”) obligating any Group Member to
make payments to such Derivatives Counterparty as a result of any change in market value of any
such Capital Stock (collectively, “Restricted Payments”), except that:




     (a) any Subsidiary may make Restricted Payments to the Borrower or any Subsidiary;




     (b) the REIT may make Restricted Payments in the form of common stock of the REIT;




     (c) the REIT may make Restricted Payments to its direct or indirect owners during any
four quarter period (and the Borrower may make Restricted Payments to the



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REIT and the holders of the Borrower Common Units, in each case, to the extent
necessary to enable the REIT to make such Restricted Payments), not to exceed the greater of
(x) such amount necessary to enable (disregarding the ability of the REIT to make consent
dividends within the meaning of Section 565 of the Code) the REIT to maintain REIT Status
and (y) such amount necessary to enable the REIT to avoid the imposition of income and
excise taxes on the REIT; provided that, (1) in the case of clause (x), no such
Restricted Payments shall be made pursuant to this Section 7.6(c) if (A) a Default or Event
of Default under Section 8.1(a) or (f) shall have occurred and be continuing or (B) the
Obligations have become due and payable pursuant to Section 8.1, (2) in the case of clause
(y), no such Restricted Payments shall be made pursuant to this Section 7.6(c) if a Default
or Event of Default shall have occurred and be continuing, and (3) on the date of any such
Restricted Payment, the Borrower shall deliver to the Administrative Agent a pro forma
Compliance Certificate delivered by the Borrower to the Administrative Agent certifying that
immediately prior to and after giving effect to such Restricted Payment, (A) no Default or
Event of Default shall have occurred and be continuing and (B) containing all information
and calculations necessary, and taking into consideration such Restricted Payment, for
determining pro forma compliance with the provisions of Section 7.1 hereof, provided
that, in the case of a certification made in connection with Restricted Payment under clause
(x), such Compliance Certificate may include a statement (together with supporting detail
satisfactory to the Administrative Agent) that a Default or Event of Default has occurred
and is continuing (other than a Default or Event of Default under Section 8.1(a) or (f));




     (d) the Borrower may make Restricted Payments to the REIT to permit the REIT to (i) pay
corporate overhead expenses incurred in the ordinary course of business and (ii) pay any
taxes which are due and payable by the REIT, the Borrower or any Subsidiary;




     (e) the Borrower may make redemption payments in cash with respect to (i) the Borrower
Common Units to the extent required by the Borrower LP Agreement as in effect on the Closing
Date in an aggregate amount not exceeding $50,000 during the term of this Agreement and (ii)
the Borrower LTIP Units to the extent permitted by the Borrower LP Agreement as in effect on
the Closing Date in an aggregate amount not exceeding $3,000,000 during the term of this
Agreement; provided that, on the date of any such Restricted Payment, the Borrower
shall deliver to the Administrative Agent a pro forma Compliance Certificate (A) certifying
that, immediately prior to and after giving effect to such Restricted Payment, no Default or
Event of Default shall have occurred and be continuing, and (B) containing all information
and calculations necessary, and taking into consideration such Restricted Payment, for
determining pro forma compliance with the provisions of Section 7.1 hereof; and




     (f) any Joint Venture may make Restricted Payments pursuant to the terms of its joint
venture agreement; provided that, such Restricted Payments shall be made (i) pro
rata concurrently to each applicable Group Member in accordance with its relevant Ownership
Percentage at the time of any such Restricted Payment, (ii) such Restricted Payments do not
exceed the amount of such Joint Venture’s obligations under its joint



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venture agreement and (iii) such Restricted Payments are required pursuant to the terms
of such joint venture agreement.



          7.7 Limitation on Investments. Make any advance, loan, extension of credit (by way of
guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes,
debentures or other debt securities of, or any assets constituting an ongoing business from, or
make any other investment in, any other Person (all of the foregoing, “Investments”),
except:




     (a) extensions of trade credit in the ordinary course of business;




     (b) Investments in Cash Equivalents;




     (c) Investments arising in connection with the incurrence of Indebtedness permitted by
Sections 7.2(b), (e) and (k);




     (d) loans and advances to employees of the REIT, the Borrower or any Subsidiaries of
the Borrower in the ordinary course of business (including, without limitation, for travel,
entertainment and relocation expenses) in an aggregate amount for the REIT, the Borrower and
Subsidiaries of the Borrower not to exceed $100,000 at any one time outstanding;




     (e) Investments (other than those relating to the incurrence of Indebtedness permitted
by Section 7.7(c)) by the Group Members in the Borrower or any Subsidiary Guarantor,
provided that, (x) immediately prior to and after giving effect to such Investment,
no Default or Event of Default shall have occurred and be continuing, and (y) after giving
pro forma effect to such Investment, the Borrower shall be in compliance with the provisions
of Section 7.1 hereof;




     (f) REIT Permitted Investments; and




     (g) Investments by the Borrower or any of its Subsidiaries, consisting of Acquisitions;
provided that the Administrative Agent shall have received a certificate of a
Principal Financial Officer (i) certifying that after giving pro forma effect to such
Acquisition, the Total Revolving Extensions of Credit shall not exceed the Maximum Facility
Availability, (ii) containing all information and calculations necessary, after giving pro
forma effect to such Investment, for determining pro forma compliance with the provisions of
Section 7.1 hereof and (iii) certifying that immediately prior to and after giving effect to
such Acquisition, no Default or Event of Default shall have occurred or be continuing.



          7.8 Limitation on Modifications of Organizational Documents. Amend its organizational
documents in any manner determined by the Administrative Agent to be adverse to the Lenders.



          7.9 Limitation on Transactions with Affiliates. Enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service
or the payment of any management, advisory or similar fees, with any Affiliate



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(other than any Group Member) unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of business of such Group Member, as the case may be, and (c)
upon fair and reasonable terms no less favorable to such Group Member, as the case may be, than it
would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.




          7.10 Limitation on Sales and Leasebacks. Enter into any arrangement with any Person
providing for the leasing by the REIT, the Borrower or any Subsidiary of real or personal property
which has been or is to be sold or transferred by the REIT, the Borrower or such Subsidiary to such
Person or to any other Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the REIT, the Borrower or such Subsidiary.



          7.11 Limitation on Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end
on a day other than December 31 or change the Borrower’s method of determining fiscal quarters.



          7.12 Limitation on Negative Pledge Clauses. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any Group Member to create, incur,
assume or suffer to exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, to secure the Obligations or, in the case of any Guarantor, its obligations
under the Guarantee and Collateral Agreement, other than (a) this Agreement and the other Loan
Documents; (b) any agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby; (c) documentation evidencing Indebtedness permitted pursuant to Section
7.2(g); (d) any restrictions in connection with existing Indebtedness incurred pursuant to Section
7.2(d), Mortgage Financing or Permitted Construction Financing, including on the Capital Stock of
the Subsidiary that is the borrower under such existing Indebtedness incurred pursuant to Section
7.2(d), Mortgage Financing or Permitted Construction Financing or any direct or indirect parent of
such Subsidiary; and (e) single purpose entity limitations contained in charter documents for
Excluded Subsidiaries, provided that, (i) in the case of clauses (b) and (c), such prohibition or
limitation shall only be effective against the assets financed thereby and (ii) in the case of
clause (d), such prohibition or limitation shall only be effective against the assets financed
thereby and indirect transfers of the Capital Stock of the Subsidiary.



