Document:

lfr_Current_Folio_10K_Ex10575

		
			EXHIBIT 10.57.5
		

		
			 
		

		
			 
		

		
			FOURTH AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
		

		
			 
		

		
			This FOURTH AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (this
		

		
			“Fourth Amendment”) is made as of the 17th day of February, 2020 (the “Amendment Date”) by and among CENTRAL PA EQUITIES 17, LLC, a Pennsylvania limited liability company (“HIS York South Seller”), CENTRAL PA EQUITIES 19, LLC, a Pennsylvania limited liability company (“H2S York Seller”), SPRINGWOOD – FHP LP, a Pennsylvania limited partnership (“FIS Hershey Seller”, together with HIS York South Seller and H2S York Seller herein referred to collectively and individually, as the context so requires, as “Seller”), and LODGING FUND REIT III OP, LP, a Delaware limited partnership (the “Buyer”).
		

		
			WHEREAS, Buyer and Seller entered into that certain Agreement of Purchase and Sale dated November 22, 2019, as amended by the First Amendment dated January 13, 2020 and as amended by the Second Amendment dated January 31, 2020, and as amended by the Third Amendment dated February 10, 2020 to Agreement of Purchase and Sale (together, the “Agreement”) for the purchase and sale of three (3) hotels, namely the Hampton Inn York South hotel in York, PA (“HIS York South Hotel”), the Home2 Suites York hotel in York, PA (“H2S York Hotel”) and the Fairfield Inn & Suites Hershey Chocolate Avenue hotel in Hershey, PA (“FIS Hershey Hotel”, together with HIS York South Hotel and H2S York Hotel herein referred to collectively and individually, as the context so requires, the “Property”);
		

		
			 
		

		
			WHEREAS, Buyer intends this Fourth Amendment to its unconditional Satisfaction Notice in accordance with Section 7.1(a);
		

		
			 
		

		
			NOW THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
		

		
			 
		

		
			1.Capitalization. All capitalized terms used herein will have the meanings ascribed to those terms in the Agreement, unless otherwise specified herein.
		

		
			 
		

		
			2.Satisfaction Notice. The parties acknowledge and agree that this Fourth Amendment shall serve as Buyer’s Satisfaction Notice pursuant to Section 7.1(a) of the Agreement.
		

		
			 
		

		
			3.Purchase Price. The first sentence of Section 2.2(a) shall read as follows:
		

		
			 
		

		
			“(a)Consideration. The consideration for the purchase of the Assets shall be Forty-Six Million Eight Hundred Seventy-Five Thousand and no/100 ($46,875,000.00) (the “Purchase Price”).
		

		
			 
		

		
			4.Deposit. The last sentence in Section 2.3 shall read as follows:
		

		
			 
		

		
			“The Deposit will be held in escrow, and shall be evenly applied among each Asset at such Asset’s respective Closing.”
		

		
			 
		

		
			5.Closing Date. Section 2.4(a) of the Agreement is hereby deleted in its entirety and replaced with the following:
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			"(a) Closing Date. Unless this Agreement is terminated upon the express terms herein, the closing of the sale and purchase of the Assets or an individual Asset (as the context may require, a "Closing" or the "Closings") must take place in the following sequence: (1) first, the FIS Hershey Hotel; (2) second, the H2S York Hotel; and (3) third, the HIS York South Hotel. Buyer shall provide Seller written notice of Buyer's intent to close on the individual Hotels no later than ten (10) days prior to each intended Closing date (each a "Closing Date Notice"). Unless this Agreement is earlier terminated as expressly set forth herein, Buyer and Seller acknowledge and agree on the following: (a) the FIS Hershey Hotel Closing shall occur no later than April 2, 2020; (b) the H2S York Hotel Closing shall occur no later than June 1, 2020, however, if the H2S York Hotel closes before May 18, 2020, Buyer shall receive a Twenty-Five Thousand Dollar ($25,000) credit, applied to purchase price of the H2S York; and (c) the HIS York Hotel Closing shall occur no later than July 31, 2020, however, if the HIS York Hotel Closing occurs before July 2, 2020, the Buyer shall receive a Twenty Five Thousand Dollar ($25,000) credit, applied to the purchase price of the HIS York Hotel. For the avoidance of doubt, any reference to the purchase price increase to compensate Seller for costs, fees, or charges in connection with the mortgage interest of the FIS Hershey Hotel is hereby deleted.”
		

		
			 
		

		
			6.Purchase Price Allocation.  Schedule A-4 of the Agreement is hereby deleted in its entirety and replaced with Schedule A-4 (“Purchase Price Allocation”) attached hereto and incorporated herein.
		

		
			 
		

		
			7.Ongoing Management Agreement. Seller and Buyer acknowledge and agree that the Ongoing Management Agreement contemplated by Section 14.27 of the Agreement has been agreed upon by the parties in substantially the same form as Exhibit A, subject to customary administrative updates (e.g. hotel names, addresses, franchisors) including a complete Exhibit D, attached hereto (the “Final Management Agreement”) and that such Final Management Agreement will be executed at each Closing. Notwithstanding the immediately preceding sentence to the contrary, the parties acknowledge and agree that: (i) the Section 3-05 Audit requirements set forth in Schedule 3.5 of the Agreement shall be inserted into the Final Management Agreement in substantially the same form as the language included in Schedule 3.5 of the Agreement; provided, however that all references to “Seller” in such schedule shall be revised to be the “Operator” (as such term is defined in the Final Management Agreement), and (ii) Parties will continue, in good faith, to negotiate or update the terms required by Section 12.1, as applicable or advisable until the Closing Date; in the event parties have not agreed within 24-hours of the first Closing Date, then Buyer shall obtain and bind insurance in both coverage and policy limits suitable to Buyer.
		

		
			 
		

		
			8.Conflict; Counterparts. In the event of any conflict between the terms of this Amendment and the Agreement, this Amendment shall control. This Amendment may be executed in multiple counterparts via facsimile or email in .PDF format, each of which shall be deemed to be an original, but such counterparts when taken together shall constitute but one Amendment.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			9.Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, administrators and assigns.
		

		
			 
		

		
			10.Ratification. Except as set forth above, the terms of the Agreement are hereby ratified and confirmed in their entirety.
		

		
			 
		

		
			[Signature Page to Follow]
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			IN WITNESS WHEREOF, this Fourth Amendment has been duly executed by the patties hereto as of the day and year first above written.
		

		
			 
		

		
			CENTRAL PA EQUITIES 17, LLC,
		

		
			a Pennsylvania limited liability company
		

		
			 
		

		
			By:  /s/ David H. Hogg
		

		
			Name:  David H. Hogg
		

		
			Title:  Manager
		

		
			 
		

		
			CENTRAL PA EQUITIES 19, LLC,
		

		
			a Pennsylvania limited liability company
		

		
			 
		

		
			By:  /s/ David H. Hogg
		

		
			Name:  David H. Hogg
		

		
			Title:  Manager
		

		
			 
		

		
			SPRINGWOOD – FHP LP,
		

		
			a Pennsylvania limited partnership
		

		
			 
		

		
			By:  /s/ David H. Hogg
		

		
			Name:  David H. Hogg
		

		
			Title:  Manager
		

		
			 
		

		
			[BUYER'S SIGNATURE PAGE TO FOLLOW]
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			BUYER:
		

		
			 
		

		
			LODGING FUND REIT III OP, LP
		

		
			A Delaware limited partnership
		

		
			 
		

		
			By: Lodging Fund REIT Ill, Inc. Its: General Partner
		

		
			 
		

		
			By: /s/ David R. Durell
		

		
			Name: David R. Durell
		

		
			Title: Chief Acquisition Officer
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			SCHEDULE A-4
		

		
			 
		

		
			Purchase Price Allocation Asset Allocations
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						Asset

					
					
						Purchase Price

				
	
					
						HIS York South Hotel

					
					
						$12,625,000.00

				
	
					
						H2S York Hotel

					
					
						$14,225,000.00

				
	
					
						FIS Hershey Hotel

					
					
						$20,025,000.00

				
	
					
						Total

					
					
						$46,875,000.00

				

		
			 
		

		
			 
		

		
			Sch. A-4
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			Exhibit A
		

		
			 
		

		
			Ongoing Management Agreement
		

		
			 
		

		
			[Attached behind.]
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			HOTEL MANAGEMENT AGREEMENT
		

		
			 
		

		
			LF3
		

		
			TRS, LLC
		

		
			 
		

		
			[Hotel address]
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			TABLE OF CONTENTS (CONTINUED)
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Page

				
	
					
						ARTICLE I

					
					
						THE HOTEL

					
1
				
	
					
						 

					
					
						1.1

					
					
						Hotel Description

					
1
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE II

					
					
						TERM

					
2
				
	
					
						 

					
					
						2.1

					
					
						Initial and Renewal Terms

					
2
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE III

					
					
						GENERAL SERVICES BY OPERATOR

					
2
				
	
					
						 

					
					
						3.1

					
					
						Scope of Services

					
2
				
	
					
						 

					
					
						3.2

					
					
						Reimbursements of Transition Expenses

					
4
				
	
					
						 

					
					
						3.3

					
					
						Major Agreements

					
4
				
	
					
						 

					
					
						3.4

					
					
						Independent Contractor Status

					
4
				
	
					
						 

					
					
						3.5

					
					
						Standard of Care and Disclaimer of Fiduciary Duty

					
5
				
	
					
						 

					
					
						3.6

					
					
						Third Party Undertaking Management Functions

					
6
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE IV

					
					
						GENERAL OPERATION OF THE HOTEL

					
6
				
	
					
						 

					
					
						4.1

					
					
						Exclusive Operator of Hotel

					
6
				
	
					
						 

					
					
						4.2

					
					
						Manner of Operations

					
6
				
	
					
						 

					
					
						4.3

					
					
						Consultation with Owner

					
6
				
	
					
						 

					
					
						4.4

					
					
						Hiring of General Manager

					
6
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE V

					
					
						HOTEL EMPLOYEES

					
7
				
	
					
						 

					
					
						5.1

					
					
						Hotel Employees and Contractors

					
7
				
	
					
						 

					
					
						5.2

					
					
						Benefit Plan

					
7
				
	
					
						 

					
					
						5.3

					
					
						Lodging for Executive Employees

					
8
				
	
					
						 

					
					
						5.4

					
					
						Employment Laws

					
8
				
	
					
						 

					
					
						5.5

					
					
						Employment Policy

					
8
				
	
					
						 

					
					
						5.6

					
					
						Collective Bargaining Agreements

					
9
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE VI

					
					
						PROVISION OF FUNDS

					
9
				
	
					
						 

					
					
						6.1

					
					
						Available Funds for Operations

					
9
				
	
					
						 

					
					
						6.2

					
					
						No Advance of Funds

					
9
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE VII

					
					
						CENTRALIZED SERVICES; MULTI-PROPERTY PROGRAMS; NETWORKING SERVICES

					
10
				
	
					
						 

					
					
						16.1

					
					
						Centralized Services

					
10
				
	
					
						 

					
					
						16.2

					
					
						Multi-property Programs

					
10
				
	
					
						 

					
					
						16.3

					
					
						Networking Services

					
11
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE VIII

					
					
						WORKING CAPITAL AND BANK ACCOUNTS

					
					
						 

				
	
					
						 

					
					
						8.1

					
					
						Working Capital

					
11
				
	
					
						 

					
					
						8.2

					
					
						Operating and FF&E Account

					
11
				
	
					
						 

					
					
						8.3

					
					
						Internal Controls for Accounts

					
11
				
	
					
						 

					
					
						 

					
					
						 

					
12
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

		
			TABLE OF CONTENTS (CONTINUED)
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Page

				
	
					
						ARTICLE IX

					
					
						BOOKS, RECORDS AND STATEMENTS; BUDGETS

					
12
				
	
					
						 

					
					
						9.1

					
					
						Accounting Procedures

					
12
				
	
					
						 

					
					
						92.

					
					
						Monthly Reports

					
13
				
	
					
						 

					
					
						9.3

					
					
						Audited Financials

					
13
				
	
					
						 

					
					
						9.4

					
					
						Annual Budgets

					
14
				
	
					
						 

					
					
						9.5

					
					
						Resolution of Disputes over Budgets

					
14
				
	
					
						 

					
					
						9.6

					
					
						Approval for Capital Expenditures

					
15
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE  X

					
					
						MANAGEMENT  FEES  AND  PAYMENTS  TO  OPERATOR  AND OWNER

					
15
				
	
					
						 

					
					
						10.1

					
					
						Base Fee

					
15
				
	
					
						 

					
					
						10.2

					
					
						Incentive Fee

					
15
				
	
					
						 

					
					
						10.3

					
					
						Funds from Operating Account

					
16
				
	
					
						 

					
					
						10.4

					
					
						Audit of Management Fees

					
16
				
	
					
						 

					
					
						10.5

					
					
						Renovation Services

					
16
				
	
					
						 

					
					
						10.6

					
					
						Reimbursable Expenses

					
16
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XI

					
					
						FF&E RESERVE

					
17
				
	
					
						 

					
					
						11.1

					
					
						Establishing FF&E Reserve Account

					
17
				
	
					
						 

					
					
						11.2

					
					
						Use of Funds in FF&E Reserve Account

					
17
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XII

					
					
						INSURANCE

					
17
				
	
					
						 

					
					
						12.1

					
					
						Insurance Requirements

					
17
				
	
					
						 

					
					
						12.2

					
					
						Named Insured Party

					
17
				
	
					
						 

					
					
						12.3

					
					
						Form of Insurance

					
18
				
	
					
						 

					
					
						12.4

					
					
						Cancellation and Modification of Insurance

					
18
				
	
					
						 

					
					
						12.5

					
					
						No Subrogation Rights

					
18
				
	
					
						 

					
					
						12.6

					
					
						Insurance Proceeds

					
18
				
	
					
						 

					
					
						12.7

					
					
						Payment for Insurance

					
18
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XIII

					
					
						SPECIAL TERMINATION EVENTS

					
19
				
	
					
						 

					
					
						13.1

					
					
						Performance Test

					
19
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XIV

					
					
						DAMAGE OR DESTRUCTION; CONDEMNATION

					
19
				
	
					
						 

					
					
						14.1

					
					
						Fire or Casualty

					
19
				
	
					
						 

					
					
						14.2

					
					
						Condemnation

					
19
				
	
					
						 

					
					
						14.3

					
					
						Miscellaneous

					
20
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XV

					
					
						EVENTS OF DEFAULT

					
20
				
	
					
						 

					
					
						15.1

					
					
						Listing of Defaults

					
20
				
	
					
						 

					
					
						15.2

					
					
						Termination Rights

					
21
				
	
					
						 

					
					
						15.3

					
					
						Non-Exclusive Remedy

					
21
				
	
					
						 

					
					
						15.4

					
					
						Force Majeure

					
21
				
	
					
						 

					
					
						15.5

					
					
						Waiver of Certain Claims

					
21
				

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

		
			TABLE OF CONTENTS (CONTINUED)
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Page

				
	
					
						ARTICLE XVI

					
					
						TERMINATION

					
22
				
	
					
						 

					
					
						16.1

					
					
						Termination Fee

					
22
				
	
					
						 

					
					
						16.2

					
					
						Prior Commitments to Customers

					
22
				
	
					
						 

					
					
						16.3

					
					
						Transition of Management

					
23
				
	
					
						 

					
					
						16.4

					
					
						WARN Act Liability

					
23
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XVII

					
					
						ASSIGNMENT

					
24
				
	
					
						 

					
					
						17.1

					
					
						Assignment by Operator

					
24
				
	
					
						 

					
					
						17.2

					
					
						Assignment by Owner

					
24
				
	
					
						 

					
					
						17.3

					
					
						Effect of Assignment

					
24
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XVIII

					
					
						NOTICES

					
24
				
	
					
						 

					
					
						18.1

					
					
						Requirement for Notice

					
24
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XIX

					
					
						ESTOPPELS

					
25
				
	
					
						 

					
					
						19.1

					
					
						Confirmation of Agreement

					
25
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XX

					
					
						INDEMNIFICATION25

					
25
				
	
					
						 

					
					
						20.1

					
					
						Indemnity of Operator

					
25
				
	
					
						 

					
					
						20.2

					
					
						Indemnity of Owner

					
26
				
	
					
						 

					
					
						20.3

					
					
						Employment Claims

					
26
				
	
					
						 

					
					
						20.4

					
					
						Procedure for Indemnity

					
26
				
	
					
						 

					
					
						20.5

					
					
						Survival Beyond Termination

					
27
				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE XXI

					
					
						MISCELLANEOUS

					
27
				
	
					
						 

					
					
						21.1

					
					
						Binding and Enforceable Agreement

					
27
				
	
					
						 

					
					
						21.2

					
					
						Transactions with Affiliates

					
27
				
	
					
						 

					
					
						21.3

					
					
						Entire Agreement

					
27
				
	
					
						 

					
					
						21.4

					
					
						Headings

					
28
				
	
					
						 

					
					
						21.5

					
					
						Waiver

					
28
				
	
					
						 

					
					
						21.6

					
					
						Binding Agreement

					
28
				
	
					
						 

					
					
						21.7

					
					
						Choice of Law

					
28
				
	
					
						 

					
					
						21.8

					
					
						Qualified Loans

					
28
				
	
					
						 

					
					
						21.9

					
					
						Dispute Resolution

					
28
				
	
					
						 

					
					
						21.10

					
					
						No Guarantee of Operating Results

					
29
				
	
					
						 

					
					
						21.11

					
					
						Oversight of Renovation Services

					
29
				
	
					
						 

					
					
						21.12

					
					
						Operating Funds

					
29
				
	
					
						 

					
					
						21.13

					
					
						Consents and Approvals

					
30
				
	
					
						 

					
					
						21.14

					
					
						Signature Counterparts

					
30
				
	
					
						 

					
					
						21.15

					
					
						Subordination, Non-Disclosure and Attornment

					
30
				

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			TABLE OF CONTENTS (CONTINUED)
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Page

				
	
					
						EXHIBITS

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						EXHIBIT A

					
					
						Centralized Services

					
					
						 

				
	
					
						EXHIBIT B

					
					
						EBITDA Projections; Calculation of Incentive Fee 

					
					
						 

				
	
					
						EXHIBIT C

					
					
						Insurance Requirements

					
					
						 

				
	
					
						EXHIBIT D

					
					
						Competitive Set

					
					
						 

				
	
					
						EXHIBIT E

					
					
						Certain Definitions

					
					
						 

				

		
			 
		

		
			v
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			HOTEL MANAGEMENT AGREEMENT HOTEL NAME
		

		
			 
		

		
			THIS HOTEL MANAGEMENT AGREEMENT (this "Agreement"), made effective as of [DATE], 2020 (the "Commencement Date"), is entered into between LF3   TRS, LLC, a Delaware limited liability company ("Owner"), and SPRINGWOOD HOSPITALITY, LLC, a [STATE NAME] limited liability company ("Operator").
		

		
			 
		

		
			RECITALS
		

		
			 
		

		
			A.Owner owns the hotel known as the [NICK NAME OF HOTEL] located at [LOCATION] (the "Hotel"); and
		

		
			 
		

		
			B.[Owner has entered into a Franchise Agreement (the "Franchise Agreement"), dated as of [FA DATE], with [NAME OF FRANCHISOR] ("Franchisor") under which Owner is licensed to operate the Hotel as a [BRAND NAME], or similarly situated brand (the "Brand");] and
		

		
			 
		

		
			C.Owner desires to engage Operator to manage and operate the Hotel, and Operator has agreed to manage and operate the Hotel, in accordance with the terms and conditions of this Agreement.
		

		
			 
		

		
			NOW, THEREFORE, for and in consideration of the mutual promises contained herein, and for other good and valuable consideration, Owner and Operator agree as follows:
		

		
			 
		

		
			ARTICLE I
		

		
			 
		

		
			THE HOTEL
		

		
			 
		

		
			1.1Hotel Description
		

		
			 
		

		
			Owner and Operator acknowledge that the Hotel consists of and contains:
		

		
			 
		

		
			A.That certain real property (the "Land") located at the address shown in Recital A
		

		
			above, and improvements thereon with [] guest rooms and other facilities
		

		
			 
		

		
			together with any outdoor parking areas, retail spaces and other facilities located
		

		
			on the Land (the "Building") or otherwise used by the Hotel;
		

		
			 
		

		
			B.Mechanical systems and built-in installations (the "Installations") of the Building including, but not limited to, heating, ventilation, air conditioning, electrical and plumbing systems, elevators, and built-in laundry, refrigeration and kitchen equipment;
		

		
			 
		

		
			C.Furniture, furnishings, wall coverings, floor coverings, window treatments, fixtures and hotel equipment and vehicles (the "FF&E");
		

		
			 
		

		
			D.Chinaware, glassware, silverware, linens, and other items of a similar nature (the "Operating Equipment"); and
		

		
			 
		

		
			1
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			E.Stock and inventories of paper supplies, cleaning materials and similar consumable items and food and beverage (the "Operating Supplies").
		

		
			 
		

		
			ARTICLE II
		

		
			 
		

		
			TERM
		

		
			 
		

		
			2.1Initial and Renewal Terms
		

		
			 
		

		
			This Agreement shall have a term commencing on the Commencement Date and expiring on the date (as the same may be extended in accordance with the provisions of this Agreement, the "Expiration Date") which is the fifth (5th) anniversary of the later of (a) the Commencement Date, or (b) the date the Hotel opens for business to the public, unless sooner terminated in accordance with the provisions of this Agreement or unless extended by the written agreement of Owner and Operator (the "Initial Term"). Subject to the earlier termination of this Agreement pursuant to the terms of this Agreement, this Agreement shall, upon mutual consent of Operator and Owner, be extended for up to two (2) additional consecutive five (5) year renewal terms (each a "Renewal Term", and together with the Initial Term and all prior Renewal Terms, the "Term") (each such Renewal Term to commence on the day immediately following the last day of the then expiring term) unless Owner or Operator provides a written notice of non-renewal to the other party ("Non- Renewal Notice") at least sixty (60) days prior to the last day of the then-expiring Term.
		

		
			ARTICLE III
		

		
			 
		

		
			GENERAL SERVICES BY OPERATOR
		

		
			 
		

		
			3.1Scope of Services
		

		
			 
		

		
			During the Term, Operator, for the account of Owner, shall in accordance with the applicable provisions of this Agreement, and only to the extent Owner has provided sufficient funds therefor, either through Hotel operations or directly from Owner:
		

		
			 
		

		
			A.Recruit, train, direct, supervise, employ and dismiss on-site staff (the "Hotel Employees") necessary for the operation of the Hotel;
		

		
			 
		

		
			B.Establish all prices, rates and charges for guest rooms, meeting rooms, commercial space (including stores, office space and lobby space), food, beverage, and other salable or rentable items comprising the Hotel and its business;
		

		
			 
		

		
			C.Implement advertising, marketing, promotion, publicity and other similar programs for the Hotel;
		

		
			 
		

		
			D.(i) Negotiate and enter into leases, licenses and concession agreements (collectively, the "Leases") for stores, office space and lobby space at the Hotel, collect the rent under the Leases and otherwise administer the Leases; provided, however, that all Leases require Owner’s prior written approval which may be withheld and (ii) negotiate and enter into contracts for the provision of goods and services required in the ordinary course of business in operating the Hotel;
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			provided, however, without Owner's prior written approval, which shall not be unreasonably withheld, conditioned or delayed, Operator shall not enter into any contract for the provision of goods and services to the Hotel unless the same is (1) terminable upon not more than thirty (30) days' notice without penalty, or (2) is provided for in the applicable Budget, or (3) requires an annual (calculated in the aggregate) payment of less than $6000;
		

		
			 
		

		
			E.Apply for, process and take all necessary steps, as determined by Operator, to procure and keep in effect in Owner's name (or, if required by the licensing authority, in Operator's name, or a third party tenant's name, or any or all of the foregoing) all licenses and permits required for the operation of the Hotel;
		

		
			 
		

		
			F.Purchase all FF&E, Operating Equipment and Operating Supplies reasonably necessary for the operation of the Hotel,; provided, however, that any such single purchases exceeding $2,500 require Owner’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed; Establish and revise, as necessary, administrative policies and procedures including, without limitation, policies and procedures for the control of revenue and expenditures, for the purchase of Operating Equipment, Operating Supplies and services, for the control of credit, and for the scheduling of maintenance.
		

		
			 
		

		
			G.Provide routine accounting services in accordance with the "Uniform System of Accounts" (Eleventh Revised Edition 2014, as further revised from time to time), as adopted by the American Hotel and Motel Association of the United States and Canada (the "Uniform System") and purchasing services as required in the ordinary course of business;
		

		
			 
		

		
			H.Comply with all applicable laws, ordinances, regulations, rulings and orders of governmental authorities affecting or issued in connection with the Hotel, as well as with orders and requirements of any board of fire underwriters or any other body which may exercise similar functions, so long as Owner promptly delivers to Operator any notice of violation thereof received by Owner;
		

		
			 
		

		
			I.Cause all ordinary repairs and maintenance to the Hotel, of which Operator is aware, to be made and conducted; provided, however, that any repairs that are structural in nature, or cost more than $6,000 require Owner’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed;
		

		
			 
		

		
			J.Provide project management services on Owner's behalf in connection with capital improvements to the Hotel, or the renovation and refurbishment of the Hotel, provided that all such capital improvements shall be funded from the FF&E Reserve Account (as hereinafter defined) or by Owner in accordance with the applicable approved Budgets;
		

		
			 
		

		
			K.Subject to Section 3.3 below, operate the Hotel in accordance with the Franchise Agreement, as it may be amended or replaced at any time during the Term, and any mortgage or deed of trust encumbering the Land (the "Mortgage"), and any
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			covenants, conditions and restrictions encumbering the Land as of the date of this Agreement (the "Encumbrances") (collectively, the Franchise Agreement, the Mortgage and the Encumbrances, the "Major Agreements");
		

		
			 
		

		
			L.Prepare and deliver to Owner any Budgets and such other information as required by this Agreement;
		

		
			 
		

		
			M.Procure and maintain insurance in accordance with ARTICLE XII;
		

		
			 
		

		
			N.Open and maintain the Operating Account and the FF&E Reserve Account as required by this Agreement;
		

		
			 
		

		
			O.Retain legal counsel and such other professionals, consultants, and specialists (collectively the “Counsel”) as Operator deems necessary in connection with the management of the Hotel, the cost of which shall be an Operating Expense; provided, however, (i) Operator shall not expend more than $1,500 per occurrence with respect to such fees and expenses without the prior written consent of Owner,
		

		
			(ii) Owner receives written notice explaining the circumstances for the retention of the Counsel, and (iii) Owner provides written approval of the retention such counsel, whereby consent may unreasonably withheld, so long Owner provides adequate Counsel to the expectation explained in Manager’s notice;
		

		
			 
		

		
			P.Provide such other services as are required under the terms of this Agreement.
		

		
			 
		

		
			3.2Reimbursements of Transition Expenses
		

		
			 
		

		
			Owner and Operator shall both utilize the M3 hospitality accounting and analytics software. Operator shall be reimbursed by Owner for any out-of-pocket expenses and disbursements incurred by Operator during or in connection with any switch to a software system other than M3 or material changes in reports or chart of accounts within the M3 system. Operator shall maintain and provide to Owner invoices or other evidence supporting such charges.
		

		
			 
		

		
			3.3Major Agreements
		

		
			 
		

		
			Operator covenants it will comply with the material terms of all Major Agreement, so long as complete and accurate copies of the Major Agreements, have been delivered to Operator sufficiently in advance of the Commencement Date to allow Operator to review the terms of such Major Agreements.
		

		
			 
		

		
			3.4Independent Contractor Status
		

		
			 
		

		
			In the performance of its duties in the administration, management and operation of the Hotel, Operator shall act solely as an independent contractor. Nothing herein shall constitute or be construed to be or create a partnership or joint venture between Owner and Operator, or be construed to appoint or constitute Operator as an agent of Owner for any purpose, or be construed to create a lease by Operator of the Hotel or its facilities. Except as otherwise provided in this Agreement, including without limitation the provisions of Article XX hereof, (a) unless Operator exceeds its authority or acts not in accordance with the approved Budgets, all debts and liabilities
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			to third persons incurred by Operator in the course of its operation and management of the Hotel in accordance with the provisions of this Agreement shall be the debts and liabilities of Owner only, and (b) unless Operator acts grossly negligent, with reckless disregard, fraudulently or in bad faith or commits intentional misrepresentations or acts not in accordance with the approved Budgets, Operator shall not be liable for any such obligations by reason of its management supervision, direction and operation of the Hotel for Owner. Operator may so inform third parties with whom it deals on behalf of Owner and may take any other reasonable steps to carry out the intent of this paragraph. It is expressly covenanted that this Agreement is no more than an agreement for the rendering of services by Operator on behalf of Owner in the operation and management of the Hotel only. To the extent that any fiduciary or other duties may be implied as a result of the relationship of the parties under this Agreement, the parties disclaim any such implied duties and agree that: (a) Operator shall have no duties that are inconsistent with, or would have the effect of expanding, modifying, limiting or restricting any of the express terms of this Agreement, (b) the express terms of this Agreement shall control the duties of Operator hereunder,
		

		
			(c) this Agreement shall be interpreted in accordance with general principles of contract interpretation without regard to the common law principles of agency, and (d) any liability of the parties shall be based solely on principles of contract law and the express terms of this Agreement. The parties further acknowledge and agree that for the purposes of determining the nature and scope of any fiduciary duties of Operator under this Agreement, the terms of this Agreement, and the duties and obligations set forth herein, are intended to satisfy all such fiduciary duties that may exist as a result of the relationship between the parties, including all duties of loyalty, good faith, fair dealing and full disclosure, and any other duty deemed to exist under the common law principles of agency or otherwise (other than the duty of good faith and fair dealing implied under general contract principles, independent of the common law principles of agency). Accordingly, notwithstanding anything to the contrary in this Agreement, to the fullest extent permitted under applicable law, the parties hereby unconditionally and irrevocably waive and disclaim any power or right such party may have to claim any punitive, exemplary, treble, incidental or consequential damages for any breach of fiduciary duties.
		

