BRYAN CAVE LLP

Lawrence P. Gottesman (LG-7061)

Michelle McMahon (MM-8130)
1290 Avenue of the Americas
New York, New York 10104
(212) 541-2000
and
DUANE MORRIS LLP
Phillip K. Wang, Esq. (admitted pro hac vice)
One Market Plaza, Spear Tower, Suite 2200
San Francisco, CA 94105-1127
(415) 957-3185

Attorneys for Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First
Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
2007-C1 and U.S. Bank National Association, as Trustee for the registered holders of ML-CFC
Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series
2006-4
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
x
In re:

INNKEEPERS USA TRUST, et al.,

Debtors.
:

:

:
Chapter 11
Case No.: 10-13800 (SCC)

(Jointly Administered)
x

DECLARATION OF EDWARD C. BROWN IN SUPPORT OF THE
OBJECTIONS OF WELLS FARGO BANK, N.A., AS TRUSTEE FOR THE
REGISTERED HOLDERS OF CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP., COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2007-C1 AND U.S. BANK NATIONAL ASSOCIATION, AS
TRUSTEE FOR THE REGISTERED HOLDERS OF ML-CFC COMMERCIAL
MORTGAGE TRUST 2006-4, COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2006-4

I am a Senior Vice President for the Real Estate Finance and Servicing Group of LNR
Partners, LLC (LNR), the special servicer for the property level lenders described below
(collectively, the Property Level Lenders). I am authorized to submit this declaration in

2
C053239/0312771/1591411.2
support of certain Objections filed by the Property Level Lenders (jointly, the Objections).
1
I
declare, pursuant to section 1746 of title 28 of the United States Code, the following to be true
and correct to the best of my knowledge, information and belief based on my personal
knowledge, as well as review of pleadings filed in the above-captioned case, contracts,
documents and reports prepared and/or maintained by the Property Level Lenders in the ordinary
course of business.
1. The Property Level Lenders hold secured debt with an aggregate unpaid principal
balance of approximately $160 million (as described below, the Property Level Loans). The
loans set forth below were sold into the commercial mortgage backed securities (CMBS)
market and are part of a mortgage pool known as Credit Suisse First Boston Mortgage Securities
Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1, for which Wells Fargo
Bank, N.A. (Wells Fargo) is trustee and LNR serves as special servicer:

1
These Objections include (1) Objection Of Wells Fargo Bank, N.A., As Trustee For The Registered Holders Of Credit
Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1 And
U.S. Bank National Association, As Trustee For The Registered Holders Of ML-CFC Commercial Mortgage Trust
2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 To The Debtors Motion For The Entry Of A
Final Order (A) Authorizing The Debtors To (I) Use The Adequate Protection Parties Cash Collateral And (ii) Provide
Adequate Protection To The Adequate Protection Parties Pursuant To 11 U.S.C. 361, 362, And 363, And (B) To The
Extent Approved In The Final Order, Granting Senior Secured, Priming Liens On Certain Postpetition Intercompany
Claims, And (C) To The Extent Approved In The Final Order, Granting Administrative Priority Status To Certain
Postpetition Intercompany Claims, (2) Limited Objection of Wells Fargo Bank, N.A., As Trustee For The Registered
Holders Of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates,
Series 2007-C1 And U.S. Bank National Association, As Trustee For The Registered Holders Of ML-CFC Commercial
Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 to Debtors Motion For The
Entry Of An Order Authorizing Debtors To Obtain Postpetition Financing From Five Mile Capital Partners On A
Priming Basis Pursuant To Sections 364(c)(1), 364(c)(2), 364(c)(3), And 364(e) Of The Bankruptcy Code, and (3)
Objection of Wells Fargo Bank, N.A., As Trustee For The Registered Holders Of Credit Suisse First Boston Mortgage
Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1 And U.S. Bank National Association,
As Trustee For The Registered Holders Of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-
Through Certificates, Series 2006-4 to Debtors' Motion For An Order (A) Authorizing The Debtors To Assume The
Plan Support Agreement And (B) Granting Related Relief

3
C053239/0312771/1591411.2
i. KPA RIMV, LLC, as borrower, and Capmark Bank, as lender, are parties to that
certain Deed of Trust Note (the Capmark Mission Valley Loan Agreement), dated
as of October 4, 2006. Pursuant to that certain Loan Assumption, Affirmation, and
Modification Agreement, dated June 29, 2007, Grand Prix RIMV Lessee, LLC
(Grand Prix RIMV) assumed all of KPA RIMV, LLCs obligations under the
Capmark Mission Valley Loan Agreement. As a result, Grand Prix RIMV is
obligated under a mortgage loan in the original principal amount of $47.4 million (the
Capmark Mission Valley Loan), which amount is secured by a first-priority,
perfected mortgage and assignment of leases and rents in and to the Residence Inn in
San Diego, California (the Capmark Mission Valley Mortgage and Assignment of
Rents, and together with the Capmark Mission Valley Loan Agreement and all other
documents executed or delivered in connection with this loan, the Capmark Mission
Valley Loan Documents). The Capmark Mission Valley Loan has a stated maturity
date of November 11, 2016.
ii. KPA RIGG, LLC, as borrower, and Capmark Bank, as lender, are parties to that
certain Deed of Trust Note (the Capmark Garden Grove Loan Agreement), dated as
of October 4, 2006. Pursuant to that certain Loan Assumption, Affirmation, and
Modification Agreement, dated June 29, 2007, Grand Prix RIGG Lessee LLC
(Grand Prix RIGG) assumed all of KPA RIGG LLCs obligations under the
Capmark Garden Grove Loan Agreement. As a result, Grand Prix RIGG is obligated
under a mortgage loan in the original principal amount of $37.6 million (the
Capmark Garden Grove Loan), which amount is secured by a first-priority,
perfected mortgage and assignment of leases and rents in and to the Residence Inn in
Garden Grove, California (the Capmark Garden Grove Mortgage and Assignment of
Rents, and together with the Capmark Garden Grove Loan Agreement and all other
documents executed or delivered in connection with this loan, the Capmark Garden
Grove Loan Documents). The Capmark Garden Grove Loan has a stated maturity
date of November 11, 2016.
2. The loans set forth below were sold into the CMBS market and are part of a
mortgage pool known as ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage
Pass-Through Certificates, Series 2006-4, for which U.S. Bank, N.A. is trustee and LNR serves
as special servicer:
i. KPA Washington DC, LLC,
2
as borrower, and Merrill Lynch Mortgage Lending, Inc.
(Merrill Lynch) as lender, are parties to that certain Loan Agreement (the Merrill
Lynch Washington D.C. Loan Agreement), dated as of September 21, 2006. The
Merrill Lynch Washington D.C. Loan Agreement provides for a mortgage loan in the
original principal amount of $25.6 million (the Merrill Lynch Washington D.C.
Loans), which amount is secured by a first-priority, perfected mortgage and

2
KPA Washington DC, LLC was formerly known as KPA Washington DC DT, LLC.

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C053239/0312771/1591411.2
assignment of leases and rents in and to the Doubletree Guest Suites in Washington,
D.C. (the Merrill Lynch Washington D.C. Mortgage and Assignment of Rents, and
together with the Merrill Lynch Washington D.C. Loan Agreement and all other
documents executed or delivered in connection with this loan, the Merrill Lynch
Washington D.C. Loan Documents). The Merrill Lynch Washington D.C. Loan has
a stated maturity date of October 1, 2016.
ii. KPA Tysons Corner RI, LLC, as borrower, and Merrill Lynch as lender, are parties to
that certain Loan Agreement (the Merrill Lynch Tysons Corner Loan Agreement),
dated as of September 19, 2006. The Merrill Lynch Tysons Corner Loan Agreement
provides for a mortgage loan in the original principal amount of $25.2 million (the
Merrill Lynch Tysons Corner Loan), which amount is secured by a first-priority,
perfected mortgage and assignment of leases and rents in and to the Residence Inn in
Vienna, Virginia (the Merrill Lynch Tysons Corner Mortgage and Assignment of
Rents, and together with the Merrill Lynch Tysons Corner Loan Agreement and all
other documents executed or delivered in connection with this loan, the Merrill
Lynch Tysons Corner Loan Documents). The Merrill Lynch Tysons Corner Loan
has a stated maturity date of October 1, 2016.
iii. KPA San Antonio, LLC,
3
as borrower, and Merrill Lynch as lender, are parties to that
certain Loan Agreement (the Merrill Lynch San Antonio Loan Agreement), dated
as of September 19, 2006. The Merrill Lynch San Antonio Loan Agreement provides
for a mortgage loan in the original principal amount of $24.2 million (the Merrill
Lynch San Antonio Loans), which amount is secured by a first-priority, perfected
mortgage and assignment of leases and rents in and to the Homewood Suites in San
Antonio, Texas (the Merrill Lynch San Antonio Mortgage and Assignment of
Rents, and together with the Merrill Lynch San Antonio Loan Agreement and all
other documents executed or delivered in connection with this loan, the Merrill
Lynch San Antonio Loan Documents). The Merrill Lynch San Antonio Loan has a
stated maturity date of October 1, 2016.
3. The Obligations of the Grand Prix RIMV, KPA RIMV, LLC, Grand Prix RIGG,
KPA RIGG LLC, KPA Washington DC, LLC, KPA Tysons Corner RI, LLC, KPA San Antonio,
LLC (collectively, the Property Level Debtors) under the Capmark Mission Valley Loan
Documents, Capmark Garden Grove Loan Documents, Merrill Lynch Washington D.C. Loan
Documents, Merrill Lynch Tysons Corner Loan Documents, and Merrill Lynch San Antonio
Loan Documents (collectively, the Loan Documents) are secured by first-priority, perfected
mortgages, liens and security interests on and in each of the hotel properties commonly know as

3
KPA San Antonio, LLC was formerly known as KPA San Antonio HS, LLC.

5
C053239/0312771/1591411.2
Residence Inn San Diego, Residence Inn Garden Grove, Double Tree Guest Suites
Washington D.C., Residence Inn Tysons Corner, and Homewood Suites San Antonio
(collectively, the Hotel Properties) and related personal property (including all cash generated
thereby), owned or leased by the Property Level Debtors. None of the Property Level Loans are
cross-collateralized, either with each other or with any other loan.
4. Each of the Property Level Debtors is a separate, independent special purpose
entity (SPE) as contemplated by the Loan Documents. Although the exact terms of each of the
Capmark Mission Valley Loan Agreement, Capmark Garden Grove Loan Agreement, Merrill
Lynch Washington D.C. Loan Agreement, Merrill Lynch Tysons Corner Loan Agreement, and
Merrill Lynch San Antonio Loan Agreement (collectively, the Loan Agreements) may differ,
in general the Loan Documents require the applicable Property Level Debtor to maintain its
separateness by representing and agreeing to certain provisions, including provisions that it does
and will (i) limit its purposes to ownership and operation of the Property Level Debtors hotel
property; (ii) not own any other significant property or assets other than the Property Level
Debtors hotel property; (iii) not engage in any business other than the ownership and operation
of the Property Level Debtors hotel property; (iv) limit its incurrence of debt to that reasonably
necessary to operate the Hotel Properties; (v) observe organizational formalities and preserve the
separateness of its existence; (vi) maintain separate books and records; (vii) require the approval
of the independent director(s), for significant decisions; (viii) not merge or reorganize; and (ix)
conduct its business so that all of the assumptions contained in the non-consolidation opinion
that was given with respect to the Property Level Debtor and was relied upon by the Property

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C053239/0312771/1591411.2
Level Lender shall be true and correct (collectively, the Separateness Provisions).
4
See, e.g.,
Merrill Tysons Corner Loan Agreement, 5.1.23. The Loan Agreements prohibit the Property
Level Debtors from guaranteeing or becoming obligated for the debts of another entity and
pledging their assets for the benefit of another entity. Id. at 5.2.2 and 5.2.7.
5. In accordance with the Loan Documents, the Property Level Debtors are required
to fund from the revenue generated by the Property Level Hotel Properties certain reserves for
the payment of taxes, insurance, property improvements, repairs, replacements, and/or capital
improvements to the properties. See, e.g., Merrill Tysons Corner Loan Agreement, Art. VII.
6. Despite having the cash flow to do so, the Debtors failed to pay pre-petition real
estate taxes in the aggregate amount not less than $1,455,294.98 due on certain of the Hotel
Properties.
I declare under penalty of perjury that the foregoing is true and correct to the best of my
knowledge, information and belief.
Dated: August 23, 2010
/s/ Edward C. Brown
Edward C. Brown


