From PLI’s Course Handbook Hotels 2007: Acquiring, Managing, Developing & Converting the Hot Property#11193

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MODEL LENDER-MANAGERAGREEMENT FOR HOTEL

Joshua SteinLatham & Watkins LLP

Copyright © 2006 Joshua Stein. Based on a chapterFrom Joshua Stein, Lender’s Guide to Structuring andClosing Commercial Mortgage Loans (MortgageBankers Association Campus MBA). For more articlesand other materials by Joshua Stein, visit www.real-estate-law.com. The author acknowledges the helpfulassistance of Michelle V. Kelban and Jeffrey Marsilio,associates at Latham & Watkins LLP.

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MODEL LENDER-MANAGER AGREEMENT FOR HOTEL

Joshua Stein1

A hotel lender (the “Lender”) and a hotel manager (the “Manager”) each benefits from the existence of the other. Depending on the structure of the particular hotel, though, each of those parties may also need certain assurances and agreements from the other. Because of the wide range of deal structures for hotels, the relationship between a Lender and a Manager may raise a tremendous range of issues.

The following comprehensive Lender-Manager agreement shows how a Lender and a Manager may accommodate one another regarding a wide range of possible issues. Those issues go far beyond those addressed in a subordination, nondisturbance, and attornment agreement with a space tenant, even a long-term and fundamentally important space tenant.

The complexity of the relationship between and a Lender and Manager arises because:

A hotel can be a very complex asset;

The value of the hotel to a Lender depends very much on what the Manager does and does not do;

Far more than for pure commercial real estate (e.g., an office building or shopping center), a hotel borrower can readily impair or destroy the lender’s collateral or important pieces of it, whether intentionally or unintentionally; and

The Manager has physical control of the Lender’s collateral, including particularly its cash flow.

The fundamental “starting point” issue in the Lender-Manager relationship is simply whether the Lender can terminate the Management Agreement after a foreclosure or similar event. If the Lender has that right, then much of this Lender-Manager Agreement becomes moot and can be disregarded. This model document offered here starts from that base and then considers a range of other issues.

This document is offered both for use in transactions and as a checklist for comparison and ideas when considering some other form of Lender-Manager Agreement. This model document can also be used for “assisted living” transactions if the management/ownership structure tracks that of a hotel, as it often does.

1 Copyright (C) 2006 Joshua Stein. Based on a chapter from Joshua Stein, Lender’s Guide to Structuring and Closing Commercial Mortgage Loans (Mortgage Bankers Association Campus MBA). For more articles and other materials by Joshua Stein, visit www.real-estate-law.com. The author acknowledges the helpful assistance of Michelle V. Kelban and Jeffrey Marsilio, associates at Latham & Watkins LLP.

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After this model document appear some additional provisions that a Lender or a Manager may want to include in the document, but only in particular circumstances or based on one party or another’s uniquely strong leverage.

For any particular transaction, this model document as written will be “too much” or just plain inappropriate. Rarely will everything here apply to any particular transaction. Any user of this model document should delete and shorten – perhaps massively -- as appropriate. Do not assume that anything here is “standard.” If it doesn’t seem right for a particular transaction, consider deleting it. This is one area of real estate finance where the concept of “industry standard” carries relatively little meaning and weight.

Except for the optional provisions collected at the end of this document, and any provisions driven by unique concerns of a particular transaction or its structure, it is probably safe to assume that this model document includes every possible provision that might appear in any Lender-Manager Agreement. This does not, of course, constitute a representation or warranty of any kind.

If the Manager is already in place, particularly under an older “Eighties” style management agreement, then the Manager may have little or no incentive to agree to any but the most innocuous provisions in this Agreement. A Lender’s position would be stronger for a hotel under development that needs the Lender’s financing or that is being reflagged.

Coordination with Loan Documents.

Nonrecourse. The Owner’s Acknowledgment at the end of this Lender-Manager Agreement provides for incorporating the Nonrecourse Clause by reference here (as between the Lender and the Owner). It is not obvious that such incorporation is always appropriate, because many of the risks covered here represent appropriate candidates for nonrecourse carveouts. The nonrecourse clause itself may require some hotel-related carveouts. A Manager typically will not expect or receive nonrecourse protections under the Management Agreement or a Lender-Manager Agreement, but everything depends on the business context.

Limit Loan. The Manager may wish to limit or control the amount of the Lender’s Loan, including any future increases, particularly if debt service will be paid before any part of the Manager’s basic fee or deferred fee, or if a Foreclosure Event can terminate the Management Agreement.

Owner’s Language. The Owner may wish to add the following, relating to some or all of the Lender’s rights under this Lender-Manager Agreement:

For the benefit of Owner only, Lender agrees that, so long as no Owner Event of Default and no Foreclosure Event has occurred, Lender’s exercise of any rights of Lender under this Agreement shall be subject to any provisions of the Loan Documents that expressly refer to and limit Lender’s exercise of its rights under this Agreement. Any disagreement as to Lender’s exercise of such rights shall be resolved solely between Owner and Lender. [Pending resolution of such disagreement, Manager shall comply

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with the directions, instructions, and requests of Lender notwithstanding any contrary directions, instructions, or assertions by Owner.]

Additional Points.

Consent to Transfers. This Agreement requires the Manager to “pre-consent” to a number of possible transactions affecting the Lender without regard to the identity of the transferee. The Manager may want to limit those possible transactions to those by which the Lender or any affiliate, nominee, or subsidiary of the Lender becomes a Successor Owner.

Future Agreements. The Manager might try to limit its obligation to enter into future Lender-Manager Agreements with future Lenders -- for example, by requiring that such future Lenders must be “institutional,” a term that would need to be defined.

Owner Benefits? Parts of this Lender-Manager Agreement, such as the Manager Certificates, might benefit the Owner as well as the Lender. The Manager may say that the Owner has already made its deal in the Management Agreement, and the Manager’s obligations and assurances under this Lender-Manager Agreement (at best annoyances to the Manager) should benefit only the Lender.

Manager vs. Operator. A Manager sometimes prefers to be described as the “Operator” of the Hotel, perhaps in part in the hope that this will help insulate the Manager/Operator from “fiduciary duty” claims. Edit as appropriate.

Consent by Trustee. In a deed of trust state, if the Manager tries very hard to find issues, the Manager may decide to ask the “trustee” under the deed of trust to join in this Lender-Manager Agreement (beyond the language already in this Agreement captioned “Trustee Under Deed of Trust”). If so, consider the following signature block for the trustee:

To the extent that any Mortgage legally constitutes a “deed of trust,” the undersigned, as “trustee” under such deed of trust, having been requested by Lender to do so, consents to and agrees to be bound by the Agreement. The Agreement shall bind Trustee and its successors and assigns as Trustee under any such deed of trust as fully and effectively as if Trustee had executed the Agreement.

Of course, this language will have to be reviewed by the trustee and its counsel, who will then have comments and want changes. If this is not handled as part of the regular document negotiations, it can create a problem at the closing, as will the need to arrange for timely signature by the trustee. It makes far more sense to dispense with any requirement for the trustee’s signature.

Creditworthiness. The Lender may want the Manager’s parent company to guarantee the Manager’s obligations under this Agreement and the Management Agreement. Such a guaranty may be troublesome if not already contemplated.

Security Interest in Permits. This model document requires the Manager to assist any Successor Owner in transferring any Permits after Foreclosure. A Lender may want to go a

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step further and require the Manager to grant the Lender a security interest in such Permits (or at least in whatever interest the Manager has in such Permits). Any such security interest is likely to be unenforceable in large part. If the Manager’s credit is good, a mere covenant to transfer the Permits should suffice. The larger issue is whether and how the Permits can be transferred (absolutely or collaterally). In many cases: (1) any such transfer requires some form of governmental approval, but (2) Lenders live with the resulting risk and uncertainty.

Routine Operating Credit. Although the concept of “Routine Operating Credit” sounds, perhaps, “routine,” it is not obvious that even this level of credit should be permitted. The definition is provided for use where appropriate. If Lender does not intend to permit this type of credit, the definition should be omitted, references to the term should be modified, and/or appropriate prohibitions should be added/confirmed.

Subordinate Items. Tailor the scope of “Subordinate Payments” and “Subordinate Obligations” as appropriate for the business deal. Should any other Management Fees also constitute Subordinate Payments? What about Routine Operating Credit, if permitted? Any other claims? To the extent that any Management Fees are suspended during any Loan Event of Default (or mere default), add appropriate language. This issue varies from deal to deal.

Termination Remedy. In addition to the termination rights defined within the scope of “Termination Remedy,” does the Management Agreement contain any other termination options? Does the Lender want protection against them? How?

Owner’s Options. Although this Agreement contains language to allow the Lender to exercise and control any valuable options the Management Agreement gives the Owner, think about what conditions need to be satisfied for such options to be available, and whether the Lender will be able to (or should not be required to) satisfy those conditions.

Measure of Damages. What if the Manager doesn’t remember to notify the Lender of the Owner’s default? What would be the Lender’s measure of damages? Answer: probably rather complicated -- which may translate into “too speculative for a court to award.” Few parties to agreements of this type think about remedies, but if they did they might propose measures such as liquidated damages or an obligation for the Manager to buy out the Lender’s position.

Attorneys’ Fees. This Lender-Manager Agreement allows the prevailing party in any dispute to recover its reasonable attorneys’ fees. Delete if not desired.

Equity Pledge. This Agreement does not adequately cover loans that are secured by pledges of the equity of the Owner. Any such transaction would require significant changes.

Other. In addition to the possible additional provisions just listed, this Lender-Manager Agreement is followed by sample language on a number of points that either a Lender or a Manager may wish to add to this Lender-Manager Agreement. In the typical case, none of this language would be relevant.

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Other Documentation.

This Model Document may require the following additional documents, exhibits, etc.:

Management Agreement. The Lender’s counsel should review the Management Agreement, from both the Lender’s perspective and the Owner’s. The latter topic is summarized in the author’s and James I. Hisiger’s article on Hotel Management Agreements: The Owner’s Agenda, published in the Winter 2000 issue of Real Estate Review and available from the author. As an option, a copy of the entire Management Agreement can be attached to this Agreement. This would probably not be desired by any party if the agreement will be recorded. In that case, obtain a certificate -- from the Manager (and its guarantor, if applicable), not merely the Owner -- confirming that the attached copy of the Management Agreement is true, correct, and complete. (Of course, the Lender would prefer not to record this Agreement or any memorandum of this Agreement.)

Loan Documents. Loan documents need to be tailored for hotel lending, including the existence of a management agreement. The author maintains a set of hotel-specific provisions that counsel should consider using when preparing documents for a hotel loan.

Memorandum of Agreement. Assuming the parties desire to record this Agreement, in place recording the entire Agreement, the parties may wish to record a “memorandum” of this Agreement. In that case, it may also be appropriate to record a memorandum of the Management Agreement. A Lender will often resist any effort to record anything, in the hope that failure to record will weaken the Manager’s claim.

Bar/Restaurant Arrangements. If the Manager operates the bar and restaurant under a “lease” or “license” that effectively makes the liquor operations part of the hotel under management for the Owner’s account, then the Lender needs an assignment of the bar/restaurant arrangements, or they can be treated as part of the Management Agreement. In either case, this Agreement should take them into account.

Opinion of Counsel. Given the importance of the Manager, the Lender may desire an opinion of counsel, and backup documentation, as to the Manager’s entry into this Agreement and the Management Agreement. The same applies to any guarantor of the Manager’s obligations.

Loan Agreement. Any breach by the Owner — and perhaps by the Manager — under this Agreement should lead to consequences under the Loan Agreement. If the Manager wrongfully terminates (or purports to terminate) this Agreement or the Management Agreement, or if the Management Agreement is otherwise terminated without the Lender’s consent, this should perhaps trigger an Event of Default under the Loan Agreement. The Loan Agreement should prohibit the Owner from ousting the Manager from possession or control of the Hotel without Lender’s Consent, not subject to any standard of reasonableness (backed by protective language explaining why total discretion is appropriate). Any breach of that covenant should at the Lender’s option

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constitute an immediate and incurable Event of Default under the Loan. The Loan Agreement will also need to include a number of other hotel-specific provisions, as well as nonrecourse “carveouts” to address hotel-related covenants the breach of which would constitute willful destruction of collateral (e.g., wrongful termination of the Management Agreement). The Loan Agreement should also contain other appropriate covenants relating to the Management Agreement, including language that treats the Lender’s cure expenses under this Agreement as protective advances, which the Borrower must immediately repay with interest at a high rate, and secured by the Mortgage. If at any time the Lender requests updated Manager Certificates, and those Manager Certificates come back “not clean,” the Loan Agreement should allow the Lender, as appropriate, to require the Borrower to correct any problems the Manager raised.

License Agreement and “Comfort Letter.” The Lender will want to confirm the existence of a proper license agreement, and would prefer to obtain comfort from the licensor that the license agreement will continue after foreclosure and/or if the current Manager were terminated. The licensor may be willing to give little if any comfort -- a “cold comfort letter.” If the Manager controls the brand name, the Lender will be particularly concerned about its possible loss. The Lender may want a backup license agreement to cover the possible termination of this Agreement.

Guarantor Confirmation. If the Owner’s obligations are guarantied, then the Owner’s guarantor should perhaps provide an acknowledgment relating to this Agreement. It could take a form similar to the acknowledgment this Agreement contains from the Manager’s guarantor.

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THIS AGREEMENT IS NOT TO BE RECORDED. ALL RECORDING OFFICERS ARE DIRECTED NOT TO RECORD THIS AGREEMENT.

