Document:

<PAGE> 1

        EXHIBIT 10.4: FORM OF NON-STATUTORY STOCK OPTION AWARD AGREEMENT

<PAGE> 2

                                     FORM OF
                   NON-STATUTORY STOCK OPTION AWARD AGREEMENT
           FOR THE UNITED COMMUNITY BANCORP 2006 EQUITY INCENTIVE PLAN

         This Award Agreement is provided to _______________ (the "Participant")
by United Community Bancorp (the "Company") as of _________, the date the
Compensation Committee (the "Committee") granted the Participant the right and
option to purchase Shares pursuant to the United Community Bancorp 2006 Equity
Incentive Plan (the "2006 Plan"), subject to the terms and conditions of the
2006 Plan and this Award Agreement:
<TABLE>
<CAPTION>
         <S>      <C>                                <C>
         1.       OPTION GRANT:                      You have been granted a NON-STATUTORY STOCK OPTION
                                                     (referred to in this Agreement as your "Option"). Your
                                                     Option is NOT intended to qualify as an "incentive stock
                                                     option" under Section 422 of the Internal Revenue Code
                                                     of 1986, as amended.
         2.       NUMBER OF SHARES
                  SUBJECT TO YOUR OPTION:            ________ shares of Common Stock ("Shares"), subject
                                                     to adjustment as may be necessary pursuant to Article 10
                                                     of the 2006 Plan.

         3.       GRANT DATE:                        ________

         4.       EXERCISE PRICE:                    You may purchase Shares covered by your Option at a
                                                     price of $______ per share.
</TABLE>

         Unless sooner vested in accordance with Section 2 of the Terms and
Conditions (attached hereto) or otherwise in the discretion of the Committee,
the Options shall vest (become exercisable) in accordance with the following
schedule:

  Continuous Status
  as a Participant       Percentage of        Number of Shares
  after Grant Date       Option Vested     Available for Exercise   Vesting Date
  ----------------       -------------     ----------------------   ------------
  Less than 1 year          _____               _____                ______
            1 year          _____               _____                ______
           2 years          _____               _____                ______
           3 years          _____               _____                ______
           4 years          _____               _____                ______
           5 years          _____               _____                ______

         IN WITNESS WHEREOF, United Community Bancorp, acting by and through the
Compensation Committee of the Board of Directors, has caused this Award
Agreement to be executed as of the Grant Date set forth above.

                                      UNITED COMMUNITY BANCORP

ACCEPTED BY PARTICIPANT:              By:
                                         ---------------------------------------
                                         On behalf of the Compensation Committee

--------------------------
[Name]

--------------------------
Date

<PAGE> 3

TERMS AND CONDITIONS

1.       GRANT OF OPTION. The Grant Date, Exercise Price and number of Shares
         subject to your Option are stated on page 1 of this Award Agreement.
         Capitalized terms used herein and not otherwise defined shall have the
         meanings assigned to such terms in the 2006 Plan.

2.       VESTING OF OPTIONS. The Option shall vest (become exercisable) in
         accordance with the vesting schedule shown on page 1 of this Award
         Agreement. Notwithstanding the vesting schedule on page 1, the Option
         will also vest and become exercisable:

         (a)      Upon your death or Disability during your Continuous Status as
                  a Participant; or

         (b)      Upon a Change in Control.

3.       TERM OF OPTIONS AND LIMITATIONS ON RIGHT TO EXERCISE. The term of the
         Option will be for a period of ten (10) years, expiring at 5:00 p.m.,
         Eastern Time, on the tenth anniversary of the Grant Date (the
         "Expiration Date"). To the extent not previously exercised, the vested
         portion of your Option will lapse prior to the Expiration Date upon the
         earliest to occur of the following circumstances:

         (a)      Three (3) months after the termination of your Continuous
                  Status as a Participant for any reason other than your death
                  or Disability.

         (b)      Twelve (12) months after termination of your Continuous Status
                  as a Participant by reason of Disability.

         (c)      Twelve (12) months after the date of your death, if you die
                  while employed, or during the three-month period described in
                  subsection (a) above or during the twelve-month period
                  described in subsection (b) above and before the Option would
                  otherwise lapse. Upon your death, your beneficiary (designated
                  pursuant to the terms of the 2006 Plan) may exercise your
                  Option.

         (d)      At the end of the remaining original term of the Option if
                  your employment is involuntarily or constructively terminated
                  within twelve (12) months of a Change in Control.

         The Committee may, prior to the lapse of your Option under the
         circumstances described in paragraphs (a), (b), (c) or (d) above,
         extend the time to exercise your Option as determined by the Committee
         in writing and subject to federal regulations. If you return to
         employment with the Company during the designated post-termination
         exercise period, then you will be restored to the status as a
         Participant you held prior to such termination, but no vesting credit
         will be

<PAGE> 4

         earned for any period you were not in Continuous Status as a
         Participant. If you or your beneficiary exercises an Option after your
         termination of service, the Option may be exercised only with respect
         to the Shares that were otherwise vested on the date of your
         termination of service.

4.       EXERCISE OF OPTION. You may exercise your Option by providing:

         (a)      a written notice of intent to exercise to [NAME] at the
                  address and in the form specified by the Committee from time
                  to time; and

         (b)      payment to the Company in full for the Shares subject to the
                  exercise (unless the exercise is a cashless exercise). Payment
                  for the Shares can be made in cash, Company common stock
                  ("stock swap"), a combination of cash and Company common stock
                  or by means of a cashless exercise (if permitted by the
                  Committee).

5.       BENEFICIARY DESIGNATION. You may, in a manner determined by the
         Committee, designate a beneficiary to exercise your rights under the
         2006 Plan and to receive any distribution with respect to this Option
         upon your death. A beneficiary, legal guardian, legal representative,
         or other person claiming any rights under the 2006 Plan is subject to
         all terms and conditions of this Award Agreement and the 2006 Plan, and
         to any additional restrictions deemed necessary or appropriate by the
         Committee. If you have not designated a beneficiary or none survives
         you, the Option may be exercised by the legal representative of your
         estate, and payment shall be made to your estate. You may change or
         revoke a beneficiary designation at any time provided the change or
         revocation is filed with the Company.

6.       WITHHOLDING. The Company or any employer Affiliate has the authority
         and the right to deduct or withhold, or require you to remit to the
         Company, an amount sufficient to satisfy federal, state, and local (if
         any) withholding taxes and employment taxes (I.E., FICA and FUTA).
         OUTSIDE DIRECTORS OF THE COMPANY ARE SELF-EMPLOYED AND ARE NOT SUBJECT
         TO TAX WITHHOLDING.

7.       LIMITATION OF RIGHTS. This Option does not confer on you or your
         beneficiary designated pursuant to Paragraph 5 any rights as a
         shareholder of the Company unless and until the Shares are in fact
         issued in connection with the exercise of the Option. Nothing in this
         Award Agreement shall interfere with or limit in any way the right of
         the Company or any Affiliate to terminate your employment at any time,
         nor confer upon you any right to continue in the service of the Company
         or any Affiliate.

8.       RESTRICTIONS ON TRANSFER AND PLEDGE. You may not pledge, encumber, or
         hypothecate your right or interest in this Option to or in favor of any
         party other than the Company or an Affiliate, and this Option shall not
         be subject to any lien, obligation, or liability of the Participant to
         any other party other than the

<PAGE> 5

         Company or an Affiliate. You may not assign or transfer this Option
         other than by will or the laws of descent and distribution or pursuant
         to a domestic relations order that would satisfy Section 414(p)(1)(A)
         of the Code if such Section applied to an Option under the 2006 Plan;
         provided, however, that the Committee may (but need not) permit other
         requested transfers. Only you or any permitted transferee may exercise
         this Option during your lifetime.

9.       PLAN CONTROLS. The terms contained in the 2006 Plan are incorporated
         into and made a part of this Award Agreement and this Award Agreement
         shall be governed by and construed in accordance with the 2006 Plan. In
         the event of any actual or alleged conflict between the provisions of
         the 2006 Plan and the provisions of this Award Agreement, the
         provisions of the 2006 Plan will control.

10.      SUCCESSORS. This Award Agreement shall be binding upon any successor of
         the Company, in accordance with the terms of this Award Agreement and
         the 2006 Plan.

11.      SEVERABILITY. If any one or more of the provisions contained in this
         Award Agreement is invalid, illegal or unenforceable, the other
         provisions of this Award Agreement will be construed and enforced as if
         the invalid, illegal or unenforceable provision had never been included
         in this Award Agreement.

12.      NOTICE. Notices and communications under this Award Agreement must be
         in writing and either personally delivered or sent by registered or
         certified United States mail, return receipt requested, postage
         prepaid. Notices to the Company must be addressed to:

                           United Community Bancorp
                           92 Walnut Street
                           Lawrenceburg, Indiana 47025
                           Attn:   Compensation Committee

         or any other address designated by the Company in a written notice to
         the Participant. Notices to you will be directed to your address, as
         then currently on file with the Company, or to any other address that
         you provide in a written notice to the Company.

13.      STOCK RESERVE. The Company shall at all times during the term of this
         Agreement reserve and keep available a sufficient number of Shares to
         satisfy the requirements of this Agreement.Form 8-K November 17, 2006

     

    
      

      

    

    
 

    

    EXHIBIT
      10.1

    

    

    

    

    

    

    

    

    

    DEED
      OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

    

    

    GRANTOR:  (COMPANY
      SUBSIDIARY), L.P., a _________ limited partnership

    

    GRANTEE:  CHICAGO
      TITLE INSURANCE COMPANY, TRUSTEE

    

    GRANTEE: JPMORGAN
      CHASE BANK, N.A., a banking association chartered under the laws of the United
      States of America, BENEFICIARY

    

    Legal
      Description:

     

    Additional
      legal on Exhibit A

    

    Assessor's
      Tax parcel ID No(s): 199220-0235-01

    

    Reference
      number(s) of Related Document(s):  

    

    

    Loan
      No.
      V_60804

    

    

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    DEED
      OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

    

    THIS
      DEED
      OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (this “Security
      Instrument”
      is made
      as of the _____ day of November, 2006, by (COMPANY SUBSIDIARY), a _________
      limited partnership, (“Borrower”),
      having
      its principal place of business at c/o Equity Inns, 7700 Wolf River Blvd.,
      Germantown, Tennessee 38138 to CHICAGO TITLE INSURANCE COMPANY (“Trustee”),
      having
      its principal place of business at 701 5th Avenue, Suite 3400, Seattle,
      Washington 98104, for the benefit of JPMORGAN CHASE BANK, N.A., a banking
      association chartered under the laws of the United States of America, having
      its
      principal place of business at 270 Park Avenue, New York, New York 10017, as
      beneficiary (“Lender”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

    
      	
              ARTICLE
                1 -

            	
              GRANTS
                OF SECURITY

            	
              1

            
	
              Section
                1.1

            	
              PROPERTY
                CONVEYED

            	
              1

            
	
              Section
                1.2

            	
              ASSIGNMENT
                OF RENTS

            	
              5

            
	
              Section
                1.3

            	
              DEFINITION
                OF PERSONAL PROPERTY

            	
              6

            
	
              Section
                1.4

            	
              PLEDGE
                OF MONIES HELD

            	
              6

            
	 	 
	
              CONDITIONS
                TO GRANT

            	
              6

            
	 	 	 
	
              ARTICLE
                2 -

            	
              DEBT
                AND OBLIGATIONS SECURED

            	
              6

            
	
              Section
                2.1

            	
              DEBT

            	
              6

            
	
              Section
                2.2

            	
              OTHER
                OBLIGATIONS

            	
              7

            
	
              Section
                2.3

            	
              DEBT
                AND OTHER OBLIGATIONS

            	
              7

            
	
              Section
                2.4

            	
              PAYMENTS

            	
              7

            
	 	 	 
	
              ARTICLE
                3 -

            	
              BORROWER
                COVENANTS

            	
              7

            
	
              Section
                3.1

            	
              INCORPORATION
                BY REFERENCE

            	
              7

            
	
              Section
                3.2

            	
              INSURANCE

            	
              8

            
	
              Section
                3.3

            	
              PAYMENTS
                OF TAXES, ETC.

            	
              15

            
	
              Section
                3.4

            	
              CONDEMNATION

            	
              16

            
	
              Section
                3.5

            	
              USE
                AND MAINTENANCE OR PROPERTY

            	
              17

            
	
              Section
                3.6

            	
              WASTE

            	
              17

            
	
              Section
                3.7

            	
              COMPLIANCE
                WITH LAWS; ALTERATIONS

            	
              17

            
	
              Section
                3.8

            	
              BOOKS
                AND RECORDS

            	
              18

            
	
              Section
                3.9

            	
              PAYMENT
                FOR LABOR AND MATERIALS

            	
              20

            
	
              Section
                3.10

            	
              PERFORMANCE
                OF OTHER AGREEMENTS

            	
              20

            
	
              Section
                3.11

            	
              CERTAIN
                HOTEL COVENANTS

            	
              20

            
	 	 	 
	
              ARTICLE
                4 -

            	
              SPECIAL
                COVENANTS

            	
              22

            
	
              Section
                4.1

            	
              PROPERTY
                USE

            	
              22

            
	
              Section
                4.2

            	
              ERISA

            	
              22

            
	
              Section
                4.3

            	
              SINGLE
                PURPOSE ENTITY

            	
              23

            
	
              Section
                4.4

            	
              EMBARGOED
                PERSON

            	
              29

            
	
              Section
                4.5

            	
              OFAC

            	
              29

            
	
              Section
                4.6

            	
              BANK
                ACCOUNTS

            	
              30

            
	 	 	 
	
              ARTICLE
                5 -

            	
              REPRESENTATIONS
                AND WARRANTIES

            	
              31

            
	
              Section
                5.1

            	
              BORROWER’S
                REPRESENTATIONS

            	
              31

            
	
              Section
                5.2

            	
              WARRANTY
                OF TITLE

            	
              31

            
	
              Section
                5.3

            	
              STATUS
                OF PROPERTY

            	
              31

            
	
              Section
                5.4

            	
              NO
                FOREIGN PERSON

            	
              32

            
	
              Section
                5.5

            	
              SEPARATE
                TAX LOT

            	
              32

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Section
                5.6

            	
              FRANCHISE
                AGREEMENT

            	
              33

            
	
              Section
                5.7

            	
              MANAGEMENT
                AGREEMENT

            	
              33

            
	
              Section
                5.8

            	
              VALIDITY
                OF AGREEMENTS

            	
              34

            
	 	 	 
	
              ARTICLE
                6 -

            	
              OBLIGATIONS
                AND RELIANCES

            	
              34

            
	
              Section
                6.1

            	
              RELATIONSHIP
                OF BORROWER AND LENDER

            	
              34

            
	
              Section
                6.2

            	
              NO
                RELIANCE ON LENDER

            	
              34

            
	
              Section
                6.3

            	
              NO
                LENDER OBLIGATIONS

            	
              34

            
	
              Section
                6.4

            	
              RELIANCE

            	
              35

            
	 	 	 
	
              ARTICLE
                7 -

            	
              FURTHER
                ASSURANCES

            	
              35

            
	
              Section
                7.1

            	
              RECORDING
                FEES

            	
              35

            
	
              Section
                7.2

            	
              FURTHER
                ACTS

            	
              35

            
	
              Section
                7.3

            	
              CHANGES
                IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS

            	
               

              36

            
	
              Section
                7.4

            	
              CONFIRMATION
                STATEMENT

            	
              36

            
	
              Section
                7.5

            	
              SPLITTING
                OF SECURITY INSTRUMENT

            	
              37

            
	
              Section
                7.6

            	
              REPLACEMENT
                DOCUMENTS

            	
              37

            
	 	 	 
	
              ARTICLE
                8 -

            	
              DUE
                ON SALE/ENCUMBRANCE

            	
              37

            
	
              Section
                8.1

            	
              TRANSFER
                DEFINITIONS

            	
              37

            
	
              Section
                8.2

            	
              LENDER
                RELIANCE

            	
              38

            
	
              Section
                8.3

            	
              NO
                SALE/ENCUMBRANCE

            	
              38

            
	
              Section
                8.4

            	
              EXCLUDED
                AND PERMITTED TRANSFERS

            	
              39

            
	
              Section
                8.5

            	
              NO
                IMPLIED FUTURE CONSENT

            	
              41

            
	
              Section
                8.6

            	
              COSTS
                OF CONSENT

            	
              41

            
	
              Section
                8.7

            	
              CONTINUING
                SEPARATENESS REQUIREMENTS

            	
              42

            
	 	 	 
	
              ARTICLE
                9 -

            	
              DEFAULT

            	
              42

            
	
              Section
                9.1

            	
              EVENTS
                OF DEFAULT

            	
              42

            
	
              Section
                9.2

            	
              DEFAULT
                INTEREST

            	
              45

            
	 	 	 
	
              ARTICLE
                10 -

            	
              RIGHTS
                AND REMEDIES

            	
              45

            
	
              Section
                10.1

            	
              REMEDIES

            	
              45

            
	
              Section
                10.2

            	
              RIGHT
                OF ENTRY

            	
              51

            
	 	 	 
	
              ARTICLE
                11 -

            	
              INDEMNIFICATION;
                SUBROGATION

            	
              52

            
	
              Section
                11.1

            	
              GENERAL
                INDEMNIFICATION

            	
              52

            
	
              Section
                11.2

            	
              ENFIRONMENTAL
                INDEMNIFICATION

            	
              53

            
	
              Section
                11.3

            	
              DUTY
                TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES

            	
               

              55

            
	
              Section
                11.4

            	
              SURVIVAL
                OF INDEMNITIES

            	
              55

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              ARTICLE
                12 -

            	
              SECURITY
                AGREEMENT

            	
              55

            
	
              Section
                12.1

            	
              SECURITY
                AGREEMENT

            	
              55

            
	
              Section
                12.2

            	
              FIXTURE
                FILING INFORMATION

            	
              57

            
	 	 	 
	
              ARTICLE
                13 -

            	
              WAIVERS

            	
              57

            
	
              Section
                13.1

            	
              MARSHALLING
                AND OTHER MATTERS

            	
              57

            
	
              Section
                13.2

            	
              WAIVER
                OF NOTICE

            	
              57

            
	
              Section
                13.3

            	
              SOLE
                DISCRETION OF LENDER

            	
              58

            
	
              Section
                13.4

            	
              SURVIVAL

            	
              58

            
	
              Section
                13.5

            	
              WAIVER
                OF TRAIL BY JURY

            	
              58

            
	
              Section
                13.6

            	
              WAIVER
                OF AUTOMATIC OR SUPPLEMENTAL STAY

            	
              59

            
	 	 	 
	
              ARTICLE
                14 -

            	
              NOTICES

            	
              59

            
	
              Section
                14.1

            	
              NOTICES

            	
              59

            
	 	 	 
	
              ARTICLE
                15 -

            	
              APPLICABLE
                LAW

            	
              60

            
	
              Section
                15.1

            	
              GOVERNING
                LAW; JURISDICTION

            	
              60

            
	
              Section
                15.2

            	
              USURY
                LAWS

            	
              60

            
	
              Section
                15.3

            	
              PROVISIONS
                SUBJECT TO APPLICABLE LAW

            	
              61

            
	 	 	 
	
              ARTICLE
                16 -

            	
              SECONDARY
                MARKET

            	
              61

            
	
              Section
                16.1

            	
              TRANSFER
                OF LOAN

            	
              61

            
	
              Section
                16.2

            	
              SALE
                OF NOTES AND SECURITIZATION

            	
              61

            
	 	 	 
	
              ARTICLE
                17 -

            	
              COSTS

            	
              62

            
	
              Section
                17.1

            	
              PERFORMANCE
                AT BORROWER’S EXPENSE

            	
              62

            
	
              Section
                17.2

            	
              ATTORNEY’S
                FEES FOR ENFORCEMENT

            	
              62

            
	 	 	 
	
              ARTICLE
                18 - 

            	
              DEFINITIONS

            	
              63

            
	
              Section
                18.1

            	
              GENERAL
                DEFINITIONS

            	
              63

            
	 	 	 
	
              ARTICLE
                19 -

            	
              MISCELLANEOUS
                PROVISIONS

            	
              63

            
	
              Section
                19.1

            	
              NO
                ORAL CHANGE

            	
              63

            
	
              Section
                19.2

            	
              LIABILITY

            	
              63

            
	
              Section
                19.3

            	
              INAPPLICABLE
                PROVISIONS

            	
              63

            
	
              Section
                19.4

            	
              HEADINGS,
                ETC.

            	
              63

            
	
              Section
                19.5

            	
              DUPLICATE
                ORIGINALS; COUNTERPARTS

            	
              63

            
	
              Section
                19.6

            	
              NUMBER
                AND GENDER

            	
              64

            
	
              Section
                19.7

            	
              SUBROGATION

            	
              64

            
	
              Section
                19.8

            	
              ENTIRE
                AGREEMENT

            	
              64

            
	 	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              ARTICLE
                20 -

            	
              TRUSTEE

            	
              64

            
	 	 	 
	
              ARTICLE
                21 - 

            	
              SPECIAL
                STATE OF WASHINGTON PROVISIONS

            	
              65

            
	
              Section
                21.1

            	
              ACCELERATION;
                REMEDIES

            	
              65

            
	
              Section
                21.2

            	
              RECONVEYANCE

            	
              66

            
	
              Section
                21.3

            	
              SUBSTITUTE
                TRUSTEE

            	
              66

            
	
              Section
                21.4

            	
              USE
                OF PROPERTY

            	
              66

            
	
              Section
                21.5

            	
              NO
                ORAL AGREEMENTS

            	
              66

            
	 	 	 
	
              ARTICLE
                22 -

            	
              ASSIGNMENT
                OF CONTRACTS PROVISIONS

            	
              66

            
	 	 	 
	
              ARTICLE
                23 -

            	
              OPERATING
                LEASE PROVISIONS

            	
              68

            

    

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    INDEX
      OF DEFINED TERMS

    

    
      	
              “ADA”

            	
              18

            
	
              “Affiliated
                Manager”

            	
              38

            
	
              “ALR”

            	
              5

            
	
              “Annex”

            	
              30

            
	
              “Applicable
                Laws”

            	
              18

            
	
              “Assignment
                of Contracts”

            	
              4

            
	
              “attorneys’
                fees”

            	
              63

            
	
              “attorneys”

            	
              53

            
	
              “Bankruptcy
                Code”

            	
              3

            
	
              “Borrower”

            	
              1

            
	
              “Business
                Day”

            	
              61

            
	
              “Collateral”

            	
              56

            
	
              “counsel
                fees”

            	
              63

            
	
              “Debt”

            	
              6

            
	
              “Default
                Rate”

            	
              45

            
	
              “Embargoed
                Person”

            	
              29

            
	
              “Environmental
                Indemnity”

            	
              8

            
	
              “Environmental
                Law”

            	
              53,
                54

            
	
              “Environmental
                Lien”

            	
              54

            
	
              “ERISA”

            	
              23

            
	
              “Escrow
                Agreement”

            	
              5

            
	
              “Event
                of Default”

            	
              42

            
	
              “Event”

            	
              63

            
	
              “Exculpated
                Portion”

            	
              52

            
	
              “family
                members”

            	
              40

            
	
              “fees
                and expenses”

            	
              53

            
	
              “Franchise
                Agreement”

            	
              33

            
	
              “Franchisor”

            	
              21,
                33

            
	
              “Guarantor”

            	
              24,
                27

            
	
              “Guaranty”

            	
              8

            
	
              “Hazardous
                Substances”

            	
              54

            
	
              “”Improvements”

            	
              2

            
	
              “Indemnified
                Parties”

            	
              55

            
	
              “Insurance
                Premiums”

            	
              11

            
	
              “Insured
                Casualty”

            	
              13

            
	
              “Intangibles”

            	
              5

            
	
              “Investor”

            	
              62

            
	
              “Land”

            	
              1

            
	
              “Lease”

            	
              3

            
	
              “Leases”

            	
              3

            
	
              “legal
                fees”

            	
              63

            
	
              “Lender”

            	
              1

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              “Lessee”

            	
              3

            
	
              “Licenses”

            	
              32

            
	
              “Loan
                Documents”

            	
              8

            
	
              “Loan”

            	
              41

            
	
              “Losses”

            	
              55

            
	
              “Management
                Agreement”

            	
              34

            
	
              “Note”

            	
              1

            
	
              “Obligations”

            	
              7

            
	
              “OFAC”

            	
              30

            
	
              “Operating
                Lease”

            	
              3

            
	
              “Original
                Assignment”

            	
              3

            
	
              “Original
                Lessee”

            	
              33

            
	
              “Original
                Principals”

            	
              40

            
	
              “Other
                Charges”

            	
              15

            
	
              “Other
                Loan Documents”

            	
              8

            
	
              “Other
                Obligations”

            	
              7

            
	
              “Patriot
                Act”

            	
              31

            
	
              “Permitted
                Exceptions

            	
              31

            
	
              “person”

            	
              63

            
	
              “Personal
                Property”

            	
              6

            
	
              “PML”

            	
              11

            
	
              “Policies”

            	
              11

            
	
              “Policy”

            	
              11

            
	
              “Prohibited
                Person”

            	
              30

            
	
              “Property
                Manager”

            	
              33

            
	
              “Property”

            	
              1

            
	
              “Qualified
                Insurer”

            	
              11

            
	
              “Qualified
                Manager”

            	
              21

            
	
              “Rating
                Agency”

            	
              62

            
	
              “Release”

            	
              55

            
	
              “Remediation”

            	
              55

            
	
              “Rents”

            	
              3

            
	
              “Restricted
                Party”

            	
              38

            
	
              “Sale
                of Pledge”

            	
              38

            
	
              “Securities”

            	
              62

            
	
              “Securitization”

            	
              62

            
	
              “Security
                Instrument”

            	
              1

            
	
              “Taxes”

            	
              15

            
	
              “Terrorism
                Coverage”

            	
              11

            
	
              ‘Terrorism
                Premium Cap”

            	
              12

            
	
              “Transfer”

            	
              38

            
	
              “Trustee”

            	
              1

            
	
              “Underwritten
                Management Fee”

            	
              34

            
	
              “Uniform
                Commercial Code”

            	
              3

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    RECITALS:

     

    Borrower
      by its Fixed Rate Note of even date herewith given to Lender is indebted to
      Lender in the principal sum of $_________ in lawful money of the United States
      of America (such Fixed Rate Note, together with all extensions, renewals,
      modifications, substitutions and amendments thereof, shall collectively be
      referred to as the “Note”,
      with
      interest from the date thereof at the rates set forth in the Note, principal
      and
      interest to be payable in accordance with the terms and conditions provided
      in
      the Note, and with a final maturity date of December 1, 2016.