4
A representative sample of one of the Loan Agreements, the Merrill Tysons Corner Loan Agreement, is attached as
hereto as Exhibit 1. Due to the size of this document a hard copy has not been served on the parties on the Master
Service List. A copy of the document is available on-line, http://omnimgt.com, or may be requested by contacting the
undersigned counsel.
LOAN AGREEMENT
Dated as ofSeptember 19, 2006
between
KPA TYSONS CORNJ.RRI LLC,
a Delaware limited liability company,
as Borrower
and
MERRILL LYNCH MORTGAGE LENDING, INC.,
a Delaware corporation,
as Lender
. '
..
TABLE OF CONTENTS
Page
L DEFINITIONS; PRINCIPLES OF .. --. !
Section 1.1.
Section 1.2.
Definitions ............................................................................................ I
Principles ofConstruction .................................................................. 19
D. TERMS ..... - ........ ------- .. ---------.. ---19
Section 2.1.
Sedion2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Section 2.6.
Section 2. 7.
Loan Commitment; Disbunement to Borrower ................................ 19
Interest Rate ....................................................................................... 20
Loan Payment .................................................................................... 21
Prepayments ....................................................................................... 21
Release ............................................................................................... 22
Loc:kbox Account/Cash Mauagcment ................................................ 22
Defeasance ......................................................................................... 23
10. JN'TI!N'I10NALLY DEI..E'fED ....... ----- .... ---- .... ------ 25
Section 4.1.
Section 4.2.
Section 4.3.
Borrower Repteaentatious .................................................................. 25
Survival ............................................................... 33
Knowledge and Other Matters ........................................................... 33
V. BORROWER COVENAN"fS --.. -------- .. -- ... .. --- .. -33
Section 5.1. Affirmative Covenants ....................................................................... 33
Section 5.2. Negative Covenants ........................................................................... 43
VL INSURANCE; CASUALTY; CONDEMNATION; REQUIRED
Section 6.1.
Section 6.2.
Section 6.3.
Section 6.4.
Insurance ............................................................................................ 48
Casualty .............................................................................................. 51
Condc:mnarion .................................................................................... 52
Restoration ......................................................................................... 52
VD. RESERVE JltJNDS ---- .. ---------------------56
Section 7 .1.
Section 7.2.
Section 7 .3.
SectionU .
Requited Repairs ................................................................................ 56
Tax and Insurance Bsaow Fund ............................................... ....... 56
Replacements md Replacement RC5e1Ve ........................................... 57
Reserve Fmds, Geuerall.y .................................................................. 60
VID. DEPAUL TS -------------.. --... - ... - .......... - ... ---61
Section 8.1.
Section 8.2.
Section 8.3.
Event ofDefllllt ...... ......................................................................... 61
Rc:z:a.ccliCSu .. ooooooooouooooooooooooooooo .. oooo-- .. uooooooooo .. o'"ooooOoooooo 63
Remedies Cumulative; Waiven ......................................................... 64
IX. SPECIAL PROVISIONS------.. ---- .. ------64
Section 9.1.
Section 9.2.
12!180147.6.11\lSINI!SS
Secondary Market Tran.sactions ......................................................... 64
Jnd1111111ification ..................................... ....... ........... 66
..j. .
Section 9.3.
Section 9.4.
Section 9.5.
TABLE OF CONTENTS
(continued)
Page
Exculpation ........................................................................................ 68
Matters Concerning Manager ............................................................ 71
Serviccr .............................................................................................. 71
X. MISCELLANEOUS ... - ....... - ... - ... - .... - ................... --... ------- 71
Section 1 0.1.
Section 1 0.2.
Section 10.3.
Section 1 0.4.
Section 10.S.
Section 1 0.6.
Section 10.7.
Section 1 0.8.
Section 10.9.
Section 10.10.
Section 1 0.11.
Section 10.12.
Section 10.13.
Section 1 0.14.
Section 10.15.
Section 10.16.
Section 10.17.
Section l 0.18.
Section 10.19.
Section 1 0.20.
Section 10.21.
Section 1 0.22.
Section 10.23.
Section 1 0.24.
Section 1 0.25.
Swvival .............................................................................................. 71
Intentionally Omitted ......................................................................... 71
Governing Law .................................................................................. 71
Modification, Waiver in Writing ....................................................... 73
Delay Not a Waiver ........................................................................... 73
Notices ............................................................................................... 73
Trial by Jury ....................................................................................... 74
Hcadinp ............................................................................................ 74
Severability ........................................................................................ 74
Pieferences ......................................................................................... 15
Waiver ofNotice ................................................................................ 75
Remedies of Borrower ....................................................................... 75
Expenses; Indemnity .......................................................................... 75
Schednlea Incorporated ...................................................................... n
Oflicta, CoiDlterclaims and Defenses ................................................ n
No Joint Ventun: or Partnership; No Third Party Beneficiaries ........ n
Publicity ............................................................................................. 78
Waiver ofManhalling of Assets ....................................................... 78
Waiver of Counterclaim ..................................................................... 78
Collflict; Cooslruction of Documents; Reliance ................................ 78
Brokma and Financial Advisors ......................................................... 78
Prior Agn:anents ............................................................................... 79
Execntion in Counterparts .................................................................. 79
Entire Agreement_ ............................................................................ 79
Time is of the Essence ....................................................................... 19
. j j ~ . .
..
Scbcdulel
Schedulen
Schedulem
ScheduleW
Sc:hedulo V
ScheduloVI
Schcdutovn
Schedulovm
12111747.6.iiiJSINEss .
SCHEDULES
Organizational Chart ofBonower
Required Repair
Reserved
Exceptions to RqncsentatiODS
Reserved
Dc:scription of Management Agrec:ment
Identification ofCettain Qualified Managm
. . -
. .....
..
.. . :
LOANAGREEMNT
THIS LOAN AGREEMENT, dated as of September 19, 2006 (as amended,
restated, replaced, supplemenled or otherwise modified from time to time, this "Agmpent'1,
MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corpcnation, having an
address at Four World Financial Center, 16"' Floor, New York, New York 10080 ("!&nder'),
and KPA TYSONS CORNER Rl LLC, a Delaware limiled liability company, having its
principal place of business at c/o Innkeepers USA Truat, 340 Royal Poinciana Way, Suite 306,
Palm Beach, Florida 33480 ("Borrower'1.
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
WHEREAS, Leoder is williDg to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as hereinafter
defined).
NOW THEREFORE, in COIISicleratiol of the making of the Loan by Lender and
the coveoants, agreements, representations and wamnties set forth in this Agreem.e:ot, the parties
hereto hereby covenant, agree, repreant and wanantas follows:
I. DEFINITIONS; PRINCIPLES OF CON$TRUCTIQN
Section I.l. DellDidous. For all pwposes of this Agreemeot, except as
otherwise expressly required or unless the context clearly indicates a contrary intent
"MJf' shall mean the automated clearinghouse system.
"Addldoaal Insolvepcy OpJDion" shall have the meaning set forth in Section
4.1.30<bl hereof.
"Afflllate" shall mean, as to aoy Person, any other Penon that, directly or
indirectly, is in control ot is controlled by or is unckz common control with sw:h Person or is a
director or officer of such Penon or of an Affiliate of such Person.
"Aim!" shall mean PNC Ba.ok National Association or any successor
Institution acting as Agent under the Cash Management Agreement.
"AireeJDeDt'' sballmc:an this Loan Agreement, as the same may be ameoded,
restated, replaced, supplemented or otherwise modified &om time to time.
"Agreement of Mange[' sba1l mesn, with respect to the Property, that certain
Assignment of Management Agreement and Subordination ofMallagement Fees, dated as of the
date hereof, amoug Lender, Bonower, Operaling Lesaee and Manager, as the same may be
amended, restated, replaced, supplemented or othctwise modified from time to time .
. . ... .
'r,.
"Altenrtioa" shall mean any demolition, alteration, installation, improYeiJ'Ient or
~ a n s i o n of or to the Property or any portion thereof.
"Aitera!fon l)nshold Amounf' shall mean, witb respect to an Alte:ation at the
Property, an amount equal to 4% of the original principal balance of the Loan.
"Anaaal Badgef' shall mean a budget setting for the Property prepared by
Bormwcr in ucordance with Section S.l.l!.Cdl hereof for the applicable Fiscal Y car.
"Approved Al!nual Bgdget" &ball have the meaning set forth in Section
S.l.ll(d) hereof.
"Aslig!ment of I eues" shall mean that cortain fiist priority Assignment of
Leases and Rents, dated as of the date hereof; from Borrower, as assignor, to Lender, as assigocc,
assigning to Lender all of Bormwer's intt:rest in and to the Leases, the Room License
Agreements aad Rmts of the Property as security for the Loan, as the same may be amended,
restated, replaced, supplemcmcd or otherwise modified from time to time.
"Award" shall mean any compelllllltion paid by any Govemmental Authority to
or for the benefit of Borrower in connection with a Condemnalion in respect of all or any part of
the Property.
"Buknlptcy Action" shall mean with respect to any Person (a) such Person
filing a voluntary petition under the Bankruptcy Code or any other Fcdc:nl or state bankruptcy or
insolvency law; (b) the filing of an involuntary petition against such Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, (c) such Person
filing an answer consenting to or otherwise acquiescing in or joining in any involuntary petition
filed against it, by any other Person Wldcr the Bankruptcy Code or any other Federal or state
banlauplcy or insolvency law; (d) sw:h Penon comenting to or joining in an application for the
appointment of a custodian, receiver, trustee, or examiner for such Person or any p o ~ o o of the
Ploperty; or (e) such Person malcing an assignment fOr the benefit of cmlitors, or admitting. in
writing or in any legal proceedin& its insolvency or inability to pay its dcb1s as they become due.
"Ban.lr.ruptcy Cocle" shall mean Title 11 of the UDited States Code, II U.S. C.
101, et ~ as the ame may be amended from time to time, BDd rsny Sli(:Ce&Sor statute or statu tea
and all rules and regulati0111 from time to time promulgated thereunder, and any comparable
foreign laws relaling to baukruptcy, insolvency or creditors' rights or any other Federal or stale
banbuptcy or insolvalcy law.
"Basic Camfpg Costs" shall mean. with respect to the Property, the sum of the
following cos1s auociated with the Property for the relevant Fiscal Year or payment period: (a)
Taxes, (b) Other Charges and (c) Insurance PlanilDilS.
"Borrower'' shall have the meaning set forth in the introdudDry puapph llereto,
together with ita wccessors and pc:nnitted assigns.
-2-...... .
. . .
.
:
'
"Business Day" shall mean any day other than a Saturday, Sunday or any other
day on wbich national bmks in New York, New York; or the place of business of my then
cliii'Cilt are not open for business.
"C!IIIItal Expenditures" shall mean, for any period, the amount expended for
items capitalized under GAM and the Unifonn System of Accounts (including expenditwes for
building improvements or major repaiJs).
"Cuh Management Aecount" shall have the meaning set forth in the Cash
Management Agreement
"Cull Managepm!t Aareemenf' shall mean that certain Cash Management
Agice.ueut, dated as of the date hereof, by and among Borrower, Manager, Operating Lessee,
Agent and laider, as the same may be amcodcd, restated, n:placcd, supplemented or olhcrwisc
modified from time to time.
"Cuaaltv" sball have the meaning set forth in Section 6.2 hereof.
"Cuaalty CoDaultut'' shall have the meaning set forth in Section 6.4lbl(iiil
hereof:
"Cuualty Ret!fpage" shall have the meaning set forth in Section 6.41bXivl
hereof.
"Ciosi!!g Date" shall mean the date of the funding of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as it may be
further mumded from time to time, and my Sllccessor ststlltca thereto, and applicable U.S.
DepaibDent ofTreaswy regulations isaued punuant thereto in temporary or final form.
"Company Aareement" shall mean the Limited Liability Company Apeement
of Borrower dated as of the date be!eof, entered into by IImkeepclS USA Limited Partnmb.ip.
"Condemnation" shall mem a tmoporary or permanent taking by my
Govemmeotal Authority as the result or in lieu cr in mlicipalion of lhe exercise of lhe right of
condemllltion or eminent domain, of all or my part of the Property, or any interest therein or
right accruing lhereiO, including any right of access thereto or any change of grade affecting the
Property or any part thereof.
"Condemnation Proqeds" shall have lhe meamng set forth in Section 6.4(b).
"Contror shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of mansgcment, policies Or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.
"Debt" shall mean the ouhJInding principal amount set forth in, and evidenced
by, 1his Agreement and the Note together with all inten:&t acctued and llllplid thmon and all
. -
..
.. .-.
olber sums (including, but not limited to, any Yield Maintenance Premium) due to Lender in
respect of the Loan wtder the Note, this Agreement, the Mortgage or any other Loan Document.
"Debt Serylce" shall mean, with respect to any particular period of time,
scheduled payments of interest and, if required hereunder, principal, due wtder this Agreement
and the Note.
''Debt Service Paymeat Amo .. t" shall mean, with respect to each Payment Date
(i) prior to the Payment Date occurring in October, 2009, a monthly payment of interest ooly for
the applicable Interest Period, which for the purposes hereof 8lld I8SIIIIling the Loan is equal to
$25,200,000, shall equal to (a) SJ18,168.40 iu any Interest Period consisting of 28 days, (b)
$122,388.70 in any Interest Period consisting of29 days, (c) $126,609.00 in any Interest Period
consisting of30 days and (d) $130,829.30 in any Interest Period ccmsisting of 31 days and (ii)
from and including the Payment Date occurring in Novcmba", 2009, a monthly payment in the
amount of SlS1,556.90 (the principal component of which amount is bued on a 30 year
amortization scbedule ).
''Defaalf' shall mean the occurrence of any event hcmmder or under any other
Loan Document which, but for the giving of notice or P811818e of time, or both, would be Ill
Event of Default
"Defaalt Rate" shall mean, with 1 espect to tb.e Loan, a rate per 8IIDIIlD equal to
the Jesser of(a) the Maximum Legal Rate or (b) five percent(S%) above the Interest Rate.
"Defeasance Date" shall have the meaning set forth in S!!flion 2,7.1lil hereof.
nereasance Collateral" shall mean U.S. Obligations, which provide payments
(i) on or prior to, but as ci.OBC as possible to, the Business Day immediately preceding all
monthly Payment Dates and other scheduled payment dates, if any, under the Note after the
Defeesaore Date 8lld Up to 8Dd including the Prepayment Release Date, and (ii) in amounts equal
to or gRiler tban the Scheduled Defeasance Payments rdating to such monthly Payment Dates
and other scheduled payment dates.
"Defeuauee CoUatenl Account" shall have tho mOIIIIing set forth in Section
"DefCUIDce Eveaf' shall have the meaning set forth in Section 2.7.1 hereof.
"Eligible Acco1111t" shall mean a separate and identifiable account from all other
funds held by tb.e boldiug iostitution that is either (a) an ICCOUIIt or accoUD!s maintained with a
fedenl or state-chartered depository institution or trust company which complies with the
defiDition of Eligible Institution or (b) a segregated trust account or accoUDis maintained with a
fedaal or state chartered depository institution or trust company acliDg in its fiduciary capacity
which, in the CUG of a state chartered depository institution or tnlllt company, is subject to
regulations sub&tantially similar to 12 C.F.R. 9.10(b), having in either CUG a combined capital
and surplus of ll least Fifty Million md 001100 Dollars ($50,000,000.00) md subject to
supervision or examination by federal md state authority. An Eligible Account will not be
evidenced by a certificate of deposit, ~ k or other instrument. .
. .
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. ', I
. -4-.
''Eligible Institution" shall mean a depository institution or trust company, the
s1lrt tenn UllleCIIRd debt obligations or commereial paper of which are rated at least "A-1 +" by
S&P, "P-1 w by Moody's and "F-1+" by Fitch in the case of accounts in which .filnds arc held for
thirty (30) days or less (or, in the cue of accounts in which funds are held for more tbao thirty
(30) days, the long-term unsecured debt obligatiODS of which are rated at least "AA" by Fitch
and S&P and "Ml." by Moody's).
''Embarroed Penon" shall have the meaning set forth in Sectioo4.13S hereof.
"Jgyiroameatal lndemlllty" shall mean that certain Environmental Indemnity
Agrecmc:ut dated the date hereof executed by Borrower in connection with the Loau for the
benefit of Lenda-, u the same may be amended, restated, replac:ed, supplemented or otherwise
modified from time to time.
"ERISA" shall mean the Employee Income Security Act of 1974, as
ameadcd fiom time to time, and the regulations promulgated and the rulings issued tbemmder.
"Eveat or Defaalt" shall have the mCIJiing set forth in Section S.Hal hereof.
"fiscal fear" shall mean each twelve (12) month period commencing on JIDIIII)'
1 and caliDg on December 31 during each year of the leml of the Loan.
"fitch" shall mean Fitch, Inc., or its successors and assigns as a Rating Agency.
"fone Ma!eare" shall mean a delay due to acts of God, govc:rmnental
restrictions, stays, judgments, onicrs, decrees, actions, civil commotion, fire, casualty,
strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable
control of Borrower, but lack of 1imds in and of itself shaD DOt be deemed a cause beyond the
control of Borrower.
"Fraael!e Agmmeat'' shall meao that certain agreement dated October 20,
2000 betweea Marriott International, Inc., as francbisor, 1nd KPA Lcascco, lnc., as :fhmrhi....,,
with 1espect to 1he Pwpeny.
"GAAP" shall mean genCilllly accepted accounting principles in the United States
of America as of the date of the applicable financial report.
Aathorlty" shaD meao IDY court, board, agmcy, commission,
office or other authority of my 111ture whatsoever tor IDY governmental unit (tbroign, federal,
state, county, district, municipal, city or otherwise) whetber now or in exist=.
"Gross bcome from ODeiJ!tionll" shall mean all revenues, receipts IDd iDcome
of my kind dcrim1 directly or indirectly by or on behalf of Borrower or Opcialing Lessee from
or iD c:oonection with the oprntion of the Property, delcrmincd on an accrual basis in accordance
with GAAP, whether on a cash basis or credit, paid or collected, including, without limitation,
net rent (i.e., gross rent less pass-througbs of utilities and other operating expenses) received
.fi:om commercial tenants of the Property, and CICI:uding, however: (i) funds furnished by
Bo110wer or Operating Lcsaee to Manager, (ii) investment inCI)m.e including inltacst acaued on
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amounts in the accounts of the Manager; (iii) federal, state and municipal hotel, excise, sales,
occupancy and usc taxes collected directly from patrons and guests of the Property or as part of
the sales pric:c of my goods, scrvic:cs or displa)'5, such a& gross receipts, admissions, cabaret or
simil1r or equivalent taxes aDd paid over to federal, state or municipal govcrrunents; (iv)
gratuities; (v) proceeds of insurance and condemnation, except for the proceeds &om business
intemlption insurance; (vi) procceds from the sale or other disposition of capital assets; and
rebates, discounts or cmlits of a similar nature; and {vii) "pass-throughs" of food or other
expenses incuned by guests arising for the purchase of goods or services from third-party
vendors.
"Gaarutorn shall mean hmkeepers USA Tnlst, a Maryland real estate
investment trust and its permitted successors and/or assigns in acc:oxdaace with Section 5.2.10
hereo[
"Guarutv" aball mean that certain Glwanty Agreement, dated as of the date
hercot: executed and dcliverccl by Guarantor in connection with the Lom to and for the benefit
of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified
from time 10 time.
"lmprovemeats" shall have the meaning set forth in the granting clause of the
related Mortgage with 1espect 10 the Property.
"IDdelttedJ!ess" of a Person, at a. particular dale, means the swn (witbout
duplication) at such dale of (a) all indebtedness or liability of auch Person (including, without
limitation, amoUD!s for bonowcd money and indebtedness in the fOJDJ of mezzanine debt or
prefem:d equity); (b) obligatious evidenced by bonds, debentures. uotes, or other similar
instrummts; (c) obligatious for the dcfcmd purchase price of property or services (mcluding
trade obligations); (d) obligations under leuers of credit; (e) obligations under acceptance
facilities; (f) all guanmties, Clldorscments (other than 10r collection or deposit in the ordinary
course of business) and other continprt obligatious to purdwc, to provide fimds for payment,
to supply fimds, to invest in any Person or entity, or otherwise to assue creditor against loss;
and (g) obligations aecmed by my LieDS, whether or not the obligatioos have been assumed
(olher than the Permitted EDcu:mbraoces).
"bulrmnlficd I .lbilltia" shall have tho meaning set forth in &#jon I O.l3(b)
hereof.
"'D"rmnlfylllg Persoll" shall mean Bonower.
"'Ddeoeadeat Mauger" shall mean a illllllliF of who is not at tho
time of initial appojnhneut, or at any time while serving as a mana.ger of Borrower, and ha& not
been at any time during the five (5) years: (a) a stocl:holder, director (with the
exception of serving as the Independent Manager of Borrower), oflioer, employee, partner,
member, attomey or coUDSCI. of Borrower or any of its Affiliates; (b) a aeditor, customer,
supplier or otha: Persoa who derives any of its purdlascs or revmues from its activities with
or my of its Affiliates; (c) a Person controlling or under common control with my
such stockholder, director, officer, employee, pailllet, member, aeditor, customer, aupplier or
..
other Person; or (d) a member of the immediate family of any such stoclr:holdcr, director, officer,
employee, partner, member, creditor, customer, supplier or other person. A natural person who
satisfies the foregoing dcfurition other than subparagraph (b) shall not be disqualified fiom
serving as an lndq1e11dcnt Manager of Borrower if such individual is sn independent direetor
provided by a natimaDy-rccognized company that provides professional independent diicctors
and other corporate scrvicca in the ordinary cowse of its business. A natural person who
otherwise satisfies the foregoing dcfurition shall not be disqualified fi:om serving as an
IDdepcndent Manager of Borrower bccau.se such person is the independent director or
indcpsndc:nt manager of a "special pwpose entity" affiliated with Borrowa- that does not own a
direet or indirect equity interest in Borrower if such individual is an indcpcndont director
provided by a nationally-recognized wnlp8lly that provides professional independent directoJS.
For p111p03cs of this paragraph, a "special purpose entity" is an entity, whose organizational
documents contain restrictions on its activities and impose requirements intended to preserve its
separateness that are substantially simil.- to !bose of the Bo110wer, and provide, inter alia, that it:
(a) is organiml for the limited purpose of owning, leasing and/or operating one or more
properties or of being the general partner or member- of a special purpose entity orpnizcd for the
limited pmpose of owning, leasing and/or operating one or more proper1ics (i.e., of an m
Borrower"); (b) bas nmictions on its ability to incur indebtedness, dissolve, liquidate,
consolidate, merge and/or sell assets; (c) may not file vohmtarily a bankruptcy petition either on
its own behalf or, if it is a general partner or member of an SPE Borrower, on behalf ofsw:h SPE
Borrower without the consent of an independent direetor and (d) shall conduct itself in
accordance wilh cel1ain "separateness covenants," including, but not limited to, the maintenance
of its books, records, bank accounts and usets sep8Illtc fi:om those of any otbcr person or entity.
"lllsolveacy Opinion" shall mean that certain non-consolidation opinion letter
dated the date hereof delivered by Hunton &: Williams ll.P in WIUlcction with the Loan.
"1Dauruce P!'!2!!hm!'' shall have lhe meaning set forth in Section 6.1@ hereof:
"b!aamce Proceeds" sball have the meaning set fOrth in Section 6.4(b) hereof.
"IDterest Period" shall mean, in connection with the calculation of interest
accrued with respect to any specified Payment Date including the Maturity Date, the period
wnnnencing on (and including) the fiJSt (1st) day of the prior calendar month and ending on
(and including) the last calendar day of the prior calendar month.
"lllterest Rate" sball mean a fixed mte per annwn equal to 6.029o/o.
"Leae" shall mean any leaae, sublease or subsublcase, letling. liceuse,
wnccssioa or other agreement, oth thaD a Room Agreement, wbctbcr wriucn or oral
and whether now or herea1ler in effect, pursuant to which any Person ia grated a poiSOI80r:y
interest in, or right to u.se or occupy all or any portion of any space in the Plope.ty ( acluding
bote! guests a1 the Ptoperty), and every modification, amendment or other agreement relating to
such lease, sublease, sabsublease, or other entered into in connection with IAICh lease,
subloasc, subsubloase, or other agrcemr:nt and every guarantee of thc pcrfotiDIDCC and
obsuvanc:c of the wvcnams, conditions and agreements to be performed and observed by the
otbc:z- party thc:Rto.
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.
"Leg.J ReQoinmentl" shall mean, with respect to the Property, all federal, state,
county, municipal and other governmental statutes, laws, rules, orders, mgulatio1111, ordinances,
judgments, dcaecs and injunctions of Governmental Authorities affecting Borrower, Operating
Lessee, the Property or ilny part thereof, or the construction, use, Alteration or operation lhcnof,
or any part thereof; whether now or hereafter enacted and in force, and all permits, licenses and
authorizations and mgulations of Governmental Authorities relating thereto, and all covenants,
agreements, restrictioos and encumbrances contained in my instnuncnts, either of record or
known to Borrower, at any time in force affecting Borrower, Operating Lessee, the Property or
any part thereof, including. without limitation, any which may (a) require repairs, modifications
or Alterations in or to the Property or any part thereof, or (b) in any way limit the liSe and
enjoyment thereof.
"Lender" shall have the meamng set forth in the in1roductory paragraph hereto,
together with its ~ s o r a and assips.
"Uc:eases" sball have tbc: meaning set forth in Section 4.1.22 hem>!
''Y!!!.'' shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
usigament, security interest, or my other encumbrance or charge on tho Property, or any portion
thereof or any intrnst therein, including. without limitation, any conditional sale or other title
R:tenlion agreement, any financing lease having substanlially the same economic effect as any of
the foregoing. the filing of any financing statement (tmless otherwise permitted. under the Loan
Documents), and mechanic's, materiaJmens and other similar liens and encumbrances.
"Lou" shall IM8JI the loan made by Lender to Bo:uower pursuant to this
Agreement in the amollllt of Twenty Yrve Million Two Hundred TboUSIIDd and No/100 Dollais
($25,200,000.00).
"Log Documcata" shall mean, colloctively, thia Agreement, the Note, the
Mortgage, the Assignment of I eases, the Envii'OIIl1lental Indc:nmity, the Agreement of Manager,
the Guaranty, the Cash Management Agreement, the .LorJcbox Agreement and all other
doc:ummts executed and/or delivered in coonoction with the Loan.
"Lor!rMJ Acsont" shall have the meaning set forth in the Cash Management
Agreement hereo
"Lnr!rho.J Agreemmt" shall have the meaning set forth in the Cash Management
Agreement
"Losk!m ""k" shall have the meaning set forth in the Cash Management
''Managtmpt Agreement" shall mean with respect to the F'loperty, (i) the
management agr=mmt deacribcd on Sshsdu!e VD attached hereto, or (ii) if the context Rquires,
the Replacanmt Management Agreemeat
. :.
"Muacer" shall mean Innkeepers Hospitality Management, Inc., a Florida
corporation, or, if !he context mquires, any Qualified Manager who is managing the Property in
accordance with !he tenns and provisions of !he ~ c : n t Agreement.
"Material Advene Effect" shall mean any event or condition that has a material
advene effect on (i) the use, value or possession of the Property, (ii) the business, prospects,
profits, operations or condition (financial or otheJwise) of Borrower, or (iii) the ability of
8orrowCI" to repay the principalllld interest of the Loan it becomes due.
"Maturitt Date" shall mean the Paymeut Date occwring in October, 2016, or
such other date on which the final payment of principal of the Note becomes due llld payable as
therein or herein provided, whether at such stated maturity dale, by declaration of acceleration,
or otherwise.
"MarimDm Le21l Rate" shall mean the maximum nonusurious interest rate, if
any, that ll any time or from time to time may be contracted for, taken, rescncd, charged or
received on the indebtedness evidenced by the Note and as provided for herein or tbe other Loan
Docwncnts, IDider the laws of such state or states whose laws are held by any court of competent
jurisdiction to govem the interest rate provisions oftbe Loan.
"Mezznine Borrower" shall have the meaning set forth in Section 9.1.4(cl
"Mezzulne Loan" shall have the meaning set forth in Section 9.1.2Cb) heRo
"Moody's" shall mean Moody's lnvestoiS Service, Inc., and its sw:cessors lllld
assigns as a Rating Agency.
"Mortgage" Bball mean, with respect to the Property, that certain first priority
Deed of Trust and Security Agreement, dated the date harcot; executed and dciM:red by
Borrower to LeDder as security for the Loan and CIICIIIIlbering the Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to time.
"Net Operatlpg Income" shall mean the amolDit obtained by subtracting
Operating Expenses from Gross Income from Operations.
"Net Proceeds" shall have the meaning set forth in Section 6.4fb) heRo
"Net Proceeds Deflciegcy" shall have the meaning set forth in Scctjog 6,1fb)(W
hereof.
"Note" shall mean that certain Promissory Note, dated the date hereof; in the
principal amoiDit of Twenty Five Million Two Hundred Thousand and No/100 Dollar&
($25,200,000.00), made by Borrower iD favor of LcDdcr, as thc same may be amended. restated,
replaced, supplemented or otherwiSe modified fiom time to time.
"Omcer's CertUicate" shall mean a certificate delivered to Lender by BoJrower
which is sigllcd by an authorized o.tlicer of the general partner or managing member of Borrower.
...
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MODerating Emenses" shall mean the total of all expenditures by Borrower,
computed in accordance with GAAP, of whatever kind relaling to the operation, maintc:nm:e
and management of the Property for the applicable period, includillg without limitation, utilities,
r:epaiJs and maintenance (other than rt411irs or maintenance which are Capital Expendilllml),
Insurance PR:miwns, Other Charges, liceose fees, Taxes, advertising expemes, management fees
equal to three percent (3%) of Gross Income liom Operations. payroll aod related taxes,
computer processing charges, operational equipment or other lease payments permitted by this
Agreement, and other similar costs, but excluding depreciation, Debt Service Payment AmoiDlts,
Capital Expenditures and contributions to the Reserve Funds applicable to the Property.
"Operating Lease" shall mean that certain Operating Lease, dated as of Janllll')'
8, 2001, between Borrower, as lessor, and Operating Lessee, as Jessee.
"Open.tla!! I ere" sball mean KPA Leaseco Inc., a Vuginia corporation,
together with its successors ml permitted assigns.
"'Der&tinl! Reuf' &ball mean all amounts to be paid to Borrower by Operating
Lessee p ~ to the Operating Lease.
"Other Chmes" shall mean all ground rents, mainteoan.ce charges, impositions
other than Taxes, and any other charges, including. without limitation, vault charges and license
fees for the use ofVIIIIts, chutes and similar areas adjoining the Ploperty, Dow or hereafter levied
or asscssed or imposed against the Property or any partlhereo[
"Otber nhlfpdont" shall bave the meaning as set forth in the Mortgage.
"Payment Date" sba1l mean the first (1st) day of every month during the term of
the Loan, to but tCiuding the Maturity Dale.
"Permitted Eac:aml!l'lllees" sball mean, with respect to the Property,
eollectively, (a) the Liens and security interests created by the Loan Documents, (b) all Liens,
c:DCUIIIbnmces and other mattm disclosed in the Title Insurance Policy and Sum:y relating to
the Property or any put tha:cot; (c) Liem, if any, for Taxes imposed by any GoverriDlental
Authority not yet due or delinquent or are being contested pursuant to Section 5.1.2 hereof; (d)
mtx:hanic's, materialmen's, 1"'41"jnnan's and other like Liens arising in the ordina!y course of
business and securing obligations that are not overdue or delinquent that are being contested
pursuant to the terms of the Mortgage. (e) Room License .AgieeD Ifill"' DOW Cllisting. (f) such
other tide and survey exceptions as Lender has approved or may approve in writing in Lender's
sole discretion and (g) the Lien created by the Operating Lease, which Permitted Encumbrmces
in the aggregate do not materially adversely affect the value or use of the P10perty or Borrower's
ability to repay the Loan.
"Permitted Innstmeats" shall have the meaning set forth in the Cash
Managanent Agreement
"Permitted Rep<e Date" shall mean the cla1e that is the earlier of (a) three (3)
years from the Oosing Date, or (b) two (2) years liom the "start up day" within the meaning of
. . .
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Section 860G(aX9) of the Code of the REMIC Trust established in connection with the last
Securitization involving my portion of the Loan.
"Permitted Transfer" means any of the following: (a) any transfer, directly as a
result of the dealh of a natural penon, of stock, membership interests or other ownenhip
interests previously held by the decedent in question to the Person or Persons lawfiiUy Clltitled
thereto, (b) any transfer, directly as a result of the legal incapacity of a natw"al person, ofstoclc,
membership interests or other ownership inta-ests previously held by such natwal person to the
PCISOn or Persons lawfully entitled thereto, (c) any transfer of ahares in any Person whose sbmes
are publicly traded on any nationally recognized public exchange. or (d) any transfer (direct or
indirect) of limited partnership intc:rcst in lankeepen USA Limited Partnership, a Virginia
limited partnership (''IDakeepen LP'1 provided that at all times one hundred percent (I 00%) of
the gencnl partnenbip interesls in IDnlceepen LP are beneficially owned and CODtrolled by
Sponaor.
"Person" shall mean any individual, COJPOraOOD, partnership, joint ventmc,
limited liability COIIIpiDy, estate, trust, unincc11porated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any fiduciary acting in
such capacity on behalf of any of the foregoing.
"PmonaJ Property" shall have the meaning set forth in the granting clause of
the Mortgage with 1 cspcct to the Property.
"Pbys!ea! Conditions Reoort' shall mean, with respect to the Property, that
certain Property Condition Report dated August 25, 2006 by EMG delivered to Lei1der in
CODDCCtion with the closing of the Loan.
2016.
"Polldes" shaD have the meaning specified in Sectjon 6.l(b) hereof:
have the meaning specified in Section 6.l(b) hereof
"Prepaymeat Release Date" shall mean the Payment Date occurring in July,
"PropertY" shall have the meaning set forth in the Mortgage.
"froyfded laformat!on" shall moan my and all financial and other informalion
provided at any time by, or on behalf of, any IDdemnifyi.os Person with respect to the Property,
Borrower, Operating Lessee. Gwuantor andfor Manager-.
"'uaUfled lasarer" shall mean one or JDCml tinanciany sound and responsible
insurance comp&Dies authorized to do business in !be Stale aDd having a claims paying ability
tating by at least two (2) of the Rating AgeDCiea tiling the Securities (one of which shall be S&P
if they are ratina the Secwities and one of which will be Moody's if they are rating the
Securities) of "A or bc:ttcr by S&P and Fitch 8ild "A" by Moody's, or if only one Rating
Ajency is rating the Securities, then only by such Rating Agency .
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''Oaallfled Manager" sbalJ mean either (a) Manager; or (b) a Person identified
on ScMdu1c vm or (c) in the reasonable judgment of Lender, a reputable and experienced
DWllplll<t organization (which may be an Affiliate of BoJTOwer) possessing experience iu
managing properties similar in size, scope, use and value as the Property, provided, that in the
case of ciBIISC Cc>. Borrower shall have obtained (i) prior written confirmation from the
applicable Rating Agencies that management of the Property by such Person will not cause a
doWliJllde, withdrawal or qua\i fication of the then cunent ratings of the Securities or any class
tha'eof and (ii) if such Pmon is an Affiliate of Borrower, an Additional Insolvency Opinion.
"Ratjpg Ageuc:ies" shall mean each of S&P, Moody's and Fitch, or any other
nationally recognized statistical ratiDg agency which has been approved by Lender.
"REMIC Trust" shall mean a "teaa estate mortgage investment conduit" within
of Section 8600 of the Code that holds the Note or any interest thczein.
"Rents" sba1l mean, with respect to the Property, all reDts, MOt equivaleuts,
moneys payable as damages or in lieu of reot or rent equivalents, royalties (including. without
limitation, all oil and gas or other miDeral IDCI bonuses), income, rcccivablea, receipts,
reveuuea, deposits (including. without limitaticm, security, utility and other deposits), accounts,
cash, issues, profits, charges for services ll!lldmxf, and other coosideration of whatever furm or
nature received by or paid to or for the acaiUDt of or benefit of Borrower, Openting Lessee or its
agents or employees from any and aD som:es arising from or attn"butable to the Plopesty, and
proceeds, if any, from business iutmuption or other loss of income or insurance, including.
without limitation, all hotel receipts, revemu:s 8Dd credit card receipts collected from guest
rooms, restaurants, bars, meeting rooms, banquet rooms 8Dd recreational facilities, all receivables,
custaner obligations, installment payment obligations and other obligations now existing or
hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of
the rigllt of the use and occupancy of property or rendering of services by Bomwer or Operating
Lessee or any operator or manager of the hotel or the commeccial space located iD the
Improvements or acquired from others (mcluding, without limitation, from any Room License
Agrec:mCDI, or from the reutal of any office space, retail space, gaest rooms or other space. halla,
storea, and offices, and deposits securing reservations of such space), license, lease, aublcase and
concession fees and renlals, health club membership feea, food and beverage wholesale and retail
sa1ea, service charges, vending mchine sales and proceeds, if any, from bus'nma intenuption or
other loss of income illsurance.
"Replacement M1nm!!K?It Agmmenr shall mean, collectively, (a) either (i)
a management agreemCDt with a Qualified MaMger subatantially in the same form and substance
as the Agreement, or (ri) a management agreement with a Qualified Manager,
whicb 11181118CD1ent agreement shall be reasonably acceptable to Lender iu form and subatance,
proyided, with to lhia W.lensc (u), Le.ndcr, at its option, may J:eqUire that Borrower
shall bave obllined prior written coofi!DItirnl from the ljlplicable Rating Ageocies tbat auc:b
management agreement will oot canse a downgrade, withdrawal or qualification of the then
CIIJrellt rating of !he Securities or any class thereof and (b) an assignment of managemmt
agreement and subordination of llliiiiJCUICIIl fees substantially iu the form lbeu used by Lender
(or substantially the same form as the Agreement of Maoager delivered on the Closiug Date of
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the Loan or such other form and substance reasonably acceptable to Lender), executed and
deliwred to Lellder by Borrower and such Qualified Manager at Borrower's Cllpense.
"ReplacemeDt Reserve Accouat" shall have the meaning set forth in Sectj9JI
7.3.1 hereof.
"Replacemeat Reserve Fllnd" shall have the meaning set forth in Section 7 .3.1
hereof.
"RepJacemeat Reserve Moati!Jv Denosit Amout" shall have the meaning set
forth in Section 7.3.1 hereo
"Replacemqts" shall mean the furniture, fixtures and equipment required to
keep the Property in good order and repair or aa requized by the Management AgrermCDt or
Franchise Agreement
"Reserve .Faods" shall mean, collectiwly, the Tax and lnsunmce Escrow Fund
and the Replacement Reserve Fund.
MResta1U'&IIt Lgu" sba11 have the meaning set forth io Section 5.1.20 hereof.
uaestoratfoa" shall mean the repair and JeStoratioa of the Property after a
Cuualty or Conclmnation as oearly as possible to the CODdition the Property was in immediately
prior to such Casualty or Condemnation.
''Restoratioa Threshold Amoaaf' shall mean. as to the Property, an amount
equal to 4% ofthe original principal balance of the Loan.
"Room Llcease Mreemeaf' shall mean my shan term license or similar
&gleeDiellt for the use or occupancy of any meeting room, conferellce space, blllqUCt facilities,
dining room or hotel room occupancy agreement.
''S&P" shall mean Standard & Poor's Ratings Group, a division of the McGraw-
Hill Companies, or ita 1uccessors and assigns as a R.atiog Agmcy.
"SIIle or Pledge" shall mean a voluntcy or invohmtary sale, coaveymce,
aasignment, transfer, or grant of a Lien encumbering any legal or beoeficial interest, whether
direct or iudircct.
"Sc;hedp!rd Defeasance Pnmeall" shall mean ll('lwlnled paymeals of intelest
under the Note for all moathly Payment Dates occaniDg after the Defeasance Date and up to and
including the Maturity Date (including the outstanding principal balance on the Note as of the
Maturity Date).
"ecuritjes" sball bave the meaning set forth io Section 9 .1.1 bereo!
"Secaritizatioa" shall have the meaning set forth in Section 9.1, 1 hereof.
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"Security .Agreement" shall mean a security agreement iD form and substance
that would be reuonably satisfactory to a pradent lender pUJSIWlt to which Borrower grants
IAldc:r a perfected, fint priority security interest in the Defeuance Collateral Account and the
Defeasance Collateral.
"Servfcer" shall have the meaning set forth in Section 9.5 biRO f.
"Senic:iag Acreement" shall have the meaning set forth in Sectiog 9.5 hereof.
"Severed Loan Doc:umeatl" shall bave the meaning set forth in Section 8.2Cb)
h!ROf.
''SPecial Purpose EDt!ty" sball mean a limited liability COIDpiDy or limited
par1Denbip wbicb, at all times on and after the date hereof untillbe Loan is repaid, complies with
1he foUowing requirements unless it bas rec:eivM the prior CODSeDt of Leudcr or a permitted
administrative ageot thereof; and, while the Loan is securitized, unless it has received
confirmation 1i:om each of the applicable Rating Agencies that sw:h action would not result in
the qualification, withdrawal, or dowugrade of the ratings of any Securities or sny class thereof:
.... : .
(i) the sole purpose conducted or promoted is to engage exclusively in
the foUowiDg activities:
(A) to acquire, OWD, hold, sell, transfer, excbange, lease,
operate, manage. maintain, develop and impmve, the Ploperty
(B) inlentionaUy omitted;
(C) to enter into and perform its obligations UDder the
Operating Lease with Opa:ating Lessee relating to the Property;
(D) to enter into and ped'orm its obligations UDder the Loan
Documents;
(B) to sell, transfer, service, convey, dispose of: pledge, assign
borrow money a,gaiDat, liDance, refinance or othelwise deal with the
Property to the extent permitted under the Loan Documents, or to repay
the Loan;
(F) inlartiODilly omitted;
(G) to cogage in any lawful act or activity and to exercise any
p o w ~ : ~ ~ permitted to limited liability compauies orglllized under the laws
of the State of Delawue that ue related or incidental to and DOC esauy,
conveoieol or advisable a the accomplisbmeot of the _above-mentioned
pmposes.
(il.) does not have any assets other than 1bose relaled to the pmposes
set forth in subsection Cil above;
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(iii) mamti.IJIS its own books, records, resolutions, agreements,
financial statements, entity documents and bank accounts separate ftom those of
any othc:r Penon;
(iv) pays its debts and liabilities from its own assets (to the extent it has
sufficient assets to do so) as the same shall become due;
(v) except with respect to any moneys in which (A) Manager or (B)
Operating Lessee may have an interest, alld to the extent such moneys are held in
the cash mmagement account established UDder the Cash Management
Agreement or the Lockbox Account to the extent requi!ed by and established
under the Lockbox Agreement, holds its assets in its own name (provided that in
no event shall assets ftom any source other than the Ptoperty be commingled
therewith);
(vi) bas no Indebtedness other than (A) the Loan and (B) liabilities
incumd in the ordinary oourse of business which do not violate the terms of this
Agreement;
(vii) except with espect to any moneys in which (A) M8Jill8er or (B)
Operatiog Lessee may have an interest, and to the extent such moneys are held in
the cash management account establiahed under the Cash Management
Agreement or the Lockbox AccoiDlt as required by and established under the
Lockbox Agreement, maintains its assets in such a Dl8llJJel' that it will not be
costly or difiicuh to segregate, ascertain or idel1tify its individual assets 1i:om
those of any other Person (provided that in oo event shall assets from any solDCe
other the Property be commingled thercwith);
(viii) except as contc:mplalcd by the Guaranty, does not have any of its
obligations guaranteed by an Affiliate;
(ix) at all times holds itself out and identifies itself to the public and all
other Persons as a separate and diatinct entity under its own name or in a name
franchised or 1iccnsed to it by an entity other than an Affiliate of lbe Company
md DOt as a division or part of any otlu:r Penon;
(x) files its own tax returns (except to the extent that it is required by
law to file consolidated tax returna IDlless it is a "tax disreganled entity" for tax
purposes and ia not required to file tax IeiUml under applicable Jaw), and pays
any taxes required to be paid under applicable law;
(xi) does not (A) commingle its fimcls or assc:b with those of any other
Persou, except with n:spect to any moneys in which (i) or (11) Operating
Lessee may have an interest, and to the c:xtcnt snch moneys are held in the cash
m.anagemeut IM:COU!It establiahcd UDder the Cub Mallagement Agieement or the
Loclcbox Account as required by and established ll!lder the Lockhox Agreement,
and (B) participates in any cash !ll8ll8gmlent system other than the cash
systems which do DOt violate the terms Agreement (provided
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that in no event shall assets li'om any source other than the Property be
commingled therewith);
(xii) conducts its business only in its own name or in a name franchised
or licensed to it by an entity other than its Affiliate;
(xiii) complies with all material organizational fonnalities necessary to
maintain its separate existance;
(xiv) complies with all of the material tenns and provisions cooJainal in
its 01P"i7lltional dociDDents;
(xv) maintains separale financial statemants, showing its II88Cts and
liabilities separate and apart li'om those of any other Pemon and not have its assets
listed on any financial statement of any other Penon except u required by
GAAP; provided, however, that its assets may be iDcludcd in a conaolidated
financial statement of its Affiliate provided that, to the extent permitted by GAAP
(A) appropriate notation aball be made on sw:h consolidated financial statements
to indicate the separateuess of the Borrower from such Affiliate and to indicate
that the Borrower's assets and liabilities are not available to satisfy the debts and
other obligations of such Affiliate or any other Penon, other than those of
Operating Lessee, snd (B) such usets shall also be listed on the Borrower's own
separate balance sheet;
(xvi) except u coutemplaltd by the Guaranty, pays its own liabilities
and expenses only out of its own fmlds and usets;
(xvil) maintains an arm's-length relatiOIIIbip with its Afliliales, and,
except for capital contributions or capital distributions permitted under lhe tenna
and conditions of 1be Company Asr=ncnt and properly reflected on the books
and records of the Borrower, not enter into or be a party to any transaction with
any member or any Aftilialx: of the Borrower except (A) in the ordinary course of
business, and (B) on terms that are intrinsically fair, commercially reasonable and
are DO less favorable to the Bonowcr than would be obtained in a co!DpUllble
arm's length transaction with 111 unrelared third party;
(xviii) except in connection with the Franchise Agreement, does not hold
out its credit or usets u being available to satisfy the obligatioos of any other
Person;
(xix) allocates fairly and reasonably any overhead expCDSCS that are
shared with an Affiliate iDcluding tor sbared office space md tor services
pezfonned by an employer of an Affiliate;
(xx) uses separate stationery, invoices and checks bearing its own
{XXI) IDtenlioaally omitted;
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(xxii) does not (A) assume or guarantee or bi!COIDe obligated for the
debts of any other Penoo, (B) except in connection with the Franchise Agreement,
hold out its credit as being available to satisfy the obligations of any other Peraon,
or (C) except for a pledge for the benefit of Lender pUISUIIIIt to the Loan
Documents. pledge its assets for the benefit of any other Person;
(xxiii) corrects any Icnown misunderstanding regarding its separate
identity, not identify itself as a division of any other Peraou, and not identify its
mcmben or any Affiliate of them as a division or part of the Borrower;
(xxiv) to the extent of its assets, maintains adequate capital in light of its
contemplated business pUIJIOSC, transactions and liabilities (but without giving
effect to any potential liability arising from any cross-collateralization under the
Loan Doc:umcnta);
(xxv) observes all material Delaware limited liability company
formalities;
(xxvi) does not acquire any obligation or securities of any Affiliate of the
Borrower, other than Operating Lessee;
(xxvii) pays the salaries of its own emplo)ll'CS, if any, only from its own
funds;
(xxviii) Intentionally omitted;
(xxix) does not guarantee any obligation of any Peraon, including any
Affiliate, or become obligated for tbc debt! of my other Peraon or bold out its
aedit as being available to pay the obligations of 811)' other Penon;
(xxx) does not eugage, directly or indim:tly, in any business other than
as required or pemritted to be performed under spbsectjon Cil md this subsection
!ill of the definition of Special Puxpose Entity, the Company Agreement, the
Managemeot Agreemart, the Loan Documenta and all documents and certificates
CODtemplated thm:by or delivered in coiii!eClion therewith;
(XXX1) inlentionally omitted;
(xxxii) does not make or permit to remain outstanding any loan or advance
to, or own or acquile my stock or aecurities of, any Person, except it may (A)
invest in Operatiog Lessee and !bose other investments permitted UDder the Loan
Documents, and (B) make any advance required or expressly pemritted to be
made pursuant to any provisions of the Loan Docmnmts and pemrit the same to
remain outmnding in accordance with such provisi01111;
(xxxfu) to the fullest c:m:nt permitted by law, does not mpge in,
seek or consent to aay dissolution, winding up, liquidation, COJiliOiidation, merger,
sale or transfer of any of its assets outside the ordinary course of its b'IISiness,
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other than those permitted sales wbich result in a permitted payment or
defcuance in full or in part of the Loan;
(xxxiv)does not buy or bold evidence of indcbmdness issued by any other
Person (other than cash or investmeut-grade securities issued by an entity that is
not an Affiliate of or subject lo C011DDon ownership with the BoJIOwer); or
(xxxv) doc::s oot Conn, acquire or hold any subsidiary (whether COJ))Orate,
partnership, limited liability company or other) or own any equity in any
other entity other than Operating Lessee.
"Spon!IO!"' shall meau USA Trust, a Marylaud real estate investment
"SPE Borrower" shall have the meaning as defined in the definition of
'1ndependeot Mauager''.
"State" &hall mean Virgiaia.
"Sarvev" shall mean the survey of the Property delivered to Lender in CODDection
with the closing of the Loan.
"Tu and loa"U'811ee Etc;row Fud" shall have the meaning set forth in Section
Z2hm:of
''Tues" shall mean all real estate and personal property taxC$, assessments, water
tate& or sewa reuti, now or heRai\cr levied or assessed or impnstft against the Property or part
thereof.
"Title IDsumce Pofic;y" sball mean, with respect to the Property, a mortgagee
title insurance policy issued with respect to the Property and insuring the lien of the Mortgage
encumbering the Property and delivered to LerJder in with the closing of1he Loan.
AI Entn" sba1l have the meaning set forth in Sec;tiOD 7.2 hereof.
"TnDtfer" shall have the meaning set forth in Section S.2.10f'a) hereof.
''Trpptfem"lhall have the meaning set forth in Section S.2.l(J(b)(u1 hereof.
"UCC" or "Unlfom Commm Code" shall mean the Uniform Commercial
Code as in effect in the State ofNew Ycnt.
"Ualform SY*m of Ac;coqptl" shall mean the most recent edition of the
UDifonn System of AcooiDlm for Hotels as adopted by the American Hotel and Motel
Associatioo.
"U.S. Obligation!" shall mean non securities evidencing an
obligation to timely pay principal and/or interest in a full and timely manner that ue (a)
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obligations or securities not subject to prepaymeot, call or early redemption which an: direct
obligations of; or obligations fully guaranteed as to timely payment by, the United States of
America or of any ageocy or insUumeotality of !he United States of America, which qualify
IDlder 1.860G-2{a)(8) of the Treasury Regulations. (b) other non-callable "government
securities" as defined in Treasury Section 1.860G-2{a)(8)(i), as amended which will
not result in a r=uction, downgride or witbdnwal of !he ratings for the Securities or any class
thereof issued in COMection with a Securitization and which are then outstanding or (c) other
non-callable instruments, which if a Securitization bas OCC\Imld, the REMIC Trust fonned
pwsuant to such Securitization will not fail to maintain ita stalUS as a "reaa estate mortgage
investment conduit" within the meaning of Section 860D of the Code and which will not result in
a reduction, downgrade or wi1hdrawal of the ratings for the Securitiea or any class thereof issued
in connection with a Securitization and which are then outstanding. Arrt obligations or
instruments pwsuant to clause (b) above and, provided same shall not constitute a "significant
modification" for REMIC plllpOSCS, clause (c) above, sball be subject to Lender's reuonable
approval.
"Yield Mlintelluce Premiqm" shall mean the amount (if any) which, when
added to the remaining priDcipal amount of the Note will be sufficient to purchase U.S.
Obligations providing the required Scheduled Defeasance Payments as and when due.
Seetlon 1.2. Prl!eWla of CoDStruedon. All references to sections and
schedules are to sectioiiS and sd!cdulcs in or to this Agreement unless olbe!wi&e specified. All
uses of the word ''including" sbaiJ mean "including. without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words ''heleor, "hcmn" and ''he!amdcr" and
words of similar import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless othc:rwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the singular and plural
forms of the terms so defined Whenever pursuant to this Agreement or the other Loan
DOCIDDc:ota, Lender's COI1ICilt or approval is stated as to not be "unreasonably withheld", such
consent or approval shall DOt be IIIDUiOnably withheld, conditioned or delayed.
D. GENERAl. TERMS
Sectloa 2.1. Loy Cc>mmhment; Disburpmgt to Borrowq.
2.1.1. Agreemnt to Lmd and Bori'OJ!. Subjoct to and upon the terms and
conditions set forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept
the Loan on the ClosiDg Date.
2.1.2. Sillgle Dllbnemeot to Borrower. Borrower may request and receive
only one (1) borrowing hereunder in respect of the Loan and any amount bonowed and repaid
hereunder in respect of the Loan may not be reborrowcd.
2.1.3. The Note, Mortgw md Lou Doc:ummts. The Loan sbal1 be evidenced
by lhe Note and secured by the Mortgage, lhe Aasigmncnt of Leases and the other Loan
Documeots.
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:1.1.4. Use of Proceeds. Borrower aballll!e the proceeds of the Loan to (a) repay
and dischar&e any existing loans relating to the Property, (b) pay all past-due Basic Caztyiq
Costs, if any, with respect to the Ploperty, (c) make deposits into the Reserve Funds, (d) pay
costs and expenses incurred in coonection with the Loan, (e) fund any working capital
requirements of the Property, and (f) distribute the balance, if any, in accordance with its
organizational documents.
Section 2.2. Interest Rate.
2.2.1. Interest Rate; Payment Gmenl!y. Interest on the outstanding principal
balBDCe of the Loan evidenced by the Note shall accrue at the Interest Rate and shall be
calculated in accordance with Sectioo 2.2.2. Borrower shall pay to Lender (a) on the Closing
Date, an amount equal to intCieSt only Oil the outstarvting principal balance of the Loan from the
Closing Date to September 30, 2006 and (b) on the Payment Date occuning in November, 2006
and on each Payment Date thereaft up to but not includiDg the Marurity Date, an amount equal
to the applicable Debt Service Payment Amount, which payments shall be applied by l..Gnder to
interest due for the cumnt Intm:st Period, and the balance, if any, shall be applied to the
outstanding principal balance of the Loan. The outstandiog principal balance of the Loan
together with all acaued and unpaid interest thereon through the end of the Interest Period in
which the Maturity Date occurs shall be due and payable Oil the Maturity Date. AlliiDOIIDta due
under the Note sball be payable without setoff, coiDiterclaim or any other wbaboever.
If the date on which any payment is due under the Note or this Agreement is not a Business Day,
such payment shall be due on the first Business Day succeeding such date.
2.2.2. Interest Clcalat!on. Intezest on the outstanding principal balance of the
Loan shall be calculated by multiplying (a) the actual number of days elapsed in the lnbnat
Period for which the calculation is being made by (b) a daily rate based on 1 three hundred sixty
(360) day year by (c) the outstanding principal balance of the Loan.
2.2.3. oer .. It Rate. In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal balance of the Loan and, to the
extmt peunitted by law, all accrued and unpaid iDtelest in respect of the Loan and any other
amounts due pumuant to the Loan Documents, sball ICCIIIe interest at the Default Rate,
calculated from the date such payment was due without regard to any grace or cure periods
contained hCRin.
2.2.4. Usury SariDg. This Agreanc:ot, the Note and the other Loan Documents
are subject to the express condition that at DO time shall Borrower be obligated or required to pay
interest on the principal balance of the Loan at a rate which could subject Lender to either civil
or criminal liability as a result ofbeing in excess of1he Maximum Legal Rate. by the terms of
this Agreement or the other Loan Documants, Borrower is at any lime required or obligated to
pay interest on the PI ilx:ipal balance due hemmder at a rate in excess of the Maximum Legal
Rate. the Interest Rate or the Default Rate, as the case may be, shall be deemed to be
immediately teduced to the Maxim1DD Legal Rate and all previous payments in e::tcess of the
Maximum Lcgal Rate sball be deemed to have been payments iD reduction of priucipal and DOt
on account of the interest due hermnder. All SIJIII8 paid or agreed to be paid to Lender for the
use, forbelrance, or detention of the suma due UDder the Loan, sball, to the extent pennitted by
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applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment iD full so that the rate or amount or inla'esl on account of the Loan does
not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the
Loan for so long as the Loan is Olltstuding.
Section 2.3. Lou PaymePt
:Z.J.I. Payment on Matnrity Date. Borrower shall pay to Lmder on the
Maturity Date the outstanding principal bal8111Z of the Loan, all accrued and wpaid interest
through the end of the related Interest Period and all other amounta due bemmder aod ID!der the
Note, the Mortgage and the other Loan Documents.
:Z.3.Z. Late Paymeat Cha!"'e. If any principal, inteleSI or any other sums due
under the Loan Documents (excluding the IUilODDts due on the Maturity Date) are not paid by
Borrower on or prior to the date on which is five calendar (S) days after the date such payment is
due, Borrower sball pay to Lender upon demand an amoUDt oqnal to the lesser of three percent
(3%) of such unpaid sum or the Maximum Legal Rate in order to defray the expense incurred by
Lender in handling and prormsing such delinquent paymeut 8lld to compensate Lender for the
loA of the usc of sucb delinquart payment. Any such amo\llll shall be secured by the Mortgage
lll!d the other Loan Documenta to the extem permitted by applicable law.
1.3.3. Metbod yd Place of PaymeDl Except as otherwise specifically
provided herein, all payments aod prepayments under this Agreement and the Note shall be made
to Lmder not later than2:00 p.m., New York City time, on the dale when due and shall be made
in lawful money of the United States of America by ACH as diRctcd by Lender, and any timda
received by Lender after such time shall, for aD purposes hereof, be deemed to have been paid on
the next sueeding Business Day.
Section 2.4. Prepal'JD!I!ts.
2.4.1. Volutlry Prepaymt!fl.
(a) Borrower shall not have the riglit to prepay the Loan in whole or in part
except in aceordance with this Agreemeot.
(b) From and after the Prepayment Release Date, Borrower may, at its option
and upon fifteen (1 5) days prior written notice to Lender, prepay the Debt in whole, but not in
part, without paymeut of the Yidd Maintenance PremiiDD or any other prepayment premium;
prpyjdM howeyer, Borrower shall pay to Lender, simultaneously with such prepayment, (i) all
accrued and unpaid interest on the outstanding principal bai!I!X'C of the Lolli, ("u) interest on the
outstanding principal baliDOC of the Loan from the date of such prepayment through the end of
the Interest Period in which such prepaymeot occ:um, and (iii) all other amounts due to Lender
pursuant to the Lolli Documents.
2.4.2. Ma.adatorv Prepayments. IfleDder is DOt oblip!M to make any Net
Proceeds available to Borrower for Restoration, an amoUDt equal to one hUDdred percent (100t.4)
of such Net Proceeds shall be applied to the outstanding pliDCipal balance of the Loan. Except as
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set forth in Section 2.4.3. no Yield Maintenance Praniwn or other peoalty shall be due in
connection wilh a prepayment made punuant to Ibis Secti0112.4.2.
2.4.3. Prepaymea!J after Default If following an Event of Default which is
continuing, payment of all or any part of the Loan (exclusive of any monthly Debt Service
Payment Amount) is tendered by Borrower or otherwise recovered by Lender (including Net
Proceeds), such tender or recovery shall be deemed a voluntary prepayment by Borrower and
Borrower shall pay, in addition to the Debt interest on the 01ttstandiog principal amount of the
Loan so tendered or recovered by Lender through the end of the Interest Period in wbich such
tender or recovery occurs, and if such teDder or prepayment occurs prior to the Permitted Release
Date, an amotmt equal to the greater of (i) the applicable Yield Maintenance Premium calculated
on the basis of the outstanding principal amount of the Loan to be satisfied or prepaid or (ii) OllC
(I%) pen:cnt of the outstanding principal balance of the Loan.
Section Z5. Release.
1.5.1. Release of the Property. Except as set forth in this Section 2.5, no
repayment or prepayment of all or any portion of the Loan shall cause, give rise to a right to
require. or otherwise result in, the release of the Lieu of the Mortgage on tho Property. Leuder
shall, at the expeD&e of Borrower, upon payment in full of all principal and interest on the Loan
and all other amounts due and payable by Borrower UDder the Loan Documents in IIIXOI"dance
with the terms and provisions of the Note and this AgreaneDt, promptly release the Lien of the
Mortgage from the Property in accordance with the provisions described in Section 2.5.2.
Z5.Z. Release ppon Defreapce or Prepament with Yield
(a) If Borrower bas elected to prepay the entire Loan in accordallce with
Section 2.4.1, the Property sball be released from the Lien of the Mortgage and the other Loan
Docummtts; and if Borrower has elected to defease the entire Loan in ecoordance with Section
2. 7, the Property sball be rcleued from the Lien of the Mortgage mel the other Loan Documenls,
aod the U.S. Obligalions, pledged pW"IWID.t to the Security Agreement, sball be the sole source of
collalmll securing the Debt
(b) In coiiJICCtion with tho release of tho Lien of the Mortgage and the other
applicable Loan Documents, Borrower shall submit to Laxler, a release of Lien (and related
Loan Documen!J) for execution by Lender. Such release shall be in a fotm appropriate in the
jurisdiction in which the Ptoperty is 1ocatcd and that would be satisfactory to a prudeot lender
acting reaoll8bly. In addition, Borrower ahall comply with the provisions of Section 2.7 hereof,
if applicable.
Sectloa 2.6. L9ckbo:a: Acco .. UCuh Management
Z.6.1. PIJme,g!J Received under the Cull Maaagaaent AJ!reement
Notwithstanding anytbiog to the conlnly contained in this Agreement or the other Loan
Documents, and provided no Event of Default has occurrod and is cootiunin& Borrower's
obligations with respect to the payment of the monthly Debt Service Payment AmoiDit and
amounts required to be deposited into the Reserve Fonds, if any, shall be deemed satisfied for
any month to the cmnt sufficient amollllls arc deposited in the Cash Management Aocount to
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satisfy such obligations pursuant to the Cash Management Agreement on the dates each such
payment is required, regardless of whether any of such amoUDts are so applied by Lender.
Sec:tion 2.7. Defeasance.
2.7.1. Voluntary Defesance. Provided that no Event of Default shall then
exist, Borrower shall have the right at any time after the Permitted Release Date and prior to the
Prepayment Release Date to voluntarily deCease the I.oau in full but not in part by and upon
satisfaction of the following conditions (such event being a "Defeasance Evenf):
(i) Borrower shall provide not less than fifteen (15) days prior written notice
to Lender specifying tbe Payment Date (the "Defeasaace Date") on wbicb the
Defeasance Event shall occur,
(ii) BOl'TOWa" shall pay to Lender all accrued and llllp8id interest on tbe
principal balance of the Note to and including the Defeasance Date;
(iii) Borrower shall pay to Lender all other fWliS, not including accrued or
scheduled interest or principal payments and otherwise without duplication of the
payment required by r.lnR 2. 7.1Ca)@ above, then due to Lender UDder the Note, this
Agreement, the Mortgage, and the other Loan Documents;
(iv) Borrower sball deposit the Defeasance Collatc:ral into the Defeasance
Col1ateral Account and otherwise comply with the provisions of Scctioaa 2. 7.2 and 2. 7.3
hereof;
(v) IntentiODally Deleted;
(vi) Borrower shall execute and deliver to lender a Security Agreement in
respect of the Defeasance Collateral Account aad the Defeasance CoUateml;
(vii) Borrower &hall deliver an opinion of counsel for Borrower in a form that
would be satisfactory to a prudent lender acting reasonably stating. among other things,
that Borrower has legally and validly transferred and assigned the U.S. Obligations and
all obligations, rights and duties of Borrower tmdc:r and to the Note to the Successor
Borrower, if any, that Lender has a pemcted lint priority security interest in the
Defeasance Collateral and the Defeasance Collateml Account and that any REMIC Tru&t
formed pursuant to a Securitization will not WI to maintain its status as a "real estate
mortpge invesbucnt conduit" within the meaning of Section 860D of the Code as a
result of such Defeuce Event;
(viii) Tho applicable Rating Age:u.cies shall have coofirmcd in writing tbal such
Event will not result in a downgradmg. withdrawal or qualification of tbe
RSpCCtive ratingl in effect immediately prior to such Defeasance Event for the Securities
issued in coDDeCtion with the Securitization which ue then outstauding. If required by the
applicable Rating Agencies. Borrower shall also deliver or cause to be delivered a
NODCOnsolidation Opinion with 1cspcct to the Succeasor Borrower in foDD and substance
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that would be satisfactory to a prudem lender acting reasonably and satisfactory to the
applicable Rating Agencies;
(ix) Borrower shall deliver an OffJCer's Certificate certifYing that the
mjuiremell.ts set forth in this Section 2.7.Ual have been satisfied;
(x) Borrower shall deliver a certificate of Borrower's iudcpendent certified
public accolllltant certifying that the Defeasance Collatcral will gc:oc:rate monthly
amounts on or prior to each successive Paymem Date equal to or greater than tbe
Scheduled Defeasance Payments due on the applicable Payment Dates;
(xi) Borrower shall deliver suc.b adler certificates, documents or inslnunalts as
Lt:oder may reuouably request; and
(xii) Except to the extent included in the Defeasance Collateral, Borrower shall
pay all out-of-pocket <:OSts and expenses of Leuder reasonably incurred in coJIDection
with dle Defeasance Eveat, includiug my such costs and expenses assoc:iatoed with a
release of tbe Lim of the Mortpge as provided in Section 2.5 hereof as well as
reasonable attorneys' fees and oxpc:ues.
Nothing herein contained shall require Borrower to employ the services of a commercial
dDfeaamce company in connection with a Defeasancc:.EvenL
2.7.2. Successor Borrower. In connection with any Dcfeas!IIICc Event,
Borrower may or, at the request of the Rating Agencies, shall establish or designate a succ m rr
entity {the ''Sueeessor Borrow![) which shall be a single purpose banbuptcy remote entity
with an illdependem Manager, and Borrower shall transfer and assign all of Borrower's
obligations, rights and duties under and to the Note, together with Borrower's intaut in the
pledged U.S. Obligations to such SIICC0880r Borrower. Any Succcsaor Bonowcr may be an
Affiliate of Borrower. Such Successor Borrower shall assume the obligations ofBorrower under
the Note and the Security Agreement and Borrower ahall be relieved of its obligations under
such documents and the other Loan Documents. Borrower shall pay Sl,OOO to any such
Successor Borrower as consideration for assumiDg the obligations of Borrower under the Note
and the Security Agreement Notwithstmding anything in this Agreement to the contrary, no
otber assumption fee shall be payable upon a transfa: of the Note, in accordance with this
Section 2.7.2. but Borrower shall pay all out-of-pocket costs and ezpenses reaaonably incurred
by Lc:oder, including Lender's reasonable attorneys' fees 8Dd expenses, incumd in connection
therewith.
2.7.3. Defeasuce Collatenl Accopnt. On or before the date on which
Borrower delivers the Defeasance Collateral, Borrower shall open at my Eligible Institution the
defeasmce coUateml account (the "Defeasuce CoDateral Auo1111f') which shall at all times be
an Eligible Accollll1. The Defeasance Collatenl Accowrt shall contain only (i) Defeasance
Collatcnl, and (li) cash from interest and principal paid on the Defeasance Collateral. An cash
fiom intemlt and principal payments paid on the Defeasance Coiiateral sbail be paid over to
Lender (i) on each monthly Paymem Date and applied to accrued and unpaid inlc!Qt for the
applicable Interest Period and (ii) on the Maturity Date, to the outstanding priucipal amount of
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the loaD. AD.y cash from interest and principal paid on the Defeasance Collateral not needed to
pay the Scheduled DefeaslllCC Payments shall be paid to Borrower promptly foUowing the
Maturity Date. Bonower shall cause the Eligible IDstirution at which the Defeasance Collateral
is deposited to enter an agreement with Borrower and Lender, satisfactory to lender in its sole
discretion, pUrSUID[ to which such Eligible Institution shall agree to hold and distribute the
Defeasance CoUatcral in aceordulce with this Agreement The Borrower or Successor
Borrower, as applicable, shall be the owner of the Defeasance Collateral Account and shall
n:port all income accrued on Defeasance Collatenl for fedCJal, state and local income tax
pwposes in its income t8X rc:tum. Bonowc:r sbal1 pn:pay all cost and c:xpcoses associated with
opening and maintaining the Defeasance Collateral Account. Lender shall oot in any way be
liable by reason of any insufficiency in the Defeasance Collateral Account
m. INJENTIONALLY DELE'fED
IV. REPRESENTATIONS AND WARRANTIES
Sedioa 4.1. Borrower Rmreseutatio Borrower lq)rc:sents and wmants as
of the Closing Date that
4.1.1. Orgyjpdog. Borrower bas been duly organimi and is validly existina
and in good slanding with raplisitc power and authority to own its p!opertic:s aud to transact the
busiDesses in which it is now engaged Borrower is duly qualified to do business llld is in good
standing in each jurildiction where it is required to be so qualified in connection with its
propc:dic:s, businc:saes and opc:ratioJIS. Borrower possesses all rights, licenses, permits and
autborizations, governmental or otherwise, necesssry to entitle it to own itB properties and to
transact the bnsine<tSes in which it is now engaged. The ownership interests in Borrower are as
set forth CD the organizational chart attached hereto as Schedule I.
4.1.2. Prorrcdlpp. Bozrower has taken all necessary action to authorize the
execution, delivery and pezfomumce of this Agreement and tho other Loan Documents to which
Borrower is a party. This Agreement and such other Loan Documents have been duly exeaited
and delivaed by or CD bebalf of Bozrower and coDStitutc legal. valid and binding obligations of
Bozrower enforceable against Borrower in accordance with their reapectin t e m ~ ~ , subject only to
applicable baukruptcy, insolvency and similar laws affecting rights of aeditors genecally, and
mbjCI:t, as to c:afcm:c:ability, to gmeral principles of equity (regardless ofwhethm: c:nforcanc:nt is
sought in a proceeding in equity or at law).
4.1.3. No CGnOic:ts. The execution, cleliveryandperformanceofthis Agreement
and tbe other Loan Documents by Borrower will not conflict with or result in a breach of any of
tbe terms or provisions of, or constitute a default under, or result in the creation or imposition of
any Lien, cJwae or CllCUIIIbnmcc (other than pursuant to the Loan Documents) upon any of the
property or assets of Borrower pursuant to the te:mu of any indenture, mortgage, deed of trust.
loan agreemellt, organizational or other .fonnation agreement, management agreement or other
agreement or instrument to which Borrower is a party or by which any ofBozrowcr's property or
assets is subject, nor wiD such action result in any violalion of the provisiona of any statute or
any Older, rule or regulation of any Govcnunental Authority having jurisdiction over Borrower
or auy of Borrower's properties or usets, and a n ~ coDSCDt, approval, authorization, onier,
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registration or qualification of or with any coun or any such Govemmental Authority required
for the execution, delivery and perfol1llllllce by Borrower of this Agreement or any other Lom
Docwnents has been obtained BDd is in full force and effect.
4.1.4. Litieatlon. There are no actions. Bllits or proceediugs at law or in equity
by or before any Governmental Authority now pending or, to Borrower's knowledge, threatened
against or affecting Borrower, Guarantor, Operating Lessee or the P10perty, which actions, suits
or proceedings, could reasonably be expected to have a material adverse affect on the condition
(financial or othCI"Wiae) or business of Borrower, Guarantor, OpentiDg Lessee, or the condition
or ownenhip of the Property.
4.1.5. Al!reemqts. Neither Bonowcr nor Operating Lc&scc is a party to any
agreement or instrument or subject to any restriction which could reasonably be expected to
materially and adversely affect Borrower or the Property, or Bonower's b11siness, properties or
assets, operations or condition, finmcial or otherwise. Bonower is not in default in any material
respect in the perfOJD!ance, observance or fulfillment of any of the obligations, covenants or
conditiom contained in any material agreement or instrument to which it is a party or by which
Borrower, Operating Lessee or the Property is bound. BOJIOwer has no material financial
obligation under any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Borrower ia a party or by which Borrower, Opcntiug Lessee or the Property
is otherwise bound. other than (a) obligations pamitted pursuant to clause (xvii) of the definition
of "Special Purpose Entity" set forth in Section 1.1 hermf and (b) obligations under the Loan
Documents.
4.1.6. Borrower bas good, marltctable and insurable fee simple title to the
Property free BDd clear of all Lieus whatsoever except the Permitted Em:umbrances, such other
liens as are permitted punuant to the Loan Documents and tbe Liens created by the Loan
Documents (other than tho&e Lieus in connection with existing financing which Lien will
be satisfied simultaneously with the funding of the Loan 8Dd released.) The Permitted
Encumbrances in the aggregate do not materially and advc:rsely affect the value, operation or !ISC
of the Property (u currently used) or Borrower's ability to pay when due amounts due to Leoder
in COJIJieCtion wi1h the Loan. The Mortgage, when properly recorded in the approp! iate records,
together with any UDiform Commercial Code fiDancing statements required to be filed in
coDDCCtion therewith, will create (i) a valid, perfected .liJllt priority lien on the Property, subject
only to Encumbrances and the Liens created by the Loan Documents and (ii) perfected
sCICUrity intal:sts in and to, and perfected collateral assiguments all penonalty (mcluding the
Leases} owned by Borrower, all in accordance with the terms in cue subject only
to any applicable Permitted Encumbnmces, such other Liens u ue permitted pii!Winl to the
Loan Doc11111ents and the Liens created by the Loan Documents. Except as may be otherwise set
for1h in the Title Insurance Policy, there are no claims for payment for wort, labor or materials
affecting the P.toperty wbich are or, to Borrower's knowledge, may reasonably be expected to
become a Lien prior to, or of equal priority with, the Liens created by tbe Loan Documents.
4.1.7. Solvucy. Borrower has (a) not entered into this tnDsaction or executed
tbc Note, this Agreement or any other Loan Documents with the actual intmt to hinder, delay or
deftaud any c:Mditor and (b) received reiiSOillbly equivalent value in for its obligations
under such Loan Doannents.. After giving _effect to the Loan, tbe fair saleable value of
Borrower's assets exceeds and will, immediately following the malciog of the Loan, exceed
Borrower's total liabilities, includin& without limitation, subordinated, unliquidated, disputed
and contingent liabilities. The fair saleable value of Borrower's assets is and will, immediately
following the llllking of the Loan, be greater than Borrower's probable liabilities, including the
maximum amount that can reasonably be expected to become due IIld payable by such Borrower
in respect of its contingent liabilities on ita debts as such debts become absolute and matured.
Borrower's assets do DOt and, immediately following the making of the Loan will not, constitute
umasonably small capital to cmy out its business as conducted or as proposed to be conducted.
Borrower does not intclld to, and does not believe that it will, incur debt and liabilities (including
contingeot liabilities and other commitmcub) beyond its ability to pay such debt and liabilities as
they matwe (taking into acconnt the timing and amounts of cash to be received by Borrower and
the amounts to be payable on or in respect of obligations of Borrower). No petition in
banbuptcy has been filed against Borrower, the owner of any din:ct interest in Borrower,
Operating Lessee or Guarantor in lhe last seven (7) years, and neilher Borrower, the owner of
any direct interest in Borrower, Opc:rating Lessee or Guarantor in the 1sst seven (7) yean bas
ever 1118de an assigament for the benefit of creditors or talccn advantage of any insolvency act for
the benefit of debtors. Neither Borrower nor any of its Affiliates are contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of Borrower's assets or property, and, to Borrowei's
knowledge, no Person is contemplating lhe filing of any such petition against it, its sole member,
OperatiDg Lessee or Glwantor.
4.1.8. F!D ud Aeeurate Disclosure. No statement of fact made by Borrower
in this Agreement or in any of the other Loan Documents contains any untrue statement of a
lll8terial fact or omits to state any material fact necessary to make statements contained herein or
therein not misleading There is no material fact presently known to Borrower which has not
been discloaed to Leader which materially and advenlely affects the Property or the b11sincss,
operations or condition (financial or otherwise) of Borrower.
4.1.9. No P!u Assets. Each of Borrower and Operating Lessee do not sponsor,
is not obligated to contribute to, and are not themselves an .. employee benefit plan," as defined in
Section 3(3) of ERISA, lllbjoct to Title I of ERISA oc Section 4975 of the Cocle, and none of the
wets of Borrower or Operating Lessee constitute or will constitute "plan aaets" of oue or more
such plans within the meaning of29 C.F.R. Section 2510.3101 or Section 3(42) of ERISA. In
addition, (a) neither Borrower nor Operating Lessee is a "govenuneutal plan" within the meaning
of Section 3(32) of ERISA and (b) tnmsactions by or with Borrower or Operating Lessee are not
subjoct to any state or other statute, regulation or other restriction regulating investmmts of, or
fiduciuy obligations with respect to, governmental plmm within the meaning of Section 3(32) of
ERISA which is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code
and which prohibit or otherwise restrict the lrallsactions contemplated by this Agreement,
illcluding. but not limited to the cx:crcise by l.el1det of any of its rights lltlder the Loan
Documents.
4.1.1 0. CompUance. Except as otherwise exprealy set forth in the Physical
Conditions Repo11s, the Suney, and the Phase I (and Phase II. if any) euviroomental reports, or
as otherwise identified on SchrdtJle V, Boaower and the Property and the usc thereof comply, to
Borrower's knowledge, in all material respects with all applicable Legal Rt;quiranems,
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including, without limitation, building and zoning ordinances and codes. To Bonower's
knowledge, Bonower is not in any material default or violation of any written order, writ,
injunction, decree or demand of any Governmental Authority. There has not beat committed by
Borrower or, to Bonowcr's knowledge, my other PCJWn in occupancy of or involved with the
operation or use of the P1operty rmy act or omission affordiDg the federal government or any
other Governmental Authority the right of forfeiture as against Borrower's interest in the
Property or any part thereof or any monies paid in perfonniiiiCC of Borrower's obligations under
any of the Loan Documents.
4.1.)). FIDud!.l hdormatloa. All financial data, including. without limitation,
the statements of cash flow and income and operating expense but excluding any historical
balance sheet itt:ms, that have been delivered to Lender in cotmection with the Loan (i) are true,
complete and correct in all material respects, (ii) 8CCUI111ely represent the results of operations of
the Property for the perioda covered thereby, and (fu) to the m:tmt prepared or audited by an
independent certified public accounting finn, have been pRPII'Cd in accordance with GAAP
throughout the periods covered, except as disclosed therein. Except for Permitted Encmnbrances
and Borrower's obligations 1mder the Loan Documents, Borrower does not have any contingent
liabilities, liabilities fur taxes, UDUSUa1 forward or long-tam commitments or unrealized or
anticipaled. losses from any unfavorable commitme:nts that are lcnown to Bom>wer and
reasonably likely a materially adverse effect on the Property or the operation thmof as a
hotel, except as referred to or reflected in said financial llltnneats. Since the date of such
financial there has been no materially adverse change in the fiDancial condition,
operations or b118iness ofBorrower from that set forth in said finaocial statements.
4.1.12. Coadeamadon. Except as otherwise disclosed to Lender in writing or in
the Title Insunnce Policy, no Condemnation or other proceeding has been commenced whicb is
continuing or, to Bom>wer's lr:nowledge, is threatened or contemplated with respect to all or any
portion of the Property or for the relocation of roadways providing access to the Property.
4.1.13. Fedenl ReseJVe Reculatioas. No part of the proceeds of the Loan will
be used for 1hc purpoae of pUJCbasing or acquiring any "margin atoek" within the meanillg of
Regulation U of the Board ofGowmors of the Federal Reserve or for my other purpose
which would be inconsistent with such Regulation U or any other Regulations of such Board of
Govemors, or for any purposes prohibited by Legal Requirements or by the terms and conditions
of this Agrceme:nt or the other Loan Documents.
4.1.14. UtiHifes aad PllbHc Access. Except as set forth in the Survey or Tide
Policy or olberwise diaclosed to Lender in writing. (a) the Property bas rights of access to one or
more public ways aDd is served by water, sewer, sanitary II8Wel' and stonn drain ficilities
adequate to service the Property for its inte:nded nscs, (b) all public utilities necessary or
conveniCill to the full use and e:njoyme:nt of the Property an: located either in the public right-of-
way abutting tho Pwperty (which an: COilllected so as to scrve the Ptope:r:ty without passing over
other property) or in recomcd eaaemeots serviag the Property aad such casementa are set forth in
and insnred by the Tide lnsannce Policy and (c) all roads necessary for the use of the Property
for its c:um:Dt purposea have been completed and dedicated to public nse and accepted by all
Govc:uuneutal Authorities.
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4.1.15. Not a Foreip Penoa. Borrower is not a "foreigp penon" within the
meaning of 144S(f)(3) of the Code.
4.1.16. Separate Lots. The Ploperty is comprised of one (1) or more parcela
which constitute a separate tax lot or lots and doe& not constitute a portion of any other tax lot
not a put of the Property.
4.1J 7. A.sKasmeats. Except u disclosed to Lender in writing or as set forth in
the Tide Insurance Policy, (a) there are no pending or, to Borrower's knowledge, proposed
special or other us: mnents for public improvements or otherwise affecting the Property, (b)
nor, to Bouower's knowledge, are there any contemplated improvements to the Property that
could reasonably be expected to result in such special or other assessments.
4.1.18. Enforceabmty. The Loan Documents are not subject to any right of
rescission, set-oft; counterclaim or defense by Borrower, Operating Lessee or Guarantor,
including the defeose of usury, nor would the operation of sny of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable
(subject to principles of equity and bankruptcy, insolve:ocy and other laws generally affecting
cn:diloni' rights ml the Cllfixcement ofdcbloni' obligations and eertain procedural requirements
in connection thtnwith), and neither Borrower, Operating Lessee nor Guarantor have asserted
any right of resciaaion, set-oft; counterclaim or defeose with respect thereto.
4.1.19. No Prior Ay!pJDellt. There are no prior assignments of the Leases, the
Room Liceuse Agreements or any portion of the Rents (other than to OperaliJ:lg Lessee pursuant
to the Operating Lease) due and payable or to become due and payable which are oubfanding
other than those prior assignments of the I eases, the Room Licmse Agreements and Rents
granted in CODIIeCtion with existing financing which will be satisfied simultaneously with the
limdiDg of the Loan and such assignments
4.1.10. luanmee. Borrower has obtained and has delivered to Lender certified
copies of the Policies reflecting the insurance coverages, amounts and o1her requilantnts set
forth in thia AgJeement.. No claims have been made or are cummly pendin& outstauding or
otherwise remain UJI68tisfied under any such Policies, and neither Borrower nor, to Borrower's
knowledge, any other Penon, has done, by act or omission, anything which would materially
impair the coverage of any such Policies.
4.1.21. Use of Property. The Property is used exclusively as a hotel and other
appurtcnant and rdated uses.
4.1.ll. Certificate of OCC!!J!!!!C!j Lk:enses. To Bonowa-'s lalowledge, all
certifications, permits, lieeoses and approvals, including without limitation, certificates of
completion and occupancy permits and any applicable liquor liceiiSC required fur the legal use,
occupancy and operation of the Property as a hotel and such other uses as permitted pl1Jl111811t to
Ibis Agreanent ( colloctivcly, the "Licepsgj, have bcal obtained and are in fbil force and
effect, except for where the failiii'C to obtain such licenses or for such licenses to not be in fiill
force and effect does not bave a material advCille effect with respect to the Plopedy or BoDOwer.
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To Bonowcr' s knowledge, the usc being made of the Property is in con.fonnity wilh the Licenses
issuod for the P:iopeny.
4.1.13. Flood Zone. Except as shown on the applicable Survey, none of the
Improvements on the Property are located in an area as identified by the Federal Emergency
Management as an area hamg special flood hazards and. if so located, the flood
insurance required pumwrt to Section 6. Ha)(j) is in fiill force and effect with respect to the
Property.
4.l.l4. Pll.ysicll ColldiUoa. To Borrower's knowledge 111d except as expressly
set forth in the Physical Conditions Report or otherwise disclosed to Lender in writing: (a) the
P10perty, including. witbout limitation, all buildings, improvements, puking facilities,
sidewalks, SIOIDI drainage systems, roofs, pliUDbing systems, HV AC systems, fire protection
systems, electrical systtiiDS, cquipmeot, exterior sidinp and doors, landscaping,
itrigation systems and all structural components, are in good condition, order and repair in all
material respec:ta; and (b) there exists no structural or other material defects or damages in the
PropMy, whether 1ataJt or otherwise, and Borrower bas not m:eived notice fiom any insurance
company or bonding company of any defects or inadequacies in the Property, or any part
which would advcr&ely affect tho insurability of the same or CIIIJ8C the imposition of
extrmrdinuy premiums or c:barges thereon or of any termination or threatened termination of
any policy of insurance or bond.
4.1.25. Bouad.lries. To Borrower's knowledge and except as expressly set forth
in the Survey, Title Insurance Policy or Physical Conditions Report, (a) all of the material
improvements wbicb were included in determining the appnliscd value of tho Property lie wbolly
within the boundaries and building restriction lines of the Property, (b) no improvements on
adjoining properties eucroacll upon the Property, and (c) no easements or other encumbrances
upon the P1operty encroach upon any of the hnprovemems, so as to affect the value or
marlcelability of the Pxoperty except tbosc which are insured against by the Title Insurance
Policy.
4.1.26. Leases. The Property is not subject to any ICMCS other than the Leases
described on Scl!edule n and made a part hereof and the Operating Lease. Operating Lessee is
the OWilCl" and lessor of landlmd's intaest in the Leases other tban the Operating Leaae..
Borrower is the owner aud lessor of landlord's interest in the Operating Lease. No Person bas
any possessory inrmmt in tbe Ploperty or right to occapy the same except under aud pur&llllll to
the provisions of the Leases and Room License Agreements. To the Bonower's knowledge. the
CUITmlt Leases are in full force and effect and there are no de1imlts themmder by either party aud
there are no coaditions that, with the passage of time or the givins of notice, or both, would
coDStitute defaults themmdcr. To Borrower's knowledge, except as disclosed to Lender on
Schedule 0 (a) no Rent (mcluding security deposits) has been paid more than one (I}
month in advance of its due date. (b) aD work to be perfOIDled under cecb Lcuc bas been
pcrfonned as required and has been accepted by the applicable tenant. and any payments, free
rent, partid rebate of rem or other payments, credits, aDowances or abatcmeu1s required to
be given to any tenant bas already been received by such tenant, (c) there bas been no prior sale,
lnlllsfer or usigmnc:nt, hypothecation or pledge of any Lease or of the Rents m:eived therein
which mnains in effect, (d) in each case, unless otherwise iodicaled thmon, oo tenant listed on
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Schedule ll bas assigned its Lease or sublet all or any portion of the premises demised thereby,
no such tenant holds its leased premises WJder assignment or sublease, nor docs anyone cccept
auch tenaJlt and its employees occupy such leued premises, (e) no tenant under my Lease bas a
right or option pursuant to such Lease or otherwise to purchase all or my part of the leased
premises or the building of which the leased premises an: a part. and (f) no tenmt under any
Lease bas any right or option for additional space in the Improvements.
4.U7. Survey. To Borrower's knowledge, the Survey for the Property delivered
to Lender in comection with this Agreement does not fail to reflect any material mattec affecting
the Property or the title thereto.
4.1.18. latutionally Omitted.
4.1.29. Fllfng ud R.ec:onllac TIIDI. All transfer taxes, deed s1t1mp11. inbmgible
taxes or other amounts ill the nature of transfer taxes to be paid by any Pmon under
applicable Legal R.equimnenta CUD"CIItly in effect ill connection with the transfer of the Ploperty
to Borrower have been paid. All mortgage, mortgage recording, stamp, intaDgable or other
similar tax Jequired to be paid by any Person under applicable Legal Requirements currently in
effect in conacction with the ctecution, delivery, recordalion, filing. regiatiation, perfection or
enforcement of any of the Loan Documents, including, without limitation, the Mortgage, have
been paid or wiD be paid simultaneously with the fimding of the Loan, and, IU!der cumnt Legal
Requiiements and after giving effect to the payment of aucb. taxes, the Mortgage is c:nfon:eable
in accordance with its tapeetive terms by Lender (or any subsequent holder thereof), subject to
principles of equity and bllllkruptcy, inaolvency and other laws generally applicable to creditors'
rights and the enforcement of debtors' obligations.
4.1.30. Special Pun!ose Eadtv/Sepantel!eu.
(a) Borrower is a Special Pwpoae Entity and Operati.ns Lessee is in
compliaDce with the separateness provisions of its certificale of incorporation.
(b) All of the assumptions made in the Inaolvency Opinion, including. but not
limited to, my ctlubits attached thereto, an: bue and comet in all respects and any assumptions
made in any subsequent DOD-consolidation opinion to be delivered in connection with
the Loan Documenls (an "Additionalll!soh'eaey Opbafoa"). including. but not limited to, my
ctlubits attached thmto, will have been and shall be bue and comet in all respects as of the date
when made. Bon-ower has complied with all of the assumptions made with respect to Borrower
in the blsolvency Opinion.
{c) From the date of its organization, Bonower has complied with the special
purpose, bankruptcy remote provisiODS of its organizational documents.
4J.31. Mu!yemeat Agreemeat The Management Agreement is in fiill force
and e.ffcct and then; is no default lbereander by any party thereto 8lld no material event bas
occwcd that, with the paasage of time indlor the giving of notice would coostitute a material
default thereunder.
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4.1.3Z.JilegaJ Actfyfty. No portion of the Property has been or will be pUIChased
with proceeds of any illegal activil)'.
4.1.33. No Cbyge ID Facts or CjrcnmstaDces; Diselo.nre. All information
submitted by and on behalf of Borrower to Lender and in all financial statcmeu1s, m1t rolls
(iDcluding the mll roll attached hereto as Schedule m. reports, cenificates and other documents
submitted by or on behalf of Borrower in COMection with the Loan or in satisfaction of the lerllls
thereof 8lld all statemmts of fact made by Borrower in this Agreement or in any other Loan
Document, are accurate, complete and correct in all material respecla. There bas been no
material adverse change in any condition, fact, circumstance or event that would make any such
information inaccurate, incomplete or otherwise misleading in any malerial respect or that
otherwise materially and adversely affects the use, operation or value of the Property or the
business operations or the financial condition of Borrower.
4.1.34.1D'Igtmept Company Aet. Borrower ia not (a) an "invesunent company"
or a company "controlled" by an "investmeot company," within the meaniug of the Investment
Company Act of 1940, as amended; (b) a "holding compaay" or a "subsidiary company" of a
''holding company" or aa "affiliottr of either a "holding company" or a "sslbsidiaty company''
within the meaning of the Public Utili!)' Holding Company Act of 1935, as amended; or. (c)
subject to any other federal or state law or regulation which plllpOrta to rcstrict or n:gulatc its
ability to borrow money.
4.1.35. Embarped Penoa.. AB of the date hcreofaodatall times throughout the
1em1 of the Loan, including after giving eJfect to any Transfers pennitted pursuant to the Loan
Documents, (a) none of the fimda or other assets of Borrower, Operating Lessee and Guarantor
constitute property of, or are owned, directly or indirectly, by any person, entity or
government subject to trado restrictions UDder U.S. law, including but not limited to, the
lnlernational EmergeDcy Economic Powers Act, SO U.S. C. 1701 et a.. The Trading with the
Enemy Act, SO U.S.C. App. 1 et m. aod any Executive Orders or regulations promulgated
thereunder with the n:sult that the iovestmaJt in Borrower, Operating Lessee or Guarantor, as
applicable (wbe!her directly or iDdirectly). is prolu1ri1ed by law or the Loan mad by the Lender
is in violation of law ("Embargoed Penoa,; (b) no Embargoed Penon has any interest of any
nature whatsoever in Borrower, Operating Lessee or Guarantor, as applicable. with the R811lt that
lhe investment in Borrower, Operating Lessee 01" Guarantor, as applicable (whether directly or
inclirectly), is prohibited by law or the Loan is iD violation of law; llld (c) none of the fimds of
Borrower, Operating Lessoe or Guarautor, as applicable. have been derived fiom any unlaw1bl
activity with the result that the investment in Borrower, Opeiatiug Lessee or Guuantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation oflaw.
4.1.36. Place of Bugeu; State of Orguizatioa. Bol:rower's principal place of
bnsin'sa as of the date hereof it the address set forth iD the introductory paragraph of this
Agreement. Borrower is organized UDder the laws of the State of Delaware and Operating Lessee
is organized under lhe laws of the State ofVuginia.
4.1.37. btendOD.IIlf Deleted.
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4.1.38. Operathlg Lease. The Operating Lease is in full force and effect and
there is no material defaolt, breach or violation thereunder by Borrower or Operating
Lessee and no event has occurred that, with 1he passage of time or the giving of notice, or both,
would constitute a default, breach or violation by any party thcn:under. The terms and
provisions of the Operating Lease are subordinate to this Agreement and the Mortgage.
Secdoa 4.2. Sarvlval of Represt11tatloas. Borrower agrees that all of the
representations and warranties of Bonowcr set forth in Section 4.1 hereof and elsewhere in this
Agreement and in the other Loan Documents shall survive for so long as any amount remains
owing to Lender under this or any of the other LoaD Documents. All representations,
wammties, covenants and agreements made in this Agreement or in the other LoaD Documents
by Borrower shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
Section 4.3. Knowledge ud Other Matters. . Whenever the term "to
Borrower's lalowledge" or my similar pbraac is used in this Agr=nent or any other LoaD
Document, the aame shall mean the actual knowledge, after due inquiry and investigation, of
Dennis Craven, Mule Murphy, the general manager of the Property and any Penon who
succeeds to their positions.
V. BORRQWER CoyENAN'fS
Section 5.1. Affirmative Coveauts. From the date hereof and until payment
and pcrfo1111l111Ce in full of all obligatious of Borrower under the Loan Documents or the earlier
release of the Lien of the Mortgage encumbering the Property (and all related obligatiOill) in
accordmce with the terms of this Agreement and the other Loan Documents, Borrower hereby
covcmnts and agrees with Lender that:
5.1.1. Exlstence; Complllmce wid! Legal Regulremeats. Borrower shall do or
cause to be done all tbiDgs ncceasary to preserve, renew and keep in full foroc and effect its
existence, rights, licenaes, permits and franchises and comply with all Legal Requirements
applicable to it, Operating Les&ee and the P10perty except where the faiiUie to comply with such
Legal Requirements is not reasonably likely to have a material adverse effect with aerpea to the
Property or Borrower; provided. however, Borrower's obligation to comply with Legal
Requiramc.nts sbaiJ be suapc:nded for 110 long as Bo110wa- amtests tbe applicability or violltion
of such Legal Requimuc.nts pursuant to Ssmon S.l.l hereof. There shall never be commiUed by
Borrower, and Borrower shall never pemlit any other Person in occupancy of or involved with
the operation or use of the Paoperty to commit any act or omission aftbrdi:ng the federal
government or any s1ale or local government the right of forfeiture against the Paoperty or any
part thereof; or any monies paid in perfoamance of Borrower's obligations UDder any of the Loan
I>ocumc.nts. Borrower hereby cowuants and agrees not to commit, permit or suffer to exist any
act or omission affurding such right of forfeiture. Borrower shall at all timtJS maintain, preserve
and protect or cause to be maintained, preserved and protcctcd, all famchises and trade names
and preserve all the aemaindcr of its property used or useful in the conduct of its business and
shall maintain or CIWIC to be maintained the Property in good woaking oader and aepair, and from
time to time mate, or cause to be made, all reasonably DCCCSSil)' repairs, renewals, replacements,
bettennents and improvemc.nts thereto, all as more tiilly provided in tbe Mortgage. Borrower
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shall keep the Property, or cause the Property to be kept, insured at all times by financially sound
and reputable insurers, to such extent and against such risks, and maintain liability and such
other insurance, as is more fully provided in this Agreement. After prior written notice to
Lender, Borrower, at its own expense, may contest by appropriate legal proceediog promptly
initiated and co!lducted in good faith and with due diligence, the validity of any Legal
Requirement, the applicability of any Legal. Requirement to Borrower, Operating Lessee or the
Ploperty or any alleged violation of any Legal Requirement, provided that (i) no Default or
Event of Default bas oc:cuned (other than the violation of the Legal Requirement then being
coolested) and remains uncured; (ii) Borrower is permitted to do so under the provisions of any
mortgage or deed of trust 8Upfirior in Jieo to the Mortgage; (iii) such proceeding shall be
permitted under and be conducted in accordaDce with the provisions of any instrument to which
BoiiOwer is subject and shall not COIIIIitute a default thereunder and such proceeding shall be
conducted in accordance with all applicable statutes, laws and ordinances; (iv) neither the
Property nor any part theleof or intcRst therein will be in imminent danger of being sold,
forfeited, tenninated, cancclled or lost; (v) BoiiOwer shall promptly upon final non-appealable
determination thereof comply with any such Legal Requirement determined to be valid or
applicable or cure any violation of any Legal Requirement; (vi) such proceeding shaD suspend
the enforcement of the contested Legal Requirement against Borrower, Operating Lessee or the
Property; and (vii) Bonowa- shall furnish mch security as may be required in the proceeding, or
as may be reasonably requested by Lender, to insun: compliance with such Legal Requirement,
to&ethcr with all interest and penalties payable in COIIJlection therewith. Lender may apply any
such III:CIIrity, as necessary to cause compliance with such Legal Requiremem at any time when,
in the reasonable judgment of Leader, the validity, applicability or violation of such Legal
Requirement is finally established or the Property (or any part thereof or interest therein) shall be
in imminent danger ofbeing sold, forfeited, tcnnillated, cancelled or lost.
5.1.1. Tues apd Other Cb!l'ft!!. Bouower- shall pay or canae to be paid all
Taxes and Other Charges now or hereafter levied or assessed or imposed against the Property or
any part thereof prior to the date 1he same become delinquent; provided. however. Borrower's
obligation to directly pay Taxes 111111 Other Charges shall be suspended for so long as Borrower
complies with the tc:nns and provisions of Section 7.2 bm:of or contests anch Taxes or Otha-
Charges pursuant to the Mortpgc. BoiiO'VI'CI' will deliver to Lender receipts for payment or otha-
evidence satisfactory to 1eDdcr that the Taxes and Other Charges have been so paid or are not
then delinquent within ten (l 0) Business Days after l.a!der' s request Borrower shal1 furnish to
Lender receipts for the payment of the Taxes and the Other Owges prior to the date the same
shall become delinquent (provided. however. Borrower is not required to furnish such receipts
for payment of Taxes in the event that such Taxes have been paid by Lmda- pursuant to Section
7.2 hereof or Bouower ia oontestiog same in accordance with the terms hc:n:of). Borrower shall
not suffer and shall promptly cause to be paid and discharged any Lien (other than Permitted
Encumbrance) or charge whalsoeva- which may be or become a Lien or charge against the
Property (other than Permitted Pnmmhl'IIIJCC), and shall promptly pay or cause to be paid for all
utility services provided to the Pl:op&'ly. After prior written notice to Lender, Borrower, or
Operating Lessee_ at its own expense, may contest by appropriate legal proceeding. promptly
initiated and conducted in good faith and wi1h due diliFUCC, the amount or validity or
application in whole or in part of any Taxes or Other Charges, moyided that (i) no Default or
Eveot of Defitult has oocurml and remins uncured; (ii) BoiiOwer or Operating Lessee is
.. permitted to do so under the provisions of any mortgage or deed of tn1st lllpCrior in lien to the
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Mortgage; (iii) such proceeding shall be pennined under and be conducted in accordance with
lhc provisions of any other instxwnent to which Borrower or Operating Lessee is subject and
shall not constitute a default themmder and such proceeding shall be conducted in accordance
with all applicable statutes, laws and ordinances; (iv) neither the Property nor any put thereof or
interest therein will be in imminent danger of being sold, forfeited, terminated, cancelled or lost;
(v) Borrower shall promptly upon final determination thereof pay or CIII8C the payment of the
amount of any such Taxes or Other Charges, together with all costs, interest and penalties which
may be payable in C:OIDlc:dion therewith; (vi) such proceeding shall suspend the collection of
mc:h contested Taxes or Other Charges from the Property; and (vii) Borrower shall fumisb. or
cause to be fumished such security as may be requiR:d in the proceeding. or as may be
reasonably requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon. Lender may pay owr any such c:aah deposit or
part thereof held by Lender to the claimant entitled thereto at any time when, in the judgment of
Lender, the entitlement of such claimant is established or the P10perty (or put thereof or interm
therein) shall be in danger of being sold. torl'eited, tmninetrd, cmcelled or lost or thc shall be
any danger of the Lim of the Mortgage being primed by any related Lien.
5.1.3. u!fgaUou. Upon acquiring knowledge thereof, Borrower shall give
prompt written notice to Leuder of any litigation or governmental proceedjngs pending or
threatened in writing against the Property, Borrower, Operating Lessee and/or Guarantor which
could reasonably be ClpCCled to malerially adversely affect Borrower's, Operating Lessee's or
Guarantor's condition (finmcial or otherwise) or business or the Property.
5.1A. Access to the Property. Borrower shall permit, end cause Operatiug
Lessee to pennit, agents, Rpl'Cientativea and employees of LendCI' to inspect the Property or any
part thereof at reasonable hours upon reasonable advance notice.
5.1.5. Notice or Deraalt. Borrower shall promptly advise Lender of any material
adverse change in Borrower's condition, financial or olhawise, or of the occumnce of any
Default or Event ofDefault of which Borrower bas knowledgt:.
5.1.6. Coouerate g Leg .. Proceedfap. Borrower sball cooperate fiilly with
Lender with respect to any proceedings before any court, board or other Governmental Authority
which may in any way adversely affect the rights oflmdm: hereunder or any rights obtained by
Lender under any of the other Loan DociiiiiCDia and, in COIDICCtion therewith, permit Lender, at
its elcctiou, to participate in any such proceedings.
5.1.1. Perform Loan Docapnts. Borrower shall observe, perform aDd satisfy
alllhe terms, provisiODS, COVCDI!Its and conditions of; and sball pay when due all costs, fees and
expeases to tho ex1e11t Ieqaired under the Loan Documents executed and dtlivcred by, or
applicable to, Borrower.
5.1.8. Award and IDsuruce Beudlts. Borrower shall cooperate with LeDder
in obtainin& for Lmder the benefits of any Awards or Insurance Proceeds (subject to the
provisious of Section 6.4 hereof) lawfully or equitably payable in c:ouncction with the Ploperty,
and Leader shall be nimbursed for any reasonable cxpeuaca incurred in connection therewith
(mcluding attorneys' fees and disbwseu!Qts, and the payment by Borrower otbe expease o an
appraisal on behalf of Lender in case of Casualty or Condemnation affecting the Property or any
part !hereof) out of such Insunn:e Proceeds.
5.1.9. Further Borrower shall, at Borrower's sole cost and
expense:
(a) furnish to Lender all instruments, documents, boundary surveys, footing or
foundation II\II'Veya, certificates, plans aud specification&, appraisals, title and othc:r insurance
reports aud agreements, and each aud t!f'lr:ty other document, certificate, agreement and
instrument required to be furnished by Borrower pursuant to the terms of the Loan Docwnents;
(b) execute and deliver to Lender such documents, instruments, certificates,
asaignmmts and other writinp, and do such other acts necessary or desirable, to evidence,
preserve andfor protect the collata'al at any time securing or intended to secure the obligatiom of
Borrower UDder the Loan Documents, 11 Lender may reasonably require; and
(c) do and exewte all and such further lawful and reasonable acts,
conveyances and assurances for the better Uld IJIOR effective cazrying out of the intents and
this Agreement SDd tho other Loan DocumentS, 11 Lander sball reasonably require
ftom time io time.
5.1.10. Principal Plaee of Bn!lnM' State of O!l!!l!iptioD. Except 11 otherwise
set forth in Section S.2.10, Borrower will not cause or permit any change to be made in its name,
identity (including its trade name or 1111111e8), place of organization or fOrmation (as set forth in
Section 4.1 J6 hereof) or Borrower's limited liability company or limited partnership structure,
as applicable, tmlcss Borrower shall have first notified Lender in writing of such change at least
tbirty (30) days prior to the effective date of such change. and shall have first tabn all action
requited by Lender for the pwpose of perfecting or protecting the lien and security interests of
Lender puJSUID.t to this Agrcc:mcut, the Cash Managanmt Agm:ment and the other Loan
Documents and, in the case of a change in Bmrower's structure, without first obtaining the prior
CODSellt of Lender. Upon Lender's request, Borrower shall exewte and deliver additional
finmcing sttemenf.s, security agreements and other instruments which may be necessary to
effectively evidence or perfect Lender's security interest in the Property as a result of such
change of principal place of business or place of o:tgani111tion. Borrower's principal place of
business and cbicf executive office bas beal for the prcc;eding four mooths (or, if less, the mtirc
period of the existence of Borrower) and will cnntinne to be the address of Borrower set forth at
the intrnductozy pangraph of this Agreement (unless Borrower notifies Lender in writing at least
thirty (30) days prior to the date of such change). Borrower's organizational identification
number, if any, IISSigned by the state of fOrmation is 4206283. Borrower shall promptly ootify
Lender of any change in its orgaoizaticmal identification munber. If Borrower docs not DOW have
m orpnizatioaal icla!tificalion rwmbcr &lid later obtains one, Borrower promptly sball notify
Lender of soch orgmi111ti0Dal ideatification number. At the request of Lender, Borrower shall
execu1e a certificate in foun satisfactory to Leoder listing the tJadc names under which Borrower
intt:nds 10 operate the Property, and irptesenting and wmaoliug lhlt Borrower does business
IIJid5" DO other trade name with mpect to the Ptoperty .
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5.1.11. Finuc:ial Reporting.
(a) Bonowa- will keep and maintain or will cause to be kept and maintained
on a Fiscal Year basis, in accordance with the Unifmm System of Accounts and reconciled in
accordance with GAAP (or such other accounting basis acceptable to Lender it being agreed that
the accounting basis employed by Borrower as of the date hercofis acceptable to Lender), proper
and accurate books, records and accounts reflecting all of the financial affairs of Bo110wer and
all ilt:ms of income and expense in COillledion with the opc:mtion of the Property. Lender shall
have the right ftom time to time at all times during normal business hours upon reasonable notice
to examine such boolcs, records and accounts at the office of Borrower or any other Person
maintaining such books, records and accounts and to make such copies or extracts thereof as
Lender shall desire. Upon the occurrence and during the continuance of an Event of Defiult,
Borrower shall pay any c:os1s and expenses incurred by Lender to examine Borrower's
accounting records with reapect to the Property, aa Lcmdcr shall determine to be necessary or
appropriate in the protection of Lender's inlerest.
(b) BoiiOwa- will furnish, or cause to be fimis!wi, to Lender annually, within
ninety (90) days foRowing the end of each Fiscal Year of Borrower, a complete copy of
Borrower's and Operating Lessee's financial statements prepared in accordance with the
Uniform System of Accounts and recoociled in accoxdmce with GAAP (or such ether
accounting basis acceptable to Lender) covering the Property for such Fiscal Year and containing
statemenls of profit and loss for Borrower, Operating Lessee and the Ptoperty and a balance
sheet for Borrower and Operating Lessee. Such statements shall set forth the financial condition
and the results of operations for the Property for such Fiscal Year, and shall include, but not be
limited to, amounts 1epxcsenting amma1 Net Operating lllcome, Gross Income from OpcratiODS
and Operating Expeases. Together with such financial statements, Borrower shall deliver
Guarantor's audited financial statements prepared by a "Big Four" accounting firm or other
indeperuk:ot certified public accountant reasoll3bly acceptable to Lender in accordance with the
Uniform System of Acclounts and rec:oociled in accordance with GAAP (or such other
accounting basis acceptable to Leader). Financial statancnts delivered to Lender in accordance
with this Section shall be accompanied by (i) a comparison of the budgeted income and cxpea&ell
and the actual income and expenses for the prior Fiscal Year, (ii) m Officer's Certificate stating
that, to such officer's knowledge, each such annual financial statement preseats fairly, in all
material rellpCC!s, the financial cooclition and the results of opc:mtions of Borrower, Operating
Lessee and the Property being n:ported upon and baa been prepared in accordance with the
Uoifo!m System of Accounts and reconciled in accordance with GAAP, and (fu) occupancy
statistics for the Plopc..1y in 1imn reasonably acceptable to Lender. Together with Borrower's
annual financial statements, Borrower shall furnish to Lender an Officer's Certificate certifying
as of the date thereof whether there exists an event or circumstance which constitutes a Default
or Event of Defiwlt under the Loan Documents executed and delivered by, or applicable to,
Borrower md if such Defaul1 or Event of De&ul.t exists, the nature thereof, the period of time it
baa existed and the IK:tion then being ta1ceu. to remedy the same.
(c) Borrower will filmish, or cause to be furnished, to Lender on or bc:fole
thirty (30) days after the ead of each caleadar quarter the following items, accompanied by an
Officer's Certificate stating that such items are accurate and complc:te and Wrly preseat, in each
case in all matc=ri31 1espects, to such officer's knowledge after due inquiry and investigation, the
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financial condition and results of the operations of Borrower, Operating Lessee and the Property
(subject to normal year-end adjustmeniS) as applicable: (i) a occupancy report for the subject
quarter, including an average daily rate; (ii) quarterly and year-to-date operating statements,
(iDcludiDg Capital Expenditures) prepared for each calendar quarter, noting Net Operating
Income, Gross Income from Opmal:iODS, and Operati11g Expenses (not including any
contributions to the Replacement Reserve Fund), and other information necessary and sufficient
to fairly represent, in all material respects, to such officer's knowledge, the financial ~ s i t i o n and
results of openlion of the Property during such calendar quarter, and containing a comparison of
budgeted iDcomc and expcrlliCS and the actual ineome and CltpCIISCS together with a detailed
explanation of any variances of fifteen pera:nt {IS%) or more between budgeted and actual
amollllts for such periods, all in fonn reasonably satisfactory to Lender; {iii) a sdledule of Net
Operating Income; and (iv) the amount of all rent due pursuant to the Operating Lease for the
subject period. ln addition, such Officer's Certificate shall also state the representations and
wmanties of BoD"OWer set forth in Section 4.1.30 and the covenants of Borrower set forth in
Sqnn 5.1.23 hereof arc true and correct as of the date of such certi.1i.catc, to the exlalt lhat such
representations, warranties and coveaauts ae true and correct as of the date of such ctificate
(or, if not true, the ex:tent same are not true), and that there are no trade payables outstanding for
more than sixty (60) days that are DOt being contested in accordance with this Agreement All
calculatioDS of the Operating Rent due UDder the Operating Lease sball be subject to verification
by Lender. In addition, Borrower wili1Umisb, or cause to be 1Umislied, to Lender on or before
twenty (20) days after the end of eadl caleodar month, any monthly RpOrts delivered to
Borrower or Operating Lessee by Manager pur.mant to the Management .AgJeemeDt
{d) Borrower sbal1 submit to Lender an Annual Budget not lateJ than ten (10)
days prior to the commencement of eadl Fiscal Year. lbe Annual Budget sba1J be subject to
Leoder's written approval not to be umeasonably withheld (each such Annual Budget, an
"AI!proyed. Apga! Budget'). In the event that Lender reaso.nably objects to a proposed
Annual Budget submitted by Borrower, Lender sball advise Borrower of such objections within
fifteen (1S) days after receipt thereof (and deliver to Borrower a reasonably detailed description
of such objections) and Borrower shall promptly revise such Annual Budget and resubmit the
SIIIJIC to Lender_ Lender shall advise Borrower of any objections to such revised Ammal Budget
within tea (10) days after receipt tbcroof (and deliver to Borrower a reuonab1y detailed
description of such objections) and Borrower shall promptly revise the same in accordance with
the process described in this subsection until Lender approves the Annual Budget. UDtil such
time lbat Lender approves a proposed Almual Budset, the most recently Approved Annual
Budget aba1l apply.
{e) AIJy report&, statements or other infommion required to be delivered
UDder this Agm:ment sball be delivCRd (i) in paper fonn, and (il) if requested by I ender and
within the capabilities of Borrower'a data syatems without change or modification thereto, in
electrollic form llld prepared using a Microsoft Word for Windows or WordPerfect for Windows
files (which files may be pxepared using a spiPadsheet program and saved as word processing
files). Borrower agrees that Leoder may discloae information regarding the Property 111d
Borrower that is provided to Lender ptUliiiiDt to this Section S.l.i I( e) in COJmecti.m with the
Securitization to such parties requesting such information in connection with such Securitization.
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5.1.12. Business ud Ootrltions. Borrower shall, and shall cause Operating
Lessee to, continue to tngage in tbc busineACS presently conducted by Borrowac and Operating
Lessee as mel to the extent the same are necessary for the owneJSbip, maintenance, management
ll1d operatioo of the Property. Bonower sball, and shall c:ause Operating Lessee to, qualify to do
business and will remain in good mnding under the laws of each jurisdiction as and to the extent
the same are requiJed for the oWDerShip, maintenance, management and operation of the
Property.
5.1.13. Title to the ProRCrtv. Borrower will warrant and defend (a) the title to
the Property and tiY'J part thereof, subject only to Uens permitted hemmder (including tiCDS
described in Section 5.2.2 and Permitted Encumbrances) and (b) the validity and priority of the
Uea of the Mortgage and the Assignment of Leases on the Ploperty, subject only to UCDS
permitted ha"cuDder (including LiCDS described in S!!djon 5,2.2 and Pennitted Encumbrances).
in ead! case against the claims of all Persons whomsoever. Borrower lhall reimburse l..ender for
any losses, costs, damages or expeases (including reasonable attorneys' fees and court costs)
iDcurnd by Lender if an interest in the Plopcrty, other than as peunitted hereunder, is claimed by
another Pmon.
5.1.14. COif! of Enforcement. In the event (a) that the Mortgage encumbering
the Property is foreclosed in whole or in part or that the Mmgage is put into the hands of an
attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage prior to
or subsequent to the Mortgage encumbe:ril!g the Property in which proceeding Lender is made a
party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in Jespect
of Bonowa-, Operating Lessee or any of its conmtuent Persons or an assigmneut by Borrower or
any of its constituent Persons for the benefit of its creditors. Bonower, its successors or assigns,
shall be chargeable with and agrees to pay all costs of collection and defCDSe, including
attorneys' fees and costs, incuaed by Lender or Borrower in connection therewith and in
CODilection with any appellate proceeding or post judgment action involved therein, together with
all required service or use taxes.
5.1.15.ldtoDDe.! St!tcmept.
(a) After request by Lender, Borrower shall within ten (10) days fUrnish
Lender with a statemcot, dilly acknowledged and certified, setting forth (i) the original principal
amount of the Note, (ii) the unpaid principal amount of the Note, (iii) the Interest Rate of the
Note, (iv) the date instaDmeats of interest arW/or principal were last paid, (v) any offsets or
defi:nscs to the payment of the Debt, if any, and (vi) that the Note, this Agreement, the Mortgage
and the other Lom Doeumeots are valid, legal and binctiDg obligations and have not been
modified or if modified, giving particulars of such modification.
(b) After request by Bonowa-, Lender shall within ten (10) days furnish
Borrower with a statemcot, duly acknowledged and certified, setting forth (i) the original
principal amounl of the Note, (ii) the tmpaid principal amount of the Note, (ili) the Interest Rate
of the Note, (iv) the date iJJstalbnentl of interest arW/or principal were last paid, (v) any offsets or
defenses to the paymCJJt of the Debt, if any, aDd (VJ) that the Note, this AgrecmCJJt, the Mongage
and the other Loan Documcota are valid, legal and binding obligatiom and have not been
modified or if modified, giving particulani of such modification.
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(c) Borrower sball use its commercially reasonable: effilrts to deliver to
Lender upon requcat, tcDant estoppel cartificates fiom each commercial teoant leasing space at
the Property in excess of S,OOO squue feet in form and substance reascmably satisfactoty to
Lender (it being agreed that the foDII or content requiRd by the applicable Lease shall be deemed
to be satisfactory to Lender) provided tbat Borrower shall not be required to deliver such
certificates more frcqucndy than two (2) times in any calendar year.
5.1.16. Lou Proceed&. Borrower shall use the proceeds of the: Loan received by
it on the Cloaing Date only for the pwposcs, set forth in Section 2.1.4 hereof.
5.1.17. Per{o1111111ce by Bomn!er. Borrower shall in a timely manner observe,
perform and fW1ill each and tt:Very covCIIIIIt, term and provision of each Loan Document
executed and delivered by, or applicable to, Borrower, and shall not enter into or othc:rwisc suffer
or pamit any amendment, waiver, supplement, tennination or other modification of any Loan
Documl!llt executed and delivered by, or applicable to, Borrower without the: prior written
consent of Lender.
5.1.18. CoDIIrmatioD o( lkPraeDtations. Borrower shall deliver, in connection
with any Sec:uritization. certificates of the relevant Govemmeotal Authorities in all n:ltt:Vant
jurisdictiODS indiGiting the good standing and qualification of Borrower, Operating Lessee and
Guarantor ss of the date ofthe Securitization.
5.1.19. No J'oillt Aspment Borrower shall not suffer, permit or iuititc the
joint assessment of the Property (a) with any other real property constituting a tax lot separate
limn the P I ~ . and (b) which constitutes real p:tope.ty with any portion of the Property which
may be deemed to constitute periOIIal property, or any other procechue whereby the lien of any
tu.es wllich may be levied against such pasonal property shall be assessed or levied or clwgcd
to such real p:toperty portion of the: Property.
5.1.20. Leasipg Matter!. (a) Any Leases with respect to the Property written
after the date hCie()t; for more than S,OOO square feet shall be approved by Lender, which
approval shall DOt be unreasonably withheld, including approval for the approximately 8,000
square feet of space intended to be leased to be used as a rcstauralll (the "RestgraDt Le!AA").
Upon request, Borrower shall fUrnish Lender with executed copies of all Lc:uca. All n:newals of
Lc:asc:s and all proposed Lc:asc:s sball provide for rental rates comparable: to existiDg local madcet
rates. All proposed Lc:ascs shall be on commercially reasonable tcm1s and shall not contain any
tams which would ma!erially and adversely affect Lender's rights lll!dl:r the Loan Documents.
All Leases executed after the date hereof sbaD provide that they are subordinate to the Mortgage
encumbering the: Property and that tho lesaee apes to anom to Lender or any pwdlaser at a sale
by foreclosure or power of sale:. Bonower sball (i) observe: Blld perfonn the obligations imposed
upon the: lessor UDder the Leases in a COIIIIIIC'ftially reasonable manner; (u) enforce the terms,
covenants and e11ndilions contained in die Lc:ues upon lbe part of the lessee thereunder to be
observed or performed in a commcrcially reasonable manner and in a manner which is
reasonably likely DOt to impair the value of the Property; (fu) not IIXJeDd or modify any of the
material provisi0118 of any Lase in a manner reasonably likely to have a M&mal Adverse
Bft'cct; (iv) not terminlle or accept the aum:ndcr of any Leue except that a termination by
Borrower or Operating I.asec or acceptance of sumoder by a tenant of any Leases shall be
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pemtined by reason of a renant default and then only in a commercially reasonable manner to
prc:scrve and protect the P10po:rty; Drovided. bowevm-. that no such teuninalion or acceptance of
SLDrell.der of any l..eue covering more than S,OOO squan: feet wiR be permitted without the
written consent of Lellder; {v) not collect any of the rents more than one (I) month in advance
(other than security deposits); (vl) not execute any other assignment of lc&&or's interest in the
Leases or the Rents (except as contemplated by the Loan Documents); (vii) execute and deliver
at the request of Lender all such fbrther assurances, confumations lll!d assignments in connection
with the Leases as Leader shall 1iom time to time reasonably require; and (viii) and cause
Operating Lessee to comply wi1h clnn (jl through Cvij) hereof. Notwilhstanding anything to
the contrary conlained herein, neither Borrower nor Operating Lessee shall enter into a lease of
all or substantially all of1he Ptopetl)' without Lender's prior written c:oruent.
(b) With rqard to any action described in this Section 5.1.20 for which
Lender's c:onsent is RICJUired, Lender shall not withhold its coosenl or disapproval to any such
action for IDOJe than twenty (20) Business Days after request for approval thereof has bea:l made
by Borrower, ucompaoied by a detailed description of the request for which approval is sought,
provided that Bcmower mbmits such request fur Lender's approval in an envelope labeled
"Priority" and delivered to Lender by overnight delivery and otherwise in accordance with the
provisions of Section 10,6 and wbich request shall state at tho top of tbe fiJst page in bold
lettering in 14 pt font "LENDER'S RESPONSE IS RJ:QUIRED WITHIN TWENTY (20)
BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A
LOAN AGRJ:EMENT BETWEEN THE UNDERSIGNED AND LENDER!' In the evmt
tbat Lender fails to either approve such request or disapprove such RqUCSt (such disapproval
stating the reasons for such disapproval) for more than twenty (20) Business Days after rc:ceipt
thereof, Bonower shall deliver to Lender a second request, wbich second request shall contain
the material transmitted with the fust request, in an envelope labeled "Priority" and delivered to
Lender by overnight clelivsy and otherwise in accordance with the provisioos of Section 10.6
and which request shall state at the top of the first page in bold lettering in 14 pt font "SECOND
REQUEST: LENDER'S RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS
DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN
AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER.'' In the event that
Lender fails to either approve such second request or disapprove such secood request (such
disapproval staling tho reasons for such disapproval) for more 1han tCil (10) Business Days after
receipt thereof; the actioD that wu the subject of said request sball be deemed approved.
5.1.21. AlteratiOJIS. Borrower shall obtain Lezlder's prior written consent to any
Alterations to any Improvements costing in excess of the AlteratiOD Threshold Amount with
respect to the P1operty, wbicb CODSalt shall not be unreasonably withheld except with respect to
Alterations that could reasonably be expected to have a Material Advetse Effect.
Notwithstanding the foregoing. Lender's COilSCIIt sball not be requhed in ODI1lleCtion with any
AlteratiODS that will oot have a Material Adverse Effect, orovided that such Alterations ue made
in connection with (a) teaant improvemeat work pafo.med pursuant to the terms of any l..eue
executed on or before the date hereof; (b) tenant improvement work performed pursuant to the
terms and provisimia of a Lease and DOt advmely affecting my structural component of any
lmprovemeots, any utility or HV AC system contained in any lmpruvemeots or the exterior of
any building constituting a put of any Improvements, (c) Alterations pafmmed in cooncction
with the Restoration of the Ptopeoty after tho occurrence of a Casualty or Condemnation in
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accordance with !he terms and provisions of this AgRement, or (d) the requilemeniS of the
Franchise Agreement If the total tmpaid amounts due and payable with I'Cipcct to Alterations to
the hnprovements other than the Planned Improvements (other than such amounll to be paid or
reimbursed by tenants under the Leases or fi:om WsliDg Reserves) sbaU at any time exceed the
Alteration Threshold Amount, Borrower shall promptly deliver to Lender as security for the
payment of such amoiDlls and as additional security for Borrower's obligations under the Loan
Documenls any of the following: (A) cash, (B) U.S. Obligations, (C) other securities having a
rating acceptable to Lender and, after Securitization, that the applicable Rating Agencies have
confinned in writing will not, in and of itsel( reauh in a downgrade, withdrawal or qualification
of the initial, or, if higher, then current ratinp assigned to any Securities or any clasa thereof in
connection with any Securitization or (D) a completion and perfonnance bond or an irrevocable
letter of cralit (payable on sight draft only) issued by a financial institution having a rating by
S&P of not less lhan "A-t+" and by Moody's if not less than ''P-I" iftbe term of such bond or
letter of credit ia no tonser than three (3) months or, if such term is in excess ofthrcc (3) months,
issued by a financial institution having a rating that is acceptable to Lender and, after
Securitization, that the applicable Rating Agencies have c:onfioned in writing will not, in md of
itsel1; result in a downgrade, withdrawal or qualificatioo of the initial, or, if higher, lhen c:umnt
ratings assigned to any Securities or clasa thereof in counection with any Securitization. Such
security sball be in an amount equal to the excess of the tolal unpaid amolllliB with respect to
Alteratious to the Improvements on lhe Property (other than such amoants to be paid or
reimbursed by teuants under the Leases) over the Alteration Threshold Amount shall be applied
fi:om time to time at the request of Borrower to pay (or reimburse Borrower) for such Alterations
as the related work is performed (subject to Lender's reasonable oversight and approval prior to
any such application).
5.1.22. Operation of Property.
(a) Borrower shall cause the Property to be operated, in all material respects,
in accordance wiJh Management Apement (or Replacement Management Agreement). Except
as othc:rwisc expressly provided in Section 2.5 hereof; in the event that any MJmasement
Agreement expira or is terminated (without limiting any obligation of Boi101II'CI" to obtain
Lender's consent to any termination or moclifir,ation of the Management AgRement in
accordance with the terms and provisions of this Agreement), Borrower sbaU , or shall cauae
Opetating Lessee to enter into a Replacement Management Agreement with Manager or another
Qualified Manager, as applicable, prior to the date that aucb failure would become an Event of
De1iwh.
(b) Except as otherwiso cmpressly provided in Section 2.5 hereof; Borrower
shaH, or sbaU cause Operating Lessee to: (i) promptly perform and/or observe, in all material
respects, all of the covenants and agreemea.IS required to be performed and observed under the
Management Agaeemmt and do all things pee y to preserve and to keep unimpaired ita
material rights thereunder; (ii) promptly notify Lender of any material defauh under lbe
Management Agreement of wbich it is aware; (Iii) Jllowptly deliver to Lender a copy of each
fiDancial s1atement, business plan, capital expenditures plan, notice, report ml estimate received
by Borrower or Operating Lessee under the Management Agreement; and (iv) enforce lbe
performance and observance of all of the covenants and agreements required to be performed
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andfor observed by Mmager under the Management Agreanent, in a commercially reasonable
IIIIDIIet".
5.1.23. SpeciaJI'!upose Eatity/Separateaess. Bonower will, at all times (a) be
a Special Pwpose Entity, aud (b) comply with all of the material 81SWllptions contained in the
Inaolvency Opinion. Bonower sball cause Operating Lessee to comply with the separateness
provisions of the Certificate of IDcorporation of Operating Lessee. Bonowez- will cause e.:b
other Person covered by the Jnsolwucy Opinion to comply with all of the material assumptions
contained in the Insolvency Opinion.
S.l.:Z4. Fruclaise Agreemeat Bonower shall, and shall cause Operating Lessee
to comply in all respects with the tecos and conditions of the Franchise Agreemeot.
5.1.25. Opentllg Leuea. Except as otherwise expressly provided in Section 2.S
hemlf; Borrower shall (a) cauae the botellocated on the Pmperty to be operated pursuant to the
Opaating Leue; (b) promptly perfOrm and/or observe all of the coveuants, agreemcmts and
obligations rtquired to be perfOJIDed aud observed by Bonower UIIdc:r the Operaling Lease and
do all things necessary to PftlHIV8 and to keep IIDimpaired i1a material rigbls therounder; (c)
promptly notify Lender of any default under the Operating Lease; (d) promptly deliver to Lender
a copy of each fiDaDcia1 statemmlt, business plan. c:apital elpmditures plan, notice, report and
estimate received by Bonower under the Operating Lease; (e) promptly enforce the perfonnauce
aud observulce of all of the coveoant& IUid agreemen1a requilecl to be perfonnecl and/or observed
by the Operating Lessee UDder the Operating Lease; (f) cause Operaliug Lessee to depo&it all
Rents into the Lockbox Account; and (&) maintain or cause Operating Lessee to maintain all
Uceoses necessary for the operation of the Property as a hotel with retail uses.
Sectioa !.2. Negative Coveaanb. From the date hereof until payment and
performance in full of all obligations of Borrower under the Lom Documents or the eulier
Rlcase of the LieD of the Mortgage encumbering the Ptopm ty aDd lillY other collatera1 in
accordance with the terms of this Agreement and the other Loan Documents, Borrower
covenants md agrees with Lender that it will not do, directly or indirectly, any of the following:
5.%.1. OUeratioa or Property. Except as otherwise expR:Ssly provided ill
Section 2.5 Borrower lhall not, and shall not permit or allow Operating Lessee to,
witbout Leader's prior written consent: (i) surreoder, terminate or CIIDCCI, the Management
Agreement; pmvj4ed that without Lender's consent, Bonower may replace or cause Operating
Lessee to the Manager so long as the replacement DIIDigCJ is a Qualified Manager
plii'IIIIDt to a Replacanent Mmagement Agreement; or (ii) ameDd or modify, or allow Operating
Lessee to amend or modifY, the Management Agreement ill lilly material 1espect; or (iii) amCDd
or modify the Fraachise Agreement ill any material R:IJICCl
5.2.2. !Jg. Borrower shall not create, iDcur, asiiUiiiC or suffer to exist aay Lien
on any portion of the Ptopaty orpmmit my such action to be taken. acept:
(i) Permitted Encumbrances;
(ii) Liens czeated by or permitted pursuant to the Loan Documents;
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(iii) Room Liceuae Agreemc:nts hereafter entered into in the ordinary course of
operatiug the Property; and
(iv) Ueos for Taxes or Other O!arges not yet due.
5.2.3. Dissolution. Borrower shall not (a) engage ill any dissolution, liquidation
or consolidation or merger with or into any other bnsin.._ entity, (b) engage in any business
activity not within its authorized purposes as set forth in its organizational doc:wnenta, (c)
transfer, lease or aell, in one transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower except to the extent permitted by the
Loan Documents. (d) modify, amend, waive or terminate its organizational documents or its
qualification 8lld good standing iD any jurisdiction or (e) cause Openting Lessee to (i) dissolve,
wind up or liquidate or !.Ike any action, or omit to take an action, as a result of which the
OptntiDg Lessee would be dissolved, wound up or liqnidatrd iD whole or ill pet, or (ii) amend.
modify or waive any of the malcrial provisions of the organizational documents of Operating
Lessee or terminate the organizational documents of the Operating Lessee, in each case. without
obtaining the prior written consent of Lender or Lender's designee but no amendment to the
organizational documents of the Operating Lessee sba11 amend or modify any of 1bc special
pmpose, bankruptcy-remoteness provisions thereof.
5.2.4. Chuge in Business. Borrower sball not permit, allow or otherwise cause
Operating Lessee to enter into any line of business or make any material change in lbc scope or
nature of its business objectives, purposes or operations, or undertake or participate in activities
otha- than, in each case, activities within the scope ofits authorized purposes as set furth in its
organizational documents in effect as of the date bereot: as the same may be amended, I"SfaWW
or modified fi:om time to time in accordance with the provisions of this Agr=neot and the olher
Loan Documents.
5.2.5. Debt Cycena!fon. Borrower aball not cancel or otherwise forgive or
release any claim oc debt (other than tcrminatioo of Leases in accordance heRwith) owed to
Borrower by any Person, except for adequate consideration and ill the ordinary COUI1IC of
Borrower's business
5.2.6. le!inr, Bonower shall not initiate or COIISCilt to 1111)' zooiDg
reclassification of any portion of the P10perty or seek any variance under any existing zoning
onlinance or use or pemrit the use of any portion of the Property in any manner that could result
in such use becoming a nse unc1er any zoning ordinance or any other applicable
land usc law, rule or regulalion, without the prior CODSCilt ofleoder.
5.2.7. Dellt. Borrower shall not create, incur or asswne any Indebtedness other
than the Debt except to the extent expressly permitted hereby.
5.l.8. No Jolat Alsessment. Borrower shall not suffer, permit or initiate the
joint I8SCSIIIIlall of the Piupaty with (a) any olbcr real p1operty constituting a tax lot sepmte
fi:om the Ptoperty, or (b) l1li'f portion of the Property which may be deemed to CODitituto peraonal
property, or any otba- proccdun: whereby the Lien of any taxes which may be levied against
such personal property sbal1 be assessed or levied or charged to the Property
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S.Z.9. ERISA.
(a) (a) BortOwer shall not. and Boaower shall not pennit Operating Lessee to
engage in any lransaction which would cause any obligation, or action takeo or to be taken,
bemmder (or the by Le.nder of any of its rights under the Note, this Agreentmt or the
other Loan Documents) to (i) be a non-exempt (llllder a statutory or administrative class
exemption) prohibited transaction under ERISA or (ii) violate any state statute
investment of, or fiduciary obligations with to, "governmental plans" within the meaning
of Section 3(32) of ERISA.
(b) Borrower further c:ovenants and to deliver to Lender such
certifications or other evidence ftom time to time throughout the term of the Loan, as reasonably
r:equemd by Lender, that (A) neither Bcmower nor Oplnting Lessee is, and neither Bonower
nor Operating Lessee maintains, an "employee benefit plan" as defilled in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(32) of ERISA; (B) neither Bonowc:r nor Operating Lessee is subject to any state
statute investment of, or fiduciary obligations with respect to govemmmtal plans and
(C) one or of the following ciJcumstances is true:
(i) Equity interests in Borrowez- publicly offered securities, within the
meaning of29 C.F.R. 2Sl0.3-101(bX2);
(ii) Less than twenty-five perten1 (25%) of each outstanding class of equity
interests in BortOwer is held by "benefit plan investors" within tho meaning of 29 C.P.R.
2510.3-101(0(2); or
(Iii) BortOwer qualifies as an "operating company" or a ''real estate operating
company" within the meaning of29 C.F.R. 2510.3-lOl(c) or (e).
5.1.10. Tnnsfen.
(a) Without the prior written consent of Lender, and except to the extent
otherwise set forth in this Section :1.2.10 and Section 2.5 hereo( Borrower shall not, and shall
not permit any Penon owning a direct or iDdim:t interat in Bonower or Operating Lessee to do
any of the following (collectively, a '1'naferj: (i) sell, convey, mortgage, grant, bargain,
eocum.ber, pledge, assign, grant options with ri:SJICCI to, or otherwise transfer or dispose of
(voluntarily or involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) the Property or any direct or indirect intCri:SI therein, or (ii) permit a
Sale or Pledge of a direct or iDdim;t intcmlt in Borrower or Operating Lessee, other than (A) the
Operating Lease, (B) pur1U1Dt to Leasea of space in the Improvemeats to lenallts in accordance
with the provisions of Sectjoo 5.1.20. (C) the Room license Agnanents, and (D) Permitted
Transfers.
(b) Notwithslmting tho foregoing, a sale or conveyance by Bonower of the
Plopcrty subject to the lien of the Mortgage (but not any other mortgage, lic:n or other
encumbrance (other than the Permitted l!llcumbriDces and Room License Agreements hereafter
eatered inlo in the ordinary course of operating the Ploperty)) is permitted provided that the
following conditions are satisfied:
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(i) no Eveot of Default sball have occumd aod be continuing and such sale
or conveyance shall not result in an Bveot of Default;
(ii) the Person to whom the P'loperty is sold or conveyed (the
satisfies lhe Ja!WremeDts of a Special Pmpose Entity and lhe organizational documents
of the Tranafetce are reasonably acceptable to Lender and, after a Secwitizatioo, to the
Rating Agencies;
(iii) if sw:h sale or conveyance OCCDIB prior to a Secwitization, Lender sball
have CODieoled to such sale or conveyance, which COIIIIeDl shall not be unreasonably
withheld;
(iv) Lcnder bas received an AdditiOIIII Insolvency Opinion which may be
relied upon by Leader, the Rating Agcnci.ea and their 1espective IIUcCeasors and aaigns.
with respect to the Transferee and its applicable affiliates, which Additional Insolvency
Opinion aball be reasonably acceptable to Lender or, after a Securitization, the Rating
Agencies;
(v) the Transferee shall execute an assumption, effective as of the date of
transfer, of all of the of the BoirOwer thereafter arising or to be performed
under Ibis Agreemeot, the Mortgage and the other Loan Documeots, subject, however, to
the provisions of Section 9.3 hereof and upon such usumptioo, Borrower shall be
released 1iom all liabilities and obligations UDder the Loan DocumCDIS;
(vi) following sw:h sale or conveyance the property manager of the Property
must be a Qaali.fied Manager; and
(vii) the Tr:ansferee pays to Lender a loan usumption .fee of 1% of the then
outstanding principal amount of the Loan;
(viii) it; after giving effect to such Transfer, Sponsor does not own at least 51%
of the equity intaests in BOII'Ower and COJIIIOI Borrower, the Rating Agencies have
confinoed that auch sale or conveymce, in IIIII of itxl4 will not result in a downglade,
qualification or withdrawal of the theo Cllll"eDt ratiDp assigned to the Securities; and
(ix) BoirOwer pays Lender's reasonable costs and expeDSCS (mcluding any .fees
due to the Rating Agencies) in coooection with the sale or conveyance.
(c) A Transfer (but not a pledge. hypothecltion, creation of a security interest
in or other eocumbraDce) of aoy direct or indirect intm:sts in Boii'Ower is permitted provided
that the following conditions are satisfied:
(i) if such sale or conveyance occurs prior to a Securitization, Leoder shall
have CODSeotcd to such sale or CODveyance, which cooseot sball not be UIIJ'CISOJI8bly
withheld; "J!"'ids' however. Lender's CODlllll shall not be required it; after giving ef&ct
to the Transfer, Sponsor owns not less lban S 1% of the equity interests in Bo110wer and
controls, directly or indircctly, Bunowet,
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(ii) if as a result of any such Transfer or series of'fransfm more lban 49% of
the direct or indirect ownership interests in Borrower shall be transf=cd to a Person
individually or together with its Affiliates not owning at least 49% of the direct or
indiiect ownership interests in Bonower immediately prior to such Transfer (or as
rdlccted in the most recent Additi0118.1 Insolvency Opini011 delivered to Lender),
Borrower shall deliver to Lender an Additional Insolvency Opinion which may be relied
upon by Lender, the Rating Agencies and their respective connsel, successors and
assigns. with respect to the proposed transfer or sale, which Additional Insolvency
Opinion shall be reasonably acceptable to Lender and, after a Secwitization, the Rating
Agencies;
(iii) at the time of such Transfer no Event of Default has occurred and is
c:ootinuing;
(iv) following such Transfer the property manager of the Property must be a
Qualified Manager;
(v) if, aftar givillg effect to such Transfer, Sponsor does not own at least Sl%
of the equity interests in Boi1owe. 8lld control BoiJ'Ower, the Rating Agencies shall have
confirmed that such Transfer, in 8lld ofitself, will not resuh in a downgrade, qualificati011
or withdrawal of the then cum:nt ratiDp assigned to the Secwities
(vi) Boll'Owcr shall pay, or cause to be paid, to Lender its reasonable out-of-
pocket expenses (including any feea due to the Rating Agencies) in connectioo with sucb
sale or conveyance; and
(vii) in 001111ection with any TDIISfer as a result of which SpoiiiOI' will not own
at least Sl% of the equity interests in Borrower and conb:ol, dircctly or indirectly,
Bo!J'Ower, Bo!J'Ower shall give or cause to be given written notice to Leuder of the
proposed Transfer not later than fifteen (IS) days prior thereto, which ootice shall set
forth the name of the Person to which the interest in Bonower is to be transferred,
ideutify the proposed tnmsferee and set forth the date ibe T!'IIJS(er is expected to be
effective and (A) Lender shall bave CODSeDted to such Transfer aud (B) Borrower shall
pay to Lmder a loan aaumption fee of 1% of the then outatncting principal unount of
the Loan.
5.2.11. Operating Lease. Except as otherwise expressly provided in Sections 2.5
and 5.1.26 haeof, without Lender's prior written consent which consent shall not be
111RU00Bbly withheld, Borrower sba1J not (a) swrender, te.nninate or c:anccl the Operating
Lease; (b) reduce or consent to the reduction of the term of the Operating Lease; (c) incrcasc or
consent to the increase of the amount of any charges under the Operating Leise; (d) modify,
change, supplement, alter or ameod any of the material provisions of the OperatiDg Lease or
waive or e1ease any of Borrower's material rights md nmedies under the Operating Lease; (c)
graot ita consent or approval as IIIII)' be requested or requiled in connection with the terms aDd
provisions of the Operating Lease; (t) declare any default or event of default under the Operating
Leue or pursue any of Bo!J'Ower's rights or remedies thereunder in connection therewith or (g)
permit, suffer or con.sent to 111 asaigmnent of the OperatiDg Leue by Operating Lessee .
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Notwithstanding the foregoing. Lender's prior written consent sball not be required in
connection with commercially reasonable adjustments of rent payable under the Operating Lease
in connection with a renewal or extension of the Operating Lease.
VI. INSURANCE; CASUALTY; CONDEMNATION; REOUIRED
REPAIRS
Sec:don 6.1. bpruce. (a) Borrower ahall obtain and maintain, or cause to be
maintained, insUiancc for Borrower and the Property providing at least the following coverages:
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(i) compreht:Dsive all risk insurance ("Special Form'1 including, but not
limited to, loss c:auacd by my type of windstonn or hail on the Improvements md the
Pmaonal P1op.llty, (A) in an amount equal to one hundred pcn:cnt (100"/o) of the "l!l!.
Replacement COif', which for purposes of this Asr-tent shall mean actual
replacanent value (exclusive of costs of excavations, fo\Uidations, utilities
and footings) with a waiver of dcpR:ciation, but the amount shall in no event be lea than
the outstanding principal balance of the Loan (B) containing an agreed amOUDt
cndoiSelllent with 1cspcct to the Improvements and Personal Property waiving all co-
insurance proviaiOIIS or to be written on a no co-insurance form; (C) providing for no
deductible in excess of Ten Thousand and 00/100 Dollan (Sl 0,000.00) for aU such
insuraDce coverage and (D) if any of the Improvements or the use of the Property shall at
my time constitute legal DOIHXIIIforming structures or uses, coverage for loss due to
operation of law in an amount equal to the full Replacement Cost. coverage for
demolition costs and coverage for increased costs of conatruction. In addition, Borrower
shall obtain: (x) if my portion of the Improvements is c:urrcntly or at any time in the
future located in a federally designated ''special flood hazard area", flood hazard
insurance in an amount equal to the lesser of(l) the outstanding principal balance of the
Loan or (2) the mnimiDD amount of such insurance available under the National Flood
IDsunmce Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
fnaurancc Reform Act of 1994, u each may be amendrd or such gJeater IIII101IDl u
Lender shall require md (y) eartbqualce insunmce in amounts and in form and substance
satisfactory to Lmder in the event the Property is located in all area with a high degree of
seismic activity;
(ii) buaine't income iDs1llliDI:e (A) with loss payable to Lendrr, (B) insuring
against all risks required to be covered by the insurance provided fur in subsection til
above; (C) with a limit ofinsmance adequate to cover one llundml pcn:cnt (1000.4) of the
projected gross revenues fiom the operation of the Property (as reduced to xellect
cxpeuses not incurred during a period ofRestoJation) for a period of at least eighteen (18)
111011ths llfler the date of the Casualty; and (d) containing Ill extended period of indemnity
endoncment which provides that after the physical 1oes to the Improvements and the
Personal Property bas been repam:d, the continued loss of income wiD be insured until
I1ICh income mums to the same level it wu prior to the loss, or the expiralion of 360
days iom the date that the Property is repaired or and operations are resumed,
wbic:bevcr fiJst occurs, and DOtwithstlllding that the policy may expire prior to tbe eod of
such period. The amolDit of such businCISS income insur8DCe shall be determined prior to
the date hereof and at least once each )Qr therctftcr based on Borrower's reasouable
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I:Stimatc of the gross revenues tiom the Property for the succww!ing twelve (12) month
period. Notwithatanding the provi.siona of Section 2.6 hereof: all proceed& payable to
Lender pursuant to this subsection shall be held by Lender and, provided no Event of
Defiult is continuiug. shall be applied to (I) the monthly Debt Service Payment Amounts
and the other obligations &eCUied by the Loan Documents from time to time as such
payments and obligations become due and payable hereunder and under the Note and (II)
Opcnling ExpcniCIII approved by Lender in Lender's reasonable discmion;
howeyer. that nothing herein contained shall be deemed to relieve Bonower of its
obligations to pay !he obligations secured by the Loan Documents on the respective dateS
of payment provided for in the Note and the other Loan Documents except to the extent
such amounts are actually paid out of the proceeds of such business income insurance;
(iii) at all times duriag which construction, repairs or Alterations arc
being made with respect to the Improvements, and only if the Ptoperty coverage fonn
does not otbclwise apply, (A} owner's contingent or protective liability insurance.
otherwise known as Owner Contractor's Protective Liability, covering claims not covered
by or UDder the terms or provisions of the above mentioned commercial genm.lliability
insurance policy and (B) the insurance provided for in subsection (i) above written in a
ao-<:alled builder's risk completed value fOJm (1) on a non-reporting basis, (2) against all
risks insured against pursuant to S!!baection (j) above, (3) including permiasioo. to occupy
the Property and (4) with an agreed amount cndorscmcnt waiving co-insunmce
provisions;
(iv) comprehensive boiler and machinery insurance, if steam boilers or other
prasme-fixed vessels are in operation, in amounts as shall be reasonably r:equi1ed by
Lender on terms consistent with the commercial property insurance policy required under
subsection (i) above;
(v) oommercial general liability insutauce apinst claims for pcrsoual injury,
bodily injury, death or p1operty damage ocx:uaing upon, in or about the Property, sw:h
insunmce (A) to be on the so-called "occum:oce" form with a combined limit of not less
than Two Million and 001100 DoUars ($2,000,000.00) in the aggregate and One Million
and 00/100 Dollars ($1,000,000.00) per OCCUIICDCC; (B) to continue at not less than the
aforeaaid limit unb1 required to be changed by Lender in writing by reason of cbangcd
economic conditions making I1ICh protection inadequalo and (C) to cover at least the
following hazards: (1) premises 8lld operations; (2) products and completed operations on
an "if my" basis; (3) independent contractors; ( 4) blanket contractual liability for all
written contracts l!ld (S) CODilactUal liability covering the indemnities contained in
Alticle 9 of the Mortgage to the extent the same is available;
(vi) automobile liability covmage for all owned IIIII noJH)WDed vehicles,
including rented and leased vehicles cootaining minimum limits per occurrence of One
Million Dollars and 00/100 Dollm ($1,000,000.00);
(vii) worker's compeusation and employee's liability subject to the wodcer's
compensation laws of the applicable state;
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(viii) umbrella and cxcesa liability insurance in an amount not less than One
Hundred Million and 00/100 Dollars ($100,000,000.00) per occiiiTellCe on terms
consisteut with the commercial general liability insurance policy required under
subsection Cvl above, including, but not limited to, supplemeutal coverage for employer
liability and mtomobile liability, which umbrella liability coverage sball apply in excess
of the automobile liability coverage in clause (vi) above;
(ix) the insuraDce requiral under this Section 6.Ha) above shall insure against,
if commercially available, perils of terrorism and acts of terrorism and Borrower shall
maintain insurance for loss reaulting from perils and acts of terrorism on terms (including
amounts) consistmt with those required under SecliODS 6.1Cal above at all times during
the lenD of the Loao; IIDil
(x) upon sixty (60) days written notice, such other reasonable inswancc,
iDcluding, but not limited to, mold, sinlchole or land subsidence insurance, and in such
rea.conable amounts as Lalder from time to time may reasonably requi:SI against such
other insurable hazards which at the time arc commonly insured against for property
similar to the Property located in or around tho region in wbich the Property is located.
(b) All insuraDCe provided for in Section 6.1Ca> btRof, shall be obtained
under valid and enforceable policies (collectively, the "Policies or in the singular, the "l2lli:Ij.
The Policies sball be ilslled by a Qualified Insurer. The Policies described in Section 6.l hereof
(other than those 81rictly limited to liability protection) shall designate Lender as loss payee. Not
less than ten (l 0) days prior to the expiration dates of the Policies theretofore furnished to
Lender, certificates of insurance evidencing the Policies accompmied by evidence satisfactory to
Lender of payment of the pnmiums due thereunder (the ''JDsnnDce Premiqms"), shall be
delivered by Borrower to Lender or, alternatively, Borrower shall advise La!der of the status of
such renewals within such ten (10) day period, with certificates of insurance evidencing tho
Policies delivered prior to expiration.
(c) Ally biaDket insurance Policy shall specifically allocate to the P.toperty the
amount of coverage from time to time required hereunder and shall otherwise provide the same
protection as would a aeparate Policy insuring oDly the P1operty in compliance with the
provisions of Section 6.1Ca) hereof.
(d) All Policies provided for or contemplated by Section 6.Hal bereot; except
for the Policy Iefeteaud in Section 6.l(alCvii) of this AgrecmeDt, shall name Borrower and
Operating Lessee (as their interest may appear) as the inslll"ed and Leader as dle additional
insured, as its interests may appear, and in the case of property damap. boiler and machinc:ry,
flood and earthquake insunmce, shall contain a so-called New Y orlc stsndud non-contn"buting
mortgagee clause or its equivalent in favor of Lender providing that the loss the!eunder shall be
payable to Lender. AD.y insurance maintained by Operating Lessee punuant to the Operating
Lease shall name Bouower 8Dd Lender u additional insureds, u their interests may appear.
(e) All Policies pertainiDg to property related insunnce (except whme
excepted below) shall contain ctanses or endorsements to the eft"ect that:
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(i) no act or nogligence of Borrower, or anyone acting for Borrower, or of
any tenant or other occupant, or failure to comply with the pr:ovisiom of any Policy,
which might otherwise result in a fonciture of the insurance or any part thereof, shall in
any way affect the validity or enforceability of the insurance insofar as Lender is
concerned;
(il) the property and liability Policies shall not be DUiterially changed (other
than to increase the coverage provided thcn:by) or canceled without at least thirty (30)
days written notice to Lender and any other party named therein as an additional insured;
(iii) the issuers thereof shall give written notice to Lender if the Policy has not
been Rllcwed thirty (30) days prior to its expiration; and
(iv) Lender $hall not be liable for any Insurance Premiums thCICOn or subject
to any assessments thereunder when not in conflict with mortgagee or loss payable
endorsements.
(f) If at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect. Lender shall bave the rigb!, without notice to
Borrower, to take such action as Lender deems necessary to protect its iniCRat in the Property,
including, without limitation, the obtsiniDg of such insurance coverage as Lender in its sole
discretion deems appropriate without notice to Borrower. All premiums incurred by Lender in
connection with such action or in obtaining such insurance and keeping it in effect shall be paid
by Borrower to Lender upon demand and, until paid, shall be secured by the Mortgage and shall
bear intCRat at the Dcfauh Rate.
(g) Any blanket insurance Policy shall specifically allocate to the Property tbc
amount of coverage from time to time required hereunder and shall otherwise provide the same
protcctioo as would a separate Policy insuring only the Property in compliance with the
provisions of Section 6.!(a). Ifthe insuranl:e dcsc:n"bed in Section 6.1Ca)('Q, iil aodfiiil is written
on a blanket basis, a breakdown of the properties' insurable value sball be provided to Lender
upon Lender's request.
Sec:tioa 6.2. Cuaalty. If the Ptoperty shall be damaged or destroyed, in whole
or in part. by .fire or other casualty (a "Casaalty"), and such Casnlty has caused damap to tbe
Ptoperty which, in Borrower's reasonable estimation, is in excess of $250,000, Borrower sball
give prompt notice of such damage to Lender and, to the extent that the Net Proceeds are made
available to Borrower pursuant to Section 6.4, sball promptly commence and diligently prosecute
the completion of the Restmllion of the Property pursuant to Scctjog 6,4 lunof as nearly as
poesible to the c:ooditiou the Property was in immediately prior to such Casualty. Borrower shall
pay all costs of such Restoration whether or not such costs ue covered by insurance. Lender
may, but shall not be obligated to make proof of loss if not made promptly by Borrower. In
addition, Lender may participate in any settlement discussions with any insurance wmpanics
(and shall approve tho fiDal settlement, which approval sball not bo unreasonably withheld) with
respect to any Casualty in which the Net Proceeds or the costs of complctiug the Restoration are
equal to or greater than the RaJtoration Tbm;bold Amount IIId Borrower shall deliver to Leudcr
all inslrumeots required by Lender to permit such participation.
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Section 6.3. Cond"'ftaetion. Borrower shall promptly give Lender notice of
the actual or threatened commencement of aay proceeding for the Condemnation of the Property
and shall deliver to l..mlder copies of any and all papers served in counection with such
proceedings. Lender may participate in any such proceedings, and Borrower shall from time to
time deliver to Lender all instruments requested by it to permit such participation. Borrower
shall, at its diligently prosecute any such proceedings. and shall consult with Lender, its
attorneys and expens, and cooperate with !hom in the carrying on or defense of any such
proceedings. Notwithstauding any taking by any public or quasi-public authority through
Condemnation or otherwise (including. but not limited to, any transfer made in lieu of or in
anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time
and in the IIWIIIer provided for its pa)'lllent in the Note and in this Agreement and the Debt shall
oot be reduced IDIIil any Award shall have been actually received and applied by Lender, after
the deduction of expenses of collection, to the reduction or discharge of the Debt Lender shall
not be limited to the interest paid on the Award by the condemning authority but sha11 be entitled
to receive out of the Award interest at the rate or rates provided hm:in or in the Note. If the
Property or any portion tb::n:of is taken by a condll1l!l!ing IIUthority, to the extent that the Net
Proceeds are made available to Borrower pursuant to Section 6.4, Borrower shall promptly
coouncnce and diligently proaecute the Restoration of the Property or any portion thereof
pursuant to Section 6.4 hereof and otherwise comply with the provisions of Section 6.4 hereo
If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the
A ward, Lender shall have the right, whether or not a deficiency judgment on the Note shall have
been sought, n:covcrcd or denied, to receive the A ward, or a portion tbereof sufficient to pay the
Debt
Section 6.4. Re!toration. The following provisions shall apply in CO!IIIection
with the Restoration of the Property:
(a) If the Net Proceeds shall be less than the Restoration Threshold Amount
and the costs of completing the Restoration sball be less than the Restoratioo Threshold Amount,
the Net Proceeds will be disb!IISlld by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 6.4lb)(il hereof are met and Borrower delivers to Lender a written
undertalcing to expeditioualy commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than 1be Restoration Tbresbold
Amount a: the costs of completing the Restoration is equal to or greater than the Restoration
Threshold Amount shall make the Net Proceeds available for the Restoralion in
accordance with the provisions of this Section 6.4. The term "Net Proceeds" for purposes of
this Section 6.4 shall mcan: (i) the net amount of all insurance proceeds received by LeDder
pursuant to Section 6.1<a)fi\ Civ), Cixl and {!} as a result of such daznap or destruction, after
deduction of its reasonable costs md expenses (including. but not limited to,leaSODible COlDISel
fees), if any, in col!co:djng same {"'D.IIllUice Pr!ceeds1, or (Ji) the DCI amount of the Award,
after deduction of its reasonable costs and expenses (including. but not limited to, rea.ronsble
counsel fees), if any, in collecting same ("Copd.,.,natioa Proceedl"), whirllever the case may
be.
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(i) The Net Proceeds shall be made available to Borrower for Restoration
provided tbat (i) the Management Agreement requires the application of Net Proceeds to
the Restoration or (ii) each of the following conditions are met:
(A) no Event of Default shall have occurred and be continuing;
(B) (1) in the event the Net Proceeds are Insurance Proceeds,
less than twenty-five pen:ent (2S%) of the total floor area of the
Improvements on !he Property has been damaged, destroyed or rendered
lll!usablc as a result of such Casualty or (2) in the event the Net Proceeds
are Condemnation Proceeds, less than ten percent (10%) of the land
constituting the Property is taken, and such land is located along the
perimeter or periphery of the Property, and no portion of the
Improvements is located on such land;
(C) Borrower sball commence the Restoration as soon as
reasonably practicable (but in no event later than one hundred oigbty (180)
days after such Casualty or Condannation. whichever the case may be,
occurs) and shall diligently pmsue the same to satisfl!clory completion;
(D) Lender sball be satisfied that any operaling deficits,
including all scheduled paymenta of interest under the Note, which wiU be
incurred with respect to the Pl:operty as a result of the occunence of any
such Casualty or Condemnation, whichever the case may be, will be
covered out of(!) the Net Proceeds, (2) !he insurmce coverage referred to
in Section 6. l(a)(iil hereof; if applicable, or (3) by other funds of
BoiiOwa;
(E) Lender shall be satisfied that the Restoration will be
completed on or before the earlier of (1) tluee months prior to the Maturity
Date, (2) such time as may be required under all applicable Lege)
RequiremeniS in order to repair and restore the Property to the condition it
was in immediately prior to such Casualty or to as nearly as poasible the
condition it was in immediately prior to such CoDclemnarinn, as
applicable, or (3) the expiration of the insuraDcc coverage :refened to in
Section 6.l(a)(U) hereof (unless other funds have been provided to by
Borrower to pay any opmting deficits);
(F) the Ploperty and the use thereof after tbe Restoration will
be in compliance with and pennitted under all applicable Legal
Rcquira:nl:ots;
(G) the Restoration shall be done and completed by Borrower
in an expeditious aDd diligent fashion and in compliance with all
applicable Legal Requi:remenls;
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(H) such Casualty or Condemnation. as applicable, does not
result in the permanent loss of access to the .Property or the related
Improvements;
(1) Borrower shall deliver, or cause to be deliveml, to Lender
a signed detailed budget approved in writing by Borrower's architect or
engineer stating the entire cost of completing the Restoration, which
budget shall be reasonably acceptable to Lender; and
(J) the Net Proceeds together with any cash or cash equivalent
deposited by Borrower with Lender are suJlicic:nt in Lender's reasonable
determination to cover the cost of the Restoration.
(ii) The Net Proceeds shall be held by Lender in an Eligible Account at a
financial institution reasonably acceptable to Lender and, until disbtu3cd in accordance
with the provisions oftbis Section 6.4lbl, shall constitutr: additioual security for the Debt
and Other Obligatioos under the Loan Documents. The Net Proceeds shall be disbul!led
by Lender to, or u diiectcd by, Borrower .from time to time during the course of the
Restoration, upon receipt of evidence satisfactory to Lender that (A) all materials
iDstalled and work l!ld labor pea funned (except to the extent that they are to be paid for
out of the requested disbursement) in connection with the Restoration bave been or will
be contemporaneously therewith paid for in full, and (B) there exist no notices of
pendency, stop orders, mtw:hsmic's or rnateriahnan's liens or notices of intention to file
same, or any other liens or CIICWIIbrances of any nature whatsoever on the Property (other
than Permitted Encumlmmces and Liens permitted pursuant to Section 5.2.2) which have
not either been fully bonded to the satisfaction of Lender and discharged of record or in
the alternative fully insured to the satisfaction of Lender by lhe title company issuing the
Tide IDsurance Policy.
(ili) All plans and apecifications, if any, required in connection with the
Restoration sball be subject to prior review and approval in all respects by Lender (such
approval not be ameasonably withheld and by an independent consulting engineer
selected by Lender which approval sball not be unrcasonably withheld (the "C!!!!!lty
Consnlt .. t ' ~ . Lender shall have the use of the plans and specifications and all pennits,
licenses and approvala required or obtained in connection with the Restoration. The
identity of the contractors, subcontractors and materialmen engaged in the Restoration, as
well as the contracts under wbicb they have been engaged, shall be subject to prior
rmew and accep!IDCe by Lend and the Casualty Consultant which review and
acceptance sball not be liiii'CIISOnably withheld. All costs and expenses inculmi by
Lender in connection with making the Net Proceeds available for the Restoration
including, wilhout limitation, reascmabl.e counsel fees and disbursements and the Casualty
Comul.tant's fees, shall be paid by Borrower.
(iv) In no CIVCilt abaiJ. Lender be obligated to make disbwscmcnts of the Net
Proceeds in excess of an 8IDOIIIIt eqnal to the colts actnally iucwed fiom time to time for
work in place as part of 1he Restoration, as ctrti.fied by the Casualty Consultant, minll8
the Casualty Retainage. The llml "Casualty RetliDage" shall mean an amotmt equal to
ten percent {lO"A.) of the costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until the Restoration has been
completed. The Casualty Retainagc sball in no event, and notwithstanding anything to
the contrary set forth above in this Section 6.4Cb). be less thaD the amount actually held
back by Borrower from contractors, subcontractors and materialmen engaged in the
Restoration. 1be Casualty Retaioage sball not be released until the Casualty Coosultant
certifies to Lcoder that the Restoration has been completed in accordance with the
provisions of this Section 6.4(b) and that all approvals necessary for the re-occupaucy
aod use of the Plopcrty have been obtained from all appropriate governmental and quasi-
governmental authorities, and laJder receives evidence satisfactory to Lender that the
costs of the Reslontion have been paid in full or will be paid in full out of the Casualty
Rctainage; provided however. that Lender will release the portion of the Casualty
ReWnage beins held with respect to any colllractor, subcontractor or materialman
cnpged in the Restoration as of the dale upon which the Casualty Consultant certifies to
Lcoder that the CODtJactor, subcontractor or materialman has satisfactorily compk:tcd all
work aod bas supplied all materials in acc:ordaDcc with the provisions of the wulractor's,
subCODirlctor'a or materialman's contract, the contractor, subcontractor or materialman
delivers the lien waivers and cvidmcc of payment in fuU of all sums due to lhc
contractoi, subccntractor or materialman as may be reasonably requested by Lender or by
lhe title company issuing the Title Jnsunmcc Policy, and Lender receives an eadorsement
to lhc Title Insurance Policy insuriDg the continued priority of the lien of the Mortgage
and evidence of payment of any pranimn payable for such endorsement. If required by
l.aldcr, the release of any such portion of the Casualty Retainage sball be approved by
the surety company, if any, which bas issued a payment or pctformance bond with
respect to the contractor, subcontraaor or materialman.
(v) Lender shall not be obligated to make disbuncmCDts of the Net Proceeds
more frequently than once every calendar month, but. subject to compliance with the
other provisions of Ibis Section 6.4. Lender wiD make such disbunements ll least once
per calendar month.
(VJ) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in the reasonable opinion of LeDdcr in consultation with the Casualty Consul Iaiit, be
sufficient to pay in full the balance of the costs which are estimated by the Casualty
Coosul!aDl to be incurred in counection with tho completion of the Restoratio11, BOIIOWm"
shall deposit the deficiency (the ''Net Prpc;eeds Deficlencyj with l.aldcr before any
further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency
deposited with Lender shall be held by LeDdcr and shall be disbursed for costs actually
incurred in connection with the Restoration on the same CODditions applicable to tbc
disbursement of the Net Proceeds, llld until so disbursed pursuant to Ibis Section 6.4Cb)
shall constitute additional security for the Debt llld Other Obligations under the Loan
Documents.
(vii) The excess, if any, of the Net Proceeds (and the remaining balance, if any,
of the Net Proceeds Deficiency) depoaited with Lender after the Casualty Consultant
certifies to Lender that the R.cstoratioo lw been completed in accordance with the
provisions of this Section 6.4(b>. and the receipt by Lender of evidence satiaW:tory to
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Lender that all costs incurred in counection with the Restoration have been paid in full,
shall be released to Borrow provided no Event of Default shall have occurred and shall
be continuing under the Note, this Agreement or any of the othez- Loan Documents.
(c) All Net Proceeds not ~ u i r e d (i) to be made available fOt the Restoration
or (ii) to be returned to Borrower as excess Net Proceeds pUISuant to Section 6.4(blCviil hez-eof
sball be applied toward the payment of the Debt in accordance with Section 2.4.2.
(d) In the event of foreclosure of the Mortga&e, or other tnmsfer of title of the
Property in extinguishment in whole or in part of the Debt all right, title and interest of Borrow
in and to the Policies that arc not blanket Policies then in force conceming such the Property and
all proceeds payable themmder shall thereupon vest in the pwcllaser at &UCla forcclosurc: or
Lend or othez- transferee in the event of such other transfer of title.
VD. RESERVE fUNDS
Section 7.1. R!c!u!nd Repairs. Borrower shaD complete, or cause to be
completed, the Required Repairs, if any, set forth on Schedule m, within the time period set
forth on Schedule W.
Section 7.2. Tax and lnRruce ESC!O!! FDDd. Borrower shall deposit Ot
C&lllle to be deposited with Lender on each Payment Dale (a) ono-twelflh (1112) of the Taxes that
Lender estimates will be payable during the next ensuing twelve (12) months in order to
accumulate sufficient funds to pay all such Taxes at least thirty (30) days prior to their respective
due dates, and (b) one-twelfth (1/12) of lhc Insurance Premiums that Lend n:asonably
emmtes will be payable for the renewal of the ooveragc afforded by the Policies upon the
apiration thez-eof in order to accumulate suflicient funds to pay all such ln.su.rauce Premiums at
least thirty (30) days prior to the expiration of the Policies (said amounts in (a) and (b) above
hereinafter called the 'Tu yd Igeranc;e Escrow Fundj. Amounts on deposit in the Tax and
lnsurauce Escrow Fund sball be applied to payments ofT axes and Insurance PR:miums required
to be made by Borrower pursuant to Section 5.1.2 bez-eof and UDder the Mortgage. In making
my payment relating to the Tax and Insurance Escrow Fund, .Lender may do so according to my
bill, statement or estimate procured fiom the appropriate public office (with rapect to Taxes) or
insurer or agent (with respect to lnlurmce Premiums), without inquiry into the accuracy of such
bill, atstement Ot estimate or into the validity of any tax, assessment, sale, forfeitum, tax lieo or
title or claim thereof, liDless Borrower is conteating the Taxes in ICCOI"dance with Section 5.1.2
hez-eof and Borrower has so notified Lender. Upon written notice from Borrower to Lender,
provided that the Tax and In.sunmce Escrow Fund contains sufficient funds for such pwpose,
Lender llhallusc reasonable efforts to pay any Taxes at such time as will provide the maximum
disoount allowable by law to Borrower, bnt the failure of Lender to pay BUCh Taxes early enough
to obtain any discount shall not result in any liability fiom Lender to Bmrower. If the amount of
the Tax 8lld Insurance Escrow Fund sball exceed the amounts due for Taxes and .Insurance
Praniums pursuant to Section 5.1.2 haof (the 'TI Excess'), Lender shall promptly mum, or
cause to be returned, any excess to Boaowcr or, at Borrower's direction, to Operating Lessee.
Any amount remaining in the Tax and IDsuraDcc Escrow FUDd after the Debt bas bCCII paid in
full shall be returned. to Borrower Ot, at Borrower's direction, to Operating Lesaee. In allocating
such accss, Lender may deal with the PeJSOn shown on the records of Lender to be the Owner
.
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of the Property. If at any time Lender reasonably determines that the Tax and lns1D11!1ce Escrow
Flllld is not or wiD not be sullicicot to pay Taxes and Insurance Premiums by the dates set forth
in (a) and (b) above, Lender shall notifY Borrower of such determination and Borrower shall
increase its monthly payments by the amount that Lender estimates is sufficient to ma1ce up the
deficiency at least thirty (30) days prior to the due date of the Taxes and/or thirty (30) days prior
to expiration of the Policies, as the case may be. Notwithstanding the foregoing. Lender agrees
that upon delivery to Lender by Borrower of evidence satisfactory to Lender that the Policies of
insurance required to be maintained by Borrower pumumt to Section 6.Hal arc maintained
pursuant to blanket insurance Policies covering the P:toperty and other properties and which
blanket iJisurance Policies otherwise comply with the requirements of Section 6.1 and the
lnsiD1IIlce Premiums payable in connection therewith have been prepaid for not less than one
year in advance ( OI, for the period of covcrap under the Policies as to which Certificates arc
delivered at closing. such period, if less than one year), Lender will waive the requirement that
B0110wer deposit 1nawance Premiums into the Tax aud Inswance Escrow Fund. Upon request
of Lender, Borrower shall provide evidence satisfactory to Leoder that the InSWIIDCo Premiums
payable iD connection with such blanket insunmce Policies arc paid as soon as appropt iate
evidence i6 reasolllbly available.
ScctiOil 7.3. RmlacemeDb ud Rmlacemmt Reserve.
7.3.1. Replacement Reserve Fw!d. Boi'IOWC" shall deposit or cause to be
deposited into an account with Lender (the "Replacement Reserve Acc:onnt'1 each calendar
m011th, an amount equal to the greater of (i) the actual percemage of the Gross Income from
Opcratiom for the most recently reported month required to be expended (without duplication)
Wlder the Management Agreemcot or tho Franchise Agreemc:a.t for Replacemcots, and (ii) four
p c n : c : ~ ~ t (4%) of Gross Income from Operations from the Property for the most recently reported
month (the greater of such amounlS for lily month being referred to herein as the "Replacement
Reserve Monthly Deposit AmoDDtj. Amounts deposited into the Replacement Reserve
AccoWlt shall hereiDatter be referred to as Borrower's "Rcpl!ceJDeat Reserve Fund".
7.3.2. D!sbpncmutl from Beplace-.....,t Reserve Accoaat Provided that a
Event of Default sball have not occurred and be continuing. Borrower, or at Boaower'a
dircctioo, Opmting Lessee or Manager, shall be entitled to disblii8cments from the Replacement
Reserve Account to pay, or to reimburse Borrower, MaDager or ()peiating Lessee for, the costs
ofReplacements as IIICh oosts are iDcwrcd.
7.3.3. Performaace of Replacemea1s.
(a) Borrower shall make, or cause to be made, R.eplaceml':llts whl':ll required in
order to keep the Property in condition and 1epair colllistent with other first class, full sarvice
hotels in the same market segment in the metropolitan area in which the Property i5 located, and
to kl!q) the Property or my portion thereof fioDi deteriorating beyond normal wear and ~ .
Borrower &ball complete, or cause to be completed, all Replacements in a good aod womnanlike
manner as soon as practicable following the commeu.cement of making each sucll Replacement
Borrower ahall provide to Lender, or cause Mmager to provide to Lender during the
performance of any Replacemc:n18 copies of receipts evidencing that such Replacements have
...
been made and paid for, together with a certification from Borrower (or on behalf of
Borrowa') that such Replacements evidenced by such receipts have been made.
(b) (i) reserves the right, at its option, 10 approve all contracts or
work orders with materialmen, mechanics, 811pplicrs, subcontractors, coD!ractors or other parties
providing labor or materials in connection with a single Replacement (or multiple Replacements
which togelher constitute a single project) to be funded from the ReplacanCDI Reserve Accotmt,
the tolal cost of which is equal to or grater than SSOO,OOO.OO which approval shall not be
IIIIR8SOnably withheld. In the event that any materials for which "the request is made have not
been incorporated into tbc Propaty, such materials shall be on site at the Property and be
properly secuml. Upon Lender's request, Borrower sball assign any contract or subcontract
enteml into by Borrower to Lcoder.
(ii) With resard to any action described in this Section 7.3.3(b) for which
Lender's consent is required, Lender shall not withhold its consent or disapproval to any
such action for more than ten (10) Business Days after request for approval thereof bas
been made by Borrower, accompanied by a detailed description of the request for which
approval is sought, provided that Borrower submits such request for Lender's approval in
an envelope labeled "Priority" and delivered to Lender by overnight delivery and
otherwise in accordance wi1h the provisions of Section 10.6 and which request shall state
at the top of the fust page in bold lettering in 14 pL font "LENDER'S RESPONSE IS
REQUIRED WITHIN TEN (10) BUSINESS DAYS OJ' RECEIPT OF THIS
NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN
THE UNDERSIGNED AND LENDER.'' In the event lhal Lender fails to either
approve such request or disapprove such request (such disapproval stating the reasons for
such disapproval) for more than ten ( 1 0) Business Days after rocc:i.pt thereo( Borrower
shall deliver to Lender a secoai request, which second request shall contain the material
lranamitted with the first request, in an envelope labeled "Priority'' and delivered 10
Lender by overnight delivery and otherwise in accordance with lhe provisioos of Section
10.6 and which reque.t shall state at the top of the first page in bold lettering in 14 pt.
font "SECOND REQUEST: LENDER'S RESPONSE IS REQUIRED WITHIN
TEN (10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO
11D: TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED
AND LENDER.'' In the event 1hat Lender fails to eitbcr approve such second request or
disapprove such &CCOI1d request (such disapproval statins 1hc reasons for such
disapproval) for more than ten (I 0) Business Da)'ll aftrr receipt thereof; the action that
was the subject of said request shall be deaned approved.
(c) In lhe event that Lender detamines in its reasonable discretion that any
Replacement is not being performed in a worlananlike or timely mlllDer or that any ReplacanCDI
baa not been completed in a worlananlih or timely manner, Lender shall have the _option to
withhold disbursement for such tmSatisfactory Replacement and. in 1he event that such
Replacement is det.med by Lender to affect the life, health or safety of Persons wbich may be
present ai the Property, to proceed under existing contracts or to contract with third parties to
complete such Replacement aad to apply the Replacemc:nt Reserve Fund toward the labor and
materials necessary to complete such Replacement, oroyided, that Lender shall provide five (5)
days prior to notice to Borrower before taking such action. . .