____________________ (“Lender”)

AND

____________________ (“Manager”)

_______________________

LENDER-MANAGER AGREEMENT

_______________________

___________, ____ (“Effective Date”)

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TABLE OF CONTENTS

1. Definitions..................................................................................................................................2

2. Estoppel Certificate....................................................................................................................8

3. Warranty Certificate.................................................................................................................11

4. Financial Matters.....................................................................................................................14

5. Additional Covenants...............................................................................................................15

6. Manager Loans.........................................................................................................................19

7. Defaults; Lender’s Right to Cure.............................................................................................19

8. Subordination...........................................................................................................................22

9. Nondisturbance, Recognition, and Attornment.......................................................................23

10. Effect of Attornment................................................................................................................26

11. Manager’s Corporate Financing..............................................................................................28

12. Miscellaneous..........................................................................................................................29

_________________________

Attachments:

Owner’s Acknowledgment and AgreementGuarantor’s Acknowledgment and AgreementIndex of Defined TermsSchedule A = Description of Owner’s Premises[Schedule B = Effective Date Financial Data][Schedule C = Copy of Management Agreement,

Including All Amendments][Schedule D = Copy of Guaranty]

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LENDER-MANAGER AGREEMENT

This LENDER-MANAGER AGREEMENT (together with its schedules and exhibits, this “Agreement”) is entered into as of __________ (the “Effective Date”), between _______________, a _______________, whose address is _________________________ (with its successors and assigns, “Lender”), and _______________, a _______________, whose address is _________________________ (“Manager”), with reference to the following facts:

A. _______________, a _______________, whose address is ____________________ (with its successors and assigns and any estate arising under any Insolvency Proceeding affecting it, “Owner”), owns the real property located at ____________________ (such real property, including all buildings, improvements, structures, fixtures, furniture, fixtures, equipment, and other personal property located thereon, and all other collateral encumbered by the Mortgage, including any claims and intangible property and all proceeds of the foregoing, “Owner’s Premises”), part of which is more particularly described in Schedule A.

B. Lender has made a loan to Owner in the original principal amount of $__________ (as it may be amended, extended, or increased from time to time, and whether or not presently due and payable, the “Loan”).

C. To secure the Loan, Owner has delivered to Lender that certain __________ Mortgage dated __________, for the benefit of Lender (whether or not recorded or perfected, and as it may be amended or extended from time to time, the “Mortgage”) [intended to be] recorded [on __________, at Book _____, Page _____] in the Official Records of the County of __________, State of __________ (the “Land Records”), affecting Owner’s Premises.

D. Pursuant to a __________ Management Agreement between _______________ and ______________, dated as of __________, as amended only by _______________ dated __________ and _______________ dated _________ (as so amended, as amended or affected by this Agreement, and as amended in the future in compliance with, under, or as a result of this Agreement, the “Management Agreement”), Owner or its predecessor in interest engaged Manager to manage [part of] Owner’s Premises as a hotel, on Owner’s behalf ([the part of Owner’s Premises so managed by Manager under the Management Agreement,] the “Hotel”).

E. The Hotel is commonly known as _______________.

[F. A full and correct copy of the Management Agreement (including all amendments) is attached as Schedule C.]

[G. A memorandum of the Management Agreement] [is to be recorded in the Land Records.] [was recorded in the Land Records on _____, at Book _____, Page _____.]

[H. The Management Agreement requires Manager to make certain Manager Loans to Owner.]

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[I. Some or all of Manager’s obligations under the Management Agreement have been guarantied by __________, a __________ having an office at _______________ (with its successors and assigns, the “Guarantor”), under that certain __________ dated __________ (the “Guaranty”), a full and correct copy of which is attached as Schedule D.]

[J. At Owner’s request, Manager has given Lender certain financial information and projections for the Hotel, copies of which are attached as Schedule B (the “Effective Date Financial Data”).]

K. Manager and Lender desire to agree upon certain priorities, rights, and obligations related to the Loan, the Management Agreement, Owner’s Premises, and related matters.

[L. A memorandum of this Agreement is being recorded in the Land Records simultaneously herewith (but after recordation of (1) the Mortgage and (2) a memorandum of the Management Agreement).]

NOW, THEREFORE, for good and sufficient consideration, Manager and Lender agree:

1. Definitions

.

The following terms shall have the following meanings for purposes of this Agreement. (For convenience, an Index of Defined Terms follows the signatures of this Agreement. Terms may be used before they are defined.)

“Additional Reserve Deposits” means deposits into any Reserve Account in excess of such deposits that the Management Agreement requires the Manager to make, provided that such additional deposits shall be funded solely from any amounts that would otherwise constitute Owner’s Remittances under the Management Agreement.

“Collection Account” means Account No. ________ maintained at __________ in the name of _________, or such other bank account as Lender shall designate by notice to Manager from time to time.

“Debt Service” means any and all payments of principal, interest, and other amounts required under the Loan Documents, including all payments (whether of principal or otherwise) due upon maturity or acceleration, all as determined under the express terms of the Loan Documents without regard to any Insolvency Proceeding affecting Owner, and whether or not Lender’s claims for the foregoing are enforceable, allowed, or disallowed, in any such Insolvency Proceeding.

“Deemed Loan Amount” means, after a Foreclosure Event, the indebtedness that would have been evidenced and secured by the Mortgage and the Loan Documents if they had remained in full force and effect without default thereunder, as certified by Lender or Successor Owner from time to time.

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“Default Notice” means a notice by Manager to Lender of Owner’s (alleged) breach or default under the Management Agreement.

“Deferred Management Fee” means any Management Fee that is, was, or may after the Effective Date become payable to Manager, but for the fact that, under the Management Agreement or otherwise, such payment was or has been deferred for future payment or rendered contingent upon the occurrence or nonoccurrence of future events, including financial results of the Hotel. The term “Deferred Management Fee” shall also refer to interest accrued on the foregoing amounts, at the rate(s) provided for in the Management Agreement from time to time.

“FF&E Reserve” means the _______________ Fund established under Section _____ of the Management Agreement.

“Foreclosure Event” means: (1) completion of a foreclosure sale, trustee’s sale, or foreclosure under the Mortgage; (2) Lender’s exercise of rights and remedies (under the Mortgage or under applicable law, including the law governing any Insolvency Proceeding) that divest Owner of title to Owner’s Premises; (3) any other divestiture of Owner’s title to Owner’s Premises through any Insolvency Proceeding (including as the result of an auction or a plan of reorganization); or (4) Owner’s delivery to Lender (or its designee or nominee), with Lender’s Consent, of a deed or other conveyance of Owner’s interest in Owner’s Premises in lieu of the foregoing.

“Former Owner” means Owner and any other party that was Owner under the Management Agreement at any time before a Foreclosure Event.

“Hotel Accounts” means the Reserve Accounts, together with any and all other bank accounts or deposits maintained by Manager on behalf of Owner for the Hotel under the Management Agreement, or in which Owner otherwise has any interest, including any escrow accounts and reserves for taxes and insurance premiums maintained from time to time by Manager. The Hotel Accounts consist of only the following identified bank accounts, titled and held as follows:

Name and Purpose Bank Account No.

“Hotel Information” means all operating or financial budgets, projections, plans, audits, statements, reports, books, records, receipts, statements, computer files, plans and specifications, contracts, and other documents, information, and records of any kind relating to the Hotel, whether periodic or prepared on particular occasion(s), “capital” or “operating,” “audited” or not “audited,” “preliminary” or “final,” and including any financial information obtained from auditors or other third parties relating to the Hotel, or from any quality control inspector(s)

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reporting to Manager or any affiliate of Manager. “Hotel Information” does not include any of the foregoing to the extent relating to any hotel(s) other than the Hotel.

“Incentive Fees” means the [Incentive Management Fee] payable to Manager under Section _____ of the Management Agreement, and any other so-called “incentive fee” or “profits participation” provided for under the Management Agreement.

“Initial Construction” means any obligation of Owner under the Management Agreement to construct, alter, fixturize, renovate, or otherwise prepare the Hotel for operation or occupancy. “Initial Construction” shall not include reconstruction or repair after a Loss.

“Insolvency Proceeding” means, for any person, the liquidation, dissolution, or other winding up of such person or of such person’s business, or any receivership, trusteeship, insolvency, or bankruptcy proceeding, or assignment for the benefit of creditors, or any proceeding by or against such person for any relief under any bankruptcy or insolvency law or other law relating to the relief of debtors, readjustment of indebtedness, reorganization, or composition, or any similar proceeding, whether under state or federal law, and whether voluntary or involuntary.

“Lender’s Consent” means Lender’s prior written consent or written waiver of the requirement for such consent. As between Lender and Manager, Lender may withhold such consent for any reason or no reason, except where Lender has expressly agreed with Manager that Lender’s consent shall not be unreasonably withheld.

“Lender’s Cure Period” means a cure period determined as follows. Lender’s Cure Period shall commence when Owner’s Cure Period commences under the Management Agreement. Notwithstanding any limitation on Owner’s Cure Period, Lender’s Cure Period shall continue until all of the following have occurred: (1) Owner’s Cure Period has expired but Owner has failed to Cure Owner’s default; (2) Manager has notified Lender of “1”; and, after the occurrence of both “1” and “2,” (3) the following additional period of time has elapsed: (a) 30 days in the case of a monetary default; or (b) 90 days, in the case of any Nonmonetary Default reasonably capable of cure by Lender. Lender’s Cure Period, but only as to Nonmonetary Defaults reasonably capable of cure by Lender, is subject to further extension as provided for in this Agreement. To the extent of any such extension, “Lender’s Cure Period” shall be redefined accordingly.

“Loan Agreement” means ______________.

“Loan Documents” means the Mortgage, the Loan Agreement, and any and all notes, agreements, assignments, pledges, certificates, guaranties, letter(s) of credit, and other documents of any kind that the Mortgage secures or Owner delivered to Lender for the Loan, or otherwise secure or relate to the Loan.

“Loan Event of Default” means an Event of Default under the Loan Documents. For purposes of this Agreement, occurrence of a Loan Event of Default shall be evidenced solely by Lender’s certificate that a Loan Event of Default has occurred.

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“Loss” means any casualty or condemnation affecting Owner’s Premises or any part of it.

“Loss Proceeds” means, in the event of any Loss, any proceeds of insurance coverage or any award paid by any condemning authority, or any settlement or compensation in lieu of any of the foregoing.

“Management Fee” means any fee or payment payable to Manager as compensation for managing the Hotel under the Management Agreement, but does not include reimbursement of Manager’s actual bona fide expenses. [The Management Fee includes the Incentive Fees and the Deferred Management Fees.]

“Manager Certificates” means the Estoppel Certificate and the Warranty Certificate.

“Manager Claim” means any claim of Manager against Owner based on or arising from Owner’s default or alleged default under or breach of the Management Agreement, and any right or alleged right of Manager to any offset, defense (other than one arising from actual payment and performance, which payment and performance would bind a Successor Owner under this Agreement), claim, counterclaim, reduction, deduction, or abatement against Manager’s payment or disbursement of any Owner’s Remittance, or performance of any of Manager’s other obligations under the Management Agreement, arising (under the Management Agreement or applicable law) from Owner’s breach or default under or violation of the Management Agreement. A “Manager Claim” shall also include the existence or nonexistence, before a Foreclosure Event, of any condition or circumstance within Owner’s control that could or would (1) cause any Deferred Management Fee to become immediately due and payable; (2) otherwise accelerate payment of any Deferred Management Fee; (3) discharge, diminish, or otherwise limit any obligation of any guarantor under any guaranty of Manager’s performance of the Management Agreement; (4) entitle Manager to exercise or assert any right of first refusal; or (5) entitle Manager to assert any Termination Remedy.

“Manager Event of Default” means either (1) a default by Manager under the Management Agreement that has continued beyond applicable cure periods, or (2) a default by Manager under this Agreement provided that, unless Lender is legally prohibited from giving Manager notice of such default, such default shall have continued for the following period after notice from Lender: (i) five business days for failure to pay or remit money; or (ii) 30 days for any other default.

“Manager Loan” means any loan(s) or other extension(s) of credit (including forbearance in collecting any payment the Management Agreement otherwise requires) that Manager or its affiliate provides to Owner or its affiliate under the terms of the Management Agreement or otherwise, including any such loan to cover operating shortfalls, debt service, or capital outlays or for any other purpose. Routine Operating Credit is not a Manager Loan. A Manager Loan shall also include any guaranty or delivery of security by Manager or its affiliate for any indebtedness of Owner or its affiliate.

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“Manager’s Knowledge” means Manager’s actual knowledge, including actual knowledge based on Manager’s prior occupancy, possession, and management of the Hotel, but it does not include constructive knowledge or imply any duty of investigation.

“Nonmonetary Default” means any default by Owner under the Management Agreement that cannot be cured by mere payment of money. If a default under the Management Agreement can partly be cured by the mere payment of money but partly requires nonmonetary performance of any kind, then only the latter portion of such default shall constitute a Nonmonetary Default.

“Owner’s Cure Period” means any grace or cure period that the Management Agreement allows Owner to cure any default.

“Owner’s Personal Obligations” means: (1) any obligation of Owner to comply with the Loan Documents; (2) any obligation of Owner to comply with the documents relating to, or make any payments on account of, any loan that is subordinate to the Loan (including any Subordinate Payments); (3) any obligation or default that is personal to Owner in nature, such as the occurrence of an Insolvency Proceeding affecting Owner, a prohibited transfer, or nondelivery of financial information about Owner or its affiliates to the extent (if any) the Management Agreement requires; (4) any obligation of Owner to employ or retain any particular individual; (5) any obligation of Owner under the Management Agreement for which Owner’s liability is not limited to Owner’s interest in the Hotel; and (6) any other obligation or default by Owner that by its nature relates only to Owner or that Lender or Successor Owner cannot reasonably perform.

“Owner’s Remittance(s)” means any and all payments, remittances, and disbursements that the Management Agreement from time to time requires or permits Manager to deliver, pay, or remit to Owner, or to any direct or indirect member, partner, or other principal of Owner, including: (1) any return on or return of Owner’s investment in the Hotel, whether or not such payments to Owner are prior to any Management Fees; (2) the balance of any Hotel Accounts when and as otherwise payable to Owner under the Management Agreement; (3) any payments or other sums that the Management Agreement or applicable law requires Manager to deliver to Owner upon any termination of the Management Agreement (including any bank account balances and any purchase price for consumables, inventory, or other items, to the extent, if any, payable by Manager to Owner); (4) any damages payable by Manager to Owner for Manager’s breach of the Management Agreement, either under an agreed-upon settlement of Owner’s claims against Manager or as determined and evidenced by a judgment being paid; (5) the proceeds of any Manager Loans; (6) any advances, proceeds of Manager Loans, or contributions of funds by Manager to defeat or nullify any right that Owner would or might otherwise have to terminate the Management Agreement; (7) the proceeds of any sale or other disposition of furniture, fixtures, fittings, and equipment no longer needed for the Hotel; and (8) all other payments the Management Agreement requires Manager to make to Owner, including any remittances of gross or net revenues of the Hotel. For this Agreement, Owner’s Remittances shall be calculated and determined before deducting, and with no deduction for, any Subordinate Payments payable to Manager.