		
			 
		

		
			3.5Standard of Care and Disclaimer of Fiduciary Duty
		

		
			 
		

		
			Operator shall operate the Hotel in a reasonably prudent and efficient manner as is common among operators managing similar properties in the same geographic area that the Hotel is in, in the same industry. Both Owner and Operator agree that, to the extent allowable under applicable law, neither Operator, nor any of its Affiliates or any of their respective directors, officers, employees, consultants, agents or representatives, shall owe any fiduciary duty to Owner in the operation of the Hotel. Operator shall not, in the performance of its obligations under this Agreement, be liable to Owner or to any other Person for any act or omission (whether negligent, tortious or otherwise) of Operator or any of its Affiliates or any of their respective directors, officers, employees, consultants, agents or representatives, except only to the extent such liabilities, obligations, claims, costs and expenses arise out of or are caused by the willful misconduct (including fraud or the willful breach of this Agreement), gross negligence or bad faith of Operator or any of its Affiliates or any of their respective directors, officers, employees, consultants, agents or representatives.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			3.6Third Party Undertaking Management Functions
		

		
			 
		

		
			Operator may, upon consulting Owner, delegate to third parties certain management functions. All such delegation shall require Owner's approval.
		

		
			 
		

		
			ARTICLE IV
		

		
			 
		

		
			GENERAL OPERATION OF THE HOTEL
		

		
			 
		

		
			4.1Exclusive Operator of Hotel
		

		
			 
		

		
			Owner hereby engages Operator as the exclusive operator of the Hotel during the Term, and Operator hereby accepts such engagement. Subject to the terms of this Agreement and the Owner’s approval of the applicable Budget, Operator shall have control and discretion in the operation, direction, management and supervision of the Hotel. Such control and discretion of Operator shall include, without limitation, the determination of credit policies (including entering into agreements with credit card organizations), terms of admittance, charges for rooms, food and beverage policies, employee wages, benefits and severance policies, entertainment policies, leasing, licensing and granting of concessions for commercial space at the Hotel (subject to Section 3.1C above), and all phases of advertising, promotion and publicity relating to the Hotel.
		

		
			 
		

		
			4.2Manner of Operations
		

		
			 
		

		
			Operator shall operate the Hotel and all of its facilities and activities in the same manner as is customary and usual in the operation of other hotels operated by Operator under the Brand in markets similar to the Hotel, to the extent consistent with the Budget and the Hotel's facilities, for so long as the Hotel remains under the Brand. If the Hotel is not operated under the Brand, then Operator shall operate the Hotel and all of its facilities and activities in the same manner as is customary and usual in the operation of similar hotels by Operator in the geographic area of the Hotel to the extent consistent with the Budget and the Hotel's facilities.
		

		
			 
		

		
			4.3Consultation with Owner
		

		
			 
		

		
			Operator will be available to consult with and advise Owner, at Owner's reasonable request, concerning all policies and procedures affecting all phases of the conduct of business at the Hotels. Operator, including any Hotel Employee, will participate in conferences with Owner at any reasonable frequency and duration as Owner requires.
		

		
			 
		

		
			4.4Hiring of General Manager
		

		
			 
		

		
			Prior to hiring any general manager for the Hotel ("General Manager"), Operator will deliver the résumé of such proposed General Manager to Owner, and Owner shall have a period not to exceed seven (7) business days from and after delivery of such résumé to Owner to interview such General Manager, and consent to proposed General Manager’s hiring; if Owner does not object to the General Manager’s résumé within seven (7) business days after delivery, then Owner’s consent is deemed granted.
		

		
			 
		

		
			ARTICLE V
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			HOTEL EMPLOYEES
		

		
			 
		

		
			5.1Hotel Employees and Contractors
		

		
			 
		

		
			All Hotel Employees shall be employees of Operator, an Affiliate of Operator, or a professional employer organization ("PEO") engaged by Operator. Subjet to the approved Budget, and any limitations of a Major Agreement, Operator may, as deemed reasonably necessary by Operator, utilize shared employees and shared positions across multiple hotels owned by the same or different owners, or may assign employees of Operator, an Affiliate of Operator or PEO temporarily, part-time or on a shared basis to perform services at the Hotel or from a remote location, including Operator's home office; and the allocable portion of such temporary, part-time shared employee's salary (including employee benefits and all applicable employer taxes as well as any federal, state or local taxes imposed upon Operator for such reimbursement) while performing services for the Hotel, then actual expenses incurred by such employee in traveling to and from the Hotel (limited to $600 for reasonable travel expenses), will be reimbursed to Operator by Owner, or to the owner of the hotel from which the employee is being shared, including any federal, state or local taxes imposed upon Operator for such reimbursement, as an Operating Expense, and such employee will be entitled to complimentary lodging, food and beverages, and parking and other amenities, and use of Hotel facilities while performing such services away from the employee's home hotel. Subject to the Budgets, Operator shall have absolute discretion to hire, fire, promote, supervise, direct and train all employees at the Hotel, to reasonably fix their compensation and benefits, subject to market rates in similar geographic areas and job descriptions, and generally to establish and maintain all policies relating to employment and employment benefits. All costs of every kind and nature pertaining to all employees at the Hotel arising out of the employer-employee relationship, including, without limitation, salaries, benefits (including vacation, sick and personal days and accruals at the accrual rate established by Operator), bonuses, relocation cost for Director of Sales and the General Manager, reasonable employment-related legal costs, employee taxes, costs incurred in connection with governmental laws and regulations and insurance rules, and such other expenses as Operator, in its reasonable discretion, may deem appropriate (e.g., costs of defense of employees charged with a crime in connection with the performance of their duties at the Hotel and costs of defending claims brought by Hotel employees against Owner, Operator or the Hotel) shall be an Operating Expense, and, absent a legal determination that the Operator acted with willful misconduct or grossly negligent, Owner shall reimburse, indemnify, defend, and hold harmless Operator from all costs, expenses, fees (including, without limitation, attorney's fees), costs, liabilities and claims incurred in connection therewith.
		

		
			 
		

		
			5.2Benefit Plan
		

		
			 
		

		
			Operator may, to the extent consistent with the Budget, enroll the Hotel Employees in retirement, health and welfare employees benefit plans substantially similar to corresponding plans implemented in other hotels with similar service levels managed by Operator. Such plans may be joint plans for the benefit of employees at more than one hospitality property owned, leased or managed by Operator or its affiliates. Subject (except as set forth below) to the Budgets, employer contributions to such plans (including without limitation, but not subject to the Budgets, any withdraw liability incurred upon termination of this Agreement) and reasonable administrative
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			fees which Operator may expend in connection therewith, shall be responsibility of Owner and shall be an Operating Expense. The administrative expenses of any joint plans will be equitably apportioned by Operator among properties covered by such plan. Owner hereby acknowledges and agrees that compliance with the provisions of Worker Adjustment and Retraining Notification. Act and/or similar state or local laws (together with all rules and regulations promulgated thereunder and including, without limitation, any such state or local laws, the "WARN Act") upon any disposition of the Hotel, upon any termination of this Agreement or upon the occurrence of any other event outside the normal course of operation giving rise to the application of the WARN Act, is the responsibility and obligation of Owner, and Owner hereby agrees to reimburse, indemnify, defend, and hold harmless Operator from all costs, expenses, fees (including, without limitation, reasonable attorney's fees), costs, liabilities and claims incurred in connection therewith which Operator may incur arising out of or in connection with any breach or claimed breach of the WARN Act in connection with any such disposition, termination or other occurrence. For the avoidance of doubt, if Operator identifies a violation, or a violation that is imminent of the WARN Act, Operator will immediately provide written notice to Owner prior to incurring any costs as described herein.
		

		
			 
		

		
			5.3Lodging for Operator’s Employees
		

		
			 
		

		
			Operator, in its discretion, may (i) on an as-available basis provide lodging for Operator's key employees visiting the Hotel in connection with the performance of Operator's services and allow them the use Hotel facilities and (ii) subject to the Budget, provide such General Manager of the Hotel temporary living quarters within the Hotel, and the use of all Hotel facilities, in either case at a discounted price or without charge and not to exceed thirty (30) days.
		

		
			 
		

		
			5.4Employment Laws
		

		
			 
		

		
			Operator shall not be liable for any failure of the Hotel to comply prior to the Commencement Date with any federal, state, local and foreign statutes, laws, ordinances, regulations, rules, permits, judgments, orders and decrees affecting labor union activities, civil rights or employment in the United States, including, without limitation, the Civil Rights Act of 1870, 42 U.S.C. §1981, the Civil Rights Acts of 1871, 42 U.S.C. §1983 the Fair Labor Standards Act, 29 U.S.C. §201, et seq., the Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq., as amended, the Age Discrimination in Employment Act of 1967, 29 U.S.C. §621 et seq., the Rehabilitation Act, 29 U.S.C. §701, et seq., the Americans With Disability Act, of 1990, 29 U.S.C. §706, 42
		

		
			U.S.C. §12101 et seq., the Employee Retirement Income Security of 1974, 29 U.S.C. §301, et seq., the Equal Pay Act, 29 U.S.C. §201 et seq., the National Labor Relations Act, 29 U.S.C. §151, et seq., and any regulations promulgated pursuant to such statutes (collectively, as amended from time to time, and together with any similar laws now or hereafter enacted, the "Employment Laws").
		

		
			 
		

		
			5.5Employment Policy
		

		
			 
		

		
			Operator shall from time to time develop and implement policies, procedures and programs for the Hotel (collectively, the "Employment Policies") reasonably designed to affect compliance with the Employment Laws. The Employment Policies shall be consistent with industry standards from time to time for reputable hotel management companies. Owner acknowledges and agrees
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			that Operator shall have the right to institute severance payment policies for the Hotel Employees so long as such policies are reasonable and customary in the industry; notwithstanding the foregoing, any Employment Policy desired by Operator that materially increases costs associated with the approved Budget must then be approved by Owner.
		

		
			 
		

		
			5.6Collective Bargaining Agreements
		

		
			 
		

		
			Each party represents, at the time of entering into this Agreement, that neither such party nor any of its affiliates or related entities has entered into any agreement with a labor organization that has the purpose or effect of requiring Operator to waive any rights under the National Labor Relations Act with respect to the employees at the Hotel, including but not limited to, any neutrality and/or card check recognition agreement. Neither party shall execute any agreement with a labor organization or agree to any labor contract provision that would impact the other party, including any type of card-check neutrality, without the express prior written consent of the other party. If either party is notified of collective bargaining or labor union activity which may affect the Hotel, such party will notify the other party within three (3) business days of receipt thereof. Operator shall negotiate with any labor unions representing any employees at the Hotel or otherwise affecting the Hotel and any collective bargaining agreement or labor contract will be executed by Operator, or an affiliate of Operator, as the employer. Owner agrees to comply with all applicable obligations under any such Operator-approved collective bargaining agreement, the cost of which shall be an Operating Expense. Operator shall not have any obligations or liabilities under any collective bargaining agreement as a result of the termination of this Agreement including, without limitation, any obligation to fund any portion of an unfunded pension liability. All such liabilities and obligations shall be the liabilities and obligation of the Owner or replacement manager.
		

		
			 
		

		
			ARTICLE VI PROVISION OF FUNDS
		

		
			6.1Available Funds for Operations
		

		
			 
		

		
			In performing its services under this Agreement, Operator shall act solely for the account of Owner. Operator shall not be deemed to be in default of its obligations under this Agreement to the extent it is unable to perform any obligation due to a lack of available funds from the operation of this Hotel or as otherwise provided by Owner.
		

		
			 
		

		
			6.2No Advance of Funds
		

		
			 
		

		
			Operator shall in no event be required (i) to advance any of its funds (whether by waiver or deferral of its management fees or otherwise) for the operation of the Hotel or (ii) to incur any liability unless Owner shall have furnished Operator with funds necessary for the discharge thereof prior to incurring such liability.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			ARTICLE VII
		

		
			 
		

		
			CENTRALIZED SERVICES; MULTI-PROPERTY PROGRAMS; NETWORKING SERVICES
		

		
			 
		

		
			7.1Centralized Services
		

		
			 
		

		
			Operator shall provide or cause its affiliated companies to provide for the Hotel and its guests the full benefit of any reservations system hereafter established by Operator or its affiliates (if such reservations systems do not violate the provisions of the Franchise Agreement) and provide, or cause its affiliated companies to provide, centralized accounting services, IT services, purchasing services, revenue management services, sale and marketing services, training, satisfaction surveys, and/or other centralized services as may be made available generally to similar properties managed by Operator from time to time (individually and collectively, "Centralized Services"). The Centralized Services currently provided by Operator are described in Exhibit A attached hereto. The cost of Centralized Services shall be (i) provided and invoiced in amounts according to the approved Budgets, (ii) reasonably allocated to the Hotel on an equitable basis with all other hotels utilizing the Centralized Services of Operator or its affiliates in a manner that does not unreasonably favor other hotels managed by Operator over the Hotel, and (iii) reimbursed to Operator on a cost reimbursement basis, which costs may include, without limitation, salaries (including payroll taxes and employee benefits) of employees and officers of Operator and its affiliates, costs of all equipment employed in the provision of such services, and a reasonable charge for additional overhead of Operator or its affiliates. Operator agrees that, with respect to any new Centralized Services offered by Operator in the future, the cost of such services shall be established on an equitable basis among all hotels utilizing the Centralized Services.
		

		
			 
		

		
			7.2Multi-property Programs
		

		
			 
		

		
			Owner acknowledges and agrees that Operator may in Operator's discretion enter into certain purchasing, maintenance, service or other contracts with respect to the operation of the Hotel and other hotels operated by Operator (collectively, "Multi-Property Programs" pursuant to which Operator or affiliates of Operator may receive rebates, discounts, cash or other incentives, administration fees, concessions, profit participations, stock or stock options, investment rights or similar payments or economic considerations (collectively, "Operator Rebates") from the vendors or suppliers of goods or services provided under such Multi-Property Programs. Owner acknowledges and agrees that (i) Operator has disclosed to Owner the types of Multi-Property Programs Operator currently makes available to properties which it operates and (ii) (a) the Hotel is likely to receive substantial benefit from its participation in such Multi-Property Programs which the Hotel could not obtain on its own and for which Operator is not adequately compensated by its Base Fee and Incentive Fee, (b) any and all Operator Rebates are the sole property of Operator and not Owner, and (c) the receipt by Operator of any Operator Rebates does not breach any fiduciary or other duty which Operator may have to Owner. Notwithstanding the foregoing, Operator hereby covenants to Owner that the terms of any Multi-Property Programs in which the Hotel participates, when taken as a whole, shall not be materially less favorable to the Hotel than the prevailing terms of contracts to provide similar goods or services on a single-property basis obtainable on a commercially reasonable basis from unrelated parties in the area of the Hotel, and Owner may elect to require use of its own or an affiliate’s Multi-Property Programs.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			7.3Networking Services
		

		
			 
		

		
			Operator shall have the right to install and use Operator's networking services (the "Network") and associated software at the Hotel throughout the Term which will be compatible with Owner’s current software and/or information will be delivered to Owner in a format compatible with its current software. The Network installation and connectivity charges and associated software license fees shall be determined in an equitable manner by Operator, shall be subject to the reasonable approval of Owner, shall be an Operating Expense, and shall be paid or reimbursed to Operator out of the Operating Account, or if the funds therein are insufficient, by Owner. Owner acknowledges that, as of the date hereof, such charges and fees are approximately
		

		
			$15 per user per month and agrees that such charge is reasonable and approved.
		

		
			 
		

		
			ARTICLE VIII
		

		
			 
		

		
			WORKING CAPITAL AND BANK ACCOUNTS
		

		
			 
		

		
			8.1Working Capital
		

		
			 
		

		
			Prior to the Commencement Date, Owner will fund the Operating Account with a commercially reasonable amount of initial working capital for the Hotel, for use during the transition of management to Operator's management of the Hotel. Thereafter, Owner shall at all times provide, either from Total Revenues or from other funds of Owner, funds sufficient in amount, in the good faith business judgment of Operator (as identified in an applicable cash flow forecast pursuant to Section 9.2 below or in a supplement to such cash flow forecast), to constitute normal working capital for the uninterrupted and efficient operation of the Hotel, including without limitation funds sufficient to pay all Operating Expenses as and when due and operate, maintain and equip the Hotel for a period of two (2) months in accordance with all Major Agreements and to maintain the Hotel in a first-class physical condition ("Working Capital"). Working Capital for the first two (2) months of operation of the Hotel has been estimated at $100,000. Operator may adjust the total required Working Capital from time to time as required based upon changes in the Budgets. If at any time the funds in the Operating Account are less than the required Working Capital, Operator shall deliver written notice to Owner of the amount required to be deposited into the Operating Account, and Owner shall deposit such sum into the Operating Account within five (5) days of such written notice; provided that, Operator shall not to exceed three (3) requests per fiscal year.
		

		
			 
		

		
			8.2Operating and FF&E Account
		

		
			 
		

		
			All funds received by Operator in the operation of the Hotel, including Working Capital and other funds furnished by Owner from time to time as required under this Agreement, shall be deposited in an operating account held by Operator (the "Operating Account") in such federally insured bank, savings and loan or trust company as may be selected by Operator and reasonably approved by Owner. Any successor or substitute bank, savings and loan or trust company shall be selected in the same manner. From the Operating Account, but only to the extent of funds in the Operating Account, Operator shall pay Operating Expenses, Fixed Charges, debt service, capital costs and other amounts, if and to the extent the same are required to be paid by Operator on Owner's behalf under this Agreement. In addition to the Operating Account, an account shall be
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			established by Operator at the same institution or another institution selected by Operator and reasonably approved by Owner for a reserve for replacements, substitutions, and additions to the FF&E or other capital improvements (the "FF&E Reserve Account").
		

		
			 
		

		
			8.3Internal Controls for Accounts
		

		
			 
		

		
			The Operating Account and (unless otherwise required by any Mortgage encumbering the Hotel) the FF&E Reserve Account shall be in the name of Operator for the account of Owner (and held in the EIN of Owner for IRS reporting purposes) and shall be under the control of Operator. Checks or other documents of withdrawal shall be signed only by representatives of Operator, provided that such representatives shall be bonded or otherwise insured in a manner reasonably satisfactory to Owner. The premiums for such bonding or other insurance shall be an Operating Expense and paid from the Operating Account or by Owner to the extent insufficient funds exist in the Operating Account for the payment of such premiums. Upon the expiration or termination of this Agreement and once Operator has been paid all funds due to Operator under this Agreement, all remaining amounts in the Operating Account and the FF&E Reserve Account shall be transferred to Owner.
		

		
			 
		

		
			ARTICLE IX
		

		
			 
		

		
			BOOKS, RECORDS AND STATEMENTS; BUDGETS
		

		
			 
		

		
			9.1Accounting Procedures
		

		
			 
		

		
			Operator shall keep full and accurate books of account and other records reflecting the results of the operation of the Hotel on an accrual basis and in accordance with the Uniform System with such exceptions as may be required by the provisions of this Agreement; provided, however, that Operator may, with prior notice to Owner, make such modifications to the methodology in the Uniform System as are consistent with Operator's standard practice in accounting for its operations under management contracts generally, so long as such modifications do not affect the determination of Total Revenues, Operating Expenses or Fixed Charges under Article XL. Except for the books and records which may be kept in Operator's principal office or accounting office pursuant to the adoption of a central billing system or other centralized service, the books of account and all records relating to or reflecting the operation of the Hotel shall be kept at the Hotel, and such books of accounts and other records shall be available to Owner and its representatives at all reasonable times and upon reasonable prior written notices for examination, audit, inspection and transcription. All of such books and records including, without limitation, books of account, guest record and front office records shall be property of Owner. Upon any termination of this Agreement, all such books and records shall be turned over to Owner to ensure the orderly continuation of the operation of the Hotel. All of such books and records shall thereafter be available to Operator at all reasonable times for inspection, audit, examination and transcription for a period of three (3) years. In the event Owner elects to resume its own internal auditing of the Hotel, Operator hereby agrees and acknowledges that it will provide Owner with access to any and all system as may reasonably be required for Owner to undertake such auditing, including but not limited to any accounting hardware or software or any property-based management hardware or software. Owner may elect to perform its own internal accounting with consent of Operator, which consent shall not be unreasonably withheld and subject further to the Owner and Operator agreeing
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			in good faith to an amendment to this Agreement to provide for data migration and sharing of accounting information with Operator.
		

		
			 
		

		
			Operator is responsible, unless directed otherwise by Owner, to remit, pay and ensure compliance with all sales and lodging tax in accordance with all applicable local, county or state laws and regulations. All such taxes shall be an Operating Expense.
		

		
			 
		

		
			9.2Monthly Reports
		

		
			 
		

		
			Operator shall deliver to Owner within fifteen (15) days after the end of each month, the following items (collectively, the "Monthly Reports"):
		

		
			 
		

		
			A.A balance sheet prepared in accrual basis with all period-end balances reconciled as of the last day of such month;
		

		
			 
		

		
			B.A source and use of funds statement for such month;
		

		
			 
		

		
			C.A consolidated income and expense statement by department for such month;
		

		
			 
		

		
			D.Detailed departmental income and expense statements for such month;
		

		
			 
		

		
			E.Operator must comply with all financial statement audit requests of Owner within ten (10) business days of the request, including providing such items such as cash reconciliations, hotel ledger reports, payroll reports, prepaid schedules, inventory details, and other such items that support the income statement and balance sheet of the financial statements;
		

		
			 
		

		
			F.Such other monthly reports as Owner may reasonably request.
		

		
			 
		

		
			The Monthly Reports shall be prepared in accordance with GAAP using the Uniform System to the extent applicable and shall otherwise be prepared in accordance with Operator's standard financial reporting and budgeting practices, and to the extent the Operator is unable to provide information to the Owner, the Owner shall charge the Operator for the time and effort the Owner must expel to ensure its annual financial statement audit is completed by the required deadline. Operator shall use systems and reports that function with Owner’s existing systems, including the delivery of all information, including Monthly Reports, in a format acceptable to Owner.
		

		
			 
		

		
			9.3Audited Financials
		

		
			 
		

		
			If desired by Owner or required by Owner's Mortgage lender, year-end financial statements for the Hotel (including a balance sheet, income statement and statement of sources and uses of funds) shall be audited by an independent certified public accountant selected by Owner subject to Operator's reasonable approval, the cost of which shall be an Owner expense and not an Operating Expense. Such accountant shall address any findings, reports or opinions that concern Operator's work under this Agreement to both Operator and Owner. Operator shall provide reasonable assistance with such accountant in the preparation of such statements. Year-end final financial statement will be delivered within twenty-one (21) days of the last day of Owner’s Fiscal Year.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			9.4Annual Budgets
		

		
			 
		

		
			On or before November 1st of each Fiscal Year (or partial Fiscal Year) during the Term, Operator shall submit to Owner for the next Fiscal Year the following items (collectively, the "Budgets"):
		

		
			 
		

		
			A.An operating budget (the "Operating Budget") setting forth in reasonable line- item detail the projected income from and expenses of all aspects of the operations, direction, management, and supervision of the Hotel. The Owner shall have the right to approve the rates or anticipated occupancy. Any Operator proposed exceedances of the standards required by the Franchise Agreement that will materially increase the Operating Budget expenses shall require the consent of Owner;
		

		
			 
		

		
			B.A capital budget (the "Capital Budget") setting forth in reasonable line-item detail proposed capital projects and expenditures for the Hotel including but not limited to FF&E expenditures. Any Operator proposed exceedances of the standards required by the Franchise Agreement that will materially increase the Capital Budget expenses shall require the consent of Owner; and
		

		
			 
		

		
			C.Such other reports or projections or meetings as Owner may reasonably request and to which Operator agrees.
		

		
			 
		

		
			The Budgets shall be prepared in accordance with GAAP using the Uniform System to the extent applicable and shall otherwise be prepared in accordance with Operator's standard financial reporting and budgeting practices. Owner shall notify Operator in writing of its approval or disapproval of the Budgets not later than thirty (30) days after the delivery of the Budgets to Owner and, if Owner disapproves any such Budgets, Owner shall state in such notice the reasons therefor with reasonable specificity. Owner shall not disapprove any item in the Budgets that is reasonably necessary for the continued operation of the Hotel in accordance with the requirements of any of the Major Agreements and the operational standards set forth in this Agreement. In the event Owner fails to notify Operator in writing of its approval or disapproval of any Budgets on or before the expiration of such thirty (30) day approval period, then such Budgets shall be deemed approved by Owner.
		

		
			 
		

		
			9.5Resolution of Disputes over Budgets
		

		
			 
		

		
			If the Budgets (or any component of the Budgets) with respect to any Fiscal Year are disapproved by Owner in accordance with the provisions of this Agreement, then, until approval of the Budgets (or such components) by Owner, Operator, until the resolution of such dispute, shall cause the Hotel to be operated substantially in accordance with most recent approved Budgets, except for, or as modified by (a) those components of such Budgets for the applicable Fiscal Year approved by Owner; (b) expenses that are variable based on the utilization of the Hotel, to the extent required based upon the occupancy of the Hotel which shall be paid as required; and
		

		
			(c) necessary expenses for the continued operation of the hotel in accordance with the Major Agreements, operational standards set forth in this Agreement, or in Operator's good faith judgment are necessary to protect the physical integrity or lawful operation of Hotel or the health
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			or safety of its occupants; provided, however, that Operator shall promptly notify Owner of expenditures for such expenses.
		

		
			 
		

		
			9.6Deviations from the Budgets
		

		
			 
		

		
			Upon approval by Owner of a Budget, Operator shall use its good faith efforts to manage, operate and maintain the Hotel for the subsequent Fiscal Year in accordance with the Budget and attempt to adhere thereto, as nearly as practicable, on the condition that if Operator shall be unable, with the exercise of due diligence, and all commercially reasonable efforts to comply with the approved Budget, such inability shall not by itself constitute a default under this Agreement.
		

		
			 
		

		
			Operator shall be authorized to take appropriate remedial action without receiving Owner's prior consent (i) in an emergency threatening the Hotel, its guests, invitees or employees; or (ii) if the continuation of the given condition will subject Operator and/or Owner to civil or criminal liability, and Owner has either failed to remedy the situation or has failed to take appropriate legal action to stay the effectiveness of any Laws. In such an event, Operator shall cooperate with Owner in the pursuit of any such action and shall have the right to participate therein.
		

		
			 
		

		
			9.7Approval for Capital Expenditures
		

		
			 
		

		
			Operator shall seek approval from Owner, which shall not be unreasonably withheld, conditioned or delayed, for any capital expense that is over $5,000 individually, or $20,000 in the aggregate in the Fiscal Year, unless such expense(s) are provided for in the applicable Operating Budget or Capital Budget.
		

		
			 
		

		
			ARTICLE X
		

		
			 
		

		
			MANAGEMENT FEES
		

		
			AND PAYMENTS TO OPERATOR AND OWNER
		

		
			 
		

		
			10.1Base Fee
		

		
			 
		

		
			Operator shall be entitled to receive, on or before the 5th day of each month, commencing upon the Commencement Date and thereafter throughout the Term, for services rendered under this Agreement, a base management fee (the "Base Fee") equal to 3.0% of Total Revenues.
		

		
			 
		

		
			10.2Incentive Fee
		

		
			 
		

		
			In addition to the Base Fee and any other amounts due to Operator or its affiliates in accordance with this Agreement, Operator shall be entitled to receive an incentive management fee (the "Incentive Fee") in an amount equal to ten percent (10%) of the excess of Gross Operating Profit over the projected Gross Operating Profit as set forth in Exhibit B to this Agreement. "Gross Operating Profit" shall be as defined in the Uniform System. The Incentive Fee shall be paid quarterly on or before the 5th day of end of the calendar quarter based on the actual Gross Operating Profit through the end of the immediately preceding calendar quarter. Owner and Operator acknowledge and agree that the Incentive Fee is calculated on a cumulative basis over the course of an entire Fiscal Year, and that accordingly the total amount of the Incentive Fee payable to Operator for a particular Fiscal Year (calculated on a cumulative year-to-date basis) may vary
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			upwards or downwards from quarter to quarter and is subject to ongoing reconciliations throughout each Fiscal Year. Any overpayment of Incentive Fees from time to time will be charged against the amount of Base Fee due in the next following month after the date of determination of the overpayment. In the event this Agreement terminates on any date other than December 31st of any calendar year, the Incentive Fee shall be prorated for the actual days which have expired in the calendar year in which the termination occurred. An example of the calculation of the Incentive Fee is set forth on Exhibit B attached hereto.
		

		
			 
		

		
			10.3Funds from Operating Account
		

		
			 
		

		
			On or before the twentieth (20th) day following the last day of each calendar month (or such other fiscal period as Owner and Operator may agree upon) of each Fiscal Year during the Term, after (a) payment of Operating Expenses (including, without limitation, Base Fee, Incentive Fee, Fixed Charges, deposits to the FF&E Reserve Account in accordance with Section 11.1) and, to the extent the same are to be paid by Operator under this Agreement, debt service, (b) any required payment to Operator pursuant to Section 10.7 below, and (c) retention of Working Capital sufficient in the reasonable opinion of Operator to assure the uninterrupted and efficient operation of the Hotel as required under Section 9.1 above and consistent with the cash flow forecast for the applicable period provided to Owner pursuant to Section 9.2 above, all remaining funds in the Operating Account shall be paid to Owner.
		