     

    Borrower
      desires to secure the payment of the Debt (as defined in Article
      2)
      and the
      performance of all of its obligations under the Note and the Other Obligations
      (as defined in Article
      2
      ).

     

    ARTICLE
      1
      -   GRANTS
      OF
      SECURITY

     

    Section
      1.1  PROPERTY
      CONVEYED.
      Borrower does hereby irrevocably, unconditionally and absolutely grant, bargain,
      sell, pledge, enfeoff, assign, warrant, transfer and convey to Trustee in
      trust (with
      power of sale and right of entry and possession) for the benefit of Lender
      for
      the purposes herein set forth, the following property, rights, interests and
      estates now owned, or hereafter acquired, by Borrower (collectively, the
“Property”):

     

    (a)  Land.
      The
      real property described in Exhibit
      A
      attached
      hereto and made a part hereof (collectively, the “Land”),
      together with additional lands, estates and (to the extent assignable)
      development rights hereafter acquired by Borrower for use in connection with
      the
      development, ownership or occupancy of such real property, and all additional
      lands and estates therein which may, from time to time, by supplemental deed
      of
      trust or otherwise be expressly made subject to the lien of this Security
      Instrument;

     

    (b)  Improvements.
      The
      buildings, structures, fixtures, additions, accessions, enlargements,
      extensions, modifications, repairs, replacements and improvements now or
      hereafter erected or located on the Land (the "Improvements”),

     

    (c)  Easements.
      All of
      Borrower's right, title and interest in and to all easements, rights-of-way
      or
      use, rights, strips and gores of land, streets, ways, alleys, passages, sewer
      rights, water, water courses, water rights and powers, air rights and
      development rights, and all estates, rights, titles, interests, privileges,
      liberties, servitudes, tenements, hereditaments and appurtenances of any nature
      whatsoever, in any way now or hereafter belonging, relating or pertaining to
      the
      Land and the Improvements and the reversion and reversions, remainder and
      remainders, and all land lying in the bed of any street, road or avenue, opened
      or proposed, in front of or adjoining the Land, to the center line thereof
      and
      all the estates, rights, titles, interests, dower and rights of dower, curtesy
      and rights of curtesy, property, possession, claim and demand whatsoever, both
      at law 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    and
      in
      equity, of Borrower of, in and to the Land and the Improvements and every part
      and parcel thereof, with the appurtenances thereto;

     

    (d)  Fixtures
      and Personal Property.
      All
      machinery, equipment, goods, inventory, consumer goods, furnishings, fixtures
      (including but not limited to all heating, air conditioning, plumbing,
      inventory, lighting, communications and elevator fixtures) and other personal
      property of every kind and nature, whether tangible or intangible, whatsoever
      owned by Borrower, or in which Borrower has or shall have an interest, now
      or
      hereafter located upon the Land and the Improvements, or appurtenant thereto,
      and usable in connection with the present or future use, maintenance, enjoyment,
      operation and occupancy of the Land and the Improvements, including without
      limitation, beds, bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors,
      bookcases, tables, rugs, carpeting, drapes, draperies, curtains, shades,
      venetian blinds, screens, paintings, hangings, pictures, divans, couches,
      luggage carts, luggage racks, stools, sofas, chinaware, linens, pillows,
      blankets, glassware, foodcarts, cookware, dry cleaning facilities, dining room
      wagons, keys or other entry systems, bars, bar fixtures, mini-bars, liquor
      and
      other drink dispensers, icemakers, kitchen equipment, radios, television sets,
      cable t.v. equipment, intercom and paging equipment, electric and electronic
      equipment, dictating equipment, private telephone systems, reservation systems
      and related computer software, medical equipment, potted plants, heating,
      lighting and plumbing fixtures, fire prevention and extinguishing apparatus,
      fittings, plants, apparatus, stoves, ranges, refrigerators, cutlery and dishes,
      laundry machines, tools, machinery, engineers, dynamos, motors, boilers,
      incinerators, washers and dryers, other customary hotel equipment, and all
      building equipment, materials and supplies of any nature whatsoever owned by
      Borrower, or in which Borrower has or shall have an interest, now or hereafter
      located upon the Land and the Improvements, or appurtenant thereto, or usable
      in
      connection with the present or future operation, enjoyment and occupancy of
      the
      Land and the Improvements and the right, title and interest of Borrower in
      and
      to any of the Personal Property (as hereinafter defined) which may be subject
      to
      any security interests, as defined in the Uniform Commercial Code, as adopted
      and enacted by the state or states where any of the Property is located (the
      “Uniform
      Commercial Code”)
      superior in lien to the lien of this Security Instrument and all proceeds and
      products of the above;

     

    (e)  Leases
      and Rents.
      All
      leases, subleases and other agreements (specifically including, but not limited
      to that certain (i) Lease Agreement for (Hotel) between Borrower and (COMPANY
      SUBSIDIARY), a ________ limited liability company (the “Lessee”)
      dated
      on or about as of even date herewith (the
      “Operating
      Lease”) and
      (ii)
      Original Assignment of Leases and Rents dated as of even date herewith between
      Borrower and Lessee (the "Original
      Assignment")
      affecting the use, enjoyment or occupancy of the Land and the Improvements
      heretofore or hereafter entered into (including, without limitation, any and
      all
      security interests, contractual liens and security deposits) whether before
      or
      after the filing by or against Borrower of any petition for relief under 11
      U.S.C. §101 et seq. as the same may be amended from time to time (the
“Bankruptcy
      Code”)
      (individually, a “Lease”,
      collectively, the “Leases”)
      and all

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    income,
      rents (including, without limitation, room rents, revenues, accounts and
      receivables derived from the use or occupancy of all or any portion of the
      Improvements), issues, profits and revenues (including all oil and gas or other
      mineral royalties and bonuses) from the Land and the Improvements whether paid
      or accruing before or after the filing by or against Borrower of any petition
      for relief under the Bankruptcy Code, including, without limitation, all
      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 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 (including mini-bar revenues), service charges,
      vending machine sales and proceeds, if any, from business interruption or other
      loss of income insurance (collectively, the “Rents”)
      and all
      proceeds from the sale or other disposition of the Leases and the right to
      receive and apply the Rents to the payment of the Debt;

     

    (f)  Condemnation
      Awards.
      All
      awards or payments, including interest thereon, which may heretofore and
      hereafter be made with respect to the Property, whether from the exercise of
      the
      right of eminent domain (including but not limited to any transfer made in
      lieu
      of or in anticipation of the exercise of the right), or for a change of grade,
      or for any other injury to or decrease in the value of the
      Property;

     

    (g)  Insurance
      Proceeds.
      All
      proceeds of and any unearned premiums on any insurance policies covering the
      Property, including, without limitation, the right to receive and apply the
      proceeds of any insurance, judgments, or settlements made in lieu thereof,
      for
      damage to the Property;

     

    (h)  Tax
      Certiorari.
      All
      refunds, rebates or credits in connection with a reduction in real estate taxes
      and assessments charged against the Property as a result of tax certiorari
      or
      any applications or proceedings for reduction;

     

    (i)  Conversion.
      All
      proceeds of the conversion, voluntary or involuntary, of any of the foregoing
      including, without limitation, proceeds of insurance and condemnation awards,
      into cash or liquidation claims;

     

    (j)  Rights.
      The
      right, in the name and on behalf of Borrower, to appear in and defend any action
      or proceeding brought with respect to the Property and to commence any action
      or
      proceeding to protect the interests of Trustee and/or Lender in the
      Property;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (k)  Agreements.
      All
      agreements, contracts (including purchase, sale, option, right of first refusal
      and other contracts pertaining to the Property), certificates, instruments,
      franchises, permits, licenses, approvals, consents, plans, specifications,
      franchise agreements and other documents, now or hereafter entered into, and
      all
      rights therein and thereto, respecting or pertaining to the use, occupation,
      construction, management or operation of the Property (including any
      Improvements or respecting any business or activity conducted on the Land and
      any part thereof) and all right, title and interest of Borrower therein and
      thereunder, including, without limitation, the right, upon the occurrence and
      during the continuance of any Event of Default, to receive and collect any
      sums
      payable to Borrower thereunder and specifically including that certain
      Assignment of Contracts, Licenses, Permits, Agreements, Warranties and Approvals
      between Borrower and the Lessee dated as of even date hereof (the “Assignment
      of Contracts”)
      and the
      Original Assignment;

     

    (l)  Trademarks.
      All
      tradenames, trademarks, servicemarks, logos, copyrights, goodwill, books and
      records and all other general intangibles relating to or used in connection
      with
      the operation of the Property;

     

    (m)  Accounts.
      All
      accounts, accounts receivable, escrows (including, without limitation, all
      escrows, deposits, reserves and impounds established pursuant to that certain
      Escrow Agreement for Reserves and Impounds of even date herewith between
      Borrower and Lender; hereinafter the “Escrow
      Agreement”),
      documents, instruments, chattel paper, deposit accounts, investment property,
      claims, reserves (including deposits) representations, warranties and general
      intangibles, as one or more of the foregoing terms may be defined in the Uniform
      Commercial Code, and all contract rights, franchises, books, records, plans,
      specifications, permits, licenses (to the extent assignable), approvals,
      actions, choses, commercial tort claims, suits, proofs of claims in bankruptcy
      and causes of action which now or hereafter relate to, are derived from or
      are
      used in connection with the Property, including, without limitation, all
      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 Debtor 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, or arising
      from the sale of any Property or the rendition of services in the ordinary
      course of business or otherwise (whether or not earned by performance), together
      with any 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Property
      returned by or reclaimed from customers wherever such Property is located,
      or
      the use, operation, maintenance, occupancy or enjoyment thereof or the conduct
      of any business activities thereon (hereinafter collectively called the
“Intangibles”);
      and

     

    (n)  Liquor
      License.
      To the
      extent assignable, all licenses, permits, approvals and consents which are
      required for the sale and service of alcoholic beverages on the Property
      heretofore or hereafter obtained by Borrower from applicable state and local
      authorities.

     

    (o)  Other
      Rights.
      Any and
      all other rights of Borrower in and to the Property and any accessions,
      renewals, replacements and substitutions of all or any portion of the Property
      and all proceeds derived from the sale, transfer, assignment or financing of
      the
      Property or any portion thereof.

     

    Section
      1.2  ASSIGNMENT
      OF RENTS.
      Borrower hereby absolutely and unconditionally assigns to Lender Borrower's
      right, title and interest in and to all current and future Leases and Rents;
      it
      being intended by Borrower that this assignment constitutes a specific,
      perfected and choate assignment upon recording pursuant to RCW 7.28.230.
      Nevertheless, subject to the terms of this Section
      1.2
      and the
      terms and conditions of that certain Assignment of Rents and Leases, of even
      date herewith between Borrower and Lender (the “ALR”),
      Lender
      grants to Borrower a revocable license to collect and receive the Rents.
      Borrower shall hold the Rents, or a portion thereof sufficient to discharge
      all
      current sums due on the Debt, for use in the payment of such sums and may
      utilize all other portions of the rents for the payment of costs and expenses
      of
      operation of the Property and thereafter as deemed appropriate by
      Borrower.

     

    Section
      1.3  DEFINITION
      OF PERSONAL PROPERTY.
      For
      purposes of this Security Instrument, the Property identified in Subsections
      1.1(d) through 1.1(o),
      inclusive, shall be collectively referred to herein as the “Personal
      Property.”

     

    Section
      1.4  PLEDGE
      OF MONIES HELD.
      Borrower hereby pledges to Lender any and all monies now or hereafter held
      by
      Lender, including, without limitation, any sums deposited in the Funds (as
      defined in the Escrow Agreement), all insurance proceeds described in
Section
      3.2
      and
      condemnation awards or payments described in Section
      3.4,
      as
      additional security for the Obligations until expended or applied as provided
      in
      this Security Instrument.

     

    CONDITIONS
      TO GRANT

     

    TO
      HAVE
      AND TO HOLD the above granted and described Property unto and to the use and
      benefit of Trustee, and the successors and assigns of Trustee,
      forever;

     

    PROVIDED,
      HOWEVER, these presents are upon the express condition that, if Borrower shall
      well and truly pay to Lender the Debt at the time and in the manner provided
      in
      the Note and this Security Instrument, shall well and truly perform the Other
      Obligations as set forth in this Security Instrument and shall well and truly
      abide by and comply with each and 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    every
      covenant and condition set forth herein and in the Note, these presents and
      the
      estate hereby granted shall cease, terminate and be void; provided however,
      that
      Borrower's obligation to indemnify and hold harmless Lender pursuant to the
      provisions hereof with respect to matters relating to any period of time during
      which this Security Instrument was in effect shall survive any such payment
      or
      release.

     

    ARTICLE
      2
      -   DEBT
      AND
      OBLIGATIONS SECURED

     

    Section
      2.1  DEBT.
      This
      Security Instrument and the grants, assignments and transfers made in
Article
      1
      are
      given for the purpose of securing the following, in such order of priority
      as
      Lender may determine in its sole discretion (the “Debt”):

     

    (a)  the
      payment of the indebtedness evidenced by the Note in lawful money of the United
      States of America;

     

    (b)  the
      payment of interest, default interest, late charges and other sums, as provided
      in the Note, this Security Instrument or the Other Loan Documents (as
      hereinafter defined);

     

    (c)  the
      payment of all other moneys agreed or provided to be paid by Borrower in the
      Note, this Security Instrument or the Other Loan Documents;

     

    (d)  the
      payment of all sums advanced pursuant to this Security Instrument to protect
      and
      preserve the Property and the lien and the security interest created hereby;
      and

     

    (e)  the
      payment of all sums advanced, costs and expenses incurred, and processing fees
      charged by Lender in connection with the Debt or any part thereof, any renewal,
      extension, or change of or substitution for the Debt or any part thereof, or
      the
      acquisition or perfection of the security therefor, whether made or incurred
      at
      the request of Borrower or Lender.

     

    Section
      2.2  OTHER
      OBLIGATIONS.
      This
      Security Instrument and the grants, assignments and transfers made in
Article
      1
      are also
      given for the purpose of securing the following (the “Other
      Obligations”):

     

    (a)  the
      performance of all other obligations of Borrower contained herein;

     

    (b)  the
      performance of each obligation of Borrower contained in any other agreement
      given by Borrower to Lender which is for the purpose of further securing the
      obligations secured hereby, and any amendments, modifications and changes
      thereto; and

     

    (c)  the
      performance of each obligation of Borrower contained in any renewal, extension,
      amendment, modification, consolidation, change of, or substitution or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    replacement
      for, all or any part of the Note, this Security Instrument or the Other Loan
      Documents.

     

    Section
      2.3  DEBT
      AND OTHER OBLIGATIONS.
      Borrower's obligations for the payment of the Debt and the performance of the
      Other Obligations shall be referred to collectively herein as the "Obligations."

     

    Section
      2.4  PAYMENTS.
      Unless
      payments are made in the required amount in immediately available funds at
      the
      place where the Note is payable, remittances in payment of all or any part
      of
      the Debt shall not, regardless of any receipt or credit issued therefor,
      constitute payment until the required amount is actually received by Lender
      in
      funds immediately available at the place where the Note is payable (or any
      other
      place as Lender, in Lender's sole discretion, may have established by delivery
      of written notice thereof to Borrower) and shall be made and accepted subject
      to
      the condition that any check or draft may be handled for collection in
      accordance with the practice of the collecting bank or banks. Acceptance by
      Lender of any payment in an amount less than the amount then due shall be deemed
      an acceptance on account only, and the failure to pay the entire amount then
      due
      shall be and continue to be an Event of Default (as hereinafter
      defined).

     

    ARTICLE
      3
      -   BORROWER
      COVENANTS

     

    Borrower
      covenants and agrees that:

     

    Section
      3.1  INCORPORATION
      BY REFERENCE.
      All the
      covenants, conditions and agreements contained in (a) the Note, and (b) all
      and
      any of the documents other than the Note or this Security Instrument now or
      hereafter executed by Borrower and/or others and by or in favor of Lender in
      connection with the creation of the Obligations, the payment of any other sums
      owed by Borrower to Lender or the performance of any Obligations (collectively
      the “Other Loan
      Documents”),
      are
      hereby made a part of this Security Instrument to the same extent and with
      the
      same force as if fully set forth herein. The term “Loan
      Documents”
      as used
      herein shall individually and collectively refer to the Note, this Security
      Instrument and the Other Loan Documents; provided,
      however,
      that
      notwithstanding any provision of this Security Instrument to the contrary,
      the
      Obligations of the Borrower under that certain Environmental Indemnity Agreement
      of even date herewith executed by Borrower in favor of Lender (the “Environmental
      Indemnity”)
      and the
      Obligations of the Guarantor under that certain Guaranty of even date herewith
      executed by Guarantor in favor of Lender (the “Guaranty”)
      shall
      not be deemed or construed to be secured by this Security Instrument or
      otherwise restricted or affected by the foreclosure of the lien hereof or any
      other exercise by Lender of its remedies hereunder or under any other Loan
      Document, such Environmental Indemnity and Guaranty being intended by the
      signatories thereto to be its (or their) unsecured obligation.

     

    Section
      3.2  INSURANCE.

     

    (a)  Borrower
      shall obtain and maintain (or cause to be obtained and maintained), shall pay
      all premiums in accordance with Subsection
      3.2(b)
      below
      for, and 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    shall
      deliver to Lender certificates reasonably acceptable to Lender evidencing,
      insurance for Borrower and the Property providing at least the following
      coverages:

     

    (i)  comprehensive
      all risk insurance providing "special" form coverage (including, without
      limitation, riot and civil commotion, vandalism, malicious mischief, water,
      fire, burglary and theft, sinkhole collapse, windstorm, hail, smoke, aircraft
      or
      vehicles, sprinkler leakage, and damage from weight of ice or snow, and without
      any exclusion for terrorism) on the Improvements and the Personal Property
      and
      in each case (A) in an amount equal to 100% of the "Full Replacement Cost,"
      which for purposes of this Security Instrument 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 and replacement cost endorsement with respect to the Improvements
      and Personal Property waiving all co-insurance provisions; (C) providing that
      the deductible shall not exceed $100,000.00, for so long as the Original
      Principal (as defined herein) shall control the Borrower; and (D) containing
      Demolition Costs, Increased Cost of Construction and "Ordinance or Law Coverage"
      or "Enforcement" endorsements in amounts satisfactory to Lender if any of the
      Improvements or the use of the Property shall at any time constitute legal
      non-conforming structures or uses or the ability to rebuild the Improvements
      is
      restricted or prohibited. The Full Replacement Cost may be redetermined from
      time to time by an appraiser or contractor designated and paid by Lender or
      by
      an engineer or appraiser in the regular employ of the insurer. No omission
      on
      the part of Lender to request any such appraisals shall relieve Borrower of
      any
      of its obligations under this Subsection. Notwithstanding anything contained
      herein to the contrary, the deductible for windstorm coverage shall be equal
      to
      the lesser of (a) a commercially reasonable market deductible based on similar
      properties located in the geographic region where the Property is located or
      (b)
      ten percent (10%) of the Full Replacement Cost;

     

    (ii)  comprehensive
      commercial general liability insurance against claims for personal injury,
      bodily injury, death or property damage occurring upon, in or about the
      Property, such insurance (A) to be on the so-called "occurrence" form with
      a
      combined single limit of not less than $1,000,000.00 per occurrence and not
      less
      than $2,000,000.00 in the aggregate, as well as liquor liability insurance
      in a
      minimum amount of $2,000,000.00 if any part of the Property is covered by a
      liquor license and an aggregate coverage limit acceptable to Lender; (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; (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 contracts;
      (5) contractual liability covering the indemnities contained in Article
      11 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    hereof
      to
      the extent the same is available; and (D) to be with a $25,000.00
      deductible;

     

    (iii)  business
      income insurance (A) with loss payable to Lender; (B) covering losses of income
      and Rents derived from the Property and any non-insured property on or adjacent
      to the Property resulting from any risk or casualty whatsoever; (C) 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 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 amount equal to 100% of the projected
      gross income from the Property for a period of twelve (12) months. The amount
      of
      such business income insurance shall be determined by Lender prior to the date
      hereof and at least once each year thereafter based on Borrower's reasonable
      estimate of the gross income from the Property for the succeeding twelve (12)
      month period. All insurance proceeds payable to Lender pursuant to this
Subsection
      3.2(a)
      shall be
      held by Lender and shall be applied to the obligations secured hereunder from
      time to time due and payable hereunder and under the Note; provided, however,
      that nothing herein contained shall be deemed to relieve Borrower of its
      obligations to pay the obligations secured hereunder on the respective dates
      of
      payment provided for in the Note 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: (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
      3.2(a)(i)
      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
      3.2(a)(i),
      (3)
      including permission to occupy the Property, and (4) with an agreed amount
      endorsement waiving co-insurance provisions;

     

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

     

    (vi)  comprehensive
      boiler and machinery insurance (without exclusion for explosion), if applicable,
      covering all boilers or other pressure vessels, turbines, engines, machinery
      and
      equipment located at or about the Property 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (including,
      without limitation, electrical equipment, sprinkler systems, heating and air
      conditioning equipment, refrigeration equipment and piping) for 100% of the
      full
      replacement cost of such equipment and the building or buildings housing
      same;

     

    (vii)  if
      any
      portion of the Improvements is currently or at any time in the future located
      in
      a "special flood hazard area" as designated by the Federal Emergency Management
      Agency or such other applicable federal agency, flood hazard insurance in an
      amount equal to the maximum amount available under the National Flood Insurance
      Program and in addition to the maximum available under the National Flood
      Insurance Program, any excess limits as determined by Lender in its sole and
      absolute discretion;

     

    (viii)  umbrella
      liability insurance in an amount not less than Ten Million and No/100 Dollars
      $10,000,000.00 per occurrence and in the aggregate on terms consistent with
      the
      commercial general liability insurance policy required under Section
      3.2(a)(ii)
      hereof;

     

    (ix)  if
      the
      Property is in an area identified by any governmental, engineering or any hazard
      underwriting agencies as being subject to the peril of earthquake or located
      in
      an area with a high degree of seismic activity, with a probable maximum loss
      (“PML”)
      exceeding fifteen percent (15%), earthquake insurance equal to fifteen percent
      (15%) of the Full Replacement Cost with a waiver of depreciation of the
      Property; and

     

    (x)  such
      other insurance and in such 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 Property located in or around the
      region in which the Property is located, including, without limitation, mine
      subsidence insurance and environmental insurance, to the extent available on
      commercially reasonable terms.

     

    (b)  All
      insurance provided for in Subsection
      3.2(a)
      hereof
      shall be obtained under valid and enforceable policies (the “Policies”
      or in
      the singular, the “Policy”),
      in
      such forms and, from time to time after the date hereof, in such amounts as
      may
      from time to time be satisfactory to Lender, for a minimum policy term not
      less
      than one year, issued by financially sound and responsible insurance companies
      authorized to do business in the state in which the Property is located as
      admitted or unadmitted carriers which, in either case, have been approved by
      Lender and which have a claims paying ability rating of at least A or better
      issued by Standard & Poor's Ratings Services, a division of the Mc-Graw Hill
      Companies, Inc. or with a claims paying ability rating otherwise acceptable
      to
      Lender (each such insurer shall be referred to below as a “Qualified
      Insurer”).
      Such
      Policies shall not be subject to invalidation due to the use or occupancy of
      the
      Property for purposes more hazardous than the use of the Property at the time
      such Policies were issued. Not less than thirty (30) days prior to the
      expiration 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    dates
      of
      the Policies theretofore furnished to Lender pursuant to Subsection
      3.2(a),
      certificates evidencing renewal or replacement Policies accompanied by evidence
      satisfactory to Lender of payment of the premiums due thereunder (the
“Insurance
      Premiums”),
      shall
      be delivered by Borrower to Lender. No Policy required under Sections
      3.2(a)(i) and (iii)
      hereof
      shall contain an exclusion from coverage under such Policy for loss or damage
      incurred as a result of an act of terrorism or similar acts of sabotage, or
      if
      any such Policy does contain such an exclusion, Borrower shall obtain and
      maintain a separate terrorism insurance policy with coverage amounts and for
      periods required by Sections
      3.2(a)(i) and (iii)
      above
      (“Terrorism
      Coverage”);
      provided, however, Borrower shall not be required to pay more than $_________
      (the “Terrorism
      Premium Cap”)
      in
      annual premiums to obtain Terrorism Coverage.
       If
      the
      Terrorism Premium Cap is not sufficient to purchase the amount of Terrorism
      Coverage required by Sections
      3.2(a)(i)
      and
(iii)
      above,
      then Borrower shall purchase the amount of Terrorism Coverage that is available
      for the Terrorism Premium Cap. Upon a request by Lender, Borrower shall provide
      to Lender certified copies of the Policies. 

