Exhibit
10.154


 


 


LOAN AGREEMENT


 


 


Dated as of December 17, 2007


 


 


Between


 


 


THE ENTITIES SET FORTH ON SCHEDULE I OF THIS AGREEMENT,

as Borrower


 


 


and


 


 


BEAR STEARNS COMMERCIAL MORTGAGE, INC.,


 


 


and


 


 


BANK OF AMERICA, N.A.,

collectively, as Lender


 

















 


TABLE
OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE
  1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
  DEFINITIONS

  	
  5

  
	
  SECTION 1.2

  	
  PRINCIPLES OF
  CONSTRUCTION

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2 GENERAL TERMS

  	
  32

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  LOAN COMMITMENT;
  DISBURSEMENT TO BORROWER

  	
  32

  
	
  SECTION 2.2

  	
  INTEREST; LOAN
  PAYMENTS; LATE PAYMENT CHARGE

  	
  33

  
	
  SECTION 2.3

  	
  PREPAYMENTS

  	
  34

  
	
  SECTION 2.4

  	
  INTENTIONALLY OMITTED

  	
  36

  
	
  SECTION 2.5

  	
  RELEASE OF PROPERTY

  	
  36

  
	
  SECTION 2.6

  	
  MANNER OF MAKING
  PAYMENTS

  	
  36

  
	
  SECTION 2.7

  	
  PROPERTY SUBSTITUTIONS

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3 CONDITIONS PRECEDENT

  	
  44

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  CONDITIONS PRECEDENT TO
  CLOSING

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4 REPRESENTATIONS AND WARRANTIES

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION 4.2

  	
  SURVIVAL OF
  REPRESENTATIONS

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5 BORROWER COVENANTS

  	
  58

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  AFFIRMATIVE COVENANTS

  	
  58

  
	
  SECTION 5.2

  	
  NEGATIVE COVENANTS

  	
  72

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6 INSURANCE; CASUALTY; CONDEMNATION

  	
  79

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  INSURANCE

  	
  79

  
	
  SECTION 6.2

  	
  CASUALTY

  	
  83

  
	
  SECTION 6.3

  	
  CONDEMNATION

  	
  83

  
	
  SECTION 6.4

  	
  RESTORATION

  	
  84

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7 RESERVE FUNDS

  	
  88

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
  REQUIRED REPAIRS

  	
  88

  
	
  SECTION 7.2

  	
  TAX AND INSURANCE
  ESCROW FUND

  	
  89

  
	
  SECTION 7.3

  	
  REPLACEMENTS AND
  REPLACEMENT RESERVE

  	
  90

  
	
  SECTION 7.4

  	
  PIP RESERVE

  	
  95

  
	
  SECTION 7.5

  	
  EXCESS CASH FLOW
  RESERVE

  	
  97

  
	
  SECTION 7.6

  	
  INTENTIONALLY OMITTED

  	
  97

  
	
  SECTION 7.7

  	
  RESERVE FUNDS,
  GENERALLY

  	
  97

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8 DEFAULTS

  	
  98

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
  EVENT OF DEFAULT

  	
  98

  
	
  SECTION 8.2

  	
  REMEDIES

  	
  101

  
	
  SECTION 8.3

  	
  REMEDIES
  CUMULATIVE; WAIVERS

  	
  102

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9 SPECIAL PROVISIONS

  	
  102

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1

  	
  SALE OF NOTES AND
  SECURITIZATION

  	
  102

  
	
  SECTION 9.2

  	
  SECURITIZATION;
  INDEMNIFICATION

  	
  105

  
	
  SECTION 9.3

  	
  RATING SURVEILLANCE

  	
  108

  
	
  SECTION 9.4

  	
  EXCULPATION

  	
  108

  
	
  SECTION 9.5

  	
  TERMINATION OF MANAGER

  	
  110

  
	
  SECTION 9.6

  	
  SERVICER

  	
  110

  
	
  SECTION 9.7

  	
  MATTERS CONCERNING
  FRANCHISOR

  	
  111

  



 

















 


	
  SECTION 9.8

  	
  SPLITTING THE LOAN

  	
  111

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10 MISCELLANEOUS

  	
  111

  
	
   

  	
   

  	
   

  
	
  SECTION 10.1

  	
  SURVIVAL

  	
  111

  
	
  SECTION 10.2

  	
  LENDER’S DISCRETION

  	
  112

  
	
  SECTION 10.3

  	
  GOVERNING LAW

  	
  112

  
	
  SECTION 10.4

  	
  MODIFICATION, WAIVER IN
  WRITING

  	
  113

  
	
  SECTION 10.5

  	
  DELAY NOT A WAIVER

  	
  113

  
	
  SECTION 10.6

  	
  NOTICES

  	
  114

  
	
  SECTION 10.7

  	
  TRIAL BY JURY

  	
  115

  
	
  SECTION 10.8

  	
  HEADINGS

  	
  115

  
	
  SECTION 10.9

  	
  SEVERABILITY

  	
  115

  
	
  SECTION 10.10

  	
  PREFERENCES

  	
  116

  
	
  SECTION 10.11

  	
  WAIVER OF NOTICE

  	
  115

  
	
  SECTION 10.12

  	
  REMEDIES OF BORROWER

  	
  116

  
	
  SECTION 10.13

  	
  EXPENSES; INDEMNITY

  	
  116

  
	
  SECTION 10.14

  	
  SECTION 10.14
  SCHEDULES INCORPORATED

  	
  117

  
	
  SECTION 10.15

  	
  SECTION 10.15
  OFFSETS, COUNTERCLAIMS AND DEFENSES

  	
  117

  
	
  SECTION 10.16

  	
  NO JOINT VENTURE OR
  PARTNERSHIP; NO THIRD PARTY BENEFICIARIES

  	
  118

  
	
  SECTION 10.17

  	
  PUBLICITY

  	
  118

  
	
  SECTION 10.18

  	
  CROSS-DEFAULT;
  CROSS-COLLATERALIZATION;

  	
   

  
	
   

  	
  WAIVER OF MARSHALLING OF ASSETS

  	
  118

  
	
  SECTION 10.19

  	
  WAIVER OF COUNTERCLAIM

  	
  119

  
	
  SECTION 10.20

  	
  CONFLICT; CONSTRUCTION
  OF DOCUMENTS; RELIANCE

  	
  119

  
	
  SECTION 10.21

  	
  BROKERS AND FINANCIAL
  ADVISORS

  	
  119

  
	
  SECTION 10.22

  	
  PRIOR AGREEMENTS

  	
  120

  
	
  SECTION 10.23

  	
  TRANSFER OF LOAN

  	
  120

  
	
  SECTION 10.24

  	
  JOINT AND SEVERAL
  LIABILITY

  	
  120

  
	
  SECTION 10.25

  	
  LENDER’S RIGHT TO
  UNWIND CROSS-COLLATERALIZATION/CROSS-DEFAULT

  	
  120

  
	
  SECTION 10.26

  	
  REALLOCATION OF
  ALLOCATED PRINCIPAL AMOUNTS

  	
  120

  
	
  SECTION 10.27

  	
  CO-LENDERS

  	
  121

  
	
  SECTION 10.28

  	
  MERS

  	
  122

  
				



 


3

















 


SCHEDULES


 


	
  Schedule I

  	
  –

  	
  List
  of Borrowers

  
	
   

  	
   

  	
   

  
	
  Schedule II

  	
  –

  	
  Leasing
  Conditions

  
	
   

  	
   

  	
   

  
	
  Schedule III

  	
  –

  	
  Partial
  Payment Conditions

  
	
   

  	
   

  	
   

  
	
  Schedule IV

  	
  –

  	
  Required
  Repairs

  
	
   

  	
   

  	
   

  
	
  Schedule V

  	
  –

  	
  Rent
  Roll

  
	
   

  	
   

  	
   

  
	
  Schedule VI

  	
  –

  	
  Allocated
  Principal Amounts

  
	
   

  	
   

  	
   

  
	
  Schedule VII

  	
  –

  	
  Alteration
  Conditions

  
	
   

  	
   

  	
   

  
	
  Schedule VIII

  	
  –

  	
  List
  of Franchise Agreements

  
	
   

  	
   

  	
   

  
	
  Schedule IX

  	
  –

  	
  List
  of Operating Leases

  
	
   

  	
   

  	
   

  
	
  Schedule X

  	
  –

  	
  List
  of Operating Lessees

  
	
   

  	
   

  	
   

  
	
  Schedule XI

  	
  –

  	
  List
  of Management Agreements

  
	
   

  	
   

  	
   

  
	
  Schedule XII

  	
  –

  	
  List
  of Managers

  
	
   

  	
   

  	
   

  
	
  Schedule XIII

  	
  –

  	
  Form of
  Smith Travel Research Report

  
	
   

  	
   

  	
   

  
	
  Schedule XIV

  	
  –

  	
  PIP
  Reserve

  
	
   

  	
   

  	
   

  



 


4

















 


LOAN
AGREEMENT


 


THIS LOAN AGREEMENT, dated
as of this 17th day of December, 2007 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this “Agreement”), between BEAR STEARNS
COMMERCIAL MORTGAGE, INC., a New York corporation, having an address at 383
Madison Avenue, New York, New York 10179, and BANK OF AMERICA, N.A., a national
banking association, having an address at Bank of America Corporate Center, 100
North Tryon Street, Charlotte, North Carolina 28255 (each, a “Co-Lender” and, collectively, “Lender”), and THE ENTITIES SET
FORTH ON SCHEDULE I OF THIS AGREEMENT, each of which is a Delaware limited
liability company, having an address at 390 North Orange Avenue, Suite 1650,
Orlando, Florida 32801 (each, an “Individual Borrower”
and individually or collectively as the context requires, “Borrower”).


 


WITNESSETH:


 


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


 


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


 


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


 


ARTICLE  1


DEFINITIONS; PRINCIPLES OF CONSTRUCTION


 


Section 1.1             Definitions.  For all purposes of this Agreement, except as
otherwise expressly required or unless the context clearly indicates a contrary
intent:


 


“Additional
Insolvency Opinion” shall mean any subsequent Insolvency
Opinion.


 


“Additional
PIP Reserve Deposit” shall have the meaning set forth in Section 7.4.1
hereof.


 


“Affected
Property” shall have the meaning set forth in Section 9.1.3
hereof.


 


“Affiliate”
shall mean, as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by or is under common control with such Person or
is a director or officer of such Person or of an Affiliate of such Person.


 


“Agent”
shall mean Wells Fargo Bank N.A., a national banking association, or any
successor Eligible Institution acting as Agent under the Cash Management
Agreement.


 


“Agreement”
shall mean this Loan Agreement, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.


 


5

















 


“Aggregate
Debt Service Coverage Ratio” shall mean the Debt Service
Coverage Ratio for all Properties, calculated on an aggregate basis.


 


“Aggregate
Net Cash Flow” shall mean the Net Cash Flow for all Properties,
calculated on an aggregate basis.


 


“Allocated
Principal Amount” shall mean one hundred percent (100%) of that
portion of the Loan originally allocated to an Individual Property, as set
forth in Schedule VI hereto.


 


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


 


“Alteration Conditions”
shall have the meaning set forth on Schedule VII hereof.


 


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


 


“Annual
Replacement Reserve Requirement” shall mean, for each calendar
year, five percent (5%) of the Gross Income From Operations of the Properties
(provided, however, with respect to Individual Properties currently managed by
Interstate, to the extent such Individual Properties remain managed by
Interstate, four percent (4%) of the Gross Income From Operations of the
Properties ), to be calculated on a trailing twelve-month basis for the
twelve-month period ending on December 31st of the prior calendar year, as
determined by Lender in its reasonable discretion, as the same may be adjusted
pursuant to the terms of Section 7.3; the Annual Replacement Reserve Requirement
for the period from the Closing Date through December 31, 2008 shall be
$5,438,135.


 


“Applicable
Net Worth Requirement” shall mean, (i) in the case of an
entity that is a joint venturer with Inland American Real Estate Trust, Inc.,
or which acquires an ownership interest in Borrower, wherein Inland American
Real Estate Trust, Inc. retains at least a 20% interest in Borrower or the
Properties, $25,000,000, (ii) in the case of an entity that is a joint
venturer with Inland American Real Estate Trust, Inc., or which acquires
an ownership interest in Borrower, wherein Inland American Real Estate Trust, Inc.
retains at least a 10% interest, but less than a 20% interest, in Borrower or
the Properties, $50,000,000, (iii) in the case of an entity that is a
joint venturer with Inland American Real Estate Trust, Inc., or which
acquires an ownership interest in Borrower, wherein Inland American Real Estate
Trust, Inc. retains at least a 1% interest, but less than a 10% interest,
in Borrower or the Properties, $100,000,000, and (iv) in any other case,
$200,000,000.


 


“Approved
Annual Budget” shall have the meaning set forth in Section 5.1.11(d) hereof.


 


“Assignment
of Leases” shall mean, with respect to each Individual Property,
that certain first priority Assignment of Leases and Rents, dated as of the
Closing Date, from an Individual Borrower, as assignor, to MERS as nominee of
Lender, as assignee, assigning to Lender all of such Individual Borrower’s
interest in and to the Leases and Rents of such Individual Property as security
for the Loan, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.


 


6

















 


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


 


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


 


“Bankruptcy
Action” shall mean with respect to any Person (a) such
Person filing a voluntary petition under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law; (b) the filing of an
involuntary petition against such Person under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, in which such Person colludes
with, or otherwise assists such Person, or causes to be solicited petitioning
creditors for any involuntary petition against such Person; (c) such
Person filing an answer consenting to or otherwise acquiescing in or joining in
any involuntary petition filed against it, by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (d) such
Person consenting to or acquiescing in or joining in an application for the
appointment of a custodian, receiver, trustee, or examiner for such Person or
any portion of any Individual Property; (e) such Person making an
assignment for the benefit of creditors, or admitting, in writing or in any
legal proceeding, its insolvency or inability to pay its debts as they become
due.


 


“Bankruptcy
Code” shall mean 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.


 


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


 


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


 


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


 


“Capital
Expenditures” shall mean, for any period, the amount expended
for items capitalized under GAAP (or other accounting principles reasonably
acceptable to Lender, consistently applied) and the Uniform System of Accounts
(including expenditures for building improvements or major repairs).


 


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


 


7

















 


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


 


“Cash
Management Trigger” shall mean Lender’s determination that the
Aggregate Debt Service Coverage Ratio for the preceding twelve (12) months is
less than or equal to 1.45 to 1.0, provided, however, no Cash Management
Trigger shall be deemed to exist if within ten (10) Business Days of
Lender’s notice to Borrower that such a Cash Management Trigger has occurred,
Borrower delivers to Lender a DSCR Mitigant, which shall be held as additional
collateral for the Loan until repaid in full.


 


“Cash
Sweep Termination Event” shall mean (A) in the case of a
Cash Sweep Trigger pursuant to clause (i) of that term, the acceptance by
Lender of a cure of such Event of Default provided the Lender has not
accelerated the Loan, moved for the appointment of a receiver or commenced
foreclosure or similar proceedings; (B) in the case of a Cash Sweep
Trigger pursuant to clause (iii) of that term, (1) the replacement of
Manager with a Qualified Manager pursuant to a Replacement Management Agreement
or (2) the dismissal of the Bankruptcy Action without any adverse
consequences to the Loan or any of the Properties; (C) in the case of a
Cash Sweep Trigger pursuant to clause (iv), the replacement of Manager with a
Qualified Manager pursuant to a Replacement Management Agreement;  (D) in the case of a Cash Sweep Trigger
pursuant to clause (v) of that term, the replacement of Franchisor with a
Qualified Franchisor pursuant to a Replacement Franchise Agreement; or (E) in
the case of a Cash Sweep Trigger pursuant to clause (vi) of that term,
Lender’s determination that the Aggregate Debt Service Coverage Ratio shall be
equal to or greater than 1.35 to l.0 based upon the trailing twelve (12) month
period immediately preceding the date of such determination for three (3) complete,
consecutive months following the calendar month in which the Cash Sweep Trigger
caused by the Aggregate Debt Service Coverage Ratio deficiency occurred,
provided, however, there shall not be more than three (3) Cash Sweep
Termination Events during the term of the Loan, and there shall be no Cash
Sweep Termination Event in the case of a Cash Sweep Trigger pursuant to clause (ii) of
that term.


 


“Cash
Sweep Trigger” shall mean (i) the existence of an Event of
Default, (ii) any Bankruptcy Action of an Individual Borrower, (iii) any
Bankruptcy Action of a Manager unless such Manager is replaced with a Qualified
Manager pursuant to a Replacement Management Agreement within sixty (60) days
after the commencement of such Bankruptcy Action, (iv) a Management
Agreement is terminated without Lender’s consent (if Lender’s consent is
required hereunder), (v) a Franchise Agreement is terminated without
Lender’s consent, or (vi) Lender’s determination that the Aggregate Debt
Service Coverage Ratio for the preceding twelve (12) months is less than or
equal to 1.25 to 1.0.


 


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


 


“Casualty/Condemnation
Prepayment” shall have the meaning specified in Section 6.4(e) hereof.


 


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


 


8

















 


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


 


“Clearing
Account” shall have the meaning set forth in the Clearing
Account Agreement..


 


“Clearing
Account Agreement” shall mean that certain Clearing Account
Agreement dated the date hereof among Borrower, Lender and Clearing Bank, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time, relating to funds deposited in the Clearing Account


 


“Clearing
Bank” shall mean Wells Fargo Bank, N.A., a national banking
association, or any successor or permitted assigns thereof.


 


 “Closing Date”
shall mean the date hereof.


 


“Code” shall mean the
Internal Revenue Code of 1986, as amended, as it may be further amended from
time to time, and any successor statutes thereto, and applicable U.S.
Department of Treasury regulations issued pursuant thereto in temporary or
final form.”Co-Lender” shall have the meaning set forth in the introductory
paragraph hereto, together with its successors and assigns.


 


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


 


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


 


“Control”
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management, policies or activities of a Person, whether
through ownership of voting securities, by contract or otherwise.  “Controlled” and “Controlling” shall have
correlative meanings.


 


“Controlled
Account Agreement” shall mean, with respect to each Individual
Property, that certain Controlled Account Agreement, dated the Closing Date,
executed and delivered by Lender, an Individual Borrower and Agent (and in
certain cases, Manager).


 


“Controlled
Replacements Accounts” shall mean those 27 certain accounts into
which the Managers deposit funds to be used for Replacements with respect to
each Individual Property, and in which Lender has a security instrument
pursuant to the Controlled Account Agreement.


 


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


 


“Debt”
shall mean the outstanding principal amount set forth in, and evidenced by,
this Agreement and the Note together with all interest accrued and unpaid
thereon and all other sums


 


9

















 


(including
the Prepayment Consideration) due to Lender in respect of the Loan under the
Note, this Agreement, the Mortgages or any other Loan Document.


 


“Debt
Service” shall mean, with respect to any particular period of
time, scheduled principal and/or interest payments due under this Agreement and
the Note.


 


“Debt
Service Coverage Ratio” shall mean, with respect to an
Individual Property, a ratio for the applicable period in which:


 


(a)           the numerator is the Net
Operating Income (excluding interest on credit accounts) for such period as set
forth in the statements required hereunder, without deduction for (i) actual
management fees incurred in connection with the operation of the Properties, (ii) actual
franchise fees incurred in connection with the operation of the Properties, or (iii) amounts
paid to the Reserve Funds, less the greater of (A) the sum of actual
management fees, franchise fees, marketing fees and Replacement Reserve Fund
contributions equal to the cost for Replacements incurred, and (B) an
underwritten amount equal to eighteen and five tenths percent (18.5%) of Gross
Income from Operations; and


 


(b)           the denominator is the
aggregate amount of principal (if any) and interest due and payable on the Note
for such applicable period based on the Allocated Principal Amount of such
Individual Property.


 


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


 


“Default
Rate” shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law,
or (b) five percent (5%) above the Interest Rate.


 


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


 


“DSCR
Mitigant” shall mean a cash deposit or an Eligible Letter of
Credit in an amount that, if applied to reduce the outstanding principal
balance of the Loan, would result in an Aggregate Debt Service Coverage Ratio
of 1.55 to 1.0.


 


“Eligible
Account” shall mean a separate and identifiable account from all
other funds held by the holding institution that is either (a) an account
or accounts maintained with a federal or state-chartered depository institution
or trust company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or
trust company, is subject to regulations substantially similar to 12 C.F.R.
§9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority.  An Eligible Account will not
be evidenced by a certificate of deposit, passbook or other instrument.


 


10

















 


“Eligible
Institution” shall mean a depository institution or trust
company insured by the Federal Deposit Insurance Corporation the short term
unsecured debt obligations or commercial paper of which are rated at least A-1
by Standard & Poor’s Ratings Services, P-1 by Moody’s Investors Service, Inc.,
and F-1+ by Fitch, Inc. 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 “Aa” by Moody’s).


 


“Eligible
Letter of Credit” shall mean a freely transferable, clean,
irrevocable, unconditional sight-draft letter of credit in form and substance
satisfactory to Lender in its sole discretion; (a) issued by an Issuing
Bank (b) payable upon presentation of a sight draft only to the order of
Lender at the principal office of the Issuing Bank; (c) having an initial
expiration date not earlier than one (1) year from the date of its
issuance; (d) having automatically renewable periods of not less than one (1) year;
(e) providing for multiple draws; (f) the account party for which a
letter of credit is issued shall be a party other than Borrower or any of the
other parties required by Lender to be special purpose entities in connection
with the Loan; (g) the reimbursement obligations for which letter of
credit are not secured by the Property: (h) for which the Issuing Bank
shall be obligated to deliver to Lender sixty (60) days’ prior written notice
of the expiration of any Eligible Letter of Credit to the extent that any such
Eligible Letter of Credit is not renewed and (i) for which the Borrower
shall pay to the Issuing Bank all actual fees and charges of Issuing Bank with
respect to the extension or transfer of, or draws upon, any Eligible Letter of
Credit prior to such extension, transfer or draw.


 


“Embargoed
Person” shall have the meaning set forth in Section 5.1.23
hereof.


 


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


 


“Environmental
Report” shall have the meaning, with respect to each Individual
Property, as defined in the Environmental Indemnity executed by the applicable
Individual Borrower.


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations promulgated and the rulings issued
thereunder..


 


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


 


“Excess
Cash Flow” shall have the meaning set forth in the Cash
Management Agreement.


 


“Excess
Cash Flow Reserve Account” shall have the meaning set forth in Section 7.5.1
hereof.


 


“Excess
Cash Flow Reserve Fund” shall have the meaning set forth in Section 7.5.1
hereof.


 


11

















 


“Excess
PIP Deposit” shall have the meaning set forth in Section 7.4.3
hereof.


 


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


 


“Exchange
Act Filing” shall have the meaning set forth in Section 5.1.11(h) hereof.


 


“Extraordinary Expense”
shall have the meaning set forth in Section 5.1.11(f) hereof.


 


“FF&E”
shall mean, with respect to the Properties, furnishings, fixtures and equipment
in the guest rooms, hallways, lobbies, restaurants, lounges, meeting and
banquet rooms, parking facilities and other public areas.


 


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


 


“Franchise
Agreement” shall mean, with respect to each Individual Property,
the franchise agreement, license agreement or management agreement (as the case
may be) entered into by and between Operating Lessee Borrower and the
applicable Franchisor, pursuant to which Operating Lessee Borrower utilizes the
Franchisor’s “flag” and operating system for such Individual Property, or, if
the context requires, the Replacement Franchise Agreement, as the same may be
amended, modified, supplemented or replace from time to time in accordance with
the terms of this Agreement.  The
Franchise Agreements as of the Closing Date are listed on Schedule VIII
attached hereto and by this reference incorporated herein.


 


“Franchisor”
shall mean with respect to any Individual Property, the entity listed as
Franchisor on Schedule VIII, or any Qualified Franchisor that succeeds such
Franchisor.


 


“Fraudulent
Transfer Laws” shall have the meaning set forth in Section 4.1.41
hereof.


 


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


 


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


 


“Gross
Income from Operations” shall mean, with respect to an
Individual Property, all sustainable income and proceeds (whether in cash or on
credit, and computed on an accrual basis) received by Borrower or Manager for
the use, occupancy or enjoyment of any Individual Property, or any part
thereof, or received by Borrower or Manager for the sale of any goods, services
or other items sold on or provided from the Properties in the ordinary course
of the Individual Property’s operation, including without limitation: (a) all
income and proceeds received from rental of rooms, Leases and commercial space,
meeting, conference and/or banquet space within the Individual Property
including net parking revenue; (b) all income and proceeds received from
food and beverage operations and from catering services conducted from the
Individual Property even though rendered outside of the Individual Property; (c) all
income and proceeds from business interruption, rental interruption and use and
occupancy insurance with respect to the operation of the Individual Property
(after deducting therefrom all necessary 


 


12

















 


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 the Individual
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 the Individual 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 and interest on Reserve Funds; but
excluding, (1) gross receipts received by lessees, licensees or
concessionaires of the Individual Property; (2) consideration received at
the Individual Property for hotel accommodations, goods and services to be
provided at other hotels, although arranged by, for or on behalf of Borrower 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 the
Individual Property’s operation; (4) federal, state and municipal excise,
sales and use taxes collected directly from patrons or guests of the Properties
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; (7) gratuities collected by the Individual Property’s employees;
(8) the proceeds of any financing; (9) other income or proceeds
resulting other than from the use or occupancy of the Individual Property, or
any part thereof, or other than from the sale of goods, services or other items
sold on or provided from the Properties in the ordinary course of business; (10) any
credits or refunds made to customers, guests or patrons in the form of
allowances or adjustments to previously recorded revenues; and (11) rental paid
by an Operating Lessee Borrower under an Operating Lease.


 


“Ground
Lease” shall mean that certain Lease Agreement by and between
Ground Lessor and Apple Hospitality Five, Inc., as predecessor to Westbury
Borrower, dated December 1, 2003 (a memorandum of which, dated December 1,
2003, was recorded in the Official Records of Nassau County, New York on December 23,
2003 in liber 11713 cp 510), as amended by that certain Assignment and
Assumption of Lease Agreement by and between Ground Lessor, Apple Hospitality
Five, Inc., and AHF Westbury, Inc., dated August 1, 2005, and
recorded in the Official Records of Nassau County, New York on January 21,
2006 in liber 12069 cp 434, as further amended by that certain Assignment and
Assumption and Amendment Agreement by and between Ground Lessor, Apple
Hospitality Five, Inc., and AHF Westbury, Inc., dated August 1,
2005, and recorded in the Official Records of Nassau County, New York on January 21,
2006 in liber 12069 cp 442.


 


“Ground
Lessor” shall mean Town of Hempstead Industrial Development
Agency, a public benefit corporation of the State of New York.


 


“Guarantor”
shall mean Inland American Real Estate Trust, Inc., a Maryland
corporation.


 


“Improvements”
shall have the meaning set forth in the granting clause of the Mortgage with respect
to each Individual Property.


 


13

















 


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


 


“Indemnitor”
shall mean Inland American Real Estate Trust, Inc., a Maryland
corporation.


 


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


 


“Indemnifying
Person” shall mean each of Borrower, Principal and Guarantor.


 


“Indemnity
Agreement” shall mean that certain Indemnity Agreement dated as
of the Closing Date by Borrower and Indemnitor in favor of Lender.


 


“Independent
Director” or “Independent Manager”
shall mean a natural person serving as director of a corporation or manager of
a limited liability company who is not at the time of initial appointment, or
at any time while serving in such capacity, and has not been at any time during
the preceding five (5) years:  (a) a
stockholder, director, manager (with the exception of serving as the
Independent Director or the Independent Manager of Borrower), officer,
employee, partner, member, attorney or counsel of the Borrower or any Affiliate
of either of them; (b) a creditor, customer, supplier or other Person who
derives any of its purchases or revenues from its activities with the Borrower
or Principal or any Affiliate of either of them; (c) a Person or other
entity Controlling or under common Control with any such stockholder, director,
officer, partner, customer, supplier or other Person excluded from serving as
Independent Director or an Independent Manager under subparagraph (a) or
(b); or (d) a member of the immediate family of any such stockholder,
director, manager, officer, employee, partner, customer, supplier or other
person.  As used in this definition, the
term “control” means the possession, directly or indirectly, of the power to
direct or cause the direction of management, policies or activities of a
Person, whether through ownership of voting securities, by contract or otherwise.


 


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


 


“Individual
Operating Lessee Borrower” shall mean each Borrower listed on
Schedule I as an Operating Lessee Borrower.


 


“Individual
Owner Borrower” shall mean each Borrower listed on Schedule I as
an Owner Borrower.


 


14

















 


“Individual
Property” shall mean each parcel of real property, the
Improvements thereon and all personal property owned by an Individual Borrower
and encumbered by a Mortgage, together with all rights pertaining to such
property and Improvements, as more particularly described in the Granting
Clauses of the related Mortgage and referred to therein as the “Property”.


 


“Initial
PIP Reserve Deposit” shall have the meaning set forth in Section 7.4.1
hereof.


 


“Inland
American Real Estate Trust, Inc.” shall mean Inland
American Real Estate Trust, Inc., a Maryland corporation.


 


“Insolvency
Opinion” shall have the meaning set forth in Section 3.1.6
hereof.


 


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


 


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


 


“Interest
Rate” shall mean six and fifty hundredths percent (6.50%) per
annum.


 


“Issuing
Bank” shall mean a commercial bank having a rating of “A2” by
Moody’s and “AA” by S&P (or its equivalent) or better as determined by any
two independent Rating Agencies.


 


“Lease”
shall mean any lease, sublease or subsublease, letting, license, concession or
other agreement (whether written or oral and whether now or hereafter in
effect) pursuant to which any Person is granted a possessory interest in, or
right to use or occupy all or any portion of any space in any Individual
Property by or on behalf of the related Individual Borrower (other than the
rental of hotel rooms at any Individual Property to transient guests in the
ordinary course of an Individual Borrower’s business), and every modification,
amendment or other agreement relating to such lease, sublease, subsublease, or
other agreement entered into in connection with such lease, sublease,
subsublease, or other agreement and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto.


 


“Leasing
Conditions” shall have the meaning set forth on Schedule II
hereof.


 


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


 


15

















 


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


 


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


 


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


 


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


 


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


 


“Loan
Amount” shall mean the maximum principal balance of the Note.


 


“Loan
Documents” shall mean, collectively, this Agreement, the Note,
the Mortgages, the Assignments of Leases, the Environmental Indemnity, each
Assignment of Management Agreement, the Indemnity Agreement, the PIP Guaranty,
and all other documents executed and/or delivered in connection with the Loan.


 


“Loan to
Value Ratio” shall mean, as of the date of its calculation, the
ratio of (i) the sum of the outstanding principal amount of the Loan as of
the date of such calculation to (ii) the most recent appraised value of
the Properties (according to the most recent appraisal available to Lender).


 


“Management
Agreement” shall mean, with respect to each Individual Property,
the management agreement entered into by and between Operating Lessee Borrower
and the Manager, pursuant to which the Manager is to provide management and
other services with respect to such Individual Property, or, if the context
requires, the Replacement Management Agreement, as the same may be amended,
modified, supplemented or replace from time to time.  The Management Agreements as of the Closing
Date are listed on Schedule XI attached hereto and by this reference
incorporated herein.


 


“Manager”
shall mean any person or entity which is managing all or any part of an
Individual Property pursuant to a Management Agreement, or, if the context
requires, a Qualified Manager who is managing all or any part of an Individual
Property in accordance with the terms and provisions of this Agreement pursuant
to a Replacement Management Agreement. 
The Managers as of the Closing Date are listed on Schedule XII attached
hereto and by this reference incorporated herein.


 


“Material
Action” means, with respect to any Person, to file any
insolvency or reorganization case or proceeding, to institute proceedings to
have such Person be adjudicated bankrupt or insolvent, to institute proceedings
under any applicable insolvency law, to seek any


 


16

















 


relief
under any law relating to relief from debts or the protection of debtors, to
consent to the filing or institution of bankruptcy or insolvency proceedings
against such Person, to file a petition seeking, or consent to, reorganization
or relief with respect to such Person under any applicable federal or state law
relating to bankruptcy or insolvency, to seek or consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any
similar official of or for such Person or a substantial part of its property,
to make any assignment for the benefit of creditors of such Person, to admit in
writing such Person’s inability to pay its debts generally as they become due,
or to take action in furtherance of any of the foregoing..


 


“Maturity
Date” shall mean January 1, 2018, or such other date on
which the final payment of principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by
declaration of acceleration, or otherwise.


 


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


 


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


 


“Minimum
PIP Reserve Deposit” shall have the meaning set forth in Section 7.4.1
hereof.


 


“Monthly
Debt Service Payment Amount” shall mean an amount equal to
$1,867,937.50.


 


“Mortgage”
shall mean, with respect to each Individual Property, that certain first
priority Mortgage and Security Agreement or Deed of Trust and Security
Agreement, dated the Closing Date, executed and delivered by an Individual
Borrower to (or for the benefit of) MERS, as nominee of Lender, as security for
the Loan and encumbering such Individual Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.


 


“Net Cash
Flow” shall mean, with respect to each Individual Property for
any period, the amount obtained by subtracting Operating Expenses and Capital
Expenditures for such period from Gross Income from Operations for such period.


 


“Net Cash
Flow Schedule” shall have the meaning set forth in Section 5.1.11(b) hereof.


 


“Net
Operating Income” shall mean the amount obtained by subtracting
Operating Expenses from Gross Income from Operations.


 


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


 


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


 


17

















 


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


 


“Note”
shall mean, individually or collectively, as the context requires, that certain
Note A-1, Note A-2, Note A-3 and Note A-4, each of even date herewith, in the
aggregate principal amount of THREE HUNDRED FORTY FOUR MILLION EIGHT HUNDRED
FIFTY THOUSAND and NO/100 DOLLARS ($344,850,000.00), as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.


 


“Note A-1”
shall mean that certain Promissory Note A-1 of even date herewith made by
Borrower in favor of Bear Stearns Commercial Mortgage, Inc. in the principal
amount of EIGHTY SIX MILLION TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED and
NO/100 DOLLARS ($86,212,500.00), as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.


 


“Note A-2”
shall mean that certain Promissory Note A-2 of even date herewith made by
Borrower in favor of Bear Stearns Commercial Mortgage, Inc. in the
principal amount of EIGHTY SIX MILLION TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED
and NO/100 DOLLARS ($86,212,500.00), as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.


 


“Note A-3”
shall mean that certain Promissory Note A-3 of even date herewith made by
Borrower in favor of Bank of America, N.A. in the principal amount of EIGHTY
SIX MILLION TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED and NO/100 DOLLARS
($86,212,500.00), as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.


 


“Note A-4”
shall mean that certain Promissory Note A-4 of even date herewith made by
Borrower in favor of Bank of America, N.A. in the principal amount of EIGHTY
SIX MILLION TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED and NO/100 DOLLARS
($86,212,500.00), as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.


 


“Officer’s
Certificate” shall mean a certificate delivered to Lender by
Borrower which is signed by the Sole Member or an authorized officer of the
general partner or managing member of Borrower, as applicable.