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“Owner’s Termination” means any termination of the Management Agreement by Owner, and any notice of such termination, including any such termination by Owner: (1) under the terms of the Management Agreement; (2) arising from a purported “rejection” of the Management Agreement in Owner’s Insolvency Proceeding; (3) based on Manager’s default, nonperformance, or failure to satisfy performance or financial criteria in the Management Agreement; (4) under generally applicable law, such as a purported “revocation” of Manager’s agency; (5) by agreement between Owner and Manager; (6) arising from a Loss; (7) on any other basis or by any other means; or (8) that is conditional and subject to being nullified or defeated by Manager by payment, making a Manager Loan, or otherwise.

“Permit” means any license or permit necessary or appropriate to operate the Hotel, or whose absence could materially adversely affect the revenues or operations of the Hotel. Every liquor license necessary or appropriate for the Hotel is a “Permit.”

“Redirection Notice” means notice from Lender directing Manager to pay Owner’s Remittances to the Collection Account, to Lender, or as Lender directs.

“Reserve Accounts” means all reserve and escrow accounts that the Management Agreement requires Manager to maintain, including the FF&E Reserve; capital improvement, repair or replacement reserves; and any other reserves or escrows for the Hotel’s maintenance, operations, refurbishment, ore repairs.

“Routine Operating Credit” means Manager’s routine unsecured short-term extensions of credit made to Owner arising from the ordinary operations of the Hotel as the Management Agreement contemplates, in the ordinary course of business in accordance with prior practice (or, if Manager manages at least ten hotels for third parties, then any systemwide changes in such practices), provided that such extensions of credit: (1) shall at no time exceed in the aggregate $_______; (2) shall not bear interest; (3) shall be repaid within 45 days after the date incurred; (4) shall not be evidenced by a promissory note or other evidence of indebtedness; and (5) shall not be secured.

“Securitization Costs” means Manager’s actual, reasonable and out-of-pocket expenses incurred in accommodating Lender’s consummation of a securitization under this Agreement. At Owner’s request, Manager shall reasonably document and substantiate its Securitization Costs.

“Senior Obligations” means the Loan, all Debt Service, and all liens and security interests (i) created or intended to be created (whether or not validly created, recorded, or perfected) under the Mortgage or otherwise, for Lender’s benefit and intended to secure Owner’s obligations under the Loan Documents (including interest that would have accrued but for an Owner Insolvency Proceeding, and Lender’s future advances) and/or (ii) filed or to be filed in the Land Records, and all extensions and modifications thereof. The Senior Obligations shall be measured and determined under the Loan Documents without regard to any modification, reduction, or limitation in any Owner Insolvency Proceeding.

“Subordinate Obligations” means all: (1) obligations of Owner under the Management Agreement; (2) liens, rights, and interests (whether choate or inchoate and including all

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mechanics’ and material suppliers’ liens) owned, claimed, or held, or to be owned, claimed, or held, by Manager in and to Owner’s Premises; (3) Owner’s obligations to make Subordinate Payments; and (4) Manager’s rights regarding “1” through “3.”

“Subordinate Payments” means any Deferred Management Fee; Incentive Fee; repayments of any Manager Loans; payments on account of the Subordinate Obligations; and _______________. The “Subordinate Payments” shall also include any interest, post-petition interest, and costs of collection relating to the foregoing items, whether or not enforceable or allowed in any Owner Insolvency Proceeding.

“Succession Date” means any date when Successor Owner acquires Owner’s Premises or any part of Owner’s Premises.

“Successor Owner” means any party that acquires Owner’s Premises or any part of Owner’s Premises as the result of or through a Foreclosure Event, and such party’s direct and indirect successors and assigns.

“Successor Owner’s Interest” means the entire interest (if any) of Successor Owner in Owner’s Premises from time to time, including Loss Proceeds (subject to Manager’s rights, if any, to such proceeds under the Management Agreement so long as the Management Agreement has not been terminated); Successor Owner’s interest in the Management Agreement; and the proceeds from Successor Owner’s sale or other disposition of Successor Owner’s Interest.

“Termination Remedy” means any right of Manager to cancel or terminate the Management Agreement, in whole or in part, arising (under the Management Agreement or applicable law) from (1) Owner’s breach or default under the Management Agreement; (2) any event or circumstance within Lender’s or Owner’s control; (3) the loss of any Permit; or (4) otherwise.

2. Estoppel Certificate

.

Manager acknowledges and confirms to Lender, any Successor Owner, and their successors and assigns, as of the Effective Date, as set forth below (collectively, the “Estoppel Certificate”). Manager acknowledges that Lender is relying on this Estoppel Certificate in making the Loan and would not make the Loan but for Lender’s receipt of this Estoppel Certificate.

[1.1 Characterization of Loan.] [For all purposes of the Management Agreement, the entire amount of the Loan constitutes “Qualified Indebtedness,” and all Debt Service constitutes “Qualified Debt Service Payments.” Wherever the Management Agreement refers to a “Mortgagee” or a “Mortgage,” such terms shall be deemed to refer to Lender and Lender’s real property security for the Loan.]

2.1 Consent. Manager has irrevocably consented and does consent to (or confirms that Manager’s consent is not required as a condition to): (1) Owner’s acquisition of Owner’s

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Premises and the Management Agreement; (2) the Mortgage and the Loan Documents and any and all assignments and transfers of the foregoing from time to time, including any issuance of any participation or syndication interests in the foregoing and any securitization that includes the Mortgage and the Loan Documents or any interest therein; (3) Owner’s collateral assignment of the Management Agreement to Lender and the grant and enforcement of any other security interest or lien provided for in the Loan Documents; (4) the occurrence of any Foreclosure Event and any resulting transfer of Owner’s Premises and the Management Agreement to any Successor Owner; (5) any transfer of Owner’s Premises and the Management Agreement from a Successor Owner to any subsidiary or other controlled affiliate of Successor Owner; (6) the first2 transfer (in addition to transfers described in clauses “4” and “5”) of Owner’s Premises and the Management Agreement after any Foreclosure Event; and (7) any future mortgage financing obtained at arm’s length and on commercially reasonable terms by any direct or indirect transferee of Owner’s Premises as described in any of the foregoing clauses (or any person whose title to Owner’s Premises arises directly or indirectly from any such transferee), provided that the lender enters into an agreement in substantially the form of this Agreement with Manager. (Manager shall join in any such agreement.) Notwithstanding anything to the contrary in the Management Agreement, none of the foregoing transactions, or any action taken by Lender to bring about a Foreclosure Event or Lender’s exercise of any of its other rights and remedies under the Loan Documents, shall be deemed to give Manager any rights or remedies of any kind or any Manager Claim(s) or Termination Remedy.

2.2 Copy of Management Agreement. The copy of the Management Agreement attached to this Agreement as Schedule C is true, correct, and complete.

2.3 Effectiveness of Management Agreement. The Management Agreement has been fully executed, is in full force and effect, has not been modified except as stated in the recitals to this Agreement, and constitutes the entire agreement between Owner and Manager (and any affiliates of either of them) relating to the Hotel or any goods, services, amenities, fees, or other matters relating to the Hotel.

2.4 Management Fee. Manager is owed no Management Fee for any period(s) before the Effective Date. [To the extent that the Management Agreement provides for any Deferred Management Fee, the amount of Deferred Management Fee as of the Effective Date is $0.] [Manager is presently owed Deferred Management Fee in the amount of $_____________ in principal plus $_____________ in interest accrued to date, a total of $_______________, which Deferred Management Fee is not presently due and payable. The dollar amounts specified in the preceding sentence are subject to normal audit adjustments and periodic reconciliations.]

2.5 Manager Loans. Manager has not advanced any Manager Loans to Owner and the balance of the Manager Loans is $0.

2.6 No Interest in Loan. Manager has no right, title, or interest in or to the Loan or any proceeds of the Loan, and no right to require that any portion of the Loan be disbursed to Manager for Owner’s obligations under the Management Agreement or otherwise.

2 The Lender may prefer to allow any subsequent transfer, not merely the first.

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2.7 No Other Interest; No Conditions. Manager has no interest in Owner’s Premises except under the Management Agreement. No unfulfilled conditions exist to Manager’s obligations under the Management Agreement. This paragraph does not limit Manager’s rights or remedies under the Management Agreement as to events occurring after the Effective Date.

2.8 No Owner Default. To Manager’s Knowledge, no breach or default by Owner exists under the Management Agreement and no event has occurred that, with the giving of notice, the passage of time, or both, would constitute such a breach or default. Manager has no Manager Claim(s).

2.9 No Property Interest. The Management Agreement does not create in Manager any property interest or lien in or upon Owner’s Premises. Except as the Management Agreement expressly provides, Manager does not have (and shall at no time acquire) any interest in any property of any kind (including personal property, intangible property, and intellectual property such as trademarks, service marks, or trade names) located on, or used or useful for, the Hotel.

2.10 No Termination. Manager has not commenced any action, or sent or received any notice, to terminate the Management Agreement. Manager is not entitled to exercise any Termination Remedy.

2.11 Notice of Mortgage. Manager has received notice of the Mortgage and of Owner’s assignment of the Management Agreement to Lender. Lender is entitled to all rights, privileges, and protections of a [Mortgagee] under the Management Agreement.

2.12 Opening and Compliance. The “Opening Date” of the Hotel was ________. Manager has fully completed its pre-opening activities under the Management Agreement. The entire Hotel is open and operating for business with the public, in full compliance with the Management Agreement. Manager has accepted possession, and the physical condition, of the entire Hotel. To Manager’s Knowledge, all Initial Construction has been fully completed. To Manager’s Knowledge, there exists no material defect in the construction of the Hotel, or in any other work of improvement on or in the Hotel, that has not been fully corrected. Except for ______, Manager has not identified any material upgrade, material renovation, or other material capital expenditure that is presently necessary, appropriate, or recommended for the Hotel.

2.13 Owner’s Remittance. Manager has not paid any Owner’s Remittance that, under the Management Agreement, is first due and payable after the Effective Date.

2.14 Relationships. The relationship of Lender to Owner is only that of a creditor to a debtor. Lender is not a joint venturer or partner of Owner. The relationship of Manager to Owner is one of an agent to a principal. Such agency is not coupled with an interest. Manager is not a joint venturer or partner of Owner. Lender has no liability under the Management Agreement, but this does not limit any Successor Owner’s liability after a Succession Date.

2.15 Required SNDA. Lender’s delivery of this Agreement satisfies all conditions and requirements of the Management Agreement regarding Lender’s delivery to Manager of a

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subordination, nondisturbance, and/or attornment agreement or any other documentation, except documentation that this Agreement requires Successor Owner to deliver to Manager.

2.16 Term. The “Commencement Date” under the Management Agreement was __________. The current “Term” of the Management Agreement will expire on ___________, subject to any renewal or extension options under the Management Agreement. As of the Effective Date, Manager has not exercised any renewal or extension option under the Management Agreement, except: _______________.

2.17 Termination Remedies. To the extent that the Management Agreement gives Manager any Termination Remedy upon occurrence or nonoccurrence of any event or circumstance, no such event or circumstance exists or has occurred as would presently allow Manager to exercise any such Termination Remedy (without prejudice, however, to any exercise of any such Termination Remedy based on future events or occurrences, subject to this Agreement).

3. Warranty Certificate

.

Manager represents and warrants to Lender and to any Successor Owner, as of the Effective Date, as follows (collectively, the “Warranty Certificate”), with the knowledge and understanding that Lender is relying on this Warranty Certificate in making the Loan and would not make the Loan but for Lender’s receipt of this Warranty Certificate:

3.1 Accounts. The Hotel Accounts are titled and held as set forth in the definitions of such term. Manager maintains no other bank accounts for revenue from the Hotel or otherwise relating to the Hotel’s operations, management or capital outlays, projects, or reserves. Owner has no right to make or direct any withdrawal or disbursement from any Hotel Account(s).

3.2 Compliance. Manager is in full compliance with this Agreement and the Management Agreement.

3.3 Effective Date Financial Data. The Effective Date Financial Data are true and correct as of the date(s) stated therein, comply with generally accepted accounting principles, and fairly present the revenues, expenses, and operations of the Hotel.

3.4 Insurance. The insurance coverage arranged by Manager, certificates of which have been delivered to Lender, fully complies with all requirements of the Management Agreement.3

3 The Lender may also want the Manager to confirm that the Manager’s insurance complies with the Loan Documents, but the Manager would argue that the Lender should figure out for itself. If the Manager agrees to provide this assurance, the Manager will want to include a statement like the following: “To the extent that the Loan Document insurance requirements are within Lender’s discretion, it is assumed that Lender has exercised such discretion in a manner consistent with the normal and customary requirements of institutional

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3.5 Loan Documents. Nothing in the Management Agreement or any other agreement between Manager and Owner (or other agreement to which Manager or its affiliate is a party and that directly or indirectly binds Owner or its affiliate in any way) restricts, prohibits, or limits Owner’s right to agree to, or requires Manager’s consent to, or grants to Manager any rights or remedies for or on account of, any amendment, extension, renewal, or increase in the Loan or any Loan Document. Manager irrevocably waives any present or future right that Manager may have to restrict or prohibit Owner from agreeing to, or requiring Manager’s consent for, any of the foregoing.

3.6 Management Fee. The Effective Date Financial Data accurately set forth the amount and calculation of Management Fees payable and paid to Manager during the last full fiscal year of the Hotel, and during the current fiscal year through a date no earlier than 30 days before the Effective Date. Except as the Management Agreement discloses, neither Manager nor any person related to Manager is entitled to participate in or receive any Hotel revenue or any Management Fee.

