exv10w4






Exhibit 10.4




EXECUTION COPY




ASSUMPTION AGREEMENT




     This
Assumption Agreement (“Assumption Agreement”) is made this 9 day of September, 2010,
by BANK OF AMERICA, N.A., as successor to Wells Fargo Bank, N.A., as Trustee for the Registered
Holders of COBALT CMBS Commercial Mortgage Trust 2007-C2, Commercial Mortgage Pass-Through
Certificates, Series 2007-C2 (“Noteholder”), TARIFF BUILDING ASSOCIATES, LP, a California limited
partnership (“Borrower”), Kimpton Development Opportunity Fund, L.P., a California limited
partnership (“Original Guarantor”), JAYHAWK OWNER LLC, a Delaware limited liability company
(“Assumptor”), and PEBBLEBROOK HOTEL, L.P. , a Delaware limited partnership (“New Guarantor”).



RECITALS



     A. Noteholder’s predecessor in interest, Wachovia Bank, National Association (in such
capacity, “Original Lender”) made a loan to Borrower in the original principal amount of Thirty
Five Million and no/100 Dollars ($35,000,000.00) (“Loan”), under the terms and provisions set forth
in the following loan documents, all of which are dated as of February 23, 2007, unless otherwise
noted:



     1. Promissory Note (“Note”) in the original principal amount of the Loan, made by Borrower and
payable to Original Lender;



     2. Deed of Trust, Security Agreement, Assignment of Rents and Fixture Filing executed by
Borrower to First American Title Insurance Company, as trustee, for the benefit of Original Lender
which, secures the Note and other obligations of Borrower (“Security Instrument”), and which
Security Instrument was recorded on February 26, 2007 as instrument number 2007026007 in the land
records of the District of Columbia (“Official Records”), the Original Lender’s interest under
which was assigned to Noteholder by instrument recorded on April 30, 2008, as instrument number
2008059162, in said Official Records. The land, improvements and other real property which are
subject to the Security Instrument are hereinafter referred to as the “Property” and the equipment,
machinery and other personal property which are subject to the Security Instrument are hereinafter
referred to as the “Collateral”;



     3. Assignment of Leases and Rents (the “Assignment of Leases”) executed by Borrower, which was
recorded on February 26, 2007 as instrument number 2007026008, with said Official Records, the
Original Lender’s interest under which was assigned to Noteholder by instrument recorded on April
30, 2008, as instrument number 2008059162, in said Official Records;



     4. Guaranty executed by Original Guarantor (“Guaranty”);



     5. Consent and Agreement (“Consent and Agreement”) executed by Kimpton Hotel & Restaurant
Group, LLC (“Manager”);



 









 





     6. Central Account Agreement executed by Borrower, Wachovia Bank, National Association (in
such capacity, “Bank”) and Original Lender (“Central Account Agreement”);



     7. Rent Account Agreement executed by Borrower, Wachovia Bank, National Association (in such
capacity, “Rent Account Bank”) and Original Lender (“Rent Account Agreement”);



     8. UCC-1 Financing Statement filed on February 27, 2007, as instrument number 07-7104479342
with the California Secretary of State (“State UCC”).



     The above documents and any other Loan Documents, including, in each case, any prior
amendments thereto, together with this Assumption Agreement and all documents executed in
connection herewith are hereinafter collectively defined as the “Loan Documents”.



     B. As of the Effective Date.



     1. The principal balance outstanding under the Note was $35,000,000.00;



     2. Accrued interest on the Note has been paid through August 10, 2010;



     3. The balance in the Basic Carrying Costs Escrow Account (as defined in Section 5.06
of the Security Instrument) was $00.00;



     4. The balance in the Recurring Replacement Reserve Escrow Account (as defined in Section
5.08 of the Security Instrument) was $723,352.53 and



     5. The balance in the Engineering Escrow Account (as defined in Section 5.12 of the
Security Instrument) was $25,000.00.



     C. Borrower is about to sell and convey the Property and the Collateral to Assumptor, and both
parties desire to obtain from Noteholder a waiver of any right Noteholder may have under the Loan
Documents to accelerate the Maturity Date of the Note by virtue of such conveyance.



     D. Subject to the terms and conditions hereof, Noteholder is willing to consent to the sale
and conveyance of the Property and the Collateral, and to waive any right of acceleration of the
Maturity Date of the Note upon assumption by Assumptor of all obligations of Borrower under the
Loan Documents.


NOW THEREFORE, FOR VALUABLE CONSIDERATION, including, without limitation, the mutual covenants and
promises contained herein, the parties agree as follows:




     1. Incorporation. The foregoing recitals are incorporated herein by this reference.



     2. Assumption Fee. As consideration for Noteholder’s execution of this Assumption
Agreement and in addition to any other sums due hereunder, Borrower and Assumptor agree to pay
Noteholder or Noteholder’s servicer(s) (all as set forth in the escrow instructions to be



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executed in connection with the closing of this assumption) an assumption fee of $175,000.00
(0.5% of the loan balance), due on execution of this Assumption Agreement by Noteholder.