          7.13 Limitation on Restrictions on Subsidiary Distributions. Enter into or suffer to exist
or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to
(a) make Restricted Payments in respect of any Capital Stock of such Subsidiary held by, or pay any
Indebtedness owed to, the Borrower or any other Subsidiary, (b) make Investments in the Borrower or
any other Subsidiary or (c) transfer any of its assets to the Borrower or any other Subsidiary,
except for such encumbrances or restrictions existing under or by reason of (i) any restrictions
existing under the Loan Documents; (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the Disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary; (iii) restrictions with
respect to a Person at the time it becomes a Subsidiary pursuant to any Indebtedness permitted
pursuant to Section 7.2(g), provided that, such restrictions (x) were not entered into in
contemplation of such Person becoming a Subsidiary and (y) such



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restrictions apply solely to such Person and its Subsidiaries; (iv) restrictions imposed by
applicable law; (v) with respect to clauses (b) and (c) above, (A) restrictions pursuant to
documentation evidencing Permitted Construction Financing or Mortgage Financing incurred by
Subsidiaries that are not Guarantors, and (B) restrictions pursuant to any joint venture agreement
solely with respect to the transfer of the assets or Capital Stock of the related Joint Venture;
and (vi) any restrictions existing under an agreement that amends, refinances or replaces any
agreement containing restrictions permitted under the preceding clauses (i) through (v), provided
that, the terms and conditions of any such agreement, as they relate to any such restrictions are
no less favorable to the Borrower and its Subsidiaries, as applicable, than those under the
agreement so amended, refinanced or replaced, taken as a whole.




          7.14 Limitation on Lines of Business. Enter into any business, either directly or through
any Subsidiary, except for those businesses in which the Group Members are engaged on the date of
this Agreement or that are reasonably related thereto.



          7.15 Limitation on Activities of the REIT. In the case of the REIT, notwithstanding
anything to the contrary in this Agreement or any other Loan Document, (a) conduct, transact or
otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Capital Stock of the Borrower, (b)
incur, create, assume or suffer to exist any Indebtedness or other liabilities or financial
obligations, except (i) nonconsensual obligations imposed by operation of law, (ii) pursuant to the
Loan Documents to which it is a party, (iii) obligations with respect to its Capital Stock, (iv)
Permitted Limited Recourse Guarantees permitted by Section 7.2(j), and (v) Guarantee Obligations
permitted by Section 7.2(k) or (c) own, lease, manage or otherwise operate any properties or assets
(including cash (other than cash received in connection with dividends made by the Borrower in
accordance with Section 7.6 pending application in the manner contemplated by said Section) and
cash equivalents) other than the ownership of shares of Capital Stock of the Borrower.



          7.16 Limitation on Hedge Agreements. Enter into any Hedge Agreement other than Hedge
Agreements entered into in the ordinary course of business, and not for speculative purposes, to
protect against changes in interest rates.



          7.17 REIT Status. Permit the REIT to fail to meet the requirements for REIT Status.



          7.18 Borrower Tax Status. Permit the Borrower to become an association (or publicly traded
partnership or taxable mortgage pool) taxable as a corporation for federal tax purposes at any
time.



          7.19 Borrowing Base Properties. (a) Use or occupy or conduct any activity on, or allow the
use or occupancy of or the conduct of any activity on any Borrowing Base Properties in any manner
which makes void, voidable, or cancelable any insurance then in force with respect thereto or makes
the maintenance of insurance in accordance with Section 6.5 commercially unreasonable (including by
way of increased premium);



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          (b) Without the prior written consent of the Administrative Agent, initiate or permit any
zoning reclassification of any Borrowing Base Property or seek any variance under existing zoning
ordinances applicable to any Borrowing Base Property or use or permit the use of any Borrowing Base
Property in such a manner which would result in such use becoming a nonconforming use under
applicable zoning ordinances or other Requirement of Law, in each case, in a manner that would
materially interfere with the use or operation of such Borrowing Base Property;



          (c) Without the prior written consent of the Administrative Agent, (i) except as permitted by
Section 7.3(f), impose any material easement, restrictive covenant, or encumbrance upon any
Borrowing Base Property, (ii) execute or file any subdivision plat affecting any Borrowing Base
Property or (iii) consent to the annexation of any Borrowing Base Property to any municipality;



          (d) Suffer, permit or initiate the joint assessment of any Borrowing Base Property (i) with
any other real property constituting a tax lot separate from such Borrowing Base Property, and (ii)
which constitutes real property with any portion of such Borrowing Base Property which may be
deemed to constitute personal property, or any other procedure whereby the Lien of any taxes which
may be levied against such personal property shall be assessed or levied or charged to such real
property portion of such Borrowing Base Property;



          (e) Without the prior written consent of the Administrative Agent, permit any drilling or
exploration for or extraction, removal or production of any mineral, hydrocarbon, gas, natural
element, compound or substance (including sand and gravel) from the surface or subsurface of any
Borrowing Base Property regardless of the depth thereof or the method of mining or extraction
thereof;



          (f) Without the prior written consent of the Supermajority Lenders, surrender the leasehold
estate created by any Acceptable Lease or terminate or cancel any Acceptable Lease or modify,
change, supplement, alter, or amend any Acceptable Lease, either orally or in writing, in each
case, except as would not cause such Acceptable Lease to fail to qualify as an Acceptable Lease;



          (g) Without the prior written consent of the Supermajority Lenders, fail to (i) exercise any
option or right to renew or extend the term of any Acceptable Lease in accordance with the terms of
such Acceptable Lease (and give prompt written notice thereof to the Administrative Agent) and (ii)
execute, acknowledge, deliver and record any document requested by the Administrative Agent to
evidence the Lien of the related Mortgage on such extended or renewed lease term, in each case,
except as would not cause such Acceptable Lease to fail to qualify as an Acceptable Lease;
provided, that, the Loan Parties shall not be required to exercise any particular option or
right to renew or extend to the extent the Loan Parties shall have received the prior written
consent of the Supermajority Lenders (which consent may be withheld by the Supermajority Lenders in
their sole and absolute discretion and which consent shall not be necessary to the extent such
failure to exercise such right would not cause such Acceptable Lease to fail to qualify as an
Acceptable Lease) allowing the Loan Parties to forego exercising such option or right to renew or
extend;



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          (h) Without the prior written consent of the Supermajority Lenders, waive, excuse, condone or
in any way release or discharge any lessor of or from such lessor’s material obligations, covenants
and/or conditions under the applicable Acceptable Lease, in each case, except as would not cause
such Acceptable Lease to fail to qualify as an Acceptable Lease;



          (i) Without the prior written consent of the Supermajority Lenders, notwithstanding anything
contained in any Acceptable Lease to the contrary, sublet any portion of any Borrowing Base
Property held pursuant to an Acceptable Lease, except as would not cause such Acceptable Lease to
fail to qualify as an Acceptable Lease;



          (j) Enter into any Contractual Obligations related to any Borrowing Base Property providing
for the payment of a management fee (or any other similar fee) to anyone other than a Group Member,
unless such fee is subordinated to the Obligations in a manner satisfactory to the Administrative
Agent;



          (k) Without the prior written consent of the Administrative Agent with respect to any
Borrowing Base Property, (i) surrender, terminate, cancel, amend or modify any Management
Agreement; provided, that the Borrower may, without the Administrative Agent’s consent,
replace any Manager so long as the replacement manager is a Qualified Manager pursuant to a
Replacement Management Agreement; (ii) surrender, terminate or cancel any Franchise Agreement;
provided, that the Borrower may, without the Administrative Agent’s consent, replace any
Franchisor so long as the replacement franchisor is a Qualified Franchisor pursuant to a
Replacement Franchise Agreement; (iii) surrender, terminate or cancel any Operating Lease or enter
into any other Operating Lease with respect to such Borrowing Base Property; (iv) reduce or consent
to the reduction of the term of any Management Agreement, Franchise Agreement or Operating Lease;
(v) increase or consent to the increase of the amount of any fees or other charges under any
Management Agreement or Franchise Agreement; (vi) change the amount of any fees or other charges
under any Operating Lease; or (vii) otherwise modify, change, supplement, alter or amend, or waive
or release any of its rights and remedies under, any Management Agreement, Franchise Agreement or
Operating Lease in any material respect;