     

    (c)  Borrower
      shall not obtain (i) separate insurance concurrent in form or contributing
      in
      the event of loss with that required in Subsection
      3.2(a)
      to be
      furnished by, or which may be reasonably required to be furnished by, Borrower,
      or (ii) any umbrella or blanket liability or casualty Policy unless, in each
      case, Lender's interest is included therein as provided in this Security
      Instrument and such Policy is issued by a Qualified Insurer. If Borrower obtains
      separate insurance or an umbrella or a blanket Policy, Borrower shall notify
      Lender of the same and shall cause certified copies of each Policy to be
      delivered as required in Subsection
      3.2(a).
      Any
      blanket insurance Policy shall specifically allocate to the 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 Property in
      compliance with the provisions of Subsection
      3.2(a).

     

    (d)  All
      Policies of insurance provided for or contemplated by Subsection
      3.2(a)
      shall
      name Lender, its successors and assigns, including any servicers, trustees
      or
      other designees of Lender, and Borrower as the insured or additional insured,
      as
      their respective interests may appear, and in the case of property damage,
      boiler and machinery, and flood insurance, shall contain a so-called New York
      standard non-contributing Lender clause in favor of Lender providing that the
      loss thereunder shall be payable to Lender.

     

    (e)  All
      Policies of insurance provided for in Subsection
      3.2(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 under
      any Lease 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 on the Property thereby) or canceled without at least thirty (30)
      days'
      prior written notice to Lender and any other party named therein as an
      insured;

     

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

     

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

     

    (f)  Borrower
      shall furnish to Lender within ten (10) calendar days after Lender's request
      therefor, a statement certified by Borrower or a duly authorized officer of
      Borrower of the amounts of insurance maintained in compliance herewith, of
      the
      risks covered by such insurance and of the insurance company or companies which
      carry such insurance and, if requested by Lender, verification that the
      insurance policies maintained on the Property comply with the requirements
      hereof, issued by an independent insurance broker or appraiser acceptable to
      Lender.

     

    (g)  If
      at any
      time Lender is not in receipt of written evidence that all insurance required
      hereunder is in full force and effect, Lender shall have the right but not
      the
      obligation, without notice to Borrower, to take such action as Lender deems
      necessary to protect its interest in the Property, including, without
      limitation, the obtaining of such insurance coverage as Lender in its sole
      discretion deems appropriate, and all expenses incurred by Lender in connection
      with such action or in obtaining such insurance and keeping it in effect shall
      be paid by Borrower to Lender upon demand and until paid shall be secured by
      this Security Instrument and shall bear interest at the Default Rate (as
      hereinafter defined).

     

    (h)  If
      the
      Property shall be damaged or destroyed, in whole or in part, by fire or other
      casualty, Borrower shall give prompt notice thereof to Lender.

     

    (i)  In
      case
      of loss covered by Policies, Lender may either (1) settle and adjust any claim
      without the consent of Borrower, or (2) allow Borrower to agree with the
      insurance company or companies on the amount to be paid upon the loss;
provided,
      that so
      long as Original Principal controls Borrower, Borrower may adjust losses
      aggregating not in excess of $100,000.00 if such adjustment is carried out
      in a
      competent and timely manner, and provided that in any case Lender shall and
      is
      hereby authorized to collect and receive any such insurance proceeds; and the
      reasonable expenses incurred by Lender in the adjustment and collection of
      insurance proceeds shall become part of the Debt and be secured 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    hereby
      and shall be reimbursed by Borrower to Lender upon demand (unless deducted
      by
      and reimbursed to Lender from such proceeds).

     

    (ii)  In
      the
      event of any insured damage to or destruction of the Property or any part
      thereof (herein called an “Insured
      Casualty”),
      if (A)
      in the reasonable judgment of Lender, the Property can be restored within six
      (6) months after insurance proceeds are made available and at least six (6)
      months prior to the Maturity Date (as defined in the Note) to an economic unit
      not less valuable (including an assessment by Lender of the impact of the
      termination of any Leases due to such Insured Casualty) and not less useful
      than
      the same was prior to the Insured Casualty, and after such restoration will
      adequately secure the outstanding balance of the Debt, and (B) no Event of
      Default (hereinafter defined) shall have occurred and be then continuing, then
      the proceeds of insurance shall be applied to reimburse Borrower for the cost
      of
      restoring, repairing, replacing or rebuilding the Property or part thereof
      subject to Insured Casualty, as provided below; and Borrower hereby covenants
      and agrees forthwith to commence and diligently to prosecute such restoring,
      repairing, replacing or rebuilding; provided,
      however,
      in any
      event Borrower shall pay all costs (and if required by Lender, Borrower shall
      deposit the total thereof with Lender in advance) of such restoring, repairing,
      replacing or rebuilding in excess of the net proceeds of insurance made
      available pursuant to the terms hereof.

     

    (iii)  Except
      as
      provided above, the proceeds of insurance collected upon any Insured Casualty
      shall, at the option of Lender in its sole discretion, be applied to the payment
      of the Debt or applied to reimburse Borrower for the cost of restoring,
      repairing, replacing or rebuilding the Property or part thereof subject to
      the
      Insured Casualty, in the manner set forth below. Any such application to the
      Debt shall not be considered a voluntary prepayment requiring payment of the
      prepayment consideration provided in the Note, and, except as provided in the
      Note, shall not reduce or postpone any payments otherwise required pursuant
      to
      the Note, other than the final payment on the Note.

     

    (iv)  If
      proceeds of insurance, if any, are made available to Borrower for the restoring,
      repairing, replacing or rebuilding of the Property, Borrower hereby covenants
      to
      restore, repair, replace or rebuild the same to be of at least equal value
      and
      of substantially the same character as prior to such damage or destruction,
      all
      to be effected in accordance with applicable law and plans and specifications
      approved in advance by Lender.

     

    (v)  If
      Borrower is entitled to reimbursement out of insurance proceeds held by Lender,
      such proceeds shall be disbursed from time to time upon Lender being furnished
      with (1) evidence satisfactory to it (which evidence may include inspection[s]
      of the work performed) that the restoration, repair, replacement and rebuilding
      covered by the disbursement has been completed in accordance with 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    plans
      and
      specifications approved by Lender, (2) evidence satisfactory to it of the
      estimated cost of completion of the restoration, repair, replacement and
      rebuilding, (3) funds, or, at Lender's option, assurances satisfactory to Lender
      that such funds are available, sufficient in addition to the proceeds of
      insurance to complete the proposed restoration, repair, replacement and
      rebuilding, and (4) such architect's certificates, waivers of lien, contractor's
      sworn statements, title insurance endorsements, bonds, plats of survey and
      such
      other evidences of cost, payment and performance as Lender may reasonably
      require and approve; and Lender may, in any event, require that all plans and
      specifications for such restoration, repair, replacement and rebuilding be
      submitted to and approved by Lender prior to commencement of work. With respect
      to disbursements to be made by Lender: (A) no payment made prior to the final
      completion of the restoration, repair, replacement and rebuilding shall exceed
      ninety percent (90%) of the value of the work performed from time to time;
      (B)
      funds other than proceeds of insurance shall be disbursed prior to disbursement
      of such proceeds; and (C) at all times, the undisbursed balance of such proceeds
      remaining in the hands of Lender, together with funds deposited for that purpose
      or irrevocably committed to the satisfaction of Lender by or on behalf of
      Borrower for that purpose, shall be at least sufficient in the reasonable
      judgment of Lender to pay for the cost of completion of the restoration, repair,
      replacement or rebuilding, free and clear of all liens or claims for lien and
      the costs described in Subsection
      3.2(h)(vi)
      below.
      Any surplus which may remain out of insurance proceeds held by Lender after
      payment of such costs of restoration, repair, replacement or rebuilding shall
      be
      paid to any party entitled thereto. In no event shall Lender assume any duty
      or
      obligation for the adequacy, form or content of any such plans and
      specifications, nor for the performance, quality or workmanship of any
      restoration, repair, replacement and rebuilding.

     

    (vi)  Notwithstanding
      anything to the contrary contained herein, the proceeds of insurance reimbursed
      to Borrower in accordance with the terms and provisions of this Security
      Instrument shall be reduced by the reasonable costs (if any) incurred by Lender
      in the adjustment and collection thereof and in the reasonable costs incurred
      by
      Lender of paying out such proceeds (including, without limitation, reasonable
      attorneys' fees and costs paid to third parties for inspecting the restoration,
      repair, replacement and rebuilding and reviewing the plans and specifications
      therefor).

     

    Section
      3.3  PAYMENT
      OF TAXES, ETC.

     

    (a)  Borrower
      shall pay (or cause to be paid) all taxes, assessments, water rates, sewer
      rents, governmental impositions, and other charges, including without
      limitation, vault charges and license fees for the use of vaults, chutes and
      similar areas adjoining the Land, now or hereafter levied or assessed or imposed
      against the Property or any part thereof (the “Taxes”),
      all
      ground rents, maintenance charges and similar 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    charges,
      now or hereafter levied or assessed or imposed against the Property or any
      part
      thereof (the “Other
      Charges”),
      and
      all charges for utility services provided to the Property as same become due
      and
      payable. Borrower will deliver to Lender, promptly upon Lender's request,
      evidence satisfactory to Lender that the Taxes, Other Charges and utility
      service charges have been so paid or are not then delinquent. Borrower shall
      not
      allow 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 Property. Except
      to the extent sums sufficient to pay all Taxes and Other Charges have been
      deposited with Lender in accordance with the terms of this Security Instrument,
      Borrower shall furnish to Lender paid receipts for the payment of the Taxes
      and
      Other Charges prior to the date the same shall become delinquent.

     

    (b)  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 amount or validity or application in whole or in part
      of
      any of the Taxes, provided
      that (i)
      no Event of Default has occurred and is continuing under the Note, this Security
      Instrument or any of the Other Loan Documents, (ii) Borrower is permitted to
      do
      so under the provisions of any other mortgage, deed of trust or deed to secure
      debt affecting the Property, (iii) such proceeding shall suspend the collection
      of the Taxes from Borrower and from the Property or Borrower shall have paid
      all
      of the Taxes under protest, (iv) 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, (v) neither
      the Property nor any part thereof or interest therein will be in danger of
      being
      sold, forfeited, terminated, canceled or lost, (vi) Borrower shall have set
      aside and deposited with Lender adequate reserves for the payment of the Taxes,
      together with all interest and penalties thereon, unless Borrower has paid
      all
      of the Taxes under protest, and (vii) Borrower shall have furnished the security
      as may be required in the proceeding, or as may be requested by Lender to insure
      the payment of any contested Taxes, together with all interest and penalties
      thereon.

     

    Section
      3.4  CONDEMNATION.
      Borrower shall, or shall cause Lessee to promptly give Lender notice of the
      actual or threatened commencement of any condemnation or eminent domain
      proceeding and shall deliver to Lender copies of any and all papers served
      in
      connection with such proceedings. In case of any condemnation award excess
      of
      $100,000.00, Lender may either (1) settle and adjust any such claim with the
      consent of Borrower (which consent shall not be unreasonably withheld,
      conditioned or delayed and shall not be required during the continuance of
      an
      Event of Default), or (2) allow Borrower to agree with the condemning authority
      on the amount of the award to be paid. Borrower has the sole right to agree
      with
      the condemning authority with regard to condemnation awards in any one instance
      aggregating not in excess of $100,000.00 if Borrower acts in a competent and
      timely manner. While an Event of Default is continuing hereunder, Lender is
      hereby irrevocably appointed as Borrower's attorney-in-fact, coupled with an
      interest, with exclusive power to collect, receive and retain any award or
      payment for said condemnation or eminent domain and to make any compromise
      or
      settlement in connection with such proceeding, subject to the provisions of
      this
      Security Instrument. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Notwithstanding
      any taking by any public or quasi-public authority through eminent domain 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 Security Instrument and the Debt shall not be reduced until any award
      or
      payment therefor shall have been actually received and applied by Lender, after
      the deduction of reasonable 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. Borrower
      shall cause the award or payment made in any condemnation or eminent domain
      proceeding, which is payable to Borrower, to be paid directly to Lender. Lender
      may apply any award or payment to the reduction or discharge of the Debt whether
      or not then due and payable (such application to be free from any prepayment
      consideration provided in the Note, except that if an Event of Default, or
      an
      event which with notice and/or the passage of time, or both, would constitute
      an
      Event of Default, has occurred, then such application shall be subject to the
      full prepayment consideration computed in accordance with the Note). If the
      Property is sold, through foreclosure or otherwise, prior to the receipt by
      Lender of the award or payment, 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 payment, or a portion thereof sufficient to pay the
      Debt.

     

    Section
      3.5  USE
      AND MAINTENANCE OF PROPERTY.
      Borrower shall cause the Property to be maintained and operated in a good and
      safe condition and repair and in keeping with the condition and repair of
      properties of a similar use, value, age, nature and construction. Borrower
      shall
      not allow the Property to be used, maintained or operated in any manner which
      constitutes a public or private nuisance or which makes void, voidable, or
      cancelable, or increases the premium of, any insurance then in force with
      respect thereto. The Improvements and the Personal Property shall not be
      removed, demolished or materially altered (except for normal replacement of
      the
      Personal Property with items of the same utility and of equal or greater value)
      without the prior written consent of Lender. Borrower shall, or shall cause
      Lessee to promptly repair, replace or rebuild any part of the Property which
      may
      be destroyed by any casualty (to the extent Lender permits the use of insurance
      proceeds for repair after an insured casualty) , or become damaged, worn or
      dilapidated or which may be affected by any proceeding of the character referred
      to in Section 3.4
      hereof
      and shall complete and pay for any structure at any time in the process of
      construction or repair on the Land. Neither Borrower nor Lessee shall initiate,
      join in, acquiesce in, or consent to any change in any private restrictive
      covenant, zoning law or other public or private restriction, limiting or
      defining the uses which may be made of the Property or any part thereof. If
      under applicable zoning provisions the use of all or any portion of the Property
      is or shall become a nonconforming use, neither Borrower nor Lessee will cause
      or permit the nonconforming use to be discontinued or abandoned without the
      express written consent of Lender (provided that Lender permits Borrower to
      use
      the proceeds of insurance for such purpose, to the extent discontinuance or
      abandonment would result from an insured casualty). Neither Borrower nor Lessee
      shall take any steps whatsoever to convert the Property, or any portion thereof,
      to a condominium or cooperative form of management.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Section
      3.6  WASTE.
      Borrower shall not commit or suffer any waste of the Property or allow Lessee
      to
      commit or suffer any waste of the Property (excluding waste which results from
      an insured casualty for which Lender does not release insurance proceeds) or,
      without first obtaining such additional insurance as may be necessary to cover
      a
      proposed change in use of the Property, make or allow Lessee to make any change
      in the use of the Property which will in any way materially increase the risk
      of
      fire or other hazard arising out of the operation of the Property, or take
      any
      action that might invalidate or give cause for cancellation of any Policy,
      or do
      or permit to be done thereon anything that may in any way impair the value
      of
      the Property or the security of this Security Instrument. Borrower will not,
      nor
      will allow Lessee, without the prior written consent of Lender, permit any
      drilling or exploration for or extraction, removal, or production of any
      minerals from the surface or the subsurface of the Land, regardless of the
      depth
      thereof or the method of mining or extraction thereof.

     

    Section
      3.7  COMPLIANCE
      WITH LAWS; ALTERATIONS.

     

    (a)  Borrower
      shall promptly comply with and cause Lessee to promptly comply, in all material
      respects, with all existing and future federal, state and local laws, orders,
      ordinances, governmental rules and regulations or court orders affecting or
      which may be interpreted to affect the Property, or the use thereof, including,
      but not limited to, the Americans with Disabilities Act (the “ADA”)
      (collectively “Applicable
      Laws”).

     

    (b)  Notwithstanding
      any provisions set forth herein or in any document regarding Lender's approval
      of alterations of the Property, Borrower shall not alter the Property (or allow
      Lessee to alter the Property) in any manner which would increase Borrower's
      (or,
      if applicable, Lessee's) responsibilities for compliance with Applicable Laws
      without the prior written approval of Lender. Lender's approval of the plans,
      specifications, or working drawings for alterations of the Property shall create
      no responsibility or liability on behalf of Lender for their completeness,
      design, sufficiency or their compliance with Applicable Laws. The foregoing
      shall apply to tenant improvements constructed by Borrower or Lessee or by
      any
      of its tenants. Lender may condition any such approval upon receipt of a
      certificate of compliance with Applicable Laws from an independent architect,
      engineer, or other person acceptable to Lender.

     

    (c)  Borrower
      shall give prompt notice to Lender of the receipt by Borrower of any notice
      related to a violation of any Applicable Laws and of the commencement of any
      proceedings or investigations which relate to compliance with Applicable
      Laws.

     

    (d)  Borrower
      shall take commercially reasonable measures to prevent and will not engage
      in or
      knowingly permit any illegal activities at the Property.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Section
      3.8  BOOKS
      AND RECORDS.

     

    (a)  Borrower
      shall keep accurate books and records of account in accordance with sound
      accounting principles in which full, true and correct entries shall be promptly
      made with respect to Borrower, the Property and the operation thereof, and
      will
      permit all such books and records (including without limitation all contracts,
      statements, invoices, bills and claims for labor, materials and services
      supplied for the construction, repair or operation to Borrower of the
      Improvements) to be inspected or audited, subject to the provisions of the
      Management Agreement, and copies made by Lender and its representatives during
      normal business hours and at any other reasonable times. Borrower represents
      that its chief executive office is as set forth in the introductory paragraph
      of
      this Security Instrument and that all books and records pertaining to the
      Property are maintained at the Property or at the office of the Property
      Manager, or, if applicable, the Qualified Manager. Borrower will furnish, or
      cause to be furnished, to Lender on or before forty-five (45) calendar days
      after the end of each calendar quarter the following items, each certified
      by
      Borrower as being true and correct, in such format and in such detail as Lender
      or its servicer may request:

     

    (i)  if
      (and
      only if) there are tenants at the Property (other than the Lessee) a written
      statement (rent roll) dated as of the last day of each such calendar quarter
      identifying each of the Leases by the term, space occupied, rental required
      to
      be paid, security deposit paid, any rental concessions, and identifying any
      defaults or payment delinquencies thereunder; 

     

    (ii)  a
      report
      of occupancy for the hotel located on the Property for the subject quarter,
      including an average daily rate, and any and all franchise inspection reports
      received by Borrower during the subject quarter; and

     

    (iii)  quarterly
      and year to date operating statements prepared for each calendar quarter during
      each such reporting period detailing the total revenues received and total
      expenses incurred with respect to the Property.

     

    (b)  Within
      ninety (90) calendar days following the end of each calendar year, Borrower
      shall furnish to Lender (i) a statement of profit and loss for the Property
      in
      such format and in such reasonable detail as Lender or its servicer may request
      and (ii) a certificate from an authorized representative of Borrower certifying,
      to the best knowledge of the authorized representative of Borrower, that such
      annual financial statements present fairly the financial condition and the
      results of operations of Borrower and the Property and, following an Event
      of
      Default, an unqualified opinion of a firm of independent accountants reasonably
      acceptable to Lender. 

     

    (c)  Borrower
      will permit representatives appointed by Lender, including independent
      accountants, agents, attorneys, appraisers and any other persons, to visit
      and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    inspect
      during its normal business hours and at any other reasonable times any of the
      Property and to make photographs thereof, and to write down and record any
      information such representatives obtain, and shall permit Lender or its
      representatives to investigate and verify the accuracy of the information
      furnished to Lender under or in connection with this Security Instrument or
      any
      of the Other Loan Documents and to discuss all such matters with its officers,
      employees and representatives. Borrower will furnish to Lender at Borrower's
      expense all evidence which Lender may from time to time reasonably request
      as to
      the accuracy and validity of or compliance with all representations and
      warranties made by Borrower in the Loan Documents and satisfaction of all
      conditions contained therein. Any inspection or audit of the Property or the
      books and records of Borrower, or the procuring of documents and financial
      and
      other information, by or on behalf of Lender, shall be at Borrower's expense
      up
      to $2,000.00 per inspection or audit and requested no more than once per year
      prior to an Event of Default, and shall not constitute any assumption of
      responsibility or liability by Lender to Borrower or anyone else with regard
      to
      the condition, construction, maintenance or operation of the Property, nor
      Lender's approval of any certification given to Lender nor relieve Borrower
      of
      any of Borrower's obligations.

     

    (d)  Prior
      to
      the transfer of the Loan by Lender pursuant to Section
      16.1 hereof,
      Borrower shall deliver to Lender the reports required by Section
      3.8(a)
      on a
      monthly basis. Such reports shall be delivered within thirty (30) calendar
      days
      after the end of each calendar month.

     

    Section
      3.9  PAYMENT
      FOR LABOR AND MATERIALS.
      

     

    (a)  Borrower
      will promptly pay when due and cause Lessee to promptly pay when due all bills
      and costs for labor, materials, and specifically fabricated materials incurred
      in connection with the Property and never permit to exist beyond the due date
      thereof in respect of the Property or any part thereof any lien or security
      interest, even though inferior to the liens and the security interests hereof,
      and in any event never permit to be created or exist in respect of the Property
      or any part thereof any other or additional lien or security interest other
      than
      the liens or security interests hereof, except for the Permitted Exceptions
      (as
      hereinafter defined).

     

    (b)  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 amount or validity or application in whole or in part
      of
      any of the bills and costs referred to in Section
      3.9(a),
      provided that (i) no Event of Default has occurred and is continuing under
      the
      Note, this Security Instrument or any of the Other Loan Documents, (ii) such
      proceeding shall suspend the collection of such bills and costs from Borrower
      and from the Property or Borrower shall have paid all of such bills and costs
      under protest, (iii) 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, (iv) neither the Property
      nor any part thereof or 

     

    interest
      therein will be in danger of being sold, forfeited, terminated, canceled or
      lost
      and (v) Borrower shall have set aside and deposited with Lender adequate
      reserves or other security, reasonably satisfactory to Lender, for the payment
      of such bills and costs, together with all interest and penalties thereon,
      unless Borrower has paid all of such bills and costs under protest.

     

    Section
      3.10  PERFORMANCE
      OF OTHER AGREEMENTS.
      Borrower shall observe and perform and cause Lessee to observe and perform
      each
      and every term to be observed or performed by Borrower or Lessee pursuant to
      the
      terms of any agreement or recorded instrument affecting or pertaining to the
      Property, or given by Borrower to Lender for the purpose of further securing
      an
      obligation secured hereby and any amendments, modifications or changes
      thereto.

     

    Section
      3.11  CERTAIN
      HOTEL COVENANTS.
      Borrower further covenants and agrees with Lender as follows:

     

    (a)  Subject
      to Section
      3.11(c)(i)
      below,
      Borrower shall cause the Lessee to cause the hotel located on the Property
      to be
      operated pursuant to the Franchise Agreement (as hereinafter defined) and the
      Management Agreement (as hereinafter defined).

     

    (b)  Borrower
      covenants and agrees that it shall (or, if applicable, Borrower shall cause
      the
      Lessee to):

     

    (i)  promptly
      perform and/or observe all of the covenants and agreements required to be
      performed and observed by it under the Franchise Agreement and the Management
      Agreement and do all things necessary to preserve and to keep unimpaired its
      material rights thereunder;

     

    (ii)  promptly
      notify Lender of any default under the Franchise Agreement or the Management
      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 Lessee under the
      Franchise Agreement or the Management Agreement; and

     

    (iv)  promptly
      enforce the performance and observance of all of the covenants and agreements
      required to be performed and/or observed by Promus Hotels, Inc., a Delaware
      corporation (the “Franchisor”)
      under
      the Franchise Agreement and the Property Manager under the Management
      Agreement.

     

    (c)  Borrower
      consents and agrees that it shall not allow the Lessee to do the following,
      without Lender's prior written consent:

     

    (i)  surrender,
      terminate or cancel the Franchise Agreement or the Management Agreement;
provided,
      however,
      the
      Management Agreement may be 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    terminated
      by the Lessee if the Property Manager is in default under the terms of the
      Management Agreement or the Lessee otherwise has the right to terminate the
      Property Manager under the terms of the Management Agreement so long as Lessee,
      before terminating the Management Agreement, notifies Lender of its intention
      to
      do so and agrees to provide a Qualified Manager which shall replace the Property
      Manager. "Qualified
      Manager”
      shall
      mean a replacement property manager of the Property which, including its
      affiliates, (i) has been approved, in writing, by the Franchisor, with evidence
      of such approval sent to Lender, (ii) is the property manager pursuant to a
      replacement property management agreement that is structured at then-prevailing
      market rates for manager of properties similar to the Property and (iii) agrees
      to enter into (with Borrower, Lessee and Lender) a tri-party agreement
      acceptable to Lender comparable to the Acknowledgment of Property Manager
      executed by the Property Manager as of even date herewith. Notwithstanding
      anything contained herein to the contrary, the provisions of Section
      8.4(b)
      must
      also be complied with in order for a Qualified Manager to be appointed or
      selected;

     

    (ii)  reduce
      or
      consent to the reduction of the term of the Franchise Agreement;

     

    (iii)  increase
      or consent to the increase of the amount of any charges under the Franchise
      Agreement or in the management fees payable under the Management Agreement
      in
      excess of five percent (5%) of gross revenues of the Property; or

     

    (iv)  otherwise
      modify, change, supplement, alter or amend, or waive or release any of its
      rights and remedies under, the Franchise Agreement in any material
      respect.