(d) In order to facilnate Lender's completion or making of such Replacements
punuant to Section 7.3.3fcl above, Borrower grants Lender (and shall cause Operating Lessee to
grant to Lender) the right to enter onto the Ploperty and perform any and all work and labor
necessary to complete or make such Replacements and/or employ watchmen to protect the
Ploperty fiom damage. All Slllll5 so expended by Lender, to the cxtmt not fiom the Rcplacemeut
Reserve Fund, shall be deemed to have been advanced under the Loan to Borrower and secured
by the Mortgage. For this pwpose Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with fUll power of substitution, but c::x:crcisable only to the extent Lender is
authoriz.ed to take action on bebalf of Borrower pursuant to clause {c) preceding. to complete or
undertake such Rcplacc:mcats in the name of Borrower. Such power of attorney shall be deemed
to be a power coupled with an interest and cannot be revoked. Borrower empowers said
attorney-in-fact as follows: (i) to use any fUnds in the Replaccmeut Reserve Account for the
purpose of making or completing such Replacements; (ii) to make such additions, changes and
corrcctions to such Replacemcrtt.s as shall be necessuy or desirable to complete such
Replacements; (fu) to employ such contractors, subcontractors, agents, architects and inspectors
as shall be required for such purposes; (iv) to pay, settle or compromise all existing biDs and
claims which are or may bec:ome Liens against the Property, or as may be necessary or desirable
for the completion of such Replacements, or for cleararu:e of title; and (v) to execute all
applications and certificates in the name of Borrower which may be required by any of the
coatract documents.
(e) Nothing in this Section 7.3.3 sball: (i) make Lender responsible for
making or completing any Replacements; (ii) requiJe Lcuder to expend fUnds in addition to the
Replacement Reserve Fund to make or complete any Rcplacemeut; (iii) obligate VJ'!der to
proceed with any RepW:anents; or (iv) obligate Lender to danand fiom Borrower additional
swns to make or complete any Replacement.
(f) Borrower shall penait Lender and Lender's agents and lepiesentatives
(includin& without limitation, Lcuder's engineer, architect, or inspector) or third parties making
Replacements pnrsuanl to Section 7.3.3{c) to enter onto the Property during normal business
hours (subject to the rights of llmallts IUider their Leases) to inspect the p r o p s ~ of my
Replacements and all materials being used in COIIDCCtion thezewith, to eximine an plaDS and
shop drawings relsting to such ReplacemCDis which are or may be kept at the Property, and to
complete any Replacements made pursuant to Section 73.3(c). Borrower shall cause all
CODtradoll and subcontractors 10 cooperate with Lender or Lender's represeutatives or such
other JMIIIIOIIll described above in coanection with inspections cb:ribed in this Section 7.3.3ffi or
the completion ofReplaccments pursuant to Section 7.3.3Ccl.
(g) The Replacements and all materials, equipment, fixtures, or any otber item
comprising a part of any Replacement sball be constructed, installed or completed, as applicable,
freo and clesr of all mechanic's, materialmen's or other licm (except for those Liens existing on
the date of this Aflreement which have been approved ill writing by Lender or otherwise
contested in accoidance with SWjon 5.1,2 b.eteof).
(h) All Replacements shall comply with all applicable Legal Requir"etnems of
all Governmenlal Authorities having jmisdielion over the Property md applicable insiD"ance
...
requircm.cnta including, without limitation, applicable building codes, special use permits,
environmental regulations, and requirements of insurance undezwritcrs.
{i) In addition to any iiiSW'8IICe required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance, builder's
risk, and public liability insurance md other insurance to the extent required under applicable
law in conncction with a particular Replacement. All such policies shall be in f01111 and amount
reasonably satisfactory to Lender. All such policies which can be eudorsed with standard
mortgagee clauses making loss payable to Lender or its assigns shall be so endorsed. Certified
copies of such policies shall be delivered to Lender.
7.3.4. FaU11re to Mke Replacements. Upon the and during the
continuaoce of an Event of Default Lender may use the Replacement Reserve Fund (or any
portion thereof) for any purpose, including but DOt limited to completion of the Replacements as
provided in Section 7.3.3, or for any other repair or replacement to the Property or toward
payment of lbe Debt in such onlcr, proportion and priority as Lender may detennille in its sole
discretion. Lender's right to withdraw and apply the Replacement Reserve Fuads sball be in
addition to all other righu and rcmcdiea provided to Lendc:l" undar this Agreemeut and the other
Loan Documents. Bonowcr shall assip to Leader all rights and claims Borrower may have
against all persons or entities supplying labor, materials or other services which are to be paid
ti:om or secured by the Reserve Funds; provided. however, that Lender may not pwsue any such
right or claim unless an Event ofDefault shall have occurred and remains uncured.
7 .35. Balaaee Ia the Ra!lacempt Reserve Accouat The insuflicieucy of any
balance in the Replacement Reserve AccoUDt shall not n:lieve Borrower fiom its obligation to
fulfill all pteSCI'Vation and maintenance covCDillts in the Loan Documents.
Section 7.4. Reserve Funds, GenqaDy. Lender shall have a first-priority
perfected security interest in all of Borrower's right, title and int.ereet in, to and under {a) each of
the Reserve FUDds, {b) any and all mooics now or deposited in each Reserve Fund and
{c) 1111 proceeds of the fon:going as additional security for payment of the Debt Until expended,
applied or released in acconlance herewith, the Reserve FUDds shall constitute additional security
for the Debt. Upon the OCCUI'I'CilCC IJid during the continuance of an Event of Default, Lender
may, in addition to any and all othc:l" rights and rcmcdiea available to Lender, apply any sums
then pr I in my or all of the Reserve Funds to the payment of the Debt in any order in its sole
discretion. The Relcr'le Funds shall be held in an Eligible Account in Permitted Investmenu in
accordance with the terms and provisions of the Cash Agreement Notwithstanding
the foregoing or anything to the COIIIJary contained herein, all interest and other income on all
Reserve FUDds shall be the sole property of and shall be paid as set forth in the Cash
Manapment Apeement. Borrower shall be respousible for payment of my federal, state or
local iDcome or other tax applicable to the interest camcd on the Reserve Funds. Borrower sball
not, without obtaining the prior written consent of Lender, further pledge, assign or grant any
security interest in any Reserve Fund or the mouies or other assets dcpositod therein or permit
my lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Sttcmc:nts, except those naming Lender as the secured party, to be filed with [iCSpCCI
thereto. Lender shall not be liable for any loss sustained on the inwstmeot of any fimds
constituting tbe Reserve Funds. Borrower aball indcrnnify Lender and hold Lender hannless
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from and against any and all actions, suits, claims, demands, liabilities, losses, damages,
and costs and expenses (including litigation costa and reasonable attomc}'l fcc:s and
expenses) arising from or in any way connected with the Reserve Ftmds or the performance of
the obligations for which the Reserve Funds were established.
VID. DEFAULTS
Section 8.1. Eveat of Default (a) Each ofthc foUowing events shall constitute
an event of default hemmder (aa ''Eveat of Defulf1:
(i) if (A) any installment of the Debt Service Payment Amount is not paid on
or prior to the fifth (5) calendar day after the date when due, (B) the payment dne on the
Maturity Date is not paid on or prior to the date when due or (C) any other portion of the
Debt is not paid on or within five (S) days after the same is due;
(il) if any oftbe Taxes are not paid on or prior to the date such Taxes become
delinquent (after expiration of any applicable grace periods allowed under applicable
law), other than Taxes being contested pursuant to Section 5.1.2 hereof;
(iii) if the Policies are not kept in full force and effect. or if oertified copies of
the Policies or certificates evidencing the insunnce required by Section 6.1Cal are not
delivmed to Lender within ten (10) Business Days after written request;
(iv) if any violation of the provisions ofSectjon 52.10 hereof occurs;
(v) if any representation or warranty made by Bonower herein or in any other
Loan Document, or in any report, certificate, financial statement or other instrument,
agreement or document furnished to Lender in connection with the Loan shall have been
intentionally falae or misleading in any respect as or the date the representation or
warranty was made;
(vi) it Borrower, Operating Lessee, Guarlntor or any other guarantor under
any guaranty issued in connection with the Loan shall mala: a gmeral aaignmcnt for the
benefit of crcditora;
(vii) if a receiver, liquidator or trust= shall be appointed for Borrower,
Operating I meee, Guarantor or any other guarantor 1.llldor any guarantee issued in
connection with the Loan or if Borrower, Operating Lessee, Guarantor or such other
gtW8Dtor shall be adjudicated a bankrupt or in.solvmt, or it any petition for bankruptcy,
reorganization or mangemc:nt pursuant to federal b8Diauptcy law, or any similar fedml
or state law, shall be tiled by or against, consented to, or acquiesced in by, Borrower,
Operating I csscc, Guarantor or sucb other guaraniDJ', or if any proceeding for the
dissolution or liquidation of Borrower, Operating Lessee, Guarantor or such other
guarantor shall be instituted; provided. however, if such appointment, adjudication,
petition or prt>cm'ing was involuntary and not consented to by Bonower, Operating
Lessee, Guarantor or such other guarantor, upon the same not being discharged, stayed or
dismissed within ninety (90) days;
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(viii) if Borrower assigns its rights under this Agreement or any of the other
Loan Documents or any interest herein or therein in contravention of the Loan
Documents;
("IX) if Borrower breaches any representation, warranty or covCIIIllllt contained
in Sections 4.1.30 or S.! .23 hereof;
(x) if any of the assumptions contained in lhe Insolvency Opinion delivered to
Lender in connection with the Loan, or in any Additionallnsolvency Opinion delivered
subsequent to the closing of the Loan, is or shall become untrue in any material respect;
(xi) if a material default baa occurred and continues beyond any applicable
cure prnod under the Francbise Agreement and as a result thereof the franchisor
taminatea or cancels the Francili!e Agreement (or any Replacement Management
Agreement);
(xil) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement or under any of the other Loan Documc:nta not
specified in subsections (i) to (lj) above, for ten (1 0) Business Days after notice to
Borrower from Lender, in the case of any Default wbich can be cwed by the payment of
a sum of money, or for thirty (30) days after notice from Lender in the case of any other
Defiwlt; proyidccL however, that if such non-monetary Default is susceptible of cure but
CIIIDOt reasonably be cured within such thirty (30) day period and prpyided, further, that
Borrower shall have commenced to cure II1Ch Default within such thirty (30) day period
and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day
period shall be extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to ewe such DefaWt, such additional period not to exceed
ninety (90) days;
(xiii) if Operating Lessee ceases to do businftll as a hotel at the Property or
terminates such business for any reason wbatsoever (other than temporary cessation in
connection with my conlimw111 and diligeut renovation or restoration of the Property
following a Casualty or Condeumation); or
(xiv) if (A) a material default has occurred and continues beyond any applicable
cure period under the Operating Lease, (B) the Operating Lease is amended, modified or
t:enninted in violation of the tc:ans of this Agreement, or (C) Borrower fails to enforce
the material terms and provisions of the Operating Lease, except as otherwise expressly
providod in this Agreement.
(b) Dwing the continuance of 111 Event of Default (other than an Event of
Deliwlt described in claUIIeS (vi) or (vii) above) in addition to any other rights or nmedies
available to il pursuant to Ibis Agreement and the other Loan Docume:nts or at law or in equity,
Lender may take such action, without uotice or d e z ~ a n d , that Lender deems advisable to protect
and enforce its rights against Borrower and in and to the Property, i:ucluding. without limitation,
declaring the Debt to be immediately due and payable, and Lender may enforce or avail itself of
any or all right& or remedies provided in the Loan Documents against Borrower and the Property,
. .. . ' . . -62- . . '.
including. without limilation, all righiS or remedies available at law or in equity; and upon any
Event of Default described in dan'!C'S (vi) or {!ill above, the Debt and Other Obligations of
BoTTOwer hm:unda- and UDder the other Loan Documents sball immediately and automatically
become due and payable, without notice or demand, and Borrow hereby exp:taly waives any
such notice or demand, anything c:onlained herein or in any other Loan Document to the contrary
notwithstanding.
Section 8.2. Rupedies.
(a) Upon the occurrence and during the cxmtinnance of au Event of Default,
all or any one or more of the rights, powCIS, privileges and other remediea available to Lend
against Borrow Ulldcr this Ap:ement or any of the other Loan Docwnents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any
time and from time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have coiiiDICIICCd any foreclosuJe proceeding or other
action for the enfoJcement of ils rights and remedies UDder any of the Loan Documents with
1e&ped to the Properly. Any 8UCh actions taken by l.eDdcr shall be cumulative and concurrent
and may be pUJSued independently, singularly, successively, together or otherwise, at such time
111d in such onler as Lender may determine in its sole discretion, to tho fullest extent pemlitted
by law, without impairing or otherwise affecting the other rights and remedies of Lender
pennitted by law, equity or contract or as set forth herein or in the other Loan Documents.
Without limitiDg the generality of the foregoing, Borrower agrees that if an Event of Defauh is
continuing (i) Lender is not subject to any "one action" or "election of remedies" law or rule, and
(ii) alllieus and other rights, remedies or privileges provided to Leoder shall remain in full force
and effect until Lender has exhlusted all of its remedies against the P.toperty and the Mortgage
has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or the Debt
has been paid in full
(b) Lend sball have the right 1iom time to time during the existence of an
Event of Default to sever the Note and the other Loan Documents into one or more separate
notes, mortgages and oth security documents (the ''Seveml Loap Doc,mept!") in such
dllllominations as Leader shall detezmine in its sole discretion Cor plllJIOSCS of evidencing and
enfOicing its rights and mnedies provided hereund. Borrower shall execute aud deliver 10
Lender from timD to time, after the request of Lender, a aevcrmce agn:ament and such
olh docwneniS as lald shall request in oilfer 10 eJfect the sevcnnce de3Cribed in the
preceding sentence, all in form and substance reasonably 18tisfiu:tmy to Lender. Borrower
hereby absolutely and ilrevocably appoints Lender as its true and lawful attomcy, coupled with
an interest, in its name and stead to make and execute all documents neceasary or dcsiJable to
effect the aforesaid severance, Bonower ratifying all that its said attomcy shall do by virtue
thereof; provided, boweyer. Lender shall not make or execute any such documents under such
power until three (3) days after notice has been given to Borrower by Lend of Lender's intent
to exercise its rights under such power. Borrow shall be obligated to pay any costs or expensea
incumd in c:onnection with the JmiParaUoD, execution, m:onting or filing of the Severed Loan
DocumeniS and the Severed Loan Documents sball not contain any n:pieSCDtations, warrantiea or
covenants not rontained in the Loan Documents and any such represen'atiQDS and wmantiea
conlained in the Severed. Loan Documenls will be given by Ba1owm ollly as of the Closing
I>ale. .
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(c) Any amounts recovered from tho Property after the oc:c:um:nce and during
the continuance of an Eveol of Default may be applied by Lender toward the: payment of any
interest and/or principal of the Loan and/or any other amounts due under the Loan Documents in
such order, priority and proportions as Lender in its sole discretion sball determine.
SectloD 8.3. Remedies Cumulative; Waiven. The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not exclusive of any other
rigbl, power or remedy which Lender may have against Borrower punruant to !his Agreement or
the other Loan Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singularly, concurrently or otherwise, at such time and in such
order as Lender may determine in Lender's sole discretion. No delay or omission to cxa:cise any
remedy, right or power accruing upon an Event of Default shaD impair any such mnedy, right or
power or shall be construed as a waiver thereof, but any such remedy, right or power may be:
exaciaed from time to time and as often as may be deemed expedient. A waiver of one Default
or Event of Default with 1c:apect to Bonower shall not be construed to be a waiver of any
subsequent Default or Event of Default by Borrower or to impair any remedy, right or power
consequent thereon.
IX. SPECIAL PROVISIONS
Section 9.1. Secondary Market Trauactioas.
9.1.1. Sale of Notes aad Seepritizatioa. Al the request of the holder of the
Note and at Lender's sole cost and C:XpeDBe and, to the extent not already to be provided
by Borrower UDder this Agieanent, Borrower shall use reasonable efforts to provicle infimnation
not in the possession of the holder of the Note or to satisfy the market staDdards to which the
holder of the Note customarily adheres or which may be J:eaSOnably in the uwt.etplace
or by the RatiDg Agencies in connection with the sale of the Note or participations therein or the
firBt &DCCeSSful aocuritization (such sale aodlor securitization, the ''Seem of rated
single or multi-class securities (the secured by or evidencing ownership interests in
the Note IDd the Mortgage, iacluding, without limitation, to:
(a) provide such financial aod other infonnalion with respect to the Ptopea1y,
Borrower and the Manager-, if any, (Ji) provide budgets relating to the Ptopc:rty and (iii) in
accordance with the terms of this Agreement, to permit to be performed such site inspection,
appraisals, market studies, environmental reviews and reports (Phase I's and, if appropriate,
Phase D's), engineering reports and other due diligence investigations of the Property, IS may be
by the bolder of the Note or the Rating Agencies or as may be necessary or
reasonably appropriate in connection with the Securitization (tbe "Proyided bformadon''),
together, if customary, with appropriate verification and/or CODSeDts of the Provided Jnfon:nation
through 1cttets of auditors or opinions of counsel of iadependent attomeys acceptable to Lender
and the Rating Agencies;
(b) at Lender's expcusc, cause oounsel to render opinions or update aistiag
opinions, which may be retied upon by 1he holder of the Note, the Rating Agencies and their
zespective counsel, agents and representatives, IS to non-consolidation, fraudulent conveyance,
and tn1e sale and/or Jesse or any other opinion customary in securitization llaDPctioos, which
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counsel and opinions shall be n:asonably satisfactory to the holder of the Note and the Rating
Agencies;
(c) make such represenlalions and warranties as of the closing date of the
Securitization with respect to the Property, Borrower, Operating Lessee, Manager and the Loan
Documents as are customarily provided in securitization transactions and as may be reasonably
mjllc&ted by the holda of the Note or the Rating Agencies and consistcm with the facts covcml
by such representations and wurantics as they exist on the date thereof, including the
representations and wauanti.:s made in the Loan Documents; and
(d) execute sucll amendments to the Loan Documents and organizational
documents as may be reasonably requested by the bolder of the Note or the Rating Agencies or
otherwise to effect the Socuritization; pruvided, lwwever, that Borromr shall not be rcquiml to
modify or amend any Loan Document if such modification or amendment would (i) change the
initial weighted average iDtereat rate of the Loan (although, application of principal repayments
or the Debt Service Payment Amount in a manner determined by Lender in its sole discretion
may affect the actual weighted avaage interest rate of the Loan aubsequent to sucb
modificatioo), the stated maturity or the rcquired amortization set forth in the Note, (ii) modify
or amend any other material or ecoaomic term of the Loan, (Jii) modify Section 8.1.1 hereof; or
(iv) in the reasonable judgment of Borrower, materially increaw; Borrower's obligations and
liabilities under the Loan Documents or materially d ~ e the rights of Bonowa under the
Loan Documents.
U.l. Lou CODIJ!OI!eDtsi Menanlne Lou1.
(a) Borrower covenants and a g r = ~ that in connection with any Securitization
of the Loan, upon Lender's Ra..oonab)e request and at lalder's sole cost and expeuse, Borrower
shall deliver one or IJIOR new component notes to replace the original note or modify the original
note to refiect multiple componmts of the Loan {and such DCW notes or modified note shall have
the same initial weighted average coupon as the original note) and modify the Cash Management
Agreement with respect to the newly created components such that the pricing and marketability
of the Securities and the si2e of each class of Securitiet and the rating assigned to each such class
by the Rating Agencies aball provide the most favorable rating levels and achieve the optimum
bond execution for the Loan provided, lrowevu, that Borrower shall not be required to deliver
one or more new componeul notes to replace the original note if sucb modification or
amendment {i) rhange the initial weighted average intetm rate of the Loan (although,
application of prillcipal lq)&yments or the Debt Service Payment Amount in a manner
determined by Lender in its sole discretion may affect the actual weighted average interest rate
of the Loan subsequent to auch modification), the stated matmity or the required amortization set
forth in the Note, (ii) modify or amend any other material or ecODOIIlic tcnn of the Loan,
(iii) modify Sectioo 8.1.1 hareof; or (iv) in the reasonable judgment of Borrowa, matcria11y
inaus 1 Borrower's obligatiODS mlliabilities UDder the Loan Documenls or materially deaease
the rights ofBonowcr under the Loan Docmnenls.
(b) Borrower covcoants and agrees tlllt after the Closing Date and prior to a
Securitization, Leuder ahall havo the right to create one or more mezzanine loans (each, a
"MeaaniDe Lou,, to establish differmt interest rates and to reallocate the principal baiiJICe of
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the Loan and to require the payment of the Loan aud any such Mezzanine Loan(s) in such order
of priority as may be designated by Lender; provided, that (i) in no event shall the initial
weighted average interest rate of the Loan and any sach Mezzanine Loan(s) followiDg any such
reallocation or modification change fiom the weighted awrage interest ralC in effect immediately
preceding such reallocation, modification or creation of any Mezzanine Loan(s) (except in
coonection with any mandatory prepayment as a result of a casualty or coDdeamation in
accordance with Section 2.4.2 hereof or as a result of payments made during an Event ofDefault,
which may result in a change in the weighted averaac interest rate and, in the case of an Event of
Default and a default under any Mezzanine Loan, apply principal, interest rates and amortization
between and among the Loan and the Mezzanine Loan(s) in a manner specified by Lender in its
sole discmion), and (ii) except as expressly provided in each of the parentheticala above, none of
the foregoing actions shall have a material adverse affect on Borrower and sball not prejudice
any of the tights or obligations of Borrower und the Loan Documents. Borrower shall execute
and deliver such documents as shall reaeonably bo required by Lender as promptly as possible
under the ciraunstances in connection with this Section 9.1.2, an in form and substance
reasonably satisfactory to Lender aod the Ra!ing Agencies, including. without limitation, in
connection with the creation of my Mezzanine Loan, a promissory note and loan docmnents
necssary to evidence such Mezzanine Loan, which loan documents sba11 be substantially the
same in sub6tancc as the Loan Documents and Borrower shall execute such ameodmenta to 1he
Loan Documents as are necessary in connection with tho creation of sueb Mezzanine Loan.
Further, in oonncction with any MezzniM Loan, Borrower shall deliver to Lender opinions of
legal coUDSel with respect to due execution, authority and enforceability of the Loan Documents,
as amended, and m Additional Insolvency Opinion for the Loan and the Mezzanine Loan, each
as reasonably accep!able to Lend, prospective investors and/or the Rating Agencies.
9.1.3. Secondary Market Ingpctfoa Costs. All out-of-pocket costs and
expenses incurred by Borrow in connection with Borrower's COUlplying with requests made
under Section 9.1 (mcluding. without limitation, the fees and expenses of the Rating Agencies
and Bouower's and Lender's reasonable legal counsel) shall be paid by Lend.
Sectloa 9.2. Secllrttlzatloa bdeJIIIIIfk:atioa.
(a) Borrower understands that certain of the Provided Information may be
included in disclosure documents in coancctioa with the Secmitization, includiDg. without
limitation, a p1oepoctus. prospectus aupplCIIDCIIIt or private plaecmcnt memorandum (each. &
"DIIclosare and may abo be included in filings with the Securities aDd Exchange
Commission pursuant to the Securities At;t of 1933, as amended (the "Secaritiea or the
Securities and Exchange Act of 1934, as amcodcd (the "Exchapge Ag"), or provided or made
available to investors or prospective investors iD 1he Securities, the Rating Agencies, and service
providers relating to the SecuritizatiOD. In the that the Disclosure Document ia required to
be revised prior to the sale of all Securities, Borrower will coopcme with the hDlder of the Note
iD updating the Document by providing all current information aecessary to keep the
Disclosure Document accurate and complete in all material respects.
(b) Boaower agrees to provide in connection with each of (i) a pmiminary
and a private placement mcmoraodum or (u) a preliminary and final prospcciUS or piOSpCCtus
supplement, as applicable, an indc:mnificaoo. c:ertificate (A) certifying that Borrow has
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carefully examined such mcmcmmdum or prospectus, as applicable, including without limitation,
the sections entitled "Special Considerations," "Description of the Mortgages," "Dcsaiption of
the Mortgage Loans and Mortgaged Ptoperty," ''The Manager," ''The Borrower" and "Certain
Legal Aspects of the Mortgage Loan," and such sections (and any other sections reasonably
rcqucstcd) do not contain any untrue statanent of a material fact or omit to state a material fact
ncccssary in order to make the statements made, in the light of the circumstances under which
they were made, not misleading, (B) indemnifying Lender (and for purposes of this Section 9.2,
Lalder hereunder shall include its officers and directors), each of ita directors, each of its officers
who have signed the Registration Statement and each Person or entity who controls the Affiliate
within the meaning of Section 15 of the Securities Act or Section20 of the Exchange Act
(collectively, the "Lender Groupj, and Lender, each of its directors and each Person who
controls Lender within the meaning of Section 1 S of the Securities Act IUid Section 20 of the
Exchange Aa. (collectively, the "Uadenn1ter Groapj for any losses, claims, damages or
liabilities to which Lender, the Lc:Dder Group or the Underwriter Group may become subject
insofar as such losses, claims, damages or liabilities arise out of or- arc based upon any ~ m t r u c
statement or alleged 1mtrue stalanent of any material fact contained in such sections or arise out
of or are based upon the omission or alleged omission to state therein a material fa:t required to
be stated in such sections or necessary in order to make the statements in such sections or in light
of the ciJcumstanccs under wbich they were made, not mislcadillg (collectively, the
"Uabilities'') IUid (C) agreeing to rcimbiUBC Lender, the Lender Group and the Underwriter
Group for any legal or other expenses reasonably incurred by Lender in cormection with
defending the Liabilities; proYided, IIOIWIWIT, that Borrower will be liable in any such case under
clauses (B) or (C) above only to the extent that any such loss claim, damage or liability ~ s c s out
of or is based upon any such mtrue stalanent or omission made therein in reliance upon and in
conformity with information furnished to Lender by or on bcba1f of Borrower in connection with
the preparation of the mcmorandmn or prospectus or in connection with the underwriting of the
debt, including. without limitation, financial statcmmts of Borrower, operating statements, rent
rolls, environmental site assessment reports and property condition reports with respect to the
Property. This indemnity agreement will be in addition to any liability which Borrower may
otherwise have. Moreover, the indemnification provided for in Clauses (B) and (C) aboYC shall
be effective whether or not an indenmi fication cenificate described in (A) above is provided llld
shall be applicable based on information previously provided by Borrower or its Affiliates if
Borrower docs not provide the indenmification certificate.
(c) In connection with filings under the Exchange Act, Borrower agrees to
indc:mnify (i) Lender, the Lender Group and the UndcrwritcJ Group for Liabilitie& to which
Lender, the Lender Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon the omission or alleged omission to state in the
Provided Information a material fact required to be stated in the Provided Infurmation in order to
make the statements in the Provided Information, in light of the circumstances under which they
were made not misleading and (ii) reimburse Lender, . the Lender Group or the Underwriter
Group for any legal or other expenses reasonably incuned by La!der, the Lender Group or the
Underwriter Group in coDDection with defending the Liabilities.
(d) Promptly after receipt by an indemnified party under this Section 9.2 of
notice of the oommeoccment of any action, such jmmified party will. if a claim in respect
thereof is to be made agaitwt the indi'.IDIIifying . party under this Section 9 .2, notify the
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indemnifying party in writing of the commencement thereot but the omission to so notify the
indemnifying party will not relieve the indcmDifying party from any liability which the
indemnifying party may have to any indeumilied party hereunder cxc:cptto the extent that failwe
to notifY causes prejudice to the indemnifying party. In the event that any action is brought
agaiDSt any indmmi fied party, and it notifies the indemnifying party of the commencement
lhcreot the indemnifying party will be entitled, jointJy with any other indemnifying party, to
participate therein and, to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice fiom such indemnified party, to
IISSUI!Ie the defense thereof with counsel reasonably satiafactory to such indemnified party. After
notice from the indemnifying party to such indemnified party under this Section 9.2 the
indemnifying party shall not be respoDBible for any legal or other expenses subsequently incurred
by such indcmnified party in connection with the ddaJse thereof; provided, if the
defendants in any such action include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there are any legal defenses available
to it and/or other indemnified parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall promptly notify the indemnifying party
in writing, and shall have the right to sclcct separate coUillcl to assert such legal defenses and to
otherwise participate in the ddcnsc of such action on behalf of such indemnified party to parties.
The indcmni.fying party shall not be liable for the expenses of more than one such separate
coWJsel unless an indemnified party shall have rcaiiODably concluded that there may be legal
defenses availlble to it that arc cliffcrcol fi:om or additional to those availlble to mother
indemnified party.
(e) In order to provide for just and equitable contribution in circumstances in
which the indemnity agreements provided for in Section 9.2(b) or (c) is or arc for any reason
held to be nnenmeable by an indemnified party in respect of any losses, claims, damages or
liabilities (or action in respect thereof) referred to therein which would othcrwiac be
indemnifiahle under Section 9.2(b) or (c), the indemnifying party shall contnbute to the amount
paid or payable by the indc:mnified party as a resuh of such losses, claims, damages or liabilities
(or action in respect thereof); provided, howei'D", that no Person guilty of 1hludulent
misrqm.&ental:ion (within the meaning of Section ll(f) of the Securities Act) sball be entitled to
contn"bution from my Person "Who was not guilty of such fiaudlllcnt mimepliBCiltation. In
determining the amount of contribution to which the respective parties arc entitled, the following
factors shall be cooaidered: (i) Lender's and Borrower's relative knowledge and access to
information conccming the matter with respect to which claim was asserted; (ii) the opportunity
to correct and pfC'mlt any statement or omission; and (ill) any other equitable considerations
appropriate in the circumatanecs. Lender and Borrower b.crcby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per capita allocation.
(f) The liabilities and obligations of both Borrower and Lender under this
Section 9.2 &hall survive the termination of this Agreement and tho satisfaction and discharge of
the Debt
Section 9.3. Exc1dpatioa. Subject to the qualifieatiODJ below, the Debt and the
Other Obligations shall be non-recourse to Borrower, Guarantor and their respective Affiliates
and Lender shall not enforce the liability and obligation of Borrower to perform and observe the
obligatioos contained in the Note, this the or the other Loan Documents by
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any action or proceeding wherein' a money jud&JD.ent shall be sought against Borrower,
Guarantor and their respective Affiliates except that Lender may brillg a foreclosure action, an
action for specific perfonnance of DOD-monetary obligations or any other appropriate aclion or
proceeding to enable Lender to enforce and realize upon its interest under the Note, this
Agl'eement, the Mortgage and the otber Loan Documenta, or in the Property, the Rents, or any
other collateral given to Lender pmsuant to the Loan Documents; provjd...t, however, that,
acept as specifically provided herein, any judgment in any such action or proceeding shall be
mforccablc against Borrower only 10 the extent of Borrower's interest in the Property, in the
Rents and in any olher collatenll given to Lender, and Lender, by accepting the Note, this
Asreement, the Mortgage and the other Loan Documents, agrees that it shall not sue for, sedc or
demand any deficiency judgment against Bonower or its Affi!iates in any such action or
proceeding under or by reasoo of or under or in connection with the Note. this Apeement, the
Mortgage or the other Loan Documents. The provisions of this Section 9.3 shall not, however,
(a) COJIItitute a waiver, release or impairmmt of any obligation evidenced or secuted by any of
the Loan Documents; (b) impair the right of Lender to name Boaowcr as a party defendlll'll in
any action or suit for foreclosure and sale nnder any of the Mortgage; (c) affect the validity or
mfon:eability of the Guaranty or 1J1Y other guaranty made in c:oonection with the Loan or any of
the rigbl8 and remedies of Le.ode:r thcmmder; (d) impair the right of Lender to obtain the
appointment ofa receiver with 1espect to the Property; (e) impair the eaforceme:nt of any of the
Assignment of Leases; (f) constitutl: a prohibition against Lcoder to seek a dc.ficimcy judgmmt
asainst Borrower in orde:r to fillly realize the security granted by the Mortgage to the extent
necessary to commence any other appiupli.Uc action or proceeding in order for Lender to
exercise its remedies against all of the Property; or (g) constitute a waiver of the right of Lender
to enforce the liability and obligalion of Borrower, by money judgment or otherwise, to the
extent of any actual loss, damage. cost, expense, liability, claim or other obligation actually
incun:cd by Lender but excluding consequcutial, special or punitive damascs (including
attorneys' fees and costs reasooably incurred) arising out of or in coDDeCtion with the following:
(a) fraud or intentional misrepreseutation by Boaower, ()penlling Lessee or
Guaranlor in connection wilh the Loin;
(b) willfnl misconduct of Borrower or OperatiD& Lessee;
(c) damage to lhe Property as a resuh of lhe gross negligmce or willful
misc:onduct of Borrower, Openting Lessee or Guarantor;
(d) the breach of any represm'ati'lll, wammty, COYeii8Dt or indemnification
provision in the Environmental Indemnity Agreemmt concerning enviromnmtallaws, hazardous
substances and asbestos and any indemnification of I..eDde:r wilh respect theieto;
(e) the removal or disposal of any material portion of the Property by
Borrower or Operating Lessee upon and during lhe CODiinn!!Jv:e of an Event of Default in
violation of the Loan Apeman;
(f) the misappiopliltioo or conw:rsion by Boaower or Operating Lessee of
(A) any lnsUiaDCe Proceeda paid by reuon of my Casualty to the Pxopaty, (B) any A wilds or
other amonnts received in connection with the Condemnation of all or a portion of the Pxoperty,
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(C) any Rents following an Event of Default, or (D) any Rents or other amounts which should
have been deposited in the Lockbox Account but were diverted therefrom by Borrower,
Operating Lessee or Guarantor;
(g) failure of Borrower, Operating .lasee to pay Taxes or other charges which
give rise to Liens on the Property except to the extent 1hat Gross lDcome from Operations after
payment of Debt Service was insufficient to pay such Taxes or other charges; and
(h) the. failure of Borrower or Operating Lessee to oblain Lender's prior
written consent to any IDdebtedness voluntarily i.Dc:uned by Borrower or the voluntary grant or
cresting of any Lien (other than Permittat Encumbrances) eociDDbering the Propeny, or the
failure of Borrower to obtain Lender's prior written coiiSCDt to any voluntary Transfer in each
c:aac as may be required by the Loan Agreement; and
(i) any material interference or material resistance (mcluding. without
limitation, any action reawnably likely to cause a material delay to Lc:nder) by Boaower,
Operating Iasee, Guarantor or any of their respec!ive Affiliates, agents, employees, members,
pll'lllCIS, dilutoJs or officen, with Lender's exercise of any IIDd all of its rights md remedies
under the Loan Documents, at law or in equity (provided that defending any dcmlllld for payment
solely on thc groWld& that thc demanded amount had already been paid and not mumed or
otherwise disgorged, shaU not trigger liability under this clause (i)).
Borrower shall be liable for the entire amount of the Debt in thc event of:
(i) Borrower filing a voluntary petitica IUider the Bankruptcy Code or any
other Federal or state bankruptcy or iDsolvem:y law;
(11) the filing by any Person other than Lc:uder of ao involuntary petition
against Borrower under the Baolcruptcy Code or auy other Federal or state baolauptcy or
iDsolvency law in which Borrower colludes with such Penon, or solicits or causes to be
solicited petitioning creditors for any involuntary petition against Borrower fi:om any
Person;
(iii) Borrower filing an 8IISWCr CODJCDting to or joining in any involuntary
petition tiled against it, by any Person other than Lender under tbe B811buptcy Code or
any other Federal or state banlauptcy or iDaolvcncy law unless the opposition of
Bcrrower to such involuntary petition would violate any Rule 11 of the Federal Rules of
Civil Procedure, Rule 9011 of the Federal Rules or Bankruptcy Procedure or my other
similar state law;
(tv) Borrower consenting to or joiDing in an application for the appointment or
a custodian, receiver, trustee, or examiner for Borrower or any portion of the Pl:opcrty;
(v) Borrower making an usignmeat for the bcoefit of creditors, or admitting,
in writing or in any lepl proceeding. its insolveocy or inalnlity to pay its debts as they
become due unless the opposition of Borrowa- to such involuntuy petition would ~ o l a t e
any Rule 11 of the Fedelal Rules of Civil ProcecluR, Rule 9011 of the Federal Rules of
Ba:lkruptcy Procedure or any other similar state law; and
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(vi) Borrower violating the Single Pwpose Entity provisions of its
organizational documents.
Sectloa !).4. Matten Concerning Maaager. Subject to any contrary or other
tenns and cooditioDS of the Agrecmcot of Manager, if(a) 811 Evcot of Default has occumd and is
continuing UDder this Agreemcot or any of the other Loan Documcots and the Lender has
accelerated the Debt, (b) a moDCiaty or mataial oon-monetacy default of the Manager has
occurred and is coutinuiDg UDder any Management Agreement beyond any applicable notice and
cure, or (c) a Bankruptcy Action of Manager shall bave occurred ID1d be continuing, then in each
case to the extent pennitted by applicable law, Borrower shall, OJ shall cause Operating Lessee
to, at the of Lender, tc:mrioate the applicable Maoagcmeat Agreement and replace the
Manager with a Qualified Manager punuaat to a Rcplaccmeot Agreement, it being
uodcmood and asr-( that the IIUIJlii8CD1CDt fee for such Qualified Manager shall not excccd
then prevailiog market rate&.
Seetioa 9.5. Senicer. At the option of Leader, the Loan may be &erviced by a
sa:vicerltrustee (any such &ervic:erltrustce, together with its agents, aomincea or designees. are
collectively refemd to as selected by Leader and Leader may delegate all or any
portion of its responsibilities uoder this Agreement and the other Loan Documents to Servicer
puJSU8IIt to a servicing agreemcot (the "Servis;j!lg Agreemeaf'} between I.erxler and Servicer.
Leod.CI" sball be responsible for the regular monthly or periodic servicing fee relating to or arising
under the Servicing Agreement; Borrower will be responsible for any special or extraordinary
servicing fees due to Scrvicer UDder the Servicing Agreement
X. MISQ;LLANJOUS
Section 10.1. SnrYivlll. This Agreement and all covenants, agreements,
1ep csmtatioas and warranties made herein and in the certificate& dclivemf pursuant hereto shall
survive tho making by Lender of tho Loan and the execution and delivery to Lmdcr of the Note,
and shall continue in full force and effect so long as all OJ any of the Debt is outstanding and
tmpaid unless a longer period is expresaly set forth herein or in the other Loan Documents.
Whenever in this Agreement aoy of the parties hereto is referred to, such refcrcuce shall be
deemed to include the legal represmtatives, successors and assigns of such party. All covenants,
promises and lgifJCillents in this Agreement, by or on bcbalf of Borrower, shall inure to the
benefit of the legal reprosmttivea, IUCCelsors and assigns of Lender.
Sectioa 10.2. IDteadonaDy Omitted.
Section 10.3. Goveraiag Law. (a) THIS AGREEMENT WAS
NEGOTIATED IN THE STA'IE OF NEW YORK, TBI. LOAN WAS MADE BY
LENDER AND ACCEPTED BY BORROWER IN TBI. STATE OF NEW YORK, AND
THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES
AGREE BAS A SUBSTANTIAL RELATIONSBIP TO THE PARTD:S AND TO THE
UNDERLYING TRANSACl'ION EMBODIED HEREBY, AND IN ALL RESPECI"S,
INCLUDING, WITHOUT LIMITING THE GENERA.IJTY OF THE FOREGOING,
MATI'ERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
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AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE
OBLIGATIONS AlUSING HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN SUCH STATE (WITHO'IJT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS)
AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT
THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION AND
ENFORCEMENT OF THE LIENS ON REAL PROPERTY CREATED PURSUANT
HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL DE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN
WHICH THE PROPERTY IS LOCATED, IT BI:ING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMI'ITED BY THE LAW OF SUCH STATE, THE LAW OF
THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY
AND ENFORCEABILITY OF ALL LOAN DOCVMENJ'S AND ALL OF 1liE
OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST
EXTENT PERMllTED BY LAW, BORROWER HEREBY UNCONDMONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS miS AGREEMENT, THE NOTE AND THE
OTHER LOAN DOCUMENTS, AND, EXCEPT AS AFORESAID, THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST
LENDER OR BORROWER ARISING O'IJT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER AND LENDER EACH WAIVE ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR Ji'ORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER AND LENDER EACH HEREBY IRREVOCABLY
SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION
OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
CT CORPORATION SYSTEM
111 EIGHTH A VENVJ:
NEW YORK, NEW YORK 10011
AS ITS AUfHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF
SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW
YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID
AGINT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED
OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE .OF PROCESS UPON
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BORROWER IN ANY SUCH SUIT, ACI10N OR .PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT IIEREUNDER, (D) MAY AT
ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUmORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE 811.411 BE DESIGNATJ:D AS THE PERSON
AND ADDRESS FOR SERVICE OF PROCESS), AND (ID) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITU'l'E IF ITS AUTHORIZED AGENT CEASES TO
RAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUf
LEAVING A SUCCESSOR.
Sectioa 10.4. Modiftcatfop. Wliver Ill Wrfdag. No modification, amendment,
cxtalsion, dilclwge, tennination or waiver of any provision of this Agreement, or of lite Note,
or of any other Loan Document, aor COD8ellt to any departure by Borrower therefrom, shall in
any evem be effective unless lite same shall be in a writing signed by the party against whom
enforcement is sought, and then sucb waiver or consent shall be effective only in the specific
in.otance, and for 1he purpose, for which given. Except IS otherwise exp:essly provided herein,
no notice to, or demand on Borrower, shall entitle Borrower to any other or fUture notice or
dc:mand in the same, similar or other cimlmstances.
Seetioa 1 0.5. Delay Not a Waiver. Neither any failure nor any delay on the part
of Lc::nder in insisting upon strict perfonnanc:e of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under the Note or under any other
Loan Document, or any other instillment given as security therefor, shall opllllde as or constitute
a waiver thereof; nor shall a single or partial exercise thereof preclude any o t h ~ future exen:ise,
or the exercise of any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amolDit payable under tbis Agreement,
the Note or any other Loan Document, Lender shall not be deemed to have waived any right
either to require prompt paymeot wbeo due of all other amounts due under this Agreement, the
Note or the otha- Loan Documenb, or to decluc a default for failure to effect prompt payment of
any IUch otha- amount.
Section 1 o,6. Notlca. All ootices, consents, approvals and requests required or
permitted bereunder or under any other Loan DociDDent shall be given in writing and shall be
dfcc:tivc fur all pmposes if haod delivcnd or sent by (a) certified or regialr:Rd United States
mail, poctagc prepaid, return receipt requested or (b) expedited prepaid delivery service, either
commercial or United Stales Postal Service, with proof of attanpted delivery, and by telecopier
(with answer back acknowledged), addressed as follows (or at such other address and Person as
shall be designated from time to time by any party hereto. IS the case may be, in a written notice
to the other parties hereto in the manner provided for in this Section):
KPA TYSON CORNER RI LLC
340 Royal Poinciana Way, Suite 306
Palm Beach, Florida 33480
Attention: Mark Murphy or Demlis Craven
Facsimile No.: (!561) 835-04!57
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with a copy to:
Lender:
with a copy to:
Hunton & Williams LLP
1900 KStreet, N.W.
Washington, District of Columbia 20006
Attention: Thomas F. Kaufman. Esq.
Facsimile No.: (202) 778-2201
Merrill Lynch Mortgage L e n d ~ Inc.
Four World Finmcial Center, 16 Floor
New York, New York 10080
Attention: Donrinick Guerriero
Facsimile No. (212) 449-7684
DechcrtLLP
30 Rockefeller Plaza
New York, New York 10112
Attention: LaWIGlce A. Ceriello, Esq.
Facsimile No. (212) 698-3599
A notice sball be deemed to have been given: in the case of hand delivecy, at the time of
delivery; in the case of registered or certified mail. when deliveml or the first attempted delivery
on a Business Day; or in the case of expedited prepaid delivery and telecopy, upon the first
attempted delivery on a Business Day; or in the case of telecopy, upoo sender's receipt of a
machine-generated oonfinnation of successful transmission after advice by telephone to recipicnt
that a tclecopy notice is forthcoming.
Section 10-1. Trial by larv. BORROWER AND LENDER HEREBY
AGREE NOT TO EUCI' A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT
THAT ANY SUCH RIGHT SHALL NOW OR IIEREAFI'ER EXIST WITH REGARD
TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
AcriON ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER
AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY IURY
WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO
F'ILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER.
Section JO.S. BadOn. The Article 81Jd/or Section beadings and the Table of
Cnntcnk in this Agreement arc included herein for conveoicnce of reference only and shall DOt
constitute a part of this Agreement for any other pmpose.
Sec:tloa. lU. Sevenbilitv. Wherever pou.i'ble, each provision of this Ag!eemeat
shall be iDteqntcd in sadl mm!!lll' as to be effective and valid Wlda' applicable law, but if any
provision of this Agreemeot shall be prohibited by or innlid under applicable law, sach
provision sball be inetrective to the extc:at of such prohibition or invalidity, wi1bout invalidating
the remainder of sach provision or 1he mnainiDg provisions of this Agreement.
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Section 10.1 0. Prefereoc:es. Lender shall have the continuing and exclusive rigbt
to apply or reverse and reapply any and all payments by Borrower to lillY portion of the
obligations of Bonowcr hcmmdcr. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part then10f are subsequently invalidated, declared to
be fraudulCDt or preferential, set aside or required to be repaid to a trustee, receiver or any other
party UDder any bankruptcy law, state or federal law, common law or equitable cansc, thc:u, to the
extent of such payment or proceeds received, the obligations hereunder or part thereof intended
to be satisfied shall be mrivod and continue in full force and effect, as if sucb payment or
proceeds had not been received by Lcndec.
Seetion 10.11. Waiver of Notice. Borrower shall not be entitled to any notices of
any nature whatsoever from Lendec except with respect to matters for which 1his Agreanent or
the other Loan Documents specifically and provide for the givins of notice by LendCI'
to Borrowec and except with respect to mattcn for which Borrower is not, purauant to applicable
Legal Requirements, permitted to waive the giving of notice. Borrower hereby expreealy waives
the rigbt to receive my notice from Lender with respect to any matter for which Ibis Agm:ment
or the other Loan Documenls do not specifically and expressly provide for the giving of notice
by Lender to Borrower.
Seetion 10.12.Re-'i ol Borrower. In the event that a claim or adjudication is
made that laldcr, or its respective agent has acted unreasonably or IIJireasOnably delayed acting
in any case where by law or UDder this Agreement or the other Loan DoCllllleDts, LendCI' or such
agent, u the case may be, has an obligatiou to act reasonably or promptly, Borrower agrees that
neither Lender nor its respective agents shall be liable for any monetary damages, and
Borrower's sole remedies shall be limited to commencing 1111 action Meking injUDCtive relief or
declaratory judgment. The parties hereto asree that any action or proceeding to detemrine
wbether l.eDder has acted R:Monably shall be dctclmined by an action seeking declaratory
judgment.
Secdoa 10.13. ExpRB; ladeiDIIitv. Borrower covenants and agrees to pay or, if
Borrowec fails to pay, to reimblii'Be, Lendc:r upon receipt of written DOtice fiom lender for all
reasonable costs and expenses (including reasonable attorneys' fees and diabursemc:nts) incurred
by Lender in connection with (i) the pJqllrltion, negotiation, execution and delivery of this
Agreement and the othec Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of tinnishillg all opinions by coUDsel for
Borrower required under this Agreement or the other loan Documents; (ii) BoDOwcr's oogoing
perfoiDIIIICC of and compliance with Borrower's respective agreements and covenants contained
in 1his Agm:ment and the other Loan Documents ou its part to be pedimned or complied with
aftec the Closing Date, including, without limitation, confinning compliance with environmental
and insurance requirements; (iii) the negotiation, preparation, execution, delivery and
administration of any consents, IIIIlCildments, waivers or other modificalious to this Agreement
and the other Loan Documents and any other documents or mattczs requested by LaJdrr, (iv)
securing Borrower's compliance with any requests made p11IS1W1t to the provisions of this
Agreement; (v) the filing and recording fees and expenses, title insurance and reasonable fees
and expenses of coiiii&Cl for providing to Lender all required legal opini0111, and other similar
expenses i.ncuired in creating and perfectiog the Liens in mvor of Lender pursuant to this
Agreement and the other Loan Documents; (vi) enforcing or preserving any rigbla, in response to
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lhird party claims or the prosecuting or defending of any action or proceeding or otber litigation,
in each case against, under or affecting Borrower, this Agreement, the otber Loan Documents,
the Property or any other security given for the Loan; (vii) a default UDder Section 5.2.9 hereof;
including, without limitation, reasonable attorneys' fees and costs incurred in the investigation,
defense, and settlement of losses incurred in COIT!j!Cting any prohibited transaction or in !he sale
of a prohibited loan, and in obtaining any individual prohibited transaction exemption under
ERISA, the Code, any State statute or other similar law that may be requiled and (viii) enforcing
any obligations of or collecting any payments due from Borrower under this Agreement, the
other Loan Documents or with respect to the Properties (including any fees incurred by Servicer
in connection with the transfer of the Loan to a special scrvicc:r during an Event of Default) or in
connection with any refinancing or restructuring of the credit amDgCIIlents provided under this
Agreement in the nature of a "work-ouf' or of any insolvency or bankruptcy proceedings with
respect to any Borrower, Operating Lessee or Gulll'llltor; provided. however. that (a) Borrower
shall not be obligated for the payment of any fees, costs, or expenses which are payable by
Lender pwsuant to Section 9.1.5, (b) from and after a Sylldication, Borrowez- shall not be
required to pay or reimburse any for any fees, costs or expmscs incurred by such Co-
Lender (provided, that Borrower will be required to pay the fees, costs or expenses incurred by
Administrative Agcot on behalf of the to the same exteDt Borrower would have been
required by this Section I 0.13 to pay such fees, costs and expenses if inCUJred by Leader prior to
a Syndication), and (c) Borrower shall oot be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the gross aegligence, illegal acts, fraud or
willful misconduct of Lender. Any cost and expCIISC8 due and payable to Lender may be paid
from any amounts in the Locltbox Account or Cash Management Account, as applicable.
(a) Borrower &ball indemnify, defend and hold harmless Lender from and
against any and all other liabilities, obligations, losses, damages, peoalties, actions, jud8111ents.
suits, claims, costs, expenses and disbursemcots of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbunements of counsel for Lender in connection
with any investigative, dminimuive or judicial proceeding commenced or threatened against
Lender), that may be imposed on, incurred by, or asserted agail!st Lender in any nwmer relating
to or arising out of (i) my breach by Borrower of its obligatious under, or any mataial
miuepiesentation by Borrower contained in, this Agrecmc:m or the other Loan Documents, or
(ii) the use or intended use of the proceeds of the Loan (collectively, the "Iadelllllifled
L!abiUt!es"); movidecL however, that (a) Borrower shall not have any obligation to Leader
hemmder to the extent that such Tndcrnnified Liabilities arise from the gross negligence, illegal
acts, fraud or wiWW mimyfnct of Leader, (b) from and after a Syndication, Borrower shalloot
be required to pay for the fees 8Dd expenaes of mom than ODe law firm for all Co-Lenders 8Dd
the Administrative Agent, and (c) without limiting clang (b) precedi"& to the extent not
pn:cluded by a conflict of interest, lavler shall codeavor to wodt cooperatively with Borrower
with a view toward minimizing the legal and otber expemes associated with any defeose and any
poteDtial settlement or judgment. To the extent that the undertaking to indemnify, defend and
hold b.annless set forth in the premting seotence may be unenforceable because it violales any
law or public policy, Borrower shall pay the maximum portion that it is pcnuitted to pay IOd
satisfy under applicable law to the payment and satis&ction of aJI Indemnified Liabilitiea
incurred by Lender. Borrower further agrees that, without Administrative Agent's or the
Lenders prior wriltCD consc:m. it will not enter into any setllemcot of a lawsuit, claim or other
proceeding arising or relating to any Indemnified Liability uuless slleh settlement includes an
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explicit and unconditional release from the party bringing such lawsuit, claim or olher
proceeding of Administrative Agent l!1d each Co-Lender.
(b) Borrower covenants and agrees to pay for or, if Borrower fails to pay, to
reimbur&e Lender for, any fees and expenses incuned by any Rating Agency in coDDeCtion with
any consent, approval, waiver or confinnation obtained from such Rating Apcy in
with any action talcen or proposed to be taken by Borrower pursuant to the tenns and conditions
of this Agreement or any other Loan Document and Lender shall be entitled 10 require payment
of such fees and expenses as a condition precedeut to the obtaining of any such consent,
approval. waiver or confinnation.
Section JO.J4.Sclaedllles IDcorporated. The Schedules annexed hereto .-e
hereby illcuporated hezein as a part of this Agr=neDt with the same effect as if set forth in the
bodyhm:of.
Section Jo.JS.nt!w:fe Counterclaims ud Defenses. Any assignee of Lender's
illterest in and to this Agreement, the Note and the other Loan Documents shall talce the same
lice and clear of ell offaets, counrerclaims or defenses which are umelaled to such documents
which Borrower may othcrwiae have against any assignor of such doclllllCilts, and DO such
umelated counterclaim or defense shall be intaposed or asserted by Borrower in any action or
proceeding brought by any such assignee upon such documents and any such right to interpose
or assert any such unrelated ofTsct, counterclaim or defense in any such action or proceeding is
waived by Borrower.
Section 1G.l6. No Joint V!lltare or No Third Party
Be!leJiriaries. Borrower and Lender intmd that the relationships created bcretmder and under
the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is
intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship
between Borrower and Lender and each Co-Lender nor to grant Lender or any Co-Leoder any
interest in the Paopcrties other than that of mortgagee, beneficiary or lenclcc.
(a) This Agreement and the other Loan Documents are solely for the benefit
of Lender and Borrower and nothing contained in this Agreement or the other Loan Documents
{except with respect to Persons intended to be exculpated under Section 9.3 hcreot) shall be
deemed to confer upon anyone olbcr than Leader and Borrower any rigbt to insist upon or to
enforce the perfulllliDCe or observance of any of the obligatiom contained herein or therein. All
conditions 10 the obligations of Lender to make the Loan bereunder are imposed solely and
exclusively for the benefit of I.endtz and no other Person sball have standing to require
satisfaction of such conditions in accordance with their terms or be entided to assume that
Lender will tefuse to ma1ce the Loan in the ahSCIICC of sttict compliance with any or all thereof
and no other Person shall under any circumatmces be deemed 10 be a beneficiary of such
conditions, any or all of which may be fieely waived in whole or in part by Lender if; in
Lender's sole discretion, Lender deems it advisable or desirable 10 do so.
Sectioa 10.17.PabUdty. All news releases, publicity or advertising by Borrower
or any of its Affiliates tbrougb any media intalded to reach the gena public which refers 10 the
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Loan Documents or the financing evidenced by lhe Loan Documents, to Lender, or any of its
Affiliates shall be subject to the prior written approval of Lender.
Sectioa JG.I8. Waiver of Manballlag of Assets. To the fullest extent permitted
by law, Borrower, for itself and its successors and assigns, waives all rights to a marsballing of
the assets of Borrower, Borrower's par1DerS aad others with interests in Borrower aDd of the
Property, or to a sale in inverse order of alienation in the ~ e n t of foreclosure of the Mongage
aad agrees not to assert any right under any laws pertailling to tho marshalling of assets, the sale
in invene order of alienation, homestead exemption, the administration of estates of decedents,
or aay other matters wbabocver to defeat, mluce or amct the right of Lender under the Loan
Documents to a sale of the P1operty for the collcction of the Debt without any prior or difTemlt
reaort for collection or of the right of Lender to the payment of the Debt out of the net proceeds
of the Propeny in preference to ~ c r y other claimaat whatsoever.
Secdoo 10.19. Waiver of Coaoterdalm. Borrower hereby waives the right to
assert a counterclaim, otber thaa a compul!ory counterclaim, in any action or procding brought
against it by Lender or its aaents.
Sedloo 16.20. CpO!et; Cooltnledoo of DOC!UI!e!l!si Reliauce. In the event of
any conflict between the provisions of this AgJecment and any of tbc other Loan Docmnents, the
provisions of this Agmmc:ot shall control. The parties hereto aclmowledge that they were
represented by competent counsel in coJJDCCtion with tbc ocgotiation, drafting md execution of
the Loaa Documents aad that such Loan Documenll sba1l not be Sllbject to the principle of
construing their mcaning apiDst the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering
into the Loaa without relying in aay llUIIIDCI" on any mtements, representations or
recommendations of Lender or any parent, subsidiary <r A ffilite of Lender. Lender sball not be
lllbject to any limitstioo whataoever in the exercise of any rights or emedies available to it under
my of the Loaa DooiDICDts or any other qrccmeots or instnuncnts which govern the Lom by
virtue of the ownership by it or my parent, subsidiary or Affiliate of Lender of aay equity
interest my of them may acquire in Borrower, aad Borrower hemly inevocably waives the ri&bt
to raise any defrme or take aay action on the basia of the foregoing with respect to Lender's
exercise of any such rights or remedies. Borrower acknowledges that Leoder engages in the
business of real estate finaneings and other real estate transactions and investments which may
be viewed as adverso to or c:ompccitive with the business of Borrowa- or its Affiliates.
Section 10.11. Broken aad FiDuci81 Advisors. Borrower and Lender each
hereby repreaeot to the other that it has dealt with no finaacial advisors, brokers, underwriten,
placement agents, agenll or finders in COJDI.ection with the !rlln8actions contemplated by this
Agreement. Borrower heRby apes to indemnify, defend and bold Lender harmless fivm and
against any and all claims, liabilities, costs aad cxpcmes of aay kind (including LeDder's
attorneys' fees and expenses) in aay way relating to or arising from a claim by aay Person that
such Person acted on bdlalf of Bonowo in connection with the tnmsactions contemplated
herein. The provisioos of this Section 10.21 sball survive the expiration aad termination of thia
Agreement and the payment of the Debt
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Sec:tioa JO.Z2.Prior Agreements. This Apement and the other Loan
DocwnenJS contain the entire agreement of the parties hereto and thereto in 1 espcct of the
tiansactions contemplated hereby and thereby, and all prior agreements among or bctwccn such
parties, whether oral or written, including. wi1hout limilalion, the Summary of Principal Tenns
dated August 1, 2006 (as amended) between Borrower 10d Lender arc supeneded by the terms
of this Agreement and the other Loan Docwncnts.
Sedioa 10.23. Execation ill Couaterpartl. This Agrccmcnt and the other Loan
Documents may be executed in any number of counterparts and by different parties hereto or
thereto in separate counterparts, each of which when so executed shall be deemed to be an
original 8lld all of which taken together shall constitute one and the same agreement
Section IO.Z4. Entire Amemeat. This .Agm:ment, taken together with all of the
other Loan Documents and all certificates and other documents delivered by Borrower to Lender,
embody the entire agreement and supersede all prior commitments, agreemenls, 1ep1 I:Seltions,
and Ulldcrstandings, written or oral, relating to the subject matter hereof; and may not be
contradicted or varied by evidence of prior, contemporaneous. or subsequent oral agrcauenta or
discussions of the parties hereto.
Seetlon lO.ZS. Time is of Ole Eaenee. The parties hereto agree that time is of
the essence under this Agreement 8lld the other Loan Documents and the performance of each of
the covenants and agrccm.cnts conlained herein and therein.
(NO F1Jlt.TBEll TEXT ON THIS PAGE)
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IN WITNESS WHEREOF, the parties hereto have caused this Agxecment to be
duly executed by their duly authorized representatives, alias of the day and year first above
written.
BORROWER:
ICPA TYSONS CORNERRI ILC, a
Delaware limited liability company
By: lnDkeepera USA Limited Partneiidalp, a
Vuginia limited partnership, its Sole
Memba:
By: Ilmkeepers Fillancial Corporation, a
COIJIOratioo, its Ocnn PartnC
By: \huA