     3. Conditions Precedent. The following are conditions precedent to Noteholder’s
obligations under this Assumption Agreement:




     a. The irrevocable commitment of First American Title Insurance Company (“Title
Company”) to issue endorsements to Title Company’s Title Policy No. 104652666, dated
February 26, 2007, in each case in form and substance reasonably acceptable to Noteholder
and without deletions or exceptions other than as expressly approved by Noteholder in
writing, insuring Noteholder that the priority and validity of the Security Instrument has
not been and will not be impaired by this Assumption Agreement, the conveyance of the
Property, or the transaction contemplated hereby;




     b. Receipt by Noteholder of: (i) the executed original of this Assumption Agreement;
(ii) an executed original of a Memorandum of Assumption Agreement in the form attached
hereto as EXHIBIT A, with signatures notarized, and otherwise in form and substance
reasonably acceptable to Noteholder (“Memorandum of Assumption Agreement”); and (iii) any
other documents and agreements which are required pursuant to this Assumption Agreement, in
form and content reasonably acceptable to Noteholder;




     c. Assumptor’s delivery to Noteholder of the Memorandum of Assumption Agreement, in
proper form for filing in the appropriate jurisdictions as determined by Noteholder,
together with such other documents and agreements, if any, required pursuant to this
Assumption Agreement or which Noteholder has requested to be recorded or filed;




     d. Assumptor’s delivery to Noteholder of UCC-1 Financing Statements in proper form for
filing in the appropriate jurisdictions as reasonably determined by Noteholder, which
Assumptor expressly authorizes Noteholder to file;




     e. Execution and delivery to Noteholder by New Guarantor of a new Guaranty (“New
Guaranty”) in favor of Noteholder and in form and substance reasonably acceptable to
Noteholder, pursuant to which New Guarantor irrevocably guarantees payment and performance
of certain matters under the Loan as more specifically set forth in the New Guaranty, along
with delivery to Noteholder of such resolutions or certificates of New Guarantor as
Noteholder may reasonably require, in form and content reasonably acceptable to Noteholder;




     f. Receipt and approval by Noteholder of a Blocked Account Control Agreement with US
Bank National Association for the new Rent Account; a Blocked Account Control Agreement with
US Bank National Association for the Operating Lessee Rent Account and the execution of such
amendments to the Central Account Agreement as required by Noteholder (the “New Cash
Management Documents”);




     g. Noteholder’s receipt of the operating lease (the “Operating Lease”) between
Assumptor and Jayhawk Lessee LLC (“Operating Lessee”) in form and substance reasonably
acceptable to Noteholder;



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     h. Execution and delivery to Noteholder by Operating Lessee and Assumptor, as
applicable, of an acceptable Operating Lease Subordination and Attornment Agreement (the
“Operating Lessee Subordination”), an acceptable Security Agreement (the “Security
Agreement”) and Collateral Assignment of Security Agreement (the “Collateral Assignment of
Security Agreement”) and such other documentation as reasonably required by Noteholder;




     i. Operating Lessee’s delivery to Noteholder of UCC-1 Financing Statements (showing
Operating Lessee as debtor and Assumptor as secured party) in proper form for filing in the
appropriate jurisdictions as determined by Noteholder, which Assumptor expressly authorizes
Noteholder to file;




     j. Delivery to Noteholder of the organizational documents and evidence of good standing
of Assumptor and Operating Lessee, their constituent parties, and of New Guarantor, together
with such resolutions or certificates as Noteholder may require, in form and content
acceptable to Noteholder, authorizing the assumption of the Loan and executed by the
appropriate persons and/or entities on behalf of Assumptor, Operating Lessee and New
Guarantor;




     k. The representations and warranties contained herein are true and correct in all
material respects;




     l. Receipt by Noteholder of evidence that casualty insurance and comprehensive
liability insurance policies with respect to the Property, each in form and amount
reasonably satisfactory to Noteholder, have been obtained with the annual premium for same
to be paid at closing;




     m. Receipt by Noteholder of a copy of the Assignment and Assumption of Ground Lease by
which the Borrower’s interest in the Ground Lease (as defined in the Security Instrument)
will be conveyed to Assumptor, and the purchase and sale agreement (the “Purchase and Sale
Agreement”) documenting the sale of the Property to Assumptor;




     n. Receipt by Noteholder of an executed Form W-9 for Assumptor;




     o. Receipt and reasonable approval by Noteholder of the Assignment and Amendment of
Hotel Operating Agreement between Assumption and Manager and Manager’s execution of a new
Consent and Agreement (the “New Consent and Agreement”).




     p. Noteholder shall have received an opinion of counsel to Noteholder with respect to
the compliance of this Assumption Agreement, the transfer to Assumptor, and the transactions
referenced herein with the provisions of the Internal Revenue Code as the same pertain to
real estate mortgage investment conduits;




     q. Payment of the assumption fee provided for in Section 2 above;



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     r. Borrower’s or Assumptor’s reimbursement to Noteholder of all reasonable and
documented out-of-pocket costs and expenses incurred by Noteholder (for which invoices have
been presented) in connection with this Assumption Agreement and the transactions
contemplated hereby, including, without limitation, title insurance costs, escrow and
recording fees, reasonable and documented attorneys’ fees, appraisal, engineers’ and
inspection fees and documentation costs and charges, whether such services are furnished by
Noteholder’s employees, agents or independent contractors;




     s. Receipt by Noteholder of: (i) (A) the written acknowledgement of the United States
of America, acting by and through the Administrator of General Services (the “Ground
Lessor”) of the assignment of the Ground Lease or (B) a novation agreement from the Ground
Lessor with respect to the Ground Lease; and (ii) an acceptable lease status report from the
Ground Lessor indicating that the Ground Lease is in full force and effect and neither party
is in default thereunder;




     t. Receipt by Noteholder of confirmation that the existing liquor license has been
assigned to Assumptor (or that Assumptor has obtained a confirmation letter issued by the
Alcoholic Beverage Control Board confirming approval and issuance of Assumptor’s liquor
license) and that all other necessary permits and approvals have been assigned and/or
obtained;




     u. Receipt by Noteholder of confirmation that the items listed on Schedules 5.1(f) and
(g) of the Purchase and Sale Agreement have been resolved or are being satisfactorily
defended;




     v. Receipt and reasonable approval by Noteholder of (A) Assumption opinion from
Assumptor’s counsel (licensed in the District of Columbia) based on Noteholder’s standard
form; (B) standard Delaware single member LLC opinion from acceptable Delaware counsel; and
(C) a new Insolvency Opinion (as defined in the Security Instrument);




     w. Receipt by Noteholder of confirmations from each applicable Rating Agency (as
defined in the Security Instrument);



     4. Effective Date. The effective date of this Assumption Agreement shall be the date
that each condition precedent set forth in Section 3 above is either satisfied (or waived
by the Lender) (“Effective Date”).