		
			 
		

		
			10.4Audit of Management Fees
		

		
			 
		

		
			At the end of each Fiscal Year and, if an audit is performed pursuant to Section 9.3 above, following receipt by Owner of such audit, an adjustment will be made, if necessary, based on the audit so that Operator shall have received the accurate Base Fee and Incentive Fee for such Fiscal Year. Within thirty (30) days of receipt by Owner and Operator of such audit, Operator shall either
		

		
			(a)place in the Operating Account or remit to Owner, as appropriate, any excess amounts Operator may have received for such fees during such calendar year or (b) be paid out of the Operating Account or by Owner, as appropriate, any deficiency in the amounts due Operator for the Base Fee and the Incentive Fee.
		

		
			 
		

		
			10.5Renovation Services
		

		
			 
		

		
			From time to time, the Hotel may require renovation to upgrade its facilities to remain competitive and for asset preservation. Subject to Owner's request and prior approval, Operator shall provide project management services to include setting a scope for design, materials and construction for such renovation, requesting multiple bids and securing agreements with contractors, supervising the work of contractors, and providing project accounting updates to Owner on a regular basis. Operator shall provide these services for a fee equal to 4.0% of the total cost of such renovations (the "Project Management Fee"), as and when such costs are incurred. If Owner elects to use an affiliate construction company, Operator will take all steps necessary and helpful to facilitate such renovations.
		

		
			 
		

		
			10.6Reimbursable Expenses
		

		
			 
		

		
			To the extent consistent with any applicable approved Budget, Owner shall be obligated to reimburse Operator for all travel lodging, meals, telephone, telecopy, postage, standard overnight
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			courier charges, employee training and other expenses incurred by Operator which are reasonable and directly related to its performance of services under this Agreement ("Reimbursable Expenses").
		

		
			 
		

		
			ARTICLE XI FF&E RESERVE
		

		
			11.1Establishing FF&E Reserve Account
		

		
			 
		

		
			During each Fiscal Year there shall be allocated and paid on a monthly basis to the FF&E Reserve Account from Total Revenues or other funds provided by Owner an amount in accordance with the terms and amounts of the Owner’s lender or franchisor. The Owner may adjust the FF&E pursuant to requests of the Mortgage lender or Franchisor.
		

		
			 
		

		
			11.2Use of Funds in FF&E Reserve Account
		

		
			 
		

		
			All funds in the FF&E Reserve Account, together with any interest earned thereon and the proceeds of any sale of FF&E (which proceeds shall be deposited in the FF&E Reserve Account) shall be used solely for purposes of replacing or refurbishing the FF&E in accordance with the applicable Capital Budget or other capital improvements as approved by Owner.
		

		
			 
		

		
			ARTICLE XII
		

		
			 
		

		
			INSURANCE
		

		
			 
		

		
			12.1Insurance Requirements
		

		
			 
		

		
			Operator shall obtain and maintain throughout the Term the insurance coverage set forth in Exhibit C the cost of which shall be an Operating Expense. Operator shall also obtain, keep in force, and maintain at all times minimum insurance amounts that (a) is property damage coverage for the Hotel on an “open perils” basis (including builder’s risk during any period or periods of time that construction or remodeling is being performed), (b) includes, without limitation, the perils of fire, vandalism, and malicious mischief, flood, seepage and back-up of sewers and drains, sinkhole, loss or damage from sprinklers and from leakage or explosion or cracking of boilers carrying steam, water or gas, pressure vessels or similar apparatus, and (c) is in an amount equal to 100% of the full replacement cost of all improvements to the Hotel, the cost of which shall not be an Operating Expense.
		

		
			 
		

		
			12.2Named Insured Party
		

		
			 
		

		
			All insurance policies shall name Operator as the insured party and shall name as additional insured's Owner and such other parties as may be required by the terms of the Major Agreements as appropriate. Owner understands that coverage afforded the Owner as an additional insured is solely for liability arising out of Operator's activities performed by Owner by or on behalf of Operator and that it may be necessary for Owner to purchase separate policies to cover Owner activities not performed by or on behalf of Operator. In the event that Owner shall obtain any such
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			insurance other than through the program established by Operator, such insurance policy shall name Operator as an additional named insured party.
		

		
			 
		

		
			12.3Form of Insurance
		

		
			 
		

		
			All insurance policies shall be in such form and with such companies as shall be reasonably satisfactory to Owner and provided Owner has given Operator detailed written notice of such requirements, shall comply with the requirements of any Major Agreement. Insurance may be provided under blanket or master policies covering one or more other hotels operated by Operator or owned by Owner. The portion of the premium for any blanket or master policies which is allocated to the Hotel as an Operating Expense or Fixed Charge shall be determined in an equitable manner by Operator and reasonably approved in advance by Owner and paid out of the Operating Account, or if the funds therein are insufficient, by Owner, upon demand therefore by Operator.
		

		
			 
		

		
			12.4Cancellation and Modification of Insurance
		

		
			 
		

		
			All insurance policies shall specify that they cannot be canceled or modified on less than thirty (30) days prior written notice to both Owner and Operator and any additional insureds (or such longer period as may be required under a Major Agreement, provided that Operator has been advised in writing of such period).
		

		
			 
		

		
			12.5No Subrogation Rights
		

		
			 
		

		
			All insurance policies shall provide, to the extent customarily obtainable from the insurance company providing such insurance, that the insurance company will have no right of subrogation against Owner, Operator, any party to a Major Agreement or any of their respective agents, employees, partners, members, officers, directors or beneficial assigns. Owner and Operator hereby release one another from any and all liability, to the extent of the waivers of subrogation obtained under Section 12.5, associated with any damage, loss or liability with respect to which property insurance coverage is provided pursuant to this Article or otherwise.
		

		
			 
		

		
			12.6Insurance Proceeds
		

		
			 
		

		
			The proceeds of any insurance claim (other than proceeds payable to third parties under the terms of the applicable policy) shall be paid into the Operating Account to the extent of Owner's interest therein unless otherwise required by the terms of a Major Agreement.
		

		
			 
		

		
			12.7Payment for Insurance
		

		
			 
		

		
			Operator shall have the right to pay for, or reimburse itself for, insurance required under this Article XII out of the Operating Account. Notwithstanding anything to the contrary set forth in this Agreement, Operator shall have no obligation to obtain or maintain any insurance set forth in this Article if funds from Total Revenues or funds otherwise provided by Owner are not made available to Operator to purchase the same.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			ARTICLE XIII
		

		
			 
		

		
			SPECIAL TERMINATION EVENTS
		

		
			 
		

		
			13.1Performance Test
		

		
			 
		

		
			If, in each of any two (2) consecutive complete Fiscal Years during the Term, both of the following occurs: (a) the RevPAR index for each Fiscal Year (as determined by data from STR for a competitive set of hotels mutually agreed upon by Operator and Owner) shall be less than one hundred percent (100%) based upon the trailing 12 months; and also (b) the Gross Operating Profit for each such Fiscal Year as determined in accordance with the annual audit provided for in Section
		

		
			10.4 shall be less than Twenty (20%) of the amount in the approved Budgets for each such Fiscal Years, then, upon payment in full of all amounts then due and owing to Operator and the performance in full of all of Owner's obligations to Operator and/or any affiliate of Operator, Owner may terminate this Agreement upon ninety (90) days written notice given to Operator not more than sixty (60) days after Owner's receipt of RevPAR index data and audit for the second consecutive Fiscal Year. Notwithstanding the foregoing, the test under (a) of the preceding sentence will not apply during any year that the Hotel undergoes any material renovation and for twelve (12) months following the completion of such renovation. If Owner elects to terminate this Agreement pursuant to this Section 13.1, Operator may elect, by written notice given to Owner within thirty (30) days after the giving of Owner's termination notice, to make an advance (the "Cure Payment") to Owner in an amount equal to the amount by which Gross Operating Profit for the second of the two Fiscal Year years in such two consecutive Fiscal Year period is less than the approved Budget for such Fiscal Year (the "Base Level"). If Operator makes the Cure Payment within thirty (30) days after Operator receives the foregoing termination notice, then this Agreement shall remain in full force and effect notwithstanding Owner's election to terminate and, for the purpose of applying this Section 13.1 to future Fiscal Years within the Term, Gross Operating Profit for the calendar year for which Operator made a Cure Payment shall be deemed to be greater than One Hundred Ten Percent (110%) of approved Budget for such Fiscal year.
		

		
			 
		

		
			ARTICLE XIV
		

		
			 
		

		
			DAMAGE OR DESTRUCTION; CONDEMNATION
		

		
			 
		

		
			14.1Fire or Casualty
		

		
			 
		

		
			If the Hotel is damaged by fire or other casualty, Operator shall promptly, but in no event wait more than twenty-four (24) hours to, notify Owner. This Agreement shall remain in full force and effect subsequent to such casualty provided that either party may terminate this Agreement upon thirty (30) days prior notice to the other party if (a) Owner shall elect to close the Hotel permanently as a result of such casualty (except on a temporary basis for repair or restoration) or
		

		
			(b)Owner shall determine in good faith not to proceed with the restoration of the Hotel and provided further that Operator may terminate this Agreement upon sixty (60) days prior notice to Owner if twenty percent (20%) or more of the rooms in the Hotel are unavailable for rental for a period of sixty (60) days or longer as a result of such casualty.
		

		
			 
		

		
			14.2Condemnation
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			If all or any portion of the Hotel becomes the subject of a condemnation proceeding or if Owner or Operator learns that any such proceeding may be commenced, such party shall promptly, but in no event wait more than twenty-four (24) hours to, notify the other party promptly upon receipt of written notice thereof. Either party may terminate this Agreement on sixty (60) days' notice to the other party if (1) all or substantially all of the Hotel is taken through condemnation or (2) less than all or substantially all of the Hotel is taken, but, in the reasonable judgment of the party giving the termination notice, the Hotel cannot, after giving effect to any restoration as might be reasonably accomplished through available funds from the condemnation award, be profitably operated as a hotel consistent with the requirements of the hotel franchise agreement then in effect with respect to the Hotel.
		

		
			 
		

		
			14.3Miscellaneous
		

		
			 
		

		
			Any condemnation award or similar compensation shall be the property of Owner, provided that, subject to the provisions of any first mortgage or deed of trust loan encumbering the Hotel, Operator shall have the right to bring a separate proceeding against the condemning authority for any damages and expenses specifically incurred by Operator as a result of such condemnation. Upon any termination of the Agreement under this Article XV, Operator shall be entitled to receive the Termination Fee provided in Article XVII.
		

		
			 
		

		
			ARTICLE XV
		

		
			 
		

		
			EVENTS OF DEFAULT
		

		
			 
		

		
			15.1Listing of Defaults
		

		
			 
		

		
			The following shall constitute an event of default under this Agreement:
		

		
			 
		

		
			A.If either party shall be in default in the payment of any amount required to be paid under the terms of this Agreement, or Owner fails to fund the Operating Account as required under this Agreement, and such default continues for a period of ten
		

		
			(10) days after written notice is delivered indicating that such payment was not paid (or, with respect to a non-recurring payment under this Agreement (e.g., excluding payments of Base Fees, Incentive Fees and Centralized Services Fees), such default continues for a period of ten (10) days after written notice is delivered indicating that such payment was due and not paid);
		

		
			 
		

		
			B.If either party shall be in material default in the performance of its other obligations under this Agreement, and such default continues for a period of thirty (30) days after written notice from the other party, provided that if such default cannot by its nature reasonably be cured within such thirty (30) day period, an event of default shall not occur if and so long as the defaulting party promptly commences and diligently pursues the curing of such default; provided, however, in no event shall the cure period with respect to such obligation exceed sixty (60) days;
		

		
			 
		

		
			C.If either party shall (i) make an assignment for the benefit of creditors,
		

		
			(ii) institute any proceedings seeking relief under any federal or state bankruptcy or insolvency laws, (iii) institute any proceeding seeking the appointment of a
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			receiver, trustee, custodian or similar official for its business or assets, or (iv) consent to the institution against it of any such proceeding by any other person or entity (an "Involuntary Proceeding"); or
		

		
			 
		

		
			D.If an Involuntary Proceeding shall be commenced against the other party and shall remain undismissed for a period of thirty (30) days.
		

		
			 
		

		
			E.If within thirty (30) days after receiving Operator's written request, Owner fails to approve any changes, repairs, alterations, improvements, renewals or replacements to the Hotel which Operator determines in its reasonable judgment are necessary
		

		
			(i)to protect the Hotel, Owner and/or Operator from innkeeper liability exposure,
		

		
			(ii)to ensure material compliance with any applicable code requirements pertaining to life safety systems requirements, or (iii) to ensure material compliance with any of the Major Agreements or any applicable state, local or federal employment law, including without limitation the Americans with Disabilities Act.
		

		
			 
		

		
			15.2Termination Rights
		

		
			 
		

		
			If any event of default shall occur and not be cured within the applicable cure period set forth in this Agreement, the non-defaulting party may terminate this Agreement immediately upon delivering written notice to the defaulting party (or such longer period as is specified in the written termination notice delivered by the non-defaulting party to the defaulting party).
		

		
			 
		

		
			15.3Non-Exclusive Remedy
		

		
			 
		

		
			The right of termination set forth in Section 15.2 shall not be in substitution for, but shall be in addition to, any and all rights and remedies for breach of contract available in law or at equity.
		

		
			 
		

		
			15.4Force Majeure
		

		
			 
		

		
			Neither party shall be deemed to be in default of its obligations under this Agreement if and to the extent that such party is unable to perform such obligation as a result of fire or other casualty, act of God, strike or other labor unrest, unavailability of materials, war, terrorist activity, riot or other civil commotion or any other cause beyond the control of such party (which shall not include the inability of such party to meet its financial obligations or in any event apply to the payment of any amounts due to either party under this Agreement) (collectively, "Force Majeure Events").
		

		
			 
		

		
			15.5Waiver of Certain Claims
		

		
			 
		

		
			Each of the parties hereto irrevocably waives any right such party may have against the other party hereto at law, in equity or otherwise to any consequential damages, punitive damages, special or exemplary damages.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			ARTICLE XVI
		

		
			 
		

		
			TERMINATION
		

		
			 
		

		
			16.1Termination Fee
		

		
			 
		

		
			Upon any termination of this Agreement by Operator pursuant to Section 15.1A, B or E, or by Owner or Operator pursuant to Section 13.1 or Article XV (an "Early Termination"), Owner shall, in addition to any other rights or remedies that may be available to Operator, pay to Operator the Termination Fee. Any Termination Fee due from Owner to Operator shall be payable within thirty (30) days of termination of this Agreement. The calculation of the Termination Fee is set forth herein. If there is a dispute between Owner and Operator as to the amount of the Termination Fee, this Agreement shall nonetheless terminate, Owner shall pay to Operator the amount that is not in dispute and shall deposit the disputed portion in an escrow satisfactory to Owner and Operator with interest on the amount in escrow to be allocated in proportion to the manner in which the escrow fund is ultimately allocated, and the parties shall thereafter resolve the amount of the Termination Fee.
		

		
			 
		

		
			(a)If the Termination Date occurs during the first year of the Initial Term then the Termination Fee is $400,000;
		

		
			 
		

		
			(b)If the Termination Date occurs during the second year of the Initial Term then the Termination Fee is $300,000;
		

		
			 
		

		
			(c)If the Termination Date occurs during the third year of the Initial Term then the Termination Fee is $200,000;
		

		
			 
		

		
			(d)If the Termination Date occurs during the fourth year of the Initial Term then the Termination Fee is $100,000;
		

		
			 
		

		
			(e)If the Termination Date occurs during the fifth year of the Initial Term or any Renewal Term, then the Termination Fee is waived;
		

		
			 
		

		
			16.2Waiver of Termination in Event of Sale.
		

		
			 
		

		
			In the event the Owner sells the Hotel to an unrelated third party before the fourth anniversary of the Contract Commencement date, and either (i) assigns to new owner this agreement, or (ii) termination of this agreement is contemporaneous the execution of a continuing management agreement for Operator on substantially similar terms to this Agreement, then Operator shall waive any such fees contemplated under this Agreement. In the event the Owner sells the Hotel to an unrelated third party before the fourth anniversary of the Contract Commencement date, and neither (i) assigns to new owner this agreement, or (ii) termination of this agreement is contemporaneous the execution of a continuing management agreement for Operator on substantially similar terms to this Agreement, then the Termination Fee payable to Operator shall be discounted to $50,000.
		

		
			 
		

		
			16.3Prior Commitments to Customers
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			Upon termination of this Agreement for any reason, Owner agrees that Hotel reservations and any and all contracts made in connection with Hotel banquet or other group services made by Operator in the ordinary and normal course of business, absent any gross negligence or willful misconduct, for dates subsequent to the date of termination and at rates prevailing for such reservations at the time they were made, shall be honored and remain in effect after the date of termination of this Agreement.
		

		
			 
		

		
			16.4Transition of Management
		

		
			 
		

		
			Upon any termination or expiration of this Agreement for any reason whatsoever, Owner expressly agrees that Operator may remove any of its documents which are proprietary to Operator (including, without limitation, manuals, employee files, software programs, stored data, and internal correspondence of a proprietary nature) but specifically excluding financial records, documents, guest logs, correspondence or other materials proprietary to the Hotel. Owner shall have the right to make copies of all re-hired employee files and other non-proprietary files and information relating to management of the Hotel upon request, and any actions required by such request will not be unreasonably withheld, conditioned or delayed. Operator shall have the right to retain copies of all financial records, documents, guest logs, correspondence or other materials proprietary to the Hotel upon request, and any actions required by such request will not be unreasonably withheld, conditioned or delayed. Upon such termination or expiration, within twenty (20) days of billing thereof, Owner shall pay to Operator, in addition to any other amounts due pursuant to this Agreement (i) Operator's reasonable out-of-pocket costs incurred by reason of request by Owner for assistance after termination of this Agreement and not otherwise reasonably expected of Operator in the orderly termination of its operations at the Hotel, (ii) any unpaid fees and other charges and reimbursements due Operator hereunder, and (iii) to the extent reasonable and consistent with Operator's standard practices and industry standards, termination-related employee expenses, including payments of accrued and earned sick and vacation time, pension, bonus and other termination payments due to employees.
		

		
			 
		

		
			16.5WARN Act Liability
		

		
			 
		

		
			Owner acknowledges that Operator or its Affiliates or the PEO employer of Hotel employees may have an obligation under applicable law (including the WARN Act) to give advance notice to Hotel personnel of any termination of employment and that failure to comply with such notification obligation might give rise to certain liabilities under applicable law. Accordingly, notwithstanding anything to the contrary in this Agreement, the effective date of termination may, at Operator's discretion, be extended to permit Operator to comply with all time periods under applicable law (including the WARN Act) if any, unless Owner agrees in writing to defend, indemnify and hold harmless Operator and its Affiliates from and against all claims (including lost compensation, fines, penalties and attorneys' fees and expenses) incurred by Operator or its Affiliates or the PEO employer of Hotel employees, arising thereunder as a result of such termination.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			ARTICLE XVII
		

		
			 
		

		
			ASSIGNMENT
		

		
			 
		

		
			17.1Assignment by Operator
		

		
			 
		

		
			Operator shall not assign or pledge this Agreement without the prior consent of Owner. (a) any entity which is the successor by merger, consolidation or reorganization of Operator or Operator's general partner, managing member or parent corporation; or (b) the purchaser of all or substantially all of the hotel management business of Operator or Operator's general partner, managing member or parent corporation. Nothing in this Agreement shall prohibit or be deemed to prohibit any pledge by Operator of the Base Fee, Incentive Fee or any other amounts received by Operator under this Agreement to any lender as collateral security for debt of Operator and/or Operator's affiliates, assuming such pledge is in compliance with the USA Patriot Act.
		

		
			 
		

		
			17.2Assignment by Owner
		

		
			 
		

		
			Owner shall not assign this Agreement without the prior consent of Operator, provided that Owner may assign this Agreement without Operator's consent to any person or entity acquiring Owner's fee interest in the Hotel as of the effective date of such acquisition if such assignee agrees in writing to be bound by this Agreement and assumes in writing all of Owner's obligations under this Agreement from and after the effective date of such assignment any such assignment will not result in a transfer or termination fee. Owner shall have the right to assign this Agreement to any Qualified Lender (as defined in Section 21.8 below) as collateral security for any Qualified Loan (as defined in Section 21.8 below).
		

		
			 
		

		
			17.3Effect of Assignment
		

		
			 
		

		
			Upon any permitted assignment of this Agreement except for an assignment as collateral security to a Qualified Lender and the assumption of this Agreement by the assignee, the assignor shall be relieved of any obligation or liability under this Agreement arising after the effective date of the assignment.
		

		
			 
		

		
			ARTICLE XVIII
		

		
			 
		

		
			NOTICES
		

		
			 
		

		
			18.1Requirement for Notice
		

		
			 
		

		
			Any notice, statement or demand required to be given under this Agreement shall be in writing, sent by certified mail, postage prepaid, return receipt requested, or by nationally- recognized overnight courier, receipt confirmed, addressed if to:
		

		
			 
		

		
			Owner:LF3 TRS, LLC
		

		
			1635 43rd Street South Suite 205
		

		
			Fargo, ND 85103
		

		
			Attn:Linzey Erickson
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			With a Copy to:durellaw, PLC
		

		
			2815 Michigan Ave NE Suite C
		

		
			Grand Rapids, MI 49506 Attn:John H. Faris
		

		
			 
		

		
			Operator:Springwood Hospitality Management 3, LLC 146 Pine Grove Circle
		

		
			York PA 17403
		

		
			Attn:Justin Shelton
		

		
			 
		

		
			With a Copy to:Springwood Hospitality LLC
		

		
			146 Pine Grove Circle York PA 17403
		

		
			Attn:David Hogg
		

		
			 
		

		
			or to such other addresses as Operator and Owner shall designate in the manner provided in this Section 18.1. Any notice or other communication shall be deemed given (a) on the date three (3) business days after it shall have been mailed, if sent by certified mail, or (b) on the date received if it shall have been given to a nationally-recognized overnight courier service.
		

		
			 
		

		
			ARTICLE XIX
		

		
			 
		

		
			ESTOPPELS
		

		
			 
		

		
			19.1Confirmation of Agreement
		

		
			 
		

		
			Owner and Operator agree that from time to time upon the request of the other party or a party to a Major Agreement, it shall execute and deliver within ten (10) business days after the request a certificate confirming that this Agreement is in full force and effect, stating whether this Agreement has been modified and supplying such other information as the requesting party may reasonably require, and if either party refuses or fails to respond to such request, then the requesting party may charge $500 for every day delayed.
		

		
			 
		

		
			ARTICLE XX
		

		
			 
		

		
			INDEMNIFICATION
		

		
			 
		

		
			20.1Indemnity of Operator
		

		
			 
		

		
			Operator hereby agrees to indemnify, defend and hold Owner (and Owner's agents, principals, shareholders, partners, members, officers, directors and employees) harmless from and against all liabilities, losses, claims, damages, costs and expenses (including, but not limited to, reasonable attorneys' fees and expenses) that may be incurred by or asserted against any such party and that arise from or in connection with (a) the fraud, willful misconduct or gross negligence of the General Manager and/or any off-site employees of Operator, (b) the breach by Operator of any
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			provision of this Agreement, or (c) any action taken by Operator which is beyond the scope of Operator's authority under this Agreement. Owner shall promptly provide Operator with written notice of any claim or suit brought against it by a third party, which might evoke such indemnification. Owner shall cooperate with the Operator or its counsel in the preparation and conduct of any defense to any such claim or suit.
		

		
			 
		

		
			20.2Indemnity of Owner
		

		
			 
		

		
			Except as provided in Section 20.1, Owner hereby agrees to indemnify, defend and hold Operator (and Operator's agent, principals, shareholders, partners, members, officers, directors and employees) harmless from and against all liabilities, losses, claims, damages, cost and expenses (including, but not limited to, reasonable attorney's fees and expenses) that may be incurred by or asserted against such party and that arise from or in connection with the fraud, willful misconduct or gross negligence of Owner. Operator shall promptly provide Owner with written notice of any claim or suit brought against it by a third party, which might evoke such indemnification. Operator shall cooperate with the Owner or its counsel in the preparation and conduct of any defense to any such claim or suit.
		

		
			 
		

		
			20.3Employment Claims
		

		
			 
		

		
			Supplementing the provisions of Section 20.1 and 20.2, if any claim shall be made against Owner and/or Operator which is based upon a violation or alleged violation of the Employment Laws (an "Employment Claim"), the Employment Claim shall fall within Operator's indemnification obligations under Section 20.1 only if it is based upon the willful misconduct or gross negligence of the General Manager of the Hotel and/or Operator's off-site employees.
		

		
			 
		

		
			20.4Procedure for Indemnity
		

		
			 
		

		
			If any action, lawsuit or other proceeding shall be brought against any party (the "Indemnified Party") hereunder arising out of or based upon any of the matters for which such party is indemnified under this Agreement, such Indemnified Party shall promptly notify the party required to provide indemnification hereunder (the "Obligor") in writing thereof and Obligor shall promptly assume the defense thereof (including without limitation the employment of counsel selected by Obligor), such defense to be subject to the consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed (provided, however, by way of illustration and not limitation, it shall be reasonable for the Indemnified Party to deny consent to any settlement that requires the Indemnified Party to admit guilty or liability). The Indemnified Party shall cooperate with the Obligor in the defense of any such action, lawsuit or proceeding, on the condition that the Obligor shall reimburse the Indemnified Party for any out-of-pocket costs and expenses actually incurred in connection therewith. The Obligor shall have the right to negotiate settlement or consent to the entry of judgment with respect to the matters indemnified hereunder; provided, however, that if any such settlement or consent judgment contemplates any action or restraint on the part of Indemnified Party, then such settlement or consent judgment shall require the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. In addition to the foregoing, the Indemnified Party shall have the right, at the expense of the Indemnified Party, to employ separate counsel in any such action and to participate in the defense thereof. An Indemnified Party may settle any action for which it is indemnified hereunder
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			on behalf of itself only (i.e., with respect to its own liability and with no requirement of Obligor to admit guilt or liability) with the prior written consent of Obligor, which consent shall not be unreasonably withheld or delayed (provided, however, by way of illustration and not limitation, it shall be reasonable for Obligor to deny consent to any settlement that requires Obligor to expend funds in an amount Obligor determines in good faith to be appropriate so long as the Indemnified Party remains adequately protected at all times). In the even the Obligor fails to use reasonable efforts to defend or compromise any action, lawsuit or other proceeding for which an Indemnified Party is indemnified hereunder, the Indemnified Party may, at Obligor's expense and without limiting Obligor's liability under the applicable indemnity, assume the defense of such action and the Obligor shall pay the charges and expenses of such attorneys and other persons on a current basis within thirty (30) days of submission of invoices or bills therefore. In the event the Obligor is Owner and Owner neglects or refuses to pay such charges, Operator may pay such charges out of the Operating Account and deduct such charges from any amounts due Owner, or add such charges to any amounts due Operator from Owner under this Agreement. If Operator is the Obligor and Operator neglects or refuses to pay such charges, the amount of such charges shall be deducted from any amounts due Operator under this Agreement.
		

		
			 
		

		
			20.5Survival Beyond Termination
		

		
			 
		

		
			The provisions of this Article shall survive the termination of this Agreement with respect to acts, omissions and occurrences arising during the Term.
		

		
			 
		

		
			ARTICLE XXI MISCELLANEOUS
		

		
			21.1Binding and Enforceable Agreement
		

		
			 
		

		
			Owner and Operator shall execute and deliver all other appropriate supplemental agreements and other instruments, and take any other action necessary to make this Agreement fully and legally effective, binding, and enforceable as between them and as against third parties.
		

		
			 
		

		
			21.2Transactions with Affiliates
		

		
			 
		

		
			Operator may engage one or more of its affiliates or other related parties to furnish goods or services to Hotel, provided, however, that the terms of any such arrangement, when taken as a whole, shall not be materially less favorable to the Hotel than the prevailing terms of similar such arrangements obtainable on a commercially reasonable basis from unrelated parties in the area of Hotel. Operator shall promptly notify Owner of any such engagement of Operator's affiliates to the extent such engagement and affiliations are not included in the applicable Budgets.
		

		
			 
		

		
			21.3Entire Agreement
		

		
			 
		

		
			This Agreement constitutes the entire agreement between the parties relating to the subject matters hereof, superseding all prior agreements or undertakings, oral or written. Owner acknowledges that in entering into this Agreement Owner has not relied on any projection of earnings, statements as to the possibility of future success or other similar matter which may have been prepared by the Operator.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			21.4Headings
		

		
			 
		

		
			The headings of the titles to the several articles of this Agreement are inserted for convenience only and are not intended to affect the meaning of any of the provisions hereof.
		

		
			 
		

		
			21.5Waiver
		

		
			 
		

		
			A waiver of any of the terms and conditions of this Agreement may be made only in writing and shall not be deemed a waiver of such terms and conditions of any future occasion.
		

		
			 
		

		
			21.6Binding Agreement
		

		
			 
		

		
			This Agreement shall be binding upon and inure to the benefit of Owner and Operator and their respective successors and permitted assigns.
		

		
			 
		

		
			21.7Choice of Law
		

		
			 
		

		
			This Agreement shall be construed, both as to its validity and as to the performance of the parties in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflict of laws.
		

		
			 
		

		
			21.8Qualified Loans
		

		
			 
		

		
			Excluding Operator's right to receive payment of the Base Fee, Incentive Fee (to the extent accrued), Centralized Service Fees and reimbursement and other amounts due to Operator pursuant to this Agreement, each of which as contemplated in accordance with approved Budgets, Operator agrees to subordinate this Agreement to the lien of any Qualified Loan which now or hereafter encumber the Hotel; provided, however, Operator shall have the right to condition such subordination on its receipt of a commercially reasonable form of non-disturbance agreement from a Qualified Lender (as hereafter defined). The term "Qualified Loan" means (i) any loan from a Qualified Lender secured by a mortgage or deed of trust encumbering the Hotel or all of any part of Owner's interest therein, and (ii) all amendments, modifications, supplements and extensions of any such mortgage or deed of trust. The term "Qualified Lender" means any recognized third party institutional lender such as any federally insured commercial or savings bank, national banking association, savings and loan association, investment banking firm, commercial finance company and other similar lending institution that is a holder of a Qualified Loan.
		