Title: '{ rt..,,,,,,
(Sipature contbuae oa foUowbag page)
LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC.,
a Delawan: corporation
By: d ?
1

lf.iife: a
Title: Donllllkk F. Guerriero
VIce Praldent
SCHEDULE I
ORGANIZATIONAL CHART
(Attacbed)
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Residence Inn Tysons Comer
USA TRUST
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ICAA lYSIHI
CORNERRIW:
(oi-.II.C)
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Carnlr. VA

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('IODioOionod H. AN)


ll900747.6.BUSINBSS
SCHEDULED
LEASES
N/A
SCHEDULEUI
REQUIRED REPAIRS
The following repairs must be c;omplctcd by March 31, 2007:
I ) Rc-striping of the parking lot ill add two (2) automobile parting spaces.
2) Provide adequate llUIIlber of designated parking stalls and signage for vans.
3) Provide access aisles adjacent to parking spaces, crossing hazardous vehicle areas, from main
roadways or public transportation stops to the building sidewallcs and entrances.
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SCHEDULE IV
RESERVED
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SOODULEV
EXCEPTIONS TO REPRESENTATION
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SCHEDULE VI
RESERVED
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SCHEDULE VII
MANAGEMENT A G R E E ~
(Attaebed)
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HOTEL MANAGEMENT AGREEMENT
Bnfdn
1
u-])=r cgmer
nus HOTEL MANAGEMENT AGREEMENI' ("Agreemcaf') is ll1ldc and Cllteml into Ibis
1st day of Fdlnllly, 2004 ("Bfrective Dlloj by llld between KPA LEASJ:CO, INC, a Vqinia
CO!pOI8ticlll wilb. ita priDcipel place of busiDea at 306 Royal Poinl:iu!a PIID, Palm Beach, Florida
33410 ("Lcsaeej, BDd INNKEEPERS HOSPITALITY MANAGEMENT, INC., a Florida
CO!pCll'ltion, will! ill priadpal place of business It 302 Royal PoiDciana PD. Palm Beach, Florida
33480 ("Mauager").
BECITALS
WHEREAS, Junkrcpen USA Limiled Partnership, a Virginia limi1ed pulllcrahip ("Owncrj is
the owner of feo Iitle to lb.e pan:el of I'CII property described on Qldbtt A attached hm:to and made a
pan bereof (wbicb, oollectively wilb. ill buildings and lbc !ilcllitiea COIIIained thtnon, llball be defined
herein u the "Hocelj.
WHEREAS, C>wuer Ius leued tbc Hotel to Laaec pm1U111t to a pen:clltlp lease apecment (as
the same may be modi1i.cd, Sllpplazum.cl or reltltl:cl from time to time, the ''Perccntap
Lcascj.
WHEREAS, simulfiReoully hcmridl, Own is eatering into tblc c:ertaiu Gu.mnty Aer-ncnt
dated 11 of even elate bcrewilh and Qchal bc:rcto as Exblhft D pumiiDt to which Ownu will gaamntee
the obl.iptions af Lessee hercuadar up to the value of lbe Hotel.
WHERBAS, Leuee closires to have Manager manap and operate the Hotel from IIIII aftec the
Manlgemcut Commc:ncernellt Dldc (11 defined benlin), 111d M11J88U is willing to pea form socb services
OD lite terms IDd condilioDs set fbrth in 1hia Agrcemeot.
NOW, THBREPORB, ill OO!IIidmtion of the mutllll forth herein end ocbcr good
llld valuable CODiidention, the raleipt and Sllfficiencyofwhich are hereby ICbowledpd, Mauger and
Lessee agree as follows:
DcfiDition of Tams
Wbm 1IIOd t.c:iD, lb.e foll.owiDg tem11 sbllli'DCIIl ani be defined 11 foDows:
1.01 Accoudna Period aball be defined as mellling a Clllcndar month.
1.12 Acco ..... l Senleel Fee sball be defined tllellling 111 amount payable to Manqer for
llalOUIIting serYicc:s ptovidcd 1IIJdcr and plllliUIDt to Ibis .Agrecmeat in 111 amount equal to Five Hundred
Fifty Dollan ($550) per 1110111b.. Tbe ACC01111Ciq Serviced Fcc shall be aepuak: iom IIJd in lddilion to
any other fees, paymems or cbqes due hwader, iacladins witbout lianitltion 1bose for grovp
scnices.
1.03 AI'DIIatl lball be defiaed IS IIICIIIins my individual 01 entity, direc:dy 01 indlrccdy
c:ontrollios, COII!Iollcd by, or 1Uida' common CODtrol with a party, includiDg. withou.t liniillltion, thJouah
coe or more hVanediaries. With 1espcct ID en eality, the tmn "control" (for puposes of this definition,
the definition of Sale of the Hotel 8Dd Section 16) shall mean the possession, or indinM:tly, of
1be power to direct or cause the dir=on of tbe or pollclea of tbe c:onuollcd entity, wlletber
through tbe ownenbip of votins ICCUI'iUes, by contJact or otherNiae. Maner and its pD:iJ*a, on tbc:
011e hand, and Lessee 111d Owner, on the other band, mall not be deemed to be Affililltes of one anolber
for purposes of this Agreement.
l.Q4 Ap'eemeat shall have the meaning set forth in the Premlble.
1.05 Ap"eemen11 shall bave the meening set forth in Section 13.12A.
1.06 Aanaal OperatiJic ProJICtlumeans the estimated budget statcmeniS of profit and loss,
cash Oows 111d a balance abeet preperod end submitted by Manager end apJIJ'IMld by Le&aee in
accordm:e with Section 12.04, which sets forth Manager's reasonable estimate of the Hotel's G!o5s
Revenues, Deduc:Uons aod Operating Profit for the fol1bcomiDg Fiscal Year.
1.07 Aaaual Operahg Statemeat &ball be defined IS meaniJig lbe sta1e111ent piepamlllld
submiucd by Mmaget in accordlace with Section 12.02, which SeiS fonh iD reuolllble dealillbc Hocol
operations for the prior Fiscal Year.
1.08 Appnller shall have the meaning set foldl in Section 4.0 I.
l.O' Available Cash Plow shaH be defined u meaning IIIIIIIOUDt, with. rupect to each F'aa:al
Year or portion thereof, equal to the (if any) of the OpenlinJ Profit for such fiscal Year oyer
Lessee's Priority.
1.10 Base Fee sball be an amouat payable to Manager pu11111111t to
9.03C for services provided Wider and pursuant to tllis A.,-nent in m amount equal to line percent
(3%) of Gross Revenues.
I.U Bailcllna Ead ... te sblll be defined IS meaning the llalciJICIII pnpred and submitted by
a.- to MeIJC" for infomlatlooal piSiptacs only in accordanoe with Section 10.03, which sell fodll
Lessee's estimate of the amounts nquired to cover the expendilmCS with n:spoc:t to Major Capital
lmpl'O\'ellleDIJ for the following Fiscal Year. At Lessee's option, the FF&E EstimaiB IIDCI the Building
l!stimalc may be combined into a single, integrated estimate ed document.
1.12 Bulaess Plu cball be defined as -ing a c:olleetive term to describe 1he Annual
QINpa ... lltl.n. -'& Projection, the FF&E Eatimatc. the fiul Buildiq :EstiJrd aud the Marketing Plan.
1.13 Capital l:%peadltllre Poliey shall bave tbe meaning sat forth in SectioJ110.06.
1.14 CPI shall be defined as meaaing the Consamer Price Index Cor All Urban Consumera
(1982-84 .. 100) IS publiahed by1he United S1llea Bureau of Labor Statilltics. U.S. City Avemae. If the
c:ompilation audfor publication of the CPI shall be discootinued or transfcmd to any other govemmental
depnnent or blii'CIU or agency, LcsscC shall (subject Co Manager's approval, wbic:h shall DOt be
Wllf:UOillbly witbhcld) fix an alternate index or mecbod 10 implement the parties intention that the
2
purcbasiq powlll' of the 111101111111 to be ldjusted by refereacc to lbe CPI 1111111 lhe Allie u die
purchasing power of dlo stated amoun11as of the Effective Dale. Likwisc. if the CPI shall be modified
as to compc!III:Dtl, computing metbods or olherwile, then Lenec may (subject to J.'danaaer's IPIJIOval.
which shill not be umeasonably witbheld) fix an lllcmalc index or method, as aforesaid, or Lcasoe may
utilize an appropriate conversion fac:tor so as to achieve subiiiDtia!Jy the same result as would have been
obtained if the CPI in ctTm and as calc:ulated and <:ODstituted on tbe Etll:clive Date still
!hen iD effect.
1.15 Qaup Gl Cutrol beat ef lllllll:eepers shalllllelll iD a single transaction or series of
related translcdons (i) alllle or other traDafer by lllllkeepers of aU or substlntillly aD of its assets (which
for tbese purposes shall apn:ssly indude 111y sale or disposal of fnnkcepen USA Umitcd Panuaabip
or all or subltll1tially aD of ill uaeta), (ii) a ale resulting in fifty pereau (SO%) or more of tbe
outstanding common slwcs of fmlbepen being owned by a single purdwer or group of related
pun:basen or (Iii) a consolidation or other b111illess combilllti011. lriDsaclion of malo cpc!S a a
result of which the pe!IOI1S who, iD the aggregate, owoed aD tbe outslaoding common shares
immediately prior 1111 the JDaJ!Cr, consolidation or olber busiacss combination trii188CCion OWD, in die
agrepte, lea than fifty percc:ot (SO%) of abe 0111Btandingco11111101l oqaity of lbe aurvivor.
1.1Ci Cllaqe of Control Eftllt or MIDipr shall mean in a siD&Je tnmsactioD or series of
related triDsactions (i) a ll1e or other trmsfer by MIIIII8CI' of substanlially all of its assets. (ii) a ule or
olbcr cnmsfer for value in fifty percent or IIIQI'C of die outstlllding common atoek of
Mausser being oWDed by a single periOD or entity or JIOUII of reJated persons or entities or (iii) a
merger, COIIIOlidatioa or other bvriness combi111tion trauaction of Mauser a result of which the
penons who, in the aggrepte, owned all die Oll15t8nding common stock immediately prior to 1hc
merger, coDSOlidation or otller business conbinatioo traoaacdon own. in the Jess than fifty
pcroent of tbe OUis1lndiDg common equity of the survivor. Notwitbstlndin& the fon:goiug, a
lriiDifer by Manapr to ID llltity coatroUed by Jcffiey H. Fisher, wbida transfer is made tor es1ate
plamiog p111p05cs (and which ranains controlled by Jeffiey H. Fisber (other than upon his death or
disability)), shall DOt be deemed a Cbangc of Control Event ofMacagcr.
1.17 aler Execadve omceuhall have tbe meaning set 1bnh in Section 19.17B.
1.18 ClaJms shall bave Cbe meaning set forth in Section 13.12A.
1.19 c.de aball haw the meaning set forth In Section S.Q2.
1.20 CompetltlYe Set sball mean tbc BlOOP of companble aervice hotels which .e closest iu
poal"'""ara-pbical distmce from tbe Hotel and which are geaerally within !be samc botellllllkct segment as
the Hotel. AI of the Effective Dale, the J)ldics agree tbat 1hc Competitive Set shall be comprised of
thoeo botels set for1h on Sdledale 1.28 aaachc:d hereto. Lessee llld Maoagcr agree 10 DllltUIIy,
reasonably and in good faith, dilcau 11J1P10P1iatc changes to che lorcgoiDg list pursuant to Section
3.028. hereof aud reflect any earcecJ changes on Scbedale 1.20 atlilchod bcrcto.
1.21 Ccmtract Term sball bave the meaaing Jet forth io Seetion 4.01 D.
1..22 aba1l have lbe meuing set for1h iu Scclion 3.03K.
1.13 Dedlae P.-ctDtqe shall have the meaniu$ascribed lhcrcto in Section 3.028 hereof.
3
U4 Dedactioaalhall be defined u 1111 opentiq expenses io COJIIIection with tho operation of
lbe Hotel or tbo genmtion or creatioD of Gross Revenues, datermillcd in acoordaac:e with the Uaifonn
System of ACQOUIIIS ud past prec:tice with respect to lbe Hotel, or u lillY olbcrwiae be appropriate to
include an i1lm u IUCb 111'1 operating apeoso, iucludin& wilhout limitation, the foRowiDg: (i) cost of
Rlolllld alaries, wagea,1iiuge beadica, payroll taxea aad other c:aah payroU com of employa:a wilh
respoct to the HOld; (ii) cleplltmeotal expeam, adminislrative and general expeases, the c:ost of
ldwrtiaiDg 8Dd business p!omotioD, beat, llgbt llld power, roulino ud mainrenance Wider
Section 10.01 llld PF&B expenditures which uc not capilal exJ)CIIditurea as detamincd unci the
Capilli Policy; (iii) the COlt of IDYmtcric& llld Fixed Asset Supplies (as defined horein)
CODSWDed in tho operation of the Hocel; (iv) lhe agn:ptc amoum of ICCOI.UliS n:ccivablo written off (or
reduced) u 111111 (witbout double eounlins) lillY IWWVet for doubtful IICCOUIIIS established
by Manaacr IDd Lcssoo as part of the Business Plan process descnDod in Sect:ioa 12; (v) all coats of
indcpeadeDt professionals or other third parties who pc:rfonn servicea required or permitted hcrouDder if
8Dd to the extont the cost is not alpilllized iD ICCOidance with OAAP, including without limitation, lhinl
partiDB providing lepl services to M!!!Uipr iD COI1DOCtioD with mttters involving th11 Hotel (excludiD&
legal foae of the pM!ica hereto for disputes Lcuee IDd Mani!F' with respect to the provisions
of this (vi) the coa uul expawe of technical c:oiiiUIIMIS llld operatio .. l experts for
spodalized services in c:cmneetion with DODroutine Hotel worlc; (vii) tbe Base Manqemeat Pee and lbc
ACCOIII2tin& Servi<:e& fee; (viii) wilhout duplicalion for payments treated u Deductions in the paragnph
DeXt below, all the costs aod expenses iDcurred by Lessee pursuant to the Francbise Agreemcllt
including, buc not limited to, franchise fees, ldwztising fc:ca, c:bain scrvic:es h. 111d lbe lib; (ix)
iiiiUI'IIICe costs and expensea with aespect to the policies required 10 be maintained pursu111t to Section
13 (provided jiiOjkJty insuranc:e costs aod expcnxs lhall not be: a Deduc:tion); (x) all c:oata and expenses
to oblain and koep in full bee and effect uy licalsos and pennies required for the openticm of tbe
Hotol 8Dd n:larccl facilities, including without limitation, liquor 1iccmes for the sale of alcoholic
bevmgea at all n:stalll'lllh, bm, loangea, banquet rooms, meeting rooms and guest rooms at the Ho\d;
(xi) c:hllgos for group RrVicea, if any; (xii) IUdl ocher coati lilld expenses incuned by Manage& as -
specifically provided for elsewhere in lhis AgRement or an: otherwise reuontbly related to the
opet'lltion of die Hotel, unleas such aro excluded spec:ific:ally from DeductiODS elsewhere in chis
Apeemeot; (xiii) 1111 expeilditures made or iriCUJ 1 cd by Lessee or Owner which me roqui!ed by the terms
of the Agreement to be borne by Maoager, or which otherwise lliao out bn:ac:h or failure
to c:omply witb any of the ta'mS oflhil Aammcnt (uoleas aod unlil Mmaga n:imbunea !..aRe for the
amount of lliCb expendinue), incladin& without limitation, expendiiUI'ea to which Lesseo Indemnified
Paniea ( defined in Soc:rion 13.128) are entitled 1o indemnification under Secti111 13.128; (xiv) Taxes
(otber tbao botd, bed aud IJIIDiient GCalpiiiCy taxes); (xv) lilY otb item wbic:b pumunt to the teams
and amditionl of this is to be lreaJcd as a Deduction and (XVI) rea1al coats a1d expiiiiCS
(otbc:r than lillder c:apitllizcd lease obtiptions) with aeape to any personal property leuea used in lbe
operation of the Hotel. Tbe provilrions of this par18t11pb ebaiiiiJIPIY regardless ofwhctber ao item is paid
by Lessee or Mlnlpr.
Dedaclfoas sbaiJ not include and shall exclude the following: (i) debt JJa'Vice
payments related to any fiiW!Cing of the Hold or the pnmisea on wbich the Hotel is located; (ii) ground
lease reabll or other rcatal payments punuant to my sround leue in connec:aon with the Hotel; (iii) any
capital by Lessee, including FF&E eqw:udjtnrea wbic:b aro capital elq!C"Ciitures,
dolllnnined by OAAP or lhc Uniform SYifaD; (av) i'liltal paymenCS pursuant to my capital leases
approved by I.asec; (v) lbe co of c::xtemal (third party} audiiS of Hotel operations and/or with respect
to die Lessee attity illelf; and (vi) other rccuning and DODrCC1111iDg ownership costs, including without
4
limitation Leuee's entity administration costs; all of which shall be paid by Lcs100 from ita own timds,
and DOl from Gnlu R.evCIIICS.
1.25 Dlf'ault shall have the meaning set forth in SoctioD IS.
1.16 Early Termlllltloa Fee sball haft the meauinc set forth in Section 4.01A.
1.27 E&cdve Date shall haft the meaning set CoJ'Ib in die: Preamble.
1.28 Employee Clal sball be defined as IIICalling any and all claims (includinJ without
limilltion all fines, jadaments, penalties, c:oats, litigation and/or ubitrarion expciiiCS, attorneys' fees and
expenses, and COlts of sstdement with rapect to any such claim) by any or auploycca of
Mlmlser against Lessee or Mlmlger wilh respect to his, ber and/or their employment at tbe Hotel,
including, wilhout limilldioa. thole which: (i) ere cvcntually resolved by arbitratioa, by litiption or by
(ii) involve alleptions that my applicable employmeat-rdated cantrac:t(a) aft'eeting 1he
empJO)'ICe(s) at the Hotel haft been breadled; and (iii) involve allegations lhet any employmeat laws
have been violated.
1.29 Enrirollllltlltal LaWI ahall have tbe meenin& set tonb in Section 1.45.
1.31 Eveat ofDefult sbaU have the meaning let forth in SccUon IS.
1.31 Tal Faihare shall have the mcauing MCribed tbereto in Section 3.02A.
1.31 Explratl011 shall have the meaning set forth in Sectioo 1.86.
1.33 Enenloa Term aball have tbemaning set forth in Section 3.01.
1.34 Fllr Marlc.et VUie shall have the meaning set ilrtb in Section 4.010.
1.35 FF.U: shall be defined u IJICIIIing the fixtura, tiuniabinp and equipment in aDd of the
Hotel, i11cluding, without limilltion. all filtlllres, furniture, filmisbiDp. equipmml (not includina Pixocl
Aact Supplia and Inventories). apparatus and oth peraonaJ property IISed in. or held in SIOrage for U1C
in (or if lbe context so dielltes, required in conrw.tioo with), or required for, the opr:ralinn of 1he Hotel
FF.U FACialate ahall be defined as meaning an Clltimato ptepmcd ud submitted by
Lessee to Manascr for informllional JIU!POiel only in accordanc:e with Section 10.02, wbich sets forth
Lessee's estimate of tho capital expc:uditwca uecesary Cor replwmenl and renewal of the Hotel PP&E
IDd for building Jepairs for the Col lowing Filcal Year.
1.37 l'llcal Year sball be defined u meaning cadi period commencing at 12:00 AM oo
January 1
11
ud endillg at 11:59:59 PM en December 31. Tho plrtial Fiscal Year betweeo the
M11111gemeot O>mmeaccmcat Date and the December 31 first following 1he Manaaetn
Conunalcement Dace sball be deemed to be ita own Fiscal Year, albeit a sbort Fiscll Year, and if
necessary or appropriale adjllstmenrs shall be made to Ibis AgRelllcnt's rqiOl'tiDg and ICCOimting
procedures to ICCOUIIt therefor. The FiiiCII Y car in wbich this Agreement is ll:nllinated shall be 1he fiDal
fiscal Year 1111der daia Agrcc;man, ud if tbe Agrec:ment is taminated prior to midaight on Deamber
Jt of such year it lhall be deemed to be irs CMD Fiscal Year, albeit a abort F"J.scal Year, and ifaecessary
s
or IIIPfOPrilte, adjustmeDts shall be made to this Asreement's RpOrting end eccountiDg procedures to
ICCOllllt tbezefi:lt.
1.38 Fhccl Allet Supplies llball bo defined aa meaniDg supply items iDcludcd within
''Property llld Equipment" UDder the Unifoma Systmn of Accounts, includillg without limitMion linen,
c:biDa, glassware, sflver, 1lllimrms and similar items.
1.3!1 Frlllcllbor shall bave the meaning set fonh iD Secti011 1.41.
1.40 Foree Majeure shall be defined u melDing any oDe or of the foHowins
events or circumstances tbat, alODC or in combiDalion, mau:rially and advmely afl"ec:ta tbc opcralion of
tbe Hotel: fire, c:al1hquake, stonn or other C8111alty; strikes; terrorism, war, rebelliOD, riots or other c:ivil
unreat; or any other similar or cii"CCIII1Staalc of an oxtraordilllry oature which is beyoad M111ager's
n:uonablc cootrol.
1.41 Frueldse Aareemt sball be defined as meaning lbat certain FIII'IChise Agreement
dated October 20, 2000 between Marriott IDtcmatioaal, Inc. ("FI'IIlCbisorj and Lessee with respect to
opcming witbln !be horel brand, as ammdcd or renewed fiom time to time, and includio& Y n:lated
apcmcats which may impact the operation of the Hotd.
1.4Z GAAP shall have tbe meaning set fortb in Section 10.06.
1.43 GOP Pemata&e lhall have the Dll:llling ascribed thereto in Sec:tico 3.02C.
1.44 Grola Reveuaes shall be defined u IIICIIIing Ill revenues and n:ceipts or every lcind
derived from operaling tbe Hotel, clasaified as lllCb consistalt with the Uniform S:ymm of Accounts,
relevant indusby practic:cs and relevaat GAAP, including, but not limited to: income (fiom botb cub
and credit ti'IIIMICtiona), befon: tl0111111issiooa lllld cliiOO'miB prompt or cash paymeots, (11)111 n:atal of
I"OOIDI, stores, offices, meetin& exhibit or sales !lpiCC of every kind; license, lease and conc:cssioa fees
111d rentals; income from YeDdiDg machines; health club membership fees; food and beverage sales;
wholesale and retlfl sales of merchandise; service cha!Jes, and poceecb, if my, &om business
intmupticm or other loss of income insurmcc. Oroa Rlwenues .shaD DOt include (i) gml:llities, including
tips, plid to HOiel employees by lbin:l plll1ier, (li) Taxes coDccted directly ftom p111'0D1 or guests or
iacluded u put of tho price of my roo1111, goods, or ec:nicos or u part of the sales prico of any
gpocls, services, or displays, includiDa gxoa receipts, admiasion, cabaret, or similar or equivalent taxes;
(iii) tbe proceeda realized fiom tbe sale or capital ISlets (iDcluclins FF&E) DO lonp nee nsry to lbc
opellltion or the Hotel; (iv) proceccls of any iDsutaDcc other !ban business inlemlption insu.rance or other
iuSUiliiiCC against loss of income; (v) condenmadcm &Wilds; (vi) gross receipts received by lessoea,
1iclnsllcs, or ccmcesaicmaires of die Hotel; (vii) proceeds fiom my financing or R!finmcing. including
fiom Affiliates of Owner; (viii) proceeds of my judpleat or settlement not received u
compeusetion for actual or potmtialloss or Gross ReYeDues or Opattng Profit; (ix) intr:rest eamed on
my sums wbicll may be deposited ill my Hotel AQCODDt, tbe Opaaling Accoullt or ocher bank aa:ouDts
esllblilbed pw1118D.t to Ibis Apeement (all of wbich intelest shall be the property of Lessee); (x) rebates,
diacollllls or CR!dits ofa similar nauare, paid or JdUmed in the coune of oblliniDg Gross Revenues (DOt
including charp or a'edit card clisCOIIIIls, whidl aball not coustitutc a deduction fi:om iu
dc:tamining Groa Revenues, but shall constitutt: a Deducrion In cldermining Opcratiag Profit); 1r1d (xi)
rental received by Lessee for space leases, including. without limitation, rooftop leases and all
6
teleco111111U11icationa llld limllar leases IDd licenses described ill Sceti01l6.03.
lAS H.uardoUI Materials shall be detined IS meanin& aad iDcluding petrolalm products,
tlammable expiOiives, radiolc:civc materials, asbestos or my coiiUiining asbestos,
polydlloriDated biphenyls, mellor any haudoua. !OXic or daupvus WilSie, IIUbJtanl;c or mlltcrlal
def'mecl IS such, or as a HIZI1'doul SubetaDc:e or any similar tenD, by, in, or for the of all
eavironrncmal laws DOW or hereafter appliclble to the Hotel, iDcluding, without limitatioo, Section
101(14) of the Comprehcllllive Enviroameatal Re8poDse, CompCDJPtion lllld Liability Act of 19So (the:
"Enviromncntal Laws"). or whidl may preseDt a significant risk of harm to guests, invitees or
employees oftbc Hotel.
1.46 BoldJa& Accoaat shall have the meanillg set forth in Sectioo. 12.03A.
1.47 Rocel &ball have the meaning ICl fonh in the Recitals.
1.48 Hotel Accouab aball be dcfiDed JIICIIIing all bank accowrts established pursuant to
Section 12.03 other than the OperaliDg Accouat lllld tbe Holding Accouat.
1.49 IDceadve Fee shall be deiiuc:d IS mOII!ing an 11110unt pay.ble to MIIIIJCf
punwmt to Section 9.03D that is equal to fifty perce:ot (SO"A.) of Available Cash Flow in any Filcal Year
(or portion thcmlf).
1.50 IDidll Term shaD have tbo meaning set forth In Secdon 3.01.
151 lmlkeepen shall bave the meanina set furdl in Sectioll2.04B(ii).
1.51 latellectDII Property aball be defioed as meanins Mlllager's proprietary eoftwire,
i:Dcludiog without limitation the Software ( dofincd herein), Manager's proprietary forms, 1D111aals,
brochures and directives issued by Mana,ger to its employees at the Hotel reprdins procedures,
Maaa,ger's servicemub IDCl Manager's proprietary tcchaiquea to be used in operating tho Hotel. All
Intellectual Pl:opc:.ty owned Uld used by MIJIIFl' ill connoctioo with the Hotol ia .liated in Sdaedlle
1.51; it being llllderatood and agreed that Mll!llpl' may acquire, license or develop additional
lntdlcctual Ptoperty fOr 111e in coDDc:l:tion witb the opcndioo oftbc HOIOI (and to modify sucb Scbedale
1.52 accordiDgly), with lbe prior written CO!IHIIl of Lcnae, which sblll not be unreuonably wilbheld.
1.53 IDvealorfei.U be clefiDed as meaoing "'nventories" as defined in tbe UnifOrm System
of AccoUDts, and shall inclucle without limitation lbe foUowins: provilions in stcnrooms, n:fiigoraleln,
panll'ifS and kitchena; beYmascl in wine cellars and ban; other mm:bandiac: intended for sale; fuel;
mec:hanic:al supplia; l!ltionery, 1Dd odllr supplies and limi1ar items.
1.54 Lepl Reqalremeab ball be defined u meaning all public Jaws. statutes, ordiunccs,
orders, rules. regulations, permits, licc:naes, aulboril.ationa, IDCl requircmeats of all
sovc:ucncnts and govamnc:ntaJ authorities, wflicb, DOW 01' hc:roaftcr, may be applicable to the promises
and the opaation thereof, includizJs, wilhout limitation, those nlatiDg to zonins, buildins, life/safety,
envitonilkiiltll and health, employee bcneflls, IJid providing c:ODtimled bealth CIIe coveraae under
BIUSA.
1.55 Laaee lhall be defined meaning the eatity wlticb ia described as such in the pRIII1bJe
7
to thia AJreemeut, inclusive of its llld usigoa, piO'Iidoc:l that aucb suc:c:eaioD md assipment
is undcrtakm in fiiU compliance with the lei'IDII and concliliolll of this Agreement.
1.56 I mee ladelllllllled Pal'llel ablll have rhc DlCIIIing set forth in Section 13.128.
1.57 Leuee'aiDtdlectul Property aball bave lbe meaning set forth in Section 17.03.
1.58 Leaee'a Prlol'UJ u of a date of detl:rmiD.alion sball be defiDcd a IIICirlin& the total Rent
wbicb is owed to Owner by Lessee under 1hc Pcrc:cotBge Lease, and wbicb is UDp&id as of such dale of
determiaaticm, on a c:urnulalive bui1 fiom rhc Elfective Date, includio& tbe 11111ount of any ac:cnaed llld
unplid Rail: due Owner for any prior FiBCII Year or portion thereof as contemplated by tbe Poolina and
Cumulation Agreement
1.59 LeaeeTaeuball bavelbe mcclioaset fordlin Sectioo 11.01.
1.60 Major Capital IIIIJII'Ovemeata Jball mean all major repairs, lllelltiODS and
improvem.,.. to, 11 well u for dle renewals 111d replacements of, the stnlctural, mechanical, elec:tticll,
beating, venrilltiug. lir conditioning, plumbing IJid vertical lrlnSpOrtation dementi of the Hotel
buildiDg.
1.61 Malulpd Hotels sball be defined as meaning. collectively, the Hotel and Ill othu .bolels
wilhin the United Slatel of America operated by Manap or ita for Lessee or ita Af!j)iatea.
l.6l Mauaem-t Commee-t Date ahall bo defined as m-mg the dB upon. wbich
Manapr com!IV:IIccs operation of the Hotel pur&II8Dt to dais Agreement. Tbe M ... Jemart
Commeoc:ement date lhlll bo tbe date bemof aad shaD be CODfirmed ia writiag by Man'", IDiless
otberwile agreed by the parties.
1.63 Manapmeat Fea aball have the 111ea11iag aer forth in Seclioa 9.0 I.
U4 Maaqer shaD bave the meaaing set forth in the Preamble.
1.65 Maa 11r Wlemllifted Partlea lhall bavo set forth in Soc:tion 13.12A.
U6 Markel Dedlne sfJa1l bave the meaniag lhe:lelo in Section 3.028.
1.6'7 MarkeCID& Plaa shaD be dcfmcd 88 awning 1be cmual11111lketiqJ plu for the Hotel
developed by MaDqcr. 1be Marbting Plan ahall includr: all items included iD tbe martedng plan
prepared by Manager for iatemal use iD relation to lhe Hotel.
1.611 Marriott lhall bavc the meaniag set fonh ia Section 1.24.
L6!) Monpae lh.U be defined 11 meaaing any security instrument wbich eacambc:a lbe
Hotel lllldlor 1l1e Hotel pmnises, iacluding. wid!OIIl lirnitlltioa, aay and Ill mortpges, deeda of uust,
socurity deeds and similar iDs1rumeats.
1.70 Mol"tl9 shall be defiDed 88 meaning the holder of; or trustee under, my Mortpge, oc
the holder of my indebtedness secured lhenby.
8
Hoeel.
1.71 N., Muq_. Coatract shall have the melDing aet forth in Section 4.01B.
l. 72 Nedce Period ahal1 bave tbe IIIC8IIing set forth in SerJioa 3.020.
1.13 OIDIIIIIu Agreenleat sball have lhe meaning aet: forth in SecdoD 1.24.
1.1<1 ()peradDa ACCIIIIIDt shall bave che mfll!ling set forth in Section 12.03A.
1.15 OpeniiDg Pnllt shaD be defined as meaning the Oroaa Revc:nues millus Deductions.
1.16 Odaer Muaaed Hoteb shall be defiaed 11 meaning all Managed Hotels other IbiD the
1.11 Overdue Rata shall be defined 11 maning die leuer of (i) the Primo Rare plus five
par.eotage points or (ii) tbc biJb,elt lawful rate UDder epplicable law.
1.18 Ower shill have lbe meenjng set forth in lbe Recitals.
1.79 Leue sball haw the meaning set forth in lbe Recitals.
1.80 Pooled Aareemeata shallmeMI 1he managemem agreements for each of the Pooled
Hotels.
1.81 Pooled Hotels sball mean all hotel properties cleacribed oa Sdledule 1.11 atllebod
hereto, 11 may be amended tiom time to time pu1111111t to the terms of the Pooling and Cumulation
Agreement.
1.81 PooUq and Cumaladu shall mean that certain Pooling and Cumulltion
Agteanea1 made 11 of the dare hereof: by Lessee and Mana&cr, in the form attached bcmo as Exhibit B.
1.83 Prime Rate lba1l be dcfiaod u lllOIIIing the 1Jrimc nuc" as published in lbc "Money
Ra1ea" llelltion of The Wall Street how-, if such rate ia, It any time daring the tenn of this
Agreement, no lonpr so publisbcd. the term "Prime Rate" sball mean the avenp of lbc prime intorest
l'lla which ue IIIIII01IDCed, from time to time, by tbe three (3) 1aJpt banks (by asseta) beadquwrcd in
tho States which publish a "prime rate."
I.U Prior Y11rCOP P-tqeshlll have tbn1eaning um"bed thaero in Section3.02C
.LIIS Profit Dedlu shall bave lbe IIICIIIing ucribed thereto in Section 3.02C.
1.86 Reat shall be defined 11 mCining all "Ra!t" under lhe Pc:n:cnllge Lease; provided,
however. that from 111d after the expiration (the "Expiration") of the CIJI'I'C!Dt tenD of lhe Poi' 4"8"'
lelle u in eft'tct on tbe date bereof the expiiaeion Term of this Management Agm!malt,
Rmt lhallmean oa an annual basi& (from IDd after each Ro-Set Dace (II defined herein), wnil die next
Re-Set Date) the lesser of: (a) 8DDIIII rent actually owed by Lessee 1ll1der the Pemmtl&l' .l..clllc (or aay
rcp181:cmcnt or Cll:teoaioa tbcrcot) follawing the Expiration; and (b) lho 811111111 n:at thlt would be
prod1w:ecl UDder die Pc:entage Leaao (or my replacement or ext...,.;on t1lereof) if tho fotmula for
calc:Diating aonual rearlbercunder was die pater of (i) 7% of the un-depreciated value of che Kotcl oo
9
o-a boab. plus lhen-c:unmt IIIIDUal Rei ellal8 IIXa. plus tben-QII'RIIt INI'IIIII premiums for
paopcrty ill8lll'IIDCC, all as of the "Re-Set Date"; and (ii) 30% of all amounts up to the JeViaed
Breakpoint thereunder and 68% of aU IIIIOIIDta iD CXCCIS of such revised Breakpoint, with
lhe "B1 calcpoinc" being dctined as a dollar IIDOIIIIt of annual room revenuee .,.,.,jnc:d with refeleoce
10 ( 1) the dlr= )all of Hotel Opellting resulls immedU.Iy preceding the "Re-Set Dalew aDd (2) tbe
expected opaating results of the Hotel (tllking ICCOIIIIt of tbc I'CSIIIta referred to in tbe immeclirr1y
precediDg clause (I) and thcn-cnrrenr market conditiolll) for the twelve (12) months immeclimly
folbwiD& the "Re-Set Date .. (such twelve (12) month period being tbe "Pro Ponna Periodj, IUCb lbat
(A) DiDety five percent (95%) of the expected annual Opemring Profit of the Hotel for the Pro Forma
Period would be allOCIICd to the Owaer (in the fonn of rent) and (B) five paceut (S%) of the expected
ammal Operadng Profit of the Hotel for tile Pro Ponna Period would be aDocaU:d ro Lessee (in tbe form
of Jlet income). The "Re-Set Date" means tbe tirac day immedietely fOllowing the Expintion.IDCI each
year llllli.venmy du:reof. In the eveat ofa diapule with respect to the calculation of Rent, the
pertiee shaJ1 enpge in good faith discussiona in au eft'ort to resolve such dispute and failing such a
resolutio:a, the IIDOUnt or Reot sball be determined pllllllll1t to arbi.trllion by a mutually agreeable expert
flllm'Jiar with boteJ mMpnent Bgteemeotlllld limited aervfce hotels and the parties shall provide to
wch expert such mrar-tion u aucb expert llhall deem D"'CC'"'Y or 1ppropriate to mike the
determinations set forth bemmdcr. Until resolution of any IUCh dispu!e, the amount of Rent shall be
detemliDed by Lessee In good faith, BDd io the event that Lessee ia Ulllble to mab such. a detennillal:ion
in sood fiilh then pending rcsolutioa of such dispute Rent aball be the amoUDt set for1h in clause (a) of
tM proviso of the first aenteo.ce of1his Section l.l6.
1.87 RevPar lades Buellne shall have the mcaoiug ascribed thereto in Section 3.028.
1.88 Rev Par Yield llldex shall 1ho mi'BDing ascribed thereto in Section 3.028 bcreof.
1.89 Sale of the HMel sball he defined as meaning: (i) any ule, assigmnent, transfer or other
clispolitian, for 'fllue or otherwise, vohmwy or involUDtary. of Owner's title to the Hocel or Lessee's
leaehold iDleresc io the Hotel or the site on which tile Hotel is localed (citbcr foe or leaseb,ld tille, u
the cue may be). whcdler pwsuant to forecloswe or deed in lieu, a merger involvifts Owner or Leaee. a
aale of svt.lantflly all of lbe useta or Ownc:r or Lcs-, or anolber form of business combinltioo
having a simi1.: efl'ect, or olhcrwile; or (ii) a tlartbcr lease or nbleese of tbo entire Ho1el or site on
wblcb tbe Hocel is located; as well 11 (iii) a cbaDge of control (as defined in the definition of Affil.iare) of
Owner or Lessee, throuab any ll1e, transfer, or o1ber dispositicm. including, wilbout Jlmilatioo, by virtue
of allle or 111erJer lnlnActioo iovolviug lnnlcccpen or Innkeepers USA Limited Partnenhip, b value
or odlerwix, in a single tnuacdon or a series of ICiated nanumons. wblch cbqe of control (for
ellrification pusposea) shaD oqneuly include a Change of CODtrol Ewnt of lnnlcoepers.
1.!10 Solhrare shaD be defined 11 meaning any and all computer softwaR:t together with i1S
accom.-nyiq doc:umentatiOII, if any, whicb is o"WDed or exclusively liceued by Manager ia CODDection
witb iiS JADpe:lty IIIIIJI8CIDCDt system, with any reservation system and with all other eompaiCI'
prolfllll' BDd syatems developed by or for MaDapr IDdlor ita Aftiliaa:s for uee in coDDOCtioa wilh lhe
opaalion of tlle Hotel or OdE Manas"" Hotels. All Softwae c:umntly owned or used by M&DaF in
CODIIeclioo witb tbe Hotel is listed on Sdledule 1.90 !!lt!ched hereto.
1.91 Spedal Fee sball have the meaning aet fOrth in Section IS.02D.
10
1.92 SubsecJaaat OWIIer ahalJ have die JMmliog set forth in ScctioD S.OSB.
1.93 Tues shaD be defined 11 meaoiagall Illes, use, hotel. bod, tlmlieut OCQJpancy or excise
IDes, invfllltoJ)' IDes and similar cbargea on or rdatiug to the HOld or the operation thereof.
InespectiYe of the foregoinB. lbe following me DOt Taxes and are specifically excluded trom the
defiDition tbcrcot: (i) Any illcomo, excess profi1s or revenue taxes of 1.-ee or my person, finn or cotity
81 a partDer of Lessee; (ii) Special assessments impoaed because of facilities whicb are ccmstrueled by or
on behalf of the assessingjurisdictioo (e.g., roads, sidewalks, sewers, etc.) which directly beoeftt die
Hotel; (iii) "Jmpact Feca" which m required of Lessee as a Q)D(fition to lbe issuance of site plm
approval, zouing variiDCCS or building permiCI; (iv) "Tax-incremem financing" or similar financiug
whcrdly the mllllicipality or olber taxing111thority hat assialcd In fiomcillg !he: conslnletion of 1he Hotel
by temponrily reducing or abating llonna1 Taxa in retam Cor &Dbatantially higher !nels of Taxes at
later dates; llld (v) Lcasce Taxes.
1.!14 Term aball blve the mCIIling set forth in Section 3.01.
US TermlaatiDD shall be defilled IS I'DCIDing the expimicn or sooner cessation of this
Agreemenl
J." Uaavoldlble OcCIIrrences sbaU have the meaniogiScribed dlereto in Secti0113.02E.
1.97 Uncotrollable EI)MIIIes shill have the meaning 1c:t forth io Section 12.058.
1.98 Unlferm Syllelll of Acee111111 shall be defined u meaning tbe Uniform S)'lltau of
Aceo1m1s fur Hotels, c;uuently the NiDth Revii!Od Edition, 1996,81 may be rcviacd ftoom time to lime and
81 modified by applicable provisioas of this Agrecmenl
1.99 Unrelated Pertou sllall have the meaning set forth in Section 2.04C.
I.JIO Vmaatl011 Notlee shall bave the meamng set forth ia Section 4.01D.
1.101 WARN Act shall be defined u meaning lhe Worktr Adjustment and Retraining
Notification 1111 of 1990, as auch may be amended from timo 10 time.
Sedloo 1. AppoiDtlllellt of Muqer
2.11 Appolatmeat. x.a-llmby appoim Mauger 81 the exclusive lllllllllgcl' of the Hotel,
8lld Lessee hereby confers upou Mmag the exclusive right to supervise, direct and coutral thc
m-sement aDd operation of the Hotel foz the cbaticm of the Term {IS defined herein), all in
accordaDc:e with and subject ID the Ierma llld conditi0111 of Ibis Agreement. M11111ger accepts this
appointment and sball mwae the Hotel cluring tile Term in aa:ordamce with the terms IDd conditions
set fortb herein, in good faith aDd at all times in CODSidcratiOJI of tho best interests of Lessee and Owner.
MaiJI&er &grQlS tblt it shall l1llrRip and operale lbc Hotel, in ac:cordaDce with the terms of this
Agrocmcat, as a firat-c:lus upacale cxtcudod 1111)' taking into account the size, location and
clwactl:r of tbe Hotel, aDd in ICCCI'dauce wida the set fortll ill the Franchise AlfO"""'nt ln
COI!IIedion therewith and subject thereto, Manager, as agent of Lessee, shall have the authority 8lld
rcspolllibility, subject to the provisions of this Agr=neut, to (i) dctenniDe opentling policy, sllndlrds
or opcntioD, quality of service, the maintenance and physical eppesrance of the Hotel and any other
11
matten af'Cectiug operations IIIII IIIIJII&eDieD!; (ii) superville IDif direct all phales of adYertiiin& aalel
and businc:A promotion for the "'*1; and (iii) t:tllry out all programs IXlntemplatod by the Bl!C'r m Plan
lppi'Oved by Lcascc pur111111t to Section 12.04. Lessee bc:rcby oonfirms that Owacr has acknowledged
ud approved of l.cacc's appoiDbnent of Managa- in accordu<:e with this Section2.01and recognizes
Manager's rights IS act forth b.ereilJ subject to the rigbls of Lessee bcmmder.
l.OZ Required Malulge111111t. Exc:cpt IS olbcrwise provided berein, during the Term M111ap
shall be teSpOJIIible for 1ho proper aDd efficient opmtion of the Hotel. Except as provided tD the
c:ontnuy or as may be limited herein ('mcluding, without limitation, by virtue of the rights of Lessee
baamder), M..apr abaU haw discretion and free from IDtcduaace, intemlpdon or
diiiUrbm:e, in all IJIIUen rclaliug to the nwwgemeat and opcnlion of tho Hotol, iDcluding, without
limitation. cbaraea for rooms and commen:ial space, cralit policies (wbicb c:Rdit policies shall bo
Je15011Bble, eustomlry and in keeping with iDdusuy S1anduds for tbe market segmalt which the Hotel
services), food Blld bevemp services, the receipt, holding 1111d disbunlement of fimds, maintcrwnce of
baalc IICOOUDIS, procurement of Jnvauoria, suppHes ud aerviccs. promodon aDd publicity and,
geoerally, all activities aoceaary for the operation of 1be Hotel Without limiting the genemlity of the
foregoing. Manapr shall perform the folJowina additional serYicea, or cause the same to be porfonued
for the Hotel, subject 10 uy other ipplicablo provisions of this Agl'OODI.oat ud subject tD any applicable
provisions of the Business Plan:
A. Establilh llld revise, as neceesary, administrative policies and procedures,
including policies and procedwes for the control of revenue and expenditures. for the managemmt of
accounls roceiVIblo and acco111111 payable, for the purdwing of supplies and aervic;es, for the conlrol of
c:rtdit, and for tho scbeduling of repairs and ma.iJJ1enau<:C and preveative maintenance, and verify that
the foregoing poccdmes arc open!iDg in 1 sound IIIIDIItr.
B. Enter into COIIb'acls, commitmeniB and obliptions for aoods ud services for die
Hotel, at competitive, fair market rata and prices; provided that .Lesseci'a prior writtm approval (which
lppfOVIII shall DOt be 011re110111bly withheld) shall be required for any contract, COIIIII1illllalt or
obliprion (or series of related COIIU'ICCS, commitmei11S or oblipliona) (i) baYing 1 term in excea of one
(I) yet11 unless ISIICit agx eemmt may be tamillllted wilbollt penalty, premium or cmaoing obliptioa, or
(ii) if the mnount of tbo agpeple expenditures therenndcr would, or are reucoahly anticipated to,
CJXoeod $50,000 in the agrepte per IDIIIIlD (it being UDdentood and agreed that l.esaee's 8ppiOV8I shall
not be required filr nati0111l pricing contracts cncered intn by Manager whiob relate 10 tbe purchue of
Inventories, provided that such c:onttact Iillis wi1hin clnae (i) abuve); provided further lbat Lcssec'a
prior wriueo approval, whic;h may be granted or withheld in irs sole discn:tiou, shall be mquired for 1111)'
CODiract, commi1ma or obligaticm (or serim ofrclalecl conti1CIB, COIIIIDitmeDts or obligatiom) wilb aoy
Aftiliale of Mauager. the foregoiq. MaDiger shall DOt enter iDto any real propeny
leases, space leases (including rooftop space lcaes), amcmions or similar ammgemarls without
l.essec's prior writtm approval, which may be granted or withheld in its aolc diserctiOD, ud, if Maaager
shall have received a notice of tamination of 1bla ABJ ccma.t from Lessee, Manager aball not enter into
any COIItrKIB, oommitmenls or rhligations for goods or services without Leuoe'a prior writtm approwl,
wbich may bo granted or withheld in its sole disc:reDoD.
C. CIDse to be made all such replin and rouline maintrnnM as required llllder
Section 10.01 bawf and coopaate with Lessee and Lesaee's designees in making all rcpain,
dc:eorationa, revisiolu, altcrltiona llld improvemcnls to the Hotel which oonstitutc capital itans under
12
rbe Capital Expenditure Policy, u shall be reucmably neceuary f lbe proper maintalanoe d!aeof in
aood order, co!ldilion llld repm.
D. Pwdlalc (but DOt out of Manager's own funds) such F"wd Aasct Supples end
Juvmtories u shall be I'Q&Onably ncceasary for die opc:ntion of the Hotel aod treat such purtbuesas
Deductions.
E. Apply for, and la:cp in fUll fcm:e and effec:l (to the exteDt tbe aUII.O is within tbc
c:ontrol of Mlnlpr or its Affiliate), all licenses llld permits required of Owner, Lessee or Manager ill
COIIIICCtion with lbc operatioa aod IDIDigemcDI of the Hotel (including without limillllion any llld Ill
reqairecl b die sale or aervice of llcobolic: beverages). Leasco to uecate and deliver
lilY llld lllQiications and olbcr doCIIII1eiiiiiS shall be reaaoubly requimd and to otherwise COO(AAI!t,
in llliCISOIIIble apects, with Manager iD applying for, obtailling llld maintaining such licenaes and
pennitl.
II'. Use Ita IUIOI!Ible best dforll to do, or caiUC 110 be done, Ill such acta llld thinp
ill and about the Hotel as sball be ICISOnably necesaary 110 comply with Legll Requiremeals (iDcludillg
witbout limitation, all applicable enviroameDlal law, Nles, BDd regulations) llld the tams of all
iDsunmce policies, llld to diJcbarge UIY lien, eocumbzanl:e or cbarge on or with rapcct 10 the Hotel ani
lhe operation tbel alt. provided !bat if the lien, GICIIJillmlllcc or clwp on or with 1espect to tbe Hotel
and the opention thereof arises out of tbe actions of l.es9ee or Owner, dlll!l Manaser ahlll n..,.....hly
with Lessee or Owner in the dischqc of any such lien, cncumbruce or cblrge.
G. Pay Ill Tucs and iiiiUI'IIICO pieliliums (other than poupc:aty inSIJJ'IDce plalliums
described in Section 13 .02A-13.02C), wbcn due.
B. Use its reasonable best efforU to cause che Hotel (ad operation thereof) ID
comply with Ill applicable covCDIDts and provisiona of che Lease. lbe Fruu:bise Agreement,
tbe Pooling ud CUmulation Agmment aad any Mortpge, lild at Lessee's option and dizection pay,
wbeD due, Rent under lbe PercaJti!F Lease, and payments wider tbe Fmx:hi!!C: A11eemeaL
L Subject 10 the prior w1 itten approval of Lessee, retain legal CIOUIIXI for the Hotel,
which lepl ccnmsel aball be to lc8see and sball pei founlepl tervices UDder lhe direction of
Mtmger (it being undentaod and qreed lhlt the feel of uy sucb lepl c:ounselao Rlaincd shall be an
opera1iDg cxpenae of tho Hotcl111d ablll be belted u 1 Deduction). pJVVided that Mmlger sball
regularly confer witb Leaee reprding the st1tu of my m.atten or requiring the retention of
legal counsel in ICCOidance hocewith. Lessee shaD have the option of c:ontrolling 111y litigstioa Cl'
diaptdes whic:b do not impact or affect Hotel opot'ltiona or revenues, provided tbat Lesaee ahlll mgularly
c:oDfer wich Manager regarding tho stalus of uy such litigation or disputes.
J. Reasonably coopente with Owner, Leasee and uy current or p1ospeccive
pmchuer, laaee, Mortgagee, lllditor, broker, financial iDiermecliary oc other 1elldcr ill connection with
Ill)' ptoposcd sale, IelSe, finlllcina or iDapection of or rellting to the Hotel; provided, however, that
Mmiger shall not be required to releiSe my information that ia cooftdential or proprietary 10 Manager
oritsAffiHm.
K. lmti.lllte in its own name or in the IIIIDt of Owner, Le&see or the Hotel, llld IS m
opending expeoae of the Hotel (which shall be treated 18 a Deduction), any lllld aU legal action& or
13
proceedings to eolloct cliwpiJ, or otber income derived &om tho Hold's opmtiana or to ouat or
dispouess auesta. or olber per10111 in possession lhereftom, or to cancel or terminlte any lease,
Hcense, cr concession agreement for the bread! thereof or defiult tbcmmder by lbe teiiiD1, liceasee, or
coocessionaire; and It !be direction of lessee (and IS a Deduction), Manager shall take appropriale llepS
to challenge, proii:St, appcalllldlor litipte to final decisicm in any appropriDc court or forum lily
alleged ao!MXXDp)iancc with LcgsJ Requiranans affec1iDa lhe Hotel or any allcsecJ violation of aoy
law, aubjoct however to tho proviaioaa ofSccti011 12.050 with rapect to indenmificalion.
L Collect llld accouut for, IOd remit 10 governmental authorities, all Taxes
collectible by the Hotel directly ftcm patrons or guests, cr as put of lhe sales price of uy pocla or
services, iocluding gross admission, or similar or equivalmt taxes, duties, levies or charges.
M. F.slablilh prices, rates. aDd cbazgc:s for acnices JX'Ovided at the Hotel, iueluding
room ra1e1, and collect all charges, rem llld ocher IIDOUDts due from gucm, and CODCeaiooaires
of tile Hotel.
H. Perform IIIICh olher tasks as are customary IIIIi usual in lha operation ofa hotel of
tho class aod standing of the Hotel.
0. Provide riak 111UJB&CUlaul services with JCSpect 1o the Hotel, whil:h sa rices stall
be in scopo DO lees favanble to Lessee 1baD such rislc services being provided by M.-..aer
(or its Affiliates) witb rapect to lho Hotel (or O!bc:r Manqed Hotels in lha event 110 services are
provided by Manager or ita Af61iatea to tho Hotel prior to lhe Effective Date) prior to the Effeclive Date
of Ibis Agreement, wbich lhall iDcludo, without limitation, loss pRVention efforts, inlafacillg wilh
iDsuraDCe companies OD clalmJ IDIJlll8emen1, and insurw:e raaewal; provided, howover, to the exlalt
that the or cxpcDSe thcRto was being borne by Mmagcr or its Affilillr:s prior to .tbe
Effective Date with respect 10 the Hotel or Other Manged Hotels, such cost and expense shall be borne
by Muager Mid not be belted as a Deduction or otherwise be charpable to or reimbursed by lhc Hctd
oritsce
P. P!Ovidt 111011 lind reYOII1Ie lcsclasbip, support IIDd training to the
employa:s of the Hotel.
Nothing set forth in tbis SectiCI12.02 shall bo deemed 10 limit Manager's oblipticms or Lessee's
rights under Section 12 oflhis Agreement. Lessee shall be eodtled to meet with (i) sucb IIC:Dior cx.ecutive
oOi.cen of MaiiiSer te.ee may raquect:, on a quutcrly buis or mole hqueatly as Leuee may
reasoaably RqUCSt md (ii) lha Gcoeral MIIIIF" of the Hotel, tbe Chief J!qiDec:r, tbe Dircdor of Sales,
or otbc:r mutually agreeable respcmsible Mao11er represeoralives on a quarterly buis, or fi-cqoeotly
IS Lessee may request, not to one meeting per montb, ro review and disc:uu the
operadoo of the Hotel, iacludiag ay substantial deYiatiCil fiom the operating Slralegies, policies or
proc:cdwa which form the buill Oil which tbc then cumnt Busincas Plm wu macle. ID the event that
l.elscc deaires to avail itsolf of the meetings in the forcaoins, Lessee shall direct its inquiry and request
theRfor to 1 member ofMinapr's &ellior cx.ecutive staff.
1.03 RepreRJltatlou Repnlina Restrtctlou. Bacb party hereto wmanl8 and aepc eaeats to
the other ibat to its knowledge, u of the Mauagemcut Commencement Date. tben: uc DO covcoants or
mtrictioos which would pnMDt, prohibit or limit Manager from operating tho Hotel or ay part cbereof.
14
Mnar lball p01uptly and periodically ed'risc Lcacc of Ill licalses, per111it1 or adler iDslnmcntl
neceaary for the operation of lbe Hotel, llld, to 1he exteot MaDipr ia probibilled from holcliq aucb
licenses, permits or other ins1rwneoiS (or Leuee or Owner olbelwisc elect). Lessee shall, and shall cause
Owner to, sign any md aD appliCI!ions dlcrefor upon 1he reuouable request of Manager, without delay
or chlrge, as more fully set forth in Section 2.02E.
2.04 Representatlou ofMna1er. Manager wan'lllts llld zepaeseats that:
A. Manager is experienced in dte operation of hotels simillr 10 !be Pooled Hotels aud
sbaU II1IIIIF and operate tbe Hold in a tint-class ll18llDer in accordance with the stlllclards of
IIIIMpmalt bother similu hotels, aud in compliance with the Fl"'IIChise Apcement
B. At the Eft'octive Date. Manager qualifies u an "oliaiblo iDdependeot contractor"
as defined iD Section 8S6(d)(9) of !be Code (as defined herein). FIOD!Ibe Effective Date UDiil the end of
the Term, Mmqer coveoanes uxlagrea that il sballllllisfy !be followiDg
(i) Manager ahall DOt pezmit 'MI&erin& activities 10 be CODducccd It or in
couoection with the Hotel by any person who is eoaqcd in the business of accepting wagers and who ia
legally ll1lthorized to enpp in such business a1 or in c:amection with tho Hotel;
(ii) Maqger lhall DOt own, direotly Ol' iDdiroctly (within the meaniDg of
Section 8S6(d)(S) of the Code), more thlll 35% of the shales of belle6cial interest or IDnkeepers USA
Trust (''lnukeepenj;
(iii) No more than 3S% of die owoerahip intmst iJI Mauger's outslllldiog
stoclc, use11 or net profits sblll be owned, directly or Indirectly, by one or more pezsons owning 3.5% or
more of 1he outllllldiog sbaJes of beneficial iDtezest of Innkeepen; and
(iv) Manager lhll not sublet lb.e Hotel or enter inlo any similar IIIIIIIIJemcnl
on any buis sacb lblt the na1al or otbar 11110unts to be paid by the sublessee lbcn:wlder would be basod,
in whole or in part, em eidler (I) the net iDCOme or profita derived by the (lnoiMSB activities of 1hc
Nblessee. or (2) 111y other Cmmula Ncb tbat any portion of the l'OIIl would fail to qualify as "ren!s from
real property" within the meaning of Section 8S6(d) of !be Code, or auy similar or n<Ssor provision
thereto.
C. At the Effective Date, Mamr is (or is, within the defiDilioo or Secticm
856(d)(9)(F) of the Code, relaled to a penon tbllt is) actively eapged in the tnde or business of
opaatiq "qualified lodging ficilities" (u clefiDed herein) for a penon who is not a "!dated person ..
within the m"'oiug of Sectioa of the Code with respect to Innkeepers or Lessee
("Unrelated PCDODSj. In order to meet this n:quirancat, Ma.gez agrees that it (or any penon)
(I) derives at least 10% of both its zevaaue and profit from operating "qulll.ified lodging faeililicl,. f
Unrelated Pcnoos 111111 (2) complies with any or olber achillistrative guidance UDder Section
8S6(d)(9) of the Code wid! respect ro the llDOunt ofbole111111111&emeDt business with UJU'CIIted Persons
tl:at ia necessary to qualify u an "eligiblo iudependall COI1Inclor" with the meaning of sucb Code
aection. A qualified lodgjng faCility" is defined in Section 856(d)(9)(D) of the Code and llleiDS a
"lodging iilciJity" (115 def'med herein), unlcu wagaiog activities are CIOIIductcd Ill or in connectioa with
such taci.lity by uy per-. who ia eopaod in lbc business of w:epling wagen mel who ia leplly
authorized co eugage ill sucb busineR It or in with SDCb facility. A "'odging facility" is a
IS
boll:l, moce1 or other catlbiVduuent INIR 111111 ooo-balf of !be dwelliog llllill in wbicb IIC ucd ou a
tl'lllsieat basis, and iacludes CUSIOIIIIry amalities llld ficililiea opented pet o( or eaociated wilb,
tbe lodging facility 10 lema as auch IIMIIitim IIIII fllcilities are QJstomay for other p!opcrtiea of a
oucip8tlble size IIDd class owned by olbcr OWIIII8 Jmelated to 11mkcepen.
D. If Mr to qualifY u 111 "eligibJc indcpaldcm ccmbtor" by virtue of
iU to comply with (i) Sectioa. 2.04C(I) notwiths!M!dj"' Manapr asing ita good faith
COIDIDIIrcially laSO!IIble dforll or (ii) Sectioa 204C(2) due to a cbmge in the Jaw aotwitbltandiq
Manager using its good Wtb commerciaDy rall"l!nble eft'ortl, then, in each cue. Lclsoc shall have the
righll provided in Section I S.02D.
SedloD 3. Tena
3.01 Term. 1be initial tema of this Agiccaat (tbe "Initial Term") shall COIIIII1eiiCC on tile
Bfl'ectln: Date, 111d, llllleas IIOOJICIC lmJrin""" 11 provfdod in lhla Agi'eemCDt, lball cooaiuue for a period
eadiDa on tbe tenth mmivenuy of tbo Manlpment COliiiiiiiiCCIDC Dlae. FoDowiq the
apinlioD of the Initial Tam (or the first l!xtensiM Tcnn ( defiDed below) 11 lpp)icable). 1hia
Agreement llball, unless IOOIICI' eenni!lated punaaut to the provisiODI of 1bil Aaieement or unlms
islhcu ill default under tbis Apemeut (which ddau1t lbal1 not bave Ileal apreaaly waived in
wriliDg by Lessee). collliDue in bee 111d be IIIIDmlliailly sta"'ed for a succeuiwlixty (60) IIIODib
tam (an "&tcaaion Term") ualc:a Manap provides wtillw notice of termination to Loacc at ICIIIIt
llinety (90) da:ys prior to the end of the thai current tam. Both tile lllitia1 Tean and any Exten8ion T11r111
may collectively be 1efcoed to bam the '"l'enn," provided thllt tho Term aba11 end upon TCI'I'IIination
notwitbltandins 111ything to Cbe CODinry lid f'ordl in tbia or implied by such defined tam.
3.0l arty Tenalllltloa b,r I ec lor Canv.
A. If, as of the end of 111y Fiscal Year during the Term, Manager axcceds tbe
qgregate expausea budgeted fiJr the Hotel u set forth in the Annllll Opcmtiag Projection for such
Fiscll Year by an IIDOUIII greatc 1baa. or equal to 5%, lbaJ tbst; sbal1 be an "'!xpcnnc Test Failun:"
UDder tbia ApcmCIIt. Tho exi&lcooe of 111 Pxpeue Test Failur. for rmy F*al Yeu sball be dc:tamined
by Leaee on the buis of the ammal itiJIOIII furnished piiiBUIIIt to Sec:!ions 9.03B aad 12.02, and lhiD be
subject to cmfil'lll!ltjoo pDI'IIIIIIt to such .non.. A1Jy vpdatiags or to the Amwal Opcntiag
Projection pmiUIIt to SectiOD 12.05 aball be diaregarcled Cor pwpcsca of lhla Socticm 3.02A IDd tbe
exiltalce of an Elqlal8e Tat Failure lball be deccrmi.ued IOlely on 1bc buil or 1bo Amlull Opera1iDs
Plojection origillllly detcnnlned for a Pilcal Year determined pumllllt to Sec:ti011 12.04 (IIIII with
Ie&pecl thereto Section 19.13 to the extllat applicable).
B. as of the aad of 111y Fiscal Year duriDg the Tenn, (i) the RevPar Yield Index or
the Hocel siiiil be more thin fifleea (IS) perceasap poillll (the "Deccf:ae Percentapj below 132.2%
(i.e., the Hotel' a Revhr Yield IDda u or the Efli:c:tivc De of this Apccalart) (the "&Par Index
Bmlbae") IIICI ('u) tbe RcvPar Yield lade lball be below ninety-five penll!llt (95%), IIICh combined
clccline shallllOIIItilute a "Market Decline'' UDder lhia A&teemenl benin, "bYPar Yield lndt:x"
wbm UICd witb mpect to the Hotl:l, lball mean the paceullge IIIDOWit ol>lil*id by dividil!g the RevPar
oftbe Hotel by tbc RevPar of the Cooqditiw Set, with the term "RcvP_., baYin& the IDCIIIiDg aribed
to it in lbe Smilll Tmvel
16
Report, Stir Report, prod!,...., by Smilb Tmvel Research. .Lessee and Mmaser aball wcr1c in
good faith to ddenniDc my ICiditious 8lld deledolls to the Hotel's Coolpetitivc Set, IJld any resulting
rea ring of the ltcvPar IDdex BIBCiinc 111 oecesury to reflect any IIIICh c:bloged circwnatancc:s, on or
before J>ecember IS of each Fiscal Year, wi1h such cblaJIC& 1D be applicable to lbe followiDg Piacal
Year. Ill the eveot Lcl&lca 11111 Mmlpr cannot awee 111 tbc Hotel's Competitive Set or 1bo Rcvhr ID.dcx
Bucline obanges by December IS of aay PiiiCII Year, such IIDipOd items ablll be dctemrined by
. Smith Ttavel Relealeh, or, if it re1bsa or ia unable to do so, by arbitration pursuant to S:ticm 19.13.
Tbe llia of naniD& the Hotel' a CompHitive Set or RcvPar Index BascliDe diaD be borne equally by
the putiea. The o:illfalcC of 1 Mlrbt: Decline aball be delermined on tbe basis of tbc Star Report which
c:ontaiDs a full clleudar year cllcull!ioa of lbe Rev Par Yield IDdo: of the Hotel. If die Star Report is DO)
longer publisbod or clocll not coallin llllf&ient iDfixmllioD for tbc of a Market Decline,
the ecd!!fea.ce of a Mllbt lball be m.te.d dctenDined asiDg the methodology employed by tbe
Star ltCIJOrl, from illfonnatim on tho RavP Yield Index oflhe Hotel C('llgjned in any otber publicalioa
reasanably seJectm by Lcuee and mcogaizcd by 1lle botol iDclomy u beiDg an 1utbori1ativc soun:e of
8IICh informati.oD, or if no such publication exia!s, fiom an ID8lysil of tbe RevPar Yield mde:lt of tbe
Hocel CODducled at tbc joint expenJC of lbe pal1ie:a by a nationally tocognizrd accoUDtiDg finD or otbcr
mutullly agreeable adity wilh a bospihlity cliviai011 of whicb DOilher Leaaee nor IDY affiliate of Lessee,
nor Manqer :oar any affiliate of MIIIIIF, Ia a significnt clieat. Lcaaee's risbt to tenniDate this
UDder Section 3.020 u a result of 1 Mmbl Decline lball be subjeet ID Manager's rigbt to
Clift: lbe Market Declioc with respect to the relC'YIIIt Fi.Jcal Year, by providing to Lessee, during tbe
Notice Paiod (u defilled iD Sc:ttioiJ 3.02D), a rebale of Manqcment Fees previously paid or if sud! a
rcbelc MrC insuflici.att by providillg to Lc- (with documealation I"CUOIIIbly acceptable to Lsaee)
credia apiDit filture MaDapent Fees otherwise um owiDg to Manaaer heRioader, such rebate and any
such crodit to be equal in tbc lggreple to lbo difl'ermc:e betwcal (a) Lassee'a Priority tbat would me
been paid if the GJOu Revenues for auc:h Filcal Year equaled the IDiouat necescy 10 cause the RevP
Yield Index for lhD P"IIC81 Year to be ninety-lin penmt (95%). ICSI (b) l..cuec'a Priority paid for such
FIICIII Year; provided, however, any such credit providod to Lcsacc by MIDap pursuaot to the
foregoing abiU be eppliod and actually 111ed u an oflict 1piuat Maaaaemcnt Fees or otber llllOUDis
owed to Mlmpr bmuDcler within two (2) years of 1hc termination ri&bt pllllluant to Section 3.020
acauina hemmder, 8lld in die cvont SIICh credit is not ipplied and ICtllllly used within sucb two (2)
year period, d1al t:.eas. ahl1l have die rigbt to i111111cdiately tlllrmial1e Ibis Agreement. Lessee sball haw
110 obliptioll to repay my IIDOIIIIt or credillld by Manqer to cure a MIJtct Decline. Manager
may only cure 1 Marbt DccliDe (i) if it c:um 1 Profit Declillll in the umc Fiseal Year pumllllt 111
Section 3.02C md (ri) 0111CCGlmt of two (2) riiCIII Y em cbing the IDitial Term, IDd, if applicable, cme
(I) Fiscal Year during 111y Ex!cnsion Tenn.
C. If, with te:spec:c ID any Fileal Yeu dariDg the Tcnn, lhe ralio of Opcncioa Profit
to Gtoaa RCYC110C1 (lhc "GGP Perceategc'') is fivo (S) perclldap poiala less tb1D tbc ntio of Opendag
Profit 1D GJOu Rt:vellues IICtllllly lcbi8ved in tbe prior Fiscal Year ("PriorY ear GOP such
llball conatimlc a "Profit DecliDe" under this The uiltmce of 1 Profit Decline sball be
delcrmiaed 011 the basis of the Ammll OperaliDg Sllltemcnt JUbmired by MIDipr to Lessee pur111111t to
Secti011 12.021Dd sball be mbject to COIIfirmltion by Lcaee pu11111Dt to tbc terms thereof. Lessee's
rf&bt to tamiDite this AFement Ullder Sectioa 3.02D a rault of a Profit Decline abal.l be subjCIOt to
Manaser' riJbt to cure the Profit Deoline with respect to tbc reJmmt Fiscal Year, by providing ID
Lessee, dariDa tbe Notice Period (u defined in Section3.02D), a rcbam ofMallagemeot Fees previoudy
paid or if llldl a rebate were insufficicDt by providiDJ to Lcaaee (wilh documclltation rea!ON!hly
acceplable to Lessee) I credit
17
egain!lt future Ph"'&' mcm Pees otherwile next owing to Manapr hcrwDder, lludl reba1e and Ill)' such
czedit to be equal in the to fifty perceot (SO"AI) of the IDIOunt by which expenses would lave
had to be mdnwt in orda' to bave produced a GOP Percentaae five (S) percentage points less thaD the
prior 'JeiT OOP Perceotase; provided, however, any such aedit provided to Lessee by Manager punuant
to the forcgoiDa &ball be applied and ectually used as an ofl'set apinst Management Pees or Olber
IIDOIIIIIS owed to Maoaaer haeundcr withia two (2) yean of the tenninatioa rigbt JIIU8IIIIU to Section
3.020 eccruinJ hereunder, IDd in the event sucb credit is DOt applied and actually used within S11ch two
(2) year period, tbm:a Lessee sllall have the right to immediareJy tenninlle this Apemenl. Tbe Maaagcr
may only a Profit Decline (i) if it cures a Mutet Decline in the SliDe Fiteal Year punuant to
Section 3.028 and (ii) on account of two (2) Fiscal Years duringlbe JJiitial Tam, and, if applicable. ooe
(1) Fiscal You during any Extc:naion Term.
D. If during any two (2) consecutive Fiscal Years any two (or more ) of the
following occur: (1) an Expense Test failure. (2) a Market Decline or (3) a Profit Decline, and if
MIDIFdocs not elect to avoid termination by cure tbcnofpursuant to the foregoing aubsecli0111 of this
Soctioa 3.02, to the extent IIFPiicable, chen Leasoe sball have the rigbr, at i!s sole option. to terminele tbis
upon thirty (30) days' notice (the "Notice Period") to Mlnlgec, in which event Manager
sball immediately poaHSBion of the Hotel to Lessee, and, if Manager &ils to so suneuder,
Lessee sllall have the rigbt, without notice, to enter upon IIICillke posscsaioa of the Hotel111d to expel
or remove Manager and its effects without being liable for prosecution or my claim for damages
thcfel"ore. Mlmger shaD, and heRby agn:os, to indcnmif)' Lessee for the total of (1) in the ova1t 1M!
Manager does not prompdy IIWTI!Dder possession of the Hotel, the reuonlhle costa of recoveriDg
poaession of the Hotel and all otber loaes, liabilities IDd reasonable CIJIIIOD!Iel iDcurml by Leasee in
conaoction with Muager's failure to Sllll'eJider; (2) the unpaid Available Cash Plow due to Lessee as of
the date of tenaiiiiiMm, plus intaest at the Overdue Rate accruing after the due dare; and (3) all other
suma of money !ben owed by M111ager to Leslee hereunder. Lessee's opdon to terminate this AgRement
Wider this &ccion 3.02D aball bo exercised by serving writteD notice thereof on MIIJI8Fl' within ninety
(90) days after the later of (A) the receipt by Lessee of the Annual OperatinJI Statement for atJda second
(2"") ccmsec:utM Fiscal Y oar and {B) with respect to the Marbt Decline. the date of publication of
information regardiDg the RevPar l':ndex of the hotels within tbe Competitive Sr.t, if applicable. Lessee's
failure to exercise its right to terminato this Agleement pnrsnnt to this Section 3.02 with respect to a
specific period of two (2) c:oDSeCutiYC Fiac;al Yean aball not be deeroed 111 estoppel or waiver of
Leaee's right to twminate lhia Asreemcnt as to any other specific period of two (2) consecutive Piscal
Years to wbicb this Section 3.02 may apply.
E. Notwithstanding anything to the contrary contained bereia, Lessee's rigbt to
termilllle thia Agtcc:mcat purs111Dt to Section 3.020 aball be eliminmcl with N&peet to a perticulw
Fiscal You to tbe extent tbat the tenni!llltion right i1 attributable to the following "Uaavoidable
Occurrences:" (i) a Forco Majeure Bvcnt; proviclcd tbll with respect to Section 3.02B a Force Majeure
Event must materially and disproportionately impact tbe Hotel as compared to other hotels in the
Cocnpetitive Set. (ii) Major Clpitallmprovcmeul& which result in forty percent (40%) or more of the
Hocol rooms beiDg out of service for mon: tban one hundred twenty (120) days, (iii) taking by cmiaent
domain which by its nature materially and advenely llfrecta Operating Profit oftbo Hotel or (iv) failure
by Lessee to provide capital fbr any expenditures with 1 espect to Major Capital Improvements, after a
detemrinalion by arbitration under Section 19.13 tbat such capital is required to maintain the Hotel in
ea:ordance with the franchise AJJ.y dilp.ltes CODCellling tbc applicability of this Section
3.02E sball be re10lved purauant to the arbitration procedarc described in Section 19.13, and tbo time
18
period govemi1J8 any Leaee tcr'lllbwioa risJ!t or Mauser care ript &ball be exfelldecl for a
period of lime (ool exceediug 180 days) following such resollnion.
F. If Jefliey H. Fisbcr oeaes, for any re111011, to bave a controlliDg i.ola"at in
Manager, tbe perl"OIIDanc;e .standuds lllld mcaauring periods act forth in Soctions 3.028 and 3.02C. shall
be revised IS follows: Mmap'a right to cure a Muket Decliae aad a Profit Decline with respect to the
re1C9111t Fisc:al Year shall not iDClude tbc riabt to provide Lessee a credit apinlt filtwe Maoaaemeat
Pees otherwise aext owing to Manager.
3.03 Acti8DI to be Taken TermiDaCieD. Upon 1 Tennioalion of this Agrccmcar, the
following shaJl apply and sball SUJVive any Termilllli011:
A. Except as otherwise provided in this Agreement, any and all apcnses with
respect co !be Hotel Irisin& IS a rault of such Tennination or as a result of tho ceasatioD of Hotel
operatioas (includiog CXpciiiCS lriling under this Section 3.03) lhall be far the sole ICClOIIIII of Leuoe
(mel sball DOl: be treated as a Deduction), and Lessee shall reimburse Manager immediately on receipt of
any invoice or invoifa from Mmager, for my expemes, including tbo11t arising from or in connection
with the sevq oftbe employment of Hotel per.M:diDd (with llh&&DCe be:mefits calmla!td according to
policies applicable gcncrally to a:aployces of Managed Hotels, nbject to Lessee's prim wrincn
approval) incvrml by Managa- in tbe course of dfccting the tamiuation of this Agn:anCIIl or- the
cessation of Hotel operatio. Notwilbmnding the forepiog. any arising u a result of a
lamination of this Aareemeot due to m Event of Default or a termination purslW!t to Section 3.02D by
Menaaer aball be for the sole IICOOuot of Manager.
B. M-gcr shall, wld:lin sixty (60) clays after Tcnnioaticm, pn:perc ll!ld deliver to
Lessee a finalacc:ounting ltatemem with respect to the Hotel, along with a sUrtemeot of any SUJill due
l'rom l.elslle to Manager puraumt b&nto, dated u of lbc dale of Temlinatioa. WithiD lbirty (30) days
after the IeCeipt by Lcs&ce of aud!. final accouDtiDg statemeat. or Lcasec's receipt of tbc fiiiiiiCial
&!alaDcnll of the Hotel for the list F"ISC:II Year, whicbevcr is later, the parties will make wbatevcr c:asb
adjUSIIIIcnlll are neceauy pllmllmt to sud1 fiDaJ etatemen.t. 10 the exteo1 agreed upo11. 1bc 1:01t of
preparing suc:h fiDal accounting sla'ement aball be a Deduction, onleas the Tenninlltioa OCCIII"I ua rCIIIIt
of m Evcat of Default by cilhcr party, in which c:ase the defanltinJ party shaD pay such COIL MaDager
ud Lessee acknowleclge dllt tbcrc may be certain adjulm!eots fOr which the uc:essary informalion wiU
not be available at the time of such final acc:omting, lll1d the parties agree 10 Jlldjuslsuc:h amounts 111d
make tbc c:asb adjUBbliiCiiiS wbc:n such information bcccmea available; provided, IJD11'C"Vor, that
(uoless ODgoin& disputes ofwbich each party IIOii.ce) aiiiiCCOIIIIts shall be clccmed
tiDal as of011e lmadred eighty(l80)days after such Terminatioa.
C. As of the date of lhe fiDa1 accounting ref&red to in subsection B aboft, Mauger
sbal1 release md tnDSfcr 10 Lessee any of Lessee's 1\mds which are be.ld or controlled by Mpnager with
reapect to tho Hou:l. DuriDg the period bc:tw cen lhc date of TamiDatioo and 1bo date of such fmal
accoanti.og. Manager aball pay (or- reserve against) all Deductions which accrued (but were noc paid)
prior to lbe date of Termillllion, using for ncb pmpose aoy Gross Revalues wbic:h acaued prior to the
dalr: of Termination. In aoy event, Leuee sbaU be cntided to such distributions ud ri&hta with respect to
cash u otherwise provided in lhi1 A&recment as if a Termination bad not occurred.
D. Manaaer shan usiga ad deliver to Lessee (or its desigoee) a11 boob and records
19
WIM i11g the Hotel (iac:lading, without limitation, boob lild records for all periods prior to lbo
E1fecciw Dale), subject to Muaqer's rlabt to Dllke copies d!rnof iD ecoordaoce with n:asonable
reconfa relr:DiiCIII policies. 111ch boob aocl m:ords to include, without Jimitatioo, !hose needed by Lessee
to prepue the finenciaJ il81tiiiQIIS, in aCCOJdmce with lbe Unifclnn System of Acronnta, for the Hotel
for the year in wbich the Termination occurs aad for 111y subsequent year. Sucb boob ml records aball
not include: (i) employee ptnOilllCllilcs or (ii) aay Intdlcc:tual Pioperty.
E. Manager aballassip and lrlnsfer to Lessee (or its desipee):
(i) any ill1ercst wbic:h Manager may have or claim in and to .n of Lessee's
boob IDd reoords, plllls and specifications, III'Chiteclural or engiDccring drawings, c;onlnctl, l08Ms and
othea documems respedias lhe Hotel that me DOt Intellectual Paoperty or employee penoanel files and
are iD the custody IDd con1r01 of Manager, iDcluding those provided for in Sectioo 12.01;
(ii) all of Manager's rigbl, title and inlaclit in and to all liquor, restaurant and
any other licenses aod permits, if any, held by M1111ager in CODIIectioD with the operatioa of 1he Hotel;
provided, however, tbat 10 lhe ex:tent Mlliaaec his ell:pCI'Icled a marerial amollllt of its own fiuJcls (aacl not
funds fiom OrOis Reveawea or Lessee), 111d for wbicb it lias not been reimbursed, for tbe proc:wement
andlor maintenaoce of a liquor lic:euse, iD each case after tbe Efl"ective Date and duri11g the Term, thai
paomptly following 1he effective asai8JiilllGll and transt'er by Manager or any such liquoa IK:cule
Jliii1UIIIII to the provisi0111 of this Section 3.03B(ii), Lessee shall reimburse Manqer for such raaonable,
documented unreimbuned funds so expended; and
(iii) any iDterest wbich Manapr may have or claim in and to the Hotel
ACCOWlts.
F. shall assign to Lessee{ ita designee) its interest (if any) iD, and Lessee
shall conflnn in writing its c:ontiDuing aponsibility for all obliptions and liabilities aelatiq to, aay and
aU cootmcts (including. if, but only to 1be extent, required by law, collective bargaining apccmeotl and
pc:ilsioo planl, leases, lil:enlcs or c0111;ession agreaoatts and mam'"'ru:e and aervicc c0111rae:ts) ill
effect with reapect to 1be Hotel u of the elite of tennin.Uon of this Aaz-nent; provided that,
notwithstandin& the foregoing. cbe obliptioos IDd liabilities usum.ed by Lessee aball, to the emot
peamittcd by law, exclude any collective barpilliDs ap:anent IDd emplo)'IDeat and
if aad only if such agreem.cata aad 111'11\gemeniS m cmaed iDto without
Leaee"a prior writa:n c:onsent. unless Lessee In Its IIOle aad absolute discretion eledl to .. wuc suc:b
obUptions and apeaueuts by subscqueut document; provided fUrther that Muser &ball ooly
ISlip such u intcre&t if (i) such assignment il pennissi'ble, (ii) Lessee ( its desipee) epees to
sume rapouibility for future obliptions and Habilities thereunder (but only 10 the exteot such future
obllptioos aad lilbililiea relate to fUture perfo1111811CC and benefits to Lessee accauing thereuoder) and
(iii) Lessee (or its desipee) ex:ceutes sueh documeDIB IS may be JeiSOIIIbly required by M1111ger in
cooncc;tion with such usignment. AddirionaDy, Mlap llhall iodemnify, defeod and hold Lessee (or its
designee) hamtle&l fio!D IDd against any costa, clliml, expenses or loss iacuned u a result of the
traosfer by Manager of peiSOJIDd from the Hotel to notber botel property.
G. All reaezvatioos, propoaed reacmatiODS ud arrangements for rooms. caterinS.
meetinp or odter Hotel facilities lllld services shall be the pioperty of Lessee Jlldlor Owner foDowing
die ctrectivc date of die TcnniiUition, and MaDIF shall use all neceiiBil)' eflinta to anaimain and
20
promote tbe business of the Hotel lhrough lhe eft'ectiw date of the Tenninltion, incJudin& without
limi1ation, by the mainteaancc of licenses IDd permits, IDd rolicitina rescrwtiooa and other business for
the Hotel following TermiDation and in IICXXIIdiDce wid! the operating policies of the
Hotel.
B. Manager shall continue to operate the Hotel in JOOd faith in accordiDce with the
terms of this AgreaDCDt Wdil tbc cfl'octive date: of suc:b Termination. shall peacefiilly vacate
IIIII surrender the Hotel to Leaee or Owner (or to Lessee's or Owner's dcsipcc) on the effective date of
such tcrmilllltion. Mmllpr sball coopc:iatc with the new operator of the Hotel as to cft'ect a smooth
ll'IIIISition, includiDg, withoiJIJimitatiOD, by respoading to aU RUODab)C IDformation I'OqUCSIS ftom such
operator (at DO expenee to Manager), iJu:Juding. wilbout limitation, "data clumpa" of infomlation into tho
new operator's property managemcat
L To the atent !bat Manaser's books 111d rcc:ords are DOt required to be tnnsferRd
to Lessee by lilY other provision of Ibis Apwuent upon Termination bcmof or the cx.piratiOD of any
Tmn bereunder, Manager shall make ita boob IIIII J:eaxdl with respect to Ill mataen involving tbe
Hotel durinl the Term and 1hrougb Termination bmof (inrhvling work papers in the possession of its
accouotanes) available for inspection by Lessee, or by its iepiaeJUitives, at Ill rearmeble times during
nonnal business hours, for a seven (7) year period afta' the Tenninltion of this or the
expiration of any Term hemmdel'. In the evan that Mmagcr desires to destroy sucb boob md R:COI'III
prior to tho en4 of aucll seven (7) year period, Manager shill pve "'-llinety (90) days prior writtllll
notice of sudt intent to deatroy and shall transfer to Lessee my such boob and records in
writina by Lessee.
J. Various olbcr actions sblll be tlkeu as may be described elsewhere in thil
Agreement.
K. If an atlmlpt at traaafcr or usignmem of (i) a liquor license or (ii) any matc:rill
claim, contract, lease, licalse, peonit. commitment, sales order or purcbaae order, or (iii) lilY benefit
ariaing tlu:rcunder or n:sulting fi:om 1117 of tho forcgoillg (each of !be itema ill (i), (ii) or (iii) being a
"Commitmllltj, witbout the coosent Rqllircd or D ry for 111eb triDsfer or assignment, would
constitute a breach tb=of or ia any way advcrxly lfl'ect tbe rigtds of Lesaeo with therefD, tbeJt
at tbe option of. Lessee (I) lilY other provision oflhis .Apemmt to the conlrlry aotwithstandiog, thil
Apment sball not COIIItitutc 111. agreement to traasfer or sign a Commitment, or a traasfer or
assipncnt thereof or (2) Manapr sball use its bat etrona to oblain lhc COIISCIIl to die assignma1t or
transfa- therco If Maaeger is IDIIble to obcain the C008tlllt to tbe usianmem or transfer of a
Commitment, then Mmager shall use it best eft'oi1S to obtain (and to tab all aeces&IIJY action to assiat
Lalcc in oblaiDin&) a repllcement Commitlllall acceptlble to Lessee in its sole discretion. If (A) my
required coiiiCIII to the tnafer or assignment to Leuec of any Commitment ia not obJjDed, (B) a
!eplaccment of a Commitment is DOt obtaiDed, (C) an attanptl!d transfer or assignment would be
ineft'ectivc or would adversely affect tbe riglds of Lessee thaeuDder 10 tbat Laaee w011ld not J:ecei.vc
subataatillly all of such risJ!b or (D) a Commitmeut is aaigaed to Lcuce punuam to the provisi0111
hereof. ad the adler party thereto (or tbe issuing party ia the cue of a lli:eDse) thereafter raises
objcctioas to the assignmcDt and muses to allow Lessee to palbJm the Commitment on the terms
thereill provided, or tlueateDa to terminate the Commitmeat or aue for damages, then Lessee ud
Manager (at Lessee's cx.pcnsc) sball coopesllle in any arrangancat Lessee may reasonably request to
providt for Lcssoc the benefib under IUd1 CommitmaJt. Coopcratioo mil)' include, without limitatioa,
21
md at Laacc's rcquelt IbiD include, m mrugcmcat, to be Cilleicd into bctwcen Lcacc IIIII Mlmagcr,
punUIIt to which Manager ahall IIOIIIhlally perfoma tbe Conunitmeat with fUD mel complete
indemnification by Leaee, ud Lessoe sbaD !$in the ec:oaomie bendi.t1 or detriments of tho
Commitmeat. Ccopetadon sball also i.Dclude, wilb 1eapec:t to mattezs covered by tbis Section 3.03K,
Maaap's collection of any monies owed with respect to a Commitmeot, all for1hc benefit of Lessee.
In lhis COIIDec:tion, Manlger shall, witbaut fUJthcr considerltioo thelefor, pay 111d remit to
Lessee promptly all mODia, rigbls and oth considcratious received in ieSJ*t of such Commitmont If
and wi!Cii my such consent shall be obbrined or unusi3ned Commiemmts shall otherwise become
lllipble or able to be novated, Manager sbal1 promptly assign aDd oovate all rights and obliptiODB
thereunder to Lesaee without tho paymeot of further CODSidmtioo aod without the payment
of any flar1hclr oonaidention lhcrefor, ... ume such rightl. Nothing contained in thia Section 3.03K sbaD
limit the liability, if my, of Manager p111111111t to this Aaroemeot. It ia understood and agreed that Lessee
sball not be required to enter into any arrangemcniS pursuant to this Section 3.03K IJ1d any
arrangemeo.IB that may be so into sbal1 be acc:epllble to Lessee in its sole di&aetion, provided
that such mangemcnt is otherwise consisteot with the tDDI or tbia Scclion l.OlK, including, w:ltboat
Jimitldion, fall llld complete indomnification of M-aec by Les- ill coJIIICCtion with the opcqlion of
such arrangement
Sectloa 4. Termillatln upoa Sale or Demolition
4.01 Sale or DelnoUtloD of die Hotel
A. Lessee may terminate tbis Aareemcnt upon any Sale of the Hole! 01 demolition of
the Hot=! (other tbaD a demolition cunteaoplatcd by Section 14 hereof in which cue such aection shall
apply by its own tenns and conditiooa), provided that Lesseo provides at least sixty (60) days pri01
wrltteo notice thereof to Manager, ll!d further provided tbar Lessee pays to Maoeger a tennination fee
(an "Early Tenniaatioo Feej, subject to the Pooling md Cumulation Agreement, equal to the Fair
Market Value oflhe Agreemeot IS determiJied ill ecconlanec with Sc:dion 4.010.
Notwithstanding anytbillg to the contrary contained ill tbia Agreemmt, it is expressly undentood
Uld asr-1 that in the Lessee does not provide fimdiog as coocanpllred by this Aareement, or
does not comply with its obHptions bemmder wbich n:quire material f'undina, with RSpCCt to the
Hotel, ia c:omection with a deteoninltica by Lessee or the board of tnastees of Imkrcpets that such
fundiug or complim:e ia DOt in the best interests of Lessee or lnn'!N'tXIIS (regudless or wben sud1
dctamination is maclo), thai Lcasee.11 lbe ofcbe board oftrustcc:s ofiDDlceepea, may c:hoosc
to terminate this Agreomeat u if a "Sale of tbe Hoter' occumd pursuant to this Soction 4.01A and
Manaacr shall bavc no other rights or remedies beieunder with .espeet thereto, and no Dafault or Event
ofDofauh UDder lhis AjVICillCiit sball occur. or be deemed to occur, in coooocti011 with, related to, or IS
a result of such tenniDalion or the failure to provide such fUnding or comply wilh such obligatio111.
B. 'NotwitbsiBDdillg the foregrio& Lcaee IDd Manager agree tbat tho Eldy
Tennination Fee shall be SO, aod dw tbc:rc shill be no other delmminltioo or !!plnisal of lbo Early
Tminatioa Fee as contanplatod by Section 4.01A, if: (1) U.CC wigns lhis Agreemeot to an assignee
in conaoctioa wilh a Sale of the Hceel (such assigameot and assignee to be in ac:c:onlance with
16.02); (2) wilhin twohe ( 12) months following the ten'ninatfoa of this Agreemalt. an asaigoee and
Manap enter into, and MBMger "'mmeoccs opcntioas under, a replacement avmagr:mcot cODinlct fOr
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the Hold ou subtuntlllly llimilar tmnaand COJiditi0111 as tbD Agreemat aacl with economic benefiCB co
M-IS' which are DO las than thole of this Ageemcnc, bldng into IICCOWit any iDtr:rim period (a "New