     

    (d)  Borrower
      shall not, without Lender's prior consent, enter into transactions (or allow
      Lessee to enter into transactions) with any affiliate, including without
      limitation, any arrangement providing for the managing of the hotel located
      on
      the Property, the rendering or receipt of services or the purchase or sale
      of
      inventory, except any such transaction in the ordinary course of business of
      Borrower if the monetary or business consideration arising therefrom would
      be
      substantially as advantageous to Borrower as the monetary or business
      consideration that would obtain in a comparable transaction with a person not
      an
      affiliate of Borrower.

     

    (e)  Except
      as
      provided in Section
      3.11(c)(i),
      Borrower shall cause the Lessee to maintain the Management Agreement for the
      operation of the Property in full force and effect and timely perform all of
      Lessee's obligations thereunder and enforce performance of all obligations
      of
      the Property Manager thereunder, and not permit the termination or amendment
      of
      such Management Agreement unless the prior written consent of Lender is first
      obtained. Borrower will cause the Lessee and the Property Manager to enter
      into
      an assignment and subordination of such Management Agreement in form
      satisfactory to 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Lender,
      assigning and subordinating the Property Manager's interest in the Property
      and
      all fees and other rights of the manager pursuant to such Management Agreement
      to the rights of Lender. 

     

    ARTICLE
      4
      -   SPECIAL
      COVENANTS

     

    Borrower
      covenants and agrees that:

     

    Section
      4.1  PROPERTY
      USE.
      The
      Property shall be used only for a hotel and ancillary services and amenities,
      and for no other use without the prior written consent of Lender, which consent
      may be withheld in Lender's sole and absolute discretion.

     

    Section
      4.2  ERISA.

     

    (a)  It
      shall
      not 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 Security Instrument and the Other Loan Documents) to be a
      non-exempt (under a statutory or administrative class exemption) prohibited
      transaction under the Employee Retirement Income Security Act of 1974, as
      amended (“ERISA”).

     

    (b)  It
      shall
      deliver to Lender such certifications or other evidence from time to time
      throughout the term of the Security Instrument, as requested by Lender in its
      sole discretion, that (i) Borrower is not an "employee benefit plan" as defined
      in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a
      "governmental plan" within the meaning of Section 3(32) of ERISA; (ii) Borrower
      is not subject to state statutes regulating investments and fiduciary
      obligations with respect to governmental plans; and (iii) 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) or an investment company
      registered under The Investment Company Act of 1940.

     

    Section
      4.3  SINGLE
      PURPOSE ENTITY.
      (1)
      Borrower covenants and agrees that it has not and shall not:

     

    (a)  engage
      in
      any business or activity other than the acquisition, ownership, operation and
      maintenance of the Property, and activities incidental thereto;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (b)  acquire
      or own any material asset other than (i) the Property, and (ii) such incidental
      Personal Property as may be necessary for the operation of the
      Property;

     

    (c)  merge
      into or consolidate with any person or entity or dissolve, terminate or
      liquidate in whole or in part, transfer or otherwise dispose of all or
      substantially all of its assets or change its legal structure, without in each
      case Lender's consent;

     

    (d)  fail
      to
      preserve its existence as an entity duly organized, validly existing and in
      good
      standing (if applicable) under the laws of the jurisdiction of its organization
      or formation, or without the prior written consent of Lender, amend or modify
      in
      any material respect, terminate or fail to comply with the provisions of
      Borrower's Partnership Agreement, Articles or Certificate of Incorporation,
      Articles of Organization, Operating Agreement or similar organizational
      documents, as the case may be;

     

    (e)  own
      any
      subsidiary or make any investment in or acquire the obligations or securities
      of
      any other person or entity without the consent of Lender;

     

    (f)  commingle
      its assets with the assets of any of its partner(s), members, shareholders,
      affiliates, or of any other person or entity or transfer any assets to any
      such
      person or entity other than distributions on account of equity interests in
      the
      Borrower not prohibited hereunder and properly accounted for;

     

    (g)  incur
      any
      debt, secured or unsecured, direct or contingent (including guaranteeing any
      obligation), other than the Debt, except unsecured trade and operational debt
      incurred with trade creditors in the ordinary course of its business of owning
      and operating the Property in such amounts as are normal and reasonable under
      the circumstances, provided that such debt is not evidenced by a note and is
      paid when due and provided in any event the outstanding principal balance of
      such debt shall not exceed at any one time four percent (4%) of the outstanding
      Debt;

     

    (h)  allow
      any
      person or entity to pay its debts and liabilities (except a Guarantor) or fail
      to pay its debts and liabilities solely from its own assets;

     

    (i)  fail
      to
      maintain its records, books of account and bank accounts separate and apart
      from
      those of the shareholders, partners, members, principals and affiliates of
      Borrower, the affiliates of a shareholder, partner or member of Borrower, and
      any other person or entity or fail to prepare and maintain its own financial
      statements in accordance with generally accepted accounting principles and
      susceptible to audit, or if such financial statements are consolidated fail
      to
      cause such financial statements to contain footnotes disclosing that the
      Property is actually owned by the Borrower;

     

    (j)  enter
      into any contract or agreement with any shareholder, partner, member, principal
      or affiliate of Borrower, any guarantor of all or a portion of the Debt (a
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Guarantor”)
      or any
      shareholder, partner, member, principal or affiliate thereof, except upon terms
      and conditions that are intrinsically fair and substantially similar to those
      that would be available on an arms-length basis with third parties other than
      any shareholder, partner, member, principal or affiliate of Borrower or
      Guarantor, or any shareholder, partner, member, principal or affiliate
      thereof;

     

    (k)  seek
      dissolution or winding up, in whole or in part;

     

    (l)  fail
      to
      correct any known misunderstandings regarding the separate identity of
      Borrower;

     

    (m)  hold
      itself out to be responsible or pledge its assets or credit worthiness for
      the
      debts of another person or entity or allow any person or entity to hold itself
      out to be responsible or pledge its assets or credit worthiness for the debts
      of
      the Borrower (except for a Guarantor);

     

    (n)  make
      any
      loans or advances to any third party, including any shareholder, partner,
      member, principal or affiliate of Borrower, or any shareholder, partner, member,
      principal or affiliate thereof, except advances to the Lessee or Property
      Manager in accordance with the requirements of the Management Agreement and
      Disbursements to members of Borrower not prohibited under the Loan
      Documents;

     

    (o)  fail
      to
      file its own tax returns or to use separate contracts, purchase orders,
      stationery, invoices and checks;

     

    (p)  fail
      either to hold itself out to the public as a legal entity separate and distinct
      from any other entity or person or to conduct its business solely in its own
      name in order not (i) to mislead others as to the entity with which such other
      party is transacting business, or (ii) to suggest that Borrower is responsible
      for the debts of any third party (including any shareholder, partner, member,
      principal or affiliate of Borrower, or any shareholder, partner, member,
      principal or affiliate thereof);

     

    (q)  fail
      to
      allocate fairly and reasonably among Borrower and any third party (including,
      without limitation, any Guarantor) any overhead for common employees, shared
      office space or other overhead and administrative expenses;

     

    (r)  allow
      any
      person or entity to pay the salaries of Borrower's employees or fail to maintain
      a sufficient number of employees for its contemplated business
      operations;

     

    (s)  fail
      to
      maintain adequate capital for the normal obligations reasonably foreseeable
      in a
      business of its size and character and in light of its contemplated business
      operations, subject only to the limits of revenues generated by the
      Property;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (t)  file
      a
      voluntary petition or otherwise initiate proceedings to have the Borrower or
      any
      general partner, manager or managing member of Borrower adjudicated bankrupt
      or
      insolvent, or consent to the institution of bankruptcy or insolvency proceedings
      against the Borrower or any general partner, manager or managing member of
      Borrower, or file a petition seeking or consenting to reorganization or relief
      of the Borrower or any general partner, manager or managing member of Borrower
      as debtor under any applicable federal or state law relating to bankruptcy,
      insolvency, or other relief for debtors with respect to the Borrower or any
      general partner, manager or managing member of Borrower; or seek or consent
      to
      the appointment of any trustee, receiver, conservator, assignee, sequestrator,
      custodian, liquidator (or other similar official) of the Borrower or any general
      partner, manager or managing member of Borrower or of all or any substantial
      part of the properties and assets of the Borrower or any general partner,
      manager or managing member of Borrower, or make any general assignment for
      the
      benefit of creditors of the Borrower or any general partner, manager or managing
      member of Borrower , or admit in writing the inability of the Borrower or any
      general partner, manager or managing member of Borrower to pay its debts
      generally as they become due or declare or effect a moratorium on the Borrower
      or any general partner, manager or managing member of Borrower debt or take
      any
      action in furtherance of any such action;

     

    (u)  share
      any
      common logo (other than logos associated with the Franchisor of the hotel and
      logos associated with the Borrower's affiliation with Equity Inns, Inc.) with
      or
      hold itself out as or be considered as a department or division of (i) any
      shareholder, partner, principal, member or affiliate of Borrower, (ii) any
      affiliate of a shareholder, partner, principal, member or affiliate of Borrower,
      or (iii) any other person or entity or allow any person or entity to identify
      the Borrower as a department or division of that person or entity; or

     

    (v)  conceal
      assets from any creditor, or enter into any transaction with the intent to
      hinder, delay or defraud creditors of the Borrower or the creditors of any
      other
      person or entity.

     

    (2) Borrower
      covenants and agrees that Lessee has not and shall not:

     

    (a) engage
      in
      any business or activity other than the acquisition, ownership, operation and
      maintenance of its leasehold interest in the Property, and activities incidental
      thereto;

     

    (b) acquire
      or own any material asset other than (i) its leasehold interest in the Property,
      and (ii) such incidental Personal Property as may be necessary for the operation
      of the Property;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (c) merge
      into or consolidate with any person or entity or dissolve, terminate or
      liquidate in whole or in part, transfer or otherwise dispose of all or
      substantially all of its assets or change its legal structure, without in each
      case Lender's consent;

     

    (d) fail
      to
      preserve its existence as an entity duly organized, validly existing and in
      good
      standing (if applicable) under the laws of the jurisdiction of its organization
      or formation, or without the prior written consent of Lender, amend, modify,
      terminate or fail to comply with the provisions of Lessee's Partnership
      Agreement, Articles or Certificate of Incorporation, Articles of Organization,
      Operating Agreement or similar organizational documents, as the case may
      be;

     

    (e) own
      any
      subsidiary or make any investment in or acquire the obligations or securities
      of
      any other person or entity without the consent of Lender;

     

    (f) commingle
      its assets with the assets of any of its partner(s), members, shareholders,
      affiliates, or of any other person or entity or transfer any assets to any
      such
      person or entity other than distributions on account of equity interests in
      the
      Lessee permitted hereunder and properly accounted for;

     

    (g) incur
      any
      debt, secured or unsecured, direct or contingent (including guaranteeing any
      obligation), other than its obligations under the Operating Lease, except
      unsecured trade and operational debt incurred with trade creditors in the
      ordinary course of its business of owning and operating the Property in such
      amounts as are normal and reasonable under the circumstances, provided that
      such
      debt is not evidenced by a note and is paid when due and provided in any event
      the outstanding principal balance of such debt shall not exceed at any one
      time
      four percent (4%) of the outstanding Debt,
      which
      four percent (4%) specifically excludes (a) the amounts that are paid out of
      reserves held by Lender and (b) the following GAAP (meaning
      generally accepted accounting principles as applied in the United States defined
      by the Financial Accounting Standards Board or its successor, as in effect
      from
      time to time consistently applied) accruals: (i) employee benefits, (ii) payroll
      taxes and (iii) income taxes;

     

    (h) allow
      any
      person or entity to pay its debts and liabilities or fail to pay its debts
      and
      liabilities solely from its own assets;

     

    (i) fail
      to
      maintain its records, books of account and bank accounts separate and apart
      from
      those of the shareholders, partners, members, principals and affiliates of
      Lessee, the affiliates of a shareholder, partner or member of Lessee, and any
      other person or entity or fail to prepare and maintain its own financial
      statements in accordance with generally accepted accounting principles and
      susceptible to audit, or if such financial statements are consolidated fail
      to
      cause such financial statements to contain footnotes disclosing that the
      Property is actually owned by the Lessee;

     

    

     

    (j) enter
      into any contract or agreement with any shareholder, partner, member, principal
      or affiliate of Lessee, any Guarantor or any shareholder, partner, member,
      principal or affiliate thereof, except upon terms and conditions that are
      intrinsically fair and substantially similar to those that would be available
      on
      an arms-length basis with third parties other than any shareholder, partner,
      member, principal or affiliate of Lessee or Guarantor, or any shareholder,
      partner, member, principal or affiliate thereof;

     

    (k) seek
      dissolution or winding up, in whole or in part;

     

    (l) fail
      to
      correct any known misunderstandings regarding the separate identity of
      Lessee;

     

    (m) hold
      itself out to be responsible or pledge its assets or credit worthiness for
      the
      debts of another person or entity or allow any person or entity to hold itself
      out to be responsible or pledge its assets or credit worthiness for the debts
      of
      the Lessee;

     

    (n) make
      any
      loans or advances to any third party, including any shareholder, partner,
      member, principal or affiliate of Lessee, or any shareholder, partner, member,
      principal or affiliate thereof;

     

    (o) fail
      to
      file its own tax returns or to use separate contracts, purchase orders,
      stationery, invoices and checks;

     

    (p) fail
      either to hold itself out to the public as a legal entity separate and distinct
      from any other entity or person or to conduct its business solely in its own
      name in order not (i) to mislead others as to the entity with which such other
      party is transacting business, or (ii) to suggest that Lessee is responsible
      for
      the debts of any third party (including any shareholder, partner, member,
      principal or affiliate of Lessee, or any shareholder, partner, member, principal
      or affiliate thereof);

     

    (q) fail
      to
      allocate fairly and reasonably among Lessee and any third party any overhead
      for
      common employees, shared office space or other overhead and administrative
      expenses;

     

    (r) allow
      any
      person or entity to pay the salaries of its own employees or fail to maintain
      a
      sufficient number of employees for its contemplated business
      operations;

     

    (s) fail
      to
      maintain adequate capital for the normal obligations reasonably foreseeable
      in a
      business of its size and character and in light of its contemplated business
      operations;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (t) file
      a
      voluntary petition or otherwise initiate proceedings to have the Lessee or
      any
      general partner, manager or managing member of Lessee adjudicated bankrupt
      or
      insolvent, or consent to the institution of bankruptcy or insolvency proceedings
      against the Lessee or any general partner, manager or managing member of Lessee,
      or file a petition seeking or consenting to reorganization or relief of the
      Lessee or any general partner, manager or managing member of Lessee as debtor
      under any applicable federal or state law relating to bankruptcy, insolvency,
      or
      other relief for debtors with respect to the Lessee or any general partner,
      manager or managing member of Lessee; or seek or consent to the appointment
      of
      any trustee, receiver, conservator, assignee, sequestrator, custodian,
      liquidator (or other similar official) of the Lessee or any general partner,
      manager or managing member of Lessee or of all or any substantial part of the
      properties and assets of the Lessee or any general partner, manager or managing
      member of Lessee, or make any general assignment for the benefit of creditors
      of
      the Lessee or any general partner, manager or managing member of Lessee , or
      admit in writing the inability of the Lessee or any general partner, manager
      or
      managing member of Lessee to pay its debts generally as they become due or
      declare or effect a moratorium on the Lessee or any general partner, manager
      or
      managing member of Lessee debt or take any action in furtherance of any such
      action;

     

    (u) share
      any
      common logo with or hold itself out as or be considered as a department or
      division of (i) any shareholder, partner, principal, member or affiliate of
      Lessee, (ii) any affiliate of a shareholder, partner, principal, member or
      affiliate of Lessee, or (iii) any other person or entity or allow any person
      or
      entity to identify the Lessee as a department or division of that person or
      entity; or

     

    (v) conceal
      assets from any creditor, or enter into any transaction with the intent to
      hinder, delay or defraud creditors of the Lessee or the creditors of any other
      person or entity.

     

    Section
      4.4  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,
      to Borrower's knowledge (a) none of the funds or other assets of Borrower and
      Guarantor constitute property of, or are beneficially owned, directly or
      indirectly (excluding any shares owned in any publicly traded company), by
      any
      person, entity or government subject to trade restrictions under U.S. law,
      including but not limited to, the International Emergency Economic Powers Act,
      50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et
      seq., and any Executive Orders or regulations promulgated thereunder with the
      result that the investment in Borrower or Guarantor, as applicable (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 or
      Guarantor, as applicable (excluding any shares owned in any publicly traded
      company), with the result that the investment in Borrower or Guarantor, as
      applicable (whether 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    Section
      4.5  OFAC.
      Borrower
      hereby represents and warrants that, to Borrower's knowledge, Borrower and
      Guarantor and each and every Person affiliated with Borrower and/or Guarantor
      or
      that to Borrower's knowledge has an economic interest in Borrower, or, to
      Borrower's knowledge, that has or will have an interest in the transaction
      contemplated by this Security Instrument or in the Property or will participate,
      in any manner whatsoever, in the Loan (excluding any shareholder in any publicly
      traded company) are
      (i)
      in full compliance with all applicable orders, rules, regulations and
      recommendations of The Office of Foreign Assets Control of the U.S. Department
      of the Treasury; (ii) is not a Prohibited Person (as defined below); (iii)
      in
      full
      compliance with the requirements of the Patriot Act and all other requirements
      contained in the rules and regulations of the Office of Foreign Assets Control,
      Department of the Treasury (as used in this Section only, “OFAC”);
      (iv)
      operated under policies, procedures and practices, if any, that are in
      compliance with the Patriot Act and available to Lender for Lender's review
      and
      inspection during normal business hours and upon reasonable prior notice; (v)
      not in receipt of any notice from the Secretary of State or the Attorney General
      of the United States or any other department, agency or office of the United
      States claiming a violation or possible violation of the Patriot Act; (vi)
      not a
      person who has been determined by competent authority to be subject to any
      of
      the prohibitions contained in the Patriot Act; and (vii) not owned or controlled
      by or now acting and or will in the future act for or on behalf of any person
      who has been determined to be subject to the prohibitions contained in the
      Patriot Act. Borrower covenants and agrees that in the event Borrower receives
      any notice that Borrower or Guarantor (or any of their respective beneficial
      owners, affiliates or participants) become listed on the Annex or any other
      list
      promulgated under the Patriot Act or is indicted, arraigned, or custodially
      detained on charges involving money laundering or predicate crimes to money
      laundering, Borrower shall immediately notify Lender. It shall be an Event
      of
      Default hereunder if Borrower, Guarantor or any other party to any Loan Document
      becomes listed on any list promulgated under the Patriot Act or is indicted,
      arraigned or custodially detained on charges involving money laundering or
      predicate crimes to money laundering.

     

    “Prohibited
      Person”
      shall
      mean any person or entity:

     

    (a)  a
      "blocked" person listed in the Annex,
      or
      otherwise subject to the provisions of, the Executive Order Nos. 12947, 13099
      and 13224 on Terrorist Financing, effective September 24, 2001, and all
      modifications thereto or thereof, and relating to Blocking Property and
      Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
      Terrorism
      (as used
      in this Section only, the "Annex");

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

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

     

    (d)  who
      commits, threatens or conspires to commit or supports "terrorism" as defined
      in
      the Annex;

     

    (e)  that
      is
      named as a "specially designated national and blocked person" on the most
      current list published by the U.S. Treasury Department Office of Foreign Assets
      Control at its official website, http://www.treas.gov.ofac/t11sdn.pdf or at
      any
      replacement website or other replacement official publication of such list
      or
      any
      other list of terrorists or terrorist organizations maintained pursuant to
      any
      of the rules and regulations of the OFAC issued pursuant to the Patriot Act
      or
      on any other list of terrorists or terrorist organizations maintained pursuant
      to the Patriot Act;
      or

     

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

     

    “Patriot
      Act”
      shall
      mean the USA
      PATRIOT Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes
      and all orders, rules and regulations of the United States government and its
      various executive departments, agencies and offices related to the subject
      matter of the Patriot Act, including Executive Order 13224 effective September
      24, 2001.

     

    Section
      4.6  BANK
      ACCOUNTS.
      If at
      any time while the Loan is outstanding, the Property is managed by an Affiliate
      of Borrower or of Guarantor (or at any time after a transfer of the Loan
      pursuant to Section
      16.1
      hereof),
      then Borrower shall cause to be established and maintained with JPMorgan Chase
      Bank, N.A.: (i) all bank accounts into which Rents and other revenue from the
      Property are deposited; and (ii) to the extent permitted by applicable law
      and
      the Leases, all bank accounts into which tenant security deposits are deposited.
      Under such circumstances, unless otherwise required by the Loan Documents,
      the
      Leases or applicable law, there shall be no other accounts maintained by
      Borrower or any other person into which security deposits or revenues from
      the
      ownership and operation of the Property are deposited.

     

    

     

    ARTICLE
      5
      -   REPRESENTATIONS
      AND WARRANTIES

     

    Section
      5.1  BORROWER'S
      REPRESENTATIONS.
      Borrower represents and warrants to Lender that each of the representations
      and
      warranties set forth in that certain Closing Certificate of even date herewith
      executed by Borrower in favor of Lender are true and correct as of the date
      hereof and are hereby incorporated and restated in this Security Instrument
      by
      this reference.

     

    Section
      5.2  WARRANTY
      OF TITLE.
      Borrower represents and warrants that it has good and marketable title to the
      Property and has the right to grant, bargain, sell, pledge, assign,

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    warrant,
      transfer and convey the same and that Borrower possesses an unencumbered fee
      simple absolute estate in the Land and the Improvements and that it owns the
      Property free and clear of all liens, encumbrances and charges whatsoever except
      for the Operating Lease and those other exceptions shown in the title insurance
      policy insuring the lien of this Security Instrument (the “Permitted
      Exceptions”).
      Borrower shall, at its sole cost and expense, forever warrant, defend and
      preserve the title and the validity and priority of the lien of this Security
      Instrument and shall, at its sole cost and expense, forever warrant and defend
      the same to Trustee and Lender against the claims of all persons
      whomsoever.

     

    Section
      5.3  STATUS
      OF PROPERTY.

     

    (a)  No
      portion of the Improvements is located in an area identified by the Secretary
      of
      Housing and Urban Development or any successor thereto as an area having special
      flood hazards pursuant to the National Flood Insurance Act of 1968 or the Flood
      Disaster Protection Act of 1973, as amended, or any successor law, or, if
      located within any such area, Borrower has obtained and will maintain the
      insurance prescribed in Section
      3.2
      hereof.

     

    (b)  Borrower
      has obtained (or caused Lessee to obtain or to cause Property Manager to obtain)
      all necessary certificates, permits, licenses and other approvals, governmental
      and otherwise, necessary for the use, occupancy and operation of the Property
      and the conduct of the business as a hotel (including, without limitation,
      any
      applicable liquor license, certificates of completion and certificates of
      occupancy) and all required zoning, building code, land use, environmental
      and
      other similar permits or approvals, all of which are in full force and effect
      as
      of the date hereof and not subject to revocation, suspension, forfeiture or
      modification (collectively, the “Licenses”).

     

    (c)  The
      Property and the present and contemplated use and occupancy thereof are to
      the
      best knowledge of Borrower in compliance in all material respects with all
      Applicable Laws, including, without limitation, zoning ordinances, building
      codes, land use and environmental laws, laws relating to the disabled
      (including, but not limited to, the ADA) and other similar laws.

     

    (d)  The
      Property is served by all utilities required for the current or contemplated
      use
      thereof. All utility service is provided by public utilities and the Property
      has accepted or is equipped to accept such utility service.

     

    (e)  All
      public roads and streets necessary for service of and access to the Property
      for
      the current or contemplated use thereof have been completed, are serviceable
      and
      are physically and legally open for use by the public.

     

    (f)  The
      Property is served by public water and sewer systems.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (g)  The
      Property is free from damage caused by fire or other casualty. There is no
      pending or, to the best knowledge of Borrower, threatened condemnation
      proceedings affecting the Property or any portion thereof.

     

    (h)  All
      costs
      and expenses of any and all labor, materials, supplies and equipment used in
      the
      construction of the Improvements have been paid in full or will be paid prior
      to
      the attachment to the Property of any lien in connection therewith, and no
      notice of any mechanics' or materialmen's liens or of any claims of right to
      any
      such liens have been received.

     

    (i)  Borrower
      has paid in full for, and is the owner of, all furnishings, fixtures and
      equipment (other than tenants' property) used in connection with the operation
      of the Property, free and clear of any and all security interests, liens or
      encumbrances, except the lien and security interest created hereby.

     

    (j)  All
      liquid and solid waste disposal, septic and sewer systems located on the
      Property are to the best knowledge of Borrower in a good and safe condition
      and
      repair and in compliance with all Applicable Laws.

     

    (k)  All
      Improvements lie within the boundary of the Land.