 


“Operating
Expenses” shall mean the sum of all costs and expenses of
operating, maintaining, directing, managing and supervising the Properties
(excluding, (i) depreciation and amortization, (ii) any Debt Service
in connection with the Loan, (iii) any Capital Expenditures in connection
with the Properties, (iv) rental paid by an Operating Lessee under an
Operating Lease, or (v) the costs of any other things specified to be done
or provided at Borrower’s or Manager’s sole expense), incurred by Borrower or
Manager pursuant to the Management Agreement, or as otherwise specifically
provided therein, which are properly attributable to the period under
consideration under GAAP, 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 Borrower and/or Manager shall reasonably consider


 


18

















 


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 the Properties to the appropriate operating departments; (b) salaries
and wages of personnel of the Properties, including costs of payroll taxes and
employee benefits (which benefits may include, without limitation, a pension
plan, medical insurance, life insurance, travel accident insurance and an
executive bonus program) and the costs of moving (i) employees of the
Properties whose primary duties consist of the management of the Properties or
of a recognized department or division thereof; or (ii)  personnel (A) who
customarily and regularly direct the work of five (5) or more other
employees of the Properties, (B) who have authority with reference to the
hiring, firing and advancement of other employees of the Properties, (C) who
customarily and regularly exercise discretionary powers, (D) who devote at
least ninety five percent (95%) of their work time to activities which are
directly and closely related to the performance of the work described in
clauses (A) through (C) of clause (ii) of this sentence, and (E) who
are not compensated on an hourly basis (the “Executive
Hotel Personnel”), their families and their belongings to the
area in which the Properties are located at the commencement of their
employment at the Properties and all other expenses not otherwise specifically
referred to in this definition which are referred to as “Administrative and
General Expenses” in the Uniform System of Accounts.  If the Executive Hotel Personnel are on the
payroll of Guarantor or any Affiliate of Guarantor, the cost of their salaries,
payroll taxes and employee benefits (which benefits, in the case of employees
who are not United States citizens or in the case of employees of hotels
located outside the continental United States may include, without limitation,
in addition to the foregoing benefits, reasonable home leave transportation
expenses approved by Lender) shall be billed by said Affiliate to and be
reimbursed by Borrower and/or Manager monthly, and such reimbursement shall be
an Operating Expense.  Except as
otherwise expressly provided under the Management Agreement with respect to
employees regularly employed at the Properties, the salaries or wages of other employees
or executives of Manager, Guarantor or any of its Affiliates shall in no event
be Operating Expenses, but they shall be entitled to free room and board and
the free use of all facilities at such times as they visit any Individual
Property exclusively in connection with the management of such Individual
Property.  Notwithstanding the foregoing,
if it becomes necessary for a Guarantor employee or an employee or executive of
Guarantor Affiliate to temporarily perform services at any Individual Property
of a nature normally performed by personnel of the Properties, his or her
salary (including Borrower’s or Manager’s payroll taxes and employee benefits)
as well as his or her traveling expenses will be Operating Expenses and he or
she will be entitled to free room, board and use of the facilities as
aforesaid, while performing such services; (c) the cost of all other goods
and services obtained by Borrower or Manager in connection with its operation
of the Properties 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,


 


19

















 


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 the Properties other than of a capital nature; (e) 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 the Properties (as
distinguished from any property damage insurance on the Properties building or
its contents) and losses incurred on any self-insured risks of the foregoing
types, provided that Borrower and Manager have specifically approved in advance
such self-insurance or insurance is unavailable to cover such risks.  Premiums on policies for more than one year
will be pro rated over the period of insurance and premiums under blanket
policies will be allocated among properties covered; (f) all Taxes and
Other Charges (other than federal, state or local income taxes and franchise
taxes or the equivalent) payable by or assessed against Borrower or Manager
with respect to the operation of the Properties; (g) legal fees and fees
of any firm of independent certified public accounts designated from time to
time by Borrower (the “Independent CPA”)
for services directly related to the operation of the Properties; (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,
including the reasonable fees of Guarantor or any Guarantor subsidiary or
division in connection therewith, provided that such employment of Guarantor or
of any such subsidiary or division of Guarantor is approved in advance by
Lender; provided, however, that if such costs and expenses have not been
included in an approved budget, then if such costs exceed $5,000 with respect
to any Individual Property in any one instance the same shall be subject to
approval by Lender; (i) all expenses for advertising the Properties and
all expenses of sales promotion and public relations activities; (j) all
out-of-pocket expenses and disbursements determined by the Independent CPA to
have been reasonably, properly and specifically incurred by Borrower, Manager,
Guarantor or any of their Affiliates pursuant to, in the course of and directly
related to, the management and operation of the Properties under the Management
Agreement.  Without limiting the
generality of the foregoing, such charges may include all reasonable travel,
telephone, telegram, radiogram, cablegram, air express and other incidental
expenses, but, excluding costs relating to the offices maintained by Borrower,
Manager, Guarantor, or any of their Affiliates other than the offices
maintained at the Individual Property for the management of such Individual
Property and excluding transportation costs of Borrower or Manager related to
meetings between Borrower and Manager with respect to administration of the
Management Agreement, as applicable or of the Properties involving travel away
from such party’s principal executive offices; (k) 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 Borrower’s
system; (l) the cost associated with any Leases; (m) any management
fees, basic and incentive fees or other fees and reimbursables paid or payable
to Manager under the Management Agreement; (n) any franchise fees or other
fees and reimbursables paid or payable to Franchisor under the Franchise
Agreement; the cost associated with the Ground Lease or any other ground
leases, and (p) all costs and expenses of owning, maintaining, conducting
and supervising the operation of such Individual Property to the extent such
costs and expenses are not included above.


 


“Operating
Lease” shall mean, with respect to each Individual Property, the
lease agreement between the applicable Individual Owner Borrower, as landlord,
and the applicable Individual Operating Lessee Borrower, as tenant, as the same
may be amended, modified,


 


20

















 


supplemented
or replace from time to time.  The
Operating Leases as of the Closing Date are listed on Schedule IX attached
hereto and by this reference incorporated herein.


 


“Operating
Lessee” shall mean any person or entity with a possessory right
to all or any part of an Individual Property pursuant to an Operating
Lease.   The Operating Lessees as of the
Closing Date are listed on Schedule X attached hereto and by this reference incorporated
herein.


 


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


 


“Partial
Prepayment Conditions” shall have the meaning set forth in
Schedule III hereof.


 


“Payment
Date” shall mean the first (1st) day of each calendar month
during the term of the Loan or, if such day is not a Business Day, the
immediately succeeding Business Day.


 


“Permitted
Encumbrances” shall mean, with respect to an Individual
Property, collectively, (a) the Liens and security interests created by
the Loan Documents, (b) all Liens, encumbrances and other matters
disclosed in the Title Insurance Policy relating to such Individual Property or
any part thereof, (c) Liens, if any, for Taxes imposed by any Governmental
Authority not yet due or delinquent, (d) easements or other encumbrances
granted pursuant to Section 5.2.13(d) hereof, and (e) such other
title and survey exceptions as Lender has approved or may approve in writing in
Lender’s reasonable discretion, which Permitted Encumbrances in the aggregate
do not materially adversely affect the value or use of such Individual Property
or Borrower’s ability to repay the Loan.


 


“Permitted
Prepayment Date” shall mean the Payment Date on July 1,
2008.


 


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


 


“Personal
Property” shall have the meaning set forth in the granting
clause of the Mortgage with respect to each Individual Property.


 


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


 


“PIP Guaranty”
shall have the meaning specified in Section 7.4.3 hereof.


 


21

















 


“PIP
Requirements” shall mean, collectively, the obligation of
Borrower to comply with any property improvement program pursuant to any Franchise
Agreement.


 


“PIP
Reserve Account” shall have the meaning specified in Section 7.4.1
hereof.


 


“PIP
Reserve Deposit”  shall
have the meaning specified in Section 7.4.1 hereof.


 


“PIP
Reserve Fund” shall have the meaning specified in Section 7.4.1
hereof.


 


“PIP
Reserve LC” shall have the meaning specified in Section 7.4.4
hereof.


 


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


 


“Pre-Approved
Franchisor” shall mean Hilton, Marriott, Starwood or
Intercontinental, provided such entity has not suffered a material diminution
in its credit quality since the date hereof, as determined by Lender in its
reasonable discretion.


 


“Pre-Approved
Manager” shall mean Hilton, Marriott or Interstate, provided
such entity has not suffered a material diminution in its credit quality since
the date hereof, as determined by Lender in its reasonable discretion.


 


“Prepayment
Consideration” shall have the meaning set forth in Section 2.3.1.


 


“Prepayment
Premium” shall mean, an amount equal to: four percent (4.0%) of
the outstanding principal balance of the Loan to be prepaid if the Loan is
prepaid after the Permitted Prepayment Date and on or before twelfth (12th)
Payment Date hereunder; three percent (3.0%) of the outstanding principal
balance of the Loan to be prepaid if the Loan is prepaid after the twelfth
(12th) Payment Date hereunder and on or before twenty-fourth (24th) Payment
Date hereunder; and one percent (1.0%) of the outstanding balance of the Loan
to be prepaid if the Loan is prepaid after twenty-fourth (24th) Payment Date
hereunder.  For purposes hereof, the
first Payment Date shall be the Payment Date on February 1, 2008.


 


“Prepayment
Rate” shall mean the bond equivalent yield (in the secondary
market) on the United States Treasury Security that as of the Prepayment Rate
Determination Date has a remaining term to maturity closest to, but not
exceeding, the remaining term to the Maturity Date, as most recently published
in the “Treasury Bonds, Notes and Bills” section in The Wall Street Journal as
of the date of the related tender of the payment.  If more than one issue of United States
Treasury Securities has the remaining term to the Maturity Date referred to
above, the “Prepayment Rate” shall be the yield on the United States Treasury
Security most recently issued as of such date. 
If the publication of the Prepayment Rate in The Wall Street Journal is
discontinued, Lender shall determine the Prepayment Rate on the basis of “Statistical
Release H.15(519), Selected Interest Rates,” or any successor publication,
published by the Board of Governors of the Federal Reserve System, or on the
basis of such other publication or statistical guide as Lender may reasonably
select.


 


“Prepayment
Rate Determination Date” shall mean the date which is five (5) Business
Days prior to the prepayment date.


 


22

















 


“Properties”
shall mean, collectively, each and every Individual Property which is subject
to the terms of this Agreement.


 


“Property”
shall mean the parcel of real property, the Improvements thereon and all
personal property owned by Borrower and encumbered by the Mortgage, together
with all rights pertaining to such property and Improvements, as more
particularly described in the Granting Clauses of the Mortgage and referred to
therein as the “Property”.


 


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


 


“Qualified
Entity”  shall mean an
entity (a) with a net worth equal to or greater than the Applicable Net
Worth Requirement, (b) intentionally omitted, (c) that has not been a
party to any bankruptcy proceedings, voluntary or involuntary, made an
assignment for the benefit of creditors or taken advantage of any insolvency
act, or any act for the benefit of debtors within (7) years prior to the
date of the proposed transfer of an Individual Property, (d) that has no
material litigation or regulatory action pending or threatened, and (e) that
has not defaulted under its or their obligations with respect to any other
indebtedness.


 


“Qualified
Franchisor” shall mean either (a) Franchisor; (b) in
the reasonable judgment of Lender, a reputable and experienced franchisor
(which may be an Affiliate of Borrower) possessing experience in flagging hotel
properties similar in size, scope, use and value as the Properties; or (c) 
Pre-Approved Franchisor, provided that (i) such Franchisor is not the
subject of a Bankruptcy Action, (ii) if such Person is an Affiliate of
Borrower, Borrower shall have obtained an Additional Insolvency Opinion, and (iii) in
the case of (b) only, Borrower shall have obtained prior written
confirmation from the applicable Rating Agencies that licensing of such
Individual Property by such Person will not cause a downgrade, withdrawal or
qualification of the then current ratings of the Securities or any class
thereof .


 


“Qualified
Manager” shall mean (a) a reputable and experienced hotel
management organization reasonably satisfactory to Lender, which organization
or its principals possess at least ten (10) years experience in managing
properties similar in scope and value of the applicable Individual Property; or
(b) a Pre-Approved Manager; provided that (i) such Manager is not the
subject of a Bankruptcy Action, (ii) if such Person is an Affiliate of
Borrower, Borrower shall have obtained an Additional Insolvency Opinion, and (iii) 
in the case of (a) only, Borrower shall have obtained prior written
confirmation from the applicable Rating Agencies that management of such
Individual Property by such Person will not cause a downgrade, withdrawal or
qualification of the then current ratings of the Securities or any class
thereof .


 


“Ratable
Share” shall mean, with respect to any Co-Lender, its share of
the Loan based on the proportion of the outstanding principal of the Loan advanced
by such Co-Lender to the total outstanding principal amount of the Loan.


 


“Rating
Agencies” shall mean each of Standard & Poor’s Ratings
Services, a division of McGraw-Hill, Inc., Moody’s Investors Service, Inc.
and Fitch, Inc., or any other nationally-recognized statistical rating
agency which has been approved by Lender.


 


“Rating
Surveillance Charge” shall have the meaning set forth in Section 9.3
hereof.


 


23

















 


“Reg AB
Related Property” shall mean a parcel of real property, together
with the improvements and personal property related thereto, that is “related”,
within the meaning of the definition of Significant Obligor, to one or more of
the Individual Properties.


 


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


 


“Related
Documents” shall mean the Related Mortgage and the Assignment of
Leases encumbering the Related Property, and the other Loan Documents to the extent
related to the Related Property.


 


“Related
Entities” shall have the meaning set forth in Section 5.2.10(c) hereof.


 


“Related
Loan” shall mean a loan made to an Affiliate of a Borrower or
secured by a Reg AB Related Property, that is included in a Securitization with
the Loan.


 


“Related
Mortgage” shall mean the Mortgage encumbering the applicable
Release Property.


 


“Related
Property” shall mean the Individual Property encumbered by the
Related Mortgage.


 


“Release
DSCR” shall mean the greater of (i) 1.65 multiplied by a
fraction, the numerator of which is the Allocated Principal Amount of those
Individual Properties subject to the Lien of the Mortgage immediately after the
release, and the denominator of which is the principal balance of the Loan immediately
after the release, and (ii) the Debt Service Coverage Ratio for all of the
then remaining Individual Properties for the twelve (12) full calendar months
immediately prior to the release of the Individual Property.


 


“Release
LTV” shall mean the lesser of (i) 55.0% multiplied by a
fraction, the numerator of which is the principal balance of the Loan
immediately after the release, and the denominator of which is the aggregate
Allocated Principal Amount of those Individual Properties subject to the Lien of
the Mortgage immediately after the release, and (ii) the Loan to Value
Ratio for all of the then remaining Individual Properties (including the
Individual Property to be released) immediately preceding the release of the
Individual Property.


 


“Release
Principal Payment” shall mean, for any Individual Property, the
sum of (a) the Allocated Principal Amount for such Individual Property,
and (b) twenty percent (20%) of the Allocated Principal Amount for such
Individual Property.


 


“Release
Property” shall mean an Individual Property subject to release
pursuant to Section 2.3.1(b) hereof.


 


“Relevant
Leasing Threshold” shall mean, any Lease for an amount of
leaseable square footage equal to or greater than 10,000 square feet.


 


“Relevant
Restoration Threshold” shall mean Three Hundred Fifty Thousand
and No/100 dollars ($350,000.00).


 


24

















 


“Remaining
Mortgages” shall mean, collectively, all of the Mortgages that
are not a Related Mortgage and that have not previously been a Related
Mortgage.


 


“Remaining
Property” shall mean, collectively, the Properties encumbered by
the Remaining Mortgages.


 


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


 


“Rents”
shall mean, with respect to each Individual 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 Borrower, Manager or their agents or employees from
any and all sources arising from or attributable to the Individual 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 Borrower, Manager 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.


 


“Replacement
Franchise Agreement” shall mean either (a) a franchise,
trademark and license agreement with a Qualified Franchisor substantially in
the same form and substance as the Franchise Agreement being replaced, or a
Franchise Agreement in effect at another Individual Property, or (b) a
franchise, trademark and license agreement with a Qualified Franchisor, which
franchise, trademark and license agreement shall be reasonably acceptable to
Lender in form and substance, provided, with respect to this subclause (b),
Lender, at its option, may require that Borrower shall have obtained prior
written confirmation from the applicable Rating Agencies that such franchise,
trademark and license agreement will not cause a downgrade, withdrawal or
qualification of the then current rating of the Securities or any class
thereof.


 


“Replacement
Management Agreement” shall mean, collectively, (a) either (i) a
management agreement with a Qualified Manager substantially in the same form
and substance as the Management Agreement (or any other existing Management
Agreement that previously has been approved by Lender), or (ii) a
management agreement with a Qualified Manager, which management agreement shall
be reasonably acceptable to Lender in form and substance, provided, with
respect to this subclause (ii), Lender, at its option, may require that
Borrower 


 


25

















 


shall
have obtained prior written confirmation from the applicable Rating Agencies
that such management agreement will not cause a downgrade, withdrawal or
qualification of the then current rating of the Securities or any class thereof
and (b) an assignment of management agreement and subordination of
management fees substantially in the form then used by Lender (or of such other
form and substance reasonably acceptable to Lender), executed and delivered to
Lender by Borrower and such Qualified Manager at Borrower’s expense.


 


“Replacement
Property” shall have the meaning set forth in Section 2.7
hereof.


 


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


 


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


 


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


 


“Replacements”
shall have the meaning set forth in Section 7.3.1(a) hereof.


 


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


 


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


 


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


 


“Reserve
Funds” shall mean, collectively, the Tax and Insurance Escrow
Fund, the Replacement Reserve Fund, the Required Repair Fund, the Excess Cash
Flow Reserve Fund (if any), the PIP Reserve Fund, or any other escrow fund
established by the Loan Documents.


 


“Resizing
Event” shall have the meaning set forth in Section 9.1.2
hereof.


 


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


 


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


 


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


 


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


 


“Securitization
Date” shall mean the anticipated date of Securitization as set
forth in the Securitization Notice.


 


“Servicer”
shall have the meaning set forth in Section 9.6 hereof.


 


“Servicing
Agreement” shall have the meaning set forth in Section 9.6
hereof.


 


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


 


“Severing
Documentation” shall have the meaning set forth in Section 9.8
hereof.


 


26

















 


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


 


“Sole
Member” shall mean, for each Individual Owner Borrower, Inland
American Orchard Hotels, Inc., a Delaware corporation; and for each
Individual Operating Lessee Borrower, Inland American Orchard TRS Holdings, Inc.,
a Delaware corporation.


 


“Special
Purpose Entity” means a corporation, limited partnership,
limited liability company, or Delaware statutory trust which at all times on
and after the Closing Date:


 


(i)                is organized solely for the
purpose of (A) acquiring, developing, owning, holding, selling, leasing,
transferring, exchanging, managing and operating an Individual Property,
entering into this Agreement with the Lender, refinancing the Individual in
connection with a permitted repayment of the Loan, and transacting lawful
business that is incident, necessary and appropriate to accomplish the
foregoing; or (B) acting as a general partner of the limited partnership
that owns an Individual Property, a member of the limited liability company
that owns the Individual Property or the beneficiary or trustee of a Delaware
statutory trust that owns the Individual Property;


 


(ii)               is not engaged and will not
engage in any business unrelated to (A) the acquisition, development,
ownership, management or operation of an Individual Property, (B) acting
as general partner of the limited partnership that owns an Individual Property,
(C) acting as a member of the limited liability company that owns an
Individual Property, or (D) acting as the beneficiary or trustee of a Delaware
statutory trust that owns an Individual Property, as applicable;


 


(iii)              does not have and will not
have any assets other than those related to an Individual Property or its
partnership interest in the limited partnership, the member interest in the
limited liability company or the beneficial interest in the Delaware statutory
trust that owns an Individual Property or acts as the general partner, managing
member or beneficiary or trustee thereof, as applicable;


 


(iv)              has not engaged, sought or
consented to and will not engage in, seek or consent to any dissolution,
winding up, liquidation, consolidation, merger, sale of all or substantially
all of its assets, transfer of partnership, membership or beneficial or trustee
interests (if such entity is a general partner in a limited partnership, a
member in a limited liability company or a beneficiary of a Delaware trust) or
amendment of its limited partnership agreement, articles of incorporation,
articles of organization, certificate of formation, operating agreement or
trust formation and governance documents (as applicable) with respect to the
matters set forth in this definition;


 


(v)               if such entity is a limited
partnership, has as its only general partners, 
Special Purpose Entities each of which (A) is a corporation or
single-member Delaware limited liability company, (B) has two Independent
Directors, and (C) holds a direct interest as general partner in the
limited partnership of not less than 0.5% (or 0.1%, if the limited partnership
is a Delaware entity);


 


27

















 


(vi)              if such entity is a
corporation, has at least two (2) Independent Directors, and has not
caused or allowed and will not cause or allow the board of directors of such
entity to take any Material Action without the unanimous affirmative vote of
100% of the members of its board of directors, including the vote of the (2) two
Independent Directors;


 


(vii)             if such entity is a limited
liability company and such limited liability company has more than one member,
such limited liability company has as its manager a Special Purpose Entity that
is a corporation and that owns at least 1.0% (one percent) of the equity of the
limited liability company;


 


(viii)            if such entity is a limited
liability company and such limited liability company has only one member, such
limited liability company (a) has been formed under Delaware law, and (b) has
either a corporation or other person or entity that shall become a member of
the limited liability company upon the dissolution or disassociation of the
member, and (c) has not fewer than two (2) Independent Managers, and (d) will
not cause or allow to be taken any Material Action without the unanimous
affirmative vote of the two (2) Independent Managers;


 


(ix)              if such entity is (a) a
limited liability company, has articles of organization, a certificate of
formation and/or an operating agreement, as applicable, (b) a limited
partnership, has a limited partnership agreement, (c) a corporation, has a
certificate or articles of incorporation and bylaws, as applicable, or (d) a
Delaware statutory trust, has organizational documents that, in each case,
provide that such entity will not: (1) dissolve, merge, liquidate,
consolidate; (2) except as permitted herein, sell all or substantially all
of its assets or the assets of the Borrower (as applicable) except as permitted
herein; (3) engage in any other business activity, or amend its
organizational documents with respect to the matters set forth in this
definition without the consent of the Lender; or (4) without the
affirmative vote of (A) all directors of the corporation (that is such
entity or the general partner or managing or co-managing member or manager of
such entity) and (B) the Independent Managers of the limited liability
company, file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings with respect to itself or to any other entity in which
it has a direct or indirect legal or beneficial ownership interest;


 


(x)               has not entered into or been
a party to, and will not enter into or be a party to, any transaction with its
partners, members, beneficiaries, shareholders or Affiliates except (A) in
the ordinary course of its business and on terms which are intrinsically fair,
commercially reasonable and are no less favorable to it than would be obtained
in a comparable arm’s-length transaction with an unrelated third party, (B) in
connection with this Agreement, and (C) the Operating Leases;


 


(xi)              is solvent and pays its
debts and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same become due to the extent that Gross
Income from Operations shall then exist, and is maintaining and will maintain
adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations;


 


28

















 


(xii)             has not failed and will not
fail to correct any known misunderstanding regarding the separate identity of
such entity;


 


(xiii)            will file its own tax
returns; provided, however, that Borrower’s assets and income may be included
in a consolidated tax return of its parent companies if inclusion on such
consolidated tax return is in compliance with applicable law;


 


(xiv)            has maintained and will
maintain its own resolutions and agreements;


 


(xv)             (a) has not commingled
and will not commingle its funds or assets with those of any other Person and (b) has
not participated and will not participate in any cash management system with
any other Person, except with respect to a custodial account maintained by the
Manager on behalf of Affiliates of Borrower and, with respect to funds in such
custodial account, has separately accounted, and will continue to separately
account for, each item of income and expense applicable to an Individual
Property and Borrower;


 


(xvi)            has held and will hold its
assets in its own name;


 


(xvii)           has conducted and will
conduct its business in its name or in a name franchised or licensed to it by
an entity other than an Affiliate of Borrower;


 


(xviii)          has maintained and will
maintain its balance sheets, operating statements and other entity documents
separate from any other Person and has not permitted and will not permit its
assets to be listed as assets on the financial statement of any other entity
except as required or permitted by GAAP (or other accounting principles
reasonably acceptable to Lender, consistently applied); provided, however, that
(i) any such consolidated financial statement shall contain a note
indicating that it maintains separate balance sheets and operating statements
for the Borrower and each Individual Property, or (ii) if such Person is
controlled by Inland American Real Estate Trust, Inc., then such Person
may be included in the consolidated financial statement of Inland American Real
Estate Trust, Inc. provided such consolidated financial statement contains
a note indicating that it maintains separate financial records for each Person
controlled by Inland American Real Estate Trust, Inc.;


 


(xix)             has a sufficient number of
employees in light of its contemplated business operations, which may be none;


 


(xx)              has observed and will
observe all partnership, corporate, limited liability company or Delaware
statutory trust formalities, as applicable;


 


(xxi)             has and will have no
Indebtedness (including loans (whether or not such loans are evidenced by a
written agreement) between Borrower and any Affiliates of Borrower and relating
to the management of funds in the custodial account maintained by the Manager)
other than (i) the Loan, (ii) liabilities incurred in the ordinary
course of business relating to the ownership and operation of an Individual
Property and the routine administration of Borrower, which liabilities are not
more than sixty (60) days past the date incurred (unless disputed in accordance
with applicable law), are not evidenced by a note and are paid when due, and
which amounts are normal and reasonable under the circumstances, and (iii) such
other liabilities that are permitted pursuant to this Agreement;


 


29

















 


(xxii)            has not and will not assume
or guarantee or become obligated for the debts of any other Person or hold out
its credit as being available to satisfy the obligations of any other Person
except as otherwise permitted pursuant to this Agreement, including, in the
case of an Individual Owner Borrower, a guarantee of its related Individual
Operating Lessee Borrower’s obligations under its Franchise Agreement;


 


(xxiii)           has not and will not acquire
obligations or securities of its partners, members, beneficiaries or
shareholders or any other Affiliate;


 


(xxiv)          has allocated and will
allocate fairly and reasonably any overhead expenses that are shared with any
Affiliate, including, but not limited to, paying for shared office space and
services performed by any employee of an affiliate;


 


(xxv)           has not maintained or used,
and will not maintain or use, invoices and checks bearing the name of any other
Person, provided, however, that Manager, on behalf of such Person, may maintain
and use invoices and checks bearing Manager’s name;


 


(xxvi)          has not pledged and will not
pledge its assets for the benefit of any other Person except as permitted or
required pursuant to this Agreement;


 


(xxvii)         has held itself out and
identified itself and will hold itself out and identify itself as a separate
and distinct entity under its own name or in a name franchised or licensed to
it by an entity other than an Affiliate of Borrower and not as a division or
part of any other Person, except for services rendered by Manager under the
Management Agreement;


 


(xxviii)        has maintained and will
maintain its assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other
Person;


 


(xxix)           has not made and will not
make loans to any Person or hold evidence of indebtedness issued by any other
person or entity (other than cash and investment-grade securities issued by an
entity that is not an Affiliate of or subject to common ownership with such
entity);


 


(xxx)            has not identified and will
not identify its partners, members, beneficiaries or shareholders, or any
Affiliate of any of them, as a division or part of it, and has not identified
itself and shall not identify itself as a division of any other Person;


 


(xxxi)           does not and will not have
any of its obligations guaranteed by any Affiliate except as otherwise required
in the Loan Documents, including, in the case of an Individual Operating Lessee
Borrower, a guarantee of its obligations under its Franchise Agreement by its
related Individual Owner Borrower, and an indemnification from losses related
to the Loan or its Operating Lease from an Affiliate;


 


(xxxii)          has not entered into or been
a party to, and will not enter into or be a party to, any transaction with its
partners, members, beneficiaries, shareholders or Affiliates except (A) in
the ordinary course of its business and on terms which are intrinsically fair,
commercially


 


30
















 


reasonable
and are no less favorable to it than would be obtained in a comparable arm’s-length
transaction with an unrelated third party and (B) in connection with this
Agreement;


(xxxiii)         has complied and
will comply with all of the terms and provisions contained in its
organizational documents.  The statement
of facts contained in its organizational documents are true and correct and
will remain true and correct; and


 


(xxxiv)         has conducted and
shall conduct its business so that each of the assumptions made about it and
each of the facts stated about it in the Insolvency Opinion are true.


 


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


 


“Substituted
Property” shall have the meaning set forth in Section 2.7
hereof.


 


“Survey”
shall mean a survey of the Individual Property in question prepared by a
surveyor licensed in the State and satisfactory to Lender and the company or
companies issuing the Title Insurance Policy, and containing a certification of
such surveyor satisfactory to Lender.


 


“Tax and
Insurance Escrow Fund” shall have the meaning set forth in Section 7.2
hereof regardless of whether the funds held therein are held by Lender for the
payment of Taxes or Insurance Premiums or both.


 


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


 


“Tenant”
shall mean any person or entity (other than an Operating Lessee) with a
possessory right to all or any part of an Individual Property pursuant to a
Lease or other written agreement.


 


“Terrorism
Insurance Guarantor” shall have the meaning set forth in Section 6.1
hereof.


 


“Threshold
Amount” shall mean $350,000.


 


“Title
Insurance Policy” shall mean, with respect to each Individual
Property, an ALTA mortgagee title insurance policy in the form (acceptable to
Lender) (or, if an Individual 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
acceptable to Lender) issued with respect to such Individual Property and
insuring the lien of the Mortgage encumbering such Individual Property.


 


“Transfer”
shall have the meaning set forth in Section 5.2.13 hereof.


 


“Transferee”
shall have the meaning set forth in Section 5.2.13 hereof.


 


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“UCC”
or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the applicable State in which an Individual Property is located.


 


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


 


“U.S.
Obligations” shall mean direct non-callable obligations of the
United States of America as defined in Section 2(a)(16) of the Investment
Company Act as amended (15 USC 80a-1) stated in REMIC Section 1.86
OG-2(a)(8).


 


“Westbury
Borrower” shall mean IA Orchard Hotels Westbury, L.L.C., a
Delaware limited liability company.


 


“Westbury
Mortgage” shall mean the Mortgage encumbering the Westbury
Property.


 


“Westbury
Property” shall mean the Westbury Hilton Garden Inn, located at
1575 Privado Rd., Westbury, New York.


 


Section 1.2             Principles of
Construction.  All
references to sections and schedules are to sections and schedules in or to
this Agreement unless otherwise specified. 
All uses of the word “including” shall mean “including, without
limitation” unless the context shall indicate otherwise.  Unless otherwise specified, the words “hereof,”
“herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  Unless
otherwise specified, all meanings attributed to defined terms herein shall be
equally applicable to both the singular and plural forms of the terms so
defined. All covenants, representations, terms and conditions contained in this
Agreement applicable to Borrower or the Property shall be deemed to apply to
each Individual Borrower and each Individual Property, as applicable,
individually.  It shall constitute an
Event of Default if any covenant, representation, term or condition contained
in this Agreement is breached (beyond any applicable notice and cure periods)
with respect to any Individual Borrower or Individual Property.


 


ARTICLE 2


GENERAL TERMS


 


Section 2.1             Loan Commitment; Disbursement to Borrower.


 


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


 


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


 


2.1.3        The Note, Mortgage and Loan Documents. 
The Loan shall be evidenced by the Note and secured by the Mortgage, the
Assignment of Leases and the other Loan Documents.


 


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2.1.4        Use of Proceeds. 
Borrower shall use the proceeds of the Loan to (a) acquire the
Properties or repay and discharge any existing loans relating to the
Properties, (b) pay all past-due Basic Carrying Costs, if any, in respect of the
Properties, (c) make deposits into the Reserve Funds on the Closing Date
in the amounts provided herein, (d) pay costs and expenses incurred in
connection with the closing of the Loan, as approved by Lender, (e) fund
any working capital requirements of the Properties, and (f) distribute the
balance, if any, to Borrower.


 


Section 2.2             Interest; Loan Payments; Late Payment Charge.


 


Interest Generally.  Interest on the outstanding principal balance
of the Loan shall accrue from the Closing Date to but excluding the Maturity
Date at the Interest Rate.


 


2.2.1        Interest Calculation.  Interest on the outstanding principal balance
of the Loan shall be calculated on the basis of a three hundred sixty (360) day
year comprised of twelve (12) months of thirty (30) days each, except that
interest due and payable for a period of less than a full month shall be
calculated by multiplying the actual number of days elapsed in the period for
which the calculation is being made by a daily rate based on a three hundred
sixty (360) day year.


 


2.2.2        Payments Generally.  Borrower shall pay to Lender (a) on the
Closing Date, an amount equal to interest only on the outstanding principal
balance of the Loan from the Closing Date up to but not including the first
Payment Date following the Closing Date, and (b) on February 1, 2008
and each Payment Date thereafter up to but not including the Maturity Date, an
amount equal to the Monthly Debt Service Payment Amount, which shall be applied
to interest on the outstanding principal amount of the Loan for the prior
calendar month at the Interest Rate.


 


2.2.3        Intentionally Omitted.


 


2.2.4        Payment on Maturity Date.  Borrower shall pay to Lender on the Maturity
Date the outstanding principal balance of the Loan, all accrued and unpaid
interest and all other amounts due hereunder and under the Note, the Mortgage
and other the Loan Documents.


 


2.2.5        Payments after Default.  Upon the occurrence and during the
continuance of an Event of Default, interest on the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest and
other amounts due in respect of the Loan, shall accrue at the Default Rate,
calculated from the date such payment was due without regard to any grace or
cure periods contained herein.  Interest
at the Default Rate shall be computed from the occurrence of the Event of
Default until the earlier of (i) in the event of a non-monetary default,
the cure of such Event of Default by Borrower and acceptance of such cure by
Lender, and (ii) in the event of a monetary default, the actual receipt
and collection of the Debt (or that portion thereof that is then due).  To the extent permitted by applicable law,
interest at the Default Rate shall be added to the Debt, shall itself accrue
interest at the same rate as the Loan and shall be secured by the
Mortgage.  This paragraph shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default and Lender retains its rights under
the Note and this Agreement to accelerate and to continue to demand payment of
the Debt upon the happening and continuance of any Event of Default.


 


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2.2.6        Late Payment Charge.  If any principal, interest or any other sums
due under the Loan Documents is not paid by Borrower on or prior to the date
which is five (5) days after the date on which it is due, Borrower shall
pay to Lender upon demand an amount equal to the lesser of five percent (5%) of
such unpaid sum or the maximum amount permitted by applicable law in order to
defray the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment.  Any such amount shall be
secured by the Mortgage and the other Loan Documents to the extent permitted by
applicable law.  The foregoing late
payment charge shall not apply to the payment of all outstanding principal,
interest and other sums due on the Maturity Date.


 


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


 


Section 2.3             Prepayments.


 


2.3.1        Voluntary Prepayments.


 


(a)           Except as otherwise provided herein,
Borrower shall not have the right to prepay the Loan in whole or in part on or
prior to the Permitted Prepayment Date. 
After the Permitted Prepayment Date, Borrower may, provided it has given
Lender prior written notice in accordance with the terms of this Agreement,
prepay the unpaid principal balance of the Loan in whole, but (subject to Section 2.3.1(b) below)
not in part, by paying, together with the amount to be prepaid, (i) interest
accrued and unpaid on the outstanding principal balance of the Loan being
prepaid to and including the date of prepayment, (ii) unless prepayment is
tendered on a Payment Date, an amount equal to the interest that would have
accrued on the amount being prepaid after the date of prepayment through and
including the next Payment Date had the prepayment not been made (which amount
shall constitute additional consideration for the prepayment), (iii) all
other sums then due under this Agreement, the Note, the Mortgage and the other
Loan Documents, and (iv) if prepayment occurs prior to the Payment Date
which is one month prior to the Maturity Date, a prepayment consideration (the “Prepayment Consideration”) equal to
the greater of (A) the applicable Prepayment Premium, or (B) the
excess, if any, of (1) the sum of the present values of all then-scheduled
payments of principal and interest under this Agreement including, but not
limited to, principal and interest on the Maturity Date (with each such payment
discounted to its present value at the date of prepayment at the rate which, when
compounded monthly, is 


 


34

















 


equivalent to the Prepayment
Rate), over (2) the outstanding principal amount of the Loan. Lender shall
notify Borrower of the amount and the basis of determination of the required
prepayment consideration.


 


(b)           After the Permitted Prepayment Date,
Borrower may, provided it has satisfied the Partial Prepayment Conditions,
obtain a release of the Related Documents with respect to a Release Property,
by prepaying, (i) an amount equal to the Release Principal Payment, (ii) interest
accrued and unpaid on the Release Principal Payment to and including the date
of prepayment, (iii) unless prepayment is tendered on a Payment Date, an
amount equal to the interest that would have accrued on the Release Principal
Payment after the date of prepayment up to but not including the next Payment
Date had the prepayment not been made (which amount shall constitute additional
consideration for the prepayment), (iv) all other sums then due under this
Agreement, the Related Mortgage and the other Loan Documents, (v) the
Prepayment Consideration (calculated on the amount of the Release Principal
Payment), (vi) an administrative fee in the sum of  $1,500, as assessed by the Servicer, and (vii) all
third-party costs and expenses incurred by Lender or the Servicer (including,
without limitation, reasonable attorneys fees and disbursements) in connection
with the release of a Property.  Upon
payment of the Release Principal Payment, the Monthly Debt Service Payment
Amount under the Note shall be recalculated based on the unpaid principal
balance effective as of the day following the next occurring Payment Date.  Lender promptly shall notify Borrower in
writing of the new Monthly Debt Service Payment Amount with respect to the
Note.  Payments made in connection with
any release may be applied in reduction of a portion of the Loan (including
subordinate financing or mezzanine financing, if any) in any order or priority
as Lender may determine in its sole discretion.   Following such a release, the applicable
Borrower shall no longer be deemed a Borrower hereunder or under the Loan
Documents.