Manapment Contrlet"); or (3) as of the elfo:ctive date of lmnination of this Agreemem, Manapr bas
not acc;pted a WJittea offer fivm die usignee 10 enter into a New Mana&eman Contua:t on terms
similar or more filvorable 10 Manager tbaJI tbis Agreanent wilhill lhiJty (30) days of being offered lhe
IIIJD.t;
c. Manager sbaU cooperato widl Lessee, Owner and their Aftiliates iD connection
with a Sale of Hotel or a Change of Cootml Event oflonkccpers. 1114 shall otherwise act in good faith ill
cormection wid! any sacb tnmaaction, coni"ent wilh tbe illccrests ofT essoe and Owner.
D. AI used in Ibis Scctiao 4.01, "Fair Market Value" of the
contract with respect to which a fair l'llll'ket value determination is beiDg made shall mean the fair
market value of such contract, illcluding. witbollt timiCatioD, taltiDg into account the management fees
payable under such Dllllllgc:ruent contnct (but excludi113 tbc Accountillg ServU:cl Fee ID delmniniq ID
Early Termi111dion Feo), tbe costs of Manager assocl.ted with such contract IDCI the perfo1111111c:c of its
duties UDder such contract, mel giving effect 10 the Colllract Term (as defined berc:in). For purposes of
this Ap-oement, "Contract Term" shall mean with reapec1 10 this Agreement the period of time
remailling in the Initial Term (if the Initial Tenn. is then ill effect) or an Exreaaion Term (if an Ellteasion
Term is theD in effect). For purposes of my Additional M11111.gement Contrac:t (u defined in the Pooling
and Cumulatioo Agieeui'Mt), the "Contract Term" shall be dle initialtmm lbeRof, LeiiiCC and Manapr
aball aso reasonable. good filith efl'or1s to teiCh on lbe Fair Madcet Value. If Lessee ud
Mllllga' fail to J:esCb IJI'CCIIII'Ill on the Fair Muket Value within thirty (30) days of Leuee'a writteD
notice to Manager requesting the CODmltll(;eiiiCDt of ncaotiatioua as 10 dle Fair Market Value (a
"Valoatioll Notice"), dle dc:lmnination of the Flir Mukct Value sball be made by a rautually
satisfactory indepcDClent8CCOUIII:ing finn, Investment bulking finn, real estate couccm or other apprmsal
firm, of rccopizcd Dllional atallding, c:xperiellced in valllltkm of this typo (dlc "Appniser"). If Lessee
and Manager are unable to agree 11 to the selection of the Appraiser, eac:b shall aelect an appraiser at his
or ils own expense, and each appraiser ao seloctod sballaelect a third appraiser wbicb sball per10rm the
appraisl1 herein clescn'bed. The Appraiser shall employ such medloda of valuation 11 are CUJtomarily
applicable co valualion of botd 1111111PU1CDt agRCIIleiiiS, taking into acco1111t all appropriate factors. The
Appnliler sball issue a writlen opini.oD collfuming iiB appraisal of the Fair Market Value as soon as
praclicable (but in no eveotlacer than sixty (60) days) after 1be Valuation Notice mel receipt of all the
appropriate lofonnalion tiom lbe parties as provided below. The parties sbal.1 provide auch information
as is roa80111bly requeated by the Appzaiaer. The detamination of tbe Fair Market Value by the
Apprai&a" so selected shall be final 1114 biading upon Lessee IIDd Manager, and their respective
soccesaors IDCI aaaigus. Lessee ud Manageraball elldl pay one-balf(l/2) oftbc fees mel expenses ofthe
Appralaer.
SectlGD 5. ne Hotel
5.01 Owucnbfp. Durins tbc lmm of tbis Agreement, Lessee shall calce such as are
coiiiiMI'Cially reasonable, without unduo coat or expense to Leuce or OwDer, in an effort to ensure tbat
Owner bas good llld IIIIJl:otlble tide 10 dtc land doscdbed in Edllblt A and all irnproveillenll lbc:recr.,
free and clear of all liens and enc:umb!IIICCS other than: (a) liens, and other 1hal
do not macerially and aclvencly affect the operation of tbe Hotel by Manager and do oot Rlqllire the
payment of my money by Manager; (b) Monpges wbich ue given to aeeure any loans; (c) liODS for
23
taxes, ._smenll, liMes, orher public chirp ud Taxes wbich - not yet due or are beiDs CODtelted
iD good &lilb; (d) amendment! or modificatioas to tbe ground loase, if any, catisting11 of lhe Effective
Date to which MN18ger COnseniS, Wbicb. COIISCIIl shall DOl be IIIIRISODably witbheld; (c) liens, CISCIMIIII
IDd other encmabnloces arising from Manager's acts or omisaioas in conlrlventioo of ita obligations
under this Agm:mcnt; (f) the Paceulligc LAue and the tGI1II5 chaeof, (g) undelamlncd or incboale liCI'II
or c:blrgus fbr labor or materials supplied to the Hotel in COIIIIOction with che construction Ill' cummt
operation which bave DOt at the time beeo filed or JeCOidcd pursuant to law; (b) easemaxa.
resaiccioDs on ute, zoning laws and Oldinances, rights of way aod otber encumbrances lllld minor
il'fCIUIIrities in title, which do not individually or in lbe aggregate impair lbe 111e of the Hotel lor' bote I
purposes; and {i) those mattas set forth OD Sdledale 5.01 atllchcd hereto lllld incorporated herein by
Ibis rd'c:rcncc.
SAil SahordiDatioa .r AgreeDMat to Perceatace Leue. Manager acla!owlcdges and lgRICS
that this Agreement is subject and subordinate to 1he Percentage Lease ll1d that Manager, on bebalf of
Lessee aiiCl at Lessc:c's sole mtpensc (exc:epc 11 olbcrwise provided herem) shall usc its best c1lxts to
fulfill Loslce' duties lind oblipti011111 ten1nt under tbe Lease; provided, however, thet the
.-yments to be made to Manager haamder are to be made in accordance wich Sdledule 9.13F. Lessee
sball not enter into any amend menta or modific:atioos of tbe Perceotage Lease, without tlae plior written
approval of Manager; provided that 5llcb. approval of MIIIIF ahall not be unreasonably witbbeld, and
that 110 such approvallball be requin:d if (a) tbe amendmenl or modificalion (i) would not blve a
llllllaial advvac efl'cct on the rights lllldlor obligations of Menapr, and (ii) would not reduce in any
matmal way the 1111011nt of the fees to be plid to Manager under this Agreement; or (b) tbe 11111endment
or modification is (i) made soldy to ensure that rents under the Percentage Lease contiJiue to q111lify as
''reats fulm teal propeny'' within 1hc meaning of Section 8S6(d) of the IDtemal RCVCDUe Code of 1986,
as amended (the "Code''), and, 1o tho exteat applicable, 1he Treasury ltegulations promulgated Ulldel' tbe
Code, each as llliiCI1ded fiom time to time; or (il) is tequin:d in order to othenviae conform to the Code
and such l'rcaslll)' RegulatiODJ. Tbia Section S.02 aball not limit action liken under the Pezcenlage
Lease witb respect to die setting oftbc rent fommJa fivm and after the expiration oftbe cumnt limn of
the Pe:roeatage Leaso 11 in effccr 011 the dale hereof.
5,03 Coopen.dDII wfdl respect to "nandap. Operator ackoowlcdp that Lessee or Owner
baa fiDIDccd aadlor may in lbe future fiND:C 1hoir inlawts in tbe HOle!, includins CODittUCtioa,
fumishing and equipmeat of the Hotel tbrough equity and/or debt financing. Manager
sball cooperate in all rcspccl8 wid! Lessee or Owner, at the request of Lessee or Owner, in Lessee's or
Owner's efforts to obtain, ameod, reaew or otherwise retain construction and periiWICI1t financiDg for
tbe Hotel. In eoDDCCtloo. with eny finaDcing obtained after tbe Effective Date wilh 1espect 10 lhc Hotel,
Lessee shall request a JIOD-diaturblulec aper:ment for the benefit of Manager, in form and substance
reaSIX'bJy atisfactory to ManiS"' (provided Collowing sw:h request Lessee ahall not be mquired to cake
lilY fiDtba' aetion witb 1espect thereto and provided further tbat the &ilure to obllin a IIOll-disturbanco
provision or '8"='1CIIt for the benefit of Manager dial I have no effect on M11118p's obliptioos to en!B'
into any subordinaeion agreaneat). Lcsseo shall bave the right to eJICIImber all of the assets tblt
comprise the Hotel, or BDY part lhareof, Ill' any interest lhc:mn, includiag the real estate upon which the
Hotd is located, the Hotd building and improvemeats thereto, and all FPAB and Fixed Asset Supplies
placed in or used iD connection wilh tbe operation of the Hotel II contemplated in any Mortp&l: that is
entered into by Owner or Lessee, IIICI to assign to BDY Mortgagee as coUau:ral aecurity for any loaD
sec:wed by the MOI'tpge, all of OWner's or LesHe's right, titlo tlll.d interest in and to this Agreement.
24
5.14 C.Opendoa wltb MDI18-aee- MlullfF apes to with any Mortpgee wbo
may IIIICIIJIIbcr !be Hotel aad related assets, IUCh eoopmtion to include, but DOt be lbnitcd to,
Manager's agtcemcnt to lnlulfer ill iDterest in Ibis Agreement to a special purpoee eotity in a form and
Slibslabte reasonably appnm:d by Mortpaee or aay rating qc:ucy wbicb such mort!IIIF 101111
or related securities. Manager and Lessee each agree to bear one-balf of the costs and CXJICIIICS iaalm:d
by Manqer iD complying wid! tho foregoiq. Further, Manager hereby CODieiiU to my n:qumed
modificatiou or arnendmenll to Ibis wbicb may be required by a propostd Mortgagee as a
condition to makiq a mortpge 1om to Lessee or Owner on their interest in the Hotel, so lona 11 IIUCh
modification or ameudmem docs not dimiDish the f'oimula for fees or reimbursements becoming due to
Maaager bereuoder and does DOt olhwisc materially and adversely affect Manager's rigbts IIIII
be:Defits UDder this Apmellt
5.o5 SullonlblaUoa of Apeemeat to MortpgL Subject to lhe ttmls of any SllbordiDation
agrcemeat. Mma&cr acknowledges ud agrees 1bat Ibis Agreement is subject and subordinate in all
rapects to a Mortpge wbic:h may encumber the Hotm and parts thereof and IDtaests therein, from time
to time, and that Mwger, on bdlalf of Le8lee and at Lessee' I tole expense, shall use its best cff'ons to
fialfill Lasec's dillies and obliptious under tbe Mortgage; provided, boweva-, thlt, lifter paymeot of all
debt ICrYioe and reterYea under any mortgatp: and IUhject 10 Section S.OSC below, d!e payments to be
made to Manager hereunder are to be made in accordance with Sclledule 9.03F. I essee may RlqUelt, but
shall DOt be obligated to use commercially reasonable efforts to obtain, from each Mortgagee, a
lllbcmlinatiila agreemeot wbieb includes a nondisturbence covCDIIII for the beoefil of Manager,
provided, however, tho failwe 10 obtain a noodiiCurbancc c:oveDIIIII: Cor bouofit of Mmwgcr shall
havo no eB'oet on Manapr'a obliptioos to enter into aucb subordination asxeement. Manager agrees to
cooperate with Lessee wid! respect to Lcuee's anclfor Owoer'& efforts to finance or refiuanc:e !be Hotel
and ahall DOt withhold ill cooperation as a resu.lt of being required to subordinate ita iDiaesls to and
attorn to the Mortgqec and not receiving a ncmdiltlubance c:oveoant from IIUCh Monp&ee- Further,
Mlllllp" aclcnowledps and qroas it sball promptly execute and deliver to Owner, Lessee md any
Mortpgec subontiDation agrcem.eot wbich indwlos the following t1:nas and auch other terms as may
be n:quired by the Mortgagee:
A. This Agreemmt and the extaiSians, renewals, replac:aneata or modificaticma
thereto, and all right and intm:st of Manqer in tho Hob:l, shall be subject aod aubon:liMr: to IIICb
Mortpge;
B. Manager aball obHpted 10 each party coming into poSJOI&ion or title 10 die
Hotel at foreclosure or 11 a IUbaequent purclwer from the Mortpgee or ita desipee (Cic:b a
'"SubRquent Owner") 10 perfonn aU of tbe ttmls and c:onditions of tbi1 A&itCDICIII for die balance of the
Rl!llining tam with tho same force and dfoc:t if auc:h Sublequeot OwDer WCR Lessee; and
C. Each Mortppc ("m the event of an uncured delilult under the applicabiD
Mortgaae) and Subsequeut Owner sbaU ba\le tile right 10 terminale this Agreemeot without pellllty, cost
or expense.
Secdoa 6. Pollellfoa ud Ute of the HoCel
6.01 ha 1 tloa IIUl Ute. Lessee that, so long as an Evatt of Default by Manager
has not occurred and lasec has not cxc:teiacd my rigbt arising 11 a result of such an Event ofDe&ult.
2S
indudiag the right to ll:lmiaa1l= dlis A8f""'"cnt, aad Lcsscc hll DOl otbcrwiK tamiaatocllhia Apcment
(IUIIIer any Sec:tion of INs Agreenwt),lllbjcd to the rial* of any Mortpgee pun1W1t to Section 5.0S,
Mlnager lhaD have the: right to quietly bold, cx:c:upy and enjoy tbc Hom! throughout die Tenn bcreof
flee ftcm hiDdriiiC:c or ejection by Lessee, by Owner or by any other party claimiDg UDder,lhrougb or by
right of Lessee or Owner, except as othenvisc: apec:ified in this Agreemart. Without l.imitiDJ the
generality of its adler obligations under this Apeement, without llmillliou, Sa:ticm 2.01,
MIDiger sball mmase aad open1e tho Homl in comp!iaace with all applicable laws, onli11111cea, ll!d
regulations.
Ul Ript te lupcct. Leuee and Owaor or tbeir agents shall have aceess to the Hole! at all
times for the purpose or prutecti.ag the SII1IC against fire or otber c:uua.lty, pmvcntion or
dlrnago to tbe Homl, inspection, Dllkiag repairs, &bowiDg the H01al to prospoctlve purclulsers, teDaldl or
Mortgagees, examining ll!ld rnalriaa extrlcts of the financial boob llld records of die Homl or for aay
other JIUIJIOie wbich lessee,. in its discretion, shall deem DeCeatary or advislblc (without owaial
disruptioo to the O)JCJatioo llld businc:ss of the Hotel, and at the Hofel'a expense, except u olhenviR
provided under tbia A&reaJ1ellt). Lessee ahall, and aball cause Owner to, provide at lead 24 houm'
notice to MJnepr prior to eurciJiDa their rights 1Didcr this Section 6.02, except in the evCDt of an
emerptcy.
6.03 TcleccnunllllatlaDII.euelaDd IJeellRI. Notwithstmding aay other provision ofthis
Agreement to the COIIIIM)', Lestee, without the CODICIIl of Manager, shaD have the ript to Ieese or
license portioaa of tho Homl for (and to Jetain all reveaue from) telecotiiiDIIIIicationt and ailnilarly
related facilities, or other uses, to the extent such leasea and licenses do not materially intcrfa"e with the
operations of the Hoccl, and Manager ahall ttlce aU actiCIIS to cooperate with Lessee aad any lessees or
licensees UDder this Section 6.03, including. wilhout limitlltion, rights of &e<;CSs.
Holel Empt.yea
7.01 IIIIPioyeel
A. MaDagcr shall hire, promoce, IUpCrvise, direct ad train all emplo,- It tbe
Hob:l, shall fix their tams of and shall establish and maintain policies relatiug to
employmart at the Hotel. Manager ahaU eosure that all mmilen of the executive staff of the Hom! aball
be propel ly qualified for their positiona, and lhat the direct compeusation payable to such penons aball
be compc:titift with the clir:ect compcnsation paid to lbe mcu.,ers of the esecutive staff of other
hotds of tbe same franchise brand, taking into a.ount the locatioo and size of tho Hotlll,
ud 10 that Manl8"' can best eDS1IIe compliance with the PrancbiiC Agt13e111ct1L Notwitbstanding
aa}'lhing cantaincd ia 1be foregoing co tbe contrlry, Lessee sblll have the right co approft the &election
and any of the individuals for the General Mlllllgel of lbe Hotel; provided 1hat Lessee shall
be deemed to haft IIJIIIOVfld the appointmmlt of any such individuals unless Lcsscc deliveD tiOCice of its
disapproval of such appoinanent within two (2) business after (a) Manapr's delivery to Lessee of
a written summary of auch individual's prot'euioDal cxporieDce and qualifiolllione, (b) Ill imwvicw
between Lessee aad IIUCb iDdividual at the Hotel or at another mumally IICCeplable location (it being
Bgleed that Lessee will forego its ript to my such individual if Lessee is unwilling or lllllble
tO have an IUthorized represetltatift participate m tho interVieW within two (2) business days following
Mmmgcr's notice to lcasee of Manager's desire to arrange such .. interview) IDd (c) Mar's
deUvery of 1 written suamwy of 1 backgowul cbeck, 8UIIIIDII"ies aad salary or WIF
26
rcquilancncs. Mlmpr shall be roquired ro maintain at all times a faD-time Oeneral Manager aad Olief'
lillgiaeu or other oquivalent Dllilltenllle:e polition (and all such odter peiiODIMIDIY be required by tho
Frmcbise AgnlllmCIIt, marlcet demaDds ancl aood practice) for tbe Manager repmcats that
Sdledule 7.01 lpCCifies tbe filllctioas and identity of eacb member of Manager's executive
s1a1f at the Hotel111d the COij)Olate paaoanel of Maaager who may render services to or with n:spect to
tbc llarel 8lld MlnaF c:ova111111 cbat it shall nor deviace 1i'om such funcUons llld the RISODible
perfvrmlllce thereof of executive staff wi1bout Leaaee's prior written approval, which
appronl sball not be unreasooably witbheld.
B. All employees sballlt all times be tho employees of Manapr and not of lessee
or Owner. All compensation of Hotel employees sball be paid by Manager, aad the amount or such
paymcoll to HO(Cl employees U.ll be reimburlod to MuuiJF by l..caoc by MallaJF'I withdrawal or
llldl1111011111l1 u Deductions each Accouuting Period. shall not have any or control
tespecting sucb eqlloyecs unless otberwile specified in this Agreement. M11111ge1 shaJ1 Clllblish
lpiKOPiiate payroll acc:olllds covering all audl of !be Hotel. Notwitbstancling any other
provilioD or thil ApmeDI to the c:oalrlry, no c:ollcctiw bargaining llfCCIDOIIIB will be signed by
M-aer without lmsec'a prior wriucn approval which may be provided or withheld in ill aole
diecmion (IUbject to the provisions of applicable law).
C. Manager and Lessee agee to cooperate with each odJer to allmlpt to avoid uy
disqulliJi&:alioD of employee INmefit piiDB of any o! than 10 tho atent .such pJans may be
aft'cc:ll:d by lbc provisions of thil Agrc:cmcnt or the aervices provided bcn:undor. However, nai1bcr
MaDar nor Leuee shall be RqUind eo change the tenns of any such plan 11 put of 5DCh coopen1ial.
Notwilllatanding lhe foregoing. in no CYeat sball Managa- initiate or adopt ay plaDs, propms or
bcaeftll for Hotel employees not odlcrwise in effect at Other Manapl Hotels uleas {i) roquired by
applicable collective barpining agmmcm or applicable laws, statutes, ordinmces or or'(il'}
neceuitated by local labor madtct provided that such plan. program or benefit docs 1101
RqUire a collective bargaining agreement 10 be enteiod into, is Dot a violalion of law llld does oot
teqUire tbe provision of such plan, prosram or beaefit It Other Managed Hotels.
D. All pa101111el at the Hotel sball be m:ruited and trained by Manager in
a 111111111er !:OIIIilltent with the Prancbiae Agreancut, and with Manager's praaices at other comparable
hotels mall8gccl and operated by .... ger lhall RUonlhly decide which, if any, ortbe Hotel's
employees or guesll sball reside at 1he Hl ud shill be permitted to provide gtatuitous or reduced
c:bqe accommoclatioll services, and ameuities to i1s employees and gucsta, subject to 8Yiilability and
iD acccmlance wilh lhe uaual pniCtices of the hotclancl ttavel industry.
E. Subjf to tho limitations on union conbacts otberwiJe c:ontlined in tbis
Agreement, Mneger qrces to respond to orpnjzarional efforts by Ullions ad iD ucgotiating and
implanetlliDg uion lpt'ut"'S. With R1pec1 to Manaaer's Manager wiD c:ontrol the terms
of ny uniou contract and will not be required to tab actio111 which will WlrCIBOIIIbly increase
Manqcr's liabilities p111111111t to the union CUIIDact. Upon termiDation of Ibis Ap:anetit, in the event
that Leasee or ita dcsigneo eJecta to hire Y employees of Maqer, Lessee (or its cleaigneo) williSIWJIC
Manager's obligations DDdcr the union contract with respect to any employees bired by .Leslec (or its
designee) atlhat time; provided, bowcYcr, it is ur.dccMUOd and agreed that Leaee or its deaignec shall
bave 110 obliptioa to hire any cmplo)'I:CS ofMaaa&a' upon the or expiration this Agreement.
Tl
7.02 Tenllnatioa. Leacc ldalowleclga thlt Manager or ill Aflitiale may bave ao oblipl:ion
under fedenl, dale, or loc:al law to give advmce DOiice to Hotel personnel of any ttmlinalion of thllir
employmeat, IDd tbat fiilurt 10 comply wilh any such notification obligation c:ould give rise to civil
liabilities. Therefore, notwithstanding anything 10 the coatrary contained in this A&Jeemcnt, (i) tbe date
of Tenniution of this Agreemeat sball be exteuded (adler tllao upon cuqriratioCL of 1be lllitial Term or
any &!eliSion Term), so t1w the dale of tenniDition after notice of tcnnillllion is giveo to or by
Mnr sball be on a dato which is not earlier lban ten (10) daya pl.u 1be munbor of clays, if any,
Mtnar is to give its amployees adwnce notification of tenninati.., of employment as
required by the WARN Act. or any similar federal or state staeute; (ii) Lessee shall indemnify, hold
harmless and defend Mlmlpr ancf its Affiliates from and against any such liabilities baed on Less='s
actions (iDcludiDB tenninatiD& this Agreement) whicll givo rile to aucb a notification obligation on !be
pan of MaDager Ill' 111y of its Affiliates, if Lcasoo fails 10 extend !be date of tamilllllion as roquired by,
and ill ICCOidance with, subacction (i) of this Section 7.02; llld (iii) Manager &ball continue to employ
111cl! cuneat employees at the fiom and after the Eft'ective Dale of thia A&tecmeDI as aro
Drnary and for so long as is nocesury to DDt cause a "mass la)'Off," "PPam closiu&" or other viobli011
relating to the tenninalion of employees of under lbe WARN Act. Lessee shall have 110
resp011sibility llllder, nor lilY liability 10 lad its Aftililtes w:ilb respect to, the WARN Act or
any similar federal or state atatute, provided Lessee baa complied witb its obliptioas UDder this ScctiOil
7.02. If a WARN Act notice or other sinular aotice is m:(Uired to be given in CODDection with the
termination oftbia Agrcc:ment, tben Manager shaiiJiive such notice as soon as IQ&Olllbly prac1icable.
7.113 EIIIPIItyee Claims. Managa- shall pay from its own flmda, and not from 01"058
Revellua. for any Claim and for die defenae of any Employee Claim which: (i) is a
subatantial violation of tbe standards of respclldiblc labor relations as generally practiced by prudent
ownen or upc1at011 of !limilar bote! properties in tbe gcncnlgeopaphic area of the Hotel, or (ii) is not
the isolmd act of illdividual employees, but mtber is a direct result or action or neglect of Manager
wbicb citbor encoumges or fails to discoWIIF IIUCh oooduct. Jn addition, Mlllagcr sbal1 indemnify,
del'c:ad and hold harmless Lessee and Owner from and against 111y fines or judgments arising out of .suc:b
cooduct, and all litigation expeases (mcluding reasonable attomeys' fees llll.d expenses) incurred in
cwmmion therewith.
Section L l'nlldllse Agnemeat
During the Term, the Hotel aball be Ullllllgecl Uld operated in compliance with the teml8 Uld
cooditians of the Franchise Agreemeot, and Man.,... lhall at all timea comply with tho Prandlise
Agreement. IIDd, without limiting any other provisions of this Agreement, any 1o1m and loan related
doc:umeDII with rapect 10 tbe HOld in ell'ect as of tho dale hcreo( and advise and anist ill tbe
paformancc and diacbarp of ita COVCDIDII and oblipti0111 tbereunder. Lessee shall comply with any
capital expenditorc requiremeots and product improvement plan, IIIICl shall purchase or provide for the
purcblse ofPF&E 111d Fixed Asset Supplies (but iD tbe cue of Fixed Asset Supplies only such amount
u neoeuary 10 initiaUy implement operatiqlllllldard changes), in each case as may be required from
time 10 lime by the f.nax:biaor in accordance with Jbe 1em11 of tbe Frm:hisc the cost of
which shall be paid in IIGCIXdancc with Ibis AgreemODL Franchisor aball bavo tho right to OOIDIIII.Diic:lle
clirectly with Manager reprding day-to-day operation of tbe Hoel, provided that Manap:r shall
promptly brief' Lessee oo any such direct communication.
28
Sec:tloD !1. CompcauUo ud Muqer
9.11 MIDapmeat Fees. In CCJIIIiderltion ofcbe service& to be perfbnned by Maapr, during
tbe Tean &hall be paid the followiDB fees (wbicb may be referred to bercin collectiwly u lbe
"MIIIIpmlilll Fees"):
A. Base Managemeat Fee. Mazlagcr lhall be plid a poriodic bese IDIIIagement fi:e
("Base Mnagemeat Feej ia chc lltlouutofda'copercart (3%) of bOld! Fiscal Year.
B. Jnmrtive Mllllpllalt Fa:. Iu addition to the Base Ml(lllgancat Fee, subject 10
tbe Pooliug aad Onnnftion Agncment, Maaager shall be paid an incentive fee
M"*&""W\!d Feej equal to fiftypen:mt (SO%) of Available Cub Flow in any Fiscal Year.
C. Ac:countiDg Services Fee. In Mmon to the Base Mallqcmcnt Fee llld tbe
Incaltive Mlaapmeat Fee, MAnager shall be paid a flat fa: fur acc:ouolios services ("ACC!OIJDring
Semeet Fecj equal to Five Hundred Fifty Dollm (SSSO) per month.
9.12 Grop Service&. Manager 11114 ill Affilillel may filmish or cause to be fllmished to the
Hocel a lilt of group service& wbidl Msnap to render to tht: HoteL Leaee llball han die rJabt
to decline fillY or all of the group ac:rvic:cs proposed to be 6u:Dilhcd by MaMgc:r, ad Co DOt be
mpansi'ble for the costs of same. CharFa for 8fOUP RJYiees which are IICCepted by Lessee in w1itiog
sbaU be equal to the adual COSI thereof, without mark-up or profit to Manager or Ill)' Amliates. M of
the date br.ieof, MIDIF expiCSSly acknowleclp md that it is not providing IDY poop tervices
to
9.03 Atcouatlll& ucl PaJIIIeaf.
A. Periodic Aa:DIIDtina. Wi.thio twenty (20) days after the close of each Acc:ouming
Period, Mlmager sball submit paper IIIII elec:tnmic copies of an accoun1iJia to I es-c, in inm
utieferto?' to lalee, showing Maaagcr's COI'Ip'!btiOD of G1011 Revenues, Decblctions, Openting
Plofit, A vaileble Cub Flow aDd distribu1ions for IIUCb Accountins Period and for the Fiacal Year to
dao. Notwiths1mding the forcgofag, MaDager lhall deliver to Lessee on a daily ba,sis dectiorric "ffash"
rcpa111 with to the average daily .mud OCQlpliiCY Cor the Hotel.
B. Annual AcCCIIIIItiag. The calculaticm ud payment of the Malapmlmt Fees and
the disttibution of Available Cull Flow lllllde with reapect to each Acccnmtina Period within a Piscal
Yell' shall be IICCCJUIIted for cumulatively. Witbio tweary (20) days after tbe cbe of each Fiacal Year,
Manar shall UJarit an ICCOUIIIiDg. as men twly described In Sectioa J2.CI2 for IUCb Fiscal Year to
aa:o11J1tiDa shall be CODtroUing cm:r 81e inlaim 'CCO"ntinp. Auy payment ectjusCmenta
mpliied fi:lr aadl FiJc:al Yar by NCb finai8CCCIUIIting sball be illlde pzomptly by the parties.
C. Bue Management Pee. The Bale Malapm.eat Pee sball be payable in IDOIIIbly
inslallmeota COIICUlRDdy with die deJiyeey to Lessoo or tbe monthly repoit under Section 9.03A. 1be
monlbly imtlllmmts of lhe Buc 1\.fanagmnent Fee ahall be an III110IIDl equal to 3% of Groes Rtveaues
for 1be pRCidiDg DIOnlb. On a quulldy buia, lbe IDOidb1y (and, if applicable, aau.l) n:porll to be
cleHwnd by ManalO' to Lessee Uilder Seclioas 9.03 llld 12.02 shall be reviewed with rapect to the
Bue ManagemeDt Fee. If such 1ep01111how that the aggrepre of the moot:bly :inltallmalls of tbe Base
29
M-acmcat Pee actu.lly peid will! tapCCt eo tbc proccdiDg qu.tcr oflbe fiscal Ycm- exceed or are leas
than the Base Mauagement Fees 11 shown in tbc reports applicable to such quancr of the FiiCII Year,
chon Manager sball clcposit fi:om ill own fi.mdl imo, or withdraw fi:om, !be Hotel Accoiiii1S or 1he
Operating Ac;eoont, tbe IIDOUIIt of IIIICh OYClpi)'IDellt or WJdcrpaymeut, as the case may be.
D. Incentive Managemoem Fee. Notwithatanding that the lnc:cntive Maaapmcat Feo
all be calculated based upon the Awilable Cuh Flow with Iespect to Fiscal y Clf pursuant to the
terms of thil Apmcnt, quarterly ldvancea oo tbc 11Ct11811Jlceotive Mllllii8CIDCllt Fcc, if any, to be paid
to Manager with respect to a Fiscal Year lhall be made based upon interim calnJ!atima
Available Casb Flow at 1hc end of eacb of die first tbice (3) fisc:al quarters of a Pilcal Year givinJ
Lessee cmiit for any prior ldVIDC:CS whicb lave been made iD rcapec;t of a prior qllllt in such
Fiscal Year. Pa:ymeou of nch quar1erly lldvaDcea of the Incentive Manapmeat Fee lball be mlde based
apm, and within lhirty (30) da)'l of tbe delivery to Lessee of 1hc reports requiml by SectioD
9.03A. subject to the laiiiS 111d conditiona oftbil Agrocmenlllld aubjcct to Leacc's ri&hls to cODtell or
cballenge such Ieport and to the n:solation of any sucb cballcnge. If, as of the eud of any fiscal quarter,
Manager lla received exc:esa paymcms of its Inccativc Management Fee for year-Io-date pcrfonnmce,
then llhiR immedialllly repay aud1 eo Lessee and Losseo aball, without Jinlicing the
foregoin& have the rigbt to iollteld offllet such cxc:esaliiiOIIDts owing to it against any IIIIClU1I1 owma by
Lessee to Manager heraunder. Within thirty (30) days of the delivery to Lcsscc of the Annual Opcratin&
Statemeut report under Sections 9.038 8lld 12.02, the final paymeut of amo111111 owed to Maoa&er with
respect to the Available Cuh Flow in respect of tbc: Fiscal Year as to wbicb sucb Annual Opentillg
Slllll:lllent relata abaD be made, or, if based 11p011 auc:b Annual Operltios Statanart Manapr has bocu
paid advancca on the IDcelldve Maaagc:mont Fee in rapect of such Fiscal Year which exceed llle
am"'mt of lbc Incentive Managemcot Fee ICIUally owed to Manager for such Fiscal Y Clll', thea witbiD
such lhirty (30) days Managlll' &ball repay to Lessee sucb exc:esa. All paymen1S to Manap will! Iespect
to tbe IDcenlive Management Fee, including, without limilllioo adYancca, are cxpre&!ly 10bject to the
prior paymem to Lessee, .00. subonliDated to Lessee's right to rea:lve, Lcaee'a Priority, and are subject
eo tho olber tC1'1118 llld oondidoas of dlis AgreCD!tllt, die Pooling llld Cun!Jati<lll AJrec:mcnt, IIIICI
Lessee's rights to contest or cbaJiengc any 111cb RpOrt and to the rcsolution of Ill)' aach cbailcnge.
Without limiting the folegoin& for clari6CIIion pufposes. MIDager llld Lessee hereby sree that the
payment to Manager of the lnCCDtivc Mlllagemeut Fc:c:, if any, shaD be llllbordinad to Lessee's Priority
hereunder (for tbe then. current Pi&eal Year and for lilY and all prior Fiscal YCIIII'I, to the extent not fully
paid) ud ahall be subject to tbe Poolinc aad Cumulaticm Ageemcnt.
E. Accounting Services Fees. The Accolllltios Services Fee sba1l be payable in
mond!ly ins111lm111ts concurremly with the delivery 1o Leuee of the mon1hly repon 1lllder Section
9.03A.
F. Otder and Priority. Notwitbsllmding anything to the contrary conlaincd in this
Section 9, but subject to tbe last two r.euttncca of9.03D above, payment of Management Pees provided
for hereunder shall be subject to the priority of payment on, and made in tbc order conlcmplatcd by,
Sdledllle 9.13F at1ICbcd haelo.
c. DisplltCI. Any di.sputes uisillg out of the llllbject of 1hia Section 9 shall be:
submitted to mecliationandarbitrllion pum11111t to Secticm 19.13.
30
10.01 Repa1n aad Malateuace. From 8lld after the Managcmart Commeac:emeot Dace.
Mauager allall maintain 1he Hotel in pd repair IIICl condition, in material conformity with applicable
laws llld regulatioDS. as well as in c:omplial!ce in Ill matcrilliapecla with 111y and all
IUj\liRIDICIIts of tile Frandlisor. Mauapr aball mab or cause to be 1IUidc all routiDc IDBiDb:nancc m:l
repain to the Hotel which are OO!DIIIly expeased 1111der GAAP, as it rnay nsasODobly deem aeceaary.
1be cost or all such routine moin,.,.nce and Ieplin shall be J)lid from Gross Revenuer 1111d be llelled
as a Deduction bcreundcr.
10.02 fF&E EIU..te.
A. ODor before December a of each Fiscal Veer, Lcasee shall cause Owner to
Piepate and submit for Lessee's and Malager's information only a prcliminlry FF&B Estimate
11111icipared f01 the following Fiscal Y car, with iDput and c:oopcration from Mlllager. 1b1111, 011 01 before
Januuy t of cub Piaeal Y011, l.ealec sball cause Ownc:r to prepare II1ICl submit for Lcslce'a llld
Mauager's infonnali011 ouly a final FF&E Estimate, wbicb shill I be subject to approwl of the board of
tn111ccs or IImkeepers, icipared for the following Fiscal V 011, with input ud coopetation from
Maoap. ahall COD&ider the pielimilwy and final FF&B Estimates in prepariDg the projol:tioas
i)f meoues and expcoses coJIIaincd in the Amwal Operating Projection. Mlllll8fl' sba1l not bave any
rigltt to appi'UR my FP'&B Estimate 10 J:ona u tb= F111DChiaoi of lbr; Hotel has not decJaral a default
CODCerDing tbe for the wnclitio:D. of !he Hotel under tbe Fr111Chise
. B. Notwitbllaoding Section 10.02A, Manager sbaU be entitled to make aclditioaal
expenditum not authorized 1D1dcr the dlen applicable FF&E Eatimatc: in cue or emagencies arisiog oat
of fire 01 my Olbcr casualty (as c:ontenlplaled by Section 12.0SC), or in 111'1 cmapney in order to oomply
with Ill)' lppl.icablo Legal Requiranrm.tl or reatoJllb'c safecy (u contemplated by Section
12.0SD), provided M1111ager lballnOiifY Lessee before making aw:h additicmal (which
notice shall abo include ao explanation of the l!eCCISity of tbe additional c:xpeDditura, as weD u
doCUIIlCIItltioo in support or such expcnclitarea), or if prior notice to Lessee is not piliCtically
then Mllillger lba1l notify Lessee as pcomptly u reasonably possible after 1ba mug of any sucll
lldditiollll OAJieDditln&. If, at any lime, 111oh expeaditurea en: required 10 be made, Mazla&er may Jllllke
such expmdlturea out of then available Gross :Rt:veoucs contaiDed in the Hotel AccoUDII llld ncb.
expenditures sbaU be accolllltCd for ill acc:ordlnce with Section 1.14 bereo
C. M..gcr Bhllll cwpaile with Leasec in Lessee's (or Its IIFJIS') pi-ing.
scheduliJia llld ped'uJnJioa of projects conrempiiRd by cbe FF&E l!ltimate, including. without
limitation, coordinatioallllterial delivery, permittillg access to COIIti'ICtOn and othen involved with tbe
projocts, and mating lbc affected guest rooms and otbcr areas of the Hotel available fOr the projects on
the CXWJIICiaplatcd scllodult.
D. If, as 1 ccoditioo 10 i1s required consent to or approval of a Change of Control
Evart of Manqer, the Pram:bisor requires this Apeement to be ameoded to provide for the
eatablishmau of an FF.U ft:8Ci tt: out of Grols Revawa, lheo Lessee II1ICl Mallap lball io good failh
oegotialc an amendment to provide 1Cr tbe establishment of an FF&B reserve to the extent 10 Iequired
by Fmclrisor, provided. Lessee ahall DOt be required to enter inlo any amenclmeut wblcb
increases Lesace's tiaancial obligation with Ieapt\.1 to FF&E, provided lilltha' tbat (I) Manager shall DOt,
31
wilbout die p!'Qif prior wrirtm CIIIIIICIIf oflesaee, iniU. or cnpge in any discussiooa or aeptiatioas
with the F""""'isor with rapect to the foregoing end (ii) Lessee lball It all times <:Olllrol any
negotiltions or discuaiclla with chc Fraocbisar with respect to tbe fbJ'OIC)ing.
10.03 Major C.plbl Epeadltllns. The cost of with rapect to Major Capillll
lmpmvomcnta not ochenrise provided for herein, shall be approved and borne solely by Lcuee aodlor
Owner, and shall not be paid iom Gross Revcnues.
A. On or before December 1
11
of each Fiscal Year, Lessee shall cause Owner to
prepare and submit for Lessee' md M11J11Fl'& information only a preliminary Building Bldmale oftbc
Major Capirallmprovcmanta meieipeled foe tho following Fiscal Year, with input IUid c:oopaation from
Manager. 'Theil, on or before January 1
11
ofeech Fiscal Year, Lessee shall CIUSe Owner to lllld
submit for I.csscc'sud Manager's information only a final Builctins Eatimate, which shall be aubject to
lp)iroval of the board of lrUitees of lnokecpm, of tile Major Olpilll Improvemeatl anticipated for lhe
followins Fiscal Year, wilh input and coopentioo from Manager. Such pmimilwy Md final Bulldiag
.Eatitnaa shall tab into M1COWJI those Major Capital lmprovaneatl neccslll)' 10 comply with the
FI'IIIChise Apemeut. Maaaser shall comidcr the preliminary md final Building Estimatea in
the projections of reveauea and coataiocd in the Annual OpmtiRg Projectioa. Ex<:ept u
provided io Section 10.03, all wolk to pcrfonn Major Capital Improvements shall be
pcrtOrmed by Lessee or Owner or persons employed by I.eacc or Owner to pea:foml such MaJor Capital
Jmprovemaus, and Manager shall coopcrale with Lc:uee and pc:110111 relaiaed by Lessee to perfOJm
suc:h Major Capital Jmprovancnts. Malllger shall not make Y Major Capital Improvemeuts wilhout
lhe prior written consent of I cace, which may be illllted or widlheld in its sole disaetion, except u
provided in Sublection B below.
B. Notwilhsllnding tbe foreJOin&, Manager shall be authorized 10 lake appropriate
remedial action (includins mlkillg my nc:c:eaary capital expenditures) without Reeiving Lessee's prior
appmval if (i) lhere is an emeraea:y immillmtly threateDiDg !be HotGI, or the life or property of its
guata, invitees or employees or (ii) the continnation of !be giWil coadition would subject Manager,
Lessee or Owner to criminal or material civil liability. Manager shill notify Leaec: as promptly as
rasonably possible in either IDd betbre making aucb expendilurel, or if prior notice to Lessee is
not practically poasible, thco Mmmger shall notify Lessee u promptly u reasonably possible after the
makins of any aucb md lhall adhere to Ill reasonwble instructions of Lc:saee in reapcmse
tberdo.
C. Maaa&a" ahall coopr:ntc witb Leucc in I..eao::'s (or ill plennin&
tc:bednling and ped"oJmlag of Capital ImprovemeniS, includiD& without limitation, coordinalillg
material delivery, pcrmiuioa access to c:oatracton and otbcn involved with tbe projects, aad making the
aflected pest rooma and other cas of the Hotel available for Cbo projecll on the contemplated
sc:bedule.
I 0.94 Ueu. Mu.ger and Leasoo shaU 1IIC their reasonable best efforts to prcYa11 lieaa
from being filed against lhe Hotel which ariiiC from any maintenance, c:bangea, repairs, alteratiOJII,
inaprovcmcnls, Je:Dewals or replfcemenll in or to lbc Hotel. MnlgCr md Lesaee shall cooperate fbUy in
obtalaiag tbe release of uy such lienJ, and the cost thereof, if the lien wu not occasioned by the fault of
either paJty, sball be treated the llllrJe IS the COlt incumd )IIIDIIIIlt to Section I 0.03. [f the tieo 1Ji1ea II
a result of !he fault aC either puty, du:n the party al fault shall bear the cost of oblaioing tbc lim rclcuo.
32
10.15 Owaenblp of AJI cblnges, n:pairs, allallticas,
or rc:plaoemeuts to die Hotd rna punuant 10 this Sec:tioD 10 sball be 1he property of 1.-ee or OwDer,
dc:tamined in the l...c:ase.
10.06 Clpitll Ezpeadlture Polley. Jn lddilioD to the foregoing povisl01111 of IIIia Section 10,
Lessee or OwDer may, from time to time, promulpto a Capital ExpC!IIditln Policy providing for dae
idezttifielliOD, paymeor, 111d implcmontacion of capital expenditures and DOIH:Ipital expenditutes.
Atw:hed hereto as Sdaedale 10.06 is Owaer's c:um:nt Capital Expenditure Policy. Lessee or Owner
shall have tbe ript. from time 10 time, to modify this Capital Policy to collfonn 10
gmerally eccepted eccoUiltiug principles ("GAAP") or the l1DifiJno Systm or as otberwisc may be
reqaile<l by GAAP or die Uuiform System, and any IUCh modiBcatiooa sball be deemed (X)DbQIJio&
upon Lcaacc and Manapr upon such promulption by Lessee or Owner, provided, however, dllt iD the
eveut that 111y such modification of the Capital Expenditure Policy shall have a materialldvme affect
on the be:nefi11 to Mazia&er UDder thiJ Agrcemeol, theu Manl&er shall have the ript by written 1lOiicc to
Lessee, within thirty (30) days of receiving DOtioc of such modifiearion, 10 tcrmillate tbil Agreement
upon ninety (!10) clays prior notice without tiuthcr liability or obliplion of Lessee hl:rewldcr and
Manager lball c:omply with Section 3.03 in cannection with such termination. In the eveat of any
conflict between this Apeemcot ud the Cllpital E.xpendinue Policy, the terms of the Capital
Expenditure Policy shaD govem.
Secdoa 11. Pa)'lllellt or Cet1ala Ta1:es
11.81 Paymeat of Cer111ba Tuea. During tbc Term, aU taxes in the nature of penoaal
property or tal catale taxc:e ("Lessee Tuea") followiD& or a!IIX:Iblc to 1hc period following the
Maoagcmcut CommaJccmcnt Date shall be, IS betweeo Manager lllld Lessee, the raponsibility of
Lessee at its sole COSt and cxpeDIC before any fines, peaaldea, or intcrcst IR added thereto or li11111
phccd upon die Holicl, unlCIII paymeot is in good faith being <:Ontelted and eaforcement thaeof ia
stayed. Ma.gcr shall bave no right or interest in 111y re1imd or rdla1e of any such Lessee Tuea md, IS
belweal Lessee aod Mnagrr, Lesaee sball be eatidcd !hereto. Ally fines, peaallies or interest added to
any Lwee Tucs whb:h from Lessee's or Owner's acts or omissioos shall be paid by Lessee at its
sole expense, md Les$ee sball indenmify Manager and bold Manapr lwmlcss ftom 8Dd against liability
fiJr SIICh fines, pcualties or interest.
Secti011I:Z. Boob, Reconll, Statemeata, AccoCJ uu:l Projediom
11.01 Boob and Recordl; Ceatl'lllblld Accoudaa Sa ..tees. Except as othenriac provided
i.a tbis Man.pr aball bep 1iill and adequate boob of I4'COliDt minch ether JeCOJds as IR
DeC ry to reflect the operations, asset1 aDd liabilities of the Hotel, all such boob and records to be
kept by Manager on an aa:rual basis in IICCORiaiH:e witb GAAP coasistcntly appHed, 8Dd in alllllltaial
rapccl8 iD accordance: with the Uniform Systm or Accounts. Lessee may, upon 24 hours' notice 111d
during Manager's normal business bouJS, examine such records IIDCI Manager's ICOOIB'Iting syatem and
illlcrllal controls. MaDager expressly agrece to adopt my iDtcmal coniiOII 11 may be reaaoll'bly
reqaeated by Leaeo &om time to rime. MMger &ball, clildy, or lhrougb an Affiliate or ono of the
Otbcr Maagm Holcls, povide the accounting fimctioDS for lbe Hotel, includiD& without limitation,
accoiiiiiS payable, general ledger, payroll and IICCOIIIIII receivable, or lilY part thereof, wbicb may be
1ccpt on a CCI1Irllized basis wid! one or more Other Managed Hotels for the JltiiJIOR of achieving. and for
so long IS sucb. efforts of Maaqer result in, a more cost-eflicicnt operation or tbe Hotel.
33
12.01 Amnw Opendog Statemeat; Audltl111d llllpeedoa Rlgllb.
A. Within 1WCDtY (20) days followiq the c:lolc of eacb Pilcal Y car, Manager shall
fiDllisla to Lessee (a) paper and elec:tronic: copies of an Amwa1 Operating Statement, in the tbrm attached
hereto u RJMbJt C. 1 balance sheet. a rotated slllement of profit lllld loa and 1 Sbltemeat of cash flowa,
haviDg aoncxed thcrelo a computation iD rc:11101111ble detail of each CO!DpODIZt of lhc Mllllllgc:mCIIl Fen
for such Piscal Year, (b) 1 Dlltificue lliped by Mmwger's c:hainrum, ill ciUef executive and its
chief ICCOUIItiDg officer, certifyina that tbe Aruraal ()pentiag Statement and aucb olber finencial
statrments are 1rDc and comet to !be best of the knowledge and bdief of ca:h such offiecr, and
certifyiq u to such olber matten as reasonably by Lessee to comply wilh its Affilialel'
ICCIIrities laws reporting reqlliremelUs and, (c) if required by 11 Mortgagee, an opinion thereon (to be
delivered witbill the time required by Mortpaco. Laldelcd by 11 firm of iadepeodeot c:ertifled public:
accoJIIIIIIIII of recopized staading in the hotel iDdustry 11 may be by LesliCe llld Maoagr:r).
lbe form of Annual Operaliag Statement shall be aa app!QVcd ia writing by Lessee Any objectioos by
Lesac:e to the Amwal Operating S"'""'"'' or such oth fiDaacial statemeots l1liiSt be made in writing
10d sent to MIDIF in IICCordlace with the notic:e p!OVisicml of this AgRement withia thirty (30) days
of Mlnlp''s submiasiOD thereof. If Lessee elec:ts act &o rai&e 10y auch objcc:tions in accor:danu with the
foregoiag sallence, it sball be deemed to have ac:cepted the AIIDIII1 Operating Statement wl such other
financial ltatemCIIIB, absalt fraud. Within tweuty (20) days followiag the close of each month aod
quarter of each Fiscal Year, shall fumilh to Lessee statemeats similar to those siBtaneots
required to be delivet'Cd on 10 111111111 basis pulllllllt to tbis Section 12.02A.
B. Lcueo abaU have tbe right, .t its owo expense, to inlpect md audit any d all
books and ra:ords of Mwr or 1he Hotel with n:spect to c:osts aad expenses related to the Hotd, 11
furthu provided below. Sucb illapedions aod audits may be conducted by Leuce or its dosiJ1111tccl agent
no mare than q11111erly (for iDspectioos) and annually (for full-scale audits) at tile Hotel (and/or .t any
Jocation wbae Maaager provides for the storage, compilation, poc:cssing or geuaatioo of books 10d
K:COrds relating to the HOle.!) on twenty (20) days prior writteo notice to Manager. agrees 10
cooperate with 10y 8IICb. inlpection and llldit by making available to Les10e or its designated agcut all
boolcs aod m:onls reasOIIIbly necessary for the coaduct of such iDspection or audit. If my SitCh
iaspectioo or audit ditcloiiCS tbat Ill)' foes, expenses or my olhcr am0110ts requiled to be paid uacler thia
Agroemem have beezi underpaid or overpaid by tine perce.lt (3%) or more, tbr:.a Manager abaU (i)
JIIOIIIPlly depoait iato the Hotel Ac:crmts, or, if nee : 111ry and permiUDd by any applicable Mortpgee,
dindly disblne to lbe applic::able payee thereof, the IIIIOilDt of any auch underpaymeot or overpaymeut
togedler witb inlmst at tbe Overdue Rate (provided that, if and for so 1oog as thia Aarecmcnt is in
eft'ed. Maospr sball aedit any such underpaid amoun1s 1gainlt future M801JC111eut Pees DeXt payable
to it hereunder), aod (d) pay to Lmco, at Mllllger's sole cost 111111 expeosc, all reuooable fees and COIItl
iaculred by Lessee directly ia colliiCICCion wilh tbe audit.
C. Lessee shall haw such additiooal inspection ll!d audit righls, ad Maaap shall
provide aucb additional reports 10 leaseD, as Lessee may request &om time m time in c:oaaectiOD with
tho satisiiclioa of tho fedeJa1 eccuritiea laws reporting obUptionl of llmkeepcn. In d1c evem that
Manapr ineun mataial costs ill complyi.n& with tbe foregoiDg sentence, the parties shall nc:JO[iatc in
good fllitb with respect to bctring IIICb coats and'or uy approprlllo compeii.SIItim 111111y be consilfeot
with tbe other tams and conditions of this Agreement.
11.03 Accouts; Cull Maaapmeat IDCIIUdkll-
34
A. All funds derived from the opention of the Hotel. oc othr:rwiac relatiq to tbe
Hotel (iadumn& without Jimilltion, proceeds of extriOrdiauy events llld ooa-opcnting
procoods), shall belcmg to and be the property of lessee and shall be deposited by Maaaser, u and whea
received, in bank accounts (the "Hoccl Accounts'') c:scablished by Mlnager for Lessee in one or more
banks appiOved by Lessee, which approval &ball not be uoiasonably be conditioned, 'Nilbheld or
dela:yecl. All such fuads so depo6ital shall be awcpt daily ioto an ICCOIIDt -.blisbed by Manager on
behllf of md for tbe benefit of Lcsscc (such account beius u:fared to hereinafter a the "Opcntiq
Account"). Subject co lbe working capital rcquiremeDt in the Pooling aod CUmulatloa Agreemeat, all
fiJDds ill the Opctlting Account shall be swept ooa co an account established Uld solely
COIIIIODed and operated by Lessee or one or its Aflilialet (such account being refcned to hemaafter as
lhe "Holdins Allcountj (it being undmtood llld lgRICd that Mauaacr shall not ha'Aleccess co cr COIIII'OI
aYfll the Hokling Aceount). Notwitbscandins tbe Mmager and Lessee agree to rneet from
time to time rcprding the IIUillbcr aad na!Ure of tbe allo\le described accounts &Dd the mcdlod of
sweeping cub from such accounts. All disburscmcoll and witbdrawals from the Hotel AccowJts and the
Operating Account as required or perm.iaed under this Agreement shall be made by authorized
RpleiGllllivcs of Manager. Reasonable petty Cllh fimds and bouse blab, in amounts acisfactoJy 10
Leaee, sball be maintained at tbe Hotel. may, upon n:asonable notice, inspect andlor oopy
monthly 8111emcnts fbr any or all of the Hotel Acc:ounll. In the event of a Ollnp of Control Event of
lnnkcepcn or a pmnitted Change of Conttol Event of MIIIIIFf, Mnager shall be entitled to propose,
and tbe parties shall negotiate in good faith with respect to the imposition ot a cash sw=p mechanism
wnsiatellt 'Nitb the lbcn-prcvailiDg illduatry plliCtice.
B. All paymas to be made by Mlaaaer hemmder shall be made from the Operating
Acoount. from petty CISh funds or tiom other funds provided by Lessee as contemplated by Section
12.030 hcJeo Debts aad liabilities incurred by Manap as a n:sult of its opcntioll and t1111111ganent of
tbe Hotel punuant to the terms hereof and which are the rcsponsibiUty of Lessee haalnder, whether
111ocr1Cd bofore or after Teaninalion, sbaR be peid dinx:lly by Lcsaee to the c:xtcnt thlt fundi from GrOll
Revenues are not available for that putpOSe. Maager aball not be nK[UiRd to make any adVIDce or
payment to or for the ac:count of Leascc except out of sucb flaKis, and Manager llhall not be obligated to
incw- any liability or obligation for Lcuee's account
C. Tbo Hotel Accounts and tho Operating Accout shall be owned by Leaoo and
shall be aolcly comrolled and operated by Manager oo Lcsscc's behal Any funds deposited in such
bank KCOIIIIIS shall not be c:ommingled with the ISICis of Mmager, its Affiliates or other thin! parties.
MMgcr wiR deposit in Hotel Accounts aU mODiea received ftom the opcratiou of the Hotol Lessee
shall be provided with "read-only" internet 1CCCS1 to tbe HOld AClCOUIIIS Uld the Opcnting ACQOIIDt If
and to the c:xtcnt suc:h access is commercially ICUOIIIbly availeblc. All of the tams aad provisiona of
this Sectioa 12.03 Jba1l be subject to the terms of any MortJ118C, subordination apeement or other loan
doc:umalll held by a Monpgcc.
D. Subject to tbe requirements of 111y Mor18asec and tbc terms of the Pooling and
Camalalion AJiwnad, Manager shall present docamentation l'CISOIIIbly ac:ClCplllblc to Leaee
evidencins IllY amounts nK[Uired to be paid in COIIIICCtion with the operation of the Hotel. Upon receipt
of such dooomentltion, Lcssec shall promptly distribute IIIICb amounts requiJed to be paid into the
Operating Account aad Manager shall pay 8Uch IIIIOUIIII on or prior to tbcir due dates. NotwithiCioc!ing
the foregoin& Leacc's funding of the foregoing amounts sbal.l not constitute a 1110diflc:ation of the
Busjnes Plan, acc:eptaDCe or approval of aay expenses, or a wliver of any of Lessee's rigbll or mnedic:s
3S
or Manqer's obliptioua hereunder, incJudina, without limitatioa, rigbla to review, approw
and audit tbe Anaual Opmting UDder Section 12.02 and to rmcw and audit the periodic aod
aonual accountinp delivrml punuant to Section 9.03. Subject to Section 3.03, Ill)' IUDOUIIII remaining
in tbc Hotd Ac:coonts lllld tile Operating Acoount on lhc tenninatim of this Aplemcot shall be
disbursed fo Lcucc. Subject to the flm:going pi"'Yisicm oflhis Seclion 12.03, MIDagcr's sbaJI
be lho oaly petBCmS authorized to draw from the Hotel Mcoonlfl and the Opezatiaa Accou:at, and
Maaager shall be lllllitled 10 make deposit& in an tbe Hotel AcaJUDts, in accordaacc with the tmDS of
Ibis Agreement and Malllgcr's IIIDdard ICOOUDting policies and pnctic:es. Mlllll8c:r shall esllblilh
coottols to ensuro ac:aum repoJ1iq. llfi:ty llld security of all tnnnctioaa involvins tbe Hotel
Accoaars and the ()pcr'alif1i AcCOIDit and to comply will! the p10visions of applicable Jaw with reapecc
thereto. Unless due fo Maaapr's grvu uogligalco or wili1Ul misconduet, any lola llllffered in lbo Hotel
Aecoums or 111y other blmk account established punuant to driJ Sec:tioo 12.03, sball be treated 11 a
Deduction; 10 lbe Clltcnt lillY such loa IUfl"=-ed is a result of Manager's gross Degligence or willful
misccmduct, Maop:r absiJ have tbe liability llld respoosibility therefor and lhall reimburse such
IICCOUIIt lhcrufor (p!Ovidal tiW Manaaer sball be liable for my loss in tbe Operating Account due to the
lll:lioo or iDKtion of Manager or 111y of its ageuiB or employees). All designees of MUllpr dllt are
signaro.ries on either tho Hotel AceoiiDIII or tho Operating Account wn be employees of Manager aDd,
as such, shall be iDsured by Manager's fidclity/aime insunnce oovmp with respect to die
rnanapme111 of such accounts. Notwilbstanding the foregoiDg provisiooa of this Soctioo 12.03, tbe Hotel
Accounts aod the Operating AccOUDI: may, in acconlanco with the requil cments of 1 Mortgage, be
esllblishcd Ill blmkiDg lnsti1ulion or inatillltiOJIS selcaed by Mortpgec and held in Mortxascc's OlDie ..
ID auch event, Lees. llld Mort.aee aball enter info a cash maoagement apemeot, "'ock-box"
qreanCDt or olhcr similar qreemart regulalina the of Orosa R.cvenuea fiom the operatioo
of the Hotel.
12.14 BudDen Plaa.
A. Malllgc:r will submit to Lessee, not lea than forty-five (45) clays in advance of
each FiiCal Year, ID estimate of profit 111d lou, cash flows and a baiUICC sheet IDd cac:b other
component Df tbe Businesa Plao (i.e . wb.icb considers tbe PP&:E Estimate and BuildiDg Estillllle
aod submitted by Lessee. aod the Marketing Plan) for sudl Fiscal Year. Additiooally, Manager
aballsubmit the followina informlllion atons with each BusiDCSS Plan: gcoeral infomaation cooccming
pay scales aod programs applicable to the employees of the Hotel, Manager' a genml ata1ling
policies aod MaNger's piiDa mr staffiog lcvek at the Hotel for tho fordu:omlog Fiscal Year. A
specimen copy of a Busioess Plm il IGIChed "hereto as Scledale 12.D4A, however, the foan and
IUUC1Ure of the Business Plao is subject to dlauge upon tbe agreetnCDt of Lesacc lllld Manager. The
Businoas Plao aball scpaJatO oxpeaaes inlo specific "depai:hilental" groupiop aod provide an -spsate
expease IDlOunt for c:ach such deplrbnt:ncal BJ'Oupin&. iD addition to lioe item IIDDWIIS of Cllpenses
within a grouping.
B. ID connectioo with tbe submission of the Busiocss Plan, the represcnwives of
MaDagc:r will meet with Lesaee to have an io-deplb diacnsaion with reapoct thereto, iDcludiDg 1
compari.soo witb the previous year's pcrfonnance of the Hotel, a discussion of marltetina Sll'ltegy,
icleotity of DIIJbla ani the proposed expenditures CODiaiood in lbe AnDual Operating ProjcctiOO. and
any questiODS Maoaga- may have COIII:el1l.iDa the JIF&:E J!stimau: and Buildin& Estimate, subject to the
provisions ofSoction 10.
36
C. The Business Plan rhlll be lllbject CO rhe appronl ofi ereee, in ita 10le cbmion,
it being coatemplated tlllteach such Buaineas Plan llha1J be agreod IIPOil bytbc parties by liDWIIY tsor
eadl year. If Lessee sbaH fail to 1pp10W Ill)' Business Plan by J111uary ISIIi ll1d 1ilila co submit ita
'M'ium objections thereto 1D ManiiF by IIIICh date, Ibm in such eYeDt Lessee shall be deesraed to bave
lppi)Yed tbe same. In cue of 1 dispute witb Rprd to any ooillp(I"'Rt of lhc Arunlll Opcratiag
Projection, chen peadina the settlement cbmeof by the putiea, or 1llltil such dispute is molvecl in
arbitration in ICCOI'dlllce with Section I 9.13 (wbich ubilration decision witb respect to such diJpute
sball be rcsolwd by the arbitJator(s) on 1 rcuonable basis giviDg due c:ortsideration to such facton u
may be Rlevant to aucb dispute, including. witbout limilalion, tile reuonablencsa of the parties'
positions and infonnatioo, to tile extent 1Yiilable, witb respect to tbe Competitive Sec and S1ICh otbcr
relevant iliformation available fiom Smitb Travel Trends Raport, Star Report, p:rodllced by Smhh Tmrcl
Reseatdl), Jhnsger lhall be entitled to c:onti11110 to operate tbe Hotel in accordance with tile standards
set fOrth herein and sball be entitled to mako expeadituret which arc contemplated by and consisteot
with tbe relevant Annual Openting Projection JII'O]IOied by Manager 1br aach Fiscal Year; provided that,
subject to Sectiona 120SAl2.0SD, the maximum approved IDiount of such etpenditurta d!all be equal
10 (1) the IIJRple of all items set fortb in the Amwal Opemdng Projection which arc not disputed by
Leuec, plua (b) wi1b respect 10 aD ilellls in 1ho Annual Oporalin& Projection which - disputed or
objected tb by LesiCC, the unount allocated to such itcm(s) in the Amlual Openting Projeeticm for lho
imrnedialdy Precedina F"ISCII Year increased by the between lhe CPI on January 1 the
Fiscal Year immediately preceding the Fiscal Year in question and tile CPI on January 1 of the FIICII
Ym iD question. .
ll.OS PerftnDIDce Uaclet BaDiea Pl111. Mluqer shall use commercially reumeble best
efforts 10 achieve tho results set forth in each compom:nt of the Business Plan witll 1espect to any Fiscal
Year in order 10 achieve the A vailablo Cash Flow as anticipated by the Business Plan; provided,
however, Lessee aclalowledges that 1he Bum-ess Plan is 1 compiladon of eatimltcs and, therefore,
Manager QIU!Ot guarantee or actual opention of 1be Hotel for my FlliCIII Y ev will be u
set folth in the Business Plari fur such FiiCal Year, proYided fiuther dial I.easce's actnowledgmcot and
sucb llldt of an4 WlttiDI)' shall not limit Leslec's rigbta ofTonninatioo under Sec:tioo 3.02 or
olherwise. During each Fiscal Year during tbe Term, M101ger shall usc ils rommerw.ially reaslllllble best
etform to operate tbc Hold within the approved Business Plan (subject, in the case of any diaputed
items, 10 tbe provisions of Section 12.04C). In preparing all budgets and forccNb 10 be to
hcmind, Mllll8er llial1 hue iiS estimala upon 1be moat rcceilr and reliable infom..Uon then
available, talciJae into KlCO\illt die lcx:ation of the Hotel and its experience in other comparable hotels.
Manager rcsavea 1be right, and sba1l bave lho obliption, 10 update and leVise the Busineu Plan, ar any
component tbtftot; ftom time to time (and 11 Ieist quatterly) during the periods covcrod thereby 10
reflect l.Jncoottollab1e BxpeniCIJ or cbaapd c:in:umlrlnces. Such upclatinp and rcvisiona shall
incorporate IIOtual mulls for tbe year 10 dale and M11111er' lhon curreot estimate of the rmiiiS of
operationa of tho Hotel for tho balance of the Fiacal Year, include 1 reasonably detailed cxplanalicm of
the chmges and tbe new alimate and shall be provided quarterly topher with the monthly statement
delivered after the month endiDg each quarter. AIIIIICb vpdatinp and misiona of the Business Plan
(whcdler or DOt any JUCh changes in the Business Plan indicate sbortfalls which would meceasilate a need
for additional working capital 10 be provided by l.A:uee) shall be submitted. toFher wilh rcuoillblc
of the 1 m 01111 for auch chlqes, to .I..asoe for its appJOval, which may be pnted or
withheld in its sole diiiCI'CtiOa. Notwidlstandiug the fOrcaoin& Lesaec lild Manqer undemtllld and
agree as follows:
37
A. Cc:rtain cxpcnscs provided for in the Annllll Opc:ratiDg Projcc:lion for uy Fiscal
Y ar wiD wry based on the OCCIIplllcy of the: Hotel; BDd. accordinsJy, to the eJttmt that OCCIIplllq' of
die Hotel for uy Fiscal Year exceeds or is less th8111he OCCIIpiJICy projected in the approved Almual
Openling Projection for such Filcal Year, such approved Annual Operating Projcctioo .&ball be cleaned
1o include cx.a 1 cspon.ting inc:reues or deaaises in such variable oxpenses (for clarification purposes, it
beias expeasly agreed thlt &UCh corrcapoading iDclasos or dccRuca shill be Included in the Alm111l
Opcming Projection for purposes ofSectioa 3.02).
B. Utilities. insunmce pmniums (oilier than property pmniwns) llld
license and permit fees incuncd pWSUIIIt 1o this Agra:zncnt (Oihec than regularly acheduled or expmsly
i1111ed paymeata conu:mplled thm:by) IDlY exceed the budgeted IIDOUD1S provklec1 difllefoR: in lbe
Aunual Operating Projection aad FFAB p.arimatefur uy Fisoal Year, as a n:suJt of ein;umstenccs wbicb
eR: outside of M101ger's ability to c011trol; and (ii) certain expenditures IIIII may be required 1o comply
with new amd unforeseen mid-PiiiCII Year rcqubemencs imposed by the Fnmcbiaor and mc:h
expenditures may exceed the buclgeled IIDOIIi1tll for the Franchise Agreement (but only for the balance
of such Fiscal Yw) (collecUvely,lhe matlen described in A and B ahaJI be considered "Unconnrollable
Manager shall notify l.elsee as promptly as reasonably poaible of any propoaed
expendituR: contemplated by this subsection (BXii) bel'cre maJcina: such expmclitures, or if prior notice
to l.euec is aot p.niCtically possible, then Mnager ahall notify Lessee a1 promptly as reuon1bly
poasible after dte making of any sud! expcoditures, and ahall adhere to all reasoaable of
Lessee in response lherdo.
C. If 811)' expenditures eR: required u 1 rault of a Fon:e Evc:at directly .,d
ldvawly lffecting the physical plaot or operation of the Hotel, or 011 Ill emergency basis to avoid
I'DIIIerial propeuy damage 1o the Hotel or inj1lly to persons ar ptope.-ty, Manaarz may mllce such
expeaditures, wbe1her or DOt provided for or within die provided for in the approved Annual
OpetatiDg Projection for the PiKa! Yw in question, u may rasooably be required to avoid oc mitigate
such damlge or injury. Manapr shall notify l.eclee u ponipcly u rasoaably possible of 811)' Pon:e
MajeuR: Event, and befote makina such or if prioc aotice to Lessee is not practically
-poasible, tbea Mlneger ahaU notify Leucc as ptvmpdy as reasonably possible after the llllkiog of lilY
sadt expenditures, Iilii shall adhere to all reasonable i111tructiona of Lessee in tbereto.
D. If any are required to cure 1 violalion of a Legal Requirement or
nocamy with respect to the safety of penons aldie Hotel, subjoct to Lessee's ript to din:ct
M.,.ger to CODte8t such Legal R.equilaDads or Yiolltion out of fimds available from G:rosa Revc:nues
(or if not so available, fium Lessee), Maager may make such expenditures, whether or not provided for
or wiltlin the amo111111 provided 1br in the approved Business Plm for the fiscal Year in question, as may
be necnnry 1o COIIlply with ncb Lepl Requiranent octo remove or prevent the violation thereof or
neceasuy with rapcct to tbe reasolllble llfety of penom at the Hotel. Manap:r shall notify Lessee IS
proa1pdy u remmllly possible of UIY proposod expc11diture contemplated by this Section 12.0SD
before meJcing such expendimzes. or if pior notice to Lessee is not practically possible, thea Manager
shall notify l.elsec IS piooiptly as reuonably posaible after tbe mating of aay such expenditures, and
sballldbere to all RaSOIIBble iD&IJUctions of Lcslcc: in rcaponsc lhcmo. Any sud! amounts so paid fi'om
Oroa Revenues or paid by Lessee punuant to tbis Section 12.0SD lball be tteated u a Deduction under
this A,rccment. If Lessee directs Manqa- 1o contest a Legal Requiremcat or violllcion, MIDager ahall
be indmmificd against any direc:t liability that ManaJIII' may ._ve as 1 result of fiiliDg to cure such a
violatioa, such indemnification fint to c:onae &om Gross Revenues and lbmufter, if necessary, from
38
Lessee.
E. Ally deviations by Manager fioom any line item of aoy CODipOIICIIt of 1be Business
Plan (but. in the cae af deviations hm any cstimllte in the BusiDen Plan of the agtepte
amount of any cxpcusc depar1mcnt) dariDg auy Fiscal Year (illcluding. wilhoat limitation, any Lessco-
8ppi"OVCd updates or revisions thereto u contcmplaacd above) shall be eo J...cucc'e prior writtaJ
approwl which may be lfll*d or withheld in ita soJe diiWetiuu; provided, however. l..eaee'a approval
aball not bo reqUired 10 the ateot such deviatioDS ll'e cawaecl by lilY of the c:in:umstances comemplated
iD subaections A through D of this Section 12.0S, llld are COIISiaiCIIt with the limitations set tbrth in sucb
aJbsectious.
ll.06 AlloeaiiH of Certain bpeDHS. Subject to Section 9.02, it is agreed that, to the extent
that any COILCift"rioo or OCher expense reimbursable to Manager or ils Affiliates UDder this Agrccunent
is not incurred 10lely for the benefit of lhe Hotel, then sudt compeosation or ellpCDIC shill be
appropriately allocatrd to the other beneficiaries of such expeD&C. With rcspcet to group sc:rvil:es
provided by Manap in IICCOidlmcc with Scaion 9.02, if any, Manager shall, witbin ninety (90) daya
after the cmcl of ell;b Fiscal Year, fbmisb to Leaee a certification from the c:hief fiDaDcial officer of
Manager (a) that such penon has reviewed Ill lbo J10UP semccs and purchaaiag and procurement
compallltion, costs and expenses, and allocations (b) that such scrviecs were fimrished on a
not-for-profit biSis; and (c) thai the lllloc:ati0111 af auch WUlpCIIIItioll, costs and expenses 11 described
were uniformly IJ1d &lrly allocatlld to the HOle! a all Olhcc Maaapcl Hotels in the manner dc:smbed
without giving effect eo any otlw bcllcfrts gi"YeD eo Otha- Muaged Homla. Upon receipt of sach
c:enification, Lessee may elect to require, and MaMpr consents to, an audit by an independent
accountiug firm selected by Lessee of IIICh group IIIII purchasing aDd procurement
coell aad e1peoscs, and the llllocatiOD thereof to the Hotel. In lbc event sucb audit revellls
a vuiancc with respect to the nwtm Cllltitied in tbe fOregoing, Mmapr lball promptly refimd the
amount of such VlriaDc:e to Lessee fivm Muasa-'s own fimds (such refimd aball not be trca1ed 11 a
Deduction). If suoh audit reveals a Vllriance in exoea of $50,000, then MIDipr lhall 1olely bear the
expcase of such audit (othe:rwiae l..csscc shill solely bear sucb expense). Manager shall give Loaee not
lea thaD sixty (60) clays prior written notice af ey proposed. chango in the method for allocating such
cosll and expensea, ineludiag tbe reasaas therefor and a description of the proposed new method of
allocation together with an analysis, iD reasonable dclail, of how 11111:b cbangc would afl'ec:t the youp
acrvic:ea and pun:haalu& or pocurcmcnt compeualion, coati and expenses wbicb would be biDed or
credited to the Hotd. MIIIIF lball DOt change the method of alloc:aring sucb coell and expeniCS UDleas
the miaed metbod is fair llld equitable, and sach revised method provides tbr lbe allocation of such
001t1 and expenses on the same blsis u allocatrd to all of1he Other Managed Hotels.
SldloD 13. tannmce; IDdllllllllleadon
13.81 Preperty ud OperadoaallJIIal'llnce.
A. Maintamu of IIIIUI'IIICO. Commellcing with the Manaacment Comme11ceme11t
Date and CQIItinuina tbrougbout the Term, Leslee sball at Ill times bep the Hotel insured with the kinds
llld IIIIOUIIb of Insurance cleacn"bed in Section 13.02 below and in wilh any Mortgage and
the FI'IDCbile AgrecmCIIt with the exceptioo of workers compa'ISition insuruce and employment
practices liabilily illlllli'IDI:O, provided for in Sec:tioos 13.02H and 13.02J, respectively. 'Ibil insurance
shaD be written by qu1lified. solvent compaDies wbicb can lcgally write insurauc:c In lhe state in which
39
the Hotel is 1ocatrAI The policies must name Leuee ad Marulger as parties iDilll'ed, as their interest
may YJII'If, witb minimum deduc:tiblea CUSUJnWy in lhe industry, but ill .,Y eveot. not peatcr Ibm
S2S,OOO, or S2SO,OOO with tt:Spect to property coverages; such deductible limi11ti0111 sbaU not apply to
eartllqlllllce, wind, flood insurance and employment liability coverage. Losses sblll be payable
to Lessee OIICCI" 10 tbe ateut thai Mauapr's intcrata uay appear with rapect to any rn6r beiDa
settled 'UDder die coverages described in Seclioos 13.020 or l3.02J below. Subject to Section 13.10
below, any_ loss adjutmcnt witb respect to the iiiiUIUICe coverages set forth in A. B IDd C of Section
13.02 below sbiU be made by Lesroo acdag iD ics801e and absolute diswelioa. Ctificares iD standanf
fonn mdellciDg the insunlnce required to be maiD1aiDc:d UDder this AgR:eiiiCilt 1baJl be provided by the
procuring party to the other party.
B. Lessee Methods of Oblainina IDsw:locc. At its opti011, Lessee may procure and
mlintain the insurance by (i) Ulldcrtalcing !be procuring of iDaunnc:o directly in ita own name and behalf
or (ii) apecing to coverage UDder Manaaer's blallket poHcies in accordance witb Mngr:r's proposal at
a price emblisbcd Upou and in the cvcut of the aelcc:tiQD of Manager's iDauraucc policy,
such policy lhall be deemed to Lessee.
13.02 Co't'enees. The policies provided by Lcuee shall include:
A. Subject to Section 13.02M, Building llllllliiiiCC of risb on the "Special Form" or
"All Risk Form" in an amOUDt not leas thaa 100% of !he then fill1 cost thmof(as defined in
Section 13.04 below) or such other 1111ount which is acceptable to Lessee, and personal property
iiiSIIIIDCe on the "Special Form" or "All Risk Fum" in the full amOUDt of the replacement cost thereof;
B. Elrthquake and, if the HO!el is iD the floodplain, flood iiiSIII'IIDCe in
reasonable lllld adequate amoUDtl as RUOCIIbly determiac:d by Leuee;
C. Insurance for loaa or damqe (diJect and indirect) from Itaim boilers, pasurc
veaaela or similar apparatus, now or installed in the Hold, iD the minimum 111101111t of
$5,000,000 or in IIICb pacer amouall 11 are then CUJtomary or as may be JUSOnlbly determined by
Lessee tiom time to time;
D. Loss of income IDd business inlmuption illsunmce on 1be "Special PormM or All
Riak Form," in tbe 1111ouot of at least one yur of Manager's net iDcomo ancl.._'s net income for the
beaefit of Lessee and Manaac:r:
E. Commercial genc:raJ liability iDsurance, with IIDOUDII not less than $20,000,000
covering Clcb or the following: bodily injury, delltb, or property damage liability pa- occumnc:e,
pomonald advelti8iDs injury, aenenl18J1'9111, products and compleced opemioos, and liquor law or
"dram shop" liability, if liquor or aloobolic bc:vcnses lrC served at the witb raped to Lessee and
Manager;
F. IDiurancc covc:ring such other lwarda and in such 1111ouma as may be c:ustomary
for QOillpltlblc pmpcrties in the arce of !be Hotelllld is IMitable run insw&DCC comp1111ios, insurance
pools other appropriale companies autbotized to do business in the state in which the Hotel is located
at rares which lrC economically practicable in rdlltion to the: risks covm:d as may be reasonably
doeerminedbyLc:asee;
40
G. Fidelity bonds with limits m:l deductibles II may 1Q5011Bb1y detelmined by
Lessr:c, coveriq MBDIF'I anployees in job cluaificaticms normally bonded under prucleDt hotel
awapmCRt pi'ICii<:ea iD tbe Uaitcd States or othenrix RqUired by law;
B. WorkeD' c:ompcnsali011 iDsu1'1111Ce COYei'IF for Ill persoas employed by Manaser
at the Hotel. Such worbn' compen811tioa insurance shall be in accordanc:e with !be requiremCil1S of
ll)lplicable local, state llld fedmllaw,111d shall always be p!'OCIIRd Blld maintained by Manager:
I. Vcbiclc: liability iDsursnce for owned, nOA-OWDCd, and hired vehicles, in the
amount ofSlS,OOO,OOO. Sucb wbicle liability insurmce shall be in aoc:ordallce with the .requirements of
applicable 1ocaL state and fcdc:rallaw, md shallalwa'YII be and maintained by Manager,
J. l!mploymeat pmcticcs liability insurance iD an amoun1 not lea than $2,000,000.
Such anplo}'IDCIU liability iDsuram:c shall be iu accordaDcc with tbc rcquircmarts of
applicable local, SCIIteiDd federaJJaw,aodshalJ aJWI)'I be procured 8Jid maintained by Manager;
K. Such other insurance as Lesaee and Manager may reuonably delermiJic for
fiK:ilitie& such aa the Hotel and the openlion dlcreof, or u Pranc:bisor may .require;
L Crime Coverage in Che 8IDOIIIIt of $500,000, Guest Property and Safe Deposit
Liability in the aggrcptc amount of$25,000 ($1,000 per guest), m:llmlbeper's Liability iD the amount
and
M. At Leaee'a option, in it sole disaetion, tmorism insul'lllCC with limits and
deducdbles as may be reasonlbly cktrnnir-=11 by Lesaee.
13.03 far Premiums. All premiums. other than for die coverages Mfcrcnced iD
Sections 13.02A dlrougb l3.02C, shall be .r:eOected in the ADnul Opcntiua Projection 8lld paid out of
Oro.ss (and shall be trailed a Deductioos).
13.04 Replacemaat Cost. The term "fuul cost" as used hc.r:eiD shall me111 the actual
replucment coat of the Ho1el. requiring replacemcDt from time to dme Including an increased cost of
conatructiOD c:ndonem011t, if IYIIilable, and the coat of debris removal.
13.05 WIIYer .r SabroptloD aiUI ladeamltlea. All insurance policies carried by Lessee or
MaDager ooveriDg tbe Hotc:l. includiD& witbnut limilllion, contents, fire 8lld casualty illSlUUCC, sball
expressly waive: any ripl of subropticm 011 the part of the iDiurer against 1hc Olher party. The parties
haeto agree: that their policies win include sucb waiwr claule or eodonemODtiiO long 11 the same are
nbtaiooNe wilhout axtra cost, 8lld in !be event or such an extra charge the olher party, at its election,
1111)' pay the 8811lC, bul: shall not be obligated to do so.
t3.Gfi Fo111t Satbfadory, etc. All of the: policies of insuna:e tefei:Jed 10 in this Section 13
shall be writleo in a form reuonably aadsfac:toty to the party to whom lbe beaefit of tho iNuraDce nms
in with the tams of this AgJeemeJJl Lessee shall deliwr llliCb policies or certificates tbeteof
to Manager prior to their cf&ctive date (a:od, with respect to auy renewal policy, thirty (30) da'YS prior to
the expiration of the existing policy). 8lld iD the event of the failure or Lcnee to effect such iDswuK:e as
hemin called for, or to deliVCl such policies or certifica1cs thereof to Manager at !be limes required,
Manager lball be Clltitled, but sball have no obligation, to effect such inlurauc:e, the fur whidt
41
will be paid in KCIOrdancc with Section 13.03. Elch iiiSIII'el' mcDlioned in this Sa::tioa 13 by
cadonement of the policy or policies iaued by it. or by indcpaldeat instrument, tblt it will gi\'e to
Lessee and Manager thirty (30) days written notice before the policy or policies in question sba1l be
mlhlrially altered, II lowed to or cmrelled.
13.G'7 IDcreue Ia Umits. If eidlar Lessee or Manaaer at my lime deems the limits of tbe
pc:I10III1 property damaae amder the comprehmsiw public liability inauriJICe tbon Cll'ried to be
elthtr excessiw or insufficient. Lessee llld M8Dapr shaU mdeavor in good flitb ro as= oa the proper
md re8110111ble limill for such iiiSUlMce 10 be carried and such iDsuraDce 111111 tht:rea1a be carried wi1b
1be limill thus egtWdou until farther change puniWittotho provisions of Ibis Sectioa 13.
13AI8 Blaakel Polley. Notwithstanding mythiDa 10 tbe contained in chis Scctioo 13,
Lessee, or 18 tbe cae may be, may briq the illlurance provided for herein within 1be
coverage of a 80-CIIIod blllllkd policy or polides of inlurlnce carried and maintained by Lcssoe, or
18 the c.- may be; provided, however, that the coverage afforded to Lessee aocl MlaIF will
not be rcducccl or dimiJrished or otberwise be different from 1bat whicb would exist UDder a nparate
policy meeting Ill ocher requirements ofdlis Agreement by reuon of 1be use of such blannt policy of
iiiiUI'IDCe,lllll provided funher that the requiremans of this Scctionl3111'e otbwiae satisfied.
13.09 Separate l111urance. lMsee aball not OD Lcssco's own inidltiw or punUIIU to 1bc
request or requirement of any third party, take out sepmate insurance CODCliiTellt ill form or conlributinc
in the event of lou with lbat required in this Section 13 to be f\Jmished, or increase tbe amount of any
dtea existing insuraDCe by securing m additi0111l policy or aclditiOIIII policies, UDic:ss all parties bave m
iDsurable interest in !he subject matter of the iuW"allcc, including in all cacs Muqer, ce included
therein as ldclitiOillll iDawed, lllld tho loss is payable UDder such adclitioull llepll8le msu- in 1be
Slllle II!IMer as losses are payable under the Agreement. Lessee ahall inunediatcly notify Mmager
LcsRe has obwned any such separate insuranco or of the iDcrasiDg of my of the lm10IIIltS of die !ben
existing insurance.
13.10 Reports oa ID1ruce Clabaa. MaMger, with 1hc 111istanoe of Leuee, 8ball p-omp!ly
invcstipte 8Dd malcc a complelc and timely writtea report to tbe appropriato iiiiJUI"IIICe company IS to all
acc:idenG, for damage relating to the ownersbip, operation, and maintellauce of the Hotel, my
damap or dostruction to the Hocel and the estimated cost of rqllir thereof and &ball prepare IDY md all
reports required by any inllllriDCe company in connection tbelewllh. All snell iCpOIIS sbiD be limely
filed with tbe iDsurancc ClOihpiiiY as required under the 111m1s of the iDsllliiDCC policy imolved, end a
fiDal copy of cuch report shill be fumiabed to Lessee. Manager sblll not ldjust, aettlc. or compromise
ay insuraace loss, or execute proofa of such loss, wilh respect to the: insanlllce covaagcs with R!&pCCI
to lilY c:asuaity or other event without the prior writlal coascnt of Lessee
13.11 Declucdblcs Co lie Operatla& Eipauu. Any dedaaiblea paid towud insurance claims
shall be deemed Deductioas, other dum deductibiel paid with taped to the coverages refcrmc:cd in
Sections 13.02A through 13.02C.
13.1Z llldCIIIIIUicatloa.
A. Lc:sscc shall indanllify, defend aod bold Manager, iu Affilites and tbo rmpecdve
dircaors, offic:m, shardl.olders, and agents of cadi of them (collectively, "MUJ18Cr
42
Indemnified Putiel"), bumlesa ftom Uld apinst all daima, C8USOI of action, loa.,lttoloeys' fees and
ocher coe11 and expe:nses (1DchJi:liD& bat DOt limited 10, liquideted clamqes, tnmsftr fees, and
taminllioo COlts), liabilitiel IIIII clunaps ( I:Oilcctively Rierred to 11 "Claims") imposed 11J1011 or
incurred by or ISICited apilllt Mmager IDdemnificd Parties UDder, or on ICC01IIIt of; or with 1espect to
tbia Ap'ecment arit;ing out of or naultlng fiom: (i) MamaJIIJ's due perfomwlce of this Agreement lllcl
the apccmema and instnuncntl eatcRd into in conncotion with this AgrecmcDt (tiUs Apement and
IIUCh olber qreements and instrumellls are colleetiwly referred to bemn 11 the "Agreemeots") or (ii)
1hc fiilure by Lessee to perform its obliptiOil'J under my of the Withoul limirin& the
gencnlity of lbe foregoiDg. Lessee aball indcmnil}l, clefmd and bold Mmmgcr Jm:lemDifJed Parties
barmlcss ftom Ed against all Claims imposed upon or iocumd by or asserted agaillst Muap
Indcmni1led Parties UDder or with rcspc:ct to tbc Flanchisc Aarcomeat wbidl arise as a mult of any
dofiwk by Lossee or Owner UDder tbe ICmls oC lbc Franchise Aareemont. except to the ezta such
default is the result of !be gross oegllgax:e or willful misconduct ot or breach of any of the Agreemenra
by, Mauger.
B. Manaser shall indemnify, dofCDd IDd bold Lca&Dt, Owner, its Affiliates and tbc
respective diicciUis, officen.lhareholdcn, and ageull of each of them (collectively, "Lessee
Indemnified Parties"), barmlcss ftom and apimt aU Claims impoacd upon or iDI:urred by or usertcd
ipinst Lessee IDdemnified Parties Ullder, or on IICC01IIIt or wi1h respect to aay of the Agreeme!Q
arising out of or rasultiDg from: (i) Lessee's aDd/or Owller's due pes:b:IDIIlcc oflhc Agrccrneuts, (il) the
by Manap to pcrfo:nn iu obliptiODB under 111y of tho or (iii) lbe infrinpmcot of
the rigbta of third parties Win& from the aae of the Intellectual Prope.ty or other illtcllcctual property
used by ( exe:ept, in the case of tbia clusc (iii), if IDCh i:D&iJiacmcot arises UDdc:r the Franthiae
Agreemt:nt by virtue of Lessee's failure to mike payntCIIIS UDder the Prancbisc Agreemcut). Without
limitillg the paelllity of lbe turegoiDg. Manager sbal1 indemnify, defend llld bold Lessee lndc:mnified
Parties blrmleas fiom aad apinst all Claims imposed upon or incurrod by or asscrted agaillst Lcsscc
.lodcmni&d Parties UDdCI Dr wilb rc:spcct to the Flllllcbisc Aslcemc:out which ariec as 1 I'CIIIlt of uy
de&u1t by Manager under the terms of any of the Agrccmeuts or lbe Fnnchise Agrccmeat, except 10 the
extent sucb dofault ia the rcsuh of die 8109S negligence or willfi:d mliiOODCbiCt or breach of any of lhc
Agreemellla by, Lessee or Owner.
C. The proviaiom oftbia Sectioa 13.121haU survive TcnaiDI1ion of this Agrcomcmt.
Sedloa 14. Damap aDd Co"em"tiGD
14.01 Damap aad Repair.
A. If the Hotel is damap by fire, caualty, or other c:ause duriag the Tonn, and such
cJaraqe docs not materially IUid adversely affect the opcnlion or the Hotel, Lessee shall, with all
IUSOillble cliligeoce, to lbc that proceeds from tbc insurance delcrlbed iD Section 13 arc available
(subject to tbc provisions of any Mol1pge eacumbering the Hotel) mr such purpose, rqMir or replace
tbe damaged Or destroyed portion or die Hotel to 111'bllanti1Ry die 111ii1e coadition IS existed previously,
subject 10 the raaaiDder of Ibis Sectiou 14.0l.ID soch event IIlii during the period of 111ch repair, it is
Ulldentood and agreecllhlt the Hotel shall not bo (lerm.;d 10 be a Pooled Hotel fOr purposes of Section