          (l) Without the prior written consent of the Administrative Agent, with respect to each
Borrowing Base Property, fail to cause the obligations of any lessee under any related Operating
Lease to be secured by all of the assets of such lessee pursuant to documentation either (i) in
form and substance substantially similar to the Leaseco Security Documents delivered to the
Administrative Agent on the Closing Date or (ii) otherwise reasonably satisfactory to the
Administrative Agent, including, without limitation, any Management Agreement, Franchise Agreement
or deposit account or Lockbox Account; provided that, in the alternative, the relevant
lessee shall provide a first priority security interest in all of the assets of such lessee in
favor of the Administrative Agent for the benefit of the Secured Parties;



          (m) Following the occurrence and during the continuance of an Event of Default, exercise any
rights, make any decisions, grant any approvals or otherwise take any action under any Management
Agreement, Franchise Agreement or Operating Lease without the



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prior written consent of the Administrative Agent, which consent may be granted, conditioned
or withheld in the Administrative Agent’s sole discretion; or




          (n) Any acquisition of any related lessor’s interest in any Acceptable Lease by any Group
Member shall be accomplished by the Group Member in such a manner so as to avoid a merger of the
interests of lessor and lessee in such Acceptable Lease, unless consent to such merger is granted
by the Administrative Agent.



          7.20 Environmental Matters. (a) Cause, commit, permit, or allow to continue (i) any
violation of any Environmental Requirement which could reasonably be expected to cause a Material
Property Event or have a Material Adverse Effect: (A) by any Group Member or by any Person; and
(B) by or with respect to any Borrowing Base Property or any use of or condition or activity on any
Real Property, or (ii) the attachment of any environmental Liens on any Borrowing Base Property.



          (b) Place, install, dispose of, or release, or cause, permit, or allow the placing,
installation, disposal, spilling, leaking, dumping, or release of, any Materials of Environmental
Concern or storage tank (or similar vessel) on any Real Property; provided that, any
Materials of Environmental Concern or storage tank (or similar vessel) disclosed in the Acceptable
Environmental Report or otherwise permitted pursuant to any Lease affecting any Borrowing Base
Property shall be permitted on any Borrowing Base Property so long as such Materials of
Environmental Concern or storage tanks (or similar vessels) are maintained in compliance with all
applicable Environmental Requirements.



          7.21 Disclosable Events. (a)(i) Engage, directly or indirectly, in business dealings with
any party listed on the Specially Designated Nationals List or other similar lists maintained by
OFAC, or in any related Executive Order issued by the President; (ii) conduct, directly or
indirectly, business dealings with a party subject to sanctions administered by OFAC; (iii) derive,
directly or indirectly, income from business dealings with a party subject to sanctions
administered by OFAC; or (iv) use the proceeds of the Loans or any Letter of Credit to conduct any
business dealings or transaction, either directly or indirectly, with any party subject to
sanctions administered by OFAC.



          (b) Derive any of its assets in violation of the anti-money laundering or anti-terrorism laws
or regulations of the United States, including but not limited to the USA PATRIOT Act, the Money
Laundering Control Act, the Bank Secrecy Act and any related Executive Order of the President.



          (c) Fail to comply with applicable anti-bribery and anti-corruption laws and regulations
(including the FCPA), including any failure to so comply that may result in the forfeiture of the
Collateral or the proceeds of the Loans or a claim of forfeiture of the Collateral or the proceeds
of the Loans.



          (d) Fail to provide the Administrative Agent and the Lenders with any information regarding
any Group Member or any REIT Controlled Affiliate necessary for the Administrative Agent or any of
the Lenders to comply with (i) the anti-money laundering laws and regulations, including but not
limited to the USA PATRIOT Act, The Money Laundering



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Control Act, the Bank Secrecy Act and any related Executive Order issued by the President,
(ii) all applicable economic sanctions laws and regulations administered by OFAC, and (iii) all
applicable anti-corruption and anti-bribery laws and regulations, including the FCPA.




SECTION 8. EVENTS OF DEFAULT




          8.1 Events of Default. If any of the following events shall occur and be continuing:




     (a) the Borrower shall fail to pay any principal of any Loan or Reimbursement
Obligation when due in accordance with the terms hereof; or the Borrower shall fail to pay
any interest on any Loan or Reimbursement Obligation, or any other amount payable hereunder
or under any other Loan Document, within five days after any such interest or other amount
becomes due in accordance with the terms hereof or thereof; or




     (b) any representation or warranty made or deemed made by any Loan Party herein or in
any other Loan Document, in any Borrowing Base Certificate, or that is contained in any
certificate, document or financial or other statement furnished by it at any time under or
in connection with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed made or furnished; or




     (c) (i) any Loan Party shall default in the observance or performance of any agreement
contained in Section 6.1(a) or 6.1(b), clause (i) or (ii) of Section 6.4(a) (with respect to
the REIT and the Borrower only), Section 6.7(a), 6.12, 6.13 or Section 7, or in Section 5 of
the Guarantee and Collateral Agreement or (ii) an “Event of Default” under and as defined in
any Mortgage shall have occurred and be continuing; or




     (d) (i) any Loan Party shall default in the observance or performance of any agreement
contained in Section 6.1(c) or 6.1(d), and such default shall continue unremedied for a
period of 15 days; or (ii) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or




     (e) any Group Member shall (i) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation, but excluding the
Loans and Reimbursement Obligations) on the scheduled or original due date with respect
thereto; or (ii) default in making any payment of any interest on any such Indebtedness
beyond the period of grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to cause, or to
permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or to



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become subject to a mandatory offer to purchase by the obligor thereunder or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to become payable;
provided, that a default, event or condition described in clause (i), (ii) or (iii)
of this paragraph (e) shall not at any time constitute an Event of Default unless, at such
time, one or more defaults, events or conditions of the type described in clauses (i), (ii)
and (iii) of this paragraph (e) shall have occurred and be continuing with respect to
Indebtedness having an aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or syndicated credit
arrangement) of which exceeds in the aggregate $5,000,000; or




     (f) (i) any Group Member shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Group Member shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against any Group Member any
case, proceeding or other action of a nature referred to in clause (i) above that (A)
results in the entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall
be commenced against any Group Member any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any such relief
that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) any Group Member shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they become due;
or




     (g) (i) any Person shall engage in any “prohibited transaction” (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding
deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan, or any Lien in favor of the PBGC or a Plan shall arise on the assets of
the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event
or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for purposes of Title
IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders shall be likely to, incur, any liability in connection with
a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan; and in each case in
clauses (i)



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through (vi) above, such event or condition, together with all other such events or
conditions, if any, could, in the sole judgment of the Required Lenders, reasonably be
expected to have a Material Adverse Effect; or




     (h) (i) one or more judgments or decrees shall be entered against any Group Member
involving for the Group Members taken as a whole a liability (not paid or fully covered by
insurance as to which the relevant insurance company has acknowledged coverage) of
$5,000,000 or more, or (ii) one or more non-monetary judgments shall have been entered
against any Group Member have, or could reasonably be expected to have, a Material Adverse
Effect, and, in either case, (x) enforcement proceedings are commenced by any creditor upon
such judgment or order or (y) all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or




     (i) any of the Security Documents shall cease, for any reason (other than by reason of
the express release thereof pursuant to Section 10.15), to be in full force and effect, or
any Loan Party or any Affiliate of any Loan Party shall so assert, or any Lien created by
any of the Security Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or