     

    Section
      5.4  NO
      FOREIGN PERSON.
      Borrower is not a "foreign person" within the meaning of Section 1445(f)(3)
      of
      the Internal Revenue Code of 1986, as amended, and the related Treasury
      Department regulations, including temporary regulations.

     

    Section
      5.5  SEPARATE
      TAX LOT.
      The
      Property is assessed for real estate tax purposes as one or more wholly
      independent tax lot or lots, separate from any adjoining land or improvements
      not constituting a part of such lot or lots, and no other land or improvements
      is assessed and taxed together with the Property or any portion
      thereof.

     

    Section
      5.6  FRANCHISE
      AGREEMENT.
      Franchise License Agreement between Original Lessee and Promus Hotels, Inc.,
      a
      Delaware corporation (the “Franchisor”)
      dated
      January 1, 2001, as assigned (collectively, the “Franchise
      Agreement”),
      pursuant to which Lessee has the right to operate the hotel located on the
      Property under a name and/or hotel system controlled by the Franchisor, is
      in
      full force and effect and there is no default, breach or violation existing
      thereunder by any party thereto and no event has occurred (other than payments
      due but not yet delinquent) that, with the passage of time or the giving of
      notice, or both, would constitute a default, breach or violation by any party
      thereunder.

     

    Section
      5.7  MANAGEMENT
      AGREEMENT.
      

     

    (a)  The
      Master Management Agreement between (COMPANY SUBSIDIARY), a _________
      corporation (the "Original
      Lessee")
      and
      (Hotel Manager), 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    a
      ________ limited liability company (the “Property
      Manager”)
      dated
      January 1, 2001, as amended by the following: (i) that certain First Amendment
      to Master Management Agreement between the Original Lessee and Property Manager
      dated December 4, 2001, (ii) that certain Second Amendment to Master Management
      Agreement between the Original Lessee and Property Manager dated December 31,
      2002, (iii) that certain Third Amendment to Master Management Agreement between
      the Original Lessee and Property Manager dated December 31, 2003 and (iv) that
      certain Fourth Amendment to Master Management Agreement between the Original
      Lessee and Property Manager dated December 31, 2004, and the portion of which
      pertains to the Property was partially assigned by Original Lessee and partially
      assumed by Lessee pursuant to that certain Partial Assignment and Partial
      Assumption of Management Agreement between Property Manager, Original Lessee,
      Lessee and (COMPANY SUBSIDIARY) (collectively, the “Management
      Agreement”),
      pursuant to which such Property Manager operates the Property as a hotel, is
      in
      full force and effect and there is no default, breach or violation existing
      thereunder by any party thereto and no event has occurred (other than payments
      due but not yet delinquent) that, with the passage of time or the giving of
      notice, or both, would constitute a default, breach or violation by any party
      thereunder. 

     

    (b)  If
      (i)
 an Event of Default remains uncured after the expiration of all applicable
      notice and cure periods and pursuant to which Lender either (aa) accelerates
      the
      Loan or (bb) either (xx) commences an action, process or procedure that is
      for
      the purpose of enforcing its liens and security interests under the loan
      documents or acquiring possession or title to the Property or (yy) the interests
      of Borrower are transferred to and owned by Lender by reason of foreclosure,
      acceptance of a deed in lieu of foreclosure, or other proceedings brought by
      it
      or by any other manner, (ii)  the Property Manager is the subject of a
      bankruptcy or similar proceeding or (iii) a material default occurs under
      the Management Agreement beyond any applicable notice and cure periods, Borrower
      shall, at the request of Lender, cause the termination of the Management
      Agreement and cause the Property Manager to be replaced with a Qualified
      Manager.

     

    (c)  The
      management fee payable to Property Manager shall not exceed five percent (5.0%)
      of gross income from operations (the “Underwritten
      Management Fee”).

     

    Section
      5.8  VALIDITY
      OF AGREEMENTS.
      Neither
      the execution and delivery of the Loan Documents, the Borrower's and Lessee's
      performance thereunder, the recordation of this Security Instrument,
      nor the
      exercise of any remedies under this Security Instrument, will adversely affect
      Lessee's rights under the Franchise Agreement, the Management Agreement, or
      any
      of the Licenses.

     

    ARTICLE
      6
      -   OBLIGATIONS
      AND RELIANCES

     

    Section
      6.1  RELATIONSHIP
      OF BORROWER AND LENDER.
      The
      relationship between Borrower and Lender is solely that of debtor and creditor,
      and Lender has no fiduciary 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    or
      other
      special relationship with Borrower, and no term or condition of any of the
      Note,
      this Security Instrument and the other Loan Documents shall be construed so
      as
      to deem the relationship between Borrower and Lender to be other than that
      of
      debtor and creditor.

     

    Section
      6.2  NO
      RELIANCE ON LENDER.
      The
      partners, members, principals and (if Borrower is a trust) beneficial owners
      of
      Borrower are experienced in the ownership and operation of properties similar
      to
      the Property, and Borrower and Lender are relying solely upon such expertise
      and
      business plan in connection with the ownership and operation of the Property.
      Borrower is not relying on Lender's expertise, business acumen or advice in
      connection with the Property.

     

    Section
      6.3  NO
      LENDER OBLIGATIONS.

     

    (a)  Notwithstanding
      the provisions of Subsections
      1.1(e) and 1.1(k)
      or
Section
      1.2,
      Lender
      is not undertaking (i) any obligations under the Leases; or (ii) any obligations
      with respect to such agreements, contracts, certificates, instruments,
      franchises, permits, trademarks, licenses and other documents.

     

    (b)  By
      accepting or approving anything required to be observed, performed or fulfilled
      or to be given to Lender pursuant to this Security Instrument, the Note or
      the
      Other Loan Documents, including without limitation, any officer's certificate,
      balance sheet, statement of profit and loss or other financial statement,
      survey, appraisal, or insurance policy, Lender shall not be deemed to have
      warranted, consented to, or affirmed the sufficiency, legality or effectiveness
      of same, and such acceptance or approval thereof shall not constitute any
      warranty or affirmation with respect thereto by Lender.

     

    Section
      6.4  RELIANCE.
      Borrower recognizes and acknowledges that in accepting the Note, this Security
      Instrument and the Other Loan Documents, Lender is expressly and primarily
      relying on the truth and accuracy of the warranties and representations set
      forth in Article
      5
      and that
      certain Closing Certificate of even date herewith executed by Borrower, without
      any obligation to investigate the Property and notwithstanding any investigation
      of the Property by Lender; that such reliance existed on the part of Lender
      prior to the date hereof; that such warranties and representations are a
      material inducement to Lender in accepting the Note, this Security Instrument
      and the Other Loan Documents; and that Lender would not be willing to make
      the
      Loan (as hereinafter defined) and accept this Security Instrument in the absence
      of the warranties and representations as set forth in Article
      5
      and such
      Closing Certificate.

     

    ARTICLE
      7
      -   FURTHER
      ASSURANCES

     

    Section
      7.1  RECORDING
      FEES.
      Borrower will pay all taxes, filing, registration or recording fees, and all
      expenses incident to the preparation, execution, acknowledgment and/or recording
      of the Note, this Security Instrument, the Other Loan Documents, any note or
      deed of trust supplemental hereto, any security instrument with respect to
      the
      Property and any instrument of further assurance, and any modification or
      amendment of the foregoing documents, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    and
      all
      federal, state, county and municipal taxes, duties, imposts, assessments and
      charges arising out of or in connection with the execution and delivery of
      this
      Security Instrument, any deed of trust supplemental hereto, any security
      instrument with respect to the Property or any instrument of further assurance,
      and any modification or amendment of the foregoing documents, except where
      prohibited by law so to do.

     

    Section
      7.2  FURTHER
      ACTS.
      Borrower will, at the cost of Borrower, and without expense to Lender, do,
      execute, acknowledge and deliver all and every such further acts, deeds,
      conveyances, deeds of trust, assignments, notices of assignments, transfers
      and
      assurances as Lender shall, from time to time, require, for the better assuring,
      conveying, assigning, transferring, and confirming unto Lender the property
      and
      rights hereby mortgaged, granted, bargained, sold, conveyed, confirmed, pledged,
      assigned, warranted and transferred or intended now or hereafter so to be,
      or
      which Borrower may be or may hereafter become bound to convey or assign to
      Lender, or for carrying out the intention or facilitating the performance of
      the
      terms of this Security Instrument or for filing, registering or recording this
      Security Instrument, or for complying with all Applicable Laws. Borrower, on
      demand, will execute and deliver and hereby authorizes Lender to execute in
      the
      name of Borrower or without the signature of Borrower to the extent Lender
      may
      lawfully do so, one or more financing statements, chattel mortgages or other
      instruments, to evidence more effectively the security interest of Lender in
      the
      Property. Borrower grants to Lender an irrevocable power of attorney coupled
      with an interest for the purpose of exercising and perfecting any and all rights
      and remedies available to Lender at law and in equity, including without
      limitation such rights and remedies available to Lender pursuant to this
Section
      7.2.

     

    
      	Section
              7.3  	
              CHANGES
                IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.

            

    

     

    (a)  If
      any
      law is enacted or adopted or amended after the date of this Security Instrument
      which imposes a tax, either directly or indirectly, on the Debt or Lender's
      interest in the Property, requires revenue or other stamps to be affixed to
      the
      Note, this Security Instrument, or the Other Loan Documents, or imposes any
      other tax or charge on the same, Borrower will pay the same, with interest
      and
      penalties thereon, if any. If Lender is advised by counsel chosen by it that
      the
      payment of tax by Borrower would be unlawful or taxable to Lender or
      unenforceable or provide the basis for a defense of usury, then Lender shall
      have the option, by written notice of not less than ninety (90) calendar days,
      to declare the Debt immediately due and payable; provided that Borrower shall
      have no obligation to pay any prepayment fee or penalty in connection with
      payment of the Debt so accelerated.

     

    (b)  Borrower
      will not claim or demand or be entitled to any credit or credits on account
      of
      the Debt for any part of the Taxes or Other Charges assessed against the
      Property, or any part thereof, and no deduction shall otherwise be made or
      claimed from the assessed value of the Property, or any part thereof, for real
      estate tax purposes by reason of this Security Instrument or the Debt. If such
      claim, credit or deduction shall be 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    required
      by law, Lender shall have the option, by written notice of not less than ninety
      (90) calendar days, to declare the Debt immediately due and payable; provided
      that Borrower shall have no obligation to pay any prepayment fee or penalty
      in
      connection with payment of the Debt so accelerated.

     

    Section
      7.4  CONFIRMATION
      STATEMENT.

     

    (a)  After
      request by Lender, Borrower, within ten (10) days, shall furnish Lender or
      any
      proposed assignee with a statement, duly acknowledged and certified, confirming
      to Lender (or its designee) (i) the amount of the original principal amount
      of
      the Note, (ii) the unpaid principal amount of the Note, (iii) the rate of
      interest of the Note, (iv) the terms of payment and maturity date of the Note,
      (v) the date installments of interest and/or principal were last paid, and
      (vi)
      that, except as provided in such statement, there are no defaults or events
      which with the passage of time or the giving of notice or both, would constitute
      an event of default under the Note or this Security Instrument; provided,
      however,
      Lender
      shall not be entitled hereunder to receive more than one (1) such statement
      in
      each calendar year.

     

    (b)  
      Subject
      to the provisions of the Leases, Borrower shall use commercially reasonable
      efforts to deliver to Lender, promptly upon request (but not more frequently
      than once annually so long as Borrower is not in default hereunder), duly
      executed estoppel certificates from any one or more lessees as required by
      Lender attesting to such facts regarding the Lease as Lender may require,
      including but not limited to attestations that each Lease covered thereby is
      in
      full force and effect with no defaults thereunder on the part of any party,
      that
      none of the Rents have been paid more than one month in advance, and that the
      lessee claims no defense or offset against the full and timely performance
      of
      its obligations under the Lease.

     

    (c)  Upon
      any
      transfer or proposed transfer contemplated by Section
      16.1
      hereof,
      at Lender's request, Borrower, and any Guarantors shall provide an estoppel
      certificate to the Investor (defined in Section
      16.1)
      or any
      prospective Investor in such form, substance and detail as Lender, such Investor
      or prospective Investor may require.

     

    Section
      7.5  SPLITTING
      OF SECURITY INSTRUMENT.
      This
      Security Instrument and the Note shall, at any time until the same shall be
      fully paid and satisfied, at the sole election of Lender, be split or divided
      into two or more notes and two or more security instruments, each of which
      shall
      cover all or a portion of the Property to be more particularly described
      therein. To that end, Borrower, upon written request of Lender, shall execute,
      acknowledge and deliver, or cause to be executed, acknowledged and delivered
      by
      the then owner of the Property, to Lender and/or its designee or designees
      substitute notes and security instruments in such principal amounts, aggregating
      not more than the then unpaid principal amount of Debt, and containing terms,
      provisions and clauses similar to those contained herein and in the Note, and
      such other documents and instruments as may be required by Lender. Borrower
      shall have no obligation to pay any expenses incurred by Lender in connection
      herewith.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Section
      7.6  REPLACEMENT
      DOCUMENTS.
      Upon
      receipt of an affidavit of an officer of Lender as to the loss, theft,
      destruction or mutilation of the Note or any Other Loan Document which is not
      of
      public record, and, in the case of any such mutilation, upon surrender and
      cancellation of such Note or Other Loan Document, Borrower will issue, in lieu
      thereof, a replacement Note or Other Loan Document, dated the date of such
      lost,
      stolen, destroyed or mutilated Note or Other Loan Document in the same principal
      amount thereof and otherwise of like tenor. Borrower shall have no obligation
      to
      pay any expenses of Lender incurred in connection herewith.

     

    ARTICLE
      8
      -   DUE
      ON
      SALE/ENCUMBRANCE

     

    Section
      8.1  TRANSFER
      DEFINITIONS. “Affiliated
      Manager”
      shall
      mean any property manager which is an Affiliate of, or in which Borrower or
      any
      Guarantor has, directly or indirectly, any legal, beneficial or economic
      interest; a “Restricted
      Party”
      shall
      mean Borrower, Lessee, any Guarantor, or any Affiliated Manager or any
      shareholder, partner, member or non-member manager, or any direct or indirect
      legal or beneficial owner of Borrower, any Guarantor, any Affiliated Manager
      or
      any non-member manager; and a “Sale or
      Pledge”
      shall
      mean a voluntary or involuntary sale, conveyance, transfer or pledge of a direct
      or indirect legal or beneficial interest.

     

    Section
      8.2  LENDER
      RELIANCE.
      Borrower acknowledges that Lender has examined and relied on the
      creditworthiness of Borrower and experience of Borrower, Lessee and their
      respective partners, members, principals and (if Borrower is a trust) beneficial
      owners in owning and operating properties such as the Property in agreeing
      to
      make the Loan, and will continue to rely on Borrower's ownership of the Property
      as a means of maintaining the value of the Property as security for repayment
      of
      the Debt and the performance of the Other Obligations. Borrower acknowledges
      that Lender has a valid interest in maintaining the value of the Property so
      as
      to ensure that, should Borrower default in the repayment of the Debt or the
      performance of the Other Obligations, Lender can recover the Debt by a sale
      of
      the Property.

     

    Section
      8.3  NO
      SALE/ENCUMBRANCE.
      

     

    (a)  Borrower
      shall not individually and shall not allow Lessee to sell, convey, mortgage,
      grant, bargain, encumber, pledge, assign, grant options with respect to, or
      otherwise transfer or dispose of (directly or indirectly, voluntarily or
      involuntarily, by operation of law or otherwise, and whether or not for
      consideration or of record) the Property or any part thereof or any legal or
      beneficial interest therein or permit a Sale or Pledge of an interest in any
      Restricted Party (collectively, a “Transfer”),
      other
      than pursuant to (i) Leases of space in the Improvements to tenants in
      accordance with the provisions of Article
      3
      of the
      ALR and the Operating Lease, (ii) the Original Assignment or (iii) the
      Assignment of Contracts, without (aa) the prior written consent of Lender and
      (bb) if a Securitization has occurred, delivery to Lender of written
      confirmation from the Rating Agencies that the Transfer will not result in
      the
      downgrade, withdrawal or 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    qualification
      of the then current ratings assigned to any Securities or the proposed rating
      of
      any Securities.

     

    (b)  A
      Transfer shall include, but not be limited to: (i) an installment sales
      agreement wherein Borrower or Lessee agrees to sell the Property (including,
      without limitation, Lessee's leasehold interest in the Property) or any part
      thereof for a price to be paid in installments; (ii) any assignment or sublease
      by Lessee of its interest in the Operating Lease or, other than the Operating
      Lease, an agreement by Borrower or Lessee leasing all or a substantial part
      of
      the Property for other than actual occupancy by a space tenant thereunder or
      a
      sale, assignment or other transfer of, or the grant of a security interest
      in,
      Borrower's right, title and interest in and to any Leases or any Rents; (iii)
      if
      a Restricted Party is a corporation, any merger, consolidation or Sale or Pledge
      of such corporation's stock or the creation or issuance of new stock; (iv)
      if a
      Restricted Party is a limited or general partnership or joint venture, any
      merger or consolidation or the change, removal, resignation or addition of
      a
      general partner or the Sale or Pledge of the partnership interest of any general
      partner or any profits or proceeds relating to such partnership interest, or
      the
      Sale or Pledge of limited partnership interests or any profits or proceeds
      relating to such limited partnership interests or the creation or issuance
      of
      new limited partnership interests; (v) if a Restricted Party is a limited
      liability company, any merger or consolidation or the change, removal,
      resignation or addition of a managing member or non-member manager (or if no
      managing member, any member) or the Sale or Pledge of the membership interest
      of
      a managing member (or if no managing member, any member) or any profits or
      proceeds relating to such membership interest, or the Sale or Pledge of
      non-managing membership interests or the creation or issuance of new
      non-managing membership interests; (vi) if a Restricted Party is a trust or
      nominee trust, any merger, consolidation or the Sale or Pledge of the legal
      or
      beneficial interest in a Restricted Party or the creation or issuance of new
      legal or beneficial interests; or (vii) the removal of the Property Manager
      (including, without limitation, an Affiliated Manager) other than in accordance
      with Section
      3.11
      hereof.

     

    Section
      8.4  EXCLUDED
      AND
      PERMITTED TRANSFERS.

     

    (a)  Notwithstanding
      the provisions of Sections
      8.3(a) and (b),
      the
      following transfers shall not be deemed to be a Transfer: 

     

    (i)  a
      transfer by devise or descent or by operation of law upon the death of a member,
      partner or shareholder of a Restricted Party or a Restricted Party itself
      subject, however, to all the following requirements: (A) written notice of
      any
      transfer under this Section
      8.4(a)(i)
      is
      provided to Lender or its servicer, together with copies of such documents
      relating to the transfer as Lender or its servicer may reasonably request,
      (B)
      control over the management and operation of the Property is retained by one
      or
      more of Equity Inns, Inc., a Tennessee corporation (the “Original
      Principals”,
      whether
      one or more), (C) no such transfer upon death will release such party's estate
      from any liability as a 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Guarantor,
      and (D) no such transfer upon death has any adverse effect either on the
      bankruptcy-remote status of Borrower or Lessee under the requirements of any
      Rating Agency or on the status of Borrower or Lessee as a continuing legal
      entity liable for the payment of the Debt and the performance of all other
      obligations secured hereby; 

     

    (ii)  the
      Sale
      or Pledge, in one or a series of transactions, of not more than forty-nine
      percent (49%) of the stock in a Restricted Party; provided, however, no such
      transfers shall result in the change of voting control in the Restricted Party,
      and as a condition to each such transfer, Lender shall receive not less than
      thirty (30) days prior written notice of such proposed transfer; 

     

    (iii)  the
      Sale
      or Pledge, in one or a series of transactions, of not more than forty-nine
      percent (49%) of the limited partnership interests or non-managing membership
      interests (as the case may be) in a Restricted Party; provided, however, as
      a
      condition to each such transfer, Lender shall receive not less than thirty
      (30)
      days prior written notice of such proposed transfer; or

     

    (iv)  a
      transfer of all or any portion of ownership interests in a Restricted Party
      to
      one or more family members of such Restricted Party or a trust in which all
      of
      the beneficial interest is held by one or more family members of such Restricted
      Party or a partnership or limited liability company in which a majority of
      the
      capital and profits interests are held by one or more family members of such
      Restricted Party, provided,
      that
      any transfer pursuant to this Section
      8.4(a)(iv)
      is made
      in connection with such Restricted Party's bona fide, good faith estate planning
      and that the person(s) with voting control of such Restricted Party or the
      management of the Property are (i) the same person(s) who had such voting
      control and management rights immediately prior to the transfer in question,
      or
      (ii) reasonably acceptable to Lender and provided further
      that no
      such transfer shall have any adverse effect on the bankruptcy remote status
      of
      Borrower under the requirements of any Rating Agency. As used herein,
“family
      members”
      shall
      include the spouse, children and grandchildren and any lineal
      descendants.

     

    (b)  Notwithstanding
      anything to the contrary contained in Section
      8.4(a),
      Equity
      Inns, Inc. must continue to control Borrower and Lessee and own, directly or
      indirectly, at least a 51 % interest in Borrower and Lessee.

     

    (c)  Lender
      shall not be required to demonstrate any actual impairment of its security
      or
      any increased risk of default hereunder in order to declare the Debt immediately
      due and payable upon a Transfer in violation of this Article
      8.
      This
      provision shall apply to every Transfer regardless of whether voluntary or
      not,
      or whether or not Lender has consented to any previous Transfer. Notwithstanding
      anything to the contrary contained in this Article
      8,
      (a) no
      transfer (whether or not such transfer shall constitute a Transfer) shall be
      made to any Prohibited Person and (b) in the event any transfer (whether or
      not
      such transfer shall constitute a Transfer) results in any person or entity
      owning in excess of forty-nine percent (49%) of the ownership interest in a
      Restricted Party, Borrower shall, prior to such transfer, deliver an updated
      Insolvency Opinion to Lender, which opinion shall be in form, scope and
      substance acceptable in all respects to Lender and the Rating
      Agencies.

     

    (d)  Notwithstanding
      the provisions of Section
      8.3
      above,
      Lender will give its consent to three separate sales or transfers of the
      Property or ownership interests in a Restricted Party, if (but only if) no
      Event
      of Default under the Loan Documents has occurred and is continuing, and if
      each
      of the following conditions precedent have been fully satisfied (as determined
      in Lender's sole and absolute discretion): (i) the grantee's or transferee's
      integrity, reputation, financial condition, character and management ability
      are
      satisfactory to Lender in its sole discretion, and all information relating
      thereto requested by Lender is delivered to Lender at least 30 days prior to
      the
      proposed transfer, (ii) the grantee's or transferee's (and its sole general
      partner's or managing member's) single purpose and bankruptcy remote character
      are satisfactory to Lender in its sole discretion, and all information relating
      thereto requested by Lender is delivered to Lender at least 30 days prior to
      the
      proposed transfer, (iii) the grantee's or transferee's continued compliance
      with
      the representations and covenants set forth in Sections
      4.2 and 4.3
      hereof,
      (iv) Lender has obtained such estoppels from any guarantors of the Note or
      replacement guarantors and such other legal opinions regarding substantive
      consolidation issues, enforceability of the assumption documents, no adverse
      impact on the Securities or any REMIC holding the Note and similar matters
      as
      Lender may require, (v) all of Lender's costs and expenses associated with
      the
      sale or transfer (including reasonable attorneys' fees and Rating Agency fees)
      are paid by Borrower or the grantee or transferee, (vi) the payment to Lender
      of
      a $5,000 non-refundable application fee and a transfer fee not to exceed 1%
      of
      the then unpaid principal balance of the loan evidenced by the Note and secured
      hereby (the “Loan”),
      (vii)
      the execution and delivery to Lender of a written assumption agreement and/or
      substitute guaranty (in its sole and absolute discretion) and such modifications
      to the Loan Documents executed by such parties and containing such terms and
      conditions as Lender may require in its sole and absolute discretion prior
      to
      such sale or transfer (provided that in the event the Loan is included in a
      REMIC and is a performing Loan, no modification to the terms and conditions
      shall be made or permitted that would cause (A) any adverse tax consequences
      to
      the REMIC or any holders of any Mortgage-Backed Pass-Through Securities, (B)
      the
      Security Instrument to fail to be a Qualifying Security Instrument under
      applicable federal law relating to REMIC's, or (C) result in a taxation of
      the
      income from the Loan to the REMIC or cause a loss of REMIC status), (viii)
      if
      applicable, the delivery to Lender of an endorsement (at Borrower's sole cost
      and expense) to Lender's policy of title insurance then insuring the lien
      created by this Security Instrument in form and substance acceptable to Lender
      in its sole judgment, and (ix) if required by Lender, confirmation in writing
      from the Rating Agencies to the effect that such transfer will not result in
      a
      re-qualification, reduction or withdrawal of the then current rating assigned
      to
      the Securities or any class thereof in any applicable
      Securitization.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (e)  Without
      limiting the foregoing, if Lender shall consent to a transfer of the Property,
      the written assumption agreement described in Subsection
      8.4(d)(vii)
      above
      shall provide for the release of Borrower and each Guarantor of personal
      liability under the Note and Other Loan Documents, but only as to acts or events
      occurring, or obligations arising, after the closing of such
      transfer.