m.A oftbe Pooling 111d Cumulation Apcmcnt.
B. In lbr: cvcat damaF or destruction to the H01cl from any cause materially and
43
ad\'erscly lfl'ects the operation of 1ho Hotd IJid Lessee fails or ciOiltlaot ro c:ommcuco and c:omp'le1e the
repairing. rebuilcJins or repla:emeo1t of lbe IIDlc 10 that the Hel shall be aubiiiJmtially tbe same 11 it
wu prior 10 I1ICb damqe or des1ruction, Lessee may, at its optioa, elcc:t 10 tmnilll!e 1biJ Aareemcm
(without ny Early Terminltion Fee) upon sixty (60) days' prior wriUcn notice. In nacb event lllld duriug
such period, it ia 1IJiderslood and lgrced tbat lhe Hotel llhall not be deemed to be a Pooled HDII:I for
purpo105 of Scdioo mA of the Pooling and Cumulation AgtCCJncut Additioually, if lbe Fmm;hisc
Agreement ia tennjnpect due 10 Leaee's fiil1ln to repair Uldlor cestoro the Ho1el, Ibis Agreement shall
termiDile, effective upon the termination of the Franchise Asreemcut In the CMlllt dwnae or
destruction to the Holcl fiom Ill)' cause lllllcriaDy and ldvmely affects !be opmtiOD of lbe Ho1eland
Lessee electa to colllllleiiCe IIIII CODlJicte the repairina. rebuilding or rcplacemeot of the same so diet the
HOielaball be I'!Jletanrilly the amc u it was prior to such damage or dcstnaction, durtq the pcudcney
of lillY period of repair it is undctaiDod ll1d qreed tbat the Hotel abaU not be deemed to be a Pooled
Hoael forJIWPOiel ofSec:tion m.A of the Pooling and Cumulation Agreemeot.
C. For purposea of this Sec:tioa 14, the Hotel shall be c:onsidered materially and
ldveJSCiy aft'cctcd by a c:asualty event if forty percent (40"At) or more of the Hotel rootn1 are out of
service and the: c.timated time for repair of such danuiJC does or eould equal or exceed cme bunciRd
eighty(l80) days.
14.01 Coodeamatloo.
A. If all or substantially all of tbe Hotel is takeo in any eminent domaiu,
oondemnatian, compdsory ecqui&itian, or similar proceeding by any competent authority for any public
or quasi-public use or pwpose, Lessee or Manager may elect 10 tennilllle this Agreement, subject to
Section 14.02B (witbout any Early Termination Foe). All awudl for such taking or condcrmation shill
be paid to Lasee or Owner.
B. In the event a portion of the Hotel shill be tlbD by die evvms described in
Section 14.02A or tbc ~ Hotel is affected on a leqlOimy basis, but lbe result in cilher cue is not to
make it unreuonabl.e. in Leuee's dillcretion, for Mlilqer 10 continuo to operate tbc Hotel, this
Mtnagcmmt Agreemcnt may remain ia tbU tbru: aad cft'oct. All awardll for any such penial or
tempomry takiJig or oowlemrwlion shall be paid over to Lc:ssec andfor Owner.
C. Ml!!!lfF sball be enlitled 10 make 1 claim to dte coademning audlority for the
value of its losa ofh&i""$1 ariaiDJ fi:om the everdl desaibed in this Section 14.o2A or 14.02B, wbicb
abal1 in no way IICrYe 10 diminish or reduce tbc c;lllim allocable 10 Lcssco or OMw.
SectJe IS. Delalllt
15.01 Deraalta and Eveats ofDefaalt.
Each oflhe foUowing shall constitute a "Default'':
A. 1be oypoiututent of a m::eivcr, trustee. or CDStodiln for Ill or any substaotial part
of the p1opcaty of Manager, lessee or Owner, u the c:uc maybe, ifsueb appointmeat ia notset aside or
vacaiBCl within sixty (60) da)'l. Upon the occurrence of .ny Default by either party 11 described under
this Secti011 lS.OlA, said Default shall be deemed an "Event of DeCauit" under this Agreement.
44
B. Tbe conu1IIIDCelllelll by Manapr, Lessee or Owaer, u the cue may be, of any
vobmtary cue or proccc:diDg under present or fwure fedeml bankruptcy laws or Ullder lilY oilier
baDicruptcy, insolvency, or adler laws respo4 ing debtor' a righta. Upon tho OOCIImiii:O of lilY Default by
either party u de!aibed under Ibis Sediou 15.018, said Default shall be deemed m "Evl!lll of Default
UDder lhil Apeemem.
C. ThDIDikn. of a gencralllliplliCIIIt by Mamp, Lcslee ar Owner, a !be c:ue
may be, Cor the beacfit of i crediton. Upcm tho oc:curnace of lilY Default by either party as de8cribed
andcrthis Sectiou IS.OIC, said DofanltsbaU bedcaned an "Evatt ofDefaulf"Widertbis Agreemeot.
D. The eatry apillst Manager, Lossee ar Owucr, as the case may be, or 111y "order
b relief' or other j!Migmrn! or dccrcc by any c:owt of compei&:Ut jurisdictioa iD any invohmlaly
proceeding apinat Mauger, Leaee or Owner, as tho cue may be, uadrz any or fulure fedcnl
blnkruptcy laws or under any Oilier baakruptoy, ioaolvem:y, or odler IIWI ftllpectiDg debtor' rights, if
auch onlcr, judgmem, or decree ooatiDues 11111tayod aad in e1rect for a period of sixty (60) CODJeCUiive
days. Upon the ocCIIITGICe of any Default by either party as daaibed Wider this SectioD 15.010, said
Dellllllt shall be ckemed an '"Event of Default" 1111der tbls Aglecmc:ut.
E. Tbe failure of Manager or Leaoe, u the case may be, to make any payment
required to be made in acconllncc with the tenna bereo Upoo the occumccc of aay Default by eilber
party as described 1IJider this Section 15.01 E. aaid Defimlt sba1l be deemed an "Event of Deliult'' Ullda-
this Agreement if tbe defanlt!ng party fails to make die equired payment widlin tm (10) days aftEr
writ1111. DOtice by lbo party to the defaaltins party that the paymCDt baa DOt yet beCD
Riccivad.
F. A witbdrawal or moc:ation, by any JOWilling body baving juriaclictiOD
thcnof; of any llllllerial liecmc&, permill, dcc!:ees, acta. orders or my other approvals, the ablence of
wbich would preveot Maapr's J.eriiWidar, pvvicW tblt such withdrawal or JeYOCitioo is
duo to the ICII, omisaioos or De&J.ipuce of either party. Upcm lhe occ:uneDce of lilY Default by eilber
psrty as deac:n'bed UDder this Section 15.0IP, said Default sbal1 be deemed m "Ew:ut of Wt" under
this Agreement lllld shall be bcreuader to such defaulting party if it faila to cure such Default
witbin thirty (30) da:ys after receipt ofwrium notice from the noo-<lefilulting party demanding sucb cure,
or, if the Default is sucb that it cannot I'CIIOIIIbly be CURld witbiD said tbirty (30) day period of time, if
the defisnlri"8 party falls to c:ommence the cure of sncb Default within said tbirty (30) day ptriod oftime
or thma1tlr fails to diligeDdy pmsue IIICh etrorts to completioa.
G. The flllhuv of Lessee or Mlnapr to pafonn, bep or JWJUI any of the Olbcr
covenants, 1111clertllkillp, obliptiODI or ccmditiona aet fords in this Agreemmt. inclucfiD&, without
limitl!ion, M-r the au!bority granted to it bemJDdao. Upon the occurrence of 111y Dc&ult
by either party as described under 1bis Section 15.010, aid Default abaU be deemed 111 "Bva1t of
Default"; provided, however, if such .Defmlt is capable of being cured, tbaJ. the defaultiag party &ball
have thirty (30) days after receipt of writtea.I!Oti.ce fiom the 11011.-def'aaltiag party daDanding such cure
to cure the Default, provided fwtbcr that if tbc Default is 1ueh that it caanot rQIIOJIIbly be CURld by the
dcflulling party using ita best efl'ola wilbin said tllirty (30) day period of time lheo the defaulq party
sball have an additioul dlirty (30) days to cure such Default
H. Manager tails to comply with Section 2.04 hereof or otherwise ceaaes to be m
45
"elisibJe ; .. , f1 ndent COIIhclor," u defilled in Sectioo 856(4) of die Code; with ICIIpect to the HoteJ.
Upcm tbe occum:acc of lilY Default by Mafta&er as dcsc:ribecl UDder this Sectioa I S.OIH, said Default
sbaB be deemed 111 "EVCDt of Dcfauh UDder Ibis Agieanent if Manqer falls to cure the Default within
sixty (60) days after the OCCIIIJ'Qicc thcmlf (provided that such pCiriod is permitted by law) !OOject to the
limitations ofSectloo JS.02D.
L Manaacr sbll have CODIIDihed an BYma of Default under 111y of the. Pooled
ApaneaiS. Upon the OCC\m'ellce of any Default by ManiF' as dcacn'bcd under this Section I S.OU,
ll1ldl Default shaD be deemed an "Bmmt of Default" by Man'F"IIIICier this AgreemcDt
J. Termination of the Franchise Aareement by the Francbisor as a rcault of Lessee's
failure to provide capital to improve tbe Hotel as raqui!ed by such Franchise Agreancnt Upon the
OCCUII'eiiCtl of any Default IS descn'bed Ulldtr this Section IS.OIJ, such Defiwk sball be deemed 111
"Eveat of Default" by Lessee this AgreemenL
K. Termillalioa of the Fnncbise Agreement by the Franchisor u a result of any
reason ocher than tbe I'CISOII specified in Section IS.OIJ. Upon lbe occum:nce of any Default as
cbuibcd UDder llli& Sectionl5.01K, such Default ahall be deemed an "Event of Default" by Maoager
UDder this Agl>ecmcnt
L. TmmiDation of this Agreement onder Section S.OSC where suc:h terminatioo does
DOt result frvm actions or omissioo of Manager and Manager is oot othe:rwiae in default hereuocler.
Upon tbe occurraJCC of any Default u described under this SectioD lS.Oil., such Default shall be
deemed an "Evart of Default" by Le.- under tbis Agreemen1
15,02 Remtdls apR EventofDerult.
A. Upon the oceuaeDCe of ao Eveot of DcfiUJt, the noo-definlting party shill have
die right to punuc any cme cr of the followiDg councs of IICiion: (i) to tamioate this Apanent by
wriuan notice to the delaultillg party, which lmmiDalion shall be effective u of !be ef!'ective elate which
is set forth ia said DOtice; (ii) to i111titute any IJid Ill proccodinp permitted by Jaw or equity, including
without lilllitlitioo actiou for spoGific perfonnaoc:e andfcr damages; aDd/or (ill) to avail itself of any aod
all other remediea which may be av111able to 1he DOD-defaulting puty. Upon tbe occumnce of ao Evont
of Dd'ault by either pany with reap:ct to the peyment of mcmey, the IDIOunt owed to tbe non-cle&ultiog
party llball accruc inteR8t at the Overdue Ralc, from and after the dale on which IUcb paymeat w11
originllly clue to the non.def'auJiing party. The rights granted hereunder shill noc be in substitutioa for,
but sbaB be in addition to, any Uld all rights and mncdics available to the non-defaulting party by
reason of applicable provisions oflaw or equity.
B. Notwithstallding the foregoin& in the eYCIIt that Manager tcrminatas, or has the
right to tcnninate, this Agreement by reiiOil of BD Bvent of Default on behalf of Lessee, Lessee sball pey
to Mmlger as liquidated damages an am01111t eqaaJ to (i) lbe fair market value of lhia Asz>ecment rating
into ac:collDl all facll aod cin:umataoces, including. without limitatioa, all fees. costs and
expenses of the perties. plus (ii) to the exteat MIDager is not compeDSitcd theRfor by llllOUDIS to be
paid pui'SIIIIIt to clause (i) above, the direcl costs of emplo:yee tamlnidon and aevennce for Hotel-level
t:q)loyeea rcsultins din:ctly fiom tbe tenninalioo of Ibis Agreement. all of which must be .re&IOilllble,
CU3tomary mel pursuant to lind in accordlace with plans, policies BOd agreemen11 of
46
Maager in effect consinmt with the terms and GOIIdicions of this Agrccmcat of which Lessee Ius
bowled&e and which haw historically been in etrect. If the parties are Ulllble 10 ape upcm 1111ch fiir
mubt value and such dkect costa n:fem:d to ia claaea (i) IDd (ii) lbove wflhiD thirty (30) days after
such right af lermioaliao by Ma!lllger arises, die detemlination af aucb fair market Vlllue plusucb dinx:l
cost1 shall be made by sa Apprailrr. lfLeaaee and are uaable 10 to the selection of die
eecb shall selea an 8pprliser at his or its owa expense. and each appraiser 110 sclcmd sball
select a third lplniser which shall perfom the appraiAI herein clolcribed. The Apptaiser shall employ
such methods of valuation as IRI customarily applicable to valulliao of hotel mmagement qreemeocs,
taking into ICCOUI1C all appropriltO fadora as aforesaid. The Appraiser sball isaue a writtea opiDion
coofinning its appraisal of such fiir market value aad such dimcl costs as soon as practicable (bat in no
evem later dian sixty (60) days) after lhe dale of rermination of tbis by Manager and receipt
of all the appropriate inbmalion fiom tho parties as provided below. The parties 1ball pmviclc such
information as is reasonably requealed by the Appraiser. The detc:rmiJultion of IIJCh fair market value
and such dirccl costs by 1he Appnliler so selected shall be fiDal and binding upon l..clsc:c IIJid Maaager,
and tbeir respective SUCCCISOl'l and aaigns Leasee and Maaager sball each pay one-half ( 112) of lbe fees
111d oflhe Appraiser. Such liquidated damages shall be Maoager's sole and exclusive remedy
It law or in equity ariaiag &om 01 relm:d to sach Event of Default. The partias agree that the foregoiog
liquidated damages arc fair 8Dd compeasation to Manager tbr the business wbic:h it willl01e
as a IeSUit oflhe tcnniaation and that lbe aemc: arc not and shall not be coaatrved as a penalty.
If Leaee diJputea Manager's rigbt to tenniaae Ibis Agrwuc.11t, the provisiODS of this Section I S.02B
shall be 1olled pending 1e10lution of Ill)' dispute. Upon the paymeat of such liquidated damages as
coau:mplaled by the foregoing. this Agn:lement shall tc:nninab: (if DOt prmously teJnh ted by MBDager
iD CORDection lhemrith). Manapr shall be entidccl to payment of liquidatod damaga only once under
this Agreement.
C. Notwithlrladiag tile foregoing, Manager lball not be entitled to treat an eftllt
under Section IS.OIJ as a Default or m Event of Defaalt bereunder for a period of oue (I) yoar
following lhe terminatiou of the Francbi8e Asreemeat reCerred to therein, md in lhe eveat that within
such ouc (I) yar period Lessee Rpi!KleS the tmmiaated Franchise Alfeement and elects to apply this
Agreement to tbc Hotel under IIUcb new fiancbise BgJeemmt. wbicb sbal.l be reasonably equivalent
brand which could reasonably be expected to provide substantially similar to the taminated
Praachise Agreemalt, then sacb. Default lllld Bveat of Defiult sball be deemed cured, but in aucb event
Loleee sball compmute Menepr, subject to the Pooling llld Cumulation Agnx:mart, for the amount of
lost Manlgemem Fees ldllllly sutalned by Manager during such gap period as a JeiU!t of lhe
lamination of the Franchise Apeemcot; proviclecl, however, thai M"9r shall be caoclusively dmned
not to have sustained any lolses 01 c1!111ap if Gross Revenues and Available Cash Flow for lhe Hotel
during such period are substiDtillly aquiVIlent to those IICt forth in the Annual Operatillg Projectiou for
the Fieeal Year in which SPdl tonDiaatiOD occurs (any uptinp or reviaioas to the Annual ()perltiDg
Projection pur111111t to Sectioa 12.05 lball be disregarded). It is UDdars1ood d agreed tblt duriDs such
one (I) year period u deacdbed above. lbe Hotel sball DOt be deemed to bo a Pooled Hotel for J!III'PC&a&
of Section m.A of the Pooling IIICI Cunmlatiao Apet n"""
D. NotwithstandiDg lbe fore&Qin& in tbc: event of an Event of Deflwlt pW'IIIIIIt to
Section IS.OIH, if such Evart of Default results from a cbaage of lllW after the Bffeccive Date which
pm:ludea Manager from cootiauiag 10 maa.aae lhe Hotel OlllllY oflbe other Pooled Hotels, 01 as 1 result
of wbicb Lessee or any of ill direct or indirect af!iliates, includiDg. without limitation, Innkeepers,
would der advene fedaal inOOIIIC I8X consoqueoces from Manager's contimed management of the
47
Hoed or P)' of tbe other Pooled 11omb, 1beD. Leuee shall have the rigbt, u ill sole III1Cl exclusive
runody, 10 tenniDate this Apcment and M-ger lhall have no liability or obliptioD 10 Lesaee in
damages as a result of such termination of Ibis Agreemeot; provided that in the event dud 1.-ee ao
tamiuatcs thia Agreement in accordance with tbc linaoiD& Lesaec lhall pay to Manap a one-time
tamiDation paymeot equal to the Pair Market V aluc of1his Aplemeat as determined in IICCOn:laacc with
4.010 leas the liir marbt value c;oasi&lalt wid! tbc filir DIIIIa:t value dctami.aation
metllodology aad procaa aet forth in Secti011 I S.o2B above) of the agreement (or agreemeniS) eotered
into to rcplaec lhia Agrecmeot following such lmDiuatioo tbrougb the encl of tbc Contnct Tam (the
"Special Terminacioo Fecj. In the event dud lid! replaremmr a.grec:mmt is an interim repleccment
qreemlll1 that docs not CICttnd lbrougb the em1 oftbc Coatract Term used 10 determine the Fair Mlrket
Value of this Agreement (or is terminable by Lessee witbout penalty or premium), tbeD Lessee shall
provide 1 good faith estimate of the fair market value of a rcpiiiCCIIlcnt agreem.cnt 10 the new maaager
for the ranlinder of the Contract Tenu not so covered and auc.b good faith estimate sball be utilized,
together with the fair marltat value of the interim replacement agmemml, to delcnnine the aurepte fair
mutct value of the replacement agr=neots tlmlgb the end of the Cormct Term. 11 is UDdentood and
agreed that if a replaccmeat agreemem is tenninable by Lessee at aoy time (subject to ootice) willlout
pcllalty or premium, then it lhall be deemed a ona (1) iDiaim replacc:mcnt .pccuiCIII for p111p0sea
of this Section IS.02D.
SeedeR 16. Alllpmeot
16.01 Autpmnt lly Mmqer. Managor ahall DOt ll5igc this Agreement without the prior
written coucnt of Lessee, which c:onsmt may be p10vided or withheld in its aole discraion. Mauacr
aball aot engage in a ChanJc of Control Event of Maowger without lha prior written conseat of I esscc,
which COIIIIIIIt thereto (aod any rdalal asi&Jlllent iu CODDcction tbc:rewilh) will not be ume810111bly
withheld, 111d, if applicable, the prior wrim:n cODSC!II of Mottpgee and/or the Francbiaor, provided
bowewz, thlt it is cxprasly 11!1dcntood IDd asrocd bl, without limiting ID)' ocher deeormilllli0111 of
Lessee's retSOI!ablenea in CORDedioD with any such COIISCIII, l.er.tet! ahall oot be acting IIIUCISOIIIbly if
it witbholds COIIICIIt 10 a Cha!IF of Coalrol Bvalt ofMaoagcr inwlviDg a party that is DOt experienced
IDd qualified and proficient in the 1111111ge111CIIt of upale cxteaded stay hotels on a basis reaaoubly
commeDIIIllte with Manager or thlt is DOt ao "elipble indcpcndeut contra:tor" u defiDCd in Section
8'6(d) oftbe Code or lhll does DOt othmvise meet the Rquiraneots under Section 2.04B hereof. In the
evmt that M111ager enpges in a Olancc of Conrrul BviDt of without obtliniDa the prior
written COIIIGit of LesHe u couteii!Plated lbove, thea Lessee abaii llave the right, in addition to any
other rigbls and remedies of Leuee hereunder, to tamiuwte Ibis Apeement without any obliplion,
lilbility or pcllllty. The dilpositioo by Mawgc:r, direcdy or incliJectly, of ita controlling inlerest in aoy
Affiliate to which it has pmiou.sly assigned tbia A8Jecmeut, or lilY otlla" Cllansc of Conttol Evmt of
MmF shall be clmned to be a prohibited ISsigmncnt llcmmcler requiriDa the prior written consent of
Lessee and, if applicable. the Mortpgee aodlor the Franchisor. No IISigmnent of thi1 Apernent shaD
opcl'lte to release Manaau &om any of its obligarioDs llllder this AgaeeiDimt Ulllesa otherwise agreed to
iu writina by Lessee in its 10le ditcretion. No U&i8JIDI.CDI by Manqer of illi intercat in Ibis AgleemcDt,
whether aucb occurs voluntlrily or by operation of Jaw, aball relieve Maoger from any of its obliptioDI
UDder Ibis Agreement which ICCIUed prior to the date of IIUCh usipmenlaod is npn:uly pcnnitllld.
16.0Z A..,._t by Leuee. Lessee DtiY assip this Agreement without the prior written
conacnt of Maulger provided that: (a) the aaignce meets lbe following criteria: (i) it has llllfficieat
financial resouReS 8Dd liquidity to meet the oagoing fioaclal obHgatioDa of the Hotel and to llllintaiu
48
tho Hotel in accordmce with lbc Frncbise Agreement pursuant to Section 2.01; (ii) it it nota convicted
felon or a penon geaenlly kDowa to be a member of orpnized crime; llld (Iii) it hi& usumed lllld
agRCd in writiDg (to be dc'IM:red to Manapr 110t more IbiD twenty (20) days followina tho eft'ective
da1e of such aaipment) to be bouDd by all of the 1erm1 of Ibis Agreement; (b) tbe usignment resu11s
1iom any mtlgcr, consolidaliou or teOrpnizatioo iovolviug Lessee or Owner (but subject to any
CClllllelll, if any, required by ay applicable Monpgee), proVided that die &urviving entity mce1s the
folJowinc aiteri!= (i) it has lllfticient fiDaDcial ICIOUII:e8 and liquidity to mea tho ongoiog financial
obligations of tbe Hotel and to mainrain Che Hotel in acconlaace witb the Fl'lllchile Agreement pursuant
to Section 2.01; lllld (ii) it ia Dot a convicted felon or a penon generally lmown to be a member of
orpnized crime; or (1:) 1hc 11111ignee is any Mortgagee or ita affili!!lr:d desisnee or otber party who
Iitle to the Hotel tbrougb ale by power of sale, foreclosure, or deed-in-lieu tbmof. No
111ignmcmt by Lellctl of its inla'cll in this Agreement, whether aucb OCI:1III voluntarily or by operation
of law, aba1l relieve Lessee from any of its obliptionsliDder this Apeement whicb IICCI'IIfld prior to the
date of suc:h aaigmncnt, but Leuee sball be expressly relcued Jbr liabilities and obliptioDS accruina on
or liter the date of such asaipmeot It is expressly lllldmtood 8Dil agreed that a ChaDge of Conlrol
Event of Inakeq)en sbaiJ not be deemed an usiguuart berewldcr. Nolbing in Ibis Sec:tion 16.02 shall
limit tho rights of Lessee anderSectioo 4ofthis Agrecmeat(axcept IS provided in Scctioo 4.018(1)).
16.03 !fl'ect of Permitted Anipll!fl!fl. A coosent to ny pllticullr Uligomeot shall not be
deemed to be a CODSCDt to any other usignment or a waiver of the requirement that c:oasent be obtained
in the case or my other -.signment. No such assi.goment shall relieve tho usigniog patty hm its
liabilities or obliptionslllldcr this AgrecmCIIlll:cruiog prior to the effel:tive date oflhe usigmoeot
1'-04 Fartller AlpmentL If eidler patty c:oaseots to an assignment of Ibis Agreemeut by
!be other, no fill1her auipment shall be made without lhe apress consent in wriring of such party,
DDless sucb assigmnenl: may od!envise be made without IUCb COII8CII.t pwsuant to the tams of Ibis
Asrcemeot.
Secdoa 17. 1Dtellec1uJ Propert)', Software ud Eqalpmen.t
17.01 ltdlec:Cual Property. Alllntellec:Qial Property paid for and owned by Muager II and
llbalJ RIDain lbc oxclusiw property of Maaapr andfor its Amliates, Slid aball be utilized by Manager in
c:oaoecti011 wilh the operation of the Hold aod Che paformlllce of MaMpr's services UDd Ibis
LePee lbal.l hlwc no Jiab.t to use aoy Iotellcctual Propelty witholll Mllllger's prior wliltell
approval, wbich may be granlcd or withheld in M-aer's sole 111d absolute discretion. Upoo
Termination, Ill I'Dtellcc:tull Propa 1y shall be remoYCd fiom 1he Hotel by MIIIIF without
compeosation therefor to l811ee, and l.cslee sball ceue immc:dlately IDY usa of the Intolloc:tual Property
and remm to Mwwpr IllY and Ill copies or olber r:qmMiuc:tlons thaeot; wbether such are in pbysic:ll or
eledroai<: format.
17Jil Software ud EqalpmeDt All Softwlre Is and &ball remain lhc exclusive prupa:ty of
Mauser aodfor its Affiliates (or of the Iiccmor ofsuc:h Softwam, IS the may be), and Lessee sball
bave 110 risbt to use, copy, duplicate, reverse eogineer or otherwise biDdle or manipulate any Software.
Manager oWDS, or has other lawfUl riabts, UDder licenses llld other CODtradS with third party valdors. to
use, all Softwam, for all purposes required in order for Mana!F to perform ita obliptioas UDder this
Agreemeat. Upon Taminalion, Maoager &ball remove all Sofun.rc from the Holel without
COIIlpeontkm therefor to Lessee, together with aoy computer equipment whk:b is proprietary to
49
Mmeger llld hal ben peid fOr md ia owned by Manascr Maaqcr aball fiiCilitau: tht: prompt d
orderly II'IIISf'er to Lessee (or its desipeo) of IAuee'a recorda md customer, operating aod
other dill tepnliug lbe HOCI!I in Malllger'a control in form or medium that sud! teCOnla and
dlla 11'1: maintainod or stoml by or 011 ill behaiC aod ManiiiF shall cease using such
and dill. after such 11'1118fer.
17.83 Leuee'a hlteledual Property. Informatioo which coaatitutes l..elaee's Intellec:tual
Property (u defiDed hmin), regardless afthc medium iD wbicb. it is compiled or stored, amd reprdlcss
of whether my portion ofLcsaee's Intellectual Property ia compiled or &toted using Ill)' portion af
Software or oilier componeata of lnlelleclllll. Property, sball be and remain the exclusive property of
Lcs:tCC. Nolwitbmnding tbe foR&oin& Mmwgcr JUly use information comprising Lessee's
Property fur JIIIIPOICI .._bly mated to tbe proyiaioa of services by Mlllapr llllder llld in
ICCOI"diiiCe with die tams llld conditions of this Agreement, provided thai Manaaer sball take such
areps to provide reasonable 8IS1IliiiCC8 that Lessee's IDiellcctual Property shall remain COIIfidcntial, is
not disclosed 10 III)'Onc other than the at the Hotel ad DOt used for any purpose other than
lbe pmposc of providing services under this Agreement. Leslee'a Imelleetual Plopeny lhall be defined
u meaning (i) y names or logos uaod by the Hotel or restaurants or lounges Jocakd in the Hotel.
whether uaed aloae or in my combination of words or pbrasel (but excluding Manager's name to the
extent pan thereof), (ii) any and all informllion .rcprding guests and other usen of guest rooms or otber
amenities and facilities at lbc Hotel, includiDg, wilbout limitation, guest profiles or history of use by a
guest at the Hotel 8Dd (iii) all information concerning the Hotel and its operations, financial or
othcnrisc. Upon a termiuation af tbis Ageemcnt, Mauger aball ouke available to Lcuee all of
I..eaee'a Intellectual Property stored in tbe .lnlellectual Property ofManager
Seetl011 18. Hazardous Mattrllll
18.01 IWpoufbllldel or MJ!u.pr. .Mlmager c:oveaama and that: (i) the Hoccl mall
not be used to geDente, 1111D11factur1:, refine, transport. tre11, IIDre, handle, dispose, transfer, produce, or
process Hazardous Materials, excepring quantities of c:hemk:allllld other procilcts customarily used iD
the opemrion of similar Hotels; (ii) Maoager &ball not causo or permit the release of Hamdoua Materials
ftom lhe HOtel; (iii) Manager shall comply with all applicable Ellvironmcnlll Laws mating to or
affcctiaa the Holltl; llld (iv) if aad wbcn Maaqer receives written notice of or bccolnes aware (by
c:urreut IICIUillcDowledge) of the presence of Hazlnloua Materials or mold on the premises or comiag
onto the Hotel fiom off site, Maqer shall notify Lessee of such condition llld, after consuhation with
Lessee, sbal1 take such action, in complimce witb applicable Lepl Roquitemcnts, at no expense to
Manaaer (except that M-ger sball be solely !apOIIIible for Slldt COS1S if and to the exteot 11111 tile
pa CIIIIIICC of such Hazaldoua Materials or mold was ceused by the IK:tioQ or omi11ions of Manager, ia
Affiliates, agea11 or u Lesace d MID..,. mutually dean approprilte in order to
comply with law, and 10 PR serve and protect the Hotel llld the health and safety of guests, employees
and invitees. Without limiting any other temedy that Leuee may have, Manager sball indemnify, dcfcad
and hold Lester: and its Affiliates (and their tapeclive directors, officers, sharcholdcn, employees md
agcniS) harmless fiom llild against all losses, COlli, Habilitles aod diiiJII&Cs (including, without
limitation, c:agineers' and atlonlcyw' foes end c:xpcmcs. aod thc coet of litigation, which shall not be a
Dc:dw:tion and sball be paid for by Man..,. out of Manager's own funds) arising iiom the breach of Ibis
Sectioo 18.01.
18.01 RespoaiiiiJlltlel of I .atee In tbc ovatt of tbc diiCOvcry of Hazardous Materials or mold
so
OD die Hold prcmiacs or in the Hold durinJ the term of this Apc:mmlt, Lesacc abllll (ex<;ept to the
exte11t aucb ranoval is Menager'a re11p0111ibility pursuat to SectiOD 18.01) protuplly remove, if required
by II)J)Iicable mwromnemallaw, l1ldl Hazardous Marerials or mold, together with llJ CODIIminlted soiJ
and c:oncainers, IK1d sb.U otherwise remedy die problem in accordance with all envinmmemal laws.
Lessee shall (except to the extent !bat MaDagcr ha bracllecl Section 18.01) indemnify, defend and hold
Mauapr md ita AfJiliatcl {IIIII their mpcclhe clirectorl, ofticcn, aluaeholderl, employa:s lllld agents)
lwmless &om and apinat all lo&sa, COlli, liabiHties IDd c1amapt without limitatiou,
caginccrs' and attomeyl' fees ad expenses, and the cost of litiption) arisina fitm lbe preseac:e of
Hazadous Maleriala or mold on tbe Hotel premises or in the Hotel. All costs ad expenses of the
of HIZIIJ'dous Materials ot mold piii'IUIIIIt to this Sectioa 18.02, and of compliam:e with all
Eaviromnectal L1w1, ahall bo paid by Leslee from its own fimds, and the same ahallnot be 1I'C*d as a
Deduction.
Secdoa 19. Mflcellaaeons
19.01 Rlpt to Make Ap-eemat. Badl party wJantl, with 1cspc;a to itself, that ncidu:r tbe
c:x.ec:u1ioo of this Agreement nor lbe finalimti.oa of the tranaactioaa c:ontemplated hereby sball Yiollte
any proviJiODS of law or judgment. writ, iojuDCti011, onlcr or decree of uy court or govemmcntal
authority llavinJ jarisdidion ovu it; result in or CONiitato a breach or default under any indcotln,
oontrlet, otlJu commitment or mtriction to wbicb it is a party or by which it is bouDd; or 111y
wee or approval whlch bu nor been likeD, or the lime of tbo lrlillacticm involw:d sbaD not
have been or taken.
19..G2 Relatloubip of Parties. Neither this Agrmneat oor aoy olber apeemeo11, instruments,
documents, or tnll88Ctions ooJJtomplated hereby sball in any way bo or be interpreted. deancd or
c:ollllti'Ued as jDiking Manager a partner of or joint vealllrm' witb, l...c!l-. Lessee aod agree tbat
neither party will make anycontruy assertioo in any lepl proceedinp iovolving Lessee zd Mmager.
19.03 Pallare to Perform; ltelerfttloa of Rfchb.. Subject 10 the odter tams and conditions
of Ibis Agreema!t, If Maoaga- or Lessee at lilY time fails to make any paymeols to lbinl parties u
apccificd or bcRIIIICier or fllils to perform aoy other ICt for tbird parties .red em i1s put to
be made or performed hen:under, theD the otber party after thirty (30) cla)'s' writtm to lbe non-
pcrfoJ111in& party my (but aball not be obligated 10) pay any soch delinquent IDIOIIJit or perform any
such other act on the noo-pe:d'onning party's part; provided, however, that Ill}' such payment or
performance by the other party oa tbe non-perfouuiag party's part sball not cure sw:h DOD-performing
puty'a lm:ach IIDdcr this Agreemalt. Any IUIIIS dms paid 111d all costa IDd expc:nacs iDcmred io
with the makins of IIICb payment or tho proper performance of any nob act, I'OgOiher willa
ioMrelt tbercon at tha loaer of (i) the inteJcst rate allowed by the applicable usury Jaws or (ii) at lbe
Ovadue Rate. ftom the elm lhat aucb payment is made or such 0011& and e:qJeDSeS incuned, sball
couslitute a liquidmd amount to be paid by the defaulting party under this Agreement to the other party
on demand.
19M 8rneb of Lessee and Manager shall be entitled, in case of IDY bJeach of this
Agrcemnt by the other party to injuactivc Jdid' and to any other right or ranedy awilable at law.
1'-05 Heldlllp. Headings of Sections are inscr1M oaly for convenicace and are iD no way 10
be c:omuued as alimitadon em tbc SI:OJICI of the puticular Secti0111to which they
51
19JI6 Notlcel. Notic:cs, slabmlenll aDd 01her c:orrmumicatjMs 10 bo si_, in acccndanco with
tmDI of Ibis Apeemeal shall be in writing aud delivered by biDd apiast receipt or sent by filcsimilo
(with au eloclrooic confirmation oftransmiaionlhereof), cc:rti6od mum receipt requested. or by a
naliOIIIIlly recognized ovemipt service to lhc followillg addresses:
to:
Innkeepers USA Limited
Partnersbip
clo lnnkccpcr11 Finaucial
Corporation
306 Royal Poiol:iana Way
Palm 8elcll, FL 33480
a copy to:
Innkeepers USA Limited
Plltllemhip
clo Tnnketpm Fioaacial
Colponlioa
306 Royal Poincimm Way
Palm Beach. FL 33480
Aim: Mart Murphy, Vice
KP A I CI&CCO, Inc.
306 Royal PoinctaDa Way
Palm Beach, FL 33480
Attn: President
copy 10:
KPA Le111eoo,lnc.
306 Royal Poinciana Way
Palm Beach, FL 33480
Attn: Mark Mwphy, Vice
Prcaidcnt lllld Sectelliy
to:
Innkeepers Hospilllity
Mamgemcnt.Juc.
302 Royal Poincm Plaza
Palm Beach, Florida 33480
Aueation: President
Facsimile: S61-833-23S2
acopy10:
.Innkeepers Hoapilllity
MlmagcmCDt,lnc:.
302 Royal Poinciana Way
Palm Bead!, Florida 33480
Attenlioo: Secretary
Facsimile: S61-833-23S2
to u to
1bat such dc:signatiou shall be ill acc:ordiDcc with Ibis Seclion 19.06. AIJ.y such which is properly
IICilt in acconlaace wilh the beaoiDslhall be clecmod 10 have been served wbeD delivCRCI u proYidcd
above.
19.D'7 Certa!D Restrlcdeu. The p8!tiel acknowledge and aam tbat Manager ia Slbject to that
certaio Covmant Not to Compete dated as of Dcccmb 1, 2003 which is being tii!aed into
simullllleously bcrewilb or has boea previously entered into.
19.01 Estoppel CertiDcata. Mlllagcr and Lesaee 1nd Lessee sbaD cause Owner to, at
lillY time and from time to time within fiftocln (15) days of the mplCSt of the requesting platy, cxecall:,
aclmowlc:dgc, aad deliver to the requesting party a certificate c:enif)'ing: (a) lblt Ibis Ap:ement is
UDIDodified IDd io filii force IDCI eft"ec:t (or, if lhcrc haw bee!l modifiCIIiona, dlattbesame is iD full force
md c1fect 11 modified 8l:ld staliDg such modificatioas); (b) tbe dalr:s throush wbicb the required
distributioos to Lessee haft bceD paid lllld all MllllgCIMIIt Fees bavc been paid; (c) wbelbcr arc
.. y Dting Defaults by the other p8lty to tbe bowlcdp or the party malcina such c:atificatioa, llld
specifying tbe aatrue of such Defaults. if any; and (d) &uc:h other mattas IS may be revonebly
reques1Q1 Any mch catificatc:s bo relied upon by my party to whom tile ceniftcatc i5 clireaed.
19.09 Waiver. The failure of either party to iosiat upon strict pcrfo!JIIIIIICe of any of tbe tc:nns
or provisions of this ApemeDt, or to exercise any optiou, right or remedy herein contained, shall DOt be
construed IS a waiver or IS a relioquishment for tbc fUture of such ll:rm, provisicm, option, riaht or
remedy, but the same shall COI!Iinue and remain in ftllllbn:e 8Dd ctrcct. No waiver by either party of any
tam or p!OVilioD hereof lhall be deemed to have beea made llllleu expressed ill wriliDg IIIIi sigaed by
such party, md DO waiver aball be implied by Ill)' payment, fundi'll of 8 payment or authozizatioo of
payment by Leaee pumllllt to SectiOD 12.030 or mowledgc with iQpccl to any of the foregoing. No
Wlliver of 8 provision in ooe inlcanc:c is a waiver of Ibm provision in any Olhcr iDatance or 8 waiver of
any otber JXOVi&ioo.
1!1.10 SaYIDp. In the tbal uy portion of this Agr=ncnt shall be deelared invalid by
order, decree or judamatt of a court, this Apemem shall be construed as if such portioo bad not been
ioserted hctein cxccpe when such constroc1ion would operate 11 1111 undue bardabip to Manager or Lessee
or constitute a subltllltial deviation ftom the gcncraJ iJdealt aod purpose of said panics as rdlc:ctcd in
chis ApemeDt.
19.11 Nqotiation of A&reemeat. Leaseo IJid MIDager are bach buajness cmrltiea baviDg
substalitial widl the subject matter of Ibis Apcmeat. and each bu fUlly participaled in the
ncgotilti011 IJid dJiftiDg of this Agp:icmCDt. Accordingly, chis Agreement sball be COD8IniCd without
reprd to the role that ambiguities in a doc:ument arc to be conmued apilllt the draftsman. No
inferences lball be drawn from the filet that the fiDal, daly Asrccmmt diffi:rs in aoy respect
from any previous draft hereof.
lt.U Choke of JAw. Tbis lhaJJ be inltip&eted uadcr and enforced in acconlance
with tbe laws oftbe State of Florida, imspeetive of the rules governing choice of laws.
19.13 Dlspate Raol11doa. Except as may be o1bcrwise CODtemplated by this Apeement, any
controversy, diapule or daim arising out . of or relatiDg to this Agreemcat or tbe per1ormaDce,
cofoRemeot, brcac:b, ecrmination or validity lhcrcof. ahaD fint bo submitted to JIOilobinding medihm
and llball thereafter be determined by final binding lllbitration (whether or DOt lbe relsvut provisions of
this Agreemmt make to a dispute resolution mccblnism), and not litiption, die van&e
for mediation md arbitration beiDa in Palm Belch Cowlty, Florida, in accordliloe with the ICr1iiS or this
Section 19.13 and u ICC forth in Schedule 19.13 attached herero and incoipOI'Ited herein by this
n:ference. Disputes with ftniJICial mattm ahall be resolved In ICCOidai&l;c with Paragrapb 2 of
Sdledale 19.13 IXId dispute& wilh n:spec:t to all other Jlllltcn sball be 1'8110Jved ia accordance with
P8riiiiPh 3 ofSchedule 19.1J. This Section 19.13 shall not limit cllims for ftavd.
19.1.. EDUre Ap'eemeat This Agreement, together with the exhibits IIDd schedules b.ereco,
and ocber writinp signed by lbe parties Cltprcasly ltlted to be sapplement"')' berelo and togcdla with
my iDitrumenll to be executM uu:l dclivCI'ed pursuant 10 this AsJ-neot, coiUICilutea the eotire
qrecmeat between the parties 8Dd superscdc:s all prior 1lildcntlodinas IDd writinp, aDd may be
chlnged only by a writing signed by the parties hereto. This Agecment may be Cltecuted in
counterparts, each of which lball be deemed 8D original and all sucb coiUilelplltS together ahall
coDIIillltC one llild lhe same instrument
19.15 Ezcalpadea. Except u otherwise provided iD the <iuaranty, notwitbstandiag111y other
provision of this Asrecmcnt to the contnry, the liability of Lessee arising out of or in co&mectioo with
IIIia Agreemeot, Cbe obligations contemplated md 1he ownership of the Hotel aball at all times be
limited to the of Lessee in the Hotel, and iD my litiption or other cli8pllle, neither Manager nor
my odlcr JJ11i1Y shall seck or have recourse 10 any other ISlet of Lessee or 10 LesiiCC'I permcrs,
member&, aatOCi.tet, lfweholclcrs, agenta, Cltecutives or AfliHIIBI, IIDd DO such. paiOil afliliated witb
53
Leuee dlaJl be penoully liable with nspect to any obliptioo of Ex u odw;rwise provided
in the Gulrauty, without limiting the foft:soiD& oeichcr Lessee nor my p111y aaocillted with Leace
ahall haw any liability ia exc:ca of Lessee'a ilmest in the Hotel tor any act by Lessee, includiag
liability for the grou negligence, willful miscoDduct, bud or braoh of Ibis Apaaeat by Lcssco file
any RIISOII whatsoever.
19.16 Ref'enac:es lu Omler. Except as otherwise provided in du: Guaranty, no refmuce 10
Owner in this AgrccaiCllt aball make Owner a party hcmo or create any liability or obliption of Owner
1IJidor this Apeement to MMp", and MBDiger ahall look solely to Leuee for the performaace of
Lessee's obliptioDs bemmder.
19.17 Apprev.:IRJabtofLeaee.
A. Notwitbstanding anything to the contrary coollinecl in Chis Agrccnacnt, in lhe
event of the dealh or )H'JIII...,, disability of Jefftey H. Fisher during lhe Term of lbia Aarmneat (but
prior to the occarrenc:e of a pcnnitled ChlftF of Control EwnC of MMpr), then at aD times 1htnafter
Manaaer shall have a penoD serving ea 1hc Cllief Bxecutive Oflicer (as defined below) ofMuulger, who
sbaJJ be subjccllo the approval of Leaec in writin& wbic:h approval shall only be given at the direction
of tbe board of trusleel of lmlbepera. which approval and diJcclion shall not be umeuoaably
withheld (it beiDg Ullderltood and agreed tbat Lessee shall not have tbe right 10 n:vokc ill approval with
respect to a particalar CliefExecutive Officer after IUCb approval hal beeo given).
B. Subject to Section 19.17C(ii), Leasce shill be deemed to bave approved (and
rm:ivod the boan:l of trus11:c:1 of Jllllkeepc:zs' direction with rcapect thereto) any pc:rson II$ Chief
Excc:ulivc: Oflicer wbo for at least the last (i) fiftcca (IS) years (as of tho time of mcb persoa's biring)
bas boc:a employed in the hotel IIIIDIIgement businesa and (ii) five (S) yean (111 of the limo of ncb
person's hiring) bas served in ono oz more Kllior corporate ntftlgemeat positions for one or mo.e hotel
management companies with at least tweoty-fi.ve (25) fii'St-class limited and/or fbU service
C. Por clarific:adon purpam, it is undcnicood ad agm:d tlw Lcssec shall not be
dooalOCl to bavo acted wuasonably in DOt approving a Chief Eltoc:utiw Officer-oomiaee (and tho bomd
of trostccs of Innkeepm aball DOC be deemed to have acted unnuonably iD JIOt giving direction) if (i)
the proposed penon does DOt have the cxpericnce described iD Section 19.17B and. in lbc reasonable
opinioa of I..atoe, is not otherwise experieaced and qualified in the menapncat of finr.-cl limited
service or fldkervice bocels on a besia reasoaably commensurate with Mcr or (ii) notwithstandiDg
such pcrsoa haviag lhe experience described in Section 19.178, such pc:raaD would ceu.sc Manager not
to be an "eligible independent comradot" as defiDed in Section 8S6(d) of lhe Code with 10 the
Hotel.
D. Notwilhlrandlng 19.17 A, if MBDiger is actiog in good faith llld COIItimliDg to usc
its reuoDible best efforts to idenci1Y and hire a Chief Bxcwtiw Officer to be approved by
Lessee as contemplated hereby (which approval shall not be UDreUOIIIhly withheld). thea nabl tbe first
(I") IIDDiva'811')' of the death or disability of Mr. Fisher or the death, disability or dcpartuR of any Cllief
Excc:utive Officer that was so approved by Lessoe, Manage:r shall not be in default UDder this Agreement
for failing to anploy a Clliof Executive Officer that baa been 10 approved by Lessee
I. Por pllpOII!8 of this Ageemcnt, the "Chief Executive Officer" of Manager shall
S4
be the principal executive officer of Manager at lilY time, who shall in aeneraJIIIpii(Yise 111d OOIIII'ollll
of lhe bnsi...,., lllld aftiits of Mlnlpr, subject to the general cli=tioo of the board of dircctcn of
Mnapr pumllllt to applicable IIW.
F. 'Ibil Section 19.17 ... II blve no force or effect from lllld aftor lhe cllto dill
Leuec ceues to be an Affiliate of Innkeepers USA Trust.
[.ri&Jralln page foliDW6]
55
IN WITNESS WHEJtEOF, lbe parties hereto have eauaed tbia Agreement 10 bo exocutcd by duly
uthorized individuals.
Lcs&ee: KPA LEASECO,INC.
By:
NIIIIC: odl
Title: Vice President
S6
ExllibltA
Lepl Daaiptlaa efllotel Site
r
&XHIIIT A
._ ... VD-1D
C.a! ... lllltllt No.: YK471 0
M lllll -'lift Jat ,. .,.,c.r of lllld II.,_ IIIII lrfllll 1ft l'oitlec 'lllrglnla, end 1110r1
plltlllullrty "-IIMCI u 111111-
.... 11111111 at m1 Iron pi" lit on tile -'II llno fA Old Caui'VIIIIIH RaM Reut. H77
(W:IIIM wNII), IIH pipe tJ1111 41 ... '-1M oen\edlno lllenet, and ""'' an 1M -.th
--.... , ... ....,._ ofl'*lol ....... .....
'1'- d t 114 ON C.WIIiluee Roell, ntlllllllg wlllllhe ulll- Nne f/1 htrlet NIIIOIIII
..., OO!IIInul14 will ._ ...,. - ... of F. S. Sllftr, Tre. Ooweon hlldl l'lrlfterehlp,
alld N......,_ .... A. Po I t! IM tile IDIIDwilll --1) 111.14 r..a 1D 111
linin rvd r..cl, 2) H11'40'4ft II.JI ... II lnln plpo tNnlll, I) NI5'U'IICMI DI teet
1D Ill Iran I'Od fallllll, llld 4) NU'14'14"E 70.11 feet 18 11 lnln plpo tound, 'Wtll an 1111
eodl - 1M a1 ..._ .... llld P Ill " nllal tlw IW1II 111011 oomw of 1111 propWfll
hlrell'l tlacrlbocl, cl llell Mraer at 1111 welt Una ol tllo propll'fll of JAM
l!lnlrplioa
1"*- d.,.... Nllhenbll and Pozullldon, ovMinl wtlll lllo utll wut linea of JAM
F '111'-lllo loiiOwllll 00111'111: 1) 124'DI'O?"E 11.11 fHt 11 an Iron plpo fOuiMI, 2)
............ 10D.00 tNt 1D In lroll p!po lluncl, Mill I) 824 'DIW'e 111.1' feot till 1111 Iron
plpa Ill on -a. 11M of ttowcl Aftnu.t RDIII8 #711 (va-211111 wttllll), omll plpa 1v1n1
a r.t awa Ill CII'IWIIIII tllerlof.
Tlllftoa diPuUne .lAM Fnterprlotl, run11lng wlllt till 11ortll llno of Howard Annuo;
... M'II'W 111.11 fHt II on lnln pipe lei -'dnt Ill lnter..UO.. of tho nartll llno al
lie II AIMnue wiVI tho nerlll 1M ef Old CauriiiO- ........
1'llollco d p lla. ltaword A .. nu.t. Nllhllll wltll lllo .-Ill lno Of 0111 C:0. tlloUII Floacl ( 41'
pnlill 11 a. oiii!WIIne .,..,.., Ill 11n.w1r1g -...; 1) "41'A'W 17.71 feet 111
1n1n plpo Ill. ZJ Nll'2t'G7'W 14.11 flo& til lnln plpo lit, 3) with a curve lo llle rltllt 11
fol'- ....UU.1174.77' I I T.,. ....... .a I DallllooOI'IZ'U' I I
Chord ._...,.,.14'11'W ID on lnlll pipe Rl,and 4) NI2'21'34'W Ul.tlleot lo tho point
81 &llllluldng conlllnlng III,IQ S11uar Feat Of 1..31DI Acrao of lind, 11111'1 ., ,...,
1111o rdiCialllllt I,US UJII-2211 /Ill wwo dlciii:IIM IDr puiiiiC atroot purpo111
rerod Ia DoH Book tOtlt It page t2S3. Rlferancu to till narth of 01c1
Courlllouee RCIIII end Howard Awenue 1110 relloct 1111 rlgllt or r pint) cre1tecl lly tile
dedication In Dolcl 8Mic tOIA !It fllltl 12A
TOQEI'KiiR WITH Priveto Storm Dnl!llfll llllcl TllftJIO..., Conlln!don EMI,.ente 11 creot.cl
bJ ..,._. IICIM did Augult 14, 1111 Ill Dllcl Boolr 10524 I& Plllt ..,Ong lite Land
Rlconlo al Fairfax County, \'lrtiiiiL
AND IIIIEIN8 .... Ill llle pro,._ CIIII\&)Cd 1IDI LU;, a ftPtla lllllliell ... lly COI'Ipenr,
b ~ Gull Clllllll Deed tr.n Fftl&nl D.,_.t IMur- Cllrponlloll, AI Rcoclvw of Nctlotlcl
118nk of Wiilll ... on, dalctl MIRIII I, 1ltl cncll ~ c d llirall11, 1HI In Deed Book 1141
..........
ExblbltB
Poollltc ud Culllalatloa Agreemeat
POOLING ANDCUMVLATION AGREEMENT
TIDS POOUNG AND CUMULATION AGREEMENT ("Agrccmcncj is made as of
Dccanber I, 2003 (the "Ciq Date'') by and 11n0111 KPA LEASECO, INC., a Virginia
corporation ("11{8 1"), KPA U!ASECO II, INC., a Virginia c:orporaliOD ('"TRS D"). KPA
I..BASECO m, INC., a Virginia c:orporation ("TRS m"), KPA LEASECO IV, INC., a Vi!Jinia
corporation ("TRS IV''), KPA I.EASECO V, INC .. a Virginia corpormon (''TRS V" l!ld
toaether with TRS l, TRS II, TRS DJ and TRS IV, collectively the "TRS Entities'') aDCI
INNKBBPERS HOSPrrAUI'Y MANAGEMENT,JNC., a Florida corporation (''IH').
L Redtab
A. Jnnk""4""'1 USA Trust, a Marybmd real eata1c invcatmcDt trust (the "lt.Bl'Ij.
indirocdy tJuouab. ill subsidiaies, owns a fcc or leuehold iDteRst iD ead1 hotel propaty
ideatified on Emtbf! A 1 aaacbed bc:reto 81111 iocorporakd hen:in by ref'eralce (individually, a
"Subject Hoter and c:ollcc:tivcly,lhc "Subject Ho=lsj.
B. 1be TRS Eotities have entered into (or will enter into) sepanlte DllllBFIItent
agreemooll with 01, ideDtified on l:xlllllit B atlllcbed bmeto and illcorpotaed bercio by
with rapect 10 1be SUbject HOlds (individually 1 "MaDqement Agreemcot"' IIIII
collectively, tho "Pooled Asr-neats'') (tbe Subjeet Hotels whidl ere llllbjoct co the Pooled
Agreements ae collectively rd"em:d co oomnafter IS lbe "Pooled Hocelsj.
C. IH llld 1be TitS Entities bave agreed that for the limited .P1J1P0M11 of CllculatiDg
tcnain fees and exercising certain otba' rigbls under lhe Pooled Agreements, sueb feel and rigllll
should be in die fi8B"Iple lllher !ban on a Hotel-by-Hotel basis.
NOW, 'llfEREPORE, lJr good and valuablo COJUidcration, the receipt and lllfB.ci.ency of
which 10 bmby acknowledged, n:I and the TRS Entities eacb agree as follows:
D. IDterpret.tkm
A. Deftnltiolll. Ally capitalized term used in this Agreement wbicb is DCIC defiJied in
this Asr-cnt shall bave the meaning givm such wm in !he Mluagemall Ageemc:Dt
pcrtainiag to the applicable Subject Hocel
B. Mlseelaoeou IDterpred.ve Provisions. This AJ!J"C'i'ent shall be governed by
tbe Documentary Conventions wbich are attacbed berdo IS Exl!fi!U C.
m PooUaaofS.bjec:tRot.ll
A. Detenalutlon of r-. Daring the lDitial Term or any Bxtcnaion Term of the
Pooled Agi'CCIJICinS, Cor pu!pOICS of dctermi.Din& tho Jnceotive Mmwpmeot Pee ("IIICCIItivc
Pcea") pay.blc to nl for each iatcrim and period for which such loccotive Foes are
calculared UDder tho Pooled AgteeJJKUts, the followiDs shall apply:
1. Available Cash Flow lhall be agregatt:d Cor all Pooled Ho=ts, and the
IOnnulac for delermiDiDg tbc Incentive Fees sbiiJ be applied to tbc amoUDis so aggregated;
2. To the Olltont tho [IICIIItivo Fees calculltcd puriUIIIlt 1o S;tioo RI.A.I. aro
less tban the 1811'1Jile total of the l.aceutive Foos calculated sepuately for oacb Pooled Hotel
under the fadividual Manlgemall Agreemat, 1beD the lru:ontive Fees payable separately by each
Pooled Hold UDder the applicable Pooled Apanents sball be ralueed proportionately
(according co the amouot of tbe positiw IIICaltive Fees pa)'lblc without 1efela1C0 co this Section
ID.A.); aad
3. Rent Sbortlalls; Paymeat of laeeatlve Feel.
L For pwposc& or thil Agecmcnt, a "Base .Rent Shortfill" witb tcspcct co a
Fiacel Y oar shaD (i) occur only in the evaJt tbat aggregate Rent (Mid wich rcapoct to llleh Fiscal
Yosr durill8 tbe Term for aU Pooled Hocels is less tblll aggregate Baae Rat (as defined in the
Perc:coul&je Leaaea) due for all Pooled HOlds with tespcd 10 such Fuca! Yoar, (ii) io 1be event or
aucb occurrence, be equal to the diff'ereoce betwecA Buc Rent due with rapoct to
sucb Fiscal Year during the Term for Ill Pooled Hote!J llld (2) aggrepiC Relit actually paid by
1hc TRS Bnlitiea for all Pooled Hotels with tcapc:ct co auch Fisc;al Year aucl (iii) be added to the
asgrepte lessee'& Priority then in
b. For purposes of this Aanemcnt, a "PerceDtage Rent Shortfall" with
respect to a P"ucal Year sball (i) occur only in tile mmt 1lw aggregate Rat paid for aU Pooled
Hotels with respe.."1 to IIUCh Fiacal Y oar daring che ten (l 0) yar pcriocl c:ommenciog oo tbe dale
hereof is pater tblil1ggreple Base Rent due for all Pooled Hotels with respect to such Fiscal
Y car, but is leas thin lbe agepte totll Rent due for aD Pooled Hocels with respect to such
Fiscal Year, (ii) in the event or liiCb OCCIII'RIIce, be equal to tile diffmncc between (I) agrepe
Rmt due with rcepcct to such Fiscal Y fllf for aU Pooled Hotels :md (2) 1ggrepJc Ra1t actually
paid by the TRS Entities for all Pooled Hotels with respect to such Fiscal Year and (ill) be added
to tho agegate Leuee's Priority then io existmc:e.
c. Ally amounfl borrowed, c:oatributcd or paid by the REIT or oae of its
Affiliates, and any imeresl therecm, to r:anecly, or prevw the ocx:mrmco of, either a SUe Rent
Sbort&ll or a Rent Short&lllhlll be added 10 the aggn:gatc Lcascc's Priority lbcn in
exillfellce_
d. Notwithaancling an)'lbing contained herem to tbe contrary, in no event
shaJI any lnceative Fees be paid 10 lH under tbc Pooled unless and 1aUII 1grepte
Lessee's Priority, includios lilY Buc Rtm Shodfall and any Relit ShorUkll, for aU
the Pooled Hotels is paid
B. A.dclldoul Maagmeat COIItracll. Dl and acknowledp that (i) the
RE1T or one af Its Afftlialcs haw IICIC(IIiml, or may from time 10 time acquire, ownership or
leasehold illteRsts in additional bocoll (CICb, au "Additional Hotclj, other thap (a) the Pooled
Hotels and (b) ihe hotels listed on (IIOIIC of which shall be Additional Hotels), other
lhan die Pooled Hotels, (ii) tbe or ooc of its Affiliates may otTer (or bu ofrcrcd since
August 4, 2003) to 01 to enter into 1 illlllllgCIIIcnt contrlet for an Additi0111l Hotel (au
"Additicmal Management Conlnletj, on IIUCb terms as the REIT or ooe or ill Affiliates aball
dclcnaine in ill sole distrctiou, by 1 DOilce setting fonh the material terms of such
AdditioaaJ Ma:ottaemont Comract (ID "'ffer Noticej, whereupon IH shall hue lhirty (30) days
4
fuUowing tbo date of tbe Offer Notice ID accept llliCb offer. llld (iii) the REIT and ay of ite
AffiHatos is not, and wll not be. Wider liD)' obligation to 10 acquire iatuesll in Additlcmal
Hotels or to offer to enter iDto AclditiOIIII Maugement CoDirlcts with nL For eacb Additiooal
Manapmeut CoDIJict eaterai into with 01, the .. Additkml Contract Value" shall equal the Fair
Mlltd Value thereof as detuminod in acooniiJice with Seclion J.OI.D of the Pooled
Apeemmls. For each Additional MlllllgCmCilt Coolral:t offered to IH by the REIT or one of its
Afliliatee ad Dot aoecptod by nl within thirty (30) days of Off Noticle, the .. Additional
Conlrlct Value" shall equal tbe Fair Market Value thereof as dctermiDed in accordance with
Section 4.01.0 of the Pooled Agreemeuts; provicled. llovmer, an Additional Management
Coatract Dot so accepted by Df within 1111Cb thirty (30) day period but later entered illlO by Dllllld
the REIT or ooe of its AffililllCS on fiuther negotiated lams and conditions shall be tteatod only
IS an Additional Manapmcut CoDtract cutued into with lH. NotwitJwanc!ing tbe foregoing, the
hotels liseed on Eshlbft D attached hereto lhall be included as Additi01111l Hotels to the estent
IUCh botela are offered for mauaganeot, or become DWII&ed. by m.
C. Credits. If as of any lime 1hcrD has been an OlltltiiDding Net m Credit (as defined
for a period of 365 c:onsccutiYC days, the TRS Entities shall notify Dl of such fact IDCl
indic:ale the TRS &tities' computation of lhe extl!ll! to wbicb tbe Net Ul Credit bas been so
outstaoding aDd the TRS .Eolity or Eulities to whicb the Net Dl Credit relaiiCS shall pay to Ul, in
casb, lbc amount of such Net IH Credit outstanding for more !han 365 days, such payment to be
paid within thirty (30) days after ma detivery to the TRS Entities of a writlen statement
Kblowledgiog the accuracy of the TRS Blltitles of the amount so payable.
Notwithstanding anylhiDg ID tbe coatnry set fofth iD tbe PooJed Agreements, within thirty (30)
days oftbe earlier of (a) tbe last day of lilY Exlulsioa Term under any of the Pooled Agreemaa
or (b) tbe date of a Change or Control .Event of Innkeepers (the earlier or such dates, beiDg the
''Settlemeut Dale"), the TRS Bn1ities abal1 deliver a wriUeo to IH setting forth the
. c:alc:ulllioa of till: TRS Cmli1s (as deftncd herein). 1he Dl CJeditl (as defiocd herein) lllld any Net
m Credit, in each case u of such Settl._t Date. If there shall be a Net IH Credit IS of such
Sectlement Date, the TRS Eutity or Entities to which 1he Net IH Credit relates sball pay 1he
IDlOIIIIt of 8IICh Net IH Credit to I H. in c:ash, within thirty (30) days after nl's deliwry to the
TRS Entities of a statunent admowlcdging tbe accuracy of tbe TRS Entities' computation of
suc:h Net 1H Credit As a c:ondition prcceclent to till: paymart llld receipt of lbe Net Di acdit, Dl
and its Aftilieecs shall cxccutc sud! cloc:wnarta 111111 instrumr:DII, and sball take a1ch fllnber
Ktions, u lhc TRS Entities, Owners. tbeir Affiliates or tbe acquiror may reasonably request,
including, without limi111tion, stockholder IJDder1akiDp. Por purposcs of this Agreement, the
"TRS Crediil" sball equal u of a particular date of clf:termiDatlon the sum of (i) the agregatc
value of the Additiollal CcJattiCt Values for all Addldonal Holels as delaiiliAcd punuant lo
Soctioo m.B hereof and (ii) any aggn:gato unused cm!its provided by lH eo any or the TRS
Entities pursuant to Section 3.02 or 12.02 oftbe Pooled Agreements, in e8Ch c:ase IS of IIIICb date
of determination. For purpotes of 1his Acreement. tbe "DD Crcdita" ahall equal as of 1 par1ic:ular
date ofdetermiDation the sam of(l) the Degate IIDOUIIl oftbe Early Temlination Fees for all
hotels which have been removed as a Poolod Hotel pursuant to Sectim 4.0l.A of lhc Pooled
Agreemenls 8Dd (2) any agpeprc .. compensation" payeble to m punu111t to Section 15.02.0 of
tba Pooled Agieemeollleu (3) any agrepto amounts previOUily paid by tbc TRS En!ities to Dl
punuant to the fim sentcnoc of this Scctioa m.c, iD e8Ch c:uo as of such date of detumiilation.
For pu!pOieS of this Ag,:eanent, "Net Dl Credit" as of a pllticular date of determination shall
s
equal the axoc:a1, if any, of (A) the Dl CJedits over (B) 1bc TRS Credits, in each case of 8IICia
elm of determination.
D. Workllla Capital. The 11tS Entities sball maintain a balmce in the OperatiDg
Account in 111 agrcpac amount oqual to Sl 00,000 for all of the Pooled Hotels wbich shill be
UleCl by IH as wortin& capilal for the benefit of all of lbe Pooled Hotels.
E. ReportiJie Reqalremeats.
a. Period AcccnmdDs- Within twe:Dty (20) days after lhe cl01e of each
Ac:countiJJs Period, Dl shall aubmlt piper and eleclronic copies of m accollllliDg to 1he TRS
Entities, in fbnn satisfactory to 1he TRS Entities, showing IH's computation of Gross Revenues,
Dcdudi0111, ()perltiDg Profit, Leuee'a Priority, Available Cull Flow ud distributioos 10r ncb
Al:counting Period and for the Fiscal Year to date on a asgrepte buis for all of the Pooled
Hotell.
b. Allaaal Aa:oaadq. Within twenty (20) clays after the close of each
Fiacal Year, m shall submit an agrepte ac:countiDg for all1he Pooled Hotels, as more fully
described below in Sec'ion III.E (c) for auch Fiacal Year to lhe TRS Entities, which accoUD1ing
aball be CCIIIl'OIIiq over tbe illlerim accountinp.
c. Allllul Operaliq StmiiiCIIt. Within twclll)' (20) days foUowiDg the
close of each Fiscal Year, HI alllll fumish to 1he TRS Eatitics (a) paper and eloctronic copies of
m Amrual Operating Statement, balenre sheet, related llldemaJt of profit and loss llllcl a
lta1emcot of cash flows on an aggregate buls for alllhe Pooled Ho!Dis. having annexed thereto a
computation iD reasonable dccail of each compoaeat of the aspgatc Fees for ACb.
Fiscal Year for all of the Pooled Hotels, (b) a certificate signed by IH's chainnan, its chief
executive officer and ils chief aocounting officer, certifyiDg tbat the Annual Operating Scatcmeot
111d such other fiuDcial stalaDCDIS ue true and comet to dJe beat of tbe knowledge and belief of
eacb such officer, and certifyiog as 10 such oilier maua-s as reaacmably requested by the TRS
Ealitics to comply witb ita Affilialles' securities laws reporting raquilwnents and, (c) if required
by a Mortpp, m opinion lbereon (to be delivered wi1biD the time requiRd by Mortpgoe,
reademl by a finn of indcpendeot certified public aCCOUIIUIDts of ft:COgajzed standing in the
hole! industry as may be BpJIJOVCd by lbe 11tS Entities 111d IH). ID the event !here is a dilplte
with respc:et to any compoDellt of the AIIDual Operating SlltCID.eat with respect to a particular
Pooled Hotel, such dispute alllll be resolved in 1he provisicm oftbe applicab!G
MIDapmel1t Aal-c:at. Upon re110Jucion of IIICb dilputo, the Anrwal Opel8tiag Stltemeot aball
be revised acccmliqly. Within twaUy (20) days foUowing the close of eacb month and quarter
of each Fiacal Year, Manager lhall fiunisb. to Lessee atateiDCIIts on an agregate basis similat to
lboae statements RqUbd to be ddivcm! on an annual basi$ pUiaw!t to this Section m.E.
F. Dllpate Jt.olatloa. SeclioD 19.13 of tho Pooled ApeeJllCIIIS is hereby expressly
adopted llld iDcolpOrated into lhia AsRcmenL
G. No Otber Peollq. Except as set forth in Secti0111 mA through mF. hm:of or
aa may otherwise be CODiemplated by dJe Agreements, each
shall be separate IDd distinct, and 1he respective rights, obliptioos and liabilities of
6
-b of Cbe TRS Boticiea llld IH theramdec aball no bo by chis The ms
Entities ll1d IH intend tbat lbil Apemeat shall apply 10 1he Pooled ApeemeDIS u betwcca lhe
TRS Entilics and IH only, and al1al1 not modify,llliCIJd, OJ in Ill)' '"'""t:ratTcct the tcrma of the
Pooled Agreements. The Pooled Asreemeots. uul Ill righls, powers, privileges, obligatioos IOd
liabilities of the puties thcreuDdcr, shall cominuc in fall force ll1d effect notwllbstanding tbia
AgrccmcnL
IV, Tflllllen ofOwaersblp
A. If there occura any Sale or aoy iDdi.vidual Pooled Hotel (odler 1llan a Sale to an
Affiliate of the REIT), or if the ManagcmCQt Agreemcmt ilr ay Pooled Holel aball expiie or
otherwise terminlte, lhen (i) this Agreement ahaB tmninate u to IIICb Pooled Hotel, efTectiw: aa
of the dale of 111Ch Sale of lhe Pooled Hotel or expiration or tamilllltion, and (ii) the odler Pooled
Hotels shall lhc:reafter cootiiiiiC to bo subject to this Agreemeat. Por JllllliOses of thia Scctioo
IV .A., the Sale of a Pooled Hillel shall include tho expiration of any grouJid lease afleclillg my
Pooled Hotel except to die a:teDt lblt 1hc RElT or oae of its Affilialos ia the pun:bacr of the fcc
iD.tlnlt UDdcrlyiDg such pllllld leue.
B. If IH sball asaigD its interest in any Managcmcnt A&Jeement, then lH shall cauac
the assigoec thereof to be bOIIIld by tbe obligations of IH under this Agreement to the exlent such
in1a'at in the ManagemCDt ia assigned, and IH shall cause such anigncc to oxcculo
and deliver to the applicable TRS Blltity ao instrwDent in a fmm MUOnably to the
applicable TRS Entity confirming that it shall bo so bolaul.
V. Mllc:eDIIIIOIU
A. lurbdicdoa. Any suit, action or proceeding UDder OJ ill amnection with this
Apcment shall be brought in any fcdoral or state CCJ1IIt of compormt jurisdiction Jocated in the
State of Florida. By execution of thia Agreement, eacb party CODSCDIS 10 the exclusive
jurisdiction of such courts, 111d waives any rigb.l to cblllengc the jurisdiction of sucb couns or
the appropriateness of venue in nab COIIJ1I. BACH PARTY TO nDS AGREEMENT HBREBY
WAIVES ANY RIGHT TO TRIAL BY JURY IN CONNECTION wrm ANY SUIT, AcriON
OR PROCEEDn.lG UNDER. OR IN CONNECTION WffiiTIIIS AGREEMENT.
B. Notlcel. Ally DOtlce requ!Jed or permitted to be Jivcn Dndcr this ApcmeDI aha1l
be in writing and shall bo haJid-delivllfed, delivered by a Dationally RJCOgnixd ovemigbt courier,
mailed by certified or regiltmd mail. poetl8e prepaid. return rcuipt reqllllllled, or ficsimi!e wilh
confirmation of RCeipt, to the addresses set fOrth below, or to 111cb 01bor addieascs of wbid1
eilber party shall notify the other party in acc:ordaocc with this Section V.B. and slall be deemed
givalas of the time of such mailing or delivery, as applicable:
If to the TRS Entitios:
7
Innkeepers USA TIUst
306 Royal Poinciana Way
Palm Beach, P1orida 33480
Ata:ntion: Mark A. Mwpby
PIICiimilc: (S61) 832-2332
with I copy to:
lfto IH:
with a copy to:
Orcc:abcrg Tl'lurig
n W. WICker Driw, Suite 2500
Cbicqo, Dlinois 6060 I
AUeotiOII: Peter H. Liebeiniiu IIIII
Todd A. Mazur
Faimile: (312)456-8435
Innteepen Hospilllity Inc:.
302 RD)'II PoiDcilna Way
Palm Belch, Florida 33480
Altelltion: Jeftiey H. Fitber
F101imilc: (561) 835-1800
Jmard Law Omup
4 Professional Drive
Suite 148
Gaitbcnburg. MD 20879
AtlaM:ion: Christopbet B. McKem11, Esq.
(301)990-4838
All notices which are required to be given 1Uider the Pooled Agreements shall be aivm in lbe
manner provided therein.
C. Updpftnr 'i"lhlll At each "Ciosina", defined in tllll certain Mater I...casc
A&eisnment Ap111111111t (chc "MLAA j dated u of AU&Uit 8, 2003 by and 1D10J18 IDnkeepem
USA Trust, lnnkcepen USA Umited Pubieilbip 111d ceruin of their direct ud indirect
IUbaidilriu, JnnkCeper-s Hospilllity, Inc. aDd oertaia of its affiliates llld hmteepc:n Hospilllity
Mmapeat, Inc:., Exhlblt A-land Exl!lblt B of this Agreement sball be 101eoded and restlled
to add appropriate rc:femlces to the hotels sabjcat to 1111c:b Closing, aDd IJ"Ih!t A-l of this
ABr-t wiD be amended and n::sCated to delete rcfcratCCS to the hotels IIUbjoot to III!Cb
Closing. This provision does DOt amead uy term or provision of the MLAA.
8
IN WITNESS WHEREOF, cachofthe 'IRS Elltidcuud Dllw CllCCUICd 1bia A&ac:uldm
under teal of the Closing Dldc.
KPA LEASBCO, INC., a Vilginia corporation
B y . ~ ~ ~ ~ ~ - - - - - - - - - -
Name: Mid A. Morpby
Title: Vice President aod ~
KPA LBASBCO II, INC., a Vu-giDia
corporation
By. ____________________ ___
N110e: Mark A. Mmphy
Title: Vice Pcesidenr lllld SecRtary
KPA U!ASECO m, INC., a VirJioia
corporation
By. ______ ~ ~ - - - - - - - - - - -
Name: Made A. Mwphy
Title: Vice Plesideot lllld Secmary
KP A LEASBCO IV, INC., 1 Vqinia
CO!pOrariOII
By. ______ ~ ~ - - - - - - - - - - - - -
Name: Mark A. MIDJiby
Title: Vu:e Presint IIIII Secretary
KP A LEASECO V, INC., a Vll'giDia
tOipcnaDOD
B Y . - - - - - - ~ ~ - - - - - - - - - -
Name: Mark A. Murphy
Title: Vu:e Presint IIIII Secretary
INNICEEPERS HOSPITALITY
MANAGEMJ!Itlf,INC., a Florida corpontion
By. __ ~ - - ~ ~ - - - - - - - - - - - - - -
Name: Jeffrey H. 1-llhr:r
Tide: President
EXHIBIT A-I
SJMCipgm.s
RIBM- nJKWILA, WA
IBM- LAEE OSWEGO, OR
RIBM-VANC:OUVER, WA
RIBM-BELLEVUE, WA
IUBM-LYNNWOOD, WA
RJBM- ONTARIO, CA
IDE- LEXINGTON, MA
IU-SCHAUMBURG,IL
HI- ALBANY, NY
ID- LOMBARD,IL
10- WESTCHESTBR, IL
JUBM- SOUTH SAN JOSE, CA
RIBM- ClUCAGO (O'HARE),IL
RIBM -GAITHERSBURG, MD
RIBM I...BXINOTON, KY
HI- TAlLAHASSEE. FL
RlBM- BINGHAMTON, NY
RIBM- SUNNYV ALE(SJLICON VAU.EV 1), CA
HI-NAPLES, FL
HI-ISI...ANDIA, NY
R.IBM- CHERRY HILL, NJ
RlBM WICHII'AEAST, KS
RIBM DENVER DOWNTOWN, CO
QUALITY INN- ATLAN'DC CITY, NJ
1
EXHIBIT A-%
arHg HOTELS THAT ARE NOT TO BE
'I'UATED AS "ADDIDQNAL BOTEI.S"
RIBM- FREMONT, CA
RIBM-MT. VJEW,CA
RIBM- CAMPBBl..l.. (SAN JOSE), CA
RIBM- TROY (CENTRAL), MI
RJBM- TR.OY (SE), MI
RIBM- RICHMOND (WEST END), VA
RIBM- ENGLBWOOD (DENVER SOUTH), CO
RIBM- WINDSOR, CT
RIBM- SUNNYV ALB (SILICON VALLEY II), CA
Ill- WILLOW GROVE, PA
RJBM- HARRISBURG, PA
HI-GBRMANTOWN, MD
HI- WOBURN, MA
IUBM- BOTHBLL, WA
TPSBM- HORSHAM, PA
RIBM- VIENNA (TYSON'S CORNBR), VA
RJBM- SADDLE RIVBR, NJ
HI- WEST PALM BEACH, FL
RIBM- EAST LANSING, MI
RIBM- GRAND RAPIDS, M1
HI-NORCROSS, GA
RIBM- PORTI.AND, MB
RIBM- ATLANTA (DOWNTOWN), OA
RIBM- SAN MATEO, CA
RIBM- ARLINGTON, TX
RIBM- ADDISON, TX
RIBM- SHELTON, CT
RIBM- ALTAMONTE, PL
RIBM- EDEN PRAIRIE, MN
RIBM -COLUMBUS, OH
RIBM- INDIANAPOUS, IN
RIBM-FT. WAYNE, IN
RIBM -LOUISVILLE, KY
RIBM- ATLANTA (PEACHTREE), GA
RIBM- RICHMOND (NW), VA
RIBM- UVONIA, MI
CYBM- FT. LAUDERDALE, FL
2
EXHJB[[B
MANACQUNT ACREMENTS
1. Hotel Muagement AgretmeDt by and betwcm KPA Leueco V,lnc.,as lessee, and m,
daled December 1, 2003, relating 10 the Raidellce Ian by Marriott bote! in
Tukwila, WA.
2. Hotel Managancut Agreematt by and between KPA Leaseco V, Inc., IS lessee, and IH,
as manager, dated December 1, 2003, relating110 tho Residence Inn by Marriott hotel in
Lake Olwego, OR.
3. Hotel by and KPA I QSCCO V, Inc:., IS lessee, and IH,
as maoager, dated December I, 2003, relating to the Residence Inn by Marriott hotel in
Vancouver, WA.
4. Hotel Management Apement by lnd between KPA Leaseco V, lnc., u lessee, and IH.
IS manager, dated December 1, 2003, relating to tbe Reaideru:e Inn by Marriott hotel in
WA.
5. Hocei.Managemeot Apementby and between lCPA l.eMeco V,lnc.. IS lasee, llld IH,
u 1111118ger, dated December I, 2003, relating 110 lhe Reaideoce Inn by Marriott hotel in
Lynnwood, WA.
6. Hotel Management Apemeot by 111d betweeo lCPA leacc:o V, Inc., alcasee, and Df,
liS m-ser, dated Docember I, 2003, rclating to tbe Reaidence lim by Marriott bote! in
Ontario, CA.
7. Hotel MIDagemeot Agreemeat by ID4 between UA Leaseco IV,lnc., IS lessee. and 01,
IIIIJ8D&F, datocl December 1, 2003, relalins to tbe Holiday 11m Express hotel in
J..exiDston, MA.
8. Hotel MalllgiCI'IIent Agrcc:rnmt by 8lld betweea KP A Leaseco IV, Inc., u les-, BDCllH,
IS liiiiDIIgel", dated December J, 2003, rclatillg to tile Haiuptuli Inn bote! ia Sdlaumburg,
IL.
9. Hotel MlllapmaltAgRlCmalt by and berwcm KPA Leaseco IV,Inc., u lelsee,Uid Dl,
u lllllllga", dated December I, 2003, relating 110 tho Hampton Inn hotel in Albaoy, NY.
10. Hotel Mloagemeot Agreemt:lll by and between JCPA Leuew IV, Inc., liS JH,
as manager, dated J')owmher I, 2003, Jelating to the Hampton IM hotel in Lombard, IL.
II. HotOI Management Agreemem by mlbetweea KPA I cascco IV, Inc., IS lessee, and IH,
IS manager, dated December 1, 2003, rclatiug to lhe .Haqlton Ian hotel in Westchester,
II..
3
12. Hotel Mlnegement by lnd I easeco, IDe., u leue, utd IH,as
mBNaer, dated December I, 2003, relating 10 tbe ReaidCDCe lnD by Marriott bole! in San
Jose (South), CA.
13. Hotel Mauapment by and between K P A Lc11$CC0, Inc.., as Jessee, 111d Ill, as
manager, dal8d Decant- I, 2003, relating to the Residence Jan by Marriott hotel in
.Roscmcmt (Oiicego O'Hire), IL.
14. Hotel Menagemem Agreemeat by llld between KPA Leaseco, Inc., as lessee, and IH, as
manager, claiM Decemba' I, 2003, rellltius to the RosidcDc:c Inn by Marriott hotel in
MD.
IS. Hotel Mlllagement Agr=ncnt by and between KPA I eascco, me., a lessee, md IH, as
manager, dalcd December I, 2003, relatiJig to the Residence 1m by Mamou hotel in
I ningtoo, KY.
16. Hotd Agreement by and beaweeo KP A Leascco Ill, Inc., as lessee, end 1H,
a mmager, dated Doccmber 1, 2003, relating to the Hampton hm hocel in Tallabusee,
PL.
17. Hotel Management Apecment by and between KPA Leaaeco ID, luc., as lessee. and IH,
a manager, dated December I, 2003, telatiDg to the Resideuce Inn by Marriott hotel in
Binghamton, NY.
18. Hotel Maaapment Agreement by and between KP A I aeco DI, Inc., u lessee, and IH,
as lllllllger, dated December I, 2003, telring to the Residence Inn by Maniott hotel in
S111111yvale (Silicon Valley I), CA.
19. Hotel Manapoc:ot Agreemed by lllld between KPA Lceeeco Ul, Inc., u Jossce, anciiH,
IS a.nager, December I, 2003, relaq to the Hampton Inn- Naples, FL.
20. Hotel Mlaagement Agreement by and belween ICPA Leaseco Ul, Inc., IS lessee, lH,
a IDIIIIIgeT, dated December I, 2003, reJatiD& to the H1111pton Inn -lslaudia, NY.
21. Hotel MJn .. al<t Aarecmc:nt by and between KPA I ceseco DI,Inc., as les&ee, and nl,
as lllllllger, datl:d December I, 2003, relating to lbe Resideace Inn by Marriott hotel in
Cherry Hill, NJ.
22. Hotel ment Asrec:mc:nt by and between KPA DI, Inc., IS lessee, and nl,
as manaeer. datl:d December I, 2003, relating to the ResideDc:e IDn by Marriott hotel in
Wichita (Eut), KS.
23. Hotel Mallagcmcn1 Apemart by and bctwcc:u KP A LC8IOilO m, Inc., as lessee, and IH,
as manager, dmd December I, 2003, relating to tbe ReUdeace Inn by Marriott hotel in
Denver (Downtown), CO.
24. Hotel MU11p111ent Agreement by and between KPA lelseco, Inc., as Jessee. and Di, as
llliiiiger, dated u of June I, 2003, relatill& to the Quality Inn botcl in Atlantic City, NJ.
4
t:XHIBITC
DOCIJMENTARY CONVENTIONS
Tbis Agreement sball be deemed to iuclade the following provisious:
(i) Modifications. No IIIOdification 10 thil Agreement shall be valid unJesa In
writing and signed by all parties tbmelo; provided, however, Eddbit B shall be deemed to be
automatically amended 10 iJicludc any Subject HoteJa u to which a closiPg occucs UDder the
Muter Aesignmeot Agreameot. No putpOrtecl waiver of any of the provisions of this
Agreement shall be valid <r effective unless in writing signed by the party agaimt whom such
waiver is sought to be enforced.
(ii) Sanlftl. All I"CJJI'C8CCltations, Wlmll1ies amd covenants in this Agn:cmcnt sba1l
survive and not bo merged iD the IIUCutiou of this AsJ-ncnt
(iii) GoYerafDc Law. 1bls Agreemeot lball be governed by and CODSirUcd in
ac:cordlmce wi1h tbe internal laws of the State of Florida, without reference to conflk:ls of laws
principles.
{iv} Captl11111; Pr011owu. Captions in this Agreement are filr of
elbeute ODiy and sball Dot be COillidered iD CClDS!nliDg this Agreement Whenever tho context
shall so rcq11ire, the singular shall include the plural, t!le male geuder sbaD iuclude the l"emalo,
and vma. "IDclude," "includes IIDd "ini:JucfiD8" sball be deemed to be fonowed by
"without limitation" whether or DOt !bey are iD filet followed by IUCh words or vrords of like
impon.
(v) bldbltt. All cxhibill 10 thia .Agleemalt ue illcorporated iD this AgreemeDt as
lbough set forth iD fill I in the text of Ibis Apemeat
(vi) Co1111terpart1. Multiple originals of this Agreement may be exccm=, eacb of
which shall constitute ODe and tbe same agreement This aareomcnt may be exccu11:d in
couuterputs, and it shall not be nee y that 1hc original signature of esch party to this
AgrccmcntiiJIPCIII" DR au;h IIUCb cauntapmt.
('rii) SeverabiUty. In 1bc: Cftlrt that one or more of provisiODJ of this AgreemeDt
sball be held to be illegal, invalid or Wtenforceable, sudl proYisions shall be deemed severable
IIIII the remaining provisions oflbia Agrecmcm shall aJDtinue iD 1WI force illld effect.
(viii) Not Coastnled Aallllt Bratt.. Each party 10 this Agieemeot acknowledges
lbat it was tepreSeuted by C01111$Cl in comecticm with this Agreement, and that it aod ill counsel
reviewed aDd in the prepualioD and uegotillion of this Agreement Cansequeutly,
any rule of CODStniCtioo to the effect !hat ambiguities are to be resolved agaiDst the clraftiDg puty
&ball not be employed in the interpretation of this ApeemeoL
[IX) Baslaess Day. To the extmt thlt the dale of my perfui11111l1CC Jequired under this
Agreematt falls on a dale which is DOt a bll!l'"ess day. the date of perfOrmance shall be extended
to the uext succeeding l:nsies day.
s
(x) Waiven. No waiver of lilly provilion or rigbt set tOrtb. ill Ibis Agreement shall be
valid unlea it is in writiDg sigDed by the party against which IIIICh WIIMr is sought to be
eafun:ed. Tbe fiu1111e of any party to insist 011 mict perfonuocc of my of the proviaio111 of this
Agreement or to exa'cisc any right gnw&ed to it under tbis Asrcemmt dlall Dot be construed u a
waiver of lbc n:quircmtlll of sucb ped"ormancc.
(XI) .ParCfes ID latel'elt. Tbis Agreement shall be biDding upon and inun: to the
benefit of each party, &lid oolhiog iD tlris Agreemeot, express or implied, is inccnded to confer
upon any other penon or entity UIY riglua or remedies of aoy oaturc whalaoevcr UDder or by
reason of this Agreement. Nothing in this Agreement is i n ~ n d e d to relieve or discharge the
obligatioo of my third ~ 1 1 0 1 1 to any party to thi& Agreement.
6
h!tlbUD
1. Sumile Suites bote! ia Tinton Falls, NJ
2. Summerfield Suites hotel in Bclmollt, CA
3. Summafield Subcs hotel in E1 Segundo, CA
4. Smnmerfield Suite1 bote! in Lu Colbw, TX
S. Summerfield Suia hotel in Addisoa, TX
6. Summerfield Suilel hotel in Mt Laurel, NJ
7. Quality 11111 botel (to be converted to a Courtyard by Marriott hotd) in Adaatic City, NJ
7
IJidhltC
Ferm of Allaaal Operatfn& Statmaeat
8
I ;
..
I-
ii
! a a
I
G 0 0
cl
I ;
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GUARANTY
TillS GUARANTY is given this first day of Dcecmbcr, 2003 by INNKEEPERS RI
GENERAL, LP., a Vlrgillia llmitcd parmership whose principal office is located at 306 Royal
Poincilll8 Way, Palm Beach, Florida 33480 ("Guaramorj, to INNKEEPERS HOSPITALJTY
MANAGEMENT INC., a Florida corporation whose priDcipal oflice i1 located at 302 Royal
Poincima Way, Palm Beacb, Florida 33480 ("Manager").
WHEREAS, Mlnager ud KPA Lfllseco, Inc., a Vrrginia corporation whose principal
oflice i& located at 306 Royal PoiDci1111 Way, Pahn .Beach, Florida 33480 ("Leuee''), are parties
10 that c:eltlin Managoment Agrccmcnt datod December 1, 2003 ("M&Dagement Agreementj for
the operatioa of Rcsidall:e 11m by Marriott- Gaithcnburg. Maryland hotel (the "Hotel'');
WHEREAS, L-is a "taxable RFlT subsidiary'' of Guarantor; and
WHEREAS, as a material inducement to Mmager to enter into lbe MIIDigemeat
Apement, GIWIDtOr hereby obliptes itlelf 10 Mmager Uld guarantees certain obligations of
Lessee UDder the Management Agreement in acc:ordance with tbe terms and CODditions hereof.
NOW THEREFORE, in consideration of Manager entering into the Muagement
Agreement with lessee, and for other JOOd ud valuable comideration, tbe receipt aDd
Rfliciency of which are hereby aclcnowledpd, Gllllrllltor agrees 115 follows:
1. Gaarudled ObHpdou. Guaramor hereby guaranties tbe prompt payment when
due of aay and all financial obligations of Lessoo under tho Manapnc:nt -srcement of f1YefY
lcind 111d ni!Ure which are or may be due in the future under the terms of the M111agement
Agreement 8Dd tbe Pooling and Cumulation Agreement (collc:ctively, the "Agreements'') and/or
aoy to or JaiCwala of either of the Apmmtl (oollc:ctively, the "Guarantied
Obligalioas").
2. Daratlaa ofGaAI'Hty. This guaranty of the Guarantied Obligations shall remain
iD effect after the expiralion of tile term of the Agreements only until 311ch Guaraatics
Obligatioas ue satisfied. 'Ibis Ouarad:y extalds to the obligations UDder the Agreemezrts of any
successor, aaigDee, or sublessee of Lessee under the to die exteDt, Lessee is
obligated Ullder the Agreemellll for tbc oblipcions of IUd1 a successor, usip or aublcuee.
3. Uacoadltfoul Obllpdou. Except a set forth bel0111, Oulllntor's liability for
the GuanDtied Obliptions shall be direct, lbeolutc, continuing. IUICOIIditional, and unlimited. If
Lessee defaults with re&peCt to the Glllllllliecl ObliptioDS, Manaaer shall piovide Lessee and
Gumntor with written notice or IAICh detEt. If, lll1d cmly Guarantor bas DOt sucb
ddauh of Lessee within thirty (30) days afta- 1be lei:Cipt or a wriaen noti<:e from Manager to
Laeeo and Guarantor of IUCh default, thea MIIIBIF hall not be roquired to pllliiiC any remedies
1
EXHIBIID
Gaaraaty Apeemellt
1
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Scluldule l.ZO
CompeCitfve Set AI Reviled
3
apinst Leaee u 1 cODd.itiOil to eafOn:eraeot of this Guaranty. Guarantor &haJJ not be clilcbqed
or Rlcuc:d by rDIISOII of die ctiscblrae or release or Lessee by reason of a discharge for Jess than
thO satiafictioll ill baalaupccy, Jeeeivcrsbip or ocher similar proceediDga. a disaftirmatiOD or
rejection of 1he Manageml':llt Agreemeat by a trust=, custodiiD, or other in
bankruptcy, rec:ei\ltl'lldp or ot:bflr simlllr proceedings, or a stay or other restric:tion,
or 11JY 0111 reduction, modificatiOD, impairment, or limitations of Leaaec's liability or lillY
remedy of MBDISer 1.lllder banbuptcy, rec:eivenbip or other simillr proc:eedinp. Except u
limited by 1he immediately foregoing sentence, it is expressly UDdastood IDd !bat
Ouarantllr shall have u a defense to its oblipliOM hemmder all defenses, rigbts of Ktoff and
couutcrclaima that Lessee may have apiust Manager under lhc Agreements.
4. Blwllnc Ueet. This Guaranty is binding upon Guarantor, ill sutx:esiiOI"II IIJid
usiJIII, ll1d aball inure to the benefit of Manaaer and its succ:euon: ud 111igns under tbe
Agrc:cmeuiS in COilDcction with a tlldSfer pamitted UDder the Agru:mcnta to such successors or
usigns. No usigmneot or deleption by Ouaraotor sllall release it of its obligations Wider tbis
Guaranty. Tho a;nn "Lesaee" usocl in this Ouarlllty includea also the first IDd IllY vc
assignee or sublessee of LcAcc.
5.. Modlflcatlo& This Guaranty may not be modified orally, but only by writiq;
sp by bodl. OuarBDtor and Modifications include, without limilatiOD, any waiver,
cbnge, discharge, modificatiOD, or tcnnillltion of Guarantor's obligatiOIIS hcrcundcr.
IN WITNESS WHEROF, Guarantor has duly signed this Guuanty as of tbe date
bereinlbove given.
OwD: INNKEEPERS Rl GENERAL, LP.
By: IDDkeepers RI General, Inc., l!a Sole General Partner
By:
Name: Malt A. MUIJIIIY
Title: Vice Praiclent & Secretary
Lestee: KPA LEASECO,INC.
By:
Name: Mark A. Murphy
Title: Vice Preaideat
2
Schedalel.81
Pooled Botell
AI ofFebruar)' 1
1
211041
Albmy, NY- Hampton lDn
Bcllcwc, WA- Residence Ian
BiugbamiOII, NY Residence Inn
Cl!eny Hill - Residence Inn
Denver-Downtown Residence Inn
G.itbaslug. MD Residt:Dce lml
Islandia, NY Hampton 1m
Lake Oswego, CA- Residence Inn
Lcldagtou, ME Holiday Ion Express
Laington, KY -Residence 1m
Lombard, IL- Hampton 11m
L ~ w o o d , W A - Residence Inn
Naples, FL- Hampton Inn
Ontario, CA -lleaidcoce Inn
OlicapO'Htre (Rosemont). n.- Residence
IIUI
San1oae-Soulh, CA-Residcncc Inn
Schaumburg. n. -Residence Inn
Silicon ], CA -Residence llln
Tallahlsscc, FL- Rcsidmlce lDn
Tukwila, WA- Residence Inn
Vancouver, WA- Rcaideoce lan
Westchtall:r, JL -Residence Inn
Wicbita East, KS- Residence Inn
Atlanta (Pcachtroc)- Re&idalce IDn
Bothell. WA Reaidcocc .IDII
Columbas, OH Raideacc 1m!
Pt Wayne, IN Residence lml
CiJmd Rapids, Ml Resldeoce Inn
l'Ddil!lllpOiia, IN Residence Inn
Louisville, K.Y- Residence Inn
Non:coss, OA- Hampton lrm
Portland (Scarborough), ME - Residence Ina
Richmond (NW), VA- Residence Inn
Wobum, MA Hunpton Inn
1
Adctiaoa. TX- Rcsidcnc:e Inn
Altam.ollle Springs, PL- Residence Inn
Arlingtoa. TX- Raldence Inn
Athmta-Downtovm, GA- ResideDce 1m
Denver (South). CO- Residence 1m!
Eut I .ansing. Ml- Residence Inn
Fremont, CA- Residence Inn
Pt. Lauderdale, FL- Courtyard by Mlrriott
Oarmantown, MD - Hampton Inn
Hmilburg. PA- Residence Inn
H011ham, PA- ToWDPiace Suites
Livonia, MI- Residmcc lml
Mo110tain Viow, CA- Rcsidence Inn
Ric:lunollll. VA- R.caidcnc:c Inn
San Jose (Campbell), CA- Residence Inn
San Mateo. CA- Residence Inn
Sbelton, CT - Residence Inn
Sili I], CA -Residence Inn
Troy (Central), MI-Residence Inn
Troy (SE), MI- Residence Ian
Tysons Comer, VA- Residence Inn
Welt Palm, fL-Hamptoa llln
WiUow Grove, PA- Hampton Inn
Windsor. CT- Residence Inn
n
.... - -..s). 41441 (CoUifwoo<l