     5. Assumption. Assumptor hereby assumes and agrees to pay when due all sums due or to
become due or owing under the Note, the Security Instrument and the other Loan Documents and shall
hereafter faithfully perform all of Borrower’s obligations under and be bound by all of the
provisions of the Loan Documents, as modified by this Assumption Agreement, and assumes all
liabilities of Borrower under the Loan Documents as if Assumptor were an original signatory
thereto. The execution of this Assumption Agreement by Assumptor shall be deemed its execution of
the Note, the Security Instrument and the other Loan Documents.



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     6. Partial Release of Borrower; Release of Noteholder. Noteholder hereby releases (on
the Effective Date) Borrower from liability under the Loan Documents other than this Assumption
Agreement; provided however, that the parties hereby acknowledge and agree that Borrower is
expressly not released from and nothing contained herein is intended to limit, impair, terminate or
revoke, any of Borrower’s obligations with respect to the matters set forth in Section 4 of
the Note and Section 18.32 of the Security Instrument, to the extent the same arise out of
or in connection with any act or omission occurring on or before the Effective Date (the “Retained
Obligations”), and that such obligations shall continue in full force and effect in accordance with
the terms and provisions thereof and hereof. Borrower’s obligations under the Loan Documents with
respect to the Retained Obligations shall not be discharged or reduced by any extension, amendment,
renewal or modification to, the Note, the Security Instrument or any other Loan Documents,
including, without limitation, changes to the terms of repayment thereof, modifications, extensions
or renewals of repayment dates, releases or subordinations of security in whole or in part, changes
in the interest rate or advances of additional funds by Noteholder in its discretion for purposes
related to those set forth in the Loan Documents. Each of Borrower, Original Guarantor, Assumptor
and New Guarantor hereby fully releases (on the Effective Date) Noteholder and any servicer(s) of
the Loan from any liability of any kind arising out of or in connection with the Loan or the Loan
Documents other than this Assumption Agreement; provided, however, this release shall not apply to
any liability due to fraud, gross negligence or willful misconduct of Noteholder. Each of
Borrower, Original Guarantor, Assumptor and New Guarantor, after consultation with its respective
attorney, hereby expressly waives the benefits of the provisions of applicable law, if any, which
provides to the effect that:




“A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release
which, if known by him, must have materially affected his settlement with
the debtor.”




From time to time without first requiring performance on the part of Assumptor,
Noteholder may look to and require performance by Borrower of all Retained
Obligations.



     7. Confirmation of Guaranty; Partial Release of Original Guarantor. Nothing contained
herein is intended to limit, impair, terminate or revoke Original Guarantor’s obligations under the
Guaranty to the extent the same arise out of or in connection with any act or omission occurring on
or before the Effective Date and such obligations shall continue in full force and effect in
accordance with the terms and provisions of the Guaranty; provided, however, Noteholder hereby
releases Original Guarantor from its obligations under the Guaranty to the extent the same arise
out of or in connection with any act or omission occurring after the Effective Date.



     8. Representations and Warranties.




     a. Assignment. Borrower and Assumptor each hereby represents and warrants to
Noteholder that Borrower will on the Effective Date contemporaneously with the transactions
contemplated by this Assumption Agreement irrevocably and



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unconditionally transfer and assign to Assumptor all of Borrower’s right, title and
interest in and to:




          i. The Property and the Collateral;




          ii. The Loan Documents;




          iii. All leases related to the Property or the Collateral;




          iv. All rights as named insured under all casualty and liability insurance
policies (and all endorsements in connection therewith) relating to the Property or
the Collateral (unless, but only to the extent that, Assumptor is obtaining its own
such insurance policies);




          v. All reciprocal easement agreements, operating agreements, and declarations
of conditions, covenants and restrictions related to the Property;




          vi. All prepaid rents and security deposits, if any, held by Borrower in
connection with leases of any part of the Property or the Collateral; and




          vii. All funds, if any, deposited in impound accounts held by or for the
benefit of Noteholder pursuant to the terms of the Loan Documents.




          Borrower and Assumptor each hereby further represents and warrants to
Noteholder that no consent to the transfer of the Property and the Collateral to
Assumptor is required under any agreement to which Borrower or Assumptor is a party,
including, without limitation, under any lease, operating agreement, mortgage or
security instrument (other than the Loan Documents), or if such consent is required,
that the parties have obtained all such consents.




     b. No Defaults. Assumptor and Borrower each hereby represents and warrants, to
its respective knowledge, that no default, event of default, breach or failure of condition
has occurred, or would exist with notice or the lapse of time or both, under any of the Loan
Documents, as modified by this Assumption Agreement, and all representations and warranties
herein and in the other Loan Documents are true and correct in all material respects.




     c. Loan Documents. Assumptor represents and warrants to Noteholder that
Assumptor has actual knowledge of all terms and conditions of the Loan Documents, and agrees
that Noteholder has no obligation or duty to provide any information to Assumptor regarding
the terms and conditions of the Loan Documents. Assumptor further agrees that all
representations, agreements and warranties in the Loan Documents regarding Borrower (as
modified by this Assumption Agreement), its status, authority, financial condition and
business shall apply to Assumptor, as though Assumptor were the borrower originally named in
the Loan Documents. Assumptor further understands and acknowledges that, except as
expressly provided in this Assignment and Assumption Agreement or in any other writing
executed by Noteholder, Noteholder has not waived any right of Noteholder or obligation of
Borrower or Assumptor under the Loan



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Documents and Noteholder has not agreed to any modification of any provision of any
Loan Document or to any extension of the Loan.