     (j) the guarantee contained in Section 2 of the Guarantee and Collateral Agreement
shall cease, for any reason (other than by reason of the express release thereof pursuant to
Section 10.15), to be in full force and effect or any Loan Party or any Affiliate of any
Loan Party shall so assert; or




     (k) any Change of Control shall occur; or




     (l) a material default (i) shall occur and continue beyond any applicable notice or
grace period required by any Management Agreement or Franchise Agreement or (ii) permits the
applicable Franchisor or Manager to terminate or cancel any Management Agreement or
Franchise Agreement, as applicable; or




     (m) a default (i) shall occur and continue beyond any applicable notice or grace period
required by any Operating Lease or (ii) permits any Person party to a Operating Lease to
terminate or cancel such Operating Lease; or




     (n) the Loan Parties shall cease to do business as a hotel at each of the Borrowing
Base Properties or terminates such business for any reason whatsoever (other than temporary
cessation in connection with any continuous and diligent renovation or restoration of any
individual Borrowing Base Property following a Casualty or Condemnation);


then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) above with respect to the Borrower, automatically the Revolving Credit
Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required thereunder)






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shall immediately become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Revolving Credit Commitments to
be terminated forthwith, whereupon the Revolving Credit Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare
the Loans hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith, whereupon the same
shall immediately become due and payable. In the case of all Letters of Credit with respect to
which presentment for honor shall not have occurred at the time of an acceleration pursuant to this
paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired face amount of
such Letters of Credit. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower
hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in
such cash collateral account shall be returned to the Borrower (or such other Person as may be
lawfully entitled thereto).




          8.2 Right to Cure. (a) Notwithstanding anything to the contrary contained in Section
8.1(c), if an Event of Default arising solely as a result of failure to comply with the
requirements of Section 7.1(a) occurs at the end of any fiscal quarter, the REIT may issue cash
common equity, the proceeds of which shall be used to make a voluntary prepayment of the Loans
pursuant to Section 2.8, in an aggregate amount sufficient to cause the Borrower to be in
compliance with the financial covenant set forth in Section 7.1(a), provided that, (i) the
aggregate proceeds of such issuance shall not exceed the amount sufficient to cure such Event of
Default, (ii) such proceeds shall be contributed by the REIT to the Borrower as cash common equity,
(iii) no more than one cure shall be permitted during the term of this Agreement and (iv) such
prepayment shall be deemed to have been made on the last day of the relevant fiscal quarter
requiring such cure. Such prepayment must be made no later than the date that is 15 days after the
date on which the relevant Compliance Certificate is required to have been delivered. The Lenders
hereby waive any notice required by Section 2.8 in connection with such prepayment.



          (b) If on a pro forma basis after giving effect to the prepayment of the Loans pursuant to
Section 8.2(a), the Borrower would have been in compliance with the financial covenant set forth in
Section 7.1(a) as of the date of the relevant Compliance Certificate, the Event of Default under
Section 8.1(c) shall be deemed to have not occurred. During the pendency of any cure right
afforded to the Group Members pursuant to Section 8.1(a), (i) the Administrative Agent and the
Lenders shall not exercise any remedies described under Section 8.1 or otherwise for failure to
satisfy the financial covenant set forth in Section 7.1(a)



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 and (ii) the Borrower shall not be
permitted to request any extension of credit pursuant to
Section 5.2.


          (c) The Borrower shall, immediately following the prepayment of the Loans pursuant to Section
8.2(a), deliver to the Administrative Agent a Compliance Certificate demonstrating to the
Administrative Agent’s satisfaction that on a pro forma basis after giving effect to the prepayment
of the Loans, the financial covenant set forth in Section 7.1(a) is then complied with.



SECTION 9. THE AGENTS




          9.1 Appointment. Each Lender hereby irrevocably designates and appoints the Agents as the
agents of such Lender under this Agreement and the other Loan Documents, and each Lender
irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any
duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against
any Agent.



          9.2 Delegation of Duties. Each Agent may execute any of its duties under this Agreement
and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.



          9.3 Exculpatory Provisions. Neither any Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted from its or such
Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received by the Agents under
or in connection with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party to perform its obligations hereunder or thereunder.
The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions of, this Agreement
or any other Loan Document, or to inspect the properties, books or records of any Loan Party.



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          9.4 Reliance by Agents. Each Agent shall be entitled to rely, and shall be fully protected
in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Loan Parties), independent accountants and other experts
selected by such Agent. The Agents may deem and treat the payee of any Note as the owner thereof
for all purposes unless such Note shall have been transferred in accordance with Section 10.6 and
all actions required by such Section in connection with such transfer shall have been taken. Each
Agent shall be fully justified in failing or refusing to take any action under this Agreement or
any other Loan Document unless it shall first receive such advice or concurrence of the Required
Lenders (or, if so specified by this Agreement, all Lenders, Supermajority Lenders or any other
instructing group of Lenders specified by this Agreement) as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall
in all cases be fully protected in acting, or in refraining from acting, under this Agreement and
the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified
by this Agreement, all Lenders, Supermajority Lenders or any other instructing group of Lenders
specified by this Agreement), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the Loans.



          9.5 Notice of Default. No Agent shall be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless such Agent shall have received
notice from a Lender, the REIT or the Borrower referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a “notice of default”. In the event that the
Administrative Agent shall receive such a notice, the Administrative Agent shall give notice
thereof to the Lenders. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so
specified by this Agreement, all Lenders, Supermajority Lenders or any other instructing group of
Lenders specified by this Agreement); provided that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or Event of Default
as it shall deem advisable in the best interests of the Lenders.



          9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that
neither any of the Agents nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to it and that no act
by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate
of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any
Lender. Each Lender represents to the Agents that it has, independently and without reliance upon
any Agent or any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their affiliates and
made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own



122









 




credit analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent shall
have any duty or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the
possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.




          9.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity as such (to
the extent not reimbursed by the REIT or the Borrower and without limiting the obligation of the
REIT or the Borrower to do so), ratably according to their respective Revolving Credit Percentages
in effect on the date on which indemnification is sought under this Section (or, if indemnification
is sought after the date upon which the Revolving Credit Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with such Revolving Credit Percentages
immediately prior to such date), for, and to save each Agent harmless from and against, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever that may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted against such Agent
in any way relating to or arising out of, the Revolving Credit Commitments, this Agreement, any of
the other Loan Documents or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or
in connection with any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from such Agent’s gross negligence or willful
misconduct. The agreements in this Section shall survive the payment of the Loans and all other
amounts payable hereunder.



          9.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business with any Loan Party as though
such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to
any Letter of Credit issued or participated in by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as
though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its
individual capacity.



          9.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative
Agent upon ten days’ notice to the Lenders and the Borrower. If the Administrative Agent shall
resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor
agent shall (unless an Event of Default under Section 8.1(a) or 8.1(f) with respect to the Borrower
shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall
not be unreasonably withheld or



123









 




delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act
or deed on the part of such former Administrative Agent or any of the parties to this
Agreement or any holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is ten days following a retiring Administrative Agent’s
notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon
become effective, and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as
provided for above. The Syndication Agent may, at any time, by notice to the Lenders and the
Administrative Agent, resign as Syndication Agent hereunder, whereupon the duties, rights,
obligations and responsibilities of the Syndication Agent hereunder shall automatically be assumed
by, and inure to the benefit of, the Administrative Agent, without any further act by the
Syndication Agent, the Administrative Agent or any Lender. After any retiring Agent’s resignation
as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents.