 


(c)           On the Payment Date that is one month
prior to the Maturity Date, and on each day thereafter through the Maturity Date,
Borrower may, at its option, prepay the Debt without payment of any Prepayment
Consideration or other penalty or premium; provided, however, if such
prepayment is not paid on a regularly scheduled Payment Date, the Debt shall
include interest that would have accrued on such prepayment through and
including the day immediately preceding the Maturity Date.  Borrower’s right to prepay any portion of the
principal balance of the Loan shall be subject to (i) Borrower’s
submission of a notice to Lender setting forth the amount to be prepaid and the
projected date of prepayment, which date shall be no less than thirty (30) days
from the date of such notice, and (ii) Borrower’s actual payment to Lender
of the amount to be prepaid as set forth in such notice on the projected date
set forth in such notice or any day following such projected date occurring in
the same calendar month as such projected date.


 


2.3.2        Mandatory Prepayments.  (a) On the next occurring Payment Date
following the date on which Borrower actually receives any Net Proceeds, if
Lender is not obligated to make such Net Proceeds available to Borrower
pursuant to this Agreement for the restoration of the applicable Individual
Property, Borrower shall, at Lender’s option, prepay the outstanding balance of
the Note in an amount equal to one hundred percent (100%) of such Net
Proceeds.  No Prepayment Consideration or
other penalty or premium shall be due in connection with any prepayment made
pursuant to this Section 2.3.2.  Any
partial prepayment under this Section shall be applied to the last
payments of principal due under the Loan.


 


35

















 


(b)           On the date on which Borrower tenders a
Casualty/Condemnation Prepayment pursuant to Section 6.4(e) below,
such tender shall include (a) all accrued and unpaid interest and the
principal indebtedness being prepaid, including interest on the outstanding
principal amount of the applicable Note through the last day of the month
within which such tender occurs, and (b) any other sums due hereunder
relating to the applicable Note.  Except
as set forth in this Section 2.3.2(b), other than following an Event of
Default, no Prepayment Consideration or other penalty or premium shall be due
in connection with any Casualty/Condemnation Prepayment.


 


2.3.3        Prepayments after Default.  Following an Event of Default, if Borrower or
anyone on Borrower’s behalf makes a tender of payment of all or any portion of
the Debt at any time prior to a foreclosure sale (including a sale under the power
of sale under the Mortgage), or during any redemption period after foreclosure,
(i) the tender of payment shall constitute an evasion of Borrower’s
obligation to pay any Prepayment Consideration due under this Agreement and
such payment shall, therefore, to the maximum extent permitted by law, include
a premium equal to the Prepayment Consideration that would have been payable on
the date of such tender had the Loan not been so accelerated, or (ii) if
at the time of such tender a prepayment of the principal amount of the Loan
would have been prohibited under this Agreement had the principal amount of the
Loan not been so accelerated, the tender of payment shall constitute an evasion
of such prepayment prohibition and shall, therefore, to the maximum extent
permitted by law, include an amount equal to the greater of (i) 1% of the
then principal amount of the Loan (or the relevant portion thereof being
prepaid) and (ii) an amount equal to the excess of (A) the sum of the
present values of a series of payments payable at the times and in the amounts
equal to the payments of principal and interest (including, but not limited to
the principal and interest payable on the Maturity Date) which would have been
scheduled to be payable after the date of such tender under this Agreement had
the Loan (or the relevant portion thereof) not been accelerated, with each such
payment discounted to its present value at the date of such tender at the rate
which when compounded monthly is equivalent to the Prepayment Rate, over (B) the
then principal amount of the Loan.


 


Section 2.4             Intentionally Omitted.


 


Section 2.5            Release of Property.  Except as set forth in Section 2.3.1(b) and
this 2.5, no repayment or prepayment of all or any portion of the Loan shall
cause, give rise to a right to require, or otherwise result in, the release of
any Liens of the Mortgages on the Properties. 
If Borrower has elected to prepay the entire amount of the Loan pursuant
to Section 2.3.1(a) and the requirements of this Section 2.5
have been satisfied, the Properties shall be released from the Liens of the
Mortgages.


 


2.5.1        Release on Payment in Full.  Lender shall, upon the written request and at
the expense of Borrower, upon payment in full of all principal and interest on
the Loan and all other amounts due and payable under the Loan Documents in
accordance with the terms and provisions of Section 2.3.1 of this Loan
Agreement, release the Liens of the Mortgages on the Properties not theretofore
released.


 


2.5.2        Intentionally omitted.


 


Section 2.6             Manner of Making Payments.


 


36

















 


2.6.1        Making of Payments.  Each payment by Borrower hereunder or under
the Note shall be made in funds settled through the New York Clearing House
Interbank Payments System or other funds immediately available to Lender by
1:00 p.m., New York City time, on the date such payment is due, to Lender
by deposit to such account as Lender may designate by written notice to
Borrower.  Whenever any payment hereunder
or under the Note shall be stated to be due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day.


 


2.6.2        No Deductions, Etc.  All payments made by Borrower hereunder or
under the Note or the other Loan Documents shall be made irrespective of, and
without any deduction for, any setoff, defense or counterclaims.


 


2.6.3        Cash Management.


 


(a)           Borrower, Lender and Agent are party
to (i) that certain Clearing Account Agreement, and (ii) that certain
Cash Management Agreement, each of even date herewith, which agreements,
together, describe cash management applicable to the Loan, including following
a Cash Management Trigger and following a Cash Sweep Trigger.


 


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


 


(c)           The Clearing Account shall not be
commingled with other monies held by Borrower or Clearing Bank.


 


(d)           Borrower shall not further pledge,
assign or grant any security interest in the Clearing Account or the monies
deposited therein or permit any lien or encumbrance to attach thereto, or any
levy to be made thereon, or any UCC-1 Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto.


 


(e)           Borrower shall indemnify Lender and
hold Lender harmless from and against any and all actions, suits, claims,
demands, liabilities, losses, damages, obligations and costs and expenses
(including litigation costs and reasonable attorneys fees and expenses) arising
from or in any way connected with the Clearing Account and/or the Clearing
Account Agreement (unless arising from the gross negligence or willful
misconduct of Lender) or the performance of the obligations for which the
Clearing Account was established.


 


(f)            The insufficiency of funds on
deposit in the Cash Management Account shall not relieve Borrower from the
obligation to make any payments, as and when due pursuant to this Agreement and
the other Loan Documents, and such obligations shall be separate and
independent, and not conditioned on any event or circumstance whatsoever.


 


(g)           All funds on deposit in the Cash
Management Account following the occurrence of an Event of Default may be
applied by Lender in such order and priority as Lender shall determine.


 


37

















 


(h)           Notwithstanding anything to the
contrary contained in this Agreement or the other Loan Documents, and provided
no Event of Default has occurred and is continuing, Borrower’s obligations with
respect to the payment of the Monthly Debt Service Payment Amount and amounts
required to be deposited into the Reserve Funds, if any, shall be deemed
satisfied to the extent sufficient amounts are deposited in the Cash Management
Account to satisfy such obligations pursuant to the Cash Management Agreement
on the dates each such payment is required, regardless of whether any of such
amounts are so applied by Lender.


 


Section 2.7            Property Substitutions.  Notwithstanding the provisions of Section 2.5
hereof, subject to the terms and conditions set forth in this Section 2.7,
Borrower may obtain a release of the Lien of a Mortgage (and the related Loan
Documents) encumbering an Individual Property (a “Substituted
Property”) by substituting therefor another limited or full
service hotel property acquired by Borrower (individually or collectively, as
the context requires, the “Replacement Property”),
provided that (a) the Allocated Principal Amount of the proposed
Substituted Property, when aggregated with the Allocated Principal Amounts for
all previously Substituted Properties, shall not exceed the sum of
$86,212,500.00, (b) the Replacement Property is not located in the State
of Texas (unless an Individual Property located in the State of Texas has been
previously released pursuant to Section 2.5.2 hereof), and (c) such
substitution shall be subject to the satisfaction of the following conditions
precedent:


 


(i)                Lender shall have received a copy of a deed conveying
all of Borrower’s right, title and interest in and to the Substituted Property
to an entity other than Borrower or an Affiliate of Borrower and a letter from
Borrower countersigned by a title insurance company acknowledging receipt of
such deed and agreeing to record such deed in the real estate records of the
appropriate recording office in the county in which the Substituted Property is
located.


 


(ii)               Lender shall have received an appraisal of each of the
Replacement Property and the Substituted Property, each dated no more than one
hundred twenty (120) days prior to the substitution by an appraiser acceptable
to the Rating Agencies, indicating an appraised value of the Replacement
Property that is not less than the greater of (a) the value of the
Substituted Property as set forth in the appraisal delivered to Lender at the
time of the encumbrance of the Substituted Property by the related Mortgage or (b) the
value of the Substituted Property on the date of substitution.


 


(iii)              After giving effect to the substitution, the Aggregate
Debt Service Coverage Ratio for the Loan for all of the Properties (including
the Replacement Property but excluding the Substituted Property) is not less
than the greater of (a) the Aggregate Debt Service Coverage Ratio on the
Closing Date or (b) the Aggregate Debt Service Coverage Ratio (including
the Substituted Property but excluding the Replacement Property) as of the date
immediately preceding the substitution.


 


(iv)             The Net Operating Income for the Replacement Property
does not show a downward trend over three (3) consecutive years prior to
the date of substitution (or such shorter time to the extent available after
Borrower’s exercise of diligent efforts).


 


38

















 


(v)              The Debt Service Coverage Ratio (for the twelve (12)
month period immediately preceding the substitution) for the Replacement
Property is not less than the Debt Service Coverage Ratio (for the twelve (12)
month period immediately preceding the substitution) for the related
Substituted Property, provided, however, if the Replacement Property has less
than twelve month’s operating history, for purposes of this determination, Debt
Service Coverage Ratio shall be calculated by Lender acting in its reasonable
discretion using annualized actual income and budgeted annual operating
expenses set forth on a budget approved by Lender pursuant to the terms hereof.


 


(vi)             Lender shall have received a certified copy of a Franchise
Agreement for the Replacement Property with a Qualified Franchisor that is
either (i) substantially the same in form and substance as the Franchise
Agreement or Replacement Franchise Agreement, as applicable, in effect for the
Substituted Property or (ii) acceptable to Lender in its reasonable
discretion, together with a comfort letter among Borrower, Operating Lessee,
the Qualified Franchisor and Lender either (A) in form and substance
substantially the same as the counterpart of such document executed and
delivered with respect to the related Substituted Property or (B) in form
and substance acceptable to Lender in its reasonable discretion.


 


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


 


(viii)           No Event of Default shall then
exist.  Lender shall have received a
certificate from each Borrower confirming the foregoing, stating that the
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents are true and correct in all material respects on and as of
the date of the substitution with respect to each Borrower, the Substituted
Property and the Replacement Property, such certificate to be in form and
substance reasonably satisfactory to Lender and the Rating Agencies.


 


(ix)              The applicable Borrower(s) shall have executed,
acknowledged and delivered to Lender (A) a Mortgage and an Assignment of
Leases with respect to the Replacement Property, together with a letter from
such Borrower countersigned by a title insurance company acknowledging receipt
of such Mortgage, and Assignment of Leases and agreeing to record in the real
estate records for the county in which the Replacement Property is located and
to file any UCC Financing Statements in the public records of the jurisdictions
in which Lender shall require such UCC Financing Statements to be filed, so as
to effectively create upon such recording and filing valid and enforceable
first priority Liens upon the Replacement Property, in favor of Lender (or such
other trustee as may be required under local law), subject only to the
Permitted Encumbrances and such other Liens as are permitted pursuant to the
Loan Documents and (B) and an Environmental Indemnity with respect to the
Replacement Property.  The Mortgage,
Assignment of Leases and Rents, UCC Financing Statements shall be the same in
form and substance as the counterparts of such documents executed and delivered
with respect to the related 


 


39

















 


Substituted Property subject to modifications
reflecting the Replacement Property as the Property that is the subject of such
documents and such modifications reflecting the laws of the state in which the
Replacement Property is located as shall be recommended by the counsel admitted
to practice in such state and delivering the opinion as to the enforceability
of such documents required pursuant to clause (xiv) below.  The Mortgage encumbering the Replacement
Property shall secure all amounts evidenced by the Note and Guaranty executed
by the applicable Borrower.


 


(x)               Each of Borrower, Guarantor and Indemnitor shall have
executed and delivered to Lender an instrument ratifying its respective
indemnification and/or guaranty obligations under any of the Loan Documents
notwithstanding the applicable Property substitution, which instrument shall be
in form and substance satisfactory to Lender in its reasonable discretion.


 


(xi)              Lender shall have received (A) any “tie-in” or
similar endorsement (if available) to each applicable Title Insurance Policy
insuring the Lien of an existing Mortgage as of the date of the substitution
available with respect to the Title Insurance Policy insuring the Lien of the
Mortgage with respect to the Replacement Property and (B) a Title
Insurance Policy (or a marked, signed and redated commitment to issue such
Title Insurance Policy) insuring the Lien of the Mortgage encumbering the
Replacement Property, issued by the title company that issued the Title
Insurance Policies insuring the Lien of the existing Mortgages and dated as of
the date of the substitution.  The Title
Insurance Policy issued with respect to the Replacement Property shall (1) provide
coverage in the amount of the related Note if the “tie-in” or similar
endorsement described above is available or, if such endorsement is not
available, in an amount equal to one hundred twenty-five percent (125%) of the
such amount, (2) insure Lender that the relevant Mortgage creates a valid
first priority lien on the Replacement Property encumbered thereby, free and
clear of all exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the terms of
any endorsements), (3) contain such endorsements and affirmative coverages
(if available) as are contained in the Title Insurance Policies insuring the
Liens of the existing Mortgages, and (4) name Lender, together with its
successors and assigns, as the insured. 
Lender also shall have received copies of paid receipts or other
evidence showing that all premiums in respect of such endorsements and Title
Insurance Policies have been paid.


 


(xii)             Lender shall have received a title survey for each
Replacement Property, dated within thirty (30) days of the substitution,
certified to the title company and Lender and their successors and assigns, in
the materially same form and having the same content as the certification of
the Survey of the Substituted Property prepared by a professional land surveyor
licensed in the state in which the Replacement Property is located and
acceptable to the Rating Agencies in accordance with the 2006 Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys.  Such survey shall reflect the same legal
description contained in the Title Insurance Policy relating to such
Replacement Property.  The surveyor’s
seal shall be affixed to each survey and each survey shall certify that the
Improvements on such surveyed property is not located in a “one-hundred-year
flood hazard area.”


 


40

















 


(xiii)            Lender shall have received valid
certificates of insurance indicating that the requirements for the policies of
insurance required for each Property hereunder have been satisfied with respect
to the Replacement Property and evidence of the payment of all premiums payable
for the existing policy period.


 


(xiv)            Lender shall have received a Phase I environmental report
and, if recommended under the Phase I environmental report, a Phase II
environmental report, which conclude that the Replacement Property does not
contain any Hazardous Substance (as defined in the Mortgage) and is not subject
to any material risk of contamination from any off-site Hazardous Substance.


 


(xv)             The applicable Borrower shall deliver or cause to be
delivered to Lender (A) updates certified by Borrower of all
organizational documentation related to Borrower and/or the formation,
structure, existence, good standing and/or qualification to do business
delivered to Lender in connection with the Closing Date; (B) good standing
certificates, certificates of qualification to do business in the jurisdiction
in which the Replacement Property is located (if required in such jurisdiction)
and (C) resolutions of the member of Borrower authorizing the substitution
and any actions taken in connection with such substitution.


 


(xvi)            Lender shall have received the following opinions of
Borrower’s counsel: (A) an opinion or opinions of counsel admitted to
practice under the laws of the state in which the Replacement Property is located
stating that the Loan Documents delivered with respect to the Replacement
Property pursuant to clause (ix) above are valid and enforceable in
accordance with their terms, subject to the laws applicable to creditors’
rights and equitable principles, and that Borrower is qualified to do business
and in good standing under the laws of the jurisdiction where the Replacement
Property is located or that Borrower is not required by applicable law to
qualify to do business in such jurisdiction; (B) an opinion of counsel
stating that the Loan Documents delivered with respect to the Replacement
Property pursuant to clause (ix) above were duly authorized, executed and
delivered by Borrower and that the execution and delivery of such Loan
Documents and the performance by Borrower of its obligations thereunder will
not cause a breach of, or a default under, any agreement, document or
instrument to which Borrower is a party or to which it or its properties are
bound; (C) an opinion of counsel or other evidence acceptable to the
Rating Agencies stating that subjecting the Replacement Property to the Lien of
the related Mortgage and the execution and delivery of the related Loan
Documents does not and will not affect or impair the ability of Lender to
enforce its remedies under all of the Loan Documents or to realize the benefits
of the cross-collateralization provided for thereunder; and (E) an opinion
of counsel acceptable to the Rating Agencies that the substitution does not
constitute a “significant modification” of the Loan under Section 1001 of
the Code or otherwise cause a tax to be imposed on a “prohibited transaction”
by any REMIC Trust holding an interest in the Loan.


 


(xvii)           Borrower shall have paid (or caused
to be paid) all Basic Carrying Costs relating to the Properties and the
Replacement Property, including without limitation, (i) accrued but unpaid
insurance premiums relating to the Properties and the Replacement Property, (ii) currently
due and payable Taxes (including any in arrears) relating to the


 


41

















 


Properties and the Replacement Property and (iii) currently
due Other Charges relating to the Properties and Replacement Property.


 


(xviii)          Borrower shall have paid to Lender a
substitution fee equal to one percent (1%) of the Substituted Property’s
Allocated Principal Amount, and shall have paid or reimbursed Lender for all
costs and expenses incurred by Lender (including, without limitation,
reasonable attorneys fees and disbursements) in connection with the substitution
and Borrower shall have paid all recording charges, filing fees, taxes or other
expenses (including, without limitation, mortgage and intangibles taxes and
documentary stamp taxes) payable in connection with the substitution.  Borrower shall have paid all costs and
expenses of the Rating Agencies incurred in connection with the substitution.


 


(xix)            Lender shall have received annual operating statements
and occupancy statements for the Replacement Property for the most recently
completed fiscal year and a current operating statement for the Substituted
Property, each certified to Lender as being, to the best of the applicable
Borrower’s knowledge, true and correct and a certificate from the applicable
Borrower certifying that there has been no adverse change in the financial
condition of the Replacement Property since the date of such operating
statements.


 


(xx)             Intentionally omitted.


 


(xxi)            Lender shall have received copies of all tenant leases
(if any) and any ground leases affecting the Replacement Property certified by
the applicable Borrower as being true and correct.  Lender shall have received a current rent
roll of the Replacement Property (if there are any tenant leases) certified by
such Borrower as being true and correct.


 


(xxii)           Lender shall have received
subordination, nondisturbance and attornment agreements from any tenants with
recorded leases (unless such Leases that are, by their terms, subordinate to
the Mortgage with respect to the Replacement Property).


 


(xxiii)          Lender shall have received an
endorsement to the Title Insurance Policy insuring the Lien of the Mortgage
encumbering the Replacement Property insuring that the Replacement Property
constitutes a separate tax lot or, if such an endorsement is not available in
the state in which the Replacement Property is located, other evidence
acceptable to Lender that the Substitute Policy constitutes a separate tax lot.


 


(xxiv)          Lender shall have received a Physical
Conditions Report with respect to the Replacement Property stating that the
Replacement Property is in good condition and repair and free of damage or
waste. If the Physical Conditions Report recommends that any repairs be made
with respect to the Replacement Property, such Physical Conditions Report shall
include an estimate of the cost of such recommended repairs.  If Borrower has not delivered to Lender
within six (6) months after the date of substitution evidence reasonably
satisfactory to Lender that it has completed such repairs, Borrower shall
deposit with Lender an amount equal to one hundred twenty-five percent (125%)
of such estimated cost, which deposit shall constitute part of the Required
Repair Fund and shall 


 


42

















 


be held and disbursed in accordance with Section 7.1
hereof.  Notwithstanding the foregoing,
if (x) the recommended repairs include life safety items or (y) the
aggregate amount of the recommended repairs exceeds two percent (2%) of the
Allocated Principal Amount of the Substituted Property, Borrower shall deposit
with Lender an amount equal to one hundred twenty-five percent (125%) of such
estimated cost of such repairs.


 


(xxv)           Lender shall have received a certificate of occupancy for
the Replacement Property (or other evidence reasonably acceptable to Lender
that the Replacement Property complies with building codes), and evidence
reasonably acceptable to Lender that the Replacement Property and its use
comply in all material respects with all applicable zoning and subdivision
laws.  Such compliance shall be confirmed
by delivery to Lender by one or more of the following: a letter from the
municipality in which such Replacement Property is located, or a certificate of
a surveyor that is licensed in the state in which the Replacement Property is
located (with respect to zoning and subdivision laws), or an ALTA 3.1 zoning
endorsement to the Title Insurance Policy delivered pursuant to clause (ix) above
(with respect to zoning laws) or a subdivision endorsement to the Title
Insurance Policy delivered pursuant to clause (ix) above (with respect to
subdivision laws).


 


(xxvi)          Lender shall have received a certified
copy of a Management Agreement between Operating Lessee and Manager reflecting
the management of the Replacement Property by Manager, which Management Agreement
shall either (i) be substantially the same in form and substance as the
Management Agreement in effect for the Substituted Property immediately prior
to the substitution date or (ii) a Replacement Management Agreement, and
such Manager and Operating Lessee shall have executed and delivered to Lender
an Assignment of Management Agreement in form and substance substantially the
same as the counterpart of such document executed and delivered with respect to
the related Substituted Property (which Assignment of Management Agreement
shall be covered by the opinion required pursuant to clause (xvi) above).


 


(xxvii)         Intentionally omitted.


 


(xxviii)        Lender shall have received copies of all
contracts and agreements relating to the leasing and operation of the Replacement
Property (other than the Management Agreement) together with a certification of
Borrower attached to each such contract or agreement certifying that the
attached copy is a true and correct copy of such contract or agreement and all
amendments thereto.


 


(xxix)           Borrower shall submit to Lender, not
less than fifteen (15) days prior to the date of such substitution, a release
of Lien (and related Loan Documents) for the Substituted Property for execution
by Lender.  Such release shall be in a
form appropriate for the recordation in the jurisdiction in which the
Substituted Property is located.


 


(xxx)            At least one (1) Business Day prior to the
Substitution Date, Lender shall have received evidence that the Operating Lease
relating to the Substituted Property will be terminated on the Substitution
Date;


 


43

















 


(xxxi)              Lender shall have received a
certified copy of an Operating Lease between the applicable Individual Owner
Borrower and the Individual Operating Lessee Borrower, which Operating Lease
shall be substantially the same in form and substance as the Operating Lease in
effect for the Substituted Property immediately prior to the Substitution Date
as approved by Lender (subject to changes approved by Lender or for which
Lender’s approval was not required), and Operating Lessee shall have executed
and delivered to Lender a Security Agreement and UCC-1 financing statements
each in form and substance substantially the same as the counterpart of such
documents executed and delivered with respect to the related Substituted
Property (all of which documents shall be covered by the opinion required
pursuant to clause (xvi) above).


 


(xxxii)             Lender shall have received evidence
reasonably satisfactory to Lender that the occupancy statistics and the average
daily rate for the Replacement Property for the twelve (12) months prior to the
substitution date shall be equal to or greater that the occupancy statistics
and the average daily rate for the Substituted Property for such period.


 


(xxxiii)            The Replacement Property shall have
credit characteristics that are equal to or better than the credit
characteristics of the Substituted Property, including, without limitation,
being located in the same or better market and having the same or better “flag”,
as reasonably determined by Lender.


 


(xxxiv)           After giving effect to the
substitution, forty percent (40%) or less of the Aggregate Net Cash Flow for
the Loan for all of the Properties (including the Replacement Property but excluding
the Substituted Property) shall result from one State or one market.


 


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


 


(xxxvi)           The applicable Borrower shall deliver
an Officer’s Certificate certifying that the requirements set forth in this Section 2.7.1
have been satisfied.


 


Upon receipt of all required
deliverables from the related Borrower, Lender shall process Borrower’s request
with commercially reasonable diligence. 
Upon the satisfaction of the foregoing conditions precedent, Lender will
release its Lien from the Substituted Property and the Replacement Property
shall be deemed to be a Property for purposes of this Agreement.


 


ARTICLE 3


CONDITIONS PRECEDENT


 


Section 3.1             Conditions
Precedent to Closing.  The
obligation of Lender to make the Loan hereunder is subject to the fulfillment
by Borrower or waiver by Lender of the following conditions precedent no later
than the Closing Date:


 


44

















 


3.1.1        Representations and
Warranties; Compliance with Conditions.  The representations and warranties of
Borrower contained in this Agreement and the other Loan Documents shall be true
and correct in all material respects on and as of the Closing Date with the
same effect as if made on and as of such date, and no Default or an Event of
Default shall have occurred and be continuing; and Borrower shall be in
compliance in all material respects with all terms and conditions set forth in
this Agreement and in each other Loan Document on its part to be observed or
performed.


 


3.1.2        Loan Agreement and Note.  Lender shall have received a copy of this
Agreement and the Note, in each case, duly executed and delivered on behalf of
Borrower.


 


3.1.3        Delivery of Loan
Documents; Title Insurance; Reports; Leases, Etc.


 


(a)           Mortgages, Assignments of
Leases and other Loan Documents. 
Lender shall have received from Borrower fully executed and acknowledged
counterparts of the Mortgages and the Assignments of Leases and evidence that
counterparts of the Mortgages and Assignments of Leases have been delivered to
the title company for recording, in the reasonable judgment of Lender, so as to
effectively create upon such recording valid and enforceable first priority
Liens upon each Individual Property in favor of Lender or its nominee (or such
trustee as may be required under local law), subject only to the Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents.  Lender shall have also
received from Borrower fully executed counterparts of the Assignments of
Management Agreement and the other Loan Documents.


 


(b)           Title Insurance.  Lender shall have received, with respect to
each Individual Property, a Title Insurance Policy issued by a title company
acceptable to Lender and dated as of the Closing Date with reinsurance and
direct access agreements acceptable to Lender. 
Such Title Insurance Policy shall (i) provide coverage in an amount
at least equal to the Allocated Principal Amount of the the applicable
Individual Property together with, if applicable, a “tie-in” or similar endorsement,
(ii) insure Lender that the relevant Mortgage creates a valid first
priority lien on the Individual Property encumbered thereby, free and clear of
all exceptions from coverage other than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as modified by the terms of any
endorsements), (iii) contain such endorsements and affirmative coverages
as Lender may reasonably request, and (iv) name Lender, its successors and
assigns, as the insured.  The Title
Insurance Policy shall be assignable without cost to Lender.  Lender also shall have received evidence that
all premiums in respect of such Title Insurance Policy have been paid.


 


(c)           Survey.  Lender shall have received a title survey for
each Individual Property, certified to the title company and Lender and their
successors and assigns, in form and content satisfactory to Lender and prepared
by a professional and properly licensed land surveyor satisfactory to Lender in
accordance with the most recent Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys.  The
following additional items from the list of “Optional Survey Responsibilities
and Specifications” (Table A) should be added to each survey: 2, 3, 4, 6, 8, 9,
10, 11 and 13.  The survey shall reflect
the same legal description contained in the Title Insurance Policy relating to
such Individual Property referred to in clause (ii) above and shall
include, among other things, a legal description of the real property


 


45

















 


comprising part of such
Individual Property reasonably satisfactory to Lender.  The surveyor’s seal shall be affixed to each
survey and the surveyor shall provide a certification for each survey in form
and substance acceptable to Lender.


 


(d)           Insurance.  Lender shall have received valid certificates
of insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period.


 


(e)           Environmental Reports.  Lender shall have received an Environmental
Report in respect of each Individual Property, in each case reasonably
satisfactory to Lender.


 


(f)            Zoning.  With respect to each Individual Property,
Lender shall have received, at Lender’s option, (i) letters or other
evidence with respect to each Individual Property from the appropriate
municipal authorities (or other Persons) concerning applicable zoning and
building laws, (ii) an ALTA 3.1 zoning endorsement to the applicable Title
Insurance Policy or (iii) other evidence of zoning compliance, in each
case in substance reasonably satisfactory to Lender.


 


(g)           Encumbrances.  Borrower shall have taken or caused to be
taken such actions in such a manner so that Lender has a valid and perfected
first Lien on each Individual Property as of the Closing Date with respect to
each Mortgage on the applicable Individual Property, subject only to applicable
Permitted Encumbrances and such other Liens as are permitted pursuant to the
Loan Documents, and Lender shall have received satisfactory evidence thereof.


 


3.1.4        Related Documents.  Each additional document not specifically
referenced herein, but relating to the transactions contemplated herein, shall
have been duly authorized, executed and delivered by all parties thereto and
Lender shall have received and approved certified copies thereof.


 


3.1.5        Delivery of Organizational
Documents.  On or before
the Closing Date, Borrower shall deliver or cause to be delivered to Lender
copies certified by Borrower of all organizational documentation related to
Borrower and/or the formation, structure, existence, good standing and/or
qualification to do business, as Lender may request in its sole discretion,
including, without limitation, good standing certificates, qualifications to do
business in the appropriate jurisdictions, resolutions authorizing the entering
into of the Loan and incumbency certificates as may be requested by Lender.


 


3.1.6        Opinions of Borrower’s
Counsel.  Lender shall
have received opinions of Borrower’s counsel (and if applicable, Borrower’s
local counsel) (a) with respect to non-consolidation issues (an “Insolvency Opinion”) and (b) with
respect to due execution, authority, enforceability of the Loan Documents and
such other matters as Lender may reasonably require, all such opinions in form,
scope and substance reasonably satisfactory to Lender and Lender’s counsel in
their reasonable discretion.


 


3.1.7        Budgets.  Borrower shall have delivered, and Lender
shall have approved, the Annual Budget for its Individual Property for the
current Fiscal Year.


 


3.1.8        Basic Carrying Costs.  Borrower shall have paid all Basic Carrying
Costs relating to the Properties which are in arrears, including without
limitation, (a) accrued but


 


46

















 


unpaid insurance premiums
relating to the Properties, (b) currently due and payable Taxes (including
any in arrears) relating to the Properties, and (c) currently due Other
Charges relating to the Properties, which amounts shall be funded with proceeds
of the Loan.


 


3.1.9        Completion of Proceedings.  All organizational proceedings taken or to be
taken in connection with the transactions contemplated by this Agreement and
other Loan Documents and all documents incidental thereto shall be reasonably
satisfactory in form and substance to Lender, and Lender shall have received
all such counterpart originals or certified copies of such documents as Lender
may reasonably request.


 


3.1.10      Payments.  All payments, deposits or escrows required to
be made or established by Borrower under this Agreement, the Note and the other
Loan Documents on or before the Closing Date shall have been paid.


 


3.1.11      Intentionally Omitted.


 


3.1.12      Transaction Costs.  Borrower shall have paid or reimbursed Lender
for all title insurance premiums, recording and filing fees or taxes, costs of
environmental reports, Physical Conditions Reports, appraisals and other
reports, the fees and costs of Lender’s counsel and all other third party
out-of-pocket expenses incurred in connection with the origination of the Loan.


 


3.1.13      Material Adverse Change.  There shall have been no material adverse
change in the financial condition or business condition of Borrower or the
Properties since the date of the most recent financial statements delivered to
Lender.  The income and expenses of the
Properties, the occupancy leases thereof, and all other features of the
transaction shall be as represented to Lender without material adverse change.  Neither Borrower, any of its constituent
Persons, shall be the subject of any bankruptcy, reorganization, or insolvency
proceeding.


 


3.1.14      Leases and Rent Roll.  Lender shall have received copies of all
tenant leases, certified copies of any tenant leases as requested by Lender and
certified copies of all ground leases affecting the Properties, if any.  If there are any Leases at the Property,
Lender shall have received a current certified rent roll of the Properties,
reasonably satisfactory in form and substance to Lender.


 


3.1.15      Intentionally omitted.


 


3.1.16      Tax Lot.  Lender shall have received evidence that each
Individual Property constitutes one (1) or more separate tax lots, which
evidence shall be reasonably satisfactory in form and substance to Lender.


 


3.1.17      Physical Conditions Reports.  Lender shall have received a Physical
Conditions Reports with respect to each Individual Property, which reports
shall be reasonably satisfactory in form and substance to Lender.


 


3.1.18      Management Agreement.  Lender shall have received a true, correct
and complete copy of all existing Management Agreements, and with respect to
each Individual Property for which a new Management Agreement is being
executing in connection with the


 


47

















 


Loan, Lender shall have
approved the form of Management Agreement with respect to such Individual
Property.


 


3.1.19      Appraisal.  Lender shall have received an appraisal of
each Individual Property, which shall be satisfactory in form and substance to
Lender.


 


3.1.20      Franchise Agreement.
Lender shall have received a true, correct and complete copy of all existing
Franchise Agreements, and with respect to each Individual Property for which a
new Franchise Agreement is being executing in connection with the Loan, Lender
shall have approved the form of Franchise Agreement with respect to such
Individual Property.


 


3.1.21      Financial Statements.  Lender shall have received (a) a balance
sheet with respect to each Individual Property for the two most recent Fiscal
Years and statements of income and statements of cash flows with respect to
such Individual Property for the three most recent Fiscal Years, each in form
and substance reasonably satisfactory to Lender or (b) such other
financial statements relating to the ownership and operation of the Individual
Property, in form and substance reasonably satisfactory to Lender.


 


3.1.22      Operating Leases.  Lender shall have received a true, correct
and complete copy of each of the Operating Leases.


 


3.1.23      Further Documents.  Lender or its counsel shall have received
such other and further approvals, opinions, documents and information as Lender
or its counsel may have reasonably requested including the Loan Documents in
form and substance reasonably satisfactory to Lender and its counsel.


 


3.1.24      Environmental Insurance.  If required by Lender, Borrower shall have
obtained a secured creditor environmental insurance policy with respect to an
Individual Property, which shall be in form and substance satisfactory to
Lender.  Any such policy shall have a
term not less than the term of the Loan. 
Borrower shall have provided to Lender evidence that the premiums for
such policy has been paid in full.


 


ARTICLE 4


REPRESENTATIONS AND
WARRANTIES


 


Section 4.1             Borrower
Representations.  Borrower
represents and warrants as of the date hereof and as of the Closing Date that:


 


4.1.1        Organization.  Each Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
its Properties and to transact the businesses in which it is now engaged.  Each Borrower is duly qualified to do
business and is in good standing in each jurisdiction where it is required to
be so qualified in connection with its Properties, businesses and operations.  Each Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its Properties and/or to transact the businesses in which it is now
engaged, and the sole business of Borrower is the ownership, management and
operation of the Properties.


 


48

















 


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


 


4.1.3        No Conflicts.  The execution, delivery and performance of
this Agreement and the other Loan Documents by Borrower will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the
property or assets of Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement or other
agreement or instrument to which Borrower is a party or by which any of
Borrower’s property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or
regulation of any Governmental Authority having jurisdiction over Borrower or
any of Borrower’s properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any court or any
such Governmental Authority required for the execution, delivery and
performance by Borrower of this Agreement or any other Loan Documents has been
obtained and is in full force and effect.


 


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


 


4.1.5        Agreements.  Except for the Franchise Agreements,
Management Agreements, and such instruments and agreements set forth as
Permitted Exceptions in the applicable Title Insurance Policy, no Borrower is a
party to any agreement or instrument or subject to any restriction which might
materially and adversely affect Borrower or any Individual Property, or
Borrower’s business, properties or assets, operations or condition, financial
or otherwise.  To Borrower’s knowledge,
Borrower is not in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party or by which
Borrower or any of the Properties are bound. 
Borrower has no material financial obligation under any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Borrower is a party or by which Borrower or the Properties are otherwise
bound, other than (a) obligations incurred in the ordinary course of the
operation of the Properties and (b) obligations under the Loan Documents.


 


4.1.6        Title.  Borrower has good and indefeasible fee simple
title to the real property comprising part of each Individual Property (except
with respect to the Westbury Property, for which the Westbury Borrower has
good, marketable and insurable leasehold title to the real property comprising
such Individual Property) and good title to the balance of such Individual 


 


49

















 


Property, free and clear of
all Liens whatsoever except the Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by the Loan
Documents.  Each Mortgage, when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create (a) a
valid, perfected lien on the applicable Individual Property, subject only to
Permitted Encumbrances and the Liens created by the Loan Documents and (b) perfected
security interests in and to, and perfected collateral assignment of, all
personalty (including the Leases), all in accordance with the terms thereof, in
each case subject only to any applicable Permitted Encumbrances, such other
Liens as are permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents.  There are no claims
for payment for work, labor or materials affecting the Properties which are due
and unpaid under the contracts pursuant to which such work or labor was
performed or materials provided which are or may become a lien prior to, or of
equal priority with, the Liens created by the Loan Documents.  All state, county and municipal mortgage
recording and intangibles taxes and documentary stamp taxes due in connection
with the acquisition or financing of the Property have, as of the date hereof,
been paid (or are in escrow with the title insurance company insuring the Lien
of the Mortgage).