3.7 No Assignment. Except as this Agreement discloses, and except assignments no longer in effect: (1) Manager has not received notice of Owner’s assignment of the Management Agreement, or any interest in the Management Agreement; and (2) Manager has not assigned the Management Agreement, or any interest in the Management Agreement.

3.8 No Manager Default. To Manager’s Knowledge, Manager is not in default under the Management Agreement and Manager has not received from Owner any notice of default under the Management Agreement, except as to default(s) that has/have been cured.

3.9 No Transfer. Except as this Agreement or any exhibit to this Agreement expressly discloses, Manager has not transferred, encumbered, mortgaged, assigned, conveyed, or otherwise disposed of any interest in the Management Agreement.

3.10 Opinion of Counsel. The opinion of counsel being issued to Lender by Manager’s counsel regarding this Agreement and certain related matters was issued at Manager’s request. Lender may rely upon it.

3.11 Other Agreements. Except the Management Agreement, no arrangements or agreements exist between Owner and Manager (or any affiliates of either of them) relating to the Hotel or the operation of any bar, other alcoholic beverage facilities, restaurant, garage, amenity, or other facility of any kind in or serving the Hotel or the Hotel’s guests.

3.12 Permits. All Permits are in full force and effect. Manager has received no written notice that any Permit has been terminated, revoked, limited, or restricted (except routine expirations). Manager has no reason to believe any such notice may be forthcoming. To the extent that any Permit will expire in the 12 months after the Effective Date, Manager has no reason to believe it will not be renewed in the ordinary course. Without limiting the generality of the foregoing, Manager (or its affiliate) has all licenses necessary to sell and serve (and continue

lenders holding mortgages on properties similar to the Hotel.”

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to sell and serve) wine, beer, and liquor in all bar areas of the Hotel. Manager has no reason to believe that the Hotel does not comply with all applicable law, including zoning.

3.13 Real Property. The physical operation, maintenance, and management of the Hotel (including any parking and other amenities or services made available, directly or indirectly, to guests or other users of the Hotel) in accordance with existing practices or the Management Agreement does not require the use or possession of, or otherwise use, occupy, or require at any time, any real property or interest therein in the vicinity of Owner’s Premises except Owner’s Premises and public streets and sidewalks.

3.14 Representations and Warranties. Manager’s representations and warranties in the Management Agreement are true and correct as of the Effective Date, subject to all qualifications, limitations, and exceptions in the Management Agreement.

3.15 Reserve Balances. Manager holds the following funds in the Reserve Accounts, subject in each case to normal audit adjustments and periodic reconciliations:

3.15.1 FF&E. The balance of the FF&E Reserve is $_____. Of that sum, Manager anticipates (but does not represent, warrant, or guarantee) that Manager will apply approximately $___________ for expenditures in progress or anticipated within three months (“Short-Term Disbursements”).

3.15.2 Capital Replacements. The balance of the Capital Replacements Reserve under the Management Agreement is $_____. Of that sum, Manager anticipates (but does not represent, warrant, or guarantee) that Manager will apply approximately $_____ for Short-Term Disbursements.

3.15.3 No Other. Manager does not hold, and does not maintain or apply any cash flow of the Hotel to fund, any reserves except those listed above.

3.15.4 Projections. The Effective Date Financial Data accurately set forth Manager’s good faith projection of expenditures to be funded from the FF&E Reserve and the Capital Replacements Reserve during the next 36 months.

3.16 Status of Agreements. Manager has full authority to enter into this Agreement and the Management Agreement, which have been duly authorized by all necessary actions. Each constitutes the legal, valid, and binding obligation of Manager, enforceable against Manager in accordance with its terms, subject to general principles of equity and laws affecting rights and remedies of debtors and creditors generally. Each such agreement fully complies with all applicable law affecting Manager.

4. Financial Matters

.

4.1 Additional Reserve Deposits. From time to time, Lender may (with Owner’s written consent) direct Manager to deposit Additional Reserve Deposits into any Reserve

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Account. Any such direction from Lender shall be irrevocable absent Lender’s Consent. (Any such revocation shall not require Owner’s approval.) Manager shall hold and apply any Additional Reserve Deposits in any Reserve Account in the same manner, and for the same purposes, as any other deposits into such Reserve Account. Manager acknowledges receipt of Lender’s instructions, joined in by Owner, to make Additional Reserve Deposits in the FF&E Reserve in an amount equal to __% of Gross Revenue (as defined in the Management Agreement).

4.2 Books and Records; Hotel Information. Manager maintains and shall continue to maintain all books and records relating to the operation of the Hotel and Manager’s performance of its obligations under the Management Agreement. Such books and records are, and shall continue to be, located at _________. Manager shall, from time to time upon Lender’s request made no more often than once every calendar quarter (or, after the occurrence of a Loan Event of Default, no more frequently than once every calendar month), give Lender such financial reports and other information about the Hotel (including Hotel Information) as Lender shall reasonably require.

4.3 Budgets and Disbursements. Manager shall at all times diligently endeavor to comply with the most recent budgets approved by Lender.4

4.4 Hotel Accounts. Manager shall collect all revenue from the Hotel solely in the applicable Hotel Account and shall hold such revenue as trust funds subject to this Agreement. Manager shall not, without Lender’s Consent, release any Hotel Account(s) or funds in any Hotel Account(s) to Owner or cause or allow Owner to obtain access to, possession of, or signature or withdrawal rights (separate or joint) for any Hotel Account(s). Manager shall not, without Lender’s Consent (not to be unreasonably withheld), open any bank account to hold any income, revenues, cash, escrows, funds, or reserves under the Management Agreement, except the Hotel Accounts. Unless Lender directs otherwise in writing, upon any termination of the Management Agreement, Manager shall promptly remit to Lender all funds in all Hotel Accounts, as additional Owner’s Remittances. Manager acknowledges that Owner has validly pledged all Hotel Accounts to Lender and all funds in the Hotel Accounts are subject to Lender’s security interest, which Manager acknowledges has been fully perfected. Manager acknowledges that Manager has no property or ownership interest in the Hotel Accounts or any funds in any Hotel Account. Absent Lender’s Consent, Manager shall disregard any withdrawal instructions from Owner relating to any Hotel Account. Manager shall not claim or assert any defense, offset, or set-off against any Hotel Account on account of Owner’s obligations to Manager (including any Manager Loans) except as this Agreement expressly allows.

4.5 No Lender Obligations. To the extent that this Agreement requires Manager to pay any Owner’s Remittance to Lender, this shall not be deemed to: (1) cause Lender to succeed to or assume any obligations of Owner under the Management Agreement, all of which solely Owner shall continue to perform and discharge unless and until a Succession Date has occurred, whereupon Successor Owner shall perform such obligations, subject to this Agreement; or (2) relieve Owner of any obligations under the Management Agreement.

4 The Lender may want the Manager to report budget variations above a certain point.

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4.6 No Loans. Manager shall not, without Lender’s Consent, directly or indirectly (including through any affiliate of Manager) make or provide any Manager Loan, except: (1) accrual of Deferred Management Fees under the Management Agreement; (2) Manager Loans as expressly provided for in the Management Agreement, provided Manager disburses such Manager Loans as Owner Remittances under this Agreement; and (3) Routine Operating Credit. Except with Lender’s Consent or as this Agreement requires, Manager shall not extend the time to pay, or forbear in collecting, any obligations of Owner to Manager. If Manager reimburses Owner for any losses of the Hotel, then Manager disclaims any right to be repaid for such reimbursements. Without limiting Lender’s remedies for Manager’s violation of this paragraph, if Owner incurs any liabilities to or for the benefit of Manager or any affiliate of Manager as a result of such violation, then Manager waives any right to be repaid such liabilities.

4.7 Owner’s Remittances. Manager has received notice that Owner has assigned the Management Agreement and all Owner’s Remittances to Lender. After the Effective Date, Manager shall pay all Owner’s Remittances only to the Collection Account or as Lender from time to time directs in writing.

[Choose either the previous paragraph or the next paragraph, but not both.]

4.8 Owner’s Remittances. Manager has received notice that Owner has collaterally assigned the Management Agreement and all Owner’s Remittances to Lender. After Manager receives any Redirection Notice, Manager shall pay all Owner’s Remittances only as the Redirection Notice requires, until Lender directs otherwise in writing.

4.9 Payments in Violation. Any sum(s) paid to Owner in violation of the foregoing shall not be credited against any payment obligations of Manager under the Management Agreement.

4.10 Transactions with Manager’s Affiliates. To the extent that Manager enters into transactions with any of its affiliates relating to the Hotel, Manager shall at Lender’s request: (1) identify and list all such transactions; (2) give Lender copies of all applicable documents; and (3) demonstrate to Lender’s reasonable satisfaction that such transactions were arm’s length and competitive.

5. Additional Covenants

.

5.1 Delivery of Hotel Information and Notices. To the extent that the Management Agreement requires Manager to deliver to Owner any Hotel Information, Manager shall [if Lender has so requested] simultaneously and by the same means deliver the same Hotel Information to Lender. If Manager delivers to Owner any notice (whether or not a notice of default) under the Management Agreement, Manager shall simultaneously and by the same means deliver a copy to Lender. If Manager receives from any licensing authority any notice that threatens revocation or nonrenewal of any Permit, or identifies any actual or possible noncompliance of the Hotel with any applicable law or regulation, or otherwise could adversely

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affect the Hotel or violate the Management Agreement or the Loan Documents, then Manager shall promptly deliver a copy of such notice to Lender, with all enclosures.

5.2 Dispute Resolution. If Manager gives Owner any notice of arbitration or otherwise for any arbitration, other dispute resolution procedure, or valuation procedure under the Management Agreement, then Manager shall simultaneously deliver such notice to Lender. Such delivery shall be a condition to the effectiveness of Manager’s notice to Owner. Lender may participate in any such proceeding either as a separate participant or, at Lender’s option, by exercising, in place of and to the exclusion of Owner, all of Owner’s rights and remedies under the Management Agreement as to such proceeding.

5.3 Future Lenders. Manager shall, upon request by Lender, Owner, or Successor Owner, enter into an agreement with any future holder of a mortgage or deed of trust encumbering Owner’s Premises (at the same time such mortgage or deed of trust is executed and delivered, if so requested) on substantially the same terms as this Agreement, including this paragraph. [The preceding sentence shall not limit any requirements in the Management Agreement relating to Manager’s approval of Owner’s financing.]

5.4 Hotel Information. Manager shall promptly upon request give Lender copies of Hotel Information or otherwise allow Lender (and its designees) to reasonably inspect, review, and audit Hotel Information upon Lender’s request, all in a manner reasonably acceptable to Lender and Manager, upon reasonable prior notice.

5.5 Indemnities. To the extent that the Management Agreement requires Manager to indemnify Owner as to any matter(s), Manager shall indemnify Lender as to such matter(s), under the same terms and conditions and subject to the same limitations, conditions, and restrictions, as if each reference to “Owner” in any such indemnity referred instead to “Lender.”

5.6 Inspection and Access. Manager shall cooperate with Lender’s representatives in any inspection of all or any portion of the Hotel and permit such representatives to inspect the Hotel in a reasonable manner from time to time. Manager shall allow Lender access to the Hotel for any purpose the Loan Documents allow, as Lender reasonably requests from time to time.

5.7 Insurance. To the extent that the Management Agreement requires Manager[, or the Loan Documents require Owner,] to maintain, provide, or deliver any insurance to benefit Owner or Lender, Manager shall arrange such insurance and cause Lender to be named as mortgagee under a standard mortgagee’s endorsement (or as an additional insured, as applicable) under such insurance. Lender shall have the right to enforce, directly against Manager, all obligations of Manager under the Management Agreement relating to insurance. Manager shall deliver to Lender no later than 30 days before every annual policy renewal date and promptly upon Lender’s request from time to time Manager’s certificate stating that Manager is in compliance with this paragraph and will continue to be in such compliance after the next policy renewal. This does not limit any insurance-related requirements of the Loan Documents[, all of which Manager shall perform and discharge when and as the Loan Documents require].

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5.8 Manager Certificates. Manager shall, from time to time upon Lender’s request made no more often than once a year, deliver to Lender (or such party(ies) as Lender designates) Manager’s Certificates substituting the date of delivery of such Manager’s Certificates for every reference to the “Effective Date.” Lender or any party(ies) Lender designates may rely on any such future Manager’s Certificates.

5.9 Offsets and Counterclaims. Manager waives, and covenants not to assert against Owner or Lender, any offset right, claim, counterclaim, or other defense against Manager’s obligations under the Management Agreement (including payment of any Owner’s Remittances) arising from or relating to any transaction or matter other than the Hotel or the Management Agreement. This paragraph does not limit any other provision of this Agreement that prevents Manager from asserting Manager Claims. The foregoing waiver and covenant does not, however, extend to any offset, claim, counterclaim, defense, or other right or remedy of Manager arising from a breach of this Agreement.

5.10 Operating Losses. Lender shall have no liability for any operating losses or cash requirements of the Hotel. This shall not limit any obligations of Successor Owner under the Management Agreement after a Foreclosure Event. Manager shall have no liability for any operating losses or cash requirements of the Hotel except as the Management Agreement provides or Manager agrees in writing.

5.11 Other Transactions. Manager shall not, without Lender’s Consent, enter into any agreement relating to Owner’s Premises, the Hotel, or the Management Agreement with any holder of any mortgage, deed of trust, or other real property security instrument affecting Owner’s Premises or any part of it, except Lender. Nothing in this paragraph prevents Manager from negotiating or arranging the release of mechanics’ liens that may from time to time arise, but this does not limit Owner’s obligations under the Loan Documents regarding mechanics’ liens. To the extent the Management Agreement requires Owner to obtain Manager’s consent to any assignment, pledge, or other transfer of the Hotel, the Management Agreement, or any ownership interest in Owner, or any part of the foregoing, Manager shall not grant such consent without Lender’s Consent.