          9.10 Authorization to Release Liens and Guarantees. The Administrative Agent is hereby
irrevocably authorized by each of the Lenders to effect any release of Liens or guarantee
obligations contemplated by Section 10.15.



          9.11 The Arrangers; the Syndication Agent; the Co-Documentation Agents. None of the
Arrangers, the Syndication Agent or the Co-Documentation Agents, in their respective capacities as
such, shall have any duties or responsibilities, nor shall any such Person incur any liability,
under this Agreement and the other Loan Documents.



          9.12 No Duty to Disclose. The Administrative Agent, the Syndication Agent, the Arrangers
and their respective affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the REIT, the Borrower, the other Loan Parties and their
respective Affiliates, and none of the Administrative Agent, the Syndication Agent nor the
Arrangers has any obligation to disclose any of such interests to the REIT, the Borrower, any other
Loan Party or any of their respective Affiliates.



          9.13 Waiver. To the fullest extent permitted by law, each of the REIT, the Borrower and the
other Loan Parties hereby waives and releases any claims that it may have against the
Administrative Agent, the Syndication Agent and the Arrangers with respect to any breach or alleged
breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated
hereby.



SECTION 10. MISCELLANEOUS




          10.1 Amendments and Waivers. Neither this Agreement or any other Loan Document, nor any
terms hereof or thereof may be amended, restated, supplemented or modified except in accordance
with the provisions of this Section 10.1. The Required Lenders and each Loan Party party to the
relevant Loan Document may, or (with the written consent of the



124









 




 Required Lenders) the
Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan
Documents (including amendments and restatements hereof or thereof) for the purpose of adding any
provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder
or thereunder or (b) waive, on such terms and conditions as may be specified in the instrument of
waiver, any of the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall:





     (i) forgive the principal amount or extend the final scheduled date of maturity of any
Loan or Reimbursement Obligation, reduce the stated rate of any interest or fee payable
under this Agreement (except (x) in connection with the waiver of applicability of any
post-default increase in interest rates (which waiver shall be effective with the consent of
the Required Lenders) and (y) that any amendment or modification of defined terms used in
the financial covenants in this Agreement (which amendment or modification shall be
effective with the consent of the Supermajority Lenders) shall not constitute a reduction in
the rate of interest or fees for purposes of this clause (i)) or extend the scheduled date
of any payment thereof, or increase the amount or extend the expiration date of any
Revolving Credit Commitment of any Lender, in each case without the consent of each Lender
directly affected thereby;




     (ii) amend, modify or waive any provision of this Section or Section 6.18 or reduce any
percentage specified in the definition of Required Lenders or Supermajority Lenders,
increase any percentage specified in clause (iii) of the definition of Borrowing Base,
consent to the assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release the REIT or all or substantially all of the Subsidiary Guarantors from
their guarantee obligations under the Guarantee and Collateral Agreement, in each case
without the consent of all the Lenders;




     (iii) amend, modify or waive any provision of Section 9, or any other provision
affecting the rights, duties or obligations of any Agent, without the consent of any Agent
directly affected thereby;




     (iv) amend, modify or waive any provision of Section 2.3 or 2.4 without the consent of
the Swing Line Lender;




     (v) amend, modify or waive any provision of Section 2.15 without the consent of each
Lender directly affected thereby;




     (vi) amend, modify or waive any provision of Section 3 without the consent of each
Issuing Lender affected thereby;




     (vii) impose restrictions on assignments and participations that are more restrictive
than, or additional to, those set forth in Section 10.6 without the consent of each Lender
directly affected thereby; or




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     (viii) amend, modify or waive (x) the definitions of “Acceptable Lease,”
“Additional Borrowing Base Properties,” “Borrowing Base,” “Borrowing
Base Properties,” “Borrowing Base Value,” “Capitalization Rate,”
“Eligible Borrowing Base Property,” “Maximum Facility Availability” or
“Total Asset Value,” (and, with respect to
each such definition, the related defined terms used therein, solely to the extent such
related defined terms are used in the calculation of the Borrowing Base) or (y) the
definitions of “Debt Service Coverage Amount” (and the related defined terms used
therein), “Net Operating Income” (and the related defined terms used therein) or any
other defined terms (and the related defined terms used therein) used in the financial
covenants set forth in Section 7.1, or (z) Section 2.9, 5.3 or 5.4, in each case, without
the consent of the Supermajority Lenders.


Any such waiver and any such amendment, supplement or modification shall apply equally to each of
the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents and all future
holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents
shall be restored to their former position and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon. Any such waiver, amendment, supplement or modification shall be effected
by a written instrument signed by the parties required to sign pursuant to the foregoing provisions
of this Section; provided, that delivery of an executed signature page of any such
instrument by facsimile transmission or electronic communication shall be effective as delivery of
a manually executed counterpart thereof.




          10.2 Notices. (a) All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when delivered, or three
Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed (i) in the case of the REIT, the Borrower and the Agents, as
follows, (ii) in the case of the Lenders, as set forth in an administrative questionnaire delivered
to the Administrative Agent or, in the case of a Lender which becomes a party to this Agreement
pursuant to an Assignment and Assumption substantially in the form of Exhibit E, in such Assignment
and Assumption or (iii) in the case of any party, to such other address as such party may hereafter
notify to the other parties hereto:




	 	 	 	 
		
	 	The REIT and the Borrower:

	 	Chatham Lodging Trust
	 	 

	 	Chatham Lodging, L.P.
	 	 

	 	50 Cocoanut Row
	 	 

	 	Suite 200
	 	 

	 	Palm Beach, FL 33480
	 	 

	 	Attention: Mr. Jeffrey Fisher
	 	 

	 	Telecopy: (561) 659-7318
	 	 

	 	Telephone: (561) 802-4477






126









 






	 	 	 	 
			
	 	with a copy to:

	 	Chief Financial Officer
	 	 

	 	Chatham Lodging Trust
	 	 

	 	30 Cocoanut Row
	 	 

	 	Suite 200
	 	 

	 	Palm Beach, FL 33480
	 	 
	 	 
	 	The Administrative Agent:

	 	Barclays Bank PLC
	 	 

	 	745 Seventh Avenue
	 	 

	 	New York, NY 10019
	 	 

	 	Attention: Craig Malloy
	 	 

	 	Telecopy: (646) 758-4617
	 	 

	 	Telephone: (212) 526-7150
	 	 
	 	 
	 	Issuing Lender:

	 	As notified by such Issuing Lender
to the Administrative Agent and the Borrower





provided that any notice, request or demand to or upon any Agent, any Issuing Lender or any
Lender shall not be effective until received.




          (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices pursuant to Section 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent
or the Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications.




          10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder
or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.




          10.4 Survival of Representations and Warranties. All representations and warranties
made herein, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and delivery of this
Agreement and the making of the Loans and other extensions of credit hereunder.