		
			 
		

		
			21.9Jurisdiction
		

		
			 
		

		
			The laws of the Commonwealth of Pennsylvania shall govern the interpretation, validity, performance, and enforcement of this Agreement. Any litigation relating to matters arising under, in connection with or with respect to this Agreement shall be brought by Owner or Operator in a court for the county of the state in which the Hotel is located or in the federal district court for the district where the Hotel is located. Owner and Operator hereby consent to the jurisdiction of such courts and waive any defense that such courts lack venue with respect to such proceeding.
		

		
			 
		

		
			This Section 21.9 shall survive the expiration or termination of this Agreement.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			21.10No Guarantee of Operating Results
		

		
			 
		

		
			Owner acknowledges that (a) all budgets and financial projections, prepared by Operator or its Affiliates prior to the Commencement Date or under this Agreement, are intended to assist in operating the Hotel, but are not to be relied on by Owner or any third party as to the accuracy of the information or the results predicted therein, and (b) Operator does not guarantee the accuracy of the information nor the results of in such budgets and projections. Accordingly, Owner agrees that (i) neither Operator nor its Affiliates shall have any liability whatsoever to Owner or any third party for any divergence between such budgets and projections and actual operating results achieved, (ii) the failure of the Hotel to achieve any forecasted Total Revenue in the Budgets or shall not constitute a default by Operator or give Owner the right to terminate this Agreement, and
		

		
			(i)if Owner provides any such budgets or projections to a third party, Owner shall advise such third party in writing of the substance of the disclaimer of liability set forth in this Section 21.10.
		

		
			 
		

		
			21.11Oversight of Renovation Services
		

		
			 
		

		
			Owner acknowledges that any review, advice, assistance, recommendation or direction provided by Operator with respect to the design, construction, equipping, furnishing, decoration, alteration, improvement, renovation or refurbishing of the Hotel (including, if applicable, the property improvement plan or any capital expenditure) (a) is intended solely to assist Owner in the development, construction, maintenance, repair and upgrading of the Hotel and Owner's compliance with its obligations under this Agreement, and (b) does not constitute any representation, warranty or guaranty of any kind whatsoever that (i) there are no errors in the plans and specification, and (ii) there are no defects in the design of construction of the Hotel or installation of any building systems or FF&E therein, or (c) the plans, specifications, construction and installation work will comply with all applicable laws (including the American with Disabilities Act or similar laws or regulations governing public accommodations for individuals with disabilities). Accordingly, Owner agrees that neither Operator nor its Affiliates shall have any liability whatsoever to Owner or any third party for any (1) errors in the plans and specifications,
		

		
			(2) defects in the design of construction of the Hotel or installation of any building systems or FF&E therein, or (3) non-compliance with any engineering and structural design standards or applicable laws.
		

		
			 
		

		
			21.12Operating Funds
		

		
			 
		

		
			Operator's obligations under this Agreement are subject in all respects to the availability of sufficient funds from the operation of the Hotel, or which are otherwise provided by Owner. Except as otherwise expressly provided in this Agreement, all costs and expenses of operating the Hotel shall be payable out of funds from the operation of the Hotel, or which are otherwise provided by Owner. In no event shall Operator be obligated to pledge or use its own credit or advance any of its own funds to pay any such costs or expenses for the Hotel. Operator is not, and never shall be, liable to any creditor of Owner or its subsidiaries or affiliates for any debt incurred by Operator which was incurred in furtherance of Operator's services hereunder for the Hotel. Owner agrees, unless Operator exceeds the scope of its authority and must indemnify Seller pursuant to Section 20.1, to indemnify and hold Operator harmless from and against any and all such claims of creditors and against all costs, charges and expenses (including attorney's fees and expenses) incurred or sustained by Operator in connection with any action, suit or proceeding to
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			which it may be made a party by any creditor of Owner or with respect to any debt incurred by Operator which was incurred in furtherance of providing the services hereunder for the Hotel (the "Credit Obligation"). In the event that Operator has pledged or used its own credit, or advanced any of its own funds to pay any costs or expenses, for the Hotel, Owner may be required to provide a parent guaranty to guarantee any such Credit Obligation and for repayment of any such extensions of credit by Operator upon thirty (30) days prior written notice from Operator. Accordingly, notwithstanding anything to the contrary in this Agreement, Operator shall be relieved from its obligations to operate the Hotel in accordance with this Agreement whenever and to the extent that Operator is prevented or restricted in any way from doing so by reason of (a) the occurrence of a Force Majeure event, (b) Owner's breach of any term of this Agreement (including Owner's obligation to provide sufficient funds or a parent guaranty as required under this Agreement), or (c) any limitation or restriction in this Agreement on Operator's authority or ability to expend funds in respect of the Hotel. The provisions of this Section 21.12 shall survive the termination of this Agreement with respect to acts, omissions and occurrences arising during the Term.
		

		
			 
		

		
			21.13Consents and Approvals
		

		
			 
		

		
			Owner acknowledges that in granting any consents, approvals or authorizations under this Agreement, and in providing any advice, assistance, recommendation or direction under this Agreement, neither Operator nor its Affiliates guarantee success or a satisfactory result from the subject of such consent, approval, authorization, advice, assistance, recommendation or direction. Accordingly, Owner agrees that neither Operator nor its Affiliates shall have any liability whatsoever to Owner or any third person by reason of (a) any consent, approval or authorization, or advice, assistance, recommendation or direction, given or withheld by Operator, or (b) any delay or failure by Operator to provide any consent, approval or authorization, or advice, assistance, recommendation or direction.
		

		
			 
		

		
			21.14Signature Counterparts
		

		
			 
		

		
			To facilitate execution, this Agreement may be executed in as many counterparts as may be required, each of which so executed shall be deemed an original, irrespective of the date of its execution and delivery, and counterparts together shall constitute one and the same instrument. Counterparts delivered by facsimile, email or other electronic means shall be deemed originals for all purposes. It shall not be necessary that the signature on behalf of both parties hereto appear on each counterpart hereof.
		

		
			 
		

		
			21.15Subordination, Non-Disclosure and Attornment
		

		
			 
		

		
			Owner will endeavor to ensure that existing and future mortgagees and lessors provide Operator with commercially reasonable non-disturbance agreements in form and content reasonably acceptable to Operator, which agreements shall if acceptable to future mortgagee and lessors, preclude the termination of this Agreement absent the uncured breach of this Agreement by Operator, and shall further preclude the conveyance or leasing of the Hotel (whether on foreclosure, deed in lieu thereof or otherwise) to any Person to which Owner could not assign this Agreement without Operator's consent. Operator shall negotiate such agreements in good faith, and execution of such agreement shall not be unreasonable delayed.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			[The remainder of the page is intentionally left blank.]
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			IN WITNESS WHEREOF, Owner and Operator have duly executed this Hotel Management Agreement the day and year first above written.
		

		
			 
		

		
			OWNER:
		

		
			 
		

		
			By: Name: Title:
		

		
			 
		

		
			OPERATOR:
		

		
			 
		

		
			By: Name: Justin Shelton
		

		
			Title: Manager for Springwood Hospitality Management 3, LLC
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			EXHIBIT A CENTRALIZED SERVICES
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						Fees

					
					
						Amount/ Calculation

					
					
						Description

				
	
					
						Accounting and Financial Services Fee (M3)

					
					
						Direct pass through from Vendor.

					
						Approximately $700 per month

					
					
						To reimburse Operator for costs related to the integration, support, budgeting, centralized accounting services, and financial reporting associated with the Hotel.

				
	
					
						Payroll Service (Inova)

					
					
						Direct pass through from Vendor.  Based on employee census, $9 per month

					
					
						To reimburse Operator for payroll management.

				
	
					
						Revenue Management (Springwood)

					
					
						$900 for select service and $1,100 for Extended Stay monthly

					
					
						To reimburse Operator for Revenue Management.

				
	
					
						Sales support (Springwood)

					
					
						$1,200 for select service and $1,500 for

					
						Extended Stay monthly

					
					
						To reimburse Operator for Sales support to the properties.

				
	
					
						Corporate Facilities Management (Springwood)

					
					
						$500 a month.

					
					
						To reimburse Operator for Corporate Facilities Management.

				
	
					
						Property Operations and Maintenance System (Quore)

					
					
						Direct pass through from Vendor. $175 a month

					
					
						To reimburse Operator for electronic operating system and maintenance system.

				
	
					
						Texting Guest service program (Kipsu)

					
					
						Direct pass through from Vendor. $150 a

					
						month

					
					
						To reimburse Operator for texting based system for guest service.

				

		
			 
		

		
			 
		

		
			*This is not meant to be a complete list of items, but is meant to identify the larger monetary items that are already included in the current expenses for the properties. Most are direct pass-through charges that are subject to price fluctuations from 3rd party vendors.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			EXHIBIT B
		

		
			 
		

		
			EBITDA Projections; Calculation of Incentive Fee GROSS OPERATING PROJECTIONS (Attached)
		

		
			 
		

		
			Calculation of Incentive Fee Example:
		

		
			 
		

		
			Projected Gross Operating Profit$100,000 ($25,000 per quarter) Actual Gross Operating Profit$25,000 in Quarter 1
		

		
			$35,000 in Quarter 2
		

		
			 
		

		
			$22,000 in Quarter 3
		

		
			 
		

		
			$50,000 in Quarter 4
		

		
			 
		

		
			Installment payments:10% of Year–to-Date excess of Actual Gross Operating Profit over Projected Gross Operating Profit, less prior installment Gross Operating Profit payments
		

		
			 
		

		
			Quarter 1:$0 = ([$25,000-$25,000] x 10%) – $0
		

		
			 
		

		
			Quarter 2:$1,000 = [($60,000-$50,000] x 10%) - $0
		

		
			 
		

		
			Quarter 3:-$300 = [($82,000-$75,000] x10%) - $1,000
		

		
			 
		

		
			Note: $300 to be deducted from next installment of Base Fee
		

		
			 
		

		
			Quarter 4:$2,500= [($132,000-$100,000] x10%) - $700
		

		
			 
		

		
			Total Incentive Fee:$3,200 = ($132,000-$100,000) x10%)
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			EXHIBIT C
		

		
			 
		

		
			Insurance Requirements
		

		
			 
		

		
			1.Commercial general liability insurance against claims for bodily injury, including death, personal injury or property damage occurring on, in or about the Hotel, with a combined single limit of not less than One Million Dollars ($1,000,000) for each occurrence, with an annual aggregate (where applicable) of Two Million Dollars ($2,000,000.00).
		

		
			 
		

		
			2.Liquor Liability (dram shop) Insurance (if Liquor is sold) with minimum primary limits of not less than One Million Dollars ($1,000,000) for each occurrence
		

		
			 
		

		
			3.Commercial automobile liability insurance providing coverage on any owned, leased, hired and non-owned vehicles with combined single limits of not less than One Million Dollars ($1,000,000.00) per accident for bodily injury, and property damage.
		

		
			 
		

		
			4.Umbrella and Excess liability umbrella coverage (including excess Liquor Liability (dram shop) Insurance) with limits of not less than Twenty-Five Million Dollars ($25,000,000) per occurrence and Twenty-Five Million Dollars ($25,000,000) in the aggregate.
		

		
			 
		

		
			5.Employment Practices Liability with a combined single limit of not less than One Million Dollars ($1,000,000) for each occurrence covering all employees of the hotel, including 3rd party coverage.
		

		
			 
		

		
			6.Crime Insurance (Fidelity) covering the dishonest act of employees in the amount of not less than $250,000.
		

		
			 
		

		
			7.Workers Compensation Insurance on all Hotel Employees in compliance with applicable statutory requirements with a $500,000 limit under the employer’s liability section.
		

		
			 
		

		
			8.Fidelity insurance, in such amounts and with such deductibles as Operator may deem advisable, covering Operator's employees at the Hotel (other than executive employees of Operator) or in job classifications normally bonded in other hotels it manages in the United States or otherwise required by law;
		

		
			 
		

		
			9.Business interruption insurance covering loss of income for a minimum period of twelve (12) months resulting from interruption of business resulting from physical damage caused by the occurrence of any of the risks affecting the Hotel insured under an "all-risk" policy referred to in Section 12.1(A);
		

		
			 
		

		
			10.If the Hotel is located within an area designated "flood prone" pursuant to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as the same may be amended from time to time, flood insurance in such amount as Owner or Owner’s Mortgage lender may reasonably require;
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			11.Such other or additional insurance as may be (i) required under the provisions of any applicable Major Agreements (provided Operator has been given detailed written notice of such requirements) or (ii) requested by Owner in writing and customarily carried by prudent operators of hotels of having a quality and service level similar to the brand under the Franchise Agreement in the geographic area of the Hotel.
		

		
			 
		

		
			2
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			EXHIBIT D
		

		
			 
		

		
			Competitive Set
		

		
			 
		

		
			1.As shown on the Star Reports. 
		

		
			 
		

		
			2.
		

		
			 
		

		
			3.
		

		
			 
		

		
			4.
		

		
			 
		

		
			5.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			EXHIBIT E CERTAIN DEFINITIONS
		

		
			 
		

		
			Affiliate means an entity that controls, is controlled by or under common control with the subject entity. For this purpose, “control” shall mean the ability to direct the operations and policies of an entity, whether by ownership of interests, contract or otherwise.
		

		
			 
		

		
			Agreement means this Hotel Management Agreement.
		

		
			 
		

		
			Base Fee shall have the meaning in Section 10.1. Base Level shall have the meaning in Section 13.1. Budgets shall have the meaning in Section 9.4.
		

		
			 
		

		
			Building shall have the meaning in Section 1.1.
		

		
			 
		

		
			Capital Budget shall have the meaning in Section 9.4.
		

		
			 
		

		
			Centralized Services shall have the meaning given in Section 7.1
		

		
			 
		

		
			Centralized Services Fee shall mean the amount paid for Centralized Services and described in Exhibit A.
		

		
			 
		

		
			Commencement Date shall have the meaning given to it in the introductory paragraph to this Agreement
		

		
			 
		

		
			Early Termination shall have the meaning in Section 16.1. Employment Claim shall have the meaning in Section 20.3. Employment Laws shall have the meaning in Section 5.4.
		

		
			 
		

		
			Employment Policies shall have the meaning in Section 5.5.
		

		
			 
		

		
			Encumbrances shall have the meaning in Section 3.1. Expiration Date shall have the meaning in Section 2.1. 
		

		
			 
		

		
			FF&E shall have the meaning in Section 1.1.
		

		
			 
		

		
			FF&E Reserve Account shall have the meaning in Section 8.2.
		

		
			 
		

		
			Fiscal Year shall mean each twelve (12) consecutive calendar month period or partial twelve (12) consecutive calendar month period within the Term commencing on January 1st (or, with respect to the first year of the Term, the Commencement Date) and ending on December 31st (or, with respect to the last year of the Term, the expiration or earlier termination of the Term) unless Owner and Operator otherwise agree.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			Fixed Charges shall mean the cost of the following items to the Hotel or its facilities, which are properly attributable under the Uniform System to the period in question:
		

		
			 
		

		
			(i)Real estate taxes, assessments, personal property taxes and any other ad valorem taxes imposed on or levied in connection with the Hotel, the Installations and the FF&E (collectively, "Property Taxes");
		

		
			 
		

		
			(ii)Insurance against physical damage to the Hotel; and
		

		
			 
		

		
			(iii)Payments into the FF&E Reserve Account in accordance with Section 11.1.
		

		
			 
		

		
			Force Majeure Events shall have the meaning in Section 15.4.
		

		
			 
		

		
			GAAP shall mean generally accepted accounting principles in the United States of America, as in effect from time to time, set out in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
		

		
			 
		

		
			General Manager shall have the meaning in Section 4.4.
		

		
			 
		

		
			Gross Operating Profit for any period shall mean the amount, if any, by which Total Revenues for such period exceed Operating Expenses for such period.
		

		
			 
		

		
			Hotel shall have the meaning given in Recital A to this Agreement.
		

		
			 
		

		
			Hotel Employees shall have the meaning in Section 3.1.
		

		
			 
		

		
			Incentive Fee shall have the meaning in Section 10.2. Indemnified Party shall have the meaning in Section 20.4. Initial Term shall have the meaning in Section 2.1.
		

		
			 
		

		
			Installations shall have the meaning in Section 1.1. Involuntary Proceeding shall have the meaning in Section 15.1. Land shall have the meaning in Section 1.1.
		

		
			 
		

		
			Leases shall have the meaning in Section 3.1.
		

		
			 
		

		
			Major Agreements shall have the meaning in Section 3.1. Monthly Reports shall have the meaning in Section 9.2. Mortgage shall have the meaning in Section 3.1.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			Multi-Property Programs shall have the meaning in Section 7.2.
		

		
			 
		

		
			Operating Expenses shall mean all costs and expense of maintaining, conducting and supervising the operation of the Hotel and all of its facilities, which are properly attributable under the Uniform System to the period in question. Operating Expenses shall include, without limitation:
		

		
			 
		

		
			(i)The cost of all Operating Equipment and Operating Supplies;
		

		
			 
		

		
			(ii)Salaries and wages of Hotel personnel, including costs of payroll taxes, employee benefits and severance payments. Except as set forth in Exhibit A (“Centralized Services”), the salaries or wages of off-site employees or offsite executives of Operator shall not be Operating Expenses, provided that if it becomes necessary for an off-site employee or executive of Operator to temporarily perform reasonable and necessary services for a reasonable and necessary period of time at the Hotel of a nature normally performed by Hotel Employees, his or her salary (including payroll taxes and employee benefits) for such period only, as well as his or her traveling expenses, shall be Operating Expenses and reimbursed to Operator by Owner;
		

		
			 
		

		
			(iii)The costs of all other goods and services obtained in connection with the operation of the Hotel including, without limitation, heat and utilities, laundry, landscaping and exterminating services and office supplies;
		

		
			 
		

		
			(iv)The costs of all non-capital repairs to and maintenance of the Hotel;
		

		
			 
		

		
			(v)Insurance premiums (or allocable portion thereof in the case of blanket policies) for all insurance maintained under Article XIII (other than insurance against physical damage to the Hotel) and losses incurred on any self-insured risks including deductibles;
		

		
			 
		

		
			(vi)All taxes, assessments, permit fees, inspection fees, and water and sewer charges and other charges (other than income and franchise taxes) payable by or assessed against Owner with respect to the operation of the Hotel, excluding Property Taxes (defined below);
		

		
			 
		

		
			(vii)Legal fees and fees of any independent certified public accountant for services directly related to the operation of the Hotel and its facilities;
		

		
			 
		

		
			(viii)All expenses for advertising the Hotel and all expenses of sales promotion and public relations activities;
		

		
			 
		

		
			(ix)All Reimbursable Expenses, which fees and disbursements shall be paid out of the Operating Account or paid or reimbursed by Owner to Operator upon demand. Without limiting the generality of the foregoing, such charges may include all reasonable travel, telephone, telegram, facsimile, air express and other incidental expenses but, except as otherwise provided in this Agreement, shall not include any of the regular expenses of the central offices maintained by Operator, other than
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			offices maintained at the Hotel for the management of the Hotel. Operator shall maintain and make available to Owner invoices or other evidences supporting such charges;
		

		
			 
		

		
			(x)The Base Fee and Centralized Services Fees, as set forth in Exhibit A;
		

		
			 
		

		
			(xi)Periodic payments made in the ordinary course of business under the Franchise Agreement;
		

		
			 
		

		
			(xii)Any other item specified as an Operating Expense in this Agreement; and
		

		
			 
		

		
			(xiii)Any other cost or charge classified as an Operating Expense or an Administrative and General Expense under the Uniform System unless specifically excluded under the provision of this Agreement.
		

		
			 
		

		
			Operating Expense shall not include:
		

		
			 
		

		
			(i)Amortization and depreciation;
		

		
			 
		

		
			(ii)The making of or the repayment of any loans or any interest thereon;
		

		
			 
		

		
			(iii)The costs of any alterations, additions, or improvements which for Federal income tax purposes must be capitalized and amortized over the life of such alteration, addition, or improvement;
		

		
			 
		

		
			(iv)Payments on account of any equipment lease that is to be capitalized under GAAP;
		

		
			 
		

		
			(v)Payments under any space lease, ground lease, submerged land lease, or easement agreement;
		

		
			 
		

		
			(vi)Payments into or out of the FF&E Reserve Account;
		

		
			 
		

		
			(vii)Payments of Incentive Fees; or
		

		
			 
		

		
			(viii)Any item defined as a Fixed Charge;
		

		
			 
		

		
			(ix)Capital Expenditures.
		

		
			 
		

		
			Network shall have the meaning in Section 7.3.
		

		
			 
		

		
			Non-Renewal Notice shall have the meaning in Section 2.1.
		

		
			 
		

		
			Obligor shall have the meaning in Section 20.4. Operating Account shall have the meaning in Section 8.2. Operating Budget shall have the meaning in Section 9.4.
		

		
			Operating Equipment shall have the meaning in Section 1.1.
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			Operating Supplies shall have the meaning in Section 1.1. Operator Rebates shall have the meaning in Section 7.2. PEO shall have the meaning in Section 5.1.
		

		
			Person shall mean an individual or a partnership, corporation, limited liability company, trust or other entity formed under the laws of any jurisdiction.
		

		
			 
		

		
			Project Management Fee shall have the meaning in Section 10.6. Purchasing Management Fee shall have the meaning in Section 10.7. Qualified Lender shall have the meaning in Section 21.8.
		

		
			Qualified Loan shall have the meaning in Section 21.8. Reimbursable Expenses shall have the meaning in Section 10.8. Renewal Term shall have the meaning in Section 2.1.
		

		
			RevPAR means Revenue Per Available Room, as defined by STR, Inc.
		

		
			 
		

		
			Term shall have the meaning in Section 2.1.
		

		
			 
		

		
			Total Revenues shall mean all income, revenue and proceeds resulting from the operation of the Hotel and all of its facilities (net of refunds and credits to guest and other items deemed "Allowances" under the Uniform System), which are properly attributable under the Uniform System to the period in question. Total Revenues shall include, without limitation, all amounts derived from:
		

		
			 
		

		
			(i)The rentals of rooms, banquet facilities and conference facilities;
		

		
			 
		

		
			(ii)The sale of food and beverage whether sold in a bar, lounge or restaurant, delivered to a guest room, sold through an in-room facility or vending machines, provided in meeting or banquet rooms or sold through catering operations;
		

		
			 
		

		
			(iii)Charges for admittance to or the use of any parking facilities, recreational facilities or any entertainment events at the Hotel; and
		

		
			 
		

		
			(iv)The gross income amount on which the proceeds of business interruption or similar insurance are determined, with respect to any period for which such proceeds are received.
		

		
			 
		

		
			Total Revenues shall not include:
		

		
			 
		

		
			(i)Sales or use taxes or similar government impositions collected by Owner or Operator;
		

		
			 
		

		
			
		

		
			

		 

		

		
			 
		

		
			(ii)Tips, service charges and other gratuities received by Hotel Employees;
		

		
			 
		

		
			(iii)Proceeds of insurance, except for those expressly included in Total Revenues;
		

		
			 
		

		
			(iv)Proceeds of the sale or condemnation of the Hotel, any interest therein or any other asset of Owner not sold in the ordinary course of business, or the proceeds of any loans or financing;
		

		
			 
		

		
			(v)Capital contributed by Owner to the Hotel;
		

		
			 
		

		
			(vi)Rental income from any and all building rooftop or antennae leases;
		

		
			 
		

		
			(vii)The receipts of any tenant, license or concessionaire under a Lease; and
		

		
			 
		

		
			(viii)Interest, if any, accrued on the balance of the Operating Account or the FF&E Reserve Account.
		

		
			 
		

		
			Uniform System shall have the meaning in Section 3.1.
		

		
			 
		

		
			WARN Act shall have the meaning in Section 5.2.
		

		
			 
		

		
			Working Capital shall have the meaning in Section 8.1.lfr_Current_Folio_10K_Ex10581

		

			EXHIBIT 10.58.1

		

		
			LOAN AGREEMENT
		

		
			THIS LOAN AGREEMENT (as it may be amended, restated, supplemented, extended or renewed from time to time, this “Agreement”) is made as of February 21, 2020, between WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”), and LF3 SOUTHAVEN, LLC, a Delaware limited liability company (“Landlord Borrower”) and LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company (“Tenant Borrower”, and together with Landlord Borrower, individually and/or collectively, as the context may require, “Borrower”).
		

		
			FOR VALUABLE CONSIDERATION, the parties agree as follows:
		

		
			agreement to lend
		

		
			Agreement.  Subject to the terms and conditions provided herein, Lender agrees to make the following loans to Borrower: (a) a term loan (the “Loan”) in the maximum principal amount of $13,460,000.00.  Notwithstanding anything to the contrary, Lender shall not be obligated to advance Loan funds in an amount exceeding the lowest of the following (the “Loan Amount”): (1) $13,460,000.00, (2) 65.0% of documented Site acquisition costs approved by Lender, or (3) 65.0% of the appraised value of the Site, as may be adjusted by Lender in its sole discretion.  Borrower agrees to borrow and repay the Loan, with interest, in accordance with the Note, this Agreement, and the other Loan Documents.  
		

		
			LOAN Terms
		

		
			Loan Purpose.  The Loan shall be used exclusively by Borrower to finance the cost of the Site acquisition, to finance the cost of the PIP Improvements and to fund closing costs and certain other permitted amounts (to the extent herein provided), in accordance with the terms of this Agreement and the other Loan Documents.  
		

		
			Notes.  The Loan will be evidenced by the Term Loan Note by Borrower to Lender in the principal amount of $13,460,000.00 (the “Note”).  
		

		
			Collateral.  The Loan will be secured by the Collateral described in the “Collateral Table” attached as Exhibit 2.3, as well as all other Collateral described in the Loan Documents.
		

		
			Closing.  The date on which the Closing occurs is the “Closing Date.”  Borrower hereby authorizes Lender to insert the Closing Date on the first page hereof, as the date hereof, and in the various Loan Documents, including the Note, as the date thereof.  The Closing must occur on or before 11:00 o’clock a.m. Pacific time, on February 21, 2020 (the “Closing Deadline”).  If the Closing has not occurred on or before the Closing Deadline, Lender shall have absolutely no obligation whatsoever to make the Loan to Borrower.  Lender may extend the Closing Deadline in Lender’s sole discretion.  Any Closing Deadline extension must be in writing to be valid.
		

		
			Funding.  Prior to Closing, Borrower shall deliver to Lender a complete, executed “Closing Draw Request” for disbursement of the Loan proceeds. At Closing Lender will fund the Loan by wire transfer in accordance with the instructions contained in the Closing Draw Request.  Lender shall be entitled to fully rely and act on the Closing Draw Request and shall have no duty to verify the content or accuracy of information contained therein, the authority of the person executing the Closing Draw Request or the identity of the sender thereof.  Lender does not have and is not undertaking any obligation whatsoever to Borrower to verify the source of the Closing Draw Request or to detect errors in transmission or content, including discrepancies between account names and numbers.  
		

		
			Closing Fee.  At Closing, Borrower will pay Lender a closing fee equal to 0.50% of the Loan Amount.
		

		
			Transaction Costs; Deposits.  Borrower shall pay Lender, at or before Closing, all reasonable out‐of‐pocket costs and expenses incurred by or on behalf of Lender in connection with Lender’s underwriting and closing due diligence and the negotiation, documentation, and closing of the Loan (including in connection with Lender’s evaluation of and determinations with respect to, the Closing conditions) (the “Transaction Costs”).  Transaction Costs include the following, as applicable:  (a) Lender’s outside legal counsel fees; (b) expenses for UCC search reports, title searches, and title insurance; (c) escrow, recording, and filing fees; (d) transfer or mortgage taxes (if any); 

		 

(e) costs of site inspections, inspection reports, surveys, appraisals, flood certifications, environmental reports and testing, and other due diligence required by Lender; and (f) costs and fees of consultants and other professional advisers retained by Lender.  At Closing, all deposits paid by Borrower prior to entering into this Agreement, other than rate lock fee deposits (if any), shall be applied to pay Transaction Costs and any other fees, costs and expenses then payable by Borrower.  If the deposit exceeds the sum of such items, the excess will be refunded at Closing.
		

		
			General Payment Provisions.
		

		
			Manner and Place; No Deductions.  Principal, interest, and all other amounts due to Lender from time to time under the Notes, this Agreement, and the other Loan Documents, including each Monthly Payment due under the Notes (each, a “Payment”) shall be made by Automated Clearing House (“ACH”) debit (and Borrower agrees to execute and deliver to Lender such authorizations and agreements as Lender may require to establish such ACH arrangements) unless Lender gives prior written consent, in its sole discretion, for Payments to be made by wire transfer.  Any Payment made by wire transfer and not received by Lender prior to 12:00 o’clock noon (Pacific time) may, in Lender’s sole discretion, be deemed to have been received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue.  All Payments, including Payments made by ACH debit, shall be in U.S. dollars and shall be made from a business deposit account in Borrower’s name at a U.S. bank.  All Payments shall be made without deduction of present and future Taxes (such amounts to be paid by Borrower) and without any other abatement, reduction, setoff, defense, counterclaim, deferment or recoupment.
		