5.12 Owner’s Consents. To the extent the Management Agreement requires Manager to obtain Owner’s consent, approval, or agreement for (1) any assignment or transfer of the Management Agreement or of ownership interests in Manager or (2) any other matter [that is or would be material to the operations, cash flow, or value of the Hotel] [as Lender identifies by notice to Manager from time to time], such consent, approval, or agreement by Owner shall not be effective without Lender’s Consent.

5.13 Owner’s Options. Whether or not a Loan Event of Default or any Foreclosure Event has occurred, Lender may, by notice to Manager, exercise any renewal, extension, cancellation, or termination option(s) in the Management Agreement and otherwise available to Owner, with no requirement for Owner’s joinder or confirmation. The period within which Lender may exercise any such option shall extend until the latest of: (1) the deadline in the Management Agreement; (2) the date 30 days after Manager has notified Lender that such option has arisen and Lender may exercise it (which notice Manager may give no earlier than 60 days

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before the date in clause “1”); and (3) the date 10 days after Lender has received notice of the termination of any order, injunction, or other legal constraint that would or might otherwise prohibit or limit Lender’s exercise of such option.

5.14 Performance; Amendment. Manager shall perform its obligations under the Management Agreement. Manager shall not agree to or accept any amendment, modification, or waiver of the Management Agreement, oral or written, without Lender’s Consent. To the extent the Loan Documents contain covenants, obligations, or restrictions relating to the management or operation of the Hotel, Manager shall comply with such covenants, obligations, and restrictions, but in doing so need not incur expenses except to the extent reimbursed from Hotel revenues.

5.15 Restoration and Use of Proceeds. In the event of any Loss, the use of Loss Proceeds shall be governed solely by the Loan Documents. Any Loss Proceeds shall be disbursed only to Lender and shall be held and applied in accordance with the Loan Documents. Manager shall cooperate and assist in adjusting and collecting Loss Proceeds, as Lender reasonably requests. This paragraph does not limit Owner’s obligations to Manager under the Management Agreement, but such obligations do not bind Lender. To the extent that Loss Proceeds include proceeds of “business interruption” insurance attributable to, or in substitution for, Management Fees (except Subordinate Payments), Lender agrees, so long as the Management Agreement has not been validly terminated, to release such proceeds to Manager when and as such Management Fees (except Subordinate Payments) would be payable under the Management Agreement, notwithstanding any dispute between Owner and Lender. Manager shall not otherwise be entitled to any Loss Proceeds (directly or under a separate action or claim), or any fee on account of Loss Proceeds, unless and until any such Loss Proceeds have first been applied to repay the entire Loan in full.

5.16 Securitization. Manager acknowledges that Lender may consummate a “securitization” of part or all of the Loan. Manager shall provide such assistance as Lender reasonably requests to facilitate such a securitization, all at [Owner’s] expense. For a securitization, Manager shall execute and deliver Manager Certificates and provide such publicly available information about Manager and other certificates and documents as Lender reasonably requests (provided that, in Manager’s reasonable judgment, all the foregoing are accurate) and modify the Management Agreement and this Agreement as reasonably necessary to facilitate the securitization, provided that such modifications do not impose additional material burdens on Manager or in any material way impair Manager’s rights and remedies. To the extent that Lender reasonably determines the closing or subsequent monitoring of a securitization requires disclosure of Hotel Information, Manager consents to such disclosure, and Lender shall, upon request, consult with Manager about its scope and format, and consider Manager’s comments.

5.17 Termination. At Lender’s option, any Owner’s Termination shall not be effective against Lender or Successor Owner without Lender’s Consent.

6. Manager Loans

.

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6.1 Disbursement. To the extent the Management Agreement requires or permits Manager to make any Manager Loan, Manager shall disburse the proceeds of such Manager Loan in the same manner as Owner’s Remittances. To the extent that Manager otherwise disburses any Manager Loan, Manager waives repayment of such Manager Loan, and such Manager Loan shall be deemed not to have been advanced.

6.2 Lender’s Right to Obtain Loans. Lender may directly enforce Manager’s obligation to make any Manager Loan, subject to the same conditions as would apply under the Management Agreement. Notwithstanding the preceding sentence: (1) Lender need not satisfy any disbursement condition(s) that are/were personal to Owner or that Lender cannot reasonably satisfy or that relate to the repayment of any previous Manager Loan(s); (2) any certification, representation, warranty or other assurance required for disbursement of Manager Loans shall be made solely to Lender’s actual knowledge; (3) Lender need not satisfy any condition(s) relating to existence or nonexistence of Manager Claims; and (4) the absence of a Loan Event of Default shall not be a condition to any Manager Loan.

6.3 Subordination. All rights of Manager to receive any repayments on account of any Manager Loan shall constitute Subordinate Payments. Lender shall have no obligation to repay any Manager Loans. [Successor Owner shall have no obligation to repay any Manager Loans that Manager disbursed before the Succession Date.]

7. Defaults; Lender’s Right to Cure

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So long as no Foreclosure Event has occurred, Manager agrees:

7.1 Notice to Lender. Manager shall, promptly upon obtaining notice thereof, notify Lender of any default by Owner or Manager under the Management Agreement. Before exercising any Termination Remedy or asserting any Manager Claim, or otherwise asserting that Owner is in default under the Management Agreement, Manager shall give Lender a Default Notice and, thereafter, the opportunity to cure such default as described below. Manager shall give Lender a copy of any Default Notice at the same time, and by the same means, as Manager gives it to Owner. Failure to do so shall be deemed a failure to give proper notice to Owner. If Owner has not cured Owner’s (alleged) breach or default within Owner’s Cure Period, then Manager shall promptly notify Lender.

7.2 Lender’s Cure Period. Lender may, within Lender’s Cure Period, cure any breach or default by Owner. Manager shall accept Lender’s performance in place of Owner’s. So long as Lender’s Cure Period has not expired, Manager shall not exercise any right or remedy for Owner’s (alleged) breach or default, including any applicable Termination Remedy and assertion of any Manager Claim.

7.3 Cure Not Requiring Possession of Owner’s Premises. If a Nonmonetary Default can reasonably be cured by a mortgagee without obtaining possession of the Owner’s Premises, but is not reasonably susceptible to cure within Lender’s Cure Period, then Lender’s Cure Period

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shall be automatically extended so long as Lender commences to cure such default within the applicable Lender’s Cure Period and thereafter diligently pursues such cure to completion.

7.4 Cure Requiring Possession. If a Nonmonetary Default is of such a nature that it cannot be cured without obtaining possession of the Owner’s Premises (or is otherwise not reasonably curable by a mortgagee), then Lender’s Cure Period shall be automatically extended so long as Lender notifies Manager that Lender intends to diligently seek to cure Owner’s default, and thereafter diligently initiates action, whether or not judicial, to obtain possession of Owner’s Premises or to commence an action to foreclose or otherwise enforce possessory remedies under the Mortgage, and thereafter diligently pursues obtaining possession of Owner’s Premises, by foreclosure or otherwise. If and when a Foreclosure Event occurs, Lender’s Cure Period shall continue for an additional 30 days or such additional period as Lender or Successor Owner shall reasonably require to cure the Nonmonetary Default.

7.5 Cooperation by Manager. During Lender’s Cure Period, Manager shall, to the extent within Manager’s reasonable control, facilitate Lender’s cure efforts by granting Lender access to Owner’s Premises, as necessary or appropriate.

7.6 Owner’s Personal Obligations. Notwithstanding anything to the contrary in this Agreement or the Management Agreement, Lender shall not be required, as a condition to maintaining the Management Agreement in full force and effect or to prevent the exercise of any Termination Remedy, or in response to any Manager Claim, to cure any default or perform any obligation related to Owner’s Personal Obligations. This shall not limit Lender’s obligation to cure or undertake to cure any other Nonmonetary Defaults, as this Agreement provides, as a condition to maintaining the Management Agreement in full force and effect and preventing Manager from exercising a Termination Remedy or asserting a Manager Claim.

7.7 No Duty. Lender shall have no obligation to cure (and no liability or obligation for not curing) any breach or default by Owner, except to the extent Lender agrees or undertakes otherwise in writing. If Lender commences any cure of a default by Owner, Lender may abandon such cure at any time. Lender shall have no obligations under the Management Agreement. This shall not limit Successor Owner’s obligations, subject to this Agreement.

7.8 Effect on Operations. During any Lender’s Cure Period, if Owner’s default materially impairs Manager’s ability to operate the Hotel under the Management Agreement, such inability shall not be deemed a default by Manager. Manager shall reasonably endeavor to minimize adverse effects on Hotel operations. If, because of Owner’s uncured default, the Hotel does not meet the standards the Management Agreement imposes on Owner, Manager may, subject to the Management Agreement and applicable law, suspend operations as reasonably necessary or temporarily cover Manager’s brand identification, but may not exercise any Termination Remedy except in compliance with this Agreement. If and when the noncompliance has been remedied, unless Manager has validly and in compliance with this Agreement exercised a Termination Remedy, Manager shall promptly recommence regular operations and uncover all brand identification. Any impairment of Manager’s ability to operate the Hotel under this paragraph shall constitute force majeure for purposes of the Management Agreement.

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7.9 Subordinate Payments. If Owner fails to pay any Subordinate Payment or perform any other Owner’s Personal Obligation, then such failure shall not give Manager any Manager Claims valid against Lender or a Successor Owner. Manager waives and agrees not to exercise any Termination Remedy from Owner’s failure to pay any Subordinate Payments. Accordingly, Lender’s failure to cure any such failure shall not give Manager any right or remedy under the Management Agreement except the right to seek a judgment for damages against Owner, to the extent this Agreement and the Management Agreement allow. Any such judgment would continue to constitute a Subordinate Obligation of Owner in the same manner as any other claim by Manager for any Subordinate Payment.

8. Subordination

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8.1 Generally. The Management Agreement, as extended and renewed, and all Subordinate Obligations, are and shall be in all respects subordinate and inferior (in right, priority, and time of payment) to the Senior Obligations, regardless of when and whether, and the order in which, any document(s) relating to any of the foregoing were recorded.

8.2 Foreclosure Event. Upon any Foreclosure Event, without any further action by anyone: (a) Manager’s rights to receive any Subordinate Payments from Owner or the Hotel [and all other rights of Manager relating to the Hotel and Owner’s Premises] shall automatically terminate; and (b) any unpaid balance of Subordinate Payments, and all other Subordinate Obligations, shall automatically, permanently, and irrevocably be waived and forgiven.

8.3 Management Fees. The foregoing subordination shall not affect Manager’s right to receive and retain Management Fees accrued or accruing through the date the Management Agreement terminates, but Manager shall not be entitled to receive or collect any Subordinate Payments unless and until the entire Loan shall have been paid in full in cash.

8.4 Application of Owner’s Assets. In the event of any distribution, division, or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of any of Owner’s assets or their proceeds, to Owner’s creditors, or upon Owner’s indebtedness, by reason of any Insolvency Proceeding affecting Owner, then and in any such event any payment or distribution of any kind or character, either in cash, securities, or other property, on account of any Subordinate Obligation shall be paid or delivered to Lender to be applied to the Senior Obligations, due or not due, until the Senior Obligations have been fully paid and satisfied.

8.5 Actions by Lender to Enforce. Manager irrevocably authorizes and empowers Lender to demand, sue for, collect, and receive every such payment or distribution and give acquittance therefor and to file claims and take such other proceedings, in Lender’s or Manager’s name or otherwise, as Lender deems necessary or advisable to enforce this Agreement. Manager shall execute and deliver to Lender such powers of attorney, assignments, or other instruments as Lender reasonably requests so Lender can enforce any and all claims upon or arising from any Subordinate Obligation(s), and collect and receive any and all payments or distributions payable or deliverable at any time upon or for any Subordinate Obligation(s).

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8.6 Payments Received by Manager. If Manager receives any payment, distribution, security, or proceeds arising from or for any Subordinate Obligation(s) contrary to the foregoing provisions, Manager shall forthwith deliver it to Lender in precisely the form received (except Manager’s endorsement or assignment where necessary) to be applied to the Senior Obligations. Until so delivered, Manager shall hold the same in trust as Lender’s property. If Manager fails to make any such endorsement or assignment, then Lender, or its officer or employee, is irrevocably authorized to do so. Manager appoints Lender as Manager’s attorney in fact for such purpose. Such appointment, being coupled with an interest, is irrevocable.

8.7 No Transfer. Manager shall not assign or transfer any claim against Owner for any Subordinate Obligation while any Senior Obligation remain unpaid, unless such assignment or transfer is made (1) in conjunction with Manager’s assignment of the Management Agreement in compliance with the Management Agreement and this Agreement; (2) expressly subject to this Agreement; and (3) under an instrument in form and substance satisfactory to Lender.

8.8 Lender-Owner Agreements. Lender, at any time and from time to time, may enter into any agreement(s) with Owner as Lender may deem proper to modify or extend any Senior Obligation (including any increase in amount or interest rate, and any other change that may make the Senior Obligations more burdensome) without notice to Manager or in any way impairing or affecting Manager’s obligations under this Agreement. Nothing in this paragraph obligates Lender to enter into any such agreement.

8.9 No Prejudice. Lender shall not be prejudiced in its right to enforce this Agreement because of any act or omission by Owner or anyone in custody of Owner’s assets or property.

8.10 Insolvency Proceedings. Manager shall not participate, facilitate, or consent to commencing, initiating, or prosecuting any Owner Insolvency Proceeding.

9. Nondisturbance, Recognition, and Attornment

.

9.1 No Exercise of Mortgage Remedies Against Manager. Provided no Manager Event of Default exists, Lender shall not name or join Manager as a defendant in any exercise of Lender’s rights and remedies upon a Loan Event of Default unless applicable law requires Lender to do so as a condition to proceeding against Owner or prosecuting Lender’s rights and remedies against Owner’s Premises. In the latter case, Lender may join Manager as a defendant only for such purpose and not to terminate the Management Agreement or otherwise adversely affect Manager’s rights under the Management Agreement or this Agreement.

9.2 Nondisturbance and Attornment. Provided no Manager Event of Default exists, from and after any Succession Date Lender shall cause Successor Owner to agree to be bound by, the following covenants, except as this Agreement otherwise provides. Manager agrees, for Successor Owner’s benefit, to be bound by the following covenants.