          10.5 Payment of Expenses. Each of the REIT and the Borrower jointly and severally
agrees (a) to pay or reimburse the Agents for all their reasonable out-of-pocket costs and expenses
incurred in connection with the syndication of the Revolving Credit Commitments (other than fees
payable to syndicate members) and the development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and the other Loan Documents and any other documents
prepared in connection herewith or therewith, and the




127









 







consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the reasonable fees
and disbursements and other charges of counsel to the Administrative Agent and the charges of
Intralinks, (b) to pay or reimburse each Lender and the Agents for all their costs and expenses
incurred in connection with the enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any other documents prepared in connection herewith or therewith,
including, without limitation, the fees
and disbursements of counsel (including the allocated fees and disbursements and other charges
of in-house counsel) to each Lender and of counsel to the Agents, (c) to pay, indemnify, or
reimburse each Lender and the Agents for, and hold each Lender and the Agents harmless from, any
and all recording and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation or administration of
any of the transactions contemplated by, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such
other documents, and (d) to pay, indemnify or reimburse each Lender, each Agent, their respective
affiliates, and their respective officers, directors, trustees, employees, advisors, agents and
controlling persons (each, an “Indemnitee”) for, and hold each Indemnitee harmless from and
against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever incurred by an Indemnitee
or asserted against any Indemnitee by any third party or by the REIT, the Borrower or any other
Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of
this Agreement, any other Loan Document, any commitment letter or fee letter in connection
therewith, or any agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto or thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit
or the use or proposed use of the proceeds thereof (including any refusal by any Issuing Lender to
honor a demand for payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or
alleged presence or release of Materials of Environmental Concern on or from any property owned,
occupied or operated by the REIT, the Borrower or any of their respective Subsidiaries, or any
environmental liability related in any way to the Borrower or any of their respective Subsidiaries
or any or their respective properties, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by any third party or by the REIT, the Borrower or any other Loan
Party, and regardless of whether any Indemnitee is a party thereto (all the foregoing in this
clause (d), collectively, the “Indemnified Liabilities”), provided, that neither the REIT
nor the Borrower shall have any obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use
by unauthorized persons of information or other materials sent through electronic,
telecommun
ications or other information transmission systems that are intercepted by such persons
or for any special, indirect, consequential or punitive damages in connection with the Revolving
Credit Commitments. Without limiting the foregoing, and to the extent permitted by applicable law,
the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and





128









 







hereby waives
and agrees to cause its Subsidiaries so to waive, all rights for contribution or any other rights
of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws,
that any of them might have by statute or otherwise against any Indemnitee. All amounts due under
this Section shall be payable not later than 30 days after written demand therefor. Statements
payable by each of the REIT and the Borrower pursuant to
this Section shall be submitted to Dennis Craven, Chief Financial Officer (Telephone No. (561)
227-1386) (Fax No. (561) 650-0958), at the address of the REIT and the Borrower set forth in
Section 10.2, or to such other Person or address as may be hereafter designated by the REIT or the
Borrower in a notice to the Administrative Agent. The agreements in this Section shall survive
repayment of the Loans and all other amounts payable hereunder.




          10.6 Successors and Assigns; Participations and Assignments. (a) This Agreement
shall be binding upon and inure to the benefit of the REIT, the Borrower, the Lenders, the Agents,
all future holders of the Loans and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Agents and each Lender.




          (b) Any Lender may, without the consent of the Borrower, in accordance with applicable law, at
any time sell to one or more banks, financial institutions or other entities (each, a
“Participant”) participating interests in any Loan owing to such Lender, any Revolving
Credit Commitment of such Lender or any other interest of such Lender hereunder and under the other
Loan Documents. In the event of any such sale by a Lender of a participating interest to a
Participant, such Lender’s obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the performance thereof,
such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the
other Loan Documents, and the Borrower and the Agents shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under this Agreement and
the other Loan Documents. In no event shall any Participant under any such participation have any
right to approve any amendment or waiver of any provision of any Loan Document, or any consent to
any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or
consent would require the consent of all Lenders pursuant to Section 10.1. The Borrower agrees
that if amounts outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right
of setoff in respect of its participating interest in amounts owing under this Agreement to the
same extent as if the amount of its participating interest were owing directly to it as a Lender
under this Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as
provided in Section 10.7(a) as fully as if such Participant were a Lender hereunder. The Borrower
also agrees that each Participant shall be entitled to the benefits of Sections 2.16, 2.17 or 2.18
with respect to its participation in the Revolving Credit Commitments and the Loans outstanding
from time to time as if such Participant were a Lender; provided that, in the case of
Section 2.17, such Participant shall have complied with the requirements of said Section, and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been entitled to receive
in respect of the amount of the




129









 








participation transferred by such transferor Lender to such
Participant had no such transfer occurred.




          (d) Any Lender (an “Assignor”) may, in accordance with applicable law and upon written
notice to the Administrative Agent, at any time and from time to time assign to any Lender or any
affiliate, Related Fund or Control Investment Affiliate thereof or, with the consent
of the Borrower and the Administrative Agent and, in the case of any assignment of Revolving
Credit Commitments, the written consent of the Issuing Lender and the Swing Line Lender (which, in
each case, shall not be unreasonably withheld or delayed) (provided that no such consent
need be obtained by the Arrangers or the Administrative Agent, each in its capacity as a Lender),
to an additional bank, financial institution or other entity (an “Assignee”) all or any
part of its rights and obligations under this Agreement pursuant to an Assignment and Assumption,
substantially in the form of Exhibit E, executed by such Assignee and such Assignor (and, where the
consent of the Borrower, the Administrative Agent or the Issuing Lender or the Swing Line Lender is
required pursuant to the foregoing provisions, by the Borrower and such other Persons) and
delivered to the Administrative Agent for its acceptance and recording in the Register;
provided that no such assignment to an Assignee (other than any Lender or any affiliate
thereof) shall be in an aggregate principal amount of less than $5,000,000 (other than in the case
of an assignment of all of a Lender’s interests under this Agreement), unless otherwise agreed by
the Borrower and the Administrative Agent. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such Assignment and Assumption,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment
and Assumption, have the rights and obligations of a Lender hereunder with the Revolving Credit
Commitments and/or Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent
provided in such Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of an Assignor’s rights and
obligations under this Agreement, such Assignor shall cease to be a party hereto, except as to
Section 2.16, 2.17 and 10.5 in respect of the period prior to such effective date). In the event
that Borrower fails to respond within five Business Days after the receipt of a request to approve
an assignment pursuant to this Section 10.6(c), the Borrower shall be deemed to have consented to
such assignment. Notwithstanding any provision of this Section, the consent of the Borrower shall
not be required for any assignment that occurs at any time when any Event of Default shall have
occurred and be continuing. For purposes of the minimum assignment amounts set forth in this
paragraph, multiple assignments by two or more Related Funds shall be aggregated.




          (c) The Administrative Agent shall, on behalf of the Borrower, maintain at its address
referred to in Section 10.2 a copy of each Assignment and Assumption delivered to it and a register
(the “Register”) for the recordation of the names and addresses of the Lenders and the
Revolving Credit Commitment of, and principal amount of the Loans owing to, each Lender from time
to time. The entries in the Register shall be conclusive, in the absence of manifest error, and
the Borrower, each Agent and the Lenders shall treat each Person whose name is recorded in the
Register as the owner of the Loans and any Notes evidencing such Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not evidenced by a Note, shall
be effective only upon appropriate entries with respect thereto being made in the Register (and
each Note shall expressly so provide). Any assignment or transfer of all or part of a Loan
evidenced by a Note shall be registered on the Register only upon




130









 







surrender for registration of
assignment or transfer of the Note evidencing such Loan, accompanied by a duly executed Assignment
and Assumption; thereupon one or more new Notes in the same aggregate principal amount shall be
issued to the designated Assignee, and the old Notes shall be returned by the Administrative Agent
to the Borrower marked “canceled”. The Register shall be available for inspection by the Borrower
or any Lender (with respect to any entry relating to such Lender’s Loans) at any reasonable time
and from time to time upon
reasonable prior notice. Each Lender that sells a participation, acting for this purpose as a
non-fiduciary agent (solely for tax purposes) shall maintain a register on which it enters the name
and address of each participant and the principal amounts of each participant’s interest in the
Revolving Credit Commitments, Loans and other Obligations held by it (the “Participant
Register”). The entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the Participant Register as the
owner of such interest in the Revolving Credit Commitments, Loans and other Obligations as the
owner thereof for all purposes of this Agreement notwithstanding any notice to the contrary.