		
			Application of Payments Generally.  Except as otherwise provided in subsection (c) below: (i) all Payments of principal and interest required to be made pursuant to the Note shall be applied first to accrued and unpaid interest and then to principal; (ii) Payments by or on behalf of Borrower for fees, costs, and other expenses payable pursuant to any Loan Document, including Payments with respect to Transaction Costs, Closing fees and expenses, and other amounts payable by a Credit Party pursuant to any provision of the Loan Documents, shall be applied to the applicable fee, cost or other expense; and (iii) if Lender receives any other Payment, including Collateral proceeds and principal prepayments, Lender shall apply such Payment in such order, manner, and amounts as is specifically provided in the applicable Loan Document pursuant to which such Payment is made, or, in the absence of such a provision, in such order, manner, and amounts as Lender, in its sole discretion, may determine.  Any prepayment shall be without prejudice to Borrower’s obligations under any swap agreement (as defined in 11 U.S.C. § 101), which shall remain in full force and effect subject to the terms of such swap agreement (including provisions that may require a reduction, modification or early termination of a swap transaction, in whole or in part, in the event of such prepayment, and may require Borrower to pay any fees or other amounts for such reduction, modification or early termination), and no such fees or amounts shall be deemed a penalty hereunder or otherwise.
		

		
			Application of Payments After Default.  Any other provision of this Agreement, the Note or any other Loan Document to the contrary notwithstanding, during such time as a Default has occurred and is continuing, all Payments shall be applied in such order and manner and in such amounts as Lender, in its sole discretion, may determine.
		

		
			REPRESENTATIONS AND WARRANTIES
		

		
			Borrower acknowledges and agrees that the representations and warranties in this Article are a material consideration to Lender; that Lender is relying on their correctness and completeness in entering into this Agreement and making the Loan; and that these representations and warranties are true and accurate as of the date hereof, will be true and accurate as of the Closing, as if made at Closing, and will survive the Closing, regardless of any investigation or inspection by Lender.  Accordingly, Borrower represents, warrants, and certifies to and covenants with Lender that:
		

		
			Borrower Status.  Borrower’s exact legal name is set forth on the signature page hereof.  Borrower is a domestic U.S. entity, validly existing and in good standing under the laws of the state of its formation, is duly qualified and licensed to do business in the state where each Site is located, and has full power and authority to enter into and perform its obligations under the Loan Documents to which it is a party.  Borrower’s chief executive office and principal place of business is at the location set forth on the signature page hereof. The organizational chart attached 

		 

as Exhibit 3.1, relating to Borrower and certain of its Affiliates, is true, complete and correct on and as of the date hereof. 
		

		
			Due Authorization, Execution and Delivery.  The Loan Documents have been duly authorized and validly executed and delivered by Borrower.  The individual(s) executing the Loan Documents on behalf of Borrower have been duly authorized to do so in accordance with resolutions duly adopted by Borrower’s board of directors (or similar governing body), members, or partners, as the case may be.
		

		
			No Conflicts; No Defaults.  The authorization, execution, delivery, consummation, and performance by Borrower of the Loan Documents does not and will not conflict with, violate, or breach (a) any provision of Borrower’s organizational documents; (b) any Applicable Law; or (c) any Contractual Obligation of Borrower.  Borrower is not in default under and, to the best of Borrower’s knowledge, no event has occurred that, with the giving of notice or the passage of time, or both, would constitute a default under any Contractual Obligation of Borrower.
		

		
			Binding Obligations. This Agreement and the other Loan Documents to which a Credit Party is a party constitute the legal, valid and binding obligations of such Credit Party, enforceable against such Credit Party in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, liquidation, reorganization and other laws affecting the rights of creditors generally, and general principles of equity.
		

		
			Litigation and Condemnation.  There is no action, suit, investigation, proceeding or arbitration at law or in equity, including condemnation proceedings or proceedings in lieu of condemnation, pending or, to the best of Borrower’s knowledge, threatened against or affecting (a) any Credit Party or any of its or their assets or revenues; or (b) any of the Loan Documents or any of the transactions contemplated thereby.
		

		
			Administrative, Criminal and Governmental Matters and Investigations.  There are no administrative or criminal matters or investigations, government investigations or audits, or other similar matters currently pending or, to the best of Borrower’s knowledge, threatened that involve any Credit Party nor has any Credit Party been involved in any such matters within the past seven years.
		

		
			Bankruptcy and Similar Matters. There are no bankruptcy, insolvency, or similar proceeding currently pending or, to the best of Borrower’s knowledge, threatened that involve any Credit Party.  During the past seven years:  (a) no assets of any Credit Party have been the subject of any foreclosure or similar proceeding or been transferred by deed in lieu; (b) no Credit Party has filed (or had filed against such Credit Party) a petition under the U.S. Bankruptcy Reform Act of 1978, 11 U.S.C. §101, et seq. (the “Bankruptcy Code”) or obtained a discharge of its debts under the Bankruptcy Code; and (c) no Person that is a principal officer, executive, member, manager or equity owner of a Credit Party held a similar position in an entity that, during the time such Person held such position or within one year after leaving such position, filed (or had filed against it) a petition under the Bankruptcy Code or that obtained a discharge of its debts under the Bankruptcy Code.
		

		
			Solvency.  Both before and after giving effect to consummation of the transactions contemplated by the Loan Documents to be consummated at or concurrently with the Closing and the payment and accrual of all Transaction Costs, and other costs, fees, and expenses payable in connection with the foregoing, the Credit Parties taken together, and Borrower, individually, are Solvent.
		

		
			Anti-Money Laundering; Anti-Terrorism; Anti-Corruption Laws.  None of Borrower, any Credit Party or their respective Affiliates (each, an “AML Party”) is: (a) a Sanctioned Person; (b) controlled by or acting on behalf of a Sanctioned Person; (c) under investigation for an alleged breach of Sanction(s) by a governmental authority that enforces Sanctions; or (d) under administrative, civil or criminal investigation for an alleged violation of, or has received notice from or made a voluntary disclosure to any governmental authority regarding a possible violation of, Anti-Corruption Laws.  Each AML Party  is and will remain in compliance with the following (collectively, the “AML Requirements”):  all U.S. economic sanctions laws and executive orders; all regulations promulgated by OFAC; all Anti-Corruption Laws; and all applicable anti-money laundering and counter-terrorism provisions of the Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56, and all rules and regulations issued pursuant to such laws, including those relating to “know your customer”, anti-money laundering, and anti-terrorism.  No AML Party is or will become a Person 

		 

included by OFAC on the list of Specially Designated Nationals and Blocked Persons (the “SDN List”) or who is otherwise the target of Sanctions.
		

		
			Title to Assets; Permitted Exceptions.  Borrower owns all assets reflected in its most recent balance sheet delivered to Lender, except for assets disposed of in the ordinary course of business since the date of such balance sheet.  Borrower is the owner of all of the Collateral, free and clear of all Liens and other matters affecting title to such assets, other than the Permitted Exceptions.
		

		
			Outstanding Indebtedness.  As of the Closing Date and after giving effect to the Closing, Borrower and the other Credit Parties have no outstanding Indebtedness, other than (a) the Obligations; and (b) trade debt incurred and paid in the ordinary course of business and in any event within 60 days after incurrence.
		

		
			Compliance with Law; Permits.  Each Site and the operations of each Credit Party at such Site comply with all Applicable Law, except for such noncompliance that has not had, and could not reasonably be expected to have, a Material Adverse Effect.  All governmental permits required to use and operate such Site for the Permitted Concept, including liquor licenses, if any, have been obtained and are in full force and effect, except for permits, the failure of which to obtain or maintain has not had, and could not reasonably be expected to have, a Material Adverse Effect.
		

		
			Site Conditions, Zoning, Access, and Utilities.  Each Site, including all buildings and other improvements associated with such Site, is in good condition and repair; well maintained, ordinary wear and tear excepted; fully equipped and operational; free (to the best of Borrower’s knowledge) from structural defects; and safe and properly lighted.  Each Site is unconditionally zoned by the appropriate Government Authority for the use of such Site for the Permitted Concept.  Permanent, legal access is available to each Site from a physically open and dedicated public right-of-way.  Adequate public or private utilities are available at each Site to permit operation of such Site as a Permitted Concept, and all utility connection fees and use charges have been paid in full.
		

		
			Franchise Agreement.  Attached as Exhibit 3.14 is a complete list of each Franchise Agreement and the information set forth thereon with respect to each Franchise Agreement is true, complete, and correct.  At Lender’s request from time to time, Borrower shall deliver to Lender a fully executed, complete copy of each Franchise Agreement. Each Franchise Agreement is in full force and effect, the entire interest of the franchisee thereunder is owned by one or more of the Credit Parties, and such interest has not been assigned, transferred, mortgaged, or otherwise encumbered other than pursuant to Lender’s Liens.  No notice of default from Franchisor has been received by any Credit Party with respect to any Franchise Agreement that has not been cured, and no notice of default to Franchisor has been given that has not been cured.  To the best of Borrower’s knowledge, no event has occurred and no condition exists, including with respect to any required remodeling or re-imaging, that, with the giving of notice or the lapse of time or both, would constitute a default under any Franchise Agreement.  Other than the PIP, Borrower is not subject to any property or performance improvement plan or similar requirement under the Franchise Agreement. Borrower has fully disclosed to Lender all requirements of the PIP, including expenses, required reserves, and other requirements.
		

		
			Management Agreement.  Attached as Exhibit 3.15 is a complete list of each Management Agreement and the information set forth thereon with respect to each Management Agreement is true, complete, and correct.  At Lender’s request from time to time, Borrower shall deliver to Lender a fully executed, complete copy of each Management Agreement.  The Management Agreement is in full force and effect, the entire interest of the Site owner thereunder is held by Borrower, and such interest has not been assigned, transferred, mortgaged, or otherwise encumbered other than pursuant to Lender’s Liens.  No notice of default from Manager has been received by any Credit Party that has not been cured, and no notice of default to such Manager has been given that has not been cured.  To the best of Borrower’s knowledge, no event has occurred and no condition exists that, with the giving of notice or the lapse of time or both, would constitute a default under the Management Agreement.  The Management Agreement (a) is fully subordinate to the Loan and Loan Documents, including to all Lender’s Liens; and (b) does not contain any rights of first refusal or other options in favor of Manager to acquire any Collateral or other property of Borrower.
		

		
			Taxes.  All federal, state, local and foreign income, franchise and other material tax returns and reports (collectively, “Tax Returns”) required to be filed by any Tax Affiliate have been filed with the appropriate Government Authorities, all such Tax Returns are true and correct in all material respects, and all Taxes reflected therein or otherwise due and payable have been paid prior to the date on which any Liabilities may be added thereto 

		 

for non-payment except for those contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Tax Affiliate in accordance with GAAP.  No Tax Return is under audit or examination by any Government Authority and no notice of such an audit or examination or any assertion of any claim for Taxes has been given or made by any Government Authority.  Proper and accurate amounts have been withheld by each Tax Affiliate from their respective employees for all periods in full and complete compliance with Applicable Law, and such withholdings have been timely paid to the respective Government Authorities.  No Tax Affiliate has participated in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b) or has been a member of an affiliated, combined or unitary group other than the group of which a Tax Affiliate is the common parent.  “Tax Affiliate” means Borrower and its subsidiaries (if any) and any Borrower Affiliate with which Borrower files or is eligible to file consolidated, combined or unitary tax returns.  “Taxes” means all taxes, including income taxes, excess profits taxes, sales taxes, gross receipts taxes, payroll taxes, withholding taxes, ad valorem real and personal property taxes and assessments, and all other taxes, duties, imposts, levies, assessments, deductions, withholdings, and charges imposed by any Government Authority, and all Liabilities with respect thereto, excluding taxes imposed on or measured by the Lender’s net income.
		

		
			Evaluation Information.  All information provided to Lender by or on behalf of any Credit Party in connection with the Loan (collectively, the “Evaluation Information”) is correct and complete in all material respects as of the date thereof.  Borrower acknowledges that Lender is relying on the Evaluation Information in entering into this Agreement and making the Loan available to Borrower.  None of the Credit Parties has any knowledge of any material change in any of the Evaluation Information that has not been disclosed to Lender in writing.
		

		
			Full Disclosure.  There is no fact known to any Credit Party that materially and adversely affects the business, operations, assets or condition (financial or otherwise) of any of the Credit Parties that has not been disclosed herein or in the Evaluation Information.  None of the representations or warranties made by any Credit Party in the Loan Documents or any exhibit, report, statement or certificate furnished by or on behalf of any Credit Party pursuant thereto, as of the date such representations and warranties are made or deemed made, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.
		

		
			Commercial Purpose of Loan.  The purpose of the Loan is a commercial business purpose and not a personal, family, or household purpose.  No portion of the Collateral is being used by Borrower or any other Person for any personal, family or household purposes.
		

		
			Securities Activities.  Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying any margin stock (as defined within Regulations T, U or X of the Board of Governors of the Federal Reserve System), and none of Borrower's assets consists of such margin stock.  No part of the Loan will be used to purchase or carry any margin stock or to extend credit to others for that purpose or for any other purpose that violates the provisions of Regulations T, U or X of said Board of Governors.
		

		
			Regulated Entities.  None of any Credit Party, any Person controlling any Credit Party, or any Affiliate of any Credit Party, is (a) an "investment company" within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other federal or state statute, rule or regulation limiting its ability to incur Indebtedness, pledge its assets or perform its obligations under the Loan Documents.
		

		
			ERISA.  None of the Credit Parties maintains, or has any Liabilities with respect to, any employee benefit plan or multiemployer plan, as defined in the Employee Retirement Income Security Act of 1974 (“ERISA”).
		

		
			Hotel Lease.  The information set forth on Exhibit 3.23 with respect to the Hotel Lease is true, complete, and correct.  Borrower has delivered to Lender a fully executed, complete copy of the Hotel Lease.  The Hotel Lease is in full force and effect, Tenant is the sole owner of the entire leasehold interest thereunder, and such interest has not been assigned, transferred, subleased, mortgaged, or otherwise encumbered other than pursuant to Liens in Lender’s favor.  No notice of default under the Hotel Lease has been received or given by Borrower that has not been cured.  To the best of Borrower’s knowledge, no event has occurred and no condition exists, that, with the giving of notice or the lapse of time or both would constitute a default under the Hotel Lease.  In the event of any conflict between the terms of the Hotel Lease and the Loan Documents, the terms of the Loan Documents shall control.
		

		
			

		 

		

		
			Beneficial Ownership Certification. As of the Closing Date, all of the information included in the Beneficial Ownership Certification is true and correct.
		

		
			AFFIRMATIVE COVENANTS
		

		
			Until such time as all Obligations are fully paid and performed:
		

		
			Organization and Status; Preservation of Existence.  Borrower will continue to be validly existing and in good standing under the laws of its state of incorporation or formation and will continue to be qualified to do business in the state where each Site is located.
		

		
			Collateral.  Borrower will (a) keep the Collateral free and clear of all Liens, other than the Permitted Exceptions; (b) use the Collateral only in its trade or business; (c) keep the tangible Collateral at each Site and maintain such tangible Collateral in good operating condition and repair and in material compliance with manufacturers’ recommendations, normal wear and tear excepted; and (d) own and keep at each Site all equipment, including all machinery, furniture, appliances, trade fixtures, tools, office and record keeping equipment, and inventory required to be maintained by Borrower at such Site pursuant to the Franchise Agreement and the Management Agreement for such Site and that are reasonably necessary for the proper and prudent operation of such Site as the Permitted Concept.
		

		
			Taxes.  Borrower shall timely pay or cause to be paid, prior to delinquency, all Taxes which may at any time be assessed, levied or imposed upon Borrower, any Site, the Collateral, the Loan Documents, the Obligations, or the rents, issues, profits, damages, income and other benefits now or hereafter derived from any of the Sites, or which may arise in respect of the occupancy, use, possession or operation thereof.
		

		
			Insurance.
		

		
			Insurance Requirements.  Borrower shall obtain and keep in full force and effect insurance of the types and in amounts customarily carried in lines of business and in geographic areas similar to Borrower’s and as Lender may specify from time to time including insurance of the types and in amounts specified in the Insurance Requirements Agreement, which may specify, among other things,  (i) property insurance; (ii) business income insurance; (iii) builder’s risk insurance, for any period during which construction shall take place on the Site; (iv) commercial general liability insurance, including excess/umbrella coverage and, if liquor, beer, or wine may be sold at or from the Site, liquor liability coverage; (v) worker’s compensation insurance; (vi) flood insurance; (vii) earthquake insurance, for Sites located in an area designated by the US Geological Survey as high hazard; and (viii) such other policies and coverages as may be necessary to comply with Applicable Law or as Lender may otherwise require.  Each required insurance policy and coverage (each, a “Policy”) and each required binder, certificate, or other evidence of coverage (collectively, with the Policy, the “Policy Documents”) shall satisfy the requirements set forth in this Section and in any Insurance Requirements Agreement (collectively, the “Insurance Requirements”), unless, in a particular case, Lender, in its sole discretion and in writing, modifies or waives a particular Insurance Requirement.  All Insurance Requirements are at the sole cost and expense of Borrower and apply to each Site.  If, in addition to Borrower, any other Credit Party has an insurable interest in a particular Site, the Insurance Requirements shall apply with equal force to such other Credit Party, as if such Credit Party were a Borrower.  Borrower’s compliance or non-compliance with the Insurance Requirements shall not limit Borrower’s liability for the acts or omissions of Borrower or any other Credit Party as provided herein or in any of the other Loan Documents.
		

		
			Policy Requirements.  Each insurer must be licensed to do business in each state where a Site is located and, except for NFIP approved flood insurance carriers, must be rated A-:VIII or better by Best’s Key Rating Guide.  Each Policy Document shall name Lender and its successors and/or assigns, and affiliates, as their interests may appear, as additional insureds and as mortgagee and loss payee, as applicable, and shall state Borrower’s correct address and list Borrower as the named insured.  Each Policy shall (i) provide that the Policy will not be terminated, cancelled or substantially modified without at least 30 days’ prior written notice to Lender (10 days for non-payment) and be written for a period of at least 12 consecutive months; (ii) include a waiver of subrogation by the insurer as to claims against Lender, its employees, agents, and affiliates and provide that such Policy cannot be cancelled or suspended on account of the conduct of Borrower, its affiliates, or any of their respective officers, directors, employees, or agents; (iii) be written on an “occurrence” basis and 

		 

provide that all coverage under such Policy is primary, that any “no other insurance” clause in such Policy excludes policies of insurance maintained by Lender or its affiliates, and that such Policy will not be brought into contribution with any insurance maintained by Lender or its affiliates; (iv) contain a standard without contribution mortgagee clause endorsement in favor of Lender, its successors, assigns, and affiliates, as their interests may appear; and (v) include an agreement by the insurer that any loss will be payable in accordance with the terms of the Policy notwithstanding any act or neglect of Borrower, anyone acting for Borrower, or any tenant or other occupant of a Site.  At least 30 days prior to the expiration of each Policy, Borrower shall furnish Lender written evidence that such Policy has been renewed or replaced by delivering to Lender a copy of the replacement Policy or other documentation reasonably satisfactory to Lender evidencing that the required insurance is in full force and effect.  
		

		
			Lender Insurance.  SPECIAL NOTICE:  Unless Borrower provides Lender with evidence that the required Policies have been obtained, are in full force and effect, and meet the Insurance Requirements, Lender may purchase insurance at Borrower’s expense to protect Lender’s interests.  Borrower may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that Borrower has obtained insurance satisfying the Insurance Requirements.  Borrower shall reimburse Lender, upon demand, for the costs of such insurance obtained by Lender, together with interest thereon at the default interest rate applicable to the Loans from the date such insurance was purchased to the date of such reimbursement.
		

		
			Casualty.
		

		
			Casualty; Continuation of Obligations.  Borrower shall at all times bear the entire risk of any loss, theft, damage to, or destruction of, any Collateral from any cause whatsoever, including as a result of a taking by eminent domain (a “Casualty”).  If a Casualty occurs, whether or not covered by insurance, Borrower will promptly give Lender written notice thereof, describing the nature and extent thereof.  No Casualty shall relieve Borrower of any of its Obligations, including its obligation to make regularly scheduled Note payments.
		

		
			Restoration Obligation.  Promptly following the occurrence of a Casualty, Borrower shall, at its expense, commence and diligently complete the repair, restoration, replacement, and rebuilding of the Collateral as nearly as possible to its value, condition and character immediately prior to the Casualty (a “Restoration”).  Borrower shall not be excused from Borrower’s Restoration obligation, regardless of whether there are Insurance Proceeds available to Borrower or whether any such Insurance Proceeds are sufficient in amount, and the application or release by Lender of any Insurance Proceeds shall not cure or waive any Default under this Agreement or the other Loan Documents or invalidate any act done pursuant thereto.
		

		
			Application of Insurance Proceeds.  All insurance proceeds with respect to any Casualty (the “Insurance Proceeds”) shall be payable to Lender, and Borrower authorizes and directs any affected insurance company to pay the Insurance Proceeds directly to Lender.  If Borrower receives any Insurance Proceeds relating to such Casualty, Borrower shall promptly pay such proceeds to Lender.  All Insurance Proceeds will be applied by Lender to payment of the Obligations in such order as Lender, in its sole discretion, shall determine.  To the extent that Insurance Proceeds are applied to prepay principal on the Loan, no prepayment fee will be charged in connection with such prepayment; provided, however, Borrower shall pay Breakage Costs (as defined in the Note) as liquidated damages for loss of a bargain and not as a penalty as calculated as set forth in the Note.   Notwithstanding the foregoing, if no Default has occurred and is continuing, the Insurance Proceeds, less costs, fees and expenses incurred by Lender and Borrower in the collection thereof, including adjuster’s fees and expenses and reasonable attorneys’ fees and expenses (the “Net Insurance Proceeds”), shall be made available to Borrower as follows:  (i) if the Net Insurance Proceeds are less than $100,000, the Net Insurance Proceeds shall be paid to Borrower and applied by Borrower to the cost of the Restoration; and (ii) if the Net Insurance Proceeds are $100,000 or greater, the Net Insurance Proceeds shall be held and disbursed by Lender, or as Lender may from time to time direct, as the Restoration progresses, to pay or reimburse Borrower for Restoration costs, upon Borrower’s written request accompanied by evidence, reasonably satisfactory to Lender, that:  (A) the Restoration is in compliance with Applicable Law and all private restrictions and requirements; (B) the amount requested has been paid or is then due and payable and is properly a part of such cost; (C) there are no Liens for labor or materials previously supplied in connection with the Restoration; (D) if the estimated cost of the Restoration exceeds the Net Insurance Proceeds (exclusive of proceeds received from Borrower’s business income insurance), Borrower has deposited into an escrow 

		 

satisfactory to Lender such excess amount, which sum will be disbursed pursuant to escrow instructions satisfactory to Lender; and (E) the balance of such Net Insurance Proceeds, together with the funds deposited into escrow, if any, will, after making the payment requested, be sufficient to pay the balance of the Restoration costs.  Upon receipt by Lender of evidence reasonably satisfactory to it that the Restoration has been completed, the cost thereof has been paid in full, and that there are no Liens for labor or materials supplied in connection therewith, the balance, if any, of such Net Insurance Proceeds shall be paid to Borrower.  
		

		
			Obligations regarding Representations and Warranties.  Borrower will do all things necessary or appropriate such that the representations and warranties of Borrower and the other Credit Parties contained in any of the Loan Documents remain true, complete, and correct.
		

		
			Franchise Agreement.  Borrower will timely comply with and perform all of its obligations under each Franchise Agreement, including all remodeling and re-imaging obligations, and will give Lender prompt written notice of the occurrence of any default by any Credit Party or Franchisor under such Franchise Agreement and of any notice of default given to any Credit Party by Franchisor.  Borrower will send Lender copies of all notices given by a Credit Party to Franchisor concurrently with the giving of such notices to Franchisor.  Borrower will keep each Franchise Agreement in full force and effect and will exercise all available options, such that the term of each Franchise Agreement, as so extended, will not expire prior to the Maturity Date (as defined in the Note).  Borrower will notify Lender immediately if any Site becomes subject to any PIP, and Borrower shall provide such information with respect to such PIP as Lender may require, including the expected expenses, required reserves and compliance requirements.  Borrower will complete (or cause to be completed), in lien free condition, all improvements required pursuant to each PIP by the earlier of (a) the date required thereunder; and (b) October 15, 2020.  
		

		
			Management Agreement.  Borrower will timely comply with and perform all of the property owner’s obligations under the Management Agreement and will give Lender prompt written notice of the occurrence of any default by any Credit Party or Manager under the Management Agreement and of any notice of default given to any Credit Party by Manager.  Borrower will also give Lender prompt written notice of any bankruptcy filing by or against Manager of which Borrower has knowledge.  Borrower will send Lender copies of all notices given by a Credit Party to Manager concurrently with the giving of such notices to Manager.  Borrower will keep the Management Agreement in full force and effect and will exercise all available options, such that the term of the Management Agreement, as so extended, will not expire prior to the Maturity Date (as defined in the Note). 
		

		
			Requirement to Operate.  At all times, Borrower shall (a) occupy each Site and diligently operate its business at each Site as the Permitted Concept; provided, however, that Borrower may cease operations at a particular Site during the course of a Restoration, to the extent that operations cannot reasonably be conducted during such Restoration; and (b) maintain each Site, including all buildings and other improvements associated with the Site, in good condition and repair, ordinary wear and tear excepted and safe and properly lighted.  Borrower will set aside and maintain adequate reserves for repair, replacement and maintenance of each Site.  
		

		
			Compliance with Applicable Law; Permits.  Borrower will comply with all Applicable Law, except for such non-compliance as could not reasonably be expected to have a Material Adverse Effect.  Borrower will obtain and maintain in full force and effect at all times all permits that are required to use and operate each Site as a Permitted Concept,  including any required liquor licenses.
		

		
			Payment of Indebtedness.  Borrower will, and will cause each Credit Party to, pay and discharge, when due and prior to delinquency, all of its Indebtedness, including, within 60 days of incurrence, all trade debt.
		

		
			Books and Records.  Borrower will keep proper books and records in which complete and correct entries are made pursuant to GAAP and Applicable Law of all financial transactions and Borrower’s assets and business.
		

		
			Inspections.  Each Credit Party shall, during normal business hours and upon reasonable advance notice (unless a Default shall have occurred and be continuing, in which case no notice shall be required and Lender shall have access at any and all times):  (a) provide access to each Site to the Lender Parties, and their representatives,  as often as Lender reasonably deems appropriate; and (b) permit the Lender Parties and their representatives to inspect, audit and make copies (or take originals if reasonably necessary) of such Credit Party’s books and records, and to inspect, review, evaluate and make physical inspections and appraisals of the Collateral in any manner and through any 

		 

medium that Lender considers advisable, and, in each such case, each Credit Party agrees to provide Lender, at Borrower’s cost and expense, such clerical and other assistance as Lender may reasonably request.
		

		
			Estoppel Certificates.  From time to time and within 15 days after a request from Lender, Borrower will execute and deliver to Lender a certificate, in the form supplied by Lender, certifying (a) the unpaid principal of and interest on the Note as of the date of the certificate and whether Borrower or any other Credit Party claims any offset or defense against any such amounts; (b) whether, to the best of Borrower’s knowledge, there are then any existing Defaults by Borrower in the performance of its Obligations under any of the Loan Documents, and, if there are any such Defaults, specifying the nature and extent thereof; and (c) as to such other facts and circumstances as Lender may reasonably request. 
		

		
			Financial Reporting.
		

		
			Quarterly Reports.  Within 45 days after the end of each Fiscal Quarter of Borrower (excluding the last Fiscal Quarter in each Fiscal Year), Borrower shall deliver to Lender:
		

		
			Complete Financial Statements for the Fiscal Quarter then ended (other than for  individuals).  Financial Statements are to include standard hotel data of rooms sold and rooms available for the Fiscal Quarter, as well as gross revenue breakdown of room revenue from other revenue for such period, so that occupancy ADR and RevPAR statistics for such Fiscal Quarter can be calculated;
		

		
			The Smith Travel Research Reports for such Fiscal Quarter; and
		

		
			Copies of the most recent Franchisor quality assurance reports available to Borrower.
		

		
			Annual Reports.  Within 90 days after the end of each Fiscal Year of Borrower, Borrower shall deliver to Lender:
		

		
			Complete Financial Statements as outlined in clause (a) above for the Fiscal Year then ended; 
		

		
			Complete REIT Financial Statements for the Fiscal Year then ended; and
		

		
			Budgets and projections, including for capital expenditures, for the operation of each Site for the current Fiscal Year, in form and content reasonably satisfactory to Lender.
		

		
			Other Information.  Within 15 days following Lender’s written request, Borrower will also deliver to Lender such additional Financial Statements and information (financial or otherwise) as Lender may reasonably request from time to time, to verify compliance with the terms and conditions of the Loan Documents, including any financial covenants.
		

		
			Financial Statement Requirements.  All Financial Statements, other than Financial Statements for Credit Parties that are individuals or trusts, shall be prepared in accordance with GAAP on a consistent basis from period to period.  The Financial Statements need not be audited, but Borrower shall deliver to Lender copies of any audited Financial Statements which may be prepared, as soon as they are available.  “Financial Statements” means, for each of (i) Landlord Borrower, (ii) Tenant Borrower, (iii) Landlord Borrower and Tenant Borrower on a consolidated basis, and (iv) each other Credit Party that is an entity, a consolidated and consolidating balance sheet, including retained earnings, as of the end of the relevant fiscal period, together with related consolidating profit and loss statements, cash flows (if available), shareholders’ equity, and all related schedules for the fiscal period then ended; provided, however, quarterly Financial Statements will not require statements of retained earnings or cash flows unless requested by Lender.  In those cases where a Credit Party is an individual or a trust, Financial Statements shall also include statements of assets and liabilities, statements of trust property (if the Credit Party is a trust), tax returns, and such other information as Lender may reasonably request.  “REIT Financial Statements” means for Lodging Fund REIT III, Inc. a consolidated and consolidating balance sheet, including retained earnings, as of the end of the relevant fiscal period, together with related consolidating profit and loss statements, cash flows (if available), shareholders’ equity, and all 

		 

related schedules for the fiscal period then ended, such consolidated statements to be audited by an independent certified public accountant of nationally recognized standing reasonably acceptable to Lender.  “Fiscal Quarter” and “Fiscal Year” means, respectively, the quarterly accounting periods and the annual accounting periods of Borrower consistent with the Borrower’s accounting and reporting practices in effect on the Closing Date.
		