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9.2.1 No Termination. Successor Owner shall not terminate or disturb the Management Agreement or Manager’s rights regarding the Hotel under the Management Agreement, except in accordance with the Management Agreement and this Agreement;

9.2.2 Successor Owner Bound. Successor Owner shall assume and be bound to Manager under all the terms and conditions of the Management Agreement;

9.2.3 Recognition and Attornment. Manager shall recognize and attorn to Successor Owner as the new “Owner,” and the party to whom Manager shall owe all obligations as “Manager,” under the Management Agreement;

9.2.4 Continuation of Agreement. The Management Agreement shall continue in full force and effect as a direct contract between Manager and such Successor Owner after the Succession Date (or, at Successor Owner’s option, Manager and Successor Owner shall enter into a replacement agreement in the same form as the Management Agreement, modified as appropriate under the circumstances); and

9.2.5 Reinstatement. If Owner has previously terminated the Management Agreement except in accordance with its terms (for example, rejection in Owner’s Insolvency Proceeding), then such termination shall be of no force or effect and Manager and Successor Owner shall promptly enter into a new Management Agreement on terms substantially identical to those of the purportedly terminated Management Agreement, or shall reaffirm the purportedly terminated Management Agreement.

9.3 Condition to Payment. Notwithstanding the foregoing, Manager need not pay Owner’s Remittances to Successor Owner unless and until Successor Owner and Lender have notified Manager of Successor Owner’s name, address, and status as Successor Owner. Pending such notice, Manager shall continue to pay Owner’s Remittances as the Management Agreement and this Agreement require. Successor Owner shall indemnify Manager against any reasonable losses, liabilities, and expenses (including reasonable attorneys’ fees) Manager directly incurs as the direct result of any claim Former Owner makes against Manager because Manager pays Owner’s Remittances to Successor Owner in accordance with this paragraph.

9.4 Further Documentation. This Article shall be effective and self-operative without any need for Successor Owner or Manager to execute any further documents. Manager and Successor Owner shall, however, confirm the provisions of this Article (including any attornment and assumption(s) of liability) in writing upon request by either of them.

9.5 Termination of Management Agreement. If a Foreclosure Event occurs after which Manager is not entitled to remain in possession under the Management Agreement, or if the Management Agreement otherwise terminates when Successor Owner has the right to occupy, use, operate, or possess the Hotel, then from time to time, only to the extent Successor Owner requests in writing, Manager shall perform the following obligations, in addition to such other obligations as arise under the Management Agreement upon its termination:

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9.5.1 Interim Management. For up to 365 days, Manager shall manage and operate the Hotel on an interim basis pending Successor Owner’s selection and engagement of a new manager. As compensation for such interim management, Successor Owner shall pay Management Fees but only to the extent accruing after the Succession Date, and without regard to any Manager Claims.

9.5.2 Orderly Transition. Manager shall perform or continue to perform, for Successor Owner’s benefit (including upon conclusion of Manager’s interim management as provided for above), the same actions that Manager would have been obligated to perform for Owner upon termination of the Management Agreement, all with no interruption or diminution of services to the Hotel. Without limiting the generality of the foregoing, Manager shall take such actions as Successor Owner shall reasonably request to facilitate the transfer of any Permits to or as directed by Successor Owner and operation of the Hotel in compliance with such Permits pending such transfer. Successor Owner’s rights under this paragraph shall be conditioned upon Successor Owner’s continuing to comply with the current obligations of Owner under the Management Agreement on an interim basis during the transition period, but excluding any obligations for periods before the Succession Date or for which this Agreement otherwise states that Lender or Successor Owner is not responsible.

9.5.3 Use of Software. Subject to, and to the extent permitted by, licensing agreements with unrelated third parties, for a period of up to ____ years, Manager and its affiliates shall: (1) allow Successor Owner to use any software developed or provided by Manager or its affiliate and previously used for Hotel operations and management; and (2) assist Successor Owner in maintaining and troubleshooting such software. If Successor Owner exercises its rights under the preceding sentence, then Successor Owner shall compensate Manager and its affiliates for the use of such software and for such related services at a rate equal to fair market arm’s length charges for use of similar software and services in the hotel industry, but never exceeding the fees and charges that the Management Agreement or related software licenses would have required absent the Foreclosure Event.

10. Effect of Attornment

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Notwithstanding anything to the contrary in this Agreement, the Management Agreement, or the Mortgage, as of and after any Succession Date, Manager agrees for the benefit of Successor Owner:

10.1 Protection of Successor Owner. Successor Owner shall not be liable for or bound by, Manager shall not be entitled to collect, Manager shall not apply any revenues of the Hotel or other funds within Manager’s control to pay, and Manager shall be deemed (as against Successor Owner) to have waived any default arising from or relating to, any of the following matters to the extent arising before the Succession Date:

10.1.1 Claims Against Former Owner. Any Manager Claim against any Former Owner, including any claim for damages of any kind whatsoever because of Former

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Owner’s breach, even if Manager gave Lender notice of such claim or the underlying facts. (This shall not limit either (1) Manager’s right to assert against Successor Owner any Manager Claim otherwise available to Manager because of events occurring after the Succession Date or (2) Successor Owner’s obligation to correct any conditions that existed as of the Succession Date and violate Successor Owner’s obligations as “Owner” under the Management Agreement.)

10.1.2 Prepayments. Any Owner’s Remittance that Manager paid Former Owner more than 30 days before first due and payable under the Management Agreement for any period after the Succession Date except, and only to the extent that, the Management Agreement expressly required such a prepayment and Manager paid it in compliance with this Agreement.

10.1.3 Owner’s Personal Obligations. Any Owner’s Personal Obligation.

10.1.4 Modification, Amendment, or Waiver. Any modification of the Management Agreement, or any waiver of its terms, made without Lender’s Consent.

10.1.5 Surrender, Etc. Any consensual or negotiated surrender, cancellation, or termination of the Management Agreement, in whole or in part, agreed upon between Owner and Manager, unless effected unilaterally by Manager under the express terms of the Management Agreement, provided however that Manager’s exercise of any Termination Remedy shall be subject to the further terms and conditions of this Agreement.

10.1.6 Construction. Any Initial Construction of the Hotel or any obligation to upgrade, improve, or undertake any capital projects at the Hotel.

10.1.7 Refunds. Any refunds that Manager may otherwise be entitled to obtain from Former Owner, including any refund resulting from audit adjustments or corrections.

10.1.8 Funding. Any obligation to make any advance or to contribute any working capital or other funds to the Hotel or to Manager.5

10.2 Loan Amount and Debt Service. To the extent that any right or obligation of Manager (including calculation or payment of any Management Fee and application of any revenues to pay Debt Service) depends, directly or indirectly, in whole or in part, on the amount of any Debt Service or of the Loan, Debt Service and the Loan shall, for such purpose, at Successor Owner’s option, continue to be calculated and determined based on the Deemed Loan Amount, even if the Foreclosure Event terminates the Loan Documents and the Loan. Any Owner’s Remittance (and any Debt Service to be paid by Manager on Owner’s or Successor Owner’s behalf, to the extent the Management Agreement requires or permits such payment) shall, at Successor Owner’s option, be calculated and determined (and, in the case of Debt Service, paid as Successor Owner directs) as if the Loan remained in place, and Debt Service continued to be payable to Lender or Successor Owner (even though Successor Owner owns Owner’s Premises), in accordance with the Deemed Loan Amount. If any Successor Owner from

5 The Manager will often regard this paragraph as excessive, except (perhaps) as it might relate to periods before the Successor Owner took over the Hotel.

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time to time refinances Owner’s Premises (i.e., obtains new or increased loans secured by Owner’s Premises), then after each such refinancing, the Loan and Debt Service shall be determined based on the greater of (1) the Deemed Loan Amount or (2) the actual indebtedness secured by Owner’s Premises and all payments required thereunder.

10.3 Certain Fees. Any unpaid Subordinate Payments and all Subordinate Obligations shall be deemed permanently, irrevocably, and unconditionally waived and no longer payable.

10.4 Additional Loans. Successor Owner shall have the same rights that Owner had before the Succession Date to obtain Manager Loans. In satisfying the conditions to any disbursement of a Manager Loan, Successor Owner shall be entitled to the same rights and protections that applied to Lender for such purpose before the Succession Date.

10.5 Deemed Approvals. To the extent, if any, that the Management Agreement states that Owner shall be deemed to have approved any matter (a “Deemed Approval”) if Owner has not objected within a specified period after receiving Manager’s request for such approval (an “Approval Request”), such provision of the Management Agreement shall be deemed modified as follows.6 Any Approval Request to Successor Owner shall not be effective unless its opening paragraph states in all capital bold type as follows (blanks filled as appropriate): “APPROVAL OF THIS REQUEST SHALL BE DEEMED GRANTED UNLESS WITHHELD WITHIN ___ DAYS IN ACCORDANCE WITH SECTION ____ OF THE MANAGEMENT AGREEMENT.” If Successor Owner does not respond to such Approval Request within the stated period, Manager shall send a second notice again complying with the preceding sentence. For that second notice Successor Owner shall be entitled to a response period equal to the lesser of (1) ten business days or (2) a period equal to the original response period for Successor Owner otherwise provided for under the Management Agreement. If and only if, after such second response period expires, Successor Owner has still not responded to the second Approval Request, the Deemed Approval shall become effective.

10.6 Exculpation. Successor Owner’s obligations and liability under the Management Agreement shall never extend beyond Successor Owner’s Interest. Manager shall look exclusively to Successor Owner’s Interest for payment or discharge of Successor Owner’s obligations under the Management Agreement. If Manager obtains any money judgment against Successor Owner relating to the Management Agreement or the relationship between Successor Owner and Manager, Manager shall look solely to Successor Owner’s Interest to collect such judgment. Manager shall not collect or attempt to collect any such judgment out of any other assets of Successor Owner.

10.7 Modifications to Management Agreement. The Management Agreement shall automatically be deemed to have been modified as follows:

[Fill in as appropriate]

6 Lender would probably prefer instead to delete any Deemed Approvals.

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11. Miscellaneous

.

11.1 Notices. All notices or other communications that this Agreement requires or permits shall be in writing and given by a nationally recognized overnight courier service that regularly maintains records of items delivered. Each party’s address is as set forth in the opening paragraph, subject to change by notice. Notices shall be effective the next business day after being sent by overnight courier service.

11.2 Termination. When Owner has repaid the Loan and performed all its obligations under the Loan Documents, this Agreement shall terminate and the parties shall execute such termination documents as either shall reasonably request.

11.3 Lender’s Nominees. Wherever this Agreement allows Lender to take any action or exercise any right, Lender may do so through a nominee, designee, or agent, provided that it is: (1) a direct or indirect wholly owned subsidiary of Lender, (2) an employee of Lender, (3) an attorney at law or receiver acting for Lender, or (4) a servicer or custodian designated by Lender.

11.4 Exercise of Lender’s Remedies. Notwithstanding anything to the contrary in this Agreement, any decision to commence, prosecute, discontinue, or recommence any exercise of rights or remedies under the Loan Documents, or to bring about a Foreclosure Event, shall be solely Lender’s decision(s), which decision(s) Lender may make in its sole and absolute discretion, with no obligation to notify Manager of Lender’s intentions or actions. Lender may change any such decision(s) from time to time with no obligation to notify Manager.

11.5 Waiver of Defenses. Manager waives any right to require Lender, before or as a condition to enforcing this Agreement, to: (1) proceed against or exhaust any security; (2) give notice of any exercise of Lender’s rights or remedies, including occurrence of any Foreclosure Event; or (3) pursue any other remedy whatsoever in Lender’s power.

11.6 Successors and Assigns. This Agreement shall bind and benefit the parties, their successors and assigns, any Successor Owner, and its successors and assigns.7 If Lender notifies Manager that Lender has assigned the Loan, then: (a) the assignor’s liability under this Agreement shall terminate to the extent that the assignee has assumed this Agreement8; and (b) at the assignee’s request, Manager and the assignee shall enter into a direct agreement in the same form as this Agreement, to replace and supersede this Agreement.

11.7 Entire Agreement. This Agreement constitutes the entire agreement between Lender and Manager about the subordination of the Management Agreement to the Mortgage and the rights and obligations of Manager and Lender as to the subject matter of this Agreement.

7 An Owner may want to add the following: “Although Owner is not a party to this Agreement, Owner may rely on any Manager Certificate.” A Manager would regard this concept as inappropriate.

8 The Manager might ask that the assignee satisfy some standard of creditworthiness.

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11.8 Interaction with Other Documents. If this Agreement conflicts with the Management Agreement, then this Agreement governs as between the parties and any Successor Owner, including after any Succession Date. This Agreement supersedes, and constitutes full compliance with, any provisions in the Management Agreement on subordination and nondisturbance. Lender has consented to the Management Agreement. [If the Loan Documents conflict with the Management Agreement, then such inconsistency shall be resolved in favor of the Loan Documents.] Nothing in this Agreement gives Manager any consent or other rights beyond those in the Management Agreement.

11.9 Lender’s Rights and Obligations. Except as this Agreement expressly provides, neither Lender nor Successor Owner has any obligations to Manager regarding the Management Agreement, even as to matters for which Lender’s Consent was granted. Notwithstanding any act, omission, or course of conduct by Lender, Lender shall have no liability under the Management Agreement unless and until both (i) a Foreclosure Event has occurred and (ii) Lender becomes a Successor Owner. Any such liability shall then be limited as this Agreement provides. If, after a Foreclosure Event, a Successor Owner recognizes and does not disturb Manager’s rights under the Management Agreement, as more fully set forth in, and subject to the conditions and limitations in, this Agreement, then all rights and obligations of Lender under this Agreement shall terminate, without thereby affecting Successor Owner’s rights and obligations.