 


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


 


4.1.8        Full and Accurate
Disclosure.  To Borrower’s
knowledge, no statement of fact made by Borrower in this Agreement or in any of
the other Loan Documents contains any untrue statement of a material fact or
omits to state any material fact necessary to make statements contained herein
or therein not misleading.  There is no
material fact presently known to 


 


50

















 


Borrower which has not been
disclosed to Lender which adversely affects, nor as far as Borrower can
foresee, might adversely affect, any Individual Property or the business,
operations or condition (financial or otherwise) of Borrower.


 


4.1.9        No Plan Assets.  No Borrower is an “employee benefit plan,” as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and
none of the assets of Borrower constitutes or will constitute “plan assets” of
one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.  In addition, (a) no Borrower is a “governmental
plan” within the meaning of Section 3(32) of ERISA and (b) transactions
by or with Borrower are not subject to state statutes regulating investment of,
and fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code
currently in effect, which prohibit or otherwise restrict the transactions
contemplated by this Loan Agreement.


 


4.1.10      Compliance.  To Borrower’s knowledge, Borrower and the
Properties and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes.  To the best
of Borrower’s knowledge after due inquiry, Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority.  There has not been committed
by Borrower or to Borrower’s knowledge, any other Person in occupancy of or
involved with the operation or use of the Properties any act or omission
affording the federal government or any other Governmental Authority the right
of forfeiture as against any Individual Property or any part thereof or any
monies paid in performance of Borrower’s obligations under any of the Loan
Documents.


 


4.1.11      Financial Information.  All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that
have been delivered to Lender in respect of the Loan (i) are, to the best
of Borrower’s knowledge, true, complete and correct in all material respects, (ii) accurately
represent the financial condition of the Properties as of the date of such
reports, and (iii) to the extent prepared or audited by an independent
certified public accounting firm, have been prepared in accordance with GAAP
(or other accounting principles reasonably acceptable to Lender, consistently
applied) throughout the periods covered, except as disclosed therein; provided,
however, that if any financial data is delivered to Lender by any Person other
than Borrower, Guarantor, Indemnitor or any of their Affiliates, or if such
financial data has been prepared by or at the direction of any Person other
than Borrower, Guarantor, Indemnitor or any of their Affiliates, then the
foregoing representations with respect to such financial data shall be to the
best of Borrower’s knowledge, after due inquiry.  Borrower does not have any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are
known to Borrower and reasonably likely to have a materially adverse effect on
any Individual Property or the operation thereof as a limited service hotel,
except as referred to or reflected in said financial statements.  Since the date of such financial statements,
there has been no materially adverse change in the financial condition,
operations or business of Borrower from that set forth in said financial
statements.


 


4.1.12      Condemnation.  Except as previously disclosed to Lender in writing
with respect to the Individual Property known as the Dallas Marriott Residence
Inn Park Central, located at 


 


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7642 LBJ Freeway, Dallas,
Texas, no Condemnation or other proceeding has been commenced or, to Borrower’s
knowledge, is contemplated with respect to all or any portion of any Individual
Property or for the relocation of roadways providing access to any Individual
Property.


 


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


 


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


 


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


 


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


 


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


 


4.1.18      Enforceability.  The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable, and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.


 


4.1.19      No Prior Assignment.  There is no prior assignment of the Leases or
any portion of the Rents by Borrower or any of its predecessors in interest,
given as collateral security which are presently outstanding.


 


4.1.20      Insurance.  Borrower has obtained and has delivered to
Lender certified copies of the Policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement.  To the best of Borrower’s knowledge, no
claims have been made under any such Policy, and no Person, including Borrower,
has done, by act or omission, anything which would impair the coverage of any
such Policy.


 


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4.1.21      Use of Property.  Each Individual Property is used exclusively
as a limited service hotel and other appurtenant and related uses.


 


4.1.22      Certificate of Occupancy;
Licenses.  All
certifications, permits, licenses and approvals, including without limitation,
certificates of completion and occupancy permits required to be obtained by
Borrower for the legal use, occupancy and operation of each Individual Property
as a limited service hotel have been obtained and are in full force and effect,
and to the best of Borrower’s knowledge, after due inquiry, all certifications,
permits, licenses and approvals, including without limitation, certificates of
completion and occupancy permits required to be obtained by any Person other
than Borrower and any applicable liquor license required for the legal use,
occupancy and operation of each Individual Property have been obtained and are
in full force and effect (all of the foregoing certifications, permits,
licenses and approvals are collectively referred to as the “Licenses”).  Borrower shall and shall cause all other
Persons to, keep and maintain all Licenses necessary for the operation of each
Individual Property as a limited service hotel. 
To Borrower’s knowledge, the use being made of each Individual Property
is in conformity with all certificates of occupancy issued for such Individual
Property.


 


4.1.23      Flood Zone.  To the best of Borrower’s knowledge, after
due inquiry, no Improvements on any Individual Property are located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards and, if so located, the flood insurance required pursuant to Section 6.1(a)(i) is
in full force and effect with respect to each such Individual Property.


 


4.1.24      Physical Condition.  Except as disclosed in the Physical
Conditions Reports delivered to Lender in connecting with this Loan, to
Borrower’s knowledge, each Individual Property, including, without limitation,
all buildings, improvements, parking facilities, sidewalks, storm drainage
systems, roofs, plumbing systems, HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; there exists no
structural or other material defects or damages in any Individual Property,
whether latent or otherwise, and no Borrower has received notice from any
insurance company or bonding company of any defects or inadequacies in any
Individual Property, or any part thereof, which would adversely affect the
insurability of the same or cause the imposition of extraordinary premiums or
charges thereon or of any termination or threatened termination of any policy
of insurance or bond.


 


4.1.25      Boundaries.
To the best of Borrower’s knowledge, after due inquiry, all of the improvements
which were included in determining the appraised value of each Individual
Property lie wholly within the boundaries and building restriction lines of
such Individual Property, and no improvements on adjoining properties encroach
upon any Individual Property, and no easements or other encumbrances upon any
Individual Property encroach upon any of the Improvements, so as to affect the
value or marketability of applicable Individual Property except those which are
insured against by the applicable Title Insurance Policy.


 


4.1.26      Leases.  The Properties are not subject to any leases
other than the Operating Leases and the Leases described on the Rent Roll
attached as Schedule V hereto and made a part


 


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hereof, except that the
Westbury Property is subject to the Ground Lease.  Each Operating Lease delivered to Lender in
connection with the closing of this Loan was, when delivered, true, correct and
complete, and no such Operating Agreement has been modified since delivery
except in accordance with the terms hereof. 
No Person has any possessory interest in any Individual Property or
right to occupy the same except under and pursuant to the provisions of the
Leases.  The current Leases are in full
force and effect and to Borrower’s knowledge after inquiry, there are no
defaults thereunder by either party and there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute defaults
thereunder.  No Rent (including security
deposits) has been paid more than one (1) month in advance of its due
date.  All work to be performed by
Borrower under each Lease has been performed as required and has been accepted
by the applicable tenant, and any payments, free rent, partial rent, rebate of
rent or other payments, credits, allowances or abatements required to be given
by Borrower to any tenant has already been received by such tenant.  There has been no prior sale, transfer or
assignment, hypothecation or pledge of any Lease or of the Rents received
therein which is outstanding.  To
Borrower’s knowledge after inquiry, except as set forth on Schedule V, no
tenant listed on Schedule V has assigned its Lease or sublet all or any portion
of the premises demised thereby, no such tenant holds its leased premises under
assignment or sublease, nor does anyone except such tenant and its employees
occupy such leased premises.  No tenant
under any Lease has a right or option pursuant to such Lease or otherwise to
purchase all or any part of the leased premises or the building of which the
leased premises are a part.  Except as
set forth in Schedule V, no tenant under any Lease has any right or option for
additional space in the Improvements except as set forth in Schedule V.  To Borrower’s actual knowledge based on the
Environmental Report delivered to Lender in connection herewith, no hazardous
wastes or toxic substances, as defined by applicable federal, state or local
statutes, rules and regulations, have been disposed, stored or treated by
any tenant under any Lease on or about the leased premises nor does Borrower
have any knowledge of any tenant’s intention to use its leased premises for any
activity which, directly or indirectly, involves the use, generation,
treatment, storage, disposal or transportation of any petroleum product or any
toxic or hazardous chemical, material, substance or waste, except in either
event, in compliance with applicable federal, state or local statues, rules and
regulations.


 


4.1.27      Survey.  The Survey for each Individual Property
delivered to Lender in connection with this Agreement has been prepared in
accordance with the provisions of Section 3.1.3(c) hereof, and does
not fail to reflect any material matter affecting such Individual Property or
the title thereto.


 


4.1.28      Loan to Value.
The maximum principal amount of the Note does not exceed one hundred
twenty-five percent (125%) of the fair market value of the Properties as set
forth on the appraisals of the Properties delivered to Lender.


 


4.1.29      Inventory.
Except for items owned or leased by a Franchisor or Manager as expressly set
forth in a Franchise Agreement or Management Agreement, as applicable, each
Borrower is the owner of all of the Equipment, Fixtures and Personal Property
(as such terms are defined in the Mortgages) located on or at each Individual
Property and shall not lease any Equipment, Fixtures or Personal Property
without Lender’s prior written consent. 
All of the Equipment, Fixtures and Personal Property (together with
equipment, fixtures and personal


 


54

















 


property owned or leased by
Franchisor or Manager) are sufficient to operate the Properties in the manner
required hereunder and in the manner in which they are currently operated.


 


4.1.30      Filing and Recording Taxes.  All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid by
any Person under applicable Legal Requirements currently in effect in
connection with the acquisition of the Properties to Borrower have been paid or
are simultaneously being paid.  All
mortgage, mortgage recording, stamp, intangible or other similar tax required
to be paid by any Person under applicable Legal Requirements currently in
effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents,
including, without limitation, the Mortgages, have been paid, and, under current
Legal Requirements, each of the Mortgages are enforceable in accordance with
its terms by Lender (or any subsequent holder thereof).


 


4.1.31      Special Purpose
Entity/Separateness.


 


(a)           Until the Debt has been paid in full,
each Individual Borrower hereby represents, warrants and covenants that such
Individual Borrower is, shall be and shall continue to be a Special Purpose
Entity.  If an Individual Borrower
consists of more than one Person, each such Person shall be a Special Purpose
Entity.


 


(b)           The representations, warranties and
covenants set forth in Section 4.1.31(a) shall survive for so long as
any amount remains payable to Lender under this Agreement or any other Loan
Document.


 


(c)           Any and all of the facts presented
and assumptions made in any Insolvency Opinion, including, but not limited to,
any exhibits attached thereto, will have been and shall be true and correct in
all respects, and Borrower will have complied and will comply with all of the
assumptions made with respect to it in any Insolvency Opinion.  Each entity other than Borrower with respect
to which an assumption is made in any Insolvency Opinion will have complied and
will comply with all of the assumptions made with respect to it in any such Insolvency
Opinion.


 


4.1.32      Management Agreement.  The Management Agreement, with respect to
each Individual Property, is in full force and effect and, to Borrower’s
knowledge, there is no default thereunder by any party thereto and no event has
occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder.


 


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


 


4.1.34      No Change in Facts or
Circumstances; Disclosure. 
All information submitted by Borrower to Lender and in all financial
statements, rent rolls, reports, certificates and other documents submitted in
connection with the Loan or in satisfaction of the terms thereof and all
statements of fact made by Borrower in this Agreement or in any other Loan
Document, are accurate, complete and correct in all material respects,
provided, however, that if such information was provided to Borrower by
non-affiliated third parties or predates the merger transaction pursuant to
which Inland American Real Estate Trust, Inc. became the indirect owner of
Borrower (or its predecessor-in-title to the Property), Borrower represents
that such


 


55

















 


information is, to the best
of its knowledge after due inquiry, accurate, complete and correct in all
material respects.  There has been no
material adverse change in any condition, fact, circumstance or event that
would make any such information inaccurate, incomplete or otherwise misleading
in any material respect or that otherwise materially and adversely affects or
might materially and adversely affect the Properties or the business operations
or the financial condition of Borrower. 
Borrower has disclosed to Lender all material facts and has not failed
to disclose any material fact that could cause any representation or warranty
made herein to be materially misleading.


 


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


 


4.1.36      Embargoed Person.  As of the date hereof and at all times
throughout the term of the Loan, including after giving effect to any Transfers
permitted pursuant to the Loan Documents, (a) none of the funds or other
assets of Borrower, Guarantor or Indemnitor constitute property of, or are
beneficially owned, directly or indirectly, by any Embargoed Person; (b) no
Embargoed Person has any interest of any nature whatsoever in Borrower,
Guarantor or Indemnitor, as applicable, with the result that the investment in
Borrower, Guarantor or Indemnitor, (whether directly or indirectly), is prohibited
by law or the Loan is in violation of law; and (c) none of the funds of
Borrower, Guarantor or Indemnitor, have been derived from any unlawful activity
with the result that the investment in Borrower, Guarantor or Indemnitor
(whether directly or indirectly), is prohibited by law or the Loan is in
violation of law.


 


4.1.37      Principal Place of
Business and Organization. 
Borrower shall not change its principal place of business without first
giving Lender thirty (30) days prior written notice.  Borrower shall not change the place of its
organization as set forth in the introductory paragraph of this Agreement
without the consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed.  Upon
Lender’s request, Borrower shall execute and deliver additional financing
statements, security agreements and other instruments which may be necessary to
effectively evidence or perfect Lender’s security interest in the Properties as
a result of such change of principal place of business or place of
organization.


 


4.1.38      Cash Management Account.
Borrower hereby represents and warrants to Lender that:


 


(a)           This Agreement, together with the
other Loan Documents, create a valid and continuing security interest (as
defined in the Uniform Commercial Code of the State of New York) in the
Clearing Account and Cash Management Account in favor of Lender, which security
interest is prior to all other Liens, other than Permitted Encumbrances, and is
enforceable as such against creditors of and purchasers from Borrower.  Other than in connection with the Loan
Documents and except for Permitted Encumbrances, Borrower has not sold, 


 


56

















 


pledged, transferred or
otherwise conveyed the Clearing Account and Cash Management Account ;


 


(b)           Each of the Clearing Account and Cash
Management Account constitute “deposit accounts” and/or “securities accounts”
within the meaning of the Uniform Commercial Code of the State of New York);


 


(c)           Pursuant and subject to the terms
hereof and the other applicable Loan Documents, the Clearing Bank and Agent
have agreed to comply with all instructions originated by Lender, without
further consent by Borrower, directing disposition of the Clearing Account and
Cash Management Account and all sums at any time held, deposited or invested
therein, together with any interest or other earnings thereon, and all proceeds
thereof (including proceeds of sales and other dispositions), whether accounts,
general intangibles, chattel paper, deposit accounts, instruments, documents or
securities; and


 


(d)           The Clearing Account and Cash
Management Account are not in the name of any Person other than Borrower, as
pledgor, or Lender, as pledgee. Borrower has not consented to the Clearing Bank
and Agent complying with instructions with respect to the Clearing Account and
Cash Management Account from any Person other than Lender.


 


4.1.39      Franchise Agreement.  Each 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 and/or giving of notice, would
constitute a default thereunder.


 


4.1.40      Ground Lease.  Borrower hereby represents and warrants to
Lender the following with respect to the Ground Lease:


 


(a)           Recording; Modification.  A memorandum of the Ground Lease has been
duly recorded.  There have not been
amendments or modifications to the terms of the Ground Lease since recordation
of the Ground Lease (or a memoranda thereof), with the exception of written
instruments which have been recorded. 
The Ground Lessor has executed the Westbury Mortgage and the fee estate
in the Westbury Property is encumbered thereby.


 


(b)           No Liens.  Except for the Permitted Encumbrances and
other encumbrances of record, Westbury Borrower’s interest in the Ground Lease
is not subject to any Liens or encumbrances superior to, or of equal priority
with, the Westbury Mortgage other than the Ground Lessor’s related fee
interest.


 


(c)           Default.  As of the date hereof, the Ground Lease is in
full force and effect and no default has occurred under the Ground Lease and
there is no existing condition which, but for the passage of time or the giving
of notice, could result in a default under the terms of the Ground Lease.


 


(d)           Term.  The term of the Ground Lease extends to December 23,
2014.


 


4.1.41      Fraudulent Transfer.  It is the intention of all Individual
Borrowers that the obligations of each Individual Borrower under the Note or
this Agreement shall not constitute a fraudulent transfer or conveyance under
any Federal or state fraudulent transfer or conveyance 


 


57

















 


laws including Section 548
of the Bankruptcy Code (collectively, the “Fraudulent Transfer Laws”).  To effect the foregoing intention any term or
provision of this Agreement or any other Loan Document notwithstanding, the
maximum aggregate amount of the obligations for which any Individual Borrower
shall be liable under this Agreement and the other Loan Documents shall in no
event exceed an amount equal to the largest amount that would not render such
Individual Borrower’s obligations subject to avoidance under any Fraudulent
Transfer Laws.


 


4.1.42      Operating Leases.  Each Operating Lease is in full force and
effect, and there are no defaults thereunder by either party and there are no
conditions that, with the passage of time or the giving of notice, or both,
would constitute defaults thereunder. The terms and provisions of each
Operating Lease are subject and subordinate to the terms and lien of this
Agreement and the Mortgages.  Neither the
execution and delivery of the Loan Documents, Borrower’s performance
thereunder, nor the exercise of any remedies by Lender will adversely affect
Borrower’s rights under any Operating Lease.


 


4.1.43      PIP Requirements.  Borrower has disclosed to Lender, in writing,
prior to the date hereof, all outstanding PIP Requirements with respect to the
Property.


 


Section 4.2            Survival of
Representations.  Borrower agrees that
all of the representations and warranties of Borrower set forth in Section 4.1
hereof and elsewhere in this Agreement and in the other Loan Documents shall
survive for so long as any amount remains owing to Lender under this Agreement
or any of the other Loan Documents by Borrower. 
All representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents by Borrower shall be deemed to have
been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf.


 


ARTICLE 5


BORROWER COVENANTS


 


Section 5.1             Affirmative
Covenants.  From the
Closing Date and until payment and performance in full of all obligations of
Borrower under the Loan Documents or the earlier release of the Liens of the
Mortgages encumbering the Properties (and all related obligations) in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:


 


5.1.1        Existence; Compliance with
Legal Requirements; Insurance. 
Borrower shall do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its existence, rights, licenses,
permits and franchises and comply with all Legal Requirements applicable to it
and the Properties.  No Borrower shall
commit, nor shall Borrower permit any other Person in occupancy of or involved
with the operation or use of the Properties to commit, any act or omission
affording the federal government or any state or local government the right of
forfeiture as against any Individual Properties or any part thereof or any
monies paid in performance of Borrower’s obligations under any of the Loan
Documents.  Borrower hereby covenants and
agrees not to commit, permit or suffer to exist any act or omission affording
such right of forfeiture.  Borrower shall
at all times maintain, preserve and protect all its franchises and trade names
and preserve all the remainder of its property used or useful in the conduct of
its business and shall keep the Properties in good working order and repair,
and from time to time


 


58

















 


make, or cause to be made,
all reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgage.  Borrower shall keep the Properties insured at
all times by financially sound and reputable insurers, to such extent and
against such risks, and maintain liability and such other insurance, as is more
fully provided in this Agreement. Borrower shall operate, or cause the tenant
to operate, any Individual Property that is the subject of an O&M Agreement
(if any) in accordance with the terms and provisions thereof in all material
respects.  After prior written notice to
Lender, Borrower, at its own expense, may contest by appropriate legal
proceeding promptly initiated and conducted in good faith and with due
diligence, the validity of any Legal Requirement, the applicability of any
Legal Requirement to Borrower or any Individual Property or any alleged
violation of any Legal Requirement, provided that (i) no Event of Default
has occurred and remains uncured; (ii) intentionally omitted; (iii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances; (iv) no
Individual Property nor any part thereof or interest therein will not be in
danger of being sold, forfeited, terminated, cancelled or lost; (v) Borrower
shall promptly upon final determination thereof comply with any such Legal
Requirement determined to be valid or applicable or cure any violation of any
Legal Requirement; (vi) such proceeding shall suspend the enforcement of
the contested Legal Requirement against Borrower or any Individual Property;
and (vii) Borrower shall furnish such security as may be required in the
proceeding, or as may be requested by Lender, to insure compliance with such
Legal Requirement, together with all interest and penalties payable in
connection therewith.  Lender may apply
any such security, as necessary to cause compliance with such Legal Requirement
at any time when, in the reasonable judgment of Lender, the validity,
applicability or violation of such Legal Requirement is finally established or
any Individual Property (or any part thereof or interest therein) shall be in
danger of being sold, forfeited, terminated, cancelled or lost.


 


5.1.2        Taxes and Other Charges.  Borrower shall pay or cause to be paid all
Taxes and Other Charges now or hereafter levied or assessed or imposed against
the Properties or any part thereof as the same become due and payable;
provided, however, Borrower’s obligation to directly pay to the appropriate
taxing authority Taxes shall be suspended for so long as Borrower complies with
the terms and provisions of Section 7.2 hereof.  Borrower will deliver to Lender receipts for
payment or other evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid or are not then delinquent no later than ten (10) days
prior to the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid (provided, however, that Borrower is not required to
furnish such receipts for payment of Taxes in the event that such Taxes have
been paid by Lender pursuant to Section 7.2 hereof).  Provided no Event of Default shall then
exist, if Borrower pays or causes to be paid all Taxes and Other Charges and
provides a copy of the receipt evidencing the payment thereof to Lender, then
Lender shall reimburse Borrower, provided that there are then sufficient
proceeds in the Tax and Insurance Escrow Fund and provided that the Taxes are
being paid pursuant to Section 7.2. 
Upon written request of Borrower, if Lender has paid such Taxes pursuant
to Section 7.2 hereof, Lender shall provide Borrower with evidence that
such Taxes have been paid.  Borrower
shall not suffer and shall promptly cause to be paid and discharged any Lien or
charge whatsoever which may be or become a Lien or charge against the
Properties, and shall promptly pay for all utility services provided to the
Properties.  After prior written notice
to Lender, Borrower, at its own expense,


 


59

















 


may contest by appropriate
legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any
Taxes or Other Charges, provided that (i) Borrower is permitted to do so
under the provisions of any mortgage or deed of trust superior in lien to the
applicable Mortgage; (ii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all applicable statutes, laws
and ordinances; (iii) no Individual Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost; (iv) Borrower shall promptly upon final determination
thereof pay the amount of any such Taxes or Other Charges, together with all
costs, interest and penalties which may be payable in connection therewith; (v) such
proceeding shall suspend the collection of such contested Taxes or Other
Charges from the applicable Individual Property; and (vi) Borrower shall
furnish such security as may be required in the proceeding, or as may be
reasonably requested by Lender, to insure the payment of any such Taxes or
Other Charges, together with all interest and penalties thereon.  Lender may pay over any such cash deposit or
part thereof held by Lender to the claimant entitled thereto at any time when,
in the reasonable judgment of Lender, the entitlement of such claimant is
established, or any Individual Property (or part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, cancelled or lost, or
there shall be any danger of the Lien of any Mortgage being primed by any other
Lien, in each case, as determined by Lender in its reasonable discretion.


 


5.1.3        Litigation.  Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened against
Borrower, Guarantor or Indemnitor which might materially adversely affect such
party’s condition (financial or otherwise) or business or any Individual
Property.


 


5.1.4        Access to Properties.  Borrower shall permit agents, representatives
and employees of Lender to inspect the Properties or any part thereof at
reasonable hours upon reasonable advance notice, subject to the rights of
Manager under the Management Agreement.


 


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


 


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


 


5.1.7        Perform Loan Documents.  Borrower shall observe, perform and satisfy
all the terms, provisions, covenants and conditions of, and shall pay when due
all costs, fees and expenses to the extent required under the Loan Documents
executed and delivered by, or applicable to, Borrower.


 


5.1.8        Insurance Benefits.  Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully
or equitably payable in


 


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


 


5.1.9        Further Assurances.  Borrower shall, at Borrower’s sole cost and
expense:


 


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


 


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


 


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


 


5.1.10      Supplemental Mortgage
Affidavits.   If at any
time Lender determines, based on applicable law, that Lender is not being
afforded the maximum amount of security available from any Individual Property
as a direct or indirect result of applicable taxes not having been paid with
respect to such Individual Property, Borrower agrees that Borrower will
execute, acknowledge and deliver to Lender, immediately upon Lender’s request,
supplemental affidavits increasing the amount of the Debt attributable to the
Individual Property for which all applicable taxes have been paid to an amount
determined by Lender to be equal to the lesser of (a) the greater of the
fair market value of such Individual Property (i) as of the date hereof
and (ii) as of the date such supplemental affidavits are to be delivered
to Lender, and (b) the amount of the Debt attributable to the Individual
Property, and Borrower shall, on demand, pay any additional taxes.


 


5.1.11      Financial Reporting.


 


(a)           Each Borrower will keep and maintain
or will cause to be kept and maintained on a Fiscal Year basis, in accordance
with GAAP and the Uniform System of Accounts, proper and accurate books,
records and accounts reflecting all of the financial affairs of Borrower and
all items of income and expense in connection with the operation of its
Individual Property.  Lender shall have
the right from time to time at all times during normal business hours upon
reasonable notice to examine such books, records and accounts at the office of
Borrower or any other Person maintaining such books, records and accounts and
to make such copies or extracts thereof as


 


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Lender shall desire.  After the occurrence and during the
continuance of an Event of Default, Borrower shall pay any costs and expenses
incurred by Lender to examine Borrower’s accounting records with respect to the
Properties, as Lender shall reasonably determine to be necessary or appropriate
in the protection of Lender’s interest.


 


(b)           Borrower will furnish to Lender
annually, within ninety (90) days following the end of each Fiscal Year of
Borrower, either (i) a complete copy of each Borrower’s annual financial
statements audited by an accounting firm or other independent certified public accountant
reasonably acceptable to Lender, or (ii) a consolidated and annotated
financial statement of each Borrower, Sole Member and Guarantor (as
applicable), audited by an accounting firm or other independent certified
public accountant reasonably acceptable to Lender in accordance with the GAAP
(or other accounting principles reasonably acceptable to Lender, consistently
applied) and the Uniform System of Accounts, together with audited financial
statements relating to each Borrower and its Individual Property.  Such financial statements covering the
Properties on a combined basis as well as each Individual Property for such
Fiscal Year and shall contain statements of profit and loss for each Borrower
and its Individual Property, and a balance sheet for each Borrower.  Such statements shall set forth the financial
condition and the results of operations for each of the Individual Properties
for such Fiscal Year, and shall include, but not be limited to, amounts
representing annual Net Cash Flow, Net Operating Income, Gross Income from
Operations and Operating Expenses. 
Borrower’s annual financial statements shall be accompanied by (i) a
comparison of the budgeted income and expenses and the actual income and
expenses for the prior Fiscal Year, (ii) a certificate executed by the
chief financial officer of Borrower, Sole Member or Guarantor, as applicable,
stating that each such annual financial statement presents fairly the financial
condition and the results of operations of Borrower and each Individual
Property being reported upon and has been prepared in accordance with the
Uniform System of Accounts and GAAP (or other accounting principles reasonably
acceptable to Lender, consistently applied), (iii) an unqualified opinion
of an accounting firm or other independent certified public accountant
reasonably acceptable to Lender, (iv) a certified rent roll containing
current rent, lease expiration dates and the square footage occupied by each
tenant, if any; (v) a schedule audited by such independent certified
public accountant reconciling Net Operating Income to Net Cash Flow (the “Net Cash Flow Schedule”), which
shall itemize all adjustments made to Net Operating Income to arrive at Net
Cash Flow deemed material by such independent certified public accountant; and (vi) occupancy
statistics for the Properties on a combined basis as well as for each
Individual Property.  Together with
Borrower’s annual financial statements, Borrower shall furnish to Lender an
Officer’s Certificate certifying as of the date thereof whether there exists an
event or circumstance which constitutes a Default or Event of Default under the
Loan Documents executed and delivered by, or applicable to, Borrower, and if
such Default or Event of Default exists, the nature thereof, the period of time
it has existed and the action then being taken to remedy the same.


 


Notwithstanding anything in
this subsection (b) to the contrary, provided that the Aggregate Debt
Service Coverage Ratio based on the preceding twelve (12) month period as
determined by Lender in January of each Fiscal Year is greater than or
equal to 1.65 to 1.0, Borrower shall not be required to provided audited
financial statements with respect to any Borrower or Individual Property, but
in lieu thereof, such financial statements shall be certified by the chief
financial officer of Borrower as being true, correct, accurate, and complete
and fairly


 


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presenting
the financial condition and results of the operations of such Borrower and such
Individual Property.


 


(c)           Borrower will furnish, or cause to be
furnished, to Lender on or before forty five (45) days after the end of each
calendar quarter the following items, accompanied by a certificate of the chief
financial officer of Borrower, Sole Member or Guarantor, as applicable, stating
that such items are true, correct, accurate, and complete and fairly present
the financial condition and results of the operations of Borrower and the
Properties on a combined basis as well as each Individual Property (subject to
normal year-end adjustments) as applicable: (i) an occupancy report for
the subject month, including an average daily rate accompanied by an Officer’s
Certificate with respect thereto; (ii) quarterly and year-to-date
operating statements (including Capital Expenditures) prepared for each calendar
quarter, noting Net Operating Income, Gross Income from Operations, and
Operating Expenses (not including any contributions to the Replacement Reserve
Fund, and other information necessary and sufficient to fairly represent the
financial position and results of operation of the Properties during such
calendar month, and containing a comparison of budgeted income and expenses and
the actual income and expenses together with a detailed explanation of any
variances of five percent (5%) or more between budgeted and actual amounts for
such periods, all in form satisfactory to Lender; (iii) a calculation
reflecting the annual Debt Service Coverage Ratio for the immediately preceding
twelve (12) month period as of the last day of such month accompanied by an
Officer’s Certificate with respect thereto; (iv) a Net Cash Flow Schedule;
and (v) the total amount of rent paid by each Individual Operating Lessee
Borrower under its Operating Lease.  In
addition, such certificate shall also be accompanied by a certificate of the
chief financial officer of Borrower, Sole Member or Guarantor stating that the
representations and warranties of Borrower set forth in Section 4.1.31(a) are
true and correct as of the date of such certificate.  On or before thirty (30) days after the end
of each calendar month, Borrower also will furnish, or cause to be furnished,
to Lender the most current Smith Travel Research Reports in the form of
Schedule XIII hereto then available to Borrower reflecting market penetration
and relevant hotel properties competing with each Individual Property.


 


(d)           For the partial year period
commencing on the Closing Date, and for each Fiscal Year thereafter, Borrower
shall submit to Lender an Annual Budget not later than thirty (30) days prior
to the commencement of such period or Fiscal Year (or if Manager prepares such
Annual Budget, such longer time as set forth in the Management Agreement) in
form reasonably satisfactory to Lender (or as otherwise set forth in the
Management Agreement).  The Annual Budget
shall be subject to Lender’s written approval (each such Annual Budget, an “Approved Annual Budget”).  In the event that Lender objects to a
proposed Annual Budget submitted by Borrower, Lender shall advise Borrower of
such objections within fifteen (15) days after receipt thereof (and deliver to
Borrower a reasonably detailed description of such objections) and Borrower
shall promptly revise such Annual Budget and resubmit the same to Lender.  Lender shall advise Borrower of any
objections to such revised Annual Budget within ten (10) days after
receipt thereof (and deliver to Borrower a reasonably detailed description of
such objections) and Borrower shall promptly revise the same in accordance with
the process described in this subsection until Lender approves the Annual
Budget.  Until such time that Lender
approves a proposed Annual Budget, the most recently Approved Annual Budget
shall apply; provided that, such Approved Annual Budget shall be adjusted to
reflect actual increases in real estate taxes, insurance premiums and utilities
expenses.  Notwithstanding anything in
this subsection (d) to


 


63

















 


the contrary, Lender’s right
to approve the Annual Budget shall be subject to Manager’s right to establish the
budget for an Individual Property and shall be limited to the extent of
Borrower’s rights under the applicable Management Agreement to review and
object to the budget prepared by Manager. 
Borrower shall promptly deliver to Lender a copy of any budget prepared
or proposed by Manager, and shall timely present to Manager any objection
raised by Lender and otherwise cooperate with Lender in exercising its rights
hereunder.


 


(e)           Borrower shall furnish to Lender,
within ten (10) Business Days after request (or as soon thereafter as may
be reasonably possible), such further detailed information with respect to the
operation of the Properties and the financial affairs of Borrower as may be
reasonably requested by Lender.


 


(f)            In the event that, Borrower must incur
an extraordinary operating expense or capital expense not set forth in the
Approved Annual Budget (each an “Extraordinary Expense”),
then Borrower shall promptly deliver to Lender a reasonably detailed
explanation of such proposed Extraordinary Expense for Lender’s approval.  Notwithstanding the foregoing, any
Extraordinary Expense required, in writing, by Franchisor shall be deemed
approved.


 


(g)           Borrower will cause Guarantor and
Indemnitor to furnish to Lender annually, within one hundred twenty (120) days
following the end of each Fiscal Year of each such party, financial statements
audited by an independent certified public accountant, which shall include an
annual balance sheet and profit and loss statement of Guarantor and Indemnitor,
in the form reasonably required by Lender.


 


(h)           If, at the time one or more
Disclosure Documents are being prepared for a Securitization, Lender expects
that Borrower alone or Borrower and one or more Affiliates of Borrower
collectively, or the Properties alone or the Properties and Related Properties
collectively, will be a Significant Obligor, Borrower shall furnish (or shall
cause Franchisor or Manager, as applicable, to furnish) to Lender upon request (i) the
selected financial data or, if applicable, Net Operating Income, required under
Item 1112(b)(1) of Regulation AB, if Lender expects that the principal
amount of the Loan together with any Related Loans as of the cut-off date for
such Securitization may, or if the principal amount of the Loan together with
any Related Loans as of the cut-off date for such Securitization and at any
time during which the Loan and any Related Loans are included in a
Securitization does, equal or exceed ten percent (10%) (but less than twenty
percent (20%)) of the aggregate principal amount of all mortgage loans included
or expected to be included, as applicable, in the Securitization or (ii) the
financial statements required under Item 1112(b)(2) of Regulation AB, if
Lender expects that the principal amount of the Loan together with any Related
Loans as of the cut-off date for such Securitization may, or if the principal
amount of the Loan together with any Related Loans as of the cut-off date for
such Securitization and at any time during which the Loan and any Related Loans
are included in a Securitization does, equal or exceed twenty percent (20%) of
the aggregate principal amount of all mortgage loans included or expected to be
included, as applicable, in the Securitization. 
Such financial data or financial statements shall be furnished to Lender
(A) within ten (10) Business Days after notice from Lender in
connection with the preparation of Disclosure Documents for the Securitization,
(B) not later than thirty (30) days after the end of each fiscal quarter
of Borrower and (C) not later than seventy-five (75) days after the end of
each fiscal year of Borrower; provided, however, that Borrower shall not be
obligated to furnish


 


64

















 


financial data or financial
statements pursuant to clauses (B) or (C) of this sentence with
respect to any period for which a filing pursuant to the Exchange Act in
connection with or relating to the Securitization (an “Exchange
Act Filing”) is not required. 
If requested by Lender, Borrower shall furnish to Lender financial data
and/or financial statements for any tenant of any of the Properties if, in
connection with a Securitization, Lender expects there to be, with respect to
such tenant or group of Affiliated tenants, a concentration within all of the
mortgage loans included or expected to be included, as applicable, in the
Securitization such that such tenant or group of affiliated tenants would
constitute a Significant Obligor.


 


(i)            All financial statements provided by
Borrower hereunder pursuant to Section 5.1.11(h) hereof shall be
prepared in accordance with GAAP, and shall meet the requirements of Regulation
AB and other applicable legal requirements. 
All audited financial statements referred to in Subsections 5.1.11(h) above
shall be audited by independent accountants of Borrower acceptable to Lender in
accordance with Regulation AB and all other applicable legal requirements,
shall be accompanied by the manually executed report of the independent
accountants thereon, which report shall meet the requirements of Regulation AB
and all other applicable legal requirements, and shall be further accompanied
by a manually executed written consent of the independent accountants, in form
and substance acceptable to Lender, to the inclusion of such financial statements
in any Disclosure Document and any Exchange Act Filing (as defined below) and
to the use of the name of such independent accountants and the reference to
such independent accountants as “experts” in any Disclosure Document and
Exchange Act Filing, all of which shall be provided at the same time as the
related financial statements are required to be provided.  All financial statements (audited or
unaudited) provided by Borrower under Section 5.1.11(h) shall be
accompanied by an Officer’s Certificate, which shall state that such financial
statements meet the requirements set forth in the first sentence of this
5.1.11(i).