		
			Tax Returns.  Borrower shall deliver to Lender true and complete copies of all Tax Returns filed by Borrower, or if Borrower is a disregarded entity for tax purposes, by such Borrower’s sole member, during each Fiscal Year on or before the earlier of (i) 30 days after filing such Tax Returns with the appropriate Government Authorities; or (ii) November 15 of the succeeding Fiscal Year. Within 15 days following Lender’s written request, Borrower shall deliver to Lender true and complete copies of any requested Tax Returns filed by any other Credit Party.
		

		
			Compliance Certificates.  Each delivery of Financial Statements shall be accompanied by a compliance certificate from each Credit Party, in the form of Exhibit 4.15(f) (a “Compliance Certificate”), duly executed by the treasurer, chief financial officer, or other appropriate officer of such Credit Party.
		

		
			Financial Covenants.  Borrower shall comply with each of the following financial covenants:
		

			
	
			
				 (a)
			Debt Service Coverage Ratio.  Borrower must maintain a Debt Service Coverage Ratio of at least 1.30:1, measured as of (i) March 31, 2021, and (ii) the last day of each Fiscal Quarter of Borrower’s next succeeding Fiscal Quarters throughout the Loan term.

			
	
			
				 (a)
			Debt Yield.  Borrower must maintain a Debt Yield of at least 10.0%, measured as of (i) March 31, 2021, and (ii) the last day of each Fiscal Quarter of Borrower’s next succeeding Fiscal Quarters throughout the Loan term.

		
			Notice of Litigation and Other Defaults.  Borrower will give prompt written notice to Lender of the following of which Borrower has knowledge:  (a) any lawsuit or proceeding instituted by or against it in any court or before any arbitrator, commission or regulatory body or any such proceeding which is threatened against it; (b) any other action, event or condition of any nature which could reasonably be expected to have a Material Adverse Effect, or which, with notice or lapse of time or both, would constitute an event of default or a default under any other instrument or agreement to which it is a party or by or to which it or any of its assets may be bound or subject; and (c) the occurrence of any Default and the action Borrower proposes to take with respect thereto.
		

		
			Single Purpose Entity Requirements.  Borrower shall comply with the following requirements and cause its organizational documents to include the following provisions, as required by Lender:  (a) Borrower shall not engage in any business or activity other than the acquisition, ownership, operation, maintenance, development and improvement of the Site and activities incidental thereto; (b) Borrower shall not acquire or own any material asset other than the Site and such incidental equipment and other personal property as may be necessary for the operation of the Site; (c) Borrower shall not commingle its assets with the assets of any of its Affiliates or of any other Person or transfer any assets, including pursuant to any statutory division, to any such Person other than transfers and distributions on account of equity interests in the Borrower permitted pursuant to the Loan Documents; (d) Borrower shall not allow any Person to pay its debts and liabilities (except Guarantor) or fail to pay its debts and liabilities solely from its own assets; (e) Borrower shall not fail to maintain its records, books of account and bank accounts separate and apart from those of its Affiliates and any other Person; (f) Borrower shall not fail to correct any known misunderstandings regarding the separate identity of Borrower; (g) Borrower shall not hold itself out to be responsible or pledge its assets or credit worthiness for the debts of another Person or allow any Person to hold itself out to be responsible or pledge its assets or credit worthiness for the debts of the Borrower (except for Guarantor); (h) Borrower shall not make any loans or advances to any Person, including any Affiliate of Borrower; (i) Borrower shall not fail to file its own tax returns or to use separate contracts, purchase orders, stationery, invoices and checks; (j) Borrower shall not fail either to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name in order not to mislead others as to the Person with which such other party is transacting business, or to suggest that Borrower is responsible for the debts of any third party (including any Affiliate of Borrower); (k) Borrower shall not fail to allocate fairly and reasonably among Borrower and any third party (including any Guarantor) any overhead for common employees, shared office space or other overhead and 

		 

administrative expenses; (l) Borrower shall not allow any Person to pay the salaries of Borrower’s employees or fail to maintain a sufficient number of employees for Borrower’s contemplated business operations; (m) Borrower shall not 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; (n) Borrower shall not share any common logo with or hold itself out as or be considered as a department or division of any Affiliate of Borrower or any other Person or allow any Person to identify Borrower as a department or division of that Person; (o) Borrower shall not 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; (p) Borrower shall not incur, create or assume any indebtedness or liabilities other than the Loan and any swap, derivative, foreign exchange or hedge transaction or arrangement or similar transaction or arrangement entered into by Borrower in connection with the Loan and unsecured trade payables incurred in the ordinary course of its business that are related to the ownership and operation of the Site and the Collateral not to exceed two percent (2%) of the outstanding balance of the Loan, and which is not evidenced by a note and which must be paid within sixty (60) days and which are otherwise expressly permitted under the Loan Documents; (q) no indebtedness, other than the Secured Obligations, may be secured by the Site; (r) Borrower shall not, to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, merger, sale, statutory division or other transfer of any of its assets outside the ordinary course of Borrower’s business; (s) Borrower shall not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other), including pursuant to any statutory division, or own any equity interest in any other entity; (t) Borrower shall not, without the unanimous written approval of all members of Borrower, (i) file any insolvency, or reorganization case or proceeding, (ii) institute proceedings to have Borrower be adjudicated bankrupt or insolvent, (iii) institute proceedings under any applicable insolvency law, to seek any relief under any law relating to relief from debts or the protection of debtors, (iv) consent to the filing or institution of bankruptcy or insolvency proceedings against Borrower, (v) file a petition seeking, or consent to, reorganization or relief with respect to Borrower under any applicable federal or state law relating to bankruptcy or insolvency, (vi) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for Borrower or a substantial part of its property, (vii) make any assignment for the benefit of creditors of Borrower, (viii) admit in writing Borrower’s inability to pay its debts generally as they become due, or (ix) take action in furtherance of any of the foregoing; (t) Borrower shall comply with all organizational formalities necessary to maintain its separate existence; (u) Borrower shall not enter into any transaction with any Affiliate except on an arm’s-length basis on terms which are intrinsically fair and no less favorable than would be available for unaffiliated third parties, and pursuant to written, enforceable agreements; or (v) Borrower shall cause the managers, officers, employees, agents and other representatives of Borrower to act at all times with respect to Borrower consistently and in furtherance of the foregoing and in the best interests of Borrower.
		

		
			Hotel Lease Obligations.  Borrower will timely comply with and perform all obligations under the Hotel Lease, and will give Lender prompt written notice of the occurrence of any default under such Hotel Lease.  Borrower will send Lender copies of all notices given under the Hotel Lease.  Borrower will keep the Hotel Lease in full force and effect and will exercise all available options under the Hotel Lease, such that the term of the Hotel Lease, as extended, will not expire prior to the Maturity Date (as defined in the Note) for the Loan. 
		

		
			Beneficial Ownership Regulation. Borrower shall (a) notify Lender of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified therein (or, if applicable, the Borrower ceasing to fall within an express exclusion to the definition of “legal entity customer” under the Beneficial Ownership Regulation) and (b) promptly upon the reasonable request of Lender, provide Lender, as the case may be, with any information or documentation requested by it for purposes of complying with the Beneficial Ownership Regulation.
		

		
			NEGATIVE COVENANTS
		

		
			Until such time as all Obligations are fully paid and performed:
		

		
			No Name or Other Organizational Changes.  No entity Credit Party shall (a) amend, restate, supplement, or terminate its organizational documents in a manner that could reasonably be expected to have a Material Adverse Effect; or (b) change any of the following from what it is as of the Closing:  (i) its name; (ii) its place of business or, if there is more than one principal place of business, its chief executive office; (iii) its mailing address; (iv) the location of its books and records; (v) the type of legal entity that it is; (vi) the organization identification number issued by its state of incorporation or organization, if it has one; however if such Credit Party does not have such a number and 

		 

later obtains one, such Credit Party will immediately notify Lender of such number; or (vii) its state of incorporation or organization, without, in each instance, giving Lender at least 45 days’ prior written notice thereof and taking all actions deemed necessary or appropriate by Lender to continuously protect and perfect Lender’s Liens in the Collateral.
		

		
			Accounting Changes.  No Credit Party shall change its accounting treatment, or reporting practices, except as required by GAAP or Applicable Law and then only after giving effect to Section 8.23 or change its Fiscal Year from that in effect on the date hereof.
		

		
			Maintenance of Existence; Consolidations and Mergers.  No entity Credit Party shall dissolve, liquidate, or otherwise cease to exist or merge, consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person; provided, however, that the foregoing shall not operate to prevent a transaction that results in the Obligations being paid and performed in full.
		

		
			Business and Operational Changes.  No Credit Party shall (a) make any changes in any of such Credit Party’s business objectives, purposes, or operations that could reasonably be expected to adversely affect repayment of the Obligations or that could reasonably be expected to have a Material Adverse Effect; (b) carry on any business, operations or activities substantially different from those carried on by such Credit Party at the date hereof, including business, operations and activities reasonably related thereto; or (c) by itself or through any sale, lease or other transfer, convert any Site or other Collateral to an alternative use.
		

		
			No Liens.  No Credit Party shall incur, maintain or otherwise suffer to exist any Lien upon or with respect to any Collateral, except for Permitted Exceptions.
		

		
			Franchise Agreement Changes.  No Credit Party shall:  (a) agree to any Franchise Agreement amendment that could reasonably be expected to materially and adversely affect (i) the rights and privileges of the franchisee thereunder; or (ii) the rights, privileges, and remedies of Lender under the Loan Documents with respect to the Collateral or the Franchise Agreement; or (b) assign, transfer, mortgage, pledge or otherwise encumber any Franchise Agreement or any interest therein to any Person other than Lender.  Borrower will send Lender a copy of all Franchise Agreement amendments promptly following execution thereof by all parties thereto.
		

		
			Management Agreement Changes.  No Credit Party shall (a) agree to any Management Agreement amendment that (i) could reasonably be expected to materially and adversely affect the rights and privileges of the owner thereunder or the rights, privileges, and remedies of Lender under the Loan Documents with respect to the Collateral or the Management Agreement; or (ii) that would be inconsistent with the operational restrictions set forth in Section 5.4; (b) assign, transfer, mortgage, pledge or otherwise encumber the Management Agreement or any interest therein to any Person other than Lender; (c) make any change in Manager; or (d) become obligated with respect to any other Contractual Obligation for the maintenance or operation of any Site or for providing services in connection with such Site, other than the Management Agreement and other agreements entered into in the ordinary course of business and on normal and customary terms.  Borrower will send Lender a copy of all Management Agreement amendments promptly following execution thereof by all parties thereto.
		

		
			Prohibited Transactions.  No Credit Party shall do or permit to be done, voluntarily or involuntarily, or by operation of law or otherwise, any of the following (each, a “Prohibited Transaction”) without the prior written consent of Lender, in its sole discretion:  (a) sell, lease, mortgage, pledge, license, assign, transfer, or otherwise encumber or dispose of any Collateral to any Person, except for (i) sales of inventory in the ordinary course of business; and (ii) so long as no Default has occurred and is continuing, sales or other dispositions of obsolete equipment consistent with past practices, so long as such items are replaced by items of equal or greater value and utility; (b) sell, mortgage, pledge, assign, transfer, or otherwise encumber or dispose of its interest in this Agreement or the other Loan Documents; (c) engage in or allow a change of Control of any Credit Party to occur, including a change resulting from (i) direct or indirect transfers of beneficial ownership of, or the right and power to vote, stock or partnership, membership or other ownership interests, whether in one or a series of transactions; or (ii) creation or issuance of new or additional equity interests; (d) pledge, assign, or otherwise encumber or dispose of any interest in any Credit Party as collateral for any obligation of a Credit Party or any other Person; or (e) enter into any agreement to do, or which would or could result in, any of the foregoing.
		

		
			

		 

		

		
			Affiliate Transactions; Use of Funds.  No Credit Party shall enter into a transaction between such Credit Party and another Credit Party or any Affiliate of any Credit Party unless the transaction is on terms substantially as advantageous as those which could be obtained in a comparable arm’s length transaction with an independent third party.  Borrower shall not use any proceeds of the Loan or the Collateral for personal, family, or household purposes.  No Credit Party shall use any portion of the Loan proceeds, directly or indirectly, to purchase or carry “margin stock” as defined in Regulation T, U or X of the Federal Reserve Board or repay or otherwise refinance Indebtedness of any Credit Party or others incurred to purchase or carry such margin stock, or otherwise in any manner which is in contravention of any Applicable Law or in violation of this Agreement.
		

		
			Equity Distributions.  Borrower shall not make any dividend or distribution for or on account of equity interests in Borrower if, either before or after giving effect to such dividend or distribution, a Default or Event of Default would occur or has occurred and is continuing.
		

		
			ERISA.  Borrower shall not establish, maintain or incur any Liabilities with respect to, any ERISA employee benefit plan or multiemployer plan.
		

		
			No Further Indebtedness.  Borrower shall not create, incur, assume, permit to exist, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, other than (a) the Obligations and trade indebtedness incurred in the ordinary course of business provided, that such trade indebtedness shall be unsecured trade payables incurred in the ordinary course of its business that are related to the ownership and operation of the Site and the Collateral not to exceed two percent (2%) of the outstanding balance of the Loan, and which is not evidenced by a note and which must be paid within sixty (60) days and which are otherwise expressly permitted under the Loan Documents; (b) obligations of Borrower existing or arising under any Related Swap Contract in form and substance satisfactory to Lender entered into by Borrower in connection with the Loan; and (c) obligations of Borrower existing or arising under any other Swap Contract entered into by Borrower in connection with the Loan provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party.
		

		
			Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. No Credit Party or their Affiliates shall: (a) use any of the Loan proceeds for the purpose of: (i) providing financing to or otherwise making funds directly or indirectly available to any Sanctioned Person; or (ii) providing financing to or otherwise funding any transaction which would be prohibited by Sanctions or would otherwise cause Lender or Borrower, or any entity affiliated with Lender or Borrower, to be in breach of any Sanction; (b) fund any repayment of the Loan with proceeds derived from any transaction that would be prohibited by Sanctions or would otherwise cause Lender or Borrower, or any entity affiliated with Lender or Borrower, to be in breach of any Sanction; or (c) provide financing to or otherwise fund any transaction which would be prohibited by Anti-Corruption Laws or would otherwise cause Lender or Borrower, or any entity affiliated with Lender or Borrower, to be in breach of any Anti-Corruption Laws.  Each Credit Party shall, at all times, comply, and cause its Affiliates to comply, with all AML Requirements. Borrower shall notify Lender in writing not more than one (1) Business Day after becoming aware of any breach of this Section.
		

		
			Hotel Lease Changes.  Borrower shall not, without the prior written consent of Lender, in its reasonable discretion:  (a) agree to any amendment to the Hotel Lease that (i) could reasonably be expected to materially and adversely affect the rights and privileges of Borrower thereunder or the rights, privileges, and remedies of Lender under the Loan Documents with respect to the Collateral or the Hotel Lease; or (ii) that would be inconsistent with the operational restrictions set forth in Section 5.4; (b) enter into any sublease with respect to the Site; (c) assign, transfer, mortgage, pledge or otherwise encumber the Hotel Lease or any interest therein to any Person other than Lender; or (d) terminate the Hotel Lease.  Borrower will send Lender a copy of all Hotel Lease amendments promptly following execution thereof by all parties thereto. 
		

		
			DEFAULTs AND REMEDIES
		

		
			Defaults.  The following constitute events of default (each, an “Event of Default”):
		

		
			

		 

		

		
			Non-Payment.  The Borrower or any other Credit Party fails to pay within five (5) days after the same becomes due (i) any amount of principal of any Loan, (ii) any interest on any Loan or any fee due hereunder, or (iii) any other amount payable hereunder or under any other Loan Document.
		

		
			Misrepresentations.  If any representation or warranty of any Credit Party contained in any of the Loan Documents was untrue or incorrect in any material respect when made or deemed made, or if a Credit Party renders any statement or account which is untrue, incorrect, or incomplete in any material respect.
		

		
			Certain Covenant Breaches.  If Borrower (i) shall fail to maintain insurance in accordance with the requirements of this Agreement or any of the other Loan Documents; (ii) shall fail to perform or observe any term, covenant or agreement contained in any of Sections 4.1, 4.10, 4.13, 4.15, 4.16, 4.17, 4.18 or 4.20; or (iii) breaches any of the covenants contained in Article 5.  An Event of Default under clause (ii) or clause (iii) shall conclusively be deemed to be a continuing Event of Default until Lender, in its sole discretion, waives such Event of Default in writing.
		

		
			Non-Monetary Events of Default.  If any Credit Party fails to observe or perform any of the covenants, conditions, or obligations of this Agreement or any of the other Loan Documents, other than those referred to in the other subsections of this Section 6.1, and such failure continues without being fully cured for more than 30 days following written notice to such Credit Party of such failure.  However, if such failure is not willful or intentional, does not place any rights or interest in any Collateral in immediate jeopardy, and is within the reasonable power of such Credit Party to promptly cure after receipt of notice thereof, all as determined by Lender in its reasonable discretion, then such failure shall not constitute an Event of Default (unless otherwise expressly provided) if during such 30-day period, such Credit Party begins to cure the failure and then diligently pursues the cure to completion, except that in no event will the cure period under this subsection exceed 90 days from the date such Credit Party receives the notice from Lender.  If such Credit Party fails to cure such failure within the time periods provided in this subsection, an Event of Default shall be deemed to have occurred without further notice or demand of any kind being required.
		

		
			Dissolution. Any Credit Party that is an entity is dissolved or its existence is terminated or there is commenced against any such Credit Party any action or proceeding which seeks as one of its remedies the dissolution of such Credit Party or termination of its existence.
		

		
			Bankruptcy, Insolvency, and Certain Other Proceedings.  Occurrence of any of the following:
		

		
			Insolvency; Business Cessation.  Any Credit Party (A) ceases to be Solvent; (B) generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (C) voluntarily ceases to conduct its business in the ordinary course; or (D) takes any action to effectuate or authorize any of the foregoing;
		

		
			Insolvency Proceedings.  Any Credit Party shall institute or have instituted against it any proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, receivership, or relief of debtors, (A) seeking to adjudicate it bankrupt or insolvent; (B) seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, composition of it or its debts or any similar order; or (C) seeking entry of an order for relief or appointment of a custodian, receiver, trustee, conservator, liquidating agent, liquidator, or other official with similar powers, for it or for any substantial part of its property; and in the case of any such proceeding or other action instituted against (but not by or with the consent of) such Credit Party, either (i) such proceeding or action shall remain undismissed or unstayed for a period of 60 days or more; or (ii) any action sought in such proceedings shall occur;
		

		
			Failure of Enforceability or Lien.  If (A) any provision of any Loan Document shall, at any time after the delivery of such Loan Document, fail to be valid and binding on, or enforceable against, a Credit Party; (B) any Loan Document purporting to grant a Lien to secure any Obligation shall, at any time after the delivery thereof, fail to create a valid and enforceable Lien on any Collateral purported to be covered thereby; (C) any such Lien shall fail or cease to be a perfected Lien with the priority required 

		 

in the relevant Loan Document; or (D) a Credit Party shall state in writing that any of the events described in the preceding clauses of this subsection has occurred; or
		

		
			Actions in Furtherance.  Any Credit Party shall take any action to authorize or effectuate, or otherwise further, any action or circumstance described in the preceding clauses of this Section 6.1(f).
		

		
			Death or Incompetency of Guarantor.  A Guarantor dies or becomes incompetent; provided, however, that in the event of a death or incompetency, an Event of Default shall not occur if either (i) such Guarantor's estate or conservator, as applicable, assumes unconditionally the obligations arising under the Guaranty in a manner satisfactory to Lender, and Lender determines in its reasonable discretion that such deceased Guarantor's estate or Guarantor, through Guarantor's conservator, as applicable, maintains a tangible net worth and liquidity that is not less than the tangible net worth and liquidity of the applicable Guarantor at such Guarantor's death or incompetency, or (ii) a substitute Guarantor acceptable to Lender, in Lender's sole and absolute discretion, is provided within 30 days of such death or incompetence.
		

		
			Litigation.  A final judgment or judgments for the payment of money shall be rendered against any Credit Party, unless (i) the same shall be (A) fully covered by insurance and the issuer(s) of the applicable policies shall have acknowledged full coverage in writing within 30 days of judgment or (B) vacated, stayed, bonded, paid or discharged within a period of 45 days from the date of such judgment; or (ii) payment of such money judgment would not have a Material Adverse Effect.
		

		
			Other Defaults.  If (i) a default occurs in the payment or performance when due (after giving effect to any applicable notice and grace periods), whether by acceleration or otherwise, of any Indebtedness or other material Contractual Obligation of any Credit Party; (ii) the Franchise Agreement, the Management Agreement or the Hotel Lease terminates or expires prior to the performance and payment in full of the Loan; or (iii) any other event or circumstance designated elsewhere in this Agreement or the other Loan Documents as an Event of Default shall occur.
		

		
			Breach of Sanctions Provisions.  The failure of any representation or warranty of Borrower, or Borrower’s or any Credit Party’s failure to perform or observe any covenant, contained in either of those Sections of this Agreement entitled “Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws” or “Sanctions”.
		

		
			Crimes and Forfeitures.  Any officer, director, manager, or owner of a Credit Party shall be charged with, indicted for, or convicted of a crime (other than misdemeanor traffic violations), a punishment for which could include the forfeiture of any assets of such Credit Party or of any equity interest in such Credit Party, the loss of eligibility for any permit, imprisonment, or a material fine or other material monetary penalty.
		

		
			Cross-Default.  There occurs under any Related Swap Contract any default or event of default under such Related Swap Contract as to which the Borrower or any Credit Party is the defaulting party.
		

		
			Remedies.  Upon the occurrence and during the continuance of an Event of Default, Lender may declare all or any part of the Obligations to be due and payable without presentment, demand, protest or further notice of any kind.  Upon any Event of Default described in Section 6.1(f), all of the unpaid principal of the Loan, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document shall be immediately due and payable.  Borrower waives any notice of intent to accelerate payment of such principal, interest or amounts, and notice of such acceleration.  In connection with any acceleration of all or any part of the Obligations under this Section 6.2, Borrower shall pay Breakage Costs (as defined in the Note) as liquidated damages for loss of a bargain and not as a penalty as calculated as set forth in the Note.  In addition, Lender may exercise, at its option, concurrently, successively or in any combination, all rights and remedies now or in the future available under any of the Loan Documents or at law or in equity, and none of such rights or remedies are exclusive.  Neither the acceptance of this Agreement nor its enforcement shall prejudice or in any manner affect Lender’s rights to realize upon or enforce its rights with respect to any security now or in the future held by Lender, and Lender is entitled to enforce this Agreement and its rights and remedies with respect to any such security in such order and manner as it may in its sole discretion determine.
		

		
			

		 

		

		
			No Waiver or Cure.  Neither the application of a default rate of interest in the circumstances described in the Note or any of the other Loan Documents nor the imposition of any late fee shall be interpreted to extend any cure period set forth in the Note or any other Loan Document; to cure any Default; or to otherwise limit or waive any of Lender’s rights or remedies under this Agreement, the Note, or any other Loan Document.
		

		
			Full Payment Required.  The acceptance by Lender of any sum after the same is due shall not constitute a waiver of the right either to require prompt payment, when due, of all other sums hereby secured or to declare a subsequent Event of Default.  The acceptance by Lender of any sum in an amount less than the sum then due shall be deemed to be an acceptance on account only and upon condition that it shall not constitute a waiver of Borrower’s obligation to pay the entire sum then due, and Borrower’s failure to pay such entire sum then due shall, at Lender’s election, constitute an immediate Event of Default without the necessity for any further notice, notwithstanding such acceptance of such amount on account.
		

		
			Right to Cure; Interest; Late Fees.  Lender may (but has no obligation to) pay, perform, and discharge any and all costs, expenses and liabilities that are the responsibility of any Credit Party under any Loan Document, if such Credit Party fails to timely pay, perform or discharge the same after 10 days prior written notice to such Credit Party of Lender’s intent to take such action.  All amounts reasonably expended by Lender in so doing shall (a) be part of the Obligations, secured by Lender’s Liens; (b) bear interest at the default interest rate applicable to the Loan from the date Lender made payment until paid; and (c) be immediately due and payable to Lender on demand.  All other amounts at any time owed by any Credit Party to Lender, other than amounts due and payable pursuant to the Note, shall bear interest at the default interest rate applicable to the Loan from the date due until paid.  Late fees shall be due and payable as provided in the Note.
		

		
			LENDER TRANSFERS
		

		
			Lender Transfers.  Lender, from time to time and without the consent of any Credit Party, may assign, sell, or transfer all or any portion of its right, title, and interest, including servicing rights, in the Loan or the Loan Documents, in each case whether as part of a securitization or by participation, assignment, sale or other transfer (each, a “Lender Transfer,” with the interests that are the subject of the Lender Transfer being referred to as the “Transferred Interests”).  From and after the date of a Lender Transfer, Lender shall automatically be released from liability for the performance of any obligation arising out of or relating to the Transferred Interests.  Each Credit Party shall execute such modifications to the Loan Documents or other documents as shall, in Lender’s reasonable judgment, be necessary or desirable in connection with any Lender Transfer.  Upon a Lender Transfer (including transfer of a participation interest) of less than all of the Loan (a “Partial Assignment”), each Credit Party agrees that:  (a) Lender may become a fiscal agent, administrative agent, or servicer of the Loan or may delegate servicing or agent responsibilities to another Person; (b) the granting of consents or approvals pursuant to the Loan Documents may require the compliance with participation agreements, servicing agreements, co-lending agreements or other agreements governing the Partial Assignment, including the joinder or agreement of other Persons holding an interest pursuant to the Partial Assignment or providing servicing with respect to the Loan; and (c) Lender will not be in breach or violation of this Agreement or the other Loan Documents or be deemed to have acted unreasonably after a Partial Assignment if Lender withholds a consent or approval by reason of Lender’s inability to obtain the required joinder or agreement of such other Persons.
		

		
			GENERAL PROVISIONS
		

		
			Defined Terms; Applicability of General Provisions.  Capitalized terms used herein and in the other Loan Documents and not otherwise defined herein or therein have the meanings set forth on the “Schedule of Defined Terms” attached as Exhibit 8.1.  The Schedule of Defined Terms also includes various rules of construction and interpretation that the parties agree are applicable to each Loan Document.  Unless otherwise specifically provided, all terms defined herein, on the Schedule of Defined Terms, or in any other Loan Document shall have the same defined meanings when used in any certificate or other document made or delivered pursuant hereto or thereto.  Terms (including uncapitalized terms) not otherwise defined herein and that are defined in the UCC shall have the meanings therein provided.  The provisions of this Article and the Schedule of Defined Terms apply equally to each Loan Document and each Credit Party, the same as if such provisions were set forth in full in each other Loan Document.
		

		
			Modifications, Approvals, Waivers and Consents.  None of the terms and provisions of this Agreement or the other Loan Documents may be amended, extended, renewed, terminated, or supplemented, nor shall Lender have 

		 

waived any of its rights under any of the Loan Documents, by any course of dealing or other action or inaction of the parties, unless and until the Credit Parties obtain Lender’s prior written consent with respect to any such matter, which consent may be withheld or conditioned in Lender’s sole discretion, unless otherwise expressly provided in the Loan Documents.  Lender’s approval or waiver of, or consent to, any matter shall not be deemed an approval or waiver of, or consent to, the same or any other matter on any future occasion.  All approvals, waivers, and consents granted by Lender for any matter shall be narrowly construed to cover only the parties and facts identified in such approval, waiver or consent.  No failure to exercise and no delay in exercising, on Lender’s part, any right, remedy, power or privilege hereunder or pursuant to any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or pursuant to any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
		

		
			Binding Effect.  Each of the Loan Documents shall become effective when executed by the required Credit Parties and Lender and shall be binding upon and inure to the benefit of the Credit Parties and Lender, and, in each case, their respective heirs, executors, representatives, successors and permitted assigns.
		

		
			Costs, Expenses and Fees.  Any action taken by a Credit Party with respect to the Loan or any Loan Document, even if required thereunder or at Lender’s request, shall be at Borrower’s sole cost and expense.  Borrower agrees to pay Lender, or reimburse Lender within 10 days of written demand therefor, for all reasonable out-of-pocket costs and expenses, including reasonable attorneys’ fees and expenses, incurred by or on behalf of the Lender Parties in connection with:  (a) the interpretation or administration of the Loan and Loan Documents, including Lender’s evaluation of, and determinations with respect to, any conditions precedent that must, at any time, be satisfied by Borrower; (b) the preparation, negotiation, execution, and consummation of any modification, termination, or waiver of any Loan Document, including any commitment or proposal letter related thereto; (c) any request for Lender consent to or approval of any matter; (d) internal audit reviews, field inspections, Collateral examinations, and Collateral releases and substitutions; (e) any refinancing or restructuring of the Loan in the nature of a “work-out”; (f) the enforcement or preservation of any right or remedy under any Loan Document or with respect to any Obligation or the Collateral, or any other related right or remedy, whether at law or in equity; (g) the commencement, defense, conduct of, intervention in, or the taking of any other action with respect to, any proceeding (including any bankruptcy or insolvency proceeding) related to any Credit Party, any Loan Document, any Collateral, or any Obligation (including preparation for and/or response to any subpoena or request for document production relating thereto); and (h) any other matter stated herein or in any other Loan Documents to be at the expense of Borrower or any other Credit Party.  Lender may charge, and Borrower agrees to pay, a reasonable processing and review fee in connection with the foregoing matters.  Lender may also charge Borrower such additional fees as Lender may require, as consideration to Lender in connection with, and as a condition precedent to, any such matter.  From time to time, Lender may impose fees or charges, which Borrower agrees to pay, for returned checks, multiple payoff quotes, additional document copies, processing non-ACH payments, release fees, and such other services as it may provide to any Credit Party during the term of the Loan.
		