11.10 Interpretation; Governing Law. The interpretation, validity, and enforcement of this Agreement shall be governed by and construed under the internal laws of the State of [New York], excluding its principles of conflict of laws, except to the extent the jurisdiction where Owner’s Premises are located mandatorily applies the law of such jurisdiction. The words “include” and its variants shall be deemed in each case to be followed by the words “without limitation.” Wherever this Agreement refers to any document or agreement, that means such document or agreement as modified, amended, increased, renewed, extended, spread, consolidated, severed, restated, supplemented, otherwise changed, or assigned from time to time with or without notice to Manager, but (at Lender’s option) without giving effect to any modification that: (a) results from any Insolvency Proceeding affecting Owner, even if such modification is made with Lender’s consent or agreement; or (b) required Lender’s consent but was made without Lender’s consent. All obligations of any party under this Agreement are to be performed at the sole cost and expense of the party bearing the obligation, except where this Agreement expressly states otherwise. If a party has agreed not to unreasonably withhold consent or approval as to any matter, such consent shall also not be unreasonably conditioned or delayed.

11.11 Amendments. This Agreement may be amended, discharged, or terminated, or any of its provisions waived, only by a written instrument executed by the party to be charged.

11.12 Exculpation of Lender. Notwithstanding anything to the contrary in this Agreement, Lender’s obligations and liability under this Agreement shall never extend beyond Lender’s interest in Owner’s Premises. Manager shall look exclusively to Lender’s interest in Owner’s Premises (or that of Lender’s successors and assigns) for payment or discharge of any obligations of Lender under this Agreement. If Manager obtains any money judgment against Lender regarding this Agreement or the relationship between Lender (or Successor Owner) and Manager, then Manager shall look solely to Lender’s interest in Owner’s Premises (or that of

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Lender’s successors and assigns) to collect such judgment. Manager shall not collect or attempt to collect any such judgment out of or from any other assets of Lender. Manager shall not be entitled to any reciprocal limitations on liability.

11.13 Execution. This Agreement may be executed in any number of counterparts, each deemed an original and collectively constituting one and the same instrument.

11.14 Further Assurances. Manager shall execute such affidavits, certificates and other documents as Lender or any Successor Owner shall reasonably require from time to time to further evidence and implement the agreements herein contained, provided same do not materially increase Manager’s obligations.

11.15 Lender’s Representation. Lender represents that Lender has full authority to enter into this Agreement; Lender’s entry into this Agreement has been duly authorized by all necessary actions; and this Agreement constitutes the legal, valid, and binding obligation of Lender, enforceable against Lender in accordance with its terms, subject to general principles of equity and laws affecting the rights and remedies of debtors and creditors generally.

11.16 JURY TRIAL WAIVER. THE PARTIES WAIVE JURY TRIAL IN ANY DISPUTE REGARDING THE INTERPRETATION, ENFORCEMENT, OR APPLICATION OF THIS AGREEMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES OR BETWEEN ANY SUCCESSOR OWNER AND MANAGER.

11.17 Recordation. This Agreement shall not be recorded.

11.18 No Waiver. Any failure by any party to enforce any provision of this Agreement shall not be deemed a waiver of the right to enforce such provision in the future.

11.19 Attorneys’ Fees. The prevailing party in any dispute to interpret, enforce, or apply this Agreement shall be entitled to reimbursement of its reasonable costs and attorneys’ fees.

11.20 Trustee Under Deed of Trust. If the Mortgage legally constitutes a deed of trust, then Lender shall cause any trustee(s) under such deed of trust not to do anything that, if done by Lender, would violate this Agreement.

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IN WITNESS WHEREOF, Lender and Manager have duly executed this Agreement as of the Effective Date.

[Signature Blocks]

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OWNER’S ACKNOWLEDGMENT AND AGREEMENT

Owner consents and agrees to the foregoing Agreement (the “Agreement,” all of whose defined terms shall apply in this Owner’s Acknowledgment and Agreement). Owner is not a party to the Agreement. Owner acknowledges and agrees:

A. Effect on Other Documents. The Agreement was entered into at Owner’s request and shall not modify or waive Owner’s obligations under the Loan Documents or the Management Agreement. To the extent Owner’s Remittances are insufficient to make any payments the Loan Documents require, Owner shall remain responsible to make such payments.

B. Lender’s Obligations. The Agreement discharges any obligation of Lender under the Loan Documents to enter into a subordination, attornment or nondisturbance agreement with Manager.

C. Lender’s Exercise of Rights. Owner irrevocably directs Manager to comply with any written exercise of Lender’s rights under the Agreement, notwithstanding any contrary direction, instruction, or assertion by Owner. Manager may rely on any notice from Lender (including any notice by Lender of a Loan Event of Default). Manager need not controvert or challenge any such notice. Manager’s compliance with any notice by Lender shall not violate the Management Agreement. If any exercise of Lender’s rights under the Agreement is improper or violates Owner’s rights, then Owner releases Manager from any resulting liability, and shall look solely to Lender for any claims arising from such allegedly wrongful exercise of Lender’s rights. Owner unconditionally and irrevocably releases Manager from, and shall indemnify and hold Manager harmless from and against, any and all loss, claim, damage, liability, cost or expense (including payment of reasonable attorneys’ fees and disbursements) arising from any claim based upon Manager’s compliance with any notice by Lender under the Agreement. Any Owner’s Remittance paid to Lender or the Collection Account in accordance with the Agreement shall be deemed to have been paid to Owner for purposes of Owner’s rights against Manager, and shall be credited against Manager’s obligations to Owner.

[D. Cure of Loan Defaults. If Manager advances any funds to Lender to cure an alleged default under the Loan Documents, then notwithstanding anything to the contrary in the Management Agreement, Manager may offset the amount of such advance against any sums otherwise payable to Owner under the Management Agreement (but Manager may not claim any such offset as against Lender or any Successor Owner) and Owner shall look solely to Lender as to any claims of Owner based upon the inaccuracy of Lender’s allegation of a default under the Loan Documents. Owner releases Manager from any liability on account of the inaccuracy of any assertion by Lender of a default under the Loan Documents.]

E. Lender’s Rights and Remedies. Lender’s rights and remedies under the Agreement, and Lender’s exercise thereof, are reasonably necessary and appropriate to protect Lender’s security. Nothing in the Agreement violates Owner’s rights or involves Lender in an inappropriate or excessive manner with operation or control of the Hotel, all of which remains fully vested in Owner subject to the Management Agreement. Neither the Agreement nor Lender’s exercise any of its rights and remedies thereunder makes Lender a “mortgagee in

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possession” or imposes any obligation or liability of any kind on Lender to Owner. To the extent Lender expends any sum to cure any default by Owner under the Agreement, Owner shall repay such sum to Lender upon demand. Such obligation shall be secured by the Mortgage.

F. Manager Securitization Costs. Owner shall promptly upon request reimburse Manager’s Securitization Costs.

G. JURY TRIAL WAIVER. OWNER WAIVES JURY TRIAL IN ANY DISPUTE REGARDING THE INTERPRETATION, ENFORCEMENT OR APPLICATION OF THE FOREGOING OWNER’S ACKNOWLEDGMENT.

H. Coordination with Loan Documents. Section _____ of the Loan Agreement (“nonrecourse”) is incorporated by reference in this Owner’s Acknowledgment and Agreement as if set forth in full. If the foregoing Agreement is inconsistent with the Loan Documents, then such inconsistency shall be resolved in favor of the foregoing Agreement, except that nothing in the foregoing Agreement shall be deemed to limit, diminish, or reduce any obligations of Owner under the Loan Documents. As between Lender and Owner, this Owner’s Acknowledgment and Agreement is a Loan Document. If Owner takes any action(s) or gives any notice(s) to Manager inconsistent with this Owner’s Acknowledgment and Agreement, then such action(s) or notice(s) shall be deemed breach(es) under the Loan Documents. Owner represents and warrants that the Manager’s Certificates are true and correct in all material respects as of the Effective Date.

I. Attorneys’ Fees. If Lender prevails in any dispute regarding the interpretation, enforcement or application of this Owner’s Acknowledgment and Agreement or the Agreement, then Owner shall reimburse Lender’s reasonable attorneys’ fees.

J. Benefit to Manager. Manager is a third-party beneficiary of this Owner’s Acknowledgment.

This Owner’s Acknowledgment and Agreement is executed and delivered as of the Effective Date.

[OWNER SIGNATURE BLOCK]

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GUARANTOR’S ACKNOWLEDGMENT AND AGREEMENT

Each of the undersigned Guarantor(s) consents to Manager’s and Owner’s execution, delivery, and performance of the foregoing Agreement (the “Agreement,” all of whose definitions apply in this Guarantor’s Acknowledgment and Agreement).

Guarantor represents, warrants, covenants, acknowledges, and agrees as follows:

A. Enforcement of Guaranty. After any Succession Date, the Guaranty shall automatically benefit and be enforceable by Successor Owner and its successors and assigns, all of whom shall not be subject to any defense, offset, claim, counterclaim, reduction, or abatement of any kind resulting from any act, omission, or waiver by any Former Owner for which Successor Owner would, under the Agreement, not be liable or answerable after a Succession Date. This does not limit any waiver in the Guaranty.

B. Confirmation of Facts. Guarantor represents, warrants, and confirms to Lender as of the Effective Date that: (1) the copy of the Guaranty attached to the Agreement is correct and complete; (2) the Manager Certificates are true and correct in all material respects; (3) the Guaranty is in full force and effect and has not been amended or waived, in whole or in part; and (4) Guarantor has no offset, defense, claim, counterclaim, reduction, deduction, or abatement against the Guaranty.

C. Lender’s Benefit. The Guaranty is modified and extended, for Lender’s benefit, to apply to all monetary and nonmonetary obligations of Manager under the Agreement, as if all such obligations were specifically identified in the Guaranty as being within the “[Guarantied Obligations].” Guarantor guaranties to Lender Manager’s payment and performance of all such obligations in accordance with the Guaranty.9 As to Manager’s obligations under the Agreement, Lender may enforce the Guaranty directly against Guarantor. To the extent Guarantor pays any amount under the Guaranty, Guarantor shall pay it in the same manner, and to the same payee, as the Agreement requires Manager to pay Owner’s Remittances.

D. Waivers, Etc. All waivers, consents, acknowledgments, and other terms and conditions of the Guaranty are incorporated by reference in this Acknowledgment for Lender’s benefit, as if set forth in this Acknowledgment. Owner’s waiver, modification, release, cancellation, or termination of the Guaranty shall not be effective without Lender’s Consent.

E. Securitization. Guarantor joins in all obligations of Manager under the Agreement relating to any securitization, as if each such obligation were a direct obligation of Guarantor, but subject to all conditions and limitations that apply to such obligations of Manager, including the requirement that Owner reimburse Securitization Costs.

F. Updated Warranty Certificates. If Manager delivers any updated Warranty Certificate(s), then Guarantor shall be deemed to have joined in such Warranty Certificates as of the date made or deemed made. Guarantor shall, upon request, so confirm in writing.

9 The preceding two sentences will sometimes be appropriate, but not always.

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G. TRIAL BY JURY. GUARANTOR WAIVES JURY TRIAL IN ANY DISPUTE REGARDING THE INTERPRETATION, ENFORCEMENT OR APPLICATION OF THE FOREGOING GUARANTOR’S ACKNOWLEDGMENT AND AGREEMENT.

H. Attorneys’ Fees. If Lender prevails in any dispute regarding the interpretation, enforcement, or application of this Guarantor’s Acknowledgment and Agreement, then Guarantor shall reimburse Lender’s reasonable attorneys’ fees.

This Acknowledgment and Agreement is executed and delivered as of the Effective Date.

[GUARANTOR SIGNATURE BLOCK]

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INDEX OF DEFINED TERMS

Agreement....................................................1Approval Request......................................28Attornment Date..........................................2Collection Account......................................2Debt Service.................................................2Deemed Approval......................................28Deemed Loan Amount.................................2Default Notice..............................................3Deferred Management Fee..........................3Effective Date..............................................1Effective Date Financial Data......................2Estoppel Certificate.....................................9FF&E Reserve.............................................3Foreclosure Event........................................3Former Owner..............................................3Guarantor.....................................................2Guaranty......................................................2Hotel............................................................1Hotel Accounts............................................3Hotel Information........................................3Incentive Fees..............................................4include........................................................31Initial Construction......................................4Insolvency Proceeding.................................4Land Records...............................................1Lender..........................................................1Lender’s Consent.........................................4Lender’s Cure Period...................................4Loan.............................................................1Loan Agreement..........................................4Loan Documents..........................................5Loan Event of Default.................................5

Loss..............................................................5Loss Proceeds..............................................5Management Agreement..............................1Management Fee..........................................5Manager.......................................................1Manager Certificates....................................5Manager Claim............................................5Manager Event of Default...........................5Manager Loans............................................6Manager’s Corporate Financing................28Manager’s Knowledge.................................6Mortgage......................................................1Nonmonetary Default..................................6Owner..........................................................1Owner’s Cure Period...................................6Owner’s Personal Obligations.....................6Owner’s Premises........................................1Owner’s Remittance(s)................................6Owner’s Termination...................................7Redirection Notice.....................................14Permit...........................................................7Reserve Accounts........................................7Routine Operating Credit.............................7Securitization Costs.....................................8Senior Obligations.......................................8Subordinate Obligations..............................8Subordinate Payments.................................8Successor Owner.........................................8Successor Owner’s Interest..........................8Termination Remedy...................................9Warranty Certificate..................................11

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SCHEDULE A

Description of Owner’s Premises

ALL THAT CERTAIN REAL PROPERTY lying, being and situated in the City of __________, County of __________, and State of __________, more particularly described as follows:

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ADDITIONAL PROVISIONS TO CONSIDER

In some transactions, either the Lender or the Manager may want to add provisions of the type(s) suggested below. These are, however, so unusual and/or unpalatable that the model documents does not include them.

1. Lender’s Possible Additional Provisions.

Additional Hotel Information. To the extent Manager prepares or submits any Hotel Information (beyond that required under the Management Agreement) from time to time for the use of Manager or Manager’s regional or central office(s), Manager shall, if Lender requests, give Lender copies of any or all such Hotel Information.

Third-Party Notices. Manager shall promptly give Lender copies of all material notices received from any governmental authority, regulator, redevelopment authority or agency, citizens group, or private litigant (other than a personal injury case seeking damages under $__________ and fully covered by insurance, other than any deductible amount) that Manager receives relating to the Hotel or any part of it.