 


(j)            If requested by Lender, Borrower
shall provide Lender, promptly upon request, with any other or additional
financial statements, or financial, statistical or operating information, as
Lender shall determine to be required pursuant to Regulation AB or any
amendment, modification or replacement thereto or other legal requirements in
connection with any Disclosure Document or any Exchange Act Filing or as shall
otherwise be reasonably requested by the Lender.


 


(k)           In the event Lender determines, in
connection with a Securitization, that the financial statements required in
order to comply with Regulation AB or other legal requirements are other than
as provided herein, then notwithstanding the provisions of Section 5.1.11(h) hereof,
Lender may request, and Borrower shall promptly provide, such other financial
statements as Lender determines to be necessary or appropriate for such
compliance


 


(l)            Any reports, statements or other
information required to be delivered under this Agreement shall be delivered (i) in
paper form, (ii) on a diskette, and (iii) if requested by Lender and
within the capabilities of Borrower’s data systems without change or
modification thereto, in electronic form and prepared using a Microsoft Word
for Windows or WordPerfect for Windows files (which files may be prepared using
a spreadsheet program and saved as word processing files).  Borrower agrees that Lender may disclose
information regarding the Property and Borrower that is provided to Lender
pursuant to this Section in connection with the Securitization to such
parties requesting such information in connection with such Securitization.


 


65

















 


(m)          Notwithstanding anything herein to the
contrary, if any of the financial statements or other information required to
be delivered to Lender pursuant to this Section 5.1.11 are generated by
Manager under the Management Agreement, Borrower shall have at least five (5) Business
Days (or thirty (30) Business Days if such statements are to be audited
pursuant to the terms hereof) after the date on which Borrower receives such
information from Manager to deliver such information to Lender.


 


5.1.12      Business and Operations.  Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Properties.  Borrower will qualify to do
business and will remain in, and cause Operating Lessee to remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the ownership, maintenance, management and operation of the
Properties.


 


5.1.13      Title to the Properties.  Borrower will warrant and defend (a) the
title to each Individual Property and every part thereof, subject only to Liens
permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the applicable Mortgage and the
applicable Assignment of Leases on the applicable Individual Property, subject
only to Liens permitted hereunder (including Permitted Encumbrances), in each
case against the claims of all Persons whomsoever.  Borrower shall reimburse Lender for any
losses, costs, damages or expenses (including reasonable attorneys’ fees and
court costs) incurred by Lender if an interest in any Individual Property,
other than as permitted hereunder, is claimed by another Person.


 


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


 


5.1.15      Estoppel Statement.


 


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


 


66

















 


(b)           Borrower shall use commercially
reasonable efforts to deliver to Lender upon request, tenant estoppel
certificates from each commercial tenant leasing space at the Properties in
form and substance reasonably satisfactory to Lender provided that Borrower
shall not be required to deliver such certificates more frequently than one (1) time
in any calendar year.


 


(c)           Within thirty (30) days of request by
Borrower, Lender shall deliver to Borrower a statement setting forth the items
described at (a)(i), (ii), (iii) and (iv) of this Section 5.1.15.


 


(d)           Borrower shall, promptly upon request
of Lender, use commercially reasonable efforts to deliver an estoppel
certificate from the Ground Lessor stating that (i) the Ground Lease is in
full force and effect and has not been modified, amended or assigned, (ii) neither
Ground Lessor nor the Westbury Borrower is in default under any of the terms,
covenants or provisions of the Ground Lease and the Ground Lessor knows of no
event which, but for the passage of time or the giving of notice or both, would
constitute an event of default under the Ground Lease, (iii) neither the
Ground Lessor nor the Westbury Borrower has commenced any action or given or
received any notice for the purpose of terminating the Ground Lease and (iv) all
sums due and payable to Ground Lessor under the Ground Lease have been paid in
full.


 


(e)           Borrower shall, promptly upon request
of Lender, shall use commercially reasonable efforts to deliver an estoppel
certificate from Franchisor stating that (i) the Franchise Agreement or
Management Agreement, as applicable, is in full force and effect and has not
been modified, amended or assigned, (ii) neither Franchisor nor Borrower
is in default under any of the terms, covenants or provisions of the Franchise
Agreement or Management Agreement, as applicable, and Franchisor knows of no
event which, but for the passage of time or the giving of notice or both, would
constitute an event of default under the Franchise Agreement or Management
Agreement, as applicable, (iii) neither Franchisor nor Borrower has
commenced any action or given or received any notice for the purpose of
terminating the Franchise Agreement or Management Agreement, as applicable, and
(iv) all sums due and payable to Franchisor under the Franchise Agreement
or Management Agreement, as applicable, have been paid in full.  If Borrower timely requests an estoppel
letter from Franchisor, but Franchisor has no legal obligation under the
Franchise Agreement to provide such estoppel letter and refuses to provide such
estoppel letter, Borrower’s failure to deliver such estoppel letter to Lender
shall not be an Event of Default.


 


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


 


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


 


5.1.18      Confirmation of
Representations.  Borrower
shall deliver, in connection with any Securitization, (a) one or more
Officer’s Certificates certifying as to the accuracy of all representations
made by Borrower in the Loan Documents as of the date of the closing of such


 


67

















 


Securitization, and (b) certificates
of the relevant Governmental Authorities in all relevant jurisdictions
indicating the good standing and qualification of Borrower and its member as of
the date of the Securitization.


 


5.1.19      No Joint Assessment.  Borrower shall not suffer, permit or initiate
the joint assessment of any Individual Property (a) with any other real
property constituting a tax lot separate from such Individual Property, and (b) which
constitutes real property with any portion of such Individual Property which
may be deemed to constitute personal property, or any other procedure whereby
the lien of any taxes which may be levied against such personal property shall
be assessed or levied or charged to such real property portion of the
Individual Property.


 


5.1.20      Leasing Matters.


 


(a)           Borrower may enter into Leases (other
than an Operating Lease) or modify existing Leases (other than an Operating
Lease) demising a portion of an Individual Property less than or equal to the
Relevant Leasing Threshold without Lender’s prior approval provided such Leases
shall be on commercially reasonable terms and shall not contain any terms which
would materially affect Lender’s rights under the Loan Documents, and further
provided that such Leases shall provide that they are subordinate to the
Mortgage encumbering the applicable Individual Property and that the tenant
thereunder agrees to attorn to Lender or any purchaser at a sale by foreclosure
or power of sale.  Borrower may not enter
into a Lease or modify an existing Lease covering all or substantially all of
an Individual Property without the prior written approval of Lender, which
approval may be given or withheld in the sole discretion of Lender.  Borrower may not enter into Leases or modify
existing Leases demising a portion of an Individual Property greater than the
Relevant Leasing Threshold without the prior written approval of Lender,
provided, however, Lender shall not withhold such approval if Borrower delivers
to Lender together with its request for approval an abstract or summary of the
proposed Lease terms, an affidavit certifying that the Leasing Conditions have
been satisfied.  To the extent Lender’s
approval or consent is required, Lender shall approve or disapprove any such
Lease or modification (excluding a Lease for all or substantially all of an
Individual Property) within ten (10) Business Days of Lender’s receipt of
Borrower’s written request for approval together with the foregoing, and such
Lease shall be deemed approved, if Lender does not disapprove such Lease within
said ten (10) Business Day period provided such written notice
conspicuously states, in large bold type, that “PURSUANT TO SECTION 5.1.20
OF THE LOAN AGREEMENT, THE LEASE SHALL BE DEEMED APPROVED IF LENDER DOES NOT
RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS DAYS OF LENDER’S RECEIPT
OF SUCH LEASE AND WRITTEN NOTICE”. 
Borrower shall furnish Lender with executed copies of all Leases.   Borrower (i) shall observe and perform
the obligations imposed upon the lessor under the Leases in a commercially reasonable
manner; (ii) shall enforce the terms, covenants and conditions contained
in the Leases upon the part of the tenant thereunder to be observed or
performed in a commercially reasonable manner and in a manner not to impair the
value of the Individual Property involved except that, subject to the terms of
this Section 5.1.20, no termination by Borrower or acceptance of surrender
by a tenant of any Lease shall be permitted without the written consent of
Lender which consent may be withheld in the sole discretion of Lender; (iii) shall
not collect any of the rents more than one (1) month in advance (other
than security deposits); (iv) shall not execute any other assignment of
lessor’s interest in the Leases or the Rents (except as contemplated by the Loan
Documents); and (v) shall execute


 


68

















 


and deliver at the request
of Lender all such further assurances, confirmations and assignment in
connection with the Leases as Lender shall from time to time reasonably
require.  Notwithstanding the foregoing,
Borrower may, without the prior written consent of Lender, terminate (or accept
a surrender of) any Lease which demises less than the Relevant Leasing
Threshold under any of the following circumstances: (i) the tenant under
said Lease is in default beyond any applicable grace and cure period, and
Borrower has the right to terminate such Lease; (ii) such termination is
permitted by the terms of the Lease in question and Borrower has secured an
obligation from a third party to lease the space under the Lease to be
terminated at a rental equal to or higher than the rental due under the Lease
to be terminated; and (iii) if the tenant under the Lease to be terminated
has executed a right under said Lease to terminate its Lease upon payment of a
termination fee to Borrower, and has in fact terminated its Lease and paid said
fee, Borrower may accept said termination.


 


(b)           Borrower shall (i) observe and
perform the obligations imposed upon the lessor under the Leases in a commercially
reasonable manner;  (ii) enforce the
terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed in a commercially reasonable
manner and in all material respects; (iii) not collect any of the Rents
more than one (1) month in advance (other than security deposits); (iv) not
execute any assignment of lessor’s interest in the Leases or the Rents (except
as contemplated by the Loan Documents); and (v) hold all security deposits
under all Leases in accordance with Legal Requirements.


 


(c)           Notwithstanding anything to the
contrary contained herein, without the prior written consent of Lender, which
consent may be withheld in Lender’s sole discretion, Borrower shall not (i) enter
into an Operating Lease or surrender, terminate or cancel the Operating Lease
to which it is a party; (ii) reduce or consent to the reduction of the
term of the Operating Lease to which it is a party; (iii) increase or
consent to the increase of the amount of any charges under the Operating Lease
to which it is a party; (iv) modify, change, supplement, alter, replace or
amend the Operating Lease to which it is a party or waive or release any of
Borrower’s rights and remedies under the Operating Lease, including, without
limitation, any material defaults; or (v) grant its consent or approval as
may be requested or required in connection with the terms and provisions of the
Operating Lease to which it is a party with respect to any matter that would
require the consent of Lender pursuant to the Loan Documents.  Notwithstanding the foregoing, provided both
an Individual Owner Borrower and Individual Operating Lessee Borrower are the
parties to the Operating Lease and are owned, directly or indirectly, by a real
estate investment trust, Lender shall not unreasonably withhold its consent to
changes to the Operating Lease (including, but not limited to, changes in rent
payable) deemed by Borrower to be necessary to comply with tax requirements
related to real estate investment trusts. 
Solely with respect to such required changes, Lender shall attempt to
approve or disapprove any such modification within ten (10) Business Days
of Lender’s receipt of Borrower’s written request for approval, provided such
written notice conspicuously states, in large bold type, that “PURSUANT TO SECTION 5.1.20
OF THE LOAN AGREEMENT, LENDER SHALL RESPOND WITHIN TEN (10) BUSINESS DAYS
OF LENDER’S RECEIPT.”  If Lender does not
approve or disapprove same within said ten (10) Business Day period, Borrower
shall provide a second written request for approval, which written request
conspicuously states, in large bold type, that “PURSUANT TO SECTION 5.1.20
OF THE LOAN AGREEMENT, THIS REQUEST SHALL BE DEEMED APPROVED IF LENDER DOES NOT
RESPOND TO THE CONTRARY WITHIN TEN (10)


 


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BUSINESS DAYS OF LENDER’S
RECEIPT”.  If Lender does not disapprove
such request within such second ten (10) Business Day period, such request
shall be deemed approved.  Further
notwithstanding the foregoing, Lender shall not unreasonably withhold its
consent to an Individual Owner Borrower renewing any Operating Lease upon the
expiration thereof or to an Individual Owner Borrower entering into a new
Operating Lease with an Individual Operating Lessee Borrower upon the
expiration of the current Operating Lease. 
As conditions precedent to an Individual Owner Borrower renewing any
Operating Lease or entering into a new Operating Lease after the date hereof,
in addition to obtaining Lender’s consent to the terms thereof as required
above (A) An Individual Owner Borrower shall provide written notice to
Lender of such renewed or new Operating Lease not less than thirty (30) days
prior to the date on which such renewed or new Operating Lease blacklined to
the Operating Lease being replaced, (B) intentionally omitted, (C) Individual
Owner Borrower and Individual Operating Lessee Borrower shall execute and
deliver to Lender (and record in the appropriate real estate records if
required by Lender) such amendments of the Loan Documents to which they are
respectively a party as may be reasonably required by Lender to evidence,
preserve and/or protect the collateral securing or intended to secure the
Obligations, and (D) Individual Owner Borrower and/or Individual Operating
Lessee Borrower shall deliver to Lender evidence reasonably acceptable to
Lender that the Franchise Agreement and the Management Agreement and all other
licenses and permits required to operate the Property as a hotel are and shall remain
in full force and effect.


 


5.1.21      Alterations.  Borrower shall obtain Lender’s prior written
consent to any alterations to any Improvements, which consent shall not be
unreasonably withheld or delayed except with respect to alterations that may
have a material adverse effect on Borrower’s or Operating Lessee’s financial
condition, the value of the applicable Individual Property or the Net Operating
Income.  Notwithstanding the foregoing,
Lender’s consent shall not be required in connection with any alterations that
will not have a material adverse effect on Borrower’s financial condition, the
value of the applicable Individual Property or the Net Operating Income,
provided that such alterations are made in connection with (a) a so-called
“property improvement plan” (or “PIP”)
imposed by a Franchisor, (b) tenant improvement work performed pursuant to
the terms and provisions of a Lease and not adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any Improvements
or the exterior of any building constituting a part of any Improvements, (c) alterations
performed in connection with the Restoration of an Individual Property after
the occurrence of a Casualty or Condemnation in accordance with the terms and
provisions of this Agreement, (d) any alteration which costs less than the
Threshold Amount in the aggregate for all components thereof, or (e) any
alteration which costs more than the Threshold Amount but less than $4,000,000
in the aggregate for all components thereof, provided Borrower complies with
the Alteration Conditions.  If the total
unpaid amounts due and payable with respect to alterations to the Improvements
at any Individual Property (other than such amounts to be paid or reimbursed by
tenants under the Leases) shall at any time equal or exceed the Threshold
Amount, Borrower, upon Lender’s request, shall promptly deliver to Lender as
security for the payment of such amounts and as additional security for
Borrower’s obligations under the Loan Documents any of the following: (A) cash,
(B) U.S. Obligations, (C) other securities having a rating acceptable
to Lender and that the applicable Rating Agencies have confirmed in writing
will not, in and of itself, result in a downgrade, withdrawal or qualification
of the initial, or, if higher, then current ratings assigned to any Securities
or any class thereof in connection with any Securitization, or (D) a
completion bond or letter of credit issued by a financial institution having a
rating by


 


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Standard & Poor’s
Ratings Group of not less than A-1+ if the term of such bond or letter of
credit is no longer than three (3) months or, if such term is in excess of
three (3) months, issued by a financial institution having a rating that
is acceptable to Lender and that the applicable Rating Agencies have confirmed
in writing will not, in and of itself, result in a downgrade, withdrawal or
qualification of the initial, or, if higher, then current ratings assigned to
any Securities or class thereof in connection with any Securitization.  Such security shall be in an amount equal to
the excess of the total unpaid amounts with respect to alterations to the
Improvements on the applicable Individual Property (other than such amounts to
be paid or reimbursed by tenants under the Leases) over the Threshold Amount
and, if cash, may be applied from time to time, at the option of Borrower, to
pay for such alterations.  At the option
of Lender, following the occurrence and during the continuance of an Event of
Default, Lender may terminate any of the alterations and use the deposit to
restore the Individual Property to the extent necessary to prevent any material
adverse effect on the value of the Individual Property.


 


5.1.22      Operation of Property.


 


(a)           Borrower shall cause the Properties
to be operated, in all material respects, in accordance with the Management
Agreement (or Replacement Management Agreement, as applicable).  In the event that the Management Agreement
expires or is terminated (without limiting any obligation of Borrower to obtain
Lender’s consent to any termination or modification of the Management Agreement
in accordance with the terms and provisions of this Agreement), Borrower shall
promptly enter into a Replacement Management Agreement with Manager or another
Qualified Manager, as applicable.  In the
event that the Franchise Agreement (if applicable) expires or is terminated
(without limiting any obligation of Borrower to obtain Lender’s consent to any
termination or modification of the Franchise Agreement in accordance with the
terms and provisions of this Agreement), Borrower shall promptly either (i) renew
the Franchise Agreement with the applicable Franchisor or (ii) enter into
a Replacement Franchise Agreement with Franchisor or another Qualified
Franchisor, as applicable.


 


(b)           Borrower shall: (i) promptly
perform and/or observe in all material respects, all of the covenants and
agreements required to be performed and observed by Borrower under the
Management Agreement and the Franchise Agreement and do all things necessary to
preserve and to keep unimpaired its material rights of Borrower thereunder; (ii) promptly
notify Lender of any material default under the Management Agreement and the
Franchise Agreement of which it is aware; (iii) promptly deliver to Lender
a copy of each financial statement, business plan, capital expenditures plan,
notice, report and estimate received by Borrower under the Management
Agreement; and (iv) enforce the performance and observance of all of the
covenants and agreements required to be performed and/or observed by Manager
under the Management Agreement, in a commercially reasonable manner.


 


5.1.23      Embargoed Person.  Borrower has performed and shall perform
reasonable due diligence to insure that at all times throughout the term of the
Loan, including after giving effect to any Transfers permitted pursuant to the
Loan Documents, (a) none of the funds or other assets of Borrower,
Guarantor or Indemnitor constitute property of, or are beneficially owned,
directly or indirectly, by any person, entity or government subject to trade
restrictions under U.S. law, including, but not limited to, The USA PATRIOT Act
(including the anti terrorism provisions thereof), the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701, et seq., The


 


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Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder including those related to Specially Designated Nationals and
Specially Designated Global Terrorists, with the result that the investment in
Borrower, Guarantor or Indemnitor (whether directly or indirectly), is
prohibited by law or the Loan made by the Lender is in violation of law (“Embargoed Person”); (b) no
Embargoed Person has any interest of any nature whatsoever in Borrower,
Guarantor or Indemnitor with the result that the investment in Borrower,
Guarantor or Indemnitor (whether directly or indirectly), is prohibited by law
or the Loan is in violation of law; and (c) none of the funds of Borrower,
Guarantor or Indemnitor have been derived from, or are the proceeds of, any
unlawful activity, including money laundering, terrorism or terrorism
activities, with the result that the investment in Borrower, Guarantor or
Indemnitor (whether directly or indirectly), is prohibited by law or the Loan
is in violation of law, or may cause the Properties to be subject to forfeiture
or seizure.


 


5.1.24      PIP Requirements.  Borrower shall provide to Lender copies of
all PIP Requirements required by a Franchisor after the date hereof, and shall
complete all PIP Requirements within the time frames set forth in the
applicable Franchise Agreement (as same may be extended by the applicable
Franchisor).  Borrower shall not be
permitted to modify in any material respect the PIP Requirements without the
consent of Lender. Lender shall approve or disapprove any material modification
of PIP Requirements within ten (10) Business Days of Lender’s receipt of
Borrower’s written request for approval together with all necessary
information, and such modification shall be deemed approved, if Lender does not
disapprove such modification within said ten (10) Business Day period
provided such written notice conspicuously states, in large bold type, that “PURSUANT
TO SECTION 5.1.24 OF THE LOAN AGREEMENT, THE ENCLOSED REQUEST SHALL BE
DEEMED APPROVED IF LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS
DAYS OF LENDER’S RECEIPT HEREOF.” 
Borrower shall furnish Lender with copies of all modified PIP
Requirements.  Notwithstanding anything
contained in the foregoing to the contrary, Borrower shall not be permitted to
reduce the scope of PIP work without Lender consent, and the foregoing
provisions regarding deemed approval shall not apply with respect thereto any
such proposed reduction.


 


5.1.25      Ground Lease.      Westbury Borrower shall, at its sole cost
and expense, promptly and timely perform and observe all the terms, covenants
and conditions required to be performed and observed by Westbury Borrower as
lessee under the Ground Lease (including, but not limited to, the payment of
all rent, additional rent, percentage rent and other charges required to be
paid under the Ground Lease).


 


5.1.26      Certain Other Agreements.  Borrower
shall perform, in all material respects, its obligations under all material
agreements affecting the operation of the Property.  With respect to the Individual Property known
as Marriott Courtyard and located at 300 Corporate Drive, Lebanon, New Jersey,
Borrower shall enter into a contract with a pest elimination company
satisfactory to Lender for the elimination and future prevention of bed bugs at
such Individual Property, shall at all time comply with its obligations under
such contract, and shall keep such contract (or a replacement contract) in full
force and effect.


 


Section 5.2             Negative
Covenants.            From
the Closing Date until payment and performance in full of all obligations of
Borrower under the Loan Documents or the earlier


 


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release
of the Liens of the Mortgages encumbering the Properties and any other
collateral in accordance with the terms of this Agreement and the other Loan
Documents, Borrower covenants and agrees with Lender that it will not do,
directly or indirectly, any of the following:


 


5.2.1        Operation of Property.


 


(a)           Borrower shall not, without Lender’s
prior written consent (which consent shall not be unreasonably withheld): (i) surrender,
terminate, cancel, amend or modify the Management Agreement; (ii) surrender,
terminate or cancel any Franchise Agreement; (iii) reduce or consent to
the reduction of the term of the Management Agreement or the Franchise
Agreement; (iv) increase or consent to the increase of the amount of any
charges under the Management Agreement or the Franchise Agreement; or (v) otherwise
modify, change, supplement, alter or amend, or waive or release any of its
rights and remedies under, the Management Agreement or the Franchise
Agreement.  Solely with respect to
changes to the Management Agreement, Lender shall attempt to approve or
disapprove any such modification within ten (10) Business Days of Lender’s
receipt of Borrower’s written request for approval, provided such written
notice conspicuously states, in large bold type, that “PURSUANT TO SECTION 5.2.1
OF THE LOAN AGREEMENT, LENDER SHALL RESPOND WITHIN TEN (10) BUSINESS DAYS
OF LENDER’S RECEIPT.”  If Lender does not
approve or disapprove same within said ten (10) Business Day period,
Borrower shall provide a second written request for approval, which written
request conspicuously states, in large bold type, that “PURSUANT TO SECTION 5.2.1
OF THE LOAN AGREEMENT, THIS REQUEST SHALL BE DEEMED APPROVED IF LENDER DOES NOT
RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS DAYS OF LENDER’S RECEIPT”.  If Lender does not disapprove such request
within such second ten (10) Business Day period, such request shall be
deemed approved.


 


(b)           Following the occurrence and during
the continuance of an Event of Default, Borrower shall not exercise any rights,
make any decisions, grant any approvals or otherwise take any action under the
Management Agreement or the Franchise Agreement without the prior written
consent of Lender, which consent may be granted, conditioned or withheld in
Lender’s sole discretion.


 


5.2.2        Liens.  Borrower shall not, without the prior written
consent of Lender, create, incur, assume or suffer to exist any Lien on any
portion of any Individual Property or permit any such action to be taken,
except:


 


(i)            Permitted
Encumbrances;


 


(ii)           Liens created by or related to Indebtedness permitted
pursuant to the Loan Documents; and


 


(iii)          Liens for Taxes or Other Charges not yet due (or that
Borrower is contesting in accordance with the terms of Section 5.1.2 hereof).


 


5.2.3        Dissolution.  Borrower shall not (a) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (b) engage in any business activity not related to the
ownership and operation of the Properties, (c) transfer, lease or sell, in
one transaction or any combination of transactions, the assets or all or
substantially all of the


 


73

















 


properties or assets of
Borrower except to the extent permitted by the Loan Documents, (d) modify,
amend, waive or terminate its organizational documents or its qualification and
good standing in any jurisdiction or (e) cause the Sole Member to (i) dissolve,
wind up or liquidate or take any action, or omit to take an action, as a result
of which the Sole Member would be dissolved, wound up or liquidated in whole or
in part, or (ii) amend, modify, waive or terminate the certificate of
limited partnership or partnership agreement of the Sole Member, in each case,
without obtaining the prior written consent of Lender or Lender’s designee.


 


5.2.4        Change in Business.  Borrower shall not enter into any line of
business other than the ownership and operation of the Properties, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the
continuance of its present business.


 


5.2.5        Debt Cancellation.  Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower’s business.


 


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


 


5.2.7        Zoning.  Borrower shall not initiate or consent to any
zoning reclassification of any portion of any Individual Property or seek any
variance under any existing zoning ordinance or use or permit the use of any
portion of any Individual Property in any manner that could result in such use
becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation, without the prior consent of
Lender.


 


5.2.8        Assets.  Borrower shall not purchase or own any
properties other than the Individual Property owned by Borrower as of the
Closing Date as reflected in the applicable Title Insurance Policy.


 


5.2.9        Debt.  Borrower shall not create, incur or assume
any Indebtedness other than the Debt except to the extent expressly permitted
hereby.


 


5.2.10      No Joint Assessment.  Borrower shall not suffer, permit or initiate
the joint assessment of an Individual Property with (a) any other real
property constituting a tax lot separate from the Individual Property, or (b) any
portion of the Individual Property which may be deemed to constitute personal
property, or any other procedure whereby the Lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to
the Individual Property.


 


5.2.11      Intentionally Omitted.


 


5.2.12      ERISA.


 


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(a)           No Borrower shall engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Lender of any of its rights under the Note, this
Agreement or the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.


 


(b)           Borrower further covenants and agrees
to deliver to Lender such certifications or other evidence from time to time
throughout the term of the Loan, as requested by Lender in its sole discretion,
that (A) no Borrower is and does maintain an “employee benefit plan” as
defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, or a “governmental plan” within the meaning of Section 3(3) of
ERISA; (B) no Borrower is subject to state statutes regulating investments
and fiduciary obligations with respect to governmental plans; and (C) one
or more of the following circumstances is true:


 


(i)            Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2);


 


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


 


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


 


5.2.13      Transfers.


 


(a)           Unless such action is permitted by
the provisions of this Section 5.2.13, Borrower agrees that it will not (i) sell,
assign, convey, transfer or otherwise dispose of its interests in any
Individual Property or any part thereof, (ii) permit any owner, directly
or indirectly, of an ownership interest or leasehold interest in any Individual
Property, to transfer such interest, whether by transfer of stock or other
interest in Borrower or any entity, or otherwise, (iii) incur Indebtedness
(other than the Indebtedness permitted pursuant to the terms of this
Agreement), (iv) mortgage, hypothecate or otherwise encumber or grant a
security interest in any Individual Property or any part thereof or any
leasehold interest therein, (v) sell, assign, convey, transfer, mortgage,
encumber, grant a security interest in, or otherwise dispose of any direct or
indirect ownership interest in Borrower, or permit any owner of an interest in
Borrower to do the same, or (vi) file a declaration of condominium with
respect to an Individual Property (any of the foregoing transactions, a “Transfer”). For purposes hereof, a “Transfer”
shall not include (A) any issuance, sale or transfer of interests in
Inland American Real Estate Trust, Inc. or any successor entity resulting
from any merger permitted hereunder, (B) transfer by devise or descent or
by operation of law upon the death of a member or partner of Borrower, or (C) the
merger of the Inland American Real Estate Trust, Inc. with (1) any of
the following entities: Inland Real Estate Investment Corporation, a Delaware
corporation, Inland Western Retail Real Estate Trust, Inc., a Maryland
corporation, any other real estate investment trust sponsored by Inland Real
Estate Investment Corporation, or any other entity composed entirely of any of
the foregoing, or (2) any other real estate investment trust that is
publicly registered with the Securities and Exchange Commission; provided,
however, (i) Lender shall receive not less than thirty (30) days prior
written notice of any such proposed merger, (ii) the net worth of the
entity surviving such


 


75

















 


merger shall equal or exceed
the net worth of Inland American Real Estate Trust, Inc. immediately prior
to such merger, (iii) the surviving entity shall be Controlled by the
Persons that Control Inland American Real Estate Trust, Inc. immediately
prior to such merger, and (iv) immediately following such merger, the
entity surviving the merger shall be publicly registered with the Securities
and Exchange Commission.


 


(b)           At any time other than the period
commencing ninety (90) days prior to the Securitization Date and ending thirty
(30) days after the Securitization Date, Lender shall not withhold its consent
to a Transfer of all of the Properties, (or 100% of the membership interests in
all of the Individual Borrowers (an “Equity Transfer”)
to a single transferee (an “Equity Transferee”)), provided
that the following conditions are satisfied:


 


(1)           the transferee of the Properties shall be (or if the
Transfer is an Equity Transfer, Borrower shall continue to be) a Qualified
Entity with experience in the ownership and management of properties similar to
the Properties and a Special Purpose Entity (the “Transferee”)
which at the time of such transfer will be in compliance with the covenants
contained in Section 5.1.1 and the representations contained in 4.1.31
hereof and which shall have assumed in writing (subject to the terms of Section 9.4
hereof) and agreed to comply with all the terms, covenants and conditions set
forth in this Loan Agreement and the other Loan Documents, expressly including
the covenants contained in Section 5.1.1 and the representations contained
in 4.1.31 hereof;


 


(2)           if requested by Lender, Borrower shall deliver
confirmation in writing from the Rating Agencies that such proposed Transfer
will not cause a downgrading, withdrawal or qualification of the then current
rating of any Securities issued pursuant to such Securitization;


 


(3)           if Manager does not act as manager of the transferred
Properties then the manager of the Properties must be a Qualified Manager;


 


(4)           no Event of Default shall have occurred and be continuing;


 


(5)           Borrower shall deliver, at its sole cost and expense, an
endorsement to the Title Insurance Policies, as modified by the assumption
agreement, as a valid first lien on the Properties and naming the Transferee as
owner of the fee estate of the Properties, which endorsement shall insure that,
as of the date of the recording of the assumption agreement, the Properties
shall not be subject to any additional exceptions or liens other than those
contained in the relevant Title Policy issued on the date hereof, or otherwise
permitted by Lender;


 


(6)           Transferee or Equity Transferee, as applicable, shall
deliver opinions regarding its existence, authority and enforceability, and if
required or requested by any of the Rating Agencies, Borrower shall deliver an
opinion with respect to non-consolidation issues, and a fraudulent conveyance
opinion which in each case may be relied upon by the holder of the Note, the
Ratings Agencies and their respective counsel, agents and representatives with
respect to the proposed


 


76

















 


transaction, including the Transferee, which
opinions customarily would be acceptable to a lender in the context of an
assumption of a securitized loan;


 


(7)           Borrower shall have paid (A) an assumption fee equal
to one percent (1.0%) of the then outstanding principal balance of the Loan,
and (B) the reasonable and customary third-party expenses (including
reasonable attorneys’ fees and disbursements) actually incurred by Lender in
connection with such Transfer; provided, however, no assumption fee shall be
required for a Transfer to a Transferee or Equity Transferee, (as applicable),
acceptable to Lender in connection with a joint venture between Inland American
Real Estate Trust, Inc. and a Qualified Entity, provided (x) Inland
American Real Estate Trust, Inc., or an Affiliate wholly-owned (directly
or indirectly) by Inland American Real Estate Trust, Inc., owns at least
one percent (1.0%) of the ownership interests in such Transferee, or Equity
Transferee, (as applicable), (y) Inland American Real Estate Trust, Inc.,
or an Affiliate wholly-owned (directly or indirectly) by Inland American Real
Estate Trust, Inc., is the managing entity and otherwise maintains
operational and managerial control of such Transferee or Equity Transferee, (as
applicable), and (z) Inland American Real Estate Trust, Inc.,
continues to be Guarantor and Indemnitor, and provided further that Borrower
shall pay all of Lender’s reasonable and customary third-party expenses
(including reasonable attorneys’ fees and disbursements) actually incurred by
Lender in connection with such Transfer and a processing fee determined
pursuant to the following schedule:


 


Retained
interest              Processing Fee


 


At
least twenty percent (20%)                 $20,000


 


At
least ten percent (10%), but less than twenty percent (20%)                                                $50,000


 


At least one percent (1%),
but less than ten percent (10%)    The greater of $75,000
and one-quarter of one percent (0.25%) of the then outstanding principal
balance of the Loan for the first such Transfer of all of the Properties, and
one percent (1%) of the then outstanding principal balance of the Loan for each
subsequent Transfer of all of the Properties.


 


Lender shall use reasonable
efforts to approve or disapprove any proposed Transfer governed by this Section 5.2.13(a) within
thirty (30) days of Lender’s receipt of a written notice from Borrower
requesting Lender’s approval, provided such notice includes all information
necessary to make such decision.


 


(c)           At any time other than the period
commencing ninety (90) days prior to the Securitization Date and ending thirty
(30) days after the Securitization Date, Lender shall not withhold its consent
to, and shall not charge an assumption fee in connection with a Transfer of up
to, in the aggregate, ninety-nine percent (99%) of the direct or indirect
ownership interests in Borrower, provided that (A) if such Transfer
exceeds forty-nine percent (49.0%) of the direct or indirect ownership
interests in Borrower, such Transfer is to a Qualified Entity, (B) Inland
American Real Estate Trust, Inc., or an Affiliate wholly-owned (directly
or indirectly) by Inland American Real Estate Trust, Inc., maintains
operational and managerial control of Borrower, (C)


 


77

















 


Inland American Real Estate
Trust, Inc. continues to be Guarantor and Indemnitor, and (D) Borrower
shall pay all of Lender’s reasonable and customary third-party expenses
(including reasonable attorneys’ fees and disbursements) actually incurred by
Lender in connection with such Transfer and a processing fee determined
pursuant to the table set forth in Section 5.2.13(b), above.  If required or requested by any of the Rating
Agencies, Borrower shall deliver a substantive non-consolidation opinion with
respect to any party not now owning more than 49% of the ownership interests in
Borrower acquiring more than 49% of the ownership interests in Borrower.


 


(d)           Notwithstanding anything in this Section 5.2.13
to the contrary, at any time other than the period commencing ninety (90) days
prior to the Securitization Date and ending thirty (30) days after the
Securitization Date, Borrower shall be permitted to Transfer all of the
Properties in a single transaction to one newly-formed Special Purpose Entity
which shall be wholly-owned subsidiary of Inland American Real Estate Trust, Inc.
(“Permitted Affiliate Transferee”) which
shall be approved by Lender in its reasonable discretion (“Permitted
Affiliate Transfer”), provided (1) no Event of Default
shall have occurred and be continuing, (2) the creditworthiness of Inland
American Real Estate Trust, Inc., as applicable, has not deteriorated, in
the sole discretion of Lender, from the Closing Date to the date of the
proposed Transfer, and (3) Borrower shall have paid all reasonable and
customary third party expenses (including reasonable attorneys’ fees and
disbursements) actually incurred by Lender in connection with such Transfer
(but not any assumption or processing fee).


 


(e)           Borrower, without the consent of
Lender, may grant easements, restrictions, covenants, reservations and rights
of way in the ordinary course of business for access, parking, water and sewer
lines, telephone and telegraph lines, electric lines and other utilities or for
other similar purposes, provided that no transfer, conveyance or encumbrance
shall materially impair the utility and operation of any Individual Property or
materially adversely affect the value of an Individual Property or the Net
Operating Income of an Individual Property. 
If Borrower shall receive any consideration in connection with any of said
described transfers or conveyances, Borrower shall have the right to use any
such proceeds in connection with any alterations performed in connection
therewith, or required thereby.  In
connection with any transfer, conveyance or encumbrance permitted above, the
Lender shall execute and deliver any instrument reasonably necessary or
appropriate to evidence its consent to said action or to subordinate the Lien
of the applicable Mortgage to such easements, restrictions, covenants,
reservations and rights of way or other similar grants upon receipt by the
Lender of: (A) a copy of the instrument of transfer; and (B) an
Officer’s Certificate stating with respect to any transfer described above,
that such transfer does not materially impair the utility and operation of the
Individual Property or materially reduce the value of the Individual Property
or the Net Operating Income of the Individual Property.


 


5.2.14      Ground Lease.


 


(a)           Westbury Borrower shall not, without
Lender’s written consent, fail to exercise any option or right to renew or
extend the term of the Ground Lease in accordance with the terms of the Ground
Lease.


 


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(b)           Westbury Borrower shall not waive,
excuse, condone or in any way release or discharge the lessor under any Ground
Lease of or from such lessor’s obligations, covenant and/or conditions under
the related Ground Lease without the prior written consent of Lender.