		
			Broker Involvement.  Borrower represents and warrants to and covenants with Lender that no Credit Party has dealt with any broker, agent, finder or other intermediary, and Lender represents and warrants to and covenants with Borrower that no Lender Party has dealt with any broker, agent, finder or other intermediary, in each case in connection with the Loan and the transactions contemplated by this Agreement and the other Loan Documents.
		

		
			Indemnities.  Borrower agrees to indemnify, hold harmless and defend each of the Lender Parties (each, an “Indemnitee”) for, from and against all Liabilities that may be imposed on, incurred by or asserted against an Indemnitee in any matter relating to or arising out of:  (a) any Loan Document or Obligation (or repayment thereof) or the use of Loan proceeds; (b) the Lending Proposal, or any other commitment letter, proposal, or term sheet with any Person; (c) Borrower’s operations at or relating to the Sites; (d) the Collateral, including its design, construction, operation, alteration, maintenance, or use by Borrower or any other Person; (e) any permitted disclosure of Credit Party Information; (f) any misrepresentation or inaccuracy in any representation or warranty in any Loan Document; (g) any breach or failure by any Credit Party to pay or perform the Obligations; or (h) any other act, event or transaction related, contemplated in or attendant to any of the foregoing, including any actual or prospective investigation, litigation or other proceeding relating to any of the foregoing, whether or not such Indemnitee initiated such investigation, litigation or other proceeding or is a party thereto and without regard to legal theory, including pursuant to Applicable Law, common law, equity, contract, tort, or otherwise (collectively, the “Indemnified Matters”).  Notwithstanding the foregoing, Borrower shall not have any liability hereunder to any Indemnitee with respect to any 

		 

Indemnified Matter, to the extent such liability has resulted primarily from the gross negligence or willful misconduct of such Indemnitee, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.  Furthermore, Borrower and each other Credit Party waive and agree not to assert against any Indemnitee, and shall cause each other Credit Party to waive and not assert against any Indemnitee, any right of contribution with respect to any Liabilities that may be imposed on, incurred by or asserted against any Lender Party.
		

		
			Survival.  Any indemnification or other protection provided to a Lender Party pursuant to any Loan Document, all representations and warranties made in any Loan Document, the provisions of this Article 8, and all other provisions of the Loan Documents that are stated to survive, shall survive repayment in full and performance of the Obligations and inure to the benefit of any Person that at any time held a right thereunder and, thereafter, its successors and permitted assigns.
		

		
			Limitation of Liability. In no event shall Lender, any Credit Party, or any Affiliate of Lender or any Credit Party be liable to any Person on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings).  Lender and each Credit Party hereby waive, release and agree (and shall cause each of its respective Affiliates to waive, release and agree) not to sue upon any claim for special, indirect, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided, however, that nothing herein shall be deemed a waiver of Lender’s rights to sue upon or otherwise recover on all amounts due Lender under the Loan Documents, including with respect to the Obligations and the Collateral.
		

		
			Relationship of the Parties.  The relationship between Lender, on the one hand, and the Credit Parties, on the other hand, is solely that of lender and creditor.  Lender has no fiduciary relationship or duty to any Credit Party arising out of or in connection with, and there is no agency, tenancy or joint venture relationship between Lender and any Credit Party by virtue of, any Loan Document or any transaction contemplated therein.  No Loan Document provision is intended, nor shall be deemed or construed, to make Lender in any way responsible for the debts, obligations or losses of any Credit Party.
		

		
			Notices.  All notices, demands, requests, and other communications (collectively, “Notices”) required or authorized to be made by the Loan Documents shall be in writing and addressed (a) if to Borrower, to the notice address for the Borrower Representative as on the signature page hereto to such other address as the Borrower Representative may provide to Lender in a Notice given after the date hereof; (b) if to any other Credit Party, to the notice address for such Credit Party specified in the Loan Documents executed by such Credit Party or to such other address as such Credit Party may provide to Lender in a Notice given after the date hereof; and (c) if to Lender, at Lender’s notice address on the signature page hereto or to such other address as Lender may provide to the Credit Parties in a Notice given after the date hereof.  Notices may be given by hand delivery; by overnight delivery service, freight prepaid; or by U.S. mail, postage paid, and shall be effective and deemed to have been received (x) upon personal delivery to a responsible individual at the appropriate notice address, if Notice is given by hand delivery; (y) one Business Day after delivery to an overnight delivery service, if Notice is given by overnight delivery service; and (z) two Business Days following deposit in the U.S. mail, if Notice is given by U.S. mail.
		

		
			Governing Law.  The laws of the State of NEW YORK (without giving effect to its conflicts of laws principles) shall govern all matters arising out of, in connection with or relating to this Agreement and the other Loan Documents, including its validity, interpretation, construction, performance and enforcement.
		

		
			Jurisdiction and Service of Process.  Any legal action or proceeding with respect to any Loan Document shall be brought exclusively in the courts of the State of New York having proper venue, and Borrower accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts; provided, however, that nothing in this Agreement shall limit or restrict Lender’s right to commence any proceeding in the federal or state courts located in the state in which a particular Site is located to the extent Lender deems such proceeding necessary or advisable to exercise remedies available under any Loan Document.  Lender and Borrower hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that either of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.  Borrower hereby (a) irrevocably waives personal service of any and all legal process, summons, 

		 

notices and other documents of any kind; (b) consents to such service in any suit, action or proceeding brought in the United States by any means permitted by Applicable Law, including by the mailing thereof to Borrower’s address specified on the signature page hereto; and (c) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.
		

		
			Waiver of Jury Trial.  LENDER AND EACH CREDIT PARTY, TO THE MAXIMUM EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY.  THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.
		

		
			Arbitration.
		

		
			Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.  In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.
		

		
			Governing Rules.  Any arbitration proceeding will (i) proceed in a location in the State selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.
		

		
			No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.
		

		
			

		 

		

		
			Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State or a neutral retired judge of the state or federal judiciary of the State, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of the State and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the corresponding rules of civil practice and procedure applicable in the State or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.
		

		
			Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limted to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.
		

		
			Class Proceedings and Consolidations.  No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity. 
		

		
			Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of the arbitration proceeding.
		

		
			Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control.  This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.
		

		
			Small Claims Court.  Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction.  Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.
		

		
			Severability.  Any provision of any Loan Document being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of any Loan Document or any part of such provision in any other jurisdiction.
		

		
			

		 

		

		
			Document Execution.  This Agreement and the other Loan Documents may be executed in any number of counterparts and by different parties in separate counterparts, each of which, when so executed, shall be deemed an original and all of which, taken together, shall constitute one integrated agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.  Except as otherwise expressly provided in any Loan Document, the E-Transmission of an executed signature page to a Loan Document shall be as effective as delivery of a manually executed counterpart thereof.  The parties may, but are not required to, transmit or otherwise make or communicate any Loan Document as an E-Transmission, except that the Credit Parties shall deliver, as a further condition to Closing, live pen and ink signatures for those Loan Documents to be delivered on or before Closing, that Lender, in its sole discretion, designates as requiring live signatures.  From time to time after Closing, each Credit Party agrees to deliver to Lender, upon Lender’s request, a live pen and ink signature page for any Loan Document.  Where this Agreement or any other Loan Document, including any executed signature pages, is communicated by E-Transmission:  (a) this Agreement, such other Loan Document and such signature pages shall conclusively be deemed sufficient to satisfy any requirement for a “writing,” “authentication,” “signature,” or “original” pursuant to any Loan Document or Applicable Law and shall be admissible as an original in any legal proceeding arising out of or relating to this Agreement or any of the other Loan Documents; and (b) each such E-Transmission shall have the same legal effect as a live pen and ink signed paper original.  Neither Lender nor any Credit Party shall contest the validity or enforceability of any Loan Document, on the basis that such Loan Document, or one or more signatures hereto or thereto was the subject of an E-Transmission; provided, however, that nothing herein shall limit a party’s right to contest whether this Agreement or such other Loan Document has been altered after E-Transmission or whether the E-Transmission was delivered to an appropriate representative of Lender.  “E-Transmission” means the communication of any document, including signature pages, by e-mail or any system used to receive or transmit faxes electronically.
		

		
			USA Patriot Act Notice, Compliance.  The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution.  Consequently, Lender may from time-to-time request, and Borrower shall provide to Lender, Borrower’s name, address, tax identification number and/or such other identification information as shall be necessary for Lender to comply with federal law.  An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.
		

		
			Tombstones; Use of Lender Name.  Each Credit Party consents to the publication by Lender of any tombstones, press releases, advertising or other promotional materials (including via E-Transmission) relating to the financing transactions contemplated by this Agreement using such Credit Party’s name, product photographs, logo or trademark.  Lender shall provide a draft of any such press release, advertising or other promotional material to Borrower Representative for review and comment prior to the publication thereof.  Each Credit Party agrees not to issue any press release or other public disclosure using the name or logo of or otherwise referring to Lender or any of its Affiliates, the Loan Documents, or any transaction contemplated thereby, without Lender’s prior consent, except to the extent required to do so under Applicable Law and then only after consulting with Lender prior thereto.
		

		
			Time of the Essence; Time Periods.  Time is of the essence for performance of the Obligations under each of the Loan Documents.  Unless otherwise expressly stated in a particular Loan Document, the time for performance of any obligation or taking any action under such Loan Document shall be deemed to expire at 5:00 o’clock p.m. on the last day of the applicable time period provided for in such Loan Document.  If the time for performance of any obligation or taking any action under such Loan Document expires on a day other than a Business Day, the time for performance or taking such action shall be extended to the next succeeding Business Day.  Unless otherwise expressly stated, references in any of the Loan Documents to a particular time of day shall be to Pacific time.
		

		
			Right Of Setoff; Deposit Accounts.  Upon and after the occurrence  of an Event of Default, (a) Borrower hereby authorizes Lender, at any time and from time to time, without notice, which is hereby expressly waived by Borrower, and whether or not Lender shall have declared the Note to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, Borrower's obligations and liabilities under the Note (whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by Lender to Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), 

		 

and (b) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such obligations and liabilities and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Lender, in its sole discretion, may elect.  Borrower hereby grants to Lender a security interest in all deposits and accounts maintained with Lender to secure the payment of all obligations and liabilities of Borrower to Lender under the Loan Documents.
		

		
			Authorization to Provide Information.  Each Credit Party authorizes its banks, creditors (including trade creditors), vendors, suppliers, Franchisor, Manager, and customers to disclose and release to the Lender Parties any and all information they may request from time to time regarding (a) any depository, loan or other credit account of such Credit Party; (b) the status of the Franchise Agreement and the Management Agreement; (c) the affairs and financial condition of such Credit Party, or any operator of the Sites; and (d) the business operations at the Sites, including Site level and entity level operating results.  Each Credit Party also expressly authorizes the Lender Parties, from time to time while any of the Obligations are outstanding to perform background, credit, judgment, lien and other checks, searches, inspections and investigations and to obtain personal and business credit reports and asset reports with respect to such Credit Party and to answer questions about its credit experience with such Credit Party.  All of the information which the Lender Parties obtain from time to time in accordance with this Section, together with all other information which the Lender Parties now possess or in the future may acquire with respect to any of the Credit Parties, the Collateral, the Loan, or the business operations at the Sites, whether pursuant to the Loan Documents or otherwise, is referred to as “Credit Party Information.” 
		

		
			Permitted Disclosures of Credit Party Information.  Each Credit Party authorizes the Lender Parties (each, an “Authorized Person”) to disclose Credit Party Information:  (a) to Franchisor upon the occurrence and during the continuation of a Default; (b) to any proposed transferee, purchaser, assignee, servicer, participant, lender, investor, ratings agency, or other Person with respect to any proposed Lender Transfer or sale of any of the Collateral; (c) to any other Authorized Person or any insurance or title company in connection with the transactions contemplated by the Loan Documents, including any action, suit, or proceeding arising out of, in connection with, or relating to, this Agreement or the other Loan Documents, the Loan, or any other transaction contemplated hereby; (d) to the extent such information is or becomes available to an Authorized Person from sources not known by such Authorized Person to be subject to disclosure restrictions; (e) to the extent disclosure is required by Applicable Law or other legal process or is requested or demanded by any Government Authority; and (f) as may otherwise be authorized in writing by Borrower. Borrower and each other Credit Party also authorize and consent to the use by the Authorized Persons of data relating to Borrower’s operations, including unit-level and corporate level operating results, to produce and distribute various industry statistical analyses and data compilations, provided that all such analyses and data compilations will be aggregated and will not be specifically attributable to the Sites, Borrower, any other Credit Party, or any operator or lessee of the Sites.  Each Credit Party agrees that the disclosures permitted by this Section and any other disclosures of Credit Party Information authorized pursuant to any of the Loan Documents may be made even though any such disclosure may involve the transmission or other communication of Credit Party Information from the nation of residence or domicile of such Credit Party or an Authorized Person to another country or jurisdiction, and each Credit Party waives the provisions of any data privacy law, rule, or regulation of any applicable Government Authority that would otherwise apply to the disclosures authorized in this Section.
		

		
			Corrections and Insertions.  Lender may correct patent errors in the Loan Documents and fill in all blanks in this Agreement and the other Loan Documents consistent with the agreement of the parties.
		

		
			Transaction Characterization.  The Loan Documents are a contract to extend a Financial Accommodation (as such term is used in the Bankruptcy Code) for Borrower’s benefit.
		

		
			Further Assurances.  At any time and from time to time, upon Lender’s written request and at Borrower’s sole expense, Borrower shall promptly execute and deliver any and all such further instruments and documents and take such further action as Lender may reasonably deem necessary or advisable to (a) fully implement and obtain the full benefits of this Agreement and the other Loan Documents; (b) protect, preserve, maintain and enforce Lender’s rights in (and the priority of Lender’s Liens on) any Collateral; and (c) enable Lender to exercise all of its rights, remedies and powers granted in the Loan Documents.
		

		
			Accounting Requirements.  All accounting terms shall be construed, and all accounting determinations required to be made pursuant to any Loan Document, including with respect to financial covenant compliance, shall, unless 

		 

otherwise expressly provided, be made, in accordance with GAAP.  However, if there is a change in GAAP following the date of this Agreement and that change is implemented by Borrower, such change shall not be given effect if such change would affect a calculation that measures compliance with, or entitles any Credit Party to any rights under, any provision of the Loan Documents unless Borrower and Lender agree in advance and in writing to modify such provisions to reflect such change.  Unless such provisions are modified, all Financial Statements, compliance certificates and similar documents provided pursuant to the Loan Documents shall be provided together with a reconciliation between the calculations and amounts set forth therein before and after giving effect to such change.  Notwithstanding any other provision contained herein or any of the other Loan Documents, all terms of an accounting or financial nature used in this Agreement or any of the other Loan Documents shall be construed, and all computations of amounts and ratios provided for in this Agreement or any of the other Loan Documents shall be made, without giving effect to any election under FAS 159 (ASC 825) (or any other financial accounting standard having a similar result or effect) to value any Indebtedness or other liabilities of any Credit Party at “fair value,” as defined therein.
		

		
			Interpretation.  The Loan Documents shall be interpreted and construed in a fair and impartial manner without regard to such factors as which party prepared the document, the relative bargaining powers of the parties or a party’s domicile, but shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties.
		

		
			Interpretative Rules.  Unless otherwise expressly provided or the context may otherwise require:  (a) the words “hereof”, “herein”, “hereunder” and words of similar import, when used in a Loan Document, shall refer to such Loan Document as a whole and not to any particular provision hereof or thereof; (b) in the computation of time periods from a specified date to a later specified date, the term “from” means “from and including” and the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including” and the term “including” means “including without limitation”; (c) the term “incur” means incur, create, make, issue, assume or otherwise become directly or indirectly liable in respect of or responsible for, in each case whether directly or indirectly, and the terms “incurrence” and “incurred” and similar derivatives shall have correlative meanings; (d) the term “sole” means “sole and absolute”; (e) Article, Section, subsection, clause, Appendix, Exhibit, Schedule, and Table references in a Loan Document are to such items in or attached to such Loan Document; (f) references to a Loan Document include all exhibits, schedules, and appendices thereto and, unless Lender’s consent is required therefor but was not obtained, any amendment, restatement, or supplement thereto; (g) references to any statute, law, ordinance, regulation or rule are to such statute, law, ordinance, regulation or rule, as modified from time to time and to any successor to any such statute, law, ordinance, regulation or rule, in each case as in effect at the time any such reference is operative; (h) Article, Section, subsection, Appendix, Exhibit, Schedule and Table titles and other divisions contained in any Loan Document are without substantive meaning or content of any kind and are not a part of the agreement between the parties; (i)  the meaning of any term defined (including by reference) in any Loan Document shall be equally applicable to both the singular and plural forms of such term; and (j) references to days, months, and years are to calendar days, months, or years, unless otherwise defined.
		

		
			Co-Borrower Provisions.
		

		
			Joint and Several Liability.  References in this Agreement and the other Loan Documents to “Borrower” are to each Borrower signing this Agreement.  Each Borrower’s liability with respect to the Obligations is joint and several, notwithstanding the provisions of subsection (c) below, including any allocation of losses and liabilities pursuant to such subsection or otherwise.  Each Borrower is a direct, primary and independent obligor, and no Borrower shall be deemed to be a guarantor, accommodation party or otherwise secondarily liable for the Obligations.  Each Borrower represents and warrants to and covenants with Lender that (i) Borrowers are engaged in operations that require financing on a joint basis and, accordingly, each Borrower will materially benefit, directly or indirectly, from the Loan; (ii) the Loan has been offered to Borrowers on a joint basis and would not be available to Borrowers on an individual basis on the terms and conditions stated in this Agreement; and (iii) the benefits received by each Borrower are reasonably equivalent to the obligations undertaken by each Borrower.
		

		
			Borrower Representative.  Each Borrower hereby appoints LF3 SOUTHAVEN TRS, LLC (“Borrower Representative”) as its representative and agent, and Borrower Representative accepts such appointment, for the purposes of (i) making the Closing Draw Request, including giving Lender disbursement instructions, wire and deposit instructions, and telephonic confirmations; (ii) delivering certificates, including compliance 

		 

certificates; (iii) selecting interest rate options, if applicable; (iv) giving and receiving all Notices and consents hereunder or under any of the other Loan Documents; (v) requesting and providing information with respect to accounts payable matters; financial reporting matters, property tax matters (if applicable); insurance matters, and all other account servicing matters; and (vi) taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or the Borrowers under the Loan Documents or otherwise with respect to the Loan.  Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers.  Each warranty, covenant, agreement and undertaking made on behalf of a Borrower by the Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.  
		

		
			Obligations and Allocations among Borrowers.  If any Borrower (the “Overpaying Borrower”) pays (whether directly or by application of Collateral), or is otherwise held liable for, obligations in excess of the Pro Rata Share of the Overpaying Borrower, the other Borrowers will pay the amount of such excess to the Overpaying Borrower and will indemnify the Overpaying Borrower for, from and against any claims, damages, loss or liability arising from or related to such overpayment.  Borrowers agree to maintain books and records accurately reflecting each Borrower’s Pro Rata Share.  This subsection is only intended to allocate payments, losses, and liabilities among Borrowers in order that (i) as between Borrowers, each Borrower is ultimately liable for its Pro Rata Share; and (ii) the value to each Borrower of the resulting rights and claims against other Borrowers pursuant to this subsection will assure that no Borrower is rendered “insolvent” by virtue of the Obligations for purposes of any Applicable Law relating to fraudulent conveyances and similar claims.  The rights and obligations among Borrowers pursuant to this subsection shall survive the payment and performance of the Obligations.  “Pro Rata Share” means the amount of Loan proceeds actually advanced to or for the benefit of each Borrower as reflected on the books and records of such Borrower.  Each Borrower has expressly assumed the risk that such Borrower’s actual liability may exceed such Borrower’s Pro Rata Share and that overpayments may not actually be reimbursed or indemnified.
		

		
			Waivers.
		

		
			Each Borrower authorizes Lender, without notice to or demand on such Borrower, and without affecting such Borrower's liability for the Obligations, from time to time to: (i) alter, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of, the indebtedness of any other Borrower to Lender on account of the Loan; (ii) take and hold security from any other Borrower for the payment of any Obligations and exchange, enforce, waive, subordinate or release any such security; (iii) apply such security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage, or deed of trust, as Lender in its discretion may determine; (iv) release or substitute any one or more of the endorsers or any guarantors of any Loan hereunder, or any other party obligated thereon; and (v) apply payments received by Lender from any other Borrower to indebtedness of such other Borrower to Lender other than to any Loan extended under this Agreement.  
		

		
			Each Borrower waives any right to require Lender to: (i) proceed against any other Borrower or any other Person; (ii) proceed against or exhaust any security held from any other Borrower or any other Person; (iii) pursue any other remedy in Lender's power; (iv) apply payments received by Lender from any other Borrower to any of the Obligations; (v) make any presentments or demands for performance, or give any notices of nonperformance, protests, notices of protest or notices of any kind, including without limitation, any notice of nonperformance, protest, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration; or (vi) set off against the Obligations the fair value of any real or personal property given as collateral for the Obligations (whether such right of setoff arises under statute or otherwise).  In addition to the foregoing, each Borrower specifically waives any statutory right it might have to require Lender to proceed against other Borrowers or any collateral that secures the Obligations.
		

		
			Each Borrower waives to the extent permitted by Applicable Law any defense to its liability for repaying any Loan extended under this Agreement based upon or arising by reason of: (i) any disability or other defense of any other Borrower or any other person; (ii) the cessation or limitation from any 

		 

cause whatsoever, other than payment in full, of the liability of any other Borrower for the Obligations; (iii) any lack of authority of any officer, director, partner, agent or other person acting or purporting to act on behalf of any other Borrower or any defect in the formation of any other Borrower; (iv) the application by any other Borrower of the proceeds of any Loan extended under this Agreement for purposes other than the purposes intended or understood by Lender or each other Borrower; (v) any act or omission by Lender which directly or indirectly results in or aids the discharge of any other Borrower by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Lender against any other Borrower; (vi) any impairment of the value of any interest in any security for any Obligations, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with Applicable Law in disposing of, any such security; or (vii) any modification of the Indebtedness of any other Borrower for any Loan extended under this Agreement, including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the indebtedness of any Borrower for any Loan extended under this Agreement, including increase or decrease of the rate of interest thereon.
		

		
			Until the Obligations shall have been paid in full, no Borrower shall have any right of subrogation.  Each Borrower waives all rights and defenses it may have arising out of (i) any election of remedies by Lender, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for each Loan extended under this Agreement, destroys its rights of subrogation or its rights to proceed against any other Borrower for reimbursement, or (ii) any loss of rights it may suffer by reason of any rights, powers or remedies of any other Borrower in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging any Borrower's indebtedness for each Loan extended under this Agreement, whether by operation of law, or otherwise, including any rights Borrower may have to claim a fair market credit with respect to a deficiency or have a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Indebtedness, and Borrower waives any right Borrower may have under any “one-action” rule.  Borrower further waives the benefit of any homestead, exemption or other similar laws.
		

		
			Until all Obligations arising under or in connection with this Agreement shall have been paid in full, each Borrower waives any right to enforce any remedy which Lender now has or may hereafter have against any other Borrower or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Lender.  To the fullest extent permitted by Applicable Law, Borrower waives all rights of a surety and the benefits of any applicable suretyship law, statute or regulation, and without limiting any of the waivers set forth herein, Borrower further waives any other fact or event that, in the absence of this provision, would or might constitute or afford a legal or equitable discharge or release of or defense to Borrower.
		

		
			Credit Party Experience and Advisers; No Lender Advice.  Each Credit Party represents, warrants, and covenants that (a) such Credit Party (i) IS EXPERIENCED IN COMPLEX AND SOPHISTICATED BUSINESS MATTERS AND COMMERCIAL FINANCING TRANSACTIONS OF THE TYPE CONTEMPLATED BY THE LOAN DOCUMENTS; (ii) HAS HAD SUFFICIENT TIME TO CAREFULLY REVIEW ALL PROVISIONS, TERMS AND CONDITIONS OF EACH LOAN DOCUMENT AND CONSULT WITH SUCH INVESTMENT, TAX, LEGAL, FINANCIAL AND OTHER ADVISERS AS SUCH CREDIT PARTY HAS DEEMED APPROPRIATE; and (iii) HAS DETERMINED THAT THE LOAN DOCUMENTS COMPLETELY AND ACCURATELY REFLECT THE FINAL BUSINESS DEAL OF THE PARTIES; and (b) no Lender Party or any employee, agent, representative, or adviser of a Lender Party has provided any Credit Party with any investment, tax, legal, or financial advice or acted as an advisor to any Credit Party with respect to such matters.
		

		
			Acknowledgement Regarding Any Supported QFCs.  To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Contracts or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and, each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the FDIC under the Federal Deposit Insurance Act and Title II of the Dodd-Frank 

		 

Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
		

		
			In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that any rights and remedies of the parties with respect to the Lender if the Lender has failed to perform any of its obligations under the Loan Documents shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
		

		
			As used in this Section 8.31, the following terms have the following meanings:
		

		
			“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
		

		
			“Covered Entity” means any of the following:
		

		
			a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
		

		
			a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
		

		
			a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
		

		
			“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
		

		
			“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
		

		
			Entire Agreement.  The Loan Documents collectively constitute the final expression and entire written agreement of Lender and the Credit Parties with respect to the subject matter thereof; supersede all prior and contemporaneous agreements, discussions, and understandings relating to the subject matter thereof, written or oral, including prior letters of interest, proposal letters, commitment letters, fee letters, confidentiality agreements, or other agreements, involving any Credit Party or Lender or any of their respective Affiliates relating to a financing of substantially similar form, purpose, or effect; and may not be contradicted by evidence of any alleged oral agreement.    
		

		
			

		 

		

		
			Attachments.  The following items are attached to and are an integral part of this Agreement:
		

		
			Exhibit 2.3:Collateral Table
		

		
			Exhibit 2.4:Closing Conditions
		

		
			Exhibit 3.1:Organizational Chart
		

		
			Exhibit 3.14:Franchise Agreement Information
		

		
			Exhibit 3.15:Management Agreement Information 
		

		
			Exhibit 3.23:Hotel Lease Information
		

		
			Exhibit 4.15(f):Form of Compliance Certificate
		

		
			Exhibit 8.1:Schedule of Defined Terms
		

		
			 
		

		
			[SIGNATURE PAGES FOLLOW]
		

		
			 
		

		
			 
		

		
			

		 

		

		
			EXECUTED effective as of the date first set forth above.
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						BORROWER:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						LF3 SOUTHAVEN, LLC, a Delaware limited liability company

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						Lodging Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By:

					
					
						Lodging Fund REIT III, Inc., a Maryland corporation, its General Partner

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By:

					
					
						/s/ Katie Cox

				
	
					
						 

					
					
						 

					
					
						Name:

					
					
						Katie Cox

				
	
					
						 

					
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						Lodging Fund REIT III TRS, Inc., a Delaware corporation, its Sole Member

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By:

					
					
						/s/ Katie Cox

				
	
					
						 

					
					
						 

					
					
						Name:

					
					
						Katie Cox

				
	
					
						 

					
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Address for Notices:

				
	
					
						 

					
					
						1635 43rd Street South, Suite 205

				
	
					
						 

					
					
						Fargo, North Dakota 58103

				
	
					
						 

					
					
						Attn:  Corey R. Maple

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						With copy to:

				
	
					
						 

					
					
						Dave Durell

				
	
					
						 

					
					
						644 Lovett St SE, Suite A

				
	
					
						 

					
					
						Grand Rapids, Michigan 49506

				

		
			 
		

		
			
		

		
			

		 

		

		
			LENDER:
		

		
			WELLS FARGO BANK, NATIONAL ASSOCIATION
		

		
			By:  /s/ Maureen Malphus
		

		
			Printed Name:  Maureen Malphus
		

		
			Its: Vice President
		

		
			Address for Notices:
		

		
			 
		

		
			Wells Fargo Bank, National Association
		

		
			1808 Aston Avenue, Suite 250
Carlsbad, California 92008
Attention: Loan Administration
		

		
			 
		

		
			 
		

		
			

		 

		

		
			EXHIBIT 2.3
		

		
			COLLATERAL TABLE
		

		
			At Closing, the Collateral will include a first priority blanket lien on and security interest in all of Borrower’s tangible and intangible personal property, wherever located, including all such property located at or used in connection with the Sites identified below.  The Collateral will also include first priority Mortgages on each Site identified below. 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Permitted Concept

					
					
						Owner of Record

					
					
						Street Address

					
					
						City

					
					
						State

					
					
						ZIP

				
	
					
						Homewood Suites 

					
					
						LF3 Southaven, LLC

					
					
						135 Homewood Drive 

					
					
						Southaven

					
					
						MS

					
					
						38671

				

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

		
			EXHIBIT 2.4
		

		
			CLOSING CONDITIONS
		

		
			 
		

		
			Lender's obligation to close and fund the Loan is subject to Lender's satisfaction with or waiver of, in Lender's sole discretion, the following conditions, including required deliverables, each at Borrower's expense, it being agreed that if any of the conditions are not satisfied or waived by the Closing Deadline, Lender shall have absolutely no obligation whatsoever to make the Loan to the Borrower.
		