     

    Section
      8.5  NO
      IMPLIED FUTURE CONSENT.
      Lender's consent to one sale, conveyance, alienation, mortgage, encumbrance,
      pledge or transfer of the Property shall not be deemed to be a waiver of
      Lender's right to require such consent to any future occurrence of same. Any
      sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of
      the
      Property made in contravention of this Article 8
      shall be
      null and void and of no force and effect.

     

    Section
      8.6  COSTS
      OF CONSENT.
      Borrower agrees to bear and shall pay or reimburse Lender on demand for all
      reasonable expenses (including, without limitation, all recording costs,
      reasonable outside attorneys' fees and disbursements and title search costs)
      incurred by Lender in connection with the review, approval and documentation
      of
      any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
      transfer.

     

    Section
      8.7  CONTINUING
      SEPARATENESS REQUIREMENTS.
      In no
      event shall any of the terms and provisions of this Article
      8
      amend or
      modify the terms and provisions contained in Section
      4.3
      herein.

     

    ARTICLE
      9
      -   DEFAULT

     

    Section
      9.1  EVENTS
      OF DEFAULT.
      The
      occurrence of any one or more of the following events shall constitute an
“Event
      of Default”:

     

    (a)  if
      any
      portion of the Debt is not paid prior to the tenth (10th) calendar day after
      the
      same is due or if the entire Debt is not paid on or before the maturity date,
      along with applicable prepayment premiums, if any; 

     

    (b)  if
      Borrower, or its general partner, manager or managing member, if applicable,
      violates (or allows Lessee to violate) or does not comply with any of the
      provisions of Section
      4.3, Article
      8,
      or the
      Undelivered Items Letter, fails to deliver any of the reports required by
Section
      3.8,
      or
      fails to complete any "Immediate Repairs" (as defined in the Escrow Agreement);
      provided,
      however,
      Lender
      shall give Borrower notice of a default under this Section
      9.1(b)
      pertaining solely to the reports required by Section
      3.8
      and a
      fifteen (15) day cure period once each calendar year before an Event of Default
      can be deemed to exist;

     

    (c)  if
      any
      representation or warranty of Borrower or of its members, general partners,
      principals, affiliates, agents or employees, or of any Guarantor made herein
      or
      in the Environmental Indemnity or in any other Loan Document, in any guaranty,
      or in 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    any
      certificate, report, financial statement or other instrument or document
      furnished to Lender shall have been false or misleading in any material respect
      when made;

     

    (d)  if
      Borrower or any Guarantor shall make an assignment for the benefit of creditors
      or if Borrower or any Guarantor shall admit in writing its inability to pay,
      or
      Borrower's or any Guarantor's failure to pay its debts as they become
      due;

     

    (e)  if
      (i)
      Borrower or any subsidiary or general partner, manager or managing member of
      Borrower, or any Guarantor shall commence any case, proceeding or other action
      (A) under any existing or future law of any jurisdiction, domestic or foreign,
      relating to bankruptcy, insolvency, reorganization, conservatorship or relief
      of
      debtors, seeking to have an order for relief entered with respect to it, or
      seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
      arrangement, adjustment, winding-up, liquidation, dissolution, composition
      or
      other relief with respect to it or its debts, or (B) seeking appointment of
      a
      receiver, trustee, custodian, conservator or other similar official for it
      or
      for all or any substantial part of its assets, or Borrower or any subsidiary
      or
      general partner, manager or managing member of Borrower, or any Guarantor shall
      make a general assignment for the benefit of its creditors; or (ii) there shall
      be commenced against Borrower or any subsidiary or general partner, manager
      or
      managing member of Borrower, or any Guarantor any case, proceeding or other
      action of a nature referred to in clause (i) above which (A) results in the
      entry of an order for relief or any such adjudication or appointment or (B)
      remains undismissed, undischarged or unbonded for a period of ninety (90)
      calendar days; or (iii) there shall be commenced against Borrower or any
      subsidiary or general partner, manager or managing member of Borrower or any
      Guarantor any case, proceeding or other action seeking issuance of a warrant
      of
      attachment, execution, distraint or similar process against all or any
      substantial part of its assets which results in the entry of any order for
      any
      such relief which shall not have been vacated, discharged, or stayed or bonded
      pending appeal within sixty (60) calendar days from the entry thereof; or (iv)
      Borrower or any subsidiary or general partner, manager or managing member of
      Borrower, or any Guarantor shall take any action in furtherance of, or
      indicating its consent to, approval of, or acquiescence in, any of the acts
      set
      forth in clause (i), (ii) or (iii) above; or (v) Borrower or any subsidiary
      or
      general partner, manager or managing member of Borrower, or any Guarantor shall
      generally not, or shall be unable to, or shall admit in writing its inability
      to, pay its debts as they become due; 

     

    (f)  subject
      to Borrower's right to contest certain liens as provided in this Security
      Instrument, if the Property becomes subject to any mechanic's, materialman's
      or
      other lien other than a lien for local real estate taxes and assessments not
      then due and payable and the lien shall remain undischarged of record (by
      payment, bonding or otherwise) for a period of thirty (30) calendar
      days;

     

    (g)  if
      any
      federal tax lien is filed against Borrower, any general partner, manager or
      managing member of Borrower, any Guarantor or the Property and same is

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    not
      discharged of record within one hundred eighty (180) calendar days after same
      is
      filed, so long as (i) Borrower is diligently pursuing the discharge and release
      of the federal tax lien and (ii) the Internal Revenue Service, or other
      applicable federal agency, takes no action during such one hundred eight (180)
      day period to enforce such lien;

     

    (h)  except
      as
      permitted in this Security Instrument or required by the Franchisor pursuant
      to
      the Franchise Agreement, the actual or threatened alteration, improvement,
      demolition or removal of any of the Improvements, or any construction on the
      Property, without the prior consent of Lender;

     

    (i)  Borrower's
      failure to maintain (or cause to be maintained) the insurance required under
      this Security Instrument;

     

    (j)  Borrower's
      failure to comply with Section
      3.11(c);

     

    (k)  this
      Security Instrument shall cease to constitute a first-priority lien on the
      Property (other than in accordance with its terms);

     

    (l)  seizure
      or forfeiture of the Property, or any portion thereof, or Borrower's interest
      therein, resulting from criminal wrongdoing or other unlawful action of
      Borrower, its affiliates, or Lessee under any federal, state or local
      law;

     

    (m)  if
      Borrower consummates a transaction which would cause this Security Instrument
      or
      Lender's exercise of its rights under this Security Instrument, the Note or
      the
      Other Loan Documents to constitute a nonexempt prohibited transaction under
      ERISA or result in a violation of a state statute regulating governmental plans,
      subjecting Lender to liability for a violation of ERISA or a state statute;
      

     

    (n)  if
      any
      default occurs under any guaranty or indemnity including the Environmental
      Indemnity and Guaranty executed in connection herewith and such default
      continues after the expiration of applicable grace periods, or such guaranty
      or
      indemnity shall cease to be in full force and effect, or any guarantor or
      indemnitor shall deny or disaffirm its obligation thereunder; 

     

    (o)  if
      without Lender's prior consent, there is any change in the term or fees paid
      under the Franchise Agreement (or any successor franchise agreement) which
      are
      not consistent with market conditions;

     

    (p)  if
      a
      default has occurred and continues beyond any applicable cure period under
      the
      Franchise Agreement (or any successor franchise agreement) if such default
      permits the Franchisor to terminate or cancel the Franchise Agreement (or any
      successor franchise agreement) and a substitute franchise agreement with a
      franchisor reasonably acceptable to Lender is not executed by Borrower or Lessee
      and such franchisor within sixty (60) days of such termination or cancellation;
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (q)  if
      Lessee
      ceases to do business as a hotel on the Property or terminates such business
      for
      any reason whatsoever (other than temporary cessation in connection with any
      renovations or casualty or condemnation repair to the Property); 

     

    (r)  if
      without Lender's prior consent, there is any material change in the Operating
      Lease, including, but not limited to a change in the rent; 

     

    (s)  if
      Borrower or Lessee shall (i) fail to observe or perform any term, covenant,
      condition or agreement in the Operating Lease beyond any cure period contained
      therein, (ii) cancel or terminate if the Operating Lease for any reason or
      (iii)
      fail to renew the Operating Lease in accordance with the renewal provisions
      contained within the Operating Lease; and

     

    (t)  if
      Borrower or any Guarantor, as the case may be, shall continue to be in default
      under any other term, covenant or condition of this Security Instrument or
      any
      Other Loan Documents for thirty (30) calendar days after notice from Lender;
      provided
      that if
      such default cannot reasonably be cured within such thirty (30) calendar day
      period and Borrower (or such Guarantor as the case may be) shall have commenced
      to cure such default within such thirty (30) calendar day period and thereafter
      diligently and expeditiously proceeds to cure the same, such thirty (30)
      calendar day period shall be extended for so long as it shall require Borrower
      (or such Guarantor as the case may be) in the exercise of due diligence to
      cure
      such default, it being agreed that no such extension shall be for a period
      in
      excess of ninety (90) calendar days after the notice from Lender referred to
      above. 

     

    Section
      9.2  DEFAULT
      INTEREST.
      Borrower will pay, from the date of an Event of Default through the earlier
      of
      the date upon which the Event of Default is cured or the date upon which the
      Debt is paid in full, interest on the unpaid principal balance of the Note
      at a
      per annum rate equal to the lesser of (a) the greater of (i) five percent (5%)
      plus the Prime Rate (as defined in the Note), and (ii) five percent (5%) plus
      the Applicable Interest Rate (as defined in the Note), and (b) the maximum
      interest rate which Borrower may by law pay or Lender may charge and collect
      (the “Default
      Rate”).

     

    ARTICLE
      10 -   RIGHTS
      AND REMEDIES

     

    Section
      10.1  REMEDIES.
      Upon
      the occurrence of any Event of Default, Borrower agrees that Lender may take
      such action, by or through Trustee, by Lender itself or otherwise, without
      notice or demand, as it deems advisable to protect and enforce its rights
      against Borrower and in and to the Property, including, but not limited to,
      the
      following actions, each of which may be pursued concurrently or otherwise,
      at
      such time and in such order as Lender may determine, in its sole discretion,
      without impairing or otherwise affecting the other rights and remedies of
      Lender:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (a)  Right
      to Perform Borrower's Covenants.
      If
      Borrower has failed to keep or perform any covenant whatsoever contained in
      this
      Security Instrument or the Other Loan Documents, Lender may, but shall not
      be
      obligated to any person to do so, perform or attempt to perform said covenant
      and any payment made or expense incurred in the performance or attempted
      performance of any such covenant, together with any sum expended by Lender
      that
      is chargeable to Borrower or subject to reimbursement by Borrower under the
      Loan
      Documents, shall be and become a part of the "Debt", and Borrower promises,
      upon
      demand, to pay to Lender, at the place where the Note is payable, all sums
      so
      incurred, paid or expended by Lender, with interest from the date when paid,
      incurred or expended by Lender at the Default Rate.

     

    (b)  Right
      of Entry.
      Lender
      may, prior or subsequent to the institution of any foreclosure proceedings,
      enter upon the Property, or any part thereof, and take exclusive possession
      of
      the Property and of all books, records, and accounts relating thereto and to
      exercise without interference from Borrower any and all rights which Borrower
      has with respect to the management, possession, operation, protection, or
      preservation of the Property, including without limitation the right to rent
      the
      same for the account of Borrower and to deduct from such Rents all costs,
      expenses, and liabilities of every character incurred by Lender in collecting
      such Rents and in managing, operating, maintaining, protecting, or preserving
      the Property and to apply the remainder of such Rents on the Debt in such manner
      as Lender may elect. All such costs, expenses, and liabilities incurred by
      Lender in collecting such Rents and in managing, operating, maintaining,
      protecting, or preserving the Property, if not paid out of Rents as hereinabove
      provided, shall constitute a demand obligation owing by Borrower and shall
      bear
      interest from the date of expenditure until paid at the Default Rate, all of
      which shall constitute a portion of the Debt. If necessary to obtain the
      possession provided for above, Lender may invoke any and all legal remedies
      to
      dispossess Borrower, including specifically one or more actions for forcible
      entry and detainer, trespass to try title, and restitution. In connection with
      any action taken by Lender pursuant to this Subsection
      10.1(b),
      Lender
      shall not be liable for any loss sustained by Borrower resulting from any
      failure to let the Property, or any part thereof, or from any other act or
      omission of Lender in managing the Property unless such loss is caused by the
      willful misconduct of Lender, nor shall Lender be obligated to perform or
      discharge any obligation, duty, or liability under any Lease or under or by
      reason hereof or the exercise of rights or remedies hereunder. Borrower shall
      and does hereby agree to indemnify Lender for, and to hold Lender harmless
      from,
      any and all liability, loss, or damage, which may or might be incurred by Lender
      under any such Lease or under or by reason hereof or the exercise of rights
      or
      remedies hereunder, and from any and all claims and demands whatsoever which
      may
      be asserted against Lender by reason of any alleged obligations or undertakings
      on its part to perform or discharge any of the terms, covenants, or agreements
      contained in any such Lease. Should Lender incur any such liability, the amount
      thereof, including without limitation costs, expenses, and reasonable attorneys'
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    fees,
      together with interest thereon from the date of expenditure until paid at the
      Default Rate, shall be secured hereby, and Borrower shall reimburse Lender
      therefor immediately upon demand. Nothing in this Subsection
      10.1(b)
      shall
      impose any duty, obligation, or responsibility upon Lender for the control,
      care, management, leasing, or repair of the Property, nor for the carrying
      out
      of any of the terms and conditions of any such Lease; nor shall it operate
      to
      make Lender responsible or liable for any waste committed on the Property by
      the
      tenants or by any other parties, or for any hazardous substances or
      environmental conditions on or under the Property, or for any dangerous or
      defective condition of the Property or for any negligence in the management,
      leasing, upkeep, repair, or control of the Property resulting in loss or injury
      or death to any tenant, licensee, employee, or stranger. Borrower hereby assents
      to, ratifies, and confirms any and all actions of Lender with respect to the
      Property taken under this subsection.

     

    (c)  Right
      to Accelerate.
      Lender
      may, without notice (except as provided in Section
      9.1(t)
      above)
      demand, presentment, notice of nonpayment or nonperformance, protest, notice
      of
      protest, notice of intent to accelerate, notice of acceleration, or any other
      notice or any other action, all of which are hereby waived by Borrower and
      all
      other parties obligated in any manner whatsoever on the Debt, declare the entire
      unpaid balance of the Debt immediately due and payable, and upon such
      declaration, the entire unpaid balance of the Debt shall be immediately due
      and
      payable.

     

    (d)  Foreclosure-Power
      of Sale.
      Lender
      may institute a proceeding or proceedings, judicial, or nonjudicial, by
      advertisement or otherwise, for the complete or partial foreclosure of this
      Security Instrument or the complete or partial sale of the Property under any
      applicable provision of law. Lender may, through the Trustee, sell the Property,
      and all estate, right, title, interest, claim and demand of Borrower therein,
      and all rights of redemption thereof, at one or more sales, as an entirety
      or in
      parcels, with such elements of real and/or personal property, and at such time
      and place and upon such terms as it may deem expedient, or as may be required
      by
      applicable law, and in the event of a sale, by foreclosure or otherwise, of
      less
      than all of the Property, this Security Instrument shall continue as a lien
      and
      security interest on the remaining portion of the Property. 

     

    (e)  Rights
      Pertaining to Sales.
      Subject
      to the requirements of applicable law and except as otherwise provided herein,
      the following provisions shall apply to any sale or sales of all or any portion
      of the Property under or by virtue of Subsection
      10.1(d)
      above,
      whether made under the power of sale herein granted or by virtue of judicial
      proceedings or of a judgment or decree of foreclosure and sale:

     

    (i)  Trustee
      may conduct any number of sales from time to time. The power of sale set forth
      above shall not be exhausted by any one or more such sales as to any part of
      the
      Property which shall not have been sold, nor by any sale which is not completed
      or is defective in Trustee's or Lender's opinion, until the Debt shall have
      been
      paid in full. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (ii)  Any
      sale
      may be postponed or adjourned by public announcement at the time and place
      appointed for such sale or for such postponed or adjourned sale without further
      notice, or may be postponed in any manner permitted by law.

     

    (iii)  After
      each sale, Trustee or an officer of any court empowered to do so shall execute
      and deliver to the purchaser or purchasers at such sale a good and sufficient
      instrument or instruments granting, conveying, assigning and transferring all
      right, title and interest of Borrower in and to the property and rights sold
      and
      shall receive the proceeds of said sale or sales and apply the same as specified
      in the Note. Each of Trustee and Lender is hereby appointed the true and lawful
      attorney-in-fact of Borrower, which appointment is irrevocable and shall be
      deemed to be coupled with an interest, in Borrower's name and stead, to make
      all
      necessary conveyances, assignments, transfers and deliveries of the property
      and
      rights so sold, Borrower hereby ratifying and confirming all that said attorney
      or such substitute or substitutes shall lawfully do by virtue thereof.
      Nevertheless, Borrower, if requested by Trustee or Lender, shall ratify and
      confirm any such sale or sales by executing and delivering to Trustee, Lender
      or
      such purchaser or purchasers all such instruments as may be advisable, in
      Trustee's or Lender's judgment, for the purposes as may be designated in such
      request.

     

    (iv)  Any
      and
      all statements of fact or other recitals made in any of the instruments referred
      to in Subsection
      10.1(e)(iii)
      given by
      Trustee or Lender shall be taken as conclusive and binding against all persons
      as to evidence of the truth of the facts so stated and recited.

     

    (v)  Any
      such
      sale or sales shall operate to divest all of the estate, right, title, interest,
      claim and demand whatsoever, whether at law or in equity, of Borrower in and
      to
      the properties and rights so sold, and shall be a perpetual bar both at law
      and
      in equity against Borrower and any and all persons claiming or who may claim
      the
      same, or any part thereof or any interest therein, by, through or under Borrower
      to the fullest extent permitted by applicable law.

     

    (vi)  Upon
      any
      such sale or sales, Lender may bid for and acquire the Property and, in lieu
      of
      paying cash therefor, may make settlement for the purchase price by crediting
      against the Debt the amount of the bid made therefor, after deducting therefrom
      the expenses of the sale, the cost of any enforcement proceeding hereunder,
      and
      any other sums which Trustee or Lender is authorized to deduct under the terms
      hereof, to the extent necessary to satisfy such bid.

     

    (vii)  Upon
      any
      such sale, it shall not be necessary for Trustee, Lender or any public officer
      acting under execution or order of court to have present or constructively
      in
      its possession any of the Property.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (f)  Lender's
      Judicial Remedies.
      Lender,
      or Trustee upon written request of Lender, may proceed by suit or suits, at
      law
      or in equity, to enforce the payment of the Debt to foreclose the liens and
      security interests of this Security Instrument as against all or any part of
      the
      Property, and to have all or any part of the Property sold under the judgment
      or
      decree of a court of competent jurisdiction. This remedy shall be cumulative
      of
      any other nonjudicial remedies available to Lender under this Security
      Instrument, the Note or the Other Loan Documents. Proceeding with a request
      or
      receiving a judgment for legal relief shall not be or be deemed to be an
      election of remedies or bar any available nonjudicial remedy of
      Lender.

     

    (g)  Lender's
      Right to Appointment of Receiver.
      Lender,
      as a matter of right and (i) without regard to the sufficiency of the security
      for repayment of the Debt and without notice to Borrower, (ii) without any
      showing of insolvency, fraud, or mismanagement on the part of Borrower, (iii)
      without the necessity of filing any judicial or other proceeding other than
      the
      proceeding for appointment of a receiver, and (iv) without regard to the
      then value of the Property, shall be entitled to the appointment of a receiver
      or receivers for the protection, possession, control, management and operation
      of the Property, including (without limitation), the power to collect the Rents,
      enforce this Security Instrument and, in case of a sale and deficiency, during
      the full statutory period of redemption (if any), whether there be a redemption
      or not, as well as during any further times when Borrower, except for the
      intervention of such receiver, would be entitled to collection of such Rents.
      Borrower hereby irrevocably consents to the appointment of a receiver or
      receivers. Any receiver appointed pursuant to the provisions of this subsection
      shall have the usual powers and duties of receivers in such
      matters.

     

    (h)  Commercial
      Code Remedies.
      Lender
      may exercise any and all rights and remedies granted to a secured party upon
      default under the Uniform Commercial Code, including, without limiting the
      generality of the foregoing: (i) the right to take possession of the Personal
      Property or any part thereof, and to take such other measures as Lender may
      deem
      necessary for the care, protection and preservation of the Personal Property,
      and (ii) request Borrower at its expense to assemble the Personal Property
      and make it available to Lender at a convenient place acceptable to Lender.
      Any
      notice of sale, disposition or other intended action by Lender with respect
      to
      the Personal Property sent to Borrower in accordance with the provisions hereof
      at least ten (10) days prior to such action, shall constitute commercially
      reasonable notice to Borrower.

     

    (i)  Apply
      Escrow Funds.
      Lender
      may apply any Funds (as defined in the Escrow Agreement) and any other sums
      held
      in escrow or otherwise by Lender in accordance with the terms of this Security
      Instrument or any Other Loan Document to the payment of the following items
      in
      any order in its uncontrolled discretion:

     

    (i)  Taxes
      and
      Other Charges;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    (ii)  Insurance
      Premiums;

     

    (iii)  Interest
      on the unpaid principal balance of the Note;

     

    (iv)  Amortization
      of the unpaid principal balance of the Note; and

     

    (v)  All
      other
      sums payable pursuant to the Note, this Security Instrument and the Other Loan
      Documents, including without limitation advances made by Lender pursuant to
      the
      terms of this Security Instrument and reasonable third party costs and expenses
      incurred by Lender including, without limitation, Lender's reasonable legal
      fees.

     

    (j)  Other
      Rights.
      Lender
      (i) may surrender the Policies maintained pursuant to this Security Instrument
      or any part thereof, and upon receipt shall apply the unearned premiums as
      a
      credit on the Debt, and, in connection therewith, Borrower hereby appoints
      Lender as agent and attorney-in-fact (which is coupled with an interest and
      is
      therefore irrevocable) for Borrower to collect such premiums; and (ii) may
      apply
      the Tax and Insurance Funds (as defined in the Escrow Agreement) and/or the
      On-going Replacement Funds (as defined in the Escrow Agreement) and any other
      funds held by Lender toward payment of the Debt; and (iii) shall have and may
      exercise any and all other rights and remedies which Lender may have at law
      or
      in equity, or by virtue of any of the Loan Documents, or otherwise.

     

    (k)  Discontinuance
      of Remedies.
      In case
      Lender shall have proceeded to invoke any right, remedy, or recourse permitted
      under the Loan Documents and shall thereafter elect to discontinue or abandon
      same for any reason, Lender shall have the unqualified right so to do and,
      in
      such event, Borrower and Lender shall be restored to their former positions
      with
      respect to the Debt, the Loan Documents, the Property or otherwise, and the
      rights, remedies, recourses and powers of Lender shall continue as if same
      had
      never been invoked.

     

    (l)  Remedies
      Cumulative.
      All
      rights, remedies, and recourses of Lender granted in the Note, this Security
      Instrument and the Other Loan Documents, any other pledge of collateral, or
      otherwise available at law or equity: (i) shall be cumulative and concurrent;
      (ii) may be pursued separately, successively, or concurrently against Borrower,
      the Property, or any one or more of them, at the sole discretion of Lender;
      (iii) may be exercised as often as occasion therefor shall arise, it being
      agreed by Borrower that the exercise or failure to exercise any of same shall
      in
      no event be construed as a waiver or release thereof or of any other right,
      remedy, or recourse; (iv) shall be nonexclusive; (v) shall not be conditioned
      upon Lender exercising or pursuing any remedy in relation to the Property prior
      to Lender bringing suit to recover the Debt; and (vi) in the event Lender elects
      to bring suit on the Debt and obtains a judgment against Borrower prior to
      exercising any remedies in relation to the Property, all liens and 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    security
      interests, including the lien of this Security Instrument, shall remain in
      full
      force and effect and may be exercised thereafter at Lender's
      option.

     

    (m)  Bankruptcy
      Acknowledgment.
      In the
      event the Property or any portion thereof or any interest therein becomes
      property of any bankruptcy estate or subject to any state or federal insolvency
      proceeding, then Lender shall immediately become entitled, in addition to all
      other relief to which Lender may be entitled under this Security Instrument,
      to
      obtain (i) an order from the Bankruptcy Court or other appropriate court
      granting immediate relief from the automatic stay pursuant to § 362 of the
      Bankruptcy Code so to permit Lender to pursue its rights and remedies against
      Borrower as provided under this Security Instrument and all other rights and
      remedies of Lender at law and in equity under applicable state law, and (ii)
      an
      order from the Bankruptcy Court prohibiting Borrower's use of all "cash
      collateral" as defined under § 363 of the Bankruptcy Code. In connection with
      such Bankruptcy Court orders, Borrower shall not contend or allege in any
      pleading or petition filed in any court proceeding that Lender does not have
      sufficient grounds for relief from the automatic stay. Any bankruptcy petition
      or other action taken by the Borrower to stay, condition, or inhibit Lender
      from
      exercising its remedies are hereby admitted by Borrower to be in bad faith
      and
      Borrower further admits that Lender would have just cause for relief from the
      automatic stay in order to take such actions authorized under state
      law.