Affiliate Transactions. After the Effective Date, Manager shall not materially modify the prices, terms, and conditions under which Manager purchases goods and services from Manager’s affiliates, except as demonstrably necessary to reflect changes in the general marketplace.

No Assignment. Neither Manager nor Owner may assign the Management Agreement without Lender’s Consent.

Financial Meetings. Manager shall at Lender’s request allow Lender’s representative to meet with the controller of the Hotel to determine the Hotel’s cash position and to review projections and expectations for operations, including reviewing (and discussing any anticipated deviations from) the current cash forecast reports.

Management Meetings. Manager shall give Lender reasonable prior notice of, and allow Lender’s representative to participate in, all meetings between Owner and Manager (whether with Manager’s on-site or corporate personnel) at which significant management issues are to be discussed, including regular monthly property meetings.

Certain Insurance Arrangements. To the extent that Manager or any affiliate of Manager provides or arranges any insurance for the Hotel, Manager shall not cause or permit the carrier (or any of its reinsurers) to enter into any arrangement with Manager or Owner or any affiliate of either of them by which such person indemnifies or provides reinsurance for any covered losses, varies the deductible for such insurance so as to not comply with the Loan Documents, or assumes any risk required to be insured against under the Management Agreement or the Loan Documents.

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Direct Enforcement. Lender may, from time to time, directly enforce against Manager any of Manager’s obligations under the Management Agreement, and give any notice or file any objection the Management Agreement permits or requires. Any such notice or objection given by Lender shall be deemed to have been given by Owner. As to Lender, the period to give any such notice or objection shall commence only when Lender has received from Manager notice of the particular calculation or other matter.

Lender’s Right to Terminate.10 At any time [within ____ days] after (1) occurrence of a Foreclosure Event, (2) a change in the majority control of Manager, or (3) ___________, Lender may terminate the Management Agreement by giving Manager at least 30 days prior notice of such termination. Manager shall not look to Lender or Successor Owner for any Management Fees accrued but unpaid as of the effective date of such termination, or accruing after its effective date. Any such Management Fees shall constitute Subordinate Payments.

Suspension of Remedies. Notwithstanding anything to the contrary in this Agreement, during any period when Lender is exercising its rights and remedies for a Loan Event of Default, and continuing until ________, Manager shall not exercise any Termination Remedy or other right or remedy under the Management Agreement.

Deferred Management Fee. As of any Succession Date, any Deferred Management Fee then outstanding shall automatically be reduced to Zero Dollars, but without prejudice to the subsequent accumulation of Deferred Management Fee under the express terms of the Management Agreement based on events or occurrences (including failure to achieve specified level(s) of profits or cash flow) after the Succession Date.

Noncompete. Manager shall not manage, operate, license, or otherwise participate in any hotel property that directly or indirectly competes with the Hotel within ________, except for ________.11

2. Foreclosure Fallback.

If the Manager refuses to waive any right under the Management Agreement to approve or disapprove a foreclosure-sale purchaser, then consider the following:

Foreclosure Sale Process. If Lender desires to accomplish a Foreclosure Event, then Manager shall reasonably cooperate with Lender and with potential bidders and purchasers (the “Prospects”) so that Manager shall have notified each Prospect, at least ______ days before any auction or bidding deadline, whether such Prospect would qualify as a permitted assignee of the Management Agreement. [Notwithstanding

10 This provision would replace any “nondisturbance” obligation of the Lender or any Successor Owner and could eliminate the need for much of this document. On the other hand, the Lender might want the express ability to keep the Manager and then be entitled to all the same protections that would apply if the Lender were obligated to “nondisturb” the Manager.

11 The parties need to define what constitutes a competitive property.

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anything to the contrary in the Management Agreement, Manager shall not unreasonably disapprove any Prospect.] To the extent Lender requests Manager to consider so pre-approving any Prospect, Lender shall give Manager at least _______ days prior notice of the identity of such Prospect, and such information as Manager reasonably requests about such Prospect’s credit, character, and capabilities (excluding any Prospect’s bid or proposals or intentions for the Hotel). Manager shall exercise reasonable efforts to consider any Prospect within less than _______ days when necessary. Manager shall not disclose (to Prospect(s) or to third parties) the identity of any Prospect(s), the number or nature of any Prospect(s), or any other information about Prospect(s). Manager shall preserve the confidentiality of all information Manager receives under this paragraph.

3. Manager’s Possible Additional Provisions.

The Manager may wish to add provisions such as these, many of which should be objectionable to the Owner and the Lender.

In Definitions:

[In definition of Estoppel Certificate.] Although this Estoppel Certificate estops Manager from asserting any position inconsistent with this Estoppel Certificate, this Estoppel Certificate does not constitute Manager’s representation or warranty.

As Separate Covenants:

Indemnification. If at any time Owner directs Manager not to comply with any covenant made by Manager to Lender in this Agreement, or with any instructions that Lender gives Manager under this Agreement, then Manager shall so notify Lender. Lender shall either: (1) waive such compliance by Manager; or (2) agree to protect, indemnify, and defend Manager and hold Manager harmless from and against, any and all loss, cost, liabilities, expenses, and fees arising directly or indirectly on account of Owner’s claims against Manager as a result of Manager’s complying with this Agreement or Lender’s instructions.

Manager’s Right to Cure. If Lender gives Owner any notice of default under any Loan Document, then Lender shall give Manager a copy of such notice at the same time and by the same means. Failure to do so shall not be deemed a failure to give proper notice to Owner or impair Lender’s rights or remedies against Owner. Lender shall accept Manager’s payment or performance under the Loan Documents with the same force and effect as if rendered by Owner. Manager need not cure Owner’s default.

Notice of Loan Event of Default. Lender shall reasonably endeavor to give Manager prompt notice of any Loan Event of Default. Failure to do so shall neither (1) give Manager any rights against Lender nor (2) give Owner any defense against Lender. Any such notice is for Manager’s information only. It shall not give Manager any “right to cure” or any other right(s) that Manager would not otherwise have had. Notwithstanding the foregoing or anything else in this Agreement, whenever this

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Agreement requires Manager to take or refrain from taking any action, or to act or refrain from acting only with Lender’s consent or at Lender’s direction, after a Loan Event of Default, Manager need not comply with such provision unless and until it has received notice from Lender of such Loan Event of Default.

Agency Coupled With an Interest. Owner and Lender acknowledge that the Management Agreement gives Manager an “agency coupled with an interest,” and is accordingly irrevocable (and may not be revoked except as the Management Agreement expressly provides, subject to this Agreement), in that: (1) the Management Agreement benefits Manager; (2) Manager’s agency under the Management Agreement is for Manager’s benefit as to the Management Agreement and to protect Manager’s legitimate and substantial interests under the Management Agreement relating to the Hotel; and (3) Manager’s agency and Manager’s interest under the Management Agreement are coupled in the identical party, i.e., Manager. Therefore, under the law of agency, neither Owner nor any Successor Owner has any right, power or authority to terminate the Management Agreement except in accordance with its terms, subject to the Agreement.

Manager Approvals. The “Manager Approvals” means any right of Manager to approve or consent to any matter under the Management Agreement, and any resulting approval or consent. Lender acknowledges that all Manager Approvals are for the sole and exclusive benefit of Manager. No other person or party (including Lender) may rely on any Manager Approval, except as satisfying any express requirement to obtain Manager Approval for any matter. Manager may, in its sole discretion, waive any Manager Approval(s).

NOTICE OF OWNER EVENT OF DEFAULT; One-Time Purchase Option.12 During the continuance of any Loan Event of Default, BEFORE LENDER CAUSES ANY TRANSFER OF TITLE TO OCCUR THROUGH A FORECLOSURE EVENT, LENDER SHALL NOTIFY MANAGER OF SUCH OWNER EVENT OF DEFAULT AND OF LENDER’S INTENTION TO CAUSE A FORECLOSURE EVENT (an “Owner Event of Default Notice”). Manager shall then have the right to purchase the entire Loan (the “Loan Purchase Option”) at a price equal to all indebtedness (including principal, interest, prepayment or yield maintenance premium, late charges, protective advance, reimbursement of costs and expenses, and all other sums then payable under the Loan Documents, all calculated through closing of the Loan Purchase Option [the “Option Closing Date”]) that Owner would be required to pay if on the Option Closing Date Owner prepaid the Loan in full (the “Option Price”), as follows:

Request for Option Price Notice. After a Loan Event of Default, Lender shall, within a reasonable time after Manager’s notice, give Manager notice of the Option Price (the “Option Price Notice”), calculated as if the Option Closing Date

12 This language would require the Lender to remember to give a notice to the Manager, which is undesirable. If the Lender maintains a reminder system, appropriate entries should be made. If possible, shift the burden (the risk of forgetting) to the Manager instead.

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were the date of Lender’s Option Price Notice. Lender need not issue more than one Option Price Notice during any 90-day period.

Time to Exercise. The time within which Manager may exercise the Loan Purchase Option shall commence upon a Loan Event of Default and shall continue until such date (the “Response Deadline”) as is the first to occur of (1) the date ___days after Lender has given Manager both the Owner Event of Default Notice and the Option Price Notice, or (2) the cure of such Owner Event of Default.

Means of Exercise. Manager shall have the right, which must be exercised, if at all, before the Response Deadline, to exercise the Loan Purchase Option. Time is of the essence as to exercise of the Loan Purchase Option. The only manner in which Manager may exercise the Loan Purchase Option is by giving Lender unequivocal and unconditional notice, received by Lender before the Response Deadline, that Manager exercises the Loan Purchase Option. Such exercise notice, to be effective, shall be accompanied by a certified or bank check equal to 10% of the Option Price as stated in the Option Price Notice. If Owner cures the Owner Event of Default before the Option Closing Date and such cure legally prevents Lender (or causes Lender to refrain in its sole and absolute discretion) from concluding the transfer of title through a Foreclosure Event, then Manager’s exercise of the Loan Purchase Option shall be deemed rescinded and all sums paid shall be promptly returned to Manager without interest.

Closing. If Manager exercises the Loan Purchase Option, Lender shall recalculate the Option Price as of the Option Closing Date; Manager shall pay the balance of the Option Price by certified or bank check; and Lender shall assign all Loan Documents to Manager, without recourse except as this Agreement provides, all at a closing on the first business day at least __ days after Manager exercises the Loan Purchase Option. All closing documents shall be in form reasonably satisfactory to both parties. In the event of a bona fide dispute about calculation of any portion of the Option Price arising from any sums other than principal and interest of the Loan, Manager shall pay Lender the Option Price as calculated by Manager, plus 50% of the amount in dispute. The other 50% of the amount in dispute shall be placed in escrow under arrangements reasonably satisfactory to both parties. The parties shall promptly resolve such dispute and make such adjusting payments, without interest, as shall be necessary. Lender’s calculation of principal and interest shall apply for purposes of the closing under the Option, without prejudice to Manager’s right to a refund of any overpayment.

Representations and Warranties. Lender shall represent and warrant only that Lender has not assigned, transferred, or conveyed the Loan to anyone except Manager; Lender is duly authorized to assign and transfer the Loan to Manager; and the Option Price is correct. Except for the foregoing representations and warranties (which shall survive closing for 180 days), Lender’s assignment of the Loan to Manager shall be “as is” and without representation, warranty, or

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recourse of any kind whatsoever against Lender. Manager acknowledges that all other risks, defenses, claims, and possible impairments of value related to the Loan (including any arising from Lender’s Loan administration and enforcement) shall not entitle Manager to any claim against Lender.

No Limit on Remedies. Notwithstanding anything to the contrary in this Agreement, Lender may exercise all its rights and remedies for a Loan Event of Default, including after the date of the Option Price Notice and during the entire Response Period. Lender shall not, however, cause any transfer of title through a Foreclosure Event either (1) before Lender has given Manager an Option Price Notice; (2) during a Response Period; or (3) if Manager has exercised the Loan Purchase Option (unless Manager defaults in purchasing the Loan). This paragraph does not otherwise limit the effect of this Agreement.

No Owner Rights. Nothing in the Loan Purchase Option gives Owner any right, defense, claim, or counterclaim against Lender’s rights and remedies, or any right to require Lender to defer or delay such rights or remedies.

Limit on Lender’s Cure Period. At any time after Lender’s Cure Period has continued for __ or more days as to a particular Nonmonetary Default (except one arising from Owner’s Personal Obligations), Manager may request in writing that Lender agree to cure the Nonmonetary Default for which such Lender’s Cure Period arose, provided that such request (1) expressly refers to this paragraph and (2) conspicuously identifies the response period in this paragraph. Lender is under no obligation to provide any such written assurance to Manager. If Lender in its sole and absolute discretion provides such written assurance to Manager, then such written assurance shall apply only to the particular Nonmonetary Default in question and shall not require Lender to assume or perform any other obligation under the Management Agreement, or otherwise impose any other obligation on Lender. If Lender fails to provide such written assurance within ____ days after Lender receives Manager’s written request, then Lender’s Cure Period shall be deemed to have ended on the day after such response period expires.

Reservations Software. Under no circumstance shall Manager’s reservations system (including software used solely for such reservations system) be used for the Hotel after the Management Agreement has terminated.

Manager’s Corporate Financing. Notwithstanding anything to the contrary in this Agreement, if Manager is a publicly traded corporation, then:

Definition: Manager’s Corporate Financing. The “Manager’s Corporate Financing” means any general corporate company-wide financing of Manager, not solely or primarily relating to the Hotel or the Management Agreement, and any liens and collateral assignments (encumbering only Manager’s rights under the Management Agreement and no right, title, or interest of any other party in the Hotel or Owner’s Premises), Manager grants its lender(s) for such financing.

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No Violation. Manager’s Corporate Financing does not violate this Agreement or require Lender’s Consent. Nothing in this Agreement prohibits Manager’s Corporate Financing. Any transfer of Manager’s interest in the Management Agreement by exercise of remedies under Manager’s Corporate Financing shall, however, require Lender’s Consent to the same extent, if any, it requires Owner’s consent under the Management Agreement. Manager represents and warrants that this Agreement complies with Manager’s Corporate Financing.

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