 


(c)           Westbury Borrower shall not, without
Lender’s prior written consent, surrender, terminate, forfeit, or suffer or
permit the surrender, termination or forfeiture of, or change, modify or amend,
the Ground Lease.  Consent to one
amendment, change, agreement or modification shall not be deemed to be a waiver
of the right to require consent to other, future or successive amendments,
changes, agreements or modifications. 
Any acquisition of lessor’s interest in any Ground Lease by Westbury
Borrower or any Affiliate of Westbury Borrower shall be accomplished by
Westbury Borrower in such a manner so as to avoid a merger of the interests of
lessor and lessee in such Ground Lease, unless consent to such merger is
granted by Lender.


 


ARTICLE 6


INSURANCE; CASUALTY;
CONDEMNATION


 


Section 6.1             Insurance.


 


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


 


(i)            comprehensive all risk insurance (including, but not
limited to, loss caused by any type of windstorm or hail) on the Improvements
and the Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred percent
(100%) of the “Full Replacement Cost,” which for purposes of this Agreement
shall mean actual replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings) with a waiver of depreciation;
(B) containing an agreed amount endorsement with respect to the Improvements
and Personal Property waiving all co-insurance provisions; (C) providing
for no deductible in excess of Five Hundred Thousand and No/100 Dollars
($500,000) for all such insurance coverage; and (D) containing an “Ordinance
or Law Coverage” or “Enforcement” endorsement if any of the Improvements or the
use of the Individual Property shall at any time constitute legal
non-conforming structures or uses.  In
addition, Borrower shall obtain: (y) if any portion of the Improvements 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 principal balance of the Note 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 or such greater amount as Lender shall
require; and (z) earthquake insurance in amounts and in form and substance
satisfactory to Lender in the event the Individual 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)           commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about each Individual 


 


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Property, such insurance (A) to be on the
so-called “occurrence” form with a combined limit, including umbrella coverage,
of not less than Five Million and No/100 Dollars ($5,000,000.00); (B) to
continue at not less than the aforesaid limit until required to be changed by
Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following
hazards:  (1) premises and
operations; (2) products and completed operations on an “if any” basis; (3) independent
contractors; (4) blanket contractual liability for all legal contracts;
and (5) contractual liability covering the indemnities contained in Article IX
of the Mortgages to the extent the same is available;


 


(iii)          business income insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the insurance
provided for in subsection (i) above; (C) covering rental losses or
business interruption, as may be applicable, for a period of at least twenty-four
(24) months after the date of the Casualty and containing an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it
was at prior to the loss, or the expiration of six (6) months from the
date that the applicable Individual Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) in an annual
amount equal to (100%) of the rents or estimated gross revenues from the
operation of the applicable Individual Property (as reduced to reflect expenses
not incurred during a period of Restoration). 
The amount of such business income insurance shall be determined prior
to the date hereof and at least once each year thereafter based on Borrower’s
reasonable estimate of the gross income from each Individual Property for the
succeeding twenty-four (24) month period. 
All proceeds payable to Lender pursuant to this subsection shall be held
by Lender and shall be applied to the obligations secured by the Loan Documents
from time to time due and payable hereunder and under the Note; provided,
however, that nothing herein contained shall be deemed to relieve Borrower of
its obligations to pay the obligations secured by the Loan Documents on the
respective dates of payment provided for in the Note, 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;


 


(iv)          at all times during which structural construction, repairs
or alterations are being made with respect to the Improvements, and only if the
Individual Property coverage form does not otherwise apply, (A) owner’s
contingent or protective liability insurance covering claims not covered by or
under the terms or provisions of the above 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 the Individual Property, and (4) with an agreed amount endorsement
waiving co-insurance provisions;


 


(v)           workers’ compensation, subject to the statutory limits of
the State;


 


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


 


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


 


(viii)        if any of the policies of insurance
covering the risks required to be covered under subsections (i) through (vii) above
contains an exclusion from coverage for acts of terrorism, Borrower shall
obtain and maintain a separate policy providing such coverages in the event of
any act of terrorism, provided such coverage is commercially available for
properties similar to the applicable Individual Property and located in or
around the region in which the applicable Individual Property is located.
Notwithstanding the foregoing, Borrower shall not be required to obtain such a
policy, provided (I) Borrower confirms to Lender, in writing, that it
shall protect and hold Lender harmless from any losses associated with such
risks by, among other things, either (A) depositing with Lender sums
sufficient to pay for all uninsured costs related to a Restoration of the
applicable Individual Property following any act of terrorism (which sum shall
be treated as a Net Proceeds Deficiency), or (B) provided such act of
terrorism occurs after the Permitted Prepayment Date, prepaying the Loan in
accordance with the terms hereof; (II) Inland American Real Estate Trust, Inc.
(“Terrorism Insurance Guarantor”)
executes a guaranty, in form and substance satisfactory to Lender, guaranteeing
in the event of any act of terrorism, payment to Lender of any sums that
Borrower is obligated to pay to Lender under clause (I) above (which shall
be applied in accordance with Section 6.4 hereof) and (III) Terrorism
Insurance Guarantor maintains a net worth of at least $500,000,000 (as
determined by such entity’s most recent audited financial statements), such
entity maintains a direct or indirect ownership interest in Borrower, and the
aggregate Loan to Value Ratio (as determined by Lender) for all properties on
which such entity has a direct or indirect ownership interest shall not exceed
55%, however, Terrorism Insurance Guarantor may exceed the 55% Loan to Value
Ratio for a period not to exceed six (6) months out of any twelve (12)
month period either 1) during the time period when Terrorism Insurance Guarantor
is offering securities to the public, or 2) when in the business judgment of
Terrorism Insurance Guarantor, exceeding an Loan to Value Ratio of 55% is
necessary given existing circumstances of the credit environment, if the
Terrorism Insurance Guarantor maintains a net worth greater than or equal to
$600,000,000, but in no event shall the LTV exceed 65%.


 


(ix)           upon sixty (60) days’ written notice, such other
reasonable 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 Individual Property
located in or around the region in which the Individual Property is located.


 


(b)           All insurance provided for in Section 6.1(a) shall
be obtained under valid and enforceable policies (collectively, the “Policies” or in the singular, the “Policy”), and shall be subject to
the approval of Lender as to insurance companies, amounts, deductibles, loss
payees 


 


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and insureds.  The Policies shall be issued by one or more
financially sound and responsible insurance companies authorized to do business
in the State of New York (admitted or non-admitted basis) and having a claims
paying ability rating of “A-” or better or its equivalent by at least two (2) of
the Rating Agencies, one of which shall be Standard & Poor’s Ratings
Group (S&P), or by a syndicate of insurers through which at least 60% of
the coverage is with carriers having such claims paying ability ratings
(provided that all such carriers shall have claims paying ability ratings of
not less than “BBB” by S&P and the equivalent rating by other Rating
Agencies).  The Policies described in Section 6.1
(other than those strictly limited to liability protection) shall designate
Lender as loss payee.  Not less than
thirty (30) days prior to the expiration dates of the Policies theretofore
furnished to Lender, certificates of insurance evidencing the Policies
accompanied by evidence satisfactory to Lender of payment of the premiums due
thereunder (the “Insurance Premiums”),
shall be delivered by Borrower to Lender.


 


(c)           Any blanket insurance Policy shall
specifically allocate to the Individual Property the amount of coverage from
time to time required hereunder and shall otherwise provide the same protection
as would a separate Policy insuring only the Properties in compliance with the
provisions of Section 6.1(a).


 


(d)           All Policies of insurance provided
for or contemplated by Section 6.1(a), except for the Policy referenced in
Section 6.1(a)(v), shall name Borrower, as the insured and Lender 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
Lender providing that the loss thereunder shall be payable to Lender.


 


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


 


(i)                no act or negligence of Borrower, or anyone acting
for Borrower, 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 Lender is concerned;


 


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


 


(iii)              the issuers thereof shall give written notice to Lender
if the Policy has not been renewed fifteen (15) days prior to its expiration;
and


 


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


 


(f)            If at any time Lender is not in
receipt of written evidence that all insurance required hereunder is in full
force and effect, Lender shall have the right, after ten (10) Business
Days written notice to Borrower, to take such action as Lender deems necessary
to protect its 


 


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interest in the Properties,
including, without limitation, the obtaining of such insurance coverage as
Lender in its sole discretion deems appropriate.  All premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender upon demand and, until paid, shall be secured by
the Mortgages and shall bear interest at the Default Rate.  If Borrower fails in so insuring the
Properties or in so assigning and delivering the Policies, Lender may, at its
option, obtain such insurance using such carriers and agencies as Lender shall
elect from year to year and pay the premiums therefor, and Borrower will
reimburse Lender for any premium so paid, with interest thereon as stated in
the Note from the time of payment, on demand, and the amount so owning to
Lender shall be secured by the Mortgages. 
The insurance obtained by Lender may, but need not, protect Borrower’s
interest and the coverage that Lender purchases may not pay any claim that
Borrower makes or any claim that is made against Borrower in connection with
the Properties.


 


Section 6.2             Casualty.  If any Individual Property shall be damaged
or destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrower (a) shall
give to Lender prompt notice of such damage reasonably estimated by Borrower to
cost more than One Hundred Thousand Dollars ($100,000.00) to repair, and (b) shall
promptly commence and diligently prosecute the completion of the Restoration of
the Individual Property as nearly as possible to the condition the Individual
Property was in immediately prior to such fire or other Casualty, with such
alterations as may be reasonably approved by Lender (a “Restoration”)
and otherwise in accordance with Section 6.4.  Borrower shall pay all costs of such
Restoration whether or not such costs are covered by insurance.  Lender may, but shall not be obligated to
make proof of loss if not made promptly by Borrower.


 


Section 6.3             Condemnation.


 


(a)           Borrower shall promptly give Lender
notice of the actual or threatened commencement of any proceeding for the
Condemnation of any Individual Property and shall deliver to Lender copies of
any and all papers served in connection with such proceedings.  Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all instruments
requested by it to permit such participation. 
Borrower shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.  Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. 
Lender shall not be limited to the interest paid on the Award by the
condemning authority but shall be entitled to receive out of the Award interest
at the rate or rates provided herein or in the Note.  If any Individual Property or any portion
thereof is taken by a condemning authority, Borrower shall promptly commence
and diligently prosecute the Restoration of the applicable Individual Property
and otherwise comply with the provisions of Section 6.4.  If any Individual Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt.


 


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(b)           Intentionally deleted.


 


Section 6.4             Restoration.  The following provisions shall apply in
connection with the Restoration of any Individual Property:


 


(a)           If the Net Proceeds shall be less
than Relevant Restoration Threshold and the costs of completing the Restoration
shall be less than the Relevant Restoration Threshold, the Net Proceeds will be
disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in clauses (A), (E), (F), (G), (H), (J) and (L) of
Section 6.4(b)(i) below are met and Borrower delivers to Lender a
written undertaking to expeditiously commence and to satisfactorily complete
with due diligence the Restoration in accordance with the terms of this
Agreement.


 


(b)           If the Net Proceeds are equal to or
greater than the Relevant Restoration Threshold or the costs of completing the
Restoration is equal to or greater than the Relevant Restoration Threshold,
then in either case, Lender shall make the Net Proceeds available for the
Restoration in accordance with the provisions of this Section 6.4(b).  The term “Net Proceeds” for purposes of this Section 6.4
shall mean: (x) the net amount of all insurance proceeds received by
Lender pursuant to Section 6.1 (a)(i), (iv), (vi) and (viii) as
a result of such damage or destruction, after deduction of its reasonable costs
and expenses (including, but not limited to, reasonable counsel fees), if any,
in collecting same (“Insurance Proceeds”),
or (y) the net amount of the Award, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting same (“Condemnation Proceeds”),
whichever the case may be.


 


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


 


(A)          no Event of Default shall have occurred and be continuing;


 


(B)           (1) in the event the Net Proceeds are Insurance
Proceeds, and less than twenty-five percent (25%) of the total floor area of
the Improvements on the Individual Property has been damaged, destroyed or
rendered unusable as a result of such fire or other casualty, or (2) in
the event the Net Proceeds are Condemnation Proceeds, and less than ten percent
(10%) of the land constituting the Individual Property is taken, and such land
is located along the perimeter or periphery of the Individual Property, and no
portion of the Improvements is located on such land;


 


(C)           Intentionally Omitted;


 


(D)          Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than ninety (90) days after such
Casualty or Condemnation, whichever the case may be, occurs) and shall
diligently pursue the same to satisfactory completion;


 


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


 


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(F)           Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) the Maturity Date, (2) the
earliest date required for such completion under the terms of any Leases, (3) such
time as may be required under applicable zoning law, ordinance, rule or
regulation in order to repair and restore the applicable Individual Property to
the condition it was in immediately prior to such Casualty or to as nearly as
possible the condition it was in immediately prior to such Condemnation, as
applicable or (4) the expiration of the insurance coverage referred to in Section 6.1(a)(iii);


 


(G)           the Individual Property and the use thereof after the
Restoration will be in compliance with and permitted under all applicable
zoning laws, ordinances, rules and regulations provided, however, that
compliance with such zoning laws, ordinances, rules and regulations
(including, without limitation, parking requirements) will not require
restoration of the Improvements or the Individual Property to a size,
condition, or configuration materially different than that which existed
immediately prior to such Casualty or Condemnation;


 


(H)          the Restoration shall be done and completed by Borrower in
an expeditious and diligent fashion and in compliance with all applicable
governmental laws, rules and regulations (including, without limitation,
all applicable environmental laws);


 


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


 


(J)            the Debt Service Coverage Ratio for the affected
Individual Property and the Aggregate Debt Service Coverage Ratio, after giving
effect to the Restoration, shall be equal to or greater than 1.65:1.0;


 


(K)          Borrower shall deliver or cause to be delivered to Lender a
signed detailed budget approved in writing by Borrower’s architect or engineer
stating the entire cost of completing the Restoration, which budget should be
consistent with restoration budgets of similar hotel properties then owned and
operated by nationally recognized owners and operators of hotel properties
located in the areas in which the Individual Property is located; and


 


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


 


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


 


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alternative fully insured to the satisfaction of
Lender by the title company issuing the Title Insurance Policy.


 


(iii)              All plans and specifications required in connection
with the Restoration shall be subject to prior review and acceptance in all
respects by Lender and by an independent consulting engineer selected by Lender
(the “Casualty Consultant”), such review
and acceptance not to be unreasonably withheld or delayed.  Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in
connection with the Restoration.  The
identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been engaged, shall
be subject to prior review and acceptance by Lender and the Casualty
Consultant, such review and acceptance not to be unreasonably withheld or
delayed.  All costs and expenses incurred
by Lender in connection with making the Net Proceeds available for the
Restoration including, without limitation, reasonable counsel fees and
disbursements and the Casualty Consultant’s fees, shall be paid by Borrower.


 


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


 


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


 


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


 


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


 


(c)           All Net Proceeds not required (i) to
be made available for the Restoration or (ii) to be returned to Borrower
as excess Net Proceeds pursuant to Section 6.4(b)(vii) may be
retained and applied by Lender toward the payment of the Debt whether or not
then due and payable in such order, priority and proportions as Lender in its
sole discretion shall deem proper (provided no Event of Default exists, such
Borrower shall not be required to pay any Prepayment Consideration in
connection with such payment), or, at the discretion of Lender, the same may be
paid, either in whole or in part, to Borrower for such purposes as Lender shall
designate, in its discretion.


 


(d)           In the event of foreclosure of the
Mortgage with respect to an Individual Property, or other transfer of title of
an Individual Property in extinguishment in whole or in part of the Debt all
right, title and interest of Borrower in and to the Policies that are not
blanket Policies then in force concerning such Individual Property and all
proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other transfer
of title.


 


(e)           Lender shall with reasonable
promptness following any Casualty or Condemnation notify Borrower whether or
not Net Proceeds are required to be made available to Borrower for restoration
pursuant to this Section 6.4.  All
Net Proceeds not required to be made available for Restoration shall be
retained and applied by Lender in accordance with Section 2.3.2(a) hereof
(a “Net Proceeds Prepayment”).  If such Net Proceeds Prepayment shall be
equal to or greater than sixty percent (60%) of the Allocated Principal Amount
for the applicable Individual Property, Borrower shall have the right to elect
to prepay the remaining outstanding 


 


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principal balance of the
Note (a “Casualty/Condemnation Prepayment”)
in accordance with Section 2.3.2(b) hereof upon satisfaction of the
following conditions:  (i) within
thirty (30) days following the date of the Net Proceeds Prepayment, Borrower
shall provide Lender with written notice of Borrower’s intention to pay the
Note in full, (ii) Borrower shall prepay the Note in accordance with Section 2.3.2(b) hereof
on or before the second Payment Date occurring following the date of the Net
Proceeds Prepayment, and (iii) no Event of Default shall exist on the date
of such Casualty/Condemnation Prepayment. 
Notwithstanding anything in Section 6.2 or Section 6.3 to the
contrary, Borrower shall have no obligation to commence Restoration of the
affected Individual Property upon delivery of the written notice set forth in
clause (i) of the preceding sentence (unless Borrower subsequently shall
fail to satisfy the requirement of clause (ii) of the preceding sentence).


 


ARTICLE 7


RESERVE FUNDS


 


Section 7.1             Required Repairs.


 


7.1.1        Deposits.
Borrower shall perform the repairs at the Properties, as more particularly set
forth on Schedule IV hereto (such repairs hereinafter referred to as “Required Repairs”) within six (6) months
from the Closing Date, or such earlier time as specified on Schedule III. If
Borrower has not delivered to Lender evidence reasonably satisfactory to Lender
that it has completed all Required Repairs on or before the date that is six (6) months
from the Closing Date, or such earlier time as specified on Schedule III,
Borrower shall deposit with Lender the amount for the Properties set forth on
such Schedule III hereto, if any (less the amount allocated to the performance
of Required Repairs for which evidence of completion has been delivered to
Lender), to perform the Required Repairs for the Properties. Notwithstanding
the immediately preceding sentence, if (x) the Required Repairs include
life safety items or (y) the aggregate amount of the Required Repairs
exceeds $7,000,000, Borrower shall deposit with Lender the amount for the
Properties set forth on such Schedule III hereto.  Amounts so deposited with Lender, if any,
shall be held by Lender in an interest bearing account.  Amounts so deposited, if any, shall hereinafter
be referred to as Borrower’s “Required Repair Fund” and the account, if any, in
which such amounts are held shall hereinafter be referred to as Borrower’s “Required
Repair Account”.  It shall be an Event of
Default under this Agreement if Borrower does not either (i) does not
deposit with Lender the Required Repair Fund as set forth above, or (ii) complete
the Required Repairs at the Properties within nine (9) months from the
Closing Date.  Upon the occurrence of
such an Event of Default, Lender, at its option, may withdraw all Required
Repair Funds from the Required Repair Account and Lender may apply such funds
either to completion of the Required Repairs at one or more of the Properties
or toward payment of the Debt in such order, proportion and priority as Lender
may determine in its sole discretion. 
Lender’s right to withdraw and apply Required Repair Funds shall be in
addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents.


 


7.1.2        Release of Required Repair
Funds.  Lender shall
disburse to Borrower the Required Repair Funds from the Required Repair Account
from time to time upon satisfaction by Borrower of each of the following
conditions:  (i) Borrower shall
submit a written request for payment to Lender at least fifteen (15) days prior
to the date on which Borrower requests such payment be made and specifies the
Required Repairs to be paid, (ii) on the date such request is


 


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received by Lender and on
the date such payment is to be made, no Default or Event of Default shall exist
and remain uncured, (iii) Lender shall have received a certificate from
Borrower (A) stating that all Required Repairs at the applicable
Individual Property to be funded by the requested disbursement have been
completed in good and workmanlike manner and in accordance with all applicable
federal, state and local laws, rules and regulations, such certificate to
be accompanied by a copy of any license, permit or other approval by any
Governmental Authority required to commence and/or complete the Required
Repairs, (B) identifying each Person that supplied materials or labor in
connection with the Required Repairs performed at such Individual Property to
be funded by the requested disbursement under a contract in excess of $50,000,
and (C) stating that each Person who has supplied materials or labor in
connection with the Required Repairs to be funded by the requested disbursement
has been
paid in full or will be paid in full upon such disbursement, such certificate
to be accompanied by lien waivers or other evidence of payment satisfactory to
Lender, (iv) at Lender’s option, a title search for such Individual
Property indicating that such Individual Property is free from all liens,
claims and other encumbrances not previously approved by Lender, and (v) Lender
shall have received such other evidence as Lender shall reasonably request that
the Required Repairs at such Individual Property to be funded by the requested
disbursement have been completed and are paid for or will be paid upon such
disbursement to Borrower.  Lender shall
not be required to make disbursements from the Required Repair Account with
respect to an Individual Property more than once each calendar month and such
disbursement shall be made only upon satisfaction of each
condition contained in this Section 7.1.2.


 


Section 7.2             Tax and Insurance
Escrow Fund.  Borrower
shall pay to Lender on each Payment Date (a) one-twelfth (1/12) of the
Taxes that Lender estimates will be payable during the next ensuing twelve (12)
months in order to accumulate with Lender sufficient funds to pay all such
Taxes at least thirty (30) days prior to their respective due dates and (b) one-twelfth
(1/12) of the Insurance Premiums that Lender estimates will be payable for the
renewal of the coverage afforded by the Policies upon the expiration thereof in
order to accumulate with Lender sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the Policies,
(said amounts in (a) and (b) above are hereinafter called the “Tax and Insurance Escrow Fund”).  The Tax and Insurance Escrow Fund and the
payments of interest or principal or both, payable pursuant to the Note, shall
be added together and shall be paid as an aggregate sum by Borrower to
Lender.  Lender will apply the Tax and
Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to
be made by Borrower pursuant to this Agreement and under the Mortgages.  In making any payment relating to the Tax and
Insurance Escrow Fund, Lender may do so according to any bill, statement or
estimate procured from the appropriate public office (with respect to Taxes) or
insurer or agent (with respect to Insurance Premiums) or from Borrower without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof, provided, however, Lender shall use reasonable efforts to pay such
real property taxes sufficiently early to obtain the benefit of any available
discounts of which it has knowledge.  If
the amount of the Tax and Insurance Escrow Fund shall exceed the amounts due
for Taxes and Insurance Premiums, Lender shall, in its sole discretion, return
any excess to Borrower or credit such excess against future payments to be made
to the Tax and Insurance Escrow Fund. 
The Tax and Insurance Escrow Fund shall be held by Lender in an
interest-bearing account and shall at Lender’s option be held in Eligible
Account at an Eligible Institution. Any interest earned on said account shall
accrue in said account for the benefit of Borrower, but shall remain in and


 


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constitute
part of the Tax and Insurance Escrow Fund, and shall be disbursed in accordance
with the terms hereof.  Any amount
remaining in the Tax and Insurance Escrow Fund after the Debt has been paid in
full shall be returned to Borrower.  In
allocating such excess, Lender may deal with the Person shown on the records of
Lender to be the owner of the Properties. 
If at any time Lender reasonably determines that the Tax and Insurance
Escrow Fund is not or will not be sufficient to pay Taxes or Insurance Premiums
by the dates set forth above, Lender shall notify Borrower of such
determination and Borrower shall increase its monthly payments to Lender by the
amount that Lender estimates is sufficient to make up the deficiency at least
thirty (30) days prior to delinquency of the Taxes or Insurance Premiums.


 


Notwithstanding anything to
the contrary hereinbefore contained, in the event that Borrower provides (1) evidence
satisfactory to Lender that the Properties are insured in accordance with Section 6.1
of this Agreement and (2) evidence satisfactory to Lender that the Taxes
for the Properties have been paid in accordance with the requirements set forth
in this Agreement, Lender will waive the requirement set forth herein for
Borrower to make deposits into the Tax and Insurance Escrow Fund for the payment
of Insurance Premiums and for payment of such Taxes, provided, however, Lender
expressly reserves the right to require Borrower to make deposits to the Tax
and Insurance Escrow Fund for the payment of Insurance Premiums if at any time
the Properties are not insured in accordance with Section 6.1 of this
Agreement or Taxes are not paid in accordance with the requirements of this
Agreement.


 


Section 7.3             Replacements and Replacement Reserve.


 


7.3.1        Replacement Reserve Fund.  Borrower shall pay to Lender on each Payment
Date one-twelfth (1/12) the Annual Replacement Reserve Requirement (the “Replacement Reserve Monthly Deposit”)
reasonably estimated by Lender in its sole discretion to be due for
replacements and repairs required to be made to the Properties to (i) pay
for replacements necessary to keep the Property in good order and repair and in
a good marketable condition or prevent deterioration of the Property and (ii) purchase,
replace and/or install FF&E necessary to keep the Properties in good order
and repair and in a good marketable condition. (collectively, the “Replacements”); provided, however,
the Replacement Reserve Monthly Deposit shall never be less than the initial
Replacement Reserve Monthly Deposit, which is $453,178.  Amounts so deposited shall hereinafter be
referred to as Borrower’s “Replacement Reserve Fund” and the account in which
such amounts are held shall hereinafter be referred to as Borrower’s “Replacement
Reserve Account”.  Lender may reassess
its estimate of the amount necessary for the Replacement Reserve Fund from time
to time, and may increase the monthly amounts required to be deposited into the
Replacement Reserve Fund upon thirty (30) days notice to Borrower if Lender
determines in its reasonable discretion that an increase is necessary to
maintain the proper maintenance and operation of the Properties.  Any amount held in the Replacement Reserve
Account and allocated for an Individual Property shall be retained by Lender in
an interest bearing account, or, at the option of Lender, in an Eligible
Account at an Eligible Institution; provided, however, that, any interest
earned on said account shall accrue in said account for the benefit of
Borrower, but shall remain in and constitute part of the Replacement Reserve
Fund, and shall be disbursed in accordance with the terms hereof.


 


Notwithstanding anything to
the contrary in this Section 7.3, Borrower shall not be required to make
Replacement Reserve Monthly Deposits, provided that: (i) no Event of
Default


 


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shall
have occurred; and (ii) Borrower makes all necessary Replacements and
otherwise maintains the Properties to Lender’s satisfaction.  Upon notice from Lender following: (a) an
Event of Default; or (b) the failure of Borrower to make necessary
Replacements or otherwise maintain the Properties to Lender’s satisfaction,
Borrower shall begin to deposit the Replacement Reserve Monthly Deposit into
the Replacement Reserve Fund beginning on the Payment Date (as defined herein)
immediately following the date of such notice. 
If Borrower is required to make Replacement Reserve Monthly Deposits,
then any amounts deposited by Manager into the Controlled Replacements Accounts
shall be credited against Borrower’s obligation.


 


7.3.2        Disbursements from
Replacement Reserve Account.


 


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


 


(b)           Lender shall, upon written request
from Borrower and satisfaction of the requirements set forth in this Section 7.3.2,
disburse to Borrower amounts from the Replacement Reserve Account necessary to
pay for the actual approved costs of Replacements or to reimburse Borrower
therefor, upon completion of such Replacements (or, upon partial completion in
the case of Replacements made pursuant to Section 7.3.2(f)) as determined
by Lender.  In no event shall Lender be
obligated to disburse funds from the Replacement Reserve Account if a Default
or an Event of Default exists.


 


(c)           Each request for disbursement from
the Replacement Reserve Account shall be in a form specified or approved by
Lender and shall specify (i) the specific Replacements for which the
disbursement is requested, (ii) the quantity and price of each item
purchased, if the Replacement includes the purchase or replacement of specific
items, (iii) the price of all materials (grouped by type or category) used
in any Replacement other than the purchase or replacement of specific items,
and (iv) the cost of all contracted labor or other services applicable to
each Replacement for which such request for disbursement is made.  With each request Borrower shall certify that
all Replacements have been made in accordance with all applicable Legal
Requirements of any Governmental Authority having jurisdiction over the
applicable Individual Property to which the Replacements are being provided
and, unless Lender has agreed to issue joint checks as described below, each
request shall include evidence of payment of all such amounts.  Each request for disbursement shall include
copies of invoices for all items or materials purchased and all contracted
labor or services provided.  Except as
provided in Section 7.3.2(e), each request for disbursement from the
Replacement Reserve Account shall be made only after completion of the
Replacement for which disbursement is requested.  Borrower shall provide Lender evidence of
completion satisfactory to Lender in its reasonable judgment.


 


(d)           Borrower shall pay all invoices in
connection with the Replacements with respect to which a disbursement is
requested prior to submitting such request for disbursement from the
Replacement Reserve Account or, at the request of Borrower, Lender will issue
joint checks, payable to Borrower and the contractor, supplier, materialman,
mechanic, subcontractor or other party to whom payment is due in connection
with a Replacement.  In the case of
payments made


 


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


 


(e)           If (i) the cost of a Replacement
exceeds $100,000, (ii) the contractor performing such Replacement requires
periodic payments pursuant to terms of a written contract, and (iii) Lender
has approved in writing in advance such periodic payments, a request for
reimbursement from the Replacement Reserve Account may be made after completion
of a portion of the work under such contract, provided (A) such contract
requires payment upon completion of such portion of the work, (B) the
materials for which the request is made are on site at the applicable
Individual Property and are properly secured or have been installed in such
Individual Property, (C) all other conditions in this Agreement for
disbursement have been satisfied, (D) funds remaining in the Replacement
Reserve Account are, in Lender’s judgment, sufficient to complete such
Replacement and other Replacements when required, and (E) if required by
Lender, each contractor or subcontractor receiving payments under such contract
shall provide a waiver of lien with respect to amounts which have been paid to
that contractor or subcontractor.


 


(f)            Borrower shall not make a request
for disbursement from the Replacement Reserve Account more frequently than once
in any calendar month and (except in connection with the final disbursement)
the total cost of all Replacements in any request shall not be less than
$5,000.00.


 


7.3.3        Performance of
Replacements.


 


(a)           Borrower shall make Replacements when
required in order to keep each Individual Property in condition and repair
consistent with other first class, full service limited service hotels in the
same market segment in the metropolitan area in which the respective Individual
Property is located, and to keep each Individual Property or any portion
thereof from deteriorating.  Borrower
shall complete all Replacements in a good and workmanlike manner as soon as
practicable following the commencement of making each such Replacement.


 


(b)           Lender reserves the right, at its
option, to approve all contracts or work orders with materialmen, mechanics,
suppliers, subcontractors, contractors or other parties providing labor or
materials under contracts for an amount in excess of $100,000 in connection
with the Replacements performed by Borrower. 
Upon Lender’s request, Borrower shall assign any contract or subcontract
to Lender.


 


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(c)           In the event Lender determines in its
reasonable discretion that any Replacement is not being performed in a
workmanlike or timely manner or that any Replacement has not been completed in
a workmanlike or timely manner, and such failure continues to exist for more
than thirty (30) days after notice from Lender to Borrower, Lender shall have
the option to withhold disbursement for such unsatisfactory Replacement and to
proceed under existing contracts or to contract with third parties to complete
such Replacement and to apply the Replacement Reserve Fund toward the labor and
materials necessary to complete such Replacement, without providing any prior
notice to Borrower and to exercise any and all other remedies available to
Lender upon an Event of Default hereunder.


 


(d)           In order to facilitate Lender’s
completion or making of such Replacements pursuant to Section 7.3.3(c) above,
Borrower grants Lender the right to enter onto any Individual Property and
perform any and all work and labor necessary to complete or make such
Replacements and/or employ watchmen to protect such Individual Property from
damage.  All sums so expended by Lender,
to the extent not from the Replacement Reserve Fund, shall be deemed to have
been advanced under the Loan to Borrower and secured by the Mortgages.  For this purpose Borrower constitutes and
appoints Lender its true and lawful attorney-in-fact with full power of
substitution to complete or undertake the Replacements in the name of Borrower.  Such power of attorney shall be deemed to be
a power coupled with an interest and cannot be revoked but shall only be
effective following an Event of Default. 
Borrower empowers said attorney-in-fact as follows:  (i) to use any funds in the Replacement
Reserve Account for the purpose of making or completing the Replacements; (ii) to
make such additions, changes and corrections to the Replacements as shall be
necessary or desirable to complete the Replacements; (iii) to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for such purposes; (iv) to pay, settle or compromise all existing
bills and claims which are or may become Liens against any Individual Property,
or as may be necessary or desirable for the completion of the Replacements, or
for clearance of title; (v) to execute all applications and certificates
in the name of Borrower which may be required by any of the contract documents;
(vi) to prosecute and defend all actions or proceedings in connection with
any Individual Property or the rehabilitation and repair of any Individual
Property; and (vii) to do any and every act which Borrower might do in its
own behalf to fulfill the terms of this Agreement.


 


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


 


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


 


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such other persons described
above in connection with inspections described in this Section 7.3.3(f) or
the completion of Replacements pursuant to this Section 7.3.3.


 


(g)           Lender may require an inspection of
the Individual Property at Borrower’s expense prior to making a monthly
disbursement in excess of $10,000 from the Replacement Reserve Account in order
to verify completion of the Replacements for which reimbursement is
sought.  Lender may require that such
inspection be conducted by an appropriate independent qualified professional
selected by Lender and/or may require a copy of a certificate of completion by
an independent qualified professional acceptable to Lender prior to the
disbursement of any amounts from the Replacement Reserve Account.  Borrower shall pay the expense of the
inspection as required hereunder, whether such inspection is conducted by Lender
or by an independent qualified professional.


 


(h)           The Replacements and all materials,
equipment, fixtures, or any other item comprising a part of any Replacement
shall be constructed, installed or completed, as applicable, free and clear of
all mechanic’s, materialman’s or other liens (except for those Liens existing
on the date of this Agreement which have been approved in writing by Lender).


 


(i)            Before each disbursement from the
Replacement Reserve Account, Lender may require Borrower to provide Lender with
a search of title to the applicable Individual Property effective to the date
of the disbursement, which search shows that no mechanic’s or materialmen’s
liens or other liens of any nature have been placed against the applicable
Individual Property since the date of recordation of the related Mortgage and
that title to such Individual Property is free and clear of all Liens (other
than the lien of the Mortgage and any other Liens previously approved in
writing by Lender, if any).


 


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


 


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


 


7.3.4        Failure to Make
Replacements.


 


(a)           It shall be an Event of Default under
this Agreement if Borrower fails to comply with any provision of this Section 7.3.4
and such failure is not cured within thirty (30) days after notice from Lender;
provided, however, if such failure is not capable of being cured within said
thirty (30) day period, then provided that Borrower commences action to
complete such cure and thereafter diligently proceeds to complete such cure,
such thirty (30) day period shall be extended for such time as is reasonably
necessary for Borrower, in the exercise of due diligence,


 


94

















 


to cure such failure, but
such additional period of time shall not exceed sixty (60) days.  Upon the occurrence of such an Event of
Default, Lender may use the Replacement Reserve Fund (or any portion thereof)
for any purpose, including but not limited to completion of the Replacements as
provided in Section 7.3.3, or for any other repair or replacement to any
Individual Property or toward payment of the Debt in such order, proportion and
priority as Lender may determine in its sole discretion.  Lender’s right to withdraw and apply the
Replacement Reserve Funds shall be in addition to all other rights and remedies
provided to Lender under this Agreement and the other Loan Documents.


 


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


 


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


 


7.3.6        Indemnification.  Borrower shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys fees and expenses) arising from or in
any way connected with the performance of the Replacements unless the same are solely
due to gross negligence or willful misconduct of Lender.  Borrower shall assign to Lender all rights
and claims Borrower may have against all persons or entities supplying labor or
materials in connection with the Replacements; provided, however, that Lender
may not pursue any such right or claim unless an Event of Default has occurred
and remains uncured.


 


Section 7.4             PIP Reserve.


 


7.4.1        Deposits.  Subject to Section 7.4.3 hereof, on the
Closing Date, Borrower shall deposit with Lender (a) $604,594.60 (the “Minimum PIP Reserve Deposit”), plus
(b) the amount for each Individual Property set forth on such Schedule XIV
hereto (cumulatively, the “Initial PIP Reserve
Deposit”) to perform the PIP Requirements for such Individual
Property.  In addition, at any time
Lender reasonably determines that the required balance in the PIP Reserve Fund
(defined below) is insufficient to satisfy PIP requirements during the next
twelve month period, Lender may require Borrower to make additional deposits to
the PIP Reserve Fund in an amount equal to the deficiency (the “Additional PIP Reserve Deposits”;
together with the Initial PIP Reserve Deposit, the “PIP
Reserve Deposit”).  The
Minimum PIP Reserve Deposit, the PIP Reserve Deposit and all other amounts so
deposited with Lender, if any, shall be held by Lender in an interest bearing
account.  Amounts so deposited, if any,
shall hereinafter be referred to as Borrower’s “PIP Reserve Fund” and the
account, if any, in which such amounts are held shall hereinafter be referred to
as Borrower’s “PIP Reserve Account”. Borrower shall complete or cause to be
completed the PIP Requirements on or before the deadline for each PIP
Requirement as set forth on Schedule XIV, as same may be extended by the
applicable Franchisor; provided, however, the time for Borrower to complete any
of the PIP Requirements shall be extended until such time as Franchisor
delivers a default notice to Borrower under the


 


95

















 


related Franchise Agreement
regarding Borrower’s failure to so complete such PIP Requirements and any cure
period relating to such notice of default shall have expired.