          (e) Upon its receipt of an Assignment and Assumption executed by an Assignor and an Assignee
(and, in any case where the consent of any other Person is required by Section 10.6(c), by each
such other Person) together with payment to the Administrative Agent of a registration and
processing fee of $3,500 (treating multiple, simultaneous assignments by or to two or more Related
Funds as a single assignment) (except that no such registration and processing fee shall be payable
(x) in connection with an assignment by or to the Arrangers, the Administrative Agent or their
Control Investment Affiliates or (y) in the case of an Assignee which is already a Lender or is an
affiliate or Related Fund of a Lender or a Person under common management with a Lender), the
Administrative Agent shall (i) promptly accept such Assignment and Assumption and (ii) on the
effective date determined pursuant thereto record the information contained therein in the Register
and give notice of such acceptance and recordation to the Borrower. On or prior to such effective
date, the Borrower, at its own expense, upon request, shall execute and deliver to the
Administrative Agent (in exchange for the Revolving Credit Note of the assigning Lender) a new
Revolving Credit Note to the order of such Assignee in an amount equal to the Revolving Credit
Commitment assumed or acquired by it pursuant to such Assignment and Assumption and, if the
Assignor has retained a Revolving Credit Commitment upon request, a new Revolving Credit Note to
the order of the Assignor in an amount equal to the Revolving Credit Commitment retained by it
hereunder. Such new Note or Notes shall be dated the Closing Date and shall otherwise be in the
form of the Note or Notes replaced thereby.




          (f) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of
this Section concerning assignments of Loans and Notes relate only to absolute assignments and that
such provisions do not prohibit assignments creating security interests in Loans and Notes,
including, without limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.




          (g) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting
Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such
in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower,
the option to provide to the Borrower all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrower pursuant to this Agreement;




131









 







provided that
(i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the
Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a
Loan by an SPC hereunder shall utilize the Revolving Credit Commitment of the Granting Lender to
the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby
agrees that no SPC shall be liable for any indemnity
or similar payment obligation under this Agreement (all liability for which shall remain with
the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the date that is one year
and one day after the payment in full of all outstanding commercial paper or other indebtedness of
any SPC, it will not institute against, or join any other person in instituting against, such SPC
any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws
of the United States or any state thereof. In addition, notwithstanding anything to the contrary
in this Section 10.6(g), any SPC may (A) with notice to, but without the prior written consent of,
the Borrower and the Administrative Agent and without paying any processing fee therefor, assign
all or a portion of its interests in any Loans to the Granting Lender, or with the prior written
consent of the Borrower and the Administrative Agent (which consent shall not be unreasonably
withheld) to any financial institutions providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans, and (B) disclose on a
confidential basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to
such SPC; provided that non-public information with respect to the Borrower may be
disclosed only with the Borrower’s consent which will not be unreasonably withheld. This paragraph
(g) may not be amended without the written consent of any SPC with Loans outstanding at the time of
such proposed amendment.




          10.7 Adjustments; Set-off. (a) Except to the extent that this Agreement provides for
payments to be allocated to a particular Lender or to the Lenders, if any Lender (a “Benefited
Lender”) shall at any time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in 8.1(f) or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender, if any, in respect
of such other Lender’s Obligations, such Benefited Lender shall purchase for cash from the other
Lenders a participating interest in such portion of each such other Lender’s Obligations, or shall
provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause
such Benefited Lender to share the excess payment or benefits of such collateral ratably with each
of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without interest.




     (b) Subject to Sections 10.7(c) and (d), in addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the REIT or the
Borrower, any such notice being expressly waived by the REIT and the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the REIT or the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and
appropriate and apply against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or claims,



132









 




in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender or any branch or agency thereof to or for the credit or the
account of the REIT or the Borrower, as the case may be. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of such setoff
and application.




          (c) Each Lender hereby acknowledges that the exercise by any Lender of offset, set-off,
banker’s lien or similar rights against any deposit account or other property or asset of the
Borrower or any other Group Member could result under certain laws in significant impairment of the
ability of all Lenders to recover any further amounts in respect of the Obligations. Each Lender
hereby agrees not to charge or offset any amount owed to it by Borrower against any of the
accounts, property or assets of the Borrower or any other Group Member held by such Lender without
the prior written approval of the Required Lenders.




          (d) In the event that any Defaulting Lender shall exercise any such right of setoff, all
amounts so set off shall be paid over immediately to the Administrative Agent for further
application in accordance with the provisions of Section 2.23 and, pending such payment, shall be
segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit
of the Administrative Agent and the Lenders.




          10.8 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an executed signature page
of this Agreement by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be
lodged with the Borrower and the Administrative Agent.




          10.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.




          10.10 Integration. This Agreement and the other Loan Documents represent the entire
agreement of the REIT, the Borrower, the Agents, the Arrangers and the Lenders with respect to the
subject matter hereof and thereof, and there are no promises, undertakings, representations or
warranties by the Arrangers, any Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.




          10.11 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.




133









 








          10.12 Submission To Jurisdiction; Waivers. Each of the REIT and the Borrower hereby
irrevocably and unconditionally:





     (a) submits for itself and its Property in any legal action or proceeding relating to
this Agreement and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;




     (b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;




     (c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to the REIT or the Borrower, as the case may be at its address set
forth in Section 10.2 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;




     (d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and




     (e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section any special,
exemplary, punitive or consequential damages.



          10.13 Acknowledgments. Each of the REIT and the Borrower hereby acknowledges that:





     (a) it has been advised by and consulted with its own legal, accounting, regulatory and
tax advisors (to the extent it deemed appropriate) in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;




     (b) none of the Arrangers, any Agent nor any Lender has any fiduciary relationship with
or duty to the REIT or the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Arrangers, the Agents and
the Lenders, on one hand, and the REIT and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor;




     (c) it is capable of evaluating, and understands and accepts, the terms, risks and
conditions of the transactions contemplated hereby and by the other Loan Documents; and




     (d) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Arrangers, the Agents and
the Lenders or among the REIT, the Borrower and the Lenders.



134









 





          10.14 Confidentiality. Each of the Agents and the Lenders agrees to keep confidential
all non-public information provided to it by any Loan Party pursuant to this Agreement that is
designated by such Loan Party as confidential; provided that nothing herein shall prevent any Agent
or any Lender from disclosing any such information (a) to the Arrangers, any Agent, any other
Lender or any affiliate of any thereof, (b) to any Participant or Assignee (each, a
“Transferee”) or prospective Transferee that agrees to comply with the provisions of this
Section or substantially equivalent provisions, (c) to any of its employees, directors, agents,
attorneys, accountants and other professional advisors, (d) to any financial institution that is a
direct or indirect contractual counterparty in swap agreements or such contractual
counterparty’s professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions of this Section), (e)
upon the request or demand of any Governmental Authority having jurisdiction over it, (f) in
response to any order of any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (g) in connection with any litigation or similar proceeding,
(h) that has been publicly disclosed other than in breach of this Section, (i) to the National
Association of Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender’s investment portfolio in
connection with ratings issued with respect to such Lender or (j) in connection with the exercise
of any remedy hereunder or under any other Loan Document.




          10.15 Release of Collateral and Guarantee Obligations. (a) Notwithstanding anything
to the contrary contained herein or in any other Loan Document, upon request of the Borrower in
connection with any Disposition of Property permitted by the Loan Documents, the Administrative
Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender
that is a party to any Specified Hedge Agreement) take such actions as shall be required to release
its security interest in any Collateral being Disposed of in such Disposition, and to release any
guarantee obligations under any Loan Document of any Person being Disposed of in such Disposition,
to the extent necessary to permit consummation of such Disposition in accordance with the Loan
Documents.