AKXXXIXXXXXJCXJCXXXXXa
XXXXIXXXXXXIXJ.KXX.JlX.I
............... xxx
............
N011c
Sclledllle 1.90
Seftwue
2
Sclledale 5.01
CtrtiiD EIICGIIIbl'lllctl
1
COMMITMENT FOR mLE INSURANCE
COMMONWEALTH LAND TITlE INSURANCE COMPANY
Fll No. V81471 0
Schedule B SICiiuu 2
Excepauna
Schedulo B al tile polcv 0t pallelol b Ill .... tel wll ._.. _,...,, 10 .,. .aer. .., .... too - .,..
tllp ; 1
1
olio .,. llllfllloiiOot a1 IN c:anp.n,:
1. 01-, - ---.or --. I..,,- ... --"''IIII lt. pu-llc- or
1111 llllcllwe dill hnol IIIII """' 10 IIIII - 1111 PI p uecl IMIIIH IGqUirtls lor uo ol rwcord
u. cr-0< ftiiiiiPII thlnon- II)' IIIia c-,...,L
1/"-z;:::;!:.,.llllb'llloiOt elllrno of ...,. ill _ .... naC -by ... pulllo .........

.AJ.l-J.OY len, Ot rWI!ID I len, lot ........ Idiot Ot .....W IIMtoloN Ot hnaftllr Unlohld, mpa- tip law IIICIIIOI
_.., ... ,_....,..
NQ!E; I Mlotwt11'1 L'"" c-. II ldlllron.r ,.., ..,,. -cr IIOIIIIIonl .. Ill - te lllil
--
11UV"'t-.......... --. _.., ............. II' ..... - 'IIIIich- boo-- loy .. _..... ......, ot
liDit al 1111 IIIICI.
NOlS: lipan wc::ploofo<l of oo:""' llo d ,.._ al ..,.....,. ullllloloiY 101 Colnponr, lllil ._ wll boo -lid or
1100
1
II will .. llola t I II Mil 11J llld -F
1. E_._ent(e) 111 VIrginia Public: Arvin Company rnurded In Deed look D-14 8t p11ge
- 311, In Deed Book M-14 8t page 291, In Deed look Zt1 at 271 and In Deed Book
0.13 et page Ia 11 lllwn and noted un AL.TAIACSM Lind ntle SUrvey prepared by Tri-Tek
E111lnnrfng dated July 1, 1899, herllnlftlr refwrld to 11 "aa!WY"
1. Ill The Board or Supervl10re ol Falrflx County, VIrginia, recorded in Deed
Booll 1147 at page 112, 11 not8d 11n eurvey.
10. Euernent(a) to Vltglnr. Electrlo Power Company recorded In Deed Book 1111111 PIG
523, a 111own on IIIMY
11. Ellelftent(l) Ill The CIIHIPellce end Poto11111c Telephonl Company recorded In Dltd
Book F-8 II Pill 127, 11 noted un eurvey.
12. Privlte Slorm Drelnage ll'ld Temporwy Conatructlon Euementa rec:orded In Died Bouk
1 DS24 II pege 113, 11 IMwn un MIY
13. Deed of Dedlc:etlon 1nd Easement recorded In Deed Book 10168 at p1ge 1253,
eements at.wn un eurvey.
14, Fence IIICfCIIChH Z.D' along b01Jndlry with Lot 14 10 IIIII north 11 lllown on eurvey.
e
15. E111mlllt(e) to Vlrgtnll Electric Power Company recorded In Deed Book 1117 page
76. (Afftoll n111en11 duorlbed In Deed Book 10624 at page 983 and In
Schedule A, h..rn.lfter referred 10 ea "'ppurtenan&
1&. Stor111 Sewer Euement Agreement with The Boerd of Supervl.are or Flllrfu County,
VIrginia, In Dud Book 1143 at pege 1544. {Affec:llappurtenant -mente.)
17. Storm Wnlll' Detention Agrnment with The Boerd ot Supervleote or P'elrfu County,
Vlrglnll, reoorlled In Deed Baok 5144 at pag. 72. (Airecla IPPUrllllllll e-lltl.)
11. Deed ot Truat !tom 2071 Chlln Bridge Rucl, L.L.C., e Vlrglnle Ullllad llabUity eompany,
10 Philip J. Bagley, Ul, and Mark 8. Shlembob, Truateea, deled November 30, 1995 end
recorded December 1, 1816 In Dud Book 11571 at pqe 1117, Heuring USG Annuity a ure
Compeny, en Oklllla1111 corporetlon, In the IIIIDUnt otl1 ,200,000.00; a llllllgnld to Golden
American Ufe ln111rence Ca11pany by General Aalgnment deted Dece111ber 30, 118& end
reaorded Febru11y 3, 1117 In Deed Baok 1118 et pege 1009. (Affeete eppurtenant
--nta.)
19. Alllgnmenl Of Hen .. llld by zon Chain Bridge ROlli, LLC., I Vlrginll Hmllld
liability eo111p...y, for 1M benefit ot UIQ Annuity a Ute Carllpeny, an Oklallome COI'poretlan,
ctd November 30, 1115 end recorded Decomber 1, 1H8 In Deed Book H71 et Plllll
1152, enlgned by Generel Alelgnmen& de8Crlbed above. (Arreell eppurtenant
-mente.)
20. Flnenolng Slltement lhowlnv 2071 Ctndn Bridge Roed, L.L.C. u debtor and USG
Anrulty a iJre Compeny u cured p1rty flied January 1, 1tH In the Clerk' Office ot tile
ClrcuH Court for Falrflx County, Vlrglnle File No. 11..000131, u -lgned to Golden
Arlerk:ln ute lnaii'II1Ce Company by Aalgnment recorded ,.nuery 8, 1817 In aid Clerk'
Otnco FDe No. 87..000232. {Afllctlappurtenant 11U8111entL)
21. lllme 4 end 5 tre llereby deleted.
7
ENDORSEMENT
Atllchftl Ia end forming 1 p.t ot
OWNER'S POUCY S P B C I K B R
Trl-81lte Commercii! Clollnp. Ina. C. No. Vlll-3710
r ... . . : ~ a y
CommonweaHh Land nue Insurance Company
Tile Company rn .. rn the lrwured that llle land 111-ed In the policy ia the ame lilt
ehown on ALTAIACSM Ulld ntle Survey prepll'ed by TriTek Engineering deted July 1,
1111, lilt reviMd July tot, 1111.
Thle endorment 11 made 1 pert or the policy. It II lllbfect Ia all terms end Pf'OVlllans
!hereof and or 1ny prior endGI'IIIIIenll thereto. Except to the 8XIInt exprelr lilted, the
r.rm., dltel and 1111ount of lhl poncy and prior endcnemen&a not chlnged.
Deuld:SPECIMEN
Comrnonweelth t..ncl Tille -renee Compeny
Trl-8tl1e Commercllr Closlnga, lno.
1110 11th Slrelt, N.W., 911111 57&
WMhlligiDn, D.C. 20031
:::
4
lfl0Ei
NGII: ,. ................... "' ............... _... ... . . - . . . . : ~ .... ...,
......... y ~ ........ , .. ,. - ~
PROPERD LIYEL
Sdaedle 7.01
l'tfaDIIpmeDt Semca Jnc:Judecllll Base
Maaapmeat aad Ac:codq Senlea Fee
1. Sdcct key cmplo)'CCI and clcpanmcm beads
2. E&lablish stafliog requireiDellm. consiateat with the requiraneots of the Agnemeut
3. Implcmcot employment policies such as hiring policies, tmns of emplo)'l11eat, wage
scales, llld vacation and benefit JIICbges
4. Provide property levd Slles, operations and legal compliance training
S. Esl!b!ish l!ld implement sal"' marltceing and managaneut ltralegies
6. Eslablish rates IDd cbargoa ilf the aoocJs and ICf'Yiecs to be sold by tbc
Hotel, in ac:cordance with the Agreement
7. Ilq)lement Manager's standud admiaisCnllive. acc:oliDtiDg, budgeting.II'IIU'Iccting.llld
operatioaal poHcies aod practices
8. Sqlervise all property opcmiona and aaJes fimclions.
9. Maintain the HO!el iD &ood order, repair,l!ld coadition
I 0. Purcbasc all opaatiug supplies and opeuttiug equipmau
1 I. Implement a mainteniDce ptogJam consistent with prior practice and in
compliance with any applicable frMchiaur requiremeats
HQMEOFFICE
I. Maintain a lm:;l of Cllccutive S1affing lpplOJHiate for the size md DltUre of the Manager's
business, consistent with put practice and iDdllllry SIIDdanls, conaisting of, at a
minimiiiJI, (i) a filii-time Chief QperatiDg omcer (or equivalent). (ii) full.. lime Cbicf'
Fi.aanci81 Ofticer (or equivalent), (iii) a fuU-time Corporate Director of Sales and
Marketiag (or equivalml), (iv) a full-time Director of Operations (or oquivalcnt), (v)
regioaaJ direclon Of operations to IUpeMIC property activities (Approxilllllldy 12-15
hotela per regional director).
I
2. Maiuain a level of information ecdmology support staffine and equipment app&opriale
for 1be size and 1111tme oftbe M11111pr's business and iafonnalioa. tecbnology
infivtnac:ture, which aball CODSiat or It 1cut ooe appropriately qualified staff member for
each 22 hotels IDil18pd by tbe Manger
3. Full-time asset manager to administer third party maDigeB and managanent fimcdon..
4. Provide lwmaa resources management
S. Provide filii time risk JD8DI&eDICDI Support Kr't'icea (J pcriOII per 6S hotels)
6. Establilb employment polici sucb as biring policies, 1enns of employment, wage scales,
and vacation and bcoefir pacbaes
7. Provide revenue managemcDIIIIIppOn servic:a (I pmon per 32 botcla)
8. NCJO!We aod administer 1-.tioaal supplier aDd veuding agrmneniS
9. Prmde purdlasing fuoctioa CODSisteot with past practice ud u ueceuary to comply
wid! the Agn:cment, including bur not limited to approYillg all mmrial purcllase orders
andsemcc agrecmerus
ACCQUNTINGSEBVJOO
I. Pttpla'e IIJIJ/or process monthly ad yearly fi11111cial stataneDts, cODSislent with the
requiranents ofthe Agreement
2. Plepare IDCI!or process aCCOWI1S payable
3. P.tepare and/or process sal and 11110 1IX rctums
4. P.tepare aacllor proccn payroll aad relaled payroll itemr
2
Scbedule 9JI3F
Priority ofl'aymllltl
1. F'JDt. fimds ncccssary to pay Dedoctioas (other than Base Manapncnt Foes aDd
lbc Ac:c:ounting Services Fees as set forth under 2 and 3 below) for the currr:ot AccoUDtiD(!
Period;
2. Second, 1imds necesnry to pay Base Feea due for the cUIRIIt
Accounting Period;
3. Third, ftmds uec:essary to pay Manager iiS Aa:ounting Services Pee due for 1be
current Acoounting Period;
4. Fourth, fuDds necmr to pay I..asee's Priority(u calculated through the C1IIRIIt
Accountiq Period), first satisfYing any Buo Rent Shortfall (as defined in the PooliDg aDd
Cunu&lation Agn:anart) and IIDY Pac:u:ttage R.ent Sbort&JI (as clc6Ded iD me Pooliug md
Cumulation A8feemeut); aod
S. Fiflb, lands JICCOSIIJ}' to pay Manager fifty percent (SO%) of Available Cash
Flow as its IDce:Dtivc MIIDIJentenl Fee and Lessee fifty percent (SO"At) of Available Cash Flow,
puipiSIU.
I
GENERAL POLICY
Sdedale IO.Ofi
SCHEDULE 10.08
Innkeepers USA (and affiliates)
Capital Expenditure Polley
Effacllva June 20, 2000
Revised October 18, 2002
All capital expenditures will be approved during the annual capital budgeting proce&a.
All non-budgeted capital expenditures must have the attached Cepital Expenditure
Approval Form oompleted and the appropriate approvals obtained before any contracls
are Mterad Into or funds are expended. This Capital Expenditure Approval Form Is to
be completed by the General Manager of the hotel or the Innkeepers USA project
manager a811gl18d to the hotel. The property could possibly be responsible for the
payment ot the Invoice If the Cspltal Expenditure Approval Form is not properly
approved prior to purchase.
In emergerJCY situations (e.g. situations lnwlving guest or employee safety, catastrophic
events, etc.) capital expenditures can be made Immediately to address the problem;
however, verbal notification should be made ASAP to your Innkeepers USA project
manager and a capllal Expendltu'e Approval Form should be completed and forwarded
to your project manager within 7 days.
GUIDELINES FOR NON-BUDGETED CAPITAL EXPENDITURES
Minor inprovements and ordinary repairs
Minor Improvements and ordinary repairs that bring the aaset back to its original
condiUon (and value) are not capital expenditures and Shall be expensed on the hotel's
profit ant loss statement
Individual Ham purchases
The purchase of an lndvldual Item with a cost than $250 and an expected
useful life of more than one yaar Is a capital expenditure. The exception to this rule will
apply only when a particular Item is on lhe approved capital budget (as these have
already been determined to a capllat The cost to be capltalzed Includes
installation, labor, freight, storage and tax. It does not include maintenance contracts.
Dispoaltlon of original assets must be approved it advance by your Innkeepers USA
2
project manager and fhe deposition documentad. Any funds obtained from the
disposition of these assets must be forwarded to Uncia Price at l n n k e e p e n ~ USA.
Group asset purch81811
Group asset purchases of ten (10) or more Identical items with an aggregate of cost of
at least $1,500 and a unit cost of at least $100, and a useful life of at least one year are
capital expenditures. From time to time exceptions to this policy may be made to
provide for capitalization of aystem.wlde initiatives or new franchisor standards that
otherwise might not meet the above aiteria. In order for a purchase to be capitalized aa
a system-wide initiative or new franchisor standard, lhe purchase for a single hotel must
consist of a mtnlroom of one hundred (100) identical Items (or the number of rooms at
the pal'tlclJar hotel; for example, at an 80 room hotel, the minimum quantity WOUld be
o91ty and not one hundred) wfth an aggregate coat of $3,000 and a unit ooat of at least
$25.
Asset Improvement I major repairs
Asset Improvements (major repairs) must cost at least $2,000 and meet one of the
following three alteria to be caplallzed:
The rapalr extends the use[ul life of the asset beyond Is
original life.
The value of the asset is significantly Increased.
The assat Ia adapted to a ditrarent use.
CLARIFICATIONS TO GUIDELINES
111d ....... ._,nolto. ... "NgllllloaafbOMIUia .. adlhllh...,._ .. ,_..afhl ~
....,........_
Items that are damaged by guesta before they reach the end of their useful life generaly
will not be capitaliZed.
The following items will not be capilallzed regan! less of the cost of the expenditure (this
list is Dlustratlve, and not elChaustlve ):
Vehlde Repairs
Vacuum Cleaners
On going termite protection treatment
Landscaping annuals
Coffee Makers
Irons, Boards and Accessories
Hair Dryers
3
The final determinallon of whether an Item Is a capital expenditure or a repairs and
maintenance Item that wiD be expensed rests with Stacey Berman and Greg Fay of
Innkeepers USA.
INNI(EEPERS USA CONTACT INFORMADON
Greg Fay, Chief Accounting and Administrative Officer
Stacey Berman. Director of Purchasing
and Project Management
Unda Price. Controller
l'mlkeDpm USA
306 Royal Poinciana Way
Palm Beach, FL 33480
4
(561) 227-1386
(561) 227-1381
(561) 227-1325
Sclledale 12.04A
BadaeaPIID
s
Table of :.-.: 1
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1
I
GDIUAL OV!lVIEW
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2
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DDIAND OVDVUV
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3
I
UYS '1'0 2003 'I!Vt'AI. Cllllml
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4
I
MEV IIOtEL DPKLOI'KD't
[
I
5
I
COIIlE!IrtVE IVALUAttOII'
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I
6
I
COKl'll:l'liVE I'UCE Sllll'S
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7
PlliCIJG
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8
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KDt Sl'UADSHIEt
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9 toP A.CCOUltT PROCUTIOR
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'SKA1'I
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10
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MOUI IXP!IISE IUDGETS
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12
II!V$