 


In addition to the foregoing
required deposits, if Borrower has not provided to Lender on or before December 31,
2007 evidence that it has completed and paid for PIP Requirements costing at
least $1,269,105.40, then within one (1) Business Day, Borrower shall make
an Additional PIP Reserve Deposit equal to the difference between (A) $1,269,105.40
and (B) the cost of PIP Requirements for which Borrower has delivered to
Lender evidence of completion and payment. 
Failure to make such Additional PIP Reserve Deposit shall be an Event of
Default.


 


7.4.2        Disbursements from PIP
Reserve Account.  Lender
shall disburse to Borrower (a) funds from the PIP Reserve Account or (b) amounts
drawn on the PIP Reserve LC (as defined below) from time to time upon
satisfaction by Borrower of each of the following conditions:  (i) Borrower shall submit a written
request for payment to Lender at least fifteen (15) days prior to the date on
which Borrower requests such payment be made and specifies the PIP Requirements
to be paid, (ii) on the date such request is received by Lender and on the
date such payment is to be made, no Default or Event of Default shall exist and
remain uncured, (iii) Lender shall have received a certificate from
Borrower (A) stating that all PIP Requirements at the applicable
Individual Property to be funded by the requested disbursement have been
completed in good and workmanlike manner and in accordance with all applicable
federal, state and local laws, rules and regulations, such certificate to
be accompanied by a copy of any license, permit or other approval by any
Governmental Authority required to commence and/or complete the PIP
Requirements, (B) identifying each Person that supplied materials or labor
in connection with the PIP Requirements performed at such Individual Property
to be funded by the requested disbursement under a contract in excess of
$50,000, and (C) stating that each Person who has supplied materials or
labor in connection with the PIP Requirements to be funded by the requested
disbursement has been paid in full or will be paid in full upon such
disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, (iv) at Lender’s option
(exercisable only if the PIP Requirements relate to real property or fixtures,
and not just personal property), a title search for such Individual Property
indicating that such Individual Property is free from all liens, claims and
other encumbrances not previously approved by Lender, and (v) Lender shall
have received such other evidence as Lender shall reasonably request that the
PIP Requirements at such Individual Property to be funded by the requested
disbursement have been completed and are paid for or will be paid upon such
disbursement to Borrower.  Lender shall
not be required to make disbursements from the PIP Reserve Account or amounts
drawn on the PIP Reserve LC with respect to an Individual Property more than
once each calendar month and such disbursement shall be made only upon
satisfaction of each condition contained in this Section 7.4.2.


 


7.4.3        PIP Guaranty.  Notwithstanding the provisions of Section 7.4.1,
Borrower shall not be obligated to make the PIP Reserve Deposit, provided (a) the
cost to perform the PIP Requirements for the Properties (less any balance in
the PIP Reserve Fund) does not at any time exceed $20,000,000, (b) Borrower
completes the PIP Requirements within the time frames set forth in the
applicable Franchise Agreement, (c) that certain Guaranty Agreement
Regarding PIP Requirements, dated as of the Closing Date, from Guarantor in
favor of Lender, pursuant to which Guarantor guarantees the payment and
performance of the PIP Requirements within the time frames set forth in the
Franchise Agreements up to an guaranteed amount of $20,000,000


 


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(the “PIP
Guaranty”), remains in full force and effect, (d) Guarantor
maintains a net worth of at least $500,000,000, and (e) a Cash Management
Trigger has not occurred.  In the event
that the cost to perform the PIP Requirements for the Properties, less any
balance in the PIP Reserve Fund, at any time exceeds $20,000,000, Borrower
shall promptly deposit the excess amount (the “Excess
PIP Deposit”) with Lender, which Excess PIP Deposit shall be
held and disbursed by Lender in accordance with Sections 7.4.1 and 7.4.2.  In the event that one or more of the
conditions sets forth in clauses (b) through (e) of the Section 7.4.3
no longer is satisfied, Borrower shall promptly deposit the cost of any PIP
Requirements that remain uncompleted with Lender, which shall be held and
disbursed by Lender in accordance with Sections 7.4.1 and 7.4.2.


 


7.4.4        PIP Letter of Credit.  In lieu of depositing the PIP Reserve Deposit
or the Excess PIP Deposit with Lender, Borrower may deliver to Lender an
irrevocable sight draft, transferable letter of credit in favor of Lender (a) in
the amount of the PIP Reserve Deposit or the Excess PIP Deposit, as applicable,
(b) issued by an Issuing Bank, (c) with an initial term of at least
one (1) year, (d) automatically renewable unless the Issuing Bank
provides the Lender with notice of non-renewal at least sixty (60) days prior
to expiration thereof, and (e) otherwise in form and substance acceptable
to Lender in its sole discretion (the “PIP Reserve LC”).
The PIP Reserve LC shall constitute additional security for the Loan.  Following an Event of Default, Lender shall
have the right, exercisable in its sole discretion, to draw upon the PIP
Reserve LC (i) to pay any and all costs associated with such Event of
Default or (ii) to apply against Borrower’s obligations under the Note,
the Mortgages or the other Loan Documents, in such order and priority as Lender
shall determine in its sole discretion.


 


Section 7.5             Excess Cash Flow
Reserve.  Following a Cash
Sweep Trigger and prior to the occurrence of the related Cash Sweep Termination
Event, on each Payment Date all Excess Cash Flow remaining in the Cash
Management Account following the required transfers of sums to various
sub-accounts pursuant to Section 3.4(a)-(g) of the Cash Management
Agreement shall be deposited with Lender to be held by Lender as additional
security for the Loan (amounts so deposited shall hereinafter be referred to as
the “Excess Cash Flow Reserve Fund” and the account to which such amounts are
held shall hereinafter be referred to as the “Excess
Cash Flow Reserve Account”). 
Subject to the terms of this Agreement, sums from the Excess Cash Flow
Reserve Fund may be disbursed to Borrower upon payment in full of the
Debt.  Upon the occurrence of the related
Cash Sweep Termination Event following a Cash Sweep Trigger, Lender shall
disburse, or cause to be disbursed, all amounts in the Excess Cash Flow Reserve
Account to Borrower and Borrower shall no longer be obligated to pay Excess
Cash Flow to Lender on each Payment Date.


 


Section 7.6             Intentionally Omitted.


 


Section 7.7             Reserve Funds, Generally.


 


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


 


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


 


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


 


7.7.4        Intentionally omitted.


 


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


 


7.7.6        Lender shall not be liable for any loss
sustained on the investment of any funds constituting the Reserve Funds unless
occasioned by the gross negligence or willful misconduct of Lender.


 


7.7.7        Upon payment in full of the Debt and
performance of all other obligations under this Agreement and the other Loan
Documents, Lender shall disburse to Borrower all remaining Reserve Funds.


 


ARTICLE 8


DEFAULTS


 


Section 8.1             Event of Default.


 


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


 


(i)              if any portion of the Debt is not paid within five (5) days
of the applicable due date or if not paid on or before the Maturity Date;


 


(ii)             if any of the Taxes or Other Charges are not paid prior
to the date when the same become delinquent, except to the extent that Borrower
is contesting same in accordance with the terms of Section 5.1.2 hereof,
or there are sufficient funds in the Tax and Insurance Escrow Fund to pay such
Taxes or Other Charges and Lender fails to or refuses to release the same from
the Tax and Insurance Escrow Fund;


 


(iii)            if the Policies are not kept in full force and effect, or
if certified copies of the Policies are not delivered to Lender within ten (10) days
of request;


 


(iv)            if Borrower transfers or encumbers any portion of the
Properties without Lender’s prior written consent (to extent such consent is
required) or otherwise violates the provisions of Section 5.2.13 of this
Loan Agreement;


 


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


 


(vi)            if Borrower, indemnitor or any guarantor under any
guaranty or indemnity issued in connection with the Loan shall make an
assignment for the benefit of creditors;


 


(vii)           if a receiver, liquidator or trustee shall be appointed
for Borrower or any guarantor or indemnitor under any guarantee or indemnity
issued in connection with the Loan or if Borrower or such guarantor or
indemnitor shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law,
or any similar federal or state law, shall be filed by or against, consented
to, or acquiesced in by, Borrower, or such guarantor or indemnitor, or if any
proceeding for the dissolution or liquidation of Borrower or such guarantor or
indemnitor shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by
Borrower or such guarantor or indemnitor, upon the same not being discharged,
stayed or dismissed within one hundred eighty (180) days;


 


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


 


(ix)            if Borrower breaches any of its respective negative
covenants contained in Section 5.2 or any covenant contained in Section 4.1.31
hereof;


 


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


 


(xi)            if any of the assumptions contained in the Insolvency
Opinion or an Additional Insolvency Opinion are or shall become untrue in any
material respect;


 


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


 


(xiii)          if Borrower shall continue to be in
Default under any of the terms, covenants or conditions of Section 9.1
hereof, or fails to cooperate with Lender in connection with a Securitization pursuant
to the provisions of Section 9.1 hereof, for three (3) days after
notice to Borrower from Lender;


 


(xiv)          if Borrower shall continue to be in Default under any of
the other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xii) above, 


 


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for ten (10) days after notice to Borrower from
Lender, in the case of any Default which can be cured by the payment of a sum
of money, or for thirty (30) days after notice from Lender in the case of any
other Default; provided, however, that if such non-monetary Default is
susceptible of cure but cannot reasonably be cured within such 30-day period
and provided further that Borrower shall have commenced to cure such Default
within such 30-day period and thereafter diligently and expeditiously proceeds
to cure the same, such 30-day period shall be extended for such time as is
reasonably necessary for Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed one hundred eighty (180) days;


 


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


 


(xvi)          if a default has occurred and continues beyond any
applicable cure period under the Franchise Agreement;


 


(xvii)         if Borrower ceases to do business as a
hotel at the 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 Property following a Casualty or
Condemnation);


 


(xviii)        if Borrower fails to complete the PIP
Requirements in the time frames noted thereon, and such failure results in a
termination by Franchisor of the Franchise Agreement, unless Borrower, promptly
upon such termination, replaces the Franchisor with a Qualified Franchisor;


 


(xix)           if Borrower fails to promptly either (i) renew the
Franchise Agreement with the applicable Franchisor or (ii) enter into a
Replacement Franchise Agreement with Franchisor or another Qualified
Franchisor, as applicable, in the event that a Franchise Agreement expires or
is terminated;


 


(xx)            if (A) a breach or default by the Westbury Borrower
under any condition or obligation contained in the Ground Lease is not cured
within any applicable cure period provided therein, (B) there occurs any
event or condition that gives the lessor under the Ground Lease a right to
terminate or cancel the Ground Lease, or (C) the Westbury Property shall
be surrendered or the Ground Lease shall be terminated or cancelled for any
reason or under any circumstances whatsoever, or (D) any of the terms,
covenants or conditions of the Ground Lease shall in any manner be modified, changed,
supplemented, altered, or amended without the prior written consent of Lender;
or


 


(xxi)           if (A) a breach or default under any condition or
obligation contained in an Operating Lease is not cured within any applicable
cure period provided therein, (B) an Operating Lease shall be terminated
or cancelled for any reason or under any circumstances whatsoever, or (C) any
of the terms, covenants or conditions of an


 


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Operating Lease shall in any manner be modified,
changed, supplemented, altered, or amended without the prior written consent of
Lender.


 


(b)           Upon the occurrence of an Event of
Default (other than an Event of Default described in clauses (vi), (vii) or
(viii) above) and at any time thereafter Lender may, in addition to any
other rights or remedies available to it pursuant to this Agreement and the
other Loan Documents or at law or in equity, Lender may take such action,
without notice or demand, that Lender deems advisable to protect and enforce
its rights against Borrower and in and to any Individual Property, including,
without limitation, declaring the Debt to be immediately due and payable, and
Lender may enforce or avail itself of any or all rights or remedies provided in
the Loan Documents against Borrower and any or all of the Properties,
including, without limitation, all rights or remedies available at law or in
equity; and upon any Event of Default described in clauses (vi), (vii) or (viii) above,
the Debt and all other obligations of Borrower hereunder and under the other
Loan Documents shall immediately and automatically become due and payable,
without notice or demand, and Borrower hereby expressly waives any such notice
or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.


 


Section 8.2             Remedies.


 


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


 


(b)           With respect to Borrower and the
Properties, nothing contained herein or in any other Loan Document shall be construed
as requiring Lender to resort to any Individual Property for the satisfaction
of any of the Debt in any preference or priority to any other Individual
Property, and Lender may seek satisfaction out of all of the Properties, or any
part thereof, in its absolute discretion in respect of the Debt.  In addition, to the extent permitted by
applicable law, Lender shall have the right from time to time to partially
foreclose the Mortgages in any manner and for any amounts secured by the
Mortgages then due and payable as determined by Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the
event Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled


 


101

















 


payments of principal and
interest, Lender may foreclose one or more of the Mortgages to recover such
delinquent payments, or (ii) in the event Lender elects to accelerate less
than the entire outstanding principal balance of the Loan, Lender may foreclose
one or more of the Mortgages to recover so much of the principal balance of the
Loan as Lender may accelerate and such other sums secured by one or more of the
Mortgages as Lender may elect. 
Notwithstanding one or more partial foreclosures, the Properties shall
remain subject to the Mortgages to secure payment of sums secured by the
Mortgages and not previously recovered.


 


(c)           Lender shall have the right from time
to time to sever the Note and the other Loan Documents into one or more
separate notes, mortgages and other security documents (the “Severed Loan Documents”) in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder.  Borrower shall execute and deliver to Lender
from time to time, promptly after the request of Lender, a severance agreement
and such other documents as Lender shall request in order to effect the
severance described in the preceding sentence, all in form and substance
reasonably satisfactory to Lender. 
Borrower hereby absolutely and irrevocably appoints Lender following the
occurrence of an Event of Default as its true and lawful attorney, coupled with
an interest, in its name and stead to make and execute all documents necessary
or desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days
after notice has been given to Borrower by Lender of Lender’s intent to
exercise its rights under such power. 
Borrower shall not be obligated to pay any costs or expenses incurred in
connection with the preparation, execution, recording or filing of the Severed
Loan Documents, and the Severed Loan Documents shall not contain any
representations, warranties or covenants not contained in the Loan Documents
and any such representations and warranties contained in the Severed Loan
Documents will be given by Borrower only as of the Closing Date.


 


(d)           As used in this Section 8.2, a “foreclosure”
shall include any sale by power of sale.


 


Section 8.3             Remedies Cumulative; Waivers.  The rights, powers and remedies of Lender
under this Agreement shall be cumulative and not exclusive of any other right,
power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise.  Lender’s rights, powers and
remedies may be pursued singly, concurrently or otherwise, at such time and in
such order as Lender may determine in Lender’s sole discretion.  No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default shall impair any such remedy,
right or power or shall be construed as a waiver thereof, but any such remedy,
right or power may be exercised from time to time and as often as may be deemed
expedient.  A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.


 


ARTICLE 9


SPECIAL PROVISIONS


 


Section 9.1             Sale of Notes and Securitization


 


102

















 


.   At
the request of the holder of the Note and, to the extent not already required
to be provided by Borrower under this Agreement, Borrower shall cooperate with
Lender to allow Lender to satisfy the market standards to which the holder of
the Note customarily adheres or which may be reasonably required in the
marketplace or by the Rating Agencies in connection with the sale of the Note
or participations therein or securitization (such sale and/or securitization,
the “Securitization”) of rated single or
multi-class securities (the “Securities”)
secured by or evidencing ownership interests in the Note and the Mortgage.  In this regard Borrower shall:


 


(a)           (i)            provide
such financial and other information with respect to the Properties, Borrower
and the Manager (including, without limitation, information required pursuant
to Section 5.1.11 hereof), (ii) provide budgets relating to the
Properties and (iii) to perform or permit or cause to be performed or
permitted such site inspection, appraisals, market studies, environmental
reviews and reports (Phase I’s and, if appropriate, Phase II’s), engineering
reports and other due diligence investigations of the Properties, as may be
reasonably requested by the holder of the Note or the Rating Agencies or as may
be necessary or appropriate in connection with the Securitization (the “Provided Information”), together,
if customary, with appropriate verification and/or consents of the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to Lender and the Rating Agencies;


 


(b)           cause counsel to render opinions,
which may be relied upon by the holder of the Note, the Rating Agencies and
their respective counsel, agents and representatives, as to non-consolidation,
fraudulent conveyance, and true sale and/or lease or any other opinion
customary in securitization transactions, which counsel and opinions shall be
reasonably satisfactory to the holder of the Note and the Rating Agencies;


 


(c)           make such representations and
warranties as of the closing date of the Securitization with respect to the
Properties, Borrower, and the Loan Documents as are consistent with the
representations and warranties made in the Loan Documents; and


 


(d)           deliver an Additional Insolvency
Opinion, in form and substance reasonably satisfactory to the holder of the
Note and the Rating Agencies, if requested by the holder the Note or the Rating
Agencies;


 


(e)           intentionally omitted; and


 


(f)            execute such other amendments to the
Loan Documents and organizational documents as may be reasonably requested by
the holder of the Note or the Rating Agencies or otherwise to effect the
Securitization; provided, however, that Borrower shall not be required to
modify or amend any Loan Document if such modification or amendment would (i) change
the weighted average interest rate (subject to the qualification stated in Section 9.1.2
below related to changes in the weighted average interest rate following the
prepayment of principal or and Event of Default), the stated maturity or the amortization
of principal set forth in the Note, or (ii) modify or amend any other
material economic term of the Loan;


 


(g)           if requested by Lender, review any
information regarding the Property, Borrower, Guarantor, Indemnitor and the
Loan which is contained in a preliminary or final private


 


103

















 


placement memorandum,
prospectus, prospectus supplement (including any amendment or supplement to
either thereof), or other disclosure document to be used by Lender or any
affiliate thereof; and


 


(h)           supply to Lender such documentation,
financial statements and reports in form and substance required in order to
comply with any applicable securities laws.


 


9.1.2        Loan Components.  Borrower covenants and agrees that in connection
with any Securitization of the Loan, upon Lender’s request Borrower shall
deliver one or more new component notes to replace any of the original Notes or
modify any such original Note to reflect additional components of the Loan or
create one or more mezzanine loans (including amending Borrower’s
organizational structure to provide for one or more mezzanine borrowers) (each
a “Resizing Event”).  Lender agrees that such new notes or modified
notes or mezzanine notes shall immediately after the Resizing Event have the
same initial weighted average coupon as the original note prior to such
Resizing Event, notwithstanding that such new notes or modified note or
mezzanine notes or may, in connection with the application of principal to such
new notes or modified note or mezzanine notes, subsequently cause the weighted
average spread of such new notes or modified note or mezzanine notes to change
(but not increase, except that the weighted average spread may subsequently
increase due to involuntary prepayments or if an Event of Default shall occur)
and apply principal, interest rates and amortization of the Loan between such
new components and/or mezzanine loans in a manner specified by Lender in its
sole discretion such that the pricing and marketability of the Securities and
the size of each class of Securities and the rating assigned to each such class
by the Rating Agencies shall provide the most favorable rating levels and
achieve the optimum bond execution for the Loan.  In connection with any Resizing Event,
Borrower covenants and agrees to modify the Cash Management Agreement to
reflect the newly created components and/or mezzanine loans.


 


9.1.3        Uncross of Properties.  Borrower agrees that at any time Lender shall
have the unilateral right to elect to uncross any of the Properties (the “Affected Property”).  In furtherance thereof, Lender shall have the
right to (i) sever or divide the Note and the other Loan Documents in
order to allocate to such Affected Property the portion of the Loan allocable
to such Affected Property (the “Allocated Principal Amount”)
evidenced by a new note and secured by such other loan documents (collectively,
the “New Note”) having a principal
amount equal to the Loan Amount applicable to such Affected Property, (ii) segregate
the applicable portion of each of the Reserve Funds relating to the Affected
Property, (iii) release any cross-default and/or cross-collateralization
provisions applicable to such Affected Property and (iv) take such
additional action consistent therewith; provided, that such New Note secured by
such Affected Property, together with the Loan Documents secured by the
remaining Properties, shall not increase in the aggregate (A) any monetary
obligation of Borrower under the Loan Documents, or (B) any other
obligation of Borrower under the Loan Documents in any material respect.  In connection with the transfer of any such
Affected Property as provided for in this Section 9.1.3, the Loan shall be
reduced by an amount equal to amount of the New Note applicable to such
Affected Property and the new loan secured by such Affected Property and
evidenced by the New Note shall be in an amount equal to such Allocated
Principal Amount.  Subsequent to the
release of the Affected Property from the lien of the Loan pursuant to this Section 9.1.3,
the balances of the components of the Loan shall be the same as they would have
been had a prepayment occurred in an amount equal to the Allocated Principal
Amount of the


 


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Affected Property.  At the request of Lender, Borrower shall
otherwise cooperate with Lender in its attempt to satisfy all requirements
necessary in order for Lender to obtain written confirmation from the Rating
Agencies that such transfer of the Affected Property from the Securitization
and splitting of the Loan shall not cause a downgrade, withdrawal or
qualification of the then current ratings of the Securities or any class
thereof, which requirements shall include, without limitation:  (A) delivery of evidence that the single
purpose nature and bankruptcy remoteness of the Individual Borrowers owning
Properties other than the Affected Property following such release have not
been adversely affected and are in accordance with the terms and provisions of
this Agreement (which evidence may include a “bring-down” of the Insolvency
Opinion); and (B) the execution of such documents and instruments and
delivery by Lender of such opinions of counsel as are typical for similar
transactions, including, an opinion of counsel that the release of the Affected
Property will not be a “significant modification” of this Loan within the
meaning of Section 1.1001-3 of the regulations of the United States
Department of the Treasury and that all other requirements applicable, if any,
to a REMIC Trust, have been satisfied or have not otherwise been violated.


 


All material out-of-pocket
third party costs and expenses incurred by Borrower or Lender in connection
with complying with requests made under this Section 9.1 shall be paid by
Borrower.


 


Section 9.2             Securitization; Indemnification.


 


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


 


(b)           The Indemnifying Persons agree to
provide, in connection with the Securitization, an indemnification agreement (A) certifying
that (i) the Indemnifying Persons have carefully examined the Disclosure
Documents as such Disclosure Documents relate to Borrower, Indemnitor,
Guarantor or the Property, including without limitation, the sections entitled “Risk
Factors,” “Special Considerations,” “Description of the Mortgages,” “Description
of the Mortgage Loans and Mortgaged Properties,” “The Manager,” “The Borrower”
and “Certain Legal Aspects of the Mortgage Loan,” and (ii) the factual
statements and representations contained in such sections and such other
factual information in the Disclosure Documents (to the extent such information
relates to or includes any Provided Information or any information regarding
the Properties, Borrower, Manager and/or the Loan), in each case, as
specifically identified by Lender (collectively with the Provided Information,
the “Covered Disclosure Information”)
are not false or misleading, (B) jointly and severally indemnifying
Lender, Lender, its designee (whether or not it is the Lender), any Affiliate
of Lender that has filed any


 


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registration statement
relating to the Securitization or has acted as the sponsor or depositor in
connection with the Securitization, any Affiliate of Lender that acts as an
underwriter, placement agent or initial purchaser of Securities issued in the
Securitization, any other co underwriters, co placement agents or co initial
purchasers of Securities issued in the Securitization, and each of their
respective officers, directors, partners, employees, representatives, agents
and Affiliates and each Person or entity who Controls any such Person within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the “Indemnified Persons”),
for any losses, claims, damages, liabilities, costs or expenses, including
without limitation legal fees and expenses, to which any such Indemnified
Person becomes subject pursuant to a final judgment (collectively, the “Liabilities”) insofar as the
Liabilities arise out of or are based upon any false or misleading statement of
any material fact contained in the Covered Disclosure Information and (C) agreeing
to reimburse each Indemnified Person for any legal or other expenses incurred
by such Indemnified Person in connection with investigating or defending the
Liabilities.  This indemnity agreement
will be in addition to any liability which Borrower may otherwise have.  Moreover, the indemnification and
reimbursement obligations provided for in clauses (B) and (C) above
shall be effective, valid and binding obligations of the Indemnifying Persons,
whether or not an indemnification agreement described in clause (A) above
is provided. (collectively, the “Liabilities”)


 


(c)           In connection with Exchange Act
Filings, the Indemnifying Persons jointly and severally agree to indemnify (i) the
Indemnified Persons for Liabilities to which any such Indemnified Person may
become subject insofar as the Liabilities arise out of or are based upon any
false or misleading statement of any material fact in the Covered Disclosure
Information, and (ii) reimburse each Indemnified Person for any legal or
other expenses incurred by such Indemnified Persons in connection with
defending or investigating the Liabilities.


 


(d)           Promptly after receipt by an
Indemnified Person of notice of any claim or the commencement of any action,
the Indemnified Person shall, if a claim in respect thereof is to be made
against any Indemnifying Person, notify such Indemnifying Person in writing of
the claim or the commencement of that action; provided, however, that the
failure to notify such Indemnifying Person shall not relieve it from any
liability which it may have under the indemnification provisions of this Section 9.2
except to the extent that it has been materially prejudiced by such failure
and, provided further that the failure to notify such Indemnifying Person shall
not relieve it from any liability which it may have to an Indemnified Person
otherwise than under the provisions of this Section 9.2.  If any such claim or action shall be brought
against an Indemnified Person, and it shall notify any Indemnifying Person
thereof, such Indemnifying Person shall be entitled to participate therein and,
to the extent that it wishes, assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Person.  After notice from any Indemnifying Person to
the Indemnified Person of its election to assume the defense of such claim or
action, such Indemnifying Person shall not be liable to the Indemnified Person
for any legal or other expenses subsequently incurred by the Indemnified Person
in connection with the defense thereof except as provided in the following
sentence; provided, however, if the defendants in any such action include both
an Indemnifying Person, on the one hand, and one or more Indemnified Persons on
the other hand, and an Indemnified Person shall have reasonably concluded that
there are any legal defenses available to it and/or other Indemnified Persons
that are different or in addition to those available to the Indemnifying
Person, the Indemnified Person or Persons shall have the right to select
separate counsel to assert


 


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such legal defenses and to
otherwise participate in the defense of such action on behalf of such
Indemnified Person or Persons.  The
Indemnified Person shall instruct its counsel to maintain reasonably detailed
billing records for fees and disbursements for which such Indemnified Person is
seeking reimbursement hereunder and shall submit copies of such detailed
billing records to substantiate that such counsel’s fees and disbursements are
solely related to the defense of a claim for which the Indemnifying Person is
required hereunder to indemnify such Indemnified Person.  No Indemnifying Person shall be liable for
the expenses of more than one (1) such separate counsel unless such
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another Indemnified Person.


 


(e)           Without the prior written consent of
Lender (which consent shall not be unreasonably withheld or delayed), no
Indemnifying Person shall settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such claim, action, suit
or proceeding) unless the Indemnifying Person shall have given Lender
reasonable prior written notice thereof and shall have obtained an unconditional
release of each Indemnified Person hereunder from all liability arising out of
such claim, action, suit or proceedings. 
As long as an Indemnifying Person has complied with its obligations to
defend and indemnify hereunder, such Indemnifying Person shall not be liable
for any settlement made by any Indemnified Person without the consent of such
Indemnifying Person (which consent shall not be unreasonably withheld or
delayed).


 


(f)            The Indemnifying Persons agree that
if any indemnification or reimbursement sought pursuant to this Section 9.2
is finally judicially determined to be unavailable for any reason or is
insufficient to hold any Indemnified Person harmless (with respect only to the
Liabilities that are the subject of this Section 9.2), then the Indemnifying
Persons, on the one hand, and such Indemnified Person, on the other hand, shall
contribute to the Liabilities for which such indemnification or reimbursement
is held unavailable or is insufficient:  (x) in
such proportion as is appropriate to reflect the relative benefits to the
Indemnifying Persons, on the one hand, and such Indemnified Person, on the
other hand, from the transactions to which such indemnification or
reimbursement relates; or (y) if the allocation provided by clause (x) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (x) but also
the relative faults of the Indemnifying Persons, on the one hand, and all
Indemnified Persons, on the other hand, as well as any other equitable
considerations.  Notwithstanding the
provisions of this Section 9.2, (A) no party found liable for a
fraudulent misrepresentation shall be entitled to contribution from any other
party who is not also found liable for such fraudulent misrepresentation, and (B) the
Indemnifying Persons agree that in no event shall the amount to be contributed
by the Indemnified Persons collectively pursuant to this paragraph exceed the
amount of the fees actually received by the Indemnified Persons in connection
with the closing of the Loan.


 


(g)           The Indemnifying Persons agree that
the indemnification, contribution and reimbursement obligations set forth in
this Section 9.2 shall apply whether or not any Indemnified Person is a
formal party to any lawsuits, claims or other proceedings.  The


 


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Indemnifying Persons further
agree that the Indemnified Persons are intended third party beneficiaries under
this Section 9.2.


 


(h)           The liabilities and obligations of
the Indemnified Persons and the Indemnifying Persons under this Section 9.2
shall survive the termination of this Agreement and the satisfaction and
discharge of the Debt.


 


(i)            Notwithstanding anything to the
contrary contained herein, Borrower shall have no obligation to act as
depositor with respect to the Loan or an issuer or registrant with respect to
the Securities issued in any Securitization.


 


Section 9.3             Rating
Surveillance.   Lender, at its option, may retain
the Rating Agencies to provide rating surveillance services on any certificates
issued in a Securitization.  Such rating
surveillance will be at the expense of Lender (the “Rating
Surveillance Charge”).


 


Section 9.4             Exculpation.    Subject
to the qualifications below, Lender shall not enforce the liability and
obligation of Borrower to perform and observe the obligations contained in the
Note, this Agreement, the Mortgages or the other Loan Documents by any action
or proceeding wherein a money judgment shall be sought against Borrower, except
that Lender may bring a foreclosure action, an action for specific performance
or any other appropriate action or proceeding to enable Lender to enforce and
realize upon its interest under the Note, this Agreement, the Mortgages and the
other Loan Documents, or in the Properties, the Rents following an Event of
Default, or any other collateral given to Lender pursuant to the Loan
Documents; provided, however, that, except as specifically provided herein, any
judgment in any such action or proceeding shall be enforceable against Borrower
only to the extent of Borrower’s interest in the Properties, in the Rents
following an Event of Default and in any other collateral given to Lender, and
Lender, by accepting the Note, this Agreement, the Mortgages and the other Loan
Documents, agrees that it shall not sue for, seek or demand any deficiency
judgment against Borrower in any such action or proceeding under or by reason
of or under or in connection with the Note, this Agreement, the Mortgages or
the other Loan Documents.  The provisions
of this Section shall not, however, (a) constitute a waiver, release
or impairment of any obligation evidenced or secured by any of the Loan
Documents; (b) impair the right of Lender to name Borrower as a party
defendant in any action or suit for foreclosure and sale under any of the
Mortgages; (c) affect the validity or enforceability of or any guaranty
made in connection with the Loan or any of the rights and remedies of Lender
thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of any of the Assignments of Leases
following an Event of Default; (f) constitute a prohibition against Lender
commencing any other appropriate action or proceeding in order for Lender to
exercise its remedies against all of the Properties; or (g) constitute a
waiver of the right of Lender to enforce the liability and obligation of
Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys’ fees and costs reasonably incurred) arising out of or in
connection with the following:


 


(i)            fraud
or intentional misrepresentation by Borrower or any guarantor in connection
with the Loan;


 


(ii)           the gross negligence or willful misconduct of Borrower;


 


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(iii)          material physical waste of an Individual Property;


 


(iv)          the breach of any representation, warranty, covenant or
indemnification provision in any Environmental Indemnity or in any Mortgage
concerning environmental laws, hazardous substances and asbestos and any
indemnification of Lender with respect thereto in either document;


 


(v)           the removal or disposal of any portion of any Individual
Property after an Event of Default;


 


(vi)          the misapplication or conversion by Borrower of (A) any
Insurance Proceeds paid by reason of any loss, damage or destruction to the
Properties which are not applied by Borrower in accordance with this Agreement,
(B) any Awards or other amounts received in connection with a Condemnation
of all or a portion of the Properties which are not applied by Borrower in
accordance with this Agreement, or (C) any Rents following an Event of
Default;


 


(vii)         failure to pay charges for labor or materials or other
charges that can create Liens on any portion of any Individual Property;


 


(viii)        any security deposits, advance deposits
or any other deposits collected with respect to the Properties which are not
delivered to Lender upon a foreclosure of the Properties or action in lieu
thereof, except to the extent any such security deposits were applied in
accordance with the terms and conditions of any of the Leases prior to the
occurrence of the Event of Default that gave rise to such foreclosure or action
in lieu thereof;


 


(ix)           any surrender, termination or forfeiture of, or change,
modification or amendment of the Ground Lease made without Lender’s consent;


 


(x)            any surrender, termination or forfeiture of, or change,
modification or amendment of a Management Agreement made without Lender’s
consent (if consent was required pursuant to the terms hereof);


 


(xi)           any surrender, termination or forfeiture of, or change,
modification or amendment of a Franchise Agreement made without Lender’s consent
(if consent was required pursuant to the terms hereof); or


 


(xii)          Borrower’s failure to comply with the terms of Section 5.1.24
hereof.


 


Notwithstanding anything to
the contrary in this Agreement, the Note or any of the Loan Documents, (A) the
Debt shall be fully recourse to the Borrower and (B) Lender shall not be
deemed to have waived any right which Lender may have under Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to
file a claim for the full amount of the Debt secured by the Mortgages or to
require that all collateral shall continue to secure all of the Debt owing to
Lender in accordance with the Loan Documents in the event that the (I) first
full monthly payment under the Note is not paid within five (5) days of
notice that such payment is late (provided, however, that such grace period
relates only to the recourse trigger described in


 


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this
paragraph), or (II) failure of Borrower to permit on-site inspections of
any Individual Property subject to the rights of Tenants and any applicable
cure period set forth in the Loan Documents, to provide financial information
as required under the Loan Documents subject to any applicable cure period
(except for financial information required to be delivered by a tenant pursuant
to the applicable Lease that has not been delivered to Borrower, provided
Borrower has requested such financial information from such tenant), or (III) failure
of Borrower to comply with Section 4.1.31 hereof, or (IV) failure of
Borrower to obtain Lender’s prior written consent (to extent such consent is
required) to any subordinate financing or other voluntary Lien encumbering the
Properties, or (V) failure of Borrower to obtain Lender’s prior written
consent to any assignment, transfer or conveyance of any of the Properties, or
any portion thereof, or any interest therein as required by this
Agreement.  Notwithstanding the provision
set forth in clause (IV) of this paragraph, a voluntary lien other than a
lien securing an extension of credit filed against any of the Properties shall
not constitute a recourse trigger for purposes of this paragraph provided such
lien (A) is fully bonded to the satisfaction of Lender and discharged of
record within ninety (90) days of filing, or (B) within such ninety (90)
day period, Lender receives affirmative title insurance from the title
insurance company insuring the lien of the applicable Mortgage that such lien
is subject and subordinate to the lien of the Mortgage and no enforcement
action is commenced by the applicable lien holder.  Upon the acceptance by Lender of any cure by
Borrower of a recourse trigger described in clauses (I), (II) or (IV) above,
the Debt shall no longer be fully recourse to Borrower solely as a result of
such trigger.  Upon the acceptance by
Lender of any cure by Borrower of a recourse trigger described in clauses (III) or
(V) above, the Debt shall no longer be fully recourse to Borrower solely
as a result of such trigger, provided, however, Borrower shall remain liable to
the extent of any loss, damage, cost, expense, liability, claim or other
obligation incurred by Lender (including attorneys’ fees and costs reasonably
incurred) arising out of or in connection with such trigger.