     d. Financial Statements. Assumptor represents and warrants to Noteholder that
the financial statements of Assumptor, New Guarantor, and Pebblebrook Hotel Trust (the
“REIT”), previously delivered by Borrower, Assumptor or any of such parties to Noteholder:
(i) are complete and correct in all material respects; (ii) present fairly and in all
material respects the financial condition of each of such parties; and (iii) have been
prepared in accordance with generally accepted accounting principles consistently applied,
except as expressly noted therein, or other accounting standards approved by Noteholder.
Assumptor further represents and warrants to Noteholder that, since the date of such
financial statements, there has been no material adverse change in the financial condition
of any of such parties, nor have any assets or properties reflected on such financial
statements been sold, transferred, assigned, mortgaged, pledged or encumbered except as
previously disclosed in writing by Assumptor to Noteholder and approved in writing by
Noteholder or disclosed in public filings prior to the Effective Date.




     e. Reports. Assumptor represents and warrants to Noteholder that all reports,
documents, instruments and information (other than information of a general economic or
industry nature) that Assumptor has delivered to Noteholder in connection with Assumptor’s
assumption of the Loan: (i) are correct and sufficiently complete to give Noteholder
accurate knowledge of their subject matter; and (ii) do not contain any misrepresentation of
a material fact or omission of a material fact which omission makes the provided information
misleading omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they are made, not materially misleading; provided
that, with respect to projected financial information, Assumptor represents and warrants
only that such information was prepared in good faith based upon assumptions believed to be
reasonable at the time.




     f. Assumptor Location. Assumptor represents and warrants that its chief
executive office is located at the following address: c/o Pebblebrook Hotel Trust, 2
Bethesda Metro Center, Suite 1530, Bethesda, Maryland 20814. Assumptor represents and
warrants that its state of formation is Delaware. All organizational documents of Assumptor
delivered to Noteholder are complete and accurate in every respect. Assumptor’s legal name
is exactly as shown on page one of this Assumption Agreement. Assumptor shall not change
Assumptor’s name or, as applicable, Assumptor’s chief executive office, Assumptor’s
principal residence or the jurisdiction in which Assumptor is organized, without giving
Noteholder at least 30 days’ prior written notice.




     g. Reserved.




     h. No Pledge of Equity Interests. Assumptor and New Guarantor represent and
warrant to Noteholder that the equity interests in (i) Assumptor or (ii) any entity that,
directly or indirectly, owns an equity interest in Assumptor have not been pledged,
hypothecated or otherwise encumbered as security for any obligation, and that no portion of
the capital contributed to Assumptor, directly or indirectly, in connection with Assumptor’s
acquisition of the Property consists of borrowed funds.



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     i. Embargoed Person. Assumptor and New Guarantor represent and warrant that
none of the funds or other assets of Assumptor or New Guarantor constitute property of, or
are beneficially owned, directly or indirectly, by any person, entity or government subject
to trade restrictions under U.S. law, including but not limited to, the USA PATRIOT Act
(including the anti-terrorism provisions thereof), the International Economic Powers Act, 50
U.S.C. §§ 1701, et. seq., the Trading with the Enemy Act, 50 U.S.C. App. 1 et. seq., and any
Executive Orders or regulations promulgated thereunder, including those related to Specially
Designated Nationals and Specially Designated Global Terrorists (“Embargoed Person”) and
further warrant and represent that no Embargoed Person has any interest of any nature
whatsoever in Assumptor or New Guarantor with the result that the investment in Assumptor
(whether directly or indirectly) is prohibited by law.



     9. Waiver of Acceleration. Noteholder hereby consents to the sale and conveyance of
the Property and Collateral and agrees that it shall not exercise its right to cause all sums
secured by the Security Instrument to become immediately due and payable because of the conveyance
of the Property and the Collateral from Borrower to Assumptor; provided, however,
Noteholder reserves its right under the terms of the Security Instrument or any other Loan Document
to accelerate all principal and interest in the event of any subsequent sale, transfer, encumbrance
or other conveyance of the Property, the Collateral or any interest in Assumptor, except as
permitted by the Loan Documents.



     10. Modification of Loan Documents. The Loan Documents are hereby modified as
follows:




     a. The definition of “Leases” on page 3 of the Security Instrument and on page 1 of the
Assignment of Leases is modified to specifically include the Operating Lease.




     b. The following definitions are hereby added to Section 1.01 of the Security
Instrument:




     “Operating Lease” shall mean that certain Agreement of Lease dated as
of September 9, 2010 between Borrower, as landlord, and Operating Lessee, as
tenant.




     “Operating Lessee” shall mean Jayhawk Lessee LLC.




     c. The definition of “Borrower’s Knowledge” on page 8 of the Security
Instrument is hereby deleted and replaced with the following:




     “Borrower’s Knowledge” or words of similar effect shall mean the
actual knowledge of Borrower or Borrower’s President, Vice President, Secretary
and/or Vice President or knowledge after making all due inquiry of the Property’s
general manager or assistant general manager.”



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     d. The definition of “Guarantor” on page 13 of the Security Instrument is
hereby modified to refer to New Guarantor as the current “Guarantor” under the Loan
Documents.




     e. The definition of “Loan Documents” on page 15 of the Security Instrument is
hereby modified to include this Assumption Agreement, the new Guaranty, the Operating Lessee
Subordination, the Collateral Assignment of Security Agreement, Consent and Agreement, the
new Cash Management Documents and the other documents executed by Assumptor, New Guarantor,
Operating Lessee and Manager in connection with the assumption.




     f. The reference to “Kimpton Group Holding LLC” in the definition of “Transfer”
on pages 22-24 of the Security Instrument is hereby modified to refer to “Pebblebrook Hotel
Trust.”




     g. The definition of “Transfer” on pages 22-24 of the Security Instrument is
hereby modified to restrict Transfers of direct interests in Operating Lessee to the same
extent as Transfers of direct interests in Assumptor; provided, however, that nothing
contained in the definition of “Transfer” shall prohibit the execution of the Operating
Lease between the Borrower and Operating Lessee.