     (b) Notwithstanding anything to the contrary contained herein or in any other Loan Document,
upon request of the Borrower in connection with any incurrence of Indebtedness permitted by Section
7.2, the Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any
affiliate of any Lender that is a party to any Specified Hedge Agreement) take such actions as
shall be required to release its security interest in any Collateral to be subject to a Lien
permitted by Section 7.3, and to release any guarantee obligations under any Loan Document of the
Person incurring such Indebtedness, to the extent necessary to permit the incurrence of such
Indebtedness (and the granting of Liens to secure such Indebtedness) in accordance with the Loan
Documents, provided that, the Borrower shall deliver to the Administrative Agent a pro
forma Compliance Certificate (i) certifying that, immediately prior to and after giving effect to
the incurrence of such Indebtedness, no Default or Event of Default shall have occurred and be
continuing, (ii) containing all information and calculations necessary, and taking into
consideration such Indebtedness, for determining pro forma compliance with the provisions of
Section 7.1 hereof and the Borrowing Base and (iii) with respect to any Borrowing Base Property,
certifying that the conditions set forth for the release of such Borrowing Base Property in Section
5.4 have been satisfied.



135









 





          (c) Notwithstanding anything to the contrary contained herein or in any other Loan Document,
upon request of the Borrower in connection with any transaction undertaken by the Borrower pursuant
to which the removal of certain Collateral is necessary or advisable to facilitate such
transaction, the Administrative Agent shall (without notice to, or vote or consent of, any Lender,
or any affiliate of any Lender that is a party to any Specified Hedge Agreement) take such actions
as shall be required to release its security interest in such Collateral and, if such Collateral is
comprised of a Person, to release any guarantee obligations under any Loan Document of such Person,
but only to the extent reasonably necessary to facilitate the transaction
being undertaken by the Borrower, provided that, the Borrower shall deliver to the
Administrative Agent a pro forma Compliance Certificate (i) certifying that, immediately prior to
and after giving effect to the removal of such Collateral, no Default or Event of Default shall
have occurred and be continuing, (ii) containing all information and calculations necessary, and
taking into consideration the removal of such Collateral, for determining pro forma compliance with
the provisions of Section 7.1 hereof and the Borrowing Base and (iii) with respect to any Borrowing
Base Property, certifying that the conditions set forth for the release of such Borrowing Base
Property in Section 5.4 have been satisfied.




          (d) Notwithstanding anything to the contrary contained herein or any other Loan Document, when
all Obligations (other than obligations in respect of any Specified Hedge Agreement) have been paid
in full, all Revolving Credit Commitments have terminated or expired and no Letter of Credit shall
be outstanding, upon request of the Borrower, the Administrative Agent shall (without notice to, or
vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Specified
Hedge Agreement) take such actions as shall be required to release its security interest in all
Collateral, and to release all guarantee obligations under any Loan Document, whether or not on the
date of such release there may be outstanding Obligations in respect of Specified Hedge Agreements.
Any such release of guarantee obligations shall be deemed subject to the provision that such
guarantee obligations shall be reinstated if after such release any portion of any payment in
respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial
part of its property, or otherwise, all as though such payment had not been made.




          10.16 Accounting Changes. In the event that any Accounting Change (as defined below)
shall occur and such change results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent
agree to enter into negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the desired result that the criteria for evaluating
the Borrower’s financial condition shall be the same after such Accounting Change as if such
Accounting Change had not been made. Until such time as such an amendment shall have been executed
and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated or construed as if
such Accounting Change had not occurred. “Accounting Change” refers to any change in accounting
principles required by the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board or, if applicable, the SEC, or a change in the Uniform System
of Accounts.




136









 








          10.17 Waivers of Jury Trial. THE REIT, THE BORROWER, THE AGENTS AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.




          10.18 Effect of Consolidation, Amendment and Restatement of the Existing Notes. On
the Closing Date, each of the Existing Note shall be consolidated, amended, restated and superseded
in its entirety by this Agreement. The parties hereto acknowledge and agree that (a) this
Agreement and the other Loan Documents, whether executed and delivered in connection herewith or
otherwise, do not constitute a novation, payment and reborrowing, or termination of the “Debt” (as
defined in the Existing Note) under the Existing Note as in effect prior to the Closing Date, (b)
such “Debt” are in all respects continuing (as amended and restated hereby) with only the terms
thereof being modified as provided in this Agreement and (c) upon the effectiveness of this
Agreement all Existing Term Loans of the Existing Lender outstanding under the Existing Note
immediately before the effectiveness of this Agreement will be converted into Revolving Credit
Loans hereunder on the terms and conditions set forth in this Agreement.




137









 








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




	 	 	 	 	 
	 	CHATHAM LODGING TRUST, as the REIT

 	 
	 	By:  	/s/ Jeffrey H. Fisher
 	 
	 	 	Name:  	Jeffrey H. Fisher 	 
	 	 	Title:  	Chairman, President and CEO 	 
	 
	 	CHATHAM LODGING, L.P., as Borrower

 	 
	 	By:  	Chatham Lodging Trust, its general partner
 	 
	 	 	 
	 	By:  	                                                  /s/ Jeffrey H. Fisher
 	 
	 	 	Name:  	Jeffrey H. Fisher 	 
	 	 	Title:  	Chairman, President and CEO 	 
	 



[Signature Page to Credit Agreement]







 









 








	 	 	 	 	 
	 	BARCLAYS BANK PLC,

       as Administrative Agent

 	 
	 	By:  	/s/ Craig Malloy
 	 
	 	 	Name:  	Craig Malloy 	 
	 	 	Title:  	Director 	 
	 



[Signature Page to Credit Agreement]







 









 








	 	 	 	 	 
	 	BARCLAYS BANK PLC,

       as Lender

 	 
	 	By:  	/s/ Craig Malloy
 	 
	 	 	Name:  	Craig Malloy 	 
	 	 	Title:  	Director 	 
	 



[Signature Page to Credit Agreement]







 









 








	 	 	 	 	 
	 	REGIONS BANK,

       as Lender and Syndication Agent

 	 
	 	By:  	/s/ Michael R. Mellott
 	 
	 	 	Name:  	Michael R. Mellott 	 
	 	 	Title:  	Director 	 
	 



[Signature Page to Credit Agreement]




 









 








	 	 	 	 	 
	 	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK,

       as Lender and Co-Documentation Agent

 	 
	 	By:  	/s/ David Bowers
 	 
	 	 	Name:  	David Bowers 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	                     /s/ Joseph Asciolla
 	 
	 	 	Name:  	Joseph Asciolla 	 
	 	 	Title:  	Managing Director 	 
	 



[Signature Page to Credit Agreement]







 









 








	 	 	 	 	 
	 	UBS SECURITIES LLC,

        as Co-Documentation Agent

 	 
	 	By:  	/s/ Mary E. Evans           /s/ Irja R. Otsa
 	 
	 	 	Name:  	Mary E. Evans           Irja R. Otsa 	 
	 	 	Title:  	Attorney-in-Fact        Associate Director 	 
	 
	 	UBS LOAN FINANCE LLC,

       as Lender

 	 
	 	By:  	/s/ Mary E. Evans                /s/ Irja R. Otsa
 	 
	 	 	Name:  	Mary E. Evans              Irja R. Otsa 	 
	 	 	Title:  	Associate Director       Associate Director 	 
	 



[Signature Page to Credit Agreement]







 









 








	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

        as Co-Documentation Agent and Lender

 	 
	 	By:  	/s/ Lori Y. Jensen
 	 
	 	 	Name:  	Lori Y. Jensen 	 
	 	 	Title:  	Vice President 	 
	 



[Signature Page to Credit Agreement]





 









 








Annex B