 


Section 9.5             Termination of Manager


 


.   If a
Manager is in default under the terms of its Management Agreement beyond any
applicable grace or cure period, then Borrower shall, at the request of Lender,
terminate such Management Agreement pursuant to its terms and replace the
Manager with a Qualified Manager pursuant to a Replacement Management
Agreement, it being understood and agreed that the management fee for such
Qualified Manager shall not exceed then prevailing market rates.  In addition and without limiting the rights
of Lender hereunder or under any of the other Loan Documents, in the event that
(i) the Management Agreement is terminated, (ii) the Manager no
longer manages the applicable Individual Property, or (iii) a receiver,
liquidator or trustee shall be appointed for Manager or if Manager shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any
similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Manager, or if any proceeding for the dissolution or
liquidation of Manager shall be instituted, then Borrower (at Borrower’s sole
cost and expense) shall immediately, in its name, establish new deposit
accounts separate from any other Person with a depository satisfactory to
Lender into which all Rents and other income from the Individual Property shall
be deposited and shall grant Lender a first priority security interest in such
account pursuant to documentation satisfactory in form and substance to Lender.


 


Section 9.6             Servicer


 


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.   At the
option of Lender, the Loan may be serviced by a servicer/trustee (the “Servicer”) selected by Lender and
Lender may delegate all or any portion of its responsibilities under this
Agreement and the other Loan Documents to the Servicer pursuant to a servicing
agreement (the “Servicing Agreement”)
between Lender and Servicer.  Lender
shall be responsible for any set-up fees or any other costs relating to or
arising under the Servicing Agreement.


 


Section 9.7             Matters Concerning Franchisor


 


.   If a
Franchisor is in default under the terms of its Franchise Agreement beyond any
applicable grace or cure period, then Borrower shall, at the request of Lender,
terminate such Franchise Agreement pursuant to its terms and replace the
Franchisor with a Qualified Franchisor pursuant to a Replacement Franchise
Agreement, it being understood and agreed that the franchise fee for such
Qualified Franchisor shall not exceed then prevailing market rates.


 


Section 9.8             Splitting the Loan


 


.   At the
election of Lender in its sole discretion, the Loan or any individual Note
making up the Loan shall be split and severed into two or more loans which, at
Lender’s election, shall not be cross-collateralized or cross-defaulted with
each other.  Borrower hereby agrees to
deliver to Lender to effectuate such severing of the Loan or any individual
Note, as the case may be, as reasonably requested by Lender, (a) additional
executed documents, or amendments and modifications to the applicable Loan
Documents, (b) new opinions or updates to the opinions delivered to Lender
in connection with the closing of the Loan, (c) endorsements and/or
updates to the title insurance policies delivered to Lender in connection with
the closing of the Loan, and (d) any other certificates, instruments and
documentation reasonably determined by Lender as necessary or appropriate to
such severance (the items described in subsections (a) through (d) collectively
hereinafter shall be referred to as “Severing Documentation”),
which Severing Documentation shall be acceptable to Lender in form and
substance in its reasonable discretion. 
Borrower hereby acknowledges and agrees that upon such severing of the
Loan, Lender may effect, in its sole discretion, one or more Securitizations of
which the severed loans may be a part.


 


ARTICLE 10


MISCELLANEOUS


 


Section 10.1           Survival


 


.   This
Agreement and all covenants, agreements, representations and warranties made
herein and in the certificates delivered pursuant hereto shall survive the
making by Lender of the Loan and the execution and delivery to Lender of the
Note, and shall continue in full force and effect so long as all or any of the
Debt is outstanding and unpaid unless a longer period is expressly set forth
herein or in the other Loan Documents. 
Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the legal representatives, successors
and assigns of such party.  All
covenants, promises and agreements in this Agreement, by or on behalf of
Borrower, shall inure to the benefit of the legal representatives, successors
and assigns of Lender.


 


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Section 10.2           Lender’s Discretion


 


.   Whenever
pursuant to this Agreement, Lender exercises any right given to it to approve
or disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide whether arrangements
or terms are satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Lender and shall be
final and conclusive.


 


Section 10.3           Governing Law.


 


(a)           THIS AGREEMENT WAS NEGOTIATED IN THE
STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE
STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS
ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS)
AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS
AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD
THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR
THEREUNDER.  TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.


 


(b)           ANY LEGAL SUIT, ACTION OR PROCEEDING
AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL
OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS
WHICH IT MAY NOW OR HEREAFTER


 


112

















 


HAVE BASED ON VENUE AND/OR
FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING.  BORROWER DOES
HEREBY DESIGNATE AND APPOINT:


 


CT Corporation System


111 Eighth Avenue


New York, New York 10011


 


AS ITS AUTHORIZED AGENT TO
ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN
NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK.  BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A
SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE
IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.


 


Section 10.4           Modification, Waiver in Writing


 


.   No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, or of the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given.  Except as otherwise expressly provided
herein, no notice to, or demand on Borrower, shall entitle Borrower to any
other or future notice or demand in the same, similar or other circumstances.


 


Section 10.5           Delay Not a Waiver


 


.   Neither
any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege hereunder, or under the Note or under any
other Loan Document, or any other instrument given as security therefor, shall
operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. 
In particular, and not by way of limitation, by accepting payment after
the due date of any amount payable under this Agreement, the Note or any other
Loan Document, Lender shall not be deemed to have waived any right either to
require prompt


 


113

















 


payment
when due of all other amounts due under this Agreement, the Note or the other
Loan Documents, or to declare a default for failure to effect prompt payment of
any such other amount.


 


Section 10.6           Notices


 


.   All
notices, consents, approvals and requests required or permitted hereunder or
under any other Loan Document shall be given in writing and shall be effective
for all purposes if hand delivered or sent by (a) certified or registered
United States mail, postage prepaid, return receipt requested or (b) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, and by telecopier (with answer back
acknowledged), addressed as follows (or at such other address and Person as
shall be designated from time to time by any party hereto, as the case may be,
in a written notice to the other parties hereto in the manner provided for in
this Section):


 


If to Lender:


 


Bank of America, N.A.


900 West Trade St., Suite 650


NC1-026-06-01


Charlotte, North Carolina  28255


Attention: Servicing Manager


 


and:


 


Bear Stearns Commercial Mortgage, Inc.


383 Madison Avenue


New York, New York 10179


Attention:  J. Christopher
Hoeffel


 


with a copy to:


 


Katten Muchin Rosenman LLP


401 South Tryon Street


Suite 2600


Charlotte, North Carolina 28202-1935


Attention: Daniel S. Huffenus, Esq.


 


If to any Borrower:


 


[Borrower Name]


2901 Butterfield Road


Oak Brook, Illinois 60523


Attention:  Lori Foust


 


with a copy to:


 


Inland American Real Estate Trust, Inc.


 


114

















 


2901 Butterfield Road


Oak Brook, Illinois 60523


Attention: Robert H. Baum, Esq.


 


and with a copy to:


 


Inland American Real Estate Trust, Inc.


2901 Butterfield Road


Oak Brook, Illinois 60523


Attention: Roberta Matlin


 


A notice shall be deemed to
have been given:  in the case of hand
delivery, at the time of delivery; in the case of registered or certified mail,
when delivered or the first attempted delivery on a Business Day; or in the
case of expedited prepaid delivery and telecopy, upon the first attempted
delivery on a Business Day.


 


Section 10.7           Trial by Jury


 


.   BORROWER
AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS,
OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL
BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
BORROWER AND LENDER.


 


Section 10.8           Headings


 


.   The Article and/or
Section headings and the Table of Contents in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.


 


Section 10.9           Severability


 


.   Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.


 


Section 10.10         Preferences


 


.   Lender
shall have the continuing and exclusive right to apply or reverse and reapply
any and all payments by Borrower to any portion of the obligations of Borrower
hereunder.  To


 


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the
extent Borrower makes a payment or payments to Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.


 


Section 10.11         Waiver of Notice


 


.   Borrower
shall not be entitled to any notices of any nature whatsoever from Lender
except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice.  Borrower hereby expressly waives
the right to receive any notice from Lender with respect to any matter for
which this Agreement or the other Loan Documents do not specifically and
expressly provide for the giving of notice by Lender to Borrower.


 


Section 10.12         Remedies of Borrower


 


.   In the
event that a claim or adjudication is made that Lender or its agents have acted
unreasonably or unreasonably delayed acting in any case where by law or under
this Agreement or the other Loan Documents, Lender or such agent, as the case
may be, has an obligation to act reasonably or promptly, Borrower agrees that
neither Lender nor its agents shall be liable for any monetary damages, and
Borrower’s sole remedies shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. 
The parties hereto agree that any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory judgment.


 


Section 10.13         Expenses; Indemnity.


 


(a)           Borrower covenants and agrees to pay
or, if Borrower fails to pay, to reimburse, Lender upon receipt of written
notice from Lender for all reasonable costs and expenses (including reasonable
attorneys’ fees and disbursements) incurred by Lender in connection with (i) the
preparation, negotiation, execution and delivery of this Agreement and the
other Loan Documents and the consummation of the transactions contemplated
hereby and thereby and all the costs of furnishing all opinions by counsel for
Borrower (including without limitation any opinions requested by Lender as to
any legal matters arising under this Agreement or the other Loan Documents with
respect to the Properties); (ii) Borrower’s ongoing performance of and
compliance with Borrower’s respective agreements and covenants contained in
this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date, including, without limitation, confirming
compliance with environmental and insurance requirements; (iii) Lender’s
ongoing performance and compliance with all agreements and conditions contained
in this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date (except for those costs and expenses
expressly assumed herein or in the other Loan Documents by Lender); (iv) except
as otherwise


 


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provided in this Agreement,
the negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters reasonably requested by
Lender; (v) securing Borrower’s compliance with any requests made pursuant
to the provisions of this Agreement; (vi) the filing and recording fees
and expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (vii) enforcing or preserving
any rights, in response to third party claims or the prosecuting or defending
of any action or proceeding or other litigation, in each case against, under or
affecting Borrower, this Agreement, the other Loan Documents, the Properties, or
any other security given for the Loan; and (viii) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Properties or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a “work-out” or of any
insolvency or bankruptcy proceedings; provided, however, that Borrower shall
not be liable for the payment of any such costs and expenses to the extent the
same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender.


 


(b)           Borrower shall indemnify, defend and
hold harmless Lender from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for Lender
in connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not Lender shall be designated a party
thereto), that may be imposed on, incurred by, or asserted against Lender in
any manner relating to or arising out of (i) any breach by Borrower of its
obligations under, or any material misrepresentation by Borrower contained in,
this Agreement or the other Loan Documents, or (ii) the use or intended
use of the proceeds of the Loan (collectively, the “Indemnified
Liabilities”); provided, however, that Borrower shall not have
any obligation to Lender hereunder to the extent that such Indemnified
Liabilities arise from the gross negligence, illegal acts, fraud or willful
misconduct of Lender.  To the extent that
the undertaking to indemnify, defend and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, Borrower shall pay the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.


 


Section 10.14         Section 10.14 
Schedules Incorporated


 


.   The
Schedules annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.


 


Section 10.15         Section 10.15 
Offsets, Counterclaims and Defenses


 


.   Any
assignee of Lender’s interest in and to this Agreement, the Note and the other
Loan Documents shall take the same free and clear of all offsets, counterclaims
or defenses which are unrelated to such documents which Borrower may otherwise
have against any assignor of such documents, and no such unrelated counterclaim
or defense shall be interposed or asserted by Borrower in any action or
proceeding brought by any such assignee upon such documents and


 


117

















 


any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by
Borrower.


 


Section 10.16         No Joint Venture or Partnership; No Third Party
Beneficiaries.


 


Borrower and Lender intend
that the relationships created hereunder and under the other Loan Documents be
solely that of borrower and lender. 
Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Properties other than that
of mortgagee, beneficiary or lender.


 


(a)           This Agreement and the other Loan
Documents are solely for the benefit of Lender and Borrower and nothing
contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrower any right to insist upon or
to enforce the performance or observance of any of the obligations contained
herein or therein.  All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing
to require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.


 


Section 10.17         Publicity


 


.   All news
releases, publicity or advertising by Borrower or their Affiliates through any
media intended to reach the general public which refers to the Loan Documents
or the financing evidenced by the Loan Documents, to Lender, its designee, or
any of their Affiliates shall be subject to the prior written approval of
Lender.  All news releases, publicity or
advertising by Lender through any media intended to reach the general public
which refers solely to the Borrower or to the Loan made by the Lender to the
Borrower shall be subject to the prior written approval of Borrower, provided
however, the foregoing shall not apply to Provided Information included in
disclosure documents in connection with a Securitization.


 


Section 10.18         Cross-Default; Cross-Collateralization; Waiver of
Marshalling of Assets.   Borrower acknowledges
that Lender has made the Loan to Borrower upon the security of its collective
interest in the Properties and in reliance upon the aggregate of the Properties
taken together being of greater value as collateral security than the sum of
each Individual Property taken separately. 
Borrower agrees that the Mortgages are and will be cross-collateralized
and cross-defaulted with each other so that (i) an Event of Default under
any of the Mortgages shall constitute an Event of Default under each of the
other Mortgages which secure the Note; (ii) an Event of Default under the
Note or this Agreement shall constitute an Event of Default under each
Mortgage; (iii) each Mortgage shall constitute security for the Note as if
a single blanket lien were placed on all of the Properties as security for the
Note; and (iv) such cross-collateralization shall in no event be deemed to
constitute a fraudulent conveyance..  To
the fullest extent permitted by law, Borrower, for itself and its successors
and assigns, waives all rights to a marshalling of the assets of Borrower,
Borrower’s partners and others with interests in


 


118

















 


Borrower, and of the Properties, or to a sale in inverse order of
alienation in the event of foreclosure of all or any of the Properties by power
of sale, Mortgages and agrees not to assert any right under any laws pertaining
to the marshalling of assets, the sale in inverse order of alienation,
homestead exemption, the administration of estates of decedents, or any other
matters whatsoever to defeat, reduce or affect the right of Lender under the
Loan Documents to a sale of the Properties for the collection of the Debt
without any prior or different resort for collection or of the right of Lender
to the payment of the Debt out of the net proceeds of the Properties in
preference to every other claimant whatsoever. 
In addition, Borrower, for itself and its successors and assigns, waives
in the event of foreclosure of any or all of the Mortgages, any equitable right
otherwise available to Borrower which would require the separate sale of the
Properties or require Lender to exhaust its remedies against any Individual
Property or any combination of the Properties before proceeding against any
other Individual Property or combination of Properties; and further in the
event of such foreclosure Borrower does hereby expressly consents to and
authorizes, at the option of Lender, the foreclosure and sale either separately
or together of any combination of the Properties.


 


Section 10.19         Waiver of Counterclaim.  Borrower hereby waives the right to assert a
counterclaim, other than a compulsory counterclaim, in any action or proceeding
brought against it by Lender or its agents.


 


Section 10.20         Conflict; Construction
of Documents; Reliance. 
In the event of any conflict between the provisions of this Agreement
and any of the other Loan Documents, the provisions of this Agreement shall
control.  The parties hereto acknowledge
that they were represented by competent counsel in connection with the
negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. 
Borrower acknowledges that, with respect to the Loan, Borrower shall
rely solely on its own judgment and advisors in entering into the Loan without
relying in any manner on any statements, representations or recommendations of
Lender or any parent, subsidiary or Affiliate of Lender.  Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender’s exercise of any such rights
or remedies.  Borrower acknowledges that
Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.


 


Section 10.21         Brokers and Financial
Advisors.  Borrower hereby
represents that it has dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the transactions
contemplated by this Agreement other than Inland Mortgage Corp.  Borrower hereby agrees to indemnify, defend
and hold Lender harmless from and against any and all claims, liabilities,
costs and expenses of any kind (including Lender’s reasonable attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein.  The
provisions of this Section 10.21 shall survive the expiration and
termination of this Agreement and the payment of the Debt.


 


119

















 


Section 10.22         Prior Agreements.  This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of
the transactions contemplated hereby and thereby, and all prior agreements or
understandings among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Loan Documents and
unless specifically set forth in a writing contemporaneous herewith the terms,
conditions and provisions of such prior agreement do not survive execution of
this Agreement.


 


Section 10.23         Transfer of Loan.  In the event that Lender transfers the Loan,
Borrower shall continue to make payments at the place set forth in the Note
until such time that Borrower is notified in writing by Lender that payments
are to be made at another place.


 


Section 10.24         Joint and Several
Liability.  The parties
hereto acknowledge that the defined term “Borrower” (as well as the defined
term defining each other Collective Group) has been defined to collectively
include each Individual Borrower (and in the case of each Collective Group,
defined to collectively include each member of the same).  It is the intent of the parties hereto in
determining whether (a) a breach of a representation or a covenant has
occurred, (b) there has occurred a Default or Event of Default, or (c) an
event has occurred which would create recourse obligations under Section 9.4
of this Agreement, that any such breach, occurrence or event with respect to
any Individual Borrower (or with respect to any single member of a Collective
Group) shall be deemed to be such a breach, occurrence or event with respect to
all Individual Borrowers (and in the case of each Collective Group, each member
of the same) and that all Individual Borrowers need not have been involved with
such breach, occurrence or event in order for the same to be deemed such a
breach, occurrence or event with respect to every Individual Borrower (and
likewise that each member of a Collective Group need not have been involved
with such breach, occurrence or event in order for the same to be deemed such a
breach, occurrence or event with respect to such Collective Group).  The term “Collective Group” as used in this
Agreement shall refer to each of the groups of entities represented in this
Agreement by the following defined terms: 
Borrower and Guarantor.  The
obligations and liabilities of each Individual Borrower shall be joint and
several.


 


Section 10.25         Lender’s Right to
Unwind Cross-Collateralization/Cross-Default.  Lender shall have the right, at any time and
from time to time, to release any Individual Property or Individual Borrower
from the cross-defaulting and the cross-collateralization secured by the lien
of the applicable Mortgage. Borrower shall cooperate with Lender in executing
all documents as may be required in connection therewith.  Borrower shall properly deliver or cause to
be delivered to Lender or its designee any replacement or substitute loan
agreements, promissory notes, security instruments and other loan documents,
title, hazard and liability insurance policies, opinions of counsel and other
documents and instruments as Lender may reasonably request in order to
effectuate the foregoing. Borrower shall have no obligation to reimburse Lender
for any of Lender’s costs and expenses (including, but not limited to,
reasonable attorneys’ fees and expenses) in connection with the foregoing.  Borrower shall have no obligation to
reimburse Lender for any of Lender’s costs and expenses (including, but not
limited to, reasonable attorneys’ fees and expenses) in connection with the
foregoing.


 


Section 10.26         Reallocation of
Allocated Principal Amounts. 
Lender, without in any way limiting Lender’s other rights hereunder, in
its sole and absolute discretion, shall have the


 


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right at any time prior to Securitization to reallocate the Allocated
Principal Amounts and/or the Release Principal Payments, provided that (i) the
aggregate principal amount of the Loan immediately following such reallocation
shall equal the outstanding principal balance of the Loan immediately prior to
such reallocation, and (ii) the weighted average interest rate of the Loan
immediately following such reallocation shall equal the weighted average
interest rate which was applicable to the Loan immediately prior to such
reallocation, notwithstanding that the application of principal to the Loan may subsequently
cause the weighted average spread of the Loan to change (but not increase,
except that the weighted average spread may subsequently increase due to
involuntary prepayments (including any involuntary prepayment due to a Casualty
or Condemnation) or if an Event of Default shall occur). At Borrower’s sole
cost and expense (including, without limitation, Lender’s attorneys fees and
costs), Borrower shall cooperate with all reasonable requests of Lender in
order to reallocate the amount of the Loan and shall execute and deliver such
documents as shall reasonably be required by Lender and the Rating Agencies in
connection therewith, all in form and substance reasonably satisfactory to
Lender and the Rating Agencies. In the event Borrower fails to execute and
deliver such documents to Lender within five (5) Business Days following
such request by Lender, Borrower hereby absolutely and irrevocably appoints Lender
as its true and lawful attorney, coupled with an interest, in its name and
stead to make and execute all documents necessary or desirable to effect such
transactions, Borrower ratifying all that such attorney shall do by virtue
thereof. Borrower shall pay all costs and expenses in connection with the
reallocation of the Loan and all requirements relating thereto. It shall be an
Event of Default under this Agreement, the Note, the Mortgages and the other
Loan Documents if Borrower fails to comply with any of the terms, covenants or
conditions of this Section 10.26 after expiration of ten (10) Business
Days after notice thereof.


 


Section 10.27                          Co-Lenders.


 


(a)                                  Each Individual Borrower hereby acknowledges
and agrees that notwithstanding the fact that the Loan may be serviced by
Servicer, prior to a Securitization of the Loan, all requests for approval and
consents hereunder and in every instance in which Lender’s consent or approval
is required, each Individual Borrower shall be required to obtain the consent
and approval of each Co-Lender and all copies of documents, reports, requests
and other delivery obligations of Borrower required hereunder shall be
delivered by Borrower to each Co-Lender.


 


(b)                                 Following the Closing Date (i) the
liabilities of Lender shall be several and not joint, (ii) neither
Co-Lender shall be responsible for the obligations of the other Co-Lender, and (iii) each
Co-Lender shall be liable to Borrower only for their respective Ratable Share
of the Loan. Notwithstanding anything to the contrary herein, all indemnities
by Borrower and obligations for costs, expenses, damages or advances set forth
herein shall run to and benefit each Co-Lender in accordance with its Ratable
Share.


 


(c)                                  Each Co-Lender agrees that it has,
independently and without reliance on the other Co-Lender, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of Borrower and their Affiliates and decision to enter into this
Agreement and that it will, independently and without reliance upon the other
Co-Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to


 


121





















 


make
its own analysis and decisions in taking or not taking action under this
Agreement or under any other Loan Document.


 


Section 10.28                     MERS. Mortgage Electronic Registration Systems, Inc.,
a Delaware corporation (“MERS”),
serves as mortgagee of record and secured party solely as nominee, in an
administrative capacity, for Lender and only holds legal title to the interests
granted, assigned, and transferred in the Mortgages and the Assignments of
Leases. MERS shall at all times comply with the instructions of Lender. If
necessary to comply with law or custom, MERS (for the benefit of Lender) may be
directed by Lender to exercise any or all of those interests, including without
limitation, the right to foreclose and sell the applicable Individual Property,
and take any action required of Lender, including without limitation, a
release, discharge or reconveyance of the applicable Mortgage. Subject to the
foregoing, all references in the Loan Documents to “Mortgagee” shall include
Lender and its successors and assigns. The relationship of Borrower and Lender
under the Mortgages and the other Loan Documents is, and shall at all times
remain, solely that of borrower and lender (the role of MERS thereunder being
solely that of nominee as set forth above and not that of a lender); and
Mortgagee neither undertakes nor assumes any responsibility or duty to Borrower
or to any other Person with respect to any Individual Property.


(THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)


 


122

















 


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


 


BORROWER:


 


IA ORCHARD HOTELS TUCSON SOUTH WILLIAMS, L.L.C., a
Delaware limited liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS TUCSON SOUTH WILLIAMS TRS, L.L.C., a Delaware limited
liability company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


123

















 


IA ORCHARD HOTELS TUCSON EAST WILLIAMS, L.L.C., a Delaware limited
liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS TUCSON EAST WILLIAMS TRS, L.L.C., a Delaware limited
liability company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


124

















 


IA ORCHARD HOTELS LOS ALAMITOS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS LOS ALAMITOS TRS, L.L.C., a Delaware limited
liability company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


125

















 


IA ORCHARD HOTELS COLORADO SPRINGS, L.L.C., a Delaware limited
liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS COLORADO SPRINGS TRS, L.L.C., a Delaware limited
liability company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


126

















 


IA ORCHARD HOTELS DANBURY, L.L.C., a Delaware limited liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS DANBURY TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


127

















 


IA ORCHARD HOTELS TAMPA, L.L.C., a Delaware limited liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS TAMPA TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


128

















 


IA ORCHARD HOTELS BATON ROUGE, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS BATON ROUGE TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


129

















 


IA ORCHARD HOTELS CRANBURY, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS CRANBURY TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


130

















 


IA ORCHARD HOTELS LEBANON, L.L.C., a Delaware limited liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS LEBANON TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


131

















 


IA ORCHARD HOTELS SOMERSET, L.L.C., a Delaware limited liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS SOMERSET TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


132

















 


IA ORCHARD HOTELS ALBUQUERQUE, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS ALBUQUERQUE TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


133

















 


IA ORCHARD HOTELS HAUPPAUGE, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS HAUPPAUGE TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


134

















 


IA ORCHARD HOTELS WESTBURY, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
  Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS WESTBURY TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


135

















 


IA ORCHARD HOTELS SOLON, L.L.C., a Delaware limited liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS SOLON TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


136

















 


IA ORCHARD HOTELS NASHVILLE, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS NASHVILLE TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


137

















 


IA ORCHARD HOTELS ADDISON LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Addison GP, L.L.C., a
Delaware limited liability company, its general partner


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS ADDISON TRS LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Addison TRS GP, L.L.C.,
a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


138

















 


IA ORCHARD HOTELS BROWNSVILLE LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Brownsville GP, L.L.C.,
a Delaware limited liability company, its general partner


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS BROWNSVILLE TRS LIMITED PARTNERSHIP, an Illinois
limited partnership


 


By:                              IA Orchard Hotels Brownsville TRS GP,
L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


139

















 


IA ORCHARD HOTELS DALLAS LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Dallas GP, L.L.C., a
Delaware limited liability company, its general partner


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS DALLAS TRS LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Dallas TRS GP, L.L.C.,
a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


140

















 


IA ORCHARD HOTELS FORT WORTH LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Fort Worth GP, L.L.C.,
a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS FORT WORTH TRS LIMITED PARTNERSHIP, an Illinois
limited partnership


 


By:                              IA Orchard Hotels Fort Worth TRS GP,
L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


141

















 


IA ORCHARD HOTELS HARLINGEN LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Harlingen GP, L.L.C., a
Delaware limited liability company, its general partner


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS HARLINGEN TRS LIMITED PARTNERSHIP, an Illinois
limited partnership


 


By:                              IA Orchard Hotels Harlingen TRS GP,
L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


142

















 


IA ORCHARD HOTELS HOUSTON 9965 WESTHEIMER LIMITED PARTNERSHIP, an
Illinois limited partnership


 


By:                              IA Orchard Hotels Houston 9965 Westheimer
GP, L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS HOUSTON 9965 WESTHEIMER TRS LIMITED PARTNERSHIP, an
Illinois limited partnership


 


By:                              IA Orchard Hotels Houston 9965 Westheimer
TRS GP, L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


143

















 


IA ORCHARD HOTELS HOUSTON 9975 WESTHEIMER LIMITED PARTNERSHIP, an
Illinois limited partnership


 


By:                              IA Orchard Hotels Houston 9975 Westheimer
GP, L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS HOUSTON 9975 WESTHEIMER TRS LIMITED PARTNERSHIP, an
Illinois limited partnership


 


By:                              IA Orchard Hotels Houston 9975 Westheimer
TRS GP, L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


144

















 


IA ORCHARD HOTELS HOUSTON 2929 WESTPARK LIMITED PARTNERSHIP, an
Illinois limited partnership


 


By:                              IA Orchard Hotels Houston 2929 Westpark
GP, L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS HOUSTON 2929 WESTPARK TRS LIMITED PARTNERSHIP, an
Illinois limited partnership


 


By:                              IA Orchard Hotels Houston 2929 Westpark
TRS GP, L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


145

















 


IA ORCHARD HOTELS HOUSTON 2939 WESTPARK LIMITED PARTNERSHIP, an
Illinois limited partnership


 


By:                              IA Orchard Hotels Houston 2939 Westpark
GP, L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS HOUSTON 2939 WESTPARK TRS LIMITED PARTNERSHIP, an
Illinois limited partnership


 


By:                              IA Orchard Hotels Houston 2939 Westpark
TRS GP, L.L.C., a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


146

















 


IA ORCHARD HOTELS IRVING LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Irving GP, L.L.C., a
Delaware limited liability company, its general partner


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS IRVING TRS LIMITED PARTNERSHIP, an Illinois limited
partnership


 


By:                              IA Orchard Hotels Irving TRS GP, L.L.C.,
a Delaware limited liability company, its general partner


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


147

















 


IA ORCHARD HOTELS VIENNA, L.L.C., a Delaware limited liability company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS VIENNA TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


[Signatures continue on following page]


 


148

















 


IA ORCHARD HOTELS FEDERAL WAY, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard Hotels, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


IA ORCHARD HOTELS FEDERAL WAY TRS, L.L.C., a Delaware limited liability
company


 


By:                              Inland American Orchard TRS Holding, Inc.,
a Delaware corporation, its sole member


 


 


	
    By:

  	
    /s/ Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Lori J. Foust

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Treasurer

  	
   

  



 


 


                [Signatures
continue on following page]


 

















 


LENDER:


 


BANK OF AMERICA, N.A., a national banking association


 


 


	
    By:

  	
    Illegible

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Illegible

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Illegible

  	
   

  



 


 


BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York corporation


 


 


	
    By:

  	
    /s/ Michael
  Forastiere

  	
   

  
	
   

  	
   

  	
   

  
	
    Name:

  	
    Michael
  Forastiere

  	
   

  
	
   

  	
   

  	
   

  
	
    Title:

  	
    Managing Director

  	
   

  



 


149

















 


SCHEDULE I


LIST OF BORROWERS (by Property)


 


	
  Property

  	
   

  	
  Owner Borrower

  	
   

  	
  Operating Lessee Borrower

  
	
  Tucson Courtyard

  201 South Williams Blvd.

  Tucson, AZ 85711

  	
   

  	
  IA Orchard Hotels Tucson South Williams, L.L.C., a
  Delaware limited liability company

  	
   

  	
  IA Orchard Hotels Tucson South Williams TRS, L.L.C.,
  a Delaware limited liability company

  
	
  Lebanon Courtyard

  300 Corporate Drive

  Lebanon, NJ 08833

  	
   

  	
  IA Orchard Hotels Lebanon, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Lebanon TRS, L.L.C., a Delaware
  limited liability company

  
	
  Addison Courtyard

  15160 Quorum Drive

  Addison, TX 75001

  	
   

  	
  IA Orchard Hotels Addison Limited Partnership

  	
   

  	
  IA Orchard Hotels Addison TRS Limited Partnership

  
	
  Fort Worth Courtyard

  6530 West Freeway

  Fort Worth, TX 76116

  	
   

  	
  IA Orchard Hotels Fort Worth Limited Partnership

  	
   

  	
  IA Orchard Hotels Fort Worth TRS Limited Partnership

  
	
  West Chase Courtyard 

  9975 Westheimer Road 

  Houston, TX 77042

  	
   

  	
  IA Orchard Hotels Houston 9975 Westheimer Limited
  Partnership

  	
   

  	
  IA Orchard Hotels Houston 9975 Westheimer TRS
  Limited Partnership

  
	
  West University Courtyard 

  2929 Westpark Drive 

  Houston, TX 77005

  	
   

  	
  IA Orchard Hotels Houston 2929 Westpark Limited
  Partnership

  	
   

  	
  IA Orchard Hotels Houston 2929 Westpark TRS Limited
  Partnership

  
	
  Vienna Courtyard 

  2722 Gallows Road 

  Vienna, VA 22180

  	
   

  	
  IA Orchard Hotels Vienna, L.L.C., a Delaware limited
  liability company

  	
   

  	
  IA Orchard Hotels Vienna TRS, L.L.C., a Delaware
  limited liability company

  
	
  Federal Way Courtyard 

  31910 Gateway Ctr 

  Boulevard 

  S Federal Way, WA 98003

  	
   

  	
  IA Orchard Hotels Federal Way, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Federal Way TRS, L.L.C., a
  Delaware limited liability company

  
	
  Harlingen Courtyard 

  1725 West Filmore Avenue 

  Harlingen, TX 78550

  	
   

  	
  IA Orchard Hotels Harlingen Limited Partnership

  	
   

  	
  IA Orchard Hotels Harlingen TRS Limited Partnership

  
	
  Tampa Hilton 

  1700 East 9th Avenue 

  Tampa, FL 33605

  	
   

  	
  IA Orchard Hotels Tampa, L.L.C., a Delaware limited
  liability company

  	
   

  	
  IA Orchard Hotels Tampa TRS, L.L.C., a Delaware
  limited liability company

  
	
  Westbury Hilton 

  1575 Privado Road 

  Westbury, NY 11590

  	
   

  	
  IA Orchard Hotels Westbury, L.L.C., a Delaware limited
  liability company

  	
   

  	
  IA Orchard Hotels Westbury TRS, L.L.C., a Delaware
  limited liability company

  
	
  Colorado Springs Homewood 

  9130 Explorer Drive 

  Colorado Springs, CO 80920

  	
   

  	
  IA Orchard Hotels Colorado Springs, L.L.C., a
  Delaware limited liability company

  	
   

  	
  IA Orchard Hotels Colorado Springs TRS, L.L.C., a
  Delaware limited liability company

  
	
  Baton Rouge Homewood 

  5860 Corporate Center Dr 

  Baton Rouge, LA 70808

  	
   

  	
  IA Orchard Hotels Baton Rouge, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Baton Rouge TRS, L.L.C., a
  Delaware limited liability company

  



 


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  Property

  	
   

  	
  Owner Borrower

  	
   

  	
  Operating Lessee Borrower

  
	
  Albuquerque Homewood 

  7101 Arvada Avenue, Ne 

  Albuquerque, NM 87110

  	
   

  	
  IA Orchard Hotels Albuquerque, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Albuquerque TRS, L.L.C., a
  Delaware limited liability company

  
	
  Solon Homewood 

  6085 Enterprise Parkway 

  Solon, OH 44139

  	
   

  	
  IA Orchard Hotels Solon, L.L.C., a Delaware limited
  liability company

  	
   

  	
  IA Orchard Hotels Solon TRS, L.L.C., a Delaware
  limited liability company

  
	
  Tucson Residence 

  5400 East Williams Circle 

  Tucson, AZ 85711

  	
   

  	
  IA Orchard Hotels Tucson East Williams, L.L.C., a
  Delaware limited liability company

  	
   

  	
  IA Orchard Hotels Tucson East Williams TRS, L.L.C.,
  a Delaware limited liability company

  
	
  Los Alamitos Residence 

  4931 Katella Avenue 

  Los Alamitos, CA

  	
   

  	
  IA Orchard Hotels Los Alamitos, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Los Alamitos TRS, L.L.C., a
  Delaware limited liability company

  
	
  Cranbury Residence 

  2662 Route 130 

  Cranbury, NJ 08512

  	
   

  	
  IA Orchard Hotels Cranbury, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Cranbury TRS, L.L.C., a Delaware
  limited liability company

  
	
  Somerset Residence 

  37 Worlds Fair Drive 

  Somerset, NJ 08873

  	
   

  	
  IA Orchard Hotels Somerset, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Somerset TRS, L.L.C., a Delaware
  limited liability company

  
	
  Hauppauge Residence 

  850 Veterans Memorial Highway Hauppauge, NY 11788

  	
   

  	
  IA Orchard Hotels Hauppauge, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Hauppauge TRS, L.L.C., a Delaware
  limited liability company

  
	
  Nashville Residence 

  2300 Elm Hill Pike 

  Nashville, TN 37214

  	
   

  	
  IA Orchard Hotels Nashville, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Nashville TRS, L.L.C., a Delaware
  limited liability company

  
	
  Brownsville Residence 

  3975 North Expressway 83 Brownsville, TX 78520

  	
   

  	
  IA Orchard Hotels Brownsville Limited Partnership

  	
   

  	
  IA Orchard Hotels Brownsville TRS Limited
  Partnership

  
	
  Irving Residence 

  8600 Esters Boulevard

  Irving, TX 75063

  	
   

  	
  IA Orchard Hotels Irving Limited Partnership

  	
   

  	
  IA Orchard Hotels Irving TRS Limited Partnership

  
	
  Park Central Residence 

  7642 LBJ Freeway 

  Dallas, TX 75251

  	
   

  	
  IA Orchard Hotels Dallas Limited Partnership

  	
   

  	
  IA Orchard Hotels Dallas TRS Limited Partnership

  
	
  West Chase Residence 

  9965 Westheimer Road 

  Houston, TX 77042

  	
   

  	
  IA Orchard Hotels Houston 9965 Westheimer Limited
  Partnership

  	
   

  	
  IA Orchard Hotels Houston 9965 Westheimer TRS
  Limited Partnership

  
	
  West University Residence 

  2939 Westpark Drive 

  Houston, TX 77005

  	
   

  	
  IA Orchard Hotels Houston 2939 Westpark Limited
  Partnership

  	
   

  	
  IA Orchard Hotels Houston 2939 Westpark TRS Limited
  Partnership

  



 


151

















 


	
  Property

  	
   

  	
  Owner Borrower

  	
   

  	
  Operating Lessee Borrower

  
	
  Danbury Springhill 

  30 Old Ridgebury Road

  Danbury, CT 06810

  	
   

  	
  IA Orchard Hotels Danbury, L.L.C., a Delaware
  limited liability company

  	
   

  	
  IA Orchard Hotels Danbury TRS, L.L.C., a Delaware
  limited liability company

  



 


152