		
			 
		

			
	
			
				 1.
			Due Diligence.  Lender shall have received and approved all items, documents and information required by Lender in connection with its underwriting and due diligence for the Loan and shall have completed such credit underwriting and due diligence with respect to Borrower, each Guarantor, the Collateral described in this Agreement, as well as all other collateral described in any of the Loan Documents, and the Loan as Lender deems appropriate.

			
	
			
				 2.
			Payment of Costs, Expenses and Fees.  All costs, expenses and fees to be paid by Borrower on or before the Closing will have been paid in full.

			
	
			
				 3.
			No Default; Representations.  Both before and after giving effect to the Closing, there shall be no Default.  Each representation and warranty made by Borrower and each Guarantor pursuant to the Loan Documents shall be true and correct in all material respects.

			
	
			
				 4.
			Absence of Litigation.  There shall not exist any action, suit, investigation, litigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority that challenges the transactions contemplated by the Lending Proposal, the Loan or any other transactions contemplated hereby.

			
	
			
				 5.
			Executed Loan Documents.  Lender shall have received each of the following Loan Documents, together with all such other documents and instruments as are required by Lender in connection with the Loan, in each case duly executed and, where appropriate, acknowledged, by all of the parties to such documents, other than Lender, each in form and substance satisfactory to Lender:

			
	
			
				 (a)
			This Agreement.

			
	
			
				 (b)
			A promissory note evidencing the Loan.

			
	
			
				 (c)
			A guaranty signed by each Guarantor.

			
	
			
				 (d)
			A mortgage or deed of trust and environmental indemnity agreement for the Site.

			
	
			
				 (e)
			A security agreement from Borrower and each other party required to grant a security interest in the Collateral.

			
	
			
				 (f)
			A Borrower authorization.

			
	
			
				 (g)
			A request for all advances to be funded on the Closing Date.

			
	
			
				 6.
			Absence of Material Adverse Effects.  Lender shall have determined that no Material Adverse Effect has occurred since Borrower's submission of the Evaluation Information and there are no facts or circumstances existing and not previously disclosed in writing to Lender with respect to any Borrower or  Guarantor, the Collateral, the seller, if any, of any Collateral, any other person representing or otherwise acting on behalf of any Borrower or Guarantor, or the transaction that, in Lender's judgment, are inconsistent in a material and adverse manner with any such Evaluation Information that, if known to Lender, would have caused Lender not to agree to make the Loan to the Borrower.

			
	
			
				 7.
			Financing Statement Filings.  Lender shall have received evidence that appropriate financing statements have been properly filed with the appropriate governmental authorities and that the security interests of Lender in all Collateral consisting of personal property are in first lien position.

		
			

		 

		

			
	
			
				 8.
			Deliverables.  Borrower shall have delivered to Lender or Lender shall otherwise have obtained, and Lender shall have approved, the following, together with such other information and documentation as Lender may reasonably require, all at Borrower’s expense:

			
	
			
				 (a)
			Pay-Off Letters and Lien Terminations.  (i) Evidence that any and all existing liens encumbering any of the Collateral, including liens to be paid from the initial funding of the Loan, have been released; or (ii) pay-off letters with respect to such liens, except for such liens as Lender has agreed may remain and that have been subordinated to the Loan and Lender’s liens on terms and conditions satisfactory to Lender.

			
	
			
				 (b)
			Evidence that Existing Debt Paid.  Evidence that all outstanding seller financing, indebtedness owed to any of Borrower’s shareholders, members, partners, or principals and all other indebtedness owed to any third party, excluding indebtedness held by Lender or its affiliates, has been paid in full prior to closing, unless Lender agrees, in its sole discretion, that such indebtedness may remain, in which case the indebtedness must be unsecured and fully subordinated to the Loan and Lender’s liens on terms satisfactory to Lender. 

			
	
			
				 (c)
			Insurance.  Evidence that the insurance coverages that Borrower is required to have in force at closing pursuant to the Loan Documents have been obtained and are in full force and effect and in compliance with the requirements of the Loan Documents.

			
	
			
				 (d)
			Approval of Other Agreements.  Acceptable agreements with third parties necessary to operate each Site, including license and franchise or management agreements, as well as the Hotel Lease.  All such agreements shall be in full force and effect, in the name of Borrower, shall have expiration dates, including all renewal and extension options, of not less than the maturity date for the Loan, and the non-borrower third party to such agreements shall have delivered to Lender such executed subordination agreements, collateral assignments, comfort letters, status certificates, and consents with respect thereto, as Lender may, in its sole discretion, require.

			
	
			
				 (e)
			Appraisal.  An appraisal that is compliant with applicable law and such additional requirements and standards as Lender may specify, performed by state certified appraisers selected by Lender, for each Site for which Lender requires an appraisal.  Lender will order each appraisal.  The reports must be dated no earlier than 60 days prior to closing.

			
	
			
				 (f)
			Survey.  A survey from a licensed surveyor acceptable to Lender for each Site for which Lender requires a survey, certified to Lender and the title company.

			
	
			
				 (g)
			Opinions.  Such legal opinions as Lender may reasonably require, in form and substance and from counsel reasonably satisfactory to Lender.

			
	
			
				 (h)
			Solvency Certificate.  A certificate from Borrower, signed by Borrower’s chief financial officer or other comparable person certifying to Lender that, both before and immediately after consummation of the transactions contemplated by the Loan Documents and after giving effect thereto, Borrower is solvent.

			
	
			
				 9.
			Title and Title Insurance.  At Borrower’s expense, the mortgage or deed of trust relating to each Site shall have been recorded and the title company selected by Lender to close the Loan shall be unconditionally committed to issue to Lender an ALTA lender’s title insurance policy with respect to each such Site in such form and amounts and with such endorsements as Lender may require, insuring that each mortgage or deed of trust is in first lien position subject only to exceptions permitted by Lender.

			
	
			
				 10.
			Environmental.  Lender shall have approved the environmental condition of each Site.  Prior to closing, Lender will order an environmental assessment for each such Site, at Borrower’s expense.  On occasion, additional assessment work will be required to adequately understand environmental risks.  Additional work may include  regulatory office review, site inspection, phase I and/or phase II subsurface investigations.  If additional work is required and there is no pre-existing phase I and/or phase II reports or if such reports are out of date (typically six months prior to closing), Lender may order new phase I and/or phase II reports from Lender approved consultants, at Borrower’s expense.

		
			

		 

		

			
	
			
				 11.
			Confirmation of Equity.  Information satisfactory to Lender verifying the source and availability to Borrower of any equity required of Borrower in the transaction.

			
	
			
				 12.
			Site Conditions.  Lender shall have approved the location and site characteristics of each Site.

			
	
			
				 13.
			Beneficial Ownership. Borrower shall have delivered to Lender, a Beneficial Ownership Certification in relation to it (or a certification that Borrower qualifies for an express exclusion from the “legal entity customer” definition under the Beneficial Ownership Regulations), at least five (5) Business Days prior to the Closing Date.

			
	
			
				 14.
			Other Conditions.  All other conditions to Lender’s obligations to close the Loan have been satisfied.

		
			 
		

		
			 
		

		
			

		 

		

		
			Exhibit 3.1
		

		
			ORGANIZATIONAL CHART 
		

		
			 
		

		
			
		

		
			 
		

		
			
		

		
			 
		

		
			 
		

		
			

		 

		

		
			Exhibit 3.14
		

		
			Franchise Agreement Information
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Named Franchisee

					
					
						Named Franchisor

					
					
						Franchise Agreement Effective Date

					
					
						Franchise Agreement Expiration Date

				
	
					
						LF3 Southaven TRS, LLC

					
					
						Hilton Franchise Holding LLC

					
					
						February 21, 2020

					
					
						March 31, 2036

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

		
			Exhibit 3.15
		

		
			MANAGEMENT Agreement Information
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Management Company

					
					
						Owner

					
					
						Management Agreement Effective Date

					
					
						Management Agreement Expiration Date

				
	
					
						Vista Host, Inc.

					
					
						LF3 Southaven TRS, LLC

					
					
						February 21, 2020

					
					
						February 21, 2025

				

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

		
			Exhibit 3.23
		

		
			Hotel Lease Information
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
						 

				
	
					
						Name of Lessor

					
					
						Name of Lessee

					
					
						Lease Description

					
					
						Lease Expiration Date

					
						(without options)

				
	
					
						LF3 Southaven, LLC

					
					
						LF3 Southaven TRS, LLC

					
					
						Lease Agreement dated as of 
February 21, 2020

					
					
						February 28, 2030

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

		
			EXHIBIT 4.15(f)
		

		
			COMPLIANCE CERTIFICATE FORM
		

		
			COMPLIANCE CERTIFICATE
		

		
			 
		

		
			WELLS FARGO BANK, NATIONAL ASSOCIATION
		

		
			 
		

		
			                                    
		

		
			 
		

		
			Re:Loan Agreement (the “Agreement”) dated                     , 20     , between LF3 SOUTHAVEN, LLC, a Delaware limited liability company and LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company (collectively, “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).  Capitalized terms used in this Compliance Certificate and not defined herein have the meanings given to those terms in the Agreement.
		

		
			 
		

		
			The undersigned certifies the following to Lender, as of the date of this Compliance Certificate:
		

		
			 
		

			
	
			
				 1.
			The attached Financial Statements are complete and true and have been prepared in accordance with GAAP from period to period and otherwise in compliance with the requirements stated in the Agreement.

		
			Borrower is in compliance with all financial covenants contained in the Loan Agreement.  Attached hereto as Schedule 1 are the covenant calculations used in determining compliance with the financial covenants.
		

		
			No Default has occurred that is continuing, except for the following, as to which Borrower is taking the actions listed in order to cure such Default:  If none, so state. 
		

			
					
						 

					
					
						 

				
	
					
						DEFAULT

					
					
						CURE ACTIONS

				
	
					
						 

					
					
						 

				

		
			 
		

		
			Since the Closing Date and except as disclosed in prior Compliance Certificates delivered to Lender, neither Borrower nor any other Credit Party has:
		

		
			Changed its legal name, identity, jurisdiction of incorporation, organization or formation or organizational structure or formed or acquired any subsidiary except as follows:                                     ;
		

		
			Acquired the assets of, or merged or consolidated with or into, any Person, except as follows:                                     ; or
		

		
			Changed its address or otherwise relocated, except as follows:                                     .
		

		
			All real property impositions that are due and owing have been paid.
		

		
			All fees owed to Franchisor pursuant to the Franchise Agreement that are due have been paid, and no default has occurred under the Franchise Agreement.
		

		
			The Site passed its latest quality assurance report by Franchisor, except with respect to the following items:                                     . The date of such report is:                     , 20     ,  and the score is:           .
		

		
			The current Franchisor for the Site is                                     .
		

		
			The current Manager for the Site is                                     .
		

		
			Dated:                     , 20     ,
		

		
			
		

		
			

		 

		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						LF3 SOUTHAVEN, LLC, a Delaware limited liability company

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						Lodging Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By:

					
					
						Lodging Fund REIT III, Inc., a Maryland corporation, its General Partner

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By:

					
					
						/s/ Katie Cox

				
	
					
						 

					
					
						 

					
					
						Name:

					
					
						Katie Cox

				
	
					
						 

					
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						LF3 SOUTHAVEN TRS, LLC, a Delaware limited liability company 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						Lodging Fund REIT III TRS, Inc., a Delaware corporation, its Sole Member

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By:

					
					
						/s/ Katie Cox

				
	
					
						 

					
					
						 

					
					
						Name:

					
					
						Katie Cox

				
	
					
						 

					
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				

		
			
		

		
			

		 

		

		
			Schedule I
		

		
			Financial Covenant Calculations
		

		
			 
		

		
			 
		

		
			

		 

		

			 

		

		

			 

		

		

		
			EXHIBIT 8.1
		

		
			SCHEDULE OF DEFINED TERMS
		

		
			Defined Terms.  The following terms have the meanings set forth below:  
		

		
			“AAA” has the meaning specified in Section 8.14.
		

		
			“ACH” has the meaning specified in Section 2.8.
		

		
			“Affiliate” means, with respect to a Person, each officer, director, manager, general partner, or joint-venturer of such Person and any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with, such Person.
		

		
			“Agreement” has the meaning specified in the introductory paragraph hereto.
		

		
			“AML Party” has the meaning specified in Section 3.9.
		

		
			“AML Requirements” has the meaning specified in Section 3.9.
		

		
			“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction from time to time concerning or relating to bribery or corruption, including the United States Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder and the U.K. Bribery Act 2010 and the rules and regulations thereunder.
		

		
			“Applicable Law” means, as to a Person, any law (statutory or common), ordinance, rule, regulation, order, policy, other legal requirement or determination of an arbitrator or Government Authority, in each case applicable to or binding on such Person or any of its assets or to which such Person or any of its assets is subject.
		

		
			“Authorized Person” has the meaning specified in Section 8.22.
		

		
			“Bankruptcy Code” has the meaning specified in Section 3.7.
		

		
			“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
		

		
			“Beneficial Ownership Regulation” means 31 CFR § 1010.230.
		

		
			“BHC Act Affiliate” has the meaning specified in Section 8.31.
		

		
			“Borrower” has the meaning specified in the introductory paragraph hereto.
		

		
			“Borrower Representative” has the meaning specified in Section 8.29.
		

		
			“Business Day”  means any day that is not a Saturday, Sunday or other day on which commercial banks in the U.S. are authorized or required by Law to remain closed.  
		

		
			“Capital Lease” means any lease or similar arrangement that is classed as a capital lease pursuant to GAAP.
		

		
			“Casualty” has the meaning specified in Section 4.5.
		

		
			“Closing” means the satisfaction with or waiver of, in Lender’s sole discretion, each of the “Closing Conditions” listed on Exhibit 2.4 with respect to funding of the Loan.
		

		
			“Closing Date” has the meaning specified in Section 2.4.
		

		
			“Closing Deadline” has the meaning specified in Section 2.4.
		

		
			

		 

		

			 

		

		

		
			“Closing Draw Request” has the meaning specified in Section 2.5.
		

		
			“Collateral” means all real and personal property, tangible and intangible, as to which Lender is granted a Lien pursuant to any Loan Document, and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a Lien in favor of Lender, with references to “Collateral” to include all or any portion of or interest in any of the Collateral.
		

		
			“Collateral Table” has the meaning specified in Section 2.3.
		

		
			“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § I et seq.), as amended from time to time, and any successor statute.
		

		
			  “Compliance Certificate” has the meaning specified in Section 4.15.
		

		
			“Contractual Obligation” means as to any Person, any provision of any security issued by such Person or of any agreement, instrument, or other undertaking (other than a Loan Document) to which such Person is a party or by which it or any of its property is bound or subject, including the Franchise Agreement and the Management Agreement.
		

		
			“Control” and “Controlled” means possession of either (a) the power to vote, or the beneficial ownership of, 10% or more of any class of voting securities (or other ownership interests) of such Person; or (b) the power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
		

		
			“Covered Entity”  has the meaning specified in Section 8.31.
		

		
			“Covered Party”  has the meaning specified in Section 8.31.
		

		
			“Credit Party” means Borrower, each Guarantor and each other Person (other than Lender) that is or may become a party to this Agreement or any other Loan Document.
		

		
			“Credit Party Information” has the meaning specified in Section 8.21.
		

		
			“Debt Service Amount” means the actual interest and principal payments due on the Loan during the 12 month period ending on the applicable Determination Date; provided, during the first 12 months after the Closing Date, the Debt Service Amount will be calculated based on the interest and principal payments made to the applicable Determination Date, provided such payments will be annualized; and provided further, if at any time during the 12 month period ending on the applicable Determination Date, interest-only payments are due, then with respect to such interest-only period, the Debt Service Amount will be the monthly payment of principal and interest that would be due based on a 25 year amortization schedule using the then-current interest rate.
		

		
			  “Debt Service Coverage Ratio” means, with respect to the 12-month period ending on the measurement date, the ratio, calculated for Borrower for such time period, each as determined in accordance with GAAP and calculated according to the Uniform System of Accounts for Hotels, of (a) Net Operating Income; to (b) the Debt Service Amount.
		

		
			“Debt Yield” means, with respect to the 12-month period of time immediately preceding the date of determination, the percentage, calculated for Borrower for such time period, each as determined in accordance with GAAP and calculated according to the Uniform System of Accounts for Hotels, of:  (a) Net Operating Income; to (b) the outstanding principal amount of the Loan as of the date of determination.
		

		
			“Default” means any Event of Default (as defined in Article 6) or any event or circumstance that, with the passage of time or the giving of notice or both, would (if not cured or otherwise remedied during such time) become an Event of Default.
		

		
			“Default Right” has the meaning specified in Section 8.31.
		

		
			“Determination Date” means the last day of each Fiscal Quarter occurring after the Closing Date.
		

		
			  “E-Transmission” has the meaning specified in Section 8.16.
		

		
			

		 

		

			 

		

		

			 

		

		

			2

		

		

		
			“ERISA” has the meaning specified in Section 3.22.
		

		
			“Evaluation Information” has the meaning specified in Section 3.17.
		

		
			“Event of Default” has the meaning specified in Section 6.1.
		

		
			“Excluded Swap Obligation” means with   respect  to  any  Guarantor,  any  Swap Obligation  if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes  illegal under the Commodity Exchange Act or any rule, regulation or order   of  the   Commodity   Futures   Trading   Commission   (or   the   application   or  official interpretation of any thereof) by virtue of such Guarantor's failure for any reason to constitute an "eligible contract participant" as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee  or security interest is or becomes illegal.
		

		
			“Financial Statements” has the meaning specified in Section 4.15.
		

		
			“Fiscal Quarter” has the meaning specified in Section 4.15.
		

		
			“Fiscal Year” has the meaning specified in Section 4.15.
		

		
			“Franchise Agreement” means the franchise agreement, license agreement, or similar agreement relating to a particular Site, granted by the franchisor or licensor named in such agreement (“Franchisor”), together with all amendments, assignments, restatements, extensions, supplements, and exhibits thereto, that grants to Borrower the right to develop and operate such Site as the Permitted Concept.
		

		
			“Franchisor” has the meaning specified in the definition of “Franchise Agreement”.
		

		
			“GAAP” means generally accepted accounting principles in the United States, as in effect from time to time, set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, in the statements and pronouncements of the Financial Accounting Standards Board and in such other statements by such other entity as may be in general use by significant segments of the accounting profession that are applicable to the circumstances as of the date of determination.
		

		
			“Government Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
		

		
			“Guarantor” has the meaning specified in the definition of “Guaranty”.
		

		
			“Guaranty” means a guaranty agreement pursuant to which one or more Persons (each, a “Guarantor”, with references in the Loan Documents to “Guarantor” to mean and include each such Guarantor) guarantees payment and performance of all of the Obligations.
		

		
			“Hotel Lease” means the Lease Agreement related to the Site described on Exhibit 3.23 attached hereto, together with all amendments, assignments, restatements, extensions, supplements, and exhibits thereto.
		

		
			“Indebtedness” means, without duplication, all of the following, whether or not matured:  (a) indebtedness for borrowed money, including the outstanding balances of any revolving lines of credit; (b) obligations evidenced by bonds, debentures, notes, or similar instruments; (c) reimbursement and other obligations with respect to letters of credit and acceptances; (d) obligations representing the deferred purchase price of property or services; (e) obligations created or arising under any conditional sale or other title retention agreement; (f) obligations with respect to Capital Leases; (g) any other obligation for borrowed money or other financial accommodation (direct or contingent), whether evidenced by a note, instrument, guaranty or other writing and whether contingent, unliquidated or disputed; and (h) net obligations under any Swap Contract. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.
		

		
			

		 

		

			 

		

		

			 

		

		

			3

		

		

		
			“Indemnified Matters” has the meaning specified in Section 8.6.
		

		
			“Indemnitee” has the meaning specified in Section 8.6.
		

		
			“Insurance Proceeds” has the meaning specified in Section 4.5.
		

		
			“Insurance Requirements” has the meaning specified in Section 4.4.
		

		
			“Landlord Borrower”  has the meaning specified in the introductory paragraph hereto.
		

		
			  “Lender” has the meaning specified in the introductory paragraph hereto.
		

		
			“Lender Party” means each of Lender and its Affiliates.
		

		
			“Lender Transfer” has the meaning specified in Section 7.1.
		

		
			“Lending Proposal” means that certain Lending Proposal accepted by and agreed to by Borrower on December 6, 2019. 
		

		
			“Liabilities” means all claims, actions, suits, judgments, damages, losses, liabilities, obligations, fines, penalties, sanctions, costs, fees, Taxes, commissions, charges, disbursements and expenses, in each case of any kind or nature, including fees, charges and disbursements of financial, legal and other advisors and consultants (including those incurred in connection with responding to subpoenas or other discovery requests, third party or otherwise) and including interest accrued thereon or as a result thereof, whether joint or several, and whether or not indirect, contingent, consequential, actual, punitive, treble or otherwise.
		

		
			“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, lien (statutory or other), security interest, including purchase money security interests, and any other preference, priority or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor under a Capital Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.
		

		
			“Loan” has the meaning specified in Section 1.1.
		

		
			“Loan Amount” has the meaning specified in Section 2.2.
		

		
			“Loan Documents” means, collectively, this Agreement; the Note; the Guaranty; the Mortgage; and each security agreement, management agreement subordination, environmental indemnity agreement, Closing Draw Request, cross-default and/or cross-collateral agreement, and each other document or instrument now or hereafter executed and delivered by any Credit Party in connection with the Loan or any of the foregoing, with references in the Loan Documents to a particular Loan Document to mean such Loan Document, as it may be amended, restated, supplemented, extended or renewed from time to time.  Each Exhibit, Schedule, Table, or Appendix attached to a Loan Document is an integral part of such Loan Document, the same as if set forth in full in the body thereof.  The definition of Loan Documents shall exclude any Related Swap Contract.
		

		
			“Management Agreement” means the management or similar agreement with the manager named in such agreement (“Manager”), together with all amendments, assignments, restatements, extensions, supplements, and exhibits thereto and relating to a particular Site, granting Manager the right to manage and operate such Site as the Permitted Concept.
		

		
			“Manager” has the meaning specified in the definition of “Management Agreement”.
		

		
			“Master Agreement” has the meaning specified in the definition of “Swap Contract”.
		

		
			“Material Adverse Effect” means any fact, event, circumstance or other effect, whether foreseeable or unforeseeable, that alone or in combination with other facts, events, circumstances, or effects occurring or existing concurrently with such fact, event, circumstance, or effect results in or causes, or could reasonably be expected to result in or cause, a material adverse change in any of (a) the condition (financial or otherwise), business, performance, operations or assets of any Credit Party; (b) the ability of any Credit Party to perform its obligations under any Loan Document; (c) the validity or enforceability of any Loan Document or the rights and remedies of Lender under any Loan Document; or (d) the Collateral, Lender’s Liens in the Collateral, or the priority of such Liens.
		

		
			

		 

		

			 

		

		

			 

		

		

			4

		

		

		
			“Maximum Loan Amount” has the meaning specified in Section 2.2.
		

		
			“Mortgage” means each mortgage, deed of trust, or similar document granting a Lien to Lender, now or hereafter encumbering any of the Collateral, with references in the Loan Documents to “Mortgage” being to each such Mortgage.
		

		
			“Net Insurance Proceeds” has the meaning specified in Section 4.5.
		

		
			“Net Operating Income” means, as determined in accordance with GAAP and calculated according to the Uniform System of Accounts for Hotels, the following:  (i) the sum of net income (or loss), interest expense, income taxes, depreciation, amortization, management fees, replacement reserves, and officers’ salaries expensed on the income statement, minus (ii) the greater of (1) 4% of total revenues as an assumed reserve for replacement or (2) actual replacement reserve, minus (iii) the greater of (1) 3% of total revenues as an assumed management fee or (2) actual management fees (including both base and incentive management fees), minus (iv) non-recurring miscellaneous income (as determined by Lender), and plus (v) non-recurring miscellaneous expense (as allowed by Lender), and plus or minus any adjustments made by Lender in its sole discretion to calculations for acquisitions or other similar circumstances where operating performance history is limited.
		

		
			“Note” has the meaning specified in Section 2.2.
		

		
			“Notices” has the meaning specified in Section 8.10.
		

		
			“Obligations” means all amounts, obligations, liabilities, covenants and duties of every type and description (including for the payment of money), owing by any Credit Party to any Lender Party arising out of, under, or in connection with any Loan Document, all obligations arising under Related Credit Arrangements (excluding any Excluded Swap Obligations), and all costs and expenses incurred in connection with enforcement and collection of the foregoing, including the fees, charges and disbursements of counsel, in each case, whether direct or indirect, absolute or contingent, due or to become due, liquidated or not, now existing or hereafter arising, however acquired, and whether or not evidenced by any instrument. 
		

		
			“Overpaying Borrower” has the meaning specified in Section 8.29.
		

		
			“Partial Assignment” has the meaning specified in Section 7.1.
		

		
			“Payment” has the meaning specified in Section 2.8.
		

		
			“Permitted Concept” means the concept set forth for a particular Site in the Collateral Table or such other concept as may be approved by Lender in its sole discretion for a particular Site.
		

		
			“Permitted Exceptions” means (a) recorded easements, covenants, conditions, restrictions, encumbrances, and other matters of record affecting the Collateral and approved by Lender in its sole discretion; (b) the Lien for current real property taxes and assessments, not yet due and payable, with respect to any real property Collateral; and (c) Liens in favor of a Lender Party.  
		

		
			“Person” means any individual, partnership, corporation, business trust, public benefit corporation, joint stock company, estate, association, firm, enterprise, trust, limited liability company, unincorporated association, joint venture and any other entity or Government Authority.
		

		
			“PIP” means the Product Improvement Plan dated October 15, 2019, issued for the Site by the Franchisor.
		

		
			“PIP Improvements” means the improvements to the Site, and furniture and fixtures required to be incorporated into the Site pursuant to the PIP.
		

		
			“Policy” has the meaning specified in Section 4.4.
		

		
			“Policy Documents” has the meaning specified in Section 4.4.
		

		
			“Pro Rata Share” has the meaning specified in Section 8.29.
		

		
			“Prohibited Transaction” has the meaning specified in Section 5.8.
		

		
			

		 

		

			 

		

		

			 

		

		

			5

		

		

		
			“QFC”  has the meaning specified in Section 8.31.
		

		
			“QFC Credit Support” has the meaning specified in Section 8.31.  
		

		
			“REIT Financial Statements” has the meaning specified in Section 4.15.
		

		
			  “Related Credit Arrangements” means, collectively, any Related Swap Contracts and any Related Treasury Management Arrangements.
		

		
			“Related Swap Contract” means all Swap Contracts which are entered into or maintained by any Credit Party with the Lender or an Affiliate of the Lender.
		

		
			“Related Treasury Management Arrangement” means all arrangements for the delivery of cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements, to or for the benefit of any Credit Party which are now or hereafter entered into or maintained with the Lender or an Affiliate of the Lender.
		

		
			“Restoration” has the meaning specified in Section 4.5.
		

		
			“Rules” has the meaning specified in Section 8.14.
		

		
			“Sanction” or “Sanctions”  means individually and collectively, respectively, any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by:  (a) the United States of America, including those administered by the OFAC, the U.S. State Department, the U.S. Department of Commerce, or through any existing or future Executive Order, (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e) any other governmental authorities with jurisdiction over any Credit Party or its Affiliates.
		

		
			“Sanctioned Person”  means any Person that is a target of Sanctions, including without limitation, a Person that is:  (a) listed on OFAC’s Specially Designated Nations and Blocked Persons List; (b) listed on OFAC’s consolidated Non-Specially Designated Nationals List; (c) a legal entity that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Person(s); or (d) a Person that is a Sanctions target pursuant to any territorial or country-based Sanctions program.
		

		
			“Schedule of Defined Terms” has the meaning specified in Section 8.1.
		

		
			“SDN List” has the meaning specified in Section 3.9.
		

		
			“Site” means (a) each site listed in the Collateral Table and (b) each other business property that now or hereafter constitutes Collateral or at which any Collateral is located or that is otherwise designated or deemed a Site pursuant to any Loan Document, in each case including the buildings and improvements thereon and rights and privileges appurtenant thereto.  All references in the Loan Documents to “Site” shall mean each such Site.
		

		
			“Solvent” means, with respect to any Person as of any date of determination, that, as of such date, (a) the value of the assets of such Person (both at fair value and present fair saleable value) is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person; (b) such Person is able to pay all liabilities of such Person as such liabilities mature; and (c) such Person does not have unreasonably small capital.  In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
		

		
			“Supported QFC” has the meaning specified in Section 8.31.
		

		
			“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject 

		 

		

			 

		

		

			 

		

		

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to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
		

		
			“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under  any  agreement, contract or transaction that constitutes a "swap" within the meaning of section la(47) of the Commodity Exchange Act. 
		

		
			“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include the Lender or any Affiliate of the Lender).
		

		
			“Tax Affiliate” has the meaning specified in Section 3.16.
		

		
			“Tax Returns” has the meaning specified in Section 3.16.
		

		
			“Taxes” has the meaning specified in Section 3.16.
		

		
			“Tenant Borrower”  has the meaning specified in the introductory paragraph hereto.
		

		
			“Transaction Costs” has the meaning specified in Section 2.7.
		

		
			“Transferred Interests” has the meaning specified in Section 7.1.
		

		
			“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York.
		

		
			“United States” and “U.S.” means the United States of America.
		

		
			“U.S. Special Resolution Regimes” has the meaning specified in Section 8.31.
		

		
			 
		

		 

		

			 

		

		

			 

		

		

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