     

    (n)  Application
      of Proceeds.
      The
      proceeds from any sale, lease, or other disposition made pursuant to this
      Security Instrument, or the proceeds from the surrender of any insurance
      policies pursuant hereto, or any Rents collected by Lender from the Property,
      or
      the Tax and Insurance Escrow Fund or the Replacement Escrow Fund (as defined
      in
      the Escrow Agreement) or proceeds from insurance which Lender elects to apply
      to
      the Debt pursuant to Article
      3
      hereof,
      shall be applied by Trustee, or by Lender, as the case may be, to the Debt
      in
      the following order and priority: (1) to the payment of all expenses of
      advertising, selling, and conveying the Property or part thereof, and/or
      prosecuting or otherwise collecting Rents, proceeds, premiums or other sums
      including reasonable attorneys' fees and a reasonable fee or commission to
      Trustee, not to exceed five percent of the proceeds thereof or sums so received;
      (2) to that portion, if any, of the Debt with respect to which no person or
      entity has personal or entity liability for payment (the “Exculpated
      Portion”),
      and
      with respect to the Exculpated Portion as follows: first, to accrued but unpaid
      interest, second, to matured principal, and third, to unmatured principal in
      inverse order of maturity; (3) to the remainder of the Debt as follows: first,
      to the remaining accrued but unpaid interest, second, to the matured portion
      of
      principal of the Debt, and third, to prepayment of the unmatured portion, if
      any, of principal of the Debt applied to installments of principal in inverse
      order of maturity; (4) the balance, if any or to the extent applicable,
      remaining after the full and final payment of the Debt to the holder or
      beneficiary of any inferior liens covering the Property, if any, in order of
      the
      priority of such inferior liens (Trustee and Lender shall hereby be entitled
      to
      rely exclusively on a commitment for title insurance issued to determine such
      priority); and (5) the cash balance, if any, as
      provided by applicable law. The application of proceeds 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    of
      sale
      or other proceeds as otherwise provided herein shall be deemed to be a payment
      of the Debt like any other payment. The balance of the Debt remaining unpaid,
      if
      any, shall remain fully due and owing in accordance with the terms of the Note
      and the other Loan Documents.

     

    Section
      10.2  RIGHT
      OF ENTRY.
      Lender
      and its agents shall have the right to enter and inspect the Property at all
      reasonable times.

     

    ARTICLE
      11 -   INDEMNIFICATION;
      SUBROGATION

     

    Section
      11.1  GENERAL
      INDEMNIFICATION.

     

    (a)  Borrower
      shall indemnify, defend and hold Lender and Trustee harmless against: (i) any
      and all claims for brokerage, leasing, finder's or similar fees which may be
      made relating to the Property or the Debt, and (ii) any and all liability,
      obligations, losses, damages, penalties, claims, actions, suits, costs and
      expenses (including Lender's reasonable attorneys' fees, together with
      reasonable appellate counsel fees, if any) of whatever kind or nature which
      may
      be asserted against, imposed on or incurred by Lender or Trustee in connection
      with the Debt, this Security Instrument, the Property, or any part thereof,
      or
      the exercise by Lender or Trustee of any rights or remedies granted to it under
      this Security Instrument (other than those arising solely from a state of facts
      that first came into existence after Lender acquired title to the Property
      through foreclosure or a deed in lieu thereof); provided,
      however,
      that
      nothing herein shall be construed to obligate Borrower to indemnify, defend
      and
      hold harmless Lender from and against any and all liabilities, obligations,
      losses, damages, penalties, claims, actions, suits, costs and expenses enacted
      against, imposed on or incurred by Lender by reason of Lender's willful
      misconduct or gross negligence.

     

    (b)  If
      Lender
      is made a party defendant to any litigation or any claim is threatened or
      brought against Lender concerning the secured indebtedness, this Security
      Instrument, the Property, or any part thereof, or any interest therein, or
      the
      construction, maintenance, operation or occupancy or use thereof, then Lender
      shall notify Borrower of such litigation or claim and Borrower shall indemnify,
      defend and hold Lender harmless from and against all liability by reason of
      said
      litigation or claims, including reasonable attorneys' fees (together with
      reasonable appellate counsel fees, if any). The right to such attorneys' fees
      (together with reasonable appellate counsel fees, if any) and expenses incurred
      by Lender in any such litigation or claim of the type described in this
Subsection 11.1(b),
      whether
      or not any such litigation or claim is prosecuted to judgment, shall be deemed
      to have accrued on the commencement of such claim or action and shall be
      enforceable whether or not such claim or action is prosecuted to judgment.
      If
      Lender commences an action against Borrower to enforce any of the terms hereof
      or to prosecute any breach by Borrower of any of the terms hereof or to recover
      any sum secured hereby, Borrower shall pay to Lender its reasonable attorneys'
      fees (together with reasonable appellate counsel fees, if any) and expenses.
      If
      Borrower breaches any term of this Security Instrument, Lender may engage the
      services of an attorney or attorneys to 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    protect
      its rights hereunder, and in the event of such engagement following any breach
      by Borrower, Borrower shall pay Lender reasonable attorneys' fees (together
      with
      reasonable appellate counsel fees, if any, and fees in any bankruptcy or
      insolvency proceeding) and expenses incurred by Lender, whether or not an action
      is actually commenced against Borrower by reason of such breach. All references
      to “attorneys”
      in this
Subsection
      11.1(b)
      and
      elsewhere in this Security Instrument shall include without limitation any
      attorney or law firm engaged by Lender and Lender's in-house counsel, and all
      references to “fees
      and expenses”
      in this
Subsection
      11.1(b)
      and
      elsewhere in this Security Instrument shall include without limitation any
      fees
      of such attorney or law firm and any allocation charges and allocation costs
      of
      Lender's in-house counsel.

     

    (c)  A
      waiver
      of subrogation shall be obtained by Borrower from its insurance carrier and,
      consequently, Borrower waives any and all right to claim or recover against
      Lender, its officers, employees, agents and representatives, for loss of or
      damage to Borrower, the Property, Borrower's property or the property of others
      under Borrower's control from any cause insured against or required to be
      insured against by the provisions of this Security Instrument.

     

    Section
      11.2  ENVIRONMENTAL
      INDEMNIFICATION.
      

     

    The
      term
“Environmental
      Law”
      means
      any present and future federal, state and local laws, statutes, ordinances,
      rules, regulations and the like, as well as common law, relating to protection
      of human health or the environment, relating to Hazardous Substances, relating
      to liability for or costs of Remediation or prevention of Releases of Hazardous
      Substances or relating to liability for or costs of other actual or future
      danger to human health or the environment or relating to any wrongful death,
      personal injury or property damage that is caused by or related to the presence,
      growth, proliferation, reproduction, dispersal, or contact with any biological
      organism or portion thereof, including molds or other fungi, bacteria or other
      microorganisms or any etiologic agents or materials. The term "Environmental
      Law"
      includes, but is not limited to, the following statutes, as amended, any
      successor thereto, and any regulations promulgated pursuant thereto, and any
      state or local statutes, ordinances, rules, regulations and the like addressing
      similar issues: the Comprehensive Environmental Response, Compensation and
      Liability Act; the Emergency Planning and Community Right-to-Know Act; the
      Hazardous Substances Transportation Act; the Resource Conservation and Recovery
      Act (including but not limited to Subtitle I relating to underground storage
      tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act;
      the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
      Safety and Health Act; the Federal Water Pollution Control Act; the Federal
      Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
      National Environmental Policy Act; and the River and Harbors Appropriation
      Act.
      The term “Environmental
      Law”
      also
      includes, but is not limited to, any present and future federal, state and
      local
      laws, statutes, ordinances, rules, regulations and the like, as well as common
      law: conditioning transfer of property upon a negative declaration or other
      approval of a governmental authority of the environmental condition of the
      Property; requiring notification or disclosure of Releases of Hazardous
      Substances or other environmental condition of the Property 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    to
      any
      governmental authority or other person or entity, whether or not in connection
      with transfer of title to or interest in property; imposing conditions or
      requirements in connection with permits or other authorization for lawful
      activity; relating to nuisance, trespass or other causes of action related
      to
      the Property; and relating to wrongful death, personal injury, or property
      or
      other damage in connection with any physical condition or the presence of
      biological or etiologic agents or materials or use, management, or maintenance
      of the Property.

     

    The
      term
“Environmental
      Lien”
      includes
      but is not limited to any lien or other encumbrance imposed pursuant to
      Environmental Law, whether due to any act or omission of Borrower or any other
      person or entity.

     

    The
      term
“Hazardous
      Substances”
      includes
      but is not limited to any and all substances, biological and etiologic agents
      or
      materials (whether solid, liquid or gas) defined, listed, or otherwise
      classified as pollutants, hazardous wastes, hazardous substances, hazardous
      materials, extremely hazardous wastes, or words of similar meaning or regulatory
      effect under any present or future Environmental Laws or that may have a
      negative impact on human health or the environment, including but not limited
      to
      petroleum and petroleum products, asbestos and asbestos-containing materials,
      polychlorinated biphenyls, lead, lead-based paints, radon, radioactive
      materials, flammables and explosives, and any biological organism or portion
      thereof (living or dead), including molds or other fungi, bacteria or other
      microorganisms, or any etiologic agents or materials.

     

    The
      term
“Indemnified
      Parties”
      includes
      but is not limited to Lender, any person or entity who is or will have been
      involved in originating the Loan evidenced by the Note, any person or entity
      who
      is or will have been involved in servicing the Loan, any person or entity in
      whose name the encumbrance created by this Security Instrument is or will have
      been recorded, persons and entities who may hold or acquire or will have held
      a
      full or partial interest in the Loan (including but not limited to those who
      may
      acquire any interest in Securities, as well as custodians, trustees and other
      fiduciaries who hold or have held a full or partial interest in the Loan for
      the
      benefit of third parties), as well as the respective directors, officers,
      shareholders, partners, employees, agents, servants, representatives,
      contractors, subcontractors, affiliates, subsidiaries, participants, successors
      and assigns of any and all of the foregoing (including but not limited to any
      other person or entity who holds or acquires or will have held a participation
      or other full or partial interest in the Loan or the Property, whether during
      the term of the Loan or as part of or following foreclosure pursuant to the
      Loan) and including but not limited to any successors by merger, consolidation
      or acquisition of all or a substantial part of Lender's assets and
      business.

     

    The
      term
“Losses”
      includes
      but is not limited to any claims, suits, liabilities (including but not limited
      to strict liabilities), administrative or judicial actions or proceedings,
      obligations, debts, damages, losses, costs, expenses, diminutions in value,
      fines, penalties, charges, fees, expenses, costs of Remediation (whether or
      not
      performed voluntarily), judgments, award, amounts paid in settlement,
      foreseeable and unforeseeable consequential damages, litigation costs,
      attorneys' fees, engineer's fees, environmental consultants' fees and
      investigation costs 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (including
      but not limited to costs for sampling, testing and analysis of soil, water,
      air,
      building materials, and other materials and substances whether solid, liquid
      or
      gas), of whatever kind or nature, and whether or not incurred in connection
      with
      any judicial or administrative proceedings.

     

    The
      term
“Release”
      with
      respect to any Hazardous Substance includes but is not limited to any release,
      deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating,
      injecting, pumping, pouring, emptying, escaping, dumping, disposing or other
      movement of Hazardous Substances, which requires reporting to any governmental
      Authority or which could result in a violation of any Environmental
      Law.

     

    The
      term
“Remediation”
      includes
      but is not limited to any response, remedial, removal, or corrective action;
      any
      activity to cleanup, detoxify, decontaminate, contain or otherwise remediate
      any
      Hazardous Substance; any actions to prevent, cure or mitigate any Release of
      any
      Hazardous Substance; any action to comply with any Environmental Laws or with
      any permits issued pursuant thereto; any inspection, investigation, study,
      monitoring, assessment, audit, sampling and testing, laboratory or other
      analysis, or evaluation relating to any Hazardous Substances or to anything
      referred to in this Article
      11.

     

    Section
      11.3  DUTY
      TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES.
      Upon
      written request by any Indemnified Party, Borrower shall defend such Indemnified
      Party (if requested by any Indemnified Party, in the name of the Indemnified
      Party) by attorneys and other professionals approved by the Indemnified Parties.
      Notwithstanding the foregoing, any Indemnified Parties may, in their sole and
      absolute discretion, engage their own attorneys and other professionals to
      defend or assist them, and, at the option of Indemnified Parties, their
      attorneys shall control the resolution of claim or proceeding. Upon demand,
      Borrower shall pay or, in the sole and absolute discretion of the Indemnified
      Parties, reimburse, the Indemnified Parties for the payment of reasonable fees
      and disbursements of attorneys, engineers, environmental consultants,
      laboratories and other professionals in connection therewith.

     

    Section
      11.4  SURVIVAL
      OF INDEMNITIES.
      Notwithstanding any provision of this Security Instrument or any other Loan
      Document to the contrary, the provisions of Section
      11.1
      and
Section
      11.2,
      and
      Borrower's obligations thereunder, shall survive (a) the repayment of the Note,
      (b) the foreclosure of this Security Instrument, and (c) the release (or
      reconveyance, as applicable) of the lien of this Security
      Instrument.

     

    ARTICLE
      12 -   SECURITY
      AGREEMENT

     

    Section
      12.1  SECURITY
      AGREEMENT.
      This
      Security Instrument is both a real property mortgage and a "security agreement"
      within the meaning of the Uniform Commercial Code. The Property includes both
      real and personal property and all other rights and interests, whether tangible
      or intangible in nature, of Borrower in the Property. Borrower by executing
      and
      delivering this Security Instrument has granted and hereby grants to Lender,
      as
      security for the Obligations, a security interest in the Property to the full
      extent that the Property may be 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    subject
      to the Uniform Commercial Code (said portion of the Property so subject to
      the
      Uniform Commercial Code being called in this paragraph the “Collateral”).
      Borrower hereby authorizes Lender to prepare and file, in form and substance
      satisfactory to Lender, such financing statements, continuation statements,
      other uniform commercial code forms and shall pay all expenses and fees in
      connection with the filing and recording thereof, and such further assurances
      as
      Lender may from time to time, reasonably consider necessary to create, perfect,
      and preserve Lender's security interest herein granted. This Security Instrument
      shall also be effective as a "fixture filing" as to property which is or is
      to
      become fixtures. Information concerning the security interest herein granted
      may
      be obtained from the parties at the addresses of the parties set forth in the
      first paragraph of this Security Instrument. If an Event of Default shall occur,
      Lender, in addition to any other rights and remedies which they may have, shall
      have and may exercise immediately and without demand, any and all rights and
      remedies granted to a secured party upon default under the Uniform Commercial
      Code, including, without limiting the generality of the foregoing, the right
      to
      take possession of the Collateral or any part thereof, and to take such other
      measures as Lender may deem necessary for the care, protection and preservation
      of the Collateral. Upon request or demand of Lender, Borrower shall at its
      expense assemble the Collateral and make it available to Lender at a convenient
      place acceptable to Lender. Borrower shall pay to Lender on demand any and
      all
      expenses, including legal expenses and attorneys' fees, incurred or paid by
      Lender in protecting the interest in the Collateral and in enforcing the rights
      hereunder with respect to the Collateral. Any notice of sale, disposition or
      other intended action by Lender with respect to the Collateral sent to Borrower
      in accordance with the provisions hereof at least ten (10) days prior to such
      action, shall constitute commercially reasonable notice to Borrower. The
      proceeds of any disposition of the Collateral, or any part thereof, may be
      applied by Lender to the payment of the Obligations in such priority and
      proportions as Lender in its discretion shall deem proper. Borrower shall
      promptly advise Lender of the accrual of any commercial tort claims involving
      the Property. In the event of any change in name, identity, structure, or
      jurisdiction or form of organization of any Borrower, such Borrower shall notify
      Lender thereof, and Lender shall be authorized to prepare and file such Uniform
      Commercial Code forms as Lender may deem necessary to maintain the priority
      of
      Lender's lien upon and security interest in the Collateral, and Borrower shall
      pay all expenses and fees in connection with such filing. Lender shall also
      be
      authorized to prepare and file such other additional Uniform Commercial Code
      forms or continuation statements as Lender shall deem necessary, and Borrower
      shall pay all expenses and fees in connection with the filing thereof, it being
      understood and agreed, however, that no such additional documents shall increase
      Borrower's obligations under the Note, this Security Instrument and the Other
      Loan Documents. Borrower hereby irrevocably appoints Lender as its
      attorney-in-fact, coupled with an interest, to file with the appropriate public
      office on its behalf any financing or other statements signed only by Lender,
      as
      Borrower's attorney-in-fact, in connection with the Collateral covered by this
      Security Instrument. Notwithstanding the foregoing, Borrower shall appear and
      defend in any action or proceeding which affects or purports to affect the
      Property and any interest or right therein, whether such proceeding affects
      title or any other rights in the Property (and in conjunction therewith,
      Borrower shall fully cooperate with Lender in the event Lender is a party to
      such action or proceeding).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Section
      12.2  FIXTURE
      FILING INFORMATION.
      The
      information in the subsections below this paragraph is provided in connection
      with the filing of this Security Instrument as a financing statement as referred
      to above, and the Borrower hereby represents and warrants such information
      to be
      true and complete as of the date of this Security Instrument. 

     

    (a)  The
      Borrower is the record owner of the real estate described in this Security
      Instrument. The name and mailing address of the record owner of the real estate
      described in this Security Instrument is set forth in the first paragraph of
      this Security Instrument.

     

    (b)  For
      purposes of the Uniform Commercial Code, Borrower is the Debtor. The name,
      mailing address, type of organization and state of formation of the Debtor
      (Borrower) is set forth in the first paragraph of this Security Instrument.
      The
      Organizational Identification Number of the Borrower is 0531986.

     

    (c)  For
      purposes of the Uniform Commercial Code, the Lender is the Secured Party. The
      name and mailing address of the Secured Party (Lender) is:

     

    JPMorgan
      Chase Bank, N.A.

    c/o
      ARCap
      Servicing, Inc.

    5221
      North O'Connor Boulevard, Suite 600

    Irving,
      Texas 75039

    Attention:
      Loan Servicing

    

    (d)  This
      document covers goods which are or are to become fixtures.

     

    ARTICLE
      13 -   WAIVERS

     

    Section
      13.1  MARSHALLING
      AND OTHER MATTERS.
      Borrower hereby waives, to the extent permitted by law, the benefit of all
      appraisement, valuation, stay, extension, reinstatement and redemption laws
      now
      or hereafter in force and all rights of marshalling in the event of any sale
      hereunder of the Property or any part thereof or any interest therein. Further,
      Borrower hereby expressly waives any and all rights of redemption from sale
      under any order or decree of foreclosure of this Security Instrument on behalf
      of Borrower, and on behalf of each and every person acquiring any interest
      in or
      title to the Property subsequent to the date of this Security Instrument and
      on
      behalf of all persons to the extent permitted by applicable law.

     

    Section
      13.2  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 Security Instrument
      specifically and expressly provides for the giving of notice by Lender to
      Borrower and except with respect to matters for which Lender is required by
      applicable law to give notice, and Borrower hereby expressly waives the right
      to
      receive any notice from Lender with respect 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    to
      any
      matter for which this Security Instrument does not specifically and expressly
      provide for the giving of notice by Lender to Borrower.

     

    Section
      13.3  SOLE
      DISCRETION OF LENDER.
      Wherever pursuant to this Security Instrument 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 that
      arrangements or terms are satisfactory or not satisfactory shall be in the
      sole
      discretion of Lender and shall be final and conclusive, except as may be
      otherwise expressly and specifically provided herein.

     

    Section
      13.4  SURVIVAL.
      Subject
      to the limitations provided in Section
      10
      of the
      Note, the indemnifications made pursuant to Article
      11,
      shall
      continue indefinitely in full force and effect and shall survive and shall
      in no
      way be impaired by: any satisfaction or other termination of this Security
      Instrument, any assignment or other transfer of all or any portion of this
      Security Instrument or Lender's interest in the Property (but, in such case,
      shall benefit both Indemnified Parties and any assignee or transferee), any
      exercise of Lender's rights and remedies pursuant hereto including but not
      limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
      exercise of any rights and remedies pursuant to the Note or any of the Other
      Loan Documents, any transfer of all or any portion of the Property (whether
      by
      Borrower or by Lender following foreclosure or acceptance of a deed in lieu
      of
      foreclosure or at any other time), any amendment to this Security Instrument,
      the Note or the Other Loan Documents, and any act or omission that might
      otherwise be construed as a release or discharge of Borrower from the
      obligations pursuant hereto. Nothing herein shall be deemed to create any
      liability for original Borrower, to the extent it has been released from
      liability arising subsequent to a Permitted Transfer.

     

    Section
      13.5  WAIVER
      OF TRIAL BY JURY.
      BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
      RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
      ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS SECURITY
      INSTRUMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM
      OR
      OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO
      THOSE
      RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN LENDER AND
      BORROWER; (B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF
      UNCONSCIONABLE ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR
      DEALING, LACK OF COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH
      AS
      FIDUCIARY, TRUST OR CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION,
      CONTROL, ALTER EGO, INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD,
      MISREPRESENTATION, DURESS, COERCION, UNDUE INFLUENCE, INTERFERENCE OR
      NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH PRESENT OR PROSPECTIVE
      BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F) SLANDER, LIBEL OR DAMAGE TO
      REPUTATION. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THIS
      WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER,
      AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
      WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY
      AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
      EVIDENCE OF THIS WAIVER BY BORROWER. 

     

    Section
      13.6  WAIVER
      OF AUTOMATIC OR SUPPLEMENTAL STAY.
      In the
      event of the filing of any voluntary or involuntary petition under the
      Bankruptcy Code by or against Borrower (other than an involuntary petition
      filed
      by or joined in by Lender), the Borrower shall not assert, or request any other
      party to assert, that the automatic stay under § 362
      of the
      Bankruptcy Code shall operate or be interpreted to stay, interdict, condition,
      reduce or inhibit the ability of Lender to enforce any rights it has by virtue
      of this Security Instrument, or any other rights that Lender has, whether now
      or
      hereafter acquired, against any guarantor of the Debt. Further, Borrower shall
      not seek a supplemental stay or any other relief, whether injunctive or
      otherwise, pursuant to § 105
      of the
      Bankruptcy Code or any other provision therein to stay, interdict, condition,
      reduce or inhibit the ability of Lender to enforce any rights it has by virtue
      of this Security Instrument against any guarantor of the Debt. The waivers
      contained in this paragraph are a material inducement to Lender's willingness
      to
      enter into this Security Instrument and Borrower acknowledges and agrees that
      no
      grounds exist for equitable relief which would bar, delay or impede the exercise
      by Lender of Lender's rights and remedies against Borrower or any guarantor
      of
      the Debt.

     

    ARTICLE
      14 -   NOTICES

     

    Section
      14.1  NOTICES.
      All
      notices or other written communications hereunder shall be deemed to have been
      properly given (i) upon delivery, if delivered in person or by facsimile
      transmission with receipt acknowledged, (ii) one (1) Business Day after having
      been deposited for overnight delivery with any reputable overnight courier
      service, or (iii) three (3) Business Days after having been deposited in any
      post office or mail depository regularly maintained by the U.S. Postal Service
      and sent by registered or certified mail, postage prepaid, addressed as
      follows:

     

    If
      to
      Borrower:  (COMPANY
      SUBSIDIARY)

    c/o
      Equity Inns

    7700
      Wolf
      River Blvd.

    Germantown,
      Tennessee 38138

    Attention:
      Michelle Chatfield

    Facsimile
      No.: (901) 754-2374

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    If
      to
      Trustee: Chicago
      Title Insurance Company

    701
      5th
      Avenue

    Suite
      3400

    Seattle,
      Washington 98104

    Attention:
      ____________

    Facsimile
      No.: _______________

    

    If
      to
      Lender: JPMorgan
      Chase Bank, N.A.

    c/o
      ARCap
      Servicing, Inc.

    5221
      North O'Connor Boulevard, Suite 600

    Irving,
      Texas 75039

    Attention:
      Wesley Wolf

    Facsimile
      No.: (972) 868-5493

    

    With
      a
      copy to: Stites
      & Harbison, PLLC

    400
      W.
      Market Street

    Suite
      1800

    Louisville,
      Kentucky 40202

    Attention:
      Barry A. Hines, Esq.

    Facsimile
      No.: (502) 587-6391

    

    or
      addressed as such party may from time to time designate by written notice to
      the
      other parties. For purposes of this subsection, the term “Business
      Day”
      shall
      mean a day on which commercial banks are not authorized or required by law
      to
      close in New York, New York. 

     

    Any
      party
      by notice to the other parties may designate additional or different addresses
      for subsequent notices or communications.

     

    ARTICLE
      15 -   APPLICABLE
      LAW

     

    Section
      15.1  GOVERNING
      LAW; JURISDICTION.
      This
      Security Instrument shall be governed by and construed in accordance with
      applicable federal law and the laws of the state where the Property is located,
      without reference or giving effect to any choice of law doctrine. Borrower
      hereby irrevocably submits to the jurisdiction of any court of competent
      jurisdiction located in the state in which the Property is located in connection
      with any proceeding arising out of or relating to this Security
      Instrument.