     h. The following is hereby added at the end of the definition of “Transfer” on
pages 22-24 of the Security Instrument:




     “Notwithstanding the foregoing or anything to the contrary contained herein or
in any other Loan Documents, the issuance, sale, conveyance, transfer or other
disposition (the “REIT Transfer”) of any shares of stock (the “REIT
Shares”) in Pebblebrook Hotel Trust (the “REIT”) shall be permitted
without Lender’s prior written consent, provided that (i) the REIT Shares are
publicly traded on a nationally recognized U. S. Stock Exchange; (ii) no Person or
group (as that term is used in Section 13(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) and the rules and regulations
thereunder) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of a percentage (based on voting power, in the event
different classes of stock shall have different voting powers) of the voting stock
of the REIT greater than forty nine percent (49%); and (iii) the REIT Transfer does
not result in or cause: (A) Borrower no longer being the owner of the Property; (B)
Operating Lessee no longer being the tenant under the Operating Lease; (C) the REIT
no longer being the sole general partner and in Control of Guarantor and the owner
of at least 51% of the limited partnership interests in the Guarantor; (D) the
Guarantor no longer owning at least a 51% ownership interest in and maintaining
Control over both DC Hotel Trust (the “Baby REIT”) and Pebblebrook Hotel
Lessee, Inc. (the “TRS”); (E) the Baby REIT no longer being the sole member
of and in Control of Borrower; (F) TRS no longer being the sole member of and in
Control of Operating Lessee; (G) Guarantor no longer being the guarantor under the
Loan Documents; or (H) a REIT Change of Control (as defined below).



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     For purposes of this Section, a “REIT Change of Control” shall occur
when: (i) one Person or group of affiliated Persons acquires more than 49% of the
REIT Shares in one or a series of transactions, (ii) during the twelve (12) month
period immediately prior to the REIT Transfer, individuals who at the beginning of
such period constituted the Board of Directors or Trustees of the REIT (the
“Board”) (together with any new directors whose election by the Board or
whose nomination for election by the shareholders of the REIT was approved by a vote
of at least a majority of the members of the Board then in office who either were
members of the Board at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the members of the Board as of the date of completion of the REIT
Transfer, or (iii) if the REIT enters into a merger, consolidation or other business
combination, or a sale of all or substantially all of the REIT’s assets and/or
ownership interests which results in Borrower, Operating Lessee and/or Guarantor no
longer being controlled, directly or indirectly, by the REIT.”




     i. The following language is hereby deleted from the end of the first sentence of
Section 2.02(g) (iv) on page 27 of the Security Instrument: “...have filed and will
file their own tax returns or, if Borrower and/or, if applicable, General Partner is part of
a consolidated group for purposes of filing tax returns, Borrower and General Partner, as
applicable, have been shown and will be shown as separate members of such group.”




     j. Section 2.02(g)(vii) on page 27 of the Security Instrument is hereby amended
and restated in its entirety as follows: “Borrower and, if applicable, each General
Partner, have been at all times, and intend to remain, adequately capitalized in light of
the nature of their respective businesses.”




     k. The reference to “California limited partnership” in Section 2.02(g)(xi) on
page 28 of the Security Instrument is modified to refer to “Delaware limited liability
company”.




     l. The following is hereby added as Section 2.05(y) of the Security Instrument:




     “(y) Operating Lease.




     (i) Borrower shall (A) promptly perform and observe all of the material
covenants required to be performed and observed by it under the Operating Lease and
do all things necessary to preserve and to keep unimpaired its material rights
thereunder; (B) promptly notify Lender of any material default under the Operating
Lease; (C) promptly deliver to Lender a copy of any notice of default or other
material notice under the Operating Lease delivered to Operating Lessee by
Borrower; (D) promptly give notice to Lender of any notice or information that
Borrower receives which indicates that Operating Lessee is terminating its Operating
Lease or that Operating Lessee is otherwise



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discontinuing its operation of the Property; and (e) promptly enforce the
performance and observance of all of the material covenants required to be performed
and observed by Operating Lessee under the Operating Lease.




     (ii) Borrower shall not, without the prior written consent of Lender, (A)
surrender, terminate or cancel the Operating Lease or otherwise replace Operating
Lessee; (B) reduce or consent to the reduction of the term of the Operating Lease;
or (C) enter into, renew, amend, modify, waive any provisions of, reduce Rents under
or shorten the term of the Operating Lease except in the case of clauses (B) and (C)
above, to the extent the foregoing could not reasonably be expected to be materially
adverse to the Noteholder.




     m. Assumptor acknowledges and agrees that the annual, quarterly and other financial
statements and reports required or otherwise requested by Noteholder under Section
2.09 of the Security Instrument shall include statements and reports of Operating Lessee
as applicable.




     n. The seventh and eighth sentences in Section 5.01 shall be amended and
restated in their entirety as follows:




“Additionally, Borrower shall cause Operating Lessee or Manager to
send each respective credit card company or credit card clearing
bank with which Operating Lessee or Manager has entered into
merchant’s agreements (each, a “Credit Card Company”) a direction
letter in the form of Exhibit F annexed hereto and made part hereof
(the “Credit Card Payment Direction Letter”) directing such Credit
Card Company to make all payments due in connection with goods or
services furnished at or in connection with the Property by Federal
wire or through ACH directly to a bank account established by the
Operating Lessee (the “Operating Lessee Rent Account”). Without the
prior written consent of Lender, Borrower shall not permit Operating
Lessee or Manager to (i) terminate, amend, revoke or modify any
Credit Card Payment Direction Letter in any manner or (ii) direct or
cause any Credit Card Company to pay any amount in any manner other
than as specifically provided in the related Credit Card Payment
Direction Letter.”




     o. The definition of “Management Agreement” in Section 7.02(e) on page
77 of the Security Instrument is hereby modified to include that certain Assignment of and
First Amendment to Hotel Operating Agreement being executed by Operating Lessee and Manager
in connection with this assumption.




     p. Assumptor shall cause Operating Lessee to comply in all material respects with all
provisions of the Management Agreement and to comply with all of the provisions of the
Security Instrument relating to the management and operation of the Property, including,
without limitation, Section 7.02 of the Security Instrument.