ALICT liOEX INDfllNG SYST11
GENERAL OVERVIEW
Describe JOia' property. In ,our dacription include age, aeosraphic: loclltio11 in the .lll.8l'bt, aad
how sbould be sold in tbis marlcet.
TbD Pidence IDil Dellwr DowutowD property is 22 yean old. We are locldi:Cl11:r011 die
IJishway &om dowmowa. The oeighborbood is COIISidmd North Dea.wr, which W. oriaiuUY
111 Ita1ill1 Jaidl:n!ill area. It is DOW a mixed ncighborbood ofHilpaaic; low inco bousin& and
youag couples leiiOvaDog tile uew old bomBs. or doing scrape ofrs. We have a beauli1bl new
1bc zest of oar ptopaty is tired lllld wom. We aeed a complete Oeu I miesh with a
repiDI, aew S111irw811s, ml suilu teiiOVIIIed. We an: across the biibwaY fiom dowatowll, whicb
i.s somea- pii'Ceived as beiDa on the "wroag side ofthr: uacb". Our shUida lhe lifi:liDes
f'or IU IPMIS\s IIIIi be '"asy tG the offices dowa.'IOWD. We also sell ounelns
u easy ICCCISS to tbe 1101'111 meuo area, ll!id the airport. The only COIIIisteat top account we
maintlia.yearcm:r:yar is Government ess We pull ourocbeuccoliiiSI fiom the doWil10wn
uea, along wUh die North 12S c:olriclor llld 170 corridor.
Descal!e the hotels stieDgtbs 8lld '\W'llh I U illlhis 1llllrbr., ll1d how it mould be priced rcla!ive
to toDJV4itnm.
Tbe sll'e:Dgth of Deliver DownlOWn is the staff. We haw a vmy seasm:od, staff' that is vay loyal
to our guests. lbe ap of our propeny aDd. location ue considered 01&' biggat c:balletlges to
owercome. We often have to discoullt olD' n1te more than a doWIIIDwn bo1el hecISC of this
Joc:alion. With a completed m10vation we will be able to drive our tate some becal1se of the
updaled ptOCiueL
Clovemmelll busiDess is both a challenge end stteDglh. The strength lies with the escncies we
bave worb:d OYa' lbe years. We have lllways bad govemmeat busiDess as last room availability
becan oflbe volume. Denver is a baiouiiDistrict Office for 13 Federal Divisions. We have
loyalties wilh DOD, 001, IRS, FBI, Postal Service, ad Social Security. The cballcqe with the
pYel1liDI:IIt lies with tbeir per diem ofS 112.00 iD Denver. Every hotel DOW WilliS ll1is busiDess.
1bc full service botels offer all govcmmeut employees, concierp floor, he btakfast, free
happy bour,llld free pvking This is bald to compete with when the bolels are Ia the middle of
doW!lfOWn IIIII !bey earn more Maniott points also.
AddteSs my m:nds )'011 fomee in yoiD' nwket, as weD u my coocema or opportunities you see
b the upcollliq year.
The office VIC8IICY rare is 22% downtown. The Ullelllploymeat rate ill Denver is 6.2%. which is
up from S% in 200212003. Tbc economy is wcpec;tcd ID Rmain soft throlllh the New Year, with
comJIIDics 1114 local sovemment COiltiJiuias ID lay employees off. The loq-sutferia& telccom,
cable, llir!iDc 1114 hipll:ch iDdusuia, which Iurie bisloril:ally drivc111he downtown l1lllrkel, will
coatilluembeJluaish.
Opportuaitics dlat we arc fncnsing on arc CD share shift arc: g o ~ (pat l'llle), medical
(lower raUl but extcDded stay). project basiDess- to fiDd. eYir:!!de4 stay base bnsinen This year
lbe project busiDcss Ills evc11 beeD slower lblll otber years.
DEMAND OVERVIEW
Govemmmt (R.egioaal bub for 13 goveommc:nt divisions)
City wide CODVCDtiODS (19 011 the books- 10 wbic:h will implct
us-- specialeWGt scbedule)
KPMG
70,000
6000 room nisbts
213,000 room lligbts
6000 room aigh1S
6SOO room nigbls
Whllclwlaes do )'OU foresee for DeXt ~ (New demand aencraronJprojeciS in area, lost
cfnnand gear:nmrs iD. mabt, ere.)
Dowutown is bo)ding stady fbr am year. 1'hae is ao new growth or cfemend that is scbeduled
for 2004. 20051ua the: openiDa or !he
new conveotion bceel. We bave yet to - what large convemions this briags in; otherwise it is
just adding 1100 mon: rooms to a soft marbt.
1be doWDlDWII market wiU COIIlimJe to see more oftbe same in 2004. 1'ben: is a lot of
~ w i t h ll:mUiliS. It is a buyers IIIIICt
111111 die cOIISIIIDel' knows thll ad thtftfon: is willing to shop lllOUIId for the "best dell".
Qwat. Accenll!re, KPMO uc IDp dc:mlllll pcrmors for doWIIIDWIL Tbese corponle accounts
bave been very diffic:Wt for uato sblac shift. Accen!!ue will only uae two beckoom 311ites. They
will not use Patdloase Qwest llld ICPMG are all location driven. We are able to set project
business, but for dlem to be top accounts is a c:ballqe.
KEYS TO REVPAR GRO\VTH
P3ge I ofS
KEYS TO REVPAR GROWTH
Pleue ladude l to 3 brtef ballet poiDD oa wllat aeeda to llappea for &lllCCtllfallOI-4 Ia clle
foiiGwiq U'ell:
Trauleat Travel ("mdadlac Corporate ..t Lelnre Tnvelen)
Set boliday SUIII&Y in place DOW. (sceatmcbed holiday schedule)
Make sure city wide SUIIiCgy is in place 111111 all reslrictioas IIIII in place DOW. RI:Jirict Cl!epries
C,O,E, m:l F. (see city wide CIJender attacMd mel !be special.-t scbednle shows what wiD aff"ec:t us
1llrouP CUIII)XessiOII), MDIIi1or citywide c:ompteSSiOD aiODg with tesuJar corporate aad lriiiSienl
bomre'S. If citywldcs begin baviag quic:lc pick ap IDd look u lboup tbcy will become sellouts. cbea
load a spcdal cYI:IItl nre ofS13S.OO for all special evats.
Shop c:ompetilioa. molllhly
OpeD 'llleekead rllla ill. Deed times
Uli!Qe special prbr on Marriott.com lllld with ropeet pest!
Corporate Accollllt S IIJIMDt
1m EBC ud work tllellla llll&calllllt. GOIIII for cllaa to book 5208.000 Ia rwt"ealltl
Get Rfl''aiD earty witla COIIIpCdtive rata
Sllop compedtioa moati!Jr
* Holt cold "Pinl sales blitzel to clowatowa oflica qlllll"terly
EDacled Sa.y/8- Project Bulla-
Set pridac for Ws tier correctly,so ao basiaess illolt due to prk:e. Thil is lacavily dilcowtecl
by aprtlllelltl.
Slaop compcdtioa to lalotr nat Ia iD their koteL Slalft shan.
Filld tile "IIIC &II"- laceatm adllkoldl (24 sllku, 4 moatlas, $90.00 rate)
file://A:\KEYS%20T0o/o20REVP AR'Io20GROWTH.htm
9122/2003
KEYS TO REVPAR ORO\Vl'H
12116-IVJO OldlaiiWeck
12111 New Y_.s Eve
111113 Nn Years
211321111 VaiiiiiiDO'sDay
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2004 Top Account Summary
R!SIDENCE INN DENVER DOWNT'OWM
Account Nlnle
t GOVERNMENT
2QUIZNOS
3 MEDICAUHOSPITAI.
" NfYADA cen 1 ER
5 MERCH. MART & SHOWS
Tolala
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IWOIV-cJ .IUUeCI
Sdaedale 19.13
Dllpate Relolada Rider
&cept 11 epecified in Section 19.13, Ill clUpulea uiaing UDder this AgrUIWt 111
amount iD cootroYerSy of $10,000 or more or which arise oat ot; or may have the effect of
causillg. an event or cin:umslance inwlvin& a material adverse otroct upon a party to Ibis
Agreement, sbaU be resolved tbrvup a two-step dilplltO I"CCIJation process, lhe tbst step of
which shall be DOD-binding mediation conclacted in accordance with Paragraph 1 below ud tbe
&cc:oDd llq) ofwhieb lball be bindiDg arbitralion J1WS111111 10 eilber Parqtapb 2 or 3 below.
1. Mediation. The mediation process &ball be admillisrercd by a mutually acceptable
mediator selected in accordiDCC witb the Commercial Rcsolutioa Proc:edurel of d!c
American .AJbitration AIIOCill:ion AAA j, IDd Ill mectimon couferences sball occur in Pllm
Beacb Collllty, Florida. Absent an agrccniQtt as to a mediator, lhc medilltDr will tbca be selected
in aa:ordanc:e with the JUles of AAA, but tbe mediator muse blve experieoce in tbe hospitality
indlllby IDd must not bave my conflict of inJaest. The mediation will be a non-binding aod
entirely confideDtial conference betweeo 1be parties cmch"'-Ced in accordance with tbe
rules and procedures of .AAA. ud nothing at the mediation shall be IKimissible in evidence
except a sipcd agreement wbfch dtber party bas the rigid to move a c:ourt of competent
juriadiction to eaixce. Any mediation will be c:onsidcrcd complcto: (i) if tbe puties eDter into a
Mitten agreement to IUOIYc the diJpute; (ii) with to the p111y submitting the dispute to
mediatioo, if tbe o1ber party fiils to appear at or participate ill a mediatioo confcn:ncc scheduled
in ICCOidiiDce wid!. lhe rules of AAA; or (iii) if the dispute i1 not resolved within five (S) days
after tbe mediatioa. is comple(ed. If, at the time a dispute Irises, AAA docs not exist or is
u111vailable or Ulllble to admjni.otc:r tbc diaputo raolution PfO"SS and the parties C8DIIOt agree on
the ideDiily of a substitute sezvice provider, then thore shall be no medilllioa, aDd the parties shall
proceed to final bindi111 atbitmion 11 described in ci1her Pamgmpb. 2 or 3 below.
If uy dispute remaills wuesolved between the parties after the mediation process has
been completed, eidla" party may tbeo lllbmi.t eny such UIIRIOJvod diapute to fmal end
arbitration in accordance with the rules and pnx:edurc::5 set out in either Pangraph 2 or 3 below,
with 111 matlalrclated to the cnfoR:Cibility of 1his lrbilrltion llfCCIIIenl llld any a'Witd laldcrcd
pumill11 to this apc:ment 10 be govemed by tbe Fedaal AJbitrat:ioo Aet, 9 U.S.C. Section 1-16.
The IWird rendered by the ubitraiDr lbail be tinalllld binding. llld judament onlhe award may
be OJtcrcrl by any court havinajurisdiction theno Subpmanphl! 4.3 through 4.6 &ball apply to
mcdiatiODS coaducted pwllllllt 10 this Parqraph 1.
2. brbjtratioD ol Disputes Jtepnlipg Fin Mal Mattcn.
2.1. fi!Wio;jal MaJ!m 10 be Submjttpl to Arbjl!!tjon. If a dispute has JIOl been
re10lved by the mediation process set forth in ParaJrapb 1. then with tespcct to any of tbc
following 1111t1e11, the di&plllc shall be re10lved by llibilrlllioa, IDd DOt by Jitiptioa. in
accordlllce witb the tams of Ibis subparagraph 2.1:
(a) computation oftbe
(b) relmbunemcnts due to MarJqa- under the AgROliCilt;
6
(c) any ldjuatmciiC in dollar amoums of insurance c;onnp:s required
to be maiJIIIiDed;
(d) IllY dispute c::onceming the apprvval w modification of a Business
Plall, or my C"IIIJ III1ICI't thereof, pUJIIIIIIt to Section 12; IIIII
(e) any apportiooment of compensation for any tlllcing purmant to
Section 14.02 of lllil Agreement; and
2.2. 1be Accounlant Bither pmy may submit such umesolved financial nwrer to
ubitratioa wbidl shall be condueled by a solo aubitrator {lhe "AccounlaDI') who hu at
ten (10) experience in the hospitality industry. The individual shaH be selected fiorn ODe of
the "Big Four" finns of certified public acconntanh of m:ognized national stancliDs, i.e.,
PricewatabouJeCoopera, Brost &: YOIJIII, KPMG, IIIII Deloittc 111d Toucbc {or the successcn
thereto), DOtwitbstladiDg lilY existing or prior relationship! between Lessee IDCl such accounting
f:1nn.s or Mauger IIIII auch accounlillg firms. 'l'be party desiring to IUbmit aoy financial mat=
described llbove for resolution by mbillatioD UDder PlraFIPb 2 shall do so by writlal notice to
lbe other party, which notice sball set furth the items to be llbilnltrXIIUid such party's c:hoice of
an ICCOUIIIIIIIL The party receiving such notice lhaJI witbiD fifteen (IS) days afterteoeipt of nc:b
notice oi1her approve such choice, or nominate ID ICCOI.IDint &om one of the remaining lhn:c (3)
finna by wri!ICD notice back to the first party, and the first puty sb11l wilhin fifteeo (IS) days
after recoipt of IIICh DOtice either approve 8UCh choice or disapprove the 1ame, IDd tho SIIDO
procedure &ball be followed 1Dltil the parties approve 1111 'CCO' mtant fi'om ooe of BUCh firms or
there is only ODO remaining firm IKJt nominaled by eitber party. If both parties shall have:
approved one of the firms Wldel" the precediag eeatmce. then such firm shall be the
u Accountmt" for the purposea of ubltratillg die displlle; if die parties are unable to agree on an
&COOUDtillg firm, then 1ho romlliniaa fum, which wu not nomiDated by either party, shall be the
"Accouabmt" for such plJIJ)OSe. The arbitrllion shall be c:onduciM IS provided in Pin graph 4.
3. A@ratioo of Djsputes Beprdinc Ngn-fiMPcil Manm. If a dispale reprdins
1 non-financial llllllcl' baa no1 been resolved by the mediation process set forth in Paragraph I,
tba1 it lhall be resolved by arbilnltiun, and not by litiptiM, in acc::ordance with the tcnna of this
Pmgrapb 3. Ei1ber Jllllly may submit such umesolved noo-fiDancial rnaaer to arbittation which
lball be conducled by a sole llbitnlor, or, if the parties m Ulllb)e to agree on a sole ubitrator, a
panel of 1hroo (3) llbitrators. The party deslril!g to submit such 1 matta" for resollllion by
llbitration under Pllllgnlph 3 sllall do so by notice to tbe otber party, which DOtice sball set forth
tbe itana to be wbibaadllld iUCh party's dloicc ohn llbitreror. 1bc puty notice
lhall within fi1lwD (1 S) days after rec:eipt of 111ch notice either approve such choice, or nominale
a aecond arbitrator, and shall, within tbiJty (30) days after receipt of such 110ticc, file its
IIISWa'ing &tatanent u wdl u aoy c::ounterclaim. Tbe two IJtritratora shall nominate the third
ubitnltor within fifteen (IS) days of the aominali011 of the second IJbitrator. The lbiJd party
must be indepmdear of both the parries BUd the ocher two lltibllm. The: srbitratioll sball be
conducted in West Palm ae.ch , Florida, llld IS provided in Paragraph 4.
4. Arbitrltion - Administration. ('.mfw:t Procedures Effect. C)C.
7
4.1. Adminillntjcm, Arbitration CODducted for the reenlntioo of dispua uDder cidacr
Parqraph 2 or 3 sblll be aclmiDitterM by AAA. To the die tmns of this Puagrlpb 4
COD1lict with the Commm:lal AJbitration Rules of AAA, IIlia Paragraph 4 sbalJ control. If. at the
time a dispwe ari101, AAA does not exist or ia unavailable or Ullllble to administer die dispute
resolution procas IIIIi 1bc parties cannot agree on tbe identity of a substitulll service proviclcr,
lhen either pari)' may petition lbc Illite or &.den.l distric:t court iD Weat Palm .Bcac:b, Florida, to
lppOint anubitrator to IC!mjnjoter lbe ubitrali.on In accordance with the Federal AJbilnlion Act
{if the petition is ftled iD fedcnJ dislrict cowt) or the IIJIPiicable stile ubitratioo (if die
petitioo ia filed iD 8lltC court). Jf suc:b cowt shall rmae to do 10, tllere shill be no arbitration,
llld the parties may proceed to exercile any 1nd all rigbla and ranedies available co the parties,
11 If the provisions of Section 19.13 and lbe 1efeuaa in 1bls to the dispute
rc:solution process UDderaucb Soccion 19.13 had not been included in this Agreement.
42. Rl!)a. Each m:bitratioo sball be conducted In ICCOidancc with the rules of tbe
ICrVic:c provida', to tbe extellt not otberwise provided herein.
42.1. Arbitration of any must be initiated within two (2) :years from the date on
which tbe facts giving rille to 111Ch dispute lll08C, 8Dd any party who fails 1o commence an
abitratioo witbin IUCh two (2) year period aball be deemed to bave waived any of its lfJirmative
rigb1s 111d claims in COI!IIecCiOD with lbe diapute and shall be barred from ISieltiDg such rigbls
and claims at BDY time thcrcder. This Seccion 4.2.1 shall not limit claims for fraud.
42.2. If 1 party wiJ1fiiJiy impedes the progress or caoduct of any llbitration hereunder,
including the failure to comply in a timdy manner with proper diacovezy IeqDCSIS or to altaid
belriDp, the llbilrltor(s) shall be empowered to enter appropriate amctions up to and iDCiuding
tbr: reodition of a del:iaion apinst such party OD tbr: maaen tbat 1n: the 111bjca of audl dispute. .
4.2.3. In all arbitration the arbitrator(&) ahall be required to agree upon 8Dd
approve tbe substantive poaitioo advocated by Lessee or Manager with respect to each dillputed
item.
4.2.4. The arbitrltor may require and facilitate ncb discovery liS it shall determine is
approprillle in the ciicumstanca. taking info ICCOUDt lhe needs af 1hc parties aDd the de:siiabiuty
of rnakiq discovery expeditious and c:oatdective.. The .-bitrator shall be empoweml 10
subpoeaa non-party IIDCI perty wilaellleli for deposition and hclriDg to die tuJJ extm1 provided
UDder the AAA Rules aDd the Federal Albitralion Act (or tbe ipplicable Illite arbitration statute if
tbe arfritrator ia appointed p111SW1Dt to a petition tiled in Illite court). The ubitralor may 1iso
direct die prodacdoa of doc:umal1s and other infonna1ioo 8Dd the advance identification of
witllesses to be called 8lld cloc:wnents to be admitted. The arbitrator may iiiiJO mler1 to protect
lbe c:onfidcn!iality af proprietary infonnation. lrade secrell and other HIDSitivo infonnatioo
before it is required to be disclosed in discovery.
U.S. In addition co DIODetary damages, or in lieu tbercof, 1hc llbilrator(s) shall have lbc
power to pot aU equitable relief (both by way of interim relief and u a part of ita final aWBid)
as may be gnwud by any court in the a111e where the Hotel is located. Monetary damage liability
shall limitr:d to ICblll r:!amagfll; tbe panics ben:by die right to claim and/or receive
CODiequential damagca, lost profits, business loesos, punitive clawaaes or exemplary relief. Tho
8
arbitrator Wll dctcmliao wbetb and to what mcnl any paty ia a pllMiling party and shall
aw.rd atiDiae)'l' feel and expeoses usociated with the ubilrllioD proceediaa to tbe "prevviiiag"
party, If my. All prceeedinp sblll. be reported by a c:er1ified sbonbaDcl court n:poa lei anc1 writteo
transeripCs of the proceedings shall be prepared aDd made available to the pmiel. The fees of the
arbitnltor(s), tosether will all costs IIIII expenses incumd in conductins the arbitration (but
cxdudiDa the panics' 1especdve altomey, witnca lild related COliS and expeDICS) llllall be home
by the party apWt wbom tho ubitnl awud ia made and llball be a (the) component of 1hc
arbitral awud.
4.2.6. The parties agree tbat the llbitntion proce&S shall be conducted expeditiously
11 possible and !hal the production or evidence and wiiiiCSSes shall be llllr10Wly focused on 1be
JIWier in di&pute. Notwi1hsllllldina the fORgOiag. each party shall have a .reeJOnahJe oppor!Unity
to present ita cue, iDcJudiDa witnesaa, evidence 8ild briefs.
4.2.7. The ubitratcr(s) sball be required to render a decision in IICCOrdaucc with tbe
prococlaces described in subparagraph 4.2 withia twomy (20} days aflc:r the close of cvidc:Dce 8lld
any post evidence briefills 111d upmauta, but in ao event more dum six (6) montba after the
actection of lhe ubitnltol(s). Tbc decision shan be in writing and state only those ICISODI
nec:s ny to support tbe awud.
4.2.8. The ubitrator may 1UJ11irc and &cilillde, colllirteal with Rllle 34 of tbe Fedrnl
Rulea of Civil Procedure, ncb discovery 11 it lball determiae is appropriate in the
ciiWU111111ces, taking into account lhe needs of the parties and tho desirability of making
di8covmy expeditious and c:ost-dfcctive. The ubiliator may allo direct tbe procb:lion of
doc:umelliB aod other infonasli011 and the advaDce identification of willlesses to be caDed 111d
docwneniS to be admit=!. Tho arbilrator may issue order$ to protect the confidentiality of
proprietuy information, trade aecnts aad other s c a s i t i ~ information before it is required to be
disclosed in discovery.
4.3. Coii!I!CDS!!tion ofAibitrator. Subject to the prevailing party's right to recover fcc:s
and COSIS, tbc parties as- to ~ equally lbe COSIS, iRcluding foes, of the arbitrator(s). A3
aooa a practicable after aelcctioD of the abitra101(s), the arbitrator(s) or tho ubitrator(s)'s
deaipated represeatati.ve aball determine a Jeasonble estimate of tbe ubitratot(s)'s IDiiciplted
foes ll1d C<llls, aad scud a lllaltmear to each party setting forth the party's equal alwe of the fees
aacl ~ Each party shall. witbin 1m (10) clays after receipt of the ltltemc:Dt, depolit tbe
rcquiral sum with the ubitration aociati.on
4.4. Venue. Jl'in4irtiOA. pM Jury Waim. The exclllsive verwe of any llbilmtioa
proceedings shill be in WCIIt Palm Beach, Florida 11 a neutnl lite aelecled by tbe arbitntor. For
purpoa of cnforcina any lllbintion award, each party irrevocably submits to the ft(:huivc
jurisdic:don of the federal and ltate couns lot:alrld in West Palm Beach, Florida for purposes of
obtUUac lit'bpocnas for depositi0111 or heuinp and for pwpoeea of coforciag equitable relief as
M:ll as aay llbitration awml Each party waives to tbe fullest exteat permitted by law, trial by
jury of all disputes, iac:luding dispuaarising out of or rdllting to IJiis Agreement.
4..5. Expegsa 1bc prevaliiDa party in my arbi!Jatioa, suit or otha' action arising our
or or related to this Agreement iball be CDtitlod to recover iiS reasonable foes, costs, aacl
Cllpcnscs rc!Jiing to IUCh arbitration, solt or ICtioD, including rc&scmlble judicial 1111d extra-
judicial ldtonulyl' feel, expemea, 111d dilburacments, llld fcea, CCIIII, ad cxpeues relating to
any mediatioo or appeal.
4.6. Survival llld SeyenDC!!. The provisi0111 of Sectioo 19.13 llhall survive the
oxpirwtioo or carllc:r lmniDatiOD of this Agreement for IDY reason, reprdless of 'ffhether 1
dilpllle lri111111 before or after expiratioa. or earlier llermirudion of this Apce111e11t, IIIJd repnllesa
of whether the rclataJ arbilntiou proceediop occor befOre or after expiration or earlier
lamiiiiUiOD. If my pan of Section 19.13 or this Schedule 19.13 ia beld to be unenforceable, it
shall bo severed and sball not effcc:t either the duties to mcdim: or 1Ibitra11: or 1111)' other part of
Sectioo 19.13 or this Sclledule 19.13 10 loog as the process for molution of disputes can still bo
coDducted subltantially in the mumer coutemplated the!eiD.
4.7. Monpp. Any Mortgagee may en11:r 111 appcannc:e in and monitor ubilntiOD
prooeedings in which either Manager or Lessee bas aoullht a riafrt to termination (bill DOt a
mediation p!OC""ding) botw=n Lessee and Mlmager, 11111 !be reuoDable expenses of suc:b
Mortpgee iD appearing and IIIDIIitDriag suc:h proccodiap lblll be an apc:ase of Lessee except
as provided in Section 4.5 oftbis Scll!dale 19.13.
10
SCHEDVLEvni
IDENfiFICATION OF CERTAIN QUALIFIED MANAGERS
Noae
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