     

    Section
      15.2  USURY
      LAWS.
      This
      Security Instrument and the Note are subject to the express condition that
      at no
      time shall Borrower be obligated or required to pay interest on the Debt at
      a
      rate which could subject the holder of the Note to either civil or criminal
      liability as a result of being in excess of the maximum interest rate which
      Borrower is permitted by applicable law to contract or agree to pay. If by
      the
      terms of this Security Instrument or the Note, Borrower is at any time required
      or obligated to pay interest on the Debt at a rate in excess of such

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    maximum
      rate, the rate of interest under the Security Instrument and the Note shall
      be
      deemed to be immediately reduced to such maximum rate and the interest payable
      shall be computed at such maximum rate and all prior interest payments in excess
      of such maximum rate shall be applied and shall be deemed to have been payments
      in reduction of the principal balance of the Note. All sums paid or agreed
      to be
      paid to Lender for the use, forbearance, or detention of the Debt shall, to
      the
      extent permitted by applicable law, be amortized, prorated, allocated, and
      spread throughout the full stated term of the Note until payment in full so
      that
      the rate or amount of interest on account of the Debt does not exceed the
      maximum lawful rate of interest from time to time in effect and applicable
      to
      the Debt for so long as the Debt is outstanding. 

     

    Section
      15.3  PROVISIONS
      SUBJECT TO APPLICABLE LAW.
      All
      rights, powers and remedies provided in this Security Instrument may be
      exercised only to the extent that the exercise thereof does not violate any
      applicable provisions of law and are intended to be limited to the extent
      necessary so that they will not render this Security Instrument invalid,
      unenforceable or not entitled to be recorded, registered or filed under the
      provisions of any applicable law. If any term of this Security Instrument or
      any
      application thereof shall be invalid or unenforceable, the remainder of this
      Security Instrument and any other application of the term shall not be affected
      thereby.

     

    ARTICLE
      16 -   SECONDARY
      MARKET

     

    Section
      16.1  TRANSFER
      OF LOAN.
      Lender
      may, at any time, sell, transfer or assign the Note, this Security Instrument
      and the Other Loan Documents, and any or all servicing rights with respect
      thereto, or grant participations therein or issue mortgage pass-through
      certificates or other securities evidencing a beneficial interest in a rated
      or
      unrated public offering or private placement (the “Securities”).
      Lender
      may forward to each purchaser, transferee, assignee, servicer, participant,
      investor in such Securities or any Rating Agency (as hereinafter defined) rating
      such Securities (collectively, the “Investor”)
      and
      each prospective Investor, all documents and information which Lender now has
      or
      may hereafter acquire relating to the Debt and to Borrower, any Guarantor,
      and
      the Property, whether furnished by Borrower, any Guarantor, or otherwise, as
      Lender determines necessary or desirable. The term “Rating
      Agency”
      shall
      mean each statistical rating agency that has assigned a rating to the
      Securities.

     

    Section
      16.2  SALE
      OF NOTES AND SECURITIZATION.
      Lender
      may, at any time, sell, transfer or assign the Note, this Security Instrument
      and the Other Loan Documents, and any or all servicing rights with respect
      thereto, or grant participations therein or issue mortgage pass-through
      certificates or other securities (the “Securities”)
      evidencing a beneficial interest in a rated or unrated public offering or
      private placement (the “Securitization”).
      Lender may forward to each purchaser, transferee, assignee, servicer,
      participant, investor in such Securities or any Rating Agency (as hereinafter
      defined) rating such Securities (collectively, the “Investor”)
      and
      each prospective Investor, all documents and information which Lender now has
      or
      may hereafter acquire relating to the Debt and to Borrower, Lessee, any
      Guarantor and the Property, whether furnished by Borrower, any Guarantor or
      otherwise, as Lender determines necessary or desirable. Borrower shall cooperate
      and shall cause Lessee to cooperate with 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Lender
      in
      effecting any such Securitization and shall cooperate to implement all
      requirements imposed by any Rating Agency involved in any Securitization;
      provided that neither Borrower no Lessee shall incur any additional obligations
      not originally contemplated in the Loan Documents. Borrower shall provide and
      shall cause Lessee to provide such information and documents relating to
      Borrower, Lessee, the Property and any additional tenants of the Property as
      Lender may reasonably request in connection with such Securitization. In
      addition, Borrower shall make available and cause Lessee to make available
      to
      Lender all information concerning its business and operations that Lender may
      reasonably request. It is understood that the information provided by Borrower
      and Lessee to Lender may ultimately be incorporated into the offering documents
      for the Securitization and thus Investors may also see some or all of the
      information. Lender and all of the aforesaid third-party advisors and
      professional firms shall be entitled to rely on the written information supplied
      by, or on behalf of, Borrower and Lessee. The term “Rating
      Agency”
      shall
      mean each statistical rating agency that has assigned a rating to the
      Securities. Any transfer of the Loan pursuant to this Section
      16.1
      shall be
      at Lender's expense. 

     

    ARTICLE
      17 -   COSTS

     

    Section
      17.1  PERFORMANCE
      AT BORROWER'S EXPENSE.
      Borrower acknowledges and confirms that Lender shall impose certain
      administrative processing and/or commitment fees in connection with (a) the
      extension, renewal, modification, amendment and termination (excluding the
      scheduled maturity of the Note) of its loans, (b) the release or substitution
      of
      collateral therefor, (c) obtaining certain consents, waivers and approvals
      with
      respect to the Property, (d) reviewing leases, easements, or any other document
      submitted by or on behalf of Borrower to Lender for review or approval, or
      (e)
      determining, at Borrower's request, Borrower's satisfaction of any condition
      under the Loan Documents (the occurrence of any of the above shall be called
      an
“Event”).
      Borrower hereby acknowledges and agrees to pay, immediately, upon demand, all
      such fees (as the same may be increased or decreased from time to time),
      including Lender's reasonable outside legal fees.

     

    Section
      17.2  ATTORNEY'S
      FEES FOR ENFORCEMENT.
      (a)
      Borrower shall pay all reasonable outside legal fees incurred by Lender in
      connection with (i) the preparation of the Note, this Security Instrument and
      the Other Loan Documents and (ii) the items set forth in Section
      17.1
      above,
      and (b) Borrower shall pay to Lender on demand any and all expenses, including
      outside legal expenses and attorneys' fees, incurred or paid by Lender in
      protecting its interest in the Property or Personal Property and/or collecting
      any amount payable or in enforcing its rights hereunder with respect to the
      Property or Personal Property, whether or not any legal proceeding is commenced
      hereunder or thereunder, together with interest thereon at the Default Rate
      from
      the date of payment or incurring by Lender until paid by Borrower.

     

    ARTICLE
      18 -   DEFINITIONS

     

    Section
      18.1  GENERAL
      DEFINITIONS.
      Unless
      the context clearly indicates a contrary intent or unless otherwise specifically
      provided herein, words used in this Security Instrument may be used
      interchangeably in singular or plural form and the word "Borrower" 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    shall
      mean "each Borrower and any subsequent owner or owners of the Property or any
      part thereof or any interest therein," the word "Lender" shall mean "Lender
      and
      any subsequent holder of the Note," the word "Note" shall mean "the Note and
      any
      other evidence of indebtedness secured by this Security Instrument," the word
      “person”
shall
      include an individual, corporation, partnership, trust, unincorporated
      association, government, governmental authority, and any other entity, the
      word
      "Property" shall include any portion of the Property and any interest therein,
      and the phrases “attorneys'
      fees” “legal
      fees”
      and
“counsel
      fees”
      shall
      include any and all outside attorneys', paralegal and law clerk fees and
      disbursements, including, but not limited to, fees and disbursements at the
      pre-
      trial, trial and appellate levels incurred or paid by Lender in protecting
      its
      interest in the Property, the Leases and the Rents and enforcing its rights
      hereunder.

     

    ARTICLE
      19 -   MISCELLANEOUS
      PROVISIONS

     

    Section
      19.1  NO
      ORAL CHANGE.
      This
      Security Instrument, the Note, and the Other Loan Documents and any provisions
      hereof or thereof, may not be modified, amended, waived, extended, changed,
      discharged or terminated orally or by any act or failure to act on the part of
      Borrower or Lender, but only by an agreement in writing signed by the party
      against whom enforcement of any modification, amendment, waiver, extension,
      change, discharge or termination is sought.

     

    Section
      19.2  LIABILITY.
      If
      Borrower consists of more than one person, the obligations and liabilities
      of
      each such person hereunder shall be joint and several. This Security Instrument
      shall be binding upon and inure to the benefit of Borrower and Lender and their
      respective successors and assigns forever.

     

    Section
      19.3  INAPPLICABLE
      PROVISIONS.
      If any
      term, covenant or condition of the Note or this Security Instrument is held
      to
      be invalid, illegal or unenforceable in any respect, the Note and this Security
      Instrument shall be construed without such provision.

     

    Section
      19.4  HEADINGS,
      ETC.
      The
      headings and captions of various Sections of this Security Instrument are for
      convenience of reference only and are not to be construed as defining or
      limiting, in any way, the scope or intent of the provisions hereof.

     

    Section
      19.5  DUPLICATE
      ORIGINALS; COUNTERPARTS.
      This
      Security Instrument may be executed in any number of duplicate originals and
      each duplicate original shall be deemed to be an original. This Security
      Instrument may be executed in several counterparts, each of which counterparts
      shall be deemed an original instrument and all of which together shall
      constitute a single Security Instrument. The failure of any party hereto to
      execute this Security Instrument, or any counterpart hereof, shall not relieve
      the other signatories from their obligations hereunder.

     

    Section
      19.6  NUMBER
      AND GENDER.
      Whenever the context may require, any pronouns used herein shall include the
      corresponding masculine, feminine or neuter forms, and the singular form of
      nouns and pronouns shall include the plural and vice versa.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Section
      19.7  SUBROGATION.
      If any
      or all of the proceeds of the Note have been used to extinguish, extend or
      renew
      any indebtedness heretofore existing against the Property, then, to the extent
      of the funds so used, Lender shall be subrogated to all of the rights, claims,
      liens, titles, and interests existing against the Property heretofore held
      by,
      or in favor of, the holder of such indebtedness and such former rights, claims,
      liens, titles, and interests, if any, are not waived but rather are continued
      in
      full force and effect in favor of Lender and are merged with the lien and
      security interest created herein as cumulative security for the repayment of
      the
      Debt, the performance and discharge of Borrower's obligations hereunder, under
      the Note and the Other Loan Documents and the performance and discharge of
      the
      Other Obligations.

     

    Section
      19.8  ENTIRE
      AGREEMENT.
      The
      Note, this Security Instrument and the Other Loan Documents constitute the
      entire understanding and agreement between Borrower and Lender with respect
      to
      the transactions arising in connection with the Debt and supersede all prior
      written or oral understandings and agreements between Borrower and Lender with
      respect thereto. Borrower hereby acknowledges that, except as incorporated
      in
      writing in the Note, this Security Instrument and the Other Loan Documents,
      there are not, and were not, and no persons are or were authorized by Lender
      to
      make, any representations, understandings, stipulations, agreements or promises,
      oral or written, with respect to the transaction which is the subject of the
      Note, this Security Instrument and the Other Loan Documents.

     

    
      	ARTICLE
              20 -   	
              TRUSTEE

            

    

     

    Trustee
      may resign by the giving of notice of such resignation in writing or verbally
      to
      Lender. If Trustee shall die, resign, or become disqualified from acting in
      the
      execution of this trust, or if, for any reason, Lender shall prefer to appoint
      a
      substitute trustee or multiple substitute trustees, or successive substitute
      trustees or successive multiple substitute trustees, to act instead of the
      aforenamed Trustee, Lender shall have full power to appoint a substitute trustee
      (or, if preferred, multiple substitute trustees) in succession who shall succeed
      (and if multiple substitute trustees are appointed, each of such multiple
      substitute trustees shall succeed) to all the estates, rights, powers, and
      duties of the aforenamed Trustee. Such appointment may be executed by any
      authorized agent of Lender, and if such Lender be a corporation and such
      appointment be executed in its behalf by any officer of such corporation, such
      appointment shall be conclusively presumed to be executed with authority and
      shall be valid and sufficient without proof of any action by the board of
      directors or any superior officer of the corporation. Borrower hereby ratifies
      and confirms any and all acts which the aforenamed Trustee, or his successor
      or
      successors in this trust, shall do lawfully by virtue hereof. If multiple
      substitute Trustees are appointed, each of such multiple substitute Trustees
      shall be empowered and authorized to act alone without the necessity of the
      joinder of the other multiple substitute trustees, whenever any action or
      undertaking of such substitute trustees is requested or required under or
      pursuant to this Security Instrument or applicable law. Any substitute Trustee
      appointed pursuant to any of the provisions hereof shall, without any further
      act, deed, or conveyance, become vested with all the estates, properties,
      rights, powers, and trusts of its or his predecessor in the rights hereunder
      with 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    like
      effect as if originally named as Trustee herein; but nevertheless, upon the
      written request of Lender or of the substitute Trustee, the Trustee ceasing
      to
      act shall execute and deliver any instrument transferring to such substitute
      Trustee, upon the trusts herein expressed, all the estates, properties, rights,
      powers, and trusts of the Trustee so ceasing to act, and shall duly assign,
      transfer and deliver any of the property and moneys held by such Trustee to
      the
      substitute Trustee so appointed in the Trustee's place. No fees or expenses
      shall be payable to Trustee, except in connection with a foreclosure of the
      Property or any part thereof or, to the extent joinder of Trustee is required
      under applicable law, in connection with the release of the Property following
      payment in full of the Debt.

     

    

     

    ARTICLE
      21 -   SPECIAL
      STATE OF WASHINGTON PROVISIONS

     

    Section
      21.1  ACCELERATION;
      REMEDIES.
      Upon
      Borrower's breach of any covenant or agreement of Borrower in this Security
      Instrument, including, but not limited to the covenants to pay when due any
      sums
      secured by this Security Instrument, Lender at Lender's option may declare
      all
      of the sums secured by this Security Instrument to be immediately due and
      payable without further demand. After giving Borrower notice of default, Lender
      may request that Trustee exercise the power of sale and any other remedies
      permitted by applicable law or provided herein. Borrower acknowledges that
      the
      power of sale herein granted may be exercised without prior judicial hearing.
      Borrower has the right to bring an action to assert the non-existence of a
      breach or any other defense of Borrower to sale. Lender and Trustee shall be
      entitled to collect all costs and expenses incurred in pursuing such remedies,
      including, but not limited to, attorney's fees and costs of documentary
      evidence, abstracts and title reports.

     

    If
      Lender
      invokes the power of sale, Lender shall give written notice to Trustee of the
      occurrence of an Event of Default and of Lender's election to cause the Property
      to be sold. Trustee and Lender shall give such notices as the laws of the State
      of Washington may require to Borrower and to such other persons as the laws
      of
      the State of Washington prescribe, and after the lapse of such time as may
      be
      required by applicable law. Trustee shall sell the Property according to the
      laws of the State of Washington. Trustee may sell the Property at the time
      and
      place and under the terms designated in the notice of sale in one or more
      parcels and in such order as Trustee may determine. Trustee may postpone sale
      of
      all or any parcel of the Property as provided by law. Lender or Lender's
      designee may purchase the Property at any sale.

     

    Trustee
      shall deliver to the purchaser Trustee's deed conveying the Property so sold
      without any covenant or warranty, expressed or implied. The recitals in the
      Trustee's deed shall be prima facie evidence of the truth of the statements
      made
      therein. Trustee shall apply the proceeds of the sale in the following order:
      (a) to all costs and expenses of the sale, including, but not limited to,
      Trustee's and attorney's fees and costs of title evidence; (b) to all sums
      secured by this Security Instrument in such order as Lender, in Lender's sole
      discretion, directs; and (c) the excess, if any, to the clerk of the superior
      court of the county in which the sale took place. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Section
      21.2  RECONVEYANCE.
      Upon
      payment of all sums secured by this Security Instrument, Lender shall request
      Trustee to reconvey the Property and shall surrender this Security Instrument
      and all notes evidencing indebtedness secured by this Security Instrument to
      Trustee. Trustee shall reconvey the Property without warranty to the person
      or
      persons legally entitled thereto. Such person or persons shall pay Trustee's
      reasonable costs incurred in so reconveying the Property. 

     

    Section
      21.3  SUBSTITUTE
      TRUSTEE.
      In
      accordance with applicable law, Lender may from time to time appoint a successor
      trustee to any Trustee appointed hereunder who has ceased to act. Without
      conveyance of the Property, the successor trustee shall succeed to all the
      title, power and duties conferred upon the Trustee herein and by applicable
      law.

     

    Section
      21.4  USE
      OF
      PROPERTY.
      The
      Property is not used principally for agricultural or farming
      purposes.

     

    Section
      21.5  NO
      ORAL AGREEMENTS.
      NOTICE
      IS HEREBY GIVEN THAT ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND
      CREDIT, MODIFY LOAN TERMS, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
      ARE
      NOT ENFORCEABLE UNDER WASHINGTON LAW.

     

    

    ARTICLE
      22 -   ASSIGNMENT
      OF CONTRACTS PROVISIONS

     

    In
      connection with the Borrower's assignment of Assignment of Contracts to Lender
      pursuant to this Security Instrument, Borrower hereby makes the following
      warranties, representations and covenants to Lender:

     

    (a) Borrower
      hereby irrevocably directs the grantor or licensor of or the contracting party
      under the Operating Agreements (as defined in the Assignment of Contracts),
      to
      the extent permitted by the Operating Agreements and under any recognition
      or
      other agreement executed by such grantor, licensor or contracting party, upon
      Lender's unilateral demand, to recognize and accept Lender as the holder of
      the
      Operating Agreements for any and all purposes as fully as it would recognize
      and
      accept Borrower or Lessee and Borrower's or Lessee's performance
      thereunder;

    

    (b) Subject
      to the other provisions of this Security Instrument and the Loan Documents,
      for
      so long as no Event of Default shall have occurred and be continuing, Lessee
      may
      exercise all of its rights and privileges under the Operating Agreements.
      Lessee's, and Borrower's (if applicable), rights under the immediately preceding
      sentence shall immediately cease and terminate upon and during the continuance
      of any such Event of Default;

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c) Borrower
      has the full power, right and authority to assign the Assignment of Contracts
      to
      Lender;

    

    (d) Borrower
      has not sold, assigned, transferred, mortgaged, pledged or otherwise
      hypothecated any such right or interest under the Operating Agreements to any
      person other than Lender and has not executed any other document or instrument
      that might prevent or limit Lender from operating under or realizing the
      benefits of the terms, conditions and provisions of this Security
      Instrument;

    

    (e) No
      authorizations, consents, approvals, licenses, permits, filings or registrations
      with any governmental authority or agency are necessary for the execution,
      delivery or performance by Borrower of this Security Instrument in connection
      with the assignment of the Assignment of Contracts or for the validity or
      enforceability of such assignment;

    

    (f) Borrower
      has delivered, or caused to be delivered, to Lender a true, correct and
      completely executed copy of the Operating Agreements, which are valid and
      enforceable in accordance with their terms, are in full force and effect and,
      as
      of the date hereof and have not been canceled, amended, modified, assigned,
      supplemented or superseded in any manner whatsoever;

    

    (g) Borrower
      shall timely perform and observe all of Borrower's covenants, conditions,
      obligations and agreements, if any (and require Lessee to timely perform and
      observe all of Lessee's covenants, conditions, obligations and agreements)
      under
      the Operating Agreements and shall not suffer or permit any material delinquency
      on its part to exist thereunder;

    

    (h) Borrower
      shall not and shall not allow Lessee to, without Lender's prior written consent:
      (i) sell, assign, transfer, mortgage, pledge or otherwise hypothecate the
      Operating Agreements or any right or interest therein or thereunder, or (ii)
      cancel, terminate, amend, supplement or modify the Operating Agreements, except
      for non-material changes in the ordinary course of business;

    

    (i) Borrower
      shall use commercially reasonable efforts to (or cause Lessee to) enforce or
      secure the performance of each and every material obligation, covenant,
      condition and agreement to be performed by the tenants under any leases to
      ensure that tenants maintain the Operating Agreements;

     

    (j) Nothing
      contained herein shall operate or be construed to obligate Lender to perform
      any
      of the terms, covenants or conditions contained in the Operating Agreements
      or
      otherwise to impose any obligation upon Lender with respect to the Operating
      Agreements. Notwithstanding anything herein to the contrary: (i) the operating
      tenants shall remain liable in respect of the Operating Agreements to the extent
      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    set
      forth
      therein to perform and satisfy all of its duties and obligations thereunder
      to
      the same extent as if this Assignment had not been executed and (ii) Lender's
      exercise of any rights or remedies hereunder shall not release Borrower from
      any
      of Borrower's duties, obligations or liabilities under the Operating Agreements;
      

    

    (k) Borrower
      shall (and shall required Lessee to), from time to time upon Lender's written
      request, promptly execute and deliver such further documents and take such
      further action as Lender may reasonably request in order create, preserve,
      perfect, protect or confirm the assignment granted hereby or to enable Lender
      to
      exercise and enforce its rights and remedies hereunder. All of the foregoing
      shall be undertaken at Borrower's expense, including, without limitation: (a)
      all filing, registration and recording fees, if any; and (b) all stamp taxes
      and
      other taxes, charges and similar impositions in connection therewith;
      and

    

    (l) Lender
      is
      hereby appointed Borrower's attorney-in-fact (which appointment is coupled
      with
      an interest and is irrevocable) for the purpose of carrying out the provisions
      of this Article
      21
      and
      taking any action and executing any instruments which Lender may deem necessary
      or desirable to effect the intents and purposes hereof including, without
      limitation, the right to sign and file any financing statement (or amendment
      or
      extension thereof) deemed necessary by Lender in connection herewith and the
      right to transfer any liquor licenses or other licenses applicable to the
      Property.

    

    ARTICLE
      23 -   OPERATING
      LEASE PROVISIONS

     

    (a)  Borrower
      will, or, if applicable, will cause Lessee to: (i) observe all applicable terms,
      covenants, obligations and conditions of this Security Instrument, (ii) pay
      the
      rent reserved by the Operating Lease as the same becomes due and payable; (iii)
      promptly perform and observe all of the covenants, agreements, obligations
      and
      conditions required to be performed and observed by the Lessee under the
      Operating Lease, and do all things necessary to preserve and keep unimpaired
      its
      rights thereunder; (iv) promptly notify Lender in writing of the commencement
      of
      a proceeding under the federal bankruptcy laws by or against Lessee; (v) if
      any
      of the indebtedness secured hereby remains unpaid at the time when notice may
      be
      given by the Lender under the Operating Lease of the exercise of any right
      to
      renew or extend the term of the Operating Lease, promptly give notice to the
      Borrower of the exercise of such right of extension or renewal; (vi) in case
      any
      proceeds of insurance upon the Property or any part thereof are deposited with
      any person other than Lender, promptly notify Lender in writing of the name
      and
      address of the person with whom such proceeds have been deposited and the amount
      so deposited; (vii) promptly notify the Lender in writing of the receipt by
      the
      Lessee of any notice (other than notices customarily sent on a regular periodic
      basis) from the Borrower under the Operating Lease and of any notice noting
      or
      claiming any default by the Lessee in the performance or observance of any
      of
      the terms, covenants, or conditions on the part of the Lessee to be performed
      or
      observed under the Operating Lease; (viii) promptly notify the Lender in writing
      of the receipt by the Lessee of any 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    notice
      from the Borrower of any termination of the Operating Lease; (ix) promptly
      cause
      a copy of each such notice received by the Lessee from the Borrower under the
      Operating Lease to be delivered to the Lender, and (x) promptly notify Lender
      in
      writing of any request made by either party to the Operating Lease to the other
      party thereto for arbitration or appraisal proceedings, and of the institution
      of any arbitration or appraisal proceedings and promptly deliver to Lender
      a
      copy of the determination of the arbitrators or appraisers in each such
      proceeding.

     

    (b)  Borrower
      will not terminate or cancel the Operating Lease; and will not, without the
      prior written consent of Lender modify, change, supplement, alter or amend
      the
      Operating Lease, either orally or in writing. 

     

    (c)  Unless
      Lender shall otherwise expressly consent in writing, the fee title to the real
      property demised by the Operating Lease and the leasehold estate thereunder
      shall not merge, but shall always remain separate and distinct, notwithstanding
      the union of such estates either in the Borrower or in a third party by purchase
      or otherwise.

     

    [SIGNATURES
      ON FOLLOWING PAGE]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower
      effective the day and year first above written.

     

    

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    BORROWER:

    

    (COMPANY
      SUBSIDIARY), a _________ limited partnership 

    

    By: (COMPANY
      SUBSIDIARY), a _________ corporation, its sole general partner

    

    

    By:      

    Name:      

    Title:      

    

    

    STATE
      OF
 )

    )
      ss.

    COUNTY
      OF
 )

    

    I
      certify
      that I know or have satisfactory evidence that _________________________________
      is the person who appeared before me, and said person acknowledged that he/she
      signed this instrument, on oath stated that he/she was authorized to execute
      the
      instrument and acknowledged it as the _________________________________ of
      (COMPANY SUBSIDIARY), a _________ corporation, the sole general partner of
      (COMPANY SUBSIDIARY), a _________ limited partnership to be the free and
      voluntary act of such party for the uses and purposes mentioned in the
      instrument on behalf of said corporation and limited partnership.

    

    Dated:
      ________________________

    

    
      	
               

               

               

              [SEAL]

               

               

               

               

               

            	
               

              Notary
                Public

              Print
                Name     

              My
                commission expires     

               

               

            

    

    

    

     

    

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A

     

    (Description
      of Land)

     

    All
      of
      that certain lot, piece or parcel of land, with the buildings and improvements
      thereon, situate, lying and being described as follows:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]