12









 






     q. Sections 13.01 (d), (f), (g), (h), (i), (j), (l) and (n) of the Security
Instrument are hereby modified to include acts and omissions of the Operating Lessee to the
same extent as acts and omissions of the Assumptor and/or New Guarantor, as applicable




     r. Except as specifically amended hereby, the Loan Documents shall remain unchanged and
in full force and effect.



     11. Net Worth Representation of New Guarantor. As of the Effective Date, New
Guarantor represents and warrants to Noteholder that New Guarantor has a Tangible Net Worth of not
less than $300,000,000. For purposes of this Section 11, “Tangible Net Worth” means the
sum of (a) consolidated partnership’s equity of the New Guarantor and its subsidiaries, plus (b)
accumulated depreciation with respect to real assets (to the extent deducted in determining
partnerships’ equity), less (c) the value of all intangible assets of New Guarantor and its
consolidated subsidiaries on a consolidated basis (to the extent included in determining
partnerships’ equity), in each case as determined in accordance with GAAP.



     12. Hazardous Materials. Without in any way limiting any other provision of this
Assumption Agreement, Assumptor and Borrower expressly reaffirm as of the date hereof, and
Assumptor reaffirms continuing hereafter: (a) each and every representation and warranty in the
Loan Documents respecting “Hazardous Materials”; and (b) each and every covenant and indemnity in
the Loan Documents respecting “Hazardous Materials”.



     13. Multiple Parties. If more than one person or entity has signed this Assumption
Agreement as Assumptor or Borrower, then all references in this Assumption Agreement to Assumptor
or Borrower shall mean each and all of the persons so signing, as applicable. The liability of all
persons and entities signing shall be joint and several with all others similarly liable.



     14. Confirmation of Security Interest. Nothing contained herein shall affect or be
construed to affect any lien, charge or encumbrance created by any Loan Document or the priority of
that lien, charge or encumbrance. All assignments and transfers by Borrower to Assumptor are
subject to any security interest(s) held by Noteholder. Assumptor shall promptly execute and
deliver any further documents reasonably requested by the Noteholder to evidence the liens, charges
and encumbrances created by the Loan Documents, including, without limitation, evidence of
recordation of the Memorandum of Assumption Agreement after the Effective Date.



     15. Notices. All notices to be given to Assumptor and/or Operating Lessee pursuant to
the Loan Documents shall be addressed as follows: c/o Pebblebrook Hotel Trust, 2 Bethesda Metro
Center, Suite 1530, Bethesda, Maryland 20814, Attn. Attn: Raymond Martz, Vice President and
Secretary. All notices to be given to Noteholder pursuant to the Loan Documents shall be
addressed as follows: c/o Wells Fargo Commercial Mortgage Servicing – East, 201 S. College Street,
9th Floor, Charlotte, NC 28244-1075, MAC D1100-090, Attn. Asset Manager.




13











 





     16. Integration; Interpretation. The Loan Documents, including this Assumption
Agreement, contain or expressly incorporate by reference the entire agreement of the parties with
respect to the matters contemplated herein and supersede all prior negotiations. The Loan
Documents shall not be modified except by written instrument executed by Noteholder and Assumptor.
Any reference in any of the Loan Documents to the property or the Collateral shall include all or
any parts of the Property or the Collateral.



     17. Successors and Assigns. This Assumption Agreement is binding upon and shall inure
to the benefit of the heirs, successors and assigns of the parties but subject to all prohibitions
of transfers contained in any Loan Document.



     18. Attorneys’ Fees; Enforcement. If any attorney is engaged by Noteholder to
enforce, construe or defend any provision of this Assumption Agreement, or as a consequence of any
default under or breach of this Assumption Agreement, with or without the filing of any legal
action or proceeding, Assumptor shall pay to Noteholder, within 15 days after written demand, the
amount of all attorneys’ fees and costs reasonably incurred by Noteholder in connection therewith,
together with interest thereon from the date that is15 days after the date of such demand at the
rate of interest applicable to the principal balance of the Note as specified therein.



     19. Right of Transfer of Property. The parties acknowledge that Section 9.04
of the Security Instrument provides that Noteholder shall consent to the voluntary sale or
exchange of all of the Property, all subject, however, to the terms and conditions set forth
therein. The parties agree that this Assumption Agreement and the actions to be taken as
contemplated herein shall constitute one such consent.



     20. Deferred Maintenance; Liquor License. Assumptor covenants and agrees that it
will, within 60 days of the Effective Date, provide Noteholder with satisfactory evidence that (a)
the short term repair items listed on Exhibit D of the Security Instrument have been
completed; (b) the elevator #2 repairs have been completed with no further environmental clean-up
necessary; and (c) that Assumptor has obtained a permanent liquor license for the Property.
Assumptor further covenants and agrees that should such items of Deferred Maintenance not be
repaired as provided herein or that the permanent liquor license shall not be obtained in such
time-frame, that an immediate Event of Default shall have occurred, and that Noteholder shall have
all remedies available to it under the terms of the Loan Documents, including but not limited to
the immediate right to accrue interest on the Loan at the Default Interest Rate.



     21. Miscellaneous.




     a. This Assumption Agreement shall be governed and interpreted in accordance with the
laws of the jurisdiction(s) specified in the other Loan Documents as governing the other
Loan Documents. In any action brought or arising out of this Assumption Agreement,
Borrower, Original Guarantor, New Guarantor, Noteholder and Assumptor, and general partners,
members and joint venturers of them, hereby consent to the jurisdiction of any state or
federal court having proper venue as specified in the other Loan Documents and also consent
to the service of process by any means authorized by the law of such jurisdiction(s).
Except as expressly provided otherwise herein, all terms



14









 







used herein shall have the meaning given to them in the Loan Documents. Time is of the
essence of each term of the Loan Documents, including this Assumption Agreement. If any
provision of this Assumption Agreement or any of the other Loan Documents shall be
determined by a court of competent jurisdiction to be invalid, illegal or unenforceable,
that portion shall be deemed severed therefrom and the remaining parts shall remain in full
force as though the invalid, illegal, or unenforceable portion had not been a part thereof.




     b. Notwithstanding anything to the contrary herein, this Agreement is subject to the
provisions of Section 4 of the Note and Section 18.32 of the Security
Instrument as if such provisions were set forth at length herein.



     22. Counterparts. This Assumption Agreement may be executed in any number of
counterparts, each of which when executed and delivered will be deemed an original and all of which
taken together will be deemed to be one and the same instrument.



[SEE ATTACHED SIGNATURE PAGES]




15









 






     IN WITNESS WHEREOF, Noteholder, Assumptor, New Guarantor, Borrower, and Original Guarantor
have caused this Assumption Agreement to be duly executed as of the date first above written.



	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 	NOTEHOLDER:	 	BANK OF AMERICA, N.A., as successor to Wells Fargo Bank, N.A., as
Trustee for the Registered Holders of COBALT CMBS Commercial Mortgage Trust 2007-C2,
Commercial Mortgage Pass-Through Certificates, Series 2007-C2	 	 
	 
	 	 	 	 	 	 	 	 	 
	 	 	 	By: 	 	Wells Fargo Bank, N.A., successor
by merger to Wachovia Bank, National Association, as authorized
pursuant to that certain Pooling and Servicing Agreement dated
as of April 1, 2007	 	 






	 	 	 	 	 
	 	By:  	/s/
 Tracy Mills-Smith	 
	 	 	Name:  	Tracy Mills-Smith	 
	 	 	Title:  	Vice President	 
	 





 









 





	 	 	 	 	 	 	 	 
	
		 

	 	 	 	 	 	 
		ASSUMPTOR:	 	JAYHAWK OWNER LLC,	 	 
		 	 	a Delaware limited liability company	 	 
		 
	 	 	 	 	 	 
		 

	 	By:	 	/s/ Raymond D. Martz	 	 
		 

	 	 	 	 	 
		 

	 	 	Name:	  Raymond D. Martz	 	 
		 

	 	 	 	 	 	 
		 

	 	 	Title:	  Vice President & Secretary	 	 
		 

	 	 	 	 	 	 
		 

	 	 	 	 	 	 
		NEW
	 	 	 	 	 	 
		GUARANTOR:	 	PEBBLEBROOK HOTEL, L.P.,	 	 
		 	 	a Delaware limited partnership	 	 
		 
	 	 	 	 	 	 
		 	 	By: Pebblebrook Hotel Trust,	 	 
		 	 	Its general partner	 	 
		 
	 	 	 	 	 	 
		 

	 	By:	 	/s/ Raymond D. Martz	 	 
		 

	 	 	 	 	 
		 

	 	 	Name:	  Raymond D. Martz	 	 
		 

	 	 	 	 	 	 
		 

	 	 	Title:	  Chief Financial Officer	 	 
		 

	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 
	
		 

	 	 	 	 	 	 	 	 	 	 
		BORROWER:	 	TARIFF BUILDING ASSOCIATES, L.P.,

a California limited partnership	 	 
		 
	 	 	 	 	 	 	 	 	 	 
		 	 	By:	 	Square 430, LLC,

a Delaware limited liability company,

its general partner	 	 
		 
	 	 	 	 	 	 	 	 	 	 
		 	 	 	 	By:	 	Kimpton Group Holding LLC, a Delaware limited

liability company, its sole member	 	 
		 
	 	 	 	 	 	 	 	 	 	 
		 

	 	 	 	 	 	By:	 	/s/ Judith C. Miles	 	 
		 

	 	 	 	 	 	 	 	 	 
		 

	 	 	 	 	 	 	Name:	  Judith C. Miles	 	 
		 

	 	 	 	 	 	 	 	 	 	 
		 

	 	 	 	 	 	 	Title:	  EVP and Secretary	 	 
		 

	 	 	 	 	 	 	 	 	 	 





	 	 	 	 	 	 	 	 	 	 
			
		ORIGINAL

	 	 	 	 	 	 	 	 
		GUARANTOR:	 	KIMPTON DEVELOPMENT OPPORTUNITY FUND, L.P.,

a California limited partnership	 	 
		 
	 	 	 	 	 	 	 	 
		 	 	By:	 	Kimpton Group Holding, LLC,

a Delaware limited liability company,

its General Partner
		 
	 	 	 	 	 	 	 	 
		 

	 	 	 	By:	 	/s/ Ben Rowe	 	 
		 

	 	 	 	 	 	 	 
		 

	 	 	 	 	Name:	  Ben Rowe	 	 
		 

	 	 	 	 	 	 	 	 
		 

	 	 	 	 	Title:	  CFO	 	 
		 

	 	 	 	 	 	 	 	 






 












 





EXHIBIT A

TO ASSUMPTION AGREEMENT




	 	 	 	 	 

	PREPARED BY AND
	 	)	 	 
	WHEN RECORDED MAIL TO:
	 	)	 	 
	Alston & Bird LLP
	 	)	 	 
	Bank of America Plaza
	 	)	 	 
	101 S. Tryon Street, Suite 4000
	 	)	 	 
	Charlotte, NC 28280-4000
	 	)	 	 
	Attn: James A. L. Daniel, Jr.
	 	)	 	 






MEMORANDUM OF ASSUMPTION AGREEMENT




     TARIFF BUILDING ASSOCIATES, LP, a California limited partnership, with a mailing address at
222 Kearny Street, Suite 200, San Francisco, CA 94108 (“Borrower”), Kimpton Development
Opportunity Fund, L.P., a California limited partnership, with a mailing address at 222 Kearny
Street, Suite 200, San Francisco, CA 94108 (“Original Guarantor”), JAYHAWK OWNER LLC, a Delaware
limited liability company, with a mailing address at c/o Pebblebrook Hotel Trust, 2 Bethesda Metro
Center, Suite 1530, Bethesda, Maryland 20814 (“Assumptor”), PEBBLEBROOK HOTEL, L.P. , a Delaware
limited partnership, with a mailing address c/o Pebblebrook Hotel Trust, 2 Bethesda Metro Center,
Suite 1530, Bethesda, Maryland 20814 (“New Guarantor”), and BANK OF AMERICA, N.A., as successor to
Wells Fargo Bank, N.A., as Trustee for the Registered Holders of COBALT CMBS Commercial Mortgage
Trust 2007-C2, Commercial Mortgage Pass-Through Certificates, Series 2007-C2, with a mailing
address c/o Wells Fargo Bank, N. A., Commercial Mortgage Servicing, 1901 Harrison Street, 7th
Floor, Oakland, CA 94612, MAC AO227-020 “Noteholder"), are parties to that certain Assumption
Agreement dated of even date herewith (“Assumption Agreement”).



     The undersigned parties agree that all obligations under that certain Promissory Note dated
February 23, 2007 (“Note”) in the original principal amount of $35,000,000.00, secured by: (i)
that certain Deed of Trust, Security Agreement, Assignment of Rents and Fixture Filing executed by
Borrower to First American Title Insurance Company, as trustee, for the benefit of Original Lender,
which Security Instrument was recorded on February 26, 2007 as instrument number 2007026007 in the
land records of the District of Columbia (“Official Records”), the Original Lender’s interest under
which was assigned to Noteholder by instrument recorded on April 30, 2008, as instrument number
2008059162, in said Official Records; (ii) that certain Assignment of Leases and Rents executed by
Borrower, which was recorded on February 26, 2007 as instrument number 2007026008, with said
Official Records, the Original Lender’s interest under which was assigned to Noteholder by
instrument recorded on April 30, 2008, as instrument number 2008059162, in said Official Records;
and (iii) all other Loan Documents (as defined in the Assumption Agreement) securing the real
property described on EXHIBIT A, have been assumed by Assumptor upon the terms and
conditions set forth in the Assumption Agreement. The Assumption Agreement is by this reference
incorporated herein and made a part hereof. This Memorandum of Assumption Agreement may be
executed in any number of



 









 




counterparts, each of which when executed and delivered will be deemed an original and all of
which taken together will be deemed to be one and the same instrument.




[SEE ATTACHED SIGNATURE PAGES]





 









 









     IN WITNESS WHEREOF, Noteholder, Assumptor, New Guarantor, Borrower, and Original Guarantor
have caused this Memorandum of Assumption Agreement to be duly executed as of the                      day of
September, 2010.



	 	 	 	 	 	 	 

	 	 	NOTEHOLDER:	 	BANK OF AMERICA, N.A.,
as successor to Wells Fargo Bank,
 N.A., as
Trustee for the Registered Holders of COBALT CMBS
Commercial Mortgage
Trust 2007-C2,
Commercial Mortgage
Pass-Through Certificates, Series 2007-C2
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Wells Fargo Bank, N.A., successor
by merger to Wachovia 

Bank, National Association, as authorized
pursuant to that 

certain Pooling and Servicing Agreement dated
as of April 1, 2007






	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



ACKNOWLEDGMENT OF NOTEHOLDER




	 	 	 	 	 	 	 

	STATE OF CALIFORNIA

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss
	COUNTY OF CONTRA COSTA

	 	 	)	 	 	 






     On                     , 2010, before me,                                         ,
the undersigned Notary Public in and for said County and State, personally appeared Tracy Mills-Smith, who proved to me on the basis
of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.


I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.



WITNESS my hand and official seal.




	 	 	 	 	 

	 

	 	 

Notary Public
	 	 







	 	 	My Commission Expires:                                         






 











 






	 	 	 	 	 	 
	 	ASSUMPTOR:  	JAYHAWK OWNER LLC, 

a Delaware limited liability company

 	 
	 		By:  	 	 
	 		 	Name:

	 
	 		 	Title:
	 
	 	
	 	NEW	
 	 
	 	GUARANTOR:	PEBBLEBROOK HOTEL, L.P.,

a Delaware limited partnership

 	 
	 		By: Pebblebrook Hotel Trust,
 	 
	 		Its general partner	 
	 	
	 	
	 		By:  	
 	 
	 		 	
Name:
	 
	 		 	
Title: 
	 



 









 







	 	 	 	 	 
	BORROWER: 	TARIFF BUILDING ASSOCIATES, L.P.,

a California limited partnership

 	 
	 	By:  	Square 430, LLC,
 a Delaware limited liability company,
 its general partner
 	 



					
	 	
 	 
	 	By:  	Kimpton Group Holding LLC, a Delaware limited
 liability company, its sole member
 	 



					
	 	
 	 
	 	By:  	 	 
	 	  	Name: 

	 
	 	  	Title: 

	 
	 



	 	 	 	 	 
		
 	 
	ORIGINAL         

GUARANTOR: 	KIMPTON DEVELOPMENT OPPORTUNITY FUND, L.P.,

a California limited partnership

 	 
	 	By:  	Kimpton Group Holding, LLC,
 a Delaware limited liability company,
 its General Partner
 	 



					
	 	
 	 
	 	By:  	 	 
	 	  	Name: 

	 
	 	  	Title: 

	 
	 




 









 






	 	 	 	 	 



Exhibit A

Legal Description